Neogen's Q2 Earnings and Revenues Beat Estimates, Stock Climbs

Core Insights - Neogen Corporation (NEOG) reported adjusted earnings per share (EPS) of 10 cents for Q2 fiscal 2026, exceeding the Zacks Consensus Estimate by 42.86%, but down from 11 cents in the same quarter last year [2] - Revenues for the quarter decreased by 2.8% year-over-year to $224.69 million, with core revenues increasing by 2.9%, surpassing the Zacks Consensus Estimate by 7.93% [3][10] Revenue Breakdown - The Food Safety segment generated revenues of $165.6 million, reflecting a 0.8% year-over-year increase, driven by 4.1% core revenue growth, despite a negative impact from divestitures and discontinued products [4] - The Animal Safety segment reported revenues of $59.1 million, down 11.8% year-over-year, with a slight core revenue increase of 0.1% and a significant negative impact from divestitures [5] Margin and Expense Analysis - Gross profit for Q2 declined by 5.9% year-over-year to $106.7 million, with a gross margin contraction of 153 basis points to 47.5% [6] - Sales and marketing expenses decreased by 9.1% to $42.3 million, while administrative expenses rose by 12.9% to $65 million, leading to an operating loss of $5.4 million compared to a profit of $3.9 million in the prior year [7] Cash Position and Liabilities - Neogen's cash and cash equivalents at the end of Q2 totaled $145.3 million, an increase from $138.9 million at the end of Q1 [8] - The company has total outstanding debt of $800 million and a committed borrowing capacity of $201.5 million [8] Fiscal 2026 Outlook - Neogen raised its fiscal 2026 revenue guidance to a range of $845 million to $855 million, up from the previous estimate of $820 million to $840 million, with adjusted EBITDA expected to be around $175 million [10][11] - The company noted encouraging early progress with a return to positive core growth across the enterprise [12] Segment Performance Highlights - Within the Food Safety segment, the strongest core revenue growth was observed in Indicator Testing and Culture Media, attributed to higher sales of sample collection products [13] - The Biosecurity product category in Animal Safety saw strong growth in insect control product sales [13]