IDEXX Laboratories, Inc. (IDXX) Earnings Call Transcript & Summary

Good morning, and welcome to IDEXX's 2024 Investor Day. A warm welcome to all of you here in the room at our global headquarters, and welcome to all those folks joining us virtually through the webcast. I'm Jay Mazelsky, President and CEO of IDEXX. And we have a fabulous Investor Day program planned for you this morning. I'll be joined by members of my management team, who will provide a comprehensive update on the company's strategy, long-term growth opportunity, the innovation cycle and execution drivers. Let me quickly go through the agenda and set up the morning, and then we'll jump right into the substance of the overall discussion. So I'll start, I'll provide an update on our business, business strategy, highlight a couple of the more compelling initiatives. I'll be followed by Dr. Tina Hunt, who leads our Strategy, Sector Development and Global Operations teams she'll provide an update on the overall sector opportunity, some of the more compelling growth drivers behind it, as well as a number of initiatives that support testing utilization. Dr. Mike Erickson, who leads our industry-leading Point of Care franchise will follow, who'll provide an update on that business as well as highlighting some of the progress we've made on innovation. Mike Lane, who leads our Global Reference Lab business and Information Technology teams will talk about our Reference Labs business, the comprehensiveness, the breadth and depth of the menu and how we serve our customers. Michael Schreck will then follow, who leads our Veterinary Software, Corporate Accounts and Customer Experience teams. We'll talk about the strategic nature of our software business, how it enables diagnostics and supports both independent and corporate groups. George Fennell, who leads our Global Commercial teams, will then bring it together and talk about how our commercial team's emphasis on teams partner with our customers are really positioned in bringing these innovations and work with our customers to help prioritize the things that are most important to them. And then we'll conclude the formal part of the presentation with Brian McKeon, our Chief Financial Officer, who will provide a financial update. We'll have time at the end for questions and answers. And let's get started. But just a quick pause to remind folks that today's event is covered by the safe harbor disclaimer. If you'd like to get some more detail on that, we have it as part of our website. So let's begin. A key point to understand about our business and business model at IDEXX is that there's a very significant opportunity still before us in the companion animal diagnostics sector. We pegged this at about $45 billion plus. The key to being able to realize that growth opportunity and drive testing over time is innovation, innovation plays a foundational role. Sometimes it's innovation within the business model, sometimes it's innovation in terms of the overall technology offering. In the Point of Care business, it takes the form of menu extensions, so our new testing platforms that are new to animal health or even potentially new to the world. In the Reference Labs business, it may take the form of building out the global network of Reference Labs, but also the comprehensiveness, depth and breadth of the menu itself. Within the customer-facing software business. It's really about tying together the diagnostic modalities supporting workflow optimization within the practice, but also staff productivity, client communications and really enabling the practice, the business of medicine to be practiced, and it's not just innovation. It's then taking that innovation to our customers, through awareness and education, a team-based approach where the team is trusted, the subject matter experts and they help our customers achieve their objectives. The net result of this is a long-term durable growth opportunity with high returns, aligned with the high value that we, as IDEXX deliver to our customers. Our business strategy is very much aligned with the company's purpose, as a growth company being purpose-driven has its advantages. Our employees are highly engaged. From a professional motivation standpoint, they absolutely love what they're doing. And as we advance our growth strategy, we're committed to creating a positive and lasting impact on pets, people and livestock through the product and service offerings, that we deliver. This morning's discussion will focus on a Companion Animal Diagnostics Group that represents more than 90% of the company's revenue. More information if you're interested in corporate responsibility and some of the initiatives that support our purpose can be found on our website, in accessing the 2023 Corporate Responsibility Report. With respect to strategy, we've taken a consistent approach over time, focused on the long-term organic development of very attractive businesses, particularly the Companion Animal Health Care business. Our strategic focus and strong execution have yielded outstanding results over time. You can see from the chart that our top line double-digit organic growth, yielding 22% earnings per share growth over that period 2018, 2023; supported by consistently expanding operating margins. This has resulted in a 48% return on invested capital. That's a 2023 number, reflecting both the attractiveness of the pet health care space and the benefits that flow from the type of innovation that we've been able to deliver in the high-value customer engagement. A key driver of our organic growth in the business has been a highly profitable CAG Diagnostics recurring revenue stream. And that's grown faster than our overall revenue, as you can see from the chart. And in fact, worldwide CAG Diagnostics revenue now comprises more than 80% of the total company's revenue. And this growth has been supported by key strategic drivers. These include diagnostics innovation, a comprehensive multi-modality suite supported by an increase in pace and breadth of innovation in R&D, fast-growing customer software solutions, more than just software, but a vertical SaaS suite of software products, enabled by data and connectedness, both to the practice and from the practice to the client and a direct commercial model, that has expanded, particularly in international regions, really reflecting that we love our pets everywhere, we are in the U.S., in Germany, in Australia, Japan, it's really a global opportunity. So wherever there are pets, and veterinary practices that care for them, we want to be there, too. And we want to be able to support our customers in an appropriate way. So we've expanded to be able to do that. And as we've grown, IDEXX's business model has shown extraordinary resilience through macroeconomic cycles, even during the great financial crisis, of 2008, 2009. Our worldwide revenues grew 5%. And it's a very different sector than it is now, the strengthening of the pet-human bond. As a company, we're far more capable. Our innovation portfolio is broader. We directly represent ourselves. We have a lot -- larger footprint. And I think it reflects the attractiveness of the whole health -- pet health care space as well as the strong execution that we've been delivering as a company. Now more recently, we've been working with an unusual time post pandemic. Let me just set the table and talk a bit about the context. Our revenues, 2020, 2021 grew 33%. So much higher volume base. Some of the challenges we've seen from a capacity and labor standpoint within practices, are the same labor workforce challenges that the general economy as a whole has experienced. In terms of the challenges of retention of trained staff, I think a lot of both veterinarians and veterinary technicians wanted to strike a bit of a better balance, in terms of their professional responsibilities and families and personal desires. And of course, more recently, the macroeconomic impacts, the cumulative pressures of price and the choices that their pet owners have had to make from the standpoint of where they spend their money. But we're working through this post-pandemic period effectively. We're leveraging very strong execution across the board, and we're growing up as much, much higher volume and revenue base. And so our -- while our business is resilient to macro pressures and in fact, very resilient to macro pressures, it's not immune. And you can see in the chart in front of you, this is recent survey data, June of 2024 that IDEXX did. And it sort of lays out or characterizes that prioritization of pet spend and it's largely consistent with what we've seen through other periods, which pet owners are willing and do prioritize the spend on a health and well-being of pet -- dogs and cats, they consider to be members of their family at the expense of other categories, travel, entertainment, going out to eat, those sort of things. But as you can see, they make choices. It has some trade-off, and I think we see that at the margin. So this prioritization that I shared with you in the prior chart, I think is reflected in strong secular growth tailwinds that reinforce the long-term growth potential of the business. The strengthening human-pet bond shows no signs of abating. The step-up, significant step-up in the number of pets on a global basis, hasn't pulled back and Tina will show you some data that continues to support that growth. Pets are living longer, and we have some updated data to share with you, partly as a result of receiving better medical care. And of course, younger households within a couple of years will be the majority of household owning pets and their desire and their -- from an actual spend basis to really support the health and well-being of what they consider to be members of their family. And we believe that innovation plays a key role, that as pet owners and veterinarians want the latest technology that support the practice of medicine that support a higher standard in practice of medicine, but also really help them run their businesses, the business of medicine more effectively. And we think these things create cumulatively in an integrated way, very long term, very compelling long-term growth potential. So let me bring this together as a result of these trends. We see this as a $45 billion TAM or opportunity, which is largely unserved today. If you look at the most advanced region, which is the U.S., it's bit over 20% in very wealthy regions like Europe where the large percentage of household owning pets, it's 8%. It's very much underserved. Let me just quickly go through the methodology in terms of how we achieve this. So we assume a current proportion of household owning pets visiting veterinary practices. Of course, it's by number -- population or groups and that varies by geography. Then we apply a medically optimal inclusion rate for diagnostics, wellness and non-wellness medically optimal, meaning this is what from an academic and professional association, standards suggests you should be using diagnostics. Then we apply to that the average cost, the manufacturers cost to the practice, of diagnostics. It's about $80 and this is U.S. numbers, $80 per wellness, about $115 for non-wellness, and discounted a bit to reflect the somewhat lower prices in our international region. So you go through the math, it's a $45 billion TAM. So the central question then is, how do you get at it? How do you continue to grow appropriate testing utilization to achieve this opportunity? Our strategy has been geared for a long time being able to address that question in an effective way and our strategy going forward is what we're going to talk about this morning, which is largely a continuation of what we believe is the most effective. Before I go into some of the initiatives, let me just set the stage with a couple of slides that further provide some context. The core driver of growth and realizing this long-term potential is testing utilization. This is U.S. data. We get this from our PIMS systems, it's divided between wellness and non-wellness, and historically, we've grown utilization at about 50 basis points a year. It's been a bit faster during the pandemic period, but there's been really very, very steady growth. And it reflects the foundational role that diagnostics plays in the overall care equation. And I'll go into this in greater detail on the next slide. But this development of this opportunity just didn't happen historically. It's a result of taking very explicit intentional strategies, around innovation, around commercial engagement, around delivering a great experience. And that's where the focus is. From an innovation standpoint, it focuses from channel. And really, it drives what we think are medical best practices. Let me paint a quick snapshot of your typical veterinary practice in the U.S. today. You can see it's changed a lot. They're about twice as large as they once were just over a period of 12, 13 years, about $2 million. If you take a look at medical services in conjunction with the other categories, like product, in this case, pharma and specialty diets and those sort of things. The vast, vast majority of activity that occurs within the practice today is driven by that medical services activity, delivering care, whether it's wellness or non-wellness and therapeutic follow-ups. It just so happens, you can't treat unless you diagnose. When you do treat, you want to be able to assess how effective that treatment has been, and that requires diagnostics. If a patient has chronic conditions, you want to be able to track that over time. And you want to be able to assess the underlying health status of a patient, where they're young and potentially well and so diagnostics plays its key role. It's a key profit center within the practice, highest from a percentage basis. It drives all the other activity within the practice. Veterinaries recognize that. You see, from a growth standpoint on the right-hand side, it's grown faster than other areas and continues to grow faster. So let me now get into the initiatives and strategies to continue to drive the appropriate use of diagnostics. And really from our perspective, it starts with innovation. And from an R&D standpoint, we've been developing deep areas of expertise and capability really over decades, and we've had to, because it wasn't possible to take solutions, whether medical device or life sciences in the human space and then transport it over to animal health. The cost, the performance and the footprint and ability from an ease-of-use standpoint, we're just not appropriate, wrong for the animal health space. So we had to develop this deep capability in instrumentation and platforms and assays, software, data, AI and really integrated as a system. And I think, inVue Dx is just the latest great example. But let me sort of describe what went into that. In the cellular platform, advanced Optics, in AI algorithm, 10 million-plus images trained by board-certified pathologists, proprietary reagent mix, so you could actually see whatever the sample is, in a system that doesn't use a slide, plug and go and produces a result across multiple menu categories. Just a great example of -- you have to be able to have that capability, develop it and understand how it comes together from a systems standpoint. So this focus on developing diagnostic ecosystems has put us in amidst of a new wave of innovation. It's reflected in our multi-modality solution set, highly relevant product launches across Point of Care, reference labs and software. I couldn't even include the complete product set. We have a UR/UA Analyzer that we also released as well as a number of software products. So it's just, I think, a great story to support our customers. But these products, so this is the important point, the takeaway, are not just disparate point solutions. They represent an intentional focus on building key diagnostic franchises through layers of innovation. And so this intentional strategy of innovation is something that we have an incredibly strong track record of doing. We got to do this. We approach it with a very long-term horizon in mind, I can give you a few examples because I think they're illustrative. It really sets up to the discussion for the rest of the morning. So 3 disease franchises, all a bit different in terms of how we approached it and the clinical medical problem we set out to solve vector-borne disease, parasitology and renal health. In parasitology -- I'm sorry, vector-borne disease. It's a great example of that area, it's telling you, if we can't see it, it doesn't exist. If you were able to rewind the real 30 years ago 30-plus years ago, they would tell you the vector-borne disease and this is like lime and anaplasmosis and ehrlichiosis. These were very geographically specific, low prevalent -- potentially clinically impactful diseases, but nothing really to worry about. We introduced heartworm, in 3Dx, 4Dx. We continue to improve the menu. We brought in the case of Rapid Assay for vector-borne disease testing into the IDEXX Diagnostic Ecosystem with SNAP Pro. And more recently, and Mike Erickson in his part of his presentation, we'll talk about Leishmania and the ability and the strategy and the approach to support international vector-borne disease development. We think it's a very compelling story. As a result, Vector-borne disease screening is now considered to be a fundamental part of our overall testing franchise and considered by far to be the leader. It's made a very significant contribution veterinarians today, understand that is prevalent everywhere that it needs to be tested for and that when a patient is impacted, there's a very substantial, very substantial medical impact. Parasitology, a bit different. In a veterinarian -- veterinary practices would do fecal flotations for a long time looking for parasites. [indiscernible] parasites by looking under the microscope at eggs. And the problem is it's time consuming. It's technique-sensitive. The results are inconsistent and it's not pleasant, veterinary technicians hate doing this, but you need to do it because it's a clinically impactful disease state or condition. We thought there was a better way. We developed a fecal antigen technology suite that detects proteins before those eggs or ova are parent under a microscope. And we set out and with a technology for life philosophy, developed a very comprehensive complete panel. Over the last couple of years with Tapes and Cystoisospora, we have a very comprehensive panel that we believe is as good and much better from a detection standpoint than what veterinarian can achieve through O&P or fecal flotation. And Michael Lane as part of his Reference Labs discussion will talk about that in some studies that support that. In the case of Renal, a completely different situation. If you go back to 2014, Mike Lane will tell you, they use creatinine was not perfect, but good enough. The problem with creatinine is kidney function was 75% permanently impaired by the time that test result exited the reference range, very breed, specific. So lots and lots of problems with it. This is an example of understanding at an insightful clinical level what the problem is -- was, bringing SDMA in case of Reference Labs and then later Catalyst SDMA as a tool set to the veterinarian, and really was able to detect kidney impairment, GFR impairment as early as 25% of kidney impairment. So huge, huge breakthrough from that standpoint. And then we didn't stop there. FGF-23 for flea lines. as a way of measuring phosphorus loading and appropriate therapeutic interventions. Cystatin B very, very important, impactful biomarker for acute kidney injury. So collectively, as a cluster of tests, these have really transformed their individual disease spaces. In the case of Renal, for example, veterinarians will tell you, specialists will tell you, it's transformed the way kidney disease is detected, staged and managed. So something that we're very proud of. We're not done. We think there are other disease franchises and other opportunities that are very significant. It's not forwarding. I'd try to back up. There we go. Thank you. Oncology. This is a disease category and franchise that we've been at for over 30 years, starting with pathology and histology, and sending images of potential tumors, to maybe a Board-certified radiologists that diagnose cancer. It's a business that's a very important category for the industry as a whole and for IDEXX in particular, we do 1,500,000 suspected cancer submissions, a year as a company, primarily more in the pathology, histopathology space. As it turns out, about 1/3 or so of those are validated as having cancer. The big problem is, for those of you who have had dogs or cats that have had cancer, you know this and veterinarians will tell you really across the board. By the time that patient comes in is clinically symptomatic, and they do the work up to determine whether it's cancer or maybe something else affecting the patient. It's very late in disease progression. It's Stage 3, it's stage 4. Sometimes, there's this things that they can do from an intervention standpoint to prolong the life of the pet. Very often, there's not. And then they take more palliative approach. So this notion of being able to detect cancer specifically, classify it earlier, is this huge unmet need. Let me try to size this from an overall patient population standpoint. And you're going to see various slides this morning, Tina and then Mike Lane. This is sort of the broad look at number of patients. We do dogs and cats. And there are two different categories. I'll get back or two different clinical use cases, and I'm going to get back to that in a minute. But 36 million on a global basis of patients who will benefit from cancer testing, aiding diagnosis and screening. And you can read the footnote later. It's a pretty conservative estimate given that cancer in dogs, for example, is a leading cause of death, leading cause of mortality by far, and we'll share with you some data that supports that. A couple of words about the different clinical use cases. It Aiding Diagnosis is, the patient comes into the practice, clearly, clinically symptomatic. But the veterinarian doesn't know whether it's cancer, what type of cancer, it may be or if it's cancer at all. It could be something else -- there's a lot of conditions that present with similar symptoms. So it's a very challenging, complex, expensive and long process, very often to get to a definitive diagnosis, and what you need to do. The diagnostic screen is completely different, uses clinical use case. In those cases, the patient comes into the practice, they may be well they may have a higher prevalence as a breed in the case of dogs to get cancer. But there's no way of really detecting it. They are not a good way. There's some products out there that give you some level of risk assessment that may suggest over time, there are things you should look for, but it's largely an unmet need from a clinical standpoint. These are the type of challenges that we, as a company, love. It requires lots of lots of scientific and medical capability, expertise, clinical insights, the ability to develop testing platforms that support it very, very compelling type of opportunity. So not surprisingly, I'm very pleased to share with you that our intention is to introduce an IDEXX Cancer Diagnostics panel available at the IDEXX Reference Lab starting in 2025, which will enable early detection at a price point that fits with the wellness panel. Let me unpack this and share with you why we think this is such a compelling opportunity. Our intention is to start with lymphoma, Canine Lymphoma in 2025 and within a fairly short period of 3 years, have a panel of 6 cancer markers that cover the majority of cancer cases in dogs. Now majority, more than 50%. So it will be -- for example, we'll start with lymphoma and the ability to classify B versus T, which is very important in terms of directing the next therapeutic action or the appropriate therapeutic action and then expand it from there. Well, whether it's osteosarcoma or hemangiosarcoma, still working through the sequence, of what that looks like. But this is a panel, again, from an economics and turnaround time, we'll be able to be included as part of a wellness screen for the majority of cancer cases. Something that we think pet owners, and you'll see some data this morning, veterinarians almost across the board. The data and the percentages in terms of what pet owners are looking for and veterinarians would like to be able to have in their tool set, their armamentarium is in the '90s. And we've been able to do this as a result of very significant technology advancements or breakthrough as a company, that we've been working on a very long time. It's a combination of biomarkers, testing platforms and the ability to drive performance and cost so that these cancers are detected with patients are clinically asymptomatic, they're coming into the practice in the front-end part of the disease process and progression when intervention can result in, I think, far more satisfying, far more efficacious outcomes. And here's the kicker. As a result of all the work, all the investment we've done in software and data and software applications, IDEXX software customers who use these diagnostics, will be able to, in a very focused way, understand pets, dogs, who at an earlier age, 4 years or older for specific breeds, it's about 20, 25 breeds, but a very high incidences of cancer, who should be screened, be able to identify them the awareness and education and they have them come in as part of early upfront wellness screen. It's very, very compelling, but we're not done. Let's talk about inVue Dx. Very pleased to share with you that inVue Dx, lumps and bumps supplying Needle Aspirate testing, will be available in 2025 as part of our cancer testing suite, which includes, which is part of the In-clinic solutions. I'll come back to some of the customer feedback. But we think this is also very significant. We know our customers value lumps and bumps. Those of you who have -- in my case, you have a labra-doodle, he has lumps and bumps all over the place and veterinarians always say, "Well, I'm not sure. It's not red, but it doesn't -- when I touch it, it doesn't exactly feel like fatty tissue. Maybe we should test this, but that's -- I don't know, he's so many probably won't do that." So it's a big problem. And those lumps and bumps to come, in some cases, cancers. So the ability to be able to test that within that patient window is very important. And we think this is part of the broader inVue Dx product strategy and story by the way. And Mike Erickson will speak to that as part of his section. This is a little bit of a different product than, let's say, hematology or SediVue, where you drive testing utilization by increasing the number of when you use CBC or in the case of SediVue, you're in sediment analysis. These are broader categories, ear cytology, blood morphology and now FNA lumps and bumps. In 2025, It represents a comprehensive menu, the cohort of possible patients who can benefit from that are even larger. So very excited by that, by the way, the feedback we've got on inVue Dx as it is with ear cytology and blood morphology has been outstanding. The field has been trained. They're off and taking orders in North America. Both Mike and George will talk about some of the initial feedback. It really hits the sweet spot. We believe it solves compelling high volume medical procedures, it automates it. It provides high accuracy, consistent results and that it's a very important product to the overall product portfolio. So let me now tie together the cancer story in a way that we've been thinking about this for quite some time now. And we think as a result of what I've described, that we will transform cancer detection, classification and care management in a multibillion-dollar sector or category opportunity. that we will be able to provide testing, very compelling, high-performance appropriately costed testing solutions for screenings for patients that will benefit from it. When a patient comes into the practice, there's lumps and bumps and fine needle aspirate testing that we'll be able to -- the veterinarian believes that, that lump or bump is suspicious, be able to assess within that patient window what the result is and building off of 1.5 million, pathology, histology, radiology tests that we do today. All brought together by a medical consulting team internal medicine, consulting team with oncology specialists that can support our customers. So in combination, integrated in a way that we believe will transform cancer care management, the single leading cause of mortality in dogs, single leading cost. Okay, let's continue and talk a little bit about our in-clinic innovation story. And so I provided an update on inVue Dx, you'll hear more about that in great depth this morning. But I do want to talk about the way we think about and approach innovation within our in-clinic portfolio. And sometimes, as I mentioned, it's menu extension so that products we've released 8, 9, 10 years ago have the exact same features and capability as products that we may have installed last week. It's something that our customers value. They see it as an investment in them and protecting their investment. And we follow first principles when it comes to Point of Care solutions. It should work from a performance standpoint as good or better than what you see at the reference labs. From a workflow standpoint, we prefer, we can -- if it's able to do it to really address the sample management challenges upfront. So it's a plug-and-go solution. It's not about moving work around the practice. It's about eliminating work. We designed for technology for life upfront. And you'll see this in the case of Catalyst One. I'll describe what that means. From both a medical standpoint as well as a menu standpoint. And then we make sure that from a connectivity standpoint, it's just not working as a suite, it works within the practice and the practice management system in terms of integration and connectedness with other applications. And so it's something that has been very compelling, and we think the customers on a worldwide basis have responded to. So let me update you in terms of our progress we've made in being able to grow our installed base and updating the potential opportunity. And you can see we've added here inVue Dx at 90,000 placement opportunities we shared with you at VMX in earlier part of this year that our opportunity to place 20,000 units, 5 years from a shipment is something that we have a lot of confidence in being able to achieve. But what you see here is a far larger global opportunity for all Point of Care. And you'll see how quickly in the progression of instrument placements we've had over the years, where they continue -- we continue to place more, we continue to place more suites in within competitive accounts. You could also notice from the chart that the U.S. is our most advanced region in the world, still has lots of opportunity. Still have lots and lots of opportunity. So we were excited by that, but the international space is even more. And that's not surprising. There's a lot of greenfield opportunity given the state the veterinary medicine and the advancement still to be made there. So placements, premium and some replacements provide a step function increase in opportunity for us. But it's not just about the quantity. It's not just about the quantity of premium replacements as important as they are. It's also about the economic value of the consumables stream. In other words, customers have to exercise these systems. They have to use them. It has to be appropriate for what they're trying to accomplish. -- from a medical services standpoint. So we track that, and we measure that we develop solutions really for clinically relevant high-volume procedures within the practice. And we look at really being able to grow that over time. If you go back look at 1 introduction in 2014 with the menu there, you track the menu enhancements and extensions, 10 slides, 10 parameters over a period of 12 years. That consumable stream, what we call economic value has doubled, has doubled. So that's a that's a 7-year, that's a 7-year profile, a 7-year snapshot of that consumables stream. And so we continue to expand the capability and features and relevance of [ cat 1. ] And keep in mind, even though we shorthanded as a chemistry analyzer, it really is electrolytes, chemistry and immunoassays. Nobody is able to do this in the -- nobody is able to do this anywhere except IDEXX. As you can see, more recently, we announced Pancreatic Lipase base for Catalyst, which is a breakthrough, a technical breakthrough on several fronts. Mike Erickson is going to speak to that and why we believe it's so compelling. And then SmartQC, it's an example of not only do we focus on menu innovation, but we also focus on workflow innovation and being able to calibrate the catalyst system, 15 minutes, plug and go and really be up and customers can have confidence it's accurate and something that we attach and they attach a lot of value, too. Customers will tell you as best-in-breed as important as best-in-breed solutions are to them, that equally important is the way it works together in clinic reference lab, the way it supports overall connectivity and supports workflow optimization, staff productivity, the ability to then connect increasingly, digitally with clients who demand that. And so that entire approach is what they value the most. It's what they -- I think at the end of the day, when they assess customer experience, and you'll see this throughout the morning that they attribute sort of the highest accolades to IDEXX. The other thing that I would say is we continue to work the administrative burden and productivity challenges within the practice. And Michael Schreck will talk about as part of the software piece, how we're thinking about that. In the past, it was more around integration and connectivity. Increasingly, using AI, you can do things like take a 130 page patient record using AI and summarize it into a paragraph or 2. So when a patient -- before a patient comes in, the veterinarian can familiarize herself with what she may want to check, the conversations she may want to have, what are some suspected things that may be a problem, being able to do automatic transcription. So veterinarian talking instead of having a veterinary tech, typing in everything he or she is saying, have it done automatically. And then it could be quickly reviewed. So this ability to really support the productivity of the practice and integrate it with a broader diagnostics ecosystem is something that we think is highly differentiated from an IDEXX standpoint. So let me now bring the innovation to piece together. The way we think about it, and you can see from this pictorial chart that the patient, the pet owner and veterinarian are at the center of everything we do. It starts and ends with them. The best-in-breed modalities, the connectivity and integration with those modalities, the way we organize the solution to support their workflow on their terms. They're at the center. That's what they value the most. And that's what we strive to be able to do and hold ourselves to a very high standard and measure ourselves against that. But pivoting a bit to talk about the commercial piece, innovation isn't the end, beginning and the end in and of itself. You have to be able to create awareness and education and sometimes belief change, within our customer base to adopt the innovation. And we've learned -- and George will go through the story in terms of how we think about that partnership model. It's not just an account manager. It's not just a veterinary diagnostic consultant visiting the practice and saying, "Hey, Doc, did you hear about this." It's really a team. It's a field service workforce team. The largest by far in the industry. All of them are former veterinary technicians or practice managers. They have instant street credibility when they talk to a practice. It's peer-to-peer conversations with the top-rated professional service veterinarian organization in the industry, in the entire animal health industry. It's an account manager, which we call veterinary diagnostic consultant, which is a subject matter expertise, which has earned the trust of the practices. So when they say Dr. Smith, we have the solution, we think you should consider it, because you said that you think that blood morphology -- you should be doing blood morphologies and 2/3 of the time that, that doctor is going to trust that message and trust the messenger. That's a very important part of how we think about it. As a result of that, we say customers are inspired to use more of our overall solutions. I came to IDEXX in 2012. And that overlap in the U.S. between customers using both in clinic and our reference lab modalities was in the low 40s. And I thought that was pretty good, but not good enough. And we continue to drive that. And if you take a look at the last year is 57%. 57% in the U.S. And that's not -- that's really a function of the fact that customers see the benefits of using our diagnostic testing suite. But we think that there's an opportunity outside of the U.S. and again, George will really speak to this and how we think about it. And these are two illustrative examples of expansion countries in the case of Germany and Spain, which we've been able to grow. We've been able to inspire -- if that comes down to we're having the right service level, having the right footprint of commercial facing resources in the field and local countries. But also really comes down to reach and frequency and the ability to visit these customers and have these conversations and create the awareness and education, that's so important. And so one of the reasons customers are inspired to use more of our stuff, is it all works better together. They grow faster. They support better clinical -- is it throughput, and you see their -- their clinical revenues are higher, IDEXX engaged practices versus non-IDEXX engage practices and diagnostics revenue. Really important category for driving medical services grow faster. Historically, we've outgrown the diagnostic sector by about 200 basis points. And there's a reason all of this works better together. We're able to integrate embedded protocols, improve throughput, eliminate administrative burdens on the practice. Find more. The diagnostics uncover more. We know that for, fecal antigen, really in parasitology, in the renal space, all the things we're talking about and then going forward. So it's this combination of innovation and commercial engagement. That's a multiplier on top of these attractive modality solutions. Let me now provide a quick -- staying within the commercial section, provide a quick update on the landscape itself in terms of the corporate practices. A lot of questions around what's happening in corporate consolidation? And these are some numbers we have pretty good visibility in terms of what's happening within North America. You see coming out of the pandemic, the amount of consolidation really dramatically decreased. And we estimate for this year will be around 300 practices or so that have consolidated. Then a couple of reasons, the cost of money is a lot higher. So a lot of these corporate consolidators, not necessarily strategic in a sense of big groups like buyers, but PE backed. And when money gets more expensive and valuations for practices are higher, that's more challenging. There's also, especially in like areas like the specialty practices, pretty high level of consolidation already about 70% ourself. So the corporate groups that we spent a lot of time myself included, talking to the CEOs and the C-suites of these corporate groups, they'll tell you they pivoted. What they're interested is in operating these consolidated groups, for growth. And that requires a different approach than a lot of them have taken. They're looking for harmonized information technology solutions, both PIMS and vertical SaaS. They want to be able to embed care protocols that work across a distributed network. They want to be able to have the right set of metrics that define what best practices are within cohorts, within their groups and implement them more broadly. They want deep partnership support in creating new diagnostic categories like wellness and preventive care and not just on the diagnostics fronts, but help implementing it. So everywhere they are, we are. We have very deep and I think very attractive relationships with these corporate groups. And by the way, there's a fair amount of corporate consolidation, depending upon the country outside of the U.S. For example, in the U.K., it's largely a majority consolidated, some of the Nordics countries and some of the other countries within the European Union are also growing pretty quickly. Let me tie a couple of things together, both from an innovation standpoint and commercial engagement is as a result of this focus, putting the customer at the center of everything we do. We hold ourselves to a very high standard. We do have a double-blinded study and ask customers, how are we doing? This is NPS, but we also do customer experience, we do event surveys, customers consistently tell us that they're extremely happy with their solutions. They're extremely happy with their partnership with IDEXX. That's not to say we don't have things to work on. This is a -- the customer experience is a major area of continued focus for us. And you're going to hear some of the exciting things that the reference that folks are doing and Mike Lane will talk about digitizing the customer experience and the whole sample management process. But what you see is these just aren't numbers. those gaps represent very real, very substantial differences in terms of the quality of the diagnostics, quality of the experience. Look, at the end of the day, customers want to focus on caring for patients. They recognize that with very high tech life sciences type of equipment. There's going to be an occasional problem, as reliable as our products and solutions are. But when they have that problem, they want to be able to talk to a person quickly. they want it to be able to be resolved. They want to know that we're in the trenches with them. And what this data consistently tells us is we do this in a very, very compelling way on behalf of our customers, really across the board from a science and accuracy standpoint, but also importantly, once they buy it, they'd use it for the next 10 or 15 years. So let me begin to tie it together, and dismount. As a result of these sector tailwinds that I described earlier, in innovation strategy that solves our customers' most challenging problems, both on the medical and business side, a commercial model with subject matter expertise with reach and frequency that gets to know our customers and their practices, in some ways, more insightful than they may know that. We believe that there's an enduring long-term growth opportunity in the sector. And you see it expressed as a high single digit there, but that we, as a result of our innovation and the approach that we take, we believe that we can disproportionately benefit and outgrow this sector opportunity. And really, we'll talk about the buildup for that as part of Brian's section and what the various components and assumptions behind support that. So in conclusion, we're at an incredibly exciting point in the company's history. Last December, I and the leadership team went to Nasdaq, we rang the opening bell, celebrating and I think recognizing 40 years of our journey starting just down the road from where we're staying at a hotel. Five employees on the waterfront, working waterfront of Portland and building over that 4-decade period, just at the industry-leading franchise that, I think is transformed detection, care management and really resulted in healthier, longer-lived dogs and cats and supporting other areas of the business. We believe as a result of our strategy and innovation, the way we approach our customer relationships, that we have a chance and a very strong opportunity of not just continuing to grow in a very highly compelling sector but outgrow. And benefit disproportionately from strong execution, from strong, really a very compelling value proposition to our customers. So more to come. Look forward to having some discussion when we're done with the formal part of the presentation. But I'd like to next introduce Dr. Tina Hunt, who heads up our Strategy, Sector Development and Global Operations team. Tina will speak through the opportunity within the sector, some of the tailwinds and drivers and of course, the -- some of our initiatives that support testing utilization. So with that...

