NEOGEN CORP
For the period ended May 31, 2026. Filed Jul 30, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed Jul 30, 2026
NEOG$11.76+0.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2025-05-31; filed 2025-07-30.
0000950170-25-100064
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-K
Period ended 2026-05-31; filed 2026-07-30.
0001193125-26-326092
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 96 previous paragraphs and 93 current paragraphs.
52 unchanged; 24 reworded; 16 added; 20 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
In fiscal year 2027, we plan to execute a growth strategy focused on commercial excellence, innovation, and operational efficiency. Key initiatives include enhancing our global go-to-market capabilities, investing in research and development to expand and differentiate our product portfolio, and strengthening customer engagement to drive market share growth. These investments are expected to be supported by cost management and operational improvement initiatives designed to enhance profitability and fund continued reinvestment in the business.
Current report
On March 2, 2026, we announced that we had entered into a definitive agreement to sell our Genomics business to Zoetis, Inc. The transaction is subject to customary closing conditions and regulatory approvals, and the parties continue to work toward a closing by the end of the first half of fiscal year 2027. In July 2026, the Australian Competition and Consumer Commission (ACCC) and the New Zealand Commerce Commission (NZCC) each announced that they are moving their respective reviews of the Company’s proposed genomics divestiture into the second phase of review. The Company will continue to cooperate with the ACCC and the NZCC as they complete their respective review processes.
Current report
Revenue decreased $24.3 million for fiscal year 2026 compared to the prior fiscal year 2025. The decrease was due to $55.6 million of discontinued product lines, primarily from the divestiture of our Cleaners and Disinfectants business partially offset by $14.0 million favorable foreign exchange and $17.3 million growth in the business. Business growth was primarily driven by higher sales of indicators, pathogen detection, and sample collection products.
Current report
Gross margin, expressed as a percentage of revenue, was 46.9% during fiscal year 2026 compared to 47.1% in the prior fiscal year. The decrease in margin was primarily due to volume decreases and duplicative costs as we prepare to manufacture Petrifilm products internally, partially offset by price increases and favorable foreign currency exchange.
Current report
Sales and marketing expenses were $166.6 million during fiscal year 2026, compared to $183.8 million during the prior fiscal year. The decrease was primarily due to lower outbound shipping costs, lower bad debt expenses, reduced costs associated with the divested Cleaners and Disinfectants business, and lower compensation costs associated with headcount reductions, partially offset by increased restructuring costs and one-time project costs.
Current report
General and administrative expenses were $245.1 million during fiscal year 2026, compared to $218.2 million during the prior fiscal year. The increase was primarily driven by investments in transformation initiatives, transaction costs associated with corporate transactions and capital structure initiatives, compensation related costs, and IT related costs, partially offset by reduced costs associated with the divested Cleaners and Disinfectants business.
Current report
The increase in corporate expenses during the period was primarily due to higher compliance and transformation initiatives costs, restructuring expenses and certain corporate development initiatives. These increases were partially offset by lower equity-based compensation expense.
Current report
OTHER INCOME (EXPENSE)
Current report
Other income (expense) increased $84.7 million for the year ended May 31, 2026, compared to the year ended May 31, 2025. The increase is primarily due to the $76.4 million gain recognized on the sale of our Cleaners and Disinfectants business and a reduction in interest expense stemming from the refinancing of our Term Loan and Revolving Credit Facility in April 2025 and lower outstanding debt.
Current report
Revenue for the Food Safety segment increased $3.0 million during fiscal year 2026 compared to the prior year. The increase was primarily due to $13.3 million favorable currency impact and $19.5 million growth in the business. Business growth was led by indicator sales, pathogens detection products, and sample collection products, partially offset by a decline in sales of food quality products. These favorable impacts were partially offset by a $29.8 million decrease in revenues from discontinued product lines, primarily from the divestiture of our Cleaners and Disinfectants business.
Current report
Operating income for the Food Safety segment increased by $1,049.1 million during fiscal year 2026 compared to the prior year. Excluding the goodwill impairment charge of $1,046.2 million recorded in the prior year, operating income increased during the current fiscal year by $2.9 million. This increase was primarily driven by business growth and cost reductions initiated in the second quarter of fiscal year 2026, partially offset by increased duplicative Petrifilm costs of $9.8 million.
