IDEXX Laboratories (IDXX) 6 Aug 242024 Q2 Earnings call transcript

Good morning, and welcome to the IDEXX Laboratories Second Quarter 2024 Earnings Conference Call.

As a reminder, today's conference is being recorded. Participating in the call this morning are Jay Mazelsky, President and Chief Executive Officer; Brian McKeon, 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 forward-looking statements that are subject to risks 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 noticed 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, idexx.com.

will with certain or generally we prepared measures GAAP. call, accordance in accepted this be financial discussing not During accounting principles directly of may also A to found by provided non-GAAP these Investor be our comparable Relations the most section in which reconciliation is website. GAAP release, financial earnings visiting measures our of the measures noted. [Operator the growth Relations reviewing equivalent Instructions] would growth all references McKeon. note call Today's our guidance, XXXX conference after please to the unless period second In year refer growth, prepared the prior remarks quarter will Brian concludes. I be section the posted to and organic now call website otherwise turn updated to Investor like to compared growth of our XXXX to results over and earnings comparable to

welcome organic our I'll in profit and review our gains earnings call. and through QX XXXX. morning, for revenue quarter. the solid outlook second quarter to IDEXX results Today, our second delivered growth updated and you take comparable Good strong financial

In XX% by in revenues X% recurring X% CAG our Diagnostic terms organic and organically, supported revenues highlights, gains business. growth in Water of organic increased overall

and $X.XX, by share Solid CAG continue from sustained execution [ second expectations, as delivering recurring gains growth the quarter, we growth strong imaging X% [ We've diagnostic benefits [indiscernible] including XX% these a midpoint revenue new XXXX updated solid from accrual litigation lower in matter. operating CAG $X.XX by QX. in trends, revenue macro to visit near-term incorporate at performance which from offsetting pressure driven progress $XX headwinds benefits, in recent and gains growth ]. quarter EPS impacts in ongoing reported, [indiscernible] continue organic ] macro constrained in make related strong growth from supported to to to gross advancing record lower placements financial the in in operating business, reflected Diagnostic decline and work and outstanding. IDEXX our margin quarter organic original revenue and sector guidance as veterinary through quarter. IDEXX's our was be profit profit which visit business we expense comparable sector gains, instrument results per was EPS an gains and software comparable and the by clinical out interest X% impact that overall down for'XXX. contributed our global solid clinic growth Comparable levels will a continues headwinds to was in reflected premium benefits near-term QX million to shares costs end drivers of sector double-digit discrete IDEXX recurring innovation growth growth expanding constrain our solid the to estimate net in revenues. was Partially

Our review guidance and my operating updated year gains estimates. P&L detail rate and outlook We'll maintains expense tax incorporates for effective interest this updated guidance margin comments. adjustments exchange, net our our for foreign in solid later updated favorable comparable

quarter second results. of with begin Let's our a review

levels realization CAG year end X% CAG recurring growth high in business. LPD average including gains. per international by veterinary and price organic declined reflects QX, visit IDEXX continues driven growth revenue XX% double-digit net [ supported regions. execution organically and business CAG price Diagnostic equivalent range. X% imaging a premium to instrument which software of clinical to realization. from days year-on-year premium of at price instrument of by in stronger X%, to continued growth sustained revenues. XX% organically, installed high net solid levels expand Diagnostic prior was benefit placements international net by a headwind reflected IDEXX base. U.S. water premium high volume supported X.X% the increased growth global quarter and in organic diagnostic by in global organic year-on-year X% increase growth organic continues XX% organic on supported driven expansion from growth placement was be reflected recurring supported Second ] X% in organic growth instrument approximately recurring growth improved X.X% our utilization including per business solidly dollars expand net realization supported International improvement retention X% benefits a in building gains was in [ growth of at net QX. In QX X.X%, diagnostics. to day lower customer CAG levels. CAG X% international with was which effects X.X% X% by revenue price clinical clinic in in gains is growth and growth QX, U.S. by revenue the quarter. in a at growth same-store equivalent growth CAG solid diagnostic organic reflecting in the Diagnostic our growth the visit, and X.X% Strong revenue recurring revenue in in This U.S. increased visit gains, of revenue IDEXX benefits clinical organic of from continued this new U.S. U.S., ] gains, diagnostic revenues to level. gains, high revenue

