Q2 2025 IDEXX Laboratories Inc Earnings Call
Good morning and welcome to the idexx. Laboratories second quarter 2025 earnings conference call. As a reminder, today's conference is being recorded participating in the call this morning, our jazeli president and chief executive officer and Drew Emerson Chief Financial Officer and John Ravis, vice president. Investor relations idexx would like to preface the discussion today with a caution regarding forward. Looking statements. Listeners are reminded that our discussion during the call will include 4 looking statements that are subject to risk and uncertainties that could cause actual results to differ materially from those discussed today. Additional information regarding these risks and uncertainties is available under the forward-looking statements notice in our press release issued this morning as well as in our periodic filings with the Securities and Exchange Commission, which can be obtained from the SEC, or by visiting, the investor relations section of our website, idex.com
During this call, we will be discussing certain Financial measures not prepared in accordance with generally accepted accounting principles or gaps. A Reconciliation of these non-gaap Financial measures to the most directly comparable. Gaap measures is provided in our earnings release. Which may also be found by visiting. The investor relations section of our website in reviewing. Our second quarter, 2025 results and updated 2025 guidance.
Please note all references to growth organic growth and comparable, growth refer to growth compared to the equivalent prior year period. Unless otherwise noted to allow broad participation in the Q&A, we ask that each participant limit their questions to 1 with 1 follow-up as necessary. We appreciate you may have additional questions. So, please feel free to get back into the queue and if time permits will take your additional questions, today's prepared remarks will be posted in the investor relations section of our website after the earnings conference call. Concludes, I would now like to turn the call over to Andrew Emerson.
Good morning. I'm pleased to take you through our second quarter results and provide an update on our full year 2025 Financial Outlook. In terms of highlights idexx delivered another quarter of strong financial results supported by continued, strong Global execution and our Companion Animal business with momentum building in the adoption of idexx Innovations.
Revenue increased 11% as reported and 9% organically supported by nearly 7 and a half percent organic growth. In KAG, diagnostic reoccurring revenues reflecting continued gains in the US and double digit expansion in international regions.
Overall organic Revenue benefited by approximately 200 basis points from KAG instrument revenues, delivering a record quarter of Premium. Instrument placements, including nearly 2400 idexx in view DX instruments.
Partially offsetting these benefits. KAG diagnostic reoccurring Revenue growth in Q2 was constrained by impacts for macro and sector headwinds leading to a 2 and 1.5% decline in US. Same store clinical. Visit growth levels in the quarter.
IDEXX's operating performance continues to be strong in Q2, reflected in operating profit growth of 14% on a comparable basis, net of approximately 27% benefit from lapping a discrete litigation expense in Q2 2024.
Operating profit benefited from solid Revenue growth and operating margin gains, which were led by gross margin expansion.
The prior year period, discreet litigation expense, and a $0.10 benefit from share-based compensation.
Idexx execution remains strong as we advance our Innovation agenda in the CAG businesses, while continuing to work through pressure on clinical visit levels.
We're increasing our full-year revenue outlook by $90 million at midpoint, with an updated range of $425 million to $428 million.
This reflects an outlook for overall, reported Revenue, growth of 7.7% to 9.7%, including
Strong Q2 performance and increased in view of DX instrument Revenue, along with favorable impacts from foreign exchange updates.
Our updated full-year overall organic revenue growth outlook is for 7% to 9%, with organic tag diagnostic recurring revenue growth of 5.8% to 8%.
These organic growth ranges represent a half percent increase at midpoint to our previous outlook, supported by strong global execution in our tag business.
We're increasing our EPS Outlook to 12.40 to 12.76 cents per share up. 40 cents per share at midpoint reflecting 9% to 13% full year comparable, EPS growth,
We'll discuss our updated 2025 financial outlook later in my comments. Let's begin with a review of our second quarter results and recent sector trends.
Second quarter, organic Revenue. Growth of 9% was driven by 10%, KAG Revenue. Gains 8% growth in our water business and 3% gains in LPD
Strong CAG results were supported by KAG, with diagnostic recurring revenues increasing nearly 7.5% organically, including the global average. Net price improvement of approximately 4% and benefits from KAG, with diagnostic instrument revenues, increased 62% organically, aided by in-view DX placements.
Diagnostic recurring revenue growth in Q2 was supported by 11% organic gains in international regions, marking another quarter of double-digit expansion.
Strong international performance continues to be driven by IDEXX. Execution is reflected in solid volume gains, benefiting from new business and double-digit year-over-year expansion of our premium instrument install base, as well as benefits from net price realization.
Us organic KAG diagnostic. Recurring revenues grew 6% in Q2 supported by solid volume gains and 3 and a half percent benefit from net price realization
Us clinical visits, declines 2 and a half percent. In the quarter, reflecting an idexx, us CAG diagnostic reoccurring, Revenue, growth premium to us clinical visits of approximately 800, basis points up modestly from the first quarter.
Diagnostic frequency and utilization for clinical. Visit continued to expand solidly at the clinic level highlighting, the important and expanding role of diagnostics for those seeking Veterinary Services.
Idexx Innovation and Commercial execution, delivered or organic Revenue gains in our major testing modalities globally in the second quarter.
