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Good day, everyone, and welcome to the Inotiv First Quarter 2026 Earnings Call. [Operator Instructions] Please be advised that today's call is being recorded. [Operator Instructions] I'd now like to turn the call over to Steven Halper with LifeSci Advisors.

Thank you, Jamie, and good morning, everyone. Thank you for joining today's quarterly call with Inotiv's management team. Before we begin, I'd like to remind everyone that some of the statements that management will make on this call are considered forward-looking statements, including statements about the company's future operating and financial results and plans. Such statements are subject to risks and uncertainties that could cause actual performance or achievements to be materially different from those projected. Any such statements represent management's expectations as of today's close. You should not place undue reliance on these forward-looking statements, and the company does not undertake any obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise. Please refer to the company's SEC filings for further guidance on this matter including risks and uncertainties that could cause results to differ from forward-looking statements. Management will also discuss certain non-GAAP financial measures in an effort to provide additional information for investors. Definitions of these non-GAAP measures and reconciliations to the most comparable GAAP measures are included in the company's current and previous earnings releases, which have been posted to the Investors section of the company's website, www.inotiv.com and is also available in the Form 8-K filed with the Securities and Exchange Commission. If you haven't obtained a copy of today's press release yet, you can do so by going to the Investors section of Inotiv's website. Joining us from the company this afternoon -- this morning are Bob Leasure, President and Chief Executive Officer; and Beth Taylor, Chief Financial Officer. John Sagartz, Chief Strategy Officer, will join us for the question-and-answer portion of the call. Bob will begin with some opening comments, after which Beth will present a summary of the company's financial results for our first quarter of 2026, and then we'll open the call for questions. It is now my pleasure to turn the call over to Bob Leasure, CEO. Bob, please go ahead.

Thank you, Steve, and good morning, everyone. During the first quarter of fiscal 2026, despite the usually weaker seasonality, we saw very strong year-over-year revenue growth in our DSA business with both increased discovery and translational sciences revenue and increased safety assessment revenue, somewhat offset by weak performance of our NHPs and typical seasonal weakness in the rest of our RMS business. We're delighted to see the continued strength in our DSA business, building on several quarters of improvement against a backdrop of generally slow market demand. Q1 of 2026, DSA revenue increased 12% versus the same period last year. Within that, DTS revenues were up 26% and safety assessment revenues were up 7%. In addition to revenue growth, this quarter, we also saw strong growth in net awards with discovery awards up 44%, safety assessment awards up 22% versus the prior year period. With this, our trailing 12-month DSA awards have increased 34% over the prior 12-month period. This brought our book-to-bill for the quarter to 1.16:1 and for the trailing 12 months to 1.08:1. The revenue growth in DSA drove our strongest first quarter DSA margins in the last 3 years. The RMS business continued to be challenging, in particular, for NHPs, where lower volume sales impacted our RMS revenues and margins compared to last year. We remain on track with our site optimization, transportation, fleet optimization plans, which we believe will be positive for margins in future periods. In connection with the current phase of the RMS site optimization plan, we exited 2 leased facilities during the first fiscal quarter of 2026, one in October and the second in December. And this phase should be complete by the third quarter of fiscal 2026. Overall, our RMS revenue for the first quarter declined 5.4% compared to the prior year quarter. As I noted, this was primarily driven by decreased NHP sales with lower volumes shipped to customers during the quarter. We still expect NHP full year 2026 revenue to remain flat compared to last year. Despite the lower overall sales in the quarter, we did see growth in RMS services revenue of 13% compared to Q1 of fiscal 2025, mainly due to higher NHP Colony management services revenue. As we disclosed in September, we engaged Perella Weinberg Partners to provide general financial advisory and investment banking services to assist the company in exploring potential debt refinancing alternatives. We've continued these efforts and remained committed to our goal of refinancing our debt and improving our balance sheet. We will provide any updates at the appropriate time. The company has received a waiver for noncompliance with the financial covenant ratios under our credit agreement for the first quarter of fiscal 2026. We again to thank our lenders for their continued support in working with us. Overall, we're generally pleased with our progress and momentum as it relates to the DSA business and the site optimization and cost reduction initiatives we are implementing for the RMS business. We are continuing to navigate the business trends and macroeconomic factors that are affecting our RMS business. Our focus remains on improving revenue and margins in our DSA business and reducing costs, diversifying our sources of revenue, improving margins in our RMS business. We continue to enhance our new approach methods or NAMs strategy in support of FDA guidance and industry expectations for continued innovation. Over the last couple of months, we announced important collaborations that bring state-of-the-art machine learning tools, allowing us to integrate, analyze and visualize complex datasets as well as providing us access to disease-relevant human tissue. We believe the offerings we are continuing to build within the NAMs space will allow us to make our customers' discovery efforts increasingly human relevant earlier in the process and help speed their important new medicines to successful registration. Finally, we remain committed to improving our financial performance. To facilitate this, we will continue to focus on client satisfaction, enhance speed and delivery while simultaneously initiating cost reductions and optimizing our product and services portfolio and operating footprint. I will now hand things over to Beth to provide a financial overview.

