IDEXX lifts 2026 outlook after Q3 beat

IDEXX Laboratories (IDXX) increased its full-year 2026 outlook after posting third-quarter results that topped Wall Street expectations. Third-quarter revenue reached $1.21 billion, above the $1.19 billion analyst forecast and up 10% from $1.11 billion in the same period a year earlier. Adjusted earnings per share came in at $3.96, exceeding the $3.72 consensus by $0.24 per share. Shares rose 2.57% in pre-market trading following the release.

The company now expects 2026 revenue of $4.741 billion to $4.767 billion, compared with a prior midpoint that was lower. IDEXX lifted its full-year 2026 EPS guidance to a range of $14.96 to $15.16, also above its previous midpoint. The updated outlook implies organic revenue growth of 9.3% to 10.0% for the year, with management indicating that operational performance is driving the upgrade.

IDEXX’s guidance raise comes despite softness in U.S. veterinary clinic traffic. U.S. same-store clinical visits declined an estimated 1.8% in the third quarter. However, CAG diagnostics recurring revenue continued to outpace visit trends.

In the quarter, organic revenue grew 10%, led by companion animal diagnostics, reference laboratories and software. Companion animal diagnostics recurring revenue rose 11% organically, with U.S. CAG diagnostics recurring revenue up 9.6% organically and international CAG diagnostics recurring revenues growing 14% organically. Management has emphasized that growth is being driven by broader diagnostic use, new products and commercial execution rather than relying solely on higher visit volumes.

The company reported that CAG diagnostics recurring revenue grew 11% on both a reported and organic basis, supported by same-store volume gains, innovation, net customer additions and a larger installed base of premium instruments. IDEXX VetLab consumables revenue increased 14% as reported, helped by an 11% larger global premium instrument installed base. More than 1,900 inVue Dx analyzers were placed in the quarter, bringing the installed base to nearly 11,000 units.

Reference laboratory diagnostic and consulting services revenue grew 10% in the quarter. Rapid assay products rose 1%, and capital instrument revenue was flat. Recurring diagnostics revenue increased 10% in the U.S. and 13% in international regions on a reported basis, reflecting broad-based demand for diagnostic solutions across geographies.

Profitability improved in the third quarter, with gross margin reaching 62.9%, up 110 basis points as reported. Operating margin was 33.1%, an increase of 100 basis points as reported and 60 basis points on a comparable basis. Diluted EPS was $4.01, up 18% from $3.40 a year earlier and up 22% on a comparable basis.

For the full year 2026, IDEXX now expects a reported operating margin of 32.1% to 32.3%. This represents a lower margin outlook even as revenue and EPS guidance increase, reflecting higher costs including those related to the recent CoVet acquisition and ongoing investments. Management also projects CAG diagnostics recurring revenue growth of 10.3% to 11.0% for 2026 and free cash flow conversion of 95% to 100% of net income.