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Neogen Corporation (NEOG - Free Report) reported third-quarter fiscal 2023 earnings per share (EPS) of 12 cents, down 20% year over year. However, the reported figure topped the Zacks Consensus Estimate by a remarkable 200%.
Revenues for the third quarter increased 70.2% on a year-over-year basis to $218.2 million. Core revenue growth was registered at 4%, while acquisitions contributed 68.1%. However, the figure missed the Zacks Consensus Estimate by 1.6%.
The third quarter was the 123rd out of the past 129 quarters in which Neogen reported a year-over-year revenue increase.
Segments in Detail
Within segments, Neogen registered Food Safety revenues of $151.5 million, reflecting 141.5% year-over-year growth. The 5.8% core growth was led by the Culture Media & Other category, which benefited from a large order from a vaccine manufacturer. The revenue growth was also led by 139.1% from acquisitions and a foreign currency headwind of 3.4%.
Neogen Corporation Price, Consensus and EPS Surprise
Revenues from Animal Safety were $66.7 million, up 1.9% year over year, consisting of 2.2 % core growth and a foreign currency headwind of 0.3%. The core growth was led by Neogen’s portfolio of biosecurity products, largely driven by insect control share gains in the animal protein market.
Revenues from the worldwide genomics reported core growth of 7.7%. This was driven by volume increases in global beef markets, partially offset by declines in testing due to persistent pandemic-related lab closures in China.
Margin Details
Neogen’s fiscal third-quarter gross profit increased 88.05% year over year to $108 million. The gross margin expanded 470 basis points (bps) to 49.5%. The increase was led by the addition of the higher margin business in the 3M Food Safety transaction.
Sales and marketing expenses rose 79.7% to $38.6 million, whereas administrative expenses rose 85.7% from the prior year’s quarter to $46 million. Research & development expenses were $7.2 million, up 59.1% year over year. Operating costs totaled $92.3 million, up 80.8% from the last year’s quarter.
The company reported an operating profit of $15.7 million for the quarter under review. The adjusted operating margin expanded 221 bps to 7.2%.
Cash Position
Neogen exited the fiscal third quarter with cash and investments of $183.2 million, down from $276.3 million at the end of the fiscal second quarter. The company’s non-current liabilities included gross debt of $900 million compared with $940 million at the end of the fiscal second quarter.
In February 2023, the company completed the strategic bolt-on acquisition of Corvium Inc., the Virginia-based provider of the software supporting Neogen Analytics.
Our Take
Neogen exited the third quarter of fiscal 2023 with better-than-expected earnings and a revenue miss. NEOG delivered core growth across all product categories due to a diversified portfolio, with the strongest growth reported in sales of biosecurity products. The performance of the recently added Food Safety business is also expected to gain momentum, citing several long-term secular tailwinds.
The expansion in both margins is also encouraging. Additionally, the recent acquisition of Corvium allows NEOG to embed Neogen Analytics software in the market by launching additional software modules and digital mapping capabilities in the near future.
Meanwhile, key product lines in the Food Safety business are adversely affected by the production backlog situation at NEOG’s transition manufacturing partner. By addressing root causes and reducing process constraints, the company expects to come up with favorable resolutions over the coming quarters.
Zacks Rank and Key Picks
Neogen currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are ConforMIS , Avanos Medical (AVNS - Free Report) and LivaNova (LIVN - Free Report) .
ConforMIS, carrying a Zacks Rank #2 (Buy), reported a fourth-quarter fiscal 2023 loss of 51 cents per diluted share, beating the Zacks Consensus Estimate by 72.2%. Revenues of $17 million outpaced the consensus mark by 25.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ConforMIS has an estimated growth rate of 11.8% for the next year. CFMS’ earnings missed estimates in three of the trailing four quarters and beat the same in once, the average being 4.23%.
Avanos Medical, having a Zacks Rank #2, reported a fourth-quarter fiscal 2023 adjusted EPS of 60 cents, which beat the Zacks Consensus Estimate by 25%. Revenues of $218 million outpaced the consensus mark by 1.11%.
Avanos Medical has an estimated growth rate of 19.05% for the next year. AVNS’ earnings surpassed estimates in all the trailing four quarters, the average being 11.01%.
LivaNova reported fourth-quarter fiscal 2023 adjusted earnings of 81 cents per share, beating the Zacks Consensus Estimate by 12.5%. Revenues of $275 million surpassed the Zacks Consensus Estimate by 4.12%. It currently carries a Zacks Rank #2.
LivaNova has an estimated growth rate of 17.83% for the next year. LIVN’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average surprise being 2.62%.
