Company: NOTV
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0001628280-25-039017
Chunk: 217

Company: Inotiv, Inc.
Filing Date: 2025-08-07
Form: 10-Q
Item: Part I, Item 2
Chunk 217
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Although no agreements have been reached, based on current negotiations with the plaintiffs, the Company has recorded a $10,000 liability for the Securities Class Action, Federal Derivative and State Derivative lawsuits (as defined in Note 12 - Contingencies and Commitments) as of June 30, 2025 and a $10,000 receivable, as the Company currently expects to recover the full amount of the accrual under its existing insurance policies. Refer to Note 5 - Supplemental Balance Sheet for further information on balance sheet presentation of the liability and the receivable. Although these amounts have been recorded to date, there can be no assurance that final agreements will be reached, on these or other terms. Final amounts payable or recoverable related to these lawsuits may be materially different than the amounts recorded, and are subject to final resolution of these lawsuits, including negotiations between the Company, the other defendants and the plaintiffs, and required approvals by all parties involved and the courts.

External Factors

Additionally, we remain attentive to external factors, including tariffs, client research and development funding levels, and the recently announced efforts to accelerate implementation of the FDA Modernization Act 2.0, passed in December 2022, any of which may increase our costs and could continue to drive uncertainty and instability in global markets. Any or all of these external factors could impact both of our segments during the remainder of fiscal 2025 and beyond.

Our imported NHPs were subject to 10% tariffs during the third quarter of fiscal 2025. These tariffs were required to be paid within 30 days of import, which is a shorter timeframe than the average NHP research model inventory turnover period. As a result, payment of tariffs negatively impacted the Company's cash flows during the third fiscal quarter of 2025 and is expected to continue to impact the Company's cash flows in the future. Future NHP imports are expected to be subject to 15%-20% tariffs. However, we have and expect to continue to work with suppliers and customers to attempt to mitigate the financial impact of these additional costs. The current and future applicable tariff percentages are based on the country of origin of the imported NHPs. If tariff rates continue to increase, we expect to continue working with suppliers and customers to attempt to mitigate these potential additional costs as the NHP’s are mission-critical to the safety testing of new medicines.  

Client research and development funding levels, particularly those impacted by government sources like the U.S. National Institutes of Health ("NIH