Financial Trends -- 9/10
Textbook accelerating compounder. Revenue YoY has inflected sharply higher over the last four
comparable quarters (+3.6% at the 25Q1 trough to +14.3% in 26Q1); the highest-quality CAG
diagnostics recurring line has accelerated every quarter to +14.1%. Gross margin is expanding
55-144bps YoY to a record 63.4%. The diluted share count is shrinking ~2-2.4%/yr via buybacks, and
free cash flow is positive and growing (+30.8% FY25). No penalty modifiers. Off a perfect 10 only
because GAAP operating-margin expansion is choppy quarter-to-quarter and quarterly FCF is lumpy.
Weight: 25%
Gross Margin
63.4%
Record | +92 bps YoY | Expanding
FCF
Growing
FY25 $1,057M, +30.8% | Strong
Share Count
Declining
~2.2%/yr buyback | No dilution
Quarterly Revenue Trajectory ($M)
| Quarter | 24Q1 | 24Q2 | 24Q3 | 24Q4 | 25Q1 | 25Q2 | 25Q3 | 25Q4 | 26Q1 |
|---|---|---|---|---|---|---|---|---|---|
| Total Revenue | $964.1M | $1,003.6M | $975.5M | $954.3M | $998.4M | $1,109.5M | $1,105.2M | $1,090.6M | $1,140.8M |
| YoY | +7.1% | +6.4% | +6.6% | +5.8% | +3.6% | +10.6% | +13.3% | +14.3% | +14.3% |
| CAG Dx recurring | $780.1M | $808.5M | $783.4M | $757.5M | $806.3M | $878.0M | $873.3M | $849.7M | $920.3M |
| CAG Dx recurring YoY | +7.3% | +6.0% | +6.7% | +6.4% | +3.3% | +8.6% | +11.5% | +12.2% | +14.1% |
Clean, sustained acceleration off the 25Q1 trough: +3.6% to +14.3% in four comparable quarters.
The trough was a known distributor-inventory drawdown and tough comp. CAG Diagnostics recurring
revenue -- the highest-quality, razor-blade portion of the model -- has accelerated every quarter
since, from +3.3% to +14.1% YoY, driven by ~4pts of price plus improving volume and the inflection
in Cancer Dx / inVue platform adoption. This is real organic acceleration, not just easy comps.
Gross Profit ($M)
Gross profit up +15.9% and gross margin expanded to a record 63.4% in 26Q1.
Gross margin has expanded +55 to +144 bps YoY in every one of the last nine quarters and +303 bps over
five years (58.8% FY21 to 61.8% FY25). Durable mix and pricing power, not a one-off -- the razor/blade
consumables model carries structurally high, expanding margins.
Annual Financial Summary (FY ends December)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Total Revenue ($M) | $3,215.4M | $3,367.3M | $3,661.0M | $3,897.5M | $4,303.7M |
| Rev YoY | — | +4.7% | +8.7% | +6.5% | +10.4% |
| Diluted EPS | $8.60 | $8.03 | $10.06 | $10.67 | $13.08 |
| EPS YoY | — | -6.6% | +25.3% | +6.1% | +22.6% |
| Gross Margin | 58.8% | 59.5% | 59.8% | 61.0% | 61.8% |
| Net Income ($M) | $744.8M | $679.1M | $845.0M | $887.9M | $1,059.5M |
| Diluted Shares (000) | 86,572 | 84,600 | 83,978 | 83,246 | 81,025 |
Key trends
- Revenue compounding, now re-accelerating: From $3.2B (2021) to $4.3B (2025), with FY growth re-accelerating to +10.4% in 2025 and +14.3% YoY in 26Q1 on price plus volume and inVue/Cancer Dx adoption
- EPS compounding at ~11% CAGR: From $8.60 (2021) to $13.08 (2025), a +22.6% jump in FY25
- Gross-margin expansion: +303 bps over five years (58.8% to 61.8%), and a record 63.4% print in 26Q1
- Share count declining: Diluted shares fell from 86.6M to 81.0M (-6.4% over 5 years), buyback-driven with no dilution
Segment Revenue ($M, Annual)
| Segment | FY2024 | FY2025 | % FY25 | YoY |
|---|---|---|---|---|
| CAG (Companion Animal) | $3,574.0M | $3,953.3M | 91.9% | +10.6% |
| — of which CAG Dx recurring | $3,129.5M | $3,407.2M | 79.2% | +8.9% |
| Water | $185.1M | $201.1M | 4.7% | +8.7% |
| LPD (Livestock/Poultry/Dairy) | $122.1M | $131.8M | 3.1% | +8.0% |
| Other | $16.3M | $17.5M | 0.4% | +7.3% |
| Total | $3,897.5M | $4,303.7M | 100% | +10.4% |
Free Cash Flow ($M, Annual)
FCF positive every period and growing. FY25 FCF of $1,057M (+30.8% YoY),
with FCF margin expanding to 24.6% and cash conversion near 100% of net income. Quarterly FCF is
lumpy (working-capital and tax timing), so "growing" is unambiguous and "accelerating" holds on a
TTM/annual basis; 26Q1 FCF of $234.3M was +12.7% YoY.
Share Count & Diluted Shares (000)
- Share count declining steadily: 86.6M (2021) to 81.0M (2025), -6.4% cumulative, buyback-driven
- No dilution: Consistent ~2-2.4%/yr reduction; $1.2B buyback program funded internally with minimal leverage (~0.6x gross)
Score Rationale
Score of 9/10 reflects one of the strongest financial-trend profiles in the coverage universe. No penalty modifiers applied.
Supports 9/10:
- Revenue YoY clearly accelerating (+3.6% at the 25Q1 trough to +14.3% in 26Q1); FY also re-accelerated to +10.4% in 2025
- Gross margin expanding +55 to +144 bps YoY every quarter and +303 bps over five years, a record 63.4% in 26Q1
- Share count declining ~2-2.4%/yr, -6.4% over five years via consistent buybacks, no dilution
- FCF positive every period and growing ($636M FY21 to $1,057M FY25, +30.8% FY25); cash conversion near 100%
- CAG Dx recurring revenue -- the highest-quality razor/blade line -- accelerating every quarter to +14.1% YoY
Penalty modifiers: None apply. FCF is positive and growing (no -2). Share count is shrinking, not diluting (no -1/-2). Revenue and operating income both growing (no -1). Total debt is flat-to-down and well below revenue growth (no 3-quarter debt-outgrowing-revenue pattern).
Why not a 10: GAAP operating-margin expansion is choppy quarter-to-quarter (mix and quarterly G&A noise) rather than a clean uninterrupted 100bps+ climb, and quarterly FCF is lumpy enough that the "accelerating" leg holds on an annual/TTM but not every-quarter basis.
Data sourced from Daloopa (company_id: 429). Fiscal year ends December 31. All financials in USD.