Good morning, and welcome to the IDEXX Laboratories third quarter 2026 earnings conference call. As a reminder, today's conference is being recorded. Participating in the call this morning are Mike Erickson, President and Chief Executive Officer, Andrew Emerson, Chief Financial Officer, and John Ravis, Vice President, Investor Relations. IDEXX would like to preface the discussion today with a caution regarding forward-looking statements. Listeners are reminded that our discussion during the call will include forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those discussed today. Additional information regarding these risks and uncertainties is available under the forward-looking statements notice in our press release issued this morning, as well as in our periodic filings with the Securities and Exchange Commission, which can be obtained from the SEC or by visiting the Investor Relations section of our website, idexx.com.
During this call, we will be discussing certain financial measures not prepared in accordance with generally accepted accounting principles, or GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is provided in our earnings release, which may also be found by visiting the Investor Relations section of our website. In reviewing our third quarter 2026 results and updated 2026 guidance, please note all references to growth, organic growth, and comparable growth refer to growth compared to the equivalent prior year period, unless otherwise noted. To allow broad participation in the Q&A, we ask that each participant limit their questions to one, with one follow-up as necessary. We appreciate you may have additional questions, so please feel free to get back into the queue, and if time permits, we'll take your additional questions.
Today's prepared remarks will be posted to the Investor Relations section of our website after the earnings conference call concludes. I would now like to turn the call over to Andrew Emerson.
Good morning. I'm pleased to take you through our third quarter results and provide an updated outlook for our full year 2026 financial expectations. During the third quarter, IDEXX delivered outstanding financial results, driven by strong global execution, the expanding impact of IDEXX Innovations, and continued progress in increasing the medically relevant use of diagnostics across our companion animal business. We also advanced our software, data, and AI capabilities through the acquisition of CoVet. Revenue increased 10% organically, supported by 11% organic growth in CAG Diagnostics recurring revenues, reflecting nearly 14% gains in international regions and nearly 10% growth in the U.S. We see strong demand for diagnostic solutions, including IDEXX Innovations, as demonstrated with premium instrument placements of nearly 5,800 units, with over 1,900 IDEXX inVue Dx analyzers.
Operating performance was excellent, with comparable operating margin gains of approximately 60 basis points year-over-year, led by improvement in gross margin while making ongoing investments in the business, including costs related to the CoVet acquisition. Strong operating profit gains enabled earnings per share of $4.01 in the quarter, an increase of 18% as reported and 22% on a comparable basis. Strong third quarter performance supports an increase to our full year revenue outlook. We are raising our full year revenue range to $4.741 billion-$4.767 billion, an increase of $32 million at midpoint, reflecting strong third quarter performance and approximately $5 million of revenue from CoVet. Our updated full year overall organic revenue growth outlook is 9.3%-10%, with organic CAG Diagnostics recurring revenue growth of 10.3%-11%.
These ranges represent an increase of approximately 60 basis points at midpoint, along with tightening the low end of the range as we enter the final quarter of the year. We also increased our full year EPS outlook to $14.96-$15.16 per share, an increase of $0.25 per share at midpoint, reflecting 15%-16% comparable EPS growth while absorbing near-term dilution related to the CoVet acquisition. We will provide further details on our updated 2026 financial expectations later in my comments. Let's begin with a review of our third quarter results. Third quarter organic revenue growth of 10% was driven by 10% CAG revenue gains, 8% growth in our water business, and 3% growth in LPD.
Strong CAG results were driven by CAG Diagnostics recurring revenue growth of 11% organically, which was volume-led, reflecting strong execution and contributions from innovations, and included approximately 4% global net price improvement. Demand for IDEXX diagnostic solutions remains high, and we have realized benefits from net new customer gains, expansion of our premium instrument install base, and increased utilization of IDEXX innovations. U.S. organic CAG Diagnostics recurring revenue grew 9.6% in Q3, with solid volume gains and net price realization aligned with our full year expectations. U.S. growth continues to be supported by greater testing frequency and intensity per visit as customers adopt our expanded menu. U.S. same-store clinical visits declined an estimated 1.8% in the quarter, reflecting a U.S. CAG Diagnostics recurring revenue growth premium of approximately 1,100 basis points, our fourth consecutive quarter above 1,000 basis points. Underlying patient dynamics continue to support long-term demand for diagnostics.
In the quarter, pets age five plus years, where diagnostic frequency rises, contributed to clinical visit growth. With a substantial majority of wellness visits still not including blood work, increased diagnostic inclusion remains a long-duration growth lever that does not depend on visit growth. International CAG Diagnostics recurring revenues grew 14% organically in Q3, with double-digit gains across major international regions. International performance reflects the success of our strategic focus on developing the sector and strong IDEXX execution. We are also encouraged by the quality of growth reflected by the strong momentum in net new customers and same-store sales gains. We have successfully completed expansions highlighted on the second-quarter call well ahead of schedule. IDEXX innovation and commercial execution drove strong organic revenue gains across our major testing modalities globally in the quarter.
