Hi. Good afternoon, everyone, and thanks for joining for the first session of our afternoon lineup. We're very pleased to have IDEXX here today, a leading provider of animal health diagnostic products. On stage with me, I have Jay Mazelsky, President and CEO. We have John Rausch from Investor Relations in the audience as well. Jay, maybe to start, sort of an open-ended question. You know, 2022, definitely a year of transition for the industry coming off of the surge of demand that we saw during the pandemic.
I guess as we sit here at the start of 2023, how do you kind of feel about the state of the industry, both from in terms of how vet clinics have adapted to kind of the new way of the world, as well as the, you know, demand that you're seeing from, you know, the pet owners, many of them new since the pandemic?
Yeah. Thank you for having us, Nate, IDEXX. Really appreciate it. The, you know, we just have an outstanding opportunity, more generally speaking, within animal health, but specifically within diagnostics. Let me just take a step back and maybe context that in terms of you referred to the surge in demand during the pandemic. You know, if you take a look at both pet adoptions and overall patient visits, it really was unprecedented. Let me call out a 12-month period. From Q1 of 2020 to Q1 of 2021, we saw clinical visit growth of 13%. Typically, you know, if you go back over history and look at trend lines, clinical visit growth pre-pandemic averaged 2%-3% per annum. You saw a 4, 5 times plus type of clinical visit growth.
From a pet adoption standpoint, dogs and cats, but the majority of which were puppies and kittens, by the way, what we saw was 10% increase in overall pet population. These are U.S. numbers, but we saw similar type metrics outside of the U.S., whether you're looking at Germany, U.K., Australia. That compares historically pre-pandemic to a 1% or so trend line. 5%, 5% compared to 1%. This was an enormous surge of both patients and pet visits. What the practices did is essentially heroically supported through sometimes longer hours. They hired staff where they needed to hire staff. They did what they needed to do to adjust and to support that surge. It was ultimately, I think, not sustainable.
If you take a look at, you know, post-pandemic, if you recall back to the beginning of 2022 with Omicron and, you know, some of the sick outs connected with that, I think that was a catalyzing event in some ways. The animal health industry had some of the same challenges with staff and retaining staff and in really supporting this increase in capacity. We saw moderation, and we saw some pullback in Q3. We talked about a 2.4% decline, 3% in Q2. You know, the industry's working through it, and there's a number of ways in which they're doing it. We can talk about that. You know, keep in mind that the overall animal health space is just a terrific place to be.
Strengthening pet owner, pet bond has gotten just stronger through the years, over the decades. The type of innovation that we and others in the therapeutic and information management and specialty diet space are bringing the increase in, you know, commensurately the standard of care in adopting these type of solutions. The fact that veterinarians, especially the newer generation of veterinarians and their staff, are embracing technology in completely, you know, new ways. Very exciting time to be in this market.
I guess as we think about kind of how this plays forward from here, you know, clinical visits on track this year to kind of be down low single digits, like you said. Do you kind of feel like we're nearing a level that's sustainable from a capacity standpoint where practices have adapted, some of the staffing constraints, with vet techs are kind of working through the system that, you know, clinics are in a place where they can kind of get back to that level of historical kind of same visit growth, same sort of visit growth that we've seen in the past?
There's a couple ways, you know, that we're thinking about this. If you take a look, you know, getting back to the pre-pandemic, the industry, the profession has demonstrated that they can support in a sustainable way the 2%-3% clinical visit growth. There's a surge we talked about, and then there's this pullback. The question is, how do you get back to, you know, where's this new equilibrium, and how do you get back to, you know, what we think is sustainable and is possible, which is 2%-3%. I think, you know, practices have really taken this time to say, "You know, fundamentally our industry has changed.
