UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒
x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~

2022

☐
o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 001-37856

Medpace Holdings, Inc.

(Exact name of registrant as specified in its charter)

5375 Medpace Way, Cincinnati, OH 45227

(Address of principal executive offices) (Zip Code)

(513) 579-9911

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒x No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated ~~filer,”~~filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

~~(Do not check if a smaller reporting company)~~

Smaller reporting company

☐

Emerging growth company

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐o No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.

~~Class~~
Class						Number of Shares Outstanding
Common Stock $0.01 par value						~~37,606,244~~31,099,897 shares outstanding as of October ~~27, 2017~~ 21, 2022

Table of Contents

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

FORM 10-Q

FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, ~~2017~~

2022

TABLE OF CONTENTS

~~Item Number~~		~~Page~~
Item Number			Page
	PART I — FINANCIAL INFORMATION			3
Item 1.			Financial Statements (unaudited)		3
			Condensed Consolidated Balance Sheets as of September 30, ~~2017~~2022 and December 31, ~~2016~~2021		3
			Condensed Consolidated Statements of Operations for the three and nine months ended September 30, ~~2017~~2022 and ~~2016~~2021		4
			Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, ~~2017~~2022 and ~~2016~~2021		5
	Condensed Consolidated Statements of Shareholders’ Equity for the three and nine months ended September 30, 2022 and 2021		6
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2017~~2022 and ~~2016~~2021			6 7
			Notes to Condensed Consolidated Financial Statements		7 8
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations		17 18
Item 3.			Quantitative and Qualitative Disclosures About Market Risk		26 25
Item 4.			Controls and Procedures		27 25

			PART II — OTHER INFORMATION		27 26
Item 1.			Legal Proceedings		27 26
Item 1A.			Risk Factors		27 26
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds		27 28
Item 3.			Defaults Upon Senior Securities		29 28
Item 4.			Mine Safety Disclosures		29 28
Item 5.			Other Information		29 28
Item 6.			Exhibits		29 28

EXHIBIT INDEX			30
	SIGNATURES			31 30

~~- 2 -~~

-2-

Table of Contents

PART I — ~~FINANCIAL~~FINANCIAL INFORMATION

Item 1. Financial Statements

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


(Amounts in thousands, except share amounts)	As Of						(Amounts in thousands, except share amounts)	As of
	September 30,			December 31.			(Amounts in thousands, except share amounts)
	2017			2016
(Amounts in thousands, except share amounts)							(Amounts in thousands, except share amounts)	September 30, 2022		December 31, 2021
(Amounts in thousands, except share amounts)							(Amounts in thousands, except share amounts)
Current assets:							Current assets:
Cash and cash equivalents	$	24,168		$	37,099		Cash and cash equivalents	$	31,007	$	461,304
Restricted cash		79			308
Accounts receivable and unbilled, net (includes $0.8 million and $2.3 million with related parties at September 30, 2017 and December 31, 2016, respectively)		74,708			79,767
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)							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		18,074			16,074		Prepaid expenses and other current assets	57,648		43,176
Total current assets		117,029			133,248		Total current assets	337,741		690,912
Property and equipment, net		45,903			43,805		Property and equipment, net	104,719		93,153
Operating lease right-of-use assets							Operating lease right-of-use assets	139,071		129,558
Goodwill		660,981			660,981		Goodwill	662,396		662,396
Intangible assets, net		108,234			136,071		Intangible assets, net	38,846		41,360
Deferred income taxes		11,115			97		Deferred income taxes	27,023		25,134
Other assets		5,614			4,903		Other assets	18,629		17,422
Total assets	$	948,876		$	979,105		Total assets	$	1,328,425	$	1,659,935
LIABILITIES AND SHAREHOLDERS’ EQUITY							LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:							Current liabilities:
Accounts payable	$	9,972		$	10,911
Accounts payable (includes $0.3 million with related parties at September 30, 2022 and December 31, 2021, respectively)							Accounts payable (includes $0.3 million with related parties at September 30, 2022 and December 31, 2021, respectively)	$	28,245	$	25,678
Accrued expenses		20,085			24,417		Accrued expenses	204,117		159,286
Pre-funded study costs (includes $1.5 million and $3.9 million with related parties at September 30, 2017 and December 31, 2016, respectively)		53,246			51,948
Advanced billings (includes $2.7 million and $7.6 million with related parties at September 30, 2017 and December 31, 2016, respectively)		68,341			65,668
Current portion of long-term debt		15,469			12,375
Advanced billings (includes $5.7 million and $8.3 million with related parties at September 30, 2022 and December 31, 2021, respectively)							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							Short-term debt	139,700		—
Other current liabilities		5,250			3,284		Other current liabilities	30,879		27,612
Total current liabilities		172,363			168,603		Total current liabilities	820,868		557,217
Long-term debt, net, less current portion		169,152			151,267
Deemed landlord liability, less current portion		27,104			28,527
Operating lease liabilities							Operating lease liabilities	139,203		130,965
Deferred income tax liability		513			12,030		Deferred income tax liability	911		1,080
Deferred credit		20,956			-
Other long-term liabilities		8,538			7,968		Other long-term liabilities	17,558		17,745
Total liabilities		398,626			368,395		Total liabilities	978,540		707,007
Commitments and contingencies (see Note 11)							Commitments and contingencies (see Note 11)
Shareholders’ equity:							Shareholders’ equity:
Preferred stock - $0.01 par-value; 5,000,000 shares authorized; no shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		-			-
Common stock - $0.01 par-value; 250,000,000 shares authorized at September 30, 2017 and December 31, 2016, respectively; 37,403,764 and 40,662,856 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		375			407
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							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							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							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		628,558			623,629		Additional paid-in capital	759,986		727,857
Accumulated deficit		(77,420	)		(9,584	)
(Accumulated deficit) Retained earnings							(Accumulated deficit) Retained earnings	(380,115)		234,984
Accumulated other comprehensive loss		(1,263	)		(3,742	)	Accumulated other comprehensive loss	(16,052)		(4,846)
Total shareholders’ equity		550,250			610,710		Total shareholders’ equity	349,885		952,928
Total liabilities and shareholders’ equity	$	948,876		$	979,105		Total liabilities and shareholders’ equity	$	1,328,425	$	1,659,935

See notes to condensed consolidated financial statements.

~~- 3 -~~

-3-

Table of Contents

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


(Amounts in thousands, except per share amounts)	Three Months Ended						Nine Months Ended						(Amounts in thousands, except per share amounts)	Three Months Ended September 30,				Nine Months Ended September 30,
	September 30,						September 30,							2022		2021		2022		2021
	2017			2016			2017			2016
Revenue:
Service revenue, net (includes $2.0 million and $6.9 million with related parties for the three months ended September 30, 2017 and 2016, respectively, and $8.9 million and $19.3 million with related parties for the nine months ended September 30, 2017 and 2016, respectively)	$	98,681		$	94,812		$	287,014		$	275,245
Reimbursed out-of-pocket revenue (includes $0.2 million and $1.4 million with related parties for the three months ended September 30, 2017 and 2016, respectively, and $1.3 million and $4.3 million with related parties for the nine months ended September 30, 2017 and 2016, respectively)		11,962			12,987			36,456			38,094
Total revenue		110,643			107,799			323,470			313,339
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)													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:													Operating expenses:
Direct costs, excluding depreciation and amortization		53,144			51,221			156,204			147,436
Reimbursed out-of-pocket expenses (includes $0.2 million and $1.4 million with related parties for the three months ended September 30, 2017 and 2016, respectively, and $1.3 million and $4.3 million with related parties for the nine months ended September 30, 2017 and 2016, respectively)		11,962			12,987			36,456			38,094
Direct service costs, excluding depreciation and amortization													Direct service costs, excluding depreciation and amortization	136,648		112,540		394,200		322,160
Reimbursed out-of-pocket expenses													Reimbursed out-of-pocket expenses	128,062		95,934		354,991		271,494
Total direct costs													Total direct costs	264,710		208,474		749,191		593,654
Selling, general and administrative		16,606			16,391			46,515			44,724		Selling, general and administrative	35,418		28,046		97,999		80,757
Depreciation		2,237			1,915			6,468			5,481		Depreciation	4,951		4,056		13,928		11,819
Amortization		9,496			12,668			28,406			38,004		Amortization	838		1,278		2,514		3,835
Total operating expenses		93,445			95,182			274,049			273,739		Total operating expenses	305,917		241,854		863,632		690,065
Income from operations		17,198			12,617			49,421			39,600		Income from operations	77,827		53,713		202,266		143,760
Other expense, net:
Miscellaneous expense, net		(145	)		(378	)		(642	)		(1,319	)
Other income, net:													Other income, net:
Miscellaneous income, net													Miscellaneous income, net	5,649		1,064		9,027		2,253
Interest expense, net		(1,906	)		(4,656	)		(5,508	)		(16,550	)	Interest expense, net	(1,584)		(41)		(2,078)		(82)
Total other expense, net		(2,051	)		(5,034	)		(6,150	)		(17,869	)
Total other income, net													Total other income, net	4,065		1,023		6,949		2,171
Income before income taxes		15,147			7,583			43,271			21,731		Income before income taxes	81,892		54,736		209,215		145,931
Income tax provision		5,316			2,547			15,440			8,285		Income tax provision	15,865		6,162		32,517		14,117
Net income	$	9,831		$	5,036		$	27,831		$	13,446		Net income	$	66,027	$	48,574	$	176,698	$	131,814
Net income per share attributable to common shareholders:													Net income per share attributable to common shareholders:
Basic	$	0.25		$	0.14		$	0.70		$	0.39		Basic	$	2.13	$	1.35	$	5.39	$	3.67
Diluted	$	0.25		$	0.13		$	0.69		$	0.39		Diluted	$	2.05	$	1.29	$	5.18	$	3.49
Weighted average common shares outstanding:													Weighted average common shares outstanding:
Basic		38,579			37,118			39,803			34,138		Basic	31,009		35,816		32,791		35,822
Diluted		39,329			37,623			40,537			34,365		Diluted	32,253		37,519		34,098		37,641

See notes to condensed consolidated financial statements.

~~- 4 -~~

-4-

Table of Contents

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


(Amounts in thousands)	Three Months Ended				Nine Months Ended				(Amounts in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	September 30,				September 30,
	2017		2016		2017		2016			2022		2021		2022		2021
Net income	$	9,831	$	5,036	$	27,831	$	13,446	Net income	$	66,027	$	48,574	$	176,698	$	131,814
Other comprehensive income									Other comprehensive income
Foreign currency translation adjustments, net of taxes		765		176		2,479		184	Foreign currency translation adjustments, net of taxes	(6,080)		(1,483)		(11,206)		(3,112)
Comprehensive income	$	10,596	$	5,212	$	30,310	$	13,630	Comprehensive income	$	59,947	$	47,091	$	165,492	$	128,702

See notes to condensed consolidated financial statements.

~~- 5 -~~

-5-

Table of Contents

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)


(Amounts in thousands)	Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive 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
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

	Common Stock		Treasury Stock		Additional Paid-In Capital		(Accumulated Deficit) Retained Earnings		Accumulated Other Comprehensive 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
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

See notes to condensed consolidated financial statements.

-6-

Table of Contents

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


(Amounts in thousands)	Nine Months Ended						(Amounts in thousands)	Nine Months Ended September 30,
	September 30,
	2017			2016				2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:							CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	27,831		$	13,446		Net income	$	176,698	$	131,814
Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		6,468			5,481		Depreciation	13,928		11,819
Amortization		28,406			38,004		Amortization	2,514		3,835
Stock-based compensation expense		3,215			8,559		Stock-based compensation expense	15,819		10,488
Amortization of debt issuance costs and discount		498			2,024
Deferred income tax benefit		(420	)		(568	)
Noncash lease expense							Noncash lease expense	13,460		11,878
Deferred income tax (benefit) provision							Deferred income tax (benefit) provision	(2,126)		3,299
Amortization and adjustment of deferred credit							Amortization and adjustment of deferred credit	(465)		(501)
Other		(615	)		(256	)	Other	115		213
Changes in assets and liabilities:							Changes in assets and liabilities:
Accounts receivable and unbilled, net		5,340			(16,606	)	Accounts receivable and unbilled, net	(62,438)		(25,046)
Prepaid expenses and other current assets		(1,271	)		(8,733	)	Prepaid expenses and other current assets	(17,397)		(22,049)
Accounts payable		(467	)		(943	)	Accounts payable	770		2,150
Accrued expenses		(4,840	)		1,257		Accrued expenses	47,848		24,691
Pre-funded study costs		1,149			6,810
Advanced billings		2,381			16,560		Advanced billings	73,286		48,184
Lease liabilities							Lease liabilities	(11,134)		(11,335)
Other assets and liabilities, net		1,058			(2,368	)	Other assets and liabilities, net	488		2,993
Net cash provided by operating activities		68,733			62,667		Net cash provided by operating activities	251,366		192,433
CASH FLOWS FROM INVESTING ACTIVITIES:							CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment expenditures		(8,329	)		(7,843	)	Property and equipment expenditures	(27,636)		(19,155)
Acquisition of intangibles		(569	)		-
Other		44			83		Other	(1,886)		(3,093)
Net cash used in investing activities		(8,854	)		(7,760	)	Net cash used in investing activities	(29,522)		(22,248)
CASH FLOWS FROM FINANCING ACTIVITIES:							CASH FLOWS FROM FINANCING ACTIVITIES:
Payment for common stock issuance costs		-			(2,719	)
Proceeds from stock option exercises		1,187			452		Proceeds from stock option exercises	16,313		15,212
Repurchases of common stock		(95,260	)		-		Repurchases of common stock	(800,667)		(62,096)
Payment of debt		(9,281	)		(225,054	)
Proceeds from revolving loan		40,000			-		Proceeds from revolving loan	299,200		—
Payments on revolving loan		(10,000	)		-		Payments on revolving loan	(159,500)		—
Payment of deemed landlord liability		(1,240	)		(1,129	)
Proceeds from common stock issued, net of underwriters discount		-			173,578
Net cash used in financing activities		(74,594	)		(54,872	)	Net cash used in financing activities	(644,654)		(46,884)
EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		1,555			227		EFFECT OF EXCHANGE RATES ON CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(7,487)		(2,680)
(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		(13,160	)		262		(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(430,297)		120,621
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period		37,407			17,737		CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period	461,304		277,766
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period	$	24,247		$	17,999		CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period	$	31,007	$	398,387
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION —							SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION —
Acquisition of property and equipment—non-cash							Acquisition of property and equipment—non-cash	$	9,094	$	5,424

See notes to condensed consolidated financial statements.

