IDEXX Laboratories (IDXX) 10-K risk factor changes: FY2019 vs FY2018

[removed: Because] [added: Because] our business lines are highly attractive, they are also highly competitive.

Our failure to successfully execute certain strategies within this competitive environment could have a material negative impact on our future growth and [removed: profitability][added: profitability]

| • | Maintaining premium pricing, including by effectively implementing price increases, for our differentiated products and services through, among other things, effective communication and promotion of the value of our products and services in an environment where many of our competitors promote, [removed: market] [added: market,] and sell lesser offerings at prices lower than ours; |

| • | Providing our veterinary customers with the medical and business tools, information, and resources that enable them to grow their practices and the utilization of our diagnostic products and services, through increased pet [removed: visits] [added: visits, use of preventive care protocols] and enhanced practice of real-time care; |

[removed: Our] [added: Our] dependence on suppliers could limit our ability to sell certain products or negatively affect our operating [removed: results][added: results]

We rely on third-party suppliers to provide components for our products, manufacture products that we do not manufacture [removed: ourselves] [added: ourselves,] and perform services that we do not provide ourselves, including package-delivery services.

Disruption to our supply chain could occur as a result of any number of events, including, but not limited to, increases in wages that drive up prices; the imposition of regulations, trade protection measures, tariffs, duties, import/export restrictions, quotas or embargoes on key components; labor stoppages; transportation failures affecting the supply and shipment of materials and finished goods; the unavailability of raw materials; severe weather conditions; natural disasters; [added: public health issues (such as outbreaks, epidemics, or the prospect of a pandemic);] climate change-related events; civil unrest, war, terrorism or other geopolitical developments, including the United Kingdom’s [removed: June 2016 vote and formal notice in March 2017 to leave] [added: exit from] the European Union; computer viruses, physical or electronic breaches, or other information system disruptions or security breaches; and disruptions in utility and other services.

For more information regarding the risks presented by natural and other disasters and system disruptions and security breaches from cyberattacks, see [removed: “Natural] [added: “We are increasingly dependent on the continuous] and [removed: other disasters,] [added: reliable operation of our] information technology [removed: system failures and network disruptions] [added: systems,] and [removed: cybersecurity] [added: a disruption of these systems or significant security] breaches [removed: and attacks] could adversely affect our business” [added: and "Natural and other disasters could adversely affect our business"] below.

Even where products and materials are available from [removed: alternate] [added: alternative] suppliers, if any [removed: becomes] [added: become] unavailable to us for any [removed: reason] [added: reason,] we likely would incur additional costs and delays in identifying or qualifying replacement materials and there can be no assurance that replacements would be available to us on acceptable terms, or at all.

We [added: also] seek to [removed: mitigate risks associated] [added: enter into long-term contracts] with [added: our] sole and single source [removed: suppliers, when possible, by entering into long-term contracts] [added: suppliers] that provide for an uninterrupted supply of products at predictable or fixed prices.

[removed: However,] [added: In addition,] suppliers may decline to enter into long-term contracts for any number of reasons, which would require us to purchase products via short-term contracts or on a purchase order basis.

[removed: Our] [added: Our] biologic products are complex and difficult to manufacture, which [removed: could negatively affect] [added: could negatively affect] our ability to supply the [removed: market][added: market]

[removed: Risks] [added: Risks] associated with doing business internationally could negatively affect our operating [removed: results][added: results]

For the [removed: years] [added: year] ended December 31, [removed: 2018, 2017 and 2016,] [added: 2019,] approximately [removed: 39%] [added: 38%] of our revenue was attributable to sales of products and services to customers outside the U.S. Although we intend to continue to expand our international operations and business, we may not be able to successfully promote, market, import, export, sell or distribute our products and services outside the U.S. Various risks associated with foreign operations may impact our international sales, including, but not limited to, disruptions in transportation of our products or our supply chain; fluctuations in oil prices; increased border protection and restriction on travel; the differing product and service needs of foreign customers; difficulties in building, staffing and managing foreign operations (including a geographically dispersed workforce); differing protection of intellectual property; trade protection measures, quotas, embargoes, import/export restrictions, tariffs, duties, and regulatory and licensing requirements; natural and other disasters; [added: public health issues (such as outbreaks, epidemics, or the prospect of a pandemic);] ongoing instability or changes in a country’s or region’s regulatory, economic or political conditions, including as a result of the United Kingdom’s [removed: June 2016 vote and formal notice in March 2017 to leave] [added: exit from] the European Union; other unfavorable geopolitical conditions; security concerns; and local business and cultural factors that differ from our normal standards and practices, including business practices prohibited by the Foreign Corrupt Practices Act and other anti-corruption laws and regulations.

[removed: Various] [added: Various] U.S. and foreign government regulations could limit or delay our ability to market and sell our products or otherwise negatively impact our [removed: business][added: business]

In the U.S., the manufacture and sale of certain of our products are regulated by agencies such as the USDA, the FDA, [removed: or] [added: and] the EPA.

These regulations include the Biocidal Products Regulation, which [removed: require] [added: requires] approval for the use of certain biocides in our products prior to being manufactured, used, or sold in the European [removed: Union,] [added: Union;] the European Regulation for Registration, Evaluation, Authorization and Restriction of Chemical Substances, or REACH, which regulates and restricts the use of certain chemicals in the European [removed: Union,] [added: Union;] and the Restriction of Hazardous [removed: Substances] [added: Substances("RoHS") Directive,] which regulates and restricts certain hazardous substances in electrical and electronic equipment.

Compliance with these regulations (and similar regulations that may be adopted [removed: elsewhere)] [added: elsewhere, including China and Brazil)] may require registration of the applicable substances or the redesign or reformulation of our products and may reduce or eliminate the availability of certain parts and components used in our products and services in the event our suppliers are unable to comply with the applicable [added: regulations in a timely and cost-effective manner.]

In addition, some foreign governments require us to register our [removed: products,] [added: products before they can be distributed or sold,] and these product registration requirements, which vary among the applicable jurisdictions and change from time to time, are often complex and require us to engage in lengthy and costly [removed: processes.][added: processes and provide confidential, proprietary information about those products to foreign regulatory agencies.]

We are also subject to a variety of federal, state, local, and international laws and [removed: regulations,] [added: regulations governing,] as well as [removed: the associated] legal and political [removed: environments, concerning,] [added: environments that vary broadly regarding,] among other things, the importation and exportation of products; our [added: global] business [removed: practices in the U.S. and abroad,] [added: practices,] such as anti-corruption, anti-money laundering, and anti-competition laws; and immigration and travel restrictions.

[removed: Increased] [added: Increased] competition from and technological advances by our competitors could negatively affect our operating [removed: results][added: results]

We face intense competition within the markets in which we sell our products and services, and we expect that future competition [removed: may] [added: will] become even more intense as new products, services and technologies become available and new competitors enter the market.

Our competitors in the veterinary diagnostic market in the United States and abroad include companies that develop, manufacture, and sell veterinary diagnostic tests and commercial veterinary reference laboratories, certain large and well-funded animal health pharmaceutical companies, as well as corporate hospital chains that operate reference laboratories that serve both their hospitals and unaffiliated hospitals, such as VCA Inc. (formerly named VCA Antech, Inc.), which [removed: was acquired in 2017] [added: is wholly owned] by Mars, Incorporated, another operator of corporate hospital chains.

While we believe that our [removed: reference laboratory service] offerings are competitively differentiated due to our proprietary products and [removed: services, such] [added: services (such] as the IDEXX SDMA test and VetConnect [removed: Plus,] [added: Plus) that offer an integrated, comprehensive diagnostic solution and the quality of our technical and customer service,] there can be no assurance that increased consolidation [removed: and] [added: among our competitors or customers (as well as any resulting] reference laboratory vertical integration among our [removed: customers] [added: customers)] would not have a negative impact on our ability to compete successfully.

[removed: Some of] our competitors and potential competitors may choose to differentiate themselves by offering products and services perceived in the eyes of customers as similar, at substantially lower sales prices, which could have an adverse effect on our results of operations through loss of market share or a decision to lower our own sales prices to remain competitive.

[added: Certain of our competitors and potential competitors, including large diagnostic and pharmaceutical companies, also] have substantially greater financial and managerial resources than us, as well as greater experience in manufacturing, marketing, research and development, and obtaining regulatory approvals than we do.

[removed: Consolidation] [added: Consolidation] in our customer base, including through increased corporate hospital ownership, and prevalence of buying consortiums could negatively affect our [removed: business][added: business]

[removed: Changes] [added: Changes] in testing patterns could negatively affect our operating [removed: results][added: results]

[removed: Our] [added: Our] success is heavily dependent [removed: upon] [added: on our continued] proprietary [removed: technologies][added: product and service innovation]

[added: If we lose, we] may be prohibited from selling certain products and/or we may be required to pay damages and/or ongoing royalties as a result of the lawsuit.

[removed: Natural] [added: Natural] and other [removed: disasters, information technology system failures and network disruptions and cybersecurity breaches and attacks] [added: disasters] could adversely affect our [removed: business][added: business.]

Our business and results of operations could be negatively affected by certain factors beyond our control, such as natural disasters and/or climate change-related events (such as hurricanes, earthquakes, fires, and floods); [added: public health issues (such as outbreaks, epidemics, or the prospect of a pandemic);] civil unrest; negative geopolitical conditions and developments; [added: and] war, terrorism, or other man-made [removed: disasters; and information technology system failures, network disruptions and cybersecurity breaches and attacks.][added: disasters.]

[removed: Any of these events could result in, among other things, damage to or the] temporary closure of one or more of our manufacturing or distribution facilities or reference laboratories (damage to one of our facilities or the manufacturing equipment we use could be costly and may require substantial lead-time to repair or replace); damage to or closure of one or more facilities of our third-party business partners or suppliers on which we rely; a temporary lack of an adequate work force in one or more markets; an interruption in power supply; a temporary or long-term disruption in our supply chain (including a disruption to our ability to obtain critical components for the manufacture of our products); a temporary disruption in our ability to deliver (or delays in the delivery of) our products or services; and short- or long-term damage to our customers’ businesses (which would adversely impact customer demand for our products and services).

Although we [added: maintain information security policies and] employ system backup measures and engage in information system redundancy planning and processes, such [added: policies,] measures, planning and processes, as well as our current disaster recovery [removed: plan,] [added: plans,] may be ineffective or inadequate to address all eventualities.

Further, our information systems and our business partners’ and suppliers’ information systems may be vulnerable to attacks by hackers and other security breaches, [removed: including] [added: including, among other things,] computer viruses and malware, [added: denial of service actions, misappropriation of data and similar events] through the internet (including via devices and applications connected to the internet), [added: and through] email attachments and persons with access to these information systems, such as our employees or third parties with whom we do business.

As information systems and the use of software and related applications by us, our business partners, suppliers, and customers become more cloud-based and connected to the “Internet of Things,” [added: which is inherently susceptible to cyberattacks,] there has been an increase in global cybersecurity vulnerabilities and threats, including more sophisticated and targeted cyber-related attacks that pose a risk to the security of our information systems and networks and the confidentiality, availability and integrity of data and information.

Furthermore, any access to, public disclosure of, or other loss of data or information (including any of our confidential or proprietary information or personal data or information) as a result of an attack or security breach could result in governmental actions or private claims or proceedings, which could damage our reputation, cause a loss of confidence [added: in our products and services, damage our ability to develop (and protect our rights to) our proprietary technologies and have a material adverse effect on our business, financial condition, results of operations or prospects.]

In addition, such insurance will not compensate us for [removed: the] [added: potential] long-term competitive effects of being out of the market for the period of any interruption in operations.

