Medpace (MEDP) Q3 2026 Earnings Call Transcript

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DATE

Thursday, Oct. 22, 2026

CALL PARTICIPANTS

• Director of Investor Relations - Lauren Morris
• Chief Executive Officer - August James Troendle
• Chief Financial Officer - Kevin Brady

TAKEAWAYS

• Revenue -- $716 million, growing 8.5% year over year due to strong project execution and backlog conversion.
• Nine-Month Revenue -- $2.13 billion, increasing 16.9% for the period ended Sept. 30, 2026.
• EBITDA -- $172.1 million, representing a 16% increase reflecting improved operational efficiency.
• EBITDA Margin -- 24%, rising from 22.5% in the prior year primarily due to lower reimbursable costs.
• GAAP Net Income -- $137.5 million, growing 23.7% year over year driven by higher interest income and a lower effective tax rate.
• Diluted EPS -- $4.84, an increase from $3.86 in the third quarter of 2025.
• Net New Business Awards -- $873.4 million, increasing 10.6% year over year as a result of high-quality Request for Proposal activity.
• LTM Net New Business Awards -- $3.02 billion, representing a year-over-year increase of 23.9%.
• Ending Backlog -- $3.17 billion, growing 5.6% year over year and providing a strong visibility into future revenue.
• Backlog Conversion Rate -- 23.8%, reflecting the pace at which the company is working through its existing project commitments.
• Projected Backlog Conversion -- $1.99 billion, representing the amount of current backlog expected to convert to revenue over the next 12 months.
• Operating Cash Flow -- $216.6 million, generated during the third quarter through efficient project management.
• Net Days Sales Outstanding -- -66 days, indicating the company's ability to manage billings and collections effectively.
• Cash and Cash Equivalents -- $705.3 million, providing the company with significant liquidity at the end of the quarter.
• Share Repurchase Authorization -- $1 billion, newly approved by the board to replace the previous authorization that had $527 million remaining.
• 2026 Revenue Guidance -- $2.835 billion to $2.855 billion, representing projected growth of 12% to 12.8%.
• 2026 EBITDA Guidance -- $638 million to $652 million, reflecting expected growth of 14.4% to 16.9% for the full year.
• 2026 Net Income Guidance -- $514 million to $524 million, based on current project timelines and interest income expectations.
• 2026 Diluted EPS Guidance -- $17.97 to $18.32, assuming 28.6 million weighted average shares outstanding.
• Effective Tax Rate -- 19% to 19.5%, projected for the full year 2026.
• Cincinnati Campus Expansion -- $20 million, expected to add to operating costs in 2027 as new facilities come online.
• Customer Concentration -- 31% for the top five and 39% for the top 10 customers, based on last 12-month revenue.

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RISKS

• Troendle noted that backlog cancellations during the third quarter reached the higher end of the expected range, though they remained within projected limits.
• Brady warned that a new significant expansion coming online in Cincinnati will add about $20 million of operating costs in 2027.
• Troendle noted that current cancellations are primarily driven by product failures such as safety signals rather than customer funding issues.

SUMMARY

Medpace Holdings, Inc. (NASDAQ:MEDP) reported third-quarter results characterized by record net new business awards and significant growth in net income. Management reported that the business environment remains strong with high-quality Request for Proposal (RFP) activity and a normalized competitive environment. The company increased its cash position to $705.3 million and announced a new $1 billion share repurchase authorization while updating its full-year 2026 guidance to reflect higher interest income and a lower effective tax rate. Management stated that they expect to provide formal 2027 guidance in February to ensure greater accuracy, as internal modeling currently aligns with analyst consensus estimates.

• Chief Executive Officer Troendle stated, "Things look very good. We have a lot of stuff in the pipeline. You know, both in terms of opportunities, RFPs that are, you know, pending award."
• Management reported a therapeutic shift back toward traditional oncology projects, while noting that metabolic demand is showing signs of recovery despite a recent lull.
• The company has implemented adjustments to its win rate strategies since late 2025, which management indicated have been successful in securing new high-quality business.
• Staffing remains stable with turnover rates at record lows and no abnormal pressure on salaries or wages as the company prepares for its 2027 facility expansion.
• Troendle noted that large pharmaceutical company opportunities are primarily emerging from the acquisition of existing biotech clients rather than direct outreach to new large-cap accounts.

