IDEXX Laboratories Announces Third Quarter Results

Rhea-AI Summary

IDEXX Laboratories reported Q3 2024 results with revenue of $976 million, showing 7% reported growth and 6% organic growth. The Companion Animal Group (CAG) segment grew 7% reported and 6% organic, while Water revenue increased 13%. Earnings per share reached $2.80, up 11% reported and 12% comparable, with operating margin expansion of 110 basis points. The company adjusted its 2024 revenue guidance to $3,865-$3,890 million, reducing previous estimates by ~1% due to macro conditions affecting U.S. veterinary clinic visits. The updated EPS outlook is narrowed to $10.37-$10.53, maintaining consistent midpoint compared to prior guidance.

Positive

• Revenue growth of 7% to $976 million in Q3
• EPS increased 11% to $2.80
• Operating margin expansion of 110 basis points
• Water segment revenue grew 13%
• 10% growth in global premium instrument installed base
• Strong international CAG Diagnostics growth of 10%

Negative

• Reduced 2024 revenue guidance by $38 million (~1%)
• Declining U.S. veterinary clinic visits and demand
• LPD revenues declined 3% reported and 2% organic
• Lower Asia Pacific revenues in swine testing

Insights

Financial Analyst

Q3 results show mixed performance with 7% revenue growth but a lowered 2024 outlook. Key positives include 11% EPS growth to $2.80 and operating margin expansion of 110 basis points. However, management reduced 2024 revenue guidance by $38M (~1%) due to weakening U.S. veterinary clinic demand.

The core CAG Diagnostics segment remains resilient with 7% recurring revenue growth, supported by international expansion and installed base growth. The maintained EPS guidance ($10.37-$10.53) despite revenue headwinds suggests effective cost management and operational efficiency.

The 61.1% gross margin improvement and sustained operating margin outlook demonstrate pricing power and operational leverage, though slowing U.S. clinical visits warrant attention for future growth trajectory.

Market Research Analyst

The veterinary diagnostics market shows signs of pressure in the U.S., with IDEXX's revised guidance reflecting broader sector challenges in pet healthcare spending. However, international markets remain robust with 10% growth, indicating geographic diversification benefits.

The strong pre-orders for inVue Dx™ Cellular Analyzer (700 units) and 10% growth in premium instrument installed base demonstrate continued innovation adoption. The shift toward cloud-based software solutions and high recurring revenue streams provides stability despite macroeconomic headwinds.

• Achieves third quarter revenue growth of 7% as reported and 6% organic, supported by CAG Diagnostics recurring revenue growth of 7% as reported and organic.

• Organic revenue growth supported by benefits from IDEXX execution drivers including continued solid new business gains and double-digit year-over-year global premium installed base growth.

• Delivers EPS of $2.80, an increase of 11% as reported and 12% on a comparable basis, supported by operating margin expansion of 110 basis points as reported and 100 basis points on a comparable basis.

• Adjusts 2024 revenue guidance to $3,865 million - $3,890 million, a reduction of $38 million or ~1% at midpoint, incorporating expectations for near-term negative impacts on growth related to macro and sector conditions constraining pet owner visits and demand at U.S. veterinary clinics.

• Updates 2024 revenue growth guidance to 5.5% - 6.2% as reported and 5.3% - 6.0% organic, driven by projected CAG Diagnostics recurring revenue growth of 5.6% - 6.2% as reported and 5.8% - 6.4% organic.

• Narrows 2024 EPS outlook to $10.37 - $10.53, maintaining consistent EPS midpoint compared to prior guidance, supported by consistent outlook for solid operating margin performance and benefits from lower projected interest expense and effective tax rate.

WESTBROOK, Maine--(BUSINESS WIRE)-- IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in pet healthcare innovation, today announced third quarter results.

Third Quarter Results

The Company reports revenues of $976 million for the third quarter of 2024, an increase of 7% as reported and 6% organic, driven by Companion Animal Group ("CAG") growth of 7% as reported and 6% organic, and Water revenue growth of 13% as reported and organic. CAG Diagnostics recurring revenue growth of 7% as reported and organic was supported by sustained double-digit growth in international regions and global benefits from IDEXX execution drivers including 10% annual growth in IDEXX's global premium instrument installed base. IDEXX veterinary software, services and diagnostic imaging systems revenue increased 11% as reported and 6% organic, reflecting high recurring revenue growth and continued momentum in cloud-based software placements.