IDEXX's vet lab consumable revenues increased 14% on an organic basis in the second quarter, reflecting double-digit growth in both the U.S. and international markets.
Consumable Revenue expansion is supported by testing utilization across regions, including benefits from recent product, launches and high customer retention levels. While our commercial teams further build our Global premium instrument install base,
tag instrument placements, increase significantly in Q2 compared to Prior year levels.
Reaching a quarterly record, aided by the broad availability of MVX.
Total premium placements. Reached 6,070 units and increase of 23% year-over-year.
In 1091, Global new and competitive Catalyst, placements, including 346 new and competitive placements in North America.
Idexx nvx, placements of 2388 were driven by strong demand for our new, highly differentiated platform.
These new placements and high customer retention levels supported a 10% year-over-year growth in our premium instrument install base, and we're looking forward to building on this momentum during the second half of the year.
Idexx, Global Reference Lab revenues increased 5% organically in Q2, an increase of approximately 2% from the first quarter on a day's of adjusted basis.
Global Reference Lab gains continued to be driven by solid volume growth, including initial benefits from IDEXX Cancer DX.
Global rapid assay revenues declined, 3% organically in Q2 rapid, assay results were constrained by customer shifting. Pancreatic lipase testing to our Catalyst instrument platform, which we estimated to be a 5% headwind in Q2 Revenue growth,
Better Software and Diagnostic Imaging organic revenues increased 9%, driven by recurring revenues reflecting benefits from ongoing momentum in our cloud-based software installations.
Water revenues increased 8% organically in Q2 with growth driven by double-digit Revenue expansion and our International regions in solid. Mid single-digit growth in the US.
Livestock, poultry, and dairy revenues increased 3% organically in the quarter, led by commercial execution in North America and Asia-Pacific.
Turning to the p&l. We had another quarter of strong profit gains in Q2 reflected in 130 basis, points of comparable, operating margin and expansion. Net of approximately 600 basis points benefit from lapping a now concluded, discrete litigation expense in Q2 2024,
Gross profit increased 12% in the quarter as reported and 11% on a comparable basis.
Gross margins were 62.6%, up approximately 110 basis points on a comparable basis.
These gains reflected benefits from idexx, vetlab consumable growth, lab productivity and operational improvements and pricing which offset inflationary cost effects.
Reported gross margin gains were moderated by a 20 basis. Point negative impact related to Foreign Exchange changes net of our hedge positions
On a reported basis operating expenses decreased 9%, year-over-year reflecting a 19%, favorable growth rate impacts from comparison to the prior levels. Which included a 61.5 million expense in in the now concluded, litigation matter?
Adjusting for this, operating expenses grew modestly below revenue growth at 9%, as we continue to invest in innovation and commercial capabilities, while supporting operating margin gains.
Q2 EPS was 3.63 cents per share, including benefit of 8 million or 10 cents per share related to share based compensation activity, and 7 cents from a discrete tax Reserve release.
Foreign exchange added $3 million to operating profit and 3 cents to EPS in Q2, net of hedge effects, reflecting a comparable EPS increase of 17%.
Free cash flow was 152 million in Q2 and 360 million in the first half of 2025.
On a trailing 12-month basis. Our net income to free cash flow conversion. Rate was 80%, including approximately 8% unfavorable impact from the approximately 80 million judgment payment related to the now concluded litigation noted on prior calls.
For full year, we're maintaining our outlook for free cash flow conversion of 80 to 85% reflecting consistent outlook for a full year Capital spending of approximately 160 million.
Our balance sheet remains strong. We finished the period with leverage ratios of 0.8 times gross and 0.6 times net of cash.
During the quarter, we repaid approximately 103 million of long-term notes and continued to deploy Capital towards share repurchases, allocating 329 million during the second quarter.
For the first half of the year we've allocated 744 million of capital to share repurchases supporting a 2.7% year-over-year reduction in diluted shares outstanding for this period aligned with our previously stated expectations.
Turning to our full year 2025 Outlook as noted, we're increasing our projected range for overall Revenue to 425 million to 4,280 million.
At midpoint this reflects approximately 20 million, operational improvements building on strong second. Quarter performance and increased in view DX Revenue, expectations along with approximately 70 million benefit from updated, foreign exchange impacts at the rates. Outlined in our press release.
Our updated revenue growth outlook is 7.7% to 9.7%. As reported, this includes approximately 0.7% for full-year growth benefit from foreign exchange.
As a sensitivity, a 1% strengthening of the US dollar would reduce Revenue by approximately 8 million dollars in EPS by 3 cents for the year.
% reflects an estimated organic growth range of 5.8% to 8% for KAG. Diagnostic reoccurring revenues including consistent, 4 to 4 and a half percent benefit of global net, price realization, and US. Clinical visit declines aligned with more recent trends at midpoint,
We're increasing our expectations for in-view DX to 5,500 placements during the year, with instrument revenue expected to be over a million dollars, building off strong demand signals for the platform.
In terms of key financial metrics, we're increasing our reported operating margin outlook for 2025 to 31.3% to 31.6%.
Reflecting increased expectations for 50 to 80 basis points for full year comparable operating margin improvement, net of 180 basis point operating margin benefit related to the discrete litigation expense.
Impacts of updated foreign exchange effects.
