IDEXX Laboratories Announces Third Quarter Results

Rhea-AI Summary

IDEXX Laboratories, Inc. reports third quarter revenue growth of 9% reported and 8% organic. EPS increases by 18% as reported and 16% on a comparable basis. Adjusts 2023 revenue guidance to $3,635 million - $3,650 million. Updates 2023 EPS outlook to $9.74 - $9.90.

• Achieves third quarter revenue growth of 9% reported and 8% organic, driven by CAG Diagnostics recurring revenue growth of 10% reported and 9% organic
• Solid revenue growth reflects benefits from IDEXX execution drivers including double-digit year-over-year installed base growth across global premium instrument platforms
• Delivers EPS of $2.53, representing 18% growth as reported and 16% on a comparable basis, supported by operating margin expansion of 100 basis points as reported and 140 basis points on a comparable basis
• Adjusts 2023 revenue guidance to $3,635 million - $3,650 million, reflecting 7.9% - 8.4% growth as reported and 8.3% - 8.8% organically, driven by projected CAG Diagnostics recurring revenue growth of 9.4% - 9.9% as reported and 9.8% - 10.3% organically
• Updates 2023 EPS outlook to $9.74 - $9.90, a year-over-year increase of 21% - 23% as reported and 25% - 27% on a comparable basis, including ~12% combined EPS growth benefit from a customer contract resolution payment in Q1 2023 and lapping of discrete 2022 R&D investments

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 $916 million for the third quarter of 2023, an increase of 9% reported and 8% organic, driven by Companion Animal Group ("CAG") growth of 9% reported and 8% organic and Water revenue growth of 9% reported and 7% organic. CAG Diagnostics recurring revenue growth of 10% reported and 9% organic was supported by sustained benefits from IDEXX execution drivers and reflects high single-digit organic growth in the U.S. and double-digit organic growth internationally. Commercial engagement and sustained high interest in adopting IDEXX innovation drove high levels of premium instrument placements, supporting 11% annual growth in IDEXX's global premium instrument installed base. Veterinary software, services and diagnostic imaging systems revenue grew 14% as reported and 13% organically, reflecting high recurring revenue growth and ongoing momentum in cloud-based software placements.

Third quarter earnings per diluted share (“EPS”) were $2.53, an increase of 18% as reported and 16% on a comparable basis, including $0.04 per share in tax benefits from share-based compensation and $0.01 per share negative impact from currency changes.

"Strong execution by IDEXX teams and sustained interest in adopting IDEXX's differentiated multi-modality testing and workflow solutions helped deliver solid organic revenue gains and strong financial results in the third quarter," said Jay Mazelsky, President and Chief Executive Officer. "Busy veterinarians appreciate that they must very often first test before they can determine the most optimal treatment course, which drives the medical services activity in their practice. They also want these testing solutions to seamlessly connect to a modern cloud-based PIMS, and have shown an increased appetite to invest in software that supports higher staff productivity and client communications. IDEXX remains very well positioned to address these needs while driving development of the companion animal diagnostics sector through relevant innovation and commercial engagement."

Third Quarter Performance Highlights

Companion Animal Group

The Companion Animal Group generated revenue growth of 9% as reported and 8% organic for the quarter. Solid growth was supported by CAG Diagnostics recurring revenue growth of 10% on a reported basis and 9% organically. U.S. CAG Diagnostics recurring revenue organic growth of 8.3% included an ~50 basis point negative impact from fewer equivalent selling days and remained solidly above sector growth levels in the third quarter, reflected in an ~1,100 basis point growth premium to U.S. same store clinical visit growth.

Additional U.S. companion animal practice key metrics are available in the Q3 2023 Earnings Snapshot accessible on the IDEXX website, www.idexx.com/investors.