Third quarter earnings per diluted share (“EPS”) were $2.80, an increase of 11% as reported and 12% on a comparable basis, supported by operating margin expansion of 110 basis points as reported and 100 basis points on a comparable basis.

“IDEXX teams continued their strong execution in the third quarter as demonstrated by solid net customer gains, continued growth in our premium IDEXX VetLab® instrument installed base, and nearly 700 pre-orders of IDEXX inVue Dx™ Cellular Analyzer, which will begin shipping later in the fourth quarter,” said Jay Mazelsky, President and Chief Executive Officer. "Customers especially value IDEXX technology solutions like inVue Dx that provide meaningful clinical insights while giving time back to busy practice staff.”

Third Quarter Performance Highlights

Companion Animal Group

The Companion Animal Group generated revenue growth of 7% as reported and 6% organic for the quarter. Solid growth was supported by CAG Diagnostics recurring revenue growth of 7% as reported and organic. CAG Diagnostics recurring revenue growth was supported by 10% reported and organic gains in international regions. U.S. CAG Diagnostics recurring revenue growth of 5% as reported and organic continued to outpace sector growth levels in the third quarter.

Additional U.S. companion animal practice key metrics are available in the Q3 2024 Earnings Snapshot accessible on the IDEXX website, www.idexx.com/investors.

Solid global growth was achieved across IDEXX's testing modalities.

• IDEXX VetLab® consumables generated 11% reported and organic revenue growth, with double-digit gains in the U.S. and International regions supported by strong installed base growth across premium instrument platforms and benefits from equivalent days effects.

• Reference laboratory diagnostic and consulting services generated 3% reported and 2% organic revenue growth, driven by solid International growth.

• Rapid assay products revenues grew 6% as reported and organic, driven by solid gains in the U.S., including benefits from higher net price realization and equivalent days effects.

Veterinary software, services and diagnostic imaging systems revenues grew 11% as reported and 6% organically, driven by continued high levels of organic growth in software and diagnostic imaging recurring revenues and benefits from a recent software and data platform acquisition.

Water

Water revenues grew 13% as reported and organic for the quarter, reflecting double-digit gains in the U.S. and continued solid growth in Europe.

Livestock, Poultry and Dairy (“LPD”)

LPD revenues declined 3% as reported and 2% organic for the quarter. Solid gains in the U.S. and for poultry tests globally were offset by lower Asia Pacific revenues, including impacts from reduced swine testing and herd health screening levels.

Gross Profit and Operating Profit

Gross profits increased 9% as reported and on a comparable basis. Gross margin of 61.1% increased 120 basis points as reported and 140 basis points on a comparable basis supported by benefits from business mix, led by high growth in IDEXX VetLab consumable revenues and veterinary software, services, and diagnostic imaging recurring revenues and lower instrument costs.

Operating margin was 31.2% for the quarter, higher than the prior year by 110 basis points as reported and 100 basis points on a comparable basis. Operating margin results reflect 7% operating expense growth as reported and 8% on a comparable basis. Operating expense growth was driven by higher sales and marketing expense and higher R&D spend related to advancing the Company's growth and innovation agenda.

2024 Growth and Financial Performance Outlook

The Company is updating its full year revenue growth guidance range to $3,865 million - $3,890 million, or reported growth of 5.5% - 6.2%, a reduction of $38 million at midpoint. This reflects an adjustment of ~1.5% at midpoint to full year estimates for organic revenue growth, which is now projected at 5.3% - 6.0%, reflecting recent trends in U.S. clinical visit and demand levels. The updated guidance range includes ~$15 million of favorable impact from more recent foreign exchange estimates.

The Company maintained a consistent full year reported operating margin outlook of 28.7% - 29.0%, including ~160 basis points of impact related to the previously reported discrete litigation expense accrual. At midpoint, projected full year comparable operating profit margin expansion of 70 - 100 basis points includes a ~40 basis point negative growth impact from lapping a customer contract resolution payment in the first quarter of 2023.

The Company narrowed its EPS outlook range to $10.37 - $10.53, maintaining a consistent midpoint. 2024 EPS results include a $0.56 negative impact from a discrete litigation expense accrual recorded in the second quarter. Negative EPS impacts related to adjustments to the organic revenue outlook were offset by $0.02 in favorable adjustments to foreign exchange estimates and favorable refinements to interest expense and effective tax rate estimates. The updated EPS growth outlook is 3% - 5% as reported and 10% - 11% on comparable basis, including a ~2% negative growth impact from lapping a customer contract resolution payment in the first quarter of 2023.

