On April 28, 2020 Medpace Holdings, Inc. (Nasdaq: MEDP) ("Medpace") reported financial results for the first quarter ended March 31, 2020 (Press release, Medpace, APR 28, 2020, View Source [SID1234556707]).
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First Quarter 2020 Financial Results
Revenue for the three months ended March 31, 2020 increased 15.0% to $230.9 million, compared to $200.7 million for the comparable prior-year period. On a constant currency organic basis, revenue for the first quarter of 2020 increased 15.2% compared to the first quarter of 2019.
Backlog as of March 31, 2020 grew 16.8% to $1.3 billion from $1.1 billion as of March 31, 2019. Net new business awards were $246.9 million, representing a net book-to-bill ratio of 1.07x for the first quarter of 2020, as compared to $248.7 million for the comparable prior-year period. The Company calculates the net book-to-bill ratio by dividing net new business awards by revenue.
For the first quarter of 2020, total direct costs were $165.8 million, compared to total direct costs of $145.7 million in the first quarter of 2019. Selling, general and administrative (SG&A) expenses were $25.1 million in the first quarter of 2020, compared to SG&A expenses of $21.3 million in the first quarter of 2019.
GAAP net income for the first quarter of 2020 was $29.0 million, or $0.76 per diluted share, versus GAAP net income of $19.2 million, or $0.51 per diluted share, for the first quarter of 2019. This resulted in a net income margin of 12.5% and 9.6% for the first quarter of 2020 and 2019, respectively.
EBITDA for the first quarter of 2020 increased 21.3% to $40.6 million, or 17.6% of revenue, compared to $33.4 million, or 16.7% of revenue, for the comparable prior-year period. On a constant currency basis, EBITDA for the first quarter of 2020 increased 19.1% from the first quarter of 2019.
A reconciliation of the Company’s non-GAAP financial measures, including EBITDA and EBITDA margin to the corresponding GAAP measures is provided below.
Balance Sheet and Liquidity
The Company’s Cash and cash equivalents were $134.0 million at March 31, 2020, and the Company generated $49.1 million in cash flow from operating activities during the first quarter of 2020. During the first quarter of 2020, the Company repurchased approximately 0.7 million shares for a total of $43.2 million. The Company had $56.8 million remaining under its authorized share repurchase program at the end of the quarter.
COVID-19 Update and Financial Guidance
While we continue to operate globally, the level of activity at each of our locations varies depending on the local governmental requirements and guidelines. The majority of our office staff are effectively working remotely and our labs are fully operational with modifications made to ensure the safety of our employees. The diversion of resources to treat COVID-19 patients has significantly impacted the operations at most of the investigative sites where patients in our clinical trials are recruited and treated. This has resulted in reduced trial starts and slowed new business awards. Depending on the duration of the disruption ongoing studies may be cancelled and some of our clients may lack the funding to complete trials which are extended due to slowed recruitment of patients. We work with many smaller clients with limited financial resources and market disruptions may make raising additional funds difficult. Travel restrictions and business closures have also impacted study participants and clinical sites which affects our ability to efficiently provide clinical trial services. As a result, we are working with our customers to develop solutions to limit disruption to clinical trials while following required regulatory guidelines and maintaining quality to ensure the health and well-being of study participants. These include alternative assessment methods such as virtual monitoring visits.
We believe the COVID-19 pandemic will have an increasing impact on our results of operations in the future, and as we cannot predict the duration or scope of the pandemic, the future financial impact on our results of operations cannot be reasonably estimated at this time. Due to this economic uncertainty, the Company is withdrawing previously provided revenue, EBITDA, net income, and net income per diluted share guidance and is not issuing new guidance at this time. We will provide updated guidance when we can reasonably estimate the impacts of the COVID-19 pandemic on business results.
Conference Call Details
Medpace will host a conference call at 9:00 a.m. ET, Wednesday, April 29, 2020, to discuss its first quarter 2020 results.
To participate in the conference call, dial 800-219-7113 (domestic) or 574-990-1030 (international) using the passcode 5203559.
To access the conference call via webcast, visit the "Investors" section of Medpace’s website at medpace.com. The webcast replay of the call will be available at the same site approximately one hour after the end of the call.
A supplemental slide presentation will also be available at the "Investors" section of Medpace’s website prior to the start of the call.
A recording of the call will be available at 12:00 p.m. ET on Wednesday, April 29, 2020 until 12:00 p.m. ET on Wednesday, May 13, 2020. To hear this recording, dial 855-859-2056 (domestic) or 404-537-3406 (international) using the passcode 5203559.