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II

Inotiv, Inc. (NOTV)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 preliminary revenue is $137.5–$138.5M, broadly in line with expectations; FY2025 preliminary revenue is $512.5–$513.5M. DSA book-to-bill was ~1.08x with backlog ~$138.0M, up from $129.9M a year ago .
  • Q3 showed sequential improvement: revenue $130.7M (+23.5% YoY), Adjusted EBITDA $11.6M (8.9% margin), DSA book-to-bill 1.07x; backlog $134.3M .
  • Wall Street consensus for Q4: revenue $137.5M* and EPS -$0.46*; Q3 actual beat consensus revenue ($130.7M vs $127.1M*) and modestly beat consensus EPS (reported diluted EPS -$0.51 vs -$0.515*) .
  • Catalysts to watch: continued DSA awards growth and backlog build , optimization savings starting to benefit margins , and capital structure considerations given elevated debt and covenant compliance focus .
  • External/legal noise persists (investor rights firm outreach), but company recorded a $10M litigation accrual with an expected $10M insurance recovery; settlement discussions ongoing .

What Went Well and What Went Wrong

What Went Well

  • Strong DSA momentum: CEO highlighted “strong contract awards” with DSA services up ~60% YoY in Q4 and book-to-bill ~1.08x; backlog rose to ~$138.0M .
  • Sequential improvement in Q3: revenue $130.7M (+23.5% YoY), Adjusted EBITDA $11.6M (8.9% margin), positive DSA book-to-bill (1.07x) .
  • RMS improvement: higher NHP volumes and stable pricing dynamics; non-GAAP RMS operating income increased significantly YoY in Q3 .

Management quotes:

  • “We continued to see strong contract awards in our DSA services business… grew sequentially in the fourth quarter and were up 60% over the same period last year.”
  • “This quarter’s results demonstrate continued progress in the execution of our strategic plans.”
  • “We are cautiously optimistic… we remain committed to building a business that will create value.”

What Went Wrong

  • Elevated cancellations: Q3 saw a “fairly big quarter of cancellations,” requiring higher gross bookings to offset; trailing 12-month cancellations modestly higher vs prior period .
  • DSA margin pressure: management cited prior pricing pressure, higher costs (utilities, supplies), and residual higher-cost NHPs impacting study costs in early calendar 2025; margins expected to improve with mix and pricing .
  • Liquidity/working capital strain: cash declined to $6.2M at 6/30; nine-month operating cash flow was -$24.8M; total debt ~$396.5M .

Financial Results

Consolidated Financials vs Prior Periods (oldest → newest)

MetricQ2 2025Q3 2025Q4 2025 (Prelim)
Revenue ($USD Millions)$124.3 $130.7 $137.5–$138.5
Diluted EPS ($USD)-$0.44 -$0.51 n/a
Adjusted EBITDA ($USD Millions)$8.0 $11.6 n/a
Adjusted EBITDA Margin %6.4% 8.9% n/a

Segment Breakdown

Segment MetricQ2 2025Q3 2025
DSA Revenue ($USD Millions)$45.3 $48.2
RMS Revenue ($USD Millions)$79.0 $82.5
DSA Non-GAAP Operating Income ($USD Millions)$5.0 $7.2
RMS Non-GAAP Operating Income ($USD Millions)$15.6 $16.9

KPIs and Balance/Liquidity

KPIQ2 2025Q3 2025Q4 2025 (Prelim)
DSA Book-to-Bill (x)1.01 1.07 ~1.08
DSA Backlog ($USD Millions)$130.8 $134.3 ~$138.0
Cash And Equivalents ($USD Millions)$19.3 $6.2 n/a
Total Debt (net of issuance costs, $USD Millions)$399.5 $396.5 n/a
FY Revenue (Prelim, $USD Millions)n/an/a$512.5–$513.5

Actual vs Wall Street Consensus (S&P Global)

MetricQ3 2025 ActualQ3 2025 Consensus*Q4 2025 Prelim/GuidanceQ4 2025 Consensus*
Revenue ($USD Millions)$130.7 $127.1*$137.5–$138.5 $137.5*
EPS (Diluted, $USD)-$0.51 -$0.515*n/a-$0.46*

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 FY2025No formal guidance provided Prelim: $137.5–$138.5M n/a (preliminary range)
RevenueFY2025No formal guidance provided Prelim: $512.5–$513.5M n/a (preliminary range)
DSA Book-to-BillQ4 FY2025n/a~1.08x (prelim) n/a

