IDEXX Laboratories, Inc. · NASDAQ:IDXX

IDEXX Laboratories — Investor Day (August 2018)

79 slides from IDEXX Laboratories's investor day presentation, Aug 15, 2018

  1. Slide 1: IDEXX Growth Strategy

    IDEXX Growth Strategy Jonathan Ayers, Chairman and CEO IDEXX Investor Day I August 15, 2018 1 © 2018 IDEXX Laboratories, Inc. All rights reserved.

  2. Slide 2: Safe Harbor Disclaimer

    Safe Harbor Disclaimer The following information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations and beliefs, as well as a number of assumptions concerning

  3. Slide 3: IDEXX – Expanding Opportunity to Advance Pet Care

    IDEXX – Expanding Opportunity to Advance Pet Care ▪ Strong market growth with favorable demographic trends ▪ Enduring recurring revenue model ▪ Global leadership with wide innovation gap ▪ Expanding commercial model driving adoption of an elevated standard of pet care ▪ Accelerated organic growth of

  4. Slide 4: The Core Business Model Consists of Profitable Recurring Revenue

    The Core Business Model Consists of Profitable Recurring Revenue Recurring Revenue Comprises 88% of 2017 Total IDEXX Revenue Annual IDEXX Revenue ($Billion) $ 2.1 $2.0B 1.8 Other Revenue 1.5 1.2 $1.1B 0.9 Recurring Revenue3 0.6 0.3 0.0 2010 2017 Recurring as a % of Total 88% IDEXX Revenues 81% 3 Ple

  5. Slide 5: IDEXX Recurring Revenue is Led by CAG Diagnostics

    IDEXX Recurring Revenue is Led by CAG Diagnostics IDEXX Recurring Revenue Annual Recurring Revenue ($Billion)1,3 Components $ 2.1 (88% of IDEXX Total Revenue) 1.8 Water Testing Livestock Testing* 1.5 Veterinary Software and Services** Rapid 10% 1.2 Assay 0.9 IDEXX Companion 30% VetLab®*** Animal 0.6

  6. Slide 6: The Global Market is ~$4.2 Billion with Strong Secular Growth Trends

    The Global Market is ~$4.2 Billion with Strong Secular Growth Trends U.S. represents ~$2.6B, or ~62% and International represents ~$1.6B or ~38% Estimated 2017 Total Companion Animal Diagnostic and Veterinary Software Spending ($M)* Canada Europe U.S. Region Asia Pacific Region Latin America * Reven

  7. Slide 7: Pet Owners View their Pets as Members of their Families

    Pet Owners View their Pets as Members of their Families and Can’t Imagine Giving them Up “I feel that my pet is an important part of 98% my family.” “I couldn’t imagine giving up my pet for 95% any reason.” Percentages represent those responding “Strongly agree” or “Agree”. Source: Pet Owner Survey

  8. Slide 8: Pets Improve People’s Health – The Evidence Continues to Build

    Pets Improve People’s Health – The Evidence Continues to Build Cardiovascular Health* Mental Health Longevity*** American Heart Association 74% of pet owners reported mental Clear correlation between dog issued a scientific statement health improvements from pet ownership and longer life that pet ow

  9. Slide 9: Millennials have become the ‘Pet Generation’

    Millennials have become the ‘Pet Generation’ Millennial Pet Owners’ Attitudes and Behaviors: ▪ 43% Refer to their pet as their “Fur Baby”** ▪ 71% Would take a pay cut to take their pets to work every day*** ▪ 33% of first home buyers cited ‘better space/ yard for their dog’ as a major driver of thei

  10. Slide 10: Early Indications are that Gen Z Love their Pets At Least As Much

    Early Indications are that Gen Z Love their Pets At Least As Much Baby Boomers Millennials Gen Z U.S. Pet Owner Survey* (54 yrs to 72 yrs) (22 yrs to 37 yrs) (Up to 21 yrs) Celebrate Their Pet’s 48% 83% 93% Birthday Celebrate Valentine’s Day 18% 44% 67% 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100

