Clinical research company Medpace Holdings (NASDAQ: MEDP) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 23.7% year on year to $659.9 million. The company’s full-year revenue guidance of $2.51 billion at the midpoint came in 1.6% above analysts’ estimates. Its GAAP profit of $3.86 per share was 10% above analysts’ consensus estimates.

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Company Overview

Founded in 1992 as a scientifically-driven alternative to traditional contract research organizations, Medpace (NASDAQ: MEDP) provides outsourced clinical trial management and research services to help pharmaceutical, biotechnology, and medical device companies develop new treatments.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, Medpace’s 21.4% annualized revenue growth over the last five years was excellent. Its growth beat the average healthcare company and shows its offerings resonate with customers, a helpful starting point for our analysis.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Medpace’s annualized revenue growth of 15.1% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

We can better understand the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Medpace’s organic revenue averaged 15.2% year-on-year growth. Because this number aligns with its two-year revenue growth, we can see the company’s core operations (not acquisitions and divestitures) drove most of its results.

This quarter, Medpace reported robust year-on-year revenue growth of 23.7%, and its $659.9 million of revenue topped Wall Street estimates by 2.7%.

Looking ahead, sell-side analysts expect revenue to grow 12.1% over the next 12 months, a slight deceleration versus the last two years. Still, this projection is commendable and indicates the market is forecasting success for its products and services.

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Operating Margin

Medpace has managed its cost base well over the last five years. It demonstrated solid profitability for a healthcare business, producing an average operating margin of 19.6%.

Analyzing the trend in its profitability, Medpace’s operating margin rose by 3.3 percentage points over the last five years, as its sales growth gave it operating leverage. The company’s two-year trajectory shows its performance was mostly driven by its recent improvements. These data points are very encouraging and show momentum is on its side.

This quarter, Medpace generated an operating margin profit margin of 21.5%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Medpace’s EPS grew at an astounding 34.2% compounded annual growth rate over the last five years, higher than its 21.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Medpace’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Medpace’s operating margin was flat this quarter but expanded by 3.3 percentage points over the last five years. On top of that, its share count shrank by 23.7%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

In Q3, Medpace reported EPS of $3.86, up from $3.01 in the same quarter last year. This print beat analysts’ estimates by 10%. Over the next 12 months, Wall Street expects Medpace’s full-year EPS of $14.30 to grow 3.2%.

Key Takeaways from Medpace’s Q3 Results

We were impressed by how significantly Medpace blew past analysts’ organic revenue expectations this quarter, leading to reported revenue and EPS beats. We were also glad its full-year revenue guidance was lifted and full-year EPS guidance outperformed Wall Street’s estimates. Zooming out, we think this quarter featured a lot of important positives. The stock traded up 18.5% to $648.98 immediately after reporting.

Medpace had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.