Simulations Plus (NASDAQ: SLP) reported Q2 EPS of $0.12, $0.02 worse than the analyst estimate of $0.14. Revenue for the quarter came in at $10.3 million versus the consensus estimate of $9.86 million.

2QFY20 highlights compared with 2QFY19:

• Net revenues increased 22.2%, or $1.9 million, to $10.3 million from $8.5 million
• Gross profit was $7.7 million, up $1.4 million, or 22.7%, from $6.3 million
• SG&A was $4.1 million, up $1.3 million, or 46.3%, from $2.8 million
• SG&A as a percentage of revenues increased to 39.7% from 33.2%, inclusive of $350,000 in transaction costs related to the Lixoft acquisition
• R&D expense increased 3.3%, or $23,600, to $748,000 from $724,000
• Income before taxes increased 5.2%, or $140,500, to $2.8 million from $2.7 million
• Net income increased to $2.2 million from $2.1 million
• Diluted earnings per share remained unchanged at $0.12 per share

Shawn O’Connor, chief executive officer of Simulations Plus, said: “This was a strong, productive, and important quarter for Simulations Plus, highlighted by the acquisition of Lixoft, which expands our presence in Europe and bolsters our software revenue mix. Operationally, we grew revenues 22% for the quarter and 23% year-to-date, driving a nearly 16% increase in year-to-date net income and strengthening our balance sheet. Today, Simulations Plus is a strong company with a global presence, more than $40 million in trailing 12 month revenue, much of which is recurring, a service business that operates with a large backlog of project-based business, proven profitability and a balance sheet that gives us flexibility during these challenging times. Our new business sales have slowed, as our customers deal with the Covid-related interruptions and uncertainty. To date, this has resulted in sales pipeline growth, as sales have been mostly delayed but not lost.”

“To proactively contribute to solving this worldwide pandemic, we established the StrategiesPlus™ COVID-19 ACT Program to speed consulting assistance to any organization involved in coronavirus research,” Mr. O’Connor continued. “This program enables each part of our organization to provide tools and expertise to help accelerate drug development and R&D. In particular, we are adding to our consulting services team in an effort to address the growing demand and expanding opportunities we see in the marketplace.”

John Kneisel, chief financial officer of Simulations Plus, added: “We finished the quarter with $12.2 million in cash. Early in the third fiscal quarter, we paid approximately $6 million in net cash for the Lixoft acquisition. We maintain a strong balance sheet with sufficient cash reserves and working capital and access to a line of credit to provide flexibility. The Lixoft acquisition will be immediately accretive, helping boost future cash flows to further strengthen our position.”

For earnings history and earnings-related data on Simulations Plus (SLP) click here.