Increased trial site activity boosted Medpace’s revenues in the second quarter, prompting the CRO to revise its full year guidance.
The US contract services firm posted its second quarter results last month, revealing that it revenue for the period increased 31% to nearly $461 million.
Medpace also revised up its full year revenue expectations, predicting it will bring in revenue in the range of $1.84 billion to $1.880 billion, representing growth of 26.0% to 28.8% over 2022 revenue of $1.460 billion.
Medpace CFO Kevin Brady told analysts on the Q2 call that “Revenue growth for the quarter was favorably impacted by higher pass-throughs particularly at investigator sites.”
In clinical research “pass-throughs” are costs not directly related to per-subject costs. They are passed directly to the trial sponsor. Typically, pass-through costs include administrative start-up costs, the IRB start-up work, and contract and budget development.
CEO August Troendle told analysts the higher pass-through costs reflected a return to normal operations at trial sites.
“I think staffing is improving at sites and operations are becoming more normalized. There was a lot of disruption for quite a bit of time. Now, the reimbursement sites have gone up in many cases, and in some cases, that helps, but, it's fundamentally staffing.
“And the other reason, our costs are going up, and our activity is also the positioning of programs that are getting into the rapidly recruiting phase.”
“But I think it's all good news, and that, in general, I think things are getting back to a normalized pace. And things are moving along nicely. And that speaks well for our performance on trials.”
In addition to increasing Medpace’s revenues, the surge in pass through costs was also the key factor in Medpace’ for the decision to increase its full year revenue guidance according to Brady.
“The largest portion of the guide increase was driven by the elevated pass-throughs. And so that again, coming back to my comment on that we do expect pass-through cost to be elevated similar to what we saw in the second quarter, is what's built into our guidance.”
Medpace also reported a surge in new business wins in the quarter. It said it had signed contracts worth nearly $575 million in the period, which is a 27% year-over-year increase.