The following table provides the Company's updated outlook for annual key financial metrics in 2024 with a comparison to the prior outlook:

Amounts in millions except per share data and percentages

2024 Growth and Financial Performance Outlook
		Updated				Prior
Revenue		$3,865	-	$3,890		$3,885	-	$3,945
Reported growth		5.5%	-	6.2%		6.2%	-	7.8%
Organic growth		5.3%	-	6.0%		6.2%	-	7.8%
CAG Diagnostics Recurring Revenue Growth
Reported growth		5.6%	-	6.2%		5.7%	-	7.3%
Organic growth		5.8%	-	6.4%		6.2%	-	7.8%
Operating Margin		28.7%	-	29.0%		28.7%	-	29.0%
Operating margin expansion		(130 bps)	-	(100 bps)		(130 bps)	-	(100 bps)
Negative impact of ongoing litigation matter		~160 bps				~160 bps
Comparable margin expansion		70 bps	-	100 bps		30 bps	-	60 bps
Negative impact of 2023 customer contract resolution payment		~ 40 bps				~ 40 bps
EPS		$10.37	-	$10.53		$10.31	-	$10.59
Reported growth		3%	-	5%		2%	-	5%
Negative impact of ongoing litigation matter		~ 6%				~ 6%
Comparable growth		10%	-	11%		9%	-	12%
Negative impact of 2023 customer contract resolution payment		~ 2%				~ 2%
Other Key Metrics
Net interest expense		~ $19				~ $20
Share-based compensation tax benefit		~ $9				~ $10
Share-based compensation tax rate benefit		~ 1%				~ 1%
Effective tax rate		~ 20.7%				~ 21.5%
Share-based compensation EPS impact		~ $0.11				~ $0.12
Reduction in average shares outstanding		0.5%	-	1%		0.5%	-	1%
Operating Cash Flow (% of Net Income)		110% - 115%				110% - 115%
Free Cash Flow (% of Net Income)		90% - 95%				90% - 95%
Capital Expenditures		~ $160				~ $180

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 2024.

Estimated Foreign Currency Exchange Rate Impacts		2024
Revenue growth rate impact		(~ 20 bps)
CAG Diagnostics recurring revenue growth rate impact		(~ 20 bps)
Operating margin growth impact		~ 0 bps
EPS impact		(~ $0.03)
EPS growth impact		~ 0%
Go-Forward Foreign Currency Exchange Rate Assumptions		2024
In U.S. dollars
euro		$1.08
British pound		$1.29
Canadian dollar		$0.72
Australian dollar		$0.66
Relative to the U.S. dollar
Japanese yen		¥152
Chinese renminbi		¥7.18
Brazilian real		R$5.66

Conference Call and Webcast Information

IDEXX Laboratories, Inc. will be hosting a conference call today at 8:30 a.m. (EDT) to discuss its third quarter 2024 results and management’s outlook. 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. The live call also will be accessible by telephone. To listen to the live conference call, please dial 1-800-289-0462 or 1-323-794-2442 and reference passcode 205740.

About IDEXX Laboratories, Inc.

IDEXX is a global leader in pet healthcare innovation. Our diagnostic and software products and services create clarity in the complex, constantly evolving world of veterinary medicine. We support longer, fuller lives for pets by delivering insights and solutions that help the veterinary community around the world make confident decisions—to advance medical care, improve efficiency, and build thriving practices. Our innovations also help ensure the safety of milk and water across the world and maintain the health and well-being of people and livestock. IDEXX Laboratories, Inc. is a member of the S&P 500® Index. Headquartered in Maine, IDEXX employs approximately 11,000 people and offers solutions and products to customers in more than 175 countries and territories. For more information about IDEXX, visit www.idexx.com.

