Inotiv, Inc.NOTV
Inotiv, Inc. Income Taxes Disclosure
INCOME TAXES
The components of loss before income taxes are presented below:
| Fiscal Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Loss before income taxes: | |||||||||||||||||
| U.S. | $ | (91,902) | $ | (135,913) | $ | (121,245) | |||||||||||
| Non-U.S. | 4,134 | 5,153 | (2,997) | ||||||||||||||
| Total loss before income taxes | $ | (87,768) | $ | (130,760) | $ | (124,242) | |||||||||||
Significant components of the benefit for income taxes are presented below:
| Fiscal Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 319 | $ | 198 | $ | 4,490 | |||||||||||
| State and local | 242 | 5 | 967 | ||||||||||||||
| Foreign | 1,918 | 1,193 | 944 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (18,517) | (18,954) | (20,560) | ||||||||||||||
| State and local | (2,801) | (4,019) | (4,807) | ||||||||||||||
| Foreign | (304) | (298) | (374) | ||||||||||||||
| Income tax benefit | $ | (19,143) | $ | (21,875) | $ | (19,340) | |||||||||||
The effective income tax rate on continuing operations varied from the statutory federal income tax rate as follows:
| Fiscal Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Federal statutory income tax rate | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||
| Increases (decreases): | |||||||||||||||||
| State and local income taxes, net of Federal tax benefit, if applicable | 2.7 | % | 3.2 | % | 3.3 | % | |||||||||||
| Goodwill | — | % | — | % | (3.5) | % | |||||||||||
| Impact of foreign operations | (3.5) | % | (1.2) | % | (0.3) | % | |||||||||||
| Sale of Israeli businesses | — | % | — | % | (0.8) | % | |||||||||||
| Fines and penalties | — | % | (4.6) | % | — | % | |||||||||||
| Other | (2.0) | % | (0.8) | % | 1.1 | % | |||||||||||
| Valuation allowance changes | 3.6 | % | (0.9) | % | (5.2) | % | |||||||||||
| Effective income tax rate | 21.8 | % | 16.7 | % | 15.6 | % | |||||||||||
Significant components of our deferred tax assets and liabilities are presented below as of the Company's fiscal year-end:
| September 30, 2025 | September 30, 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Inventory | $ | 1,926 | $ | 1,009 | |||||||
| Allowance for credit losses | 1,628 | 1,676 | |||||||||
| Domestic net operating loss carryforwards | 16,707 | 16,343 | |||||||||
| Foreign net operating loss carryforwards | 7,736 | 10,170 | |||||||||
| Foreign tax credit carryforwards | 4,632 | 3,861 | |||||||||
| Capital loss carryforward | 1,833 | 1,870 | |||||||||
| Stock compensation expense | 3,020 | 3,017 | |||||||||
| Business interest limitation | 28,207 | 19,948 | |||||||||
| Lease liabilities | 12,507 | 12,450 | |||||||||
| Goodwill | 6,069 | 7,739 | |||||||||
| Other | 466 | 194 | |||||||||
| Total deferred tax assets | 84,731 | 78,277 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Prepaid expenses | (617) | (333) | |||||||||
| Lease ROU assets | (11,845) | (12,123) | |||||||||
| Accreted interest on convertible debt | (3,707) | (5,240) | |||||||||
| Basis difference for property and equipment | (11,179) | (13,374) | |||||||||
| Basis difference for intangible assets | (49,533) | (56,041) | |||||||||
| Total deferred tax liabilities | (76,881) | (87,111) | |||||||||
| Total net deferred tax liabilities | 7,850 | (8,834) | |||||||||
| Valuation allowance for net deferred tax assets | (13,423) | (18,207) | |||||||||
| Net deferred tax liabilities | $ | (5,573) | $ | (27,041) | |||||||
U.S. GAAP requires that valuation allowances should be established against deferred tax assets based on consideration of all available evidence, both positive and negative, using a “more likely than not” standard. The Company assesses its deferred income taxes to determine if valuation allowances are required or should be adjusted. This assessment considers, among other matters, the nature, frequency and amount of recent losses, the duration of statutory carryforward periods, and tax planning strategies. In making such judgments, significant weight is given to evidence that can be objectively verified.
The Company’s U.S. tax reporting group has a cumulative three-year loss. The valuation allowance related to the Company’s U.S. tax reporting group as of September 30, 2025, 2024 and 2023 was $5,991, $7,114 and $4,618, respectively, and the valuation allowance related to the Company's non-U.S. entities was $7,432, $11,093 and $11,757, respectively, as the Company does not believe that certain deferred tax assets will be realized in the foreseeable future. Payments made in fiscal years 2025, 2024 and 2023 for income taxes, net of refunds, amounted to $749, $1,843 and $7,146, respectively.
The cumulative undistributed earnings, projected as of September 30, 2025, of the Company’s non-U.S. subsidiaries, except the Deemed Repatriated Entities (as defined below), are considered to be indefinitely reinvested. Accordingly, no provision for U.S. federal and state income taxes or withholding taxes has been made in the accompanying consolidated financial statements. A determination of the unrecognized deferred tax liability for the amount indefinitely reinvested is not practicable due to the complexities in the tax laws and assumptions we would have to make. Further, the Company’s intent regarding repatriation of retained earnings at certain non-U.S. subsidiaries, Envigo RMS Sarl, Envigo RMS GmbH, and
Envigo RMS, S.L. (collectively, the "Deemed Repatriated Entities"), is primarily driven by a change in our transfer pricing policy. Since any such additional taxes would generally be limited to foreign withholding, the tax effect of currency gains and losses, capital gains and state taxes, any additional taxes due to a repatriation would be immaterial, Accordingly, no deferred tax liability has been recorded as of September 30, 2025.
At September 30, 2025, the Company had domestic net operating loss carryforwards for federal tax purposes of $48,827, all of which may be carried forward indefinitely. State and local loss carryforwards totaled approximately $129,411. The majority of these loss carryforwards expire from September 30, 2028 through 2044; however, approximately $39,969 may be carried forward indefinitely, as they relate to states conforming to the provisions of the Tax Cuts and Jobs Act which allowed for an indefinite carryforward period of losses generated after December 31, 2017. The Company had non-U.S. net operating loss carryforwards of $40,617, which have been fully offset by valuation allowance. These losses may be carried forward indefinitely.
The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon regulatory examination based on the technical merits of the position. The amount of the benefit for which an exposure exists is measured as the largest amount of benefit determined on a cumulative probability basis that we believe is more likely than not to be realized upon ultimate settlement of the position. As of September 30, 2025, there were no material uncertain tax positions based on any federal or state tax position.
The Company is no longer subject to U.S. Federal tax examinations for tax years before 2022 or state and local tax examinations for tax years before 2021, with limited exceptions. For federal purposes, the tax attributes carried forward could be adjusted through the examination process and are subject to examination 3 years from the date of utilization.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Dec 5, 2025 | Showing above |
| 2024 | Dec 4, 2024 | |
| 2023 | Dec 12, 2023 | |
| 2022 | Jan 13, 2023 | |
| 2021 | Dec 21, 2021 | |
| 2020 | Dec 22, 2020 | |
| 2019 | Dec 26, 2019 | |
| 2018 | Dec 21, 2018 | |
| 2017 | Dec 22, 2017 | |
| 2016 | Dec 28, 2016 | |
| 2015 | Dec 24, 2015 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.