When pet owners take their dogs and cats to the vet for checkups, they want to know on the spot if there are any health issues they need to address--and they’re willing to pay to get the information fast. IDEXX Laboratories ($IDXX) recognized this trend years ago and responded with a host of diagnostic tests that can diagnose common health problems in pets in minutes. Judging from the company’s third-quarter earnings, announced on November 1, it’s reaping the rewards from being an early mover in the rapidly growing market for animal diagnostics.
IDEXX’s third-quarter revenues of $448.3 million were in line with analysts’ expectations, and its earnings of $56.5 million, or 62 cents per, share beat estimates by two pennies. After last quarter’s strong performance, IDEXX hiked its 2016 sales estimate by $25 million, to $1.76 billion to $1.78 billion--and it’s now saying it will finish the year at the high end of that range. The company also raised its EPS forecast to between $2.35 and $2.39, up slightly from the previous estimate of $2.32 to $2.39.
What's more, the company provided preliminary estimates for 2017, telling investors to expect revenues of $1.9 billion, reflecting organic growth of about 9%, and EPS of $2.77 to $2.93. That’s year-over-year earnings growth of at least 17% on a reported basis.
“We believe the sustained strong growth in companion animal health care, including the increasing use of diagnostics, is supported by the deeply rooted, global trend of the strengthening bond between humans and their pets,” said CEO Jonathan Ayers in the earnings release.
IDEXX sells diagnostics systems like Catalyst One, which detects up to 30 diseases in 8 minutes from blood samples taken from dogs and cats. Last year it introduced a diagnostic that can spot early signs of kidney disease in pets using the biomarker SDMA. In 2015, the company placed 9,771 chemistry and hematology analyzers--a strong showing that earned it the No. 7 spot on Fierce Animal Health’s list of the top 10 companies of 2015. The company plans to add SDMA to the Catalyst system within a year, which Ayers believes could expand the market for the product even further, he said in a conference call with analysts after the earnings release.
When asked during the call to predict how sustainable the positive trends in the animal health market would be through next year, Ayers didn’t waver in his optimism. “I think it's steady as she goes,” he said, adding “we see a continuation of the fundamentals we've seen in this market for the past year or two, and that's what's embedded in our outlook for 2017.”
Special Report: Top 10 Animal Health Companies of 2015 - IDEXX Laboratories