Investment Thesis
Inotiv is in severe financial distress with operating losses of $35.6M and net losses of $60.8M despite modest 4.5% revenue growth. The company faces a critical liquidity crisis (current ratio 0.27x) with only $15.2M cash against $410.4M long-term debt, generating negative operating cash flow of -$6.5M. With negative interest coverage and unsustainable profitability metrics, the business is burning cash and cannot service debt from operations.
Strengths
- Modest revenue growth of 4.5% YoY suggests some market demand
- Gross profit of $30.2M indicates core product/service has some profitability potential
- Asset base of $702.4M provides some collateral value if restructured
Risks
- Severe liquidity crisis: current ratio of 0.27x and only $15.2M cash with $625.3M liabilities
- Unsustainable debt: $410.4M long-term debt with 5.32x debt-to-equity ratio and negative interest coverage of -8.3x
- Fundamental business model failure: negative operating cash flow (-$6.5M), negative free cash flow (-$13.8M), and -25.5% net margin indicate operations cannot sustain the business
- Profitability deterioration: -14.9% operating margin and -78.9% ROE demonstrate value destruction
- Liquidity runway at risk: company burning cash despite revenue, increasing default risk
Key Metrics to Watch
- Quarterly operating cash flow trend and path to positive operations
- Debt restructuring or refinancing activities given liquidity crisis
- Gross margin expansion and cost structure reduction to improve operating leverage
- Cash position monthly burn rate and liquidity runway estimate
Financial Metrics
Revenue
238.5M
Net Income
-60.8M
EPS (Diluted)
$-1.76
Free Cash Flow
-13.8M
Total Assets
702.4M
Cash
15.2M
Profitability Ratios
Gross Margin
12.6%
Operating Margin
-14.9%
Net Margin
-25.5%
ROE
-78.9%
ROA
-8.7%
FCF Margin
-5.8%
Balance Sheet & Liquidity
Current Ratio
0.27x
Quick Ratio
0.21x
Debt/Equity
5.32x
Debt/Assets
89.0%
Interest Coverage
-8.32x
Long-term Debt
410.4M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-12T07:42:58.994261 |
Data as of: 2026-03-31 |
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