We need to think about doing some things differently than we've done. A lot of practices, you know, have done that, and they've been leaders in getting out and looking at staffing mix. You know, currently, again, U.S. data, but it's roughly equivalent to outside the U.S. What you see is you see a little over 2 veterinary technicians per veterinarian. The veterinarian economists who have looked at this said, "You know, you could reduce that to 3 or 4 and improve practice economics and in care and allow your licensed techs and your veterinarians to practice at the top of their license." They're looking at number of practice rooms they have, workflow, you know, how they pay and retain their staff so that they are better able to retain them and provide career tracking.
You know, you add all these things together, plus what we as a company are doing from the standpoint of supplying technology, premium instrumentation, software, you know, PIMS systems and associated applications. We've had record placement levels in those areas as practices are incredibly hungry for technology that helps them with workflow, that helps them optimize each step of that patient visit. We're confident that the industry, the profession will work through this, that, you know, it's not a question of really identifying a date and a month when that's gonna happen. It's, it's progressing. Some practices have probably worked through that. Some practices may be lagging a bit, but it's happening. In the end, I think we'll be able to support as an industry that much higher demand level that's out there.
Got it. Should we think about that as like, you know, I think the bulk of the adjustment, you know, that practices have, you know, started to make kind of came in the early parts of 2022 as sort of the visit growth shifted. Is that sort of like, you know, a point where we can kind of say that, "Hey, they've had a year to deal with this step down in capacity." It's not an easy solve and, you know, something that will take time, but, like, that's sort of the timeline for when the industry potentially gets back to a more normalized level of visit growth?
Yeah. It depends a little bit on geography. We, we indicated that we began to see some pullback in Q4 in 2021.
Right
... in Europe. Then in the US, you know, we saw it through. It's pretty healthy practice visit growth through Q1. If you think about those as benchmarks, the by geography practices, to your point, have had now some time to work through it. It's not a, you know, people tend to think about it as sort of a discrete event. At what point have we reached a spontaneous combustion and we can get back to normal? I think what practices have realized is that this is going to be a set of steps cumulatively which allow them to be more productive.
We had a veterinarian and investigator, Bruce Francke, out of a Michigan practice, you know, talk about as a practice owner that he takes a step back and looks at different things that they do, including like callbacks to customers and like, "How do I save a minute or 2 ?" If he's got a 4 or 5-doctor practice and they're all looking for these discrete time saving type things that they can manage their practice better, it adds up. I think this is what the industry is going through. The other thing is, you know, the staff, you can never underestimate the importance of retaining the people you have and then hiring. You know, the quickest path to be able to do that is through technicians.
Veterinarians go through a school, and then there's residency, and so that tends to happen at a slower pace. The technicians and non-licensed technicians, and that varies by state, can support practice productivity fairly quickly.
I guess, when I think about the guidance for 2022 in the fourth quarter, you know, I think it assumed, clinical visits were around the same level that you saw in 3Q. I think looking at some of the vet traffic data for the fourth quarter, it seems like that's sort of what we've seen play out. I guess, is that sort of the right way to think about your guidances, you, for the fourth quarter, you kind of assumed consistency relative to what you saw in the third?
We're in the blackout period now, so I can't comment on, you know, Q4 per say. What we said as part of the Q3 earnings call was that we anticipated, you know, sort of a stable trend of what we had seen up to that point. There'd be, you know, continue this moderation.
Yeah.
That's how we thought about that and built that in, you know, to the guidance. What I will say is, you know, our focus as a company has really been on those, what we're calling execution factors. If you take a look at customer loyalty and retention, never been higher. Price realization has been, you know, very strong. Instrument replacement, software, diagnostics adoption, and when they adopt a diagnostic as part of a clinical visit, utilization has been growing, in some cases even hotter-
Yeah
... than what you've seen. Those are things we can control through innovation, through commercial partnering. It's really our strategy. It's an embodiment of our strategy.
Yeah.
That's where our focus is.
Yeah. I guess 1 other kind of more near-term question. You know, when we see things like these, you know, severe weather event that we had kind of leading up to Christmas or some of, you know, the spikes in flu that may cause some disruption in, like staffing levels, do you feel like that typically has, like, an impact on the volumes that you see through your business, or is it sort of second or third derivative and so maybe not as acute?