IDEXX VetLab consumable revenues increased 15% on an organic basis, reflecting double-digit growth in both the U.S. and international regions. Consumables growth was supported by the expansion of our premium instrument install base and broader menu utilization. We benefited from ongoing growth of Catalyst Pancreatic Lipase, Catalyst Cortisol, and SDMA inclusion in chemistry runs following the integration of SDMA into our chemistry CLIPs. inVue Dx recurring revenue continues to ramp, aided by the expanding install base and broadening of FNA on the platform. We remain in our estimated range of $3,500-$ 5,500 of recurring revenue per analyzer, while making fine-needle aspirate testing with canine mast cell tumor detection available across all North America customers at the beginning of Q4. Premium instrument placements reached 5,780 units in the quarter, and placement quality remained high.
Globally, we placed 1,904 inVue Dx instruments, with strong international demand and nearly 1,200 competitive and greenfield Catalyst placements globally, with over 300 in the U.S. IDEXX global RefLab revenues increased 10% organically in Q3, led by volume gains from net new customers, including competitive lab wins in the U.S., and increased same-store utilization as customers adopt broader testing menu. The IDEXX Cancer Dx customer base continued to expand, with nearly a quarter of customers ordering in Q3 representing non-primary IDEXX RefLab accounts. With the addition of canine mast cell tumor detection to the panel in late September, we have meaningfully increased the medical value to customers without increasing our price on the panel. Global rapid assay revenues increased 1% organically in Q3, sustaining modest growth seen during Q2.
Veterinary software and diagnostic imaging organic revenues increased 10%, driven by recurring revenue growth and strong placements of our ImageVue DR50 Plus platform, including another record quarter of installations in the U.S. Our cloud-native PIMS footprint continues to expand across both independent and corporate-owned clinics as well. In September, we acquired CoVet, a leading and rapidly growing provider of AI-native ambient listening and clinical workflow software for veterinary practices. The CoVet revenue run rate is approximately $20 million annualized and growing at strong double-digit rates, creating another revenue growth driver for the software modality and opportunity for further supporting diagnostic utilization. Water revenues increased 8% organically in Q3, and livestock, poultry, and dairy revenues increased 3% organically.
Turning to the P&L, strong recurring revenue growth enabled 13% reported operating profit gains, with reported operating margins of 33.1%, up 100 basis points as reported and approximately 60 basis points on a comparable basis, inclusive of CoVet-related costs. Gross profit increased 12% in the quarter as reported, and gross margins were 62.9%, up 110 basis points as reported and 90 basis points on a comparable basis. These gains reflect benefits from strong recurring revenue growth in IDEXX VetLab consumables and RefLab volumes, operational productivity, and favorable product mix, with pricing benefits offsetting inflationary cost pressures. On a reported basis, operating expenses increased 10% year-over-year and 11% on a comparable basis, including CoVet-related costs. We continue to advance investments in our innovation agenda, global commercial expansions, and information technology capabilities.
Q3 EPS was $4.01 per share, an increase of 18% as reported and 22% on a comparable basis. EPS in the quarter included a $0.03 per share benefit related to a $3.5 million non-operating gain on an equity investment, bringing the year-to-date benefit to $0.05 per share, or $4.7 million. Share-based compensation activity benefited the quarter by $0.01 per share, compared to a $0.17 per share benefit in the prior year period, and foreign exchange added $4 million to operating profit and $0.04 to EPS in Q3, net of hedge effects. Free cash flow was $421 million in Q3 and $978 million year to date. On a trailing 12-month basis, our net income to free cash flow conversion rate was 110%.
For the full year, our updated outlook for free cash flow conversion is 95%-100% of net income, including updated full-year capital spending of approximately $160 million. Our balance sheet remains strong. Total debt was aligned with prior year-end as strong free cash flow supported repaying $75 million of senior notes in the quarter, and we deployed approximately $335 million of capital towards the CoVet acquisition and share repurchases in Q3, bringing the year-to-date share repurchases to $805 million and supporting a 2% year-over-year reduction in diluted shares outstanding. Turning to our full year 2026 outlook, as noted, we're increasing our outlook for overall revenue to $4,741 million-$4,767 million, an increase of $32 million at midpoint.
This reflects the flow-through benefits of strong third quarter performance, CoVet revenue, and relatively consistent foreign exchange effects compared to prior estimates. Our reported revenue growth of 10.1%-10.8% includes approximately 70 basis points benefit from foreign exchange at the rates outlined in our press release and approximately $5 million of CoVet revenue in 2026. As a sensitivity, a 1% strengthening of the U.S. dollar would reduce revenue by approximately $4 million and EPS by $0.02 per share for the remainder of the year. Our updated overall organic revenue growth outlook of 9.3%-10% includes organic growth range of 10.3%-11% for CAG Diagnostics recurring revenue, including approximately 4% benefit from global net price realization.