Thank you, Bob, and good morning, everyone. For the first quarter of fiscal 2026 total revenue was $120.9 million compared to $119.9 million in the first quarter of fiscal 2025. This was an increase of $1 million or 0.8% in revenue from the prior year quarter, primarily driven by increased DSA revenue and partially offset by decreased RMS revenue. DSA revenue in the fiscal 2026, first quarter was $48 million compared to $42.8 million in Q1 fiscal 2025. The year-over-year increase in DSA revenue was primarily driven by an increase in discovery pharmacology service and surgical services revenue as well as an increased revenue at our Rockville facility. Overall, net new DSA awards during the quarter were $53.6 million, a 27% increase over Q1 of fiscal 2025 and a 34% year-over-year increase for the trailing 12-month period ended December 31, 2025. We have also seen strong quoting and awards for the month of January representing an encouraging start to our second fiscal quarter of 2026. The backlog conversion rate in the first quarter of fiscal 2026 was 33.2% compared to 32.8% in the prior year period. DSA cancellations and negative change orders in the first quarter of fiscal 2026 were approximately 51% lower than the prior year first quarter. Cancellations and negative change orders in the trailing 12-month period were approximately 17% lower than the prior trailing 12-month period. The book-to-bill ratio for DSA in the first quarter of fiscal 2026 was 1.16:1, and our trailing 12-month book-to-bill was 1.08:1. DSA backlog was $145.4 million at December 31, 2025, compared to $138.2 million at September 30, 2025 and $130.4 million at December 31, 2024. RMS revenue for the first quarter of fiscal 2026 of $72.9 million decreased $4.1 million or 5.4% compared to Q1 fiscal 2025. The decrease in RMS revenue was due primarily to lower NHP volumes sold partially offset by higher average selling prices for NHPs and higher NHP related services revenue. The overall operating loss for the first quarter of fiscal 2026 increased $0.8 million from $15.5 million in the first quarter of fiscal 2025 to $16.3 million in Q1 of fiscal 2026. The increase in operating loss was primarily driven by an increase in RMS operating loss of $2.4 million in Q1 fiscal 2026 partially offset by an increase in DSA operating income of $1.2 million. The increase in RMS operating loss was primarily due to the $4.1 million decrease in RMS revenue previously mentioned, partially offset by decreased RMS cost of revenue. The DSA increase in operating income was driven by higher DSA revenue, partially offset by increased cost of revenue related to increased personnel to support planned DSA growth and increased supplies expense. Non-GAAP operating income for our DSA segment in the first quarter was $8.2 million or 6.8% of total revenue compared to $7.1 million or 5.9% of total revenue in last fiscal year's first quarter. As Bob mentioned, we continue to focus on our DSA margins, and we believe we will see improvement in future quarters. As we experienced an increase in discovery service revenue and continue to fill the added capacity and services we have developed over the last 18 months, we believe we will see margin improvement through operating leverage. In addition, we continue to see a more stable pricing environment across our DSA services. In our RMS segment, non-GAAP operating income in the first quarter of fiscal 2026 was $7.2 million or 5.9% of total revenue compared to $9.4 million or 7.9% of total revenue in the first quarter of fiscal 2025. Lower margins were primarily driven by lower NHP volume sales. Interest expense in Q1 of fiscal 2026 decreased to $13.5 million from $13.8 million in the first quarter of fiscal 2025, primarily due to lower interest rates. Consolidated net loss in the first quarter of fiscal 2026 totaled $28.4 million or at $0.83 loss per diluted share. This is compared to consolidated net loss of $27.6 million or a $1.02 loss per diluted share in the first quarter of fiscal 2025. For the first quarter of 2026, total company adjusted EBITDA was $1.8 million or 1.5% of total revenue compared to $2.6 million or 2.2% of total revenue for the first fiscal quarter of 2025. Our balance sheet as of December 31, 2025, included $12.7 million in cash and cash equivalents as compared to $21.7 million on September 30, 2025. The company is utilized and will continue to utilize its revolving credit facility during the normal course of business as needed. As of December 31, 2025, the company had borrowings of $6 million on the $15 million revolving credit facility, which is still outstanding. Total debt, net of debt issuance costs as of December 31, 2025, was $405.8 million compared to $402.1 million on September 30, 2025. This includes $118.2 million of convertible notes as of December 31, 2025, and our second lien notes of $24.7 million. Cash used in operating activities was $5.4 million for the 3 months ended December 31, 2025, compared to $4.5 million for the 3 months ended December 31, 2024. Capital expenditures in the first quarter of 2026, or $5.2 million or approximately 4.3% of total revenue, $3 million of the capital expenditures in the first quarter of 2026 related to the current phase of our RMS site optimization plan, which allowed us to exit 2 leased facilities during the quarter. The first quarter of fiscal 2025 capital expenditures were $4.5 million or 3.7% of revenue. We continue to expect our annual spend for CapEx for fiscal year 2026 to be less than 4% of revenue. At this juncture, we are not providing formal financial guidance for fiscal year 2026. We continue to feel positive about the progress we have made in recent quarters. As we have stated previously, we hope to resume providing guidance once we have greater clarity on the market and client demand and clarity on any further impact to our business as tariff policies evolve. And with that financial overview, we will turn the call over to Jamie, our operator, for questions.

[Operator Instructions] We'll hear first from Frank Takkinen with Lake Street Capital Markets.

I was hoping to start with a little bit more color on profitability. It sounds like it was likely margins in RMS that weighed on adjusted EBITDA in the quarter, but I think there was maybe a little bit more OpEx than I was expecting in there, too. I was curious if you could unpack that at all and talk to some of the moving pieces around the adjusted EBITDA number. And then as a second part, how should we be thinking about adjusted EBITDA trending with seasonality through the rest of the fiscal year?

Okay. Frank. First, address seasonality. I think that the seasonality will be pretty much the same as last year. The first quarter has always been -- and we'd like to find a way to smooth that out. But unfortunately, the first quarter has always been a little bit tougher. As we go through the closures to the universities and some of our clients and Thanksgiving over the holiday season. The only other seasonality issue that we may really come across is if weather significantly can impact our business. And we did have some weather in January that affected the last week of January. But typically, we didn't make that up during February and March. But sometimes that can also impact shipping, if you will. In terms of our margins and OpEx, I do think we had some increase in expenses that have come through in some of our cost of goods sold, mainly if you look at some of the animal costs or tariffs that may have come through that we've not passed along. A lot of what we do in terms of our quotes, if you will. And we've alluded to the pricing stabilizing. But again, what we started quoting last summer in March, April, May, June, some of that pricing and some of those price increases that came through that we made amended in our pricing in the summer. We won't see that really come through until 9 to 12 months later. If you think about it, some of our quoting, we may quote 1 quarter, it may be 3 or 4 months before it's awarded, maybe another 3 or 4 months before that starts, which means you could be out 9 to 12 months before you start to see those margins. So I think we'll continue to see margins improve in the back half of this year also as I think some of the pricing and some of the cost increases got passed along. So, yes, I mean it was -- I think that we were a little -- I say, I think frustrated that we didn't maybe have more volume of the NHPs. It was, I thought, significantly less than we would have expected or significantly as it was prior year in terms of volume, but we were able to overcome quite a bit of that with some of the DSA growth and some of our services growth. And I think we'll be fine going forward, as I said, I think we'll make up the volume also before the year is over.