  11. Slide 11: Millennial and Gen Z Are Highly Sensitive to the Needs of their Pets

    Millennial and Gen Z Are Highly Sensitive to the Needs of their Pets U.S. Pet Owner Survey*: % Agreeing with Statement Baby Boomers Millennials & Gen Z (55 yrs to 74 yrs) (18 yrs to 39 yrs) “I rely on my veterinarian for advice 65% 75% about medicine and pet food” “My pet has special health needs” 1

  12. Slide 12: U.S. Market Backdrop: Pet-related Spending Growth Outpaced Consumption

    U.S. Market Backdrop: Pet-related Spending Growth has Significantly Outpaced Personal Consumption U.S. Personal Consumption Expenditure for Key Categories* CAGR** Indexed (1959 = 100) 1959-2017 30,000 Veterinary and Related Services 10.3% 25,000 20,000 15,000 Pets and Related Products 8.6% 10,000 De

  13. Slide 13: U.S. Market Backdrop: Pet Healthcare Bounces Back Faster

    U.S. Market Backdrop: Pet Healthcare Bounces Back Faster and Thrives during Expansions Year-over-year Growth (%)* CAGR 1979-2017 U.S. Veterinary and Related Services CAGR ‘Premium’ over PCE Growth 20% + 350 bps + 240 bps + 450 bps + 460 bps + 320 bps + 340 bps 15% Veterinary and Related Services 10%

  14. Slide 14: All Signs Point to a Second 25-Year Generational Macro-Cycle

    All Signs Point to a Second 25-Year Generational Macro-Cycle of Global Growth Reasonable Scenario: In 2042, International reaches U.S. 2017 level of Dx utilization** Estimated Worldwide Companion Animal Diagnostic Spending ($M)* CAGR 2017 - 2042 $24B Reasonable Scenario: High Single-digit Growth ~ 8

  15. Slide 15: Vet Healthcare Spending Averages 0.3% of Total Household Spending

    Vet Healthcare Spending Averages 0.3% of Total Household Spending 2017 U.S. Total Pet Spending as a Percentage of Household Consumption Spending by Household Income Segment* Veterinary Service Spending 1.1% 1.1% 1.0% 1.1% ~0.3% 0.9% of Household Spending < $20k $20 - 39k $39 - 65k $65k – 109k $109k

  16. Slide 16: We Lead with Best-in-Class Offerings and Global Scale

    We Lead with Best-in-Class Offerings in Each Diagnostic and Software Modality and with Global Scale Estimated 2017 Total Companion Animal Diagnostic and Veterinary Software Spending ($M)* Canada EMEA China Japan U.S. Other ~40% Asia $1.7 B Latin America Australia & New Zealand * Revenue estimated at

  17. Slide 17: IDEXX’s Innovation has Created a Highly Proprietary Diagnostic Offering

    IDEXX’s Innovation has Created a Highly Proprietary Diagnostic Offering Comparison of Annual R&D Investment of Major Veterinary Diagnostics Companies ($M), calendar years shown 120 109 98 100 101 100 IDEXX Invests More than 80% of 88 Identifiable Diagnostic Industry R&D 82 80 60 40 19 23 15 18 20 13

  18. Slide 18: IDEXX VetLab Instrument Suite - Innovation that Uniquely Expands Utility

    IDEXX VetLab Instrument Suite - Innovation that Uniquely Expands Utility Fully-Integrated Diagnostic Solution with IDEXX Reference Lab Ordering and Results Through VetConnect® PLUS IDEXX VetLab Station IDEXX Reference Lab Results Practice Management System 2-Way Integration Catalyst One® ProCyte Dx®

  19. Slide 19: Preventive Care Bloodwork – The Medical Evidence from Big Data

    Preventive Care Bloodwork – The Medical Evidence from Big Data CBC Wellness exam CHEM 22 SDMA Analysis ? 268,817 visits 76% dogs; 24% cats What 5,016 practices Proportion Indicate Potential Health Concerns? Source: Data on file at IDEXX Laboratories, Inc. Westbrook, Maine USA. 19 © 2018 IDEXX Labora