You know, it depends on the event per se. If we think that it's material, we call it out.
Yeah.
You know, the, you know, again, I'm not gonna comment on, you know, past weather events in Q4 'cause of the, 'cause of the blackout period. You know, the weather happens all the time, so we cannot necessarily identify it unless it's particularly.
Yeah
... you know, severe. If you think about in the Q3, we had, you know, Hurricane Ian. I don't believe we necessarily called that out specifically.
Yeah. Makes sense. Okay. I guess, moving on, I wanted to talk a little bit about price. I guess, you know, with consumers, obviously their budgets are under pressure. How do you feel like that plays out at the vet office? Like, is the decision, you know, do I take my pet in or not? Once the pet owner does show up at the vet, it's really like, I want the best standard of care, and so there's less maybe sensitivity to price once you get there. Do you think that, you know, consumers may kind of look at, okay, what am I paying for? What's the vet recommending? Maybe trying to find the best solution that fits their budget.
Yeah. You know, a couple maybe context-setting, you know, remarks about price. As a company, we really work very hard and are very careful to make sure that the value proposition we have from a solution, testing solution, information management standpoint is in line with the price that we're asking for. We tend not to. We don't wanna get over our ski tips. You know, our strategy is really a sector development strategy to encourage adoption and utilization. Keeping that in equilibrium is, you know, a very important element of our strategy. Our. We've talked about Technology for Life in the past. This is a notion that when you buy our solutions, we continue to update the feature and capability of our solutions.
If you take a look at Catalyst O ne, over the last decade, for example, we've had 8 menu or parameter extensions over that period of time. A customer who bought our chemistry analyzer 5, 7 years ago has the exact same features and capability of a customer who purchased that same instrument a month ago. Having this Technology for Life philosophy across our entire suite allows us to maintain the differentiation and the value that allows us to, in turn, take price. That's an important anchoring principle. Secondly, you know, this year, you know, specifically, the cost of running our business was higher as a result of, you know, headline inflation, 7.7%, you know, thereabouts.
The cost of fuel and staff and logistics and plastics, resins, microprocessors, that all went up. When we talk to our customers, our customers tell us, "I don't wanna have to spend a second thinking about diagnostics. I want it from a turnaround time standpoint, from a product availability standpoint, from the perspective of giving me what I need when I need it. I need you to do that. I need you to do your job so that we can focus on patient care." Coming out of the 2 years of the pandemic, we grew more than 30% in the CAG business, we had to invest in capacity, in logistics, manufacturing, all those things connected with being able to supply uninterrupted, you know, product. We did that, and customers appreciated that investment.
That's the second pillar. The third pillar is the customer, the veterinarian, the practice themselves. The diagnostics category within the practice is the biggest profit center within the practice. The way veterinarians practice and charge for diagnostics, it's an activity cost. They tend to put a markup on it, 2 and a half to 3 times the cost of the diagnostics. That covers their activity, technicians and the exams that they themselves may do. With this markup of 2 and a half to3 times, it's a very important part of not just diagnosing, because you can't treat unless you first diagnose, but practice economics.
If we increase the price and we've done it for the right reasons and we're in balance with the value that we're delivering, they increase their price to the pet owner. That's the third pillar. They're willing to do that, and Cause it's such an important part. It's a foundational part of how they practice medicine. The fourth part, the way we think about pricing, is the pet owner. You know, is the pet owner willing to pay for, you know, these type of solutions? You were asking that as part of 1 of your questions. The, you know, the truth is that the pet owner considers the pet to be part of their member of their household, a beloved member of their household.
All the survey data says, independent of the economic segment you're in, whether you're lower income or higher income, is that you see it the same. You're willing to spend on behalf of the pet. When you take a look at the total spend, it's a little bit. It's about 2% or so. That's not just healthcare and diagnostics, but food and, you know, grooming, all the things connected with healthcare with the pet. Healthcare is a little bit over 1%, and then diagnostics is a fraction of that. From a share of wallet standpoint, as a share of the personal consumption expenditure, relatively small.
