Neogen (NASDAQ:NEOG) executives told investors the company delivered “encouraging early progress” in its fiscal second quarter as it begins what CEO Mike Nasif described as a transformation focused on improving growth and profitability. Management highlighted a return to positive core growth across the enterprise, a sharp sequential improvement in adjusted EBITDA margins, and a raised full-year outlook, while also emphasizing a cautious stance for the second half due to lingering end-market weakness and a leadership team still “settling in.”
Quarter results show core growth and margin rebound
New CFO Brian Rigsby said total second-quarter revenue was $224.7 million, representing core growth of 2.9%. Foreign currency contributed 0.9%, while divestitures and discontinued products were a 6.6% headwind year over year, driven by the July 2025 sale of the company’s Cleaners and Disinfectants business.
Animal Safety revenue was $59.1 million with core revenue growth that was “approximately flat.” Rigsby said biosecurity grew, led by insect control products aided in part by market share gains, while veterinary instruments were pressured by lower needles and syringes, and life sciences was affected by timing of orders and fulfillment.
On profitability, Rigsby reported second-quarter gross margin of 47.5%, up 210 basis points sequentially, primarily due to volume and lower tariff costs. Excluding integration-related and restructuring costs, gross margin was 50.3%. Adjusted EBITDA was $48.7 million, a 21.7% margin and a 470-basis-point sequential improvement, driven by the higher gross margin and a headcount reduction implemented during the quarter.
Adjusted net income was $22.6 million and adjusted EPS was $0.10, compared to $9.4 million and $0.04 in the prior quarter, which Rigsby said was primarily due to the higher adjusted EBITDA.
Operational priorities: costs, sample collection, Petrifilm transfer
Nasif said the “initial phase” of the transformation is centered on stabilizing and strengthening Neogen’s core business. He pointed to cost structure actions implemented in the second quarter that are expected to deliver about $20 million in annualized savings, with continued review of resource allocation and an emphasis on disciplined execution.
A key operational focus remains the sample collection product line, which management has previously described as a challenge. Nasif said progress getting out of backorders should allow Neogen to reduce temporary labor and scrap and “get more to a steady state,” while continuing to work on pricing and line efficiency. He said the company expects sample collection to return to profitability in the second half of the fiscal year, though he added he does not expect it to be as profitable as other parts of the portfolio.
Rigsby quantified the improvement trend by referencing the company’s non-GAAP reconciliation schedule, noting the negative impact associated with sample collection was about $10 million in Q4, $6 million in Q1, and about $3 million in Q2, with expectations to turn positive in the back half.
Neogen also provided an update on the Petrifilm integration and manufacturing transfer project, which Nasif called “super important.” He said the project remains on track for the timeline previously shared and that production testing has gone well. The company has moved into initial stages of product validation to confirm its ability to produce each of the 17 SKUs, with completion expected this summer. Nasif said early work has demonstrated the ability to manufacture Petrifilm plates on the new equipment, with continued internal quality and performance testing underway.
Commercial execution changes and leadership additions
Nasif said Neogen is implementing a more process-oriented approach to commercial excellence, emphasizing planning and data-driven decisions. In Food Safety, he said the company sees an opportunity to shift toward solutions-based selling to drive “customer stickiness” and cross-portfolio penetration, noting that more than 75% of food safety customers already buy multiple product categories from Neogen.
In response to analyst questions, Nasif described specific changes inside the commercial organization, including instituting a weekly “latest best estimate” forecasting process that brings together sales leaders and supporting functions to review forecasts, risks and opportunities, and targeted accounts. He said the effort aims to make the broader organization more customer-centric and “in service of the commercial team.”
Nasif also highlighted multiple leadership appointments intended to accelerate execution and innovation, including CFO Brian Rigsby and new Chief Commercial Officer Joe Freels, whom Nasif described as a seasoned diagnostics executive with senior commercial experience at Abbott and Cepheid. Neogen also added Tammy Rinaldi as SVP and GM of the Food Safety business unit, James Meadows as head of North America Food Safety, and Jeremy Yarwood as chief scientific officer.
Cash flow, balance sheet, and genomics divestiture process
Rigsby said Neogen ended the quarter with $800 million of gross debt, with 68% at a fixed rate, and $145.3 million in cash. He said the company remains in compliance with all debt covenants.
Free cash flow was $7.8 million in Q2, an improvement of $20.9 million from Q1, reflecting lower capital expenditures and improved working capital efficiency. Rigsby added that routine capex is expected to trend toward 3%–4% of revenue starting in late fiscal 2026, which he said should improve free cash flow.
Management also discussed the previously disclosed process to divest Neogen’s global genomics business. Rigsby said the process is progressing and, while timing can be difficult to predict, the company anticipates being able to make an announcement in the fourth quarter of fiscal 2026 based on the current stage of the process. He said proceeds would be prioritized for debt reduction, and that divesting genomics would simplify and focus the business while positioning it for improved incremental margins. Nasif noted the company’s prior divestiture of cleaners and disinfectants enabled Neogen to pay down $100 million of debt.
Guidance raised, but management strikes conservative tone
Rigsby said Neogen is raising its full-year fiscal 2026 guidance after second-quarter performance came in ahead of expectations. The company now expects:
- Revenue: $845 million to $855 million
- Adjusted EBITDA: approximately $175 million
However, management emphasized caution for the second half. Rigsby said guidance assumes fourth-quarter revenue will be modestly higher than the third quarter, with the third quarter stepping down from the second quarter primarily due to seasonality, and adjusted EBITDA margins following a similar pattern. He reiterated expectations for approximately $50 million of capex for the year and positive free cash flow.
Nasif described the approach as “prudent” as Neogen works to build predictability and credibility with investors amid lingering macro weakness, tariffs, and uncertainty. Rigsby echoed that Q2 is “one data point,” adding that the new team wants to take the right approach in managing guidance.
During Q&A, Rigsby also noted one item he characterized as a one-time revenue tailwind: about $2 million of insecticide benefit in Q2 within the Animal Safety segment.
Nasif closed by saying he believes Neogen can exit fiscal 2026 as “a stronger, leaner, and more disciplined organization,” positioning the company to focus more on innovation and “a next leg of growth” in fiscal 2027 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.
