Medical tech company Simulations Plus (SLP +1.29%) ended up slightly in positive territory on Friday. That was largely due to solid quarterly results, although a bottom-line guidance cut dampened some investors' enthusiasm. Ultimately, the company's shares only rose 0.4% that day.
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Simulations Plus' second quarter of 2026 was topped by a revenue line of $24.3 million, which was 8% higher year over year. Of that, software revenue rose by 9% to $14.6 million, while the company's take for services advanced by 8% to comprise the remainder.
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Net income not under generally accepted accounting principles (GAAP) improved more dramatically, rising 13% to slightly over $7 million, or $0.35 per share.
This meant a double dose of beats for the healthcare tech company, as the consensus analyst estimate for revenue was under $21.7 million, and that for non-GAAP (adjusted) net profit was $0.31.
In its earnings release, Simulations Plus attributed the growth in software revenue to the popularity of its discovery and development solutions, though a dip in clinical operations software partially offset this. As for services revenue, it derived mostly from -- again -- development solutions.
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While those numbers were satisfying, they were tempered by Simulations Plus' cut to full-fiscal-year adjusted net income guidance. Management now anticipates earning $0.75 to $0.85 per share, well down from the previous forecast of $1.03 to $1.10. The company chalked this up to a higher effective tax rate. Meanwhile, it left its revenue guidance unchanged at $79 million to $82 million.
If a tax bill is the only major concern for the company and its investors, it's doing extremely well. I'd focus on its solid performance and the clear momentum in both facets of its business. It's looking like a buy to me these days, particularly after that lukewarm market reaction to what was a very solid quarter.