Momentum across our innovation portfolio, including recent launches of Catalyst proBNP, broadening of inVue Dx FNA, and the expanded IDEXX Cancer Dx panel, together with our larger global commercial footprint, supports our outlook. In terms of key financial metrics, we're updating our reported operating margin outlook to 32.1%-32.3% for 2026, reflecting 50 basis points- 70 basis points of full-year comparable operating margin improvement. The updated outlook includes approximately 30 basis points of negative impact related to CoVet, including integration costs and one quarter of estimated amortization. We expect to expand margin off of these levels over the next 12 months, aligned with our long-term goals. Our updated full-year EPS outlook is $14.96-$15.16 per share, an increase of $0.25 per share at midpoint.
This reflects approximately $0.12 per share improvement in our operational outlook, along with benefits from a lower effective tax rate, now estimated at 20.5%, lower net interest expense of approximately $32 million, and $0.05 per share benefit from non-operating gain on an equity investment, partially offset by approximately $0.13 per share of dilution related to CoVet. Full-year foreign exchange benefits EPS by approximately $0.25 per share at rates outlined in our press release, and our outlook continues to include $19 million, or $0.24 per share, of share-based compensation benefits, and a 2% reduction in average diluted shares outstanding. For the fourth quarter, our implied reported revenue growth range includes an approximately 70 basis point headwind from foreign currency, partially offset by benefits from the CoVet acquisition.
We expect reported operating margins of 28.4%-29.3% in the quarter, which benefits from gross margin improvement being offset by CoVet expenses and ongoing investments in the business. That concludes our financial review. I'll now turn the call over to Mike for his comments.
Thank you, Andrew, and good morning. IDEXX delivered an exceptional third quarter, driven by execution across all growth drivers, expansion of diagnostic utilization, growth in our global instrument and customer base, and continued delivery against our broad-based innovation pipeline. Our innovations work together as a solution across point of care, RefLabs, and software to expand care and diagnostics utilization in the hands of our customers. IDEXX diagnostics and software innovations are enabling more pets around the world to get the high-quality care they deserve. This morning, I'll focus my comments on three areas: global commercial execution, diagnostics and software innovation delivery, and our acquisition of CoVet. Our commercial execution was strong again this quarter, reflected in exceptional instrument placements, new customer acquisition, and volume-driven growth ahead of sector averages.
At the point of care, each instrument placement is a long-term platform investment by the practice, and every menu addition grows the recurring value of that installed base. Our RefLabs delivered another quarter of double-digit growth, led by volume expansion, including strong pull-through from IDEXX Cancer Dx. And in diagnostic imaging, we delivered a third consecutive quarter of more than 300 digital radiography placements, driven by demand for the ImageVue DR50 Plus. Customer retention in CAG Diagnostics remains in the high 90s globally, reflecting the trust veterinarians place in IDEXX and the durable value of our integrated solutions. We know from experience that diagnostics is a performance category. Practices that embrace our innovative platforms, point of care, RefLabs, software, and imaging, see higher growth in both their diagnostics and overall practice revenue. Internationally, demand for IDEXX innovations remains robust.
The commercial expansions we announced on the Q2 call for France, Spain, South Korea, and Canada were all completed ahead of schedule. These investments follow our well-proven playbook for accelerated sector development through smaller territories for increased customer proximity. When we work side by side with our customers to build our innovations into their everyday protocols, we see higher diagnostics adoption and utilization supporting practice growth. Turning to innovation, inVue Dx momentum is strong, and we are well on track to exceed our placement goal of 5,500 for the year. Nearly half of our Q3 placements were international, showing that the value of this paradigm-changing platform resonates with clinicians around the world. We added both nucleated red blood cells and eccentrocytes to blood morphology in Q3. These updates push automatically to our global installed base of nearly 11,000 inVue Dx instruments, with no action required by the practice.
At the start of the fourth quarter, we opened fine needle aspirate, or FNA, availability to all North American inVue Dx customers, and every new North American placement now includes FNA. Every day, veterinarians face dogs with suspicious lumps and bumps, and a pet parent worried about cancer. Today, only around 10% of these masses get assessed because of the cost and the complexity of glass slides and sending samples out. Early customers using FNA on inVue Dx are evaluating twice as many masses. This is IDEXX innovation bending the cost curve to expand care access and care volume. We have also broadened what FNA can identify, adding lipomas and keratinized growth alongside mast cell tumor detection. A mast cell tumor can feel very similar to a lipoma, which is why examining the cells matters.
With inVue Dx, veterinarians can give owners answers and reassurance during the visit and focus on the masses that need attention. If a mass needs further evaluation, a board-certified IDEXX pathologist review is one click away, which also brings more volume to our reference labs. For customers not currently using our lab, inVue Dx placements also include onboarding to the IDEXX Reference Lab for a seamless experience. IDEXX Cancer Dx continues to be one of our most important innovations, filling a critical gap in care for early and specific cancer detection. Cancer is the top cause of mortality in dogs, with more than 25 million at-risk dogs globally. Tragically, cancer is often found too late to take action. Early detection expands treatment options and has the potential to extend a pet's life.
