Cover Page
Cover Page | 9 Months Ended |
Feb. 28, 2023 shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Feb. 28, 2023 |
Document Fiscal Year Focus | 2023 |
Document Fiscal Period Focus | Q3 |
Current Fiscal Year End Date | --05-31 |
Entity Interactive Data Current | Yes |
Entity Current Reporting Status | Yes |
Entity Registrant Name | Neogen Corporation |
Entity Central Index Key | 0000711377 |
Trading Symbol | NEOG |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Document Quarterly Report | true |
Document Transition Report | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 216,220,821 |
Entity File Number | 0-17988 |
Title of 12(b) Security | Common Stock, $0.16 par value per share |
Security Exchange Name | NASDAQ |
Entity Incorporation, State or Country Code | MI |
Entity Tax Identification Number | 38-2367843 |
Entity Address, Address Line One | 620 Lesher Place |
Entity Address, State or Province | MI |
Local Phone Number | 372-9200 |
Entity Address, City or Town | Lansing |
City Area Code | 517 |
Entity Address, Postal Zip Code | 48912 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Feb. 28, 2023 | May 31, 2022 |
Current Assets | ||
Cash and cash equivalents | $ 67,134,000 | $ 44,473,000 |
Marketable securities | 116,080,000 | 336,578,000 |
Accounts receivable, net of allowance of $2,200 and $1,650 | 146,393,000 | 99,674,000 |
Inventories | 143,863,000 | 122,313,000 |
Prepaid expenses and other current assets | 81,901,000 | 23,760,000 |
Total Current Assets | 555,371,000 | 626,798,000 |
Net Property and Equipment | 164,888,000 | 110,584,000 |
Other Assets | ||
Right of use assets | 5,062,000 | 3,184,000 |
Goodwill | 2,135,118,000 | 142,704,000 |
Other non-amortizable intangible assets | 14,252,000 | 15,397,000 |
Amortizable intangible and other assets, net of accumulated amortization | 1,620,229,000 | 92,106,000 |
Other non-current assets | 13,844,000 | 2,156,000 |
Total Assets | 4,508,764,000 | 992,929,000 |
Current Liabilities | ||
Accounts payable | 60,494,000 | 34,614,000 |
Accrued compensation | 17,387,000 | 11,123,000 |
Income tax payable | 1,645,000 | 2,126,000 |
Accrued interest | 3,438,000 | 0 |
Deferred revenue | 6,765,000 | 5,460,000 |
Other accruals | 17,426,000 | 24,521,000 |
Total Current Liabilities | 107,155,000 | 77,844,000 |
Deferred Income Tax Liability | 362,630,000 | 17,011,000 |
Non-current debt | 884,701,000 | 0 |
Other non-current liabilities | 28,723,000 | 10,700,000 |
Total Liabilities | 1,383,209,000 | 105,555,000 |
Commitments and Contingencies (note 12) | ||
Equity | ||
Preferred stock, $1.00 par value, 100,000 shares authorized, none issued and outstanding | 0 | 0 |
Common stock, $0.16 par value, 315,000,000 shares authorized, 216,220,821 and 107,801,094 shares issued and outstanding at February 28, 2023 and May 31, 2022, respectively | 34,595,000 | 17,248,000 |
Additional paid-in capital | 2,564,713,000 | 309,984,000 |
Accumulated other comprehensive loss | (33,222,000) | (27,769,000) |
Retained earnings | 559,469,000 | 587,911,000 |
Total Stockholders' Equity | 3,125,555,000 | 887,374,000 |
Total Liabilities and Stockholders' Equity | $ 4,508,764,000 | $ 992,929,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Feb. 28, 2023 | May 31, 2022 |
Accounts receivable, allowance | $ 2,200 | $ 1,650 |
Preferred stock, par value | $ 1 | $ 1 |
Preferred stock, shares authorized | 100,000 | 100,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.16 | $ 0.16 |
Common stock, shares authorized | 315,000,000 | 315,000,000 |
Common stock, shares issued | 216,220,821 | 107,801,094 |
Common stock, shares outstanding | 216,220,821 | 107,801,094 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Loss) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 28, 2023 | Feb. 28, 2022 | Feb. 28, 2023 | Feb. 28, 2022 | |
Revenues | ||||
Total revenue | $ 218,255 | $ 128,244 | $ 580,637 | $ 387,066 |
Cost of Revenues | ||||
Total Cost of Revenues | 110,291 | 70,832 | 297,864 | 209,052 |
Gross Margin | 107,964 | 57,412 | 282,773 | 178,014 |
Operating Expenses | ||||
Sales and marketing | 38,598 | 21,477 | 98,329 | 63,220 |
General and administrative | 46,424 | 24,997 | 151,369 | 60,985 |
Research and development | 7,258 | 4,561 | 18,985 | 13,218 |
Total Operating Expenses | 92,280 | 51,035 | 268,683 | 137,423 |
Operating Income | 15,684 | 6,377 | 14,090 | 40,591 |
Other (Expense) Income | ||||
Interest income | 640 | 349 | 2,163 | 804 |
Interest expense | (17,460) | (35) | (38,007) | (63) |
Other expense | (1,124) | (48) | (7,938) | (34) |
Total Other (Expense) Income | (17,944) | 266 | (43,782) | 707 |
(Loss) Income Before Taxes | (2,260) | 6,643 | (29,692) | 41,298 |
Provision for Income Taxes | (10,450) | 1,200 | (1,250) | 7,950 |
Net Income (Loss) | $ 8,190 | $ 5,443 | $ (28,442) | $ 33,348 |
Net Income (Loss) Per Share | ||||
Basic | $ 0.04 | $ 0.05 | $ (0.16) | $ 0.31 |
Diluted | $ 0.04 | $ 0.05 | $ (0.16) | $ 0.31 |
Weighted Average Shares Outstanding | ||||
Basic | 216,218 | 107,818 | 179,666 | 107,648 |
Diluted | 216,399 | 108,133 | 179,666 | 108,130 |
Product Revenues | ||||
Revenues | ||||
Total revenue | $ 190,688 | $ 101,566 | $ 500,797 | $ 311,701 |
Cost of Revenues | ||||
Total Cost of Revenues | 94,377 | 56,550 | 252,348 | 167,650 |
Service Revenues | ||||
Revenues | ||||
Total revenue | 27,567 | 26,678 | 79,840 | 75,365 |
Cost of Revenues | ||||
Total Cost of Revenues | $ 15,914 | $ 14,282 | $ 45,516 | $ 41,402 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 28, 2023 | Feb. 28, 2022 | Feb. 28, 2023 | Feb. 28, 2022 | |
Net Income (Loss) | $ 8,190 | $ 5,443 | $ (28,442) | $ 33,348 |
Foreign currency translations | 3,354 | 2,789 | (6,677) | (9,482) |
Unrealized gain (loss) on marketable securities, net of tax | 944 | (993) | 674 | (1,582) |
Unrealized gain on derivative instruments, net of tax | 2,978 | 0 | 550 | 0 |
Total comprehensive income (loss) | $ 15,466 | $ 7,239 | $ (33,895) | $ 22,284 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings |
Beginning Balance at May. 31, 2021 | $ 840,377 | $ 17,195 | $ 294,953 | $ (11,375) | $ 539,604 |
Beginning Balance (in shares) at May. 31, 2021 | 107,468,000 | ||||
Exercise of options and share-based compensation expense | 1,839 | $ 1 | 1,838 | ||
Exercise of options and share-based compensation expense (in shares) | 6,000 | ||||
Issuance of shares under employee stock purchase plan | 899 | $ 3 | 896 | ||
Issuance of shares under employee stock purchase plan (in shares) | 19,000 | ||||
Net Income (Loss) | 17,077 | 17,077 | |||
Other comprehensive loss | (4,829) | (4,829) | |||
Ending Balance at Aug. 31, 2021 | 855,363 | $ 17,199 | 297,687 | (16,204) | 556,681 |
Ending Balance (in shares) at Aug. 31, 2021 | 107,493,000 | ||||
Beginning Balance at May. 31, 2021 | 840,377 | $ 17,195 | 294,953 | (11,375) | 539,604 |
Beginning Balance (in shares) at May. 31, 2021 | 107,468,000 | ||||
Net Income (Loss) | 33,348 | ||||
Ending Balance at Feb. 28, 2022 | 875,544 | $ 17,251 | 307,780 | (22,439) | 572,952 |
Ending Balance (in shares) at Feb. 28, 2022 | 107,818,000 | ||||
Beginning Balance at Aug. 31, 2021 | 855,363 | $ 17,199 | 297,687 | (16,204) | 556,681 |
Beginning Balance (in shares) at Aug. 31, 2021 | 107,493,000 | ||||
Exercise of options and share-based compensation expense | 7,316 | $ 44 | 7,272 | ||
Exercise of options and share-based compensation expense (in shares) | 275,000 | ||||
Net Income (Loss) | 10,828 | 10,828 | |||
Other comprehensive loss | (8,031) | (8,031) | |||
Ending Balance at Nov. 30, 2021 | 865,476 | $ 17,243 | 304,959 | (24,235) | 567,509 |
Ending Balance (in shares) at Nov. 30, 2021 | 107,768,000 | ||||
Exercise of options and share-based compensation expense | 1,852 | $ 4 | 1,848 | ||
Exercise of options and share-based compensation expense (in shares) | 26,000 | ||||
Issuance of shares under employee stock purchase plan | 977 | $ 4 | 973 | ||
Issuance of shares under employee stock purchase plan (in shares) | 24,000 | ||||
Net Income (Loss) | 5,443 | 5,443 | |||
Other comprehensive loss | 1,796 | 1,796 | |||
Ending Balance at Feb. 28, 2022 | 875,544 | $ 17,251 | 307,780 | (22,439) | 572,952 |
Ending Balance (in shares) at Feb. 28, 2022 | 107,818,000 | ||||
Beginning Balance at May. 31, 2022 | $ 887,374 | $ 17,248 | 309,984 | (27,769) | 587,911 |
Beginning Balance (in shares) at May. 31, 2022 | 107,801,094 | 107,801,000 | |||
Exercise of options and share-based compensation expense | $ 1,905 | $ 1 | 1,904 | ||
Exercise of options and share-based compensation expense (in shares) | 4,000 | ||||
Issuance of shares under employee stock purchase plan | 867 | $ 5 | 862 | ||
Issuance of shares under employee stock purchase plan (in shares) | 33,000 | ||||
Net Income (Loss) | 5,209 | 5,209 | |||
Other comprehensive loss | (11,557) | (11,557) | |||
Ending Balance at Aug. 31, 2022 | 883,798 | $ 17,254 | 312,750 | (39,326) | 593,120 |
Ending Balance (in shares) at Aug. 31, 2022 | 107,838,000 | ||||
Beginning Balance at May. 31, 2022 | $ 887,374 | $ 17,248 | 309,984 | (27,769) | 587,911 |
Beginning Balance (in shares) at May. 31, 2022 | 107,801,094 | 107,801,000 | |||
Net Income (Loss) | $ (28,442) | ||||
Ending Balance at Feb. 28, 2023 | $ 3,125,555 | $ 34,595 | 2,564,713 | (33,222) | 559,469 |
Ending Balance (in shares) at Feb. 28, 2023 | 216,220,821 | 216,221,000 | |||
Beginning Balance at Aug. 31, 2022 | $ 883,798 | $ 17,254 | 312,750 | (39,326) | 593,120 |
Beginning Balance (in shares) at Aug. 31, 2022 | 107,838,000 | ||||
Exercise of options and share-based compensation expense | 2,637 | $ 7 | 2,630 | ||
Exercise of options and share-based compensation expense (in shares) | 46,000 | ||||
Issuance of shares for 3M transaction (Value) | 2,262,841 | $ 17,323 | 2,245,518 | ||
Issuance of shares for 3M transaction (shares) | 108,270 | ||||
Net Income (Loss) | (41,841) | (41,841) | |||
Other comprehensive loss | (1,172) | (1,172) | |||
Ending Balance at Nov. 30, 2022 | 3,106,263 | $ 34,584 | 2,560,898 | (40,498) | 551,279 |
Ending Balance (in shares) at Nov. 30, 2022 | 216,154,000 | ||||
Exercise of options and share-based compensation expense | 2,835 | $ 1 | 2,834 | ||
Exercise of options and share-based compensation expense (in shares) | 5,000 | ||||
Issuance of shares under employee stock purchase plan | 991 | $ 10 | 981 | ||
Issuance of shares under employee stock purchase plan (in shares) | 62,000 | ||||
Net Income (Loss) | 8,190 | 8,190 | |||
Other comprehensive loss | 7,276 | 7,276 | |||
Ending Balance at Feb. 28, 2023 | $ 3,125,555 | $ 34,595 | $ 2,564,713 | $ (33,222) | $ 559,469 |
Ending Balance (in shares) at Feb. 28, 2023 | 216,220,821 | 216,221,000 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Feb. 28, 2023 | Feb. 28, 2022 | |
Cash Flows (For) From Operating Activities | ||
Net Income (Loss) | $ (28,442) | $ 33,348 |
Adjustments to reconcile net (loss) income to net cash (for) from operating activities: | ||
Depreciation and amortization | 59,938 | 17,833 |
Impairment of discontinued product lines | 2,300 | 0 |
Loss on sale of minority interest | 1,516 | 0 |
Deferred income taxes | (5,299) | (720) |
Share-based compensation | 7,311 | 5,045 |
Disposal of property and equipment | (472) | 0 |
Financing fee amortization | 1,860 | 0 |
Change in operating assets and liabilities, net of business acquisitions: | ||
Accounts receivable | (47,535) | (883) |
Inventories | (656) | (11,956) |
Prepaid expenses and other current assets | (31,896) | (3,824) |
Accounts payable, accruals and other changes | (8,422) | (5,652) |
Change in other non-current assets and non-current liabilities | (3,579) | 14,457 |
Interest expense accrual | 3,438 | 0 |
Net Cash (For) From Operating Activities | (49,938) | 47,648 |
Cash Flows From (For) Investing Activities | ||
Purchases of property, equipment and other non-current intangible assets | (40,253) | (11,891) |
Proceeds from the sale of marketable securities | 233,020 | 284,367 |
Purchases of marketable securities | (12,523) | (314,442) |
Proceeds from the sale of property and equipment | 682 | 0 |
Business acquisitions, net of working capital adjustments and cash acquired | 13,237 | (38,164) |
Net Cash From (For) Investing Activities | 194,163 | (80,130) |
Cash Flows (For) From Financing Activities | ||
Exercise of stock options and issuance of employee stock purchase plan shares | 943 | 7,842 |
Financing fees paid | (19,276) | 0 |
Repayment of debt | (100,000) | 0 |
Net Cash (For) From Financing Activities | (118,333) | 7,842 |
Effects of Foreign Exchange Rates on Cash | (3,231) | (8,083) |
Net Increase (Decrease) in Cash and Cash Equivalents | 22,661 | (32,723) |
Cash and Cash Equivalents, Beginning of period | 44,473 | 75,602 |
Cash and Cash Equivalents, End of period | $ 67,134 | $ 42,879 |
Description of Business and Bas
Description of Business and Basis of Presentation | 9 Months Ended |
Feb. 28, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION DESCRIPTION OF BUSINESS Neogen Corporation and subsidiaries ("Neogen," "we," "our," or the "Company") develop, manufacture and market a diverse line of products and services dedicated to food and animal safety. Our Food Safety segment consists primarily of diagnostic test kits and complementary products (e.g., culture media) sold to food producers and processors to detect dangerous and/or unintended substances in human food and animal feed, such as foodborne pathogens, spoilage organisms, natural toxins, food allergens, genetic modifications, ruminant by-products, meat speciation, drug residues, pesticide residues and general sanitation concerns. Our diagnostic test kits are generally easier to use and provide quicker results than conventional diagnostic methods. The majority of the test kits are disposable, single-use, immunoassay and DNA detection products that rely on proprietary antibodies and RNA and DNA testing methodologies to produce rapid and accurate test results. Our expanding line of food safety products also includes genomics-based diagnostic technology, and advanced software systems that help testers to objectively analyze and store their results and perform analysis on the results from multiple locations over extended periods. Neogen’s Animal Safety segment is engaged in the development, manufacture, marketing and distribution of veterinary instruments, pharmaceuticals, vaccines, topicals, parasiticides, diagnostic products, rodenticides, cleaners, disinfectants, insecticides and genomics testing services for the worldwide animal safety market. The majority of these consumable products are marketed through veterinarians, retailers, livestock producers and animal health product distributors. Our line of drug detection products is sold worldwide for the detection of abused and therapeutic drugs in animals and animal products, and has expanded into the workplace and human forensic markets. MERGER WITH THE FOOD SAFETY BUSINESS OF 3M On September 1, 2022, the Company completed its merger (the “Merger”) with Garden SpinCo, a newly formed, wholly owned subsidiary of 3M created to carve out 3M’s Food Safety Division (“3M FSD”, “FSD”), in a Reverse Morris Trust transaction. The purchase price consideration was $ 3.2 billion, net of customary purchase price adjustments and transaction costs, which consisted of 108.3 million shares of Neogen common stock issued on closing. Immediately following the transaction, Garden SpinCo stockholders owned, in the aggregate, approximately 50.1 % of the issued and outstanding shares of Neogen common stock and pre-merger Neogen shareholders owned, in the aggregate, approximately 49.9 % of the issued and outstanding shares of Neogen common stock. Neogen was deemed to be the accounting acquiror of the 3M FSD for accounting purposes under U.S. generally accepted accounting principles. BASIS OF PRESENTATION AND CONSOLIDATION The accompanying unaudited condensed consolidated financial statements include the accounts of Neogen Corporation (“Neogen” or the “Company”) and its wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (generally accepted accounting principles) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the results of the interim period have been included in the accompanying unaudited condensed consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation. The results of operations during the three and nine months ended February 28, 2023 are not necessarily indicative of the results to be expected for the full fiscal year ending May 31, 2023. For more complete financial information, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2022. Our functional currency is the U.S. dollar. We translate our non-U.S. operations’ assets and liabilities denominated in foreign currencies into U.S. dollars at current rates of exchange as of the balance sheet date and income and expense items at the average exchange rate for the reporting period. Translation adjustments resulting from exchange rate fluctuations are recorded in other comprehensive income (loss). Gains or losses from foreign currency transactions are included in other income (expense) on our condensed consolidated statements of income (loss). ACCOUNTING POLICIES Comprehensive Income (Loss) Comprehensive income (loss) represents net income and any revenues, expenses, gains and losses that, under U.S. generally accepted accounting principles, are excluded from net income and recognized directly as a component of equity. Accumulated other comprehensive income (loss) consists of foreign currency translation adjustments and unrealized gains or losses on our marketable securities and derivative instruments. Fair Value of Financial Instruments Fair value measurements are determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants exclusive of any transaction costs. The Company utilizes a fair value hierarchy based upon the observability of inputs used in valuation techniques as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The carrying amounts of certain financial instruments, consisting of cash and cash equivalents, accounts receivable, accounts payable, our revolving credit agreement, and long-term debt, approximate their fair value based on either their short maturity or current terms