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IDEXX (IDXX) Earnings Beat Estimates in Q1, '21 View Up

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IDEXX Laboratories, Inc. (IDXX - Free Report) posted first-quarter 2021 earnings per share (“EPS”) of $2.35, reflecting an 82.2% year-over-year rise. The figure surpassed the Zacks Consensus Estimate by 36.6%.

Comparable-constant-currency EPS growth was 73%, which excludes tax benefits from share-based compensation of 17 cents per share.

Revenues in Detail

First-quarter revenues grew 24.2% year over year to $777.7 million. Organically, growth was 21%. The metric exceeded the Zacks Consensus Estimate by 5.9%.

The year-over-year upside was primarily driven by 27% reported and 23% organic growth in global Companion Animal Group (“CAG”) Diagnostics’ recurring revenues and 31% reported and 27% organic growth in CAG Diagnostics capital instrument revenues. Sustained strong growth in the Livestock, Poultry and Dairy ("LPD") business also drove the top line. OPTI Medical Systems’ COVID-19 human Polymerase Chain Reaction (“PCR”) testing contributed about 1% to the first-quarter top line.

However, first-quarter results were impacted by a fall in diagnostic imaging systems revenues and soft revenues from the Water business impacted by factors related to the COVID-19 pandemic.

Segmental Analysis

IDEXX derives revenues from four operating segments — CAG, Water, LPD and Other.

In the first quarter, CAG revenues rose 25.5% (up 22.4% organically) year over year to $692.8 million. The Water segment’s revenues were down 0.3% (down 2.6% organically) year over year to $34 million. LPD revenues rose 15% (up 9.3% organically) to $39.3 million. Revenues at the Other segment grew 92.7% on reported and organic basis to $11.6 million.

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

Margins

Gross profit in the first quarter rose 30.9% to $470.8 million. Gross margin expanded 312 basis points (bps) to 60.5% despite a 15.1% rise in cost of revenues to $306.9 million.

Sales and marketing expenses fell 1.1% to $114.8 million, while general and administrative expenses moved up 7.5% to $70.8 million. Research and development expenses climbed 12.8% to $37.6 million.

Operating profit in the reported quarter was $247.6 million, reflecting an improvement of 71.6% year over year. Operating margin in the quarter expanded 880 bps to 31.8%.

Financial Position

IDEXX exited the first quarter of 2021 with cash and cash equivalents of $351.2 million compared with $383.9 million recorded at the end of 2020. Total debt (including current portion) for the company at the end of first quarter of 2021 was $903.7 million compared with total debt of $908.5 million at the end of 2020.

Net cash provided by operating activities at the end of the first quarter of 2021 was $124.4 million compared with $27.9 million a year ago.

2021 Outlook

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

The company projects revenues for the year to be in the range of $3,105 million- $3,160 million, reflecting growth of 14.5-16.5% and 13-15% on a reported and on an organic basis, respectively. This is significantly up from the previously provided financial outlook where revenue growth was projected to be $3,065 million-$3,120million, reflecting growth of 13-15.5% and 11.5-13.5% on a reported and on an organic basis, respectively. The Zacks Consensus Estimate for the same is currently pegged at $3.09 billion.

CAG Diagnostics’ recurring revenues for 2021 are expected to reflect growth of 16-17.5% on a reported basis and 14.5-16% on an organic basis (up from the previously issued guidance of a growth of 13.5-16% on a reported basis and 12-14.5% on an organic basis).

Further, IDEXX projects full-year EPS to be in the range of $7.88-$8.18, reflecting growth of 17-22% on a reported basis (up from the previously-issued outlook of $7.39-$7.71, reflecting a reported growth of 10-14%). The comparable constant currency growth is expected in the range of 21-26%, up from the previous range of 15-20%. The Zacks Consensus Estimate for the full-year EPS is currently pegged at $7.55.

Our Take

IDEXX exited the first 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 and LPD 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, the company’s human health business, OPTI Medical Systems’ COVID-19 human PCR testing, also contributed to the top line. Margin expansions look encouraging.

However, fall in diagnostic imaging systems revenues and continued lower revenues from the Water segment are concerning.

Zacks Rank & Stocks to Consider

IDEXX has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader medical space are Boston Scientific Corporation (BSX - Free Report) , CONMED Corporation (CNMD - Free Report) and HCA Healthcare, Inc. (HCA - Free Report) .

Boston Scientific reported first-quarter 2021 adjusted EPS of 37 cents, beating the Zacks Consensus Estimate by 23.3%. Net revenues of $2.75 billion outpaced the consensus estimate by 5.3%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CONMED, a Zacks Rank #2 company, reported first-quarter 2021 adjusted EPS of 63 cents, beating the Zacks Consensus Estimate by 46.5%. Revenues of $232.7 million outpaced the consensus mark by 7%.

HCA Healthcare reported first-quarter 2021 adjusted EPS of $4.14, surpassing the Zacks Consensus Estimate by 23.6%. Net revenues of $14 billion exceeded the Zacks Consensus Estimate by 2.2%. It currently carries a Zacks Rank #2.

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