IDEXX Laboratories (IDXX) 10-K risk factor changes: FY2021 vs FY2020

[removed: The] [added: In addition, the] ongoing [removed: COVID-19] pandemic has increased economic [removed: uncertainty,] [added: uncertainty and] caused economic slowdowns that may continue or [removed: recur and disrupted business activity.][added: recur.]

Such actions may disrupt our supply chain, [added: logistics network,] 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, [removed: market] [added: market, sell,] and [removed: sell] [added: distribute] our products and services; and our financial performance.

In addition, [removed: the social distancing procedures] [added: public health-related guidance] and [removed: guidelines,] [added: directives,] including stay-at-home orders that may be further deployed to combat the spread of COVID-19, [added: including variants (such as Delta] and [added: Omicron), and] possible higher infection rates could result in a decrease in companion animal clinical visits, [added: labor shortages,] the delay of elective procedures and wellness [removed: visits] [added: 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 [removed: 88%] [added: 90%] of our [removed: 2020] [added: 2021] consolidated revenues.

If stay-at-home orders [added: or other similar public health-related directives] 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.

[removed: If economic slowdowns continue or recur, the decline in our customers' demand] [added: Demand] for our [removed: water testing products,] [added: companion animal,] livestock and poultry diagnostic tests and [added: our] dairy [added: and water testing] products [removed: may] [added: could] be [removed: significant.][added: negatively impacted by a number of factors impacting testing practices.]

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

The companion animal healthcare industry is highly competitive, and we anticipate increasing levels of competition from both existing competitors and new [removed: market] [added: sector] entrants given our performance and the [removed: market’s] [added: industry’s] strong growth and returns.

- 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 [removed: instruments] [added: instruments,] and increase demand for related recurring sales of consumable products, services, and accessories;

- Developing and introducing new [removed: proprietary] [added: innovative] 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: Increasing] [added: Developing and introducing innovative, data-insightful software solutions that increase] 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;

- 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 [removed: protocols and] [added: protocols,] enhanced practice of real-time [removed: care;][added: care, and improved practice efficiency;]

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

- 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 [removed: operate;][added: operate, as well as COVID-19-related impacts on the workforce;]

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

For examples of some of the events that could result in disruption to our supply chain or operations, and negatively impact our operating results, [removed: see] [added: refer to] “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 "Factors and events beyond our [removed: control, including natural and other disasters and climate change-related events,] [added: control] could disrupt our [removed: operations or our] [added: operations,] supply [removed: chain] [added: chain,] and [added: logistics network and] adversely affect our business" below.

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

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

We seek to mitigate sole and [removed: single source] [added: single-source] suppliers 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 single or sole-sourced products.

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

In cases where we purchase sole and [removed: single source] [added: single-source] products, components, or 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 products, components, or raw materials in the future from sole and [removed: single source] [added: single-source] suppliers, or if such sole and [removed: single source] [added: single-source] suppliers are unable to obtain the components or other materials required to manufacture the products, we may be unable to supply [removed: the market,] [added: our customers,] 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.

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

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

Our inability to produce or obtain necessary biological materials or to successfully manufacture biologic products that incorporate such materials could result in our inability to supply [removed: the market] [added: our customers] with these products, which would have an adverse effect on our results of operations.

[removed: Our] [added: The methods used by our] water testing products must be approved by the EPA, as a part of [removed: a] [added: its] water quality monitoring [removed: program required by the EPA,] [added: program,] 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, [removed: revision] [added: revision,] or revocation of an Emergency Use Authorization for our [added: OPTI] test kits, could have a negative impact on our growth and profitability.

These regulations [removed: include] [added: include, but are not limited to,] the Biocidal Products Regulation, which requires the use of 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 [removed: certain] chemicals in the European Union; the Restriction of Hazardous [removed: Substances("RoHS")] [added: Substances ("RoHS")] Directive, which regulates and restricts certain hazardous substances in electrical and electronic equipment; the Electromagnetic Compatibility Directive; and the Waste Electrical and Electronic Equipment Directive.

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

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

Any inability to obtain or maintain a required product registration in a jurisdiction could adversely affect our ability to market and sell the applicable product in that jurisdiction, which could have a negative effect on our business, financial [removed: condition] [added: condition,] and results of operations.

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

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

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

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

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 adversely affected by competitors who utilize substantially equivalent technologies [removed: that] [added: to] compete with us.

In addition, expiration of patent rights could result in substantial new competition [removed: in the markets] for products previously covered by those patent rights.

In the past, we have received notices claiming that our products infringe third-party [removed: patents] [added: patents,] and we may receive such notices in the future.

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

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

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

For more information regarding the risks presented by consolidation and reference laboratory vertical integration among our customers, [removed: see] [added: refer to] “Consolidation in our customer base, including through increased corporate hospital ownership, and prevalence of buying consortiums could negatively affect our business” below.

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

Business lockdowns, pool and beach closures and weakened economic conditions related to the COVID-19 pandemic reduced demand for our water testing products in 2020.

While our water testing volumes have been recovering during 2021, public health-related guidance and directives that may be further deployed to combat the spread of COVID-19, including variants, may significantly reduce demand.

Economic weakness in our key geographies related to the COVID-19 pandemic may also reduce demand for our companion animal, water, livestock, poultry and dairy products and services, which could have an adverse impact on our results of operations.

While demand for our CAG products and services remained strong in 2021, the degree to which the COVID-19 pandemic ultimately impacts us depends on future developments that are unpredictable and most of which are outside of our control, including the duration, scope, and severity of the COVID-19 pandemic, the emergence of new variants, changes in infection rates, the vaccine participation rate, the effectiveness of vaccines, the availability of testing kits, as well as regulations and requirements impacting the ability of veterinarians to treat patients, the return to our offices, and/or our ability to visit customer sites.

Any of the foregoing factors, or other cascading effects of the COVID-19 pandemic that are not currently foreseeable, could have a material adverse effect on our business, results of operations, liquidity, financial conditions, and stock price.

Our supply chain and our cost of goods also may be adversely impacted by unanticipated price increases due to factors such as inflation, including wage inflation, or to supply restrictions beyond our control or the control of our suppliers.

If current suppliers fail to supply sufficient goods or materials to us on a timely basis, or at all, we could experience inventory shortages and disruptions in our supply of goods or materials.

There can also be no assurance that confidential, proprietary information provided to foreign regulatory agencies may not be accessed by

that increased consolidation among our competitors or customers (as well as any resulting reference laboratory vertical integration among our customers) would not have a negative impact on our ability to compete successfully.

from changes in disease prevalence.

Furthermore, the recent pandemic-related labor force shortages have made it more difficult and costly to attract qualified labor, and prolonged shortages could adversely affect our ability to achieve our business objectives.

results of operations or prospects.

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

The European Commission adopted a UK adequacy decision in June 2021 which organizations can rely on for EEA to UK personal data transfers.

This decision will automatically expire four years after its entry into force, but it might be renewed provided the UK maintains an adequate level of data protection.

The relationship between the UK and the EU in relation to certain aspects of data

protection law remains unclear, however, and it is unclear how UK data protection laws and regulations will develop in the medium to longer term, and how data transfers to and from the UK will be regulated in the long term.

Any changes to these laws may require us to modify our data processing practices and policies and to incur substantial costs and expenses to comply.

The European Commission updated the SCCs on June 4, 2021, and additional regulatory guidance has been released that seeks to impose additional obligations on companies seeking to rely on the SCCs for such transfers.

Parties transferring personal data from the EEA to third countries with “inadequate data protection” such as the U.S. will have until December 27, 2022 to update any existing agreements, or any new agreements executed before September 27, 2021, that rely on SCCs.

The new SCCs apply only to the transfer of data outside of the EEA and not the UK, though on January 31, 2022, the UK’s Information Commissioner’s Officer announced that proposals for the U.K.'s own form of agreement and addendum to the E.U. SCCs (the "U.K. SCCs") which could be used for transfers for data from the U.K., have been laid before Parliament.

If no objections are raised in Parliament and the proposals are approved, the U.K. SCCs will come into force on March 21, 2022 (subject to a grace period for implementation).

Any transfers by us or our vendors of personal data from the EEA/UK may not comply with EEA/UK data protection laws, may increase our exposure to the GDPR’s/UK GDPR’s heightened sanctions for violations of its cross-border data transfer restrictions and may reduce demand for our products from companies subject to European/United Kingdom data protection laws.

- In August 2021, China passed the new China Personal Information Protection Law ("PIPL"), which became effective November 2021.

The PIPL provides a comprehensive set of data privacy and protection requirements that apply to the processing of personal information and expands data protection compliance obligations to cover the processing of personal information of persons by organizations and individuals in China, and the processing of personal information of persons in China outside of China if such processing is for purposes of providing products and services to, or analyzing and evaluating the behavior of, persons in China.

Several PIPL requirements (such as data localization requirements and international cross border transfer restrictions) remain unclear as the processing amount thresholds for these requirements have not been implemented by the Chinese authorities yet.

These thresholds could result in data localization practices that may complicate our operations and create additional compliance challenges for cross-border transfers of personal information.