[removed: Our] [added: Our] operations and reputation may be impaired if we, our products, or our services do not comply with our [removed: Global Privacy Policy] [added: global privacy policy] or evolving laws and regulations regarding data privacy and [removed: protection][added: protection]

We offer products and services that collect and use personal data provided by [removed: client practices and] [added: customer practices,] individuals, [added: and third-parties at customers' direction,] including practice management systems for veterinary practices, online [removed: client] [added: customer] communication tools and services, VetConnect [removed: PLUS and] [added: PLUS,] two-way integration [removed: technology.][added: technology, and use by third-parties authorized by our customers to provide programs and services to such customers.]

RISKS RELATED TO OUR BUSINESS

We depend on key leadership and talent to succeed and compete effectively

Our continued success is substantially dependent on our ability to attract, develop, and retain highly capable and skilled senior leadership and other key personnel.

As we continue to grow our business, expand our geographic scope, and develop and offer innovative, new products and services, we require the organizational talent necessary to ensure effective succession for our senior leadership and other key personnel.

Competition for experienced leaders and employees, particularly for persons with specialized skills, can be intense.

Our ability to recruit and retain such talent will depend on a number of factors, including compensation and benefits, work location, work environment and development opportunities.

The loss of the services of, or our failure to recruit or develop and implement effective succession plans for, our senior leadership or other key personnel may significantly delay or prevent the achievement of our strategic objectives, disrupt our operations, and adversely affect our business and our future success.

In addition, even if we effectively develop and implement succession plans and make key leadership transitions, we cannot provide assurances as to whether we may experience management or other challenges in connection with any of those leadership transitions that could adversely affect our future success.

We seek to mitigate risks associated with sole and single source suppliers on a risk-prioritized basis and in a variety of ways, including, when possible, by identifying and qualifying alternative suppliers, developing applicable in-house manufacturing capabilities and expertise, and entering into escrow arrangements for manufacturing information for certain

single or sole-sourced products.

However, there can be no assurance that we will successfully implement any of these mitigating activities or that, if implemented, any of them will be effective in preventing any delay or other disruption in our ability to supply the market.

We are increasingly dependent on the continuous and reliable operation of our information technology systems, and a disruption of these systems or significant security breaches could adversely affect our business.

We, and some of our third party vendors, have experienced cybersecurity attacks in the past and may experience further attacks in the future, potentially with more frequency.

To our knowledge, most of these attacks have been unsuccessful, and none have resulted in any material adverse impact to our business or operations.

We have adopted measures to mitigate potential risks associated with information technology disruptions and cybersecurity threats; however, given the unpredictability of the timing, nature and scope of such disruptions and the evolving nature of cybersecurity threats, which vary in technique and sources, if we or our business partners or suppliers were to experience a system disruption, attack or security breach that impacts any of our critical functions, or our customers were to experience a system disruption, attack or security breach via any of our connected products and services, we could potentially be subject to production downtimes, operational delays, other detrimental impacts on our operations or ability to provide products and services to our customers, the compromising of confidential or otherwise protected information, destruction or corruption of data, security breaches, other manipulation or improper use of our systems or networks, financial losses and additional costs from remedial actions, repairs to infrastructure, physical systems or data processing systems, increased cybersecurity and information technology protection costs, loss of business or potential liability, and/or damage to our reputation, any of which could have a material adverse effect on our competitive position, results of operations, cash flows or financial condition.

Our customers could also face negative consequences such as the compromises of sensitive or critical information or systems.

For more information regarding data and information privacy and protection risks, see “Our operations and reputation may be impaired if we, our products, or our services do not comply with our global privacy policy or evolving laws and regulations regarding data privacy and protection” below.

In addition, to market and sell many of our products outside the U.S., we are subject to product approval and registration requirements that often require us to provide confidential, proprietary information about those products to foreign regulatory agencies.

There can be no assurance that the confidential, proprietary information provided to foreign regulatory agencies to comply with product approval and registration requirements may not be accessed by unauthorized persons or otherwise stolen, which could negatively affect our ability to protect our proprietary rights in our innovative products and our future success.

We also may forgo marketing and selling some of our products in certain foreign jurisdictions due to the risk of intellectual property theft, which could negatively affect our ability to expand our international operations and business.

For more information about the risks related to the protection of our proprietary rights in our products and services, see "Our success is heavily dependent on our continued proprietary product and service innovation" below.

There can also be no assurance that confidential, proprietary information provided to foreign regulatory agencies may not be accessed by unauthorized persons or otherwise stolen, which could negatively impact our ability to protect our proprietary rights in our innovative products and our future success.

For more information about the risks related to the protection of our proprietary rights in our products and services, see "Our success is heavily dependent on our continued proprietary product and service innovation" below.

We believe our future success significantly depends on our ability to continue, on a cost-effective and timely basis, to enhance our existing proprietary product and service offerings and to develop and introduce new and innovative proprietary products and services.

As a result, we invest substantial funds and efforts into R&D, investigating new products and technologies being developed by third parties and obtaining certain such new products and technologies through licenses or acquisitions.

There can be no assurance that our R&D, licensing, or acquisition efforts will achieve expected results, when or whether any of our products or services now under development will be launched, or whether we may be able to develop, license or otherwise acquire new products or technologies.

We also cannot predict whether any product or service offering, once launched, will achieve market acceptance or achieve sales and revenue consistent with our expectations.

Consolidation among our competitors and our customers may intensify the competition we face.

Business combinations and mergers among our competitors may result in competitors that are better positioned to create, market, and sell more compelling product and service offerings.

Some of

The outbreak of certain diseases (such as African swine fever) among livestock or poultry, or the adverse impact of climate change-related events (such as hurricanes, earthquakes, fires, and floods), could lead to the widespread death or precautionary destruction of such animals in the affected regions, reducing herd or flock sizes, which could reduce the demand for our testing products for such animals.

Any of these events could result in, among other things, damage to or the

The nature of our business involves the receipt and storage of information about our customers, pet owners, suppliers, and employees.

In addition, there has been, and may continue to be, volatility in currency exchange rates as a result of the United Kingdom’s withdrawal from the European Union, especially between the U.S. dollar and the British pound.

Economic weakness in our significant markets could cause pet owners to forgo or defer visits to veterinary hospitals

We have received a tax ruling from the Netherlands that documents our mutual understanding of how existing tax laws apply to our circumstances.

This ruling expires as of December 31, 2022, and we have been informed that it will not be renewed due to changes to the advance ruling policy in the Netherlands.

While the absence of an advance agreement does not

preclude our ability to continue to apply existing tax laws in the same manner as allowed by the existing ruling, the lack of such agreement could create uncertainty as to our future tax rate.

Borrowings under our Credit Facility bear interest at variable rates, including rates based on the London Interbank Offered Rate (LIBOR), exposing us to interest rate risk.

regulations in a timely and cost-effective manner.

Certain of our competitors and potential competitors, including large diagnostic and pharmaceutical companies, also

If we lose, we

If we or our business partners or suppliers were to experience a system disruption, attack or security breach that impacts any of our critical functions, or our customers were to experience a system disruption, attack or security breach via any of our connected products and services, it could result in a period of shutdown of information systems during which we (or our customers) may not be able to operate, the loss of sales and customers, financial misstatement, potential liability for damages to our customers, reputational damage and significant incremental costs, which could adversely affect our business, results of operations and profitability.

in our products and services, damage our ability to develop (and protect our rights to) our proprietary technologies and adversely affect our business.

When we collect and use personal data in our operations, we apply state of the art data management and security practices, and we post on our website a comprehensive Global Privacy Policy and Cookie Statement concerning the collection, use and disclosure of personal data.

We only use the personal data that we collect as described in our Global Privacy Policy and customer agreements.

Our Global Privacy Policy informs our customers, potential customers, vendors, pet owners, website visitors and any other current or potential IDEXX partner that we will not share their personal information with third parties unless required by law or as reasonably necessary with trusted third parties working for or with us to fulfill or administer orders or contracts made with IDEXX or to manage our relationship and marketing activities with the applicable customer.

and Brazilian real, adversely affects our results, as it reduces the dollar value of sales and profits that are made in those currencies.

For example, in January 2019, the U.S. Department of Treasury issued final regulations related to the deemed repatriation tax.

We have received tax rulings from various governments that have jurisdictional authority over our operations.

If we are unable to meet the requirements of such agreements, or if they expire or are renewed on less favorable terms, the result could negatively impact our future earnings.

competitors, a more segmented customer base and more rapid technological innovation.

[removed: The] [added: *The] following discussion and analysis of our financial condition and results of operations should be read in conjunction with [removed: our] [added: the] consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form [removed: 10‑K.][added: 10‑K.* *The discussion of our financial condition and results of operations and liquidity and capital resources for the year ended December 31, 2017, is included in our Annual Report on Form 10-K for the year ended December 31, 2018, within Item 7.]

We have included certain terms and abbreviations used throughout this Annual Report on Form 10-K in the [removed: "Glossary] [added: "Glossary] of Terms and Selected Abbreviations.”

We operate primarily through three business segments: diagnostic and information [removed: technology-based] [added: management-based] products and services for the veterinary market, which we refer to as the Companion Animal Group (“CAG”); water quality products (“Water”); and diagnostic products and services for livestock and poultry health and to ensure the quality and safety of milk and food, which we refer to as Livestock, Poultry and Dairy (“LPD”).

See "Part [removed: II.][added: II, Item 8.]

Segment Reporting" to the consolidated financial statements for the year ended December 31, [removed: 2018,] [added: 2019,] included in this Annual Report on Form 10-K for financial information about our segments, including our product and service categories, and our geographic areas.

These costs include costs that do not align with one of our existing operating segments or are cost prohibitive to allocate, which primarily consist of our R&D function, regional or country expenses, certain foreign currency revaluation [added: and settlement] gains and losses on monetary balances in currencies other than our subsidiaries’ functional [removed: currency] [added: currency,] and unusual items.

Differences from these pre-determined budgeted amounts or rates are [added: also] captured within Unallocated Amounts.

[removed: Companion] [added: Companion] Animal [removed: Group][added: Group]

[added: *Diagnostic Capital Revenue.*] Revenues related to the placement of the IDEXX VetLab suite of instruments are non-recurring in nature, in that the customer will buy an instrument once over its respective product life cycle, but will purchase consumables for that instrument on a recurring basis as they use that instrument for testing purposes.

During the early stage of an instrument’s life cycle, we derive relatively greater revenues from instrument placements, while consumable sales become [added: relatively more significant in later stages as the installed base of instruments increases and instrument placement revenues begin to decline.]

As of December 31, [removed: 2018,] [added: 2019,] our Catalyst and VetTest chemistry analyzers provided for a combined active installed base of approximately [removed: 50,800] [added: 56,200] units globally, as compared to approximately [removed: 47,000] [added: 50,800] units in [removed: 2017] [added: 2018] and approximately [removed: 43,000] [added: 47,000] units in [removed: 2016.][added: 2017.]

As of December 31, [removed: 2018,] [added: 2019,] our premium Catalyst chemistry analyzers provided for an active installed base of approximately [removed: 37,000] [added: 43,900] units globally, as compared to approximately [removed: 30,000] [added: 37,000] units in [removed: 2017] [added: 2018] and approximately [removed: 24,500] [added: 30,000] units in [removed: 2016.][added: 2017.]

[removed: Approximately 54%] [added: A majority] of [removed: 2018 and 2017] [added: our] Catalyst [added: chemistry] analyzer placements were to customers that are new to IDEXX, including customers who had been using instruments from one of our competitors, sometimes referred to as competitive accounts.

As of December 31, [removed: 2018,] [added: 2019,] these hematology analyzers provided for a combined active installed base of approximately [removed: 35,900] [added: 38,200] units, as compared to [removed: 33,400] [added: 35,900] units in [removed: 2017] [added: 2018] and [removed: 31,000] [added: 33,400] units in [removed: 2016.][added: 2017.]

