NEOG 10-K & 10-Q changes, risk factors and insider trading

The integrationtransition of thePetrifilm manufacturing operations from 3M Food Safety business withto Neogen presents challenges, and the failure to successfully complete the transition and integrate the 3M FoodFSD Safetywith businessNeogen could have a material adverse effect on our business, financial condition and results of operations. .

Although significant progress has been made to date in the integration of the 3M Food Safety businessFSD with Neogen, theresubstantial is much thatwork remains to be accomplished, particularly incomplete the integrationtransition of thePetrifilm manufacturing operations of thefrom 3M Food Safety business with Neogen. There is a significant degree of difficulty inherent in the process of integrating the 3M Food Safety business withto Neogen. The difficultiessuccessful execution of this manufacturing transition is complex and involves significant operational, technical and regulatory activities while continuing to support ongoing business operations. Challenges include:

Our international operations subject us to a multitude of different tariffs and trade policies, some of which may be discriminatory or conflicting. As a result of the newcurrent administration's trade policy, tariffs have increased and may continue to increase our material input costs. We do not expect to be able to fully mitigate the impact of these increased costs or pass price increases on to our customers. In addition, new and increased tariffs as well as uncertainty regarding global trade policies generally have also contributed to softened demand for certain of our products. These factors are expected to continue to negatively impact our results of operations and financial condition in the near term, and continued and/or increasing trade restrictions, retaliatory trade measures and additional tariffs could further exacerbate the problem.

If we are unable to successfully manage the risks associated with expanding our global business or adequately manage operational risks of our existing international operations, these risks could have a material adverse effect on our growth strategy into new geographical markets, reputation, business, results of operations, financial condition and cash flows. In addition, the impact of such risks could be outside of our control and could decrease our ability to sell products internationally, which could adversely affect our business, financial condition, results of operations and cash flows. We continue to monitor the impact of the conflict between Russia and Ukraine,Ukraine and conflict in the Middle East. While it is difficult to anticipate the effect the sanctions announcedrelated to these conflicts that have been implemented to date could have on us, they have contributed to volatility in global energy markets, including increases in oil prices, which may increase our transportation and shipping cost. In addition, any further sanctions imposed or actions taken by the U.S. or other countries,countries could affect the global price and availability of raw materials, reduce our sales and earnings or otherwise have an adverse effect on our business and results of operationsoperations.

We rely on several information systems throughout our company, as well as those of our third-party business partners, to provide access to our web-based products and services, keep financial records, analyze results of operations, process customer orders, manage inventory, process shipments to customers, store confidential or proprietary information and operate other critical functions. We also rely on third-party cloud infrastructure providers, software-as-a service (SaaS) platforms, and other hosted solutions for certain business-critical applications. An outage, service disruption, or security incident at one of these third-party providers could interrupt our operations, compromise our data, or impair our ability to serve customers, regardless of whether our own systems are directly affected. Although we employ system backup measures and engage in information system redundancy planning and processes, such measures, as well as our current disaster recovery plan, may be ineffective or inadequate to address all vulnerabilities.vulnerabilities, including those arising from our dependence on third-party cloud and SaaS providers over whom we have limited control. Further, our information systems and our business partners’ and suppliers’ information systems may be vulnerable to attacks by hackers and other security breaches, including computer viruses and malware, through the internet (including via devices and applications connected to the internet), email attachments and persons with access to these information systems, such as our employees or third parties with whom we do business. As information systems and the use of software and related applications by us, our business partners, suppliers and customers become more cloud-based, there has been an increase in global cybersecurity vulnerabilities and threats, including more sophisticated and targeted cyber-related attacks that pose a risk to the security of our information systems and networks and the confidentiality, availability and integrity of data and information.

OurWe business sellssell many products through distributors, which presents risks that could negatively affect our operating results.

We sell many of our products, both within and outside of the U.S., through independent distributors. As a result, we are dependent on distributors to sell our products and assist us in promoting and creating demand for our products. Our distributors sometimesmay offer products from several different companies, and those distributors may carry our competitors’ products and promote our competitors’ products over our own. We have limited ability, if any,ability to cause our distributors to devote adequate resources to promoting, marketing, selling and supporting our products. We cannot assure that we will be successful in maintaining and strengthening our relationships with our distributors or establishing relationships with new distributors who have the ability to market, sell, and support our products effectively. We may rely on one or more key distributors for a product or region, and the loss of one or more of these distributors could reduce our revenue. Distributors could face financial difficulties, including bankruptcy, which could impact our ability to collect our accounts receivable and negatively impact our financial results. In addition, violations of anti-bribery and anti-corruption or similar laws by our distributors could have a material impact on our business. Further, termination of a distributor relationship could result in increased competition in the applicable jurisdiction. Failing to manage the risks associated with our use of distributors could reduce sales, increase expenses and weaken our competitive position, which could have a negative impact on our operating results.

