PART I. FINANCIAL INFORMATION [Item 1. Interim Condensed Consolidated Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Interim%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents Neogen Corporation's unaudited condensed consolidated financial statements for the three months ended August 31, 2025, including balance sheets, statements of operations, comprehensive income, equity, and cash flows, along with detailed notes explaining business operations, accounting policies, segment information, and other financial disclosures [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%E2%80%93%20August%2031%2C%202025%20and%20May%2031%2C%202025) Presents the company's financial position, detailing assets, liabilities, and equity, at specific reporting dates Condensed Consolidated Balance Sheets (August 31, 2025 vs. May 31, 2025) | Metric (in thousands) | August 31, 2025 | May 31, 2025 | Change | % Change | | :-------------------- | :-------------- | :----------- | :----- | :------- | | Total Current Assets | $524,060 | $576,937 | $(52,877) | -9.16% | | Total Assets | $3,378,156 | $3,443,836 | $(65,680) | -1.91% | | Total Current Liabilities | $146,205 | $174,011 | $(27,806) | -15.98% | | Total Liabilities | $1,259,507 | $1,372,582 | $(113,075) | -8.24% | | Total Stockholders' Equity | $2,118,649 | $2,071,254 | $47,395 | 2.29% | - Assets held for sale decreased from **$50,402 thousand** to **$0**, indicating the completion of the divestiture[11](index=11&type=chunk) - Current portion of debt decreased from **$19,301 thousand** to **$0**, reflecting debt repayments[11](index=11&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20%E2%80%93%20three%20months%20ended%20August%2031%2C%202025%20and%20August%2031%2C%202024) Details the company's revenues, expenses, and net income or loss over specific reporting periods Condensed Consolidated Statements of Operations (Three months ended August 31, 2025 vs. 2024) | Metric (in thousands, except EPS) | August 31, 2025 | August 31, 2024 | Change | % Change | | :-------------------------------- | :-------------- | :-------------- | :----- | :------- | | Total Revenues | $209,189 | $216,964 | $(7,775) | -3.58% | | Gross Profit | $94,970 | $104,926 | $(9,956) | -9.49% | | Operating (Loss) Income | $(16,091) | $2,257 | $(18,348) | -812.94% | | Gain on sale of business | $76,390 | $0 | $76,390 | N/A | | Net Income (Loss) | $36,338 | $(12,609) | $48,947 | 388.20% | | Basic Net Income (Loss) Per Share | $0.17 | $(0.06) | $0.23 | 383.33% | | Diluted Net Income (Loss) Per Share | $0.17 | $(0.06) | $0.23 | 383.33% | - Net Income significantly improved from a loss of **$12.6 million** in Q1 2024 to a gain of **$36.3 million** in Q1 2025, primarily driven by a **$76.4 million** gain on the sale of a business[14](index=14&type=chunk) [Condensed Consolidated Statements of Comprehensive (Loss) Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20(Loss)%20Income%20%E2%80%93%20three%20months%20ended%20August%2031%2C%202025%20and%20August%2031%2C%202024) Reports net income and other comprehensive income or loss components, reflecting total changes in equity from non-owner sources Condensed Consolidated Statements of Comprehensive (Loss) Income (Three months ended August 31, 2025 vs. 2024) | Metric (in thousands) | August 31, 2025 | August 31, 2024 | Change | % Change | | :-------------------- | :-------------- | :-------------- | :----- | :------- | | Net income (loss) | $36,338 | $(12,609) | $48,947 | 388.20% | | Foreign currency translation gain | $5,817 | $2,459 | $3,358 | 136.56% | | Unrealized loss on derivative instruments | $(404) | $(3,859) | $3,455 | -89.53% | | Total comprehensive income (loss) | $41,751 | $(14,009) | $55,760 | 398.03% | [Condensed Consolidated Statements of Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity%20%E2%80%93%20three%20months%20ended%20August%2031%2C%202025%20and%20August%2031%2C%202024) Outlines changes in stockholders' equity, including common stock, retained earnings, and other comprehensive income, over time Condensed Consolidated Statements of Equity (Three months ended August 31, 2025 vs. 2024) | Metric (in thousands, except shares) | August 31, 2025 | May 31, 2025 | August 31, 2024 | May 31, 2024 | | :----------------------------------- | :-------------- | :----------- | :-------------- | :----------- | | Common Stock Shares | 217,298,626 | 217,044,498 | 216,698,138 | 216,614,407 | | Common Stock Amount | $34,768 | $34,728 | $34,672 | $34,658 | | Additional Paid-in Capital | $2,607,452 | $2,601,848 | $2,588,930 | $2,583,885 | | Accumulated Other Comprehensive Loss | $(23,485) | $(28,898) | $(31,421) | $(30,021) | | Accumulated Deficit (Retained Earnings) | $(500,086) | $(536,424) | $543,011 | $555,620 | | Total Stockholders' Equity | $2,118,649 | $2,071,254 | $3,135,192 | $3,144,142 | - Total Stockholders' Equity increased by **$47.4 million** from May 31, 2025, to August 31, 2025, primarily due to net income and other comprehensive income[22](index=22&type=chunk) - Accumulated deficit improved by **$36.3 million**, moving from **$(536,424) thousand** to **$(500,086) thousand**, reflecting the net income for the period[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%93%20Three%20months%20ended%20August%2031%2C%202025%20and%20August%2031%2C%202024) Summarizes cash inflows and outflows from operating, investing, and financing activities for the reporting period Condensed Consolidated Statements of Cash Flows (Three months ended August 31, 2025 vs. 2024) | Metric (in thousands) | August 31, 2025 | August 31, 2024 | Change | % Change | | :-------------------- | :-------------- | :-------------- | :----- | :------- | | Net Cash from Operating Activities | $10,853 | $(17,914) | $28,767 | 160.58% | | Net Cash from Investing Activities | $97,725 | $(33,662) | $131,387 | 390.33% | | Net Cash from Financing Activities | $(99,393) | $979 | $(100,372) | -10252.50% | | Net Increase (Decrease) in Cash | $9,879 | $(50,134) | $60,013 | 119.70% | | Cash and Cash Equivalents, End of Year | $138,883 | $120,477 | $18,406 | 15.28% | - Net cash provided by investing activities significantly increased to **$97.7 million** in Q1 2025, primarily due to **$121.7 million** in proceeds from the sale of the Cleaners & Disinfectants business[25](index=25&type=chunk)[38](index=38&type=chunk) - Cash used for financing activities increased substantially to **$(99.4) million** in Q1 2025, driven by debt repayments using divestiture proceeds[25](index=25&type=chunk)[110](index=110&type=chunk) [Notes to Interim Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Interim%20Condensed%20Consolidated%20Financial%20Statements%20%E2%80%93%20August%2031%2C%202025) Provides detailed explanations and disclosures supporting the interim condensed consolidated financial statements [1. Description of Business and Basis of Presentation](index=9&type=section&id=1.%20DESCRIPTION%20OF%20BUSINESS%20AND%20BASIS%20OF%20PRESENTATION) Describes Neogen's business segments and the accounting principles used in financial statement preparation - Neogen operates in two segments: Food Safety (diagnostic test kits, genomics-based tech, software for food/animal feed safety) and Animal Safety (veterinary instruments, pharmaceuticals, vaccines, diagnostics, biosecurity, genomics testing for animal health)[27](index=27&type=chunk)[28](index=28&type=chunk) - The company adopted new accounting pronouncements for Segment Reporting (ASU 2023-07) and Income Taxes (ASU 2023-09) effective June 1, 2025, modifying disclosure requirements[31](index=31&type=chunk)[32](index=32&type=chunk) [2. Revenue Recognition](index=10&type=section&id=2.%20REVENUE%20RECOGNITION) Explains the company's policies and disaggregated data for recognizing revenue from contracts with customers Disaggregated Revenue by Major Product and Service Categories (Three months ended August 31, 2025 vs. 2024) | Category (in thousands) | August 31, 2025 | August 31, 2024 | Change | % Change | | :---------------------- | :-------------- | :-------------- | :----- | :------- | | **Food Safety** | | | | | | Natural Toxins & Allergens | $19,962 | $20,376 | $(414) | -2.03% | | Bacterial & General Sanitation | $41,649 | $39,899 | $1,750 | 4.39% | | Indicator Testing, Culture Media & Other | $79,085 | $81,703 | $(2,618) | -3.20% | | Biosecurity Products | $5,799 | $11,779 | $(5,980) | -50.77% | | Genomics Services | $5,555 | $5,588 | $(33) | -0.59% | | Total Food Safety | $152,050 | $159,345 | $(7,295) | -4.58% | | **Animal Safety** | | | | | | Life Sciences | $1,859 | $1,733 | $126 | 7.27% | | Veterinary Instruments & Disposables | $11,908 | $12,523 | $(615) | -4.91% | | Animal Care & Other | $7,578 | $6,679 | $899 | 13.46% | | Biosecurity Products | $19,229 | $20,806 | $(1,577) | -7.58% | | Genomics Services | $16,565 | $15,878 | $687 | 4.33% | | Total Animal Safety | $57,139 | $57,619 | $(480) | -0.83% | | **Total Revenues** | $209,189 | $216,964 | $(7,775) | -3.58% | Contract Liabilities (Three months ended August 31, 2025 vs. 2024) | Metric (in thousands) | August 31, 2025 | August 31, 2024 | | :-------------------- | :-------------- | :-------------- | | Beginning balance | $5,558 | $4,632 | | Additions | $3,206 | $3,078 | | Amounts recognized into revenue | $(2,940) | $(2,075) | | Ending balance | $5,824 | $5,635 | [3. Divestiture](index=11&type=section&id=3.