IDEXX Laboratories (IDXX) 10-K risk factor changes: FY2020 vs FY2019

RISKS RELATED TO OUR [removed: BUSINESS][added: BUSINESS AND INDUSTRY]

[removed: | • |] [added: -] Developing, manufacturing, and marketing innovative new or improved and cost competitive in-clinic laboratory analyzers that drive sales of IDEXX VetLab instruments, grow our installed base of instruments and increase demand for related recurring sales of consumable products, services, and accessories; [removed: |]

[removed: | • |] [added: -] Developing and introducing new proprietary diagnostic tests and services for both our reference laboratories and in-clinic applications that provide valuable medical information to our customers and effectively differentiate our products and services from those of our competitors; [removed: |]

[removed: | • |] [added: -] Increasing the value to our customers of our companion animal products and services by enhancing the integration of the information and transactions of these products and the management of diagnostic information derived from our products; [removed: |]

[removed: | • |] [added: -] 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, market, and sell lesser offerings at prices lower than ours; [removed: |]

[removed: | • |] [added: -] 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 visits, use of preventive care protocols and enhanced practice of real-time care; [removed: |]

[removed: | • |] [added: -] Achieving cost improvements in our worldwide network of reference laboratories by implementing global best practices, including lean processing techniques, incorporating technological enhancements, including laboratory automation and a global laboratory information management system, employing purchasing strategies to maximize leverage of our global scale, increasing the leverage of existing infrastructure and consolidating testing in high volume laboratory hubs; [removed: |]

[removed: | • |] [added: -] Achieving cost improvements in the manufacture and service of our in-clinic laboratory analyzers by employing the benefits of economies of scale in both negotiating supply contracts and leveraging manufacturing overhead, and by improving reliability of our instruments; [removed: |]

[removed: | • |] [added: -] Continuing to expand, develop, and advance the productivity of our companion animal diagnostic sales, marketing, customer support and logistics organizations in the U.S. and international markets in support of, among other things, our all-direct sales strategies; [removed: |]

[removed: | • |] [added: -] Attracting, developing, and retaining key leadership and talent necessary to support all elements of our strategy, which is challenging due to the increasingly competitive and tight labor markets in which we operate; [removed: |]

[removed: | • |] [added: -] Expanding our served market and growing our market share by strengthening our sales and marketing activities both within the U.S. and in geographies outside of the U.S.; [removed: |]

[removed: | • |] [added: -] Identifying, completing, and integrating acquisitions that enhance our existing businesses or create new business or geographic areas for us; [removed: |]

[removed: | • |] [added: -] Developing and implementing new technology and licensing strategies; and [removed: |]

[removed: | • |] [added: -] Continuing to effectively manage our growth and expansion on a global scale through, among other things, designing and implementing cost-effective improvements to our processes, procedures, and infrastructure. [removed: |]

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

We rely on third-party suppliers to provide components [added: and raw materials (including biological materials)] for our [added: manufactured] products, manufacture [added: some of the] products that we [removed: do not manufacture ourselves,] [added: sell,] and perform [removed: services that we do not provide ourselves,] [added: certain services,] including package-delivery services.

[removed: Any problems with our suppliers and associated disruptions to our supply chain could materially negatively impact our ability to supply the market, substantially decrease sales, lead to higher costs, or damage our reputation with our customers, and any longer-term] [added: Longer-term] disruptions could potentially result in the permanent loss of our customers, which could reduce our recurring revenues and long-term profitability.

[removed: Disruption to our supply chain] [added: Our business and results of operations] could [removed: occur] [added: be negatively affected by certain factors and events beyond our control, such] as [removed: a result of any number of events, including, but not limited to,] [added: natural disasters, severe weather conditions and/or climate change-related events (such as hurricanes, earthquakes, fires, and floods); public health issues (such as outbreaks, epidemics, or pandemics, including the ongoing COVID-19 pandemic); civil unrest; geopolitical conditions and developments (such as the United Kingdom’s exit from the European Union); war, terrorism, or other man-made disasters;] 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; [removed: severe weather conditions; natural disasters; public health issues (such as outbreaks, epidemics,] [added: Any of these events could result in, among other things, damage to] or the [removed: prospect] [added: temporary closure] of [removed: a pandemic); climate change-related events; civil unrest, war, terrorism] [added: one] or [removed: other geopolitical developments, including the United Kingdom’s exit from the European Union; computer viruses, physical] [added: more of our manufacturing] or [removed: electronic breaches,] [added: distribution facilities] or [removed: other information system disruptions] [added: reference laboratories (damage to one of our facilities] or [removed: security breaches; and disruptions in utility and other services.][added: the manufacturing equipment we use could be]

For [removed: more information regarding] [added: examples of some of] the [removed: risks presented by natural and other disasters and system disruptions] [added: events that could result in disruption to our supply chain or operations,] and [removed: security breaches from cyberattacks,] [added: negatively impact our operating results,] see “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” and [removed: "Natural] [added: "Factors] and [added: events beyond our control, including natural and] other disasters [added: and climate change-related events,] could [added: disrupt our operations or our supply chain and] adversely affect our business" below.

In addition, we currently purchase many [removed: products] [added: products, components,] and materials from sole or single sources.

Some of [removed: the products that we purchase from] these [removed: sources] [added: products] are proprietary and, therefore, cannot be readily or easily replaced by alternative sources.

Even [removed: where products] [added: if products, components,] and materials [removed: are] [added: were to become] available [added: to us] from alternative suppliers, [removed: if any become unavailable to us for any 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 seek to mitigate [removed: risks associated with] sole and single source suppliers [added: risks] 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 [added: single or sole-sourced products.]

We also seek to enter into long-term contracts [removed: with our sole and single source suppliers] that provide for an uninterrupted supply of products at predictable or fixed prices.

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

There can be no assurance that suppliers with which we do not have long-term contracts will continue to supply our [removed: requirements for products, that suppliers with which we do have long-term contracts] [added: requirements,] will always fulfill their obligations under those contracts, or [removed: that any of our suppliers] will not experience disruptions in their ability to supply our [removed: requirements for products.][added: requirements.]

In cases where we purchase sole and single source [removed: products] [added: products, components,] or [removed: components] [added: raw materials] under purchase orders, we are more susceptible to unanticipated cost increases or changes in other terms of supply.

If we are unable to obtain adequate quantities of [removed: products] [added: products, components, or raw materials] in the future from sole and single source suppliers, or if such sole and single source suppliers are unable to obtain the components or other materials required to manufacture the products, we may be unable to supply the market, which could have a material adverse effect on our results of operations, and any longer-term disruptions could potentially result in the permanent loss of customers, which could reduce our recurring revenues and long-term profitability.

Many of our rapid assay, livestock and poultry diagnostic, water and dairy products are biologic [removed: products, which are] products that include [removed: materials from living organisms,] [added: biological materials,] such as antibodies, cells, and sera.

Manufacturing biologic products is highly complex due to the inherent variability of biological [removed: input] materials and the difficulty of controlling the interactions of these materials with other components of the products, samples, and the environment.

We rely on [removed: several information systems throughout] our [removed: company,] [added: information systems,] as well as our third-party business partners’ and suppliers’ information systems, to provide access to our web-based products and services, keep financial records, analyze results of operations, process customer orders, manage inventory, process shipments to customers, store confidential or proprietary information and operate other critical functions.

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

For the year ended December 31, [removed: 2019,] [added: 2020,] approximately 38% of our [added: overall] revenue [added: and approximately 90% of our LPD 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; public health issues (such as outbreaks, epidemics, [added: the ongoing COVID-19 pandemic,] 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 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.

Our diagnostic tests for animal health applications that involve the detection of infectious diseases, including most rapid assay canine and feline SNAP tests and livestock and poultry diagnostic tests, must be approved by the USDA prior to sale in the U.S. Our dairy testing products as well as the manufacture and sale of our OPTI line of human point-of-care electrolytes and blood gas analyzers require approval by the FDA before they may be sold commercially in the [removed: U.S. Our water testing products must be approved by] [added: U.S., and our OPTI PCR test kits for] the [removed: EPA, as a part] [added: detection] of [removed: a water quality monitoring program required by] the [removed: EPA, before they can be used] [added: virus that causes COVID-19, are subject to regulation] by [removed: customers in] the [removed: U.S. Delays in obtaining regulatory approvals for new products or product upgrades could have a negative impact on our growth] [added: FDA] and [removed: profitability.][added: sold and distributed pursuant to Emergency Use Authorizations issued by the FDA.]

These regulations include the Biocidal Products Regulation, which requires [removed: approval for] the use of [removed: certain] [added: approved] biocides in our products prior to being manufactured, used, or sold in the European 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 Union; [removed: and] the Restriction of Hazardous Substances("RoHS") Directive, which regulates and restricts certain hazardous substances in electrical and electronic [removed: equipment.][added: equipment; the Electromagnetic Compatibility Directive; and the Waste Electrical and Electronic Equipment Directive.]

Compliance with these [removed: regulations (and] [added: and] similar regulations [removed: that may be adopted elsewhere, including China] [added: in the U.S.] and [removed: Brazil)] [added: abroad] 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 regulations in a timely and cost-effective manner.

If we do not have adequate protection of our proprietary rights or are unable to license third-party patents and technologies on reasonable terms, our business may be [added: adversely] affected by competitors who utilize substantially equivalent technologies that compete with us.

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 [removed: Inc. (formerly named VCA Antech, Inc.),] [added: Inc.,] which is wholly owned by Mars, Incorporated, another operator of corporate hospital chains.

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

[added: 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.

RISK RELATED TO THE COVID-19 PANDEMIC

The effects of the ongoing COVID-19 pandemic could have a material adverse impact on our business, results of operations, liquidity, financial condition, and stock price.

The ongoing COVID-19 pandemic has increased economic uncertainty, caused economic slowdowns that may continue or recur and disrupted business activity.

If weakened economic conditions reduce our customers' ability or willingness to pay for our products and service or our suppliers' ability to provide products and services to us, then our business, results of operation, liquidity, financial condition, and stock price could be negatively impacted, and these impacts could be material.

The spread of COVID-19 has caused us to modify aspects of our business practices (including the management of and access to our facilities, employee remote work locations, and employee travel), and we may take further actions, as may be required by federal, state, and local governments or as we determine to be in the best interests of our employees and customers.

