Neogen Corp. (NASDAQ:NEOG) saw its shares rise sharply following the release of its second-quarter fiscal 2026 financial results, which showed performance metrics that outpaced market expectations. The company reported adjusted earnings of 10 cents per share, beating the consensus estimate of 6 cents. Sales totaled $224.69 million, marking a 2.8% decrease compared with the same period last year, but still substantially above the anticipated $207.85 million figure. Core revenue increased by 2.9%, demonstrating underlying business strength despite the overall sales decline.
Mike Nassif, Neogen's CEO and President, outlined the company's strategic priorities as it looks toward the latter half of fiscal 2026. He emphasized continued efforts on integrating Petrifilm, optimizing manufacturing processes related to sample collection, and enhancing the company's solutions-based sales approach. Nassif also highlighted a commitment to ongoing evaluation and adjustment of resource allocation to improve operational efficiency across the enterprise.
The company’s gross margin in the quarter was reported at 47.5%, lower than the 49.0% recorded a year prior. This contraction was primarily attributed to several factors, including increased tariff expenses, inventory write-offs, and an unfavorable shift in product mix. Neogen reported adjusted EBITDA earnings of $48.7 million for the quarter, yielding a margin of 21.7%, a slight decrease from $51.4 million and 22.2% margin in the previous year’s comparable period.
From an analytical perspective, William Blair maintained a Market Perform rating on Neogen, noting that with shares trading at approximately 15 times their 2026 EBITDA estimate, the company is in the early stages of a turnaround. The analyst acknowledged signs of improvement under new leadership while cautiously evaluating the sustainability of these gains.
Segment Performance
Neogen's Food Safety segment contributed $165.6 million in revenue during the second quarter, representing a modest 0.8% year-over-year increase. This growth was supported primarily by stronger demand in Indicator Testing and Culture Media products, propelled by increased sales of sample collection products and continued robust performance of Petrifilm offerings.
Conversely, the Animal Safety segment reported a revenue decline of 11.8%, generating $59.1 million. The segment’s decrease stemmed largely from reduced sales of needles and syringes within the Veterinary Instruments & Disposables category. Additionally, the Life Sciences category faced challenges related to the timing of substrate purchase fulfillment, which further impacted revenue results.
Outlook and Guidance
Neogen updated its fiscal 2026 sales guidance, now projecting revenue between $845 million and $855 million, a revision upward from the earlier range of $820 million to $840 million and above the consensus forecast of $823.30 million. The company, known for its broad range of tests targeting cattle, swine, sheep, and goat diseases, anticipates adjusted EBITDA in the vicinity of $175 million, narrowing the previous guidance bracket between $165 million and $175 million.
Capital expenditures for the fiscal year are expected to remain steady at approximately $50 million, supporting ongoing investment in operational enhancements and growth initiatives.
Market Reaction
Following the announcement, Neogen's stock surged by 29.34%, reaching $9.54 as of Thursday’s trading session, based on Benzinga Pro data. This impressive price movement reflects investor optimism fueled by the company’s outperformance against expectations and raised fiscal outlook.