August J. Troendle
Chief Executive Officer and
Chairman of the Board of Directors
Jesse J. Geiger
President
Susan E. Burwig
Executive Vice President, Operations
Stephen P. Ewald
General Counsel and Corporate Secretary
Kevin M. Brady
Chief Financial Officer and Treasurer
August J. Troendle
Chairman of the Board of Directors
Brian T. Carley
Audit Committee, Chair
Nominating and Governance Committee
Fred B. Davenport Jr.
Lead Director
Compensation Committee, Chair
Audit Committee
Nominating and Governance Committee
Ashley M. Keating
Nominating and Governance Committee
Thomas C. King
Nominating and Governance Committee
Robert O. Kraft
Audit and Compensation Committee
Nominating and Governance Committee
Cornelius P. "Neal" McCarthy III
Compensation Committee
Nominating and Governance Committee
Medpace Holdings, Inc.
5375 Medpace Way
Cincinnati, Ohio 45227
513-579-9911
www.medpace.com
American Stock Transfer
& Trust Company, LLC
718-921-8124
Email: help@astfinancial.com
www.astfinancial.com
Lauren Morris
513-579-9911, ext. 11994
l.morris@medpace.com
Julie Hopkins
513-579-9911, ext. 12627
j.hopkins@medpace.com
NASDAQ under ticker symbol
MEDP
Deloitte & Touche LLP
50 W 5th St.
Suite 200
Cincinnati, Ohio 45202
The information included in this Annual Report on Form 10-K as filed with the U.S. Securities and Exchange
Commission on February 15, 2022 presents information as of and for the fiscal year ended December 31, 2021 and,
accordingly, does not include information for updates or developments that are not required to be otherwise reported
in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
Or
☐ 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)
Delaware
(State or other jurisdiction of
incorporation or organization)
32-0434904
(I.R.S. Employer
Identification No.)
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
Common Stock $0.01 par value
Trading Symbol(s)
MEDP
Name of each exchange on which registered
Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒
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,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
Emerging growth company
☒
☐
☐
Accelerated filer
Smaller reporting 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report.
☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, based upon the closing sale price as reported
on the Nasdaq Global Select Market on June 30, 2021, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $5.1
billion. For purposes of this computation, shares of the registrant’s common stock held by each executive officer, director, and each person known to the registrant to
own 10% or more of the outstanding voting power reporting such ownership on Schedule 13D have been excluded in that such persons are affiliates.
Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.
Class
Common Stock $0.01 par value
Number of Shares Outstanding
35,228,722 shares outstanding as of February 11, 2022
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission relating to the 2022 Annual Meeting of
Stockholders are incorporated herein by reference into Part III of this Annual Report on Form 10-K to the extent stated herein.
MEDPACE HOLDINGS, INC. AND SUBSIDIARIES
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 2021
TABLE OF CONTENTS
Item
Number
1.
1A.
1B.
2.
3.
4.
5.
6.
7.
7A.
8.
9.
9A.
9B.
9C.
10.
11.
12.
13.
14.
15.
16.
PART I
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Reserved
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
PART IV
Exhibits, Financial Statement Schedules
Form 10-K Summary
Exhibit Index
Signatures
Page
No.
6
6
13
31
31
31
31
32
32
34
35
46
48
84
84
84
84
85
85
85
85
85
86
87
87
87
88
91
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FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K 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 statements regarding our results of operations; financial position and
performance; the anticipated impact of the coronavirus COVID-19 pandemic on our business; liquidity and our
ability to fund our business operations and initiatives; capital expenditure and debt service obligations; business
strategies, plans and goals, including those related to marketing, acquisitions and expansion of our business; product
approvals and plans; industry trends; 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. The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,”
“would,” “target,” “likely”, and similar expressions are intended to identify forward-looking statements. 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 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 statements we may make. In light of these risks,
uncertainties and assumptions, the 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 statements. We caution you therefore against relying on these forward-looking statements. Some
of the important factors that could cause actual results to differ from our expectations include regional, national, or
global political, economic, business, competitive, market and regulatory conditions and the other important factors
included in this Annual Report on Form 10-K in “Item 1A Risk Factors,” “Item 7 Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” and “Item 7A Quantitative and Qualitative Disclosures
About Market Risk.” 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 this Annual Report on Form
10-K.
WEBSITE AND SOCIAL MEDIA DISCLOSURE
We use our website (www.medpace.com) and our corporate Facebook, YouTube, LinkedIn, Vimeo, Instagram and
Twitter accounts as channels of distribution of company information. The information we post through these
channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following
our press releases, Securities and Exchange Commission, or SEC, filings and public conference calls and webcasts.
The contents of our website and social media channels are not, however, a part of this report.
TRADEMARKS
We own or have the rights to use various trademarks referred to in this Annual Report on Form 10-K, including,
among others, Medpace and ClinTrak and their respective logos. Solely for convenience, we may refer to
trademarks in this Annual Report on Form 10-K without the TM and ® symbols. Such references are not intended to
indicate, in any way, that we will not assert, to the fullest extent permitted by law, our rights to our trademarks.
Other trademarks appearing in this Annual Report on Form 10-K are the property of their respective owners.
- 3 -
MARKET AND INDUSTRY INFORMATION
Market data used throughout this Annual Report on Form 10-K is based on management’s knowledge of the
industry and the good faith estimates of management. All of management’s estimates presented herein are based on
industry sources, including analyst reports and management’s knowledge. We also relied, to the extent available,
upon management’s review of independent industry surveys and publications prepared by a number of sources and
other publicly available information. We are responsible for all of the disclosure in this Annual Report on Form 10-
K and while we believe that each of the publications, studies and surveys used throughout this Annual Report on
Form 10-K are prepared by reputable sources, we have not independently verified market and industry data from
third-party sources.
All of the market data used in this Annual Report on Form 10-K involves a number of assumptions and limitations,
and you are cautioned not to give undue weight to such estimates. While we believe the estimated market position,
market opportunity and market size information included in this Annual Report on Form 10-K is generally reliable,
such information, which in part is derived from management’s estimates and beliefs, is inherently uncertain and
imprecise and has not been verified by any independent source. Projections, assumptions and estimates of our future
performance and the future performance of the industry in which we operate are necessarily subject to a high degree
of uncertainty and risk due to a variety of factors, including those described in “Item 1A Risk Factors” of Part I of
this Annual Report on Form 10-K and elsewhere in this Annual Report on Form 10-K. These and other factors could
cause results to differ materially from those expressed in our estimates and beliefs and in the estimates prepared by
independent parties. See “Forward-Looking Statements” above.
GLOSSARY
We define the terms below that appear throughout this report as follows:
“Large pharmaceutical companies.” Large pharmaceutical companies represent the top 20 pharmaceutical
companies by worldwide prescription drug sales as classified by Evaluate Ltd via EvaluatePharma©.
“Mid-sized biopharmaceutical companies.” Mid-sized biopharmaceutical companies represent biopharmaceutical
companies with at least $250 million in sales, based on publicly available data and management’s knowledge, that
are not classified as a top 20 pharmaceutical company by Evaluate Ltd via EvaluatePharma©.
“Small biopharmaceutical companies.” Small biopharmaceutical companies represent biopharmaceutical
companies that have less than $250 million in sales, based on publicly available data and management’s knowledge.
“Phase I.” Phase I trials are typically conducted in healthy individuals or, on occasion, in patients, and typically
involve 20 to 80 subjects and range from a few months to several years. These trials are designed to establish the
basic safety, dose tolerance, absorption, metabolism, distribution and excretion of the clinical product candidate, the
side effects associated with increasing doses, and if possible, early evidence of effectiveness. If the trial establishes
the basic safety and metabolism of the clinical product candidate, Phase II trials are generally initiated.
“Phase II.” Phase II trials are conducted in a limited population of patients with the disease or condition that the
clinical product candidate is intended to treat. These trials typically test a few hundred patients and last on average
12 to 18 months. Phase II trials are typically designed to identify possible adverse effects and safety risks, to
preliminarily evaluate the efficacy of the clinical product candidate for specific targeted diseases or conditions, and
to determine dose tolerance, optimal dosage and dosing schedule. Phase II trials are sometimes divided into two
phases: Phase IIa trials typically evaluate the dose response of the clinical product candidate and Phase IIb trials
typically evaluate the efficacy of the clinical product candidate at the prescribed doses. If the Phase II trials indicate
that the clinical product candidate may be safe and effective, Phase III trials are generally initiated.
- 4 -
“Phase III.” Phase III trials evaluate the clinical product candidate in significantly larger and more diverse patient
populations than Phase I and II trials and are conducted at multiple, geographically dispersed sites. On average, this
phase lasts from one to three years. Depending on the size and complexity, Phase III CRO contracts may include
multiple sequential trials. During this phase, the clinical product candidate’s overall benefit/risk ratio and the basis
for product approval are established. If the clinical product candidate successfully completes Phase III, then the
sponsor may submit a New Drug Application, or NDA, or Biologics License Application for approval by the United
States Food and Drug Administration, or FDA, or a similar marketing authorization application for approval by non-
U.S. regulatory agencies.
“Phase IV.” Phase IV or “post-approval” trials are intended to monitor the drug’s long-term risks and benefits, to
analyze different dosage levels, to evaluate different safety and efficacy parameters in target populations or to
substantiate marketing claims. Phase IV trials typically enroll thousands of patients and last from six months to
several years. The FDA may require Phase IV testing and surveillance programs to monitor the effect of approved
drugs which have been commercialized, and the FDA has the power to prevent or limit further marketing of a
product based on the results of post-marketing programs.
- 5 -
Item 1. Business
Overview
Part I
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. Accordingly, our business strategy aims to continue to expand our market share in the growing Phase I-
IV CRO market as we conduct clinical trials across all major therapeutic areas, with particular strength in Oncology,
Metabolic Disease, Cardiology, Antiviral and Anti-infective (AVAI) and Central Nervous System (CNS).
Our Revenues: Markets and Clinical Development Services
Before a new drug can be commercialized, it often must undergo extensive pre-clinical and clinical testing and
regulatory review to verify safety and efficacy. CROs provide a comprehensive range of product development
services for Phase I-IV clinical trials. These clinical trials are separated into distinct phases in order to thoroughly
evaluate the product. We generate our revenues by providing a full suite of services supporting the entire clinical
development process from Phase I to Phase IV across a wide range of therapeutic areas.
Medical Department: Our medical department consists of therapeutic leads who provide strategic direction
for study design and planning, train operational staff, work with primary investigators, provide medical
monitoring and meet with regulatory agencies.
Clinical Trial Management: Our team of clinical trial managers (CTMs) lead all aspects of study execution
and drive accountability across the functional team members. Our CTMs use ClinTrak, our proprietary
information management system for clinical trials, which is integrated with our standard operating
procedures (SOPs), allowing the CTMs to access real-time study metrics.
Data-Driven Feasibility: Our dedicated feasibility team of clinical experts analyze specific protocols, using
many data sources to determine countries and sites that are most appropriate for the study.
Study Start-Up: Our global Study Start-Up staff conducts trial start up activities, including study
documentation submission processes to independent Institutional Review Boards, or IRBs, ethics
committees and to ex-US competent authorities. Our study start-up team includes fully dedicated budget
and legal associates to ensure focused negotiations and execution of site contracts.
Patient Recruitment and Retention: We navigate the complexities of patient recruitment and retention by
providing strategic solutions that address clinical program needs. Our patient recruitment and retention
department identify patient motivators and any potential barriers to join and remain in the clinical research
study.
Clinical Monitoring: Our clinical research associates, or CRAs, provide site management services
including in-house, onsite and virtual monitoring. Their knowledge of local regulations and laws, in
addition to Good Clinical Practice, or GCP, and International Council on Harmonisation of Technical
Requirements for Registration of Pharmaceuticals for Human Use, or ICH, guidelines ensure compliance
and data quality. CRAs report into a global matrix structure and receive comprehensive, hands-on training
- 6 -
in an individualized curriculum consisting of in-house and field-based training, supplemented with clinical
research department core rotations and ongoing study-specific training.
Risk-Based Monitoring: We support a comprehensive approach to monitoring to ensure adequate protection
of the rights, welfare, and safety of human subjects and the quality and integrity of the study. This approach
focuses on prevention and mitigation of important and likely risks and is part of the overarching
surveillance utilized to manage studies.
Regulatory Affairs: We provide expert strategic, operational, and tactical regulatory guidance, and create
thorough scientifically-grounded regulatory compliant documentation at each stage of the drug and
biologics development process to regulatory agencies around the globe.
Medical Writing: Medical writers work closely with our medical experts, biostatisticians, and other
members of the study team to develop study protocols, clinical and statistical study reports, and integrated
submission documents according to regulatory guidelines.
Biometrics and Data Sciences: We provide high-quality data collected during clinical trials that supports
regulatory submissions, including NDAs or Biologics License Application for approval by the FDA, or a
similar marketing authorization application for approval by non-U.S. regulatory agencies. Our data science
team develops detailed specifications for the collection, organization, validation, analysis and quality
control of clinical trial data. Our biostatisticians provide trial design consulting, statistical methodology
recommendations, programming expertise and reporting accuracy.
Pharmacovigilance: Our safety and pharmacovigilance group collects, evaluates, analyzes and reports
safety information. We provide global adverse event management, physician reviewed safety narrative
writing and custom safety surveillance.
Core Laboratory: Our core laboratory services include both imaging services and cardiovascular core
laboratory services. We partner with imaging experts from major academic and clinical institutions
involved in research to provide image reading in a secure environment utilizing identical software and
workstations integrated into ClinTrak allowing for prompt turnaround and oversight. Our cardiovascular
core laboratory provides state of the art standardized electrocardiogram services and data analysis.
- 7 -
Central Laboratory: Our Central Laboratory operates in four locations, including Cincinnati, Ohio; Leuven,
Belgium; Shanghai, China; and Singapore. The Central Laboratory has longstanding core competency in
specialized esoteric testing, including biomarkers for efficacy in addition to standard assay offerings. We
also provide biorepository services offering solutions for comprehensive specimen life cycle management,
and molecular and genetic testing for detection of pathogenic events at the genome level including viral
load and viral shedding.
Bioanalytical Laboratory. Our Bioanalytical Laboratory is located on our clinical research campus in
Cincinnati, Ohio. Working in a Good Laboratory Practice compliant setting following FDA and European
Medicines Agency, or EMA, guidelines, the Bioanalytical Laboratory delivers method transfer,
development, validation, sample analysis and metabolite screening and identification of pre-clinical and
clinical biological samples with expertise in developing proprietary, highly scientific, esoteric and sensitive
tests for small and large molecules.
Clinics: Our clinics conduct studies in normal healthy volunteers, special populations, and patient
populations over a spectrum of diseases and is located on our clinical research campus in Cincinnati, Ohio.
Quality Assurance: Our quality assurance team works closely with study teams to ensure compliance with
protocols, SOPs and regulatory guidelines to ultimately protect research subject safety as well as the
integrity and validity of study data. Our quality assurance team also provides services including regulatory
training, internal system audits, SOP oversight, hosting of audits and regulatory inspections, as well as
performs third party audits of critical vendors and investigative sites on behalf of our customers.
Customers
We have a well-diversified, attractively-positioned customer base that includes small biopharmaceutical companies,
mid-sized biopharmaceutical companies and large pharmaceutical companies.
We have in the past and may in the future enter into arrangements with our customers or other drug, biologic or
medical device companies in which we take on payment risk by making strategic investments in our customers or
other drug companies, providing flexible payment terms or fee financing to customers or other companies, or
entering into other risk sharing arrangements on trial execution.
For a discussion of our net new business awards and backlog, see Item 7. “Management’s Discussion and Analysis
of Financial Condition and Results of Operations—Net New Business Awards and Backlog” of Part II of this
Annual Report on Form 10-K.
Sales and Marketing
We employ an integrated sales and marketing team to sell our services to biotechnology, pharmaceutical and
medical device companies. The team consists of professional business development representatives focused on
securing business from both new and existing customers, through a consultative and strategic sales approach. We
embed our medical and scientific experts from the beginning of the sales process when we first engage potential
customers.
- 8 -
As part of our sales strategy, our team focuses on a customer segmentation model. Our team targets and engages
customers in our addressable market, matches customer characteristics with therapeutic fit and maintains a mindset
of full-service outsourcing. Our structured and disciplined approach facilitates strong account evaluation, which
results in increased focus by the sales team, the development of effective and productive territories, the management
of sales force effectiveness and the creation of a process whereby both marketing and sales operate under the same
guiding principles.
We consult collaboratively with our customers and help optimize timely completion of their clinical trials and
programs, in part, because we engage our therapeutic experts, regulatory affairs experts and operations team
throughout the clinical trial process. Our sales team is then able to take the study design, regulatory plan and
execution plan discussed up front and carry that through to the proposal and provide a final concept during one-on-
one customer discussions and final CRO evaluations.
Our marketing team supports the business development function in three key areas, generating brand awareness
through customized campaigns and web-site development, conference planning and lead generation through market
research and business intelligence analysis. All of our sales and marketing data are housed within a third party
customer relationship management tool that provides us the analytics we need to make sales planning and sales
management decisions.
Competition
We compete primarily against other full-service CROs as well as services provided by in-house research and
development (R&D) departments of biopharmaceutical companies. Our major CRO competitors include Laboratory
Corporation of America Holdings, ICON plc, Syneos Health, Inc., PAREXEL International Corporation, PPD, Inc.
(now part of Thermo Fisher Scientific Inc.), IQVIA Holdings Inc. and numerous specialty and regional CROs.
We generally compete on the basis of a number of factors, including experience within specific therapeutic areas,
quality of staff and services, reliability, range of provided services, ability to recruit principal investigators and
patients into studies expeditiously, ability to organize and manage large-scale, global clinical trials, global presence
with strategically located facilities, speed to completion, price and overall value. We believe we compete effectively
with our competitors across these factors, particularly due to our full-service operating model, our deep therapeutic
expertise in areas that are among the largest, most complex and fastest growing in pharmaceutical development, our
global platform and our experienced and committed management team.
The CRO industry remains fragmented, with several hundred smaller, narrowly focused service providers and a
small number of full-service companies with global capabilities. We believe there are significant barriers to others
becoming a global provider offering a broad range of services and products including the cost and experience
necessary to develop strong therapeutic areas, expertise to manage complex clinical programs, infrastructure to
support large global programs, ability to deliver high-quality services and expertise required to prepare regulatory
submissions in numerous jurisdictions.
Government Regulation
Development of Drugs, Biologics and Medical Devices
The development of drugs, biologics and medical devices is highly regulated in the United States and other
countries. Our services are subject to varying regulatory requirements designed to ensure the quality and integrity of
the pre-clinical and clinical trial process. In the United States, the FDA has primary authority to regulate these
activities, in addition to the approval process, and the subsequent manufacturing, safety, labeling, storage, record
keeping and marketing for these products, which are the responsibility of our customers. Before a marketing
application for a drug is ready for submission to regulatory authorities, the candidate drug must often undergo
rigorous testing in clinical trials. In the United States, these trials must be conducted in accordance with the Federal
Food, Drug, and Cosmetic Act, its implementing regulations, and other federal and state requirements that require
the drug to be tested and studied in certain ways prior to approval. The FDA has similar authority and requirements
with respect to the clinical testing of biological products and medical devices. Before a human clinical trial may
begin in the United States, the manufacturer or sponsor of the clinical product candidate must file an Investigational
- 9 -
New Drug Application (IND) with the FDA, which contains, among other things, the results of pre-clinical tests,
manufacturer information and other analytical data. A separate submission to an existing IND must also be made for
each successive clinical trial conducted during product development. Each clinical trial must be conducted pursuant
to, and in accordance with, an effective IND. Each human clinical trial we conduct is subject to the oversight of an
IRB, which is an independent committee that has the regulatory authority to review, approve and monitor a clinical
trial for which the IRB has responsibility. The FDA and IRB receive reports on the progress of each phase of clinical
testing and may require the modification, suspension, or termination of clinical trials if, among other things, an
unreasonable risk is presented to patients or if the design of the trial is insufficient to meet its stated objective. In
addition, information about certain clinical trials must be made publicly available on the federal government
website, www.clinicaltrials.gov.
In the United States, GCP regulations govern the design, conduct, performance, monitoring, auditing, recording,
analysis, and reporting of clinical trials. In order to comply with GCP and other requirements, we must, among other
things:
comply with specific requirements governing the selection of qualified principal investigators and
clinical research sites;
obtain specific written commitments from principal investigators;
obtain IRB review and approval and supervision of the clinical trials by an independent review board or
ethics committee;
obtain a favorable opinion from regulatory agencies to commence a clinical trial;
verify that appropriate patient informed consents are obtained before the patient participates in a clinical
trial;
ensure that adverse drug reactions resulting from the administration of a drug or biologic during a
clinical trial are medically evaluated and reported in a timely manner;
monitor the validity and accuracy of data;
monitor drug or biologic accountability at clinical research sites; and
verify that principal investigators and clinical trial staff maintain records and reports and permit
appropriate governmental authorities access to data for review.
Clinical trials conducted outside the United States are subject to the laws and regulations of the country where the
trials are conducted. These laws and regulations may or may not be similar to the laws and regulations administered
by the FDA and other laws and regulations regarding the protection of patient safety and privacy and the control of
clinical trial pharmaceuticals, medical devices or other clinical trial materials. Within the EU, these requirements are
enforced by the EMA and requirements may vary slightly from one member state to another. In Canada, clinical
trials are regulated by the Health Products and Food Branch of Health Canada as well as provincial regulations.
Similar requirements also apply in other jurisdictions, including countries outside the EU and countries in Asia and
Latin America where we operate or where our customers may intend to apply for marketing authorization. Clinical
trials conducted outside the United States also may be subject to FDA regulation if the clinical trials are conducted
pursuant to an IND or an Investigational Device Exemption for a product candidate that will seek FDA approval or
clearance. In addition, clinical trial sponsors follow ICH E6 guidelines as a principle for GCP.
The clinical trial customer and the parties conducting the clinical trials share in responsibilities to ensure that all
applicable legal and regulatory requirements are fulfilled. Many of the functions we regularly perform in the conduct
of clinical trials subject us directly to regulations (e.g., compliance with GCP), and in some circumstances, we will
take on legal and regulatory responsibility either through a transfer of obligations to us from our clinical trial
customers or our acting as local legal representative for certain of our clinical trial customers. We may be subject to
regulatory action if we fail to comply with these requirements. Failure to comply with certain regulations may also
result in the termination of ongoing research and disqualification of data collected during the clinical trials. For
example, violations of GCP could result, depending on the nature of the violation and the type of product involved,
in the issuance of a warning letter, suspension or termination of a clinical trial, refusal of the FDA to approve
clinical trial or marketing applications or withdrawal of such applications, injunction, seizure of investigational
products, civil penalties, criminal prosecutions or debarment from assisting in the submission of new drug
applications.
- 10 -
We monitor our clinical trials to test for compliance with applicable laws and regulations in the United States and
the foreign jurisdictions in which we operate. We have adopted SOPs that are designed to satisfy regulatory
requirements and serve as a mechanism for controlling and enhancing the quality of our clinical trials. In the United
States, our procedures were developed to ensure compliance with GCP and associated requirements.
Health Information Privacy
The confidentiality of personal health information, including patient-specific information collected during clinical
trials, is heavily regulated in the United States and other countries. The U.S. Department of Health and Human
Services has promulgated rules under the Health Insurance Portability and Accountability Act of 1996, as amended
by the Health Information Technology for Economic and Clinical Health Act of 2009 and their implementing
regulations, including the Privacy and Security Rules, or collectively, HIPAA, that govern the use, handling and
disclosure of personally identifiable medical information. These regulations also establish procedures for the
exercise of an individual’s rights and the methods permissible for de-identification of health information. HIPAA
applies to “covered entities,” which include certain types of healthcare providers, as well as service providers to
covered entities which access protected health information, known as “business associates.” Two of our subsidiaries,
Medpace Clinical Pharmacology, LLC and C-MARC, LLC, are covered entities under HIPAA. Further, many
investigators with whom we are involved in clinical trials are also directly subject to HIPAA as covered entities.
There are instances where we may be considered a business associate of a covered entity investigator, and we have
signed business associate agreements with some investigators. If we are determined to be a business associate, we
would be directly liable for any breaches of protected health information and other HIPAA violations. We are also
liable contractually under any business associate agreements we have signed with covered entities. In addition, we
are also subject to privacy legislation in Canada under the federal Personal Information Protection and Electronic
Documents Act, the Act Respecting the Protection of Personal Information in the Private Sector and the Personal
Health Information Protection Act and privacy legislation in the EU under the 95/46/EC Privacy Directive on the
protection and free movement of personal data, as replaced by the General Data Protection Regulation from early
2018 onwards.
Health Industry Arrangements
The conduct of pre-clinical and clinical trials may be subject to laws and regulations that are intended to prevent the
misuse of government healthcare program funding. In the United States, these laws include, among others, the False
Claims Act, which prohibits submitting or causing the submission of false statements or improper claims for
government healthcare program payments; and the Anti-Kickback statute, which prohibits paying, offering to pay or
receiving payment with the intent to induce the referral of services or items that are covered under a federal
healthcare program. Violations of these laws and regulations may incur administrative, civil, and criminal penalties.