~~- 6 -~~

-7-

Table of Contents

MEDPACE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

September 30, ~~2017~~

2022

(1) Basis of Presentation

Description of Business

Medpace Holdings, Inc. ~~together~~(together with its subsidiaries, ~~(“Medpace”~~“Medpace” or the “Company”), a Delaware corporation, is a global provider of clinical research-based drug and medical device development services. The Company partners with pharmaceutical, biotechnology, and medical device companies in the development and execution of clinical trials. The Company’s drug development services focus on full service Phase I-IV clinical development services and include development plan design, ~~coordinated central laboratory,~~ project management, regulatory affairs, clinical monitoring, data management and analysis, pharmacovigilance new drug application submissions, ~~and~~ post-marketing clinical ~~support. The Company also provides bio-analytical~~support, laboratory services, clinical human pharmacology, imaging services, and electrocardiography reading support for clinical trials.

The Company’s operations are principally based in North America, Europe, and Asia.

Unaudited Interim Financial Information

The interim condensed consolidated financial statements include the accounts of the Company, are prepared in conformity with U.S. generally accepted accounting principles (“GAAP”), and are unaudited. In the opinion of the Company’s management, all adjustments of a normal recurring nature necessary for a fair presentation have been reflected. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted. The preparation of the interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results and outcomes could differ from management’s estimates and assumptions. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~.

2021.

Share Repurchases

In ~~August 2017,~~the second quarter of 2021, the Board approved an increase of ~~Directors of~~$150.0 million to the ~~Company (the “Board”) members who are not affiliated with Cinven (the “Disinterested Directors”) approved a~~Company's stock repurchase ~~agreement with Medpace Limited Partnership, a Guernsey limited partnership (the “Limited Partnership” acting through its general partner, Medpace GP Limited, a Guernsey company,~~program bringing the ~~“General Partner” and,~~total repurchase authorization up to $300.0 million. In the ~~Limited Partnership acting through~~first quarter of 2022, the ~~General Partner, “Cinven”), pursuant~~Board approved additional increases totaling $500.0 million to ~~which~~the Company's stock repurchase program. In the second quarter of 2022, the Board approved further increases of $110.0 million to the Company's stock repurchase program. During the nine months ended September 30, 2022, the Company repurchased ~~2,000,000~~5,463,244 shares ~~of the Company’s common stock from Cinven~~ for aggregate consideration of approximately $60.5 million, representing a purchase price of $30.27 per share. The Company funded the repurchase with cash on hand and $40.0 million in borrowings under the Senior Secured Revolving Credit Facility.

~~In April 2017, the Board of the Company authorized a share repurchase program with an authorized repurchase level of $50.0~~$800.5 million. ~~The share repurchase program, according to its terms, will expire in April 2018. Repurchases under the repurchase program may take place in the open market or~~ ~~negotiated transactions, at the discretion of the Company’s management~~. During the three and nine months ended September 30, ~~2017,~~2021, the Company repurchased ~~300,331~~34,624 and ~~1,342,786~~377,783 shares ~~of its outstanding common stock~~ for ~~$8.3~~$5.9 million and ~~$34.7~~$62.1 million, ~~respectively,~~respectively. As of September 30, 2022, the Company has completed all authorized share repurchases under ~~this~~the repurchase program.

Repurchases under the share repurchase ~~program.~~

program are executed in the open market or negotiated transactions under trading plans put in place pursuant to Rule 10b5-1. The Company ~~has elected to~~ constructively ~~retire all~~retired the repurchased shares associated with ~~all~~these approved share repurchases, except for a small portion which were retained as Treasury Shares on the condensed consolidated statements of shareholders' equity. Retired share repurchase amounts paid in excess of ~~Common stock~~ par value are reflected within Accumulated ~~deficit~~deficit/Retained earnings in the Company’s condensed consolidated balance sheets.

Recently ~~Adopted~~Issued Accounting Standards

In ~~January 2017,~~November 2021, the ~~Financial Accounting Standards Board (“FASB”)~~FASB issued ~~Accounting Standards Update (“ASU”) 2017-01,~~ASU 2021-10, "Government Assistance (Topic 832): Disclosures by Business ~~Combinations.~~Entities about Government Assistance" which requires entities to provide disclosures on material government assistance transactions for annual reporting periods. The ~~standard changes~~disclosures include information around the ~~definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. Under the new guidance, an entity first determines whether substantially all~~nature of the ~~fair value~~assistance, the related accounting policies used to account for government assistance, the effect of government assistance on the entity's financial statements, and any significant terms and conditions of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set is not a business. If it’s not met, the entity then evaluates whether the set meets the requirement that a business include, at a minimum, an inputagreements, including commitments and ~~a substantive process that together significantly contribute to the ability to create outputs. ASU 2017-01~~contingencies. The guidance is effective for ~~fiscal years~~annual periods beginning after December 15, 2017, and for interim periods within those fiscal years. The Company, as permitted, early adopted ASU 2017-01 using the prospective method in the second quarter of 2017. ASU 2017-01 was considered in the asset acquisition described in Note 2.

~~- 7 -~~

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The new guidance is intended to reduce diversity in practice by requiring the statement of cash flows to explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. The Company, as permitted, early adopted ASU 2016-18 in the fourth quarter of 2016. As a result of this adoption, cash flows resulting from changes in restricted cash balances, are no longer presented as a component of net cash provided by operating activities in the Company’s condensed consolidated statements of cash flows, but have been reclassified and combined within (Decreases)/Increases in Cash, Cash Equivalents and Restricted Cash. This reclassification was retrospectively applied to all periods presented within the condensed consolidated statements of cash flows.

~~In March 2016, the FASB issued ASU No. 2016-09,~~ ~~Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting~~. The new guidance is intended to simplify certain aspects of accounting for share based payments to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The Company elected to adopt this ASU in the first quarter of 2017 as required. The following summarizes the effects of the adoption on the Company's condensed consolidated financial statements:

~~Income taxes~~ - Upon adoption of this standard, all excess tax benefits and tax deficiencies (including tax benefits of dividends, if distributed, on share-based payment awards) are recognized as income tax expense or benefit in the statement of operations. The tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. As a result, the Company recognized discrete adjustments to income tax expense for the nine months ended September 30, 2017 of less than $0.1 million related to excess tax benefits. The Company also recognizes excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. The Company applied the prospective adoption approach for any unrecognized excess tax benefits beginning in 2017, which did not result in any cumulative-effect adjustment upon adoption. Prior periods have not been adjusted.

~~Forfeitures~~ - Prior to adoption, share-based compensation expense was recognized on a straight line basis, net of estimated forfeitures, such that expense was recognized only for share-based awards that were expected to vest. A forfeiture rate was estimated annually and revised, if necessary, in subsequent periods if actual forfeitures differed from initial estimates. Upon adoption, the Company no longer applies a forfeiture rate and instead accounts for forfeitures as they occur. The Company applied the modified retrospective adoption approach beginning in 2017 and booked an immaterial cumulative-effect adjustment to additional paid-in-capital and retained earnings within Shareholders’ Equity. Prior periods have not been adjusted.

~~Statements of Cash Flows~~ - The Company historically accounted for excess tax benefits on the condensed consolidated statements of cash flows as a financing activity. Upon adoption of this standard, excess tax benefits are classified along with other income tax cash flows as an operating activity. The Company elected to adopt this portion of the standard on a prospective basis beginning in 2017. Prior periods have not been adjusted.

~~Earnings Per Share~~ - The Company uses the treasury stock method to compute diluted earnings per share, unless the effect would be anti-dilutive. Under this method, the Company is no longer required to estimate the tax rate and apply it to the dilutive share calculation for determining the dilutive earnings per share. The Company utilized the prospective adoption approach and applied this methodology beginning in 2017. Prior periods have not been adjusted.

~~Upon adoption, no other aspects of ASU 2016-09 had an effect on the Company's condensed consolidated financial statements or related footnote disclosures.~~

~~Recently Issued Accounting Standards~~

~~In February 2016, the FASB issued ASU 2016-02, Leases~~ ~~(Topic 842).~~ ~~The guidance in ASU 2016-02 supersedes the lease recognition requirements in ASC Topic 840,~~ ~~Leases (FAS 13)~~. ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 will be applied on a modified retrospective basis to each prior reporting period presented and is effective for fiscal years beginning after December 15, 2018,2021, with early adoption permitted. The Company is currently evaluating the effect this standard will have on its condensed consolidated financial ~~statements.~~

statements and related disclosures.

-8-

~~In May 2014, the FASB issued ASU No. 2014-09 ‘‘Revenue from Contracts with Customers,’’ to clarify the principles~~Table of recognizing revenue and create common revenue recognition guidance between US GAAP and International Financial Reporting Standards. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. In May 2016, the FASB issued ASU 2016-12, Narrow-

~~- 8 -~~

Scope Improvements and Practical Expedients. In December 2016, the FASB issued ASU 2016-20 Technical Corrections and Improvements to Topic 606, Revenue From Contracts with Customers. ASUs’ 2016-20, 2016-12, 2016-10 and 2016-08 all clarify the interpretation guidance in ASU No. 2014-09, “Revenue from Contracts with Customers” specifically related to narrowing specific aspects of Topic 606 and adding illustrative examples to assist in the application of the guidance. The effective date and transition requirements in ASUs’ 2016-20, 2016-12, 2016-10, and 2016-08 are the same as the effective date and transition requirements of ASU 2014-09. ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, deferred the original effective date of ASU 2014-09 by one year. The new standard allows for either a retrospective or modified retrospective approach to transition upon adoption. The new standard will be effective for annual reporting periods beginning after December 15, 2017. Early adoption is permitted for annual reporting periods beginning after December 15, 2016.

The Company continues to evaluate the potential impact of adopting this standard on its business policies, processes and systems, internal control over financial reporting environment, and financial reporting disclosures.

The Company expects that the majority of its contracts will have a single performance obligation that is satisfied over time, with revenue recognized based on overall project progress measured as of the financial statement date. This represents a change in the Company’s current revenue accounting methodology as a majority of contracts are accounted for with multiple units of account under the multiple element arrangement guidance. Under the current accounting methodology, certain revenue related to reimbursable expenses is presented either as a separate line item within Reimbursable out-of-pocket revenue or net of related expenses within Service revenue, net in the condensed consolidated statements of operations. As a result of having a single performance obligation, the Company anticipates that all revenue related to reimbursable expenses will prospectively be accounted for gross within a single revenue line item with related expenses presented gross within Direct Costs, excluding depreciation and amortization. Measurement of progress on contracts with customers will generally be based on the input measurement of cost incurred relative to the total expected costs to satisfy the performance obligation.

~~The Company will adopt ASU 2014-09 as well as the clarified guidance in ASUs’ 2016-20, 2016-12, 2016-10, 2016-08, utilizing the modified retrospective approach, during the first quarter of 2018.~~

Contents

(2) ~~Acquisition~~

In May 2017, the Company acquired out of bankruptcy NephroGenex, Inc. (“Nephrogenex” or the “Debtor”), a publicly-held pharmaceutical company that had previously filed for relief under Chapter 11 of the United States Bankruptcy Code. The Company, which was the largest unsecured creditor of Nephrogenex, entered into an agreement through the bankruptcy process, to exchange its unsecured claim for 100% of the common stock in the post-bankruptcy, debt free Debtor. The assets of the acquired Debtor consist primarily of tax attributes as well as in-process research and development and other intangible assets. An analysis by the Company determined that substantially all the fair value of the assets on the date of acquisition is captured in the tax attributes, as the intangible assets account for a relatively immaterial portion of the fair market value of the total assets received. The acquisition of the Debtor was accounted for as an asset purchase.

The Company allocated its consideration paid of $1.2 million, consisting of accounts receivable and unbilled receivables and transaction related costs, on a pro rata basis to the assets acquired based on their respective fair values. Acquired assets include intangible assets of $0.5 million, deferred tax assets of $22.2 million, consisting of tax effected net operating losses in the amount of $21.1 (partially offset with a $7.6 million valuation allowance), tax effected capitalized research and development expenses of $8.5 million and tax effected federal tax credits of $1.4 million (partially offset with a $1.2 million valuation allowance) and deferred tax liabilities of $0.1 million. The excess amount of fair value received over consideration paid of $21.4 million was recorded as a Deferred credit in the condensed consolidated balance sheets and will be recognized within Income tax provision in proportion to the realization of the deferred tax assets and federal tax credits prospectively.

~~(3)~~ Net Income Per Share

Basic and diluted earnings or loss per share (“EPS”) are computed using the two-class method, which is an earnings allocation that determines EPS for each class of common stock and participating securities according to dividends declared and participation rights in undistributed earnings. The Company’s Restricted Stock Awards (“~~RSAs”~~RSA”) are considered participating securities because they are legally issued at the date of grant and holders are entitled to receive non-forfeitable dividends during the vesting term.

The computation of diluted EPS includes additional common shares, such as unvested Restricted Stock Units (“RSU”) and stock options with exercise prices less than the average market price of the Company’s common stock during the period (“in-the-money options”), which would be considered ~~outstanding under the treasury stock method. The treasury stock method~~outstanding. This assumes that additional shares would have to be issued in cases where the exercise price of stock options is less than the value of the common stock being acquired because the cash proceeds received from the stock option holder would not be sufficient to acquire that same number of shares. The Company does not compute diluted EPS in cases where the inclusion of such additional shares would be anti-dilutive in effect.