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

• IDEXX VetLab^® consumables generated 13% reported and 11% organic revenue growth, with double-digit gains across U.S. and international regions supported by benefits from higher net price realization and an expanded global premium instrument installed base.
• Reference laboratory diagnostic and consulting services generated 8% reported and 7% organic revenue growth, driven by high single-digit gains in the U.S. and improved, mid-to-high single-digit growth in international regions.
• Rapid assay products revenues grew 9% as reported and 8% organically, driven by strong growth in the U.S., supported by benefits from higher net price realization.

Veterinary software, services and diagnostic imaging systems revenues grew 14% as reported and 13% organically, driven by continued high levels of organic gains in recurring software and diagnostic imaging revenues. Strong demand for cloud-based products continues to support momentum in software solution placements and customer gains.

Water

Water revenues grew 9% on a reported basis and 7% on an organic basis for the quarter, reflecting solid gains across regions, including benefits from net price improvement.

Livestock, Poultry and Dairy (“LPD”)

LPD revenues grew 5% on a reported basis and grew 2% organically for the quarter, as solid gains in the U.S. were offset by lower herd health screening levels internationally.

Gross Profit and Operating Profit

Gross profits increased 8% as reported and on a comparable basis. Gross margin of 59.9% decreased 30 basis points as reported and increased 30 basis points on a comparable basis, supported by benefits from net price gains, business mix and improvement in software service gross margins.

Operating margin was 30.1% in the quarter, higher than the prior year by 100 basis points as reported and 140 basis points on a comparable basis. Operating margin expansion reflects gross margin gains benefiting from strong CAG Diagnostics recurring revenue growth and operating expense growth of 4% as reported and on a comparable basis. Reported operating expense growth reflects benefits from cost controls and lapping of prior year R&D and commercial investments.

2023 Growth and Financial Performance Outlook

The Company is updating its full year revenue growth outlook range to 7.9% - 8.4% as reported and 8.3% - 8.8% organically. This updated outlook is centered on the lower end of the Company's most recent full year guidance range and at the midpoint of its original full year organic growth estimates, reflecting third quarter results and continued headwinds to clinical visit growth rates globally. The overall reported revenue range was decreased by $20 million for updated foreign exchange impact estimates compared to earlier guidance estimates, reflecting the recent strengthening of the U.S. dollar.

The Company raised its full year reported operating margin outlook to 29.6% - 29.8%, incorporating strong year-to-date profit performance. Operating margin guidance includes an increased ~70 basis points in year-over-year unfavorable net margin impact from updated foreign currency exchange rate changes, including effects from comparisons to prior year foreign exchange hedge gains.

The Company updated its EPS outlook range to $9.74 - $9.90, increasing midpoint estimates by $0.05 per share and maintaining its high end EPS outlook. The Company is maintaining a similar operational outlook at midpoint, as positive revisions to the Company's operating margin outlook offset adjustments to organic revenue growth estimates. Positive adjustments of ~$0.11 per share to projections for interest expense and effective tax rates, including share-based compensation tax benefits, offset an ~$0.05 negative EPS impact related to updated foreign currency exchange rate estimates — which is now estimated to provide a $0.25 per share headwind to full year EPS results.

The following table provides the Company's updated outlook for annual key financial metrics in 2023:

Amounts in millions except per share data and percentages

Growth and Financial Performance Outlook		2023
Revenue		$3,635	-	$3,650
Reported growth		7.9%	-	8.4%
Organic growth		8.3%	-	8.8%
CAG Diagnostics Recurring Revenue Growth
Reported growth		9.4%	-	9.9%
Organic growth		9.8%	-	10.3%
Operating Margin		29.6%	-	29.8%
Operating margin expansion		290 bps	-	310 bps
Negative impact of foreign exchange		~ 70 bps
Comparable margin expansion		360 bps	-	380 bps
Positive impact of discrete in-license of technology and customer contract resolution		~ 280 bps
EPS		$9.74	-	$9.90
Reported growth		21%	-	23%
Comparable growth		25%	-	27%
Positive impact of discrete in-license of technology and customer contract resolution		~ 12%
Other Key Metrics
Net interest expense		~ $37
Share-based compensation tax benefit		~ $12
Share-based compensation tax rate benefit		~ 1%
Effective tax rate		21%	-	21.5%
Share-based compensation EPS impact		~ $0.14
Reduction in average shares outstanding		0.5%	-	1%
Operating Cash Flow		100% - 110% of net income
Free Cash Flow		85% - 90% of net income
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 2023.

