Inotiv Secures Liquidity with Credit Agreement Amendments and Second Lien Notes

Inotiv, Inc., a leading contract research organization, has taken significant steps to strengthen its financial position by amending its credit agreement and issuing $22.6 million in Second Lien Notes. This strategic move aims to increase liquidity, provide financial covenant relief, and support the Company's long-term growth and market share.

Financial covenant relief through the Credit Agreement
The amended credit agreement provides Inotiv with financial covenant relief until the quarter ending June 30, 2025. This relief gives the Company additional flexibility and time to implement its recently completed site optimization plans, recover and strengthen the NHP market, and grow market share and cash flow. This flexibility enables Inotiv to focus on its core business operations and strategic initiatives without being constrained by short-term financial obligations.

Improved liquidity with Second Lien Notes
Inotiv has issued $22.6 million in 15% Senior Secured Second Lien PIK Notes due February 2027, which accrue interest at a rate of 15% per annum and are payable in kind. These notes are fully and unconditionally guaranteed on a senior secured second lien basis by certain of Inotiv's subsidiaries. The Company received $17.0 million in cash and canceled approximately $8.3 million of its existing convertible senior notes as part of this transaction. Additionally, the investors received warrants to purchase 3,946,250 shares of the Company's common stock, with an exercise price of $1.57 per share and an expiration date of September 13, 2034.

Potential impact on long-term financial health and debt-to-equity ratio
The 15% Senior Secured Second Lien PIK Notes will mature on February 4, 2027, unless earlier repurchased or redeemed. The high interest rate of 15% per annum may pose a challenge for Inotiv's long-term financial health if not properly managed. However, the Company's focus on improving customer experience, growing organic revenue, and optimizing its balance sheet should help mitigate this risk. Additionally, the cancellation of $8.3 million of existing convertible senior notes reduces Inotiv's overall debt burden, potentially improving its debt-to-equity ratio.

Inotiv's focus on customer acquisition, retention, and organic revenue growth
Inotiv has been building its business over the last five years through strategic acquisitions and the initiation of new services to provide biopharma customers with an end-to-end product and services solution. The Company has been focused on integrating and optimizing these acquisitions while transforming its organization to meet customer expectations and deliver solutions for drug discovery and development. By improving customer acquisition and retention and growing organic revenue, Inotiv aims to capture market share and improve cash flow, ultimately supporting its long-term financial stability and growth.