Abaxis ($ABAX) makes a range of blood-test analysis systems for both human and animal health, but it was the company's veterinary division that stole the show during its fiscal third-quarter earnings release on Thursday. Abaxis announced that its revenues for the quarter came in at $59.5 million--up 46% year over year--and its diluted earnings per share skyrocketed 86% to 26 cents. The company's veterinary sales were $46.9 million, marking a 46% increase over the same period a year ago. Abaxis surpassed analysts' expectations for both revenues and profits, according to Zacks Investment Research.
"On the veterinary side of the business, execution on our initiatives to drive sales with our strategic distribution partners continued to contribute positively," said CEO Clinton Severson in a press release.
Abaxis' veterinary division turned in one record after another during the quarter. It placed a record 1,284 instruments in veterinary clinics--up 42% from the previous quarter and 23% year over year--plus an additional 100 placements via its partnership with the large veterinary hospital chain VCA ($WOOF). The company saw an increase in demand for both its VetScan VS2 chemistry analyzer and HM5 hematology analyzer, said Craig Tockman, vice president of sales and marketing for the North American animal health unit, during a conference call with investors and analysts.
"These results are far greater than we have ever seen before and it's clearly a result of our distributors' ability to drive market share to Abaxis," Tockman said.
Abaxis works with multiple distributors--including Henry Schein ($HSIC), MWI ($MWIV), and Patterson ($PDCO)--and during the Q&A session during the earnings call, one analyst asked Severson to comment on which company contributed most to sales. He said that MWI is performing the best so far but that the others are catching up rapidly, and "all three of those organizations have better strength and we think they will perform well."
Many distributors are angling for position in the increasingly competitive market for veterinary products such as those made by Abaxis. On January 12, AmerisourceBergen ($ABC) announced its plans to buy MWI for $2.5 billion. And Schein has been expanding its footprint in animal health, adding nutritional and orthopedic products to its offerings and boosting its presence in countries like Australia, Poland and Ireland.
No doubt, Abaxis has set a high bar for growth going forward. The company is developing a new therapeutic drug assay for the veterinary market, and it has a rapid-testing tool up for approval with the USDA. Severson told investors during the earnings call that the company's fourth-quarter goals "include meeting a very aggressive sales plan" for the veterinary market.