Idexx Laboratories, Inc. · NASDAQ:IDXX
Idexx Laboratories — Investor Day (August 2021)
96 slides from Idexx Laboratories's investor day presentation, Aug 12, 2021
Slide 1: IDEXX Opportunity and Strategy Overview
IDEXX Opportunity and Strategy Overview Jay Mazelsky, President & CEO IDEXX Investor Day I August 12, 2021 1 © 2021 IDEXX Laboratories, Inc. All rights reserved.
Slide 2: Jay Mazelsky, President and Chief Executive Officer
Jay Mazelsky President and Chief Executive Officer Shu-Shu 2 © 2021 IDEXX Laboratories, Inc. All rights reserved.
Slide 3: Safe Harbor Disclaimer
Safe Harbor Disclaimer This presentation 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 future
Slide 4: IDEXX Focus: Increasing Companion Animal Healthcare Globally
IDEXX Focus: Increasing Companion Animal Healthcare Globally Through Innovation, Insight and Customer-focused Engagement Decades+ opportunity to increase standard of care with ~$37 billion TAM Innovation delivering best-in- class, integrated diagnostic and software solutions Global commercial
Slide 5: Consistent Strategy Yields High Long-term Revenue Growth and ROIC
Consistent Strategy Yields High Long-term Revenue Growth and ROIC IDEXX Revenue and Normalized Organic Revenue CAGRs ($B)3 Key Growth Drivers $2.7B 11% Innovation: diagnostic menu, CAGR new and existing platform extensions, integrated software 8% $1.6B Direct commercial model with CAGR subject m
Slide 6: Outstanding Financial Performance Driven by Expanding CAG Diagnostics Recurring Revenues
Outstanding Financial Performance Driven by Expanding CAG Diagnostics Recurring Revenues IDEXX CAG Diagnostics Recurring Revenue and IDEXX Comparable Normalized Organic Revenue CAGR ($B)1,3 EPS Growth CAGR (%)6 $7.0 $2.1B $6.0 13% CAGR International $5.0 27% CAGR $4.0 9% $1.1B CAGR $3.0 $0.7B 14% U.
Slide 7: Accelerated CAG Diagnostics Growth Seen Globally Through Pandemic
Accelerated CAG Diagnostics Growth Seen Globally Through Pandemic H1 2021 IDEXX CAG Diagnostics Recurring Revenue Organic Year-over-year Growth2 2-Year Average Organic Growth2 Worldwide 16.5% 35% 30% International 18.5% 25% U.S. 15.5% 20% 15% 10% 5% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2019 2020 2021 2
Slide 8: Our Purpose is Reflected in Our Work and Contributions to Community
Our Purpose is Reflected in Our Work and Contributions to Community Creating Caring for Our Fostering Water, Opportunities for the Companions Climate and Diverse Leaders of Food Security Tomorrow Solutions Advance diversity, equity and inclusion in Support access to veterinary care for Cultivate for
Slide 9: Decades+ Opportunity for Profitable Growth in Diagnostics and Software Globally
IDEXX has Decades+ Opportunity for Profitable Growth in Diagnostics and Software Globally, with the Greatest Untapped Opportunity Internationally Worldwide Total Addressable Companion Animal Diagnostics Revenue Opportunity ($B)* Latin America Total Worldwide TAM ~$37B Region $6B Total Worldwide Segm
Slide 10: Companion Animal Diagnostics is an Attractive, Resilient Sector
Companion Animal Diagnostics is an Attractive, Resilient Sector with Even Greater Potential Coming out of COVID Period U.S. Personal Consumption Expenditure, IDEXX U.S. CAG Dx Recurring Normalized Organic Revenue3 and U.S. Companion Animal Dx Revenue per Practice Year-over-year Growth 25% IDEXX CAG
Slide 11: Increases in Bloodwork Testing Utilization have Accelerated
Increases in Bloodwork Testing Utilization have Accelerated % of U.S. Clinical Visits % of U.S. Wellness Clinical Visits % of U.S. Non-wellness Clinical Visits including Bloodwork including Bloodwork including Bloodwork 30% 30% 30% + 1.2% + 0.7% per year + 0.6% + 0.9% 25% 25% 25% 23.4% per year 22%
Slide 12: Testing Begets Testing
Testing Begets Testing Practices with higher bloodwork utilization in-house have higher utilization at reference labs Percentage of 2020 Clinical Visits Percentage of 2020 Clinical Visits Including a Chemistry Panel by Practice Decile Including a CBC by Practice Decile 30% 27% 24% 21% 21% 19% 19% 19
