Good morning and welcome to IDEXX's twenty twenty first ever virtual investor day. It's a great example of how we're all adapting to COVID while staying focused on key priorities. I'm Jay Mazelski, President and CEO of IDEXX and I'd like to welcome everybody participating through webcast. We have two hours planned for this morning. The first ninety minutes or so will be prepared remarks and presentation.
Following a brief ten minute break, we'll open the session to question and answers. If you have questions during the prepared remarks, all you need to do is hit the Ask Question button in your display viewer. Our Investor Relations team will handle the rest. I'll be joined this morning by our management team who will highlight selected topics. Jim Pawlowski, the Executive Vice President in charge of the Global Commercial Organization will talk about our commercial strategy.
Doctor. Tina Hunt, who has responsibility for our global point of care diagnostics business and operations business will highlight the newest addition to our vet lab suite, the ProSight one. And Mike Lane, Executive Vice President to his overall responsibility for global reference lab business, telemedicine and the IT group will talk about the latest addition to our global lab network in Cord Westheim, now the largest. And then after completing the IDEXX Opportunities and Strategy section, Brian McKean, our Chief Financial Officer, will cover the financial review. As a reminder, our Safe Harbor disclaimer is available on our website.
With that, let's get started. IDEXX's consistent strategic approach centered on market development frames the enduring high growth opportunity we'll discuss this morning. We're excited to be talking about the markets we participate in. My focus will be on companion animal diagnostics and the many factors that make it so attractive, like the strengthening pet owner bond, favorable demographics and increasing standards of pet health care. The story is supported by high quality analytics that we generate for the benefit of both investors and the industry.
This data and our industry get a lot of attention from the resulting insights, which we think is a good thing. A recurring theme I'll emphasize is that innovation is foundational to our approach to market development as is the leverage of direct commercial capability aligned with our customers' priorities. These factors drive sustained high growth at our business. You'll hear today about the long term secular growth story that reflects the strengthening of the pet family bond and underpins the growth in pet healthcare that we believe will continue for a very long time. These themes are reflected in the $30,000,000,000 plus total addressable market we see in the companion animal diagnostic space.
These core market opportunities and our strategic approach reinforce the sustained potential for long term double digit organic growth we see for the company. The strategy we've been pursuing has been highly effective and has driven 11% annual growth in recent years, aligned with our long term goals. This strategy has some core elements. First, we have a relentless focus on developing attractive core markets. Second, we have an innovation led growth strategy.
In companion animal diagnostics, this leverages a fully integrated multimodality testing platform with services in data and software solutions. And next, world class innovation is joined by a world class commercial team and approach. We create and grow diagnostics and software market through education and partnership with our customers. The face of this partnership is our expert and trusted commercial team. The result of earning credibility and trust is that customers are inspired to grow relevant testing adoption.
Through this process, we capture a higher share of the faster market growth we enable with our customers, expanding our recurring revenues. The recurring annuity business is at the center of our business model. It has exceptional durability and retention and delivers a high return on invested capital. In terms of recurring revenues, we're approaching 90% of the total IDEXX revenues with 76% from CAG Diagnostics recurring, setting a strong foundation for durable, high return growth. And through high levels of execution, including benefits from our successful growth initiatives, we've been able to accelerate recurring revenue growth.
As shown on this chart, we've accelerated to approximately 12% CAG Diagnostics recurring revenue growth years with strong gains across both The U. S. And international markets. The strong momentum reflects tangible progress in aligning innovation and market engagement. This achievement is noteworthy.
Going beyond the numbers, they reflect decisions made by veterinarians who are highly demanding customers who evaluate product effectiveness and workflow fit claims, want peer reviewed data supporting performance and economics that are compelling. They also want their commercial partner to understand their practice needs versus just being transactional. They look to us to help them through change management challenges and for staff support and training. Practice owners value information systems, too. These very often drive how their work gets done, how effective their communications are with both staff and clients and the overall productivity of their team.
Our customers tell us that we do a terrific job in these areas and partner for their effective use. This is reflected in IDEXX's world class Net Promoter Scores and other arm's length surveys. Brian will later share with you the outstanding retention rates which result. The strength of our core markets and the IDEXX business model can be seen in the resilience of our core CAG business through the COVID-nineteen pandemic. This graph frames our U.
S. CAG Diagnostics recurring organic revenue growth for the first six months of this year relative to growth of clinical visits and its components, wellness and non wellness visits. IDEXX's companion animal business has shown strong resilience during COVID, even when practices and competitors alike were impacted by stay at home policies and restricted retail openings. From late March through mid April, practices experienced a dramatic drop off in patient visits as the industry adapted to a once in a century shock. By late April, however, the market began to substantially return.
This is the classic profile of a V shaped recovery. These solid recovery trends have continued in July, reflected in 6% growth in same store clinical visits as shown in updated snapshot we shared this morning, which is available on our website. This chart speaks to what makes our industry and IDEXX so attractive, the enduring and growing human animal bond, the willingness of pet owners to spend for the health and well-being of their family members, even during times of economic distress, and the critical role that IDEXX Diagnostics plays in the pet care equation. The resilience of the diagnostics market has been seen globally. The connectivity of our in clinic analyzers through Smart Service allows us to have a real time view of testing activities and volumes.
This graph depicts trend lines in year over year growth for chemistry testing for the first six months of twenty twenty in several of our major markets. We experienced nearly identical impacts from COVID in Europe and The U. S. As you can see from the chart, even though these markets showed some variations by country within Europe and by region within The U. S.
For example, in late March and early April, workflows and patient check-in procedures were modified. Practices that went to patient curbside drop off and pickup had follow on impacts as they saw fewer patients with increased average appointment times. Japan's relatively low human COVID-nineteen case rate was attributed to strict adherence to social distancing and other safety precautions. So though there were impacts, clinics remained open and services were not dramatically curtailed. And we saw only modest impacts early in Australia, which was successful in preventing a larger outbreak.
These results are, after all, not surprising. Pet owners don't consider caring for their furry family member to be a discretionary outlay. And as access to the veterinary practice was expanded, pet owners returned quickly. IDEXX has been proactive in assisting the market's recovery. We approach our customer partnerships expansively as depicted in the slide.
Our customers have expressed their deep appreciation for how we have lived these values during the pandemic. When COVID-nineteen hit and impacted veterinary practices very often in significant ways, we made a commitment as an organization that we would be there for our customers. Period. The first Concert as a business that was designated to stay open was product availability and uninterrupted reference out testing services. We delivered.
This enabled them to focus on their job to care for patients. We also continued to visit with customers virtually or physically in person as requested. In fact, 40% of our visits were in person in June, both for The U. S. And internationally.
Some customers with restricted patient traffic flows also wanted flexibility on payment and recalibrated volume commitments where needed. We provided such flexibility as we take a very long term view and seek to build on our already strong relationships. And we and they know that COVID-nineteen won't be here forever, that the need for new solutions that solve long standing practice challenges did not go away with the emergence of a virus. So our innovation roadmaps have progressed to plan, like our recently announced launch of ProSci one. These efforts and encouraging trends are helping the pet healthcare market sustain solid growth.
This graph shows year on year growth in overall pet spending and revenue per companion animal practice to benchmarks such as PCE and other segments such as dental services that have been more impacted by the pandemic. The chart reinforces the relative attractiveness of our core CAG business in the priority that pet owners place on companion animal health care. It also reflects the underlying health of vet clinics. Even during the height of impact from the pandemic in late March and April, practice revenue held up reasonably well considering the social distancing restrictions and prioritization of care management in favor of sick and emergency care. Overall, in Q2, U.
S. Same store vet practice revenues grew 2.5% despite a decline in overall visits of 5%. And strong recovery trends have continued in July, reflected in 10% growth in overall clinic revenues as reported in our most recent snapshot. A dynamic we are seeing during this time is a shift to focus on providing services, including greater use of diagnostics. Changes in delivery of care may be helping to drive higher diagnostics.
