"Medpace" Q2 2026 Earnings Call - Backlog Conversion Runs Hot as Oncology Reclaims Mix and Cancellations Cool

Conference Call Operator: Good day, ladies and gentlemen, and welcome to the Medpace second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker’s remarks, there will be a question and answer session. If you’d like to ask a question, please press star one one on your phone. If your question has been answered and you’d like to remove yourself from the queue, simply press star one one again. As a reminder, this call is being recorded. I would now like to introduce your host for today’s conference call, David Roof, Medpace’s Director of Investor Relations. You may begin.

David Roof, Director of Investor Relations, Medpace: Good morning, and thank you for joining Medpace’s second quarter 2026 earnings conference call. Also on the call today is our CEO, August 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 1995. 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-K 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 Troendle, CEO, Medpace: Good day, everyone. The business environment was strong in Q2 2026. Cancellations were well-behaved and supported a record quarter for net bookings. RFPs were up sequentially and year-over-year, generating high-quality opportunities. Initial award notifications remained solid, although they declined sequentially from a very strong Q1. Overall, the environment remains constructive into July, we are making good progress in positioning the business for 2027. Kevin will now review our financial results from Q2.

Kevin Brady, CFO, Medpace: Thank you, and good morning to everyone listening in. Revenue was $707.3 million in the second quarter of 2026. This represented a year-over-year increase of 17.2%. Revenue for the six months ended June 30, 2026, was $1.41 billion, and increased 21.7%. EBITDA of $153.4 million increased 17.6%, compared to $130.5 million in the second quarter of 2025. Year-to-date EBITDA was $302.8 million and increased 21.5% from the comparable prior year period. EBITDA margin for the second quarter was 21.7%, compared to 21.6% in the prior year period. Year-to-date EBITDA margin of 21.4% was flat compared to the prior year period, as the impact of higher reimbursable costs was offset primarily by lower employee-related costs. In the second quarter of 2026, net income of $121.4 million increased 34.5%, compared to net income of $90.3 million in the second quarter of 2025.

Net income growth above EBITDA growth was primarily driven by a lower effective tax rate and higher interest income compared to the prior year period. Year-to-date net income was $245.2 million compared to $204.9 million in the comparable prior year period, which represents a 19.7% increase. Net income per diluted share for the quarter was $4.25 compared to $3.10 in the prior year period. Year-to-date net income per diluted share was $8.53 compared to net income per diluted share of $6.79 in the comparable prior year period. Net new business awards entering backlog in the second quarter increased 28.2% from the prior year to $795.7 million, resulting in a 1.13 net book-to-bill. Ending backlog as of June 30, 2026, was approximately $3 billion, an increase of 4.9% from the prior year. We project that approximately $1.96 billion of backlog will convert to revenue in the next 12 months.

Backlog conversion in the second quarter was 24.1% of beginning backlog. Regarding customer concentration, our top 5 and top 10 customers represent roughly 31% and 40%, respectively, of our last 12 months revenue. In the second quarter, we generated $162 million in cash flow from operating activities, and our net days sales outstanding was negative 59.6 days. During the second quarter, we repurchased approximately 706,000 shares for $294.7 million. As of June 30, 2026, we had $527 million remaining under our share repurchase authorization program. Cash end of the quarter at $502.7 million. Moving now to our updated guidance for 2026. Full year 2026 total revenue is now expected in the range of $2.805 billion to $2.885 billion, representing growth of 10.9% to 14% over 2025 total revenue of $2.53 billion.

Our 2026 EBITDA is now expected in the range of $618 million to $642 million, representing growth of 10.8% to 15.1% compared to EBITDA of $557.7 million in 2025. We forecast 2026 net income in the range of $494 million to $514 million. This guidance assumes a full-year 2026 effective tax rate of 19% to 19.5%, interest income of $21.1 million and no additional share repurchases assumed in our guidance. Earnings per diluted share is now expected to be in the range of $17.25 to $17.95. Guidance is based on foreign exchange rates as of June 30, 2026. With that, I will turn the call back over to the operator so we can take your questions.