Such actions may disrupt our supply chain, operations, facilities, and employee workforce, which could negatively affect our employees' efficiency and productivity; our development and introduction of innovative new products and services; our ability to manufacture, market and sell our products and services; and our financial performance.

In addition, the social distancing procedures and guidelines, including stay-at-home orders that may be further deployed to combat the spread of COVID-19, and possible higher infection rates could result in a decrease in companion animal clinical visits, the delay of elective procedures and wellness visits and disruption of veterinary clinic operations, all of which would have a negative effect on veterinary service providers and result in declines in demand for our CAG products and services, which represented 88% of our 2020 consolidated revenues.

If stay-at-home orders are re-implemented periodically to combat the spread of COVID-19, particularly in the United States, the negative impact on veterinary service providers and their businesses, and correspondingly on demand for our CAG products and services, may be material.

Weakened economic conditions caused by the effects of the COVID-19 pandemic have reduced, and may further reduce, demand for our water testing products, livestock and poultry diagnostic tests and dairy products due to reduced testing or disruptions in livestock, poultry, dairy, or other food supply and distribution chains and markets that could negatively impact the related production markets.

If economic slowdowns continue or recur, the decline in our customers' demand for our water testing products, livestock and poultry diagnostic tests and dairy products may be significant.

In the second quarter of 2020, we began selling our new OPTI COVID-19 human PCR test products and services, and these sales were the primary contributor to our Other segment's revenue growth in 2020.

The future demand for these products and services, (and our other COVID-19-related products and services) is difficult to project given the uncertain nature of the COVID-19 pandemic, including short-term project commitments, available PCR testing capacity, alternative suppliers and the potential impact of vaccinations and other treatments, and there can be no assurance that sales of this product (and our other COVID-19-related products and services) will continue.

While demand for our CAG products and services recovered in the latter half of 2020, this recovery was due in part to pent-up demand following a period during which access to veterinary clinics was constrained due to governmental policies.

Demand also increased in the second half of 2020 driven by other factors, including an increase in pet ownership and higher levels of diagnostic test frequency and utilization, which may have been aided by factors related to the pandemic.

There can be no assurance that this increased demand will be sustained, and the environment remains uncertain.

The degree to which the COVID-19 pandemic ultimately impacts our business, results of operations, liquidity, financial condition and stock price depends on future developments that are unpredictable and most of which are outside of our control, including the duration, scope and severity of the pandemic, the availability and effectiveness of vaccinations and other treatment, related governmental advisories and restrictions to contain COVID-19, and how quickly economic conditions improve once the COVID-19 pandemic subsides.

There can be no assurance that we will be able to prevent or mitigate any or all of the COVID-19 near- or long-term adverse impacts, which could be material.

Actions taken by third-party suppliers in operating their business, as well as any disruptions to their business operations (or their supplier's business operations), could disrupt our supply chain or operations and materially negatively impact our ability to supply the market, substantially decrease sales, lead to higher costs, and damage our reputation with our customers.

These products, components, and materials are used in a majority of our instruments, including our Catalyst Dx, Catalyst One, and ProCyte Dx; consumables and accessories used in our instruments; livestock and poultry diagnostic tests, dairy testing products, and water testing products.

Our water testing products must be approved by the EPA, as a part of a water quality monitoring program required by the EPA, before they can be used by customers in the U.S. Delays in obtaining regulatory approvals for new products or product upgrades, or any termination, revision or revocation of an Emergency Use Authorization for our test kits, could have a negative impact on our growth and profitability.

For example, compliance with extensive country-specific regulatory processes is required in connection with importing and marketing our diagnostic products in Japan, Germany, Canada, Brazil, the Netherlands, China, and many other countries.

more compelling product and service offerings.

Weakened economic conditions caused by the effects of the ongoing COVID-19 pandemic have reduced, and may further reduce, demand for our water testing products, livestock and poultry diagnostic tests and dairy products, and COVID-19-related social distancing procedures and guidelines, including stay-at-home orders that may be further deployed to combat the spread of COVID-19, and possible higher infection rates could result in a decrease in companion animal clinical visits, the delay of elective procedures and wellness visits and disruption of veterinary clinic operations, all of which

would have a negative effect on veterinary service providers and result in declines in demand for our CAG products and services.

GENERAL RISKS

ineffective or inadequate to address all eventualities.

Due to governmental mandates and recommended safety measures to control the spread of COVID-19, we modified aspects of our business practices.

This has resulted in a greater number of our employees working remotely for extended periods of time, which may result in some increased risk of vulnerability or attacks associated with additional individuals accessing our data and systems remotely.

In addition, security industry experts and government officials have warned about the risks of hackers and cybersecurity attacks targeting U.S. organizations conducting COVID-19 related research, such as IDEXX.

Factors and events beyond our control, including natural and other disasters and climate change-related events, could disrupt our operations or our supply chain and adversely affect our business

In addition, we transfer information, including personal data, among IDEXX, our subsidiaries and third parties with which we have commercial relations for business purposes.

Our collection, protection, security, retention, storage, disclosure, sharing and use of personal data described above are subject to expanding and increasingly complex laws and regulations in the U.S. and abroad.

Compliance with these evolving requirements can be costly, require us to change our business practices in a manner adverse to our business or delay or impede the development and offering of innovative products and services.

Examples of laws and regulations that have impacted or could impact our business include:

- The California Consumer Privacy Act (“CCPA”), which became effective in January 2020, gives California residents, among other things, expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used.

The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches.

Moreover, a new privacy law, the California Privacy Rights Act, which is scheduled to take effect on January 1, 2023 (with a lookback to January 1, 2022), will significantly modify the CCPA, and will impose additional data protection obligations on companies such as ours doing business in California.

Similar laws have been proposed in other states and at the federal level, and if passed, such laws may have potentially conflicting requirements that would make compliance challenging.

The effects of the CCPA and other similar laws may require us to modify our data processing practices and policies and to incur substantial costs and expenses to comply.

- The European Union's General Data Protection Regulation ("GDPR"), which became effective in May 2018, imposes stringent operational requirements for controllers and processors of personal data of individuals in the EEA, and noncompliance can trigger fines of up to the greater of €20 million or 4% of global annual revenues.

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Because these suppliers are independent third parties with their own financial objectives, actions taken by them could have a materially negative effect on our results of operations.

The risks of relying on suppliers include our inability to enter into contracts with such suppliers on reasonable terms, breach, or termination by suppliers of their contractual obligations, inconsistent or inadequate quality control, relocation of supplier facilities, disruption to suppliers’ business, including work stoppages, suppliers’ failure to comply with complex and changing regulations, and third-party financial failure.

These products include the majority of our Catalyst Dx and Catalyst One consumables; VetLyte electrolyte consumables; ProCyte Dx hematology, IDEXX VetAutoread hematology, and VetTest Chemistry analyzers and related consumables and accessories; SediVue Dx urine sediment analyzer and consumables; image capture plates used in our diagnostic imaging systems; and certain components and raw materials used in our SNAP rapid assay kits and SNAP Pro Mobile Device, Catalyst One, LaserCyte and LaserCyte Dx hematology analyzers, livestock and poultry diagnostic tests, dairy testing products, and water testing products.

single or sole-sourced products.

Some of

Natural and other disasters could adversely affect our 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); public health issues (such as outbreaks, epidemics, or the prospect of a pandemic); civil unrest; negative geopolitical conditions and developments; and war, terrorism, or other man-made disasters.

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

The privacy, security, retention, sharing and use of the personal data described above are subject to expanding and increasingly complex laws and regulations in the U.S. (such as the California Consumer Privacy Act (“CCPA”), which became effective on January 1, 2020) and abroad (such as the Brazilian General Data Protection Law (“LGPD”), which will become effective on August 15, 2020), some of which impose significant compliance obligations.

Some of these laws and regulations apply broadly to the collection, use, storage, disclosure, sharing and security of personal data that identifies or may be used to identify an individual, such as names, contact information, and sensitive personal data.

In many cases, the federal, state, and international laws described above apply not only to third-party transactions, but also to transfers of information between us and our subsidiaries, and among us, our subsidiaries, and other parties with which we have commercial relations.

For example, we are subject to the European Union's General Data Protection Regulation, or GDPR, which became effective in May 2018.

The GDPR imposes stringent operational requirements for controllers and processors of personal data, including expanded disclosures about how personal information is to be used, limitations on retention of information and mandatory data breach notification requirements, and could subject us to increased liability for violations.

In addition, the laws and regulations related to data privacy and protection continue to develop, are subject to differing interpretations and may be applied inconsistently from jurisdiction to jurisdiction and may be inconsistent with our current global privacy policy and data protection practices.

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10‑K.* *The discussion of our financial condition and results of operations and liquidity and capital resources for the year ended December 31, [removed: 2017,] [added: 2018,] is included in our Annual Report on Form 10-K for the year ended December 31, [removed: 2018,] [added: 2019,] within Item 7.

We operate primarily through three business segments: diagnostic and information 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 [removed: food,] [added: improve producer efficiency,] which we refer to as Livestock, Poultry and Dairy (“LPD”).

Our Other operating segment combines and presents [added: our] products [added: and services] for the human [removed: point-of-care] medical diagnostics market (“OPTI Medical”) with our out-licensing arrangements because they do not meet the quantitative or qualitative thresholds for reportable segments.

Revenue Recognition and Note [removed: 16.][added: 17.]

Segment Reporting" to the consolidated financial statements for the year ended December 31, [removed: 2019,] [added: 2020,] 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.

[removed: Certain] [added: Prior to January 1, 2020, certain] costs [removed: are] [added: were] not allocated to our operating segments and [removed: are] [added: were] instead reported under the caption “Unallocated [removed: Amounts”.][added: Amounts.” These costs included costs primarily consisting of our R&D function, regional or country expenses and unusual items.]

Corporate support function costs (such as information technology, facilities, human resources, finance and legal), health benefits and incentive compensation [removed: are] [added: were] charged to our business segments at pre-determined budgeted amounts or rates.

We place our Catalyst chemistry analyzers [added: and VetTest instruments] through sales, leases, rental, and other programs.