Thank you, Jay. Good morning. The Pet Healh Care industry has seen an enormous amount of change over the past 5 years. The secular sector stays resilient and continues to adapt for growth. Here are some illustrative snapshots of both the tremendous growth and the challenges that this industry has been working through. Veterinary services and products have increased by over $10 billion in U.S. alone since 2018. 82 million U.S. households have pets with an increasing number adopting multiple pets. My family has 3. Ishika, our German Shepherd, who happily poses for pictures with me and 2 cats who absolutely refuse to. Our pets just like us need regular checkups and health care. To ensure a sustainable supply of talent, veterinary schools have been expanding class sizes and new schools have been forming. The number of graduating veterinarians has increased by over 30% in the last decade. Veterinary colleges saw the highest ever enrollment in U.S. last year. This is all encouraging because veterinary clinics continue to see staffing challenges, productivity challenges at both the veterinarian and technician level. Clinical visits have expanded significantly from the pre-pandemic level, a 12% increase during this 5-year period. With near-term staffing and economy challenges have pressured visit growth off of this expanded base. We're still seeing the effects of the huge step-up in pet ownership and demand during the pandemic and the resulting veterinarian burnout because of growing at such an unsustainable pace. To get to a more manageable balance and retain talent, clinics reduce operating hours, especially during weekends and evenings. We haven't seen those hours being reinstated yet. More recently, we have seen a slight moderation in demand because of the broader macro pressures on consumers. We think this will resolve itself over time because there is significant underserved demand. I will frame up several powerful sector trends that give us great confidence in the long-term and durable growth of our business. As Jay highlighted, there is massive multi-decade opportunity ahead of us to continue advancing pet health care, and we are executing strongly on multiple strategic enablers. As you heard from Jay and my colleagues will share this morning, our innovation road map has never been stronger. We continue to expand the breadth and depth of the clinician's tool-set. Our customers are increasingly relying on our software and technology solutions to optimize workflow, enhance productivity and communicate with pet parents. With new-to-world innovation comes the responsibility of developing rigorous scientific evidence and getting the buy-in of key opinion leaders. Executing on comprehensive global awareness and education plans to bring our customers along and accelerate adoption. And all of this underpinned by the deep customer partnerships and engagement of our commercial teams globally. After a 12% increase between 2020 and '22, last year, the net U.S. pet population increased at the historic pre-pandemic level of 1%. These pets will continue to fuel long-term growth with health care needs throughout their lifetimes as illustrated in this graph. The bar show the total clinical visits by age groups. The green line is the diagnostic utilization during those clinical visits, the clinical visits that include diagnostics. As pets age, diagnostic utilization increases. The huge step-up in pet population during the pandemic resulted in a flurry of clinical visits but mostly for puppies and kittens at a much lower diagnostic intensity. This large cohort of pets is moving from left to right of this graph as they continue to get older. While this will be an ongoing phenomena, what you see here is a snapshot in time for illustrative purposes. By 2028, we expect that there will be a 30% increase in senior pet visits and a 15% increase in geriatric pets compared to 2023. This increased diagnostic utilization as pets age amplified by the bolus of pandemic pets getting older points to a significant tailwind for our business. We shared this data for the first time last year, and it was very encouraging to see the trends hold when we updated it again this year. As a reminder, this is data from over 2 million medicalized pets in U.S. Since 2010, the median longevity for dogs has increased by 12% or 1.4 years. For cats, it's even higher than last year at 15% or 1.9 year increase in lifespan. While it's difficult to point to the exact causal reasons for these increases, the stronger pet human bond that results -- that has leveraged better quality of care for pets as well as the innovation in the industry, that improved access to better diagnostics, diet and pharmaceuticals all likely played a significant role here. These increased lifespans translate to a meaningful driver in growth of diagnostic spend per patient, a trend that we expect will continue as more of our pets enjoy longer lives than ever before. The data here shows annual diagnostic revenue per patient, again, segmented by pet life stages. I'm going to highlight 2 key points here. First, just like humans, as pets age, they consume more medical care with diagnostic spending increasing over their lifetimes. The impact of pets living longer from the previous slide is greatest on the right side of this chart with the highest medical spend. The second point demonstrates what is possible, as we have previously shared, there is huge variability in diagnostic utilization at the practice level. The light blue bars show the annual average diagnostic revenue from 8,300 U.S. practices. The dark blue bars are the top clinics. They do more diagnostics across all age cohorts, almost double that of the average practice. They are not waiting for pets to get older. We continue to engage with our customers on the indispensable value of diagnostics in assessing the health status of a pet to bring them along on the belief journey that these top clinics have been on and increase diagnostic utilization for all age cohorts. When it comes to pet health care spending, costs vary widely by breed. Normalized for patient lifespan, certain breeds incur higher annual expenses than others. A trend that we are seeing is a growing preference for breeds that require more medical attention. This evolving pet demographic is highly supportive of our business. Let's talk through this one. The chart on the left shows the demographic mix of the top canine breeds that make up 84% of newly medicalized puppies. Breeds that incur higher annual expenses -- higher medical annual expenses like the French Bulldog, Golden Retriever, Labradoodle, sorry for all the Labradoodle owners here, they are increasing in popularity. Puppies from these high-spend breeds grew to 19% of the total mix last year. On the other hand, low-spend breeds like terriers and Chihuahuas are becoming an increasingly smaller mix of the Puppy population. So what are the implications of these breed mix changes? As we look forward, we see this as an additional tailwind for growth. We think that it can add another 3% to the annual veterinary care spend over the next 5 years. Now let's look at the pet parent demographics. Younger generations, Millennials and Gen-Z, are driving majority of the pet adoptions and make up almost half of the dog parents today. Our data consistently shows that these younger generations have deeper emotional connections and are more focused on the health of their pet. As you can see on the far right, they place even greater importance to the annual wellness diagnostics than the generations before, a very positive trend. A vast majority of pet parents trust and accept the veterinarian's recommendations. But veterinarians may decide whether or not to offer diagnostics based on their perception of the pet parent's ability to pay. If they offer the choice based on consistent medical protocols, most pet parents will be willing to spend to get optimum care for their pets. IDEXX [ scan ] health care by preparing and educating pet parents on the value of diagnostics, both before and after the visit. This also lines up with how the younger digitally native generations want to interact with their pet's health care provider. With a connected diagnostic software and data ecosystem, we can create very personalized experiences for the pet parent based on their pets' needs, for example, the risk of cancer based on their dog's breed and age. Let's talk about cancer, which is a huge cause of suffering in pets, both dogs and cats. It is by far the predominant reason for canine mortality. One in 4 dogs will die of cancer. We had a scare last year with our German Shepherd. She had this huge lump that kept growing on her neck. Thankfully, it was benign and safely removed, but not all our pets have been as lucky. There are probably several of us here who have gone through the traumatic experience of losing a pet to cancer. It is devastating both for the pet and the entire pet's family. We estimate that there are 13.5 million dogs living with cancer globally with a little over 3 million newly diagnosed last year. And we think that this number may be underestimated. IDEXX provides diagnostic results for 1.5 million suspected cancer cases, as Jay highlighted earlier, but there is a large opportunity to help uncover disease earlier to support better patient outcomes. Despite its high prevalence because of lack of early diagnostic tools, cancer is typically detected when the pet shows up in the clinic sick or symptomatic. Pets have shorter lifespans so the disease progression is much faster in them as compared to humans. In most cases, by the time the cancer is diagnosed, it is in such advanced stages that it is too late for intervention. Palliative care or, unfortunately, euthanasia are the primary options. Veterinarians want to detect cancer earlier when interventions can have a meaningful impact. Nine out of 10 veterinarians will include cancer screening in their preventive care protocols, and most believe that it will have a positive impact on their practices. Cancer is a very emotional disease for the hospital staff also. When we talk to pet parents, most of them have had some experience with cancer, either themselves, someone they know or a pet. 61% are worried about the risk of cancer in their dogs. 3/4 are interested in adding cancer screening for their pet. And most of them already believe that early detection will improve outcomes. In U.S., clinics get an estimated 750,000 inquiries every year for cancer screening, so there is very high awareness and desire to take action in pet parents. Our data from 6 million dogs in U.S. shows that certain breeds like Boxers, Rottweiler and Great Danes have a much higher risk of cancer, almost 2 to 3x higher than the average population. And they can get cancer at a much earlier age with risk increasing starting the average age of 4. The 7 breeds with the highest cancer incidents that you see highlighted in the top blue there make up 6.5 million medicalized dogs in the U.S. That's just the 7 breeds, and there are a lot more that have higher cancer incidence rates. The risk of cancer increases in almost all breeds as they age, especially over 7 years old. We believe early, accurate and specific cancer detection at the right price point can transform the standard of care for cancer. It will also probably facilitate the development of earlier-stage therapies by other industry players. We intend to include a very affordable cancer screening as part of our broader preventive care panel for at risk dogs. This can also have a multiplier impact on the broader diagnostic utilization. For example, a pet parent interested in cancer screening will likely opt for the full preventive care panel if they don't do that today, resulting in an uplift to chemistry, hematology and urinalysis, which will then lead to uncovering hidden health issues and diseases in seemingly healthy pets much earlier, improving patient outcomes. Detecting cancer and other diseases earlier will also drive broader diagnostics to treat, confirm and closely monitor the pet's health status throughout their life. But it is more than just offering the test. We have to educate and bring our customers along to increase adoption and utilization. As I shared last year, we have a tried and true approach to sector development, especially when we bring new testing categories to market. We developed robust evidence, extensive education, peer-reviewed publications and key opinion leader support. For cancer, we also have to win the trust and advocacy of oncology and internal medicine specialists. They are the first ones that general practitioners will call to ask about a test. To keep advancing the standard of care for oncology, we're also designing a very fast iterative loop to incorporate new data and medical insights as they become available. Cancer is a complex and complicated disease. We are taking a very holistic end-to-end approach to support our customers and ensure that they are fully bought in, prepared and ready. We're well positioned to do that with our boarded oncologists, our extensive network of medical consulting specialists our highly regarded professional services veterinarians, and the clinical workflow and decision support tools, including communications with pet parents. We estimate that the addressable opportunity for the cancer diagnostic category is $2.5 billion. Most of this opportunity is incremental addressing the needs that are not being met today. Similar to vector-borne disease, renal and parasitology diagnostic franchises, where IDEXX has led from the front and developed the market, we intend to shape the oncology category into another major growth vector for IDEXX. To wrap up, we stay very bullish about the tremendous long-term growth potential of our business with several favorable tailwinds. We are laser-focused on delivering on a very compelling innovation road map and developing the sector. Our purpose built ecosystem of diagnostics, software and data offers rich opportunities for us to keep advancing pet care and deliver new and powerful solutions. And all of this while keeping the mission and success of our customers at the core of everything we do. Next, you will hear from my colleague, Dr. Mike Erickson about how IDEXX is transforming the point of care diagnostics. But, first, we will take a short break. Thank you. [Break]