%20DIVESTITURE) Details the sale of a business segment, including proceeds, gain recognized, and classification impact - Neogen completed the sale of its Cleaners and Disinfectants (C&D) business to Kersia Group on July 17, 2025, receiving **$121.7 million** in cash at closing, plus contingent consideration up to **$3.5 million**[38](index=38&type=chunk) - A gain of **$76.39 million** on the sale of the C&D business was recognized during the three months ended August 31, 2025[38](index=38&type=chunk) - The divestiture did not meet the criteria for classification as a discontinued operation[37](index=37&type=chunk) [4. Net Income (Loss) Per Share](index=11&type=section&id=4.%20NET%20INCOME%20(LOSS)%20PER%20SHARE) Presents the calculation of basic and diluted earnings per share, including adjustments for anti-dilutive securities Net Income (Loss) Per Share Calculation (Three months ended August 31, 2025 vs. 2024) | Metric | August 31, 2025 | August 31, 2024 | | :----- | :-------------- | :-------------- | | Net income (loss) attributable to Neogen | $36,338 | $(12,609) | | Weighted average shares (Basic) | 217,217,836 | 216,695,348 | | Weighted average shares (Diluted) | 217,334,926 | 216,695,348 | | Basic EPS | $0.17 | $(0.06) | | Diluted EPS | $0.17 | $(0.06) | - For Q1 2025, **661,000 shares** were excluded from diluted EPS calculation as they were anti-dilutive. For Q1 2024, all stock options and RSUs were anti-dilutive due to the net loss[41](index=41&type=chunk) [5. Segment Information and Geographic Data](index=12&type=section&id=5.%20SEGMENT%20INFORMATION%20AND%20GEOGRAPHIC%20DATA) Provides financial data broken down by operating segments and geographic regions Segment Performance (Three months ended August 31, 2025 vs. 2024) | Metric (in thousands) | Food Safety 2025 | Animal Safety 2025 | Corporate 2025 | Total 2025 | Food Safety 2024 | Animal Safety 2024 | Corporate 2024 | Total 2024 | | :-------------------- | :--------------- | :----------------- | :------------- | :--------- | :--------------- | :----------------- | :------------- | :--------- | | Net Revenue | $152,050 | $57,139 | — | $209,189 | $159,345 | $57,619 | — | $216,964 | | Operating Income (Loss) | $7,091 | $4,472 | $(27,654) | $(16,091) | $17,905 | $2,589 | $(18,237) | $2,257 | | Total Assets | $2,947,343 | $291,929 | $138,884 | $3,378,156 | $4,056,444 | $342,077 | $104,652 | $4,503,173 | Revenue by Geographic Location (Three months ended August 31, 2025 vs. 2024) | Geographic Location (in thousands) | August 31, 2025 | August 31, 2024 | Change | % Change | | :--------------------------------- | :-------------- | :-------------- | :----- | :------- | | Domestic | $102,074 | $104,383 | $(2,309) | -2.21% | | International | $107,115 | $112,581 | $(5,466) | -4.86% | | Total revenue | $209,189 | $216,964 | $(7,775) | -3.58% | - Food Safety segment operating income decreased by **60%** YoY, while Animal Safety operating income increased by **73%** YoY[43](index=43&type=chunk) [6. Restructuring](index=13&type=section&id=6.%20RESTRUCTURING) Outlines charges and activities related to the company's restructuring initiatives by segment Restructuring Charges by Segment (Three months ended August 31, 2025 vs. 2024) | Segment (in thousands) | August 31, 2025 | August 31, 2024 | | :--------------------- | :-------------- | :-------------- | | Food Safety | $407 | $132 | | Animal Safety | $52 | — | | Corporate | $(127) | $238 | | Total | $332 | $370 | - Total restructuring charges decreased slightly to **$332 thousand** in Q1 2025 from **$370 thousand** in Q1 2024, primarily related to employee separation costs and other exit costs[46](index=46&type=chunk) [7. Long-Term Debt](index=13&type=section&id=7.%20LONG-TERM%20DEBT) Details the composition of the company's long-term debt, including changes and related transactions Long-Term Debt Composition (August 31, 2025 vs. May 31, 2025) | Debt Type (in thousands) | August 31, 2025 | May 31, 2025 | Change | % Change | | :----------------------- | :-------------- | :----------- | :----- | :------- | | Term Loan | $405,000 | $450,000 | $(45,000) | -10.00% | | Senior Notes | $346,500 | $350,000 | $(3,500) | -1.00% | | Revolver Facility | $48,500 | $100,000 | $(51,500) | -51.50% | | Finance Lease | — | $2,426 | $(2,426) | -100.00% | | Total debt and finance lease | $800,000 | $902,426 | $(102,426) | -11.35% | - Neogen repaid **$100 million** of outstanding debt in Q1 2026 using proceeds from the C&D divestiture, including **$51.5 million** on the Revolving Facility, **$45 million** on the Term Loan, and **$3.5 million** of Senior Notes[48](index=48&type=chunk)[103](index=103&type=chunk) - Debt prepayments resulted in extinguishment losses of **$393 thousand** for the Term Loan and **$41 thousand** for Senior Notes[48](index=48&type=chunk) [8. Income Taxes](index=14&type=section&id=8.%20INCOME%20TAXES) Explains the company's income tax expense or benefit, effective tax rate, and unrecognized tax benefits Income Tax Expense (Benefit) (Three months ended August 31, 2025 vs. 2024) | Metric (in thousands) | August 31, 2025 | August 31, 2024 | Change | | :-------------------- | :-------------- | :-------------- | :----- | | Income Tax Expense (Benefit) | $7,470 | $(3,000) | $10,470 | - The shift from an income tax benefit to an expense is primarily due to pre-tax income from the gain on the sale of the Cleaners and Disinfectants business[49](index=49&type=chunk) - Unrecognized tax benefits increased from **$3,849 thousand** to **$4,732 thousand**, mainly associated with the acquired 3M Food Safety Division (FSD) for transfer pricing and R&D credits[51](index=51&type=chunk) [9. Commitments and Contingencies](index=15&type=section&id=9.%20COMMITMENTS%20AND%20CONTINGENCIES) Discloses potential future obligations and legal matters that could impact the company's financial position - Neogen has an estimated environmental remediation liability of **$916 thousand** as of August 31, 2025, for its Randolph, Wisconsin facility, with **$100 thousand** as current liability[53](index=53&type=chunk) - The company is facing two putative class action lawsuits filed in July and August 2025, alleging false and misleading statements related to the integration of the 3M business and the 2022 acquisition offering materials[54](index=54&type=chunk)[55](index=55&type=chunk) - Stockholder litigation demands were received in August 2025, leading the Board to establish a litigation committee to investigate[56](index=56&type=chunk) [10. Derivatives and Fair Value](index=16&type=section&id=10.%20DERIVATIVES%20AND%20FAIR%20VALUE) Describes the company's use of derivative instruments and their fair value measurements - Neogen uses non-designated foreign currency forward contracts to manage balance sheet risk, with a net fair value of **$123 thousand** as of August 31, 2025 (compared to **$(407) thousand** on May 31, 2025)[60](index=60&type=chunk)[61](index=61&type=chunk) - A cash flow hedge interest rate swap with a notional value of **$200 million** (decreased from **$250 million**) fixes a portion of variable interest on the term loan at **4.215%** plus margin[62](index=62&type=chunk) Fair Value of Derivatives Designated as Hedging Instruments (August 31, 2025 vs. May 31, 2025) | Instrument (in thousands) | August 31, 2025 | May 31, 2025 | | :------------------------ | :-------------- | :----------- | | Interest rate swap – current | $(764) | $(369) | | Interest rate swap – non-current | $(1,426) | $(1,290) | [11. Accumulated Other Comprehensive Loss](index=17&type=section&id=11.