IDEXX Laboratories Announces Second Quarter Results

Rhea-AI Summary

IDEXX Laboratories announced strong second quarter results for 2021, with a reported revenue growth of 30% and organic revenue growth of 25%. The Companion Animal Group (CAG) Diagnostics saw recurring revenue growth of 30% reported and 26% organic. The earnings per share (EPS) reached $2.34, a 36% increase. The company raised its 2021 revenue guidance to $3.170 - $3.205 billion and EPS outlook to $8.20 - $8.36. Growth drivers include strong demand for CAG Diagnostics and expansion in water testing revenues.

Positive

• 30% reported revenue growth and 25% organic revenue growth.
• EPS of $2.34, reflecting a 36% increase.
• Raised 2021 revenue guidance to $3.170 - $3.205 billion.
• CAG Diagnostics recurring revenue grew by 30% reported and 26% organic.
• Operating margin improved to 31.4%, a 110 basis point increase.

Negative

• Gross margin decreased by 30 basis points to 59.2%.
• Operating expenses increased by 24%, reflecting prior year cost control lapsing.

WESTBROOK, Maine, July 30, 2021 /PRNewswire/ --

• Achieves reported revenue growth of 30% and organic revenue growth of 25%, driven by CAG Diagnostics recurring revenue growth of 30% as reported and 26% organic
• Delivers EPS of $2.34, representing 36% growth as reported and 33% on a comparable basis
• Increases 2021 revenue guidance to $3,170 million - $3,205 million, reflecting higher expectations for reported growth of 17% - 18.5% and organic growth of 14.5% - 16%, supported by projected CAG Diagnostics recurring revenue growth of 18% - 19.5% as reported and 16% - 17.5% organic
• Raises 2021 EPS outlook to $8.20 - $8.36, reflecting an increase of 1% - 1.5% in the organic revenue growth outlook and expectations for higher operating margins of 28.6% - 29.1%

IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in veterinary diagnostics, veterinary practice software and water microbiology testing, today announced second quarter results, as well as an update on U.S. companion animal diagnostics sector trends.

Second Quarter Results

The Company reports revenues of $826 million for the second quarter of 2021, an increase of 30% as reported and 25% organically. Second quarter results were driven by Companion Animal Group ("CAG") Diagnostics recurring revenue growth of 30% reported and 26% organic, reflecting continued high gains in the U.S. and internationally, as well as 86% reported and 78% organic growth in CAG Diagnostics capital instrument revenue. Overall revenue growth was also supported by 32% reported and 27% organic revenue growth in the Water business.

Earnings per diluted share ("EPS") of $2.34 for the second quarter was supported by solid operating margin gains despite comparisons to highly controlled cost levels in the prior year. Overall operating margins expanded 110 basis points on an as reported and comparable basis. EPS results also benefited from a higher than expected $0.07 per share in tax benefits from share-based compensation. 

"The IDEXX team delivered another quarter of outstanding performance, reflected in continued high growth in CAG Diagnostics recurring revenues and accelerated gains in instrument placements, as the global animal healthcare sector sustained strong growth momentum globally," said Jay Mazelsky, the Company's President and Chief Executive Officer. "We doubled prior year CAG premium instrument placements, as our customers look ahead to supporting continued strong global demand for companion animal diagnostics in their practices. We look forward to building on this momentum with the ongoing successful rollout of ProCyte One^TM, our next-generation hematology point-of-care instrument. We continue to drive exceptional performance across our major regions driven by strong commercial execution and adoption of IDEXX innovation. We also continue to build on our capabilities, including expansion of our cloud-based software solutions that support veterinary clinic productivity. We were excited to announce the acquisition of the ezyVet practice management software platform in the quarter and to welcome the talented ezyVet team to IDEXX. Our best-in-class in-clinic platforms and unparalleled global lab services capabilities, integrated with our cloud-based information management solutions, position us to drive accelerated advancement of the global standard of healthcare for companion animals."

Companion Animal Diagnostics Trends Update

Favorable global trends in companion animal healthcare continue to support high growth for CAG diagnostic products and services across regions. U.S. same-store clinical visit growth at veterinary practices was 13% in the second quarter, reflecting year-over-year growth of 11% in non-wellness visits and 14% in wellness visits. These gains include benefits from comparisons to prior year impacts on demand related to the COVID-19 pandemic.  Average same-store revenue growth at U.S. veterinary practices was 16% in the second quarter, driven by high growth in healthcare services, including increased utilization of diagnostics. Additional U.S. companion animal practice key metrics are available in the Q2 2021 Earnings Snapshot accessible on the IDEXX website, www.idexx.com/investors.

Second Quarter Performance Highlights

Companion Animal Group 

The Companion Animal Group generated 32% reported and 27% organic revenue growth for the quarter, supported by CAG Diagnostics recurring revenue growth of 30% on a reported basis and 26% on an organic basis. High growth across IDEXX's major modalities in the second quarter reflected continued high growth in clinical visits, which benefited in part from lapping of prior year COVID-19 impacts in April and May. Overall CAG revenue growth included 86% reported growth and 78% organic growth in CAG Diagnostics capital instrument revenues, compared to constrained prior year levels.

