Neogen charts earnings turnaround on strong genomics sales

Neogen is experiencing high demand for its animal genomics testing products.

Lansing, MI-based Neogen is placing much of its hopes for future growth on its animal genomics business, GeneSeek. The strong performance of that unit helped the company chart record sales and earnings in its fiscal fourth quarter and full year, despite currency adjustments that knocked $7.7 million off its top line.

Neogen reported July 19 that its fourth-quarter sales jumped 15% year-over-year to $90 million, while its full-year sales were up 13% to $321.3 million. The company’s net income in the fourth quarter bumped up slightly to $9.9 million (26 cents per share). For the full year, Neogen’s net income grew 9% to $36.6 million or $0.97 per share, according to the earnings release. The results were in line with Wall Street expectations.

The company’s GeneSeek business offers genomic testing for swine, poultry, dogs and cattle. In fiscal 2016, the unit’s sales jumped 22%, thanks to additional demand from a large poultry producer, according to the release. Neogen also enjoyed an uptick in orders for its canine gene testing products, and it says it increased its market share for DNA chip technology that’s geared primarily to pig and cattle producers.

“We met our goal of producing double-digit organic growth for the fiscal year, expanded the company’s product line and broadened our geographic foundation,” said Neogen CEO James Herbert in the release. “Although the relative strength of the U.S. dollar created challenges to our short-term financial performance, it also created acquisition opportunities.”

Indeed, Neogen has made three key acquisitions in just the last few months. In April, it picked up Deoxi Biotecnologia, a Brazilian genomics laboratory. The addition will help speed up Neogen’s efforts to roll out GeneSeek in Brazil. The following month, the company acquired Preserve International and Tetradyne, which sell disinfectants and other cleaners to food producers.

Investors were pleased with Neogen’s earnings report, pushing shares of the company up 3% to $58.57 in morning trading. The strong report helped erase memories of the company’s disappointing third-quarter results, which sent shares down 12% in a day.

Currency fluctuations continue to drag down Neogen’s financials, but CFO Steven Quinlan urged investors to put the numbers in perspective. In local currencies, he explained in the release, sales in the company’s Brazil operation grew 49% for the year, while the Mexico unit was up 44%. Those gains shrank to 7% and 20% respectively when converted to dollars, Quinlan said.

- here’s the earnings release

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