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) Details changes in components of accumulated other comprehensive loss, such as foreign currency translation adjustments Changes in Accumulated Other Comprehensive Loss (Three months ended August 31, 2025 vs. 2024) | Component (in thousands) | August 31, 2025 | August 31, 2024 | | :----------------------- | :-------------- | :-------------- | | Beginning balance | $(28,898) | $(30,021) | | Foreign currency translation adjustment (end balance) | $(21,820) | $(29,426) | | Fair value of derivatives change (end balance) | $(1,665) | $(1,995) | | Ending balance | $(23,485) | $(31,421) | - Accumulated other comprehensive loss improved from **$(28.9) million** at May 31, 2025, to **$(23.5) million** at August 31, 2025, driven by foreign currency translation gains and a smaller unrealized loss on derivative instruments[67](index=67&type=chunk) [12. Subsequent Events](index=17&type=section&id=12.%20SUBSEQUENT%20EVENTS) Reports significant events that occurred after the balance sheet date but before the financial statements were issued - In September 2025, management approved a plan to reduce headcount by approximately **10%** as part of an organizational restructuring, with expected employee separation benefits of **$6.75 million** - **$7.25 million**[68](index=68&type=chunk)[106](index=106&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Neogen's financial performance and condition for the three months ended August 31, 2025, discussing key trends, operational results, segment performance, liquidity, and cash flows, highlighting the impact of divestitures, economic headwinds, and strategic initiatives [Safe Harbor and Forward-Looking Statements](index=18&type=section&id=Safe%20Harbor%20and%20Forward-Looking%20Statements) Provides cautionary statements regarding forward-looking information and associated risks and uncertainties - The report contains forward-looking statements, which are subject to risks and uncertainties, including the integration of the 3M food safety business, competition, and regulatory changes[70](index=70&type=chunk) - Neogen disclaims any obligation to update forward-looking statements beyond the filing date, except as legally required[71](index=71&type=chunk) [Trends and Uncertainties](index=18&type=section&id=Trends%20and%20Uncertainties) Discusses key economic, operational, and market factors influencing the company's financial performance and outlook - Neogen continues to face economic headwinds including softening consumer demand, elevated interest rates, and geopolitical tensions, despite easing inflation[72](index=72&type=chunk) - Order fulfillment issues from a new ERP system implementation and 3M transition service agreement exit in fiscal year 2024 led to lost market share in Food Safety, continuing into fiscal year 2025[74](index=74&type=chunk) - The company experienced elevated inventory write-offs and production inefficiencies in its sample collection product line, which are expected to continue impacting fiscal year 2026[74](index=74&type=chunk)[75](index=75&type=chunk) - Economic policy shifts towards increasing tariffs could raise costs on imported materials and negatively impact international sales[76](index=76&type=chunk) [Executive Overview](index=19&type=section&id=Executive%20Overview) Summarizes the company's overall financial performance and key highlights for the reporting period Executive Overview of Financial Performance (Three months ended August 31, 2025 vs. 2024) | Metric (in thousands) | August 31, 2025 | August 31, 2024 | Increase/ (Decrease) | | :-------------------- | :-------------- | :-------------- | :------------------- | | Total Revenues | $209,189 | $216,964 | $(7,775) | | Gross Profit | $94,970 | $104,926 | $(9,956) | | Operating (Loss) Income | $(16,091) | $2,257 | $(18,348) | | Net Income (Loss) | $36,338 | $(12,609) | $48,947 | - Net income significantly improved due to a **$76.4 million** gain on the sale of a business, despite a decline in total revenues and operating income[80](index=80&type=chunk) [Results of Operations](index=19&type=section&id=Results%20of%20Operations) This section covers results of operations [Revenues](index=19&type=section&id=Revenues) Analyzes the drivers of changes in total revenue, including impacts from divestitures and foreign exchange - Total revenue decreased by **$7.8 million** (**3.6%**) YoY, primarily due to a **$9.6 million** unfavorable impact from divestitures (Cleaners & Disinfectants business) and discontinued product lines[81](index=81&type=chunk) - The decrease was partially offset by a **$1.1 million** favorable foreign exchange rate impact and **$0.7 million** growth in the business, driven by insect control, genomics services, pathogen detection, and sample collection products[81](index=81&type=chunk) - Lower Petrifilm sales were attributed to channel inventory rebalancing in Asia and normalization of buying patterns in the U.S[82](index=82&type=chunk) [Service Revenue](index=20&type=section&id=Service%20Revenue) Focuses on revenue generated from services, primarily genomics, and its year-over-year changes Service Revenue (Three months ended August 31, 2025 vs. 2024) | Metric (in thousands) | August 31, 2025 | August 31, 2024 | Change | % Change | | :-------------------- | :-------------- | :-------------- | :----- | :------- | | Service revenues | $25,051 | $24,446 | $605 | 2.47% | - Service revenue, primarily from genomics services, increased by **$0.6 million** (**2.5%**) YoY[83](index=83&type=chunk) [International Revenue](index=20&type=section&id=International%20Revenue) Examines revenue generated from international sales, including currency and divestiture impacts International Revenue (Three months ended August 31, 2025 vs. 2024) | Metric (in thousands) | August 31, 2025 | August 31, 2024 | Change | % Change | | :--------------------------------- | :-------------- | :-------------- | :----- | :------- | | International sales | $107,115 | $112,581 | $(5,466) | -4.86% | - International sales decreased by **$5.5 million** (**4.9%**) YoY, mainly due to the divestiture of the Cleaners & Disinfectants business, partially offset by a **$1.1 million** favorable foreign exchange rate impact[84](index=84&type=chunk) [Gross Margin](index=20&type=section&id=Gross%20Margin) Analyzes the company's gross profit margin and factors influencing its changes Gross Margin (Three months ended August 31, 2025 vs. 2024) | Metric | August 31, 2025 | August 31, 2024 | Change (bps) | | :----- | :-------------- | :-------------- | :----------- | | Gross Margin | 45.4% | 48.4% | -300 | - Gross margin decreased by **300 basis points** YoY, primarily due to lower sales volume, higher tariff costs, increased manufacturing costs for sample collection products, inventory write-offs, and duplicative costs for internal Petrifilm manufacturing[85](index=85&type=chunk) [Operating Expenses](index=20&type=section&id=Operating%20Expenses) Discusses trends and changes in the company's sales and marketing, general and administrative, and research and development expenses [Sales and Marketing](index=20&type=section&id=Sales%20and%20Marketing) Details changes in sales and marketing expenditures and their underlying causes Sales and Marketing Expenses (Three months ended August 31, 2025 vs. 2024) | Metric (in thousands) | August 31, 2025 | August 31, 2024 | Change | % Change | | :-------------------- | :-------------- | :-------------- | :----- | :------- | | Sales and marketing | $45,048 | $45,799 | $(751) | -1.64% | - Sales and marketing expenses decreased by **$0.8 million** (**1.6%**) YoY, mainly due to lower outbound shipping costs and reduced costs from the divested C&D business, partially offset by headcount costs[86](index=86&type=chunk) [General and Administrative](index=20&type=section&id=General%20and%20Administrative) Explains fluctuations in general and administrative expenses, including corporate and transaction costs General and Administrative Expenses (Three months ended August 31, 2025 vs. 2024) | Metric (in thousands) | August 31, 2025 | August 31, 2024 | Change | % Change | | :-------------------- | :-------------- | :-------------- | :----- | :------- | | General and administrative | $60,888 | $51,671 | $9,217 | 17.84% | - General and administrative expenses increased by **$9.2 million** (**17.8%**) YoY, driven by higher corporate expenses related to transformation initiatives and transaction costs[87](index=87&type=chunk) - Amortization expense for definite-lived intangible assets was **$23.0 million** in Q1 2025, with estimated annual expenses of **$89 million** to **$94 million** for fiscal years 2026-2030[88](index=88&type=chunk) [Research and Development](index=20&type=section&id=Research%20and%20Development) Analyzes research and development spending and its impact on product innovation Research and Development Expenses (Three months ended August 31, 2025 vs. 2024) | Metric (in thousands) | August 31, 2025 | August 31, 2024 | Change | % Change | | :-------------------- | :-------------- | :-------------- | :----- | :------- | | Research and development | $5,125 | $5,199 | $(74) | -1.42% | - Research and development expense slightly decreased by **$0.07 million** (**1.4%**) YoY, primarily due to lower contracted services and employee costs[89](index=89&type=chunk) [Other Income/Expense](index=20&type=section&id=Other%20Income%2FExpense) Reports non-operating income and expenses, such as gains on asset sales and interest expenses Other Income (Expense) (Three months ended August 31, 2025 vs. 2024) | Metric (in thousands) | August 31, 2025 | August 31, 2024 | Change | | :-------------------- | :-------------- | :-------------- | :----- | | Total Other Income (Expense) | $59,899 | $(17,866) | $77,765 | - Other income significantly increased to **$59.9 million** in Q1 2025 from an expense of **$17.9 million** in Q1 2024, primarily driven by a **$76.4 million** gain on the sale of the Cleaners & Disinfectants business[90](index=90&type=chunk) - Interest expense decreased by **$2.2 million** YoY due to lower interest costs resulting from the Term Loan refinancing in April 2025[91](index=91&type=chunk) [Provision for Income Taxes](index=21&type=section&id=Provision%20for%20Income%20Taxes) Discusses the company's income tax provision or benefit and factors affecting the effective tax rate Income Tax Expense (Benefit) (Three months ended August 31, 2025 vs. 2024) | Metric (in thousands) | August 31, 2025 | August 31, 2024 | Change | | :-------------------- | :-------------- | :-------------- | :----- | | Income Tax Expense (Benefit) | $7,470 | $(3,000) | $10,470 | - Income tax expense of **$7.5 million** in Q1 2025 (compared to a **$3.0 million** benefit in Q1 2024) is primarily related to pre-tax income from the gain on the C&D business sale[92](index=92&type=chunk) - The One Big Beautiful Bill Act (OBBBA) enacted in July 2025 did not have a significant impact on income tax expense or effective tax rate for Q1 2025[93](index=93&type=chunk) [Segment Results of Operations](index=21&type=section&id=Segment%20Results%20of%20Operations) Provides a detailed breakdown of financial performance by the company's operating segments [Revenues](index=21&type=section&id=Revenues%20(Segment)) Analyzes revenue performance for each operating segment, highlighting key drivers and impacts Segment Revenues (Three months ended August 31, 2025 vs. 2024) | Segment (in thousands) | August 31, 2025 | August 31, 2024 | Increase / (Decrease) | % Change | | :--------------------- | :-------------- | :-------------- | :-------------------- | :------- | | Food Safety Revenue | $152,050 | $159,345 | $(7,295) | (5)% | | Animal Safety Revenue | $57,139 | $57,619 | $(480) | (1)% | | Total Revenues | $209,189 | $216,964 | $(7,775) | (4)% | - Food Safety revenue decreased by **$7.3 million** (**5%**) YoY, primarily due to **$5.9 million** from discontinued products and the C&D divestiture, and a **$2.7 million** business decline, partially offset by favorable currency impact[95](index=95&type=chunk) - Animal Safety revenue decreased by **$0.5 million** (**1%**) YoY, impacted by **$3.7 million** from discontinued products/divestiture and negative FX, but offset by **$3.3 million** growth in insect control, genomics, and animal care products[96](index=96&type=chunk) [Operating Income](index=22&type=section&id=Operating%20Income%20(Segment)) Examines operating income for each segment, explaining changes due to sales, costs, and strategic actions Segment Operating Income (Three months ended August 31, 2025 vs. 2024) | Segment (in thousands) | August 31, 2025 | August 31, 2024 | Increase / (Decrease) | % Change | | :--------------------- | :-------------- | :-------------- | :-------------------- | :------- | | Food Safety Operating Income | $7,091 | $17,905 | $(10,814) | (60)% | | Animal Safety Operating Income | $4,472 | $2,589 | $1,883 | 73% | | Segment Operating Income | $11,563 | $20,494 | $(8,931) | (44)% | | Corporate | $(27,654) | $(18,237) | $(9,417) | 52% | - Food Safety operating income declined by **$10.8 million** (**60%**) YoY due to the C&D divestiture and increased expenses from production inefficiencies and duplicative costs for Petrifilm manufacturing[97](index=97&type=chunk) - Animal Safety operating income increased by **$1.9 million** (**73%**) YoY, driven by favorable product mix and lower costs from fiscal year 2025 restructuring actions in the genomics business[98](index=98&type=chunk) - Corporate expenses increased due to headcount, equity-based compensation, one-time transaction costs, and corporate development initiatives[99](index=99&type=chunk) [Financial Condition and Liquidity](index=22&type=section&id=Financial%20Condition%20and%20Liquidity) Assesses the company's financial health, including cash position, debt, and ability to meet short-term obligations - Primary liquidity sources are cash, operating cash flows, and available borrowing capacity under the Revolving Facility[100](index=100&type=chunk) - As of August 31, 2025, Neogen had **$138.9 million** in cash and cash equivalents and **$201.5 million** available under its revolving line of credit[102](index=102&type=chunk) - Net proceeds from the C&D divestiture (**$121.7 million**) were primarily used to repay **$100 million** of debt in Q1 2026[103](index=103&type=chunk) - The company is in compliance with all financial covenants under its Credit Facilities and estimates **$50 million** in capital expenditures for fiscal 2026, including **$35 million** for 3M FSD integration and a new manufacturing facility[104](index=104&type=chunk)[105](index=105&type=chunk) [Cash Flows](index=23&type=section&id=Cash%20Flows) Summarizes the sources and uses of cash across operating, investing, and financing activities [Net Cash provided by (used for) Operating Activities](index=23&type=section&id=Net%20Cash%20provided%20by%20(used%20for)%20Operating%20Activities) Analyzes cash generated or used by core business operations, excluding non-cash items Net Cash from Operating Activities (Three months ended August 31, 2025 vs. 2024) | Metric (in thousands) | August 31, 2025 | August 31, 2024 | Increase / (Decrease) | | :-------------------- | :-------------- | :-------------- | :-------------------- | | Net Cash from Operating Activities | $10,853 | $(17,914) | $28,767 | - Net cash provided by operating activities increased by **$28.8 million** YoY, driven by improvements in working capital (accounts receivable and accounts payable), despite a decline in operating income[108](index=108&type=chunk) [Net Cash provided by (used for) Investing Activities](index=23&type=section&id=Net%20Cash%20provided%20by%20(used%20for)%20Investing%20Activities) Examines cash flows related to asset acquisitions, sales, and other investment activities Net Cash from Investing Activities (Three months ended August 31, 2025 vs. 2024) | Metric (in thousands) | August 31, 2025 | August 31, 2024 | Increase / (Decrease) | | :-------------------- | :-------------- | :-------------- | :-------------------- | | Net Cash from Investing Activities | $97,725 | $(33,662) | $131,387 | - Cash provided by investing activities increased by **$131.4 million** YoY, primarily due to cash proceeds from the sale of the Cleaners & Disinfectants business and decreased capital expenditures as the new Lansing production facility nears completion[109](index=109&type=chunk) [Net Cash (used for) provided by Financing Activities](index=23&type=section&id=Net%20Cash%20(used%20for)%20provided%20by%20Financing%20Activities) Details cash flows from debt, equity, and dividend transactions, reflecting capital structure changes Net Cash from Financing Activities (Three months ended August 31, 2025 vs. 2024) | Metric (in thousands) | August 31, 2025 | August 31, 2024 | Increase / (Decrease) | | :-------------------- | :-------------- | :-------------- | :-------------------- | | Net Cash from Financing Activities | $(99,393) | $979 | $(100,372) | - Cash used for financing activities increased by **$100.4 million** YoY, primarily due to debt repayment made with proceeds from the sale of the Cleaners and Disinfectants business[110](index=110&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Neogen Corporation continuously evaluates its exposure to currency exchange and interest rate risk, reporting no meaningful changes in these exposures compared to its previous Form 10-K filing - There have been no meaningful changes in the company's exposure to foreign currency exchange rates and interest rates related to variable-rate borrowings since the last Form 10-K[112](index=112&type=chunk) [Item 4. Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details Neogen's disclosure controls and procedures, acknowledging material weaknesses in internal control over financial reporting as of August 31, 2025, and outlining ongoing remediation efforts to address these deficiencies - Neogen's disclosure controls and procedures were not effective as of August 31, 2025, due to material weaknesses in internal control over financial reporting[116](index=116&type=chunk) - Material weaknesses were identified in control activities and information and communication components, as discussed in the 2025 Annual Report on Form 10-K[115](index=115&type=chunk) - Remediation efforts include enhancing existing controls, developing new controls, improving documentation, expanding entity-level controls, providing training, and hiring qualified personnel[118](index=118&type=chunk)[120](index=120&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 9, 'Commitments and Contingencies,' for a detailed description of Neogen's material pending legal proceedings, including shareholder litigation - Material pending legal proceedings are described in Note 9, 'Commitments and Contingencies,' of the interim condensed consolidated financial statements[122](index=122&type=chunk) [Item 1A. Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) Neogen states that there have been no material changes to the risk factors previously described in its Annual Report on Form 10-K for the year ended May 31, 2025 - No material changes in risk factors have occurred since the Annual Report on Form 10-K for the year ended May 31, 2025[123](index=123&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details equity grants made to the new CEO, Mikhael Nassif, as inducement awards and long-term incentives, and confirms no share repurchase activity during the quarter - On August 15, 2025, Mikhael Nassif, the new CEO, received equity grants including options to purchase **473,352 shares**, **184,162 restricted stock units**, options to purchase **1,065,042 shares**, and **414,365 performance share units**[124](index=124&type=chunk) - These equity awards were inducement grants for his appointment as CEO and fiscal year 2026 long-term incentive awards, granted under Section 4(2) of the Securities Act of 1933[124](index=124&type=chunk) - No shares were repurchased under the authorized program during the quarter ended August 31, 2025, with **5,900,000 shares** remaining available for repurchase[125](index=125&type=chunk) [Item 5. Other Information](index=26&type=section&id=Item%205.%20Other%20Information) This section states that no director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarterly period ended August 31, 2025 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter[126](index=126&type=chunk) [Item 6. Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including various equity award agreements, certifications, and Inline XBRL documents - The exhibits include various equity award agreements for the CEO, certifications from the Principal Executive Officer and Chief Financial Officer, and Inline XBRL documents[127](index=127&type=chunk) [SIGNATURES](index=28&type=section&id=SIGNATURES) Formal declaration by authorized officers confirming the accuracy and completeness of the financial report - The report is signed by Mikhael Nassif, President & Chief Executive Officer, and David H. Naemura, Chief Financial & Operating Officer, on October 9, 2025[129](index=129&type=chunk)

Group 1 - The article does not provide any specific content related to a company or industry [1]

Core Insights - Neogen (NEOG) reported quarterly earnings of $0.04 per share, missing the Zacks Consensus Estimate of $0.05 per share, and down from $0.07 per share a year ago, representing an earnings surprise of -20.00% [1] - The company posted revenues of $209.19 million for the quarter ended August 2025, surpassing the Zacks Consensus Estimate by 2.96%, but down from $216.96 million year-over-year [2] - Neogen shares have declined approximately 52.1% year-to-date, contrasting with the S&P 500's gain of 14.8% [3] Earnings Outlook - The company's earnings outlook is crucial for investors, including current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The trend of estimate revisions for Neogen was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] - Current consensus EPS estimate for the next quarter is $0.08 on revenues of $210.41 million, and $0.32 on revenues of $818.26 million for the current fiscal year [7] Industry Context - The Medical - Products industry, to which Neogen belongs, is currently ranked in the top 26% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Another company in the same industry, ResMed (RMD), is expected to report quarterly earnings of $2.49 per share, reflecting a year-over-year increase of +13.2%, with revenues projected at $1.32 billion, up 7.9% from the previous year [9]

Financial Data and Key Metrics Changes - Neogen reported revenue of approximately $209 million for Q1 FY 2026, reflecting a year-over-year increase of 0.3% on a core basis, which was in line with expectations [12][15] - Adjusted EBITDA margin was 17%, impacted by lower revenue, higher tariff costs, and increased operating expenses [21] - Free cash flow for the quarter was an outflow of $13 million, representing an improvement of $43 million compared to the prior year [22][23] Business Line Data and Key Metrics Changes - Food Safety segment revenues were $152 million, down 4.6% year-over-year, with a core decline of 1.7% [15][16] - Animal Safety segment revenues were $57 million, a decline of 0.8%, but core revenue grew by 5.8% [17] - PetriFilm experienced a mid-single-digit decline in core revenue, attributed to distributor inventory adjustments rather than a change in underlying demand [12][16] Market Data and Key Metrics Changes - Core revenue growth was mixed across regions, with LATAM showing mid-single-digit growth, while the U.S. and Canada had low single-digit growth [18] - The APAC region faced challenges, particularly in China and ASEAN countries, impacting overall performance [19] Company Strategy and Development Direction - The company aims to drive top-line growth, right-size its cost base, reinvigorate innovation, and deleverage [5][11] - A global headcount reduction of approximately 10% is expected to save about $20 million annually, with some reinvestment planned for commercial and R&D capabilities [7][24] - The focus will be on optimizing the product portfolio for market share gains and profitability, particularly in high-growth markets [8][11] Management's Comments on Operating Environment and Future Outlook - The new CEO emphasized the need for improved execution to regain market share and enhance operational efficiency [4][26] - Management expressed confidence in reaffirming full-year guidance, anticipating improvements in margins and cash flow as the year progresses [23][29] Other Important Information - The company completed the divestiture of its Cleaners and Disinfectants business, generating approximately $115 million in net proceeds used to pay down debt [22] - The integration of the PetriFilm production process is on track, with expectations for completion in the second quarter of the next fiscal year [10][11] Q&A Session Summary Question: Can you discuss the strengths of Neogen and the challenges faced? - The new CEO highlighted the strong market position and dedicated workforce, acknowledging execution challenges that have impacted market share [33][34] Question: How will the company regain market share with unique products? - The CEO outlined three strategies: leveraging a broad product portfolio, targeting underpenetrated markets, and enhancing commercial execution [38][39] Question: What is the timeline for outlining the company's vision? - The CEO indicated that more details would be shared in early 2026 as he gains more insight into the company's operations [44] Question: Can you clarify the impact of inventory and cash flow challenges? - Management acknowledged that inventory write-offs and sample collection inefficiencies are significant challenges but expressed confidence in improving these areas [46][48] Question: How is the company addressing the headcount reduction and turnover? - The CEO emphasized the importance of ongoing evaluation of resources and the need to engage the workforce to drive growth [76][77]

