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spk18: and gentlemen, and welcome to the MedPay's first quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct question and answer session, and instructions will follow at that time. If anyone should require operator assistance, please press star, then zero on your touchstone telephone. As a reminder, this call may be recorded. I would now like to introduce your host for today's conference call, Kevin Braney, MedPace Executive Director of Finance. You may begin.
spk13: Good morning, and thank you for joining MedPace's first quarter 2021 earnings conference call. Also on the call today is our President and CEO, August Trundle, and our CFO and COO of Laboratory Operations, Jesse Geiger. Before we begin, I would like to remind you that our remarks and responses to your questions during this teleconference may include forward-looking statements within the meaning of the Private Security Litigation Reform Act of 1995. These statements involve inherent assumptions with known and unknown risk and uncertainties, as well as other important factors that could cause actual results to differ materially from our current expectations. These factors, including the ongoing impact of COVID-19 on our business, are discussed in our Form 10-K and other filings with the SEC. Please note that we assume no obligation to update forward-looking statements, even if estimates change. Accordingly, you should not rely on any of today's forward-looking statements as representing our views as of any date after today. During this call, we will also be referring to certain non-GAAP financial measures. These non-GAAP measures are not superior to or a replacement for the comparable GAAP measures, but we believe these measures help investors gain a more complete understanding of results. A reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures is available in the earnings press release and earnings call presentation slides provided in connection with today's call. The slides are available in our investor relations section of our website at investor.medpace.com. With that, I would now like to turn the call over to Jesse Geiger to discuss our financial results and guidance.
spk02: Thank you, Kevin, and good morning, everyone. Net new business awards entering backlog in the first quarter increased 44.2% from the prior year to $356.2 million, resulting in a 1.37 net book to bill. Ending backlog as of March 31st was $1.6 billion, an increase of 26.1% from the prior year. Revenue was $260 million in the first quarter of 2021, which represents a year-over-year increase of 12.6% on a reported basis and 11.6% on a constant currency organic basis. EBITDA of $53.6 million increased 32.1% compared to $40.6 million in the first quarter of 2020. On a constant currency basis, first quarter EBITDA increased 34.1% compared to the prior year. EBITDA margin for the first quarter was 20.6% compared to 17.6% in the prior year period. The higher margin was primarily attributable to lower reimbursed out-of-pocket expenses as a percentage of revenue. In the first quarter of 2021, net income was $43.3 million compared to net income of $29 million in the prior year period. Net income growth was primarily driven by higher EBITDA as well as a lower effective tax rate. Net income per diluted share for the quarter was $1.14, compared to 76 cents in the prior year period. Regarding customer concentration, our top five and top 10 customers represent roughly 16% and 24% respectively of our first quarter revenue. In the first quarter, we generated 57.3 million in cash flow from operating activities and our net day sales outstanding decreased compared to the fourth quarter from negative 33.6 days to negative 40.8 days. We ended the first quarter with $332.9 million of cash, no outstanding debt, and $50 million of undrawn capacity on our revolving line of credit. Moving now to our guidance for 2021. We are now forecasting total revenue in the range of 1.09 billion to 1.15 billion for the full year 2021. representing growth of 17.7% to 24.2% over 2020 total revenue of $925.9 million. This reflects our current view of a slightly slower return of reimbursed out-of-pocket costs and the associated revenue related to investigator site payments. Our 2021 EBITDA is expected in the range of $205 million to $215 million representing growth of 9.2% to 14.5%, compared to EBITDA of $187.8 million in 2020. This updated EBITDA guidance reflects increased cost expectations related to our strong hiring in the first quarter and anticipated continued robust headcount growth. We anticipate our 2021 effective tax rate to be in the range of 12% to 13%. We have assumed 37.9 million fully diluted shares for 2021, and there are no share repurchases in our guidance. We forecast 2021 net income in the range of 160.6 million to 167.6 million, and earnings per diluted share in the range of $4.24 to $4.42, with the increased expectations for net income and earnings per diluted share driven by the anticipated lower tax rate. With that, I will turn the call back over to the operator so we can take your questions.
spk17: Operator?
spk18: Ladies and gentlemen, if you have a question at this time, please press star, then the number one key on your touchstone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Your first question comes from the line of Sandy Draper with Trivia Securities. Your line's open.