Current report
Operating income for the Animal Safety segment increased by $17.2 million during fiscal year 2026 compared to the prior year. Excluding the goodwill impairment charge of $13.1 million recorded in the prior year, operating income increased by $4.1 million. The increase was primarily due to lower operating costs in the current year, which is the result of the prior year's restructuring actions incurred for the genomics business and cost reductions initiated in the second quarter of fiscal year 2026.
Current report
The increased corporate expense during fiscal year 2026 is related to increases in compliance and transformation initiatives, restructuring expense and certain corporate development initiatives. These increases were partially offset by lower equity-based compensation expense.
Current report
As of May 31, 2026, we had approximately $800.0 million of outstanding indebtedness, consisting of $48.5 million under our revolving credit facility, $405.0 million under our term loan facility, and $346.5 million of senior notes. Subsequent to May 31, 2026, we repaid $20.0 million of our term loan. Refer to Note 8, "Long Term Debt" in the consolidated financial statements included in Item 8. “ List of Financial Statement Schedules” of this Report. As a result of the prepayment, there are no additional required principal payments for the Term Loan until the first quarter of fiscal year 2029.
Current report
Net cash from investing activities was a net $169.7 million inflow during the twelve months ended May 31, 2026 compared to the twelve months ended May 31, 2025. The increase was primarily the result of cash proceeds received from the sale of our Cleaners and 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. Capital expenditures were $51.3 million and $104.6 million during the twelve months ended May 31, 2026 and 2025, respectively.
Current report
Net Cash used for Financing Activities
Removed paragraphs (20)
Previous report
Although we have no operations in or direct exposure to Russia, Belarus or Ukraine, we have experienced intermittent shortages in materials and increased costs for transportation, energy and raw materials due, in part, to the negative impact of the Russia-Ukraine military conflict, which began in February 2022, on the global economy. Our European operations and customer base have been negatively impacted by the conflict. Similarly, the military conflicts in the Middle East have increased overall geopolitical tensions. As the respective conflicts continue or worsen, they may further impact our business, financial condition or results of operations throughout fiscal year 2026.
Previous report
Revenue decreased $29.6 million for the fiscal year 2025 compared to prior year 2024. The decrease included a $24.3 million unfavorable foreign exchange rate impact and a $3.9 million unfavorable impact due to discontinued product lines with a nominal decline of $1.4 million in the business. Sales of new products in the food quality and nutritional analysis product line paired with growth in indicator testing, pathogens, and biosecurity product lines were offset primarily by reduced sales of sample collection products due to production constraints, lower sales of veterinary instruments due, in part, to a customer sourcing move based on geographical preference, and lower genomics volume due to a combination of voluntary attrition of certain business in connection with restructuring actions, weakness in the companion animal market and a higher level of customer insourcing that offset growth in the bovine market.
Previous report
Gross margin, expressed as a percentage of revenue, was 47.1% during fiscal year 2025 compared to 50.2% during the prior fiscal year. The decrease in margin during the year was primarily due to lower volume, higher manufacturing costs related to our sample collection product line, and an elevated level of inventory write-offs, as well as some impact from tariffs. The elevated level of write-offs were due, in part, to the large amount of built-up inventory that was shipped exiting fiscal year 2024 as the previous shipment delays stemming from our ERP implementation were resolved. Finally, the decreased gross margin was also negatively impacted by $4.4 million of restructuring charges related primarily to the genomics business. These decreases were partially offset by the positive impact of price increases and mix of products sold, as there was a proportional increase in sales of higher margin products.
Previous report
Sales and marketing expenses were $183.8 million during fiscal year 2025, compared to $182.9 million during the prior fiscal year. The increase was primarily due to higher shipping costs and costs associated with commercial support activities, partially offset by a decrease in fees paid to 3M for distribution services and lower royalty expense.
Previous report
General and administrative expenses were $218.2 million during fiscal year 2025, compared to $199.9 million during the prior fiscal year. For the Food Safety segment, expenses were relatively consistent compared to the prior year. For the Animal Safety segment, the increases were due to $7.4 million of restructuring charges incurred in the current fiscal year. These charges were primarily incurred in the second quarter of the current fiscal year, offset by lower salary expenses.
Previous report
Corporate expense has increased primarily due to additional headcount, contracted services, and higher costs associated with our prior year enterprise resource planning system implementation. We have also incurred additional expense in the current fiscal year for retention related costs, as we executed on certain strategic and transformation actions. These increases were partially offset by decreased bonus accrual charges.
