NEOGEN CORP

Previous wording

Forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, are made throughout this Quarterly Report on Form 10-Q, including statements relating to management’s expectations regarding new product introductions; the adequacy of our sources for certain components, raw materials and finished products; and our ability to utilize certain inventory. For this purpose, any statements contained herein that are not statements of historical fact are deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates,” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are intended to provide our current expectations or forecasts of future events; are based on current estimates, projections, beliefs, and assumptions; and are not guarantees of future performance. Actual events or results may differ materially from those described in the forward-looking statements. There are a number of important factors that could cause Neogen’s results to differ materially from those indicated by such forward-looking statements, including many factors beyond our control. Factors that could cause actual results to differ from those contained within forward-looking statements include (without limitation) the continued integration of the 3M food safety business and the realization of the expected benefits from that acquisition; the relationship with and performance of our transition manufacturing partner; our ability to adequately and timely remediate certain identified material weaknesses in our internal control over financial reporting; competition; recruitment and retention of key employees; impact of weather on agriculture and food production; global business disruption caused by the Russia invasion in Ukraine and related sanctions and conflict in the Middle East; identification and integration of acquisitions; research and development risks; intellectual property protection; increasing and developing government regulation; and other risks detailed from time to time in our reports on file at the Securities and Exchange Commission, including this Quarterly Report on Form 10-Q.

Current wording

Forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, are made throughout this Quarterly Report on Form 10-Q, including statements relating to management’s expectations regarding new product introductions; the adequacy of our sources for certain components, raw materials and finished products; and our ability to utilize certain inventory. For this purpose, any statements contained herein that are not statements of historical fact are deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates,” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are intended to provide our current expectations or forecasts of future events; are based on current estimates, projections, beliefs, and assumptions; and are not guarantees of future performance. Actual events or results may differ materially from those described in the forward-looking statements. There are a number of important factors that could cause Neogen’s results to differ materially from those indicated by such forward-looking statements, including many factors beyond our control. Factors that could cause actual results to differ from those contained within forward-looking statements include (without limitation) the continued integration of the 3M food safety business and the realization of the expected benefits from that acquisition; the relationship with and performance of our transition manufacturing partner; our ability to adequately and timely remediate certain identified material weaknesses in our internal control over financial reporting; competition; recruitment and retention of key employees; impact of weather on agriculture and food production; global business disruption caused by the Russia invasion in Ukraine and related sanctions; identification and integration of acquisitions; research and development risks; intellectual property protection; increasing and developing government regulation; and other risks detailed from time to time in our reports on file at the Securities and Exchange Commission, including this Quarterly Report on Form 10-Q.

Previous wording

Beginning in the first half of fiscal year 2024, we implemented a new enterprise resource planning system and exited our transition service agreements with 3M, which led to certain shipment delays and an elevated backlog of open orders, specifically in the Food Safety segment. At the conclusion of fiscal year 2024, order fulfillment issues were largely resolved, however, the impact of lost market share stemming from these fulfillment issues continued in fiscal year 2025. Also in fiscal year 2025, we experienced an elevated amount of inventory write-offs, particularly in the fourth quarter, due, in part, to expiration of certain inventory held at our international locations stemming from supply chain and distribution challenges in fiscal year 2024. Further, in fiscal year 2025, we experienced negative impacts from delays in restarting full production of our sample collection product line, which we relocated from 3M into a Neogen facility. In the second half of fiscal year 2025, production increased to the prior normal levels, but with significant production inefficiencies. These production inefficiencies continued in first quarter of fiscal year 2026, with the expectation that they will be reduced continuously throughout the fiscal year.