Conference Call Operator: Thank you. As a reminder to ask a question, please press 11 again. Please stand by while we compile the Q&A roster. Our first question comes from Charles Rhyee of TD Cowen. Your line is open.

Charles Rhyee, Analyst, TD Cowen: Oh, yeah. Thanks for taking the questions. Wanted to ask, obviously a lot of the growth that we’ve seen over the last year or so has been really driven by metabolic mix, and at the same time, it looks like our concentration of top customers, particularly the top five, has increased. Can you give us a sense on, are the two related in such that maybe a lot of the metabolic work you’re doing is coming from a couple large clients? Can you give us a sense on sort of what visibility you have of that going forward? I guess the question is, does the mix within your bookings and backlog look similar to what your current revenue mix?

Just trying to get a sense how long we could expect this kind of mix persist, and particularly on the metabolic side, or does that kind of roll off at some point? Maybe any sense on timing of would that be?

August Troendle, CEO, Medpace: Sure. It is August. The top five growth has been driven quite a bit by that metabolically. The answer to that is yes, there are some large programs among that top five that are a good part of that growth in the group. As to the timing of that, more recently, this year, the last couple of quarters, I think that oncology has come back quite a bit in terms of both our award notifications. The earliest part of the pipeline for awards and the backlog recognition. Our bookings. Particularly in this last quarter, we’re very strong in oncology. Oncology represented over half of our overall bookings, and our award notifications. Cardiometabolic has kind of dropped off quite a bit in terms of new award notifications. I think we are seeing kind of a shift back towards the more historical averages.

Kevin Brady, CFO, Medpace: I don’t know that we’ll get back to where we were two years ago in terms of percent of, but I think oncology will retake its position, move up a few % in our mix, et cetera. I would expect over the next year or so that to kind of head back toward that kind of prior mix. Yes, the metabolic is kind of, some of the very large programs are kind of reducing and sort of the new opportunities are not as great as a year ago.

Charles Rhyee, Analyst, TD Cowen: Great. Maybe just to follow up then, Kevin, just from a modeling perspective then, should we think back to maybe two years ago what the backlog conversion rate? I would assume backlog conversion rate would just fall naturally because of the mix, because the oncology trials are longer in duration?

Kevin Brady, CFO, Medpace: Yeah. I mean, Charles, as you know, we don’t guide to the burn rate. We’ve got to kind of see how those programs where we’ve been awarded the work from a notification standpoint, how those progress into awards the rest of this year, and we’ll have more color on what 2027 will look like, possibly next quarter, but certainly in the February call.

August Troendle, CEO, Medpace: Yeah. I would challenge the very premise that the metabolic programs are driving the conversion rate up. I don’t think that is necessarily the dynamic. It might have had an influence, but that is not the primary driver of the increased conversion rate. Remember, we do block backlog greater than three years, in fact, the average duration of backlog across programs is much lower based upon interim analyses or steps that we limit backlog recognition until we get certainty around that. That is very prevalent among many of the non-metabolic programs in oncology. The fact that you think that metabolic has a faster burn rate, that can be true, but it’s not overwhelmingly apparent, and I don’t think that’s the biggest driver of that’s going to cause a normalization of our conversion.

Charles Rhyee, Analyst, TD Cowen: I’m sorry, can you just clarify, August, what is the change that allows My understanding of duration was the way backlog converts is length of trials and where recognition happens, but you’re saying that with interim analysis, even in, let’s say, an oncology trial, that triggers a revenue rec?

August Troendle, CEO, Medpace: We might only have one year of backlog for that program. The program might be five years planned to go, but we only have one year of backlog in there because there is another stage looking at before they do the expansion or before there’s some increase in the program, and we won’t put any of the backlog beyond that point until we get to it and there’s a favorable decision.

Charles Rhyee, Analyst, TD Cowen: Oh, I see. Okay. That’s really helpful. Appreciate the comments. Thank you.

