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Inotiv Reports Fourth Quarter and Full Year Financial Results for Fiscal 2023 and Provides Business Update
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Inotiv Reports Fourth Quarter and Full Year Financial Results for Fiscal 2023 and Provides Business Update

— Fiscal year 2023 revenue up 4.5% to $572.4 million, achieving full year revised guidance
— Achievements in the past fiscal year to expand DSA capacity, develop new services and reduce outsourcing expected to drive continued growth of fiscal 2024 DSA revenues
— Anticipate achieving the balance of expected expense reductions in fiscal 2024
— Conference call begins today at 4:30 pm ET

WEST LAFAYETTE, Ind., Dec. 11, 2023 (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 (“Q4 FY 2023”) and twelve months (“FY 2023”) ended September 30, 2023.

Revenue by Segment

(in millions of USD) Three months ended
September 30
  %
change
  Fiscal years ended
September 30,
  %
change
  2023   2022       2023   2022    
  (unaudited)   (unaudited)                
DSA (Discovery & Safety Assessment) $50.2   $44.2   13.6%   $185.1   $165.3   12.0%
RMS (Research Models & Services) 90.5   106.3   (14.9)%   387.3   382.4   1.3%
Total $140.7   $150.5   (6.5)%   $572.4   $547.7   4.5%


Management Commentary

Robert Leasure Jr., President and Chief Executive Officer, commented, “We are pleased to note recent accomplishments including quarter over quarter DSA revenue growth and corresponding margin improvements, completion of several of the site optimization projects, expansion projects, reduction in some of our outsourcing, and growing backlog conversion rates. The cumulative achievements in fiscal 2023 across all our core initiatives to improve profitability, operational efficiencies and to grow sales sets the stage for the next chapter of Inotiv’s story. We remain strongly positioned to continue to grow the DSA business in 2024. With the recent DSA expansions and services added, we can now effectively sell services to multiple sectors and are building the sales and marketing organization to expand our customer base in: Drug Discovery and Translational Science, Drug Development, Chemical Development, and Medical Device Development, including Safety Assessment in these sectors.

Looking ahead, we also expect to close on contracts of assets held for sale, complete validation of new facilities and equipment enabling new capacity, the ramping of new services, the in house transition of our transportation services and completing our facility improvements and consolidation of our UK facilities. In NHPs, we continue to monitor the situations related to Cambodia and China and continue to expand our supply base,” concluded Mr. Leasure.

Financial Highlights

Q4 FY 2023 Highlights

  • Revenue was $140.7 million in Q4 FY 2023 as compared to $150.5 million during the three months ended September 30, 2022 (“Q4 FY 2022”), driven by a reduction of $15.8 million, or 14.9%, in Research Models and Services (“RMS”) revenue partially offset by a $6.0 million, or 13.6%, increase in Discovery and Safety Assessment (“DSA”) revenue.
  • Consolidated net loss for Q4 FY 2023 was $8.7 million, or 6.2% of total revenue, compared to consolidated net loss of $243.6 million, or 161.9% of total revenue, in Q4 FY 2022.
  • Adjusted EBITDA1 was $23.7 million, or 16.8% of total revenue, compared to $18.3 million, or 12.1% of total revenue, in Q4 FY 2022.
  • Net book-to-bill ratio for Q4 FY 2023 was 0.65x for the DSA services business.
  • DSA backlog was $132.1 million at September 30, 2023 down from $147.2 million at September 30, 2022.

