news/IDXX/2023.02.06/IDEXX Laboratories Announces Fourth Quarter and Full Year 2022 Results.txt

Achieves fourth quarter revenue growth of 3% reported and 7% organic, driven by CAG Diagnostics recurring revenue growth of 4% reported and 8% organic  Solid growth supported by continued benefits from IDEXX execution drivers, including 13% year-over-year expansion of IDEXX's global premium instrument installed baseDelivers fourth quarter EPS of $2.05, an increase of 8% as reported and 14% on a comparable basis, supported by operating margin expansion Provides initial outlook for 2023 revenue of $3,590 million - $3,690 million, reflecting reported growth of 6.5% - 9.5% and organic growth of 7% - 10%Estimates 2023 EPS of $9.27 - $9.75, an increase of 16% - 21% as reported and 19% - 26% on a comparable basis, including ~ 10% growth benefit from lapping discrete R&D investments in 2022WESTBROOK, Maine, Feb. 6, 2023 /PRNewswire/ -- IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in pet healthcare innovation, today announced fourth quarter and full year results, as well as an update on U.S. companion animal diagnostic trends.
Fourth Quarter and Full Year Results
The Company reports revenues of $829 million for the fourth quarter of 2022, an increase of 3% compared to the prior year period on a reported basis and 7% on an organic basis. Fourth quarter results reflected solid organic revenue gains across IDEXX's CAG, Water and LPD business segments. CAG Diagnostics recurring revenue gains of 4% reported and 8% organic in the quarter were supported by continued benefits from IDEXX execution drivers including new business gains, high quality placements of CAG Diagnostics capital instruments across regions, high customer retention and net price realization. CAG revenue gains also reflect veterinary software, services and diagnostic imaging systems revenue growth of 15% as reported and 17% organically, supported by software solution placement growth and a continued shift to cloud-based products. 
Earnings per diluted share ("EPS") were $2.05 for the fourth quarter, an increase of 8% as reported and 14% on a comparable basis. Results were supported by operating margin expansion of 240 basis points as reported and 220 basis points on a comparable basis. Fourth quarter EPS included $0.07 per share negative impact from currency changes and $0.05 per share in tax benefits from share-based compensation.
Revenue for the full year of $3,367 million increased 5% as reported and 7% on an organic basis, driven by 5% reported and 8% organic growth in CAG Diagnostics recurring revenue.
For the full year 2022, EPS of $8.03 declined 7% on a reported basis and 1% on a comparable basis, including a $0.72 negative impact, representing a 9% EPS growth headwind, related to $80 million of discrete R&D investments in the second quarter. EPS results reflect operating margin contraction of 230 basis points as reported, driven by the impact from the discrete R&D investments. EPS results also included a $0.22 negative impact from currency changes and $0.15 in tax benefits from share-based compensation compared to $0.38 in tax benefits from share-based compensation in the prior year.
The Company's revenue guidance range reflects full year 2023 growth of 6.5% - 9.5% as reported and 7% - 10% growth on an organic basis, supported by 8% - 10.5% reported growth and 8.5% - 11% organic growth in CAG Diagnostics recurring revenues. The high end of the Company's revenue guidance range reflects goals for sustained strong execution drivers, including an estimated 7% - 8% full year benefit from net price improvement. The Company's revenue guidance range aligns with an estimated 2023 EPS of $9.27 - $9.75, reflecting a targeted 230 - 290 basis points of reported operating margin improvement, including benefits from the lapping of discrete 2022 R&D investments.
"As a result of outstanding execution by IDEXX commercial and operational teams, IDEXX delivered continued solid CAG Diagnostics recurring revenue growth across our major regions and record full-year premium instrument placements, with solid gains across our major in-clinic platforms," said Jay Mazelsky, President and Chief Executive Officer. "Veterinarians continue to look to IDEXX as their trusted partner to deliver highly effective diagnostic testing solutions and information management products to support growing demand for companion animal healthcare. We're well positioned to build on our growth momentum moving forward as we address the significant untapped potential for companion animal healthcare globally."
Companion Animal Diagnostics Trends Update
Trends in companion animal healthcare, including growth in demand for clinical services, continue to support solid growth for companion animal diagnostic products and services across regions. Average U.S. diagnostics revenue per practice grew 7% on a same-store basis in the fourth quarter, faster than 5% growth in overall clinic revenues. U.S. same-store clinical visits at veterinary practices declined 2.8% in the fourth quarter, consistent with recent trends in 2022, reflecting impacts from reductions in veterinary clinic capacity levels. Growth for pet healthcare including diagnostics remains elevated compared to pre-pandemic levels, reflecting compound annual growth of 3% in clinical visits and 12% in same-store diagnostics revenues for the U.S. compared to the fourth quarter of 2019. Additional U.S. companion animal practice weekly key metrics are available in the Q4 2022 Earnings Snapshot accessible on the IDEXX website, www.idexx.com/investors.
Fourth Quarter Performance Highlights 
Companion Animal Group 
The Companion Animal Group generated 4% reported and 8% organic revenue growth for the fourth quarter. CAG Diagnostics organic recurring revenue growth of 8% reflects solid gains across IDEXX's major modalities globally, supported by growth in clinical service demand and expanded utilization of diagnostic products and services.
