QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Delaware 32-0434904 (State or other jurisdiction of (I.R.S. Employer Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock $0.01 par value MEDP NASDAQ Global Select Market Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company Class (Amounts in thousands, except share amounts) As Of June 30, December 31, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 42,551 $ 461,304 Accounts receivable and unbilled, net (includes $6.6 million and $2.7 million with related parties at June 30, 2022 and December 31, 2021, respectively) 225,695 186,432 Prepaid expenses and other current assets 60,641 43,176 Total current assets 328,887 690,912 Property and equipment, net 103,538 93,153 Operating lease right-of-use assets 135,389 129,558 Goodwill 662,396 662,396 Intangible assets, net 39,684 41,360 Deferred income taxes 26,441 25,134 Other assets 19,118 17,422 Total assets $ 1,315,453 $ 1,659,935 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable (includes $0.3 million with related parties at June 30, 2022 and December 31, 2021, respectively) $ 28,800 $ 25,678 Accrued expenses 173,192 159,286 Advanced billings (includes $12.0 million and $8.3 million with related parties at June 30, 2022 and December 31, 2021, respectively) 401,368 344,641 Short-term debt 249,700 - Other current liabilities 25,899 27,612 Total current liabilities 878,959 557,217 Operating lease liabilities 134,977 130,965 Deferred income tax liability 1,002 1,080 Other long-term liabilities 17,263 17,745 Total liabilities 1,032,201 707,007 Commitments and contingencies (see Note 11) Shareholders’ equity: Preferred stock - $0.01 par-value; 5,000,000 shares authorized; 0 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively 0 0 Common stock - $0.01 par-value; 250,000,000 shares authorized at June 30, 2022 and December 31, 2021, respectively; 30,987,636 and 36,006,778 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively 309 360 Treasury stock - 81,573 and 180,000 shares at June 30, 2022 and December 31, 2021, respectively (14,243 ) (5,427 ) Additional paid-in capital 753,300 727,857 (Accumulated deficit) Retained earnings (446,142 ) 234,984 Accumulated other comprehensive loss (9,972 ) (4,846 ) Total shareholders’ equity 283,252 952,928 Total liabilities and shareholders’ equity $ 1,315,453 $ 1,659,935 (Amounts in thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Revenue, net (includes $17.2 million and $9.9 million with related parties for the three months ended June 30, 2022 and 2021, respectively, and $30.5 million and $15.2 million with related parties for the six months ended June 30, 2022 and 2021, respectively) $ 351,207 $ 278,293 $ 682,154 $ 538,258 Operating expenses: Direct service costs, excluding depreciation and amortization 132,118 108,233 257,552 209,620 Reimbursed out-of-pocket expenses 120,093 95,409 226,929 175,560 Total direct costs 252,211 203,642 484,481 385,180 Selling, general and administrative 33,215 26,973 62,581 52,711 Depreciation 4,707 3,951 8,977 7,763 Amortization 838 1,279 1,676 2,557 Total operating expenses 290,971 235,845 557,715 448,211 Income from operations 60,236 42,448 124,439 90,047 Other income, net: Miscellaneous income, net 2,311 265 3,378 1,189 Interest expense, net (548 ) (27 ) (494 ) (41 ) Total other income, net 1,763 238 2,884 1,148 Income before income taxes 61,999 42,686 127,323 91,195 Income tax provision 12,639 2,752 16,652 7,955 Net income $ 49,360 $ 39,934 $ 110,671 $ 83,240 Net income per share attributable to common shareholders: Basic $ 1.52 $ 1.11 $ 3.28 $ 2.32 Diluted $ 1.46 $ 1.06 $ 3.16 $ 2.20 Weighted average common shares outstanding: Basic 32,493 35,894 33,696 35,825 Diluted 33,695 37,714 35,034 37,737 (Amounts in thousands) Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Net income $ 49,360 $ 39,934 $ 110,671 $ 83,240 Other comprehensive income Foreign currency translation adjustments, net of taxes (3,584 ) 506 (5,126 ) (1,629 ) Comprehensive income $ 45,776 $ 40,440 $ 105,545 $ 81,611 MEDPACE HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) (Amounts in thousands) Accumulated Additional Other Common Treasury Paid-In Retained Comprehensive Stock Stock Capital Earnings Loss Total BALANCE — December 31, 2020 $ 355 $ (5,578 ) $ 695,904 $ 115,229 $ (131 ) $ 805,779 Net income 43,306 43,306 Foreign currency translation (2,135 ) (2,135 ) Stock-based compensation expense 2,871 2,871 Stock options exercised 4 9,102 9,106 BALANCE — March 31, 2021 $ 359 $ (5,578 ) $ 707,877 $ 158,535 $ (2,266 ) $ 858,927 Net income 39,934 39,934 Foreign currency translation 506 506 Stock-based compensation expense 3,570 3,570 Stock options exercised 2 5,100 5,102 Repurchases of common stock (3 ) (56,154 ) (56,157 ) BALANCE — June 30, 2021 $ 358 $ (5,578 ) $ 716,547 $ 142,315 $ (1,760 ) $ 851,882 (Accumulated Accumulated Additional Deficit) Other Common Treasury Paid-In Retained Comprehensive Stock Stock Capital Earnings Loss Total BALANCE — December 31, 2021 $ 360 $ (5,427 ) $ 727,857 $ 234,984 $ (4,846 ) $ 952,928 Net income 61,311 61,311 Foreign currency translation (1,542 ) (1,542 ) Stock-based compensation expense 4,372 4,372 Stock options exercised 3 13,894 13,897 Repurchases of common stock (27 ) (14,243 ) (411,680 ) (425,950 ) Retirement of treasury stock 5,427 (5,427 ) - BALANCE — March 31, 2022 $ 336 $ (14,243 ) $ 746,123 $ (120,812 ) $ (6,388 ) $ 605,016 Net income 49,360 49,360 Foreign currency translation (3,584 ) (3,584 ) Stock-based compensation expense 5,653 5,653 Stock options exercised 1,524 1,524 Repurchases of common stock (27 ) (374,690 ) (374,717 ) BALANCE — June 30, 2022 $ 309 $ (14,243 ) $ 753,300 $ (446,142 ) $ (9,972 ) $ 283,252 See notes to condensed consolidated financial statements. (Amounts in thousands) Six Months Ended June 30, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 110,671 $ 83,240 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 8,977 7,763 Amortization 1,676 2,557 Stock-based compensation expense 10,025 6,441 Noncash lease expense 8,959 7,899 Deferred income tax (benefit) provision (1,439 ) 2,667 Amortization and adjustment of deferred credit (310 ) (334 ) Other (323 ) 131 Changes in assets and liabilities: Accounts receivable and unbilled, net (39,059 ) (353 ) Prepaid expenses and other current assets (18,789 ) (14,889 ) Accounts payable 2,552 (270 ) Accrued expenses 15,643 11,937 Advanced billings 56,727 26,553 Lease liabilities (7,705 ) (7,956 ) Other assets and liabilities, net (4,730 ) (5,306 ) Net cash provided by operating activities 142,875 120,080 CASH FLOWS FROM INVESTING ACTIVITIES: Property and equipment expenditures (20,457 ) (12,515 ) Other (1,878 ) (3,133 ) Net cash used in investing activities (22,335 ) (15,648 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from stock option exercises 15,421 14,200 Repurchases of common stock (800,667 ) (55,877 ) Proceeds from revolving loan 299,200 - Payments on revolving loan (49,500 ) - Net cash used in financing activities (535,546 ) (41,677 ) EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS, AND (3,747 ) (1,512 ) (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (418,753 ) 61,243 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period 461,304 277,766 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period $ 42,551 $ 339,009 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION — Acquisition of property and equipment—non-cash $ 7,441 $ 5,824 Unaudited Interim Financial Information Share Repurchases Recently Issued Accounting Standards (2) Net Income Per Share The following table sets forth the computation of basic and diluted earnings per share for the three and Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Weighted-average shares: Common shares outstanding 32,493 35,894 33,696 35,825 RSAs 21 114 21 115 Total weighted-average shares 32,514 36,008 33,717 35,940 Earnings per common share—Basic Net income $ 49,360 $ 39,934 $ 110,671 $ 83,240 Less: Undistributed earnings allocated to RSAs (31 ) (127 ) (68 ) (267 ) Net income available to common shareholders—Basic $ 49,329 $ 39,807 $ 110,603 $ 82,973 Net income per common share—Basic $ 1.52 $ 1.11 $ 3.28 $ 2.32 Basic weighted-average common shares outstanding 32,493 35,894 33,696 35,825 Effect of diluted shares 1,202 1,820 1,338 1,912 Diluted weighted-average shares outstanding 33,695 37,714 35,034 37,737 Net income per common share—Diluted $ 1.46 $ 1.06 $ 3.16 $ 2.20 Accounts receivable and unbilled, net consisted of the following (in thousands): As of June 30, December 31, 2022 2021 Accounts receivable $ 182,080 $ 150,496 Unbilled receivables 43,785 36,107 Less: allowance for doubtful accounts (170 ) (171 ) Total accounts receivable and unbilled, net $ 225,695 $ 186,432 Advanced billings consisted of the following (in thousands): As of June 30, December 31, 2022 2021 Advanced billings $ 401,368 $ 344,641 (5) Intangible Assets, Net Intangible assets, net consisted of the following (in thousands): As of June 30, December 31, 2022 2021 Intangible assets: Finite-lived intangible assets: Carrying amount: Customer relationships 145,051 145,051 Accumulated amortization: Customer relationships (137,013 ) (135,337 ) Total finite-lived intangible assets, net 8,038 9,714 Trade name (indefinite-lived) 31,646 31,646 Total intangible assets, net $ 39,684 $ 41,360 Amortization Remainder of 2022 $ 1,677 2023 2,199 2024 1,443 2025 946 2026 620 Later years 1,153 $ 8,038 Accrued expenses consisted of the following (in thousands): As of June 30, December 31, 2022 2021 Employee compensation and benefits $ 53,297 $ 57,846 Project related reimbursable expenses 108,310 91,839 Other 11,585 9,601 �� Total accrued expenses $ 173,192 $ 159,286 Debt consisted of the following (in thousands): As of June 30, December 31, 2022 2021 Revolving credit facility $ 249,700 $ - Short-term debt $ 249,700 $ - Principal payments on debt are due as follows (in thousands): 2022 (remaining) - 2023 249,700 Total $ 249,700 The components of lease expense were as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Operating lease cost $ 6,375 $ 5,817 $ 12,875 $ 11,547 Variable lease cost 2,097 1,112 4,113 2,816 Six Months Ended June 30, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 8,257 $ 8,185 Right-of-use assets obtained in exchange for lease obligations: Operating leases 18,222 4,851 Supplemental balance sheet information related to the leases was as follows (in thousands): As of June 30, December 31, 2022 2021 Operating lease right-of-use assets $ 135,389 $ 129,558 Other current liabilities $ 18,770 $ 16,276 Operating lease liabilities 134,977 130,965 Total operating lease liabilities $ 153,747 $ 147,241 Weighted Average Remaining Lease Term (years) Operating leases 11.4 12.0 Weighted Average Discount Rate Operating leases 5.3 % 5.5 % Related Party Non-Related Parties Total Operating Leases Operating Leases Operating Leases Remainder of 2022 $ 5,471 $ 6,935 $ 12,406 2023 11,025 13,855 24,880 2024 11,154 10,851 22,005 2025 11,286 8,518 19,804 2026 11,422 7,124 18,546 Later years 106,988 10,230 117,218 Total lease payments 157,346 57,513 214,859 Less: imputed interest (56,020 ) (5,092 ) (61,112 ) Total $ 101,326 $ 52,421 $ 153,747 Six Months Ended June 30, 2022 Weighted Average Stock Options Exercise Price Outstanding - beginning of period 1,992,915 $ 68.39 Granted 251,661 $ 139.37 Exercised (362,102 ) $ 42.59 Cancelled/Forfeited/Expired (22,947 ) $ 64.76 Outstanding - end of period 1,859,527 $ 83.06 Exercisable - end of period 1,243,560 $ 55.65 Outstanding and unvested - beginning of period 602,187 Granted 151,159 Vested (159,000) Forfeited (40,248) Outstanding and unvested - end of period 554,098 Cumulative vested shares - end of period 2,191,916 Stock-based compensation expense recognized in the condensed consolidated statements of operations related to all outstanding stock based compensation awards is summarized below (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Total direct costs $ 3,125 $ 2,187 $ 5,565 $ 4,234 Selling, general and administrative 2,528 1,383 4,460 2,207 Total stock-based compensation expense $ 5,653 $ 3,570 $ 10,025 $ 6,441 (11) Commitments and Contingencies immaterial as of Certain affiliates of CinRx included in previous reported quarters are no longer disclosed due to changes in the affiliate relationship. rate annually for increases in the consumer price index. Operating lease cost recognized for the three months ended The following table disaggregates our revenue by major source (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Therapeutic Area Oncology $ 115,542 $ 93,248 $ 220,755 $ 172,386 Other 73,555 64,120 143,972 133,058 Metabolic 55,600 38,143 103,716 70,638 Cardiology 42,027 28,040 79,423 51,802 Central Nervous System 38,906 28,551 77,393 53,363 AVAI 25,577 26,191 56,895 57,011 Total revenue $ 351,207 $ 278,293 $ 682,154 $ 538,258 months to several years. These contracts are individually priced and negotiated based on the anticipated project scope, including the complexity of the project and the performance risks inherent in the project. The majority of our contracts are structured with an upfront fee that is collected at the time of contract signing, and the balance of the fee is collected over the duration of the contract either through an arranged billing schedule or upon completion of certain performance targets or defined milestones. continuing along with the rest of the industry with a blend of on-site monitoring and remote based monitoring and we are using technology tools like e-PRO for patient reported outcomes, e-COA, for clinical outcome assessment, remote data capture and remote data review. We are also leveraging internal service capabilities like patient concierge service to help facilitate patient travel to sites and master service agreements in place with strategic vendors for other patient services like home health. Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 U.S. Dollars per Euro: 1.07 1.20 1.09 1.21 Three Months Ended June 30, (Amounts in thousands, except percentages) 2022 2021 Change % Change Revenue, net $ 351,207 $ 278,293 $ 72,914 26.2 % Direct service costs, excluding depreciation and amortization 132,118 108,233 23,885 22.1 % Reimbursed out-of-pocket expenses 120,093 95,409 24,684 25.9 % Total direct costs 252,211 203,642 48,569 23.9 % Selling, general and administrative 33,215 26,973 6,242 23.1 % Depreciation 4,707 3,951 756 19.1 % Amortization 838 1,279 (441 ) (34.5 )% Total operating expenses 290,971 235,845 55,126 23.4 % Income from operations 60,236 42,448 17,788 Miscellaneous income, net 2,311 265 2,046 Interest expense, net (548 ) (27 ) (521 ) Income before income taxes 61,999 42,686 19,313 Income tax provision 12,639 2,752 9,887 Net income $ 49,360 $ 39,934 $ 9,426 Six Months Ended June 30, (Amounts in thousands, except percentages) 2022 2021 Change % Change Revenue, net $ 682,154 $ 538,258 $ 143,896 26.7 % Direct service costs, excluding depreciation and amortization 257,552 209,620 47,932 22.9 % Reimbursed out-of-pocket expenses 226,929 175,560 51,369 29.3 % Total direct costs 484,481 385,180 99,301 25.8 % Selling, general and administrative 62,581 52,711 9,870 18.7 % Depreciation 8,977 7,763 1,214 15.6 % Amortization 1,676 2,557 (881 ) (34.5 )% Total operating expenses 557,715 448,211 109,504 24.4 % Income from operations 124,439 90,047 34,392 Miscellaneous income, net 3,378 1,189 2,189 Interest expense, net (494 ) (41 ) (453 ) Income before income taxes 127,323 91,195 36,128 Income tax provision 16,652 7,955 8,697 Net income $ 110,671 $ 83,240 $ 27,431 Six Months Ended June 30, Cash Flows (Amounts in thousands) 2022 2021 Net cash provided by operating activities $ 142,875 $ 120,080 Net cash used in investing activities (22,335 ) (15,648 ) Net cash used in financing activities (535,546 ) (41,677 ) Effect of exchange rates on cash, cash equivalents and restricted cash (3,747 ) (1,512 ) (Decrease) increase in cash, cash equivalents and restricted cash $ (418,753 ) $ 61,243 Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publically Announced Plan Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan April 1, 2022, through April 30, 2022 231,727 $ 135.71 4,538,470 $ 343,180,669 May 1, 2022, through May 31, 2022 1,573,616 $ 136.28 6,112,086 $ 128,735,169 June 1, 2022, through June 30, 2022 912,036 $ 141.15 7,024,122 $ — Total 2,717,379 $ 137.86 7,024,122 Date Equity Plan Number of Stock Options Exercised Exercise Price Approximate Aggregate Purchase Price April 6, 2022 2014 Equity Incentive Plan 1,000 $ 18.23 $ 18,200 June 1, 2022 2014 Equity Incentive Plan 6,000 16.88 101,300 June 15, 2022 2014 Equity Incentive Plan 650 18.23 11,800 Total 7,650 $ 131,300 31.1 Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer * 31.2 * 32.1 ** 32.2 ** 101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document * 101.SCH Inline XBRL Taxonomy Extension Schema Document * 101.CAL Inline XBRL Taxonomy Calculation Linkbase Document * 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document * 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document * 101.PRE Inline XBRL Taxonomy Extension Presentation * 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) /s/ Kevin M. Brady Kevin M. Brady Chief Financial Officer☒xJuneSeptember 30, 2022☐o
incorporation or organization)
Identification No.), Cincinnati,, OH45227(513) Yes☒x No ☐oYes☒x No ☐o☒x☐o☐o☐o☐o☐o☐o No ☒xClassNumber of Shares OutstandingCommon Stock $0.01 par value30,998,636 shares outstanding as of July 22, 2022MEDPACE HOLDINGS, INC. AND SUBSIDIARIESFORM 10-QFOR QUARTERLY PERIOD ENDED JUNE 30, 2022TABLE OF CONTENTSNumber of Shares Outstanding Common Stock $0.01 par value 31,099,897 shares outstanding as of October 21, 2022 (Amounts in thousands, except share amounts) September 30,
2022December 31,
2021ASSETS Current assets: Cash and cash equivalents $ 31,007 $ 461,304 Accounts receivable and unbilled, net (includes $3.0 million and $2.7 million with related parties at September 30, 2022 and December 31, 2021, respectively) 249,086 186,432 Prepaid expenses and other current assets 57,648 43,176 Total current assets 337,741 690,912 Property and equipment, net 104,719 93,153 Operating lease right-of-use assets 139,071 129,558 Goodwill 662,396 662,396 Intangible assets, net 38,846 41,360 Deferred income taxes 27,023 25,134 Other assets 18,629 17,422 Total assets $ 1,328,425 $ 1,659,935 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable (includes $0.3 million with related parties at September 30, 2022 and December 31, 2021, respectively) $ 28,245 $ 25,678 Accrued expenses 204,117 159,286 Advanced billings (includes $5.7 million and $8.3 million with related parties at September 30, 2022 and December 31, 2021, respectively) 417,927 344,641 Short-term debt 139,700 — Other current liabilities 30,879 27,612 Total current liabilities 820,868 557,217 Operating lease liabilities 139,203 130,965 Deferred income tax liability 911 1,080 Other long-term liabilities 17,558 17,745 Total liabilities 978,540 707,007 Commitments and contingencies (see Note 11) Shareholders’ equity: Preferred stock - $0.01 par-value; 5,000,000 shares authorized; no shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively — — Common stock - $0.01 par-value; 250,000,000 shares authorized at September 30, 2022 and December 31, 2021, respectively; 31,098,397 and 36,006,778 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively 309 360 Treasury stock - 81,573 and 180,000 shares at September 30, 2022 and December 31, 2021, respectively (14,243) (5,427) Additional paid-in capital 759,986 727,857 (Accumulated deficit) Retained earnings (380,115) 234,984 Accumulated other comprehensive loss (16,052) (4,846) Total shareholders’ equity 349,885 952,928 Total liabilities and shareholders’ equity $ 1,328,425 $ 1,659,935 (Amounts in thousands, except per share amounts) Three Months Ended
September 30,Nine Months Ended
September 30, 2022 2021 2022 2021 Revenue, net (includes $9.8 million and $8.7 million with related parties for the three months ended September 30, 2022 and 2021, respectively, and $40.3 million and $23.9 million with related parties for the nine months ended September 30, 2022 and 2021, respectively) $ 383,744 $ 295,567 $ 1,065,898 $ 833,825 Operating expenses: Direct service costs, excluding depreciation and amortization 136,648 112,540 394,200 322,160 Reimbursed out-of-pocket expenses 128,062 95,934 354,991 271,494 Total direct costs 264,710 208,474 749,191 593,654 Selling, general and administrative 35,418 28,046 97,999 80,757 Depreciation 4,951 4,056 13,928 11,819 Amortization 838 1,278 2,514 3,835 Total operating expenses 305,917 241,854 863,632 690,065 Income from operations 77,827 53,713 202,266 143,760 Other income, net: Miscellaneous income, net 5,649 1,064 9,027 2,253 Interest expense, net (1,584) (41) (2,078) (82) Total other income, net 4,065 1,023 6,949 2,171 Income before income taxes 81,892 54,736 209,215 145,931 Income tax provision 15,865 6,162 32,517 14,117 Net income $ 66,027 $ 48,574 $ 176,698 $ 131,814 Net income per share attributable to common shareholders: Basic $ 2.13 $ 1.35 $ 5.39 $ 3.67 Diluted $ 2.05 $ 1.29 $ 5.18 $ 3.49 Weighted average common shares outstanding: Basic 31,009 35,816 32,791 35,822 Diluted 32,253 37,519 34,098 37,641 (Amounts in thousands) Three Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 Net income $ 66,027 $ 48,574 $ 176,698 $ 131,814 Other comprehensive income Foreign currency translation adjustments, net of taxes (6,080) (1,483) (11,206) (3,112) Comprehensive income $ 59,947 $ 47,091 $ 165,492 $ 128,702 - 5 -- 6 -(Amounts in thousands) Additional
