Life sciences company Neogen (NASDAQ: NEOG) reported Q3 CY2025 results exceeding the market’s revenue expectations, but sales fell by 3.6% year on year to $209.2 million. The company’s full-year revenue guidance of $830 million at the midpoint came in 1.3% above analysts’ estimates. Its non-GAAP profit of $0.04 per share was in line with analysts’ consensus estimates.

Is now the time to buy Neogen? Find out by accessing our full research report, it’s free for active Edge members.

“I see tremendous opportunity ahead to leverage Neogen’s strong, longstanding leadership in food and animal safety,” said Mike Nassif, Neogen’s Chief Executive Officer and President.

Company Overview

Founded in 1981 and operating at the intersection of food safety and animal health, Neogen (NASDAQ: NEOG) develops and manufactures diagnostic tests and related products to detect dangerous substances in food and pharmaceuticals for animal health.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, Neogen’s sales grew at a solid 15.8% compounded annual growth rate over the last five years. Its growth beat the average healthcare company and shows its offerings resonate with customers.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Neogen’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 1.8% over the last two years.

This quarter, Neogen’s revenue fell by 3.6% year on year to $209.2 million but beat Wall Street’s estimates by 2.6%.

Looking ahead, sell-side analysts expect revenue to decline by 7.3% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will see some demand headwinds.

Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend.

Operating Margin

Neogen’s high expenses have contributed to an average operating margin of negative 23.2% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

Looking at the trend in its profitability, Neogen’s operating margin decreased significantly over the last five years. The company’s two-year trajectory also shows it failed to get its profitability back to the peak as its margin fell by 127.2 percentage points. This performance was poor no matter how you look at it - it shows its expenses were rising and it couldn’t pass those costs onto its customers.

This quarter, Neogen generated a negative 7.7% operating margin.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Neogen, its EPS declined by 12.2% annually over the last five years while its revenue grew by 15.8%. This tells us the company became less profitable on a per-share basis as it expanded.

Diving into the nuances of Neogen’s earnings can give us a better understanding of its performance. As we mentioned earlier, Neogen’s operating margin declined by 137.5 percentage points over the last five years. Its share count also grew by 104%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

In Q3, Neogen reported adjusted EPS of $0.04, down from $0.07 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 9.1%. Over the next 12 months, Wall Street expects Neogen’s full-year EPS of $0.30 to grow 1.1%.

Key Takeaways from Neogen’s Q3 Results

We enjoyed seeing Neogen beat analysts’ revenue expectations this quarter. We were also glad its full-year revenue guidance slightly exceeded Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 9.6% to $6.38 immediately after reporting.

Neogen had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.