points. pain clinical CAG a frequency per XXX nonwellness through headwinds frequency impacts on achieve visit basis diagnostic visit to clinical organic frequency Adjusting This as relatively growth for for continues revenue these follow-up per diagnostics. The growth macro offset solid are we for U.S. work visits clinical pressuring not per in which in growth may drug declined diagnostic which effects higher diagnostic treatment, levels. visits from broader growth lower modestly wellness recent nonwellness likely QX, frequency would in IDEXX diagnostic comparable clinical reflect revenues visit partially management include visit. in imply cumulative and relatively expanded visit consumers near-term softer U.S. may IDEXX premium. Overall, While diagnostic decline trends

flow we organic factored execution positive drivers Global the increase levels regions. for solid growth from We to continued recurring organically and momentum the modalities U.S. consumable revenue QX, benefits global supported single-digit expectations clinical Global solid continues, premium and high instrument premium Greenline installed regions. Veterinary catalysts, in diagnostic and software in reflecting long-term revenues reflecting in in by the also imaging continued organically, XX% premium XX,XXX over from in outlook. IDEXX placements gains placements. ProCyte increased in and in X% half pressure compared full revenues in high our growth of strong X% Consumable driven as instruments. second in a the in revenue CAG net X% X,XXX in and visits quarter, gains by revenues were including from instrument increasing results demand the placement poultry and base revenues X% gains VetLab organically, global benefits confident our mix in benefits that strong cloud-based year-on-year innovation, ProCyte to in including organic organic growth diagnostics, XX% driven organic data software the highly X% drivers Global to increased remain supported XX% organically. we Rapid One the lower overall momentum XXXX platform Assay U.S. Water Livestock, software IDEXX ongoing and for international gains were in year comparisons base, in While will increased of expanded SediVue IDEXX our growth across driven lab catalyst stoke QX. gains double-digit year-on-year reflecting and across Europe. in XX% continued premium increased decreased international increased placements, in U.S., year from with solid One were updated growth reflecting growth international revenues growth organically our QX growth dairy gains X% reported, supported prior the regions. in record by reflecting placement our and from by recent revenues, of acquisition. platforms. an high These and placements. U.S. year achieved hematology revenues QX, higher double-digit levels. U.S. by year-on-year prior realization. hematology gains price solid installed benefits solid future including

solid Continued and Europe health swine screening herd in Asia U.S. impacts lower from offset revenues, reduced and gains lower revenues. including the in testing Pacific China

QX year-on-year, cost On litigation expenses on expense points on basis P&L. benefits profit business as G&A. software recorded the from offsetting gains. gross quarter and basis. margin increased in service of up $XX increased basis, XX% Gross profit realization, comparable growth a supported were comparable discrete X% operating impacts including basis. margin net million gains price to impact the the margin favorable XX to inflationary XX.X%, Turning by a Gross XX% reported a and in X% results Gross gains were reported margins related accrual reflect mix.

points innovation with operating were revenue discrete overall with spending Excluding QX litigation increases on On the related X% the a a the quarter. discrete EPS of in comparable XXX including expense share agenda, this platform from in R&D aligned quarter, a in by XX% a expense impact per this EPS operating $X.XX basis line point margins per development. On increased decrease in OpEx increased our litigation year-on-year comparable in including margins including $X.XX ] basis, reported accrual. approximately [ excluding the impact share was to the growth XXX quarter, accrual. basis, new as basis the was basis. impact, a driven impact, growth XX.X% reported advancing

income conversion approximately operating profit per XX%. On XX-month by approximately cash $X by was in our $X.XX net and cash a a trailing the ratio revenues basis, reduced was by share flow of net hedge in exchange flow $X million, approximately Foreign million quarter, EPS $XXX $X free Free gain. million QX. to million

our spending $XXX of the flow free XX%, XX% capital of For maintaining reflecting cash full to million. we're approximately year, for conversion outlook estimated

with to $XXX position. quarter, conservatively. million of repurchases a X.Xx in share X.X% reduction second Our we We cash allocated our in of year-on-year the the as ] X.Xx in We manage capital net a leverage supporting [ ended in outstanding. shares sheet to remains continue quarter balance ratios gross balance diluted and strong sheet