Paid-In
CapitalBALANCE — December 31, 2020 $ 355 $ (5,578) $ 695,904 $ 115,229 $ (131) $ 805,779 Net income 43,306 43,306 Foreign currency translation (2,135) (2,135) Stock-based compensation expense 2,871 2,871 Stock options exercised 4 9,102 9,106 BALANCE — March 31, 2021 $ 359 $ (5,578) $ 707,877 $ 158,535 $ (2,266) $ 858,927 Net income 39,934 39,934 Foreign currency translation 506 506 Stock-based compensation expense 3,570 3,570 Stock options exercised 2 5,100 5,102 Repurchases of common stock (3) (56,154) (56,157) BALANCE — June 30, 2021 $ 358 $ (5,578) $ 716,547 $ 142,315 $ (1,760) $ 851,882 Net income 48,574 48,574 Foreign currency translation (1,483) (1,483) Stock-based compensation expense 4,047 4,047 Stock options exercised 1 1,003 1,004 Repurchases of common stock (5,939) (5,939) BALANCE — September 30, 2021 $ 359 $ (5,578) $ 721,597 $ 184,950 $ (3,243) $ 898,085 Additional
Paid-In
CapitalBALANCE — December 31, 2021 $ 360 $ (5,427) $ 727,857 $ 234,984 $ (4,846) $ 952,928 Net income 61,311 61,311 Foreign currency translation (1,542) (1,542) Stock-based compensation expense 4,372 4,372 Stock options exercised 3 13,894 13,897 Repurchases of common stock (27) (14,243) (411,680) (425,950) Retirement of treasury stock 5,427 (5,427) — BALANCE — March 31, 2022 $ 336 $ (14,243) $ 746,123 $ (120,812) $ (6,388) $ 605,016 Net income 49,360 49,360 Foreign currency translation (3,584) (3,584) Stock-based compensation expense 5,653 5,653 Stock options exercised 1,524 1,524 Repurchases of common stock (27) (374,690) (374,717) BALANCE — June 30, 2022 $ 309 $ (14,243) $ 753,300 $ (446,142) $ (9,972) $ 283,252 Net income 66,027 66,027 Foreign currency translation (6,080) (6,080) Stock-based compensation expense 5,794 5,794 Stock options exercised 892 892 BALANCE — September 30, 2022 $ 309 $ (14,243) $ 759,986 $ (380,115) $ (16,052) $ 349,885
RESTRICTED CASH(Amounts in thousands) Nine Months Ended
September 30,2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 176,698 $ 131,814 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 13,928 11,819 Amortization 2,514 3,835 Stock-based compensation expense 15,819 10,488 Noncash lease expense 13,460 11,878 Deferred income tax (benefit) provision (2,126) 3,299 Amortization and adjustment of deferred credit (465) (501) Other 115 213 Changes in assets and liabilities: Accounts receivable and unbilled, net (62,438) (25,046) Prepaid expenses and other current assets (17,397) (22,049) Accounts payable 770 2,150 Accrued expenses 47,848 24,691 Advanced billings 73,286 48,184 Lease liabilities (11,134) (11,335) Other assets and liabilities, net 488 2,993 Net cash provided by operating activities 251,366 192,433 CASH FLOWS FROM INVESTING ACTIVITIES: Property and equipment expenditures (27,636) (19,155) Other (1,886) (3,093) Net cash used in investing activities (29,522) (22,248) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from stock option exercises 16,313 15,212 Repurchases of common stock (800,667) (62,096) Proceeds from revolving loan 299,200 — Payments on revolving loan (159,500) — Net cash used in financing activities (644,654) (46,884) EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS, AND
RESTRICTED CASH(7,487) (2,680) (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (430,297) 120,621 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period 461,304 277,766 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period $ 31,007 $ 398,387 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION — Acquisition of property and equipment—non-cash $ 9,094 $ 5,424 June$150.0$150.0 million to the Company's stock repurchase program bringing the total repurchase authorization up to $300.0$300.0 million. In the first quarter of 2022, the Board approved additional increases totaling $500.0$500.0 million to the Company's stock repurchase program. In the second quarter of 2022, the Board approved further increases of $110.0$110.0 million to the Company's stock repurchase program. During the three and sixnine months ended JuneSeptember 30, 2022, the Company repurchased 2,717,379 shares and 5,463,244 shares for $374.6 million and $800.5 million, respectively.$800.5 million. During the three and sixnine months ended JuneSeptember 30, 2021, the Company repurchased 343,15934,624 and 377,783 shares for $56.1$5.9 million and $62.1 million, respectively. As of JuneSeptember 30, 2022, the Company has completed all authorized share repurchases under the repurchase program.sixnine months ended JuneSeptember 30, 2022 and 2021 (in thousands, except for earnings per share):Three Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 Weighted-average shares: Common shares outstanding 31,009 35,816 32,791 35,822 RSAs 21 112 21 114 Total weighted-average shares 31,030 35,928 32,812 35,936 Earnings per common share—Basic Net income $ 66,027 $ 48,574 $ 176,698 $ 131,814 Less: Undistributed earnings allocated to RSAs (44) (151) (112) (419) Net income available to common shareholders—Basic $ 65,983 $ 48,423 $ 176,586 $ 131,395 Net income per common share—Basic $ 2.13 $ 1.35 $ 5.39 $ 3.67 Basic weighted-average common shares outstanding 31,009 35,816 32,791 35,822 Effect of diluted shares 1,244 1,703 1,307 1,819 Diluted weighted-average shares outstanding 32,253 37,519 34,098 37,641 Net income per common share—Diluted $ 2.05 $ 1.29 $ 5.18 $ 3.49 sixnine months ended JuneSeptember 30, 2022, the Company had (in thousands) 274.4 stock options, respectively, that were excluded due to the exercise price exceeding the average fair value of the Company’s common stock during the period. During the three and six months ended June 30, 2021, the Company had (in thousands) 0 and 273.6 stock options, respectively, that were excluded due to the exercise price exceeding the average fair value of the Company's common stock during the period.- 9 -JuneSeptember 30, 2022. There were 0no transfers between Level 1, Level 2 or Level 3 during the three and sixnine months ended JuneSeptember 30, 2022 or JuneSeptember 30, 2021.September 30,
2022December 31,
2021Accounts receivable $ 207,792 $ 150,496 Unbilled receivables 41,463 36,107 Less: allowance for doubtful accounts (169) (171) Total accounts receivable and unbilled, net $ 249,086 $ 186,432 As of September 30,
2022December 31,
2021Advanced billings $ 417,927 $ 344,641 JuneSeptember 30, 2022, we had approximately $2.5$2.5 billion of performance obligations remaining to be performed for active projects.- 10 -September 30,
2022December 31,
2021Intangible assets: Finite-lived intangible assets: Carrying amount: Customer relationships 145,051 145,051 Accumulated amortization: Customer relationships (137,851) (135,337) Total finite-lived intangible assets, net 7,200 9,714 Trade name (indefinite-lived) 31,646 31,646 Total intangible assets, net $ 38,846 $ 41,360 JuneSeptember 30, 2022, estimated amortization expense of the Company’s intangible assets for each of the next five years and thereafter is as follows (in thousands):Amortization Remainder of 2022 $ 839 2023 2,199 2024 1,443 2025 946 2026 620 Later years 1,153 $ 7,200 As of September 30,