Okay. Welcome back, everybody, from break, and good morning to all of you in the room and all of you on the live cast. I'm Mike Erickson, and I have responsibility for point-of-care diagnostics, diagnostic imaging and our telemedicine business. And it's a real pleasure to be back with all of you again here at our Investor Day to talk about how we're transforming diagnostics at the point of care. Now you've heard me say this before. The stakes are particularly high when it comes to testing at the point of care. There's a narrow window during which the pet is in the hospital and the clinical team needs answers that they trust so that they can form a treatment plan or take a clinical action, maybe decide whether to bring that pet into surgery. And our IDEXX point-of-care diagnostics bring our reference lab testing standards into that practice environment, packaged into small footprint, high technology analyzer platforms. We iterate over and over to ensure the most elegant sample workflow because practice teams, they just don't have the time for messy hands-on sample preparation. Our load and go technology enables the sample to go from the pet to the platform with accurate results back all within 10 minutes or less. Take our SediVue platform for example. 4 to 5 drops of urine go into SediVue and a complete urine sediment analysis comes back in 3 minutes. And we never rest when it comes to adding new capabilities to our existing platforms. This is our technology-for-life promise to our customers. And then all of this, of course, is tied together in our end-to-end cloud software ecosystem. We understand the specific requirements for success at the point of care. It's a high bar that we've been setting for decades, and we are executing to these high standards, providing trusted results at the point of care more than 400,000 times every day on behalf of over 0.5 million practice team members and over 100 million pets every year. This is what we do. We're executing to ensure our customers have the point-of-care diagnostics experience that they need to be successful. So let me talk a little bit more about our execution track record. Last year was another record year in terms of premium analyzer placements. We placed over 19,000 premium analyzers, a fivefold increase over just a decade ago. And that record velocity of placements continued again into the first half of this year, setting new high watermarks in both Q1 and Q2 including records in both urinalysis and hematology. And on the hematology front, we continue to be delighted by the positive customer response to our ProCyte One analyzer. We've now placed more than 17,000 ProCyte Ones around the world, and we're on track to exceed 20,000 by the end of this year. That's 1 full year ahead of our plan for ProCyte One and with continued high attach rates to Catalyst exceeding 95%. So when you take all of this together, these high-quality placements, expanding menu and utilization and world-class levels of customer loyalty, all of this together supports growth in our high-value durable VetLab annuity stream. And so as a result, we've stayed long-term double-digit growth in our VetLab consumable recurring revenue across are now over 135,000 premium analyzers around the world. And we see plenty of headroom to continue expanding this installed base and propelling this kind of growth. As Jay shared a little bit earlier this morning, we've updated our perspective on the global premium analyzer placement opportunity, recognizing the expanded opportunity with both urinalysis and now also cytology with inVue Dx. This represents a 3.5-fold total opportunity over where we stand today. Now as high as we've set the bar at the point of care, we also just keep raising it higher. We are innovating at an unprecedented pace on behalf of our customers, transforming diagnostics at the point of care. Our advancements in point of care span all 3 of our innovation pillars here at IDEXX: enhanced software at the point of care that streamlines workflow and gives time -- valuable time back to the practice team, new menu on our existing platforms that expands their clinical utility, and brand new to the world novel platforms like inVue Dx that expand our VetLab suite and bring new categories of testing into the clinic. On the software front, I'm very pleased to share that we're now rolling out our new IDEXX VetLab station software experience over the air to our customers and to rave reviews. This new VetLab software experience is -- provides twice as fast workflows across the entire VetLab suite and of course, all of the integration benefits that customers have come to appreciate. And just as a reminder, the IDEXX -- the VetLab Station is the one-stop control panel and workflow engine for the entire VetLab suite. This is technology for life applied to our software. Now we also apply this same philosophy when it comes to adding new menu to our existing platforms. Take our Catalyst platform for example, which, as Jay said, does chemistry, immunoassay and electrolyte testing, 9 new tests in the preceding 12 years, more than $280 million of recurring revenue coming from these new IDEXX-developed tests against the backdrop of an ever-expanding Catalyst installed base now at over 70,000 strong around the world. And when we develop new tests like this, all of our Catalysts around the world are automatically upgraded via our SmartService Internet of Things backbone that connects all of our instruments. And all of our Catalyst customers come into their practices the next morning having even more capable and more valuable Catalysts sitting on their benchtops. And when we roll out tests that have broad clinical utility across this very large installed base, we see a rapid uptake in the installed base and a reliable boost to utilization growth. So let me just share 3 examples of what I'm talking about: Lyte 4 CLIPs for electrolyte testing; total T4, thyroid function testing; and Catalyst SDMA for earlier and more accurate kidney function testing. In each of these cases, more than half of the Catalyst installed base adopted these new tests into their practice protocols within the first year of the test launching with ongoing growth in subsequent years. And our next major new test on the Catalyst is Catalyst Pancreatic Lipase. Now this is one of our most widely requested new tests for the Catalyst. It addresses a major area of unmet need at the point of care. Pancreatitis is unfortunately a common disease in both dogs and cats. It's treatable if it's caught early, but if not, it can be fatal to the pet. And the challenge is diagnosing pancreatitis is very difficult because the symptoms are common and very nondescript, symptoms like vomiting and weight loss, general lethargy, what's referred to by veterinarians is ain't doing right, or ADR, like this St. Bernard that you see up there on the screen. And today, there's just a lack of reliable and specific and quantitative tools to diagnose pancreatitis in the clinic. But now with Catalyst Pancreatic Lipase, veterinarians get quantitative results in under 10 minutes, enabling them to confidently diagnose pancreatitis. And when they find it, they can immediately begin treatment, which saves time and improves outcomes. Now I can tell you that it was an enormous technical feat to create a single point-of-care test that's multi-species, dog and cat, with accuracy that matches what we do in our reference labs. But the benefit is that veterinarians need only stock this one test, and then they always have it on hand, whether a dog or a cat walks into their practice. So this new test, it makes our Catalysts even more valuable for our existing customers, as I mentioned, and also for new prospective customers. And I've shared before that menu expansion like this on the Catalyst has contributed to a more than doubling of our Catalyst platform economic value over the years since we launched Catalyst One in 2014. This is the power of technology for life applied to versatile, extensible platforms like the Catalyst. And this brings me to inVue Dx. This is our game-changing cellular analyzer and the newest instrument in our VetLab suite. And like Catalyst, inVue Dx is extensible with a long road map of cytology applications and runway for growth. And inVue Dx, it illustrates what I said last year at our Investor Day on the same stage. When it comes to new platforms, we just are not interested in doing things that are incremental. We bring forward new platforms when we're confident that we can provide foundational steps forward in point-of-care diagnostic capabilities. And inVue Dx does that. It transforms cytology in the clinic with its revolutionary slide-free, load and go workflow and its deeper cytology insights. Now our development and manufacturing programs are all on track to ship in Q4. We are following our very well-established process for getting every detail worked out on the instrument before we ship. We're in trials now with customers, and we monitor all the metrics, so the quality metrics and the utilization metrics are all exceptional. And really, in general, the feedback that we've consistently heard from customers has been exceptional. We did early survey work, both looking at awareness but also intent to purchase even before a formalized sales effort, and we saw very encouraging results in North America and internationally. All of this data is telling us we have a very solid product market fit here. And as Jay mentioned earlier, we are now in the field, taking orders in North America. Now let's just pause and remind ourselves the current state for cytology in the practice. So just about every practice around the world does cytology in the clinic. And they do it today predominantly with a microscope, sometimes with a microscope slide scanner. inVue Dx addresses the critical pain points that are experienced every day with cytology in the clinic. Making slides, using the microscope, these are hands-on time-consuming and technique sensitive and of course, not in any way integrated with the practice management software. And all this variability that I'm talking about, it impacts the results. It makes it difficult to track results across visits. inVue Dx turns all of this on its head. And where -- when we see other new products in our industry come into the practice, very often, they change the workflow in the practice, sometimes actually add more work to the practice team. inVue Dx removes the work of making slides, giving that time back to the practice and delivering deeper cytology insights than what's possible today. And it does this because it sees cells in their natural state. It applies our proprietary precision staining multi-wavelength advanced optics and deep learning AI to uncover actionable insights in around 10 minutes, things like cell counting and cell typing and 3D shape characterization and deep elucidation of the features inside the cell, which help uncover abnormalities and lead to an appropriate diagnosis. And then because all of this is quantified, it lends itself to trending over time. Now we're applying this breakthrough technology to very large and well-established cytology testing categories that have a real need for point-of-care enablement starting with ear cytology and blood morphology. Now when it comes to ears, just about every visit has an ear exam. And when a pet comes in with itchy, gunky, oftentimes painful ears, it's important for the doctor to get to the root cause issues, so they can apply the appropriate treatment and bring some relief to the pet and some relief to that pet owner. And today, ear cytologies like this are done in mass, at volume around the world by hand with microscopes more than 19 million times every year. inVue Dx automates all of that existing testing volume, and it delivers an improved diagnostic quality. And because inVue Dx is repeatable and quantitative, it enables the doctor to objectively measure a change, an improvement in the ears to see when the pet comes back for a recheck, is that treatment actually working. And that's regardless of which technician in the practice runs that cytology in inVue Dx. Now if we turn to blood morphology. Just about every veterinarian is trained on the clinical importance of blood morphology for every sick pet and for any well pet that has an abnormal complete blood count or CBC. And we know that the CBC is coming off of our ProCyte analyzers. Two out of 3 of those uncover abnormalities that clinically call for doing blood morphology. However, outside of the specialty hospital environment, in most general practices, blood morphology just -- it doesn't get done. And that's because it's just so incredibly challenging to do blood morphology by hand with slides and a technique called the blood smear. inVue Dx eliminates that challenge in a category where clinical beliefs are already high. And the morphology assessment that comes from inVue Dx comes together with the CBC results from our ProCyte to provide our industry's first and only comprehensive hematology assessment at the point of care with the unified results on the VetLab Station and in VetConnect PLUS. Now because of inVue Dx' extensibility to platform -- as a platform, we also took the step to communicate that the next menu addition will be lumps and bumps fine needle aspirates or FNA. And as Jay said, we'll be adding this to the menu next year, all as part of our comprehensive cancer diagnostics offering from IDEXX. Now today, at the point of care, only around 10% or less of the lumps and bumps that come into the practice get interrogated. And only a fraction of those gets sent on for a pathologist to look at. inVue Dx will provide actionable insights on those lumps and bumps in the clinic backed up by our IDEXX pathology team. And all of this recognizes that earlier identification of a cancerous bump is crucial to expanding treatment options and improving and extending quality of life for pets. So all these benefits that I'm talking about for inVue Dx, all these benefits, they're only possible because of the convergence of IDEXX capabilities across the spectrum of technology, expertise and purpose-built instrument design and manufacturing. We're the only company that can bring together the largest global network of board-certified veterinary pathologists, training deep learning AI on more than 10 million samples, harnessing our preexisting connected software ecosystem and on instrument platforms that are specifically designed, developed and manufactured by IDEXX for veterinary practices and for pets. We've built these capabilities over decades of investment and experience, and we know that this is not easy to do. But this is what it takes to meet and keep raising the bar at the point of care and diagnostics. Now these same capabilities and commitment to innovation that I'm talking about are also what fuel our rapid assay franchise. And so I wanted to wrap up by sharing an update on our SNAP line of rapid assay solutions. Our SNAP platform is a remarkable innovation story, more than 3 decades in the making. Going back to our canine heartworm SNAP that we launched in 1992 with many advancements on top of that, multiplexing, feline-specific menu extensions, SNAP Pro for totally hands-free workflow and connectivity and results on VetConnect PLUS. And over those decades, more than 730 million SNAPs have been run, benefiting countless millions of pets. And there's just no question that SNAP is the trusted standard when it comes to rapid testing in the more than $1 billion vector-borne disease screening category. Now Jay showed some charts of the percent of visits that include full blood work. And it turns out that SNAP in the U.S. has played an outsized role in establishing the behavior around preventive care blood work screening. Annual screening with SNAP for heartworm and Lyme in addition to other tick-borne diseases provided the starting point which then broadened over time to include full blood work, chemistry, hematology, urinalysis and so on. However, this didn't translate to certain parts of the world, in particular, Southern Europe, where Lyme is just not a concern. And so earlier this year, we expanded our SNAP offering with the all-new SNAP Leish 4Dx test, a comprehensive screening test for multiple vector-borne diseases where we replaced the Lyme with a test for canine Leishmaniosis. Now Leishmania is a devastating zoonotic disease, and it's transmitted to dogs by sandflies in certain parts of the world, Southern Europe, as I mentioned, also Asia, South and Central America. And any dog that's either living in or traveling through these popular tourist destinations really needs to be tested. This disease is fatal if it's not managed correctly. And it turns out that dogs are the reservoir for this. And so accurate diagnosis and appropriate treatment is a top human health public concern. So the protocols to screen the dogs at the point of care and any positives should go to a reference lab for confirmation testing prior to treatment. Our new IDEXX SNAP Leish 4Dx test provides doctors with the first end-to-end solution in this category, accurate point-of-care screening for Leishmania and 3 other vector-borne diseases with a single sample, full compatibility with the IDEXX SNAP Pro for connectivity and workflow, and a streamlined confirmation process with the IDEXX Reference Labs and what we call IDEXX Anywhere, which is included in with the price of the SNAP. Now just like we saw with Lyme and heartworm screening and SNAPs in the U.S., we expect that annual screening for Leishmania over time will be a starting point for a broadened protocol of preventive care blood work in these Leishmania-endemic regions. And so we're using the playbook that we know well to partner with doctors and practices in these regions on education and protocol adoption. And so in closing, I want to thank our entire cross IDEXX team that supports our point-of-care diagnostics businesses. This team is steadfast in their commitment to transforming access to high standards of point-of-care diagnostics all around the world, and we're executing on this mission, generating value for our customers and our shareholders with a clear view on the path ahead for continued growth, both with our existing platforms and our new ones. And so with that, I want to thank you. And now I want to invite my colleague, Mike Lane, to the stage. Mike is the Executive Vice President and General Manager for our IDEXX Reference Laboratories and Information Technology. Mike, over to you.