Environmental Regulation and Liability
We are subject to various laws and regulations relating to the protection of the environment and human health and
safety in the countries in which we do business, including laws and regulations governing the management and
disposal of hazardous substances and wastes, the cleanup of contaminated sites and the maintenance of a safe
workplace. Our operations include the use, generation and disposal of hazardous materials and medical wastes. We
may, in the future, incur liability under environmental statutes and regulations for contamination of sites we own or
operate (including contamination caused by prior owners or operators of such sites), the off-site disposal of
hazardous substances and for personal injuries or property damage arising from exposure to hazardous materials
from our operations. We believe that we have been and are in substantial compliance with all applicable
environmental laws and regulations and that we currently have no liabilities under such environmental requirements
that could reasonably be expected to materially harm our business, results of operations or financial condition.
Intellectual Property
We develop and use a number of proprietary methodologies, analytics, systems, technologies and other intellectual
property in the conduct of our business. We rely upon a combination of confidentiality policies, nondisclosure
agreements and other contractual arrangements to protect our trade secrets, and copyright and trademark laws to
protect other intellectual property rights. We have obtained or applied for trademarks and copyright protection in the
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United States and in a number of foreign countries. Our material trademarks include Medpace and ClinTrak.
Although the duration of trademark registrations varies from country to country, trademarks generally may be
renewed indefinitely so long as they are in use and/or their registrations are properly maintained, and so long as they
have not been found to have become generic.
Human Capital
As of December 31, 2021 we had approximately 4,500 employees located across 41 countries. As of December 31,
2020 and 2019, we had approximately 3,600 and 3,500 employees, respectively. Our associates are our most
important asset and we recognize the importance of motivating and rewarding our associates by providing them with
competitive benefits as part of their overall compensation and benefits package. We have developed comprehensive
benefits packages that deliver quality and value while satisfying the diverse needs of our workforce and meeting
local market requirements and expectations.
Attracting, developing, retaining and advancing talent at all levels at Medpace is a key component to sustaining our
organic growth and continuing our mission. We strive to maintain a culture of diversity and inclusion in which
people from all backgrounds can fully contribute to the growth and success of our business. As such, we are
committed to maintaining a respectful work environment, providing equal opportunity and the fair treatment of all
individuals on the basis of merit, without regard for gender, race, color, creed, religion, family status, age, national
origin or ancestry, physical or mental disability, medical condition, veteran status, citizenship, sexual orientation,
gender identity, or any other protected group status. Anti-discrimination, anti-harassment and anti-retaliation
policies are applicable to all employees and are set forth in the Medpace Code of Conduct. All employees are
responsible for upholding the Medpace Code of Conduct, which forms the foundation of our personnel and ethics
policies and practices.
We have developed a strong record of hiring and developing women at all levels of the organization. Approximately
70% of our employees globally are women representing 64% of management and 52% of director level and above
positions. In addition, of our U.S. based employees, approximately 17% are non-white, including 12% of
management. None of our US employees are currently covered by a collective bargaining agreement specific to our
Company.
Our commitment to compliance, people, safety, communities and the environment is further described in our 2019-
2020 Corporate Responsibility Report published within the Investor Relations section of our website at
investor.medpace.com. That Report is not part of this Annual Report on Form 10-K.
Recruitment and Retention
The success of our business depends upon our ability to attract and retain qualified professional, scientific and
technical staff. The level of competition among employers in the United States and globally for skilled personnel,
particularly for those with Ph.D., M.D. or equivalent degrees or training, is high. We believe that our brand
recognition and our multinational presence are advantages in attracting qualified candidates. We also believe that the
wide range of clinical trials in which we participate allows us to offer broad experience to clinical researchers. Our
disciplined and centralized approach to hiring, training, and development of employees has fostered, and we believe
will continue to foster, strong employee loyalty. Retention of experienced employees is important to maintaining our
growth and our high quality of service over time.
As our associates develop knowledge and skills that will contribute to the wider Medpace mission and business
success, we believe in rewarding strong performance with compensatory and non-compensatory recognition. We
have a robust career path and compensation structure that acknowledges associate performance and development at
all levels of the organization. Of the 442 management-level roles that were newly filled in 2021, approximately 53%
of these roles were filled by our pipeline of internal talent.
Development
We have a history of identifying talented individuals and training them to excel in our disciplined operating model.
Dedicated training and development teams are focused on creating, facilitating, and evaluating the success of
training programs across functional areas. We have invested in the development and implementation of a global
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learning management system which is universally used to record regulatory compliance, capture attendance at
instructor led training sessions, deliver online training content, proctor online exams, and to facilitate other training
activities.
Safety
Safety is at the core of Medpace’s mission. We have a robust incident reporting procedure for work-related injuries
and illnesses and our lab operations follow all additional Health and Safety requirements. Our facilities are equipped
with access control systems to maintain proper physical security for our associates and company assets, as well as
on-site security personnel in key offices. In addition to physical security, we have programs and training in place for
First Aid, CPR and Fire Wardens for safe evacuations. We are proud of our extremely low incident rates and remain
committed to continuously monitoring campus- and policy-related measures that can be incorporated in order to
further reduce risk for our associates.
Liability and Insurance
We may be liable to our customers for any failure to conduct their clinical trials properly according to the agreed-
upon protocol and contract. If we fail to conduct a clinical trial properly in accordance with the agreed-upon
procedures, we may have to repeat a clinical trial or a particular portion of the services at our expense, reimburse the
customer for the cost of the services and/or pay additional damages.
At our Phase I clinic, we study the effects of drugs on healthy volunteers. In addition, in our clinical business we, on
behalf of our customers, contract with physicians who render professional services, including the administration of
the substance being tested to participants in clinical trials, many of whom are seriously ill and are at great risk of
further illness or death as a result of factors other than their participation in a trial. As a result, we could be held
liable for bodily injury, death, pain and suffering, loss of consortium or other personal injury claims and medical
expenses arising from a clinical trial. In addition, we sometimes engage the services of vendors necessary for the
conduct of a clinical trial, such as laboratories or medical diagnostic specialists. Because these vendors are engaged
as subcontractors, we are responsible for their performance and may be held liable for damages if the subcontractors
fail to perform in the manner specified in their contract.
To reduce our potential liability, and as a requirement of the GCP regulations, informed consent is required from
each volunteer and patient. In addition, our customers provide us with contractual indemnification for all of our
service related contracts. These indemnities generally do not, however, protect us against certain of our own actions
such as those involving negligence or misconduct. Our business, financial condition and operating results could be
harmed if we were required to pay damages or incur defense costs in connection with a claim that is not
indemnified, that is outside the scope of an indemnity or where the indemnity, although applicable, is not honored in
accordance with its terms.
Available Information
We are subject to the informational requirements of the Exchange Act and, in accordance therewith, file reports,
including annual, quarterly and current reports, proxy statements and other information with the Securities and
Exchange Commission (SEC). Copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K and our Proxy Statements for our annual meetings of stockholders, and any amendments to
those reports, as well as Section 16 reports filed by our insiders, are available free of charge on our website as soon
as reasonably practicable after we file the reports with, or furnish the reports to the SEC. Our website address is
http://www.medpace.com, and our investor relations website is located at investor.medpace.com. Information on our
website is not incorporated by reference herein. The SEC maintains an Internet site (http://www.sec.gov) containing
reports, proxy and information statements, and other information regarding issuers that file electronically with the
SEC.
Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk. You should consider carefully the risks and
uncertainties described below, together with the other information included in this report. The occurrence of any of
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the following risks may materially and adversely affect our business, financial condition, results of operations and
future prospects. In these circumstances, the market price of our common stock could decline. Other events that we
do not currently anticipate or that we currently deem immaterial may also affect our business, prospects, financial
condition and results of operations.
Risk Factor Summary
The following summarizes the most material risks that make an investment in our common stock risky.
Business and Economic Risks
The potential loss, delay or non-renewal of our contracts, or the non-payment by our customers for services
that we have performed, could adversely affect our results.
Our backlog may not convert to net revenue at our historical conversion rates.
Our operating results have historically fluctuated between fiscal quarters and years and may continue to
fluctuate in the future, which may adversely affect the market price of our stock.
Our operating margins could decrease due to increased pricing pressure or other pressures, if we are unable
to either achieve efficiencies in our operating expenses or grow revenues at a rate faster than expenses.
Our customer or therapeutic area concentration may have a material adverse effect on our business,
financial condition, results of operations or cash flows.
We bear financial risk if we underprice our fixed-fee contracts or overrun cost estimates, and our financial
results can also be adversely affected by failure to receive approval for change orders or delays in
documenting change orders.
The outbreak of the coronavirus (COVID-19) is disruptive to our business.
If we are unable to successfully execute our growth strategies or manage our growth effectively, our results
of operations or financial condition could be adversely affected.
If we are unable to recruit suitable investigators and enroll patients for our customers’ clinical trials, our
clinical development business may suffer.
The failure of third parties to provide us critical support services could materially adversely affect our
business, financial condition, results of operations, cash flows or reputation.
Potential future investments in our customers’ businesses or products could have a negative impact on our
financial results.
Technical and Cybersecurity Risks
Our business depends on the continued effectiveness and availability of our information systems, including
the information systems we use to provide our services to our customers, such as ClinTrak, and failures of
these systems may materially limit our operations.
If the security of confidential information used in connection with our services is breached or otherwise
subject to unauthorized access, our reputation and business may be materially harmed.
International Risks
Our business is subject to international economic, political and other risks that could negatively affect our
results of operations and financial condition.
Due to the global nature of our business, we may be exposed to liabilities under the Foreign Corrupt
Practices Act and various other anti-corruption laws, and any allegation or determination that we violated
these laws could have a material adverse effect on our business.
Industry Risks
Outsourcing trends in the biopharmaceutical industry and changes in aggregate expenditures and R&D
budgets could adversely affect our operating results and growth rate.
We may be affected by healthcare reform and potential additional regulatory reforms, which may adversely
impact the biopharmaceutical industry or otherwise reduce the need for our services or negatively impact
our profitability.
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Consolidation in the biopharmaceutical industry could lead to a reduction in our revenues.
If we fail to comply with federal, state and foreign healthcare laws, including fraud and abuse laws, we
could face substantial penalties and our business, results of operations, financial condition and prospects
could be adversely affected.
Laws and regulations regarding the protection of personal data could result in increased risks of liability or
increased cost to us or could limit our service offerings.
Our business could be harmed from the loss or suspension of a license or imposition of a fine or penalties
under, or future changes in, or interpretations of, the law or regulations of the Clinical Laboratory
Improvement Act of 1967, and the Clinical Laboratory Improvement Amendments of 1988 (CLIA), or
those of other national, state or local agencies in the U.S. and other countries where we operate
laboratories.
The biopharmaceutical industry has a history of patent and other intellectual property litigation, and we
might be involved in costly intellectual property lawsuits.
If we do not keep pace with rapid technological changes, our services may become less competitive or
obsolete.
Circumstances beyond our control could cause the CRO industry to suffer reputational or other harm that
could result in an industry-wide reduction in demand for CRO services, which could harm our business.
Other Legal, Regulatory, Insurance and Tax Risks
If we fail to perform our services in accordance with contractual requirements, government regulations and
ethical considerations, we could be subject to significant costs or liability and our reputation could be
adversely affected.
Some of our services involve direct interaction with clinical trial patients and operation of a Phase I clinical
facility, which could create potential liability that may adversely affect our results of operations and
financial condition.
Our clinical development services could subject us to potential liability that may adversely affect our
results of operations and financial condition.
Our operations involve the use and disposal of hazardous substances and waste which can give rise to
liability that could adversely impact our financial condition.
We act as legal representative and/or data representative for some clients.
Our insurance may not cover all of our indemnification obligations and other liabilities associated with our
operations.
Our effective income tax rate may fluctuate, which may adversely affect our operations, earnings and
earnings per share.
Structural and Organizational Risks
Our Chief Executive Officer and founder controls a substantial amount of our outstanding common stock
and his interests may be different from or conflict with those of our other shareholders.
We are party to transactions with related persons that may increase the risk of allegations of conflicts of
interest, and such allegations may impair our ability to realize the benefits we expect from these
transactions.
General Risks
If we lose the services of key personnel or are unable to recruit experienced personnel, our business could
be adversely affected.
Our operations might be affected by the occurrence of a natural disaster or other catastrophic event.
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Business and Economic Risks
The potential loss, delay or non-renewal of our contracts, or the non-payment by our customers for services that
we have performed, could adversely affect our results.
We experience termination, cancellation and non-renewals of contracts by our customers in the ordinary course of
business, and the number and dollar value of cancellations can vary significantly from year to year.
The time between when a clinical trial is awarded and when it goes to contract is typically several months, and prior
to a new business award going to contract, our customers can cancel the award without notice. Moreover, once an
award goes to contract, most of our customers for clinical trial services can terminate our contracts without cause
upon 30 days’ notice. Our customers may delay, terminate or reduce the scope of our contracts for a variety of
reasons beyond our control, including, but not limited to:
decisions to forego or terminate a particular clinical trial;
lack of available financing, budgetary limits or changing priorities;
actions by regulatory authorities;
changes in law;
production problems resulting in shortages of the drug being tested;
failure of the drug being tested to satisfy safety requirements or efficacy criteria;
unexpected or undesired clinical results;
insufficient investigator recruitment or patient enrollment in a trial;
decisions to downsize product development portfolios due to general economic conditions, market
conditions or otherwise;
dissatisfaction with our performance, including the quality of data provided and our ability to meet agreed
upon schedules;
shift of business to another CRO or internal resources;
product withdrawal following market launch; or
shut down of our customers’ manufacturing facilities.
As a result, contract terminations, delays and modifications are a regular part of our business. In the event of
termination, our contracts often provide for payment to us of fees for services provided up to the point of
termination and for close-out activities for winding down the clinical trial, and reimbursement of all non-cancellable
expenses. These payments may not be sufficient for us to maintain our profit margins or recover our costs, and
termination or non-renewal may result in lower resource utilization rates, including with respect to personnel who
we are not able to place on another customer engagement. Historically, cancellations and delays have negatively
impacted our operating results.
Clinical trials can be costly and for the year ended December 31, 2021, 77% and 16% of our net revenue was
derived from small biopharmaceutical companies and mid-sized biopharmaceutical companies, respectively, which
may have limited access to capital. In addition, we provide services to our customers before they pay us for some of
our services. There is a risk that we may initiate a clinical trial for a customer, and the customer subsequently
becomes unwilling or unable to fund the completion of the trial. In such a situation, notwithstanding the customer’s
ability or willingness to pay for or otherwise facilitate the completion of the trial, we may be legally or ethically
bound to complete or wind down the trial at our own expense.
Because the contracts included in our backlog are generally terminable without cause, we do not believe that our
backlog as of any date is necessarily a meaningful predictor of future results. In addition, we may not realize the full
benefits of our backlog of contractually committed services if our customers cancel, delay or reduce their
commitments under our contracts with them. Thus, the loss or delay of a large contract or the loss or delay of
multiple contracts could adversely affect our net revenue and profitability. In addition, the terminability of our
contracts puts increased pressure on our quality control efforts, since not only can our contracts be terminated by
customers as a result of poor performance, but any such termination may also affect our ability to obtain future
contracts from the customer involved and others.
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Our backlog may not convert to net revenue at our historical conversion rates.
Backlog represents anticipated future net revenue from net new business awards that have commenced, but have not
been completed. Reported backlog will fluctuate based on new business awards, changes in scope to existing
contracts, cancellations, revenue recognition on existing contracts and foreign exchange adjustments from non-U.S.
dollar denominated backlog. Once work begins on a project, net revenue is recognized over the duration of the
project. Projects may be terminated or delayed by the customer or delayed by regulatory authorities for reasons
beyond our control. To the extent projects are delayed, the timing of our net revenue could be adversely affected.
Moreover, in the event that a customer cancels a contract, we often would be entitled to receive payment for services
provided up to the point of cancellation and for close-out activities for winding down the clinical trial, and
reimbursement of all non-cancellable expenses. Typically, however, we have no contractual right to the full amount
of the future net revenue reflected in our backlog in the event of a contract cancellation or subsequent changes in
scope that reduce the value of the contract. The duration of the projects included in our backlog, and the related net
revenue recognition, generally range from a few months to several years. Our backlog may not be indicative of our
future net revenue, and we may not realize all of the anticipated future net revenue reflected in our backlog. A
number of factors may affect the realization of our net revenue from backlog, including:
the size, complexity and duration of the projects;
the cancellation or delay of projects; and
changes in the scope of work during the course of a project.
Fluctuations in our reported backlog levels also result from the fact that we may receive a small number of relatively
large projects in any given reporting period that may be included in our backlog. Because of these large projects, our
backlog in that reporting period may reach levels that may not be sustained in subsequent reporting periods.
Additionally, although an increase in backlog will generally result in an increase in net revenue over time, an
increase in backlog at a particular point in time does not necessarily correspond directly to an increase in net revenue
during any particular period, or at all. The extent to which contracts in backlog will result in net revenue depends on
many factors, including, but not limited to, delivery against project schedules, scope changes, contract terminations
and the nature, duration and complexity of the contracts, and can vary significantly over time.
As we increasingly compete for and enter into large contracts that are more global in nature, there can be no
assurance about the rate at which our backlog will convert into net revenue. A decrease in this conversion rate would
mean that the rate of net revenue recognized on contracts may be slower than what we have experienced in the past,
which could impact our net revenue and results of operations on a quarterly and annual basis. The revenue
recognition on larger, more global projects could be slower than on smaller, less global projects for a variety of
reasons, including, but not limited to, an extended period of negotiation between the time the project is awarded to
us and the actual execution of the contract, as well as an increased timeframe for obtaining the necessary regulatory
approvals. Additionally, delayed projects will remain in backlog and will not generate revenue at the rate originally
expected. Thus, the relationship of backlog to realized revenues is indirect and may vary significantly over time.
Our operating results have historically fluctuated between fiscal quarters and years and may continue to
fluctuate in the future, which may adversely affect the market price of our stock.
Our operating results have fluctuated in previous quarters and years and may continue to vary significantly from
quarter to quarter and year to year and are influenced by a variety of factors, such as:
timing of contract amendments for changes in scope that could affect the value of a contract and potentially
impact the amount of net new business awards and net revenue from quarter to quarter;
commencement, completion, execution, postponement or termination of large contracts;
contract terms for the billing and recognition of revenue milestones;
progress of ongoing contracts and retention of customers;
timing of and charges associated with completion of acquisitions and other events;
changes in the mix of services delivered, both in terms of geography and type of services;
customer disputes or other issues that may impact the revenue we are able to recognize or the collectability
of our related accounts receivable;
exchange rate fluctuations;
adoption of Accounting Standards Updates released by the Financial Accounting Standards Board; and
timing and ability to hire in advance of future projects
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Our operating results for any particular quarter or year are not necessarily a meaningful indicator of future results
and fluctuations in our quarterly or yearly operating results could negatively affect the market price and liquidity of
shares of our common stock.
Our operating margins could decrease due to increased pricing pressure or other pressures, if we are unable to
either achieve efficiencies in our 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, 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.
Our customer or therapeutic area concentration may have a material adverse effect on our business, financial
condition, results of operations or cash flows.
Although we did not have any customer that represented 10% or more of our net revenue during the year ended
December 31, 2021, we derive a significant portion of our revenues from a limited number of large customers. If
any large customer decreases or terminates its relationship with us, our business, financial condition, results of
operations or cash flows could be materially adversely affected. Also, consolidation in our actual or potential
customer base results in increased competition for important market segments and fewer available customer
accounts. Additionally, conducting multiple clinical trials for different sponsors in a single therapeutic class,
involving similar drugs, biologics or medical devices, may adversely affect our business if some or all of the trials
are terminated because of new scientific information or regulatory decisions that affect the products as a class.
Moreover, even if these trials are not terminated, they may compete with each other, thereby limiting our potential
revenue going forward.
We bear financial risk if we underprice our fixed-fee contracts or overrun cost estimates, and our financial
results can also be adversely affected by failure to receive approval for change orders or delays in documenting
change orders.
The majority of our Phase I–IV contracts are fixed-fee contracts. We bear the financial risk if we initially underprice
our contracts or otherwise overrun our cost estimates. In addition, contracts with our customers are subject to change
orders, which we commonly experience and which occur when the scope of work we perform needs to be modified
from that originally contemplated by our contract with the customer. Modifications can occur, for example, when
there is a change in a key trial assumption or parameter, a significant change in timing or a change in staffing needs.
Furthermore, we may be unable to successfully negotiate changes in scope or change orders on a timely basis or at
all, which could require us to incur cost outlays ahead of the receipt of any additional revenue. In addition, under US
GAAP, we cannot recognize additional revenue anticipated from change orders until appropriate documentation is
received by us from the customer authorizing the change. However, if we incur additional expense in anticipation of
receipt of that documentation, we must recognize the expense as incurred. Such underpricing, significant cost
overruns or delay in documentation of change orders could have a material adverse effect on our business, results of
operations, financial condition or cash flows.
The outbreak of the coronavirus (COVID-19) is disruptive to our business.
The COVID-19 pandemic has resulted in increased travel restrictions and caused the shutdown of many businesses
in countries in which we operate. While we continue to operate globally, the level of activity at each of our locations
varies depending on the local governmental requirements and guidelines.
Our office staff are working in the office or remotely and our labs are fully operational with modifications made to
ensure the safety of our employees. The diversion of resources to treat COVID-19 patients has significantly
impacted the operations at most of the investigative sites where patients in our clinical trials are recruited and
treated.
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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, including alternative assessment methods such as virtual monitoring
visits.
While certain governments eased restrictions during the balance of 2020 and into 2021, 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.
If we are unable to successfully execute our growth strategies or manage our growth effectively, our results of
operations or financial condition could be adversely affected.
Our key growth strategies include: continued investment in organic growth, continued maintenance of margins,
increasing capture of the high-growth clinical development market, deepening existing and developing new
relationships with our core customer segment and attracting, developing and retaining talent. Though we will strive
to meet these goals, we may not have or adequately build the competencies necessary to achieve our objectives. In
addition, we may not receive market acceptance for our services and we may face increased competition. If we are
unable to successfully continue our organic growth, continue to maintain our margins, increase our capture of the
clinical development market, deepen existing and develop new relationships with our core customer segment, or
attract, develop and retain talent, our future business, reputation, results of operations and financial condition could
be adversely affected. The nature and pace of our growth introduces risks associated with quality control and
customer dissatisfaction due to delays in performance or other problems. In addition, foreign operations involve the
additional risks of assimilating differences in foreign business practices, hiring and retaining qualified personnel and
overcoming language barriers. Failure to manage growth effectively could have a material adverse effect on our
business.
If we are unable to recruit suitable investigators and enroll patients for our customers’ clinical trials, our clinical
development business may suffer.
The recruitment of investigators and patients for clinical trials is essential to our business. Investigators are typically
located at hospitals, clinics or other sites and supervise the administration of the investigational drug, biologic or
device to patients during the course of a clinical trial. Patients typically include people from the communities in
which the clinical trials are conducted. Our clinical development business could be adversely affected if we are
unable to attract suitable and willing investigators or patients for clinical trials on a consistent basis. For example, if
we are unable to engage investigators to conduct clinical trials as planned or enroll sufficient patients in clinical
trials, we may need to expend additional funds to obtain access to resources or else be compelled to delay or modify
the clinical trial plans. These considerations might result in additional costs to us or otherwise adversely impact the
progress of a clinical trial, our being unable to successfully achieve our projected development timelines, or
potentially even lead to the termination of ongoing clinical trials or development of a product.
The failure of third parties to provide us critical support services could materially adversely affect our business,
financial condition, results of operations, cash flows or reputation.
We depend on third parties for support services vital to our business. Such support services include, but are not
limited to, laboratory services, third-party transportation and travel providers, technology providers, freight
forwarders and customs brokers, drug depots and distribution centers, suppliers or contract manufacturers of drugs
for patients participating in clinical trials and providers of licensing agreements, maintenance contracts or other
services. In addition, we also rely on third-party CROs and other contract clinical personnel for clinical services
either in regions where we have limited resources, or in cases where demand cannot be met by our internal staff. The
failure of any of these third parties to adequately provide us critical support services could have a material adverse
effect on our business, financial condition, results of operations, cash flows or reputation.
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Potential future investments in our customers’ businesses or products could have a negative impact on our
financial results.
We have in the past and may in the future enter into arrangements with our customers or other drug, biologic or
medical device companies in which we take on payment risk by making strategic investments in our customers or
other drug companies, providing flexible payment terms or fee financing to customers or other companies, or
entering into other risk sharing arrangements on trial execution. Our financial results would be adversely affected if
the amount realized from any such risk sharing arrangement was less than the value of our services under the
contract related to such arrangement.
Technical and Cybersecurity Risks
Our business depends on the continued effectiveness and availability of our information systems, including the
information systems we use to provide our services to our customers, such as ClinTrak, and failures of these
systems may materially limit our operations.
Due to the global nature of our business and our reliance on information systems to provide our services, we intend
to increase our use of web-enabled and other integrated information systems in delivering our services. We already
provide access to such an information system, ClinTrak, to certain of our customers in connection with the services
we provide to them. As the breadth and complexity of our information systems continue to grow, we will
increasingly be exposed to the risks inherent in the development, integration and ongoing operation of evolving
information systems, including:
disruption, impairment or failure of data centers, telecommunications facilities or other key infrastructure
platforms;
intrusions and security breaches of, cyberattacks on and other failures or malfunctions in our critical
application systems or their associated hardware; and
excessive costs, excessive delays or other deficiencies in systems development and deployment.
