Conference. My name is Elliot Wilbur. I'm the coverage analyst on IDEXX, which is a bellwether name, of course, in the veterinary space, the global leader in veterinary diagnostics and software systems. Presenting for the company this morning is its President and CEO, Jay Mazelsky. Jay.
Good morning, thank you, Elliot. It's just a great pleasure to be here to talk a little bit about IDEXX and the animal health industry in general. I'm joined by here in the front, Dr. Mike Erickson, who's the leader of our point of care diagnostics business. In the back, John Ravis, who's the vice president of investor relations. Just wanna remind everybody that this morning's presentation is covered by a safe harbor disclaimer. If you're not familiar with this, you can access one in our company website under investor relations and get a deeper sense of what's covered and what some of the guidelines are. Let me jump right into talking about, you know, the company and our strategy. We've pursued a very consistent approach to sector development over a long period of time.
Our strategy and our success is based on having compelling strategy that addresses customer needs from both a clinical and business standpoint, and bringing innovations across a full suite of diagnostic products, our in-clinic laboratories, reference laboratories, and integrated with software. We also have a global commercial capability. This is a high-touch frequency model of subject matter experts who partner with customers, who understand their needs and make recommendations, create awareness, education, and ultimately adoption and utilization. We believe that the longer-term TAM or sector opportunity approaches $40 billion. I'll build up some of the numbers throughout my presentation, which gives you a sense of diagnostics utilization for clinical visits and what we think is possible as a result of excellent execution of the strategy itself.
As a result of the execution and really servicing our customers' needs, we've been able to deliver a long-term durable 10+% organic growth position and do it while also with delivering a high ROIC. I know there's some folks in the audience who may not be as familiar with IDEXX. Let me just give you a brief overview of the various parts of the business. These are the three business segments. They all have a compelling organic growth strategy and enjoy excellent margins and returns. 91% of our business is companion animal diagnostics. That's what I'm gonna talk about this morning. I did wanna mention our water business, which is a microbiology testing business. It comprises about 5% or so of the company as a whole.
We have very high customer retention at 99%+ , operating profit margins of approximately 45%. Approximately 2.5 billion people benefit from safe water testing on an annual basis. This is a very ubiquitous testing solution. Our livestock, poultry, and dairy business comprises about 4% or so of total company revenues. It heavily leverages technology, similar technology that we use in the companion animal diagnostic side. It's also compelling. It serves things like herd outbreaks, African swine fever, as an example. We also have a pregnancy confirmation testing set of solutions called Alertys. It's in that sector and, you know, again, complements the overall portfolio. Let's talk about the companion animal diagnostics business. That's 91% of the business. CAG Diagnostics recurring revenue, almost 80% of total company revenues.
This is, you know, the output of pursuing a consistent strategy of really focusing on solving customer problems through innovation and driving relevant testing utilization over a long period of time. You see that the growth rate has accelerated based on the periods in front of you, 9% from 2010 to 2015, accelerated to 13% through the next period, 2019. Then through the pandemic and a bit of a pullback after the pandemic in 2020 to sustain that very high growth rate of 13%. Growing faster than the company as a whole. What has enabled us to do that is by bringing differentiated innovation.
I'm gonna spotlight a couple of elements of our innovation strategy and what we think differentiates us from others in the marketplace. The commercial model I spoke to, which is a high intimacy, frequency, and touch model with subject matter experts to position and bring these solutions to our customers. The ability to really service customers on a global basis. We've had seven international country market expansions since 2020. We think there's a very sizable and interesting opportunity outside of the U.S. Our sizable standalone software business, which has been growing, you know, very fast. It's a key strategic enabler to diagnostics as a whole, as well as being an attractive standalone business. Our whole CAG Diagnostics recurring revenue growth model starts with retention. It starts with customer loyalty. It's a key element of our growth strategy.