  20. Slide 20: Preventive Care Bloodwork Frequently Uncovers Significant Findings

    Preventive Care Bloodwork Frequently Uncovers Significant Findings 268,817 visits from 5,016 practices 1 in 7 adults dogs aged 3–6 years; cats aged 2–8 years 1 in 5 seniors Preventive care profiles (Chem 22 with CBC and dogs aged 7–10 years; IDEXX SDMA); revealed that three or more clinically cats a

  21. Slide 21: The Addition of IDEXX SDMA is Essential to Preventive Care Bloodwork

    The Addition of IDEXX SDMA is Essential to the Value of Preventive Care Bloodwork Adults Seniors Geriatrics 40% 40% 70% 43% 30% 21% 15% 15% 9% Chem 22 + CBC Plus SDMA Chem 22 + CBC Plus SDMA Chem 22 + CBC Plus SDMA Based on analyses of combined dogs and cats; 268,817 profiles; 5,016 North American v

  22. Slide 22: IDEXX SDMA Also Adds Significant Value to Non-Wellness Testing

    IDEXX SDMA Also Adds Significant Value to Non-Wellness Testing Percentage of Patients with Clinically Significant Increases in Creatinine or SDMA (non-wellness visits) Adults Seniors Geriatrics 109% 28% 110% 124% 12% 14% 9% 4% 5% Creatinine SDMA Creatinine SDMA Creatinine SDMA Source: Based on analy

  23. Slide 23: Why Does the Addition of Just SDMA Testing Increase the Findings so Much?

    Why Does the Addition of Just SDMA Testing Increase the Findings so Much? An Increased SDMA Reflects Both Kidney Disease and Other Diseases that Impact Kidney Function Diabetes Chronic Kidney Disease Infections sepsis (Lyme nephritis) Urinary Track Infection (pyelonephritis) Cancer SDMA Obstruction

  24. Slide 24: Catalyst SDMA Launched in January, 2018

    Catalyst SDMA Launched in January, 2018 IDEXX SDMA® at the Over 50% Reference Lab*: of Catalysts globally have already Over 17 Million purchased* Increasing Recognition as an Essential Element of the Chemistry Panel * As of August 3, 2018. 24 © 2018 IDEXX Laboratories, Inc. All rights reserved.

  25. Slide 25: SediVue Dx - Urinalysis Plays a Role in Both Sick and Wellness Visits

    SediVue Dx - Urinalysis Plays a Role in Both Sick and Wellness Visits 1 in 3 urinalyses in wellness visits have significant findings* Wellness urinalysis addressable market barely penetrated today 5,200 instruments placed to date used primarily for sick animal differential STR STR diagnoses * IDEXX

  26. Slide 26: Fecal Antigen Presents a ~$600 Million Total Addressable Annual Market

    Fecal Antigen Presents a ~$600 Million Total Addressable Annual Market Opportunity* 2017 North America Companion Animal Estimated Fecal Testing Market 91 (Millions Annually) Hookworm Roundworm Whipworm 66 40 Less than 4% of fecal tests run today benefit from 1.5 Fecal Antigen Technology Number Numbe

  27. Slide 27: IDEXX Fecal Antigen – The Medical Evidence

    IDEXX Fecal Antigen – The Medical Evidence Uncovers 2x ▪ Fecal antigen uncovers underlying Underlying 3.4% intestinal parasite infections missed infections IDEXX by microscopy used in the Fecal reference labs Antigen Panels ▪ Fecal antigen – IDEXX-proprietary 1.7% (IDEXX Traditional Reference ▪ A fe

  28. Slide 28: Fecal Antigen in IDEXX Reference Labs – Early Stages of Adoption

    Fecal Antigen in IDEXX Reference Labs – Early Stages of Adoption North America Reference Lab Fecal Testing Revenue ($M) $120 Million Incremental Annual Panels with Revenue IDEXX Fecal Antigen Opportunity in Traditional Five Years Parasitology Panels * * All references to 2018 YTD mean January 1, 201