Our domestic and international sales and operations are subject to risks associated with changes in laws, regulations and policies (including environmental and employment regulations, export/import laws, tax policies and other similar programs). Failure to comply with any of these laws, regulations and policies could result in civil and criminal as well wasas monetary and non-monetary penalties, and damage to our reputation. In addition, we cannot provide assurance that our costs of complying with new and evolving regulatory reporting requirements and current or future laws, including environmental protection, employment, data security, data privacy and health and safety laws, will not exceed our estimates. While these risks and the impact of these risks are difficult to predict, any one or more of them could adversely affect our business, results of operations and reputation.

OurOn TermJune Loan,30, comprised2022, Neogen Food Safety Corporation entered into a credit agreement consisting of oura five-year senior secured term loan facility (“Term Loan Facility”) and a five-year senior secured revolving facility (“Revolving Credit Facility”). Our Revolving Credit Facility and Term Loan Facility,Facility contains customary affirmative and negative covenants, including financial covenants based on leverage and cash interest expense coverage ratios and limitations on our ability to make certain investments, declare or pay dividends or distributions on capital stock, redeem or repurchase capital stock and certain debt obligations, incur liens, incur indebtedness, or merge, make certain acquisitions or sales of assets. In April 2025, Neogen Food Safety Corporation entered into the Amendment No. 1 and Refinancing Amendment to Credit Agreement (the “Refinancing Amendment”), which amended the existing credit agreement, dated June 30, 2022. The Refinancing Amendment, among other things, provides for (i) a new tranche of senior secured term loans in an aggregate principal amount of $450.0 million (the “2025 Term Loans”) and (ii) a revolving credit facility in an aggregate principal amount of $250.0 million, against which $100.0 million has been drawn. The 2025 Term Loans will mature on April 4, 2030.

Our outstanding 8.625% senior notes due 2030, which were issued by Neogen Food Safety Corporation on July 20, 2022 and became guaranteed on a senior unsecured basis by the Company and certain wholly owned domestic subsidiaries upon the closing of the Transaction on September 1, 2022 (the "Senior Notes") also include customary events of default. A violation of any of these credit-related covenants or agreements could result in a default under one or more of these agreements, which could permit the lenders or note holders, as applicable, to accelerate repayment of any borrowings or notes outstanding at that time, levy on any collateral securing such indebtedness, and/or taking other actions designed to protect our ability to repay our indebtedness. Any such event would materially and adversely affect our ability to operate our business and our results of operations and financial condition.

We have no current plans to start paying dividends in the near-term.near term.

Our success and ability to compete depends, in part, on our ability to protect, in the U.S.establish and other countries, our products by establishing and maintainingmaintain intellectual property rights capable of protecting our technology and products.products in the U.S and other countries. Patent applications filed by us may not result in the issuance of patents or, if granted, may not be granted in a form that will be commercially advantageous to us. Even if granted, patents can be challenged, narrowed, invalidated, or circumvented, which could limit our ability to stop competitors from marketing similar products or limit the length of time we have patent protection for our products. We also cannot assure that our nondisclosure agreements, together with trade secrets and other common law rights, will provide meaningful protection for our trade secrets and other proprietary information. Moreover, the laws of some foreign jurisdictions may not protect intellectual property rights to the same extent as in the U.S., and many companies have encountered significant difficulties in protecting and defending such rights in foreign jurisdictions. If we encounter such difficulties or we are otherwise precluded from effectively protecting our intellectual property rights domestically or in foreign jurisdictions, we could incur substantial costs and our business, including our business prospects, could be substantially harmed.

CertainSome of our products could be the subject of patent infringement challenges.

From time to time, we have received notices alleging that our products infringe third-party proprietary rights. Whether the manufacture, sale, or use of current products, or whether any products under development would, upon commercialization, infringe any patent claim cannot be known with certainty unless and until a court interprets a patent claim and its validity in the context of litigation. The outcome of infringement litigation is subject to substantial uncertainties, and alsoincluding the testimony of experts as to technical facts upon which experts may reasonably disagree. Our defense of an infringement litigation lawsuit could result in significant expense. Regardless of the outcome, infringement litigation could significantly disrupt our marketing, development and commercialization efforts, divert management’s attention and consume our financial resources. In the event that we are found to infringe any valid claim in a patent held by a third party, we could, among other things, be required to:

The manufacturing and distribution of our products and the performance of our services involves an inherent risk of liability claims being asserted against us. Regardless of whether we are ultimately determined to be liable or whether our products are determined to be defective, we could incur significant legal expenses not covered by insurance. In addition, product or service liability litigation could damage our reputation and impair our ability to market our products and services, regardless of the outcome. Litigation also could impair our ability to retain product liability insurance or make our insurance more expensive. Although we currently maintain liability insurance, we cannot assure that we will be able to continue to obtain such insurance on acceptable terms, or that such insurance will provide adequate coverage against all potential claims. If we are subject to an uninsured or inadequately insured product or services liability claim, our business, financial condition and results of operations could be adversely affected.