spk07: Good morning. And I just wanted, the first question, Jessie, I think I heard you right, but it's confirmed. It sounds like the trimming off of the top end of guidance is pretty much solely due to lower pass-through revenue. You're not looking at a lower expectation for service revenue. Is that correct?
spk02: That's the largest driver, Sandy. Yeah, we're just seeing a slightly slower return of the burn rate, and it's particularly influenced by the pass-through cost in particular site payment activity.
spk19: That's right. Okay, so is that somewhat? Go ahead, August. Sorry.
spk10: I just wanted you to understand that obviously that reflects a little bit slowdown in our expected overall activity at sites that does slow things overall a bit. But it is disproportionately pass-throughs, but it also slows service revenue to an extent.
spk07: Got it. But it's not indicative that you're seeing a slowdown of RFPs or proposals or broad demand. It's just more of a near-term dynamic related to, you know, getting sites back and running and that, you know, we're still sort of obviously, you know, coming out of the back end but still in a pandemic. Correct. That's right. Yep.
spk02: We're still seeing a good business environment. We're still seeing good RFP flow, you know, good funding dynamics in biotech. Those fundamentals are still intact.
spk07: Okay, great. And then my follow-up or unrelated follow-up, and I'll ask about this a lot, but just in terms of the hiring, obviously, you said you did a good job hiring. You got aggressive plans. Is it still the same strategy? Have you changed anything to try to accelerate that and but it looks like the success is happening, but just, you know, thoughts on, you know, your go-to-market strategy for hiring people. Is it still pretty much the same approach? That's correct. I don't think we've got any real change in hiring. You know, we will be hiring throughout the year, we think. Great. Those are my two questions. Thanks so much.
spk18: Your next question comes from the line of John Krieger with William and Blair. Your line's open.
spk00: Hi, thanks very much. Just to follow up on that, if you think about your revenue guidance for the full year, what sort of hiring or staff increase would you expect by year end?
spk10: We don't really try to project that out, but I think – I think we're going to continue to hire relatively rapidly through the year. I don't think it'll match the first quarter's hiring rate, but we'll continue to hire pretty strongly.
spk00: Okay, so sort of catching up to revenue growth, but maybe not quite getting there?
spk10: That's possible.
spk00: Okay, thanks. And then, August, maybe just to follow up on your comments to Sandy's question, Can you just talk a little bit more about what caused the backlog conversion to revenue in the first quarter to come down a little bit? And I know there's just general variability in that metric, but would you expect it to trend back up as we move through the rest of the year?
spk10: Yeah, I don't think it's going to go down. But it is hard to predict. And you're right, there's a lot of volatility there. But I think fundamentally there has been a greater delay related to, you know, COVID. And we have had a couple of studies that, you know, were held up in first quarter for other reasons, for actually drug availability reasons. But, you know, the biggest thing, I think, is just a little bit of headwind from COVID activity at sites, et cetera, that was a little bit more than we had anticipated at this point. We kind of hoped that things were going to lift and, you know, things were really going to run quickly. We're still hoping that as you get later in the year, this is going to be the dynamic. But things have moved a little bit. You know, there hasn't been much change at sites over the last, you know, several months.
spk00: And maybe just one more follow-up on that. Is that comment sort of a global one, or are you seeing a disparity in site accessibility in the U.S. versus Europe versus Asia?
spk10: I mean, certainly they differ by region, but it is generally a pretty broad statement that we've seen a little bit more slowing than we'd anticipated.
spk03: Okay, thank you.
spk18: Your next question comes from the line of Dave Windley with Jefferies. Your line is open.
spk16: Hi, good morning. Thanks for taking my questions. I wanted to try to clarify a little bit on the margin first. So, I understand your comments about predominantly pass-through impact on revenue, which, I mean, I understand it's not a big change, but would have at least a slight impact, positive impact on mix. toward margin-driving revenue, but your margin for the balance of the year is down on the hiring. Can you just help to understand a little bit more the magnitude of the moving parts there?
spk10: We're hiring, and a lot of that didn't hit first quarter, but they were hired late in first quarter and we're continuing to hire, and so I think it kind of layers in as you go through the year. But, Jesse, you want to address?