  29. Slide 29: U.S. Transformation Has Expanded our Presence with Customers

    IDEXX U.S. Transformation Has Expanded our Presence with Customers, Resulting in an Accelerated Rate of Adoption of IDEXX’s Proprietary Innovations 5-Year Revenue Potential Rate of Organic Growth U.S. CAG Diagnostics 9% - 13% Recurring Revenue 2,3,5 + 13% Compound Annual Growth Rate 490 435 445 390

  30. Slide 30: Expanding International CAG Commercial Presence Supported Accelerated Growth

    Our Expanding International CAG Commercial Presence has Supported Accelerated CAG Dx International Recurring Revenue Growth 5-Year Growth Rate Potential Rate of Organic Growth 12% - 16% + 14% Compound Annual International CAG Growth Rate Diagnostics Recurring Revenue 2,3,5 Total International 390 CA

  31. Slide 31: Catalyst Placements Continue to be the Key Growth Driver Outside North America

    Catalyst Placements Continue to be the Key Growth Driver Outside of North America, with Strong Runway for Foreseeable Future Catalyst Analyzer Placements Outside North America Catalyst loyalty rates exceeding 99%! * * 2018YTD reflects placements through June 30, 2018. 31 © 2018 IDEXX Laboratories, I

  32. Slide 32: Continued 10%+ Annual Revenue Growth Potential

    Continued 10%+ Annual Revenue Growth Potential Driven By Expansion of CAG Diagnostics Recurring Revenue IDEXX Total Company Annual Revenue Growth Potential 2023 vs. 2018E, ~2023 Constant Currency* Revenue 6% - 8%*** 8% - 12%*** 12% - 16%*** 10%+ Compound Annual Growth Rate 9% - 13%*** 2018E** Revenu

  33. Slide 33: IDEXX – Exceptional, Durable Growth and Returns

    IDEXX – Exceptional, Durable Growth and Returns An Enduring Recurring Revenue Model with ... exceptionally long-run growth dynamics... ... accelerated by IDEXX’s unique innovation and growing commercial model... ... generating exceptional financial returns. 33 © 2018 IDEXX Laboratories, Inc. All rig

  34. Slide 34: IDEXX Financial Review

    IDEXX Financial Review Brian McKeon, Executive Vice President and CFO 34 IDEXX Investor Day I August 15, 2018 © 2018 IDEXX Laboratories, Inc. All rights reserved.

  35. Slide 35: Financial Review – Key Messages

    Financial Review – Key Messages Accelerated growth, overdelivering against our long-term financial goals Tremendous, long-term potential in developing core CAG business Increasing high-return investments aligned with growth opportunity Well positioned to deliver continued strong long-term financial

  36. Slide 36: We are Over-Delivering Against our Long-term Financial Goals

    We are Over-Delivering Against our Long-term Financial Goals Introduced in 2015 Multi-Year Goals 2016 2017 2018E * Organic Revenue Growth5 10%+ 11.4% 10.4% 11.5% - 12.5% Operating Margin Gain 50 bps+ 170 bps 140 bps 90 - 130 bps (Adjusted Constant Currency)7 EPS Growth 15% - 20% 25% 21% 32% - 36% (C

  37. Slide 37: Strong Execution Yielding Outstanding Returns

    Strong Execution Yielding Outstanding Returns After-Tax Return on Invested Capital, Excluding Cash & Investments9 48% 42% 34% 29% 29% * 2014 2015 2016 2017 2018E * All references to 2018E reflect the midpoint of 2018 outlook communicated August 1, 2018. Please refer to our Safe Harbor Disclaimer. 9

  38. Slide 38: Overall Growth has Accelerated to 10%+

    Overall Growth has Accelerated to 10%+ Driven by CAG Diagnostics Recurring Annuity Gains Annual CAG Diagnostics Recurring Normalized Organic Revenue Growth2,3,5 Growth before Normalization for Changes in Distributor Inventory and Margin Capture Related to 2015 U.S. Go-Direct * * All references to 20

