Medpace's Cancellation Storm Clears: Record Bookings and a Mix Shift
The turnaround quarter
For the past several quarters, Medpace's story has been dominated by one number: the cancellation rate. Elevated cancellations — in both backlog and the crucial pre-backlog (the awarded-but-not-started pipeline) — repeatedly dragged book-to-bill below 1.0x and capped revenue growth. The Q2 2026 report, however, marks an inflection point. “The business environment was strong in Q2 26. Cancellations were well behaved, and supported a record quarter for net bookings. RFPs were up sequentially and year over year, generating high quality opportunities.” — August James Troendle, Chief Executive Officer · 2026-07-23 The result was a blowout quarter: net new business awards surged 28.2% to $795.7 million, book-to-bill hit 1.13x, and the company raised its full-year revenue, EBITDA, and EPS guidance.
The improvement was not just about fewer cancellations — it was about a fundamental shift in the book of business. “Oncology represented over half of our overall bookings and our award notifications. So that is and metabolic cardiometabolic has kinda dropped off quite a bit.” — August James Troendle, Chief Executive Officer · 2026-07-23 This is a deliberate reversal of the recent concentration in metabolic/GLP-1 work, which had been a major growth driver but also carried higher pass-through costs and, at times, more volatility.
Backlog burn: policy, not just mix
The company's backlog conversion rate has marched up to 24.1% of beginning backlog — well above the historical ~18%. Management attributed part of this to the mix of short-duration, high-burn metabolic studies, but also — critically — to a tightening of how they recognize backlog. Revenue is only booked when a trial is essentially starting, and more aggressive gating on interim analyses and decision points has shortened the average recognized duration of projects. As CEO “I think it is our 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 if we were more maybe attuned to looking for those type of issues.” — August James Troendle, Chief Executive Officer · 2026-07-23 In prior quarters, the elevated burn was often pinned on metabolic studies alone, but the company now insists that was an oversimplification. The policy shift helps explain why Backlog burn remains elevated even as oncology programs, which tend to be longer, re-enter the mix.
The increase has been related to the average age of projects and the dynamics of what is coming in and off of backlog. And that would I would expect the more would at least revert towards our historical norm.
That said, the record Net bookings and the growing pre-backlog (now larger than reported backlog and growing faster) suggest the company is replenishing the pipeline, even as the conversion rate stays high.
The metabolic retreat and oncology's return
The shift away from metabolic programs is a strategic inflection. In the prior quarter, “Cancellations were a little bit skewed towards the metabolic area... there were some elevated cancellations.” — August Troendle, Chief Executive Officer · 2026-02-10 That volatility, along with a maturing GLP-1 landscape, appears to have prompted a repositioning. The current quarter's oncology-led book is a return to Medpace's historical strength. It also has implications for pass-through revenue: oncology trials generally have lower reimbursable costs than metabolic studies, which should help normalize the pass through mix in 2027. Management expects reimbursables to decline from the high 40%+ level to 41–42% in H2 2026, a signal that the direct-services margin will improve.
Broader funding is also improving. “We see a lot of clients that have had recent funding... it is quite a bit of broader. We are seeing more opportunities with you know, recent funding and moving forward with the program.” — August James Troendle, Chief Executive Officer · 2026-07-23 This breadth contrasts with the concentrated, funding-constrained environment of the past year, giving confidence that the record Q2 bookings are not a one-off.
Financial health and valuation
The balance sheet remains fortress-like. Total Revenue grew 17.2% y/y in Q2 to $707M, and the company generated $162M in operating cash flow. With Effective Net Cash of $245M, Medpace continues to buy back stock (though not in guidance). The stock has responded: the 90-day price action shows a +25.8% rally, with the recent trend up-17w:+26% — likely reflecting the earnings beat and guidance raise.
The biggest question going forward is whether the improved cancellation environment is durable. Management was careful to caution that cancellations are inherently unpredictable, but the combination of record bookings, a broader funding backdrop, and a more balanced therapeutic mix sets up a much healthier 2027 setup than seemed possible just a quarter ago.