Inotiv, Inc. (NASDAQ: NOTV) (the “Company”, “We”, “Our” or
“Inotiv”), 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
(“Q2 FY 2022”) and six months (“H1 FY 2022”) ended March 31, 2022.
Q2 FY 2022 Highlights
- Revenue grew 646.3% to $140.3
million, from $18.8 million during the three months ended March 31,
2021 (“Q2 FY 2021”), driven by $30.6 million in accretive sales
from internal growth initiatives and $90.9 million from incremental
revenue from the acquisitions of HistoTox Labs, Inc. (“HistoTox
Labs”), Bolder BioPATH, Inc. (“Bolder BioPATH”), Gateway
Pharmacology Laboratories LLC (“Gateway Pharmacology”), Plato
BioPharma, Inc. (“Plato BioPharma”), Envigo RMS Holding Corp.
(“Envigo”), Robinson Services, Inc. (“RSI”), BioReliance
Corporation (“BRC”), Integrated Laboratory Systems Holdings, LLC
(“ILS”) and Orient BioResource Center, Inc. (“OBRC”).
- Gross profit increased 609.5% to
$44.7 million, from $6.3 million in Q2 FY 2021, primarily
reflecting additional gross profit from acquisitions.
- Operating income totaled $7.9
million, compared to an operating loss of $(0.5) million in Q2 FY
2021, reflecting higher gross profit on higher revenue, partially
offset by an increase in operating expenses and higher strategic
investment in unallocated corporate general and administrative
(“G&A”) expense.
- Net loss attributable to common
shareholders was $(6.1) million, or (4.3)% of total revenue, and
$(0.24) per basic and diluted share, compared to a net loss of
$(0.7) million, or (3.7)% of total revenue, and $(0.06) per basic
and diluted share, in Q2 FY 2021.
- Adjusted EBITDA increased 1,846.2%
to $25.3 million or 18.0% of total revenue, from $1.3 million or
6.9% of total revenue in Q2 FY 2021.
- Book-to-bill ratio was 1.52x for
the DSA services business for the three months ended March 31,
2022. In Q2 FY 2022, during which we had a record quarter of
requests for quotes and sales awards.
- DSA backlog was $133.6 million at
March 31, 2022, up 27.7% compared to $104.6 million at December 31,
2021, and up 147.9% from $53.9 million at March 31, 2021.
H1 FY 2022 Highlights
- Revenue grew 513.4% to $224.5
million, from $36.6 million during the six months ended March 31,
2021 (“H1 FY 2021”), driven by $40.2 million in accretive sales
from internal growth initiatives and $147.7 million from
incremental revenue from the acquisitions of HistoTox Labs, Boulder
BioPATH, Gateway Pharmacology, Plato BioPharma, Envigo, RSI, BRC,
ILS, and OBRC. RMS revenue in H1 FY 2022 reflected one partial and
one full quarter contribution from Envigo, which was acquired on
November 5, 2021.
- Gross profit increased 425.4% to
$64.1 million, from $12.2 million in H1 FY 2021, primarily
reflecting additional gross profit from acquisitions.
- Operating loss totaled $(25.8)
million, compared to operating loss of $(0.5) million in H1 FY
2021, reflecting an increase in operating expenses, which more than
offset higher gross profit on higher revenue.
- Net loss attributable to common
shareholders was $(89.1) million, or (39.7)% of revenue, and
$(3.84) per basic and diluted share, compared to a net loss of
$(1.1) million, or (3.0)% of revenue, and $(0.10) per basic and
diluted share, in H1 FY 2021.
- Adjusted EBITDA increased 1,157.1%
to $35.2 million, or 15.7% of total revenue, from $2.8 million, or
7.6% of total revenue in H1 FY 2021.
- Book-to-bill ratio was 1.64x for
the DSA services business for the six months ended March 31,
2022.
Significant Events during Q2 FY
2022
- On January 4, 2022, the Company
announced a collaboration with Synexa Life Sciences, a world leader
in clinical biomarker and bioanalysis research services, that will
accelerate the Company’s development of biomarkers essential to the
understanding of safety and efficacy of novel biotherapeutics,
enhancing the Company’s core preclinical DSA services.
- On January 10, 2022, the Company
announced the purchase of ILS, a contract research organization
(“CRO”), located in Morrisville, North Carolina, specializing in
genetic toxicology, in vivo and in vitro toxicology, pathology,
molecular biology, bioinformatics and computational toxicology
services. Transaction consideration totaled $56.0 million,
consisting of: $38.0 million in cash and 429,118 the Company’s
common shares having a value of $18.0 million based on the volume
weighted average closing price of Company shares as reported by
NASDAQ for the twenty trading-day period ending on January 6, 2022.