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Neogen (NEOG) Q3 Earnings Beat Estimates, Revenues Rise Y/Y
Neogen Corporation (NEOG - Free Report) reported third-quarter fiscal 2023 earnings per share (EPS) of 12 cents, down 20% year over year. However, the reported figure topped the Zacks Consensus Estimate by a remarkable 200%.
Revenues for the third quarter increased 70.2% on a year-over-year basis to $218.2 million. Core revenue growth was registered at 4%, while acquisitions contributed 68.1%. However, the figure missed the Zacks Consensus Estimate by 1.6%.
The third quarter was the 123rd out of the past 129 quarters in which Neogen reported a year-over-year revenue increase.
Segments in Detail
Within segments, Neogen registered Food Safety revenues of $151.5 million, reflecting 141.5% year-over-year growth. The 5.8% core growth was led by the Culture Media & Other category, which benefited from a large order from a vaccine manufacturer. The revenue growth was also led by 139.1% from acquisitions and a foreign currency headwind of 3.4%.
Neogen Corporation Price, Consensus and EPS Surprise
Neogen Corporation price-consensus-eps-surprise-chart | Neogen Corporation Quote
Revenues from Animal Safety were $66.7 million, up 1.9% year over year, consisting of 2.2 % core growth and a foreign currency headwind of 0.3%. The core growth was led by Neogen’s portfolio of biosecurity products, largely driven by insect control share gains in the animal protein market.
Revenues from the worldwide genomics reported core growth of 7.7%. This was driven by volume increases in global beef markets, partially offset by declines in testing due to persistent pandemic-related lab closures in China.
Margin Details
Neogen’s fiscal third-quarter gross profit increased 88.05% year over year to $108 million. The gross margin expanded 470 basis points (bps) to 49.5%. The increase was led by the addition of the higher margin business in the 3M Food Safety transaction.
Sales and marketing expenses rose 79.7% to $38.6 million, whereas administrative expenses rose 85.7% from the prior year’s quarter to $46 million. Research & development expenses were $7.2 million, up 59.1% year over year. Operating costs totaled $92.3 million, up 80.8% from the last year’s quarter.
The company reported an operating profit of $15.7 million for the quarter under review. The adjusted operating margin expanded 221 bps to 7.2%.
Cash Position
Neogen exited the fiscal third quarter with cash and investments of $183.2 million, down from $276.3 million at the end of the fiscal second quarter. The company’s non-current liabilities included gross debt of $900 million compared with $940 million at the end of the fiscal second quarter.
In February 2023, the company completed the strategic bolt-on acquisition of Corvium Inc., the Virginia-based provider of the software supporting Neogen Analytics.
Our Take
Neogen exited the third quarter of fiscal 2023 with better-than-expected earnings and a revenue miss. NEOG delivered core growth across all product categories due to a diversified portfolio, with the strongest growth reported in sales of biosecurity products. The performance of the recently added Food Safety business is also expected to gain momentum, citing several long-term secular tailwinds.
The expansion in both margins is also encouraging. Additionally, the recent acquisition of Corvium allows NEOG to embed Neogen Analytics software in the market by launching additional software modules and digital mapping capabilities in the near future.
Meanwhile, key product lines in the Food Safety business are adversely affected by the production backlog situation at NEOG’s transition manufacturing partner. By addressing root causes and reducing process constraints, the company expects to come up with favorable resolutions over the coming quarters.
Zacks Rank and Key Picks
Neogen currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are ConforMIS , Avanos Medical (AVNS - Free Report) and LivaNova (LIVN - Free Report) .
ConforMIS, carrying a Zacks Rank #2 (Buy), reported a fourth-quarter fiscal 2023 loss of 51 cents per diluted share, beating the Zacks Consensus Estimate by 72.2%. Revenues of $17 million outpaced the consensus mark by 25.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ConforMIS has an estimated growth rate of 11.8% for the next year. CFMS’ earnings missed estimates in three of the trailing four quarters and beat the same in once, the average being 4.23%.
Avanos Medical, having a Zacks Rank #2, reported a fourth-quarter fiscal 2023 adjusted EPS of 60 cents, which beat the Zacks Consensus Estimate by 25%. Revenues of $218 million outpaced the consensus mark by 1.11%.
Avanos Medical has an estimated growth rate of 19.05% for the next year. AVNS’ earnings surpassed estimates in all the trailing four quarters, the average being 11.01%.
LivaNova reported fourth-quarter fiscal 2023 adjusted earnings of 81 cents per share, beating the Zacks Consensus Estimate by 12.5%. Revenues of $275 million surpassed the Zacks Consensus Estimate by 4.12%. It currently carries a Zacks Rank #2.
LivaNova has an estimated growth rate of 17.83% for the next year. LIVN’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average surprise being 2.62%.