Let's look at this through both the perspective of the pet owner and the veterinarian. First, the pet owner. We're all spending significantly more time with our pets. As we work from home, it may observe more issues like clipping, scratching and lesions. Consequently, we've become more attuned to our pets' activities and needs, which has resulted in more visits to our veterinarian.
Next, let's examine diagnostics usage through the perspective of the veterinarian and practice owner. There was already a trend pre COVID for product sales to increasingly go online. Veterinarians have reacted by focusing more on delivering medical services. This is veterinarian's core value proposition after all and drives better care. And to treat, you first must diagnose.
Diagnostic testing plays a central enabling role in this paradigm. A second important reason, and we hear this from many veterinarians, is that they are providing a more complete service, a higher standard of care, if you will, when the patient is in their practice. This may be due to concerns about a second wave or a potential recession which may impact when they see the pet again. This has the potential to sustain itself as veterinarians experience pet owner receptivity to a for service approach. These dynamics are building on longer term trends towards higher standards of care.
These charts show the average percentage of clinical visits with diagnostics and average revenue per clinical visits by month for periods going back to 2013. As shown here, we've seen a steady longer term trend towards increased use of diagnostics, which has stepped up during the pandemic. The proportion of clinical visits, including at least one diagnostic, has increased since March in both wellness and non wellness visits. In addition, we're seeing greater dollars of diagnostics revenue per clinical visit. Overall, the average diagnostics revenue per clinical visit in 2020 that included at least one diagnostic has been trending above previous year's levels as well, approximately 5% higher for the 2020 versus the 2019.
In fact, Diagnostics revenue per clinical visit overall and per non wellness visit has been higher than in 2019 every month this year. These dynamics reinforce the healthy market backdrop we see for Diagnostics that continues to evolve favorably. As shown here, historically, we've seen a healthy mix of growth in same store clinical visits, increased use of diagnostics and increasing revenue per clinical visit using diagnostics to support high single digit per practice growth in diagnostics revenues in The U. S. In the 2020, even with pressure on clinical visits related to the pandemic, U.
S. Vet clinics sustained strong per practice diagnostics revenue growth through increased utilization and relative expansion in the scope of services. These are encouraging trends that we will look to build upon in our growth strategy. To fully understand the resiliency of the market for veterinary services, it's important to understand the connection between the pet owner and the pet. This is foundational.
This bond drives when and how much we spend for the health and well-being of our family members. We've shared past measures of this connection of human animal bond with pet owners surveyed who consider pets to be members of their family in the mid to high 90% range. The data before you are new from a recently completed IDEXX survey that showed that the experience of COVID-nineteen and the impacts of sheltering at home have only strengthened this bond. In fact, a stunning seventy seven percent of pet owners have indicated that the health needs of their pet are as important to them as their own health. An important question in this context is whether this translates into intent, both in terms of greater visits to the veterinarian and greater resources spent more generally on their pets.
Our data suggests, in fact, the intent is there. And this is true across different generational cohorts. With Gen Z and millennials comprising close to half of all pet owners and growing strongly, these favorable demographics, are hardwired into the math of future pet owner behavior, suggest favorable tailwinds for veterinary practice visits and services in the years to come. This is one more factor that gives us confidence in the high long term growth projections for the companion animal diagnostics market. As powerful as the survey data is, it doesn't speak to whether pet owners are willing to make prioritized spending decisions for the benefit of their pets relative to other choices.
Considering the potential macroeconomic factors arising from COVID-nineteen and the impact on the consumer, this question has added importance. Even though discretionary spend on pet ownership is relatively low at about 1% of the PCE total, the survey data strongly supports the thesis that pet owners prioritize the health and happiness of their pet dramatically over other discretionary categories, like eating out, personal grooming services and live entertainment. These spend categories represent a significant budget outlay for many consumers. So not only has the pandemic brought us closer to our pets, pet owners also intend to spend more in the coming year. And if there's a decline in household income due to a more prolonged recession, spending on our pets will be prioritized over other discretionary areas.
Continued strong industry trends and powerful evidence of the growing pet owner bond reinforce the significant long term opportunity we see for our CAG business. This is a depiction of the addressable companion animal diagnostics market that we introduced last year. Let me set the table in terms of how we think about The 2019 global market for diagnostics and software is $4,900,000,000 of which $4,100,000,000 is core diagnostics, excluding software, digital radiography and ultrasound. This chart highlights the large addressable market at $33,000,000,000 based on a relatively straightforward set of assumptions versus served or actual outlays of the $4,100,000,000 Let me quickly describe these assumptions. Using The U.
S. As a base, we took current levels of wellness and non wellness visits and relying on clinical expertise as to existing medical standards and best practice benchmarks, estimated the number of visits that should include a diagnostics test. We then applied a reasonable manufacturer level revenue estimate, dollars 60 for wellness diagnostics and $105 for non wellness diagnostics per visit, to estimate the international, which has significantly greater number of household owned pets, we use U. S. Benchmarks with some adjustments for international market factors, for example, wellness versus non wellness visit levels.
A key conclusion is that diagnostics usage is significantly underserved. No matter how you look at it, U. S. And international, wellness and non wellness, there's a ton of opportunity with only 12% of the potential $33,000,000,000 TAM served today. A key driver of our conviction in the long term runway for our business is the relatively low level of utilization of diagnostics, even in established markets like The U.
S. Let's go a level deeper, looking at The U. S. Market through blood work done as a percentage of clinical visit data since it's during the clinical visit that blood work is performed and treatment decisions are made. This analysis is based on data from over 7,000 practices.
Blood work includes chemistry and or hematology. Some important insights from this data are worth highlighting. An average of seventeen percent of all clinical visits included blood work in 2019, but average doesn't capture the wide variability in testing as you can see from the charts. The top 2% of standout performers shown on the leftmost chart represents the future if we do our job well, which by the way is still far, far below benchmarks for best medicine guidelines. Let's continue by looking at blood work through the filter of wellness versus non wellness clinical visits.
An average of only nine percent of wellness visits include blood work, while a far higher but still modest average of twenty two percent of non wellness visits include blood work. The ranges between the means of the top decile and our overall mean is substantially greater in wellness clinical visits, suggesting much greater practice variation due to wider differences in wellness testing. This finding is consistent with observed market dynamics, where wellness too often focuses on geriatric patients versus the full spectrum of adult and senior pets. Though non wellness testing is more established, both averages are far below ideal benchmarks, which highlight a substantial room for growth. These analytics all support a sustained long term growth opportunity for the global CAG market, which IDEXX can lead in developing.
So let's look at the twenty five year runway of the market by projecting growth rates in clinical visits and the underlying usage growth in blood work. The starting point is with today's $4,100,000,000 served core diagnostics market, with blood work at seventeen percent of clinical visits in The U. S. And a much smaller estimated 6% in international markets. Starting with The U.
S. And projecting the diagnostics utilization growth observed over the last five years could continue in the next twenty five, you see the implications of this growth on the right side of the slide. The question is, is this a reasonable scenario? If it happened this way in the year 2044 for The U. S, 30% of clinical visits would include blood work.
Said another way, the average in The U. S. Would still not reach what we already see today in the top decile with an applied diagnostics revenue growth of only 7% to 8% CAGR. For international, we assumed it only reaches The U. S.
2019 level of diagnostic utilization in twenty five years with an implied market revenue growth of between 1011% CAGR. And with these levels of growth, we've still only tapped less than 30% of the estimated total addressable market at 2,044. One could certainly make the argument that there are more ambitious scenarios based on developments like an accelerated view of preventive care awareness that might result in even faster growth. This huge attractive opportunity is why we're focused on organically driving our growth strategy. Our strategy to do this is simply described, to build this market through testing innovations that raise the standard of care with a commercial presence that helps our veterinary partners achieve their practice and patient care goals while delivering an exceptional customer experience.
Jim Pawlachak is now going to discuss our global commercial approach and its role in market creation.