ILS operates in two leased facilities with a total of 50,000 square
feet, including a vivarium that is accredited by the Association
for Assessment and Accreditation of Laboratory Animal Care, and
recognized revenue of approximately $20.0 million in 2021.
- On January 10, 2022, the Company
borrowed the full amount of its existing $35.0 million delayed draw
term loan facility (the "DDTL") under its credit agreement dated
November 5, 2021, to fund the purchase of ILS.
- On January 27, 2022, the Company
announced the purchase of OBRC, from Orient Bio, Inc., a
preclinical CRO and animal model supplier based in Seongnam, South
Korea. OBRC is a primate quarantine and holding facility located
near Alice, Texas. Consideration for the OBRC stock consisted of
$28.2 million in cash, subject to certain adjustments, and 677,339
of the Company's common shares. As part of the purchase
consideration, the Company agreed to leave in place a payable owed
by OBRC to the Seller in the amount of $3.7 million, which the
Company determined to have a fair value of $3.3 million as of
January 27, 2022. The payable will not bear interest and is
required to be paid to the Seller on the date that is 18 months
after the closing.
- In connection with the purchase of
OBRC, the Company entered into a first amendment to its existing
credit agreement on January 27, 2022. The amendment provides for,
among other things, an increase to the existing term loan facility
in the original principal amount of $40.0 million (“Incremental
Term Loans”) and a new DDTL 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 DDTL.
- As part of the Company’s ongoing
strategy to invest in building an executive management team, the
Company successfully recruited Fernanda Beraldi as General Counsel
and Corporate Secretary, and Mo Dastagir as Chief Technology
Officer, during Q2 FY 2022. In addition, we filled critical open
positions in the scientific team, veterinarian staff, sales,
marketing, client experience, finance, technology, human resources
and accounting teams to support future growth and continued
improvements across both segments.
- The Company continued commitment to
upgrade and expand facilities and infrastructure through investing
capital of $9.5M Q2 FY 2022 (6.8% of revenue) bringing total H1 FY
2022 capital expenditures to $15.2 million (6.8% of revenue).
Subsequent Events
- On April 25,
2022, the Company announced the purchase of Histion, LLC
(“Histion”), a CRO that provides histology operations for
highly-specialized plastics and medical device pathology. The
acquisition is a strategic element of the Company’s expansion of
its specialized pathology services in the DSA segment.
Robert Leasure, Jr., the Company's President and
Chief Executive Officer, commented, “In the second quarter of
fiscal 2022, Inotiv achieved exceptional year over year growth in
quoting levels, awards, backlog, revenue and EBITDA, reflecting
strong ongoing demand for our DSA and RMS services and the positive
incremental impact from strategic acquisitions along with internal
growth. We achieved these outstanding results while generating
positive operating cash flow and continuing to make internal growth
investments in our people, services, infrastructure, systems, and
capacity expansion programs. In Q2 FY 2022, we completed the second
phase of our St. Louis expansion, and we are currently hiring
additional talent. We have also initiated DSA capacity expansion in
Rockville, MD, Boulder, CO, Fort Collins, CO, and Morrisville, NC.
For the RMS business, we are in the process of expanding capacity
in North America and Europe. As we complete expansions, we plan to
close two RMS sites and consolidate RSI into other current
facilities by the end of Q1 FY 2023. We also are making significant
investments across the RMS organization to improve infrastructure
and animal welfare.”
Mr. Leasure continued, “We are very encouraged
by recent cross-selling success between our RMS and DSA businesses,
client uptake of our comprehensive preclinical research
capabilities, and Inotiv’s robust backlog and book-to-bill levels.
We are providing guidance for revenue of $290 million in H2 FY 2022
for a total of at least $510 million in fiscal 2022, implying year
over year growth of 30% or more, from expansions and internal
growth on the base of acquisitions we completed over the last six
months of FY 2021. We expect our adjusted EBITDA margin for FY 2022
will not be less than our H1 FY 2022 adjusted EBITDA margin of 15%.
Our integration and optimization of acquired businesses is going
very well and we anticipate additional operating leverage as we
complete our investments and our expansion and consolidation plans.
While Inotiv has become a much larger organization over the last
few years, we remain steadfast in our continued investments and our
emphasis on white glove customer service, which we believe is
paramount for our continued success.”
