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November 2, 2021

IDEXX tops Q3 earnings expectations and raises guidance, but stock falls 5.3%

File photo IDEXX posted higher-than-expected earnings on Tuesday and raised its full-year guidance.

Veterinary diagnostics and software maker IDEXX Laboratories Inc. (Nasdaq: IDXX) posted higher-than-expected third-quarter earnings on Tuesday morning and raised full-year guidance back to the higher end of earlier forecasts.

However, revenue for the Westbrook company's livestock, poultry and dairy business dropped 21% from a year ago. Shares of IDEXX opened at $654.62 on Tuesday, but by 11 a.m. were trading for as low as $620.

Overall, third-quarter net income rose to $175.2 million, or $2.03 a share, compared with $146.3 million, or $1.69 a share a year ago, IDEXX reported. Wall Street expected the company to earn $1.88 a share for Q3, according to Zacks Investment Research.

Third-quarter revenue rose to $810.4 million, up from $721.8 million a year ago. The 12% reported growth was driven by 15% reported growth in the companion animal group business, the company said. 

For the full year, IDEXX raised its outlook to a range of $8.30 to $8.38 a share, on revenues in the range of $3.185 billion to $3.2 billion. Analysts on average expect the company to earn $8.36 a share, according to Zacks.

IDEXX previously expected full-year earnings to be in the range of $8.20 to $8.36 a share.

“The IDEXX team delivered another quarter of excellent performance, reflected in high CAG Diagnostics recurring revenue growth and record Q3 levels of premium instrument placements, with strong gains across our major in-clinic platforms,” said President and CEO Jay Mazelsky.

The company said positive trends in companion animal healthcare continued to support strong growth for diagnostic products and services. In the U.S., same-store clinical visit growth at veterinary practices was 2% in the third quarter, reflecting year-over-year growth of 2% for non-wellness visits and 1% for wellness visits.

In IDEXX's water microbiology testing business, revenue grew 15% on a reported basis for the quarter, compared with declines in the year-ago period of 5% due to pandemic-related impacts. Strong revenue growth reflected increased demand for water testing as economies reopened, IDEXX said.

In its livestock, poultry and dairy business, IDEXX revenue fell 21% from a year ago, when that sector had benefited from the ramping up of African swine fever test programs in China. Revenue in the country was also hurt by lower pork prices and changes in government testing requirements for livestock.

IDEXX warned that these headwinds offset growth in other regions and are expected to pressure the livestock group’s revenues in future quarters.

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