Idexx Laboratories, Inc. · NASDAQ:IDXX
Idexx Laboratories — Investor Day (August 2016)
114 slides from Idexx Laboratories's investor day presentation, Aug 18, 2016
Slide 1: U.S. Commercial Strategy
U.S. Commercial Strategy Jay Mazelsky, Executive Vice President August 18, 2016
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
Slide 3: U.S. Market Key Highlights
U.S. Market Key Highlights o A market with strong underlying growth o Diagnostics seen as the “fastest way to practice growth” o Veterinary software recognized as critical to clinic success o Enduring relationships earned by category experts 3 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 4: U.S. at $2.2B Makes Up Two Thirds of Global Diagnostics and Software Market
Today, the U.S., at $2.2B, Makes Up Two Thirds of the Global Market for Diagnostics and Software Canada Europe, U.S. Middle East & Africa China Japan $2.2 Billion Other Asia Latin America Australia & New Zealand Estimated 2015 Total Companion Animal Diagnostic and Software Spending stated in USD $ m
Slide 5: Growth in Diagnostic Revenue per Practice is Robust
Growth in Diagnostic Revenue per Practice is Robust, and Significant Opportunity Remains U.S. Total Revenue and Diagnostic Revenue per 2015 Sample of U.S. Practices by Diagnostic Practice year-over-year Growth (%)* Utilization Level* Higher Diagnostic 8% 15.2% Utilization Diagnostic Revenue per Prac
Slide 6: Significant Potential Ahead to Expand Level of Care and Diagnostics
Significant Potential Ahead for the Profession to Expand Level of Care and Diagnostics Lifetime Value of Typical 12 Year Old Dog Projected Total Veterinary Practice Revenue Over 12 Year Life $20,000 100% Compliance of Standards $18,000 $17,700 AAHA standards* $16,000 High Utilization Practice Estima
Slide 7: IDEXX's Commercial Transformation Completed
IDEXX’s Commercial Transformation Completed … though the work is far from done 2013 2014 2015 2016 Modality Centric Territory Centric Hospital Centric Customer Centric Modality sales Account Managers Fully direct Driving Dx utilization w/Distributors w/Distributors 300+ field-based New CRM system, 8
Slide 8: IDEXX Commercial Team Delivering Strong Growth
IDEXX Commercial Team Delivering Strong Growth o Sales model delivering double-digit growth o Customer retention levels approaching historic highs o IDEXX innovation providing access and relevance o Current capacity exists to support future growth 8 © 2016 IDEXX Laboratories, Inc. All rights reserve
Slide 9: The Largest Companion Animal Commercial Organization in the U.S.
The Largest Companion Animal Commercial Organization in the U.S. National 185 7 VDCs IVDCs Regional 22 22 VDSs PSVs ~1 per 2 VDC 89 Dx FSRs Plus >100 Inside Sales, Corporate Account, and Laboratory, Digital and Veterinary Software Specialists VDC - Veterinary Diagnostic Consultants, VDS - Veterinary
Slide 10: Frequency of Customer Visits Grow, a Key Measure of Productivity
Frequency of Customer Visits Grow, a Key Measure of Productivity 1H Dx Field Customer Visits* 140,000 +19.2% 120,000 100,932 100,000 Number of Customer Visits 80,000 123,637 62,852 (5 for every 60,000 practice 103,762 location) 47,798 40,000 20,000 0 1H 2015 1H2016 * U.S.-Veterinary Diagnostic Consu
Slide 11: Investing in Diagnostic Category Expertise
Investing in Diagnostic Category Expertise Launch of the SediVue™ Dx Analyzer IDEXX Learning Academy 30 -50 hours (role dependent) Online pre-learning and assessment Live trainings and role plays Clinic change management training framework Competency certifications Additional 1:1 gap training Podcas
Slide 12: U.S. Customer-Facing Employees at Best Company Level of Engagement
U.S. Customer-Facing Employees at “Best Company” Level of Engagement 2016 Benchmark IDEXX U.S. Commercial Team Norm “Best Company” 50th Percentile 75th Percentile Benchmarked against the world’s most vibrant organizations 12 © 2016 IDEXX Laboratories, Inc. All rights reserved. Based on Sirota Consul
Slide 13: IDEXX's U.S. Clinical Team
IDEXX’s U.S. Clinical Team Peer-to-peer partnering that complements innovation o 34 Internal Medicine Specialists o 14 DVMs for clinical and scientific markets development o 60 FTE Telemedicine Consultants o 22 field-based Professional Service Veterinarians o ~85 customer-facing Pathologists 13 © 20
Slide 14: A New CRM System is Key to Further Operating Leverage