Q2 FY 2022 Review
Total revenue increased to $140.3 million from
$18.8 million in Q2 FY 2021, driven by a $20.3 million increase in
DSA revenue and $101.2 million of incremental RMS revenue.
|
Revenue (in millions) |
|
|
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
Segment |
|
Q2 FY 2022 |
|
Q2 FY 2021 |
|
Difference |
|
% Change |
|
|
DSA1 |
|
$39.1 |
|
$18.8 |
|
$20.3 |
|
+108.0 |
% |
|
|
RMS |
|
$101.2 |
|
|
- |
|
$101.2 |
|
- |
|
|
|
Total |
|
$140.3 |
|
$18.8 |
|
$121.5 |
|
+646.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
1
includes BASi Products |
|
The acquisitions of HistoTox Labs, Bolder
BioPATH, Gateway Pharmacology, Plato BioPharma, OBRC and ILS added
$12.9 million of incremental service revenue and internal growth
generated $7.4 million of additional service revenue in our DSA
segment during Q2 FY 2022. The acquisitions of Envigo, RSI and OBRC
added $78.0 million of incremental revenue and internal growth
generated $23.2 million of additional revenue to our RMS segment
during Q2 FY 2022.
Total gross profit was $44.7 million, or 31.9%
of revenue, compared to $6.3 million, or 33.5% of revenue, in Q2 FY
2021. The decrease in gross profit as a percent of revenue was
primarily due to the mix of lower margin RMS products relative to
DSA services along with investments made in the DSA business.
|
Gross Profit1 (in millions) |
|
|
|
|
(unaudited) |
|
|
|
(unaudited) |
|
|
|
|
Segment |
|
Q2 FY 2022 |
|
% of Segment Revenue |
|
Q2 FY 2021 |
|
% of Revenue |
|
|
DSA2 |
|
$12.3 |
|
31.5 |
% |
|
$6.3 |
|
33.5 |
% |
|
|
RMS |
|
$32.4 |
|
32.0 |
% |
|
|
- |
|
- |
|
|
|
Total |
|
$44.7 |
|
31.9 |
% |
|
$6.3 |
|
33.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
1
excludes amortization of intangible assets2includes BASi
Products |
|
DSA gross profit for Q2 FY 2022 increased to
$12.3 million, or 31.5% of DSA revenue, from $6.3 million, or 33.5%
of DSA revenue, in Q2 FY 2021. The year over year decrease in gross
profit percentage was due to investing in capacity and capability
to meet increasing customer demand.
RMS gross profit for Q2 FY 2022 was $32.4
million, or 32.0% of RMS revenue. We did not have any RMS gross
profit in the prior year comparable period. There was $2.6 million
of non-cash inventory step-up amortization in Q2 FY 2022, which
negatively impacted the RMS gross profit percentage by 2.6%. RMS
gross profit in Q2 FY 2022 represents a $25.3 million, or a 356.3%,
increase over Q1 FY 2022 driven primarily by the mix of higher
margin research models along with a full quarter of margin from the
Envigo acquisition.
Operating expenses increased by 442.6%, or $30.1
million, in Q2 FY 2022 compared to Q2 FY 2021, due to strategic
investment in unallocated corporate G&A expense to support
additional future revenue growth, which included additional
headcount, recruiting and relocation expense, higher compensation
expense, transaction costs primarily related to the acquisitions of
Robinson, ILS, OBRC and Histion, an increase in sales commissions
due to higher sales awards and an increase in startup costs for
internal investments in 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 Q2 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 $(6.1) million,
or (4.3)% of total revenue, and $(0.24) per basic and diluted
share, compared to a net loss of $(0.7) million, or (3.7)% of total
revenue, and $(0.06) per basic and diluted share, in Q2 FY 2021.
Net loss attributable to common shareholders for Q2 FY 2022
includes income tax expense of $6.7 million due change in the
Company’s forecasted effective tax rate primarily due to the
earnings impact of acquisitions. Income before income taxes was
$0.2 million for Q2 FY 2022.
Adjusted EBITDA increased 1,846.2% to $25.3
million, or 18.0% of total revenue, from $1.3 million, or 6.9% of
total revenue in Q2 FY 2021.
H1 FY 2022 Review
Total revenue increased 513.4% to $224.5 million
from $36.6 million in H1 FY 2021, driven by a $35.3 million
increase in DSA revenue and $152.6 million of incremental RMS
revenue.
|
Revenue (in millions) |
|
|
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
Segment |
|
H1 FY 2022 |
|
H1 FY 2021 |
|
Difference |
|
% Change |
|
|
DSA1 |
|
$71.9 |
|
$36.6 |
|
$35.3 |
|
+96.4 |
% |
|
|
RMS |
|
$152.6 |
|
|
- |
|
$152.6 |
|
- |
|
|
|
Total |
|
$224.5 |
|
$36.6 |
|
$187.9 |
|
+513.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
1
includes BASi Products |
|
The acquisitions of HistoTox Labs, Bolder
BioPATH, Gateway Pharmacology, Plato BioPharma, OBRC and ILS added
$21.0 million of incremental service revenue and internal growth
generated $14.3 million of additional service revenue in the DSA
segment during H1 FY 2022. The acquisitions of Envigo, RSI and OBRC
added $126.6 million of incremental revenue and internal growth
generated $26.0 million of additional revenue to the RMS segment
during H1 FY 2022. RMS revenue in H1 FY 2022 reflected one partial
and one full quarter contribution from Envigo, which was acquired
on November 5, 2021, and a partial quarter of contribution from
OBRC, which was acquired on January 27, 2022.