Thank you, Jay. Good morning, everyone. Greetings from Maine and I trust everyone is doing well. I appreciate the opportunity to spend some time today discussing our global commercial approach, which has been supported and accelerated by the transition we made earlier this year into a global commercial organization here at IDEXX. As Jay touched upon, we're extremely fortunate to participate in a market with tremendous resiliency and opportunity associated with it.
The pet health market, and more specifically, the category of diagnostics and software, currently at $4,900,000,000 offers an exceptional multi decade global growth opportunity for IDEXX, an opportunity for us to continue to create growth. As we look to develop the global market opportunity for our business, a key element of our strategy will be to leverage the demonstrated capability of our highly successful U. S. Direct commercial model. The U.
S. Continues to be our largest and most mature market. And to capture the significant opportunity domestically, we've taken a very disciplined and thoughtful approach over many years to build an expansive commercial ecosystem, one which puts a strong and talented team of diagnostic category experts at its center. Our transition over the years to a veterinary diagnostic consultant, Go Direct, account management model has taught us that the key to long term growth is to see the market through the eyes of our customers, deeply engaging with them on the role diagnostics can play in the health of their patients and their practices. Multiple expansions have not only increased the frequency and reach with which we call on our customers in The U.
S, they've also given us a playbook of best practices to leverage internationally as we seek to realize the exceptional opportunity that Diagnostics represents globally. Leveraging this commercial playbook of best practices, we will scale our commercial footprint on a rolling basis in targeted international markets over the coming years. Keep in mind, twothree of the addressable market is international relative to the 62%, 38% split of the current diagnostic and software market I shared with you on the previous slide. We see significant runway to apply the learnings that we found in developing The U. S.
Market to accelerating the global adoption and utilization of best in class diagnostics, advancing pet health care around the world. We believe the combination of continued innovations like ProSightOne, which we are extremely excited about as a commercial organization, coupled with strong commercial presence and execution in key countries around the world, is critical to realizing this tremendous multi decade opportunity. Inspiring customers through the belief evolution journey is core to our commercial strategy and requires an ecosystem of diagnostic category experts, talented professionals who can confidently and competently speak to the clinical and economic value of our differentiated products and services. A critical component of our commercial success has been the modality agnostic approach our VDC model provides. Viewing the opportunity through our customers' eyes means when we grow together by enabling veterinarians to practice medicine the way they choose to, with our category experts there to provide awareness, education and ultimately consideration of the unique diagnostic tools available to them.
As a result of this approach, we continue to see the proportion of customers going all in with IDEXX in The U. S. Continue to increase each year. As you can see from the chart, more than half of our customers choose to partner with IDEXX for all of their diagnostic needs. If we were to look at comparable data for international regions, we see even greater opportunity.
For example, in Europe, we see overlap closer to 33% overall with variation by country. This speaks to the tremendous runway we see internationally and where the strength of our innovation portfolio, global reference lab network, including our newest and largest lab in Kornwestein, Germany, as well as connectivity solutions like VetConnect PLUS support a similar commercial approach as well. A major goal of our commercial strategy is to accelerate the growth of our customers as diagnostics is increasingly viewed as playing an essential enabling role to medical services in veterinary medicine. The correlation between presence and growth is compelling. Irrespective of which key country we look at around the world and whether these customers already use both in clinic and reference lab service from IDEXX, the result is similar.
When we call on customers with IDEXX diagnostic category experts, they grow faster, meaningfully faster. Recent investments in international markets have continued to demonstrate this correlation between presence and growth. And therefore, it's a strategically compelling approach for us to continue our commercial footprint in targeted international countries around the world. To ensure an efficient and disciplined approach with these investments, we're leveraging core elements from our commercial playbook, including hiring and engaging the right talent profiles, applying deep analytical insight to market opportunities, driving a world class training and education curriculum and supporting our field and our customers with education, tools and creative marketing and capital placement programs like IDEXX three sixty. To further ensure we're replicating a proven approach with a high probability of successful execution, we've also established a set of global centers of excellence that will support commercial expansion and investment in each of these chosen countries.
One of these recently formed global centers of excellence is in the areas of corporate accounts, given the growing importance of these entities globally. This team, led by Mike Erickson, is already playing a very valuable role in ensuring IDEXX is meeting the unique needs of these important customers around the world. Another critical element of excellence is commercial marketing led by Kathy Turner. Global marketing efforts will play a crucial role in complementing our on the ground commercial model, supporting our efforts to create growth globally moving forward. The power of this global commercial approach was recently demonstrated in the extremely successful global launch of our novel veterinary COVID-nineteen test and will be applied to the launch of ProSight one as well over the coming weeks, which we are enormously excited about.
In summary, the combination of our innovation portfolio and an expanded commercial presence in a targeted number of high return markets around the world will ensure we continue to capture the exceptional growth opportunity for Diagnostics in the years to come. With that, I thank you for your time and I'm going to hand it back over to Jay.
Thank you, Jim. We believe that IDEXX is well positioned to drive long term market development. Jim just described what the commercial component of this looks like. The other strategically important dimension is having an exceptional portfolio of solutions and an ongoing commitment to innovation. Our leadership position is and has been built on a continuous commitment to and focus on innovation, new platform development and diagnostics information technology, big data and more and more artificial intelligence.
It's not just our investments in R and D and their cumulative impacts as significant as our outlays have been. Innovation extends to areas like customer experience with our pay per run and auto replenishment models and embedded integration with our software applications. And it takes a very long time to get good at this. We're down the learning curve and are world class product developers. Since Tina is going to speak to ProSight one in a minute, let me highlight an element of our innovation strategy you see on the slide, our approach to platform development.
Platforms highlight an important design consideration. This design approach allows us to continue to invest in the performance, menu and connectivity of this solution, something we call technology for life. A customer investment grows in value through the years since it becomes more capable. It becomes more valuable to us, too, since there's an opportunity to realize faster recurring revenue growth through an expanded menu. One of our guiding principles is innovate with intelligence.
Our innovation spend is focused, integrated across modalities and software and highly differentiated. Our point of care instrument suite is a case in point. The Catalyst Chemistry Analyzer anchors our suite and generates most of the recurring revenue. But we're also the leader in hematology and created a completely new category in automated urinalysis with SediVue. Virtually all our instruments around the world could be connected to IDEXX.
The Internet of Things, we've been doing this for over a decade. There are, of course, enormous advantages for the customer, including receiving silent updates for new menu and functionality, reviewing diagnostic test results on their smartphone, being able to embed the results in the PIMS electronic medical record and only pass when you run a test, like in the case of SteadyView and now with ProSide one versus one when product inventory is received in the practice. And the good news is that there's a long runway to continue expanding our premium installed base, almost 200,000 opportunities for placement globally, in fact. There are 43,000 practices with Catalyst analyzers installed as of mid-twenty twenty based on placement since we launched the analyzer in late two thousand and eight. We see another 73,000 opportunities globally, including 59,000 internationally and 14,000 in North America.
Keep in mind, with each chemistry placement, the attach rates are typically very high for hematology and increasingly so for Sytogue. Next, I'd like to introduce Doctor. Tina Hunt, who will provide an overview of the latest addition to our in house diagnostic suite family, ProSci one.
Thank you, Jay, and good morning from Westbrook, Maine. We are glad that you could join us today and I'm excited to share more about our new hematology analyzer ProSite one. But first, a little context. Chemistry and hematology are the most commonly run diagnostics in a veterinary clinic and they usually run together. Hematology is quite complex.
It's more odd than science with living cells that are changing. So it can be challenging to run, get accurate results and for veterinarians to interpret those results. ProSight DX, our premier hematology offering, is recognized as absolutely best in class for its menu and performance capabilities. Customers just love it and consistently give a very high Net Promoter Scores. It is ideal for mid to high volume clinics and specialty hospitals, but there is a large segment of customers looking for a more economical in house offering.