Note Regarding Forward-Looking Statements

This earnings release and the statements to be made in the accompanying earnings conference call contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including statements about the Company’s business prospects and estimates of the Company’s financial results for future periods. Forward-looking statements are included above under "Third Quarter Results", "2024 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 our expectations regarding financial performance; revenue growth and EPS outlooks; operating and free cash flow forecast; projected impact of foreign currency exchange rates and interest 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 (including benefit from an expected release of a non-recurring tax reserve), reduction of average shares outstanding and net interest expense; U.S. clinical visit trends, including macro and sector trends affecting pet owner visits and demand at U.S. veterinary clinics; net price realization improvement; anticipated benefits from corporate account contract expansions; projected impact of recent severe weather events; software placement and user-base growth; and future product and service launches and expansions. 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, 2023 and in the corresponding sections of the Company's Quarterly Reports on Form 10-Q for the quarter ended March 31, 2024, June 30, 2024, and September 30, 2024, 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 third quarter 2024 results as follows: decreased gross profit growth by 0.2%, decreased gross margin growth by 20 basis points, decreased operating expense growth by 0.8%, increased operating profit growth by 0.4%, increased operating profit margin growth by 10 basis points, and increased EPS growth by 0.4%. 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 nine months ended September 30, 2024 and refer to the 2024 Growth and Financial Performance Outlook section of this earnings release for estimated foreign currency exchange rate impacts on 2024 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 represents the percent change in revenue, as compared to the same period for the prior year, net of 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. 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 nine months ended September 30, 2024. Please refer to the constant currency note above for a summary of foreign currency exchange rate impacts. Please refer to the 2024 Growth and Financial Performance Outlook section of this earnings release for estimated full year 2024 organic revenue growth for the Company and CAG Diagnostics recurring revenue growth. The percentage change in revenue resulting from acquisitions represents revenues during the current year period, limited to the initial 12 months from the date of the acquisition, that are directly attributable to business acquisitions. Revenue from acquisitions is expected to benefit projected full year 2024 revenue growth by 0.4% and have no impact on CAG Diagnostics recurring revenue growth.

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			Nine Months Ended							Year-over-Year
		September 30,				September 30,			Change			September 30,				September 30,			Change
Dollar amounts in thousands		2024				2023						2024				2023
Gross Profit (as reported)		$	596,038			$	547,982		9	%		$	1,808,267			$	1,663,803		9	%
Gross margin			61.1	%			59.9	%	120	bps			61.4	%			60.3	%	110	bps
Less: comparability adjustments
Change from currency			(1,081	)			—						(4,201	)			—
Comparable gross profit growth		$	597,119			$	547,982		9	%		$	1,812,468			$	1,663,803		9	%
Comparable gross margin and gross margin gain (or growth)			61.2	%			59.9	%	140	bps			61.5	%			60.3	%	120	bps
Operating expenses (as reported)		$	292,146			$	272,699		7	%		$	941,616			$	811,977		16	%
Less: comparability adjustments
Change from currency			(2,286	)			—						(2,591	)			—
Ongoing litigation matter			—				—						61,500				—
Comparable operating expense growth		$	294,432			$	272,699		8	%		$	882,707			$	811,977		9	%
Income from operations (as reported)		$	303,892			$	275,283		10	%		$	866,651			$	851,826		2	%
Operating margin			31.2	%			30.1	%	110	bps			29.4	%			30.9	%	(140	) bps
Less: comparability adjustments
Change from currency			1,205				—						(1,610	)			—
Ongoing litigation matter			—				—						(61,500	)			—
Comparable operating profit growth		$	302,687			$	275,283		10	%		$	929,761			$	851,826		9	%
Comparable operating margin and operating margin gain (or growth)			31.0	%			30.1	%	100	bps			31.5	%			30.9	%	70	bps
Amounts presented may not recalculate due to rounding.

Projected 2024 comparable operating margin expansion outlined in the 2024 Growth and Financial Performance Outlook section of this earnings release reflects: (i) projected full year 2024 reported operating margin is adjusted for impacts of the discrete expense accrual related to an ongoing litigation matter in the second quarter of 2024; and (ii) projected full year 2024 reported operating margin includes an immaterial impact from year-over-year foreign currency exchange rate changes at noted exchange rates.

These impacts described above reconcile reported gross profit growth, gross margin gain, operating expense growth, operating profit growth and operating margin gain (including projected 2024 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			Nine Months Ended							Year-over-Year
		September 30,			September 30,			Growth			September 30,				September 30,			Growth
		2024			2023						2024				2023
Earnings per share (diluted)		$	2.80		$	2.53		11	%		$	8.05			$	7.75		4	%
Less: comparability adjustments
Share-based compensation activity			—			0.04						0.11				0.14
Ongoing litigation matter			—			—						(0.56	)			—
Change from currency			0.01			—						(0.01	)			—
Comparable EPS growth			2.79			2.49		12	%			8.51				7.61		12	%
Amounts presented may not recalculate due to rounding.

