IDEXX Instrument Placement Momentum Reinforces Strong Organic Revenue Growth Outlook
- Fourth quarter placements of Catalyst® and premium hematology analyzers in total increased 21%
- IDEXX commences international launch of Catalyst One™ this month
- US all-direct sales and product distribution capability fully operational; channel inventory reduced to immaterial levels at end of 2014 and thus no drawdown impact expected in 2015
- Company updates outlook for organic revenue growth of 9.5% to 10% in 2014 excluding one-time impacts related to the drawdown of US channel inventory and reinforces guidance for normalized organic revenue growth of 13% to 14% in 2015
WESTBROOK, Maine, January 14, 2015 — IDEXX Laboratories, Inc. (NASDAQ: IDXX) achieved record total placements of over 2,000 premium chemistry and hematology analyzers globally in the fourth quarter. Results reflected placement of 460 Catalysts and 488 premium hematology analyzers in the US, increases of 9% and 18%, respectively, compared to the prior year period and also a record for total US premium instrument quarterly placements. Total international placements of premium analyzers grew 27% in the fourth quarter compared to the prior year period.
“Outstanding instrument placement results reflect benefits from our investments in innovation and enhanced commercial capability,” said Jonathan Ayers, the Company’s Chairman and Chief Executive Officer. “Our fourth quarter results capped a year of excellent progress, reflected in full year Catalyst placement gains of 29%, including growth of 20% in the US and 40% in International.”
“We are building on this progress through the launch of Catalyst One in Europe this month, with expansion to Latin America and Asia Pacific in the second quarter. Catalyst One expands the IDEXX point-of-care chemistry market by offering Catalyst Dx® technology at a significantly lower entry price. This offering is ideally suited to further growing the customer base in international markets. Catalyst technology offers the broadest, most complete and flexible test menu, fastest time to results, unmatched accuracy, low cost per test and integration with IDEXX’s free VetConnect® PLUS cloud-based diagnostic portal. Catalyst One provides a highly differentiated, economical point-of-care solution that will support continued increases in diagnostics utilization, accelerating development of our global market opportunity.”
“In the US, we finished the year with record premium instrument placements while completing implementation of our all-direct sales and product distribution capability. All elements of our approach became fully operational over the course of Q4, including a significantly expanded US customer sales center, a new e-commerce site offering unique online ordering capabilities and an expanded logistics infrastructure that provides free shipping and next day delivery across the continental US.”
“Our expanded US sales territory model is complete with an expanded and fully trained force of Veterinary Diagnostic Consultants (VDCs) and Field Support Representatives, experts who work with veterinarians to support and expand their standard of care. We know that when we call on our customers, they grow faster. The move to a VDC account manager model and the 58% increase in number of sales territories in the past two years and corresponding reduction in territory size, is helping us achieve an expected cumulative increase of 168% in quarterly customer visits from our VDCs in 2015. In total, our field-based and inside sales force supporting the US companion animal market is now well over 400 professionals.
“With the completion of our two-year transformation towards a fully integrated and significantly expanded IDEXX account manager model, we are well positioned to drive accelerated growth in the US companion animal diagnostics market with our highly innovative, complete and integrated diagnostic and information management offering,” added Ayers. “Along those lines, next week at the North American Veterinary Conference we will be announcing an important addition to our reference lab test menu for availability later this year. While the revenue contribution will be immaterial in 2015, it will provide another differentiator for our diagnostic offering that will help sustain long term growth in the recurring revenues of our Companion Animal Group.”
Reflecting continued strong momentum in the business, the Company is today updating its guidance for organic revenue growth1 of 9.5% to 10% in 2014 excluding one-time impacts from US channel inventory reductions related to the transition to the all-direct CAG diagnostics sales strategy in the US.
