Certara (CERT) 6 Nov 24 2024 Q3 Earnings call transcript

Certara, a leading provider of biosimulation and regulatory services for global drug development, recently held its third quarter earnings call, providing insights into the company's financial performance and strategic directions. In the call, executives discussed key themes, including the company's focus on biosimulation, recent acquisitions, and financial results.

Biosimulation as a Strategic Focus

Certara's strategy of investing in biosimulation for drug development has yielded positive results. The company's revenue for the third quarter increased by 11% compared to the previous year, with total bookings up by 13%. This growth is a testament to the increasing demand for biosimulation in the pharmaceutical industry and Certara's strong position in this market.

Strategic Acquisitions and Expansion

A notable highlight of the call was the acquisition of Chemaxon, a leading software company focused on chemical property calculation, search, research workflow, and in silico simulation. This acquisition is expected to expand Certara's reach into the preclinical market and create an end-to-end biosimulation platform. The combination of Chemaxon's software and Certara's data infrastructure and biosimulation capabilities could significantly enhance the company's offerings and position it for future growth.

Financial Performance and Outlook

Certara reported a total revenue of $94.8 million for the third quarter, with software revenue contributing significantly to this growth. The company's services revenue also showed improvement, with revenue performance among Tier 3 customers showing a notable sequential improvement. However, there were challenges in the regulatory services market, which has led to a cautious outlook for second half growth. Certara is revising its 2024 guidance modestly to reflect these changes.

Strategic Review of Regulatory Services Business

Certara's regulatory services business, which has faced challenges in recent times, is undergoing a strategic review. The company is considering various options, including divestiture, to align with its core biosimulation business. This review is expected to be completed during the first half of 2025.

Market Dynamics and Competitive Landscape

The call provided insights into the current market dynamics, with a focus on the pharmaceutical industry's ongoing efforts to contain costs and the increasing acceptance of biosimulation by regulatory agencies. Certara's investment in biosimulation technology and its strategic acquisitions position the company well to capitalize on these trends.

Conclusion

Certara's third quarter earnings call underscored the company's strategic focus on biosimulation and its commitment to expanding its capabilities through acquisitions. Despite challenges in certain areas, the company's financial performance and strategic initiatives suggest a strong foundation for future growth. Investors and analysts will closely watch Certara's progress in the coming quarters as it executes its strategic vision and navigates the evolving market landscape.