Simulations Plus, Inc.

What they do

Simulations Plus develops and sells scientific software for drug discovery and development, using modeling, simulation, artificial intelligence, and machine learning to predict molecule properties and support dosing, formulation, trial design, and regulatory submissions. It also provides consulting and services across the drug lifecycle, including clinical trial operations (adaptive learning, recruitment and retention) and medical communications for approval and commercialization. Clients include major pharmaceutical, biotechnology, agrochemical, cosmetics, and food companies and academic and regulatory agencies. The company is headquartered in Research Triangle Park, North Carolina, with a European office in Paris.

Revenue drivers

• Software — Software products for discovery, development, clinical operations, and commercialization. In Q3 fiscal 2026, software revenue was $12.6 million, or 58% of total revenue, and was flat year over year; for the nine months, software revenue was $36.1 million, or 56% of total revenue, down 2%.
• Services — Consulting and service offerings spanning the drug development lifecycle. In Q3 fiscal 2026, services revenue rose 20% to $9.3 million, or 42% of total revenue; for the nine months, services revenue rose 14% to $28.5 million, or 44% of total revenue.
• Pro-ficiency acquisition contribution — Fiscal 2025 revenue growth of 13% to $79.2 million was attributed to twelve months of Pro-ficiency revenue of $11.7 million versus $2.3 million in fiscal 2024.

Recent performance

For the third quarter of fiscal 2026 ended May 31, 2026, total revenue increased 7% to $21.9 million, with software flat at $12.6 million and services up 20% to $9.3 million. Gross profit was $15.1 million (69% margin) versus $13.0 million (64%); net income was $3.6 million, or $0.18 diluted EPS, compared with a net loss of $67.3 million, or $3.35 diluted loss per share, a year earlier. Adjusted EBITDA was $7.9 million (36% of revenue) versus $7.4 million (37%), and adjusted diluted EPS was $0.30 versus $0.45. For the nine months of fiscal 2026, revenue rose 5% to $64.6 million, gross margin was 65% versus 59%, and net income was $8.8 million, or $0.43 diluted EPS, versus a net loss of $64.0 million, or $3.19 diluted loss per share, a year earlier.

Strategy

Management describes the company as a partner across the drug development lifecycle, integrating scientific software, AI-augmented insights, and expert consulting. At the start of the fourth quarter of fiscal 2025, the company reorganized from business units to a function-based structure covering Services, Operations, Product and Technology, Research and Development, Sales and Marketing, and General and Administrative. It has stated investments in cloud-enabled platforms and artificial intelligence-enabled capabilities. On June 15, 2026, the company entered a definitive merger agreement to be acquired by affiliates of Altaris, LLC, with the transaction expected to close in the fourth quarter of calendar 2026. Management says it remains focused on serving clients and executing during the transition.

Risks

• Pending merger and closing conditions — The Altaris merger requires stockholder approval and regulatory approvals, and the company cites the availability and sufficiency of merger financing as a risk to timing or completion.
• Dependence on existing and new clients — The company states that sustaining or increasing revenue depends on entering new markets, growing its client base, and deriving more revenue from existing clients, primarily modeling and simulation specialists in pharma, biotech, agrotechnology, and cosmetics.
• Macroeconomic pressure on R&D spending — The 10-Q notes attention on global drug pricing causing a temporary reduction in R&D spending by pharmaceutical and biotech companies, which affects demand for the company's offerings.
• Fiscal 2025 impairment and operating leverage — Fiscal 2025 results included $77.2 million of impairments and a net loss of $64.7 million, while fiscal 2026 nine-month gross margin improved to 65% but software revenue declined 2%.

Outlook

Management said the company delivered solid third quarter results with 7% revenue growth led by 20% services growth while software was flat, and described the business model as resilient. Regarding the Altaris merger, management said the transaction better positions the company to advance its scientific leadership and expand its model-informed and AI-enabled solutions, and that it expects closing in the fourth quarter of calendar 2026. The company said it remains focused on clients and executing at a high level through the transition.