IDEXX Laboratories Q3 2025: Contradictions Emerge on InVue Placement Projections, International CAG Diagnostics Growth, and Macroeconomic Impact

Date of Call: November 3, 2025

Financials Results

• Revenue: Q3 revenue increased 13% as reported and 12% organically; updated 2025 revenue guidance $4.270B to $4.300B (reported growth 9.6%–10.3%)
• EPS: Q3 EPS $3.40, comparable EPS growth ~15%; updated 2025 EPS guidance $12.81 to $13.01 (up $0.33 at midpoint; 12%–14% comparable EPS growth)
• Gross Margin: Q3 gross margin 61.8%, up ~80 basis points year-over-year (reported gross margin gains moderated by ~10 bps FX impact)
• Operating Margin: Q3 comparable operating margin up 120 basis points; updated 2025 operating margin guidance 31.6%–31.8%, expecting 80–100 bps comparable improvement (note: 180 bps discrete litigation/FX benefit referenced)

Guidance:

• Updated 2025 revenue guidance $4.270B–$4.300B (reported growth 9.6%–10.3%); overall organic growth 8.8%–9.5%
• CAG Diagnostics recurring revenue organic growth 7.5%–8.2% with net price realization of 4%–4.5%
• 2025 EPS guidance $12.81–$13.01 (up $0.33 at midpoint; ~12%–14% comparable EPS growth)
• Operating margin guidance 31.6%–31.8%, expecting 80–100 bps comparable improvement
• InVue Dx placements expected ~6,000 in 2025; instrument revenue > $65M and recurring revenue per analyzer ~$3.5k–$5.5k
• Free cash flow conversion expected 95%–100% of net income; capex ~ $140M; FX sensitivity: 1% USD stronger ≈ -$4M revenue and -$0.01 EPS

Business Commentary:

* Revenue Growth and CAG Diagnostics Performance: - IDEXX Laboratories reported revenue growth of 13% as reported and 12% on an organic basis for Q3 2025. - This growth was driven by over 10% organic growth in CAG Diagnostics recurring revenues, including an 8% increase in the U.S. and double-digit growth internationally.

• Premium Instrument Placements and Installed Base Expansion:
• IDEXX achieved more than 1,750 IDEXX InVue Dx analyzer placements in Q3, contributing to a 71% organic growth of CAG instrument revenues.

• This growth is attributed to strong commercial execution and the quality of placements, with new and competitive Catalyst placements significant in both North America and globally.

• Strong Financial Performance and Margin Improvement:

• IDEXX experienced a 16% rise in comparable operating profit, supported by gross margin expansion of approximately 80 basis points on a comparable basis.

• This was driven by benefits from strong recurring revenue growth, IDEXX VetLab consumables, and Reference Lab volumes, while offsetting inflationary cost pressures.

• Innovation and Product Launch Impact:

• New product launches, including Catalyst Cortisol and InVue Dx, have contributed positively to IDEXX's recurring revenue growth and customer retention.
• The success of these innovations reflects IDEXX's strategy of expanding the Catalyst menu and introducing new platforms to enhance diagnostic accuracy and workflow efficiency.

Sentiment Analysis:

Overall Tone: Positive

• Management reported Q3 revenue up 13% (12% organic), Q3 EPS $3.40 with ~15% comparable EPS growth, raised full-year revenue and EPS guidance, expanded InVue placement expectations to ~6,000, and raised operating margin and free-cash-flow conversion outlooks — all indicating upward momentum and confidence.

Q&A:

• Question from Erin Wilson Wright (Morgan Stanley): Great. I want to unpack a little bit the strength of consumables in the quarter and what's sustainable -- what's sustainable here. For instance, how much of the strength is actually InVue consumables, lipase or just the new contracting terms when you do place an InVue? For instance, you used to give us this metric back when you launched Catalyst Dx, that you used to say, with every Dx upgrade, it translated into a considerable amount of consumables uplift. I guess, do you have that metric when you're placing kind of InVue's, you're establishing and recontracting with new IDEXX 360 relationships? And presumably, this is an all InVue consumables contribution? I just want to unpack that.
  Response: Management: VetLab consumable growth is broad‑based — driven by a 10% installed‑base expansion, specialty tests (pancreatic lipase, SmartQC, Cortisol) and early InVue add‑on consumables; InVue is additive (didn't exist before) and contributes both direct consumable uplift and longer‑term recurring revenue rather than simply substituting Reference Lab volumes.

