Inotiv, Inc.

Hello, and welcome everyone joining today's Innotive Fourth Quarter and Full Year 2025 Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. To register to ask a question at any time, please press star 1 on your telephone keypad. Please note, this call is being recorded. We are standing by if you should need any assistance. And it is now my pleasure to turn the meeting over to Steve Halper of LifeSci Advisors. Please go ahead.

Thank you, Chloe, and good afternoon. Thank you for joining today's quarterly call with Initiv's management team. Before we begin, I'd like to remind everyone that some of the statements that management will make on this call are considered forward-looking statements, including statements about the company's future operating conditions and financial results and plans. Such statements are subjects to risks and uncertainties that could cause actual performance or achievements to be materially different from those projected. Any such statements represent management's expectations as of today's date. You should not place undue reliance on these forward-looking statements and the company does not undertake any obligation to update or revise forward-looking statements, whether as a result of new information, future events, I lost my place, future events, The company does not undertake any obligation to update or revise forward-looking statements whether as a result of new information, future events, or otherwise. Please refer to the company's SEC filings for further guidance on this matter, including risks and uncertainties that could cause results to differ from forward-looking statements. Management will also discuss certain non-GAAP financial measures in an effort to provide additional information for investors. Definitions of these non-GAAP measures and reconciliations to the most comparable GAAP measures are included in the company's earnings release. which has been posted to the investor section of the company's website, www.initiv.com, and is also available in the form 8K, filed with the Securities and Exchange Commission. If you haven't obtained a copy of today's press release yet, you can do so by going to the investor section of Initiv's website. Joining us from the company this afternoon are Bob Leisure, President and Chief Executive Officer, and Beth Taylor, Chief Financial Officer. John Sagartz, Chief Strategy Officer, will join us for the question and answer portion of the call. Bob will begin with some opening remarks, after which Beth will present a summary of the company's financial results for its fourth quarter and full year fiscal 2025. And then we'll open the call for questions. It's now my pleasure to turn the call over to Bob Leisure, CEO. Bob, please go ahead.

