Inotiv, Inc. (NOTV)·Q1 2025 Earnings Summary

Executive Summary

• Q1 FY25 revenue declined 11.5% YoY to $119.9M, with RMS down 15.1% on sharply lower NHP pricing and DSA down 4.2%; operating loss widened to $15.5M and net loss to $27.6M; Adjusted EBITDA fell to $2.6M (2.2% margin) .
• Liquidity improved via a December equity raise ($27.5M net), boosting cash to $38.0M at 12/31/24; total debt (net) was $396.0M; no revolver borrowings outstanding at quarter-end .
• DSA health stabilized: book-to-bill 1.01x and backlog $130.4M (flat vs Sep-24), though cancellations were elevated due to a single ~$4M project cancellation; management highlighted improving Discovery awards and expects sequential RMS margin improvement as high-cost NHPs are now worked through .
• No FY25 guidance was provided; management reiterated a plan to comply with covenants and expects capex <4% of revenue; “substantial doubt” language remains in the 10-Q pending execution of plans and lender discussions .

What Went Well and What Went Wrong

• What Went Well

  • DSA bookings/backlog resilience: book-to-bill 1.01x; backlog $130.4M vs $129.9M in Sep-24 (“encouraging” Discovery awards momentum) .
  • Liquidity actions executed: $27.5M net proceeds from 6.9M-share offering lifted cash to $38.0M at 12/31/24; zero revolver borrowings at quarter-end .
  • Cost optimization trajectory: next phase of North American RMS site optimization expected to generate ~$4–$5M annual savings once complete; CEO: “We are dedicated to building a stronger, more consistent company… enhancing the client experience” .

• What Went Wrong

  • RMS pressure from NHP pricing: RMS revenue fell 15.1% YoY; CFO noted US NHP ASPs were ~30.3% lower YoY and 1.6% lower QoQ; RMS GAAP operating swung to a $1.2M loss .
  • Profitability compression: operating loss widened to $15.5M (from $9.4M); Adj. EBITDA fell to $2.6M vs $9.6M in Q1 FY24; net loss rose to $27.6M .
  • Cancellations: DSA cancellations rose, driven by one >$4M project, muting otherwise stronger awards; management flagged lumpiness risk in shipment timing that can swing quarterly RMS revenue by $3–$4M .

Financial Results

Segment breakdown

KPIs and balance sheet snapshot

Notes:

• RMS decline driven primarily by lower NHP pricing; CFO indicated US NHP ASP down ~30.3% YoY and 1.6% QoQ in Q1 FY25; unit volumes were “approximately the same” YoY .
• Equity offering: $27.5M net proceeds in Dec-24; cash at 12/31/24 $38.0M; no revolver draws at Q1-end .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO strategy and execution: “We are dedicated to building a stronger, more consistent company… strengthening our financial stability, and enhancing the client experience… [equity offering] allows us to continue to make thoughtful, strategic decisions” .
• On RMS/NHP stabilization: “We have expanded our NHP client base and secured pre-sales for calendar year 2025… anticipate annual cost savings of approximately $4.0 to $5.0 million” from North American RMS optimization .
• Outlook tone: “We expect to see year-over-year revenue and adjusted EBITDA growth each quarter for the remainder of fiscal 2025 as well as reduced NHP revenue volatility” .
• CFO on guidance and capex: “We are not providing fiscal 2025 guidance at this time… We expect to spend less than 4% of revenue for CapEx in fiscal 2025” .

Q&A Highlights

• NHP inventory/costs: High-cost NHPs “worked through”; expect a “step function down” in costs; pre-sold inventory improves visibility; shipment timing still can swing $3–$4M between quarters .
• Revenue recognition on pre-sales: No revenue recognized until title transfers; deposits/back-to-back supplier prepayments increase planning certainty .
• Colony management services: ~$27M in FY24, expected ~20% growth; significant capacity (700 acres; ~250 in use) with ongoing investments .
• DSA cancellations: One >$4M project cancellation elevated cancels; otherwise Discovery awards trends are a “green shoot” .
• Covenant cadence/EBITDA: Management indicated trailing covenant math is “ahead” of expectations and expects sequential improvement through FY25, though no formal guidance was offered .

Estimates Context

• We attempted to retrieve Wall Street consensus (S&P Global) for Q1 FY25; data was unavailable due to API request limits at the time of query. As a result, we cannot quantify beats/misses versus S&P Global consensus for revenue or EPS for Q1 FY25. Values would ordinarily be sourced from S&P Global.

Key Takeaways for Investors

• RMS under pressure but stabilizing: NHP ASP reset cut RMS revenue and margins, but high-cost inventory is worked through and presold 2025 volumes should dampen volatility; expect sequential RMS margin improvement from Q2 onward .
• DSA improving indicators: Book-to-bill back above 1x and backlog stable; Discovery awards rising despite one-off cancellation—an early sign of demand recovery leverageable into margins as capacity fills .
• Liquidity improved, leverage elevated: $27.5M equity raise lifted cash to $38.0M; total debt (net) $396.0M underscores importance of EBITDA recovery and covenant compliance execution .
• Cost/savings catalyst into FY26: RMS site optimization next phase targets ~$4–$5M annual savings; timing suggests more tangible P&L impact as projects complete by end of FY26 .
• Legal/regulatory overhang easing but obligations persist: DOJ resolution terms, compliance monitor, and scheduled payments are in place; execution risk remains embedded in 10-Q “substantial doubt” language absent improved results and supportive lender actions .
• Trading lens: Near-term narrative turns on RMS margin inflection (NHP cost step-down) and sustained DSA bookings; print lacked guidance and consensus comparison, keeping focus on sequential KPIs and Q2 cadence.

Supporting detail and sources:

• Q1 FY25 8-K/press release and financial statements .
• Q1 FY25 press release (quotes, segment table) .
• Q1 FY25 earnings call transcript (ASP, bookings, cancellations, guidance posture) .
• Q1 FY25 10-Q (going concern, covenants, monitorship terms) .
• Prior quarters for trend (Q4 FY24, Q3 FY24) .