One-glance verdict
Within fair range
$8.27 our estimate vs market $7.17
Wall Street consensus: $7.48 (-9.6% lower than our fair-value estimate)
13% below our estimate
Fundamentals snapshot
Certara, Inc.
CERT · NMS · Healthcare · Health Information Services
Current price
$7.17
52-week range
$4.45 - $13.88
Market cap
$1.12B
Balance sheet
Stretched
1.06x Concerning
Net debt $155.15M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
3 Risks
2 rewards · 3 risks
- Reward Revenue grew 0.2% last year.
- Reward Free cash flow was positive in 7/10 years.
- Risk Net debt grew 63.0% over 3 years.
- Risk Operating margin compressed from 9.7% to 3.8% over 3 years.
What this company does
Certara, Inc.
Certara provides software and services that help drug companies test new medicines on computers before they are ever tested on people. The company makes money by selling this simulation technology to pharmaceutical firms, which can make the long and expensive process of developing new drugs faster and safer. This helps its customers bring new treatments to patients more efficiently.
How the company got here
Certara was formed in 2008 through the merger of two companies, Tripos and Pharsight, to combine their expertise in drug discovery and development. Over the years, it has grown by acquiring other specialized companies, like Simcyp in 2012, which is a leader in simulating how drugs work in virtual populations. This strategy of buying and integrating different technologies and services helped it become a major player in its field. The company went public on the Nasdaq stock exchange in 2020, which provided more funds to continue its growth and acquisitions.
What it actually does
Certara helps pharmaceutical and biotech companies develop new drugs faster and more efficiently. It provides software and expert consulting services that create computer models to simulate how a drug will behave in the human body. This process, called biosimulation, allows drug developers to ask "what-if" questions and predict outcomes without having to run as many real-world experiments or clinical trials (tests in humans). Their tools and services are used from the earliest stages of drug discovery all the way through to getting the drug approved by regulators and sold on the market.
Software
This part of the business involves selling licenses for its specialized software platforms, which makes up a significant and growing portion of its revenue. Pharmaceutical companies and researchers pay subscription fees, typically for one to three years, to use tools like 'Simcyp' and 'Phoenix'. These programs help scientists predict how a drug might affect different people and analyze data from clinical trials. This is a key part of the company's business because software provides recurring revenue (predictable income from ongoing subscriptions).
Technology-Enabled Services
Besides software, Certara also makes money by offering the brainpower of its scientists and experts as a service. Companies hire Certara's consultants for specific projects, such as designing a clinical trial, figuring out the right dosage for a new drug, or preparing documents for regulatory agencies like the FDA. This segment also includes helping companies with market access (the process of ensuring new drugs are available and paid for by insurers). While software is a major focus, these expert services make up the other large slice of the company's income and help build deep customer relationships.
What management is betting on now
The company is heavily focused on integrating Artificial Intelligence (AI) into its software to make its simulations even more powerful and easier to use. A key priority is to grow its software business faster than its services business, as software sales tend to be more profitable. Management is also working to get its tools used more widely within large pharmaceutical companies, encouraging a customer who uses one product to adopt others. By divesting (selling off) its medical writing business, the company is sharpening its focus on its core biosimulation and technology offerings.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q2
$9.39M
FY2024 Q3
$16.82M
FY2024 Q4
$48.95M
FY2025 Q1
$16.75M
FY2025 Q2
$17.78M
FY2025 Q3
$32.09M
FY2025 Q4
$27.81M
FY2026 Q1
$11.06M
Revenue
$106.92M
Net income
$-8.76M
Diluted EPS
-0.06
Operating cash flow
$11.69M
Free cash flow
$11.06M
Fetching…
Sources
Revenue
$103.65M
Net income
$-5.89M
Diluted EPS
-0.04
Operating cash flow
$28.82M
Free cash flow
$27.81M
Fetching…
Sources
Revenue
$104.62M
Net income
$1.52M
Diluted EPS
0.01
Operating cash flow
$32.31M
Free cash flow
$32.09M
Fetching…
Sources
Revenue
$104.57M
Net income
$-1.97M
Diluted EPS
-0.01
Operating cash flow
$17.84M
Free cash flow
$17.78M
Fetching…
Sources
Revenue
$106.00M
Net income
$4.74M
Diluted EPS
0.03
Operating cash flow
$17.35M
Free cash flow
$16.75M
Fetching…
Sources
Revenue
$100.36M
Net income
$6.58M
Diluted EPS
0.04
Operating cash flow
$49.37M
Free cash flow
$48.95M
Fetching…
Sources
Revenue
$94.82M
Net income
$-1.37M
Diluted EPS
-0.01
Operating cash flow
$16.99M
Free cash flow
$16.82M
Fetching…
Sources
Revenue
$93.31M
Net income
$-12.57M
Diluted EPS
-0.08
Operating cash flow
$9.81M
Free cash flow
$9.39M
Fetching…
Sources
Is it cheap or expensive?
Fair value $8.27 vs current price $7.17
Wall Street consensus is the average analyst price target: $7.48 (-9.6% lower than our fair-value estimate).
Our most-likely fair value is $8.27 a share — about 15.4% away from today's price of $7.17, so the stock currently looks fairly priced.
Is it drowning in debt?
Stretched
Net debt $155.1M. Interest coverage 1.1x.
Net debt
$155.15M
Interest coverage
1.06x
Certara, Inc.'s profit covers its interest bill about 1.1 times over. which is stronger than most peers shown here and 2 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Stretched
Worse cushion
Baseline
Better cushion
CERT
BASELINE
Certara, Inc.
Total debt $304.66M Interest coverage 1.06x This is the baseline the peer rows are being compared against.
Total debt $107.01M Interest coverage -157.90x -100% vs CERT This peer has almost no interest-payment cushion compared with CERT.
Total debt $103.07M Interest coverage 3.43x +222% vs CERT Carries about 3.2x more debt cushion than CERT.
Total debt $16.22B Interest coverage 3.14x +195% vs CERT Carries about 2.9x more debt cushion than CERT.
Total debt $169.84M Interest coverage -1.82x -100% vs CERT This peer has almost no interest-payment cushion compared with CERT.
What you should know
The case for and against CERT
2 Rewards
3 Risks
Rewards
-
Revenue grew 0.2% last year.
-
Free cash flow was positive in 7/10 years.
Risks
-
Net debt grew 63.0% over 3 years.
-
Operating margin compressed from 9.7% to 3.8% over 3 years.
-
Return on equity was -1.4% last year — the company lost money on shareholders' equity.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
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Forward P/E
17.32x
P/B
1.08x
P/S
2.66x
EV/EBITDA
13.51x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
61.6%
Operating margin
3.8%
Net margin
-3.6%
ROE
-1.4%
ROA
0.8%
Health
Liquidity and balance-sheet strength
Debt / equity
0.30x
Current ratio
1.88x
Quick ratio
1.78x
Total debt
$304.66M
Total cash
$149.51M
Growth
How the business has been compounding
Revenue TTM
$419.75M
Revenue 5Y CAGR
10.0%
EPS TTM
-0.10
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$90.67M
Free CF TTM
$94.56M
FCF margin
22.5%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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