As of December 31, [removed: 2019,] [added: 2020,] our Catalyst and VetTest chemistry analyzers provided for a combined active installed base of approximately [removed: 56,200] [added: 59,600] units globally, as compared to approximately [removed: 50,800] [added: 56,200] units in [removed: 2018] [added: 2019] and approximately [removed: 47,000] [added: 50,800] units in [removed: 2017.][added: 2018.]

As of December 31, [removed: 2019,] [added: 2020,] our premium Catalyst chemistry analyzers provided for an active installed base of approximately [removed: 43,900] [added: 49,600] units globally, as compared to approximately [removed: 37,000] [added: 43,900] units in [removed: 2018] [added: 2019] and approximately [removed: 30,000] [added: 37,000] units in [removed: 2017.][added: 2018.]

As of December 31, [removed: 2019,] [added: 2020,] these hematology analyzers provided for a combined active installed base of approximately [removed: 38,200] [added: 41,200] units, as compared to [removed: 35,900] [added: 38,200] units in [removed: 2018] [added: 2019] and [removed: 33,400] [added: 35,900] units in [removed: 2017.][added: 2018.]

As of December 31, [removed: 2019,] [added: 2020,] our premium ProCyte Dx and LaserCyte Dx hematology analyzers provided for an active installed base of approximately [removed: 31,500] [added: 34,600] units globally, as compared to approximately [removed: 29,000] [added: 31,500] units in [removed: 2018] [added: 2019] and approximately [removed: 26,000] [added: 29,000] units in [removed: 2017.][added: 2018.]

As we continue to experience growth in placements of ProCyte [removed: Dx] analyzers and in sales of related consumables, we expect this growth to be partly offset by a decline in placements of LaserCyte Dx and VetAutoread analyzers and a decrease in the associated recurring revenue stream.

As of December 31, [removed: 2019,] [added: 2020,] our premium SediVue Dx analyzers provided for an active installed base of [removed: nearly 8,900] [added: nearly10,700] units globally, as compared to approximately [removed: 6,600] [added: 8,900] units in [removed: 2018] [added: 2019] and approximately [removed: 4,000] [added: 6,600] units in [removed: 2017.][added: 2018.]

[removed: Beginning in January of 2017, with our] [added: Our] ProRead [removed: software,] [added: software interprets results of] the SNAP Pro [removed: Analyzer interprets results.][added: Analyzer.]

Our long-term success in the continuing growth of our CAG recurring diagnostic product and services is dependent 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, [removed: our ability to realize] [added: and realizing] modest annual price increases based on our differentiated products and the growing value of our diagnostic offering.

With all of our instrument product lines, we seek to differentiate our products from our competitors’ products based on time-to-result, ease-of-use, throughput, breadth of diagnostic menu, flexibility of menu selection, accuracy, reliability, ability to handle compromised samples, analytical capability of diagnostics software, integration with the IVLS and VetConnect PLUS, [removed: client communications capabilities, education and training, and superior sales and customer service.]

For the year ended December 31, [removed: 2019,] [added: 2020,] recurring diagnostic revenue, which is both highly durable and profitable, accounted for approximately [removed: 76%] [added: 78%] of our consolidated revenue.

In certain markets outside the U.S., [added: the prevalence of] in-clinic testing may [removed: be less prevalent,] [added: vary,] and [removed: an even] [added: a] greater [added: or lesser] percentage of diagnostic testing [removed: is done] [added: may be performed] in reference laboratories.

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

New laboratories [removed: that we open typically will] [added: may] operate at a loss until testing volumes achieve sufficient scale.

Therefore, in the short term, new and acquired reference laboratories generally [removed: will] [added: may] have a negative effect on our operating margin.

[removed: Our up-front customer loyalty programs are associated with customer acquisitions and retention and provide incentives to customers in the form of cash] payments or IDEXX Points upon entering multi-year contractual agreements to purchase annual minimum amounts of products or services, including reference laboratory services.

With our [removed: Smart Flow] [added: SmartFlow] cloud technology, we are able to improve overall patient management through coordination and tracking of every step in a patient workflow.

Our [removed: newest] digital radiography systems, [removed: the ImageVue DR50 Digital Imaging System] enables low-dose radiation image capture without sacrificing clear, high-quality diagnostic images, reducing the risk posed by excess radiation exposure for veterinary professionals.

[added: 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.

Our strategy in the OPTI Medical business for the human market is to develop, manufacture, and sell electrolyte and blood gas [removed: analyzers] [added: analyzers,] and related consumable products for the medical point-of-care diagnostics market worldwide, with a focus on small to mid-sized hospitals.

[added: 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.

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

Revenue Recognition" to the consolidated financial statements for the year ended December 31, [removed: 2019,] [added: 2020,] included in this Annual Report on Form 10-K for additional information about our revenue recognition policy and criteria for recognizing revenue.

We determine the transaction price for a contract based on the [added: total] consideration we expect to receive in exchange for the transferred goods or services.

Differences between estimated and actual customer purchases may impact the amount and timing of revenue recognition and a 10% change in these estimates would have increased or reduced other assets and cumulative revenue related to these programs by approximately [removed: $1.6] [added: $1.5] million at December 31, [removed: 2019.][added: 2020.]

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

Differences between estimated and actual customer purchases may impact the amount and timing of revenue recognition and a 10% change in these estimates would have increased or reduced contract assets and cumulative revenue related to these programs by approximately [removed: $2.2] [added: $3.1] million at December 31, [removed: 2019.][added: 2020.]

Our instrument rebate [removed: programs, previously referred to as IDEXX Instrument Marketing Programs,] [added: programs] require an instrument purchase and provide customers the opportunity to earn future rebates based on the volume of products and services they purchase over the term of the program.

We allocate total consideration to identified performance obligations, including a customer’s right to earn rebates on future purchases, which is deferred and recognized upon the purchase of future products and services, [added: partly] offsetting future rebates as they are earned.

Differences between estimated and actual customer rebates may impact the amount and timing of revenue recognition and a 10% change in these estimates would have increased or reduced deferred revenue and cumulative revenue related to these programs by approximately [removed: $2.4] [added: $1.8] million at December 31, [removed: 2019.][added: 2020.]

When [removed: material,] [added: significant,] we [added: typically] utilize independent valuation experts to advise and assist us in determining the fair values of the identified intangible assets acquired in connection with a business acquisition and in determining appropriate amortization methods and periods for those intangible assets.

Goodwill is initially valued based on the excess of the purchase price of a business combination over the fair value of acquired net assets recognized and represents the future economic benefits arising from other assets acquired that could not be [removed: individually] [added: separately] identified and [removed: separately] recognized.

Examples of the factors considered in assessing the fair value of a reporting unit include: the results of the most recent impairment test, the competitive environment, the regulatory environment, [added: the effects of the ongoing COVID-19 pandemic,] anticipated changes in product or labor costs, revenue growth trends, the consistency of operating margins and cash flows and current and long-range financial forecasts.

Companion Animal Group

We place our ProCyte Dx, LaserCyte Dx and VetAutoread hematology analyzers through multiple sales programs as well.

During 2020, we introduced and began selling our new ProCyte One analyzer and will begin delivery of these analyzers in 2021.

client communications capabilities, education and training, and superior sales and customer service.

Our up-front customer loyalty programs are associated with customer acquisitions and retention and provide incentives to customers in the form of cash

Water

Livestock, Poultry and Dairy

During 2020, we introduced the OPTI SARS-CoV-2 RT-PCR test kit for COVID-19 testing.

A significant portion of the growth in our OPTI Medical business was from revenue generated from the test kits and related laboratory services.

The future demand for this product is difficult to project given the uncertain nature of the COVID-19 pandemic, including short-term project commitments, available PCR testing capacity, alternative suppliers, and the potential impact of vaccinations and other treatments.

Effective January 1, 2020, we modified our management reporting to the Chief Operating Decision Maker to provide a more comprehensive view of the performance of our operating segments by including costs that were previously not allocated to our segments.

Beginning January 1, 2020, the segments will reflect these actual costs allocated to the segment based on various allocation methods, including revenue and headcount.

Foreign exchange losses on settlements of foreign currency denominated transactions are not allocated to our operating segments and are instead reported within our Other reporting segment.

These management reporting changes did not have a material impact to our segment results of operations for the years ended December 31, 2019 and 2018.

The following tables reflect adjustments to previously reported costs in our Unallocated segment, that are now allocated to our CAG, Water, LPD and Other segments:

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

| *(in thousands)* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | CAG | | | | | | Water | | | | | | LPD | | | | | | Other | | | | | | Unallocated | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Cost of sales | | | | | | $ | (247) | | | | | $ | (11) | | | | | $ | (14) | | | | | $ | (6) | | | | | $ | 278 | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| General and administrative | | | | | | 13,004 | | | | | | 501 | | | | | | 625 | | | | | | 1,363 | | | | | | (15,493) | | |

| Total operating expenses | | | | | | 29,244 | | | | | | 523 | | | | | | 653 | | | | | | 1,363 | | | | | | (31,783) | | |

| Income from operations | | | | | | $ | (28,997) | | | | | $ | (512) | | | | | $ | (639) | | | | | $ | (1,357) | | | | | $ | 31,505 | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

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

| *(in thousands)* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | CAG | | | | | | Water | | | | | | LPD | | | | | | Other | | | | | | Unallocated | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Cost of sales | | | | | | $ | (1,540) | | | | | $ | (69) | | | | | $ | (87) | | | | | $ | (35) | | | | | $ | 1,731 | |

| Gross profit | | | | | | 1,540 | | | | | | 69 | | | | | | 87 | | | | | | 35 | | | | | | (1,731) | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Sales and marketing | | | | | | $ | (574) | | | | | $ | (25) | | | | | $ | (32) | | | | | $ | — | | | | | $ | 631 | |

| Research and development | | | | | | 15,658 | | | | | | (4) | | | | | | (4) | | | | | | — | | | | | | (15,650) | | |

The following tables reflect the impact to previously reported segment gross profit margin, operating income margin and operating expenses as a percentage of revenue, due to the allocation of these costs to our CAG, Water, LPD and Other segments:

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

| | | | | | | CAG | | | | | | Water | | | | | | LPD | | | | | | Other | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

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 and settlement gains and losses on monetary balances in currencies other than our subsidiaries’ functional currency, and unusual items.