In the third quarter, we delivered another milestone, adding canine mast cell tumor detection alongside canine lymphoma in North America, taking Cancer Dx from a test to a multi-cancer panel. Mast cell tumors are among the most common cancers in dogs and are frequently missed. We tune detection toward the more aggressive forms, where early detection makes the greatest difference and a positive result is highly actionable. Mast cell tumor detection also connects directly to inVue Dx. A positive result for mast cell tumor on Cancer Dx prompts a next step to examine any external masses for cancer using inVue Dx FNA. This is the kind of connected solution IDEXX can deliver across point of care and reference labs.
As we shared at Investor Day, we are offering the expanded IDEXX Cancer Dx panel at the same affordable price as when we launched, as low as $15 in the U.S. when run with most blood work panels in the IDEXX Reference Labs. Doctors and pet parents should never have to choose between early cancer screening and wellness blood work. These should be run together for at-risk dogs. Independent practices and corporate groups alike are welcoming our leadership stance on affordable screening. IDEXX Cancer Dx runs on the same blood sample practices already send us for routine blood work, with no change to specimen requirements or workflow. We see strong evidence that our strategy to grow blood work utilization is working. 70% of IDEXX Cancer Dx runs are part of a broader blood work panel, and customers who adopt IDEXX Cancer Dx see higher routine testing volumes.
By the end of the year, IDEXX Cancer Dx capabilities will expand further to include hemangiosarcoma detection, and we are planning for broad customer availability in North America beginning in the first quarter. Hemangiosarcomas grow silently inside an organ like the spleen and are too often discovered only as an emergency when the mass ruptures and the dog can be lost within hours. This is a heartbreaking experience for owners and veterinarians alike. With hemangiosarcoma, IDEXX Cancer Dx will address approximately 40% of all canine cancers. We believe this marks a tipping point for affordable cancer screening, inspiring broader wellness blood work. Earlier this month, we also advanced our Technology for Life platform strategy with the North American launch of Catalyst proBNP, the first and only dual-species quantitative cardiac test at the point of care.
Heart disease affects approximately one in six cats and one in 10 dogs, yet it remains under-assessed in general practice, with only about 420 veterinary cardiologists in the U.S. for more than 23 million affected cats and dogs. Catalyst proBNP supports screening, diagnosis, and monitoring across multiple clinical scenarios. It delivers quantitative results during the patient visit with laboratory-level accuracy, so decisions can be made while the patient is still in the clinic, and results appear in VetConnect PLUS with built-in interpretive guidance. Catalyst menu additions, such as SDMA-inclusive chemistry CLIPs, Catalyst Pancreatic Lipase, Catalyst Cortisol, and now proBNP, expand the value of our over 80,000 Catalysts around the world. We have seen how software, data, and AI are powerful enablers of diagnostic utilization growth, and in September, we strengthened these capabilities with the acquisition of CoVet, a leading AI clinical assistant purpose-built for veterinary practices.
CoVet gives time back to clinical teams and helps them deliver more complete care. When I visit practices, I see the friction firsthand: complex caseloads, rising pet parent expectations, and burdensome documentation that pulls clinicians away from their patients. CoVet automatically captures exam room and phone conversations, builds treatment plans, and supports more personalized client follow-up after the visit. Every minute saved is capacity to see more patients, and in-context prompts help with next steps. Practices and groups using CoVet are seeing measurable gains in team productivity and satisfaction across the care workflow. With CoVet, we saw a category-leading solution along with a talented AI-native team with deep sector knowledge. CoVet has rapidly grown adoption across the U.S. and more than a dozen countries internationally.
Combined with IDEXX's software, data, diagnostics, and commercial capabilities, CoVet advances our vision for an AI-powered connected system that unlocks greater value from information generated throughout the clinical workflow to support expanded patient care. CoVet is already integrated with ezyVet, and we will integrate it more deeply with our other software and data assets, including VetConnect PLUS and Vello. We'll also continue to advance CoVet integrations with non-IDEXX practice management systems. CoVet's international footprint extends our software reach to benefit customers in geographies not currently served by IDEXX practice management systems. Looking ahead, I'm energized by the opportunity in front of us. The long-term drivers of the animal health sector remain sound. The bond between people and their pets continues to deepen. Pets are living longer and aging into the years when diagnostics matter most. Expectations for quality care keep rising, with diagnostics at the center of clinical decision-making.
These factors reinforce the durability of sector growth, while practices and corporate groups that embrace innovation and engage their clients realize faster growth. They're leaning into IDEXX diagnostics and software as growth engines. Combined with IDEXX execution, this is driving our growth well above sector averages. We're in the early innings of a broad-based innovation cycle. inVue Dx and FNA, Cancer Dx as a multi-cancer panel, Catalyst proBNP, CoVet, and our software. Next up is IDEXX MultiCue Dx, our next paradigm-changing point-of-care platform designed and built here in Maine, U.S.A. We'll share more at an investor event at VMX in Orlando on Monday, January 18th, at 1:00 P.M. Eastern. We'll also make this available via livestream on the Investor Relations section of our website, idexx.com. I hope you can join us. To IDEXX employees around the world, thank you. And a special warm welcome to our new colleagues from CoVet.
