Inotiv (NOTV) Jefferies Global Healthcare Conference summary

Business integration and growth drivers

• Integration of 14 acquisitions and launch of new services in the DSA segment have expanded the customer base and driven sales growth over the past two years.

• New services, particularly in genetic toxicology and biotherapeutics, now contribute 5%-10% of quarterly sales, up from nearly zero 18 months ago.

• High single-digit (8%-9%) growth in safety assessment attributed to new services and added capacity, despite moderate single-digit pricing pressure.

• Ability to offer previously outsourced services has improved competitiveness and enabled cross-selling within broader service packages.

• Most capacity expansions are now in service, with current DSA capacity estimated at $250-$260 million, up from $165 million in 2022.

Market trends and competitive landscape

• Biotech funding recovery and the Biosecure Act are expected to drive demand and shift work from China to the U.S.

• Some competitors have reduced capacity, creating opportunities to gain market share.

• Discovery segment sales were down 12% year-over-year, while safety assessment grew, reflecting broader industry trends.

• Investments in sales and marketing, especially in discovery, are showing early positive momentum but have not yet translated into revenue growth.

• The company is targeting specific customers and tracking pipeline quality to drive future growth.

Non-human primate (NHP) and small animal supply dynamics

• NHP supply stabilized after the loss of Cambodian imports, with diversified sourcing and increased veterinary oversight.

• Industry-wide overbuying led to excess NHP inventory at customers, resulting in a correction period expected to last through the back half of the year.

• Customers are now seeking long-term contracts for supply certainty, potentially requiring new boarding capacity investments.

• Significant investments in animal welfare, infrastructure, and medical record systems have differentiated the company in the NHP market.

• Small animal demand declined 10% in recent quarters, mirroring broader CRO industry downturns, but pricing has remained stable or slightly up.