Inotiv, Inc. Announces First Quarter Fiscal 2023 Financial Results Reiterates Select Full Year Fiscal 2023 Financial Guidance

Inotiv, Inc. Announces First Quarter Fiscal

2023 Financial Results

Reiterates Select Full Year Fiscal 2023 Financial

WEST LAFAYETTE, IN, February 13, 2023-

Inotiv, Inc. (Nasdaq: NOTV) (the "Company", "We", "Our" or "Inotiv"), a leading

contract research organization specializing in nonclinical and analytical drug discovery and development services and research models

and related products and services, today announced financial results for the three months ("Q1 FY 2023") ended December 31,

Financial Highlights

Q1 FY 2023 Highlights

Reiterating Select Financial Guidance for

the Full Fiscal Year 2023 Ending September 30, 2023 ("FY 2023")

The Company's guidance takes into account a number

of factors, including existing DSA backlog, current sales pipeline, trends in cancellations and delays, trends in pricing, the impact

of new products and services and recent efficiency initiatives including the announced facility consolidation plans in the U.S. In addition,

the guidance presented below represents the Company's best efforts to estimate the impact of the NHP supply disruption that was

identified and disclosed in Q1 FY 2023. For FY 2023, we are confirming guidance of at least $580 million of revenue and at least

$75 million of Adjusted EBITDA with adjusted EBITDA margins of approximately 17% for the nine-month period ended September 30, 2023,

as well as capital expenditures of no more than 5% of revenue during FY 2023. The select financial guidance for the full fiscal year

ending September 30, 2023, includes the shipping of our existing Cambodian NHP inventory. Subsequent to January 13, 2023, and after an

internal analysis and review, the Company has shipped a select number of its Cambodian NHP inventory; however, the Company is not currently

shipping Cambodian NHPs at the same volumes that it was prior to the events on November 16, 2022. The Company expects to establish new

procedures before it will resume Cambodian NHP imports. The Company expects that future imports of NHPs from Cambodia will be dependent

on working with third parties to establish additional procedures aiming at providing additional assurances that future NHP imports from

Cambodia are purpose-bred.

Management Commentary

Robert Leasure Jr., President and Chief Executive

Officer, commented, "The investments we have made, the foundation we have created, and the improvements we are implementing have

put Inotiv on a path to becoming a stronger and more efficient company. We did have some unexpected challenges during the past quarter,

which we are addressing, and we continue to work to improve our business. We believe our business is well-positioned to achieve above-market

revenue growth rates and a significant expansion in margins through a combination of increased organic sales growth, synergies from our

acquisitions over the last 14 months, and the benefits from our ongoing site optimization initiatives. We continue to advance towards

our goal of achieving long-term revenue growth rates of high-single to low-double digits, and Adjusted EBITDA margins of 18-22%. I remain

grateful to Inotiv's dedicated and hard working team of professionals."

Revenue (in millions)

1 includes BASi Products

Higher total revenue was driven by a $8.3 million increase in DSA revenue

and a $30.3 million increase in RMS revenue. The increase in the DSA revenue was primarily driven by revenue generated from Integrated

Laboratory Systems, LLC ("ILS"), which was acquired on January 10, 2022. The remaining increase was primarily driven by an

increase in general toxicology services. The increase in the RMS revenue was due primarily to the timing of contributions from the acquisitions

of Envigo RMS Holding Corp. ("Envigo"), Robinson Services, Inc. ("RSI") and Orient BioResource Center, Inc. ("OBRC").

Envigo was acquired on November 5, 2021, RSI was acquired on December 29, 2021, and OBRC

was acquired on January 27, 2022.

Gross Profit1 (in millions)

1 excludes amortization of intangible assets

2includes BASi Products

Higher total gross profit in Q1 FY 2023 was the

result of a $0.9 million increase in DSA gross profit from Q1 FY 2022, and a $1.5 million increase in RMS gross profit from Q1 FY 2022.

The decrease in DSA gross profit as a percent of DSA revenue was primarily due to laboratory capacity investments and costs associated

with the successful recruitment of scientists in Q1 FY 2023, to begin adding services and capacity which we expect to have available in

Q2 and Q3 of FY 2023. The decrease in RMS gross profit as a percent of RMS revenue was primarily due to the mix of products sold and inflationary

pressure on product expenses, energy and wages, partially offset by favorable pricing for several different RMS product lines.