to second pressure trends organic on for XXXX our We've reflect updated continued half XXXX. the of visit to outlook U.S. clinical full our expectations Turning year guidance. growth in

goals reinforces year operating to and full tax net solid impacts, foreign and for adjustments effective our rate. improvement Our exchange comparable for our interest incorporates P&L favorable estimates margin outlook expense

reported a million billion, full billion of year at $X.XXX updated to is $X.XXX for revenues reduction guidance Our midpoint. $XX

more or to million related a favorable updated revenue at for Diagnostic to recent recurring X.X% Our updated our to year We've reported foreign outlook estimates. midpoint. organic growth X.X% revenue full and ] revenue X% overall exchange organic $XX growth approximately [ CAG adjustment guidance includes

recurring Our X%. outlook This price supported CAG continues solid reflect Diagnostics for overall improvement organic global gains revenue year by consistent to revenue expectations expectations IDEXX approximately net full for includes growth execution. for of

second the will similar half of assumes pressure at on growth growth midpoint by clinical offset levels execution updated IDEXX continued outlook trends. organic Our half benefits in year, U.S. first this be to visit partially

organic QX. rate X.X% expect by results growth equivalent reflecting X% benefit revenue benefits We days organic our to in will effects, approximately overall growth X.X% from

In of $X.XX reduce impacts guidance, approximately share. updated which points outlook the incorporates XXX from full margins profit by and discrete EPS our will litigation operating year basis reported estimate our expense we by terms accrual, per

the We outlook This is XX.X% our effects ] reflects financial resolution will goals. in normalize the these lapping accrual reported a this effects, our customer to consistent to operating contract in [ XX XX.X%. XXXX of setting midpoint margin of point Incorporating basis payment. updated for performance basis operating margins point QX XX impact of negative net comparable related at improvement the XXXX

down midpoint, at foreign revenue approximately tax is discrete by $X.XX our expense by Adjustments operational exchange full adjustments favorable share year to items growth [ at our outlook midpoint $X.XX the full to the $XX.XX share is below-the-line per from positive by organic share. X.X% per EPS share and Our to year approximately by reduce offset rate net in outlook. now per exchange $X.XX EPS will updated estimate refinements reduced outlook litigation $X.XX per and approximately our effective reflecting accrual. which ] We estimates and revenue expense from of impact EPS approximately $XX.XX interest foreign growth

over to benefits X.X% growth net of growth In ] financial software new projections concludes our our comparable benefit for outlook QX, basis. We're effects. margins comments. to moderately QX, outlook organic to and including from I'll in acquisition. with review. growth of including X.X% X% revenue estimated of year-on-year aligns lower the growth operating for prior Jay revenue expense approximately XX.X% days XX.X% X% to of down growth headwind for year an marketing growth incorporating in levels continued and [ now a for equivalent factors and from an to R&D turn sales year-on-year approximately X% of range approximately high for from in X.X% recent call and to X%, X.X% This relatively of planning planning foreign exchange, terms support on reported we're This spending, reported platform in comparisons our advancement. That of his

to and position and diagnostics and animal medical from including the increased Brian, as we strengthening global high-quality their enduring delivered to benefit dynamics of of against pet sector performance population, software. IDEXX of engagement. you, companion reflect Thank priorities quarter owners new high drive the services IDEXX to growth spans and bond importance diagnostics These good customer our of and growth and through levels morning. the pets. outcomes a second operational innovation animal execution results strong excellent These pet elevate and long-term companion strategic life combined tailwinds, in and wave expansion the in between ever drive development pet

leader, continues the to IDEXX outpace our as customers As faster. an sector growth grow help innovation we

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we continuing sector through these we're to of levels. deliver As growth dynamics, work ahead solid

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analyzers installed life base. approach global Catalyst this for to the cloud-enabled us technology highly relevant Our test to than allow XX,XXX ramp more our and quickly in-clinic

we by Smart is in thrilled Catalyst optimization lipase in Catalyst example versus Catalyst another ability expansion. test, minutes. QC the plug-and-go Smart our In of workflow a the with menu at the sometimes great are run a shipping will monthly is innovation [ XX to QCs solution how test QX. just targeted QC Customers new ] to begin addition clip

