Neogen Corporation (NASDAQ: NEOG) in the third quarter of FY 18 has posted mixed results leading to the stock fall of over 1.5% on March 22nd, 2018 (as of 1:45 PM GMT-4; Source: Google finance). The group and reported 61 percent growth in the net income was $16.586 million. NEOG got benefitted from corporate tax rate reform enacted in December 2017 that resulted in an effective tax rate of 4% for the third quarter, compared to 34% in the prior year. Further, the company benefitted from Washington’s long-discussed reduction of the corporate tax rate. NEOG in the third quarter has posted the gross margin of 47.5% of sales compared to 46.3% in the same quarter of the prior fiscal year, which is positively impacted by cost improvements in its genomics service business and favorable product mix in its animal safety product lines.
NEOG in the third quarter of FY 18 has reported the adjusted earnings per share of 32 cents, beating the analysts’ estimates for the adjusted earnings per share of 24 cents as per Zacks Investment Research. The company had reported the adjusted revenue growth of 8 percent to $95.9 million in the third quarter of FY 18, missing the analysts’ estimates for revenue of $97.6 million. In the third quarter, the revenue increase in core product lines across the food and animal market segments, including strong growth in the global agricultural genomics services. The prior year’s quarter had featured strong sales of mycotoxin test kits due to an outbreak of DON in crops in the U.S. and Europe, and sales of a disinfectant product line that the company no longer offer currently.
Additionally, in the third quarter of FY 17, the revenues for the company’s Food Safety segment increased 11%. The international sales for the quarter increased 17% over the prior year, driven by acquisitions. In addition, NEOG’s Animal Safety segment posted a revenue growth for the third quarter of 6%, driven by growth in genomics business, an 11% increase in its rodent control product lines, a 19% increase in sales of drug detection products, a 14% increase in sales of detectable needles, and a 26% increase in sales of its animal care line of products
Meanwhile, in February, NEOG had launched BetaStar Advanced tests for beta-lactam and tetracycline antibiotics in milk. The new tests were developed for the U.S. market, and designed to be performed with Neogen’s new Raptor testing platform. Raptor allows testers to easily perform up to nine tests at once. The Raptor platform is also designed to work with other Neogen tests.