• IDEXX VetLab® consumables generated 31% reported and 26% organic revenue growth, supported by increased testing utilization across regions, high customer retention levels, ongoing expansion of our global premium instrument installed base, and moderate net price gains.
• Reference laboratory diagnostic and consulting services generated 28% reported and 25% organic revenue growth, with high organic growth across regions reflecting strong volume gains across testing categories and benefits from moderate net price gains.
• Rapid assay products revenues grew 30% as reported and 28% on an organic basis, with continued worldwide growth in SNAP® 4Dx Plus Test volumes, benefiting from strong overall sector conditions, including high growth in wellness testing, high customer retention levels, and moderate net price gains.

Veterinary software, services and diagnostic imaging systems revenues grew 33% reported and 26% on an organic basis, driven by double-digit growth in subscription-based service revenues and strong growth in new veterinary software system placements and recurring software services. Reported growth includes initial benefits from the recent acquisition of ezyVet which closed in June.

Water

Water revenues grew 32% on a reported basis and 27% on an organic basis for the quarter, compared to prior year results, which reflected a 16% organic revenue decline driven by early pandemic-related impacts. Solid revenue growth reflects increased demand for water testing as economies re-open, including continued recovery in non-compliance related testing volumes.

Livestock, Poultry and Dairy ("LPD")

LPD revenues grew 4% reported and declined 2% on an organic basis, as strong results were constrained by the lapping of high prior year demand in key areas such as African Swine Fever testing and relatively lower herd health screening levels due to reduced export levels.

Gross Profit and Operating Profit

Gross profits increased 29% as reported and 25% on a comparable basis. Gross margin of 59.2% decreased 30 basis points compared to prior year period results as reported and 20 basis points on a comparable basis. Gross margin results were impacted by mix impacts from high instrument revenue growth and the lapping of tightly controlled prior year cost levels in key areas including lab operations, which moderated reference lab gross margin gains. These effects were partially offset by a mix benefit from strong CAG Diagnostics recurring revenue growth and moderate net price gains.

Operating margin was 31.4% in the quarter, 110 basis points higher than the prior year period results on both as reported and comparable bases, supported by operating expense leverage on strong revenue growth. Operating expenses increased 24% as reported and 20% on a comparable basis, reflecting comparisons to lower prior year levels impacted by early pandemic-related cost controls, as well as the advancement of investments in our global commercial and innovation capabilities. The Company is planning for constrained gross margin gains and higher levels of operating expense growth over the balance of the year as we continue to lap tightly controlled prior year spending levels, with increases in specific cost areas as pandemic restrictions are eased and advancement of investments aligned with our goals for sustained high revenue growth.

2021 Growth and Financial Performance Outlook

The following table provides the Company's outlook for annual key financial metrics in 2021:

Amounts in millions except per share data and percentages 

Growth and Financial Performance Outlook		2021
Revenue		$3,170		-	$3,205
Reported growth		17%		-	18.5%
Organic growth		14.5%		-	16%
CAG Diagnostics Recurring Revenue Growth
Reported growth		18%		-	19.5%
Organic growth		16%		-	17.5%
Operating Margin		28.6%		-	29.1%
Operating margin expansion		290		-	340 bps
Comparable margin expansion		175		-	225 bps
EPS		$8.20		-	$8.36
Reported growth		22%		-	25%
Comparable growth		25%		-	27%
Other Key Metrics
Net interest expense		~  $30.5
Share-based compensation tax benefit		~ $22
Share-based compensation tax rate benefit		~ 2.5%
Effective tax rate		18.5%		-	19.5%
Share-based compensation EPS impact		~ $0.25
Reduction in average shares outstanding		0%		-	0.5%
Operating Cash Flow		100% - 110% of net income
Free Cash Flow		~80% of net income
Capital Expenditures		$150  - $160

The following table outlines estimates of foreign currency exchange rate impacts, net of foreign currency hedging transactions, and foreign currency exchange rate assumptions reflected in the above financial performance outlook for 2021.

Estimated Foreign Currency Exchange Rates and Impacts		2021
Revenue growth rate impact		~ 2%
CAG Diagnostics recurring revenue growth rate impact		~ 2%
Operating margin growth impact		~ 10 bps
EPS impact		~ $0.17
EPS growth impact		~ 3.0%
Foreign Currency Exchange Rate Assumptions
In U.S. dollars
euro		$1.17
British pound		$1.37
Canadian dollar		$0.79
Australian dollar		$0.73
Relative to the U.S. dollar
Japanese yen		¥112.00
Chinese renminbi		¥6.56
Brazilian real		R$5.33

Conference Call and Webcast Information

IDEXX Laboratories, Inc. will be hosting a conference call today at 8:30 a.m. (EDT) to discuss its second quarter 2021 results and management's outlook. To participate in the conference call, dial 1-888-771-4371 or 1-847-585-4405 and reference confirmation number 50183464. Individuals can access a live webcast of the conference call through a link on the IDEXX website, www.idexx.com/investors. An archived edition of the webcast will be available after 1:00 p.m. (EDT) on that day via the same link and will remain available for one year.

