Sign in

You're signed outSign in or to get full access.

NC

NEOGEN CORP (NEOG)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 revenue of $225.5M modestly exceeded consensus while adjusted EPS of $0.05 missed; GAAP net loss of $612.2M was driven by a non-cash goodwill impairment primarily tied to the former 3M Food Safety acquisition . Revenue consensus: $222.5M*; EPS consensus: $0.09*.
  • Gross margin compressed to 41.2% (ex-items 46.5%) on elevated inventory write-offs, sample collection production inefficiencies, and tariff impacts; adjusted EBITDA fell to $40.6M (18.0% margin) from $53.0M (22.4%) YoY .
  • FY2026 outlook initiated: revenue $820–$840M, adjusted EBITDA $165–$175M, and CapEx ~ $50M (vs $105M in FY2025); tariff headwind now sized at ~$10M annualized, up from ~$5M previously .
  • Strategic actions: Cleaners & Disinfectants business divested for $130M cash (net proceeds ~$115M), with planned $100M debt paydown in Q1 FY2026 reducing net leverage by ~0.4x pro forma . Launch of Listeria Right Now assay on MDS platform underscores pathogen detection focus .

What Went Well and What Went Wrong

What Went Well

  • Food Safety core revenue (ex sample collection) grew low single digits in Q4; pathogen detection saw strong growth supported by new assays (MDS Quant Salmonella, Listeria Right Now) .
  • Europe region delivered mid-single-digit core growth with strength in Pathogen and Food Quality products and Petrifilm, partly offsetting sample collection declines .
  • Portfolio simplification progressed: Cleaners & Disinfectants sale closed; genomics divestiture process advancing, with intent to accelerate deleveraging and sharpen focus on core areas .

What Went Wrong

  • Gross margin compression to 41.2% on elevated inventory write-offs, tariff costs, and inefficient sample collection production; adjusted EBITDA margin fell to 18.0% .
  • Animal Safety revenue declined 8.9% YoY with a 6.7% core revenue decline; veterinary instruments (needles/syringes) and vitamin injectables weakened, while insect control softened .
  • Non-cash goodwill impairment of $597.9M in Q4 (FY total $1.06B) tied primarily to the 3M Food Safety acquisition, reflecting weaker end markets, trade impacts, and execution issues in sample collection ramp .

Financial Results

Quarterly Performance vs Prior Periods

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$231.3 $221.0 $225.5
GAAP Diluted EPS ($)$(2.10) $(0.05) $(2.82)
Adjusted EPS ($)$0.11 $0.10 $0.05
Gross Margin (%)49.0% 49.9% 41.2% (ex-items 46.5%)
Adjusted EBITDA ($USD Millions)$51.4 $48.5 $40.6
Adjusted EBITDA Margin (%)22.2% 22.0% 18.0%

Q4 Year-over-Year and vs Estimates

MetricQ4 2024Q4 2025YoY ChangeConsensusActual vs Consensus
Revenue ($USD Millions)$236.8 $225.5 (4.8%) $222.5*Beat (by ~$3.0M)*
GAAP Diluted EPS ($)$(0.02) $(2.82) N/M$0.09*Miss (GAAP; non-comparable)*
Adjusted EPS ($)$0.10 $0.05 (50.0%)$0.09*Miss (by $0.04)*
Gross Margin (%)47.9% 41.2% (670 bps)——
Adjusted EBITDA ($USD Millions)$53.0 $40.6 (23.4%)$40.8*Inline (slight miss)*
Adjusted EBITDA Margin (%)22.4% 18.0% (440 bps)——

Note: Values with asterisks retrieved from S&P Global.

Segment Breakdown (Q4 2025)

SegmentRevenue ($USD Millions)YoY %Core Growth %FX Impact %Acq/Divest Impact %
Food Safety$161.8 (3.0%) (1.3%) (1.3%) (0.4%)
Animal Safety$63.6 (8.9%) (6.7%) (0.2%) (2.0%)
Total NEOG$225.5 (4.8%) (2.9%) (1.0%) (0.9%)

KPIs and Balance Sheet Highlights

KPIQ4 FY2025Prior Quarter/Year
Cash & Investments ($USD Millions)$129.0 $127.7 (Q3)
Total Debt ($USD Millions)$900.0 $900.0 (Q3)
Net Debt Repayment PlanRepay $100M in Q1 FY2026 (from ~$115M net proceeds) —
Net Leverage Reduction (Pro Forma)~0.4x from $100M repayment —
CapEx ($USD Millions)FY2025: $105 FY2026 guide: ~$50
Shares (diluted)217.0M 216.6M (Q4 FY2024)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY2026—$820M–$840M Initiated
Adjusted EBITDAFY2026—$165M–$175M Initiated
CapExFY2026~$100M (FY2025 run-rate/updated) ~$50M Lowered
Tariff Impact (Headwind)FY2026~$5M annualized ~$10M annualized Raised
DebtQ1 FY2026—Repay $100M; net leverage −~0.4x New plan

