All right, well, good afternoon, everyone, and welcome to our next session. Again, welcome, and thank you for joining the H.C. Wainwright 27th Annual Global Investment Conference. My name is Matt Keller. I'm a Vice President in the Equity Research Department, and it is my pleasure to introduce our next company and our next presenter. With us, we have Robert Leasure, the CEO of Inotiv. Robert, the floor is all yours.
Thank you, Matt, and thank you, H.C. Wainwright, for inviting us today. I think we have a presentation today, so we're going to go a little bit about our history of Inotiv. We're about a seven, eight-year-old company that it's an older company, but we got involved seven or eight years ago. It was a $20 million business, and we're now about a $500 million business. We're a contract research organization focused mainly on the preclinical market, from discovery to first in human through the IND phase. It's predominantly focused. We also, over the last two or three years ago, bought the research models. We're fully integrated, so we provide all the services. We've been building this over seven years, and then we are fully integrated.
So we also have the research models where we board and breed or import all the research models required to do drug discovery and safety and safety assessment. In addition to being fully integrated, we have our own transportation system now that we can transport the animals throughout the U.S., and then we can also provide them all the feed and the diet. In addition to being in the U.S., we have locations throughout Europe. We think we have a large addressable market. It's $25 billion. Of that, we're a fairly small player in this market. So we have two market segments, really: RMS and the what we call the DSA, Discovery and Safety Assessment. RMS is Research Models, which is about two-thirds of our business, and then the Discovery and Safety Assessment business.
As we look at our business today, we have been working on, since over the last couple of years, how are we going to integrate and optimize these organizations? So, as I said, our starting point was through the acquisitions and growth, and we started up about eight or nine new services. And then about two or three years ago, what we were was a company that we're selling 14, 15, 16 different services individually. We're a conglomerate of companies that we are selling those individual services. So the key is, how are we going to integrate those services? How are we going to rebrand ourselves? And how are we going to take our value equation to our customers? And there are two critical things that we wanted to do.
One is we wanted to be able to be a full-service research organization to do drug discovery and development, not just sell unique services, but how do we integrate those services? The second thing that I thought was very important is how do we deliver speed and on time. If we were to go back seven years ago, what are the things that were really compelling us to build this business? As well, I went to conferences. I could hear our key customers ask for two things, and one was we need a CRO that can serve the small and middle market. The perception was other CROs are more focused on getting large pharma as a customer base, and they felt that they had unique needs.
And the second was they wanted somebody who would return a phone call time, what they called timely, and could deliver timely. And for us, I think time is defined as when are the venture people or when do the C-suite people envision the time being done. Many times in a project, science can change, and the scientists may want to change the timeline, but as most people know, in the C-suite and the venture capital world, they're going to run out of money at some point. And the board and the C-suite want to make sure you're hitting their timeframe, not elongating the science. So by having all the services, and if we integrate them, if we're going to do additional science upfront, how do we take that time back out of the end?
And if we can do the histology and the pathology and the SEND and the data and the reporting, there may be times that are, on behalf of our client, we need to accelerate a project to make sure we still meet those timelines. So how do we develop that company? So over the last two or three years, we've been working on our integration and optimization. So the integration is on the DSA business, and how do we integrate and create a project management system that allows us to communicate as one company, know where our projects are, and also be able to communicate effectively with our customers and accelerate the speed and make sure that we can meet those expectations. In the optimization, it was basically in the RMS business. How are we going to optimize our sites?
We have reduced our facilities by 30-35%. So we've closed 10 or 11 facilities without losing, with rarely losing any capacity. That gives us the ability to really focus our capital expenditures, and then we got the transportation system, which allows us to leverage our transportation and use more of a hub-and-spoke approach, be much more cost-effective, be much better with animal welfare, much more compliant, and focus on compliance on the structures we have left. How are we doing on that? On the optimization, we're in our last site facility optimization right now. We're building out one more facility that we have, and that should be completed over the next six months. As we do that, we'll close three other facilities, and that'll allow us to take out some additional costs that we've talked about.