A New CRM* System is Key to Further Operating Leverage o Leveraging best-in-class commercial applications o Real-time access by field sales to 360 degree customer record o Supports team selling and collaboration • What’s happening at the practice? • Where do I focus my efforts to support growth? o T
Slide 15: Industry-leading Online Performance
Industry-leading Online Performance % of Direct IHD Revenue 70% 61% (June) 60% 50% 40% Animal health market 30% average 20% 10% 0% 1H 2015 1H 2016 (10K Customers) (13K Customers) 97% customer satisfaction A ‘low effort’ customer experience is an important component of our direct commercial model 15
Slide 16: Placing Units Based on Quality of Recurring Revenue
Placing Units Based on Quality of Recurring Revenue Urinalysis* Hematology Chemistry * Urinalysis represents orders during the first half of 2016 – of which 467 were recognized as revenue 16 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 17: The Standard for In-clinic Laboratory
The Standard for In-clinic Laboratory PIMS 2-Way Integration VetConnect® PLUS Catalyst One® ProCyte Dx® SediVue Dx™ SNAP Pro® Chemistry, T4, SDMA Complete CBC, Retics Urine Sediment Infectious Diseases and Bands 17 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 18: Benefiting from a Decade of Investment and Customer Insights
Benefiting from a Decade of Investment and Customer Insights Points of Difference: IDEXX VetLab Station (IVLS) o Provides two-way integration, multi-instrument control o Eliminates manual data entry, ensures every charge is captured o Integrates seamlessly with VC+ o Records results into patient rec
Slide 19: IDEXX SmartService - Internet of Things Engine
IDEXX SmartService™ – ‘Internet of Things’ Engine Unique Value Proposition: o Relies on smart instruments that talk in two directions o Proactive performance monitoring, support and software updates o Enables value-added services like SediVue pay-per-run and auto replenishment Technology Approach: o
Slide 20: SDMA is More Reliable than Creatinine
SDMA is More Reliable than Creatinine 5MM global tests since launch, 38 peer reviewed publications 20 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 21: Using IDEXX Diagnostics Drives Additional Benefits for the Practice
Using IDEXX Diagnostics Drives Additional Benefits for the Practice Vet Channel Renal Diets Since IDEXX SDMATM Launch Revenue Growth Volume Growth 17% 8% 9% 1% Not using non-IDEXX Practices Using IDEXX SDMA Not using non-IDEXX Practices Using IDEXX SDMA Practices Practices SDMA SDMA SDMA SDMA Source
Slide 22: SDMA on a Catalyst Slide for Q4 2017 Launch
SDMA on a Catalyst® Slide for Q4 2017 Launch 90% awareness amongst U.S. In-clinic customers • Real-time care with SDMA in-clinic • Simply ”Load and Go” • Chemistry + Lytes + SDMA in under 10 minutes - one sample, one run • Whole Blood, Plasma, Serum • Reference lab clinical accuracy • TT4 + SDMA opt
Slide 23: Practice Management Information Systems
Practice Management Information Systems An opportunity to more fully address the entire market ~25,000 customers in North America CORE WORKFLOW ADVANCED WORKFLOW SEGMENT SEGMENT Basic workflow, ease of Most advanced features, high level use, and lower cost of integration, and higher willingness to p
Slide 24: IDEXX Neo Software is Fit-for-task for Core Workflow Segment
IDEXX Neo® Software is Fit-for-task for Core Workflow Segment • Intuitive user interface • Self-training • Integrated with VC+, Web PACs and Dx 24 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 25: Reimagining Digital Radiography
Reimagining Digital Radiography • Superior image, up to 50% lower radiation dose required ‒ ~65%* of all veterinary techs female, childbearing age • Wireless panel • IDEXX PACS integration IDEXX Digital customers are amongst our best Diagnostic customers * Based on analysis of 2016 NAVTA (National A
Slide 26: IDEXX's Unique Capability
IDEXX’s Unique Capability Expanding Highly Profitable Durable o Ongoing test and instrument Recurring Revenues innovation (80% of industry R&D) o Category experts that drive education, utilization and new customer acquisitions o Clear and expanding leadership in cloud-based software and IT technolog
Slide 27: Reference Labs & Rapid Assay
Reference Labs & Rapid Assay Mike Lane, Corporate Vice President August 18, 2016
Slide 28: 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
Slide 29: Reference Labs and Rapid Assay - Key Highlights