  39. Slide 39: Durability of CAG Recurring Annuity Continues to Strengthen

    Durability of CAG Recurring Annuity Continues to Strengthen Annual U.S. Customer Revenue Retention Rates Catalyst® 98.3% 98.1% Consumables 97.7% 97.4% Reference Lab 97.2% 96.4% 96.1% 96.7% 96.2% 95.8% 95.8% 94.6% 2013 2014 2015 2016 2017 2018YTD * * All references to 2018 YTD mean January 1, 2018 th

  40. Slide 40: Key Growth Drivers: Global Catalyst Installed Base Expansion

    Key Growth Drivers: Global Catalyst Installed Base Expansion Worldwide Catalyst Installed Base Number of Active Installed Catalysts Catalyst One Launch North America Catalyst Dx Launch International** * * 2018 YTD as of June 30, 2018. ** International installed base excluding Canada. 40 © 2018 IDEXX

  41. Slide 41: Key Growth Drivers: Accelerated U.S. Reference Laboratory Growth

    Key Growth Drivers: Accelerated U.S. Reference Laboratory Growth U.S. Reference Lab Organic Revenue Growth by Driver5,* 15% 15% 14% 13% Price 11% Net Customer Acquisition Same Customer Volume * * Includes U.S. Reference Lab revenue. International Reference Lab organic revenue will be discussed in th

  42. Slide 42: Key Growth Drivers: Greenfield Innovation Creating Large, New CAG Franchises

    Key Growth Drivers: Greenfield Innovation Creating Large, New CAG Franchises … Worldwide Sedivue Dx Installed Base Number of Active Installed SediVue Dx Instruments 6,000 5,000 4,000 3,000 2,000 1,000 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2016 2017 2018 42 © 2018 IDEXX Laboratories, Inc. All rights reserved.

  43. Slide 43: Key Growth Drivers: Greenfield Innovation Driving Annuity Revenues

    Key Growth Drivers: Greenfield Innovation … Which Drive Enduring, High Margin Annuity Revenues Worldwide Sedivue Dx Recurring Revenue ($M)* 2016 2017 2018 * SediVue Dx Recurring Revenue is reported within CAG Diagnostics recurring revenue and includes Sedivue consumables, services and accessories. 4

  44. Slide 44: Key Growth Drivers: Enhanced Direct Commercial Capability

    Key Growth Drivers: Enhanced Direct Commercial Capability Total U.S. and International CAG Field-Based Professional Headcount* 880 900 800 2x 775 700 674 603 U.S. 600 500 437 465 400 300 International 200 100 0 2013 2014 2015 2016 2017 2018E ** * Includes all field-based sales and technical services

  45. Slide 45: High Incremental Return on CAG Organic Growth Investments

    High Incremental Return on CAG Organic Growth Investments Global CAG Incremental Opex & Gross Profit 2014 vs. 2018E* (Constant Currency)4 ▪ “To Date” Incremental ROIC 120%+ ▪ Estimated Annuity NPV => 6x Incremental Opex Total Opex Investment Gross Profit 2014 – 2018E* Incremental ROIC: Compares actu

  46. Slide 46: Continued 10%+ Annual Revenue Growth Potential

    Continued 10%+ Annual Revenue Growth Potential Driven by Expansion of CAG Diagnostics Recurring Revenue IDEXX Total Company Annual Revenue Growth Potential 2023 vs. 2018E, ~2023 Constant Currency* Revenue 6% - 8%*** 8% - 12%*** 12% - 16%*** 10%+ Compound Annual Growth Rate 9% - 13%*** 2018E** Revenu

  47. Slide 47: High U.S. CAG Diagnostics Recurring Revenue Growth Potential

    High U.S. CAG Diagnostics Recurring Revenue Growth Potential Driven by Strong Market Growth, Customer Acquisition and Innovation IDEXX U.S. CAG Dx Recurring Revenue ~2023 Annual Growth Potential – Next Five Years Revenue 2.5% - 4%*** Constant Currency* 9% - 13% Compound Annual 1% - 2%*** Growth Rate