spk02: Yeah, no, you're right on. It's the... The driver on margin is really the elevated hiring. We had a strong hiring in Q1. As August mentioned, it didn't necessarily happen literally or sequentially, you know, relatively across the quarter, but then we are continuing aggressive hiring as we move through these next couple of quarters based on the view of strong demand in the market, and it's personnel-related cost. driving the margins as we make investments.
spk16: Got it. And on that, relative to burn rate and maybe, August, your answer to John or Sandy's question might have been thinking service revenue, but the revenue guidance does seem to suggest that at least at the midpoint, your burn rate maybe ticks down ever so slightly for the balance of the year, but let's say it basically doesn't change. Can you help me understand? It sounds like you're aggressively accelerating hiring, or at least in the first quarter it was pretty rapid, but you're not really expecting, say, a return to hire conversion out of backlog. So, again, just trying to understand the hiring need versus the pace at which you expect revenue to come out.
spk10: Yeah, sure, Dave. We hire towards the longer term. term needs and, you know, the business environment is very strong or backlog is growing, you know, it's what, 26%, you know, year over year, you know, that conversion rate will come back and, you know, things will unwind, you know, we'll get, you know, a substantial surge in, you know, revenue growth. So, you know, we do hire ahead of the curve, you know, I think our utilization rates running in the low to mid 70s, which is a good place for us, but we do think it, you know, given the environment and it will continue for a while, and in fact we've got a lot of kind of pent-up backlog that will eventually convert at a more normalized rate, we're going to need the staff. So we like to get, you know, well out in front of that, but we don't we look at it in terms of, well, we're not going to have the activity this next quarter, so let's not hire. I think we have the luxury of being able to look out quite a ways, and we're not trying to defend a particular margin.
spk16: Got it. And then maybe last question, your backlog coverage metric improved very nicely, certainly was above where we were looking for, kind of the, you know, the coverage ratio as a result of that picks up a few percentage points. Should we interpret that as a cover, you know, maybe impacted by fourth quarter, first quarter, kind of the outer quarters of that timeframe? Or maybe another way to ask the question is, is the cadence of revenue through the year fairly gradual, or are you seeing, because of the impact of what you're describing, pass-through payments, is that more of an immediate impact in 2Q and then a steeper inflection after that, just trying to get a sense of cadence? Thanks.
spk09: Jesse, you want to?
spk02: Yeah, Dave, from a cadence standpoint, we still do expect revenue to be slightly back-end weighted, kind of second half versus first half, as we think about the movement of it through the year.
spk15: Got it. Thank you. Appreciate the answers.
spk18: Your next question comes from the line of Erin Wright with Credit Suisse. Your line's open.
spk14: Great, thanks. There's obviously a lot of commotion in the CRO space right now, several pending strategic reviews and transactions. I assume you don't see a need for a competitive response given your unique focus, but have you already been seeing some benefit potentially from disruption in terms of win rates or customer dynamics and or hearing anything from your customers or the number of resumes that you're seeing. I'm curious if you're seeing anything on that front. Thanks.
spk10: Yeah, sure. I don't think we've seen anything. I think, yeah, we have not heard of any kind of disruptions or work being brought our way because of, you know, concerns or anything like that. The environment is, you know, strong for us anyway, and... You know, in terms of activity on the recruitment, you know, we have kind of geared up our recruitment. And whether there's, you know, we did hire pretty strongly in the first quarter. And we, you know, we got some individuals from, that came from competing companies. But I can't say that it was any relation to any of the pending deals.
spk14: Okay. All right. Can you speak a little bit to the nature of the new business wins in the first quarter, looking at the therapeutic mix or customer mix? Was there anything that was disproportionately like outsized larger contracts that were influencing the new business wins? I'm curious if there's anything to call out on that front.
spk10: No, I don't think there's anything unusual in terms of size or therapeutic area. Oncology, you know, kind of led... in terms of our awards. So I don't really see any kind of unusual nature to it.
spk14: Okay, perfect. Thank you.
spk18: Again, ladies and gentlemen, if you have a question at this time, please press star and the number one key on your touchstone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Our next question comes from the line of Donald Herker with Keyback. Your line is open.
spk06: Great. Good morning. Maybe some more granular questions. I'm not sure if I missed this, but the tax rate for this year looks pretty favorable. Can you walk through some of the moving parts there? It looks like you're benefiting from a particularly low tax rate. What would you recommend we expect beyond the current year, kind of on a more normalized basis?