Thank you, Mike. Good morning. It is a pleasure to be here with all of you this morning to share the tremendous momentum and opportunities we have in front of us, as we execute the pillars of our strategy to drive laboratory excellence, innovation, growth and profitability. Take a moment and look at this picture. This is a picture from our Kornwestheim laboratory, largest laboratory in our network serving Germany and many parts of Europe. And you can see just how highly innovative and technologically advanced our business is. This picture also symbolizes our enduring commitment to supporting veterinary practices and elevating patient care because we went live with this largest laboratory in the middle of the pandemic. Let's start with the journey to setting the standard in innovation in patient care. It started with our first laboratory in Japan over 30 years ago to our most recent laboratory we opened in Perth, Australia last year, over 80 laboratories that form a global network, core laboratories, like Kornwestheim, you just saw, that deliver the full breadth and depth of our diagnostic menu, regional laboratories that operate through the night as an extension of the veterinary practice to deliver results by 8 a.m. for sick patients the next morning; day laboratories that provide not only the most comprehensive results but help us enable timely results throughout the day. Now this is not only a laboratory network and technology business. This is a logistics business, 7 million courier stops, reaching 65,000 customers a year. It's also an information technology business, bringing together this global network and sophisticated regional hub-and-spoke networks, moving samples and information and images, including images to approximately 750 board-certified specialists and medical specialists around the world, often helping veterinarians with their most difficult cases. This is also a scientific biomarker business with a very long track record of developing novel menu that, over years, the cumulative effect are integrated disease franchises, end-to-end solutions with infectious disease, parasitology, renal health and now oncology. This business is propelled by 5 strategic pillars that are integrated, building, starting with our differentiated offering, tests like IDEXX Cancer Dx as a result of breakthrough multi-omics platform, continuing to build on our highly advanced customer experience, digitizing workflow, making it easier for customers to do business with IDEXX end to end. Laboratory excellence, highly talented teams that drive operational excellence in our laboratories with high-throughput technology, that not only helps provide differentiation for our customers but productivity and quality in our laboratories. And this network is all aligned with the commercial footprint needed to support our customers with education and belief change, elevating standards of care, all supported by highly engaged IDEXXers around the world in an integrated software solution, VetConnect PLUS, DecisionIQ, Vello, pet owner engagement software, embedded in PIMS. VetConnect PLUS is one of a kind, unifying and integrating point-of-care results with reference laboratory results, putting those results in context with history and trending and from a reference lab perspective, also a tremendous workflow tool we're increasingly digitizing end to end the ability to search our broad menu for the most relevant tests and panels given that patient condition; receiving those results but also sharing those results, sharing those results with images for confidence for the veterinarian in the diagnosis and also in the conversation with a pet parent; and easily adding on additional diagnostics that may be recommended next step consideration through DecisionIQ. We already have the sample at the lab. You can simply add on additional diagnostics. VetConnect PLUS is foundational to how we provide exceptional service. And this is what I mean by exceptional service. This is the double-blinded Net Promoter survey that Jay referenced. This is the reference laboratory view. You can see the wide margin and that we lead in advocacy. This isn't just a number. There's a lot behind this number. Why is this? Well, it starts with a mindset that every IDEXX Reference Lab employee, when they see a sample, they see a patient and the patient behind the sample as one of their own. And we're an extension of the veterinary practice, and we care for this patient every step of the way, from sample pickup to on-time delivery and all the steps in between. And when there's a customer question, it's the ability to answer the phone in 35 seconds. It's this board-certified network and medical specialists that are there for the most difficult cases. And yes, it's our differentiated menu, the variety and availability of this deep diagnostic menu that we've built over decades in disciplines like chemistry and hematology, urinalysis, parasitology, microbiology, molecular diagnostics. These all come together, the cumulative effect into end-to-end disease diagnostic solutions. I'm going to talk about 3 today: renal health, parasitology and oncology. Renal health, let's start there, is a huge global opportunity, $4 billion, less than 20% served, highly relevant for both well and non-well patients. We know for well patients, about half of geriatric cats and dogs will develop some kidney impairment, and early detection can really help slow the progression. And we know for non-well pets, about 1/3 of kidney cases are a result of kidney injury. And this is why we've included IDEXX Cystatin B at no additional charge as part of the sick patient diagnostic panels. Joining IDEXX SDMA at the point of care in the reference lab, FGF-23 at the lab, SediVue at the point of care to form a complete renal diagnostic solution, supported by our integrated IDEXX software, DecisionIQ. IDEXX Cystatin B is first to the veterinary industry and supports all the growth drivers that IDEXX SDMA does, earning new customers, customer loyalty, supporting adoption and utilization of new care protocols, supporting price realization. And it's now available in North America, the U.K., Australia soon and across Europe and Japan. The International Renal Interest Society, leading key opinion leaders and experts in kidney health, accurately predicted last year when we introduced this, that Cystatin B was going to reshape kidney diagnostics. It already is. We've already tested 800,000 patients across about 15,000 customers in the countries I mentioned, 1 in 5 dogs, 1 in 7 cats with an abnormal result, allowing the veterinarian to uncover and explore and uncover and discover kidney injury. These are common cases that have therapeutic options, but they need to be discovered. Thanks to IDEXX Cystatin B, kidney injury can no longer hide. Let's turn to parasitology. Jay talked about the global parasitology opportunity. This is specifically North America wellness, 90 million wellness visits coming in. 65 million, no fecal testing is happening today. Yet we know these nasty parasites are in our communities. They're in our dog parks. They're at the kennel. They're in the day cares. This study, the dog park study, 85% of dog parks tested positive, 1 in 5 dogs. This is a global opportunity. We have a similar study, pan-European, very similar results. These nasty parasites are present. Yet 65 million tests or opportunities for testing to discover these and treat for these is not happening. There's an additional 15 million tests that are happening at the point of care. Problem is they're happening with some outdated methods that rely on the presence of eggs and seeing eggs through a microscope. And whether that's a manual microscope or that's an automated microscope on an instrument base. If you're looking through eggs, whether manual or automated, you're still looking through eggs, and you're going to miss infections. IDEXX Fecal Antigen redefines fecal antigen testing because it doesn't rely on the presence of eggs. As Jay mentioned, it's looking for the protein. And based on technology for life in the reference laboratory from Giardia, whipworm, hookworm, roundworm, flea tapeworm, most recently, Cystoisospora, we've reached a level of completeness with the fecal antigen panel that it alone discovers about 2x the infections as the traditional fecal O&P. Now this data is at our Reference Laboratory where we use some more advanced methods. If this were compared to the in-clinic methods used today, this would be even higher. So just like kidney injury can no longer hide with Cystatin B, these nasty parasites can no longer hide with IDEXX Fecal Antigen. Let's turn now to the cancer opportunity. And here, I'm speaking specifically about IDEXX Cancer Dx, the blood test that we're going to introduce next year. Jay and Tina talked about -- and Mike, the broader opportunity with inVue and our entire IDEXX ecosystem. This is a specific opportunity to IDEXX Cancer Dx. And we estimate there are 12 -- 20 million, excuse me, 20 million dogs that are at risk based on breed and age that can benefit from this test both as a diagnostic screen as well as a diagnostic aid. Now cancer is complicated. It's not one disease. It's many diseases and a collection of health conditions and difficult to diagnose. IDEXX Cancer Dx will bring case clarity in aiding in diagnosis. And it will transform as part of a diagnostic screen preventive care. So building on our expertise, we're already testing 1.5 million patients, supporting veterinarians with our board-certified specialists in areas such as anatomic pathology, clinical pathology, radiology, imaging. Building on this expertise, we'll be introducing IDEXX Cancer Dx. The problem is what you see on the right in blue, it's all late stage. It's really important testing and we're supporting that today, but it's all late stage. So what's needed is a multi-cancer panel that's sensitive and specific, and by cancer type, that is affordably included in a preventive care panel. It fits the workflow. In fact, it's the same sample, the same sample that's coming in for the preventive care screen. You can simply add it on, no additional blood needed. So as Jay announced, we'll be introducing IDEXX Cancer Dx next year, starting with lymphoma and then, with our technology for life approach, expand it to include the majority of canine cancers. Importantly, it will include B versus T cell classification. This is very important for staging and classification, prognosis and guidelines for -- and guidance in managing this. Part of our IDEXX software ecosystem and, as I mentioned, from a workflow perspective, just fits into the current preventive care workflow. Tina shared pet owners are looking for this. Veterinarians want to include it, and I think in part informed by what has happened in the human health condition with cancer. And these are 4 categories in human health: breast, melanoma, colon lymphoma. And what you see on the left bar is if these are found early. And on the right, this is 5-year survival. Dramatic difference and tremendous evidence that discovering these diseases early has a huge impact. I've had 4 dogs in my family, 2 have died from cancer. Far too many dogs are dying from cancer. And thanks to IDEXX Cancer Dx, these major canine cancers will no longer be able to hide until this late stage. So the cumulative result of breakthrough technology in menu like Cystatin B, fecal antigen, IDEXX cancer Dx is -- we help our customers grow by expanding -- them expanding their care protocols, elevating standards of care, they grow faster, and we grow. And when we grow, we have high profit drop-through on incremental growth. And we're able to reinvest that. We're able to realize steady gross margin improvement, like you see, and we're able to reinvest in the things that we've talked about today, additional breakthrough biomarkers, additional breakthrough workflow improvements through digitization for our customers, taking work out of workflow, additional lab technology that, by design, brings differentiation and speed to result for our customers in productivity, in service quality, in our laboratories, advancements in network and commercial footprint, information technology investments, AI and, very importantly, expert talent. In summary, it's been a pleasure to share the tremendous opportunities we've got in front of us and the momentum that we have. We're transforming care with these breakthroughs. And many of these are not only first to the veterinary industry, they're first to world. And they give us high confidence in realizing the TAM, the $45 billion TAM, that Jay shared. But what we do is not easy, the intersection of bringing together medicine and science with laboratory technology and customer experience, information technology and talent. But we've got incredibly dedicated teams. And I'd like to close by thanking those teams that wake up every day and work around the clock and around the world as an extension of the veterinary practice to provide exceptional service to our customers. Thank you. Next, I'd like to introduce Michael Schreck. Michael is Executive Vice President of IDEXX software, corporate accounts and customer experience. Michael is going to provide an update on IDEXX software and the tremendous opportunities that it brings for our customers. Michael?

