Simulations Plus' Stock Sinks in Legal and Earnings Storms; AI Hopes Anchor Recovery

Shares of Simulations Plus, Inc. (NASDAQ: SLP) have experienced significant turbulence in recent months, driven by a combination of earnings shortfalls, legal investigations, and shifting analyst sentiment. The biopharma software developer, known for its modeling and simulation tools, has seen its stock plummet over 25% following the release of third-quarter 2025 financial results that missed expectations, sparking a wave of lawsuits and investor concerns, according to a Rosen Law Firm press release.

The company reported third-quarter revenue of $20.4 million, a 10% year-over-year increase but below the $20.9 million consensus estimate. This shortfall followed preliminary guidance in June that already indicated weaker-than-expected performance, with sales projected at $19–20 million against a $22.78 million forecast. The stock dropped 25.75% on July 15, 2025, after the earnings report, prompting two separate securities class action investigations by the Rosen Law Firm and Bleichmar Fonti & Auld LLP, according to a GlobeNewswire investor notice. Both firms allege that Simulations Plus issued misleading information about its financial health and integration of Pro-ficiency Holdings, a 2024 acquisition that was touted as doubling the company's total addressable market.

Compounding the legal risks, Simulations Plus announced in June 2025 that it had terminated its auditor, Grant Thornton, citing unresolved issues with segment reporting and internal controls, according to a GlobeNewswire alert. The company also recorded a $77.2 million charge related to prior acquisitions, further eroding investor confidence. Despite these challenges, CEO Shawn O'Connor emphasized in a recent Simulations Plus press release that the firm expects to meet revised 2025 guidance and unveiled an AI-driven product roadmap to strengthen its cloud and simulation capabilities.

The stock's volatility has drawn mixed reactions from analysts. Cowen initiated a "hold" rating in September 2025, while William Blair maintained an "outperform" rating. However, KeyCorp downgraded the stock to "sector weight" in July, reflecting broader market uncertainty. Stephens Investment Management Group, meanwhile, made a new $4.69 million investment in SLP, according to a MarketBeat filing.

Simulations Plus has also faced internal challenges. The company's attempt to integrate Pro-ficiency, a provider of simulation-based compliance solutions, appears to have faltered, with internal controls found lacking. These issues, combined with external pressures like drug pricing regulations and global tariffs, have created a complex operating environment.

Investors affected by the stock's decline are encouraged to consult legal counsel. The Rosen Law Firm, which has secured hundreds of millions in settlements for shareholders, is seeking to represent a class action. BFA Law, another firm involved in the litigation, is investigating claims of securities fraud related to the Pro-ficiency acquisition and financial reporting misstatements.

As the company prepares to release its full 2025 financial results on December 1, 2025, the path forward remains uncertain. With fiscal 2026 revenue guidance set at $79–82 million-a 0–4% growth range-Simulations Plus must navigate a challenging landscape while rebuilding trust with stakeholders.