Projected 2024 comparable EPS growth outlined in the 2024 Growth and Financial Performance Outlook section of this earnings release reflects adjustments to projected full year 2024 reported EPS for: (i) estimated positive share-based compensation activity of ~$0.11; (ii) a negative $0.56 impact from a discrete expense accrual related to an ongoing litigation matter in the second quarter of 2024; and (iii) estimated negative year-over-year foreign currency exchange rate change impact of ~$0.03 at noted exchange rates.

These impacts and those described in the constant currency note above reconcile reported EPS growth (including projected 2024 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 three and nine months ended September 30, 2024 and 2023. To estimate projected 2024 free cash flow, we have deducted projected purchases of property and equipment (also referred to as capital expenditures) of approximately $160 million. Free cash flow conversion, or the net income to free cash flow ratio, is a non-GAAP financial measure that is defined as free cash flow, with respect to a measurement period, divided by net income for the same period. To calculate trailing twelve-month net income to free cash flow ratio for the twelve months ended September 30, 2024, we have deducted purchases of property and equipment of approximately $124 million from net cash provided from operating activities of approximately $917 million, divided by net income of approximately $866 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, 2023 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.

Notes and Definitions

Discrete litigation expense accrual - During the second quarter of 2024, the Company increased its previously established $27.5 million accrual related to an ongoing litigation matter by $61.5 million.

Ongoing litigation matter - The Company is a defendant in an ongoing litigation matter involving an alleged breach of contract for underpayment of royalty payments made from 2004 through 2017 under an expired patent license agreement. The Company's total accrual of $89.0 million for this matter includes the discrete $61.5 million litigation expense accrual recorded in the second quarter of 2024 and represents our best estimate of the amount of the probable loss. The actual loss associated with this matter may be higher or lower than the accrued amount depending on the ultimate outcome of this matter. For further information, see the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.

IDEXX Laboratories, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations
Amounts in thousands except per share data (Unaudited)
				Three Months Ended						Nine Months Ended
				September 30,			September 30,			September 30,			September 30,
				2024			2023			2024			2023
Revenue:		Revenue		$975,543			$915,527			$2,943,216			$2,759,352
Expenses and Income:		Cost of revenue		379,505			367,545			1,134,949			1,095,549
		Gross profit		596,038			547,982			1,808,267			1,663,803
		Sales and marketing		146,281			135,698			438,399			424,034
		General and administrative		91,887			89,034			341,154			248,804
		Research and development		53,978			47,967			162,063			139,139
		Income from operations		303,892			275,283			866,651			851,826
		Interest expense, net		(4,983	)		(7,392	)		(13,207	)		(30,318	)
		Income before provision for income taxes		298,909			267,891			853,444			821,508
		Provision for income taxes		66,068			55,660			181,726			170,987
Net Income:		Net income attributable to stockholders		$232,841			$212,231			$671,718			$650,521
		Earnings per share: Basic		$2.83			$2.55			$8.12			$7.83
		Earnings per share: Diluted		$2.80			$2.53			$8.05			$7.75
		Shares outstanding: Basic		82,304			83,097			82,675			83,058
		Shares outstanding: Diluted		83,056			83,993			83,478			83,990

IDEXX Laboratories, Inc. and Subsidiaries
Selected Operating Information (Unaudited)
				Three Months Ended						Nine Months Ended
				September 30,			September 30,			September 30,			September 30,
				2024			2023			2024			2023
Operating Ratios		Gross profit		61.1	%		59.9	%		61.4	%		60.3	%
(as a percentage of revenue):		Sales, marketing, general and administrative expense		24.4	%		24.5	%		26.5	%		24.4	%
		Research and development expense		5.5	%		5.2	%		5.5	%		5.0	%
		Income from operations1		31.2	%		30.1	%		29.4	%		30.9	%
1Amounts presented may not recalculate due to rounding.