You can see over the last 5+ years, it's actually improved. We have 99% retention in our Catalyst consumables. That's a surrogate for what you might see in clinic with a broader set of solutions. Both reference labs and rapid assay are above 97%. Again, this comes back to. A number of different things like technology for life orientation, where investments that our customers make aren't obsoleted. It comes back to delivering an exceptional customer experience, even when the supply chain environment is very challenging, and really being able to partner with our customers when they have a problem. Let me talk a little bit about the industry as a whole. These are eye-watering numbers.
This particular study is from HABRI in summer of 2021. It's really the foundational part of this, of the industry as a whole. It speaks to the fact that we, as pet owners who love our dogs and cats, really consider them to be part of our family. We're willing to prioritize investments on their behalf for their health, happiness, and longevity. It all starts there. We, as pet owners, want the very best care for members of our family, and we're willing to pay for it. I'll show you some data that supports that. The other thing that I'd like to just share with you is that four to five years out, the majority of pet owners who head up pet households will be younger generation.
This is a hot off the press study that IDEXX completed in November of 2022. What you see with the younger generation is the bond between pet parent and pet is even stronger. They trust the veterinarian. They want to provide the very best care. We've surveyed across three different countries with three different types or profiles of markets, the U.S., U.K., and Germany. You see, you know, low 90s all the way to 79% in the U.S. of these younger pet owners support at least annual screening. We think this is very positive. We think the whole pet experience and providing healthcare and the relationship with the veterinarian starts with the annual screening exam.
The question always becomes, clearly, no matter what survey you look at, and the summer IDEXX surveys, there's a number of independent surveys which support this. The question becomes from a prioritization standpoint, capacity of wallet standpoint, can pet owners support this care that they aspire to? This is, I think, important data, which shows percentage of spending of pet-owning households on pet care. Excuse me. What you see across different economic demographics is it's relatively constant and relatively small in the big scheme of things. Under 2%, whether you're a household who earns under $50,000 a year or $200,000 or more. When you spotlight and go deeper into healthcare spend and diagnostics, a subset of healthcare spend, it's even less so.
Under a % for veterinary services and a tenth of a %, which is de minimis for diagnostics. Clearly, from a prioritization standpoint, if it's between spending on care for your pet or going out to eat, traveling, entertainment, what pet owners say and what they do is that they prioritize care for pets. Let me also give you before I go into the detail part of the IDEXX strategy, a view of the whole utilization, diagnostics utilization in the marketplace. This is for the sector as a whole in the U.S., not just IDEXX. What we see is that diagnostics as a % of clinical visits, blood work as a % of clinical visits has grown over this period from 2010. Let me give you a couple of definitions.
Clinical visit is when the pet comes into the practice and actually sees the veterinarian. Blood work is chemistry and/or hematology. What you've seen historically is that has tended to grow about 50 basis points a year. During the pandemic, it grew about 100 basis points, so it grew even faster. I'll talk a bit about that. Then building on that much higher base in 2022, another 50 basis points. Diagnostics frequency, when the pet comes in and diagnostics is used or prescribed, and then when it is used, the extent to which it's used are key drivers. It's, it starts with blood work as a proportion of clinical visits. Now we break it down by wellness and non-wellness.
Non-wellness is primarily sick patient testing, but it can include pre-anesthetic testing, things like chronic testing for disease management, those type of things. Not surprising, you see a lot of variability, especially on the wellness side, and less variability, but still significantly so on the non-wellness or sick side. Sick patients that come into the practice, only one in four the patient is sick, is getting blood work. It just gives you a sense of the very sizable opportunity still before us. Let me give you another backdrop before getting into IDEXX strategy. This is net pet additions. There we go. What this shows you is that during the pandemic, we had an historic surge in net pet additions or adoptions. Historically, pre-pandemic net pet additions averaged about 1% a year.