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

Companion Animal Group

In addition, we continue to place VetTest instruments through sales, lease, rental, and other programs, with substantially all of our revenues from that product line currently derived from consumable sales.

The ProCyte Dx analyzer is our latest generation hematology analyzer.

In addition, we sell the LaserCyte Dx and VetAutoread analyzers.

Our SediVue Dx instrument was launched in North America early in 2016 and in the U.K. and Australia in the fourth quarter of 2016.

During 2017, we continued to launch SediVue Dx internationally.

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.

Health Monitoring and Biological Materials Testing.

We believe the acquisition of the research and diagnostic laboratory business of the College of Veterinary Medicine from the University of Missouri has allowed us to leverage our expertise in veterinary diagnostics and expand our integrated offering of reference laboratory diagnostic and consulting services and in-clinic testing solutions in the adjacent bioresearch market.

Placements of imaging systems are

Water

Livestock, Poultry and Dairy

The performance of the business is particularly subject to the various risks that are associated with doing business internationally.

See “Part I, Item 1A.

Risk Factors.”

Our long-term success

The performance of the business is particularly subject to the various risks that are associated with doing business internationally.

See “Part I, Item 1A.

Risk Factors.”

Our share-based compensation programs provide for grants of stock options, restricted stock units and deferred stock units, along with the issuance of employee stock purchase rights.

The total fair value of future awards may vary significantly from past awards based on a number of factors, including our share-based award practices.

Therefore, share-based compensation expense is likely to fluctuate, possibly significantly, from year to year.

We use the Black-Scholes-Merton option-pricing model to determine the fair value of options granted.

Option-pricing models require the input of highly subjective assumptions, particularly for the expected stock price volatility and the expected term of options.

The risk-free interest rate is based on the U.S. Treasury yield for a duration similar to the expected term at the date of grant.

We have never paid any cash dividends on our common stock and we have no intention to pay a dividend at this time; therefore, we assume that no dividends will be paid over the expected terms of option awards.

We determine the assumptions to be used in the valuation of option grants as of the date of grant.

As such, we use different assumptions during the year if we grant options at different dates.

Substantially all our options granted during the years ended December 31, 2019, 2018 and 2017 were granted in the first quarter of each year.

The weighted average of each of the valuation assumptions used to determine the fair value of each option grant during each of the previous three years is as follows:

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

| | | | | | | | | | |

| | | 2019 | | | 2018 | | | 2017 | |

| | | | | | | | | | |

| Expected stock price volatility | | 26 | % | | 24 | % | | 26 | % |

| Expected term, in years (1) | | 6.0 | | | 5.8 | | | 5.8 | |

For the year ended December 31, [removed: 2019,] [added: 2020,] approximately [removed: 22%] [added: 21%] of our consolidated revenue was derived from products manufactured or sourced in U.S. dollars and sold internationally in local currencies, as compared to 22% for the [removed: year] [added: years] ended December 31, [removed: 2018,] [added: 2019,] and [removed: 21% for the year ended December 31, 2017.][added: 2018, respectively.]

The functional currency of most of our subsidiaries is their local [removed: currency.][added: currency, except four of our foreign subsidiaries where the functional currency is the U.S. dollar.]

Based on projected revenues and expenses for [removed: 2020,] [added: 2021,] 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: $9] [added: $11] million and operating income by approximately [removed: $5] [added: $5.5] million.

Additionally, we project our foreign currency hedge contracts in place as of December 31, [removed: 2019,] [added: 2020,] would provide incremental offsetting gains of approximately $2 million.

At our current foreign exchange rate assumptions, we anticipate the effect of a [removed: stronger] [added: weaker] U.S. dollar will have [removed: an unfavorable] [added: a favorable] effect on our operating results by [removed: decreasing] [added: increasing] our [removed: revenues, operating profit,] [added: revenues by 1.5% to 2.0%] and [added: increasing our] diluted earnings per share [removed: in] [added: by approximately $0.14 for] the year ending December 31, [removed: 2020, by approximately $11 million, $10 million, and $0.09 per share, respectively.][added: 2021.]

This [removed: unfavorable] [added: favorable] impact includes foreign currency hedging activity, which is expected to decrease total company operating profit by approximately [removed: $6] [added: $8] million and diluted earnings per share by [removed: $0.05 in] [added: $0.07 during] the year ending December 31, [removed: 2020.][added: 2021.]

The above estimate assumes that the value of the U.S. dollar relative to other currencies will reflect the euro at [removed: $1.10,] [added: $1.19,] the British pound at [removed: $1.29,] [added: $1.34,] the Canadian dollar at [removed: $0.76,] [added: $0.77,] and the Australian dollar at [removed: $0.68;] [added: $0.76;] and the Japanese yen at [removed: ¥110,] [added: ¥105,] the Chinese renminbi at RMB [removed: 7.10,] [added: 6.57,] and the Brazilian real at [removed: R$4.14] [added: R$5.36] to the U.S. dollar for the full year of [removed: 2020.][added: 2021.]

The following table presents the [added: estimated] foreign currency exchange [removed: impacts] [added: impact] on our revenues, operating profit, and diluted earnings per [removed: share,] [added: share for the current period and] as compared to the respective [removed: prior periods:][added: prior-year period:]

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

| *(in thousands, except per share amounts)* | | [removed: 2019] | | | | [removed: 2018] [added: 2020] | | | | [removed: 2017] | | [added: 2019] | [added: | | | | | 2018 | | |]

| Revenue impact | | [added: | | | |] $ | [removed: (38,624] [added: 1,301] | [removed: )] | | [added: | |] $ | [removed: 13,623] [added: (38,624)] | | | [added: | |] $ | [removed: 6,615] [added: 13,623] | |

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

| Hedge gains (losses) - current [removed: year] [added: period] | | [removed: 10,628] | | | | [removed: (976] [added: 829] | | [removed: )] | | [removed: 27] | | [added: 10,628] | [added: | | | | | (976) | | |]

| Diluted earnings per share [removed: impact, including hedge activity] [added: impact - as compared to prior period] | | [added: | | | |] $ | [removed: (0.05] [added: (0.06)] | [removed: )] | | [added: | |] $ | [removed: 0.01] [added: (0.05)] | | | [added: | |] $ | [removed: (0.01] [added: 0.01] | [removed: )] |

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

Financial Statements and Supplementary Data, Note [removed: 18.][added: 19.]

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: 2019.][added: 2020.]

As a result, no significant ineffectiveness has resulted or been recorded through the statements of income for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017.][added: 2018.]

We [added: target to] hedge approximately 85% of the estimated exposure from intercompany product purchases and sales denominated in the euro, British pound, Canadian dollar, Japanese yen, [removed: Australian dollar,] and [removed: in 2017 and prior, the Swiss Franc.][added: Australian dollar.]

The notional amount of foreign currency exchange contracts to hedge forecasted intercompany purchases and sales totaled [removed: $210.9] [added: $202.7] million at December 31, [removed: 2019,] [added: 2020,] and [removed: $190.9] [added: $210.9] million at December 31, [removed: 2018.][added: 2019.]

At December 31, [removed: 2019,] [added: 2020,] we had [removed: $2.7] [added: $12.1] million of net unrealized [removed: gains] [added: losses] on foreign currency exchange contracts recorded in accumulated other comprehensive loss, net of related tax.

We have a Credit Facility with a syndicate of multinational banks, which matures on [removed: December 4, 2020,] [added: April 14, 2023,] and requires no scheduled prepayments before that date.

Although the Credit Facility does not mature until [removed: December 4, 2020,] [added: April 14, 2023,] all individual borrowings under the terms of the Credit Facility have a stated term between 30 and 180 days.

| | | | | | | | | | | | | | | | | | | | | |

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

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| Operating profit impact, excluding hedge activity and exchange impacts on settlement of foreign currency denominated transactions | | | | | | $ | 887 | | | | | $ | (18,989) | | | | | $ | 6,311 | |

| Exchange gains (losses) on settlements of foreign currency denominated transactions - current period | | | | | | 699 | | | | | | (1,116) | | | | | | (3,158) | | |

| Operating profit impact - current period | | | | | | $ | 2,415 | | | | | $ | (9,477) | | | | | $ | 2,177 | |

| | | | | | | | | | | | | | | | | | | | | |

| Exchange losses on settlement of foreign currency denominated transactions - prior period | | | | | | 1,116 | | | | | | 3,158 | | | | | | (893) | | |

| Operating profit impact - as compared to prior period | | | | | | $ | (7,097) | | | | | $ | (5,343) | | | | | $ | 1,257 | |

| | | | | | | | | | | | | | | | | | | | | |

We will continue to assess the reasonableness of increasing our hedge exposure to our long-term level during 2021.

For more information on our hedge agreements see "Part II, Item 8.

Financial Statements and Supplementary Data, Note 19.

Hedging Instruments."

At December 31, 2020, we had no borrowings outstanding under the Credit Facility.

As of December 31, 2020, based on our gross leverage ratio, our borrowing costs under the Credit Facility would have been approximately 2.5%.

For four of our foreign subsidiaries the functional currency is the U.S. dollar.

| | | | | | | | | | | | | |

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| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

| Operating profit impact, excluding hedge activity | | $ | (16,947 | ) | | $ | 2,260 | | | $ | 2,542 | |

| | | | | | | | | | | | | |

| Hedging activity impact | | 11,604 | | | | (1,003 | | ) | | (3,593 | | ) |

| | | | | | | | | | | | | |

| Operating profit impact, including hedge activity | | $ | (5,343 | ) | | $ | 1,257 | | | $ | (1,051 | ) |

We

Borrowings outstanding under the Credit Facility at December 31, 2019, were $288.8 million at a weighted-average effective interest rate of 2.78%.

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

We also [removed: sell a line of portable electrolytes] [added: provide point-of-care] and [removed: blood gas analyzers] [added: laboratory diagnostics] for the human [removed: point-of-care] medical [removed: diagnostics] [added: diagnostic] market.