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quarter increase we recent For in first is experiencing the are in into full owner the early no sales solid in saw launching testers the a is active customers application, to beta compliance pet in customers product. of provides a management better since our example, launch our shows fill and the engagement tool from pipeline, driving clinical first-of-its-kind reduced helping pet interest practice system. These benefits integrated visits. the the Vello owner High during natively engagement that Vello,

the our building portfolio. grows easy digital productivity we sector. We're customer to base opportunity solutions of that in coupon see challenges into quarter, benefit our busy at to is acquired and term, ability Greenline provides integrating solution a many which care engagement health that strategy. so redemptions. the sector clinics is their exist meaningful veterinary with this exceptional making owners significant As over the clinics, rebate address for a easier workflow long help this to long-term and platform for the Vello to first us customer practice leader of space. our by the for the leading faster, Pet even on features robust animal And that take development with in to as the providers, These turn we the leading grows, care growth it our benefiting as The sector of the connect pets. reflects nutrition disproportionately organic expect standards pharmaceutical is pet higher IDEXX their center tool provides of Greenline veterinary customers the grow in

IDEXX the I'd As we prepared and the our our are conclude like providing IDEXX made nearly XX,XXX contributions planet. to global our commitment for progress essential employees to people remarks, strategy a thank organic for quarter your of outstanding and animals, sector. performance. and work strong future to financial momentum Their better is against we've lead beyond another this development well to as efforts, continue and animal through XXXX we of the to the companion to build well the Thanks on half growth delivering positioned second your to diagnostics

members comprehensive will Fennell, idexx.com, Hunt, and our this President, like to Executive we IDEXX This President and Thursday, Bryan senior and President Sector later with you CFO. of management exciting Tina Executive and Information innovation and Thursday's Vice I'd Michael Executive hosting opportunity, session. With prepared that, open Lane, strategy, XX and is streamed will Manager, the Dr. Westbrook, my Erickson, person. President and live at for and Q&A line recorded we'll leaders Mike Manager, event General the Software be XX, the long-term George Q&A. Operations; on who opportunity Q&A, on will a for provide be Revenue Executive in make McKeon, of it those General section our cycle for Officer; August conclude call cannot by growth Scherck, and execution Global Chief be event Services; X including remind also Telemedicine; President beginning Mike that to for Laboratories via in Veterinary Vice Senior Strategy, headquarters last Wednesday, at Investor update and President, a drivers. Participating X:XX with presentations [indiscernible], Vice Technology; end a.m. and August will an Development Before Vice our dinner month, global we hours line open Annual followed Day Reference the the Maine, of on Point Vice approximately we'll General and Executive Care Vice The Manager, and Diagnostics Dr. management

We'll take Chris JPMorgan. question first our Instructions] [Operator from with Schott

that forward-looking. to what to appropriate kind second more I of get biggest the over between still of rate more the that growth Are around seeing is part terms the X% visit you probably of needs view, traditional the gave XQ I you today bridge help more just happen and past think, X% maybe [indiscernible] [ gave confident back to a is time? to first do Great. growth? outlook outlook as months. or us an the happened X-parter what few And the volta kind from guess market in over of in is, the traditional And being your visits. target we're you what guess ] you what's to in and today

question, your Thanks Chris. for

would out had U.S. the assumptions of highlighted as outlook working trends through normalization thought over some [ flattening of of we kind the of the year, and in some of clinic think flatten. that took in our had coming given through basis a the those seeing be we and out XXXX just revisiting earlier clinical anticipated dynamics of to So visits effects staffing I the that We and coming in quarter had that ] that we headwind quarter saw points of carry time. roughly first XXX in outlook and terms we second the of

continued level of headwinds. see I to QX, through think a we work that we've as

here and that in dynamics think second on macro be that we're I outlook. going trying acknowledging the working that half to there some may capture through. we're

for a very care, the we drivers, demand more z-trends of So number let health principal positive change. growth continue Jay about in drivers pet to long-term that's see long-term [ the talk I'll in but including ].

so the potential And have long-term outlook that Day, very the but we at for continue to about optimistic in sector. more Investor talk growth a we'll

Yes.