Conference Call Operator: Thank you. Our next question comes from Michael Cherny of Leerink Partners. Your line is open.

Michael Cherny, Analyst, Leerink Partners: Good morning. Thank you for taking the question. Very nice job on the bookings. As you think about the mix that you saw, anything to call out relative to the stability of the bookings in terms of pricing, in terms of competition? What are you seeing in terms of any potential changes, adjustments, fierceness in competition relative to the overall market health with your core biotech customers?

August Troendle, CEO, Medpace: No, I don’t think the market has changed. It’s gotten stronger over the last few quarters. We had a pretty strong, I would say pretty strong because I didn’t want to say just unqualified strong business environment in the prior quarter, because there were cancellations. Still, we continue to see clients that were looking for funding or having problems, et cetera. A high level of cancellations. This quarter, this very last quarter, Q2, cancellations came down quite a bit. The business environment continued to be strong. New opportunities look good. I don’t really see competitive dynamics or anything. Like I said, the profiles moved more back towards oncology programs being the largest, in fact, the majority of opportunities as opposed to sort of metabolic drivers of a year or so ago. Otherwise, I think things are pretty stable.

Michael Cherny, Analyst, Leerink Partners: Just quickly on the cancellation side, I know you don’t guide to cancellations, I know they can be volatile from quarter to quarter. Do you feel going forward, like cancellations should be at least in a better place versus what seemingly could have been an outlier in one quarter, in one Q?

August Troendle, CEO, Medpace: The cancellations are completely beyond my ability. It’s not like we have any of these past year had a situation where we had a very high-risk programs. We thought, "Oh, there could be high cancellations." Sure enough, they were. We just have no idea. There’s not been that kind of insight into future cancellations. I don’t anticipate that there will be going forward. Cancellations just come up. Like I said, we are very careful about gating our backlog by having any sort of interim look or analysis or thing that might, regulatory decision that might influence the remainder of the program, we won’t put in backlog beyond that point. We’ll wait for that to happen. The cancellations that we have are completely unanticipated and out of the blue sky. I can’t say that.

What I can say is that the business environment is good. Our pipeline of stuff, including in the kind of pre-backlog that have been awarded programs, is very strong. I would anticipate that our gross bookings, which we do have reasonable insight into, are going to scale in the next second half, are going to ramp up. I think that independent of where cancellations are, that should be a scaling in our a ramping up in our net bookings. I say that if cancellations are in any kind of reasonable range, but there’s always possible cancellations spike to an unusual level.

Conference Call Operator: Thank you. Our next question comes from Ann Hynes of Mizuho. Your line is open.

Ann Hynes, Analyst, Mizuho: Great. Thank you. I know your business. You do a little bit of phase I, but phase II and III, and there’s been some increased investor concern that maybe phase II is hitting a wall, maybe something’s moving to China. I don’t know if that’s the case for you. I’m just giving you a biotech mix, but maybe if you can just discuss gross bookings trends, and phase I versus phase, I’m sorry, phase II versus phase III, that would be great. Thank you.

August Troendle, CEO, Medpace: Yeah. I think if we look at kind of the numbers, maybe phase I has increased some relative to phase II. Phase III’s been pretty stable, and of course, that phase I is driven largely by oncology programs.

I don’t know that that’s not just the kind of move towards the very heavy oncology. I haven’t tried to analyze that too greatly in terms of where that’s going. I don’t really see a shift of things to China greatly for at least the programs we’re chasing. I don’t know that I see that dynamic.

Ann Hynes, Analyst, Mizuho: Okay

August Troendle, CEO, Medpace: I don’t opposite.

Ann Hynes, Analyst, Mizuho: Great. I know the past couple of quarters, I believe you said gross bookings was good, but maybe a little bit below your expectations. Was gross bookings this quarter actually in line or better than what you expected heading into the quarter?

August Troendle, CEO, Medpace: Yeah. That kind of is set up. Gross bookings are going to be determined by pre-booked backlog cancellations from the past.