IDEXX Laboratories, Inc. and Subsidiaries
Segment Information
Amounts in thousands (Unaudited)
				Three Months Ended
				September 30, 2024		Percent of Revenue			September 30, 2023			Percent of Revenue
Revenue:		CAG		$891,990					$837,160
		Water		50,162					44,450
		LPD		28,992					29,747
		Other		4,399					4,170
		Total		$975,543					$915,527
Gross Profit:		CAG		$544,461		61.0	%		$499,291			59.6	%
		Water		34,755		69.3	%		31,034			69.8	%
		LPD		14,627		50.5	%		15,836			53.2	%
		Other		2,195		49.9	%		1,821			43.7	%
		Total		$596,038		61.1	%		$547,982			59.9	%
Income from Operations:		CAG		$277,082		31.1	%		$253,358			30.3	%
		Water		23,608		47.1	%		20,328			45.7	%
		LPD		889		3.1	%		2,405			8.1	%
		Other		2,313		52.6	%		(808	)		(19.4	%)
		Total		$303,892		31.2	%		$275,283			30.1	%

				Nine Months Ended
				September 30, 2024		Percent of Revenue			September 30, 2023			Percent of Revenue
Revenue:		CAG		$2,703,573					$2,531,091
		Water		139,959					126,362
		LPD		87,503					88,866
		Other		12,181					13,033
		Total		$2,943,216					$2,759,352
Gross Profit:		CAG		$1,659,768		61.4	%		$1,523,757			60.2	%
		Water		97,326		69.5	%		88,621			70.1	%
		LPD		45,419		51.9	%		46,975			52.9	%
		Other		5,754		47.2	%		4,450			34.1	%
		Total		$1,808,267		61.4	%		$1,663,803			60.3	%
Income from Operations:		CAG		$798,328		29.5	%		$790,617			31.2	%
		Water		63,542		45.4	%		57,119			45.2	%
		LPD		3,254		3.7	%		5,664			6.4	%
		Other		1,527		12.5	%		(1,574	)		(12.1	%)
		Total		$866,651		29.4	%		$851,826			30.9	%

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
		September 30, 2024		September 30, 2023		Dollar Change			Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions			Organic Revenue Growth1
Net Revenue
CAG		$891,990		$837,160		$54,830			6.5	%		0.1	%		0.4	%		6.0	%
United States		604,170		573,830		30,340			5.3	%		—			0.6	%		4.6	%
International		287,820		263,330		24,490			9.3	%		0.3	%		—			9.0	%
Water		50,162		44,450		5,712			12.9	%		(0.3	%)		—			13.2	%
United States		26,671		22,804		3,867			17.0	%		—			—			17.0	%
International		23,491		21,646		1,845			8.5	%		(0.6	%)		—			9.2	%
LPD		28,992		29,747		(755	)		(2.5	%)		(0.2	%)		—			(2.4	%)
United States		5,561		5,040		521			10.3	%		—			—			10.3	%
International		23,431		24,707		(1,276	)		(5.2	%)		(0.2	%)		—			(5.0	%)
Other		4,399		4,170		229			5.5	%		—			—			5.5	%
Total Company		$975,543		$915,527		$60,016			6.6	%		0.1	%		0.4	%		6.1	%
United States		638,058		603,046		35,012			5.8	%		—			0.6	%		5.2	%
International		337,485		312,481		25,004			8.0	%		0.2	%		—			7.8	%

		Three Months Ended
		September 30, 2024		September 30, 2023		Dollar Change			Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions			Organic Revenue Growth1
Net CAG Revenue
CAG Diagnostics recurring revenue:		$783,443		$733,958		$49,485			6.7	%		0.1	%		—			6.7	%
IDEXX VetLab consumables		329,128		296,042		33,086			11.2	%		0.1	%		—			11.1	%
Rapid assay products		92,774		87,562		5,212			6.0	%		(0.2	%)		—			6.2	%
Reference laboratory diagnostic and consulting services		328,383		320,294		8,089			2.5	%		0.1	%		—			2.4	%
CAG Diagnostics services and accessories		33,158		30,060		3,098			10.3	%		0.1	%		—			10.2	%
CAG Diagnostics capital – instruments		29,528		32,254		(2,726	)		(8.4	%)		0.3	%		—			(8.7	%)
Veterinary software, services and diagnostic imaging systems:		79,019		70,948		8,071			11.4	%		0.1	%		5.2	%		6.1	%
Recurring revenue		64,644		54,607		10,037			18.4	%		0.1	%		6.8	%		11.5	%
Systems and hardware		14,375		16,341		(1,966	)		(12.0	%)		—			—			(12.0	%)
Net CAG revenue		$891,990		$837,160		$54,830			6.5	%		0.1	%		0.4	%		6.0	%