spk02: Yeah, thanks, Don. Yeah, the Q1 rate is highly influenced by our deduction for employee stock option exercises. These are discrete items that we take the deduction in the quarter of the exercise, and these are options largely issued at the time of the IPO that vested the latter part of last year. And so we do anticipate some of that to continue. That's why we've lowered our tax rate guidance from 15% to 16% down to the 12% to 13% range. Longer term, I would say our current longer-term tax rate assumption right now is around 20%. That's based on current laws, and that does not impact any early analysis of any of the proposed changes in tax law that are being considered.
spk06: Okay, super. And maybe last, another one for me. In terms of obviously another very topical area is the use of, you know, virtual clinical trials, decentralized clinical trials, you know, telehealth and those concepts. Would love your kind of maybe broader perspective. This is a question we could probably be asking you every quarter. In terms of any changes you're seeing there in terms of acceptance and use of some of these virtual technologies, with respect to your business and the industry?
spk04: Jesse, you want to?
spk02: Yeah, Don. Nothing that we've really changed or that we're seeing changing, you know, kind of from last quarter. I think we're operating well in a, you know, hybrid, you know, decentralized environment. You know, we have the tools we need. We're always investing in technology and enhancements for different things like remote data capture, remote data review, platforms for wearable technologies. Those are the themes of kind of where we're making some investments, but that's all kind of factored into our ongoing costs, nothing that we see there that's any sort of major investment. But no, we're active, and I think the environment's going to continue to be one that is operating in some sort of hybrid style versus what it had been pre-pandemic.
spk05: Super. Thanks so much.
spk02: Thanks, Don.
spk18: Again, ladies and gentlemen, if you have questions at this time, please press star, the number one key on your touchstone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the count key. I am showing no further questions at this time. I would now like to turn the conference back to Kevin Brady.
spk13: Thank you for joining us on today's call and for your continued interest in MedPace. We look forward to speaking with you again on our second quarter 2021 earnings call. Thanks and have a good day.
spk18: Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect. Thank you. Thank you. Thank you. Thank you. THE END Thank you. Thank you. Thank you. Good day, ladies and gentlemen, and welcome to the MedPay's first quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct question-and-answer session, and instructions will follow at that time. If anyone should require operator assistance, please press star, then zero on your touchstone telephone. As a reminder, this call may be recorded. I would now like to introduce your host for today's conference call, Kevin Braney, MedPace Executive Director of Finance. You may begin.
spk13: Good morning, and thank you for joining MedPace's first quarter 2021 earnings conference call. Also on the call today is our President and CEO, August Trundle, and our CFO and COO of Laboratory Operations, Jesse Geiger. Before we begin, I would like to remind you that our remarks and responses to your questions during this teleconference may include forward-looking statements within the meaning of the Private Security Litigation Reform Act of 1995. These statements involve inherent assumptions with known and unknown risk and uncertainties, as well as other important factors that could cause actual results to differ materially from our current expectations. These factors, including the ongoing impact of COVID-19 on our business, are discussed in our Form 10-K and other filings with the SEC. Please note that we assume no obligation to update forward-looking statements, even if estimates change. Accordingly, you should not rely on any of today's forward-looking statements as representing our views as of any date after today. During this call, we will also be referring to certain non-GAAP financial measures. These non-GAAP measures are not superior to or a replacement for the comparable GAAP measures, but we believe these measures help investors gain a more complete understanding of results. A reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures is available in the earnings press release and earnings call presentation slides provided in connection with today's call. The slides are available in our investor relations section of our website at investor.medpace.com. With that, I would now like to turn the call over to Jesse Geiger to discuss our financial results and guidance.