FY 2023 Highlights

  • Revenue grew to $572.4 million in FY 2023 from $547.7 million during the twelve months ended September 30, 2022 (“FY 2022”), driven by a $19.8 million, or 12.0%, increase in DSA revenue and a $4.9 million, or 1.3%, increase in RMS revenue.
  • Consolidated net loss for FY 2023 was $104.9 million, or 18.3% of total revenue, compared to consolidated net loss of $337.3 million, or 61.6% of total revenue, in FY 2022. The FY 2023 consolidated net loss included a $66.4 million non-cash goodwill impairment charge related to our RMS segment. The FY 2022 consolidated net loss included a $236.0 million non-cash goodwill impairment charge related to our RMS segment and one-time charges of $56.7 million of fair value remeasurement of the embedded derivative component of the convertible notes issued in September 2021 and $23.0 million of post-combination stock compensation expense relating to the adoption of the Envigo Equity Plan.
  • Adjusted EBITDA1 was $65.8 million, or 11.5% of total revenue, compared to $90.5 million, or 16.5% of total revenue, in FY 2022.
  • Net book-to-bill ratio was 0.92x for the DSA services business.

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

  • The Company previously announced several site optimization initiatives which it was able to complete as planned during FY 2023. 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 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 is completing the validation of the facility and equipment and plans to be operational early in the second quarter of fiscal 2024.
  • During the three months ended September 30, 2023, the Company closed the sale of its Israeli businesses, as well as its Boyertown, Pennsylvania facility.
  • The Company’s facilities in Cumberland, Virginia; Haslett, Michigan; Gannat, France; and Blackthorn, U.K. continued to be held for sale as of September 30, 2023. Additionally, the Company’s Spain facility was held for sale as of September 30, 2023 and was subsequently sold.

Fourth Quarter Fiscal 2023 Financial Results (Three Months Ended September 30, 2023)

Revenue decreased 6.5% to $140.7 million in Q4 FY 2023 as compared to $150.5 million in Q4 FY 2022. The lower total revenue in the fourth quarter was driven by a $15.8 million decrease in RMS revenue, partially offset by a $6.0 million increase in DSA revenue.

Operating income was $2.5 million in Q4 FY 2023 as compared to an operating loss of $242.5 million in Q4 FY 2022. Higher total operating income in Q4 FY 2023 was the result of an approximate $7.4 million increase in DSA operating income, an approximate $235.6 million increase in RMS operating income and an approximate decrease in unallocated corporate expenses of $1.9 million. The increase in RMS operating income was primarily due to a $236.0 million non-cash goodwill impairment charge in Q4 FY 2022 that did not recur in Q4 FY 2023.

Cash and cash equivalents as of September 30, 2023, was $35.5 million and there were no borrowings on the Company’s $15.0 million revolving credit facility. Total debt, net of debt issuance costs, as of September 30, 2023, was $377.7 million. The Company was in compliance with its debt covenants as of September 30, 2023.

Full Year Fiscal 2023 Financial Results (Twelve Months Ended September 30, 2023)

Revenue increased 4.5% to $572.4 million in FY 2023 as compared to $547.7 million in FY 2022. The higher total revenue was driven by a $19.8 million increase in DSA revenue and a $4.9 million increase in RMS revenue.

Operating loss was $81.5 million as compared to $263.5 million in FY 2022. The reduction in total operating loss in FY 2023 was the result of an approximate $164.4 million decrease in RMS operating loss, primarily driven by a $169.6 million decrease in non-cash goodwill impairment charge in FY 2023 compared to FY 2022, and an approximate $24.6 million decrease in unallocated corporate expenses, partially offset by an approximate $7.1 million decrease in DSA operating income.

Cash provided by operating activities was $27.9 million for FY 2023, compared to cash used by operating activities of $5.2 million for FY 2022. For FY 2023, capital expenditures totaled $27.5 million compared to $36.3 million for FY 2022.

Subsequent Events

  • Subsequent to September 30, 2023, the Company closed on the sale of its Spain facility and signed a purchase agreement for its Gannat, France facility, to be closed in the next 60 days.
  • Subsequent to September 30, 2023, the Company announced that it will be partnering with Vanguard Supply Chain Solutions LLC, the Company’s current provider of transportation services, to enable the in-house integration of Inotiv’s North American transportation operations.

Fiscal 2024 Outlook

Fiscal 2024 revenues are expected to be in the range of $580 to $590 million. We expect gains in DSA sales and flat to decreasing RMS sales based on the possible reduction in NHP sales.