IDEXX VetLab® consumables generated 4% reported and 9% organic revenue growth, supported by expansion of our global premium instrument installed base, high customer retention levels and net price gains.Reference laboratory diagnostic and consulting services generated 4% reported and 8% organic revenue growth, reflecting high single-digit growth in the U.S. and improved organic growth Internationally, supported by benefits from global net price realization.Rapid assay products generated 7% reported and 9% organic revenue growth, reflecting continued solid volume gains in the U.S. and benefits from net price increases.Veterinary software, services and diagnostic imaging systems revenue growth increased 15% on a reported basis and 17% organically, supported by double-digit growth in subscription-based service revenues and strong growth in new veterinary software system placements.
Water
Water achieved revenue growth of 6% on a reported basis and 10% on an organic basis, reflecting benefits from net price improvement and volume gains for compliance and non-compliance testing.
Livestock, Poultry and Dairy ("LPD") 
LPD revenue declined 2% on a reported basis and grew 6% on an organic basis, benefiting from growth in herd health screening and improved year-over-year results in China, which now compare to normalized levels of African Swine Fever and core Swine testing.
Gross Profit and Operating Profit
Gross profits increased 6%, and gross margins of 59% increased 150 basis points compared to prior year results on a reported basis and 110 basis points on a comparable basis. Gross margin results reflect benefits from net price gains, higher software service margins, lab productivity gains and comparisons to higher prior year initiative investment levels, and business mix, all of which offset inflationary cost effects.
Operating margin was 27.3% in the quarter, 240 basis points higher than the prior year period results on a reported basis and 220 basis points on a comparable basis. Operating expenses were flat on a reported basis and increased 4% on a comparable basis. Low operating expense growth reflects benefits from investment prioritization, leverage from prior commercial expansions, and favorable comparisons to prior year operating expense levels. 
2023 Growth and Financial Performance Outlook
The following table provides the Company's initial estimates for annual key financial metrics in 2023:
Amounts in millions except per share data and percentages 
Growth and Financial Performance Outlook
2023
Revenue
$3,590
-
$3,690
Reported growth
6.5 %
-
9.5 %
Organic growth
7 %
-
10 %
CAG Diagnostics Recurring Revenue Growth
Reported growth
8 %
-
10.5 %
Organic growth
8.5 %
-
11 %
Operating Margin 
29.0 %
-
29.6 %
Reported operating margin expansion
230
-
290 bps
Impact of foreign exchange
(~ 50 bps)
Comparable operating margin expansion
280
-
340 bps
Impact of 2022 discrete R&D investments
~ 230 bps
EPS
$9.27
-
$9.75
Reported growth
16 %
-
21 %
Comparable growth
19 %
-
26 %
Impact of 2022 discrete R&D investments
~ 10%
Other Key Metrics
Net interest expense
~ $48
Share-based compensation tax benefit
~ $8
Share-based compensation tax rate benefit
~ 1 %
Effective tax rate
21.5 %
-
22 %
Share-based compensation EPS impact
~ $0.10
Reduction in average shares outstanding
1 %
-
1.5 %
Operating Cash Flow
100% - 110% of net income
Free Cash Flow
80% - 90% of net income
Capital Expenditures
~ $180 million
The following table outlines estimates of foreign currency exchange rate impacts, net of foreign currency hedging transactions, and foreign currency exchange rate assumptions reflected in the above financial performance outlook for 2023.
Estimated Foreign Currency Exchange Rates and Impacts
2023
Revenue growth rate impact
(~ 0.5%)
CAG Diagnostics recurring revenue growth rate impact
(~ 0.5%)
Operating margin growth impact
(~ 50 bps)
EPS impact
(~ $0.23)
EPS growth impact
(~ 3.0%)
Foreign Currency Exchange Rate Assumptions
In U.S. dollars
euro
$1.06
British pound
$1.19
Canadian dollar
$0.73
Australian dollar
$0.68
Relative to the U.S. dollar
Japanese yen
¥135
Chinese renminbi
¥6.88
Brazilian real
R$5.30
Conference Call and Webcast Information
IDEXX Laboratories, Inc. will host a conference call today at 8:30 a.m. (Eastern) to discuss its 2022 fourth quarter and full year financial results and management's outlook. To participate in the conference call, dial 1-800-289-0459 or 1-323-794-2095 and reference access code 819614. Individuals can access a live webcast of the conference call and the Q4 2022 Earnings Snapshot through links on the IDEXX website, www.idexx.com/investors. A copy of management's prepared remarks will be posted to the IDEXX website following the completion of the conference call, and an archived edition of the webcast will be available after 1:00 p.m. (Eastern) on that day via the same link and will remain available for one year.

About IDEXX Laboratories, Inc.