• Question from Erin Wilson Wright (Morgan Stanley): Okay. And then are we still on track with FNA and the launch? And what are you seeing from some of the pilot programs with FNA so far? And do you think there's this backlog of customers kind of waiting for FNA that should support another leg of growth here for InVue?
  Response: Management: On track for FNA (mast cell tumor) rollout; most InVue customers who use ear cytology/blood morphology are expected to adopt FNA as well, supporting additional consumable and utilization upside.

• Question from Michael Ryskin (BofA Securities): You've put up really good numbers despite the end market weakness. I was just wondering if you could parse out a little bit, you talked a lot about InVue and the strength of that rollout there, whether you're seeing sort of the ability to leverage that for the rest of the business, the uplift you're seeing in consumables that will add consumables in the Reference Lab. Just sort of -- I don't know if I would call it a cross-selling opportunity, but just the ability to bring that into the vet clinic office, if that's leading to a stronger IDEXX premium and just ability to really drive the performance despite the continued softer macro?
  Response: Management: InVue provides direct recurring consumables and indirect uplift — placements often tied to IDEXX 360 programs that drive broader testing (Reference Lab, rapid assay, SaaS); aging pet mix is boosting diagnostic frequency and utilization, supporting resilience despite softer wellness visits.

• Question from Michael Ryskin (BofA Securities): You talked about investments a couple of times in the prepared remarks. Could you expand on that a little bit, between incremental R&D on future platforms and maybe to continue to work on Multi-Q Dx, I don't know how much you'll be able to talk about that, or the commercial sales force. Just wondering the strength that you've had in the top line this year, how you're flowing that through the model and just sort of what are your relative priorities for investment from that strength?
  Response: Management: Priorities are disciplined — short‑payback commercial investments (salesforce expansions internationally and modest US adds) and multiyear R&D on biomarkers, instruments and software; investments funded while maintaining margin improvement (Q3 OpEx +12% y/y).

• Question from Jonathan Block (Stifel): The '25 placement guidance implies roughly 1,500 systems for 4Q '25. Are you caught up with orders when we think about where you are with InVue? Any thoughts on the longer‑term 20,000 over 5 years goal given the strong start?
  Response: Management: Still targeting 20,000 InVue placements over 5 years; raised 2025 target to ~6,000 placements (implies ~1.5k in Q4) and feel good about the early traction and trajectory.

• Question from Jonathan Block (Stifel): International CAG Diagnostic recurring revenue grew ~14% — what's driving that strength and is this the sustainable run rate given future tailwinds?
  Response: Management: International strength driven by salesforce expansion, Reference Lab network build‑out, software localizations and a synchronized commercial/support ecosystem; Q3 included ~100 bps benefit from equivalent days.

• Question from Christopher Schott (JPMorgan): On the aging pet commentary — is this becoming a tailwind for 2026 and beyond or could it remain bumpy? Also, can you elaborate on visit trends internationally?
  Response: Management: Aging pet population is likely a multi‑quarter tailwind increasing non‑wellness visits and diagnostic utilization, though quarter‑to‑quarter variability remains; international visit visibility is limited but appears stabilized.

• Question from Daniel Christopher Clark (Leerink Partners): On days‑adjusted CAG recurring growth (13%) and the 13%–16% potential range, what gets you to the higher end — continued sales rollout or other factors?
  Response: Management: To reach 15%–16% requires continued disciplined salesforce expansion, Reference Lab investments, localized support and product‑market fit — all combined support the higher growth range.

• Question from Brandon Vazquez (William Blair): With Cancer Dx enabling entry into competitive accounts, how does that help you take more share on the Reference Lab side given many contracts?
  Response: Management: Cancer Dx is a differentiator (≈17% of submissions from competitor labs) that can open doors to reintroduce IDEXX Reference Lab services and expand relationships, but it's one of multiple commercial levers.

• Question from Andrea Zayco Narvaez Alfonso (UBS): On Cancer Dx adoption and screening: can you frame age/frequency sweet spots and how you engage customers given wellness visits lag?
  Response: Management: Two use cases — diagnostic (current majority) and screening (recommended for dogs ≥7 and high‑risk breeds); panel expansion (lymphoma + mast cell + third in 2026) will materially strengthen the screening value proposition.