Next, how are we doing on the DSA side? Very pleased with how we're seeing the DSA align. We now, as we develop these systems, have a much better customer metrics. And as we have these metrics, as we have these customer metrics, we're able to then determine, are we delivering on time and has our customer satisfaction? As we can see all those customer metrics, and there are many more than that that we look at, and not only do we deliver on time, but what hour of the day do we deliver according to when we're supposed to? What are the customer complaints? Do we enter things right the first time? As we do all these things right and we see our customer performance improve, I think we've started to see our ability to gain market share improve.
And that's really what we've been focusing on the last two years. As we go back through this, again, our acquisition strategy, you can see over the five years is a little bit what we talk about, some of the things that we acquired, and then some of the capabilities that we added. This was all in order to make sure we were that full-service DSA organization. So most of these are discovery and safety assessment, with the exception of maybe Envigo or and those were mainly our key RMS facility acquisitions. So we talked about the integration and optimization, how we're going about building one. So we talked about, again, branding, commercial organization. And about 18 months ago, we really started doing is selling with science. And before that, we were selling individual services.
Now we include our salespeople and our scientists much more involved in our selling process. As I said, we developed our enterprise study management system. This was critical to how we're going to track our projects and make sure that we're on time. Site optimization was critical to cutting costs, optimizing our animal welfare, optimizing our efficiency, and how we operate. Insourcing transportation was critical to being able to optimize, so all these things kind of go together, and then the NHP business. The NHP business has changed significantly. One of the reasons we got in the RMS business is because the importance of NHPs and safety assessment historically and in the future, we thought it was going to be a very volatile market. We want to be able to control our destiny with this. It has been very volatile. We have been able to control our destiny.
We have significantly diversified our customer base, the countries that we buy from, and our supply base. We've also changed and significantly invested in domestic boarding and breeding, and contract breeding for third parties. And so we're pleased with how our NHP business has been. Topped off by, I think I said in our Q3 release, our recent AAALAC audits where we got exemplary ratings, which is a very highest rating you can get from AAALAC. So now what do we have, you know, we're looking at where do we go from here? We have a great foundation. We want to continue to build our brand. We want to continue to develop. We want to continue to improve. And I think what we also have something is, you know, we have a DNA and M&A.
I think in the next two to three years, we'll see opportunities again. We're very, we have a very accretive engine and much, and a lot we can build upon. So I'm very proud of where we are today. The DSA growth, we talked a little bit about, and the importance of this. This will be our, I think, our key driver in the future. How are we going to grow and grow our margins? In the last two quarters, we reported 25% year-over-year award growth in Q2 and 25%, I think 27% maybe in Q3. So very pleased with the growth that we're starting to see.
We're, you know, very interested in coming to these conferences and listening to what other people are seeing, making sure we want to verify is our growth coming because of, you know, we can see our customer metrics. We know what we've done with our branding. We know what we've done with our selling. And, you know, then we're also following what the industry is. But overall, our DSA business is about $200 million, which is a very small piece of a very large pie. So I don't know that we're, we don't, we're not making an excuse that our, our growth is dependent on industry tailwinds. I think our growth is dependent on how well we can do and how, what, and how we can deliver for our customers. And hopefully the last two quarters are an indication of what is, what is possible.
Our RMS margins, these are just a couple of the indicators that we've talked about, the site optimization that we went through, the importance of driving down customer complaints, the importance of reducing our cost, and then, you know, finally the evolution of the NHP business. So we can see that, you know, what we're really focusing on is colony management services revenue. And as you can see from the blue line, that is the, that's the amount of inventory we have on hand that belong to third parties. The orange line is what we have. So what we've become is we're not a bank holding a lot of NHPs available for sale. What we're now doing is selling and holding it for when people need them. And those are important services.
It operates a little bit like a hotel would, you and so we've been building that capacity, and I think it's a much better recurring business model for us than what we had in the past. In addition, the fact we've significantly diversified our supply base and our customer base. Other key infrastructure investments we've made, integration and strategic investments in IT. We've reduced our IT systems that we have down by 34% and continuing to make our IT systems consistent across give us the ability to help really focus on how we communicate internally and with third parties, and then what is very, very important in our industry, we have a heavily regulated industry and enhanced compliance is really very critical to everything that we do.
