Daniel Clark

Daniel Clark from Leerink Partners inquired about the primary product contributors to the $60 million increase in the full-year innovation sales guidance and questioned the company's philosophy on reinvesting financial upside into the business versus accelerating debt reduction.

Answer

CFO Bob VanHimbergen stated that while the entire innovation portfolio is performing well, Credelio Quattro is a standout driver of the guidance raise. He noted some seasonality in products like AdTab. Regarding capital allocation philosophy, VanHimbergen explained that the company will continue to reinvest in DTC and R&D as long as the data supports strong top-line growth and returns, but will actively monitor effectiveness and ratchet down spending if returns diminish. He highlighted that total dollar OpEx is guided to be down sequentially from Q2 to Q3.

Daniel Clark questioned whether the success of the Zenrelia sampling program has altered the product's sales and marketing strategy, and asked for feedback from veterinarians on its use as a first-line treatment.

Answer

President and CEO Jeff Simmons confirmed the sampling program is a key driver of clinic adoption, stating that once veterinarians experience Zenrelia's efficacy, it leads to conversion. He explained the strategy is multifaceted, including vet tech-to-tech engagement and DTC marketing to drive pet owner interest. Simmons noted that experience with the product, supported by KOLs, is increasing vets' willingness to prescribe it, which is critical for establishing it as a first-line treatment, especially as the peak allergy season begins.

Daniel Clark asked about the tracking of Zoetis's previous guidance for double-digit growth across the dermatology, Simparica Trio, and OA pain franchises, and how to project their future growth given current market dynamics.

Answer

Wetteny Joseph, Chief Financial Officer, stated that the key franchises (dermatology, Simparica, OA pain) are tracking to about 9% year-to-date, down from the initial double-digit expectation, and are now expected to achieve high single-digit growth for the full year. He noted the impact of OA pain headwinds on Q3 performance but highlighted encouraging signs of Librela stabilization and a less than 1% decline in U.S. dermatology therapeutic visits in Q3, an improvement from prior quarters.

Daniel Clark of Leerink Partners inquired about the current tracking of Zoetis's previous guidance for double-digit growth across its dermatology, Simparica Trio, and OA pain franchises, and how to project the future growth of these key areas given the recent market dynamics.

Answer

CFO Wetteny Joseph stated that the key franchises (dermatology, Simparica, OA pain) are tracking at approximately 9% year-to-date, down to 2% for the quarter, and are now expected to achieve high single-digit growth for the full year. He noted that the stabilization in OA pain is helpful, and therapeutic visits for dermatology in U.S. clinics were down less than 1% in the quarter, an improvement from previous quarters. Joseph deferred specific 2026 forecasts to the February guidance call but highlighted encouraging signs.

Daniel Clark sought clarification on the expected timing of a competing launch in the dermatology space, which the company anticipates in the fourth quarter. He asked if this timing had changed from previous expectations and how that might have affected the full-year guidance.

Answer

EVP & CFO Wetteny Joseph explained that the company's guidance has consistently factored in a competitive launch in the second half of the year. He noted that they model various scenarios regarding timing and competitive intensity, and the current expectation for a Q4 launch is within that range of scenarios and is fully reflected in the company's raised full-year guidance.

Daniel Clark asked what factors would drive international CAG recurring revenue growth from its current 13% (days-adjusted) to the higher end of the 15%-16% potential range. He also asked if there was any impact on headline visit numbers in Q3 from lapping the prior year's launch of a competitor's pain medicine.

Answer

Jay Mazelsky, President and CEO, reiterated that continued sales force expansion, product-market fit (e.g., ProSite One), building out the reference lab network, and ensuring strong customer support are key drivers for achieving higher international growth rates. Andrew Emerson, CFO, clarified that there was no specific impact to highlight in Q3 related to lapping the competitor's pain medicine launch, indicating a clean view of sector metrics and IDEXX's performance.

Daniel Clark asked what factors would drive international CAG recurring revenue growth from its current 13% (days-adjusted) to the higher end of the 15%-16% growth potential. He also followed up on the impact of a different company's pain medicine launch, mentioned in the prior year's third quarter, on headline visit numbers in the current quarter, now that IDEXX has lapped that launch.

Answer

Jay Mazelsky, President and CEO, explained that achieving 15-16% growth involves continued Salesforce expansions (disciplined, market-ready, product-market fit), specific products like ProSite One, building out the global reference lab network for next-day performance, and ensuring strong in-country customer support ahead of commercial investment. Andrew Emerson, CFO, clarified that the prior year's commentary on the pain medicine launch referred to its effect on clinical visits and inverse impact on diagnostic frequency, not a direct impact on IDEXX's business. He stated there's nothing specific to call out in Q3 related to that, and they have a clean view of sector metrics and IDEXX's interim performance.

Daniel Clark questioned the long-term launch trajectory for InVueDx, asking if its performance could exceed that of the SediVue analyzer, which serves as a historical analog.

Answer

CFO Andrew Emerson stated that IDEXX is not updating its long-term outlook at this time but reiterated the five-year placement opportunity of approximately 20,000 units for InVueDx. He noted that the strong start of 5,500 placements in 2025 positions them well to achieve this goal and mentioned that further updates may be provided at the upcoming Investor Day.

Daniel Clark of Leerink Partners questioned the long-term launch trajectory for InVue Dx, asking if there's reason to be more positive about its path compared to the SediVue launch, which could serve as an analog.

Answer

CFO Andrew Emerson responded that IDEXX is not updating its long-term outlook at this time but reiterated the previously stated five-year placement opportunity of approximately 20,000 units for InVue Dx. He noted the strong start of 5,500 placements in 2025 positions them well and mentioned that updates might be provided at the upcoming Investor Day.

Daniel Clark of Leerink Partners inquired about customer buying behavior in the Supply Chain Services segment, specifically asking if there was any pull-forward ahead of potential tariffs, and questioned the primary drivers behind the recent momentum in the advisory business.

Answer

President & CEO Michael Alkire stated that the company did not observe any significant pull-forward of buying behavior related to tariffs. Regarding the advisory business, both Mr. Alkire and David Zito, President of Performance Services, attributed the momentum to a combination of strong market demand driven by financial pressures on health systems and improved execution, including the hiring of new leadership. They emphasized that Premier's trusted brand and comprehensive capabilities are key differentiators.

Daniel Clark of Leerink Partners asked for clarification on whether the selling season's early commitments being 'comparable' to last year was on a gross or net basis, particularly regarding the large former client.

Answer

CEO Peter Anevski confirmed the comparison is on a gross basis. He explained that to assess the underlying growth, one should exclude the large former client from both this year's and last year's figures to get a true like-for-like view of new business momentum.

Daniel Clark of Leerink Partners, on for Michael Cherny, asked about the significance of the European Medicines Agency (EMA) qualification for Simcyp, seeking to understand how it differentiates the product and what early customer feedback has been.

Answer

CEO William Feehery called the qualification a major accomplishment that provides a pre-qualification for the platform's underlying science. He explained that this streamlines the review process for customers by increasing consistency and reducing uncertainty across EMA member nations, making it easier to use the software in regulatory submissions.

Daniel Clark of Leerink Partners questioned the competitive dynamics in the RFP process, asking if more CROs are competing for deals and if there have been any notable changes in pricing.

Answer

CEO & Chairman Ari Bousbib responded that for large pharma, the top three CROs remain the main providers, while in other segments, the number of bidders hasn't changed much. He confirmed there is pricing pressure due to a tighter market and some competitors being aggressive. He stated that IQVIA's strategy has shifted to be more willing to match lower prices to win business and build its backlog, accepting some short-term margin pressure.