IDXX · Earnings call · 2026Q2T · Full report

Gross Margin Drivers

IDEXX LABORATORIES INC /DE · 2026-08-04 · Importance 30 · Surprise 40

Second-quarter gross margin was 64%, an approximately 120-basis-point comparable improvement from the prior year. Gross profit increased 12% as reported and 11% on a comparable basis, supported by strong recurring revenue growth in IDEXX VetLab consumables and Reference Lab volumes. Operational productivity, favorable business mix, and margin gains in the Water and LPD businesses also improved profitability. Pricing benefits offset inflationary cost pressures, which eased during the quarter compared with management’s expectations.

Key facts

• Gross profit increased 12% in the quarter as reported and 11% on a comparable basis.
• Gross margins were 64%, up approximately 120 basis points on a comparable basis.
• We expect gross margins to continue to lead our overall operating margin profile and to drive operating profit flow-through, with high incremental margins as volume growth continues in the second half.
• Gross margin gains reflected benefits from recurring revenue growth in VetLab consumables and Reference Lab volumes, operational productivity, favorable business mix, and strong margin gains in Water and LPD businesses.
• Pricing benefits offset inflationary cost pressures, which eased in the quarter compared to expectations.