IDEXX is a global leader in pet healthcare innovation. Our diagnostic and software products and services create clarity in the complex, constantly evolving world of veterinary medicine. We support longer, fuller lives for pets by delivering insights and solutions that help the veterinary community around the world make confident decisions—to advance medical care, improve efficiency, and build thriving practices. Our innovations also help ensure the safety of milk and water across the world and maintain the health and well-being of people and livestock. IDEXX Laboratories, Inc. is a member of the S&P 500® Index. Headquartered in Maine, IDEXX employs nearly 11,000 people and offers solutions and products to customers in more than 175 countries. For more information about IDEXX, visit www.idexx.com.
Note Regarding Forward-Looking Statements 
This earnings release and the statements to be made in the accompanying earnings conference call contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including forward-looking statements about the Company's business prospects and estimates of the Company's financial results for future periods. Forward-looking statements are included under "2023 Growth and Financial Performance Outlook" and elsewhere in this earnings release and can be identified by the use of words such as "expects", "may", "anticipates", "intends", "would", "will", "plans", "believes", "estimates", "projected", "should", and similar words and expressions. Our forward-looking statements include statements relating to our expectations regarding financial and business performance; revenue growth and EPS outlooks; operating and free cash flow forecast; projected impact of foreign currency exchange rates and interest rates; projected operating margins and expenses and capital expenditures; projected tax, tax rate and EPS benefits from share-based compensation arrangements; projected effective tax rates, reduction of average shares outstanding and net interest expense; and expectations for clinical visit growth in the U.S. and net price realization. These statements are intended to provide management's expectation of future events as of the date of this earnings release; are based on management's estimates, projections, beliefs and assumptions as of the date of this earnings release; and are not guarantees of future performance. These forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, among other things, the matters described under the headings "Business," "Risk Factors," "Legal Proceedings," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosures About Market Risk" in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 and in the corresponding sections of the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022, June 30, 2022, and September 30, 2022, as well as those described from time to time in the Company's other filings with the U.S. Securities and Exchange Commission available at www.sec.gov. The Company specifically disclaims any obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
Statement Regarding Non-GAAP Financial Measures
The following defines terms and conventions and provides reconciliations regarding certain measures used in this earnings release and/or the accompanying earnings conference call that are not required by, or presented in accordance with, generally accepted accounting principles in the United States of America ("GAAP"), otherwise referred to as non-GAAP financial measures. To supplement the Company's consolidated results presented in accordance with GAAP, the Company has disclosed non-GAAP financial measures that exclude or adjust certain items. Management believes these non-GAAP financial measures provide useful supplemental information for its and investors' evaluation of the Company's business performance and liquidity and are useful for period-over-period comparisons of the performance of the Company's business and its liquidity and to the performance and liquidity of our peers. While management believes that these non-GAAP financial measures are useful in evaluating the Company's business, this information should be considered as supplemental in nature and should not be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly titled measures reported by other companies. 
Constant currency - Constant currency references are non-GAAP financial measures which exclude the impact of changes in foreign currency exchange rates and are consistent with how management evaluates our performance and comparisons with prior and future periods. We estimated the net impacts of currency on our revenue, gross profit, operating profit, and EPS results by restating results to the average exchange rates or exchange rate assumptions for the comparative period, which includes adjusting for the estimated impacts of foreign currency hedging transactions and certain impacts on our effective tax rates. These estimated currency changes impacted fourth quarter 2022 results as follows: decreased gross profit growth by 3.2%, increased gross margin growth by 40 basis points, decreased operating expense growth by 3.2%, increased operating profit margin growth by 20 basis points, and decreased EPS growth by 3.4%. Estimated currency changes impacted full year 2022 results as follows: decreased gross profit growth by 2.6%, increased gross margin growth by 40 basis points, decreased operating expense growth by 2.5%, increased operating profit margin growth by 10 basis points, and decreased EPS growth by 2.6%. Constant currency revenue growth represents the percentage change in revenue during the applicable period, as compared to the prior year period, excluding the impact of changes in foreign currency exchange rates. See the supplementary analysis of results below for revenue percentage change from currency for the three months and year ended December 31, 2022 and refer to the 2023 Growth and Financial Performance Outlook section of this press release for estimated foreign currency exchange rate impacts on 2023 projections and estimates.
Growth and organic revenue growth - All references to growth and organic growth refer to growth compared to the equivalent prior year period unless specifically noted. Organic revenue growth is a non-GAAP financial measure that represents the percentage change in revenue, as compared to the same period for the prior year, net of the impact of changes in foreign currency exchange rates, certain business acquisitions, and divestitures. Management believes that reporting organic revenue growth provides useful information to investors by facilitating easier comparisons of our revenue performance with prior and future periods and to the performance of our peers. Organic revenue growth should be considered in addition to, and not as a replacement of or a superior measure to, revenue growth reported in accordance with GAAP. See the supplementary analysis of results below for a reconciliation of reported revenue growth to organic revenue growth for the three and twelve months ended December 31, 2022. Please refer to the constant currency note above for a summary of foreign currency exchange rate impacts. The percentage change in revenue resulting from acquisitions represents revenues during the current year period, limited to the initial 12 months from the date of the acquisition, that are directly attributable to business acquisitions. Revenue from acquisitions is not expected to have an impact on projected full year 2023 revenue growth and CAG Diagnostics recurring revenue growth. For a reconciliation of fourth quarter 2022 CAG Diagnostics recurring revenue organic growth to CAG Diagnostics recurring revenue growth reported in accordance with GAAP, see the supplementary analysis of results in the Company's earnings release dated February 2, 2022.