Current wording

Beginning in the first half of fiscal year 2024, we implemented a new enterprise resource planning system and exited our transition service agreements with 3M, which led to certain shipment delays and an elevated backlog of open orders, specifically in the Food Safety segment. At the conclusion of fiscal year 2024, order fulfillment issues were largely resolved, however, the impact of lost market share stemming from these fulfillment issues continued in fiscal year 2025. Also in fiscal year 2025, we experienced an elevated amount of inventory write-offs, particularly in the fourth quarter, due, in part, to expiration of certain inventory held at our international locations stemming from supply chain and distribution challenges in fiscal year 2024. Further, in fiscal year 2025, we experienced negative impacts from delays in restarting full production of our sample collection product line, which we relocated from 3M into a Neogen facility. In the second half of fiscal year 2025, production increased to the prior normal levels, but with significant production inefficiencies. These production inefficiencies continued in first half of fiscal year 2026, with continued improvement in each successive quarter. Continued improvement is expected for the remainder of the current fiscal year.

Previous wording

Within the Food Safety industry, the end market generally continues to experience a lower level of food production, largely due to the cumulative effect of the significant recent inflation, particularly in food prices. However, there have been signs of sequential improvement from prior quarters related to food production volumes. Within Animal Safety, the end market is at or near cyclical lows. As a result, we are optimistic about potential future revenue growth in the segment, particularly if the distribution channel begins to meaningfully restock inventory.

Current wording

Within the Food Safety industry, the end market generally continues to experience a lower level of food production, largely due to the cumulative effect of the significant recent inflation, particularly in food prices. However, there have been signs of sequential improvement from prior quarters in certain key product lines. Within Animal Safety, the end market has remained near cyclical lows. Because of our extensive and longstanding partnerships in the distribution channels, we are optimistic about potential future revenue growth in the segment, particularly as a result of our commercial teams leveraging these partnerships.

Previous wording

In fiscal year 2025, restructuring actions in our genomics business led to voluntary revenue attrition, following our strategic shift away from smaller production animals. A portion of our genomics business also serves the companion animal market, which has been experiencing weakness recently, primarily due to the impact of continued inflation, a lower number of pet adoptions, and a higher level of customer in-sourcing.

Current wording

In fiscal year 2025, restructuring actions in our genomics business led to voluntary revenue attrition, following our strategic shift away from lower margin business. A portion of our genomics business also serves the companion animal market, which has been experiencing weakness recently, primarily due to the impact of continued inflation, a lower number of pet adoptions, and a higher level of customer in-sourcing. Additionally, in the second quarter of fiscal year 2026, management initiated a restructuring plan to right-size our cost base through a reduction of approximately 10% in global headcount, including both existing and planned positions, as well as additional non-labor cost reductions.

Previous wording

We continue to evaluate the nature and extent of these issues and their impact our business, including consolidated results of operations, financial condition and liquidity. We expect these issues to continue to impact us in fiscal year 2026.

Current wording

We continue to evaluate the nature and extent of these issues and their impact on our business, including consolidated results of operations, financial condition and liquidity. We expect these issues to continue to impact us in fiscal year 2026.

Previous wording

Revenue decreased $7.8 million during the three months ended August 31, 2025 compared to the three months ended August 31, 2024. The decrease includes a $9.6 million unfavorable impact due to divestitures and discontinued product lines, primarily from the divestiture of our Cleaners & Disinfectants business, offset by a $1.1 million favorable foreign exchange rate impact and $0.7 million of growth in the business. The increase in the business was driven by higher sales of insect control products and genomics services, continued strength in the pathogen detection product line, and sample collection products, as we reduced our backlog. These increases were offset by lower sales of Petrifilm, rodent control products, natural toxins test kits, and a decline in sales of veterinary instruments, which have been negatively impacted by tariffs. The lower level of Petrifilm sales compared to the prior year period was due primarily to channel inventory rebalancing related to switching distributors in Asia and the normalization of buying patterns at a large distributor in the U.S.