All right. Thank you, Steve. Good afternoon, everyone. During the fourth quarter of fiscal 2025, we saw the continuation of some positive trends for our business, including a strong year-over-year increase in demand for our discovery and safety assessment business. We continue to execute on the core goals outlined in our May 2025 investor day, including improving our cash flow and margins and maintaining our focus on customer matrix. Two critical elements of our plan consist of improving DSA revenue and margins and continuing our RMS site consolidation efforts in order to further reduce cost. On today's call, I'll provide an update on the progress we are making on these objectives, along with the other general business updates for the fourth quarter. On that last point, on August 18th, we filed an 8K disclosing that we became aware of a cybersecurity incident. which caused disruption to certain of our business operations. We worked to restore availability and access to our networks and systems during this fiscal fourth quarter. We were required to work through a number of challenges that were disruptive to the business, but we continued to execute requests for delivery of products and services. While this incident inevitably had some financial impact on the quarterly results, I'm very proud of how the team responded, and as you can see from the results of the quarter, the company maintained its momentum through this process. In September, we disclosed that we had engaged Perel and Weinberg Partners to provide general financial advisory and investment banking services to assist the company in exploring potential debt refinancing alternatives. And then we later announced a proposed settlement of our securities class action and an agreement in principle to settle the derivative of lawsuits in each case pending court approval and expect that the settlement payments will be fully covered by insurance. Now moving on to the quarterly results, we continue to see some very encouraging signs. For the fourth quarter of fiscal 2025, total revenue was 138.1 million, an increase of 7.7 million or 5.9% compared to the fourth quarter of fiscal 2024. The DSA business was a primary driver of this increase. Sequentially, revenue was up 7.4 million or 5.7%. For fiscal year 2025, total revenue was 513 million, an increase of 22.3 million or 4.5% compared to 490.7 million for fiscal 2024. Some of the key highlights of Q4 2025 included quarter-over-quarter and year-over-year increases in net DSA awards and revenue growth. DSA revenue growth was a goal that we outlined during our Investor Day in May of this year. Compared to the prior year, fourth quarter, DSA quarterly revenue increased 15.7% and awards increased approximately 61%. These results were some of the strongest DSA quarterly results we have seen over the last two years. Since our May Investor Day, we have posted increases of 12.4% in DSA revenue and 41.1% in DSA awards for the last two fiscal quarters of 2025 as compared to the last two fiscal quarters of 2024. In the fourth quarter, Discovery Business Awards increased 55% over the same period a year ago and we achieved even stronger growth rates in the new service lines we started or expanded over the last couple years, including biotherapeutics, medical devices, and genetic toxicology. The DSA backlog conversion rate was 37.4% for the fourth quarter and was the highest quarterly conversion rate we've seen in three years. DSA margins also continued to improve, and while we believe there should be further opportunities in the future, We are pleased with the current momentum. RMS revenue for the fourth quarter was slightly ahead of last year by approximately 1%, and for the fiscal year 2025 increased 4.7% over fiscal year 2024. Phase two of our RMS site consolidation project has remained on track. In early October, we closed one of the three planned RMS facilities and now have two additional lease facilities remaining to close. As we stated last quarter, we anticipate future annual savings of $67 million on a capital investment related to expanding an existing lease location of approximately $6.5 million. To date, we have spent approximately $1.8 million net of tenant allowances related to this capital investment. As with previous projects we have executed in the RMS segment, these additional investments are intended to help modernize our existing footprint while allowing us to close older facilities. The plan will reduce open capacity, should create operating efficiencies while continuing our efforts to support our animal welfare objectives. Additionally, we believe that this plan allows us to remain agile and to increase production capacity in the future as needed. When the site consolidation Project is complete. We expect to have closed a total of 13 RMS facilities or possibly 60% of the RMS facilities over the last three years. During fiscal 2025, we sold two properties as a result of our site consolidation project. One property was sold in June and the other property was sold in September. The net proceeds were used to repay principal. on our term loans during July and October, respectively. Our efforts also saw additional achievements during the fourth quarter, including advancements in our RMS management operation system, which have been developed over the last 14 months and are now providing data and metrics that we believe will allow us to further improve RMS operations and efficiencies in the future. We continue to improve our North American transportation fleet and operations. In the second quarter of fiscal 2026, we expect to have achieved a 24% reduction in our fleet to yield a cost savings since bringing the North American transportation in-house. This two-year project has been critical helping improve our delivery and client satisfaction. In addition to other improvements being made with order intake and accuracy, we have seen a 55% reduction in our RMS client complaints over the last two years. Subsequent to the end of fiscal fourth quarter, in October 2025, we're able to transfer our commercial operations to one new CRM system, integrating multiple systems into one solution for our customer relationship management systems. In addition to cost savings, we anticipate this will provide operating efficiencies, improved data, metrics, and enhanceability to communicate internally between business segments and with customers. We have reduced the number of IT systems from 249 in early 2022 to 162 as of October 2nd, 2025. This reduction has been part of our planned efforts beginning in 2022 to streamline and enhance our technology environment. We look forward to continue to focus our efforts on increasing revenue, improving margins, and improving our client experiences. While we did face some headwinds in the quarter, we were pleased with our results, which we believe further demonstrate our ability to identify opportunities, integrate businesses we acquired and start up, and implement action plans designed to improve revenue and margins. As for our balance sheet, we generated $14.3 million of cash from operations in the fourth quarter and increased our cash balance to $21.7 million compared to $6.2 million at June 30, 2025. Lean term debt matures in November of 2026, our second lean term loan in February of 2027, and our convertible debt in October of 2027. As we mentioned previously, we have retained Perla Weinberg to assist us in exploring potential debt refinancing alternatives with the goal of improving our balance sheet. We are actively having these discussions and will provide more information at the appropriate times. Well, I turn the call over to Beth, who wants to recognize and acknowledge that it has been very, very nice to see this increase in DSA revenue and the DSA awards over the last three quarters. I believe these trends are continuing through the first two months of the current quarter compared to the same period in prior year. However, as a reminder, we are coming off some very weak numbers from a year ago, and the geopolitical and macroeconomic conditions, risk uncertainties are likely to remain with the industry for the foreseeable future. I'll now hand things over to Beth to provide the financial overview.