DESCRIPTION OF THE BUSINESS

12 Months Ended

Sep. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

DESCRIPTION OF THE BUSINESS

DESCRIPTION OF THE BUSINESS

Inotiv, Inc. and its subsidiaries (“we,” “our,” “us,” "the Company,” “Inotiv”) began operating in 1975 as Bioanalytical Systems, Inc. Bioanalytical Systems, Inc. was incorporated in 1974 and we completed our initial public offering in 2000. On March 18, 2021, the Company filed Articles of Amendment to the Company’s Second Amended and Restated Articles of Incorporation, as amended, and amended its Second Amended and Restated Bylaws, as amended, to reflect a corporate name change from Bioanalytical Systems, Inc. to Inotiv, Inc. Our stock is traded on the Nasdaq Stock Market LLC under the symbol “NOTV.” We are headquartered in West Lafayette, Indiana. Our headquarters mailing address is 2701 Kent Avenue, West Lafayette, Indiana, 47906, and the telephone number at that location is (765) 463-4527. Our Internet site is www.inotiv.com. The information contained on our website is not a part of this Report and is not incorporated by reference herein.

Operational Update

The most significant challenge we faced financially during the fiscal years ended September 30, 2024 and 2023 has been the volatility of sales volumes and margins in our RMS segment, and more specifically, for our NHPs. The preclinical research industry has faced challenges and volatility resulting from the U.S. Attorney’s Office criminally charging a Cambodian government official on alleged charges of conspiracy to illegally import NHPs into the U.S., and the subsequent decline in imports of Cambodian NHPs to the U.S. beginning in late 2022, which the Company has previously disclosed. NHP imports into the U.S. for drug discovery significantly declined from 2022 to 2023. The decrease in overall NHP supply drove an increase in NHP pricing in fiscal 2023. During fiscal 2024, both the cost of obtaining and the sale price of NHPs decreased, which typically result in reduced margins. However, we still have some higher cost NHPs in inventory to sell. Further, we believe that during fiscal 2024 some NHP customers were and may still be working towards reducing some owned inventory and aligning their NHP purchases more closely with their immediate needs rather than purchasing historical levels of NHPs. We also believe the decreased U.S. NHP supply caused some studies to be shifted outside of the U.S. The continued limited supply of NHPs able to be imported into the U.S. has added to the strain of managing the timing of procuring NHPs and delivering NHPs to clients within their required timelines. During fiscal 2024, the sale price of our NHPs decreased in addition to the cost of acquiring them. RMS revenue decreased $76,712 from fiscal 2023 to fiscal 2024, which was primarily driven by a $60,399 decrease in revenue related to NHPs and a decrease in revenue related to the Company’s Israeli businesses (which the Company sold in August of 2023). For fiscal 2024, the reduction in NHP product and service revenues adversely affected our business, financial condition and results of operations.

Although Cambodia has remained closed as a source through fiscal 2024, we have identified and extensively audited multiple additional sources of purpose-bred animals that can be made available for life-saving medical research. While the available supply does not account for the total volume that was previously imported from Cambodia, the additional sources have allowed us to diversify our sourcing of NHPs outside of Cambodia and to satisfy demand at our DSA business segment and to our RMS clients. Further, we believe that we have identified the appropriate supply of NHPs to meet forecasted demand for fiscal 2025. In addition, we have developed, and sourced, novel genetic testing techniques to further bolster our auditing capabilities to determine whether the animals we import are purpose-bred, and we are assessing the ability to introduce these techniques into our supply chain.

Although biotechnology funding in the market increased in the first nine months of calendar 2024, we believe that the reduced biotechnology funding in the market during 2022 and 2023 has continued to influence our clients' spending patterns for early-stage research and development. Additionally, we believe the funding allocation in the market among large biopharmaceutical companies and small to mid-size biotechnology companies, as well as current and expected interest rates, are tempering the speed of the recovery of the discovery services market.