Medpace Holdings (MEDP)·Q4 2025 Earnings Summary

Medpace Crashes 14% After Elevated Cancellations Spook Investors

February 10, 2026 · by Fintool AI Agent

Medpace Holdings (NASDAQ: MEDP) beat Q4 2025 estimates but shares crashed 14% after CEO August Troendle revealed backlog cancellations were "the highest they've been in over a year." Revenue of $708.5M (+32% YoY) and EPS of $4.67 beat by 2.5% and 11.5% respectively, but the elevated cancellations pushed the net book-to-bill ratio to just 1.04x and rattled investors already nervous about the conservative 2026 guidance calling for 9-13% revenue growth.

Did Medpace Beat Earnings?

Yes—convincingly on both metrics:

*EBITDA estimate based on analyst models

The EPS beat was particularly notable given the company's history—Medpace has now beaten EPS estimates in 7 of the last 8 quarters.

What Were the Key Q4 Highlights?

Revenue & Backlog Performance

Revenue growth of 32% marks a significant acceleration from prior quarters, while net new business awards of $736.6M (+39% YoY) drove the book-to-bill ratio above 1.0x for the fourth consecutive quarter.

Profitability Metrics

The margin compression reflects the company's investment in growth—total direct costs rose to $503.1M from $358.3M as Medpace scaled operations to support the expanding backlog. SG&A held flat at ~$45M, demonstrating operating discipline.

What Did Management Guide?

This is where the stock story shifts. Despite the strong Q4 beat, FY 2026 guidance disappointed:

FY 2026 Guidance vs. FY 2025 Actual

The 9-13% revenue growth guide represents a meaningful step-down from the 20% growth Medpace achieved in FY 2025. Key guidance assumptions include:

• Tax rate of 18.5% to 19.5%
• Interest income of $24.3M
• 29.2M diluted weighted average shares outstanding
• FX rates as of December 31, 2025
• Excludes impact of future share repurchases

The exclusion of buyback benefits from guidance is notable given Medpace has $821.7M remaining under its authorized repurchase program after buying back 2.96M shares ($912.9M) during FY 2025.

How Did the Stock React?

The sell-off intensified following the earnings call, with shares plunging 14% on heavy volume:

The -14% decline is the worst single-day drop for Medpace in recent memory, wiping out ~$2B in market cap. The stock opened down 8.6% at $484.75 but continued selling through the day as investors digested management's commentary on elevated cancellations. The sell-off suggests investors are recalibrating both growth expectations and visibility into backlog quality. Medpace now trades at ~27x forward earnings, down from ~35x pre-earnings.

What Changed From Last Quarter?

Positive Developments:

• Revenue acceleration: Q4's 32% YoY growth vs Q3's 24% growth
• Book-to-bill improved to 1.04x from 0.98x in Q3
• Strong cash generation: $192.7M operating cash flow in Q4
• Backlog crossed $3B milestone

Areas of Concern:

• Net income margin compressed 270 bps YoY to 19.1%
• EBITDA margin down 230 bps to 22.6%
• Cash position declined to $497M from $669M as buybacks consumed capital
• 2026 guidance implies significant growth deceleration
• Q4 cancellations highest in over a year

What Did Management Say About Cancellations?

This was the bombshell from the call. CEO August Troendle opened with the headline:

"Cancellations were elevated again in Q4. Backlog cancellations, in absolute and percent terms, were the highest they've been in over a year. This resulted in a lower than anticipated net book-to-bill ratio of 1.04."

Key details on cancellations:

• Widespread, not concentrated: "There was no single or couple of very large projects that canceled. It was just a higher level of cancellations overall."
• Metabolic skew: Cancellations were "a little bit skewed towards the Metabolic area" which has been growing rapidly
• Causes varied: "A number of studies ended early because of compound performance" plus normal restructuring and design changes
• No discernible pattern: "There was no pattern to it to discern. It was just kind of the usual random stuff that was very heavily concentrated."

Management's forward outlook on cancellations:

"I see no reason to expect the higher level of cancellations to continue, but did not anticipate the spike in Q4. Only time will tell."

What Did Analysts Ask on the Call?

The Q&A focused heavily on cancellations, pass-throughs, and the growth deceleration. Here are the key exchanges:

On Metabolic Normalization

Analyst (David Windley, Jefferies): Asked about concentration risk in Metabolic given it's heavily focused on obesity/diabetes vs. Oncology's broader micro-indications.

CEO August Troendle:

"I don't think we're at a level of overconcentration that that's a big worry. Metabolic will be decreasing as a percent of our revenue next year... I think it's going to kind of somewhat normalize, head towards a more normal range."

On Pass-Through Dynamics

Analyst (David Windley): Asked if pass-through outstripping expectations was due to site-level inflation.

