Pet healthcare is witnessing a surge in demand as more households prioritize their pets’ well-being, driving companies in this sector to outperform expectations. This trend is reflected in IDEXX Laboratories Inc.‘s (NASDAQ:IDXX) recent financial results, showcasing significant growth and revised earnings guidance.
IDEXX Laboratories on Monday reported second-quarter 2025 adjusted earnings of $3.50, up 17% year over year, beating the consensus of $3.28.
The pet healthcare company reported sales of $1.11 billion, beating the consensus of $1.06 billion, up 11% on a reported and 9% on an organic basis, driven by Companion Animal Group (CAG) growth of 11% as reported and 10% organic, and Water revenue growth of 9% as reported and 8% organic.
CAG revenue growth to $1.02 billion was led by CAG Diagnostics recurring revenue growth of 9% as reported and 7% organic, including 15% reported and 11% organic gains in International regions, and 6% reported and organic growth in the U.S., outpacing sector growth levels.
IDEXX Surprises With Strong Earnings Growth
Water achieved revenue growth of 9% on a reported basis and 8% on an organic basis, reaching $51 million. This reflects solid organic growth across major regions, with double-digit International growth.
Livestock, Poultry, and Dairy (LPD) revenue grew 5% on a reported basis and 3% on an organic basis to $31.76 million, led by commercial execution in North America and Asia Pacific.
Gross profits increased 12% as reported and 11% on a comparable basis to $694.73 million.
Gross margin of 62.6% increased 90 basis points as reported and 110 basis points on a comparable basis, supported by strong growth in IDEXX VetLab consumables revenue, Reference Labs productivity initiatives, and benefits from net price realization helping to offset inflationary impacts.
Adjusted gross margin increased to $688.97 million, up 11%, with a margin of 62.8%.
What's Driving IDEXX's Impressive Revenue Surge?
Operating margin was 33.6% for the quarter, higher than the prior year period by 730 basis points as reported and by 130 basis points on a comparable basis, net of ~600 basis points impact from lapping the prior year period $61.5 million discrete litigation expense accrual.
The operating margin of $373.05 million reflects a 9% decline in operating expenses, as reported, and 9% growth on a comparable basis.
Adjusted operating margin was $370.03 million, up 14%, with a margin of 33.7%.
Guidance: IDEXX Laboratories raises fiscal 2025 earnings guidance from $11.93-$12.43 per share to $12.40-$12.76 per share, versus the consensus of $12.13.
The company revised its 2025 sales guidance from $4.09 billion to $4.21 billion, with a range of $4.21 billion to $4.28 billion, compared to the consensus of $4.14 billion.
Updated guidance includes 2025 reported revenue growth to 7.7%-9.7% (prior 5%-8%) and reported CAG Diagnostics recurring revenue growth to 6.5%-8.7% (prior 4%-7%), while refining outlook for 7%-9% (prior 6%-9%) organic revenue growth and CAG Diagnostics recurring revenue organic growth of 5.8%-8% (prior 5%-8%).
How Updated Guidance Signals Optimism Ahead
William Blair analyst Ryan Daniels writes, “We continue to believe the long-term investment merits of Idexx remain very compelling…”
Daniels says Idexx stock trades roughly 39 times William Blair’s 2026 EPS target and 28 times 2026 EBITDA estimate.
“While these are lofty multiples, we believe Idexx is a durable business franchise that warrants a premium,” the analyst said on Monday.
William Blair reiterates Outperform rating.
IDXX Price Action: IDEXX Laboratories shares were up 23.88% at $663.42 at the time of publication on Monday, according to Benzinga Pro.
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