2022December 31,
2021Employee compensation and benefits $ 63,517 $ 57,846 Project related reimbursable expenses 127,603 91,839 Other 12,997 9,601 Total accrued expenses $ 204,117 $ 159,286 As of September 30,
2022December 31,
2021Revolving credit facility $ 139,700 $ — Short-term debt $ 139,700 $ — 2022 (remaining) — 2023 139,700 Total $ 139,700 $50.0$50.0 million (as amended from time to time, the “Credit Facility”) through its wholly owned subsidiaries, Medpace, Inc., as borrower (the “Borrower”), and Medpace IntermediateCo, Inc., as guarantor (the “Guarantor”)., adds provisions for alternative rates of interest as a result of global reference rate initiatives and removes the Borrower's ability to obtain advances in any currency other than U.S. Dollars. After the LIBOR cessation date of December 31, 2021, the Credit Facility bears interest at a rate of the sum of The Secured Overnight Financing Rate (SOFR) and the benchmark replacement adjustment plus 100 basis points (1.00%). On March 15, 2022, the Company entered into Amendment No. 4 to the Loan Agreement, which increased the aggregate principal amount that may be borrowed under the facility’s line of credit to up to $250.0$250.0 million.JuneSeptember 30, 2022, there were $0.2$0.2 million in letters of credit outstanding related to certain operating lease obligations, which are secured by the Credit Facility.- 11 -Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Operating lease cost $ 6,482 $ 5,941 $ 19,357 $ 17,488 Variable lease cost 2,240 1,749 6,353 4,565 Nine Months Ended September 30, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 12,045 $ 11,847 Right-of-use assets obtained in exchange for lease obligations: Operating leases 29,915 24,251 September 30,
2022December 31,
2021Operating lease right-of-use assets $ 139,071 $ 129,558 Other current liabilities $ 18,691 $ 16,276 Operating lease liabilities 139,203 130,965 Total operating lease liabilities $ 157,894 $ 147,241 Weighted Average Remaining Lease Term (years) Operating leases 11.4 12.0 Weighted Average Discount Rate Operating leases 5.2 % 5.5 % JuneSeptember 30, 2022 were as follows (in thousands):Remainder of 2022 $ 2,746 $ 3,674 $ 6,420 2023 11,025 13,894 24,919 2024 11,154 11,394 22,548 2025 11,286 9,302 20,588 2026 11,422 8,108 19,530 Later years 106,988 17,570 124,558 Total lease payments 154,621 63,942 218,563 Less: imputed interest (54,538) (6,131) (60,669) Total $ 100,083 $ 57,811 $ 157,894 JuneSeptember 30, 2022, we have several additional leases with contractual obligations, which have not yet commenced, with future payments of $14.5$0.1 million.- 12 -377,394392,231 awards to employees under the 2016 Incentive Award Plan during the sixnine months ended JuneSeptember 30, 2022, consisting of 137,151151,159 RSU and 113,009113,838 stock option awards having four year vesting schedules and 127,234 stock option awards having two year vesting schedules. The Company granted an additional 11,418 stock option awards to non-employee directors under the 2016 Incentive Award Plan, during the sixnine months ended JuneSeptember 30, 2022. These awards are scheduled to vest on the earlier of (a) the day immediately preceding the date of the first annual meeting following the date of grant and (b) the first anniversary of the date of grant, subject to the non-employee director continuing in service through the applicable vesting date.Nine Months Ended September 30, 2022 Stock Options Weighted Average
Exercise PriceOutstanding - beginning of period 1,992,915 $ 68.39 Granted 252,490 $ 138.91 Exercised (395,863) $ 41.21 Cancelled/Forfeited/Expired (28,747) $ 72.76 Outstanding - end of period 1,820,795 $ 84.01 Exercisable - end of period 1,212,799 $ 56.49 SixNine Months Ended
September 30, 2022June 30, 2022Shares/Units137,151(82,000)(32,594)624,7442,114,916Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Total direct costs $ 3,179 $ 2,607 $ 8,744 $ 6,841 Selling, general and administrative 2,615 1,440 7,075 3,647 Total stock-based compensation expense $ 5,794 $ 4,047 $ 15,819 $ 10,488 20.4%19.4% and 6.4%11.3% for the three months ended JuneSeptember 30, 2022 and 2021, respectively. The Company's effective income tax rate was 13.1%15.5% and 8.7%9.7% for the sixnine months ended JuneSeptember 30, 2022 and 2021, respectively. The Company’s effective income tax rate for the three months ended JuneSeptember 30, 2022 varied from the U.S. statutory rate of 21%21% primarily due to the impact of state taxes, which was favorably offset by excess tax benefits recognized from share-based compensation. The Company's effective income tax rate for the sixnine months ended JuneSeptember 30, 2022 varied from the U.S. statutory rate of 21%21% due to the impact of the state taxes, which was favorably offset by excess tax benefits recognized from share-based compensation and benefits from uncertain tax positions.- 13 -JuneSeptember 30, 2022 and December 31, 2021. There is a reasonable possibility that a loss exceeding amounts already recognized may be incurred related to these actions; however, the Company believes that such potential losses were immaterial as of JuneSeptember 30, 2022.$14.7$14.3 million as of JuneSeptember 30, 2022. In return for the commitment, Medpace receives preferential pricing. The commitments expire at various times through 2029.$0.3 million and $0.2$0.2 million existed at JuneSeptember 30, 2022 and December 31, 2021, respectively, and are included in the Prepaid expenses and other current assets and Other assets line items of the condensed consolidated balance sheets, respectively, depending on the contractual repayment date.$9.7$9.5 million and $2.8$2.3 million during the three months ended JuneSeptember 30, 2022 and 2021, respectively, and $17.1$26.6 million and $3.3$5.6 million during the sixnine months ended JuneSeptember 30, 2022 and 2021, respectively, in the Company’s condensed consolidated statements of operations. As of JuneSeptember 30, 2022 and December 31, 2021, respectively, the Company had Advanced billings from LIB of $3.5$4.7 million and $2.9$2.9 million in the condensed consolidated balance sheets. In addition, as of JuneSeptember 30, 2022 and December 31, 2021, respectively, the Company had Accounts receivable and unbilled, net from LIB of $4.2$1.7 million and $0.5$0.5 million in the condensed consolidated balance sheets.