Comparable growth metrics - Comparable gross profit growth, comparable gross margin gain (or growth), comparable operating expense growth, comparable operating profit growth and comparable operating margin gain (or growth) are non-GAAP financial measures and exclude the impact of changes in foreign currency exchange rates and non-recurring or unusual items (if any). Please refer to the constant currency note above for a summary of foreign currency exchange rate impacts. Management believes that reporting comparable gross profit growth, comparable gross margin gain (or growth), comparable operating expense growth, comparable operating profit growth and comparable operating margin gain (or growth) provides useful information to investors because it enables better period-over-period comparisons of the fundamental financial results by excluding items that vary independent of performance and provides greater transparency to investors regarding key metrics used by management. Comparable gross profit growth, comparable gross margin gain (or growth), comparable operating expense growth, comparable operating profit growth and comparable operating margin gain (or growth) should be considered in addition to, and not as replacements of or superior measures to, gross profit growth, gross margin gain, operating expense growth, operating profit growth and operating margin gain reported in accordance with GAAP.
The reconciliation of these non-GAAP financial measures is as follows:
Three Months Ended
Year-over-Year
Twelve Months Ended
Year-over-Year
December 31,
December 31,
Change
December 31,
December 31,
Change
Dollar amounts in thousands
2022
2021
2022
2021
Gross Profit (as reported)
$    484,927
$    456,421
6 %
$ 2,004,338
$ 1,889,432
6 %
Gross margin
58.5 %
57.0 %
150 bps
59.5 %
58.8 %
70 bps
Less: comparability adjustments
Change from currency
(14,752)
—
(48,412)
—
Comparable gross profit growth
$    499,679
$    456,421
10 %
$ 2,052,750
$ 1,889,432
9 %
Comparable gross margin and gross margin gain (or growth)
58.1 %
57.0 %
           110 bps
59.1 %
58.8 %
30 bps
Operating expenses (as reported)
$    258,400
$    257,230
— %
$ 1,105,573
$    957,404
15 %
Less: comparability adjustments
Change from currency
(8,277)
—
(23,549)
—
Comparable operating expense growth
266,677
257,230
4 %
1,129,122
957,404
18 %
Income from operations (as reported)
$    226,527
$    199,191
14 %
$    898,765
$    932,028
(4) %
Operating margin
27.3 %
24.9 %
           240 bps
26.7 %
29.0 %
-230 bps
Less: comparability adjustments
Change from currency
(6,475)
—
(24,864)
—
Comparable operating profit growth
$    233,002
$    199,191
17 %
$    923,629
$    932,028
(1) %
Comparable operating margin and operating margin gain (or growth)
27.1 %
24.9 %
         220 bps
26.6 %
29.0 %
-240 bps
Amounts presented may not recalculate due to rounding.
Projected 2023 comparable operating margin expansion outlined in the 2023 Growth and Financial Performance Outlook section of this earnings release reflects the projected full year 2023 reported operating margin adjusted for estimated negative year-over-year foreign currency exchange rate change impact of approximately 50 basis points.
These impacts described above reconcile reported gross profit growth, gross margin gain, operating expense growth, operating profit growth and operating margin gain (including projected 2023 operating margin expansion) to comparable gross profit growth, comparable gross margin gain, comparable operating expense growth, comparable operating profit growth and comparable operating margin gain for the Company.
Comparable EPS growth -  Comparable EPS growth is a non-GAAP financial measure that represents the percentage change in earnings per share (diluted) ("EPS") for a measurement period, as compared to the prior base period, net of the impact of changes in foreign currency exchange rates from the prior base period and excluding the tax benefits of share-based compensation activity under ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, and non-recurring or unusual items (if any). Management believes comparable EPS growth is a more useful way to measure the Company's business performance than EPS growth because it enables better period-over-period comparisons of the fundamental financial results by excluding items that vary independent of performance and provides greater transparency to investors regarding a key metric used by management. Comparable EPS growth should be considered in addition to, and not as a replacement of or a superior measure to, EPS growth reported in accordance with GAAP. Please refer to the constant currency note above for a summary of foreign currency exchange rate impacts.
The reconciliation of this non-GAAP financial measure is as follows:
Three Months Ended
Year-over-Year
Twelve Months Ended
Year-over-Year
December 31,
December 31,
Growth
December 31,
December 31,
Growth
2022
2021
2022
2021
Earnings per share (diluted)
$            2.05
$            1.89
8 %
$            8.03
$            8.60
(7 %)
Less: comparability adjustments
Share-based compensation activity
0.05
0.08
0.15
0.38
Change from currency
(0.07)
—
(0.22)
—
Comparable EPS growth
2.07
1.81
14 %
8.10
8.22
(1 %)
Amounts presented may not recalculate due to rounding.