Slide 13: Diagnostics Sector is Vastly Underserved Globally
Diagnostics Sector is Vastly Underserved Globally 2020 Diagnostic Revenue per Companion Animal Practice ($k)* Top 14 Countries in terms of Diagnostic Segment Revenue $79 $45 $40 $39 $31 $26 $19 $16 $15 $14 $12 $11 $8 $6 United States Next 13 Countries in Terms of Total Diagnostic Segment Revenue * R
Slide 14: Fully-integrated Multi-modality Diagnostic and Software Solution
IDEXX Offers a Fully-integrated Multi-modality Diagnostic and Software Solution Meeting Customers’ Needs in a Differentiated Way VetConnect PLUS Diagnostics & Imaging VetConnect® PLUS IDEXX Web PACS™ Wellness Plans Petly® Plans Clinical Workflow Vet Radar, Smart Flow Client Engagement Pet Health Net
Slide 15: Multi-modality, Integrated Software Model Enables Flexibility for Customers
Multi-modality, Integrated Software Model Enables Flexibility for Customers More and more practices choose IDEXX across modalities IDEXX U.S. Companion Animal Customer Overlap Percentage of IDEXX Reference Lab or IDEXX In-house Chemistry Platform Customers Who are IDEXX Customers for Both* IDEXX Ref
Slide 16: Sustained Focus on Best-in-class Customer Experience Recognized
Sustained Focus on Best-in-class Customer Experience Recognized Ranked first on several key dimensions in recent U.S. survey 2021 IDEXX Ranking by U.S. Veterinary Practices IDEXX U.S. Net Promoter Score** among Animal Health Manufacturers* Overall Company Performance #1 57 60 World-class = 50 Bringi
Slide 17: Growth Strategy Driven By Innovation - Focused on Four Pillars
Growth Strategy Driven By Innovation - Focused on Four Pillars A Instrument Platforms vs. “one-and-done boxes” delivering on our Platform “technology for life” promise Development B Differentiated Addressing unmet patient needs with best-in-class diagnostic Assay Development assays, supported by cli
Slide 18: IDEXX's Innovation Built on Decades of Capability Development
IDEXX’s Innovation has been Built on Decades of Capability Development Selected IDEXX Innovations Instrument Platform Development Catalyst ProCyte LaserCyte® Catalyst SNAP® SediVue ProCyte Dx® Dx® Dx One® Pro Dx® OneTM IDEXX SDMA® SNAP® SNAP® Differentiated SNAP® Feline 4Dx® Assay Development 4Dx® F
Slide 19: Kerry Bennett
Kerry Bennett Senior Vice President, Corporate Strategy and Advanced Analytics Ringo 19 © 2021 IDEXX Laboratories, Inc. All rights reserved.
Slide 20: Medical Services Strongest Driver of Total Practice Revenue Growth
Medical Services are the Strongest Driver of Total Practice Revenue Growth, with High-growth Diagnostics Uncovering Needs for Clinical Intervention Average U.S. Revenue per Practice by Segment ($M)* Total U.S. Segment CAGR %*** 2010 – 2015 2015 – 2020 2010 – 2020 $1.6M Total 5.5% 7% 6% Product Oth
Slide 21: U.S. Diagnostic Sector Revenue Growth Jumped to ~13% in 2020
U.S. Diagnostic Sector Revenue Growth Jumped to ~13% in 2020 Largely driven by increased diagnostic frequency Contributors to U.S. Companion Animal Diagnostic Revenue Growth* Average of 2014 – 2019 Year-over-year Growth (%) 2020 Year-over-year Growth (%) 14% 14% + 1% + 13% + 5.5% 12% 12% 10% + 1% +
Slide 22: Pet Diagnostics Growth Aided by Four Tailwinds
Pet Diagnostics and Software Revenue Growth Aided by Four Tailwinds, with Potential Future Moderation from Vet Capacity and Return to “Normalcy” Tailwinds Potential Headwinds Strengthening Pet – Parent Bond Capacity Constraints: Supply of Veterinarians, Vet Techs Vet Clinic and Nurses May be New Car
Slide 23: Pet Parents Feel Even Closer to Their Pets
Pet Parents Feel Even Closer to Their Pets and Prioritize Their Health Agreed that taking care of their pet’s health Agreed that taking good care of my pet means is as important to them as taking care of they have regular visits with a veterinarian their own health 88% 86% Source: Based on responses
Slide 24: People Love Their Pets Around the World