Estimated Foreign Currency Exchange Rate Impacts		2023
Revenue growth rate impact		(~ 40 bps)
CAG Diagnostics recurring revenue growth rate impact		(~ 40 bps)
Operating margin growth impact		(~ 70 bps)
EPS impact		(~ $0.25)
EPS growth impact		(~ 3%)
Go-Forward Foreign Currency Exchange Rate Assumptions		2023
In U.S. dollars
euro		$1.05
British pound		$1.21
Canadian dollar		$0.73
Australian dollar		$0.63
Relative to the U.S. dollar
Japanese yen		¥151
Chinese renminbi		¥7.40
Brazilian real		R$5.14

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 2023 results and management’s outlook. To participate in the conference call, dial 1-800-289-0459 or 1-773-377-9037 and reference passcode 917383. 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 nearly 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 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 "2023 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, 2022 and in the corresponding sections of the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023, June 30, 2023 and September 30, 2023, 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 2023 results as follows: decreased gross profit growth by 0%, decreased gross margin growth by 60 basis points, increased operating expense growth by 0%, decreased operating profit growth by 1%, decreased operating profit margin growth by 40 basis points, and decreased EPS growth by 0%. 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, 2023 and refer to the 2023 Growth and Financial Performance Outlook section of this earnings release for estimated foreign currency exchange rate impacts on 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 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 months and nine months ended September 30, 2023. Please refer to the constant currency note above for a summary of foreign currency exchange rate impacts. Please refer to the 2023 Growth and Financial Performance Outlook section of this earnings release for estimated full year 2023 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 not expected to have an impact on projected full year 2023 revenue growth or 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		2023				2022							2023				2022
Gross Profit (as reported)		$	547,982			$	506,626			8	%		$	1,663,803			$	1,519,411			10	%
Gross margin			59.9	%			60.2	%		(30	)bps			60.3	%			59.8	%		40	bps
Less: comparability adjustments
Change from currency			(290	)			—							(24,793	)			—
Comparable gross profit growth		$	548,272			$	506,626			8	%		$	1,688,596			$	1,519,411			11	%
Comparable gross margin and gross margin gain (or growth)			60.5	%			60.2	%		30	bps			60.9	%			59.8	%		100	bps
Operating expenses (as reported)		$	272,699			$	261,798			4	%		$	811,977			$	847,173			(4	)%
Less: comparability adjustments
Change from currency			1,008				—							(3,797	)			—
Comparable operating expense growth		$	271,691			$	261,798			4	%		$	815,774			$	847,173			(4	)%
Income from operations (as reported)		$	275,283			$	244,828			12	%		$	851,826			$	672,238			27	%
Operating margin			30.1	%			29.1	%		100	bps			30.9	%			26.5	%		440	bps
Less: comparability adjustments
Change from currency			(1,298	)			—							(20,996	)			—
Comparable operating profit growth		$	276,581			$	244,828			13	%		$	872,822			$	672,238			30	%
Comparable operating margin and operating margin gain (or growth)			30.5	%			29.1	%		140	bps			31.5	%			26.5	%		500	bps
Amounts presented may not recalculate due to rounding.

Projected 2023 comparable operating margin expansion outlined in the 2023 Growth and Financial Performance Outlook section of this earnings release reflects projected full year 2023 reported operating margin adjusted for estimated negative year-over-year foreign currency exchange rate change impact of approximately 70 basis points.

These impacts described above reconcile reported gross profit growth, gross margin gain, operating expense growth, operating profit growth and operating margin gain (including projected 2023 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
		2023				2022						2023				2022
Earnings per share (diluted)		$	2.53			$	2.15		18	%		$	7.75			$	5.97		30	%
Less: comparability adjustments
Share-based compensation activity			0.04				—						0.14				0.10
Change from currency			(0.01	)			—						(0.19	)			—
Comparable EPS growth			2.50				2.15		16	%			7.80				5.87		33	%
Amounts presented may not recalculate due to rounding.