for similar instruments. Leases We lease various manufacturing, laboratory, warehousing and distribution facilities, administrative and sales offices, equipment and vehicles under operating leases. We evaluate our contracts to determine if an arrangement is a lease at inception and classify it as a finance or operating lease. Currently, all our leases are classified as operating leases. The Company recognizes a lease liability in the statement of financial position to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. Right-of-use assets are recorded in Other Assets on our condensed consolidated balance sheets. Current and non-current lease liabilities are recorded in other accruals within current liabilities and other non-current liabilities, respectively, on our condensed consolidated balance sheets. Costs associated with operating leases are recognized on a straight-line basis within operating expenses over the term of the lease. The right-of-use assets were $ 5,062,000 and $ 3,184,000 as of February 28, 2023 and May 31, 2022, respectively. The total current and non-current lease liabilities were $ 5,112,080 and $ 3,228,000 as of February 28, 2023 and May 31, 2022 , respectively. Derivatives We operate on a global basis and are exposed to the risk that our financial condition, results of operations and cash flows could be adversely affected by changes in foreign currency exchange rates and changes in interest rates. To reduce the potential effects of foreign currency exchange rate movements on net earnings, we enter into derivative financial instruments in the form of foreign currency exchange forward contracts with major financial institutions and have also entered into interest rate swap contracts as a hedge against changes in interest rates. All derivatives are recognized as assets or liabilities and measured at fair value. For derivatives that are determined to be effective hedges, changes in fair value are recognized in other comprehensive income (loss) until the underlying hedged item is recognized in earnings. Derivatives that are not determined to be effective hedges are adjusted to fair value with a corresponding adjustment to earnings. We do not use financial instruments for trading or speculative purposes. ESTIMATES AND ASSUMPTIONS The preparation of these financial statements requires that management make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, management evaluates the estimates, including, but not limited to, variable consideration related to revenue recognition, allowances for doubtful accounts, the market value of, and demand for, inventories, stock-based compensation, provision for income taxes and related balance sheet accounts, accruals, goodwill and other intangible assets and derivatives. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Accounts Receivable and Concentrations of Credit Risk Financial instruments which potentially subject Neogen to concentrations of credit risk consist principally of accounts receivable. Management attempts to minimize credit risk by reviewing customers’ credit histories before extending credit and by monitoring credit exposure on a regular basis. Collateral or other security is generally not required for accounts receivable. We maintain an allowance for customer accounts that reduces receivables to amounts that are expected to be collected. In estimating the allowance for doubtful accounts, management considers relevant information about past events, current conditions and reasonable and supportable forecasts that affect the collectability of financial assets. Once a receivable balance has been determined to be uncollectible, generally after all collection efforts have been exhausted, that amount is charged against the allowance for doubtful accounts . No customer accounted for more than 10 % of accounts receivable at February 28, 2023 or May 31, 2022 , respectively. Inventory The reserve for obsolete and slow-moving inventory is reviewed at least quarterly based on an analysis of the inventory, considering the current condition of the asset as well as other known facts and future plans. The reserve required to record inventory at lower of cost or net realizable value is adjusted as conditions change. Product obsolescence may be caused by shelf-life expiration, discontinuance of a product line, replacement products in the marketplace or other competitive situations. Goodwill and Other Intangible Assets Goodwill represents the excess of purchase price over fair value of tangible net assets of acquired businesses after amounts are allocated to other identifiable intangible assets. Other intangible assets include customer relationships, trademarks, licenses, trade names, covenants not-to-compete and patents. Customer-based intangibles are amortized on either an accelerated or straight-line basis, reflecting the pattern in which the economic benefits are consumed, while all other amortizable intangibles are amortized on a straight-line basis. Intangibles are generally amortized over 5 to 25 years . We review the carrying amounts of goodwill and other non-amortizable intangible assets annually, or when indications of impairment exist, to determine if such assets may be impaired. If the carrying amounts of these assets are deemed to be less than fair value based upon a discounted cash flow analysis and comparison to comparable EBITDA multiples of peer companies, such assets are reduced to their estimated fair value and a charge is recorded to operations. Long-Lived Assets Management reviews the carrying values of its long-lived assets to be held and used, including definite-lived intangible assets, for possible impairment whenever events or changes in business conditions warrant such a review. The carrying value of a long-lived asset is considered impaired when the anticipated separately identifiable undiscounted cash flows over the remaining useful life of the asset indicate that the carrying amount of the asset may not be recoverable. In such an event, fair value is determined using discounted cash flows and, if lower than the carrying value, impairment is recognized through a charge to operations. Business Combinations We utilize the acquisition method of accounting for business combinations. This method requires, among other things, that results of operations of acquired companies are included in Neogen’s results of operations beginning on the respective acquisition dates and that assets acquired and liabilities assumed are recognized at fair value as of the acquisition date. Any excess of the fair value of consideration transferred over the fair values of the net assets acquired is recognized as goodwill. Contingent consideration liabilities are recognized at the estimated fair value on the acquisition date. These amounts are recorded in either other accruals within current liabilities (for expected payments to be made within the next 12 months) or other non-current liabilities (for expected payments to be made after the next 12 months), both on our condensed consolidated balance sheets. Subsequent changes to the fair value of contingent consideration liabilities are recognized in other income (expense) in the condensed consolidated statements of income (loss). Contingent consideration payments made soon after the acquisition date are classified as investing activities in the condensed consolidated statements of cash flows. Contingent consideration payments not made soon after the acquisition date that are related to the acquisition date fair value are reported as financing activities in the condensed consolidated statements of cash flows, and amounts paid in excess of the original acquisition date fair value are reported as operating activities in the condensed consolidated statements of cash flows. The fair value of assets acquired and liabilities assumed in certain cases may be subject to revision based on the final determination of fair value during a period of time not to exceed 12 months from the acquisition date. Legal costs, due diligence costs, business valuation costs and all other business acquisition costs are expensed when incurred. Equity Compensation Plans Share options awarded to employees, restricted stock units (RSUs) and shares of stock awarded to employees under certain stock purchase plans are recognized as compensation expense based on their fair value at grant date. The fair market value of options granted under the Company stock option plans was estimated on the date of grant using the Black-Scholes option-pricing model with assumptions for inputs such as interest rates, expected dividends, an estimate of award forfeitures, volatility measures and specific employee exercise behavior patterns based on statistical data. Some of the inputs used are not market-observable and have to be estimated or derived from available data. Use of different estimates would produce different option values, which in turn would result in higher or lower compensation expense recognized. For RSUs, we use the intrinsic value method to value the units. To value equity awards, several recognized valuation models exist; none of these models can be singled out as being the best or most correct. The model applied by us can accommodate most of the specific features included in the options granted, which are the reason for their use. If different models were used, the option values could differ despite using the same inputs. Accordingly, using different assumptions coupled with using a different valuation model could have a significant impact on the fair value of employee stock options. Fair value could be either higher or lower than the number provided by the model applied and the inputs used. Further information on our equity compensation plans, including inputs used to determine the fair value of options, is disclosed in Note 7 . Income Taxes We account for income taxes using the asset and liability method. Under this method, deferred income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and for tax credit carryforwards and are measured using the enacted tax rates in effect for the years in which the differences are expected to reverse. Deferred income tax expense represents the change in net deferred income tax assets and liabilities during the year. Accounting Pronouncements Recently Adopted Acquired contract assets and liabilities in a business combination In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends ASC 805 to require an acquirer to, at the date of acquisition, recognize and measure contract assets and contract liabilities acquired in accordance with ASU 2014-9, Revenue from Contracts with Customers (Topic 606) as if the entity had originated the contracts. The guidance is effective for fiscal years beginning after December 15, 2022. We adopted this standard in the third quarter of fiscal 2023 and applied the amendment retrospectively to all business combinations in fiscal year 2023. Adoption of this standard did not have a material impact on our condensed consolidated financial statements and related disclosures. Reference Rate Reform In March 2020, the FASB issued Update 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This update provides temporary optional expedients to applying the reference rate reform guidance to contracts that reference LIBOR or another reference rate expected to be discontinued. Under this update, contract modifications resulting in a new reference rate may be accounted for as a continuation of the existing contract. We adopted this standard in the second quarter of fiscal 2023, and now use the Secured Overnight Financing Rate (SOFR). Adoption of this standard did not have a material impact on our condensed consolidated financial statements and related disclosures. |
Cash and Marketable Securities
Cash and Marketable Securities | 9 Months Ended |
Feb. 28, 2023 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Marketable Securities | 2. CASH AND MARKETABLE SECURITIES Cash and Cash Equivalents Cash and cash equivalents consist of bank demand accounts, savings deposits, certificates of deposit and commercial paper with original maturities of 90 days or less. Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company has not experienced losses related to these balances and believes it is not exposed to significant credit risk regarding its cash and cash equivalents. Cash and cash equivalents were $ 67,134,000 and $ 44,473,000 as of February 28, 2023 and May 31, 2022, respectively. The carrying value of these assets approximates fair value due to the short maturity of these instruments and is classified as Level 1 in the fair value hierarchy. Marketable Securities The Company has marketable securities held by banks or broker-dealers as of February 28, 2023. Changes in market value are monitored and recorded on a monthly basis. In the event of a downgrade in credit quality subsequent to purchase, the marketable securities investment is evaluated to determine the appropriate action to take to minimize the overall risk to our marketable securities portfolio. These securities are classified as available for sale. The primary objective of management’s short-term investment activity is to preserve capital for the purpose of funding current operations, capital expenditures and business acquisitions; short-term investments are not entered into for trading or speculative purposes. These securities are recorded at fair value based on recent trades or pricing models and therefore meet the Level 2 criteria. Interest income on these investments is recorded within other income on the income statement. Adjustments in the fair value of these assets are recorded in other comprehensive income. Marketable Securities as of February 28, 2023 and May 31, 2022 are listed below by classification and remaining maturities. (in thousands) Maturity February 28, 2023 May 31, 2022 Commercial Paper & Corporate Bonds 0 - 90 days $ 34,443 $ 106,497 91 - 180 days 22,322 61,373 181 days - 1 year 52,462 91,706 1 - 2 years 6,853 77,002 Total Marketable Securities $ 116,080 $ 336,578 The components of marketable securities, consisting of commercial paper and corporate bonds, as of February 28, 2023 are as follows: (in thousands) Amortized Unrealized Unrealized Fair Value Commercial Paper & Corporate Bonds $ 118,166 $ — $ ( 2,086 ) $ 116,080 The components of marketable securities, consisting of commercial paper and corporate bonds, as of May 31, 2022 are as follows: (in thousands) Amortized Unrealized Unrealized Fair Value Commercial Paper & Corporate Bonds $ 339,540 $ 7 $ ( 2,969 ) $ 336,578 |
Inventories
Inventories | 9 Months Ended |
Feb. 28, 2023 | |
Inventories | 3. INVENTORIES Inventories are stated at the lower of cost, determined by the first-in, first-out method, or net realizable value. The components of inventories follow: (in thousands) February 28, 2023 May 31, 2022 Raw materials $ 73,514 $ 58,667 Work-in-process 7,054 6,388 Finished and purchased goods 63,295 57,258 $ 143,863 $ 122,313 |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Feb. 28, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | 4. REVENUE RECOGNITION The Company determines the amount of revenue to be recognized through application of the following steps: • Identification of the contract with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, the Company satisfies the performance obligations. Essentially all of Neogen’s revenue is generated through contracts with its customers. A performance obligation is a promise in a contract to transfer a product or service to a customer. We generally recognize revenue at a point in time when all of our performance obligations under the terms of a contract are satisfied. Revenue is recognized upon transfer of control of promised products and services in an amount that reflects the consideration we expect to receive in exchange for those products or services. The collectability of consideration on the contract is reasonably assured before revenue is recognized. To the extent that customer payment has been received before all recognition criteria are met, these revenues are initially deferred in other accruals on the balance sheet and the revenue is recognized in the period that all recognition criteria have been met. Certain agreements with customers include discounts or rebates on the sale of products and services applied retrospectively, such as volume rebates achieved by purchasing a specified purchase threshold of goods and services. We account for these discounts as variable consideration and estimate the likelihood of a customer meeting the threshold in order to determine the transaction price using the most predictive approach. We typically use the most-likely-amount method for incentives that are offered to individual customers, and the expected-value method for programs that are offered to a broad group of customers. Variable consideration reduces the amount of revenue that is recognized. Rebate obligations related to customer incentive programs are recorded in accrued liabilities; the rebate estimates are adjusted at the end of each applicable measurement period based on information currently available. The performance obligations in Neogen’s contracts are generally satisfied well within one year of contract inception. In such cases, management has elected the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component. Management has elected to utilize the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred because the amortization period for the prepaid costs that would otherwise have been deferred and amortized is one year or less. We account for shipping and handling for products as a fulfillment activity when goods are shipped. Shipping and handling costs that are charged to and reimbursed by the customer are recognized as revenues, while the related expenses incurred by Neogen are recorded in sales and marketing expense. Revenue is recognized net of any tax collected from customers. The taxes are subsequently remitted to governmental authorities. Our terms and conditions of sale generally do not provide for returns of product or reperformance of service except in the case of