Ann Hynes, Analyst, Mizuho: Yeah

August Troendle, CEO, Medpace: high cancellations, we’ve had an improving business environment. As I said, that’s what we’ve been saying last few quarter, last three quarters or so, the business environment is pretty good. It looks actually, I would say very good except that we keep having cancellations and that is part of the business environment. There has been still a number of clients that were challenged financially. I don’t know.

Ann Hynes, Analyst, Mizuho: Yeah.

August Troendle, CEO, Medpace: I’m not sure.

Ann Hynes, Analyst, Mizuho: All right. Thank you.

Conference Call Operator: Thank you. Our next question comes from Jailendra Singh of Truist Securities. Your line is open.

Jailendra Singh, Analyst, Truist Securities: Thank you, and thanks for taking my questions, and congrats on a good quarter. I just want to go back to cancellation comment, August. I was wondering if you can put Q2 trends in some perspective. Is it fair to say that cancellations have improved back to levels seen in Q3 of last year or even better or worse? Just to confirm that. Also to confirm, did cancellations improve in both backlog and pre-backlog?

August Troendle, CEO, Medpace: Yeah. I guess so. Cancellations were actually at a pretty good range this quarter. In fact, if you look at the net bookings, a bigger driver of the net bookings increase from last quarter was due to reduced cancellations, rather than kind of gross bookings. Okay? You look at it that way. I think second half, we’re going to see more just gross bookings ramping up quite a bit. This quarter was helped along quite a bit by a substantial drop from what had been a kind of elevated cancellation rate. It’s come down nicely, not to unusually low level, but a very good level, let’s say. Even in this quarter, cancellations and AIS were very well-behaved also. That also helps toward the ramping in gross bookings going forward in the second half. Across the board, yes, cancellations were down.

They were in a nice range. Were more than half of the driver, I would say, of the net bookings growth from the prior quarter from Q1.

Jailendra Singh, Analyst, Truist Securities: Okay.

August Troendle, CEO, Medpace: Does that answer?

Jailendra Singh, Analyst, Truist Securities: Yeah. It helps. Thank you. My follow-up. I know last quarter you did call out implementing initiatives to improve win rates. Can you provide any update on that? Have you started to see the impact of those initiatives? If any color they can provide around what are these initiatives related to? Is it commercial execution, positioning, quality? Just give us more color, like if that’s having an impact on your wins here.

August Troendle, CEO, Medpace: Yeah. I brought that up to say that we had recognized that our win rate last year, largely was less than it had been in prior years. We were making some changes. We did make changes, in fact, late last year and maybe a little bit in the first quarter. They were really done last year. They’ve been implemented and are in place. I think we’re a possible influence on our very strong win rate in Q1. I think that has come back. I don’t want to go into the details. I just wanted to acknowledge, recognize that we hadn’t won the same percentage of programs that we had historically in 2025. We’re implementing some changes, but I don’t want to go into just how those competitive changes we’re rolling out.

Jailendra Singh, Analyst, Truist Securities: Got it. Thanks a lot.

Conference Call Operator: Thank you. Our next question comes from Jared Haase of William Blair. Your line is open.

Christine Renson, Analyst, William Blair: Great. Thank you. It’s Christine Renson for Jared. While I realize the majority of the work that you booked today will not burn till at least 2027, given the volatility of recent, hoping you can give some color on what you’re expecting for bookings growth cadence in the back half of the year. Really, if you expect 2Q net bookings to be a high water mark or if we could see sequential acceleration as we move throughout the year.

August Troendle, CEO, Medpace: I’m sorry. You’re a little bit faint there. It sounds like you’re asking about how the bookings are going to go in the second half towards 2017.

Christine Renson, Analyst, William Blair: Yeah. No, I apologize. I was just hoping to get some color on really if 2Q is expected to be the high water mark for bookings here, if we really could see an acceleration, as we move throughout the year in terms of net bookings.