~~- 9 -~~

The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, ~~2017~~2022 and ~~2016,~~2021 (in thousands, except for earnings per share):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016			2022		2021		2022		2021
Weighted-average shares:									Weighted-average shares:
Common shares outstanding		38,579		37,118		39,803		34,138	Common shares outstanding	31,009		35,816		32,791		35,822
RSAs		62		-		60		-	RSAs	21		112		21		114
Total weighted-average shares		38,641		37,118		39,863		34,138	Total weighted-average shares	31,030		35,928		32,812		35,936
Earnings per common share—Basic									Earnings per common share—Basic
Net income	$	9,831	$	5,036	$	27,831	$	13,446	Net income	$	66,027	$	48,574	$	176,698	$	131,814
Less: Undistributed earnings allocated to RSAs		16		-		42		-	Less: Undistributed earnings allocated to RSAs	(44)		(151)		(112)		(419)
Net income available to common shareholders—Basic	$	9,815	$	5,036	$	27,789	$	13,446	Net income available to common shareholders—Basic	$	65,983	$	48,423	$	176,586	$	131,395

Net income per common share—Basic	$	0.25	$	0.14	$	0.70	$	0.39	Net income per common share—Basic	$	2.13	$	1.35	$	5.39	$	3.67

Basic weighted-average common shares outstanding		38,579		37,118		39,803		34,138	Basic weighted-average common shares outstanding	31,009		35,816		32,791		35,822
Effect of diluted shares		750		505		734		227	Effect of diluted shares	1,244		1,703		1,307		1,819
Diluted weighted-average shares outstanding		39,329		37,623		40,537		34,365	Diluted weighted-average shares outstanding	32,253		37,519		34,098		37,641

Net income per common share—Diluted	$	0.25	$	0.13	$	0.69	$	0.39	Net income per common share—Diluted	$	2.05	$	1.29	$	5.18	$	3.49

During the three ~~months ended September 30, 2017~~ and 2016, respectively, there were 158,034 and 61,896 shares excluded from the computation of EPS because they were anti-dilutive under the treasury method calculation of diluted weighted average shares outstanding. During the nine months ended September 30, ~~2017 and 2016, respectively, there were 90,553 and 25,699 shares excluded from~~2022, the ~~computation of EPS because they were anti-dilutive under the treasury method calculation of diluted weighted average shares outstanding.~~

~~During the three months ended September 30, 2017, there were 27,500~~Company had (in thousands) 274.4 stock options, respectively, that were excluded ~~from the computation of EPS~~ due to the exercise price exceeding the average fair value of the Company’s common stock during the period. During the nine months ended September 30, 2017 and 2016, respectively, there were 27,500 and 643,680 stock options that were excluded from the computation of EPS due to the exercise price exceeding the average fair value of the Company’s common stock during the period.

~~(4)~~

(3) Fair Value Measurements

The Company follows accounting guidance related to fair value measurements that defines fair value, establishes a framework for measuring fair value, and establishes a hierarchy for inputs used in measuring fair value. This hierarchy maximizes the use of “observable” inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy specifies three levels based on the inputs, as follows:

Level 1: Valuations based on quoted prices in active markets for identical assets or liabilities.

Level 2: Valuations based on directly observable inputs or unobservable inputs corroborated by market data.

Level 3: Valuations based on unobservable inputs supported by little or no market activity representing management’s determination of assumptions of how market participants would price the assets or liabilities.

-9-

Table of Contents

The fair value of financial instruments such as cash and cash equivalents, accounts receivable and unbilled, net, accounts payable, accrued expenses and advanced billings approximate their carrying amounts due to their short term maturities.

The Company does not have any recurring fair value measurements as of September 30, ~~2017.~~2022. There were no transfers between Level 1, Level 2 or Level 3 during the three orand nine months ended September 30, ~~2017~~2022 or September 30, 2021.

(4) Contract Assets and ~~2016.~~

~~- 10 -~~

~~(5) Accounts Receivable And Unbilled, Net~~

Contract Liabilities

Contract assets and liabilities are reflected in the Company’s condensed consolidated balance sheets within the accounts reflected below.

Contract Assets

Accounts receivable represent amounts due from the Company’s customers who are concentrated primarily in the pharmaceutical, biotechnology, and medical device industries. Unbilled represents revenue recognized to date that has not been billed or is not yet contractually billable to the customer. In general, amounts become billable upon the achievement of negotiated contractual events, in accordance with predetermined payment schedules or when a reimbursable expense has been incurred. Amounts classified to unbilled ~~net includes service revenue and reimbursed out-of-pocket revenue.~~ are those billable to customers within one year from the respective balance sheet date.

Accounts receivable and unbilled, net consisted of the following (in thousands):

	As of
	September 30,		December 31,				As of
	2017		2016				September 30, 2022		December 31, 2021
Accounts receivable	$	50,973	$	48,270	��	Accounts receivable	$	207,792	$	150,496
Unbilled	25,947			34,719
Less allowance for doubtful accounts	(2,212)		(3,222)
Unbilled receivables						Unbilled receivables	41,463		36,107
Less: allowance for doubtful accounts						Less: allowance for doubtful accounts	(169)		(171)
Total accounts receivable and unbilled, net	$	74,708	$	79,767		Total accounts receivable and unbilled, net	$	249,086	$	186,432

~~(6)~~

Contract Liabilities

Advanced billings represent cash received from customers, or billed amounts per an agreed upon payment schedule, in advance of services being performed or revenue being recognized.

Advanced billings consisted of the following (in thousands):


	As of
	September 30, 2022		December 31, 2021
Advanced billings	$	417,927	$	344,641

As of September 30, 2022, we had approximately $2.5 billion of performance obligations remaining to be performed for active projects.

-10-

Table of Contents

(5) Intangible Assets, Net

Intangible assets, net consisted of the following (in thousands):

	As of
	September 30,			December 31,				As of
	2017			2016				September 30, 2022		December 31, 2021
Intangible assets:							Intangible assets:
Finite-lived intangible assets:							Finite-lived intangible assets:
Carrying amount:							Carrying amount:
Backlog	$	72,630		$	72,630
Customer relationships		145,051			145,051		Customer relationships	145,051		145,051
Developed technologies		54,475			54,475
Other		3,074			2,505
Total finite-lived intangible assets		275,230			274,661
Accumulated amortization:							Accumulated amortization:
Backlog		(72,630	)		(72,630	)
Customer relationships		(86,063	)		(66,267	)	Customer relationships	(137,851)		(135,337)
Developed technologies		(38,133	)		(29,961	)
Other		(1,816	)		(1,378	)
Total accumulated amortization		(198,642	)		(170,236	)
Total finite-lived intangible assets, net		76,588			104,425		Total finite-lived intangible assets, net	7,200		9,714
Trade name (indefinite-lived)		31,646			31,646		Trade name (indefinite-lived)	31,646		31,646
Total intangible assets, net	$	108,234		$	136,071		Total intangible assets, net	$	38,846	$	41,360

As of September 30, ~~2017,~~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 2017

$
9,495

2018

29,561

2019

14,828

2020

7,877

2021

5,114

Later years

9,713

$
76,588


	Amortization
Remainder of 2022	$	839
2023	2,199
2024	1,443
2025	946
2026	620
Later years	1,153
	$	7,200

~~- 11 -~~

~~(7)~~

(6) Accrued Expenses

Accrued expenses consisted of the following (in thousands):

	As of
	September 30,		December 31,			As of
	2017		2016			September 30, 2022		December 31, 2021
Employee compensation and benefits	$	16,989	$	21,453	Employee compensation and benefits	$	63,517	$	57,846
Project related reimbursable expenses					Project related reimbursable expenses	127,603		91,839
Other		3,096		2,964	Other	12,997		9,601
Total accrued expenses	$	20,085	$	24,417	Total accrued expenses	$	204,117	$	159,286

~~(8)~~

(7) Debt

Debt consisted of the following (in thousands):

As of

September 30,

December 31,

2017

2016

Revolving credit facility

$
30,000

$
-

Term loan

155,719

165,000

Less unamortized discount

(432
)

(534
)
Less unamortized term loan debt issuance costs

(666
)

(824
)
Less current portion of long-term debt

(15,469
)

(12,375
)
Long-term debt, net, less current portion

$
169,152

$
151,267


	As of
	September 30, 2022		December 31, 2021
Revolving credit facility	$	139,700	$	—
Short-term debt	$	139,700	$	—

-11-

Table of Contents

Principal payments on debt are due as follows (in thousands):

2017 (remaining)

$
3,094

2018

16,500

2019

16,500

2020

20,625

2021

129,000

Total

$
185,719


2022 (remaining)	—
2023	139,700
Total	$	139,700

On September 30, 2019 (the “Closing Date”), the Company obtained an unsecured credit facility in an aggregate principal amount up to $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”).

On the Closing Date, the Borrower and lender entered into a Loan Agreement (as it may be amended from time to time, the “Loan Agreement”) providing for the Credit Facility, and the Guarantor executed a Guaranty Agreement providing for its guarantee of the payment and performance of the obligations under the Loan Agreement. On December 27, 2021, the Company entered into Amendment No. 3 to the Loan Agreement, which, among other things, extends the expiration date of the revolving credit note to March 31, 2023, 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 ~~estimated fair value~~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 million.

As of September 30, 2022, there were $0.2 million in letters of credit outstanding related to certain operating lease obligations, which are secured by the Credit Facility.

(8) Leases

The Company enters into leases for real estate and equipment. Real estate leases are for our corporate office space and laboratories around the world. Real estate leases have remaining lease terms of less than 1 year to 18 years. Many of the Company’s ~~debt based~~leases include options to extend the leases on ~~Level 2 inputs using~~a month to month basis or for set periods for up to 20 years. Many leases also include options to terminate the ~~market approach, which is primarily based on rates at which~~leases within 1 year or per other contractual terms.

The components of lease expense were as follows (in thousands):


	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

Supplemental cash flow information related to the ~~debt is traded among financial institutions, approximates~~leases was as follows (in thousands):


	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

-12-

Table of Contents

Supplemental balance sheet information related to the ~~carrying value~~leases was as follows (in thousands):


	As of
	September 30, 2022			December 31, 2021
Operating 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		%

Lease payments due related to lease liabilities as of September 30, ~~2017 and December 31, 2016.~~

2022 were as follows (in thousands):


	Related Party Operating Leases		Non-Related Parties Operating Leases		Total Operating Leases
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

As of September 30, 2022, we have several additional leases with contractual obligations, which have not yet commenced, with future payments of $0.1 million.

(9) Shareholder’s Equity and Stock-Based Compensation

The Company granted ~~974,896~~392,231 awards to employees under the 2016 Incentive Award Plan during the nine months ended September 30, ~~2017,~~2022, consisting of ~~777,550~~151,159 RSU and 113,838 stock option awards ~~118,000 restricted~~having four year vesting schedules and 127,234 stock option awards ~~(“RSA”) and 38,000 restricted stock units (“RSU”), all~~having two year vesting ~~after four years.~~schedules. The Company granted an additional ~~41,346~~11,418 stock option awards ~~vesting over one year,~~ to non-employee directors under the 2016 Incentive Award Plan, during the nine months ended September 30, ~~2017.~~

~~The Company granted 45,923 Awards under~~2022. These awards are scheduled to vest on the ~~2014 Equity Incentive Plan, consisting~~earlier of ~~34,812 stock options~~(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 equally over four years and 11,111 fully-vested shares, during the nine months ended September 30, 2016. The Company also granted 643,680 stock options under the 2016 Plan during the nine months ended September 30, 2016, consistingdate.

-13-

Table of 626,650 stock options vesting after four years and 17,030 stock options with one-third vesting on October 31, 2016, and the remainder vesting in eight equal monthly installments beginning in November 2016.

~~- 12 -~~

Contents

Award Activity

The following table sets forth the Company’s stock option activity:

	Nine Months Ended September 30, 2017
				Weighted Average			Nine Months Ended September 30, 2022
	Stock Options			Exercise Price			Stock Options	Weighted Average Exercise Price
Outstanding - beginning of period		2,350,166		$	17.57	Outstanding - beginning of period	1,992,915	$	68.39
Granted		818,896		$	28.29	Granted	252,490	$	138.91
Exercised		(83,675	)	$	15.26	Exercised	(395,863)	$	41.21
Forfeited/Expired		(225,051	)	$	20.66
Cancelled/Forfeited/Expired						Cancelled/Forfeited/Expired	(28,747)	$	72.76
Outstanding - end of period		2,860,336		$	20.46	Outstanding - end of period	1,820,795	$	84.01

Exercisable - end of period		939,835		$	15.34	Exercisable - end of period	1,212,799	$	56.49

The following table sets forth the Company’s RSA/RSU activity:


	Nine Months Ended				September 30, 2022
				~~September 30, 2017~~		Shares/Units
		~~Shares/Units~~
Outstanding and unvested - beginning of period			~~59,258~~		602,187
Granted					~~156,000~~	151,159
Vested					-	(159,000)
Forfeited					-	(40,248)
Outstanding and unvested - end of period					~~215,258~~	554,098

Cumulative vested shares - end of period					~~1,854,658~~	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 September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016			Three Months Ended September 30,				Nine Months Ended September 30,
Direct costs, excluding depreciation and amortization	$	389	$	2,500	$	1,504	$	4,974
										2022		2021		2022		2021
Total direct costs									Total direct costs	$	3,179	$	2,607	$	8,744	$	6,841
Selling, general and administrative		592		1,784		1,711		3,585	Selling, general and administrative	2,615		1,440		7,075		3,647
Total stock-based compensation expense	$	981	$	4,284	$	3,215	$	8,559	Total stock-based compensation expense	$	5,794	$	4,047	$	15,819	$	10,488

(10) Income Taxes

The Company’s effective income tax rate was ~~35.1%~~19.4% and ~~35.7%~~11.3% for the three months ended September 30, 2022 and 2021, respectively. The Company's effective income tax rate was 15.5% and 9.7% for the nine months ended September 30, ~~2017, respectively. The Company’s effective income tax rate was 33.6%~~2022 and ~~38.1% for the three and nine months ended September 30, 2016,~~2021, respectively. The Company’s effective income tax rate for the three ~~and nine~~ months ended September 30, ~~2017~~2022 varied from the U.S. statutory rate of ~~35.0%~~21% primarily due to the impact of state taxes, ~~domestic~~which was favorably offset by excess tax benefits recognized from share-based compensation. The Company's effective income tax rate for the nine months ended September 30, 2022 varied from the U.S. statutory rate of 21% due to the impact of the state taxes, which was favorably offset by excess tax benefits recognized from share-based compensation and ~~foreign~~benefits from uncertain tax ~~positions and the tax impact associated with acquired tax attributes.~~

positions.

-14-

Table of Contents

(11) Commitments and Contingencies

Legal Proceedings

The Company is involved in legal proceedings from time to time in the ordinary course of its business, including employment claims and claims related to other business transactions. The Company cannot predict with certainty the outcome of such proceedings, but it believes that adequate reserves have been recorded and losses already recognized with respect to such ~~actions~~proceedings, which were immaterial as of September 30, ~~2017~~2022 and December 31, ~~2016.~~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 September 30, ~~2017.~~

2022.

Purchase Commitments

The Company has several minimum purchase commitments for project related supplies totaling $14.3 million as of September 30, 2022. In return for the commitment, Medpace receives preferential pricing. The commitments expire at various times through 2029.

(12) Related Party Transactions

Employee Loans

The Company periodically extends short term loans or advances to employees, typically upon commencement of employment. Total receivables as a result of these employee advances of $0.2 million existed at September 30, ~~2017~~2022 and December 31, ~~2016,~~

~~- 13 -~~

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.