Our business is subject to tax-related external conditions, such as tax rates, tax laws, and regulations, changing political environments in the U.S. and foreign jurisdictions that impact tax examination, assessment and enforcement approaches. In addition, changes in tax laws including further regulatory developments arising from U.S. tax reform legislation and/or regulations around the world could result in a tax expense or benefit recorded to our consolidated statement of earnings. In connection with guidance such as the Base Erosion and Profit Shifting (BEPS) Integrated Framework provided by Organization for Economic Cooperation and Development (OECD), determination of multi-jurisdictional taxation rights and the rate of tax applicable to certain types of income may be subject to potential change. In particular, the OECD’s Pillar Two framework, which establishes a global minimum effective tax rate of 15%, has been adopted or is in the process of being adopted by numerous jurisdictions in which we operate. As a result, we may face incremental tax liabilities, compliance costs, or restructuring needs as Pillar Two rules take effect in applicable jurisdictions. Due to uncertainty of the regulation changes and other tax-related factors stated above, it is currently not possible to assess the ultimate impact of these actions on our financial statements.

Although we believe that our historical tax positions are sound and consistent with applicable laws, regulations and existing precedent, there can be no assurance that our tax positions will not be challenged by relevant tax authorities or that we would be successful in any such challenge. Given the complexity of our international structure, including intercompany arrangements among our U.S. and international subsidiaries, we face heightened exposure to transfer pricing challenges and adjustments by tax authorities in multiple jurisdictions. Income tax audits associated with the allocation of income and other complex issuesissues, including transfer pricing, could result in significant income tax adjustments that could negatively impact our future operating results.

In addition, any forward-looking statements represent management’s views only as of the day this Form 10-K was first filed with the Securities and Exchange Commission and should not be relied upon as representing management’s views as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views change.change, except as required by law.

Neogen Corporation and subsidiaries develop, manufacture and market a diverse line of products and services dedicated to food and animal safety. Our Food Safety segment consists primarily of diagnostic test kits and complementary products (e.g., culture media) sold to food producers and processors to detect dangerous and/or unintended substances in human food and animal feed, such as foodborne pathogens, spoilage organisms, natural toxins, food allergens, ruminant by-products, meat speciation, drug residues, pesticide residues and general sanitation concerns. The majority of the diagnostic test kits are disposable, single-use,single-use immunoassay and DNA detection products that rely on proprietary antibodies and RNA and DNA testing methodologies to produce rapid and accurate test results. Our line of food safety products also includes advanced software systems that help testers to objectively analyze and store their results and perform analysis on the results from multiple locations over extended periods.

Neogen’s Animal Safety segment is engaged in the development, manufacture, marketing and distribution of veterinary instruments, pharmaceuticals, vaccines, topicals, parasiticides, diagnostic products, rodent control products, cleaners, disinfectants, insect control products and genomics testing services for the worldwide animal safety market. The majority of these consumable products are marketed through veterinarians, retailers, livestock producers and animal health product distributors.

In recent years, input cost inflation, including increases in certain raw materials, negatively impacted operating results. InAlthough fiscal year 2024, despite a slowingthe rate of inflation,inflation therehas wereeased, we continued to face economic headwindsheadwinds, ofrelated softeningto consumer demanddemand, and higherelevated interest rates, coupled withand ongoing geopolitical tensiontensions in certain regions.regions, such as eastern Europe and the Middle East.

TheIn fiscal year 2025, restructuring actions undertaken in our genomics business haveled resulted in theto voluntary attritionrevenue of revenue,attrition, following theour strategic shift in focus already made away from smallerlower productionmargin animals.business. A portion of our genomics business also serves the companion animal market, which has been experiencing weakness recently,weakness, primarily due to the impact of continued inflation, a lower number of pet adoptions, and a higher level of customer in-sourcing. Additionally, in the second quarter of fiscal year 2026, management initiated a restructuring plan to right-size our cost base through a reduction of approximately 10% in global headcount, including both existing and planned positions, as well as additional non-labor cost reductions.

We continue to evaluate the nature and extent to whichof these issues and their impact on our business, including consolidated results of operations, financial condition and liquidity. We expect these issues to continue to impact us in fiscal year 2026.2027.

Service revenue, which consists primarily of genomics services provided to animal production and companion animal markets,markets was $97.3$102.2 million in fiscal 2025,2026, aan decreaseincrease of 5% overcompared to prior fiscal year revenue of $102.4$97.3 million. The declineincrease was primarily duedriven toby higher genomics revenue in bovine and integrated protein markets, partially offset by a combination of voluntary attrition of certain businessdecline in connection with restructuring actions, weakness in the companion animal market and a higher level of customer insourcing that offset growth in the bovine market.markets.