For the past several years, we have been hard at work developing a transformational hematology analyzer to serve the broader global market, building on more than twenty years of hematology experience since LaserCite launch. ProSci one completely redefines ease of use, the entire customer experience for hematology. Not only will it offer a broad and differentiated menu, the innovation magic is in its intuitive and elegantly simple user experience designed and iterated over and over with constant customer feedback until we were confident it exceeded their expectations. There's also tons of AI built into the system to operate it and get highly accurate results and also to provide clinical decision support in interpreting the complex hematology results and recommending actionable next steps to the veterinarian. To top it off, ProSci one packs a powerful punch with very compelling economics, mid to high teens analyzer list price and all the advantages of a paper run model that our customers enjoy with CetiView today.
And with auto replenishment, we free up their time spent on inventory management and reordering. ProSiteOne fits beautifully within the in clinic diagnostic suite and a fully integrated end to end ecosystem, including VetConnect PLUS that delivers exceptional workflow, productivity and economic benefits to our customers. This high level of integration also makes clinical decision support with AI, paper run and auto replenishment possible. As Jay highlighted, a lot of forethought has gone into ProSightOne's design to deliver on our unique technology for life customer promise now and in the future as we have done year after year with other platforms like Catalyst and SediVue. Let's take a closer look in this video.
Everything into a small and compact, but super powerful footprint. The reagents take seconds to change. There are no big separate packs sitting on the counter. No tubes, no valves, no messes. ProSide one is going to be another game changer.
Just like Catalyst one, it hits the sweet spot of high performance, effortless user experience, extensive functionality, all at a very affordable price and will open up broad access to all segments of the market globally. It will also have a multiplier effect. Our sales teams around the world will be able to leverage this innovative product to earn competitive chemistry placements as well as win new lab business with customers leveraging the IDEXX three sixty program. More now than ever in the current environment, customers increasingly realize the importance of in clinic diagnostics and real time care and ProSci one couldn't have come at a better time. We are currently in customer experience trials in several clinics and will expand the number of units over the next month.
Customer feedback is going very well. As Jim shared earlier, our sales teams in North America are super excited and are already starting to take orders. We will place a ProSight DX in the interim until we are satisfied that ProSight one meets our high standards of performance and quality and is ready for shipment. We expect to begin shipping a small number of analyzers by year end with volume shipments starting early next year. We anticipate an annual recurring revenue in the range of $2,500 to $3,000 per placement in U.
S. There is tremendous global hematology placement opportunity with majority over 75,000 in competitive and greenfield space. We expect ProSci one as a best in class hematology solution at an extremely attractive price point to follow a similar growth trajectory to Catalyst One, opening customer access globally and driving broader CAG Diagnostics recurring revenue growth. And with that, I'm going to turn it back to Jay.
Thank you, Tina. Next, I'd like to shift focus to one of the areas we're very excited about, preventive care. It's one of our key strategies to grow diagnostic utilization. Historically, the preventive care checkup has been heavily anchored in just the physical exam, vaccine and a simple heartworm screen. What's exciting is the increasing recognition using IDEXX big data peer reviewed studies that blood work should be included in the preventive care or wellness visit as an essential element.
These studies show that with IDEXX diagnostics, veterinarians uncover more disease. In one landmark study we shared with you last year that looked at over 30,000 canines, one in four of adult and senior visits indicate the need somewhere in the panel of tests for further action, perhaps a hookworm infection or anaposmosis. So preventive care testing is not just for geriatric patients, though of course they also benefit. The slide before you describes the results of another very important study that IDEXX did with Halonga, the dog park fecal study. We wanted to understand the prevalence of fecal infections of dogs visiting dog parks, which are growing rapidly, particularly in urban areas.
The data shows that for almost 300 dog parks that were looked at, the prevalence of these infections is high, higher than you might have expected. In fact, it sits between the prevalence based on typical submissions we see in our reference lab of about twelve percent and shelters, which are typically much higher at between thirty and forty percent. These findings reinforce that there's a lack of compliance with monthly control products despite what pet owners might otherwise profess. The study also highlights the superiority of IDEXX's fecal antigen relative to a fecal flotation and a microscope with nearly 80 more infections uncovered as the antigen detects the worm protein in the pre patent stage of infection. Our customers ask for such studies since it drives conviction and testing adoption.
IDEXX has been able to bring together relevant tests, including fecal antigen to create preventive care protocols that closely align with how our customers use diagnostics testing. We call this initiative the IDEXX Preventive Care Program, and we have approximately 4,300 cumulative enrollees to date. Several key elements are included in this turnkey program, like care protocols, compliance based pricing consultation, pet owner communication Several materials and practice staff training. As discussed earlier, our approach is to help customers increase the standard of patient care through the increased use of blood work in this instance for wellness visits. The data before you clearly demonstrate the impact of this preventive care program.
Though they tended to be relatively higher users of blood work and wellness visits relative to non enrollees in the base year 2017, the year before program enrollment, preventive care program enrollees dramatically increased the use of blood work by two thirty basis points one year past enrollment. This is relative to an 80 basis point increase in the case of non enrollees that represents overall market progression. This is a great example of how we approach market creation. We develop a proprietary test based on deep science that uncovers more disease, addressing an unmet clinical need. We support our discovery with multiple peer reviewed studies that empirically demonstrate superior efficacy.
Lastly, the test is included as part of a relevant integrated care protocol that our commercial organization can partner with veterinarians to drive adoption. Next, I'd like to introduce Mike Lane, whose responsibilities include Global Reference Labs, the primary testing venue for preventive care sendouts. Michael will discuss our new Korn Westlake facility and how it fits in with our reference lab strategy.
Thank you, Jay. Good morning, everyone. We are continuously strengthening our position as a global leader reference laboratory services. Our sustained double digit revenue growth, combined with high margin drop through, enables ongoing significant investment in innovation, continuously laboratory network and commercial capability. The result of our cumulative investment over decades is the most complete and advanced menu of differentiated tests and services, proprietary information systems that integrate our network and our offering, productivity and efficiencies across our global and regional laboratory networks and exceptional service for our customers.
Delivering exceptional service requires a sophisticated global and regional hub and spoke network, serving practices locally during the day with dozens of day labs and efficiently transferring samples to regional and core labs that operate throughout the night to deliver results by the next morning. Leveraging over two decades of IDEXX expertise, Korn Westein is now our largest Core Lab, the center of our European network and the most advanced veterinary laboratory in the world, bringing capability and capacity to support our growth across Europe and beyond for years to come. I am very pleased to bring Westyme to all of you today in a video. Welcome to Korn Westyme. Please play the video.
As you saw in the video, Korn Westheim reflects our unrelenting commitment to innovation with state of the art diagnostic, automation and information technology. Of course, it's not enough to just have the physical infrastructure. You also need the complete and advanced menu of tests and services to deliver exceptional service to the veterinarian so they in turn can provide exceptional care for both well and sick patients. Corn Westein delivers the full breadth and depth of our differentiated menu, such as IDEXX SDMA, IDEXX Fecal DX, and many more proprietary tests that you see in maroon on this slide. And in blue, you see IDEXX tests that are uniquely performed by the Korn Westheim Lab for our European network.
We have tremendous opportunity in front of us as veterinarians expand the breadth and depth of diagnostic testing. Investments like Korn Westyme allow us to attract the best talent in the industry and provide exceptional service to our customers, resulting in very strong customer loyalty. Customer loyalty is the foundation of our enduring recurring revenue growth, and our customers have never been more loyal. I'm
sure many of
you are familiar with Net Promoter Score as a proven method of gauging customer loyalty. We recently achieved a world class score of 62 in the survey we just conducted in The U. S. Market in July 2020, significantly higher than our largest competitor. In summary, it has been a pleasure to introduce you to Korn Westheim, a living example of how we are continuously strengthening our position as a global leader to capture the tremendous opportunity in front of us.
Jay, back to you. Thank you, Mike. Next, I'd like to provide a quick overview of our software offering. We see software as a great business. As important, it's a strategic enabler of diagnostics.