~~Management Fees~~

The Company pays fees for director services provided by Cinven employees that are members of the Company’s Board of Directors and any related committees. The director fees are paid directly to Cinven in accordance with the Company’s non-employee director compensation policy. During the three and nine months ended September 30, 2017, the Company incurred board of director fees to Cinven of less than $0.1 million and $0.1 million, respectively, in the Company’s condensed consolidated statement of operations. During the three and nine months ended September 30, 2016, the Company incurred management fees to Cinven of less than $0.1 million and $0.2 million, respectively, in the Company’s condensed consolidated statements of operations.

Service ~~Agreements~~

~~Symplmed Pharmaceuticals, LLC (“Symplmed”)~~

Medpace Investors LLC, a noncontrolling shareholder of the Company that is owned by employees of the Company and managed by the Company’s chief executive officer, has a majority ownership interest in Symplmed, a private pharmaceutical development company. In addition, the chief executive officer and other executives of the Company are board members of Symplmed. The Company has operated under a Master Services Agreement (“MSA”) with Symplmed since 2013 (amended in 2014) to perform clinical trial related services. Certain task orders governed by this arrangement were amended in the third quarter of 2016, changing the fee structure from unitized in nature to time and materials and revised pricing to more appropriately reflect market pricing based on the Company’s leveraging of this work to develop and enhance certain new service capabilities. The Company has evaluated its relationship with Symplmed and concluded that Symplmed is not a variable interest entity because the Company has no direct ownership interest or relationship other than the MSA. During the three months ended September 30, 2017 and 2016, the Company recognized service revenue from Symplmed of less than $0.1 million and negative service revenue adjustments from Symplmed of $0.4 million, respectively, and during the nine months ended September 30, 2017 and 2016, the Company recognized service revenue from Symplmed of less than $0.1 million and negative service revenue adjustments from Symplmed of less than $0.1 million, respectively, in the Company’s condensed consolidated statements of operations.

~~Coherus BioSciences, Inc. (“Coherus”)~~

The chief executive officer of the Company is a member of Coherus’s board of directors. During the three months ended September 30, 2017 and 2016, the Company recognized service revenue from Coherus of $1.4 million and $6.8 million, respectively, and during the nine months ended September 30, 2017 and 2016, the Company recognized service revenue from Coherus of $6.5 million and $18.2 million, respectively, in the Company’s condensed consolidated statements of operations. ~~In addition, the company recognized Reimbursed out-of-pocket revenue and Reimbursed out-of-pocket expenses with Coherus in the condensed consolidated statements of operations of $0.1~~ ~~million and $1.3~~ ~~million during the three months ended September 30, 2017 and 2016, respectively, and $1.1~~ ~~million and $4.2~~ ~~million during the nine months ended September 30, 2017 and 2016.~~ As of September 30, 2017 and December 31, 2016, respectively, the Company had Accounts receivable and unbilled, net from Coherus of $0.3 million and $2.0 million recorded in the condensed consolidated balance sheets. As of September 30, 2017 and December 31, 2016, respectively, the Company had, from Coherus, $2.6 million and $6.3 million of Advanced billings and $1.5 million and $3.8 million of Pre-funded study costs, in the condensed consolidated balance sheets.

~~Xenon Pharmaceuticals, Inc. (“Xenon”)~~

Certain executives and employees of the Company, including the chief executive officer, have held equity investments in Xenon, a clinical-stage biopharmaceutical company. During the second quarter of 2017, the chief executive officer sold his entire equity position held in Xenon. Xenon is no longer considered to be a related party subsequent to this sale. During July 2015 the Company and Xenon entered into an amended MSA agreement for the Company to provide clinical trial related services. The Company recognized service revenue from Xenon of $0.4 million during the three months ended September 30, 2016, and service revenue from Xenon of $0.6 million and $0.8 million during the six months ended June 30, 2017 and nine months ended September 30, 2016, respectively, in the Company’s condensed consolidated statements of operations. As of December 31, 2016, the Company had, from Xenon, $1.3 million of Advanced billings and $0.1 million of Pre-funded study costs in the condensed consolidated balance sheets.

~~Cymabay Therapeutics, Inc. (“Cymabay”)~~

~~Cymabay~~ is a clinical-stage biopharmaceutical company developing therapies to treat metabolic diseases with high unmet medical need, including serious rare and orphan disorders. During the first quarter of 2016, it was announced that a Medpace employee would join Cymabay’s board of directors. The Company and Cymabay entered into a MSA dated October 21, 2016. Subsequently, the Company and Cymabay have entered into several task orders for the Company to perform clinical trial related services. ~~During the three months ended September 30, 2017 and 2016, the Company recognized service revenue from Cymabay of $0.2 million and $0.1~~

~~- 14 -~~

million, respectively, and during the nine months ended September 30, 2017 and 2016, the Company recognized service revenue from Cymabay of $0.4 million and $0.3 million, respectively, in the Company’s condensed consolidated statements of operations.

LIB Therapeutics LLC and subsidiaries (“LIB”)

Certain executives and employees of the Company, including the chief executive officer, are members of LIB’s board of managers. The Company entered into a MSA dated November 24, 2015 with LIB, a company that engages in research, development, marketing and commercialization of pharmaceutical drugs. Subsequently, the Company and LIB have entered into several task orders for the Company to perform clinical trial related services. ~~During~~The Company recognized total revenue from LIB of $9.5 million and $2.3 million during the three months ended September 30, ~~2017~~2022 and ~~2016, the Company recognized service revenue from LIB of $0.5~~2021, respectively, and $26.6 million and ~~$0.1~~$5.6 million ~~respectively, and~~ during the nine months ended September 30, ~~2017~~2022 and ~~2016, the Company recognized service revenue from LIB of $1.1 million and $0.1 million,~~2021, respectively, in the Company’s condensed consolidated statements of operations. As of September 30, ~~2017~~2022 and December 31, ~~2016,~~2021, respectively, the Company had Advanced billings from LIB of $4.7 million and $2.9 million in the condensed consolidated balance sheets. In addition, as of September 30, 2022 and December 31, 2021, respectively, the Company had Accounts receivable and unbilled, net from LIB of ~~$0.2~~$1.7 million and ~~less than $0.1~~$0.5 million ~~recorded~~ in the condensed consolidated balance sheets.

~~CinRx~~

CinRX Pharma, ~~LLC~~subsidiaries and affiliates (“CinRx”)

Certain executives and employees of the Company, including the chief executive officer, are members of CinRx’s board of managers and/or have equity investments in CinRx, a biotech company. The Company and CinRx have entered into several task orders for the Company to perform clinical trial related services. ~~During~~The Company recognized total revenue from CinRx of $0.5 million and $6.4 million during the three months ended September 30, 2022 and 2021, respectively, and $13.8 million and $18.3 million during the nine months ended September 30, ~~2017, the Company recognized service revenue from CinRx of $0.1 million~~2022 and ~~$0.3 million,~~2021, respectively, in the Company’s condensed consolidated statements of operations.

As of September 30, 2022 and December 31, 2021, respectively, the Company had Advanced billings from CinRx of $1.0 million and $5.4 million in the condensed consolidated balance sheets. As of September 30, 2022 and December 31, 2021 the Company had Accounts receivable and unbilled, net from CinRx of $1.3 million and $2.1 million, respectively, in the condensed consolidated balance sheets. Certain affiliates of CinRx included in previous reported quarters are no longer disclosed due to changes in the affiliate relationship.

The Summit Hotel (“The Summit”)

The Summit Hotel, located on the Medpace ~~Investors, LLC~~

~~Medpace Investors is a noncontrolling shareholder and related party of Medpace Holdings, Inc. Medpace Investors~~campus, is owned by the chief executive officer, and managed by ~~employees~~an unrelated hospitality management entity. Medpace incurs travel lodging and meeting expenses at The Summit. Medpace incurred expenses of ~~the Company. The chief executive officer of Medpace is also the manager~~$0.1 million and majority unit holder of Medpace Investors. The Company acted as a paying agent for Medpace Investors with taxing authorities principally in instances when employee tax payments or remittance of withholdings related to equity compensation are required. During$0.2 million during the three months ended September 30, 2022 and 2021, respectively, and $0.2 million and $0.3 million during the nine months ended September 30, ~~2016, the Company paid $0.1 million~~2022 and ~~$0.8 million to various taxing authorities on behalf~~2021 at The Summit, respectively.

-15-

Table of ~~Medpace Investors.~~

~~Purchase of Real Estate Properties~~

In December 2016, the Company entered into a purchase agreement for four parcels of real estate property that are closely situated to the Medpace campus in Cincinnati, Ohio, from AT Redevelopment Company, LLC, which is wholly-owned by the Company’s chief executive officer. The purchase price of the real estate property was $0.4 million as determined by an independent third party broker's opinion of value. The transaction closed on January 11, 2017.

Contents

Leased Real Estate

Headquarters Lease

The Company entered into an operating lease for its corporate headquarters with an entity that is wholly owned by the chief executive officer of the Company. The Company has evaluated its relationship with the related party and concluded that the related party is not a variable interest entity because the Company has no direct ownership interest or relationship other than the lease. The lease for headquarters is for an initial term of twelve years through November 2022 with a renewal option for one 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 rate annually for increases in the consumer price index. Operating lease cost recognized for the three months ended September 30, 2022 and 2021 was $0.6 million and $1.7 million and $1.6 million for the nine months ended September 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 September 30, 2022 and December 31, 2021 were $18.6 million and $19.7 million, respectively, in the condensed consolidated balance sheets. The current and long-term portions of the lease liabilities at September 30, 2022 were $1.5 million and $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 million and $18.3 million, respectively, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets.

In 2018, Medpace, Inc. entered into a multi-year lease agreement governing future occupancy of additional office space 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 began to occupy the premises in the second quarter of fiscal year 2020. The lease expires in 2040 and the Company has two 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. ~~Lease expense~~The Company has determined that the lease is an operating lease. Operating lease cost recognized for ~~each of~~ the three months ended September 30, ~~2017~~2022 and ~~2016~~2021 was ~~$0.5~~$1.5 million ~~respectively,~~ and ~~lease expense recognized~~$4.3 million for ~~each of~~ the nine months ended September 30, ~~2017~~2022 and ~~2016 was $1.6 million, respectively.~~2021. The operating lease ~~expense~~cost was allocated between ~~Direct~~Total direct costs ~~excluding depreciation and amortization,~~ and Selling, general and administrative in the condensed consolidated statements of operations.

~~Deemed Assets~~ The Operating lease right-of-use assets at September 30, 2022 and ~~Deemed Landlord Liabilities~~

December 31, 2021 were $53.9 million and $55.1 million, respectively, in the condensed consolidated balance sheets. The current and long-term portions of the lease liabilities at September 30, 2022 were $1.1 million and $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 million and $65.9 million, respectively and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets.

The Company entered into two multi-year lease agreements governing the occupancy of space of two 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. In accordance with the accounting guidance related to leases, the Company was deemed in substance to be the owner of the property during the construction phase and at completion. Accordingly, the Company reflected the buildings and related liabilities as deemed assets from landlord building construction in Property and equipment, net, Other current liabilities, and Deemed landlord liability, less current portion, respectively, on the condensed consolidated balance sheets. The Company assumed occupancy in 2012 and the leases expire in 2027 with the Company having one 10-year option to extend the lease term. The ~~deemed assets are being fully depreciated,~~

~~- 15 -~~

~~on a straight line basis, over~~Company pays rent, taxes, insurance, and maintenance expenses that arise from the ~~15-year term~~use of the ~~lease. Deemed landlord liabilities are recorded at their net present value when~~property. Annual base rent for the ~~Company enters into qualifying leases and are reduced as~~corporate headquarters allows for adjustments to the ~~Company makes periodic lease payments on the properties. Accretion expense is being recorded over the term of the lease as a component of Interest expense, net~~rental rate annually for increases in the ~~Company’s~~consumer price index. The Company has determined that the leases are operating leases. Operating lease cost recognized for the three months ended September 30, 2022 and 2021 was $0.9 million and $2.7 million for the nine months ended September 30, 2022 and 2021. The operating lease cost was allocated between Total direct costs and Selling, general and administrative in the condensed consolidated statements of operations. The ~~Company paid $0.9 million during the three months ended~~Operating lease right-of-use assets at September 30, ~~2017~~2022 and ~~2016,~~December 31, 2021 were $15.3 million and $17.2 million, respectively, ~~and $2.8 million during~~in the ~~nine months ended September 30, 2017 and 2016.~~condensed consolidated balance sheets. The current and long-term portions of the ~~Deemed landlord liability~~lease liabilities at September 30, ~~2017~~2022 were ~~$1.8~~$2.7 million and ~~$27.1~~$12.6 million, ~~respectively.~~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 ~~Deemed landlord liability~~lease liabilities at December 31, ~~2016~~2021 were ~~$1.7~~$2.6 million and ~~$28.5~~$14.6 million, ~~respectively. The Company has~~respectively, and were recognized ~~deemed assets, net of $16.8 million~~in Other current liabilities and ~~$18.1 million at September 30, 2017 and December 31, 2016, respectively,~~Operating lease liabilities in the condensed consolidated balance sheets.

Travel Services

The Company incurs expenses for travel services for company executives provided by a private aviation charter companies which is a company ~~that is owned~~controlled by the chief executive officer ~~and the executive vice president of operations~~ of the Company ~~(“private~~(each a “private aviation charter”). The Company may contract directly with the private aviation charter for the use of its aircraft or indirectly through a third party

-16-

Table of Contents

aircraft management and jet charter company (the “Aircraft Management Company”). The travel services provided are primarily for business purposes, with certain personal travel paid for as part of the executives’ compensation arrangements. The Aircraft Management Company also makes the private aviation charter aircraft available to third parties. The Company incurred travel expenses of ~~$0.3~~$0.6 million and $0.4 million during the three months ended September 30, ~~2017~~2022 and ~~2016,~~2021, respectively, and ~~$0.9~~$1.6 million and ~~$0.8~~$0.9 million during the nine months ended September 30, ~~2017~~2022 and ~~2016,~~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.

~~(13) Cash Flow Statement- Supplemental Information~~

~~During the nine months ended~~ As of September 30, ~~2017,~~2022 and December 31, 2021, the Company ~~engaged~~had Accounts payable to the Aircraft Management Company of $0.2 million, respectively, in the condensed consolidated balance sheets.

(13) Entity Wide Disclosures

Revenue by Category

The following ~~significant non-cash investing and financing activities:~~

table disaggregates our revenue by major source (in thousands):


	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

~~Acquired net assets totaling $0.7 million consisting~~

-17-

Table of net Deferred tax assets of $22.2 million, offset by net Deferred tax liabilities of $0.1 million and Deferred credits of $21.4 million in exchange for Accounts receivable and unbilled, net of $0.6 million and Other assets of $0.1 million.