Reference Labs and Rapid Assay – Key Highlights o Global leadership positions o High margin recurring revenue o Most advanced menu and superior product performance o Integrated with the IDEXX information ecosystem 29 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 30: Reference Labs: Well Positioned for Sustained Double-Digit Growth
Reference Labs: Well Positioned for Sustained Double-Digit Growth and Expanding Margins o Expanded commercial presence o IDEXX SDMA™ is a key clinical differentiator o Global laboratory network o Operational excellence 30 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 31: Accelerating Global Reference Lab Organic Revenue Growth
Accelerating Global Reference Lab Organic Revenue Growth1,2 $MM 13-14% 11% 11% Int’l 9% 7% 9% 8% 5% U.S. 1Non-GAAP financial measure, please refer to Appendix for footnotes. 2Please refer to Appendix for descriptive footnote. * Reference Laboratory and Diagnostic Consulting Services. 31 © 2016 IDEXX
Slide 32: Advanced Reference Lab Menu Supports Growth
Advanced Reference Lab Menu Supports Growth Skin • Ringworm RealPCR™ Test • GREER® Aller-g-complete® by IDEXX • Allergen Sublingual Immunotherapy Vector-Borne Diseases • Lab 4Dx® Plus Test • Lyme Quant C6® Test Heart • Cardiopet® proBNP Test Kidneys • IDEXX SDMA™ Lungs • Comprehensive Canine Respira
Slide 33: SDMA contributed about 2-3% to U.S. Lab growth in Q2 2016
Chemistry Now One of Fastest Growing Testing Areas* 4% Growth of Chemistry Panel Volume Relative to All Other Testing Growth in the U.S. Reference Labs 3% 2% SDMA contributed about 2 - 3% to our U.S. Lab 1% growth in Q2 2016 0% -1% -2% IDEXX SDMA Launch -3% Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15
Slide 34: Veterinarians Agree: SDMA Should be Standard
Veterinarians Agree: “SDMA Should be Standard” “How much do you agree or disagree that SDMA should be a standard part of routine chemistry panels?” SDMA Agree: 66% Neutral: 33% Disagree: 1% 82% 55% 43% 18% 0% 2% IDEXX Reference IDEXX Lab Customers CUSTOMERS Non-IDEXX Reference COMPETITVE Lab Custome
Slide 35: Volume Leverage, Global Scale and Operational Excellence Support Margin Expansion
Volume Leverage, Global Scale and Operational Excellence Support Reference Lab Margin Expansion Standard Common Technologies IT Systems SDMA Network Global Optimization Best Practices Logistics Global Leverage Sourcing 35 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 36: Accelerating Global Reference Lab Margin Expansion
Accelerating Global Reference Lab Margin Expansion Global Reference Lab Gross Margin Improvement 500 - 800 bps 500 bps 2009-2015 2015-2021 36 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 37: Rapid Assay: Well Positioned for High Customer Retention and Margin
Rapid Assay: Well Positioned for Continued High Levels of Customer Retention and Profit Margin o Most advanced menu o Superior product performance o SNAP® Fecal launch 1st half of 2018 o Transition to “razor/razor blade” modality with SNAP Pro® 37 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 38: Clinical Studies Prove SNAP Platform Provides Superior Performance
Clinical Studies Prove SNAP® Platform Provides Superior Performance o Reference lab quality results o The most trusted brand with a highly satisfied customer base o Over 25 years of clinical validation o Over 100 peer reviewed publications 38 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 39: Independent Head-to-Head Comparison of Feline Retrovirus Tests
Results of a Recent Independent Head-to-Head Comparison of Feline Retrovirus Tests IDEXX Zoetis Abaxis SNAP Witness VetScan FeLV Sensitivity*, ** 100.0% 89.0% 85.6% FeLV Specificity*, ** 100.0% 95.5% 85.7% * J. Levy et al. Performance of Point-of-Care Assays For FeLV and FIV. J Vet Intern Med. [ACVI
Slide 40: High-Stakes Testing Accuracy may be Life or Death
“High-Stakes” Testing Accuracy may be Life or Death Prevalence of FeLV is 3% in the tested population*, and Zoetis Witness test was only 95.5% specific** Illustrative results for a Zoetis Witness Test: 3 true positives. 4.5 false positives. A “positive” Zoetis Witness test result would have been mor
Slide 41: SNAP Fecal Completes In-House Minimum Database
SNAP® Fecal Completes In-House “Minimum Database” History & o SNAP Fecal launch 1st half Physical Exam Chemistry Urinalysis of 2018 o 40 million annual in-house Tick & Mosquito- Hematology fecal tests in U.S. Borne Diseases o SNAP® Fecal more reliable than in-house methods o Also faster, easier and