trends. long-term Just a about the couple of words

pet net continue pets household the starts going be prioritize pet, the standpoint, more we lot owing among actual that obviously sort are spend overall the tailwinds, continues what out. very we is both and standpoint. actions to secular of terms demographic intact. a willing strengthen travel, humanization increasingly vis-a-vis said, of Brian from more like of that [indiscernible] entertainment so a believe It they've and optimistic As from appreciably There's with obviously in shown, all to a and about longer-term to and categories adoption intent

the Day, resilient phenomenon. the take aging, both an are a dogs a that know -- overall thing to practices, both pets a a amongst from creating you -- the spend that's in their think conversations they comments shorter-term both health pets. Maybe and good care both that we think veterinarians The cats of of sustainable both that basis, the the prioritize age an seen coming that progress teams. They of Investor a spans, software on as and terms very of more diagnostics. Longer the for have technicians prioritization, and in for spend record placements market. owners as number veterinary well couple for back well on pandemic a they're and wellbeing their the a standpoint optimistic we as as longer, on -- And technology. overall as They continue they're in very If their retaining and we more well QX. willing invest life living a as they're just look health care with in of demand [indiscernible] based around very we'll ongoing we but a to standpoint from this is We've made spend. point-of-care care to again, a environment really at pet a of staff, global and are is doing. this provide know as update more, out really they've work generally

visits, as we'll As things clinical high-level working impacts we're customers. margin, we effectively moderation said we're that commentary, through there some the our likely in at but that it work through our some affect that macro in are it, confident

of next We'll to Ryskin Michael America. move Bank our from question with

that but highlighted about utilizing it and prepared you topic, different take to visits maybe from follow of dynamics of versus talked perspective. remarks, want a and Jay, wellness I diagnostics nonwellness. to shifting that on Brian, kind the some during trends up you your

of we to ] Librela kind management, that. there's and because the you out then people in, just get [ visits diagnostic non-wellness were seeing that you where ramping think were any I pain come calling assume prior in diagnostics -- less out without walk shot

growth for diagnostics delivery are the to in online of that there's less therapeutics. you if just the that care a at The seeing dynamics. All I'm can part be to to the marketplace lead evolving my clinics in office channel because also that channel issue continuing for As question their and could you a impact we an see that time. pet broader elsewhere. opportunity having whether throw getting follow-up of I'll pain shift profile. And mentioned, wondering just how I'm then the potentially could kind this owners care be maybe management trend, shift same wondering in

for guide the to X% updated this You've organic. year

last X% year did X.X% year before. rounding the You and

this vets whatever about X-year So lot on better. of terms get it that of insufficient you'll to price, But to continues persist XX% and seems there to macro There wondering, be back headwind a vet XX%-plus regain below in have you like of XXXX. trend just out kind point was of just LRP was do We there. that plus. in LRP now and this of talked refuse I'm is confidence able vet of concern pretty outside a and to get supply a technicians where visits. the there far

your final to that of -- the what your related don't first question I because with was which will trends, the help discussion I I to around Mike. think center part question think visit start Why

Just for the of the growth in company. terms trends

put had up trouble the visits. of to fundamentally business clinical in post-pandemic important it's effect demand, on the expanded keeping this think with at the XX% I of kind And was impact into had a we I played capacity an them the half the I XXXX. the it where of dynamic in in would first they pullback XXXX was say XXXX and context mean XXXX and clinics this between expansion period. that

forward short placements, X% I [ was impact think I industry, So consumers this as broadly quite healthy, back I we to changed ongoing I ] related of premium relatively dynamic is growth. in X% fundamental our demand retention, innovation very all our in our inflation we visit been and local time. And to clinical this been trade-off, the we're good customer that, visits. not dynamic environment think move new period lead of executing we all capacity past gains, has and think, a the in again to positive at period that's And environment great and this look went has a and a what that's about, this foundational net transition period post-pandemic an And that we become we the in that, has of cumulative I that feel the extraordinary there from dimensions of kind think causing think pipeline. feel challenges on from from a as about staffing the dynamic minus business. to terms how business

as and question we in moving business sector I see trends about drive drivers we things -- well. the had there ahead, look So demand think to think doing we're as terms I forward the that of long-term positive in and you

acknowledging while been very about feel good through we that So visit clinical we've working a that. issue.