Projected 2023 comparable EPS growth outlined in the 2023 Growth and Financial Performance Outlook section of this earnings release reflects the following adjustments: (i) full year 2022 reported EPS adjusted for positive share-based compensation activity of $0.15 for full year 2022; and (ii) projected full year 2023 reported EPS adjusted for estimated positive share-based compensation activity of $0.10 and estimated negative year-over-year foreign currency exchange rate change impact of $0.23.
These impacts and those described in the constant currency note above reconcile reported EPS growth (including projected 2023 reported EPS growth) to comparable EPS growth for the Company.
Free cash flow - Free cash flow is a non-GAAP financial measure and means, with respect to a measurement period, the cash generated from operations during that period, reduced by the Company's investments in property and equipment. Management believes free cash flow is a useful measure because it indicates the cash the operations of the business are generating after appropriate reinvestment for recurring investments in property and equipment that are required to operate the business. Free cash flow should be considered in addition to, and not as a replacement of or a superior measure to, net cash provided by operating activities. See the supplementary analysis of results below for our calculation of free cash flow for the years ended December 31, 2022 and 2021. To estimate projected 2023 free cash flow, we have deducted projected purchases of property and equipment (also referred to as capital expenditures) of ~ $180 million. Free cash flow conversion, or the net income to free cash flow ratio, is a non-GAAP financial measure that is defined as free cash flow, with respect to a measurement period, divided by net income for the same period. To calculate the free cash flow conversion for the twelve months ended December 31, 2022, we have deducted purchases of property and equipment of approximately $149 million from net cash provided from operating activities of approximately $543 million, divided by net income of approximately $680 million.
Debt to Adjusted EBITDA (Leverage Ratios) - Adjusted EBITDA, gross debt, and net debt are non-GAAP financial measures. Adjusted EBITDA is a non-GAAP financial measure of earnings before interest, taxes, depreciation, amortization, non-recurring transaction expenses incurred in connection with acquisitions, share-based compensation expense, and certain other non-cash losses and charges.  Management believes that reporting Adjusted EBITDA, gross debt and net debt in the Debt to Adjusted EBITDA ratios provides supplemental analysis to help investors further evaluate the Company's business performance and available borrowing capacity under the Company's credit facility. Adjusted EBITDA, gross debt, and net debt should be considered in addition to, and not as replacements of or superior measures to, net income or total debt reported in accordance with GAAP. For further information on how Adjusted EBITDA and the Debt to Adjusted EBITDA Ratios are calculated, see the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2022.
After-Tax Return on Invested Capital, Excluding Cash and Investments ("ROIC") - After-Tax Return on Invested Capital, Excluding Cash and Investments, is a non-GAAP financial measure. After-tax return on invested capital, excluding cash and investments, represents our after-tax income from operations, divided by our average invested capital, excluding cash and investments, using beginning and ending balance sheet values. Management believes that reporting ROIC provides useful information to investors for evaluating the efficiency and effectiveness of our use of capital. ROIC, after-tax income from operations and average invested capital, excluding cash and investments, are not measures of financial performance under GAAP and should be considered in addition to, and not as replacements of or superior measures to, return on assets, net income, total assets or other financial measures reported in accordance with GAAP. See the supplementary table below for reconciliation of this non-GAAP financial measure.
IDEXX Laboratories, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations
Amounts in thousands except per share data (Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
December 31,
December 31,
2022
2021
2022
2021
Revenue:
Revenue
$828,568
$801,090
$3,367,324
$3,215,360
Expenses and Income:
Cost of revenue
343,641
344,669
1,362,986
1,325,928
Gross profit
484,927
456,421
2,004,338
1,889,432
Sales and marketing
131,935
128,458
524,505
486,735
General and administrative
83,047
83,466
326,248
309,660
Research and development
43,418
45,306
254,820
161,009
Income from operations
226,527
199,191
898,765
932,028
Interest expense, net
(13,312)
(7,308)
(38,793)
(29,374)
Income before provision for income taxes
213,215
191,883
859,972
902,654
Provision for income taxes
41,008
29,112
180,883
157,810
Net Income:
Net income
172,207
162,771
679,089
744,844
Less: Noncontrolling interest in subsidiary's earnings
—
—
—
(1)
Net income attributable to stockholders
$172,207
$162,771
$679,089
$744,845
Earnings per share: Basic
$2.08
$1.92
$8.12
$8.74
Earnings per share: Diluted
$2.05
$1.89
$8.03
$8.60
Shares outstanding: Basic
82,934
84,828
83,623
85,200
Shares outstanding: Diluted
83,815
86,142
84,600
86,572
 
IDEXX Laboratories, Inc. and Subsidiaries
Selected Operating Information (Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
December 31,
December 31,
2022
2021
2022
2021
Operating Ratios
Gross profit
58.5 %
57.0 %
59.5 %
58.8 %
(as a percentage of revenue):
Sales, marketing, general and administrative expense
25.9 %
26.5 %
25.3 %
24.8 %
Research and development expense
5.2 %
5.7 %
7.6 %
5.0 %
Income from operations1
27.3 %
24.9 %
26.7 %
29.0 %
1Amounts presented may not recalculate due to rounding.