$7.5$0.5 million and $7.1$6.4 million during the three months ended JuneSeptember 30, 2022 and 2021, respectively, and $13.3$13.8 million and $11.9$18.3 million during the sixnine months ended JuneSeptember 30, 2022 and 2021, respectively, in the Company’s condensed consolidated statements of operations. As of JuneSeptember 30, 2022 and December 31, 2021, respectively, the Company had Advanced billings from CinRx of $8.5$1.0 million and $5.4$5.4 million in the condensed consolidated balance sheets. As of JuneSeptember 30, 2022 and December 31, 2021 the Company had Accounts receivable and unbilled, net from CinRx of $2.4$1.3 million and $2.1$2.1 million, respectively, in the condensed consolidated balance sheets.less than $0.1$0.1 million and $0.2 million during the three months ended JuneSeptember 30, 2022 and 2021, respectively, and $0.1$0.2 million and $0.3 million during the sixnine months ended JuneSeptember 30, 2022 and 2021 at The Summit, respectively.1one 10-year term at prevailing market rates. In Q3 2021, the Company accounted for the renewal option, as it became reasonably certain it would be exercised per the agreement, by extending the lease term through November 2032. The Company pays rent, taxes, insurance, and maintenance expenses that arise from the use of the property. Annual base rent for its corporate headquarters allows for adjustments to the rental- 14 -JuneSeptember 30, 2022 and 2021 was $0.5 million, respectively, and $1.1$0.6 million and $1.0$1.7 million and $1.6 million for the sixnine months ended JuneSeptember 30, 2022 and 2021, respectively. The operating lease cost was allocated between Total direct costs and Selling, general and administrative in the condensed consolidated statements of operations. The Operating lease right-of-use assets at JuneSeptember 30, 2022 and December 31, 2021 were $19.0$18.6 million and $19.7$19.7 million, respectively, in the condensed consolidated balance sheets. The current and long-term portions of the lease liabilities at JuneSeptember 30, 2022 were $1.5$1.5 million and $17.5$17.1 million, respectively, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets. The current and long-term portions of the lease liabilities at December 31, 2021 were $1.5$1.5 million and $18.3$18.3 million, respectively, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets.2two 10-year options to extend the term of the lease. The Company pays rent, taxes, insurance, and maintenance expenses that arise from the use of the property. Annual base rent for the corporate headquarters allows for adjustments to the rental rate annually for increases in the consumer price index. The Company has determined that the lease is an operating lease. Operating lease cost recognized for the three months ended JuneSeptember 30, 2022 and 2021 was $1.4$1.5 million respectively, and $2.8$4.3 million for the sixnine months ended JuneSeptember 30, 2022 and 2021, respectively.2021. The operating lease cost was allocated between Total direct costs and Selling, general and administrative in the condensed consolidated statements of operations. The Operating lease right-of-use assets at JuneSeptember 30, 2022 and December 31, 2021 were $54.3$53.9 million and $55.1$55.1 million, respectively, in the condensed consolidated balance sheets. The current and long-term portions of the lease liabilities at JuneSeptember 30, 2022 were $1.0$1.1 million and $65.4$65.1 million, respectively, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets. The current and long-term portions of the lease liabilities at December 31, 2021 were $0.9$0.9 million and $65.9$65.9 million, respectively and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets.2two multi-year lease agreements governing the occupancy of space of 2two buildings in Cincinnati, Ohio with an entity that is wholly owned by the Company’s chief executive officer and certain members of his immediate family. The Company assumed occupancy in 2012 and the leases expire in 2027 with the Company having 1one 10-year option to extend the lease term. The Company pays rent, taxes, insurance, and maintenance expenses that arise from the use of the property. Annual base rent for the corporate headquarters allows for adjustments to the rental rate annually for increases in the consumer price index. The Company has determined that the leases are operating leases. Operating lease cost recognized for the three months ended JuneSeptember 30, 2022 and 2021 was $0.9$0.9 million respectively, and $1.8$2.7 million for the sixnine months ended JuneSeptember 30, 2022 and 2021, respectively.2021. The operating lease cost was allocated between Total direct costs and Selling, general and administrative in the condensed consolidated statements of operations. The Operating lease right-of-use assets at JuneSeptember 30, 2022 and December 31, 2021 were $15.9$15.3 million and $17.2$17.2 million, respectively, in the condensed consolidated balance sheets. The current and long-term portions of the lease liabilities at JuneSeptember 30, 2022 were $2.7$2.7 million and $13.3$12.6 million, respectively, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets. The current and long-term portions of the lease liabilities at December 31, 2021 were $2.6$2.6 million and $14.6$14.6 million, respectively, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets.$0.6$0.6 million and $0.4$0.4 million during the three months ended JuneSeptember 30, 2022 and 2021, respectively, and $1.0$1.6 million and $0.5$0.9 million during the sixnine months ended JuneSeptember 30, 2022 and 2021, respectively, related to these travel services. These travel expenses are recorded in Selling, general and administrative in the Company’s condensed consolidated statements of operations. As of JuneSeptember 30, 2022 and December 31, 2021, the Company had Accounts payable to the Aircraft Management Company of $0.2$0.2 million, respectively, in the condensed consolidated balance sheets.- 15 -Three Months Ended
September 30,Nine Months Ended
September 30,2022 2021 2022 2021 Therapeutic Area Oncology $ 122,834 $ 94,724 $ 343,589 $ 267,110 Other 72,767 64,088 216,739 197,146 Metabolic 63,478 42,133 167,194 112,771 Cardiology 49,802 34,736 129,225 86,538 Central Nervous System 43,418 32,854 120,811 86,217 AVAI 31,445 27,032 88,340 84,043 Total revenue $ 383,744 $ 295,567 $ 1,065,898 $ 833,825 4,8005,000 employees across 4140 countries as of JuneSeptember 30, 2022, providing our customers with broad access to diverse markets and patient populations as well as local regulatory expertise and market knowledge.- 17 -- 18 -$450.6$470.9 million and $873.6$1,344.4 million for the three and sixnine months ended JuneSeptember 30, 2022, respectively. Net new business awards were $387.6$408.0 million and $743.7$1,151.7 million for the three and sixnine months ended JuneSeptember 30, 2021, respectively.JuneSeptember 30, 2022, our backlog increased by $425.7$386.4 million, or 24.4%20.9%, to $2,168.3$2,236.2 million compared to $1,742.6$1,849.8 million as of JuneSeptember 30, 2021. Included within backlog as of JuneSeptember 30, 2022 was approximately $1,120$1,165.0 million to $1,140$1,175.0 million that we expect to convert to net revenue over the next twelve months, with the remainder expected to convert to net revenue thereafter.$17.0$17.4 million for the three months ended JuneSeptember 30, 2022; unfavorable foreign currency adjustments of $15.8$33.2 million for the sixnine months ended JuneSeptember 30, 2022; favorableunfavorable foreign currency adjustments of $3.3$3.5 million for the three months ended JuneSeptember 30, 2021; and unfavorable foreign currency adjustments of $0.4$3.9 million for the sixnine months ended JuneSeptember 30, 2021.