[removed: | • |] [added: -] Point-of-care veterinary diagnostic products, comprised of instruments, consumables, and rapid assay test kits; [removed: |]

[removed: | • |] [added: -] Veterinary reference laboratory diagnostic and consulting services; [removed: |]

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

[removed: | • |] [added: -] Health monitoring, biological materials testing, laboratory diagnostic instruments, and services used by the biomedical research community; [removed: |]

[removed: | • |] [added: -] Diagnostic, health-monitoring products for livestock, poultry, and dairy; [removed: |]

[removed: | • |] [added: -] Products that test water for certain microbiological contaminants; and [removed: |]

[removed: | • |] [added: -] Point-of-care electrolytes and blood gas analyzers [added: and SARS-CoV-2 RT-PCR (COVID-19 test)] used in the human [removed: point-of-care medical] diagnostics market. [removed: |]

Our [removed: purpose guides our strategy:] [added: 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.

[removed: Companion] [added: Companion] Animal Group (“CAG”) [removed: -] [added: -] Diagnostic and information management-based products and services for the veterinary [removed: market.][added: market, including in-clinic diagnostic solutions, outside reference laboratory services, and veterinary software and services.]

[added: Other -] Our Other operating segment combines and presents [added: our] products [added: and services] for the human [removed: point-of-care] medical diagnostics market (“OPTI Medical”) with our out-licensing arrangements because they do not meet the quantitative or qualitative thresholds for reportable segments.

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

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

Our in-clinic diagnostic solutions also include a broad range of single-use, [removed: handheld] IDEXX SNAP rapid assay test kits that provide quick, accurate, and convenient point-of-care diagnostic test results for a variety of companion animal diseases and health conditions.

We sell [removed: four] [added: five] hematology analyzers that assess the cellular components of blood, including red blood cells, white blood cells, and platelets (also called a complete blood count).

The SediVue Dx analyzer is designed to provide automated real-time results in a fraction of the time of manual microscope [removed: analysis.][added: analysis, which allows veterinary staff to perform a urine sediment analysis in approximately 3 minutes.]

The SNAP rapid assays are single-use, handheld test kits that can work without the use of instrumentation, although many kits may also be [removed: read and recorded automatically by the SNAPshot Dx analyzer or] activated [removed: and captured] [added: with results] automatically [added: captured and interpreted] by the SNAP Pro [removed: Analyzer and interpreted using ProRead, as discussed above.][added: Analyzer.]

[removed: | • |] [added: The principal canine] SNAP [added: rapid assay tests include SNAP] 4Dx Plus, which tests for the six vector-borne [removed: diseases;] [added: diseases including] Lyme [removed: disease, *Ehrlichia canis, Ehrlichia ewingii, Anaplasma phagocytophilum* and *Anaplasma platys,* and] [added: disease as well as] canine [removed: heartworm; |][added: heartworm and SNAP Heartworm RT, which tests for heartworm.]

Sales of [added: our] canine vector-borne disease [removed: tests, including SNAP 4Dx Plus and SNAP Heartworm RT,] [added: tests] are greater in the first half of our fiscal year due to seasonality of disease testing in the veterinary practices in the Northern Hemisphere.

[removed: | • |] [added: The principal feline] SNAP [added: rapid assay tests include SNAP] Feline Triple, which tests for feline immunodeficiency virus (“FIV”) (which is similar to the virus that leads to AIDS in [removed: humans), feline] [added: humans) and SNAP FIV/FeLV Combo Test, which tests for FIV and Feline] leukemia virus [removed: (“FeLV”) and feline heartworm; |][added: ("FeLV").]

[added: Outside Reference Laboratory Diagnostic and Consulting 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 over 80 laboratories.

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

[removed: | • | *Software applications that extend workflow capabilities for practices and groups*. With our Smart Flow] [added: Our SmartFlow] cloud [removed: 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. Smart Flow] [added: offering] works in conjunction with major veterinary practice management systems, including IDEXX Cornerstone, DVMAX, IDEXX Animana, IDEXX Neo, and certain third-party practice management systems. [removed: |]

[removed: | • | *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. [removed: 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. |]

We market and sell [removed: three] [added: four] diagnostic imaging systems primarily used in small animal veterinary applications: the IDEXX ImageVue DR50, the IDEXX ImageVue DR40, [added: the IDEXX ImageVue DR30,] and the IDEXX ImageVue CR20.

IDEXX Web PACS is integrated with Cornerstone, IDEXX [removed: Neo] [added: Neo, IDEXX DVMAX,] and IDEXX VetConnect PLUS to provide centralized access to diagnostic imaging results alongside patient diagnostic results from any internet connected device.

IDEXX I-Vision Mobile is a software application that allows veterinarians with IDEXX digital radiography systems the ability to request, view and send images using an iPad® [removed: or an Android™] mobile tablet.

The tests also are used in evaluating water used in production processes (for example, in beverage and pharmaceutical applications) and in evaluating bottled water, recreational water, wastewater, and water from private [removed: wells.][added: wells.We also sell consumables, parts, and accessories to be used with many of our water testing products.]

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

[removed: In 2016, we launched Legiolert,] [added: Our Legiolert product is] a simple culture method test for the detection of *Legionella pneumophila,* the most common *Legionella* species in [removed: water,] [added: water] and the primary cause of Legionnaires’ disease.

Our Quanti-Tray products, when used in conjunction with our Colilert, Colilert-18, Colisure, Enterolert, Pseudalert, Heterotrophic Plate Count [removed: (HPC)] [added: ("HPC")] or Legiolert products, provide users quantitative measurements of microbial contamination rather than a presence/absence indication.

[removed: These instruments] [added: Our Quanti-Tray Sealer PLUS, and Quanti-Tray Sealer 2X] are used with the Quanti-Tray products for the determination of bacterial density in water samples.

We sell diagnostic tests, services and related instrumentation that are used to manage the health status of livestock and poultry, to improve producer efficiency, and to ensure the quality and safety of [removed: milk and food.][added: milk.]

Our principal livestock and poultry diagnostic products include tests for Bovine Viral Diarrhea Virus [removed: (“BVDV”) and] [added: (“BVDV”),] Porcine Reproductive and Respiratory Syndrome [removed: (“PRRS”).][added: (“PRRS”), and African Swine Fever ("ASFV").]

[removed: This test] [added: Our RealPCR ASFV Test is a real-time polymerase chain reaction ("PCR") assay that] provides early and accurate detection of ASFV supporting prevention, control, and eradication programs by veterinarians and producers.

[removed: OTHER][added: Other Activities.]

Our [removed: latest generation] OPTI CCA-TS2 Blood Gas and Electrolyte [removed: analyzer, which launched in 2013,] [added: analyzer] contains many new features relative to previous generation blood gas analyzers including customized work flows, faster time to result, improved communication, and a multi-level electronic control.

We sell our OPTI [removed: electrolyte] [added: products] and [removed: blood gas analyzers] [added: services] both directly and through independent human medical product [removed: distributors in the U.S. and we sell most of the related consumables through the distribution channel.][added: distributors.]

Our research and development expenses, which consist of salaries, employee benefits, materials and external consulting and development costs, were [removed: $133.2] [added: $141.2] million for the year ended December 31, [removed: 2019,] [added: 2020,] or [removed: 5.5%] [added: 5.2%] of our consolidated revenue, [removed: $117.9] [added: $133.2] million for the year ended December 31, [removed: 2018,] [added: 2019,] or [removed: 5.3%] [added: 5.5%] of our consolidated revenue and [removed: $109.2] [added: $117.9] million for the year ended December 31, [removed: 2017,] [added: 2018,] or [removed: 5.5%] [added: 5.3%] of our consolidated revenue.

Patents and licenses of patents and technologies from third parties are considered important to the Company based on a variety of factors, including providing protection for the Company’s inventions and other proprietary intellectual [removed: property,] [added: property;] affording protection from competitors in certain [removed: markets,] [added: markets;] enabling the use of more effective and efficient technologies in the development and production of our products and [removed: offerings,] [added: offerings;] strengthening our reputation and standing among customers, employees and key [removed: suppliers,] [added: suppliers;] and acting as a deterrent against counterfeiters, imitators and other copiers of technologies.

We operate primarily through three business segments: Companion Animal Group, Water quality products, and Livestock, Poultry and Dairy.

Our Other operating segment combines and presents our products and services for the human medical diagnostics market with our out-licensing arrangements because they do not meet the quantitative or qualitative thresholds for reportable segments.

These analyzers include the ProCyte Dx hematology analyzer, the LaserCyte Dx hematology analyzer; and the IDEXX VetAutoread hematology analyzer.

During 2020, we introduced and began selling our new ProCyte One analyzer and will begin delivery of these analyzers in 2021.

Rapid Assay.

Our SNAPshot Dx analyzer can run multiple patient samples at once.

Practice management systems.

Software, hardware, and integrated services that run key functions of veterinary clinics, including managing patient electronic health records, 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).

To support the software system needs of practices, IDEXX provides integrated services including: Hardware, Payment Solutions, Data Backup & Recovery, and Practice Supplies.

Software applications that extend workflow capabilities for practices and groups.

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.

Client marketing and wellness plan management.

To support the communication needs between general practices and specialty referral practices, IDEXX offers rVetLink software.

Lastly, IDEXX Enterprise provides centralized management and reporting capabilities for groups of veterinary practices.

Water quality products (“Water”) \- Water provides innovative testing solutions for easy, rapid and accurate detection and quantification of various microbiological parameters in water.

Water testing.

Enterolert.

Pseudalert.

Legiolert.

Quanti-Tray products.

Livestock, Poultry and Dairy (“LPD”) - LPD provides diagnostic tests, services, and related instrumentation that are used to manage the health status of livestock and poultry, to improve dairy efficiency, and to ensure the quality and safety of milk.

Livestock, Poultry and Heard Health Screening.

Dairy products.

OPTI Medical.

Through OPTI Medical we also provide human COVID-19 testing products and laboratory services.

On May 7, 2020, we announced that OPTI Medical was granted by the United States Food and Drug Administration ("FDA") an Emergency Use Authorization ("EUA") for the OPTI SARS-CoV-2 RT-PCR laboratory test kit for the detection of SARS-CoV-2, the virus that causes COVID-19.

On June 5, 2020 OPTI Medical announced that it has received the CE mark certification in the European Union for its OPTI SARS-CoV-2 RT-PCR laboratory test kit.