Total gross profit was $64.1 million, or 28.6%
of revenue, compared to $12.2 million, or 33.3% of revenue, in H1
FY 2021. The decrease in gross profit as a percent of revenue was
due to RMS products that have a lower gross profit as a percent of
revenue compared to DSA services.
|
Gross Profit1 (in millions) |
|
|
|
|
(unaudited) |
|
|
|
(unaudited) |
|
|
|
|
Segment |
|
H1 FY 2022 |
|
% of Segment Revenue |
|
H1 FY 2021 |
|
% of Revenue |
|
|
DSA2 |
|
$24.6 |
|
34.2 |
% |
|
$12.2 |
|
33.3 |
% |
|
|
RMS |
|
$39.5 |
|
25.9 |
% |
|
|
- |
|
- |
|
|
|
Total |
|
$64.1 |
|
28.6 |
% |
|
$12.2 |
|
33.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
1
excludes amortization of intangible assets2includes BASi
Products |
|
DSA gross profit for H1 FY 2022 was $24.6
million, or 34.2% of DSA revenue, compared to $12.2 million, or
33.3% of DSA revenue, in H1 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 H1 FY 2022 was $39.5
million, or 25.9% of RMS revenue. We did not have any RMS gross
profit in the comparable period. There was $6.3 million of non-cash
inventory step-up amortization in H1 FY 2022, which negatively
impacted the RMS gross profit percentage by 4.1%.
Operating expenses increased by 606.8%, or $77.1
million, due to acquisitions including 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 higher strategic investment in unallocated
corporate G&A expense to support additional future revenue
growth, which included recruiting and relocation expense, higher
compensation expense, transaction costs related to the acquisitions
closed in H1 FY 2022 and Histion, an increase in sales commissions
due to higher sales awards and an increase in startup costs for
internal investments in 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 H1 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 $(89.1)
million, or (39.7)% of revenue, and $(3.84) per basic and diluted
share, compared to a net loss of $(1.1) million, or (3.0)% of
revenue, and $(0.10) per basic and diluted share, in H1 FY 2021.
Net loss for H1 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.
Net loss attributable to common shareholders was $(89.1)
million, or (39.7)% of revenue, and $(3.84) per basic and diluted
share, compared to a net loss of $(1.1) million, or (3.0)% of
revenue, and $(0.10)
Adjusted EBITDA increased 1,157.1% to $35.2
million, or 15.7% of total revenue, from $2.8 million or 7.6% of
total revenue in H1 FY 2021.
Cash Provided by Operating Activities
and Financial Condition
As of March 31, 2022, the Company had $47.0
million in cash and cash equivalents and a $0 balance on a $15.0
million revolving credit facility. Total debt as of March 31, 2022
was $337.6 million.
On January 10, 2022, the Company borrowed the
full $35.0 million available on its DDTL facility to fund the
purchase of ILS. 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 DDTL 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 DDTL.
Cash provided by operating activities was $4.0
million for the six months ended March 31, 2022, compared to $4.5
million for the same period last year.
Guidance
The Company is launching annual revenue guidance as follows:
- Revenue of $290 million in H2 FY
2022 for a total fiscal 2022 annual revenue of at least $510
million, implying year over year internal growth of 30% or
more.
- We expect our adjusted EBITDA
margin for FY 2022 will not be less than our H1 FY 2022 adjusted
EBITDA margin of 15%.