This Outlook also incorporates commercial expansions in 4 countries during the second half of the year, including a modest expansion in the US to support our growing portfolio of diagnostic Solutions.
With respect to the dynamic trade environment, we remain well positioned to navigate the changing tariff landscape, with our best estimates included. In our outlook, our primary objectives and ongoing efforts remain focused on continuous supply to customers and minimizing impacts through operational planning.
Our updated full year, EPS Outlook is 12.40 to 12.76 cents per share, an increase of 40 cents per share at midpoint our EPS Outlook incorporates increased projections, for operational, performance of 11 cents and foreign exchange benefits of 22 cents at midpoint compared to our prior God.
We've also updated our tax benefit related to share-based compensation activity. Now, $15 million for the full year, an increase of $0.09 per share compared to our prior estimate. This is partially offset by $0.02 per share in unfavorable tax impacts compared to our prior projections, including benefits from the discrete tax reserve release and updated outlook for our base rate.
For the third quarter, we're planning for reported Revenue growth in line with the implied. Second half growth range, including approximately 1% growth benefit from foreign exchange. At midpoint the organic Revenue growth Outlook includes us clinical visit growth in line with recent Trends and expanding benefits from Innovation, including the cortisol slide which began shipping last week.
We're planning for modest operational margin expansion aligned with advancing additional commercial investments and the timing of project spend.
That now concludes our financial review. I'll turn the call over to Jay for his comments.
Thank you. Andrew. Good morning, idexx delivered, a very strong quarter of performance as reflected in solid execution across all key drivers of our strategy. Our focus on supporting our customers and our mission resulted in Rapid update of new Innovations, and the broader adoption of software tools that support practice workflow and staff.
The demand for diagnostics reflects its foundational role in assessing the health of the patient. While macroeconomic pressures persist, in many of our key regions, veterinary practices continue to prioritize investments in diagnostics and software that enhance efficiency, deliver clinical insight, and support better outcomes.
At the same time, pet owners are demonstrating a strong desire for our high standard of care.
Particularly for an aging pet population, in Q2, Diagnostics frequency, the percentage of clinical visits that included diagnostic tests sustained at 50 basis points year on year in growth. In important metrics, we track the continued growth in Diagnostics use, underscoring pet owners' focus on early detection and comprehensive treatment to support longevity and well-being. It also highlights the willingness to pay for advanced veterinary services where complex health issues may be of concern.
Idex is extremely well, positioned to support. These broad care objectives with our expanding menu of innovative Diagnostics testing platforms. And our cloud data software solutions that provides advantages in detecting disease and supporting patient workflow. Helping practices support more patient visits, productively comes at a time when many still face Staffing and client service challenges.
DX, placements, and high sustained momentum in our Chemistry and Hematology Solutions.
North America delivered a historic record Q2 of placements and economic value, supported by the unrestrained launch of mbx and well over 300 competitive and Greenfield catalysts.
We continue to see significant engagement across new Greenfield and competitive accounts.
Reflecting practices desire to invest in best in breed, innovative solutions, that improve patient care and Clinic productivity.
Supporting this. There was a strong Trend in new practice formation in Q2 with idexx selected in a high, number of instances as the partner of choice. In outfitting these practices with a full portfolio of about X Solutions.
Internationally, our teams achieved double-digit growth in KAG Diagnostics, with recurring revenue supported by the 10th consecutive quarter of double-digit installed base growth. This success is a result of commercial strategies tailored for local country circumstances, with an excellent product market fit and a network of reference labs supporting high service levels and an expanding commercial footprint.
Is Andrew mentioned in his full year guidance. We are making commercial Investments to expand 3 more international country organizations as well as modestly enhancing the US commercial team.
These high return Investments are a reflection of the confidence. We have in growing these geographies and supporting a broader, portfolio of diagnostic products that are resonating strongly with customers.
These expansions are key enablers to support an expanding set of Innovations. Ranging from the launch of idexx cancer DX in India, DX to new additions like Catalyst cortisol and pancreatic lipase. Each of these products represents a meaningful advancement. In our Veterinary Diagnostics offering and their successful adoption supports long-term growth.
There are also significant benefits to decreasing the number of customers that each account manager is responsible for, as our experience. Is that customers use more Diagnostics as part of their care, protocols, when we visit them more often,
We expect to have these expanded organizations in place by the start of 2026.
I keep focus of our commercial organization is ensuring that placements are high quality and positioned to drive strong recurring revenues over time. We continue to prioritize placements and practices where IDEXX Solutions can deliver the most value to both clinicians and their clients within Budx. As an addition to our premium instrument offering, we are seeing very strong sustained double-digit growth in EV amongst our field team.
As they have an opportunity to place both larger Dollar Value Suites for a single mbx addition, to an existing idexx. Customer
As a testament to the value we deliver, customer retention remains in the high 90s across diagnostic modalities.
This enduring loyalty reflects a confidence veterinarians have in IDEXX to be their partner in providing excellent patient care through the ongoing investments we make to keep their solutions at the leading edge.
