IDEXX Laboratories Announces Third Quarter Results

Rhea-AI Summary

IDEXX Laboratories reported a 19% revenue growth for Q3 2020, reaching $722 million, primarily driven by a 23% growth in Companion Animal Group (CAG) Diagnostics recurring revenue. The company achieved an Earnings per Share (EPS) of $1.69, reflecting a 36% increase. Although the CAG business performed well, revenue was constrained by lower instrument placements and a 5% decline in Water revenues. IDEXX is cautious regarding future guidance due to the ongoing COVID-19 pandemic impacts.

Positive

• 19% revenue growth to $722 million in Q3 2020.
• 23% growth in CAG Diagnostics recurring revenue.
• EPS of $1.69 representing a 36% increase.
• Improved gross margin to 58.5%, a 150 basis points increase.

Negative

• Lower instrument placements in CAG business.
• 5% decline in Water revenues due to non-compliance testing pressures.
• Suspended full-year guidance due to COVID-19 unpredictability.

WESTBROOK, Maine, Oct. 29, 2020 /PRNewswire/ -- 

• Achieves revenue growth of 19% on a reported basis and 18% on an organic basis driven by Companion Animal Group Diagnostics recurring revenue growth of 23% reported and 21% organic
• High revenue growth supported by sustained strong global recovery in the pet healthcare market
• Delivers EPS of $1.69, representing 36% growth on a reported basis and 47% on a comparable constant currency basis, reflecting benefits from high CAG Diagnostics recurring revenue gains and proactive cost controls

IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in veterinary diagnostics, veterinary practice software and water microbiology testing, today announced third quarter results, as well as business and market condition updates related to the 2019 novel coronavirus (COVID-19) pandemic.

Third Quarter Results

The Company reports revenues of $722 million for the third quarter of 2020, an increase of 19% on a reported and 18% on an organic basis. Third quarter results were driven by Companion Animal Group ("CAG") Diagnostics recurring revenue growth of 23% reported and 21% organic, supported by similarly high organic gains in both U.S. and International markets, as well as revenue growth of 18% in the Livestock, Poultry and Dairy ("LPD") business. Third quarter growth benefited by approximately 1% from revenues associated with OPTI Medical Systems COVID-19 human PCR testing. Third quarter results were moderated by constrained new CAG instrument placement levels and lower Water business revenues, reflecting pressures on non-compliance water testing, impacted by factors related to the COVID-19 pandemic.

Earnings per diluted share ("EPS") was $1.69 for the third quarter, representing 36% growth on a reported basis and 47% growth on a comparable constant currency basis, which excludes $0.24 per share impact from an ongoing litigation matter involving a royalty claim under an expired patent license agreement and tax benefits from share-based compensation of $0.18 per share. Comparable constant currency growth measures are non-GAAP financial measures and have been modified to exclude the related operating expense impact of $27.5 million, in addition to share-based compensation tax benefits, as described in our footnotes. EPS results reflected benefits from strong CAG Diagnostics recurring revenue growth, which supported gross margin gains and operating expense leverage, augmented by proactive cost control efforts. Overall operating margins improved 70 basis points on a reported basis compared to prior year levels and 470 basis points on a comparable constant currency basis.

"We are very pleased to report excellent third quarter financial results, which reflect impressive global growth in our CAG business and outstanding efforts by the IDEXX team to support the needs of our customers during a dynamic global pandemic environment," said Jay Mazelsky, the Company's President and Chief Executive Officer. "We are very encouraged by the sustained strong recovery in pet healthcare, which reinforces our optimism in the long-term growth potential for our companion animal diagnostics business and positions us well to deliver continued strong financial results."

