Core message: Two practices had the same owner, used the same PIMS, charged the same unit prices for comparable services, and received the same vendor unit pricing. Their total In-House Lab COGS still differed substantially. One blended account can also conceal rising analyzer costs when low-cost Manual Diagnostic revenue is growing.
Case Snapshot
Practice 1 and Practice 2 operated under common ownership. The comparison controls for several explanations that often complicate group reviews: ownership, PIMS, client unit pricing, and vendor unit pricing were aligned. The practices were not operationally identical, however. They generated very different amounts and proportions of manual diagnostics, point-of-care testing, and analyzer diagnostics.
Figure 1. Practice 2 incurred substantially more total In-House Lab COGS in both years while reporting a lower blended COGS percentage.
Practice 2 incurred $55,559 more total In-House Lab COGS in 2023 and $48,191 more in 2024. At the same time, its blended COGS percentage was lower because its revenue base and diagnostic mix were different. Total COGS dollars and COGS percentage answer different questions. Both need the three-category context.
The Three-Way Revenue Breakout
PIMS service detail was reclassified by diagnostic methodology. Cytology and PCV or total-solids revenue were classified as Manual In-House Diagnostics. SNAP and CITE revenue were classified as Point-of-Care Testing. The remaining In-House Lab revenue was classified as In-House Analyzer Diagnostics.
Figure 2. Practice 1 generated a much larger share of revenue from POCT, while Practice 2 generated more from Manual and Analyzer Diagnostics.
What the mix changes
Practice 2's manual diagnostic share was 11.0 percentage points higher in 2023 and 12.4 points higher in 2024. Manual services add revenue with comparatively little direct product cost.
Practice 1's POCT share was 20.9 points higher in 2023 and 25.2 points higher in 2024. Kit-based testing carries a direct consumable cost each time a test is used.
Analyzer diagnostics were the largest revenue category at both practices, but the total account did not isolate the related reagent and equipment economics.
Interpretation guardrail: A lower blended COGS percentage does not, by itself, prove stronger purchasing or pricing. In this case, Practice 2 had higher COGS dollars and a lower COGS percentage because it was larger and generated more manual diagnostic revenue.
Isolating Identifiable Point-of-Care Test Purchases
IDEXX invoice exports allowed identifiable SNAP test-kit purchases to be compared with the PIMS service group labeled SNAP & CITE. The practices received the same unit pricing. Their realized POCT cost rates were similar, but not identical.
Figure 3. With identical vendor unit pricing, identified SNAP purchases ranged from 25.6% to 29.2% of related revenue and combined to 26.8%.
Across both practices and both years, identifiable SNAP purchases were $63,388 on $236,947 of related revenue. The four realized rates ranged from 25.6% to 29.2%, a much narrower spread than a review of the broad In-House Lab account might suggest.
Why identical unit prices can produce different realized POCT rates
Expired tests may be discarded without generating revenue.
A test may be rerun without a second client charge.
Inventory movement, incomplete charge capture, waste, credits, complimentary product, and purchase timing can change the period result.
Purchase-based cost is not the same as inventory-adjusted test consumption.
Isolating Identifiable Analyzer Purchases
The same IDEXX invoice exports were used to identify net purchases associated with Catalyst, ProCyte, SediVue, VetStat, and VetTrol. SNAP products and IDEXXCare service-plan charges were excluded. The resulting amounts show direct analyzer purchasing activity, but they are not inventory-adjusted Analyzer Diagnostics COGS.
Figure 4. Practice 2 purchased far more analyzer products in total, while the two practices' purchase-to-revenue rates moved in opposite directions.
Practice 2 purchased approximately $108,000 of identifiable analyzer products in 2023 and $107,000 in 2024, compared with approximately $29,000 and $22,000 at Practice 1. The purchase-to-revenue rates moved in different directions: Practice 1 increased from 34.1% to 37.4%, while Practice 2 declined from 28.3% to 25.5%. These results support investigation, not a conclusion about realized analyzer margin.
Critical interpretation: Net analyzer purchases are not Analyzer Diagnostics COGS. Beginning inventory, ending inventory, purchase timing, credits, and waste are not known. That limitation is itself a management finding: without separate Analyzer revenue, COGS, and inventory controls, higher analyzer purchasing or waste can be hidden by growth in Manual Diagnostic revenue, which carries comparatively little direct product cost.
