Neogen(NEOG) - 2026 Q1 - Quarterly Results

Executive Summary & CEO Commentary 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 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] - 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] First Quarter Financial & Business Highlights 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] - 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] Segment Performance 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 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] - 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] Animal Safety Segment 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] - Lower revenue in Veterinary Instruments & Disposables, primarily driven by a decline in sales of needles and syringes[10] Genomics Business 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] - Solid growth in bovine and other markets was partially offset by a decline in the companion animal market[11] Financial Position & Outlook 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 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] Fiscal Year 2026 Outlook 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] Company Information 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 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] - Access to the live webcast, accompanying presentation materials, and a replay is available through Neogen's investor relations website[14] About Neogen 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] - The company offers comprehensive solutions in Food Safety, Livestock, and Pet Health & Wellness markets, with a presence in over 140 countries[15] Forward-Looking Statements 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] - 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] Consolidated Financial Statements (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 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 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 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] - Repayment of outstanding debt of $100.0 million was the primary driver of cash used in financing activities[22] Non-GAAP Financial Measures & Reconciliations 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 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] - Adjusted Net Income is an additional profitability measure, excluding certain items that impact business performance comparisons[24] - Core revenue growth excludes effects of foreign currency translation rates, acquisitions, and discontinued product lines for meaningful year-over-year performance comparison[25] Reconciliation of Net Income to Adjusted EBITDA 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 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 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% |