Additionally, the FDA has granted EUA for the new OPTI DNA/RNA Magnetic Bead Kit for nucleic acid extraction from respiratory samples to be used with the OPTI SARS-CoV-2 RT-PCR test kit, which enables OPTI Medical Systems to provide laboratories with a complete OPTI Medical Systems-manufactured workflow solution for COVID-19 testing.

We also provide human COVID-19 testing laboratories services to the Maine Center for Disease Control and Prevention in support of their COVID-19 testing program.

Additional information about of our products and services can be found on our website.

and consumables, SediVue Dx urinalysis instruments and consumables, and certain components of our internally manufactured analyzers.

- Companion animal diagnostic offerings.

Our major competitors in most geographic locations in North America are Antech Diagnostics, a unit of VCA Inc., a division of Mars, Incorporated; Zoetis Inc. (including its wholly-owned subsidiary Abaxis, Inc.); Heska Corporation; Samsung Electronics Co., Ltd., and FUJIFILM North America Corporation.

We also compete in certain international markets with Zoetis, Fujifilm Holdings Corporation, Samsung Electronics, Arkray, Inc., Heska, Mindray and BioNote, Inc.

- Water, livestock, poultry, and dairy testing products.

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

- Veterinary Software, Services and Diagnostic Imaging Systems.

We sell these products primarily in North America and Europe.

Our largest competitor in North America and the U.K. is Covetrus, Inc., which offers several systems and leverages its animal health distribution business in sales and service.

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We operate primarily through three business segments:

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.

The performance of our business is particularly subject to various risks that are associated with doing business internationally.

For the year ended December 31, 2019, sales of products and services to customers outside the U.S. accounted for approximately 38% of our overall revenue.

See “Part I, Item 1A.

Risk Factors”, “Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” and "Part II, Item 8.

Financial Statements and Supplementary Data, Note 16.

Segment Reporting" to the consolidated financial statements for the year ended December 31, 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.


In this way, VetConnect PLUS can aid veterinarians and practice staff in engaging the pet owner in the patient’s care, which can support greater compliance with medical recommendations or preventive care protocols.

Customers have activated VetConnect PLUS in over 100 countries.

The IDEXX VetLab suite includes several instrument systems, as well as associated proprietary consumable products, all of which are described below.

These three instruments use consumables manufactured for IDEXX by Ortho-Clinical Diagnostics, Inc. (“Ortho”) based on Ortho’s dry slide technology.

In addition, the Catalyst analyzers also use dry slide electrolyte consumables manufactured by IDEXX at our Roswell, Georgia facility, as well as certain slides that are manufactured at our Westbrook, Maine facility.

Blood tests commonly run on these analyzers include glucose, alkaline phosphatase, ALT (alanine aminotransferase), albumin, calcium, creatinine, blood urea nitrogen, total protein, and many others.

Tests are sold individually and in prepackaged panels, called clips.

All three analyzers also run a urine test called urine protein:creatinine ratio, which assists in the detection of renal disease.

The Catalyst analyzers provide significantly improved throughput, ease of use and test menu relative to the VetTest analyzer (our original chemistry analyzer), including the ability to run electrolytes, phenobarbital, fructosamine, total thyroxine (“T4”), C-reactive protein, and SDMA, as part of one run.

Key ease-of-use features include the ability to run a whole blood sample using an on-board centrifuge, the ability to run pre-packaged, multi-slide clips in addition to single chemistry slides and an automated metering system.

These analyzers also enable automated dilutions, which is an ease-of-use feature both for certain blood chemistries and the test for urine protein:creatinine ratio.

The Catalyst Dx analyzer allows a veterinarian to run multiple patient samples simultaneously and both the Catalyst Dx and Catalyst One analyzers run different sample types including whole blood, plasma, serum, and urine.

The Catalyst SDMA 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 SDMA Test is also available in a combo kit with T4.

The Catalyst One analyzer is engineered to deliver the same laboratory-quality results and real-time work flow as the Catalyst Dx analyzer.

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

| | [added: | |] (Mark One) | | [added: | | | |]

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

For the fiscal year ended December 31, [removed: 2019][added: 2020]

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

[removed: ][added: ]

| Delaware | | | [added: | | | | | |] 01-0393723 | [added: | |]

| *(State or other jurisdiction of incorporation or organization)* | | | [added: | | | | | |] (IRS Employer Identification No.) | [added: | |]

| One IDEXX Drive | [removed: Westbrook] | [added: | Westbrook, | | |] Maine | [added: | |] 04092 | [added: | |]

| *(Address of principal executive offices)* | | | [added: | | | | | |] *(ZIP Code)* | [added: | |]

[removed: 207\-556-0300][added: 207-556-0300]

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

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

Yes [removed: ☒] [added: ☒] No ☐

Yes ☐ No [removed: ☒][added: ☒]

Yes [removed: ☒] [added: ☒] No ☐

Yes [removed: ☒] [added: ☒] No ☐

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

| Non-accelerated filer | [added: | |] ☐ | [added: | |] Smaller reporting company | [added: | |] ☐ | [added: | |]

| | | [added: | | | |] Emerging growth company | [added: | |] ☐ | [added: | |]

Yes ☐ No [removed: ☒][added: ☒]

Based on the closing sale price on June 30, [removed: 2019] [added: 2020] 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: $23,368,790,688.][added: $27,735,989,165.]

The number of shares outstanding of the registrant’s Common Stock was [removed: 85,329,642] [added: 85,426,080] on February [removed: 10, 2020.][added: 9, 2021.]

Part III—Specifically identified portions of the Company’s definitive Proxy Statement to be filed in connection with the Company’s [removed: 2020] [added: 2021] annual meeting of stockholders (the [removed: “2020] [added: “2021] Annual Meeting”), to be held on May [removed: 6, 2020,] [added: 12, 2021,] are incorporated herein by reference.

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

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

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

| CAG | | [added: | | | |] 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 [removed: pets] [added: pets.] | [added: | |]

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

| Credit Facility | | [added: | | | |] Our [removed: $850 million five-year] [added: $1 billion three-year] unsecured revolving credit facility under an amended and restated credit agreement that was executed in [removed: December 2015,] [added: April 2020,] also referred to as line of [removed: credit] [added: credit.] | [added: | |]

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

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

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

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

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

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

| Instrument rebate programs | | [added: | | | |] Our customer instrument rebate programs, previously referred to as IDEXX Instrument Marketing Programs, which require an instrument purchase and provide customers the opportunity to earn future rebates based on the volume of products and services they purchase over the term of the [removed: program] [added: program.] | [added: | |]

| IVLS | | [added: | | | |] IDEXX VetLab Station, connects and integrates the diagnostic information from all the IDEXX VetLab analyzers and thus provides reference laboratory information management system [removed: capability] [added: capability.] | [added: | |]

| Kits and consumables | | [added: | | | |] Rapid assay kits and IDEXX VetLab consumables | [added: | |]

| LIBOR | | [added: | | | |] London Interbank Offered Rate, current benchmark interest rate used between banks and used to set interest rates on [removed: loans] [added: loans.] | [added: | |]

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Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

☒

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| ASU 2016-13 | | | | | | ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments | | |

| Clinical visits | | | | | | The reason for the visit involves an interaction between a clinician and a pet, including wellness and non-wellness visit types. | | |

| EURIBOR | | | | | | Interest rate used in lending between banks on the European Union interbank market and also used as a reference for setting the interest rate on other loans. | | |

| Non-wellness visits | | | | | | Patient visits where the reason for the visit is sickness, procedure, or monitoring. | | |

| Prime rate | | | | | | The prime rate is an interest rate determined by individual banks. It is often used as a reference rate for many types of loans. | | |

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| Wellness visits | | | | | | Patient visits where the reason for the visit is an annual exam, vaccination, or routine check-up. | | |

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| [Signatures](#i1f6e15ac4f474568883062210711adbf_286) | | | | | | | | |

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

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

| 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 |

| FeLV | | Feline leukemia virus |

| FIV | | Feline immunodeficiency virus, similar to the virus that leads to AIDS in humans |

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| 2017 Tax Act | | The Tax Cuts and Jobs Act enacted on December 22, 2017, which includes significant changes to the U.S. corporate tax system |

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| [Signatures](#s5F9A6E07321351ED9F3F40CF62BE6D8F) | | |

| Location | [added: | |] Functions | [added: | |] Own/Lease | [added: | |]

| Westbrook, Maine | [added: | |] United States Headquarters | [added: | |] Own | [added: | |]

| Hoofddorp, Netherlands | [added: | |] European Headquarters | [added: | |] Lease | [added: | |]

| Memphis, Tennessee | [added: | |] Distribution Center and Reference Lab | [added: | |] Lease | [added: | |]

| [removed: Ludwigsburg,] [added: Kornwestheim,] Germany | [added: | |] Reference Lab | [removed: Lease] | [added: | Own | | |]

| Wetherby, United Kingdom | [added: | |] Reference Lab | [added: | |] Lease | [added: | |]

| Newmarket, United Kingdom | [added: | |] Water manufacturing | [added: | |] Lease | [added: | |]

| Bern, Switzerland | [added: | |] LPD manufacturing | [added: | |] Lease | [added: | |]

| [removed: Montpelier,] [added: Montpellier,] France | [added: | |] LPD manufacturing | [added: | |] Lease | [added: | |]

| Roswell, Georgia | [added: | |] OPTI Medical manufacturing | [added: | |] Lease | [added: | |]

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A detailed listing of all our locations can be found on our website.

We are also in the process of relocating and expanding our laboratory facility in Ludwigsburg, Germany to Kornwestheim, Germany which is expected to be completed in 2020.

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As of February [removed: 10, 2020,] [added: 9, 2021,] there were [removed: 420] [added: 395] holders of record of our common stock.

During the three months ended December 31, [removed: 2019,] [added: 2020,] we repurchased shares of common stock as described below:

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

(1) As of December 31, [removed: 2019,] [added: 2020,] our Board of Directors had approved the repurchase of up to [removed: 68] [added: 73] million shares of our common stock in the open market or in negotiated transactions pursuant to the Company’s share repurchase program.

There were no other repurchase programs outstanding during the three months ended December 31, [removed: 2019,] [added: 2020,] and no repurchase programs expired during the period.