August Troendle, CEO, Medpace: No, no. In response to the last few questions, I said that we expect a ramp in bookings. I expect a ramp in gross bookings. I would expect that to translate into a ramp in net bookings, but cancellations are always a wild card. That was my commentary on second half.

Christine Renson, Analyst, William Blair: Perfect. Thank you. Hoping you can give a little bit more color on RFPs in terms of magnitude of sequential and year-over-year growth on bookings quality as well. A similar question on magnitude of initial awards declined sequentially, and if this bucket was up year-over-year.

August Troendle, CEO, Medpace: RFPs were up meaningfully. Certainly on a sequential basis. RFPs were up substantially. The quality has been good and improved. We see a lot of clients that have had recent funding. I think the big thing is funding has been a lot broader rather than just a few companies getting quite a bit more money. It’s quite a bit broader. We’re seeing more opportunities with recent funding and moving forward with the program. I think the business environment is in good shape, and I think the RFPs numbers have increased. I don’t like paying a lot of attention to the numbers. They are up substantially year-over-year. They were up also sequentially, by a reasonable amount. Again, quality is more important, and I think the quality has been there and is good. What was your other question?

Christine Renson, Analyst, William Blair: Very helpful. Thank you.

August Troendle, CEO, Medpace: You had another question on that?

Christine Renson, Analyst, William Blair: It was just on initial awards, in terms of, they seemed strong, but declined sequentially.

August Troendle, CEO, Medpace: Yeah

Christine Renson, Analyst, William Blair: In your commentary. Just curious, one, if this bucket was up on a year-over-year basis, and then just any commentary on the magnitude, sequentially.

August Troendle, CEO, Medpace: Yeah. Sorry. I don’t have any other comments on it, really. We had a very strong Q1. We had a Q2 that they were down. They were on the lower side of kind of a, but not unusually low. I don’t know what to say about that. These are things that do bounce around. We look at it over a longer period of time because single large programs often drive the actual number there, whether you win or miss that one or two very large programs. It’s not like a metric that can be looked on an individual quarter. The overall new awards were in a good range, because the business environment was very strong, and even though maybe there were some very large ones that we lost and made the actual % not fantastic, overall, awards were good.

Christine Renson, Analyst, William Blair: Perfect. Very helpful. Thank you.

Conference Call Operator: Thank you. Our next question comes from David Windley of Jefferies. Your line is open.

David Windley, Analyst, Jefferies: Hi, good morning. Thanks for taking my question. August, I wanted to try to understand hearing you on the contingency backlog considerations that you had mentioned to me recently, and mentioned again this morning, and how influential they are. I guess I’ll spin the question to the backlog burn has ramped over a couple of years, kind of making new highs. Sounds like you would not attribute that to the metabolic mix. To what do you attribute, I guess is my basic question. What are the various factors that contribute to that burn rate being as high as it is?

August Troendle, CEO, Medpace: Well, I think given the environment with the high cancellations that we were in, I think we double looking at programs for decision points, and I think they may have not been as broadly implemented. There’s a lot of gray area there in terms of what is a decision point. Is this look for power? Is that something that could influence their continuation of the program? There’s a lot of different factors that could. We were in a very high cancellation environment. We didn’t want large reductions in backlog hitting us. I think that was It. I think that just overall, the awards that were slower did cause a change in the average profile for the program.

Metabolic, I’m not denying that it has had some effect, I just don’t think it is the overwhelming driver, because metabolic conversion isn’t naturally a lot faster in our systems. I think that it can be if there’s a decision point that’s a very large program. I’m not saying there couldn’t be situations where metabolic might be a driver, but almost any other program also could be. I just don’t think that is, "Oh, yeah, metabolic’s much faster burning and therefore, that is the driver of our conversion rate." I don’t think it has been.

David Windley, Analyst, Jefferies: It sounds like you kind of went through a, logically, a backlog recheck as a result of what the environment was signaling to you.

Yeah.