As of December 31, [removed: 2018,] [added: 2019,] our premium ProCyte Dx and LaserCyte Dx hematology analyzers provided for an active installed base of approximately [removed: 29,000] [added: 31,500] units globally, as compared to approximately [removed: 26,000] [added: 29,000] units in [removed: 2017] [added: 2018] and approximately [removed: 23,500] [added: 26,000] units in [removed: 2016.][added: 2017.]

As of December 31, [removed: 2018,] [added: 2019,] our premium SediVue Dx analyzers provided for an active installed base of nearly [removed: 6,600] [added: 8,900] units globally, as compared to approximately [removed: 4,000] [added: 6,600] units in [removed: 2017] [added: 2018] and approximately [removed: 1,500] [added: 4,000] units in [removed: 2016.][added: 2017.]

Our long-term success in the continuing growth of our CAG recurring diagnostic product and services is dependent [removed: upon;] [added: upon:] growing volumes at existing customers by increasing their utilization of existing and new test offerings, acquiring new customers, maintaining high customer loyalty and retention, our ability to realize modest annual price increases based on our differentiated products and the growing value of our diagnostic offering.

[added: Our latest] generation of chemistry and hematology instruments demonstrates this commitment by offering enhanced ease of use, faster time to results, broader test menu and connectivity to various information technology platforms that enhance the value of the diagnostic information generated by the instruments.

[added: *Recurring Diagnostic Revenue.*] Revenues from our proprietary IDEXX VetLab consumable products, our SNAP rapid assay test kits, outside reference laboratory and consulting services, and extended maintenance agreements and accessories related to our CAG Diagnostics instruments are considered recurring in nature.

For the year ended December 31, [removed: 2018,] [added: 2019,] recurring diagnostic revenue, which is both highly durable and profitable, accounted for approximately [removed: 75%] [added: 76%] of our consolidated revenue.

We seek to differentiate these tests from those of other in-clinic test providers and reference laboratory diagnostic service providers based on critically important sensitivity and specificity, as demonstrated by [removed: peer reviewed] [added: peer-reviewed] third-party research, as well as overall superior performance and ease of use by providing our customers with combination tests that test a single sample for up to six diseases at once, including the ability to utilize our SNAP Pro Analyzer.

When possible, we utilize core reference laboratories to service samples from other states or countries, expanding our customer reach without an associated [removed: expansion in our reference laboratory footprint.]

[removed: Placements of imaging systems are] important to the growth of revenue streams that are recurring in nature, including extended maintenance agreements and IDEXX Web PACS, which is our cloud-based SaaS offering for viewing, accessing, storing, and sharing multi-modality diagnostic images.

[removed: Water][added: Water]

[removed: Livestock,] [added: Livestock,] Poultry and [removed: Dairy][added: Dairy]

[removed: Other][added: Other]

[removed: Our long-term success] in this area of our business is dependent upon new customer acquisition, customer retention and increased customer utilization of existing and new assays introduced on these instruments.

We leverage this facility’s know-how, intellectual property, and manufacturing capability to continue to expand the menu and instrument capability of the VetStat and Catalyst platforms for veterinary [removed: applications] [added: applications,] while reducing our cost of consumables by leveraging experience and economies of scale.

[removed: CRITICAL] [added: CRITICAL] ACCOUNTING ESTIMATES AND [removed: ASSUMPTIONS][added: ASSUMPTIONS]

The discussion and analysis of our financial condition and results of operations is based upon [removed: our] [added: the] consolidated financial statements, which have been prepared in accordance with U.S. GAAP.

[added: See] "Part II, Item 8.

[removed: Note 2] Summary of Significant Accounting Policies" to the consolidated financial statements included in this Annual Report on Form 10-K describes the significant accounting policies used in preparation of these consolidated financial statements.

[removed: Revenue Recognition][added: Revenue Recognition]

Revenue Recognition" to the consolidated financial statements for the year ended December 31, [removed: 2018,] [added: 2019,] included in this Annual Report on Form 10-K for additional information about our revenue recognition policy and criteria for recognizing revenue.

We enter into contracts [added: with multiple performance obligations] where customers purchase a combination of IDEXX products and services.

Determining whether products and services are considered distinct performance obligations that should be accounted for separately requires [removed: significant] judgment.

We allocate revenue to each performance obligation in proportion to the relative standalone selling prices and recognize revenue when [removed: transfer] [added: control] of the related goods or services [removed: has occurred] [added: is transferred] for each obligation.

[removed: We offer customer incentives] [added: Our volume commitment programs, such as our IDEXX 360 program, provide customers with free or discounted instrument or system] upon entering into multi-year agreements to purchase annual minimum amounts of products and services.

Up-front incentives to customers in the form of cash or IDEXX Points are not made in exchange for distinct goods or services and are capitalized as customer acquisition costs within other [added: current and long-term] assets, which are subsequently recognized as a reduction to revenue over the term of the customer agreement.

We estimate, based on historical experience, and apply judgment to predict the amounts of future customer purchases and expected price adjustments related [added: to] these multi-year agreements.

Management's Discussion and Analysis of Financial Condition and Results of Operations, and is incorporated by reference herein.*

Revenue Recognition and Note 16.

A majority of our Procyte analyzer placements were made to new or competitive accounts.

This new pay-per-run consumable revenue stream is contributing to our continuing growth, however is not currently material relative to IDEXX’s overall revenue.

expansion in our reference laboratory footprint.

Placements of imaging systems are

Our long-term success

See "Part II, Item 8.

asset within other current and long-term assets.

We estimate, based on historical experience, and apply judgment to predict the amounts of future customer purchases and expected price adjustments related to these multi-year agreements.

During the fourth quarter of 2019, we entered a mutual separation agreement with our former CEO, pursuant to which his outstanding stock options were modified, which resulted in $10.9 million of share-based compensation expense in the quarter related to the acceleration and revaluation of his stock options.

See "Part II, Item 8.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE

Our purpose is to be a great company that creates exceptional long-term value for our customers, employees, and stockholders by enhancing the health and well-being of pets, people, and livestock.

Corporate Responsibility is core to IDEXX culture and is reflected in our environmental, social and governance (“ESG”) performance across the company.

We prioritize

community investments and partnerships that are aligned with our purpose, conduct ourselves with the highest ethical standards and demonstrate environmental responsibility in our facilities and operations.

Our Corporate Responsibility Report is available on our website and features examples of our ESG activities and performance metrics.

Executive Officers and Directors.

As reported previously, effective October 23, 2019, our Board of Directors (our “Board”) appointed Jonathan (Jay) Mazelsky as our President and Chief Executive Officer and as a director of the Company.

Mr. Mazelsky had been serving as our Interim President and Chief Executive Officer since June 28, 2019.

Prior to that time, since August 2012, Mr. Mazelsky had been an Executive Vice President of the Company.

In addition, effective November 1, 2019, Lawrence D.

Kingsley, a Company director since October 2016 and Lead Independent Director since May 2018, was appointed as Independent Non-Executive Chairman of our Board.

Also, effective November 1, 2019, Jonathan W.

Ayers, our Chairman and former President and Chief Executive Officer, who had been on a medical leave of absence since June 28, 2019, stepped down as Chairman of our Board, ceased to be an employee of the Company and transitioned to the role of external Senior Advisor to the Company.

Mr. Ayers continues to serve as a member of our Board.

While we cannot provide assurances as to whether we may experience management or other challenges in connection with our leadership transition that could adversely affect our future success, we believe that under the leadership of Mr. Mazelsky as President and Chief Executive Officer and Mr. Kingsley as Independent Non-Executive Chairman, we will continue to successfully execute our strategy and create long-term value for shareholders, customers, and employees.

In connection with the foregoing, Mr. Ayers and IDEXX entered into a mutual separation agreement pursuant to which severance payments will be made to Mr. Ayers, in accordance with the terms of his pre-existing employment agreement, and his outstanding stock options were modified.

As a result of his severance payments and the modification of Mr. Ayers’s outstanding stock options, we recognized a charge to operating income of approximately $13.4 million in the fourth quarter of 2019, representing the cost of the severance and an acceleration of the cost of the equity awards, which was offset by a reduction to our provision for income taxes of approximately $1.2 million, resulting in a total charge to net income of approximately $12.2

million, net of tax impacts.

This total charge to net income is less than our previously communicated expectation of approximately $15.5 million, as a result of finalizing our income tax provision.

| CAG | | $ | 2,119,183 | | | $ | 1,935,428 | | | $ | 183,755 | | | 9.5 | % | | (1.5 | %) | | 0.2 | % | | 10.8 | % |

| *United States* | | *1,410,278* | | | | *1,277,146* | | | | *133,132* | | | | *10.4* | *%* | | *—* | | | *0.3* | *%* | | *10.1* | *%* |

| *International* | | *708,905* | | | | *658,282* | | | | *50,623* | | | | *7.7* | *%* | | *(4.6* | *%)* | | *—* | | | *12.2* | *%* |

| Water | | 132,850 | | | | 125,198 | | | | 7,652 | | | | 6.1 | % | | (2.6 | %) | | *—* | | | 8.7 | % |

| *United States* | | *62,673* | | | | *58,774* | | | | *3,899* | | | | *6.6* | *%* | | *—* | | | *—* | | | *6.6* | *%* |

| *International* | | *70,177* | | | | *66,424* | | | | *3,753* | | | | *5.7* | *%* | | *(4.9* | *%)* | | *—* | | | *10.6* | *%* |

| LPD | | 132,635 | | | | 130,581 | | | | 2,054 | | | | 1.6 | % | | (4.2 | %) | | — | | | 5.8 | % |

| *United States* | | *14,230* | | | | *13,932* | | | | *298* | | | | *2.1* | *%* | | *—* | | | *—* | | | *2.1* | *%* |

Item 8.

Financial Statements and Supplementary Data, Note 16.

Diagnostic Capital Revenue.

relatively more significant in later stages as the installed base of instruments increases and instrument placement revenues begin to decline.

Approximately 67% of 2018 and 59% of 2017 ProCyte placements were made at competitive accounts.

Our latest

Recurring Diagnostic Revenue.

During the first half of 2016, management reviewed the OPTI Medical product offerings.

As a result of this review, in March 2016 we discontinued certain development activities in the human point-of-care medical diagnostics market that were devoted to a new platform and focused our efforts on supporting our current generation OPTI CCA-TS2 Blood Gas and Electrolyte analyzer.

Effective January 1, 2018, we adopted the New Revenue Standard using the modified retrospective method for all contracts not completed as of the date of adoption.

Under the New Revenue Standard, revenue is recognized when, or as, performance obligations under the terms of a contract are satisfied, which occurs when control of the promised products or services is transferred to a customer.

We exclude sales, use, value-added, and other taxes we collect on behalf of third parties from revenue.

Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or services to a customer.

To meet the requirements of the New Revenue Standard and accurately present the consideration received in exchange for promised products or services, we applied the prescribed five-step model outlined below:

| | |

| --- | --- |

| 1. | Identification of a contract or agreement with a customer |

| 2. | Identification of our performance obligations in the contract or agreement |

| 3. | Determination of the transaction price |

| 4. | Allocation of the transaction price to the performance obligations |

| 5. | Recognition of revenue when, or as, we satisfy a performance obligation |

We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations.

The timing of revenue recognition, billings, and cash collections results in accounts receivable, contract assets as a result of revenue recognized in advance of billings (included within other assets), and contract liabilities or deferred revenue as a result of receiving consideration in advance of revenue recognition within our consolidated balance sheet.

Contracts with Multiple Performance Obligations.

The following customer programs represent our most significant customer contracts which contain multiple performance obligations:

Customer Commitment Programs.

Up-Front Customer Loyalty Programs.

Volume Commitment Programs.

Our volume commitment programs, such as our IDEXX 360 program, provide customers with a free or discounted instrument or system upon entering into multi-year agreements to purchase annual minimum amounts of products and services.

