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) risks related to the integration of the 3M Food Safety business and the performance of acquired or transitioned businesses and technologies; execution risks associated with our manufacturing transitions (including Petrifilm) and related product qualifications, duplicate manufacturing costs, and ramp‑up activities; dependence on and qualification of third‑party suppliers, logistics partners and package delivery services, and the impact of disruptions or pricing increases; the timing, terms and outcome of portfolio actions (including the announced divestiture of the genomics business) and satisfaction of closing conditions; our ability to realize expected cost savings, transformation initiatives and operational efficiencies on the anticipated timelines; changes in customer demand, competitive dynamics, market acceptance and pricing; regulatory, legal, tax and trade developments (including tariffs, export/import restrictions, sanctions and other trade controls); risks associated with international operations and expansion into new geographies; cybersecurity incidents, data privacy or other systems failures or disruptions; currency fluctuations, inflation, interest rates and broader macroeconomic conditions; availability and cost of raw materials and other inputs; our ability to develop, launch and protect new products and intellectual property and to avoid third‑party claims; our reputation and relationships with customers and distributors, including the risk of customer loss; our ability to attract, retain and develop key person…

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Current wording

This Quarterly Report contains 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, including (without limitation) statements relating to management’s expectations regarding new product introductions; the adequacy of our sources for certain components, raw materials and finished products; our ability to utilize certain inventory; the pending divestiture of the Genomics business; future revenue growth and market trends; anticipated cost savings and operational efficiencies from restructuring initiatives; the expected impact of tariffs and trade policy changes; and the outcome of pending legal proceedings and regulatory matters. For this purpose, any statements contained herein that are not statements of historical fact may be 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 maintain effective internal control over financial reporting; tariffs and trade policy changes; product recalls and related litigation; pending securities litigations and shareholder demands; the risk that regulatory approvals required for pending divestitures may not be obtained on expected timelines or at all; cybersecurity threats and data security risks; changes in tax laws or regulations; pending divestitures and the realization of related expected benefits; 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 the 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 in item 1A. RISK FACTORS in our most recent Annual Report on Form 10‑K and in subsequent Quarterly Reports on Form 10‑Q and Current Reports o…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

In addition, any forward-looking statements represent management’s views only as of the date this Quarterly Report on Form 10-Q 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. Except to the extent legally required to do so, we specifically disclaim any obligation to update forward-looking statements, even if our views change.

Current wording

In addition, any forward-looking statements represent management’s views only as of the date this Quarterly Report on Form 10-Q 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 management may elect to update forward-looking statements at some point in the future, it specifically disclaims any obligation to do so, even if its views change, unless required by law.

Previous 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, including softening consumer demand, elevated interest rates, and ongoing geopolitical tensions in certain regions, such as eastern Europe and the Middle East.

Current wording

We have and will continue to experience input cost inflation, including increases in certain raw materials, which negatively impact operating results. Although the rate of inflation has moderated, we continued to face economic headwinds, including related to consumer demand, elevated interest rates, and ongoing geopolitical tensions in certain regions, such as eastern Europe and the Middle East.

Previous 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 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, which increases interest expense on the unhedged portion of our Term Loan.

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 we have refinanced our variable interest rate outstanding debt and reduced outstanding borrowing through debt repayments, the overall interest rate we pay on our outstanding debt remains elevated compared to recent historical interest rates. This 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 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 have continued throughout fiscal year 2026, albeit with continued improvement in each successive quarter. Continued improvement is expected for the remainder of the current fiscal year.

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 and the first quarter of fiscal year 2027, albeit with continued improvement in each successive quarter.

Previous 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.

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

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. The Company expects the transaction to close by the end of the first half of its fiscal year 2027.

Current wording

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 we continue to work toward completing the sale. 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. We will continue to cooperate with the ACCC and the NZCC as they complete their respective review processes, which are currently expected to conclude by the end of December 2026.

Previous 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.

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 our results throughout fiscal year 2027.

