Neogen’s third quarter results were met with a strong positive market reaction, despite reporting a year-over-year sales decline. Management attributed the quarter’s performance to ongoing operational challenges, including inefficiencies in sample collection and excess inventory, which impacted margins. CEO Mikhael Nassif pointed to improvements in core food safety products and stabilization efforts in the Animal Safety segment, while also acknowledging temporary distributor-related disruptions in Petrifilm. The company’s actions to streamline costs, such as a global workforce reduction and portfolio optimization, were central to mitigating near-term pressures.
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Neogen (NEOG) Q3 CY2025 Highlights:
- Revenue: $209.2 million vs analyst estimates of $203.9 million (3.6% year-on-year decline, 2.6% beat)
- Adjusted EPS: $0.04 vs analyst estimates of $0.04 (in line)
- Adjusted EBITDA: $12.96 million vs analyst estimates of $36.27 million (6.2% margin, 64.3% miss)
- The company reconfirmed its revenue guidance for the full year of $830 million at the midpoint
- EBITDA guidance for the full year is $170 million at the midpoint, above analyst estimates of $163.3 million
- Operating Margin: -7.7%, down from 1% in the same quarter last year
- Market Capitalization: $1.29 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Neogen’s Q3 Earnings Call
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Brandon Vazquez (William Blair) questioned where Neogen’s core strengths lie and how it plans to regain market share; CEO Mikhael Nassif emphasized a broad portfolio, employee commitment, and renewed commercial discipline as key to recovery.
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Subhalaxmi Nambi (Guggenheim) asked about the lack of raised revenue guidance despite a revenue beat; CFO Dave Naemura confirmed no material one-time items, citing ongoing uncertainty in sample collection volumes.
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Bob Labick (CJS Securities) inquired about the impact of execution challenges on the new product pipeline; Nassif acknowledged past misaligned priorities, stating that future innovation will be more focused and externally informed.
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David Westenberg (Piper Sandler) pressed for details on sample collection inefficiencies and the impact of headcount reductions; Naemura explained that high labor turnover and scrap costs are being addressed, while Nassif highlighted a commitment to organizational optimization and talent alignment.
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Tom DeBourcy (Nephron Research) asked about ongoing portfolio evaluation and potential for further divestitures; Nassif and Naemura both stressed an ongoing review process but expressed satisfaction with the current core focus.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be watching (1) the successful integration and ramp-up of Petrifilm production, (2) progress in reducing sample collection inefficiencies and excess inventory, and (3) updates on the divestiture process for the genomics business. We will also monitor the impact of new commercial leadership hires and the pace of innovation pipeline development as leading indicators of sustainable margin recovery.
Neogen currently trades at $5.84, in line with $5.82 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).
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