Slide 42: SNAP Pro Results Interpretation Coming Next Quarter
SNAP Pro® Results Interpretation Coming Next Quarter o Makes SNAP even easier o 11,000 devices in 8,000 practices, 51% of U.S. Rapid Assay revenue o Augments SNAP Pro value o Expands IDEXX ecosystem of integration 42 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 43: Transforming SNAP Platform into Razor/Razor Blade Modality
Transforming SNAP® Platform into “Razor/Razor Blade” Modality Improves Simplifies Client Workflow Compliance Supports Increases Electronic Staff Medical Record Efficiency Automates Eliminates Charge Errors Capture 43 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 44: VetConnect PLUS Software Brings it All Together
VetConnect® PLUS Software Brings it All Together o Improved clinical decision making o Increased client compliance o Easier workflows for the staff o Increased customer retention for IDEXX Ordering Status Results Sharing 44 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 45: Easier Lab Ordering Lowers Customer Effort and IDEXX Cost
Easier Lab Ordering Lowers Customer Effort and IDEXX Cost Ordering Status Results Sharing 45 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 46: Engaging Both Veterinarians and Technicians
Engaging Both Veterinarians and Technicians Ordering Status Results Sharing 46 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 47: Enabling Patient-Centered Case Management
Enabling Patient-Centered Case Management Ordering Status Results Sharing 47 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 48: Diagnostic Images Improve Clinical Decision Making and Client Compliance
Diagnostic Images Improve Clinical Decision Making and Client Compliance Ordering Status Results Sharing 48 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 49: Diagnostic Images Improve Clinical Decision Making and Client Compliance
Diagnostic Images Improve Clinical Decision Making and Client Compliance Ordering Status Results Sharing 49 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 50: Diagnostic Images Improve Clinical Decision Making and Client Compliance
Diagnostic Images Improve Clinical Decision Making and Client Compliance Ordering Status Results Sharing 50 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 51: Available Anywhere, Anytime with VetConnect PLUS Mobile
Available Anywhere, Anytime with VetConnect® PLUS Mobile Ordering Status Results Sharing 51 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 52: Continued Global Leadership
Continued Global Leadership Expanding Highly Profitable Durable o Strong global leadership Recurring Revenues positions o Continued product and service innovation o Superior test performance o Significant Reference Lab margin expansion opportunity 52 © 2016 IDEXX Laboratories, Inc. All rights reserv
Slide 53: SediVue Dx: A Revolutionary Analyzer
SediVue Dx™: A Revolutionary Analyzer 53 Tina Hunt, PhD, Vice President & GM, VetLab © 2016 IDEXX Laboratories, Inc. All rights reserved. August 18, 2016
Slide 54: 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
Slide 55: The Diagnostic Value of Urinalysis is Widely Accepted
The Diagnostic Value of Urinalysis is Widely Accepted History & Physical Exam Chemistry Chemistry Tick & Mosquito Borne Hematology Intestinal Diseases Physical exam, Parasites history, infectious disease testing “No other organ system or organ provides so much information by its excretion as does th
Slide 56: Veterinarians Know Urine is Unstable
Veterinarians Know Urine is Unstable… Cast Clinically very important Urine samples should be analyzed within 30 minutes of collection Time or vibration Debris Clinical significance lost 56 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 57: But In-house Urinalysis is Time Consuming
…But In-house Urinalysis is Time Consuming Partial Urinalysis Physical Chemical Centrifuge Prepare Read Record Analysis Analysis 5 mins Slide Slide Results 1 min 3 mins 3 mins 5 mins 1 min 18-20 minutes Interrupted workflow, multiple people, expertise 57 © 2016 IDEXX Laboratories, Inc. All rights re
Slide 58: And Requires Special Skills
And Requires Special Skills What type of cell? What is this? What kind of crystal? Traditional Microscopy 58 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 59: 12M Urinalysis Tests Done Annually in the U.S.
