What changed in this filing

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Item 1. Financial Statements

2020-10-27 compared with 2020-07-28 · 90 added, 63 removed, 341 unchanged (31% of the section changed)

4 unchanged sentences

(Amounts in thousands, except share amounts)

September 30,

Current assets:

Cash and cash equivalents

Accounts receivable and unbilled, net (includes $ 2.5 million and $ 1.9 million with related parties at June 30, 2020 and December 31, 2019, respectively)

Accounts receivable and unbilled, net (includes $ 2.9 million and $ 1.9 million with related parties at September 30, 2020 and December 31, 2019, respectively)

Prepaid expenses and other current assets

6 unchanged sentences

Current liabilities:

Accounts payable (includes $ 0.1 million and $ 0.2 million with related parties at June 30, 2020 and December 31, 2019, respectively)

Accounts payable (includes $ 0.2 million and $ 0.2 million with related parties at September 30, 2020 and December 31, 2019, respectively)

Accrued expenses

Advanced billings (includes $ 1.6 million and $ 3.0 million with related parties at June 30, 2020 and December 31, 2019, respectively)

Advanced billings (includes $ 4.6 million and $ 3.0 million with related parties at September 30, 2020 and December 31, 2019, respectively)

Other current liabilities

8 unchanged sentences

5,000,000 shares authorized;

no shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

no shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

Common stock - $ 0.01 par-value;

250,000,000 shares authorized at June 30, 2020 and December 31, 2019, respectively;

35,408,120 and 36,065,278 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

Treasury stock - 200,000 shares at June 30, 2020 and December 31, 2019, respectively

250,000,000 shares authorized at September 30, 2020 and December 31, 2019, respectively;

35,757,453 and 36,065,278 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

Treasury stock - 200,000 shares at September 30, 2020 and December 31, 2019, respectively

Additional paid-in capital

9 unchanged sentences

Three Months Ended

Six Months Ended

Revenue, net (includes $ 2.7 million and $ 4.0 million with related parties for the three months ended June 30, 2020 and 2019, respectively, and $ 8.2 million and $ 9.1 million with related parties for the six months ended June 30, 2020 and 2019, respectively)

Nine Months Ended

September 30,

Revenue, net (includes $ 3.4 million and $ 4.6 million with related parties for the three months ended September 30, 2020 and 2019, respectively, and $ 11.6 million and $ 13.7 million with related parties for the nine months ended September 30, 2020 and 2019, respectively)

Operating expenses:

19 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Other comprehensive income

18 unchanged sentences

BALANCE — June 30, 2019

Foreign currency translation

Stock-based compensation expense

Stock options exercised

BALANCE — September 30, 2019

Comprehensive

10 unchanged sentences

BALANCE — June 30, 2020

Foreign currency translation

Stock-based compensation expense

Stock options exercised

BALANCE — September 30, 2020

See notes to condensed consolidated financial statements.

3 unchanged sentences

(Amounts in thousands)

Six Months Ended

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

24 unchanged sentences

RESTRICTED CASH

INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2020

September 30, 2020

(1) Basis of Presentation

16 unchanged sentences

In the first quarter of 2020, the Board of Directors approved an additional $ 50.0 million in share repurchases, bringing the total to $ 100.0 million authorized under the share repurchase program.

During the three and six months ended June 30, 2020, the Company repurchased 110,488 and 772,125 shares for $ 7.6 million and $ 50.8 million, respectively.

As of June 30, 2020, $ 49.2 million remained available under the repurchase program authorization.

There were no share repurchases during the three months ended September 30, 2020.

During the nine months ended September 30, 2020, the Company repurchased 772,125 shares for $ 50.8 million.

As of September 30, 2020, $ 49.2 million remained available under the repurchase program authorization.

Repurchases under the share repurchase program are executed in the open market or negotiated transactions under trading plans put in place pursuant to Rule 10b5-1.

14 unchanged sentences

The Company does not compute diluted EPS in cases where the inclusion of such additional shares would be anti-dilutive in effect.

