Jay Lewis

Jay Lewis asked for more color and quantification on new signings in Q4 that moved into pre-backlog, including year-over-year and quarter-over-quarter changes. He also inquired about the impact of the accelerating M&A environment, where large pharma acquires Medpace's clients, on revenue, bookings, and future projections.

Answer

CEO August Troendle stated that Medpace does not provide details or exact magnitude on pre-backlog, noting that Q4 was a bit light, similar to the prior Q4. Regarding M&A, Mr. Troendle acknowledged that client acquisitions by large pharma are a potential impact, but Medpace has a broad client base. He explained that while they generally don't lose ongoing work, they might lose the client long-term as they are incorporated into larger pharma, but it's not typically a short-term risk.

Jay Lewis asked for more details on new signings in Q4, particularly the tranche of business moving into pre-backlog, and requested quantification of the pre-backlog and its year-over-year or quarter-over-quarter change. He also inquired about the impacts of the accelerating M&A environment, where large pharma acquires Medpace's clients, on revenue, bookings, or future revenue projections.

Answer

CEO August Troendle stated that Medpace does not provide details or exact magnitude on pre-backlog, noting that Q4 was a bit light. Regarding M&A, he acknowledged that clients have been purchased but emphasized Medpace's broad client base. He explained that while they generally don't lose ongoing work, they may lose the client long-term as they integrate into larger pharma, but it's not typically a short-term risk.

Jay Lewis of Baird asked about the expected impact of the 'one big beautiful bill' on the company's cash flow and cash taxes for 2025 and 2026.

Answer

EVP & CFO Jon Leon described the legislation as a 'net positive' for Owens & Minor. He explained that it is a continuation of beneficial tax laws from 2017 that will continue to help the company's cash tax position, particularly through measures like interest deductibility, given the company's debt level.

Jay Lewis sought to confirm the absence of one-time cancellation payments in the quarter and inquired about the outlook for the Performance Services segment, questioning why demand would remain strong in a difficult macro environment where hospitals typically delay investments.

Answer

President and CEO Michael Alkire confirmed there were no one-time cancellation payments. Chief Administrative and Financial Officer Glenn Coleman added that a payment is expected in Q4 but did not provide a specific amount. Alkire then explained that financial pressure on health systems historically increases, rather than decreases, demand for Performance Services as they actively seek technology and advisory solutions to automate processes and reduce costs.