12M* Urinalysis Tests Done Annually in the U.S. 63% done in-house, but not well In-house with Reference Sediment Lab Analysis 37% 43% In-house without Sediment 20% 63% 94% of veterinarians admit they could do more urinalysis * Source: IDEXX Estimate based on 2015 Reference Lab testing, market resear
Slide 60: There Has Been No Optimum Solution
There Has Been No Optimum Solution… In-house Send Out Fresh Sample Standardized Process 20 mins tech time Sample degrades Skill-intensive Inaccurate results Inconsistent results 5 - 24 hour turnaround time 60 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 61: SediVue Dx Analyzer
SediVue Dx™ Analyzer First and only in-clinic urine sediment analyzer o 5 drops of urine o Results in 3 minutes o Accurate interpretation with a fresh sample o Digital Images in VC+/PIMS Urinary tract infection Early but active Toxicity Urinary tract stones (“UTI”) kidney injury (“AKI”) 61 © 2016 ID
Slide 62: Video
Video 62 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 63: Easy to Use: 1-2-3
Easy to Use: 1-2-3 Low customer effort and time 63 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 64: High-resolution, High-contrast Images with Tools for Enhanced Viewing
High-resolution, High-contrast Images with Tools for Enhanced Viewing and Sharing 70 digital images automatically prioritized in order of clinical significance 64 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 65: And Requires Special Skills
And Requires Special Skills What type of cell? What is this? What kind of crystal? Traditional Microscopy RBC nsEPI SediVue Dx WBC nsEPI WBC Struvite WBC nsEPI 65 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 66: Real-time Insights for Diagnosis, More Testing, Treatment
Real-time Insights for Diagnosis, More Testing, Treatment Urinary tract Culture Antibiotics Infection Kidney Injury SDMA Renal Diet Toxicity Emergency Antidote & Therapy Crystals Ultrasound Special Diet 66 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 67: SediVue Dx Completes the Minimum Diagnostic Baseline
The SediVue Dx™ Analyzer Completes the Minimum Diagnostic Baseline During the Patient Visit PIMS 2-Way Integration IVLS VetConnect® PLUS Catalyst One® ProCyte Dx® SediVue Dx™ SNAP Pro® Chemistry, T4, Complete CBC Urine Sediment Infectious SDMA Diseases 67 © 2016 IDEXX Laboratories, Inc. All rights r
Slide 68: SediVue Dx: Breakthrough New Franchise with Recurring Revenue Potential
SediVue Dx™: Breakthrough New Franchise with Very Profitable Recurring Revenue Growth Potential… SediVue Revenue Recurring Instrument 68 © 2016 IDEXX Laboratories, Inc. All rights reserved. 6
Slide 69: ...and a Significant Multiplier Impact
…and a Significant Multiplier Impact Competitive Catalyst® Instrument Placements Customer Loyalty and Retention Synergistic with SDMA Testing Begets Testing 69 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 70: New Pay-Per-Run Business Model for SediVue Dx
New Pay-Per-Run Business Model for SediVue Dx™ Real-Time Care, but billing like the Reference Lab Very Customer Centric o Consumables at no charge o IDEXX financing inventory o Auto-replenishment o Enthusiastic customer receptivity 70 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 71: SediVue Dx Economics are Compelling for Clinics
SediVue Dx™ Economics are Compelling for Clinics • Analyzer ~$400/month; $13.75/test • Client charge ~ $50 • Test more; Charge more • ROI ~1 test/day • Capture Lost Charges $$$ 71 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 72: Customer Enthusiasm is Off the Charts
Customer Enthusiasm is Off the Charts Orders coming in Strong; 693 in H1 2016 72 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 73: Sales Force Confidence Very High; Positive Customer Feedback
Sales Force Confidence Very High; Overwhelmingly Positive Customer Feedback • “LOVING the VC+ app for his iPad. We are using the iPad to show customers their pet's UA images and results from the SediVue.” • “…truly amazed with the simplicity and workflow of the SediVue. Even more amazing was the qua
Slide 74: Clinics Enjoying Their SediVue Dx Analyzer
Clinics Enjoying Their SediVue Dx™ Analyzer 74 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 75: IDEXX International
IDEXX International Michael Williams. PhD, Executive Vice President August 18, 2016
Slide 76: 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
Slide 77: International Market - Key Highlights
International Market - Key Highlights o The bond with our pets is a global phenomenon o Pet ownership increasing o Standard of care for diagnostics improving – but lags U.S. o Same high margin recurring revenue model globally 77 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 78: Companion Animal Diagnostics is Largest and Fastest Growing International Business
Companion Animal Diagnostics is Our Largest and Fastest Growing Business Internationally IDEXX International Revenues2 $MM Water, Other Livestock, Poultry & Dairy Companion Animal Group (CAG) Organic 9% 7% 9% 11% 11% growth rate1,2 1Non-GAAP financial measure, please refer to Appendix for footnotes.
