Medpace HoldingsMEDP

Key highlights

• New business acceleration: Net new awards jumped 28.2% to $795.7 million this quarter, providing a much-needed boost to the sales pipeline after a slower start to the year. This resulted in a book-to-bill ratio of 1.13x, which means the company is successfully signing new work faster than it is completing current projects.
• Profitability holding steady: EBITDA margin, which measures profit before interest and taxes as a share of sales, was 21.7% compared to 21.6% a year ago. Management kept this figure stable even as total direct costs rose to $505.7 million to support the growing workload.
• Aggressive share buybacks: The company spent $294.7 million to buy back 705,616 shares during the quarter, reducing the total number of shares and increasing the ownership stake for remaining investors. Even after this large spend, the company ended June with $502.7 million in cash and has $527.0 million left in its buyback budget.
• Backlog conversion improving: The company turned its existing backlog into revenue at a rate of 24.1%, an improvement over the 23.3% rate seen just three months ago. A higher conversion rate is important because it shows the company is becoming more efficient at working through its $3.01 billion list of committed future projects.
• Full year outlook: Management expects 2026 revenue between $2.805 billion and $2.885 billion, representing growth of up to 14.0% over last year. Profit for the year is expected to land between $17.25 and $17.95 per share, though this does not account for any further share buybacks the company might make.

Our take: This was an excellent quarter that answered big questions about the company's ability to win new business. The jump in the book-to-bill ratio to 1.13x shows demand for clinical trials is recovering quickly, which reinforces our view that this is a highly disciplined and growing business.