Neogen's Q3 2025: Unpacking Contradictory Signals on Tariffs, Food Safety Growth, and Genomics Strategy

These are the key contradictions discussed in Neogen Corporation's latest 2025 Q3 earnings call, specifically including: Tariff Impact and Inventory Management, Food Safety Segment Performance, Genomics Business Strategy and Expectations, and Market Uncertainty and Inventory Levels:



Earnings and Revenue Impact:
- Neogen Corporation reported core revenue growth of 20 basis points for Q3, with foreign currency being a 310 basis points headwind.
- The company's Food Safety segment revenue was $153 million, down 3.2% from the prior year, despite core growth of 1.5%.
- The decline in Food Safety revenue was attributed to slower-than-expected market growth and challenges in sample collection.

Scenario of Uncertainty and Tariffs:
- Neogen faced a softening market during Q3, particularly in the Animal Safety segment, due to global trade uncertainties and tariffs.
- The implementation of retaliatory tariffs by China contributed to a $1 million decline in Animal Safety sales.
- The company expects tariff impacts to continue into Q4, potentially affecting both margins and sales volumes.

Cost Management and Integration Challenges:
- Neogen is working to align costs with the current revenue levels due to softer-than-expected performance.
- The company concluded a significant restructuring and cost realignment in the Genomics business during Q2.
- Despite integration challenges, progress is being made in derisking the Petrifilm production transition, which is expected to be completed by the fall of 2025.

Leadership and Strategic Focus:
- John Adent, CEO and President, announced his departure, with plans to ensure a smooth transition during the search for his successor.
- Neogen is focusing on strategically aligning its business to capitalize on the attractive Food Safety end market.
- The company continues to evaluate potential portfolio actions to further focus on its core end markets and improve profitability.