2Q26 Recap: Pass-Through Margin Dynamics Overshadow Strong RFP Activity; Remain Neutral

Research evidence excerpt

2Q26 Recap: Pass-Through Margin Dynamics Overshadow Strong RFP Activity; Remain Neutral

J P M O R G A N North America Equity Research

30 July 2026

ICON Plc Neutral

ICLR, ICLR US

2Q26 Recap: Pass-Through Margin Dynamics Price (29 Jul 26):$178.18

Overshadow Strong RFP Activity; Remain Neutral ▲Price Target (Dec-27):$165.00 Prior (Dec-26):$155.00

ICLR reported 2Q26 results that landed above the Street on both the top and bottom

lines (revenue of $2.06B vs. Street of $2.01B and adj. EPS of $2.56 vs. Street of Life Science Tools & Diagnostics

$2.51) and the company reiterated top and bottom line 2026 guidance. The story Casey Woodring AC

of the quarter was the increased level of pass-throughs that drove the revenue beat (1-212) 622-9074

as well as elevated bookings numbers, with ICLR posting a B2B of 1.51 and direct casey.woodring@jpmchase.com

fee B2B of 1.20, the latter of which came in-line with the company’s expectations Marta Nazarovets Zaremba

(as we noted last quarter) albeit below the >1.3 seen in 1Q. The increased pass- (1-212) 622-6046

marta.zaremba@jpmchase.com

through revenue in the quarter drove a slight adj. EBITDA margin miss vs. our

Jaden Rismay

estimates (ICLR reported adj. EBITDA margin of 15.9% vs. JPMe of 16.0%), and

(1-212) 622-8479

management indicated that it believes it could see increased pass-through revenue jaden.rismay@jpmchase.com

in 2026 relative to prior expectations, which could drive revenue to the higher end J.P. Morgan Securities LLC

of the range but adj. EBITDA margin lower (more detail on this below).

Management made it clear that the it is not sacrificing direct fee revenue when

adding more pass-throughs (pointing investors to the operating profit dollar Quarterly Forecasts (FYE Dec)