IDEXX misses earnings target, dampens 2015 forecast

Just a few months after thrilling investors by forecasting strong sales for 2015, veterinary diagnostics maker IDEXX ($IDXX) turned in a disappointing first quarter. The company's revenues of $382.5 million were up 6% year-over-year but well below the average analyst estimate of $393 million. IDEXX also lowered its full-year revenue forecast slightly, saying it expects sales to come in at $1.6 billion to $1.62 billion. Analysts had been hoping the company would bring in $1.65 billion in sales.

IDEXX also lowered its earnings forecast for this year. The company expects to earn $4.14 to $4.24 per share, down from its February forecast of $4.33 to $4.43. Investors were none too pleased and pushed the company's stock down 9% to $133.56 on Tuesday, after the company released its report.

During a conference call with analysts, chief financial officer Brian McKeon explained that unfavorable foreign exchange rates are hampering growth. But the company also suffered greater-than-expected sales declines in a line of products called Snap, which are used to rapidly diagnose diseases in cats and dogs. The company's information-management and digital-imaging systems also fell short of growth goals, McKeon said.

IDEXX CEO Jonathan Ayers

IDEXX has been transitioning to an all-direct sales model, while at the same time fending off a host of rivals who have raced into the market for animal diagnostics. During the conference call, CEO Jonathan Ayers said "new competitive headwinds … impacted us at a time when we are perfecting our new direct sales model." Though the company believes its products stack up well against the competition, it is taking "time to demonstrate these differences and reach veterinary practices with this message," Ayers said.

Several diagnostics companies are angling for position in the animal health market, including Advanced Animal Diagnostics, Thermo Fisher ($TMO), and Abaxis ($ABAX).  During the earnings call, Ayers talked up 5 new products IDEXX expects to launch over the next year that he believes will boost the company's competitive position. Among those is an SDMA test to diagnose chronic kidney disease in pets, a software-as-service product for managing veterinary offices, and a digital-imaging program.

The combination of diagnostics and IT products, said Ayers, "gives us confidence of strong organic growth for years to come in the highly attractive market for animal health."

- here's the earnings release
- read a report on IDEXX from Zacks Equity Research 
- access a transcript of the earnings call here