Revenue Recognition

6 Months Ended

Nov. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue Recognition

4. REVENUE RECOGNITION

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

•Rodent control products, disinfectants and insect control products 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 six months ended November 30, 2023, the Company recorded additions of $4,121 and $5,978 to deferred revenue, respectively. During the three and six months ended November 30, 2022, the Company recorded additions of $2,479 and $4,671 to deferred revenue, respectively. During the three and six months ended November 30, 2023, the Company recognized $3,231 and $5,915, respectively, of deferred revenue amounts into revenue. During the three and six months ended November 30, 2022, the Company recognized $2,860 and $5,048, respectively, of deferred revenue amounts into revenue. Changes in the balances relate primarily to sales of the Company's genomics services.

On September 1, 2022, Neogen closed on a Reverse Morris Trust transaction to combine with 3M Company's ("3M") Food Safety Division (“3M FSD”, “FSD”). Similar to Neogen, 3M’s former FSD 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. Revenues for these products are recognized and invoiced when the product

is shipped to the customer. Many of these products are currently manufactured, invoiced, and distributed by 3M on behalf of Neogen under a number of transition service contracts. However, the Company is currently in the process of exiting the distribution-related service contracts. This will be complete on a global basis by the end of the third quarter in fiscal 2024.

The following table presents disaggregated revenue by major product and service categories during the three and six months ended November 30, 2023 and 2022:

	Three Months Ended November 30,				Six Months Ended November 30,
	2023		2022		2023		2022
Food Safety
Natural Toxins & Allergens		21,110	$	22,251	$	43,378	$	42,038
Bacterial & General Sanitation		42,774		41,121		87,998		51,849
Indicator Testing, Culture Media & Other		83,758		82,084		165,644		101,338
Rodent Control, Insect Control & Disinfectants		10,954		10,377		22,044		19,952
Genomics Services		5,807		5,510		11,617		10,809
	$	164,403	$	161,343	$	330,681	$	225,986
Animal Safety
Life Sciences	$	1,677	$	1,427	$	3,338	$	3,016
Veterinary Instruments & Disposables		16,937		16,433		29,869		31,106
Animal Care & Other		8,985		10,569		17,160		21,095
Rodent Control, Insect Control & Disinfectants		19,953		20,665		42,639		42,879
Genomics Services		17,674		19,596		34,929		38,300
		65,226		68,690		127,935		136,396
Total Revenues	$	229,629	$	230,033	$	458,616	$	362,382