Inotiv, Inc. (NOTV) Q4 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call reveals improved financial metrics, including increased revenue, reduced net loss, and enhanced cash from operations, indicating strong operational efficiency. Despite a cybersecurity incident, the company maintained a positive trajectory with significant increases in awards and stable pricing. The Q&A section shows optimistic trends in awards and revenue growth, with stabilized margins and reduced costs. Though management was vague on some risks, the overall sentiment is positive, especially with the optimistic guidance and improved performance. This suggests a potential positive stock price movement over the next two weeks.

Key Financial Performance

Total Revenue (Q4 2025) $138.1 million, an increase of $7.7 million or 5.9% year-over-year. The increase was primarily driven by the DSA segment.

Total Revenue (Fiscal Year 2025) $513 million, an increase of $22.3 million or 4.5% year-over-year. The increase was due to a $14.5 million or 4.7% increase in RMS revenue and a $7.8 million or 4.3% increase in DSA revenue.

DSA Revenue (Q4 2025) $51.6 million, a 15.7% increase year-over-year. The increase was driven by growth in discovery and translational science services, biotherapeutics, general toxicology services, and surgical services.

DSA Revenue (Fiscal Year 2025) $187.9 million, a 4.3% increase year-over-year. The increase was driven by safety assessment services, biotherapeutic services, surgical services, general toxicology, and discovery and translational science services.

RMS Revenue (Q4 2025) $86.5 million, an increase of $700,000 or 0.8% year-over-year. The increase was primarily due to higher NHP products and services revenue.

RMS Revenue (Fiscal Year 2025) $325.1 million, a 4.7% increase year-over-year. The increase was primarily due to higher NHP products and services revenue.

Operating Loss (Q4 2025) $6.8 million, a decrease of $6.4 million from $13.2 million in Q4 2024. The improvement was due to increases in RMS and DSA operating income and a reduction in unallocated corporate expenses.

Operating Loss (Fiscal Year 2025) $30.9 million, a decrease of $55.5 million from $86.4 million in fiscal 2024. The improvement was primarily due to decreased operating expenses and increased revenue.

Adjusted EBITDA (Q4 2025) $11.8 million or 8.5% of total revenue, compared to $5.4 million or 4.1% of total revenue in Q4 2024. The improvement was due to increased revenue and operational efficiencies.

Adjusted EBITDA (Fiscal Year 2025) $34 million or 6.6% of total revenue, compared to $18.2 million or 3.7% of total revenue in fiscal 2024. The improvement was due to increased revenue and operational efficiencies.

Net Loss (Q4 2025) $8.6 million or $0.25 loss per diluted share, compared to $18.9 million or $0.73 loss per diluted share in Q4 2024. The improvement was due to increased revenue and reduced operating expenses.

Net Loss (Fiscal Year 2025) $68.6 million or $2.11 loss per diluted share, compared to $108.4 million or $4.19 loss per diluted share in fiscal 2024. The improvement was due to increased revenue and reduced operating expenses.

Cash from Operations (Q4 2025) $14.3 million, compared to a cash balance of $6.2 million at June 30, 2025. The increase was driven by changes in operating assets and liabilities, including NHP customer deposits.

Capital Expenditures (Q4 2025) $2.7 million or 1.9% of total revenue, compared to $5.3 million or 4.1% of revenue in Q4 2024. The decrease was due to reduced spending on capital projects.

Capital Expenditures (Fiscal Year 2025) $16.6 million or 3.2% of total revenue, compared to $22.3 million or 4.5% of revenue in fiscal 2024. The decrease was due to reduced spending on capital projects.

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Operating Highlights

DSA Revenue Growth: DSA revenue increased by 15.7% in Q4 2025 compared to Q4 2024, driven by discovery and translational science services, biotherapeutics, general toxicology services, and surgical services.

New Service Lines: Strong growth in biotherapeutics, medical devices, and genetic toxicology services, which were started or expanded in recent years.

Market Expansion in Discovery Business: Discovery business awards increased by 55% year-over-year in Q4 2025.

RMS Site Consolidation: Closed one of three planned RMS facilities in October 2025, with two remaining. Expected annual savings of $6-7 million upon completion.

IT System Reduction: Reduced IT systems from 249 in early 2022 to 162 by October 2025, streamlining operations and enhancing technology.

North American Transportation Fleet: Achieved a 24% reduction in fleet size, leading to cost savings and a 55% reduction in RMS client complaints over two years.

Debt Refinancing: Engaged Perella Weinberg Partners to explore debt refinancing alternatives to improve the balance sheet.

CRM System Integration: Integrated multiple systems into one CRM solution in October 2025, enhancing operational efficiency and customer communication.

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Risk or Challenges

Cybersecurity Incident: A cybersecurity incident caused disruption to certain business operations, impacting financial results for the quarter. The company had to work through challenges to restore network and system availability.

Debt Refinancing: The company is exploring potential debt refinancing alternatives to improve its balance sheet, indicating financial pressures and the need for restructuring.

Geopolitical and Macroeconomic Risks: The CEO highlighted ongoing geopolitical and macroeconomic conditions as risks and uncertainties likely to impact the industry and the company.

RMS Site Consolidation: The company is undergoing a site consolidation project, which involves closing facilities and capital investments. While aimed at cost savings, this could pose operational challenges during the transition.

Interest Expense: Interest expenses increased significantly due to noncash interest related to second lien notes and revolving credit facility growth, adding financial strain.

Client Demand and Market Clarity: The company is not providing fiscal 2026 guidance due to uncertainties in market and client demand, reflecting potential challenges in forecasting and planning.