Instrument Rebate Programs.

Reagent Rental Programs.

Our reagent rental programs provide our customers the right to use our instruments upon entering into multi-year agreements to purchase annual minimum amounts of consumables.

These types of agreements include an embedded operating lease for the right to use our instrument and no instrument revenue is recognized at the time of instrument installation.

We determine the amount of lease revenue allocated to the instrument based on relative standalone selling prices and determine the pattern of instrument revenue recognition in proportion to the customer’s minimum purchase commitment.

The cost of the instrument is removed from inventory and

capitalized within property and equipment, and is charged to cost of product revenue ratably over the term of the agreement.

Other Customer Incentive Programs.

Certain agreements with customers include discounts or rebates on the sale of products and services applied retrospectively, such as volume rebates achieved by purchasing a specified purchase threshold of goods and services.

We account for these discounts as variable consideration and estimate the likelihood of a customer meeting the threshold in order to determine the transaction price using the most predictive approach.

We typically use the most-likely-amount method, for incentives that are offered to individual customers, and the expected-value method, for programs that are offered to a broad group of customers.

For the year ended December 31, [removed: 2018,] [added: 2019,] approximately 22% of our consolidated revenue was derived from products manufactured or sourced in U.S. dollars and sold internationally in local currencies, as compared to [removed: 21%] [added: 22%] for the [removed: years] [added: year] ended December 31, [removed: 2017] [added: 2018,] and [removed: 2016.][added: 21% for the year ended December 31, 2017.]

For [removed: three] [added: four] of our [added: foreign] subsidiaries [removed: located in] the [removed: Netherlands, Singapore and Dubai, the] functional currency is the U.S. dollar.

Based on projected revenues and expenses for [removed: 2019,] [added: 2020,] excluding the impact of intercompany and trade balances denominated in currencies other than the functional subsidiary currencies, a 1% strengthening of the U.S. dollar would reduce revenue by approximately [removed: $8] [added: $9] million and operating income by approximately [removed: $4] [added: $5] million.

Additionally, [added: we project] our foreign currency hedge contracts in place as of December 31, [removed: 2018,] [added: 2019,] would provide incremental offsetting gains of approximately $2 million.

At our current foreign exchange rate assumptions, we anticipate [removed: that] the effect of a stronger U.S. dollar will have an unfavorable effect on our operating results by decreasing our revenues, operating profit, and diluted earnings per share in the year ending December 31, [removed: 2019,] [added: 2020,] by approximately [removed: $37] [added: $11] million, [removed: $4] [added: $10] million, and [removed: $0.03] [added: $0.09] per share, respectively.

This unfavorable impact includes foreign currency hedging activity, which is expected to [removed: increase] [added: decrease] total company operating profit by approximately [removed: $11] [added: $6] million and diluted earnings per share by [removed: $0.10] [added: $0.05] in the year ending December 31, [removed: 2019.][added: 2020.]

The above estimate assumes that the value of the U.S. dollar relative to other currencies will reflect the euro at [removed: $1.13,] [added: $1.10,] the British pound at [removed: $1.28,] [added: $1.29,] the Canadian dollar at [removed: $0.75,] [added: $0.76,] and the Australian dollar at [removed: $0.70;] [added: $0.68;] and the Japanese yen at [removed: ¥112,] [added: ¥110,] the Chinese renminbi at RMB [removed: 7.00,] [added: 7.10,] and the Brazilian real at [removed: R$3.79] [added: R$4.14] to the U.S. dollar for the full year of [removed: 2019.][added: 2020.]

The following table presents the foreign currency exchange impacts on our revenues, operating profit, and diluted earnings per [removed: share for the years December 31, 2018, 2017 and 2016,] [added: share,] as compared to the respective prior periods:

| | | [removed: For] [added: For] the Years Ended December [removed: 31,] [added: 31,] | | | | | | | | | | |

| [removed: Revenue impact] [added: Revenue impact] | | [removed: $] [added: $] | [removed: 13,623] [added: (38,624] | [added: )] | | [removed: $] [added: $] | [removed: 6,615] [added: 13,623] | | | [removed: $] [added: $] | [removed: (14,105] [added: 6,615] | [removed: )] |

| Operating profit impact, excluding hedge activity | | $ | [removed: 2,260] [added: (16,947] | [added: )] | | $ | [removed: 2,542] [added: 2,260] | | | $ | [removed: (6,921] [added: 2,542] | [removed: )] |

| Hedge [removed: gains] [added: losses (gains)] - prior year | | [removed: (27] [added: 976] | | [removed: )] | | [removed: (3,620] [added: (27] | | ) | | [removed: (20,879] [added: (3,620] | | ) |

| Hedge [removed: (loss) gain] [added: gains (losses)] - current year | | [removed: (976] [added: 10,628] | | [removed: )] | | [removed: 27] [added: (976] | | [added: )] | | [removed: 3,620] [added: 27] | | |

| Hedging activity impact | | [removed: (1,003] [added: 11,604] | | [removed: )] | | [removed: (3,593] [added: (1,003] | | ) | | [removed: (17,259] [added: (3,593] | | ) |

| [removed: Operating] [added: Operating] profit impact, including hedge [removed: activity] [added: activity] | | [removed: $] [added: $] | [removed: 1,257] [added: (5,343] | [added: )] | | [removed: $] [added: $] | [removed: (1,051] [added: 1,257] | [removed: )] | | [removed: $] [added: $] | [removed: (24,180] [added: (1,051] | [removed: )] [added: )] |

| [removed: Diluted] [added: Diluted] earnings per share impact, including hedge [removed: activity] [added: activity] | | [removed: $] [added: $] | [removed: 0.01] [added: (0.05] | [added: )] | | [removed: $] [added: $] | [removed: (0.01] [added: 0.01] | [removed: )] | | [removed: $] [added: $] | [removed: (0.20] [added: (0.01] | [removed: )] [added: )] |

If a hedging instrument qualifies for hedge accounting, changes in the fair value of the derivative instrument from the effective portion of the hedge are deferred in accumulated other comprehensive income, net of [added: tax, and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.]

[removed: We] immediately record in earnings the extent to which a hedge instrument is not effective in achieving offsetting changes in fair value.

See "Part [removed: II.][added: II, Item 8.]

Our foreign currency hedging strategy is consistent with prior periods and there were no material changes in our market risk exposure during the year ended December 31, [removed: 2018.][added: 2019.]

As a result, no significant ineffectiveness has resulted or been recorded through the statements of income for the years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016.][added: 2017.]

The notional amount of foreign currency exchange contracts to hedge forecasted intercompany purchases and sales totaled [removed: $190.9] [added: $210.9] million at December 31, [removed: 2018,] [added: 2019,] and [removed: $176.5] [added: $190.9] million at December 31, [removed: 2017.][added: 2018.]

At December 31, [removed: 2018,] [added: 2019,] we had [removed: $7.6] [added: $2.7] million of net unrealized gains on foreign currency exchange contracts recorded in accumulated other comprehensive [removed: income,] [added: loss,] net of related tax.

Borrowings outstanding under the Credit Facility at December 31, [removed: 2018,] [added: 2019,] were [removed: $398.9] [added: $288.8] million at a weighted-average effective interest rate of [removed: 3.63%.][added: 2.78%.]

Based on amounts outstanding under our Credit Facility as of December 31, [removed: 2018,] [added: 2019,] an increase in the LIBOR or the CDOR of 1% would increase interest expense by approximately [removed: $4.0] [added: $2.9] million on an annualized basis.

For additional information, see [removed: Part 1.][added: "Part I, Item 1A.]

Risk Factors; [removed: "Risks] [added: *Risks] associated with doing business internationally could negatively affect our operating [removed: results", "Strengthening] [added: results* and *Strengthening] of the rate of exchange for the U.S. dollar has a negative effect on our [removed: business"] [added: business*,"] and "Part [removed: II.][added: II, Item 8.]

| *(in thousands, except per share amounts)* | | 2019 | | | | 2018 | | | | 2017 | | |

We

| (dollars in thousands) | | 2018 | | | | 2017 | | | | 2016 | | |

tax, and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

Item 8.

Item 1A.

[removed: COMPANY OVERVIEW][added: COMPANY OVERVIEW]

| • | Practice management and diagnostic imaging systems and services used by [removed: veterinaries;] [added: veterinarians;] |

Our purpose guides our strategy: to be a great company that creates exceptional long-term value for our customers, employees, and [removed: shareholders] [added: stockholders] by enhancing the health and well-being of pets, people, and livestock.

[removed: DESCRIPTION] [added: DESCRIPTION] OF BUSINESS BY [removed: SEGMENT][added: SEGMENT]

[removed: ][added: ]

For the year ended December 31, [removed: 2018,] [added: 2019,] sales of products and services to customers outside the U.S. accounted for approximately [removed: 39%] [added: 38%] of our overall revenue.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” and "Part II, Item [removed: 8, Note 16.][added: 8.]

Segment Reporting" to the consolidated financial statements for the year ended December 31, [removed: 2018,] [added: 2019,] included in this Annual Report on Form 10-K for more information about our segments and revenue from customers outside of the U.S.

[removed: ][added: ]

[removed: CAG Diagnostics][added: CAG Diagnostics]

[removed: Integrated] [added: *Integrated] Diagnostic Information [removed: Management][added: Management*]

Customers have activated VetConnect PLUS in over [removed: 80] [added: 100] countries.

[removed: In-Clinic] [added: *In-Clinic] Diagnostic [removed: Solutions][added: Solutions*]

We [removed: previously sold the other chemistry analyzer, which is the] [added: continue to support our] Catalyst Dx Chemistry analyzer, [removed: and continue to support that product] [added: previously sold] as part of the Catalyst platform.

[removed: We launched the] [added: The] Catalyst SDMA [removed: Test globally in 2018, which] [added: test] allows our customers to use the Catalyst One and Catalyst Dx analyzers to screen for SDMA, an innovative proprietary test that detects the onset of canine and feline kidney disease months or years earlier than traditional methods.

The Catalyst One [removed: analyzer, launched in November 2014,] [added: analyzer] is engineered to deliver the same laboratory-quality results and real-time work flow as the Catalyst Dx analyzer.

The Catalyst One analyzer currently offers all the same tests as the Catalyst Dx, including an expanded menu of [removed: 32] [added: 33] tests.

In addition, the ProCyte Dx hematology analyzer, the LaserCyte Dx hematology analyzer, and the LaserCyte hematology analyzer each have the ability [added: to analyze the components of certain body fluids.]

The ProCyte Dx analyzer provides up to [removed: 26] [added: 27] different blood parameters, including the ability to detect band neutrophils, nucleated red blood cells, and reticulocyte hemoglobin for a more complete picture of a patient’s health.

[removed: The ProCyte Dx is validated for] many animal species (canine, feline, equine, bovine, ferret, rabbit, gerbil, pig, guinea pig, mini pig, llama, alpaca, camel, sheep, goat, dolphin, and hamster).

[removed: During 2014, we launched the] [added: Our] SNAP Pro Analyzer, which automatically activates a SNAP test, properly times the run, and captures an image of the result.

Its leading-edge technology allows veterinary staff to perform [removed: an] [added: a] urine sediment analysis in approximately 3 minutes.

The SediVue Dx analyzer leverages its algorithmic software and machine-learning, a type of artificial intelligence, to better identify abnormalities with each result generated, which we refer to as Neural Network [removed: 3.0.][added: 4.0.]