2021 Virtual Investor Day

IDEXX Laboratories, Inc. will host its 2021 Virtual Investor Day on Thursday, August 12, 2021 from 10:00 am to approximately 1:00 pm (EDT). A live audio webcast and accompanying slide presentations will be available at www.idexx.com/investors. An archived webcast replay of the event will be available approximately one hour following the event at www.idexx.com/investors.

About IDEXX Laboratories, Inc.

IDEXX Laboratories, Inc. is a member of the S&P 500® Index and is a leader in pet healthcare innovation, offering diagnostic and software products and services that deliver solutions and insights to practicing veterinarians around the world. IDEXX products enhance the ability of veterinarians to provide advanced medical care, improve staff efficiency and build more economically successful practices. IDEXX is also a worldwide leader in providing diagnostic tests and information for livestock and poultry and tests for the quality and safety of water and milk and point-of-care and laboratory diagnostics for human medicine. Headquartered in Maine, IDEXX employs approximately 9,800 people and offers products to customers in over 175 countries. For more information about IDEXX, visit: www.idexx.com.

Note Regarding Forward-Looking Statements 

This earnings release contains statements about the Company's business prospects and estimates of the Company's financial results for future periods that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are included above under "Second Quarter Results", "Gross Profit and Operating Profit", "2021 Growth and Financial Performance Outlook", and elsewhere and can be identified by the use of words such as "expects", "may", "anticipates", "intends", "would", "will", "plans", "believes", "estimates", "projected", "should", and similar words and expressions. Our forward-looking statements include statements relating to a product roll-out; revenue growth and EPS outlooks; operating and free cash flow forecast; projected impact of foreign currency exchange rates; projected operating margins and expenses and capital expenditures; projected tax, tax rate and EPS benefits from share-based compensation arrangements; projected effective tax rates, reduction of average shares outstanding and net interest expense; projected gross margin growth; and anticipated cost area increases. These statements are intended to provide management's expectation of future events as of the date of this earnings release; are based on management's estimates, projections, beliefs and assumptions as of the date of this earnings release; and are not guarantees of future performance. These forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, among other things, the matters described under the headings "Business," "Risk Factors," "Legal Proceedings," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosures About Market Risk" in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 and in the corresponding sections of the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021, as well as those described from time to time in the Company's other filings with the U.S. Securities and Exchange Commission available at www.sec.gov. The Company specifically disclaims any obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

Statement Regarding Non-GAAP Financial Measures

The following defines terms and conventions and provides reconciliations regarding certain measures used in this earnings release and/or the accompanying earnings conference call that are not required by, or presented in accordance with, generally accepted accounting principles in the United States of America ("GAAP"), otherwise referred to as non-GAAP financial measures. To supplement the Company's consolidated results presented in accordance with GAAP, the Company has disclosed non-GAAP financial measures that exclude or adjust certain items. Management believes these non-GAAP financial measures provide useful supplemental information for its and investors' evaluation of the Company's business performance and liquidity and are useful for period-over-period comparisons of the performance of the Company's business and its liquidity and to the performance and liquidity of our peers. While management believes that these non-GAAP financial measures are useful in evaluating the Company's business, this information should be considered as supplemental in nature and should not be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly titled measures reported by other companies.

Constant currency - Constant currency references are non-GAAP financial measures which exclude the impact of changes in foreign currency exchange rates and are consistent with how management evaluates our performance and comparisons with prior and future periods. We estimated the net impacts of currency on our revenue, gross profit, operating profit, and EPS results by restating results to the average exchange rates or exchange rate assumptions for the comparative period, which includes adjusting for the estimated impacts of foreign currency hedging transactions and certain impacts on our effective tax rates. These estimated currency changes impacted second quarter 2021 results as follows: increased gross profit growth by 3.8%, decreased gross margin growth by 10 basis points, increased operating expense growth by 3.5%, increased operating profit growth by 4.2%, had an immaterial impact on operating profit margin growth, and increased EPS growth by 4.1%. Constant currency revenue growth represents the percentage change in revenue during the applicable period, as compared to the prior year period, excluding the impact of changes in foreign currency exchange rates. See the supplementary analysis of results below for revenue percentage change from currency for the three and six months ended June 30, 2021 and refer to the 2021 Growth and Financial Performance Outlook section of this earnings release for estimated foreign currency exchange rate impacts on 2021 projections and estimates.

