Diagnostics maker Abaxis ($ABAX) surprised analysts Thursday with a better-than-expected earnings performance in its fiscal first quarter that was driven largely by the growth of its animal health division. The California company reported that revenues from continuing operations jumped 21% year over year to $53.1 million, while net income was up 38% to $7 million, or $0.31 per share. Analysts had been expecting earnings of $0.28, according to Zacks Investment Research.
The company also declared a quarterly dividend of $0.11 per common share, which it will pay on September 17, according to a press release announcing the earnings results.
Revenues from Abaxis' veterinary division rose 21% year over year to $43.6 million, with strong sales increases among all of its product lines, including instruments and reagents. The double-digit gains occurred both in the United States and internationally, reported Chief Executive Officer Clint Severson in the release.
Abaxis has been working hard to increase placements of its veterinary instruments, including its VetScan chemistry analyzer, largely through partnerships such as its deal with hospital chain VCA ($WOOF). In March, VCA's lab division, Antech Diagnostics, bought Abaxis' Veterinary Reference Laboratory for $21 million. The two companies have been working together to market a service that includes Abaxis' point-of-care diagnostic products.
When one analyst asked during a conference call after the earnings release if deals such as the Antech partnership were gaining traction, Severson said the goal was to go after "very large clients" and he's pleased with the progress so far. "We're very happy with the Antech relationship. We are working together and have done several very large clinic deals," he said.
Another analyst pointed out that Abaxis has 12% of its $1.26 billion market cap sitting in cash--plenty for making acquisitions. Severson agreed and made it clear that the company is interested in anything that might boost its growing presence in animal health. "So we increased our dividend by 10%, so that was kind of nice, and clearly we are always looking for products that we can add to our veterinary product line," he said.