• Total Revenue: $105.8 million for Q3 2024, down 33% from $157.5 million in Q3 2023.
• Consolidated Revenue (Nine Months Ended June 30, 2024): $360.3 million, down 16.5% from $431.7 million in the prior year period.
• DSA Revenue (Q3 2024): $44.2 million, a decrease of approximately 6% from $46.8 million in Q3 2023.
• RMS Revenue (Q3 2024): $61.6 million, down 44.4% from $110.7 million in Q3 2023.
• Operating Loss (Q3 2024): $20.8 million compared to operating income of $8.8 million in Q3 2023.
• Net Loss Attributable to Common Shareholders (Q3 2024): $26.1 million or $1 loss per diluted share, compared to net income of $1.8 million or $0.07 earnings per diluted share in Q3 2023.
• Adjusted EBITDA (Q3 2024): $0.1 million, less than 1% of total revenues, compared to $30.5 million or 19.4% of total revenue in Q3 2023.
• Interest Expense (Q3 2024): $12.1 million, up from $10.8 million in Q3 2023.
• Cash and Cash Equivalents (June 30, 2024): $14.4 million, down from $35.5 million on September 30, 2023.
• Total Debt (June 30, 2024): $382.4 million, relatively consistent with $377.7 million on September 30, 2023.
• Net Cash Used by Operations (Nine Months Ended June 30, 2024): $4.4 million, compared to cash provided by operations of $9.1 million in the prior year period.
• Capital Expenditures (Q3 2024): $4.4 million or 4.2% of total revenue.

• Warning! GuruFocus has detected 7 Warning Signs with NOTV.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Inotiv Inc (NASDAQ:NOTV) resolved the Virginia DOJ investigation and related settlement, and the US Attorney's Office for the Southern District of Florida is no longer investigating the company.
• The company completed the UK site construction and consolidation projects, reducing expenses and enhancing revenue potential.
• Inotiv Inc (NASDAQ:NOTV) achieved year-to-date and quarter-over-quarter sales increases and margin improvements in its diet business globally.
• The company saw a 32% year-over-year increase in NHP boarding and breeding service revenues.
• Inotiv Inc (NASDAQ:NOTV) implemented integration initiatives and organizational changes, reducing general and administrative expenses and showing signs of recovery in the NHP market.

Negative Points

• Pricing pressures in the DSA business impacted revenue growth and margins.
• Year-over-year declines in sales in the discovery business due to market softness.
• NHP sales and margins were significantly down, with profits decreasing by approximately $36 million for the first nine months of fiscal year 2024.
• Overall adjusted EBITDA decreased by roughly $29 million year-to-date compared to the same period last year.
• The company faced challenges and volatility in the RMS business segments, particularly in the NHP business, due to industry market dynamics and legal issues.

Q & A Highlights

Q: What impact will the resolution of the Florida DOJ investigation have on legal expenses? A: Beth Taylor, CFO, stated that legal expenses related to the Florida DOJ and Cumberland matters should decrease by about $2 million to $3 million per quarter, as the company has spent approximately $21 million on these cases over the last two years.

Q: When can we expect to see improvements in the NHP business? A: Bob Leasure, CEO, mentioned that there will be an improvement in Q4, with a potential 120%-130% increase in NHP sales compared to Q3. The pricing will align with previous quarters, and margins are expected to improve as higher-cost inventory is sold off.

Q: How is the company addressing industry headwinds, particularly in the biotech and pharma sectors? A: Bob Leasure noted that Inotiv is less exposed to large pharma, with over 95% of sales coming from biotech. The company is focusing on differentiating through service and gaining market share, despite some pricing pressures.

Q: Can you elaborate on the end customer NHP inventory levels and expectations for normalization? A: Bob Leasure explained that many customers had excess inventory last year, but current inquiries and purchase orders suggest a return to more normalized levels. The company is diversifying its customer base, reducing reliance on any single customer.

Q: What are the company's plans for long-term contracts in the NHP business? A: Bob Leasure indicated that long-term contracts, ranging from one to five years, are being pursued with a half dozen to a dozen customers, which could cover over 75% of NHP sales. This strategy aims to provide recurring revenue and stability.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.