Neogen’s international revenues were $445.3 million in fiscal year 2026, compared to $448.7 million in fiscal year 2025, compared to $459.0 million in fiscal 2024, a decrease of 2%.1%. The decline was primarily due to athe $24.3divestiture millionof currencyour headwind,Cleaners and Disinfectants business. These decreases were partially offset by increased salesgrowth in theour Latin AmericaEuropean and EuropeanAsia regions.Pacific regions and favorable foreign exchange.

Sales and marketing expenses were $183.8$166.6 million during fiscal year 2025,2026, compared to $182.9$183.8 million during the prior fiscal year. The increasedecrease was primarily due to higherlower outbound shipping costscosts, andlower bad debt expenses, reduced costs associated with commercialthe supportdivested activities,Cleaners and Disinfectants business, and lower compensation costs associated with headcount reductions, partially offset by aincreased decreaserestructuring in fees paid to 3M for distribution servicescosts and lowerone-time royaltyproject expense.costs.

For the year ended May 31, 2025, goodwill impairment charges were $1,059.3 million .million. There were no goodwill impairment charges recorded during the priorfiscal year comparable period.2026.

Research and development expense was $21.1$18.4 million in fiscal year 2025,2026, compared to $22.5$21.1 million during the prior fiscal year. The decrease during the year is primarily the result of lower contracted services and employee costs in the Food Safety segment, as we continue to realize synergies in certain areasresulting from therestructuring 3Minitiatives, FSDpartially business.offset by increased transformation costs.

OTHER INCOME (EXPENSE) INCOME

Income tax benefit during fiscal year 20252026 was $41.1$1.1 million, compared to income tax benefit of $4.9$41.1 million in the prior fiscal year. The reduction in net tax benefit in the current fiscal year was primarily related to a reduction in pre-tax losses due to goodwill impairment expense that is deductible in certain jurisdictions, in addition to amortization expense and interest expense resulting from the FSD transaction. In addition, goodwill impairment expense that is notwas deductible in certain jurisdictions reducedin the incomeprior taxyear benefitand bythe $203gain million.on the sale or the Cleaners and Disinfectants business in the current year. In the priorcurrent fiscal year, there were no goodwill wasimpairment not impaired.charges.

The total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of May 31, 20252026 and May 31, 20242025 arewere $3.8$5.0 million and $2.7$3.8 million, respectively. Increases in unrecognized tax benefits are primarily associated with transfer pricing, IRC Section 861 expense apportionment, and research and development credits.pricing.

Tax legislation continues to evolve globally with new laws and regulations that create uncertainty in the global economy. TheIn 2021, the Organization for Economic Cooperation and Development reached agreement among over 140 countries to implement a minimum 15% tax rate on certain large multinational enterprises, commonly referred to as Pillar Two. Many countries continue to announce changes in their tax laws and regulations based on the Pillar Two framework. Additionally, U.Sthe Congress enacted theU.S. One Big Beautiful Bill Act (“OBBBA”) which includesimplemented significant provisions,changes, including tax cut extensions and modifications to the international tax framework. While we continue to evaluate the impact of these legislative changes as additional guidance becomes available, uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions. These legislative changes could have an adverse impact on our future effective tax rate, tax liabilities, and cash tax.

Revenue for the Animal Safety segment decreased $12.4$27.3 million during fiscal year 20252026 compared to the prior year. The decrease was primarily due to a $9.4 million decline in the business, $2.7$25.7 million impact from discontinued product lineslines, driven by divestiture of our Cleaners and $0.3Disinfectants business, and a $2.2 million unfavorabledecline currencyin impact.the business. The decline in the business was driven by lower genomicsveterinary volume due to voluntary attrition of certain business in connection with restructuring actions, weakness in the companion animal market, and a higher level of customer insourcing that offset growth in the bovine market, paired with lowerinstrument sales of insect control and veterinary instruments products lines which offset strength in sale of rodent control products. These unfavorable impacts were partially offset by a favorable currency impact of $0.6 million.

Operating income for the AnimalFood Safety segment decreasedincreased $32.1by $1,049.1 million during fiscal year 20252026 compared to the prior year. TheExcluding decline was due to lower sales, athe goodwill impairment charge of $1,046.2 million recorded in the prior year, operating income increased during the current fiscal year by $2.9 million. This increase was primarily driven by business growth and restructuringcost chargesreductions incurred primarilyinitiated in the second quarter of the current fiscal year,year which2026, impactedpartially bothoffset grossby profitincreased andduplicative operatingPetrifilm expenses.costs of $9.8 million.

developing and implementing new technology development strategies; and identifying and completing acquisitions that enhance existing product categories or creating new products or services,offerings and successfully integrating completed acquisitions, including continued integration of the FSD transaction.Transaction.