- 19 -sixnine months ended JuneSeptember 30, 2022, the pandemic remains disruptive to our business operations. As we look ahead, we continue to expect impacts to our business to be temporary and primarily relate to limitations on our ability to physically access investigative sites, delays in patient enrollment and trial start-up activities.Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 U.S. Dollars per Euro: 1.01 1.18 1.07 1.20 JuneSeptember 30, 2022 compared to Three Months Ended JuneSeptember 30, 2021- 20 -SixThree Months Ended September 30, (Amounts in thousands, except percentages) 2022 2021 Revenue, net $ 383,744 $ 295,567 $ 88,177 29.8 % Direct service costs, excluding depreciation and amortization 136,648 112,540 24,108 21.4 % Reimbursed out-of-pocket expenses 128,062 95,934 32,128 33.5 % Total direct costs 264,710 208,474 56,236 27.0 % Selling, general and administrative 35,418 28,046 7,372 26.3 % Depreciation 4,951 4,056 895 22.1 % Amortization 838 1,278 (440) (34.4) % Total operating expenses 305,917 241,854 64,063 26.5 % Income from operations 77,827 53,713 24,114 Miscellaneous income, net 5,649 1,064 4,585 Interest expense, net (1,584) (41) (1,543) Income before income taxes 81,892 54,736 27,156 Income tax provision 15,865 6,162 9,703 Net income $ 66,027 $ 48,574 $ 17,453 JuneSeptember 30, 2022 compared to SixNine Months Ended JuneSeptember 30, 2021Nine Months Ended September 30, (Amounts in thousands, except percentages) 2022 2021 Revenue, net $ 1,065,898 $ 833,825 $ 232,073 27.8 % Direct service costs, excluding depreciation and amortization 394,200 322,160 72,040 22.4 % Reimbursed out-of-pocket expenses 354,991 271,494 83,497 30.8 % Total direct costs 749,191 593,654 155,537 26.2 % Selling, general and administrative 97,999 80,757 17,242 21.4 % Depreciation 13,928 11,819 2,109 17.8 % Amortization 2,514 3,835 (1,321) (34.4) % Total operating expenses 863,632 690,065 173,567 25.2 % Income from operations 202,266 143,760 58,506 Miscellaneous income, net 9,027 2,253 6,774 Interest expense, net (2,078) (82) (1,996) Income before income taxes 209,215 145,931 63,284 Income tax provision 32,517 14,117 18,400 Net income $ 176,698 $ 131,814 $ 44,884 $72.9$88.2 million to $351.2$383.7 million for the three months ended JuneSeptember 30, 2022, from $278.3$295.6 million for the three months ended JuneSeptember 30, 2021. Total revenue increased by $143.9$232.1 million to $682.2$1,065.9 million for the sixnine months ended JuneSeptember 30, 2022, from $538.3$833.8 million for the sixnine months ended JuneSeptember 30, 2021. The increase for the three and sixnine months ended JuneSeptember 30, 2022 was primarily driven by growth within the Oncology, Metabolic, Cardiology and Central Nervous System therapeutic areas, compared to the same period in the prior year.$48.6$56.2 million, to $252.2$264.7 million for the three months ended JuneSeptember 30, 2022 from $203.6$208.5 million for the three months ended JuneSeptember 30, 2021. Total direct costs increased by $99.3$155.5 million, to $484.5$749.2 million for the sixnine months ended JuneSeptember 30, 2022 from $385.2$593.7 million for the six monthnine months ended JuneSeptember 30, 2021. The increase was primarily attributed to higher reimbursed out-of-pocket expenses and higher personnel costs to support the growth in service activities. Reimbursed out-of-pocket expenses, which can fluctuate significantly from period to period based on the timing of program initiation and closeout, increased $24.7$32.1 million and $51.4$83.5 million for the three and sixnine months ended JuneSeptember 30, 2022, compared to the same period in the prior year. The higher personnel costs portion increased by $19.9$18.1 million and $41.3$59.4 million for the three and sixnine months ended JuneSeptember 30, 2022, compared to the same periods in the prior year.$6.2$7.4 million, to $33.2$35.4 million for the three months ended JuneSeptember 30, 2022 from $27.0$28.0 million for the three months ended JuneSeptember 30, 2021. Selling, general and administrative expenses increased by $9.9$17.2 million, to $ 62.6$98.0 million for the sixnine months ended JuneSeptember 30, 2022 from $52.7$80.8 million for the sixnine months ended JuneSeptember 30, 2021. The increase was primarily attributed to higher personnel costs to support the growth in service activities. The higher personnel costs portion increased by $4.6$4.8 million and $8.7$13.5 million for the three and sixnine months ended JuneSeptember 30, 2022, compared to the same periods in the prior year.$5.5$5.8 million and $10.7$16.4 million for the three and sixnine months ended JuneSeptember 30, 2022 remained relatively consistent with $5.2$5.3 million and $10.3$15.7 million for the three and sixnine months ended JuneSeptember 30, 2021.- 21 -Income tax provisionIncome tax provision$9.9$4.6 million to $12.6$5.6 million for the three months ended JuneSeptember 30, 2022 from $2.8$1.1 million for the three months ended JuneSeptember 30, 2021. Miscellaneous income, net increased by $6.8 million to $9.0 for the nine months ended September 30, 2022 from $2.3 million for the nine months ended September 30, 2021. These changes were mainly attributable to foreign exchange gains or losses that arise in connection with the revaluation of short-term intercompany balances between our domestic and international subsidiaries and from the settlement of third-party accounts receivables and payables denominated in a currency other than the local currency of the entity making the payment.$8.7$18.4 million, to $16.7$32.5 million for the sixnine months ended JuneSeptember 30, 2022 from $8.0$14.1 million for the sixnine months ended JuneSeptember 30, 2021. The overall effective tax rate for the three months ended JuneSeptember 30, 2022 was 20.4%19.4%, compared to an overall effective tax rate of 6.4%11.3% for the three months ended JuneSeptember 30, 2021. The overall effective tax rate for the sixnine months ended JuneSeptember 30, 2022 was 13.1%15.5% compared to an overall effective tax rate of 8.7%9.7% for the sixnine months ended JuneSeptember 30, 2021. The increase in the income tax provision and overall effective tax rate for the three months ended June 30, 2022 was primarily attributable to the increase in pre-tax book income and a decrease in excess tax benefits recognized from share based compensation which was partially offset by an increase in benefits from uncertain tax positions compared to the same periods in the prior year. The increase in the income tax provision and overall effective tax rate for the six months ended June 30, 2022 was primarily attributable to the increase in pre-tax book income compared to the same period in the prior year.JuneSeptember 30, 2022, we had cash and cash equivalents of $42.6$31.0 million which decreased from $461.3 million as of December 31, 2021 primarily due to share repurchases during the sixnine months ended JuneSeptember 30, 2022. Approximately $16.9$5.3 million of cash and cash equivalents, none of which was