Inotiv(NOTV) - 2021 Q3 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements The unaudited condensed consolidated financial statements for the periods ended June 30, 2021, and 2020, detail the company's financial position, operations, and cash flows Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2021 (In thousands) | September 30, 2020 (In thousands) | | :--- | :--- | :--- | | Total Current Assets | $48,062 | $15,300 | | Total Assets | $171,873 | $61,593 | | Total Current Liabilities | $47,062 | $31,642 | | Total Liabilities | $82,979 | $53,997 | | Total Shareholders' Equity | $88,894 | $7,596 | | Total Liabilities and Shareholders' Equity | $171,873 | $61,593 | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric (In thousands) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $22,892 | $15,765 | $59,529 | $44,695 | | Gross Profit | $7,646 | $5,064 | $19,848 | $13,846 | | Operating Loss | $(1,703) | $(477) | $(2,210) | $(1,692) | | Net Loss | $(2,265) | $(879) | $(3,354) | $(2,893) | | Diluted Net Loss Per Share | $(0.15) | $(0.08) | $(0.27) | $(0.27) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity (In thousands) | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,049 | $1,586 | | Net cash used in investing activities | $(49,054) | $(9,094) | | Net cash provided by financing activities | $64,259 | $9,850 | | Net increase in cash and cash equivalents | $23,254 | $2,342 | | Cash and cash equivalents at end of period | $24,660 | $2,948 | Notes to Condensed Consolidated Financial Statements The notes detail accounting policies and financial data, highlighting a corporate name change, a significant equity offering, major acquisitions, and new debt facilities - On March 18, 2021, the company changed its corporate name from Bioanalytical Systems, Inc, to Inotiv, Inc[16] - On April 23, 2021, the company closed a public offering of 3,044,117 common shares at $17,00 per share, generating net proceeds of approximately $49.0 million[20] - The company operates in two principal segments: Services (contract research) and Products (scientific instruments), with the Services segment being the primary driver of revenue[30][32] - On July 16, 2021, the company received notice that its Paycheck Protection Program (PPP) loan of $4,851 thousand was fully forgiven by the SBA[100] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses significant revenue growth driven by internal expansion and acquisitions, covering operating results, liquidity, capital resources, and recent financing activities Recent Developments and Executive Summary The company pursued growth through acquisitions, facility expansions, and new services, funded by a $49.0 million public stock offering and additional debt financing - Key growth initiatives include the acquisitions of HistoTox Labs and Bolder BioPATH, expansion of the St, Louis facility, and new service offerings[106][112] - Completed an underwritten public offering of common stock, resulting in net proceeds of approximately $49.0 million to support growth initiatives[106][112] - Subsequent to the quarter end, the company acquired assets from MilliporeSigma's BioReliance portfolio and Gateway Pharmacology Laboratories to expand its offerings[111] Results of Operations Financial performance showed significant revenue growth and improved gross margins, though increased operating expenses related to investments and acquisitions led to a higher net loss Q3 FY2021 vs Q3 FY2020 Revenue Comparison | Metric | Q3 2021 (In thousands) | Q3 2020 (In thousands) | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $22,892 | $15,765 | 45.2% | | Service Revenue | $21,924 | $14,852 | 47.6% | | Product Revenue | $968 | $913 | 6.1% | Nine Months FY2021 vs FY2020 Revenue Comparison | Metric | Nine Months 2021 (In thousands) | Nine Months 2020 (In thousands) | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $59,529 | $44,695 | 33.2% | | Service Revenue | $56,858 | $42,185 | 34.8% | | Product Revenue | $2,671 | $2,510 | 6.4% | - Gross profit margin improved from 31.4% to 33.4% for the third quarter and from 30.5% to 33.3% for the nine-month period, reflecting greater capacity utilization[123][128][129] - Operating expenses increased significantly, with General & Administrative expenses rising 69.0% in Q3 and 52.3% in the nine-month period due to investments and acquisition costs[133][147] Liquidity and Capital Resources The company's liquidity strengthened significantly due to a public stock offering and new debt, which funded acquisitions and capital expenditures - Cash and cash equivalents increased to $24,660 thousand at June 30, 2021, from $1,406 thousand at September 30, 2020[151] - Net cash from financing activities was $64.3 million for the nine months ended June 30, 2021, primarily from a $49.0 million public stock offering and $17.1 million in new long-term loans[157][173] - The company entered into an Amended and Restated Credit Agreement with First Internet Bank, which includes multiple term loans and a $5.0 million revolving line of credit[158][163][164] - The company's PPP loan of $4,851 thousand was fully forgiven in July 2021, subsequent to the quarter's end[171] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Inotiv, Inc, is not required to provide the information for this item - The company is a smaller reporting company and is not required to provide the information required by this Item[177] Item 4. Controls and Procedures Management evaluated and concluded that the company's disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2021[179] - There were no material changes in internal control over financial reporting during the third quarter of fiscal 2021[180] PART II OTHER INFORMATION Item 1. Legal Proceedings No material changes to the company's legal proceedings were reported during the third quarter of fiscal 2021 - No material changes to legal proceedings were reported for the third quarter of fiscal 2021[181] Item 1A. Risk Factors Key risks include challenges in integrating recent acquisitions, potential share price dilution from future stock sales, and constraints from increased indebtedness - The company faces risks in integrating the HistoTox Labs and Bolder BioPATH acquisitions, including retaining key personnel and realizing anticipated synergies[184][188] - Future sales of a substantial number of common shares, including the 1,588,235 shares issued in the Bolder BioPATH merger, could cause the stock price to decline[184][185] - The company has incurred significant additional debt, which may impair its ability to raise further capital or service its existing debt obligations[187][189] - The company may need to raise additional capital, which may not be available on reasonable terms, potentially hindering growth[190][191][192] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including key agreements and required officer certifications - Exhibits filed include the Amended and Restated Credit Agreement, acquisition agreements for HistoTox Labs and Bolder BioPATH, and required officer certifications[194]