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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Inotiv Inc | NASDAQ:NOTV | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.30 | 7.21% | 4.46 | 4.15 | 4.91 | 4.63 | 4.15 | 4.24 | 419,913 | 01:00:00 |
Q1 FY 2022 Highlights
Significant Events during Q1 FY 2022
Subsequent Events
Robert Leasure, Jr., the Company's President and Chief Executive Officer, commented, “Since the start of fiscal 2022, we have continued our momentum building Inotiv into a comprehensive provider of preclinical drug discovery and safety assessment services through our strategic acquisitions of Plato BioPharma and ILS and our collaboration with Synexa Life Sciences. Plato BioPharma brings us important new in vivo pharmacology capabilities, ILS complements our BioReliance® assets and accelerates the buildout of our genetic toxicology offerings, and the partnership with Synexa Life Sciences enhances our biomarker platform. Over the last few years, we’ve significantly broadened and scaled our DSA business, enabling one-stop-shop preclinical programs and quicker speed to market, positioning Inotiv as the primary contract research provider for our growing client base.”
Mr. Leasure continued, “The transformative acquisition of Envigo, which closed in the first quarter of fiscal 2022, established the foundation of our new Research Models and Services business, or RMS. Through Envigo, we secured access to critical research models essential for our clients’ success, further differentiating Inotiv from many of our peers. Following the Envigo acquisition, we took steps to leverage our existing RMS capacity with the acquisition of RSI’s rabbit breeding business and the acquisition of OBRC’s non-human primate facilities, which neighbor our Alice, Texas location. In an environment during which global research model demand outstrips supply, these moves mitigate potential supply bottlenecks as we pursue a multitude of cross-selling and growth opportunities across our integrated services. Finally, this quarter we augmented inorganic growth with another period of strong internal growth, reflecting our focus on delivering superior client experiences and investing in G&A to support new services and expansion. Our quarter-end DSA backlog of $104.6 million reinforces our optimism for continuing robust near-term revenue growth, and over the long-term we believe our strategy will deliver meaningfully higher operating margins as we scale.”
Q1 FY 2022 Review
Total revenue increased 370.4% to $84.2 million from $17.9 million in Q1 FY 2021, driven by a $14.9 million increase in DSA revenue and $51.4 million of incremental RMS revenue.
Revenue (in millions) | ||||||||||||||
(unaudited) | (unaudited) | |||||||||||||
Segment | Q1 FY 2022 | Q1 FY 2021 | Difference | % Change | ||||||||||
DSA1 | $32.8 | $17.9 | $14.9 | +83.2 | % | |||||||||
RMS | $51.4 | - | $51.4 | NM | ||||||||||
Total | $84.2 | $17.9 | $66.3 | +370.4 | % | |||||||||
1 includes BASi Products |
The acquisitions of HistoTox Labs, Bolder BioPATH, Gateway Pharmacology and Plato BioPharma added $10.0 million of service revenue and internal growth generated $4.9 million of service revenue in our DSA segment during Q1 FY 2022. Our acquisition of Envigo contributed $45.1 million of product revenue and $6.3 million of service revenue to our RMS segment during Q1 FY 2022. RMS revenue in Q1 FY 2022 reflected a partial quarter contribution from Envigo, which was acquired on November 5, 2021. We did not have any RMS revenue in the comparable prior year period.
Total gross profit increased to $19.3 million, or 22.9% of revenue, from $5.9 million, or 33.0% of revenue, in Q1 FY 2021. The decrease in the gross profit as a percent of revenue is due to RMS products that have a lower gross profit as a percent of revenue compared to DSA services. There was $3.7 million of non-cash amortization which negatively impacted the gross profit percentage by 4.4%.
Gross Profit1 (in millions) | ||||||||||||||
(unaudited) | (unaudited) | |||||||||||||
Segment | Q1 FY 2022 | % of Segment Revenue | Q1 FY 2021 | % of Revenue | ||||||||||
DSA2 | $12.2 | 37.2 | % | $5.9 | 33.0 | % | ||||||||
RMS | $7.1 | 13.8 | % | - | - | |||||||||
Total | $19.3 | 22.9 | % | $5.9 | 33.0 | % | ||||||||
1 excludes amortization of intangible assets2includes BASi Products |
DSA gross profit for Q1 FY 2022 was $12.2 million, or 37.2% of DSA revenue, compared to $5.9 million, or 33.0% of DSA revenue, in Q1 FY 2021. The year over year increase in gross profit percentage was primarily driven by higher margins on acquisitions of HistoTox Labs, Bolder BioPATH and Gateway Pharmacology and greater utilization of recently expanded capacity.
