IDEXX Laboratories Announces Third Quarter Results

Rhea-AI Summary

IDEXX Laboratories reported third quarter 2022 revenue of $842 million, marking a 4% increase as reported and 8% organically. Growth was supported by a 5% rise in CAG Diagnostics recurring revenue and record premium instrument placements, which rose 10%. Earnings per share (EPS) reached $2.15, reflecting a 6% reported increase. The company adjusted its 2022 revenue guidance to 3.5%-4.5% growth. EPS guidance was updated to $7.74-$7.98, incorporating foreign currency impacts. Strong demand in companion animal healthcare and innovative solutions contributed to these results.

Positive

• 4% reported and 8% organic revenue growth in Q3 2022.
• CAG Diagnostics recurring revenue increased by 5% reported and 9% organic.
• EPS rose to $2.15, a 6% increase as reported and 13% on a comparable basis.
• Record premium instrument placements increased 10% year-over-year.
• Updated 2022 revenue guidance: 3.5%-4.5% reported growth.

Negative

• EPS guidance reflects a $0.05 impact from foreign exchange and interest rate projections.
• Same-store clinical visits at veterinary practices declined by 2.4% in Q3.

• Achieves third quarter revenue growth of 4% reported and 8% organic, driven by CAG Diagnostics recurring revenue growth of 5% reported and 9% organic, building on high prior year growth
• Continued strong demand for diagnostic services and excellent commercial execution support record third quarter premium instrument placements, driving 14% growth in global premium instrument installed base
• Delivers EPS of $2.15, an increase of 6% as reported and 13% on a comparable basis supported by operating margin expansion of 120 basis points as reported and 100 basis points on a comparable basis
• Adjusts 2022 revenue guidance to 3.5% - 4.5% growth as reported and 6.5% - 7.5% organic. At midpoint, reflects consistent reported revenue outlook as solid organic growth trends offset updated foreign exchange impacts
• Updated EPS outlook of $7.74 - $7.98 reflects consistent operational outlook at midpoint, supported by strong second half comparable operating profit gains, and incorporates $0.05 combined impact from updated foreign currency exchange rate and interest rate projections

WESTBROOK, Maine, Nov. 1, 2022 /PRNewswire/ -- IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in pet healthcare innovation, today announced third quarter results and an update on U.S. companion animal diagnostics trends.

Third Quarter Results

The Company reports revenues of $842 million for the third quarter of 2022, a 4% increase as reported and 8% organically, driven by Companion Animal Group ("CAG") Diagnostics recurring revenue growth of 5% reported and 9% organic, building on strong prior year performance. Results were supported by 10% reported and organic growth in U.S. CAG Diagnostics recurring revenues, reflecting continued benefits from strong IDEXX execution. Continued high companion animal sector demand and benefits from IDEXX innovation and commercial engagement drove record global premium instrument placements, which increased 10% compared to the prior year period. Veterinary software, services and diagnostic imaging systems revenue grew 14% as reported and 15% organically, supported by record quarterly placements of software solutions and a continued shift to cloud-based products. Overall revenue gains in the quarter were also supported by Water revenue growth of 7% reported and 12% organic.

Third quarter earnings per diluted share ("EPS") were $2.15, an increase of 6% as reported and 13% on a comparable basis, reflecting solid gross margin gains and controlled operating expense growth. EPS results included $0.08 per share negative impact from currency changes and no impact from tax benefits related to share-based compensation.

"Thanks to excellent execution by teams across the organization, IDEXX drove continued solid organic growth off elevated prior year levels in the third quarter," said Jay Mazelsky, President and Chief Executive Officer. "Record premium instrument placements in the quarter and gains across our business segments were supported by decades of innovation and strong customer engagement. By advancing our strategic priorities, IDEXX continues to help veterinarians deliver high standards of care in an efficient way as we pursue enduring growth aligned to the long-term global opportunity for companion animal diagnostics."

Companion Animal Diagnostics Trends Update

Continued elevated demand for companion animal healthcare supported solid gains in CAG diagnostic products and services. Average U.S. diagnostics revenue per practice grew 7% on a same-store basis in the third quarter, faster than 4% growth in overall clinic revenues. U.S. same-store clinical visits at veterinary practices declined 2.4%, a modest improvement compared to the prior quarter. Growth for pet healthcare including diagnostics has increased significantly from pre-pandemic levels reflecting compound annual growth of approximately 2.5% in clinical visits and 11% in same-store diagnostics revenues for the U.S. compared to the third quarter of 2019.