		Three Months Ended
		September 30, 2024			September 30, 2023			Dollar Change			Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions		Organic Revenue Growth1
CAG Diagnostics recurring revenue:		$	783,443		$	733,958		$	49,485		6.7	%		0.1	%		—		6.7	%
United States			522,530			497,109			25,421		5.1	%		—			—		5.1	%
International			260,913			236,849			24,064		10.2	%		0.3	%		—		9.9	%
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)
		Nine Months Ended
		September 30, 2024		September 30, 2023		Dollar Change			Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions			Organic Revenue Growth1
Net Revenue
CAG		$2,703,573		$2,531,091		$172,482			6.8	%		(0.2	%)		0.4	%		6.7	%
United States		1,835,049		1,732,752		102,297			5.9	%		—			0.5	%		5.4	%
International		868,524		798,339		70,185			8.8	%		(0.6	%)		—			9.4	%
Water		139,959		126,362		13,597			10.8	%		(0.4	%)		—			11.1	%
United States		73,331		63,932		9,399			14.7	%		—			—			14.7	%
International		66,628		62,430		4,198			6.7	%		(0.7	%)		—			7.5	%
LPD		87,503		88,866		(1,363	)		(1.5	%)		(0.6	%)		—			(0.9	%)
United States		15,840		14,005		1,835			13.1	%		—			—			13.1	%
International		71,663		74,861		(3,198	)		(4.3	%)		(0.7	%)		—			(3.6	%)
Other		12,181		13,033		(852	)		(6.5	%)		—			—			(6.5	%)
Total Company		$2,943,216		$2,759,352		$183,864			6.7	%		(0.2	%)		0.3	%		6.6	%
United States		1,929,213		1,815,066		114,147			6.3	%		—			0.5	%		5.8	%
International		1,014,003		944,286		69,717			7.4	%		(0.6	%)		—			8.0	%

		Nine Months Ended
		September 30, 2024		September 30, 2023		Dollar Change			Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions			Organic Revenue Growth1
Net CAG Revenue
CAG Diagnostics recurring revenue:		$2,372,041		$2,223,336		$148,705			6.7	%		(0.2	%)		—			6.9	%
IDEXX VetLab consumables		971,405		890,891		80,514			9.0	%		(0.3	%)		—			9.3	%
Rapid assay products		282,379		266,934		15,445			5.8	%		(0.2	%)		—			6.0	%
Reference laboratory diagnostic and consulting services		1,020,094		973,580		46,514			4.8	%		(0.1	%)		—			4.9	%
CAG Diagnostics services and accessories		98,163		91,931		6,232			6.8	%		(0.4	%)		—			7.2	%
CAG Diagnostics capital – instruments		98,912		99,452		(540	)		(0.5	%)		(0.4	%)		—			(0.1	%)
Veterinary software, services and diagnostic imaging systems:		232,620		208,303		24,317			11.7	%		—			4.4	%		7.3	%
Recurring revenue		187,461		160,039		27,422			17.1	%		—			5.7	%		11.5	%
Systems and hardware		45,159		48,264		(3,105	)		(6.4	%)		(0.1	%)		—			(6.4	%)
Net CAG revenue		$2,703,573		$2,531,091		$172,482			6.8	%		(0.2	%)		0.4	%		6.7	%

		Nine Months Ended
		September 30, 2024		September 30, 2023		Dollar Change		Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions		Organic Revenue Growth1
CAG Diagnostics recurring revenue:		$2,372,041		$2,223,336		$148,705		6.7	%		(0.2	%)		—		6.9	%
United States		1,590,037		1,505,837		84,200		5.6	%		—			—		5.6	%
International		782,004		717,499		64,505		9.0	%		(0.6	%)		—		9.6	%
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)
				September 30, 2024		December 31, 2023
Assets:		Current Assets:
		Cash and cash equivalents		$308,636		$453,932
		Accounts receivable, net		511,250		457,445
		Inventories		389,804		380,282
		Other current assets		224,054		203,595
		Total current assets		1,433,744		1,495,254
		Property and equipment, net		717,745		702,177
		Other long-term assets, net		1,199,277		1,062,494
		Total assets		$3,350,766		$3,259,925
Liabilities and Stockholders'
Equity:		Current Liabilities:
		Accounts payable		$110,603		$110,643
		Accrued liabilities		511,047		478,712
		Line of credit		250,000		250,000
		Current portion of long-term debt		99,140		74,997
		Deferred revenue		38,434		37,195
		Total current liabilities		1,009,224		951,547
		Long-term debt, net of current portion		524,758		622,883
		Other long-term liabilities, net		198,730		200,965
		Total long-term liabilities		723,488		823,848
		Total stockholders' equity		1,618,054		1,484,530
		Total liabilities and stockholders' equity		$3,350,766		$3,259,925

