Inotiv Q3 FY24 Revenue Declines Due to NHP Sales Drop

Inotiv (ticker: NOTV), a comprehensive contract research organization (CRO), announced a notable decline in its third-quarter revenue for fiscal 2024, with total revenue falling by 33% to $105.8 million.

The revenue drop was mainly due to decreased sales in non-human primates (NHPs) and a reduction in revenue from safety and discovery services. CEO Bob Leasure discussed the challenges the company has faced and the strategic initiatives implemented to streamline operations and minimize costs. Despite these setbacks, the company remains hopeful about its long-term contracts and anticipates improvements in revenue in the upcoming quarters.

### Key Takeaways
– Total revenue for Q3 decreased by 33% to $105.8 million, primarily from lower NHP sales.
– Discovery Services and Applications (DSA) revenue fell by about 6%.
– Research Models and Services (RMS) revenue dropped by 44.4%.
– The operating loss for Q3 was reported at $20.8 million.
– Inotiv is actively working on improving liquidity and strengthening its balance sheet.
– The company expects the full benefit of cost-saving measures to materialize in fiscal 2025.
– Financial guidance for fiscal 2024 has been withdrawn, with plans to provide updates for fiscal 2025 as conditions clarify.
– Legal expenses are projected to decrease by $2-3 million per quarter following the resolution of a DOJ investigation.
– An uptick in NHP sales and margins is anticipated in the fourth quarter and into 2025.

### Company Outlook
– Inotiv plans to minimize investments in the short term until revenue stabilizes.
– The company is optimistic about the NHP market and expects demand to increase as inventory levels return to normal.
– Guidance for fiscal 2025 will be provided once market conditions and customer demand are clearer.

### Bearish Highlights
– The company experienced a significant decline in NHP sales and margins.
– Reduced revenue from safety and discovery services also contributed to the downturn.
– An operating loss of $20.8 million was recorded for the quarter.

### Bullish Highlights
– Inotiv has maintained consistent demand for safety assessment studies over recent years.
– The diet business has shown robust growth with increases in both volume and pricing.
– Long-term contracts are expected to account for a significant portion of sales moving forward.

### Misses
– Financial guidance for fiscal 2024 has been withdrawn due to current market uncertainties.
– There has been a reported decline in sales from the discovery business and DSA products.

### Q&A Highlights
– Inotiv aims for a substantial portion of its sales to come from long-term contracts, focusing on a diversified customer base.
– The company is not planning additional cost reductions beyond current efficiency measures.
– Improvements in transportation, commodity purchasing, and product quality are contributing to growth.

### Conclusion
While Inotiv faces challenges in the short term, the company’s low price-to-book ratio may attract value investors. However, the volatility and lack of profitability could deter those with a lower risk tolerance. Investors will be closely watching Inotiv’s strategic efforts and market recovery signs in the coming months.