Previous report
OTHER (EXPENSE) INCOME
Previous report
Other expense was $72.1 million for the year ended May 31, 2025 and $73.0 million for the ended May 31, 2024, respectively. The lower expense was due to a gain related to a settlement regarding the Company's prior acquisition of certain fixed assets and lower interest expense. The lower interest expense was a result of our interest rate swap instrument and our loan refinancing in April 2025. These favorable impacts were partially offset by a reduction in interest income associated with our money market portfolio.
Previous report
Revenue for the Food Safety segment decreased $17.2 million during fiscal year 2025 compared to the prior year. The decrease was primarily due to $24.0 million of currency headwinds and $1.2 million from discontinued product lines, with $8.0 million of growth in the business. Growth was driven by continued strength in indicator and pathogen testing, sales of new products in the food quality and nutritional analysis product line in the US and Canada, and higher sales of biosecurity products in the Europe and Latin America regions. These increases were partially offset by production constraints impacting the sample collection product line and lower sales in the general sanitization product line.
Previous report
Operating income for the Food Safety segment decreased $1,068.1 million during fiscal year 2025 compared to the prior year. The decline was primarily due to the goodwill impairment charge of $1,059.3 million incurred in fiscal year 2025.
Previous report
Operating income for the Animal Safety segment decreased $32.1 million during fiscal year 2025 compared to the prior year. The decline was due to lower sales, a goodwill impairment charge and restructuring charges incurred primarily in the second quarter of the current fiscal year, which impacted both gross profit and operating expenses.
Previous report
The increased corporate expense during each comparable period was related to headcount increases, increases in equity-based compensation and costs associated with our new enterprise resource planning system.
Previous report
On July 18, 2025, we completed the divestiture of our global Cleaners & Disinfectants business to Kersia Group for $130.0 million in cash at closing, plus contingent consideration tied to future performance of the business. Net proceeds from the transaction will be used primarily to repay debt in the first quarter of fiscal year 2026.
Previous report
In June 2022, Neogen Food Safety Corporation entered into a credit agreement consisting of a five-year senior secured term loan facility (“term loan facility”) in the amount of $650 million and a five-year senior secured revolving facility (“revolving facility”) in the amount of $150 million (collectively, the “Credit Facilities”).
Previous report
On April 4, 2025, Neogen Food Safety Corporation entered into the Amendment No. 1 and Refinancing Amendment to Credit Agreement (the “Refinancing Amendment”), which amended the existing credit agreement, dated June 30, 2022. The Refinancing Amendment, among other things, provides for (i) a new tranche of senior secured term loans in an aggregate principal amount of $450 million (the “2025 Term
Previous report
Loans”) and (ii) a revolving credit facility in an aggregate principal amount of $250 million, against which $100 million has been drawn (the “2025 Revolving Facility”). The 2025 Term Loans will mature on April 4, 2030. The 2025 Revolving Facility will terminate on the earlier of April 4, 2030, or the date on which the revolving commitments under the 2025 Revolving Facility are terminated. The Refinancing Amendment lowered the spread on the term loan and revolver facility borrowings from 2.35% to 1.75% based on a net leverage ratio being greater than 3.0 to 1.0.
Previous report
In July 2022, Neogen Food Safety Corporation closed on an offering of $350 million aggregate principal amount of 8.625% senior notes due in 2030.
Previous report
The Company has a single finance lease that is a building lease classified within property and equipment and the current portion of debt on the consolidated balance sheets as of May 31, 2025 and May 31, 2024. The Company intends to elect the purchase option within the lease agreement prior to the end of the lease term.
Previous report
Net cash used for investing activities increased $69.9 million during the twelve months ended May 31, 2025 compared to the twelve months ended May 31, 2024. The increase was primarily the result of lower proceeds from sales of marketable securities in the current year period, partially offset by a decrease in capital expenditures and higher proceeds from the sale of a building in the current year. Capital expenditures were $104.6 million and $111.4 million during the twelve months ended May 31, 2025 and 2024, respectively.
Previous report
Net Cash (used for) provided by Financing Activities
Reworded paragraphs (24)
Previous wording
In addition, any forward-looking statements represent management’s views only as of the day this Form 10-K was first filed with the Securities and Exchange Commission and should not be relied upon as representing management’s views as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views change.