This may require us to modify our data processing practices and policies and to incur substantial costs and expenses to comply.

The PIPL provides a comprehensive set of data privacy and protection requirements that apply to the processing of personal information and expands data protection compliance obligations to cover the processing of personal information of persons by organizations and individuals in China, and the processing of personal information of persons in China outside of China if such processing is for purposes of providing products and services to, or analyzing and evaluating the behavior of, persons in China.

Additionally, tax

In April 2021, the current U.S. administration proposed comprehensive corporate tax reforms, including (among other things) an increased tax rate and the promotion of a global minimum tax rate.

In addition, in June 2021, finance leaders of the Group of Seven countries agreed to back a new global minimum tax rate that would apply regardless of the location of headquarters or physical presence, and in October 2021, 136 countries (including all Group of Twenty countries) agreed to the OECD’s global corporate tax reform plan, which would aim to modify the determination of taxable presence for digital activities and provide for a global minimum tax rate.

Furthermore, in December 2021, the Dutch Government modified its tax laws and regulations, eliminating the benefits under our Dutch tax ruling for fiscal years beginning after December 31, 2021.

While we have taken, and may take further, actions intended to align our corporate structure and intercompany relationships with supporting our growth in international markets and maintaining operational and tax efficiency and continue to consider all of these developments within our overall tax strategy, changes in tax law in the U.S. and other countries in which we operate or have a presence may materially and adversely impact our income tax liability, provision for income taxes, effective tax rate and results of operation, and there can be no assurance that any actions we take to maintain operational and tax efficiency will effectively mitigate these impacts.

Moreover, these actions may increase our operating costs, and if ineffectual, could increase our income tax liabilities and our global effective tax rate.

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.

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.

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.

more compelling product and service offerings.

The market for our companion animal, livestock and poultry diagnostic tests and our dairy and water testing products could be negatively impacted by a number of factors impacting testing practices.

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

ineffective or inadequate to address all eventualities.

In addition, because the European Commission has not yet made an adequacy determination regarding the United Kingdom's data privacy protection, lawful transfers of personal data between these jurisdictions remain unclear.

The Brexit Trade and Cooperation Agreement (TCA) has established a four- to six-month grace period during which transfers of personal data from the EU to the UK can continue without additional safeguards, provided that the UK maintains its pre-TCA data protection laws.

During this time, the European Commission may adopt a UK adequacy decision which organizations can then rely on for EU to UK personal data transfers but, if no UK adequacy decision is adopted, the UK will be considered a third country at the end of the grace period and we will be required to implement additional safeguards for personal data transfers.

parties with whom we work or our products and services to so comply could result in damage to our reputation or legal proceedings or actions against us by governmental entities or others, any of which could have an adverse effect on our business.

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

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

While the absence of an advance agreement does not preclude our ability to continue to apply existing tax laws in the same manner as allowed by the existing ruling, the lack of such agreement creates uncertainty as to our future tax rate.

Further, the Netherlands has recently announced proposals to modify existing rules that, if enacted, could eliminate the benefits to which this ruling applies.

We continue to consider these developments within our overall tax strategy.

Additionally, the European Commission has opened formal investigations into specific tax rulings granted by several countries to specific taxpayers and several are in various stages of litigation.

While we believe that our rulings are different than those being discussed, the ultimate resolution of such activities cannot be predicted and could also have an adverse impact on future operating results.

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

*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: 2018,] [added: 2019, and year-over-year comparisons between 2020 and 2019,] is included in our Annual Report on Form 10-K for the year ended December 31, [removed: 2019,] [added: 2020,] within Item 7.

We operate primarily through three business segments: diagnostic and information management-based products and services for the [added: companion animal] veterinary [removed: market,] [added: industry,] 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 improve producer efficiency, which we refer to as Livestock, Poultry and Dairy (“LPD”).

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

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

Segment Reporting" to the consolidated financial statements for the year ended December 31, [removed: 2020,] [added: 2021,] 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.

Our strategy is to provide veterinarians with [removed: both] the highest quality diagnostic [removed: information] [added: information, software products and services, and medical evidence] to support more advanced medical care and information management solutions that help demonstrate the value of diagnostics to pet owners and enable efficient [added: and effective] practice management.

By doing so, we are able to build a mutually successful relationship with our veterinarian customers based on healthy pets, loyal [removed: customers] [added: customers, staff efficiency,] and expanding practice revenues.

Revenues from the associated [removed: proprietary] IDEXX VetLab consumables, SNAP rapid assay test kits, reference laboratory and consulting services, and extended maintenance agreements and accessories related to our IDEXX VetLab instruments and our SNAP Pro Analyzer are recurring in nature, in that they are regularly purchased by our customers, typically as they perform diagnostic testing as part of ongoing veterinary care services.

[removed: As the market for the product matures, an increasing percentage of placements are made in transactions, sometimes referred to as] volume commitments, such as our IDEXX 360 program, or reagent rentals, in which instruments are placed at customer sites at little or no cost in exchange for a multi-year customer commitment to purchase recurring products and services.

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

Generally, placement of an instrument with a new or competitive account has the highest economic value as the entire consumable stream associated with that placement represents incremental recurring [removed: revenue, whereas the consumable stream associated with a Catalyst placement at a VetTest customer substitutes a Catalyst consumable stream for a VetTest consumable stream.][added: revenue.]

We place our [removed: ProCyte Dx, LaserCyte Dx and VetAutoread] [added: premium] hematology analyzers through multiple sales programs as well.

[removed: This instrument] [added: Our premium SediVue Dx analyzer] and single-use consumable system provides a highly accurate way to automate the process of examining urine under a microscope.

[removed: We] [added: With our ProCyte One analyzer, we] provide customers with [removed: SediVue Dx] consumables that are charged upon utilization, which we refer to as pay-per-run, as compared to [removed: other instruments] [added: the ProCyte Dx analyzer,] where we charge upon shipment of consumables.

We continuously seek opportunities to enhance the care that veterinary professionals give to their patients and clients through supporting the implementation of real-time care testing [removed: work flows,] [added: workflows,] which is performing tests and sharing test results with the client at the time of the patient visit.

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

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 [removed: handle compromised samples, analytical capability of diagnostics software, integration with the IVLS and VetConnect PLUS,]

[added: handle compromised samples, analytical capability of diagnostics software, integration with the IVLS and VetConnect PLUS,] client communications capabilities, education and training, and superior sales and customer service.

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

For the year ended December 31, [removed: 2020,] [added: 2021,] recurring diagnostic revenue, which is both highly durable and profitable, accounted for approximately [removed: 78%] [added: 79%] of our consolidated revenue.

We derive substantial revenues and margins from the sale of consumables that are used in IDEXX VetLab [removed: instruments] [added: instruments,] and the multi-year consumable revenue stream is significantly more valuable than the placement of the instrument.

We attempt to differentiate our reference laboratory testing services from those of competitive reference laboratories and competitive in-clinic offerings primarily on the basis of a [removed: unique and proprietary] [added: differentiated] test menu, technology employed, quality, turnaround time, customer service and tools such as VetConnect PLUS that demonstrate the complementary manner in which our laboratory services work with our in-clinic offerings.

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

[removed: payments] [added: customers with a free] or [removed: IDEXX Points] [added: discounted instrument or system] upon entering [added: into] multi-year [removed: contractual] agreements to purchase annual minimum amounts of products [removed: or services, including reference laboratory] [added: and] services.

Our portfolio of practice management offerings is designed to serve the full range of customers [added: primarily] within the North American, Australian, and European [removed: markets.][added: regions.]

Cornerstone, [removed: DVMAX,] [added: ezyVet, Animana,] IDEXX [removed: Animana] [added: Neo,] and [removed: IDEXX Neo] [added: DVMAX] practice management systems provide superior integrated information solutions, backed by exceptional customer support and education.

These practice management systems allow the veterinarian to practice better medicine and achieve the practice’s business objectives, including a quality client experience, staff efficiency and practice [added: effectiveness and] profitability.

We market Cornerstone, [removed: DVMAX and] [added: ezyVet,] IDEXX [removed: Neo] [added: Neo, and DVMAX] practice management systems to customers primarily in North America and Australia.

We market our [removed: IDEXX] Animana offering to customers primarily throughout Europe.

[removed: IDEXX Animana] [added: Animana, ezyVet,] and IDEXX Neo practice management systems are subscription-based SaaS offerings designed to provide flexible pricing and a durable, recurring revenue stream, while utilizing cloud technology instead of a client server platform.

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

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

Our strategy in the water testing business is to develop, manufacture, market and sell [removed: proprietary] products that test primarily for the presence of microbial contamination in water matrices, including drinking water supplies, with superior performance, supported by exceptional customer service.

We develop, manufacture, [removed: market] [added: market,] and sell a broad range of tests and perform services for various livestock diseases and conditions, and have active research and development and in-licensing programs in this area.

Our strategy is to offer [removed: proprietary] [added: differentiated] tests with superior performance characteristics for use in government programs to control or eradicate disease and disease outbreaks and in livestock and poultry producers’ disease, reproductive, and herd health and production management programs.