Adjusted EBITDA guidance is expected to be in the range of $75 to $80 million. The increase in Adjusted EBITDA over fiscal 2023 is expected to be driven by increased margins from the DSA segment and cost reductions we initiated in fiscal 2023, and the projected reduction in future NHP margins.  

We expect to continue to remain in compliance with our financial covenants for the fiscal year. We expect capital expenditures to be approximately 4.5% of revenue in fiscal 2024, as compared to an average of 10.3% over the last five years as we expanded sites and grew service capacity.

Webcast and Conference Call

Management will host a conference call on Monday, December 11, 2023, at 4:30 pm ET to discuss fourth quarter and full year results for fiscal year 2023.

Interested parties may participate in the call by dialing:

  • (877) 704-4453 (Domestic)
  • (201) 389-0920 (International)
  • 13742881 (Conference ID)

The live conference call webcast will be accessible in the Investors section of the Company’s web site and directly via the following link:

https://viavid.webcasts.com/starthere.jsp?ei=1645758&tp_key=9608ec7c56 

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 and twelve months ended September 30, 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, loss on debt extinguishment, amortization of inventory step up, loss/gain on disposition of assets, loss on fair value remeasurement of convertible notes, other unusual third-party costs, gain on sale of subsidiary 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 not limited to, discussions 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, including COVID-19, 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.

Company Contact Investor Relations
Inotiv, Inc. LifeSci Advisors
Beth A. Taylor, Chief Financial Officer Bob Yedid
(765) 497-8381 (516) 428-8577
btaylor@inotivco.com bob@lifesciadvisors.com

 
INOTIV, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
  Three Months Ended
September 30
  Fiscal Years Ended
September 30,
    2023       2022       2023       2022  
Service revenue $ 58,718     $ 55,099     $ 223,813     $ 202,978  
Product revenue   82,022       95,367       348,612       344,678  
Total revenue   140,740       150,466       572,425       547,656  
Costs and expenses:              
Cost of services provided (excluding amortization of intangible assets)   40,989       38,705       153,677       130,696  
Cost of products sold (excluding amortization of intangible assets)   56,050       69,536       253,305       259,748  
Selling   5,033       4,463       19,091       16,650  
General and administrative   23,653       26,185       108,227       82,436  
Amortization of intangible assets   8,730       12,224       34,681       30,888  
Other operating expense   3,825       5,814       18,537       54,685  
Goodwill impairment loss         236,005       66,367       236,005  
Operating income (loss) $ 2,460     $ (242,466 )   $ (81,460 )   $ (263,452 )
Other (expense) income:              
Interest expense   (11,268 )     (8,888 )     (43,019 )     (29,704 )
Other income (expense)   1,582       (1,867 )     237       (59,293 )
Loss before income taxes $ (7,226 )   $ (253,221 )   $ (124,242 )   $ (352,449 )
Income tax (expense) benefit   (1,480 )     9,590       19,340       15,187  
Consolidated net loss $ (8,706 )   $ (243,631 )   $ (104,902 )   $ (337,262 )
Less: Net income (loss) attributable to noncontrolling interests   957       525       238       (244 )
Net loss attributable to common shareholders $ (9,663 )   $ (244,156 )   $ (105,140 )   $ (337,018 )
               
Loss per common share              
Net loss attributable to common shareholders:              
Basic $ (0.38 )   $ (9.54 )   $ (4.10 )   $ (13.84 )
Diluted $ (0.38 )   $ (9.54 )   $ (4.10 )   $ (13.84 )
Weighted-average number of common shares outstanding:              
Basic   25,738       25,590       25,641       24,354  
Diluted   25,738       25,590       25,641       24,354  