Current wording
In addition, any forward-looking statements represent management’s views only as of the day this Form 10-K was first filed with the Securities and Exchange Commission and should not be relied upon as representing management’s views as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views change, except as required by law.
Previous wording
Neogen’s Animal Safety segment is engaged in the development, manufacture, marketing and distribution of veterinary instruments, pharmaceuticals, vaccines, topicals, parasiticides, diagnostic products, rodent control products, cleaners, disinfectants, insect control products and genomics testing services for the worldwide animal safety market. The majority of these consumable products are marketed through veterinarians, retailers, livestock producers and animal health product distributors.
Current wording
Neogen’s Animal Safety segment is engaged in the development, manufacture, marketing and distribution of veterinary instruments, pharmaceuticals, vaccines, topicals, parasiticides, diagnostic products, rodent control products, insect control products and genomics testing services for the worldwide animal safety market. The majority of these consumable products are marketed through veterinarians, retailers, livestock producers and animal health product distributors.
Previous wording
In recent years, input cost inflation, including increases in certain raw materials, negatively impacted operating results. In fiscal year 2024, despite a slowing rate of inflation, there were economic headwinds of softening consumer demand and higher interest rates, coupled with ongoing geopolitical tension in certain regions.
Current wording
In recent years, input cost inflation, including increases in certain raw materials, negatively impacted operating results. Although the rate of inflation has eased, we continued to face economic headwinds, related to consumer demand, elevated interest rates, and ongoing geopolitical tensions in certain regions, such as eastern Europe and the Middle East.
Previous wording
Interest rates have risen sharply, particularly in fiscal year 2023, as a way to combat inflation. This increased our borrowing costs and raised the overall cost of capital. Although the federal funds rate was reduced in 2024 and we have refinanced our Term Loan and revolving line of credit, the overall interest rate we pay on our Credit Facilities remains higher than when the debt was incurred in 2022, which increases interest expense on the unhedged portion of our Term Loan. In response to the historically high inflationary environment, we took pricing actions to mitigate the impacts on the business in prior fiscal years. The impact of inflation continues to affect us in fiscal year 2025, although at a lower rate compared to prior fiscal years.
Current wording
Elevated interest rates have led to higher borrowing costs and an increased overall cost of capital. In response to the historically high inflationary environment, we took pricing actions to mitigate the impacts on the business in prior fiscal years. Although the federal funds rate was reduced in recent fiscal years and we have refinanced our variable interest rate outstanding debt, the overall interest rate we pay on our outstanding debt remains higher than when the debt was incurred, which increases interest expense on the unhedged portion of our outstanding debt.
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 the large amount of build-up inventory that was shipped exiting fiscal year 2024 as the previous shipment delays were resolved. Further, in fiscal year 2025, we have experienced negative impacts from delays in restarting full production of our sample collection product line, which we relocated from 3M into a Neogen facility. However, in the second half of this fiscal year, we resolved most of these delays, with production having returned to the prior normal levels, but with significant production inefficiencies. With a change in administration in fiscal year 2025, there has been an economic policy shift towards increasing tariffs, which in turn has led and could lead to further retaliatory tariffs. These have and may continue to increase our costs on materials imported into the U.S. and also increase costs and negatively impact sales from our international locations, which primarily sell U.S. manufactured products.
Current wording
In fiscal years 2025 and 2026, we experienced an elevated amount of inventory write-offs, 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 throughout fiscal year 2026, albeit with continued improvement in each successive quarter. Continued improvement is expected in fiscal year 2027.
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. 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 and expectations for growth in fiscal year 2027. As a result, we expect steadily increasing growth rates in this market. Within the Animal Safety industry, 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. However, in the third quarter of fiscal year 2026, we encountered a number of third-party supplier quality and manufacturing issues that detrimentally impacted the revenue in our Animal Safety segment. Some of these issues are related to manufacturing transitions at our suppliers associated with global tariffs. The Company has implemented a new, more rigorous, supplier qualification and quality program to address these challenges. In the fourth quarter of fiscal year 2026, we saw the majority of these supply issues improve.
Previous wording
The restructuring actions undertaken in our genomics business have resulted in the voluntary attrition of revenue, following the shift in focus already made 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, 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 to which these issues 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 2027.
Previous wording
Service revenue, which consists primarily of genomics services provided to animal production and companion animal markets, was $97.3 million in fiscal 2025, a decrease of 5% over prior fiscal year revenue of $102.4 million. The decline was primarily due to a combination of voluntary attrition of certain business in connection with restructuring actions, weakness in the companion animal market and a higher level of customer insourcing that offset growth in the bovine market.