• Question from Keith Devas (Jefferies): You've launched many innovations recently and more are planned — how do you ensure you aren't doing too much too soon and are your reinvestment plans adequate?
  Response: Management: Innovation cadence is intentional and demand‑driven; commercial organization has capacity to absorb launches and investments are disciplined, scalable and adjusted based on market feedback.

Contradiction Point 1

InVue Placement Expectations

It involves differing expectations regarding the number of InVue placements, which impacts the forecast for revenue growth and market penetration.

Can you explain the strength of consumables in the quarter and what aspects are sustainable? - Erin Wilson Wright (Morgan Stanley)

2025Q3: We're now off to a great start with over 10,000 placements and are confident we will achieve our goal of 20,000 placements over the next five years. - Jay Mazelsky(CEO)

What is the long-term launch trajectory for inVue compared to SediVue, and why might the outlook be more positive? - Daniel Christopher Clark (Leerink Partners)

2025Q2: We're not updating the long-term outlook for InVue Dx at this point, but we're off to a strong start with 5,500 units in 2025. We see potential for 20,000 units over five years. - Andrew Emerson(CFO)

Contradiction Point 2

International CAG Diagnostics Growth Drivers

It highlights differing explanations for the growth drivers of international CAG Diagnostic recurring revenue, which is a key revenue stream for the company.

What's driving the international CAG Diagnostic recurring revenue growth, and will the current run rate continue or improve? - Daniel Christopher Clark (Leerink Partners)

2025Q3: International CAG Diagnostic Recurring Revenue grew over 13% year-over-year, driven by lower pricing, new instrumentation and expanding diagnostic frequency. - Jay Mazelsky(CEO)

How did CAG Diagnostics perform this quarter, and why is international growth outpacing the U.S.? - Jonathan David Block (Stifel, Nicolaus & Company, Incorporated)

2025Q2: International CAG Diagnostic Recurring Revenue grew over 11%, driven by technical markets and PBM sales organizations. - Andrew Emerson(CFO)

Contradiction Point 3

Macroeconomic Impact on Diagnostics

It involves differing assessments of the impact of macroeconomic conditions on diagnostics, which are crucial for understanding the company's resilience to external pressures.

Is the aging pet trend a growth driver, and can it sustain growth through 2026? What are international market visit trends? - Christopher Schott (JPMorgan)

2025Q3: Diagnostics are very sticky and very resilient in an economic downturn. - Jay Mazelsky(CEO)

How is pet owner demand in the U.S. holding up amid economic uncertainty? - Katarina Markovic (JPMorgan)

2025Q1: We're seeing some pressure in wellness visits, but diagnostics remain strong. Some macroeconomic constraints exist, but they are well reflected in our guidance. - Andrew Emerson(CFO)

Contradiction Point 4

inVue Feedback and Market Demand

It involves differing perceptions of the market demand for InVue and the feedback received from customers, which are critical for assessing the product's market potential.

What impact is InVue's rollout having on the business and macro trends? How is the IDEXX premium being leveraged? - Michael Ryskin (BofA Securities)

2025Q3: Initial feedback on inVue is positive, as it addresses well-understood clinical needs. The removal of gating in April led to a significant increase in placements, with over 900 in April, supporting the 4,500 annual target. - Jay Mazelsky(CEO)

Regarding inVue, what feedback have you received since removing gating, and how should we view placements for the remainder of the year? - Michael Ryskin (Bank of America)

2025Q1: We've been hearing from customers who are really eager and excited about what inVue brings to the market. It both optimizes workflow, improves the quality of the diagnostic and executes this in new technology that, as I said, they're eager to bring into their practice. - Jay Mazelsky(CEO)

Contradiction Point 5

InVue Rollout and Impact on Business

It involves differing statements about the impact of the InVue rollout on the business, which could influence investor expectations regarding growth and strategic initiatives.

How is InVue's rollout impacting the broader business and macro trends? How is the IDEXX premium being leveraged? - Michael Ryskin (BofA Securities)

2025Q3: InVue has direct and indirect economic benefits, with about 2/3 of placements coming from North America. IDEXX 360 programs allow customers to fulfill volume commitments and increase other testing. This has some leverage impact, benefiting both IDEXX VetLab consumables and other areas. - Jay Mazelsky(CEO)

What are IDEXX's 2024 strategies and key accomplishments? - Jay Mazelsky (IDEXX Laboratories)

2024Q4: IDEXX inVue Dx and IDEXX Cancer Dx with canine lymphoma are two major new products launched in 2024, which will benefit our business for years to come. - Jay Mazelsky(CEO)