Conference Call
Management will host a conference call on
Thursday, May 12, 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:
- (877) 407-9753 (Domestic)(201) 493-6739 (International)
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://services.choruscall.com/mediaframe/webcast.html?webcastid=B2I1ZFbH
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 and six months ended March 31, 2022
and 2021 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, United Kingdom lease liability
reversal benefit, acquisition and integration costs, startup costs,
unrealized 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 contains 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 |
INOTIV, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
March 31, |
|
March 31, |
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
Service revenue |
$ |
49,584 |
|
$ |
17,902 |
|
|
$ |
87,760 |
|
$ |
34,934 |
|
Product revenue |
|
90,729 |
|
|
849 |
|
|
|
136,764 |
|
|
1,702 |
|
Total revenue |
$ |
140,313 |
|
$ |
18,751 |
|
|
$ |
224,524 |
|
$ |
36,636 |
|
Costs and expenses: |
|
|
|
|
|
Cost of services provided |
|
33,305 |
|
|
11,905 |
|
|
|
57,514 |
|
|
23,502 |
|
Cost of products sold |
|
62,282 |
|
|
522 |
|
|
|
102,959 |
|
|
933 |
|
Selling |
|
4,647 |
|
|
880 |
|
|
|
7,385 |
|
|
1,505 |
|
General and administrative |
|
21,347 |
|
|
5,610 |
|
|
|
34,599 |
|
|
10,492 |
|
Amortization of intangible assets |
|
6,414 |
|
|
152 |
|
|
|
9,810 |
|
|
312 |
|
Other operating expense |
|
4,450 |
|
|
203 |
|
|
|
38,030 |
|
|
399 |
|
Operating income (loss) |
$ |
7,868 |
|
$ |
(521 |
) |
|
$ |
(25,773 |
) |
$ |
(507 |
) |
Other income (expense): |
|
|
|
|
|
Interest (expense) |
|
(7,547 |
) |
|
(366 |
) |
|
|
(12,375 |
) |
|
(713 |
) |
Other income (expense) |
|
(139 |
) |
|
179 |
|
|
|
(57,866 |
) |
|
179 |
|
Income (loss) before income taxes |
$ |
182 |
|
$ |
(708 |
) |
|
$ |
(96,014 |
) |
$ |
(1,041 |
) |
Income tax (expense) benefit |
|
(6,846 |
) |
|
(15 |
) |
|
|
5,939 |
|
|
(48 |
) |
Consolidated net (loss) |
$ |
(6,664 |
) |
$ |
(723 |
) |
|
$ |
(90,075 |
) |
$ |
(1,089 |
) |
Less: Net (expense) attributable to noncontrolling interests |
|
(577 |
) |
|
- |
|
|
|
(941 |
) |
|
- |
|
Net (loss) attributable to common shareholders |
$ |
(6,087 |
) |
$ |
(723 |
) |
|
$ |
(89,134 |
) |
$ |
(1,089 |
) |
|
|
|
|
|
|
Loss per common share |
|
|
|
|
|
Net loss attributable to common shareholders: |
|
|
|
|
|
Basic and diluted |
$ |
(0.24 |
) |
$ |
(0.06 |
) |
|
$ |
(3.84 |
) |
$ |
(0.10 |
) |
|
|
|
|
|
|
Weighted-average number of common shares outstanding: |
|
|
|
|
|
Basic and diluted |
|
25,315 |
|
|
11,151 |
|
|
|
23,197 |
|
|
11,083 |
|
|
|
|
|
|
|
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. |
CONDENSED
CONSOLIDATED BALANCE SHEETS |
(In
thousands) |
|
|
|
|
|
|
|
|
|
March 31, |
|
September 30, |
|
|
2022 |
|
|
|
2021 |
|
|
(Unaudited) |
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
47,042 |
|
|
$ |
138,924 |
|
Restricted cash |
|
427 |
|
|
|
18,000 |
|
Trade receivables and contract assets, net of allowances for
doubtful accounts of $4,698 |
|
86,456 |
|
|
|
28,364 |
|
Inventories, net |
|
56,775 |
|
|
|
602 |
|
Prepaid expenses and other current assets |
|
34,883 |
|
|
|
3,129 |
|
Total current assets |
|
225,583 |
|
|
|
189,019 |
|
|
|
|
|
Property and equipment, net |
|
153,179 |
|
|
|
47,978 |
|
Operating lease right-of-use assets, net |
|
23,795 |
|
|
|
8,358 |
|
Goodwill |
|
456,631 |
|
|
|
51,927 |
|
Other intangible assets, net |
|
274,387 |
|
|
|
24,233 |
|
Other assets |
|
5,846 |
|
|
|
341 |
|
Total assets |
$ |
1,139,421 |
|
|
$ |
321,856 |
|
|
|
|
|