Current wording
Service revenue, which consists primarily of genomics services provided to animal production and companion animal markets was $102.2 million in fiscal 2026, an increase of 5% compared to prior fiscal year revenue of $97.3 million. The increase was primarily driven by higher genomics revenue in bovine and integrated protein markets, partially offset by a decline in companion animal markets.
Previous wording
Neogen’s international revenues were $448.7 million in fiscal year 2025, compared to $459.0 million in fiscal 2024, a decrease of 2%. The decline was due to a $24.3 million currency headwind, partially offset by increased sales in the Latin America and European regions.
Current wording
Neogen’s international revenues were $445.3 million in fiscal year 2026, compared to $448.7 million in fiscal 2025, a decrease of 1%. The decline was primarily due to the divestiture of our Cleaners and Disinfectants business. These decreases were partially offset by growth in our European and Asia Pacific regions and favorable foreign exchange.
Previous wording
For the year ended May 31, 2025, goodwill impairment charges were $1,059.3 million . There were no goodwill impairment charges recorded during the prior year comparable period.
Current wording
For the year ended May 31, 2025, goodwill impairment charges were $1,059.3 million. There were no goodwill impairment charges recorded during fiscal year 2026.
Previous wording
Research and development expense was $21.1 million in fiscal year 2025, compared to $22.5 million during the prior fiscal year. The decrease during the year is primarily the result of lower contracted services and employee costs in the Food Safety segment, as we continue to realize synergies in certain areas from the 3M FSD business.
Current wording
Research and development expense was $18.4 million in fiscal year 2026, compared to $21.1 million during the prior fiscal year. The decrease during the year is primarily the result of lower contracted services and employee costs resulting from restructuring initiatives, partially offset by increased transformation costs.
Previous wording
Income tax benefit during fiscal year 2025 was $41.1 million, compared to income tax benefit of $4.9 million in the prior fiscal year. The net tax benefit in the current fiscal year was primarily related to pre-tax losses due to goodwill impairment expense that is deductible in certain jurisdictions, in addition to amortization expense and interest expense resulting from the FSD transaction. In addition, goodwill impairment expense that is not deductible in certain jurisdictions reduced the income tax benefit by $203 million. In the prior fiscal year, goodwill was not impaired.
Current wording
Income tax benefit during fiscal year 2026 was $1.1 million, compared to income tax benefit of $41.1 million in the prior fiscal year. The reduction in net tax benefit in the current fiscal year was primarily related to a reduction in pre-tax losses due to goodwill impairment expense that was deductible in certain jurisdictions in the prior year and the gain on the sale or the Cleaners and Disinfectants business in the current year. In the current fiscal year, there were no goodwill impairment charges.
Previous wording
The total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of May 31, 2025 and May 31, 2024 are $3.8 million and $2.7 million, respectively. Increases in unrecognized tax benefits are primarily associated with transfer pricing, IRC Section 861 expense apportionment, and research and development credits.
Current wording
The total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of May 31, 2026 and May 31, 2025 were $5.0 million and $3.8 million, respectively. Increases in unrecognized tax benefits are primarily associated with transfer pricing.
Previous wording
Tax legislation continues to evolve globally with new laws and regulations that create uncertainty in the global economy. The Organization for Economic Cooperation and Development reached agreement among over 140 countries to implement a minimum 15% tax rate on certain multinational enterprises, commonly referred to as Pillar Two. Many countries continue to announce changes in their tax laws and regulations based on the Pillar Two framework. Additionally, U.S Congress enacted the One Big Beautiful Bill Act (“OBBBA”) which includes significant provisions, including tax cut extensions and modifications to the international tax framework. While we continue to evaluate the impact of these legislative changes as additional guidance becomes available, uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions. These legislative changes could have an adverse impact on our future effective tax rate, tax liabilities, and cash tax.
Current wording
Tax legislation continues to evolve globally with new laws and regulations that create uncertainty in the global economy. In 2021, the Organization for Economic Cooperation and Development reached agreement among over 140 countries to implement a minimum 15% tax rate on certain large multinational enterprises, commonly referred to as Pillar Two. Many countries continue to announce changes in their tax laws and regulations based on the Pillar Two framework. Additionally, the U.S. One Big Beautiful Bill Act (“OBBBA”) implemented significant changes, including tax cut extensions and modifications to the international tax framework. While we continue to evaluate the impact of these legislative changes as additional guidance becomes available, uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions. These legislative changes could have an adverse impact on our future effective tax rate, tax liabilities, and cash tax.