Additional U.S. companion animal practice key metrics are available in the Q3 2022 Earnings Snapshot accessible on the IDEXX website, www.idexx.com/investors.

Third Quarter Performance Highlights

Companion Animal Group 

The Companion Animal Group generated revenue growth of 4% reported and 8% organic for the quarter, supported by CAG Diagnostics recurring revenue growth of 5% on a reported basis and 9% organically. Continued solid growth was achieved across IDEXX's testing modalities, building off high levels in the prior year period. Record premium instrument placements were 10% higher than the prior year period, driving a 14% year-over-year increase in the global premium instrument installed base.

• IDEXX VetLab® consumables generated 4% reported and 9% organic revenue growth, with solid organic gains across U.S. and international regions supported by benefits from an expanded global premium instrument installed base.
• Reference laboratory diagnostic and consulting services generated 5% reported and 8% organic revenue growth, driven by strong gains in the U.S., which were moderated by modest organic revenue growth in international regions, reflecting pressure on same-store clinical visit growth in Europe — including macro-economic impacts.
• Rapid assay products revenues grew 5% as reported and 7% organically, supported by net price gains.

Veterinary software, services and diagnostic imaging systems revenues grew 14% as reported and 15% organically, supported by double-digit organic gains in recurring software and digital imaging revenues. Strong demand for cloud-based products continues to support momentum in software solution placements and customer gains.

Water

Water revenues grew 7% on a reported basis and 12% on an organic basis for the quarter, reflecting solid volume growth across U.S. and international regions and benefits from net price gains.

Livestock, Poultry and Dairy ("LPD")

LPD revenues declined 2% as reported and grew 7% on an organic basis for the quarter, benefiting from growth in herd health screening revenues and improved results in China.

Gross Profit and Operating Profit

Gross profits increased 7% as reported and 10% on a comparable basis. Gross margin of 60.2% increased 180 basis points as reported and 120 basis points on a comparable basis. Benefits from net price gains, lab productivity initiatives and improvement in software service gross margins offset select inflationary effects.

Operating margin was 29.1% in the quarter, 120 basis points higher than the prior year as reported and 100 basis points higher on a comparable basis, reflecting gross margin gains and controlled year-over-year operating expense growth of 6% as reported and 9% on a comparable basis. As planned, operating expense growth was in line with revenue gains as we prioritized investments and gained leverage from prior commercial investments.

2022 Growth and Financial Performance Outlook

The Company is updating its full-year revenue growth outlook to 3.5% - 4.5% as reported and 6.5% - 7.5% organically. The narrowed organic revenue growth range reflects solid third quarter performance and a fourth quarter outlook consistent with prior guidance. Updated foreign exchange projections will reduce reported revenue by $10 million, compared to the prior outlook, as a stronger U.S. dollar is now projected to reduce full-year reported growth by approximately 4%. The updated outlook includes full-year CAG Diagnostics recurring revenue growth of 4% - 5% as reported and 7.5% - 8.5% organically, supported by continued benefits from strong IDEXX execution including additional second half price gains.

The Company updated its full-year reported operating margin outlook to 26.3% - 26.8%, reflecting consistent expectations for operating margin performance on a comparable basis and an estimated ~ 10 basis points in year-over-year net margin impact from updated foreign currency exchange rate estimates.

The Company's EPS outlook of $7.74 - $7.98 reflects an adjustment of $0.05 at midpoint, including $0.01 of negative impact from higher projected interest rates and $0.04 of negative impact related to the strengthening U.S. dollar.