To successfully increase sales of dairy testing products, we believe that we need to increase penetration in dairy [removed: processors and develop product line enhancements and extensions.][added: processors.]

Our Rapid Visual Pregnancy Test [added: and Alertys On-Farm Pregnancy Test] for cattle can detect pregnancy 28 days after breeding.

[removed: This test provides] [added: These tests provide] a quick and accurate identifier using whole blood samples.

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

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

As the demand for the product matures, an increasing percentage of placements are made in transactions, sometimes referred to as

Below is a table showing active installed base units of our diagnostic instruments as of the years ended December 31, 2021, 2020, and 2019:

| *(units in thousands)* | | | | | | Installed Base | | | | | | | | | | | | | | |

| Instrument | | | | | | December 31, 2021 | | | | | | December 31, 2020 | | | | | | December 31, 2019 | | |

| Catalyst | | | | | | 56.5 | | | | | | 49.6 | | | | | | 43.9 | | |

| Premium Hematology | | | | | | 38.2 | | | | | | 34.6 | | | | | | 31.5 | | |

| SediVue | | | | | | 13.2 | | | | | | 10.7 | | | | | | 8.9 | | |

We also place additional chemistry analyzers at existing large customers where utilization supports multiple analyzers.

During the second half of 2020, we began selling our new ProCyte One analyzer.

We provide customers with SediVue Dx consumables that are charged upon utilization, similar to the ProCyte One analyzer.

Other than our ProCyte One and SediVue analyzers, we charge upon shipment of consumables for all our other analyzers.

The prevalence of in-clinic testing, as opposed to outside reference laboratories such as IDEXX Reference Laboratories, may vary by region.

Our volume commitment programs, such as IDEXX 360, provide

Refer to "Part II, Item 8.

instrument based on legal title transfer.

The long-range financial forecasts of the reporting units, which are based upon

Refer to "Part II, Item 8.

Refer to "Part II, Item 8.

During 2021, positive trends in companion animal healthcare continued to support strong growth for CAG diagnostic products and services across regions.

U.S. same-store clinical visit growth at veterinary practices was 12% in the first quarter of 2021, 13% in the second quarter, and 2% in both the third and fourth quarters of 2021.

These clinical visit gains in the second half of 2021 are compared to strong prior year period clinical visit growth, which included benefits from pent-up demand from delayed veterinary visits during the COVID-19 pandemic as policies and restrictions were relaxed.

At the beginning of 2022, we are monitoring the increase in Omicron cases globally, including impacts on factors like veterinary practice staffing levels, which may impact clinic level growth.

During 2021, our Water testing volumes continued to recover for both compliance and non-compliance testing.

LPD revenues, which expanded 10% in 2020 and contracted by 7% in 2021, were impacted by reduced demand for African Swine fever testing in China, reflecting the relaxation of local African Swine Fever disease management programs, as well as additional impacts in China from lower pork prices and changing government requirements related to live animal imports and livestock infectious disease programs, beginning in the second quarter of 2021.

We anticipate continued pressure on LPD revenues in the first half of 2022 related to these factors.

and are the primary driver of growth in that segment.

We anticipate that revenues from these products will decline in 2022, as we focus our growth efforts on IDEXX core businesses.

Many of our employees continue to work remotely.

For our laboratory and warehouse employees that are required to work on-site, we have enhanced safety procedures and protocols to help protect the health of our employees.

Supply Chain and Logistics Challenges.

We believe that building and maintaining a well-managed and disciplined infrastructure have helped minimize impacts of the COVID-19 pandemic-related supply chain constraints, including product and component availability issues, logistics challenges, including extended shipping periods and delays, and inflationary pressures that are currently occurring worldwide.

Our proactive approach to managing our operational processes, including forward planning with a focus on working closely with our suppliers and logistics partners, has enabled us to maintain continued high levels of product and service availability, and customer service.

Although we expect the current supply chain and logistics challenges to continue in 2022, we believe we are well positioned to enable sustained high growth in our businesses going forward, and to effectively manage the impacts of potentially relatively higher costs in certain areas to support these growth plans.

However, there can be no assurance as to the duration or severity of the supply chain and logistics challenges or the effectiveness of our mitigating activities.

Refer to “Part I, Item 1.

a fair and meaningful long-term representation of the trend in patient visit activity in the U.S., providing us insight regarding demand for our products and services.

| CAG | | | | | | $ | 2,889,960 | | | | | $ | 2,385,765 | | | | | $ | 504,195 | | | | | 21.1 | | % | | | | 1.5 | | % | | | | 0.9 | | % | | | | 18.7 | | % |

| *United States* | | | | | | *1,881,887* | | | | | | *1,593,855* | | | | | | *288,032* | | | | | | *18.1* | | *%* | | | | *—* | | | | | | *1.2* | | *%* | | | | *16.9* | | *%* |

| *International* | | | | | | *1,008,073* | | | | | | *791,910* | | | | | | *216,163* | | | | | | *27.3* | | *%* | | | | *4.8* | | *%* | | | | *0.4* | | *%* | | | | *22.1* | | *%* |

| Water | | | | | | $ | 146,505 | | | | | $ | 128,625 | | | | | $ | 17,880 | | | | | 13.9 | | % | | | | 2.2 | | % | | | | *—* | | | | | | 11.7 | | % |

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

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

We have found that the consumables revenues increase when a customer upgrades from a VetTest analyzer to a Catalyst analyzer due to the superior test menu capability, flexibility, and ease of use of the Catalyst analyzers, which leads to additional testing by the customer.

As we continue to experience growth in placements of Catalyst analyzers and in sales of related consumables, we expect this growth to be partly offset by a decline in placements of VetTest analyzers and in sales of related consumables.

As of December 31, 2020, these hematology analyzers provided for a combined active installed base of approximately 41,200 units, as compared to 38,200 units in 2019 and 35,900 units in 2018.

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

We also continue to place a substantial number of LaserCyte Dx instruments, both new and recertified, as trade-ups from the VetAutoread analyzer and at new and competitive accounts.

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

As of December 31, 2020, our premium SediVue Dx analyzers provided for an active installed base of nearly10,700 units globally, as compared to approximately 8,900 units in 2019 and approximately 6,600 units in 2018.

We believe approximately half of all diagnostic testing by U.S. veterinarians is provided by outside reference laboratories such as IDEXX Reference Laboratories.

In certain markets outside the U.S., the prevalence of in-clinic testing may vary, and a greater or lesser percentage of diagnostic testing may be performed in reference laboratories.

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

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.

Prior to January 1, 2020, certain costs were not allocated to our operating segments and were instead reported under the caption “Unallocated 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 were charged to our business segments at pre-determined budgeted amounts or rates.

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

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:

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

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

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

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

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

| Gross profit | | | | | | 247 | | | | | | 11 | | | | | | 14 | | | | | | 6 | | | | | | (278) | | |

| Operating Expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Sales and marketing | | | | | | $ | (239) | | | | | $ | (11) | | | | | $ | (13) | | | | | $ | — | | | | | $ | 263 | |

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

| Research and development | | | | | | 16,479 | | | | | | 33 | | | | | | 41 | | | | | | — | | | | | | (16,553) | | |

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

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

| 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 | |

| General and administrative | | | | | | 3,316 | | | | | | 66 | | | | | | 81 | | | | | | 1,145 | | | | | | (4,608) | | |

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

| Total operating expenses | | | | | | 18,400 | | | | | | 37 | | | | | | 45 | | | | | | 1,145 | | | | | | (19,627) | | |

| Income from operations | | | | | | $ | (16,860) | | | | | $ | 32 | | | | | $ | 42 | | | | | $ | (1,110) | | | | | $ | 17,896 | |

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:

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

Our market risk consists primarily of foreign currency exchange [removed: risk and] [added: risk,] interest rate [removed: risk.][added: risk, and effects of inflation.]

For the year ended December 31, [removed: 2020,] [added: 2021,] approximately [removed: 21%] [added: 23%] of our consolidated revenue was derived from products manufactured or sourced in U.S. dollars and sold internationally in local currencies, as compared to [added: 21% and] 22% for the years ended December 31, [removed: 2019,] [added: 2020,] and [removed: 2018,] [added: 2019,] respectively.

Based on projected revenues and expenses for [removed: 2021,] [added: 2022,] 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: $11] [added: $12] million and operating income by approximately [removed: $5.5] [added: $7] million.

Additionally, we project our foreign currency hedge contracts in place as of December 31, [removed: 2020,] [added: 2021,] would provide incremental offsetting gains of approximately [removed: $2] [added: $3] million.

At our current foreign exchange rate assumptions, we anticipate the effect of a [removed: weaker] [added: stronger] U.S. dollar will have a [removed: favorable] [added: unfavorable] effect on our operating results by [removed: increasing] [added: decreasing] our [removed: revenues by 1.5% to 2.0%] [added: revenues, operating profit,] and [removed: increasing our] diluted earnings per share [removed: by approximately $0.14 for] [added: in] the year [removed: ending] [added: ended] December 31, [removed: 2021.][added: 2022, by approximately $55 million, $9 million, and $0.08 per share, respectively.]