The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2020 and 2019 (in thousands, except for earnings per share):

The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2020 and 2019 (in thousands, except for earnings per share):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Weighted-average shares:

9 unchanged sentences

Net income per common share—Diluted

During the three and six months ended June 30, 2020, the Company had 439,405 stock options, respectively, that were excluded due to the exercise price exceeding the average fair value of the Company’s common stock during the period.

During the three and six months ended June 30, 2019, the Company had 30,500 and 0 stock options, respectively, that were excluded due to the exercise price exceeding the average fair value of the Company’s common stock during the period.

During the three and nine months ended September 30, 2020, the Company had 4,800 and 204,205 stock options, respectively, that were excluded due to the exercise price exceeding the average fair value of the Company’s common stock during the period.

During the three and nine months ended September 30, 2019, the Company had 245,000 stock options, respectively, that were excluded due to the exercise price exceeding the average fair value of the Company’s common stock during the period.

(3) Fair Value Measurements

6 unchanged sentences

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 June 30, 2020.

There were no transfers between Level 1, Level 2 or Level 3 during the three and six months ended June 30, 2020 or 2019.

The Company does not have any recurring fair value measurements as of September 30, 2020.

There were no transfers between Level 1, Level 2 or Level 3 during the three and nine months ended September 30, 2020 or 2019.

(4) Contract Assets and Contract Liabilities

6 unchanged sentences

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

September 30,

Accounts receivable

5 unchanged sentences

Advanced billings consisted of the following (in thousands):

September 30,

Advanced billings

As of June 30, 2020, we had approximately $ 1.4 billion of performance obligations remaining to be performed for active projects.

As of September 30, 2020, we had approximately $ 1.5 billion of performance obligations remaining to be performed for active projects.

(5) Intangible Assets, Net

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

September 30,

Intangible assets:

9 unchanged sentences

Total intangible assets, net

As of June 30, 2020, estimated amortization expense of the Company’s intangible assets for each of the next five years and thereafter is as follows (in thousands):

As of September 30, 2020, estimated amortization expense of the Company’s intangible assets for each of the next five years and thereafter is as follows (in thousands):

Remainder of 2020

1 unchanged sentence

Accrued expenses consisted of the following (in thousands):

September 30,

Employee compensation and benefits

4 unchanged sentences

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.

As of June 30, 2020, 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.

As of September 30, 2020, 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 ) Leas es

The Company enters into leases for real estate and equipment.

4 unchanged sentences

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating lease cost

1 unchanged sentence

Supplemental cash flow information related to the leases was as follows (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Cash paid for amounts included in the measurement of lease liabilities:

3 unchanged sentences

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

September 30,

Operating lease right-of-use assets

6 unchanged sentences

Operating leases

Lease payments due related to lease liabilities as of June 30, 2020 were as follows (in thousands):

Lease payments due related to lease liabilities as of September 30, 2020 were as follows (in thousands):

Related Party

8 unchanged sentences

See Note 12 for details of this related party lease.

As of September 30, 2020, we have several additional leases with contractual obligations, which have not yet commenced, with future payments of $ 1.5 million through 2025.

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

The Company granted 319,397 awards to employees under the 2016 Incentive Award Plan during the six months ended June 30, 2020, consisting of 20,724 restricted stock awards (“RSA”) and 96,768 restricted stock units (“RSU”) vesting after four years , 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, vesting after one year , to non-employee directors under the 2016 Incentive Award Plan, during the six months ended June 30, 2020.

The Company granted 510,986 awards to employees under the 2016 Incentive Award Plan during the six months ended June 30, 2019, consisting of 5,000 stock option awards and 167,310 RSU vesting after four years , 5,000 stock option awards vesting after one year , 311,676 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 38,832 stock option awards, vesting after one year , to non-employee directors under the 2016 Incentive Award Plan, during the six months ended June 30, 2019.