Consolidated Net Loss

Consolidated net loss for Q1 FY 2023 was $(86.9)

million compared to consolidated net loss of $(83.4) million in Q1 FY 2022. Consolidated net loss for Q1 FY 2023 included a $66.4 million

non-cash goodwill impairment charge related to our RMS segment. The Company determined that as a result of the November 16, 2022 event,

which led to the Company's decision to refrain from selling or delivering any of its Cambodian NHPs held in the U.S., the uncertainty

related to the Company's ability to import NHPs from Cambodia and decrease in the stock price, the carrying value of our goodwill

as of December 31, 2022, must be quantitatively evaluated. As a result of our impairment assessment, the Company determined that the

carrying amount of goodwill attributed to our RMS segment was in excess of its fair value. Additionally, in Q1 FY 2023, the Company incurred

$13.3 million of depreciation and amortization expense, an increase of $7.3 million from Q1 FY 2022, and $2.0 million of stock compensation

expense, a decrease of $21.9 million from Q1 FY 2022. The Company incurred $10.5 million of interest expense during Q1 FY 2023 as compared

to $4.8 million in Q1 FY 2022. The remaining increase in operating expenses was driven by increases in selling costs, primarily due to

increased revenue, and in general and administrative ("G&A") expenses, reflecting various acquisitions, as well as strategic

investments in unallocated corporate G&A expense to support additional revenue growth, which included additional headcount, higher

compensation expense and higher legal expense, amongst other costs. Additionally, Q1 FY 2023 G&A expense included $1.3 million for

legal, consulting and audit fees incurred in connection with the impact of the Company's decision to refrain from selling or delivering

Cambodian NHPs held in the U.S. Consolidated net loss for Q1 FY 2022 included one-time charges of $56.7 million of fair value remeasurement

of the embedded derivative component of the convertible notes issued in September 2021 and $23.0 million of post combination stock compensation

expense relating to the adoption of the Envigo Equity Plan.

Cash Provided by Operating and Financing Activities and Financial

As of December 31, 2022,

the Company had $20.8 million in cash and cash equivalents and a $0.0 million balance on its $15.0 million revolving credit facility.

The Company's $35 million delayed draw term loan ("DDTL") was drawn on October 12, 2022, and a portion of the proceeds

were used to repay the $15.0 million balance as of September 30, 2022, on the the Company's revolving credit facility while the remaining

was drawn to fund a portion of the Company's capital expenditures in 2022 and those planned

for 2023. Total debt, net of debt issuance costs, as of December 31, 2022, was $373.2 million. We were in compliance with our debt

covenants as of December 31, 2022. Cash used by operating activities was $7.4 million for Q1 FY 2023, compared to cash used by operating

activities of $1.1 million for Q1 FY 2022. For Q1 FY 2023, capital expenditures totaled $8.4 million.

Management will host a conference call on Monday,

February 13, 2023, at 4:30 pm ET to discuss first quarter reported results for fiscal year 2023.

Interested parties may participate in the call by dialing:

The live conference call webcast will be accessible in the Investors

section of the Company's web site and directly via the following link:

For those who cannot listen to the live broadcast, an online replay

will be available in the Investors section of Inotiv's web site at: https://www.inotivco.com/investors/investor-information/.

Non-GAAP to GAAP Reconciliation

This press release contains financial

measures that are not calculated in accordance with generally accepted accounting principles in the United States (GAAP), including

Adjusted EBITDA and Adjusted EBITDA as a percentage of total revenue for the three months ended December 31, 2022 and 2021 and

selected business segment information for those periods. Adjusted EBITDA as reported herein refers to a financial measure that

excludes from consolidated net income (loss) statement of operations line items interest expense and income tax (benefit) expense,

as well as non-cash charges for depreciation and amortization, stock compensation expense, acquisition and

integration costs, startup costs, restructuring costs incurred in connection with the exit of our Cumberland and Dublin facilities,

unrealized foreign exchange loss, loss on debt extinguishment, amortization of inventory step up, loss/gain on disposition of

assets, loss on fair value remeasurement of convertible notes, goodwill impairment loss and other non-recurring third-party costs.

The adjusted business segment information excludes from operating income and unallocated corporate G&A these same expenses.

Adjusted EBITDA and Adjusted EBITDA margin guidance