The following table provides the Company's updated outlook for annual key financial metrics in 2022:

 

Amounts in millions except per share data and percentages
Growth and Financial Performance Outlook		2022
Revenue		$3,325	-	$3,365
Reported growth		3.5 %	-	4.5 %
Organic growth		6.5 %	-	7.5 %
CAG Diagnostics Recurring Revenue Growth
Reported growth		4 %	-	5 %
Organic growth		7.5 %	-	8.5 %
Operating Margin		26.3 %	-	26.8 %
Operating margin expansion		(270 bps)	-	(220 bps)
Impact of foreign exchange		~ 10 bps
Comparable margin expansion		(280 bps)	-	(230 bps)
Impact of discrete in-license of technology		(230 bps)
EPS		$7.74	-	$7.98
Reported growth		(10 %)	-	(7 %)
Comparable growth		(4 %)	-	(1 %)
Other Key Metrics
Net interest expense		~ $39
Share-based compensation tax benefit		~ $8
Share-based compensation tax rate benefit		~ 1%
Effective tax rate		21.5 %	-	22 %
Share-based compensation EPS impact		~ $0.10
Reduction in average shares outstanding		~ 2%
Operating Cash Flow		85% - 90% of net income
Free Cash Flow		60% - 65% of net income
Capital Expenditures		~ $165

 

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 2022 and preliminary estimates for 2023. 

Go-Forward Foreign Currency Exchange Rate Assumptions		2022
In U.S. dollars
euro		$0.96
British pound		$1.09
Canadian dollar		$0.72
Australian dollar		$0.62
Relative to the U.S. dollar
Japanese yen		¥148
Chinese renminbi		¥7.26
Brazilian real		R$5.28
Estimated Foreign Currency Exchange Rate Impacts		2022				2023
Revenue growth rate impact		(~ 4%)				(~ 3%)
CAG Diagnostics recurring revenue growth rate impact		(~ 4%)				(~ 3%)
Operating margin growth impact		~ 10 bps				(~ 70 bps)
EPS impact		(~ $0.25)				(~ $0.45)
EPS growth impact		(~ 3%)				(~ 6%)

 

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 2022 results and management's outlook. To participate in the conference call, dial 1-866-374-5140 or 1-404-400-0571 and reference pin 55765567. 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 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 more than 10,000 people and offers solutions and products to customers in more than 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 "2022 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; and projected effective tax rates, reduction of average shares outstanding and net interest expense. 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, 2021 and in the corresponding sections of the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022, June 30, 2022, and September 30, 2022, 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 facilitates 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 2022 results as follows: decreased gross profit growth by 3%, increased gross margin growth by 70 basis points, decreased operating expense growth by 3%, decreased operating profit growth by 4%, increased operating profit margin growth by 20 basis points, and decreased EPS growth by 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 months and nine months ended September 30, 2022 and refer to the 2022 Growth and Financial Performance Outlook section of this earnings release for estimated foreign currency exchange rate impacts on 2022 and 2023 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. Please refer to the constant currency note above for a summary of foreign currency exchange rate impacts. 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 months and nine months ended September 30, 2022. Please refer to the 2022 Growth and Financial Performance Outlook section of this earnings release for estimated full-year 2022 organic revenue growth for the Company and CAG Diagnostics recurring revenue. 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 increase projected full-year 2022 revenue growth by 50 basis points and to have no impact to projected full-year 2022 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		2022		2021			2022		2021
Gross Profit (as reported)		$    506,626		$    472,921	7 %		$ 1,519,411		$ 1,433,011	6 %
Gross margin		60.2 %		58.4 %	180 bps		59.8 %		59.4 %	50 bps
Less: comparability adjustments
Change from currency		(15,044)		—			(33,660)		—
Comparable gross profit growth		$    521,670		$    472,921	10 %		$ 1,553,071		$ 1,433,011	8 %
Comparable gross margin and gross margin gain (or growth)		59.5 %		58.4 %	120 bps		59.4 %		59.4 %	— bps
Operating expenses (as reported)		$    261,798		$    246,959	6 %		$    847,173		$    700,174	21 %
Less: comparability adjustments
Change from currency		$      (6,887)		—			$    (15,272)		—
Comparable operating expense growth		$    268,685		$    246,959	9 %		$    862,445		$    700,174	23 %
Income from operations (as reported)		$    244,828		$    225,962	8 %		$    672,238		$    732,837	(8) %
Operating margin		29.1 %		27.9 %	120 bps		26.5 %		30.4 %	(390) bps
Less: comparability adjustments
Change from currency		(8,156)		—			(18,389)		—
Comparable operating profit growth		$    252,984		$    225,962	12 %		$    690,627		$    732,837	(6) %
Comparable operating margin and operating margin gain (or growth)		28.9 %		27.9 %	100 bps		26.4 %		30.4 %	(400) bps
Amounts presented may not recalculate due to rounding.