Your commitment to innovations that help clinical teams see more and do more is what turns diagnostic and software innovation into long-term durable growth for our customers and for IDEXX. With that, I'll open the line for Q&A.
If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, that is star one to signal for a question. We'll go right to Chris Schott with JPMorgan.
Great. Thanks so much for the questions. Let me just first on the guidance side. You started the year with about an 8% organic growth target. That number is looking now closer to 10%, and that is coming despite a vet visit environment in the U.S. that has not materially improved. Can you just elaborate a little bit more on what is enabling this? How much of this is the new platforms versus the sales force expansion versus maybe visits just not being the best proxy for sales growth for your business right now? My second question was just on the vet visit trends. Can you just elaborate a little bit more of what you are seeing both on the puppy side and the older dog side?
I am just trying to get a sense of where those cohorts are trending and just implications as you think about longer-term visit trends from here. Thanks so much.
Hey, Chris. Good morning, and thanks for the questions. This is Michael. I will speak to kind of the broader momentum in the business that gets at several of the elements in your questions, and then Andrew will round that out, talking about guidance and a tie-back to some of the trends. As we talked about in the call, we are executing exceptionally well. Our growth is outpacing what we are seeing in terms of broader sector averages. Chris, this is really volume-led growth, driven by the benefits that we are seeing from our innovations, from commercial execution, and also from higher-quality visits that are the result of positive trends when it comes to pet demographics. On the innovation side, keep a note, this is really a broad-based set of benefits that we are seeing, and we are in the early stages of seeing this. We talked about inVue Dx, IDEXX Cancer Dx.
We just launched proBNP on Catalyst, but even Catalyst Pancreatic Lipase, which we launched over two years ago, is continuing to drive incremental growth in our business. Commercially, our teams are executing extremely well. This was a record Q3 in terms of instrument placements, and we are seeing really strong new customer growth in the labs. Of course, all of these things come with long, durable revenue tails. As we bring on new customers, we see the long-term benefits in our growth. The other thing is we are not sitting still, of course, and neither are our customers. When we look at practices and groups who are really engaging with IDEXX innovation and focusing on things like demand generation, marketing with their clients, working on the customer experience, bringing back RefLab clients, they are seeing growth in their businesses as well.
And we're also seeing interesting moves when it comes to how pricing is applied to things like wellness diagnostics, again, to drive demand. The bottom line is, across innovation, commercial execution, and what we're seeing in terms of aging pets, we see durable growth performance. And really, our growth doesn't rely on seeing positive visits. We can grow irrespective of that. Let me hand it over to Andrew to kind of round that out.
Yeah, Chris, I think to your point, we've executed exceptionally well here. I think the initial guide that we had captured a higher end that we're actually above at this point, and we've been taking that up over the course of the year. But it really comes back to a lot of the drivers that Mike highlighted here with strong execution, really in our companion animal diagnostics business. The recurring growth really supported by innovation, global expansion, and just strong momentum, given the demand that we see for diagnostics at the clinic. We continue to see our customers also be looking for ways to grow volumes, and certainly an expanded menu is one of those ways to provide better care for their clients and also grow their businesses, and I think we find a nice match-up there.
Seeing really strong success, and I think we're comfortable with the updated guide at this point, which continues to show that we have a lot of momentum in the business, and we can continue to work through some of these pressures on clinical visits. Just in terms of your second question on the clinical visits themselves, certainly we do see some of the aging cohort continue to add growth within the overall makeup here, while we're seeing some more muted puppy and kitten adoption levels. That's not a new theme. I think that's been something that's been playing out. The macro environment continues to remain a little bit more of a challenge, and it's something we're paying close attention to. But the positive side is the aging pet population is continuing to perform well. We see that playing through on the non-wellness category more particularly.
We know pets are living longer, and I think that creates a lot of opportunity for us to continue to work with our customers on that age cohort. And then the breed mix that we see is also a positive tailwind for us over time. But fundamentally, the key drivers of the pet population, people loving their pets, remain intact, and I think that's a positive story for the longer term.
Great. Thank you.
We'll move next to Jon Block with Stifel.
Okay, great. Hey, guys. Good morning. Two for me. I'll break them up. I guess just maybe the first one, I mean, the inVues are 4,600 year-to-date. I think you said now exceed the 5,500 for 2026. But I mean, also your total since inception, since the launch seems to be running solidly ahead of near-term expectations. Maybe you're at about 11,000 total. Correct me if I'm wrong there. Just how do we think about that 20,000 analyzers over five years, with now maybe you knocking out more than half of those within two years? Are there any changes to that long-term assumption? Then I'll ask the follow-up.