Liabilities, shareholders' equity and noncontrolling interest |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
30,805 |
|
|
$ |
6,163 |
|
Accrued expenses and other liabilities |
|
20,690 |
|
|
|
8,968 |
|
Capex line of credit |
|
— |
|
|
|
1,749 |
|
Fees invoiced in advance |
|
70,238 |
|
|
|
26,614 |
|
Current portion on long-term operating lease |
|
5,356 |
|
|
|
1,959 |
|
Current portion of long-term debt |
|
5,339 |
|
|
|
9,656 |
|
Total current liabilities |
|
132,428 |
|
|
|
55,109 |
|
Long-term operating leases, net |
|
18,613 |
|
|
|
6,554 |
|
Long-term debt, less current portion, net of debt issuance
costs |
|
332,274 |
|
|
|
154,209 |
|
Other liabilities |
|
1,913 |
|
|
|
512 |
|
Deferred tax liabilities, net |
|
36,783 |
|
|
|
344 |
|
Total liabilities |
|
522,011 |
|
|
|
216,728 |
|
|
|
|
|
Shareholders’ equity and noncontrolling interest: |
|
|
|
Common shares, no par value: |
|
|
|
Authorized 74,000,000 shares; 25,495,701 issued and outstanding at
March 31, 2022 and 15,931,485 at September 30, 2021 |
|
6,336 |
|
|
|
3,945 |
|
Additional paid-in capital |
|
713,034 |
|
|
|
112,198 |
|
Accumulated deficit |
|
(101,090 |
) |
|
|
(11,015 |
) |
Accumulated other comprehensive loss |
|
(628 |
) |
|
|
— |
|
Total shareholders’ equity |
|
617,652 |
|
|
|
105,128 |
|
Noncontrolling interest |
|
(242 |
) |
|
|
— |
|
Total shareholders’ equity and noncontrolling interest |
|
617,410 |
|
|
|
105,128 |
|
Total liabilities and shareholders’ equity and noncontrolling
interest |
$ |
1,139,421 |
|
|
$ |
321,856 |
|
|
|
|
|
INOTIV, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
March 31, |
|
|
2022 |
|
|
|
2021 |
|
Operating activities: |
|
|
|
Consolidated net (loss) |
$ |
(90,075 |
) |
|
$ |
(1,089 |
) |
Adjustments to reconcile net income (loss) to net cash provided by
operating activities, net of acquisitions: |
|
|
|
Depreciation and amortization |
|
15,866 |
|
|
|
2,154 |
|
Undistributed earnings of noncontrolling interest |
|
777 |
|
|
|
- |
|
Employee stock compensation expense |
|
20,300 |
|
|
|
460 |
|
Changes in deferred taxes |
|
(1,907 |
) |
|
|
- |
|
Provision for doubtful accounts |
|
381 |
|
|
|
72 |
|
Unrealized foreign currency (gain) loss |
|
60 |
|
|
|
9 |
|
Amortization of debt issuance costs and original issue
discount |
|
1,203 |
|
|
|
- |
|
Noncash interest and accretion expense |
|
2,512 |
|
|
|
- |
|
Loss on fair value remeasurement of embedded derivative |
|
56,714 |
|
|
|
- |
|
Other non-cash operating activities |
|
- |
|
|
|
69 |
|
Loss on debt extinguishment |
|
878 |
|
|
|
- |
|
Non-cash amortization of inventory fair value step-up |
|
6,277 |
|
|
|
- |
|
Gain on disposal of property and equipment |
|
(235 |
) |
|
|
(1 |
) |
Financing lease interest expense |
|
1 |
|
|
|
137 |
|
Changes in operating assets and liabilities: |
|
|
|
Trade receivables and contract assets |
|
(8,926 |
) |
|
|
(1,927 |
) |
Inventories |
|
(14,688 |
) |
|
|
(172 |
) |
Prepaid expenses and other current assets |
|
(10,149 |
) |
|
|
178 |
|
Operational lease right-of-use assets and liabilities, net |
|
1,457 |
|
|
|
(31 |
) |
Accounts payable |
|
5,222 |
|
|
|
770 |
|
Accrued expenses and other liabilities |
|
(11,510 |
) |
|
|
66 |
|
Fees invoiced in advance |
|
28,402 |
|
|
|
3,831 |
|
Other asset and liabilities, net |
|
1,467 |
|
|
|
- |
|
Net cash provided by operating activities |
$ |
4,027 |
|
|
$ |
4,526 |
|
|
|
|
|
Investing activities: |
|
|
|
Capital expenditures |
$ |
(15,202 |
) |
|
$ |
(2,427 |
) |
Proceeds from sale of equipment |
|
283 |
|
|
|
2 |
|
Cash paid in acquisitions |
|
(288,702 |
) |
|
|
- |
|
Net cash used in investing activities |
$ |
(303,621 |
) |
|
$ |
(2,425 |
) |
|
|
|
|
Financing activities: |
|
|
|