IVLS also generates one integrated patient report incorporating all of the lab work generated by the IDEXX VetLab suite, stores, retrieves and analyzes historical patient diagnostics data, including SNAP test results, and sends and receives information from practice management systems, including the [removed: IDEXX] Cornerstone system, as well as a wide variety of third-party systems.

| • | SNAP 4Dx Plus, which tests for the six vector-borne diseases; Lyme disease, [removed: Ehrlichia] [added: *Ehrlichia] canis, Ehrlichia ewingii, Anaplasma [removed: phagocytophilum] [added: phagocytophilum*] and [removed: Anaplasma platys,] [added: *Anaplasma platys,*] and canine heartworm; |

| • | SNAP [removed: Giardia,] [added: *Giardia*,] which is a fecal test for soluble [removed: Giardia] [added: *Giardia*] antigens, a common cause of waterborne infection; and |

| • | SNAP [removed: Giardia,] [added: *Giardia*,] which is a fecal test for soluble [removed: Giardia] [added: *Giardia*] antigens; and |

[removed: Outside Reference] [added: *Outside* *Reference] Laboratory Diagnostic and Consulting [removed: Services][added: Services*]

We offer commercial reference laboratory diagnostic and consulting services to veterinarians in many developed markets worldwide, including customers in the U.S., Europe, Canada, Australia, Japan, New Zealand, South Africa, South Korea, and Brazil, through a network of [removed: 73] [added: over 80] laboratories.

[removed: These intestinal parasite] [added: Our broad range of innovative tests include our IDEXX SDMA test, which is an innovative proprietary kidney test that detects the onset of canine and feline kidney disease months or years earlier than traditional methods, as well as our hookworm, roundworm, and whipworm antigen tests on all fecal] panels [added: that] detect the presence of intestinal worms often undiagnosed by current methods, including finding them earlier in the infection cycle and therefore enabling earlier disease diagnosis and treatment intervention.

[removed: Veterinary] [added: Veterinary] Software, Services and Diagnostic Imaging [removed: Systems][added: Systems]

[added: | • | *Software applications that extend workflow capabilities for practices and groups*.] With our Smart Flow cloud offering, which we acquired in the third quarter of 2018, we are able to improve overall patient management and workflow optimization through coordination and tracking of every step of a patient during a hospital stay. [added: Smart Flow works in conjunction with major veterinary practice management systems, including IDEXX Cornerstone, DVMAX, IDEXX Animana, IDEXX Neo, and certain third-party practice management systems. |]

Our newest radiography system, the IDEXX ImageVue DR50, [removed: was launched in June 2016 and] enables low-dose radiation image capture without sacrificing clear, high-quality images, a component in reducing the risk posed by excess radiation exposure for veterinary professionals.

[removed: ][added: ]

Our principal products are the Colilert, Colilert-18, and Colisure tests, which detect the presence of total coliforms and [removed: E. coli] [added: *E. coli*] in water.

Our Enterolert products detect the presence of [removed: enterococci] [added: *enterococci*] in drinking, waste, and recreational waters.

Our Pseudalert products detect the presence of [removed: Pseudomonas aeruginosa] [added: *Pseudomonas aeruginosa*] in pool, spa, and bottled water.

[removed: Pseudomonas aeruginosa] [added: *Pseudomonas aeruginosa*] is a pathogen that can cause “hot-tub rash,” “swimmer’s ear”, and potentially fatal infections in individuals with weakened immune systems.

Our Filta-Max and Filta-Max [removed: xpress] [added: *xpress*] products are used in the detection of [removed: Cryptosporidium] [added: *Cryptosporidium*] and [removed: Giardia] [added: *Giardia*] in water.

[removed: Cryptosporidium] [added: *Cryptosporidium*] and [removed: Giardia] [added: *Giardia*] are parasites that can cause potentially fatal gastrointestinal illness if ingested.

We operate primarily through three business segments:

Companion Animal Group (“CAG”) - Diagnostic and information management-based products and services for the veterinary market.

Water quality products (“Water”) - Design, development, manufacture, and distribution of products used in the detection of various microbiological parameters in water.

Livestock, Poultry and Dairy (“LPD”) - Diagnostic products and services for livestock and poultry health and to ensure the quality and safety of milk and food, and improve producer efficiency.

Financial Statements and Supplementary Data, Note 16.

The ProCyte Dx is validated for

We develop, market, and sell a portfolio of software and services for independent veterinary clinics and corporate groups.

This portfolio includes:

| • | *Practice management systems*. Software, hardware, and integrated services that run key functions of veterinary clinics, including managing patient electronic health records (EHR), scheduling, client communication, billing, and inventory management. Our principal practice management systems are Cornerstone (on-premise), IDEXX Neo (cloud-based), DVMAX (on-premise), and IDEXX Animana (cloud-based, available in Europe). We also support several other practice management systems including Better Choice, VPM, VetLINK, and BeeFree. To support the software system needs of practices, IDEXX provides integrated services including: Hardware, Payment Solutions, Data Backup & Recovery, and Practice Supplies including PetDetect boarding collars. |

| • | *Client marketing and wellness plan management*. In addition, we offer cloud-based client communication (Pet Health Network Pro and Pet Health Network 3D) and preventive care plan management software (Petly Plans) designed to strengthen the relationship between the veterinarian and the pet owner. To support the communication needs between general practices and specialty referral practices, IDEXX offers rVetLink software, which we acquired in the second quarter of 2017. Lastly, IDEXX Enterprise provides centralized management and reporting capabilities for groups of veterinary practices. |

In 2016, we launched the RealPCR ASFV Test, which is a real-time polymerase chain reaction (PCR) assay for African Swine Fever (ASFV) in domestic and wild swine species.

This test provides early and accurate detection of ASFV supporting prevention, control, and eradication programs by veterinarians and producers.

For more information on risks related to our competition, see “Part I, Item 1A.

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

These products include our diagnostic test kits for companion and food animal infectious diseases, including most of our livestock and poultry products and our rapid assay products.

Other FDA regulated products include our non-licensed Rapid Assay products such as SNAP Pancreatic Lipase, Cortisol, Bile Acid, Foal IgG, and ProBNP.

regulatory programs.

Other Environmental Regulations.

All IDEXX products must comply with applicable global product regulations, including those governing consumer product safety and materials requirements such as the Europeans Union's Electromagnetic Compatibility ("EMC") Directive, the European Regulation for Registration, Evaluation, Authorization and Restriction of Chemical Substances ("REACH"), the Restriction of Hazardous Substances ("RoHS") Directive, and the Waste Electrical and Electronic Equipment ("WEEE") Directive.

These complex regulatory requirements create risk to IDEXX’s ability to market and sell our products, our business and our financial performance.

For more information about the risks associated with various U.S. and foreign government regulation, see *"Various U.S. and foreign government regulations could limit or delay our ability to market and sell our products or otherwise negatively impact our business*" under "Part I, Item 1A.

Risk Factors."

Other countries, including China, Russia, the United Arab Emirates, and Turkey have implemented or anticipate implementing regulatory regimes similar to the RoHS Directive.

However, these systems are required to meet CE certification, which required compliance with the RoHS Directive, the EMC Directive, and other safety requirements.

Similar requirements are specified by most counties in which we sell our products and are subject to increasing harmonization globally.

Some of our products, including some of our Companion Animal products, may be subject to pending restriction of microplastics pursuant to REACH.

In the US, the EPA regulates chemical use similarly to the EU.

In addition, certain states have their own chemical regulations, such as California's Proposition 65, which requires businesses to provide warnings to California residents about significant risk of exposures to chemicals in products that are known to cause cancer, birth defects or other reproductive harm.

We operate primarily through three business segments: diagnostic and information technology-based products and services for the veterinary market, which we refer to as the Companion Animal Group (“CAG”); water quality products (“Water”); and diagnostic products and services for livestock and poultry health and to ensure the quality and safety of milk and food, and improve dairy efficiency, which we refer to as Livestock, Poultry and Dairy (“LPD”).

See “Part I, Item 1A.

In addition, the Catalyst Dx and Catalyst One analyzers run a test to measure phenobarbital levels in blood, allowing veterinarians to adjust anticonvulsant medication more quickly and efficiently.

Our fructosamine test helps veterinarians to diagnose and manage canine and feline diabetes mellitus, helping to assess insulin treatments, and adjust insulin dosages.

We launched our total T4 test globally for use on the Catalyst One and Catalyst Dx analyzers during 2015.

T4 testing is essential to assessing and managing thyroid function and is an accepted standard for baseline testing for both sick pets and preventive care in senior pets.

to analyze the components of certain body fluids.

In January 2017, we launched ProRead for the SNAP Pro Analyzer.

In April 2016, we launched the SediVue Dx urine sediment analyzer in North America.

In the fourth quarter of 2016 we launched the SediVue Dx analyzer in the UK and Australia.

During the first half of 2017, we continued our international launch of the SediVue Dx analyzer to include other parts of Europe and New Zealand.

We continued to further our international deployment of SediVue Dx in 2018.

In 2015, we launched the IDEXX SDMA test in North America, an innovative proprietary kidney test that detects the onset of canine and feline kidney disease months or years earlier than traditional methods.

During 2016, we launched the IDEXX SDMA test in all of the major European countries and Australia, followed by a full international launch of the IDEXX SDMA test during the remainder of 2016.

In 2015, we also launched hookworm and roundworm antigen tests to all fecal panels that already included the whipworm antigen test.

We develop, market, and sell practice management systems, including hardware, software and services that run key functions of veterinary clinics, including managing patient electronic health records,

scheduling (including for boarding and grooming), client communication, billing, and inventory management.

Our principal practice management systems are Cornerstone, DVMAX, IDEXX Animana and IDEXX Neo.

IDEXX Neo, available in North America, and IDEXX Animana, available in Europe, are cloud-based practice management systems.

We also support several other practice management systems installed with our customers, including Better Choice, VPM, VetLINK, and BeeFree.

Our practice management services include Payment Solutions, Data Backup & Recovery and PetDetect boarding collars.

Smart Flow works in conjunction with major veterinary practice management systems, including Cornerstone, DVMAX, IDEXX Animana, IDEXX Neo, and certain third-party practice management systems.

In addition, we offer cloud-based client communication and preventive care plan management software designed to strengthen the relationship between the veterinarian and the pet owner.

We commercially launched Pet Health Network Pro in 2013, which is a subscription-based cloud service that permits veterinarians to provide online communication and education to pet owners before, during and after each patient visit, thus strengthening the loyalty between a practice and its clients.

Further, veterinarians can share VetConnect PLUS testing results directly with pet owners via Pet Health Network Pro.

We also offer Pet Health Network 3D, an educational subscription-based service that replaces cumbersome plastic anatomy models with engaging, three-dimensional anatomical animations on a desktop or mobile device.

In 2014, we acquired Petly Plans, a cloud-based software solution for veterinary practices to customize, manage, and monitor a range of monthly payment preventive care plans for their pet owner clients.

Petly Plans complements the Pet Health Network suite of client marketing services by making it easier for practices to increase access to the best care and offer plans that spread the cost of that care, including examinations, vaccines, and diagnostics, over the course of the year.

Certain of our services are compatible with non-IDEXX practice management systems.

With our acquisition of rVetLink in June 2017, we now also offer a comprehensive referral management solution for specialty care hospitals that streamlines the referral process between primary care and specialty care veterinarians.

General practice veterinarians often refer patients to board-certified specialists for advanced care in areas such as cardiology, oncology, dermatology, ophthalmology, surgery, or internal medicine.

rVetLink automates the time-consuming process of sharing medical records and images and sending notifications to facilitate generalist-specialist collaboration in the delivery of care.

rVetLink’s cloud technology integrates with our other major specialty hospital management systems, including IDEXX Cornerstone Software and IDEXX DVMAX Software.


In June 2016, we launched the Rapid Visual Pregnancy Test for cattle, which is a point-of-care test that can detect pregnancy 28 days after breeding.

This test provides a quick and accurate identifier using whole blood samples that enables veterinarians to optimize value-added medical consulting services while on farm visits.