INDUSTRY GLOSSARY

• CRO (Contract Research Organization): A company that provides support to the pharmaceutical, biotechnology, and medical device industries in the form of research services outsourced on a contract basis.
• RFP (Request for Proposal): A document that solicits a proposal, often made through a bidding process, by an agency or company interested in procurement of a service.
• EBITDA: Earnings before interest, taxes, depreciation, and amortization, used to measure a company's overall financial performance.
• DSO (Days Sales Outstanding): A measure of the average number of days that it takes a company to collect payment after a sale has been made.
• ASC 606: The current accounting standard for revenue recognition from contracts with customers.
• Backlog: The total value of all signed contracts that have not yet been recognized as revenue.
• FSO (Full Service Outsourcing): A model where a CRO manages all aspects of a clinical trial.
• FSP (Functional Service Provider): An outsourcing model where a company provides specific individual services or functions rather than managing an entire project.

Full Conference Call Transcript

Operator: Good day, ladies and gentlemen. And welcome to the Medpace Third Quarter 26 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' remarks, there will be a Q&A session. If your question has been answered and you would like to remove yourself from the queue, simply press *11 again. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Lauren Morris, Medpace's Director of Investor Relations. You may begin.

Lauren Morris: Good morning. And thank you for joining Medpace's third quarter 26 Earnings Conference Call. Also on the call today is our CEO, August James Troendle and our CFO, Kevin Brady. Before we begin, I would like to remind you that our remarks and responses to your questions during this teleconference may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 2 thousand. These statements involve inherent assumptions with known and unknown risks and uncertainties. As well as other important factors that could cause actual results to differ materially from our current expectations.

These factors are discussed in our Form 10-Ks and other filings with the SEC, Please note that we assume no obligation to update forward-looking statements even if estimates change. Accordingly, you should not rely on any of today's forward-looking statements as representing our views as of any date after today. During this call, we will also be referring to certain non GAAP financial measures. These non GAAP measures are not superior to or a replacement for the comparable GAAP measures. But we believe these measures help investors gain a more complete understanding of results.

A reconciliation of such non GAAP financial measures to the most directly comparable GAAP measures is available in the earnings press release and earnings call presentation slides provided in connection with today's call. The slides are available in the Investor Relations section of our website at investor.medpace.com. With that, I would now like to turn the call over to August Troendle.

August James Troendle: Thanks, David. Good morning, everyone. The business environment remains strong in quarter 26. We saw high quality RFP activity strong initial award notifications, and a good win rate. Net new business awards reached an all time high in the quarter and our last 12-month closing awards was 23.9%. We will provide guidance for 2027 at the end of our Q4 reporting. At the time of our Q4 reporting in February, however, we see no large disconnect between analyst consensus estimates and our current modeling of 2027. Kevin will now review our financial results for Q3 and our updated 2026 guide.

Kevin Brady: Thank you, and good morning to everyone listening in. Revenue was $716 million in the third quarter of 26. This represented a year over year increase of 8.5%. Revenue for the 9 months ended September 30, 2026 was $2.13 billion, and increased 16.9%. EBITDA of $172.1 million increased 16% compared to $148.4 million in the third quarter of 25. Year to date EBITDA was $474.9 million an increase of 19.5% from the comparable prior year period. EBITDA margin for the third quarter was 24% compared to 22.5% in the prior year period. EBITDA margins benefited from lower reimbursable costs. Year to date EBITDA margin was 22.3%, compared to 21.8%.

In the third quarter of 26, net income of $137.5 million increased 23.7% compared to net income of $111.1 million in the third quarter of 25. Net income growth above EBITDA growth was primarily driven by higher interest income and a lower effective tax rate compared to the prior year period. Year to date net income was $382.7 million compared to $316 million in the comparable prior year period. Which represents a 21.1% increase. Net income per diluted share for the quarter was $4.84, compared to $3.86 in the prior year period. Year to date net income per diluted share was $13.37 compared to net income per diluted share of $10.04 in the comparable prior year period.

Net new business awards entering backlog in the third quarter increased 10.6% from the prior year to $873 million Net new business awards entering backlog over the last 12 months increased $3.02 billion representing a year over year increase of 23.9%. Ending backlog as of September 30, 2026 was approximately $3.2 billion an increase of 5.6% from the prior year. We project that approximately $1.99 billion of backlog will convert to revenue in the next 12 months. Backlog conversion in the third quarter was 23.8%, of beginning backlog. Regarding customer concentration, our top 5 and top 10 customers represent roughly 31%, 39%, respectively, of our last 12 months revenue.

