Simulations Plus Inc (NASDAQ:SLP), a provider of biosimulation solutions for the biopharma industry, stock plunges 22.24% (As on July 15, 11:21:33 AM UTC-4, Source: Google Finance) after the company reported third quarter fiscal 2025 results that exceeded earnings expectations despite revenue challenges. Software revenue increased 6% to $12.6 million, representing 62% of total revenue, while services revenue grew 17% to $7.7 million. The company’s adjusted EBITDA reached $7.4 million, representing 37% of total revenue, compared to $5.6 million or 30% of total revenue in the same period last year. During the quarter, the company implemented a strategic reorganization, transitioning from a business unit structure to a functionally-driven operating model as part of a multi-year transformation to streamline operations and focus resources on growth opportunities. Adjusted net income was of $9.0 million compared to adjusted net income of $5.6 million. The company delivered gross profit was of $13.0 million; gross margin was 64%. However, the company experienced a decline in other service areas, largely due to cautious spending behavior, project delays and a cancellation from the BioPharma clients. While the sales pipeline remains robust with healthy client interest, the pace of contractual commitments slowed, impacting third quarter 2025 bookings.
Meanwhile, the company announced an investment of $1 million in technology company Nurocor. Its solution significantly accelerates the typical clinical trial lifecycle, resulting in a reduction of the overall cost of the clinical development process. The investment was made as part of Simulations Plus’ Corporate Development Initiative, launched in 2024 to support early-stage technology companies accelerating innovations within the pharmaceutical industry.
SLP in the third quarter of FY25 has reported the adjusted earnings per share of 45 cents, beating the analysts’ estimates for the adjusted earnings per share of 25 cents. The company had reported the adjusted revenue growth of 10 percent to $20.4 million in the third quarter of FY25, missing the analysts’ estimates for revenue of $21.84 million. The company recorded a net loss of $67.3 million, or -$3.35 per share, reflecting a one-time non-cash impairment charge of $77.2 million.
Simulations Plus updated its fiscal 2025 guidance, projecting revenue between $76 million and $80 million, representing growth of 9-14%, and adjusted earnings per share of $0.93-$1.06. This guidance aligns with analyst expectations of $0.97 EPS and $77.94 million in revenue. Adjusted EBITDA margin is expected to be in the range of 23% – 27%.