The materialization of any of these risks may impede the processing of data, the delivery of databases and services
and the day-to-day management of our business and could result in the corruption, loss or unauthorized disclosure of
proprietary, confidential or other data. While we have disaster recovery plans in place, they might not adequately
protect us in the event of a system failure. Despite any precautions we take, damage from fire, floods, hurricanes,
power loss, telecommunications failures, computer viruses, information system intrusions or security breaches and
similar events at our facilities or at those of our third party provider that backs up our data centers could result in
interruptions in the flow of data to our servers and from our servers to our customers. Corruption or loss of data may
result in the need to repeat a trial at no cost to the customer, but at significant cost to us, or result in the termination
of a contract or damage to our reputation. Moreover, regulatory authorities may impose requirements on the use of
electronic records and signatures for regulatory purposes. For example, FDA’s regulations at 21 CFR Part 11
establish the criteria pursuant to which the FDA will consider electronic records and signatures to be trustworthy,
reliable, and generally equivalent to paper records and handwritten signatures. Any failures to comply with those
regulatory requirements could impact our customers’ ability to rely on the data contained in those electronic records
in our systems or result in the FDA’s rejection of the data. Additionally, in order for our information systems to
continue to be effective going forward, we periodically need to upgrade our technology systems and increase our
capacity to keep pace with technological developments and our growth as a company. Significant delays in system
enhancements or inadequate performance of new or upgraded systems once completed could damage our reputation
and harm our business. Our operations also may suffer if we are unable to effectively manage the implementation of
and adapt to new technology systems. We have entered into agreements with certain vendors to provide systems
development and integration services that develop or license to us the IT platform for programs to optimize our
business processes. If such vendors fail to perform as required or if there are substantial delays in developing,
implementing and updating the IT platform, our customer delivery may be impaired, and we may have to make
substantial further investments, internally or with third parties, to achieve our objectives. Additionally, our progress
may be limited by parties with existing or claimed patents who seek to prevent us from using preferred technology
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or seek license payments from us. Any such shortcoming may require us to make substantial further investments in
our IT platform, which could adversely affect our financial results.
Unauthorized disclosure of sensitive or confidential data, whether through system failure, intrusions or breaches or
employee negligence, fraud or misappropriation, could damage our reputation and cause us to lose customers.
Similarly, unauthorized access to or through our information systems or those we develop for our customers,
whether by our employees or third parties, including a cyberattack by computer programmers and hackers who may
develop and deploy viruses, worms or other malicious software programs, could result in negative publicity,
significant remediation costs, legal liability and damage to our reputation and could have a material adverse effect
on our results of operations. In addition, our liability insurance might not be sufficient in type or amount to
adequately cover us against claims related to security breaches, cyberattacks and other related breaches.
If the security of confidential information used in connection with our services is breached or otherwise subject
to unauthorized access, our reputation and business may be materially harmed.
Our services require us to collect, store, use, and transmit significant amounts of confidential information, including
personally identifiable information, and other critical data. We employ a range of information technology solutions,
controls, procedures, and processes designed to protect the confidentiality, integrity, and availability of our critical
assets, including our data and information technology systems. While we engage in a number of measures aimed to
protect against security breaches and to minimize problems if a data breach were to occur, our information
technology systems and infrastructure may be vulnerable to damage, compromise, disruption, and shutdown due to
attacks, intrusions or breaches by hackers or due to other circumstances, such as error or malfeasance by employees
or third party service providers or technology malfunction. The occurrence of any of these events, as well as a
failure to promptly remedy these events should they occur, could compromise our systems, and the information
stored in our systems could be accessed, publicly disclosed, lost, stolen, or damaged. Any such circumstance could
adversely affect our ability to attract and maintain customers, cause us to suffer negative publicity, and subject us to
legal claims and liabilities or regulatory penalties. In addition, unauthorized parties might alter information in our
databases, which would adversely affect both the reliability of that information and our ability to market and
perform our services. Techniques used to obtain unauthorized access or to sabotage systems change frequently, are
constantly evolving and generally are difficult to recognize and react to effectively. We may be unable to anticipate
these techniques or to implement adequate preventive or reactive measures. Several recent, highly publicized data
security breaches at other companies have heightened consumer awareness of this issue and may embolden
individuals or groups to target our systems or those of our strategic partners or enterprise customers.
International Risks
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 global
contracts for our customers. As a result, we are subject to heightened risks inherent in conducting business
internationally, including the 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
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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; and
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.
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 or reputation.
Due to the global nature of our business, we may be exposed to liabilities under the Foreign Corrupt Practices
Act and various other anti-corruption laws, and any allegation or determination that we violated these laws could
have a material adverse effect on our business.
We are required to comply with the FCPA, UK Bribery Act of 2010 and other U.S. and foreign anti-corruption laws,
which prohibit companies from engaging in bribery including corruptly or improperly offering, promising, or
providing money or anything else of value to foreign officials and certain other recipients. In addition, the FCPA
imposes certain books, records and accounting control obligations on public companies and other issuers. We
operate in parts of the world in which corruption can be common and compliance with anti-bribery laws may
conflict with local customs and practices. Our global operations face the risk of unauthorized payments or offers
being made by employees, consultants, sales agents and other business partners outside of our control or without our
authorization. It is our policy to implement safeguards (including mandatory training) to prohibit these practices by
our employees and business partners with respect to our operations. However, irrespective of these safeguards, or as
a result of monitoring compliance with such safeguards, it is possible that we or certain other parties may discover
or receive information at some point that certain employees, consultants, sales agents, or other business partners may
have engaged in corrupt conduct for which we might be held responsible. Violations of the FCPA or other foreign
anti-corruption laws may result in restatements of, or irregularities in, our financial statements as well as severe
criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business,
operating results and financial condition. In some cases, companies that violate the FCPA may be debarred by the
U.S. government and/or lose their U.S. export privileges. Changes in anti-corruption laws or enforcement priorities
could also result in increased compliance requirements and related costs which could adversely affect our business,
financial condition and results of operations. In addition, the U.S. or other governments may seek to hold us liable
for FCPA violations or violations of other anti-corruption laws committed by companies in which we invest or that
we acquired or will acquire.
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Industry Risks
Outsourcing trends in the biopharmaceutical industry and changes in aggregate expenditures and R&D budgets
could adversely affect our operating results and growth rate.
Our revenues depend on the level of R&D expenditures, size of the drug development pipelines and outsourcing
trends of the biopharmaceutical industry, including the amount of such R&D expenditures that is outsourced and
subject to competitive bidding among CROs. Accordingly, economic factors and industry trends that affect
biopharmaceutical companies affect our business. For example, if biopharmaceutical companies become less able to
access capital in the future, they may commit less capital to our services going forward. Also, biopharmaceutical
companies continue to seek long-term strategic collaborations with global CROs with favorable pricing terms. Many
of our competitors seek out these collaborations, while we generally do not. If our competitors can successfully enter
into these collaborations, it may reduce the share of the biopharmaceutical outsourcing business that we might
otherwise be positioned to capture.
In addition, if the biopharmaceutical industry reduces its outsourcing of clinical trials or such outsourcing fails to
grow at projected or expected rates, or at all, our business, financial condition, results of operations and cash flows
could be materially and adversely affected. We may also be negatively impacted by consolidation and other factors
in the biopharmaceutical industry, which may slow decision making by our customers, result in the delay or
cancellation of existing projects, cause reductions in overall R&D expenditures or lead to increased pricing
pressures. Further, in the event that one of our customers combines with a company that is using the services of one
of our competitors, the combined company could decide to use the services of that competitor or another provider.
All of these events could adversely affect our business, financial condition, cash flows or results of operations.
We may be affected by healthcare reform and potential additional regulatory reforms, which may adversely
impact the biopharmaceutical industry or otherwise reduce the need for our services or negatively impact our
profitability.
Numerous government bodies are considering or have adopted various healthcare reforms and may undertake, or are
in the process of undertaking, efforts to control growing healthcare costs through legislation, regulation and
voluntary agreements with healthcare providers and biopharmaceutical companies, including many of our
customers. By way of example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the
Health Care and Education Reconciliation Act, or collectively, the Affordable Care Act, was signed into law, which,
among other things, expanded, over time, health insurance coverage, imposed health industry cost containment
measures, enhanced remedies against healthcare fraud and abuse, added new transparency requirements for
healthcare and health insurance industries, imposed new taxes and fees on pharmaceutical and medical device
manufacturers, added new requirements for certain applicable drug and device manufacturers to disclose payments
to physicians, including principal investigators, and imposed additional health policy reforms, any of which may
significantly impact the biopharmaceutical industry. We are uncertain as to the full effects of these reforms on our
business and are unable to predict what legislative proposals, if any, will be adopted in the future. If regulatory cost
containment efforts limit the profitability of new drugs, our customers may reduce their R&D expenditures, which
could reduce the business they outsource to us. Similarly, if regulatory requirements for product testing are relaxed
or harmonized across jurisdictions, or simplified drug approval procedures are adopted, the demand for our services
could decrease.
Government bodies may also adopt healthcare legislation or regulations that are more burdensome than existing
regulations. For example, product safety concerns and recommendations by the Drug Safety Oversight Board could
change the regulatory environment for drug products, and new or heightened regulatory requirements may increase
our expenses or limit our ability to offer some of our services. Additionally, new or heightened regulatory
requirements may have a negative impact on the ability of our customers to conduct industry sponsored clinical
trials, which could reduce the need for our services. These developments and the lack of clarity regarding future
healthcare policies and regulations have created significant uncertainty that could adversely affect our business,
financial condition, cash flows or results of operations.
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Consolidation in the biopharmaceutical industry could lead to a reduction in our revenues.
The biopharmaceutical and CRO industries are currently undergoing a period of increased merger activity. Several
large biopharmaceutical companies have recently completed mergers and acquisitions that will consolidate the
outsourcing trends and R&D expenditures into fewer companies, and many larger and medium sized
biopharmaceutical companies have been acquiring smaller biopharmaceutical companies. As a result of this and
future consolidations, our customer diversity may decrease and our business may be adversely affected.
If we fail to comply with federal, state and foreign healthcare laws, including fraud and abuse laws, we could
face substantial penalties and our business, results of operations, financial condition and prospects could be
adversely affected.
Even though we do not order healthcare services or bill directly to Medicare, Medicaid or other third party payors,
certain federal and state healthcare laws and regulations pertaining to fraud and abuse are applicable to our business.
We could be subject to healthcare fraud and abuse laws of both the federal government and the states in which we
conduct our business. Because of the breadth of these laws and the narrowness of available statutory and regulatory
exceptions, it is possible that some of our business activities could be subject to challenge under one or more of such
laws. If we or our operations are found to be in violation of any of the laws described above or any other
governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties,
damages, fines, imprisonment and the curtailment or restructuring of our operations, any of which could materially
adversely affect our ability to operate our business and our financial results.
Laws and regulations regarding the protection of personal data could result in increased risks of liability or
increased cost to us or could limit our service offerings.
The confidentiality, collection, use and disclosure of personal data, including clinical trial patient-specific
information, are subject to governmental regulation generally in the country in which the personal data was collected
or used. For example, U.S. federal regulations under the Health Insurance Portability and Accountability Act of
1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 and their
implementing regulations, including the Privacy and Security Rules, or collectively, HIPAA, generally require
individuals’ written authorization, in addition to any required informed consent, before protected health information
may be used for research and such regulations specify standards for de-identifications and for limited data sets. We
may also be subject to applicable state privacy and security laws and regulations in states in which we operate. Two
of our subsidiaries, Medpace Clinical Pharmacology, LLC and C-MARC, LLC, are covered entities under HIPAA.
Further, because of amendments to the HIPAA Privacy and Security Rules that were promulgated on January 25,
2013, known as the Omnibus Final Rule, service providers to covered entities under HIPAA, known as business
associates, are now directly subject to HIPAA. There are some instances where we may be a HIPAA “business
associate” of a “covered entity,” meaning that we may be directly liable for any breaches of protected health
information and other HIPAA violations. We are also liable contractually under any business associate agreements
we have signed with covered entities. If we are determined to be a business associate, we would be subject to
HIPAA’s enforcement scheme, which, as amended, can result in up to $1.5 million in annual civil penalties for each
HIPAA violation. A single breach incident can result in multiple violations of the HIPAA standards, meaning that
penalties could be in excess of $1.5 million. In addition, the Federal Civil Penalties Inflation Adjustment
Improvement Act of 2015 required all federal agencies to adjust their civil monetary penalties to inflation, no later
than August 1, 2016. As a result, the minimum annual penalties for each HIPPA violation which occurs later than
February 17, 2009 is now $1.7 million.
HIPAA also authorizes state attorneys general to file suit on behalf of their residents for violations. Courts are able
to award damages, costs and attorneys’ fees related to violations of HIPAA in such cases. While HIPAA does not
create a private right of action allowing individuals to file suit against us in civil court for violations of HIPAA, its
standards have been used as the basis for duty of care cases in state civil suits such as those for negligence or
recklessness in the misuse or breach of protected health information. In addition, HIPAA mandates that the
Secretary of the U.S. Department of Health and Human Services conduct periodic compliance audits of HIPAA
covered entities and their business associates for compliance with the HIPAA privacy and security standards, and
Phase two of these audits, focusing on business associates has begun.
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In the EU, personal data includes any information that relates to an identified or identifiable natural person with
health information carrying additional obligations, which may include obtaining the explicit consent from the
individual for collection, use or disclosure of the information. In addition, we are subject to EU rules with respect to
export of such data out of the EU. Such data export rules are constantly changing, for example, following a decision
of the European Court of Justice in October 2015, transferring personal data to U.S. companies like us that had
certified as a member of the EU-U.S. Safe Harbor Scheme was declared invalid and the other methods to permit
transfer are now under review. In July 2016, the European Commission approved the EU-U.S. Privacy Shield, which
replaces the U.S. Safe Harbor Scheme. The United States, the EU and its member states, and other countries where
we have operations, such as China, Russia and Singapore, continue to issue new privacy and data protection rules
and regulations that relate to personal data and health information. Failure to comply with certain
certification/registration and annual re-certification/registration provisions associated with these data protection and
privacy regulations and rules in various jurisdictions, or to resolve any serious privacy or security complaints, could
subject us to regulatory sanctions, criminal prosecution or civil liability. Federal, state and foreign governments may
propose or have adopted additional legislation governing the collection, possession, use or dissemination of personal
data, such as personal health information, and personal financial data as well as security breach notification rules for
loss or theft of or unauthorized access to such data. Additional legislation or regulation of this type might, among
other things, require us to implement new security measures and processes or bring within the legislation or
regulation de-identified health or other personal data, each of which may require substantial expenditures or limit
our ability to offer some of our services. Additionally, if we violate applicable laws, regulations or duties relating to
the use, privacy or security of personal data, we could be subject to civil liability or criminal prosecution, be forced
to alter our business practices and suffer reputational harm. We also are subject to the requirements of the EU’s
General Data Protection Regulation, or GDPR, because we are processing data in the EU and data of EU residents
outside of the EU. The GDPR shortens the deadline for data breach notifications, imposes additional obligations
when we process personal data on behalf of our customers, including in relation to security measures, and increases
administrative burdens on companies processing personal data, including employee and business partner data. If we
do not comply with our obligations under the GDPR we could be exposed to significant fines of up to 20 million
EUR or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher.
Our business could be harmed from the loss or suspension of a license or imposition of a fine or penalties under,
or future changes in, or interpretations of, the law or regulations of the Clinical Laboratory Improvement Act of
1967, and the Clinical Laboratory Improvement Amendments of 1988 (CLIA), or those of other national, state or
local agencies in the U.S. and other countries where we operate laboratories.
The commercial laboratory testing industry is subject to extensive U.S. regulation, and many of these statutes and
regulations have not been interpreted by the courts. CLIA extends federal oversight to virtually all clinical
laboratories operating in the U.S. by requiring that they be certified by the federal government or by a federally
approved accreditation agency. The sanction for failure to comply with CLIA requirements may be suspension,
revocation or limitation of a laboratory’s CLIA certificate, which is necessary to conduct business, as well as
significant fines and/or criminal penalties. In addition, we are subject to regulation under state law. State laws may
require that laboratories and/or laboratory personnel meet certain qualifications, specify certain quality controls or
require maintenance of certain records. We also operate laboratories outside of the U.S. and are subject to laws
governing our laboratory operations in the other countries where we operate.
Applicable statutes and regulations could be interpreted or applied by a prosecutorial, regulatory or judicial authority
in a manner that would adversely affect our business. Potential sanctions for violation of these statutes and
regulations include significant fines and the suspension or loss of various licenses, certificates and authorizations,
which could have a material adverse effect on our business. In addition, compliance with future legislation could
impose additional requirements on us, which may be costly.
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The biopharmaceutical industry has a history of patent and other intellectual property litigation, and we might be
involved in costly intellectual property lawsuits.
The biopharmaceutical industry has a history of intellectual property litigation, and these lawsuits will likely
continue in the future. Accordingly, even without wrongdoing on our part, we may face patent infringement suits by
companies that have patents for similar business processes or other suits alleging infringement of their intellectual
property rights. Legal proceedings relating to intellectual property could be expensive, take significant time and
divert management’s attention from other business concerns, regardless of the outcome of the litigation. If we do not
prevail in an infringement lawsuit brought against us, we might have to pay substantial damages, and we could be
required to stop the infringing activity or obtain a license to use technology on unfavorable terms. Further, our
customers could be similarly exposed to intellectual property suits and the resulting economic and operational strain
defending such claims could negatively impact such customers’ ability to fund or continue ongoing clinical trials on
which we are working.
If we do not keep pace with rapid technological changes, our services may become less competitive or obsolete.
The biopharmaceutical industry generally, and drug development and clinical research more specifically, are subject
to rapid technological changes. Our current competitors or other businesses might develop technologies or services
that are more effective or commercially attractive than, or render obsolete, our current or future technologies and
services. If our competitors introduce superior technologies or services and if we cannot make enhancements to
remain competitive, our competitive position would be harmed. If we are unable to compete successfully, we may
lose customers or be unable to attract new customers, which could lead to a decrease in our revenue and have a
material adverse effect on our financial condition.
Circumstances beyond our control could cause the CRO industry to suffer reputational or other harm that could
result in an industry-wide reduction in demand for CRO services, which could harm our business.
Demand for our services may be affected by perceptions of our customers regarding the CRO industry as a whole.
For example, other CROs could engage in conduct that could render our customers less willing to do business with
us or any CRO. Likewise, a widely reported injury to clinical trial participants could result in negative perceptions
of clinical trial activity, thereby adversely impacting our industry. One or more CROs could engage in or fail to
detect malfeasance, such as inadequately monitoring sites, producing inaccurate databases or analysis, falsifying
patient records, and performing incomplete lab work, or take other actions that would reduce the confidence of our
customers in the CRO industry. As a result, the willingness of biopharmaceutical companies to outsource R&D
services to CROs could diminish and our business could thus be harmed materially by events outside our control.
Other Legal, Regulatory, Insurance and Tax Risks
If we fail to perform our services in accordance with contractual requirements, government regulations and
ethical considerations, we could be subject to significant costs or liability and our reputation could be adversely
affected.
We contract with biopharmaceutical companies to perform a wide range of services to assist them in bringing new
drugs to market. Our services include monitoring clinical trials, data and laboratory analysis, electronic data capture,
patient recruitment and other related services. Such services are complex and subject to contractual requirements,
government regulations, and ethical considerations. For example, we are subject to regulation by the FDA, and
comparable foreign regulatory authorities relating to our activities in conducting pre-clinical studies and clinical
trials. Before clinical trials begin in the United States, a drug is tested in pre-clinical trials that must comply with
Good Laboratory Practice and other requirements. An applicant must file an IND, which must become effective
before human clinical testing may begin. Further, an independent IRB, for each medical center proposing to
participate in the clinical trial must review and approve the protocol for the clinical trial. Once initiated, clinical
trials must be conducted pursuant to and in accordance with the applicable IND conditions, the requirements of the
relevant IRBs, the Federal Food, Drug, and Cosmetic Act and its implementing regulations, including GCP, and
other requirements. We are also subject to regulation by the Drug Enforcement Administration, or DEA, which
regulates the distribution, recordkeeping, handling, security, and disposal of controlled substances. If we fail to
perform our services in accordance with these requirements, regulatory authorities may take action against us or our
customers. Such actions may include injunctions or failure of such regulatory authority to grant marketing approval
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of our customers’ products, imposition of clinical holds or delays, suspension or withdrawal of approvals, rejection
of data collected in our clinical trials, license revocation, product seizures or recalls, operational restrictions, civil or
criminal penalties or prosecutions, damages or fines. Customers may also bring claims against us for breach of our
contractual obligations, and patients in the clinical trials and patients taking drugs approved on the basis of those
trials may bring personal injury claims against us. Any such action could have a material adverse effect on our
business, financial condition, results of operations, cash flows or reputation.
Such consequences could arise if, among other things, the following occur:
Improper performance of our services. The performance of clinical development services is complex and time-
consuming. For example, we may make mistakes in conducting a clinical trial that could negatively impact or
obviate the usefulness of results of the trial or cause the results of the trial to be reported improperly. If the trial
results are compromised, we could be subject to significant costs or liability, which could have an adverse impact on
our ability to perform our services and our reputation would be harmed. As examples:
non-compliance generally could result in the termination of ongoing clinical trials or the disqualification
of data for submission to regulatory authorities;
non-compliance could compromise data from a particular trial, such as failure to verify that adequate
informed consent was obtained from patients, which could require us to repeat the trial under the terms
of our contract at no further cost to our customer, but at a potentially substantial cost to us; and
breach of a contractual term could result in liability for damages or termination of the contract.
The services we provide in connection with large clinical trials can cost up to tens of millions of dollars, and while
we endeavor to contractually limit our exposure to such risks, improper performance of our services could have a
material adverse effect on our financial condition, damage our reputation and result in the cancellation of current
contracts by the affected customer or other current customers or failure to obtain future contracts from the affected
customer or other current or potential customers.
Investigation of customers. From time to time, one or more of our customers are investigated by regulatory
authorities or enforcement agencies with respect to regulatory compliance of their clinical trials, programs or the
marketing and sale of their drugs. In these situations, we have often provided services to our customers with respect
to the clinical trials, programs or activities being investigated, and we are called upon to respond to requests for
information by the authorities and agencies. There is a risk that either our customers or regulatory authorities could
claim that we performed our services improperly or that we are responsible for clinical trial or program compliance.
If our customers or regulatory authorities make such claims against us, we could be subject to significant costs in
defending our activities and potential damages, fines or penalties. In addition, negative publicity regarding
regulatory compliance of our customers’ clinical trials, programs or products could have an adverse effect on our
business and reputation.
Insufficient customer funding to complete a clinical trial. As noted above, clinical trials can cost up to tens of
millions of dollars. There is a risk that we may initiate a clinical trial for a customer, and then the customer becomes
unwilling or unable to fund the completion of the trial. In such a situation, notwithstanding the customer’s ability or
willingness to pay for or otherwise facilitate the completion of the trial, we may be ethically bound to complete or
wind down the trial at our own expense.
Interactive voice/web response service malfunction. We develop and maintain our own, and also use third-parties to
run, interactive voice/web response systems. These systems automatically manage the randomization of patients in a
given clinical trial to different treatment arms and regulate the supply of investigational drugs. An error in the
design, programming or validation of these systems could lead to inappropriate assignment or dosing of patients
which could give rise to patient safety issues, invalidation of the trial or liability claims against us. Furthermore,
negative publicity associated with such a malfunction could have an adverse effect on our business and reputation.
Additionally, errors in randomization may require us to repeat the trial at no further cost to our customer, but at a
substantial cost to us.
In addition to the above U.S. laws and regulations, we must comply with the laws of all countries where we do
business, including laws governing clinical trials in the jurisdiction where the trials are performed. Failure to comply
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with applicable requirements could subject us to regulatory risk, liability and potential costs associated with redoing
the trials, which could damage our reputation and adversely affect our operating results.
Some of our services involve direct interaction with clinical trial patients and operation of a Phase I clinical
facility, which could create potential liability that may adversely affect our results of operations and financial
condition.
We operate a facility where Phase I clinical trials are conducted, which ordinarily involve testing an investigational
drug, biologic or medical device on a limited number of individuals to evaluate its safety, determine a safe dosage
range and identify side effects. Failure to operate such a facility and clinical trials in accordance with FDA, DEA
and other applicable regulations could result in disruptions to our operations. Additionally, we face risks associated
with adverse events resulting from the administration of such drugs, biologics and medical devices and the
professional malpractice of medical care providers. We also directly employ nurses and other trained employees
who assist in implementing the testing involved in our clinical trials, such as drawing blood from subjects. Any
professional malpractice or negligence by such investigators, nurses or other employees could potentially result in
liability to us in the event of personal injury to or death of a subject in clinical trials. This liability, particularly if it
were to exceed the limits of any indemnification agreements and insurance coverage we may have, may adversely
affect our financial condition, results of operations and reputation.
Our clinical development services could subject us to potential liability that may adversely affect our results of
operations and financial condition.
Our business involves the testing of new drugs, biologics and medical devices on patients in clinical trials. Our
involvement in the clinical trial and development process creates a risk of liability for personal injury to or death of
patients, particularly for those with life-threatening illnesses, resulting from adverse reactions to the products
administered during testing or after regulatory approval. For example, we may be sued in the future by individuals
alleging personal injury due to their participation in clinical trials and seeking damages from us under a variety of
legal theories. If we are required to pay damages or incur defense costs in connection with any personal injury claim
that is outside the scope of indemnification agreements we have with our customers, if any indemnification
agreement is not performed in accordance with its terms or if our liability exceeds the amount of any applicable
indemnification limits or available insurance coverage, our business, financial condition, results of operations, cash
flows or reputation could be materially and adversely affected. We might also not be able to obtain adequate
insurance or indemnification for these types of risks at reasonable rates in the future.