This [removed: favorable] [added: unfavorable] impact includes foreign currency hedging activity, which is expected to [removed: decrease] [added: increase] total company operating profit by approximately [removed: $8] [added: $18] million and diluted earnings per share by [removed: $0.07] [added: $0.16] during the year ending December 31, [removed: 2021.][added: 2022.]

The above estimate assumes that the value of the U.S. dollar relative to other currencies will reflect the euro at [removed: $1.19,] [added: $1.12,] the British pound at $1.34, the Canadian dollar at [removed: $0.77,] [added: $0.78,] and the Australian dollar at [removed: $0.76; and the Japanese yen at ¥105, the Chinese renminbi at RMB 6.57,] [added: $0.71;] and the [removed: Brazilian real at R$5.36 to the U.S. dollar for the full year of 2021.]

| *(in thousands, except per share amounts)* | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | |

| Operating profit [removed: impact,] [added: increase (decrease),] excluding hedge activity and exchange impacts on settlement of foreign currency denominated transactions | | | | | | $ | [removed: 887] [added: 28,557] | | | | | $ | [removed: (18,989)] [added: 887] | | | | | $ | [removed: 6,311] [added: (18,989)] | |

| Hedge gains (losses) - current period | | | | | | [removed: 829] [added: (7,121)] | | | | | | [removed: 10,628] [added: 829] | | | | | | [removed: (976)] [added: 10,628] | | |

| Exchange gains (losses) on settlements of foreign currency denominated transactions - current period | | | | | | [removed: 699] [added: (2,111)] | | | | | | [removed: (1,116)] [added: 699] | | | | | | [removed: (3,158)] [added: (1,116)] | | |

| Operating profit [removed: impact] [added: increase (decrease)] - current period | | | | | | $ | [removed: 2,415] [added: 19,325] | | | | | $ | [removed: (9,477)] [added: 2,415] | | | | | $ | [removed: 2,177] [added: (9,477)] | |

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

| Exchange [added: (gains)] losses on settlement of foreign currency denominated transactions - prior period | | | | | | [removed: 1,116] [added: (699)] | | | | | | [removed: 3,158] [added: 1,116] | | | | | | [removed: (893)] [added: 3,158] | | |

| Operating profit [removed: impact] [added: increase (decrease)] - as compared to prior period | | | | | | $ | [removed: (7,097)] [added: 17,797] | | | | | $ | [removed: (5,343)] [added: (7,097)] | | | | | $ | [removed: 1,257] [added: (5,343)] | |

| Diluted earnings per share [removed: impact] [added: increase (decrease)] - as compared to prior period | | | | | | $ | [removed: (0.06)] [added: 0.16] | | | | | $ | [removed: (0.05)] [added: (0.06)] | | | | | $ | [removed: 0.01] [added: (0.05)] | |

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

Our foreign currency hedging strategy is consistent with prior periods and there were no material changes in our market risk exposure during the year ended December 31, [removed: 2020.][added: 2021.]

As a result, no significant ineffectiveness has resulted or been recorded through the statements of income for the years ended December 31, [added: 2021,] 2020, [removed: 2019] and [removed: 2018.][added: 2019.]

We target to hedge approximately [added: 75% to] 85% of the estimated exposure from intercompany product purchases and sales denominated in the euro, British pound, Canadian dollar, Japanese yen, and Australian dollar.

The notional amount of foreign currency exchange contracts to hedge forecasted intercompany purchases and sales totaled [removed: $202.7] [added: $286.7] million at December 31, [removed: 2020,] [added: 2021,] and [removed: $210.9] [added: $202.7] million at December 31, [removed: 2019.][added: 2020.]

At December 31, [removed: 2020,] [added: 2021,] we had [removed: $12.1] [added: $8.2] million of net unrealized [removed: losses] [added: gains] on foreign currency exchange contracts recorded in accumulated other comprehensive loss, net of related tax.

For more information on our hedge agreements [removed: see] [added: refer to] "Part II, Item 8.

We have a Credit Facility with a syndicate of multinational banks, which matures on [removed: April 14, 2023,] [added: December 9, 2026,] and requires no scheduled prepayments before that date.

Although the Credit Facility does not mature until [removed: April 14, 2023,] [added: December 9, 2026,] all individual borrowings under the terms of the Credit Facility [added: predominantly] have a stated term between [removed: 30] [added: 1] and 180 days.

At December 31, [removed: 2020,] [added: 2021,] we had [removed: no] [added: $73.5 million of] borrowings outstanding under the Credit Facility.

As of December 31, [removed: 2020,] [added: 2021,] based on our gross leverage ratio, our borrowing costs under the Credit Facility [removed: would have been] [added: were] approximately [removed: 2.5%.][added: 1.1%.]

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

| Revenue increase (decrease) | | | | | | $ | 46,001 | | | | | $ | 1,301 | | | | | $ | (38,624) | |

Japanese yen at ¥117, the Chinese renminbi at RMB 6.47, and the Brazilian real at R$5.74 to the U.S. dollar for the full year of 2022.

Interest Rate Risk and Effects of Inflation

Inflation generally impacts us by increasing our costs of labor, material, transportation and general overhead costs.

The rates of inflation experienced in recent years have not had a material impact on our financial statements as inflationary cost increases have been more than offset by net realized annual price increases and productivity gains.

We cannot reasonably estimate our ability to successfully recover any impact of inflation cost increases into the future.

| Revenue impact | | | | | | $ | 1,301 | | | | | $ | (38,624) | | | | | $ | 13,623 | |

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

We develop, manufacture, and distribute products and provide services primarily for the companion animal veterinary, livestock and poultry, dairy and water testing [removed: markets.][added: industries.]

We also provide [added: human medical] point-of-care and laboratory [removed: diagnostics for the human medical diagnostic market.][added: diagnostics.]

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

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

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

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

Our in-clinic diagnostic solutions are comprised of our IDEXX VetLab suite of in-clinic chemistry, hematology, immunoassay, urinalysis, and coagulation analyzers, as well as associated [removed: proprietary] consumable products that provide real-time reference lab quality diagnostic results.

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

We [removed: currently] [added: actively] sell [removed: two of these chemistry analyzers,] the Catalyst One Chemistry [removed: analyzer and the VetTest Chemistry] analyzer.

We also [removed: have two other chemistry analyzers, the VetLyte Electrolyte analyzer and] [added: support] the VetStat Electrolyte and Blood Gas analyzer.

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

These analyzers include the ProCyte [removed: Dx hematology analyzer, the LaserCyte Dx hematology analyzer;] [added: One] and [removed: the IDEXX VetAutoread] [added: ProCyte Dx] hematology [removed: analyzer.][added: analyzers.]

[removed: During 2020, we] [added: We] introduced [removed: and began selling our new] [added: the] ProCyte One analyzer [added: in 2020] and [removed: will begin] [added: began] delivery of these analyzers in 2021.

The principal canine SNAP rapid assay tests include SNAP 4Dx Plus, which tests for the six vector-borne diseases [added: causing pathogens,] including Lyme disease as well as canine [removed: heartworm] [added: heartworm,] and SNAP Heartworm RT, which tests for heartworm.

The principal feline SNAP 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)] [added: humans),] and SNAP FIV/FeLV Combo Test, which tests for FIV and Feline leukemia virus ("FeLV").

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

This menu of tests also includes a number of specialized [removed: and proprietary] tests that we have developed that allow practitioners to diagnose increasingly relevant diseases and conditions in dogs and cats, including parasites, heart disease, allergies, pancreatitis, diabetes, [added: renal disease,] and infectious diseases.

Our [removed: principal] practice [added: information] management systems [removed: are Cornerstone (on-premise),] [added: offerings include cloud-based ezyVet, Animana,] IDEXX [removed: Neo (cloud-based), DVMAX (on-premise),] [added: Neo,] and [removed: IDEXX Animana (cloud-based, available in Europe).][added: Cornerstone Cloud, and on-premise Cornerstone and DVMAX.]

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

Our SmartFlow cloud offering works in conjunction with major veterinary practice management systems, including [removed: IDEXX] Cornerstone, [removed: DVMAX, IDEXX] Animana, IDEXX Neo, [added: DVMAX,] and certain third-party practice management [removed: systems.][added: systems, and VetRadar provides workflow capability for ezyVet.]

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

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

We believe that the breadth of our full diagnostic solution, including novel products and services developed and made available only by IDEXX, as well as the seamless software integration of our [removed: offering] [added: offering,] provide a [removed: unique] [added: differentiated] competitive advantage by giving veterinarians the tools and services to offer advanced veterinary medical care.

We believe that with the use of our products and services, veterinary practices significantly improve the quality of veterinary care provided to their patients, increase staff efficiencies, and [removed: effectively] [added: better] communicate the value of this medical care to the pet owner.

We believe that these capabilities, enabled by the use of IDEXX products and services, improve the [added: effectiveness and] financial health of the veterinary practice.

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

Our water tests are used by government laboratories, water [removed: utilities] [added: utilities,] and private certified laboratories to test drinking water in compliance with regulatory standards, including U.S. Environmental Protection Agency (“EPA”) standards.

