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IDEXX Laboratories Announces Third Quarter Results

  • 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, November 01, 2023--(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/

Contacts

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