In the third quarter, we generated $217 million in cash flow from operating activities. And our net days sales outstanding was -66 days. Cash ended the quarter at $705.3 million Effective 10/20/2026, the board terminated the company's current share repurchase authorization and approved a new share repurchase authorization of up to $1 billion. Moving now to our updated guidance for 2026. Full year 2026 total revenue is now expected in the range of $2.835 billion to $2.855 billion representing growth of 12% to 12.8% over 2025 total revenue of $2.53 billion Our 2026 EBITDA is now expected in the range of $638 million to $652 million representing growth of 14.4% to 16.9% compared to EBITDA of $557.7 million in 2025.

We forecast 2026 net income in the range of $514 million to $524 million. This guidance assumes a full year 2026 effective tax rate of 19% to 19.5% interest income of $22.9 million, and $28.6 million diluted weighted average shares outstanding for 2026. There are no additional share repurchases assumed in our guidance. Earnings per diluted share is now expected to be in the range of $17.97 to $18.32. Guidance is based on foreign exchange rates as of September 30, 2026. With that, I will turn the call back over to the operator so we can take your questions.

Operator: Thank you. As a reminder, to ask a question, please press *1 on your telephone and wait for your name to be announced. To withdraw your question, please press *1 again. And our first question comes from Michael Cherny of Lee Partners. Your line is open. Michael, your line is open.

Michael Cherny: Hi. Can you hear me? Can hear you now. Okay. My apologies there. August, maybe just to dive into a bit more about your bookings commentary. Clearly, net bookings performance in the quarter is really strong. As you think about where that is coming from, how do you see the evolving competitive environment within the biotech world? And how do you think about where either pricing lies or your ability to continue to push forward in your differentiation within your core biotech customer? Any more color you can give on the competitive components and what led to some of this bookings growth in what is a healthy market would be great. Thank you.

August James Troendle: August, you might be on mute. Yes, I am sorry. I am August Troendle here. Yes, I guess you are kind of ultimately addressing win rate. I guess, how we are performing versus how much is environment. The business environment is a strong 1. I think really across the board, I think that things have changed a little bit in terms of the mix of what we are seeing, and it is a little bit more traditional oncology are generally a large area, a little bit less metabolic demand at current time point, but I think there is a lot of good opportunities And our win rate has been strong. So I think it is a combination of the 2.

I think we are booking good work, and a lot of it has been in the past certainly, you know, few years here. it is been a lot of cancellations have driven ultimate performance in terms of awards and revenue growth. And I hope that is somewhat reduced going forward. Our cancellations, backlog cancellations this quarter were not something to call out, but also not a help. They were toward the higher end, but within the kind of range we would expect. So I think that is what I can provide. Thank you.

Operator: And our next question comes from Jalandra Singh of Truist Securities. Your line is open.

Jailendra Singh: Thank you and thanks for taking my questions. First, a quick clarification, August, about your comment about current consensus being in the right range. I am assuming that applies to both revenue and EBITDA. And then on the revenue expectation, I think Street is modeling 6% growth. Anything you can share in terms of how you think about direct fee revenue versus pass-through? Just mix will be. That will be really helpful.

August James Troendle: Yeah. I do not. we do not comment on direct pass-through, etcetera. If you see our pass through expenses, I think that is a kind of a way to try to back into it, not accurately, but at least directionally. I do not know. Kevin, do you want me to comment on that?

Kevin Brady: No. I mean, I think we will provide more color, Jailendra, in terms of what that will look like in February. But I would just kind of reiterate what August said that consensus looks reasonable relative to our current modeling, and that would include some assumptions on pass throughs at the current moment. We will have to see how bookings progress in the next quarter. The only other thing that I would pull out, you know, while we do agree with the percentages, just a reminder that we do have a new expansion, significant expansion coming online here in Cincinnati, which will add about $20 million Of operating costs in 2027. Okay. that is helpful.

Jailendra Singh: And then quick follow-up on the direct fee gross margin in the quarter. Really good trends there. Anything to call out in particular? Just trying to figure out if there was anything out of the ordinary in terms of mix or change orders or timing. If these Q3 direct fee gross margins levels are sustainable.