Projected 2023 comparable EPS growth outlined in the 2023 Growth and Financial Performance Outlook section of this earnings release reflects adjustments including estimated positive share-based compensation activity of $0.14 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 2023 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, 2023 and 2022. To estimate projected 2023 free cash flow, we have deducted projected purchases of property and equipment (also referred to as capital expenditures) of approximately $160 - $180 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, 2023, we have deducted purchases of property and equipment of approximately $150 million from net cash provided from operating activities of approximately $830 million, divided by net income of approximately $823 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, 2022 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.

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,
				2023				2022				2023				2022
Revenue:		Revenue		$	915,527			$	841,661			$	2,759,352			$	2,538,756
Expenses and Income:		Cost of revenue			367,545				335,035				1,095,549				1,019,345
		Gross profit			547,982				506,626				1,663,803				1,519,411
		Sales and marketing			135,698				130,021				424,034				392,570
		General and administrative			89,034				83,764				248,804				243,201
		Research and development			47,967				48,013				139,139				211,402
		Income from operations			275,283				244,828				851,826				672,238
		Interest expense, net			(7,392	)			(10,645	)			(30,318	)			(25,481	)
		Income before provision for income taxes			267,891				234,183				821,508				646,757
		Provision for income taxes			55,660				53,245				170,987				139,875
Net Income:		Net income attributable to stockholders		$	212,231			$	180,938			$	650,521			$	506,882
		Earnings per share: Basic		$	2.55			$	2.17			$	7.83			$	6.04
		Earnings per share: Diluted		$	2.53			$	2.15			$	7.75			$	5.97
		Shares outstanding: Basic			83,097				83,247				83,058				83,855
		Shares outstanding: Diluted			83,993				84,113				83,990				84,858

IDEXX Laboratories, Inc. and Subsidiaries
Selected Operating Information (Unaudited)
				Three Months Ended						Nine Months Ended
				September 30,			September 30,			September 30,			September 30,
				2023			2022			2023			2022
Operating Ratios		Gross profit		59.9	%		60.2	%		60.3	%		59.8	%
(as a percentage of revenue):		Sales, marketing, general and administrative expense		24.5	%		25.4	%		24.4	%		25.0	%
		Research and development expense		5.2	%		5.7	%		5.0	%		8.3	%
		Income from operations1		30.1	%		29.1	%		30.9	%		26.5	%
1Amounts presented may not recalculate due to rounding.

IDEXX Laboratories, Inc. and Subsidiaries
Segment Information
Amounts in thousands (Unaudited)
				Three Months Ended
				September 30, 2023				Percent of Revenue			September 30, 2022				Percent of Revenue
Revenue:		CAG		$	837,160						$	764,990
		Water			44,450							40,840
		LPD			29,747							28,452
		Other			4,170							7,379
		Total		$	915,527						$	841,661
Gross Profit:		CAG		$	499,291			59.6	%		$	456,334			59.7	%
		Water			31,034			69.8	%			29,406			72.0	%
		LPD			15,836			53.2	%			17,462			61.4	%
		Other			1,821			43.7	%			3,424			46.4	%
		Total		$	547,982			59.9	%		$	506,626			60.2	%
Income from Operations:		CAG		$	253,358			30.3	%		$	221,454			28.9	%
		Water			20,328			45.7	%			19,924			48.8	%
		LPD			2,405			8.1	%			4,480			15.7	%
		Other			(808	)		(19.4	)%			(1,030	)		(14.0	)%
		Total		$	275,283			30.1	%		$	244,828			29.1	%