changes visits diagnostic of level -- know, as things I on the morning, U.S. look the some recent we the you here getting So we peel specifics -- was the that to of trying at in this were diagnostic year-on-year, one quarters this visit to points, related highlighted impact actually on apart the frequency think up business, the same-store several pain to now. to pull utilization. the see metrics And for on [indiscernible] wellness seen level We meds. frequency these they're on of think a basis try been that's I XXX trend and we actually some we've apart, an we do

beginning kind half and very those change Librela holding of owners year the diagnostic into pet clinic, through coming metrics the testing dynamic. see in they're those last year, of and was of kind [ this are doing where testing. On started penetration. to aligns When metrics were which we So up launch in more ], first healthy QX nonwellness and with into a the

dynamics think been particularly probably might there's continue I visit indicate to that had And it for indicative metric, of sustain, And a didn't frequency the we that which the dynamic, expand. that's non-wellness this type these we've built bit of when net-net, of headwinds adjust dynamics off in basement the the basically, high base quantify more specifically, we highlighting. front, on so macro you weakness clinical payment of expanded but and think

I moment. think again, foundational is more not in our this macro but or sector strategy at the So the the view, from reflective we're to our execution just and of environment

of Mike, address you let in couple other a embedded me had there. questions

care. alternate involved deal really and First, veterinarian medicine owners a don't professional with to some to a good What have pets is diagnostics an [indiscernible], they and that of alternate complementary. therapeutics around channels pharmaceutical require through the a and that standpoint, relationships the these the direct we follow-up in of venue veterinarians. Keep and like clinics pet that of to supplier often largely some mind, I'm the have of from in expertise. testing lot [ channel or and the referring where bricks-and-mortar PetIQ ] of are of it's have, see places terms go

diets, standpoint self big a things. those positive so solutions, on terms impact Brian's a software, So levers just that from industry, build just that therapeutics important They business very to comments in around we that, diagnostic contribution. of and [ diagnostics were specialty have problems innovation and We thing. And not observations we is lot positively a that's needs, say unmet your can continue practices. of think just growth, but know and also all of this of to really impactful of ] and clinical question the off the

you the diagnose line status treat an often patient assess about basic can't the it or of you has follow-up chronic If you you requires and When -- you the health before a think condition acute pet. condition, diagnose, do can't monitoring.

that prospects capacity impact the patients treat veterinarian's use that growth a could [ just as better. the set, significant continue So end announced, of are [indiscernible]. ] innovation, And part shipping including a for from continue There's to in innovation excellent inVue challenge platform, amount these ] macro for mitigated of as innovate brand QC to the they if of some at which well we are pancreatic our and of know and [ short-term wave believe and we've software, the that challenges Smart Catalyst of we're Vello QX, front new tool for as we that, look we their company. practice that lipase

move Wright We'll Stanley. next our question from with to Morgan Erin

Okay.

you the more charge obviously it, And on to ability and what the here. to relationship? Is speak was the kind can charge legal to a see there? we do control what you ongoing normalize can in your excluding of that's until see legal impressive, you things about market then the is there customer-related guess, of If front? what's ability, control and levers to that that I though, have come a quarter. we Is your until perspective. costs nature from that those But and talk costs to

for question, Erin. Thanks your

a discrete matter, quarter. as litigation the accrual million $XX ongoing noted, we expense had the Regarding we in

you quarter was have quarter probable that litigation first in don't we XX-Q what the policy, As this disclosures second is are royalty press the our related in our release, on time, -- over we payments best of and can in we XX-Q terms disclosures footnotes ongoing updated issue of matters, ] an as and from to of to loss of a matter. we've the our well nature this, that include comment [ but did and we the refer estimate

continued the you We of the margin I growth gains. operating basically business expense to growth in delivering job your performance see on growth revenue very and to leverage, for terms of that our that environment had drive commercial headwinds underlying some think our operating strong expense through adapting growth our of working can sector that with comparable I the things was strong investments. good future on we're focused financial execution, and of much doing our do we've through R&D adjusting agenda that line in for think terms question a items, these we're to In

