Q2 FY 2021 Highlights
- Revenue grew 17.1% to
$18.8 million , from$16.0 million during the three months endedMarch 31, 2020 (“Q2 FY 2020”), driven by internal growth. - Gross profit increased 20.9% to
$6.3 million , from$5.2 million in Q2 FY 2020, reflecting higher revenue and a 106 basis point expansion in gross margin to 33.59%. - Operating loss totaled
$(521,000) , compared to an operating loss of$(195,000) in Q2 FY 2020, reflecting higher gross profit on higher revenue, more than offset by a 262 basis point increase in operating expenses as a percent of revenue. The increase in operating expenses reflects higher strategic investment in unallocated corporate general and administrative expense (“G&A”) to support additional future revenue growth, which included recruiting and relocation expense, higher compensation expense, including non-cash stock compensation, new systems and transaction costs related to theHistoTox Labs, Inc. (“HistoTox Labs”) andBolder BioPATH, Inc. (“Bolder BioPATH”) acquisitions, which the Company completed after quarter-end. Unallocated corporate G&A increased to 17.9% of revenue compared to 10.4% of revenue in Q2 FY 2020. - Net loss was
$(723,000) , or$(0.06) per diluted share, compared to a net loss of$(588,000) , or$(0.05) per diluted share, in Q2 FY 2020. - Adjusted EBITDA equaled
$1.1 million in both Q2 FY 2021 and Q2 FY 2020. - Book-to-bill ratio of 1.5x for services business.
- Ending backlog of
$53.9 million , up 19.0% compared to$45.3 million atDecember 31, 2020 , and up 49.7% from$36.0 million atMarch 31, 2020 .
H1 FY 2021 Highlights
- Revenue grew 26.6% to
$36.6 million , from$28.9 million during the six months endedMarch 31, 2020 (“H1 FY 2020”), driven by$6.2 million of internal growth and$1.5 million of incremental revenue from a full six months of operations at the Company’sFort Collins, CO location (legacyPre-Clinical Research Services, Inc. , or “PCRS”). - Gross profit increased 40.7% to
$12.2 million , from$8.7 million in H1 FY 2020, reflecting higher revenue and a 333 basis point expansion in gross margin to 33.3%. - Operating loss totaled
$(507,000) , compared to an operating loss of$(1.2) million in H1 FY 2020, reflecting higher gross profit on higher revenue, partially offset by a 52 basis point increase in operating expenses as a percent of revenue. Corporate unallocated G&A increased due to higher strategic investments to 16.5% of revenue compared to 10.7 % of revenue in H1 FY 2020. - Net loss was
$(1.1) million , or$(0.10) per diluted share, compared to a net loss of$(2.0) million , or$(0.19) per diluted share, in H1 FY 2020. - Adjusted EBITDA increased 51.3% to
$2.4 million , from$1.6 million in H1 FY 2020. - Book-to-bill ratio of 1.3x for services business.
Significant Events during Q2 FY 2021
- Announcement to broaden clinical pathology service offerings
- Appointment of
Greg Beattie as Chief Operating Officer - Announcement of investments in laboratory infrastructure, data and study management technologies and internal expertise for SEND capabilities
- Announcement of investments in additional vivarium capacity at facility in
West Lafayette, IN - Announcement for plans to expand offerings to include cardiovascular safety pharmacology
- Announcement of corporate name change to
Inotiv, Inc.
Subsequent Events
- Announcement of partnership with PhoenixBio Co., Ltd. to expand discovery pharmacology offering.
- Announcement of plan to expand internal operations.
- On
April 23, 2021 , the Company closed an underwritten public offering of 3,044,117 of its common shares, including 397,058 common shares sold pursuant to the full exercise by the underwriter of its option to purchase additional shares to cover over-allotments. All of the shares were sold at a price to the public of$17.00 per share. Net proceeds to the Company from the offering were approximately$49.0 million , after deducting the underwriting discount and estimated offering expenses. - On
April 30, 2021 , the Company announced$28.0 million in additional debt financing fromFirst Internet Bank of Indiana , completed the previously announced acquisition of substantially all of the assets ofHistoTox Labs and closed the transactions contemplated by the Bolder BioPATH Agreement and Plan of Merger, with consummation of the merger under the agreement onMay 3, 2021 .
Q2 FY 2021 Review
Q2 FY 2021 revenue increased 17.1% to
Service segment revenue for Q2 FY 2021 increased 17.8% to
Cost of Service revenue as a percentage of Service revenue decreased to 66.8% in Q2 FY 2021, from 67.2% in Q2 FY 2020. Service gross margin increased to 33.2% in Q2 FY 2021, from 32.8% in Q2 FY 2020.