RMS gross profit for Q1 FY 2022 was $7.1 million or 13.8% of RMS revenue. There was $3.7 million of non-cash amortization which negatively impacted the gross profit percentage by 4.4%. We did not have any RMS gross profit in the comparable period.
Operating expenses increased by 698.3%, or $47.1 million, due to acquisitions and cost increases as the Company continued to build the infrastructure for growth, which included additional headcount, recruiting, relocation expense, post combination non-cash stock compensation expense relating to the adoption of the Envigo Equity Plan recognized in connection with the Envigo acquisition of $23.0 million and investments in building out new service offerings. Additionally, there was an increase in selling expenses due to an increase in travel cost as our sales and marketing teams have traveled more as the COVID-19 pandemic eases and an increase in commissions due to higher sales awards. During Q1 FY 2022, we continued investing in internal capabilities to provide additional service offerings such as laboratory solutions, medical device pathology, biotherapeutics and genetic toxicology.
Net loss attributable to common shareholders was $(83.0) million, or $(3.93) per basic and diluted share, compared to a net loss of $(366,000), or $(0.03) per basic and diluted share, in Q1 FY 2021. Net loss for Q1 FY 2022 includes post combination non-cash stock compensation expense relating to the adoption of the Envigo Equity Plan recognized in connection with the Envigo acquisition of $23.0 million and $56.7 million of fair value remeasurement of the embedded derivative component of the convertible notes issued in September 2021.
Adjusted EBITDA increased 621.4% to $10.1 million or 12.0% of total revenue, from $1.4 million or 7.8% of total revenue in Q1 FY 2021.
Cash Provided by Operating Activities and Financial Condition
As of December 31, 2021, the Company had $42.4 million in cash and cash equivalents, a $0 balance on a $15.0 million revolving credit facility, and a delayed draw term loan facility (the “DDTL”) in the amount of $35.0 million available to be drawn down up to 18 months from the date of the credit agreement which was November 5, 2021. Total debt as of December 31, 2021 was $260.6 million.
On January 10, 2022, the Company borrowed the full amount of its DDTL to fund the purchase of ILS. Amounts outstanding under the DDTL will accrue interest at an annual rate equal to the LIBOR rate plus a margin of between 6.00% and 6.50%, depending on the Company’s then current secured leverage ratio (as defined in the credit agreement). The initial adjusted LIBOR rate of interest is the LIBOR rate of 1.00% plus 6.25% for a total rate of 7.25%.
On January 27, 2022, the Company entered into a first amendment to its existing credit agreement. The amendment provides for, among other things, an increase to the existing term loan facility in the amount of $40.0 million (“Incremental Term Loans”) and a new delayed draw term loan in the amount of $35.0 million, which amount is available to be drawn up to 24 months from the date of the amendment. On January 27, 2022, the Company borrowed the full amount of the Incremental Term Loans, but did not borrow any amounts under the new delayed draw term loan.
Conference Call
Management will host a conference call on Thursday, February 10, 2022, at 4:30 pm ET to discuss first quarter reported results for fiscal year 2022.
Interested parties may participate in the call by dialing:
The live conference call webcast also will be accessible in the Investors section of the Company’s website, and directly via the following link:https://themediaframe.com/mediaframe/webcast.html?webcastid=cXkN5tYP
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 for the three months ended December 31, 2021 and 2020 and selected business segment information for those periods. Adjusted EBITDA as reported herein refers to a financial performance measure that excludes from net income (loss) income statement line items interest expense and income taxes (benefit) expense, as well as non-cash charges for depreciation and amortization, stock option expense, non-recurring acquisition and integration costs, startup costs, foreign exchange losses, loss on debt extinguishment, amortization of inventory step up, gain on disposition of assets, loss on fair value remeasurement of convertible notes and other non-recurring third-party costs. The adjusted business segment information excludes from operating income and unallocated corporate G&A these same expenses.