Contents

~~- 16 -~~

Item 2. Management’s Discussion and Analysis ofof Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2021 and with the information under the heading “Management Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2021. This item and the related discussion contain forward-looking statements reflecting current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those indicated in such forward-looking statements. Important factors that may cause such differences include, but are not limited to, those discussed under the “Forward-Looking Statements” below and “Risk Factors” in “Item 1A Risk Factors” of Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~

2021.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts contained herein, ~~including~~are forward looking statements. Forward looking statements include, without limitation, statements regarding our ~~future~~ results of operations; financial position and performance; the anticipated impact of the coronavirus COVID-19 pandemic on our business; international risks including the conflict involving Russia, Ukraine and surrounding countries, respectively, on our business; liquidity and our ability to fund our business operations and ~~financial position,~~initiatives; capital expenditure and debt service obligations; business ~~strategy,~~strategies, plans and goals, including those related to operations, marketing, acquisitions and expansion of our business; product approvals and ~~plans~~plans; industry trends; general economic conditions, including inflation and other pricing pressures that could decrease our operating margins; expectations regarding consumer behaviors and trends; our culture and operating philosophy; human resource management; arrangements with and delivery of our services to the customers; conversion of backlog; dividend policy; legal proceedings; and our objectives for future ~~operations, are forward looking statements.~~operations. The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” “likely,” and similar expressions are intended to identify ~~forward looking~~forward-looking statements. ~~Forward looking~~Forward-looking statements are based largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These ~~forward looking~~forward-looking statements are subject to inherent uncertainties, risks, changes in circumstances and other important factors that are difficult to predict. Moreover, we operate in a very competitive and rapidly changing environment in which new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all important factors on our business or the extent to which any factor, or combination of such factors, may cause actual results to differ materially from those contained in any ~~forward looking~~forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the ~~forward looking~~forward-looking events and circumstances discussed may not occur and our financial condition and actual results could differ materially and adversely from those anticipated or implied in the ~~forward looking~~forward-looking statements. We caution you therefore against relying on these ~~forward looking~~forward-looking statements.

We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. For a further discussion of the risks relating to our business, see “Item 1A Risk Factors” of ~~Part I of~~ our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~

2021 and “Part II – Other Information, Item 1A Risk Factors” herein.

Business Overview

We are one of the world’s leading clinical contract research organizations, or CROs, by revenue, solely focused on providing scientifically-driven outsourced clinical development services to the biotechnology, pharmaceutical and medical device industries. Our mission is to accelerate the global development of safe and effective medical therapeutics. We differentiate ourselves from our competitors by our disciplined operating model centered on providing full-service Phase I-IV clinical development services and our therapeutic expertise. We believe this combination results in timely and cost-effective delivery of clinical development services for our customers. We believe that we are a partner of choice for small- and mid-sized biopharmaceutical companies based on our ability to consistently utilize our full-service, disciplined operating model to deliver timely and high-quality results for our customers.

We focus on conducting clinical trials across all major therapeutic areas, with particular strength in ~~Cardiology,~~Oncology, Metabolic Disease, ~~Oncology, Endocrinology,~~Cardiology, Central Nervous System, ~~(“CNS”),~~or CNS, and Antiviral and Anti-infective, ~~(“AVAI”), as well as therapeutic expertise in Medical Devices.~~or AVAI. Our global platform

-18-

Table of Contents

includes approximately ~~2,500~~5,000 employees across 3540 countries as of September 30, 2022, providing our customers with broad access to diverse markets and patient populations as well as local regulatory expertise and market knowledge.

~~Asset Acquisition~~

~~- 17 -~~

values. Acquired assets include intangible assets of $0.5 million, deferred tax assets of $22.2 million, consisting of tax effected net operating losses in the amount of $21.1 (partially offset with a $7.6 million valuation allowance), tax effected capitalized research and development expenses of $8.5 million and tax effected federal tax credits of $1.4 million (partially offset with a $1.2 million valuation allowance) and deferred tax liabilities of $0.1 million. The excess amount of fair value received over consideration paid of $21.4 million was recorded as a Deferred credit in the condensed consolidated balance sheets and will be recognized within Income tax provision in proportion to the realization of the deferred tax assets and federal tax credits prospectively.

How We Generate Revenue

~~Our revenue consists of net service revenue and reimbursed-out-of-pocket revenue.~~

~~Net Service Revenue~~

We earn ~~customer~~ fees through the performance of services detailed in our customer contracts. Contract scope and pricing is typically based on either a fixed-fee or unit-of-service model, ~~and~~with consideration of activities performed by third parties, as well as ancillary costs necessary to deliver on the contract scope that are reimbursable by our customers. Our contracts can range in duration from a few 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. ~~This payment structure is standard in the CRO industry.~~

~~Net service revenue,~~

Revenue, which is distinct from billing and cash receipt, is ~~generally~~ recognized based on the proportional performance methodology, which is determined by assessing the proportion of performance completed or delivered to date compared to total specific measures to be delivered or completed under the termssatisfaction of the individual performance obligations identified in each contract. ~~The measures utilized~~Substantially all of our customer contracts consist of a single performance obligation, as the promise to ~~assess~~transfer the individual services defined in the contracts are not separately identifiable from other promises in the contract, and therefore not distinct. Our performance obligations are ~~specific to the service provided. Net service revenue for unit-of-service contracts is~~generally satisfied over time and recognized as services are ~~performed or delivered.~~performed. The progression of our contract performance obligations are measured primarily utilizing the input method of cost to cost. Cancellation provisions in our contracts allow our customers to terminate a contract either immediately or according to advance notice terms specified within the applicable contract, which is typically 30 days. Contract cancellation may occur for various reasons, including, but not limited to, adverse patient reactions, lack of efficacy, or inadequate patient enrollment. Upon cancellation, we are entitled to fees for services rendered through the date of termination, including payment for subsequent services necessary to conclude the study or close out the contract. These fees are typically ~~subject to negotiation~~discussed and agreed upon with the customer and are realized as ~~net service~~ revenue when ~~collection~~we believe the amount can be estimated reliably and its realization is ~~reasonably assured.~~probable. Changes in ~~net service~~ revenue from period to period are driven primarily by new business volume and task order execution activity, project cancellations, and the mix of active studies during a given period that can vary based on therapeutic area and or study life cycle stage.

~~Reimbursed Out-of-Pocket Revenue~~

Reimbursed out-of-pocket revenue consists primarily of expenses we incur in relation to projects that are reimbursed by our customers with no profit or mark-up. These expenses are defined in our contracts and generally include, but are not limited to, travel, meetings, printing, and shipping and handling fees. Such reimbursements received are included in revenue with the expenditures reflected as a separate component of operating expense. Certain fees paid to investigators and other disbursements in which we act as an agent on behalf of the study sponsor are reflected in the condensed consolidated statements of operations with no resulting effect on our revenue or expenses.

Costs and Expenses

Our costs and expenses are comprised primarily of our total direct costs, selling, general and administrative costs, depreciation and amortization and income taxes. ~~In addition, as noted above, we also have reimbursed out-of-pocket expenditures that are directly offset by our reimbursed out-of-pocket revenue.~~

Total Direct Costs ~~Excluding Depreciation and Amortization~~

~~Direct~~

Total direct costs ~~excluding depreciation and amortization,~~ are primarily driven by labor and related employee benefits, but also include contracted third party service related expenses, fees paid to site investigators, reimbursed out of pocket expenses, laboratory supplies and other expenses contributing to service delivery. The other costs of service delivery can include office rent, utilities, supplies and software ~~license expenses,~~licenses which are allocated between Total direct costs ~~excluding depreciation and amortization~~ and selling, general and administrative expenses based on the estimated contribution among service delivery and support function efforts on a percentage basis. ~~Direct~~Total direct costs ~~excluding depreciation and amortization exclude reimbursed out-of-pocket expenses. Direct costs, excluding depreciation and amortization~~ are expensed as incurred and are not deferred in anticipation of contracts being awarded or finalization of changes in scope. ~~Direct~~Total direct costs, ~~excluding depreciation and amortization~~ as a percentage of net ~~service~~ revenue, can vary from period to period due to project labor efficiencies, changes in workforce, compensation/bonus programs and service mix.

~~- 18 -~~

Selling, General and Administrative

Selling, general and administrative expenses are primarily driven by compensation and related employee benefits, as well as rent, utilities, supplies, software licenses, professional fees (e.g., legal and accounting expenses), bad debt expense, travel, marketing and other operating expenses.

Depreciation

Depreciation is provided on our property and equipment on the straight-line method at rates adequate to allocate the cost of the applicable assets over their estimated useful lives, which is three to five years for computer hardware, software, phone, and medical imaging equipment, five to seven years for furniture and fixtures and other equipment, and thirty to forty years for buildings. Leasehold improvements ~~and deemed assets from landlord building construction~~ are amortized on a straight-line basis over the shorter of the estimated useful life of the improvement or the associated remaining lease term.

-19-

Table of Contents

Amortization

Amortization relates to finite-lived intangible assets recognized as expense using the straight-line method or using an accelerated method over their estimated useful lives ~~which range in term from 17 months to~~of 15 years.

Income Tax Provision

Income tax provision consists of federal, state and local taxes on income in multiple jurisdictions. Our income tax is impacted by the pre-tax earnings in jurisdictions with varying tax rates and any related tax credits that may be available to us. Our current and future provision for income taxes will vary from statutory rates due to the impact of valuation allowances in certain countries, income tax incentives, certain non-deductible expenses, and other discrete items.

Key Performance Metrics

To evaluate the performance of our business, we utilize a variety of financial and performance metrics. These key measures include new business awards, cancellations and backlog.

New Business Awards, Cancellations and Backlog

New business awards represent the value of anticipated future net ~~service~~ revenue that has been awarded during the period that is recognized in backlog. This value is recognized upon the signing of a contract or receipt of a written pre-contract confirmation from a customer that confirms an agreement in principle on budget and scope. New business awards also include contract amendments, or changes in scope, where the customer has provided written authorization for changes in budget and scope or has approved us to perform additional work as of the measurement date. Awards may not be recognized as backlog after consideration of a number of factors, including whether (i) the relevant net ~~service~~ revenue is expected only after a pending regulatory hurdle, which might result in cancellation of the study, (ii) the customer funding needed for commencement of the study is not believed to have been secured or (iii) study timelines are uncertain or not well defined. In addition, study amounts that extend beyond a three-year timeline are not included in backlog. The number and amount of new business awards can vary significantly from period to period, and an award’s contractual duration can range from several months to several years based on customer and project specifications.

Cancellations arise in the normal course of business and are reflected when we receive written confirmation from the customer to cease work on a contractual agreement. The majority of our customers can terminate our contracts without cause upon 30 days’ notice. Similar to new business awards, the number and amount of cancellations can vary significantly period over period due to timing of customer correspondence and study-specific circumstances. ~~Total cancellations in a period are offset against~~

Net new business awards represent gross new business awards received in a period ~~to determine net new business awards~~offset by total cancellations in ~~our backlog calculation.~~that period. Net new business awards were ~~$112.1~~$470.9 million and ~~$109.1~~$1,344.4 million for the three ~~months ended September 30, 2017~~ and ~~2016, respectively, and net new business awards were $311.3 million and $327.2 million for the~~ nine months ended September 30, ~~2017~~2022, respectively. Net new business awards were $408.0 million and ~~2016,~~$1,151.7 million for the three and nine months ended September 30, 2021, respectively.

Backlog represents anticipated future net ~~service~~ revenue from net new business awards that have not commenced or are currently in process but not complete. Reported backlog will fluctuate based on new business awards, changes in the scope of existing contracts, cancellations, revenue recognition on existing contracts and foreign exchange adjustments from non-U.S. dollar denominated backlog. As of September 30, ~~2017,~~2022, our backlog increased by ~~$29.6~~$386.4 million, or ~~6.2%~~20.9%, to ~~$510.0~~$2,236.2 million compared to ~~$480.4~~$1,849.8 million as of September 30, ~~2016.~~2021. Included within backlog as of September 30, ~~2017~~2022 was approximately ~~$275~~$1,165.0 million to ~~$285~~$1,175.0 million that we expect to convert to net ~~service~~ revenue over the next twelve months, with the remainder expected to convert to net ~~service~~ revenue thereafter.

The effect of foreign currency adjustments on backlog was as follows: ~~favorable~~unfavorable foreign currency adjustments of ~~$1.5~~$17.4 million for the three months ended September 30, ~~2017; favorable~~2022; unfavorable foreign currency adjustments of ~~$2.6~~$33.2 million for the nine months ended

~~- 19 -~~

September 30, ~~2017; favorable~~2022; unfavorable foreign currency adjustments of ~~$0.4~~$3.5 million for the three months ended September 30, ~~2016;~~2021; and unfavorable foreign currency adjustments of ~~$1.0~~$3.9 million for the nine months ended September 30, ~~2016.~~

2021.

Backlog and net new business award metrics may not be reliable indicators of our future period revenue as they are subject to a variety of factors that may cause material fluctuations from period to period. These factors include, but are not limited to, changes in the scope of projects, cancellations, and duration and timing of services provided.

-20-

Table of Contents

Coronavirus (COVID-19)

The COVID-19 pandemic increased travel restrictions and caused the shutdown of many businesses in countries in which we operate. While we continue to operate globally, the pandemic continues to impact our business and the level of activity at each of our locations varies depending on the local governmental requirements and guidelines which continue to evolve and change.

Our office staff are either working remotely or in the office, 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 continues to impact the operations at most of the investigative sites where patients in our clinical trials are recruited and treated.

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 for them.

Travel restrictions and business closures continue to impact study participants and clinical sites which affects our ability to efficiently provide clinical trial services. We continue to work 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. We are 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.

While certain governments eased restrictions during 2021 and into the three and nine months ended September 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.

The COVID-19 outbreak had a significant adverse effect on our results of operations and we believe that the outbreak may have a continued adverse impact on our results of operations in the future. As we cannot predict the duration or scope of the pandemic, the future financial impact on our results of operations and financial condition cannot be reasonably estimated.