And then maybe just for my second one, I wanted to ask a little bit more on DSA awards. Obviously, that's been trending very positively, fourth quarter over 1 and highest, I think, since fiscal Q3 of 2020 or fiscal Q1 of 2024. So great to see it continue to trend positively. Maybe talk a little bit about why that has continued to be a little bit above where the industry is at and then how that should translate into DSA growth for 2026.

If you recall that when we talked last May at Investor Day, there are really a couple of key pieces to what our plan was longer term. One is -- and one was dependent on our DSA growth and then obviously the growth in margins. And the second one was in the site optimization cost. So again, on the DSA business, I would remind everybody, we are much smaller than some of the other people in the industry may be comparing us to. So our ability to move the needle may be a little easier because of our size. But I believe that we've done a couple of things that we focus on. One is really making sure that we're on time and have a high degree of communication with everything we do and develop a great deal of trust with our customers. So I think we see increasing reoccurring sales from existing customers. In addition, we're still a fairly young company. So we're still seeing new customers come to us. As they get to know us and introduce themselves to us. And sometimes it may take a year or 2 before we get to know them before we actually see some business. But we're starting to get, I think, increasing expansion of our brand name out there, and that came with some of the increase in the sales force that we started 2 years ago. So some of these things we initiated 2 years ago are starting to benefit. Then finally, we also have, I think, a great deal of scientific strength, a great pathology team, great scientific team. And I believe that we alluded to it in here, but some of the innovation and some of the things that we're doing in discovery. I think, are transformational. And I think that will really be one of our strengths going forward. And I think it's starting to show more and more. So I hope that we can continue to expand on that in future quarters.

We'll move now to Dave Windley with Jefferies.

I wanted to start on DSA revenue. Your -- and backlog, I guess, your conversion rate had been marching up pretty steadily over the last 6 quarters or so and took a step back in the first quarter. I wondered if that has to do with -- you mentioned kind of seasonality in holidays. I wondered if that has to do with that, if it has anything to do with where your orders are coming and where you have available capacity? And kind of related to that, you're calling out the growth in discovery services kind of more so than safety assessment. I know you've made some investments in the discovery area. But again, is that a function of where you have capacity as much as where the demand is?

Yes, you're correct, that discovery is where we probably have more capacity than some of our safety assessment. And we've grown a little bit of that capacity lately to get ready for next quarter and what we see coming down the road. So I think -- as far as the throughput, I think we are a little higher than -- conversion rate, I should say. I think we were a little higher than last year, just a point higher, and we've been trending higher quarter-over-quarter. I think some of that comes into the seasonality and the fact that the backlog just went up quite a bit. So hopefully, we'll start to see that conversion rate increase. And generally, yes, the discovery conversion rate comes a little quicker than the safety assessment conversion rate. Safety assessment usually starts a little a little bit sooner, may take 9 months once we get PO to get it through and the discovery can take a matter of weeks to fewer months. I also think something a little bit different in the discovery in the last quarter. Is that we were getting some discovery revenue that's much -- that may have a little bit longer lead time than normal and some blanket POs and some large reoccurring business that's taking place, and that may have dropped it down a little bit.

Flipping Bob, to the RMS business, you've taken over a period of time, you've taken significant amounts of operating costs out, lease exits, et cetera, you had a couple more of those. I guess 2 questions. The simple one would be, is there -- were those lease exits late in the quarter such that we should expect some additional incremental cost outs for the sequential quarter. And then two more, I guess, bigger picture, as you're taking that operating cost out, you're -- like at least in this quarter, and you talked about NHP activity, but we're not seeing the operating leverage benefits of that. Help me understand what is shading that or when we will begin to see that operating leverage in RMS from those cost outs?

I think some of the operating leverage didn't show up because of the significant reduced volume in the NHPs. So that overshadowed some of the leverage. But you're also correct that we will see some of those costs come out next quarter. It's not only the facility, but as you ramp up these new facilities, we're building out and expanding existing facilities that are going to be much more efficient than the facilities that we are closing. So we are not only closing. We're closing our oldest facilities. These are usually have very high maintenance cost, not as efficient, higher labor cost and then the related lease cost to it. So -- and at some point, as you're bringing these new facilities up before you close the other ones down, you're running duplicate facilities. So I think we are starting to see internally, we can see some of the costs starting to come out, and we can see the margins of the , I should say, small animal business improve, but some of that was overshadowed by the lack of volume in the NHP business this quarter.

So last question quickly. On the NHPs, can you give us order of magnitude? How much was that volume down year-over-year?

Probably about 25%. It was -- and the NHPs, we've had that before. Well, it's not a straight line in terms of when they go out. And I think we've done a nice job of really reducing our dependency on the importation of NHPs. But if we had to ship the additional 25% out like we did a year ago quarter or anywhere close to what we did in Q3 or Q4. I think we'd have probably seen a little bit more of those efficiencies come through, Dave. But hopefully, we'll see that in the future quarters throughout the year.

We'll turn next to Matt Hewitt with Craig-Hallum Capital Group.

Maybe first up, you noted in your prepared remarks that you've been making some progress in signing some new relationships on the NAM side. I'm just curious if you could provide a little bit more color on those relationships and how you expect those to kind of drive incremental revenues going forward?

