Strong results from Abaxis and IDEXX reflect demand for vet diagnostics

Dog and cat

Veterinarians are snapping up sophisticated blood analysis systems, urine testing equipment and other diagnostic devices--a trend that was reflected in the latest earnings reports from Abaxis ($ABAX) and IDEXX Laboratories ($IDXX).

Abaxis got the ball rolling on April 28, when it announced after the market closed that its revenues in its fiscal fourth quarter rose 10% year-over-year to $57 million. Its fiscal 2016 sales were up 8% to $218.9 million. The company’s earnings per share from continuing operations jumped 112% to 36 cents for the quarter and 48% to $1.38 for the year.

Abaxis CEO Clint Severson said in the earnings release that he was particularly pleased with sales of the company’s VetScan Rapid Tests, which were up 81% for the year. The recent addition to the VetScan line helped complement sales of the Abaxis’ VetScan reagent discs, he noted.  And clearly it helped drive the company’s total veterinary revenues--which had taken a dip in the third quarter--up 8% for the year to $177.7 million.

During a conference call with analysts after the release, Severson said one of Abaxis’ priorities going forward is to improve its product distribution in several countries, including Italy, Germany and Spain. “There's lots of opportunity outside the U.S., and because in the past our focus has been mostly U.S., we just haven't been able to invest like we should have,” Severson said. “But now we have the resources and the management bandwidth to do it. So, that's the goal for next year.”

On April 29, IDEXX followed Abaxis’ good news with a bright report of its own. The company said that revenues in its first quarter jumped 9% year-over-year to $418 million. Earnings-per-share were crimped by negative foreign exchange rates but were up 14% on a constant-currency basis to 51 cents. IDEXX continues to enjoy strong demand for its Catalyst One chemistry analysis system, as well as its new SDMA test to detect kidney disease in pets, said CEO Jonathan Ayers in the earnings release.

IDEXX also announced that in mid-April it started shipping SediVue Dx, a new urine analyzer that automates what was formerly a clunky manual process for veterinarians, who had to use microscopes to interpret test results. During a conference call with analysts after the earnings release, Ayers said the company had 250 orders for the new product in the first quarter.

About 18 months ago, IDEXX shifted to a direct-sales model. When asked during the call to describe how veterinarians were responding to the company’s sales reps and the new products they were introducing, Ayers said he was confident that the market is starting to understand the range of products IDEXX offers and how they can be bundled into a comprehensive in-house diagnostics system.

The new tests, such as SediVue, tend to catch veterinarians’ attention, Ayers said. “But then, it really opens up the door for how IDEXX is really profoundly different in terms of integrated solutions,” he said.

Investors seem confident in the future of veterinary diagnostics. Shares of IDEXX rose 4% on April 29 to $84.33, while Abaxis’ stock bumped up about a percent to $45.21.

- here’s Abaxis’ earnings release

- access a transcript of Abaxis’ earnings call here

- get IDEXX’s earnings release here

- here’s a transcript of IDEXX’s earnings call

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