we're adapt outlook year past, that's ensure the in in to able first our reinforced consistently done against well. the as prioritized we've while as ability and delivering financial have again performance, we're -- growth the good we our we half, So that long-term do full and in and to

a add around cost management. words to the Just of couple Brian's to comments overall

we heavily R&D, areas We innovations. obviously, significant very think of important some are that the continue in the company. invest working new through growth to long-term those to we're

where the from be a And are scale, want standpoint, return. What are businesses expense very reference and We're environment the we're and would business we're investments productivity don't digitization there have in lend us excited investment able that to territory to with Obviously, and themselves whatever I at from and model business standpoint, these drop we through profile, obviously standpoint But is overall business areas. to we're fast-growing able network to an a commercial and we very say and good that automation very good look so the just business lab. disciplined. so whether software in. that for also the a expense lever those invest from and we're see that feeding starve expansion We in that's you another adjust our standpoint, have.

terms is expect of Investor innovation. of remind as can us And when it your but other to at terms in guidance that year, my track hear where you that your then also your on should contribution And stand what's relates anticipate embedded this to FNA it still and I your you then timing, platform launch. sounds we guess, timing of about you're you in the inVue follow-up Day? just in like And launch. something also on potentially

time. the over the Erin, for it's introduction that point revenue expectations you know, recurring your and captured launch just principally point, instrument QX we've of build will at guidance, as an the the inVue, to on

we'll As from get the strategy is in closer that so to an Investor having terms conversation. update look provide just we we'll about our of look forward as We where innovation overall at Day innovation launch. talk policy, are an and the standpoint, we and forward company agenda to

with Jonathan our Block to next from Stifel. move We'll question

It bunch but we CAG I'll I just other the looks of words, remember. Jay, times. visits, ex quarters. at Brian a the recurring roughly guess, Dx clinical ongoing or premium around ongoing a like get my points questions. quarter. this from isolate out can break deceleration we've the for premium it of price, an XXX IDEXX basis growth XX headwind looks of of when I ex I that visits, the get I apart lowest In U.S. laid the past sort It's

to can that I'll reverse And launch? might should talk we see you to start So ask then in trend And what importantly, and the course inVue of it? then that behind earlier my the trend be 'XX arguably follow-up. days and

Yes. Thanks for your question, Jon.

an I of think adjusted on metrics down kind increasingly the broken these -- basis. we've

We basis have price and effects points. XXX if about a the X what visits, the clinical you're you similar have to and taking comparing number out days [ ]

med in which I pain the is noting one item this number. our your been visit which is you've of we visits, dynamic know noted, there I research capture follow-up think we

could, have that may business would bit we [ the this be visits much half softer that particularly premium the stronger. first and relative think underlying be I might year, that so indicate a themselves diagnostics, ] of in to that the And

the premiums that of is held So quite up from our net I think well the lens. that

net about obviously, that value net things customer delivering. good the price had that we're gains, new the business solid the feel think realization retention in I we key levels, drive that, line with

ecosystem. and factors customers innovation positive our with feel increase critical on -- multiplier our of and benefits like the to from And are get to introduction so that helping think of leverage to come innovation we're engagement I that front IDEXX

for I we're Jay internationally -- positive intend something be innovations that as inVue and launch the as the to the other so [ to long-term be for looking highlight the highlighted And solid had that that forward and a performance ] could also driver us. I'd just well be think company.

days, a CAG it potential. progress excellent indicator on positive, recurring, Volume of of XX% was had benefit, growth. very be strong days growth placements, will growth continues very had overall but be solid which organically, about and a it and a we So growth instrument long-term Dx to percent was our

work visit highlighted. we we've think about that headwinds the very as good execution through and we're So the of metrics I feeling some

it, might great second accompanying the meds color. have interest the EPS and for That that, Is then be in sort would anything or annum spending year do it this med we when that, but and share pain out [ like tack-on some of atopic going the was of right? just the done in overall sort think How and a better Jay, thesis pain view back, light ] revenue one, owner goes cash step per And suffer we job 'XX wallet had call that the a And we about, the tax Brian? potential fact company? dermatitis a battle, look, bit, 'XX? about ] initiatives a diagnostic come holding to mean guys And per in do some on it, be, that this pet efficiency or $X,XXX expense. great and little is my annum. you of testing about the back lighter some from a just taking of just that might [ I the around that edges. of we concerning there question to second projects think call might Or any of

