Neogen (NEOG) Q2 2025 earnings summary

Executive summary

• Q2 2025 revenue reached $231.3 million, up 0.7% year-over-year, with core revenue growth in both Food Safety and Animal Safety segments; share recovery efforts and restructuring actions are underway to improve profitability and focus, especially in Genomics.

• Reported net loss of $456.3 million due to a $461.4 million non-cash goodwill impairment tied to the 3M Food Safety acquisition and integration challenges.

• Adjusted Net Income was $24.4 million ($0.11 per diluted share), nearly flat year-over-year, with Adjusted EBITDA at $51.4 million (22.2% margin), down from 24.0% a year ago.

• Free cash flow improved by $80 million sequentially, driven by working capital efficiency and lower capex.

• Leadership changes include the CFO also taking on COO responsibilities, and a search for a new Chief Commercial Officer is underway.

Financial highlights

• Q2 revenue was $231.3 million, up 1% year-over-year; core revenue grew 3.5% year-over-year despite FX headwinds.

• Food Safety segment Q2 revenue was $164.2 million (flat year-over-year); core growth was 3.6%.

• Animal Safety segment Q2 revenue was $67.0 million, up 2.8% year-over-year; core growth was 3.2%.

• Gross margin was 49.0% (down from 50.9%); excluding integration/restructuring, gross margin was 52.2%.

• Adjusted EBITDA margin was 22.2%, up 210 bps sequentially but down year-over-year due to transition and distribution costs.

• Net loss for Q2 was $(456.3) million, driven by the goodwill impairment.

Outlook and guidance

• FY2025 revenue guidance updated to $905–$925 million, reflecting FX headwinds, production delays, and Genomics restructuring.

• Adjusted EBITDA for FY2025 now expected at $205–$215 million, with margin improvement anticipated in H2 as cost efficiencies increase.

• Capital expenditures for FY2025 expected at ~$85 million, with $55 million for 3M Food Safety integration and new facility construction.

• Second-half revenue expected to be weighted toward Q4, with margin improvement from restructuring and operational efficiencies.

• Effective tax rate projected at 22%–23%.