 

Projected 2022 comparable operating margin expansion outlined in the 2022 Growth and Financial Performance Outlook section of this earnings release reflects projected full-year 2022 reported operating margin adjusted for estimated positive year-over-year foreign currency exchange rate change impact of approximately 10 basis points.

This impact 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 2022 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
		2022		2021				2022		2021
Earnings per share (diluted)		$             2.15		$             2.03		6 %		$             5.97		$             6.71		(11) %
Less: comparability adjustments
Share-based compensation activity		0.00		0.05				0.10		0.29
Change from currency		(0.08)		—				(0.17)		—
Comparable EPS growth		2.23		1.98		13 %		6.04		6.42		(6) %
Amounts presented may not recalculate due to rounding.

 

Projected 2022 comparable EPS growth outlined in the 2022 Growth and Financial Performance Outlook section of this earnings release reflects adjustments including estimated positive share-based compensation activity of $0.10 and estimated negative year-over-year foreign currency exchange rate change impact of $0.25.

These impacts and those described in the constant currency note above reconcile reported EPS growth (including projected 2022 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 nine months ended September 30, 2022 and 2021. To estimate projected 2022 free cash flow, we have deducted projected purchases of property and equipment (also referred to as capital expenditures) of approximately $165 million. To calculate trailing twelve-month net income to free cash flow ratio for the twelve months ended September 30, 2022, we have deducted purchases of property and equipment of approximately $131 million from net cash provided from operating activities of approximately $580 million, divided by net income of approximately $670 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, 2021 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2022.

 

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,
				2022		2021		2022		2021
Revenue:		Revenue		$841,661		$810,421		$2,538,756		$2,414,270
Expenses and Income:		Cost of revenue		335,035		337,500		1,019,345		981,259
		Gross profit		506,626		472,921		1,519,411		1,433,011
		Sales and marketing		130,021		124,434		392,570		358,277
		General and administrative		83,764		82,098		243,201		226,194
		Research and development		48,013		40,427		211,402		115,703
		Income from operations		244,828		225,962		672,238		732,837
		Interest expense, net		(10,645)		(7,012)		(25,481)		(22,066)
		Income before provision for income taxes		234,183		218,950		646,757		710,771
		Provision for income taxes		53,245		43,772		139,875		128,698
Net Income:		Net income		180,938		175,178		506,882		582,073
		Less: Noncontrolling interest in subsidiary's earnings		—		(57)		—		(1)
		Net income attributable to stockholders		$180,938		$175,235		$506,882		$582,074
		Earnings per share: Basic		$2.17		$2.06		$6.04		$6.82
		Earnings per share: Diluted		$2.15		$2.03		$5.97		$6.71
		Shares outstanding: Basic		83,247		85,123		83,855		85,325
		Shares outstanding: Diluted		84,113		86,511		84,858		86,712

 

IDEXX Laboratories, Inc. and Subsidiaries
Selected Operating Information (Unaudited)
				Three Months Ended				Nine Months Ended
				September 30,		September 30,		September 30,		September 30,
				2022		2021		2022		2021
Operating Ratios		Gross profit		60.2 %		58.4 %		59.8 %		59.4 %
(as a percentage of revenue):		Sales, marketing, general and administrative expense		25.4 %		25.5 %		25.0 %		24.2 %
		Research and development expense		5.7 %		5.0 %		8.3 %		4.8 %
		Income from operations1		29.1 %		27.9 %		26.5 %		30.4 %
1Amounts presented may not recalculate due to rounding.