(2) During the three months ended December 31, [removed: 2019,] [added: 2020,] we received [removed: less than 1,000] [added: 27,124] shares of our common stock that were surrendered by employees in payment for the [removed: minimum] required withholding taxes due on the vesting of restricted stock units and settlement of deferred stock units.

During the year ended December 31, [removed: 2019,] [added: 2020,] we repurchased approximately [removed: 1.2] [added: 0.7] million shares of our common stock in transactions made pursuant to our repurchase program and received approximately [removed: 0.04] [added: 0.06] 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.

Financial Statements and Supplementary Data, Note [removed: 19.][added: 20.]

Repurchases of Common Stock" to the consolidated financial statements for the year ended December 31, [removed: 2019,] [added: 2020,] included in this Annual Report on Form 10-K for further information.

This graph assumes the investment of $100 on December 31, [removed: 2014,] [added: 2015,] 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: 2014] [added: 2015] to [removed: 2019.][added: 2020.]

[removed: ][added: ]

| | | [removed: 12/31/2014] | | [added: | |] 12/31/2015 | | [added: | | | |] 12/31/2016 | | [added: | | | |] 12/31/2017 | | [added: | | | |] 12/31/2018 | | [added: | | | |] 12/31/2019 | [added: | | | | | 12/31/2020 | | |]

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| October 1, 2020 to October 31, 2020 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | 6,275,912 | | |

| November 1, 2020 to November 30, 2020 | | | | | | 26,120 | | | | | | $ | 424.82 | | | | | — | | | | | | 6,275,912 | | |

| December 1, 2020 to December 31, 2020 | | | | | | 1,004 | | | | | | $ | 476.53 | | | | | — | | | | | | 6,275,912 | | |

| Total | | | | | | 27,124 | | | (2) | | | $ | 426.73 | | | | | — | | | | | | 6,275,912 | | |

Due to the uncertainty of the duration and magnitude of the COVID-19 pandemic and its impacts during 2020, we suspended our open market share repurchase activity beginning in the first quarter of 2020.

The existing share repurchase program continues to be authorized by our Board of Directors and we have resumed share repurchases during the first quarter of 2021.

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| IDEXX Laboratories, Inc. | | | | | | $100.00 | | | | | | $160.82 | | | | | | $214.45 | | | | | | $255.10 | | | | | | $358.10 | | | | | | $685.50 | | |

| NASDAQ Index | | | | | | $100.00 | | | | | | $108.87 | | | | | | $141.13 | | | | | | $137.12 | | | | | | $187.44 | | | | | | $271.64 | | |

| S&P 500 Index | | | | | | $100.00 | | | | | | $111.96 | | | | | | $136.40 | | | | | | $130.42 | | | | | | $171.49 | | | | | | $203.04 | | |

| S&P 500 Health Care Index | | | | | | $100.00 | | | | | | $97.31 | | | | | | $118.79 | | | | | | $126.47 | | | | | | $152.81 | | | | | | $173.36 | | |

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| 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.

Repurchases of approximately 0.5 million shares were made during the three months ended December 31, 2019, in transactions made pursuant to our repurchase program.

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| 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 |

The Company has applied the amendment to Regulation S-K Item 301 which became effective on February 10, 2021.

The following table sets forth selected consolidated financial data for each of the last five fiscal years.

The selected consolidated financial data presented below has been derived from the consolidated financial statements.

This financial data should be read in conjunction with the consolidated financial statements, related notes and other financial information appearing elsewhere in this Annual Report on Form 10-K.

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| | | For the Years Ended December 31, | | | | | | | | | | | | | | | | | | |

| | | *(in thousands, except per share data)* | | | | | | | | | | | | | | | | | | |

| | | 2019 (1) | | | | 2018 (2) | | | | 2017 | | | | 2016 | | | | 2015 | | |

| | | | | | | | | | | | | | | | | | | | | |

| INCOME STATEMENT DATA: | | | | | | | | | | | | | | | | | | | | |

| Revenue | | $ | 2,406,908 | | | $ | 2,213,242 | | | $ | 1,969,058 | | | $ | 1,775,423 | | | $ | 1,601,892 | |

| Cost of revenue | | 1,041,359 | | | | 971,700 | | | | 871,676 | | | | 799,987 | | | | 711,622 | | |

| Gross profit | | 1,365,549 | | | | 1,241,542 | | | | 1,097,382 | | | | 975,436 | | | | 890,270 | | |

| Expenses: | | | | | | | | | | | | | | | | | | | | |

| Sales and marketing | | 418,193 | | | | 387,406 | | | | 354,294 | | | | 317,058 | | | | 299,955 | | |

| General and administrative | | 261,317 | | | | 244,938 | | | | 220,878 | | | | 207,017 | | | | 182,510 | | |

| Research and development | | 133,193 | | | | 117,863 | | | | 109,182 | | | | 101,122 | | | | 99,681 | | |

| Impairment charge | | — | | | | — | | | | — | | | | — | | | | 8,212 | | |

| Income from operations | | 552,846 | | | | 491,335 | | | | 413,028 | | | | 350,239 | | | | 299,912 | | |

| Interest expense, net | | (30,628 | | ) | | (33,593 | | ) | | (31,971 | | ) | | (28,393 | | ) | | (26,771 | | ) |

| Income before provision for income taxes | | 522,218 | | | | 457,742 | | | | 381,057 | | | | 321,846 | | | | 273,141 | | |

| Provision for income taxes | | 94,426 | | | | 80,695 | | | | 117,788 | | | | 99,792 | | | | 81,006 | | |

| Net income | | 427,792 | | | | 377,047 | | | | 263,269 | | | | 222,054 | | | | 192,135 | | |

| Less: Net income attributable to noncontrolling interest | | 72 | | | | 16 | | | | 125 | | | | 9 | | | | 57 | | |

| Net income attributable to IDEXX Laboratories, Inc. stockholders | | $ | 427,720 | | | $ | 377,031 | | | $ | 263,144 | | | $ | 222,045 | | | $ | 192,078 | |

| Earnings per share: | | | | | | | | | | | | | | | | | | | | |

| Basic | | $ | 4.97 | | | $ | 4.34 | | | $ | 3.00 | | | $ | 2.47 | | | $ | 2.07 | |

| Diluted | | $ | 4.89 | | | $ | 4.26 | | | $ | 2.94 | | | $ | 2.44 | | | $ | 2.05 | |

| Weighted average shares outstanding: | | | | | | | | | | | | | | | | | | | | |

| Basic | | 86,115 | | | | 86,864 | | | | 87,769 | | | | 89,732 | | | | 92,601 | | |

| Diluted | | 87,542 | | | | 88,470 | | | | 89,567 | | | | 90,884 | | | | 93,649 | | |

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| BALANCE SHEET DATA: | | | | | | | | | | | | | | | | | | | | |

| Cash and cash equivalents | | $ | 90,326 | | | $ | 123,794 | | | $ | 187,675 | | | $ | 154,901 | | | $ | 128,994 | |

| Marketable securities | | — | | | | — | | | | 284,255 | | | | 236,949 | | | | 213,591 | | |

| Cash and cash equivalents and marketable securities | | $ | 90,326 | | | $ | 123,794 | | | $ | 471,930 | | | $ | 391,850 | | | $ | 342,585 | |

| Working capital | | $ | (45,698 | ) | | $ | (116,272 | ) | | $ | (32,582 | ) | | $ | (88,984 | ) | | $ | (35,127 | ) |

| Total assets | | $ | 1,832,475 | | | $ | 1,537,349 | | | $ | 1,713,416 | | | $ | 1,530,704 | | | $ | 1,474,993 | |

| Total long-term debt | | $ | 698,910 | | | $ | 601,348 | | | $ | 606,075 | | | $ | 593,110 | | | $ | 597,085 | |

Based on the evaluation of our disclosure controls and procedures at December 31, [removed: 2019,] [added: 2020,] 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: | • |] [added: -] Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; [removed: |]

[removed: | • |] [added: -] 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 [removed: |]

[removed: | • |] [added: -] 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: |]

Based on this evaluation, we concluded that, at December 31, [removed: 2019,] [added: 2020,] our internal control over financial reporting was effective.

The effectiveness of the Company's internal control over financial reporting at December 31, [removed: 2019,] [added: 2020,] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

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: 2019,] [added: 2020,] that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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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 - Delinquent Section 16(a) 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: 2020] [added: 2021] 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: 2020] [added: 2021] 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: 2020] [added: 2021] 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: 2020] [added: 2021] 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: 2020] [added: 2021] 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: 2020] [added: 2021] 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.

| The following documents are filed as part of this Form 10-K: | | | [added: | | | | | |]

| (a) (1) and (a) (2) | | [added: | | | |] The financial statements set forth in the Index to Consolidated Financial Statements and the Consolidated Financial Statement Schedule are filed as a part of this Annual Report on Form 10-K commencing on page F-1. | [added: | |]

| (a)(3) and (b) | | [added: | | | |] The exhibits listed in the accompanying Exhibit Index are filed as part of this Annual Report on Form 10-K and either filed herewith or incorporated by reference herein, as applicable. | [added: | |]

