Revenue Recognition

9 Months Ended

Feb. 29, 2024

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, 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 nine months ended February 29, 2024, the Company recorded additions of $5,116 and $11,094 to deferred revenue, respectively. During the three and nine months ended February 28, 2023, the Company recorded additions of $4,601 and $9,272 to deferred revenue, respectively. During the three and nine months ended February 29, 2024, the Company recognized $4,308 and $10,224, respectively, of deferred revenue amounts into revenue. During the three and nine months ended February 28, 2023, the Company recognized $2,918 and $7,967, 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, 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. Subsequent to the 3M FSD transaction, many of these products were manufactured,

invoiced, and distributed by 3M on behalf of Neogen under a number of transition service contracts. In the third quarter of fiscal year 2024, the Company completed its exit of distribution-related service contracts. As a result, all product shipments and invoicing to customers is now done directly by Neogen.

The following table presents disaggregated revenue by major product and service categories during the three and nine months ended February 29, 2024 and February 28, 2023:

	Three Months Ended February 29/28,				Nine Months Ended February 29/28,
	2024		2023		2024		2023
Food Safety
Natural Toxins & Allergens		19,738	$	19,198	$	63,116	$	61,236
Bacterial & General Sanitation		40,395		39,444		128,393		91,293
Indicator Testing, Culture Media & Other		81,168		77,955		246,812		179,293
Rodent Control, Insect Control & Disinfectants		10,136		9,550		32,180		29,502
Genomics Services		6,317		5,395		17,934		16,204
	$	157,754	$	151,542	$	488,435	$	377,528
Animal Safety
Life Sciences	$	1,372	$	1,440	$	4,710	$	4,456
Veterinary Instruments & Disposables		17,976		15,428		47,845		46,534
Animal Care & Other		10,066		8,735		27,226		29,830
Rodent Control, Insect Control & Disinfectants		23,055		20,242		65,694		63,121
Genomics Services		18,589		20,868		53,518		59,168
		71,058		66,713		198,993		203,109
Total Revenues	$	228,812	$	218,255	$	687,428	$	580,637