Kevin Brady: I would just say, Jailendra, written quarter-to-quarter, there is certainly volatility. That can occur in our numbers. And I know that everybody uses pass-through as a proxy for what direct service fee revenue is, but that is not exactly how 606 works. Your margins, again, are good, very good. But they can be lumpy from quarter to quarter. But I do not see anything that would significantly disrupt kind of the margin performance in Q4. Great. Thanks a lot.

Operator: Thank you. And our next question comes from Kevin Caliendo of UBS. Your line is open.

Kevin Caliendo: Hello. This is Kevin Caliendo calling in for Kevin Caliendo here. I am going to probably double click on the last question on the margin. So head count grew high single digits sequentially. And, yeah, you were able to maintain that margin level. And so kind of like what drove to receive margin being so strong? Why would it know, essentially maintain at this level going forward?

Kevin Brady: Yeah. You know, again, there can be some timing things that happen in a given quarter. There can be some lumpiness caused by 606. But, no, it is good performance overall across the business. Utilization continues to be in a good spot. And while we are growing, headcount, you know, the revenue is growing faster than that at the given moment.

Kevin Caliendo: Okay. And then maybe if I can just follow-up quickly. This is mostly a question on the mix of servicing and pass-throughs essentially in the backlog. And so pass-throughs obviously dipped down in the quarter. And so does that essentially imply that service fee bookings are higher in backlog? And so the question is essentially, like, would Medpace be able to maintain this 10%-plus service growth in the foreseeable future? Assuming that the pass-throughs are kind of maintaining at this 40% level.

Kevin Brady: Yeah. I mean. you know, again, in terms of service fee growth, obviously, the bookings over the last couple of quarters have been good. We will have to see what happens in the fourth quarter, but that will then influence what 2027 looks like. So in terms of growth rates, nothing to comment on in terms of 2027 at the moment other than what we have already said. In that, we do not see a major disconnect with where consensus is right now. Okay. Thank you.

Operator: Thank you. And our next question comes from Ann Hynes of Mizuho.

Ann Hynes: Good morning. Thank you. So when I look at the implied growth rates for 2027, definitely lower than what Medpace usually does. Is that just a factor of even though bookings were very strong this quarter, I know last 3 quarters were just below historically what you got? Or is there anything you are seeing in the environment maybe over the past couple of weeks as interest rates have gone up that you think is gonna impact demand next year? Thanks.

August James Troendle: Yeah. No. I. Ann, I think that our growth profile has dropped quite a bit over the last, you know, few years related to primarily, though, pressure from cancellations has been, you know, 1 of the biggest things. Particularly this past year, we have had good opportunities. The business environment has been strong this year. And it continues to be. And 1 reason we decided to not provide any real guidance on next year yet is it is still shaping up quite a bit? And Q4 awards, there is still a important component of next year revenue. But more importantly is kind of where we shake out in terms of cancellation, you know, pattern.

Here in Q4 and going into next year. But things are, you know, improving month-to-month in terms of us increasing our revenue expectations for 2027. And, you know, hopefully, that continues. But, again, a large part of that will be kind of what the cancellation profile is in Q4. We see no reason for high cancellations, but these are kind of things that just come out of the blue. They were a little bit higher than we would have liked in the current quarter. But manageable. And hopefully, that continues for the rest of the year anyway.

Kevin Brady: And maybe just a quick 1 comment. Yeah. Ann, just another comment that remember the mix of pass-throughs relative to revenue will also influence that growth rate as well. Right?

Ann Hynes: Yeah. And then just maybe any incremental color on the cancellations, Did anything surprise you about them in the quarter? Is it just funding? What. I guess, what is driving the cancellations? Or any change from what is been driving them over the past few quarters?

August James Troendle: Yeah. No. These were. Our cancellations now are primarily those of product failure A little bit more clearly product failure. You know? it is always. Well, some of it prioritization too. You could say that is related. To total level of funding possible, but no real signs funding is now a main driver of many of the cancellations. it is products that are not living up to expectation, safety signals, other things that are causing programs to stop. So it is kind of the. Yeah. Everything surprises me about them. You know? it is. they are all just, you know, random events and unexpected. So no real trend there. Okay. Great. Thank you.

Operator: Thank you. And our next question comes from Justin Bowers of Deutsche Bank. Your line is open.

Justin Bowers: Hi, good morning everyone. Just a continuation of the last question. In terms of the decision to wait until February to guide, Is it what is more of a factor here? Is it more about the awards? Or is it more about cancellations? Just trying to get a better sense here of why the change from last year.

