• First quarter fiscal 2024 revenue up 10.3% to $135.5 million
• First quarter fiscal 2024 DSA revenue up 8.8% to $44.7 million and RMS revenue up 11.1% to $90.8 million
• Shift to a renewed focus on sales and marketing as near-term infrastructure projects near completion
• Conference call begins today at 4:30 pm ET

WEST LAFAYETTE, Ind., Feb. 07, 2024 (GLOBE NEWSWIRE) -- Inotiv, Inc. (Nasdaq: NOTV) (the “Company”), a leading contract research organization specializing in nonclinical and analytical drug discovery and development services and research models and related products and services, today announced financial results for the three months (“Q1 FY 2024”) ended December 31, 2023.

Revenue by Segment

Management Commentary

Robert Leasure Jr., President and Chief Executive Officer, commented, “Our transformation over the past 18 months has been significant, culminating in the optimization of our operational footprint from 35 to 24 locations, simultaneously expanding three existing facilities and then recently completing the transition of our transportation operations in-house. This will allow us to better service customer demand, add new complementary services and create a platform which will support growth and allow us to leverage our fixed cost structure and enhance margins. As we near the completion of these infrastructure projects, we have shifted to a renewed focus on sales and marketing.

"Our first quarter improvement in the DSA backlog compared to last quarter was a positive. We expect some of this may reflect pent-up demand after a slow summer, but we remain encouraged. The critical groundwork has been completed and we plan to continue building on our strategic initiatives which should improve our efficiencies across our sites and positively impact top and bottom lines,” concluded Mr. Leasure.

Financial Highlights

Q1 FY 2024 Highlights

• Revenue was $135.5 million in Q1 FY 2024 as compared to $122.8 million during the three months ended December 31, 2022 (“Q1 FY 2023”), driven by an increase of $9.1 million, or 11.1%, in Research Models and Services (“RMS”) revenue and an increase of $3.6 million, or 8.8%, in Discovery and Safety Assessment (“DSA”) revenue.
• Consolidated net loss for Q1 FY 2024 was $15.8 million, or 11.7% of total revenue, compared to consolidated net loss of $86.9 million, or 70.8% of total revenue, in Q1 FY 2023.
• Adjusted EBITDA¹ in Q1 FY 2024 was $9.6 million, or 7.1% of total revenue, compared to $(5.5) million, or (4.5%) of total revenue, in Q1 FY 2023.
• Net book-to-bill ratio for Q1 FY 2024 was 1.46x for the DSA services business.
• DSA backlog was $152.3 million at December 31, 2023 up from $147.9 million at December 31, 2022, and up from $132.1 million at September 30, 2023.

^{1 This is a non-GAAP financial measure. Refer to “Non-GAAP to GAAP Reconciliation” in this release for further information.}

DSA and RMS Highlights

• In December 2023, the Company announced that it would be partnering with Vanguard Supply Chain Solutions LLC, the Company’s then-current provider of transportation services, to enable the in-house integration of Inotiv’s North American transportation operations. The Company completed this in-house integration in the second quarter of fiscal 2024.
• The expansion activities at Fort Collins, CO, were completed by the end of October 2023 and the expanded site completed the validation of the facility and equipment which became operational in the second quarter of fiscal 2024.
• During the three months ended December 31, 2023, the Company closed the sale of its RMS facilities in Spain and France.
• The Company continues to execute on its site optimization plan for its Blackthorn, UK site. The relocation of operating activities from Blackthorn into its Hillcrest, UK site is expected to be completed by the end of March 2024.
• The Company's facilities in Cumberland and Dublin, Virginia; Haslett, Michigan; and Blackthorn, U.K. are all under contract to be sold and are held for sale as of December 31, 2023.

First Quarter Fiscal 2024 Financial Results (Three Months Ended December 31, 2023)

Revenue increased 10.3% to $135.5 million in Q1 FY 2024 as compared to $122.8 million in Q1 FY 2023. The higher total revenue in the first quarter was driven by a $9.1 million increase in RMS revenue and a $3.6 million increase in DSA revenue.

Operating loss was $9.4 million in Q1 FY 2024 as compared to an operating loss of $90.6 million in Q1 FY 2023. The lower total operating loss in Q1 FY 2024 was primarily the result of an approximately $76.4 million increase in RMS operating income and a decrease in unallocated corporate expenses of approximately $5.7 million, partially offset by an approximately $0.7 million decrease in DSA operating income. The increase in RMS operating income was primarily due to a $66.4 million non-cash goodwill impairment charge in Q1 FY 2023 that did not recur in Q1 FY 2024.

Cash and cash equivalents as of December 31, 2023, was $22.0 million and there were no borrowings on the Company’s $15.0 million revolving credit facility. Cash and cash equivalents of $22.0 million at December 31, 2023 compares to $35.5 million at September 30, 2023, the end of fiscal year 2023. Cash used in operating activities was $6.5 million for Q1 FY 2024, compared to cash used in operating activities of $7.4 million for Q1 FY 2023. For Q1 FY 2024, capital expenditures totaled $5.6 million compared to $8.4 million for Q1 FY 2023. Total debt, net of debt issuance costs, as of December 31, 2023, was $379.3 million. The Company was in compliance with its debt covenants as of December 31, 2023.

Fiscal 2024 Outlook

We reaffirm fiscal 2024 revenues are expected to be in the range of $580 to $590 million and adjusted EBITDA is expected to be in the range of $75 to $80 million.

We expect to continue to remain in compliance with our financial covenants for the next 12 months. We reaffirm that capital expenditures are expected to be approximately 4.5% of revenue in fiscal 2024.