We also contract with institutions and physicians to serve as investigators in conducting clinical trials if the
investigators or study staff commit errors or make omissions during a clinical trial that result in harm to trial
patients, or patients suffer harm with a delayed onset after a clinical trial is completed and the product has obtained
regulatory approval, claims for personal injury or products liability damages may result. Additionally, if the
investigators engage in fraudulent or negligent behavior, trial data may be compromised, which may require us to
repeat the clinical trial or subject us to liability or regulatory action. We do not believe we are legally responsible for
the medical care rendered by such third party investigators, and we would vigorously defend any claims brought
against us. However, it is possible we could be found liable for claims with respect to the actions of third party
investigators and the institutions at which clinical trials may be conducted.
Our operations involve the use and disposal of hazardous substances and waste which can give rise to liability
that could adversely impact our financial condition.
We conduct activities that have involved, and may continue to involve, the controlled use of hazardous materials and
the creation of hazardous substances, including medical waste and other highly regulated substances. As a result, our
operations pose the risk of accidental contamination or injury caused by the release of these materials and/or the
creation of hazardous substances, including medical waste and other highly regulated substances. In the event of
such an accident, we could be held liable for damages and cleanup costs which, to the extent not covered by existing
insurance or indemnification, could harm our business. In addition, other adverse effects could result from such
liability, including reputational damage resulting in the loss of additional business from certain customers.
- 28 -
We act as legal representative and/or data representative for some clients.
We act as the legal representative and/or the data representative for certain clients in certain jurisdictions. As we
believe that acting as legal representative and/or data representative of clients exposes us to a higher risk of liability,
this service is provided subject to our policy and requires certain preconditions to be met. The preconditions relate to
obtaining specific insurance commitments and indemnities from the client to cover the nature of the exposure.
However, there is no guarantee that the specific insurance will be available and provide cover or that a client will
fulfil its obligations in relation to their indemnity.
Our insurance may not cover all of our indemnification obligations and other liabilities associated with our
operations.
We maintain insurance designed to provide coverage for ordinary risks associated with our operations and our
ordinary indemnification obligations, which we believe to be customary for our industry. The coverage provided by
such insurance may not be adequate for all claims we may make or may be contested by our insurance carriers. If
our insurance is not adequate or available to pay liabilities associated with our operations, or if we are unable to
purchase adequate insurance at reasonable rates in the future, our business, financial condition, results of operations
or cash flows may be materially adversely impacted.
Our effective income tax rate may fluctuate, which may adversely affect our operations, earnings and earnings
per share.
Our effective income tax rate is influenced by our projected profitability in the various taxing jurisdictions in which
we operate. The global nature of our business increases our tax risks. In addition, for various reasons, revenue
authorities in many of the jurisdictions in which we operate are known to have become more active in their tax
collection activities. Changes in the distribution of profits and losses among taxing jurisdictions may have a
significant impact on our effective income tax rate, which in turn could have an adverse effect on our net income
and earnings per share. The application of tax laws in various taxing jurisdictions, including the United States, is
subject to interpretation, and tax authorities in various jurisdictions may have diverging and sometimes conflicting
interpretations of the application of tax laws. Changes in tax laws or tax rulings, in the United States or other tax
jurisdictions in which we operate, could materially impact our effective tax rate.
Factors that may affect our effective income tax rate include, but are not limited to:
the requirement to exclude from our quarterly worldwide effective income tax calculations losses in
jurisdictions where no income tax benefit can be recognized;
actual and projected full year pre-tax income, including differences between actual and anticipated
income before taxes in various jurisdictions;
changes in tax laws, or in the interpretation or application of tax laws, in various taxing jurisdictions;
audits or other challenges by taxing authorities;
changes to intercompany transfer pricing policies or changes in laws within foreign tax jurisdictions
the establishment of valuation allowances against a portion or all of certain deferred income tax assets if
we determined that it is more likely than not that future income tax benefits will not be realized; and
changes in the relative mix and size of clinical trials and staffing levels in various tax jurisdictions.
- 29 -
These changes may cause fluctuations in our effective income tax rate that could adversely affect our results of
operations and cause fluctuations in our earnings and earnings per share.
Structural and Organizational Risks
Our Chief Executive Officer and founder controls a substantial amount of our outstanding common stock and
his interests may be different from or conflict with those of our other shareholders.
As of December 31, 2021, August J. Troendle, our Chief Executive Officer and founder, through his direct
ownership of 706,643 shares of our common stock and his beneficial ownership of 5,506,101 shares of our common
stock held by Medpace Investors LLC (“Medpace Investors”), controls approximately 17.2% of the outstanding
shares of our common stock. Upon a distribution of our common stock held by Medpace Investors, our Chief
Executive Officer would receive approximately 85.2% of such distributed shares. Accordingly, August J. Troendle
is able to exert a significant degree of influence or actual control over our management and affairs and control all
corporate actions requiring shareholder approval, irrespective of how our other shareholders may vote, including:
the election and removal of directors and the size of our board of directors, or the Board;
any amendment of our articles of incorporation or bylaws; or
the approval of mergers and other significant corporate transactions, including a sale of substantially all
of our assets.
Moreover, August J. Troendle’s share ownership may also adversely affect the trading price for our common stock
to the extent investors perceive disadvantages in owning shares of a company with a significant shareholder.
We are party to transactions with related persons that may increase the risk of allegations of conflicts of interest,
and such allegations may impair our ability to realize the benefits we expect from these transactions.
Due to the relationships among us and certain related persons, the agreements or other transactions we have entered
into with them are considered related person transactions. Our agreements or transactions with related persons may
not be on terms as favorable to us as they would have been if they had been negotiated among unrelated persons. For
additional information on related person transactions involving us, see the “Certain Relationships” section in our
Proxy Statement for our 2022 Annual Meeting of Stockholders. While our Related Person Transaction Policy and
Procedures requires our Audit Committee’s consideration of all relevant facts and circumstances, including a
determination of whether the transaction has terms comparable to those that could be obtained in an arm’s length
transaction, the potential for a conflict of interest exists and such related persons may have conflicts of interest, or
the appearance of conflicts of interest, with respect to matters involving or affecting us and the related person.
Moreover, we are subject to the risk that our stockholders may challenge any such related person transactions and
the agreements entered into as part of them. If such a challenge were to be successful, we might not realize the
benefits expected from the transactions being challenged. Moreover, any such challenge could result in substantial
costs and a diversion of our management’s attention, could have a material adverse effect on our reputation, business
and growth and could adversely affect our ability to realize the benefits expected from the transactions, whether or
not the allegations have merit or are substantiated.
General Risks
If we lose the services of key personnel or are unable to recruit experienced personnel, our business could be
adversely affected.
Our success substantially depends on the collective performance, contributions and expertise of our senior
management team, including August J. Troendle, our Chief Executive Officer and founder, and other key personnel
including qualified management, professional, scientific and technical operating staff. There is significant
competition for qualified personnel in the biopharmaceutical services industry, particularly for those with higher
educational degrees, such as a medical or nursing degree, a Ph.D., or an equivalent degree, and our industry
generally tends to experience relatively high levels of employee turnover. If any of our key employees were to join a
competitor or to form a competing company, some of our customers might choose to use the services of that
competitor or new company instead of our own. Furthermore, customers or other companies seeking to develop in-
house capabilities may hire some of our senior management or other key employees. The departure of any key
- 30 -
contributor, the payment of increased compensation to attract and retain qualified personnel or our inability to
continue to identify, attract and retain qualified personnel or replace any departed personnel in a timely fashion may
impact our ability to grow our business and compete effectively in our industry and may negatively affect our
business, financial condition, results of operations, cash flows or reputation.
Our operations might be affected by the occurrence of a natural disaster or other catastrophic event.
We depend on our customers, investigators, laboratories and other facilities for the continued operation of our
business. Although we have contingency plans in place for natural disasters or other catastrophic events, these
events, including terrorist attacks, pandemic flu, hurricanes, floods and ice and snow storms, could nevertheless
disrupt our operations and IT systems or those of our customers, investigators and collaboration partners, which
could also affect us. Even though we carry business interruption insurance policies and typically have provisions in
our contracts that protect us in certain events, we might suffer losses as a result of business interruptions that exceed
the coverage available under our insurance policies or for which we do not have coverage. Any natural disaster or
catastrophic event affecting us or our customers, investigators or collaboration partners could have a significant
negative impact on our operations and financial performance.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
As of December 31, 2021, we had leased commercial locations in various countries across North America, Europe,
Asia/Pacific, South America and Africa. We also own lab and office space in Leuven, Belgium. Most of these
facilities consist solely of office space; however, we have five laboratories located across four facilities and a
logistics warehouse. Our principal executive offices are located on a corporate campus in Cincinnati, Ohio
consisting of five buildings totaling approximately 600,000 square feet. The leases for four buildings in our
Cincinnati site expire in 2022, 2027, 2027 and 2040. We own the fifth building. None of our leases are individually
material to our business model and all have either options to renew or are located in major markets with what we
believe are adequate opportunities to continue business operations on terms satisfactory to us.
Item 3. Legal Proceedings.
We are party to legal proceedings incidental to our business and may become subject to additional legal proceedings
in the future. While the outcome of these matters could differ from management’s expectations, we do not believe
that the resolution of these matters, individually and in the aggregate, is reasonably likely to have a material adverse
effect to our consolidated financial statements. Litigation is subject to inherent uncertainties. See Note 12
“Commitments, Contingencies and Guarantees—Legal Proceedings” to our consolidated financial statements
included in Item 8 of Part II in this Annual Report on Form 10-K.
Item 4. Mine Safety Disclosures
Not applicable.
- 31 -
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
Market Information for Common Stock
Our common stock trades on the NASDAQ Global Select Market under the symbol “MEDP”.
Holders of Record
On February 11, 2022, there were approximately 13 shareholders of record of our common stock. Because many of
the shares of our common stock are registered in “nominee” or “street” names, we believe that the total number of
beneficial owners is considerably higher.
Dividend Policy
We have not paid any dividends to date, nor do we have current plans to pay any cash dividends on our common
stock for the foreseeable future and instead intend to retain earnings, if any, for future operations, expansion and
debt repayment. However, in the future, subject to the factors described below and our future liquidity and
capitalization, we may change this policy and choose to pay dividends.
We are a holding company which does not conduct any business operations of our own. As a result, our ability to
pay cash dividends on our common stock is dependent upon cash dividends and distributions and other transfers
from our subsidiaries.
In addition, under Delaware law, our Board may declare dividends only to the extent of our surplus (which is
defined as total assets at fair market value minus total liabilities, minus statutory capital) or, if there is no surplus,
out of our net profits for the then current and/or immediately preceding fiscal year.
Any future determination to declare dividends will be at the discretion of our Board and will take into account:
general economic business conditions;
our net income, financial condition and results of operations;
our capital requirements;
our prospects;
the ability of our operating subsidiaries to pay dividends and make distributions to us;
legal restrictions; and
such other factors as our Board may deem relevant.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Share Repurchases
In 2018, the Board of Directors approved a stock repurchase program which has been amended several times to
increase the aggregate amount of the stock repurchase authorization. In the first quarter of 2020, the Board of
Directors approved an increase in the stock repurchase authorization by $50.0 million. In the fourth quarter of 2020,
the Board approved the stock repurchase authorization up to $150.0 million. In the second quarter of 2021, the
Board approved an increase of $150.0 million to the stock repurchase program bringing the total repurchase
authorization up to $300.0 million. For the year ended December 31, 2021, the Company repurchased 377,783
shares for $62.1 million. For the year ended December 31, 2020, the Company repurchased 1,183,095 shares for
$98.3 million. As of December 31, 2021, the Company has remaining authorization of $190.5 million remaining
under the repurchases program.
As of February 10, 2022 the Company's Board of Directors approved an increase of $300 million to the Company's
stock repurchase program.
- 32 -
Repurchases under the share repurchase program are executed in the open market or negotiated transactions under
trading plans established pursuant to Rule 10b5-1. The Company constructively retired the repurchased shares
associated with these approved share repurchase programs, with all amounts paid in excess of par value reflected
within Retained earnings in the Company’s consolidated balance sheets. The repurchase program may be suspended
or discontinued at any time without notice.
Recent Sales of Unregistered Securities
Date
October 26, 2021
November 2, 2021
November 4, 2021
November 8, 2021
November 9, 2021
November 15, 2021
November 23, 2021
November 24, 2021
November 30, 2021
December 6, 2021
December 14, 2021
December 15, 2021
December 16, 2021
December 29, 2021
December 31, 2021
Total
Equity Plan
2014 Equity Incentive Plan
2014 Equity Incentive Plan
2014 Equity Incentive Plan
2014 Equity Incentive Plan
2014 Equity Incentive Plan
2014 Equity Incentive Plan
2014 Equity Incentive Plan
2014 Equity Incentive Plan
2014 Equity Incentive Plan
2014 Equity Incentive Plan
2014 Equity Incentive Plan
2014 Equity Incentive Plan
2014 Equity Incentive Plan
2014 Equity Incentive Plan
2014 Equity Incentive Plan
$
Number of Stock
Options Exercised
9,037
901
1,111
925
370
480
1,851
1,677
350
2,854
2,869
1,111
350
2,555
556
26,997
Exercise Price
Approximate
Aggregate
Purchase Price
18.23
16.20
16.20
18.23
16.20
16.20
16.20
18.23
18.23
16.20
16.20
16.20
16.20
16.20
16.20
$
$
164,700
14,600
18,000
16,900
6,000
7,800
30,000
30,600
6,400
46,200
46,500
18,000
5,700
41,400
9,000
461,800
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, as transactions
pursuant to benefit plans and contracts relating to compensation.
- 33 -
Stock Performance Graph
The information included under the heading “Stock Performance Graph” is “furnished” and not “filed” for purposes
of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed to be
“soliciting material” subject to Regulation 14A or incorporated by reference in any filing under the Securities Act of
1933, as amended, or the Exchange Act of 1934, as amended.
Our common stock is listed for trading on the NASDAQ under the symbol “MEDP.” The Stock Price Performance
Graph set forth below compares the cumulative total shareholder return on our common stock for the period from
August 11, 2016 through December 31, 2021, with the cumulative total return of the Nasdaq Composite Index and
the Nasdaq Health Care Index over the same period. The comparison assumes $100 was invested on August 11,
2016 in the common stock of Medpace Holdings, Inc., in the Nasdaq Composite Index, and in the Nasdaq Health
Care Index and assumes reinvestment of dividends, if any. The stock price performance of the following graph is not
necessarily indicative of future stock price performance. Information used in the graph was obtained from the
Nasdaq Stock Market, a source believed to be reliable, but we are not responsible for any errors or omissions in such
information.
870
770
670
570
470
370
270
170
70
08/11/2016
09/30/2016
12/31/2016
03/31/2017
06/30/2017
09/30/2017
12/31/2017
03/31/2018
06/30/2018
09/30/2018
12/31/2018
03/31/2019
06/30/2019
09/30/2019
12/31/2019
03/31/2020
06/30/2020
09/30/2020
12/31/2020
03/31/2021
06/30/2021
09/30/2021
12/31/2021
MEDP
NASDAQ Composite Index
NASDAQ Health Care Index
Equity Compensation Plan Information
The information required by Part II, Item 5 of the Annual Report on Form 10-K regarding equity compensation
plans is incorporated herein by reference to “Part III, Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.”
Item 6. Reserved
- 34 -
Item 7. Management’s Discussion and Analysis of 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 consolidated financial statements and the notes thereto included elsewhere in this Annual
Report on Form 10-K to provide an understanding of our results of operations, financial condition and cash flows.
This section of this Form 10-K generally discusses 2021 and 2020 items and year-to-year comparisons between
2021 and 2020. For a comparison of our results of operations for the fiscal years ended December 31, 2020 and
December 31, 2019, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC
on February 16, 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” above and “Item IA. Risk Factors” in
Part I of this Annual Report on Form 10-K.
Business Overview
We are one of the world’s leading 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 Oncology,
Metabolic Disease, Cardiology, AVAI, and CNS. Our global platform includes approximately 4,500 employees
across 41 countries, providing our customers with broad access to diverse markets and patient populations as well as
local regulatory expertise and market knowledge.
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.
- 35 -
While certain governments eased restrictions during the balance of 2020 and into 2021, 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.
How We Generate Revenue
We earn 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, 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.
Revenue, which is distinct from billing and cash receipt, is recognized based on the satisfaction of the individual
performance obligations identified in each contract. Substantially all of our customer contracts consist of a single
performance obligation, as the promise to 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
generally satisfied over time and recognized as services are 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 and reimbursable costs incurred through the date of
termination, including payment for subsequent services necessary to conclude the study or close out the contract.
These fees are typically discussed and agreed upon with the customer and are realized as revenue when we believe
the amount can be estimated reliably and its realization is probable. Changes in revenue from period to period are
driven primarily by new business volume and task order execution activity, project cancellations, changes in
estimated costs to complete performance obligations, and the mix of active studies during a given period that can
vary based on therapeutic area and or study life cycle stage. Refer to "Critical Accounting Policies and Estimates—
Revenue Recognition," below.
- 36 -
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.
Total Direct Costs
Total direct costs 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 licenses which are allocated between Total direct costs and selling, general and administrative
expenses based on the estimated contribution among service delivery and support function efforts on a percentage
basis. Total direct costs are expensed as incurred and are not deferred in anticipation of contracts being awarded or
finalization of changes in scope. Total direct costs, as a percentage of net revenue, can vary from period to period
due to project labor efficiencies, changes in workforce, compensation/bonus programs and service mix.
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), 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 are amortized on a straight-line basis over the
shorter of the estimated useful life of the improvement or the associated remaining lease term.
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 5 to 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 net new business awards and backlog.
Net New Business Awards and Backlog
New business awards represent the value of anticipated future net revenue that has been recognized in backlog
during the period. 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
- 37 -
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 three years from
measurement date 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 or when we believe the future revenue is unlikely to be realized.
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.
Net new business awards represent gross new business awards received in a period offset by total cancellations in
that period. Net new business awards were $1,610.4 million and $1,175.0 million for the years ended December 31,
2021 and 2020, respectively.
Backlog represents anticipated future net revenue from net new business awards that have commenced, but have not
been completed. Reported backlog will fluctuate based on new business awards, changes in scope to existing
contracts, cancellations, net revenue recognition on existing contracts and foreign exchange adjustments from non-
U.S. dollar denominated backlog. As of December 31, 2021, our backlog increased by $455.4 million, or 29.5%, to
$1,997.1 million compared to $1,541.7 million as of December 31, 2020. Included within backlog as of
December 31, 2021 was approximately $1,030 million to $1,050 million that we expect to convert to net revenue in
2022, with the remainder expected to convert to net revenue in years after 2022.
The effect of foreign currency adjustments on backlog was as follows: unfavorable foreign currency adjustments of
$5.5 million for the year ended December 31, 2021 and favorable foreign currency adjustments of $14.3 million for
the year ended December 31, 2020.
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.
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 is 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:
U.S. Dollars per Euro:
Results of Operations
Year Ended December 31,
2020
2021
1.18
1.14
This section generally discusses 2021 and 2020 items and year-to-year comparisons between 2021 and 2020. For a
comparison of our results of operations for the fiscal years ended December 31, 2020 and December 31, 2019, see
“Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our
Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on February 16,
2021.
- 38 -
Year Ended December 31, 2021 compared to Year Ended December 31, 2020
(Amounts in thousands, except percentages)
Revenue, net
2021
$ 1,142,377 $
2020
925,925 $
Change
% Change
216,452
23.4%
Year Ended December 31,
Direct service costs, excluding
depreciation and amortization
Reimbursed out-of-pocket expenses
Total direct costs
Selling, general and administrative
Depreciation
Amortization
Total operating expenses
Income from operations
Miscellaneous income, net
Interest (expense) income, net
Income before income taxes
Income tax provision
Net income
441,090
373,132
814,222
108,421
16,005
5,114
943,762
198,615
3,342
(105)
201,852
20,004
181,848 $
354,426
292,773
647,199
92,156
11,652
7,876
758,883
167,042
1,183
307
168,532
23,148
145,384 $
86,664
80,359
167,023
16,265
4,353
(2,762)
184,879
31,573
2,159
(412)
33,320
(3,144)
36,464
$
24.5%
27.4%
25.8%
17.6%
37.4%
(35.1)%
24.4%
Total revenue
Total revenue increased by $216.5 million to $1,142.4 million for the year ended December 31, 2021, from $925.9
million for the year ended December 31, 2020. The increase was broad based, but primarily driven by strong activity
within the Oncology, Metabolic, Central Nervous System and other uncategorized therapeutic areas.
Total direct costs
Total direct costs increased by $167.0 million, to $814.2 million for the year ended December 31, 2021 from $647.2
million for the year ended December 31, 2020. The increase was primarily attributed to higher reimbursed out-of-
pocket expenses and higher personnel costs to support the growth in service activities. Reimbursed out-of-pocket
expenses, which can fluctuate significantly from period to period based on the timing of program initiation and
closeout, increased $80.4 million for the year ended December 31, 2021, compared to the same period in the prior
year. The higher personnel costs portion, including severance, increased by $69.7 million in the year ended
December 31, 2021, compared to the same period in the prior year.
Selling, general and administrative
Selling, general and administrative expenses increased by $16.3 million, to $108.4 million for the year ended
December 31, 2021 from $92.2 million for the year ended December 31, 2020. The increase was primarily attributed
to higher personnel costs to support the growth in service activities. Personnel costs, including severance, increased
by $11.5 million in the year ended December 31, 2021, compared to the same period in the prior year.
Depreciation and Amortization
Depreciation and amortization expense increased by $1.6 million, to $21.1 million for the year ended December 31,
2021 from $19.5 million for the year ended December 31, 2020. The increase in depreciation and amortization was
primarily related to increased depreciation related to Property and equipment, net.
Income tax provision
Income tax provision decreased by $3.1 million, to $20.0 million for the year ended December 31, 2021 from $23.1
million for the year ended December 31, 2020. The overall effective tax rates for the years ended December 31,
2021 and 2020 were 9.9% and 13.7%, respectively. The decrease in the income tax provision and overall effective
- 39 -
rate was primarily attributable to an increase in excess tax benefits recognized from share-based compensation and
increase in tax benefits related to Foreign Derived Intangible Income (FDII).
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 under our
unsecured credit facility (as amended from time to time, the “Credit Facility”). As of December 31, 2021, we had
cash and cash equivalents of $461.3 million, which primarily increased due to net cash provided by operations from
the balance of $277.8 million as of December 31, 2020. Approximately $32.2 million of our cash and cash
equivalents, none of which was restricted, was held by our foreign subsidiaries as of December 31, 2021.
On September 30, 2019, the Company entered into the Credit Facility consisting of up to a $50.0 million revolving
line of credit (as amended from time to time, the “Line of Credit”). As of December 31, 2021, we had $49.8 million
available for borrowing under the Credit Facility.
Our expected primary cash needs on both a short and long-term basis are for investment in operational growth,
capital expenditures, 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 December 31, 2021, cash commitments to
support operating business needs include lease liabilities discussed in Note 8 of the Consolidated Financial
Statements, purchase commitments discussed in Note 12 of the Consolidated Financial Statements and capital
expenditures primarily related to infrastructure investments in our facilities, equipment and technology. Capital
spending as a percentage of revenue decreased 91 basis points to 2.5% in the year ended December 31, 2021. We
expect these activities will be funded from existing cash, cash flow from operations and, if necessary, borrowings
under our existing or future credit facilities or other debt.
We have deemed that foreign earnings will be indefinitely reinvested and therefore we have not provided taxes on
these earnings. While we do not anticipate the need to repatriate these foreign earnings for liquidity purposes given
our cash flows from operations and 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 Credit Facility or otherwise, in an amount sufficient to fund our
liquidity needs.
Cash Flows (Amounts in thousands)
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Effect of exchange rates on cash, cash equivalents, and restricted
cash
Increase in cash, cash equivalents, and restricted cash
Year Ended December 31,
2020
2021
$
263,327
(31,364)
(44,453)
258,676
(31,214)
(82,282)
(3,972)
183,538
$
666
145,846
$
$
Cash Flows from Operating Activities
Cash flows from operations are driven mainly by net income, noncash lease expense, depreciation, stock-based
compensation expense, amortization of intangibles and net movement in advanced billings, accrued expenses,
prepaid expenses and other current assets, and accounts receivable and unbilled, net. Accounts receivable and
unbilled, net, and advanced billings 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.
- 40 -
Net cash flows provided by operating activities were $263.3 million for the year ended December 31, 2021
consisting of net income of $181.8 million. Adjustments to reconcile net income to net cash provided by operating
activities were $14.8 million, primarily related to noncash lease expense of $16.3 million, depreciation of $16.0
million, stock-based compensation expense of $14.5 million, amortization of intangibles of $5.1 million, offset by a
deferred income tax benefit of $37.1 million. Changes in operating assets and liabilities provided $66.7 million in
operating cash flows and were primarily driven by increased advanced billings of $ 89.0 million and increased
accrued expenses of $26.2 million, offset by increased accounts receivable and unbilled, net of $25.0 million,
decreased lease liabilities of $15.6 million and increased prepaid expenses and other current assets of $9.1 million.
