Clinical research company Medpace Holdings (NASDAQ: MEDP) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 32% year on year to $708.5 million. The company expects the full year’s revenue to be around $2.81 billion, close to analysts’ estimates. Its GAAP profit of $4.67 per share was 11.4% 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

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Medpace grew its sales at an excellent 22.3% compounded annual growth rate. Its growth beat the average healthcare company and shows its offerings resonate with customers, a helpful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Medpace’s annualized revenue growth of 15.8% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

We can dig further into 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 15.9% 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 wonderful year-on-year revenue growth of 32%, and its $708.5 million of revenue exceeded Wall Street’s estimates by 3.3%.

Looking ahead, sell-side analysts expect revenue to grow 10.8% over the next 12 months, a deceleration versus the last two years. Still, this projection is healthy and indicates the market is forecasting success for its products and services.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D.

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 19.7%.

Analyzing the trend in its profitability, Medpace’s operating margin rose by 3.8 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.

In Q4, Medpace generated an operating margin profit margin of 21.6%, down 1.7 percentage points year on year. This reduction is quite minuscule and 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 31.7% compounded annual growth rate over the last five years, higher than its 22.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into the nuances of Medpace’s earnings can give us a better understanding of its performance. As we mentioned earlier, Medpace’s operating margin declined this quarter but expanded by 3.8 percentage points over the last five years. Its share count also shrank by 23.1%, and these factors together are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

In Q4, Medpace reported EPS of $4.67, up from $3.67 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Medpace’s full-year EPS of $15.30 to grow 9.5%.

Key Takeaways from Medpace’s Q4 Results

We were impressed by how significantly Medpace blew past analysts’ organic revenue expectations this quarter. We were also glad its full-year EPS guidance outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The market seemed to be hoping for more, and the stock traded down 3.6% to $512.14 immediately after reporting.

Should you buy the stock or not? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).