Hey, Jon. Good morning. We're really pleased with the momentum and the demand for inVue Dx, really around the world. As I noted, we saw close to half our placements coming internationally. You do have the numbers right. We've seen just tremendous execution when it comes to placing inVues. We're on track, as I said, to exceed our placement goal of 5,500 for the year, and our five-year goal of 20,000 placements. We're on track to exceed both of those. As I also talked about it, we've got more happening with the platform itself. We continue to expand the menu, which brings even more clinical value to our customers. We added to the blood morphology menu with nucleated RBCs and eccentrocytes, and fine needle aspirate we know is something that's of real interest and excitement to our customers.
We've opened up availability to that now broadly in North America, and every new install will now include fine needle aspirate. We love what that's doing, not just in terms of addressing a real need in the area of fine needle aspirates, but also opening up more access to care and expanding volume of care as we're seeing these customers doing twice as many masses. We're really pleased with the overall performance and reception and level of customer demand, and we know that this analyzer is fulfilling a key need in the clinical arsenal for our customers around the world.
That's great. Helpful color. Andrew, the second one for you, and I think it's an important one, so hopefully I can lay it out clearly. The consistent 50 basis points-100 basis points of annual OM expansion in the LRP, do we have to think about anything differently for 2027 OM expansion with the recent acquisition of CoVet closing? You obviously embedded some dilution for Q4 2026 with the OM guidance coming down. Do we have to think about that dilution for the first two to three quarters of next year as well until you lap it? As a result, should we have more reserved 2027 OM expansion assumptions embedded in our models? Thank you.
Thanks, Jon. Appreciate the question. As you highlighted, we did include about 30 basis points of operating margin impact from the CoVet acquisition. Really spans both Q3 and Q4. Yeah, I think from a Q4 and going forward perspective, we have factored that into the profile. I think we're still delivering on the full year operating margin results and expectations for our long-term growth algorithm, even including some of that impact. We've been able to increase our overall guidance on revenue and EPS as it relates to those metrics as well. Certainly as part of the deal, we have some transaction costs, some integration costs, as well as then just the overall business performance, which would include some of the impact from things like amortization of the deal as well.
Keep in mind, we did highlight that we expect over the next 12 months, we would grow the total company revenues in line with those longer-term expectations of 50 basis points-100 basis points of annual operating margin impact here. As we get through the integration of the deal itself, and we continue to see success in growing that business, we would build off of the overall operating margin and expand the operating margins of CoVet directly. Keep in mind, we'd also just be managing this as a portfolio, similar to many of our other innovations. We do see multiplier benefits across this deal. It's both a direct revenue growth driver for the software business itself, but we see opportunities to really expand the use of diagnostics.
When we think about both of those components, we want to make sure we're making the right investments within the business overall, and we'd kind of look to see it play out that way. But we haven't come off of our long-term growth algorithm related to this deal directly, and I think we have opportunity to continue to grow into 2027 as well.
Thank you.
Our next question comes from the line of Erin Wright with Morgan Stanley.
Great. Thanks for taking my questions. I have one follow-up on the macro discussion earlier, and then also on RefLab. Can you speak to what magnitude of sensitivity that you're baking into guidance at this point from a macro perspective? I guess, did you see any shift in vet demand trends throughout the quarter? I'm just trying to get a gauge in terms of, you mentioned, for instance, that you're continuing to monitor what you're seeing out there from a macro perspective. Just given that innovation obviously allows you to grow through this, how are you thinking about the macro in the context of launching a new instrument next year, or MultiCue Dx when you do launch it? Do you think vets are in a position to invest further in innovation? How will MultiCue Dx, for instance, address some of those pain points at the clinic level?
Then just a quick one on RefLab. You had another double-digit growth quarter in RefLab, which tends to be a little bit more tied to vet office visits. How much of that is attributable to market share gains versus just greater utilization per existing customer, given the innovation? Thanks.
Thanks. Good morning, Erin. Maybe I'll address the first question, and then Mike can talk about our Reference Lab growth profile. From a macro perspective, I think it's been relatively consistent for us, I think, in terms of what we see play out on clinical visits. Certainly macro does have an impact here. I think when you look at the overall guide and what we've included in there, it is a range, but we've really had consistent trends here more recently and really in line with our prior guide estimates as well. Not a lot of change just in terms of that expectation as we head into Q4 at this point. Keep in mind, it can be a little bit choppy quarter to quarter, variability just with the overall metric itself. But I think we've captured that.
What we're really excited by is the continued quality of the visits, and that's really what we're focused on, is driving that quality. By quality, we mean broadening the use of diagnostics, using diagnostics more frequently in the pets that are coming through the door. Both of those metrics remain solid, and again, we continue to engage with our customers to look for ways for them to grow overall volumes. That's really our key focus at this point strategically, and I think we're seeing a lot of success in that. But maybe I'll have Mike talk about the reference lab piece of this.
