Neogen Faces Mounting Legal Challenges as Class-Action Deadlines Loom

Shares of food safety specialist Neogen came under renewed selling pressure this week as multiple law firms announced deadlines for class-action lawsuits against the company. The stock closed yesterday’s session at $5.64, marking a $0.11 decline, while pre-market trading today showed the shares hovering around $5.75.

Financial Performance and Acquisition Challenges

The legal pressure follows a period of significant financial strain for the company. For its fourth fiscal quarter ending May 31, 2025, Neogen reported a GAAP net loss of $612.2 million, primarily driven by an impairment charge related to its acquisition of the 3M Food Safety Division. This substantial write-down highlighted ongoing integration challenges, despite the company posting adjusted earnings of $0.05 per share on revenues of $225.5 million.

Market reaction to these integration difficulties has been severe. The stock experienced a dramatic 28% sell-off on April 9, 2025, followed by an additional 17% decline on June 4, 2025.

Wave of Legal Actions Intensifies

Levi & Korsinsky yesterday reminded investors of an approaching deadline for lead plaintiff motions in securities litigation. This follows similar announcements from The Gross Law Firm and Kahn Swick & Foti, which issued their own alerts throughout August and early September.

The various lawsuits level consistent allegations against Neogen, claiming the company made false statements regarding the integration progress of the acquired 3M Food Safety Division between January 2023 and June 2025. Plaintiffs specifically allege the company concealed operational inefficiencies and integration problems that negatively impacted financial performance, contradicting management’s public assurances about the acquisition’s success.

Should investors sell immediately? Or is it worth buying Neogen?

Management’s Strategic Response

Neogen’s leadership has taken several decisive steps to address these challenges. On July 18, 2025, the company divested its Cleaners & Disinfectants business to Kersia for $130 million, with proceeds earmarked for debt reduction.

In a significant leadership change, Mike Nassif assumed the role of Chief Executive Officer on August 11, 2025, taking operational responsibility for stabilizing the business and improving profitability. The persistent legal challenges, however, threaten to undermine these efforts by directly questioning management’s credibility regarding the central issue of integration execution.

Outlook and Market Perspective

Looking ahead to fiscal year 2026, Neogen has provided guidance forecasting revenues between $820 million and $840 million, with adjusted EBITDA projected in the range of $165 million to $175 million. The company plans to achieve further supply chain integration improvements and enhanced profit margins.

Despite these longer-term targets, near-term signals remain weak. The current share price of $5.64 and muted pre-market activity suggest ongoing negative pressure. Market analysts maintain an average price target of $7.50 on the stock with a “Hold” recommendation.

Investors are now watching September 16, 2025, when deadlines for several lead plaintiff motions are set to expire, potentially determining the course of the ongoing litigation.