quality or warranty issues. These situations are infrequent, and due to immateriality of the amount, warranty claims are recorded in the period incurred. The Company derives revenue from two primary sources—product revenue and service revenue. Product revenue consists of shipments of: • Diagnostic test kits, dehydrated culture media and related products used by food producers and processors to detect harmful natural toxins, foodborne bacteria, allergens and levels of general sanitation; • Consumable products marketed to veterinarians, retailers, livestock producers and animal health product distributors; and • Rodenticides, disinfectants and insecticides to assist in the control of rodents, insects and disease in and around agricultural, food production and other facilities. Revenues for our products are recognized and invoiced when the product is shipped to the customer. Service revenue consists primarily of: • Genomic identification and related interpretive bioinformatic services; and • Other commercial laboratory services. Revenues for Neogen’s genomics and commercial laboratory services are recognized and invoiced when the applicable laboratory service is performed and the results are conveyed to the customer. Payment terms for products and services are generally 30 to 60 days. The Company has no contract assets. Contract liabilities represent deposits made by customers before the satisfaction of performance obligation(s) and recognition of revenue. Upon completion of the performance obligation(s) that the Company has with the customer, the liability for the customer deposit is relieved and revenue is recognized. These customer deposits are recorded within Deferred revenue on the condensed consolidated balance sheets. During the three and nine months ended February 28, 2023 , the Company recognized $ 2.9 million and $ 8.0 million, respectively of deferred revenue amounts into revenue. On September 1, 2022, Neogen closed on a Reverse Morris Trust transaction to combine with 3M’s Food Safety business. Similar to Neogen, 3M’s former Food Safety business sells diagnostic test kits, dehydrated culture media, and related products used by food producers and processors to detect foodborne bacteria, allergens and levels of general sanitation. Revenue for these products are recognized and invoiced when the product is shipped to the customer. These products are currently manufactured, invoiced, and distributed by 3M on behalf of Neogen under a number of transition service contracts. The following table presents disaggregated revenue by major product and service categories during the three and nine months ended February 28, 2023 and 2022: Three Months Ended February 28, Nine Months Ended February 28, (in thousands) 2023 2022 2023 2022 Food Safety Natural Toxins, Allergens & Drug Residues $ 19,198 $ 17,965 $ 61,236 $ 59,397 Bacterial & General Sanitation 39,444 11,288 91,293 34,709 Culture Media & Other 77,955 18,145 179,293 56,136 Rodent Control, Insect Control & Disinfectants 9,550 9,577 29,502 25,459 Genomics Services 5,395 5,781 16,204 16,909 $ 151,542 $ 62,756 $ 377,528 $ 192,610 Animal Safety Life Sciences $ 1,440 $ 1,339 $ 4,456 $ 4,011 Veterinary Instruments & Disposables 15,428 17,047 46,534 47,956 Animal Care & Other 8,735 9,449 29,830 29,517 Rodent Control, Insect Control & Disinfectants 20,242 18,359 63,121 58,777 Genomics Services 20,868 19,294 59,168 54,195 66,713 65,488 203,109 194,456 Total Revenues $ 218,255 $ 128,244 $ 580,637 $ 387,066 |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 9 Months Ended |
Feb. 28, 2023 | |
Net Income (Loss) Per Share | 5. NET INCOME (LOSS) PER SHARE The calculation of net income (loss) per share follows: Three Months Ended February 28, Nine Months Ended February 28, (in thousands, except per share amounts) 2023 2022 2023 2022 Numerator for basic and diluted net income (loss) per share: Net income (loss) attributable to Neogen $ 8,190 $ 5,443 $ ( 28,442 ) $ 33,348 Denominator for basic net income (loss) per share: Weighted average shares 216,218 107,818 179,666 107,648 Effect of dilutive stock options and RSUs 181 315 — 482 Denominator for diluted net income (loss) per share 216,399 108,133 179,666 108,130 Net income (loss) per share: Basic $ 0.04 $ 0.05 $ ( 0.16 ) $ 0.31 Diluted $ 0.04 $ 0.05 $ ( 0.16 ) $ 0.31 Note: Due to the net loss during the nine months ended February 28, 2023 , the dilutive stock options and RSUs are anti-dilutive. |
Segment Information and Geograp
Segment Information and Geographic Data | 9 Months Ended |
Feb. 28, 2023 | |
Segment Information and Geographic Data | 6. SEGMENT INFORMATION AND GEOGRAPHIC DATA We have two reportable segments: Food Safety and Animal Safety. The Food Safety segment is primarily engaged in the development, production and marketing of diagnostic test kits, culture media and related products used by food producers and processors to detect harmful natural toxins, foodborne bacteria, allergens and levels of general sanitation. All new product revenues from the merger of the 3M FSD, effective September 1, 2022, are reported through the Food Safety segment. The Animal Safety segment is primarily engaged in the development, production and marketing of products dedicated to animal safety, including a complete line of consumable products marketed to veterinarians and animal health product distributors. This segment also provides genomic identification and related interpretive bioinformatic services. Additionally, the Animal Safety segment produces and markets rodenticides, disinfectants and insecticides to assist in the control of rodents, insects and disease in and around agricultural, food production and other facilities. Our international operations in the United Kingdom, Mexico, Brazil, China and India originally focused on the Company’s food safety products, and each of these units reports through the Food Safety segment. In recent years, these operations have expanded to offer our complete line of products and services, including those usually associated with the Animal Safety segment, such as cleaners, disinfectants, rodenticides, insecticides, veterinary instruments and genomics services. These additional products and services are managed and directed by existing Food Safety management and are reported through the Food Safety segment. Neogen’s operation in Australia originally focused on providing genomics services and sales of animal safety products and reports through the Animal Safety segment. With the acquisition of Cell BioSciences in February 2020, this operation expanded to offer our complete line of products and services, including those usually associated with the Food Safety segment. These additional products are managed and directed by existing management at Neogen Australasia and report through the Animal Safety segment. The accounting policies of each of the segments are the same as those described in Note 1. Segment information follows: (in thousands) Food Animal Corporate and Total As of and during the three months ended February 28, 2023 Product revenues to external customers $ 144,843 $ 45,845 $ — $ 190,688 Service revenues to external customers 6,699 20,868 — 27,567 Total revenues to external customers $ 151,542 $ 66,713 $ — $ 218,255 Operating income (loss) $ 11,011 $ 10,752 $ ( 6,079 ) $ 15,684 Total assets $ 3,975,921 $ 349,628 $ 183,215 $ 4,508,764 As of and during the three months ended February 28, 2022 Product revenues to external customers $ 55,372 $ 46,194 $ — $ 101,566 Service revenues to external customers 7,384 19,294 — 26,678 Total revenues to external customers $ 62,756 $ 65,488 $ — $ 128,244 Operating income (loss) $ 8,191 $ 10,783 $ ( 12,597 ) $ 6,377 Total assets $ 302,605 $ 298,854 $ 379,746 $ 981,205 (1) Includes corporate assets, consisting principally of cash and cash equivalents, marketable securities, current and deferred tax accounts and overhead expenses not allocated to specific business segments. Also includes the elimination of intersegment transactions. (in thousands) Food Animal Corporate and Total As of and during the nine months ended February 28, 2023 Product revenues to external customers $ 356,856 $ 143,941 $ — $ 500,797 Service revenues to external customers 20,672 59,168 — 79,840 Total revenues to external customers $ 377,528 $ 203,109 $ — $ 580,637 Operating income (loss) $ 41,053 $ 35,439 $ ( 62,402 ) $ 14,090 As of and during the nine months ended February 28, 2022 Product revenues to external customers $ 171,440 $ 140,261 $ — $ 311,701 Service revenues to external customers 21,170 54,195 — 75,365 Total revenues to external customers $ 192,610 $ 194,456 $ — $ 387,066 Operating income (loss) $ 29,216 $ 36,246 $ ( 24,871 ) $ 40,591 (1) Includes elimination of intersegment transactions. The following table presents the Company’s revenue disaggregated by geographic location: Three Months Ended February 28, Nine Months Ended February 28, (in thousands) 2023 2022 2023 2022 Domestic $ 109,919 $ 77,297 $ 304,974 $ 231,454 International 108,336 50,947 275,663 155,612 Total revenue $ 218,255 $ 128,244 $ 580,637 $ 387,066 |
Equity Compensation Plans
Equity Compensation Plans | 9 Months Ended |
Feb. 28, 2023 | |
Equity Compensation Plans | 7. EQUITY COMPENSATION PLANS The Company’s long-term incentive plans allow for the grant of various types of share-based awards to key directors, officers and employees of the Company. Incentive and non-qualified options to purchase shares of common stock have been granted under the terms of the 2018 Omnibus Incentive Plan. These options are granted at an exercise price of the closing price of the common stock on the date of grant . Options vest ratably over three and five year periods and the contractual terms are generally five , seven or ten years . The company grants restricted stock units (RSUs) under the terms of the 2018 Omnibus Incentive Plan, which vest ratably over three and five year periods. T he fair value of the RSUs is determined based on the closing price of the common stock on the date of grant. During the three and nine months ended February 28, 2023 and 2022, the Company recorded $ 2,812,000 and $ 1,607,000 , and $ 7,311,000 and $ 5,045,000 , respectively, of expense related to its share-based awards, recorded in general and administrative expense in the condensed consolidated income statement. Under the terms of an agreement entered into with 3M as part of the combination of the FSD, the Company issued stock options and RSUs to conveying 3M employees to replace their existing unvested 3M awards under an exchange ratio based on the closing prices of Neogen and 3M common stock on August 31, 2022, the day before the transaction. These substitute options and RSUs retained their original vesting and expiration terms (originally three year vesting and ten year lives). There were a total of 131,746 substitute options and 29,770 substitute RSUs issued during the second quarter to the conveying 3M employees as part of the employee matters agreement. The Company recognized $ 305,000 and $ 489,000 in compensation expense, respectively, during the three and nine months ended February 28, 2023 for these awards. The Company offers eligible employees the option to purchase common stock at a 5 % discount to the lower of the market value of the stock at the beginning or end of each participation period under the terms of the 2021 Employee Stock Purchase Plan. The discount is recorded in general and administrative expense. Total individual purchases in any year are limited to 10 % of compensation. |
Business Combinations
Business Combinations | 9 Months Ended |
Feb. 28, 2023 | |
Business Combinations | 8. BUSINESS COMBINATIONS The condensed consolidated statements of income (loss) reflect the results of operations for business acquisitions since the respective dates of purchase. All are accounted for using the acquisition method. Goodwill recognized in the acquisitions discussed below relates primarily to enhancing the Company’s strategic platform for the expansion of available product offerings. On September 17, 2021, the Company acquired all of the stock of CAPInnoVet, Inc., a companion animal health business that provides pet medications to the veterinary market. This acquisition provides entry into the retail parasiticide market and enhances the Company’s presence in companion animal markets. Consideration for the purchase was net cash of $ 17.9 million paid at closing. There is also the potential for performance milestone payments to the former owners of up to $ 6.5 million and the Company could incur up to $ 14.5 million in future royalty payments. Upon revaluation of the contingent liability at February 28, 2023, the Company recognized a gain of $ 300,000 on the performance milestone liability, recorded within other income. The business is operated from our location in Lexington, KY, reporting within the Animal Safety segment. On November 30, 2021, the Company acquired all of the stock of Delf (U.K.) Ltd., a United Kingdom-based manufacturer and supplier of animal hygiene and industrial cleaning products, and Abbott Analytical Ltd., a related service provider. This acquisition expanded the Company’s line of dairy hygiene products and will enhance our cleaner and disinfectant product portfolio. Consideration for the purchase was net cash of $ 9.5 million paid at closing. The companies continue to operate from their current location in Liverpool, England, reporting within the Food Safety segment and are managed through Neogen’s Scotland operation. On December 9, 2021, the Company acquired all of the stock of Genetic Veterinary Sciences, Inc., a companion animal genetic testing business providing genetic information for dogs, cats and birds to animal owners, breeders and veterinarians. This acquisition will further expand the Company’s presence in the companion animal market. Consideration for the purchase was $ 11.3 million in net cash. The business is operated from its current location in Spokane, Washington, reporting within the Animal Safety segment. Since completion of initial estimates in the second quarter of fiscal year 2022, the Company has recorded insignificant measurement period adjustments, which resulted in a decrease to the base purchase price. On July 1, 2022, Neogen acquired all of the stock of Thai-Neo Biotech Co., Ltd., a longstanding distributor of Neogen’s food safety products to Thailand and Southeast Asia. This acquisition gives Neogen a direct sales presence in Thailand. Consideration for the purchase was $ 1,581,000 in net cash, with $ 1,310,000 paid at closing, $ 37,000 paid on November 29, 2022 as a working capital adjustment and $ 234,000 payable on October 1, 2023. The final purchase price allocation, based upon the fair value of these assets and liabilities determined using the income approach, included accounts receivable of $ 177,000 , inventory of $ 232,000 , prepaids of $ 3,000 , net property, plant and equipment of $ 16,000 , other non-current assets of $ 6,000 , accounts payable of $ 98,000 , other payables of $ 6,000 , non-current tax liabilities of $ 124,000 , intangible assets of $ 620,000 (with an estimated life of 10 years) and the remainder to goodwill (non-deductible for tax purposes). The business continues to operate in Bangkok, Thailand, reporting within the Food Safety segment. On February 10, 2023, Neogen acquired certain assets as part of an asset purchase agreement with Corvium, Inc., a partner and supplier within the Company's software analytics platform. This acquisition, which primarily includes the software technology, advances the Company's food safety data analytics strategy. The purchase price consideration was $ 24.1 million, which included certain amounts for litigation and indemnity escrow. There is also the potential for performance milestone payments based on the successful implementation of the software service at customer sites and sale of licenses. As a result, the Company has recorded contingent liabilities as part of the opening balance sheet within Other accruals and Other non-current liabilities, as shown below. As of February 28, 2023, the Company has recorded a preliminary allocation of the purchase consideration to assets acquired and liabilities assumed based on initial fair value estimates and is subject to continuing management analysis, with assistance from third party valuation advisors. Goodwill, which is fully deductible for tax purposes, includes value associated with profits earned from data management solutions that can be offered to existing customers and the expertise and reputation of the assembled workforce and developed software technology. These values are Level 3 fair value measurements. The preliminary fair values of net tangible assets and intangible assets acquired were based on preliminary valuations prior to receiving a third-party assessment, and our estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date). The final determination may result in asset and liability fair values and tax bases that differ from the preliminary estimates and require changes to the preliminary amounts recognized. Due to the Company's acquisition of Corvium, Inc., it recorded a loss of $ 1.5 million in the third quarter on dissolution of its minority interest in that company. The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the date of acquisition: (in thousands) Prepaids and other current assets $ 101 Property, plant and equipment 13 Intangible assets 14,000 Deferred revenue ( 1,827 ) Other accruals ( 1,000 ) Adjustment of annual license prepaid ( 419 ) Other non-current liabilities ( 1,000 ) Total identifiable assets and liabilities acquired 9,868 Goodwill 14,199 Total purchase consideration $ 24,067 For each completed acquisition listed above, the revenues and net income were not considered material and were therefore not disclosed. 