Neogen Corporation (NASDAQ:NEOG) – Neogen’s Third-Quarter Earnings Fall Short of Expectations for Rising Raw Materials and Freight Costs

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Neogen Corporation (NASDAQ: NEOG) Third-quarter FY22 sales rose 9.9% year-over-year to $128.2 million, missing the consensus of $129.99 million.

  • Food Safety segment revenue reached $62.7 million, +7% (+4% on an organic basis).
  • Sales of the new AccuPoint Advanced NG portable health monitoring system led to a 16% increase in sales of the general health product line.
  • The Soleris rapid general microbial testing product line saw a 10% increase in equipment sales, and Listeria Sales of the Right Now 60-minute test system were up 13%.
  • Related: 3M agrees to combine food safety activities with Neogen.
  • Animal Safety segment sales increased 12% year-on-year to $65.5 million (+9% organic).
  • Growth was driven by strong sales of veterinary instruments, up 36% thanks to market share gains and private label activities.
  • Pet care products were up 12%, with growth in vitamin injections and antibiotics.
  • Gross margins were 44.8%, compared to 46.1% a year ago. Ongoing supply chain issues and the current inflationary environment continued to negatively impact raw material costs and transportation costs.
  • Additionally, a shift in product mix to animal safety products, which typically have lower gross margins, negatively impacted gross margins for the period.
  • The company reported adjusted EPS of $0.13 missing the consensus of $0.15.
  • price action: NEOG shares are down 8.60% at $30.84 in the last check trading session on Thursday.
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