Neogen's Q2 Earnings: A Mixed Bag Amidst Market Challenges

Neogen Corporation (NASDAQ: NEOG) recently reported its preliminary second-quarter 2025 results, offering a mixed bag of performance metrics amidst challenging market conditions. The company's revenue grew by 0.7% year-over-year to $231.3 million, while core revenue, excluding currency impacts and acquisitions, increased by 3.5%. However, the net loss for the quarter was $456.3 million, or $(2.10) per diluted share, primarily driven by a non-cash goodwill impairment charge related to the acquisition of the former 3M Food Safety Division.



Adjusted Net Income for the quarter was $24.4 million, or $0.11 per diluted share, a slight decline from the prior-year period. The Food Safety segment's revenue decreased by 0.1% to $164.2 million, while the Animal Safety segment's revenue increased by 2.8% to $67.0 million. The company's Adjusted EBITDA margin declined to 22.2% from 24.0% in the prior-year period, primarily due to the full cost to exit various transition service agreements and higher distribution costs.



Neogen's President and Chief Executive Officer, John Adent, commented on the results, "The second quarter reflected steady progress, as we saw improvement across the business compared to the first quarter, with core revenue growth accelerating in both of our segments, sequential margin expansion and significantly better free cash flow." However, he also acknowledged the challenges faced by the company, stating that the integration of the former 3M Food Safety business has been slowed by end-market weakness and operational delays.

To address these challenges, Neogen has initiated restructuring actions focused on rightsizing its Genomics business and streamlining operations. The company has also entered the next phase of portfolio review, with specific projects actively underway to drive a higher level of focus in the business and improved profitability. Additionally, Neogen is updating its full-year guidance, now expecting revenue between $905-925 million and Adjusted EBITDA of $205-215 million, citing U.S. dollar strengthening and operational challenges.



In conclusion, Neogen's Q2 earnings snapshot reveals a mixed performance amidst challenging market conditions. While the company's core revenue growth and Adjusted Net Income were modestly positive, the net loss and Adjusted EBITDA margin decline highlight the ongoing challenges faced by the company. Neogen's strategic initiatives, such as restructuring and portfolio review, will be crucial in addressing these challenges and positioning the company for long-term growth. Investors should closely monitor Neogen's progress as it navigates the complex market landscape.