Neogen Posts Fastest Core Growth of Fiscal Year, Guides Higher
Neogen (NEOG) closed fiscal 2026 with core revenue growth of 4.3% in the fourth quarter, its strongest quarterly pace of the year, as gross margin widened to 47.8% from 41.2%.
Neogen (NEOG), the food and animal safety products maker, reported fourth-quarter core revenue growth of 4.3%, the highest rate of any quarter in fiscal 2026 and a marked acceleration from the 0.1% posted just one quarter earlier.
The quarter capped a choppy year in which core growth swung from 0.3% in the first quarter to 2.9% in the second before stalling in the third, a pattern that obscured steadier improvement underneath in the company's two main businesses. Food Safety core growth reached 5.8% in the fourth quarter, its best showing since fiscal 2023, building on gains of 4.1% and 4.0% in the prior two periods. Animal Safety, which had been the drag on results, grew revenue more than 7% sequentially in the quarter; the company has resolved the majority of the supply-chain challenges that drove a 20.1% year-over-year decline in the third quarter. That segment's year-over-year revenue decline narrowed to 8.2% from 20.1%, with core revenue turning positive at 0.5% after an 8.7% core decline the prior quarter.
Gross margin expanded to 47.8% from 41.2% a year earlier, and on an adjusted basis rose to 49.7% from 46.4%, reversing the compression seen in the second quarter when tariffs, inventory write-offs and product mix pushed margin down to 47.5% from 49.0%. Adjusted EBITDA margin rose to 20.2% from 18.0% a year ago, though it remained below the third quarter's 22.8% and left the full fiscal year's margin at 20.4%, down slightly from 20.6%. Neogen posted a net loss of $11.3 million, or $0.05 a share, sharply narrower than the $612.2 million loss, or $2.82 a share, in the year-ago quarter, when results were weighed down by a $597.9 million goodwill impairment. Adjusted earnings per share doubled to $0.09 from $0.05, though full-year adjusted EPS slipped to $0.32 from $0.33. Free cash flow improved in every quarter of the fiscal year, moving from a negative $13.1 million in the second quarter to $26.2 million in the fourth and leaving the full year at a positive $31.9 million.
One product line continued to weigh on the top line. Rodent Control, Insect Control & Disinfectants, a category Neogen had reported as "Biosecurity Products" in its two prior releases, fell 65.5% year-over-year within Food Safety and 22.3% within Animal Safety, extending declines of 66.9% and 37.0%, respectively, in the third quarter. Domestic revenue fell 2.0% to $110.3 million while international revenue rose 1.8% to $115.0 million, continuing a full-year pattern in which the domestic business underperformed international operations.
Neogen issued fiscal 2027 guidance for the first time, projecting revenue of $880 million to $885 million, up from $870.4 million in fiscal 2026, and Adjusted EBITDA of $180 million to $182 million, up from $177.8 million, implying core growth of roughly 3%. The guidance embeds $92 million of revenue and $13 million of Adjusted EBITDA from its Genomics division, which is being sold to Zoetis for $160 million gross, or roughly $140 million net, in a deal expected to close in the first half of fiscal 2027. Regulatory review of that transaction escalated in July, with Australia's Competition and Consumer Commission and New Zealand's Commerce Commission both moving into second-phase reviews.
Neogen also firmed up the timeline for its Petrifilm manufacturing transition, stating the first fully validated SKU is expected by the end of August 2026 with the transition itself beginning in November 2026, a year earlier than the November fiscal 2027 phrasing used in the prior quarter's release.
Total debt stood at $793.7 million against cash of $185.5 million, for net debt of $608.2 million, a disclosure that supports the leverage target management set last quarter of bringing net debt below three times Adjusted EBITDA by the end of calendar 2026. Cash rose $56.5 million sequentially to $185.5 million in the quarter, helped by the absence of any debt repayment, a contrast to the $100.0 million repayment Neogen made in the comparable prior-year period.