IDEXX Highlights Diagnostics Growth Drivers, Cancer Testing at Morgan Stanley Conference

IDEXX Laboratories NASDAQ: IDXX executives reiterated the company’s long-term growth framework at the Morgan Stanley Global Healthcare Conference, citing demand for veterinary diagnostics, product innovation, commercial investments and recurring-revenue economics as key drivers. Chief Executive Officer Mike Erickson said IDEXX had an “exceptional Q2” and a strong start to the year, prompting the company to raise its full-year guidance during its second-quarter report. He said growth has been supported by innovation across point-of-care diagnostics, reference laboratories and software, alongside commercial efforts intended to help veterinary practices adopt new products.

At its investor day, IDEXX reaffirmed targets for more than 10% organic growth and more than 15% earnings-per-share growth. Erickson said the company sees a global $45 billion total addressable market in diagnostics and believes diagnostics remain underpenetrated relative to their role in veterinary practice. “Pets can’t speak,” Erickson said. “It’s diagnostics that give them a voice in the healthcare equation.”

IDEXX acknowledged continued pressure on veterinary clinical visit growth, particularly on the wellness side of the market. The company’s guidance incorporates an expected approximately 1.5% decline in clinical visits during the second half, Chief Financial Officer Andrew Emerson said. However, Erickson said the company is focused less on raw visit counts and more on the amount and quality of care delivered during each visit. He said IDEXX has observed a roughly 50-basis-point annual increase in blood-work inclusion, which translates into approximately 150 basis points of companion-animal-group diagnostic recurring-revenue growth for the company. Erickson also cited a larger pet population, more medicalized pets, aging pandemic-era pets and changes in breed mix as factors supporting demand for more intensive veterinary care. He said pets older than five are showing positive wellness and non-wellness visit growth, while dogs and cats have added roughly 1.5 years to their lifespans over the past decade. According to Erickson, longer pet lifespans translate into a 16% or greater increase in diagnostic lifetime value. Blood work is currently included in about one in five veterinary visits, Erickson said. In U.S. wellness visits, blood-work inclusion is about 13%, while international rates are approximately one-third of that level. IDEXX views those figures as a substantial expansion opportunity.

IDEXX executives highlighted adoption of its inVue Dx platform, which is used for applications including blood morphology, ear cytology and fine-needle aspiration, or FNA. Erickson described inVue Dx as one of t...