Simulations Plus Acquires Pro-ficiency, Creating One-of-a-Kind Platform Spanning the Drug Development Continuum
Simulations Plus (Nasdaq: SLP) has acquired Pro-ficiency Holdings for $100 million in cash, expanding its capabilities in drug development and commercialization. This acquisition doubles the company's total addressable market (TAM) to $8 billion and is expected to be accretive to fiscal 2025 EPS. The integration of Pro-ficiency’s simulation-enabled solutions enhances Simulations Plus' existing offerings, providing end-to-end services from pre-clinical protocols to product commercialization. The company will host a conference call to discuss the transaction.
- Acquisition doubles TAM to $8 billion.
- Expansion expected to be accretive to fiscal 2025 EPS.
- Enhances capabilities across the drug development continuum.
- Provides end-to-end solutions from pre-clinical to commercialization.
- Broadens existing platform with clinical trial operations and medical affairs.
- Unlocks cross-selling opportunities with shared customer base.
- Utilizes existing cash and investment resources, no additional debt incurred.
- Strong free cash flow and well-capitalized post-acquisition.
- Transaction cost of $100 million in cash may impact liquidity.
- Dependence on the successful integration of Pro-ficiency into Simulations Plus.
- Potential dilution of focus as the company expands its service offerings.
Insights
Simulations Plus' acquisition of Pro-ficiency for
However, it’s important to consider integration risks and costs that might arise. Although Simulations Plus has no debt and strong free cash flow, the financial community will be watching how efficiently they can integrate Pro-ficiency’s operations and whether the projected benefits materialize within the expected timeframe.
Investors should also note the company's strategy of utilizing existing cash reserves for the acquisition, indicating a prudent approach without leveraging additional debt, which maintains their strong financial health.
The acquisition is strategically aligned to broaden Simulations Plus' offerings across the entire drug development continuum. This move strengthens the company's value proposition by integrating Pro-ficiency's capabilities in clinical trial operations, medical affairs and commercialization. The expanded suite of services can lead to meaningful cross-selling opportunities, enhancing client engagements and potentially attracting new customers within life sciences.
From a market perspective, the acquisition differentiates Simulations Plus from competitors by offering a more comprehensive end-to-end solution set. This could sharpen the company's competitive edge in a sector where consolidation and innovation are key drivers of sustained growth.
Additionally, the integration of AI-driven technologies from Pro-ficiency could enhance their data analytics and outcomes, further improving drug development and commercialization processes, which are highly valued by their clients.
The integration of Pro-ficiency’s AI-enabled simulation solutions with Simulations Plus’ existing platform is a noteworthy technical advancement. These technologies are designed to enhance clinical trial training, data analytics and commercial launch efficiency, which could lead to improved drug development outcomes and faster time-to-market.
AI-driven solutions provide predictive analytics and actionable insights, helping pharmaceutical companies make better-informed decisions. This could result in increased cost-efficiency and efficacy in drug development, addressing some of the industry's biggest challenges.
The ability to offer immersive simulation-enabled learning and data-driven insights enhances Simulations Plus' portfolio, making it more attractive to pharmaceutical companies seeking comprehensive and advanced solutions. This integration could set a new standard in drug development practices and elevate Simulations Plus' standing in the market.
Acquisition doubles the Company’s TAM to
Expected to be accretive to fiscal 2025 EPS
Conference call at 5:00PM ET to discuss transaction
The transaction expands Simulations Plus’ presence across the drug development continuum from establishing pre-clinical protocols to product commercialization, providing pharmaceutical and biotech companies with an end-to-end offering that now includes clinical trial operations, medical affairs and commercial market launches. Pro-ficiency’s suite of software and services, developed with AI technologies, is a highly complementary and synergistic addition to Simulations Plus’ platform by expanding its capabilities to enhance clinical trial and launch training, data analytics and outcomes.
"We are thrilled to announce the expansion of our suite of drug discovery and R&D solutions with this strategic acquisition of Pro-ficiency,” said Shawn O’Connor, Chief Executive Officer of Simulations Plus. “This transaction brings together two businesses, each with complementary expertise and services that are grounded in science and focused on applying advanced technologies like AI to enhance actionable data analytics. Together, we will continue to assist our clients in improving their drug development return on investment and patient care delivery. With the integration of Pro-ficiency’s immersive simulation-enabled learning, data-driven insights, and medical communications platforms, we are approximately doubling our total addressable market by unlocking the significant growth potential of a
“This acquisition not only deepens our client engagement capabilities and relationships but also presents meaningful cross-selling opportunities to our shared customer base in life sciences. By further expanding our portfolio of critical solutions for efficacious and cost-efficient drug development and commercialization, we believe this acquisition gives us a distinct competitive advantage and will significantly enhance our ability to drive innovation and success within the sector. Furthermore, the transaction is expected to be accretive to our fiscal 2025 EPS,” concluded O’Connor.