As of May 31, 2025,2026, we had cash and cash equivalents of $129.0$185.5 million,million. andThe borrowingsCompany has irrevocable standby letters of credit in an amount of $3.2 million. As of May 31, 2026, no amount has been drawn on these letters of credit. The standby letters of credit reduced our borrowing available under our revolving line of credit to $198.3 million as of $150.0May million.31, 2026.

Financial covenants include maintaining specified levels of funded debt to EBITDA, and debt service coverage. As of May 31, 2025,2026, thewe Company waswere in compliance with all financial covenants under the Credit Facilities.

Net cash provided by operating activities increased $23.0$25.0 million during the twelve months ended May 31, 20252026 compared to the twelve months ended May 31, 2024.2025. The increase was primarilydue theto resultimprovement ofin working capitalcapital, items,primarily associated with inventory, and accounts payable, partially offset by a decreasedecline in income from operations.operations Priorwhen yearexcluding netthe workinggoodwill capitalimpairment reflectedcharge largein netthe cashprior outflows due to inventory purchases, as we exited transition service agreements and stocked FSD inventory.year.

Net Cash provided by (used for) Investing Activities

Net cash (usedfrom for) provided by financinginvesting activities was a net $3.5$169.7 million outflowinflow during the twelve months ended May 31, 20252026 compared to the twelve months ended May 31, 2024.2025. The net outflowincrease was primarily duethe result of cash proceeds received from the sale of our Cleaners and Disinfectants business of $121.7 million and a decrease in capital expenditures compared to taxesthe paidprior-year onperiod, employees'as share-basedour compensationnew Lansing production facility nears completion. Capital expenditures were $51.3 million and debt$104.6 issuancemillion costsduring paid.the twelve months ended May 31, 2026 and 2025, respectively.

We continue to make investments in our business and operating facilities. Our estimate for capital expenditures in fiscal 20262027 is approximately $50$40 million. This includes approximately $35 million in capital expenditures related to the integration of the acquired 3M FSD products, the most significant portion of which is related to the construction of and equipment for our new manufacturing facility in Lansing, Michigan.

Forward-lookingThis Quarterly Report contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, areincluding made(without throughout this Quarterly Report on Form 10-Q, includinglimitation) statements relating to management’s expectations regarding new product introductions; the adequacy of our sources for certain components, raw materials and finished products; and our ability to utilize certain inventory.inventory; the pending divestiture of the Genomics business; future revenue growth and market trends; anticipated cost savings and operational efficiencies from restructuring initiatives; the expected impact of tariffs and trade policy changes; and the outcome of pending legal proceedings and regulatory matters. For this purpose, any statements contained herein that are not statements of historical fact aremay be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates,” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are intended to provide our current expectations or forecasts of future events; are based on current estimates, projections, beliefs, and assumptions; and are not guarantees of future performance. Actual events or results may differ materially from those described in the forward-looking statements. There are a number of important factors that could cause Neogen’s results to differ materially from those indicated by such forward-looking statements, including many factors beyond our control. Factors that could cause actual results to differ from those contained within forward-looking statements include (without limitation) risksthe related to thecontinued integration of the 3M Foodfood Safetysafety business and the performance of acquired or transitioned businesses and technologies; execution risks associated with our manufacturing transitions (including Petrifilm) and related product qualifications, duplicate manufacturing costs, and ramp‑up activities; dependence on and qualification of third‑party suppliers, logistics partners and package delivery services, and the impact of disruptions or pricing increases; the timing, terms and outcome of portfolio actions (including the announced divestiturerealization of the genomicsexpected business)benefits from that acquisition; the relationship with and satisfactionperformance of closingour conditionstransition manufacturing partner; our ability to realizemaintain expectedeffective costinternal savings,control transformationover initiativesfinancial and operational efficiencies on the anticipated timelinesreporting; changes in customer demand, competitive dynamics, market acceptance and pricing; regulatory, legal, taxtariffs and trade developmentspolicy (includingchanges; tariffs,product export/import restrictions, sanctionsrecalls and otherrelated trade controls)litigation; riskspending associatedsecurities with international operationslitigations and expansionshareholder into new geographiesdemands; cybersecurity incidents, data privacy or other systems failures or disruptions; currency fluctuations, inflation, interest rates and broader macroeconomic conditions; availability and cost of raw materials and other inputs; our ability to develop, launch and protect new products and intellectual property and to avoid third‑party claims; our reputation and relationships with customers and distributors, including the risk ofthat customerregulatory lossapprovals required for pending divestitures may not be obtained on expected timelines or at all; ourcybersecurity ability to attract, retainthreats and developdata keysecurity personnelrisks; compliance with anti‑bribery, anti-corruption and other compliance obligations; our substantial indebtedness and access to capital markets; outcomes of litigation and other legal or regulatory proceedings; changes in domestic and foreign laws and regulations, tax audits and changes in tax legislationlaws or regulations; deteriorationpending divestitures and the realization of related expected benefits; competition; recruitment and retention of key employees; impact of weather on agriculture and food production; global business disruption caused by the Russia invasion in profitability or cash flowsUkraine and potentialrelated assetsanctions impairmentsand the conflict in the Middle East; identification and integration of acquisitions; research and development risks; intellectual property protection; increasing and developing government regulation; and other risks describeddetailed underin “Riskitem Factors”1A. RISK FACTORS in our most recent Annual Report on Form 10‑K and in subsequent Quarterly Reports on Form 10‑Q and Current Reports on Form 8‑K, as filed with the U.S. Securities and Exchange Commission.