Growth and organic revenue growth - All references to growth and organic growth refer to growth compared to the equivalent prior year period unless specifically noted. Organic revenue growth is a non-GAAP financial measure that excludes the impact of changes in foreign currency exchange rates, certain business acquisitions, and divestitures. Management believes that reporting organic revenue growth provides useful information to investors by facilitating easier comparisons of our revenue performance with prior and future periods and to the performance of our peers. Two-year average organic growth rates are provided to facilitate easier comparisons between periods impacted by the COVID-19 pandemic with prior and future periods, calculated as the average of the growth rates over the two referenced periods. Organic revenue growth should be considered in addition to, and not as a replacement of or a superior measure to, revenue growth reported in accordance with GAAP. See the supplementary analysis of results below for a reconciliation of reported revenue growth to organic revenue growth for the three and six months ended June 30, 2021. Please refer to the 2021 Growth and Financial Performance Outlook section of this earnings release for estimated full year 2021 organic revenue growth for the Company and CAG Diagnostics recurring revenue. The percentage change in revenue resulting from acquisitions represents incremental revenues attributable to business acquisitions that have occurred since the beginning of the prior year period. Revenue from acquisitions is expected to increase projected full year 2021 revenue growth by 50 basis points and increase CAG Diagnostics recurring revenue growth by 20 basis points.

The reconciliation of the two-year average annual organic growth of CAG Diagnostics recurring revenue is as follows:

		Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions			Organic Revenue Growth1
CAG Diagnostics recurring revenue growth rates for the quarter ended June 30, 2021		29.6	%		3.7	%		0.3	%		25.6	%
CAG Diagnostics recurring revenue growth rates for the quarter ended June 30, 2020		6.9	%		(1.1)	%		0.8	%		7.2	%
2-year average annual growth rates		18.3	%		1.3	%		0.6	%		16.4	%
1See Statement Regarding Non-GAAP Financial Measures, above. Amounts presented may not recalculate due to rounding.

Comparable growth metrics - Comparable gross profit growth, comparable gross margin gain (or growth), comparable operating expense growth, comparable operating profit growth and comparable operating margin gain (or growth) are non-GAAP financial measures and exclude the impact of changes in foreign currency exchange rates and non-recurring or unusual items (if any). Please refer to the constant currency note above for a summary of foreign currency exchange rate impacts. Management believes that reporting comparable gross profit growth, comparable gross margin gain (or growth), comparable operating expense growth, comparable operating profit growth and comparable operating margin gain (or growth) provides useful information to investors because it enables better period-over-period comparisons of the fundamental financial results by excluding items that vary independent of performance and provides greater transparency to investors regarding key metrics used by management. Comparable gross profit growth, comparable gross margin gain (or growth), comparable operating expense growth, comparable operating profit growth and comparable operating margin gain (or growth) should be considered in addition to, and not as replacements of or superior measures to, gross profit growth, gross margin gain, operating expense growth, operating profit growth and operating margin gain reported in accordance with GAAP.

The reconciliation of these non-GAAP financial measures is as follows:

		Three Months Ended							Year-over-Year			Six Months Ended							Year-over-Year
		June 30				June 30,			Change			June 30				June 30,			Change
Dollar amounts in thousands		2021				2020						2021				2020
Gross Profit (as reported)		$	489,308			$	379,342		29	%		$	960,090			$	738,932		30	%
Gross margin		59.2		%		59.5		%	(30)	bps		59.9		%		58.5		%	140	bps
Less: comparability adjustments
Change from currency		14,578				—						26,017				—
Comparable gross profit growth		$	474,730			$	379,342		25	%		$	934,073			$	738,932		26	%
Comparable gross margin and gross margin gain (or growth)		59.3		%		59.5		%	(20)	bps		59.9		%		58.5		%	140	bps
Operating expenses (as reported)		$	230,055			$	186,094		24	%		$	453,215			$	401,359		13	%
Less: comparability adjustments
Change from currency		6,590				—						8,201				—
Comparable operating expense growth		$	223,465			$	186,094		20	%		$	445,014			$	401,359		11	%
Income from operations (as reported)		$	259,253			$	193,248		34	%		$	506,875			$	337,573		50	%
Operating margin		31.4		%		30.3		%	110	bps		31.6		%		26.7		%	490	bps
Less: comparability adjustments
Change from currency		7,988				—						17,816				—
Comparable operating profit growth		$	251,265			$	193,248		30	%		$	489,059			$	337,573		45	%
Comparable operating margin and operating margin gain (or growth)		31.4		%		30.3		%	110	bps		31.4		%		26.7		%	470	bps
Amounts presented may not recalculate due to rounding.

Projected 2021 comparable operating margin expansion outlined in the 2021 Growth and Financial Performance Outlook section of this earnings release reflects the following adjustments: (i) full year 2020 reported operating margin adjusted for impacts of the expired royalty litigation matter charges in the third quarter of 2020, which reduced full year 2020 operating margin growth by approximately 100 basis points; and (ii) projected full year 2021 reported operating margin adjusted for estimated positive year-over-year foreign currency exchange rate change impact of approximately 20 basis points.