I think we, you know, to the extent that we've been through some challenges in the past, our industry has been through some challenges. One of the things I'm very proud of is that every time we come through the challenges, we've gotten much stronger as a result of it. We can either shy away from those challenges or we can own them. When we own them, we get much better. As a result, I think even the downturn in the industry that we've seen the last two years, I would tell you that is probably we get back two years from now, we're probably going to look at that. That was probably a good thing for us because we became more open to change.
Our management team and our employees were more open to change and we changed, I think, more aggressively and faster than we would have if everything was and if we had a lot of tailwinds in our industry. So I think we've become a much better company again over the last two years. Here we talked about some of the financial results, and the year, this is Q3 specifically, where the revenue increased on the RMS business by 34% and by 8.9% of the DSA. Those look like big numbers, of course, but 2024 was a down year for our industry. So we expected it to come back and this, you know, hopefully with what we're seeing, the increase in awards, this trend can continue.
We started seeing, in our DSA business, our discovery business start recovering in Q1 of this year, where we saw increase year-over-year in awards. And the safety assessment business, we started seeing that increase probably in Q2 of this year. And we've seen now those trends continue in Q1, Q2, and Q3. One of the things that we did, in April or May, I believe, was in May or first of June. We had an investor day. And one of the things people really wanted to see was, what are your, what, how can you get back to $70-100 million a year of EBITDA? What are your, what, and at that time we based it off our Q2 run rate. Now we've updated this, what we call bridge to our long-term goals.
We don't provide guidance at this time, but our bridge to our long-term goals. What we did is we annualized Q3 and basically saying, what are some of the key metrics it's going to take to get back to $70 million-$100 million of cash flow? I think some of the long-term decisions we made over the last two years and continue to make today are critical to this. We are seeing some of the discounting that was taking place a year ago is not taking place to the extent that it is today. I think as we do a much better job delivering on our quality and our on-time delivery, we've seen much less focus on discounting or requests for discounts. I think we're going to see some pricing improvement.
We also, because the increase in awards, I think we're going to see some revenue improvement on the DSA business and then we have modest revenue on the RMS business. So in this model, you know, we identify maybe a 10% volume growth to get to the $70 million range. Last month our DSA business was on a run rate basis of about $190 million. So if we can get that up 10%, we generally see 50%-60% of our revenue dollars go to our bottom line because of the leverage we have in our business. So we think this is something that's attainable and we're striving to get there as soon as possible.
Then we, you know, furthermore, you know, what's it going to take to get to 100 million and what did that run rate of $600 million? So I think, with the infrastructure, the integration, the systems we've been able to put in place, I now think we have a good path to achieving some of these goals that we've set for ourselves. They're really rooted in customer metrics. I think, you know, that it's gone now from looking at what are the key awards that we get every day to what are the customer metrics. As long as we take care of our customers, I think our awards are going to be strong. Our momentum has been pretty good. Very pleased with what we're seeing. I think that we have a very good future.
So, thank you very much for your time today. If there are any questions, I'd be happy to take those too.
All right. Fantastic presentation. We do have a moment for questions. Is there anybody who would like to ask one? Yep.
Just a quick question. Is the goal to build a full-service clinical development CRO or stay in preclinical, early stage CRO?
Right now we are mainly a preclinical early stage CRO. We, where we're actually focusing a lot of our growth right now is on discovery, and so we've built out in the last two years or three years our discovery safety system. We built out our discovery capabilities. We built out ability to do medical device and surgery, biotherapeutics, genetic toxicology. So if you look at where some of our growth is coming from now, it's coming from those specific segments.
We do have bioanalytical, large and small molecule bioanalytical, and we do get asked sometimes to take on clinical analysis, very small part of our business. So, less than 5%. And then our, you know, and it is mostly all small and middle-sized pharma. They're looking for to outsource all of their development. And so I think we have 80% of our dollars are coming from sites, from customers who are using multiple sites, multiple services at this time. And that's been growing. I think that's what we're going to continue to focus on. And we have, we do have the capacity probably at this point to grow another 30-40% on the DSA business without, you know, without using any more bricks and mortar.
Okay.
That might be it for those attending the conference or those that are virtual with us this year. Please feel free to have any follow-up questions for Robert and the team. I'm sure you can reach out and they'll be happy to answer anything that you might have. I want to take another moment to thank everyone for attending the conference this year, and thank you again for the presentation. Thank you, Robert. Thank you. Yep.