Current wording

Revenue decreased $6.6 million during the three months ended November 30, 2025 compared to the three months ended November 30, 2024. The decrease includes a $15.4 million unfavorable impact due to divestitures and discontinued product lines, primarily from the divestiture of our Cleaners & Disinfectants business. This decrease was offset by a $2.0 million favorable foreign exchange rate impact and $6.8 million of growth in the business. The growth in the business was driven primarily by higher sales of indicators, as well as pathogen detection and sample collection products. These increases were offset by lower sales of veterinary instruments, animal care and natural toxin products.

Previous wording

Service revenue, which consists primarily of genomics services provided to animal production and companion animal markets, was $25.1 million during the three months ended August 31, 2025 and $24.4 million during the three months ended August 31, 2024. The increase was mainly due to higher revenue in genomics services.

Current wording

Service revenue, which consists primarily of genomics services provided to production and companion animal markets, was $25.7 million and $50.7 million during the three and six months ended November 30, 2025 and $23.7 million and $48.2 million during the three and six months ended November 30, 2024. The increase in both comparable periods is primarily driven by higher genomics revenue in bovine and integrated protein markets, partially offset by a decline in companion animal markets.

Previous wording

International sales were $107.1 million during the three months ended August 31, 2025 and $112.6 million during the three months ended August 31, 2024, respectively. The decrease during the three months ended August 31, 2025 was primarily due to the divestiture of our Cleaners & Disinfectants business, partially offset by a $1.1 million favorable foreign exchange rate impact.

Current wording

International sales were $114.3 million and $221.4 million during the three and six months ended November 30, 2025 compared to $117.5 million and $230.1 million during the three and six months ended November 30, 2024, respectively. The decrease during both periods was primarily due to the divestiture of our Cleaners & Disinfectants business, partially offset by favorable foreign exchange rate impact.

Previous wording

Gross margin was 45.4% during the three months ended August 31, 2025 and 48.4% during the three months ended August 31, 2024, respectively. The decrease in margin was primarily due to lower sales volume, higher tariff costs, higher manufacturing costs related to our sample collection product line, inventory write-offs and duplicative costs as we prepare to manufacture Petrifilm products internally.

Current wording

Gross margin was 47.5% and 46.5% during the three and six months ended November 30, 2025, compared to 49.0% and 48.7% during the three and six months ended November 30, 2024, respectively. The decrease in margin was primarily due to higher manufacturing costs related to our sample collection product line, higher tariffs and inventory write-offs, and duplicative costs as we prepare to manufacture Petrifilm products internally.

Previous wording

Sales and marketing expenses were $45.0 million during the three months ended August 31, 2025 and $45.8 million during the three months ended August 31, 2024, respectively. The decline was primarily due to lower outbound shipping costs and reduced costs associated with the divested Cleaners and Disinfectants business, offset by headcount costs.

Current wording

Sales and marketing expenses were $42.3 million and $87.3 million during the three and six months ended November 30, 2025, compared to $46.5 million and $92.3 million during the three and six months ended November 30, 2024, respectively. The decrease in both comparable periods was primarily due to lower outbound shipping costs, lower bad debt expenses, reduced costs associated with the divested Cleaners and Disinfectants business, reduced compensation costs associated with headcount reductions, partially offset by increased restructuring costs.

Previous wording

General and administrative expenses include amortization expense relating to definite-lived intangible assets of $23.0 million and $23.6 million during the three months ended August 31, 2025 and August 31, 2024, respectively. Estimated amortization expense for fiscal year 2026 through 2030 is expected to be in the range of approximately $89 million to $94 million.

Current wording

General and administrative expenses include amortization expenses relating to definite-lived intangible assets of $22.9 million and $45.9 million during the three and six months ended November 30, 2025, compared to $23.6 million and $47.2 million during the three and six months ended November 30, 2024, respectively. The decline in both comparable periods was due to our divested Cleaners and Disinfectants business. Estimated amortization expense for fiscal year 2026 through 2030 is expected to be in the range of approximately $89 million to $93 million.