Product segment revenue increased 3.4% to
Cost of Product revenue as a percentage of Product revenue in Q2 FY 2021 decreased to 61.5% from 74.5% in Q2 FY 2020, due to expense reductions implemented in the last half of FY 2020 and improved margins on existing sales. Product gross margin increased to 38.5% in Q2 FY 2021, from 25.5% in Q2 FY 2020.
Operating expenses increased by 26.2% or
Net loss in Q2 FY 2021 totaled
Adjusted EBITDA of
H1 FY 2021 Review
H1 FY 2021 revenue increased 26.6% to
Service segment revenue for H1 FY 2021 increased 27.8% to
Cost of Service revenue as a percentage of Service revenue decreased to 67.3% in H1 FY 2021, from 69.9% in H1 FY 2020. Service gross margin increased to 32.7% in H1 FY 2021, from 30.1% in H1 FY 2020, reflecting operating leverage and the greater utilization of recently expanded capacity.
Product segment revenue increased 6.6% to
Cost of Product revenue as a percentage of Product revenue in H1 FY 2021 decreased to 54.8% from 71.5% in H1 FY 2020, due to expense reductions implemented in the last half of FY 2020 and improved margins on existing sales. Product gross margin increased to 45.2% in H1 FY 2021, from 28.5% in H1 FY 2020.
Operating expenses increased by 28.6% or
Net loss in H1 FY 2021 totaled
Adjusted EBITDA increased 51.3% to
Cash Provided by Operating Activities and Financial Condition
As of
In
Cash provided by operating activities was
Conference Call
Management will host a conference call on
Interested parties may participate in the call by dialing:
- (877) 407-9753 (Domestic)
- (201) 493-6739 (International)
The live conference call webcast also will be accessible in the Investors section of the Company’s website, and directly via the following link:
https://78449.themediaframe.com/dataconf/productusers/bas2/mediaframe/44705/indexl.html
For those who cannot listen to the live broadcast, an online webcast replay will be available in the Investors section of Inotiv’s web site at: https://www.inotivco.com/investors/investor-information/.
Non-GAAP to GAAP Reconciliation
This press release contains financial measures that are not calculated in accordance with generally accepted accounting principles in
The non-GAAP financial information should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Management, however, believes that Adjusted EBITDA, when used in conjunction with the results presented in accordance with GAAP, may provide a more complete understanding of the Company’s results and may facilitate a fuller analysis of the Company’s results, particularly in evaluating performance from one period to another.
Management has chosen to provide this supplemental information to investors, analysts, and other interested parties to enable them to perform additional analyses of our results and to illustrate our results giving effect to the non-GAAP adjustments shown in the reconciliation. Management strongly encourages investors to review the Company’s consolidated financial statements and publicly filed reports in their entirety and cautions investors that the non-GAAP measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures.
About the Company
This release may contain forward-looking statements that are subject to risks and uncertainties including, but not limited to, risks and uncertainties related to changes in the market and demand for our services and products, the development, marketing and sales of products and services, changes in technology, industry and regulatory standards, the timing of acquisitions and the successful closing, integration and business and financial impact thereof, the impact of the COVID-19 pandemic on the economy, demand for our services and products and our operations, including the measures taken by governmental authorities to address the pandemic, which may precipitate or exacerbate other risks and/or uncertainties and various other market and operating risks, including those detailed in the Company's filings with the
Company Contact | Investor Relations | |
(765) 497-8381 | (212) 836-9614 | |
btaylor@inotivco.com | kahl@equityny.com | |
(212) 836-9608 | ||
dsullivan@equityny.com |
Financial Tables Follow:
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
Three Months Ended | Six Months Ended | ||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||
Service revenue | |||||||||||||
Product revenue | 849 | 821 | 1,702 | 1,597 | |||||||||