  48. Slide 48: Higher International CAG Diagnostics Recurring Revenue Growth Potential

    Higher International CAG Diagnostics Recurring Revenue Growth Potential Supported by Catalyst Expansion IDEXX International CAG Dx Recurring Revenue ~2023 Annual Growth Potential Next Five Years Revenue 2% - 3%*** Constant Currency* 12% - 16% 4% - 5%*** Compound Annual Growth Rate 6% - 8%*** 2018E**

  49. Slide 49: Key Growth Drivers: Greenfield and New Innovation

    Key Growth Drivers: Greenfield and New Innovation IDEXX Greenfield and New Innovation – Annual Contribution to Revenue Growth ($M) Estimated Achievement & Future Potential Fecal Antigen New +1% SediVue IDEXX SDMA + 0.5% +1% - 1.5% Other New Fecal Products(1) Antigen + 0.5% SediVue® + 0.5% IDEXX SDMA

  50. Slide 50: Strong Growth Supports Operating Margin Gains

    Strong Growth Supports Operating Margin Gains Operating Margin, Reported and Adjusted Constant Currency4,7 23% Reported7 22% (Adjusted for Non-Recurring Items) 21% Adjusted Constant Currency7 20% 19% 18% 17% 16% 15% 14% 2014 2015 2016 2017 2018E* * All references to 2018E reflect the midpoint of 201

  51. Slide 51: Operating Margin Outlook

    Operating Margin Outlook Targeting Continued Solid Gains While Increasing Growth and Enabling Investments Margin Drivers 2016-2018E* 2019 Target Longer-Term Potential Gross Margin Expansion CAG Recurring Annuity Growth (Price & Mix) Lab Scale/Productivity Sourcing/Manufacturing (Cost/Mix) Growth Inv

  52. Slide 52: Increased Organic Capital Allocation

    Increased Organic Capital Allocation Capital and Instrument Program Investments ($M) Key Drivers ▪ Accelerated program instrument Instrument programs placements (IDEXX 360) Other capital ▪ Large facility projects (German core lab, Westbrook HQ) Large facility projects ▪ Increased lab capacity and Ma

  53. Slide 53: Substantial U.S. Tax Reform Benefits Support Increased Investment

    Substantial U.S. Tax Reform Benefits Support Increased Investment Effective Corporate Tax Rate (%) 30.9% U.S. Tax Reform ▪ Raises attractiveness of U.S. 8 - 9% Rate Benefit investment 19.0% - 20.0% ▪ 8% - 10% increase in operating cash flow ▪ Global investment flexibility (reduced tax friction) 2017

  54. Slide 54: Continued Strong Free Cash Flow Outlook

    Continued Strong Free Cash Flow Outlook Free Cash Flow ($M)8 350 300 250 200 150 100 50 0 2014 2015 2016 2017 2018E * Expect 2018/2019 free cash flow conversion at 70% - 75% of net income (as we advance major projects and increase growth capital deployment) * All references to 2018E reflect the midp

  55. Slide 55: Moderated Leverage Levels

    Moderated Leverage Levels (Reflects Post-Tax Reform Optimization) Debt to Adjusted EBITDA10 Ratio 3.5x 3.0x 2.5x Gross 2.0x 1.5x Net 1.0x 0.5x 2012 2013 2014 2015 2016 2017 2018 YTD* * All references to 2018 YTD mean January 1, 2018 through June 30, 2018. 10 Non-GAAP financial measure, please refer

  56. Slide 56: Capital Allocation Aligned with Core Business Growth and Shareholder Value

    Capital Allocation Aligned with Focus on Core Business Growth and Shareholder Value Creation Capital Allocated to Share Repurchases (Annually, $M) • Emphasis on organic growth $700 investment $600 • Support focused acquisition $500 strategy (technology, lab and distributor fold-in’s) $400 $300 • All

  57. Slide 57: Well-Positioned to Drive Sustainable, Strong Financial Performance

    Well-Positioned to Drive Sustainable, Strong Financial Performance Long-Term Financial Model* (Average Annual Constant Currency Gains) Revenue Operating Capital Long-Term Growth Margin Allocation EPS Growth Expansion Leverage Potential** 10%+ 50-100 +1%-2% 15%-20% bps Incremental EPS Growth * These

  58. Slide 58: IDEXX Veterinary Software & Services

    IDEXX Veterinary Software & Services Mike Erickson, PhD, Corporate Vice President IDEXX Investor Day I August 15, 2018 58 © 2018 IDEXX Laboratories, Inc. All rights reserved.