Net cash flows provided by operating activities were $258.7 million for the year ended December 31, 2020
consisting of net income of $145.4 million. Adjustments to reconcile net income to net cash provided by operating
activities were $47.0 million, primarily related to noncash lease expense of $13.9 million, stock-based compensation
expense of $13.8 million, depreciation of $11.7 million, amortization of intangibles of $7.9 million, and deferred
income tax provision of $0.5 million. Changes in operating assets and liabilities provided $66.3 million in operating
cash flows and were primarily driven by increased advanced billings of $63.4 million and increased accrued
expenses of $24.2 million, offset by decreased lease liabilities of $11.5 million and increased accounts receivable
and unbilled, net of $5.5 million.
Cash Flow from Investing Activities
Net cash used in investing activities was $31.4 million for the year ended December 31, 2021, primarily consisting
of property and equipment expenditures.
Net cash used in investing activities was $31.2 million for the year ended December 31, 2020, primarily consisting
of property and equipment expenditures.
Cash Flow from Financing Activities
Net cash used in financing activities was $44.5 million for the year ended December 31, 2021, primarily related to
$62.1 million in repurchases of common stock, offset by proceeds from stock options exercises of $17.6 million.
Net cash used in financing activities was $82.3 million for the year ended December 31, 2020, primarily related to
$98.3 million in repurchases of common stock, offset by proceeds from stock options exercises of $16.0 million.
Share Repurchases
In 2018, the Board of Directors approved a stock repurchase program which has been amended several times to
increase the aggregate amount of the stock repurchase authorization. In the first quarter of 2020, the Board of
Directors approved an increase in the stock repurchase authorization by $50.0 million. In the fourth quarter of 2020,
the Board approved the stock repurchase authorization up to $150.0 million. In the second quarter of 2021, the
Board approved an increase of $150.0 million to the stock repurchase program bringing the total repurchase
authorization up to $300.0 million. For the year ended December 31, 2021, the Company repurchased 377,783
shares for $62.1 million. For the year ended December 31, 2020, the Company repurchased 1,183,095 shares for
$98.3 million. As of December 31, 2021, the Company has remaining authorization of $190.5 million remaining
under the repurchases program.
As of February 10, 2022 the Company's Board of Directors approved an increase of $300 million to the Company's
stock repurchase program.
Repurchases under the share repurchase program are executed in the open market or negotiated transactions under
trading plans established pursuant to Rule 10b5-1. The Company constructively retired the repurchased shares
associated with these approved share repurchase programs, with all amounts paid in excess of par value reflected
within Retained earnings in the Company’s consolidated balance sheets. The repurchase program may be suspended
or discontinued at any time without notice.
- 41 -
Indebtedness
On September 30, 2019, Medpace Inc., as borrower (the “Borrower”), and Medpace IntermediateCo, Inc., a wholly-
owned subsidiary of the Company, as guarantor (the “Guarantor”), entered into the new loan agreement, which
provides for an unsecured credit facility in an aggregate principal amount up to $50.0 million (as amended, the
"Credit Facility"). The Credit Facility provides that outstanding balances will bear interest at a rate of LIBOR plus
100 basis points (1.00%). On March 30, 2020, the Company amended the Credit Facility to extend its expiration
date to March 31, 2021 and add provisions for alternative interest rates when certain interbank market offered rates
are not available. On March 29, 2021 the Company amended the Credit Facility expiration date to March 31, 2022.
On December 27, 2021, the Company entered into Amendment No. 3 to the Credit Facility which extends the
expiration date of the revolving credit note to March 31, 2023 and adds provisions for alternative rates of interest as
a result of global reference rate initiatives and removes the ability to obtain advances in any currency other than U.S.
Dollars. After the LIBOR cessation date of December 31, 2021, the Credit Facility will bear interest at a rate of the
sum of The Secured Overnight Financing Rate (SOFR) and the benchmark replacement adjustment plus 100 basis
points (1.00%).
The Credit Facility is guaranteed by the Guarantor and its material, direct or indirect wholly owned domestic
subsidiaries, with certain exceptions, including where providing such guarantees is not permitted by law, regulation
or contract or would result in adverse tax consequences. All of the obligations under the Credit Facility are
unsecured.
The Credit Facility is subject to customary negative covenants. The Company was in compliance with all financial
covenants as of December 31, 2021.
The Credit Facility contains certain events of default, including, among others, non-payment of principal or interest,
breach of the covenants, cross default and cross acceleration to certain other indebtedness, defaults on monetary
judgment orders, certain ERISA events, certain bankruptcy and insolvency events, actual or asserted invalidity of
any guarantee or security document and change in control.
As of December 31, 2021, we had no indebtedness under the Credit Facility. As of December 31, 2021, we had $0.2
million in letters of credit outstanding related to certain operating lease obligations, which are secured by the Credit
Facility.
Critical Accounting Policies and Estimates
The preparation of financial statements in accordance with generally accepted accounting principles in the United
States of America, or US 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.
Revenue Recognition
We generally enter into contracts with customers to provide services ranging in duration from a few months to
several years. The contract terms generally provide for payments based on a fixed-fee or unit-of-service
arrangement. We account for revenue in accordance with ASC 606, Revenue from Contracts with Customers.
Revenue on contracts is recognized, when or as we satisfy the contract performance obligations by transferring
control of the services provided to the customer, at the amount that reflects the consideration to which we expect to
be entitled in exchange for transferring those services. Our performance obligations are generally satisfied over time
and recognized as work progresses.
- 42 -
Contract Assumptions
Accounting for contracts performed over a period of time involves the use of various assumptions to estimate total
contract revenue and costs. We estimate expected costs to complete a contract and recognize contracted revenue
over the life of the contract as those costs are incurred while performing our contracted obligations.
Cost estimates are based on a detailed project budget and are developed based on many variables, including, but not
limited to, the scope of the work, labor productivity, the complexity of the study, the participating geographic
locations and the Company’s historical experience. To assist with the estimation of costs expected at completion
over the life of a project, regular contract reviews are performed in which performance to date is compared to the
most current estimate to complete assumptions. The reviews include an assessment of costs incurred to date
compared to expectations based on budget assumptions and other circumstances specific to the project. The total
estimated costs necessary to complete is updated and any revisions to the existing cost estimate results in cumulative
adjustments to the amount of revenue recognized in the period in which the revisions are identified. Because of the
uncertainties inherent in estimating the costs necessary to fulfill contractual obligations, it is possible that estimates
may change in the near term.
Contracts generally provide for pricing modifications upon scope of work changes. We recognize revenue, at an
amount to which we expect to be entitled, related to work performed in connection with scope changes when the
underlying services are performed and a binding contractual commitment has been established with the customer. If
our customers do not agree to pricing changes upon changes in our scope of work, we could be exposed to cost
overruns and reduced contract profitability. Costs are not deferred in anticipation of contracts being awarded or
amendments being finalized, but are expensed as incurred.
Most contracts are terminable by the customer, either immediately or according to advance notice terms specified
within the contracts. These contracts require payment of fees for services rendered through the date of termination
and may require payment for subsequent services necessary to conclude the study or close out the contract. Final
settlement amounts are agreed to with the customer based on remaining work to be performed. These amounts are
included in revenue when we believe the amount can be estimated reliably and its realization is probable. In
evaluating the probability of recognition, we consider the contractual basis for the settlement amount and the
objective evidence available to support the amount.
Certain contracts contain volume rebate arrangements with our customers that provide for rebates if certain specified
spending thresholds are met. These obligations are considered as a reduction in revenue when it appears probable
that the arrangement thresholds will be met.
We occasionally enter into incentive fee arrangements with customers that provide for additional compensation if
certain defined contractual milestones or performance thresholds are met. These additional fees are included in the
estimated transaction price when there is a basis to reasonably estimate the amount of the fee and when achievement
of the incentive milestone is deemed probable. These estimates are based on anticipated performance, our best
judgment at the time or ultimately, upon achievement of the threshold or milestone.
We record revenue net of any tax assessments by governmental authorities that are imposed and concurrent with
specific revenue generating transactions.
Performance Obligations
Substantially all of our contracts consist of a single performance obligation, as the promise to transfer the individual
services described in the contracts are not separately identifiable from other promises in the contracts, and therefore
not distinct. Revenue recognition is determined by assessing the progress of performance completed or delivered to
date compared to total services to be delivered under the terms of the arrangement. The measures utilized to assess
progress on the satisfaction of performance are specific to the performance obligation identified in the contract.
For the majority of our contract performance obligations, we utilize the input method of cost to cost to measure
progress. Under this method, the Company determines cost incurred to date for the services it provides compared to
the total estimated costs at completion.
- 43 -
For certain other contractual performance obligations, the Company has determined that an output method is the best
measure of progress. These relate to certain unitized contracts, and the Company recognizes revenue in the period in
which the unit is delivered compared to total contracted units.
Income Taxes
We are subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgment is
required in the forecasting of taxable income using historical and projected future operating results in determining
our provision for income taxes and the related assets and liabilities. The provision for income taxes includes income
taxes paid, currently payable and receivable, and deferred taxes.
We record deferred tax assets and liabilities based on temporary differences between the financial statement bases
and tax bases of assets and liabilities. Deferred tax assets are recorded for tax benefit carryforwards using tax rates
anticipated to be in effect in the year in which temporary differences are expected to reverse. If it does not appear
more likely than not that the full value of a deferred tax asset will be realized, the Company records a valuation
allowance against the deferred tax asset, with an offsetting charge to the Company’s income tax provision or benefit.
The recoverability of our deferred tax assets is estimated based on consideration of all available positive and
negative evidence, including, but not limited to, our ability to generate a sufficient level of future taxable income,
reversals of deferred tax liabilities (other than those with an indefinite reversal period), tax planning strategies and
recent financial performance. The assessment of recoverability is performed on a jurisdiction by jurisdiction basis.
Based on the analysis of the above factors, we determined that as of December 31, 2021 and 2020 a valuation
allowance in the amount of $0.9 million and $0.6 million, respectively, was required relating to certain foreign
operating loss carryforwards, and other deferred tax assets that are currently not expected to be realized. Differences
in actual results compared to our estimates and changes in our assumptions could result in an adjustment to the
valuation allowance in the future and would generally impact earnings or other comprehensive income depending on
the nature of the respective deferred asset for which the valuation allowance exists.
We have recognized certain liabilities, including penalties and interest in the amount of $2.8 million as of
December 31, 2021, within other long-term liabilities on the consolidated balance sheets. These relate to uncertain
tax positions that are subject to various assumptions and judgment. Liabilities for these uncertain tax positions are
assessed on a position by position basis. The calculation of these liabilities involves dealing with uncertainties in the
application of complex tax regulations in both domestic and foreign jurisdictions. These positions may be subject to
audit and review by tax authorities, and may result in future taxes, interest and penalties if we are unsuccessful in
defending our positions. If the calculation of liability related to uncertain tax positions proves to be more or less than
the ultimate assessment, a tax expense or benefit to expense, respectively would result. To the extent that an
unrecognized tax benefit is anticipated to be paid within one year of the balance sheet date, the Company will
classify the unrecognized tax benefit within other short-term liabilities on the balance sheet.
As of December 31, 2021 and 2020, as a result of an updated analysis of future cash needs in the United States and
opportunities for investment outside the United States, we assert that all foreign earnings will be indefinitely
reinvested and therefore we have not provided taxes on these earnings. These undistributed earnings of foreign
subsidiaries will support future growth in foreign markets and maintain current operating needs of foreign locations.
We will continue to monitor our assertion related to investment of foreign earnings. See Note 11 of the Notes to
Consolidated Financial Statements for further information regarding this assertion.
Stock Based Compensation
We have stock based compensation plans in which we issue stock based awards to employees and directors in the
form of vested common shares, stock options, stock appreciation rights (SARs), restricted stock awards (RSAs),
restricted stock units (RSUs), or other cash based or stock dividend equivalent awards. All of our currently
outstanding awards are subject to equity classification pursuant to the terms of the award grants and based on
accounting guidance which governs such transactions. Accounting guidance applicable to equity classified awards
require all stock based compensation, including vested shares, grants of employee stock options and restricted stock
to be recognized in the consolidated statements of operations based on their grant date fair values.
- 44 -
We estimate the fair value of our stock options utilizing the Black-Scholes-Merton option pricing model, which
requires the input of highly subjective assumptions including: the expected stock price volatility, the calculation of
the expected holding period of the award, the risk free interest rate and expected dividends on the underlying
common stock. Due to the lack of Company specific historical and implied volatility data, our estimate of expected
volatility is based upon a blended approach that utilizes the historical volatility of the Company's common stock for
periods in which the Company has sufficient information and the historical volatility of a group of peer companies
that are most representative of our company. The historical volatility is calculated based on a period of time
commensurate with the expected holding period assumption. The holding period represents the period that our
option awards are expected to be outstanding. We use the simplified method as prescribed by accounting guidance
governing such awards, to calculate the expected term for options granted to employees as we do not have sufficient
historical evidence data to provide a reasonable basis upon which to estimate the expected holding period. This
simplified method utilizes the mid-point between the vesting date and the date of the contractual term. The risk free
rate is based on extrapolated rates of U.S. Treasury bonds whose terms are consistent with the expected holding
period of the stock options. We have assumed a dividend yield of zero as we have not historically paid any
dividends on our common stock.
All our stock based option awards are subject to service based vesting conditions. Compensation expense related to
stock option awards to employees is recognized on a straight line basis based on the grant date fair value over the
associated service period of the award, which is equal to the vesting term.
The following table summarizes the key weighted average assumptions used in the Black-Scholes-Merton option
pricing model to calculate the fair value of options during the periods:
Expected holding period - years
Expected volatility
Risk-free interest rate
Expected dividend yield
2021
5.0
34.3%
0.9%
0.0%
Year Ended December 31,
2020
3.1
31.0%
1.0%
0.0%
2019
2.6
26.3%
2.0%
0.0%
The assumptions used in the table above reflect both grant date inputs to arrive at the grant date fair values for stock
options subject to equity-classified stock compensation accounting and reflect a fair value calculation for stock
options outstanding in the period subject to liability-classified stock compensation accounting. As of December 31,
2021, all outstanding stock based awards were subject to equity classification.
The weighted average grant date fair value of employee stock options granted was $52.70, $15.19 and $14.06 for the
years ended December 31, 2021, 2020 and 2019, respectively.
Effect of Recent Accounting Pronouncements
Refer to Note 2 of the Notes to Consolidated Financial Statements for management’s discussion of the effect of
recent accounting pronouncements.
- 45 -
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign currency
exchange rates, inflation, interest rates, and other relevant market rates or prices changes. We are exposed to market
risk from changes in foreign currency exchange rates, inflation rate and credit risk and we regularly evaluate our
exposure to such changes.
Foreign Currency Risk
We have business operations globally, and accordingly, we are exposed to foreign currency fluctuations that can
affect our financial results. For the years ended December 31, 2021 and 2020, approximately 10.6% and 11.1%,
respectively, of our revenue was derived from contracts denominated in currencies other than the U.S. dollar,
whereas approximately 25.9% and 25.2% of our operational costs, including, but not limited to, salaries, wages and
other employee benefits, were derived in foreign currencies. Of these exposures, approximately 78.5% and 79.7% of
revenue denominated in foreign currencies and approximately 47.1% and 50.8% of operational costs denominated in
foreign currencies were Euro denominated for the years ended December 31, 2021 and 2020, respectively. Our
financial statements are reported in U.S. dollars and, accordingly, fluctuations in exchange rates will affect the
translation of our revenues and expenses denominated in foreign currencies into U.S. dollars for purposes of
reporting our consolidated financial results. We recalculated our reported pre-tax income for the years ended
December 31, 2021 and 2020 using foreign exchange rates that were 10% higher and 10% lower than actual
exchange rates utilized during the year. When utilizing foreign exchange rates 10% higher than actual exchange
rates, our pre-tax income for the years ended December 31, 2021 and 2020 is negatively impacted by approximately
$12.3 million and $8.8 million, respectively. When utilizing foreign exchange rates 10% lower than actual exchange
rates, our pre-tax income for the years ended December 31, 2021 and 2020 is positively impacted by approximately
$12.3 million and $8.8 million, respectively.
We are also subject to foreign currency transaction risk for fluctuations in exchange rates during the period of time
between contract commencement and cash settlement for services that we provide in relation to the contract. This
exposure may affect our contract and operational profitability. To mitigate our foreign currency risk exposure we
provide for exchange rate fluctuation adjustments subject to certain thresholds within our contracts where contract
currency varies from currencies where costs will be incurred to support delivery of the contract.
Credit Risk
Financial instruments that subject the Company to credit risk primarily consist of cash and cash equivalents, and
accounts receivable and unbilled, net. The cash and cash equivalent balances are held and maintained with high-
quality financial institutions with reputable credit ratings and, consequently, we believe that such funds are subject
to minimal credit risk.
We generally do not require collateral or other securities to support customer receivables. In the years ended
December 31, 2021 and 2020, credit losses have been immaterial and within our expectations. Moreover, in many
cases we require advance payment from our customers for a portion of the study contract price upon the signing of a
service contract which helps to mitigate credit risk. As of the years ended December 31, 2021 and 2020, there were
no major customers accounting for more than 10% of our accounts receivable and unbilled, net.
Inflation
Our contracts that provide for services to be performed in excess of a year generally are based on inflation
assumptions for the portion of the services to be performed beyond one year. We do not have significant operations
in countries where the economy is considered highly inflationary, and do not believe in the near term that inflation
will have a material adverse impact on us. However, if actual rates are greater than our inflation assumptions,
inflation could have a material adverse effect on our operations or financial condition.
- 46 -
Interest Rates
We have no outstanding long-term debt as of December 31, 2021. We therefore no longer have meaningful interest
rate risk. However, if the need for additional liquidity arises and we utilize our Credit Facility, interest rates could
have a material adverse effect on our operations or financial condition.
- 47 -
Item 8. Financial Statements and Supplementary Data.
Management's Report on Internal Control Over Financial Reporting
Management of Medpace Holdings, Inc. (the “Company”) is responsible for establishing and maintaining adequate
internal control over financial reporting. Internal control over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements
for external reporting purposes in accordance with accounting principles generally accepted in the United States of
America. Internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the Company, (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of consolidated financial statements in accordance with accounting principles generally accepted in the
United States of America, and that receipts and expenditures are being made only in accordance with authorizations
of our management and directors, and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the
consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements
in the consolidated financial statements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2021. In making these assessments, management used the framework established by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework
(2013). Based on management’s assessment and the criteria in the COSO framework, management has concluded
that the Company’s internal control over financial reporting as of December 31, 2021 was effective.
The effectiveness of the Company’s internal control over financial reporting has been audited by Deloitte & Touche
LLP, an independent registered public accounting firm, as stated in their report included herein.
- 48 -
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Medpace Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Medpace Holdings, Inc. and subsidiaries (the
"Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive
income, shareholders' equity, and cash flows, for each of the three years in the period ended December 31, 2021, and
the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements referred
to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and
2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31,
2021, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria
established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission and our report dated February 15, 2022, expressed an unqualified opinion on the
Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that (1) relates to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition — Clinical Research– Refer to Note 2 to the financial statements
Critical Audit Matter Description
The Company recognizes contract revenue over the contract term as the service progresses, as the transfer of control
to the customer is continuous. Substantially all of the Company’s clinical research contracts consist of a single
performance obligation as the promise to transfer individual services described in the contracts are not separately
identifiable from other promises in the contracts, and therefore not distinct. The accounting for these contracts
involves judgment, particularly as it relates to the process of estimating costs to complete a contract for the
performance obligation, which includes direct costs, reimbursable out-of-pocket costs, and reimbursable investigator
site payments. Contract costs are recognized as incurred, and revenue recognition is based on cost incurred to date
for the services provided compared to the total estimated costs to complete a contract.
- 49 -
Given the judgments necessary to estimate costs to complete a contract for the performance obligation used to
recognize revenue for certain clinical research contracts over time, auditing such estimates required extensive audit
effort due to the complexity of contracts and a high degree of auditor judgment when performing audit procedures
and evaluating the results of those procedures.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s estimates of costs to complete a contract for the performance obligation
used to recognize revenue for clinical research contracts included the following, among others:
We tested the effectiveness of controls over revenue recognized throughout the contract term, including
management’s controls over estimates of future services to be delivered and costs to be incurred under
the contract.
We selected a sample of contracts and performed the following:
o
o
o
o
o
Evaluated whether the contracts were properly included in management’s calculation of contract
revenue based on the terms and conditions of each selected contract, including whether
continuous transfer of control to the customer occurred as progress was made toward fulfilling the
performance obligation.
Compared the transaction prices to the consideration expected to be received based on current
rights and obligations under the contracts and any pricing modifications and scope changes that
were agreed upon with the customers.
Tested management’s identification of distinct performance obligations by evaluating whether the
progress of performance completed or delivered to date compared to total services to be delivered
under the terms of the arrangement.
Evaluated estimates of costs to complete a contract for the performance obligation by:
Comparing costs incurred to date to the costs management estimated to be incurred to date.
Evaluating management’s ability to achieve the estimates of total contract cost by
performing corroborating inquiries with the Company’s project managers and financial
analysts, and comparing the estimates to management’s work plans and cost estimates.
Tested the mathematical accuracy of management’s calculation of revenue for the performance
obligation.
We selected a sample of costs related to performance obligations and tested the accuracy and
completeness of those costs incurred during the year.
We selected a sample of contracts and evaluated management’s ability to estimate total contract costs
accurately by comparing actual costs to management’s historical estimates
/s/ Deloitte & Touche LLP
Cincinnati, Ohio
February 15, 2022
We have served as the Company's auditor since 2002.
- 50 -
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Medpace Holdings, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Medpace Holdings, Inc. and subsidiaries (the
“Company”) as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion,
the Company maintained, in all material respects, effective internal control over financial reporting as of December
31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the
Company and our report dated February 15, 2022, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have
a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ Deloitte & Touche LLP
Cincinnati, Ohio
February 15, 2022
- 51 -
MEDPACE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share amounts)
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable and unbilled, net (includes $2.7 million and $2.6
million with related parties at December 31, 2021 and 2020, respectively)
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Goodwill
Intangible assets, net
Deferred income taxes
Other assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable (includes $0.3 million and $0.2 million with related
parties at December 31, 2021 and 2020, respectively)
Accrued expenses
Advanced billings (includes $8.3 million and $6.5 million with related
parties at December 31, 2021 and 2020, respectively)
Other current liabilities
Total current liabilities
Operating lease liabilities
Deferred income tax liability
Other long-term liabilities
Total liabilities
Commitments and contingencies (see Note 12)
Shareholders’ equity:
Preferred stock - $0.01 par-value; 5,000,000 shares authorized; no shares
issued and outstanding at December 31, 2021 and 2020, respectively
Common stock - $0.01 par-value; 250,000,000 shares authorized at
December 31, 2021 and 2020, respectively; 36,006,778 and 35,519,989
shares issued and outstanding at December 31, 2021 and 2020, respectively
Treasury stock - 180,000 and 185,000 shares at December 31, 2021 and
2020, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total shareholders’ equity
Total liabilities and shareholders’ equity
See notes to consolidated financial statements.
As Of December 31,
2021
2020
$
461,304
$
277,766
$
$
186,432
43,176
690,912
93,153
129,558
662,396
41,360
25,134
17,422
1,659,935
25,678
159,286
344,641
27,612
557,217
130,965
1,080
17,745
707,007
-
360
160,962
34,923
473,651
85,017
113,809
662,396
46,474
536
8,794
1,390,677
26,552
134,367
255,664
23,527
440,110
115,143
13,551
16,094
584,898
-
355
(5,427)
727,857
234,984
(4,846)
952,928
1,659,935
$
(5,578)
695,904
115,229
(131)
805,779
1,390,677
$
$
$
- 52 -
MEDPACE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
Revenue, net (includes $34.5 million, $15.9 million and $18.9
million with related parties for the years ended December 31,
2021, 2020 and 2019, respectively)
Operating expenses:
Direct service costs, excluding depreciation and amortization
Reimbursed out-of-pocket expenses
Total direct costs
Selling, general and administrative
Depreciation
Amortization
Total operating expenses
Income from operations
Other income (expense), net:
Miscellaneous income (expense), net
Interest (expense) income, net
Total other income (expense), net
Income before income taxes
Income tax provision
Net income
Net income per share attributable to common
shareholders:
Basic
Diluted
Weighted average common shares outstanding:
Basic
Diluted
See notes to consolidated financial statements.
2021
Year Ended December 31,
2020
2019
$
1,142,377
$
925,925 $
860,969
441,090
373,132
814,222
108,421
16,005
5,114
943,762
198,615
3,342
(105)
3,237
201,852
20,004
181,848
5.06
4.81
35,862
37,697
$
$
$
354,426
292,773
647,199
92,156
11,652
7,876
758,883
167,042
1,183
307
1,490
168,532
23,148
145,384 $
4.07 $
3.84 $
35,635
37,708
$
$
$
321,006
294,266
615,272
95,245
8,360
14,829
733,706
127,263
(863)
(1,568)
(2,431)
124,832
24,389
100,443
2.79
2.67
35,881
37,576
- 53 -
MEDPACE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands)
2021
181,848
Year Ended December 31,
2020
145,384 $
$
2019
100,443
(4,715)
177,133
$
2,610
147,994 $
(224)
100,219
Net income
Other comprehensive (loss) income
Foreign currency translation adjustments, net of taxes
Comprehensive income
$
$
See notes to consolidated financial statements.