Payments on finance lease liability |
$ |
- |
|
|
$ |
(207 |
) |
Payments of long-term debt |
|
(37,746 |
) |
|
|
(1,436 |
) |
Payments of debt issuance costs |
|
(9,887 |
) |
|
|
(41 |
) |
Payments on promissory notes |
|
(763 |
) |
|
|
- |
|
Payments on capex lines of credit |
|
(1,749 |
) |
|
|
(135 |
) |
Payments on revolving credit facility |
|
(10,000 |
) |
|
|
- |
|
Payments on senior term notes |
|
(513 |
) |
|
|
- |
|
Payments on delayed draw term loan |
|
(88 |
) |
|
|
- |
|
Borrowings on revolving credit facility |
|
10,000 |
|
|
|
- |
|
Borrowings on construction loans |
|
1,184 |
|
|
|
- |
|
Borrowings on capex lines of credit |
|
- |
|
|
|
387 |
|
Borrowings on delayed draw term loan |
|
35,000 |
|
|
|
- |
|
Proceeds from issuance of senior term notes |
|
205,000 |
|
|
|
- |
|
Proceeds from exercise of stock options |
|
93 |
|
|
|
111 |
|
Net cash provided by (used in) financing activities |
$ |
190,531 |
|
|
$ |
(1,321 |
) |
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
(392 |
) |
|
|
- |
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
(109,455 |
) |
|
|
780 |
|
Cash, cash equivalents, and restricted cash at beginning of
period |
|
156,924 |
|
|
|
1,406 |
|
Cash, cash equivalents, and restricted cash at end of period |
$ |
47,469 |
|
|
$ |
2,186 |
|
|
|
|
|
INOTIV, INC. RECONCILIATION OF GAAP TO
NON-GAAP SELECTED BUSINESS SEGMENT INFORMATION |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
March 31, |
|
March 31, |
|
2022 |
|
2021 |
|
|
2022 |
|
2021 |
|
DSA |
|
|
|
|
|
Revenue |
39,054 |
|
18,751 |
|
|
71,879 |
|
36,636 |
|
Operating income |
3,752 |
|
3,769 |
|
|
9,794 |
|
7,046 |
|
Operating income as a % of total revenue |
2.7% |
|
20.1% |
|
|
4.4% |
|
15.8% |
|
Add back: |
|
|
|
|
|
Depreciation and amortization |
3,417 |
|
1,125 |
|
|
5,958 |
|
2,226 |
|
Start up costs |
1,474 |
|
202 |
|
|
2,431 |
|
362 |
|
Total non-GAAP adjustments to operating income |
4,891 |
|
1,327 |
|
|
8,389 |
|
2,588 |
|
Non-GAAP operating income |
8,643 |
|
5,096 |
|
|
18,183 |
|
9,634 |
|
Non-GAAP operating income as a % of DSA revenue |
22.1% |
|
27.2% |
|
|
25.3% |
|
26.3% |
|
Non-GAAP operating income as a % of total revenue |
6.2% |
|
27.2% |
|
|
8.1% |
|
26.3% |
|
|
|
|
|
|
|
RMS |
|
|
|
|
|
Revenue |
101,259 |
|
N/A |
|
|
152,645 |
|
N/A |
|
Operating income/(loss) |
22,562 |
|
N/A |
|
|
22,642 |
|
N/A |
|
Operating income/(loss) as a % of total revenue |
26.8% |
|
N/A |
|
|
10.1% |
|
N/A |
|
Add back: |
|
|
|
|
|
|
|
Depreciation and amortization |
6,425 |
|
N/A |
|
|
9,908 |
|
N/A |
|
Amortization of inventory step up |
2,609 |
|
N/A |
|
|
6,277 |
|
N/A |
|
Other non-recurring, third party costs |
507 |
|
N/A |
|
|
946 |
|
N/A |
|
Total non-GAAP adjustments to operating income/(loss) |
9,541 |
|
N/A |
|
|
17,131 |
|
N/A |
|
Non-GAAP operating income/(loss) |
32,103 |
|
N/A |
|
|
39,773 |
|
N/A |
|
Non-GAAP operating income/(loss) as a % of RMS revenue |
31.7% |
|
N/A |
|
|
26.1% |
|
N/A |
|
Non-GAAP operating income/(loss) as a % of total revenue |
22.9% |
|
N/A |
|
|
17.7% |
|
N/A |
|
|
|
|
|
|
|
Unallocated Corporate G&A |
(18,445 |
) |
(4,290 |
) |
|
(58,209 |
) |
(7,553 |
) |
Unallocated corporate G&A as a % of total revenue |
-13.1% |
|
-22.9% |
|
|
-25.9% |
|
-20.6% |
|
Add back: |
|
|
|
|
|
Stock option expense |
1,141 |
|
279 |
|
|
25,073 |
|
460 |
|
United Kingdom lease liability reversal benefit |
- |
|
(179 |
) |
|
- |
|
(179 |
) |
Acquisition and integration costs |
2,085 |
|
229 |
|
|
10,893 |
|
229 |
|
Total non-GAAP adjustments to unallocated corporate G&A |
3,226 |
|
329 |
|
|
35,966 |
|
510 |
|
Non-GAAP unallocated corporate G&A |
(15,219 |
) |
(3,961 |
) |
|
(22,243 |
) |
(7,043 |
) |
