Neogen's Q2 2026 Earnings Call: Contradictions Emerge on Guidance Prudence, Tariff Impact, Market Growth, Genomics Outlook, and Petrifilm Drivers

Business Commentary:

Return to Positive Core Growth and Margin Expansion:- Neogen Corp returned to positive core growth across both segments in Q2, with total revenues of $224.7 million, up 2.9% on a core basis. Adjusted EBITDA margin expanded 470 basis points sequentially to 21.7%.- Reasons: Cost structure improvements implemented in Q2, headcount reduction, volume benefits, and lower tariff costs drove margin expansion. The return to positive growth was attributed to a focus on commercial excellence and solutions-based selling.

Progress on Cost Savings and Operational Efficiency:- The company expects cost actions to deliver approximately $20 million in annualized savings. Gross margin improved to 47.5% sequentially, with non-GAAP gross margin at 50.3%.- Reasons: Volume increases and lower tariff costs contributed to gross margin improvement. Inventory write-offs were elevated but are expected to normalize in the second half. Focus on inventory management and operational efficiency is a priority.

Petrifilm Integration On Track and Sample Collection Profitability Expected:- Petrifilm integration remains on track for Q2 fiscal 2027. Production testing has gone well, and internal validation for 17 SKUs is underway. Sample collection line improvements are expected to make it a positive contributor to gross profit in H2.- Reasons: Confidence stems from demonstrated ability to manufacture Petrifilm plates on new equipment and executing a detailed transfer plan. For sample collection, progress on pricing, production efficiency, and reducing back orders is expected to improve profitability.

Contradiction Point 1

Guidance Prudence and Macro Headwinds

This represents a significant shift in the company's communication regarding the rationale for its financial guidance. In 2025Q4, guidance was framed as "business-as-usual" with specific headwinds. In 2026Q2, the same guidance is described as "prudently conservative" due to lingering macro uncertainty, directly contradicting the prior characterization of its basis and confidence level.

Why hasn’t H2 growth or margin guidance increased after a strong quarter? Is this due to a conservative approach or thorough validation? - David Westenberg (Piper Sandler)

2026Q2: The guidance reflects a prudent approach to returning the business to sustainable performance... The updated guide now forecasts positive growth for the year. - Mike Nasif(CEO)

With Mike now as CEO, why is the timing for guidance appropriate? And why are these numbers accurate? How much prudence is included? - Subhalaxmi T. Nambi (Guggenheim Securities, LLC)

2025Q4: The guidance reflects the current market environment and is characterized as business-as-usual, without extraordinary commitments for the new CEO. - David H. Naemura(CEO)

Contradiction Point 2

Tariff Impact Quantification

This is a direct contradiction in the stated annual financial impact of a specific headwind (tariffs). In 2025Q4, a concrete $10 million headwind was quantified for FY2026. In the 2026Q2 discussion of headwinds, this specific figure is omitted, creating ambiguity about its ongoing effect and the accuracy of prior guidance.

Why hasn’t H2 growth or margin increased more given the strong quarter? Is this due to conservatism or ensuring accuracy? - David Westenberg (Piper Sandler)

2026Q2: The guidance... takes a conservative tack given lingering macroeconomic weaknesses (tariffs, uncertainty). - Mike Nasif(CEO)

How much of a headwind is factored into next year's outlook considering the $10 million annualized tariff impact you mentioned? - Subhalaxmi T. Nambi (Guggenheim Securities, LLC)

2025Q4: The annualized headwind from tariffs for fiscal year 2026 is $10 million, an increase from the previously estimated $5 million... - David H. Naemura(CEO)

Contradiction Point 3

Food Safety Testing Market Growth Assumption

This involves a change in a key market growth assumption embedded in the company's financial guidance. The guidance in 2025Q4 was based on a specific, low single-digit growth rate for the food safety testing market (excluding sample collection). The 2026Q2 guidance shifts this to a vaguer "positive growth," altering the underlying growth driver for the company's forecast.

Why isn't H2 growth/margin higher after a strong quarter? Is it due to caution or ensuring accuracy? - David Westenberg (Piper Sandler)

2026Q2: The updated guide now forecasts positive growth for the year. - Mike Nasif(CEO)

What is your outlook for the next four quarters? What are your guidance assumptions? - Brandon Vazquez (William Blair & Company L.L.C.)

2025Q4: Excluding sample collection issues, Neogen grew at a low single-digit rate in Q4. The full-year assumption is around 5% growth, which is being carried into the next fiscal year. - David H. Naemura(CEO)

Contradiction Point 4

Genomics Business Outlook

This is a contradiction regarding the financial trajectory of a divested business segment. In 2025Q4, the company explicitly guided that genomics revenue would be lower in FY2026 than in FY2025. In 2026Q2, the discussion frames the related divestiture (cleaners and disinfectants) as "completed" with minimal ongoing costs, implying a different post-divestiture reality than the previously communicated declining revenue outlook for genomics.

What are your updated assumptions for the 2026 Petrifilm growth rate? Is pricing power still available? - Subbu Nambi (Guggenheim Securities) - asked by Thomas:

2026Q2: For the completed cleaners and disinfectants divestiture, the majority of costs were direct to the business. $1.5–$2 million in additional costs will remain due to a Transition Services Agreement (TSA) for at least a full year post-close. - David H. Naemura(CEO)

Given the sequential improvement in genomics, particularly in bovine, is the business stabilizing for fiscal '26? Can you provide insights on demand across species and use cases? - Thomas DeBourcy (Nephron Research LLC)

2025Q4: Revenue for genomics is expected to be lower in fiscal 2026 than in fiscal 2025. - David H. Naemura(CEO)

Contradiction Point 5

Petrifilm Growth Driver

This highlights a shift in the attributed source of growth for a key product line. In 2025Q4, growth was specifically driven by new product launches. In 2026Q2, the same growth is described as "mostly organic and volume-driven," downplaying the previously emphasized role of new launches and potentially signaling a change in the product's growth narrative.

What portion of the growth in indicator testing in culture media was driven by volume versus price changes? - Subbu Nambi (Guggenheim Securities) - asked by Thomas:

2026Q2: Growth is mostly organic and volume-driven, due to specific focus on these product lines. - Mike Nasif(CEO)

Regarding the Food Safety segment's strength in food quality pathogen product lines, have you observed market share gains or addressed unmet needs? What specifically drove the growth in pathogen solutions? - Thomas DeBourcy (Nephron Research LLC)

2025Q4: The strength in pathogen products is driven by new product launches (e.g., MDS quant Salmonella and Listeria Right Now assays) and the company's focus on meeting regulatory priorities. - John Edward Adent(COO)