				Nine Months Ended
				September 30, 2023				Percent of Revenue			September 30, 2022			Percent of Revenue
Revenue:		CAG		$	2,531,091						$	2,310,261
		Water			126,362							116,406
		LPD			88,866							89,211
		Other			13,033							22,878
		Total		$	2,759,352						$	2,538,756
Gross Profit:		CAG		$	1,523,757			60.2	%		$	1,371,687		59.4	%
		Water			88,621			70.1	%			82,502		70.9	%
		LPD			46,975			52.9	%			54,005		60.5	%
		Other			4,450			34.1	%			11,217		49.0	%
		Total		$	1,663,803			60.3	%		$	1,519,411		59.8	%
Income from Operations:		CAG		$	790,617			31.2	%		$	601,105		26.0	%
		Water			57,119			45.2	%			54,498		46.8	%
		LPD			5,664			6.4	%			14,447		16.2	%
		Other			(1,574	)		(12.1	)%			2,188		9.6	%
		Total		$	851,826			30.9	%		$	672,238		26.5	%

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, 2023			September 30, 2022			Dollar Change				Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions			Organic Revenue Growth1
Net Revenue
CAG		$	837,160		$	764,990		$	72,170			9.4	%		1.0	%		—			8.4	%
United States			573,830			530,758			43,072			8.1	%		—			—			8.1	%
International			263,330			234,232			29,098			12.4	%		3.4	%		—			9.0	%
Water			44,450			40,840			3,610			8.8	%		1.2	%		1.1	%		6.6	%
United States			22,804			20,940			1,864			8.9	%		—			0.7	%		8.2	%
International			21,646			19,900			1,746			8.8	%		2.4	%		1.5	%		4.9	%
LPD			29,747			28,452			1,295			4.6	%		2.5	%		—			2.0	%
United States			5,040			4,452			588			13.2	%		—			—			13.2	%
International			24,707			24,000			707			2.9	%		2.9	%		—			—
Other			4,170			7,379			(3,209	)		(43.5	%)		0.1	%		—			(43.5	%)
Total Company		$	915,527		$	841,661		$	73,866			8.8	%		1.1	%		0.1	%		7.6	%
United States			603,046			560,292			42,754			7.6	%		—			—			7.6	%
International			312,481			281,369			31,112			11.1	%		3.3	%		0.1	%		7.7	%

		Three Months Ended
		September 30, 2023			September 30, 2022			Dollar Change				Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions		Organic Revenue Growth1
Net CAG Revenue
CAG Diagnostics recurring revenue:		$	733,958		$	667,309		$	66,649			10.0	%		1.1	%		—		8.9	%
IDEXX VetLab consumables			296,042			262,820			33,222			12.6	%		1.2	%		—		11.4	%
Rapid assay products			87,562			80,542			7,020			8.7	%		0.5	%		—		8.2	%
Reference laboratory diagnostic and consulting services			320,294			295,590			24,704			8.4	%		1.0	%		—		7.3	%
CAG Diagnostics services and accessories			30,060			28,357			1,703			6.0	%		1.3	%		—		4.7	%
CAG Diagnostics capital – instruments			32,254			35,176			(2,922	)		(8.3	%)		1.9	%		—		(10.2	%)
Veterinary software, services and diagnostic imaging systems			70,948			62,505			8,443			13.5	%		0.2	%		—		13.3	%
Net CAG revenue		$	837,160		$	764,990		$	72,170			9.4	%		1.0	%		—		8.4	%