Yeah. Good morning, Erin. Hey, we've been really pleased with the high growth in the reference labs around the world, by the way. It's really a global set of performance metrics that we're looking at there. This is the outcome of investments that we've made over many, many years into really all aspects of the lab experience. Certainly, the investments that we've made into networks so we can provide a very strong local service experience to customers all around the world, and that's something we continue to invest in to expand that network and make sure that we're getting closer to customers and we can serve them in a really strong way. Then technology, the backbone of technology in our reference labs is very sophisticated and allows us to provide, again, a great level of service, but also the types of sophisticated diagnostics that we run.
Innovation in terms of various tests, and that's broad-based as well. I mean, we talk a lot about IDEXX Cancer Dx, and that's certainly been a very strong driver of RefLab growth. We're seeing, for example, still upwards of 20%+ of IDEXX Cancer Dx runs coming from customers that aren't primarily using the IDEXX Reference Laboratories. Those are opportunities for those customers to experience our RefLab value proposition, and that opens up the door to a conversation, and we're seeing, as we shared, really strong new customer growth that is in part an outcome of that kind of conversation. We're also investing in other areas. We added Taenia tapeworms, for example, to our Fecal Dx antigen panel in the Reference Laboratories. It's really, it's a broad-based innovation strategy that includes IDEXX Cancer Dx and other areas along with the kind of service experience that we're providing.
We're doing this around the world. Really pleased to see the growth in the RefLab, not just in the U.S., but also internationally as we engage with customers, not just in one modality, but in this total solution approach that includes point-of-care diagnostics, Reference Laboratories, and software in an even expanded way.
Once again, if you'd like to signal for a question, that's star one. We'll go next to Matt Dellatorre with Goldman Sachs.
Great. Thanks for the question, and congrats on the quarter. Maybe first going back to inVue Dx, could you provide a bit more color on just what drove the strong placements in the quarter? Specifically, any notable trends you're seeing with regard to uptake or how clinics are utilizing the product across ear, blood, or FNA? Then maybe looking ahead to the upcoming VMX event for MultiCue Dx, could you just give us an idea of maybe what you'll share with that disclosure, and then how you think about the actual launch timing on the back of that? Thanks very much.
Hey, good morning, and thanks for the question. Coming back on the first part of your question for inVue Dx, really, you look at the instrument and the critical need that it's addressing around cytology. I mean, cytology is a category of diagnostics that's practiced virtually in every practice around the world. They all have a microscope, and it's been done the same way for over 100 years in a highly manual fashion. It requires a lot of steps, it's pretty messy, and it's technique-sensitive. inVue Dx addresses that core need. It takes out the slide, which is a revolutionary step. It's got advanced optics and AI, and so it's filling a key need, and that's really, I think, at the core of it.
Certainly, as we've added to the capabilities on the instrument, that makes it even more clinically valuable, and I think one of the things that customers have come to appreciate about IDEXX is that we never stand still. We're constantly expanding the value of these platforms. This year alone, we've added over half a dozen new things to our blood morphology menu, just for example, and 2 just in the last quarter. We continue to expand, and fine-needle aspirate is really early in that part of the innovation journey for inVue Dx. So I think there's a lot of exciting menu and kind of roadmap ahead of us. We've seen strong placements around the world too, as we noticed internationally, that accounted for almost half the placement. As we've expanded availability of inVue Dx globally, we've seen really good demand and uptake there.
I just think this is really, it's filling a key need with our customers, and that's what's generating demand. Certainly, we have really strong commercial teams that are able to engage with customers and support that demand through our commercial execution, and that's resulting in the types of numbers that we've shared. With respect to our event at Orlando and MultiCue Dx, we'll talk more about MultiCue Dx there. We're not providing more information today, but we're certainly excited about it, and I hope you can join us at the event.
Great. Thank you both.
We go next to Steven Dechert with KeyBanc Capital Markets.
Hey, thanks for the question, guys. I guess first off, I know you've given the cumulative number of clinics that have ordered Cancer Dx to date since launch. Just anything on what number of those clinics are recurring? Thanks.
Hi. Yeah, good morning. Thanks for the Cancer Dx question. Cancer Dx is really proving to be one of the most consequential innovations in the history of the company. I mean, this is a category that has just been calling out for innovation. You look at one out of four dogs being diagnosed with cancer in their lifetime, and there really has been no solution for early and specific detection of cancer. Cancer Dx is filling a key need, and we're seeing just a lot of excitement and interest in what it can do in the practice. We've shared some numbers around customer growth. We saw, again, significant expansion in that. We're at over 14,000 customers having ordered and run Cancer Dx.
We don't split that out further, but I can tell you that we're seeing really great momentum and demand, and also, as I shared, really good multiplier benefits into broader diagnostics utilization, with 70% of Cancer Dx runs being together with a blood work panel in our reference lab. We're very happy with the momentum, and I would say it's still early days. There's a lot of opportunity ahead of us as we continue to build out the panel and address this key area of clinical need for dogs.