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Guidance & Outlook

DSA Revenue and Awards Growth: The company has observed a significant increase in DSA revenue and awards over the last three quarters, with trends continuing into the first two months of the current quarter compared to the same period in the prior year. DSA revenue increased by 15.7% year-over-year in Q4 2025, and awards increased by approximately 61%. The company expects further opportunities for DSA margin improvement in the future.

RMS Site Consolidation: The company is on track with Phase 2 of its RMS site consolidation project, which is expected to result in annual savings of $6 million to $7 million. The project involves closing older facilities and modernizing existing ones, with the potential to increase production capacity in the future as needed. The company has closed one of the three planned RMS facilities and expects to close a total of 13 facilities by the end of the project.

Debt Refinancing: The company is actively exploring potential debt refinancing alternatives with the assistance of Perella Weinberg Partners, aiming to improve its balance sheet. Updates will be provided as discussions progress.

North American Transportation Fleet Optimization: The company expects to achieve a 24% reduction in its North American transportation fleet by the second quarter of fiscal 2026, yielding cost savings and improved delivery and client satisfaction.

CRM System Integration: The company has transitioned its commercial operations to a new CRM system, consolidating multiple systems into one. This is expected to result in cost savings, operational efficiencies, and improved internal and customer communication.

Market and Economic Conditions: The company acknowledges ongoing geopolitical and macroeconomic risks and uncertainties that are likely to persist in the industry for the foreseeable future.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:What were the headwinds faced during the quarter and their impact on revenue and expenses?

A:The major headwind was a cybersecurity incident in early August, which led to overtime, communication costs, third-party costs, and some rework. While the tangible costs were quantifiable, intangible costs like operational toll and customer hesitancy were harder to measure. Despite this, the company achieved a 63% increase in awards and $54 million in awards, which exceeded expectations. The incident had an impact on earnings and expenses, but the company recovered quickly and is moving forward positively.

Q:What are the quarter-to-date trends and seasonality effects on revenue?

A:The quarter ending December 30 is typically the weakest due to the holiday season, with fewer working days and reduced activity in research models and diet. Over the last 6 months, the company saw a 12.5% increase in DSA revenue and a 37% increase in awards over 9 months. If the company maintains a 20-30% increase in awards and similar revenue growth, it expects positive future performance. Pricing has stabilized, and industry trends are encouraging.

Q:What is the company's exposure to monoclonal antibodies and the impact of FDA guidance on new approach methodologies?

A:The company's revenue from monoclonal antibodies is minimal, so the FDA guidance on reducing large animal models in toxicology studies has little impact. Customers will make their own safety assessment decisions, and the company has not seen significant changes in demand. The guidance is seen as positive but is not expected to affect the company's operations.

Q:What are the early indications for pharma budgets in 2026?

A:The company has seen an increase in quoting and bookings, with a growing recurring customer base. While it is too early to predict 2026 budgets, current trends and the last 9 months' performance suggest optimism for revenue growth next year.

Q:What are the lead times for starting studies in the DSA business?

A:Discovery and smaller animal studies typically start within weeks, while large animal safety assessment studies have a lead time of 3-9 months. The company is operating at high capacity for large animal studies and can generally see out a couple of quarters in terms of capacity usage.

Q:What caused the sequential margin impact in the RMS segment?

A:The RMS margin was impacted by higher costs in the NHP segment due to spot market fluctuations. However, the small animal and diet business margins are improving due to a 60% reduction in sites, which has reduced fixed costs and improved efficiency.

Q:How is the RMS business performing in terms of volume versus price, large versus small animal mix, and models versus services?

A:The small animal and diet business is benefiting from reduced fixed costs and increased volume, leading to improved margins. The Alice, Texas facility is growing in domestic breeding and services, while margins in the NHP segment are influenced by market demand, tariffs, transportation, and quarantine costs. The market has stabilized, reducing volatility in margins.

Q:Review of Unclear Management Responses

A:Management avoided providing specific quantifiable impacts of the cybersecurity incident on earnings and expenses, citing intangible costs and operational tolls as difficult to measure. Additionally, they did not provide concrete predictions for 2026 pharma budgets, stating it was too early to determine.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

NOTV Transcript

Inotiv, Inc. (NOTV) Q4 2025 Earnings Call Transcript

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Inotiv, Inc. (NOTV) Q3 2025 Earnings Call Transcript

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The earnings call presents a mixed sentiment. Financial performance shows positive growth in EBITDA and net new DSA awards, but high interest expenses and declining cash reserves are concerning. The Q&A reveals elevated cancellations and cautious management responses, suggesting uncertainty. Despite growth in new service areas and improved delivery metrics, lack of formal guidance and high cancellations temper optimism. Considering these factors, the stock price reaction is likely to be neutral, with no significant short-term catalysts or market cap information to sway the prediction.

Inotiv, Inc. (NOTV) Q2 2025 Earnings Call Transcript

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The earnings call presents a mixed picture. Financial performance shows improvement with reduced operating loss and increased adjusted EBITDA, but cash flow issues and high debt remain concerns. The Q&A reveals cautious optimism with potential margin improvements and stable NHP revenue growth, but uncertainties like NIH funding impacts and slow customer growth persist. Overall, the balanced positives and negatives suggest a neutral sentiment, indicating limited stock price movement over the next two weeks.

Inotiv, Inc. (NASDAQ:NOTV) Q1 2025 Earnings Call Transcript

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The earnings call reveals mixed signals. The liquidity improvement through equity offering is positive, but the lack of fiscal 2025 guidance is concerning. The Q&A highlights some operational challenges like revenue volatility and project cancellations, offset by improved sales commitments and reduced high-cost NHPs. The overall sentiment is neutral, with no strong catalysts for a significant stock price movement.

NOTV Report

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended September 30 , 2025

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