Well, John is on the call, John may be able to help more in terms of if you're going to get into the science, but I think this is part of what we're doing from an innovation standpoint. And we've had -- I will say this, we've been doing some R&D. We had to have a line for R&D in our budget. We've been working on that and developing these relationships and I think this innovation and what we're -- is going to be a key part of our future and a key part of our industry. And we've got -- we don't want to become and we want to avoid becoming a commodity. And to do that, we've got to be able to lead with innovation. And I think we have some things that are going to be transformative as I said, in the future, and I think some of our customers see that. And I think that's really benefiting right now our brand and is benefiting where we're seeing some increased volume. But I'll let John, do you want to add anything more to that. We've been somewhat careful. And maybe, Matt, I would tell you, we may have an Investor Day in the future here where we can talk a little bit more about it. But right now, John, is there anything else you'd want to add to that?

Just that the announcements that we've made over the past couple of months have given us access to technologies and tools that allow us really to pursue a program to matching human or matching animal models to human disease through the ability to look at data differently in a big way. And as Bob mentioned, we've got some internal initiatives that are using specific therapeutic areas to integrate those technologies and really validate the overall approach, but we needed to have access to tools that weren't currently robust within our existing footprint, and that was the basis for the announced collaborations.

And then you touched on this a little bit, but with the weather that impacted shipping and whatnot later in January, maybe does that also impact your costs? I mean the cold temperatures, in particular, reached your facilities, I would think, in Texas. Does that translate into some higher cost to maintain proper heating and all of that for the NHPs in particular? Or how does that impact you?

Well, this last couple of weeks -- by the way, we also had that last year. Some cold weather comes through. But we're not transporting like we do. I should say, if the roads are going to have ice and the roads, and it's going to be dangerous. We're not transporting some of our research models and animals. So we're going to be very careful about that. And so that may -- and some of our customers are also going to be impacted and some of the universities are going to close and not be able to take orders. So that's one part of it. The second part is, yes, -- we have some great people that if it's going to be extra cold and we're concerned and you could have ice, where you could have electricity issue, we have generators, of course. But we're going to -- then we have people that volunteer and they stay at the facilities 24/7 to make sure that they're -- they can provide all the care that's needed and they do an extraordinary job. I wouldn't say it's a lot of -- it's not going to change the needle that much in terms of cost. But it is quite impressive to see the care and the culture that these people have throughout the organization. And this last cold spell went from, obviously, from Texas all the way all through the East. And there were some just extraordinary efforts in volunteering -- people volunteering their time and spending weekends and the week just 24/7, taking care of the facilities and the animals. And it's quite impressive. So to extent anybody listening, thank you once again for what you do and for caring for everything we do.

With no further questions in queue at this time. I'd like to turn the floor back over to Bob Leasure for any additional or closing comments.

Thank you. As I said, we are pleased with the recent growth in the DSA revenue quoting awards and continued focus on customer satisfaction, integration and efficiency and the cost reductions in the RMS business. We believe this progress has been made possible by our focus on execution and we'll maintain our commitment to client satisfaction and continued innovation. We're making progress on financial goals outlined last year. We're continuing to prioritize our strategic review of our capital structure and improving our balance sheet. I appreciate the support of our lenders and what they've provided to our management team and the company and for the shareholders who continue to support us. I continue to believe that we are a stronger company today, and I'm confident in our plan for continued improvement in the future. Thank you for joining us today.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Hello, and welcome, everyone joining today's Inotiv Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] Please note, this call is being recorded. We are standing by if you should need any assistance. And it is now my pleasure to turn the meeting over to Steve Halper of LifeSci Advisors. Please go ahead.

Thank you, Claudia, and good afternoon. Thank you for joining today's quarterly call with Inotiv's management team. Before we begin, I'd like to remind everyone that some of the statements that management will make on this call are considered forward-looking statements, including statements about the company's future operating and financial results and plans. Such statements are subject to risks and uncertainties that could cause actual performance or achievements to be materially different from those projected. Any such statements represent management's expectations as of today's date. You should not place undue reliance on these forward-looking statements, and the company does not undertake any obligation to update or revise forward-looking statements, whether as a result of new information, future events -- the company does not undertake any obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise. Please refer to the company's SEC filings for further guidance on this matter, including risks and uncertainties that could cause results to differ from forward-looking statements. Management will also discuss certain non-GAAP financial measures in an effort to provide additional information for investors. Definitions of these non-GAAP measures and reconciliations to the most comparable GAAP measures are included in the company's earnings release, which has been posted to the Investors section of the company's website www.inotiv.com and is also available in the Form 8-K filed with the Securities and Exchange Commission. If you haven't obtained a copy of today's press release yet, you could do so by going to the Investors section of Inotiv's website. Joining us from the company this afternoon are Bob Leasure, President and Chief Executive Officer; and Beth Taylor, Chief Financial Officer. John Sagartz, Chief Strategy Officer, will join us for the question-and-answer portion of the call. Bob will begin with some opening remarks, which -- after which Beth will present a summary of the company's financial results for its fourth quarter and full year fiscal 2025 and then we'll open the call for questions. It's now my pleasure to turn the call over to Bob Leasure, CEO. Bob, please go ahead.