Period to period over that two-year pandemic period, 10%, 4% growth. I'm sorry, 6% growth, 4% growth. That 10% would compare to an apples to apples 2% comparison. That's $17 million net pet additions in the U.S. geography. It's the same thing. We saw this exact same trend outside the U.S., Germany, the U.K., Netherlands, Australia. Wherever data was published, we saw this type of growth. Here's the new news. There was a hypothesis that coming out of the pandemic, that there would be a lot of surrenders. In fact, there were a couple of articles in newspapers saying that, you know, there were outlines of that trend. We didn't see that. In 2022, this is the first time we've shared this data, net pet additions, 2%.
That's twice as fast as what we saw pre-pandemic. We're very excited by that. We think that that's an additional tailwind to the business. It's a tailwind because as you move to the right-hand side of the slide, what you see is that diagnostics, the use of diagnostics grows through the life stages of the pet, where it's about 12% or $45 of total healthcare spend when they're young, and then it grows about three times as much, $150 or about 20% of total healthcare spend as they age and become, you know, seniors and geriatric. Obviously, with this type of step up in number of pets, the capacity of the practices has been strained. That's true in a lot of industries, not just the animal health industry and not just with the veterinary profession.
We decided to set about and do a study and look at productivity within the practice. We published this a couple weeks ago at Western on finding the time. We believe it's a seminal study. It's the first empirically-based study which really examines this notion of productivity within the practices and what differentiates one practice from another. We took almost 800 practices from our practice intelligence data. We used outside consultants. We deep dive on a number of individual practice types and profiles, working with them, looking at their books to determine what distinguishes one from the other. As a result of that, not surprisingly, and this is prayed out by tertiles, what you see is this wide variation in practice productivity, low, medium, and high. This is by clinical visits.
You can look at it by revenue, you can look at it by clinical visits per hour, per veterinarian. Lots of different ways of doing it. But you see approximately, you know, 40% from one bookend to the other bookend in differences. As we categorized or as we looked at the drivers of productivity, it. Maybe this isn't surprising to a number of you, but there were three principal categories or pillars. One was workflow, and workflow is everything from the physical layout of the practice, the mix of veterinary technicians per veterinarian, average being in the U.S. about two, but you could go to three to one or four to one per veterinarian. It's a, you know, sizable uplift.
Lots of things affected the workflow optimization in terms of high productivity practices from those that were lower. The other thing is that smart use of technology, digitizing the patient workflow was critically important. I say smart in the sense of it doesn't mean that everything needs to be digitized, electronic forms at each step of the journey, but insofar as that they use technology to remove unrewarded administrative effort, that made a very sizable difference. Very broadly speaking, culture played a big role. Culture is everything from clarity around roles and responsibilities. Are you incentivizing a team to be a team and to collaborate? Are you investing as a practice owner in the training and licensing of employees within the practice? All those things matter.
The, I think the very positive news out of this is that those practices who have low productivity can make some very meaningful improvements to increase that. Even those practices in the top tier have a lot of room, have up to 30% incremental visit potential. We know practices are working on these things. This has been very well-received and is important. One of the things that practices have done and that we as a company are strategically focused on is software and the role that software plays in a practice. Practices are complicated, they're complex, they're fragmented. There's lots of activity going on. Insofar as software as a way of supporting optimized workflow, staff productivity, communications with your client or pet owner and internally, those are very, very important solutions.
We have a full range of solutions as a company that we think, you know, can help customers. This is a business for us that's growing quickly. That's an attractive business. It's a cloud-based, data cloud-based, centered on data cloud-based PIMs, and that, you know, also customers are hungry for and very receptive after a period of time when I think there was a fair amount of conservatism in staying with on-prem systems. That's the setup. Let me move and talk about diagnostics and how to profile out diagnostics within the practice. You know, everybody, I think, is familiar with the fact that animal health industry and veterinary services in general has been an attractive place to be from an industry investment standpoint.
