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Revenue Recognition
 3 Months Ended
Aug. 31, 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 months ended August 31, 2023 and 2022, the Company recorded additions of $1,857 and $2,192 to deferred revenue, respectively. During the three months ended August 31, 2023 and 2022, the Company recognized $2,684 and $2,188, 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. 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 months ended August 31, 2023 and 2022:

 

 

Three Months Ended August 31,

 

 

 

2023

 

 

2022

 

Food Safety

 

 

 

 

 

 

Natural Toxins & Allergens

 

 

22,268

 

 

$

19,787

 

Bacterial & General Sanitation

 

 

45,224

 

 

 

10,728

 

Indicator Testing, Culture Media & Other

 

 

81,886

 

 

 

19,254

 

Rodent Control, Insect Control & Disinfectants

 

 

11,090

 

 

 

9,575

 

Genomics Services

 

 

5,810

 

 

 

5,299

 

 

$

166,278

 

 

$

64,643

 

Animal Safety

 

 

 

 

 

 

Life Sciences

 

$

1,661

 

 

$

1,589

 

Veterinary Instruments & Disposables

 

 

12,932

 

 

 

14,673

 

Animal Care & Other

 

 

8,175

 

 

 

10,526

 

Rodent Control, Insect Control & Disinfectants

 

 

22,686

 

 

 

22,214

 

Genomics Services

 

 

17,255

 

 

 

18,704

 

 

 

62,709

 

 

 

67,706

 

Total Revenues

 

$

228,987

 

 

$

132,349