Certain components incorporated into our SNAP products and certain livestock and poultry testing kits are supplied by Moss, Inc. (“Moss”) under a supply agreement that either party may terminate with 24 months prior written notice.

Pursuant to the terms of the supply agreement, Moss has escrowed its manufacturing information relating to the components, which may be released to us upon certain triggering events that would render Moss incapable of supplying the components to us.

If such a triggering event occurs, we will make royalty payments to Moss for the use of such information until Moss is able to again begin manufacturing.

competitors include highly focused smaller companies and multibillion-dollar companies with small livestock and poultry diagnostics and water testing solution franchises.

In the opinion of management, based in part upon advice of legal counsel, the disposition of any such currently pending [added: or threatened] matters is not expected to have a material effect on our results of operations, financial condition, or cash flows.

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: Form 10-K][added: Form 10-K]

| [removed: T] [added: ☒] | [removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] | |

[removed: | | |] For the fiscal year ended [removed: December] [added: December] 31, [removed: 2018 |][added: 2019]

| [removed: ¨] [added: ☐] | [removed: TRANSITION] [added: TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] | |

[removed: | | |] For the transition period from _______________ to _______________. [removed: |]

[removed: |] COMMISSION FILE NUMBER: 0-19271 [removed: | | |]

[removed: ][added: ]

[removed: IDEXX] [added: IDEXX] LABORATORIES, [removed: INC.][added: INC.]

[removed: (Exact] [added: *(Exact] name of registrant as specified in its [removed: charter)][added: charter)*]

| [removed: DELAWARE (State] [added: *(State] or other jurisdiction of incorporation or [removed: organization)] [added: organization)*] | [removed: 01-0393723 (I.R.S.] [added: | | (IRS] Employer Identification No.) |

| [removed: ONE] [added: One] IDEXX [removed: DRIVE, WESTBROOK, MAINE (Address of principal executive offices)] [added: Drive] | [removed: 04092 (ZIP Code)] [added: Westbrook] | [added: Maine | 04092 |]

[removed: Registrant’s] [added: *(Registrant’s] telephone number, including area [removed: code: 207-556-0300][added: code)*]

| Title of each class | [added: Trading Symbol(s) |] Name of each exchange on which registered |

| Common Stock, $0.10 par value per share | [added: IDXX |] NASDAQ Global Select Market |

Yes [removed: ý] [added: ☒] No ☐

Yes ☐ No [removed: ý][added: ☒]

| Large accelerated filer | [removed: ý] [added: ☒] | Accelerated filer | ☐ |

Based on the closing sale price on June [removed: 30, 2018] [added: 30, 2019] of the registrant’s Common Stock, the last business day of the registrant’s most recently completed second fiscal quarter, as reported by the NASDAQ Global Select Market, the aggregate market value of the voting stock held by non-affiliates of the registrant was [removed: $18,703,045,028.][added: $23,368,790,688.]

The number of shares outstanding of the registrant’s Common Stock was [removed: 86,006,526] [added: 85,329,642] on February [removed: 12, 2019.][added: 10, 2020.]

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Part III—Specifically identified portions of the Company’s definitive Proxy Statement to be filed in connection with the Company’s [removed: 2019] [added: 2020] annual meeting of stockholders (the [removed: “2019] [added: “2020] Annual Meeting”), to be held on May [removed: 8, 2019,] [added: 6, 2020,] are incorporated herein by reference.

[removed: GLOSSARY] [added: GLOSSARY] OF TERMS AND SELECTED [removed: ABBREVIATIONS][added: ABBREVIATIONS]

| [removed: Term/Abbreviation] [added: Term/Abbreviation] | | [removed: Definition] [added: Definition] |

| [removed: AOCI] [added: AOCI] | | Accumulated other comprehensive income or loss |

| [removed: ASC] [added: ASC] | | Accounting Standards Codification |

| [removed: ASU 2014-09] [added: ASU 2014-09] | | Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), also referred to as the “New Revenue Standard” |

| [removed: ASU 2016-02] [added: ASU 2016-02] | | ASU 2016-02, [removed: Leases] [added: *Leases] (Topic [removed: 842);] [added: 842);*] also referred to as the "New Leasing Standard" |

| [removed: CAG] [added: CAG] | | Companion Animal Group, a reporting segment that provides veterinarians diagnostic products and services and information management solutions that enhance the health and well-being of pets |

| [removed: cGMP] [added: cGMP] | | The FDA’s current Good Manufacturing Practice regulations |

| [removed: Credit Facility] [added: Credit Facility] | | Our $850 million five-year unsecured revolving credit facility under an amended and restated credit agreement that was executed in December 2015, also referred to as line of credit |

| [removed: EMA] [added: EMA] | | Extended maintenance agreements |

| [removed: EPA] [added: EPA] | | U.S. Environmental Protection Agency |

| [removed: EPS] [added: EPS] | | Earnings per share, if not specifically stated, EPS refers to earnings per share on a diluted basis |

| [removed: EU] [added: EU] | | European Union |

| [removed: FASB] [added: FASB] | | U.S. Financial Accounting Standards Board |

| [removed: FDA] [added: FDA] | | U.S. Food and Drug Administration |

| [removed: FeLV] [added: FeLV] | | Feline leukemia virus |

| Delaware | | | 01-0393723 |

| | | | |

| *(Address of principal executive offices)* | | | *(ZIP Code)* |

207\-556-0300

Yes ☒ No ☐

Yes ☒ No ☐

| | | | |

| --- | --- | --- | --- |

| | | | |

Yes ☐ No ☒

| ASU 2016-16 | | ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, |

| CDOR | | Canadian Dollar Offered Rate, a rate at which banks commit to lending to companies |

| LIBOR | | London Interbank Offered Rate, current benchmark interest rate used between banks and used to set interest rates on loans |

| --- | --- | --- |

IDEXX LABORATORIES, INC.

| --- | --- | --- |

| | | |

| | | |

| | | |

| | | |

| [Signatures](#s5F9A6E07321351ED9F3F40CF62BE6D8F) | | |

໿

These forward-looking statements involve a number of risks and uncertainties, including, among other things, the matters described under the headings "Business," "Risk Factors," "Legal Proceedings," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Quantitative and Qualitative Disclosures About Market Risk" in this Annual Report on Form 10-K.

10-K 1 idxx201810k.htm 10-K

| or | | |

| | |

| --- | --- |

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

| 2015 Amended Agreement | | Amended and Restated Multi-Currency Note Purchase and Private Shelf Agreement executed in June 2015 |

| ASU 2016-09 | | ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting |

| Moss | | Moss Inc., a supplier of certain components used in our SNAP products and certain livestock and poultry testing kits |

| [Signatures](#sDA338EC85C055062BB4DD7D811AD633E) | | |

These forward-looking statements involve a number of risks and uncertainties as more fully described under the heading “Part I, Item 1A.

Risk Factors” in this Annual Report on Form 10-K.

Our worldwide headquarters is located [removed: on a company-owned, 65-acre site] in Westbrook, Maine where we [removed: occupy a 647,000 square-foot building utilized for] [added: engage in] manufacturing, research and development, marketing, sales, and general and administrative support functions.

We are also in the process of [removed: building a] [added: relocating and expanding our] laboratory facility in [added: Ludwigsburg, Germany to] Kornwestheim, Germany which is expected to be completed in 2020.

We believe that our [removed: owned and] leased [added: and owned] properties are generally in good condition, are well-maintained, and are generally suitable and adequate to carry on our business.

Our Hoofddorp, Netherlands location includes distribution, warehousing, and office space.

Primary Facility Locations

| | | |

| --- | --- | --- |

| | | |

| Location | Functions | Own/Lease |

| Westbrook, Maine | United States Headquarters | Own |

| Hoofddorp, Netherlands | European Headquarters | Lease |

| Memphis, Tennessee | Distribution Center and Reference Lab | Lease |

| Ludwigsburg, Germany | Reference Lab | Lease |

| Wetherby, United Kingdom | Reference Lab | Lease |

| Newmarket, United Kingdom | Water manufacturing | Lease |

| Bern, Switzerland | LPD manufacturing | Lease |

| Montpelier, France | LPD manufacturing | Lease |

| Roswell, Georgia | OPTI Medical manufacturing | Lease |

Including the locations above, we have over 50 reference laboratories throughout the United States and over 25 reference laboratories internationally, including locations in Europe, Canada, Australia, New Zealand, Brazil, Asia, and South Africa.

The majority of our reference laboratories are leased, with the remainder being owned.

We also lease space in various locations worldwide for administrative support, manufacturing, sales, distribution, and storage.

We are currently in the process of expanding our headquarters by approximately 140,000 square feet, including a lease of the adjacent 20 acres for a parking lot and other infrastructure.

This construction is expected to be complete at the end of 2019.

Additional property ownership and leasing arrangements with approximate square footage, purpose and location are as follows:

Additional Properties Owned:

| | |

| --- | --- |

| • | 34,200 square feet of laboratory space located in the U.S., used for our Reference Laboratory Diagnostic and Consulting Services line of business of CAG |

| • | 24,800 square feet of office and laboratory space located in the U.K., used for our Reference Laboratory Diagnostic and Consulting Services line of business of CAG |

| • | 3,100 square feet of laboratory space located in Canada, used for our Reference Laboratory Diagnostic and Consulting Services line of business of CAG |

Additional Properties Leased:

| • | 665,300 total square feet of laboratory, office and warehousing space located throughout the U.S., Europe, Canada, Australia, New Zealand, Brazil, Asia, and South Africa, primarily used for our Reference Laboratory Diagnostic and Consulting Services line of business of CAG |

| • | 126,200 square feet of distribution, warehousing, and office space in the Netherlands, which serves as our European headquarters |

| • | 114,400 square feet of industrial space in Tennessee for distribution and warehousing related to various lines of business |

| • | 92,800 total square feet of office and manufacturing space in France, Switzerland, and Brazil related to our Livestock, Poultry and Dairy line of business |

| • | 84,300 square feet of office, manufacturing and warehousing space in Georgia related to our CAG and OPTI Medical lines of business |

| • | 65,000 square feet of office space in Maine for corporate, customer service, and information technology support services |

| • | 50,300 square feet of office space in Wisconsin related to our Veterinary Software, Services and Diagnostic Imaging Systems line of business of CAG |

| • | 8,100 square feet of manufacturing space in the U.K. related to our Water line of business |

[removed: PART II][added: PART II]

[removed: Market Information][added: Market Information]

[removed: Holders] [added: Holders] of Common [removed: Stock][added: Stock]

As of February [removed: 12, 2019,] [added: 10, 2020,] there were [removed: 432] [added: 420] holders of record of our common stock.

[removed: Purchases] [added: Purchases] of Equity Securities by the [removed: Issuer][added: Issuer]

During the three months ended December 31, [removed: 2018,] [added: 2019,] we repurchased shares of common stock as described below:

| [removed: Period] [added: Period] | | [removed: Total] [added: Total] Number of Shares [removed: Purchased (a)] [added: Purchased (a)] | | | [removed: Average] [added: Average] Price Paid per [removed: Share (b)] [added: Share (b)] | | | | [removed: Total] [added: Total] Number of Shares Purchased as Part of Publicly Announced Plans or [removed: Programs (1) (c)] [added: Programs (1) (c)] | | | [removed: Maximum] [added: Maximum] Number of Shares that May Yet Be Purchased Under the Plans or [removed: Programs (1) (d)] [added: Programs (1) (d)] | |

(1) As of December 31, [removed: 2018,] [added: 2019,] our Board of Directors had approved the repurchase of up to 68 million shares of our common stock in the open market or in negotiated transactions pursuant to the Company’s share repurchase program.

The program was approved and announced on August 13, 1999, and the maximum number of shares that may be purchased under the program has been increased by the Board of Directors on numerous [removed: occasions; most recently, on May 2, 2017, the maximum level of shares that may be repurchased under the program was increased from 65 million to 68 million shares.][added: occasions.]