 
IDEXX Laboratories, Inc. and Subsidiaries
Segment Information
Amounts in thousands (Unaudited)
Three Months Ended
Three Months Ended
December 31,
Percent of
December 31,
Percent of
2022
Revenue
2021
Revenue
Revenue:
CAG
$748,532
$719,103
Water
39,314
37,131
LPD
33,396
33,967
Other
7,326
10,889
Total
$828,568
$801,090
Gross Profit:
CAG
$434,890
58.1 %
$406,273
56.5 %
Water
27,357
69.6 %
25,038
67.4 %
LPD
18,996
56.9 %
18,309
53.9 %
Other
3,684
50.3 %
6,801
62.5 %
Total
$484,927
58.5 %
$456,421
57.0 %
Income from Operations:
CAG
$199,844
26.7 %
$174,130
24.2 %
Water
18,021
45.8 %
15,845
42.7 %
LPD
5,362
16.1 %
4,360
12.8 %
Other
3,300
45.0 %
4,856
44.6 %
Total
$226,527
27.3 %
$199,191
24.9 %
Twelve Months Ended
Twelve Months Ended
December 31,
Percent of
December 31,
Percent of
2022
Revenue
2021
Revenue
Revenue:
CAG
$3,058,793
$2,889,960
Water
155,720
146,505
LPD
122,607
135,887
Other
30,204
43,008
Total
$3,367,324
$3,215,360
Gross Profit:
CAG
$1,806,577
59.1 %
$1,683,804
58.3 %
Water
109,859
70.5 %
100,944
68.9 %
LPD
73,001
59.5 %
81,564
60.0 %
Other
14,901
49.3 %
23,120
53.8 %
Total
$2,004,338
59.5 %
$1,889,432
58.8 %
Income from Operations:
CAG
$800,949
26.2 %
$824,022
28.5 %
Water
72,519
46.6 %
65,444
44.7 %
LPD
19,809
16.2 %
28,636
21.1 %
Other
5,488
18.2 %
13,926
32.4 %
Total
$898,765
26.7 %
$932,028
29.0 %
  
IDEXX Laboratories, Inc. and Subsidiaries
Revenues and Revenue Growth Analysis by Product and Service Categories and by Domestic and International Markets
Amounts in thousands (Unaudited)
Three Months Ended
Reported
Percentage
Percentage
Organic
December 31,
December 31,
Dollar
Revenue
Change from
Change from
Revenue
Net Revenue
2022
2021
Change
Growth1
Currency
Acquisitions
Growth1
CAG
$748,532
$719,103
$29,429
4.1 %
(3.8 %)
—
7.9 %
United States
510,072
466,322
43,750
9.4 %
—
—
9.4 %
International
238,460
252,781
(14,321)
(5.7 %)
(10.5 %)
—
4.8 %
Water
$39,314
$37,131
$2,183
5.9 %
(5.4 %)
1.7 %
9.5 %
United States
18,571
17,123
1,448
8.5 %
—
—
8.5 %
International
20,743
20,008
735
3.7 %
(10.2 %)
3.4 %
10.5 %
LPD
$33,396
$33,967
($571)
(1.7 %)
(7.8 %)
—
6.2 %
United States
4,579
4,185
394
9.4 %
—
—
9.4 %
International
28,817
29,782
(965)
(3.2 %)
(8.9 %)
—
5.7 %
Other
$7,326
$10,889
($3,563)
(32.7 %)
(0.6 %)
—
(32.1 %)
Total Company
$828,568
$801,090
$27,478
3.4 %
(4.0 %)
0.1 %
7.3 %
United States
536,936
493,464
43,472
8.8 %
—
—
8.8 %
International
291,632
307,626
(15,994)
(5.2 %)
(10.1 %)
0.2 %
4.7 %
Three Months Ended
Reported
Percentage
Percentage
Organic
December 31,
December 31,
Dollar
Revenue
Change from
Change from
Revenue
Net CAG Revenue
2022
2021
Change
Growth1
Currency
Acquisitions
Growth1
CAG Diagnostics recurring revenue:
$642,748
$617,624
$25,124
4.1 %
(4.0 %)
—
8.0 %
IDEXX VetLab consumables
261,164
251,623
9,541
3.8 %
(5.0 %)
—
8.8 %
Rapid assay products
71,125
66,380
4,745
7.1 %
(2.2 %)
—
9.3 %
Reference laboratory diagnostic and consulting services
283,318
271,899
11,419
4.2 %
(3.4 %)
—
7.6 %
CAG Diagnostics services and accessories
27,141
27,722
(581)
(2.1 %)
(4.9 %)
—
2.8 %
CAG Diagnostics capital – instruments
38,926
43,495
(4,569)
(10.5 %)
(4.3 %)
—
(6.2 %)
Veterinary software, services and diagnostic imaging systems
66,858
57,984
8,874
15.3 %
(1.3 %)
—
16.6 %
Net CAG revenue
$748,532
$719,103
$29,429
4.1 %
(3.8 %)
—
7.9 %
Three Months Ended
Reported
Percentage
Percentage
Organic
December 31,
December 31,
Dollar
Revenue
Change from
Change from
Revenue
2022
2021
Change
Growth1
Currency
Acquisitions
Growth1
CAG Diagnostics recurring revenue:
$642,748
$617,624
$25,124
4.1 %
(4.0 %)
—
8.0 %
United States
$432,467
$396,383
$36,084
9.1 %
—
—
9.1 %
International
$210,281
$221,241
($10,960)
(5.0 %)
(10.8 %)
—
5.9 %
1See Statements Regarding Non-GAAP Financial Measures, above. Amounts presented may not recalculate due to rounding.