These impacts and those described in the constant currency note above reconcile reported gross profit growth, gross margin gain, operating expense growth, operating profit growth and operating margin gain (including projected 2021 operating margin expansion) to comparable gross profit growth, comparable gross margin gain, comparable operating expense growth, comparable operating profit growth and comparable operating margin gain for the Company.

Comparable EPS growth -  Comparable EPS growth is a non-GAAP financial measure that represents the percentage change in earnings per share (diluted) ("EPS") for a measurement period, as compared to the prior base period, net of the impact of changes in foreign currency exchange rates from the prior base period and excluding the tax benefits of share-based compensation activity under ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, and non-recurring or unusual items (if any). Management believes comparable EPS growth is a more useful way to measure the Company's business performance than EPS growth because it enables better period-over-period comparisons of the fundamental financial results by excluding items that vary independent of performance and provides greater transparency to investors regarding a key metric used by management. Comparable EPS growth should be considered in addition to, and not as a replacement of or a superior measure to, EPS growth reported in accordance with GAAP. Please refer to the constant currency note above for a summary of foreign currency exchange rate impacts.

The reconciliation of this non-GAAP financial measure is as follows:

		Three Months Ended								Year-over-Year			Six Months Ended								Year-over-Year
		June 30,				June 30,				Growth			June 30,				June 30,				Growth
		2021				2020							2021				2020
Earnings per share (diluted)		$	2.34			$	1.72			36	%		$	4.69			$	3.01			56	%
Less: comparability adjustments
Share-based compensation activity		0.07				0.06							0.24				0.13
Change from currency		0.07				—							0.16				—
Comparable EPS growth		$	2.20			$	1.66			33	%		$	4.29			$	2.88			49	%
Amounts presented may not recalculate due to rounding.

Projected 2021 comparable EPS growth outlined in the 2021 Growth and Financial Performance Outlook section of this earnings release reflects the following adjustments: (i) full year 2020 reported EPS adjusted for positive share-based compensation activity of $0.45 for full year 2020, negative expired royalty litigation matter impact of $0.24 in the third quarter of 2020, and positive Swiss tax reform impact of $0.25 in the fourth quarter of 2020; and (ii) projected full year 2021 reported EPS adjusted for estimated positive share-based compensation activity of $0.25 and estimated positive year-over-year foreign currency exchange rate change impact of $0.17.

These impacts and those described in the constant currency note above reconcile reported EPS growth (including projected 2021 reported EPS growth) to comparable EPS growth for the Company.

Free cash flow - Free cash flow is a non-GAAP financial measure and means, with respect to a measurement period, the cash generated from operations during that period, reduced by the Company's investments in property and equipment. Management believes free cash flow is a useful measure because it indicates the cash the operations of the business are generating after appropriate reinvestment for recurring investments in property and equipment that are required to operate the business. Free cash flow should be considered in addition to, and not as a replacement of or a superior measure to, net cash provided by operating activities. See the supplementary analysis of results below for our calculation of free cash flow for the six months ended June 30, 2021 and 2020. To estimate projected 2021 free cash flow, we have deducted projected purchases of property and equipment (also referred to as capital expenditures) of approximately $150  - $160 million.

Debt to Adjusted EBITDA (Leverage Ratios) - Adjusted EBITDA, gross debt, and net debt are non-GAAP financial measures. Adjusted EBITDA is a non-GAAP financial measure of earnings before interest, taxes, depreciation, amortization, non-recurring transaction expenses incurred in connection with acquisitions, share-based compensation expense, and certain other non-cash losses and charges.  Management believes that reporting Adjusted EBITDA, gross debt and net debt in the Debt to Adjusted EBITDA ratios provides supplemental analysis to help investors further evaluate the Company's business performance and available borrowing capacity under the Company's credit facility. Adjusted EBITDA, gross debt, and net debt should be considered in addition to, and not as replacements of or superior measures to, net income or total debt reported in accordance with GAAP. For further information on how Adjusted EBITDA and the Debt to Adjusted EBITDA Ratios are calculated, see the Company's Annual Report on Form 10-K for the year ended December 31, 2020 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.

Notes and Definitions

Swiss tax reform impact - A one-time positive income tax impact related to the enactment of tax reform in Switzerland reflected in the fourth quarter of 2020, when the Company recorded an approximately $22 million deferred tax asset related to transitional benefits.

Expired royalty litigation matter - The Company established an accrual of $27.5 million in the third quarter of 2020 related to an ongoing matter involving an alleged breach of contract for underpayment of royalty payments made from 2004 through 2017 under an expired patent license agreement. The accrual amount represents the amount of a possible loss that we have determined to be probable and estimable, and the actual cost of resolving this matter may be higher or lower than the amount accrued.