Financial Data and Key Metrics Changes - Neogen reported revenue of approximately $209 million for Q1 FY 2026, reflecting a year-over-year increase of 0.3% on a core basis [12][15] - Adjusted EBITDA was $35.5 million, representing a margin of 17%, impacted by lower revenue, higher tariff costs, and increased operating expenses [21][22] - Free cash flow for the quarter was an outflow of $13 million, an improvement of $43 million compared to the prior year [22][23] Business Line Data and Key Metrics Changes - Food safety segment revenues were $152 million, down 4.6% year-over-year, with a core decline of 1.7% [15][16] - Animal safety segment revenues were $57 million, a decline of 0.8%, but core revenue grew by 5.8% [17] - Petrifilm experienced a mid-single-digit decline in revenue, attributed to distributor inventory adjustments rather than a change in underlying demand [12][16] Market Data and Key Metrics Changes - Core revenue growth was mixed across regions, with LATAM showing mid-single-digit growth, while the U.S. and Canada had low single-digit growth [18] - The APAC region faced challenges, particularly in China and ASEAN countries, impacting overall performance [19] Company Strategy and Development Direction - The company aims to drive top-line growth, right-size its cost base, and reinvigorate innovation without a major strategic overhaul [5][7] - A focus on optimizing the product portfolio for market share gains and profitability, including targeted price increases, is underway [8] - The addition of a Chief Commercial Officer is being pursued to enhance global commercial leadership [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's potential for growth despite current execution challenges, emphasizing the need for improved operational efficiency [4][29] - The CEO highlighted the importance of regaining market share and improving customer relationships as key priorities moving forward [26][39] Other Important Information - The company executed a global headcount reduction of approximately 10%, aiming for annualized savings of about $20 million [7][24] - The divestiture of the cleaners and disinfectants business generated approximately $115 million in net proceeds, which was used to pay down debt [22] Q&A Session Summary Question: Can you discuss the strengths of Neogen and the challenges faced? - The CEO confirmed the company's strong market position and employee dedication, while acknowledging execution challenges that have led to market share losses [33][34] Question: How will the company regain market share with unique products? - The CEO outlined three strategies: leveraging a broad product portfolio, exploring underpenetrated markets, and enhancing execution within the commercial organization [38][39] Question: What is the expected progression of EBITDA margins throughout the year? - The CFO indicated that EBITDA margins are expected to improve as the year progresses, driven by volume increases and cost structure benefits [40] Question: What is the timeline for outlining the company's vision post-CEO transition? - The CEO mentioned that more details on the company's vision will be shared in early 2026, focusing on quick wins and critical projects [44] Question: Can you clarify the $6 million in sample collection costs? - The CFO explained that these costs are related to scrap and quality flags, indicating that the company is currently selling the product at a loss [72] Question: How will the company manage headcount and turnover during this transition? - The CEO emphasized the need for continuous evaluation of resources and the importance of re-engaging employees to drive growth [76][77] Question: Will there be additional divestitures beyond the genomics process? - The CEO confirmed that the company is always in portfolio review mode and will continue to assess product lines for optimization [85][87]

Financial Data and Key Metrics Changes - Neogen reported revenue of approximately $209 million for Q1 FY 2026, reflecting a year-over-year increase of 0.3% on a core basis [11][14] - Adjusted EBITDA was $35.5 million, representing a margin of 17%, impacted by lower revenue, higher tariff costs, and increased operating expenses [19][12] - Free cash flow for the quarter was an outflow of $13 million, an improvement of $43 million compared to the prior year [20][21] Business Line Data and Key Metrics Changes - Food Safety segment revenues were $152 million, down 4.6% year-over-year, with a core decline of 1.7% [14][16] - Animal Safety segment revenues were $57 million, a decline of 0.8%, but core revenue grew by 5.8% [16] - PetriFilm experienced a mid-single-digit decline in core revenue, attributed to distributor inventory adjustments rather than a change in underlying demand [11][15] Market Data and Key Metrics Changes - Core revenue growth was mixed across regions, with LATAM showing mid-single-digit growth, while the U.S. and Canada had low single-digit growth [17] - The APAC region faced challenges, particularly in China and ASEAN countries, impacting overall performance [18] Company Strategy and Development Direction - The company aims to drive top-line growth, right-size its cost base, reinvigorate innovation, and deleverage [5][10] - A global headcount reduction of approximately 10% is expected to save about $20 million annually, with some reinvestment planned for commercial and R&D capabilities [6][22] - The focus will be on optimizing the product portfolio for market share gains and profitability, including targeted price increases [7][10] Management's Comments on Operating Environment and Future Outlook - The new CEO emphasized the need for improved execution and alignment of strategic initiatives to unlock growth potential [4][5] - Management expressed confidence in reaffirming full-year guidance, citing positive trends observed in September [12][21] - The company is addressing execution challenges related to the integration of the 3M transaction, which has affected market share [25][26] Other Important Information - The divestiture of the Cleaners and Disinfectants business generated approximately $115 million in net proceeds, which was used to pay down debt [20] - The company is in the process of selling its genomics business, with ongoing evaluations of the remaining portfolio [22][84] Q&A Session Summary Question: Can you discuss the strengths of Neogen and the market opportunities? - The new CEO highlighted a strong portfolio in a growing market and the dedication of employees as key strengths [30][32] Question: How will the commercial organization take market share? - The CEO outlined the need for a broad product portfolio, under-penetrated markets, and improved execution to regain market share [35][36] Question: What is the timeline for outlining the company's vision? - The CEO indicated that more details would be shared in early 2026 as he gains more insight into the company's operations [41] Question: Can you clarify the $6 million in sample collection costs? - The CFO explained that these costs are related to scrap and quality issues, with plans to improve labor costs and reduce spoilage [68][70] Question: How will the company manage headcount and turnover? - The CEO emphasized the importance of continuous evaluation of operations and the need to engage employees with a fresh vision [75][76] Question: Will there be additional divestitures beyond genomics? - The CEO confirmed ongoing portfolio evaluations and a focus on optimizing remaining product lines for profitable growth [82][84]

Financial Performance - Neogen's Q1 FY26 revenue was $209.2 million, a decrease from $217.0 million in Q1 FY25[13] - Adjusted EBITDA for Q1 FY26 was $35.5 million, compared to $43.7 million in Q1 FY25, with a margin of 17.0% versus 20.1%[14] - Adjusted Net Income decreased to $9.4 million ($0.04 per share) in Q1 FY26 from $14.4 million ($0.07 per share) in Q1 FY25[15] - Core revenue growth in Food Safety segment was (1.7)%, while Animal Safety segment saw a core revenue growth of 5.8%[17] - The company's gross debt stands at $800 million, with net debt at $661 million[19] - Q1 Free Cash Flow improved by $43 million compared to the prior year[21] Strategic Initiatives and Outlook - A cost-reduction initiative is expected to yield annualized savings of $20 million[11] - The divestiture of Cleaners & Disinfectants funded a $100 million debt paydown[11] - The company reaffirms its full-year outlook with revenue projected between $820 million and $840 million and Adjusted EBITDA between $165 million and $175 million[11, 24] - A headcount reduction of approximately 10% has been implemented to align with the current operating environment[23]

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh. ...