Webcast and Conference Call

Management will host a conference call on Wednesday, February 7, 2024, at 4:30 pm ET to discuss first quarter results for fiscal year 2024.

Interested parties may participate in the call by dialing:

• (877) 704-4453 (Domestic)
• (201) 389-0920 (International)
• 13744155 (Conference ID)

The live conference call webcast will be accessible in the Investors section of the Company’s web site and directly by clicking here.

For those who cannot listen to the live broadcast, an online replay will be available in the Investors section of Inotiv’s web site at: https://www.inotivco.com/investors/investor-information/.

Non-GAAP to GAAP Reconciliation

This press release contains financial measures that are not calculated in accordance with generally accepted accounting principles in the United States (GAAP), including Adjusted EBITDA and Adjusted EBITDA as a percentage of total revenue for the three months ended December 31, 2023 and 2022 and selected business segment information for those periods. Adjusted EBITDA as reported herein refers to a financial measure that excludes from consolidated net income (loss), statements of operations line items interest expense and income tax (benefit) expense, as well as non-cash charges for depreciation and amortization, stock compensation expense, acquisition and integration costs, startup costs, restructuring costs incurred in connection with the exit of multiple facilities, unrealized foreign exchange gain/loss, amortization of inventory step up, loss/gain on disposition of assets, other unusual third-party costs and goodwill impairment loss. The adjusted business segment information excludes from operating income and unallocated corporate G&A these same expenses.

Adjusted EBITDA guidance for fiscal year 2024 is provided on a non-GAAP basis. The Company cannot reconcile this guidance to expected net income/loss without unreasonable effort because certain items that impact net income/loss and net income/loss margin are out of the Company's control and/or cannot be reasonably predicted at this time, which unavailable information could have a significant impact on the Company’s GAAP financial results.

The Company believes that these non-GAAP measures provide useful information to investors. Among other things, they may help investors evaluate the Company’s ongoing operations. They can assist in making meaningful period-over-period comparisons and in identifying operating trends that would otherwise be masked or distorted by the items subject to the adjustments. Management uses these non-GAAP measures internally to evaluate the performance of the business, including to allocate resources. Investors should consider these non-GAAP measures as supplemental and in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP.

Management has chosen to provide this supplemental information to investors, analysts, and other interested parties to enable them to perform additional analyses of our results and to illustrate our results giving effect to the non-GAAP adjustments. Management strongly encourages investors to review the Company's consolidated financial statements and publicly filed reports in their entirety and cautions investors that the non-GAAP measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures.

About the Company

Inotiv, Inc. is a leading contract research organization dedicated to providing nonclinical and analytical drug discovery and development services and research models and related products and services. The Company’s products and services focus on bringing new drugs and medical devices through the discovery and preclinical phases of development, all while increasing efficiency, improving data, and reducing the cost of taking new drugs to market. Inotiv is committed to supporting discovery and development objectives as well as helping researchers realize the full potential of their critical R&D projects, all while working together to build a healthier and safer world. Further information about Inotiv can be found here: https://www.inotivco.com/. 

This release contains forward-looking statements that are subject to risks and uncertainties including, but are not limited to, statements regarding our intent, belief or current expectations with respect to (i) our strategic plans; (ii) trends in the demand for our services and products; (iii) trends in the industries that consume our services and products; (iv) our ability to develop new services and products; (v) our ability to source animal research models; (vi) our ability to make capital expenditures, fund our operations and satisfy our obligations; (vii) global economic conditions, especially as they impact our markets; (viii) our cash position; (ix) our ability to successfully integrate the operations and personnel related to acquisitions; (x) our ability to effectively manage current expansion efforts or any future expansion or acquisition initiatives undertaken by us; (xi) our ability to develop and build infrastructure and teams to manage growth and projects; (xii) our ability to continue to retain and hire key talent; (xiii) our ability to market our services and products under our corporate name and relevant brand names; (xiv) our ability to service our outstanding indebtedness and to comply with financial covenants; (xv) our expectations regarding the volume of new bookings, pricing, operating income or losses and liquidity; (xvi) our ability to manage recurring and unusual costs; (xvii) our ability to execute on our restructuring and site optimization plans and to realize the expected benefits related to such actions; and (xviii) the impact of public health emergencies on the economy, demand for our services and products and our operations, including the measures taken by governmental authorities to address such public health emergencies, which may precipitate or exacerbate other risks and/or uncertainties, including those detailed in the Company's filings with the U.S. Securities and Exchange Commission.

(a) Adjustments to certain GAAP reported measures for the three months ended December 31, 2023 and 2022 include, but are not limited to, the following:

(1) For the three months ended December 31, 2023 and 2022, represents charges for legal services, accounting services, travel and other related activities in connection with various acquisitions and the related integration of those acquisitions.
(2) For the three months ended December 31, 2023, represents costs incurred in connection with the exit of multiple sites and the enablement of the in-house integration of Inotiv’s North American transportation operations as previously disclosed. For the three months ended December 31, 2022, represents costs incurred in connection with the exit of multiple sites as previously disclosed.
(3) For the three months ended December 31, 2022, represents a non-cash goodwill impairment charge of $66.4 million related to the RMS segment.

(b) Adjusted EBITDA - Consolidated net income (loss) before interest expense, income tax expense (benefit), depreciation and amortization, stock compensation expense, acquisition and integration costs, startup costs, restructuring costs, unrealized foreign exchange gain/loss, amortization of inventory step up, gain/loss on disposition of assets, other unusual third party costs and goodwill impairment loss.