NEOG · Neogen Corporation

Neogen’s Q3 FY2026 results reflect a bifurcated performance: Food Safety delivered resilient growth (+2.6% revenue, +4.0% Core Growth), anchored by double-digit gains in Indicator Testing & Culture Media (+11.0%) and Bacterial & General Sanitation (+5.5%), while Animal Safety collapsed (-20.1% revenue, -8.7% Core), explicitly attributed to third-party supplier disruptions—primarily impacting U.S.-based sales. Gross margin contracted 300 bps to 46.9%, cited to Petrifilm® transition duplicative costs, tariffs, and inventory write-offs; however, Adjusted Gross Margin improved modestly to 51.7%, signaling underlying pricing and mix stability. The $17.0 million GAAP net loss reflects transformation-related expenses, but Adjusted Net Income ($19.4M) and Adjusted EBITDA ($48.2M, 22.8% margin) held steady YoY, underscoring disciplined cost management. Critically, Neogen elevated strategic clarity: the announced $160.0M divestiture of Genomics to Zoetis accelerates portfolio simplification and deleveraging, targeting net debt-to-Adjusted EBITDA under 3x by CY2026. Concurrently, the Petrifilm® transition remains on schedule for November FY2027, with multi-SKU validation now active—key to restoring manufacturing efficiency and margin integrity. Management’s decision to raise full-year revenue guidance ($857–860M) while holding Adjusted EBITDA flat (~$175M) signals confidence in Food Safety momentum and cost actions offsetting Animal Safety headwinds, though sustained supplier remediation remains the central near-term execution risk for investors.