People Love Their Pets Around the World and are Willing to Make Financial Tradeoffs for Their Care Percentage of Pet Parents Agreed that Taking care of their pet’s health is as important to They would adjust their personal budget to pay for them as taking care of their own health care their veterina
Slide 25: Pet Populations Increased Significantly in 2020
Pet Populations Increased Significantly in 2020 U.S. Average Annual Net 2020 Increase in Pet Population in Other Countries Increase in Pet Population* ~6% Some sources suggest that global 2020 net pet population increased at a slightly higher rate than in typical years, with disproportionate growth
Slide 26: Significant Growth in First-time Pet Parents
Significant Growth in First-time Pet Parents Gen Z and Millennials had higher net pet acquisition rates Breakdown of 2020 U.S. Adopted Pets by 2020 Net Percentage of Pet Owners Acquiring Pets by Household Pet Profile Demographic Segment (% Acquiring less % Surrendering and % Losing to Death) 12% Fir
Slide 27: Pet Parents Love Their Pets, with Gen Z Strongest
Pet Parents Love Their Pets, with Gen Z Expressing the Strongest Affiliation Percentage of Pet Gen Z Millennials Baby Boomers (Up to 24 years) (25 years to 40 years) (57 years to 75 years) Parents Agreeing that “My pet is 79% 79% 72% 71% my best friend” “I treat my pet 80% 80% 69% 68% like my child”
Slide 28: As COVID Tapers, More Pet Parents Expect to Adopt than Surrender
As COVID Tapers, a Much Greater Proportion of Pet Parents Expect to Adopt a Pet than Surrender One After COVID-19 Tapers, Percentage of United States United Kingdom Canada Pet Parents Saying They Expect to… Adopt Another Pet 35% 26% 26% 4% 10% 6% Surrender a Pet Source: IDEXX Pet Owner Research Stud
Slide 29: Spending on Pet Healthcare Grows Over Lifetime of a Pet
Spending on Pet Healthcare and Diagnostics Grows Over Lifetime of a Pet 2020 Average Practice Revenue Per Active Patient by Age Segment* $615 $600 $590 $450 $400 $400 $340 Other Revenue $200 $125 Diagnostics $70 $110 $- $41 $52 Puppies & Kittens Young Adult Senior Geriatric (Less than 1 year) (1 yea
Slide 30: Strong Trends Point to Sustained High Long-term Diagnostics Sector Growth
Strong Trends and Increasing Standard of Care Point to Sustained High Long-term Diagnostics Sector Growth (~1% Above Earlier Estimates) Estimated Total Worldwide Companion Animal Diagnostics Spending ($M)* 9%+ Implied CAGR Base Case Scenario: CAGR 2020 - 2045 Continuation of past 10-year diagnostic
Slide 31: Tina Hunt, PhD
Tina Hunt, PhD Executive Vice President and General Manager, Point of Care Diagnostics and Worldwide Operations Ishka 31 © 2021 IDEXX Laboratories, Inc. All rights reserved.
Slide 32: Our Multi-modality Approach Enables Real-Time Care
Our Multi-modality Approach Enables Real-Time Care™ Actionable results during the patient visit benefits pets, clients and practices Higher standard of care for pets and more satisfied pet parents Better clinical and financial outcomes Intuitive, hands-off workflow and productivity benefits
Slide 33: IDEXX In-clinic Suite Delivers a Unique Customer Delighting Ecosystem
IDEXX In-clinic Suite Delivers a Unique Customer Delighting Ecosystem Why practices love working with IDEXX Point of Care Workflow and Results Integration Benefits IDEXX Comprehensive Diagnostic Suite Two-way connectivity to PIMs Chemistry and IA for easy ordering and patient record The most expansi
Slide 34: Delivering on Our Technology for Life Customer Promise
Delivering on Our Technology for Life Customer Promise Resolute focus on improving and expanding platform capabilities that enable better medicine and enhance the value of our customers' investments in IDEXX 2010 2014 2016 2017 2018 2019 2020 Phenobarbital Total T4 CRP IDEXX SDMA Progesterone Chemis
Slide 35: In-clinic Solutions Continue to Delight Customers and Inspire Loyalty
IDEXX In-clinic Solutions Continue to Delight Customers and Inspire Deep Loyalty Catalyst One ProCyte Dx Net Promotor Score Net Promotor Score World-class = 50 World-class = 50 2019 2021 2019 2021 Source: Double-blind primary research study conducted in July, 2019 and June, 2021, with following U.S.