Market Trend and COVID-19 Pandemic Impact Update

Companion animal healthcare markets continued to build on the sharp V-shaped recovery seen in the second quarter globally. U.S. veterinary practices have experienced strong clinical demand benefiting from continued solid non-wellness visit growth, incremental growth from postponed wellness visits and an increase in new patient visits. In the U.S., same-store clinical visit growth sustained at 6% within the third quarter, supported by 3% growth in non-wellness visits and 11% growth in wellness visits, benefiting from pent-up demand. Revenue growth at veterinary practices is also benefiting from higher growth in services, including an increasing utilization of diagnostics, which supported 11% growth in same-store practice revenue in the U.S. in the third quarter. Solid same-store clinical visit gains have continued in October, reflected in 5% same-store clinical visit growth for the two-week period ended October 16. U.S. companion animal practice weekly key metrics are available in the Q3 2020 Earnings Snapshot accessible on the IDEXX website, www.idexx.com/investors.

Strong global companion animal market trends have supported exceptional demand for CAG diagnostic products and services. Global CAG Diagnostics recurring revenues sustained their growth at high levels through the third quarter reflected in greater than 20% growth early in the quarter and growth closer to 20% in the later part of the quarter, benefiting in part from pent-up demand for wellness diagnostic testing in the U.S.. 

These trends are encouraging and reflect the resilience of the pet healthcare market. Potential effects related to ongoing COVID-19 case management efforts are challenging to predict and may pressure future revenues should enhanced social distancing policies and higher infection rates impact veterinary clinic operations in certain regions.

In managing IDEXX businesses, the Company continues to provide high levels of service delivery and product support for customers during this time and maintains high health and safety standards to protect its employees and ensure business continuity. In an effort to continue to protect the health and safety of our workforce and their families and communities, the majority of IDEXX employees continue to work remotely and travel continues to be limited.

Third Quarter Performance Highlights

Companion Animal Group 

The Companion Animal Group generated 20% reported and 18% organic revenue growth for the quarter, supported by CAG Diagnostics recurring revenue growth of 23% on a reported and 21% on an organic basis. Growth was similarly high across IDEXX's major modalities in the third quarter, reflecting continued strong growth in clinical visits and related diagnostic products and services.  Overall CAG revenue growth was constrained by lower instrument placements, which improved relative to second quarter trends, but continue to be impacted by COVID-19 related restrictions on access to veterinary practices. Despite these constraints, IDEXX achieved 3,173 premium instrument placements, supporting a 14% expansion of IDEXX's global premium instrument installed base.

• IDEXX VetLab® consumables generated 23% reported and 22% organic revenue growth, supported by ongoing expansion of our global premium instrument installed base, continued strong customer retention, increases in testing utilization and moderate net price gains.
• Reference laboratory diagnostic and consulting services generated 24% reported and 21% organic revenue growth, led by growth in U.S. markets benefiting from strong market growth including high demand for wellness testing, as well as moderate net price realization and benefits from net new customer additions.
• Rapid assay products revenues grew 20% on a reported and organic basis, led by high growth in SNAP® 4Dx® Plus sales volumes in U.S. markets benefiting from strong overall market conditions including high demand for wellness testing.

Veterinary software, services and diagnostic imaging systems revenues grew 4% on a reported and organic basis, supported by double-digit growth in subscription-based service revenues and strong growth in new veterinary software system placements. Overall growth was moderated by declines in diagnostic imaging systems placements.   

Water

Water revenues declined 5% on a reported basis and 4% on an organic basis for the quarter, reflecting continued pressures in non-compliance testing volumes impacted by the COVID-19 pandemic. 

Livestock, Poultry and Dairy ("LPD")

LPD revenues grew 18% on a reported and organic basis, driven by strong growth in the Asia Pacific region. LPD results were supported by improvements in core swine testing volumes, continued benefits from African Swine Fever diagnostic testing programs in Asia, and growth in poultry testing. These gains were moderated by lower herd health screening levels, compared to strong prior year results.

Gross Profit and Operating Profit

Gross profits increased 23% on a reported and constant currency basis. Gross margin of 58.5% increased 150 basis points compared to prior year period results on a reported basis and 200 basis points on a constant currency basis. Gross margin results reflected reference laboratory productivity gains on high revenue growth, favorable mix from strong consumable revenue and lower instrument revenue, as well as benefits from moderate price gains.