August James Troendle: Yeah. No. I am not sure I, you know, I can sort that out. it is just that our over the last quarter, our view on 2027 has moved. And we expect it to continue to move. And it just seemed that we cannot provide a very firm you know, guide. We feel we can provide a much more firm guide in February than we would be able to now. And we did not see a real need to come out with some commentary on what we expected relative to consensus, it looked somewhat in line. I am not saying it is the same, but it did not look drastically off.

So we decided that in making a poor guide that might not be very accurate in retrospect. So that is really it.

Justin Bowers: Understood. And then just a couple of quick follow ups there. How does the funnel look in terms of potential awards and RFPs through the, like, the funnel or the pipeline in terms of RFPs and for the rest of the year?

August James Troendle: No. Look. Sort of the awards the pending RFPs is up to total dollar value of opportunities that we are looking at. Is up nicely. I mean, our fee numbers are actually down some, but I feel that is not a. Like I said, I kind of ignored the argument. The quality and the total pending decisions by clients is very large. And they are not being held up. And this is just because of volume of opportunities that have come in. it is not that things are not being awarded. Things are actually moving along at a relatively normal pace in terms of you know, of word decisions, projects moving forward, you know, getting funding in place.

Things are actually going very well, but the total number of opportunities has increased and, you know, is a good. very good high. I think that if we can win well in Q4 and certainly as anywhere near as well as in Q3 and cancellations are not really out of range. You know, I think things are going to improve toward our 2027 expectations. Okay. Great. I will jump back in queue. Thank you.

Operator: Thank you. And our next question comes from Ryan Halsted of RBC. Your line is open.

Ryan Halsted: Maybe going back to the new awards and good to see that they are growing healthy. I guess do you have any way of I guess, clarifying how much of that new awards, momentum is a result of, you know, the pre backlog that you called out in the prior year period, kind of clearing those gating factors and moving into backlog?

August James Troendle: Well, I. Most of our awards come from something that was previously notified that we were you know, being. We were chosen as the, you know, CRO to do this. So most of it is the. those gating factors if you consider the start of the study being a gating factor, which, you know, we do. So, you know, we bring things into backlog when the study starts actually operationally in the field.

Now if you are asking how much is that versus other gating factors, I mean, still the biggest 1 is, you know, getting, you know, started in the trial. it is a minor number of additional amounts of backlog added because there was some gating factor on a award that was already partially in backlog. I do not know if that answers your question, but most things that are awards in a given quarter were in our suspense, our pre backlog.

Ryan Halsted: Got it. Okay. And then just you know, you mentioned a few quarters ago, some initiatives you are putting in place to address your win rates and clearly, they are bearing fruit. I mean, any more color you can share on just how those initiatives have been. have been working and generating success.

August James Troendle: No. I am not going to give details on what they were. Yeah. Again, I wanted to point out we recognized our win rate was not as high as we would like in 2025. And toward the end of 2025, we made some meaningful adjustments in our processes and how we address things. And I think they have been. I. You know, it is very difficult over even just a couple quarters to you know, assess that, but I think our assessment to date is that they have been very successful, and we hope to continue to improve going forward. Great. Thank you.

Operator: Thank you. And our next question comes from David Windley of Jefferies. Your line is open.

David Windley: Hi, thanks for taking my question. Good morning. I wanted to ask a question around kind of composition of work And what I am driving at is August, your intent, I think, consistent intent to do full service work for your clients I think you have a minimum kind of composition of the trial that you wanna control in order to really want to engage with a client What we are hearing is some additional, I guess, carve out of biometrics work within trials, you know, otherwise FSO type trials. And then biotechs that you know, somewhat counterintuitive to me, but biotechs that are interested in engaging in FSP discussions, which I do not think you are interested in.

So I wanted to probe if there are. If you are seeing changes in the way your target client base wants to engage around projects? Thanks.

August James Troendle: You know, David, I would not say that I see a certainly a meaningful change in that. I mean, there. there is always been clients that want to carve out biometrics, sometimes internally, sometimes with another chosen provider. We do prefer totally full service opportunities. But as long as we are able to add real value in terms of you know, managing the recruitment you know, quality of the trial, execution overall. So if we have all of the you know, front end operations and they wanna keep even data in house as well as, you know, biometrics, as well as statistics and medical writing. That may be an opportunity that is of interest to us. Yes.

