Simulations Plus, Inc. (Nasdaq: SLP) (“Simulations Plus” or the “Company”), a global leader in model-informed and AI-accelerated drug development that advances biopharma innovation, today reported financial results for its third quarter fiscal 2026, ended May 31, 2026.
Third Quarter 2026 Financial Highlights (as compared to third quarter 2025)
- Total revenue increased 7% to $21.9 million
- Software revenue was flat at $12.6 million, representing 58% of total revenue
- Services revenue increased 20% to $9.3 million, representing 42% of total revenue
- Gross profit was $15.1 million and gross margin was 69%, compared to $13.0 million and 64%
- Net income of $3.6 million and diluted earnings per share of $0.18, compared to net loss of $67.3 million and diluted losses per share of $3.35
- Adjusted EBITDA of $7.9 million, representing 36% of total revenue, compared to $7.4 million, representing 37% of total revenue
- Adjusted net income of $6.1 million and adjusted diluted EPS of $0.30 compared to adjusted net income of $9.0 million and adjusted diluted EPS of $0.45
Nine Months 2026 Financial Highlights (as compared to nine months 2025)
- Total revenue increased 5% to $64.6 million
- Software revenue decreased 2% to $36.1 million, representing 56% of total revenue
- Services revenue increased 14% to $28.5 million, representing 44% of total revenue
- Gross profit was $42.2 million and gross margin was 65%, compared to $36.4 million and 59%
- Net income of $8.8 million and diluted earnings per share of $0.43, compared to net loss of $64.0 million and diluted losses per share of $3.19
- Adjusted EBITDA of $20.2 million, representing 31% of total revenue, compared to $18.5 million, representing 30% of total revenue
- Adjusted net income of $15.7 million and adjusted diluted EPS of $0.78, compared to $18.7 million and adjusted diluted EPS of $0.93
Management Commentary
“We delivered solid third quarter results, with revenue increasing 7%, highlighted by strength in our services revenue, which grew 20%, while software revenue was flat year over year,” said Shawn O’Connor, Chief Executive Officer of Simulations Plus. “Our performance reflects the resilience of our business model and the value our solutions provide to clients across the drug development lifecycle.”
“Subsequent to quarter end, on June 15, 2026, we entered into a definitive merger agreement to be acquired by affiliates of Altaris, LLC (“Altaris”). We believe the transaction better positions Simulations Plus to further advance its scientific leadership and expand the impact of our model-informed and AI-enabled solutions. As we move toward the expected closing in the fourth quarter of calendar 2026, we remain focused on delivering for our clients and executing at a high level throughout this transition.”
Non-GAAP Financial Measures
This press release contains “non-GAAP financial measures,” which are measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”).
A further explanation and reconciliation of these non-GAAP financial measures is included below and in the financial tables in this release.
The Company believes that the non-GAAP financial measures presented facilitate an understanding of operating performance and provide a meaningful comparison of its results between periods. The Company’s management uses non-GAAP financial measures to, among other things, evaluate its ongoing operations in relation to historical results, for internal planning and forecasting purposes, and in the calculation of performance-based compensation. Adjusted EBITDA and Adjusted Diluted EPS represent measures that we believe are customarily used by investors and analysts to evaluate the financial performance of companies in addition to the GAAP measures that we present. Our management also believes that these measures are useful in evaluating our core operating results. However, Adjusted EBITDA and Adjusted Diluted EPS are not measures of financial performance under accounting principles generally accepted in the United States of America and should not be considered an alternative to net income, operating income, or diluted EPS as indicators of our operating performance or to net cash provided by operating activities as a measure of our liquidity. We believe the Company’s Adjusted EBITDA and Adjusted Diluted EPS measures provide information that is directly comparable to that provided by other peer companies in our industry, but other companies may calculate non-GAAP financial results differently, particularly related to nonrecurring, unusual items.
Please note that the Company has not reconciled the adjusted EBITDA or adjusted diluted earnings per share forward-looking guidance included in this press release to the most directly comparable GAAP measures because this cannot be done without unreasonable effort due to the variability and low visibility with respect to costs related to acquisitions, financings, and employee stock compensation programs, which are potential adjustments to future earnings. We expect the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results.
Adjusted EBITDA
Adjusted EBITDA represents net income excluding the effect of interest expense (income), provision (benefit) for income taxes, depreciation and amortization, equity-based compensation expense, loss (gain) on currency exchange, impairment charges, change in fair value of contingent consideration, reorganization expense, acquisition and integration expense, and other items not indicative of our ongoing operating performance.
Adjusted Net Income and Adjusted Diluted EPS
Adjusted net income and adjusted diluted earnings per share exclude the effect of amortization, equity-based compensation expense, loss (gain) on currency exchange, impairment charges, change in fair value of contingent consideration, reorganization expense, acquisition and integration expense, and other items not indicative of our ongoing operating performance as well as the income tax provision adjustment for such charges.
The Company excludes the above items because they are outside of the Company’s normal operations and/or, in certain cases, are difficult to forecast accurately.