[Executive Summary & CEO Commentary](index=1&type=section&id=Executive%20Summary%20%26%20CEO%20Commentary) Neogen's CEO outlined a strategy for commercial excellence, innovation, and cost reduction to drive margin growth, while Q1 FY26 saw a 3.6% revenue decrease but improved net income due to a divestiture [CEO's Strategic Vision & Challenges](index=1&type=section&id=CEO's%20Strategic%20Vision%20%26%20Challenges) Neogen's CEO, Mike Nassif, outlined a strategy to leverage the company's leadership in food and animal safety by addressing recent execution challenges. The plan includes a sharpened focus on commercial excellence, renewed innovation, and a leaner cost structure through company-wide cost initiatives and headcount reduction, aiming for margin growth, strategic reinvestment, and sustainable shareholder value - Neogen's CEO, Mike Nassif, identifies **tremendous opportunity** in food and animal safety, despite recent performance hampered by execution challenges[3](index=3&type=chunk) - **Strategic initiatives** include a **sharpened emphasis** on commercial excellence, renewed innovation, and a **leaner cost structure**, including headcount reduction, to fuel **margin growth** and enable **strategic reinvestment**[3](index=3&type=chunk) [First Quarter Financial & Business Highlights](index=1&type=section&id=First%20Quarter%20Financial%20%26%20Business%20Highlights) Neogen reported first-quarter fiscal 2026 revenues of $209.2 million, a 3.6% decrease year-over-year, though core revenue increased by 0.3%. Net income significantly improved to $36.3 million from a prior-year loss, primarily due to a non-cash gain on the sale of the Cleaners and Disinfectants business. Adjusted Net Income and Adjusted EBITDA declined due to lower operating income and gross margin pressures | Metric | Q1 FY26 (Millions) | Q1 FY25 (Millions) | Change (%) | | :--------------------- | :----------------- | :----------------- | :--------- | | Revenues | $209.2 | $217.0 | -3.6% | | Core Revenue Growth | 0.3% | N/A | N/A | | Net Income | $36.3 | $(12.6) | N/A | | Net Income Per Diluted Share | $0.17 | $(0.06) | N/A | | Adjusted Net Income | $9.4 | $14.4 | -34.6% | | Adjusted Net Income Per Diluted Share | $0.04 | $0.07 | -42.9% | | Gross Margin | 45.4% | 48.4% | -3.0 pp | | Adjusted EBITDA | $35.5 | $43.7 | -18.8% | | Adjusted EBITDA Margin | 17.0% | 20.1% | -3.1 pp | - Net income in the current period was **higher** compared to the prior year due to a **non-cash gain** on the sale of the Company's global Cleaners and Disinfectants business[5](index=5&type=chunk) - **Key business actions** include the **completion** of the Cleaners & Disinfectants business divestiture, **repayment** of **$100.0 million** of debt, appointment of Mike Nassif as CEO, and **restructuring actions** to **right-size the cost base**, while **reaffirming the full-year outlook**[8](index=8&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) Neogen's Food Safety segment revenue declined by 4.6% due to Petrifilm sales, while Animal Safety core revenue grew 5.8%, and Genomics returned to mid-single-digit core growth [Food Safety Segment](index=2&type=section&id=Food%20Safety%20Segment) The Food Safety segment's revenue decreased by 4.6% to $152.1 million, with a core revenue decline of 1.7%. Growth in Bacterial & General Sanitation (pathogen detection) and food quality/nutritional analysis was offset by a decline in Petrifilm sales due to channel inventory rebalancing and distributor changes | Metric | Q1 FY26 (Millions) | Q1 FY25 (Millions) | Change (%) | | :----------------- | :----------------- | :----------------- | :--------- | | Revenue | $152.1 | $159.3 | -4.6% | | Core Revenue Growth | -1.7% | N/A | N/A | | Divestitures/Discontinued Products Impact | -3.7% | N/A | N/A | | Foreign Currency Impact | 0.8% | N/A | N/A | - **Strongest core revenue growth** in Bacterial & General Sanitation, benefiting from **higher sales** in pathogen detection products[9](index=9&type=chunk) - **Decline** in Petrifilm sales largely due to **channel inventory rebalancing** related to switching distributors in Asia and normalization of buying patterns in the U.S[9](index=9&type=chunk) [Animal Safety Segment](index=2&type=section&id=Animal%20Safety%20Segment) The Animal Safety segment's revenue saw a slight decrease of 0.8% to $57.1 million, but achieved a strong 5.8% core revenue increase. This growth was driven by Animal Care & Other (biologics, wound care), Life Sciences (substrates, reagents), and Biosecurity (insect control), partially offset by lower sales in Veterinary Instruments & Disposables | Metric | Q1 FY26 (Millions) | Q1 FY25 (Millions) | Change (%) | | :----------------- | :----------------- | :----------------- | :--------- | | Revenue | $57.1 | $57.6 | -0.8% | | Core Revenue Growth | 5.8% | N/A | N/A | | Divestitures/Discontinued Products Impact | -6.4% | N/A | N/A | | Foreign Currency Impact | -0.2% | N/A | N/A | - **Core revenue growth** led by Animal Care & Other (biologics, wound care), Life Sciences (substrates, reagents), and Biosecurity (insect control products)[10](index=10&type=chunk) - **Lower revenue** in Veterinary Instruments & Disposables, primarily driven by a **decline** in sales of needles and syringes[10](index=10&type=chunk) [Genomics Business](index=2&type=section&id=Genomics%20Business) Neogen's Genomics business returned to positive mid-single-digit core revenue growth globally in the first quarter, driven by solid performance in bovine and other markets, despite a decline in the companion animal market - The Company's Genomics business **returned to positive core revenue growth** in the **mid-single-digit range** in the first quarter[11](index=11&type=chunk) - **Solid growth** in bovine and other markets was partially offset by a **decline** in the companion animal market[11](index=11&type=chunk) [Financial Position & Outlook](index=2&type=section&id=Financial%20Position%20%26%20Outlook) Neogen maintained $138.9 million in cash and $800.0 million in debt, repaying $100 million, and reaffirmed its FY26 revenue outlook of $820-840 million and Adjusted EBITDA of $165-175 million [Liquidity and Capital Resources](index=2&type=section&id=Liquidity%20and%20Capital%20Resources) As of August 31, 2025, Neogen held $138.9 million in cash and cash equivalents and had total outstanding debt of $800.0 million. The company utilized net proceeds from the Cleaners & Disinfectants divestiture to repay $100 million of debt during the quarter | Metric | As of August 31, 2025 (Millions) | | :---------------------- | :----------------------------- | | Cash and cash equivalents | $138.9 | | Total outstanding debt | $800.0 | | Committed borrowing headroom | $201.5 | - The Company used **net proceeds** from the July closing of the Cleaners & Disinfectants divestiture to **repay** **$100 million** of outstanding debt in the first quarter[12](index=12&type=chunk) [Fiscal Year 2026 Outlook](index=2&type=section&id=Fiscal%20Year%202026%20Outlook) Neogen reaffirmed its full-year fiscal 2026 outlook, anticipating revenues between $820 million and $840 million, and Adjusted EBITDA in the range of $165 million to $175 million. Capital expenditures are projected to be approximately $50 million | Metric | FY26 Outlook (Millions) | | :----------------- | :---------------------- | | Revenue | $820 - $840 | | Adjusted EBITDA | $165 - $175 | | Capital Expenditures | ~$50 | - The Company is **reaffirming its full-year outlook** for fiscal year 2026[13](index=13&type=chunk) [Company Information](index=3&type=section&id=Company%20Information) This section provides details on Neogen's Q1 FY26 conference call, an overview of the company's global food security mission, and a cautionary note on forward-looking statements [Conference Call and Webcast Details](index=3&type=section&id=Conference%20Call%20and%20Webcast%20Details) Neogen Corporation hosted a conference call on October 9, 2025, to discuss its financial results. Details for accessing the live webcast, conference call, and replay were provided for investors and interested parties - Neogen Corporation **hosted** a conference call on October 9, 2025, at 8:00 a.m. Eastern Time to discuss financial results[14](index=14&type=chunk) - **Access to the live webcast**, accompanying presentation materials, and a replay is available through Neogen's investor relations website[14](index=14&type=chunk) [About Neogen](index=3&type=section&id=About%20Neogen) Neogen Corporation is a global leader dedicated to enhancing food security through advancements in human and animal well-being. The company develops comprehensive solutions across Food Safety, Livestock, and Pet Health & Wellness markets, operating in over 140 countries with a network of scientists and technical experts - Neogen Corporation is **committed to fueling global food security** through human and animal well-being[15](index=15&type=chunk) - The company offers **comprehensive solutions** in Food Safety, Livestock, and Pet Health & Wellness markets, with a **presence in over 140 countries**[15](index=15&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This news release contains forward-looking statements subject