restricted, was held by our foreign subsidiaries as of JuneSeptember 30, 2022.JuneSeptember 30, 2022, we had $0.1$110.1 million available for borrowing under the Credit Facility. Our expected primary cash needs on both a short and long-term basis are for investment in operational growth, capital expenditures, credit facilityJuneSeptember 30, 2022, cash commitments to support operating business needs include lease liabilities discussed in Note 8 of the Condensed Consolidated Financial Statements, purchase commitments discussed in Note 11 of the Condensed Consolidated Financial Statements and capital expenditures primarily related to infrastructure investments in our facilities, equipment and technology. Capital spending as a percentage of revenue increased by 6730 basis points to 3.00%2.59% in the sixnine months ended JuneSeptember 30, 2022, compared to the same period in the prior year. We expect these activities will be funded from existing cash, cash flow from operations and, if necessary, borrowings under our existing or future credit facilities or other debt. We have deemed that foreign earnings will be indefinitely reinvested and therefore we have not provided taxes on these earnings. While we do not anticipate the need to repatriate these foreign earnings for liquidity purposes given our cash flows from operations and borrowings under existing and future credit facilities, we would incur taxes on these earnings if the need for repatriation due to liquidity purposes arises.Nine Months Ended September 30, Cash Flows (Amounts in thousands) 2022 2021 Net cash provided by operating activities $ 251,366 $ 192,433 Net cash used in investing activities (29,522) (22,248) Net cash used in financing activities (644,654) (46,884) Effect of exchange rates on cash, cash equivalents and restricted cash (7,487) (2,680) (Decrease) increase in cash, cash equivalents and restricted cash $ (430,297) $ 120,621 $142.9$251.4 million for the sixnine months ended JuneSeptember 30, 2022 beginning with net income of $110.7$176.7 million. Adjustments to reconcile net income to net cash provided by operating activities were $27.6$43.2 million, primarily related to stock based compensation expense of $10.0$15.8 million, depreciation of $9.0$13.9 million and noncash lease expense of $9.0$13.5 million. Changes in operating assets and liabilities provided $4.6$31.4 million in operating cash flows and was primarily driven by increased advanced billings of $56.773.3 million and increased accrued expenses of $15.6,47.8 million, offset by increased accounts receivable and unbilled, net of $39.162.4 million and increased prepaid expenses and other current assets of $18.817.4 million.- 22 -$120.1$192.4 million for the sixnine months ended JuneSeptember 30, 2021 beginning with net income of $83.2$131.8 million. Adjustments to reconcile net income to net cash provided by operating activities were $27.2$41.0 million, primarily related to noncash lease expense of $7.9$11.9 million, depreciation of $7.8$11.8 million, stock based compensation expense of $6.4$10.5 million and amortization of intangibles of $2.6$3.8 million. Changes in operating assets and liabilities provided $9.7$19.6 million in operating cash flows and was primarily driven by increased advanced billings of $26.6$48.2 million and increased accrued expenses of $11.9$24.7 million, offset by increased accounts receivable and unbilled, net of $25.0 million and increased prepaid expenses and other current assets of $14.9 million and decreased lease liabilities of $8.0$22.0 million.$22.3$29.5 million for the sixnine months ended JuneSeptember 30, 2022 primarily consisting of $20.5$27.6 million in property and equipment expenditures.$15.6$22.2 million for the sixnine months ended JuneSeptember 30, 2021 primarily consisting of $12.5$19.2 million in property and equipment expenditures.$535.5$644.7 million for the sixnine months ended JuneSeptember 30, 2022 primarily related to $800.7 million in repurchases of common stock and $49.5$159.5 million in repayments of the Credit Facility, partially offset by $299.2299.2 million in proceeds related to the Credit Facility and $15.4$16.3 million in proceeds from stock option exercises.$41.7$46.9 million for the sixnine months ended JuneSeptember 30, 2021 primarily related to $55.9$62.1 million in repurchases of common stock, partially offset by $14.2$15.2 million in proceeds from stock option exercises.three and sixnine months ended JuneSeptember 30, 2022, the Company repurchased 2,717,379 shares and 5,463,244 shares for $374.6 million and $800.5 million, respectively.million. During the three and sixnine months ended JuneSeptember 30, 2021, the Company repurchased 343,15934,624 and 377,783 shares for $56.1$5.9 million and $62.1 million, respectively. As of JuneSeptember 30, 2022, the Company has completed all authorized share repurchases under the repurchase program.JuneSeptember 30, 2022, we had total indebtedness of $249.7139.7 million and $0.2 million in letters of credit outstanding related to certain operating lease obligations, which are secured by the Credit Facility. Refer to Note 7 of the Notes to Condensed Consolidated Financial Statements for details regarding our Credit Facility.- 23 -sixnine months ended JuneSeptember 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.- 24 -• conducting a single trial across multiple countries is complex, and issues in one country, such as a failure to comply with local regulations or restrictions, may affect the progress of the trial in the other countries, for example, by limiting the amount of data necessary for a trial to proceed, resulting in delays or potential cancellation of contracts, which in turn may result in loss of revenue;Share RepurchasesThis table provides certain information with respect to our monthly repurchases of the Company’s common stock during the second quarter of fiscal year 2022:All share repurchases were made using cash resources and executed pursuant to established Rule 10b5-1 trading plans. Our share repurchases may occur through open market purchases or negotiated transactions. The above table excludes shares repurchased to settle employee tax withholding related to the vesting of stock awards.We returned $374.6 million to shareholders in the form of share repurchases in the second quarter of fiscal year 2022. Refer to Note 1 – Basis of Presentation of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for further discussion regarding share repurchases.Date Equity Plan Number of Stock Options Exercised Exercise Price Approximate Aggregate Purchase Price July 13, 2022 2014 Equity Incentive Plan 5,000 $ 16.88 $ 84,400 July 19, 2022 2014 Equity Incentive Plan 3,500 16.88 59,100 July 27, 2022 2014 Equity Incentive Plan 2,611 16.88 44,100 Total 11,111 $ 187,600 Incorporated by Reference Exhibit
NumberExhibit Description Form File No. Exhibit Filed/
Furnished
HerewithIncorporated by ReferenceExhibitNumberExhibit DescriptionFormFile No.ExhibitFilingDateFiled/FurnishedHerewith 31.1MEDPACE HOLDINGS, INC. MEDPACE HOLDINGS, INC.
(Principal Financial Officer)July 26,October 25, 2022- 28 -