IDEXX Laboratories Announces First Quarter Results€¦ · IDEXX VetLab® consumables generated 13%...

FOR IMMEDIATE RELEASE Contact: John Ravis, Investor Relations, 1-207-556-8155

IDEXX Laboratories Announces First Quarter Results ▪ Reports revenue growth of 9% on a reported and organic basis driven by Companion Animal

Group ("CAG") Diagnostics recurring revenue growth of 10% reported and organic

▪ Delivers EPS of $1.29, representing 10% growth on a reported basis and 13% on a comparable

constant currency basis

▪ Enhances its liquidity and financial flexibility by increasing its credit facility to $1 billion with

extended maturity to 2023 and issuing $200 million in 10-year, 2.5% fixed-rate notes

▪ Provides update on recent market and business trends, and steps taken to support customers,

protect employees and manage operating costs in the current environment

▪ Withdraws 2020 guidance due to the unpredictability of the duration and magnitude of impacts from the COVID-19 pandemic on veterinary service providers

WESTBROOK, Maine, April 30, 2020— IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in

veterinary diagnostics, veterinary practice software and water microbiology testing, today announced

first quarter results and business updates related to the 2019 novel coronavirus (COVID-19) pandemic

and its impact on market conditions.

First Quarter Results

The Company reports revenues of $626 million for the first quarter of 2020, an increase of 9% on a

reported and organic basis. First quarter results were driven by CAG Diagnostics recurring revenue

growth of 10% reported and organic, supported by double-digit organic gains in both U.S. and

International markets. Results were also supported by strong reported and organic revenue gains in the

Company’s Water and Livestock, Poultry and Dairy (“LPD”) businesses, aided in part by an estimated $5

million in accelerated stocking orders in these businesses related to the COVID-19 pandemic.

Earnings per diluted share (“EPS”) was $1.29 for the first quarter, reflecting benefits from strong CAG

Diagnostics recurring revenue gains and controlled operating expense growth, which supported

IDEXX Announces First Quarter Results April 30, 2020 of 15

relatively flat operating margins on a reported basis compared to prior year levels and 30 basis points

of improvement on a constant currency basis.

“We are pleased to report excellent first quarter financial results, supported by continued double-digit

organic gains in CAG Diagnostics recurring revenues, despite late-quarter impacts from the expansion

of COVID-19-related stay-at-home policies and social distancing procedures. These results reflect

continued strong underlying demand globally for companion animal healthcare,” said Jay Mazelsky, the

Company's President and Chief Executive Officer. “We have seen near-term impacts on veterinary

practices related to the COVID-19 pandemic and have been closely monitoring the effect of social

distancing policies and industry care guidelines on our customers. IDEXX has continued to provide high

levels of service delivery and product support for its customers during this time, while advancing key

steps to protect the safety and health of its employees, ensure business continuity and mitigate the

near-term impacts on demand for IDEXX products and services. The pet-owner bond is stronger than

ever, and IDEXX’s strategy, opportunity and fundamentals remain intact, supported by our innovative

product portfolio and talented global team. We are very well-positioned for a strong recovery in the

highly attractive and resilient companion animal healthcare market. I am extremely proud of the way

our team is working together to respond during this time and thank them for their extraordinary

commitment to our Purpose.”

COVID-19 Pandemic Update

The primary impacts of the COVID-19 pandemic have been seen in IDEXX’s CAG business. While

veterinary care is widely recognized as an “essential” service for pet owners, and veterinarians continue

to deliver essential medical care for sick and injured pets, stay-at-home and social distancing policies

being deployed to combat the spread of COVID-19, and prioritization of sick and emergency testing at

veterinary clinics, have resulted in a decrease in companion animal clinical visits, including delay of

elective procedures and wellness visits.

As an example, tracking of weekly U.S. companion animal practice data, available in the Q1 2020

Earnings Snapshot accessible on the IDEXX website, www.idexx.com/investors, indicates year-over-year

declines of 15% - 30% in per practice clinical visits from the week ended March 27, 2020 through the

week ended April 24, 2020, with lower levels of decline in non-wellness visits and higher levels of

https://www.idexx.com/en/about-idexx/investors/


decline in wellness visits. These types of trends have contributed to year-over-year declines in demand

for IDEXX’s products and services during this period, with varying impacts by region and diagnostic

testing modality. These impacts are dynamic, and we have seen meaningful improvement in clinical

visit and diagnostic testing trends over the most recent two-week period ended April 24, driven by U.S.

and International regions where COVID-19 case management efforts have progressed further and

where stay-at-home and social distancing policies have been moderated.

Protecting Employee Health and Safety

In an effort to protect the health and safety of our workforce and their families and communities, the

majority of IDEXX employees have been enabled to work remotely during this time. The Company has

also implemented other measures, such as restricting travel where possible, to protect the health and

safety of our customers, their patients and our employees.

Maintaining Operations and Customer Service

Major IDEXX operations, such as global manufacturing, distribution and our network of reference

laboratories, are operating efficiently under enhanced health and safety precautionary measures, and

the Company is continuing to serve its customers globally. For Company employees involved in these

essential operations, we have implemented recommended best practices to protect the health and

safety of our workforce.