The Company granted 347,197 awards to employees under the 2016 Incentive Award Plan during the nine months ended September 30, 2020, consisting of 20,724 restricted stock awards (“RSA”) and 119,768 restricted stock units (“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, vesting after one year , to non-employee directors under the 2016 Incentive Award Plan, during the nine months ended September 30, 2020.

The Company granted 778,986 awards to employees under the 2016 Incentive Award Plan during the nine months ended September 30, 2019, consisting of 10,000 stock option awards and 190,310 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 38,832 stock option awards, vesting after one year , to non-employee directors under the 2016 Incentive Award Plan, during the nine months ended September 30, 2019.

Award Activity

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

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Weighted Average

6 unchanged sentences

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

Six Months Ended

June 30, 2020

Nine Months Ended

September 30, 2020

Outstanding and unvested - beginning of period

2 unchanged sentences

Stock-based compensation expense recognized in the condensed consolidated statements of operations related to all outstanding stock based compensation awards is summarized below (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Total direct costs

2 unchanged sentences

(10) Income Taxes

The Company’s effective income tax rate was 20.6 % and 20.4 % for the three months ended June 30, 2020 and 2019, respectively.

The Company’s effective income tax rate was 20.6 % and 21.1 % for the six months ended June 30, 2020 and 2019, respectively.

The Company’s effective income tax rate for the three and six months ended June 30, 2020 varied from the U.S.

The Company’s effective income tax rate was 11.8 % and 18.6 % for the three months ended September 30, 2020 and 2019, respectively.

The Company’s effective income tax rate was 17.0 % and 20.3 % for the nine months ended September 30, 2020 and 2019, respectively.

The Company’s effective income tax rate for the three and nine months ended September 30, 2020 varied from the U.S.

statutory rate of 21 % primarily due to the impact of state taxes, which was favorably offset by previously acquired tax attributes, tax benefits related to Foreign Derived Intangible Income (FDII) and excess tax benefits recognized from share-based compensation.

2 unchanged sentences

The Company is involved in legal proceedings from time to time in the ordinary course of its business, including employment claims and claims related to other business transactions.

The Company cannot predict with certainty the outcome of such proceedings, but it believes that adequate reserves have been recorded and losses already recognized with respect to such proceedings, which were immaterial as of June 30, 2020 and December 31, 2019.

There is a reasonable possibility that a loss exceeding amounts already recognized may be incurred related to these actions;

however, the Company believes that such potential losses were immaterial as of June 30, 2020.

however, the Company believes that such potential losses were immaterial as of September 30, 2020.

Purchase Commitments

5 unchanged sentences

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 June 30, 2020 and December 31, 2019, respectively, and are included in the Prepaid expenses and other current assets and Other assets line items of the condensed consolidated balance sheets, respectively, depending on the contractual repayment date.

Total receivables as a result of these employee advances of $ 0.2 million existed at September 30, 2020 and December 31, 2019, respectively, and are included in the Prepaid expenses and other current assets and Other assets line items of the condensed consolidated balance sheets, respectively, depending on the contractual repayment date.

Service Agreements

4 unchanged sentences

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 $ 2.8 million and $ 5.9 million during the three and six months ended June 30, 2019 , respectively, in the Company’s condensed consolidated statements of operations.

The Company recognized total revenue from Cymabay of $ 3.5 million and $ 9.4 million during the three and nine months ended September 30, 2019 , respectively, in the Company’s condensed consolidated statements of operations.

As of December 31, 2019, the Company had Advanced billings from Cymabay of $ 1.6 million in the condensed consolidated balance sheets.

5 unchanged sentences

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 $ 0.4 million and $ 0.3 million during the three months ended June 30, 2020 and 2019, respectively, and $ 1.4 and $ 1.0 during the six months ended June 30, 2020 and 2019, respectively, in the Company’s condensed consolidated statements of operations.

As of June 30, 2020 and December 31, 2019, respectively, the Company had Advanced billings from LIB of $ 0.8 million and $ 0.5 million recorded in the condensed consolidated balance sheets.