- 54 -
(224)
2,610
(2,517)
9,153
598,856
100,443
(224)
20,741
6,467
(2,741) $ 726,283
145,384
2,610
13,784
15,992
(98,274)
(131) $ 805,779
181,848
(4,715)
14,469
17,643
(62,096)
(4,846) $ 952,928
(4,715)
MEDPACE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Amounts in thousands)
BALANCE — December 31, 2018
$
Impact to Retained Earnings from
adoption of ASU 2016-02
BALANCE — January 1, 2019
Net income
Foreign currency translation
Stock-based compensation expense
Stock options exercised
Common
Stock
Additional
Paid-In
Capital
356 $ (6,030) $ 639,381 $ (41,487) $
Treasury
Stock
(Accumulated
Deficit)
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
(2,517) $ 589,703
Total
9,153
(32,334)
100,443
356
(6,030)
639,381
4
20,741
6,463
BALANCE — December 31, 2019
$
360 $ (6,030) $ 666,585 $ 68,109 $
Net income
Foreign currency translation
Stock-based compensation expense
Stock options exercised
Repurchases of common stock
BALANCE — December 31, 2020
Net income
Foreign currency translation
Stock-based compensation expense
Stock options exercised
Repurchases of common stock
BALANCE — December 31, 2021
145,384
13,784
15,535
452
5
(10)
355 $ (5,578) $ 695,904 $ 115,229 $
$ (98,264)
$
151
14,469
17,484
8
(3)
181,848
$ (62,093)
$
360 $ (5,427) $ 727,857 $ 234,984 $
See notes to consolidated financial statements.
- 55 -
MEDPACE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation
Amortization
Stock-based compensation expense
Amortization of debt issuance costs and discount
Noncash lease expense
Deferred income tax (benefit) provision
Amortization and adjustment of deferred credit
Other
Changes in assets and liabilities:
Accounts receivable and unbilled, net
Prepaid expenses and other current assets
Accounts payable
Accrued expenses
Advanced billings
Lease liabilities
Other assets and liabilities, net
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment expenditures
Other
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock option exercises
Repurchases of common stock
Payment of debt
Net cash used in financing activities
EFFECT OF EXCHANGE RATES ON CASH,
CASH EQUIVALENTS, AND RESTRICTED CASH
INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH —
Beginning of period
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End
of period
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION—
Cash paid during the period for income taxes
Cash paid during the period for interest
Acquisition of property and equipment—non-cash
See notes to consolidated financial statements.
$
$
$
$
- 56 -
2021
Year Ended December 31,
2020
2019
$
181,848
$
145,384
$
100,443
16,005
5,114
14,469
-
16,288
(37,112)
(668)
676
(24,982)
(9,134)
1,866
26,156
88,977
(15,632)
(544)
263,327
(28,271)
(3,093)
(31,364)
17,643
(62,096)
-
(44,453)
(3,972)
183,538
277,766
11,652
7,876
13,784
-
13,924
527
(706)
(22)
(5,530)
(3,724)
(2,597)
24,231
63,407
(11,506)
1,976
258,676
(31,340)
126
(31,214)
15,992
(98,274)
-
(82,282)
666
145,846
131,920
8,360
14,829
20,741
954
9,949
10,050
(801)
1,754
(21,256)
(7,381)
4,730
21,824
44,584
(9,034)
2,121
201,867
(17,912)
(1,232)
(19,144)
6,520
-
(80,438)
(73,918)
(167)
108,638
23,282
461,304
$
277,766
$
131,920
56,243
123
6,352
$
$
$
23,105
104
18,980
$
$
$
13,235
1,489
2,529
MEDPACE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2021 and 2020, and for the Years Ended December 31, 2021, 2020 and 2019
1. BASIS OF PRESENTATION
Description of Business
Medpace Holdings, Inc. together with its subsidiaries, (“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 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.
Share Repurchases
In 2018, the Board of Directors approved a stock repurchase program which has been amended several times to
increase the aggregate amount of the stock repurchase authorization. In the first quarter of 2020, the Board of
Directors approved an increase in the stock repurchase authorization by $50.0 million. In the fourth quarter of 2020,
the Board approved the stock repurchase authorization up to $150.0 million. In the second quarter of 2021, the
Board approved an increase of $150.0 million to the stock repurchase program bringing the total repurchase
authorization up to $300.0 million. For the year ended December 31, 2021, the Company repurchased 377,783
shares for $62.1 million. For the year ended December 31, 2020, the Company repurchased 1,183,095 shares for
$98.3 million. As of December 31, 2021, the Company has remaining authorization of $190.5 million remaining
under the repurchases program.
As of February 10, 2022 the Company's Board of Directors approved an increase of $300 million to the Company's
stock repurchase program.
Repurchases under the share repurchase program are executed in the open market or negotiated transactions under
trading plans established pursuant to Rule 10b5-1. The Company constructively retired the repurchased shares
associated with these approved share repurchase programs, with all amounts paid in excess of par value reflected
within Retained earnings in the Company’s consolidated balance sheets. The repurchase program may be suspended
or discontinued at any time without notice.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Presentation
The accompanying consolidated financial statements have been prepared in accordance with generally accepted
accounting principles in the United States of America (“US GAAP”) and include the accounts and operations of the
Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
Actual results could differ from these estimates.
- 57 -
Significant items that are subject to management estimates and assumptions include revenue, net, allowances for
doubtful accounts, acquisition purchase price allocations, long-lived asset impairment and useful lives, exit
liabilities, stock-based compensation, uncertain income tax positions and contingencies.
Reportable Segments
The Company emphasizes its full service outsourcing model, providing services focused on the development,
management and execution of clinical trials. As part of this full service approach, the Company utilizes centralized
systems, customer interface technology, support functions and processes that cross service offerings and align
resources to deliver efficient clinical trial services. Given the full service approach, the chief executive officer, who
is the chief operating decision maker (“CODM”) assesses the allocation of resources based on key metrics including
revenue, backlog, and net awards by service offering and consolidated profitability and consolidated cash flows.
Based on the Company’s full service model, internal management and reporting structure, and key metrics used by
the CODM to make resource allocation decisions, management has determined that the Company’s operations
consist of a single operating segment. Therefore, results of operations are presented as a single reportable segment.
Foreign Currencies
Assets and liabilities recorded in foreign currencies on foreign subsidiary financial statements are translated at the
exchange rate on the balance sheet date, while equity accounts are translated at historical exchange rates. Revenue
and expenses are recorded at average rates of exchange during the year. Translation adjustments are recorded to
Accumulated other comprehensive loss in the consolidated statements of shareholders’ equity and consolidated
statements of comprehensive income.
Separately, net realized gains and losses on foreign currency transactions are included in Miscellaneous income
(expense), net, on the consolidated statements of operations. Foreign currency transactions resulted in a net
gain/(loss) of $2.8 million, $0.5 million, and ($0.6) million during the years ended December 31, 2021, 2020, and
2019, respectively.
Revenue Recognition
The Company generally enters into contracts with customers to provide services ranging in duration from a few
months to several years. The contract terms generally provide for payments based on a fixed fee or unit-of-service
arrangement. The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with
Customers. Revenue on contracts is recognized when or as the Company satisfies the contract performance
obligations, at the amount that reflects the Company’s cumulative progress toward delivery of the performance
obligation. This progress assessment is applied to the amount of consideration to which the Company expects to be
paid for delivery of the performance obligation. The Company’s performance obligations are generally satisfied over
time and related revenue is recognized as services are provided to meet these obligations.
Contract Assumptions
An arrangement is accounted for as a contract within the scope of ASC 606 when the Company and its customers
approve the contract, are committed to perform their respective obligations, each party can identify its rights
regarding the goods or services to be transferred, commercial substance is present, and it is probable that the
Company will collect substantially all of the consideration to which it will be entitled in exchange for the goods or
services that will be transferred to the customer.
For the Company’s services to meet this criteria, contracts generally need to be written, pending regulatory hurdles
required to commence work must be cleared, the study protocol must be completed, the customer must have
adequate funding or reasonable path to funding to execute the contracted portion of the study, and the study must be
actively moving forward. Once these criteria have been met, it is deemed that the Company and its customers are
committed to perform their respective obligations. Depending on the timing of when these criteria are met, revenue
recognition may vary significantly on a period over period basis.
- 58 -
Accounting for contracts performed over a period of time involves the use of various assumptions to estimate total
contract revenue and costs. The Company estimates expected costs to complete a contract and recognizes contracted
revenue over the life of the contract as those costs are incurred.
Cost estimates are based on a detailed project budget and are developed based on many variables, including, but not
limited to, the scope of the work, the complexity of the study, the participating geographic locations and the
Company’s historical experience. To assist with the estimation of costs expected at completion over the life of a
project, regular contract reviews are performed in which performance to date is compared to the most current
estimate to complete assumptions. The reviews include an assessment of costs incurred to date compared to
expectations based on budget assumptions and other circumstances specific to the project. The total estimated costs
necessary to complete is updated and any revisions to the existing cost estimate results in cumulative adjustments to
the amount of revenue recognized in the period in which the revisions are identified. In the case of cost estimates
related to activities legally contracted as reimbursable in nature, including but not limited to investigator fee activity,
these estimates also influence the Company’s assumed contract value and assumed remaining performance
obligations. Because of the uncertainties inherent in estimating the costs necessary to fulfill contractual obligations,
it is possible that estimates may change in the near term, resulting in a material change in revenue reported.
Contracts generally provide for pricing modifications upon scope of work changes. The Company recognizes
revenue, at an amount to which it expects to be entitled, related to work performed in connection with scope changes
when the underlying services are performed and a binding contractual commitment has been established with the
customer. If the Company’s customers do not agree to contract changes upon changes in the Company’s scope of
work, the Company could be exposed to cost overruns and reduced contract profitability. Costs are not deferred in
anticipation of contracts being awarded or amendments being finalized, but are expensed as incurred.
Most contracts are terminable by the customer, either immediately or according to advance notice terms specified
within the contracts. These contracts require payment of fees for services rendered through the date of termination
and may require payment for subsequent services necessary to conclude the study or close out the contract. Final
settlement amounts are agreed to with the customer based on remaining work to be performed. These amounts are
included in revenue when the Company believes the amount can be estimated reliably and its realization is probable.
In evaluating the probability of recognition, the Company considers the contractual basis for the settlement amount
and the objective evidence available to support the amount.
Certain contracts contain volume rebate arrangements with our customers that provide for rebates if certain specified
spending thresholds are met. These obligations are considered as a reduction in revenue when it appears probable
that the arrangement thresholds will be met, which can be at contract inception. Total revenue is presented net of
rebates of $7.2 million, $4.8 million and $6.2 million in the consolidated statements of operations during the years
ended December 31, 2021, 2020 and 2019, respectively.
The Company occasionally enters into incentive fee arrangements with customers that provide for additional
compensation if certain defined contractual milestones or performance thresholds are met. These additional fees are
included in the estimated transaction price when there is a basis to reasonably estimate the amount of the fee and
when achievement of the incentive milestone is deemed probable. These estimates are based on anticipated
performance, the Company’s best judgment at the time or ultimately, upon achievement of the threshold or
milestone.
The Company records revenue net of any tax assessments by governmental authorities that are imposed and
concurrent with specific revenue generating transactions.
Performance Obligations
Substantially all of the Company’s contracts consist of a single performance obligation, as the promise to transfer
the individual services described in the contracts are not separately identifiable from other promises in the contracts,
and therefore not distinct. Revenue recognition is determined by assessing the progress of performance completed or
delivered to date compared to total services to be delivered under the terms of the arrangement. The measures
utilized to assess progress on the satisfaction of performance are specific to the performance obligation identified in
the contract.
- 59 -
For the majority of the Company’s contract performance obligations, it utilizes the input method of cost to cost to
measure progress, as the Company has determined that it is the most consistent measure of progress among contract
tasks and represents the most faithful depiction of the transfer of services over the contract life. Under this method,
the Company determines cost incurred to date for the services it provides compared to the total estimated costs at
completion.
For certain other contractual performance obligations, the Company has determined that an output method is the best
measure of progress. These relate to certain unitized contracts, and the Company recognizes revenue in the period in
which the unit is delivered compared to total contracted units.
As of December 31, 2021 and 2020, the Company had approximately $2.1 billion and $1.6 billion of performance
obligations remaining to be performed for active projects.
Concentration of Credit Risk
Financial instruments that subject the Company to credit risk primarily consist of cash and cash equivalents and
accounts receivable. The cash and cash equivalent balances are held and maintained with financial institutions with
reputable credit ratings and, consequently, the Company believes that such funds are subject to minimal credit risk.
The Company generally does not require collateral or other securities to support customer receivables. In the years
ended December 31, 2021, 2020 and 2019, credit losses have been immaterial and within management’s
expectations. At December 31, 2021 and 2020, there were no customers accounting for more than 10% of the
Company’s accounts receivable.
Costs and Expenses
The Company incurs costs associated with service delivery including direct labor and related employee benefits,
laboratory supplies, and other expenses. These costs are recorded in Direct service costs, excluding depreciation and
amortization as a component of Total direct costs in the accompanying consolidated statements of operations. In
addition, the Company incurs expenses on behalf of its customers for various project expenditures including, but not
limited to, investigator site payments, travel, meetings, printing, and shipping and handling fees that are reimbursed
by its customers at cost. These costs are included in Reimbursable out-of-pocket expenses as a component of Total
direct costs in the accompanying consolidated statements of operations. Total direct costs are expensed as incurred
and are not deferred in anticipation of contracts being awarded or finalization of changes in scope. Selling, general
and administrative includes administrative payroll and related employee benefits, sales and marketing expenses,
administrative travel, and other expenses not directly related to service delivery. Rent, utilities, supplies, and
software license expenses are allocated between Total direct costs, and Selling, general and administrative based on
the estimated contribution among service delivery and support function efforts on a percentage basis. Depreciation
and amortization is reported separately in the accompanying consolidated statements of operations. Costs of sales
and marketing activities not subject to recovery pursuant to customer contracts, such as feasibility assessments and
negotiation of contracts, are expensed as incurred and recorded as a component of Selling, general and
administrative in the accompanying consolidated statements of operations.
Advertising expenses are recorded as a component of Selling, general and administrative expenses in the
accompanying consolidated statements of operations. Total advertising expenses of $1.2 million, $0.7 million and
$0.7 million were incurred during the years ended December 31, 2021, 2020 and 2019, respectively.
Income Taxes
The Company’s consolidated US federal income tax return is comprised of its US subsidiaries, one of its foreign
branches located in Korea and certain foreign subsidiaries.
The Company provides for income taxes on all transactions that have been recognized in the consolidated financial
statements in accordance with accounting guidance governing income tax accounting. Accordingly, the impact of
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changes in income tax laws on deferred tax assets and deferred tax liabilities are recognized in net earnings in the
period during which such changes are enacted.
The Company records deferred tax assets and liabilities based on temporary differences between the financial
statement bases and tax bases of assets and liabilities. Deferred tax assets are recorded for tax benefit carryforwards
using tax rates anticipated to be in effect in the year in which the temporary differences are expected to reverse. If it
does not appear more likely than not that the full value of a deferred tax asset will be realized, the Company records
a valuation allowance against the deferred tax asset, with an offsetting charge to the Company’s income tax
provision or benefit. The value of the Company’s deferred tax assets is estimated based on, among other things, the
Company’s ability to generate a sufficient level of future taxable income. In estimating future taxable income, the
Company has considered both positive and negative evidence, such as historical and forecasted results of operations,
and has considered the implementation of prudent and feasible tax planning strategies.
The Company’s accounting position is that unremitted foreign earnings are indefinitely reinvested. Therefore, the
Company has not recorded deferred foreign withholding taxes on the unremitted foreign earnings. Refer to Note 11
for further information regarding this assertion.
The Company follows accounting guidance related to accounting for uncertainty in income taxes which requires
significant judgment in determining what constitutes an individual tax position as well as assessing the possible
outcome of each tax position. Changes in judgments as to recognition or measurement of tax positions can
materially affect the estimate of the effective tax rate, and, consequently, the Company’s consolidated financial
results. The Company considers many factors when evaluating and estimating tax positions and tax benefits, which
may require periodic adjustments and which may not accurately anticipate actual outcomes. In addition, the
calculation of tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a
multitude of jurisdictions. The Company determines its liability for uncertain tax positions globally. If the payment
of these amounts ultimately proves to be unnecessary, the reversal of liabilities would result in tax benefits being
recognized in the period when it is determined the liabilities are no longer necessary. If the calculation of the
liability related to uncertain tax positions proves to be more or less than the ultimate assessment, a tax expense or tax
benefit would result. Interest and penalties associated with uncertain tax positions are recognized as components of
the Company’s Income tax provision.
Research and Development Credits
Research and development credits are available to the Company under tax laws in certain jurisdictions, based on
qualifying research and development spend as defined under those tax laws. Certain tax jurisdictions provide
refundable credits that are not wholly dependent on the Company’s income tax status or income tax position. In
these circumstances the benefit of the credits is recorded as a reduction of operating expense. When they are wholly
dependent upon the Company’s income tax position, research and development credits are recognized as a reduction
of income tax expense.
Stock-Based Compensation
The Company has stock-based employee compensation plans for which it incurs compensation expense.
Equity Awards
In connection with the Company's initial public offering (IPO), the Board approved the formation of the 2016
Incentive Award Plan (the “2016 Plan”), which replaced our 2014 Equity Incentive Plan (the “2014 Plan”). The
2016 Plan provides for long-term equity incentive compensation for key employees, officers and non-employee
directors. A variety of discretionary awards (collectively, the “Awards”) for employees and non-employee directors
are authorized under the 2016 Plan, including vested common shares, stock options, stock appreciation rights
(SARs), restricted stock awards (RSAs), restricted stock units (RSUs), or other cash based or stock dividend
equivalent awards. The vesting of such awards may be conditioned upon either a specified period of time or the
attainment of specific performance goals as determined by the administrator of the 2016 Plan. The option price and
term are also subject to determination by the administrator with respect to each grant. Option prices are generally
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expected to be set at the market price of our common stock at the date of grant and option terms are not expected to
exceed ten years. All outstanding Awards under the 2016 Plan are equity classified awards.
The Company created the 2014 Plan, providing for the future issuance of vested shares, stock options, RSAs and
RSUs in Medpace Holdings, Inc.’s common stock (the “2014 Plan Awards”). The 2014 Plan Awards were subject to
either equity or liability-classification pursuant to the terms of the participant’s award agreement and the 2014 Plan
based on accounting guidance which governs such transactions. All outstanding Awards under the 2014 Plan are
equity classified awards.
Stock-based compensation expense for both the 2016 Plan and 2014 Plan is calculated using the fair value method
on the grant date. The Company expenses stock-based compensation over the term of the award based on the vesting
described in the award agreement. Stock-based compensation expense is allocated between Total direct costs, and
Selling, general and administrative in the consolidated statements of operations based on the underlying
classification and scope of work for the employees receiving the Awards.
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 RSAs 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 RSUs 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. 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.
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The following table sets forth the computation of basic and diluted earnings per share for the years ended
December 31, 2021, 2020 and 2019 (in thousands, except for earnings per share):
Weighted-average shares:
Common shares outstanding
RSAs
Total weighted-average shares
Earnings per common share—Basic
Net income
Less: Undistributed earnings allocated to RSAs
Net income available to common shareholders—
Basic
Net income per common share—Basic
Basic weighted-average common shares
outstanding
Effect of diluted shares
Diluted weighted-average shares outstanding
Net income per common share—Diluted
2021
Year Ended December 31,
2020
2019
35,862
90
35,952
181,848
(458)
181,390
5.06
$
$
$
35,635
112
35,747
145,384
(459)
144,925
4.07
$
$
$
35,862
1,835
37,697
35,635
2,073
37,708
35,881
100
35,981
100,443
(279)
100,164
2.79
35,881
1,695
37,576
4.81
$
3.84
$
2.67
$
$
$
$
For the years ended December 31, 2021, 2020 and 2019, the computation of diluted EPS excludes the effect of (in
thousands) 9, 204 and 248 stock options, respectively, due to each respective period’s average fair value of the
Company’s common stock not exceeding the exercise prices.
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.
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 December 31, 2021. There were no
transfers between Level 1, Level 2, or Level 3 during the years ended December 31, 2021, 2020 and 2019.
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Cash and Cash Equivalents, including Restricted Cash
Cash and cash equivalents, including restricted cash, are invested in demand deposits and money market funds, all
of which have an original maturity of three months or less. Restricted cash consists of customer funds received in
advance and subject to specific restrictions, as well as amounts placed in escrow for contingent payments resulting
from acquisitions or other contractual arrangements.
Accounts Receivable and Unbilled, Net
Accounts receivable represent amounts due from the Company’s customers who are concentrated primarily in the
pharmaceutical, biotechnology, and medical device industries. Unbilled services represent revenue recognized to
date that is currently not billable to the customer pursuant to contractual terms. In general, amounts become billable
upon the achievement of negotiated contractual events or in accordance with predetermined payment schedules.
Amounts classified to unbilled services are those billable to customers within one year from the respective balance
sheet date.
The Company grants credit terms to its customers prior to signing a service contract and monitors the
creditworthiness of its customers on an ongoing basis. The Company maintains an allowance for doubtful accounts
based on specific identification of accounts receivable that are at risk of not being collected. Uncollectible accounts
receivable are written off only after all reasonable collection efforts have been exhausted. Moreover, in some cases
the Company requires advance payment from its customers for a portion of the study contract price upon the signing
of a service contract. These advance payments are deferred and recognized as revenue as services are performed.
Inventory
Inventory, which consists primarily of laboratory supplies, is valued at the lower of cost or market. Inventory is
stated at purchased cost using the first-in, first out (FIFO) cost method. The inventory balance is included in Prepaid
expenses and other current assets in the consolidated balance sheets.
Property and Equipment
Property and equipment is recorded at cost. Depreciation is provided 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. The Company capitalizes costs of computer software developed
for internal use and amortizes these costs on a straight-line basis over the estimated useful life, not to exceed three
years. Leasehold improvements and deemed assets from landlord building construction are capitalized and
amortized on a straight-line basis over the shorter of the estimated useful life of the improvement or the associated
remaining lease term. Repairs and maintenance are expensed as incurred.
Leases
The Company enters into contracts to lease facilities and equipment to be used in its operations. At contract
inception, the Company determines whether a contract contains a lease within the scope of Accounting Standard
Codification Topic 842, Leases (ASC 842), and determines the appropriate classification of the lease as either
operating or finance.
Contracts containing operating leases are recorded on the consolidated balance sheets within Operating lease right-
of-use (ROU) assets, Other current liabilities, and Operating lease liabilities. Operating lease ROU assets and
operating lease liabilities are recognized based on the present value of the future lease payments over the lease term
as of the lease commencement date. In addition, operating ROU assets also include lease payments made and
exclude lease incentives and initial direct costs incurred. Operating lease expense for lease payments is recognized
on a straight-line basis over the lease term within Total direct costs and Selling, general, and administrative
expenses. Variable lease costs are primarily related to adjustments for inflation, common area maintenance and
property tax and are recognized within Total direct costs and Selling, general and administrative expenses.
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Contracts containing finance leases are recognized initially in the same manner as Operating lease ROU assets and
liabilities; however, they are recorded on the consolidated balance sheets within Property and equipment, net, Other
current liabilities, and Other long-term liabilities. Finance lease assets are subsequently amortized on a straight line
basis over the lease term within Depreciation expense, while the lease liability is accreted within Interest expense,
net utilizing the discount rate determined at lease commencement and reduced by periodic lease payments over the
lease term. Currently, the Company does not have any finance leases.
The discount rate utilized in determining the present value of future payments for both operating and finance leases,
unless implicit in the lease contract, is determined based on the Company’s collateralized incremental borrowing
rate based on the information available at lease commencement.
Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will
exercise that option as determined at lease commencement.
Many of our lease agreements have both lease and non-lease components, which the Company has elected to treat as
a single lease component for recognition purposes.
The Company may enter into short-term leases (leases with a lease term of less than one year), which it has elected
not to capitalize as assets and liabilities on the consolidated balance sheets, but instead recognizes lease payments
within Total direct costs and Selling, general, and administrative expenses on a straight line basis over the lease
term.
Goodwill and Intangible Assets
Goodwill
Goodwill represents the excess of purchase price over the fair value of net assets acquired in business combinations.
The carrying value of goodwill is reviewed at least annually for impairment, or as indicators of potential impairment
are identified, at the reporting unit level. The reporting units are Phase I-IV clinical research services and
Laboratories as of December 31, 2021.
The Company performs its annual impairment tests during the fourth quarter each year, comparing the fair value of
each of our reporting units with its carrying amount, inclusive of goodwill. A goodwill impairment charge would be
recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. Fair value is
estimated using a combination of the income approach, a discounted cash flow analysis, and the market approach,
utilizing the guideline company method. There was no indication of impairment related to goodwill based on the
fourth quarter 2021 assessment.
Intangible Assets
The Company has an indefinite lived intangible asset related to its trade name. The carrying value of the trade name
asset is reviewed at least annually for impairment, or as indicators of potential impairment are identified. The
Company performs its annual impairment test in the fourth quarter each year in conjunction with its annual
assessment of goodwill. The assessment consists of comparing the carrying value of the indefinite lived intangible
asset to its estimated fair value, utilizing the relief from royalty method, an income approach valuation. There was
no indication of impairment related to the trade name asset based on the fourth quarter 2021 assessment.