Slide 36: ProCyte One: A Transformational Hematology Analyzer
ProCyte One: A Transformational Hematology Analyzer Launched in Q1’21 Phenomenal customer response and delight on accuracy, reliability, unprecedented ease of use, affordability Enables global reach: Strengthens our diagnostic suite and is highly attractive to Corporate Accounts Facilitates IDEXX 36
Slide 37: Significant Instrument Runway Remains
Significant Instrument Runway Remains ~200k additional worldwide placement opportunities, ~155k outside of North America Global IDEXX Premium Instrument Global Incremental IDEXX Premium Instrument Placement Installed Base* Opportunity** 28k 198k 97k 156 95k Urinalysis 73k Hematology 29k Internationa
Slide 38: Only ~17% of U.S. Dogs Receive a Full Vector-borne Disease Screen
Only ~17% of U.S. Dogs Receive a Full Vector-borne Disease Screen at the Veterinary Practice Annually 2020 U.S. Canine Vector-borne Disease Screening at the Veterinary Practice 100% U.S. Family Dogs ~ 93 million 69% Clinical Visit (at least 1 in 2020) ~ 64 million Lyme disease Heartworm Anaplasmosis
Slide 39: Strategy Focused on Addressing Unmet Needs and Expanding Utilization
Our Strategy is Focused on Addressing Unmet Needs and Expanding Utilization Example: IDEXX created and continues to develop the canine vector-borne disease segment through innovation, education, clinical insight and customer engagement Innovation SNAP® Platform SNAP® 3Dx® SNAP® 4Dx® SNAP ® 4Dx® laun
Slide 40: Clinical Decision Support Adds Innovation and Value to 4Dx Plus
Clinical Decision Support Brings Another Layer of Innovation and Value to Complement Superior Accuracy of IDEXX’s 4Dx Plus IDEXX’s 4Dx Plus Test is the New clinical decision support enables fast, confident most accurate test for vector-borne disease interpretation and provides next step consideratio
Slide 41: Mike Lane
Mike Lane Executive Vice President and General Manager, Reference Laboratories and Information Technology Bow & Moose 41 © 2021 IDEXX Laboratories, Inc. All rights reserved.
Slide 42: Laboratory Diagnostic and Consulting Services Growth Enabled by Innovation and Talent
IDEXX Laboratory Diagnostic and Consulting Services Growth is Enabled by Our Unrelenting Commitment to Innovation and Talent Most complete and advanced Technology that makes Personalized support menu of tests and services our customers' work easier with expert guidance 42 © 2021 IDEXX Laboratories,
Slide 43: Broad, Differentiated Menu Built from Decades of Innovation
We Offer a Broad, Differentiated Menu Built from Decades of Innovation Non-wellness Wellness and Minimum Database Molecular Diagnostics Chemistry Ringworm IDEXX SDMA® Included with Every Chemistry Profile Influenza Genetics Immunology Lab 4Dx® Plus I Lyme Quant C6® I Microbiology IDEXX Anywhere Spec
Slide 44: Endless Breadth and Depth Growth Opportunities
Endless “Breadth and Depth” Growth Opportunities Number of U.S. IDEXX Reference Lab Customers by Dx Category in Q4 2020 (thousands of practices) 22.5 IDEXX Consulting Services 14.5 14.0 13.5 11.0 11.0 9.5 9.0 8.0 7.0 5.0 3.0 Total IDEXX Chemistry Immunology Hematology Urinalysis Parasitology Microbi
Slide 45: Global Consulting Services are an Extension of Veterinary Practice
IDEXX Global Consulting Services are an Extension of Veterinary Practice Anatomic Pathology Clinical Pathology Radiology Cardiology Internal Medicine IDEXX has ~ 530 specialty consultants supporting customers around the world 45 © 2021 IDEXX Laboratories, Inc. All rights reserved.
Slide 46: IDEXX Fecal Testing Expands as Customers Value Fecal Antigens
IDEXX Fecal Testing Expands as Customers Appreciate the Value of Fecal Antigens North America Reference Lab Fecal Testing Revenue ($M) Fecal Antigen testing finds $120 more infections, generates $100 more treatment income $80 Panels Included in all Preventive Care Including IDEXX Challenge Panel
Slide 47: IDEXX Anywhere Enables a Seamless Multi-modality Experience
IDEXX Anywhere Enables a Seamless Multi-modality Experience IDEXX Anywhere IF THEN OR Lyme Positive SNAP 4Dx Plus Lab 4Dx Plus Result Lab Quant C6 47 © 2021 IDEXX Laboratories, Inc. All rights reserved.