Quite simply, customers tell us that when they use all of IDEXX's solutions, it just all works better together. This chart shows you our portfolio that addresses broad customer needs in connectivity, workflow and communications with key applications that they use to run the business end of the practice. As a result of doing this well, our software business has a lot of product and commercial momentum. A key element of our software portfolio is our practice management product offer, depicted at the center of the chart as Cornerstone, which is our flagship product. Practice management systems are important because they are the mission control center of the practice, what the veterinarian uses to manage care and run the business.
We continue to invest heavily in Cornerstone, where we recently introduced the latest version 9.2, driven by a myriad set of high value features, including updated patient check-in for 50% improved workflow and deeper integrations with SmartFlow, credit card processing and web packs. And I'm pleased to share that we are in the initial phases of Cornerstone cloud rollout, which will bring the many benefits of the cloud to customers that value Cornerstone as the go to advanced workflow practice management system. Veterinarians are not only passionate about delivering superior care, they also have to be concerned with running a successful business. As business owners, whether of independent practices or corporate group practices, they want their investments to deliver a strong return. Even though diagnostics is a profit center, we're typically marked up by a factor of about 2.5.
We have demonstrated through peer reviewed studies that not all diagnostics are the same, that a superior menu uncovers more disease, which drives follow on medical services and testing. We've also invested for over a decade in the connectivity of our solutions. Customers tell us that this is a strategic advantage for them and for us since it's very hard to do well and supports not only workflow, client communications and patient data in the PIMS, but tangibly drives better economics through charge capture. Several studies have estimated this benefit at approximately fifteen percent of diagnostic charges lost, which flows through to the bottom line. Together, as you can see from the chart, we estimate the benefit of partnering with IDEXX is two fifty plus basis points in incremental operating profit margin.
This is clearly compelling. And it's not just the bottom line advantages. What this data shows is that over a six year period, IDEXX engaged practices grow both clinical practice and diagnostics revenue faster than those not engaged. So an important question is why? First, IDEXX products occupy a unique position.
One element of this is expressed in measures of In 2019, 18% of practice revenue comes from diagnostic testing at engaged IDEXX practices versus 12% at practices that use competitive offerings. And IDEXX practices have higher growth rates and dollar increases. Second, practices that use our offering benefit from our more expansive, very often novel menu that uncovers more. This drives the medical services envelope in a patient care centered way.
As you can see from the chart, clinical practice revenue is growing 200 basis points faster on an annual basis. And next, practices that use our solutions also benefit from a deeply embedded integration strategy that captures charges and optimizes practice workflow. And you'll notice that all these explanations hold across practice size. As we look ahead, strong market trends that we continue to see for our business and our high level strategic execution reinforce our optimism in the long term growth potential for our business. We're in a market with strong, durable trends centered on the deepening family pet bond, with an opportunity for expanding medical care through diagnostics that is underdeveloped globally and is taking on added importance with the veterinary community.
And we've invested over many years in an innovation driven, integrated, multimodal strategy that is helping our customers grow faster. This all supports our consistent outlook for 10 plus percent constant currency revenue long term growth potential, driven by strong U. S. And international CAG Diagnostics recurring revenue growth, augmented by other areas like software, water microbiology testing and livestock, poultry and dairy. Brian will provide more detail on this in the billow.
In summary, IDEXX has exceptional long term growth potential. And I've shared with you how our innovations complemented by growing commercial footprint will generate a higher standard of care for pets as well as better economics for vet practices, which face many other challenges. Diagnostics represents a great opportunity for practices and a highly investable business for IDEXX. So with that, I'll turn it over to my colleague, Brian McKean.
Thanks, Jay, and welcome, everyone. I'm pleased to take you through our financial review. At past Investor Days, we focused on providing an overview of our rolling five year financial goals. This year, we'll be adapting our approach somewhat to discuss trends in our business as we work through dynamics related to the COVID-nineteen pandemic. We'll focus on how our business portfolio is positioning IDEXX to deliver continued strong financial results during this towards capturing the consistent long term opportunity we see for our business.
You should take a few key messages from today's review. First, we're executing well against a consistent focused business strategy that's yielding outstanding financial results. Five years ago, we outlined a strategy to accelerate growth in our core CAG business through an expansion of our direct commercial capability and an ongoing commitment to driving industry leading innovation. Heading into the pandemic, we were executing at a high level towards that vision, accelerating our overall organic growth to 10% plus annually, driven by consistent 11% to 12% gains in CAG Diagnostic recurring revenues. Our focus on core business execution has enabled over delivery of our long term goals for EPS growth and an exceptional return on invested capital.
We believe we're well positioned to build on this successful strategy. The second key message is that we have a very attractive business portfolio with long term runway for market development. Today, we'll discuss the key elements of our CAG, livestock and water businesses and how we're leveraging capabilities across our portfolio to contribute to the management of the COVID-nineteen pandemic. The strength and durability of our core businesses is a theme that we'll highlight today. This is reflected in the strong V shaped recovery in Companion Animal Diagnostics during the pandemic and our ability to deliver solid revenue growth and strong profit gains despite pandemic related headwinds.
The consistent long term opportunity in our core business, along with the demonstrated resilience of our markets and our ongoing high level of operational execution, gives us confidence in reinforcing our commitment to our long term financial goals. IDEXX has pursued a consistent business strategy focused on attractive core markets, with a high level of execution benefiting from our focus that's delivered strong financial results. Following our U. S. Go Direct implementation in 2015, we outlined goals to accelerate constant currency revenue growth to 10% plus while achieving 15% to 20% comparable constant currency EPS gains.
Over the last four years, we've over delivered against these goals. Our financial model is centered on expanding our high margin CAG annuity revenues, which can deliver incremental gross margins of 60% plus. Success in accelerating growth in these revenues has enabled us to expand operating margins above the high end of our long term goals while investing in organizational capability. This performance and our focus on organic growth in our attractive core businesses has resulted in a 46% after tax return on invested capital. A key driver of these outcomes is the progress we've made in accelerating CAG Diagnostics recurring revenue growth, which accounts for 76% of IDEXX revenues.
We increased growth in these revenues to 12% annually on a normalized basis following our Go Direct implementation, with sustained gains at these high levels heading into the COVID-nineteen crisis earlier this year. Progress on this front reflects strong global performance. In The U. S, our innovation and outstanding commercial execution, combined with a continued long term runway for overall market development, has supported 11% organic growth over the last four years, solidly aligned with our long term goals. We're also successfully expanding our international CAG Diagnostic recurring revenue base through a focus on growing our premium in clinic chemistry business centered on our Catalyst platform.
High consumable growth in international markets, reflecting a combination of Catalyst installed base growth, increasing utilization and expanding adoption of IDEXX Innovations, has supported acceleration of international CAG Diagnostic recurring revenue growth to 14% annually, also solidly aligned with our targeted long term growth potential. The introduction of ProSide one and the leverage of our direct commercial expertise globally will position us to build on these very strong long term recurring revenue growth trends. As we're expanding our CAG Diagnostic recurring annuity foundation, we're also increasing the high durability of these revenues. This can be seen in continued gains in customer retention rates for U. S.
Catalyst consumables and Reference Labs. Through 2019, we saw U. S. Consumable revenue retention reach above 98% and lab revenue retention above 97%, with these very high levels sustaining through the 2020. These high customer retention levels reinforce the exceptional durability of our strong cash flows, supporting the high value we see in the IDEXX CAG franchise.
Benefits from high incremental return growth, augmented by moderate annual net price increases and leverage of our global scale, has contributed to steady gains in operating margins. We delivered an average of 140 basis points of annual constant currency operating margin improvement over the past four years as we've achieved accelerated CAG Diagnostic recurring revenue growth at the higher end of our targeted growth range. This solid operating profit leverage has supported comparable constant currency EPS gains of over 20% in each of the last four years. We've built on this momentum to deliver continued strong performance in 2020. For the 2020, we achieved 6% organic revenue growth and 8.5 CAG Diagnostic recurring revenue growth despite pressures related to restrictions on procedures and access to veterinary clinics during the pandemic.