Exchange Rate Fluctuations

The majority of our contracts and operational transactions are U.S. dollar denominated. The Euro represents the largest foreign currency denomination of our contractual and operational exposure. As a result, a portion of our revenue and expenses are subject to exchange rate fluctuations. We have translated the Euro into U.S. dollars using the following average exchange rates based on data obtained from www.xe.com:

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

U.S. Dollars per Euro:

1.17

1.12

1.11

1.11


	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

-21-

Table of Contents

Results of Operations

Three Months Ended September 30, ~~2017~~2022 compared to Three Months Ended September 30, ~~2016~~

2021

	Three Months Ended
	September 30,													Three Months Ended September 30,
(Amounts in thousands, except percentages)	2017			2016			Change			% Change			(Amounts in thousands, except percentages)	2022		2021		Change		% Change
Service revenue, net	$	98,681		$	94,812		$	3,869			4.1	%
Reimbursed out-of-pocket revenue		11,962			12,987			(1,025	)		(7.9	)%
Total revenue		110,643			107,799			2,844			2.6	%
Direct costs, excluding depreciation and amortization		53,144			51,221			1,923			3.8	%
Revenue, net													Revenue, net	$	383,744	$	295,567	$	88,177	29.8	%
Direct service costs, excluding depreciation and amortization													Direct service costs, excluding depreciation and amortization	136,648		112,540		24,108		21.4	%
Reimbursed out-of-pocket expenses		11,962			12,987			(1,025	)		(7.9	)%	Reimbursed out-of-pocket expenses	128,062		95,934		32,128		33.5	%
Total direct costs													Total direct costs	264,710		208,474		56,236		27.0	%
Selling, general and administrative		16,606			16,391			215			1.3	%	Selling, general and administrative	35,418		28,046		7,372		26.3	%
Depreciation		2,237			1,915			322			16.8	%	Depreciation	4,951		4,056		895		22.1	%
Amortization		9,496			12,668			(3,172	)		(25.0	)%	Amortization	838		1,278		(440)		(34.4)	%
Total operating expenses		93,445			95,182			(1,737	)		(1.8	)%	Total operating expenses	305,917		241,854		64,063		26.5	%
Income from operations		17,198			12,617			4,581					Income from operations	77,827		53,713		24,114
Miscellaneous expense, net		(145	)		(378	)		233
Miscellaneous income, net													Miscellaneous income, net	5,649		1,064		4,585
Interest expense, net		(1,906	)		(4,656	)		2,750					Interest expense, net	(1,584)		(41)		(1,543)
Income before income taxes		15,147			7,583			7,564					Income before income taxes	81,892		54,736		27,156
Income tax provision		5,316			2,547			2,769					Income tax provision	15,865		6,162		9,703
Net income	$	9,831		$	5,036		$	4,795					Net income	$	66,027	$	48,574	$	17,453

~~- 20 -~~

Nine Months Ended September 30, ~~2017~~2022 compared to Nine Months Ended September 30, ~~2016~~

2021

	Nine Months Ended
	September 30,													Nine Months Ended September 30,
(Amounts in thousands, except percentages)	2017			2016			Change			% Change			(Amounts in thousands, except percentages)	2022		2021		Change		% Change
Service revenue, net	$	287,014		$	275,245		$	11,769			4.3	%
Reimbursed out-of-pocket revenue		36,456			38,094			(1,638	)		(4.3	)%
Total revenue		323,470			313,339			10,131			3.2	%
Direct costs, excluding depreciation and amortization		156,204			147,436			8,768			5.9	%
Revenue, net													Revenue, net	$	1,065,898	$	833,825	$	232,073	27.8	%
Direct service costs, excluding depreciation and amortization													Direct service costs, excluding depreciation and amortization	394,200		322,160		72,040		22.4	%
Reimbursed out-of-pocket expenses		36,456			38,094			(1,638	)		(4.3	)%	Reimbursed out-of-pocket expenses	354,991		271,494		83,497		30.8	%
Total direct costs													Total direct costs	749,191		593,654		155,537		26.2	%
Selling, general and administrative		46,515			44,724			1,791			4.0	%	Selling, general and administrative	97,999		80,757		17,242		21.4	%
Depreciation		6,468			5,481			987			18.0	%	Depreciation	13,928		11,819		2,109		17.8	%
Amortization		28,406			38,004			(9,598	)		(25.3	)%	Amortization	2,514		3,835		(1,321)		(34.4)	%
Total operating expenses		274,049			273,739			310			0.1	%	Total operating expenses	863,632		690,065		173,567		25.2	%
Income from operations		49,421			39,600			9,821					Income from operations	202,266		143,760		58,506
Miscellaneous expense, net		(642	)		(1,319	)		677
Miscellaneous income, net													Miscellaneous income, net	9,027		2,253		6,774
Interest expense, net		(5,508	)		(16,550	)		11,042					Interest expense, net	(2,078)		(82)		(1,996)
Income before income taxes		43,271			21,731			21,540					Income before income taxes	209,215		145,931		63,284
Income tax provision		15,440			8,285			7,155					Income tax provision	32,517		14,117		18,400
Net income	$	27,831		$	13,446		$	14,385					Net income	$	176,698	$	131,814	$	44,884

~~Service~~

Total revenue ~~net and Reimbursed out-of-pocket~~

Total revenue

~~For the three months ended September 30, 2017 service revenue, net~~ increased by ~~$3.9~~$88.2 million to ~~$98.7 million, from $94.8~~$383.7 million for the three months ended September 30, ~~2016. For~~2022, from $295.6 million for the three months ended September 30, 2021. Total revenue increased by $232.1 million to $1,065.9 million for the nine months ended September 30, ~~2017 service revenue, net increased by $11.8~~2022, from $833.8 million ~~to $287.0 million, from $275.2 million.~~for the nine months ended September 30, 2021. The increase for the three and nine months ended September 30, ~~2017, compared to the same periods in the prior year, were~~2022 was primarily driven by growth within the Oncology, Metabolic, Cardiology and ~~other uncategorized~~Central Nervous System therapeutic ~~areas.~~

~~Reimbursed out-of-pocket revenue decreased~~areas, compared to the same period in the prior year.

-22-

Table of Contents

Total direct costs

Total direct costs increased by ~~$1.0~~$56.2 million, to ~~$12.0~~$264.7 million for the three months ended September 30, ~~2017,~~2022 from ~~$13.0~~$208.5 million for the three months ended September 30, ~~2016. Reimbursed out-of-pocket revenue decreased~~2021. Total direct costs increased by ~~$1.6~~$155.5 million, to ~~$36.5~~$749.2 million for the nine months ended September 30, ~~2017,~~2022 from ~~$38.1~~$593.7 million for the nine months ended September 30, ~~2016.~~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 ~~revenues~~expenses, which can fluctuate significantly from period to period based on the timing of program initiation orand closeout, ~~and these changes do not necessarily correlate to changes in net service revenue. The reimbursements were offset by an equal amount of reimbursed out-of-pocket expenses.~~

~~Direct costs, excluding depreciation and amortization and Reimbursed out-of-pocket expenses~~

~~Our direct costs, excluding depreciation and amortization~~ increased ~~by $1.9 million, to $53.1 million for the three months ended September 30, 2017 from $51.2 million for the three months ended September 30, 2016.~~ ~~Our direct costs, excluding depreciation and amortization increased by $8.8~~ million, to $156.2 million for the nine months ended September 30, 2017 from $147.4 million for the nine months ended September 30, 2016. The increase was primarily attributed to higher personnel costs, lab related costs and office rent to support the growth in service activities. The employee related costs portion of direct costs, excluding depreciation and amortization increased by $1.3$32.1 million and ~~$6.7~~$83.5 million for the three and nine months ended September 30, ~~2017,~~2022, compared to the same period in the prior year. ~~Lab related~~The higher personnel costs portion increased by ~~$1.0~~$18.1 million and ~~$0.9 million for the three months and nine months ended September 30, 2017, respectively, compared to the same periods in the prior year. Office rent costs increased by $0.2 million and $0.7~~$59.4 million for the three and nine months ended September 30, ~~2017, respectively,~~2022, compared to the same periods in the prior year.

Selling, general and administrative

Selling, general and administrative expenses increased by ~~$0.2~~$7.4 million, to ~~$16.6~~$35.4 million for the three months ended September 30, ~~2017~~2022 from ~~$16.4~~$28.0 million for the three months ended September 30, ~~2016.~~2021. Selling, general and administrative expenses increased by ~~$1.8~~$17.2 million, to ~~$46.5~~$98.0 million for the nine months ended September 30, ~~2017~~2022 from ~~$44.7~~$80.8 million for the nine months ended September 30, ~~2016. This~~2021. The increase was primarily attributed to higher personnel costs to support the growth in service activities. The higher personnel costs portion increased by $4.8 million and $13.5 million for the three ~~months ended September 30, 2017 was primarily driven by higher personnel costs of $0.1 million, compared to the same period in the prior year. The increase for the~~and nine months ended September 30, ~~2017 was primarily driven by higher personnel costs of $2.6 million,~~2022, compared to the same ~~period~~periods in the prior year. ~~The employee related cost increase was offset by a reduction in bad debt~~

Depreciation and Amortization

Depreciation and amortization expense of ~~$1.2~~$5.8 million ~~due primarily to net bad debt recoveries~~and $16.4 million for the three and nine months ended September 30, ~~2017, compared to bad debt expense in~~2022 remained relatively consistent with $5.3 million and $15.7 million for the ~~same period in the prior year.~~

~~- 21 -~~

~~Depreciation~~three and ~~Amortization~~

~~Depreciation and amortization expense decreased~~nine months ended September 30, 2021.

Miscellaneous income, net

Miscellaneous income, net increased by ~~$2.9~~$4.6 million to ~~$11.7~~$5.6 million for the three months ended September 30, ~~2017~~2022 from ~~$14.6~~$1.1 million for the three months ended September 30, ~~2016. Depreciation and amortization expense decreased~~2021. Miscellaneous income, net increased by ~~$8.6~~$6.8 million to ~~$34.9~~$9.0 for the nine months ended September 30, 2022 from $2.3 million for the nine months ended September 30, 2017 from $43.5 million for the nine months ended September 30, 2016. The decrease in depreciation and amortization was primarily related to the continued amortization of our definite lived intangible assets, which are amortized on an accelerated basis.

~~Miscellaneous expense, net~~

Miscellaneous expense, net decreased by $0.2 million to $0.1 million of expense for the three months ended September 30, 2017 from $0.4 million of expense for the three months ended September 30, 2016. Miscellaneous expense, net decreased by $0.7 million to $0.6 million of expense for the nine months ended September 30, 2017 from $1.3 million of expense for the nine months ended September 30, 2016. The change for the nine months ended September 30, 2017 was2021. 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 ~~gains or losses from foreign currency transactions, such as those resulting~~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 and exit costs related to the previous headquarter lease.~~

~~Interest expense, net~~

~~Interest expense, net decreased~~payment.

Income tax provision

Income tax provision increased by ~~$2.8~~$9.7 million, to ~~$1.9~~$15.9 million for the three months ended September 30, ~~2017~~2022 from ~~$4.7~~$6.2 million for the three months ended September 30, ~~2016. Interest expense, net decreased~~2021. Income tax provision increased by ~~$11.0~~$18.4 million, to ~~$5.5~~$32.5 million for the nine months ended September 30, ~~2017~~2022 from ~~$16.6~~$14.1 million for the nine months ended September 30, 2016. The decrease in interest expense, net was related to the average lower outstanding balance under our Senior Secured Term Loan Facility (as defined below), as well as a lower effective interest rate as a result of the new credit agreement entered into in December 2016 (as described below).

~~Income tax provision~~

Income tax provision increased by $2.8 million, to $5.3 million for the three months ended September 30, 2017 from $2.5 million for the three months ended September 30, 2016. Income tax provision increased by $7.2 million, to $15.4 million for the nine months ended September 30, 2017 from $8.3 million for the nine months ended September 30, 2016.2021. The overall effective tax rate for the three months ended September 30, ~~2017~~2022 was ~~35.1%~~19.4%, compared to an overall effective tax rate of ~~33.6%~~11.3% for the three months ended September 30, ~~2016.~~2021. The overall effective tax rate for the nine months ended September 30, ~~2017~~2022 was ~~35.7%,~~15.5% compared to an overall effective tax rate of ~~38.1%~~9.7% for the nine months ended September 30, ~~2016.~~2021. The ~~change~~increase in the income tax provision and overall effective tax ~~rates and~~rate was primarily attributable to the increase in ~~income tax provision was primarily due to the increases in projected~~ pre-tax book income ~~for the three~~ and ~~nine months ended September 30, 2017~~a decrease in excess tax benefits recognized from share based compensation which was partially offset ~~with a favorable impact associated with domestic~~by an increase in benefits from uncertain tax positions ~~and~~compared to the ~~favorable tax impact associated with acquired tax attributes.~~

same periods in the prior year.

Liquidity and Capital Resources

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. Our principal sources of liquidity are operating cash flows and ~~funds available for borrowing~~from borrowings under our ~~Senior Secured Revolving Credit Facility (as defined below).~~unsecured credit facility consisting of up to a $250.0 million revolving line of credit which we entered into on September 30, 2019 (the “Credit Facility”), and has subsequently been amended. As of September 30, ~~2017,~~2022, we had cash and cash equivalents of ~~$24.2~~$31.0 million ~~including approximately $0.1~~which decreased from $461.3 million as of ~~restricted cash.~~December 31, 2021 primarily due to share repurchases during the nine months ended September 30, 2022. Approximately ~~$12.6~~$5.3 million of cash and cash equivalents, none of which was restricted, was held by our foreign subsidiaries as of September 30, ~~2017.~~ On December 8, 2016, the Company entered into a credit agreement (the “Senior Secured Credit Agreement”) consisting of a $165.0 million term loan (the “Senior Secured Term Loan Facility”) and a $150.0 million revolving credit facility (the “Senior Secured Revolving Credit Facility” and, together with the Senior Secured Term Loan Facility, the “Senior Secured Credit Facilities”).2022.

As of September 30, ~~2017,~~2022, we had ~~$119.7~~$110.1 million available for borrowing under ~~our Senior Secured Revolving~~the Credit Facility. Our expected primary cash needs on both a short and long-term basis are for investment in operational growth, capital expenditures, ~~payment~~credit facility

-23-

Table of ~~debt,~~Contents

repayments, share repurchases, selective strategic bolt-on acquisitions, other investments, and other general corporate needs. We have historically funded our operations and growth with cash flow from operations and borrowings under our credit facilities. We expect to continue expanding our operations through organic growth and potentially highly selective bolt-on acquisitions and investments. As of September 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 30 basis points to 2.59% in the nine months ended September 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.~~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 ~~available~~ borrowings under existing and future credit facilities, we would incur taxes on these earnings if the need for repatriation due to liquidity purposes arises. We believe that our sources of liquidity and capital will be sufficient to finance our cash needs for the next 12 months and on a longer-term basis. However, we cannot assure you that our business will generate sufficient cash flow from operations, or that future borrowings will be available to us under our Senior Secured Credit Facilities or otherwise, in an amount sufficient to fund our liquidity needs. If our cash flows and capital resources are insufficient to service our indebtedness, we may be forced to reduce or delay capital

~~- 22 -~~

expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. In addition, the terms of existing or future debt agreements may restrict us from adopting some of these alternatives. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions for fair market value or at all, and any proceeds that we could realize from any such dispositions may not be adequate to meet our debt service obligations then due. See “Risk Factors—Risks Relating to our Indebtedness—We may not be able to generate sufficient cash to service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness that may not be successful” in Item 1A of Part I of the 2016 Annual Report on Form 10-K.




