Simulations Plus (SLP) reported earnings recently sending the stock briefly higher before it returned to pre-announcement levels.
SLP revenue was $12.3 million, a year-over-year increase in the quarter of 23.8%. Profit rose 26.5% and came in at $9.6 million.
Shawn O’Connor, SLP CEO, said the company is weathering the COVID-19 impact well. O’Connor said, “A solid base of recurring revenue and a large backlog of project-based service business have minimized the impact from current economic conditions resulting from the effects of the COVID-19 pandemic.”
SLP purchased Lixoft recently, which O’Connor said is being integrated into current Simulations Plus offerings. Commenting on the purchase, O’Connor stated, “We are collaborating across the enterprise to fully integrate our sales and marketing efforts and leverage our existing infrastructure to extract maximum synergies and present a unified approach to our customers.”
John Kneisel, chief financial officer of Simulations Plus, said the company is still cash rich, even after the Lixoft acquisition. Kneisel noted that Lixoft added to the company’s cash flow, saying, “The dependable cash flow generation of our business was further enhanced with the immediately accretive acquisition of Lixoft in the third quarter.”
Kneisel noted the company had put in place additional credit options, “Following this cash investment, our financial position remains strong with a solid balance sheet that includes $7 million in unrestricted cash and no outstanding borrowed debt at the end of the third quarter and access to additional capital via a new, undrawn $3.5 million line of credit.”
In addition to the earnings report, Simulations Plus also filed a shelf allowing it to offer additional shares if necessary. Commenting on the shelf offering O’Connor said, “The Company’s filing of its shelf registration provides the company the flexibility required to support any future need to issue securities for any working capital, mergers and acquisitions, or general corporate purposes in the future.”
With several recent offerings, O’Connor said Simulations Plus is getting ahead of any offering needs and “Our recent qualification under the well-known seasoned issuer standard made this undertaking timely and efficient.”
SLP stock jumped from the low $60s to trade over $68 on the earnings news. But the stock has since fallen back to levels it was at prior to the earnings announcement, trading recently at $62.50.
Steven Adams’s personal position in Simulations Plus: none.