Thank you, Mike. Are you ready to have a little fun with software? You guys feeling it? My name is Michael Schreck. I feel like I'm the anchor leg of the Mike Olympics. I don't know if you noticed. I hope to bring it home, hope to bring it home. I'm going to highlight some of the advancements we've had in software over the last few years. And one of the things -- on a personal note, I joined IDEXX 4 years ago during the height of COVID. And one of the things that I believed strongly was that IDEXX was in a unique position to move the beliefs on modern software as much as it was able to move the beliefs in diagnostics and that we could take an industry that had been slow to adopt modern software as much as we can move the beliefs on diagnostics. And I was pleasantly surprised when I got here that not only were we committed to doing that but we were a workflow company. And you got that sense today. I mean one of the great things I love about inVue Dx that Mike shared with us is we're workflow -- we take work out of workflow. Heck, I mean, not only are we good at workflow, we just take it completely out. And obviously, Mike Lane just shared all of the logistics and the work that we do there. And one of the things I've learned in 20 years of being in software, coming from outside of the industry is, if you combine modern platforms like cloud and match it with great workflow, you'll create powerful outcomes for your customers. And what I'm going to share today is how we drive growth for our customers on modern cloud with a vertical SaaS that's purpose-built for this industry. It's never happened before. And you need to have both of those elements to do so. So I'm excited to share some data that we've never shared before that supports that. The value of software and the value of data to help customers grow has never been more important than it is today. And consequently, I think as Jay shared, our commitment to support the innovation in software and data has never been stronger and never been higher. And I hope you'll walk away with a belief and a sense for not only our commitment but our capabilities. Every one of my colleagues has talked about the connection between our diagnostics. And our software is critical to making our customers more effective and more productive. These are the themes I'm going to walk through over the next 20 minutes. The key theme you've heard from all of my colleagues is software is a strategic enabler of diagnostics. What I'm going to share with you today is some data we've never shared before, is how our new cloud platforms and some of the new pieces of our vertical SaaS business are influencing visits, not only frequency, also quality visits, and some of the ways it's actually driving diagnostic intensity in those visits. So excited to share that. We'll talk about our cloud-first commitment. And how that's transforming the value that our customers are receiving through a vertical SaaS platform that's purpose-built for the animal health vertical. And specifically, I'm going to highlight Vello, which is our pet owner engagement application, and how we've approached that very differently than anyone else. And I'll touch on artificial intelligence. It's critical that we build that so that it supports our practices and their productivity in a way that makes them more effective. And you've heard my colleagues talk about, and appropriately so, how if you use our diagnostics and the more you use them, the faster you grow. What I'm going to bring data today is, the more you use our software, the faster you grow. Now you've heard a lot about our ecosystem. This is a critical part of our business. It is a crucial differentiator. This is how we let our practices practice medicine in a modality agnostic way. It is the way that the more you use our software, the more you use our diagnostics, the better it gets because this allows for a seamless experience so that the diagnostic results show up where they need to, when they need to, to the person that they need to. And this also lets us -- you heard about the incredible scale that we have with 80-plus global reference labs, nearly 135,000 premium instruments, and I'm going to talk about the cloud network, the largest in North America, that hangs off this network. But you can't do this in one-off ways. You have to build this, as Mike Erickson said, over years, over decades. And as Jay mentioned, we invest significantly in innovation. And this is one of the places we do that. And I'm going to highlight the pet owner layer specifically, as we walk through Vello, as one of the places that we've done that over the past few years. This vertical SaaS strategy that we've committed to, which is a cloud-first strategy, once our customers are on a modern cloud-based platform, we have the ability to give them more value more consistently. They're on the latest versions always. They have the most secure software always. We know they have portable capabilities, mobile first and so on and so on. And what I'll walk you through is we're then able to build a tightly integrated set of applications that sit on top of that mobile cloud platform that creates increasing levels of value for them. And the one I'm going to highlight, as I mentioned specifically, is Vello and the pet owner engagement application, which is a key component of that vertical SaaS application platform. So I'm going to walk through -- just to orient you, I'm going to walk through each one of these and double-click on them. So I'm going to start with how are we doing in accelerating cloud adoption in the industry and at IDEXX. IDEXX has invested a lot in being a cloud-first company. We declared that we would be cloud-first in 2021. So what do we see? Well, there's been significant acceleration in the intention to switch. And for the second year in a row, our 2 cloud products are #1 and #2. For those that are intending to switch, they're looking at our 2 products. And you may remember that, that's intentional, right? We segmented the market with Neo for smaller practices. It is a brilliantly simple cloud-based product for those that need to start quickly. And for the most sophisticated hospitals in the world, ezyVet, our flagship cloud PIMS. And what we're really grateful for is that those are the top 2 in consideration. And since last year, ezyVet already was the top in consideration and expanded its lead another 5 points. Now there's lots of reasons why our flagship cloud PIMS might have expanded its lead over the last year. We've invested heavily in that platform. One of the reasons is our enterprise customers needed a specific kind of platform. And I'm going to talk about what that is. You may recall, all practice management systems, almost by definition, our practice management systems and our corporate is looking for an enterprise management system. That disconnect is material. And to take a practice management system and also make it a world-class enterprise management system is a difficult software feat and it takes both commitment and talent to get there. We leaned in because we knew our corporate customers needed it. And as Jay presented, their inorganic growth engine had stopped or abated, and so the timing of giving them an enterprise solution was critical and timely. With M&A down another 40% year-to-date and their fragmented portfolios that look like this, you can imagine our conversations have shifted from maybe portions of their portfolio moving slowly to would you have the scale to migrate our full portfolios in a relatively quick pace. And those conversations, as I think Jay mentioned, have also migrated to could we harmonize not only the software but the standardized workflows, the configurations, the protocols. And what's beautiful about those conversations is that diagnostics are part of that conversation. So you take diagnostics, which will help those corporates grow faster. You add a standardized workflow. You put that into a powerful software configuration, and you'll get some growth. Now our enterprise offering resonates with the C-suites and their private equity sponsors. And we've put in a number of features that don't exist in a typical practice management system, as I mentioned. It is the only platform that has a number of features that they're going to need when they think about going public. For example, to be SOC 2 certified is clearly a requirement that your software provider is going to need to have for you to do that. And we're SOC 2 certified. You're going to need to have scale that supports hundreds, if not 1,000 hospitals, both in terms of your ability to support and your ability to push out new features, and we're able to do that. And as a consequence of our ability to meet those needs, we're seeing more and more groups standardized on our software, and we're grateful for that. So how is this translating into our installed base? We're seeing powerful cloud acceleration. Virtually all of our placements this year are cloud. And our new sales this year are even a higher percentage of cloud. And if you extrapolate this pace into 2025, by the end of '25, 2/3 of our base will be cloud. And when I think about where we were in 2020, where only about 1/4 of our base was cloud, and by the end of next year we'll be closer to 2/3, it's an incredible milestone for the company. But way more important than that, the ability for us to influence 2/3 of our customer base on an agile, secure, modern cloud-based platform, to do all of the things that my colleagues have been talking about, allows us to do unprecedented influence on visits, visit frequency and quality and diagnostic inclusion. So this platform of cloud lets us have the ability to build a vertical SaaS suite that's unlike anything that's happened in the animal health space. And as this illustrates, ezyVet is our flagship platform, starts with the digital real estate and then lets us build a number of applications that are tightly integrated on top of that digital platform. We've looked at servers as we convert thousands at a time in a given year, and we see 8 to 20 applications that those practices have tried to self-administer and connect to their legacy software on their own. And you can imagine what that looks like, where they're copying, pasting information between the PIMS and these applications. That hope-and-pray technology strategy is difficult. Our job with this strategy is to just make it easy. And the vertical SaaS strategy that we're deploying allows our customers to sleep at night, have portability, high security and deeply integrated experiences. We just make it easier. And our new customers that are adopting this platform are adopting a high number of these applications. For example, Neo and ezyVet new customers are adopting up to 80% of the time payments. Payments may seem boring, but it means no more reconciliation, no more mischarges. And during times like COVID, we could push out things like text to pay to support curbside check-in. And more recently, when there's been pressure on the consumer to pay, we added specialty finance capabilities to allow consumers to have access to payments or to financing if they needed it. Those are things you can do quickly on cloud. We now have workflow software, and over 50% of our customers are including that. And so we're building a capability that's allowing our customers to have more value, and obviously, we're able to receive a higher multiple on recurring revenue. Now let me transition to pet owner engagement. Actually, before I do that, the question might be how does this translate to diagnostics, right? This is clearly good for the software business. Does a cloud-based application, with these on top of it, how does that translate to diagnostics? So this is the first time we've ever shown this data. This is a before-and-after view. This is loyal customers, loyal IDEXX customers, they were on a competitive server and we moved them on to our modern vertical SaaS. And as you can see, ezyVet supported double-digit increase in diagnostics, makes sense. They have digital workflows. They have much more deeply integrated applications. They have standardized protocols. And we're seeing this kind of lift in the diagnostic business, and they're seeing growth in their practice revenues. So let me pivot to the third area, pet owner engagement. All of us are managing our lives increasingly through digital means. I don't know why pet health care should be any different. The stakes are high. The single biggest drag on practices' capacity is chasing pet parents through the phone. And the stakes are only going to go higher. As we listened to Tina describe the coming digital natives, we will have Gen Alpha adult pet parents here in 3.5 years. So -- and I don't know if you know this, but Gen Zers, 25% of them have admitted they've never answered their mobile phone. Think about that, never answered their mobile phones. 50% of them believe that if it rings, it's bad news. So we've got to get to a fully digital experience to allow the practices and the pet parents to have a full digital journey. Today, the pet owner engagement apps will go -- they may schedule an appointment digitally. But the moment anything changes, it goes back to the phone. So we've got to allow a fully digital journey. The only way you can do that is to have access to the workflow in the practice management system. Before the visit, allow the data to go back and forth with the pet owner journey, they have to map. And because we have access to our cloud-based PIMS and we've built the journey with the pet owner, we're able to support 100% digital journey. So we're going to save the Gen Zers and the Generation Alphas a lot of trouble. But seriously, the value of that is that can be supported on a digital journey all the way through, rinse and repeat through the entire life cycle of the pet. That's never been done, and our view on that is our ability to influence visits through this approach is powerful. And I'm going to show you that. This is a V1 product. It's early, but it's having significant impact on frequency of visits, quality of visits and diagnostic inclusion. Let me show you this. Visits, in the backdrop of declining visits and the practices this has been deployed, are seeing visit growth. There's a number of reasons for that. The simplest of it is reduction in no-shows. It's having a significant reduction in no-shows that's causing those practices to see an increase in total visits. The other benefit it's seeing is, look, if you have a sick pet, the last thing you remember, things like fasting or bring a sample, you're just trying to get to the vet. And so the quality of visits that we're able to influence in terms of reminders, appointments on your calendar, text reminders to bring a sample are having a significant impact on the quality of visits. And the other thing that we're doing that no one has ever done because we have full influence on the journey previsit, we're asking the pet parent, "Would you like to add a diagnostic, in this case, blood work, to your wellness visit?" And pet parents are taking the opportunity to say yes. And so -- or they're saying, "I'd like to learn more at the visit." And to Tina's data that she shared, this is huge because we now signal to the clinician, "This person wants to add this," or "This person wants to know more." And so the clinician instead of making a judgment based on socioeconomic indicators, which are erroneous, they can now say, "I'm going to be a medical adviser, which is the position I want to be in, and I know the state of mind of this pet parent." And as a consequence, they're in the position they want to be in. And when you add visit growth and the pet parent making choices and the clinician being in a position where they want to be, you see diagnostic inclusion going up. Again, it's early, but we're excited about what we're seeing. Greenline was an acquisition we made in Q1. It's also a part of our pet owner engagement strategy. This is the leading platform for digital couponing at the point of care. It is also the leading provider of data back to the manufacturers in parasiticides, preventables and nutrition. They make wellness and care more affordable for the consumer. It's a very relevant item for wellness. They also make the pet owner and practice relationships stronger and they've streamlined practice operations, all important things. Our goal now is to look at this value proposition and expand it from point of care and digitally move it upstream before the visit and move it downstream post visit, much like we talked about with Vello. So we're looking forward to digitizing this experience in other relevant parts of the pet owner engagement life cycle. I told you I'd touched shortly on AI before I close. Last year, I told you we were using artificial intelligence to help clinicians make difficult judgments about challenging clinical decisions. This year, we're pushing artificial intelligence deeper into the daily workflow. So inside the practice management system, and Jay touched on this in his opening remarks, it's hard for a clinician to get all of the information previsit into a simple summary. And AI is really purpose-built to do this. And so we're deploying AI later this year for our customers so that it can take that information, put it in one summary, which will allow the clinician pre-walking in for the consult to feel better prepared, and it will allow the pet patient to feel better heard as opposed to the 2 choices a clinician has to make today, which is either slow down, shorten the visit or walk into the visit less prepared. And so we're excited about deploying this AI technology more deeply in daily workflow. Our customer Advisory Board members have given us really strong feedback about the value that this is going to provide them both in saving time and increasing the value of each visit. So bringing this all together, we walked through the 3 areas of our strategy. We see a lot of momentum in the software business. When we committed to cloud, you can see we pivoted to virtually exclusive focus on recurring revenue. And when you have that with high-90% retention rates, you get very durable revenue. Now for those fellow software geeks in the room, I'll add one other piece, which is our net dollar retention rates for Neo and ezyVet are over 110%. Those are world-class figures. So when you take that kind of retention and that kind of commitment to recurring revenue, you see gross margins or gross profit growth like this. So the software business as a stand-alone basis, we love the software business. It also gives us a signal that our vertical SaaS strategy is adding a lot of value to our customers. And we love that, too. But hopefully, you walked away with a sense that our software is also increasingly enabling diagnostics in terms of visit frequency, visit quality and diagnostic inclusion. But we're still early. We're still early innings in our software journey. But I hope you've gotten a sense for the power of this vertical SaaS play. And I just want to make a quick shout out to our global software team who I know some are watching. They are the ones who make this happen. And this momentum is a result of their hard work. Now in closing, IDEXX is incredibly well positioned to support our customers with this integrated cloud suite and it helps practices grow, grow faster, it allows them to adopt and utilize best practices, and now it lets them digitally engage pet owners in a really powerful way. It helps us enable diagnostics in unique ways, and it helps us launch new products and support organic growth of our largest enterprise customers. In short, I hope you'll walk away with a sense that IDEXX has never been more committed or more capable of bringing a vertical cloud platform to the animal health industry to do 2 things: one is raise the standard of care and advance practice productivity. Thank you. Well, next up, you're in for a treat. George Fennell is going to walk us through our commercial model. But before that, we're going to take a 10-minute break. [Break]

