Inotiv, Inc. Q2 FY2025 earnings call

• RMS Initiatives: Revised the site optimization plan with net annual savings of $6-7M, to be completed by March 2026, 6 months earlier than original plan, with savings expected in Q4 2025. Integrated transportation systems, upgraded facilities, improved efficiencies, and enhanced animal welfare. - DSA Focus: Focus on improving margins; net new orders up, conversion rate improved, cancellations down. - Industry Impacts: Supported FDA goals on reducing animal testing and NAMs role; discussed tariff impacts on NHP sourcing from Asian and African countries. - Integration Efforts: Continues to integrate scientific services to enhance client value, speed, and project management by combining scientific capabilities and improving project delivery.

RMS Segment: For the second quarter of fiscal 2025, RMS revenue increased $6.6 million or 9.1% compared to Q2 of fiscal 2024, totaling $79 million (since total revenue was $124.3M and DSA was $45.3M). The increase was primarily due to higher NHP volumes sold, though average selling price for NHPs was lower year-over-year. DSA Segment: Revenue in Q2 2025 was $45.3 million, down year-over-year due to lower general toxicology services revenue. Net new DSA orders this quarter were $44.5 million, a 27% increase over Q2 of fiscal 2024. Conversion rate was 34.1%, up from 30.1% in the prior year period, and cancellations were 28% lower than the prior year second quarter.

• Expect year-over-year revenue and adjusted EBITDA growth for the next two quarters of fiscal 2025. - Revised RMS optimization plan accelerates implementation and increases savings. - No formal fiscal 2025 guidance yet, but optimistic about progress and will provide guidance when market/clients demand clarity is achieved.

• Geopolitical and macroeconomic uncertainties. - Tariff impacts on NHP sourcing, including potential cost inflation and unknown impacts on client study prioritization. - Potential margin pressures in DSA due to factors like past pricing and higher costs.

Q: Regarding the FDA and NIH announcements, how have you adjusted marketing and what are customer feedbacks?

A: Have been including services like computational toxicology in quotes, customers are becoming educated, but impact not immediate.

Q: Tell us more about the refined RMS optimization plan?

A: Revised plan increases annual savings, accelerates completion to March 2026, allows for efficiency and animal welfare improvements.

Q: How insulated is your customer mix from NIH funding fluctuations?

A: Not seen dramatic impact yet, keeping close eye on government and university sales which make up ~7% of business.

Q: Steps to improve DSA margins?

A: Evaluating factors like past pricing, growth in discovery, and focusing on margins, expecting improvement sooner than later.