spk02: Thank you, Kevin, and good morning, everyone. Net new business awards entering backlog in the first quarter increased 44.2% from the prior year to $356.2 million, resulting in a 1.37 net book to build. Ending backlog as of March 31st was $1.6 billion, an increase of 26.1% from the prior year. Revenue was $260 million in the first quarter of 2021, which represents a year-over-year increase of 12.6% on a reported basis and 11.6% on a constant currency organic basis. EBITDA of $53.6 million increased 32.1% compared to $40.6 million in the first quarter of 2020. On a constant currency basis, first quarter EBITDA increased 34.1% compared to the prior year. EBITDA margin for the first quarter was 20.6% compared to 17.6% in the prior year period. The higher margin was primarily attributable to lower reimbursed out-of-pocket expenses as a percentage of revenue. In the first quarter of 2021, net income was $43.3 million compared to net income of $29 million in the prior year period. Net income growth was primarily driven by higher EBITDA as well as a lower effective tax rate. Net income per diluted share for the quarter was $1.14, compared to 76 cents in the prior year period. Regarding customer concentration, our top five and top 10 customers represent roughly 16% and 24% respectively of our first quarter revenue. In the first quarter, we generated 57.3 million in cash flow from operating activities and our net day sales outstanding decreased compared to the fourth quarter from negative 33.6 days to negative 40.8 days. We ended the first quarter with $332.9 million of cash, no outstanding debt, and $50 million of undrawn capacity on our revolving line of credit. Moving now to our guidance for 2021. We are now forecasting total revenue in the range of 1.09 billion to 1.15 billion for the full year 2021. representing growth of 17.7 percent to 24.2 percent over 2020 total revenue of $925.9 million. This reflects our current view of a slightly slower return of reimbursed out-of-pocket costs and the associated revenue related to investigator site payments. Our 2021 EBITDA is expected in the range of $205 million to $215 million, representing growth of 9.2% to 14.5%, compared to EBITDA of $187.8 million in 2020. This updated EBITDA guidance reflects increased cost expectations related to our strong hiring in the first quarter and anticipated continued robust headcount growth. We anticipate our 2021 effective tax rate to be in the range of 12% to 13%. We have assumed 37.9 million fully diluted shares for 2021, and there are no share repurchases in our guidance. We forecast 2021 net income in the range of 160.6 million to 167.6 million, and earnings per diluted share in the range of $4.24 to $4.42, with the increased expectations for net income and earnings per diluted share driven by the anticipated lower tax rate. With that, I will turn the call back over to the operator so we can take your questions.
spk17: Operator?
spk18: Ladies and gentlemen, if you have a question at this time, please press star, then the number one key on your touchstone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Your first question comes from the line of Sandy Draper with Trivia Securities. Your line's open.
spk07: Good morning. And I just wanted, the first question, Jessie, I think I heard you right, but it's confirmed. It sounds like the trimming off of the top end of guidance is pretty much solely due to lower pass-through revenue. You're not looking at a lower expectation for service revenue. Is that correct?
spk02: That's the largest driver, Sandy. We're just seeing a slightly slower return of the burn rate, and it's particularly influenced by the pass-through cost in particular site payment activity.
spk19: Okay, so is that somewhat? Go ahead, August. Sorry.
spk10: I just want you to understand that obviously that reflects a little bit of slowdown in our expected overall activity at sites. That does slow things overall a bit. But it is disproportionately pass-throughs, but it also slows service revenue to an extent.
spk07: Got it. But it's not indicative that you're seeing a slowdown of RFPs or proposals or broad demand. It's just more of a near-term dynamic related to, you know, getting sites back and running and that, you know, we're still sort of obviously, you know, coming out of the back end but still in a pandemic. Correct. That's right. Yep.
spk02: We're still seeing a good business environment. We're still seeing good RFP flow, you know, good funding dynamics in biotech. Those fundamentals are still intact.
spk07: Okay, great. And then my follow-up or unrelated follow-up, and I'll ask about this a lot, but just in terms of the hiring, obviously, you said you did a good job hiring. You got aggressive plans. Is it still the same strategy? Have you changed anything to try to accelerate that and but it looks like the success is happening, but just, you know, thoughts on, you know, your go-to-market strategy for hiring people, is it still pretty much the same approach? That's correct. I don't think we've got any real change in hiring. You know, we will be hiring throughout the year, we think. Great. Those are my two questions. Thanks so much.
spk18: Your next question comes from the line of John Krieger with William and Blair. Your line's open.
spk00: Hi, thanks very much. Just to follow up on that, if you think about your revenue guidance for the full year, what sort of hiring or staff increase would you expect by year end?
spk10: We don't really try to project that out, but I think – I think we're going to continue to hire relatively rapidly through the year. I don't think it'll match the first quarter's hiring rate, but we'll continue to hire pretty strongly.