IDEXX Laboratories, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations
Amounts in thousands except per share data (Unaudited)
				Three Months Ended						Six Months Ended
				June 30,			June 30,			June 30,			June 30,
				2021			2020			2021			2020
Revenue:		Revenue		$826,142			$637,592			$1,603,849			$1,263,928
Expenses and Income:		Cost of revenue		336,834			258,250			643,759			524,996
		Gross profit		489,308			379,342			960,090			738,932
		Sales and marketing		119,032			94,181			233,843			210,324
		General and administrative		73,326			60,268			144,096			126,080
		Research and development		37,697			31,645			75,276			64,955
		Income from operations		259,253			193,248			506,875			337,573
		Interest expense, net		(7,522)			(9,426)			(15,054)			(16,978)
		Income before provision for income taxes		251,731			183,822			491,821			320,595
		Provision for income taxes		49,125			34,826			84,926			59,743
Net Income:		Net income		202,606			148,996			406,895			260,852
		Less: Noncontrolling interest in subsidiary's earnings		24			56			56			85
		Net income attributable to stockholders		$202,582			$148,940			$406,839			$260,767
		Earnings per share: Basic		$2.37			$1.75			$4.76			$3.06
		Earnings per share: Diluted		$2.34			$1.72			$4.69			$3.01
		Shares outstanding: Basic		85,325			85,134			85,427			85,282
		Shares outstanding: Diluted		86,654			86,402			86,794			86,568

 

 

IDEXX Laboratories, Inc. and Subsidiaries
Selected Operating Information (Unaudited)
				Three Months Ended						Six Months Ended
				June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Operating Ratios		Gross profit		59.2	%		59.5	%		59.9	%		58.5	%
(as a percentage of revenue):		Sales, marketing, general and administrative expense		23.3	%		24.2	%		23.6	%		26.6	%
		Research and development expense		4.6	%		5.0	%		4.7	%		5.1	%
		Income from operations1		31.4	%		30.3	%		31.6	%		26.7	%
1Amounts presented may not recalculate due to rounding.

 

 

IDEXX Laboratories, Inc. and Subsidiaries
Segment Information
Amounts in thousands (Unaudited)
				Three Months Ended
				June 30, 2021			Percent of Revenue			June 30, 2020			Percent of Revenue
Revenue:		CAG		$745,595						$566,100
		Water		37,191						28,116
		LPD		33,524						32,244
		Other		9,832						11,132
		Total		$826,142						$637,592
Gross Profit:		CAG		$440,786			59.1	%		$334,467			59.1	%
		Water		25,747			69.2	%		19,678			70.0	%
		LPD		19,526			58.2	%		18,839			58.4	%
		Other		3,249			33.0	%		6,358			57.1	%
		Total		$489,308			59.2	%		$379,342			59.5	%
Income from Operations:		CAG		$234,735			31.5	%		$167,969			29.7	%
		Water		17,228			46.3	%		12,258			43.6	%
		LPD		6,868			20.5	%		8,249			25.6	%
		Other		422			4.3	%		4,772			42.9	%
		Total		$259,253			31.4	%		$193,248			30.3	%

 

 

IDEXX Laboratories, Inc. and Subsidiaries
Segment Information
Amounts in thousands (Unaudited)
				Six Months Ended
				June 30, 2021			Percent of Revenue			June 30, 2020			Percent of Revenue
Revenue:		CAG		$1,438,362						$1,118,096
		Water		71,231						62,265
		LPD		72,794						66,398
		Other		21,462						17,169
		Total		$1,603,849						$1,263,928
Gross Profit:		CAG		$853,660			59.3	%		$643,810			57.6	%
		Water		49,212			69.1	%		44,427			71.4	%
		LPD		46,407			63.8	%		41,151			62.0	%
		Other		10,811			50.4	%		9,544			55.6	%
		Total		$960,090			59.9	%		$738,932			58.5	%
Income from Operations:		CAG		$447,945			31.1	%		$286,628			25.6	%
		Water		32,000			44.9	%		28,140			45.2	%
		LPD		20,676			28.4	%		17,912			27.0	%
		Other		6,254			29.1	%		4,893			28.5	%
		Total		$506,875			31.6	%		$337,573			26.7	%

 

 

IDEXX Laboratories, Inc. and Subsidiaries
Revenues and Revenue Growth Analysis by Product and Service Categories and by Domestic and International Markets
Amounts in thousands (Unaudited)
		Three Months Ended
		June 30, 2021			June 30, 2020			Dollar Change			Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions			Organic Revenue Growth1
Net Revenue
CAG		$745,595			$566,100			$179,495			31.7	%		3.7	%		0.6	%		27.4	%
United States		486,252			387,113			99,139			25.6	%		—			0.6	%		25.0	%
International		259,343			178,987			80,356			44.9	%		12.0	%		0.6	%		32.3	%
Water		37,191			28,116			9,075			32.3	%		5.7	%		—			26.6	%
United States		17,747			13,935			3,812			27.4	%		—			—			27.4	%
International		19,444			14,181			5,263			37.1	%		11.2	%		—			25.9	%
LPD		33,524			32,244			1,280			4.0	%		5.9	%		—			(2.0)	%
United States		3,516			3,242			274			8.4	%		—			—			8.4	%
International		30,008			29,002			1,006			3.5	%		6.5	%		—			(3.1)	%
Other		9,832			11,132			(1,300)			(11.7)	%		4.5	%		—			(16.2)	%
Total Company		$826,142			$637,592			$188,550			29.6	%		3.9	%		0.5	%		25.1	%
United States		515,238			405,998			109,240			26.9	%		—			0.6	%		26.3	%
International		310,904			231,594			79,310			34.2	%		10.7	%		0.5	%		23.1	%