This shows you data from 2017 to 2022 in CAGR rates. In total revenue per practice, and this is for the U.S., by the way, total revenue per practice is a bit over 7%. As it turns out, clinical revenue on an annual basis is growing faster than at 8.3%. A little bit over 1%, which matters as you compound it over the years. That's not so surprising. We know that veterinarians are focused and pivoted on medical services and delivering medical services. To treat, you first have to diagnose. To assess, even for a wellness visit, the health status baseline of a patient, you first have to diagnose. Diagnosing very often means diagnostics. What you see is diagnostics revenue has grown almost 10%, so much faster.
It's the fastest growing area of the practice. It's a profit center for the practice and very important. IDEXX diagnostics over this period has grown even faster, over 300 basis points faster. First one was a market figure, and this one is for IDEXX. The question is why? I'm gonna talk about how we think about diagnostics and why we're growing faster than the sector as a whole, and why we think we have, yes, some differentiated solutions. It starts with, like I promised, I was gonna break down diagnostics utilization deeper. This is by deciles, clinical visits, percentage of clinical visits that include blood work. It's for the U.S. We break it down by wellness and non-wellness visits. What you see across these deciles, there's incredible variability.
There are some practices, if you look at the combination of wellness and non-wellness, so the Pareto on the left-hand side, that only about 5% of clinical visits include blood work. Then on the other end, the top decile, it's 35%. In the top 2%, it's 40%. Clearly there's a big difference between lower decile and top deciles. Our strategy, our company execution is focused on moving those customers from the left to the right through innovation, through awareness and education, by demonstrating they're missing things, important things to their customers, to the pet owner, important things to the veterinarian as a professional in not using blood work. Veterinarians are science-based, really empirically driven professionals. When you present data, when you share this type of thing, they're highly interested in it.
The other comment that I would make, typically on the lower decile customer base, what they say is our pet owners, their customers, are budget conscious, or they'll say, "I'm not yet convinced that blood work is important." Those customers could be very responsive to empirical data. On the right-hand side, those higher decile customers say, "You know, it's part of how we practice care within our practice. We embed care protocols in workflow. If somebody comes in for a wellness visit, they get a vector-borne disease, fecal, chemistry, and hematology workup." It's just how they do business. This is an important part of our strategy. This is what we've tracked. Let me talk a little bit more about this. A pillar of the strategy that drives diagnostics utilization and growth is our premium instrument, the installed base.
We had a record year in 2022. You see 17,000 units that were placed. Our installed base has grown since 2010 on a 13% CAGR rate. Keep in mind, whether it's chemistry and hematology and StatVue, these are generating consumables and cartridges in this annuity revenue stream for the business. That 17,000 units compares to just 12 years ago, 4,000 units. It gives you a sense of the scale and scope and the success we've had from an execution business. You may have noticed that the red piece, the hematology, seems to have grown a little bit faster. That's not surprising. We've come out with ProCyte One in early 2021. Just to spotlight that.
You know, we've had less than two years, you know, more than 8,000 ProCyte One analyzers placed. This has been a remarkably successful product for us. It fits from a performance, a reliability, integrated with workflow. It's easy to use. You just take blood, put it in a tube, put it in the analyzer, and get a result back in minutes. It's something we're very proud of. Keep in mind, there's a significant multiplier impact with ProCyte One. 95% of ProCyte Ones are either placed with Catalyst chemistry or placed into a chemistry installed base. This is something that, from a customer standpoint, you know, is very significant. Again, this installed base of instruments generates consumables. Let me also share with you another element of our strategy that drives relevant diagnostics testing and utilization.
This is for our chemistry analyzer. Over the last 10 years, we've come out with nine new parameters or reconfigured parameters in the case of SDMA, and we have a technology for life orientation. As a customer, if you bought a chemistry analyzer, and by the way, when we say chemistry, it's really electrolytes, chemistry, and immunoassays. If you bought this analyzer this morning, you would have the same features and functionality of a customer, no more, who bought it seven years ago or 10 years ago. This is the technology for life, a philosophy that we have as a company. It's a result of the design and architecture of our technology to be able to keep our customers latest and current. The reason that's important is we don't have to place another analyzer to run immunoassays or to run expanded chemistry panels.