All right. Thank you, Steve. Good afternoon, everyone. During the fourth quarter of fiscal 2025, we saw the continuation of some positive trends for our business, including a strong year-over-year increase in demand for our Discovery & Safety Assessment business. We continue to execute on the core goals outlined in our May 2025 Investor Day, including improving our cash flow and margins and maintaining our focus on customer metrics. Two critical elements of our plan consists of improving DSA revenue and margins and continuing our RMS site consolidation efforts in order to further reduce cost. On today's call, I'll provide an update on the progress we are making on these objectives along with the other general business updates for the fourth quarter. On that last point, on August 18, we filed an 8-K disclosing that we became aware of a cybersecurity incident which caused disruption to certain of our business operations. We worked to restore availability and access to our networks and systems during this fiscal fourth quarter. We are required to work through a number of challenges that were disruptive to the business, but we continue to execute request for delivery of products and services. While this incident inevitably had some financial impact on the quarterly results, I'm very proud of how the team responded. And as you can see from the results of the quarter, the company maintained its momentum through this process. In September, we disclosed that we had engaged Perella Weinberg Partners to provide general financial advisory and investment banking services to assist the company in exploring potential debt refinancing alternatives. And then we later announced that a proposed settlement of our securities class action and an agreement in principle to settle the derivative lawsuits in each case pending court approval and expect that the settlement payments will be fully covered by insurance. Now moving on to the quarterly results. We continue to see some very encouraging signs. For the fourth quarter of fiscal 2025, total revenue was $138.1 million, an increase of $7.7 million or 5.9% compared to the fourth quarter of fiscal 2024. The DSA business was the primary driver of this increase. Sequentially, revenue was up $7.4 million or 5.7%. For fiscal year 2025, total revenue was $513 million, an increase of $22.3 million or 4.5% compared to $490.7 million for fiscal 2024. Some of the key highlights of Q4 2025 included quarter-over-quarter and year-over-year increases in net DSA awards and revenue growth. DSA revenue growth was a goal that we outlined during our Investor Day in May of this year. Compared to the prior year fourth quarter, DSA quarterly revenue increased 15.7% and awards increased approximately 61%. These results were some of the strongest DSA quarterly results we have seen over the last 2 years. Since our May Investor Day, we have posted increases of 12.4% in DSA revenue and 41.1% in DSA awards for the last 2 fiscal quarters of 2025 as compared to the last 2 fiscal quarters of 2024. In the fourth quarter, Discovery business awards increased 55% over the same period a year ago, and we achieved even stronger growth rates in the new service lines that we started or expanded over the last couple of years, including biotherapeutics, medical devices and genetic toxicology. The DSA backlog conversion rate was 37.4% for the fourth quarter and was the highest quarterly conversion rate we have seen in 3 years. DSA margins also continued to improve. And while we believe there should be further opportunities in the future, we are pleased with the current momentum. RMS revenue for the fourth quarter was slightly ahead of last year by approximately 1% and for the fiscal year 2025 increased 4.7% over fiscal year 2024. Phase 2 of our RMS site consolidation project has remained on track. In early October, we closed one of the three planned RMS facilities and now have two additional lease facilities remaining to close. As we stated last quarter, we anticipate future annual savings of $6 million to $7 million on a capital investment related to expanding an existing lease location of approximately $6.5 million. To date, we have spent approximately $1.8 million net of tenant allowances related to this capital investment. As with previous projects we have executed in the RMS segment, these additional investments are intended to help modernize our existing footprint while allowing us to close older facilities. The plan will reduce open capacity, should create operating efficiencies while continuing our efforts to support our animal welfare objectives. Additionally, we believe that this plan allows us to remain agile and to increase production capacity in the future as needed. When the site consolidation project is complete, we expect to have closed a total of 13 RMS facilities or approximately 60% of the RMS facilities over the last 3 years. During fiscal 2025, we sold two properties as a result of our site consolidation project. One property was sold in June, and the other property was sold in September. And the net proceeds were used to repay principal on our term loans during July and October, respectively. Our efforts also saw additional achievements during the fourth quarter, including advancements in our RMS management operation system, which have been developed over the last 14 months and are now providing data and metrics that we believe will allow us to further improve RMS operations and efficiencies in the future. We continue to improve our North American transportation fleet and operations. In the second quarter of fiscal 2026, we expect to have achieved a 24% reduction in our fleet to yield the cost savings since bringing the North American transportation in-house. This 2-year project has been critical helping improve our delivery and client satisfaction. In addition to other improvements being made with order intake and accuracy, we have seen a 55% reduction in our RMS client complaints over the last 2 years. Subsequent to the end of fiscal fourth quarter, in October 2025, we're able to transfer our commercial operations to one new CRM system, integrating multiple systems into one solution for our customer relationship management systems. In addition to cost savings, we anticipate this will provide operating efficiencies, improved data metrics and enhanced ability to communicate internally between business segments and with customers. And we have reduced the number of IT systems from 249 in early 2022 to 162 as of October 2, 2025. This reduction has been part of our planned efforts beginning in 2022 to streamline and enhance our technology environment. We look forward to continue to focus our efforts on increasing revenue, improving margins and improving our client experiences. While we did face some headwinds in the quarter, we were pleased with our results, which we believe further demonstrate our ability to identify opportunities, integrate businesses we acquired in startup and implement action plans designed to improve revenue and margins. As for our balance sheet, we generated $14.3 million of cash from operations in the fourth quarter and increased our cash balance to $21.7 million compared to $6.2 million at June 30, 2025. Our first lean term debt matures in November of 2026, our second lien term loan in February of 2027 and our convertible debt in October of 2027. As we mentioned previously, we have retained Perella Weinberg to assist us in exploring potential debt refinancing alternatives with the goal of improving our balance sheet. We are actively having these discussions, and we'll provide more information at the appropriate time. Before I turn the call over to Beth, I want to recognize and acknowledge that it has been very, very nice to see this increase in DSA revenue and the DSA awards over the last 3 quarters and believe these trends are continuing through the first 2 months of the current quarter compared to the same period in prior year. However, as a reminder, we are coming off some very weak numbers from a year ago and the geopolitical and macroeconomic conditions, risk and uncertainties are likely to remain with the industry for the foreseeable future. I'll now hand things over to Beth to provide the financial overview.