Slide 79: International CAG Strategy Focused on Driving Recurring Revenues
Our International CAG Strategy is Focused on Driving Recurring Revenues International CAG Revenue Growth Drivers Other 1. Expansion of IDEXX Instrument commercial presence Consumables Rapid 2. Pet owner visit growth Assay 3. Improved standard of care 4. Expansion of IDEXX reference lab network 5. Ne
Slide 80: Growing IDEXX Commercial Presence Outside U.S.
Growing IDEXX Commercial Presence Outside U.S. Direct sales force Joint Direct & Distribution Distributor only 80 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 81: International Companion Animal Diagnostics Market is $1.1 Billion
At $1.1 Billion, the International Companion Animal Diagnostics Market is currently ½ the size of U.S. Total 2015 Companion Animal Diagnostic and Software Spending in $MM at current FX rates Canada Europe, Middle U.S. East & Africa China Japan Other Asia Latin America Australia & New Zealand 81 © 20
Slide 82: International Diagnostics Market ~3x Larger if Standard of Care Matched U.S.
International Diagnostics Market would be ~3x Larger if the Standard of Care Matched the U.S. United States International 255M* $3.7B** 150M $2.2B $1.1B Number of Veterinary Dx Number of Veterinary Dx Dogs & Cats and Software Dogs & Cats and Software Market Revenue Market Revenue * Estimated number
Slide 83: Major Markets Outside the U.S. Have Opportunity to Grow Diagnostic Testing
Major Markets Outside the U.S. Have Significant Opportunity to Grow Diagnostic Testing Average Percentage of Practice Revenue from Diagnostic Testing* 2009 2015 15.2% 14.2% 11.0% 7.9% 7.0% 4.0% 4.3% 3.0% US Canada Australia France US Canada Australia France * Includes in-house diagnostics and refere
Slide 84: Blood Diagnostics Performed Less Frequently in Europe than North America
Blood Diagnostics is Performed Significantly Less Frequently in Europe Compared to the North America Sick visits Routine/wellness visits 38% 36% 70% 29% 9% 10% 10% 50% UK France Germany 33% 28% 26% 13% North 8% 8% America UK France Germany Question: Of the sick/routine/wellness canine / feline patie
Slide 85: Europe Market Bigger if Routine Diagnostics became Standard of Care
Europe Market would be Dramatically Bigger if Routine Diagnostics became a Standard of Care like Vaccinations What do practices typically perform during annual preventative care visits? 30% Rarely/Never 42% 66% Sometimes 57% 4% Always Vaccinations Routine blood testing 85 © 2016 IDEXX Laboratories,
Slide 86: Raising the Standard of Care Involves Adoption of Improved Protocols
Raising the Standard of Care Involves Adoption of Improved Medical Protocols by the Veterinary Practice U.S. market 25 year journey 1990’s 2000’s Sick & Pre- Patient Senior Preventative Symptomatic Anesthetic monitoring Care Care pets Medical Rationale reinforced by need for patient diagnostic basel
Slide 87: International Focus on a Minimum Database of Diagnostic Results
