Neogen Corporation: Living clean

Some things are in the kitchen with Dinah, and they’re scary. A mycotoxin here, bacteria there, listeria, salmonella, and is that E. Coli playing around with the frying pan? Not to worry. Neogen Corporation (Nasdaq: NEOG) has test kits to smoke out everything from sulfites in shrimp to allergens in almonds.

Nothing stirs Neogen’s sales like contamination concerns and a few food recalls. Fiscal 2008 second-quarter revenue, released earlier this month, rose 23% to $27.2 million from the same period in fiscal 2007, with the food safety division up 24% to $14.5 million and animal safety up 21% to $12.7 million.

Sales of AccuPoint and related accessories, used to test food preparation surfaces, grew almost 20% in the second quarter through November. Sales of Soleris, an optical system used to detect microbial contamination, grew more than 40%. Soleris is used to uncover poor food quality and spoilage. And revenue from tests for microorganisms, such as E. Coli and friends, and demand to detect mycotoxins, which occur naturally in field crops such as corn, also grew.

Clean living makes for happier, healthier animals, too. Neogen’s animal safety division markets a line of diagnostics, veterinary instruments and drugs, nutritional supplements, disinfectants and rodenticides. Reducing stress on food animals such as cows by killing off pathogens and rodent barn mates, and improving the methods of administering vaccines and drugs, have a big impact on the safety and quality of meat and milk.

Sales of veterinary instruments and products rose 55% in the second quarter, while life sciences and vaccine sales dropped 10% on order timing issues and rodenticide sales were down 4% because of mild U.S. weather.

With a revenue boost from nearly each sales category, earnings for the 25-year-old Lansing, Mich.-based company rose 34% to $0.22 per share in the second quarter from a year-ago. Net income in the second quarter was a record — the 59th consecutive profitable quarter from operations for Neogen.

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