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IDEXX Laboratories, Inc. (IDXX - Free Report) posted third-quarter 2021 earnings per share (EPS) of $2.03, reflecting a 20.1% year-over-year rise. The figure surpassed the Zacks Consensus Estimate by 7.9%.
Comparable constant-currency EPS of $1.96 in the third quarter of 2021 reflects year-over-year growth of 12%.
Revenues in Detail
Third-quarter revenues grew 12.3% year over year to $810.4 million. Organically, growth was 10%. The metric surpassed the Zacks Consensus Estimate by 2.2%.
The year-over-year upside was primarily driven by 13% reported and 11% organic growth in global Companion Animal Group (CAG) Diagnostics’ recurring revenues and 34% reported and 33% organic growth in CAG Diagnostics capital instrument revenues. Overall revenue growth was also supported by 15% reported and 13% organic revenue growth in the Water business.
Segmental Analysis
IDEXX derives revenues from four operating segments — CAG, Water, Livestock, Poultry and Dairy (LPD), and Other.
In the third quarter, CAG revenues rose 15% (up 13% organically) year over year to $732.5 million. The Water segment’s revenues also grew 15% (up 13% organically) year over year to $38.1 million. However, LPD revenues dropped 21% (down 23% organically) to $29.1 million. Revenues at the Other segment fell 21.2% on a reported basis to $10.7 million.
Margins
Gross profit in the third quarter rose 11.9% to $472.9 million. However, gross margin contracted 19 basis points (bps) to 58.4% on a 12.8% rise in the cost of revenues to $337.5 million.
Sales and marketing expenses rose 15% to $124.4 million, while general and administrative expenses were down 21.8% to $82.1 million. Research and development expenses climbed 7.8% to $40.4 million.
Overall, operating profit in the reported quarter was $225.9 million, reflecting an improvement of 31.5% year over year. The operating margin in the quarter expanded 407 bps to 27.9%.
IDEXX Laboratories, Inc. Price, Consensus and EPS Surprise
IDEXX exited the third quarter of 2021 with cash and cash equivalents of $145.2 million compared with $232.1 million recorded at the end of second-quarter 2021. Total debt (including current portion) at the end of the third quarter of 2021 was $853 million compared with total debt of $905.1 million at the end of the second quarter.
Cumulative net cash provided by operating activities at the end of the third quarter of 2021 was $545.6 million compared with $429.1 million a year ago.
2021 Guidance
The company narrowed its revenue expectation for the year to the range of $3,185-$3,200 million, suggesting year-over-year growth of 17.5-18% on a reported and 15.5-16% on an organic basis. This compares with the previously-provided revenue guidance of $3,170-$3,205 million, which indicated growth of 17-18.5% on a reported and 14.5-16% on an organic basis. The Zacks Consensus Estimate for the same is currently pegged at $3.19 billion.
CAG Diagnostics’ recurring revenues are now expected to grow 18.5-19.5% on a reported basis and 17-17.5% on an organic basis (narrowed from the previously-issued guidance of growth of 18-19.5% on a reported basis and 16-17.5% on an organic basis).
Further, IDEXX raised the full-year EPS guidance to the range of $8.30-$8.38, indicating growth of 24-25% on a reported basis (from the earlier outlook of $8.20-$8.36, indicating reported growth of 22-25%). Comparable constant currency growth is expected in the range of 26-27%, from the previous range of 25-27%. The Zacks Consensus Estimate for full-year EPS is currently pegged at $8.36.
Our Take
IDEXX exited the third quarter of 2021 with better-than-expected results. Its organic revenue growth was encouraging. The top line was driven by strong sales at the CAG and Water businesses. Improved operating margin was an upside too.
On the flip side, LPD revenues declined in the quarter, constrained by comparisons to high prior-year levels and additional impacts in China related to changes in local ASF disease management approaches, lower pork prices and changes in government requirements related to livestock infectious disease testing programs. Further, the contraction of gross margin and escalating operating costs are concerns.
Zacks Rank and Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Thermo Fisher Scientific Inc. (TMO - Free Report) , SARTORIUS (SARTF - Free Report) and West Pharmaceutical Services, Inc. (WST - Free Report) .
Thermo Fisher, carrying a Zacks Rank #1 (Strong Buy), reported third-quarter 2021 adjusted EPS of $5.76, which beat the Zacks Consensus Estimate by 23.3%. Third-quarter revenues of $9.33 billion outpaced the consensus mark by 12%. You can see the complete list of today’s Zacks #1 Rank stocks here.
SARTORIUS reported third-quarter 2021 adjusted EPS of $2.55, surpassing the Zacks Consensus Estimate by 7.6%. Revenues of $1.06 billion surpassed the Zacks Consensus Estimate by 5.2%. It currently carries a Zacks Rank #2 (Buy).
West Pharmaceutical reported third-quarter 2021 adjusted EPS of $2.06, which surpassed the Zacks Consensus Estimate by 13.2%. Revenues of $706.5 million outpaced the Zacks Consensus Estimate by 3.2%. It currently carries a Zacks Rank #2.