Edex in udx continues to be a transformational platform that is reshaping point of care. Cytology testing since broad commercial availability commenced in April. Demand has exceeded expectations. We have now placed nearly 2700 instruments globally. This year through June, giving us confidence to increase our 2025 placement estimates. By a thousand units from 4500 to 5,500 feedback. From early adopters remains, highly positive practices, consistently highlight. The slide free intuitive workflow rapid, turnaround time and Diagnostics continents. Provided by INX in its Advanced AI powered insights.
Early consumables usage driven by testing in both ear, cytology and blood, morphology is highly encouraging.
With our expected launch of FNA for lumps and bumps later this year, UDX will play an important role in supporting our long-term, recurring revenue goals in UDX. It will also play an important role in our recontracting activity. As we saw a very high number of customers in Q2 extend their relationship with us, often in advance of the date required to do so.
The broad adoption of IDEXX Cancer DX is indicative of the value of clinician C in this test and the underserved need for early cancer screening.
Cancer remains one of the leading causes of mortality among dogs. The NX Cancer DX provides veterinarians with a cost-effective, highly sensitive tool to detect K9 lymphoma earlier. This enables earlier intervention and the possibility of significantly improved outcomes.
Initial utilization patterns are consistent with our expectations with customers using the test as both in aiding diagnosis and a small. But growing number of practices more broadly incorporating cancer DX into most Wellness, screening panels as awareness grows. And we brought in a test and menu over time to incorporate new cancer types. We expect a multiplier to our reference lab testing volumes.
Building up its early success. We've seen in North America. We are preparing for the international raw health of cancer DX in 2026, early excitement from veterinarians. In these regions, underscores, the significant Global need for affordable and accessible, cancer Diagnostics.
Last week, we launched Catalyst Cortisol in North America, our third new Catalyst test in less than a year, underscoring our commitment to expanding the platform's menu and our technology. For Life, Promise Catalyst, Cortisol enables veterinarians to measure cortisol levels rapidly at the point of care, supporting the diagnosis and monitoring of adrenal conditions such as Cushing's disease.
In addition to this, the addition of cortisol to catalyst, is the most frequently, requested menu expansion from our customers.
Early customer response, has been highly enthusiastic highlighting the value of real-time results. The guy treatment decisions during the patient visit
Catalyst. Pancreatic lipase large globally. Last year, continues to perform well and meet strong customer demand.
This Innovative test offers a quantitative single size solution that delivers rapid reliable results for both K9 and Feline patients. Suspected pancreatitis.
A comment and often challenging condition to diagnose early.
Adoption has been robust with over 40% of our Global Catalyst. Installed base, already utilizing the test where available
The strong uptake reflects the test clinical utility, the value of veterinarians place on speed, and accuracy and Diagnostic, workflows. And the continued expansion of our Catalyst menu to address. Important unmet needs in Vetter care.
The Catalyst Mark QC clip, which began shipping late last year is also seeing strong adoption, customers value, the load and go monthly Quality Control process, that ensures accurate results and instrument reliability.
New Innovations made meaningful contributions to the growth of idexx, vlab, consumables in a quarter.
Our software ecosystem continues to be an essential component of vex's differentiated value proposition.
By delivering intuitive Cloud native solutions that integrate Diagnostics Imaging client engagement and practice operations. Idexx software helps clinics approve efficiency and patient care. While driving incremental recurring revenues for our business.
Our cloud-based pims platforms such as easy. Vet Ando delivered, solid double-digit installed base growth with particularly strong demand for multi-location practices and corporate accounts. The next are choosing these solutions for their modern user experience, scalability and robust integration with the idexx Diagnostics ecosystem,
That will our pet owner engagement application. So I'll continue momentum and Q2 with double digit, sequential growth and active users compared to q1 Bells, integrated, communication tools are helping clinics approve, appointment, adherence, and drive compliance with recommended care.
early customer data, shows the practices using Vel experience increased, visit volume, higher Diagnostic, serialization and better treatment plan compliance positive indicators that support our thesis that digital engagement drives better clinical outcomes,
Our Diagnostic Imaging business continues to demonstrate strong momentum too, extending clinical capability in streamlining Imaging. Workflows our low dose, High image quality, radiographic Imaging systems paired with our idexx. Webpack software provides seamless image viewing sharing and storage fully integrated into Veterinary practice. Workflows in the second quarter we surpassed and installed base of 10,000 Imaging systems in North America, with a comparable number of customers subscribing to idexx web packs, highlighting strong alignment between Hardware adoption and recurring software engagement.
Healthcare demand pet ownership remains elevated. In the Aging pet population continues to expand supporting higher levels of Diagnostics utilization over time. Our Focus remains on executing with discipline, supporting our customers, through innovative solutions and investing in capabilities that position addicts to capture our significant long-term opportunity.
Diagnostics sit at the center of the system of care and pet owner, expectations for Quality Care continues to rise.
IX is well positioned to lead and our focus is on exceptional execution, to deliver solid growth and profit gains
As I conclude our prepared remarks, I want to express my deep appreciation for our 11,000, idexx employees worldwide.
The commitment to Innovation, customer partnership and operational excellence. It's what enables us to deliver these results order after quarter. I'd also like to remind you that we will be hosting our annual investor day on August 14th at our Global headquarters in Westbrook. Maine, the session will be streamed live for those unable to attend in person.
With that, we'll conclude the prepared portion of our call and open the line for questions.
Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speaker-phone, please make sure your mute function is turned off to allow the signal to reach our equipment. Again, press star 1 to ask a question and we'll pause for just a moment to assemble the queue.
We will take our first question from Chris shot with JP Morgan.
Uh, great, thanks so much for the question. Um, I was hoping you could just elaborate a bit more on the in view uptake and maybe specifically what type of practices. Are you seeing the great amount of greatest amount of traction here? Uh, and then there's a second part of that, just obviously some some, you know, um, some very good Trends here with placements but when I look at that 5,500 placements for the year, I do think it implies a bit of a Slowdown from what we saw in 2q for like a quarterly placements. Anything notable we should think about in terms of the the gating of of placements through the rest of the year. Thanks so much.
Good. Good morning Chris. Uh, thanks for the question on interview. The, you know, from an just a high level standpoint the, the feedback we're getting from customers. Uh, in view is is excellent. And uh, you know, it's really a long 2 lines. 1 is it helps them with workflow, you know? As we know both you know are psychology and blood. Morphology are things that are done in the practice today. They tend to be time intensive using microscopes so that's 15 to 20 minutes. The results are often inconsistent. And so what customers tell us, is they appreciate not only the workflow benefits but also the performance getting consistent. Highly accurate results is important. And therefore, you know, there there's been a lot of demand from it. We did update, as you mentioned the 5,500, you know placement forecast. We think that that's
Uh, reasonable a reasonable assumption to take, uh, the consumables usage across both ear, cytology and blood morphology tracking very well to to forecast, in usage. We think when we release, uh, the FNA mums and bumps later on, in the year, it'll continue to drive interest in in the platform and and continue to drive, you know, higher consumables usage. The the placement in terms of the overall profile of where we're placing, you know? And you just as you would expect, It's a combination of, you know, sweets for customers who don't have, but they are chemistry and and hematology because it fits extremely well with hematology Solutions, but also existing cidex, uh, customers who, you know, who have our suite, but see the chance of doing ear, cytology both uh, on the blood morphology side and also a, as a complement to hematology and CBC, but also a new new testing category.
the ear cytology is, is very
Uh, promising.
Thank you.
We will take our next question from Aaron Wright with Morgan Stanley.
Okay, great. I'll I'll keep it on in view here. So um can you talk a little bit about the contracts that that, you know, coincide with the placements in terms of consumables agreements and and in the consumables flow through there on like what's surprising you in terms of utilization and, and are you seeing better uptake from the Mom and Pops versus some chunkier corporate accounts in terms of how we think about that, Cadence? And in terms of Chris's question earlier and then, you know what, I'm getting at here too. Is that look the the the consumables Revenue grows kind of on an organic basis, was probably the strongest in 2 years. I mean, how much was in view of a contributor to that? Thanks.
Let me take the last part of your question. First, we we don't break out the consumables usage between the in View and pancreatic lipase, and some of the new Catalyst specialty tests that we have. I, I did mention that those were important contributors to our overall results. We, we have seen nice, uh, volume growth. And I think it's just a reflection. We have a very large installed base of, like, uh, Catalyst for example, and our ability, that the ramp that would come out with a new test is something that over time with our commercial organization. You know, we've gotten better at uh you know, in terms of placements, you know, getting back to Independent practices for versus Corporate practices for corporate practices. There tends to be a little bit of a longer lead time in terms of they want to first, you know, pilot that it could be, you know, it could be a fairly sizable number of instruments that they want to Pilot before they place before they decide.
To uh Place. Let's say a new instrument, like in view at all of their, their practices independent practices. Tend to move, you know, much more much more quickly. And uh and that's that's not surprising. It's it's really just an end of 1 and uh could assess uh what they need in. You know, in terms of usage. It's it's just that you would expect, you know, for these are very common clinical use cases. So if you take a look at your cytology most practices,
Of a reasonable size 3 or 4. Veterinarians will tell you that something that they do, pretty much on a daily basis, uh, for for blood morphology, you know, most most practices that say, an average practice at a US is doing approximately 2, chemistry, and hematology tests a day. And we know in, uh, majority of cases they would, uh, benefit from also adding a blood morphology to a CDC where they get an aberrant result, or or something indicating the need to investigate further. So, you know, overall consumables usage is, uh, is positive. It's, it's in line with where we thought it would be and, uh, the FAA lumps and bumps, only I think improve that over time. When we come out with it.
Okay. Great. And then on guidance, what's reflected in terms of that office, visit Trends. Now what gets you to the high and low end of the range, um, and what's, you know, given what's implied in the second half? How should we be thinking about the quarterly Cadence here? Thanks,
Morning, Aaron, uh, just in terms of the guide itself, we did highlight, you know, in the, uh, prepared remarks that we have updated clinical visits, you know, more in line with the recent trends that we've had. So the past several quarters, we've been uh, trending more in about the 2 and a half percent range. Uh, you know, I think about the midpoint reflecting, you know, approximately that that amount. Um, you know, as you look at the Q2 to Q3 or Q4 as an
Example with our second half implied. Um, growth expectations, really. It's not a meaningful step up, you know, I think we'll continue to benefit from, uh, the building momentum that we have on Innovation as J. Highlighted, I think there's a lot of excitement around in view. Uh, we were launched cortisol test last week, uh, within North America, we're still building on, uh, pancreatic live pace and cancer DX as well. So, we feel really good about, you know, kind of the momentum that we're building from an innovation and volume perspective within the business. Um, and there's, you know, not a material Step Up in CAD diagnostic, reoccurring, Revenue that I think we've captured in our Outlook,
Great. Thank you.
