Inotiv(US:NOTV)2023-12-12 01:44Revenue and Financial Performance - Revenue for the fiscal year ended September 30, 2023, increased to $572.4 million from $547.7 million in the fiscal year ended September 30, 2022, driven by a $19.8 million, or 12.0%, increase in DSA revenue and a $4.9 million, or 1.3%, increase in RMS revenue [252]. - Consolidated net loss for the twelve months ended September 30, 2023, was $(104.9) million, or (18.3)% of total revenue, compared to a net loss of $(337.3) million, or (61.6)% of total revenue, in the prior year [253]. - DSA revenue for the twelve months ended September 30, 2023, was $185.1 million, an increase of $19.8 million or 12.0% compared to $165.3 million in 2022 [257]. - RMS revenue increased to $387.3 million for the twelve months ended September 30, 2023, up $4.9 million or 1.3% from $382.4 million in 2022, driven by favorable pricing despite lower sales volumes [261]. - Consolidated net loss for the fiscal year ended September 30, 2023, was $104.9 million, a significant improvement from a net loss of $337.3 million in the same period of 2022 [268]. - The company reported an operating loss of $81,460,000 for 2023, compared to an operating loss of $263,452,000 in the previous year [395]. - Basic loss per common share improved to $(4.10) in 2023 from $(13.84) in 2022 [395]. - Consolidated net loss for the fiscal year ended September 30, 2023, was $104.9 million, a significant improvement from a loss of $337.3 million in 2022, representing a reduction of approximately 69.1% [403]. Cash Flow and Liquidity - Cash flows provided by operations were $27.9 million in fiscal year 2023 compared to $(5.2) million in fiscal year 2022 [256]. - Cash and cash equivalents increased to approximately $35.5 million as of September 30, 2023, compared to $18.5 million in 2022, reflecting an increase of $17.0 million [269]. - Cash provided by operations was $27.9 million in fiscal 2023, compared to cash used in operations of $5.2 million in fiscal 2022, driven by decreased working capital [274]. - The company expects existing cash and cash equivalents, along with cash generated from operations, to be sufficient to fund operations for at least the next twelve months [275]. - Cash, cash equivalents, and restricted cash at the end of the period increased to $35.5 million from $19.0 million at the beginning of the period, marking a net increase of $16.5 million [403]. Debt and Financing - Total debt, net of debt issuance costs, as of September 30, 2023, was $377.7 million, with compliance to debt covenants [256]. - The company had no borrowings on its $15.0 million revolving credit facility as of September 30, 2023, compared to $15.0 million in borrowings as of September 30, 2022 [282]. - Total long-term debt as of September 30, 2023, was $369.8 million, an increase from $330.7 million as of September 30, 2022 [280]. - The company drew $35.0 million under the delayed draw term loan in fiscal year 2023, contributing to financing activities [279][283]. - The Company issued $140.0 million principal amount of Convertible Senior Notes on September 27, 2021, with a coupon interest rate of 3.25% per annum, maturing on October 15, 2027 [320]. - For the year ended September 30, 2023, total interest expense was $11.1 million, including coupon interest expense of $4.5 million and accretion expense of $5.7 million [324]. - The Company must appoint a financial advisor and provide a 13-week budget by January 13, 2023, as part of the requirements under the Second Amendment [308]. - The Company has limitations on incurring additional debt and making investments under the Credit Agreement, impacting its financial flexibility [310]. Operational Developments - The expansion activities at Fort Collins, Colorado, were completed by the end of October 2023, with plans to be operational early in the second quarter of fiscal 2024 [240]. - The company completed all planned fiscal year 2023 consolidations and closures, including the closure of the Spain facility as of September 30, 2023 [247]. - The company announced the expansion of its safety pharmacology offering with the validation of a cardiopulmonary telemetry study model in cynomolgus macaques [240]. - The company implemented site optimization strategies, resulting in a workforce reduction of approximately 7% compared to the previous year [273]. - The company resumed limited shipping of Cambodian non-human primates (NHPs) after thorough documentation review and audits, aiming to establish robust procedures for future imports [408]. - The company is focused on expanding its Discovery and Safety Assessment (DSA) segment, which includes drug discovery and development services, to enhance revenue streams [416]. - The company has implemented new testing procedures for importing purpose-bred Cambodian NHPs to meet the needs of drug discovery and development in the U.S. [408]. Asset and Liability Management - Total assets decreased to $856,530,000 in 2023, down from $962,900,000 in 2022, a decline of 11% [393]. - Total liabilities decreased to $588,040,000 in 2023, compared to $603,134,000 in 2022, a reduction of 2.5% [393]. - The company’s accumulated deficit increased to $453,278,000 in 2023 from $348,277,000 in 2022 [400]. - The total equity attributable to common shareholders decreased to $269,154,000 in 2023 from $360,372,000 in 2022 [393]. Revenue Recognition and Accounting Policies - The Company recognizes service revenue over time based on the ratio of direct costs incurred to total estimated direct costs for certain contracts [336]. - Product revenue from DSA includes internally-manufactured scientific instruments and related software, recognized at a point in time when control is transferred to the client [340]. - Revenue from research models includes the commercial production and sale of research models, recognized at the point in time when performance obligations are satisfied [341]. - The Company bills for services on a milestone basis, with revenue recognized over time as work is performed [337]. - Revenue from contract breeding and client-owned animal colony care is recognized over time, while health monitoring and diagnostic services revenue is recognized upon service performance [422]. - Product revenue includes research models, diets and bedding, and bioproducts, recognized at the point in time when performance obligations are satisfied [426]. - The Company maintains allowances for potential credit losses based on client creditworthiness and historical collection patterns [430]. - Trade receivables and contract assets are recorded net of allowances for credit losses, with uncollectible amounts reserved or written off [429]. Market and Economic Factors - The Company does not believe that inflation has had a material adverse effect on its business, operations, or financial condition [331]. - As of September 30, 2023, a one-percentage-point increase in interest rates would lead to an estimated $2.7 million pre-tax reduction in net earnings over a one-year period [362]. - A hypothetical 10% change in foreign exchange rates would affect the cash balance by approximately $0.3 million and revenue by approximately $9.0 million for the twelve months ended September 30, 2023 [365].