In addition, as of June 30, 2020 and December 31, 2019, respectively, the Company had Accounts receivable and unbilled, net from LIB of $ 1.1 million and $ 0.3 million recorded in the condensed consolidated balance sheets.

The Company recognized total revenue from LIB of $ 0.6 million and $ 0.5 million during the three months ended September 30, 2020 and 2019, respectively, and $ 2.0 million and $ 1.5 million during the nine months ended September 30, 2020 and 2019, respectively, in the Company’s condensed consolidated statements of operations.

As of September 30, 2020 and December 31, 2019, respectively, the Company had Advanced billings from LIB of $ 0.7 million and $ 0.5 million recorded in the condensed consolidated balance sheets.

In addition, as of September 30, 2020 and December 31, 2019, respectively, the Company had Accounts receivable and unbilled, net from LIB of $ 0.3 million and $ 0.3 million recorded in the condensed consolidated balance sheets.

CinRX Pharma and subsidiaries (“CinRx”)

1 unchanged sentence

The Company and CinRx have entered into several task orders for the Company to perform clinical trial related services.

The Company recognized total revenue from CinRx of $ 2.4 million and $ 0.9 million during the three months ended June 30, 2020 and 2019, respectively, and $ 6.8 and $ 2.3 during the six months ended June 30, 2020 and 2019, respectively, in the Company’s condensed consolidated statements of operations.

As of June 30, 2020 and December 31, 2019, respectively, the Company had Advanced billings from CinRx of $ 0.8 million and $ 0.9 million recorded in the condensed consolidated balance sheets.

As of June 30, 2020 and December 31, 2019 the Company had Accounts receivable and unbilled, net from CinRx of $ 1.3 million and $ 0.2 million, respectively, in the condensed consolidated balance sheets.

The Summit, a Dolce Hotel (“The Summit”)

The Company recognized total revenue from CinRx of $ 2.7 million and $ 0.5 million during the three months ended September 30, 2020 and 2019, respectively, and $ 9.5 million and $ 2.8 million during the nine months ended September 30, 2020 and 2019, respectively, in the Company’s condensed consolidated statements of operations.

As of September 30, 2020 and December 31, 2019, respectively, the Company had Advanced billings from CinRx of $ 3.9 million and $ 0.9 million recorded in the condensed consolidated balance sheets.

As of September 30, 2020 and December 31, 2019 the Company had Accounts receivable and unbilled, net from CinRx of $ 2.6 million and $ 0.2 million, respectively, in the condensed consolidated balance sheets.

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.

Medpace incurred expenses of less than $ 0.1 million and $ 0.2 million during the three months ended June 30, 2020 and 2019, respectively, and $ 0.2 and $ 0.3 during the six months ended June 30, 2020 and 2019, respectively, at The Summit.

Medpace incurred expenses of less than $ 0.1 million and $ 0.2 million during the three months ended September 30, 2020 and 2019, respectively, and $ 0.2 million and $ 0.5 million during the nine months ended September 30, 2020 and 2019, respectively, at The Summit.

Leased Real Estate

5 unchanged sentences

Annual base rent for its corporate headquarters allows for adjustments to the rental rate annually for increases in the consumer price index.

O perating l eas e cost recognized for the t hree months ended June 3 0 , 2020 and 2019 was $ 0.5 million , respectively , and $ 1.0 million for the six months ended June 30, 2020 and 2019 , respectively .

Operating lease cost recognized for the three months ended September 30, 2020 and 2019 was $ 0.5 million, respectively, and $ 1.5 million, for the nine months ended September 30, 2020 and 2019, respectively.

The operating lease cost was allocated between Total direct costs and Selling, general and administrative in the condensed consolidated statements of operations.

The Operating lease right-of-use assets at June 3 0 , 2020 and December 31, 2019 were $ 4.4 million and $ 5.3 million, respectively, in the condensed consolidated balance sheets.

The current and long-term portions of the lease liabilities at June 3 0 , 2020 were $ 1.8 million and $ 2.6 million, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets.

