IDEXX's higher earnings forecast comes with a lower margin target

IDEXX Laboratories expects higher sales and earnings per share this year, but a lower operating margin than it projected in August. The veterinary diagnostics company’s revised forecasts show why those profit signals can move in different directions.

Its November 2 outlook puts 2026 earnings at $14.96 to $15.16 a share, up from $14.69 to $14.94. The operating margin target, the share of sales left after operating expenses, fell to 32.1% to 32.3% from 32.3% to 32.5%.

What the two forecasts imply

Research by Ticker Byline shows that multiplying the midpoint sales forecast by the midpoint operating margin gives about $1.53 billion of operating profit in both the August and November versions. This is our calculation from the published ranges.

The new sales target is higher, at $4.741 billion to $4.767 billion, but the lower expected margin absorbs much of that extra revenue before it reaches operating profit.

Other assumptions help earnings per share. IDEXX now expects about $32 million of net interest expense, down from $35 million, and a tax rate of roughly 20.5% rather than 21.1%. It also expects average shares outstanding to fall about 2%, versus the earlier range of 1.5% to 2%.

The September quarter grew strongly

Revenue rose 9.9% to $1.214 billion in the quarter ended September 30, 2026. Earnings increased to $4.01 a share from $3.40, and the actual operating margin improved to 33.1% from 32.1% a year earlier.

Recurring diagnostics revenue, from testing supplies and services, grew 11%. IDEXX pointed to more testing, new customers and a larger installed base of instruments. The revised annual margin target still implies an improvement over 2025.

A completed purchase also changes the outlook

IDEXX completed its acquisition of veterinary clinical software business CoVet on September 15 for approximately $250 million, including estimated contingent payments and amounts held back.

The new annual revenue forecast includes about $5 million from CoVet. IDEXX says the lower margin outlook includes acquisition-related effects. The purchase adds software capabilities alongside its testing business, with little acquired revenue yet in the reported quarter.

The IDEXX company profile records the completed acquisition, earlier forecasts and the latest cash, borrowing and earnings figures.