You take 1 step even deeper than that and say you can do it, you can afford it, but do you want to do it? What pet owners consistently say, very high percentages say, "I will prioritize spending on healthcare for my pet above entertainment, travel," all those things that you might think about as discretionary, potentially discretionary. We, we think we're in a pretty good place.
Yeah.
That's a long way of saying.
Yeah.
We're in a good place.
Got it. Like you kind of just said, you know, there hasn't really been pushback from the veterinary community on the price increases that you take, and I think that, you know, they understand the value. I think the plan was to take a price increase for January 1st. I guess, should we think about that as, you know, the company kind of targeting that 2%-3% price realization that you typically like to get in any given year?
We have not provided any guidance in terms of quantitatively what that price increase is. We have said, we did execute from a cadence standpoint, normal calendar cadence, January first, you know, price increase. That, that built off a summer price increase that we did in August first, which was off cycle for us and something we haven't done historically. There was a 5-month price increase in the second half of 2020 to a 7-month benefit into 23.
Yeah. Got it. I guess maybe, pivoting to Europe, you know, I guess looking at the international CAG growth in the third quarter, pretty stable sequentially, you know, kind of despite some of the macro pressures facing that consumer over there. I guess, how do you feel about the durability of that market near term? You know, I guess longer term, I think 1 of the big opportunities is to kind of continue to improve the standard of care for a lot of those countries relative to what the U.S. does in terms of diagnostic testing.
Mm-hmm.
You know, what do you feel like is the most effective way to do that?
The European region, and it's composed of 23, 24 individual country market, it's a great opportunity. They love their pets as much in Germany and Nordics and the U.K. as we do here in the U.S. In fact, if you look at per capita spend in the European region by things like specialty diets or pharmaceuticals, it's very comparable, calibrated, normalized to what we see in the U.S. Diagnostics at the end is quite a bit lower, about 5% of clinical visits include blood work, and we define blood work as chemistry and/or hematology. In the U.S. it's 19%. It gives you just a sense of how less developed that is.
You know, part of our job as a company is to develop this, develop the sector through innovation, through education, awareness, education, and drive that. We've done... If you go back to 2020, we've done 7 market expansions or country expansions with our geographic sales organization. We think that's the key. We think by having commercial partners who have subject matter experts who have very strong relationships with customers, they create that awareness, the education, and ultimately the consideration. The other thing that's really important in thinking about this opportunity is product fit. You know, we just recently introduced ProCyte One. They had just very strong growth since introduction. I think at Q3 we're at 26%, you know, hematology growth, so just outstanding.
It fits from a capability, performance, cost, and footprint profile in our international markets. Many of these markets are hematology-first markets. There's a lot of customer receptivity and interest in these products. They come with an attach rate for chemi-. There's a multiplier impact. The attach rate with our chemistry in increasingly SediVue Dx and in some cases, you know, rapid assay are, it pulls along the full suite. It's a very attractive opportunity for us longer term, and it's something we'll continue to invest in.
I guess along these same lines, when we think, you know, either on a global basis or U.S. basis, you know, how high can we go in terms of the percent of visits that include blood work? I guess, what do you feel like it will take to kind of continue to kind of push that average up, whether it's 19% in the U.S. or 5% internationally? I think we kind of touched on the international piece, but in the U.S., how much higher can that go?
We think it can go much higher. If you go back to some data, a model we presented the last couple of Investor Days, we think that there's a 25-year opportunity in front of us. If you take a look at the, you know, the U.S. at 19%, I think wellness is 10% and non-wellness is sick, which is primarily sick patient, I think it's like 25%, you know, or so. There's a big difference between where and when they use diagnostics as a first point. The other thing that I would say is that when you break down the customer groupings in the U.S. by deciles and you take a look at the top deciles, these customers are using diagnostics in 40% of these clinical visits.