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 shown in the reconciliation. 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 may contain forward-looking statements that are subject to risks and uncertainties including, but not limited to, risks and uncertainties related to changes in the market and demand for our services and products, the development, marketing and sales of products and services, changes in technology, industry and regulatory standards, the timing of acquisitions and the successful closing, integration and business and financial impact thereof, near-term and long-term growth in revenue and operating margins, the impact of the COVID-19 pandemic on the economy, demand for our services and products and our operations, including the measures taken by governmental authorities to address the pandemic, which may precipitate or exacerbate other risks and/or uncertainties and various other market and operating risks, including those detailed in the Company's filings with the U.S. Securities and Exchange Commission.
Company Contact | Investor Relations |
Inotiv, Inc. | The Equity Group Inc. |
Beth A. Taylor, Chief Financial Officer | Kalle Ahl, CFA |
(765) 497-8381 | (212) 836-9614 |
btaylor@inotivco.com | kahl@equityny.com |
Devin Sullivan | |
(212) 836-9608 | |
dsullivan@equityny.com |
Financial Tables Follow:
INOTIV, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share amounts)(unaudited)
Three Months Ended | |||||||||
December 31, | |||||||||
2021 | 2020 | ||||||||
Service revenue | $ | 38,176 | $ | 17,032 | |||||
Product revenue | 46,035 | 853 | |||||||
Total revenue | 84,211 | 17,885 | |||||||
Costs and expenses: | |||||||||
Cost of services provided (excluding amortization of intangible assets) | 24,209 | 11,597 | |||||||
Cost of products sold (excluding amortization of intangible assets) | 40,677 | 411 | |||||||
Selling | 2,738 | 625 | |||||||
General and administrative | 13,252 | 4,882 | |||||||
Amortization of intangible assets | 3,396 | 160 | |||||||
Other operating expense | 33,580 | 196 | |||||||
Operating income | (33,641 | ) | 14 | ||||||
Other income (expense): | |||||||||
Interest expense | (4,828 | ) | (347 | ) | |||||
Other (expense) income | (57,727 | ) | — | ||||||
Income (loss) before income taxes | (96,196 | ) | (333 | ) | |||||
Provision for income taxes | 12,785 | (33 | ) | ||||||
Consolidated net income (loss) | $ | (83,411 | ) | $ | (366 | ) | |||
Less: Net income (expense) attributable to noncontrolling interests | (364 | ) | — | ||||||
Net income (loss) attributable to common shareholders | (83,047 | ) | (366 | ) | |||||
Earnings per common share | |||||||||
Net income attributable to common shareholders: | |||||||||
Basic and diluted | $ | (3.93 | ) | $ | (0.03 | ) | |||
Weighted-average number of common shares outstanding: | |||||||||
Basic and diluted | 21,124 | 11,016 |
Note – Certain prior quarter amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.
INOTIV, INC.RECONCILIATION OF GAAP TO NON-GAAP EARNINGS(In thousands)(Unaudited)
Three Months Ended | |||||||
December 31, | |||||||
2021 | 2020 | ||||||
GAAP Consolidated net income (loss) | $ | (83, 411 | ) | $ | (366 | ) | |
Add back (a): | |||||||
Interest expense | 4,828 | 347 | |||||
Income taxes (benefit) expense | (12,785 | ) | 33 | ||||
Depreciation and amortization | 6,024 | 1,065 | |||||
Stock option expense (1) | 23,932 | 181 | |||||
Acquisition and integration costs (2) | 8,808 | — | |||||
Startup costs | 957 | 160 | |||||
Foreign exchange losses | 320 | — | |||||
Loss on debt extinguishment | 877 | — | |||||
Amortization of inventory step up | 3,668 | — | |||||
Other non-recurring, third party costs | 439 | — | |||||
Gain on disposition of assets | (249 | ) | — | ||||
Loss on fair value remeasurement of convertible notes (3) | 56,714 | — | |||||
Adjusted EBITDA (b) | $ | 10,122 | $ | 1,420 |
