U.S. markets closed
  • S&P Futures

    4,463.75
    +18.00 (+0.40%)
     
  • Dow Futures

    34,826.00
    +152.00 (+0.44%)
     
  • Nasdaq Futures

    15,378.25
    +59.50 (+0.39%)
     
  • Russell 2000 Futures

    2,256.70
    +12.70 (+0.57%)
     
  • Crude Oil

    75.12
    +1.14 (+1.54%)
     
  • Gold

    1,758.40
    +6.70 (+0.38%)
     
  • Silver

    22.64
    +0.21 (+0.94%)
     
  • EUR/USD

    1.1727
    +0.0010 (+0.08%)
     
  • 10-Yr Bond

    1.4600
    +0.0500 (+3.55%)
     
  • Vix

    17.75
    -0.88 (-4.72%)
     
  • GBP/USD

    1.3676
    -0.0005 (-0.03%)
     
  • USD/JPY

    110.6680
    -0.0170 (-0.02%)
     
  • BTC-USD

    43,933.13
    +1,461.75 (+3.44%)
     
  • CMC Crypto 200

    1,097.70
    -5.36 (-0.49%)
     
  • FTSE 100

    7,051.48
    -26.87 (-0.38%)
     
  • Nikkei 225

    30,261.23
    +12.42 (+0.04%)
     

IDEXX (IDXX) Q2 Earnings Beat Estimates, 2021 Guidance Up

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·5 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

IDEXX Laboratories, Inc. IDXX posted second-quarter 2021 earnings per share (EPS) of $2.34, reflecting a 36% year-over-year rise. The figure surpassed the Zacks Consensus Estimate by 16.4%.

Comparable-constant-currency EPS of $2.20 in the second quarter of 2021 reflects year-over-year growth of 33%.

Revenues in Detail

Second-quarter revenues grew 29.6% year over year to $826.1 million. Organically, growth was 25%. The metric surpassed the Zacks Consensus Estimate by 5.8%.

The year-over-year upside was primarily driven by 30% reported and 26% organic growth in global Companion Animal Group (CAG) Diagnostics’ recurring revenues and 86% reported and 78% organic growth in CAG Diagnostics capital instrument revenues. Overall revenue growth was also supported by 32% reported and 27% 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 second quarter, CAG revenues rose 32% (up 27% organically) year over year to $745.6 million. The Water segment’s revenues also grew 32% (up 27% organically) year over year to $37.2 million. LPD revenues rose 4% (down 2% organically) to $33.5 million. Revenues at the Other segment fell 11.7% on reported and organic basis to $9.8 million.

Margins

Gross profit in the second quarter rose 28.9% to $489.3 million. Gross margin contracted 27 basis points (bps) to 59.2% on a 30.4% rise in cost of revenues to $336.8 million.

IDEXX Laboratories, Inc. Price, Consensus and EPS Surprise

IDEXX Laboratories, Inc. Price, Consensus and EPS Surprise
IDEXX Laboratories, Inc. Price, Consensus and EPS Surprise

IDEXX Laboratories, Inc. price-consensus-eps-surprise-chart | IDEXX Laboratories, Inc. Quote

Sales and marketing expenses rose 26.4% to $119 million, while general and administrative expenses moved up 21.7% to $73.3 million. Research and development expenses climbed 19.1% to $37.7 million.

Despite that, operating profit in the reported quarter was $259.3 million, reflecting an improvement of 34.2% year over year. Operating margin in the quarter expanded 107 bps to 31.4%.

Financial Position

IDEXX exited the second quarter of 2021 with cash and cash equivalents of $232.1 million compared with $351.2 million recorded at the end of first-quarter 2021. Total debt (including current portion) for the company at the end of the second quarter of 2021 was $905.1 million compared with total debt of $903.7 million at the end of the last-reported quarter.

Net cash provided by operating activities at the end of the second quarter of 2021 was $358.4 million compared with $236 million a year ago.

2021 Outlook

IDEXX, boosted by the ongoing business recovery and strong performances in the reported quarter, has raised its financial outlook for 2021.

The company projects revenues for the year in the range of $3,170-$3, 205 million, suggesting year-over-year growth of 17-18.5% on a reported and 14.5-16% on an organic basis. This is significantly up from the previously-provided financial outlook where revenue growth was projected at $3,105-$3,160 million, indicating growth of 14.5-16.5% on a reported and 13-15% on an organic basis. The Zacks Consensus Estimate for the same is currently pegged at $3.12 billion.

CAG Diagnostics’ recurring revenues for 2021 are expected to grow 18-19.5% on a reported basis and 16-17.5% on an organic basis (up from the previously-issued guidance of growth of 16-17.5% on a reported basis and 14.5-16% on an organic basis).

Further, IDEXX projects full-year EPS in the range of $8.20-$8.36, indicating growth of 22-25% on a reported basis (up from the earlier outlook of $7.88-$8.18, indicating reported growth of 17-22%). The comparable constant currency growth is expected in the range of 25-27%, up from the previous range of 21-26%. The Zacks Consensus Estimate for full-year EPS is currently pegged at $7.99.

Our Take

IDEXX exited the second quarter of 2021 with better-than-expected results. Solid organic-revenue growth is encouraging. The top line in the quarter was driven by strong sales at the CAG, LPD and Water businesses. The company witnessed sturdy gains in CAG Diagnostics’ recurring revenues, supported by sustained strong global trends in pet healthcare in the quarter under review. The company’s performance in major geographies is also encouraging. Further, veterinary software, services and diagnostic imaging systems revenues grew in the reported quarter driven by double-digit growth in subscription-based service revenues and strong growth in new veterinary software system placements and recurring software services. Acquisition of ezyVet also contributed to growth during the second quarter. The raised 2021 outlook is encouraging as well.

However, contraction of gross margin and escalating operating costs are concerning. A weak capital structure does not bode well either. Foreign exchange headwind remains a concern.

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 their quarterly results are Boston Scientific Corporation BSX, West Pharmaceutical Services, Inc. WST and Laboratory Corporation of America Holdings LH, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Boston Scientific reported second-quarter 2021 adjusted EPS of 40 cents, which beat the Zacks Consensus Estimate by 8.1%. Revenues of $3.08 billion outpaced the consensus mark by 4.4%.

West Pharmaceutical reported second-quarter 2021 adjusted EPS of $2.46, which surpassed the Zacks Consensus Estimate by 41.4%. Revenues of $723.6 million outpaced the Zacks Consensus Estimate by 8.7%.

LabCorp reported second-quarter 2021 adjusted EPS of $6.13, surpassing the Zacks Consensus Estimate by 8.7%. Revenues of $3.84 billion exceeded the consensus estimate by 6.9%.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Boston Scientific Corporation (BSX) : Free Stock Analysis Report

Laboratory Corporation of America Holdings (LH) : Free Stock Analysis Report

IDEXX Laboratories, Inc. (IDXX) : Free Stock Analysis Report

West Pharmaceutical Services, Inc. (WST) : Free Stock Analysis Report

To read this article on Zacks.com click here.