Neogen Reports Third Quarter Fiscal Year 2026 Financial Results
Overview of Third Quarter 2026 Performance
Neogen Corporation, a leading innovator in food and animal safety solutions, announced its financial results for the third quarter of fiscal 2026 while also updating its full-year financial guidance, reflecting both progress in strategic transformation and challenges in certain business segments, as the company continues to realign operations, strengthen its core business, and position itself for long-term sustainable growth
Strategic Transformation and Leadership Commentary
Neogen’s President and CEO Mike Nassif emphasized that the company is making meaningful progress in its transformation journey, particularly in stabilizing and strengthening its core Food Safety operations, supported by strong growth trends and improved execution across commercial strategies, including a comprehensive go-to-market review, implementation of metric-driven key performance indicators, and a transition toward a standardized global solutions-based selling model designed to enhance efficiency and scalability across international markets
Challenges in Animal Safety Segment
Despite progress in Food Safety, the Animal Safety segment faced notable headwinds during the quarter, primarily due to third-party supply chain disruptions that negatively impacted growth, leading to lower-than-expected performance, as the company works to address these challenges through improved supplier qualification processes and enhanced sales and operations planning, while leadership remains confident that these issues are temporary and will be resolved through operational improvements and tighter supply chain management
Revenue Performance and Key Trends
Total revenues for the third quarter were reported at $211.2 million, representing a decline of 4.4% compared to $221.0 million in the same period of the previous year, although core revenue, which excludes foreign exchange impacts and discontinued operations, showed a slight increase of 0.1%, indicating underlying stability in the business despite external pressures, with performance driven largely by the Food Safety segment offsetting declines in Animal Safety
Strong Growth in Food Safety Segment
The Food Safety segment generated $156.7 million in revenue during the quarter, marking a 2.6% increase year-over-year, with core growth reaching 4.0%, supported by strong demand in key product categories such as indicator testing and culture media, which grew by 11.0%, and bacterial and general sanitation products, which increased by 5.5%, highlighting continued global demand for food quality and safety solutions as regulatory requirements and consumer awareness continue to rise
Weakness in Animal Safety Segment
In contrast, the Animal Safety segment recorded revenue of $54.5 million, a significant decline of 20.1% compared to the prior year, with core revenue falling by 8.7%, largely due to supplier-related disruptions affecting product availability, particularly in the United States where the majority of Animal Safety sales are concentrated, underscoring the importance of supply chain resilience and operational continuity in maintaining growth momentum
Geographic Revenue Distribution
From a geographic perspective, domestic revenue declined by 11.4% to $102.3 million, reflecting the impact of Animal Safety challenges in the U.S. market, while international revenue increased by 3.1% to $108.9 million, driven by strong performance in Europe and Latin America, demonstrating the company’s growing global footprint and the importance of diversified revenue streams in mitigating regional risks
Profitability and Margin Analysis
Gross profit for the quarter was $99.0 million, resulting in a gross margin of 46.9%, down from 49.9% in the prior-year period, primarily due to duplicative costs associated with the ongoing Petrifilm manufacturing transition, as well as tariff impacts and inventory write-offs, however, adjusted gross margin improved slightly to 51.7% compared to 51.4% last year, indicating that underlying profitability remains stable when excluding one-time or transitional costs
Earnings and EBITDA Performance
The company reported a net loss of $17.0 million, or $(0.08) per diluted share, compared to a net loss of $10.9 million in the prior-year quarter, reflecting the impact of lower revenue and higher costs, however, adjusted net income remained positive at $19.4 million, demonstrating the effectiveness of cost control measures, while adjusted EBITDA reached $48.2 million with a margin of 22.8%, slightly higher than the previous year’s margin, highlighting improved operational efficiency despite revenue pressures
Cost Control and Operational Efficiency
Neogen’s ability to maintain strong adjusted EBITDA margins was largely attributed to disciplined cost management and efficiency initiatives implemented across the organization, including reductions in operating expenses and increased use of technology and process improvements, which are expected to continue driving performance gains and supporting profitability in future quarters
Business and Operational Highlights
A key focus for Neogen is the ongoing review of its global go-to-market strategy, aimed at aligning resources with higher-return markets, establishing consistent global selling standards, and enhancing performance through data-driven decision-making under new commercial leadership, which is expected to strengthen the company’s competitive position and improve revenue quality over time
Progress in Petrifilm Manufacturing Transition
The company also made significant progress in transitioning to its new Petrifilm manufacturing line, having completed validation of all equipment and advancing operational validation across multiple product lines, with the transition expected to be completed by November 2026, representing a critical milestone in improving manufacturing efficiency and supporting long-term growth in the Food Safety segment
Strategic Divestiture of Genomics Business
Neogen announced a definitive agreement to sell its global genomics business to Zoetis Inc. for $160 million, with expected net proceeds of approximately $140 million after costs and taxes, as the company seeks to streamline its portfolio and focus on core competencies, with the transaction anticipated to close by the second quarter of fiscal 2027, further strengthening its financial position and enabling reinvestment in high-growth areas
Updated Financial Guidance for FY2026
The company raised its full-year revenue guidance, now expecting revenues between $857 million and $860 million, compared to the previous range of $845 million to $855 million, reflecting confidence in its growth trajectory, particularly in the Food Safety segment, while maintaining its adjusted EBITDA guidance at approximately $175 million, indicating continued focus on profitability and operational discipline
Outlook and Future Strategy
Looking ahead, Neogen remains focused on overcoming short-term challenges while building a stronger and more resilient organization, with priorities including enhancing supply chain reliability, completing key operational transitions, and driving innovation across its product portfolio, as the company aims to capitalize on increasing global demand for food safety and animal health solutions
Conference Call and Investor Engagement
Neogen will host a conference call to discuss its third-quarter results, providing investors and analysts with further insights into its performance and strategic initiatives, with access available through its official website and via dial-in options for both domestic and international participants, followed by a replay for those unable to attend the live session
About Neogen Corporation
Neogen Corporation is dedicated to advancing global food security and improving human and animal well-being through science-based solutions, with a presence in more than 140 countries and a strong network of scientists and technical experts, the company delivers innovative products and technologies across Food Safety, Livestock, and Pet Health markets, reinforcing its position as a global leader in these critical industries
Commitment to Innovation and Growth
Through continued investment in technology, operational excellence, and strategic initiatives, Neogen is positioning itself for sustained growth and long-term value creation, as it navigates industry challenges and leverages opportunities in food safety and animal health, ensuring it remains at the forefront of innovation and continues to meet the evolving needs of its customers worldwide
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