In addition, any forward-looking statements represent management’s views only as of the date this Quarterly Report on Form 10-Q was first filed with the Securities and Exchange Commission and should not be relied upon as representing management’s views as of any subsequent date. ExceptWhile management may elect to update forward-looking statements at some point in the extentfuture, legallyit requiredspecifically disclaims any obligation to do so, we specifically disclaim any obligation to update forward-looking statements, even if ourits views change.change, unless required by law.

InWe recenthave years,and will continue to experience input cost inflation, including increases in certain raw materials, which negatively impactedimpact operating results. Although the rate of inflation has eased,moderated, we continued to face economic headwinds, including softeningrelated to consumer demand, elevated interest rates, and ongoing geopolitical tensions in certain regions, such as eastern Europe and the Middle East.

Elevated interest rates have led to higher borrowing costs and an increased overall cost of capital. In response to the historically high inflationary environment, we took pricing actions to mitigate the impacts on the business in prior fiscal years. Although the federal funds rate was reduced in recent fiscal years and we have refinanced our Termvariable Loaninterest rate outstanding debt and revolvingreduced lineoutstanding ofborrowing credit,through debt repayments, the overall interest rate we pay on our Creditoutstanding Facilitiesdebt remains higherelevated thancompared whento therecent debthistorical wasinterest incurred,rates. whichThis increases interest expense on the unhedged portion of our Termoutstanding Loan.debt.

Beginning in the first half of fiscal year 2024, we implemented a new enterprise resource planning system and exited our transition service agreements with 3M, which led to certain shipment delays and an elevated backlog of open orders, specifically in the Food Safety segment. At the conclusion of fiscal year 2024, order fulfillment issues were largely resolved, however, the impact of lost market share stemming from these fulfillment issues continued in fiscal year 2025. Also, inIn fiscal years 2025 and 2026, we experienced an elevated amount of inventory write-offs, due, in part, to expiration of certain inventory held at our international locations stemming from supply chain and distribution challenges in fiscal year 2024. Further, in fiscal year 2025, we experienced negative impacts from delays in restarting full production of our sample collection product line, which we relocated from 3M into a Neogen facility. In the second half of fiscal year 2025, production increased to the prior normal levels, but with significant production inefficiencies. These production inefficiencies have continued throughout fiscal year 2026,2026 and the first quarter of fiscal year 2027, albeit with continued improvement in each successive quarter. Continued improvement is expected for the remainder of the current fiscal year.

With a change in administration in fiscal year 2025, there has been an economic policy shift towards increasing tariffs, which in turn has led and could lead to further retaliatory tariffs. These have increased,increased and may continue to increase our costs on materials imported into the U.S. and have also increased costs and negatively impacted sales from our international locations, which primarily sell U.S. manufactured products.

In fiscal year 2025, restructuring actions in our genomics business led to voluntary revenue attrition, following our strategic shift away from lower margin business. A portion of our genomics business also serves the companion animal market, which has been experiencing weakness recently,weakness, primarily due to the impact of continued inflation, a lower number of pet adoptions, and a higher level of customer in-sourcing. Additionally, in the second quarter of fiscal year 2026, management initiated a restructuring plan to right-size our cost base through a reduction of approximately 10% in global headcount, including both existing and planned positions, as well as additional non-labor cost reductions.

On March 2, 2026, we announced that we had entered into a definitive agreement to sell our Genomics business to Zoetis Inc. The transaction is subject to customary closing conditions and regulatory approvals.approvals, Theand Companywe expectscontinue to work toward completing the transactionsale. In July 2026, the Australian Competition and Consumer Commission (ACCC) and the New Zealand Commerce Commission (NZCC) each announced that they are moving their respective reviews of the Company’s proposed genomics divestiture into the second phase of review. We will continue to closecooperate with the ACCC and the NZCC as they complete their respective review processes, which are currently expected to conclude by the end of theDecember first half of its fiscal year 2027.2026.

We continue to evaluate the nature and extent of these issues and their impact on our business, including consolidated results of operations, financial condition and liquidity. We expect these issues to continue to impact usour inresults throughout fiscal year 2026.2027.