Finite-lived intangible assets consist mainly of the value assigned to customer relationships and developed
technologies. Finite-lived intangible assets are amortized straight-line or using an accelerated method over their
estimated useful lives, which range in term from five to fifteen years.
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Impairment of Long-Lived Assets
Long-lived assets, primarily property and equipment and finite-lived intangible assets, are reviewed for impairment
and the reasonableness of the estimated useful lives whenever events or changes in circumstances indicate that the
carrying amounts of the assets may not be recoverable or that a change in useful life may be appropriate.
Recoverability for long-lived assets is determined by comparing the forecasted undiscounted cash flows of the
operation to which the assets relate to the carrying amount of the assets. If the undiscounted cash flows are less than
the carrying amount of the assets, then the Company reduces the carrying value of the assets to estimated fair values,
which are primarily based upon forecasted discounted cash flows. Fair value of long-lived assets is determined
based on a combination of discounted cash flows and market multiples.
Advanced Billings
Advanced billings represents cash received from customers, or billed amounts per an agreed upon payment
schedule, in advance of services being performed or revenue being recognized.
Recently Adopted Accounting Standards
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASC 842”). The guidance in ASC 842
supersedes the lease recognition requirements in ASC Topic 840, Leases (FAS 13) (“ASC 840”). The objective of
ASC 842 is to increase transparency and comparability among organizations by requiring the recognition of Right-
of-use assets (“ROU assets”) and Lease liabilities on the balance sheet. In addition, ASC 842 introduces additional
disclosure requirements that are meant to enable users of the financial statements to assess the amount, timing, and
uncertainty of cash flows arising from leases. ASC 842 became effective for the Company in the first quarter of
2019.
ASC 842 allows by policy election, an entity to choose its transition approach. Entities must adopt ASC 842 on a
either a modified retrospective basis to each prior reporting period presented or through an optional alternative
method referred to as the “Comparatives Under ASC 840 Option” transition approach which allows entities to apply
the new requirements to only those leases that exist as of January 1, 2019. The Company has elected to adopt ASC
842 utilizing the Comparatives Under ASC 840 Option. As such, ASC 842 is applied on a prospective basis as of
January 1, 2019 and any cumulative catch up adjustment for differences between ASC 842 and ASC 840 were
recorded upon adoption.
ASC 842 also allows for the election of certain practical expedients that are meant to ease the burden of transitioning
to ASC 842 while still achieving compliance. The Company elected the “package of three” practical expedient
allowing the Company to carry forward decisions made and documented under current U.S. GAAP, rather than
reassessing all of the Company’s contracts to determine whether they are or contain leases and how they would be
classified under ASC 842. The Company has decided not to elect the hindsight practical expedient, which had it
been elected, would require the Company to reassess the lease term and assessment of impairment for all of the
Company’s leases using the facts and circumstances known up to the adoption date of the standard.
ASC 842 had a material impact on our consolidated balance sheets, as all leases currently classified as operating
were recognized as ROU assets and lease liabilities upon adoption. In addition, it was determined that two contracts
entered into with a related party for two of the Company’s corporate offices that were classified as deemed assets
and deemed liabilities under ASC 840 were determined to be operating leases under ASC 842. These deemed assets
and liabilities were reclassified on the consolidated balance sheets to ROU assets and lease liabilities and an
adjustment to retained earnings was recorded as a cumulative adjustment for the difference in depreciation expense
and operating lease expense as of the date of adoption.
- 66 -
The impact of the adoption of ASC 842 as of January 1, 2019 is as follows:
ASSETS
Current assets:
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Total assets
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities:
Other current liabilities
Total current liabilities
Operating lease liabilities
Deemed landlord liability, less current portion
Deferred income tax liability
Other long-term liabilities
Total liabilities
Shareholders’ equity:
Accumulated deficit
Total shareholders’ equity
Total liabilities and shareholders’ equity
$
January 1, 2019
Adjustments
December 31, 2018
As of
21,013
177,744
37,613
51,854
1,004,775
$
$
(370)
(370)
(14,642)
51,854
36,842
$
10,951
263,116
45,294
-
3,158
14,630
405,919
6,090
6,090
45,294
(24,484)
2,719
(1,930)
27,689
(32,334)
598,856
1,004,775
$
9,153
9,153
36,842
$
21,383
178,114
52,255
-
967,933
4,861
257,026
-
24,484
439
16,560
378,230
(41,487)
589,703
967,933
In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic
220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” ASU 2018-02
allows for an entity to elect to reclassify the income tax effects on items within accumulated other comprehensive
income resulting from U.S. tax reform to retained earnings. The guidance is effective for fiscal years beginning after
December 15, 2018 with early adoption permitted, including interim periods within those years. The Company
adopted this standard in the first quarter of 2019 and it had no impact on the consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, “Intangibles- Goodwill and Other (Topic 350): Simplifying the
Test for Goodwill Impairment.” ASU 2017-04 simplifies how an entity assesses goodwill for impairment by
eliminating Step 2 from the goodwill impairment test. As amended, the goodwill impairment test will consist of
comparing the fair value of a reporting unit with its carrying amount. An entity should recognize a goodwill
impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The
guidance is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. The
Company adopted this standard on a prospective basis in the first quarter of 2019 and it had no impact to the
consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments” intended to provide financial statement users with more decision-useful
information about expected credit losses and other commitments to extend credit held by the reporting entity. The
standard replaces the incurred loss impairment methodology with one that reflects expected credit losses and
requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.
The guidance is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. The
- 67 -
Company adopted this standard in the first quarter of 2020 and it had no material impact to the consolidated
financial statements.
Recently Issued Accounting Standards
In November 2021, the FASB issued ASU 2021-10, "Government Assistance (Topic 832): Disclosures by Business
Entities about Government Assistance" which requires entities to provide disclosures on material government
assistance transactions for annual reporting periods. The disclosures include information around the nature of the
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 agreements, including
commitments and contingencies. The guidance is effective for annual periods beginning after December 15, 2021,
with early adoption permitted. The Company is currently evaluating the effect this standard will have on its
consolidated financial statements and related disclosures.
3. CONTRACT ASSETS AND CONTRACT LIABILITIES
Contract assets and liabilities are reflected in the Company’s 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 are those billable to customers within one
year from the respective balance sheet date.
Accounts receivable and unbilled, net consisted of the following at December 31 (in thousands):
Accounts receivable
Unbilled receivables
Less: allowance for doubtful accounts
Total accounts receivable and unbilled, net
Contract Liabilities
$
$
2021
2020
150,496
36,107
(171)
186,432
$
$
137,912
23,396
(346)
160,962
Advanced billings represents cash received from customers, or billed amounts per an agreed upon payment
schedule, in advance of services being performed or revenue being recognized. During the year ended December 31,
2021, the Company recognized approximately $221.7 million of revenue that was included in the Advanced billings
balance at the beginning of the year.
Advanced billings consisted of the following at December 31 (in thousands):
Advanced billings
2021
2020
$
344,641
$
255,664
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A rollforward of allowance for doubtful account activity is as follows:
Allowance for doubtful accounts - beginning balance
Current year provision
Write-offs, recoveries and the effects of foreign currency
exchange
Allowance for doubtful accounts - ending balance
2021
Year Ended December 31,
2020
2019
(346) $
(11)
186
(171) $
(583) $
(167)
404
(346) $
(1,032)
(263)
712
(583)
$
$
4. PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of the following at December 31 (in thousands):
Land
Equipment
Furniture, fixtures, and leasehold improvements
Computer hardware, software, and phone equipment
Buildings
Construction-in-progress
Property and equipment at cost
Less: Accumulated depreciation
Property and equipment, net
2021
2020
$
$
2,446
27,976
66,295
23,308
13,770
10,459
144,254
(51,101)
93,153
$
$
2,492
24,049
61,238
18,111
14,309
3,926
124,125
(39,108)
85,017
Depreciation expense was $16.0 million, $11.7 million and $8.4 million for the years ended December 31, 2021,
2020 and 2019, respectively.
5. GOODWILL AND INTANGIBLE ASSETS
Goodwill
Total assets carried on the balance sheet and not remeasured to fair value on a recurring basis, identified as Level 3
measurements, as of December 31, 2021 are $694.0 million, comprised of $662.4 million of goodwill and $31.6
million of identified indefinite-lived intangible assets. Accumulated goodwill impairment losses to date amounts to
$9.3 million, all of which was recognized in the year ended December 31, 2015.
Intangible Assets, Net
Intangible assets, net consisted of the following at December 31 (in thousands):
Intangible assets:
Finite-lived intangible assets:
Carrying amount:
Customer relationships
Accumulated amortization:
Customer relationships
Total finite-lived intangible assets, net
Trade name (indefinite-lived)
Total intangible assets, net
2021
2020
145,051
145,051
(135,337)
9,714
31,646
41,360 $
(130,223)
14,828
31,646
46,474
$
- 69 -
As of December 31, 2021, estimated amortization expense of the Company’s intangible assets for each of the next
five years and thereafter is as follows (in thousands):
2022
2023
2024
2025
2026
Later years
6. ACCRUED EXPENSES
Accrued expenses consisted of the following at December 31 (in thousands):
Employee compensation and benefits
Project related reimbursable expenses
Other
Total accrued expenses
7. DEBT
Amortization
3,353
$
2,199
1,443
946
620
1,153
9,714
$
$
2021
57,846 $
91,839
9,601
2020
40,208
87,092
7,067
$ 159,286 $ 134,367
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 (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. The Loan Agreement provides that outstanding
balances under the Credit Facility will bear interest at a rate of LIBOR plus 100 basis points (1.00%). On March 30,
2020, the Company amended the Credit Facility to extend its expiration date to March 31, 2021 and add provisions
for alternative interest rates when certain interbank market offered rates are not available. On March 29, 2021 the
Company amended the Credit Facility expiration date to March 31, 2022. On December 27, 2021, the Company
entered into Amendment No. 3 to the Credit Facility, which extends the expiration date of the revolving credit note
to March 31, 2023 and adds provisions for alternative rates of interest as a result of global reference rate initiatives
and removes the ability to obtain advances in any currency other than U.S. Dollars. After the LIBOR cessation date
of December 31, 2021, the Credit Facility will bear interest at a rate of the sum of The Secured Overnight Financing
Rate (SOFR) and the benchmark replacement adjustment plus 100 basis points (1.00%).
The Loan Agreement contains other customary loan terms, representations and warranties, and affirmative and
negative covenants, in each case, subject to customary limitations, exceptions and exclusions. The Loan Agreement
contains certain events of default, including, among others, non-payment of principal or interest and breach of the
covenants.
As of December 31, 2021 and 2020, respectively, there were no outstanding borrowings under the Credit Facility
and $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 one year to 19 years.
- 70 -
Many of the Company’s leases include options to extend the leases on a month to month basis or for set periods for
up to 20 years. Many leases also include options to terminate the leases within one year or per other contractual
terms.
The components of lease expense were as follows (in thousands):
Operating lease cost
Variable lease cost
Year Ended December 31,
2021
2020
$
$
23,873
6,627
$
$
19,842
5,335
Supplemental cash flow information related to the leases was as follows (in thousands):
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
$
16,266
$
13,956
Right-of-use assets obtained in exchange for lease obligations:
Operating leases
33,133
73,905
Supplemental balance sheet information related to the leases was as follows at December 31 (in thousands):
Year Ended December 31,
2021
2020
Operating lease right-of-use assets
Other current liabilities
Operating lease liabilities
Total operating lease liabilities
Weighted Average Remaining Lease Term (years)
Operating leases
Weighted Average Discount Rate
Operating leases
$
$
$
2021
129,558
16,276
130,965
147,241
$
$
$
2020
113,809
15,890
115,143
131,033
12.0
5.5%
12.9
5.9%
Lease payments due related to lease liabilities as of December 31, 2021 were as follows (in thousands):
Related Party
Operating Leases
Non-Related Parties
Operating Leases
Total
Operating Leases
2022
2023
2024
2025
2026
Later years
Total lease payments
Less: imputed interest
Total
$
$
10,899
11,025
11,154
11,286
11,422
106,988
162,774
(58,989)
103,785
$
$
12,293
11,093
7,971
6,049
4,706
6,147
48,259
(4,803)
43,456
$
$
23,192
22,118
19,125
17,335
16,128
113,135
211,033
(63,792)
147,241
As of December 31, 2021, we have several additional leases with contractual obligations, which have not yet
commenced, with future payments of $12.2 million.
- 71 -
9. SHAREHOLDERS’ EQUITY
Stock-Based Compensation
2016 Incentive Award Plan
On August 11, 2016 in connection with the Company's IPO, the Board approved the formation of the 2016 Incentive
Award Plan (the “2016 Plan”), which replaced our 2014 Equity Incentive Plan (the “2014 Plan”). The 2016 Plan
provides for long-term equity incentive compensation for key employees, officers and non-employee directors. A
variety of discretionary awards (collectively, the “Awards”) for employees and non-employee directors are
authorized under the 2016 Plan, including vested shares, stock options, stock appreciation rights (SARs), restricted
stock awards (RSAs), restricted stock units (RSUs), or other cash based or stock dividend equivalent awards, which
are all equity-classified instruments under the 2016 Plan. The number of shares registered and available for grant
under the 2016 Plan is 6,000,000. The vesting of such awards may be conditioned upon either a specified period of
time or the attainment of specific performance goals as determined by the administrator of the 2016 Plan. The option
price and term are also subject to determination by the administrator with respect to each grant. Option prices are
generally expected to be set at the market price of the Company’s common stock at the date of grant and option
terms are not expected to exceed ten years.
The Company granted 374,235 awards to employees under the 2016 Incentive Award Plan during the year ended
December 31, 2021, consisting of 74,725 RSU and 205,086 stock option awards vesting after four and a half years,
27,854 RSU and 9,000 stock option awards vesting after four years, and 57,570 stock option awards vesting after
two years. The Company granted an additional 10,932 stock option awards to non-employee directors under the
2016 Incentive Award Plan, during the year ended December 31, 2021. These awards will vest on the earlier of (a)
the day immediately preceding the date of the first annual meeting following the date of grant and (b) the first
anniversary of the date of grant, subject to the non-employee director continuing in service through the applicable
vesting date.
The Company granted 405,237 awards to employees under the 2016 Incentive Award Plan during the year ended
December 31, 2020, consisting of 20,724 RSA and 177,808 RSU vesting after four years, 4,800 stock option awards
and 2,500 RSU vesting after three years and 199,405 fully-vested stock option awards. The Company granted an
additional 23,148 stock option awards to non-employee directors under the 2016 Incentive Award Plan, during the
year ended December 31, 2020. These awards will vest on the earlier of (a) the day immediately preceding the date
of the first annual meeting following the date of grant and (b) the first anniversary of the date of grant, subject to the
non-employee director continuing in service through the applicable vesting date.
The Company granted 816,286 awards to employees under the 2016 Incentive Award Plan during the year ended
December 31, 2019, consisting of 10,000 stock option awards and 227,610 RSU vesting after four years, 5,000 stock
option awards vesting after one year, 551,676 fully-vested stock option awards and 22,000 stock option awards with
vesting in twelve equal monthly installments beginning on March 31, 2019. The Company granted an additional
41,853 stock option awards to non-employee directors under the 2016 Incentive Award Plan, during the year ended
December 31, 2019. These awards will vest on the earlier of (a) the day immediately preceding the date of the first
annual meeting following the date of grant and (b) the first anniversary of the date of grant, subject to the non-
employee director continuing in service through the applicable vesting date.
The 2016 Plan expires in 2026, except for awards then outstanding, and is administered by the Board. All Awards
granted at the IPO or thereafter were or will be issued under the 2016 Plan.
The Company satisfies stock option exercises and vested stock awards with treasury shares or newly issued shares.
Shares available for future stock compensation grants under the 2016 Plan totaled 2.6 million and 2.9 million at
December 31, 2021 and 2020, respectively.
- 72 -
2014 Equity Incentive Plan
The 2014 Plan for employees and directors provided the issuance of vested shares, stock options, RSAs and RSUs in
Medpace Holdings, Inc.’s common stock. The awards were granted to key employees as additional compensation
for services rendered and as a means of retention over the vesting period, typically three to four years. RSAs
awarded under the 2014 Plan were subject to automatic forfeiture upon departure until vested and entitle the
shareholder to all rights of common stock ownership except that they may not be sold, transferred, pledged or
otherwise disposed of during the restriction period, except as noted in the following paragraph. The 2014 Plan
allowed for the issuance of non-qualified stock options to employees, officers, and directors under this plan. Under
the 2014 Plan, options could be granted with an exercise price equal to or greater than the fair value of common
stock at the grant date as determined by the Board of Directors. The stock options, if unexercised, expired seven
years from the date of grant. The awards under the 2014 Plan were equity classified instruments for all periods
presented.
In the third quarter of 2019, Medpace Investors, LLC (“MPI”), a related party to the Company, filed a Tender Offer
Statement (“Tender Offer”) offering to purchase, for cash, vested stock options of employee holders of options
outstanding from the 2014 Plan. The Tender Offer resulted in the tender and purchase of 229,431 vested options
from employee holders of options by MPI. Under generally accepted accounting guidance governing such
transactions, because the Tender Offer was made by an economic interest holder in the Company, this transaction is
accounted for as a settlement of vested options and a reissuance of options at fair value as of the transaction date.
Expense related to the reissuance of options to MPI is included as stock-based compensation expense of $5.1 million
within Selling, general and administrative expenses during the year ended December 31, 2019.
Equity Awards
Valuation Assumptions
The Company determines the fair value of stock options using the Black-Scholes-Merton option pricing model (the
“BSM Model”). The BSM Model is primarily affected by the fair value of the Company’s common stock (see
restricted share valuation discussion below), the expected holding period for the option, expected stock price
volatility over the term of the awards, the risk-free interest rate, and expected dividends.
The following table sets forth the key weighted-average assumptions used in the BSM Model to calculate the fair
value of options:
Expected holding period - years
Expected volatility
Risk-free interest rate
Expected dividend yield
2021
5.0
34.3%
0.9%
0.0%
Year Ended December 31,
2020
3.1
31.0%
1.0%
0.0%
2019
2.6
26.3%
2.0%
0.0%
The assumptions used in the table above reflect grant date inputs to arrive at the grant date fair values for stock
options subject to equity-classified stock compensation accounting.
The expected holding period represents the period of time the grants are expected to be outstanding. The Company
uses the simplified method, as prescribed by accounting guidance governing such awards, to calculate the expected
holding period for options granted to employees as we do not have sufficient historical evidence data to provide a
reasonable basis upon which to estimate the expected holding period. For options valued by the Company for the
years ended December 31, 2021, 2020 and 2019, respectively, the expected holding period is based on an average
between the midpoint of the vesting date and the expiration date of the options.
- 73 -
Due to the lack of Company specific historical and implied volatility data, our estimate of expected volatility is
based upon a blended approach that utilizes the historical volatility of the Company's common stock for periods in
which the Company has sufficient information and the historical volatility of a group of peer companies that are
most representative of our company.
The risk-free interest rate is based on the yield on U.S. Treasury obligations with remaining durations equal to the
expected holding period of the options. The expected dividend yield is assumed to be zero based on recent and
anticipated dividend activity.
Subsequent to the Company’s IPO in August 2016, the fair value of common stock is based upon the market price of
the Company’s common stock on the date of grant as listed on the NASDAQ. Due to the absence of an active
market for the Company’s common stock prior to the IPO, the Company determined the fair value of restricted
shares by obtaining an independent valuation of the fair value of the Company’s equity, applying a discount for lack
of marketability, and then calculating the implied share price. The fair value of the Company was estimated
primarily using an income approach which is based on assumptions and estimates made by management and,
secondarily, using other market-related factors in current industry trends as well as observed transaction values. In
determining the estimated future cash flows used in the income approach, the Company developed and applied
certain estimates and judgments, including current and projected future levels of income based on management’s
plans, business trends, prospects and market and economic conditions, including market-participant considerations.
Significant assumptions utilized in the income approach were based on company specific information and
projections, which were not observable in the market and are thus considered Level 3 measurements by authoritative
guidance. The discount for lack of marketability (the “Marketability Discount”) was applied to reflect what a market
participant would consider in relation to the post-vesting restrictions imposed regarding the inability to sell, transfer,
or pledge the shares during the restriction period. The Marketability Discount was estimated by using the BSM
Model to calculate the cost of a theoretical put option to hedge the fluctuation in value of the investment between the
valuation date and an anticipated liquidity date.
The following table summarizes the grant date fair values of stock options and restricted shares issued during the
period as well as the allocation of stock-based compensation expense to Total direct costs, and Selling, general and
administrative reported in the consolidated statements of operations:
Weighted average, grant date fair value
Stock options
Restricted shares (RSAs and RSUs)
Stock-based compensation expense
allocated to:
Total direct costs
Selling, general, and administrative
Total stock-based compensation expense
2021
Year Ended December 31,
2020
2019
52.70 $
174.94 $
15.19 $
98.61 $
14.06
60.53
9,345 $
5,124
14,469 $
7,781 $
6,003
13,784 $
6,999
13,742
20,741
$
$
$
$
- 74 -
Award Activity
The following table sets forth the Company’s stock option activity:
2021
Year Ended December 31,
2020
2019
Options
Weighted Average
Exercise Price
Options
Weighted Average
Exercise Price
Options
Weighted Average
Exercise Price
Outstanding - beginning of
Period
Granted
Exercised
Cancelled/Forfeited
Expired
Outstanding - end of period
2,500,727
$
$
282,588
(745,572) $
(32,283) $
(12,545) $
$
1,992,915
43.26
168.34
23.67
50.64
14.41
68.39
3,030,071
$
$
227,353
(637,806) $
(118,891) $
$
$
-
2,500,727
34.50
105.77
25.07
37.16
-
43.26
2,945,040
859,960
(399,368)
(375,561)
-
3,030,071
Exercisable - end of period
1,290,627
$
56.43
1,498,829
$
48.99
1,435,088
$
$
$
$
$
$
$
24.18
54.97
16.19
19.91
-
34.50
38.62
The following table sets forth the Company’s Restricted Share activity:
Outstanding and unvested - beginning of
period
Granted
Vested
Forfeited
Outstanding and unvested - end of period
2021
Shares/Units
Year Ended December 31,
2020
Shares/Units
2019
Shares/Units
695,562
102,579
(119,000)
(76,954)
602,187
569,770
201,032
-
(75,240)
695,562
421,200
227,610
-
(79,040)
569,770
Cumulative vested shares - end of period
2,032,916
1,913,916
1,913,916
The following table summarizes information about stock options expected to vest, stock options exercisable, and
unvested restricted share awards expected to vest at December 31, 2021:
Weighted Average
Remaining
Life (Years)
3.4
2.9
Stock
Options
1,992,915
1,992,915
1,290,627
12,329 $
Restricted
Shares/Units
-
602,187
602,187
-
27,435
3.2
2.9
Number of stock options expected to vest
Number of restricted shares/units expected to vest
Total expected to vest
Total stock options exercisable
Unrecognized compensation cost (in thousands)
Weighted average years over which unrecognized
compensation cost will be recognized
Weighted Average
Exercise
Price
$
$
68.39
56.43
$
- 75 -
The following table sets forth the aggregate intrinsic value of stock options exercised, the fair values of awards
vested, and share based liabilities settled during the respective periods (in thousands):
Total intrinsic value of stock options
exercised
Total grant-date fair value of stock
options vested
Total grant-date fair value of
restricted shares vested
Total settlement date fair value of
restricted shares vested
2021
Year Ended December 31,
2020
2019
$
$
$
$
104,695 $
57,927 $
19,807
5,185 $
6,833 $
12,117
3,796 $
22,321 $
- $
- $
-
-
The actual tax benefits recognized related to stock-based compensation totaled $20.9 million, $11.7 million and $5.5
million for the years ended December 31, 2021, 2020 and 2019, respectively.
10. EMPLOYEE BENEFIT PLANS
The Company provides a 401(k) plan that covers substantially all U.S. employees. Participants can elect to
contribute up to 50% of their eligible earnings on a pre-tax basis, subject to Internal Revenue Service annual
limitations.
The U.S.-based plan offers a year-end employer matching contribution, requiring the participant to be an employee
at year-end to qualify for the match. Participants with one year or more of service are eligible for the matching
contribution. Participants fully vest in the employer contributions after three years of service. The employer
contribution represents a percentage of a participant’s eligible compensation. The Company’s 401(k) Plan costs
were $4.3 million, $3.7 million and $3.1 million during the years ended December 31, 2021, 2020 and 2019,
respectively, and were allocated between Total direct costs, and Selling, general and administrative in the
consolidated statements of operations.
The Company has various defined contribution arrangements for eligible employees of non-U.S. entities. These
defined contribution arrangements provide employees with retirement savings and life insurance benefits. The
Company incurred expenses related to these arrangements of $1.9 million, $1.5 million and $1.2 million in the years
ended December 31, 2021, 2020 and 2019, respectively, and were allocated between Total direct costs, and Selling,
general and administrative in the consolidated statements of operations.
The Company is also required to pay certain minimum statutory post-employment benefits. The Company
recognizes a liability and the associated expense for these benefits when it is probable that employees are entitled to
the benefit.
- 76 -
11. INCOME TAXES
The Company files income tax returns for U.S. federal and various U.S. states, as well as various foreign
jurisdictions. The liabilities for unrecognized tax benefits are carried in other long-term liabilities on the
consolidated balance sheets if the payment of cash is not anticipated within one year of the balance sheet date. To
the extent that an unrecognized tax benefit is anticipated to be paid within one year of the balance sheet date, the
Company classifies the unrecognized tax benefit within other short-term liabilities on the balance sheet.
