Inotiv reported Q4 FY2024 revenue of $130.4 million, up 23% quarter-over-quarter but down 7.3% year-over-year, with a consolidated operating loss of $13.2 million and a net loss of $18.9 million. The revenue advancement was driven by a robust RMS performance (+39.3% QoQ to $85.8 million) and a modest gain in DSA (+0.9% QoQ to $44.6 million). However, gross margins contracted meaningfully versus the prior-year period, driven by the mix of higher-cost NHPs (non-human primates) and the intentional liquidation of higher-cost NHP inventory, which weighed on quarterly profitability. Management signaled that margins should begin to normalize in calendar 2025 as higher-cost NHP inventory is cleared and the new, lower-cost stock is moved into place, with RMS margins expected to improve over the year. DSA margins were pressured by a shift in study mix and softer discovery services, although the Rockville facility began to realize revenue momentum from newer service lines.
Management remains focused on cross-selling across the broad product and service portfolio, expanding the customer base, and selectively optimizing the cost base through site optimization (UK Hillcrest, US transportation/distribution improvements) and ongoing cost discipline. The company withdrew fiscal 2025 guidance, citing market clarity and demand visibility, and outlined a plan to maintain capex below 4% of revenue in 2025 while preserving liquidity and covenant compliance. The equity/credit backdrop remains a consideration, with cash of $21.4 million, total debt of $393.3 million, and net debt of approximately $423.7 million at 9/30/2024, plus covenant waivers through mid-2025.
Overall, the Q4 results reflect a transition period as Inotiv works through higher-cost NHP inventory and continued macro headwinds in biotech investment. If management’s expectations for calendar 2025 hold—particularly improvements in RMS margins, stabilized DSA growth through new services, and sustained NHP demand with pre-sold volumes—the company could begin to realize meaningful earnings leverage in the medium term. Investors should monitor NHP inventory normalization, rate of demand recovery in DSA discovery services, covenant progression, and the pace of cash flow improvement as indicators of the thesis unfolding.