That result-

August Troendle, CEO, Medpace: I don’t want to say that we removed anything from backlog, because we didn’t. We didn’t take anything out of backlog. We just started looking at should we put this into backlog when we have this decision point in a year from now-

that in the past you might’ve said, "Well, that’s just an adjustment and it isn’t really an interim look for a decision about continuing the trial.

David Windley, Analyst, Jefferies: On this point, do you have any meaningful amount of revenue where, say, a decision point or some factor would cause value to be added to backlog and go right into revenue in the same quarter?

August Troendle, CEO, Medpace: Oh, definitely.

David Windley, Analyst, Jefferies: Like, a decision point happens and-

August Troendle, CEO, Medpace: Yes

That drops into revenue?

Yes. Sure. That is kind of the profile of an interim analysis to decide whether to stop the trial. If it continues, it might be that next quarter’s revenue could be influenced. Obviously, any one program’s not going to be a big driver of a quarter, but it could be in that next quarter right away.

David Windley, Analyst, Jefferies: Yeah. Last question from me. On the labor side, your headcount growth did tick up a little bit. I wondered how you would assess where you stand on resources relative to the demand that you’re seeing matriculate toward bookings. Within that, has the composition of your labor changed geographically, you had in past years talked about beginning to do some offshoring, or between full-time equivalents and contractors as you maybe try to manage costs? Thanks.

August Troendle, CEO, Medpace: Yeah. I think we’re in a good place. That’s been substantially helped by the low turnover that we’ve had, which has continued through Q2. Very low turnover on historical terms. We do expect high single-digit growth in employees this year. I suspect we’ll continue that next year. I think we’re in a good space. Employee growth has been predominantly U.S., then also Asia Pac, and a chunk of that in India, which does kind of represent a positioning for cost. The biggest growth has been U.S., and as I think I’d mentioned previously, a lot of things have kind of moved back towards U.S. in terms of growth. There has been some repositioning, too.

David Windley, Analyst, Jefferies: Okay. Thank you.

Conference Call Operator: Thank you. Our next question comes from Ryan Halsted of RBC Capital Markets. Your line is open.

Ryan Halsted, Analyst, RBC Capital Markets: Morning. Thanks for taking the questions. Just going back to the net new awards growth. My question is, are you able to quantify, I guess, or just size how much of the new awards growth came from converting your pre-backlog awards from last year into awards this year? How much of it was from this improvement in the business environment, so kind of organic new awards this year?

August Troendle, CEO, Medpace: Yeah. In Q2, most of the backlog recognition would’ve been from award notifications the prior year. Q1 would not have influenced greatly the Q2 backlog awards.

Ryan Halsted, Analyst, RBC Capital Markets: Got it. Okay. In terms of the improving business environment, where are you seeing that? Is that sort of in the pre-award backlog?

August Troendle, CEO, Medpace: Yes, in cancellations.

Ryan Halsted, Analyst, RBC Capital Markets: Okay.

August Troendle, CEO, Medpace: Even Q4 was, I think things have improved quite a bit. It’s cancellations that were driving sort of the backlog bookings decrease, also we’re very high in our pre-backlog, reducing our potential for future conversions. In Q2 was in a very good place.

Ryan Halsted, Analyst, RBC Capital Markets: Got it. Okay. Last one from me. You had previously guided to direct service costs at, I don’t know, 41%-42% of revenue, which I think implies a sequential decrease. Just curious if that continues to be the case, if you are expecting some declining direct service costs.

Kevin Brady, CFO, Medpace: Yeah. That commentary is related to the reimbursable component of direct costs, right? That’s what I do expect, is some further decline in the back half of the year. I would say a range of 41%-42% of revenue Q3, Q4 is kind of what we’re modeling right now.

Ryan Halsted, Analyst, RBC Capital Markets: Great. Thanks for taking the questions.

Conference Call Operator: Thank you. Our next question comes from Luke Sergott of Barclays. Your line is open.

Jake, Analyst, Barclays: Hey, this is Jake on for Luke. Thanks for the question. For the last couple years, you saw a sequential step down in SG&A from 1Q to 2Q, this quarter it ticked up slightly. I know you called out benefiting from lower employer-related costs through the last couple of quarters, but what are the puts and takes there going forward around the margin step up through the year? Thank you.