Slide 48: Advancing Our Best-in-class Global Lab Network and Capabilities
Advancing Our Best-in-class Global Lab Network and Capabilities IDEXX Global Reference Lab Network Over 80 Reference Labs Global Information Management System IDEXX Kornwestheim BERLIN 6:00 AM TOKYO NEW YORK 1:00 PM 12:00 AM 1-2X Day Pick Powerful Diagnostic Results SYDNEY Platform 2:00 PM VetConnec
Slide 49: Service Innovation Results in Very Strong Customer Loyalty
Service Innovation Results in Very Strong Customer Loyalty and Growth Would You Recommend Your Reference Laboratory to a Colleague? Net Promoter Score (NPS) 61 World-class = 50 Source: Double-blind primary research study conducted in June, 2021 (IDEXX Users n = 482, Competitor Users n = 248). Questi
Slide 50: Michael Schreck
Michael Schreck Senior Vice President and General Manager, Veterinary Software and Services Callie 50 © 2021 IDEXX Laboratories, Inc. All rights reserved.
Slide 51: Engaged IDEXX PIMS Practices Generate More Recurring Revenue per Practice
Engaged IDEXX PIMS Practices Generate Significantly More CAG Diagnostics Recurring Revenue per Practice IDEXX Diagnostics Engaged Practices 2020 Average IDEXX CAG Dx Recurring Revenue per Practice for Cornerstone and Non-IDEXX PIMS ($k) 26% more $246 22% more $195 18% more $145 $119 $102 $86 Corners
Slide 52: Workflow, Productivity and Client Communications Never Been More Important
Workflow, Productivity and Effective Client Communications have Never Been More Important to Success and Sustained Growth of Our Customers …And Software is Practices are Busy, Complex Places… …Growth Accelerated in 2020 Key to the Solution U.S. Average Clinical Visits per Practice Quarterly Average
Slide 53: IDEXX Software Ecosystem Addresses Key Practice Needs
IDEXX Software Ecosystem Addresses Key Practice Needs Core Deeply Integrated Functionality Easy Turn-on Functionality VetConnect PLUS Clinical Workflow Vet Radar, Smart Flow Wellness Plans Petly Plans Diagnostics & Imaging Client VetConnect PLUS Engagement IDEXX Web PACS Pet Health Network Pro Payme
Slide 54: Veterinary Practices Increasingly Choosing Cloud-based PIMS
Veterinary Practices are Increasingly Choosing Cloud-based PIMS U.S. Percentage of PIMS Installed Base: Key Advantages of Cloud vs. On-premise Cloud Solutions + 2% + 4% per year per year 1% Access 12% 20% Cloud-based Security 99% 88% 80% On-premise Performance 2013 2018 2020 54 © 2021 IDEXX Laborato
Slide 55: IDEXX's Cloud Offerings Drive High Customer Satisfaction
IDEXX’s Cloud Offerings Drive High Customer Satisfaction IDEXX Cloud Mobile Intuitive Intelligent cloud-hosted Cloud-native software with 100+ Ideal for smaller practices that Well-suited to advanced integrations prioritize ease-of-use workflow practices, loyal to Cornerstone experience Top-
Slide 56: Customers Increasingly Experience IDEXX Diagnostics through VetConnect PLUS
Customers Increasingly Experience IDEXX Diagnostics through VetConnect PLUS VetConnect PLUS Mobile ‘Next Gen’ Clinical Decision Support Personalized and intuitive diagnostic workflows AI-Powered clinical insights delivered inside VetConnect PLUS 56 © 2021 IDEXX Laboratories, Inc. All rights reserved
Slide 57: Clinical Decision Support Creates Value for Clinicians, Corporate Practices and IDEXX
Clinical Decision Support Creates Value for Clinicians, Corporate Practices and IDEXX Benefits For Clinicians: For Corporate Partners: For IDEXX: Productivity, Confidence and Best Practices and Diagnostic Utilization, Customer Insight Productivity Acquisition and Retention Enables personalized I
Slide 58: Jim Polewaczyk
Jim Polewaczyk Executive Vice President and Chief Commercial Officer Sadie 58 © 2021 IDEXX Laboratories, Inc. All rights reserved.