Even with moderation of our growth in the first half, we increased our operating margins by nearly two twenty basis points, supported by proactive cost controls, enabling delivery of constant currency EPS gains of nearly 18%. We're very encouraged by this performance and with the overall health of the companion animal health care market, which points towards continued solid market growth going forward. As noted on our recent earnings call, we feel we're well positioned to deliver operating profit growth at or above the rate of revenue growth in the 2020 as we advance prioritized investments in support of our long term growth strategy. Our ability to deliver consistently strong financial performance flows from our long term emphasis on developing attractive core businesses. IDEXX serves three major spaces: Companion Animal Health, Water Quality Testing and Livestock Health.
Our core businesses have common characteristics. They each have solid underlying market growth potential that IDEXX is focused on accelerating through organic market development. This strategy aligns our interest with our customers and enables us to achieve high organic growth rates as we help our customers grow faster. We're a global leader in each of our core business segments. We have a global strategy leveraging common technologies and platforms across markets through integrated centers of excellence.
Each of our businesses are innovation driven with expertise centered in diagnostics and increasingly integration with information management. These businesses all have high and growing recurring revenue bases. They generate predictable, durable, high incremental gross margins, which support strong operating profit gains and excellent returns on invested capital as we reinvest towards long term market development in businesses where we have a high level of expertise. Let's briefly review our major businesses, starting with our largest business segment, Companion Animal Diagnostics. IDEXX's largest line of business is a highly attractive franchise with long term runway for high growth.
88% of IDEXX's revenues are aligned with companion animal diagnostics and software, and it's helpful to reinforce the unique characteristics of this business. It starts with a large, underdeveloped global market. As noted, CAG Diagnostics and Software is roughly a $5,000,000,000 market today with an estimated $30,000,000,000 plus long term addressable market opportunity. We followed a consistent integrated strategy to develop this market centered on innovation, global leadership across in house and reference lab modalities that's fully integrated through open architecture approaches with practice workflow and information management and a focus on enabling better healthcare through a direct commercial approach centered on supporting veterinarians and their staffs. This focus on market development has enabled higher same store sales growth at IDEXX customers, driving a 12% compound normalized organic growth rate for CAG Diagnostic recurring revenues globally.
This exceptional level of sustained high organic growth linked to a durable recurring revenue model with high incremental gross margins and low capital intensity has supported steady gains in CAG operating profit contribution margins and cash generation. A key aspect of IDEXX's CAG business is its durability, which can be seen in its resilience to macro impacts, including the recent pandemic. This chart shows U. S. CAG Diagnostic annual recurring revenue growth going back to 2010 when we started tracking this key metric.
We've compared IDEXX recurring revenue growth rates to historical U. S. Nominal personal consumption expenditure growth rate levels. IDEX has historically grown as solid spread to PCE growth rates, with the gap widening to 600 to 800 basis points in recent years. Our business has proven to be highly resilient in economic downturns.
This resilience has strengthened over time, aided by our enhanced direct commercial capability and the ongoing trend towards treating pets as members of the family. In the 2020, despite broad scale lockdown policies which constrained business activity, we achieved U. S. CAG Diagnostics recurring revenue growth of over 107% in Q1 and Q2, respectively. This resilience was seen globally with similar levels of growth recovery in our international markets.
Our sharp recovery and continued demonstrated business resilience provides optimism as we look forward that we can build on these strong trends as we hopefully see continued improvement in broader economic conditions. A factor supporting our optimism is the growing premium we've seen over time between our CAG recurring revenue growth and increases in clinical visits. The bars in this chart compare our U. S. CAG Diagnostic recurring revenue growth to U.
S. PCE growth. As noted, we've seen a solid six hundred eight hundred basis point growth premium to this broader consumer metric in recent years. This premium expanded to nearly 1,300 basis points in the 2020, reflecting prioritization of pet healthcare spending during the pandemic. An additional dynamic that we've seen in recent years is a growing premium in Diagnostic recurring revenue growth to growth in U.
S. Same store clinical visits. This premium has widened from seven fifty basis points to 900 basis points in 2019, supported by our ongoing innovation and our successful Go Direct strategy, which has helped to drive accelerated growth in diagnostics. In the 2020, we saw a further expansion of this trend supported by an increased emphasis on pet healthcare services by vet clinics during the pandemic, which could provide a favorable growth tailwind over time. These trends are aligned with our business strategy to expand the utilization of diagnostics at the practice level and reinforce the long term growth potential and attractiveness of our CAG business.
Another core element of our business portfolio, which has supported our strong financial performance, is our water business. We're a global leader in the coliform or E. Coli testing business with our tests run-in 120 countries This is a very attractive business for IDEXX with 95% plus recurring revenues, 99% customer retention, 47% operating profit contribution and very low capital intensity. We've increased we focused our efforts in water on expanding microbiology testing, including our core E. Coli testing market, which we estimate at approximately $350,000,000 currently.
We've also identified new market opportunities in areas like Legionella pneumophila testing, which is in the early stages of development. Our strategic focus remains on accelerating replacement of in house methods, which we estimate represent 50% of the coliform testing market with IDEXX solutions that offer higher accuracy and faster time to result. We successfully accelerated organic growth in this business in recent years from the mid single digit range to the high single digit range through a focus on enhancing our direct commercial capability. This has involved the addition of resources in more established markets like The U. S.
As well as through successful go direct initiatives in key markets like Brazil. We now estimate that nearly 90% of IDEXX's water revenue is sold through the direct sales channel, positioning us for sustained, solid, long term organic growth in this high return business. As noted on our recent earnings call, the vast majority of our water revenues are compliance related or mandated by government regulations, and these volumes have sustained as an essential service during the pandemic. Noncompliance testing related to areas like special projects, construction and real estate, which overall represents about 20% of our water segment revenues, have been impacted by activity restrictions related to the pandemic. Despite these near term headwinds, we remain very optimistic about our long term potential to continue developing our highly attractive global water franchise, leveraging our differentiated capability.
Another key element of our portfolio is our livestock, poultry and dairy business. IDEXX
is
a global leader in livestock infectious disease diagnostics. This is a highly synergistic business for IDEXX that leverages a common diagnostic it leverages common diagnostic testing platforms such as ELISA PCR and SNAP. It's also a truly global business with approximately 90% of IDEXX revenues in markets outside The U. S. Consistent with our overall business strategy, our growth in LPD has been driven by ongoing innovation, reflected in the launch of 30 infectious disease tests since 2015.
Our focus on innovation is supporting solid growth in the face of pandemic impacts. In the 2020, our LPD business grew 7% organically, and we actually achieved record revenues in China in Q2, supported by a rebuilding of swine herds and growth of our solutions to help manage African swine fever. We see a long term growth opportunity in LPD driven by increasing demand from livestock producers for animal health and productivity improvement. We're focused on driving global market development with an increasing emphasis on producer driven segments such as pregnancy, China swine disease management and poultry monitoring. Our growth strategy is aligned with increasing the percentage of revenues from recurring testing procedures, which have grown to over 70% of LPD revenues over the last ten years.
This focus has enabled us to steadily improve margins and deliver a high return on invested capital in LPD, leveraging our business synergies. The benefits of business portfolio synergies, including our deep innovation capability, can be seen in our successful efforts to aid the management of the COVID-nineteen pandemic through the supply of a human PCR test. The Opti COVID-nineteen PCR test was developed through leverage of our LPD R and D capabilities. In fact, it's the same testing platform we use for African swine fever and BVDV PCR tests. We also leverage the capabilities of our human division, Opti Medical, to quickly obtain EUA FDA approval and CE Mark certification.
We're leveraging our Opti distribution and our relationships with governments globally established through our LPD business to advance human COVID-nineteen testing support. A key focus of our efforts is supporting the local communities where we operate, including the state of Maine. In addition to providing PCR tests to support Maine's reopening earlier this summer, we recently announced a partnership with the state to establish a new mobile testing lab at its Health and Environmental Testing Center. We'll be operating this lab leveraging our CAG reference lab capability staffed by IDEXX personnel using equipment transferred from our CAG operations. This new lab will provide the capacity for up to 350,000 tests over the next several months, a major step forward in the state's efforts to control the disease.