Thank you, Bob, and good afternoon, everyone. For the fourth quarter of fiscal 2025, total revenue was $138.1 million compared to $130.4 million in the fourth quarter of fiscal 2024. This was a $7.7 million or 5.9% increase in revenue from the prior year quarter, primarily driven by increased revenue of $7.1 million within our DSA segment. For fiscal 2025, total revenue was $513 million compared to $490.7 million in fiscal 2024. This was a $22.3 million or 4.5% increase in revenue from the prior year due to a $14.5 million or 4.7% increase in RMS revenue primarily driven by higher NHP product and service revenue and a $7.8 million or 4.3% increase in DSA revenue. DSA revenue in the fiscal 2025 fourth quarter was $51.6 million compared to $44.6 million in Q4 of fiscal 2024. The year-over-year 15.7% increase in DSA revenue was primarily driven by an increase in discovery and translational science services, biotherapeutics, general toxicology services and surgical services. DSA revenue for fiscal 2025 was $187.9 million compared to $180.1 million for fiscal year 2024. The year-over-year 4.3% increase in DSA revenue was primarily driven by an increase in safety assessment services, including biotherapeutic services, surgical services and general toxicology and an increase in discovery and translational science services. Additionally, the year-over-year increase in DSA revenue was driven by our improved performance over the last 6 months of the fiscal year. The book-to-bill ratio for DSA for the fourth quarter of fiscal 2025 was 1.08:1, and our trailing 12-month book-to-bill was 1.05:1. DSA backlog was $138.2 million at September 30, 2025, compared to $129.9 million at September 30, 2024, and $134.3 million at June 30, 2025. Overall, net new DSA awards this quarter were $54.2 million, a 61% increase over Q4 of fiscal 2024 and a trailing 3-quarter increase of 37% year-over-year. We continue to see strong quoting and awards for the months of October and November. The backlog conversion rate in the fourth quarter of fiscal 2025 was 37.4%, up from approximately 33% in the prior year period. The DSA cancellations and negative change orders in the fourth quarter of fiscal 2025 were approximately 29% lower compared to the prior year fourth quarter. Cancellations in the trailing 12-month period were approximately 7% more than the prior trailing 12-month period. RMS revenue for the fourth quarter of fiscal 2025 was $86.5 million, an increase of $700,000 or 0.8% compared to Q4 of fiscal year 2024. RMS revenue for fiscal 2025 of $325.1 million increased $14.5 million or 4.7% compared to fiscal 2024. The increase in RMS revenue was primarily due to higher NHP products and services revenue. The overall operating loss for the fourth quarter of fiscal 2025 decreased $6.4 million from $13.2 million in the fourth quarter of fiscal 2024 to $6.8 million in Q4 of fiscal 2025, primarily due to increases in RMS operating income of $2.9 million and in DSA operating income of $2.3 million as well as a reduction in unallocated corporate expenses of $1.1 million. The increase in RMS operating income was driven by a reduction in cost of revenue, which predominantly related to reduction in costs related to NHP's operating expenses and depreciation and amortization of intangible assets. The increase in DSA operating income was driven by the increase in revenue discussed above, partially offset by an increase in cost of revenue primarily driven by increased research model expenses, compensation and benefits expense, professional fees and facility-related expenses. The overall operating loss for fiscal 2025 decreased $55.5 million from $86.4 million in fiscal 2024 to $30.9 million in fiscal 2025, primarily due to RMS operating results. The change in RMS operating results was primarily related to decreased operating expenses, a $14.5 million increase in revenue previously mentioned and partially offset by increased cost of revenue. The $38.2 million decrease in operating expenses was primarily driven by the $28.5 million charge incurred during fiscal year 2024 related to the Resolution Agreement and Plea Agreement, which did not repeat during fiscal year 2025 and a legal settlement of $7.6 million that we received during fiscal year 2025. Increase in RMS cost of revenue primarily related to increased costs associated with the increased NHP related products and service revenue. Non-GAAP operating income for our DSA segment in the fourth quarter of fiscal 2025 was $9.3 million or 6.7% of total revenue compared to $7.4 million or 5.6% of total revenue in the fourth quarter of fiscal 2024. Non-GAAP operating income for our DSA segment for fiscal 2025 was $28.5 million or 5.6% of total revenue compared to $30.3 million or 6.2% of total revenue in fiscal 2024. As Bob mentioned, we continue to be focused on our DSA margins, and we expect to see improvement in future quarters, largely through operating leverage and assuming we continue to see a stable pricing environment. In our RMS segment, non-GAAP operating income in the fourth quarter of fiscal 2025 was $14.9 million or 10.8% of total revenue compared to $12.7 million or 9.7% of total revenue in the fourth quarter of fiscal 2024. Non-GAAP operating income for RMS segment in fiscal 2025 was $56.7 million or 11.1% of total revenue compared to $44.3 million or 9% of total revenue in fiscal 2024. Interest expense in Q4 of fiscal 2025 increased to $15.7 million from $12.3 million in the fourth quarter of fiscal 2024 primarily due to noncash interest incurred in relation to the second lien notes issued in September of 2024. Interest expense for fiscal year 2025 increased to $56.6 million from $46.9 million in fiscal year 2024, primarily due to noncash interest incurred in relation to the second lien notes issued in September of 2024, and periodic growth on our revolving credit facility. Consolidated net loss attributable to common shareholders in the fourth quarter of fiscal 2025 totaled $8.6 million or a $0.25 loss per diluted share. This is compared to consolidated net loss attributable to common shareholders of $18.9 million or $0.73 loss per diluted share in the fourth quarter of fiscal 2024. Consolidated net loss attributable to common shareholders for fiscal 2025 totaled $68.6 million or $2.11 loss per diluted share. This is compared to consolidated net loss attributable to common shareholders of $108.4 million or $4.19 loss per diluted share in the fourth quarter of fiscal 2024. For the fourth quarter of 2025, adjusted EBITDA was $11.8 million or 8.5% of total revenue compared to $5.4 million or 4.1% of total revenue for the fourth fiscal quarter of 2024. For fiscal year 2025, adjusted EBITDA was $34 million or 6.6% of total revenue compared to $18.2 million or 3.7% of total revenue for fiscal year 2024. Our balance sheet as of September 30, 2025, included $21.7 million in cash and cash equivalents as compared to $21.4 million on September 30, 2024, and $6.2 million on June 30, 2025. Net cash provided by operating activities in the fourth quarter of fiscal 2025 was $14.3 million. This was primarily driven by a change in operating assets and liabilities of $18 million, partially offset by consolidated net loss adjusted for noncash impact of $3.7 million. The change in operating assets and liabilities was largely attributable to NHP customer deposits received during the fourth quarter. Cash used in operating activities was $10.5 million for the 12 months ended September 30, 2025, compared to $6.8 million of cash used in operating activities for the 12 months ended September 30, 2024. The company has utilized and will continue to utilize its revolving credit facility during the normal course of business as needed. As of September 30, 2025, the company had access to the $15 million revolver and had an outstanding balance of $3 million. Total debt, net of debt issuance costs, as of September 30, 2025, was $402.1 million compared to $393.3 million on September 30, 2024, inclusive of our first lien term loans, our convertible notes and our second lien notes. Capital expenditures in the fourth quarter of fiscal 2025 were $2.7 million or 1.9% of total revenue. The fourth quarter of fiscal 2024 capital expenditures were $5.3 million or 4.1% of revenue. Capital expenditures in the 12 months of fiscal 2025 were $16.6 million or 3.2% of total revenue. Fiscal 2024 capital expenditures were $22.3 million or 4.5% of revenue. While we continue to feel positive about the progress we have made in recent quarters, we are not providing formal fiscal 2026 guidance at this time. As we have stated previously, we hope to resume providing guidance once we have greater clarity on the market and client demand and clarity on any impact to our business once there is more information on tariffs. As with that financial overview, we will turn the call over to our operator for questions.

