Neogen (NASDAQ:NEOG) Surpasses Projections with Robust Q4 CY2025 Results, Shares Surge 19.8%

Neogen Surpasses Revenue Expectations in Q4 CY2025

Neogen (NASDAQ:NEOG), a company specializing in life sciences, delivered fourth-quarter results for calendar year 2025 that exceeded analysts’ revenue forecasts, despite a 2.8% decline in sales compared to the previous year, reaching $224.7 million. The company’s updated full-year revenue outlook stands at $850 million (midpoint), which is 3% higher than what Wall Street anticipated. Adjusted earnings per share came in at $0.10, outperforming consensus estimates by 50%.

Highlights from Neogen’s Q4 CY2025 Report

• Revenue: $224.7 million, surpassing analyst expectations of $209.7 million (down 2.8% year-over-year, 7.2% above estimates)
• Adjusted EPS: $0.10, exceeding the $0.07 forecast (50% higher than expected)
• Adjusted EBITDA: $48.75 million, topping the $39.17 million estimate (margin of 21.7%, 24.5% above consensus)
• Full-Year Revenue Guidance: Raised to $850 million (midpoint), up from $830 million, a 2.4% increase
• Full-Year EBITDA Guidance: $175 million (midpoint), above the $165.8 million analyst estimate
• Operating Margin: -2.4%, a significant improvement from -198% in the same period last year
• Free Cash Flow Margin: 3.5%, down from 10% in the prior year’s quarter
• Market Cap: $1.60 billion

About Neogen

Established in 1981, Neogen operates at the intersection of food safety and animal health. The company creates diagnostic tools and related products designed to identify harmful substances in food and pharmaceuticals, supporting animal health and safety.

Examining Revenue Trends

Assessing a company’s long-term growth can reveal much about its underlying strength. While even weaker businesses may have occasional strong quarters, truly outstanding companies demonstrate consistent expansion over time. Neogen has achieved a robust 15.2% compound annual growth rate in sales over the past five years, outpacing the average healthcare firm and indicating strong market demand for its products.

Neogen Quarterly Revenue

While long-term growth is crucial, it’s also important to consider recent shifts, especially in a dynamic sector like healthcare. Over the past two years, Neogen’s revenue trajectory has reversed, with annualized declines of 2.1%, diverging from its previous growth trend.

Neogen Year-On-Year Revenue Growth

For the latest quarter, revenue dropped 2.8% year-over-year to $224.7 million, but still exceeded analyst expectations by 7.2%.

Looking forward, analysts predict Neogen’s revenue will decrease by 5.3% over the next year, a steeper decline than seen in the previous two years. This outlook suggests the company may face challenges in maintaining demand for its offerings.

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Profitability: Operating Margin

Operating margin is a vital indicator of a company’s core profitability, reflecting earnings before taxes and interest. Over the last five years, Neogen’s average operating margin has been a negative 23.2%, highlighting persistent cost challenges. Unprofitable healthcare firms warrant close scrutiny, as they may struggle to weather industry downturns.

Neogen’s profitability has deteriorated, with its operating margin dropping by 85.2 percentage points over five years. Over the past two years, the margin fell by 79.2 percentage points, indicating rising costs that the company was unable to offset through pricing power.

Neogen Trailing 12-Month Operating Margin (GAAP)

In the most recent quarter, Neogen’s operating margin improved to -2.4%.

Earnings Per Share (EPS) Analysis

While revenue growth is important, changes in earnings per share (EPS) reveal how profitable that growth is. Sometimes, companies boost sales through heavy spending, which can erode profitability.

Despite strong revenue gains, Neogen’s EPS has declined at an average annual rate of 12.6% over the past five years, suggesting that the company’s expansion has not translated into improved per-share earnings.

Neogen Trailing 12-Month EPS (Non-GAAP)

A closer look at Neogen’s financials shows that, although its operating margin improved this quarter, it has fallen sharply over the past five years. Additionally, the company’s share count has increased by 104%, resulting in shareholder dilution and reduced efficiency in managing operating expenses.

Neogen Diluted Shares Outstanding

For Q4, Neogen posted adjusted EPS of $0.10, slightly below the $0.11 reported a year ago, but still comfortably above analyst projections. Looking ahead, Wall Street expects full-year EPS to reach $0.29, representing a 34.5% increase over the next 12 months.

Summary and Outlook

Neogen delivered a strong quarter, surpassing both revenue and EPS expectations and raising its revenue guidance above consensus. The results were well received, with shares jumping 19.8% to $8.84 following the announcement.

While Neogen’s latest performance was impressive, investors should also weigh factors such as valuation and the company’s overall business fundamentals before making a decision.