Operating margin was 23.8% in the quarter, 70 basis points higher than the prior year period results on a reported basis and 470 basis points higher on a comparable constant currency basis, supported by operating expense leverage on stronger than expected revenue growth. Operating expenses increased 22% on a reported basis, reflecting the $27.5 million accrual related to the ongoing litigation noted earlier, and increased 9% on a comparable constant currency basis. Operating expenses in the third quarter included a $10 million contribution to establish the IDEXX Foundation, a donor-advised charitable fund, focused on making a positive impact on our communities. Priorities for the IDEXX Foundation will include supporting education in the veterinary and STEM fields, including advancing diversity, equity and inclusion in animal healthcare. Given the strong recovery in its core CAG business, the Company plans to advance prioritized investments in support of its long-term growth strategy and anticipates sustaining a relatively higher rate of operating expense growth moving forward.

2020 and 2021 Financial Outlook

The Company is maintaining suspension of full-year 2020 guidance due to the unpredictability of potential future impacts from the COVID-19 pandemic and is not providing preliminary 2021 guidance at this time.

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 2020 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 49967945. 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.

About IDEXX Laboratories, Inc.

IDEXX Laboratories, Inc. is a member of the S&P 500® Index and is a leader in pet healthcare innovation, serving practicing veterinarians around the world with a broad range of diagnostic and information technology-based products and services. 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 more than 9,000 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 "Third Quarter Results," "Market Trend and COVID-19 Pandemic Update" and "Gross Profit and Operating Profit" 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, among other things, the impact of the COVID-19 pandemic and the Company's planned future investments and operating expense growth. 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 adverse impact, and the duration, of the effects of the ongoing COVID-19 pandemic on our business, results of operations, liquidity, financial condition and stock price, as well as the other 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, 2019 and in the corresponding sections of the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020 and September 30, 2020, 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 2020 results as follows: decreased gross profit growth by approximately 0.1%, decreased gross profit margin growth by 50 basis points, decreased operating expense growth by 0.2%, decreased operating profit margin growth by 20 basis points, and had an immaterial impact on EPS growth. Estimated currency changes also decreased 2020 EPS growth by 2% for the nine months ended September 30, 2020. 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, 2020.

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 and revenue from certain business acquisitions. 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, 2020.  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. We exclude only acquisitions that are considered to be a business from organic revenue growth. For more detail on what acquisitions we consider to be a business in computing organic growth, please see Management's Discussion and Analysis of Financial Conditions and Results of Operations, Non-GAAP Financial Measures, contained in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.

Comparable constant currency operating expense growth, operating profit growth, and operating margin gain (or growth) - Comparable constant currency operating expense growth, operating profit growth, and operating profit 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). Management believes that reporting comparable constant currency operating expense growth, operating profit growth, and 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 constant currency operating expense growth, operating profit growth, and operating margin gain (or growth)  should be considered in addition to, and not as replacements of or superior measures to, operating expense growth, operating profit growth, and operating margin gain reported in accordance with GAAP. Comparable constant currency operating expense growth, operating profit growth, and operating margin gain (or growth) exclude a $27.5 million operating expense impact from an ongoing litigation matter involving a royalty claim under an expired patent license agreement recorded in the third quarter of 2020.  This impact and those described in the constant currency note above reconcile reported operating expense growth, operating profit growth, and operating margin gain for the third quarter of 2020 to comparable constant currency operating expense growth, operating profit growth, and operating margin gain (or growth) for the same period.

Comparable constant currency EPS growth - Comparable constant currency EPS growth is a non-GAAP financial measure that excludes the impact of changes in foreign currency exchange rates and the tax benefits of share-based compensation activity under ASU 2016-09 and non-recurring or unusual items (if any). Management believes comparable constant currency 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. Share-based compensation tax benefits increased third quarter 2020 EPS by $0.18 per share, and 2020 EPS by $0.31 per share for the nine months ended September 30, 2020. Comparable constant currency EPS growth excludes a $27.5 million operating expense impact from an ongoing litigation matter involving a royalty claim under an expired patent license agreement recorded in the third quarter of 2020, which reduced third quarter 2020 EPS by $0.24 per share, and reduced 2020 EPS by $0.24 per share for the nine months ended September 30, 2019. These impacts and those described in the constant currency note above reconcile reported EPS growth to comparable constant currency EPS growth for the third quarter and year-to-date through September of 2020.