Slide 59: Huge Opportunity to Develop Global Pet Diagnostic and Software Sector
Huge Opportunity to Develop Global Pet Diagnostic and Software Sector Currently U.S. represents $3.8B or 63%, and international represents ~$2.2B or 37% Estimated 2020 Total Companion Animal Diagnostic and Software Spending ($M)* Europe Region Canada U.S. Asia Pacific Region Latin America Areas of t
Slide 60: Fully-integrated Diagnostic and Software Platform Enables Higher Standard of Care
Fully-integrated Diagnostic and Software Platform Enables Higher Standard of Care IDEXX Differentiated Multi-modality Diagnostic Offering IDEXX Point of Care VetConnect PLUS Diagnostics IDEXX Reference Lab 60 © 2021 IDEXX Laboratories, Inc. All rights reserved.
Slide 61: Expanding Team of Diagnostic Category Experts Globally
Expanding Team of Diagnostic Category Experts in Key Geographies Globally U.S. Fully direct + VDC expansion ~1,000 1.5x International 1.5x Total Worldwide U.S. CAG Field-based Professional Headcount* 2011 2015 2021 H1 Expanding Global Commercial Footprint Enables Reach Needed to Communicate IDEXX Di
Slide 62: Increased Commercial Reach is Key to Account Management Model
Increased Commercial Reach is Key to Our Account Management Model Average Number of Accounts per IDEXX Veterinary Diagnostic Consultant 700 600 500 Before 400 Expansion 300 After Program 200 Expansion 100 U.S. ~120 for reference 0 0 1 2 3 4 5 6 Country A Country B Country C Country D Country E 62 ©
Slide 63: International Commercial Expansion Leverages Global Centers of Excellence
International Commercial Expansion Leverages Global Centers of Excellence and Best Practices HR Assessment Sales Comm Sales Ops Operations Systems Education & Program Global Training Customer Data Management Commercial Commercial Support Office-led Planning Systems Sizing Marketing IT Finance Global
Slide 64: ProCyte One is Quickly Gaining Traction
ProCyte One is Quickly Gaining Traction and Will Play a Critical Role to Achieving Our Global Commercial Objectives First ProCyte One Installed in Italy France Spain Many countries are ‘hematology-first’ With the IDEXX 360 program, we have an opportunity to inspire point of care chemistry, Refer
Slide 65: IDEXX 360 has Global Appeal
IDEXX 360 has Global Appeal Increasingly Used Across Europe to Grow Recurring Revenue CAG Recurring Revenue from Customers Participating in IDEXX 360 Agreements ($M) U.S. Europe Region Other** Rapid Assay Products Reference Lab* IDEXX VetLab® Consumables Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2
Slide 66: Our Customers Grow Faster When We Call on Them
Our Customers Grow Faster When We Call on Them Q4 2020 Year-Over-Year Average Quarterly Growth in CAG Revenue (%)* Country A Country B Country C Loyal IDEXX 28% 27% 36% Customers 23% 23% 24% Competitive 67% 308% 106% Practices** Customers Called On Customers Not Called On * Revenue Growth Methodolog
Slide 67: A Customer Conversation with Dr. Pilar Xifra
A Customer Conversation with Dr. Pilar Xifra Andrea Iucci, Dr. Pilar Xifra, Senior Vice President and General Manager Leganes Norte Veterinary Clinic CAG, Europe Near Madrid, Spain 67 © 2021 IDEXX Laboratories, Inc. All rights reserved.
Slide 68: Brian McKeon
Brian McKeon Executive Vice President and Chief Financial Officer Daisy 68 © 2021 IDEXX Laboratories, Inc. All rights reserved.