The Operating lease right-of-use assets at September 30, 2020 and December 31, 2019 were $ 3.9 million and $ 5.3 million, respectively, in the condensed consolidated balance sheets.

The current and long-term portions of the lease liabilities at September 30, 2020 were $ 1.8 million and $ 2.1 million, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets.

The current and long-term portions of the lease liabilities at December 31, 2019 were $ 1.8 million and $ 3.5 million, respectively, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets.

6 unchanged sentences

The Company has determined that the lease is an operating lease.

Operating lease cost recognized for the three and six months ended June 30, 2020 was $ 0.9 million.

Operating lease cost recognized for the three and nine months ended September 30, 2020 was $ 1.3 million and $ 2.2 million, respectively.

The operating lease cost was allocated between Total direct costs and Selling, general and administrative in the condensed consolidated statements of operations.

The Operating lease right-of-use assets at June 30, 2020 were $ 54.2 million in the condensed consolidated balance sheets.

The current and long-term portions of the lease liabilities at June 30, 2020 were $ 0.8 million and $ 63.7 million, respectively, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets.

The Operating lease right-of-use assets at September 30, 2020 were $ 52.1 million in the condensed consolidated balance sheets.

The current and long-term portions of the lease liabilities at September 30, 2020 were $ 1.0 million and $ 61.5 million, respectively, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets.

The Company entered into two multi-year lease agreements governing the occupancy of space of two buildings in Cincinnati, Ohio with an entity that is wholly owned by the Company’s chief executive officer and certain members of his immediate family.

3 unchanged sentences

The Company has determined that the leases are operating leases.

Operating lease cost recognized for the three months ended June 30, 2020 and 2019 was $ 0.9 million, respectively, and $ 1.8 million for the six months ended June 30, 2020 and 2019, respectively.

Operating lease cost recognized for the three months ended September 30, 2020 and 2019 was $ 0.9 million, respectively, and $ 2.7 million for the nine months ended September 30, 2020 and 2019, respectively.

The operating lease cost was allocated between Total direct costs and Selling, general and administrative in the condensed consolidated statements of operations.

The Operating lease right-of-use assets at June 30, 2020 and December 31, 2019 were $ 20.8 million and $ 21.9 million, respectively, in the condensed consolidated balance sheets.

The current and long-term portions of the lease liabilities at June 30, 2020 were $ 2.4 million and $ 18.5 million, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets.

The Operating lease right-of-use assets at September 30, 2020 and December 31, 2019 were $ 20.2 million and $ 21.9 million, respectively, in the condensed consolidated balance sheets.

The current and long-term portions of the lease liabilities at September 30, 2020 were $ 2.4 million and $ 17.8 million, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets.

The current and long-term portions of the lease liabilities at December 31, 2019 were $ 2.3 million and $ 19.7 million, respectively, and were recognized in Other current liabilities and Operating lease liabilities in the condensed consolidated balance sheets.

4 unchanged sentences

The Aircraft Management Company also makes the private aviation charter aircraft available to third parties.

The Company incurred travel expenses of $ 0.2 million and $ 0.3 million during the three months ended June 30, 2020 and 2019, respectively, and $ 0.4 million and $ 0.6 million during the six months ended June 30, 2020 and 2019, respectively, related to these travel services.

The Company incurred travel expenses of $ 0.2 million and $ 0.3 million during the three months ended September 30, 2020 and 2019, respectively, and $ 0.6 million and $ 0.9 million during the nine months ended September 30, 2020 and 2019, respectively, related to these travel services.

These travel expenses are recorded in Selling, general and administrative in the Company’s condensed consolidated statements of operations.

As of September 30, 2020 and December 31, 2019, the Company had Accounts payable to the Aircraft Management Company of $ 0.2 million, respectively, and less than $ 0.1 million in the condensed consolidated balance sheets.

(13) Entity Wide Disclosures

2 unchanged sentences

Three months Ended

Six Months Ended

Nine months Ended

September 30,

Therapeutic Area

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements