Q3 FY 2021 Highlights
- Revenue grew 45.2% to
$22.9 million , from$15.8 million during the three months endedJune 30, 2020 (“Q3 FY 2020”), driven by internal growth of$2.9 million and two months of incremental revenue fromHistoTox Labs, Inc. (“HistoTox Labs”) andBolder BioPATH, Inc. (“Bolder BioPATH”) totaling$4.3 million . - Gross profit increased 51.0% to
$7.6 million , from$5.1 million in Q3 FY 2020, reflecting higher revenue and a 128 basis point expansion in gross margin to 33.4%. - Operating loss totaled
$(1.7) million , compared to an operating loss of$(477,000) in Q3 FY 2020, reflecting an increase in operating expenses, which more than offset higher gross profit on higher 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), transaction costs related to the acquisitions ofHistoTox Labs and Bolder BioPATH, an increase in sales commissions due to higher sales awards and an increase in startup costs for internal investments in new service offerings. - Net loss was
$(2.3) million , or$(0.15) per diluted share, compared to a net loss of$(879,000) , or$(0.08) per diluted share, in Q3 FY 2020. - Adjusted EBITDA increased 147.7% to
$2.2 million , from$894,000 in Q3 FY 2021. - Book-to-bill ratio of 1.53x for services business.
- Ending backlog of
$62.0 million , up 15.0% compared to$53.9 million atMarch 31, 2021 , and up 68.0% from$36.9 million atJune 30, 2020 .
9M FY 2021 Highlights
- Revenue grew 33.2% to
$59.5 million , from$44.7 million during the nine months endedJune 30, 2020 (“9M FY 2020”), driven by internal growth of$10.5 million and two months of incremental revenue fromHistoTox Labs and Bolder BioPATH totaling$4.3 million . - Gross profit increased 43.3% to
$19.8 million , from$13.8 million in 9M FY 2020, reflecting higher revenue and a 236 basis point expansion in gross margin to 33.3%. - Operating loss totaled
$(2.2) million , compared to an operating loss of$(1.7) million in 9M FY 2020, reflecting an increase in operating expenses, which more than offset higher gross profit on higher revenue. - Net loss was
$(3.4) million , or$(0.27) per diluted share, compared to a net loss of$(2.9) million , or$(0.27) per diluted share, in 9M FY 2020. - Adjusted EBITDA increased 92.2% to
$5.0 million , from$2.6 million in 9M FY 2020. - Book-to-bill ratio of 1.40x for services business.
Significant Events during Q3 FY 2021
- On
April 23, 2021 , closed an underwritten public offering of 3,044,117 common shares. 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 , announced$28.0 million in additional debt financing fromFirst Internet Bank of Indiana and completed the acquisition of substantially all of the assets ofHistoTox Labs . - On
May 3, 2021 , consummated the acquisition by merger of Bolder BioPATH. - On
May 27, 2021 , announced the purchase ofSt. Louis facility and plans to expand its capacity. - On
June 7, 2021 , announced that the company joined the broad-market Russell 3000® Index and Russell 2000® Index at the conclusion of the 2021 Russell indexes annual reconstitution, effective after theU.S. markets opened onJune 28, 2021 . - On
June 28, 2021 , announced hiringNikki Jackson and broadening of pathology services to include medical device pathology.
Subsequent Events
- On
July 12, 2021 , announced the acquisition of assets from MilliporeSigma’s BioReliance® portfolio to expand genetic toxicology offering and hiring ofGopala Krishna , PhD, to build and lead the genetic toxicology business. - On
July 15, 2021 , announced the acquisition of laboratory instrumentation to accelerate the startup and development of laboratory services pursuing cell and gene therapy as well as traditional biotherapeutics and immunotherapies. - On
August 2, 2021 , announced the acquisition ofGateway Pharmacology Laboratories for increased drug metabolism & pharmacokinetics (DMPK) technology and capability, as well as a new cell and molecular biology suite capable of delivering in vitro solutions in pharmacology and toxicology early in drug discovery. - Received notice that the PPP loan was forgiven for
$4.9 million .
Q3 FY 2021 Review
Revenue increased 45.2% to
Cost of Service revenue as a percentage of Service revenue decreased to 67.1% in Q3 FY 2021, from 68.1% in the prior year period, reflecting greater utilization of recently expanded capacity.
Product segment revenue increased 6.0% to
Cost of Product revenue as a percentage of Product revenue decreased to 56.3% in Q3 FY 2021 from 64.4% in the prior year period, due to expense reductions implemented in the last half of FY 2020 and improved margins on existing sales.
Operating expenses increased by 68.7%, or
The Company believes that unallocated corporate G&A as a percent of revenue will decline over the long-term as it continues to scale and grow its business. The Company’s long-term objective is for unallocated corporate G&A to reach between 6% and 8% of revenue.
Net loss in Q3 FY 2021 totaled
Adjusted EBITDA increased to
9M FY 2021 Review
Total revenue increased 33.2% to
Cost of Service revenue as a percentage of Service revenue decreased to 67.2% in 9M FY 2021, from 69.0% in the prior year period. The reduction in Cost of Service revenue as a percentage of Service revenue is due primarily to improved operating leverage and the greater utilization of recently expanded capacity.
Product segment revenue increased 6.4% to
Cost of Product revenue as a percentage of Product revenue in 9M FY 2021 decreased to 55.3%, from 68.9% in the prior year period, due to expense reductions implemented in the last half of FY 2020 and improved margins on existing sales.
Operating expenses in 9M FY 2021 increased year over year by 42.0%, or
Net loss for 9M FY 2021 totaled
Adjusted EBITDA increased 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/46120/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 Company believes that these non-GAAP measures provide useful information to investors. Among other things, they may help investors evaluate the Company’s ongoing operations. They can assist in making meaningful period-over-period comparisons and in identifying operating trends that would otherwise be masked or distorted by the items subject to the adjustments. Management uses these non-GAAP measures internally to evaluate the performance of the business, including to allocate resources. Investors should consider these non-GAAP measures as supplemental and in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP.
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 | Nine Months Ended | ||||
2021 | 2020 | 2021 | 2020 | ||
Service revenue | |||||
Product revenue | 968 | 913 | 2,671 | 2,510 | |
Total revenue | 22,892 | 15,765 | 59,529 | 44,695 | |
Cost of service revenue | 14,701 | 10,113 | 38,204 | 29,119 | |
Cost of product revenue | 545 | 588 | 1,477 | 1,730 | |
Total cost of revenue | 15,246 | 10,701 | 39,681 | 30,849 | |
Gross profit | 7,646 | 5,064 | 19,848 | 13,846 | |
Operating expenses: | |||||
Selling | 950 | 692 | 2,343 | 2,672 | |
Research and development | 107 | 105 | 290 | 429 | |
General and administrative | 7,813 | 4,624 | 18,584 | 12,205 | |
Start-up | 479 | 120 | 841 | 232 | |
Total operating expenses | 9,349 | 5,541 | 22,058 | 15,538 | |
Operating loss | (1,703) | (477) | (2,210) | (1,692) | |
Interest expense | (449) | (382) | (1,163) | (1,085) | |
Other income | 1 | 1 | 180 | 13 | |
Net loss before income taxes | (2,151) | (858) | (3,193) | (2,764) | |
Income tax expense | 114 | 21 | 161 | 129 | |
Net loss | ( | ( | ( | ( | |
Basic net loss per share | ( | ( | ( | ( | |
Diluted net loss per share | ( | ( | ( | ( | |
Weighted common shares outstanding: | |||||
Basic | 14,656 | 10,910 | 12,274 | 10,807 | |
Diluted | 14,656 | 10,910 | 12,274 | 10,807 |
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 | 15,487 | 8,681 | |||
Unbilled revenues and other | 4,472 | 2,142 | |||
Inventories, net | 977 | 700 | |||
Prepaid expenses | 2,466 | 2,371 | |||
Total current assets | 48,062 | 15,300 | |||
Property and equipment, net | 44,678 | 28,729 | |||
Operating lease right-of use-assets, net | 8,695 | 4,001 | |||
Finance lease right-to use assets, net | 66 | 4,778 | |||
45,750 | 4,368 | ||||
Other intangible assets, net | 24,336 | 4,261 | |||
Lease rent receivable | 106 | 75 | |||
Other assets | 180 | 81 | |||
Total assets | |||||
Liabilities and shareholders’ equity | |||||
Current liabilities: | |||||
Accounts payable | |||||
Restructuring liability | — | 168 | |||
Accrued expenses | 4,741 | 2,688 | |||
Customer advances | 19,969 | 11,392 | |||
Capex line of credit | 931 | 2,613 | |||
Current portion on long-term operating lease | 1,916 | 866 | |||
Current portion of long-term finance lease | 29 | 4,728 | |||
Current portion of long-term debt | 14,752 | 5,991 | |||
Total current liabilities | 47,062 | 31,642 | |||
Long-term operating leases, net | 6,884 | 3,344 | |||
Long-term finance leases, net | 39 | 44 | |||
Long-term debt, less current portion, net of debt issuance costs | 28,700 | 18,826 | |||
Deferred tax liabilities | 294 | 141 | |||
Total liabilities | 82,979 | 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; 15,866,655 issued and outstanding at | 3,928 | 2,706 | |||
Additional paid-in capital | 110,230 | 26,775 | |||
Accumulated deficit | (25,264 | ) | (21,910 | ) | |
Total shareholders’ equity | 88,894 | 7,596 | |||
Total liabilities and shareholders’ equity | |||||
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
(In thousands)
(Unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
GAAP Net income (loss) | $ | (2,265 | ) | $ | (879 | ) | $ | (3,354 | ) | $ | (2,893 | ) | |||
Add back (a): | |||||||||||||||
Interest expense | $ | 449 | $ | 382 | $ | 1,163 | $ | 1,085 | |||||||
Income taxes (benefit) expense | $ | 114 | $ | 21 | $ | 161 | $ | 129 | |||||||
Depreciation and amortization | $ | 1,958 | $ | 1,074 | $ | 4,184 | $ | 2,747 | |||||||
Stock option expense | $ | 580 | $ | 176 | $ | 1,040 | $ | 380 | |||||||
$ | - | $ | (79 | ) | $ | (179 | ) | $ | (208 | ) | |||||
Acquisition and integration costs (2)(3) | $ | 899 | $ | - | $ | 1,128 | $ | 339 | |||||||
Start up costs | $ | 479 | $ | 120 | $ | 841 | $ | 232 | |||||||
Other non-recurring, third-party costs | - | $ | 79 | - | $ | 782 | |||||||||
Adjusted EBITDA (b) | $ | 2,214 | $ | 894 | $ | 4,984 | $ | 2,593 |
(a) Adjustments to certain GAAP reported measures for the three and nine months ended
(1) We benefited from the initial reduction in our
(2) For the three and nine months ended
(3) For the nine months ended
(b) Adjusted EBITDA - Earnings before interest expense, income taxes (benefit) expense, depreciation and amortization, stock option expense,
RECONCILIATION OF GAAP TO NON-GAAP SELECTED BUSINESS SEGMENT INFORMATION
(In thousands)
(Unaudited)
Three Months Ended | Nine Months Ended | ||||||
2021 | 2020 | 2021 | 2020 | ||||
Services | |||||||
Revenue | |||||||
Operating income | 3,035 | 2,445 | 9,024 | 6,393 | |||
Operating income as a % of total revenue | 13.3% | 15.5% | 15.2% | 14.3% | |||
Add back (c): | |||||||
Depreciation and amortization | 1,720 | 832 | 3,465 | 2,176 | |||
Stock option expense | - | - | - | (17) | |||
- | - | - | - | ||||
Acquisition and integration costs (5)(6) | - | - | - | - | |||
Start up costs | 479 | 120 | 841 | 232 | |||
Other non-recurring, third party costs | - | 79 | - | 782 | |||
Total non-GAAP adjustments to operating income | |||||||
Non-GAAP operating income (d) | |||||||
Non-GAAP operating income as a % of total revenue | 22.9% | 22.0% | 22.4% | 21.4% | |||
Products | |||||||
Revenue | |||||||
Operating income/(loss) | 61 | 24 | 202 | (447) | |||
Operating income/(loss) as a % of total revenue | 0.3% | 0.2% | 0.3% | -1.0% | |||
Add back (c): | |||||||
Depreciation and amortization | 7 | 7 | 26 | 19 | |||
Stock option expense | - | - | - | - | |||
- | - | - | - | ||||
Acquisition and integration costs (5)(6) | - | - | - | - | |||
Start up costs | - | - | - | - | |||
Other non-recurring, third party costs | - | - | - | - | |||
Total non-GAAP adjustments to operating income/(loss) | |||||||
Non-GAAP operating income/(loss) (d) | |||||||
Non-GAAP operating income/(loss) as a % of total revenue | 0.3% | 0.2% | 0.4% | -1.0% | |||
Unallocated Corporate G&A | |||||||
Unallocated corporate G&A as a % of total revenue | -21.0% | -18.7% | -19.2% | -17.1% | |||
Add back (c): | |||||||
Depreciation and amortization | 231 | 235 | 693 | 552 | |||
Stock option expense | 580 | 176 | 1,040 | 397 | |||
- | (79) | (179) | (208) | ||||
Acquisition and integration costs (5)(6) | 899 | - | 1,128 | 339 | |||
Start up costs | - | - | - | - | |||
Other non-recurring, third party costs | - | - | - | - | |||
Total non-GAAP adjustments to unallocated corporate G&A | |||||||
Non-GAAP unallocated corporate G&A | |||||||
Non-GAAP unallocated corporate G&A as a % of total revenue | -13.5% | -16.6% | -14.7% | -14.7% | |||
Total | |||||||
Revenue | |||||||
Operating (loss) | (1,703) | (477) | (2,210) | (1,692) | |||
Operating (loss) as a % of total revenue | -7.4% | -3.0% | -3.7% | -3.8% | |||
Add back (c): | |||||||
Depreciation and amortization | 1,958 | 1,074 | 4,184 | 2,747 | |||
Stock option expense | 580 | 176 | 1,040 | 380 | |||
- | (79) | (179) | (208) | ||||
Acquisition and integration costs (5)(6) | 899 | - | 1,128 | 339 | |||
Start up costs | 479 | 120 | 841 | 232 | |||
Other non-recurring, third party costs | - | 79 | - | 782 | |||
Total non-GAAP adjustments to operating (loss) | |||||||
Non-GAAP operating income (d) | |||||||
Non-GAAP operating income as a % of total revenue | 10% | 6% | 8% | 6% |
(c) Adjustments to certain GAAP reported measures for the three and nine months ended
(4) We benefited from the initial reduction in our
(5) For the three and nine months ended
(6) For the nine months ended
(d) Adjusted operating income – Operating income before depreciation and amortization, stock option expense,
Source:
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