Neogen (NASDAQ:NEOG) reported fiscal 2027 first-quarter revenue of $222.8 million, with core growth of 8.1%, as the company cited improved commercial execution, product-line strength in food safety and animal safety, and progress on its Petrifilm manufacturing transition.
Chief Executive Officer Mike Nassif said the quarter marked an acceleration from the prior quarter, though he noted that the timing of certain customer orders contributed to growth. The company is focusing its fiscal 2027 strategy on commercial execution, innovation and operational efficiency while continuing investments intended to support long-term growth and profitability.
Revenue Growth Across Both Segments
Within Food Safety, indicator testing and culture media products, including Petrifilm, increased 11%. Bacterial and general sanitation products grew 7%, including double-digit growth in pathogen detection, Riggsbee said.
Animal Safety revenue was $59.6 million and rose 8% on a core basis, including roughly a 100-basis-point benefit from the timing of customer orders. The segment’s growth was driven by veterinary instruments, including needles and syringes supported by improved supply, as well as biosecurity products, particularly insect-control offerings.
Neogen generated growth in each geographic region, led by double-digit growth in Asia-Pacific. U.S. sales represented 49% of quarterly revenue, while international markets accounted for 51%.
During the question-and-answer session, Chief Commercial Officer Joe Freels said the company is working to increase its share of wallet with existing customers rather than relying primarily on new markets. He highlighted a new approach for global strategic accounts, under which a dedicated accountable leader is assigned to individual customers operating across multiple regions. Freels said those accounts grew 6.2% in the first quarter.
Margins, Cash Flow and Debt
Neogen reported gross margin of 47.4% and adjusted gross margin of 49.8%, up 30 basis points from a year earlier on an adjusted basis. The adjusted margin improvement reflected higher revenue, partially offset by deliberate investments in operational excellence and inventory optimization.
Adjusted operating expenses were approximately flat year over year. Increased investment in research and development and general and administrative functions was offset by lower sales and marketing costs, including lower logistics and distribution expenses, centralized regional marketing resources and the divestiture of the cleaners and disinfectants business.
Adjusted EBITDA was $41.6 million, or 18.7% of revenue, representing 170 basis points of margin expansion. Adjusted net income was $17.5 million, and adjusted earnings per share were $0.08.
Free cash flow was $4.7 million, improving approximately $18 million from the prior-year quarter. Riggsbee attributed the improvement to higher operating cash flow and reduced capital expenditures as the company approaches completion of the Petrifilm manufacturing transition.
Neogen ended the quarter with about $774 million in debt and $172 million in cash. The company repaid $20 million of its term loan in June and another $10 million at the end of September. It remains compliant with its debt covenants, Riggsbee said.
Petrifilm Transfer and Innovation Initiatives
The company said its planned multi-quarter transfer of Petrifilm manufacturing is expected to begin next month. Neogen has completed full validation of its first Petrifilm stock-keeping unit, confirming that the product met production, quality and stability requirements and performed equivalently to product made by its transition partner.
Nassif called the validation a “major de-risking milestone” for the program. He said Neogen is managing the transition around four priorities: customer continuity, safety-stock management, supplier management and disciplined sequencing across 17 SKUs.
Riggsbee said duplicative costs related to the transition are expected to peak and then decline as the transfer is completed. He said the company expects to begin implementing identified operational improvements during fiscal 2028 and anticipates 200 to 300 basis points of margin improvement in fiscal 2029.
Neogen also announced a strategic collaboration with Hinalea, a hyperspectral imaging company. Nassif said the technology could have applications across Food Safety and may help simplify customer workflows through faster detection and decision-making at processing sites.
Guidance Raised; Genomics Sale Still Under Review
Neogen raised its fiscal 2027 revenue outlook to $885 million to $890 million and increased adjusted EBITDA guidance to $181 million to $183 million. The guidance continues to include the genomics business, which Neogen has agreed to divest.
The genomics transaction remains under review by regulatory authorities in Australia and New Zealand, with a final decision expected by the end of December. Neogen expects approximately $140 million in net proceeds, primarily for debt reduction. Riggsbee said the sale could reduce net leverage to below three times at closing and closer to 2.5 times by the end of the fiscal year.
The company expects first-half core growth of approximately 3.5%, noting that first-quarter results benefited from timing items and that the second quarter is expected to have the lowest core growth rate of the year. Neogen expects first-half adjusted EBITDA margin to be in line with the first quarter while it continues to invest in R&D, commercial infrastructure, technology and automation.
About Neogen (NASDAQ:NEOG)
Neogen Corporation is a global provider of food safety and animal safety products and services. The company develops diagnostic tests, laboratory products, and related solutions that help customers detect foodborne pathogens, allergens, toxins, residues, and other contaminants throughout the food production process.
Its food safety portfolio includes test kits, culture media, molecular testing systems, sanitation monitoring products, and laboratory supplies used by food manufacturers, processors, retailers, and regulatory organizations.