That's not a few customers. you know, we're talking, you know, hundreds of customers are already doing that, and that's 40%. That's the, you know, the future is here. It's just a question of getting the rest of the customer base to do that. Our commercial strategy is really geared to being able to drive those lower decile users into that higher space and driving the higher decile users into an even higher space. If you look at what the professional associations recommend as part of clinical visits, almost in all cases, they'll recommend the use of some diagnostics, if not, you know, blood-based diagnostics. It's a, you know, I think it's a remarkable opportunity.
You know, as we've modeled this out, we think there's 25 years of growth, and we think that we can move the U.S. to an appreciably higher standard than it's at today. Europe and our international regions, obviously we're starting from a slower base, so that's even more embryonic or greenfield.
How important is wellness testing and, you know, like, the PCC program, things like that, to driving that continued growth and the utilization volumes?
Yeah, it, you know, it's absolutely critical. I'm gonna give you some data, but more just illustrative than anything else. You know, the wellness from the standpoint of diagnostics, the average wellness visit in the U.S. uses about $65 at the manufacturer level of diagnostics. A non-wellness or sick visit is considerably higher. It's about $105-$110. Wellness visits, on the face of things, use less diagnostics. The important thing to keep in mind about wellness visits, though, is they don't use a lot of the doctor's time. 'Cause typically, you know, the technician is come in, they weigh the pet, they may ask the pet owner some questions. The veterinarian then comes in and maybe a 7, 10-minute checkup.
They checkup the, you know, the dog or a cat, they're on their way. Which is very different than a sick patient, where that may be, you know, much more intensively involved from not just a single staff member but multiple staff members. It's good business for them, and it's important from a relationship-building standpoint. In fact, in 25% of the cases, clinically asymptomatic well dog is not well, that there's something that, you know, is asymptomatic but needs to be looked after by the veterinarian. In fact, you know, felines from a evolutionary and hereditary standpoint, they hide pain. They all look well until the 2 or 3 days before they, you know, before they pass away because they're very sick and they've hidden that well. That's another consideration.
The third consideration is when you find things as part of this, you know, on average 25%, and it may be a chronic condition, it may be the patient is sick and you don't know it drives healthcare services as part of the follow-on piece. It's a multiplier within the, within the practice. It's good medicine. It's good practice economics.
I wanted to ask on competition. You know, your 2 largest competitors have been investing to kind of bring a more holistic offering to market. You know, it's taken them, I think, longer than many people expected. You obviously have a very comprehensive strategy and have continued to invest in your commercial organization like you had talked about. I guess, you know, how do you see the competitive dynamics going into 2023? You know, you've seen good momentum with placement, so it seems like, you know, competition really hasn't changed the market in any significant way. I'd be curious just to get your thoughts on kind of how you're viewing the competitive landscape.
Yeah. No, I mean, this is an incredibly attractive market. Whenever you have markets with the type of characteristics that we've been talking about, you're gonna get competitors, a lot of investors, and they see the same opportunities that we do. you know, it's been very high level of competitive intensity, and we expect that, you know, to continue. you know, quite honestly, the market in many cases, especially, you know, our discussion around international markets, very greenfield. It's not a question of our success comes at somebody else's expense. There's opportunity for multiple players to enjoy, you know, success. The thing that I would say is, you know, we focus our strategy is really around sector development.
It's really around driving awareness, education around adoption, and ultimately a higher level of utilization. To do that, it's around innovation and differentially innovating to uncover more. Lots of examples of doing that, whether it's SDMA or fecal antigen, it's around bringing new categories, you know, to a marketplace. It's around partnering in ways that help veterinarians achieve their objectives. It's, yeah, a long way of saying it doesn't need to come at the expense of a competitor. Lots of opportunity for everyone to enjoy.
How do the 2 new point-of-care systems kind of fit into that? I know you don't want to get too specific, but just when you think about, like, what makes a system attractive to a vet, what would get them to invest in bringing, you know, a new analyzer into their clinic? Kind of what value do you kind of need to demonstrate to them?
