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IDEXX (IDXX) Q1 Earnings Top Estimates, Margins Decline
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IDEXX Laboratories, Inc. (IDXX - Free Report) posted first-quarter 2020 earnings per share (EPS) of $1.29, reflecting a 10.2% year-over-year rise. The figure surpassed the Zacks Consensus Estimate by 4.9%. Comparable-constant-currency EPS growth was 13%, which excludes the impact of changes in foreign exchange rates and the tax benefits of share-based compensation activity.
Revenues in Detail
First-quarter revenues grew 9% year over year to $626.3 million. The metric, however, missed the Zacks Consensus Estimate by 0.9%. The year-over-year upside was primarily driven by strong global gains in Companion Animal Group (“CAG”) Diagnostics’ recurring revenues.
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 8% (up 9% organically) year over year to $551.9 million. The Water segment’s revenues were up 13% (up 15% organically) year over year to $34.1 million. LPD revenues rose 8% (up 12% organically) to $34.1 million. Revenues at the ‘Other’ segment grew 13.4% on a reported basis to $6 million.
Margins
Gross profit in the first quarter rose 8.4% to $359.6 million. However, gross margin contracted 15 basis points (bps) to 57.4% on a 9.1% rise in cost of revenues to $266.7 million.
IDEXX Laboratories, Inc. Price, Consensus and EPS Surprise
Sales and marketing expenses rose 8.9% to $116.1 million, while general and administrative expenses moved up 9% to $65.8 million. Additionally, research and development expenses rose 5.7% to $33.3 million. Operating margin in the quarter contracted 7 bps to 23%.
Financial Position
IDEXX exited the first quarter with cash and cash equivalents of $81.4 million compared with $90.3 million at the end of 2019. Net cash provided by operating activities at the end of the first quarter was $27.9 million compared with $34.4 million at the end of 2019.
2020 Outlook Withdrawn
The uncertainties regarding the duration and impact of the coronavirus pandemic on veterinary service providers have compelled IDEXX Laboratories to withdraw its previously-issued 2020 financial guidance. It did not even provide a guidance for the second quarter.
Our Take
IDEXX exited the first quarter with better-than-expected earnings. Solid organic revenue growth is encouraging. The top line in the quarter was driven by strong sales at the CAG business. The company witnessed sturdy gains in Diagnostics recurring revenues, supported by double-digit organic gains in both U.S. and International marketsin the quarter under review. However, the primary impact of the pandemic resulted in a decrease in companion animal clinical visits, including delay of elective procedures and wellness visits.
In terms of COVID-19 related progress, in April, the company made IDEXX SARS-CoV-2 (COVID-19) RealPCR Test for pets in response to customer demand and growing evidence that in rare cases pets living with COVID-19 positive humans can be at risk of infection.
Further, the company’s human health business, OPTI Medical Systems, has developed a PCR laboratory test kit named OPTI SARS-CoV-2 RNA RT-PCR. The company has applied for FDA’s Emergency Use Authorization for the same for the detection of SARS-CoV-2.
The Zacks Consensus Estimate for ResMed’s third-quarter fiscal 2020 revenues is pegged at $715.6 million, suggesting year-over-year improvement of 8.1%. The same for EPS stands at $1, indicating growth of 12.4% from the year-ago reported figure.
The Zacks Consensus Estimate for Aphria’s fourth-quarter fiscal 2020 revenues is $100.3 million, implying 4.4% increase from the year-earlier reported figure.
The Zacks Consensus Estimate for ViewRay’s first-quarter 2020 bottom line stands at a loss of 20 cents per share, suggesting 41.2% improvement from the year-ago quarter.
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IDEXX (IDXX) Q1 Earnings Top Estimates, Margins Decline
IDEXX Laboratories, Inc. (IDXX - Free Report) posted first-quarter 2020 earnings per share (EPS) of $1.29, reflecting a 10.2% year-over-year rise. The figure surpassed the Zacks Consensus Estimate by 4.9%. Comparable-constant-currency EPS growth was 13%, which excludes the impact of changes in foreign exchange rates and the tax benefits of share-based compensation activity.
Revenues in Detail
First-quarter revenues grew 9% year over year to $626.3 million. The metric, however, missed the Zacks Consensus Estimate by 0.9%. The year-over-year upside was primarily driven by strong global gains in Companion Animal Group (“CAG”) Diagnostics’ recurring revenues.
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 8% (up 9% organically) year over year to $551.9 million. The Water segment’s revenues were up 13% (up 15% organically) year over year to $34.1 million. LPD revenues rose 8% (up 12% organically) to $34.1 million. Revenues at the ‘Other’ segment grew 13.4% on a reported basis to $6 million.
Margins
Gross profit in the first quarter rose 8.4% to $359.6 million. However, gross margin contracted 15 basis points (bps) to 57.4% on a 9.1% rise in cost of revenues to $266.7 million.
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 8.9% to $116.1 million, while general and administrative expenses moved up 9% to $65.8 million. Additionally, research and development expenses rose 5.7% to $33.3 million. Operating margin in the quarter contracted 7 bps to 23%.
Financial Position
IDEXX exited the first quarter with cash and cash equivalents of $81.4 million compared with $90.3 million at the end of 2019. Net cash provided by operating activities at the end of the first quarter was $27.9 million compared with $34.4 million at the end of 2019.
2020 Outlook Withdrawn
The uncertainties regarding the duration and impact of the coronavirus pandemic on veterinary service providers have compelled IDEXX Laboratories to withdraw its previously-issued 2020 financial guidance. It did not even provide a guidance for the second quarter.
Our Take
IDEXX exited the first quarter with better-than-expected earnings. Solid organic revenue growth is encouraging. The top line in the quarter was driven by strong sales at the CAG business. The company witnessed sturdy gains in Diagnostics recurring revenues, supported by double-digit organic gains in both U.S. and International marketsin the quarter under review. However, the primary impact of the pandemic resulted in a decrease in companion animal clinical visits, including delay of elective procedures and wellness visits.
In terms of COVID-19 related progress, in April, the company made IDEXX SARS-CoV-2 (COVID-19) RealPCR Test for pets in response to customer demand and growing evidence that in rare cases pets living with COVID-19 positive humans can be at risk of infection.
Further, the company’s human health business, OPTI Medical Systems, has developed a PCR laboratory test kit named OPTI SARS-CoV-2 RNA RT-PCR. The company has applied for FDA’s Emergency Use Authorization for the same for the detection of SARS-CoV-2.
Zacks Rank & Key Picks
IDEXX has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are ResMed Inc. (RMD - Free Report) , Aphria Inc. and ViewRay, Inc. . All the three stocks carry a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for ResMed’s third-quarter fiscal 2020 revenues is pegged at $715.6 million, suggesting year-over-year improvement of 8.1%. The same for EPS stands at $1, indicating growth of 12.4% from the year-ago reported figure.
The Zacks Consensus Estimate for Aphria’s fourth-quarter fiscal 2020 revenues is $100.3 million, implying 4.4% increase from the year-earlier reported figure.
The Zacks Consensus Estimate for ViewRay’s first-quarter 2020 bottom line stands at a loss of 20 cents per share, suggesting 41.2% improvement from the year-ago quarter.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>