Life sciences company Neogen (NASDAQ: NEOG) reported calendar Q3 2026 (fiscal Q1 2027) results exceeding the market’s revenue expectations, with sales up 6.5% year on year to $222.8 million. The company expects the full year’s revenue to be around $887.5 million, close to analysts’ estimates. Its non-GAAP profit of $0.08 per share was 50% above analysts’ consensus estimates.

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“As we entered fiscal year 2027, our focus shifted from strengthening fundamentals to scaling them to drive more consistent execution, improved customer outcomes and profitable growth,” said Mike Nassif, Neogen’s President and Chief Executive Officer. “Our first-quarter results reflect encouraging progress as the changes underway across the organization continue to take hold. We are strengthening commercial discipline, harmonizing our sales operating model, rebuilding our innovation engine and improving the systems and processes that support inventory optimization and customer service. At the same time, we are making targeted investments to enhance our capabilities and are committed to pursuing further improvements with the goal of building on our momentum to drive more consistent growth and margin expansion over the long term.”

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 sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Neogen grew its sales at a solid 12.6% compounded annual growth rate. 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 1.6% over the last two years.

This quarter, Neogen reported year-on-year revenue growth of 6.5%, and its $222.8 million of revenue exceeded Wall Street’s estimates by 7%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. While this projection indicates its newer products and services will catalyze better top-line performance, it is still below average for the sector.

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Adjusted Operating Margin

Although Neogen was profitable this quarter from an operational perspective, it’s generally struggled over a longer time period. Its expensive cost structure has contributed to an average adjusted operating margin of negative 22.1% 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 adjusted operating margin decreased by 4.6 percentage points 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 1.1 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 an adjusted operating margin profit margin of 16.4%, up 24.1 percentage points year on year. This increase was a welcome development and shows it was more efficient.

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 9.6% annually over the last five years while its revenue grew by 12.6%. This tells us the company became less profitable on a per-share basis as it expanded.

We can take a deeper look into Neogen’s earnings to better understand the drivers of its performance. As we mentioned earlier, Neogen’s adjusted operating margin expanded this quarter but declined by 4.6 percentage points over the last five years. Its share count also grew by 102%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

In Q3, Neogen reported adjusted EPS of $0.08, up from $0.04 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Neogen’s full-year EPS to shrink by 12% from $0.36 to $0.32.

Key Takeaways from Neogen’s Q3 Results

It was good to see Neogen beat analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Full-year revenue and EBITDA guidance were both ahead as well. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 8.6% to $13.00 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. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).