 

IDEXX Laboratories, Inc. and Subsidiaries
Segment Information
Amounts in thousands (Unaudited)
				Three Months Ended
				September 30, 2022		Percent of Revenue		September 30, 2021		Percent of Revenue
Revenue:		CAG		$764,990				$732,495
		Water		40,840				38,143
		LPD		28,452				29,126
		Other		7,379				10,657
		Total		$841,661				$810,421
Gross Profit:		CAG		$456,334		59.7 %		$423,871		57.9 %
		Water		29,406		72.0 %		26,694		70.0 %
		LPD		17,462		61.4 %		16,848		57.8 %
		Other		3,424		46.4 %		5,508		51.7 %
		Total		$506,626		60.2 %		$472,921		58.4 %
Income from Operations:		CAG		$221,454		28.9 %		$201,947		27.6 %
		Water		$19,924		48.8 %		$17,599		46.1 %
		LPD		$4,480		15.7 %		$3,600		12.4 %
		Other		($1,030)		(14.0) %		$2,816		26.4 %
		Total		$244,828		29.1 %		$225,962		27.9 %

 

IDEXX Laboratories, Inc. and Subsidiaries
Segment Information
Amounts in thousands (Unaudited)
				Nine Months Ended
				September 30, 2022		Percent of Revenue		September 30, 2021		Percent of Revenue
Revenue:		CAG		$2,310,261				$2,170,857
		Water		116,406				109,374
		LPD		89,211				101,920
		Other		22,878				32,119
		Total		$2,538,756				$2,414,270
Gross Profit:		CAG		$1,371,687		59.4 %		$1,277,531		58.8 %
		Water		82,502		70.9 %		75,906		69.4 %
		LPD		54,005		60.5 %		63,255		62.1 %
		Other		11,217		49.0 %		16,319		50.8 %
		Total		$1,519,411		59.8 %		$1,433,011		59.4 %
Income from Operations:		CAG		$601,105		26.0 %		$649,892		29.9 %
		Water		54,498		46.8 %		49,599		45.3 %
		LPD		14,447		16.2 %		24,276		23.8 %
		Other		2,188		9.6 %		9,070		28.2 %
		Total		$672,238		26.5 %		$732,837		30.4 %

 

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, 2022		September 30, 2021		Dollar Change		Reported Revenue Growth1		Percentage Change from Currency		Percentage Change from Acquisitions		Organic Revenue Growth1
Net Revenue
CAG		$764,990		$732,495		$32,495		4.4 %		(4.1 %)		0.1 %		8.4 %
United States		530,758		484,903		45,855		9.5 %		—		—		9.4 %
International		234,232		247,592		(13,360)		(5.4 %)		(11.8 %)		0.4 %		6.0 %
Water		40,840		38,143		2,697		7.1 %		(5.2 %)		0.4 %		11.8 %
United States		20,940		19,216		1,724		9.0 %		—		—		9.0 %
International		19,900		18,927		973		5.1 %		(10.8 %)		0.9 %		15.0 %
LPD		28,452		29,126		(674)		(2.3 %)		(9.2 %)		—		6.9 %
United States		4,452		4,177		275		6.6 %		—		—		6.6 %
International		24,000		24,949		(949)		(3.8 %)		(10.8 %)		—		7.0 %
Other		7,379		10,657		(3,278)		(30.8 %)		(0.1 %)		—		(30.7 %)
Total Company		$841,661		$810,421		$31,240		3.9 %		(4.2 %)		0.1 %		7.9 %
United States		560,292		514,343		45,949		8.9 %		—		—		8.9 %
International		281,369		296,078		(14,709)		(5.0 %)		(11.4 %)		0.4 %		6.1 %
		Three Months Ended
		September 30, 2022		September 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:		$667,309		$638,358		$28,951		4.5 %		(4.2 %)		0.2 %		8.6 %
IDEXX VetLab consumables		262,820		252,714		10,106		4.0 %		(5.4 %)		—		9.4 %
Rapid assay products		80,542		76,974		3,568		4.6 %		(1.9 %)		—		6.6 %
Reference laboratory diagnostic and consulting services		295,590		282,301		13,289		4.7 %		(3.6 %)		0.4 %		8.0 %
CAG Diagnostics services and accessories		28,357		26,369		1,988		7.5 %		(5.9 %)		—		13.4 %
CAG Diagnostics capital – instruments		35,176		39,401		(4,225)		(10.7 %)		(5.5 %)		—		(5.2 %)
Veterinary software, services and diagnostic imaging systems		62,505		54,736		7,769		14.2 %		(1.1 %)		—		15.3 %
Net CAG revenue		$764,990		$732,495		$32,495		4.4 %		(4.1 %)		0.1 %		8.4 %
		Three Months Ended
		September 30, 2022		September 30, 2021		Dollar Change		Reported Revenue Growth1		Percentage Change from Currency		Percentage Change from Acquisitions		Organic Revenue Growth1
CAG Diagnostics recurring revenue:		$667,309		$638,358		$28,951		4.5 %		(4.2 %)		0.2 %		8.6 %
United States		$459,077		$418,728		$40,349		9.6 %		—		—		9.6 %
International		$208,232		$219,630		($11,398)		(5.2 %)		(12.0 %)		0.5 %		6.3 %

