Neogen Q1 FY26 slides: revenue dips but company maintains full-year outlook

Introduction & Market Context

Neogen Corporation (NASDAQ:NEOG) presented its first quarter fiscal year 2026 results on October 9, 2025, revealing revenue declines but maintaining its full-year guidance. The food safety and animal diagnostics company saw its shares jump nearly 10% in premarket trading to $6.40, building on the previous day’s 4.11% gain, as investors responded positively to the company’s improvement initiatives despite challenging quarterly results.

The presentation comes as Neogen works to address execution challenges while emphasizing its market leadership position in food safety testing. The company is implementing a targeted improvement plan focused on growth acceleration, margin expansion, and portfolio optimization.

Quarterly Performance Highlights

Neogen reported Q1 FY26 revenue of $209.2 million, down from $217.0 million in the same period last year and representing a sequential decline from the $225.5 million reported in Q4 FY25. Adjusted EBITDA fell to $35.5 million from $43.7 million year-over-year, while adjusted net income decreased to $9.4 million ($0.04 per share) from $14.4 million ($0.07 per share).

As shown in the following financial highlights chart:

The company’s performance showed divergent trends across its business segments. The Food Safety segment experienced a 1.7% decline in core revenue, while the Animal Safety segment returned to growth with a 5.8% increase. Management noted that profitability was pressured by sample collection inefficiencies and tariff impacts, but emphasized that overall performance was in line with their expectations.

Strategic Initiatives

Neogen outlined a comprehensive set of near-term priorities aimed at addressing its execution challenges and improving financial performance. The company has implemented a cost-reduction initiative expected to deliver approximately $20 million in annualized savings.

The strategic plan focuses on three key areas: Top Line Growth, Operational Excellence, and Reinvigorating Innovation, with specific "must-do" critical priorities:

Management highlighted their initial observations about the company’s position, noting that while Neogen faces execution challenges, it remains a market leader with a loyal customer base and strong strategic vision. The company believes significant growth potential can be unlocked by strengthening core fundamentals and improving execution discipline.

Balance Sheet & Capital Allocation

Neogen reported gross debt of $800 million and cash and equivalents of $139 million, resulting in net debt of $661 million. The company’s debt profile is 68% fixed and 32% floating. First quarter free cash flow improved by $43 million compared to the prior year.

A significant development was the divestiture of the Cleaners & Disinfectants business, with net proceeds used to repay $100 million of debt. Management emphasized that near-term capital allocation priorities remain funding integration-related capital expenditures and deleveraging the balance sheet.

Targeted Improvement Plan

The company detailed its targeted improvement plan across three key areas: Growth Acceleration and Margin Expansion, Portfolio & Leverage, and Governance & Compliance. Priority actions include accelerating Food Safety growth, completing the 3M FSD integration, reinvigorating innovation, and aligning the cost structure.

Forward-Looking Statements

Despite the challenging first quarter results, Neogen reaffirmed its full-year fiscal 2026 outlook, projecting revenue between $820-$840 million and adjusted EBITDA of $165-$175 million. Capital expenditures are expected to be approximately $50 million, with free cash flow projected to be positive. The company anticipates an effective tax rate of approximately 21%.

In the earnings call summary, CEO John Adent had previously emphasized the company’s core mission of "helping to protect the world’s food supply" while acknowledging the need to address sample collection production challenges. The company’s Q1 presentation reinforces this commitment while outlining specific steps to improve operational efficiency.

The presentation summary noted that end markets are showing signs of sequential improvement from Q4 FY25, despite the revenue decline. Management is focusing on simplification and core process improvement while empowering commercial teams and prioritizing R&D initiatives. Testing of Petrifilm production is currently in process, a critical element of the company’s integration strategy following its 3M Food Safety Division acquisition.

As Neogen works through these operational challenges, the company’s ability to maintain its full-year guidance suggests management expects performance improvement in subsequent quarters, particularly in the second half of fiscal year 2026.

Full presentation:

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