We also recently completed work to adapt our Opti PCR test for use on wastewater samples, which will be offered to IDEXX water customers through our water commercial organization. We're very pleased to be leveraging the capability of IDEXX to contribute to the management of the COVID-nineteen pandemic globally. As we look ahead, the strength of our business portfolio gives us confidence in reinforcing consistent long term constant currency revenue growth goals. The foundation of our goals is the continued high growth potential we see in both U. S.
And international CAG Diagnostic recurring revenues, which we believe can sustain growth within consistent annual target organic growth ranges in The U. S. And internationally. In addition to these drivers, we see the potential for 10% plus annual constant currency revenue growth in our veterinary software and digital imaging businesses, building on our strategies for expanding our cloud based software presence. We intend to build on our CAG capital revenues through growth in our instrument platforms supported by increased utilization and ongoing adoption of IDEXX testing innovations such as ProSight one.
We also continue to see the potential for high single digit long term growth in our Water business and mid to high single digit growth in our LPD business as we continue to expand recurring revenues in these areas. The timing of our return to double digit organic growth will be impacted in the near term by uncertain effects related to the COVID-nineteen pandemic, which are difficult to predict at this time. As we work through these dynamics, we're encouraged by evidence that reinforces pet owners' desire to prioritize spending on pet health care and an increased focus by veterinarians and providing health care services, which may support favorable future growth dynamics. The resilient response of our business to pandemic impacts has only reinforced our convictions related to the long term growth potential of our core businesses. We also believe we're well positioned to build on operating margin improvement trends in support of our consistent long term goal to deliver 15% to 20% annual comparable constant currency EPS growth.
Looking forward, we're targeting consistent annual operating margin gains of 50 to 100 basis points on a constant currency basis while supporting long term growth of our high return annuity revenues. We expect to leverage consistent positive drivers of gross margin gains, including fast growth and high incremental margin CAG recurring revenues, solid net price gains in the 2% plus range and continued lab and manufacturing scale and productivity improvement. As we've done successfully, we'll reinvest part of these efficiencies towards enhancing our service differentiation, expanding our global lab capacity ahead of fast growing demand and in net new customer acquisition. We also expect to drive continued moderate operating expense leverage while enhancing our global commercial capability and sustaining investments in innovation and technology enablement of our business. As demonstrated this year, we have the ability to calibrate our investment pace as appropriate in dynamic market conditions while delivering against these goals.
Our long term intent remains the same. We're focused on investing in businesses with high demonstrated incremental return potential while delivering solid annual operating margin improvement in support of our consistent long term annual EPS growth goals. We're also maintaining a consistent outlook for strong free cash flow generation. We've historically achieved a very high rate of net income conversion into free cash flow. Over the last couple of years, this rate has moderated driven by the advancement of our two major facility our Westbrook headquarters expansion and the opening of our core reference lab in Germany.
We've also stepped up high return investments in instrument capital programs, which equated to incremental capital deployment of approximately 10% of net income in 2018 and 2019. As we work through final completion of our major projects in 2020 and as the benefits from the incremental annuity streams from our instrument programs build, we believe we're well positioned to achieve our longer term outlook for free cash flow conversion of 80% to 90% of net income. Supporting this outlook are consistent expectations for capital spending in the range of 4% to 5% of revenue. In terms of capital allocation, we suspended our share repurchases earlier this year and anticipate maintaining a conservative approach on this front in the near term. We intend to focus near term capital allocation on support of our growth strategy, including continued advancement of targeted close in acquisitions aligned with our core business focus.
Our continued strong cash flows and conservative approach through the COVID crisis has placed our balance sheet in a very strong position with significant liquidity. Our leverage ratios have remained at approximately 1.5 times EBITDA, well below our 3.5 covenant limits. We extended and expanded our revolving credit facility to $1,000,000,000 earlier this year with $877,000,000 of uncommitted financing capacity and $105,000,000 of cash as of 06/30/2020. We have a well phased tenor to our current debt structure with approximately 88% of total debt or 98% of net debt at fixed rates as of the end of the second quarter, with an average borrowing rate of 2.9. We believe we're very well positioned to fund our growth strategy and address any potential changes in the macro environment.
In summary, we continue to see strong long term growth potential for our business, leveraging market development opportunities across our attractive core business portfolio and our continued high level of operational focus and execution. This is reflected in our consistent long term goals for 10% plus annual constant currency revenue growth and 15% to 20% annual comparable constant currency EPS gains. That concludes my comments. Jay, I and the team will be happy to take your questions following a brief ten minute break, so we'll be reconvening roughly at 11:35. We look forward to your questions.
Hi, welcome back. We'll now begin our question and answer session. We know you've been submitting your questions and I'll hand it over to John Ravis. John is Head of Investor Relations and he'll have our first question at TL. Go ahead, John.
Thanks, Jay.
Our first question comes from Mike Riskin at Bank of America. Appreciate the color on ProSight one launch. I want to ask on the potential for converting competitive analyzers in Greenfield accounts. Seems like there's a still a sizable portion of competing analyzers. So how does ProSight one stack up versus ProSight DX and relative to competing products?
Yes. Thanks, Mike, for the question. Let me just set the table on that and then I'll invite Tina also to comment on the ProCyte one. The thing to keep in mind is there's marketplace out there for hematology, almost 100,000 opportunities. These are both competitive upgrade, new and greenfield accounts.
And also keep in mind that we very often sell the attach rate with hematology is very high. So we very often sell a hematology analyzer along with a chemistry analyzer. In fact, in The U. S, it's actually over 80%. So we think the opportunity is very high, not just to sell hematology, but to sell complete VetLab suites to be able to use it as part of a contract renewal strategy to sell multi modality solutions like Reference Labs.
And so it's very exciting potential. Also keep in mind, is many markets in the world where they are really hematology first. If you take a look at China and Brazil and Spain and Italy, hematology is a foundational part of their testing strategies. They very often lead with that. So we're excited by the opportunity to be able to penetrate additional competitive accounts, but also to continue to sell the entire IDEXX solution.
So Tina, would you like to add anything to that?
What I was saying was that we have customers who can pick from two best in class technology solutions now. With ProSight DX, we have absolutely the best in class hematology analyzer for mid to high volume clinics and specialty practices. It has extra features that they like. It's a faster time to result. What we realized was this is a large segment of clinics out there that wanted something that was maybe a little bit more affordable.
We did not compromise on the features. We didn't compromise on the quality. And with ProSite One, as you saw in the video, we completely redefined the whole customer experience and we were able to do that in a way that is totally delighting our customers. We're looking forward to taking this out to the market. The additional thing that we also addressed was the paper run opportunity.
Customers were delighted with it with Fetivu and we're offering that for customers with ProSay one also.
Thank you. Jay, had
a follow on question from Mike Riskin asking about how we think about the ProSite one product launch within the backdrop of the COVID-nineteen pandemic and potential restricted access to clinics?
Yes. So we believe it's a very favorable time to launch the product on compromising technology as Tita just indicated at a really affordable economic profile that never goes out of fashion, solving using technology and performance to solve very significant problems in the practice. Keep in mind, our IDEXX three sixty program is a program that's really tailor made for the whole COVID environment. It doesn't require any cash outlay as part of the capital. It matches testing and invoicing to the customer with actual usage of it.
So from that standpoint, it we're very excited by it. We think it's a great time to launch and we've already received a lot of interest, even though we've just begun our launch yesterday. I'm going to ask Jim from a commercial standpoint because he's been very close to the field and some of our strategies to comment on the field perspective. Yes.
Thank you, Jay. I can tell you we launched in the field actually this week and trained our sales organization and they are extremely, extremely excited. One of the things that we're focused on is access to customers. Veterinary clinics are extremely busy right now. But to Jay's point, talking about innovation and new things never goes out of style.
So in addition to all clinical benefits, the no capital outlay as a result of the three sixty program and then also coupled with pay per run, no inventory carrying cost as well. So it's a very compelling clinical and economic story and our field is just, they're out there running already talking to customers about this.