spk00: Okay, so sort of catching up to revenue growth, but maybe not quite getting there?
spk10: That's possible.
spk00: Okay, thanks. And then, August, maybe just to follow up on your comments to Sandy's question, Can you just talk a little bit more about what caused the backlog conversion to revenue in the first quarter to come down a little bit? And I know there's just general variability in that metric, but would you expect it to trend back up as we move through the rest of the year?
spk10: Yeah, I don't think it's going to go down. But it is hard to predict. And you're right, there's a lot of volatility there. But I think fundamentally there has been a greater delay related to, you know, COVID. And we have had a couple of studies that, you know, were held up in first quarter for other reasons, for actually drug availability reasons. But, you know, the biggest thing, I think, is just a little bit of headwind from COVID activity at sites, et cetera, that was a little bit more than we had anticipated at this point. We kind of hoped that things were going to lift and, you know, things were really going to run quickly. We're still hoping that as you get later in the year, this is going to be the dynamic. But I think things have moved a little bit. You know, there hasn't been much change at sites over the last, you know, several months.
spk00: And maybe just one more follow-up on that. Is that comment sort of a global one, or are you seeing a disparity in site accessibility in the U.S. versus Europe versus Asia?
spk10: I mean, certainly they differ by region, but it is generally a pretty broad statement that we've seen a little bit more slowing than we'd anticipated.
spk03: Okay, thank you.
spk18: Your next question comes from the line of Dave Windley with Jefferies. Your line's open.
spk16: Hi, good morning. Thanks for taking my questions. I wanted to try to clarify a little bit on the margin first. So, I understand your comments about predominantly pass-through impact on revenue, which, I mean, I understand it's not a big change, but would have at least a slight impact, positive impact on mix. toward margin-driving revenue, but your margin for the balance of the year is down on the hiring. Can you just help to understand a little bit more the magnitude of the moving parts there?
spk10: We're hiring, and a lot of that didn't hit first quarter, but they were hired late in first quarter and we're continuing to hire, and so I think it kind of layers in as you go through the year. But, Jesse, you want to address?
spk02: Yeah, no, you're right on. It's the... The driver on margin is really the elevated hiring. We had strong hiring in Q1. As August mentioned, it didn't necessarily happen literally or sequentially, you know, relatively across the quarter, but then we are continuing aggressive hiring as we move through these next couple of quarters based on the view of strong demand in the market, and it's personnel-related cost. driving the margins as we make investments.
spk16: Got it. And on that, relative to burn rate and maybe, August, your answer to John or Sandy's question might have been thinking service revenue, but the revenue guidance does seem to suggest that at least at the midpoint, your burn rate maybe ticks down ever so slightly for the balance of the year, but let's say it basically doesn't change. Can you help me understand? It sounds like you're aggressively accelerating hiring, or at least in the first quarter it was pretty rapid, but you're not really expecting, say, a return to hire conversion out of backlog. So, again, just trying to understand the hiring need versus the pace at which you expect revenue to come out.
spk10: Yeah, sure, Dave. We hire towards the longer term. term needs and, you know, the business environment is very strong or backlog is growing, you know, it's what, 26%, you know, year over year, you know, that conversion rate will come back and, you know, things will unwind, you know, we'll get, you know, a substantial surge in, you know, revenue growth. So, you know, we do hire ahead of the curve, you know, I think our utilization rates running in the low to mid 70s so which is a good place for us but we do think it you know given the environment and it will continue for a while and in fact we've got a lot of kind of pent-up backlog that will eventually convert at a more normalized rate we're going to need we're going to need the staff so we we like to get you know well out in front of that but we don't look at it in terms of, well, we're not going to have the activity this next quarter, so let's not hire. I think we have the luxury of being able to look out quite a ways, and we're not trying to defend a particular margin.
spk16: Got it. And then maybe last question, your backlog coverage metric improved very nicely, certainly was above where we were looking for, kind of the, you know, the coverage ratio as a result of that takes up a few percentage points. Should we interpret that as a cover, you know, maybe impacted by fourth quarter, first quarter, kind of the outer quarters of that timeframe? Or maybe another way to ask the question is, is the cadence of revenue through the year fairly gradual, or are you seeing, because of the impact of what you're describing, pass-through payments, is that more of an immediate impact in 2Q and then a steeper inflection after that, just trying to get a sense of cadence? Thanks.