  59. Slide 59: Veterinary Health Services are Inherently Information and Workflow Intensive

    Veterinary Health Services are Inherently Information and Workflow Intensive 59 © 2018 IDEXX Laboratories, Inc. All rights reserved.

  60. Slide 60: IDEXX Veterinary Software Provides Critical Tools for the Veterinary Team

    IDEXX Veterinary Software Provides Critical Tools for All Members of the Veterinary Team… Practice Staff Care Team Corporate Practice Manager Veterinarian Technician CIO and Group Manager • Run the practice • Deliver care • Run diagnostics • Manage fragmented IT environment • Develop and manage staf

  61. Slide 61: …And Supports Diagnostics Loyalty and Growth

    …And Supports Diagnostics Loyalty and Growth Our best customers use IDEXX software… • 2x IDEXX diagnostics per customer • Far more loyal to IDEXX diagnostics 61 © 2018 IDEXX Laboratories, Inc. All rights reserved.

  62. Slide 62: IDEXX Developed and Acquired Broad Capabilities in Veterinary Software

    IDEXX has Developed and Acquired Broad Capabilities to Establish Leadership in Veterinary Software 1995 2011 2012 2013 2014 2015 2016 2017 2018 2015 Q3 2013 Q2 Launched 2018 Q3 1997 2011 Cloud image web-based PACS 250M images in Acquired Launched storage & and IDEXX Neo cloud (~1M Better Choice I-Vi

  63. Slide 63: IDEXX Veterinary Software Strategy has Four Pillars

    IDEXX Veterinary Software Strategy has Four Pillars 1 2 3 4 Leading PIMS Valuable Apps Secure Solutions for Solutions and Services Sanctioned API Corporate Groups Critical customer real Value created here Connecting PIMS and Addressing unique estate through recurring Apps, ensuring patient enterpris

  64. Slide 64: Expanding Global Footprint of PIMS and Cloud Technology

    1 Expanding Global Footprint of PIMS and Cloud Technology 64 © 2018 IDEXX Laboratories, Inc. All rights reserved.

  65. Slide 65: PIMS + Apps/Services Together Form a Complete Solution

    2 PIMS + Apps/Services Together Form a Complete Solution Diagnostics & Imaging VetConnect PLUS WebPACS Wellness Clinical Plans Petly Plans Workflow Smart Flow PIMS Client Payment Engagement Processing Pet Health Network Pro Payments Referral Data Security Management Data Backup & rVetLink Recovery M

  66. Slide 66: VetConnect PLUS is Veterinary’s Largest Global Application

    DIAGNOSTICS & IMAGING 2 VetConnect PLUS is Veterinary’s Largest Global Application • 23,000+ active practices • 282M+ results views • 136M+ patients • 87% of U.S. Reference Lab submissions 66 © 2018 IDEXX Laboratories, Inc. All rights reserved.

  67. Slide 67: rVetLink Connects Network of Specialty and GP Practices

    REFERRAL MANAGEMENT 2 rVetLink is First-and-only Cloud Application that Connects Network of Specialty and GP Practices Referring DVM Cloud portal Medical records and images Integration with PIMS Automated medical notifications eReferral tools Mobile app 67 © 2018 IDEXX Laboratories, Inc. All rights

  68. Slide 68: Smart Flow Optimizes Clinical Workflow

    CLINICAL WORKFLOW 2 Smart Flow Optimizes Clinical Workflow – Saving Time, Paper and Ensuring all Charges Get Captured 68 © 2018 IDEXX Laboratories, Inc. All rights reserved.

