Core Viewpoint - Hagens Berman has initiated an investigation into Simulations Plus, Inc. following a significant stock price drop of approximately 25% due to alarming disclosures, including a large asset impairment charge and the termination of its independent auditor, Grant Thornton [1][3]. Financial Performance - Simulations Plus reported a net loss of $67.3 million for Q3 2025, primarily driven by a $77.2 million impairment charge related to prior acquisitions, aimed at aligning asset book values with current market values [3]. Auditor Termination - The company terminated its engagement with Grant Thornton, which had been hired just two months prior, citing the auditor's inability to finalize matters related to segment reporting and internal controls in time for the quarterly report [3]. - Grant Thornton contradicted Simulations Plus's explanation in a letter to the SEC, stating that it had raised specific concerns regarding segment reporting and internal controls that were not resolved satisfactorily at the time of termination [4]. Investigation Focus - Hagens Berman's investigation is centered on whether Simulations Plus misled investors regarding the reasons for the auditor's dismissal and whether its financial statements accurately reflected asset values [5]. - The firm is examining the discrepancies between Simulations Plus's public statements and the auditor's communications to the SEC, highlighting the potential implications for investor trust [5].

Core Viewpoint - Simulations Plus, Inc. is under investigation for potential violations of federal securities laws following disappointing financial results and issues related to its acquisition of Pro-ficiency Holdings, Inc. [1][2][3] Company Overview - Simulations Plus is a software company focused on modeling and simulation tools for the pharmaceutical, biotechnology, and chemical industries [2] - The company acquired Pro-ficiency Holdings, Inc. in June 2024, aiming to double its total addressable market and enhance sales [2][3] Financial Performance and Issues - Simulations Plus claimed effective internal controls over financial reporting, but evidence suggests struggles with the integration of Pro-ficiency and ineffective internal controls [3] - On June 11, 2025, the company announced disappointing preliminary financial results for Q3 2025, attributing challenges to market uncertainties, leading to a stock price drop of over 24% [4] - The Q3 2025 financial results included a $77.2 million charge related to prior acquisitions, and the company dismissed its auditor Grant Thornton, citing unresolved matters regarding segment reporting and internal controls [5] Stock Market Reaction - Following the announcement of the impairment charge and auditor dismissal, Simulations Plus's stock fell nearly 26% from $17.47 to $12.97 per share [5]

Core Viewpoint - Johnson Fistel, PLLP is investigating potential claims on behalf of investors of Simulations Plus, Inc. regarding possible violations of federal securities laws, particularly related to alleged misrepresentations and omissions by the company and its executives [1] Company Background - Simulations Plus is a software company that serves the pharmaceutical, biotechnology, and chemical industries [3] - In June 2024, the company acquired Pro-ficiency Holdings, Inc., claiming this acquisition would double its total addressable market and serve as a key driver of growth [3] Recent Developments - On June 11, 2025, Simulations Plus announced disappointing preliminary results for Q3 2025, attributing the downturn to "market uncertainties," which led to a stock price drop of over 24%, from $26.44 to $20.05 per share [4] - Following this, on July 14, 2025, the company reported a $77.2 million charge related to prior acquisitions and dismissed its auditor, Grant Thornton LLP, which raised concerns about unresolved issues with segment reporting and internal controls [4] - The dismissal of the auditor and the acknowledgment of unresolved issues caused the stock to fall nearly 26%, from $17.47 to $12.97 per share [4]

Company Overview - Simulations Plus is celebrating its 30th anniversary, indicating a long-standing presence in the biosimulation market [2] - The company specializes in biosimulation, which supports drug development through the integration of technology, science, mathematics, and various biological disciplines [3] Product and Services - The platform offers a comprehensive range of solutions that cover the entire drug development process, from early-stage discovery to clinical studies and post-approval applications [4] - Biosimulation is utilized to enhance efficiency and accelerate timelines in drug development, including applications in animal testing and clinical trials [4][5] Industry Context - The acceptance of biosimulation has grown over the years, gaining recognition from both scientific communities and drug sponsors [5]