Service revenue, which consists primarily of genomics services provided to production and companion animal markets, was $25.0 million and $75.7$26.8 million during the three and nine months ended FebruaryAugust 28,31, 2026 and $24.5 million and $72.6$25.1 million during the three and nine months ended FebruaryAugust 28,31, 2025. The increase in boththe comparable periodsperiod is primarily driven by higher genomics revenue in bovine and integrated protein markets, partially offset by a decline in companion animal markets.

International sales were $108.9$112.7 million and $330.3 million during the three and nine months ended February 28, 2026 compared to $105.6 million and $335.7 million during the three and nine months ended February 28, 2025, respectively. The increase during the three months ended FebruaryAugust 28,31, 2026 compared to $107.1 million during the three months ended August 31, 2025. The increase was primarily driven by increaseshigher sales in countries within EuropeAsia and Latin America and favorable foreign exchange rate impact, partially offset by a decline in sales from the divested Cleaners and Disinfectants sales. The decrease during the nine months ended February 28, 2026 was primarily due to the divestiture of our Cleaners and Disinfectants business.

Gross margin was 46.9% and 46.6%47.4% during the three and nine months ended FebruaryAugust 28,31, 2026, compared to 49.9% and 49.1%45.4% during the three and nine months ended FebruaryAugust 28,31, 2025, respectively.2025. The decreaseincrease in margin was primarily due to volume decreases,increases, price increases, and favorable foreign currency exchange impacts. These were partially offset by higher inventory write-offs, and duplicative costs as we prepare to manufacture Petrifilm products internally. These decreases were partially offset by price increases and favorable foreign currency exchange impacts.

Sales and marketing expensesexpense werewas $38.2 million and $125.5$41.5 million during the three and nine months ended FebruaryAugust 28,31, 2026, compared to $44.6 million and $136.9$45.1 million during the three and nine months ended FebruaryAugust 28,31, 2025, respectively.2025. The decrease in both comparable periods was primarily due to lower outbound shipping costs, lower bad debt expenses, reduced costs associated with the divested Cleaners and Disinfectants business, and lower compensation costs associated with headcount reductions, partially offset by increased restructuring costs.

General and administrative expensesexpense werewas $60.3 million and $186.4$59.3 million during the three and nine months ended FebruaryAugust 28,31, 2026, compared to $55.8 million and $165.2$60.9 million during the three and nine months ended FebruaryAugust 28,31, 2025, respectively.2025. The increasedecrease in boththe comparable periodsperiod was primarily driven by investmentslower instock transformationcompensation initiatives, transaction costs,expense and compensationprior related costs, partially offset by reducedyear costs associated with the divested Cleaners and Disinfectants businessbusiness. These decreases were partially offset by investments in transformation initiatives and professionaltransaction service expenses.costs.

Research and development expensesexpense werewas $3.8 million and $13.5$6.5 million during the three and nine months ended FebruaryAugust 28,31, 2026, compared to $4.5 million and $14.8$5.1 million during the three and nine months ended FebruaryAugust 28,31, 2025, respectively.2025. The decreaseincrease during boththe comparable periodsperiod is primarily the result of lowerhigher contracted services and employeeheadcount costs resulting from restructuringinnovation initiatives, offset by increased transformation costs.initiatives.

Income tax benefit was $3.3 million and $0.3$3.0 million during the three and nine months ended FebruaryAugust 28,31, 2026 compared to income tax expense of $1.2$7.5 million during the three months ended FebruaryAugust 28, 2025 and income tax benefit of $22.1 million during the nine months ended February 28,31, 2025. The net tax benefit for the quarter-to-datecurrent year period was primarily related to pre-tax losses due to acquisition amortization and interest expense. Income tax expense in the prior year period was primarily driven by pre-tax income due to the gain on the sale of our Cleaners & Disinfectants business.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law in the United States. OBBBA includescontains significant domestic and international tax provisions, including the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modificationschanges to the internationaltaxation of foreign earnings, foreign tax frameworkcredits, business interest expense limitations and research and experimental expenditures. The Company has evaluated the restorationprovisions ofcurrently favorableeffective for fiscal year 2027 and incorporated those changes into its quarterly tax treatment for depreciationprovision and interest expenses. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. There was not a significant impact to our income tax expense orannual effective tax rate for the three and nine months ended February 28, 2026.calculation.

Revenue for the Food Safety segment increased $3.9$11.1 million during the three months ended FebruaryAugust 28,31, 2026, compared to the three months ended FebruaryAugust 28,31, 2025. The increase was driven by $6.1$12.3 million of growth in the business as well as the current year benefit of distributor inventory adjustments in the prior year and timing of customer orders in the current quarter, and a $6.2$1.2 million favorable currency impact. Business growth was led by pathogenshigher sales of pathogen detection products, indicator sales and improvements in sample collection products, partially offset by a decline in sales of food quality products. These gains were offset by ana $8.4$2.4 million decline resulting primarily from the divestiture of our Cleaners and Disinfectants business.

