EQUITY, STOCK-BASED COMPENSATION AND EARNINGS (LOSS) PER SHARE

9 Months Ended

Jun. 30, 2023

Equity, Stock-Based Compensation, And Earnings Per Share

EQUITY, STOCK-BASED COMPENSATION AND EARNINGS (LOSS) PER SHARE

12.    EQUITY, STOCK-BASED COMPENSATION AND EARNINGS (LOSS) PER SHARE

Increase in Authorized Shares and Equity Plan Reserve

On November 4, 2021, the Company’s shareholders approved an amendment to the Company’s Second Amended and Restated Articles of Incorporation to increase the number of authorized shares from 20,000,000 shares, consisting of 19,000,000 common shares and 1,000,000 preferred shares, to 75,000,000 shares, consisting of 74,000,000 common shares and 1,000,000 preferred shares. Approval of this matter by the Inotiv shareholders was a condition to the closing of the Envigo acquisition. The amendment was effective on November 4, 2021. On November 4, 2021, the Company’s shareholders approved an amendment to the Company’s 2018 Equity Incentive Plan (the “Equity Plan”) to increase the number of shares available for awards thereunder by 1,500,000 shares and to make certain corresponding changes to

certain limitations in the Equity Plan. At June 30, 2023, 374,953 shares remained available for grants under the Equity Plan.

Stock Issued in Connection with Acquisitions

During the three and nine months ended June 30, 2023, no common shares were issued in relation to acquisitions. During the three and nine months ended June 30, 2022, 17,618 and 9,498,213 common shares, respectively, were issued in relation to acquisitions. See Note 4 – Business Combinations for further discussion of consideration for each acquisition.

Stock-Based Compensation

The Company expenses the estimated fair value of stock options, restricted stock and restricted stock units over the vesting periods of the grants. The Company recognizes expense for awards subject to graded vesting using the straight-line attribution method and forfeitures, as they are incurred. Stock based compensation expense for the three months ended June 30, 2023 and 2022, was $2,029 and $1,987, respectively. Stock based compensation expense for the nine months ended June 30, 2023 and 2022, was $5,856 and $27,057, respectively. Of the $27,057 stock based compensation expense during the nine months ended June 30, 2022, $23,014 related to post-combination expense recognized in connection with the Envigo transaction (see Note 4 – Business Combinations), which was inclusive of $4,772 of stock based compensation settled in cash.

Earnings (Loss) per Share

The Company computes basic earnings (loss) per share using the weighted average number of common shares outstanding. The Company computes diluted earnings (loss) per share using the if-converted method for preferred shares and convertible debt, if any, and the treasury stock method for stock options and restricted stock units.

The following table reconciles the numerator and denominator in the computations of basic and diluted earnings per share:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2023		2022		2023		2022
Numerator:
Consolidated net income (loss)	$	365	$	(3,556)	$	(96,196)	$	(93,631)
Less: Net (loss) income attributable to noncontrolling interests	(1,475)		172		(719)		(769)
Net income (loss) attributable to common shareholders	1,840		(3,728)		(95,477)		(92,862)
Denominator:
Weighted-average shares outstanding - Basic	25,726		25,510		25,690		23,938
Effect of dilutive securities:
Stock options, restricted stock units and restricted stock awards	295		—		—		—
Weighted-average shares outstanding - Diluted	26,021		25,510		25,690		23,938
Anti-dilutive common share equivalents (1)	5,494		5,549		5,790		5,549
(1) Anti-dilutive common share equivalents are comprised of stock options, restricted stock units, restricted stock awards and 3,040,268 shares of common stock issuable upon conversion in connection with the convertible debt entered into on September 27, 2021.These common share equivalents were outstanding for the periods presented, but were not included in the computation of diluted EPS for those periods because their inclusion would have had an anti-dilutive effect.