There were no other repurchase programs outstanding during the three months ended December 31, [removed: 2018,] [added: 2019,] and no repurchase programs expired during the period.

Repurchases of [removed: 489,488] [added: approximately 0.5 million] shares were made during the three months ended December 31, [removed: 2018,] [added: 2019,] in transactions made pursuant to our repurchase program.

(2) During the three months ended December 31, [removed: 2018,] [added: 2019,] we received [removed: 1,317] [added: less than 1,000] shares of our common stock that were surrendered by employees in payment for the minimum required withholding taxes due on the vesting of restricted stock units and settlement of deferred stock units.

In the above table, these shares are included in columns (a) and [removed: (b),] [added: (b)] but excluded from columns (c) and (d).

During the year ended December 31, [removed: 2018,] [added: 2019,] we repurchased [removed: 1,773,238] [added: approximately 1.2 million] shares of our common stock in transactions made pursuant to our repurchase program and received [removed: 51,460] [added: approximately 0.04 million] shares of common stock that were surrendered by employees in payment for the minimum required withholding taxes due on the vesting of restricted stock units and settlement of deferred stock units.

Repurchases of Common Stock" to the consolidated financial statements for the year ended December 31, [removed: 2018,] [added: 2019,] included in this Annual Report on Form 10-K for further information.

[removed: Dividends][added: Dividends]

[removed: Stock Performance][added: Stock Performance]

This graph compares our total stockholder returns, the Total Return for the Standard & Poor’s (“S&P”) 500 Index, the Total Return for the S&P 500 Health Care Index, and the Total Return for the NASDAQ Stock Market Index (U.S. Companies) [added: (the “NASDAQ Index”)] prepared by the Center for Research in Security [removed: Prices (the “NASDAQ Index”).][added: Prices.]

This graph assumes the investment of $100 on December 31, [removed: 2013,] [added: 2014,] in IDEXX’s common stock, the S&P 500 Index, the S&P 500 Health Care Index, and the NASDAQ Index and assumes dividends, if any, are reinvested.

Measurement points are the last trading days of the years ended December [removed: 2013] [added: 2014] to [removed: 2018.][added: 2019.]

[removed: ][added: ]

| | | [removed: 12/31/2013] [added: 12/31/2014] | | [removed: 12/31/2014] [added: 12/31/2015] | | [removed: 12/31/2015] [added: 12/31/2016] | | [removed: 12/31/2016] [added: 12/31/2017] | | [removed: 12/31/2017] [added: 12/31/2018] | | [removed: 12/31/2018] [added: 12/31/2019] |

| October 1, 2019 to October 31, 2019 | | 120,339 | | | $ | 273.57 | | | 120,339 | | | 2,408,629 | |

| November 1, 2019 to November 30, 2019 | | 197,421 | | | 258.96 | | | | 197,421 | | | 2,211,208 | |

| December 1, 2019 to December 31, 2019 | | 215,313 | | | 254.51 | | | | 214,500 | | | 1,996,708 | |

| Total | | 533,073 | | (2) | $ | 260.46 | | | 532,260 | | | 1,996,708 | |

On February 12, 2020, our Board of Directors approved an additional 5.0 million shares to be purchased under the Company's share repurchase program.

With this increase, the total amount of shares that may be repurchased pursuant to the Company's share repurchase program is 73 million shares.

| IDEXX Laboratories, Inc. | | $100.00 | | $98.36 | | $158.18 | | $210.94 | | $250.92 | | $352.24 |

| NASDAQ Index | | $100.00 | | $106.96 | | $116.45 | | $150.96 | | $146.67 | | $200.49 |

| S&P 500 Index | | $100.00 | | $101.38 | | $113.51 | | $138.29 | | $132.23 | | $173.86 |

| S&P 500 Health Care Index | | $100.00 | | $106.89 | | $104.01 | | $126.98 | | $135.19 | | $163.34 |

| October 1, 2018 to October 31, 2018 | | 364,975 | | | $ | 216.77 | | | 364,975 | | | 3,337,367 | |

| November 1, 2018 to November 30, 2018 | | 77,442 | | | 201.94 | | | | 77,442 | | | 3,259,925 | |

| December 1, 2018 to December 31, 2018 | | 48,388 | | | 185.86 | | | | 47,071 | | | 3,212,854 | |

| Total | | 490,805 | | (2) | $ | 211.38 | | | 489,488 | | | 3,212,854 | |

| IDEXX Laboratories, Inc. | | $100.00 | | $139.39 | | $137.11 | | $220.49 | | $294.03 | | $349.76 |

| NASDAQ Index | | $100.00 | | $114.75 | | $122.74 | | $133.62 | | $173.22 | | $168.30 |

| S&P 500 Index | | $100.00 | | $113.69 | | $115.26 | | $129.05 | | $157.22 | | $150.33 |

| S&P 500 Health Care Index | | $100.00 | | $125.34 | | $133.97 | | $130.37 | | $159.15 | | $169.44 |

The selected consolidated financial data presented below has been derived from [removed: our] [added: the] consolidated financial statements.

| | | [removed: For] [added: For] the Years Ended December [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | |

| | | [removed: (in] [added: *(in] thousands, except per share [removed: data)] [added: data)*] | | | | | | | | | | | | | | | | | | |

| | | [removed: 2018] [added: 2019 (1)] | | | | [removed: 2017] [added: 2018 (2)] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| [removed: INCOME] [added: INCOME] STATEMENT [removed: DATA:] [added: DATA:] | | | | | | | | | | | | | | | | | | | | |

| Revenue | | $ | [removed: 2,213,242] [added: 2,406,908] | | | $ | [removed: 1,969,058] [added: 2,213,242] | | | $ | [removed: 1,775,423] [added: 1,969,058] | | | $ | [removed: 1,601,892] [added: 1,775,423] | | | $ | [removed: 1,485,807] [added: 1,601,892] | |

| Cost of revenue | | [removed: 971,700] [added: 1,041,359] | | | | [removed: 871,676] [added: 971,700] | | | | [removed: 799,987] [added: 871,676] | | | | [removed: 711,622] [added: 799,987] | | | | [removed: 669,691] [added: 711,622] | | |

| Gross profit | | [removed: 1,241,542] [added: 1,365,549] | | | | [removed: 1,097,382] [added: 1,241,542] | | | | [removed: 975,436] [added: 1,097,382] | | | | [removed: 890,270] [added: 975,436] | | | | [removed: 816,116] [added: 890,270] | | |

| Sales and marketing | | [removed: 387,406] [added: 418,193] | | | | [removed: 354,294] [added: 387,406] | | | | [removed: 317,058] [added: 354,294] | | | | [removed: 299,955] [added: 317,058] | | | | [removed: 283,708] [added: 299,955] | | |

| General and administrative | | [removed: 244,938] [added: 261,317] | | | | [removed: 220,878] [added: 244,938] | | | | [removed: 207,017] [added: 220,878] | | | | [removed: 182,510] [added: 207,017] | | | | [removed: 173,890] [added: 182,510] | | |

| Research and development | | [removed: 117,863] [added: 133,193] | | | | [removed: 109,182] [added: 117,863] | | | | [removed: 101,122] [added: 109,182] | | | | [removed: 99,681] [added: 101,122] | | | | [removed: 98,263] [added: 99,681] | | |

| Impairment charge | | — | | | | — | | | | — | | | | [removed: 8,212] [added: —] | | | | [removed: —] [added: 8,212] | | |

| Income from operations | | [removed: 491,335] [added: 552,846] | | | | [removed: 413,028] [added: 491,335] | | | | [removed: 350,239] [added: 413,028] | | | | [removed: 299,912] [added: 350,239] | | | | [removed: 260,255] [added: 299,912] | | |

| Interest expense, net | | [removed: (33,593] [added: (30,628] | | ) | | [removed: (31,971] [added: (33,593] | | ) | | [removed: (28,393] [added: (31,971] | | ) | | [removed: (26,771] [added: (28,393] | | ) | | [removed: (13,700] [added: (26,771] | | ) |

| Income before provision for income taxes | | [removed: 457,742] [added: 522,218] | | | | [removed: 381,057] [added: 457,742] | | | | [removed: 321,846] [added: 381,057] | | | | [removed: 273,141] [added: 321,846] | | | | [removed: 246,555] [added: 273,141] | | |

| Provision for income taxes | | [removed: 80,695] [added: 94,426] | | | | [removed: 117,788] [added: 80,695] | | | | [removed: 99,792] [added: 117,788] | | | | [removed: 81,006] [added: 99,792] | | | | [removed: 64,604] [added: 81,006] | | |

| Net income | | [removed: 377,047] [added: 427,792] | | | | [removed: 263,269] [added: 377,047] | | | | [removed: 222,054] [added: 263,269] | | | | [removed: 192,135] [added: 222,054] | | | | [removed: 181,951] [added: 192,135] | | |

| Less: Net income attributable to noncontrolling interest | | [removed: 16] [added: 72] | | | | [removed: 125] [added: 16] | | | | [removed: 9] [added: 125] | | | | [removed: 57] [added: 9] | | | | [removed: 45] [added: 57] | | |

| Net income attributable to IDEXX Laboratories, Inc. stockholders | | $ | [removed: 377,031] [added: 427,720] | | | $ | [removed: 263,144] [added: 377,031] | | | $ | [removed: 222,045] [added: 263,144] | | | $ | [removed: 192,078] [added: 222,045] | | | $ | [removed: 181,906] [added: 192,078] | |

| Basic | | $ | [removed: 4.34] [added: 4.97] | | | $ | [removed: 3.00] [added: 4.34] | | | $ | [removed: 2.47] [added: 3.00] | | | $ | [removed: 2.07] [added: 2.47] | | | $ | [removed: 1.82] [added: 2.07] | |

| Diluted | | $ | [removed: 4.26] [added: 4.89] | | | $ | [removed: 2.94] [added: 4.26] | | | $ | [removed: 2.44] [added: 2.94] | | | $ | [removed: 2.05] [added: 2.44] | | | $ | [removed: 1.79] [added: 2.05] | |

| Basic | | [removed: 86,864] [added: 86,115] | | | | [removed: 87,769] [added: 86,864] | | | | [removed: 89,732] [added: 87,769] | | | | [removed: 92,601] [added: 89,732] | | | | [removed: 100,094] [added: 92,601] | | |

| Diluted | | [removed: 88,470] [added: 87,542] | | | | [removed: 89,567] [added: 88,470] | | | | [removed: 90,884] [added: 89,567] | | | | [removed: 93,649] [added: 90,884] | | | | [removed: 101,503] [added: 93,649] | | |

| [removed: BALANCE] [added: BALANCE] SHEET [removed: DATA:] [added: DATA:] | | | | | | | | | | | | | | | | | | | | |

| Cash and cash equivalents | | $ | [removed: 123,794] [added: 90,326] | | | $ | [removed: 187,675] [added: 123,794] | | | $ | [removed: 154,901] [added: 187,675] | | | $ | [removed: 128,994] [added: 154,901] | | | $ | [removed: 322,536] [added: 128,994] | |

| Marketable [removed: securities(1)] [added: securities] | | — | | | | [removed: 284,255] [added: —] | | | | [removed: 236,949] [added: 284,255] | | | | [removed: 213,591] [added: 236,949] | | | | [removed: —] [added: 213,591] | | |

| Cash and cash equivalents and marketable securities | | $ | [removed: 123,794] [added: 90,326] | | | $ | [removed: 471,930] [added: 123,794] | | | $ | [removed: 391,850] [added: 471,930] | | | $ | [removed: 342,585] [added: 391,850] | | | $ | [removed: 322,536] [added: 342,585] | |

