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IDEXX LABORATORIES INC /DE (IDXX)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered double‑digit top‑line growth and margin expansion: revenue $1.105B (+13% reported, +12% organic) and diluted EPS $3.40 (+21% reported, +15% comparable) with gross margin 61.8% and operating margin 32.1% .
  • Strong CAG Diagnostics recurring revenue (+11% reported, +10% organic) and instrument momentum (capital instrument revenue +74% reported, +71% organic) supported by >1,700 inVue Dx placements; VetLab consumables +18% reported/+16% organic; reference labs +10%/+9%; rapid assay −4%/−5% .
  • FY 2025 guidance raised: revenue $4.27–$4.30B, organic growth 8.8–9.5%, operating margin 31.6–31.8%, EPS $12.81–$13.01; higher outlook reflects stronger CAG recurring performance, more inVue Dx revenue, and FX benefit .
  • Against S&P Global consensus, Q3 was a clear beat: EPS $3.40 vs $3.146*, revenue $1.105B vs $1.071B*, and EBITDA $391M vs $370M*; management highlighted aging pet dynamics and increased diagnostic utilization as demand drivers .
  • Narrative catalysts: accelerated instrument placements (inVue Dx), adoption of Catalyst Cortisol, and upgraded FY EPS/revenue guidance—likely to drive positive estimate revisions and sentiment .

What Went Well and What Went Wrong

What Went Well

  • Double‑digit organic growth and margin gains: revenue +12% organic; comparable operating margin +120 bps; gross margin 61.8% (+80 bps comparable) from VetLab consumables and reference lab productivity .
  • Instrument momentum: CAG Diagnostics capital instrument revenue +74% reported/+71% organic, supported by >1,700 inVue Dx placements; total premium placements reached 5,665 in the quarter .
  • CEO confidence in innovation strategy: “delivering powerful new diagnostic capabilities… elevate clinical insights, streamline workflows” (Catalyst Cortisol, CancerDx, inVue Dx) .

What Went Wrong

  • U.S. same‑store clinical visits declined ~1.2%, with wellness visits −2.5% YoY, pressuring parts of the portfolio despite IDEXX’s premium growth vs visits .
  • Rapid assay products contracted (−4% reported/−5% organic) as pancreatic lipase testing shifted to Catalyst, partially offsetting price benefits .
  • Operating expense growth (+12% reported; +10% comparable) as IDEXX invested in commercial reach, R&D, and employee costs—necessary but a near‑term headwind to margins .

Financial Results

Core P&L vs prior quarters (USD)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$0.998 $1.109 $1.105
Diluted EPS ($)$2.96 $3.63 $3.40
Gross Margin %62.4% 62.6% 61.8%
Operating Margin %31.7% 33.6% 32.1%

Actual vs S&P Global Consensus (Q3 2025)

MetricConsensus*ActualBeat/Miss
Primary EPS ($)3.1459*3.40 Beat
Revenue ($USD Billions)$1.071*$1.105 Beat
EBITDA ($USD Millions)370.45*391.47 Beat
# EPS Estimates11*——
# Revenue Estimates10*——
Values retrieved from S&P Global.*

Segment revenue breakdown (Q3 2025)

SegmentRevenue ($USD Millions)Reported YoY GrowthOrganic YoY Growth
Companion Animal Group (CAG)$1,012.5 +13.5% +12.2%
Water$54.3 +8.2% +7.0%
Livestock, Poultry & Dairy (LPD)$33.9 +17.1% +14.2%
Other$4.5 +1.5% +1.5%
Total$1,105.2 +13.3% +12.0%

KPIs and operational metrics

KPIQ1 2025Q2 2025Q3 2025
CAG Diagnostics recurring revenue (reported/organic)+3% / +4.5% +9% / +7% +11% / +10%
VetLab consumables growth (reported/organic)+9% / +10% +15% / +14% +18% / +16%
CAG capital instrument revenue growth (reported/organic)(6.2)% / (4.6)% +66% / +62% +74% / +71%
Global premium instrument installed base YoY+9% +10% +10%
inVue Dx placements (units)302 2,388 1,753
Total premium instrument placements (units)4,163 6,070 5,665
New/competitive Catalyst placements (global)—1,091 1,203
Reference Labs growth (reported/organic)~flat / +1% +6% / +5% +10% / +9%
Rapid assay growth (reported/organic)(3)% / (2)% (3)% / (3)% (4)% / (5)%
Veterinary software & imaging growth (reported/organic)+9% / +7% +9% / +9% +11% / +11%
Free cash flow ($USD Millions)$207.9 $151.6 $371.2

Guidance Changes

MetricPeriodPrevious Guidance (Q2)Current Guidance (Q3)Change
Revenue ($USD Billions)FY 2025$4.205–$4.280 $4.270–$4.300 Raised
Reported Revenue GrowthFY 20257.7%–9.7% 9.6%–10.3% Raised
Organic Revenue GrowthFY 20257.0%–9.0% 8.8%–9.5% Raised
CAG Recurring Revenue (reported)FY 20256.5%–8.7% 8.3%–9.0% Raised
CAG Recurring Revenue (organic)FY 20255.8%–8.0% 7.5%–8.2% Raised
Operating MarginFY 202531.3%–31.6% 31.6%–31.8% Raised
Comparable Margin ExpansionFY 202550–80 bps 80–100 bps Raised
EPS ($)FY 2025$12.40–$12.76 $12.81–$13.01 Raised
Net interest expense ($)FY 2025~42 ~38.5 Lower
Share‑based comp tax benefit ($)FY 2025~15 ~23 Higher
Effective tax rateFY 2025~21.0% ~20.8% Lower
OCF (% of NI)FY 202595%–105% 105%–115% Raised
FCF (% of NI)FY 202580%–85% 95%–100% Raised
Capex ($)FY 2025~160 ~140 Lower