 
INOTIV, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
 
  As of September 30,
    2023       2022  
       
Assets      
Current assets:      
Cash and cash equivalents $ 35,492     $ 18,515  
Restricted cash         465  
Trade receivables and contract assets, net of allowances for credit losses of $7,446 and $6,268, respectively   87,383       100,073  
Inventories, net   56,102       71,441  
Prepaid expenses and other current assets   33,408       42,483  
Assets held for sale   1,418        
Total current assets   213,803       232,977  
       
Property and equipment, net   191,068       186,199  
Operating lease right-of-use assets, net   38,866       32,489  
Goodwill   94,286       157,825  
Other intangible assets, net   308,428       345,886  
Other assets   10,079       7,524  
Total assets $ 856,530     $ 962,900  
       
Liabilities, shareholders’ equity and noncontrolling interest      
Current liabilities:      
Accounts payable $ 32,564     $ 28,695  
Accrued expenses and other liabilities   25,776       35,801  
Revolving credit facility         15,000  
Fees invoiced in advance   55,622       68,642  
Current portion of long-term operating lease   10,282       7,982  
Current portion of long-term debt   7,950       7,979  
Total current liabilities   132,194       164,099  
Long-term operating leases, net   29,614       24,854  
Long-term debt, less current portion, net of debt issuance costs   369,795       330,677  
Other long-term liabilities   6,373       6,477  
Deferred tax liabilities, net   50,064       77,027  
Total liabilities   588,040       603,134  
       
Shareholders’ equity and noncontrolling interest:      
Common shares, no par value:      
Authorized 74,000,000 shares at September 30, 2023 and September 30, 2022; 25,777,169 issued and outstanding at September 30, 2023 and 25,598,289 at September 30, 2022   6,406       6,362  
Additional paid-in capital   715,696       707,787  
Accumulated deficit   (453,278 )     (348,277 )
Accumulated other comprehensive income (loss)   330       (5,500 )
Total equity attributable to common shareholders   269,154       360,372  
Noncontrolling interest   (664 )     (606 )
Total shareholders’ equity and noncontrolling interest   268,490       359,766  
Total liabilities and shareholders’ equity and noncontrolling interest $ 856,530     $ 962,900  

 
INOTIV, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
  Fiscal Years Ended September 30
    2023       2022  
Operating activities:      
Consolidated net loss $ (104,902 )   $ (337,262 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities, net of acquisitions:      
Depreciation and amortization   54,717       49,324  
Employee stock compensation expense   7,844       24,202  
Changes in deferred taxes   (25,810 )     (17,835 )
Provision for expected credit losses   1,273       1,306  
Amortization of debt issuance costs and original issue discount   3,182       2,257  
Noncash interest and accretion expense   6,284       5,316  
Loss on fair value remeasurement of embedded derivative         56,714  
Other non-cash operating activities   (200 )     1,658  
Goodwill impairment loss   66,367       236,005  
Non-cash amortization of inventory fair value step-up   679       10,246  
Non-cash restructuring costs   1,493       3,129  
Changes in operating assets and liabilities:      
Trade receivables and contract assets   9,550       (23,838 )
Inventories   14,011       (35,198 )
Prepaid expenses and other current assets   11,249       (20,054 )
Operating lease right-of-use assets and liabilities, net   884       824  
Accounts payable   5,963       (8,042 )
Accrued expenses and other liabilities   (8,339 )     14,662  
Fees invoiced in advance   (12,907 )     25,962  
Other asset and liabilities, net   (3,455 )     5,407  
Net cash provided by (used in) operating activities   27,883       (5,217 )
       
Investing activities:      
Capital expenditures   (27,503 )     (36,300 )
Proceeds from sale of equipment   1,115       290  
Cash paid for other investing activities   (2,367 )      
Cash paid for acquisitions         (297,712 )
Net cash used in investing activities   (28,755 )     (333,722 )
       