  69. Slide 69: DataPoint Provides Differentiated Services for App Partners

    3 DataPoint Provides Differentiated Services for App Partners – Real-time Read/Write ▪ Automatically validates claim and reimburses practice during patient check-out ▪ Enabled by DataPoint’s unique real-time PIMS database integration functionality 69 © 2018 IDEXX Laboratories, Inc. All rights reserv

  70. Slide 70: Enterprise Technology Driven by Unique Needs of Corporate Groups

    4 Enterprise Technology Driven by Unique Needs of Corporate Groups Secure API for Enterprise Technology Stack (illustrative) 3rd-party Apps Client PIMS CRM Engagement Diagnostics Inventory & HR/Payroll/Training & Imaging Ordering Clinical Business $ Financial/Audit Workflow Intelligence Referral Dat

  71. Slide 71: A National Field Service Team that Installs, Trains, and Optimizes Software Tools

    A National Field Service Team that Installs, Trains, and Optimizes Software Tools 300+ years of experience in veterinary practices 9,000+ practice visits annually 60+ user group meetings across U.S. 71 © 2018 IDEXX Laboratories, Inc. All rights reserved.

  72. Slide 72: IDEXX Software is Advancing Diagnostics and Pet Health

    IDEXX Software is Advancing Diagnostics and Pet Health ▪ IDEXX is a leader in Veterinary Cloud Software Technologies ▪ Critical tools for veterinary team and corporate groups ▪ Drives IDEXX Diagnostics loyalty and growth ▪ Source of profitable SaaS recurring revenue 72 © 2018 IDEXX Laboratories, Inc

  73. Slide 73: Appendix

    Appendix

  74. Slide 74: Footnotes

    Footnotes 1 IDEXX Reportable Segment Revisions and Divested Revenues: Prior to January 1, 2015, our Companion Animal Group (“CAG”) segment included herd testing diagnostic services processed within and managed by our CAG reference laboratories. We have transitioned the responsibility for these diagn

  75. Slide 75: Footnotes

    Footnotes 5 Organic Revenue Growth: Organic revenue growth is a non-GAAP financial measure and excludes the impact of changes in foreign currency exchange rates and revenue from business acquisitions. Management believes that reporting organic revenue growth provides useful information to investors

  76. Slide 76: Footnotes

    Footnotes 8 Free Cash Flow and the Ratio of Free Cash Flow to Net Income: Free cash flow is a non-GAAP financial measure. Free cash flow means, with respect to a measurement period, is the cash generated from operations during that period, including tax benefits attributable to share-based compensat

  77. Slide 77: Exhibit A: Reported to Organic Growth Reconciliation

    Exhibit A: Reported to Organic Growth Reconciliation Reconciliation of Annual Organic Revenue Growth CAG Diagnostics Recurring 3 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD Reported Growth 6% 11% 8% 9% 8% 10% 12% 13% 16% Currency Impact 4 1% 3% -2% 0% -1% -7% -1% 0% 3% Acquisition Impact 1% 0%

  78. Slide 78: Exhibit B: Reported to Adjusted Constant Currency Operating Margin

    Exhibit B: Reported to Adjusted Constant Currency Operating Margin 2014 2015 2016 2017 2018E (Midpoint) Constant Currency Operating Margin (Dollars in millions) Op. Op. Op Op. Op Op. Op. Rev Op Marg Rev Rev Rev Op Marg Rev Op Marg Profit Profit Marg Profit Marg Profit Profit Reported Operating Margi

  79. Slide 79: Exhibit D: After-Tax Return on Invested Capital, Excluding Cash and Investments

    Exhibit D: After-Tax Return on Invested Capital, Excluding Cash and Investments (Dollars in millions) Year Ended December 31 Numerator 2013 2014 2015 2016 2017 Income from operations (as reported) $ 267 $ 260 $ 300 $ 350 $ 413 After-tax income from operations * $ 205 $ 209 $ 223 $ 258 $ 315 Denomina

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