Good morning, everybody. Good morning to those of you on the webcast. Thank you, everybody, in the room for coming back on time. My name is George Fennell. There is no secret for those of you that know me well, I absolutely love what I do for a living. I get the chance to work with IDEXX' customers around the world. This is a really, really important segment. Let me give you a bit of a road map on where this Investor Day chapter goes. So for about the next 20 minutes or so, we're going to look through the commercial and customer lens. Then I'm going to turn it to Brian McKeon who's going to talk about our financial plan. And then Brian and Jay will cohost a Q&A. So just a bit of a road map for the next segment of Investor Day. Now as I said, for the next 20 minutes, we are going to look through the commercial and customer lens. This segment on the Investor Day agenda was placed right here intentionally. The commercial function of IDEXX is the gathering point for all of these products, all of these services, all of these innovations. We've got to gather all of that together, make sense of it, and then we turn and face our customers around the world. And that's where the magic begins to happen. Like assay development or instrument design, we think of commercial execution as a discipline of its own. It has a set of best practices. It has a set of priorities. And we work at it very, very conscientiously. Commercial execution is about translating value to IDEXX customers, translating value to create mutually beneficial, long-term, sustainably growth-oriented outcomes. Now what does that look like for customers? Well, for customers, position 1a is patient care, how do our solutions, how do our innovations, how do our products and services support and enable high-quality care at veterinary hospitals. Position 1b is how do those solutions help the practices become successful. Now why is it important to have successful practices? Well, veterinarians that I've hosted at Investor Days in the past will say that a healthy practice helps enable greater care. The 2 concepts are linked. And our job is to deliver value on a sustainable basis for customers and for IDEXX. Now what does it look like for IDEXX? Well, for IDEXX, it's about growing recurring revenue, it's about opening up new streams of productivity, and it's about building long-term customer loyalty. An important part of our equation, because the innovation agenda just keeps going and going and going, and so we're trying to build that long-term customer mindset. So let's talk a little bit about how we do this at IDEXX. Investor Day for me has a very special memory file. It teases out of memory for me, every August, every August. Now 10 years ago, almost to the week, we announced a significant innovation at IDEXX. Some of you were with me at that Investor Day where we announced our intent to move to a fully direct model. I see some of you are making eye contact with me right now. You must have been in the room. We announced our intent to move to a fully direct commercial model in the U.S., a bold and profound move that had its share of skeptics and enthusiasts. Now unapologetically, as I am today, I was an enthusiast, okay? That was 10 years ago to the week, almost to the week, we announced that. Now why did we do that? And does it still resonate? We made it clear that we felt there was an incredible source of value between category relevance, innovation, and customer proximity. Those 3 things together, well executed, had the chance to create enormous value. You can be the judge on whether or not that contributed to the enormous value of the last decade, but undoubtedly, it helped us get closer to our customers to deliver innovation in the last decade. Now as Jay said at the top of the show, IDEXX is on the cusp of the next wave of significant innovation. Through the commercial lens, we now have a decade's worth of experience working with our customers this way, time, tenure and trust of our customers, which were not proven in 2014 and are now tailwinds in 2024 to this next wave of innovation. Since that time, we've more than doubled the size of our global commercial footprint, expanded in 7 international markets, using a very effective playbook on how to work with our customers and what we describe as a commercial ecosystem. It's not only what we do, but it's how we do it with an eye toward a long-term view. The value of tenure and trust can't be understated. For those of you that are animal health industry veterans, building that trusted relationship with hospital health care teams is a thing. It's a thing. Jay mentioned this in his comments, it allows for us to unpack innovation in a patient way. With the benefit of knowing those customers over time, working with them through thick and thin, challenging times, emotional times, times of great growth, times when they're looking to create growth, we have that type of a partnership mentality. And it's really important when we think about the mindset we take in to our customers, this is not the what. This is the how. We enter our customers with a mindset of finding common ground. I say to my teams around the world, the fastest way to agree on nothing is when you try to agree on everything. That is the fastest way to agree on nothing is when you try to agree on everything. But with the benefit of IDEXX' portfolio, its highly differentiated products and services and trust and tenure, surely, you can find common ground on something, something. Even if it's SNAP 4Dx life, the opening discussion where we can begin a relationship with a customer, what we found and what I found over the last 13 years here at IDEXX is that when you agree on something and you pay it off, you find another point of agreement. And when you pay that off, you find another point of agreement. And why do we focus on becoming easy to do business with? Because we know the Net Promoter Scores. This is a performance category. This is a performance category. The products differ. They are more compelling. And we know this. That's why, and we discussed this, a few of us last night even, you want an easy on-ramp to partner with IDEXX because you know the Net Promoter Score will tell you the truth, will tell the customer the truth over time. And I want to spend a moment here on innovation, a big theme of Investor Day this year, in 2024. I want to offer a lens through the commercial team on innovation. Innovation is a key, with a capital K, to access at a veterinary hospital, which is important to drive a commercial agenda. Now why is innovation a key? Well, it turns out, innovation creates curiosity. Now this is not curious George talking to you this morning, but it is, but innovation creates curiosity. And what does curiosity do? Well, it needs to be fed, it needs to be nourished, so it creates access. When you show up prepared as a subject matter expert, when you align your commercial ecosystem to all the stakeholders at the veterinary hospital and you deliver with credibility, you address the customer's curiosity on the innovation, and you invariably get a chance to talk about more than just the innovation that opened up the access gap. You can talk about any of the other products and services. It's a force multiplier for access. Now with tenure, now with trust and now with a global mindset around this, innovation is a huge key when looked at through the commercial lens. Now I'm going to invite you to step back, we're all aware of what's going on in the sector at the moment, and I'm going to introduce to you a range of places where customers might be. Think of them as customer personas. Just join me here. All customers have a desire to grow. But not every customer's first priority for growth is the same, okay? We're going to go to East Texas here to Quitman Animal Hospital (sic) [ Quitman Animal Clinic ], growth mindset, Dr. Bennett's practice. But Dr. Bennett's priority isn't getting new products and new tests. Dr. Bennett wants to grow his team. He wants to get the most out of his team. He's trying to create team loyalty, build positive culture. He sees a role for the IDEXX team, broadly described, to help him grow his team. That's his mindset. If you shoot up to the Upper Midwest, 2 years ago, Dr. Bruce Francke and I were on this stage having a discussion about what was happening in Michigan. Dr. Francke is saying, "Listen, bring me new tools, bring me new tests. I'm looking for ideas on how to grow. I want technology to keep pushing up my standards of care." It's not that he's not for growing his team. He has a different first-order priority. He wants his team to achieve better balance. When he brings on new staff members, he wants them educated on how they interact with IDEXX products and services and the teams that we have on stage and backstage. That Dr. Francke's priority. If you go to The Cat Hospital of Media, Philadelphia, Pennsylvania, Dr. Kirnos is saying, "I want to grow, but I need to be more efficient," right? She needs to borrow a page out of Michael Schreck's playbook. She's looking for software to drive efficiency. And efficiency is a noble thing. But Dr. Kirnos is thinking about efficiency because, if she's more efficient, she can provide more care. That's what she's there to do. So the point here is that the IDEXX team, now well tenured with an experience base with these customers, is able to meet the moment regardless of where the persona of the practice is because we have the trust and credibility that we've earned over the last decade to go in and listen very carefully. And virtually all hospitals, regardless of the persona, are dealing with the dynamics that everybody in this room and on the webcast at home are following very safely. Managing the practice. Staffing challenges. There is a level of fragility in the marketplace. It's still on everybody's mind. It's there. You almost have to accept it like gravity, a force of nature you can't opt out of at the moment, okay? It's there. So we have to navigate that. We have to accept that. But IDEXX teams have an opportunity to meet that moment and continue to develop the teams. Communicating with pet owners, right? Tina touched on this in her talk. Michael certainly went deep. The ability to translate the value of veterinary health care services to clients is a growing need. It's a growing need. And customers look to IDEXX colleagues as trusted advisers to deliver them solutions, not just to say, "Oh, that's difficult. I'm sorry. Do your best." No, no, no, that's not enough. That's not enough. We've got to bring solutions there. And of course, technology. Technology doesn't just come from IDEXX, but a lot of it does. How do we think about new technology in the practice? Why is that important? New technology requires change. Change is not an event. That is a process. And with fragile teams, they want to think very, very carefully about how they engage the adoption of new technology. And so this is a slide which I say sort of is like the abundance of riches, and it's not even complete. Companies would love to have one column of this innovation, one column. They love it. We've got 3 columns of innovation here. This is absolutely amazing. I've been in this business, guys, as you know, for more than 20 years, pharmaceutical sector, now the diagnostics and the software space. What I can tell you is commercial organizations, like customers, love, absolutely love, new products, gives them the chance to build on their professional relevance, build access, help grow the practice, deliver value. It's very personal, in addition to being very professional. But what I want to point out here on this particular slide, as many of you know, and I'll touch on in a moment, we have a diverse commercial ecosystem of colleagues. There's a role for each one of our job types in the commercial ecosystem to uniquely play a role. Certainly, the sales teams are going to love the new instrument platform, okay? That's fantastic. They're going to love pancreatic lipase addition to the Catalyst. It's going to open up competitive opportunities. It's going to build loyalty within the Catalyst space. They're absolutely going to love that. But we have a field service organization, highly credentialed members of veterinary practice teams that are now working at IDEXX, have a huge opportunity with the new IDEXX VetLab Station. With the Catalyst SmartQC, there's a role for them to play. Our professional service veterinarians can pick up on the topics that Mike Lane talked about with the relevance of Cystatin B, and Tina and Jay talked about as it relates to cancer. Our professional services team have a voice here. The whole point about this is everybody in the ecosystem has a role to play. And as Michael has helped us understand software is having a moment in veterinary medicine, and we have unique matchups now with software specialists and diagnostic account managers to deliver value in a highly coordinated way to our customers to meet this moment. Absolutely amazing. This is how we deliver. This is how we deliver. We use a phrase that my colleague, Mike Lane, uses. We have onstage and we have backstage, got to have both. Got to have onstage, got to have backstage. Onstage in the practice, we have account managers. We have veterinarians. We have field service representatives. We have software specialists. Backstage, we have medical consultations, an ability to work through tough cases and an extraordinary customer and technical support organization to support our growing installed base around the world, and case consultation when it gets really, really tricky. It's a complete ecosystem connected in a way that allows us to understand what's happening at each unique practice. The practices that we've developed have been developed over a decade, and they're now in international markets as well. Best practices never go out of style. And we continue to refine our model accordingly. These are a handful of the markets where we have taken and expanded our business. Our teams are settling in, and they are delivering. They have all of the tools at their disposal to drive the business going forward. And we continue to expand in North America, as Jay mentioned, a year ago. Now what is our focus in the international regions? Our focus is on reach. We've got to reach customers. Territories are built differently in international markets than they are in North America, okay? They're bigger. We've got to get to customers. "All right. Well, that sounds interesting, George. Why?" Because when we reach customers, they grow faster. My first exposure to analytics like this was in 2006. 2006, I've never not seen this to be the case. But it's not just about showing up. You've got to show up with professionalism with a subject matter expertise mindset, the right mindset around customer needs analysis. But when we show up well prepared, our customers grow faster. It is about the what, but more importantly, it is about the how, and this is a part of our success going forward. Now Jay shared this slide, the total addressable marketplace. I'm going to make one comment about this. What you focus on expands. You focus on a problem, I promise you, it doesn't get smaller. It gets bigger. You focus on opportunities, they're endless. Part of commercial management is mindset management. How are we thinking about opportunities? Well, the mindset the IDEXX team takes is the opportunities are endless. Growth, there's no destination with growth. Growth keeps going, and that's the mindset that we bring when we call on customers around the world. Now despite the U.S.A. being a reference point out here on this slide and you look at our top 15 markets in terms of opportunity, it's unquestioned that we can grow. But the U.S., even to Jay's well-made point, earlier, when you think about clinical visits that get blood work, it's only 19%. There's a lot of care opportunity even in the benchmark on the slide at U.S.A.. So we still have opportunity to grow and develop the sector with our teams. I'm going to double-click quickly in international markets for routine testing. The long game here is moving from sick testing to well testing. Now do not mistake sounding simple with being easy, okay? If this was easy, this would have already been done. This is a journey that we're going to take with customers, but it requires data, credibility and we've got to put our back into this. And that's what we're going to work on is how to drive routine testing for appropriate diagnostics to establish health care benchmarks. What's important to know is that every time we have an IDEXX reference lab menu innovation, it gives us a chance to talk about Well Care in the context of the innovation. That's why innovation and access are so important to the commercial model. Now Mike Erickson used this slide a little bit in his presentation earlier, looking at this incredible runway, 330,000 placement opportunities. I tend to feel like that's going to be my goal at some point, okay? And I'm sure it will arrive in due course. The point is we have an ability to do this. Mike talked about what I'm going to talk about how, we bring a sweet mindset not an analyzer at a time to a customer. That is the way we think about this with the right programs and incentive systems to onboard customers with ease, why do we want to onboard customers with ease. I go back to the Net Promoter Scores that Jay shared. You know how the movie ends. The Net Promoter Score tells you how the movie ends. If you know how the movie ends, you want to get people into the theater with this least amount of friction as you can, don't you? And that's the mindset that the commercial organization takes because you know how the movie ends. very, very important thought. Jay shared this slide. I'm going to look at it through a slightly, slightly different lens. This is the overlap. One measure of commercial effectiveness is how many reference lab customers together with VetLab instruments do we have? How can we earn. The commercial take on this is, yes, there's opportunity. But the teams in the field, my colleagues in the field have the tools necessary to figure out those three questions we introduced years ago to this group and others that were there, the commercial model is about where to go, who to see and what to say? I am a simplifier at heart. Very complex what we do at IDEXX, but you got to simplify it at the time you get to the customer, and they have the tools to figure out which opportunities are the right ones to spend time with. And we bring a solutions orientation, not every product on its own vector, we think about disease franchises, care categories. That's the mindset that we bring, solution orientation with a long-term view now done at scale. I'm going to pause on this one slide very, very quickly and simply highlight that fundamental to utilization development, an area I know of a lot of interest is bringing relevant data into hospitals to have a discussion about where are the care opportunities, where are the clinical benchmarks. Most of you know that, that's the state of West Virginia, and we've got highlighted [ Monongalia ] County on there. That was the geography quiz for the morning. The point is when you have a discussion with a veterinarian in West Virginia and he or she wants to know, how am I doing? We want to have a conversation and say, you mean with cats or dogs. You mean with parasitology or do you mean with internal medicine? Do you mean with puppies, kittens, seniors, adults. Well, by the way, how is my community doing? How am I doing against my community? How am I doing against my state? Our teams have this information at their fingertips for conversations of substance with customers. And this is not about new clients. This is about the presenting client, the presenting patient, it quantitatively identifies care opportunities with relevant benchmarks. Which those of you that work closely with veterinarians understand they need the data to understand what the opportunity is. Our teams have this. But it's one thing to have it. It's another thing to have it with trust. That's different. Having this with trust takes the conversation in a much more productive direction. A final comment on inVue Dx. It's a personal best practice of mind to spend time in the field with customers, dozens of customers anytime IDEXX has a new instrument platform. I did this with SediVue, ProSiteOne, et cetera. I know a great many people in veterinary medicine at this time. It's a function of age. And it's really important. These customers will tell me what I need to hear, whether it coincides with what I want to hear or not. This product is transformational. Those are customers' words, now mine. Their ability to understand and almost struggle with how you're going to do this without a slide, which has been a part of veterinary medicine for almost 100 years. It's a bridge we've got to cross together with them. We have to show them that. But at the end of the day, it's really not an argument the value clinically of a blood film. That's not in dispute. What's in dispute is the degree of effort I need to go to, to get it and the subjectivity attached to it and that we are actually going to eliminate that. I've used this phrase, Mike Erickson and I've talked about this for a while. So a lot of new products tend to move work around. Same work has just been redistributed. Innovative products actually take the work away. But that's when the customer has to say, wait a minute, what happened on my slide. And that's what happens. That's what they said to me. Does the slide go in? There isn't a slide. There isn't a slide. And so it begins the basis of this conversation. It's really important. My takeaway after spending time in the field, both in London and in the U.S. is this is a winner. This is a winner. And I've authenticated it. Why? Because I have to stand in front of thousands of colleagues and let them know what I think we have here. And we have a chance to educate and break through with this product. The cancer Dx portfolio is going to be a journey, an incredibly exciting journey Tina, Mike, Jay, all laid out the case. Through the commercial lens, our teams are well equipped for those peer-to-peer conversations of significance. Tina mentioned this, Jay mentioned this, and I will underscore this. I'm very proud of our professional service veterinarians, the highest rated across the industry landscape, not the category landscape, the industry landscape. That is a tailwind for us to have discussions of substance as we get into the introduction of cancer Dx in 2025. I'm going to close, I'm going to end where we began, okay? Commercial execution is a discipline. It's what we focus on. We have products that focus on customer needs. We have trust, we have tenure, we have scale now as tailwinds. We have a portfolio where we can find common ground with virtually any customer around the world and a mindset to do so. Again, please, I'm going to ask you to remember what I said is that the fastest way to agree on nothing is when you try to agree on everything. We start somewhere where we can agree, and we expand from there with that right mindset. Final comment, we tend to think, at least in the commercial realm of the business in a very simple way. It's about people, it's about products, and it's about ideas. We think we have some interesting ideas. We have incredibly differentiated products and services, incredibly differentiated products and services. And we're building the most professional commercial organization around the world. Thank you. At this point, I will introduce IDEXX's Executive Vice President and Chief Financial Officer, Brian McKeon to the stage to talk about our financial plan. Brian, good morning.

