Simulations Plus Stock Climbs On Earnings Strength, Biotech Market Rebound

Core Insights - Simulations Plus Inc. reported better-than-expected fourth-quarter 2025 earnings and reaffirmed annual guidance, leading to a rise in stock price [1] Financial Performance - The company reported sales of $17.5 million, a 6% year-over-year decline, but slightly above the consensus estimate of $17.09 million [2] - Adjusted earnings were 10 cents per share, surpassing the consensus loss of 5 cents, down from 18 cents a year ago [2] - Gross profit was $9.8 million, achieving a 56% margin, while adjusted EBITDA was $3.5 million, representing 20% of total revenue, down from $4.1 million or 22% of total revenue [3] Guidance - Simulations Plus reaffirmed its fiscal 2026 adjusted earnings guidance of $1.03 to $1.10, compared to the consensus loss of $3.22 [4] - The company expects 2026 sales guidance of $79 million to $82 million, slightly above the consensus of $78.797 million [4] - An adjusted EBITDA margin of 26% to 30% is anticipated for 2026 [4] Market Outlook - Management indicated that demand appears to be stabilizing due to improved biotech funding and easing tariff and drug-pricing concerns, which has increased proposal activity [5] - The company remains cautious, seeking clearer signs of sustained recovery before confirming a rebound [5] - Simulations Plus is well-positioned to capitalize on future demand rebounds, especially with investments in AI solutions and a unified product ecosystem [6] Analyst Sentiment - Analysts from William Blair express confidence in the company's potential for consistent double-digit organic revenue growth and margin expansion over time [7] - The stock price increased by 18.38% to $20.26 following the earnings report [7]