Inotiv delays earnings amid potential DOJ resolution
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West Lafayette-based Inotiv Inc. is delaying its fiscal second quarter earnings report due to negotiations between the company and the U.S. Department of Justice.
The pharmaceutical testing company says the move is related to an investigation that included the execution of a search and seizure warrant at the company’s former facility in Cumberland, Virginia.
The earnings report, which was scheduled to be delivered last Friday, will now be released on Wednesday.
In 2022, Inotiv reached a settlement with the DOJ and the U.S. Department of Agriculture following a lawsuit that was filed over an investigation into the Virginia dog breeding facility operated by Inotiv’s Indianapolis-based subsidiary, Envigo RMS.
Inspections of the facility found record-keeping issues related to the mortality of dogs, as well as live dogs housed in filthy conditions that had received inadequate medical care and insufficient food. At least 145 beagles found to be in “acute distress” were seized.
As part of that settlement, an additional 4,000 beagles were relinquished to the Humane Society of the United States.
Inotiv has been undergoing a site optimization plan, which includes the sale the Virginia facility, as well as others in the U.S., Spain, France and the United Kingdom.
Inotiv said it has been negotiating a potential resolution with the DOJ, though specific details were not provided. However, the company noted it needed to reschedule its earnings report release to determine if a final resolution would have an impact on its fiscal second quarter earnings.
“Based on procedures completed to date, the company currently anticipates reporting significant changes in, among other things, its consolidated revenue, operating costs and expenses and net loss for the six months ended March 31, 2024,” Inotiv said in a filing with the U.S. Securities and Exchange Commission.
In the filing, Inotiv noted concern for the financial future of the company.
“During 2022 and 2023, there were decreases in U.S. biotech funding, which contributed to a reduced demand for preclinical studies,” the company said. “While U.S. biotech funding increased in the first calendar quarter of 2024, the company has yet to see a meaningful increase in demand from biotech clients.”
Inotiv said there is no assurance that it will see an increase in sales for the remainder of the fiscal year, and if its revenue and operating margins don’t increase, it could result in non-compliance with the company’s credit agreement, which could trigger more financial problems.
If its lenders accelerate their loans under the credit agreement, the company said it does not believe it would have sufficient cash to fund operations and satisfy its obligations. Inotiv said it plans to seek amendments to its credit agreement and consider seeking additional financing to meet its cash requirements for the next 12 months.
Inotiv’s stock had fallen 48% to $2.16 per share at midday trading Tuesday.
The company plans to release its fiscal second quarter earnings report after the market closes on Wednesday afternoon.