Idexx Raises Outlook as Margins Widen
Second-quarter revenue reached $1.217 billion as stronger profitability supported a higher full-year forecast.
Idexx Laboratories (IDXX), the veterinary diagnostics company, posted an 18% increase in diluted earnings to $4.27 a share as operating-margin expansion accelerated.
The profit gains came as top-line momentum moderated. Revenue growth slowed to 10% from 14% in each of the previous two quarters, while organic growth eased to 9% from 11% in the first quarter and 12% in the fourth quarter of 2024.
Revenue rose 10% year over year and about 7% sequentially. Comparable EPS growth held at 15% from the first quarter, while reported growth improved from 17%.
CAG Diagnostics recurring revenue grew 11% on a reported basis and 10% organically, down from 14% and 11%, respectively, in the first quarter. VetLab consumables growth moderated to 15% reported and 14% organic, while reference-laboratory diagnostics and consulting maintained 10% organic growth.
Capital-instrument revenue declined 19% as Idexx lapped the broad launch of inVue Dx a year earlier. Even so, inVue Dx placements increased to more than 1,600 from 1,100 in the first quarter, taking the installed base above 9,000 instruments.
Gross margin expanded 140 basis points to 64.0%, helped by recurring-revenue volume, productivity and pricing. Operating margin rose by the same amount to 35.0%, compared with a 10-basis-point expansion in the first quarter, as profitability improved across CAG, Water and livestock, poultry and dairy operations.
Idexx now expects 2025 revenue of $4.700 billion to $4.745 billion, narrowing its range and lifting the midpoint by $5 million despite a foreign-exchange headwind. The company raised its EPS outlook to $14.69 to $14.94 a share and increased the midpoint of its organic-growth forecast by 0.4 percentage point.
The company also raised the lower end of its operating-margin outlook and improved its cash-conversion targets. It now expects operating cash flow equal to 110% to 120% of net income and free cash flow equal to 90% to 100%.