 

 

		Three Months Ended
		June 30, 2021			June 30, 2021			Dollar Change			Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions			Organic Revenue Growth1
Net CAG Revenue
CAG Diagnostics recurring revenue:		$661,300			$510,254			$151,046			29.6	%		3.7	%		0.3	%		25.6	%
IDEXX VetLab consumables		256,352			196,061			60,291			30.8	%		4.8	%		—			26.0	%
Rapid assay products		83,887			64,658			19,229			29.7	%		1.8	%		—			28.0	%
Reference laboratory diagnostic and consulting services		293,675			228,816			64,859			28.3	%		3.2	%		0.6	%		24.5	%
CAG Diagnostics services and accessories		27,386			20,719			6,667			32.2	%		4.7	%		—			27.5	%
CAG Diagnostics capital – instruments		35,054			18,871			16,183			85.8	%		7.5	%		—			78.3	%
Veterinary software, services and diagnostic imaging systems		49,241			36,975			12,266			33.2	%		1.5	%		5.8	%		25.9	%
Net CAG revenue		$745,595			$566,100			$179,495			31.7	%		3.7	%		0.6	%		27.4	%
1See Statements Regarding Non-GAAP Financial Measures, above. Amounts presented may not recalculate due to rounding.

 

 

IDEXX Laboratories, Inc. and Subsidiaries
Revenues and Revenue Growth Analysis by Product and Service Categories and by Domestic and International Markets
Amounts in thousands (Unaudited)
		Six Months Ended
		June 30, 2021			June 30, 2020			Dollar Change			Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions			Organic Revenue Growth1
Net Revenue
CAG		$1,438,362			$1,118,096			$320,266			28.6	%		3.3	%		0.4	%		25.0	%
United States		930,662			760,388			170,274			22.4	%		—			0.4	%		22.0	%
International		507,700			357,708			149,992			41.9	%		10.8	%		0.4	%		30.7	%
Water		71,231			62,265			8,966			14.4	%		3.7	%		—			10.7	%
United States		34,315			30,876			3,439			11.1	%		—			—			11.1	%
International		36,916			31,389			5,527			17.6	%		7.3	%		—			10.3	%
LPD		72,794			66,398			6,396			9.6	%		5.8	%		—			3.8	%
United States		7,264			7,019			245			3.5	%		—			—			3.5	%
International		65,530			59,379			6,151			10.4	%		6.5	%		—			3.8	%
Other		21,462			17,169			4,293			25.0	%		4.2	%		—			20.8	%
Total Company		$1,603,849			$1,263,928			$339,921			26.9	%		3.5	%		0.3	%		23.1	%
United States		987,876			802,781			185,095			23.1	%		—			0.3	%		22.7	%
International		615,973			461,147			154,826			33.6	%		9.6	%		0.3	%		23.6	%

 

 

		Six Months Ended
		June 30, 2021			June 30, 2020			Dollar Change			Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions			Organic Revenue Growth1
Net CAG Revenue
CAG Diagnostics recurring revenue:		$1,278,580			$998,179			$280,401			28.1	%		3.4	%		0.2	%		24.5	%
IDEXX VetLab consumables		502,444			384,774			117,670			30.6	%		4.4	%		—			26.2	%
Rapid assay products		153,498			122,088			31,410			25.7	%		1.5	%		—			24.2	%
Reference laboratory diagnostic and consulting services		569,456			449,077			120,379			26.8	%		3.0	%		0.4	%		23.4	%
CAG Diagnostics services and accessories		53,182			42,240			10,942			25.9	%		4.2	%		—			21.7	%
CAG Diagnostics capital – instruments		66,244			42,704			23,540			55.1	%		5.4	%		—			49.8	%
Veterinary software, services and diagnostic imaging systems		93,538			77,213			16,325			21.1	%		1.1	%		2.8	%		17.2	%
Net CAG revenue		$1,438,362			$1,118,096			$320,266			28.6	%		3.3	%		0.4	%		25.0	%
1See Statements Regarding Non-GAAP Financial Measures, above. Amounts presented may not recalculate due to rounding.

