Neogen’s Laboratory of Uncertainty: When Food Safety Meets Volatility

Food safety may be a science, but for Neogen Corporation, the last six months have resembled an experiment gone awry—one where the controls failed and the variables multiplied.

“Safe” Bets and Sudden Slides

Once a market darling riding the wave of global demand for diagnostics, Neogen Corporation (NASDAQ: NEOG) has seen its stock sliced by more than half in just six months, plummeting 47.3%—and a startling 68.9% over the past year, even as the S&P 500 gained nearly 10% YTD. The promise of food chain innovation collided headlong with the chaos of boardroom musical chairs, integration missteps, and a market that has lost its appetite for excuses.

Impairments and Integration: The $1 Billion Question

The numbers tell the story in bold, red ink. For fiscal 2025, Neogen reported a net loss of $1.09 billion, a figure swollen by a $597 million goodwill impairment—the legacy of its ambitious $5.3 billion acquisition of 3M’s Food Safety Division in 2022. The integration, meant to catapult Neogen into a leadership role, instead triggered a chain reaction of internal control issues, class-action lawsuits, and quarterly revenue misses. Q4 revenues dropped to $225.5 million, down 4.8% year-on-year, with full-year revenues falling 3.2% to $894.7 million.

Boardroom Alchemy: CEO in, CEO Out

Leadership turnover added to the volatility. In April, CEO John Adent stepped aside amid mounting pressure, replaced by Mike Nassif in July. Meanwhile, Andrea Wainer joined the board to inject diagnostics expertise, while a special committee was formed to hunt for further stability. But the market remains skeptical—when the CEO’s chair is a revolving door, even the best ideas struggle to gain traction.

The Genomics Dragnet

Neogen’s genomics division, once its crown jewel, has become an anchor. Core revenue growth registered a meager 0.2% in Q3, with genomics in decline for seven consecutive quarters. The Animal Safety segment, battered by trade uncertainty and tariffs, also failed to deliver. As global supply chains snarl and inflation nips at margins, Neogen’s operating metrics have suffered: the trailing twelve-month operating margin collapsed to -118.6%, while net income margin cratered to -122.1%—a far cry from the double-digit profitability investors crave.

Divestitures: Cutting to the Core

In a bid to stanch the bleeding, Neogen offloaded its cleaners and disinfectants business to Kersia Group for $130 million—using the proceeds to shave gross debt from $900 million to $800 million. The move is strategic, narrowing focus to diagnostics and animal health, but it also signals a retreat from what was once considered synergistic growth.

Wall Street’s Jury: Hope, Hesitation, and High Risk

Despite the carnage, the analyst consensus is a cautious “Buy”—but with an average price target of $7.50, only because the stock now languishes near $5.22. Institutional ownership remains high (118.85%), with Blackrock Inc. leading the pack, but insider selling and a bruising lawsuit over the 3M deal cast long shadows. The upcoming verdict on the class-action suit, due September 2025, is a looming wildcard.

Sector Currents: Tides Lift and Ground the Ship

Food safety is a secular growth story—the global testing market is projected to grow from $25.4 billion in 2025 to $36.5 billion by 2030. Yet, the sector’s fragmentation and tightening regulations mean only the nimblest will thrive. Neogen’s EBITDA margin, at 20.6% for FY25, is respectable but shrinking. Its forward P/E of under 11x points to deep value, but only if the company stabilizes and delivers on promised margin expansion (200bps by 2026).

Conclusion: From Chaos, a Chance?

Neogen’s recent history reads like a cautionary tale: a blend of ambition, miscalculation, and the relentless pressure of public markets. The company’s core business in diagnostics and food safety remains relevant and essential. But with debt overhang, integration overhang, and a sector that rewards precision, Neogen must now prove that it can turn volatility into opportunity—before the next experiment blows up in the lab.