Previous wording
Revenue for the Animal Safety segment decreased $12.4 million during fiscal year 2025 compared to the prior year. The decrease was primarily due to a $9.4 million decline in the business, $2.7 million impact from discontinued product lines and $0.3 million unfavorable currency impact. The decline in the business was driven by lower genomics volume due to voluntary attrition of certain business in connection with restructuring actions, weakness in the companion animal market, and a higher level of customer insourcing that offset growth in the bovine market, paired with lower sales of insect control and veterinary instruments products lines which offset strength in sale of rodent control products.
Current wording
Revenue for the Animal Safety segment decreased $27.3 million during fiscal year 2026 compared to the prior year. The decrease was primarily due to a $25.7 million impact from discontinued product lines, driven by divestiture of our Cleaners and Disinfectants business, and a $2.2 million decline in the business. The decline in the business was driven by lower veterinary instrument sales and rodent control products. These unfavorable impacts were partially offset by a favorable currency impact of $0.6 million.
Previous wording
identifying and completing acquisitions that enhance existing product categories or creating new products or services, and successfully integrating completed acquisitions, including the FSD transaction.
Current wording
identifying and completing acquisitions that enhance existing product offerings and successfully integrating completed acquisitions, including continued integration of the FSD Transaction.
Previous wording
As of May 31, 2025, we had cash and cash equivalents of $129.0 million, and borrowings available under our revolving line of credit of $150.0 million.
Current wording
As of May 31, 2026, we had cash and cash equivalents of $185.5 million. The Company has irrevocable standby letters of credit in an amount of $3.2 million. As of May 31, 2026, no amount has been drawn on these letters of credit. The standby letters of credit reduced our borrowing available under our revolving line of credit to $198.3 million as of May 31, 2026.
Previous wording
Financial covenants include maintaining specified levels of funded debt to EBITDA, and debt service coverage. As of May 31, 2025, the Company was in compliance with all financial covenants under the Credit Facilities.
Current wording
Financial covenants include maintaining specified levels of funded debt to EBITDA, and debt service coverage. As of May 31, 2026, we were in compliance with all financial covenants under the Credit Facilities.
Previous wording
Net cash provided by operating activities increased $23.0 million during the twelve months ended May 31, 2025 compared to the twelve months ended May 31, 2024. The increase was primarily the result of working capital items, partially offset by a decrease in income from operations. Prior year net working capital reflected large net cash outflows due to inventory purchases, as we exited transition service agreements and stocked FSD inventory.
Current wording
Net cash provided by operating activities increased $25.0 million during the twelve months ended May 31, 2026 compared to the twelve months ended May 31, 2025. The increase was due to improvement in working capital, primarily associated with inventory, and accounts payable, partially offset by a decline in income from operations when excluding the goodwill impairment charge in the prior year.
Previous wording
Net Cash used for Investing Activities
Current wording
Net Cash provided by (used for) Investing Activities
Previous wording
Net cash (used for) provided by financing activities was a net $3.5 million outflow during the twelve months ended May 31, 2025 compared to the twelve months ended May 31, 2024. The net outflow was primarily due to taxes paid on employees' share-based compensation and debt issuance costs paid.
Current wording
Net cash from financing activities was a net $97.8 million outflow during the twelve months ended May 31, 2026 compared to the twelve months ended May 31, 2025. The increase was due to the debt repayments made with proceeds from the sale of our Cleaners and Disinfectants business.
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 and 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 2027 is approximately $40 million.
Previous wording
Our business is organized into two reporting units: Food Safety and Animal Safety. The determination of our reporting units and impairment indicators also require us to make significant judgments.
Current wording
Our business is organized into two reporting units: Food Safety and Animal Safety. The determination of our reporting units and impairment indicators also requires us to make significant judgments.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
With a change in administration in fiscal year 2025, there has been an economic policy shift towards increasing tariffs, which in turn has led and could lead to further retaliatory tariffs. These have increased, and may continue to increase our costs on materials imported into the U.S. and have also increased costs and negatively impacted sales from our international locations, which primarily sell U.S. manufactured products.