[Operator Instructions] And our first question comes from Frank Takkinen with Lake Street Capital Markets.

I was hoping I could start with one on -- one of your previous comments in the prepared remarks about some headwinds in the quarter. Look like really nice top line, really great bookings, maybe a little bit more expense in the model than expected. Can you maybe kind of parse out what some of those headwinds were and maybe what revenue would have been without those headwinds or what those incremental expenses were in the quarter to kind of give us a better feel for maybe what some of the extra expenses in the model were and kind of parse out what the quarter could have been maybe without some of the extra cybersecurity expenses in the model?

Yes. Well, Frank, you identified what the major headwind was for us in the early August finding out the cybersecurity incident we reported. That was probably the most -- major thing we faced. And we can quantify some of those things, a lot of overtime, a lot of communication, a lot of third-party cost and some studies and some work that may have been redone. But it's the intangible cost that you can't really identify the toll it takes on the operation or the customers or people may be holding back on issuing an award until you get through it. And so it's hard to quantify that. And what happened, if you would have asked me, do you think you could have increased our award 63% during a quarter or come close to the $54 million in awards we had, I would have never expected that. So I think we did a great job, but I think it would also be naive for us to think that it didn't have some impact on our earnings, our expenses and some of our awards, that would be hard for me to quantify. If we could quantify, I would. But I think it's really those intangible costs and the time it takes for organization to focus on that. As you can see, we're very focused on the client service, we're very focused on integration, we're very focused on IT integration. And so that's a lot of diversion of time and effort when you have to go through something like that. But I was very pleased how quickly we recovered. I was very pleased with our ability. We have had other times before when we've had other suppliers hit or that we've had to go manual on paper. So we try to be prepared, but no matter how prepared you are, there are always things that you're not -- you're never prepared for. But overall, I was very pleased with how we responded. But yes, it'd be naive to think that it did have some impact that is not really that quantifiable. But I think we're getting through it nicely. And as I look at the last quarter and I look at the first 2 months of this quarter, the quoting and the awards and -- are moving forward nicely. So I think we've gotten through that.

Got it. That's helpful. And then my second one was going to kind of follow up on your last sentence there. Just any quarter-to-date trends you're comfortable sharing would be great on -- as it relates to ordering patterns and then a refresh around kind of some seasonality. I think in the past, you've called out some of the holiday season has had some seasonality for kind of revenue recognition for the quarter. So anything you can help us understand as we think about [indiscernible] would be great.

Yes. Thank you. Our quarter ended December 30 is typically our weakest quarter during the holidays. We -- for a lot of research models and our diet between Thanksgiving and Christmas tends to be a slower time. There are probably less working days. Some of the universities in some places are down for the holidays. So we do tend to see this being our -- typically our weakest quarter. As far as quantifying, we're coming off 6 months -- the last 6 months of 12.5% DSA revenue, for us, is very important. As we go back to Investor Day, Frank, there are really two things that we're focused on. Costs coming out of the RMS business. We're not looking for a lot of major increase in sales, but costs coming out of the RMS business, we identified that $6 million or $7 million. And we talked about growing the DSA business and seeing incremental margins of 50-plus percent on that growth. And so seeing that 12% revenue -- increase in revenue over the last 6 months is encouraging. And we have an increase in awards of over 37% over the last 9 months. So that's -- I think last quarter, we say 63%, but it's coming off a very weak Q4 of last year. So -- but if we can maintain that awards increase of somewhere 25 -- 20% to 30%, and we can maintain the revenue increase of anything close to what we've experienced the last 2 quarters, then we're going to be pretty pleased with how things are going to go for us, I think, in the future. So I'm not seeing anything right now that says that we can't -- after these last 2 months, that can't -- it's not possible. I think that it would be helpful to see others in the industry, see some of those same tailwinds that we've seen. And I think some are starting to indicate they're starting to see that. I think that's very encouraging. For us, when the industry does well, we're obviously going to do even better. But we've had a great 9 months, no doubt about it. Very pleased, probably better than we thought we could have done. I think we're seeing the pricing stabilize quite a bit. And I think we're hopefully hearing other people now starting to see some of those same trends. And as we -- and that will be a huge help to us also.

We'll take our next question from Matt Hewitt with Craig-Hallum Capital Group.

Maybe first up, and I'm sure you're sick of talking about this since April, but with the FDA now announcing formal guidance regarding new approach methodologies and trying to pare back on the use of large animal models in toxicology studies, I'm just curious if you could remind us how you're positioned, maybe your exposure to monoclonal antibodies, anything along those lines.