But I have not really seen a step increase in the number of clients that are doing that, really. It depends on it is dependent on size of client to a good extent. If it is truly functional, you know, you are right. We are not interested at all. But, certainly, if it is front end only, we do projects that are front end only. Got it. Thanks.

David Windley: And then maybe too, you commented about therapeutic mix shifting back toward more traditional oncology, little less cardiometabolic, Ryan asked the question about the topic that you kind of raised last time about having some trials that have these interim looks or contingencies that may be removed midstream I guess I am wondering if there is an interrelationship between those 2, which therapeutic areas tend to have that interim look? How prevalent are those things, Maybe the simplest way to ask the question is we did see the backlog beyond the next 12 months kind of regrow or kind of inflate a little bit where it has not for a while, and I.

I am just again, probing around some of those moving parts in the backlog long term versus next 12 months? Thanks.

August James Troendle: Yeah. Okay. I guess fair question. I just do not have the analytics in front of me. And, I mean, I know, generally, I will look at that, but it is possible that is related to. you know, I do not know that there is any real shift in the amount that rolling in. Versus new awards, etcetera. You know, our awards have pivoted more towards, you know, both in terms of notifications and you know, things being recognized in the backlog awards. Have and to some extent, RFPs, you know, have pivoted more back towards oncology. Although we also are seeing, in terms of RFPs, quite a bit of metabolic work again.

Sort of there was a little bit of a drop, and so the notifications and a awards are down in the metabolic area, but there is a lot of pending opportunities for metabolic for us currently. But yeah, what is driving the increase in duration Is it new projects that are entered? And very short remaining projects that are coming out that is driving it. I think that is probably the bigger factor. But was there any gates that were reached that opened up that caused a meaningful, you know, increase in the duration of projects. I do not know. I doubt it is therapeutic related. It may be true that oncology has a bit more likely to have gaits.

They tend to be longer trials and have more gating. So that is probably true overall. But I do not know if that is influencing our. You know, what our outside of 12 months backlog. June. Yeah. Okay. Great. Thank you.

Operator: Thank you. And our next question comes from Jared Haas of William Blair. Your line is open.

Christine Rains: Hi, good morning. it is Christine Rains on for Jared. Thanks for taking our questions. The pass through revenue mix came in nicely below your prior 41% to 42% expectation for the second half. Is that range still the right expectation for 2H? And should we expect pass through mix to step up in 4Q?

Kevin Brady: Yeah, good question. I expect it to be somewhere around where we finished the third quarter. So kind of 40 to 40.5% based on our. Great.

Christine Rains: Perfect. that is very helpful. And then would you characterize customer decision timelines in the quarter as healthy? And overall, did you see any notable decline in time lines sequentially and relative to last year? Thank you.

August James Troendle: Yeah. I think things are moving along faster than last year. I think we are kind of in a pretty good place in terms of projects moving along well. The RFPs not being bid a thousand times and, things moving along towards award and then project start-up. So I think things are pretty normalized environment in terms of, we are getting opportunities that clients wanna move forward on in the current time frame, not sometime in the future. Perfect. Appreciate the color. Thank you.

Operator: And as a reminder, if you have a question, please press *1. And our next question comes from Eric Coldwell of Baird. Your line is open.

Eric Coldwell: Obviously, a very strong margin in the quarter and clearly the lower reimbursable revenue is a contributor to that optically. But I am curious if there were other drivers in the quarter that you would highlight, whether that be project or therapeutic mix, hiring perhaps being lower than you were anticipating or turnover being lower than you were anticipating. Other efficiencies, any accounting oddities or 1-timers. I am just continually impressed by your EBITDA margin, and I think this was the second highest quarter since, ASC 606.

So would love to get a sense on if there is anything unique to the quarter that, barring the optics of pass throughs up or down, that we would be using this as some kind of a jumping off point or have a reason to have sustainably higher expectations here.

Kevin Brady: No, Eric. Nothing to specifically call out. Just other than what I mentioned earlier, that certainly there is volatility in our margin percentages quarter-to-quarter. Right? There can be some timing aspects to when certain contracts are signed. The business is performing very well on the direct service side to your point. Attrition rates are in a very good spot. And the business continues to deliver. So but some of it certainly can be influenced by just the volatility that we see in some of the 606 impacts. But, again, I do not expect there to be a major degradation in the fourth quarter.