International Focus to Move the Market to a ‘Minimum Database’ of Diagnostic Results* Complete Complete Blood Chemistry Count (CBC) Complete Complete Electrolytes Urinalysis * For a sick patient workup 87 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 88: Growing Diagnostic Utilization Begins with Education
Growing Diagnostic Utilization Begins with Education Online Learning Staff Trainings with Local Clinical Trials & Center IDEXX Veterinarians Publications Partnerships with Veterinary Universities Seminars with Key Opinion Leaders 88 88 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 89: Industry Partnerships Can Raise the Standard of Care
Industry Partnerships Can Raise the Standard of Care Japan example o Set up by practice owners to promote routine annual health checks o Includes a common Standard of Care including diagnostics o Expanding to 1,000 practices by end of 2016 89 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 90: Northern Europe Region Expansion
Northern Europe Region Expansion UK & Ireland Number of 3,700 clinics Dogs and Cats Ireland 24MM United Kingdom Nordics 1,800 clinics ~90 North Europe CAG Revenues $MM; Adjusted to 2016 Fx rates 52 33 2006 2011 2016E 90 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 91: China Expansion
China Expansion Number of animals Dogs 120 MM (4.5 MM pets**) Brazil Cats 80 MM (2.0 MM pets**) China Dairy Cows 7 MM ~5,000 clinics* Swine 750 MM Poultry 6,500 MM ~45 Total China Revenues $MM; Adjusted to 2016 Fx rates 16 2 2006 2011 2016E * Clinics with one or more in-house analyzers ** Estimated
Slide 92: Animal Hospitals in China are Becoming More Sophisticated
Animal Hospitals in China are Becoming More Sophisticated 92 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 93: Brazil Expansion
Brazil Expansion Number of animals Brazil Dogs 20 MM ~9,000 clinics Cats 15 MM Dairy Cattle 22 MM Swine 38 MM Poultry 7,000 MM Brazil Revenues ~20 $MM; Adjusted to 2016 Fx rates 6 1 2006 2011 2016E 93 © 2016 IDEXX Laboratories, Inc. All rights reserved. 93
Slide 94: Brazil is Already a Major Pet Care Market
Brazil is Already a Major Pet Care Market 94 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 95: 4x More Potential Veterinary Practice Customers Outside the U.S.
There are 4x More Potential Veterinary Practice Customers Outside the U.S. Number of Companion Animal Veterinary Practices with In-House Chemistry Today or Eeligible Greenfield Sites Other Canada Europe Western Europe U.S. China Japan Middle East Other & Africa Asia Latin America Australia & New Zea
Slide 96: Extending Lab Network to Bring IDEXX SDMA Worldwide
We are Extending our Lab Network to Serve these Customers – Bringing IDEXX SDMA Tests Worldwide o 29 Labs across Canada, Europe, South Africa, Japan, Korea, Australia, New Zealand, Brazil o Leipzig (Germany) Lab now serving 10 countries across EU o Extending lab offering into new markets via acquisi
Slide 97: Increasing Chemistry Analyzer Placements Outside the U.S.
