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Neogen (NEOG) is soaring after delivering a beat-and-raise Q2 (Nov) report this morning. The EPS beat was modest for the food safety and animal health diagnostics provider, while revenue declined 2.9% yr/yr to $224.7 mln but came in well ahead of expectations. Additionally, the company raised its FY26 revenue guidance to $845-855 mln from $820-840 mln.

• Importantly, NEOG returned to positive core growth across both segments for the first time in four quarters, with revenue up 2.9% on a core basis. On a reported basis, results were held back by divestiture/discontinued-product headwinds, largely tied to the sale of its Cleaners & Disinfectants business.
• In Food Safety, revenue increased 0.8% to $165.6 mln, up 4.1% on a core basis, with the strongest growth in Indicator Testing and Culture Media led by Sample Collection and Petrifilm, which recovered nicely from Q1 and returned to high-single digit growth.
• In Animal Safety, revenue declined 11.8% yr/yr to $67.0 mln, but was roughly flat on a core basis, as strength in Biosecurity, led by higher insect control sales and some market share gains, was offset by softer Veterinary Instruments and Life Sciences results.
• Gross margin improved 210 bps sequentially to 47.5% and adjusted EBITDA margin increased 470 bps to 21.7%, reflecting better volume, lower tariff costs, and recent cost actions.
• On the macro front, management said end markets remain challenged, with food production volumes still down yr/yr across major producers and U.S. production animal herds near record lows, though it noted some signs these headwinds could begin to ease as it moves into FY27.

Briefing.com Analyst Insight

After what has been a rough few years for NEOG, shares are starting to show some signs of improvement. The company now has new leadership in place, while divestitures have helped streamline the portfolio and support deleveraging, with the Genomics sale process still on track. While the raised guidance is certainly encouraging, what really stood out was the return to positive core growth for the first time in four quarters. NEOG also expects further operational progress in the second half, including Sample Collection becoming a positive gross profit contributor as efficiency and inventory initiatives take hold. The macro backdrop remains challenging, but management pointed to potential improvement into FY27 as food production volumes stabilize and the cattle cycle begins to turn. For now, the new team appears to be executing well against its priorities, and the return to growth alongside the guidance raise is helping drive today's sharp move higher.