Inotiv, Inc. Announces Second Quarter Fiscal 2022 Financial Results

Inotiv, Inc. Announces Second Quarter Fiscal

2022 Financial Results

LAFAYETTE, IN, May 12, 2022 - 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 ("Q2 FY 2022")

and six months ("H1 FY 2022") ended March 31, 2022.

Q2 FY 2022 Highlights

H1 FY 2022 Highlights

Significant Events during Q2 FY 2022

Robert Leasure, Jr., the Company's President and

Chief Executive Officer, commented, "In the second quarter of fiscal 2022, Inotiv achieved exceptional year over year growth in

quoting levels, awards, backlog, revenue and EBITDA, reflecting strong ongoing demand for our DSA and RMS services and the positive incremental

impact from strategic acquisitions along with internal growth. We achieved these outstanding results while generating positive operating

cash flow and continuing to make internal growth investments in our people, services, infrastructure, systems, and capacity expansion

programs. In Q2 FY 2022, we completed the second phase of our St. Louis expansion, and we are currently hiring additional talent. We have

also initiated DSA capacity expansion in Rockville, MD, Boulder, CO, Fort Collins, CO and Morrisville, NC. For the RMS business we are

in the process of expanding capacity in North America and Europe. As we complete expansions, we plan to close two RMS sites and consolidate

RSI into other current facilities by the end of Q1 FY 2023. We also are making significant investments across the RMS organization to

improve infrastructure and animal welfare."

Mr. Leasure continued, "We are very encouraged

by recent cross-selling success between our RMS and DSA businesses, client uptake of our comprehensive preclinical research capabilities,

and Inotiv's robust backlog and book-to-bill levels. We are providing guidance for revenue of $290 million in H2 FY 2022 for a total

of at least $510 million in fiscal 2022, implying year over year growth of 30% or more, from expansions and internal growth on the base

of acquisitions we completed over the last six months of FY 2021. We expect our adjusted EBITDA margin for FY 2022 will not be less than

our H1 FY 2022 adjusted EBITDA margin of 15%. Our integration and optimization of acquired businesses is going very well and we anticipate

additional operating leverage as we complete our investments and our expansion and consolidation plans. While Inotiv has become a much

larger organization over the last few years, we remain steadfast in our continued investments and our emphasis on white glove customer

service, which we believe is paramount for our continued success."

Total revenue increased to $140.3 million from

$18.8 million in Q2 FY 2021, driven by a $20.3 million increase in DSA revenue and $101.2 million of incremental RMS revenue.

includes BASi Products

The acquisitions of HistoTox Labs, Bolder BioPATH,

Gateway Pharmacology, Plato BioPharma, BRC and ILS added $12.9 million of incremental service revenue and internal growth generated $7.4

million of additional service revenue in our DSA segment during Q2 FY 2022. The acquisitions of Envigo, RSI and OBRC added $78.0 million

of incremental revenue and internal growth generated $23.2 million of additional revenue to our RMS segment during Q2 FY 2022.

Total gross profit was $44.7 million, or 31.9%

of revenue, compared to $6.3 million, or 33.5% of revenue, in Q2 FY 2021. The decrease in gross profit as a percent of revenue was primarily

due to the mix of lower margin RMS products relative to DSA services along with investments made in the DSA business.

1 excludes amortization of intangible assets

includes BASi Products

DSA gross profit for Q2 FY 2022 increased to $12.3

million, or 31.5% of DSA revenue, from $6.3 million, or 33.5% of DSA revenue, in Q2 FY 2021. The year over year decrease in gross profit

percentage was due to investing in capacity and capability to meet increasing customer demand.

RMS gross profit for Q2 FY 2022 was $32.4 million,

or 32.0% of RMS revenue. We did not have any RMS gross profit in the prior year comparable period. There was $2.6 million of non-cash

inventory step-up amortization in Q2 FY 2022, which negatively impacted the RMS gross profit percentage by 2.6%. RMS gross profit in Q2

FY 2022 represents a $25.3 million, or a 356.3%, increase over Q1 FY 2022 driven primarily by the mix of higher margin research models

along with a full quarter of margin from the Envigo acquisition.