3M Food Safety transaction On September 1, 2022, Neogen, 3M Company (“3M”), and Garden SpinCo Corporation (“Garden SpinCo”), a newly formed, wholly owned subsidiary of 3M created to carve out 3M’s Food Safety Division (“3M FSD”, “FSD”), closed on the transaction combining 3M’s FSD with Neogen in a Reverse Morris Trust transaction and Garden SpinCo became a wholly owned subsidiary of Neogen (“FSD transaction”). Following the FSD transaction, pre-merger Garden SpinCo stockholders own, in the aggregate, approximately 50.1 % of the issued and outstanding shares of Neogen common stock and pre-merger Neogen shareholders own, in the aggregate, approximately 49.9 % of the issued and outstanding shares of Neogen common stock. This transaction is a business combination and was accounted for using the acquisition method. The acquired business is a leading provider of food safety testing solutions. It offers a broad range of food safety testing products that support multiple industries within food and beverage, helping producers to prevent and protect consumers from foodborne illnesses. The business has a broad global presence with products used in more than 60 countries and a diversified revenue base of more than 100,000 end-user customers. The combination of Neogen and the 3M FSD creates a leading innovator with an enhanced geographic footprint, innovative product offerings, digitization capabilities, and financial flexibility to capitalize on robust growth trends in sustainability, food safety, and supply chain integrity. The acquired Food Safety business continues to primarily operate in facilities in Minnesota and the United Kingdom, and is being managed overall in Michigan, reporting within the Food Safety segment. The purchase price consideration for the 3M FSD was $ 3.2 billion, net of customary purchase price adjustments and transaction costs, which consisted of 108,269,946 shares of Neogen common stock issued on closing with a fair value of $ 2.2 billion and cash consideration of $ 1 billion, funded by the additional financing secured by the Company. See Note 10 for further detail on the debt incurred. During the three months ended February 28, 2023 , the Company recorded adjustments to its preliminary allocation of the purchase consideration to assets acquired and liabilities assumed based on initial fair value estimates and is subject to continuing management analysis, with assistance from third party valuation advisors. In the third quarter of fiscal 2023, net working capital adjustments resulted in changes to the inventories acquired and valuations of property, plant and equipment resulted in recognizing the fair value of assets acquired. The excess of the purchase price over the fair value of the net tangible assets and identifiable intangible assets of $ 1.98 billion was recorded as goodwill, of which $ 1.92 billion is not deductible for tax purposes. Goodwill, which increased in the third quarter of fiscal 2023 based on an updated purchase consideration, includes value associated with profits earned from market and expansion capabilities, expected synergies from integration and streamlining operational activities, the expertise and reputation of the assembled workforce and other intangible assets that do not qualify for separate recognition. These values are Level 3 fair value measurements. The preliminary fair values of net tangible assets and intangible assets acquired were based on preliminary valuations, and our estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date). The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the fair value of inventories and property, plant and equipment, as well as deferred income tax liabilities. The fair values of the assets acquired and liabilities assumed are based on our preliminary estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. While we believe that these preliminary estimates provide a reasonable basis for estimating the fair value of the assets acquired and liabilities assumed, we will continue to evaluate available information prior to finalization of the amounts. The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the date of acquisition: (in thousands) Cash and cash equivalents $ 319 Inventories 18,403 Other current assets 14,855 Property, plant and equipment 25,721 Intangible assets 1,560,000 Right of use asset 882 Lease liability ( 885 ) Deferred tax liabilities ( 355,347 ) Other liabilities ( 3,585 ) Total identifiable assets and liabilities acquired 1,260,363 Goodwill 1,978,149 Total purchase consideration $ 3,238,512 The following table summarizes the intangible assets acquired and the useful life of these assets. (in thousands) Fair Value Useful Life in Years Trade Names and Trademarks $ 110,000 25 Developed Technology 280,000 15 Customer Relationships 1,170,000 20 Total intangible assets acquired $ 1,560,000 During the three and nine months ended February 28, 2023, transaction fees and integration expenses of $ 2.8 million and $ 55.6 million , respectively, were expensed. In the three and nine months ended February 28, 2022, acquisition related costs of $ 10.6 million and $ 19.9 million were expensed, respectively. These costs are included in general and administrative expenses in the Company’s condensed consolidated statements of income (loss). The operating results of the FSD have been included in the Company’s condensed consolidated statements of income (loss) since the acquisition date. In the third quarter of fiscal 2023, the FSD’s total revenue was $ 87.0 million and operating income was approximately $ 3.3 million . The operating income includes $ 2.8 million of transaction fees and integration expenses, $ 20.3 million of amortization expense for acquired intangible assets and a $ 614,000 credit to cost of goods sold related to an adjustment to the step up to fair value on acquired inventory. The following table presents pro forma information as if the merger with the 3M FSD business had occurred on June 1, 2021 and had been combined with the results reported in our condensed consolidated statements of income (loss) for all periods presented: Three Months Ended February 28, Nine Months Ended (in thousands, unaudited) 2023 2022 2023 2022 Net sales $ 218,300 $ 219,900 $ 675,600 $ 668,100 Operating Income (loss) $ 15,700 $ ( 17,000 ) $ ( 5,400 ) $ ( 10,900 ) The unaudited pro forma information is presented for informational purposes only and is not indicative of the results that would have been achieved if the merger had taken place at such time. The unaudited pro forma information presented above includes adjustments primarily for amortization charges for acquired intangible assets and certain acquisition-related expenses for legal and professional fees. In connection with the acquisition of the 3M FSD, the Company and 3M entered into several transition service agreements, including manufacturing, distribution and certain back-office support, that have been accounted for separately from the acquisition of assets and assumption of liabilities in the business combination. 3M periodically remits amounts charged to customers on our behalf and charges us for the associated cost of goods sold and transition service fees. As of February 28, 2023, a net receivable from 3M of $ 42.9 million was included in prepaid expenses and other current assets in the Company’s condensed consolidated balance sheets. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Feb. 28, 2023 | |
Goodwill and Other Intangible Assets | 9. GOODWILL AND INTANGIBLE ASSETS The following table summarizes goodwill by reportable segment: (in thousands) Food Safety Animal Safety Total May 31, 2022 $ 67,558 $ 75,146 $ 142,704 Acquisitions (1) 1,989,270 6,754 1,996,024 Impairment (2) ( 1,300 ) — ( 1,300 ) Foreign currency translation and other ( 1,984 ) ( 326 ) ( 2,310 ) February 28, 2023 $ 2,053,544 $ 81,574 $ 2,135,118 (1) Animal Safety acquisitions represents portion of 3M Food Safety transaction recorded at Neogen Australasia. (2) Impairment during the nine months ended February 28, 2023 relates to discontinued product lines. The amount was determined based on a relative fair value basis of the product lines compared to the overall reporting unit . As of February 28, 2023, non-amortizable intangible assets included li censes of $ 569,000 , trademarks of $ 12,459,000 and other intangibles of $ 1,224,000 . During the three and nine months ended February 28, 2023, the Company recorded an impairment of $ 1.0 million to its non-amortizable trademarks related to discontinued product lines. As of May 31, 2022 , non-amortizable intangible assets included licenses of $ 569,000 , trademarks of $ 13,604,000 and other intangibles of $ 1,224,000 . Amortizable intangible assets consisted of the following and are included in customer-based intangibles and other non-current assets within the condensed consolidated balance sheets: (in thousands) Gross Less Net Licenses $ 17,401 $ 6,952 $ 10,449 Covenants not to compete 782 716 66 Patents 8,670 5,045 3,625 Customer relationships 1,245,875 65,764 1,180,111 Trade names and trademarks 111,167 2,453 108,714 Developed technology 311,350 13,198 298,152 Other product and service-related intangibles 27,530 8,418 19,112 February 28, 2023 $ 1,722,775 $ 102,546 $ 1,620,229 Licenses $ 17,109 $ 5,682 $ 11,427 Covenants not to compete 846 671 175 Patents 8,347 4,583 3,764 Customer relationships 75,000 33,662 41,338 Trade names and trademarks 1,180 167 1,013 Developed technology 17,741 6,124 11,617 Other product and service-related intangibles 27,299 4,527 22,772 May 31, 2022 $ 147,522 $ 55,416 $ 92,106 Amortization expense relating to definite-lived intangible assets was $ 22.9 million and $ 2.6 million during the three months ended February 28, 2023 and 2022, respectively, and $ 48.0 million and $ 7.3 million during the nine months ended February 28, 2023 and 2022, respectively. The estimated amortization expense for each of the five succeeding fiscal years is as follows: $ 23.1 million remaining in 2023, $ 91.8 million in 2024, $ 91.3 million in 2025, $ 91.2 million in 2026 and $ 90.7 million in 2027 and $ 1.23 billion thereafter. The amortizable intangible assets useful lives are 2 to 20 years for licenses, 3 to 10 years for covenants not to compete, 5 to 25 years for patents, 9 to 20 years for customer relationships, 10 to 25 years for trade names and trademarks, 10 to 20 years for developed technology and 5 to 15 years for other product and service-related intangibles. All definite-lived intangibles are amortized on a straight-line basis with the exception of definite-lived customer-based intangibles and product and service-related intangibles, which are amortized on either a straight-line or an accelerated basis. The weighted average remaining amortization period for intangibles was 18 years as of February 28, 2023 and eight years as of May 31, 2022 . |
Long Term Debt
Long Term Debt | 9 Months Ended |
Feb. 28, 2023 | |
Debt Disclosure [Abstract] | |
Long Term Debt | 10. LONG TERM DEBT The Company’s long-term debt consists of the following: (in thousands) February 28, 2023 Term Loan $ 550,000 Senior Notes 350,000 Total long-term debt 900,000 Less: Unamortized debt issuance costs ( 15,299 ) Total non-current debt, net $ 884,701 The Company had a financing agreement with a bank providing for a $ 15.0 million unsecured revolving line of credit, which originally expired on November 30, 2023 , but was replaced by the five-year senior secured revolving facility as part of the Credit Facilities described below. There were no advances against the line of credit during fiscal 2022 and there were no advances in fiscal 2023 before the line of credit was extinguished. Interest on any borrowings under that agreement was at LIBOR plus 100 basis points . Financial covenants included maintaining specified levels of tangible net worth, debt service coverage, and funded debt to EBITDA, each of which the Company was in compliance with during the period the line of credit was available. As of May 31, 2022 , the Company had no outstanding debt. In connection with the acquisition of 3M’s Food Safety business as described more fully in Note 8, Neogen incurred financing through Garden SpinCo as follows: Credit Facilities On June 30, 2022, Garden SpinCo entered into a credit agreement consisting of a five-year senior secured term loan facility (“term loan facility”) in the amount of $ 650 million and a five-year senior secured revolving facility (“revolving facility”) in the amount of $ 150 million (collectively, the “Credit Facilities”) to fund the 3M Food Safety transaction. The term loan facility was drawn on August 31, 2022, to fund the closing of the 3M Food Safety transaction on September 1, 2022 while the revolving facility rema ined undrawn and continues to be undrawn as of February 28, 2023. The Credit Facilities bear interest based on the term SOFR plus an applicable margin between a range of 150 to 225 basis points determined for each interest period and paid monthly. During the three and nine months ended February 28, 2023 , the interest rates ranged from 6.48 % to 6.66 % per annum and 4.80 % to 6.66 % per annum, respectively. The term loan facility matures on June 30, 2027 and the revolving facility matures at the earlier of June 30, 2027 and the termination of the revolving commitments. In November 2022, the Company entered into an interest rate swap agreement, whereby interest on $ 250 million of the total $ 550 million principal balance is paid at a fixed rate. See Note 13. "Derivatives" for further detail on the swap agreement. The term loan facility contains an optional prepayment feature at the discretion of the Company. The Company determined that the prepayment feature did not meet the definition of an embedded derivative and does not require bifurcation from the host liability and, accordingly, has accounted for the entire instrument at amortized cost. In accordance with the prepayment feature, the Company paid $ 60 million of the term loan facility’s principal in September 2022 and an additional $ 40 million of the term loan facility's principal in December 2022, in order to decrease the outstanding debt balance. The Company can draw any amount under the revolving facility up to the $ 150 million limit, with the amount to be repaid on the termination date of the revolving commitments. Debt issuance costs of $ 2.4 million were incurred related to the revolving facility. These costs are being amortized as interest expense in the condensed consolidated statements of income (loss) over the contractual life of the revolving facility using the straight line method. Amortization of the deferred debt issuance costs for the revolving facility was $ 122,000 and $ 244,000 during the three and nine months ended February 28, 2023 , respectively. Debt issuance costs of $ 489,000 were recorded in Prepaid expenses and other current assets and $ 1.6 million were recorded in Other non-current assets on the condensed consolidated balance sheet as of February 28, 2023 . The Company must pay an annual commitment fee ranging from 0.20 % and 0.35 % on the unused portion of the Revolving Credit Facility, paid quarterly. As of February 28, 2023 , the commitment fee was 0.35 % and $ 131,000 and $ 356,000 was recorded as interest expense in the condensed consolidated statements of income (loss) during the three and nine months ended February 28, 2023, respectively. There was no accrued interest payable on the term loan as of February 28, 2023 . The Company incurred $ 10.2 million in total debt issuance costs on the term loan which is recorded as an offset to the term loan facility and amortized over the contractual life of the loan to interest expense using the straight line method. The amortization of deferred debt issuance costs of $ 529,000 and $ 1.1 million and interest expense of $ 9.1 million and $ 17.4 million (excluding swap credit of $ 136,000 ) for the term loan was included in the condensed consolidated statements of income (loss) during the three and nine months ended February 28, 2023, respectively. Financial covenants include maintaining specified levels of funded debt to EBITDA, and debt service coverage. As of February 28, 2023, the Company was in compliance with its debt covenants. Senior Notes On July 20, 2022, Garden SpinCo closed on an offering of $ 350 million aggregate principal amount of 8.625 % senior notes due 2030 (the “Notes”) in a private placement at par. The Notes were initially issued by Garden SpinCo to 3M and were transferred and delivered by 3M to the selling securityholder in the offering, in satisfaction of certain of 3M’s existing debt. Upon closing of the 3M Food Safety transaction on September 1, 2022, the Notes became guaranteed on a senior unsecured basis by the Company and certain wholly-owned domestic subsidiaries of the Company. The Company determined that the redemption features of the Notes did not meet the definition of a derivative and thus does not require bifurcation from the host liability and accordingly has accounted for the entire instrument at amortized cost. Total accrued interest on the Notes was $ 3.4 million as of February 28, 2023 based on the stated interest rate of 8.625 % and included in current liabilities on the condensed consolidated balance sheets. The Company incurred total debt issuance costs of $ 6.7 million which is recorded as an offset to the Notes and amortized over the contractual life of the Notes to interest expense using the straight line method. During the three and nine months ended February 28, 2023 , the Company recorded $ 7.8 million and $ 19.1 million of interest expense for the Notes in the condensed consolidated statements of income (loss), of which $ 209,000 and $ 557,000 related to the amortization of deferred debt issuance costs, respectively. There are no required principal payments through fiscal year 2026, due to $ 100 million in prepayments made in fiscal 2023. The expected maturities associated with the Company’s outstanding debt as of February 28, 2023, were as follows: (in thousands) Amount Fiscal Year Remainder of 2023 $ — 2024 — 2025 — 2026 — 2027 34,063 Thereafter 865,937 Total $ 900,000 |
Income Taxes
Income Taxes | 9 Months Ended |
Feb. 28, 2023 | |
Disclosure Text Block [Abstract] | |