 

 

IDEXX Laboratories, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
Amounts in thousands (Unaudited)
				June 30, 2021			December 31, 2020
Assets:		Current Assets:
		Cash and cash equivalents		$232,134			$383,928
		Accounts receivable, net		382,308			331,429
		Inventories		241,392			209,873
		Other current assets		145,392			137,508
		Total current assets		1,001,226			1,062,738
		Property and equipment, net		550,255			555,167
		Other long-term assets, net		860,668			676,656
		Total assets		$2,412,149			$2,294,561
Liabilities and Stockholders'
Equity:		Current Liabilities:
		Accounts payable		$93,016			$74,558
		Accrued liabilities		392,681			415,648
		Current portion of long-term debt		124,982			49,988
		Deferred revenue		41,130			42,567
		Total current liabilities		651,809			582,761
		Long-term debt, net of current portion		780,079			858,492
		Other long-term liabilities, net		232,038			220,513
		Total long-term liabilities		1,012,117			1,079,005
		Total stockholders' equity		747,460			632,088
		Noncontrolling interest		763			707
		Total stockholders' equity		748,223			632,795
		Total liabilities and stockholders' equity		$2,412,149			$2,294,561

 

 

IDEXX Laboratories, Inc. and Subsidiaries
Select Balance Sheet Information (Unaudited)
				June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020
Selected Balance Sheet Information:		Days sales outstanding1		42.2			41.8			42.2			41.5			44.4
		Inventory turns2		2.1			2.0			2.1			1.9			1.6
1Days sales outstanding represents the average of the accounts receivable balances at the beginning and end of each quarter divided by revenue for that quarter, the result of which is then multiplied by 91.25 days.
2Inventory turns represent inventory-related cost of product revenue for the twelve months preceding each quarter-end divided by the average inventory balances at the beginning and end of each quarter.

 

 

IDEXX Laboratories, Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
Amounts in thousands (Unaudited)
				Six Months Ended
				June 30, 2021			June 30, 2020
Operating:		Cash Flows from Operating Activities:
		Net income		$406,895			$260,852
		Non-cash adjustments to net income		79,002			70,576
		Changes in assets and liabilities		(127,520)			(95,415)
		Net cash provided by operating activities		358,377			236,013
Investing:		Cash Flows from Investing Activities:
		Purchases of property and equipment		(42,744)			(73,558)
		Acquisition of intangible assets and businesses		(156,506)			(668)
		Net cash used by investing activities		(199,250)			(74,226)
Financing:		Cash Flows from Financing Activities:
		Repayments on revolving credit facilities, net		—			(167,692)
		Issuance of senior debt		—			200,000
		Debt issuance costs		—			(4,988)
		Payments of acquisition-related contingent considerations		(1,500)			(1,080)
		Repurchases of common stock		(320,787)			(182,815)
		Proceeds from exercises of stock options and employee stock purchase plans		27,371			20,613
		Shares withheld for statutory tax withholding on restricted stock		(14,952)			(8,668)
		Net cash used by financing activities		(309,868)			(144,630)
		Net effect of changes in exchange rates on cash		(1,053)			(2,190)
		Net (decrease) increase in cash and cash equivalents		(151,794)			14,967
		Cash and cash equivalents, beginning of period		383,928			90,326
		Cash and cash equivalents, end of period		$232,134			$105,293

 

 

IDEXX Laboratories, Inc. and Subsidiaries
Free Cash Flow
Amounts in thousands except per share data (Unaudited)
				Six Months Ended
				June 30, 2021			June 30, 2020
Free Cash Flow:		Net cash provided by operating activities		$358,377			$236,013
		Investing cash flows attributable to purchases of property and equipment		(42,744)			(73,558)
		Free cash flow1		$315,633			$162,455
1See Statements Regarding Non-GAAP Financial Measures, above.

 

 

IDEXX Laboratories, Inc. and Subsidiaries
Common Stock Repurchases
Amounts in thousands except per share data (Unaudited)
		Three Months Ended						Six Months Ended
		June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Shares repurchased in the open market		341			—			618			721
Shares acquired through employee surrender for statutory tax withholding		—			—			28			30
Total shares repurchased		341			—			646			751
Cost of shares repurchased in the open market		$188,409			$—			$327,622			$179,623
Cost of shares for employee surrenders		3			65			14,986			8,669
Total cost of shares		$188,412			$65			$342,608			$188,292
Average cost per share – open market repurchases		$552.08			$—			$529.45			$249.20
Average cost per share – employee surrenders		$550.59			$312.19			$544.08			$288.94
Average cost per share – total		$552.08			$312.19			$530.07			$250.79

 

 

Contact: John Ravis, Investor Relations, 1-207-556-8155  

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SOURCE IDEXX Laboratories, Inc.

FAQ

What were IDEXX's second quarter 2021 revenue results?

IDEXX reported revenue of $826 million for Q2 2021, representing a 30% increase.

How much did IDEXX's EPS grow in the second quarter of 2021?

The earnings per share (EPS) for Q2 2021 were $2.34, which is a 36% growth.

What is the updated revenue guidance for IDEXX in 2021?

IDEXX raised its 2021 revenue guidance to $3.170 - $3.205 billion.

What factors contributed to IDEXX's revenue growth in Q2 2021?

Growth was driven by 30% increase in CAG Diagnostics recurring revenue and 32% growth in the Water business.

What challenges did IDEXX face in their second quarter 2021 financials?

IDEXX experienced a decrease in gross margin by 30 basis points and a 24% rise in operating expenses.