| Working capital | | $ | [removed: (116,272] [added: (45,698] | ) | | $ | [removed: (32,582] [added: (116,272] | ) | | $ | [removed: (88,984] [added: (32,582] | ) | | $ | [removed: (35,127] [added: (88,984] | ) | | $ | [removed: (61,508] [added: (35,127] | ) |

| Total assets | | $ | [removed: 1,537,349] [added: 1,832,475] | | | $ | [removed: 1,713,416] [added: 1,537,349] | | | $ | [removed: 1,530,704] [added: 1,713,416] | | | $ | [removed: 1,474,993] [added: 1,530,704] | | | $ | [removed: 1,384,211] [added: 1,474,993] | |

| Total long-term debt | | $ | [removed: 601,348] [added: 698,910] | | | $ | [removed: 606,075] [added: 601,348] | | | $ | [removed: 593,110] [added: 606,075] | | | $ | [removed: 597,085] [added: 593,110] | | | $ | [removed: 350,000] [added: 597,085] | |

| Total stockholders' equity (deficit) | | $ | [removed: (9,233] [added: 177,825] | [removed: )] | | $ | [removed: (53,842] [added: (9,233] | ) | | $ | [removed: (108,213] [added: (53,842] | ) | | $ | [removed: (83,995] [added: (108,213] | ) | | $ | [removed: 117,589] [added: (83,995] | [added: )] |

| [removed: (1)] [added: (2)] | See "Part [removed: II.] [added: II,] Item 8. Financial Statements and Supplementary Data, Note [removed: 6. Marketable Securities"] [added: 3. Revenue Recognition"] to the consolidated financial statements included in [removed: this] [added: the] Annual Report on Form 10-K for additional information regarding [removed: our marketable securities.] [added: the adoption of the New Revenue Standard.] |

| (1) | See "Part II, Item 8. Financial Statements and Supplementary Data, Note 2. Summary of Significant Accounting Policies" and "Part II, Item 8. Financial Statements and Supplementary Data, Note 7. Leases,"to the consolidated financial statements included in the Annual Report on Form 10-K for additional information regarding the adoption of the New Leasing Standard. |

| | |

| --- | --- |

On May 6, 2015, we announced a two-for-one split of our outstanding shares of common stock which was effected through a stock dividend that was paid through the issuance of treasury shares on June 15, 2015.

All share and per share amounts presented below, for periods prior to June 15, 2015, retroactively reflect the effect of the stock split.

[removed: Disclosure] [added: Disclosure] Controls and [removed: Procedures][added: Procedures]

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of an issuer that are designed to [added: ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC's rules and forms.]

Based on the evaluation of our disclosure controls and procedures at December 31, [removed: 2018,] [added: 2019,] our chief executive officer and chief financial officer have concluded that, as of such date, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.

[removed: Report] [added: Report] of Management on Internal Control Over Financial [removed: Reporting][added: Reporting]

Based on this evaluation, we concluded that, at December 31, [removed: 2018,] [added: 2019,] our internal control over financial reporting was effective.

The effectiveness of the Company's internal control over financial reporting at December 31, [removed: 2018,] [added: 2019,] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

[removed: Changes] [added: Changes] in Internal Control Over Financial [removed: Reporting][added: Reporting]

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended December 31, [removed: 2018,] [added: 2019,] that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

[removed: Certifications][added: Certifications]

ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC's rules and forms.

[removed: PART III][added: PART III]

The information required by this Item with respect to Directors, executive officers, compliance with Section 16(a) of the Exchange Act, our code of ethics and corporate governance is omitted from this Annual Report on Form 10-K and, pursuant to Regulation 14A of the Exchange Act, is incorporated herein by reference from the sections entitled “Corporate Governance - Proposal One - Election of Directors,” “Executive Officers,” “Stock Ownership Information - [added: Delinquent] Section 16(a) [removed: Beneficial Ownership Reporting Compliance,”] [added: Reports,”] “Corporate Governance – Corporate Governance Guidelines and Code of Ethics” and “Corporate Governance –Board Committees” in the Company’s definitive Proxy Statement with respect to its [removed: 2019] [added: 2020] Annual Meeting, which Proxy Statement will be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

The information required by this Item is omitted from this Annual Report on Form 10-K and, pursuant to Regulation 14A of the Exchange Act, is incorporated herein by reference from the sections entitled “Executive Compensation – Compensation Discussion and Analysis,” “Executive Compensation – Executive Compensation Tables,” “Executive Compensation – Potential Payments Upon Termination or Change-in-Control,” “Corporate Governance –Board Committees – Compensation Committee – Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report” in the Company’s definitive Proxy Statement with respect to its [removed: 2019] [added: 2020] Annual Meeting, which Proxy Statement will be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

The information required by this Item with respect to Item 201(d) of Regulation S-K is omitted from this Annual Report on Form 10-K and, pursuant to Regulation 14A of the Exchange Act, is incorporated herein by reference from the section entitled “Equity Compensation Plan Information” in the Company’s definitive Proxy Statement with respect to its [removed: 2019] [added: 2020] Annual Meeting, which Proxy Statement will be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

The information required by this Item with respect to Item 403 of Regulation S-K is omitted from this Annual Report on Form 10-K and, pursuant to Regulation 14A of the Exchange Act, is incorporated herein by reference from the sections entitled “Stock Ownership Information” in the Company’s definitive Proxy Statement with respect to its [removed: 2019] [added: 2020] Annual Meeting, which Proxy Statement will be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

The information required by this Item is omitted from this Annual Report on Form 10-K and, pursuant to Regulation 14A of the Exchange Act, is incorporated herein by reference from the sections entitled “Corporate Governance – Related Person Transactions” and “Corporate Governance – Director Independence” in the Company’s definitive Proxy Statement with respect to its [removed: 2019] [added: 2020] Annual Meeting, which Proxy Statement will be filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

The information required by this Item is omitted from this Annual Report on Form 10-K and, pursuant to Regulation 14A of the Exchange Act, is incorporated herein by reference from the section entitled “Audit Committee Matters - Independent Auditors’ Fees” in the Company’s definitive Proxy Statement with respect to its [removed: 2019] [added: 2020] Annual Meeting, which Proxy Statement will be filed with the SEC within 120 days after the end of the fiscal year covered by this report.

[removed: PART IV][added: PART IV]

[removed: FINANCIAL] [added: FINANCIAL] STATEMENTS AND SUPPLEMENTAL [removed: DATA][added: DATA]

[removed: INDEX] [added: INDEX] TO CONSOLIDATED FINANCIAL [removed: STATEMENTS][added: STATEMENTS]

[removed: AND][added: AND]

[removed: CONSOLIDATED] [added: CONSOLIDATED] FINANCIAL STATEMENT [removed: SCHEDULE][added: SCHEDULE]

| | [removed: Page No.] [added: Page No.] |

[removed: | [Report] [added: Report] of Independent Registered Public Accounting [removed: Firm](#sA2DB93179C9C5BA198234F364580AD02) | [F-2](#sA2DB93179C9C5BA198234F364580AD02) |][added: Firm]

| [Consolidated Balance Sheets as of December 31, [removed: 2018] [added: 2019] and [removed: 2017](#s80CA9C9F8A7B50AA9326E3BC36A7AAD4)] [added: 2018](#s0FEF6DFBDD985F41BEFA68F2099D0C48)] | [removed: [F-4](#s80CA9C9F8A7B50AA9326E3BC36A7AAD4)] [added: [F-5](#s0FEF6DFBDD985F41BEFA68F2099D0C48)] |

| [Consolidated Statements of Income for the Years Ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016](#sCEB8D636E6A456F69055554AC9BD42EC)] [added: 2017](#s3ECD79A6829D5591BC9ACA33D855A064)] | [removed: [F-5](#sCEB8D636E6A456F69055554AC9BD42EC)] [added: [F-6](#s3ECD79A6829D5591BC9ACA33D855A064)] |

| [Consolidated Statements of Comprehensive Income for the Years Ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016](#sE5974270293F50A4A30EDA5C3B618198)] [added: 2017](#s2CA5728CB1755199858BC3EAD8959F7A)] | [removed: [F-6](#sE5974270293F50A4A30EDA5C3B618198)] [added: [F-7](#s2CA5728CB1755199858BC3EAD8959F7A)] |

| [Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016](#s975DCB03230E57BC804253AFF888B6C1)] [added: 2017](#sDA41DBA07B01551B88F14FB7ABC3FB90)] | [removed: [F-7](#s975DCB03230E57BC804253AFF888B6C1)] [added: [F-8](#sDA41DBA07B01551B88F14FB7ABC3FB90)] |

| [Consolidated Statements of Cash Flows for the Years Ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016](#s85A842353B9D55B98BB2598B0DBE8EBE)] [added: 2017](#s283D45D260655C6ABCD7A42555C108CD)] | [removed: [F-8](#s85A842353B9D55B98BB2598B0DBE8EBE)] [added: [F-9](#s283D45D260655C6ABCD7A42555C108CD)] |

[removed: | [Notes to Consolidated Financial Statements](#sA349D6FB7E725DA09F9611F8BB60F681) | [F-9](#sA349D6FB7E725DA09F9611F8BB60F681) |][added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS]

| [Valuation and Qualifying Accounts for the Years Ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016](#s4D3A59CC58695954A831587D4EFF68CF)] [added: 2017](#s37994C28C4B05D6CAA15AF662026AC34)] | [removed: [F-52](#s4D3A59CC58695954A831587D4EFF68CF)] [added: [F-47](#s37994C28C4B05D6CAA15AF662026AC34)] |

[removed: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM][added: | [Report of Independent Registered Public Accounting Firm](#s2B3C04DFC0925C43800BBBA8219BB75C) | [F-2](#s2B3C04DFC0925C43800BBBA8219BB75C) |]

[removed: Opinions] [added: Opinions] on the Financial Statements and Internal Control over Financial [removed: Reporting][added: Reporting]

We have audited the accompanying consolidated balance sheets of IDEXX Laboratories, Inc. and its subsidiaries (the “Company”) as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the related consolidated statements of income, comprehensive income, stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, [removed: 2018,] [added: 2019,] including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in [removed: Internal] [added: *Internal] Control - Integrated [removed: Framework] [added: Framework*] (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2018] [added: 2019] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in [removed: Internal] [added: *Internal] Control - Integrated [removed: Framework] [added: Framework*] (2013) issued by the COSO.

[removed: Summary of Significant Accounting Policies] [added: As discussed in Notes 2 and 3] to the consolidated financial statements, the Company changed the manner in which it accounts for [removed: revenues from contracts with customers] [added: leases] in [removed: 2018] [added: 2019] and the manner in which it accounts for [removed: share-based compensation] [added: revenues from contracts with customers] in [removed: 2017.][added: 2018.]

[removed: Basis] [added: Basis] for [removed: Opinions][added: Opinions]

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the [removed: accompanying] Report of Management on Internal Control over Financial Reporting appearing under Item 9A.

[removed: Definition] [added: Definition] and Limitations of Internal Control over Financial [removed: Reporting][added: Reporting]

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and [added: dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit]

[removed: dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit] preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

[removed: IDEXX] [added: IDEXX] LABORATORIES, INC. AND [removed: SUBSIDIARIES][added: SUBSIDIARIES]

[removed: CONSOLIDATED] [added: CONSOLIDATED] BALANCE [removed: SHEETS][added: SHEETS]

[removed: (in] [added: (*in] thousands, except per share [removed: amounts)][added: amounts*)]

| | [removed: December] [added: December] 31, [removed: 2018] [added: 2019] | | | | [removed: December] [added: December] 31, [removed: 2017] [added: 2018] | | |

| [removed: ASSETS] [added: ASSETS] | | | | | | | |

| Cash and cash equivalents [added: at end of period] | [added: |] $ | [added: 90,326 | | | $ |] 123,794 | | | $ | 187,675 | |