Note: Management has refrained from formal guidance throughout FY2025, citing market/tariff visibility; preliminary ranges are directional and unaudited .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025)Previous Mentions (Q3 2025)Current Period (Q4 2025)Trend
DSA marginsPressure from pricing, costs; improvement efforts underway Sequential improvement, still below prior-year levels; focus on pricing/scale Momentum from DSA awards; expecting further improvement Improving
NHP supply/pricingHigher volumes at lower prices; tariffs manageable; residual higher-cost NHPs impacted DSA Pricing stable; imports diversified; Cambodia status monitored No new specifics; RMS trends steadyStable
Discovery & specialized servicesNAMs capabilities (computational tox, in vitro/ex vivo) positioned for future Discovery awards +31% YoY; high incremental operating leverage DSA awards +60% YoY in Q4 prelim Accelerating
Tariffs/macroWorking to mitigate tariffs; no demand change observed Continued caution; macro/geopolitical risks noted Cautionary language reiterated Persistent risk
Regulatory/NAMsSupport FDA/NIH direction; NAMs not immediate replacement Continued integration of scientific services and speed No new updateNeutral
Site optimizationSavings accelerated to $6–$7M; completion by March 2026 Focus shifting from brick-and-mortar to capacity tweaks Ongoing executionPositive
Customer satisfaction/OTDEmphasis on KPIs and delivery speed Better on-time delivery metrics; repeat business N/A in prelimPositive
Capital structure/covenantsCovenants updated; compliance planned Strategic review of balance sheet planned No update; monitorWatch

Management Commentary

  • “We anticipate that consolidated revenue for the fourth quarter will be in a range of $137.5 million to $138.5 million… and an improvement over the prior year period.” — Robert Leasure Jr., CEO
  • “Discovery awards increased 31.3%… DSA positive quarterly net book to bill of 1.07… year to date book to bill now is 1.03 times.” — CEO (Q3)
  • “We now anticipate net annual savings of $6–$7M on a capital investment of approximately $6.5M… anticipated to be completed by March 2026… benefits as soon as Q4 FY2025.” — CEO (Q2)
  • “We are seeing signs that demonstrate the potential to increase DSA awards and improve the overall revenue, margins and adjusted EBITDA.” — CEO (Q3)

Q&A Highlights

  • Cancellations: Elevated in Q3; management planning for higher gross bookings to offset; variability can be driven by single large projects .
  • NHP supply/pricing: Diversified sourcing; pricing largely stable over the past year; Cambodia import status monitored without immediate changes .
  • Discovery leverage: Incremental margin potential 70–80% given fixed-cost nature; strong bookings expected to translate to EBITDA over time .
  • Customer metrics: Significant improvement in on-time delivery and tracking systems, supporting repeat business and larger blanket POs .
  • Liquidity/working capital: Higher NHP inventory to support stability; revolver draw requested; focus on making working capital less volatile .

Estimates Context

  • Q4 FY2025: Preliminary revenue range $137.5–$138.5M vs consensus $137.5M*; EPS consensus -$0.46* (actual EPS not yet reported) .
  • Q3 FY2025: Actual revenue $130.7M vs consensus $127.1M*; reported diluted EPS -$0.51 vs consensus -$0.515* — a modest beat .

Values marked with * retrieved from S&P Global.

Where estimates may need to adjust:

  • DSA demand/backlog and sequential revenue strength support potential upward revisions to near-term revenue assumptions; watch DSA margin execution to drive EBITDA leverage .
  • EPS sensitivity remains high to DSA margin recapture and RMS pricing/mix; optimization savings timing could incrementally improve margin trajectory starting Q4 .

Key Takeaways for Investors

  • DSA momentum is the core driver: sustained >1x book-to-bill and rising backlog point to continued revenue visibility; monitor conversion and cancellation rates .
  • Margin story hinges on mix, pricing discipline, and optimization savings; expect sequential EBITDA leverage if discovery growth persists and pricing stabilizes .
  • RMS/NHP dynamics appear stable near term; diversified sourcing and customer presales/boarding mitigate volatility, but tariff/regulatory risks remain .
  • Liquidity tightness and high leverage warrant attention; covenant compliance and any balance sheet actions (equity/debt/refis) are key medium-term catalysts .
  • Near-term setup: Q4 preliminary revenue in line with consensus reduces downside surprise risk; execution on margins could drive an EPS surprise if costs trend favorably .
  • Medium-term thesis: Integrated platform, customer KPIs, and NAMs-adjacent capabilities support competitiveness; discovery growth and optimization savings underpin margin expansion potential .
  • Watch legal/monitoring developments and any settlement outcomes; company recorded $10M accrual with expected full insurance recovery — headline risk, limited P&L impact if insured .