	Nine			Nine
	Months			Months
	Ended			Ended
	September 30,			September 30,				Nine Months Ended September 30,
Cash Flows (Amounts in thousands)	2017			2016			Cash Flows (Amounts in thousands)	2022		2021
Net cash provided by operating activities	$	68,733		$	62,667		Net cash provided by operating activities	$	251,366	$	192,433
Net cash used in investing activities		(8,854	)		(7,760	)	Net cash used in investing activities	(29,522)		(22,248)
Net cash used in financing activities		(74,594	)		(54,872	)	Net cash used in financing activities	(644,654)		(46,884)
Effect of exchange rates on cash and cash equivalents		1,555			227
(Decrease) Increase in cash, cash equivalents and restricted cash	$	(13,160	)	$	262
Effect of exchange rates on cash, cash equivalents and restricted cash							Effect of exchange rates on cash, cash equivalents and restricted cash	(7,487)		(2,680)
(Decrease) increase in cash, cash equivalents and restricted cash							(Decrease) increase in cash, cash equivalents and restricted cash	$	(430,297)	$	120,621

Cash Flow from Operating Activities

Cash flows from operations are driven mainly by net income, noncash lease expense, depreciation, stock based compensation expense, and net movement in advanced billings, accrued expenses, prepaid expenses and other current assets, and accounts receivable and unbilled, ~~net, advanced billings, pre-funded liabilities, accounts payable, accrued expenses, deferred taxes and deferred credits.~~net. Accounts receivable and unbilled, net and advanced billings ~~and pre-funded liabilities~~ fluctuate on a regular basis as we perform our services, bill our customers and ultimately collect on those receivables. We attempt to negotiate payment terms in order to provide for payments prior to or soon after the provision of services, but this timing of collection can vary significantly on a period by period comparative basis.

Net cash flows provided by operating activities was ~~$68.7~~$251.4 million for the nine months ended September 30, ~~2017~~2022 beginning with net income of ~~$27.8~~$176.7 million. Adjustments to reconcile net income to net cash provided by operating activities were ~~$37.6~~$43.2 million, primarily related to ~~amortization of intangibles of $28.4 million, depreciation of $6.5 million and~~ stock based compensation expense of ~~$3.2~~$15.8 million, ~~offset by $0.4~~depreciation of $13.9 million and noncash lease expense of ~~benefit from deferred taxes.~~$13.5 million. Changes in operating assets and liabilities provided ~~$3.3~~$31.4 million in operating cash flows and was primarily driven by ~~decreased~~increased advanced billings of 73.3 million and increased accrued expenses of 47.8 million, offset by increased accounts receivable and unbilled, net of ~~$5.3~~62.4 million and increased ~~advanced billings~~prepaid expenses and other current assets of ~~$2.4 million, offset by decreased accrued expenses of $4.8~~17.4 million.

Net cash flows provided by operating activities was ~~$62.7~~$192.4 million for the nine months ended September 30, ~~2016~~2021 beginning with net income of ~~$13.4~~$131.8 million. Adjustments to reconcile net income to net cash provided by operating activities were ~~$53.2~~$41.0 million, primarily related to ~~amortization~~noncash lease expense of ~~intangibles of $38.0~~$11.9 million, depreciation of ~~$5.5~~$11.8 million, ~~and~~ stock based compensation expense of ~~$8.6~~$10.5 million ~~offset by $0.6 million~~and amortization of ~~benefit from deferred taxes.~~intangibles of $3.8 million. Changes in operating assets and liabilities ~~used $4.0~~provided $19.6 million in operating cash flows and was primarily driven by increased advanced billings of $48.2 million and increased accrued expenses of $24.7 million, offset by increased accounts receivable and unbilled, ~~services,~~ net of ~~$16.6~~$25.0 million and increased prepaid expenses and other current assets of $8.7 million, offset by increased accrued expenses of $1.3 million primarily related to employee related costs, a decrease in other assets and liabilities, net of $2.4 million, and an increase in advanced billings of $16.6$22.0 million.

Cash Flow from Investing Activities

Net cash used in investing activities was ~~$8.9~~$29.5 million for the nine months ended September 30, ~~2017~~2022 primarily consisting of $27.6 million in property and equipment ~~expenditures and an acquisition of intangible assets.~~

expenditures.

Net cash used in investing activities was ~~$7.8~~$22.2 million for the nine months ended September 30, ~~2016~~2021 primarily consisting of $19.2 million in property and equipment expenditures.

-24-

Table of Contents

Cash Flow from Financing Activities

Net cash used in financing activities was ~~$74.6~~$644.7 million for the nine months ended September 30, ~~2017~~2022 primarily related to ~~$95.2~~$800.7 million in repurchases of common stock ~~$9.3~~and $159.5 million in ~~principal payments on our Senior Secured Term Loan~~repayments of the Credit Facility, partially offset by 299.2 million in proceeds related to the Credit Facility and ~~$10.0~~

~~- 23 -~~

~~million in principal payments on our Senior Secured Revolving Credit Facility, offset by $40.0~~$16.3 million in proceeds from ~~the Senior Secured Revolving Credit Facility.~~

stock option exercises.

Net cash used in financing activities was ~~$54.9~~$46.9 million for the nine months ended September 30, ~~2016~~2021 primarily related to ~~$225.0~~$62.1 million in principal payments on our 2014 Senior Secured Term Loan Facility, offset by the IPO proceeds received of $173.6 million. The remaining activity consisted of rental payments on deemed landlord assets and the paymentrepurchases of common stock, ~~issuance costs.~~

partially offset by $15.2 million in proceeds from stock option exercises.

Share Repurchases

In ~~August 2017,~~ the ~~Disinterested Directors~~second quarter of 2021, the ~~Company~~Board approved aan increase of $150.0 million to the Company's stock repurchase ~~agreement with Medpace Limited Partnership, a Guernsey limited partnership (the “Limited Partnership” acting through its general partner, Medpace GP Limited, a Guernsey company,~~program bringing the ~~“General Partner” and,~~total repurchase authorization up to $300.0 million. In the ~~Limited Partnership acting through~~first quarter of 2022, the ~~General Partner, “Cinven”), pursuant~~Board approved additional increases totaling $500.0 million to ~~which~~the Company's stock repurchase program. In the second quarter of 2022, the Board approved further increases of $110.0 million to the Company's stock repurchase program. During the nine months ended September 30, 2022, the Company repurchased ~~2,000,000~~5,463,244 shares ~~of the Company’s common stock from Cinven~~ for aggregate consideration of approximately $60.5 million, representing a purchase price of $30.27 per share. The Company funded the repurchase with cash on hand and $40.0 million in borrowings under our Senior Secured Revolving Credit Facility.

~~In April 2017, the Board of the Company authorized a share repurchase program with an authorized level of $50.0~~$800.5 million. ~~The share repurchase program, according to its terms, will expire in April 2018. Repurchases under the repurchase program may take place in the open market or~~ ~~negotiated transactions, at the discretion of the Company’s management~~. During the three and nine months ended September 30, ~~2017,~~2021, the Company repurchased ~~300,331~~34,624 and ~~1,342,786~~377,783 shares ~~of its outstanding common stock~~ for ~~$8.3~~$5.9 million and ~~$34.7~~$62.1 million, ~~respectively,~~respectively. As of September 30, 2022, the Company has completed all authorized share repurchases under ~~this~~the repurchase program.

Repurchases under the share repurchase ~~program.~~

Indebtedness

As of September 30, ~~2017,~~2022, we had total indebtedness of ~~$185.7~~139.7 million which was attributed to outstanding borrowings on the Senior Secured Credit Facilities. There was $30.0 million in outstanding borrowings under the Senior Secured Revolving Credit Facility as of September 30, 2017. As of September 30, 2017, we had $0.3and $0.2 million in letters of credit outstanding related to certain operating lease obligations, which are secured by the ~~Senior Secured Revolving~~ Credit Facility. ~~See~~Refer to Note 87 of the Notes to ~~our audited consolidated financial statements on our Annual Report on Form 10-K~~Condensed Consolidated Financial Statements for details regarding our ~~Senior Secured~~ Credit ~~Facilities.~~

~~Contractual Obligations and Commercial Commitments~~

We have various contractual obligations, which are recorded as liabilities in our condensed consolidated financial statements. Other items, such as operating lease obligations, are not recognized as liabilities in our condensed consolidated financial statements but are required to be disclosed. The following table summarizes future payments and interest related to indebtedness, including the $30.0 million balance on the Senior Secured Revolving Credit Facility for the partial and full years subsequent to the quarter ended September 30, 2017.

~~There have been no material changes, except as follows, to our contractual obligations as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016:~~

Facility.

Payments Due by Period

Contractual Obligations (In thousands)

Total

Remaining 2017

1-3 years

3-5 years

More than 5 years

Long-term debt obligations

$
185,719

$
3,094

$
33,000

$
149,625

$
-

Interest on long-term debt

18,004

1,295

9,398

7,311

-

Total

$
203,723

$
4,389

$
42,398

$
156,936

$
-

~~Principal payments in the above table are based on the terms contained in our agreements. Interest payments are based on the interest rate in effect on September 30, 2017.~~

~~Off-Balance Sheet Arrangements~~

Off balance sheet arrangements refer to any transaction, agreement or other contractual arrangement to which an entity not consolidated under our entity structure exists, where we have an obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such an entity or similar arrangement that serves as credit, liquidity or market risk support for such assets. We have no off balance sheet arrangements currently.

~~- 24 -~~

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, requires us to make a variety of decisions which affect reported amounts and related disclosures, including the selection of appropriate accounting principles and the assumptions on which to base accounting estimates. In reaching such decisions, we apply judgment based on our understanding and analysis of the relevant circumstances, including our historical experience and other assumptions. Actual results could differ from our estimates. We are committed to incorporating accounting principles, assumptions and estimates that promote the representational faithfulness, verifiability, neutrality and transparency of the accounting information included in the financial statements.

There have been no significant changes in the critical accounting policies and estimates as previously described in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~

~~Recently Adopted~~2021.

Effect of Recent Accounting ~~Standards~~

~~In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations. The standard changes the definition of a business~~Pronouncements

Refer to ~~assist entities with evaluating when a set of transferred assets and activities is a business. Under the new guidance, an entity first determines whether substantially all~~Note 1 of the ~~fair value~~Condensed Consolidated Financial Statements for management’s discussion of the ~~gross assets acquired is concentrated in a single identifiable asset or a group~~effect of similar identifiable assets. If this threshold is met, the set is not a business. If it’s not met, the entity then evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. ASU 2017-01 is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. The Company, as permitted, early adopted ASU 2017-01 using the prospective method in the second quarter of 2017. ASU 2017-01 was considered in the asset acquisition described in Note 2.

~~In March 2016, the FASB issued ASU No. 2016-09,~~ ~~Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The new guidance is intended to simplify certain aspects of~~recent accounting for share based payments to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The Company elected to adopt this ASU in the first quarter of 2017 as required. The following summarizes the effects of the adoption on the Company's condensed consolidated financial statements:

pronouncements.

•

~~- 25 -~~

~~other income tax cash flows as an operating activity. The Company elected to adopt this portion of the standard on a prospective basis beginning in 2017. Prior periods have not been adjusted.~~

~~Upon adoption, no other aspects of ASU 2016-09 had an effect on the Company's condensed consolidated financial statements or related footnote disclosures.~~

~~Recently Issued Accounting Standards~~

~~In February 2016, the FASB issued ASU 2016-02, Leases~~ ~~(Topic 842).~~ ~~The guidance in ASU 2016-02 supersedes the lease recognition requirements in ASC Topic 840,~~ ~~Leases (FAS 13)~~. ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. ASU 2016-02 will be applied on a modified retrospective basis to each prior reporting period presented and is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect this standard will have on its condensed consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09 ‘‘Revenue from Contracts with Customers,’’ to clarify the principles of recognizing revenue and create common revenue recognition guidance between US GAAP and International Financial Reporting Standards. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. In May 2016, the FASB issued ASU 2016-12, Narrow-Scope Improvements and Practical Expedients. In December 2016, the FASB issued ASU 2016-20 Technical Corrections and Improvements to Topic 606, Revenue From Contracts with Customers. ASUs’ 2016-20, 2016-12, 2016-10 and 2016-08 all clarify the interpretation guidance in ASU No. 2014-09, “Revenue from Contracts with Customers” specifically related to narrowing specific aspects of Topic 606 and adding illustrative examples to assist in the application of the guidance. The effective date and transition requirements in ASUs’ 2016-20, 2016-12, 2016-10, and 2016-08 are the same as the effective date and transition requirements of ASU 2014-09. ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, deferred the original effective date of ASU 2014-09 by one year. The new standard allows for either a retrospective or modified retrospective approach to transition upon adoption. The new standard will be effective for annual reporting periods beginning after December 15, 2017. Early adoption is permitted for annual reporting periods beginning after December 15, 2016.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to our quantitative and qualitative disclosures about market risk as compared to the quantitative and qualitative disclosures about market risk described in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~

~~- 26 -~~

2021.

Item 4. Controls and Procedures

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired

-25-

Table of Contents

control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

~~Our~~

The Company’s management, with the participation of ~~our chief executive officer~~the Chief Executive Officer (the Principal Executive Officer) and ~~chief financial officer,~~Chief Financial Officer (the Principal Financial Officer), has evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13(a)-15(e) and 15(d) -15(e) of the Securities Exchange Act of 1934 (Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).report. Based on ~~that~~this evaluation, ~~our chief executive officer and chief financial officer~~we concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective ~~at the~~in providing reasonable assurance ~~level~~that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s forms and rules, and the material information relating to the Company is accumulated and communicated to management, including the President and Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Control systems, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that control objectives are met. Because of ~~September 30, 2017.~~

inherent limitations in all control systems, no evaluation of controls can provide assurance that all control issues and instances of fraud, if any, within a company will be detected. Additionally, controls can be circumvented by individuals, by collusion of two or more people or by management override. Over time, controls can become inadequate because of changes in conditions or the degree of compliance may deteriorate. Further, the design of any system of controls is based in part upon assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all future conditions. Because of the inherent limitations in any cost-effective control system, misstatements due to errors or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

In the ordinary course of business, we routinely enhance our information systems by either upgrading current systems or implementing new ones. There ~~was~~were no ~~change~~changes in our internal control over financial reporting ~~(as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our internal control performed~~that occurred during the ~~fiscal quarter~~nine months ended September 30, ~~2017,~~2022 that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

We are party to legal proceedings incidental to our business. While the outcome of these matters could differ from management’s expectations, we do not believe that the resolution of these matters is reasonably likely to have a material adverse effect to our financial statements.