IDEXX Laboratories, Inc. and Subsidiaries
Selected Balance Sheet Information (Unaudited)
				September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023		September 30, 2023
Selected Balance Sheet Information:		Days sales outstanding1		48.9		47.3		45.7		46.1		45.6
		Inventory turns2		1.3		1.4		1.3		1.3		1.3
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 are calculated as the ratio of four times our inventory-related cost of product revenue for the quarter, 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)
				Nine Months Ended
				September 30, 2024			September 30, 2023
Operating:		Cash Flows from Operating Activities:
		Net income		$671,718			$650,521
		Non-cash adjustments to net income		119,761			120,390
		Changes in assets and liabilities		(124,503	)		(114,252	)
		Net cash provided by operating activities		666,976			656,659
Investing:		Cash Flows from Investing Activities:
		Purchases of property and equipment		(91,667	)		(101,075	)
		Acquisition of a business		(76,694	)		—
		Proceeds from net investment hedges		1,142			6,256
		Net cash used by investing activities		(167,219	)		(94,819	)
Financing:		Cash Flows from Financing Activities:
		Repayments under credit facility, net		—			(329,000	)
		Payments of senior notes		(75,000	)		—
		Payments for the acquisition-related holdbacks		—			(1,879	)
		Repurchases of common stock		(591,042	)		(35,070	)
		Proceeds from exercises of stock options and employee stock purchase plans		31,237			35,704
		Shares withheld for statutory tax withholding payments on restricted stock		(10,486	)		(9,907	)
		Net cash used by financing activities		(645,291	)		(340,152	)
		Net effect of changes in exchange rates on cash		238			(2,538	)
		Net (decrease) increase in cash and cash equivalents		(145,296	)		219,150
		Cash and cash equivalents, beginning of period		453,932			112,546
		Cash and cash equivalents, end of period		$308,636			$331,696

IDEXX Laboratories, Inc. and Subsidiaries
Free Cash Flow
Amounts in thousands (Unaudited)
				Three Months Ended						Nine Months Ended
				September 30, 2024			September 30, 2023			September 30, 2024			September 30, 2023
Free Cash Flow:		Net cash provided by operating activities		$220,079			$272,433			$666,976			$656,659
		Investing cash flows attributable to purchases of property and equipment		(28,089	)		(34,094	)		(91,667	)		(101,075	)
		Free cash flow1		$191,990			$238,339			$575,309			$555,584
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				Nine Months Ended
		September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Shares repurchased in the open market		459		65		1,177		65
Shares acquired through employee surrender for statutory tax withholding		1		1		19		20
Total shares repurchased		460		66		1,196		85
Cost of shares repurchased in the open market		$224,945		$35,070		$600,216		$35,070
Cost of shares for employee surrenders		218		231		10,486		9,907
Total cost of shares		$225,163		$35,301		$610,702		$44,977
Average cost per share – open market repurchases		$490.23		$536.03		$509.81		$536.03
Average cost per share – employee surrenders		$465.27		$506.74		$557.64		$503.43
Average cost per share – total		$490.20		$535.83		$510.57		$528.49

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241030123813/en/

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

Source: IDEXX Laboratories, Inc.

FAQ

What was IDEXX (IDXX) Q3 2024 revenue?

IDEXX reported Q3 2024 revenue of $976 million, representing a 7% increase as reported and 6% organic growth.

What is IDEXX's (IDXX) revised 2024 revenue guidance?

IDEXX adjusted its 2024 revenue guidance to $3,865-$3,890 million, representing 5.5%-6.2% reported growth, reduced by $38 million from previous guidance.

How much did IDEXX (IDXX) EPS grow in Q3 2024?

IDEXX's Q3 2024 earnings per share (EPS) were $2.80, increasing 11% as reported and 12% on a comparable basis.

What was IDEXX's (IDXX) CAG Diagnostics recurring revenue growth in Q3 2024?

IDEXX's CAG Diagnostics recurring revenue grew 7% both as reported and organic in Q3 2024.