Non-GAAP unallocated corporate G&A as a % of total revenue |
-10.8% |
|
-21.1% |
|
|
-9.9% |
|
-19.2% |
|
|
|
|
|
|
|
Total |
|
|
|
|
|
Revenue |
140,313 |
|
18,751 |
|
|
224,524 |
|
36,636 |
|
Operating (loss) |
7,869 |
|
(521 |
) |
|
(25,773 |
) |
(507 |
) |
Operating (loss) as a % of total revenue |
5.6% |
|
-2.8% |
|
|
-11.5% |
|
-1.4% |
|
Add back: |
|
|
|
|
|
Depreciation and amortization |
9,842 |
|
1,125 |
|
|
15,866 |
|
2,190 |
|
Stock option expense |
1,141 |
|
279 |
|
|
25,073 |
|
460 |
|
United Kingdom lease liability reversal benefit |
- |
|
(179 |
) |
|
- |
|
(179 |
) |
Acquisition and integration costs |
2,085 |
|
229 |
|
|
10,893 |
|
229 |
|
Amortization of inventory step up |
2,609 |
|
- |
|
|
6,277 |
|
- |
|
Start up costs |
1,474 |
|
202 |
|
|
2,431 |
|
362 |
|
Other non-recurring, third party costs |
507 |
|
- |
|
|
946 |
|
- |
|
Total non-GAAP adjustments to operating (loss) |
17,658 |
|
1,656 |
|
|
61,486 |
|
3,062 |
|
Non-GAAP operating income |
25,527 |
|
1,135 |
|
|
35,713 |
|
2,555 |
|
Non-GAAP operating income as a % of total revenue |
18.2% |
|
6.1% |
|
|
15.9% |
|
7.0% |
|
|
|
|
|
|
|
INOTIV, INC. |
RECONCILIATION OF GAAP TO ADJUSTED EBITDA |
(In thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
March 31, |
|
March 31, |
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
GAAP Consolidated net income (loss) |
$ |
(6,664 |
) |
$ |
(723 |
) |
|
$ |
(90,075 |
) |
$ |
(1,089 |
) |
Add back (a): |
|
|
|
|
|
Interest expense |
|
7,547 |
|
|
366 |
|
|
|
12,375 |
|
|
713 |
|
Income taxes (benefit) expense |
|
6,846 |
|
|
15 |
|
|
|
(5,939 |
) |
|
48 |
|
Depreciation and amortization |
|
9,842 |
|
|
1,125 |
|
|
|
15,866 |
|
|
2,190 |
|
Stock option expense (1) |
|
1,141 |
|
|
279 |
|
|
|
25,073 |
|
|
460 |
|
United Kingdon lease liability reversal benefit |
|
N/A |
|
|
(179 |
) |
|
|
N/A |
|
|
(179 |
) |
Acquisition and integration costs (2) |
|
2,085 |
|
|
229 |
|
|
|
10,893 |
|
|
229 |
|
Startup costs |
|
1,474 |
|
|
202 |
|
|
|
2,431 |
|
|
362 |
|
Unrealized foreign exchange (gain) loss |
|
(134 |
) |
|
N/A |
|
|
|
60 |
|
|
N/A |
|
Loss on debt extinguishment |
|
N/A |
|
|
N/A |
|
|
|
877 |
|
|
N/A |
|
Amortization of inventory step-up |
|
2,609 |
|
|
- |
|
|
|
6,277 |
|
|
- |
|
Other non-recurring, third party costs |
|
507 |
|
|
- |
|
|
|
946 |
|
|
- |
|
Loss (gain) on disposition of assets |
|
12 |
|
|
- |
|
|
|
(235 |
) |
|
N/A |
|
Loss on fair value remeasurement of convertible notes (3) |
|
N/A |
|
|
N/A |
|
|
|
56,714 |
|
|
N/A |
|
Adjusted EBITDA (b) |
$ |
25,265 |
|
$ |
1,314 |
|
|
$ |
35,263 |
|
$ |
2,734 |
|
|
|
|
|
|
|
(a) |
Adjustments to certain GAAP reported measures for the three and six
months ended March 31, 2022 and 2021 include, but are not limited
to, the following: |
|
(1) |
For the six months ended March 31, 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 months ended March 31, 2022, charges for legal
services, accounting services, travel, and other related activities
in connection with the acquisitions of Envigo, RSI, ILS, OBRC and
Histion. For the six months ended March 31, 2022, charges for legal
services, accounting services, travel, and other related activities
in connection with the acquisitions of Plato BioPharma, Envigo,
RSI, ILS, OBRC and Histion. |
|
(3) |
For the six months ended March 31, 2022, loss of $56.7 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, United Kingdom lease liability reversal benefit,
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/loss on
disposition of assets and loss on fair value remeasurement of the
embedded derivative component of the convertible notes. |
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