Income Taxes | 11. INCOME TAXES Income tax benefit was $ 10.5 million during the three months ended February 28, 2023, and income tax expense was $ 1.2 million during the three months ended February 28, 2022. Income tax benefit was $ 1.3 million during the nine months ended February 28, 2023 and income tax expense was $ 8.0 million during the nine months ended February 28, 2022. Income tax benefit in the third quarter of fiscal 2023 is primarily related to a decrease in pre-tax income used to calculate the annualized effective tax rate. The net income tax benefit amount also includes approximately $ 1.1 million of expense related to non-deductible transaction costs associated with the 3M Food Safety transaction. The total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of February 28, 2023 and May 31, 2022 are $ 1.5 million and $ 808,000 , respectively. The increase in unrecognized tax benefits is primarily associated with the acquired 3M FSD, including positions for transfer pricing and research and development credits. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Feb. 28, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 12. COMMITMENTS AND CONTINGENCIES The Company is involved in environmental remediation and monitoring activities at its Randolph, Wisconsin manufacturing facility and accrues for related costs when such costs are determined to be probable and estimable. The Company currently utilizes a pump and treat remediation strategy, which includes semi-annual monitoring and reporting, consulting, and maintenance of monitoring wells. We expense these annual remediation costs, which have ranged from $ 38,000 to $ 131,000 per year over the past five years. The Company’s estimated remaining liability for these costs are $ 916,000 as of both February 28, 2023 and May 31, 2022 , measured on an undiscounted basis over an estimated period of 15 years . In fiscal 2019, the Company performed an updated Corrective Measures Study on the site, per a request from the Wisconsin Department of Natural Resources (WDNR) and is currently in discussion with the WDNR regarding potential alternative remediation strategies going forward. The Company believes that the current pump and treat strategy is appropriate for the site. However, the Company has undertaken a pilot study in which chemical reagents were injected into the ground in an attempt to reduce on-site contamination. At this time, the outcome of the pilot study is unknown, but a change in the current remediation strategy, depending on the alternative selected, could result in an increase in future costs and ultimately, an increase in the currently recorded liability, with an offsetting charge to operations in the period recorded. The Company has recorded $ 100,000 as a current liability as of February 28, 2023 , and the remaining $ 816,000 is recorded in other non-current liabilities in the condensed consolidated balance sheets. On March 6, 2020, the Company received an administrative subpoena from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) regarding activities or transactions involving parties located in Iran. The Company subsequently conducted an internal investigation under the direction of outside legal counsel and disclosed information concerning certain genomic testing services provided to an unrelated U.S.-based party engaged in veterinary activities involving an Iranian party. The Company continues to cooperate with OFAC’s investigation and is currently examining whether certain of these activities may be eligible for OFAC General Licenses authorizing agricultural and veterinary activities. In addition to responding to the administrative subpoena, the Company has implemented additional compliance measures to prevent inadvertent dealings with restricted countries or parties. These measures will further enhance the Company’s international trade compliance program, which is designed to assure that the Company does not conduct business directly or indirectly with any countries or parties subject to U.S. economic sanctions and export control laws. Although it is too early to predict what action, if any, that OFAC will take, the Company does not currently have any reason to believe that OFAC’s pending investigation will have a material impact on its operations, the results of operations for any future period, or its overall financial condition. In fiscal 2020, the Company took a charge to Other expense and recorded a reserve of $ 600,000 to provide for potential fines or penalties on this matter. At this time, the Company believes that it is adequately reserved for this issue. The Company is subject to certain legal and other proceedings in the normal course of business that, in the opinion of management, should not have a material effect on its future results of operations or financial position. |
Derivatives
Derivatives | 9 Months Ended |
Feb. 28, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | 13. DERIVATIVES We operate on a global basis and are exposed to the risk that our financial condition, results of operations and cash flows could be adversely affected by changes in foreign currency exchange rates and changes in interest rates. To reduce the potential effects of foreign currency exchange rate movements on net earnings, we enter into derivative financial instruments in the form of foreign currency exchange forward contracts with major financial institutions and have also entered into interest rate swap contracts as a hedge against changes in interest rates. Derivatives are recorded at fair value in other current assets, other assets, accrued liabilities and other long-term liabilities. Derivatives that are not determined to be effective hedges are adjusted to fair value with a corresponding adjustment to earnings. We do not use financial instruments for trading or speculative purposes. Derivatives Not Designated as Hedging Instruments We forecast our net exposure in various receivables and payables to fluctuations in the value of various currencies, and have entered into a number of foreign currency forward contracts each month to mitigate that exposure. These contracts are recorded net at fair value on our condensed consolidated balance sheets, classified as Level 2 in the fair value hierarchy. Gains and losses from these contracts are recognized in other income in our condensed consolidated statements of income (loss). The notional amount of forward contracts in place was $ 18.5 million and $ 4.4 million as of February 28, 2023 and May 31, 2022, respectively, and consisted of hedges of transactions up to April 2023. (in thousands) Fair Value of Derivatives Not Designated as Hedging Instruments Balance Sheet Location February 28, 2023 May 31, 2022 Foreign currency forward contracts, net Other accruals $ 162 $ ( 78 ) The location and amount of gains (losses) from derivatives not designated as hedging instruments in our condensed consolidated statements of income (loss) were as follows: Three months ended (in thousands) Location in statements of income (loss) February 28, 2023 February 28, 2022 Foreign currency forward contracts Other (expense) income $ ( 1,564 ) $ ( 363 ) Nine months ended (in thousands) Derivatives Not Designated as Hedging Instruments Location in statements of income (loss) February 28, 2023 February 28, 2022 Foreign currency forward contracts Other (expense) income $ ( 9,812 ) $ 648 Derivatives Designated as Hedging Instruments In November 2022, we entered into a receive-variable, pay-fixed interest rate swap agreement with an initial $ 250 million notional value, which is designated as a cash flow hedge. This agreement fixed a portion of the variable interest due on our term loan facility, with an effective date of December 2, 2022 and a maturity date of June 30, 2027 . Under the terms of the agreement, we pay a fixed interest rate of 6.215 % ( 4.215 % rate and 2.00 % margin) and receive a variable rate of interest based on term SOFR from the counterparty, which is reset according to the duration of the SOFR term. The fair value of the interest rate swap as of February 28, 2023 was $ 714,000 . We record the fair value of our interest rate swaps on a recurring basis using Level 2 observable market inputs for similar assets or liabilities in active markets. (in thousands) Fair Value of Derivatives Designated as Hedging Instruments Balance Sheet Location February 28, 2023 May 31, 2022 Interest rate swaps – current Other current assets $ 2,689 $ - Interest rate swaps – non-current Other non-current liabilities ( 1,975 ) - The following table summarizes the other comprehensive income (loss) before reclassifications of pre-tax derivative gains and losses: (in thousands) Other Comprehensive Income Before Reclassifications During Three months ended Nine months ended Derivatives Designated as Hedging Instruments February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 Interest rate swaps $ 3,083 $ — $ 655 $ — The following table summarizes the reclassification of pre-tax derivative gains and losses into net income from accumulated other comprehensive income (loss): (in thousands) Gain (Loss) Reclassified During Three months ended Nine months ended Derivatives Designated as Hedging Instruments Location of Gain (Loss) Reclassified February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 Interest rate swaps Interest expense $ 105 $ — $ 105 $ — |
Description of Business and B_2
Description of Business and Basis of Presentation (Policies) | 9 Months Ended |
Feb. 28, 2023 | |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) represents net income and any revenues, expenses, gains and losses that, under U.S. generally accepted accounting principles, are excluded from net income and recognized directly as a component of equity. Accumulated other comprehensive income (loss) consists of foreign currency translation adjustments and unrealized gains or losses on our marketable securities and derivative instruments. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value measurements are determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants exclusive of any transaction costs. The Company utilizes a fair value hierarchy based upon the observability of inputs used in valuation techniques as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The carrying amounts of certain financial instruments, consisting of cash and cash equivalents, accounts receivable, accounts payable, our revolving credit agreement, and long-term debt, approximate their fair value based on either their short maturity or current terms for similar instruments. |
Leases | Leases We lease various manufacturing, laboratory, warehousing and distribution facilities, administrative and sales offices, equipment and vehicles under operating leases. We evaluate our contracts to determine if an arrangement is a lease at inception and classify it as a finance or operating lease. Currently, all our leases are classified as operating leases. The Company recognizes a lease liability in the statement of financial position to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. Right-of-use assets are recorded in Other Assets on our condensed consolidated balance sheets. Current and non-current lease liabilities are recorded in other accruals within current liabilities and other non-current liabilities, respectively, on our condensed consolidated balance sheets. Costs associated with operating leases are recognized on a straight-line basis within operating expenses over the term of the lease. The right-of-use assets were $ 5,062,000 and $ 3,184,000 as of February 28, 2023 and May 31, 2022, respectively. The total current and non-current lease liabilities were $ 5,112,080 and $ 3,228,000 as of February 28, 2023 and May 31, 2022 , respectively. |
Derivatives | Derivatives We operate on a global basis and are exposed to the risk that our financial condition, results of operations and cash flows could be adversely affected by changes in foreign currency exchange rates and changes in interest rates. To reduce the potential effects of foreign currency exchange rate movements on net earnings, we enter into derivative financial instruments in the form of foreign currency exchange forward contracts with major financial institutions and have also entered into interest rate swap contracts as a hedge against changes in interest rates. All derivatives are recognized as assets or liabilities and measured at fair value. For derivatives that are determined to be effective hedges, changes in fair value are recognized in other comprehensive income (loss) until the underlying hedged item is recognized in earnings. Derivatives that are not determined to be effective hedges are adjusted to fair value with a corresponding adjustment to earnings. We do not use financial instruments for trading or speculative purposes. |
Estimates And Assumption | ESTIMATES AND ASSUMPTIONS The preparation of these financial statements requires that management make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, management evaluates the estimates, including, but not limited to, variable consideration related to revenue recognition, allowances for doubtful accounts, the market value of, and demand for, inventories, stock-based compensation, provision for income taxes and related balance sheet accounts, accruals, goodwill and other intangible assets and derivatives. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. |
Accounts Receivable and Concentrations of Credit Risk | Accounts Receivable and Concentrations of Credit Risk Financial instruments which potentially subject Neogen to concentrations of credit risk consist principally of accounts receivable. Management attempts to minimize credit risk by reviewing customers’ credit histories before extending credit and by monitoring credit exposure on a regular basis. Collateral or other security is generally not required for accounts receivable. We maintain an allowance for customer accounts that reduces receivables to amounts that are expected to be collected. In estimating the allowance for doubtful accounts, management considers relevant information about past events, current conditions and reasonable and supportable forecasts that affect the collectability of financial assets. Once a receivable balance has been determined to be uncollectible, generally after all collection efforts have been exhausted, that amount is charged against the allowance for doubtful accounts . No customer accounted for more than 10 % of accounts receivable at February 28, 2023 or May 31, 2022 , respectively. |
Inventory | Inventory The reserve for obsolete and slow-moving inventory is reviewed at least quarterly based on an analysis of the inventory, considering the current condition of the asset as well as other known facts and future plans. The reserve required to record inventory at lower of cost or net realizable value is adjusted as conditions change. Product obsolescence may be caused by shelf-life expiration, discontinuance of a product line, replacement products in the marketplace or other competitive situations. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill represents the excess of purchase price over fair value of tangible net assets of acquired businesses after amounts are allocated to other identifiable intangible assets. Other intangible assets include customer relationships, trademarks, licenses, trade names, covenants not-to-compete and patents. Customer-based intangibles are amortized on either an accelerated or straight-line basis, reflecting the pattern in which the economic benefits are consumed, while all other amortizable intangibles are amortized on a straight-line basis. Intangibles are generally amortized over 5 to 25 years . We review the carrying amounts of goodwill and other non-amortizable intangible assets annually, or when indications of impairment exist, to determine if such assets may be impaired. If the carrying amounts of these assets are deemed to be less than fair value based upon a discounted cash flow analysis and comparison to comparable EBITDA multiples of peer companies, such assets are reduced to their estimated fair value and a charge is recorded to operations. |
Long-lived Assets | Long-Lived Assets Management reviews the carrying values of its long-lived assets to be held and used, including definite-lived intangible assets, for possible impairment whenever events or changes in business conditions warrant such a review. The carrying value of a long-lived asset is considered impaired when the anticipated separately identifiable undiscounted cash flows over the remaining useful life of the asset indicate that the carrying amount of the asset may not be recoverable. In such an event, fair value is determined using discounted cash flows and, if lower than the carrying value, impairment is recognized through a charge to operations. |
Business Combinations | Business Combinations We utilize the acquisition method of accounting for business combinations. This method requires, among other things, that results of operations of acquired companies are included in Neogen’s results of operations beginning on the respective acquisition dates and that assets acquired and liabilities assumed are recognized at fair value as of the acquisition date. Any excess of the fair value of consideration transferred over the fair values of the net assets acquired is recognized as goodwill. Contingent consideration liabilities are recognized at the estimated fair value on the acquisition date. These amounts are recorded in either other accruals within current liabilities (for expected payments to be made within the next 12 months) or other non-current liabilities (for expected payments to be made after the next 12 months), both on our condensed consolidated balance sheets. Subsequent changes to the fair value of contingent consideration liabilities are recognized in other income (expense) in the condensed consolidated statements of income (loss). Contingent consideration payments made soon after the acquisition date are classified as investing activities in the condensed consolidated statements of cash flows. Contingent consideration payments not made soon after the acquisition date that are related to the acquisition date fair value are reported as financing activities in the condensed consolidated statements of cash flows, and amounts paid in excess of the original acquisition date fair value are reported as operating activities in the condensed consolidated statements of cash flows. The fair value of assets acquired and liabilities assumed in certain cases may be subject to revision based on the final determination of fair value during a period of time not to exceed 12 months from the acquisition date. Legal costs, due diligence costs, business valuation costs and all other business acquisition costs are expensed when incurred. |