The components of income before income taxes consisted of the following (in thousands):
Year Ended December 31,
2020
2021
187,535 $
14,317
201,852 $
158,432 $
10,100
168,532 $
2019
117,326
7,506
124,832
Current
Deferred
Total
$
$
$
$
$
$
46,138 $
8,405
2,580
57,123 $
(32,677) $
(3,622)
(820)
(37,119) $
16,405 $
4,588
1,586
22,579 $
436 $
95
38
569 $
10,577 $
1,761
2,023
14,361 $
8,922 $
987
119
10,028 $
13,461
4,783
1,760
20,004
16,841
4,683
1,624
23,148
19,499
2,748
2,142
24,389
Domestic
Foreign jurisdictions
Income before income taxes
$
$
Income tax provision consisted of the following (in thousands):
Year ended December 31, 2021
U.S. Federal
U.S. state and local
Foreign jurisdictions
Year ended December 31, 2020
U.S. Federal
U.S. state and local
Foreign jurisdictions
Year ended December 31, 2019
U.S. Federal
U.S. state and local
Foreign jurisdictions
- 77 -
The difference between the statutory rate for federal income tax and the effective income tax rate was as follows (in
thousands):
Income tax expense calculated
at the federal statutory rate
Effect of:
State and local taxes, net
of federal benefit
Tax on foreign earnings,
net of tax credits and
deductions
Deferred credit
Permanent items:
Stock-based awards
Deduction for FDII
Other
State/Local tax credits
Change in liability for
uncertain tax positions
Other
2021
Year Ended December 31,
2020
2019
$
42,389
21.0% $
35,392
21.0% $ 26,215
21.0%
3,698
1.8
2,639
1.6
2,021
1.6
(3,113)
(667)
(19,042)
(4,860)
(364)
(976)
(1.5)
(0.3)
(9.5)
(2.4)
(0.2)
(0.5)
(1,773)
(700)
(10,019)
(2,593)
144
(780)
(1.1)
(0.4)
(5.9)
(1.5)
0.1
(0.5)
593
(802)
(3,011)
(2,283)
964
(793)
2,349
590
20,004
$
1.2
0.3
9.9% $
1,120
(282)
23,148
1,325
0.7
(0.3)
160
13.7% $ 24,389
0.4
(0.6)
(2.4)
(1.8)
0.8
(0.6)
1.0
0.1
19.5%
Prior to the passage of the Tax Cuts and Jobs Act of 2017 ("TCJA"), the Company asserted that all of the
undistributed foreign earnings of its foreign subsidiaries were considered indefinitely reinvested and accordingly, no
deferred taxes were provided. Beginning in 2018, the TCJA provides a 100% deduction for dividends received from
10-percent owned foreign corporations by U.S. corporate shareholders, subject to a one-year holding period.
Although dividend income is now exempt from U.S. federal tax in the hands of the U.S. corporate shareholders,
companies must still apply the guidance of ASC 740-30-25-18 to account for the tax consequences of outside basis
differences and other tax impacts of their investments in non-U.S. subsidiaries. As of December 31, 2021, the
Company’s accounting position is that unremitted foreign earnings are indefinitely reinvested. Therefore, the
Company has not recorded deferred foreign withholding taxes on the unremitted foreign earnings and it is not
practicable to determine the amount of the additional taxes that would result if these earnings were repatriated. The
undistributed earnings of foreign subsidiaries was approximately $37.6 million for the year ended December 31,
2021.
- 78 -
Components of the Company’s net deferred tax asset (liability) included in the consolidated balance sheets consisted
of the following at December 31 (in thousands):
Deferred tax assets:
Accrued liabilities
Depreciation and amortization
Foreign operating loss carryforward
Advanced billings
Other
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Depreciation and amortization
Prepaid expenses
Advanced billings
Other
Total deferred tax liabilities
Net deferred tax asset (liability)
2021
2020
$
$
21,028 $
989
386
37,226
1,148
(850)
59,927
(34,065)
(1,292)
-
(516)
(35,873)
24,054 $
16,634
881
311
-
246
(578)
17,494
(26,119)
(829)
(3,513)
(48)
(30,509)
(13,015)
The Company has foreign operating loss carryforwards for which a deferred tax asset of $0.4 million has been
established as of December 31, 2021. The Company has a valuation allowance of $0.3 million against this deferred
tax asset as of December 31, 2021 based upon its assessment that it is more likely than not that this amount will not
be realized. The ultimate realization of this tax benefit is dependent upon the generation of sufficient operating
income in the respective tax jurisdictions. Approximately 12% of the foreign net operating loss carryforwards can be
utilized over an indefinite period whereas the remainder will expire at various times from 2023 to 2031 if not
utilized.
Annual activity related to the Company’s valuation allowance is as follows (in thousands):
Beginning Balance
Additions charged to expense
Additions due to asset acquisition
Reductions from utilization, reassessments and
expirations
Ending Balance
2021
Year Ended December 31,
2020
2019
$
$
$
578
305
-
(33)
850
$
$
755
-
-
(177)
578
$
169
375
265
(54)
755
- 79 -
A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as
follows (in thousands):
Beginning Balance
Increases in tax positions for prior years
Decreases in tax positions for prior years
Increases in tax positions for current year
Lapse in statute of limitations
Ending Balance
2021
Year Ended December 31,
2020
2019
$
$
10,691 $
1,253
(223)
3,098
(1,035)
13,784 $
9,718
-
(181)
2,881
(1,727)
10,691
$
$
8,525
-
(888)
2,081
-
9,718
Interest and penalties associated with uncertain tax positions are recognized as components of Income tax provision
in the consolidated statements of operations. There was no material change to tax-related interest and penalties
during the years ended December 31, 2021, 2020 and 2019. As of December 31, 2021 and 2020, respectively, the
Company has a liability for interest and penalties of $2.8 million and $2.1 million that is associated with related tax
liabilities of $11.0 million and $8.6 million for uncertain tax positions.
The Company operates in various foreign, state and local jurisdictions. The number of tax years for which the statute
of limitations remains open for foreign, state and local jurisdictions varies by jurisdiction and is approximately four
years (2017 through 2021). For federal tax purposes, the Company’s open tax years are 2018 through 2021.
12. COMMITMENTS, CONTINGENCIES, AND GUARANTEES
Legal Proceedings
Medpace periodically becomes involved in various claims and lawsuits that are incidental to its business.
Management believes, after consultation with counsel, that no matters currently pending would, in the event of an
adverse outcome, have a material impact on the Company’s consolidated balance sheets, statements of operations, or
cash flows for the years ended December 31, 2021, 2020 and 2019.
Purchase Commitments
The Company has several minimum purchase commitments for project related supplies totaling $12.1 million as of
December 31, 2021. In return for the commitment, Medpace receives preferential pricing. The commitments expire
at various times through 2027.
13. MISCELLANEOUS INCOME (EXPENSE), NET
Miscellaneous income (expense), net consisted of the following (in thousands):
Net gain (loss) on foreign-currency transactions
Other income (expense)
Miscellaneous income (expense), net
14. RELATED PARTY TRANSACTIONS
Employee Loans
2021
Year Ended December 31,
2020
2019
$
$
2,779 $
563
3,342 $
514 $
669
1,183 $
(581)
(282)
(863)
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 December 31, 2021
- 80 -
and 2020, respectively, and are included in the Prepaid expenses and other current assets and Other assets line items
of the consolidated balance sheets, respectively, depending on the contractual repayment date.
Service Agreements
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. A Medpace employee was a member Cymabay’s
board of directors from the first quarter of 2016 until his resignation in the first quarter of 2020. The Company and
Cymabay entered into a Master Service Agreement (“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. The
Company recognized total revenue from Cymabay of $13.2 million during the year ended December 31, 2019, in the
Company’s 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 and/or have equity investments in LIB. 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. The Company recognized total revenue from LIB of $11.8 million, $2.6
million and $2.0 million during the years ended December 31, 2021, 2020 and 2019, respectively, in the Company’s
consolidated statement of operations. As of December 31, 2021 and 2020, the Company had, from LIB, Advanced
billings of $2.9 million and $0.7 million in the consolidated balance sheets, respectively. In addition, the Company
had Accounts receivable and unbilled, net from LIB of $0.5 million and $0.3 million in the consolidated balance
sheets at December 31, 2021 and 2020, respectively.
CinRX Pharma and subsidiaries (“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 years ended
December 31, 2021, 2020 and 2019, the Company recognized total revenue from CinRx of $22.7 million, $13.2
million and $3.7 million in the Company’s consolidated statements of operations, respectively. As of December 31,
2021 and 2020, the Company had Advanced billings from CinRx of $5.4 million and $5.8 million in the
consolidated balance sheets, respectively. As of December 31, 2021 and 2020 the Company had Accounts
receivable and unbilled, net from CinRx of $2.1 million and $2.2 million in the consolidated balance sheets,
respectively.
The Summit Hotel (“The Summit”)
The Summit Hotel, located on the Medpace campus, is owned by the chief executive officer, and managed by an
unrelated hospitality management entity. Medpace incurs travel lodging and meeting expenses at The Summit.
During the years ended December 31, 2021, 2020 and 2019, Medpace incurred expenses of $0.3 million, $0.4
million and $0.6 million at The Summit, respectively.
Medpace Investors, LLC (“MPI”)
MPI is a noncontrolling shareholder and related party of Medpace Holdings, Inc. MPI is owned and managed by
employees of the Company. The chief executive officer of Medpace is also the manager and majority unit holder of
MPI. The Company acted as a paying agent for MPI with taxing authorities principally in instances when employee
tax payments or remittance of withholdings related to equity compensation are required. Refer to Note 9 of the
Notes to Consolidated Financial Statements for details of the Tender Offer transaction.
- 81 -
Leased Real Estate
Headquarters Lease
The Company has entered into operating leases for its corporate headquarters and a storage space facility with an
entity that is wholly owned by the Company’s chief executive officer. 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 leases. 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 the
third quarter of fiscal year 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 properties. Annual base rent for the
corporate headquarters allows for adjustments to the rental rate annually for increases in the consumer price index.
Operating lease cost recognized for the years ended December 31, 2021, 2020 and 2019 was $2.1 million, $2.0
million and 2.0 million, respectively, and was allocated between Direct service costs, excluding depreciation and
amortization, and Selling, general and administrative in the consolidated statements of operations. The Operating
lease right-of-use assets at December 31, 2021 and 2020 were $19.7 million and $3.5 million in the consolidated
balance sheets, respectively. 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 consolidated balance sheets. The current and long-term portions of the lease liabilities at
December 31, 2020 were $1.9 million and $1.6 million, respectively, and were recognized in Other current liabilities
and Operating lease liabilities in the 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. The Company has determined that the lease is an operating lease. Operating lease cost recognized for
the years ended December 31, 2021 and 2020 was $5.7 million and $3.6 million, respectively. The operating lease
cost was allocated between Total direct costs and Selling, general and administrative in the consolidated statements
of operations. The Operating lease right-of-use assets at December 31, 2021 and 2020 were $55.1 million and $56.6
million in the consolidated balance sheets, respectively. The current and long-term portions of the lease liabilities at
December 31, 2021 were $0.9 million and $65.9 million, respectively. The current and long-term portions of the
lease liabilities at December 31, 2020 were $0.7 million and $66.8 million, respectively and were recognized in
Other current liabilities and Operating lease liabilities in the 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. 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 Company pays rent, taxes, insurance, and maintenance
expenses that arise from the use of the property. Annual base rent for the corporate headquarters allows for
adjustments to the rental rate annually for increases in the consumer price index. The Company has determined that
the leases are operating leases. Operating lease cost recognized for the years ended December 31, 2021, 2020 and
2019 was $3.6 million, respectively. The lease cost was allocated between Total direct costs and Selling, general and
administrative in the consolidated statements of operations. The Operating lease right-of-use assets at December 31,
2021 and 2020 were $17.2 million and $19.7 million, respectively, in the consolidated balance sheets. The current
and long-term portions of the lease liabilities at December 31, 2021 were $2.6 million and $14.6 million,
respectively, and were recognized in Other current liabilities and Operating lease liabilities in the consolidated
balance sheets. The current and long-term portions of the lease liabilities at December 31, 2020 were $2.4 million
and $17.2 million, respectively, and were recognized in Other current liabilities and Operating lease liabilities in the
consolidated balance sheets.
- 82 -
Travel Services
The Company incurs expenses for travel services for company executives provided by private aviation charter
companies which in 2020 was a company owned by the chief executive officer and the executive vice president of
operations of the Company and commencing in 2021 is a company controlled by the chief executive officer of the
Company (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 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
$1.3 million, $0.7 million and $1.2 million during the years ended December 31, 2021, 2020 and 2019, respectively.
These travel expenses are recorded in Selling, general and administrative in the Company’s consolidated statements
of operations. As of December 31, 2021 and 2020, the Company had Accounts payable to the Aircraft Management
Company of $0.2 million and less than $0.1 million, respectively, in the consolidated balance sheets.
15. ENTITY WIDE DISCLOSURES
Operations By Geographic Location
The Company conducts operations in North America, Europe, Africa, Asia-Pacific and Latin America through
wholly-owned subsidiaries and representative sales offices. The Company attributes revenue to geographical
locations based upon the location of the contracting entity. For the years ended December 31, 2021, 2020 and 2019,
total revenue attributable to the U.S. represented approximately 97%, 96% and 95%, respectively, of total
consolidated total revenue.
The following table summarizes property and equipment, net by geographic region and is further broken down to
show countries which account for 10% or more of total as of December 31, if any (in thousands):
Property and equipment, net:
United States
Europe
Belgium
Other
Total Europe
Other
Total property and equipment, net
Revenue by Category
2021
2020
64,828
$
58,124
12,339
8,413
20,752
7,573
93,153
$
12,024
7,961
19,985
6,908
85,017
$
$
The following table disaggregates the Company’s revenue by major source (in thousands):
Therapeutic Area
Oncology
Other
Metabolic
Central Nervous System
Cardiology
AVAI
Total revenue
$
$
2021
Years Ended December 31,
2020
2019
362,846
267,415
159,900
121,548
119,692
110,976
1,142,377
$
$
297,675
215,370
126,075
88,393
95,153
103,259
925,925
$
$
256,766
196,159
138,650
91,746
91,258
86,390
860,969
- 83 -
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. 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 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 management, with the participation of our chief executive officer and chief financial officer, evaluated, as of the
end of the period covered by this Annual Report on Form 10-K, 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”)). Based on that evaluation, our chief executive officer and chief financial officer concluded
that our disclosure controls and procedures were effective as of the end of the period covered by this report.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management’s report on internal control over financial reporting (as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act), and the related report of our independent registered public accounting firm are
set forth in Part II, Item 8 of this Annual Report on Form 10-K and are incorporated herein by reference.
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 were no changes in our internal control over financial reporting (as such
term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the year ended
December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
- 84 -
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The information required by this item with respect to the Company’s Directors is contained in our definitive proxy
statement (the “Proxy Statement”) for our 2022 Annual Meeting of Stockholders under the heading “Proposal 1:
Election of Directors” and is incorporated herein by reference.
The information required by this item with respect to the Company’s Executive Officers is contained in the Proxy
Statement under the heading “Named Executive Officers” and is incorporated herein by reference.
The information required by this item with respect to compliance with Section 16(a) of the Exchange Act is
contained in the Proxy Statement under the heading “Delinquent Section 16(a) Reports” and is incorporated herein
by reference.
The information required by this item with respect to the Company’s code of ethics that applies to directors, officers,
and employees, including the Company’s principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, is contained in the Proxy Statement under the heading
“Corporate Governance—Code of Ethics” and is incorporated herein by reference.
The information required by this item with respect to the procedures by which security holders may recommend
nominees to the Board is contained in the Proxy Statement under the heading “Stockholders’ Proposals” and is
incorporated herein by reference.
The information required by this item with respect to the Company’s Audit Committee, including the Audit
Committee’s members and its financial experts, is contained in the Proxy Statement under the heading “Committees
of the Board—Audit Committee” and is incorporated herein by reference.
Item 11. Executive Compensation
The information required by this item with respect to executive compensation and director compensation is
contained in the Proxy Statement under the headings “Executive Compensation” and “Director Compensation” and
is incorporated herein by reference.
The information required by this item with respect to compensation committee interlocks and insider participation is
contained in the Proxy Statement under the heading “Compensation Committee Interlocks and Insider Participation”
and is incorporated herein by reference.
The compensation committee report required by this item is contained in the Proxy Statement under the heading
“Executive Compensation—Compensation Committee Report” and is incorporated herein by reference.
The information required by this item with respect to compensation policies and practices as they relate to the
Company’s risk management is contained in the Proxy Statement under the heading “Executive Compensation—
Compensation Risk Assessment” and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
The information required by this item with respect to securities authorized for issuance under the Company’s equity
compensation plans is contained in the Proxy Statement under the heading “Equity Compensation Plan Information”
and is incorporated herein by reference.
The information required by this item with respect to the security ownership of certain beneficial owners and
management is contained in the Proxy Statement under the heading “Security Ownership of Certain Beneficial
Owners and Management” and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item with respect to certain relationships and transactions with related parties is
contained in the Proxy Statement under the heading “Certain Relationships” and is incorporated herein by reference.
- 85 -
The information required by this item with respect to director independence is contained in the Proxy Statement
under the heading “Corporate Governance—Director Independence” and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
The information required by this item with respect to audit fees, tax fees, and the audit committee’s pre-approval
policies and procedures are contained in the Proxy Statement under the heading “Independent Registered Public
Accounting Firm Fees and Other Matters” and is incorporated herein by reference.
- 86 -
Item 15. Exhibits, Financial Statement Schedules
(1) Financial Statements
PART IV
The following financial statements and supplementary data are included in Item 8 of this annual report:
Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Page
49
52
53
54
55
56
57
(2) Financial Statement Schedules
The information required to be submitted in the Financial Statement Schedules for Medpace Holdings, Inc. and
subsidiaries has either been shown in the financial statements or notes, or is not applicable or required under
Regulation S-X; therefore, those schedules have been omitted.
(3) Exhibits
The exhibits listed in the accompanying Exhibit Index following the signature page are filed or furnished as a part of
this report and are incorporated herein by reference.
Item 16. Form 10-K Summary
None.
- 87 -
Exhibit
Number
3.1
3.2
4.1
4.2
#10.1
#10.2
10.3
#10.4
#10.5
#10.6
#10.7
#10.8
#10.9
#10.10
10.11
EXHIBIT INDEX
Incorporated by Reference
Exhibit Description
Form
File No.
Exhibit
Filing
Date
Filed/
Furnished
Herewith
Amended and Restated Certificate of
Incorporation of Medpace Holdings, Inc.
Amended and Restated Bylaws of Medpace
Holdings, Inc.
8-K
001-37856
3.1
8/16/16
8-K
001-37856
3.2
8/16/16
Specimen Stock Certificate evidencing
shares of common stock
S-1/A
333-
212236
Description of Securities
10-K
001-37856
4.1
4.3
7/26/16
2/25/20
Medpace Holdings, Inc. 2016 Incentive
Award Plan
Medpace Holdings, Inc. 2016 Senior
Executive Incentive Bonus Plan
10-Q
001-37856
10.1
11/3/16
10-Q
001-37856
10.2
11/3/16
Registration Rights Agreement
10-Q
001-37856
10.3
11/3/16
Form of Medpace Holdings, Inc. 2016
Incentive Award Plan Restricted Stock
Award Grant Notice
Form of Medpace Holdings, Inc. 2016
Incentive Award Plan Stock Option Grant
Notice and Stock Option Agreement
Form of Medpace Holdings, Inc. 2016
Incentive Award Plan Restricted Stock Unit
Award Grant Notice.
Medpace Holdings, Inc. 2016 Incentive
Award Plan Sub-Plan for UK Participants
Amended and Restated Employment
Agreement, by and between Medpace
Holdings, Inc. and August J. Troendle
Medpace Holdings, Inc. 2016 Incentive
Award Plan UK Company Share Option
Plan (CSOP) Sub-Plan
Medpace Holdings, Inc. Non-Employee
Director Compensation Policy revised
effective October 25, 2018
Loan Agreement dated as of September 30,
2019, by and among Medpace, Inc., as
borrower, and PNC Bank, National
Association.
S-1/A
S-1/A
S-1/A
S-1/A
S-1/A
S-1/A
333-
212236
333-
212236
333-
212236
333-
212236
333-
212236
333-
212236
10.13
8/1/16
10.14
8/1/16
10.15
8/1/16
10.16
8/1/16
10.18
7/26/16
10.19
8/1/16
10-Q
001-37856
10.1
10/30/18
8-K
001-37856
10.1
10/1/19
- 88 -
Exhibit
Number
10.12
EXHIBIT INDEX
Incorporated by Reference
Exhibit Description
Form
File No.
Exhibit
Filing
Date
Filed/
Furnished
Herewith
Amendment No. 1 dated March 30, 2020 to
Loan Agreement dated as of September 30,
2019, by and among Medpace, Inc., as
borrower, and PNC Bank, National
Association
8-K
001-37856
10.1
4/1/20
10.13
Form of Indemnification Agreement
10-K
001-37856
10.13
2/16/21
10.14
10.15
21.1
23.1
31.1
31.2
32.1
32.2
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
Amendment No. 2 dated March 29, 2021 to
Loan Agreement dated as of September 30,
2019, by and among Medpace, Inc., as
borrower, and PNC Bank, National
Association
Amendment No. 3 dated December 27, 2021
to Loan Agreement dated as of September
30, 2019, by and among Medpace, Inc., as
borrower, and PNC Bank, National
Association
List of Subsidiaries of Medpace Holdings,
Inc.
Consent of Deloitte & Touche LLP,
Independent Registered Public Accounting
Firm
Rule 13a-14(a) / 15d-14(a) Certification of
Chief Executive Officer
Rule 13a-14(a) / 15d-14(a) Certification of
Chief Financial Officer
Section 1350 Certification of Chief
Executive Officer
Section 1350 Certification of Chief
Financial Officer
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
Inline XBRL Taxonomy Extension Schema
Document
Inline XBRL Taxonomy Calculation
Linkbase Document
Inline XBRL Taxonomy Extension
Definition Linkbase Document
Inline XBRL Taxonomy Extension Label
Linkbase Document
Inline XBRL Taxonomy Extension
Presentation
- 89 -
8-K
001-37856
10.1
3/30/21
8-K
001-37856
10.1
12/29/21
*
*
*
*
**
**
*
*
*
*
*
*
EXHIBIT INDEX
Incorporated by Reference
Exhibit Description
Form
File No.
Exhibit
Filing
Date
Filed/
Furnished
Herewith
Cover Page Interactive Data File (formatted
as Inline XBRL and contained in Exhibit
101)
Exhibit
Number
104
*
**
#
Filed herewith.
Furnished herewith.
Indicates management contract or compensatory plan.
- 90 -
Pursuant to the requirements of Section 13 or 15(d) 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.
SIGNATURES
MEDPACE HOLDINGS, INC.
By:
/s/ KEVIN M. BRADY
Name: Kevin M. Brady
Title: Chief Financial Officer
Date: February 15, 2022
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENT that the undersigned officers and directors of Medpace Holdings,
Inc. do hereby constitute and appoint August J. Troendle and Kevin M. Brady, and each of them, as his or her true
and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his
or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on
Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and
confirming that all said attorneys-in-fact and agents, or any of them or their or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Capacity
Date
/s/ AUGUST J. TROENDLE
August J. Troendle
Chief Executive Officer and Chairman of the
Board of Directors (Principal Executive Officer)
February 15, 2022
/s/ KEVIN M. BRADY
Kevin M. Brady
Chief Financial Officer (Principal Financial and
Accounting Officer)
/s/ BRIAN T. CARLEY
Brian T. Carley
/s/ ROBERT O. KRAFT
Robert O. Kraft
Director
Director
/s/ FRED B. DAVENPORT JR.
Fred B. Davenport Jr.
Director
/s/ CORNELIUS P.
MCCARTHY III
Cornelius P. McCarthy III
Director
/s/ ASHLEY M. KEATING Director
Ashley M. Keating
/s/ THOMAS C. KING
Thomas C. King
Director
February 15, 2022
February 15, 2022
February 15, 2022
February 15, 2022
February 15, 2022
February 15, 2022
February 15, 2022
- 91 -
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, August J. Troendle, certify that:
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of Medpace Holdings, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal control over financial reporting.
Date: February 15, 2022
By:
/s/ August J. Troendle
August J. Troendle
Chief Executive Officer and Chairman of
the Board of Directors
(Principal Executive Officer)
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Kevin M. Brady, certify that:
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of Medpace Holdings, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal control over financial reporting.
Date: February 15, 2022
By:
/s/ Kevin M. Brady
Kevin M. Brady
Chief Financial Officer
(Principal Financial Officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Annual Report of Medpace Holdings, Inc. (the “Company”) on Form 10-K for the year
ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”),
I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
(2)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition
and result of operations of the Company for the periods presented therein.
Date: February 15, 2022
By:
/s/ August J. Troendle
August J. Troendle
Chief Executive Officer and
Chairman of the Board of Directors
(Principal Executive Officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.2
In connection with the Annual Report of Medpace Holdings, Inc. (the “Company”) on Form 10-K for the year
ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”),
I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
(2)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition
and result of operations of the Company for the periods presented therein.
Date: February 15, 2022
By:
/s/ Kevin M. Brady
Kevin M. Brady
Chief Financial Officer
(Principal Financial Officer)
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