Inotiv's Q3 2025: Navigating Contradictions in Cancellations, NIH Funding, and Profitability

Cancellation trends and impact on business, impact of NIH funding on business, dynamic of NHP sourcing and pricing, discovery business growth and profitability impact, optimization of RMS sites are the key contradictions discussed in Inotiv's latest 2025Q3 earnings call.



Revenue and Segment Growth:
- Inotiv reported a year-over-year revenue increase of 23.5%, with total revenue of $130.7 million for Q3 FY2025, compared to $105.8 million in Q3 FY2024.
- This growth was primarily due to an increase in RMS segment revenue by $21 million (34.1%) and DSA segment revenue by $3.9 million (8.9%).

Operating Margin Improvement:
- DSA operating margins improved by 4.6% from the previous quarter, although they were still 0.8% lower than Q3 FY2024.
- The improvement was attributed to better pricing and increased sales, which helped control costs and improved recurring revenue.

Non-GAAP Financial Performance:
- Adjusted EBITDA for Q3 FY2025 was $11.6 million, the highest since Q4 FY2023, and non-GAAP operating income for the DSA segment was $7.2 million.
- This was due to increased revenue and improved operating efficiency, contributing to enhanced profitability.

Animal Welfare and Facility Investments:
- Inotiv received ALAC accreditation for its NHP facilities in Texas, notable for having an "exemplary program."
- Investments in facilities were made to improve animal care and welfare, and these improvements contribute to the company's animal model business.