Equity Compensation Plans | Equity Compensation Plans Share options awarded to employees, restricted stock units (RSUs) and shares of stock awarded to employees under certain stock purchase plans are recognized as compensation expense based on their fair value at grant date. The fair market value of options granted under the Company stock option plans was estimated on the date of grant using the Black-Scholes option-pricing model with assumptions for inputs such as interest rates, expected dividends, an estimate of award forfeitures, volatility measures and specific employee exercise behavior patterns based on statistical data. Some of the inputs used are not market-observable and have to be estimated or derived from available data. Use of different estimates would produce different option values, which in turn would result in higher or lower compensation expense recognized. For RSUs, we use the intrinsic value method to value the units. To value equity awards, several recognized valuation models exist; none of these models can be singled out as being the best or most correct. The model applied by us can accommodate most of the specific features included in the options granted, which are the reason for their use. If different models were used, the option values could differ despite using the same inputs. Accordingly, using different assumptions coupled with using a different valuation model could have a significant impact on the fair value of employee stock options. Fair value could be either higher or lower than the number provided by the model applied and the inputs used. Further information on our equity compensation plans, including inputs used to determine the fair value of options, is disclosed in Note 7 . |
Income Taxes | Income Taxes We account for income taxes using the asset and liability method. Under this method, deferred income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and for tax credit carryforwards and are measured using the enacted tax rates in effect for the years in which the differences are expected to reverse. Deferred income tax expense represents the change in net deferred income tax assets and liabilities during the year. |
New Accounting Pronouncements Not Yet Adopted | Acquired contract assets and liabilities in a business combination In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends ASC 805 to require an acquirer to, at the date of acquisition, recognize and measure contract assets and contract liabilities acquired in accordance with ASU 2014-9, Revenue from Contracts with Customers (Topic 606) as if the entity had originated the contracts. The guidance is effective for fiscal years beginning after December 15, 2022. We adopted this standard in the third quarter of fiscal 2023 and applied the amendment retrospectively to all business combinations in fiscal year 2023. Adoption of this standard did not have a material impact on our condensed consolidated financial statements and related disclosures. |
Accounting Pronouncements Recently Adopted | Reference Rate Reform In March 2020, the FASB issued Update 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This update provides temporary optional expedients to applying the reference rate reform guidance to contracts that reference LIBOR or another reference rate expected to be discontinued. Under this update, contract modifications resulting in a new reference rate may be accounted for as a continuation of the existing contract. We adopted this standard in the second quarter of fiscal 2023, and now use the Secured Overnight Financing Rate (SOFR). Adoption of this standard did not have a material impact on our condensed consolidated financial statements and related disclosures. |
Cash and Marketable Securities
Cash and Marketable Securities (Tables) | 9 Months Ended |
Feb. 28, 2023 | |
Cash and Cash Equivalents [Abstract] | |
Schedule Of Classification And Maturities Of Marketable Securities | Marketable Securities as of February 28, 2023 and May 31, 2022 are listed below by classification and remaining maturities. (in thousands) Maturity February 28, 2023 May 31, 2022 Commercial Paper & Corporate Bonds 0 - 90 days $ 34,443 $ 106,497 91 - 180 days 22,322 61,373 181 days - 1 year 52,462 91,706 1 - 2 years 6,853 77,002 Total Marketable Securities $ 116,080 $ 336,578 |
Summary of components of marketable securities | The components of marketable securities, consisting of commercial paper and corporate bonds, as of February 28, 2023 are as follows: (in thousands) Amortized Unrealized Unrealized Fair Value Commercial Paper & Corporate Bonds $ 118,166 $ — $ ( 2,086 ) $ 116,080 The components of marketable securities, consisting of commercial paper and corporate bonds, as of May 31, 2022 are as follows: (in thousands) Amortized Unrealized Unrealized Fair Value Commercial Paper & Corporate Bonds $ 339,540 $ 7 $ ( 2,969 ) $ 336,578 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Feb. 28, 2023 | |
Schedule of Components of Inventories | Inventories are stated at the lower of cost, determined by the first-in, first-out method, or net realizable value. The components of inventories follow: (in thousands) February 28, 2023 May 31, 2022 Raw materials $ 73,514 $ 58,667 Work-in-process 7,054 6,388 Finished and purchased goods 63,295 57,258 $ 143,863 $ 122,313 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Feb. 28, 2023 | |
Summary of Disaggregated Revenue by Geographic Location | The following table presents the Company’s revenue disaggregated by geographic location: Three Months Ended February 28, Nine Months Ended February 28, (in thousands) 2023 2022 2023 2022 Domestic $ 109,919 $ 77,297 $ 304,974 $ 231,454 International 108,336 50,947 275,663 155,612 Total revenue $ 218,255 $ 128,244 $ 580,637 $ 387,066 |
Operating Segments [Member] | |
Summary of Disaggregated Revenue by Geographic Location | The following table presents disaggregated revenue by major product and service categories during the three and nine months ended February 28, 2023 and 2022: Three Months Ended February 28, Nine Months Ended February 28, (in thousands) 2023 2022 2023 2022 Food Safety Natural Toxins, Allergens & Drug Residues $ 19,198 $ 17,965 $ 61,236 $ 59,397 Bacterial & General Sanitation 39,444 11,288 91,293 34,709 Culture Media & Other 77,955 18,145 179,293 56,136 Rodent Control, Insect Control & Disinfectants 9,550 9,577 29,502 25,459 Genomics Services 5,395 5,781 16,204 16,909 $ 151,542 $ 62,756 $ 377,528 $ 192,610 Animal Safety Life Sciences $ 1,440 $ 1,339 $ 4,456 $ 4,011 Veterinary Instruments & Disposables 15,428 17,047 46,534 47,956 Animal Care & Other 8,735 9,449 29,830 29,517 Rodent Control, Insect Control & Disinfectants 20,242 18,359 63,121 58,777 Genomics Services 20,868 19,294 59,168 54,195 66,713 65,488 203,109 194,456 Total Revenues $ 218,255 $ 128,244 $ 580,637 $ 387,066 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 9 Months Ended |
Feb. 28, 2023 | |
Schedule of Calculation of Net Income Per Share | The calculation of net income (loss) per share follows: Three Months Ended February 28, Nine Months Ended February 28, (in thousands, except per share amounts) 2023 2022 2023 2022 Numerator for basic and diluted net income (loss) per share: Net income (loss) attributable to Neogen $ 8,190 $ 5,443 $ ( 28,442 ) $ 33,348 Denominator for basic net income (loss) per share: Weighted average shares 216,218 107,818 179,666 107,648 Effect of dilutive stock options and RSUs 181 315 — 482 Denominator for diluted net income (loss) per share 216,399 108,133 179,666 108,130 Net income (loss) per share: Basic $ 0.04 $ 0.05 $ ( 0.16 ) $ 0.31 Diluted $ 0.04 $ 0.05 $ ( 0.16 ) $ 0.31 Note: Due to the net loss during the nine months ended February 28, 2023 , the dilutive stock options and RSUs are anti-dilutive. |
Segment Information and Geogr_2
Segment Information and Geographic Data (Tables) | 9 Months Ended |
Feb. 28, 2023 | |
Schedule of Segment Information | Segment information follows: (in thousands) Food Animal Corporate and Total As of and during the three months ended February 28, 2023 Product revenues to external customers $ 144,843 $ 45,845 $ — $ 190,688 Service revenues to external customers 6,699 20,868 — 27,567 Total revenues to external customers $ 151,542 $ 66,713 $ — $ 218,255 Operating income (loss) $ 11,011 $ 10,752 $ ( 6,079 ) $ 15,684 Total assets $ 3,975,921 $ 349,628 $ 183,215 $ 4,508,764 As of and during the three months ended February 28, 2022 Product revenues to external customers $ 55,372 $ 46,194 $ — $ 101,566 Service revenues to external customers 7,384 19,294 — 26,678 Total revenues to external customers $ 62,756 $ 65,488 $ — $ 128,244 Operating income (loss) $ 8,191 $ 10,783 $ ( 12,597 ) $ 6,377 Total assets $ 302,605 $ 298,854 $ 379,746 $ 981,205 (1) Includes corporate assets, consisting principally of cash and cash equivalents, marketable securities, current and deferred tax accounts and overhead expenses not allocated to specific business segments. Also includes the elimination of intersegment transactions. (in thousands) Food Animal Corporate and Total As of and during the nine months ended February 28, 2023 Product revenues to external customers $ 356,856 $ 143,941 $ — $ 500,797 Service revenues to external customers 20,672 59,168 — 79,840 Total revenues to external customers $ 377,528 $ 203,109 $ — $ 580,637 Operating income (loss) $ 41,053 $ 35,439 $ ( 62,402 ) $ 14,090 As of and during the nine months ended February 28, 2022 Product revenues to external customers $ 171,440 $ 140,261 $ — $ 311,701 Service revenues to external customers 21,170 54,195 — 75,365 Total revenues to external customers $ 192,610 $ 194,456 $ — $ 387,066 Operating income (loss) $ 29,216 $ 36,246 $ ( 24,871 ) $ 40,591 (1) Includes elimination of intersegment transactions. |
Summary of Disaggregated Revenue by Geographic Location | The following table presents the Company’s revenue disaggregated by geographic location: Three Months Ended February 28, Nine Months Ended February 28, (in thousands) 2023 2022 2023 2022 Domestic $ 109,919 $ 77,297 $ 304,974 $ 231,454 International 108,336 50,947 275,663 155,612 Total revenue $ 218,255 $ 128,244 $ 580,637 $ 387,066 |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Feb. 28, 2023 | |
Corvium Inc [Member] | |
Business Combination Recognized Identifiable Assets Acquired Goodwill And Liabilities Assumed Net [Line Items] | |
Summary of Preliminary Fair Values of Assets Acquired And Liabilities Assumed As of The Date of Acquisition | The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the date of acquisition: (in thousands) Prepaids and other current assets $ 101 Property, plant and equipment 13 Intangible assets 14,000 Deferred revenue ( 1,827 ) Other accruals ( 1,000 ) Adjustment of annual license prepaid ( 419 ) Other non-current liabilities ( 1,000 ) Total identifiable assets and liabilities acquired 9,868 Goodwill 14,199 Total purchase consideration $ 24,067 |
Three M Food Safety Transaction [Member] | |
Business Combination Recognized Identifiable Assets Acquired Goodwill And Liabilities Assumed Net [Line Items] | |
Summary of Preliminary Fair Values of Assets Acquired And Liabilities Assumed As of The Date of Acquisition | The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the date of acquisition: (in thousands) Cash and cash equivalents $ 319 Inventories 18,403 Other current assets 14,855 Property, plant and equipment 25,721 Intangible assets 1,560,000 Right of use asset 882 Lease liability ( 885 ) Deferred tax liabilities ( 355,347 ) Other liabilities ( 3,585 ) Total identifiable assets and liabilities acquired 1,260,363 Goodwill 1,978,149 Total purchase consideration $ 3,238,512 |
Summary of Business Acquisition, Pro Forma Information | The following table presents pro forma information as if the merger with the 3M FSD business had occurred on June 1, 2021 and had been combined with the results reported in our condensed consolidated statements of income (loss) for all periods presented: Three Months Ended February 28, Nine Months Ended (in thousands, unaudited) 2023 2022 2023 2022 Net sales $ 218,300 $ 219,900 $ 675,600 $ 668,100 Operating Income (loss) $ 15,700 $ ( 17,000 ) $ ( 5,400 ) $ ( 10,900 ) |
Summary of Finite-Lived Intangible Assets Acquired as Part of Business Combination | The following table summarizes the intangible assets acquired and the useful life of these assets. (in thousands) Fair Value Useful Life in Years Trade Names and Trademarks $ 110,000 25 Developed Technology 280,000 15 Customer Relationships 1,170,000 20 Total intangible assets acquired $ 1,560,000 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Feb. 28, 2023 | |
Summary of Goodwill by Business Segment | The following table summarizes goodwill by reportable segment: (in thousands) Food Safety Animal Safety Total May 31, 2022 $ 67,558 $ 75,146 $ 142,704 Acquisitions (1) 1,989,270 6,754 1,996,024 Impairment (2) ( 1,300 ) — ( 1,300 ) Foreign currency translation and other ( 1,984 ) ( 326 ) ( 2,310 ) February 28, 2023 $ 2,053,544 $ 81,574 $ 2,135,118 (1) Animal Safety acquisitions represents portion of 3M Food Safety transaction recorded at Neogen Australasia. (2) Impairment during the nine months ended February 28, 2023 relates to discontinued product lines. The amount was determined based on a relative fair value basis of the product lines compared to the overall reporting unit . |
Summary of Amortizable of Intangible Assets | Amortizable intangible assets consisted of the following and are included in customer-based intangibles and other non-current assets within the condensed consolidated balance sheets: (in thousands) Gross Less Net Licenses $ 17,401 $ 6,952 $ 10,449 Covenants not to compete 782 716 66 Patents 8,670 5,045 3,625 Customer relationships 1,245,875 65,764 1,180,111 Trade names and trademarks 111,167 2,453 108,714 Developed technology 311,350 13,198 298,152 Other product and service-related intangibles 27,530 8,418 19,112 February 28, 2023 $ 1,722,775 $ 102,546 $ 1,620,229 Licenses $ 17,109 $ 5,682 $ 11,427 Covenants not to compete 846 671 175 Patents 8,347 4,583 3,764 Customer relationships 75,000 33,662 41,338 Trade names and trademarks 1,180 167 1,013 Developed technology 17,741 6,124 11,617 Other product and service-related intangibles 27,299 4,527 22,772 May 31, 2022 $ 147,522 $ 55,416 $ 92,106 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 9 Months Ended |
Feb. 28, 2023 | |
Debt Disclosure [Abstract] | |
Summary of Long Term Debt | The Company’s long-term debt consists of the following: (in thousands) February 28, 2023 Term Loan $ 550,000 Senior Notes 350,000 Total long-term debt 900,000 Less: Unamortized debt issuance costs ( 15,299 ) Total non-current debt, net $ 884,701 |
Summary of Expected Maturities Associated With Outstanding Debt | The expected maturities associated with the Company’s outstanding debt as of February 28, 2023, were as follows: (in thousands) Amount Fiscal Year Remainder of 2023 $ — 2024 — 2025 — 2026 — 2027 34,063 Thereafter 865,937 Total $ 900,000 |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Feb. 28, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Other Derivatives Not Designated As Hedging Instruments Statements of Financial Performance And Financial Position Location | (in thousands) Fair Value of Derivatives Not Designated as Hedging Instruments Balance Sheet Location February 28, 2023 May 31, 2022 Foreign currency forward contracts, net Other accruals $ 162 $ ( 78 ) |
Schedule of Gain Loss From Derivatives Not Designated As Hedging Instruments Statements of Financial Performance And Location | The location and amount of gains (losses) from derivatives not designated as hedging instruments in our condensed consolidated statements of income (loss) were as follows: Three months ended (in thousands) Location in statements of income (loss) February 28, 2023 February 28, 2022 Foreign currency forward contracts Other (expense) income $ ( 1,564 ) $ ( 363 ) Nine months ended (in thousands) Derivatives Not Designated as Hedging Instruments Location in statements of income (loss) February 28, 2023 February 28, 2022 Foreign currency forward contracts Other (expense) income $ ( 9,812 ) $ 648 |
Summary of Interest Rate Swaps on Recurring Basis Using Observable Market Inputs for Similar Assets or Liabilities | We record the fair value of our interest rate swaps on a recurring basis using Level 2 observable market inputs for similar assets or liabilities in active markets. (in thousands) Fair Value of Derivatives Designated as Hedging Instruments Balance Sheet Location February 28, 2023 May 31, 2022 Interest rate swaps – current Other current assets $ 2,689 $ - Interest rate swaps – non-current Other non-current liabilities ( 1,975 ) - |
Summary of Pre-tax Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss) | The following table summarizes the other comprehensive income (loss) before reclassifications of pre-tax derivative gains and losses: (in thousands) Other Comprehensive Income Before Reclassifications During Three months ended Nine months ended Derivatives Designated as Hedging Instruments February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 Interest rate swaps $ 3,083 $ — $ 655 $ — The following table summarizes the reclassification of pre-tax derivative gains and losses into net income from accumulated other comprehensive income (loss): (in thousands) Gain (Loss) Reclassified During Three months ended Nine months ended Derivatives Designated as Hedging Instruments Location of Gain (Loss) Reclassified February 28, 2023 February 28, 2022 February 28, 2023 February 28, 2022 Interest rate swaps Interest expense $ 105 $ — $ 105 $ — |