Earnings Call Themes & Trends

TopicQ2 2025 (Jan)Q3 2025 (Apr)Q4 2025 (Jul)Trend
Pathogen detection (MDS, assays)Focused investment; portfolio expansion Strong core growth in pathogen products Launch of Listeria Right Now; MDS Quant Salmonella Strengthening
Sample collection productionDecline; ramp delays Throughput reached prior levels; still impacted Sequential revenue +~50% but highly inefficient/manual Improving volumes, execution lag
Tariffs/macroFX headwind; macro uncertainty emerging Distributors cautious; trade policy uncertainty Tariff headwind raised to ~$10M; trade remains dynamic Worsened headwind
Petrifilm manufacturingBuildout progressing; duplicate startup costs Progress affirmed; difficult compares Test production in “few months”; margins slightly better than partner when fully running On track; governance enhanced
Regional demandMixed; APAC/EMEA dynamics LatAm strong prior; APAC pressured Europe up mid-single digits; APAC down mid-single digits; US/Canada low-single-digit Food Safety growth Mixed; Europe resilient
Portfolio actionsGenomics restructuring CEO transition announced; FY guide cut Cleaners & Disinfectants sale closed; genomics divestiture process active Simplification continues

Management Commentary

  • CEO on end-markets: “We estimate that many food producers are still experiencing year-over-year declines in their production volumes… the food safety end market is still able to grow… but certainly not at the mid to high single-digit levels” .
  • Regulatory tailwinds: “FSIS has increased… listeria… by over 200% and uses the Neogen Molecular Detection System (MDS) as its primary method” .
  • Operational challenges: “The elevated level of manual work [in sample collection] is causing us to incur costs for expensive temporary labor and excessive scrap rates” .
  • Petrifilm economics: “Petrifilm gross margins… once fully running, will be slightly better than… products made by our transition manufacturing partner” .

Q&A Highlights

  • Tariff guidance: $10M annualized headwind now embedded in FY2026 expectations, up from prior $5M .
  • Petrifilm KPIs: Test production start, then certification of 17 SKUs over 4–5 quarters; CapEx within reduced envelope .
  • Macro backdrop and growth: Food testing expected to grow at low-single-digit rates in current environment; management assumes FY2026 mirrors H2 FY2025 conditions .
  • Divestiture stranded costs: ~$1.5–$2.0M TSA-related costs persist for ~1 year; most OpEx goes with Cleaners & Disinfectants .

Estimates Context

  • Q4 FY2025: Revenue beat ($225.5M vs $222.5M*), Adjusted EPS miss ($0.05 vs $0.09*). EBITDA consensus $40.8M* vs adjusted EBITDA $40.6M (near inline); note consensus may reference GAAP EBITDA, which is non-comparable due to impairment .
  • FY2026 Street aligns with guidance: Revenue ~$825.4M*, EBITDA ~$165.8M*, normalized EPS ~$0.35*; target price consensus ~$8.17* (limited coverage) — estimates likely to reflect tariff headwind and margin recovery cadence [GetEstimates FY2026]*.

Note: Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term margin pressure from inventory write-offs, tariffs, and sample collection inefficiencies drove gross margin down 670 bps YoY; management expects peak costs in Q4 and gradual FY2026 improvement as processes normalize .
  • Pathogen detection is a tangible growth vector (new assays, regulatory focus), offsetting softness elsewhere; monitor uptake of Listeria Right Now and MDS testing volumes .
  • Execution on Petrifilm transfer is a critical catalyst: test production timing, SKU certifications, and cost absorption will shape margin trajectory; management expects slightly better in-house Petrifilm margins vs partner .
  • Portfolio simplification (Cleaners & Disinfectants sale; potential genomics divestiture) aids deleveraging and focus; $100M debt repayment planned in Q1 FY2026 reduces net leverage by ~0.4x .
  • FY2026 guide (rev $820–$840M, adj. EBITDA $165–$175M) embeds softer macro and ~$10M tariff headwind; modeling should bias margins higher in H2 on seasonality and operational improvements .
  • Watch regional mix: Europe resilience and US/Canada low-single-digit Food Safety growth vs APAC and LatAm variability amid trade uncertainty .
  • Non-cash goodwill impairments (FY total $1.06B) reflect revised assumptions; beyond GAAP noise, adjusted metrics and cash generation (positive FY2026 FCF expected) drive fundamental valuation .

Additional References and Press Releases

  • Cleaners & Disinfectants divestiture: “Neogen Completes Sale… to Kersia Group” ($130M cash + contingent consideration); net proceeds ~$115M earmarked for $100M debt paydown .
  • Q3 FY2025 release: Revenue $221.0M; adjusted EPS $0.10; adjusted EBITDA $48.5M; FY2025 guide updated (rev ~$895M; adj. EBITDA ~$195M) .
  • Q2 FY2025 preliminary release: Revenue $231.3M; adjusted EPS $0.11; adjusted EBITDA $51.4M; goodwill impairment $461.4M; guide updated (rev $905–$925M; adj. EBITDA $205–$215M) .