Previous wording

Research and development expense was $5.1 million during the three months ended August 31, 2025 and $5.2 million during the three months ended August 31, 2024, respectively. The decrease during the three months ended August 31, 2025 is primarily the result of lower contracted services and employee costs.

Current wording

Research and development expenses were $4.6 million and $9.7 million during the three and six months ended November 30, 2025, compared to $5.1 million and $10.3 million during the three and six months ended November 30, 2024, respectively. The decrease during both comparable periods is primarily the result of lower contracted services and employee costs resulting from restructuring initiatives, offset by increased transformation costs.

Previous wording

Other income was $59.9 million during the three months ended August 31, 2025 and other expense was $17.9 million during the three months ended August 31, 2024, respectively. The income in the current period was primarily driven by a $76.4 million gain recognized on the sale of our Cleaners & Disinfectants business, offset by

Current wording

Other expense was $15.0 million for the three months ended November 30, 2025 and other income was $44.9 million during the six months ended November 30, 2025, compared to $19.1 million and $37.0 million of other expenses during the three and six months ended November 30, 2024, respectively. The decrease in other expenses in the quarter-to-date period was primarily driven by lower interest costs, as a result of our Term Loan refinancing in April 2025 and lower amounts of outstanding debt. The income in the current year-to-date period was primarily driven by a $76.4 million gain recognized on the sale of our Cleaners & Disinfectants business.

Previous wording

Income tax expense was $7.5 million during the three months ended August 31, 2025 compared to income tax benefit of $3.0 million during the three months ended August 31, 2024. The net tax expense for the three months ended August 31, 2025, is primarily related to pre-tax income due to gains on the sale of our Cleaners & Disinfectants business.

Current wording

Income tax benefit was $4.4 million and income tax expense was $3.0 million during the three and six months ended November 30, 2025 compared to income tax benefit of $20.3 million and $23.3 million during the three and six months ended November 30, 2024, respectively. The net tax benefit for the quarter-to-date period was primarily related to pre-tax losses due to acquisition amortization and interest expense. The net tax expense for the year-to-date period was primarily related to pre-tax income due to gains on the sale of our Cleaners & Disinfectants business.

Previous wording

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law in the United States. OBBBA includes significant provisions, including the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for depreciation and interest expenses. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. There was not a significant impact to our income tax expense or effective tax rate for the three months ended August 31, 2025 associated with the OBBBA.

Current wording

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law in the United States. OBBBA includes significant provisions, including the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for depreciation and interest expenses. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. There was not a significant impact to our income tax expense or effective tax rate for the three and six months ended November 30, 2025.

Previous wording

Revenue for the Animal Safety segment decreased $0.5 million during the three months ended August 31, 2025 compared to the three months ended August 31, 2024. The decrease was due to $3.7 million of discontinued products and the divestiture of our Cleaners and Disinfectants business, a $0.1 million negative foreign currency impact, partially offset by $3.3 million growth in the business. The growth in the business was primarily related to stronger sales of our insect control, genomics, and animal care products lines. These increases were offset by decreased sales of veterinary instruments, which have been negatively impacted by tariffs.

Current wording

Revenue for the Animal Safety segment decreased $7.9 million during the three months ended November 30, 2025, compared to the three months ended November 30, 2024. The decrease was due to $7.8 million of divestitures and discontinued products primarily from divestiture of our Cleaners and Disinfectants business, a $0.1 million negative foreign currency impact and nominal growth in the business. The growth in the business was primarily related to stronger sales of our insect control and genomics products lines, offset by lower sales of veterinary instruments, which have been negatively impacted by higher tariffs and supply constraints.

Previous wording

Operating income for the Animal Safety segment increased $1.9 million during the three months ended August 31, 2025 compared to the three months ended August 31, 2024. The improvement was primarily due to favorable product mix and lower costs resulting from the fiscal year 2025 restructuring actions taken in the genomics business.

