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Neogen Corporation Unveils Preliminary Q2 Financial Results for Fiscal Year 2025

Neogen Corporation (NASDAQ: NEOG) has announced its preliminary financial results for the second quarter ending November 30, 2024. This report highlights both the achievements and challenges encountered during the quarter, showcasing resilience in the face of industry-wide fluctuations.

Revenue and Performance Overview

In the second quarter, Neogen achieved a revenue of $231.3 million, marking a slight increase of 0.7% from $229.6 million in the previous year. When isolating core revenue growth—which adjusts for foreign exchange impacts, acquisitions, and discontinued product lines—Neogen reported an encouraging 3.5% increase.

Despite the revenue growth, the company faced significant challenges, primarily a net loss of $456.3 million, or $(2.10) per diluted share. This dramatic loss was largely driven by a non-cash goodwill impairment charge related to the acquisition of the former 3M Food Safety Division. In contrast, adjusted net income stood at $24.4 million, equating to $0.11 per diluted share. The company's adjusted EBITDA was recorded at $51.4 million, resulting in an adjusted EBITDA margin of 22.2%.

Segment-Specific Insights

Food Safety Segment

In terms of sector performance, the Food Safety segment generated $164.2 million in revenue, down slightly from $164.4 million the previous year. The marginal drop was negated by core growth of 3.6%. This segment's success was propelled by strong sales in biosecurity and general sanitation categories, despite facing headwinds from discontinued product lines and foreign currency impacts.

Animal Safety Segment

Conversely, the Animal Safety segment showcased more robust growth, achieving $67.0 million in revenue—an increase of 2.8% year-over-year. Core revenue growth was reported at 3.2%, driven primarily by increased sales in biosecurity and animal care products.

Strategic Shifts and Future Outlook

In addition to fiscal numbers, Neogen is taking proactive steps to enhance profitability and focus operations. Recently, the company initiated restructuring actions, particularly aimed at refining its Genomics business. These steps are expected to increase margins, with ongoing evaluations of portfolio assets potentially leading to improved profitability.

John Adent, the CEO of Neogen, remains optimistic about the company's future, stating, "We are poised to build on the progress made in the second quarter and further position the company to win in the market."

The need for heightened food safety awareness continues to grow, influenced by various recent food contamination incidents. Neogen anticipates that this growing emphasis on food safety will facilitate core growth in its Food Safety segment, independent of regulatory dependencies.

Financial Liquidation and Capital Position

As of the end of November 2024, Neogen reported total cash of $140.2 million against outstanding non-current debt of $900 million. The company retained a committed borrowing capacity of $150 million, indicative of its intention to maintain a solid capital base while navigating the current economic landscape.

Looking Ahead

In light of the current dynamics, Neogen has updated its full-year guidance, forecasting total revenue between $905 million and $925 million and adjusted EBITDA in the range of $205 million to $215 million. The anticipated capital expenditures for the year are around $85 million, which includes significant investments related to the integration of the former 3M Food Safety Division.

Neogen Corporation is determined to leverage technological advancements to ensure global food security. With a focus on innovation and regulatory compliance, Neogen is well-positioned to enhance its contributions to both food safety and animal health sectors across more than 140 countries world-wide.