Kevin Brady, CFO, Medpace: Yeah. A lot of the impact that we see from Q1 to Q2 or Q4 to Q1 is related to the annual merit cycles. Depending on what happens with the company’s equity programs, that can influence it, both of which have already occurred this year. You’ll kind of start to see more of an influence on headcount increases as we continue in the back half of the year, but at a slower pace than revenue. You’ll see a little bit of what you’re saying in that margin expansion in the back half of this year.

Jake, Analyst, Barclays: Great. Thank you.

Conference Call Operator: Thank you. Our next question comes from Eric Coldwell of Baird. Your line is open.

Eric Coldwell, Analyst, Baird: Thank you. Good morning. I just wanted to circle back first to David’s questions and on the backlog burn rate. I think I get the gist of what you’re saying. Just to be very clear, your long-term average backlog burn rate up until the beginning of 2025 was about 18%. Now you’re at 24%. You’re saying metabolic was not the main driver. It sounds like you’re saying the main driver was that you tightened the screws, I guess, if you will, tightened the screws on your policies around what you put into backlog. Effectively changed SOPs on what went in there. You were more restrictive on gating factors. I just want to clarify that that was in fact the main driver of this increase, being 30%-35% above normal on backlog burn.

If that was the case, is your expectation that backlog burn stays at 24% moving forward? Or now that the environment is improving, are you perhaps going to go back to a more traditional process in terms of where you gate or don’t gate awards when they do or do not become bookings?

August Troendle, CEO, Medpace: Thanks, Eric. Let me clarify. I don’t think that metabolic is an overwhelming driver of the difference, and I am not saying that metabolic programs might have been contributive, but I think a bigger part was the policy implementation really enhanced. It was the same policy that was written. We did not change the SOP. It is just a matter of we were more maybe attuned to looking for those type of issues. I do not think it is a natural part of metabolic programs, and I am not saying there was not maybe a metabolic program that also had a meaningful contribution to that because of the same issue was there of gating rather than faster burn. I am saying that metabolic programs are not faster burning driving our high conversion rate. Even to a large extent, they may to some extent, but I really think there are three components.

Maybe metabolic is a little bit faster burning on average. We had the implementation of our policy up given the cancellations that were going on. I think the overall dynamics of awards and size of backlog and AIS and all the rest of it, causing dynamics in terms of the average age of programs. Okay? I think there was a number of drivers of this, and I do not think that if metabolic goes to zero or doubles in our backlog, that that is going to have a big influence on our conversion rate. Okay? Whether metabolic comes down or not, I do not think that is the driver of reducing conversion rate overwhelmingly. I do not think that is going to be a big change between 2018 and 2024.

All that said, I would expect that our conversion rate does tend to drop down some over time as we have new awards and more programs and all the rest of it and hopefully get into a lower cancellation environment.

Eric Coldwell, Analyst, Baird: Okay. On the pass-throughs, the last question, Kevin said 41%, 42% of mix in the second half. I think that is perhaps higher, maybe Q1 and Q2 were a little higher than you were thinking. Is that a fair statement that they have run at a slightly faster clip this year than you were anticipating? Is that fair?

Kevin Brady, CFO, Medpace: Yeah. That’s fair, Eric. I did anticipate it coming down a little bit more in the first and second quarter. As I had mentioned in the second quarter, I thought it would be for the year on the higher end, if you push it to 42%, it might be just north of even that watermark.

Eric Coldwell, Analyst, Baird: The current generation of bookings, the $800 million here in Q2, any sense on what the profile of that looks like with pass-through mix? If you just took that bucket individually, I’m thinking that perhaps with mix shifting back towards oncology, the pass-through mix of that bucket, maybe the newer generation buckets of awards could be lower. We would see a reduction in pass-through mix in 2027 if that were the case, maybe that’s not the right thought process.

