IDEXX Laboratories, Inc. IDXX

The business

IDEXX runs the diagnostics that tell a veterinarian what is wrong with a dog or cat: in-clinic analyzers that read blood chemistry, hematology, and urine; the recurring test slides, cartridges, and rapid SNAP assays those machines consume; a reference-lab network for send-out work; and the practice-management software that ties a clinic's workflow together. A small water-testing business and a livestock, poultry, and dairy line round out the rest. The engine is the Companion Animal Group, around 92% of revenue, and inside it the part that does the work is CAG Diagnostics recurring revenue, the consumables and lab services a clinic buys week after week once an IDEXX analyzer is installed. The reported split shows product at $2.54B and service at $1.76B for FY2025, with the recurring blade stream sitting across both.

The thing the financials do not show is the switching cost baked into that installed base. Once a clinic standardizes on IDEXX instruments, trains its technicians on the workflow, and integrates the software, it almost never rips the system out, which is why recurring revenue compounds with very little churn. What changed over the last year is the macro backdrop for the blades: US clinical vet visits have been declining as pet owners stretch out appointments and trade down, yet CAG Diagnostics recurring revenue still grew at a high-single to low-double-digit organic rate, because IDEXX keeps raising price, placing more instruments, and pushing more tests per visit. That divergence, falling visits against double-digit recurring growth, is the entire quality argument.