Neogen (NASDAQ:NEOG) reported fiscal fourth-quarter revenue of $225.3 million, with core revenue growth of 4.3%, its highest growth rate of fiscal 2026. The company said momentum improved across both its food safety and animal safety businesses as it entered fiscal 2027, while management outlined increased spending on research and development, commercial capabilities and technology.
Chief Executive Officer Mike Nassif said the company exceeded its adjusted EBITDA guidance for fiscal 2026 and ended the year with improved growth trends. “Fiscal year 2026 was all about stabilization and foundation building,” Nassif said. “In fiscal year 2027, the focus will be on accelerating profitable growth.”
Food Safety Growth Accelerates
Indicator Testing and Culture Media products grew 9%, while bacteria and general sanitation products grew 10%, according to Chief Financial Officer Bryan Riggsbee. Food safety grew in every global division during the quarter, and the company’s Latin America business posted double-digit growth.
Riggsbee said the company has seen signs of improving food-production volumes, citing public comments from food producers indicating volume growth turned positive in the first calendar quarter of 2026 after a largely weak 2025. However, he said food producers still face inflationary pressures linked to the Ukraine war, leading Neogen to retain a measured view of near-term demand.
The company also cited broader food safety trends, including an eight-year peak in food safety recalls and recalled food volume during calendar 2025, food safety regulatory reforms in China, and a 50% increase in food safety litigation and class-action lawsuits over the past five years.
Commercial Overhaul and Product Portfolio Recovery
Chief Commercial Officer Joe Freels said Neogen is restructuring its commercial organization around a new go-to-market strategy, including resource allocation across priority countries, customer segments and product lines. The company has identified 14 priority countries where it believes it can generate the greatest returns.
Freels said the company plans to focus direct sales efforts on higher-value accounts while expanding service to smaller customers through e-commerce and customer-service automation. About 40% of food safety revenue currently flows through e-commerce, though that activity is concentrated among larger accounts because of platform limitations.
The company is also creating a strategic-account function to engage senior decision-makers rather than selling primarily at individual plant locations. Management said it is moving from a product-centric sales approach toward selling integrated solutions, services and technology, including the Neogen Analytics platform.
Freels said Neogen entered fiscal 2027 with a restored product portfolio after resolving prior supply and quality problems and improving full and on-time delivery performance. In animal safety, core revenue grew 0.5% year over year and total revenue increased 7% sequentially as the company resolved the majority of supply-related headwinds.
Neogen has also received authorization to sell two topical aerosol products in Texas and Florida to help address the New World screwworm outbreak. Riggsbee said the company expects a modest contribution from those products in the first quarter, while noting that the path and scale of the outbreak remain uncertain.
Margins, Cash Flow and Debt Reduction
Fourth-quarter gross margin was 47.8%, while adjusted gross margin was 49.7%, improving 330 basis points from a year earlier. Management said freight and material costs remained elevated, although losses in the sample collection business narrowed to their lowest level of the year.
Adjusted EBITDA was $45.4 million, up 12% year over year, representing a 20.2% margin. Adjusted net income was $18.7 million, or $0.09 per share. Cash flow from operations exceeded $30 million in the quarter and free cash flow exceeded $26 million.
Neogen ended the quarter with about $794 million in gross debt and $185.5 million in cash. The company repaid $20 million of its term loan in late June and said it remained compliant with all debt covenants.
Management said inventory declined by more than $36 million year over year following implementation of a sales and operations planning process. Meanwhile, its on-time and full delivery rate improved 40% since that process began, according to Nassif.
Fiscal 2027 Outlook Includes Higher Investment
For fiscal 2027, Neogen guided for revenue of $880 million to $885 million and adjusted EBITDA of $180 million to $182 million. The outlook assumes approximately 3% core growth, including about $92 million of revenue and $13 million of adjusted EBITDA from the Genomics business.
The company expects to update its outlook once the planned sale of the Genomics business to Zoetis closes. The transaction remains subject to regulatory approvals in Australia and New Zealand, which have moved into second-phase reviews. Neogen continues to target closing by the end of the first half of fiscal 2027 and expects to use the estimated $140 million in net proceeds for debt repayment and investment.
- First-quarter fiscal 2027 revenue guidance: $207 million to $209 million.
- First-quarter adjusted EBITDA guidance: approximately $37 million.
- Fiscal 2027 R&D spending: expected to rise about 50%.
- Transformation investments: expected to total $25 million, compared with about $22 million in fiscal 2026.
Management said the planned investment increase will limit the pace of margin expansion in fiscal 2027, even as operational efficiency initiatives are expected to offset part of the spending. The company is targeting inventory write-downs, purchase price variance, pricing execution, supplier management and sample collection margins as areas for savings.
Neogen also said its Petrifilm manufacturing transition remains on schedule. It expects to fully validate its first SKU in August and begin a multi-quarter transition to manufacture sellable product in November 2026. Management expects the transition to ultimately contribute 200 to 300 basis points of gross-margin expansion as production ramps and is optimized in fiscal 2028.
Looking longer term, Nassif said Neogen aims to lift adjusted EBITDA margins to about 30%. The company plans to expand R&D toward a long-term target approaching 5% of revenue, with investments spanning Petrifilm, pathogens, sanitation, digital connectivity and potential technology licensing opportunities. Management said these initiatives are expected to begin making a more meaningful contribution to revenue growth starting in fiscal 2029 and beyond.
About Neogen (NASDAQ:NEOG)
Neogen Corporation is a global provider of food and animal safety products, offering a broad portfolio of diagnostic and testing solutions. Headquartered in Lansing, Michigan, the company develops and manufactures tests designed to detect foodborne pathogens, allergens and toxins in food, beverage and environmental samples. Since its founding in 1982, Neogen has focused on delivering rapid, accurate and user‐friendly assays to food processors, grain handlers and quality laboratories around the world.
In the food safety arena, Neogen’s product lineup includes immunoassay kits, molecular diagnostics and enrichment media for pathogens such as Salmonella, Listeria and E.