Current wording

Operating income for the Animal Safety segment increased $9.2 million during the three months ended November 30, 2025 compared to the three months ended November 30, 2024. The increase was primarily due to favorable product mix and lower material costs. Additionally, we incurred lower operating costs in the current period, which is the result of both the current quarter restructuring actions and those incurred for the genomics business at the end of the prior year period.

Previous wording

The increased corporate expense during each comparable period is related to headcount increases, increases in equity-based compensation, one-time transaction and project expenses, and certain corporate development initiatives.

Current wording

The increased corporate expense during each comparable period is related to increases in equity-based compensation, compliance and transformation initiatives, restructuring expense and certain corporate development initiatives.

Previous wording

As of August 31, 2025, we had cash and cash equivalents of $138.9 million, and borrowings available under our revolving line of credit of $201.5 million.

Current wording

As of November 30, 2025, we had cash and cash equivalents of $145.3 million, and borrowings available under our revolving line of credit of $201.5 million.

Previous wording

Since we elected to make prepayments in the first quarter of fiscal year 2026, there are no additional required principal payments for the Term Loan for fiscal year 2026. Financial covenants include maintaining specified levels of funded debt to EBITDA, and debt service coverage. As of August 31, 2025, we are in compliance with all financial covenants under the Credit Facilities.

Current wording

Since we elected to make prepayments in the first quarter of fiscal year 2026, there are no additional required principal payments for the Term Loan until the second quarter of fiscal year 2027. Financial covenants include maintaining specified levels of funded debt to EBITDA, and debt service coverage. As of November 30, 2025, we are in compliance with all financial covenants under the Credit Facilities.

Previous wording

We continue to make investments in our business and operating facilities. Our estimate for capital expenditures in fiscal 2026 is approximately $50 million. This includes approximately $35 million in capital expenditures related to the integration of the acquired 3M FSD products, the most significant portion of which is related to the construction of equipment for our new manufacturing facility in Lansing, Michigan.

Current wording

We continue to make investments in our business and operating facilities. Our estimate for capital expenditures in fiscal 2026 is approximately $50 million. This includes approximately $35 million in capital expenditures related to the integration of the acquired 3M FSD products, the most significant portion of which is related to our new manufacturing facility in Lansing, Michigan.

Previous wording

Net cash provided by operating activities increased $28.8 million during the three months ended August 31, 2025 compared to the three months ended August 31, 2024. The increase is due to improvement in working capital primarily associated with accounts receivable and accounts payable, offset by a decline in operating income.

Current wording

Net cash provided by operating activities increased $8.0 million during the six months ended November 30, 2025 compared to the six months ended November 30, 2024. The increase is primarily due to improvement in working capital primarily associated with accounts receivable and inventory, partially offset by a decrease in operating income.

Previous wording

Cash provided by investing activities increased $131.4 million during the three months ended August 31, 2025, compared to the three months ended August 31, 2024. The inflow was primarily the result of cash proceeds received from the sale of our Cleaners & Disinfectants business. Additionally, as our new Lansing production facility nears completion, our capital expenditures have decreased compared to the prior year period.

Current wording

Cash provided by investing activities increased $136.9 million during the six months ended November 30, 2025, compared to the six months ended November 30, 2024. The increase was primarily the result of cash proceeds received from the sale of our Cleaners & Disinfectants business of 121.7 million and a decrease in capital expenditures compared to the prior-year period, as our new Lansing production facility nears completion.

Previous wording

Net Cash (used for) provided by Financing Activities

Current wording

Net Cash used for by Financing Activities

Previous wording

Cash used for financing activities increased $100.4 million during the three months ended August 31, 2025 compared to the three months ended August 31, 2024 due to debt repayment made with proceeds from the sale of our Cleaners and Disinfectants business.

Current wording

Cash used for financing activities increased $99.4 million during the six months ended November 30, 2025 compared to the six months ended November 30, 2024. The increase was due to the debt repayments made with proceeds from the sale of our Cleaners and Disinfectants business.