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IDEXX (IDXX) Q3 Earnings Beat Estimates, Gross Margin Falls
IDEXX Laboratories, Inc. (IDXX - Free Report) posted third-quarter 2021 earnings per share (EPS) of $2.03, reflecting a 20.1% year-over-year rise. The figure surpassed the Zacks Consensus Estimate by 7.9%.
Comparable constant-currency EPS of $1.96 in the third quarter of 2021 reflects year-over-year growth of 12%.
Revenues in Detail
Third-quarter revenues grew 12.3% year over year to $810.4 million. Organically, growth was 10%. The metric surpassed the Zacks Consensus Estimate by 2.2%.
The year-over-year upside was primarily driven by 13% reported and 11% organic growth in global Companion Animal Group (CAG) Diagnostics’ recurring revenues and 34% reported and 33% organic growth in CAG Diagnostics capital instrument revenues. Overall revenue growth was also supported by 15% reported and 13% organic revenue growth in the Water business.
Segmental Analysis
IDEXX derives revenues from four operating segments — CAG, Water, Livestock, Poultry and Dairy (LPD), and Other.
In the third quarter, CAG revenues rose 15% (up 13% organically) year over year to $732.5 million. The Water segment’s revenues also grew 15% (up 13% organically) year over year to $38.1 million. However, LPD revenues dropped 21% (down 23% organically) to $29.1 million. Revenues at the Other segment fell 21.2% on a reported basis to $10.7 million.
Margins
Gross profit in the third quarter rose 11.9% to $472.9 million. However, gross margin contracted 19 basis points (bps) to 58.4% on a 12.8% rise in the cost of revenues to $337.5 million.
Sales and marketing expenses rose 15% to $124.4 million, while general and administrative expenses were down 21.8% to $82.1 million. Research and development expenses climbed 7.8% to $40.4 million.
Overall, operating profit in the reported quarter was $225.9 million, reflecting an improvement of 31.5% year over year. The operating margin in the quarter expanded 407 bps to 27.9%.
IDEXX Laboratories, Inc. Price, Consensus and EPS Surprise
IDEXX Laboratories, Inc. price-consensus-eps-surprise-chart | IDEXX Laboratories, Inc. Quote
Financial Position
IDEXX exited the third quarter of 2021 with cash and cash equivalents of $145.2 million compared with $232.1 million recorded at the end of second-quarter 2021. Total debt (including current portion) at the end of the third quarter of 2021 was $853 million compared with total debt of $905.1 million at the end of the second quarter.
Cumulative net cash provided by operating activities at the end of the third quarter of 2021 was $545.6 million compared with $429.1 million a year ago.
2021 Guidance
The company narrowed its revenue expectation for the year to the range of $3,185-$3,200 million, suggesting year-over-year growth of 17.5-18% on a reported and 15.5-16% on an organic basis. This compares with the previously-provided revenue guidance of $3,170-$3,205 million, which indicated growth of 17-18.5% on a reported and 14.5-16% on an organic basis. The Zacks Consensus Estimate for the same is currently pegged at $3.19 billion.
CAG Diagnostics’ recurring revenues are now expected to grow 18.5-19.5% on a reported basis and 17-17.5% on an organic basis (narrowed from the previously-issued guidance of growth of 18-19.5% on a reported basis and 16-17.5% on an organic basis).
Further, IDEXX raised the full-year EPS guidance to the range of $8.30-$8.38, indicating growth of 24-25% on a reported basis (from the earlier outlook of $8.20-$8.36, indicating reported growth of 22-25%). Comparable constant currency growth is expected in the range of 26-27%, from the previous range of 25-27%. The Zacks Consensus Estimate for full-year EPS is currently pegged at $8.36.
Our Take
IDEXX exited the third quarter of 2021 with better-than-expected results. Its organic revenue growth was encouraging. The top line was driven by strong sales at the CAG and Water businesses. Improved operating margin was an upside too.
On the flip side, LPD revenues declined in the quarter, constrained by comparisons to high prior-year levels and additional impacts in China related to changes in local ASF disease management approaches, lower pork prices and changes in government requirements related to livestock infectious disease testing programs. Further, the contraction of gross margin and escalating operating costs are concerns.
Zacks Rank and Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Thermo Fisher Scientific Inc. (TMO - Free Report) , SARTORIUS (SARTF - Free Report) and West Pharmaceutical Services, Inc. (WST - Free Report) .
Thermo Fisher, carrying a Zacks Rank #1 (Strong Buy), reported third-quarter 2021 adjusted EPS of $5.76, which beat the Zacks Consensus Estimate by 23.3%. Third-quarter revenues of $9.33 billion outpaced the consensus mark by 12%. You can see the complete list of today’s Zacks #1 Rank stocks here.
SARTORIUS reported third-quarter 2021 adjusted EPS of $2.55, surpassing the Zacks Consensus Estimate by 7.6%. Revenues of $1.06 billion surpassed the Zacks Consensus Estimate by 5.2%. It currently carries a Zacks Rank #2 (Buy).
West Pharmaceutical reported third-quarter 2021 adjusted EPS of $2.06, which surpassed the Zacks Consensus Estimate by 13.2%. Revenues of $706.5 million outpaced the Zacks Consensus Estimate by 3.2%. It currently carries a Zacks Rank #2.