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Thursday, February 2, 2023

Inotiv Inc. (NOTV) Stock Suffers Correction Following Surge from Collaboration with Envigo

Inotiv Inc. (NOTV) stock prices fell by 17.38% some time after market trading commenced on September 22nd, 2021. This brought the price per share down to USD$41.25 early on in the trading day.

NOTV Stock Partners with Envigo

September 21st 2021 saw NOTV stock jointly announce having entered into an agreement with Envigo. The agreement will facilitate the purchasing of Envigo by Inotiv. Upon the completion of the acquisition, the combined company will enable drug developers to access products and services. These offerings will be for the entirety of discovery and nonclinical development within one organization.

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Details of the Transaction

The transaction consideration is comprised of USD$200 million and 9.365,173 shares of NOTV stock’s common shares. The company has received committed debt financing to fund the cash portion of the transaction. As per the closing price of the company’s shares on September 20th 2021, the transaction values Enbigo at an enterprise value of roughly USD$545 million. The combined company has been valued at an enterprise value of roughly USD$1.2 billion.

Scope of NOTV Stock’s Partnership

The merger is expected to create a unique, full spectrum provider of drug discovery and non-clinical development services. A leading research model products platform will also be facilitated by the partnership. The combined customer base is also expected to increase to roughly 3000 clients across pharma, biotech, and academia with significant opportunities for cross-selling. The collaboration will also strengthen NOTV stock’s operational presence in North America, as well as seeing the addition of several locations in Western Europe. These moves are expected to consolidate the combined company’s global service delivery.

Promising Financials

NOTV stock’s partnership will enhance the scale of operations with an unaudited pro forma combined revenue of USD$286 million for the nine month period ended June 30th 2021. The companies continue to maintain financial momentum. NOTV’s revenue increased by 33% to hit USD$60 million for the nine month period ended June 30th 2021. This is comparable to the USD$45 million reported for the same time period of the prior year.

Future Outlook for NOTV Stock

The company reported a stellar year to date, consolidated by its collaboration with Envigo. The company is keen to capitalize on the opportunities afforded to it as a result of the expansive partnership. Current and potential investors are hopeful that management will be able to effectively leverage the combined resources at their disposal. This is hoped to facilitate significant and sustained increases in shareholder value over the long term.

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