Company: NEOG
Filing Date: 2025-01-15
Form Type: 10-Q
Source: 0000950170-25-005818
Chunk: 17

Company: NEOGEN CORP
Filing Date: 2025-01-15
Form: 10-Q
Item: Item 1
Chunk 17
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 lower number of pet adoptions.          

We continue to evaluate the nature and extent to which these issues impact our business, including consolidated results of operations, financial condition and liquidity. We expect these issues to continue to impact us throughout fiscal year 2025.

Critical Accounting Estimates

During the second quarter of fiscal year 2025, we incurred a goodwill impairment charge of $461.4 million associated with our Food Safety reporting unit. Subsequent to the goodwill impairment charge, the fair value of this reporting unit approximated its carrying value. The fair value of the reporting unit is estimated based on a combination of an income approach, which utilizes discounted cash flows and a market approach, which utilizes pricing multiples derived from an analysis of comparable public companies multiplied against historical and/or anticipated financial metrics of the reporting unit. The rate used to discount the cash flows under the income approach was 10.0%. These calculations contain uncertainties as they require management to make assumptions including, but not limited to, market comparables, future cash flows of the reporting unit, and appropriate discount and long-term growth rates.  

A decline in the actual cash flows of the Food Safety reporting unit in future periods, as compared to the projected cash flows used in the valuation, could result in the carrying value of this reporting unit exceeding its fair value. Further, a change in market comparables, discount rate or long-term growth rate, as a result of a change in economic 

17

conditions or otherwise could result in the carrying value of this reporting unit exceeding its fair value, which would result in an additional impairment charge.

Our critical accounting estimates are included in our Annual Report on Form 10-K for the year ended May 31, 2024 and did not materially change during the three months ended November 30, 2024.

Executive Overview 

    Three months ended November 30,

    Six months ended November 30,

    2024

    2023

    Increase / (Decrease)

    2024

    2023

    Increase / (Decrease)

    Total Revenues
     
    $
    231,258

    $
    229,629

    $
    1,629

    $
    448,222

    $
    458,616

    $
    (10,394
    )

    Cost of Revenues

    117,928

    112,855

    5,073

    229,966

    225,081

    4,