Thanks, George, and good morning, everyone. It's great to see everybody again in Maine this year. I promised my family before I got into the financial review that I recognize our lab Daisy, who just celebrated her 13th birthday recently. Daisy is a big part of our lives. She's been slowing down over the last year, which I kind of relate to getting older, dealing with arthritis pain, which has really limited her -- she's always been a really active dog and it's going to changed her lifestyle. And she's doing great now. I just wanted to recognize the great care that she's received and the innovations that have gone on in pet health care, in areas like pain management, which are helping dogs like Daisy to have high-quality lives as they get older. We're very grateful for that. So I'm here to take you through our financial review. I'll be spending time today talking about how we're advancing our growth strategy and our financial approach, building on the large expansion that we've seen in our business over the last several years. We'll spend some time today zeroing in on some aspects of our strategy that we're advancing in particular, our innovation agenda, the expanding software capabilities that we're adding and importantly, the progress that we're making in growing CAG diagnostics utilization globally through adoption of our technologies and through engaging with our customers. And we'll talk about how those areas of strategic advancement really align and reinforce the high long-term growth potential that we see for IDEXX. So in terms of key messages you should take away from today's review. The first is that we're continuing to deliver strong financial performance as a company through a consistent strategy that's centered around long-term development of attractive core businesses. And that ongoing strategic focus and the high execution by IDEXX teams has enabled us to deliver strong financial results as we work through dynamic macro environments. The second key message is that we continue to see significant long-term growth potential for a company centered around growth of our companion animal business. We'll spend some time today walking through the building blocks of our long-term 10% plus annual organic revenue growth potential, focusing on the CAG diagnostic recurring revenue building blocks, including the benefits that we expect to derive from our innovation agenda that you've heard a lot about today. I'll also spend some time walking through the recent sector macro dynamics and describe how they've been impacting some of the drivers of our recent growth performance and how we see them evolving over time towards the high growth potential we continue to see for IDEXX. And that high growth potential and the incremental value that we are able to generate and benefit from as we focus on innovating and raising standards of health care, we think all positions us very well for continued strong financial performance enabled by solid comparable operating margin gains, high comparable EPS growth and continued high returns on invested capital. So let me start with an overview of our strategic focus and our financial performance. As mentioned, IDEXX has had a consistent strategy over time that's delivered very strong financial results, ahead of our long-term goals. For the 4 years heading into the pandemic, we were growing at an 11% average annual organic revenue growth rate with a significant expansion of our business profits. And we built on that momentum over the last 4 years, reflected in 12% average annual organic growth rate in a 22% comparable EPS gains. And this reflects the benefits of a strategy that's centered around attractive core business development, most notably our companion animal business, which is about 90% of our revenues. And as we develop these businesses, they generate durable, high incremental gross margins that support strong operating profit growth and cash flow generation as we reinvest towards the long-term potential that we see in businesses that we know very well. And that consistent strategy and disciplined capital allocation that's aligned with core business development, has generated very high returns, reflected in our 48% return on invested capital. Now the foundation of our financial model is growth in our worldwide CAG diagnostic recurring revenues. These represent about 80% of IDEXX's overall revenue base has grown -- they've grown at a 13% CAGR over the last 8 years with strong gains across U.S. and international regions. And this growth in these revenues for a powerful annuity revenue foundation with high incremental returns that enables us to continue to invest against innovation and commercial engagement. We think the growth in these revenues also align with the value that we're delivering to our customers. As we continue to innovate, help them grow faster and help to increase levels of standards for pet health care. The increased value that we're delivering to our customers can be seen in the growth in our software revenues as well. We've made big strides in developing our veterinary software and diagnostic imaging revenues over the last several years. They reached nearly $300 million last year with 77% being recurring in nature. As you can see, it reflects very strong growth in the organic growth and the recurring software revenue base, supported by the expansion of our global PIMS platforms, the expansion and addition of services, recurring services around those platforms that are adding value to our customers and also providing incremental revenue streams that support profit gains. And we're developing this business organically and through acquisitions as well. And as we grow the software business, we're applying the same principles that we've applied for years in developing our diagnostic business, which is basically to center ourselves with helping our customers to grow faster, providing greater insight, helping them with productivity that reinforces the high customer retention levels we have across our business and it also reinforces high growth in our diagnostics business as well. So the expansion of our capabilities and strong execution has enabled us to continue delivering solid revenue growth in our CAG diagnostic revenues, building off the significant expansion that we saw during the pandemic. So this chart breaks down drivers of our worldwide CAG diagnostic recurring revenues, the key drivers over several years. The pre-pandemic period, 3 years heading into the pandemic, the 2 years of accelerated growth that we saw during the pandemic and the more recent 3 years, including the midpoint outlook that we have for 2024. What you can see here highlighted in blue is that we've had a consistent positive growth benefit from what we call IDEXX execution drivers. That includes sustained solid benefits from a growth point of view from new business gains and expansion of our global premium instrument installed base globally. We've had ongoing gains from utilization per clinic per visit expansion over time. This has always been an important part of our long-term growth strategy. It was a solid growth contributor heading into the pandemic. We saw acceleration over the 2 years, 2020 and 2021, and utilization per visit has continued to expand over the last 3 years despite some of the sector and macro headwinds, I'll talk about. And finally, net price realization has always been an important part of our growth algorithm as well that's aligned with the value that we're delivering through our innovation-driven strategy. We tried to highlight how that's evolved over the last several years. It's obviously been a bigger driver more recently, in part driven by the inflationary cost dynamics that we saw in the post-pandemic period that we've been working through. Now the combination of these execution drivers has enabled us to mitigate some of the more recent effects from clinical visit growth headwinds, which I know you're aware, this is the key dynamic that we've seen change in the business over the last 3 years that we're continuing to work through. So let's spend a little time talking about what's been going on with clinical visits, how we see them evolving, how we see them transitioning in the future as we transition towards the high long-term growth potential that we continue to see for IDEXX. So as mentioned, the big headwind that we've been working through in this post-pandemic period in terms of our growth opportunity has been moderation in clinical visit trends. This has been a global dynamic. The data that is shown here is for the U.S. clinical visit levels over time, is a chart that we've shown in the last few years. And what you can see here is a divergence in the trend between what we would have expected to have seen in clinical visit levels, given the growth in the PEP population and historical productivity gains that vet clinics have been able to deliver and what's actually transpired over the last 3 years. And this has been a growing gap, obviously, more recently. The key -- two principal drivers of this. The first is the capacity and staffing dynamics that we've been talking about over the last couple of years. There was clearly a capacity pullback effect in 2022, after the strong growth in the pandemic. And as Tina mentioned, the hours that were pulled back have not returned in the clinic. So I think this is an ongoing limiter to the overall clinical visit growth relative to what we would have expected. And that's impacted by ongoing staffing challenges that I think clinics are continuing to work through and adapt to. More recently, we've been highlighting macro impacts on clinical visits. As a business, pet health care has always been very resilient to macro impacts, but it's not immune. And I think the cumulative impact over the last 4 years of high inflation across pet owners' lives appears to be impacting the decision to bring pets into the clinic at the margin. And so we anticipate this is going to be a near-term headwind for the business. It's captured in our outlook for this year. But as we look forward, we're -- we remain very positive on the opportunity to see positive clinical visit growth as a key driver of our long-term growth potential. First of all, we view this gap that has emerged over the last year is pointing to a significant underserved demand in terms of pet health care that will transition over time. And as you've heard throughout the presentations today, there are multiple positive factors that reinforce the tailwinds for long-term growth in pet health care, including this expanded pet population that's going to get older and is going to have higher health care needs as they grow. Now as we look forward, we're really excited about the future growth drivers that we see in the business in addition to the underlying clinical visit growth trends. Most notably, the benefits that we expect to see from our innovation pipeline. We're advancing two new platforms, one launched later this year that are both focused on significant greenfield testing opportunities that will be additive to the CAG diagnostic recurring revenues that we have currently. And as we've talked about many times, these types of platforms have multiplier benefits as we engage with customers, enable our sales organizations, broaden our business relationships and get the benefits from the ongoing testing begets testing dynamic that we've seen in our business over the years. You heard a lot today about disease right franchise advancement. We have specific innovations that are coming to our customers around -- including the cancer wellness panel that we highlighted that will be additive to our long-term growth opportunity as well. And as we grow, we'll continue to add menu to our in-clinic solutions and our reference labs aligned with our technology for life strategy and continue to advance innovation and software that reinforces diagnostic insight and growth in CAG diagnostic revenues. And we look at discretely the new innovations that we'll be bringing to the customers in the coming years, we think it will contribute 2% plus as a foundational element to the building blocks of long-term CAG diagnostic recurring revenue growth. And these innovations will augment the ongoing benefit that we have to continue expanding our core premium instrument installed base. We see an opportunity for our core catalyst premium hematology and SediVue analyzers to add 240,000 placements globally in the future, centered around a large opportunity that we see in international regions. That 240,000 is a 3x increase on our existing core installed base. And when you add in the benefit that we expect to see from new platforms over time, we believe this presents a foundational element of our growth strategy where we can increase our premium instrument installed base over the long term at 10% plus. And that will have -- that is the foundation for high long-term growth in areas like consumable revenue gains, which, again, reinforces the long-term growth potential that we see in the business. We also see this as reinforcing the ongoing benefit we expect to get from net new business gains because this is a core element of engaging with our customers, showing the value that we can provide through IDEXX solutions and broadening our business relationship through vehicles like our 360 arrangements. So as we expand our business base, we'll continue to focus on driving diagnostic utilization. This has been the core element of the long-term IDEXX growth strategy. When you go back to the $45 billion TAM that Jay highlighted earlier in the day, it was -- that's centered around expanding the percentage of clinical visits that include blood work. We have a long-term track record in working with our customers to enable this through our technologies, through our customer engagement, 50 basis points a year improvement on average is roughly 19% in the U.S. last year, and we know there's benchmarks of 40% plus in terms of what clinics are doing today, best managed clinic benchmarks. And we used to take that 50 basis point improvement for the U.S. alone and extend that over time, it adds 1% to 1.5% to overall worldwide CAG Diagnostic recurring revenue growth. And of course, yet diagnostic utilization, expansion is a global opportunity. We see the same long-term potential to expand our business internationally in terms of diagnostic utilization levels that are a fraction of what they are in the U.S. today. Now that our international regions are growing at high rates, and it reinforces the benefits that we're seeing from helping our customers in international regions to understand the value of diagnostics to adapt their practices, to include best practice technologies that we can offer and to provide -- to help to engage with them to show how they can communicate that value to their customers. And when we have the international growth opportunity to the U.S. opportunity in diagnostic utilization, we see that as a building block of 1.5% to 2% to the long-term growth potential for IDEXX. And as we grow our CAG diagnostic recurring revenues, we'll have incremental growth in benefits from expanding our recurring software services. We have great momentum in this business and ongoing opportunity to expand our cloud-based PIMS presence and to build recurring services around our PIMS offering aligned with the vertical SaaS strategy that Michael highlighted today. And we see that as a 15% plus annual organic revenue growth opportunity, discreetly for software. And that's additive to the CAG diagnostic recurring growth opportunity, but of course, reinforces the strong growth in our -- and our core CAG diagnostic recurring revenues as well. So bringing this together, the combination of the innovation that we're bringing to our customers and the execution of our teams, we think position us well to bridge towards the consistent long-term view for 11% to 14% worldwide CAG Diagnostic recurring revenue growth. Now this chart tries to compare where we've been in the last 3 years in this post-pandemic period and how we see those growth drivers evolving over time. And what you see here notably is we're expecting a stepped-up contribution from utilization expansion and new innovation, benefiting from the specific initiatives that we've been discussing today. And that will build upon continued solid growth contribution from net new business gains and global installed base expansion in our core platforms as well as from solid net price realization aligned with our innovation-driven strategy and the value that we're delivering. And we believe that can build on, provide a high growth premium, sustained high growth premium that builds upon solid clinical visit growth levels as we move forward. Now these -- the growth in the recurring revenues, of course, is the foundational element of our 10%-plus overall organic growth potential. You can see here the benefits that we expect to drive in the U.S. and international regions. The incremental benefits from our recurring software growth is the biggest element of our growth strategy. We'll also get benefits from growing CAG instrument revenues, supported by our core installed base expansion and also the new platforms that we'll be introducing, expect to generate high single-digit growth in our very profitable water business and mid-single-digit organic gains in our synergistic LPD business. Now as we move forward, we expect to target continued solid annual operating margin gains. This is an area that IDEXX has a very strong track record over time. We've actually increased our comparable operating margins by 1,200 basis points over the last 8 years. We've consistently delivered at or above the long-term goal that we set for 50 to 100 basis points in comparable operating margin improvement. We're on track for that type of performance this year as well. And as we look forward, we continue to see that as an appropriate goal for the business, enabled by gross margin expansion. We see ongoing runway to enhance our gross margins, align with the value that we're delivering. We know that as we grow our CAG diagnostic recurring revenues, they have a very high incremental flow-through benefit for our overall business. We see ongoing opportunity to improve lab productivity, particularly as the scale of our international lab operations. As we deliver value and achieve solid net price realization that helps to support gross margin levels as well. And finally, as we scale our software business aligned with our cloud-based strategy that's going to have a high incremental gross margin flow-through that supports our long-term outlook. And as we grow, we'll have OpEx leverage in areas like G&A as we continue to reinvest towards the long-term growth potential that we see for IDEXX. Now in terms of areas of investment focus, it's very much aligned with the strategies that you heard about today. We intend to sustain our R&D investment levels aligned with advancing our diagnostics and software, R&D efforts and specific initiatives around leveraging data and artificial intelligence as part of our offerings and solutions. And we intend to continue investing towards global commercial expansion and sales enablement. This is an area that we have executed on very well over time. We know that when we do a sales expansion, and can deliver the incremental revenue that we see associated with that, that it's a very high return, short-term payback for us as a business, and that reinforces the high returns on invested capital that you have seen -- you saw earlier. And as we advance our organic growth investments, we'll complement that with M&A and corporate development activity that's aligned with our strategy advancement, deployed about $500 million on that front in recent years. And as you can see, an increasing emphasis on supporting our software business as well as partnership opportunities that are aligned with advancing our R&D agenda. As we move forward, we expect to deliver a very strong cash flow generation as well. We benefit from a business model that reflects -- it has a very high net income to free cash flow conversion ratio that reflects the attractiveness of the businesses that we're in, including a relatively low capital intensity of our businesses. We have a consistent longer-term view for 80% to 90% net income to free cash flow conversion aligned with expectations for capital spending of about 4% to 5% of revenue primarily driven by growth capital investments and our current year performance is aligned with these objectives as well. And looking at our balance sheet, we're in a very strong position. IDEXX has used leverage as part of our financial approach over time, aligned with us being a very predictable, durable recurring revenue business model. We've managed this area more conservatively in recent years, a combination of the transition through the pandemic and the higher interest rate environment more recently. We're comfortable being in a conservative position, that's reflected in our financial metrics that we're sharing. And we know that it gives us a lot of flexibility to advance high return strategic investments aligned with our growth strategy. And you should expect us to apply a very similar capital allocation approach going forward. It will be, first and foremost, centered on supporting organic business growth and strategically related M&A activity and to the degree that we have excess capital, we anticipate continuing to deploy this towards share repurchases. We've been very effective in managing capital allocation to share repurchases over time, see this as enhancing per share returns for our long-term shareholders and supporting our very high return on invested capital. So just in summary, we feel great about the progress that we're making as a business and advancing our strategy. Very excited about the agenda that we have in front of us and also proud of our ability to keep delivering strong financial results as we grow our business. Very optimistic about the long-term potential for IDEXX aligned with the innovation that we're bringing to our customers, the global growth opportunity that we see for the business as well as just the multiple positive long-term drivers that we see supporting growth in pet health care. And that's reflected in consistent long-term financial goals for 10% plus annual organic revenue growth and 15% to 20% comparable EPS gains supported by operating margin expansion and capital allocation leverage. So that concludes our financial review and our presentations today. Thank you very much, and we are now going to transition to our Q&A session. And I invite Jay on stage, and we'll have members of our management team available as well for your questions.