   
IDEXX Laboratories, Inc. and Subsidiaries
Revenues and Revenue Growth Analysis by Product and Service Categories and by Domestic and International Markets
Amounts in thousands (Unaudited)
Twelve Months Ended
Reported
Percentage
Percentage
Organic
December 31,
December 31,
Dollar
Revenue
Change from
Change from
Revenue
Net Revenue
2022
2021
Change
Growth1
Currency
Acquisitions
Growth1
CAG
$3,058,793
$2,889,960
$168,833
5.8 %
(3.3 %)
0.7 %
8.4 %
United States
2,073,222
1,881,887
191,335
10.2 %
—
0.9 %
9.3 %
International
985,571
1,008,073
(22,502)
(2.2 %)
(9.2 %)
0.3 %
6.7 %
Water
$155,720
$146,505
$9,215
6.3 %
(4.0 %)
0.5 %
9.7 %
United States
76,875
70,654
6,221
8.8 %
—
—
8.8 %
International
78,845
75,851
2,994
3.9 %
(7.8 %)
1.1 %
10.6 %
LPD
$122,607
$135,887
($13,280)
(9.8 %)
(5.8 %)
—
(4.0 %)
United States
16,633
15,626
1,007
6.4 %
—
—
6.4 %
International
105,974
120,261
(14,287)
(11.9 %)
(6.4 %)
—
(5.4 %)
Other
$30,204
$43,008
($12,804)
(29.8 %)
0.2 %
—
(30.0 %)
Total Company
$3,367,324
$3,215,360
$151,964
4.7 %
(3.4 %)
0.7 %
7.4 %
United States
2,182,959
1,995,683
187,276
9.4 %
—
0.8 %
8.5 %
International
1,184,365
1,219,677
(35,312)
(2.9 %)
(8.7 %)
0.3 %
5.5 %
Twelve Months Ended
Reported
Percentage
Percentage
Organic
December 31,
December 31,
Dollar
Revenue
Change from
Change from
Revenue
Net CAG Revenue
2022
2021
Change
Growth1
Currency
Acquisitions
Growth1
CAG Diagnostics recurring revenue:
$2,660,280
$2,534,562
$125,718
5.0 %
(3.4 %)
0.1 %
8.2 %
IDEXX VetLab consumables
1,057,236
1,006,781
50,455
5.0 %
(4.3 %)
—
9.3 %
Rapid assay products
313,667
296,852
16,815
5.7 %
(1.7 %)
—
7.3 %
Reference laboratory diagnostic and consulting services
1,178,113
1,123,656
54,457
4.8 %
(2.9 %)
0.3 %
7.4 %
CAG Diagnostics services and accessories
111,264
107,273
3,991
3.7 %
(4.5 %)
—
8.2 %
CAG Diagnostics capital – instruments
147,326
149,140
(1,814)
(1.2 %)
(4.7 %)
—
3.5 %
Veterinary software, services and diagnostic imaging systems
251,187
206,258
44,929
21.8 %
(1.0 %)
7.9 %
14.9 %
Net CAG revenue
$3,058,793
$2,889,960
$168,833
5.8 %
(3.3 %)
0.7 %
8.4 %
Twelve Months Ended
Reported
Percentage
Percentage
Organic
December 31,
December 31,
Dollar
Revenue
Change from
Change from
Revenue
2022
2021
Change
Growth1
Currency
Acquisitions
Growth1
CAG Diagnostics recurring revenue:
$2,660,280
$2,534,562
$125,718
5.0 %
(3.4 %)
0.1 %
8.2 %
United States
$1,784,403
$1,635,596
$148,807
9.1 %
—
—
9.1 %
International
$875,877
$898,966
($23,089)
(2.6 %)
(9.3 %)
0.4 %
6.4 %
1See Statements Regarding Non-GAAP Financial Measures, above. Amounts presented may not recalculate due to rounding.
   
IDEXX Laboratories, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
Amounts in thousands (Unaudited)
December 31,
December 31,
2022
2021
Assets:
Current Assets:
Cash and cash equivalents
$112,546
$144,454
Accounts receivable, net
400,619
368,348
Inventories
367,823
269,030
Other current assets
220,489
173,823
Total current assets
1,101,477
955,655
Property and equipment, net
649,474
587,667
Other long-term assets, net
995,814
893,881
Total assets
$2,746,765
$2,437,203
Liabilities and Stockholders'
Equity:
Current Liabilities:
Accounts payable
$110,221
$116,140
Accrued liabilities
433,662
458,909
Credit facility
579,000
73,500
Current portion of long-term debt
74,982
74,996
Deferred revenue
37,938
40,034
Total current liabilities
1,235,803
763,579
Long-term debt, net of current portion
694,387
775,205
Other long-term liabilities, net
207,838
208,427
Total long-term liabilities
902,225
983,632
Total stockholders' equity
608,737
689,992
Total liabilities and stockholders' equity
$2,746,765
$2,437,203
 
IDEXX Laboratories, Inc. and Subsidiaries
Selected Balance Sheet Information (Unaudited)
December 31,2022
September 30,2022
June 30,2022
March 31,2022
December 31,2021
Selected Balance Sheet Information:
Days sales outstanding1
43.4
43.4
43.2
42.0
42.4
Inventory turns2
1.3
1.3
1.5
1.6
2.0
1Days sales outstanding represents the average of the accounts receivable balances at the beginning and end of each quarter divided by revenue for that quarter, the result of which is then multiplied by 91.25 days.