Yeah. You know, our strategy is an organic growth strategy primarily. You know, with these 2 new point-of-care platforms, we saw an attractive opportunity to bring new testing categories to the practice environment. A couple things that I would say specifically to your question. You know, real-time care speaks to this notion of when you bring a pet into the practice, that there's a practice window, 8, 10, 15 minutes, and that the veterinarian wants to understand whether the ... maybe it's a healthy baseline-type checkup. Maybe the patient is sick, and they need to diagnose what's the matter. Getting that result within that, you know, minutes window is really important from a follow-up standpoint. It tells me as a veterinarian, I need to do the following follow-on test.
Maybe it's determinative, and I can begin therapeutic, you know, treatments. There, there's lots of value in being able to have that. Even if it's just wellness, there's a convenience value. You, you bring your pet to, you know, a veterinarian for a wellness visit. They, they take blood or fecal samples and, you know, it's sometimes it's a day or 2 before they follow back up, you know, they can connect with you and follow back up. There's that factor involved. We, we tend to look at is it time-critical as a first dimension. We look at from a performance and accuracy standpoint, you don't wanna compromise from what you can get at the reference lab. Is it as good or better than if you sent your sample out to a reference lab?
In our case, you know, we've been very disciplined about making sure that we're not sacrificing performance. The third case is, you know, remember, keep in mind that the technicians, they're generous. They're incredibly busy. You know, the continuum of responsibilities that they have couldn't be more extensive. You need point-of-care instrumentation that at the end of the day is easy to use. You know, the sample prep is as automated as it can be. You get the result back quickly, it's easy to interpret, and it fits within the workflow. It integrates within, you know, your PIM systems. You don't have to, you don't have to change your practices within the hospital itself. Those are all the things we tend to look for.
Got it. It sounded like in August, you know, we were still a few years away or a couple years away from seeing the first of these systems come to market. Is that, like, the right timeline that investors should think about?
We didn't, we didn't put a date on it for obvious reasons. We don't wanna telegraph necessarily what we're doing. What, what we said was that, you know, we have a choice when we look at a new testing category. I did say that these were new testing categories. We, we can build it internally and that, you know, that's. Sometimes you have to, 'cause if you go to the world and look at what they're doing in the human medicine or life science spaces, there's just nothing out there that you can use that fits the profile of what's needed within the veterinary practice. We, we build it, and that's, that tends to take a little longer. It's expensive, and there's sometimes invention risk connected with that.
In other cases, you know, you look at what may exist out there and it's something. It may be, you know, typically, even if it's a finished product, it needs to be adapted to the veterinary space from a workflow and perform, you know, cat and dogs are mammals, but they're different than we as humans. There's a lot of adaptation, whether it's algorithms, whether it's sample management, that type of thing that has to happen, even in those cases. In other cases it may be more IP or technology in-licensing. You know, that tends to fix some of the invention risk out of it. It probably represents in the majority of cases, a shorter timeline and, you know, less ongoing in-investment to get that to marketplace.
That's how in these cases that I cited at Investor Day and that we've talked about, we feel that there's good technology opportunities to bring those from the outside into the company.
I guess, is there anything you can talk about in terms of what the focus will be at VMX this year?
Yeah. I mean, the VMX is, this will be the first real year. This will be the first year where the pandemic is, I think, fully behind us. We expect that it's gonna be hopefully very well attended relative to what we've seen in prior years. It's just a great opportunity to reconnect with customers that, you know, I forget what the exact attendance is projected to be, but, you know, over 10,000. A chance to reconnect with customers, you know, share our products and the things that we've been working on and, you know, hopefully get back to more normal footing.
Yeah. I wanted to ask about the margins of the business. You've had very impressive margin expansion in a relatively short timeframe, I think up over 1,000 basis points in 7 years. The margin algorithm's been, you know, pretty reliable historically, but I guess as operating margins are now kind of at the 30% level, you know, has the way you think about hitting that 50-100 basis point kind of annual goal changed in any way, just given, you know, this higher level that we're working from?