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, 2022		September 30, 2021		Dollar Change		Reported Revenue Growth1		Percentage Change from Currency		Percentage Change from Acquisitions		Organic Revenue Growth1
Net Revenue
CAG		$2,310,261		$2,170,857		$139,404		6.4 %		(3.1 %)		0.9 %		8.6 %
United States		1,563,150		1,415,565		147,585		10.4 %		—		1.2 %		9.2 %
International		747,111		755,292		(8,181)		(1.1 %)		(8.8 %)		0.4 %		7.3 %
Water		116,406		109,374		7,032		6.4 %		(3.5 %)		0.1 %		9.8 %
United States		58,304		53,531		4,773		8.9 %		—		—		8.9 %
International		58,102		55,843		2,259		4.0 %		(6.9 %)		0.3 %		10.6 %
LPD		89,211		101,920		(12,709)		(12.5 %)		(5.2 %)		—		(7.3 %)
United States		12,054		11,441		613		5.4 %		—		—		5.4 %
International		77,157		90,479		(13,322)		(14.7 %)		(5.7 %)		—		(9.0 %)
Other		22,878		32,119		(9,241)		(28.8 %)		0.5 %		—		(29.2 %)
Total Company		$2,538,756		$2,414,270		$124,486		5.2 %		(3.2 %)		0.9 %		7.5 %
United States		1,646,023		1,502,219		143,804		9.6 %		—		1.1 %		8.5 %
International		892,733		912,051		(19,318)		(2.1 %)		(8.2 %)		0.4 %		5.7 %
		Nine Months Ended
		September 30, 2022		September 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:		$2,017,532		$1,916,938		$100,594		5.2 %		(3.2 %)		0.2 %		8.2 %
IDEXX VetLab consumables		796,072		755,158		40,914		5.4 %		(4.0 %)		—		9.4 %
Rapid assay products		242,542		230,472		12,070		5.2 %		(1.5 %)		—		6.8 %
Reference laboratory diagnostic and consulting services		894,795		851,757		43,038		5.1 %		(2.7 %)		0.4 %		7.3 %
CAG Diagnostics services and accessories		84,123		79,551		4,572		5.7 %		(4.3 %)		—		10.1 %
CAG Diagnostics capital – instruments		108,400		105,645		2,755		2.6 %		(4.9 %)		—		7.5 %
Veterinary software, services and diagnostic imaging systems		184,329		148,274		36,055		24.3 %		(0.9 %)		11.0 %		14.3 %
Net CAG revenue		$2,310,261		$2,170,857		$139,404		6.4 %		(3.1 %)		0.9 %		8.6 %
		Nine Months Ended
		September 30, 2022		September 30, 2021		Dollar Change		Reported Revenue Growth1		Percentage Change from Currency		Percentage Change from Acquisitions		Organic Revenue Growth1
CAG Diagnostics recurring revenue:		$2,017,532		$1,916,938		$100,594		5.2 %		(3.2 %)		0.2 %		8.2 %
United States		$1,351,936		$1,239,213		$112,723		9.1 %		—		0.1 %		9.0 %
International		$665,596		$677,725		($12,129)		(1.8 %)		(8.8 %)		0.5 %		6.5 %