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.We also sell consumables, parts, and accessories to be used with many of our water testing products.][added: wells.]

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

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 [removed: dairy] [added: producer] efficiency, and to ensure the quality and safety of [removed: milk.][added: milk and food.]

Livestock, [removed: Poultry and] [added: Poultry,] Heard Health [removed: Screening.][added: Screening and Production Management.]

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

These OPTI analyzers are used primarily in emergency rooms, operating rooms, cardiac monitoring [removed: areas] [added: areas,] and other locations where time-critical diagnostic testing is performed within the hospital setting.

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

Similar to our earlier generation OPTI CCA and OPTI Touch Electrolyte analyzers, the OPTI CCA-TS2 [added: analyzer] runs whole blood, plasma, and serum samples on single-use disposable cassettes that contain various configurations of analytes.

On June 5, 2020 OPTI Medical announced that it [removed: has] [added: had] 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 [removed: 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 own certain drug delivery technology intellectual property, that we continue to seek to commercialize through agreements with third parties, such as pharmaceutical companies, [removed: that] [added: which] are included in the Other segment.

Additional information about [removed: of] our products and services can be found on our website.

Our research and development expenses, which consist of salaries, employee benefits, materials and external consulting and development costs, were [removed: $141.2] [added: $161.0] million for the year ended December 31, [removed: 2020,] [added: 2021,] or [removed: 5.2%] [added: 5.0%] of our consolidated revenue, [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 and [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.

We continue to support our Catalyst Dx and VetTest Chemistry analyzers.

While we currently do not sell the LaserCyte Dx hematology analyzer and the IDEXX VetAutoread hematology analyzer, we continue to support these analyzers.

We sell IVLS as an integral component for our in-clinic analyzer suite.

We also sell consumables, parts, and accessories to be used with many of our water testing products.

We also sell our Rapid Visual Pregnancy Test and Alertys On-Farm Pregnancy Test for cattle, which can detect pregnancy 28 days after breeding using whole blood samples.

Information contained on or connected to our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this annual report or any other filing we make with the SEC.

Refer to “Part I, Item 1A.

Refer to “Part I, Item 1A.

Other Chemical, Environmental, and Human Health Safety Regulations.

Most countries in which we sell our products impose similar registrations and/or certification requirements.

- Building and sustaining an inclusive, ethical culture that values diversity, equity and inclusion ("DEI");

- Offering competitive and locally relevant compensation and benefits; and

- Providing growth and development opportunities.

We believe that DEI among our employees helps drive both innovation and a better understanding of our increasingly global customer base.

As of December 31, 2021, we had approximately 10,350 regular full-time and part-time employees, with underrepresented minorities representing an estimated 22.5% of our U.S. employees, as follows:

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

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

| Self-Identified Racial or Ethnic Background (1) | | | | | | Percentage of our U.S. Employees | | | | | |

| Black/African American | | | | | | 8.6 | | % | | | |

| Asian | | | | | | 6.4 | | % | | | |

| Hispanic/Latinx | | | | | | 5.4 | | % | | | |

| Other (2) | | | | | | 2.1 | | % | | | |

| White | | | | | | 76.3 | | % | | | |

(1) Data regarding racial and ethnic background are based on self-identification by our U.S. employees; underrepresented minorities is defined as Black/African American, Asian, Hispanic/Latinx and Other.

The percentages provided do not add up to 100% because some U.S. employees declined to specify race and/or ethnicity.

(2) Other is defined as American Indian, Alaska Native, Native Hawaiian/Other Pacific Islander, and two or more races.

In addition, as of December 31, 2021, women represented 58% of our global employees and were represented in leadership as follows:

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

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

| | | | | | | Percentage who self- identify as women | | | | | |

| Global Senior Leadership Team (1) | | | | | | 34.5 | | % | | | |

| Global Senior Executive Team (2) | | | | | | 23.8 | | % | | | |

(1) Global Senior Leaders are employees in compensation grades considered Director or above.

(2) Global Senior Executives are employees in compensation grades considered Senior Vice President or above.

While many of our employees have continued to work from home since March 2020, we have re-opened some of our offices, consistent with public health guidance and protocols, and support flexible work options.

We continue to monitor the state of the pandemic to ensure the continued safety and health of our employees.

Employee Turnover and Engagement.

We monitor employee turnover and engagement to identify opportunities to strengthen our approach to human capital management.

Our voluntary turnover among managerial and professional staff was approximately 6%.

With the contraction of the labor force as a result of the global pandemic, we have recently experienced the effects of the labor shortage in our staffing.

We continue to support our Catalyst Dx Chemistry analyzer, previously sold as part of the Catalyst platform.

We sell IVLS as an integral component of the Catalyst One, Catalyst Dx, LaserCyte, LaserCyte Dx and ProCyte Dx analyzers, SNAP Pro Analyzer, SNAPshot Dx analyzer and also as a standalone hardware platform.

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

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

Other Environmental Regulations.

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

sharing and security of data.

We believe that finding, developing and retaining a world-class global workforce requires that we build and sustain an inclusive, ethical culture that values diversity, equity and inclusion; offers competitive and locally relevant compensation and benefits; and provides growth and development opportunities.

Since 2011, we have grown that organization almost 2.5 times, creating a world-class and experienced companion animal diagnostics field-based professional organization.

Through diversity, equity, and inclusion ("DEI") efforts, we strive to ensure our global workplaces are dynamic, supportive of all our employees, and representative of our customers and communities.

We believe that DEI is an essential driver of our innovation and success.

Diverse talent is the foundation of a healthy and strong business.

Our entrepreneurial and collaborative spirit is enhanced when many different people, perspectives, and backgrounds are aligned toward achieving our Purpose.

As of December 31, 2020, we had approximately 9,300 regular full-time and part-time employees, with women representing 57% of our employees, and underrepresented minorities in the U.S. (defined as those who self-identify as Black/African American, Asian, Hispanic/Latinx, Native American, Pacific Islander and/or two or more races) representing an estimated 22% of our U.S. employees.

As of December 31, 2020, our global senior leadership team is 30% female, while global senior executives are 25% female.

In addition, we contract with a number of temporary and contract employees.

We also help drive diversity across our industry by actively supporting our customers, suppliers, educational institutions, community partners, and peers as they work to improve diversity, equity, and inclusion in their own workplaces, policies and practices.

We offer fair, competitive compensation and benefits that support our employees’ overall well-being.

To ensure alignment with our short- and long-term objectives, our compensation programs for all employees include base pay, short-term incentives, and opportunities for long-term incentives.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE

During 2020, we established the IDEXX Foundation, a donor-advised fund administered by a national donor-advised fund program, with a contribution of $10 million, to support activities aligned with our Purpose.

Our most recent Corporate Responsibility Report is available on our website and features examples of our ESG activities, performance metrics, and goals for the next few years.

For the fiscal year ended December 31, [removed: 2020][added: 2021]

[removed: ][added: ]

Based on the closing sale price on June 30, [removed: 2020] [added: 2021] 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: $27,735,989,165.][added: $53,417,914,936.]

The number of shares outstanding of the registrant’s Common Stock was [removed: 85,426,080] [added: 84,249,085] on February [removed: 9, 2021.][added: 11, 2022.]

Part III—Specifically identified portions of the Company’s definitive Proxy Statement to be filed in connection with the Company’s [removed: 2021] [added: 2022] annual meeting of stockholders (the [removed: “2021] [added: “2022] Annual Meeting”), to be held on May [removed: 12, 2021,] [added: 11, 2022,] are incorporated herein by reference.

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

| Credit Facility | | | | | | Our $1 billion [removed: three-year] [added: five-year] unsecured revolving credit facility under an amended and restated credit agreement that was executed in [removed: April 2020,] [added: December 2021,] also referred to as line of credit. | | |

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

| OPTI Medical | | | | | | OPTI Medical Systems, Inc., a wholly-owned subsidiary of IDEXX Laboratories Inc., located in Roswell, Georgia. This business provides point-of-care and laboratory diagnostics (including electrolyte and blood gas analyzers and related consumable products) for the human medical diagnostics [removed: market,] [added: sector,] as well as COVID-19 testing products and services. The Roswell facility also manufactures electrolytes slides (instrument consumables) to run Catalyst One®, Catalyst Dx®, and blood gas analyzers and consumables for the veterinary market; also referred to as OPTI. | | |

| USDA | | | | | | [removed: United States] [added: U.S.] Department of Agriculture | | |

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| [Financial Statements and Supplementary Data – Index to Consolidated Financial [removed: Statements](#i1f6e15ac4f474568883062210711adbf_151)] [added: Statements](#i5d795a6851d746ca914a2ddae761c329_148)] | | | | | | [removed: F-[1](#i1f6e15ac4f474568883062210711adbf_151)] [added: [F](#i5d795a6851d746ca914a2ddae761c329_148)[\-1](#i5d795a6851d746ca914a2ddae761c329_148)] | | |

Our name, logo and the following terms used in this Annual Report on Form 10-K are either registered trademarks or trademarks of IDEXX Laboratories, Inc. in the United States and/or other countries: 4Dx®, [added: Alertys®,] Animana® Veterinary Software, Catalyst Dx®, Catalyst One®, Coag Dx™, Colilert®, Colisure®, Cornerstone®, DVMAX®, Enterolert®, [added: ezyVet®,] Feline Triple®, Filta-Max®, Filta-Max *xpress*®, IDEXX I-Vision CR®, IDEXX I-Vision DR®, IDEXX I-Vision Mobile™, IDEXX ImageBank™ , IDEXX Neo®, IDEXX-PACS™, IDEXX SDMA®, IDEXX VetLab®, LaserCyte®, LaserCyte® Dx, OPTI®, Pet Health Network®, Petly® Plans, Practice Profile™, ProCyte Dx®, Pseudalert®, Quanti-Tray®, rVetLink®, SediVue Dx®, SNAP®, SNAPduo®, SNAP Pro®, SNAP® cPL™, SNAP® fPL™, SNAPshot Dx®, IDEXX VetAutoread™, VetConnect®, IDEXX VetLab® UA™, VetLINK®, VetLyte®, [added: Vet Radar®,] VetStat®, and VetTest®.