to risks and uncertainties. Actual future results may differ materially from expectations due to various factors detailed in the company's most recently filed Form 10-K - Certain portions of this news release constitute **forward-looking statements**, **subject to risks and uncertainties**[16](index=16&type=chunk) - Actual future results and trends may **differ materially** from historical results or expectations due to **factors detailed** in the company's most recently filed Form 10-K[16](index=16&type=chunk) [Consolidated Financial Statements (GAAP)](index=4&type=section&id=Consolidated%20Financial%20Statements%20(GAAP)) This section presents Neogen's unaudited GAAP financial statements for Q1 FY26, including the statement of operations, balance sheet, and cash flows, reflecting the impact of a business divestiture [Unaudited Consolidated Statement of Operations](index=4&type=section&id=Unaudited%20Consolidated%20Statement%20of%20Operations) The unaudited consolidated statement of operations shows Neogen's financial performance for the three months ended August 31, 2025, highlighting total revenue, gross profit, operating expenses, and a significant shift from a net loss to net income year-over-year, largely influenced by a gain on the sale of a business | (In thousands, except share amounts) | Three months ended August 31, 2025 | Three months ended August 31, 2024 | | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Total revenue | $209,189 | $216,964 | | Cost of revenues | $114,219 | $112,038 | | Gross profit | $94,970 | $104,926 | | Total operating expenses | $111,061 | $102,669 | | Operating loss (income) | $(16,091) | $2,257 | | Gain on sale of business | $76,390 | — | | Net Income (Loss) | $36,338 | $(12,609) | | Net Earnings (Loss) Per Diluted Share | $0.17 | $(0.06) | [Unaudited Consolidated Balance Sheet](index=5&type=section&id=Unaudited%20Consolidated%20Balance%20Sheet) The unaudited consolidated balance sheet as of August 31, 2025, indicates a decrease in total assets and liabilities compared to May 31, 2025. Key changes include a reduction in current assets due to the divestiture of assets held for sale and a decrease in total liabilities, particularly current portion of debt and non-current debt | (In thousands, except share amounts) | August 31, 2025 | May 31, 2025 | | :----------------------------------- | :-------------- | :----------- | | Cash and cash equivalents | $138,883 | $129,004 | | Total Current Assets | $524,060 | $576,937 | | Total Assets | $3,378,156 | $3,443,836 | | Total Current Liabilities | $146,205 | $174,011 | | Non-current debt | $792,530 | $874,810 | | Total Liabilities | $1,259,507 | $1,372,582 | | Total Stockholders' Equity | $2,118,649 | $2,071,254 | [Unaudited Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) The unaudited consolidated statements of cash flows show a significant increase in net cash provided by operating activities to $10.85 million in Q1 FY26 from a net use in Q1 FY25. Investing activities generated substantial cash due to proceeds from the sale of a business, while financing activities saw a net use primarily from debt repayment | (In thousands) | Three months ended August 31, 2025 | Three months ended August 31, 2024 | | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Net Cash provided by (used for) Operating Activities | $10,853 | $(17,914) | | Net Cash provided by (used for) Investing Activities | $97,725 | $(33,662) | | Net Cash (used for) provided by Financing Activities | $(99,393) | $979 | | Net Increase (Decrease) in Cash and Cash Equivalents | $9,879 | $(50,134) | | Cash and Cash Equivalents, End of Year | $138,883 | $120,477 | - **Proceeds from the sale of business**, net of cash divested, **contributed** **$121.7 million** to investing activities[22](index=22&type=chunk) - **Repayment** of outstanding debt of **$100.0 million** was the **primary driver** of cash used in financing activities[22](index=22&type=chunk) [Non-GAAP Financial Measures & Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) This section explains Neogen's non-GAAP measures like Adjusted EBITDA and Adjusted Net Income, providing reconciliations from GAAP figures to offer clearer insights into operational performance [Explanation of Non-GAAP Measures](index=7&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Neogen utilizes non-GAAP financial measures such as Adjusted EBITDA, Adjusted Net Income, and Core Revenue Growth to provide investors with a clearer understanding of business performance by excluding certain items that impact period-over-period comparisons or comparability with other businesses. These measures are supplemental to GAAP figures - **Adjusted EBITDA** is used as a **key profitability measure**, representing EBITDA before certain items impacting performance comparisons[23](index=23&type=chunk) - **Adjusted Net Income** is an **additional profitability measure**, excluding certain items that impact business performance comparisons[24](index=24&type=chunk) - **Core revenue growth excludes effects** of foreign currency translation rates, acquisitions, and discontinued product lines for **meaningful year-over-year performance comparison**[25](index=25&type=chunk) [Reconciliation of Net Income to Adjusted EBITDA](index=8&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA) The reconciliation details the adjustments made to GAAP Net Income (Loss) to arrive at Adjusted EBITDA. For Q1 FY26, Net Income of $36.3 million was adjusted for items like income tax, depreciation, interest, and significant non-recurring costs (e.g., gain on sale of business, transformation initiatives, sample collection transition costs) to yield an Adjusted EBITDA of $35.5 million | (In thousands) | Three months ended August 31, 2025 | Three months ended August 31, 2024 | | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Net income (loss) | $36,338 | $(12,609) | | EBITDA | $88,387 | $31,813 | | Share-based compensation | $4,962 | $3,982 | | Gain on sale of business | $(76,390) | — | | Transformation initiatives and related costs | $5,902 | $310 | | Adjusted EBITDA | $35,469 | $43,714 | | Adjusted EBITDA margin (% of sales) | 17.0% | 20.1% | [Reconciliation of Net Income to Adjusted Net Income](index=9&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20Net%20Income) This reconciliation shows the adjustments from GAAP Net Income (Loss) to Adjusted Net Income. For Q1 FY26, after accounting for amortization of acquisition-related intangibles, share-based compensation, the gain on sale of business, and various integration/transformation costs, Adjusted Net Income was $9.4 million, down from $14.4 million in the prior year | (In thousands) | Three months ended August 31, 2025 | Three months ended August 31, 2024 | | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Net income (loss) | $36,338 | $(12,609) | | Amortization of acquisition-related intangibles | $22,486 | $23,138 | | Share-based compensation | $4,962 | $3,982 | | Gain on sale of business | $(76,390) | — | | Transformation initiatives and related costs | $5,902 | $310 | | Estimated tax effect of above adjustments | $3,541 | $(8,052) | | Adjusted Net Income | $9,447 | $14,378 | | Adjusted Earnings Per Share | $0.04 | $0.07 | [Reconciliation of Growth to Core Growth](index=10&type=section&id=Reconciliation%20of%20Growth%20to%20Core%20Growth) This reconciliation breaks down total revenue growth into its components: reported growth, foreign currency impact, and the impact of acquisitions/divestitures, to derive core revenue growth. For Q1 FY26, total Neogen revenue declined by 3.6%, but core revenue increased by 0.3%, indicating underlying operational growth despite negative impacts from divestitures | Segment | Q1 FY26 (Thousands) | Q1 FY25 (Thousands) | Growth | Foreign Currency | Acquisitions / Divestitures | Core Revenue Growth | | :-------------- | :------------------ | :------------------ | :----- | :--------------- | :-------------------------- | :------------------ | | Food Safety | $152,050 | $159,345 | (4.6%) | 0.8% | (3.7%) | (1.7%) | | Animal Safety | $57,139 | $57,619 | (0.8%) | (0.2%) | (6.4%) | 5.8% | | Total Neogen | $209,189 | $216,964 | (3.6%) | 0.5% | (4.4%) | 0.3% |

Core Insights - Neogen Corporation is set to release its first-quarter earnings results on October 9, with analysts expecting earnings of 4 cents per share, a decrease from 7 cents per share in the same period last year [1] - The company projects quarterly revenue of $204.15 million, down from $216.96 million a year earlier [1] - Neogen's CFO and COO, David Naemura, announced his departure from the company on September 15 [1] Stock Performance - Neogen's shares fell by 7.1%, closing at $5.63 on Monday [2] Analyst Ratings - William Blair analyst Brandon Vazquez downgraded Neogen's stock from Outperform to Market Perform on July 29, 2025, with a 67% accuracy rate [7] - Guggenheim analyst Subbu Nambi maintained a Buy rating but reduced the price target from $13 to $10 on June 30, 2025, with a 61% accuracy rate [7] - Piper Sandler analyst David Westenberg kept a Neutral rating and lowered the price target from $6.4 to $5 on April 22, 2025, achieving a 70% accuracy rate [7]