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. See the supplementary analysis of results below for our calculation of free cash flow for the nine months ended September 30, 2020 and 2019.

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.  For further information on how Adjusted EBITDA and the Debt to Adjusted EBITDA ratios are calculated, see the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.

IDEXX Laboratories, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations
Amounts in thousands except per share data (Unaudited)
				Three Months Ended						Nine Months Ended
				Sept. 30,			Sept. 30,			Sept. 30,			Sept. 30,
				2020			2019			2020			2019
Revenue:		Revenue		$721,789			$605,303			$1,985,717			$1,801,462
Expenses and Income:		Cost of revenue		299,183			260,353			824,179			767,062
		Gross profit		422,606			344,950			1,161,538			1,034,400
		Sales and marketing		108,202			104,551			318,526			312,499
		General and administrative		105,031			66,337			231,111			186,653
		Research and development		37,517			34,260			102,472			98,033
		Income from operations		171,856			139,802			509,429			437,215
		Interest expense, net		(7,902)			(7,004)			(24,880)			(23,503)
		Income before provision for income taxes		163,954			132,798			484,549			413,712
		Provision for income taxes		17,633			23,960			77,376			76,464
Net Income:		Net income		146,321			108,838			407,173			337,248
		Less: Noncontrolling interest in subsidiary's earnings		102			1			187			24
		Net income attributable to stockholders		$146,219			$108,837			$406,986			$337,224
		Earnings per share: Basic		$1.71			$1.26			$4.77			$3.91
		Earnings per share: Diluted		$1.69			$1.24			$4.70			$3.85
		Shares outstanding: Basic		85,314			86,198			85,293			86,206
		Shares outstanding: Diluted		86,690			87,667			86,635			87,633

 

IDEXX Laboratories, Inc. and Subsidiaries
Selected Operating Information (Unaudited)
				Three Months Ended						Nine Months Ended
				Sept. 30, 2020			Sept. 30, 2019			Sept. 30, 2020			Sept. 30, 2019
Operating Ratios		Gross profit		58.5	%		57.0	%		58.5	%		57.4	%
(as a percentage of revenue):		Sales, marketing, general and administrative expense		29.5	%		28.2	%		27.7	%		27.7	%
		Research and development expense		5.2	%		5.7	%		5.2	%		5.4	%
		Income from operations1		23.8	%		23.1	%		25.7	%		24.3	%
1Amounts presented may not recalculate due to rounding.

 

IDEXX Laboratories, Inc. and Subsidiaries
Segment Information
Amounts in thousands (Unaudited)
				Three Months Ended					Three Months Ended
				Sept. 30, 2020			Percent of Revenue		Sept. 30, 2019			Percent of Revenue
Revenue:		CAG		$638,017					$533,130
		Water		33,272					34,906
		LPD		36,971					31,370
		Other		13,529					5,897
		Total		$721,789					$605,303
Gross Profit1:		CAG		$368,297			57.7	%	$298,517			56.0	%
		Water		23,064			69.3	%	25,389			72.7	%
		LPD		22,768			61.6	%	18,169			57.9	%
		Other		8,477			62.7	%	2,875			48.8	%
		Total		$422,606			58.5	%	$344,950			57.0	%
Income from Operations1:		CAG		$139,434			21.9	%	$117,691			22.1	%
		Water		15,243			45.8	%	16,930			48.5	%
		LPD		10,505			28.4	%	4,850			15.5	%
		Other		6,674			49.3	%	331			5.6	%
		Total		$171,856			23.8	%	$139,802			23.1	%