We will take our next question from Dan Clark, with lorinc partners.
Great, thank you. Good morning. I just had a question on how you're thinking about the longer-term launch trajectory of Envy. Obviously, you took up the placement guide for this year, but is there any reason to think more positively about the trajectory here relative to Set of You as an analog? Thank you.
Good morning, Dan. Uh, so we're not updating anything in the longer term at this point. You know, we have highlighted that we see an opportunity for a 5-year placement of approximately 20,000 for in view. I think we're off to a really exciting, uh, start here within 2025, you know, having a, a starting point, you know, within the year of 5,500 instruments, you know, we'll position this really well for that. Uh, some of our other uh, instruments as said of you or
Hematology may be slightly different just in terms of the categories that they support. So we feel good about the longer term. We may provide updates, you know, within our Investor Day in a couple of weeks.
We will take our next question from Michael, Riskin with Bank of America.
Tied together a couple of small follow-ups. Uh, so first, just on the guide, um, I think you called out an increased reported revenue of $90 million, $70 million of which is from FX, and the remaining $20 million, $10 million is in view placements, because you're saying $60 million instead of $50 million for that. If I've got my math right, um, just the remaining $10 million, is it just a combination of different moving pieces? Um, I know, like you just said, you're assuming visits are a little bit weaker. It seems like the price has reiterated. Just anything you can talk through on that last little bridge of the revenue guide, so we can tie that off.
Good morning, Mike. This is Andrew.
Yeah. Just in terms of how we think about the go forward. Uh, you highlighted it correctly. We have about 70 million dollars related to Foreign Exchange impacts, um, aligned with the, uh, rates that we have published in our, our press release specifically, you know, the uh, other 20 million is really operationally driven and you know, we certainly performed exceptionally well in Q2 uh we're really thinking about that, you know, continuing as we move forward. And, you know, we're expecting some momentum, build with the Innovation and the execution we are investing back into the business as well as J highlighted. We do plan to expand uh in 3 countries as well as modest expansion in the US to continue to support our customers and and grow volumes. And you know, we we see that as a pathway to achieve the other 20 million of operational growth um between our performance Q2 and our outlook for the full year. Despite the fact that
It does remain fairly Dynamic, you know, clinical visits have been pressured. You know, we, we've saw a decline of about 2 and a half percent in Q2 and and again we're uh, anticipated that that Trend continues for the remainder of the year.
Okay, and then on the, on the, in view consumable side, I know you don't break it out and you're not going to quantify it. You talked about the, the 35 5500 range previously. But just when you place the instrument in the um in the vet clinic, is there an initial bolus of consumers that goes with that, that sort of like sold in tandem with it? Do you start taking orders right away? Have you noticed is there, you know, can you talk about either the initial placement, or maybe the initial ramp up of utilization? Um, I know you gave the 35 to 55 range previously but just trying to think through how that played out in the quarter, given the, the mass of of box placements. I'm trying to see if there was anything tied in the consumables Revenue to that.
Okay, a couple couple things Mike the the mvx has a, a paper run in Auto replenishment capability with it. So that as the customer they they make purchase, you know, a couple couple sleeves to get started of the different cartridge types, but as the customer uses they the cartridges and uh, as part of Paper Run, we are able to track that and then uh, obviously auto ship Replacements to it. So it's uh, you know, you don't typically see,
Big bus at lunch, 1 thing that we have gotten I think very good at as a as a company as part of the onboarding and training process is spending quality time with with a customer making sure that the customer develops muscle memory in terms of how to use the how to use the instrument and get very comfortable with it. So there's not a you know typically a longer ramp to get comfortable and and Train everybody uh perhaps uh relative to historical benchmarks.
Oh, I'll get back to you.
We will take our next question from John Block with Stifel.
Order. And then maybe, if you can just talk about, you know, the ongoing tag DX recurring divergence, if you would, in the results between.
International and U.S. International continues to be really solid. I want to see stuck in mid-single digits, but still sort of mid-single digits is.
Even though I believe some of the Innovation is is maybe more prominent US versus the early days of international and then I'll just ask my follow-up. Thank you.
Good morning, John. Uh, nothing specific to Cod and Friends within the quarter. I think you, on our Q1 earnings call, we did highlight we were off to a solid start within InView, with six placements.