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

| [Report of Independent Registered Public Accounting [removed: Firm](#s2B3C04DFC0925C43800BBBA8219BB75C)] [added: Firm](#i1f6e15ac4f474568883062210711adbf_154)] | [removed: [F-2](#s2B3C04DFC0925C43800BBBA8219BB75C)] | [added: | [F-](#i1f6e15ac4f474568883062210711adbf_154)[2](#i1f6e15ac4f474568883062210711adbf_154) | | |]

| [Consolidated Balance Sheets as of December 31, [removed: 2019] [added: 2020] and [removed: 2018](#s0FEF6DFBDD985F41BEFA68F2099D0C48)] [added: 2019](#i1f6e15ac4f474568883062210711adbf_157)] | [removed: [F-5](#s0FEF6DFBDD985F41BEFA68F2099D0C48)] | [added: | [F-](#i1f6e15ac4f474568883062210711adbf_157)[4](#i1f6e15ac4f474568883062210711adbf_157) | | |]

| [Consolidated Statements of Income for the Years Ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#s3ECD79A6829D5591BC9ACA33D855A064)] [added: 2018](#i1f6e15ac4f474568883062210711adbf_163)] | [removed: [F-6](#s3ECD79A6829D5591BC9ACA33D855A064)] | [added: | [F-](#i1f6e15ac4f474568883062210711adbf_163)[5](#i1f6e15ac4f474568883062210711adbf_163) | | |]

| [Consolidated Statements of Comprehensive Income for the Years Ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#s2CA5728CB1755199858BC3EAD8959F7A)] [added: 2018](#i1f6e15ac4f474568883062210711adbf_166)] | [removed: [F-7](#s2CA5728CB1755199858BC3EAD8959F7A)] | [added: | [F-](#i1f6e15ac4f474568883062210711adbf_166)[6](#i1f6e15ac4f474568883062210711adbf_166) | | |]

| [Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#sDA41DBA07B01551B88F14FB7ABC3FB90)] [added: 2018](#i1f6e15ac4f474568883062210711adbf_172)] | [removed: [F-8](#sDA41DBA07B01551B88F14FB7ABC3FB90)] | [added: | [F-](#i1f6e15ac4f474568883062210711adbf_172)[7](#i1f6e15ac4f474568883062210711adbf_172) | | |]

| [Consolidated Statements of Cash Flows for the Years Ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#s283D45D260655C6ABCD7A42555C108CD)] [added: 2018](#i1f6e15ac4f474568883062210711adbf_178)] | [removed: [F-9](#s283D45D260655C6ABCD7A42555C108CD)] | [added: | [F-](#i1f6e15ac4f474568883062210711adbf_178)[8](#i1f6e15ac4f474568883062210711adbf_178) | | |]

| [Notes to Consolidated Financial [removed: Statements](#sC49EFF2177E95B2A8D5C01AC380031EB)] [added: Statements](#i1f6e15ac4f474568883062210711adbf_181)] | [removed: [F-10](#sC49EFF2177E95B2A8D5C01AC380031EB)] | [added: | [F-](#i1f6e15ac4f474568883062210711adbf_181)[9](#i1f6e15ac4f474568883062210711adbf_181) | | |]

[removed: | [Valuation and Qualifying Accounts] [added: The changes in the carrying amount of goodwill] for the [removed: Years Ended] [added: years ended] December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#s37994C28C4B05D6CAA15AF662026AC34) | [F-47](#s37994C28C4B05D6CAA15AF662026AC34) |][added: 2018, were as follows:]

We have audited the accompanying consolidated balance sheets of IDEXX Laboratories, Inc. and its subsidiaries (the “Company”) as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] 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: 2019,] [added: 2020,] including the related notes [removed: 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: 2019,] [added: 2020,] 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: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2019] [added: 2020] 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: 2019,] [added: 2020,] based on criteria established in [removed: *Internal] [added: Internal] Control - Integrated [removed: Framework*] [added: Framework] (2013) issued by the COSO.

As discussed in [removed: Notes] [added: Note] 2 [removed: and 3] to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019 and the manner in which it accounts for revenues from contracts with customers in 2018.

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 dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit [added: 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.]

As described in Note 3 to the consolidated financial statements, the Company recognized revenue associated with instruments totaling [removed: $132.7] [added: $109.0] million for the year ended December 31, [removed: 2019,] [added: 2020,] the majority of which were sales under customer commitment programs.

The Company [removed: also] offers customer incentives through its various customer commitment programs.

These customer commitment programs provide customers with a free or discounted instrument or system, [removed: or incentives in the form of cash payments or IDEXX Points,] upon entering into multi-year agreements to purchase annual minimum amounts of future products or services.

The principal considerations for our determination that performing procedures over revenue recognition relating to the customer commitment program is a critical audit matter are [removed: there was] [added: the] significant judgment by management in [removed: 1)] estimating the amount of variable consideration included in the transaction [removed: price] [added: price, which in turn led to significant auditor judgment, subjectivity, effort] and [removed: 2) allocating the transaction price] [added: complexity in assessing audit evidence in performing procedures] to [added: evaluate] the [removed: performance obligations based on standalone selling] [added: amount of variable consideration included in the transaction] price and [removed: future committed] [added: significant assumptions related to forecasted product] purchases.

These procedures included testing the effectiveness of controls relating to the revenue recognition process and customer commitment programs, including controls over the estimation of the amount of variable consideration included in the transaction [removed: price and allocating the transaction price to the performance obligations.][added: price.]

[removed: The] [added: These] procedures also included, among others, (i) examining contracts on a test [removed: basis and] [added: basis,] (ii) testing management’s process for estimating the amount of variable consideration included in the transaction [removed: price] [added: price, (iii) testing the completeness] and [removed: allocation] [added: accuracy] of [added: historical sales data and (iv) evaluating] the [removed: transaction price] [added: significant assumptions used by management related] to the [removed: performance obligations, including determination] [added: forecasted purchase] of [removed: the standalone selling price and future committed purchases.][added: products.]

[removed: We assessed] [added: Evaluating] management’s [removed: estimate of] [added: assumptions related to] forecasted product purchases [added: involved evaluating whether the assumptions used] by [added: management were reasonable by] comparing [added: the forecasted product purchases] to historical [removed: actual] sales data.

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

| | [added: | |] December 31, [removed: 2019] [added: 2020] | | | | [added: | |] December 31, [removed: 2018] [added: 2019] | | |

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

| Current Assets: | | | | | | | | [added: | | | |]

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

| Accounts receivable, net of reserves of [removed: $3,581] [added: $6,784] in [removed: 2019] [added: 2020] and [removed: $4,702] [added: $3,581] in [removed: 2018] [added: 2019] | [removed: 269,312] | | [added: 331,429] | | [removed: 248,855] | | | [added: | 269,312 | | |]

| Inventories | [removed: 195,019] | | [added: 209,873] | | [removed: 173,303] | | | [added: | 195,019 | | |]

| Other current assets | [removed: 124,982] | | [added: 137,508] | | [removed: 108,220] | | | [added: | 124,982 | | |]

| Total current assets | [removed: 679,639] | | [added: 1,062,738] | | [removed: 654,172] | | | [added: | 679,639 | | |]

| Long-Term Assets: | | | | | | | | [added: | | | |]

| Property and equipment, net | [removed: 533,845] | | [added: 555,167] | | [removed: 437,270] | | | [added: | 533,845 | | |]

| Operating lease right-of-use assets [removed: (Notes 2 and 7)] | [removed: 80,607] | | [added: 91,171] | | [removed: —] | | | [added: | 80,607 | | |]

| Goodwill | [removed: 239,724] | | [added: 243,347] | | [removed: 214,489] | | | [added: | 239,724 | | |]

| Intangible assets, net | [removed: 58,468] | | [added: 52,543] | | [removed: 41,825] | | | [added: | 58,468 | | |]

| Other long-term assets | [removed: 240,192] | | [added: 289,595] | | [removed: 189,593] | | | [added: | 240,192 | | |]

| Total long-term assets | [removed: 1,152,836] | | [added: 1,231,823] | | [removed: 883,177] | | | [added: | 1,152,836 | | |]

| TOTAL ASSETS | [added: | |] $ | [removed: 1,832,475] [added: 2,294,561] | | | [added: | |] $ | [removed: 1,537,349] [added: 1,832,475] | |

| LIABILITIES AND STOCKHOLDERS’ [removed: EQUITY (DEFICIT)] [added: EQUITY] | | | | | | | | [added: | | | |]

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February 12, 2021

| Cash and cash equivalents | | | $ | 383,928 | | | | | $ | 90,326 | |

| Current portion of long-term debt | | | 49,988 | | | | | | — | | |

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| Cumulative effect of accounting changes (Note 2) | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,829) | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,829) | | |

| Net income | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 581,776 | | | | | | — | | | | | | — | | | | | | 355 | | | | | | 582,131 | | |

| Balance December 31, 2020 | | | 106,457 | | | | | | $ | 10,646 | | | | | $ | 1,294,849 | | | | | $ | 4,503 | | | | | $ | 2,175,595 | | | | | $ | (53,615) | | | | | $ | (2,799,890) | | | | | $ | 707 | | | | | $ | 632,795 | |

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NOTE 2.

Furthermore, as the impact of the COVID-19 pandemic continues to develop, many of these estimates could require increased judgment and carry a higher degree of variability and volatility, and may change materially in future periods.

ASU 2018-13 removes (a) the prior requirement to disclose the amount and reason for transfers between Level 1 and Level 2 of the fair value hierarchy contained in ASC 820, (b) the policy for timing of transfers between levels, and (c) the valuation processes used for Level 3 fair value measurements.

ASU 2018-13 also adds, among other things, a requirement to disclose the range and weighted average of significant unobservable inputs used in Level 3 fair value measurements.

We adopted ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” effective January 1, 2020, using the modified retrospective transition method.

This ASU amends the impairment model to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables and leased equipment.

The amendment requires entities to consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of losses.

We recorded a non-cash cumulative effect adjustment to retained earnings of $1.8 million, net of $0.6 million of income taxes, on our opening consolidated balance sheet as of January 1, 2020.

This adjustment, before the impact of income taxes, was comprised of $2.3 million related to our contract assets and sales-type leases, and $0.2 million related to accounts receivable.

Credit Losses, for more information on our presentation of credit losses.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” The new guidance is intended to simplify the accounting for income taxes by removing certain exceptions and by updating accounting requirements around goodwill recognized for tax purposes and the allocation of current and deferred tax expense among legal entities, among other minor changes.

Early adoption is permitted.

We do not expect the adoption of ASU 2019-12 to have a material impact on our consolidated financial statements.

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| [Schedule II](#s37994C28C4B05D6CAA15AF662026AC34) | |

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.

Management allocates total consideration, including future committed purchases and expected price adjustments, based on relative standalone selling prices to identified performance obligations and recognizes instruments revenue and cost at the time of installation and customer acceptance, which is also when the customer obtains control of the instrument based on legal title transfer.

This in turn led to significant auditor judgment, subjectivity and effort in performing procedures to evaluate the amount of variable consideration included in the transaction price and allocation of transaction price to the performance obligations, as well as in evaluating audit evidence relating to future committed purchases.

To test standalone selling price, we tested on a sample basis the list price, discounts, and other price adjustments of historical sales data for products and services which are all sold separately.

February 14, 2020

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