Previous wording

Service revenue, which consists primarily of genomics services provided to production and companion animal markets, was $25.0 million and $75.7 million during the three and nine months ended February 28, 2026 and $24.5 million and $72.6 million during the three and nine months ended February 28, 2025. 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.

Current wording

Service revenue, which consists primarily of genomics services provided to production and companion animal markets, was $26.8 million during the three months ended August 31, 2026 and $25.1 million during the three months ended August 31, 2025. The increase in the period is primarily driven by higher genomics revenue in bovine markets.

Previous wording

International sales were $108.9 million and $330.3 million during the three and nine months ended February 28, 2026 compared to $105.6 million and $335.7 million during the three and nine months ended February 28, 2025, respectively. The increase during the three months ended February 28, 2026 was primarily driven by increases in countries within Europe and favorable foreign exchange rate impact, partially offset by a decline in the divested Cleaners and Disinfectants sales. The decrease during the nine months ended February 28, 2026 was primarily due to the divestiture of our Cleaners and Disinfectants business.

Current wording

International sales were $112.7 million during the three months ended August 31, 2026 compared to $107.1 million during the three months ended August 31, 2025. The increase was primarily driven by higher sales in countries within Asia and Latin America and favorable foreign exchange rate impact, partially offset by a decline in sales from the divested Cleaners and Disinfectants business.

Previous wording

Gross margin was 46.9% and 46.6% during the three and nine months ended February 28, 2026, compared to 49.9% and 49.1% during the three and nine months ended February 28, 2025, respectively. The decrease in margin was primarily due to volume decreases, higher inventory write-offs, and duplicative costs as we prepare to manufacture Petrifilm products internally. These decreases were partially offset by price increases and favorable foreign currency exchange impacts.

Current wording

Gross margin was 47.4% during the three months ended August 31, 2026, compared to 45.4% during the three months ended August 31, 2025. The increase in margin was primarily due to volume increases, price increases, and favorable foreign currency exchange impacts. These were partially offset by higher duplicative costs as we prepare to manufacture Petrifilm products internally.

Previous wording

Sales and marketing expenses were $38.2 million and $125.5 million during the three and nine months ended February 28, 2026, compared to $44.6 million and $136.9 million during the three and nine months ended February 28, 2025, 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, and lower compensation costs associated with headcount reductions, partially offset by increased restructuring costs.

Current wording

Sales and marketing expense was $41.5 million during the three months ended August 31, 2026, compared to $45.1 million during the three months ended August 31, 2025. The decrease was primarily due to lower outbound shipping costs and lower compensation costs associated with headcount reductions, partially offset by increased restructuring costs.

Previous wording

General and administrative expenses include amortization expenses relating to definite-lived intangible assets of $22.8 million and $68.7 million during the three and nine months ended February 28, 2026, compared to $23.3 million and $70.4 million during the three and nine months ended February 28, 2025, 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 $89.0 million to $93.0 million.

Current wording

General and administrative expense includes amortization expenses relating to definite-lived intangible assets of $23.0 million during the three months ended August 31, 2026 and August 31, 2025, respectively.

Previous wording

Income tax benefit was $3.3 million and $0.3 million during the three and nine months ended February 28, 2026 compared to income tax expense of $1.2 million during the three months ended February 28, 2025 and income tax benefit of $22.1 million during the nine months ended February 28, 2025. The net tax benefit for the quarter-to-date period was primarily related to pre-tax losses due to acquisition amortization and interest expense.

Current wording

Income tax benefit was $3.0 million during the three months ended August 31, 2026 compared to income tax expense of $7.5 million during the three months ended August 31, 2025. The net tax benefit for the current year period was primarily related to pre-tax losses due to acquisition amortization and interest expense. Income tax expense in the prior year period was primarily driven by pre-tax income due to the gain on the sale of our Cleaners & Disinfectants business.