2Inventory turns represent inventory-related cost of product revenue for the twelve months preceding each quarter-end divided by the average inventory balances at the beginning and end of each quarter.
 
IDEXX Laboratories, Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
Amounts in thousands (Unaudited)
Twelve Months Ended
December 31,
December 31,
2022
2021
Operating:
Cash Flows from Operating Activities:
Net income
$679,089
$744,844
Non-cash charges
137,425
148,225
Changes in assets and liabilities
(273,530)
(137,523)
Net cash provided by operating activities
542,984
755,546
Investing:
Cash Flows from Investing Activities:
Purchases of property and equipment
(148,838)
(119,549)
Acquisitions of businesses, intangible assets and equity investment, net of cash acquired
(46,512)
(173,418)
Net cash (used) provided by investing activities
(195,350)
(292,967)
Financing:
Cash Flows from Financing Activities:
Repayments on credit facilities, net
505,500
73,500
Payments of senior debt
(75,000)
(50,000)
Debt issuance costs
(435)
(2,650)
Purchase of minority interest
—
(990)
Payment of acquisition-related contingent considerations
(6,431)
(1,500)
Repurchases of common stock
(819,711)
(746,777)
Proceeds from exercises of stock options and employee stock purchase plans
35,747
46,565
Shares withheld for statutory tax withholding payments on restricted stock
(10,606)
(15,562)
Net cash used by financing activities
(370,936)
(697,414)
Net effect of changes in exchange rates on cash
(8,606)
(4,639)
Net change in cash and cash equivalents
(31,908)
(239,474)
Cash and cash equivalents, beginning of period
144,454
383,928
Cash and cash equivalents, end of period
$112,546
$144,454
 
IDEXX Laboratories, Inc. and Subsidiaries
Free Cash Flow
Amounts in thousands (Unaudited)
Twelve Months Ended
December 31,
December 31,
2022
2021
Free Cash Flow:
Net cash provided by operating activities
$542,984
$755,546
Investing cash flows attributable to purchases of property and equipment
(148,838)
(119,549)
Free cash flow1
$394,146
$635,997
1See Statements Regarding Non-GAAP Financial Measures, above.
 
IDEXX Laboratories, Inc. and Subsidiaries
After-Tax Return on Invested Capital, Excluding Cash and Investments ("ROIC")
Amounts in thousands (Unaudited)
Numerator (amounts in thousands)
For the Year Ended
December 31, 2022
Income from operations (as reported)
$898,765
After-tax income from operations1
$709,722
Denominator (dollar amounts in thousands)
As of
December 31, 2022
As of
December 31, 2021
Total shareholders' equity
$608,737
$689,992
Credit facility
579,000
73,500
Long-term debt, current portion
74,982
74,996
Long-term debt, net of current portion
694,387
775,205
Deferred income tax assets
(55,215)
(24,784)
Deferred income tax liabilities 
8,150
8,935
Total invested capital
$1,910,041
$1,597,844
Less cash and cash equivalents
112,546
144,454
Total invested capital, excluding cash and investments
$1,797,495
$1,453,390
Average invested capital, excluding cash and investments2
$1,625,443
After-tax return on invested capital, excluding cash and investments
44 %
1After-tax income from operations represents income from operations reduced by our reported effective tax rate.
2Average invested capital, excluding cash and investments, represents the average of the amount of total invested capital, excluding cash and investments.
 
IDEXX Laboratories, Inc. and Subsidiaries
Common Stock Repurchases
Amounts in thousands except per share data (Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
December 31,
December 31,
2022
2021
2022
2021
Shares repurchased in the open market
199
391
1,963
1,283
Shares acquired through employee surrender for statutory tax withholding
—
—
21
29
Total shares repurchased
199
391
1,984
1,312
Cost of shares repurchased in the open market
$68,281
$244,608
$810,942
$755,545
Cost of shares for employee surrenders
54
61
10,606
15,562
Total cost of shares
$68,335
$244,669
$821,548
$771,107
Average cost per share – open market repurchases
$342.35
$626.25
$413.12
$588.58
Average cost per share – employee surrenders
$439.17
$600.02
$501.89
$548.08
Average cost per share – total
$342.41
$626.25
$414.06
$587.70
 
Contact: John Ravis, Investor Relations, 1-207-556-8155


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SOURCE  IDEXX Laboratories, Inc.