Yeah. No, it hasn't. We think that there's this amazing sector opportunity still before us. You know, we think that it's measured not just in years, but in decades. We've I think been pretty transparent in terms of how we're modeling what that opportunity is. The CAG Diagnostics recurring, you know, consumables and reference labs and rapid assay streams are very high margin drop through. Those represent very attractive opportunities. We gate our investment in being able to, you know, put them back into the business to be able to develop this longer term opportunity, but also let some of that margin drop through.
As Brian indicated at August's last August Investor Day, you know, our long-term plan of 10+% growth, 50-100 basis points, you know, annually over sort of the planning time horizon is something that we believe we can still do.
I guess going back to placements, 'cause those have been very strong this year. You know, ProCyte is up 40%, I think largely driven by ProCyte One, but even, you know, given the tougher sales year, Catalyst placements are up, International placements are up double digits. So, you know, I guess when you think about the opportunity to continue to drive placements higher, you know, you talked a little bit about the greenfield, but I guess from a competitive standpoint or getting those second systems placed in practices, you know, how much opportunity is there? And I guess also, do you feel like this part of the business is sensitive to, you know, the macro environment or interest rates?
Because of programs like IDEXX 360, where you don't really have to make a capital commitment up front, that there's, you know, the demand doesn't vary as much based on the level.
Yeah, Let me answer the, your last question first. We don't think it's especially sensitive from the standpoint that these capital placements typically don't involve a cash outlay.
Sure.
To your point around whether it's a, you know, IDEXX 360 or volume throughput, you know, commitment, the customer is accepting a placement in exchange for volume commitment, typically over a 6-year-
Yeah
... you know, period. They're syncing up testing volumes and invoicing, you know, customers with, you know, monthly payments that they've committed to. From that standpoint, I'm not saying it's completely immune, but, you know, I think it takes some of the macro factors out of the consideration. Getting back to the front end of your question in terms of placement opportunities, you know, I think that there's an enormous placement opportunity still before us. We talked about at the Investor Day, 230,000 premium, that's on a global basis. 230,000 premium instrument placements still before us, 100,000 of which, about 100,000 of which were hematology. Remember, hematology has this multiplier, you know, impact. If you take a look...
That's just a question of continuing to serve our customers, commercially engage, you know, the customers who may not have in-clinic solutions and placing those. If you take a look at now, even more tactical, to speak to the other part of your question, you know, we've had a great year in terms of instrument placement, installed base. I think in Q3, we talked about 14% in premium instrument installed base growth. That's outstanding, and that drives the consumable recurring revenue stream in outer years. I think fundamentally, that's a question of customers are hungry for technology that helps them with productivity. They want to deliver excellent care. They want to address the productivity challenges that they have.
They see our solutions, which are integrated, which connected with PIMS, that capture the charges, that invoice those customers, as a way to do that.
I guess, just in the few minutes we have left, maybe it's the last question. Just, you know, as you look to the upcoming year, kind of what do you think, what are the priorities in your mind for the business to really execute against to have a successful year in 2023?
Yeah. You know, our focus as a business, as a company is, you know, getting back to this discussion around macro factors, but it really comes down to those things that we can control, the execution factors. We're a global leader in diagnostics and information management solutions. We know our customers are hungry for these type of solutions that help them deliver a higher standard of care, that help support workflow, client communication, staff productivity, all of those things. You know, our focus is on really continuing to develop the marketplace.
The 3 pillars that we do that with are innovation, both past and future, commercial engagement with subject matter experts, and then delivering an outstanding customer experience to make sure that we continue to invest in making sure that if our customers ever need our help, we're there to help them.
Great. Well, thank you very much, Jay. I really appreciate the time.
Thank you, Nathan. Appreciate it.
Yes, this afternoon.
Yeah, great conversation.
Thank you.
Thank you.