Idexx Laboratories (IDXX 26.22%), a leading provider of veterinary diagnostics and software, released its second-quarter earnings on August 4, 2025. The company’s update for the quarter highlighted much stronger than anticipated financial results, led by rapid adoption of new diagnostic products and robust international momentum. Revenue (GAAP) came in at $1,109 million, well above the analyst expectation of $1,066.78 million (GAAP). Diluted earnings per share (EPS) (GAAP) reached $3.63, surpassing the consensus GAAP estimate of $3.30. The company also reported notable progress in its core segments, particularly in its Companion Animal Group (CAG) business line. Overall, the results reflect an acceleration in business activity, though some areas such as rapid assays and free cash flow bear watching as the year continues.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP, Diluted) | $3.63 | $3.30 | $2.44 | 49.0 % |
| Revenue (GAAP) | $1,109 million | $1,066.78 million | $1,003.58 million | 10.5 % |
| Operating Margin (GAAP) | 33.6 % | 26.3 % | 7.3 pp | |
| Free Cash Flow | $151.6 million | $215,007 | (29.5 %) | |
| CAG Diagnostics Recurring Revenue | $878.0 million | N/A | N/A |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Strategic Focus
Idexx Laboratories specializes in developing, manufacturing, and distributing diagnostic products and software for animal health, water testing, and livestock safety. Its offerings range from in-clinic diagnostic platforms and reference laboratory services, to integrated software for veterinary practices.
The company’s critical business drivers include product innovation—such as AI-powered diagnostic and cloud-based platforms—and continued leadership in companion animal diagnostics. Investment in research and development, maintaining regulatory compliance, and growing its international sales network round out its core strategic areas. Success depends on consistent rollout of new tests, strong relationships with veterinary clinics, and the ability to adapt to global market needs.
Quarter in Review: Financial and Operational Highlights
Revenue (GAAP) increased 11% year over year and was driven mainly by strength in the Companion Animal Group segment. CAG revenue (GAAP) reached $1,022.4 million, with recurring diagnostics up 8.6%. Internationally, CAG diagnostics recurring revenue rose 15% as reported, outpacing U.S. reported and organic growth of 6%. These gains reflect both continued new customer additions and the rising adoption of recently launched products.
Product innovation contributed to the results. The inVue Dx platform, a slide-free cytology instrument for analyzing animal cells, saw record instrument placements—almost 2,400 units. Cancer Dx, a new diagnostic blood test for early detection of canine lymphoma, was introduced in North America and quickly adopted, with more than 1,000 practices ordering the test within one month of launch. These product launches are designed to streamline workflows, improve accuracy, and keep customers loyal to the Idexx ecosystem.
The company's broad portfolio also saw notable shifts: IDEXX VetLab consumables, which are test supplies for its diagnostic platforms, climbed 15% as reported. However, rapid assay products—which enable fast, in-clinic disease detection—declined by 3% on a reported and organic basis, due to customers shifting some diagnostic tests to newly introduced analyzer-based alternatives. Reference laboratory diagnostic and consulting services grew 5.9% on a reported basis, reflecting higher testing volumes and positive pricing gains.
Operating margin expanded by 7.3 percentage points to 33.6% as reported, owing in part to efficiency improvements and a recovery from a significant litigation-related accrual in the prior year (the accrual was increased by $61.5 million in Q2 2024 and reduced by approximately $9 million in Q1 2025). Gross profit margin (GAAP) improved by 0.9 percentage points. The company executed share repurchases totaling $329 million. Despite higher earnings, free cash flow (non-GAAP) declined 29.5% compared to Q2 2024.
Segment and Product Performance
The Companion Animal Group continued to anchor the business, supplying over 92% of company revenue. Within this group, recurring diagnostics—critical for ongoing client revenue—climbed steadily, with CAG Diagnostics recurring revenue growing 9% as reported and 7% organic, and 3% as reported and 4.5% organic in the prior quarter. IDEXX VetLab consumables revenue grew, driven by increased placements of premium diagnostic instruments worldwide. The company’s rapid assay line, which provides immediate results at the point of care, experienced a slowdown as new analyzer-based tests grew in importance.
Cancer Dx, Idexx’s latest reference lab-based cancer screening for dogs, signaled the company’s push into next-generation diagnostics accessible for routine wellness checks. The enhanced Cancer Dx test was included in wellness panels to entice broader adoption among veterinary practices. In addition, reference laboratory services and cloud-based veterinary software both contributed’s positively, supporting higher utilization and deeper integration in vet clinics around the globe.
Idexx also operates smaller business lines in water and livestock diagnostics. The Water segment posted revenue (GAAP) of $51 million, up 9% year-over-year, supported by strong international growth, including 11.9% reported and 10.2% organic gains in International regions. The Livestock, Poultry, and Dairy (LPD) unit generated $31.8 million in GAAP revenue, up 4.8%. Notably, the LPD segment’s operating margin remained negative at -1.6% (GAAP), slightly offsetting overall profitability gains.
The company increased R&D expenditure to $61.9 million, or 5.58% of revenue (GAAP), backing continued menu expansion and future product releases like the planned Fine Needle Aspirate (FNA) test for inVue Dx later this year. This ongoing investment underscores Idexx’s commitment to leadership in innovation and to serving evolving veterinary needs.
Looking Ahead: Guidance and Areas to Watch
Management raised its full-year reported revenue outlook to a range of $4,205–$4,280 million, representing 7.7–9.7% reported revenue growth. The forecast for organic revenue growth (non-GAAP) increased slightly to 7.0–9.0%. The company also tightened its full-year reported operating margin target to 31.3–31.6%. Adjusted EPS guidance was raised to $12.40–$12.76, reflecting optimism about product uptake, further instrument placements, and favorable foreign exchange conditions.
While results and guidance are robust, management flagged ongoing pressure in U.S. pet clinical visits, projecting a roughly 2% decline for the full year. Changes in customer testing habits—such as the shift from rapid assays to analyzer-based solutions—require ongoing innovation to avoid sales cannibalization. Additional risks include possible foreign currency volatility and uncertain macroeconomic pressures, especially regarding elective veterinary visits.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