Core Insights - Simulations Plus is celebrating its 30th anniversary, indicating its established presence in the biosimulation market [2] - The company utilizes a combination of technology, science, mathematics, and various disciplines to develop in silico models that enhance drug development efficiency [3] Company Overview - Simulations Plus offers a comprehensive platform that supports various stages of drug development, from early discovery to clinical studies and post-approval applications [4] - The platform includes applications for lead optimization, preclinical translational impact, and modeling that supports bioequivalence waivers [4] Industry Context - Biosimulation has gained acceptance over the years from scientific and drug sponsor perspectives, highlighting its importance in the drug development process [5]

Summary of Simulation Plus Conference Call Company Overview - Simulation Plus is celebrating its 30th anniversary, indicating a long-standing presence in the bio simulation market [2] - The company specializes in software licensing and scientific consulting services to support drug development [4] Industry Insights - Bio simulation combines technology, science, and regulatory support to enhance drug development efficiency [3] - The FDA has shown increasing support for bio simulation, particularly in reducing animal testing requirements [3][22] Core Business and Services - The company provides tools for various stages of drug development, including discovery, preclinical, and clinical phases [5][6] - Key products include: - **Admet Predictor**: Focused on early-stage applications, representing 15% of client support [6][7] - **GastroPlus**: A PBPK modeling tool used extensively in translational medicine and clinical trial design [7][8] - **PKPD Modeling**: Used for profiling drugs and patient stratification, crucial for personalized medicine [8] AI and Drug Development - AI has been integrated into the company's products for decades, enhancing data analysis and candidate identification [9][10] - The use of AI is seen as a revolutionary tool in drug development, improving efficiency and success rates [10][12] - Challenges include ensuring data quality and managing large datasets effectively [11][13] Regulatory Environment - The FDA's roadmap to reduce animal testing presents opportunities for Simulation Plus, as biosimulation can potentially replace some traditional methods [22][23] - The adoption of biosimulation is expected to grow, but the process will take time due to regulatory scrutiny [24][25] Market Challenges - The biopharma and biotech sectors are currently facing a challenging demand environment, with cost constraints and low funding impacting client investments [31][32] - Despite these challenges, there is a strong need for improved ROI in drug development, which bio simulation can address [33][34] Strategic Realignment - The company has undergone a reorganization to create a more functional organization, enhancing collaboration across different scientific domains [35][36] - The integration of products and development of cloud technology aims to accelerate the company's roadmap and improve client offerings [37] Future Opportunities - The company is focused on staying current with advancements in science and regulatory guidance, particularly in oncology and other therapeutic areas [39][41] - There is a long runway for biosimulation value in drug development, with ongoing opportunities for innovation and market solutions [41][42]

Core Viewpoint - Simulations Plus, Inc. is under investigation for potential violations of federal securities laws following issues related to its acquisition of Pro-ficiency Holdings and subsequent financial reporting challenges [1][2][3]. Group 1: Company Overview - Simulations Plus is a software company focused on modeling and simulation tools for the pharmaceutical, biotechnology, and chemical industries [2]. - The company acquired Pro-ficiency Holdings in June 2024, aiming to enhance its market reach and sales [2]. Group 2: Financial Reporting Issues - Simulations Plus claimed that the integration of Pro-ficiency would double its total addressable market and significantly boost sales, but it appears the integration was not successful and internal controls were ineffective [3]. - The company reported disappointing preliminary financial results for Q3 2025, citing market uncertainties, which led to a significant stock price drop of over 24% from $26.44 to $20.05 per share [4]. - A $77.2 million charge related to prior acquisitions was reported in Q3 2025, alongside the dismissal of its auditor Grant Thornton, which raised concerns about the company's internal controls and segment reporting [5]. Group 3: Stock Performance - Following the announcement of the impairment charge and auditor dismissal, Simulations Plus's stock fell nearly 26%, from $17.47 to $12.97 per share [5].

Core Insights - Bragar Eagel & Squire, P.C. is investigating potential claims against Simulations Plus, Inc. for possible violations of federal securities laws and unlawful business practices [1][3]. Financial Performance - For the third fiscal quarter of 2025, Simulations Plus reported sales of $20.4 million, which was below the consensus estimate of $20.9 million [3]. - The company experienced a net loss of $67.3 million, translating to a diluted loss per share of $3.35, compared to a net income of $3.1 million and diluted earnings per share of $0.15 for the same period in 2024 [3]. - Simulations Plus revised its fiscal 2025 adjusted earnings guidance to a range of $0.93 to $1.06, down from the previous guidance of $1.07 to $1.20 [3]. Stock Market Reaction - Following the financial results announcement, Simulations Plus's stock price fell by $4.50 per share, or 25.76%, closing at $12.97 per share on July 15, 2025 [4]. Company Actions - In June 2025, Simulations Plus initiated a restructuring of its operations, which included workforce reductions and cost-cutting measures aimed at improving operational efficiency and reducing expenses [3].

Financial Data and Key Metrics Changes - The biosimulation market has historically grown at a 15% CAGR but has fallen below that over the last couple of years, with the company achieving 10% organic growth during this period [15][18] - The company's revenue guidance was adjusted due to project cancellations and delays, impacting the expected growth trajectory [16][18] Business Line Data and Key Metrics Changes - The business is composed of approximately 60% software licensing and 40% consulting services, with the software side remaining relatively unaffected by recent market challenges [17][20] - Renewal rates for software licenses remain consistent at over 90%, with fluctuations primarily due to client bankruptcies and consolidations [20][21] Market Data and Key Metrics Changes - The drug development industry is facing cost constraints and reduced funding, leading to tighter budgets among clients [14][15] - The FDA's recent announcements regarding the reduction of animal testing requirements are seen as a potential tailwind for the biosimulation market, which could enhance growth opportunities [23][24] Company Strategy and Development Direction - The acquisition of Proficiency has expanded the company's total addressable market (TAM) from $4 billion to $8 billion, allowing for increased opportunities in clinical operations [5][6] - The company is focusing on integrating various modeling and simulation techniques to enhance product offerings and cross-selling opportunities [29][30] Management's Comments on Operating Environment and Future Outlook - Management noted that the drug development industry does not respond well to surprises, which has led to a slowdown in project approvals and contract negotiations [16][18] - The company anticipates a return to a more steady flow of project requests in fiscal year 2026, with expectations of regaining a growth rate closer to 15% [18][19] Other Important Information - The company is launching a cloud-based platform, Astra Plus, which is expected to enhance functionality and accessibility for clients [33][34] - The integration of AI technology into the company's products is a key focus for future development [31][34] Q&A Session Summary Question: What are the expectations for renewal rates and future fiscal year performance? - Renewal rates are expected to remain stable at over 90%, with the service side impacted by client cancellations but the software side performing well [20][21] Question: How is the FDA's movement away from animal models affecting the company? - The FDA's announcements regarding biosimulation and animal testing are seen as positive developments that could lead to increased adoption of the company's tools [23][24] Question: What is the company's growth formula regarding new and existing clients? - Software revenue typically comes from 80% renewals, 10% upsells, and 10% new clients, with a focus on cross-selling opportunities [29][30]

Core Viewpoint - Simulations Plus, Inc. is under investigation for potential violations of federal securities laws following issues related to its acquisition of Pro-ficiency Holdings and subsequent financial reporting problems [1][2][3]. Company Overview - Simulations Plus is a software company focused on modeling and simulation tools for the pharmaceutical, biotechnology, and chemical industries [2]. Acquisition Details - In June 2024, Simulations Plus acquired Pro-ficiency Holdings, which was expected to double its total addressable market and significantly contribute to sales [2][3]. Financial Reporting Issues - The company claimed effective internal controls over financial reporting; however, it appears that there were struggles with the integration of Pro-ficiency and deficiencies in internal controls [3]. Stock Performance - Following the announcement of disappointing preliminary financial results for Q3 2025, Simulations Plus's stock fell by $6.39 per share, a decline of over 24%, from $26.44 to $20.05 [4]. - After reporting a $77.2 million charge related to prior acquisitions and dismissing its auditor Grant Thornton, the stock further declined by $4.50 per share, nearly 26%, from $17.47 to $12.97 [5]. Auditor Dismissal - The dismissal of Grant Thornton was linked to unresolved issues regarding segment reporting and internal controls, which the auditor communicated to management and the Audit Committee [5].