This Annual Report on Form 10-K for the year ended December 31, [removed: 2020,] [added: 2021,] contains statements which, to the extent they are not statements of historical fact, constitute “forward-looking statements.” Such forward-looking statements about our business and expectations within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), include statements relating to the impact of the COVID-19 pandemic; [added: our expectations regarding supply chain and logistics disruptions; our expectations regarding the labor supply;] future revenue growth rates; future tax benefits; the impact of tax legislation and regulatory action; [added: revenue recognition timing and amounts;] business trends, earnings and other measures of financial performance; the effect of economic downturns on our business performance; the projected effect of patent and license expirations; the projected impact of foreign currency exchange rates and hedging activities; demand for our products; realizability of assets; future cash flow and uses of cash; future repurchases of common stock; future levels of indebtedness and capital spending; interest expense; warranty expense; share-based compensation expense; the adoption and projected impact of new accounting standards; [added: critical accounting estimates;] future commercial [added: and operational] efforts; future product launches; projected cost and completion of capital investments; and competition.

| PCR | | | | | | Polymerase chain reaction, a technique used to amplify small segments of DNA. | | |

| [Item 6](#i5d795a6851d746ca914a2ddae761c329_43) | | | [\[Reserved\]](#i5d795a6851d746ca914a2ddae761c329_43) | | | [33](#i5d795a6851d746ca914a2ddae761c329_43) | | |

| [Item 9C](#i5d795a6851d746ca914a2ddae761c329_10445360466006) | | | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#i5d795a6851d746ca914a2ddae761c329_10445360466006) | | | [61](#i5d795a6851d746ca914a2ddae761c329_10445360466006) | | |

| [Exhibit Index](#i5d795a6851d746ca914a2ddae761c329_250) | | | | | | | | |

| [Signatures](#i5d795a6851d746ca914a2ddae761c329_253) | | | | | | | | |

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

| EMA | | | | | | Extended maintenance agreements | | |

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

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

| [Item 6](#i1f6e15ac4f474568883062210711adbf_43) | | | [Selected Financial Data](#i1f6e15ac4f474568883062210711adbf_43) | | | [32](#i1f6e15ac4f474568883062210711adbf_43) | | |

| [Exhibit Index](#i1f6e15ac4f474568883062210711adbf_283) | | | | | | | | |

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

Our worldwide headquarters [removed: is] [added: and principal executive offices are] located in Westbrook, Maine where we engage in manufacturing, research and development, marketing, sales, and general and administrative support functions.

| Westbrook, Maine | | | [removed: United States Headquarters] [added: Worldwide Headquarters, principal executive offices] | | | Own | | |

| Hoofddorp, Netherlands | | | Distribution center, warehousing, International administrative offices | | | Lease | | |

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

| Hoofddorp, Netherlands | | | European Headquarters | | | Lease | | |

As of February [removed: 9, 2021,] [added: 11, 2022,] there were [removed: 395] [added: 390] holders of record of our common stock.

During the three months ended December 31, [removed: 2020,] [added: 2021,] we repurchased shares of common stock as described below:

[removed: (1) As] [added: (1)As] of December 31, [removed: 2020,] [added: 2021,] our Board of Directors had approved the repurchase of up to 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: 2020,] [added: 2021,] and no repurchase programs expired during the period.

[removed: (2) During] [added: (2)During] the three months ended December 31, [removed: 2020,] [added: 2021,] we received [removed: 27,124] [added: 101] shares of our common stock that were surrendered by employees in payment for the required withholding taxes due on the vesting of restricted stock units and settlement of deferred stock units.

During the year ended December 31, [removed: 2020,] [added: 2021,] we repurchased approximately [removed: 0.7] [added: 1.3] million shares of our common stock in transactions made pursuant to our repurchase program and received approximately [removed: 0.06] [added: 0.03] million shares of [added: our] common stock that were surrendered by employees in payment for the minimum required withholding taxes due on the vesting of restricted stock units and settlement of deferred stock units.

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

Repurchases of Common Stock" to the consolidated financial statements for the year ended December 31, [removed: 2020,] [added: 2021,] included in this Annual Report on Form 10-K for further information.

This graph assumes the investment of $100 on December 31, [removed: 2015,] [added: 2016,] 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: 2015] [added: 2016] to [removed: 2020.][added: 2021.]

[removed: ][added: ]

| | | | | | | [removed: 12/31/2015] [added: 12/31/2016] | | | | | | [removed: 12/31/2016] [added: 12/31/2017] | | | | | | [removed: 12/31/2017] [added: 12/31/2018] | | | | | | [removed: 12/31/2018] [added: 12/31/2019] | | | | | | [removed: 12/31/2019] [added: 12/31/2020] | | | | | | [removed: 12/31/2020] [added: 12/31/2021] | | |

| October 1, 2021 to October 31, 2021 | | | | | | 101,855 | | | | | | $ | 632.26 | | | | | 101,855 | | | | | | 5,280,968 | | |

| November 1, 2021 to November 30, 2021 | | | | | | 129,176 | | | | | | $ | 629.38 | | | | | 129,174 | | | | | | 5,151,794 | | |

| December 1, 2021 to December 31, 2021 | | | | | | 159,662 | | | | | | $ | 619.88 | | | | | 159,563 | | | | | | 4,992,231 | | |

| Total | | | | | | 390,693 | | | (2) | | | | | | | | | 390,592 | | | | | | 4,992,231 | | |

| IDEXX Laboratories, Inc. | | | | | | $100.00 | | | | | | $133.35 | | | | | | $158.63 | | | | | | $222.67 | | | | | | $426.26 | | | | | | $561.49 | | |

| NASDAQ Index | | | | | | $100.00 | | | | | | $129.64 | | | | | | $125.96 | | | | | | $172.18 | | | | | | $249.51 | | | | | | $304.85 | | |

| S&P 500 Index | | | | | | $100.00 | | | | | | $121.83 | | | | | | $116.49 | | | | | | $153.17 | | | | | | $181.35 | | | | | | $233.41 | | |

| S&P 500 Health Care Index | | | | | | $100.00 | | | | | | $122.08 | | | | | | $129.97 | | | | | | $157.04 | | | | | | $178.15 | | | | | | $224.71 | | |

| 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.

| 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 | | |

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

Based on the evaluation of our disclosure controls and procedures at December 31, [removed: 2020,] [added: 2021,] 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.

- Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material [added: adverse] effect on the financial statements.

Based on this evaluation, we concluded that, at December 31, [removed: 2020,] [added: 2021,] our internal control over financial reporting was effective.

The effectiveness of the Company's internal control over financial reporting at December 31, [removed: 2020,] [added: 2021,] 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: 2020,] [added: 2021,] that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART III

Not applicable.