 

				Nine Months Ended						Nine Months Ended
				Sept. 30, 2020			Percent of Revenue			Sept. 30, 2019			Percent of Revenue
Revenue:		CAG		$1,756,113						$1,589,397
		Water		95,537						99,980
		LPD		103,369						95,980
		Other		30,698						16,105
		Total		$1,985,717						$1,801,462
Gross Profit1:		CAG		$1,012,107			57.6	%		$897,482			56.5	%
		Water		67,491			70.6	%		72,397			72.4	%
		LPD		63,919			61.8	%		56,897			59.3	%
		Other		18,021			58.7	%		7,624			47.3	%
		Total		$1,161,538			58.5	%		$1,034,400			57.4	%
Income from Operations1:		CAG		$426,062			24.3	%		$370,600			23.3	%
		Water		43,383			45.4	%		47,467			47.5	%
		LPD		28,417			27.5	%		17,707			18.4	%
		Other		11,567			37.7	%		1,441			8.9	%
		Total		$509,429			25.7	%		$437,215			24.3	%

1 Effective January 1, 2020, we modified our management reporting to the Chief Operating Decision Maker to provide a more comprehensive view of the performance of our operating segments by including costs that were previously not allocated to our segments. Prior to January 1, 2020, certain costs were not allocated to our operating segments and were instead reported under the caption "Unallocated Amounts". These costs included costs primarily consisting of our R&D function, regional or country expenses and unusual items. Corporate support function costs (such as information technology, facilities, human resources, finance and legal), health benefits and incentive compensation were charged to our business segments at pre-determined budgeted amounts or rates. Beginning January 1, 2020, the segments will reflect these actual costs allocated to the segment based on various allocation methods, including revenue and headcount. Foreign exchange losses on settlements of foreign currency denominated transactions are not allocated to our operating segments and are instead reported under our Other reporting segment.

 

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
		Sept. 30, 2020			Sept. 30, 2019			Dollar Change			Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions			Organic Revenue Growth1
Net Revenue
CAG		$638,017			$533,130			$104,887			19.7	%		1.0	%		0.7	%		18.0	%
United States		428,105			357,810			70,295			19.6	%		—			1.1	%		18.6	%
International		209,912			175,320			34,592			19.7	%		2.9	%		—			16.8	%
Water		33,272			34,906			(1,634)			(4.7)	%		(0.7)	%		—			(4.0)	%
United States		16,634			16,794			(160)			(1.0)	%		—			—			(1.0)	%
International		16,638			18,112			(1,474)			(8.1)	%		(1.2)	%		—			(6.9)	%
LPD		36,971			31,370			5,601			17.8	%		0.3	%		—			17.5	%
United States		3,784			3,649			135			3.7	%		—			—			3.7	%
International		33,187			27,721			5,466			19.7	%		0.4	%		—			19.3	%
Other		13,529			5,897			7,632			129.5	%		—			—			129.5	%
Total Company		$721,789			$605,303			$116,486			19.2	%		0.8	%		0.6	%		17.8	%
United States		454,836			380,184			74,652			19.6	%		—			1.0	%		18.6	%
International		266,953			225,119			41,834			18.6	%		2.2	%		—			16.4	%

 