Financing activities:      
Payments of long-term debt         (36,777 )
Payments of debt issuance costs   (77 )     (10,067 )
Payments on promissory notes   (2,091 )     (2,166 )
Payments on revolving credit facility   (21,000 )     (19,000 )
Payments on senior term notes and delayed draw term loans   (2,070 )     (1,800 )
Borrowings on revolving loan facility   6,000       34,000  
Borrowings on senior term notes and delayed draw term loans   35,000       240,000  
Proceeds from exercise of stock options   110       118  
Other, net         (1,157 )
Net cash provided by financing activities   15,872       203,151  
       
Effect of exchange rate changes on cash and cash equivalents   1,512       (2,156 )
       
Net increase (decrease) in cash and cash equivalents   16,512       (137,944 )
Cash, cash equivalents, and restricted cash at beginning of period   18,980       156,924  
Cash, cash equivalents, and restricted cash at end of period $ 35,492     $ 18,980  
       
Noncash financing activity:      
Paid in kind debt issuance costs $ 1,363     $  
Seller financed acquisition $     $ 6,888  
       
Supplemental disclosure of cash flow information:      
Cash paid for interest $ 35,459     $ 17,063  
Income taxes paid, net $ 7,146     $ 479  

 
INOTIV, INC.
RECONCILIATION OF GAAP TO NON-GAAP
SELECT BUSINESS SEGMENT INFORMATION
(In thousands)
(Unaudited)
 
  Three Months Ended
September 30
  Fiscal Years Ended
September 30,
  2023     2022     2023     2022  
DSA              
Revenue 50,216     44,186     185,090     165,289  
Operating income (loss) 6,768     (635 )   15,246     22,330  
Operating income (loss) as a % of total revenue 4.8 %   (0.4 %)   2.7 %   4.1 %
Add back:              
Depreciation and amortization 4,545     4,157     16,371     13,553  
Restructuring costs         97      
Startup costs 1,291     1,525     6,858     5,687  
Total non-GAAP adjustments to operating income 5,836     5,682     23,326     19,240  
Non-GAAP operating income 12,604     5,047     38,572     41,570  
Non-GAAP operating income as a % of DSA revenue 25.1 %   11.4 %   20.8 %   25.1 %
Non-GAAP operating income as a % of total revenue 9.0 %   3.4 %   6.7 %   7.6 %
               
RMS              
Revenue 90,524     106,280     387,335     382,367  
Operating income (loss) 11,757     (223,890 )   (24,904 )   (189,346 )
Operating income (loss) as a % of total revenue 8.4 %   (148.8 %)   (4.4)%   (34.6 %)
Add back:              
Depreciation and amortization 9,997     13,300     38,288     35,771  
Restructuring costs 1,317     3,703     4,529     8,564  
Amortization of inventory step up 116     207     679     10,246  
Other unusual, third party costs 806     (1,099 )   3,958     211  
Goodwill impairment loss     236,005     66,367     236,005  
Total non-GAAP adjustments to operating income (loss) 12,236     252,116     113,821     290,797  
Non-GAAP operating income 23,993     28,226     88,917     101,451  
Non-GAAP operating income as a % of RMS revenue 26.5 %   26.6 %   23.0 %   26.5 %
Non-GAAP operating income as a % of total revenue 17.0 %   18.8 %   15.5 %   18.5 %
               
Unallocated Corporate Operating Expenses (16,065 )   (17,941 )   (71,802 )   (96,436 )
Unallocated corporate operating expenses as a % of total revenue (11.4)%   (11.9)%   (12.5)%   (17.6)%
Add back:              
Depreciation and amortization 58         58      
Stock option expense 1,988     1,917     7,844     28,974  
Acquisition and integration costs 35     1,544     1,228     16,119  
Other unusual, third party costs         572      
Total non-GAAP adjustments to operating loss 2,081     3,461     9,702     45,093  
Non-GAAP operating loss (13,984 )   (14,480 )   (62,100 )   (51,343 )
Non-GAAP operating loss as a % of total revenue (9.9)%   (9.6)%   (10.8)%   (9.4)%
               