PART III

The information required by this Item with respect to Directors, executive officers, compliance with Section 16(a) of the Exchange Act, our code of ethics and corporate governance is omitted from this Annual Report on Form 10-K and, pursuant to Regulation 14A of the Exchange Act, is incorporated herein by reference from the sections entitled “Corporate Governance - Proposal One - Election of Directors,” “Executive Officers,” “Stock Ownership Information - Delinquent Section 16(a) Reports,” “Corporate Governance – Corporate Governance Guidelines and Code of [removed: Ethics”] [added: Ethics,”] and “Corporate Governance –Board Committees” in the Company’s definitive Proxy Statement with respect to its [removed: 2021] [added: 2022] 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 [removed: –Board] [added: – Board] Committees – Compensation [added: and Talent] Committee – Compensation [added: and Talent] Committee Interlocks and Insider [removed: Participation”] [added: Participation,”] and “Compensation [added: and Talent] Committee Report” in the Company’s definitive Proxy Statement with respect to its [removed: 2021] [added: 2022] 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: 2021] [added: 2022] 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: 2021] [added: 2022] 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: 2021] [added: 2022] 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: 2021] [added: 2022] Annual Meeting, which Proxy Statement will be filed with the SEC within 120 days after the end of the fiscal year covered by this report.

| [removed: (a) (1)] [added: (a)(1)] and [removed: (a) (2)] [added: (a)(2)] | | | | | | 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. | | |

| [Report of Independent Registered Public Accounting [removed: Firm](#i1f6e15ac4f474568883062210711adbf_154)] [added: Firm](#i5d795a6851d746ca914a2ddae761c329_151) [\- PCAOB ID](#i5d795a6851d746ca914a2ddae761c329_151) [](#i5d795a6851d746ca914a2ddae761c329_151)[](#i5d795a6851d746ca914a2ddae761c329_151)[No.](#i5d795a6851d746ca914a2ddae761c329_151) [](#i5d795a6851d746ca914a2ddae761c329_151)238] | | | [removed: [F-](#i1f6e15ac4f474568883062210711adbf_154)[2](#i1f6e15ac4f474568883062210711adbf_154)] [added: [F-](#i5d795a6851d746ca914a2ddae761c329_151)[2](#i5d795a6851d746ca914a2ddae761c329_151)] | | |

| [Consolidated Balance Sheets as of December 31, [removed: 2020 and 2019](#i1f6e15ac4f474568883062210711adbf_157)] [added: 202](#i5d795a6851d746ca914a2ddae761c329_154)[1](#i5d795a6851d746ca914a2ddae761c329_154) [and 20](#i5d795a6851d746ca914a2ddae761c329_154)[20](#i5d795a6851d746ca914a2ddae761c329_154)] | | | [removed: [F-](#i1f6e15ac4f474568883062210711adbf_157)[4](#i1f6e15ac4f474568883062210711adbf_157)] [added: [F-](#i5d795a6851d746ca914a2ddae761c329_154)[4](#i5d795a6851d746ca914a2ddae761c329_154)] | | |

| [Consolidated Statements of Income for the Years Ended December 31, [removed: 2020, 2019 and 2018](#i1f6e15ac4f474568883062210711adbf_163)] [added: 202](#i5d795a6851d746ca914a2ddae761c329_157)[1](#i5d795a6851d746ca914a2ddae761c329_157)[, 20](#i5d795a6851d746ca914a2ddae761c329_157)[20](#i5d795a6851d746ca914a2ddae761c329_157) [and 201](#i5d795a6851d746ca914a2ddae761c329_157)[9](#i5d795a6851d746ca914a2ddae761c329_157)] | | | [removed: [F-](#i1f6e15ac4f474568883062210711adbf_163)[5](#i1f6e15ac4f474568883062210711adbf_163)] [added: [F-](#i5d795a6851d746ca914a2ddae761c329_157)[5](#i5d795a6851d746ca914a2ddae761c329_157)] | | |

| [Consolidated Statements of Comprehensive Income for the Years Ended December 31, [removed: 2020, 2019 and 2018](#i1f6e15ac4f474568883062210711adbf_166)] [added: 202](#i5d795a6851d746ca914a2ddae761c329_160)[1](#i5d795a6851d746ca914a2ddae761c329_160)[, 20](#i5d795a6851d746ca914a2ddae761c329_160)[20](#i5d795a6851d746ca914a2ddae761c329_160) [and 201](#i5d795a6851d746ca914a2ddae761c329_160)[9](#i5d795a6851d746ca914a2ddae761c329_160)] | | | [removed: [F-](#i1f6e15ac4f474568883062210711adbf_166)[6](#i1f6e15ac4f474568883062210711adbf_166)] [added: [F-](#i5d795a6851d746ca914a2ddae761c329_160)[6](#i5d795a6851d746ca914a2ddae761c329_160)] | | |

| [Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, [removed: 2020, 2019 and 2018](#i1f6e15ac4f474568883062210711adbf_172)] [added: 202](#i5d795a6851d746ca914a2ddae761c329_163)[1](#i5d795a6851d746ca914a2ddae761c329_163)[, 20](#i5d795a6851d746ca914a2ddae761c329_163)[20](#i5d795a6851d746ca914a2ddae761c329_163) [and 201](#i5d795a6851d746ca914a2ddae761c329_163)[9](#i5d795a6851d746ca914a2ddae761c329_163)] | | | [removed: [F-](#i1f6e15ac4f474568883062210711adbf_172)[7](#i1f6e15ac4f474568883062210711adbf_172)] [added: [F-](#i5d795a6851d746ca914a2ddae761c329_163)[7](#i5d795a6851d746ca914a2ddae761c329_163)] | | |

| [Consolidated Statements of Cash Flows for the Years Ended December 31, [removed: 2020, 2019 and 2018](#i1f6e15ac4f474568883062210711adbf_178)] [added: 202](#i5d795a6851d746ca914a2ddae761c329_166)[1](#i5d795a6851d746ca914a2ddae761c329_166)[, 20](#i5d795a6851d746ca914a2ddae761c329_166)[20](#i5d795a6851d746ca914a2ddae761c329_166) [and 201](#i5d795a6851d746ca914a2ddae761c329_166)[9](#i5d795a6851d746ca914a2ddae761c329_166)] | | | [removed: [F-](#i1f6e15ac4f474568883062210711adbf_178)[8](#i1f6e15ac4f474568883062210711adbf_178)] [added: [F-](#i5d795a6851d746ca914a2ddae761c329_166)[8](#i5d795a6851d746ca914a2ddae761c329_166)] | | |

| [Notes to Consolidated Financial [removed: Statements](#i1f6e15ac4f474568883062210711adbf_181)] [added: Statements](#i5d795a6851d746ca914a2ddae761c329_169)] | | | [removed: [F-](#i1f6e15ac4f474568883062210711adbf_181)[9](#i1f6e15ac4f474568883062210711adbf_181)] [added: [F-](#i5d795a6851d746ca914a2ddae761c329_169)[9](#i5d795a6851d746ca914a2ddae761c329_169)] | | |

We have audited the accompanying consolidated balance sheets of IDEXX Laboratories, Inc. and its subsidiaries (the “Company”) as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the related consolidated statements of income, [added: of] comprehensive income, [removed: stockholders’] [added: of stockholders'] equity (deficit) and [added: of] cash flows for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] including the related notes (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: 2020,] [added: 2021,] 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: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2020] [added: 2021] 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: 2020,] [added: 2021,] based on criteria established in [removed: Internal] [added: *Internal] Control - Integrated [removed: Framework] [added: Framework*] (2013) issued by the COSO.

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

As described in Note 3 to the consolidated financial statements, the Company recognized revenue associated with instruments totaling [removed: $109.0] [added: $149.1] million for the year ended December 31, [removed: 2020,] [added: 2021,] the majority of which were sales under customer commitment programs.

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

| | | | December 31, [removed: 2020] [added: 2021] | | | | | | December 31, [removed: 2019] [added: 2020] | | |

| Cash and cash equivalents | | | $ | [removed: 383,928] [added: 144,454] | | | | | $ | [removed: 90,326] [added: 383,928] | |

| Accounts receivable, net of [removed: reserves] [added: allowance] of [removed: $6,784] [added: $5,668] in [removed: 2020] [added: 2021] and [removed: $3,581] [added: $6,784] in [removed: 2019] [added: 2020] | | | [removed: 331,429] [added: 368,348] | | | | | | [removed: 269,312] [added: 331,429] | | |

| Inventories | | | [removed: 209,873] [added: 269,030] | | | | | | [removed: 195,019] [added: 209,873] | | |

| Other current assets | | | [removed: 137,508] [added: 173,823] | | | | | | [removed: 124,982] [added: 137,508] | | |

| Total current assets | | | [removed: 1,062,738] [added: 955,655] | | | | | | [removed: 679,639] [added: 1,062,738] | | |

| Property and equipment, net | | | [removed: 555,167] [added: 587,667] | | | | | | [removed: 533,845] [added: 555,167] | | |

| Operating lease right-of-use assets | | | [removed: 91,171] [added: 105,101] | | | | | | [removed: 80,607] [added: 91,171] | | |

| Goodwill | | | [removed: 243,347] [added: 359,345] | | | | | | [removed: 239,724] [added: 243,347] | | |

| Intangible assets, net | | | [removed: 52,543] [added: 99,035] | | | | | | [removed: 58,468] [added: 52,543] | | |

| Other long-term assets | | | [removed: 289,595] [added: 330,400] | | | | | | [removed: 240,192] [added: 289,595] | | |

| Total long-term assets | | | [removed: 1,231,823] [added: 1,481,548] | | | | | | [removed: 1,152,836] [added: 1,231,823] | | |

| TOTAL ASSETS | | | $ | [removed: 2,294,561] [added: 2,437,203] | | | | | $ | [removed: 1,832,475] [added: 2,294,561] | |

| Accounts payable | | | $ | [removed: 74,558] [added: 116,140] | | | | | $ | [removed: 72,172] [added: 74,558] | |

| Accrued liabilities | | | [removed: 415,648] [added: 458,909] | | | | | | [removed: 322,938] [added: 415,648] | | |

| Line of credit | | | [removed: —] [added: 73,500] | | | | | | [removed: 288,765] [added: —] | | |