spk09: Jesse, you want to?
spk02: Yeah, Dave, from a cadence standpoint, we still do expect revenue to be slightly back-end weighted, kind of second half versus first half, as we think about the movement of it through the year.
spk15: Got it. Thank you. Appreciate the answers.
spk18: Your next question comes from the line of Erin Wright with Credit Suisse. Your line's open.
spk14: Great, thanks. There's obviously a lot of commotion in the CRO space right now, several pending strategic reviews and transactions. I assume you don't see a need for a competitive response given your unique focus, but have you already been seeing some benefit potentially from disruption in terms of win rates or customer dynamics and or hearing anything from your customers or the number of resumes that you're seeing. I'm curious if you're seeing anything on that front. Thanks.
spk10: Yeah, sure. I don't think we've seen anything. I think we have not heard of any kind of disruptions or work being brought our way because of concerns or anything like that. The environment is strong for us anyway, and You know, in terms of activity on the recruitment, you know, we have kind of geared up our recruitment. And whether there's, you know, we did hire pretty strongly in the first quarter. And we, you know, we got some individuals from, that came from competing companies. But I can't say that it was any relation to any of the pending deals.
spk14: Okay. All right. Can you speak a little bit to the nature of the new business wins in the first quarter looking at the therapeutic mix or customer mix? Was there anything that was disproportionately like outsized larger contracts that were influencing the new business wins? I'm curious if there's anything to call out on that front.
spk10: No, I don't think there's anything unusual in terms of size or therapeutic area. Oncology, you know, kind of led... in terms of our awards. So I don't really see any kind of unusual nature to it.
spk14: Okay, perfect. Thank you.
spk18: Again, ladies and gentlemen, if you have a question at this time, please press star, then the number one key on your touchstone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Our next question comes from the line of Donald Herker with Keyback. Your line is open.
spk06: Great. Good morning. Maybe some more granular questions. I'm not sure if I missed this, but the tax rate for this year looks pretty favorable. Can you walk through some of the moving parts there? It looks like you're benefiting from a particularly low tax rate. What would you recommend we expect beyond the current year, kind of on a more normalized basis?
spk02: Yeah, thanks, Don. Yeah, the Q1 rate is highly influenced by our deduction for employee stock option exercises. These are discrete items that we take the deduction in the quarter of the exercise, and these are options largely issued at the time of the IPO that vested the latter part of last year. And so we do anticipate some of that to continue. That's why we've lowered our tax rate guidance from 15% to 16% down to the 12% to 13% range. Longer term, I would say our current longer-term tax rate assumption right now is around 20%. That's based on current laws, and that does not impact any early analysis of any of the proposed changes in tax law that are being considered.
spk06: Okay, super. And maybe last, maybe another one for me. In terms of obviously another very topical area is the use of, you know, virtual clinical trials, decentralized clinical trials, you know, telehealth and those concepts. Would love your kind of maybe broader perspective. This is a question we could probably be asking you every quarter. In terms of any changes you're seeing there in terms of acceptance and use of some of these virtual technologies, with respect to your business and the industry?
spk04: Jesse, you want to?
spk02: Yeah, yeah, Don. Nothing that we've really changed or that we're seeing changing, you know, kind of from last quarter. I think we're operating well in a, you know, hybrid, you know, decentralized environment. You know, we have the tools we need. We're always investing in technology. enhancements for different things like remote data capture, remote data review, platforms for wearable technologies. Those are the themes of kind of where we're making some investments, but that's all kind of factored into our ongoing cost, nothing that we see there that's any sort of major investment. But no, we're active, and I think the environment's going to continue to be one that is operating in some sort of hybrid style versus what it had been pre-pandemic.
spk05: Super. Thanks so much.
spk02: Thanks, Don.
spk18: Again, ladies and gentlemen, if you have questions at this time, please press star to the number one key on your touchstone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the count key. I am showing no further questions at this time. I would now like to turn the conference back to Kevin Brady.
spk13: Thank you for joining us on today's call and for your continued interest in MedPace. We look forward to speaking with you again on our second quarter 2021 earnings call. Thanks and have a good day.
spk18: Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.
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