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IDEXX (IDXX) Q1 Earnings Beat Estimates, Margins Increase

IDEXX Laboratories, Inc. IDXX posted first-quarter 2023 earnings per share (EPS) of $2.55, up 12.3% year over year. The figure surpassed the Zacks Consensus Estimate by 7.1%.

Comparable constant-currency EPS totaled $2.60 in the first quarter of 2023, up 17.6% year over year.

Revenues in Detail

First-quarter revenues increased 8% year over year to $900 million. Organically, growth was 10%. The metric exceeded the Zacks Consensus Estimate by 1.5%.
The year-over-year upside was primarily driven by 9% reported and 12% organic growth in CAG Diagnostics’ recurring revenues. U.S. CAG Diagnostics’ recurring revenues increased 14% on a reported and organic basis.

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Veterinary software, services and diagnostic imaging systems revenues increased 13% as reported and 14% organically, reflecting high growth in recurring revenues and continued strong quarterly placements of cloud-based software solutions.

Segmental Analysis

IDEXX derives revenues from four operating segments — CAG, Water, Livestock, Poultry and Dairy (LPD) and Other.

In the first quarter, CAG revenues rose 9% on a reported basis (up 11% organically) year over year to $827.3 million. The Water segment’s revenues increased 7% (up 8% organically) year over year to $38.8 million. However, LPD revenues dropped 5% on a reported basis (down 2% organically) to $29.2 million. Revenues in the Other segment fell 40.6% on a reported basis to $4.8 million.

Margins

Gross profit in the first quarter rose 8.9% to $542.9 million. Gross margin expanded 70 basis points (bps) to 60.3%.

Sales and marketing expenses rose 11.7% to $147.8 million, while general and administrative expenses dropped 10.1% to $70.1 million.  Research and development expenses rose 11.2% to $44.7 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

 

Overall, operating profit in the reported quarter was $280.4 million, up 12.9% year over year. The operating margin in the quarter expanded 146 bps to 31.1%.

Financial Position

IDEXX exited first-quarter 2023 with cash and cash equivalents of $111.4 million compared with $112.5 million recorded at the end of fourth-quarter 2022. Total debt (including the current portion) at the end of the first quarter of 2023 was $771.3 million compared with a total debt of $769.4 million at the end of fourth-quarter 2022.

Cumulative net cash provided by operating activities at the end of the first quarter of 2023 was $183.9 million compared with $114.7 million a year ago.

2023 Guidance

The company updated its full-year 2023 outlook.

For 2023, the company expects revenue growth in the range of $3.615-$3,700, indicating growth of 7.5-10% on a reported and organic basis (up from the previous guidance of $3,590-$3,690 million). The Zacks Consensus Estimate for the same is currently pegged at $3.63 billion.

IDEXX’s full-year EPS guidance is now pegged in the range of $9.33-$9.75, indicating a rise of 16-21% on a reported basis (up from the previous guidance of $9.27-$9.75). The Zacks Consensus Estimate for full-year EPS is currently pegged at $9.61.

Our Take

IDEXX exited the first quarter of 2023 on a decent note, with earnings and revenues beating estimates. The company registered year-over-year growth in revenues on a reported and organic basis. The top line was driven by continued solid demand for veterinary services and benefits from strong IDEXX execution. IDEXX innovation and commercial engagement drove record first-quarter global premium instrument placements. Veterinary software, services and diagnostic imaging systems revenues growth were supported by double-digit organic gains in recurring software and digital imaging revenues. However, LPD revenues declined in the quarter on a reported basis. Further, inflationary pressure has been denting on the bottom line.

Zacks Rank and Key Picks

IDEXX currently carries Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Edwards Lifesciences Corporation EW, Intuitive Surgical, Inc. ISRG and Johnson & Johnson JNJ.

Edwards Lifesciences, carrying a Zacks Rank #2 (Buy), reported first-quarter 2023 adjusted earnings per share (EPS) of 62 cents, beating the Zacks Consensus Estimate by 1.6%. Revenues of $1.46 billion outpaced the consensus mark by 4.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Edwards Lifesciences has a long-term estimated growth rate of 6.8%. EW’s earnings surpassed estimates in two of the trailing four quarters, missed the same in one and broke even in the other, the average being 1.2%.

Intuitive Surgical, with a Zacks Rank #2, reported first-quarter 2023 adjusted EPS of $1.23, which beat the Zacks Consensus Estimate by 3.4%. Revenues of $1.70 billion outpaced the consensus mark by 6.9%.

Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 1.9%.

Johnson & Johnson reported first-quarter 2023 adjusted earnings of $2.68 per share, beating the Zacks Consensus Estimate by 6.8%. Revenues of $24.75 billion surpassed the Zacks Consensus Estimate by 5%. It currently carries a Zacks Rank #2.

Johnson & Johnson has a long-term estimated growth rate of 5.5%. JNJ’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.9%

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