Inotiv reported Q3 2024 total revenue of $105.8 million, down 32.8% year over year and 11.1% quarter over quarter, as lower NHP volumes and pricing collided with a divestiture of Israeli operations and softer safety/discovery services. The company posted an adjusted EBITDA of roughly breakeven in Q3 and a net loss of $26.1 million, reflecting continued headwinds in the RMS and NHP segments, including material inventory costs from higher-cost NHPs and lingering price pressure in the DSA business. Management conveyed a path to near-term improvement driven by a rebound in NHP volumes in Q4 2024 (projected to be substantially higher than Q3, potentially 120%-130% higher), together with ongoing cost reductions and capacity optimization aimed at reducing variability in NHP supply and expanding long-term, recurring contracts beginning in calendar year 2025.
Management commentary highlights progress on several strategic fronts: resolution of the Virginia DOJ settlement and the Southern District of Florida inquiry (which is expected to reduce legal costs in coming quarters); UK Hillcrest completion and RMS consolidation; transportation optimization leading to faster response times and better customer experience; and diversification of the customer base with no single customer representing more than 10% of sales. However, the firm faces several near-term pressures, including lingering NHP pricing headwinds (NHP prices down about 35%-40% versus late-2023), elevated costs for older NHP inventories, and a depressed RMS margin backdrop due to historical NHP volatility. The company withdrew fiscal 2024 guidance and signaled that 2025 guidance will be provided once market visibility improves.
Overall, the investment thesis rests on a potential mid-2025 recovery in NHP volumes, a transition to long-term, recurring RMS contracts, and incremental DSA margin expansion from the ramp of newer service lines (genetic toxicology and biotherapeutic bioanalysis). Inotiv remains smaller than many peers and carries meaningful leverage and liquidity risk, underscoring the importance of execution in cost takeout, capacity management, and contract stabilization for meaningful upside.