Neogen's Q4 2025: Unpacking Contradictions in Food Safety Growth, Tariffs, and Genomics Stability

Food safety growth expectations, tariff impact and mitigation, genomics business stability, petrifilm transition timeline, and food safety growth and market environment are the key contradictions discussed in Neogen Corporation's latest 2025Q4 earnings call.



Challenges in Food Safety and Animal Safety Segments:
- Neogen Corporation's Food Safety segment saw revenues of $162 million, down 3% compared to the prior year, despite low single-digit core revenue growth.
- The Animal Safety segment reported revenues of $64 million, with a core revenue decline of 6.7%.
- These trends were primarily due to weakened end market conditions, particularly in Food Safety, with consumers under pressure from cumulative inflation, leading to decreased food production volumes.

Regulatory Environment and Product Innovation:
- The USDA FSIS announced increased testing of Listeria by over 200% and enhanced microbiological testing, focusing on Listeria detection and reducing Salmonella illnesses.
- Neogen launched the Listeria Right Now assay for use on its MDS platform for pathogens, growing in the pathogen detection market.
- These initiatives are driven by regulatory priorities and a focus on food safety, which presents opportunities for Neogen's expanding product portfolio.

Inventory and Production Challenges:
- The company reported a 41.2% gross margin for the fourth quarter, impacted by lower volume, elevated inventory write-offs, and sample collection production inefficiencies.
- Neogen experienced significant production inefficiencies in sample collection, with high levels of manual work and excessive scrap rates.
- These challenges are attributed to the aging production equipment and efforts to improve consistency and productivity.

Financial Impact of Tariffs and Divestitures:
- Neogen expects a $10 million annualized impact on its business due to tariffs, recognizing the dynamic trade environment.
- The company completed the divestiture of its cleaners and disinfectants business, receiving approximately $115 million in net proceeds.
- These changes reflect the company's ongoing efforts to mitigate trade-related impacts and simplify its business structure.

Outlook and Strategic Focus:
- Neogen's outlook for fiscal 2026 includes revenue between $820 million and $840 million and adjusted EBITDA between $165 million and $175 million.
- The company is focused on improving execution and internal processes, such as inventory planning, to capitalize on future market improvements and enhance operational efficiency.