		Three Months Ended
		Sept. 30, 2020			Sept. 30, 2019			Dollar Change			Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions			Organic Revenue Growth1
Net CAG Revenue
CAG Diagnostics recurring revenue:		$567,416			$460,974			$106,442			23.1	%		1.0	%		0.8	%		21.3	%
IDEXX VetLab consumables		218,605			177,276			41,329			23.3	%		1.2	%		—			22.1	%
Rapid assay products		70,593			58,930			11,663			19.8	%		—	%		—			19.8	%
Reference laboratory diagnostic and consulting services		254,223			204,919			49,304			24.1	%		1.2	%		1.8	%		21.1	%
CAG Diagnostics services and accessories		23,995			19,849			4,146			20.9	%		1.0	%		—			19.9	%
CAG Diagnostics capital – instruments		29,336			32,608			(3,272)			(10.0)	%		1.2	%		—			(11.2)	%
Veterinary software, services and diagnostic imaging systems		41,265			39,548			1,717			4.3	%		0.2	%		—			4.2	%
Net CAG revenue		$638,017			$533,130			$104,887			19.7	%		1.0	%		0.7	%		18.0	%
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
		Sept. 30, 2020			Sept. 30, 2019			Dollar Change			Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions			Organic Revenue Growth1
Net Revenue
CAG		$1,756,113			$1,589,397			$166,716			10.5	%		(0.4)	%		0.7	%		10.1	%
United States		1,188,493			1,062,715			125,778			11.8	%		—			1.1	%		10.8	%
International		567,620			526,682			40,938			7.8	%		(1.1)	%		—			8.9	%
Water		95,537			99,980			(4,443)			(4.4)	%		(2.1)	%		—			(2.3)	%
United States		47,510			48,157			(647)			(1.3)	%		—			—			(1.3)	%
International		48,027			51,823			(3,796)			(7.3)	%		(4.1)	%		—			(3.2)	%
LPD		103,369			95,980			7,389			7.7	%		(2.7)	%		—			10.4	%
United States		10,803			10,221			582			5.7	%		—			—			5.7	%
International		92,566			85,759			6,807			7.9	%		(3.0)	%		—			10.9	%
Other		30,698			16,105			14,593			90.6	%		—			—			90.6	%
Total Company		$1,985,717			$1,801,462			$184,255			10.2	%		(0.6)	%		0.6	%		10.2	%
United States		1,257,617			1,127,347			130,270			11.6	%		—			1.0	%		10.6	%
International		728,100			674,115			53,985			8.0	%		(1.6)	%		—			9.6	%

 

		Nine Months Ended
		Sept. 30, 2020			Sept. 30, 2019			Dollar Change			Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions			Organic Revenue Growth1
Net CAG Revenue
CAG Diagnostics recurring revenue:		$1,565,595			$1,382,196			$183,399			13.3	%		(0.4)	%		0.8	%		12.8	%
IDEXX VetLab consumables		603,379			519,646			83,733			16.1	%		(0.6)	%		—			16.7	%
Rapid assay products		192,681			181,966			10,715			5.9	%		(0.4)	%		—			6.3	%
Reference laboratory diagnostic and consulting services		703,300			621,469			81,831			13.2	%		(0.2)	%		1.8	%		11.5	%
CAG Diagnostics services and accessories		66,235			59,115			7,120			12.0	%		(0.6)	%		—			12.7	%
CAG Diagnostics capital – instruments		72,040			92,883			(20,843)			(22.4)	%		(0.4)	%		—			(22.0)	%
Veterinary software, services and diagnostic imaging systems		118,478			114,318			4,160			3.6	%		(0.1)	%		—			3.8	%
Net CAG revenue		$1,756,113			$1,589,397			$166,716			10.5	%		(0.4)	%		0.7	%		10.1	%
		—
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, 2020			December 31, 2019
Assets:		Current Assets:
		Cash and cash equivalents		$175,587			$90,326
		Accounts receivable, net		337,593			269,312
		Inventories		217,597			195,019
		Other current assets		137,902			124,982
		Total current assets		868,679			679,639
		Property and equipment, net		547,624			533,845
		Other long-term assets, net		631,104			618,991
		Total assets		$2,047,407			$1,832,475
Liabilities and Stockholders'
Equity:		Current Liabilities:
		Accounts payable		$71,933			$72,172
		Accrued liabilities		362,326			322,938
		Line of credit		—			288,765
		Current portion of long-term debt		49,983			—
		Deferred revenue		42,599			41,462
		Total current liabilities		526,841			725,337
		Long-term debt, net of current portion		853,316			698,910
		Other long-term liabilities, net		226,135			230,403
		Total long-term liabilities		1,079,451			929,313
		Total stockholders' equity		440,576			177,473
		Noncontrolling interest		539			352
		Total stockholders' equity		441,115			177,825
		Total liabilities and stockholders' equity		$2,047,407			$1,832,475

