IDXX

• Overall Business Execution

  • Delivered exceptional Q2 2026 results with strong execution across all core growth drivers, expanding diagnostic utilization, growing the installed instrument and customer base, and advancing the innovation pipeline.
  • The total installed base of premium instruments grew 11% year-over-year, with customer retention for CAG diagnostics holding in the high 90% range globally.
  • Structural demand drivers remain solid: deepening human-pet bonds, aging pet populations (pets 5+ years old show positive growth in both wellness and non-wellness visits) that drive higher demand for diagnostics, and rising expectations for high-quality veterinary care.
  • Free cash flow was $323 million in Q2 2026 and $557 million in H1 2026; trailing 12-month net income to free cash flow conversion was 110%. The company deployed $332 million to share repurchases in Q2, reducing diluted shares outstanding by 2% year-over-year.

• Innovation Updates

  • InView DX: 2,700 units placed in H1 2026, on track to hit the full-year placement target of 5,500 units. The platform has 9,000 total placements since launch, making it one of IDEXX's most successful product launches. New clinical capabilities (including red blood cell morphology testing for liver/spleen/kidney disease) are automatically pushed to all connected instruments with no clinic action required. The fine needle aspirate (FNA) application for lump/bumps evaluation is in controlled launch, with broad availability planned by end of 2026; early data shows increased mass evaluation compared to legacy glass slide workflows.
  • CancerDx: Surpassed 10,000 global clinics ordering the test since launch, available in North America, Europe, and Australia. Approximately 20% of orders come from clinics that use competitive reference labs, driving new customer conversions. The test will expand to a full multi-cancer panel including mast cell tumor detection in late Q3 2026 at no additional cost to customers.
  • Catalyst Platform: Enhanced core CLP chemistry profiles to include IDEXX SDMA kidney function testing for all North American customers, streamlining workflow and expanding early renal dysfunction detection. Early adoption is strong, and the expansion adds value to the global installed base of nearly 80,000 Catalyst instruments.
  • Reference Laboratory: Expanded the Fecal DX antigen testing platform to add tapeworm detection for U.S. and Canadian customers at no extra cost, expanding the panel to cover 7 clinically relevant intestinal parasite groups.
  • Software & Imaging: Velo pet owner engagement platform saw double-digit sequential growth in active users, with partner practices showing higher wellness blood work inclusion rates than competitors. The DR50 Plus digital radiography platform delivers 60% lower radiation dose than competing premium models, supporting workplace safety for veterinary staff.

• Full-year 2026 reported revenue guidance was raised to $4.7 billion to $4.745 billion, a $5 million increase at the midpoint: a $20 million operational upgrade from stronger-than-expected Q2 performance was partially offset by a $15 million headwind from updated foreign exchange estimates. This translates to 9.1% to 10.3% reported year-over-year revenue growth.
• Full-year 2026 organic revenue growth guidance was raised to 8.5% to 9.7%, a 40 basis point increase at the midpoint from prior guidance. Organic CAG Diagnostics recurring revenue growth guidance is 9.5% to 10.7%, with 4% expected global net price realization.
• Full-year 2026 EPS guidance was raised to $14.69 to $14.94 per share, a 14 cent increase at the midpoint from prior guidance, representing 13% to 15% comparable year-over-year EPS growth.
• Full-year 2026 comparable operating margin improvement guidance is 70 to 90 basis points, with reported operating margin expected to be 32.3% to 32.5%. The company plans incremental R&D and commercial investments in H2 2026 to support long-term growth.
• Full-year free cash flow conversion guidance is raised to 90% to 100% of net income, with full-year capital spending expected to hold steady at approximately $180 million.
• Management expects U.S. clinical visit declines of ~1.5% in H2 2026, matching the trend seen in Q2 2026.
• For Q3 2026, organic growth is expected to align with the implied H2 growth range, with a 70 basis point foreign currency headwind to reported revenue and 20 to 50 basis points of comparable operating margin expansion.

1. Companion Animal Group (CAG): Organic revenue grew 9% year-over-year. CAG Diagnostics recurring revenue grew 10.3% organically, comprising the majority of CAG revenue; U.S. CAG Diagnostics recurring revenue grew nearly 10% organically, while international CAG Diagnostics recurring revenue grew nearly 12% organically. CAG diagnostic instrument revenue declined 20% organically as the business lapped the prior year broad commercial launch of InView DX. CAG premium instrument placements reached 5,265 units in the quarter, including 1,602 InView DX units. VetLab consumable revenue grew 14% organically. Global Reference Lab revenue grew over 10% organically. Global rapid assay revenue grew 1% organically, returning to growth after prior platform shifts. Veterinary software and diagnostic imaging revenue grew 12% organically, with recurring revenue growing 10% and DR50 Plus digital radiography placements hitting a sixth consecutive record quarter.
2. Water: Organic revenue grew 13% year-over-year, with strong double-digit growth in both the U.S. and international regions, supported by order recovery in the Middle East.
3. Livestock, Poultry, and Dairy (LPD): Organic revenue grew 9% year-over-year, with solid results across all regions.

• Broad macroeconomic inflationary pressures on consumers, including higher housing and energy costs, create discretionary spending pressure on veterinary wellness visits, which have continued to decline. The post-COVID decline in puppy adoptions has also created a muted impact on overall visit volume.
• Foreign exchange volatility creates headwinds to reported revenue and earnings; a 1% strengthening of the U.S. dollar would reduce full-year 2026 revenue by ~$8 million and EPS by ~3 cents.
• All forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from projected guidance, with additional risks detailed in the company's SEC filings.

Q: How is the FNA rollout for InViewDX progressing relative to expectations, and is there upside to current consumables targets as FNA broadens? / A: FNA is on track with the company's controlled launch process, which prioritizes nailing customer experience ahead of broad release. The rollout has been meaningfully expanded ahead of Q3, with full launch planned for end of 2026. Current InViewDX consumable revenue per instrument is comfortably within the prior guided range of $3,500 to $5,500, and management sees clear long-term upside to consumables as FNA adds a new high-utilization application to the platform.

Q: What is driving strong double-digit reference lab growth, and how does the company navigate ongoing pressure on veterinary wellness visits, which are historically correlated with reference lab volume? / A: Reference lab growth is driven by new innovation (including CancerDx and FecalDx expansions) and strong commercial execution that is driving market share gains from competitive labs; 20% of CancerDx volume already comes from clinics that previously used competing reference labs. While wellness visit pressure continues, growth is supported by higher diagnostic utilization per visit and strong demand from the growing cohort of older pets, which offsets overall visit declines.

Q: Why is the company making incremental international commercial investments now, and what returns do these investments deliver? / A: International markets offer substantial long-term headroom for diagnostic growth, as wellness testing utilization is far lower outside the U.S. than domestically. Investments include expanding field commercial presence, growing the global reference lab network, adapting software for local markets, and developing region-specific innovations. These investments follow a proven playbook that drives higher customer adoption of new innovations, stronger customer relationships, and reliable returns that support durable sector growth globally.

Q: What is the expected impact of adding SDMA to core Catalyst profiles on reference lab SDMA volumes? / A: The company does not expect cannibalization of reference lab volumes, as adding testing to point-of-care platforms drives overall diagnostic growth: more testing begets more testing. SDMA is already included in all reference lab chemistry panels, and adding it to Catalyst CLPs simply streamlines workflow for point-of-care testing, particularly for acute sick pet cases, and drives higher overall detection of renal dysfunction that can lead to additional follow-up testing.