In the case of SDMA in 2022, Catalyst SDMA. These aren't the ones that are included as part of the price of a chemistry panel from the reference lab. Customers are paying for these. They used Catalyst SDMA 5.3 million times, either as part of a chemistry panel alone or included with Total T4. Something that we think differentiates us and is important part of our growth strategy. You know, I'm often asked whether or not you guys have placed some of the instruments, you know, Do you still have attractive prospects going forward? It's true, the size of our premium installed base is approximately 120,000, as you can see on the left-hand side, but that continues to grow.
You know, we think that there are approximately twice as much opportunity still in front of us with about 80% of that internationally. That's the point of care business. Let me talk about reference lab. This is a business that we've been in and invested in, you know, almost 30 years. It's something that's a technology-driven service. We have over 80 reference labs on a global basis. It requires expertise in science and medicine, technology, harmonized lab information, management system, transportation and logistics expertise. You see, we continue to invest in it. We opened up the Kornwestheim lab, the biggest lab in our network by 50% in Germany during the pandemic. Couple weeks ago, a number of folks, senior executives, were in Australia, where we opened up a new Brisbane lab.
In Louisville, we've opened up a next day PCR lab for those customers who need PCR tests the following day. Very impressive. Obviously, we're not opening labs for the sake of opening labs. When we include an expand menu, like with our fecal antigen menu, you see flea tapeworm that was introduced at no additional cost, and generates five times or uncovers five times as much that compared to a traditional O&P technique. Very important. It's a great use of the technology differentiation we bring. It detects the protein in these parasites before an ova or egg is apparent, and we're able to do that on the service of our customers.
Oncology is another area that's not just reference lab, but today is more reference lab-based, that we think represents a very attractive prospect for the company. six million dogs in the U.S. get cancer. One in four dogs through their life will get cancer. The mortality rate is three times as high. There's a lot of testing today that primarily falls on the shoulders of the general practitioner that they're responsible for, that they have to, you know, deliver. You'll hear more about that. We've had a combination of both partnerships and internal investment strategies to be able to develop that opportunity. You bring it all together, all the things that I've talked about, point of care, reference lab, software, it all works better together. It supports the customer's workflow.
Data, after all, testing is just data, after all. To the extent that you can contextualize it with the patient situation, draw clinical insights, suggest next step guidelines or considerations. Obviously, the customer feels like they can deliver better care. We do that through a sales organization which has grown in capability, in size through the years. This gives you a sense over the last, you know, 10+ years that we've, you know, very appreciably increased the footprint of our sales organizations. These are trusted advisors who work with customers. The international area has been a relatively attractive area of focus for us as a company, and we now have over 1,100 professionals. Keep in mind, these aren't just account managers. These are specialists who support reference labs or Point of Care Diagnostics, software professional service reps, field service representatives inside sales.
It's the ecosystem working synchronized together to deliver these solutions and to support our customers. Not surprisingly, maybe as a result of having a very compelling strategy, executing really expertly against this strategy, we've delivered excellent financial profile for the business. This is between 2017 and 2022. We've had revenue growth at 11%, operating margin increases of over 100 basis points annually. EPS even faster at 23% with a very high ROIC. That number is for 2022, 44%. Let's bring it together because I'm down to the last 30 seconds or so. This is a business that's really is represented from a business model standpoint as a durable recurring revenue business. We think we have a tremendous runway in front of us of 25 years.
We shared that at Investor Day. It's served I think expertly by differentiated innovation in a commercial model, which is high intimacy, high touch, which positions and engages customers with solutions that helps them do that. As a result of excellent execution and differentiation, it's a business that enjoys exceptional returns. Thank you for your time, very much appreciated.