What the Available Cost Data Can and Cannot Show
Evidence available now | Management conclusion supported |
|---|---|
Total In-House Lab COGS by practice and year | The locations incurred materially different total costs and reported different blended rates. |
Complete PIMS revenue split for Manual, POCT, and Analyzer | The locations produced materially different diagnostic mixes. |
Identifiable IDEXX SNAP purchases | The isolated POCT purchase rates were comparatively close despite the broader account differences. |
Identifiable IDEXX analyzer purchases | The practices had materially different analyzer purchasing levels and purchase-to-revenue rates. |
No inventory-adjusted three-category COGS split | Purchases cannot establish consumed cost or waste without beginning inventory, ending inventory, and reconciled category-level GL activity. |
The identified purchases do not reconcile directly to the blended GL COGS figures, and they should not be forced to do so. The GL account can include other vendors, taxes, freight, credits, timing differences, inventory movement, manual supplies, and misclassified items. The invoice data can identify what was purchased; it cannot show what was consumed, wasted, or held at year-end. The inability to reconcile these measures from one blended account is evidence for the three-category structure and routine category-level reconciliation.
Owner and Group Management Implications
Compare matching modalities. Compare Manual with Manual, POCT with POCT, and Analyzer with Analyzer across locations.
Keep total dollars visible. A low percentage can coexist with substantially higher total spending when the practice is larger.
Prevent manual revenue from masking analyzer economics. Growth in low-product-cost Manual Diagnostics can lower the blended COGS percentage even while analyzer purchases, consumption, or waste are increasing.
Separate mix from execution. Revenue mix explains part of a variance. Expiration, reruns, waste, inventory control, charge capture, and purchasing discipline explain another part.
Use common pricing as a control, not a conclusion. Same prices remove one explanation but do not make utilization or realized cost identical.
Preserve the external roll-up. VizVet Supplemental revenue accounts 5311–5313 roll up to 5301 In-House Lab Revenue, and COGS accounts 6311–6313 roll up to 6301 In-House Lab COGS for Datalink and other external reporting.
Questions the Owner Should Ask Next
Are tests, collection charges, and inventory items classified by methodology in both practices?
Do kit purchases, credits, and inventory adjustments reconcile to POCT test counts and charges?
How many tests expired, were rerun, or were performed without a client charge?
Do analyzer volumes support reagent, control, service, and equipment commitments?
Do beginning inventory, purchases, credits, waste, transfers, and ending inventory reconcile to Analyzer Diagnostics COGS?
Are manual diagnostic services charged and captured consistently at both locations?
Do the three supplemental revenue accounts and three supplemental COGS accounts reconcile to 5301 and 6301 each month?
VizVet Management View
The case does not identify a better-managed or worse-managed practice. It shows why one In-House Lab account is insufficient for evaluating affiliated locations. The total remains useful for each practice's trend and for external reporting. Internal management needs the supplemental detail to explain whether a difference comes from scale, diagnostic mix, price, purchasing, utilization, waste, inventory control, or classification. It also needs matched category reporting so growth in Manual Diagnostic revenue cannot conceal a deteriorating Analyzer Diagnostics cost pattern.
Bottom line: Same owner, same unit pricing, and the same reporting system did not produce the same In-House Lab result. Separating Manual, POCT, and Analyzer revenue and matched COGS turns that difference into a set of questions management can answer.
Data Basis and Analytical Limits
Revenue mix uses PIMS reports labeled as full-year 2023 and 2024. Total In-House Lab COGS uses general-ledger figures labeled for the corresponding years. The supplied exhibits do not show the exact start and end dates for both extract types, so identical date coverage has not been independently confirmed.
The source package also does not document beginning and ending inventory or establish that material credits received consistent treatment across both practices and years. The affiliated-practice comparison should therefore be treated as directional until identical extract dates and consistent inventory and material-credit treatment are confirmed.
The identified POCT and analyzer analyses use vendor purchases rather than inventory-adjusted consumption. Net analyzer purchases include Catalyst, ProCyte, SediVue pay-per-run tests, VetStat, and VetTrol product lines after vendor discounts. SNAP products, IDEXXCare service plans, sales tax, and shipping are excluded from the analyzer totals. Beginning inventory, ending inventory, and waste rates were not available. Displayed amounts are rounded to whole dollars; calculations use the underlying invoice totals. The practices are de-identified as Practice 1 and Practice 2.