IPO Preview: Medpace Holdings

| About: Medpace Holdings (MEDP)

Summary

Medpace provides scientifically-driven outsourced clinical development services to the pharmaceutical, biotechnology, and medical device industries.

Medpace notes in its SEC filings that its full-service operating model is its key differentiator from other CROs.

Medpace Holdings will offer 7.0 million shares at an expected price range of $20 to $23. The deal is set to price this Wed. night.

With a solid growth story behind it, and following a string of successful IPOs, we suggest buying in.

Medpace Holdings Incorporated (Pending:MEDP) expects to net ~$160 million in its upcoming IPO. Based in Cincinnati, Ohio, Medpace Holdings provides scientifically-driven outsourced clinical development services to the pharmaceutical, biotechnology, and medical device industries.

Medpace Holdings will offer 7.0 million shares at an expected price range of $20 to $23. MEDP filed for the IPO on June 24, 2016. The lead underwriters are Credit Suisse Securities and Jefferies LLP. The underwriters are Robert W. Baird & Co., UBS Investment Bank, Wells Fargo Securities, and William Blair & Co.

Business Summary: A Different Type of CRO

According to company filings, Medpace provides scientifically-driven outsourced clinical development services to the biotechnology, pharmaceutical, and medical device industries. The company offers a portfolio of services that support the clinical development process from Phase I to Phase IV in a range of therapeutic areas. Quality assurance, core laboratory, pharmacoviligance, biometrics, and medical writing are just a few of the many areas Medpace covers.

Medpace was founded by Dr. August Troendle in 1992, and Dr. Troendle continues to retain a significant ownership stake in the company. The company has approximately 2,300 employees in 35 countries to serve diverse patient populations, as well as gain market knowledge and local regulatory expertise. Medpace notes in its SEC filing that its full-service operating model is its key differentiator from other CROs.

Use of Proceeds: Primarily Debt Repayment

Medpace intends to use the net proceeds of the IPO to pay down $138.3 million in aggregate principal amount of outstanding balances under its Senior Secured Term Loan Facility.

Executive Management Highlights

President and CEO August Troendle, M.D., has been president since founding the company in 1992. His previous experience includes clinical development positions at Novartis, and the United States Food and Drug Administration. Dr. Troendle received his Medical Degree from the University of Maryland, School of Medicine.

COO, Laboratory Operations, and CFO Jesse Geiger joined Medpace in 2007 as Corporate Controller. He took his position as CFO in 2011. Mr. Geiger received his BBA degree in accounting from the University of Cincinnati and is a Certified Public Accountant.

Potential Competition: Quintiles Transnational Holdings, Pharmaceutical Product Development and Others

Medpace competes against full-service contract research organizations, along with in-house R&D departments of teaching hospitals, universities, and biopharmaceutical companies. As described in company filings, major competitors include Quintiles Transnational Holdings, PRA Health Sciences, Pharmaceutical Product Development, PARAEXEL International Corporation, InVentiv Health, Inc. INC Research Holdings, ICON plc, and Covance Inc.

Financial Overview: A Solid Growth Story

Medpace Holdings provided the following figures from its financial documents for the six months ended June 30:

2016

2015

Service revenue, net

$180,433,000

$152,782,000

Net Income

$8,410,000

$36,000

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As of June 30, 2016:

Assets

$994,863,000

Total Liabilities

$572,227,000

Stockholders' Equity

$422,636,000

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Conclusion: Consider Buying In

Despite some fluctuating operating results and stated risk from international operations, we are quite keen on Medpace, following a string of successful deals this summer. See our IPO Insights page for further reference.

We hear the deal is already popular and oversubscribed. Healthcare deals have been the most popular in the last 12 months, with 50 deals raising $4.1 billion and mostly performing well.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in MEDP over the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.