Previous wording

Revenue for the Food Safety segment increased $3.9 million during the three months ended February 28, 2026, compared to the three months ended February 28, 2025. The increase was driven by $6.1 million of growth in the business and a $6.2 million favorable currency impact. Business growth was led by pathogens detection products, indicator sales and improvements in sample collection products, partially offset by a decline in sales of food quality products. These gains were offset by an $8.4 million decline resulting primarily from the divestiture of our Cleaners and Disinfectants business.

Current wording

Revenue for the Food Safety segment increased $11.1 million during the three months ended August 31, 2026, compared to the three months ended August 31, 2025. The increase was driven by $12.3 million of growth in the business as well as the current year benefit of distributor inventory adjustments in the prior year and timing of customer orders in the current quarter, and a $1.2 million favorable currency impact. Business growth was led by higher sales of pathogen detection products, indicator and sample collection products, partially offset by a decline in sales of food quality products. These gains were offset by a $2.4 million decline primarily from the divestiture of our Cleaners and Disinfectants business.

Previous wording

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

Current wording

The decreased corporate expense during the period is related to lower equity-based compensation expense and savings from prior year restructuring initiatives. This decrease was partially offset by increases in transformation initiatives and certain corporate development initiatives.

Previous wording

Our primary sources of liquidity are cash and cash equivalents, cash flows from the operations of our business, and available borrowing capacity under our Revolving Facility. Our principal uses of cash include working capital-related items, capital expenditures, debt service, and strategic investments.

Current wording

Our primary sources of liquidity are cash and cash equivalents, cash flows from the operation of our business, and available borrowing capacity under our Revolving Facility. Our principal uses of cash include working capital-related items, capital expenditures, debt service, and strategic investments.

Previous wording

As of February 28, 2026, we had cash and cash equivalents of $159.9 million. The Company has irrevocable standby letters of credit in an amount of $3.2 million. As of February 28, 2026, no amount has been drawn. The standby letters of credit reduced our borrowing available under our revolving line of credit to 198.3 million as of February 28, 2026.

Current wording

As of August 31, 2026, we had cash and cash equivalents of $172.0 million. The Company had irrevocable standby letters of credit totaling $3.2 million during fiscal 2026. During the first quarter of fiscal year 2027, $1.6 million was drawn under the standby letters of credit and subsequently repaid, resulting in outstanding standby letters of credit of $1.6 million as of August 31, 2026. The remaining standby letters of credit reduced the borrowing capacity available under the revolving line of credit to $199.9 million as of August 31, 2026.

Previous wording

There are no additional required principal payments for the Term Loan until the second quarter of fiscal year 2028. Financial covenants include maintaining specified levels of funded debt to EBITDA, and debt service coverage. As of February 28, 2026, we are 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 August 31, 2026, 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 $50.0 million. This includes approximately $35.0 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.

Current wording

We continue to make investments in our business and operating facilities. Our estimate for capital expenditures in fiscal 2027 is approximately $40.0 million.

Previous wording

Net cash provided by operating activities increased $11.2 million during the nine months ended February 28, 2026 compared to the nine months ended February 28, 2025. The increase is primarily due to improvement in working capital primarily associated with inventory and accounts payable, and to a lesser extent, accounts receivable. Inventory reductions reflect management’s focus on enhancing operational efficiency and inventory management. This increase is partially offset by a decrease in operating income.

Current wording

Net cash provided by operating activities increased $2.1 million during the three months ended August 31, 2026 compared to the three months ended August 31, 2025. The increase is primarily due to an improvement in operating income offset by unfavorable changes in working capital primarily associated with accounts receivable and accounts payable.

Previous wording

Net Cash (used for) provided by Financing Activities

Current wording

Net Cash (used for) provided by Investing Activities

Previous wording

Cash used for financing activities increased $99.6 million during the nine months ended February 28, 2026 compared to the nine months ended February 28, 2025. The increase was due to the debt repayments made with proceeds from the sale of our Cleaners and Disinfectants business.

Current wording

Net Cash used for Financing Activities