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Medpace stock down 18% after CEO talks of ‘permanent or increasing margin headwind’

February 27, 2018 By Chris Newmarker

MedpaceThe stock of clinical contract research organization Medpace (Nasdaq: MEDP) took a hit today after the company’s CEO Dr. August Troendle told analysts that the company is facing a “relatively permanent or increasing margin headwind in the next few years.”

Medpace’s stock was down $7.02 per share, or nearly 18%, to $32.02 by the close of trading. Troendle in a conference call with analysts this morning said he expected the company’s EBITDA margin — its earnings before interest, taxes, depreciation and amortization as a percentage of total revenue — to be 25% in 2018, down from 28% in 2017.

Troendle blamed foreign exchange rates, bonus accrual, the need to expand and enhance infrastructure in several locations through 2020, increased business development activities, and an above usual uptick in labor costs. He described the foreign exchange rates as a wild card but said he believed the other costs would continue to hold down the company’s margin.

The news came even as Cincinnati-based Medpace finished what Troendle described as a “strong finish to a challenging year” that beat analysts’ expectations.

For the quarter ended Dec. 31, Medpace earned $11.3 million, or 30 cents per share, off $112.7 million in revenue, versus a loss of $21,000 off $108.2 million in revenue for the same period a year before.

Adjusted net income for the fourth quarter was 39 cents per share.

The results beat the expectations of analysts, who on average expected earnings of 38 cents per share off $97.7 million in revenue for the quarter, according to Yahoo! Finance.

For all of 2017, Medpace saw profits of $39.1 million, or 98 cents per share, off $436.2 million in revenue, up from profits of $13.4 million, or 37 cents per share,  off $421.6 million in revenue for 2016.

Adjusted net income for 2017 was $1.52 per share.

The full-year results also beat the Street, where analysts on average expected earnings of $1.50 per share off $384.8 million in revenue, according to Yahoo! Finance.

Medpace for 2018 is projecting net service revenue in the range of $412 million to $428 million, representing growth of 6.6% to 10.7% over net service revenue of $386.5 million in 2017. Adjusted net income is expected to be $1.82 to $1.93 per share.

About The Author

Chris Newmarker

Chris Newmarker is the executive editor of WTWH Media life science's news websites and publications including MassDevice, Medical Design & Outsourcing and more. A professional journalist of 18 years, he is a veteran of UBM (now Informa) and The Associated Press whose career has taken him from Ohio to Virginia, New Jersey and, most recently, Minnesota. He’s covered a wide variety of subjects, but his focus over the past decade has been business and technology. He holds bachelor’s degrees in journalism and political science from Ohio State University. Connect with him on LinkedIn or email at cnewmarker@wtwhmedia.com.

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