LANCASTER, Calif. - Simulations Plus , Inc. (NASDAQ: NASDAQ:SLP), a prominent provider of simulation software for pharmaceutical research, has expanded its market reach by acquiring Pro-ficiency Holdings, Inc., a company known for its simulation-based solutions in clinical and commercial drug development. The $100 million cash deal was announced today, with Pro-ficiency being purchased from QHP Capital and its minority shareholders.
The acquisition is set to double Simulations Plus's total addressable market (TAM) to $8 billion, enhancing its offerings across the drug development spectrum. Pro-ficiency's AI-driven software and services are poised to complement Simulations Plus's existing capabilities, targeting clinical trial operations and market launches.
Shawn O'Connor, CEO of Simulations Plus, expressed enthusiasm for the strategic move, highlighting the synergy between the two companies' expertise and the potential for improved drug development ROI and patient care. The integration is expected to be accretive to Simulations Plus's fiscal 2025 earnings per share (EPS).
Michael Raymer, CEO of Pro-ficiency, also remarked on the shared growth mentality and the anticipated benefits of leveraging Simulations Plus's infrastructure to reach broader markets. The transaction is seen as an opportunity for both companies to strengthen their client services and attract new customers with comprehensive solutions.
The funding for the acquisition comes from Simulations Plus's existing cash and investment resources, including capital raised from an August 2020 follow-on public offering. Will Frederick, CFO and COO of Simulations Plus, assured that the company remains well-capitalized, debt-free, and committed to its capital allocation strategy for future strategic acquisitions and partnerships.
This news follows Pro-ficiency's recent acquisitions of Fugitive Labs, LLC in 2022 and Compass Group (LON:CPG) Partners in 2023, which have been integral to its growth trajectory. The acquisition by Simulations Plus is anticipated to further enhance Pro-ficiency's capabilities within the clinical development sector.
The information in this article is based on a press release statement.
In other recent news, Simulations Plus, a key player in the biosimulation market, has reported a robust 16% increase in revenue for the second quarter of fiscal 2024. The company's software and services segments both demonstrated strong performance, with the services segment seeing a notable 27% increase in revenue. In addition to this, Simulations Plus is exploring potential investments and strategic acquisitions to strengthen its market position.
Furthermore, the U.S. Food and Drug Administration (FDA) renewed its license for Simulations Plus's DILIsym software platform. This renewal marks a continued partnership, allowing FDA employees to utilize DILIsym in evaluating drug-induced liver injury (DILI) risks for drug approvals. The software serves as a tool for predicting DILI risk in new drug candidates and understanding the mechanisms behind liver toxicity.
These developments come amidst a growing trend in regulatory environments to incorporate advanced technologies such as quantitative systems toxicology (QST) models in their review processes. Simulations Plus has been leading the development of the DILIsym software for 14 years through the DILI-sim Initiative, a public-private partnership.
This partnership offers the platform to the pharmaceutical and chemical industries, with membership in the consortium or commercial licenses available for direct use.
InvestingPro Insights
As Simulations Plus, Inc. (NASDAQ: SLP) solidifies its position in the pharmaceutical simulation space with the strategic acquisition of Pro-ficiency Holdings, Inc., financial metrics and insights from InvestingPro offer a deeper look into the company's current valuation and financial health. Simulations Plus boasts a robust market capitalization of $920.71 million, reflecting investor confidence in its market strategy and growth potential.
An InvestingPro Tip highlights that Simulations Plus is trading at a high earnings multiple, with a current P/E ratio of 87.69. This indicates that investors are willing to pay a premium for the company's shares, likely due to expectations of continued growth and profitability, especially in light of the recent acquisition which is expected to be accretive to Simulations Plus's earnings per share in fiscal 2025.
Another notable metric is the company's strong gross profit margin, which stands at 75.14% for the last twelve months as of Q2 2024. This impressive margin suggests that Simulations Plus is highly efficient at converting revenue into gross profit, a key indicator of its operational effectiveness and potential for future earnings growth.
For investors seeking to explore more about Simulations Plus, InvestingPro offers additional tips, including insights on the company's cash position, dividend consistency, and profitability. With a total of nine InvestingPro Tips available for Simulations Plus, savvy investors can delve deeper into the company's financial nuances. To gain access to these valuable insights, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
The acquisition of Pro-ficiency Holdings is poised to enhance Simulations Plus's service offerings and market reach, and with a sound financial base as indicated by the InvestingPro data, the company is well-positioned to leverage this strategic move for sustained growth.
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