Operating expenses increased by 442.6%, or $30.1

million, in Q2 FY 2022 compared to Q2 FY 2021, due to strategic investment in unallocated corporate G&A expense to support additional

future revenue growth, which included additional headcount, recruiting and relocation expense, higher compensation expense, transaction

costs primarily related to the acquisitions of Robinson, ILS, OBRC and Histion, an increase in sales commissions due to higher sales awards

and an increase in startup costs for internal investments in new service offerings. Additionally, there was an increase in selling expenses

due to an increase in travel cost as our sales and marketing teams have traveled more as the COVID-19 pandemic eases and an increase in

commissions due to higher sales awards. During Q2 FY 2022, we continued investing in internal capabilities to provide additional service

offerings such as laboratory solutions, medical device pathology, biotherapeutics and genetic toxicology.

Net loss attributable to common shareholders was $(6.1) million, or

(4.3)% of total revenue, and $(0.24) per basic and diluted share, compared to a net loss of $(0.7) million, or (3.7)% of total revenue,

and $(0.06) per basic and diluted share, in Q2 FY 2021. Net loss attributable to common shareholders for Q2 FY 2022 includes income tax

expense of $6.7 million due change in the Company's forecasted effective tax rate primarily due to the earnings impact of acquisitions.

Income before income taxes was $0.2 million for Q2 FY 2022.

Adjusted EBITDA increased 1,846.2% to $25.3 million,

or 18.0% of total revenue, from $1.3 million, or 6.9% of total revenue in Q2 FY 2021.

Total revenue increased 513.4% to $224.5 million

from $36.6 million in H1 FY 2021, driven by a $35.3 million increase in DSA revenue and $152.6 million of incremental RMS revenue.

includes BASi Products

The acquisitions of HistoTox Labs, Bolder BioPATH,

Gateway Pharmacology, Plato BioPharma, BRC and ILS added $21.0 million of incremental service revenue and internal growth generated $14.3

million of additional service revenue in the DSA segment during H1 FY 2022. The acquisitions of Envigo, RSI and OBRC added $126.6 million

of incremental revenue and internal growth generated $26.0 million of additional revenue to the RMS segment during H1 FY 2022. RMS revenue

in H1 FY 2022 reflected one partial and one full quarter contribution from Envigo, which was acquired on November 5, 2021, and a partial

quarter of contribution from OBRC, which was acquired on January 27, 2022.

Total gross profit was $64.1 million, or 28.6%

of revenue, compared to $12.2 million, or 33.3% of revenue, in H1 FY 2021. The decrease in gross profit as a percent of revenue was due

to RMS products that have a lower gross profit as a percent of revenue compared to DSA services.

1 excludes amortization of intangible assets

DSA gross profit for H1 FY 2022 was $24.6 million,

or 34.2% of DSA revenue, compared to $12.2 million, or 33.3% of DSA revenue, in H1 FY 2021. The year over year increase in gross profit

percentage was primarily driven by higher margins on acquisitions of HistoTox Labs, Bolder BioPATH and Gateway Pharmacology and greater

utilization of recently expanded capacity.

RMS gross profit for H1 FY 2022 was $39.5 million,

or 25.9% of RMS revenue. We did not have any RMS gross profit in the comparable period. There was $6.3 million of non-cash inventory step-up

amortization in H1 FY 2022, which negatively impacted the RMS gross profit percentage by 4.1%.

Operating expenses increased by 606.8%, or $77.1

million, due to acquisitions including post combination non-cash stock compensation expense relating to the adoption of the Envigo Equity

Plan recognized in connection with the Envigo acquisition of $23.0 million and higher strategic investment in unallocated corporate G&A

expense to support additional future revenue growth, which included recruiting and relocation expense, higher compensation expense, transaction

costs related to the acquisitions closed in H1 FY 2022 and Histion, an increase in sales commissions due to higher sales awards and an

increase in startup costs for internal investments in new service offerings. Additionally, there was an increase in selling expenses due

to an increase in travel cost as our sales and marketing teams have traveled more as the COVID-19 pandemic eases and an increase in commissions

due to higher sales awards. During H1 FY 2022, we continued investing in internal capabilities to provide additional service offerings

such as laboratory solutions, medical device pathology, biotherapeutics and genetic toxicology.

Net loss attributable to common shareholders was $(89.1) million, or

(39.7)% of revenue, and $(3.84) per basic and diluted share, compared to a net loss of $(1.1) million, or (3.0)% of revenue, and $(0.10)

per basic and diluted share, in H1 FY 2021. Net loss for H1 FY 2022 includes post combination non-cash stock compensation expense relating

to the adoption of the Envigo Equity Plan recognized in connection with the Envigo acquisition of $23.0 million and $56.7 million of fair