 

IDEXX Laboratories, Inc. and Subsidiaries
Select Balance Sheet Information (Unaudited)
				September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019
Selected Balance Sheet Information:		Days sales outstanding1		41.5			44.4			41.5			40.5			41.8
		Inventory turns2		1.9			1.6			1.9			2.2			2.0
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)
				Nine Months Ended
				Sept. 30, 2020			Sept. 30, 2019
Operating:		Cash Flows from Operating Activities:
		Net income		$407,173			$337,248
		Non-cash adjustments to net income		98,798			91,945
		Changes in assets and liabilities		(76,842)			(125,448)
		Net cash provided by operating activities		429,129			303,745
Investing:		Cash Flows from Investing Activities:
		Purchases of property and equipment		(92,768)			(109,058)
		Acquisition of intangible assets /  business / equity investment		(918)			(559)
		Net cash used by investing activities		(93,686)			(109,617)
Financing:		Cash Flows from Financing Activities:
		Repayments on revolving credit facilities, net		(289,625)			(169,532)
		Issuance of senior notes		200,000			100,000
		Debt issuance costs		(4,995)			(154)
		Payment of acquisition-related contingent consideration		(1,580)			(2,255)
		Repurchases of common stock		(182,815)			(160,969)
		Proceeds from exercises of stock options and employee stock purchase plans		39,230			28,739
		Shares withheld for statutory tax withholding on restricted stock		(9,029)			(7,849)
		Net cash used by financing activities		(248,814)			(212,020)
		Net effect of changes in exchange rates on cash		(1,368)			(1,906)
		Net increase (decrease) in cash and cash equivalents		85,261			(19,798)
		Cash and cash equivalents, beginning of period		90,326			123,794
		Cash and cash equivalents, end of period		$175,587			$103,996

 

IDEXX Laboratories, Inc. and Subsidiaries
Free Cash Flow
Amounts in thousands except per share data (Unaudited)
				Nine Months Ended
				Sept. 30, 2020			Sept. 30, 2019
Free Cash Flow:		Net cash provided by operating activities		$429,129			$303,745
		Investing cash flows attributable to purchases of property and equipment		(92,768)			(109,058)
		Free cash flow1		$336,361			$194,687
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
		Sept. 30, 2020			Sept. 30, 2019			Sept. 30, 2020			Sept. 30, 2019
Shares repurchased in the open market		—			330			721			683
Shares acquired through employee surrender for statutory tax withholding		1			1			31			38
Total shares repurchased		1			331			752			721
Cost of shares repurchased in the open market		$—			$91,051			$179,623			$165,198
Cost of shares for employee surrenders		360			277			9,029			7,849
Total cost of shares		$360			$91,328			$188,652			$173,047
Average cost per share – open market repurchases		$—			$275.50			$249.20			$241.56
Average cost per share – employee surrenders		$393.12			$286.65			$292.03			$209.20
Average cost per share – total		$393.12			$275.53			$250.96			$239.87

 

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

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SOURCE IDEXX Laboratories, Inc.

FAQ

What was IDEXX's revenue growth for Q3 2020?

IDEXX achieved a 19% revenue growth for Q3 2020, totaling $722 million.

How much did IDEXX's EPS grow in Q3 2020?

The Earnings per Share (EPS) for IDEXX in Q3 2020 was $1.69, reflecting a 36% growth.

What drove IDEXX's revenue growth in Q3 2020?

The revenue growth was primarily driven by a 23% increase in Companion Animal Group Diagnostics recurring revenue.

Did IDEXX provide full-year guidance for 2020?

IDEXX suspended its full-year 2020 guidance due to uncertainties from the COVID-19 pandemic.

What were the impacts of COVID-19 on IDEXX's business?

COVID-19 caused lower instrument placements and a decline in Water revenues, affecting overall growth prospects.