Revenue for the Animal Safety segment decreasedincreased $22.1$2.5 million during the ninethree months ended FebruaryAugust 28,31, 2026, compared to the ninethree months ended FebruaryAugust 28,31, 2025. The decreaseincrease was primarily due to $19.7$4.6 million in business growth from higher sales of divestituresveterinary instruments and discontinuedinsect control products and a $2.5$0.4 million declinefavorable inforeign thecurrency business.impact. These decreasesincreases were partially offset by a $0.1$2.5 million favorablereduction currency impact. The decline infrom the businessdivestiture wasof drivenour by lower rodent controlCleaners and veterinaryDisinfectants instrumentbusiness sales,and, whichto havea beenlesser impactedextent, bydiscontinued tariffs and supply constraints. These decreases were partially offset by higher genomics sales.products.

Operating income for the Food Safety segment decreasedincreased $3.0$9.1 million during the three months ended FebruaryAugust 28,31, 2026, compared to the three months ended FebruaryAugust 28,31, 2025. The decreaseincrease was primarily driven by duplicativehigher Petrifilmsales costsvolumes and lower sample collection manufacturing cost inefficiencies.

Operating income for the Animal Safety segment increased $10.0$3.0 million during ninethe three months ended FebruaryAugust 28,31, 2026 compared to the ninethree months ended FebruaryAugust 28,31, 2025. The increase was primarily due to lowerhigher operatingsales volumes, partially offset by transaction costs inincurred theas current year, which is the resultpart of theour priorpending year'ssale restructuringof actions incurred for theour genomics business.

The increaseddecreased corporate expense during each comparablethe period is related to lower equity-based compensation expense and savings from prior year restructuring initiatives. This decrease was partially offset by increases in compliance and transformation initiatives, restructuring expenseinitiatives and certain corporate development initiatives. These increases are partially offset by lower equity-based compensation expense.

Our primary sources of liquidity are cash and cash equivalents, cash flows from the operationsoperation of our business, and available borrowing capacity under our Revolving Facility. Our principal uses of cash include working capital-related items, capital expenditures, debt service, and strategic investments.

We are subject to certain legal and other proceedings that have not had, and, in the opinion of management, are not expected to have,have a material effect on our results of operations or financial position.

As of FebruaryAugust 28,31, 2026, we had cash and cash equivalents of $159.9$172.0 million. The Company hashad irrevocable standby letters of credit intotaling an$3.2 amountmillion during fiscal 2026. During the first quarter of $3.2fiscal million.year As2027, $1.6 million was drawn under the standby letters of Februarycredit 28,and 2026,subsequently norepaid, amountresulting hasin beenoutstanding drawn.standby letters of credit of $1.6 million as of August 31, 2026. The remaining standby letters of credit reduced ourthe borrowing capacity available under ourthe revolving line of credit to 198.3$199.9 million as of FebruaryAugust 28,31, 2026.

There are no additional required principal payments for the Term Loan until the second quarter of fiscal year 2028. Financial covenants include maintaining specified levels of funded debt to EBITDA, and debt service coverage. As of FebruaryAugust 28,31, 2026, we are in compliance with all financial covenants under the Credit Facilities.

We continue to make investments in our business and operating facilities. Our estimate for capital expenditures in fiscal 20262027 is approximately $50.0$40.0 million. This includes approximately $35.0 million in capital expenditures related to the integration of the acquired 3M FSD products, the most significant portion of which is related to our new manufacturing facility in Lansing, Michigan.

Net cash provided by operating activities increased $11.2$2.1 million during the ninethree months ended FebruaryAugust 28,31, 2026 compared to the ninethree months ended FebruaryAugust 28,31, 2025. The increase is primarily due to an improvement in operating income offset by unfavorable changes in working capital primarily associated with inventoryaccounts receivable and accounts payable, and to a lesser extent, accounts receivable. Inventory reductions reflect management’s focus on enhancing operational efficiency and inventory management. This increase is partially offset by a decrease in operating income.payable.

Net Cash (used for) provided by FinancingInvesting Activities

CashThe net cash (used for) financingprovided by investing activities increaseddecreased $99.6$105.9 million during the ninethree months ended FebruaryAugust 28,31, 2026 compared to the ninethree months ended FebruaryAugust 28,31, 2025. The increase was due toIn the debtprior repaymentsyear, madecash withprovided by investing activities included $121.7 million in cash proceeds fromrelated to the sale of our Cleaners and Disinfectants business. The net cash decrease was partially offset by a reduction in capital expenditure of $15.8 million in the current year period compared to the prior year period.