Michael Raymer, Chief Executive Officer of Proficiency, added, “We are excited to join the Simulations Plus team, which has a well-established and recognized leadership position in modeling and simulations within the pharmaceutical and biotech community. Both teams approached this transaction with a growth mentality. We look forward to leveraging Simulations Plus’ specialized offerings and business development infrastructure to expand our combined market reach. Finally, our operations are complementary, our cultures are aligned, and together we believe we can elevate the performance of our mutual clients as well as attract new ones with our end-to-end solutions.”
QHP Capital made its original investment in Pro-ficiency in 2021. Pro-ficiency completed the acquisitions of Fugitive Labs, LLC in 2022 and Compass Group Partners in 2023. “We are very pleased with the growth and innovation we have seen these past few years at Pro-ficiency and we are excited to see them continue to improve clinical development as part of the Simulations Plus offering," said Michael Sorensen, Partner at QHP Capital.
Strategic Rationale
- Expands Simulations Plus’ presence along the drug development value chain, leveraging its scientific skills, drug development expertise, data management acumen, predictive analytics and biosimulations capabilities
- Broadens and differentiates Simulations Plus’ holistic offering to include clinical trial operations, medical affairs, and communications, strengthening its overall value proposition to life sciences customers
-
Doubles total addressable market (TAM), adding
$4 billion - Provides meaningful cross-selling opportunities to a shared target customer base in life sciences
- Broadens Simulations Plus’ platform and accelerates scale, increasing aperture for continued M&A strategy and improving right-to-win as a strategic partner of choice
Key Terms of the Transaction
The transaction is being funded from existing cash and investment resources. “With approximately
Additional information about the transaction, including a copy of the purchase agreement and an investor presentation will be provided in a Current Report on Form 8-K to be filed by Simulations Plus today with the
Procopio acted as legal counsel for Simulations Plus and Wyrick Robbins acted as legal counsel for Pro-ficiency and the sellers of Pro-ficiency.
Webcast and Conference Call Details
Shawn O’Connor, Chief Executive Officer of Simulations Plus; Will Frederick, Chief Financial Officer and Chief Operating Officer of Simulations Plus; and Michael Raymer, Chief Executive Officer of Pro-ficiency, will host a conference call and webcast today at 5 p.m. Eastern Time to discuss the details of the transaction and to answer questions. The call may be accessed by calling 1-877-451-6152 (domestic) or 1-201-389-0879 (international) or by clicking on this Call me™ link to request a return call. The webcast will be available on our website under Conference Calls & Presentations. A replay of the webcast will be available on the website approximately one hour following the call.
About Simulations Plus, Inc.
Serving clients worldwide for more than 25 years, Simulations Plus is a leading provider in the biosimulation market providing software and consulting services supporting drug discovery, development, research, and regulatory submissions. We offer solutions that bridge machine learning, physiologically based pharmacokinetics, quantitative systems pharmacology/toxicology, and population PK/PD modeling approaches. Our technology is licensed and applied by major pharmaceutical, biotechnology, and regulatory agencies worldwide. For more information, visit our website at www.simulations-plus.com. Follow us on LinkedIn | X | YouTube.
Environmental, Social, and Governance (ESG)
We focus our Environmental, Social, and Governance (ESG) efforts where we can have the most positive impact. To learn more about our latest initiatives and priorities, please visit our website to read our 2023 ESG update.
About Pro-ficiency
Based in
About QHP Capital
QHP Capital is an investor in technology and services companies in the life sciences and healthcare sectors. QHP Capital spun out of NovaQuest Capital Management, which was formed in 2000 with the vision of building an investment platform to provide strategic capital and industry expertise in partnership with strong management teams. The investment team consists of seasoned investment and operational professionals with significant investment experience and deep life science and healthcare expertise. QHP benefits from an extensive network of industry experts and relationships that assist in identifying, analyzing, and growing QHP’s portfolio companies. QHP continues as the investment manager for NovaQuest Private Equity funds. For more information, please visit www.qhpcapital.com.
Forward-Looking Statements
Except for historical information, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties. Words like “believe,” “expect,” and “anticipate” mean that these are our best estimates as of this writing, but there can be no assurances that expected or anticipated results or events will actually take place, so our actual future results could differ significantly from those statements. Factors that could cause or contribute to such differences include, but are not limited to: our ability to successfully integrate the Pro-ficiency business with our own, as well as expenses we may incur in connection therewith, our ability to maintain our competitive advantages, acceptance of new software and improved versions of our existing software by our customers, the general economics of the pharmaceutical industry, our ability to finance growth, our ability to continue to attract and retain highly qualified technical staff, market conditions, macroeconomic factors, and a sustainable market. Further information on our risk factors is contained in our quarterly and annual reports and filed with the
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Simulations Plus IR or Media
Renee Bouche
661-723-7723
renee.bouche@simulations-plus.com
Financial Profiles
Lisa Fortuna
310-622-8251
slp@finprofiles.com
Source: Simulations Plus, Inc.
FAQ
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