Macro and sector headwinds, I think similar to the us, we don't have metrics to provide on, you know, some of the headwinds, you know, by country or or within the interactive region there, but um, execution continues to perform exceptionally. Well, as we commercialize some of the new products and in the US, we have seen Improvement. Yeah, I think if you look even on a day's adjusted basis compared to q1, uh, we've seen, you know, well over 150 basis point increase in in Q2. And again, I think that's largely the result of, you know, Innovation ramping. Um, and you know, our focus on, you know, really supporting our customers to drive, uh, testing. And you see that play out within the diagnostic frequency and utilization within the sector metrics as well. Uh, we delivered about 50 basis, point Improvement on diagnostic frequency and Q2. So, uh, you know, I think it, it comes back to what we're focused on which is executing, you know, across across the diagnostic solution set that we have and you know continue to partner with our customers on how to leverage Diagnostics more effectively John maybe just 1
Comment, then the US versus International typically with a product launch. We we started in the US. So you do see some uh, you know, the first direction is in our North American market and then International and and with some tests there may be regulatory or license requirements before we can sell in those those country markets. What what I would say is that for a lot of our specialty tests like pancreatic bypass and it's probably going to be true for for cortisol is very
Rapid uptake in our international markets. These are very technical markets with a DVM sales organization, and so you can't neatly compartmentalize between us and some of these international country markets. So there's really, I think, broad interest.
Got it. That was helpful. Thanks. And then.
Maybe just to follow up, you know, with...
If you can follow the different numbers, with price up for visits, Down 2 and a half, in the quarter.
The the 2q 255 addicts premium as we Define it.
It was up a solid 6% for Q2.
So can you talk to what reeler the premium in Q2.
And then, arguably, you like why the guidance assumes? This does not stick.
And the back part of 2025 and Q2 is 25, you know, considering you got these new innovations, right? And they should be ramping like the incremental from those innovations should be greater in Q2 2028 and specific to Q2 as a build momentum. Yet the premium again, as we define, it seems to be more modest in Q4 versus Q2, and hopefully some of that real-time math made sense. Thanks, guys.
Yeah, John I I uh I'm not entirely sure. I follow all the math but let me just, you know, take a step back and and highlight. Yeah, I think if if you take a look at, you know, how we performed in the second quarter, um and then the implied, you know, second half guide really we're we're still in in the same range, right? Our midpoint would suggest about a 9% growth on overall, uh, organic revenue and CAG diagnostic reoccurring revenue of about 7.8% versus, you know, Q2 of about 7.4. So we do anticipate that will benefit, you know, we'll see some ramping benefits here in in the second half. I think we've calibrated the impact of Innovations, as well as adjusted for the more recent trends for clinical visits. Uh, it does remain Dynamic, you know, from, uh, a clinical visit perspective, we're not anticipating that that's going to change at this point, but we are excited by at The Innovation that we're watching, including cortisol, which didn't have an impact in the second quarter would be on shipping that last week. So, um, you know, we're really focused on, you know, strong execution.
You know, within our, our areas of of, uh, Focus within Diagnostic and software, um, you know, I think we've factored that into our Outlook, uh, overall we do expect some, you know, pricing benefit in the second half compared to the first half as well. We had noted on prior calls that we were going to begin lapping, uh, some of the larger agreements that we have last year, uh, in this at the second quarter, specifically which should give us a little bit of uplift on that as well. So, I think overall we're well positioned,
It does remain to be a pretty dynamic environment that we're operating within, and we're just saying calibrated for that.
As a reminder, if you would like to ask a question or if you have a follow-up question, please press *1.
We'll take our next question from Ryan Daniels with William Blair.
Countries that you're moving into, thanks.
Yeah, good, good morning, Ryan. So for the international country markets, those are existing markets that we participate in. And what we're doing with those Investments, is we, we continue to increase the commercial density. Uh, our International account management, coverage tends to be much higher than what we see in the US. And the US. It's between 110, 120 accounts per per BDC or account manager internationally. It's it's uh, much higher than that. It obviously varies by country. We know that just like in the US and North America when we call on customers,
They grow, uh faster. They use more Diagnostics, of course, we benefit, you know, from that. These are our investments in the entire ecosystem. So not just the the vdcs, but also Professional Service veterinarians in the field service representatives. And they go, they go hand in hand with Investments, we've made in our Reference, Lab, Network, and software Solutions, like vetconnect Plus in terms of expanding menu in these International countries. So that uh, all the pieces are in place for for good growth. And what we typically find is, you know, we we have a Playbook it's obviously localized by different country markets but that we're able to, to get a very nice Roi on on those Investments.
At a fairly short period of of time in in the US we we have good account coverage. Uh, we do find that, you know, as we have increased the size of our overall portfolio. In terms of point of care and reference labs and and software being able to support that selectively. We've done that. I guess it's been about 18 months or so. We'll continue to do that. Makes a lot of sense. It supports the productivity of our us commercial organization which is also very, very high and enables us. The the really commercialized just a very rapid pace and and breadth of innovation that that we've had over the last couple years.
Okay, perfect, thank you for that. And then as a follow-up, I wanted to turn to the other kind of innovation this year in cancer DX and just hear your early feedback. I know you shared some commentary in your prepared comments, but I'm curious if there's anything that surprised you about how it's being used, either as part of a broader panel, you know, at a lower price, or are they seeing more standalone uses, uh, individual diagnostics? It sounds like that might be coming from some competitive accounts in particular, I assume, or they're just purchasing that. So I’d love to get some color there. Thanks.