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, 2022		December 31, 2021
Assets:		Current Assets:
		Cash and cash equivalents		$99,176		$144,454
		Accounts receivable, net		388,072		368,348
		Inventories		354,975		269,030
		Other current assets		216,636		173,823
		Total current assets		1,058,859		955,655
		Property and equipment, net		612,405		587,667
		Other long-term assets, net		968,803		893,881
		Total assets		$2,640,067		$2,437,203
Liabilities and Stockholders'
Equity:		Current Liabilities:
		Accounts payable		$110,144		$116,140
		Accrued liabilities		405,992		458,909
		Line of credit		633,000		73,500
		Current portion of long-term debt		—		74,996
		Deferred revenue		40,809		40,034
		Total current liabilities		1,189,945		763,579
		Long-term debt, net of current portion		760,814		775,205
		Other long-term liabilities, net		213,309		208,427
		Total long-term liabilities		974,123		983,632
		Total stockholders' equity		475,999		689,992
		Total liabilities and stockholders' equity		$2,640,067		$2,437,203

 

IDEXX Laboratories, Inc. and Subsidiaries
Select Balance Sheet Information (Unaudited)
				September 30, 2022		June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021
Selected Balance Sheet Information:		Days sales outstanding1		43.4		43.2		42.0		42.4		42.7
		Inventory turns2		1.3		1.5		1.6		2.0		1.9

 

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
				September 30, 2022		September 30, 2021
Operating:		Cash Flows from Operating Activities:
		Net income		$506,882		$582,073
		Non-cash adjustments to net income		92,271		118,261
		Changes in assets and liabilities		(229,597)		(154,752)
		Net cash provided by operating activities		369,556		545,582
Investing:		Cash Flows from Investing Activities:
		Purchases of property and equipment		(99,609)		(87,761)
		Acquisition of intangible assets, businesses and equity investment		(46,512)		(161,166)
		Net cash used by investing activities		(146,121)		(248,927)
Financing:		Cash Flows from Financing Activities:
		Borrowings under revolving credit facilities, net		559,500		—
		Payment of senior debt		(75,000)		(50,000)
		Payments for the acquisition-related contingent consideration and holdbacks		(5,730)		(1,500)
		Repurchases of common stock		(745,691)		(502,021)
		Proceeds from exercises of stock options and employee stock purchase plans		23,257		37,428
		Shares withheld for statutory tax withholding payments on restricted stock		(10,552)		(15,501)
		Net cash used by financing activities		(254,216)		(531,594)
		Net effect of changes in exchange rates on cash		(14,497)		(3,786)
		Net decrease in cash and cash equivalents		(45,278)		(238,725)
		Cash and cash equivalents, beginning of period		144,454		383,928
		Cash and cash equivalents, end of period		$99,176		$145,203

 

IDEXX Laboratories, Inc. and Subsidiaries
Free Cash Flow
Amounts in thousands except per share data (Unaudited)
				Nine Months Ended
				September 30, 2022		September 30, 2021
Free Cash Flow:		Net cash provided by operating activities		$        369,556		$        545,582
		Investing cash flows attributable to purchases of property and equipment		(99,609)		(87,761)
		Free cash flow1		$        269,947		$        457,821
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, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Shares repurchased in the open market		453		274		1,764		892
Shares acquired through employee surrender for statutory tax withholding		—		1		21		29
Total shares repurchased		453		275		1,785		921
Cost of shares repurchased in the open market		$        166,423		$        183,315		$        742,661		$        510,937
Cost of shares for employee surrenders		162		515		10,552		15,501
Total cost of shares		$        166,585		$        183,830		$        753,213		$        526,438
Average cost per share – open market repurchases		$          367.55		$          668.33		$          421.12		$          572.10
Average cost per share – employee surrenders		$          387.07		$          688.35		$          502.26		$          547.90
Average cost per share – total		$          367.56		$          668.38		$          422.07		$          571.36

 

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

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SOURCE IDEXX Laboratories, Inc.

FAQ

What were IDEXX's Q3 2022 revenue and earnings results?

IDEXX reported Q3 2022 revenue of $842 million with an EPS of $2.15.

How did CAG Diagnostics perform in Q3 2022?

CAG Diagnostics achieved 5% reported and 9% organic recurring revenue growth.

What is IDEXX's updated revenue guidance for 2022?

IDEXX updated its 2022 revenue guidance to 3.5%-4.5% growth.

How much did EPS increase in Q3 2022?

EPS increased by 6% as reported and 13% on a comparable basis.

What impact did foreign exchange have on IDEXX's EPS guidance?

Foreign exchange and interest rate projections combined for a $0.05 impact on EPS guidance.