Description of Business and B_3
Description of Business and Basis of Presentation - Additional Information (Detail) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 01, 2022 | Feb. 28, 2023 | May 31, 2022 | |
Significant Accounting Policies [Line Items] | |||
Right of use assets | $ 5,062,000 | $ 3,184,000 | |
Lease liabilities | $ 5,112,080 | $ 3,228,000 | |
Number Of Days Determined On Fair Value Of Assets And Liabilities From The Acquisition Date | 12 months | ||
Customer One | |||
Significant Accounting Policies [Line Items] | |||
Concentration Risk Receivables Single Customer Percentage | 10% | 10% | |
Minimum | |||
Significant Accounting Policies [Line Items] | |||
Useful Life in Years | 5 years | ||
Maximum | |||
Significant Accounting Policies [Line Items] | |||
Useful Life in Years | 25 years | ||
Three M Food Safety Transaction [Member] | |||
Significant Accounting Policies [Line Items] | |||
Number of shares issued in business acquisitions | 108,269,946 | ||
Consideration for purchase of business | $ 3,200,000,000 | ||
Three M Food Safety Transaction [Member] | Premerger Neogen Shareholders [Member] | Postmerger Neogen Corp [Member] | |||
Significant Accounting Policies [Line Items] | |||
Minority interest ownership percentage by Parent | 50.10% | ||
Minority interest ownership percentage by Noncontrolling owners | 49.90% |
Cash and Marketable Securitie_2
Cash and Marketable Securities - Additional Information (Detail) - USD ($) | 9 Months Ended | |
Feb. 28, 2023 | May 31, 2022 | |
Cash and Cash Equivalents [Abstract] | ||
Cash and cash equivalents | $ 67,134,000 | $ 44,473,000 |
Marketable securities, maturity period | 90 days |
Cash And Marketable Securitie_3
Cash And Marketable Securities - Schedule Of Classification And Maturities Of Marketable Securities (Detail) - USD ($) $ in Thousands | Feb. 28, 2023 | May 31, 2022 |
Marketable Securities, Current | $ 116,080 | $ 336,578 |
Commercial Paper | Maturing in 0 - 90 days | ||
Marketable Securities, Current | 34,443 | 106,497 |
Commercial Paper | Maturing in 91 - 180 days | ||
Marketable Securities, Current | 22,322 | 61,373 |
Commercial Paper | Maturing in 181 days - 1 year | ||
Marketable Securities, Current | 52,462 | 91,706 |
Commercial Paper | Maturing in 1 - 2 years | ||
Marketable Securities, Current | $ 6,853 | $ 77,002 |
Cash and Marketable Securitie_4
Cash and Marketable Securities - Summary of components of marketable securities (Detail) - Commercial Paper And Corporate Bonds [Member] - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Feb. 28, 2023 | May 31, 2022 | |
Marketable Securities [Line Items] | ||
Amortized Cost | $ 118,166 | $ 339,540 |
Unrealized Gains | 0 | 7 |
Unrealized Losses | (2,086) | (2,969) |
Fair Value | $ 116,080 | $ 336,578 |
Inventories - (Detail)
Inventories - (Detail) - USD ($) $ in Thousands | Feb. 28, 2023 | May 31, 2022 |
Inventory [Line Items] | ||
Raw materials | $ 73,514 | $ 58,667 |
Work-in-process | 7,054 | 6,388 |
Finished and purchased goods | 63,295 | 57,258 |
Inventories | $ 143,863 | $ 122,313 |
Revenue Recognition (Additional
Revenue Recognition (Additional Information) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Feb. 28, 2023 | Feb. 28, 2023 | |
Revenue from Contract with Customer [Abstract] | ||
Deferred revenue recognized | $ 2.9 | $ 8 |
Revenue Recognition - Summary o
Revenue Recognition - Summary of Disaggregated Revenue (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 28, 2023 | Feb. 28, 2022 | Feb. 28, 2023 | Feb. 28, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 218,255 | $ 128,244 | $ 580,637 | $ 387,066 |
Food Safety | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 151,542 | 62,756 | 377,528 | 192,610 |
Food Safety | Natural Toxins, Allergens & Drug Residues | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 19,198 | 17,965 | 61,236 | 59,397 |
Food Safety | Bacterial & General Sanitation | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 39,444 | 11,288 | 91,293 | 34,709 |
Food Safety | Culture Media & Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 77,955 | 18,145 | 179,293 | 56,136 |
Food Safety | Rodent Control, Insect Control & Disinfectants | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 9,550 | 9,577 | 29,502 | 25,459 |
Food Safety | Genomics Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 5,395 | 5,781 | 16,204 | 16,909 |
Animal Safety | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 66,713 | 65,488 | 203,109 | 194,456 |
Animal Safety | Rodent Control, Insect Control & Disinfectants | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 20,242 | 18,359 | 63,121 | 58,777 |
Animal Safety | Genomics Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 20,868 | 19,294 | 59,168 | 54,195 |
Animal Safety | Life Sciences | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 1,440 | 1,339 | 4,456 | 4,011 |
Animal Safety | Veterinary Instruments & Disposables | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | 15,428 | 17,047 | 46,534 | 47,956 |
Animal Safety | Animal Care & Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 8,735 | $ 9,449 | $ 29,830 | $ 29,517 |
Net Income (Loss) Per Share - C
Net Income (Loss) Per Share - Calculation of Net Income Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||
Feb. 28, 2023 | Nov. 30, 2022 | Feb. 28, 2022 | Nov. 30, 2022 | Feb. 28, 2023 | Feb. 28, 2022 | |
Earnings Per Share [Line Items] | ||||||
Numerator for basic and diluted net income (loss) per share - Net income (loss) attributable to Neogen | $ 8,190 | $ 5,443 | $ (28,442) | $ 33,348 | ||
Denominator for basic net income (loss) per share - Weighted average shares | 216,218 | 107,818 | 179,666 | 107,648 | ||
Effect of dilutive stock options and RSUs | 181 | 315 | 482 | |||
Denominator for diluted net income (loss) per share | 216,399 | 216,399 | 108,133 | 179,666 | 179,666 | 108,130 |
Net income (loss) per share: | ||||||
Basic | $ 0.04 | $ 0.05 | $ (0.16) | $ 0.31 | ||
Diluted | $ 0.04 | $ 0.05 | $ (0.16) | $ 0.31 |
Segment Information and Geogr_3
Segment Information and Geographic Data - Additional Information (Detail) | 9 Months Ended |
Feb. 28, 2023 Segment | |
Segment Reporting Information [Line Items] | |
Number of reportable segments | Segment | 2 |
Segment Information and Geogr_4
Segment Information and Geographic Data - Schedule of Segment Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Feb. 28, 2023 | Feb. 28, 2022 | Feb. 28, 2023 | Feb. 28, 2022 | May 31, 2022 | |
Segment Reporting Information [Line Items] | |||||
Product revenues to external customers | $ 218,255 | $ 128,244 | $ 580,637 | $ 387,066 | |
Operating income (loss) | 15,684 | 6,377 | 14,090 | 40,591 | |
Total Assets | 4,508,764 | 981,205 | 4,508,764 | 981,205 | $ 992,929 |
Operating Segments | Food Safety | |||||
Segment Reporting Information [Line Items] | |||||
Product revenues to external customers | 151,542 | 62,756 | 377,528 | 192,610 | |
Operating income (loss) | 11,011 | 8,191 | 41,053 | 29,216 | |
Total Assets | 3,975,921 | 302,605 | 3,975,921 | 302,605 | |
Operating Segments | Animal Safety | |||||
Segment Reporting Information [Line Items] | |||||
Product revenues to external customers | 66,713 | 65,488 | 203,109 | 194,456 | |
Operating income (loss) | 10,752 | 10,783 | 35,439 | 36,246 | |
Total Assets | 349,628 | 298,854 | 349,628 | 298,854 | |
Product Revenues | |||||
Segment Reporting Information [Line Items] | |||||
Product revenues to external customers | 190,688 | 101,566 | 500,797 | 311,701 | |
Product Revenues | Operating Segments | Food Safety | |||||
Segment Reporting Information [Line Items] | |||||
Product revenues to external customers | 144,843 | 55,372 | 356,856 | 171,440 | |
Product Revenues | Operating Segments | Animal Safety | |||||
Segment Reporting Information [Line Items] | |||||
Product revenues to external customers | 45,845 | 46,194 | 143,941 | 140,261 | |
Service Revenues | |||||
Segment Reporting Information [Line Items] | |||||
Product revenues to external customers | 27,567 | 26,678 | 79,840 | 75,365 | |
Service Revenues | Operating Segments | Food Safety | |||||
Segment Reporting Information [Line Items] | |||||
Product revenues to external customers | 6,699 | 7,384 | 20,672 | 21,170 | |
Service Revenues | Operating Segments | Animal Safety | |||||
Segment Reporting Information [Line Items] | |||||
Product revenues to external customers | 20,868 | 19,294 | 59,168 | 54,195 | |
Corporate and Eliminations | Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Product revenues to external customers | |||||
Operating income (loss) | (6,079) | (12,597) | (62,402) | (24,871) | |
Total Assets | 183,215 | 379,746 | 183,215 | 379,746 | |
Corporate and Eliminations | Product Revenues | Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Product revenues to external customers | |||||
Corporate and Eliminations | Service Revenues | Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Product revenues to external customers |
Segment Information and Geogr_5
Segment Information and Geographic Data - Disaggregated Revenue by Geographic Location (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 28, 2023 | Feb. 28, 2022 | Feb. 28, 2023 | Feb. 28, 2022 | |
Revenues by Geographic Location [Line Items] | ||||
Total revenue | $ 218,255 | $ 128,244 | $ 580,637 | $ 387,066 |
Domestic | ||||
Revenues by Geographic Location [Line Items] | ||||
Total revenue | 109,919 | 77,297 | 304,974 | 231,454 |
International | ||||
Revenues by Geographic Location [Line Items] | ||||
Total revenue | $ 108,336 | $ 50,947 | $ 275,663 | $ 155,612 |
Equity Compensation Plans - Add
Equity Compensation Plans - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Feb. 28, 2023 | Nov. 30, 2022 | Feb. 28, 2022 | Feb. 28, 2023 | Feb. 28, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Compensation expense related to share based awards | $ 2,812,000 | $ 1,607,000 | $ 7,311,000 | $ 5,045,000 | |
Substitute Options [Member] | Three M Food Safety Transaction [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock option vesting period | 3 years | ||||
Options, Granted | 131,746 | ||||
Share based compensation by share based award vested contractual term | 10 years | ||||
Substitute Restricted Stock Units [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Compensation expense related to share based awards | $ 305,000 | $ 489,000 | |||
Substitute Restricted Stock Units [Member] | Three M Food Safety Transaction [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock option vesting period | 3 years | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 29,770 | ||||
Share based compensation by share based award vested contractual term | 10 years | ||||
Employee Stock Purchase Plan | 2011 Employee Stock Purchase Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Annual maximum limit percentage of compensation to purchase shares | 5% | ||||
Employee stock purchase plan stock price percentage | 10% | ||||
Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock option vesting period | 3 years | ||||
Stock option contractual terms | 5 years | ||||
Minimum | 2018 Omnibus Incentive Plan | Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock option vesting period | 3 years | ||||
Average | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock option contractual terms | 7 years | ||||
Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock option vesting period | 5 years | ||||
Stock option contractual terms | 10 years | ||||
Maximum | 2018 Omnibus Incentive Plan | Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock option vesting period | 5 years |
Business Combinations - Additio
Business Combinations - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||||||
Feb. 10, 2023 | Nov. 29, 2022 | Sep. 01, 2022 | Jul. 01, 2022 | Dec. 09, 2021 | Nov. 30, 2021 | Sep. 17, 2021 | Feb. 28, 2023 | Nov. 30, 2022 | Feb. 28, 2022 | Feb. 28, 2023 | Feb. 28, 2022 | May 31, 2022 | |
Business Acquisition [Line Items] | |||||||||||||
Cash consideration for purchase of business | $ 37,000 | $ 1,310,000 | |||||||||||
Purchase price allocation for accounts receivable | 177,000 | ||||||||||||
Purchase price allocation for inventory | 232,000 | ||||||||||||
Purchase price allocation for land, property and equipment | 16,000 | ||||||||||||
Purchase price allocation for intangible assets | 620,000 | ||||||||||||
Purchase price allocation for accounts payable | 98,000 | ||||||||||||
Purchase price allocation for deferred tax liability | 124,000 | ||||||||||||
Purchase price allocation for other current liabilities | 6,000 | ||||||||||||
Purchase price allocation for other non-current assets | 6,000 | ||||||||||||
Loss on sale of minority interest | $ 1,516,000 | $ 0 | |||||||||||
Cash payable to former owner for purchase of business | 234,000 | ||||||||||||
Purchase price allocation for Prepaid Expenses | 3,000 | ||||||||||||
Payments to Acquire Businesses, Net of Cash Acquired | (13,237,000) | 38,164,000 | |||||||||||
Maximum potential Payments | $ 6,500,000 | ||||||||||||
Royalty Expense | 14,500,000 | ||||||||||||
Performance milestone liability | $ 300,000,000 | 300,000,000 | |||||||||||
Stock Issued During Period, Value, Acquisitions | $ 2,262,841,000 | ||||||||||||
Goodwill | 2,135,118,000 | 2,135,118,000 | $ 142,704,000 | ||||||||||
Operating Income (Loss) | 15,684,000 | $ 6,377,000 | 14,090,000 | 40,591,000 | |||||||||
Amortization expense for acquired intangible assets | 22,900,000 | 2,600,000 | 48,000,000 | 7,300,000 | |||||||||
CAPInnoVet, Inc [Member] | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Payments to Acquire Businesses, Net of Cash Acquired | $ 17,900,000 | ||||||||||||
Delf (UK) Ltd [Member] | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Cash consideration for purchase of business | $ 9,500,000 | ||||||||||||
Genetic Veterinary Services, Inc [Member] | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Payments to Acquire Businesses, Net of Cash Acquired | $ 11,300,000 | ||||||||||||
Thaineo Biotech Co Ltd | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Consideration for purchase of business | $ 1,581,000 | ||||||||||||
Three M Food Safety Transaction [Member] | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Cash consideration for purchase of business | $ 1,000,000,000 | ||||||||||||
Purchase price allocation for inventory | 18,403,000 | 18,403,000 | |||||||||||
Purchase price allocation for land, property and equipment | 25,721,000 | 25,721,000 | |||||||||||
Purchase price allocation for intangible assets | 1,560,000,000 | 1,560,000,000 | |||||||||||
Purchase price allocation for deferred tax liability | 355,347,000 | 355,347,000 | |||||||||||
Consideration for purchase of business | 3,200,000,000 | ||||||||||||
Business Combination Consideration Transferred Other1 | $ 3,200,000,000 | ||||||||||||
Number of shares issued in business acquisitions | 108,269,946 | ||||||||||||
Stock Issued During Period, Value, Acquisitions | $ 2,200,000,000 | ||||||||||||
Goodwill | 1,978,149,000 | 1,978,149,000 | |||||||||||
Business acquisition, goodwill, not deductible for tax purposes | 1,920,000,000 | 1,920,000,000 | |||||||||||
Business Combination, Acquisition Related Costs | 2,800,000 | ||||||||||||
Revenues | 218,300,000 | 219,900,000 | 675,600,000 | 668,100,000 | |||||||||
Operating Income (Loss) | 15,700,000 | (17,000,000) | (5,400,000) | (10,900,000) | |||||||||
Amortization expense for acquired intangible assets | 20,300,000 | ||||||||||||
Cost of goods sold | 614,000 | ||||||||||||
Three M Food Safety Transaction [Member] | Accounts Receivable Prepaid expenses and other current assets [Member] | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Accounts receivable | 42,900,000 | 42,900,000 | |||||||||||
Three M Food Safety Transaction [Member] | General and Administrative Expense [Member] | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Acquisition related fees and integration expenses | 2,800,000 | $ 10,600,000 | $ 55,600,000 | $ 19,900,000 | |||||||||
Corvium Inc [Member] | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Purchase price allocation for land, property and equipment | $ 13,000 | ||||||||||||
Purchase price allocation for intangible assets | 14,000,000 | ||||||||||||
Consideration for purchase of business | 24,100,000 | ||||||||||||
Loss on sale of minority interest | 1,500,000 | ||||||||||||
Unearned revenue liability | 1,827,000 | ||||||||||||
Purchase price allocation for Prepaid Expenses | 101,000 | ||||||||||||
Goodwill | $ 14,199,000 | ||||||||||||
3M FSD [Member] | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Revenues | 87,000,000 | ||||||||||||
Operating Income (Loss) | $ 3,300,000 | ||||||||||||
Minimum | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Finite lived intangible assets, useful life | 5 years | ||||||||||||
Maximum | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Finite lived intangible assets, useful life | 25 years | ||||||||||||
Postmerger Neogen Corp [Member] | Garden SpinCo [Member] | Three M Food Safety Transaction [Member] | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Minority interest ownership percentage by Parent | 50.10% | ||||||||||||
Postmerger Neogen Corp [Member] | Premerger Neogen Shareholders [Member] | Three M Food Safety Transaction [Member] | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Minority interest ownership percentage by Parent | 50.10% | ||||||||||||
Minority interest ownership percentage by Noncontrolling owners | 49.90% |
Business Combinations - Summary
Business Combinations - Summary of Preliminary Fair Values of Assets Acquired And Liabilities Assumed As of The Date of Acquisition (Detail) - USD ($) | Feb. 28, 2023 | Feb. 10, 2023 | Jul. 01, 2022 | May 31, 2022 |
Business Combination Recognized Identifiable Assets Acquired Goodwill And Liabilities Assumed Net [Line Items] | ||||
Inventories | $ 232,000 | |||
Prepaids and other current assets | 3,000 | |||
Property, plant and equipment | 16,000 | |||
Intangible assets | 620,000 | |||
Adjustment of annual license prepaid | $ (419,000) | |||
Deferred tax liabilities | $ (124,000) | |||
Goodwill | $ 2,135,118,000 | $ 142,704,000 | ||