Yes. Well, our revenue related to monoclonal antibodies is minimal, very small if any. And so we're not really worried about that. With the amount of quoting activity we have going on, that's not going to, I think, have an impact. We do sell a lot of research models and NHPs. I could not tell you how all of our customers use those NHPs. I've seen some others that we've reached out and talked to, and I don't think it they see any impact. I think what we saw in the guidance that they're providing is just that guidance. The customers are still going to make their own decisions about what they're going to require for safety assessment testing. And I don't know -- so this one thing is guidance. Second, what are our customers going to want to do before they put a drug into a human in terms of safety assessment. And so we've not seen a big change in that. And right now, I wouldn't see it having really any impact. But I think it was a positive that they were able to clarify what they came out and said in April. But still, it's guidance. It doesn't mean that's what people are going to do or not do because they're all going to make their own decisions of what is safe and what they want to do from a safety assessment standpoint.

That's super helpful. And then -- and I realize it's early in the pharma budget cycle as they start to look at '26. But as you talk to some of your partners, some of your customers about those budgets for next year, what are you hearing? I mean, is your sense that budgets are going to be flat to up next year? Any color on those lines would be helpful, too.

Well, right now, I think we are seeing, as we did last year, and we've seen so far this quarter an increase in the quoting that is meaningful. I would say this quarter, I think we'll see a substantial increase in quoting. I think we're -- and the closing also. So when it comes into next year, we're probably booking a little further out than we have for a while. And so I think that's encouraging. We also, I think over -- as we mature, again, we're a very young company. And I think what we're seeing is more of a reoccurring customer base. So a little bit more comfort in gaining our customers' confidence. We do a great job of delivery, and I think we see an increasing amount of reoccurring customers, which is also very encouraging. But right now, obviously, we're on a pretty good roll in the last 9 months. I don't see anything that's going to disrupt that. And I'd be very encouraged to start hearing as I think we started to hear others in the industry also identifying the same trends. So I don't have any more to add to that. I can't tell you what they're going to do next year. But right now, what we see so far this year and in the last 2 months is we haven't seen anything to dampen our optimism and our ability to see an increase in revenue next year.

No, that's good. And yes, congratulations. It hasn't been an easy environment. You guys have executed well the last few quarters. So congratulations on that.

[Operator Instructions] We'll move next to David Windley with Jefferies.

Bob, maybe another way to interrogate the DSA improvement in the environment would be to ask around your lead times. What -- how quickly can you start studies for clients and maybe flipping the coin, how quickly do clients want to start studies? And are you seeing any movement on that measure?

David, I guess some of that depends on studies. We typically in the DSA business, see our DSA business come in and start within weeks, not months. The larger animal safety assessment businesses tend to come in and -- with closer to a 3- to 9-month lead time. We have started a studies faster than that. But right now, we're operating -- our large animal safety assessment capacity is operating at a very high level of capacity at the moment. So I think we can generally see out a couple of quarters in terms of the large animal capacity and the usage of that capacity. But the -- for the discovery and for the smaller animals, we can generally start those much quicker.

Okay. Flipping to RMS, and Frank may have tried to get at this a little bit, but in your segment disclosures, margin was impacted sequentially. And I'm wondering, I guess, first of all, was the cyber event cost differentially impactful in the RMS segment versus DSA? Or I would kind of have thought that, that would have been at the corporate level, but just want to try to interrogate the moving parts in that RMS margin.

Well, the RMS margin for our small animals and diet business tend to be improving as we've reduced the number of sites we have by 60%. And I think that's becoming a bigger part of our margin story actually and that's improving. And I think we'll see that improve this year as those costs continue to come out. I believe that the -- in the NHP segment, sometimes that can differ based on the cost of the NHPs that we're bringing in. And so -- and some of the costs that relate to those NHPs. So I think we probably had a few -- a little bit higher cost maybe than we did in the prior quarter. So that's just based on spot market, sometimes what we're buying and selling for.

Okay. Maybe zooming out then, if I think about that RMS business, you've got a few different things going on, you just named a couple. But I'm wondering along a number of vertices, like how would you describe volume versus price in RMS, large animal versus small animal mix and then kind of models versus services. Again, you have kind of several different ways to think about the mix moving in that business. I wondered if you could shine a light into that for us. So volume versus price, large versus small animal. And then on the models versus services, I'm really digging at how is your animal services business in Texas developing?

Yes, volume versus price. The small animal business and the diet business, one of the reasons that it was important, we reduced the sites by 13 or by 60% is because that is a very fixed cost structure. So taking out the cost and maintaining volume definitely has -- allows us to improve our margins. And as volume goes up, that also -- and mainly fixed cost structure would help us quite a bit also. So I think we're seeing the margins improve and the diet and small animals because of that formula. As far as the Alice, Texas facility, you're right, that is -- we are buying and selling. We're also boarding and breeding and we have services. So the services business continues to grow as does the domestic breeding operation. And then some of the other margins come and go based on the demand in the market and what we're able to buy for and sell for. So -- and that has I think not -- the volatility of that market and that price has been a lot less than it has been in the last 2 or 3 years. I think it's become a lot more stable. But there are a lot of factors in there, and you start putting in tariffs and you have transportation, you have quarantine. Those are all factors that can also change your cost. For the most part, we've been able to pass along tariffs. But if we have extended quarantine, which we at times have, and -- or change in transportation costs, which we at times have, those can also impact those margins. So those are probably a little bit more variable. We're not seeing big swings, but we're seeing -- and which is -- if that's half of our RMS business, then we could see some swings in those margins as the others are constantly improving.

At this time, there are no further questions in queue. I will now turn the meeting back to Bob Leasure for any additional or closing remarks.

All right. Well, thank you, everyone. We are encouraged with these results and the recent growth we've seen with our DSA quoting awards over the last 2 quarters. And as this growth develops, we'll need to remain vigilant on delivering an exceptional experience, service and product for our clients. We made great progress on the financial goals we outlined during our Investor Day, and we're continuing to evaluate opportunities to further improve our balance sheet. As I said in the past, we are a much better company today than we have ever been in the past, and we still feel we have a plan for much further improvement in the future. Thank you, and have a good day.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.