Slide 69: Financial Review Key Messages
Financial Review Key Messages Focused strategy yields outstanding financial results Accelerated growth reinforces long- term CAG opportunity Multi-year outlook for 10%+ annual organic revenue growth driven by sustained high, durable CAG Dx recurring revenue gains Plan to invest towards long-
Slide 70: Focus on Attractive Core Business Development
Focus on Attractive Core Business Development Livestock, Poultry, and Dairy IDEXX Core Business Characteristics Water High organic revenue growth potential 5% Other Companion 5% Global leadership Animal Group Innovation-driven o Centered on diagnostics and information management Durable recu
Slide 71: Consistent Strategy with High Level of Execution
Consistent Strategy with High Level of Execution Multi-Year 2016 2017 2018 2019 2020 Goals Organic Revenue 11.4% 10.4% 11.6% 10.3% 12.0% 10%+ Growth2 Operating Margin Gain 170 bps 140 bps 130 bps 120 bps 340 bps 50 - 100 bps (Comparable Operating Margin Gain)5 EPS Growth 25% 21% 36% 21% 31% 15% - 20
Slide 72: Business Momentum Driving Outstanding 2021 Results
Business Momentum Driving Outstanding 2021 Results IDEXX H1 2021 Highlights Organic Revenue Growth2 23% Accelerated Global CAG Sector Driving High “2-Year” Recurring CAG Diagnostics Recurring 24% Revenue Growth Organic Revenue Growth2 2-Year Average 16.5% High Profit Flow – Positioned for Strong
Slide 73: Accelerated CAG Diagnostics Recurring Revenue Growth
Accelerated CAG Diagnostics Recurring Revenue Growth CAG Diagnostics Recurring Revenue ($B) Normalized Organic Revenue CAGR3 Normalized Organic Revenue CAGR3 Targeted 2015 – 2020 $ 2.0 Growth %* 13% CAGR 1.5 International 14% 12% - 16% 1.0 U.S. 13% 9% - 13% 0.5 - 2015 2020 3 Non-GAAP financial measu
Slide 74: CAG Diagnostic Annuity Resilient Through Pandemic
CAG Diagnostic Annuity Resilient Through Pandemic IDEXX WW CAG Diagnostics Recurring Normalized Organic Revenue Year-over-year Growth1,3 20% International 15% 10% U.S. 5% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1 Please refer to the Appendix for descriptive footnotes. 3 Non-GAAP fi
Slide 75: High CAG Annuity Growth Supported by IDEXX Growth Premium
High CAG Annuity Growth Supported by IDEXX Growth Premium IDEXX U.S. CAG Dx Recurring Revenue Normalized Organic Year-over-year and 2-Year Average Growth3 22.2% IDEXX Growth ‘Premium’ over 9.9% U.S. Clinical Visits per Practice 15.0% Growth 12.3% 11.4% 11.4% 10.2% 12.1% U.S. Clinical Visits 8.4% 7.5
Slide 76: High Customer Retention Supports Durability of CAG Recurring Annuity
High Customer Retention Supports Durability of CAG Recurring Annuity Annual U.S. Customer Revenue Retention Rates 98.7% 98.7% Catalyst® 98.4% Consumables 98.1% 97.7% 97.6% 97.2% 97.4% Reference Lab 96.7% 96.1% 95.8% 95.8% 2015 2016 2017 2018 2019 2020 76 © 2021 IDEXX Laboratories, Inc. All rights re
Slide 77: Strong CAG Recurring Growth Drives Operating Margin Gains
Strong CAG Recurring Growth Drives Operating Margin Gains Operating Margin Expansion Drivers Comparable operating margin expansion5 (basis points) 300 +900 bps 5-Year Comparable Operating Margin Expansion5 Gross Margin Gains 200 100 OPEX Leverage - 2016 2017 2018 2019 2020 5 Non-GAAP financial measu
Slide 78: Five-Year Potential for Continued 10%+ Annual Revenue Growth
Five-Year Potential for Continued 10%+ Annual Revenue Growth Driven by double-digit expansion of CAG Diagnostics Recurring Revenue IDEXX Total Company Annual Revenue Growth Potential (Constant Currency4) ~2026 High Single Mid-to-High Revenue Digit Single Digit 10%+ 13% - 16% 10%+ Compound Annual Gro
Slide 79: Continued High U.S. CAG Diagnostics Recurring Revenue Growth Potential
Continued High U.S. CAG Diagnostics Recurring Revenue Growth Potential Driven by increasing standard of care and expanding utilization IDEXX U.S. CAG Dx Recurring Revenue Annual Growth Potential (Constant Currency4) ~2026 ~2% - 3% Revenue 10% - 13% ~1% Compound Annual Growth Rate 4% - 5% Preventive
Slide 80: High International CAG Diagnostics Recurring Revenue Growth Potential
High International CAG Diagnostics Recurring Revenue Growth Potential Global opportunity enabled by Catalyst and premium hematology expansion IDEXX International CAG Dx Recurring Revenue Annual Growth Potential ~2026 (Constant Currency4) Revenue ~2% 3% - 4% 13% - 16% Compound Annual Growth Rate 5% -
Slide 81: Attractive Incremental Margins from Expanding CAG Diagnostics Annuity