Total revenue | 18,751 | 16,012 | 36,636 | 28,930 | |||||||||
Cost of service revenue | 11,949 | 10,207 | 23,502 | 19,118 | |||||||||
Cost of product revenue | 522 | 612 | 933 | 1,142 | |||||||||
Total cost of revenue | 12,471 | 10,819 | 24,435 | 20,260 | |||||||||
Gross profit | 6,280 | 5,193 | 12,201 | 8,670 | |||||||||
Operating expenses: | |||||||||||||
Selling | 1,175 | 1,447 | 2,138 | 2,665 | |||||||||
Research and development | 203 | 162 | 399 | 324 | |||||||||
General and administrative | 5,423 | 3,779 | 10,171 | 6,896 | |||||||||
Total operating expenses | 6,801 | 5,388 | 12,708 | 9,885 | |||||||||
Operating loss | (521 | ) | (195 | ) | (507 | ) | (1,215 | ) | |||||
Interest expense | (366 | ) | (392 | ) | (713 | ) | (703 | ) | |||||
Other income | 179 | 10 | 179 | 12 | |||||||||
Net loss before income taxes | (708 | ) | (577 | ) | (1,041 | ) | (1,906 | ) | |||||
Income tax expense | 15 | 11 | 48 | 108 | |||||||||
Net loss | ( | ) | ( | ) | ( | ) | ( | ) | |||||
Basic net loss per share | ( | ) | ( | ) | ( | ) | ( | ) | |||||
Diluted net loss per share | ( | ) | ( | ) | ( | ) | ( | ) | |||||
Weighted common shares outstanding: | |||||||||||||
Basic | 11,151 | 10,843 | 11,083 | 10,756 | |||||||||
Diluted | 11,151 | 10,843 | 11,083 | 10,756 |
Note – Certain prior quarter and year to date amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
2021 | 2020 | ||||||
(unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | |||||||
Accounts receivable | |||||||
Trade, net of allowance of | 9,340 | 8,681 | |||||
Unbilled revenues and other | 3,338 | 2,142 | |||||
Inventories, net | 872 | 700 | |||||
Prepaid expenses | 2,135 | 2,371 | |||||
Total current assets | 17,871 | 15,300 | |||||
Property and equipment, net | 29,353 | 28,729 | |||||
Operating lease right-of use-assets, net | 4,105 | 4,001 | |||||
Finance lease right-to use assets, net | 4,710 | 4,778 | |||||
4,368 | 4,368 | ||||||
Other intangible assets, net | 3,949 | 4,261 | |||||
Lease rent receivable | 129 | 75 | |||||
Other assets | 86 | 81 | |||||
Total assets | |||||||
Liabilities and shareholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | |||||||
Restructuring liability | — | 168 | |||||
Accrued expenses | 2,932 | 2,688 | |||||
Customer advances | 15,186 | 11,392 | |||||
Capex line of credit | — | 2,613 | |||||
Current portion on long-term operating lease | 1,004 | 866 | |||||
Current portion of long-term finance lease | 4,664 | 4,728 | |||||
Current portion of long-term debt | 8,317 | 5,991 | |||||
Total current liabilities | 36,070 | 31,642 | |||||
Long-term operating leases, net | 3,278 | 3,344 | |||||
Long-term finance leases, net | 42 | 44 | |||||
Long-term debt, less current portion, net of debt issuance costs | 17,925 | 18,826 | |||||
Deferred tax liabilities | 180 | 141 | |||||
Total liabilities | 57,495 | 53,997 | |||||
Shareholders’ equity: | |||||||
Preferred shares, authorized 1,000,000 shares, no par value: | |||||||
No Series A shares at | — | 25 | |||||
Common shares, no par value: | |||||||
Authorized 19,000,000 shares; 11,179,041 issued and outstanding at | 2,756 | 2,706 | |||||
Additional paid-in capital | 27,319 | 26,775 | |||||
Accumulated deficit | (22,999 | ) | (21,910 | ) | |||
Total shareholders’ equity | 7,076 | 7,596 | |||||
Total liabilities and shareholders’ equity |
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
(In thousands)
(Unaudited)
Three Months Ended | Six Months Ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
GAAP Net income (loss) | $ | (723 | ) | $ | (588 | ) | $ | (1,089 | ) | $ | (2,014 | ) | |||
Add back: | |||||||||||||||
Interest expense | $ | 368 | $ | 392 | $ | 713 | $ | 703 | |||||||
Income taxes (benefit) expense | $ | 15 | $ | 11 | $ | 48 | $ | 108 | |||||||
Depreciation and amortization | $ | 1,125 | $ | 924 | $ | 2,226 | $ | 1,673 | |||||||
Stock option expense | $ | 278 | $ | 107 | $ | 460 | $ | 204 | |||||||
$ | (179 | ) | $ | (64 | ) | $ | (179 | ) | $ | (124 | ) | ||||
Acquisition and integration costs | $ | 229 | $ | 69 | $ | 229 | $ | 339 | |||||||
Other non-recurring, third-party costs | — | $ | 260 | — | $ | 703 | |||||||||
Adjusted EBITDA | $ | 1,113 | $ | 1,111 | $ | 2,408 | $ | 1,592 |
Adjusted EBITDA - Earnings before interest expense, income taxes (benefit) expense, depreciation and amortization, stock option expense,
Source:
2021 GlobeNewswire, Inc., source