		Three Months Ended
		September 30, 2023			September 30, 2022			Dollar Change			Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions		Organic Revenue Growth1
CAG Diagnostics recurring revenue:		$	733,958		$	667,309		$	66,649		10.0	%		1.1	%		—		8.9	%
United States			497,109			459,077			38,032		8.3	%		—			—		8.3	%
International			236,849			208,232			28,617		13.7	%		3.4	%		—		10.3	%
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, 2023			September 30, 2022			Dollar Change				Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions			Organic Revenue Growth1
Net Revenue
CAG		$	2,531,091		$	2,310,261		$	220,830			9.6	%		(0.5	%)		—			10.1	%
United States			1,732,752			1,563,150			169,602			10.8	%		—			—			10.8	%
International			798,339			747,111			51,228			6.9	%		(1.6	%)		—			8.5	%
Water			126,362			116,406			9,956			8.6	%		(0.9	%)		1.5	%		8.0	%
United States			63,932			58,304			5,628			9.7	%		—			0.7	%		8.9	%
International			62,430			58,102			4,328			7.4	%		(1.8	%)		2.2	%		7.0	%
LPD			88,866			89,211			(345	)		(0.4	%)		(0.7	%)		—			0.3	%
United States			14,005			12,054			1,951			16.2	%		—			—			16.2	%
International			74,861			77,157			(2,296	)		(3.0	%)		(0.8	%)		—			(2.2	%)
Other			13,033			22,878			(9,845	)		(43.0	%)		—			—			(43.0	%)
Total Company		$	2,759,352		$	2,538,756		$	220,596			8.7	%		(0.6	%)		0.1	%		9.2	%
United States			1,815,066			1,646,023			169,043			10.3	%		—			—			10.2	%
International			944,286			892,733			51,553			5.8	%		(1.5	%)		0.1	%		7.2	%

		Nine Months Ended
		September 30, 2023			September 30, 2022			Dollar Change				Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions		Organic Revenue Growth1
Net CAG Revenue
CAG Diagnostics recurring revenue:		$	2,223,336		$	2,017,532		$	205,804			10.2	%		(0.6	%)		—		10.8	%
IDEXX VetLab consumables			890,891			796,072			94,819			11.9	%		(0.8	%)		—		12.7	%
Rapid assay products			266,934			242,542			24,392			10.1	%		(0.4	%)		—		10.4	%
Reference laboratory diagnostic and consulting services			973,580			894,795			78,785			8.8	%		(0.4	%)		—		9.2	%
CAG Diagnostics services and accessories			91,931			84,123			7,808			9.3	%		(0.8	%)		—		10.1	%
CAG Diagnostics capital – instruments			99,452			108,400			(8,948	)		(8.3	%)		(0.4	%)		—		(7.8	%)
Veterinary software, services and diagnostic imaging systems			208,303			184,329			23,974			13.0	%		(0.3	%)		—		13.3	%
Net CAG revenue		$	2,531,091		$	2,310,261		$	220,830			9.6	%		(0.5	%)		—		10.1	%

		Nine Months Ended
		September 30, 2023			September 30, 2022			Dollar Change			Reported Revenue Growth1			Percentage Change from Currency			Percentage Change from Acquisitions		Organic Revenue Growth1
CAG Diagnostics recurring revenue:		$	2,223,336		$	2,017,532		$	205,804		10.2	%		(0.6	%)		—		10.8	%
United States			1,505,837			1,351,936			153,901		11.4	%		—			—		11.4	%
International			717,499			665,596			51,903		7.8	%		(1.7	%)		—		9.5	%
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, 2023			December 31, 2022
Assets:		Current Assets:
		Cash and cash equivalents		$	331,696		$	112,546
		Accounts receivable, net			452,699			400,619
		Inventories			393,974			367,823
		Other current assets			205,861			220,489
		Total current assets			1,384,230			1,101,477
		Property and equipment, net			687,101			649,474
		Other long-term assets, net			1,015,073			995,814
		Total assets		$	3,086,404		$	2,746,765
Liabilities and Stockholders'
Equity:		Current Liabilities:
		Accounts payable		$	112,609		$	110,221
		Accrued liabilities			420,312			433,662
		Line of credit			250,000			579,000
		Current portion of long-term debt			149,990			74,982
		Deferred revenue			37,282			37,938
		Total current liabilities			970,193			1,235,803
		Long-term debt, net of current portion			618,813			694,387
		Other long-term liabilities, net			199,991			207,838
		Total long-term liabilities			818,804			902,225
		Total stockholders' equity			1,297,407			608,737
		Total liabilities and stockholders' equity		$	3,086,404		$	2,746,765