Great. Thank you all. We're going to use the microphone to ask questions. So folks listening remotely can hear us as well.

Great. Erin Wright, Morgan Stanley. On the cancer opportunity and early detection there, I guess, what did you learn from some of the prior iterations of early cancer screening tests, whether it was your previous partnership with Pet Dx or others? And then how do we think about the price point for this, for this premium cancer screening wellness platform relative to the current platform you have? And then also is this January 1 launch? Or how do we think about the specific timing on that? And then my bigger picture question, sorry, I'm going to try and put this all into one. Okay. So on the reference lab in point-of-care overlap, I think we're at like 57% today. I think it was like 45%. And maybe 10 years ago. I am always surprised that isn't even more. Does the oncology test and cancer screening get you there in terms of closing that gap because the bigger opportunity is in reference lab? And how do you think about balancing productivity gains and innovation and those dynamics with also the competitive environment from a reference lab perspective.

So lots to unpack with a series of questions. Let me talk about the cancer screening opportunity and maybe some lessons learnt. There's a couple of things that are really important. There's a difference between suspected cancer and tests that are nonspecific or, let's say, identify risk with some solutions versus a cancer diagnostic screen that actually detects the cancer and classifies it and it's able to distinguish between not just generalize, there may be a risk of generalized cancer versus lymphoma or osteosarcoma or [ mast cell ]. So being able to detect and classify answers very, very important. The other thing to keep in mind is cancer detection beats like many other tests that have the right economic or price point as a profile. So if a cancer test that uses -- if you think about [ GRAIL ], on the human side or some of the other solutions in the animal health market at $450 or $500 a test. It becomes very nichey or specialized versus a general screening test. The third, I think, important lesson is that by breed and by age, there's a very significant increase from a prevalence standpoint that if you can identify that there's just a far greater interest in it. And Tina talked about some of the breeds. I personally have a labrador and I know that he's not quite well but got cancer. And so it's really a question of by that breed, I would want to test, and I would want to test all the data says you'd want to test it 4 years. Onward is part of a screening test. So the economics have to be right. The turnaround time has to be right. Some of the cancer tests on the market 2, 3 weeks of turnaround time, which is just too long. So being able to include it as part of a preventive care profile, identify the breed, have the right detection and performance characteristics with the right economics is what will create this marketplace. And previously, we don't believe that there's any test that can do that like what we're describing. And so the plan is to be able to introduce it in 2025, we're not providing additional calendar specificity. At this point, there'll be more information coming over time. And it does feed into the last question you had around really had to drive multi-modality or had to inspire multi-modality adoption. Keep in mind that the -- by modality, our competitors may have some of those contracts -- may have some of those customers under a long-term contract. So it's just a time and distance dimension how quickly you can inspire customers to use more of the pieces. It's also -- we've also, I think, benefited and will increasingly benefit from software and the way software ties the solutions together, it enables that much better experience, much more integrated experience. And that's more recently where we've been able to really expand that broader offering. So I think it's a combination of the innovation pieces, all of the pieces, point of care, reference labs and software. The ability, as George described, to really form those long-term tenured partnerships with customers that will continue to move in a positive direction for the company.

David Westenberg from Piper Sandler. I want to also go into the oncology opportunity. Where are you at in that $2.5 billion opportunity. I suspect it's probably pretty low. And is it a reference lab or clinical -- in-clinic opportunity right now? And where do you see it tomorrow? I mentioned that because I know there is a competitor that has an in-lab solutions, I mean, in clinic solution. And then where do you envision drug -- drugs to develop because in the human side, it really took innovation around oncology drugs to really drive kind of the diagnostic arm. So where do you see that? And if there is any metrics in terms of sensitivity, specificity, but honestly, positive predictive value metrics that you need to get to in order to feel comfortable with the diagnostic test?

So a lot of questions [ in there ]. See if I can remember all of them. We don't break out by the cancer testing category-specific revenue. What we have disclosed is we do about 1 million, 500,000 tests. Most of those are pathology test. There's also some cytology test connected with it. as well as images with tumors that get sent to or certified radiologists to REIT. The way we think about this cancer panel is it's screening at least the solution that the IDEXX cancer diagnostic solution that we described. So we think appropriately belongs at the reference lab as a screening test it involves several breakthroughs in technology. So we think it's in the right place and with the right turnaround time to be included as part of a preventive care screen, the point of care or inpatient, that's a testing environment, we think is tailor-made for situations like with [ inVue Dx ], lumps and bumps, where a patient actually has something that's clinically visible and symptomatic and the veterinarian may have a suspicion based on, let's say, a mast cell and the skin of the dog that's red and -- or that appears to be growing quickly and wants it to a test right there, a lot of pet owners don't want to wait for pathology submission. So we think in that case, it makes sense, and it's included as part of the inVue Dx there. From a performance standpoint, what's really important is a couple of things. One is you don't have false positives. So the specificity has to be very high. And you also want to be able to detect early and so the sensitivity of the cancer type should also be high. We believe that we have met and will meet their requirements across the cancer types. Keep in mind that from a longer-term opportunity, you asked about positive predictive value. There's a huge number of dogs on a global basis. And because it's the leading cause of mortality amongst dogs, this isn't something that just appears once in a while. The vast, vast majority of dogs through their lifespan will either get cancer or be suspected or as a pet owner, you'll be concerned that, that particular dog or breed may have cancer. So we think it opens up that longer-term opportunity. It's going to -- we're going to have to develop it over time. But as I think George and others have described, we're very well equipped to be able to develop that testing category opportunity.

Great. Jon Block with Stifel. Maybe just the first one, again, to go down the cancer road. I think you guys mentioned the 50% of cancers identified after 3 years. What's the prevalence of those cancers? In other words, will the 50% identify, 80% to 90% of total cases, 30% of total cancer cases. And then what's the ramp to get to the 50%? Is it front-end loaded? You're on or back-end loaded. Maybe if you can give us some color there. And then just second question, just more broadly on visits. You put up some charts but maybe you can expand upon why it remains so depressed. I mean, arguably, some of those labor issues have been subsiding macros, macro. Brian, you obviously gave the guide for '24 but just what do we think about visits heading into '25 because it really is a pretty big swing factor on your growth algo?

Yes. So let me address the cancers piece and we can bring in some other folks to talk about the clinical visit piece and maybe perspectives at the clinic. From the cancer standpoint, the six tests we've described or we plan on doing really represent the majority of cancer types in dogs. So we have picked cancer types that represent the majority, and we're trying to sequence them in a way that from a percentage basis, I think that's what you were getting at, are as front-end loaded as possible. I mean there's a number of factors involved, including you want to make sure the performance is right before you introduce it, you need to have the specificity right. But yes, we want to get to as many as a large percentage of the population as possible, as quickly as possible, and we think we'll make good progress against that. So was that your cancer question in terms of the approach?

yes, that was the approach.

Yes. Here's the challenge and quite honestly, if you take a look at all the data for, let's say, stage 1 and stage 2 cancers, there's not good data out there. There's a lot of study -- there's some studies, but they're very small ends in terms of the prevalence of some of these cancers. So if you back into the -- you sort of know the end state, which is there's a large population of dogs that get cancer and die from cancer as a leading cause of mortality. But when that occurs and what the -- sort of what the prevalence rate by different age cohorts is, it's just not well characterized. And so partly, what we'll be able to do, and we know, for example, lymphoma, large percentage, may even be the largest or the second largest percentage depending upon the study. If you look at -- we'll get all this data, and we'll find out pretty quickly what it looks like and what that profile is. In terms of clinical visits, I'd like to bring George maybe in the discussion and just to provide a perspective at the clinic level in terms of. So Jon's question was around the some of the visit dynamics? And why haven't practices sort of worked through this more quickly or...

Yes. I guess, John, to your point, two lenses I would look through is when the client and the patient present, there is absolutely the highest level of expectation that the right care is going to be provided. So there's no -- I don't hear people sort of moderating their care expectations. There is an expectation of care intensity and we see variability at the practice level. There are practices. We talked about even last night, some of us in Boston, where there's clients waiting for veterinarians. And there are practices where veterinarians are in fact waiting for clients. And that's just simply the dynamic that we see. I think the one area that I'm focused on is whether or not there's a resistance to care by the client, and I don't hear that in the field. I don't hear a client coming in and say, "I'd like to do less". And I simply will echo that at least at the street level, what Tina said, is what we see. We do not see those appointment books opening back up from where they were post pandemic. If you recall, I think there was this appointment book pullback during the Omicron variant that hit in that Q1 a few years ago. I don't hear hospitals saying, okay, who's up for going back to full day Sundays right now? That's not something I hear at this point. So I just think it's going to be a near-term issue. And Jon, our approach commercially is, as I described, let's talk about what we can do to the presenting client and patient by using evidence in data and the growth mindset addressing the customers' needs with the trust that we've built over the last decade to try to create growth for the hospital.

Yes. The one thing I would add to that is if you go back pre-pandemic, there were clinics, I wouldn't call them running sort of classic marketing campaigns, but they thought a lot about how to get patients, clients into the clinic. I think one thing that changed during the pandemic, they had so much volume. They were working at such extended hours. They didn't really have to roll out that playbook in terms of how do I get that patient pet owner into the practice. One thing that I think we're starting to see a change in and maybe it's George's distinction of practices that they have too many clients and practices that don't have enough back to how do I need to run marketing campaigns. How do I need to have? This is cat month, bring your cat in or bring your dog in for a checkup. And the hunger for the type of software solutions that enable veterinary practices to do it, not just at scale, but do it in an appropriate targeted way. That [ hunger ] is pretty high. We're getting a lot of discussions around, how do I run my practice a little bit differently with client acquisition in mind?

It's Navann Ty from BNP Paribas. One more on oncology. I'm curious how IDEXX is engaging with pharma companies to develop diagnostics in the space and to bring an acceptable price point for pet owners? And then my second question is overall on pricing. We had some animal health pharma companies indicating 2025 pricing still above the historical levels. So do we expect to be the same for Diagnostics and IDEXX?

Yes. So I'll address the therapeutic and then ask Brian to talk about pricing. The therapeutic piece, keep in mind that there's actually a pretty large number of potential interventions that veterinarians can do today. There's surgery. There's chemotherapy, a different cocktail mixes, there's radiation therapy planning, then that's a lot. That's more niche. And then there's drugs and you asked specifically about therapeutics. And there are -- I guess, a distinct category maybe from chemotherapy. But there are a number of solutions out there. And I think partly what has been an inhibitor up to this point is the ability to detect the cancer you can't detect the cancer, just it's harder to sort of identify the need for therapeutics and grow that marketplace. I think that with this, and over time, some of the pharma companies out there will see a much bigger opportunity, and we'll bring drugs and we'll bring therapeutics that address that. It's just a matter of time. Given the prevalence and given the very significant opportunities to detect and treat earlier and get better outcomes, it's inevitable.

Yes. Just on pricing, I think we're -- as you know, we have an expectation of about 5%, net price realization this year globally. We'll talk more about that as we share our outlook for next year at the end of the year. We always have approached our pricing strategy aligned with the value that we're delivering. We do factor in inflationary cost impacts as well. So we'll be thoughtful about that. We're very aligned with sustaining strong long-term relationships with our customers and working in partnership with them and communicating the value that we're delivering. So we'll look forward to share more on that as we get closer to our 2025 pricing, which will be communicated late this year.

Mark Massaro, BTIG. Great to be back. Great to see you guys. As we think about the opportunity for InVue as well as the cancer opportunity, I think you talked about 200 bps of revenue growth long term. I'd be curious if you could break that out, I would imagine that InVue might have a bigger opportunity given the price tag? And then I would love some clarity on the technology behind the oncology cancer test. Is it NGS PCR? Is it nucleus homes? And I didn't hear a price, I know you talked about $400 to $500 being niche, should we think closer to the $100, $200 price range?

So maybe I can probably take that on. So that 2% plus growth contribution had a few elements to it. But clearly, the new platforms were part of that. So you have the direct benefits that we'd expect to get as we scale InVue as we'll have another platform that will be a greenfield opportunity as well. So that's an important positive contributor. That includes the benefits that we expect to get from the cancer diagnostic panel that we talked about as well as ongoing innovations that we're bringing to customers in terms of menu expansion. You can see that with the pancreatic lipase test and the Catalyst QC slide. So they're ongoing innovations in that front. But I think discreetly, these new platforms in areas like oncology and the disease franchise development, we see as being a very positive growth resource. On the math, I think I just wanted to share, I think we used for the TAM estimates for cancer, I believe we used $45 for the screening opportunity and $60 for the add in the diagnostic aid for the non-wellness. Just to be clear, that is an IDEXX pricing, but just gives you a sense of how we looked at the TAM opportunity in the analogs that we're showing.

Yes. With respect to technology and technology enablement, we were very careful not to disclose anything that was intentional. It's IDEXX proprietary technology on two different fronts, both testing platforms as well as the biomarker content development. And we think that we have -- we've been working at it a fair number of years, we think it represents a number of significant technical advancements that we're very pleased that will be protected to the extent possible through IP and know-how.

Mike Ryskin, Bank of America. Brian, I want to follow up on the pricing discussion and the framework of the LRP, you showed what price versus volume versus IDEXX execution has been previously, what's been in 2022, '23, '24? And then going forward, I think you had in there as the long term is 3% volume and then the rest of the bridge getting you to that 10% plus. Obviously, right now, we're in a sub-3% volume environment, we're negative 2%, expectations will rebound over time. But that recovery, if and when it happens, there's not going to be an instant snap back. As we look ahead for the next couple of years, it's gradually coming back, what levers are you going to push the most to make up the difference. Again, in the last couple of years, it's been priced, but is price at 5%, 6%, 7% sustainable, especially the current macro environment?

Well, we highlighted the long-term expectation was 2.5% to 4%. So I think that's an appropriate longer-term building block aligned with, again, what we've done historically with our customers and the value we anticipate we can deliver over time. I think we'll -- the near term is there's an inflationary backdrop here as that we'll be working through that we'll factor into our thinking. We're not signaling that this is a long-term higher price realization opportunity for the company. We do think about this, by the way, not as filling a gap, but as what's the value we're delivering, what are the cost dynamics that we're seeing as well in partnership with our customers, and we'll have a thoughtful approach as we advance that. So in terms of leverage for volume growth, we try to highlight them today. I mean the innovation agenda should be something that's additive to us. We're making significant progress in our global commercial capability that will reinforce the utilization expansion over time. I just want to highlight that it continues to expand even with some of the sector dynamics and macro dynamics we've been talking about. And we're very excited about that opportunity as well. And so I think those are foundational building blocks that will help to reinforce driving volume growth for us as we move forward. And clinical visits are a factor that we're working through headwinds that we think are unusual relative to the speed post-pandemic period and appears to be more about macro recently of staffing as a constraint, but I think macro is the dynamic that we're trying to understand better. And what I can say is we're going to focus on driving strong execution and strong financial performance and keep investing towards the long-term potential that we see in this business. It's amazing opportunity, business opportunity, a great franchise. We have great capability in this organization, and we'll keep focusing on the levers that we can influence, and we'll adapt and deliver good financial performance as we grow. That's our commitment.

Like one thing I would just spotlight again is the Vello opportunity. Again, early days, but what we -- as a result of really growing our cloud-based PIMS installed base of placements. And what we're seeing with Vello, and as Michael Schreck said, it's -- we're at Version 1 right now, but quickly proceeding to more featured versions. It really does impact the clinical visit piece. And if you think about the typical practice today, a big challenge for practices is they schedule these visits and they have a lot of no shows. It's a surprising number of no shows. When I go to the dentist. I get four or five reminders within like a 4 day period to show up and don't forget and please call me and they provide a number, and there's just -- but if you at a veterinary practice, and they're all a little bit differently. Sometimes there's no reminder, you get a phone call that the reception is trying to reach you, leaves a message and something happens between the 2 days, you got that voice mail and when you came in. And consequently, what ends up happening is, practices are standing around. It's sort of dead weight loss time where they expected a client, client didn't come in. So I think the opportunity for us is to scale our software business even at a more accelerated rate to put these tools and enhance our practices because it gives them a significant competitive advantage to be able to drive throughput improvements. And of course, that helps them both from a revenue and economic health of the practice perspective but helps us too. Okay. So that's the end of the question-and-answer period. Thank you so much for investing the time and joining us, either in person here at our global headquarters or those who have joined us virtually. I think we -- John, you have a quick announcement you'd like to make in terms of potential [ next test ] for people who are physically here. So don't leave yet. But if we could just end the program now. And again, thank you for joining us.