Great. Thank you, Jim.
Jay, our next question is from Nate Rich at Goldman Sachs. He writes, Brian highlighted the increase in the spread between U. S. CAG DX recurring revenue growth and clinical visits this year. Can you please provide your thoughts on what might be driving that?
And would you expect to maintain this higher than historical spread?
Sure. Thank you, Nate, for the question. I think there's a couple of things to look at. First, if you take a look at the pet owner, we're all working from home or many of us are working from home. Clearly we're seeing more in terms of the health of our pets, dogs and cats.
They may be see that they're scratching themselves or limping or have a lesion. So certainly as access to the veterinary practice improved and was relaxed, clearly there's some pent up demand and pet owners are returning to the veterinary practice, I think in large numbers. The other perspective is just through the eyes of the veterinarian and the practice owner. Clearly for a while they've been pivoting more towards delivering veterinary services. Now part of this is because some product sales in other areas of the practice have migrated outside of the practice.
It's relatively less attractive for them. And so they're focusing on what they do best, which is delivering core medical services. And to diagnose and to treat, you first have to diagnose. So diagnostics plays a really important role and we see that in the numbers. It's still early.
We'll see how this plays out over time in terms of its sustainability, but we like the trends and believe the trend towards medical services will continue. It's just a question of to what extent and what that looks like.
Jay, our next question is from Dave Westenberg at Guggenheim. He writes, when I think of hematology, I think of it as one fifth the price of chemistry. Could ProCyte one help close that pricing gap?
Yes. So from a chemistry and the consumable stream from chemistry typically is does account for a lot more of the revenue and the proportion of the revenue. It's just a function of the test. It's three, four times higher in terms of the price that the customer pays from us and competitors for chemistry versus hematology and in turn, but they charge customers. Our focus is really on being able to increase access for hematology in the marketplace.
If you just take this up a level, we think that there's this very large opportunity of almost 100,000 placements, both competitive, greenfield, new accounts, upgrades for older technology. And that's where our focus is. And we know as we continue, it's an outstanding menu as Tina indicated. And as we continue to grow and expand the menu, they'll use more. And they'll use whether it's hematology or hematology and chemistry and urinalysis in the broader suite.
That's our focus. And we think that the economics will flow from creating awareness and education around relevant testing.
Yes. And Jay, I would just add from a commercial perspective, we were speaking just about hematology, but that again, tremendous leverage effect in terms of continuing to win new competitive chemistry placements as well as new lab business as well. So it's really selling into an ecosystem in terms of overall diagnostics. That's really where I think the advantage to having a great new product like ProSight one comes into play.
Great. Thank you,
Jim. And we
have another question from Mike Riskin. On capital deployment, you've historically been active with bolt tuck in acquisitions, targeting technology and San Juan reference lab businesses. In the current COVID environment, how are you seeing M and A discussions?
Yes. It's thanks, Mike. It is continues to be a core part of how we think about our growth strategy is augmenting our focus on organic growth where we can add capability or acquisitions that are within our areas of expertise. And as you've noted, things like Reference Lab tuck ins. I would say there was a pause early on in COVID pandemic, largely driven by just access to other businesses.
I think everyone was just kind of recalibrating, trying to manage through the near term impacts and it's returned to a more normal environment at this point. And so our strategy is moving forward as planned. I think animal health relative to other industries, as you've seen in our data has recovered quite well. So there isn't a distressed sales element, if you will. I think this is more ongoing strategic discussions that make sense for IDEXX and potential business partners going forward.
So we think it's a more returning to a more normal environment.
Thank you, Brian.
We have a question from Nate Rich at Goldman. The percentage of clinical visits that included blood work was similar at seventeen percent in both 2018 and 2019. What do you see as the biggest factors to push that metric higher?
Sure. Let me start by just setting up the framework in terms of how we think about that. And then I'm to ask Jim to jump in from a commercial standpoint. Clearly, we're interested in our strategy as I described it, is really to be able to increase relevant testing utilization. We do that through a number of different strategies.
For example, we're focused on innovation and menu expansion in solving big clinical problems in a practice, whether it's FecalDx or SDMA or future releases of different menu parameters. We also look through education in our commercial organization to create awareness and education around the importance of testing. Now this very often involves peer reviewed data and showing customers, the veterinarian data that shows them that they're missing, that they can uncover more by testing appropriately. I had pointed to a very big study that we introduced last year that showed 30,000 canines for wellness testing where one in four adult and senior dogs actually through testing, we were able to uncover more. The veterinarians were able to uncover more.
And these are for wellness tests. These were for dogs that at the time the pet owner did know that there was anything wrong with them. So clearly, this type of peer reviewed data studies are very important. And then our whole commercial organization with programs like our preventive care program and forming these trusted advisory partnerships with customers is very important in terms of driving this awareness and education. So Jim, would you maybe talk a little bit about that last point?
Yes, thank you Jay. And you're right, this is where the commercial playbook comes into play. Practices don't make these decisions, individual do. And so it's all about inspiring belief change with every clinician. And this is where the concept of frequency and reach from a commercial perspective comes into play.
And so when we talk about, for example, a greater investment in a targeted number of international countries, it's all around that opportunity. And to put it in perspective, there's three times as many pets and four times as many clinics internationally as there are domestically. And so it just speaks to this tremendous multi decade opportunity we have to continue to inspire belief change, which will result in, great growth for diagnostics. Great. Thank you, Jim.
We have a question from Andrew Cooper at Raymond James. He asks, if there are specific pain points that ProSight one will help resolve for the user experience and how we view the rollout to new customers versus the existing customer base.
I'll take that and then ask Tina or Jim if you want jump in here. You're welcome to. This is a very high performance analyzer. What ProSciOne enables us to do is just to access a broader part of the marketplace. Very similar, if you take a look at Catalyst One and the success we've had with that, the footprint and profile from an economics without having to sacrifice performance has been very instrumental in its success.
And I think ProSight One enjoys a similar set of characteristics in terms of uncompromising performance, great footprint, great cost profile, very easy to use. As you saw from the video, you can essentially plug in the reagent packs and within thirty seconds, start using it. It's a really, I think transformational from that standpoint. And we think that there's very, very broad access to drive adoption. If Jay or Tina, you wanted to add to that?
Yes, Jay, just you said it very well. I think with ProSight DX, we saw that it delighted customers And the pinpoint there was that it was maybe out of reach for some customers. If you look at any of the competitive analyzers out there today, the user experience, as I've highlighted, it is so hard to run hematology. You typically see these big boxes that are sitting side next to the counter and connecting all these valves and tubes. With ProSite one, we spend a ton of time understanding all the various pain points that customers had running hematology and what stopped them from running hematology.
And we designed we did what we do best and we designed a truly transformational, very, very innovative analyzer. And just like Catalyst one, it's what we predict is it's going to just take off, including in the hematology first international markets that you mentioned.
Yes. And I just add to that Tina that you're absolutely right. I mean there's such a sweet spot in the marketplace and ProSight DX was maybe too far of a reach for some segment of customers, but and particularly as we look at international opportunities as well. So the combination of Cat one and ProSight one and we know the connect rate between chemistry and hematology is very high. It's just a it's a wonderful offering.
And then obviously, the connectivity, which pulls it all together with results through VetConnect PLUS is just fantastic. So we're just so excited about it. Great. Thank you, Jim.
Thanks, Jay. That concludes the Q and A portion.
Great. So with that, we'll, as John said, conclude the Q and A. Know we have some employees who also listen in to Investor Day, and I just want to continue to express my deep gratitude and pride in their extraordinary performance during COVID-nineteen. We run the company in a way that's very strategic and invest in it to maintain and grow the advantages we have and we've been able to do that to COVID-nineteen while still delivering today. I couldn't be more proud and appreciative of the work that the IDEXX team has done and how we live our purpose, which animates our work.
So thank you everybody for joining us in our first ever Virtual Investor Day. So hopefully, we'll see how next year develops. But thank you very much and best of luck. Stay safe.