| Current portion of long-term debt | | | [removed: 49,988] [added: 74,996] | | | | | | [removed: —] [added: 49,988] | | |

| Current portion of deferred revenue | | | [removed: 42,567] [added: 40,034] | | | | | | [removed: 41,462] [added: 42,567] | | |

| Total current liabilities | | | [removed: 582,761] [added: 763,579] | | | | | | [removed: 725,337] [added: 582,761] | | |

| Deferred income tax liabilities | | | [removed: 11,707] [added: 8,935] | | | | | | [removed: 33,024] [added: 11,707] | | |

| Long-term debt, net of current portion | | | [removed: 858,492] [added: 775,205] | | | | | | [removed: 698,910] [added: 858,492] | | |

| Long-term deferred revenue, net of current portion | | | [removed: 46,163] [added: 41,174] | | | | | | [removed: 48,743] [added: 46,163] | | |

| Long-term operating lease liabilities | | | [removed: 77,039] [added: 87,377] | | | | | | [removed: 67,472] [added: 77,039] | | |

| Other long-term liabilities | | | [removed: 85,604] [added: 70,941] | | | | | | [removed: 81,164] [added: 85,604] | | |

| Total long-term liabilities | | | [removed: 1,079,005] [added: 983,632] | | | | | | [removed: 929,313] [added: 1,079,005] | | |

| Total liabilities | | | [removed: 1,661,766] [added: 1,747,211] | | | | | | [removed: 1,654,650] [added: 1,661,766] | | |

February 16, 2022

| Net income | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 744,845 | | | | | | — | | | | | | — | | | | | | (1) | | | | | | 744,844 | | |

| Acquisition of noncontrolling interest (Note 4) | | | — | | | | | | — | | | | | | (284) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (706) | | | | | | (990) | | |

| Balance December 31, 2021 | | | 106,878 | | | | | | $ | 10,688 | | | | | $ | 1,377,320 | | | | | $ | 5,719 | | | | | $ | 2,920,440 | | | | | $ | (53,484) | | | | | $ | (3,570,691) | | | | | $ | — | | | | | $ | 689,992 | |

| Net income | | | | | | $ | 744,844 | | | | | $ | 582,131 | | | | | $ | 427,792 | |

| Payments of senior notes | | | | | | (50,000) | | | | | | — | | | | | | — | | |

| Purchase of minority interest | | | | | | (990) | | | | | | — | | | | | | — | | |

We also sell human medical point-of-care products and laboratory diagnostics.

Refer to "Note 3.

Refer to "Note 9.

Refer to "Note 6.

In July 2021, the FASB issued ASU 2021-05, “Leases (Topic 842); Lessors - Certain Leases with Variable Lease Payments.” ASU 2021-05 requires a lessor to classify a lease with variable payments that do not depend on an index or rate as an operating lease if another lease classification (i.e., sales-type or direct financing) would result in recognition of a day-one loss.

We have elected to adopt this standard as of the third quarter of 2021, on a prospective basis.

The adoption of ASU 2021-05 did not have a material impact on our consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Acquired Contract Assets and Contract Liabilities.” ASU 2021-08 is intended to improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination by providing consistent recognition guidance.

This standard is effective for fiscal years beginning after December 15, 2022.

Adoption of the ASU 2021-08 should be applied prospectively.

Early adoption is permitted, including in an interim period, for any period for which financial statements have not yet been issued.

We are currently evaluating the impact, if any, of ASU 2021-08 on our consolidated financial statements.

We recognize revenue associated with extended

If these up-front incentives are subsequently utilized to purchase instruments, we

Differences between estimated and actual customer purchases may impact the timing and amount of revenue recognition.

Impairments, revenue adjustments that relate to performance obligations satisfied in prior periods, and contract modifications during the years ended December 31, 2021 and 2020, were not material.

IDEXX Points that have not

| | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

From time to time, we may acquire small reference laboratories or radiology practices that we account for as either asset purchases or business combinations.

During the fourth quarter of 2021, we acquired the shares of a reference laboratory located in Finland for approximately $13.4 million in cash, including a holdback of approximately $1.4 million.

The fair values of the assets acquired consist of customer relationship intangibles of approximately $7.4 million, with a life of 10 years; a non-compete agreement of approximately $0.8 million, with a life of 3 years; approximately $5.3 million of goodwill, representing synergies within our broader CAG portfolio; and approximately $0.1 million in net tangible liabilities.

The purchase price allocation is

subject to revision as additional information becomes available regarding review of taxes and the settlement of the working capital adjustment.

Goodwill related to this acquisition is not expected to be deductible for tax purposes.

During the third quarter of 2021, we acquired the assets of a teleradiology business for approximately $5.4 million, including a contingent payment of $0.3 million.

This acquisition expands our current teleradiology capability.

The acquired assets primarily consist of a customer relationship intangible of approximately $1.7 million, with a weighted average life of 10 years, and approximately $3.7 million in goodwill.

The acquisition expenses were not material.

During the second quarter of 2021, we acquired the assets of the ezyVet cloud-based veterinary software businesses and the shares of ezyVet US, Inc., as well as the Vet Radar business assets, for approximately $157.2 million, including an estimated contingent payment of $5.0 million.

The acquired assets include the ezyVet cloud-native practice management system software and the Vet Radar cloud-based workflow management software.

The acquisition expands our cloud-based software offerings to support our customers with technology solutions that raise the standards of care for patients and improve practice efficiency.

The fair values of assets acquired were as follow: approximately $32.0 million in customer-related intangible with a weighted average life of 10 years; approximately $8.4 million in technology-related intangibles with a weighted average life of 6 years; approximately $2.4 million in trademarks with a weighted average life of 14 years; approximately $1.8 million in non-compete agreements with a weighted average life of 5 years; approximately $109.4 million in goodwill, representing synergies within our broader CAG portfolio; and approximately $3.2 million in net tangible assets.

Goodwill has been allocated to multiple reporting units based upon the fair value of projected earnings as of the date of the acquisition.

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*Changes in Accounting Principles*

As discussed in Note 2 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.

February 12, 2021

| Balance December 31, 2017 | | | 104,275 | | | | | | $ | 10,428 | | | | | $ | 1,073,931 | | | | | $ | 5,988 | | | | | $ | 803,545 | | | | | $ | (36,470) | | | | | $ | (1,911,528) | | | | | $ | 264 | | | | | $ | (53,842) | |

| Cumulative effect of accounting changes from adoption of ASU 2014-09 and ASU 2016-06 | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (12,648) | | | | | | — | | | | | | — | | | | | | — | | | | | | (12,648) | | |

| Net income | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 377,031 | | | | | | — | | | | | | — | | | | | | 16 | | | | | | 377,047 | | |

| Purchases of marketable securities | | | | | | — | | | | | | — | | | | | | (87) | | |

| Proceeds from the sale and maturities of marketable securities | | | | | | — | | | | | | — | | | | | | 284,125 | | |

We also sell a line of portable electrolytes and blood gas analyzers and SARS-CoV-2 RT-PCR (COVID-19 test) used in the human diagnostics market.

See "Note 3.

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.

See "Note 9.

The functional currency of all except four of our subsidiaries is their local currency.

We adopted ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)," as of January 1, 2018, using the modified retrospective method for all contracts not completed as of the date of adoption.

See Note 6.

ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

Early adoption is permitted.

To the extent

which approximately 36%, 27%, 18%, 11%, and 8% are expected to be recognized during 2021, 2022, 2023, 2024, and thereafter, respectively.

customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.

During the third quarter of 2018, we acquired substantially all of the assets of a software company for $25.0 million.

This acquisition expands the IDEXX suite of veterinary software offerings and further underscores our commitment to investing in software innovations that advance the veterinary profession.

The fair value of the assets acquired consist of $2.6 million in technology intangible assets, $2.4 million in customer relationship intangible assets, $0.3 million of net liabilities, and $20.3 million of goodwill, representing synergies with our current software product offerings.

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| Outstanding as of December 31, 2019 | | | | | | 2,311 | | | | | | $ | 117.13 | | | | | | | | | | | | | |

| Granted | | | | | | 220 | | | | | | $ | 291.14 | | | | | | | | | | | | | |

| Exercised | | | | | | (562) | | | | | | $ | 71.65 | | | | | | | | | | | | | |

| Fully vested as of December 31, 2020 | | | | | | 1,057 | | | | | | $ | 106.91 | | | | | 5.3 | | | | | | $ | 415,229 | |

| Fully vested and expected to vest as of December 31, 2020 | | | | | | 1,933 | | | | | | $ | 148.61 | | | | | 6.3 | | | | | | $ | 678,994 | |

| Nonvested as of December 31, 2019 | | | | | | 258 | | | | | | $ | 150.50 | |

| Forfeited | | | | | | (11) | | | | | | $ | 178.95 | |

| Expected to vest as of December 31, 2020 | | | | | | 208 | | | | | | $ | 201.64 | |

31, 2020, 2019 and 2018, respectively.

See Note 2.

| 2021 | | | $ | 20,187 | |

| 2022 | | | 18,698 | | |

| 2023 | | | 13,556 | | |