Item 1A. Risk Factors

For a discussion of our potential risks and uncertainties, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2021. There have been no significant changes from the risk factors previously disclosed in our Annual Report, except ~~as provided~~that the following risk factor discussion is hereby added to our "Risk Factors":

Our operating margins could decrease due to increased pricing pressure or other pressures, if we are unable to either achieve efficiencies in our ~~quarterly report~~operating expenses or grow revenues at a rate faster than expenses.

Historically, we have been able to generate the operating margins that we do because of our disciplined, full-service operating model. However, we operate in a highly competitive environment, and, if we experience increased levels of competitive pricing pressure, or pricing pressure from the continued rise of inflation, our operating margins may decrease. In addition, we may adapt our operating model to achieve greater levels of growth or in response to investor demands. Such changes could result in lower operating margins.

-26-

Table of Contents

Our business is subject to international economic, political and other risks that could negatively affect our results of operations and financial condition.

We have significant operations in foreign countries, including, but not limited to, countries in Europe, Latin America, Asia, the Middle East and Africa, that may require complex arrangements to deliver services on ~~Form 10-Q~~global contracts for our customers. As a result, we are subject to heightened risks inherent in conducting business internationally, including, without limitation, the ~~quarter ended June 30, 2017.~~

following:

•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;

•the United States or other countries could enact legislation or impose regulations or other restrictions, including unfavorable labor regulations or tax policies, which could have an adverse effect on our ability to conduct business in or expatriate profits from those countries;

•tax rates in certain foreign countries may exceed those in the United States and foreign earnings may be subject to withholding requirements or the imposition of tariffs, exchange controls or other restrictions, including restrictions on repatriation;

•certain foreign countries are expanding or may expand their regulatory framework with respect to patient informed consent, protection and compensation in clinical trials, and privacy, which could delay or inhibit our ability to conduct trials in such jurisdictions or which could materially increase the risks associated with performing trials in such jurisdictions;

•certain foreign countries are expanding or may expand their banking regulations that govern international currency transactions, particularly cross-border transfers, which may inhibit our ability to transfer funds into or within a jurisdiction, impeding our ability to pay our principal investigators, vendors and employees, thereby impacting our ability to conduct trials in such jurisdictions;

•the regulatory or judicial authorities of foreign countries may not enforce legal rights and recognize business procedures in a manner to which we are accustomed or would reasonably expect;

•we may have difficulty complying with a variety of laws and regulations in foreign countries, some of which may conflict with laws in the United States;

•potential violations of existing or newly adopted local laws or anti-bribery laws, such as the United States Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act of 2010, may cause a material adverse effect on our business, financial condition, results of operations, cash flows or reputation;

•changes in political and economic conditions, including inflation, may lead to changes in the business environment in which we operate, as well as changes in foreign currency exchange rates;

•foreign governments may enact currency exchange controls that may limit the ability to fund our operations or significantly increase the cost of maintaining operations;

•customers in foreign jurisdictions may have longer payment cycles, and it may be more difficult to collect receivables in foreign jurisdictions;

•natural disasters, pandemics or international conflict, including terrorist acts, could interrupt our services, endanger our personnel or cause project delays or loss of trial materials or results; and

•Russian military action in Europe may impact foreign countries in which we may need to enroll patients in our clinical trials, could cause such clinical trials to be delayed or suspended and could impact operations in Russia and Belarus.

These risks and uncertainties could negatively impact our ability to, among other things, perform large, global projects for our customers. Furthermore, our ability to deal with these issues could be affected by applicable U.S. laws and the need to protect our assets. In addition, we may be more susceptible to these risks as we enter and continue to target growth in emerging countries and regions, including Asia, Eastern Europe and Latin America, which may be subject to a relatively higher risk of political instability, economic volatility, crime, corruption and social and ethnic unrest, all of which are exacerbated in many cases by a lack of an independent and experienced judiciary and uncertainties in how local law is applied and enforced. The materialization of any such risks could have an adverse impact on our financial condition, results of operations, cash flows and reputation.

-27-

Table of Contents

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~Share Repurchases~~

~~This table provides certain information with respect to our purchases of shares of the Company’s common stock during the third fiscal quarter of 2017:~~

~~Issuer’s Purchases of Equity Securities~~

Period

Total Number of Shares Purchased (a), (b)

Average Price Paid per Share
(a), (b)

Total Number of Shares Purchased as Part of Publically Announced Plan
(a)

Approximate Dollar Value of Share That May Yet Be Purchased Under the Plan
(a)

July 1, 2017, through July 31, 2017

300,311

$
27.65

300,311

$
15,325,865

August 1, 2017, through August 31, 2017

2,000,000

$
30.27

-

September 1, 2017, through September 30, 2017

-

-

Total

2,300,311

300,311

~~(a)~~

~~On May 1, 2017 the Company announced that its~~ Board of Directors had authorized a share repurchase program (“2017 Repurchase Plan”) of up to $50 million of the Company’s common stock in the open market or negotiated transactions, at the discretion of our management. The 2017 Repurchase Plan expires when the entire $50 million repurchase is exhausted or on April 1, 2018, whichever occurs first.

~~(b)~~

In addition to the amounts purchased under the 2017 Repurchase Plan, these columns reflect additional share repurchases. On August 16, 2017 the Company entered into a stock repurchase agreement with Medpace Limited Partnership, a Guernsey limited partnership, pursuant to which the Company repurchased 2,000,000 shares of the Company’s common

~~- 27 -~~

~~stock from Cinven for aggregate consideration of approximately $60.5 million, representing a purchase price of $30.27 per share.~~

Recent Sales of Unregistered Securities

On January 10, 2017, an employee exercised stock options granted under the 2014 Equity Incentive Plan to purchase a total of 1,851 shares of our common stock at a price of $16.21 per share for an aggregate purchase price of approximately $30,000.

On February 2, 2017, employees exercised stock options granted under the 2014 Equity Incentive Plan to purchase a 925 shares of our common stock at a price of $14.41 per share for an aggregate purchase price of approximately $13,300 and 277 shares of our common stock at a price of $16.21 per share for an aggregate purchase price of approximately $4,500.

On February 10, 2017, an employee exercised stock options granted under the 2014 Equity Incentive Plan to purchase a total of 1,000 shares of our common stock at a price of $14.41 per share for an aggregate purchase price of approximately $14,400.

On February 15, 2017, an employee exercised stock options granted under the 2014 Equity Incentive Plan to purchase a total of 1,851 shares of our common stock at a price of $16.21 per share for an aggregate purchase price of approximately $30,000.

On February 21, 2017, employees exercised stock options granted under the 2014 Equity Incentive Plan to purchase a 1,500 shares of our common stock at a price of $14.41 per share for an aggregate purchase price of approximately $21,600 and 462 shares of our common stock at a price of $16.89 per share for an aggregate purchase price of approximately $7,800.

On February 28, 2017, employees exercised stock options granted under the 2014 Equity Incentive Plan to purchase a 2,555 shares of our common stock at a price of $14.41 per share for an aggregate purchase price of approximately $36,800 and 832 shares of our common stock at a price of $16.21 per share for an aggregate purchase price of approximately $13,500.

On March 2, 2017, employees exercised stock options granted under the 2014 Equity Incentive Plan to purchase a 1,185 shares of our common stock at a price of $14.41 per share for an aggregate purchase price of approximately $17,100 and 250 shares of our common stock at a price of $16.21 per share for an aggregate purchase price of approximately $4,100.

On April 1, 2017, employees exercised stock options granted under the 2014 Equity Incentive Plan to purchase a total of 8,154 shares of our common stock at a price of $14.41 per share for an aggregate purchase price of approximately $117,500.

On April 5, 2017, employees exercised stock options granted under the 2014 Equity Incentive Plan to purchase a total of 370 shares of our common stock at a price of $14.41 per share for an aggregate purchase price of approximately $5,300 and 1,851 shares of our common stock at a price of $18.23 per share for an aggregate purchase price of approximately $33,700.

On April 6, 2017, employees exercised stock options granted under the 2014 Equity Incentive Plan to purchase a total of 648 shares of our common stock at a price of $16.21 per share for an aggregate purchase price of approximately $10,500.

On May 2, 2017, employees exercised stock options granted under the 2014 Equity Incentive Plan to purchase a total of 11,648 shares of our common stock at a price of $14.41 per share for an aggregate purchase price of approximately $167,800, 4,259 shares of our common stock at a price of $16.21 per share for an aggregate purchase price of approximately $69,000 and 2,222 shares of our common stock at a price of $16.88 per share for an aggregate purchase price of approximately $37,500.

On May 5, 2017, employees exercised stock options granted under the 2014 Equity Incentive Plan to purchase a total of 9,260 shares of our common stock at a price of $16.21 per share for an aggregate purchase price of approximately $150,100.

On May 24, 2017, employees exercised stock options granted under the 2014 Equity Incentive Plan to purchase a total of 2,777 shares of our common stock at a price of $16.21 per share for an aggregate purchase price of approximately $45,000.

On June 12, 2017, employees exercised stock options granted under the 2014 Equity Incentive Plan to purchase a total of 6,666 shares of our common stock at a price of $14.41 per share for an aggregate purchase price of approximately $96,100 and 1,851 shares of our common stock at a price of $16.20 per share for an aggregate purchase price of approximately $30,000.

On June 23, 2017, employees exercised stock options granted under the 2014 Equity Incentive Plan to purchase a total of 8,334 shares of our common stock at a price of $14.41 per share for an aggregate purchase price of approximately $120,100 and 1,851 shares of our common stock at a price of $16.20 per share for an aggregate purchase price of approximately $30,000.

~~- 28 -~~

On July 7, 2017, employees exercised stock options granted under the 2014 Equity Incentive Plan to purchase a total of 370 shares of our common stock at a price of $16.20 per share for an aggregate purchase price of approximately $6,000.

On July 19, 2017, employees exercised stock options granted under the 2014 Equity Incentive Plan to purchase a total of 1,852 shares of our common stock at a price of $18.23 per share for an aggregate purchase price of approximately $33,800.

On July 25, 2017, employees exercised stock options granted under the 2014 Equity Incentive Plan to purchase a total of 1,600 shares of our common stock at a price of $14.41 per share for an aggregate purchase price of approximately $23,100.

On August 4, 2017, employees exercised stock options granted under the 2014 Equity Incentive Plan to purchase a total of 464 shares of our common stock at a price of $14.41 per share for an aggregate purchase price of approximately $6,700.

On August 18, 2017, employees exercised stock options granted under the 2014 Equity Incentive Plan to purchase a total of 463 shares of our common stock at a price of $14.41 per share for an aggregate purchase price of approximately $6,700 and 278 shares of our common stock at a price of $16.20 per share for an aggregate purchase price of approximately $4,500.

On September 5, 2017, employees exercised stock options granted under the 2014 Equity Incentive Plan to purchase a total of 50 shares of our common stock at a price of $14.41 per share for an aggregate purchase price of approximately $700.

On September 25, 2017, employees exercised stock options granted under the 2014 Equity Incentive Plan to purchase a total of 4,167 shares of our common stock at a price of $14.41 per share for an aggregate purchase price of approximately $60,000 and 1,852 shares of our common stock at a price of $16.20 per share for an aggregate purchase price of approximately $30,000.


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

All of the forgoing transactions involved issuances of securities to employees of the Company and are exempt from registration pursuant to Rule 701 promulgated under the Securities Act of 1933, as ~~amended.~~

amended, as transactions pursuant to benefit plans and contracts relating to compensation.

Use of Proceeds from Registered Securities

Not applicable.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The exhibits in the accompanying Exhibit Index preceding the signature page are filed or furnished as a part of this report and are incorporated herein by reference.

~~- 29 -~~

-28-

Table of Contents ~~EXHIBI~~T

EXHIBIT INDEX

Incorporated by Reference

Exhibit
Number

Exhibit Description

Form

File No.

Exhibit

Filing

Date

Filed/
Furnished
Herewith

31.1

Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer

31.2

Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer

32.1

Section 1350 Certification of Chief Executive Officer

32.2

Section 1350 Certification of Chief Financial Officer

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)

*	~~Filed herewith.~~

*Filed herewith.

**	~~Furnished herewith.~~

**Furnished herewith.

~~- 30 -~~

-29-

Table of Contents ~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			MEDPACE HOLDINGS, INC.

			/s/ ~~Jesse J. Geiger~~ Kevin M. Brady
			~~Jesse J. Geiger~~ Kevin M. Brady
			Chief Financial Officer ~~and Chief Operating Officer, Laboratory Operations~~ (~~Authorized Officer and~~ Principal Financial Officer)

Date: October ~~31, 2017~~

~~- 31 -~~

25, 2022

-30-

	Amortization
Remainder of 2017	$	9,495
2018		29,561
2019		14,828
2020		7,877
2021		5,114
Later years		9,713
	$	76,588

2017 (remaining)	$	3,094
2018		16,500
2019		16,500
2020		20,625
2021		129,000
Total	$	185,719

	Payments Due by Period
Contractual Obligations (In thousands)	Total		Remaining 2017		1-3 years		3-5 years		More than 5 years
Long-term debt obligations	$	185,719	$	3,094	$	33,000	$	149,625	$	-
Interest on long-term debt		18,004		1,295		9,398		7,311	-
Total	$	203,723	$	4,389	$	42,398	$	156,936	$	-

Period	Total Number of Shares Purchased (a), (b)		Average Price Paid per Share (a), (b)		Total Number of Shares Purchased as Part of Publically Announced Plan (a)		Approximate Dollar Value of Share That May Yet Be Purchased Under the Plan (a)
July 1, 2017, through July 31, 2017		300,311	$	27.65		300,311	$	15,325,865
August 1, 2017, through August 31, 2017		2,000,000	$	30.27		-
September 1, 2017, through September 30, 2017		-				-
Total		2,300,311				300,311

~~Delaware~~

~~32-0434904~~

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)