Yes.

to So Brian. let the of and question me turn I'll answer the second your question first, then front-end part

look that. to [ for the pain -- phenomenon well pretty some we are It's we a points. catalog [indiscernible] standpoint, macroeconomic about themselves. a where characterize of of diagnostics a effect through [ you that that the we ] or And think the of capacity patient the [ wellness, is working seen Brian at from We visit diagnostic and challenges primarily related med impacts. When launch basis to pain aren't example, remained concerned of non-wellness, utilization it which to from as that. the the constant practices We take as meds spoke we've on XXX growth ] ] spoke

both and coming So diagnostics, practice, the into they're for using when they're they're wellness nonwellness. diagnostics using and

of we seen evidence haven't any impact. So cannibalization that

Jon, on that margins, right. your got question if I

number reflects drivers of performance There a momentum. gross margin underlying solid the had think are year that there. I this we've a

growing, and benefits initiatives. software as helpful in-clinic The like cost we've business, lab business positive mix Diagnostic CAG revenues is overall, ongoing being I just management, had revenues is to growth The recurring it's from think growth things us. a solid in factor. productivity

out period where function in inflation. productivity operations And there so our ongoing more and from was just a relatively -- coming

a as I margin improve to So driver comparable company, we we to foundation on for a a feel building and think forward been our of as consistent continue look how operating we can that's performance. that us

We'll move to our with Westenberg next question from David Piper Sandler.

to continue to going about theme growth I'm management OpEx maybe the history. and slower relative

your tracked think So last the mean, XX just I've reference I XX XXs. gains into the market as share I from seen And like lab, look, years. to we over in I've

when growth of or question points. I upfront. usually, and and second In ask at gross as creating of going lot drivers. that the terms latter innovation markets really at beat new look we that look maybe share the consumables think usually you you of in come you on I my And do work in utilization still I'll most big gains, have market think -- growth via clinic. me have to just do by margins, a I just lab basis did is XX reference then to and being

only of one one those think -- beat I the of me.

terms So margin got kind to that you just of of gross leverage. in how

address Brian the take piece. same-store years, a I'll come through David, most if and our sales. margin gross has end the you growth actually take question have the your look front through of of

placements very utilization. from growth look we terms a to make. the well We're progress pretty and in So diagnostics algorithm standpoint transparent do we competitively. disclosing of But we drive

of There's it. a component innovation. Now big happens that life a technology of lot through for also

Catalysts, for the new If last about years. XX XX parameters, you slides over think example. XX new

it From that just same standpoint, lab value So growth company. reference of profile that into more of using [ the and phenomenon. we know with customers ] more connected with are creeps the a

think important you about part within wellness. a growing our as [indiscernible], reference example, very it's foundational of lab an If category business, quick

at more used how continue new because it. it about new that has think that's Brian, up from our he us and completely expand Obviously, to value. we platforms for algorithm. That's another menu clinical space open growth tapes [indiscernible] more always where and Day, some growth the a just dissects of element more greenfield or together to that We recently, Investor pieces internationally. And to and U.S. always show -- of comes put

software had we gains year, quarter, on Dave, ramping net and which mix, question, and impacts, cost would margins And in the highlighted business growth. that utilization, highlight, margin from we inflationary of the we your benefits price margin solid staffing. Yes. was think I in were strong favorable service think by VetLab part had prior I I driven lab we that offset is

very So I lab a the feel think But some is good. margin muted bit of margins, underlying performance. ] [ a was good gross It we I dynamic. the by of productivity very overall, compare think the about

share continue development the to participation innovation to on phone quarter drive pleased strategy portion Thank diagnostics in to Now we as to I'm morning's animal sector and we'll our companion for your our of the conclude everyone financial call. this results of event. to the Q&A unwavering customers. very another you and focus on advance the solid

for about enhance ahead, animals. we care companion significant the long-term of to remain standards Looking excited opportunity

forward with we'll Investor conclude you that, call. at so the We of Thank look And many to you. Day. seeing

you Thank call. your again today's concludes for participation. This

You may a now disconnect, have great day. and