Attractive Incremental Margins from Expanding CAG Diagnostics Annuity CAG Gross Margin Profile - 2020 Incremental margin on recurring revenue** 57% In-house Diagnostics* Reference Laboratory Veterinary Software CAG Diagnostics & Services & Diagnostic Consulting Services Imaging Systems * In-house Di
Slide 82: Investments Focused on Global CAG Annuity Expansion
Investments Focused on Global CAG Annuity Expansion Innovation R&D Data International Focus on Expanded and AI Commercial Differentiation and Insight Expansion and Driving Global Sales Enablement Opportunity Customer-facing Customer Growth Software Program Support (IDEXX 360) 82 © 2021 IDEXX Laborat
Slide 83: Targeting Solid Annual Operating Margin Gains
Targeting Solid Annual Operating Margin Gains Margin Drivers 5 Year Outlook Gross Margin Expansion CAG Recurring Annuity Growth (Price & Mix) Lab Scale/Productivity Sourcing/Manufacturing (Cost/Mix) Investments – Customer Service/Experience, Lab Capacity, Customer Acquisition Operating Expense Lever
Slide 84: Strong Cash Flow Generation Supported By High Conversion
Strong Cash Flow Generation Supported By High Conversion Free Cash Flow8 % of Net Income 125% Consistent long-term outlook for 100% Large facility high cash conversion 5% projects 80 – 90% of net income 11% 14% 75% Low capital investment intensity 114% 4 - 5% of revenues 50% Free cash 93% 75% 80
Slide 85: M&A Activity Focused on Core Business Expansion
M&A Activity Focused on Core Business Expansion Total Cash Spending on Acquisitions 2011 – H1’2021* Information Management Growth strategy is based on core organic expansion, fueled by innovation Actively scanning landscape within our $352M core and in near adjacencies Other Software capabilit
Slide 86: Healthy Balance Sheet Benefited from Pandemic Cash Controls
Healthy Balance Sheet Benefited from Pandemic Cash Controls Debt to Adjusted EBITDA9 Ratio 3.5x 3.0x Gross 2.5x Net 2.0x 1.5x 1.0x 0.5x 2012 2013 2014 2015 2016 2017 2018 2019 2020 Jun-21 9 Non-GAAP financial measure, please refer to Appendix for footnotes. 86 © 2021 IDEXX Laboratories, Inc. All rig
Slide 87: Disciplined Capital Allocation Aligned with Shareholder Value Creation
Disciplined Capital Allocation Aligned with Shareholder Value Creation Capital Allocated to Share Repurchases* After-Tax Return on Invested Capital, Excluding Cash & Investments7 Over 40% reduction in weighted avg share count $2.2B 55% $147 avg purchase price $2.4B 29% $22 avg purchase price 1999 -
Slide 88: Well-positioned to Drive Sustained, Strong Financial Performance
Well-positioned to Drive Sustained, Strong Financial Performance Long-term Financial Model* (Average Annual Comparable 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 projectio
Slide 89: Break
Time for a 10 minute Break We’ll be back shortly IDEXX Investor Day I August 12, 2021 89 © 2021 IDEXX Laboratories, Inc. All rights reserved.
Slide 90: Appendix - Footnotes
Appendix - Footnotes
Slide 91: Footnotes
Footnotes CAG 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 d
Slide 92: Footnotes
Footnotes 3 Normalized Organic Revenue Growth and CAGR: Normalized organic revenue growth and CAGR are non-GAAP financial measures that represent organic revenue growth and CAGR, normalized for the effects of: (a) our transition to an all-direct sales strategy in the U.S., which was effected fully b
Slide 93: Footnotes
Footnotes 3 Normalized Organic Revenue Growth and CAGR, continued: See tables below for a reconciliation of normalized and organic CAG Diagnostics recurring revenue growth and CAGR to reported growth and CAGR for the relevant periods. Amounts presented may not recalculate due to rounding. 2016 2017
Slide 94: Footnotes
Footnotes 4 Constant Currency: Constant currency references are non-GAAP financial measures which exclude the impact of changes in foreign currency exchange rates and are consistent with how management evaluates our performance and comparisons with prior and future periods. We estimated the net impa
Slide 95: Footnotes
Footnotes 6 Comparable EPS Growth and CAGR : Comparable EPS growth and CAGR are non-GAAP financial measures and represent the percentage change in earnings per share (diluted) (”EPS”) for a measurement period, as compared to the prior base period, net of the impact of changes in foreign currency exc
Slide 96: Footnotes
Footnotes 7 After-Tax Return on Invested Capital, Excluding Cash and Investments (“ROIC”), continued: The reconciliation of this non-GAAP financial measure is provided in the table below. Amounts presented may not recalculate due to rounding. For the Year Ended December 31, Numerator (amounts in mil