You know, again, there is some level of headwind 2027 as we absorb the Cincinnati campus expansion, but we will provide more color on that in February. Okay.

Eric Coldwell: And then on. You, I think you touched on it. But I did wanna specifically ask about turnover rates, hiring, salaries, wages, benefits, inflation, what your thoughts are going into 2027. I have recently conversed with a few of your peers, some of the mid tier biotech focused privates, etcetera, and what I am picking up is that everybody had, almost everybody had exceptionally low turnover in recent years on. in many cases. Actually record low turnover.

Voluntary turnover at least, But we are picking up some signs that turnover levels are starting to come back that a number of firms are starting to hire again, You know, people are more willing to jump ship if there is more options, and companies need to start paying up for talent. So I am just curious what your overall view on the staff marketplace looks like as we go into 2027.

August James Troendle: Turnover looks very low. So, I mean, I think we have continued with low turnover. I do not know what else I can say on that. No.

Eric Coldwell: And no pressures on incremental or ab. Abnormal pressures on salaries, wages, benefits at this point?

August James Troendle: No. No, it is pretty. you know, they keep sticking. You know, it is an ongoing thing, but no, I do not think there is any real change over the past over the past year. that is great. And then terms of rate. Obviously, it is always increasing some, but, you know, it is. within our expectations. Yeah. No. that is that is where I was going, so thank you for that. And then last 1 for me.

Eric Coldwell: Last quarter, August, you seemed a lot more upbeat about. I do not know. Maybe it is just the focus of what we are talking about today, but there was a lot more commentary on I think, bookings and the big second half ramp that you expected. You were, obviously, accurate with book to bill getting you know, back above that 1.2 ZIP code and strong awards that came in this quarter. It felt like there was a little less commentary on that in the fourth quarter, some modest mentions of higher cancels out of backlog. I am just. help us get to the right spot for the fourth quarter if. that is always a.

August James Troendle: Look. it is gonna be cancellations. But, no, I do not feel any different. I think that Q4, if things go right, it is going to be another record awards. I know, I hate to look at book to bill. I just think it is a bad measure. You know, I would rather focus on, you know, award growth and, you know, trailing 12 awards. And I would expect another step up. Things look very good. We have a lot of stuff in the pipeline. You know, both in terms of opportunities, RFPs that are, you know, pending award, A lot of. We had very strong quarter in terms of awards and. Of notifications, you know, themselves.

And I would expect, you know, business awards, things moving into backlog to continue to move upward. Going forward next year, next quarter and, you know, sequentially. So. But no, no real difference on that. It just comes down to where the. whether we get some unusual cancellations or not. Thank you so much. that is very helpful. Have a great day. Thanks. Yeah.

Operator: Thank you. Thank you. And our next question comes from Luke Sergott of Barclays. Your line is open.

Luke Sergott: Hey, thanks again for the question. The. You guys had a pretty big step up in the large pharma side. And I just wanted to know kind of what you are seeing there from a share dynamic. Especially over the last couple of years. I know that the revenue is really contingent on what you won over the last 2 years ago. So just give a sense of, like, where. Are there any specific indications or you adding new logos, or is this just kind of more about assets and where those existing relations progressing through the development pipeline?

August James Troendle: Yeah. Most of our large pharma opportunities have. Come from a limited number of providers. And often, it is related to biotech clients we had that got acquired. So it is not really a, you know, direct outreach from us to try to you know, win large pharma work at new clients. So it is supporting existing clients that largely are there because we had an acquisition of a former client of ours. Mhmm. So, you know, I think that is it. Okay. So just more of the same that is been going on there.

Luke Sergott: And then I guess, can you talk about pricing and competitiveness on RFPs? I mean, you guys are investing there to add capacity. It feels like market's in full recovery mode right now. So are things starting to tighten up? And you are able to maybe get some price in some types of services on the full service side?

August James Troendle: We have not really gone to you know. I mean, I think there were some that really focused on pricing. You know, we focus on quality of our deliverables. And I do think that some of the crazy approaches taken by some in the past few years have died out. I think we are kind of back to a normalized environment. Good to hear. Thanks.

Operator: Thank you. I am showing no further questions at this time. I would like to turn it back to Lauren Morris for closing remarks.

Lauren Morris: Thank you for joining us on today's call and for your interest in Medpace. We look forward to speaking with you again on our fourth quarter 26 earnings call.

Operator: This concludes today's conference call. Thank you for participating and you may now disconnect.

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