Sure. So, you know, we've had, we've had a lot of enthusiasm from customers in veterinarians, but also also pet owners, you know, a little bit surprising because we don't we don't directly Market to Pat on ours and I'd say, we're we're right about where we thought we'd be. You know, the initial waiting is probably a bit more heavily weighted towards at 8 in diagnosis and and this isn't really surprising as with these type of Novel, new tests, what customers have to do is they test the test for for performance and the feedback has been very, very positive. You know, specificity as we've gotten more data is over 99%. Uh, the sensitivity is, we've disclosed earlier is 79% and we're achieving the published turnaround times, which is super, super important because pet owners don't want to have to wait, you know, more than a couple days for for results. Uh, you know, I'd say that the number of independent practices and
Corporate groups who are using the test broadly, it Wellness experience it. It's still, it's still low, it's very days. But I would say that they also have plans to be able to do that. And it's, it's growing and they see that as a way of of really pulling through broader, Wellness, uh blood work as we have disclosed, we have over uh, 2500 practices. Now using this very, I think pleased with the fact that about
15% of the submissions are coming from competitive practices that are experiencing fairly rapid uptake across the entire marketplace. Now, keep in mind that this is canine lymphoma, which is just the first test of this broader venue. So, as this pedal expands, the offers can only grow in value, and we think becoming even more compelling.
We will take our next question from Navvante with BMP. Perry Ball.
If you are curious, whether the sales force has communicated to customers, uh, into to that the FNA extension was imminent. Um, and then if possible can you discuss Revenue contribution for the first 4 quarter of cancer Diagnostics? Uh, and maybe 1 last 1. How is competition reacting to uh, in View and and can say Diagnostics, thank you.
Take that, you know, we have broadly communicated to our customers that our video will grow over time with FNA for lumps and bumps coming later this year. So that's a lot of secret customers, you know, are buying in view based on the existing and available menu, which is the air psychology and blood morphology. In terms of the cancer DX, we don't break out the revenue.
As I had mentioned though you know it's it's a right about where we thought it would be. We're very pleased with the uptake and it's only uh growing and we think a lot of have a, you know, multiplier benefit over time.
Yeah, I think, uh, to Jace, but we haven't broken out any of the specifics associated with some of these newer innovations on the recurring revenue side, uh, you know,
We'll continue to monitor that and if it makes sense, we may in the future. But at this point, we're early in the launches and, you know, I think we're seeing really solid results that we expected, um, layout here as J highlighted, um, but nothing additional to add at this time.
Thank you. And maybe on competition, how are they reacting to IDEXX innovation? Are there any near-term launches in the pipeline?
different of same areas. Thank you.
Yeah, I mean that that hasn't really changed. It's, it's a very competitive landscape, you know, we have to earn continue to earn our customers loyalty we compete on on on every deal. That's out there as to as do. They the, you know, our growth algorithm really I think anticipates being able to grow by expanding the portfolio of testing Solutions. We offer our customers these existing customers
Have a being able to provide this broader portfolio and and being able to grow with us, is the primary means of of growing and we continue to to focus on that. But overall competitive landscape, you know, hasn't changed much.
Thank you.
We will take our last question from David Westerberg with Piper Sandler.
Hey, um, thank you for taking the question. So I just wanted to ask maybe on International markets, great job there. Um, can you talk about what's essentially been driving it between market growth, share games versus just higher utilization. SLC customer support. If you can give a kind of a flavor of which, which ones are, maybe impacting that growth, uh, a little bit more and then, you know, as a lot of people have pointed out the, uh, the utilization consumables was great. In the quarter. Did you see any, uh, tariff related? Pull forward in Europe? Maybe, uh, or or, uh, internal markets? Um, that happened in Q2 and just how we might want to think about that for the rest of the year. Thank you.
Andrew, why don't you take the tariff question? And I'll take the international.
Yeah. Dave uh this is Andrew on the Tariff side. I I don't think we saw any meaningful change in order patterns from our our customers. As Jed highlighted uh related to things. Like in view DX we do have a paper run approach which means you know, even if they were to uh, bring in some consumables, it's really at the time that they run it, that we will record the revenue. So I think from that perspective that's that's not necessarily something we've seen. And then on the lab side, uh certainly, you know, it's more local for local uh, type of Revenue anyway so I think we're, we're not necessarily seeing any major impacts related to the trade landscape, you know, from a
More perspective at this point? Yeah. Just in terms of the the international opportunity keep in mind, you know, it's just using blood work inclusion as as a benchmark. It's a bit over a third of what we see in, in the US that the opportunity is just more embryonic in in terms of really, uh, working with with customer supporting their priorities. And then driving the use of of Diagnostics, it tends to be a weighted a bit more towards sick, patient testing versus Wellness so that varies you know by by market. And I think you know, being able to bring these Solutions at
Market fit. If you take a look at UH Prosi 1, just from a cost and performance standpoint, it's very economical at lower UH usage rates, which fits our international markets very well. So I think it's a combination of its earlier days. There we have great product-market fit. We've built out an infrastructure of both commercial reference labs and soft customer-facing software tools, like Connect Plus. And it really has, I think, like we've seen in the U.S. over the last decades.
37, a growing belief in the use of Diagnostics that help them achieve that their practice priorities. And so with that, we'll now conclude the Q&A portion of the call, thank you for your participation and engagement this morning. Once again, my pleasure to share how idexx executed against our organic growth strategy while delivering strong financial results in a second quarter and so with that we'll conclude the call. Thank you.
This concludes today's call. Thank you for your participation. You may now disconnect.