The Company is also reinforcing its guidance for 13% to 14% normalized organic revenue growth2 in 2015. The 2015 outlook reflects expectations for normalized organic revenue growth of 9.5% to 10.5% excluding the benefit of margin capture3 associated with the US all-direct sales and product distribution strategy. The Company also expects no negative impacts in 2015 related to US channel inventory drawdown, reflecting the proactive and effective management of channel inventories to immaterial levels at the end of 2014. IDEXX will provide a full review of its year-end results and its 2015 outlook on its 2014 year-end earnings call scheduled for Friday, January 30.
About IDEXX Laboratories
IDEXX Laboratories, Inc. is a member of the S&P 500® Index and is a leader in pet healthcare innovation, serving practicing veterinarians around the world with a broad range of diagnostic and information technology-based products and services. IDEXX products enhance the ability of veterinarians to provide advanced medical care, improve staff efficiency, and build more economically successful practices. IDEXX is also a worldwide leader in providing livestock and poultry diagnostic tests and tests for the quality and safety of water and milk. Headquartered in Maine, IDEXX employs more than 7,000 people and offers products to customers in over 175 countries. For more information about IDEXX, visit: www.idexx.com
Note Regarding Forward-Looking Statements
This news release contains or may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as “expects,” “may,” “anticipates,” “intends,” “would,” “will,” “plans,” “believes,” “estimates,” “should,” and similar words and expressions. These forward-looking statements are based on management's current expectations and beliefs, as well as a number of assumptions concerning future events. These statements are subject to risks, uncertainties, assumptions and other important factors. Readers are cautioned not to put undue reliance on such forward-looking statements because actual results may vary materially from those expressed or implied. The reports filed by the Company pursuant to United States securities laws contain discussions of these risks and uncertainties. The Company assumes no obligation to, and expressly disclaims any obligation to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are advised to review the Company’s filings with the United States Securities and Exchange Commission (which are available from the SEC’s EDGAR database at sec.gov, at various SEC reference facilities in the United States and via the Company’s website at idexx.com).
1. Organic revenue growth is not a measure defined by generally accepted accounting principles in the United States of America (“GAAP”), otherwise referred to herein as a non-GAAP financial measure. 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. The most directly comparable GAAP financial measure is reported revenue growth, and organic revenue growth is reported revenue growth adjusted to exclude the impact of changes in foreign currency exchange rates and revenue from business acquisitions. Deferred revenue impacts associated with our Catalyst One introductory offer reduces revenue growth guidance for the full year 2014 by approximately 0.5%.
2. Normalized organic revenue growth is a non-GAAP financial measure. Management believes that reporting normalized organic revenue growth provides useful information to investors by facilitating easier comparisons of our revenue growth performance with prior and future periods. Normalized organic revenue growth is organic revenue growth adjusted to exclude the impact of changes in our significant distributor inventory levels. In regards to distributor inventory levels, our rapid assay products and VetLab instrument consumables were sold by third party distributors, who purchased products from us and sold them to end users, such as veterinary practices. As a result, distributor inventory levels had an impact on our reported sales, and distributor inventory levels may be affected by many factors, which may not be directly related to underlying end-user demand for our products. Notably, the estimated impact of a one-time reduction in projected revenue in the fourth quarter of 2014 associated with the drawdown of inventory held by distributors related to our transition to an all-direct Companion Animal Diagnostics sales strategy in the US has been added back to 2014 estimated reported revenue to calculate estimated 2015 normalized organic revenue growth. We are unable to obtain data for sales to end users from certain less significant third party distributors internationally. We do not believe the impact of changes in these international distributors’ inventories would have a material impact on our growth rates. Deferred revenue impacts associated with our Catalyst One introductory offer increases revenue growth guidance for the full year 2015 by approximately 0.5%.
3. Normalized organic revenue growth, excluding margin capture is a non-GAAP financial measure. Management believes that reporting normalized organic revenue growth, excluding margin capture provides useful information to investors by facilitating easier comparisons of our normalized organic revenue growth performance with prior and future periods. Normalized organic revenue growth, excluding margin capture is normalized organic revenue growth as described in the footnote 2 above, adjusted to exclude the impact of margin gained in 2015 from selling our products directly to our US based customers as opposed to through third party distributors.