Corvium Inc [Member] | ||||
Business Combination Recognized Identifiable Assets Acquired Goodwill And Liabilities Assumed Net [Line Items] | ||||
Prepaids and other current assets | 101,000 | |||
Property, plant and equipment | 13,000 | |||
Intangible assets | 14,000,000 | |||
Deferred revenue | (1,827,000) | |||
Other accruals | (1,000,000) | |||
Other non-current liabilities | (1,000,000) | |||
Total identifiable assets and liabilities acquired | 9,868,000 | |||
Goodwill | 14,199,000 | |||
Total purchase consideration | $ 24,067,000 | |||
Three M Food Safety Transaction [Member] | ||||
Business Combination Recognized Identifiable Assets Acquired Goodwill And Liabilities Assumed Net [Line Items] | ||||
Cash and cash equivalents | 319,000 | |||
Inventories | 18,403,000 | |||
Other current assets | 14,855,000 | |||
Property, plant and equipment | 25,721,000 | |||
Intangible assets | 1,560,000,000 | |||
Right of use asset | 882,000 | |||
Lease liability | (885,000) | |||
Deferred tax liabilities | (355,347,000) | |||
Other non-current liabilities | (3,585,000) | |||
Total identifiable assets and liabilities acquired | 1,260,363,000 | |||
Goodwill | 1,978,149,000 | |||
Total purchase consideration | $ 3,238,512,000 |
Business Combinations - Summa_2
Business Combinations - Summary of Finite-Lived Intangible Assets Acquired as Part of Business Combination (Detail) - Three M Food Safety Transaction [Member] $ in Thousands | 9 Months Ended |
Feb. 28, 2023 USD ($) | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 1,560,000 |
Trademarks and Trade Names [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 110,000 |
Useful Life in Years | 25 years |
Developed Technology Rights [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 280,000 |
Useful Life in Years | 15 years |
Customer Relationships [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 1,170,000 |
Useful Life in Years | 20 years |
Business Combinations - Summa_3
Business Combinations - Summary of Business Acquisition, Pro Forma Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 28, 2023 | Feb. 28, 2022 | Feb. 28, 2023 | Feb. 28, 2022 | |
Business Acquisition Pro Forma Information [Line Items] | ||||
Operating Income (Loss) | $ 15,684 | $ 6,377 | $ 14,090 | $ 40,591 |
Three M Food Safety Transaction [Member] | ||||
Business Acquisition Pro Forma Information [Line Items] | ||||
Net sales | 218,300 | 219,900 | 675,600 | 668,100 |
Operating Income (Loss) | $ 15,700 | $ (17,000) | $ (5,400) | $ (10,900) |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Summary of Goodwill by Business Segment (Detail) $ in Thousands | 9 Months Ended | |
Feb. 28, 2023 USD ($) | ||
Goodwill [Line Items] | ||
Beginning Balance | $ 142,704 | |
Acquisitions | 1,996,024 | [1] |
Impairment | (1,300) | [2] |
Foreign currency translation and other | (2,310) | |
Ending Balance | 2,135,118 | |
Food Safety | ||
Goodwill [Line Items] | ||
Beginning Balance | 67,558 | |
Acquisitions | 1,989,270 | [1] |
Impairment | (1,300) | [2] |
Foreign currency translation and other | (1,984) | |
Ending Balance | 2,053,544 | |
Animal Safety | ||
Goodwill [Line Items] | ||
Beginning Balance | 75,146 | |
Acquisitions | 6,754 | [1] |
Foreign currency translation and other | (326) | |
Ending Balance | $ 81,574 | |
[1] Animal Safety acquisitions represents portion of 3M Food Safety transaction recorded at Neogen Australasia. Impairment during the nine months ended February 28, 2023 relates to discontinued product lines. The amount was determined based on a relative fair value basis of the product lines compared to the overall reporting unit |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Summary of Amortizable of Intangible Assets (Detail) - USD ($) $ in Thousands | Feb. 28, 2023 | May 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 1,722,775 | $ 147,522 |
Less Accumulated Amortization | 102,546 | 55,416 |
Net Carrying Amount | 1,620,229 | 92,106 |
Licenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 17,401 | 17,109 |
Less Accumulated Amortization | 6,952 | 5,682 |
Net Carrying Amount | 10,449 | 11,427 |
Covenants not to compete | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 782 | 846 |
Less Accumulated Amortization | 716 | 671 |
Net Carrying Amount | 66 | 175 |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 8,670 | 8,347 |
Less Accumulated Amortization | 5,045 | 4,583 |
Net Carrying Amount | 3,625 | 3,764 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,245,875 | 75,000 |
Less Accumulated Amortization | 65,764 | 33,662 |
Net Carrying Amount | 1,180,111 | 41,338 |
Trade names and trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 111,167 | 1,180 |
Less Accumulated Amortization | 2,453 | 167 |
Net Carrying Amount | 108,714 | 1,013 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 311,350 | 17,741 |
Less Accumulated Amortization | 13,198 | 6,124 |
Net Carrying Amount | 298,152 | 11,617 |
Other products and service-related intangibles | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 27,530 | 27,299 |
Less Accumulated Amortization | 8,418 | 4,527 |
Net Carrying Amount | $ 19,112 | $ 22,772 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Feb. 28, 2023 | Feb. 28, 2022 | Feb. 28, 2023 | Feb. 28, 2022 | May 31, 2022 | |
Other non-amortizable intangible assets | $ 14,252,000 | $ 14,252,000 | $ 15,397,000 | ||
Non amortizable intangible assets impairment loss | 1,000,000 | 1,000,000 | |||
Amortization expense for intangible assets | 22,900,000 | $ 2,600,000 | 48,000,000 | $ 7,300,000 | |
Estimated amortization expense for period, 2023 | 23,100,000 | 23,100,000 | |||
Estimated amortization expense for period, 2024 | 91,800,000 | 91,800,000 | |||
Estimated amortization expense for period, 2025 | 91,300,000 | 91,300,000 | |||
Estimated amortization expense for period, 2026 | 91,200,000 | 91,200,000 | |||
Estimated amortization expense for period, 2027 | 90,700,000 | 90,700,000 | |||
Finite-lived intangible asset, expected amortization, after year four | 1,230,000,000 | $ 1,230,000,000 | |||
Weighted average remaining amortization period for intangibles | 18 years | 8 years | |||
Maximum | |||||
Finite lived intangible assets, useful life | 25 years | ||||
Minimum | |||||
Finite lived intangible assets, useful life | 5 years | ||||
Licenses | |||||
Other non-amortizable intangible assets | 569,000 | $ 569,000 | $ 569,000 | ||
Licenses | Maximum | |||||
Finite lived intangible assets, useful life | 20 years | ||||
Licenses | Minimum | |||||
Finite lived intangible assets, useful life | 2 years | ||||
Trademarks | |||||
Other non-amortizable intangible assets | 12,459,000 | $ 12,459,000 | 13,604,000 | ||
Other Intangible Assets | |||||
Other non-amortizable intangible assets | $ 1,224,000 | $ 1,224,000 | $ 1,224,000 | ||
Noncompete Agreements | Maximum | |||||
Finite lived intangible assets, useful life | 10 years | ||||
Noncompete Agreements | Minimum | |||||
Finite lived intangible assets, useful life | 3 years | ||||
Patents | Maximum | |||||
Finite lived intangible assets, useful life | 25 years | ||||
Patents | Minimum | |||||
Finite lived intangible assets, useful life | 5 years | ||||
Other products and service-related intangibles | Maximum | |||||
Finite lived intangible assets, useful life | 15 years | ||||
Other products and service-related intangibles | Minimum | |||||
Finite lived intangible assets, useful life | 5 years | ||||
Customer relationships | Maximum | |||||
Finite lived intangible assets, useful life | 20 years | ||||
Customer relationships | Minimum | |||||
Finite lived intangible assets, useful life | 9 years | ||||
Trade names and trademarks | Maximum | |||||
Finite lived intangible assets, useful life | 25 years | ||||
Trade names and trademarks | Minimum | |||||
Finite lived intangible assets, useful life | 10 years | ||||
Developed technology | Maximum | |||||
Finite lived intangible assets, useful life | 20 years | ||||
Developed technology | Minimum | |||||
Finite lived intangible assets, useful life | 10 years |
Long Term Debt - Summary of Lon
Long Term Debt - Summary of Long Term Debt (Detail) - USD ($) $ in Thousands | Feb. 28, 2023 | May 31, 2022 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 900,000 | |
Less: Unamortized debt issuance costs | (15,299) | |
Total non-current debt, net | 884,701 | $ 0 |
Term Loan [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 550,000 | |
Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 350,000 |
Long Term Debt - Additional Inf
Long Term Debt - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Dec. 31, 2022 | Sep. 30, 2022 | Jul. 01, 2022 | Feb. 28, 2023 | Feb. 28, 2023 | May 31, 2022 | Nov. 30, 2022 | Jun. 30, 2022 | |
Debt Instrument [Line Items] | ||||||||
Unsecured revolving line of credit, total amount available | $ 15,000,000 | $ 15,000,000 | ||||||
Unsecured revolving line of credit, maturity date | Nov. 30, 2023 | |||||||
Unsecured revolving line of credit, interest terms | LIBOR plus 100 basis points | |||||||
Unsecured revolving line of credit, outstanding debt | $ 0 | |||||||
Interest expense | 9,100,000 | $ 17,400,000 | ||||||
Swap credit | 136,000 | |||||||
Amortization of deferred debt issuance costs | 529,000 | 1,100,000 | ||||||
Debt instrument accrued interest | 3,400,000 | |||||||
Debt issuance costs incurred | 6,700,000 | 6,700,000 | ||||||
Debt instrument interest expense | 7,800,000 | 19,100,000 | ||||||
Interest expenses related to amortization, debt issuance costs | 209,000 | 557,000 | ||||||
Principal payments, remainder of 2023 | 0 | 0 | ||||||
Principal payments in 2024 | 0 | 0 | ||||||
Principal payments in 2025 | 0 | 0 | ||||||
Long-term debt | 900,000,000 | 900,000,000 | ||||||
Principal payments in 2026 | 0 | 0 | ||||||
Prepayments of principal amount | 100,000,000 | 100,000,000 | ||||||
Interest payable, Current | 3,438,000 | $ 3,438,000 | $ 0 | |||||
Interest Rate Swaps [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Long-term debt | $ 550,000,000 | |||||||
Derivative, notional amount | $ 250,000,000 | |||||||
Interest Expense [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Percentage of annual commitment fee | 0.35% | |||||||
Commitment fee | $ 131,000 | $ 356,000 | ||||||
Senior Notes [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt Instrument, Face Amount | $ 350,000,000 | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 8.625% | 8.625% | 8.625% | |||||
Debt Instrument, Term | 2030 years | |||||||
Long-term debt | $ 350,000,000 | $ 350,000,000 | ||||||
Term Loan Facility [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument periodic payments | $ 40,000,000 | $ 60,000,000 | ||||||
Payments of debt issuance costs | 10,200,000 | |||||||
Term Loan [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Long-term debt | 550,000,000 | 550,000,000 | ||||||
Interest payable, Current | 0 | 0 | ||||||
Credit Agreement [Member] | Three M Food Safety Transaction [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Unsecured revolving line of credit, total amount available | $ 150,000,000 | |||||||
Credit Agreement [Member] | Term Loan Facility [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt Instrument, Face Amount | 650,000,000 | |||||||
Five Year Senior Secured Revolving Facility [Member] | Credit Agreement [Member] | Three M Food Safety Transaction [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of credit debt issuance costs gross | $ 2,400,000 | |||||||
Amortization of debt issuance costs on line of credit | 122,000 | 244,000 | ||||||
Five Year Senior Secured Revolving Facility [Member] | Credit Agreement [Member] | Three M Food Safety Transaction [Member] | Prepaid Expenses and Other Current Assets [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt issuance costs line of credit arrangements net | 489,000 | 489,000 | ||||||
Five Year Senior Secured Revolving Facility [Member] | Credit Agreement [Member] | Three M Food Safety Transaction [Member] | Other Noncurrent Assets [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt issuance costs line of credit arrangements net | $ 1,600,000 | $ 1,600,000 | ||||||
Revolving Credit Facility | Minimum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Percentage of annual commitment fee | 0.20% | |||||||
Revolving Credit Facility | Maximum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Percentage of annual commitment fee | 0.35% | |||||||
Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Credit Agreement [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Unsecured revolving line of credit, maturity date | Jun. 30, 2027 | |||||||
Debt instrument description | revolving facility matures at the earlier of June 30, 2027 | |||||||
Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Credit Agreement [Member] | Minimum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Unsecured revolving line of credit, spread | 150% | |||||||
Debt instrument interest rate effective percentage | 6.48% | 4.80% | ||||||
Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Credit Agreement [Member] | Maximum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Unsecured revolving line of credit, spread | 225% | |||||||
Debt instrument interest rate effective percentage | 6.66% | 6.66% |
Long Term Debt - Summary of Exp
Long Term Debt - Summary of Expected Maturities Associated With Outstanding Debt (Detail) | Feb. 28, 2023 USD ($) |
Debt Instrument [Line Items] | |
Remainder of 2023 | $ 0 |
2024 | 0 |
2025 | 0 |
2026 | 0 |
2027 | 34,063,000 |
Thereafter | 865,937,000 |
Total | $ 900,000,000 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Feb. 28, 2023 | Feb. 28, 2022 | Feb. 28, 2023 | Feb. 28, 2022 | May 31, 2022 | |
Income Taxes [Line Items] | |||||
Income tax expense (benefit) | $ (10,450,000) | $ 1,200,000 | $ (1,250,000) | $ 7,950,000 | |
Income tax expense related to nondeductible transaction costs | 1,100,000 | ||||
Unrecognized tax benefits that would impact the tax effective rate | $ 1,500,000 | $ 1,500,000 | $ 808,000 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) | 9 Months Ended | |
Feb. 28, 2023 | May 31, 2022 | |
Commitments and Contingencies Disclosure [Line Items] | ||
Estimated liability costs of remediation | $ 916,000 | $ 916,000 |
Estimated liability, measurement period, years | 15 years | |
Estimated liability costs of remediation, current | $ 100,000 | |
Estimated liability costs of remediation, non current | 816,000 | |
Environmental loss contingencies, charges to expense for potential fines or penalties | 600,000 | |
Minimum | ||
Commitments and Contingencies Disclosure [Line Items] | ||
Environmental remediation expense | 38,000 | |
Maximum | ||
Commitments and Contingencies Disclosure [Line Items] | ||
Environmental remediation expense | $ 131,000 |
Derivatives - Additional Inform
Derivatives - Additional Information (Detail) - USD ($) | 9 Months Ended | ||
Feb. 28, 2023 | Nov. 30, 2022 | May 31, 2022 | |
Interest Rate Swaps [Member] | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 250,000,000 | ||
Not Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Foreign Exchange Contract [Member] | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 18,500,000 | $ 4,400,000 | |
Designated as Hedging Instrument [Member] | Interest Rate Swaps [Member] | |||
Derivative [Line Items] | |||
Fair value of interest rate swap | $ 714,000 | ||
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 250,000,000 | ||
Derivatives, maturity date | Jun. 30, 2027 | ||
Derivative fixed interest rate | 6.215% | ||
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Base Rate | |||
Derivative [Line Items] | |||
Derivative fixed interest rate | 4.215% | ||
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Prime Rate | |||
Derivative [Line Items] | |||
Derivative fixed interest rate | 2% |
Derivatives - Schedule of Other
Derivatives - Schedule of Other Derivatives Not Designated As Hedging Instruments Statements of Financial Performance And Financial Position Location (Detail) - USD ($) $ in Thousands | Feb. 28, 2023 | May 31, 2022 |
Not Designated as Hedging Instrument [Member] | Forward Contracts [Member] | Other Accruals [Member] | ||
Derivative [Line Items] | ||
Foreign currency forward contracts, net | $ 162 | $ (78) |
Derivatives - Schedule of Gain
Derivatives - Schedule of Gain Loss From Derivatives Not Designated As Hedging Instruments Statements of Financial Performance And Location (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 28, 2023 | Feb. 28, 2022 | Feb. 28, 2023 | Feb. 28, 2022 | |
Not Designated as Hedging Instrument [Member] | Forward Contracts [Member] | Other (expense) income [Member] | ||||
Derivative [Line Items] | ||||
Foreign currency forward contracts | $ (1,564) | $ (363) | $ (9,812) | $ 648 |
Derivatives - Summary of Intere
Derivatives - Summary of Interest Rate Swaps on Recurring Basis Using Observable Market Inputs for Similar Assets or Liabilities (Details) - Designated as Hedging Instrument [Member] - Interest Rate Swaps [Member] | Feb. 28, 2023 USD ($) |
Derivative [Line Items] | |
Interest rate swaps | $ 714,000 |
Other Current Assets [Member] | |
Derivative [Line Items] | |
Interest rate swaps | 2,689,000 |
Other Noncurrent Liabilities [Member] | |
Derivative [Line Items] | |
Interest rate swaps | $ (1,975,000) |
Derivative - Summary of Other C
Derivative - Summary of Other Comprehensive Income (Loss) Before Reclassifications of Pre-tax Derivative Gains and Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Feb. 28, 2023 | Feb. 28, 2023 | |
Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | ||
Derivative [Line Items] | ||
Other comprehensive income before reclassifications | $ 3,083 | $ 655 |
Derivatives - Summary of Reclas
Derivatives - Summary of Reclassification of Pre-tax Derivative Gains and Losses into Net Income from Accumulated Other Comprehensive Income (Loss) (Details) - Designated as Hedging Instrument [Member] - Interest Rate Swaps [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Feb. 28, 2023 | Feb. 28, 2023 | |
Derivative [Line Items] | ||
Location of Gain (Loss) Reclassified | Interest expense | |
Net income from accumulated other comprehensive income (loss) | $ 105 | $ 105 |