Total              
Revenue 140,740     150,466     572,425     547,656  
Operating income (loss) 2,460     (242,466 )   (81,460 )   (263,452 )
Operating income (loss) as a % of total revenue 1.7 %   (161.1 %)   (14.2)%   (48.1)%
Add back:              
Depreciation and amortization 14,600     17,457     54,717     49,324  
Stock compensation expense 1,988     1,917     7,844     28,974  
Restructuring costs 1,317     3,703     4,626     8,564  
Acquisition and integration costs 35     1,544     1,228     16,119  
Amortization of inventory step up 116     207     679     10,246  
Startup costs 1,291     1,525     6,858     5,687  
Other unusual, third party costs 806     (1,099 )   4,530     211  
Goodwill impairment loss     236,005     66,367     236,005  
Total non-GAAP adjustments to operating income/(loss) 20,153     261,259     146,849     355,130  
Non-GAAP operating income 22,613     18,793     65,389     91,678  
Non-GAAP operating income as a % of total revenue 16.1 %   12.5 %   11.4 %   16.7 %

 
INOTIV, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA
(In thousands)
(Unaudited)
 
  Three Months Ended
September 30
  Fiscal Years Ended
September 30,
    2023       2022       2023       2022  
GAAP Consolidated net loss $ (8,706 )   $ (243,631 )   $ (104,902 )   $ (337,262 )
Adjustments (a):              
Interest expense   11,268       8,888       43,019       29,704  
Income tax expense (benefit)   1,480       (9,590 )     (19,340 )     (15,187 )
Depreciation and amortization   14,600       17,457       54,717       49,324  
Stock compensation expense (1)   1,988       1,917       7,844       28,974  
Acquisition and integration costs (2)   (145 )     1,544       1,449       16,119  
Startup costs   1,291       1,525       6,858       5,687  
Restructuring costs (3)   1,317       3,703       4,626       8,564  
Unrealized foreign exchange loss   956       1,335       950       754  
Loss on debt extinguishment                     877  
Amortization of inventory step up   116       207       679       10,246  
Loss (gain) on disposition of assets   84       (3 )     403       (234 )
Loss on fair value remeasurement of convertible notes (4)                     56,714  
Other unusual, third party costs   806       (1,099 )     4,530       211  
Gain on sale of subsidiary   (1,377 )           (1,377 )      
Goodwill impairment loss (5)         236,005       66,367       236,005  
Adjusted EBITDA (b) $ 23,678     $ 18,258     $ 65,823     $ 90,496  
GAAP Consolidated net loss as a percent of total revenue (6.2)%   (161.9)%   (18.3)%   (61.6)%
Adjustments as a percent of total revenue   23.0 %     174.1 %     29.8 %     78.1 %
Adjusted EBITDA as a percent of total revenue   16.8 %     12.1 %     11.5 %     16.5 %

(a) Adjustments to certain GAAP reported measures for the three and twelve months ended September 30, 2023 and 2022 include, but are not limited to, the following:
  (1) For the twelve months ended September 30, 2022, $23.0 million relates to post combination non-cash stock compensation expense relating to the adoption of the Envigo Equity Plan recognized in connection with the Envigo acquisition.
  (2) For the three and twelve months ended September 30, 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.
  (3) For the three and twelve months ended September 30, 2023 and 2022, represents costs incurred in connection with the exit of multiple sites as previously disclosed.
  (4) For the twelve months ended September 30, 2022, represents loss of $56.7 million resulting from the fair value remeasurement of the embedded derivative component of the convertible notes.
  (5) For the twelve months ended September 30, 2023, represents a non-cash goodwill impairment charge of $66.4 million related to the RMS segment. For the three and twelve months ended September 30, 2022, represents a non-cash goodwill impairment charge of $236.0 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, loss on debt extinguishment, amortization of inventory step up, gain/loss on disposition of assets, loss on fair value remeasurement of the embedded derivative component of the convertible notes, other unusual third party costs, gain on sale of subsidiary and goodwill impairment loss.

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