Increasing our Chemistry Analyzer Placements Outside the U.S. >4,500 4,055 2,908 2,450 ~20% VetTest® growth 102% growth 40% 1,504 Catalyst® growth 2013 2014 2015 2016E 2013 2014 2015 2016F 97 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 98: Significant Catalyst One Analyzer Placement Opportunity Remains Globally
Significant Catalyst One Analyzer Placement Opportunity Remains Globally ~100k ~70k Further Placement 78k Opportunity 60k ~30k* 18k Current Catalyst 22k Installed Base 12k 10k U.S. International Worldwide US International Worldwide *Including opportunity to place a second Catalyst instrument at sele
Slide 99: International Customers are Excited about IDEXX SediVue Analyzers
International Customers are Excited about IDEXX SediVue Analyzers What is your overall opinion of IDEXX SediVue Analyzers? Excellent / 89% 88% 81% Very Good 70% 70% UK France Italy Germany Australia Source: IDEXX market research 99 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 100: Driving Towards One Billion Dollars in International Revenues
Driving Towards One Billion Dollars in International Revenues CAG Diagnostics Recurring Organic Revenue Growth1,2 Accelerate international growth 15% 11% 12% 1. Expanding customer base 11% 8% 2. Growing diagnostic utilization 3. Strengthening our International Organization 2012 2013 2014 2015 2016 H
Slide 101: IDEXX Water Microbiology
IDEXX Water Microbiology Michael Williams, PhD, Executive Vice President 101 © 2016 IDEXX Laboratories, Inc. All rights reserved. August 18, 2016
Slide 102: 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
Slide 103: IDEXX Water is a $100+ Million Business with Accelerating Growth
IDEXX Water is a $100+ million business, with Accelerating Organic Revenue Growth and 40%+ Operating Margins IDEXX Water Revenues, $97MM in 2015 9-10% Organic 8% growth rate1 7% 4% 4% 2011 2012 2013 2014 2015 2016E 103 © 2016 IDEXX Laboratories, Inc. All rights reserved. 1Non-GAAP financial measure,
Slide 104: Revenue Growth Supported by Increased Commercial Investment and Productivity
Revenue Growth Supported by Increased Commercial Investment and Productivity Global CRM Incremental direct sales headcount Commercial Excellence Distributor Training platform Excellence program 104 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 105: IDEXX Water Approved Tests Detect Fecal Contamination in Four Water Segments
IDEXX Water Provides Approved Tests that Detect Fecal Contamination in Four Highly Regulated Water Segments • Water for human • Testing of pools, spas, consumption and public beaches • Tests detect fecal • Test for fecal contamination contamination and (Coliform bacteria) other bacteria Drinking wat
Slide 106: Key Trends are Increasing Water Testing Volumes
Key Trends are Increasing Water Testing Volumes Regulatory changes New regulations drive Laboratory increased testing & new budgets applications Municipal water budgets increase over time New construction & Public health events pipe repair Disease outbreaks & contamination Increased testing required
Slide 107: Volume of Fecal Contamination Testing in Water is Increasing Worldwide
The Volume of Fecal Contamination Testing in Water is Increasing Worldwide Annual test volume growth rate* Developed markets ~2-3% U.S./Europe Developing markets ~5-7% Asia, Africa, Latin America *Growth in Developing Markets driven by infrastructure spending & increasing awareness of public health
Slide 108: IDEXX Water Broad Product Portfolio of Recurring Revenue Tests
IDEXX Water has a Broad Product Portfolio of Recurring Revenue Tests - (2015) Vessels, Trays, other accessories IDEXX Colilert® tests for Coliform bacteria * Sealer instruments Other bacteria IDEXX Water tests 1. 95% recurring revenues Cryptosporidium 2. 99.9% customer retention & Giardia tests (*)
Slide 109: IDEXX Colilert Tests Easy-to-use, Accurate and Rapid Coliform Detection
IDEXX Colilert® Tests are an Easy-to-use, Accurate and Rapid Coliform Detection Test that Provides Next-day Results Time to result Faster Enzyme based IDEXX methods Colilert® test Difficult Membrane Easy filtration Ease of use Older manual methods Multiple tube fermentation Slower 109 © 2016 IDEXX L
Slide 110: Opportunity to Substitute for Older Methods Exists Worldwide
The Opportunity to Continue to Substitute for Older Methods Exists Worldwide Global Coliform Segment: ~60MM tests per year North America Europe Asia Pacific & Russia Older IDEXX methods Middle East & Africa Latin America IDEXX sales could reach $250-$300MM if all in the Coliform segment testing (cur
Slide 111: Portfolio for On-premise Water Testing Including New Legionella Test
IDEXX is Building a Portfolio for On-premise Water Testing Including the Launch of a New Legionella Test On-premise water: $50MM+ market opportunity Legionnaire's Disease • Caused by legionella bacteria that can proliferate within a building’s water system or cooling towers. • Global segment current
Slide 112: Three Priorities for IDEXX Water
Three Priorities for IDEXX Water 1 Continue growth in core coliform markets Expand into attractive emerging markets: Latin 2 America, China, South East Asia, India 3 Enter “on-premise” testing market - Legionella 112 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 113: Appendix
Appendix 113 © 2016 IDEXX Laboratories, Inc. All rights reserved.
Slide 114: Footnotes
Footnotes 1 Organic revenue growth is a non-GAAP financial measure. Management believes that reporting organic revenue growth provides useful information to investors by facilitating easier comparisons of our revenue performance with prior and future periods and to the performance of our peers. Tota