Kevin Brady, CFO, Medpace: Yeah, it certainly can be. I would say that the mix of programs going into backlog, is it significantly different on a percentage basis? Maybe it’s a little bit lower, but I think what’s more indicative of what happens in 2027 is just the programs that end up earning revenue and where they are in their life cycles. We’ve said before that studies that are later in their life cycle have a tendency to even burn a bit more reimbursable pass-throughs. It’s just a combination of all the portfolio and how things are going to progress across that portfolio. It’s not just what you’re putting in the backlog.

Eric Coldwell, Analyst, Baird: Gotcha. Last one for me. I was hoping, sorry if I missed this, did you provide an update on pre-backlog? Was it up, down, flat quarter-over-quarter? I think last quarter you said it was around the size of backlog, maybe you could provide some more color on where that stands exiting Q2.

Kevin Brady, CFO, Medpace: Yeah. I don’t want to get into doing that. It is larger than backlog, yes. It is growing. It has grown faster than backlog over the last year. I don’t want to get into % and how much larger or what, that kind of stuff.

Eric Coldwell, Analyst, Baird: Okay. Thank you.

Conference Call Operator: Thank you. As a reminder, if you have a question, please press star one one. Our next question comes from Justin Bowers of Deutsche Bank. Your line is open.

Justin Bowers, Analyst, Deutsche Bank: Hi, good morning. I have a few questions. Just wanted to continue with Eric’s line of questioning and just clarify a couple things on the burn rate. August, it sounds like your statement on the burn rate, excuse me, coming down in the future would be driven more by fewer cancellations. I guess that would mean greater bookings showing up in the quarter versus a change in how you’re running the business or study mix. Is that the takeaway that you want us to have or?

Kevin Brady, CFO, Medpace: I think the average age of projects and the booking characteristics, what was more recently put into backlog, does have an influence on the conversion rate, and I think that will change over time. That would put pressure downward on the conversion rate. Again, I don’t want to try to project the conversion rate. I don’t know that it’s going to come down. I don’t know how fast it would come down if it did. I just think that a lot of the increase over time has been related to the average age of projects and kind of the dynamics of what’s coming in and off of backlog, and that would, I would expect, the more would do at least revert towards our historical norms.

That is, 24% is kind of high relative to historical values. I would think that that is going to come down. I’m not making a statement on we’ve projected a decrease through any kind of formal analysis.

Justin Bowers, Analyst, Deutsche Bank: Okay. Understood. Just on the environment. This is a question that’s been asked amongst some of the peers as well. You probably have line of sight into this better than anyone, just given the customers that you serve. With the increase in funding that we’re seeing now and the wider dispersion out there, how should we be thinking about the timeline of when that actually shows up, either as awards and/or in your backlog? Is there a timeframe that you can help us think about? Also, just in general, how is the cadence of decision-making right now versus maybe 12 months ago?

Kevin Brady, CFO, Medpace: Yeah. The timing of when biotech spend their money, look, I’m not the person to talk to about that. I don’t know. I don’t have a good feeling. A lot of our clients are raising money while they’re getting bids from us. It’s immediate, kind of. I don’t know overall. I don’t really have a good insight into that.

Justin Bowers, Analyst, Deutsche Bank: Okay. Any change in the trajectory of decision-making timelines or competitive landscape?

Kevin Brady, CFO, Medpace: Yeah. Sorry. No. We’re seeing more clients that come with recent funding and able to move forward in programs. We have seen better funding for things. Yeah, the trajectory’s been better and the opportunities moving along nicely. It isn’t like a lot of things are hung up now. I think trajectory has improved with the funding environment.

Justin Bowers, Analyst, Deutsche Bank: Okay, thank you. I’ll jump back in queue.

Conference Call Operator: Thank you. I’m showing no further questions at this time. I’d like to turn it back to David Roof for closing remarks.

David Roof, Director of Investor Relations, Medpace: 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 third quarter 2026 earnings call.

Conference Call Operator: This concludes today’s conference call. Thank you for participating, and you may now disconnect.