Great. Thanks.
Our next question comes from Daniel Clark with Leerink Partners.
Great. Thanks so much, and good morning. Wanted to first ask about the inVue revenue per analyzer, given it's already in your $3,500-$5,500 per year range. How are you thinking about that trending over time, given inVue FNA is just rolling out, and that feels like an area with significant unmet need?
Hey, thanks for the question. We're comfortably in the range of the $3,500-$5,500 annual recurring revenue per instrument that we've shared in the past. And this range, keep in mind, encompassed both ear cytology, blood morphology, and also fine needle aspirate. Most customers, as we rolled out blood morphology and ear cytology, do both. Those are really complementary care episodes and areas, kind of sub-modalities, if you will, within cytology. And we expect the same will be true as we roll out a fine needle aspirate more broadly. As we do roll out fine needle aspirate, we certainly see additional upside there to drive growth, balanced out by the fact that we continue to broaden availability of the instrument around the world.
The range is meant to encompass various practice sizes as we go more international, and all of those things kind of factor into that. We see long-term opportunity here, and we are not done with the menu on inVue Dx. I mean, we can look around the corner and see 100 million more cytology tests being done around the world in a, frankly, manual and suboptimal way. We are really excited about the long-term opportunity to continue to advance this platform and meet more and more of the needs in cytology in the practice.
Got it. Super helpful. Then just a quick follow-up. On the incremental placement opportunity from here, obviously international has been quite strong. U.S. has been a little more stable. How are you thinking about kind of incremental uptake from here? Is this more of a worldwide launch at this point? Maybe where we are in terms of innings for both would be great. Thank you.
We are in full worldwide launch mode with inVue Dx, and so we see really meaningful headroom to continue to place instruments around the world.
We will take our next question from Navann Ty with BNP Paribas.
Hi. Thank you for taking my question. I had a question on pricing, whether you expect pricing in the animal health diagnostics sector to remain resilient versus the animal health pharma. As we know that the therapeutic market leader has announced pricing action. Do you think diagnostics are isolated, and do you expect that to continue for IDEXX? Thank you.
Good morning, Navann. Thanks for the question. I do not know that I will comment on pricing in the pharmaceutical area. In our area, we certainly know that it is a competitive sector, as it has always been. We focus on price as a measure of the value that we are creating. We are very transparent around how price factors into our overall growth formula, both in the past and going forward. We put a lot of focus on making sure that when we put forward pricing, it is consistent with the value that we are providing. Then, as we have shared, a major part of our strategy also, if you look at what we are doing with IDEXX Cancer Dx, for example, $15 in the U.S. and an equivalent number around the world for IDEXX Cancer Dx when it is run as a screening test together with blood work in our lab.
This is just an example of what we are doing to make a bold statement around affordable screening so that more pets have access to care, and what we see is that also drives more volume of care. This is absolutely turning heads with our customers. They really welcome our stance on this. I have shared in the past, we have had a large corporate group that went all in with IDEXX Cancer Dx as part of their senior dog wellness program, and they are seeing higher utilization, higher enrollments. It is driving their broader wellness business. I was with a practice, an independent practice down in the southern part of the U.S., and they went all in with IDEXX Cancer Dx for all senior dogs. They are seeing up in the high 30s in terms of wellness blood work inclusion in their practice. So, we know the strategy works.
We want to make sure it is an accessible strategy so that doctors and owners are not having to make this false choice between blood work, screening blood work, running the blood work, and finding out if their dog has cancer. That strategy is working.
And just related to the overall company, we've had very consistent pricing, starting with our initial guidance, and we've continued to update folks along the way about that, which really hasn't changed in terms of our expectations. To Mike's point, we're constantly focused on value. We're not looking to maximize price. We're really trying to expand the sector through volume. But we've been very consistent in terms of expectations that we've set early in the part of the year.
Thank you both. And maybe just a quick one, if you have any early feedback on the mast cell tumor addition that was launched in September. Thank you.
Yeah, that is just getting really, really positive feedback. We're early in the launch process, to be clear. But certainly, customers really welcome the fact that IDEXX Cancer Dx has now turned the corner from a test to a multi-cancer panel. And mast cell tumor is one of the most common cancers in dogs, and it often gets missed. Especially with dogs that have longer coats, it can be really hard to find mast cell tumors. And the connection between IDEXX Cancer Dx and inVue Dx is also really exciting. When you get a positive on IDEXX Cancer Dx, and if you have lumps and bumps and masses, you want to go find out which one of those is cancerous, and that's where inVue Dx is a natural next step there. So, we're seeing really high receptivity to mast cell tumor and a lot of excitement too around hemangiosarcoma, which is coming next.
Okay, with that, I want to thank all of you for your questions. We'll now conclude the Q&A portion of this morning's call. It's a pleasure to share IDEXX's continued execution against our innovation-driven growth strategy while delivering strong financial results in the quarter. Thank you for your participation, and we'll now conclude the call.