CEO Troendle:

"Almost none. These were known to be very high pass-through projects going in. The design of the project is just very heavy on investigator fees."

On Business Environment & Pipeline

Analyst (Justin Bowers, Deutsche Bank): Asked to unpack the business environment and RFP activity.

CEO Troendle:

"Business environment was... reasonably good. RFPs, if they matter, were up a bit, both on the quarter-over-quarter and year-over-year."

On AI Impact

Analyst (Sean Dodge, BMO): Asked about AI as a technological step change.

CEO Troendle:

"I would not anticipate really any productivity advantage, overall net advantage to AI applications in 2026... On the surface of it, it's a net negative to a service company that makes money by providing staff to perform work that is now made more efficient. But I think that the timing of this, it's going to take years."

President Jesse Geiger on AI initiatives:

"They fall into two categories. One, just a number of different initiatives that are targeted on improving efficiency... And then the other category would be assisting with data analytics for feasibility and site selection."

On Competitive Dynamics

Analyst (Jailendra Singh, Truist): Asked if larger CROs getting more aggressive has impacted win rates.

CEO Troendle:

"I don't really see a large change in the dynamic... We see the same competitors in the space, and it seems to be the same as it was five years ago."

On M&A Risk

Analyst (Jay Lewis, Baird): Asked about large pharma acquiring Medpace clients.

CEO Troendle:

"A number of our clients have been purchased in the past year... But we have a pretty broad base of clients, so I don't anticipate that to be an issue. Generally, we don't lose the work that we're doing with the client."

Revenue Composition: Who's Buying?

The earnings slides reveal Medpace's revenue mix by therapeutic area and customer type—key data for understanding concentration risk:

Therapeutic Area Mix (FY 2025 vs FY 2024):

*Other includes Nephrology, Rheumatology, Musculoskeletal, Dermatology, Gastroenterology, and Ophthalmology

The notable shift is Metabolic's surge from 22% to 29%—likely driven by GLP-1 and obesity drug trials reshaping clinical research demand.

Customer Tier Concentration (FY 2025):

Medpace remains heavily exposed to small biopharma—a double-edged sword. These clients often have higher-touch service needs (good for pricing) but are more sensitive to biotech funding cycles (risk in down markets).

Top Customer Concentration:

Top 10 customer concentration increased to 35% from 29%, though no single customer exceeds 10% of revenue.

Full Year 2025 Performance

For context on the guidance reset, here's how FY 2025 performed:

FY 2025 represented a strong year of execution with 20% revenue growth and consistent beat rates. The question investors now face is whether the conservative 2026 guide reflects prudent management or a true inflection in demand.

Balance Sheet & Capital Allocation

Liquidity Position (Dec 31, 2025):

Medpace maintains a debt-free balance sheet but equity declined significantly due to aggressive share repurchases. The company repurchased 2.96M shares for $912.9M during FY 2025, with no buybacks occurring in Q4.

Remaining Buyback Authorization: $821.7M

2026 Outlook: Key Details From the Call

Beyond the headline guidance, management provided important color on 2026 expectations:

CFO Kevin Brady on pass-throughs:

"I do expect reimbursable costs will start the year higher as a percentage of revenue than when we end the year."

President Jesse Geiger on hiring:

"We anticipate hiring in 2026 to be above 2025 levels, somewhere in the mid to high single-digit growth area."

What to Watch Going Forward

Key monitoring points after the call:

1. Q1 2026 cancellation rates - Will elevated Q4 cancellations normalize or persist?
2. Metabolic mix - Management expects this to decrease as % of revenue
3. Pre-backlog pipeline - Q4 signings were "a bit light" per management
4. Retention trends - Productivity gains depend on continued low attrition
5. Biotech funding environment - Key driver of small biopharma client activity

The Bottom Line

Medpace beat Q4 estimates but the stock's 14% collapse tells the story: elevated cancellations shattered confidence in backlog quality. CEO Troendle's admission that Q4 cancellations were "the highest in over a year"—with no discernible pattern and skewed toward the fast-growing Metabolic segment—raises questions about the durability of the 20%+ growth rates investors had come to expect.

The positives remain: Medpace has a debt-free balance sheet, $497M in cash, $822M in buyback authorization, and a $3B backlog. RFPs are up, the competitive landscape is stable, and management sees "no reason to expect the higher level of cancellations to continue."

But investors are now pricing in execution risk. The stock went from ~35x forward earnings to ~27x in a single session. The key question: Was Q4's cancellation spike a random one-quarter blip, or an early warning sign of a tougher clinical trial environment? Q1 2026 will tell.

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Data sources: Medpace Q4 2025 Earnings Call Transcript (Feb 10, 2026); Medpace 8-K filed February 9, 2026; S&P Global Market Intelligence; company filings