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI/Technology – inVue Dx rollout and utilizationControlled rollout in Q1; ramp to 2,388 placements in Q2; consumables tracking; plan for FNA “later in 2025” 1,753 placements; total premium placements 5,665; utilization aligned; raising full‑year placements to ~6,000 Accelerating placements/consumables
Catalyst Cortisol adoptionLaunched in NA late July; early enthusiasm >25% of NA Catalyst customers adopted in first 3 months; supports adrenal Dx at point‑of‑care Rapid uptake
CancerDx adoption>1,000 practices (Q1); ~2,500 by Q2; 15% submissions from competitive labs; screening potential ~5,000 practices through Oct; >17% competitive adoption; screening nearing parity with Dx aid Broadening usage
Supply chain/tariffsWell positioned; <1% revenue from China; local‑for‑local labs mitigate impacts Continued resilience; FX benefits; sensitivity provided; manage cost impacts into 2026 Managed risk
Sector demand/visitsU.S. clinical visits −2.6% (Q1), −2.5% (Q2); frequency/utilization up U.S. same‑store −1.2%; non‑wellness ~flat; wellness −2.5%; significant growth premium to visits Gradual stabilization; utilization tailwinds
International growthDouble‑digit installed base growth; tailored strategies; reference lab network expansion CAG recurring +14% organic; sustained days‑adjusted double‑digit growth; expansion into 3 countries Strong, multi‑year runway

Management Commentary

  • CEO (Jay Mazelsky): “We are delivering powerful new diagnostic capabilities… elevate clinical insights, streamline workflows, and create meaningful value for veterinary teams” (Catalyst Cortisol, CancerDx, inVue Dx) .
  • CFO (Andrew Emerson): “Comparable operating margin gains of 120 bps… gross margin expansion benefited from strong recurring revenue growth” .
  • On inVue Dx: “Customer feedback… slide‑free cytology workflow reduces technicians’ time… AI models trained on more than 60 million cellular images provide reliable, high‑quality insights” .
  • On CancerDx: “Momentum remains strong… platform will address over one‑third of all canine cancer cases with lymphoma and mast cell tumors” .

Q&A Highlights

  • Consumables strength is broad‑based, driven by installed base growth, specialty tests (pancreatic lipase, Cortisol), and early inVue Dx consumables; not merely substitution from reference labs .
  • FNA “lumps and bumps” for inVue Dx remains on track; most customers will use ear cytology, blood morphology, and FNA—expanding consumables pull‑through .
  • Aging pet dynamics: non‑wellness visits closer to flat; wellness still pressured; diagnostics frequency and utilization per visit rising, supporting IDEXX premium to visit trends .
  • International: sustained double‑digit installed base growth and tailored commercial ecosystem (account managers, field service, VetConnect Plus) underpin growth; ~100 bps “days” tailwind noted this quarter .
  • CancerDx competitive traction: ~17% of submissions from competitive lab customers, opening share‑gain opportunities on the reference lab side .

Estimates Context

  • Q3 2025 vs S&P Global consensus: EPS $3.40 vs $3.1459*, revenue $1.105B vs $1.071B*, EBITDA $391M vs $370M*—broad beats likely to drive upward estimate revisions. Values retrieved from S&P Global.*
  • Prior quarters: Q2 EPS $3.63 vs $3.3009*, revenue $1.109B vs $1.067B*; Q1 EPS $2.96 vs $2.844*, revenue $0.998B vs $0.996B*—IDEXX has consistently exceeded consensus, strengthening confidence in guidance raises. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue/EPS beat with upgraded FY guidance and stronger FCF outlook (95–100% of NI) positions the stock for positive estimate revisions and sentiment support .
  • Instrument cycle is a durable growth engine: inVue Dx placements tracking ahead (target ~6,000 for FY), broad consumables pull‑through, and Catalyst Cortisol ramp underscore recurring revenue visibility .
  • International remains a multi‑year TAM expansion story; management is investing in commercial density and reference lab networks to sustain double‑digit days‑adjusted CAG recurring growth .
  • Mix shift away from rapid assays to point‑of‑care Catalyst testing (e.g., pancreatic lipase) is structurally favorable for margin and workflow integration despite short‑term modality impacts .
  • Aging pet demographics and rising diagnostic utilization per visit continue to offset clinic visit pressures, creating resilience in core recurring revenue .
  • Raised FY margin outlook (31.6–31.8%) and lower capex (~$140M) enhance cash conversion and capital allocation flexibility (buybacks; leverage <1x gross) .
  • Near‑term watch items: wellness visit recovery pace, FNA rollout timing/consumables trajectory, FX/tariff dynamics; all are currently well‑managed per disclosures .