IDEXX Laboratories, Inc. and Subsidiaries
Selected Balance Sheet Information (Unaudited)
				September 30, 2023		June 30, 2023		March 31, 2023		December 31, 2022		September 30, 2022
Selected Balance Sheet Information:		Days sales outstanding1		45.6		43.9		42.9		43.4		43.4
		Inventory turns2		1.3		1.3		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 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, 2023				September 30, 2022
Operating:		Cash Flows from Operating Activities:
		Net income		$	650,521			$	506,882
		Non-cash adjustments to net income			120,390				92,271
		Changes in assets and liabilities			(114,252	)			(229,597	)
		Net cash provided by operating activities			656,659				369,556
Investing:		Cash Flows from Investing Activities:
		Purchases of property and equipment			(101,075	)			(99,609	)
		Equity investment			—				(25,000	)
		Acquisition of intangible assets			—				(10,000	)
		Acquisition of a business, net of cash acquired			—				(11,512	)
		Proceeds from net investment hedges			6,256				—
		Net cash used by investing activities			(94,819	)			(146,121	)
Financing:		Cash Flows from Financing Activities:
		(Repayments) borrowings under credit facility, net			(329,000	)			559,500
		Payment of senior debt			—				(75,000	)
		Payments for the acquisition-related contingent consideration and holdbacks			(1,879	)			(5,730	)
		Repurchases of common stock			(35,070	)			(745,691	)
		Proceeds from exercises of stock options and employee stock purchase plans			35,704				23,257
		Shares withheld for statutory tax withholding payments on restricted stock			(9,907	)			(10,552	)
		Net cash used by financing activities			(340,152	)			(254,216	)
		Net effect of changes in exchange rates on cash			(2,538	)			(14,497	)
		Net increase (decrease) in cash and cash equivalents			219,150				(45,278	)
		Cash and cash equivalents, beginning of period			112,546				144,454
		Cash and cash equivalents, end of period		$	331,696			$	99,176

IDEXX Laboratories, Inc. and Subsidiaries
Free Cash Flow
Amounts in thousands except per share data (Unaudited)
				Three Months Ended								Nine Months Ended
				September 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
Free Cash Flow:		Net cash provided by operating activities		$	272,433			$	189,000			$	656,659			$	369,556
		Investing cash flows attributable to purchases of property and equipment			(34,094	)			(37,685	)			(101,075	)			(99,609	)
		Free cash flow1		$	238,339			$	151,315			$	555,584			$	269,947
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, 2023			September 30, 2022			September 30, 2023			September 30, 2022
Shares repurchased in the open market			65			453			65			1,764
Shares acquired through employee surrender for statutory tax withholding			1			—			20			21
Total shares repurchased			66			453			85			1,785
Cost of shares repurchased in the open market		$	35,070		$	166,423		$	35,070		$	742,661
Cost of shares for employee surrenders			231			162			9,907			10,552
Total cost of shares		$	35,301		$	166,585		$	44,977		$	753,213
Average cost per share – open market repurchases		$	536.03		$	367.55		$	536.03		$	421.12
Average cost per share – employee surrenders		$	506.74		$	387.07		$	503.43		$	502.26
Average cost per share – total		$	535.83		$	367.56		$	528.49		$	422.07

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231031725061/en/

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

Source: IDEXX Laboratories, Inc.

FAQ

What is the revenue growth reported by IDEXX Laboratories in the third quarter?

IDEXX Laboratories reports a revenue growth of 9% reported and 8% organic in the third quarter.

What is the increase in EPS for IDEXX Laboratories in the third quarter?

EPS for IDEXX Laboratories increases by 18% as reported and 16% on a comparable basis in the third quarter.

What is the adjusted 2023 revenue guidance for IDEXX Laboratories?

IDEXX Laboratories adjusts the 2023 revenue guidance to $3,635 million - $3,650 million.

What is the updated 2023 EPS outlook for IDEXX Laboratories?

IDEXX Laboratories updates the 2023 EPS outlook to $9.74 - $9.90.