Company: NEOG
Filing Date: 2025-01-15
Form Type: 10-Q
Source: 0000950170-25-005818
Chunk: 66

Company: NEOGEN CORP
Filing Date: 2025-01-15
Form: 10-Q
Item: Item 8
Chunk 66
---
 unfavorable impact due to discontinued product lines, offset by $4.9 million growth in the business. The year-to-date increase in the business was driven by continued strength in indicator testing paired with new sales in the food quality and nutritional analysis product line. These increases were partially offset by production 

18

constraints within the sample collection product line and lower genomics volume, which was impacted by a shift to focus on large production animals and weakness in the companion animal market.

Service Revenue

Service revenue, which consists primarily of genomics services provided to animal production and companion animal markets, was $23.7 million and $48.2 million during the three and six months ended November 30, 2024 and $25.8 million and $50.3 million during the three and six months ended November 30, 2023, respectively. The decrease in the three and six months ended November 30, 2024 was primarily due to lower genomics sales into the companion animal market, as well as lower sales into the domestic poultry market, primarily due to a shift in focus towards large production animals, offset by an increase in genomics sales into beef markets.

International Revenue

International sales were $117.5 million and $230.1 million during the three and six months ended November 30, 2024 and $116.1 million and $234.0 million during the three and six months ended November 30, 2023, respectively. The increase during the three months ended November 30, 2024 was driven by increases in the Asia Pacific and European regions, partially offset by decreases in the Latin American and South American regions. The decrease during the six months ended November 30, 2024 was due to $14.7 million of currency headwinds, partially offset by strength in Petrifilm® indicator sales.

Gross Margin

Gross margin was 49.0% and 48.7% during the three and six months ended November 30, 2024 and 50.9% during the three and six months ended November 30, 2023, respectively. The decrease in margin during the three month period was primarily due to $4.8 million of restructuring charges. The decrease in margin during the six month period was primarily due to higher freight costs in the current year and $4.8 million of restructuring charges. Additionally, a volume decline in the first quarter contributed to the lower gross margin for the year-to-date period. 

Operating Expenses 

Sales and Marketing