(a) Adjustments to certain GAAP reported measures for the three months ended December 31, 2021 and 2020 include, but are not limited to, the following: |
(1) $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 months ended December 31, 2021, charges for legal services, accounting services, travel, and other related activities in connection with the acquisitions of Plato BioPharma, Envigo and Robinson Services, Inc. (“RSI”). |
(3) For the three ended December 31, 2021, loss of $56,714 resulting from the fair value remeasurement of the embedded derivative component of the convertible notes. |
(b) Adjusted EBITDA - Earnings before interest expense, income taxes (benefit) expense, depreciation and amortization, stock option expense, non-recurring acquisition and integration costs, startup costs, foreign exchange losses, loss on debt extinguishment, amortization of inventory step up, other non-recurring, third party costs, gain on disposition of assets and loss on fair value remeasurement of the embedded derivative component of the convertible notes. |
RECONCILIATION OF GAAP TO NON-GAAP SELECTED BUSINESS SEGMENT INFORMATION | |||||
In thousands | |||||
Unaudited | |||||
Three Months Ended | |||||
December | |||||
2021 | 2020 | ||||
DSA | |||||
Revenue | 32,825 | 17,885 | |||
Operating income | 6,042 | 3,277 | |||
Operating income as a % of total revenue | 7.2 | % | 18.3 | % | |
Add back: | |||||
Depreciation and amortization | 2,541 | 872 | |||
Stock option expense | - | - | |||
Acquisition and integration costs | - | - | |||
Startup costs | 957 | 160 | |||
Other non-recurring, third party costs | - | - | |||
Total non-GAAP adjustments to operating income | 3,498 | 1,032 | |||
Non-GAAP operating income | 9,540 | 4,309 | |||
Non-GAAP operating income as a % of DSA revenue | 29.1 | % | 24.1 | % | |
Non-GAAP operating income as a % of total revenue | 11.3 | % | 24.1 | % | |
RMS | |||||
Revenue | 51,386 | N/A | |||
Operating income/(loss) | 80 | N/A | |||
Operating income/(loss) as a % of total revenue | 0.0 | % | N/A | ||
Add back: | |||||
Depreciation and amortization | 3,483 | N/A | |||
Stock option expense | - | N/A | |||
Acquisition and integration costs | - | N/A | |||
Amortization of inventory step up | 3,668 | N/A | |||
Startup costs | - | N/A | |||
Other non-recurring, third party costs | 439 | N/A | |||
Total non-GAAP adjustments to operating income/(loss) | 7,590 | N/A | |||
Non-GAAP operating income/(loss) | 7,670 | N/A | |||
Non-GAAP operating income/(loss) as a % of RMS revenue | 14.9 | % | N/A | ||
Non-GAAP operating income/(loss) as a % of total revenue | 9.1 | % | N/A |
Unallocated Corporate G&A | (39,764 | ) | (3,263 | ) | |
Unallocated corporate G&A as a % of total revenue | -47.2 | % | -18.2 | % | |
Add back: | |||||
Depreciation and amortization | - | 193 | |||
Stock option expense | 23,932 | 181 | |||
Acquisition and integration costs | 8,808 | - | |||
Other non-recurring, third party costs | - | - | |||
Total non-GAAP adjustments to unallocated corporate G&A | 32,740 | 374 | |||
Non-GAAP unallocated corporate G&A | (7,024 | ) | (2,889 | ) | |
Non-GAAP unallocated corporate G&A as a % of total revenue | -8.3 | % | -16.2 | % | |
Total | |||||
Revenue | 84,211 | 17,885 | |||
Operating (loss) income | (33,642 | ) | 14 | ||
Operating (loss) income as a % of total revenue | -39.9 | % | 0.1 | % | |
Add back: | |||||
Depreciation and amortization | 6,024 | 1,065 | |||
Stock option expense | 23,932 | 181 | |||
Acquisition and integration costs | 8,808 | - | |||
Amortization of inventory step up | 3,668 | - | |||
Startup costs | 957 | 160 | |||
Other non-recurring, third party costs | 439 | - | |||
Total non-GAAP adjustments to operating (loss) | 43,828 | 1,406 | |||
Non-GAAP operating income | 10,186 | 1,420 | |||
Non-GAAP operating income as a % of total revenue | 12.1 | % | 7.9 | % |
1 Year Inotiv Chart |
1 Month Inotiv Chart |
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