Operating Cost and Liquidity Management

The Company has taken proactive steps to prudently control costs in response to the COVID-19

pandemic, while ensuring the Company is well-positioned for a recovery in market conditions. We have

advanced actions to reduce quarterly operating expenses by approximately $25 million compared to

original plan levels. These actions include the temporary reduction of the salaries of our chief executive

officer by 30%, officers and senior executives by 20% and the majority of other salaried employees by

10%, which we intend to stop as market conditions improve, as well as the suspension of cash

compensation for IDEXX's Board of Directors. These savings will mitigate near-term financial impacts

from potential revenue declines related to COVID-19 stay-at-home policies and social distancing


procedures, which we estimate will flow through at high incremental gross margin rates associated

with CAG Diagnostics recurring revenues.

The Company is confident in its working capital and liquidity levels, supported by its high-return

recurring revenue business model with relatively low capital intensity. In April, the Company further

enhanced its liquidity and financial flexibility by issuing $200 million in 10-year, 2.5% fixed-rate

financing and securing an expanded $1 billion credit facility extended through 2023. We also have

suspended share repurchase activity.

Product Updates

In April, the Company made IDEXX SARS-CoV-2 (COVID-19) RealPCR™ Test for pets available to

veterinarians in response to customer demand and growing evidence that in rare cases pets living with

COVID-19 positive humans can be at risk for infection.

The Company’s human health business, OPTI Medical Systems, has advanced efforts in supporting

human COVID-19 testing with the development of a PCR test kit, enabled by IDEXX’s expertise in

livestock PCR test development and manufacturing. OPTI Medical Systems has applied for U.S. Food

and Drug Administration (FDA) Emergency Use Authorization (EUA) for OPTI SARS-CoV-2 RNA RT-PCR

laboratory test kit for the detection of SARS-CoV-2, the virus that causes COVID-19. The test kit provides

results in approximately 2 to 3.5 hours following RNA extraction and has been validated on commonly

available PCR instruments and extraction methods.

First Quarter Performance Highlights

Companion Animal Group

The Companion Animal Group generated 8% reported and 9% organic revenue growth for the quarter,

supported by CAG Diagnostics recurring revenue growth of 10% on a reported and organic basis. Global

CAG Diagnostics recurring revenues were trending above our full year goals for 11% to 12% organic

growth through early March, with overall first quarter CAG Diagnostics recurring revenue gains

constrained by late quarter impacts associated with the COVID-19 pandemic, including stay-at-home


policies, social distancing procedures and changes to industry guidelines to emphasize sick patient and

emergency procedures, which reduced clinical visits to veterinary practices and related diagnostic

testing volumes. While IDEXX’s premium instrument installed base expanded 15% compared to prior

year first quarter installed base levels and instrument placement trends were very strong through early

March, restrictions on access to veterinary practices also constrained instrument placements late in the

first quarter, contributing to declines in reported instrument revenues.

▪ IDEXX VetLab® consumables generated 13% reported and 14% organic revenue growth,

supported by ongoing expansion of our global premium instrument installed base, continued

strong customer retention, increases in testing utilization and moderate net price gains.

▪ Reference laboratory diagnostic and consulting services generated 9% reported and 8%

organic revenue growth, supported by volume gains with existing customers, moderate net

price realization and benefits from net customer additions.

▪ Rapid assay products generated reported and organic revenue growth of 6%, supported by

volume gains across our SNAP® portfolio of products, including SNAP 4Dx® Plus Test, high

customer retention rates and moderate net price gains.

Veterinary software, services and diagnostic imaging systems revenue grew 11% on a reported and

organic basis, driven by growth in subscription-based service revenues, supported by continued

expansion of our practice management platforms.

Water

Water achieved revenue growth of 13% on a reported basis and 15% on an organic basis in the first

quarter, including over $2 million or 8% of year-over-year estimated revenue growth benefit related to

timing of orders, including accelerated customer stocking orders related to the COVID-19 pandemic.

Livestock, Poultry and Dairy (“LPD”)

LPD generated revenue growth of 8% on a reported basis and 12% on an organic basis for the first

quarter, including approximately $3 million or 9% of year-over-year estimated revenue growth benefit

related to timing of orders, including accelerated customer stocking orders related to the COVID-19

pandemic. These results also reflect benefits from increases in African Swine Fever diagnostic testing


programs in Asia and poultry testing. These gains were constrained by lower herd health screening

levels, compared to strong prior year results.

Gross Profit and Operating Profit

Gross profits increased 8% on a reported basis and 10% on a constant currency basis. Gross margin of

57.4% was down slightly compared to prior year period results on a reported basis and was flat

compared to prior year period levels on a constant currency basis. Gross margin results reflected

favorable mix from strong consumable revenue growth, high Water revenue growth and lower CAG

Diagnostics instrument revenues, as well as benefits from moderate net price gains. These favorable

factors were offset by relatively lower reference lab margins associated with pressure on reference

laboratory revenues late in the quarter related to COVID-19 stay-at-home and social distancing policies,

as well as increased reference lab capacity investments advanced in 2019 and effects from the

integration of the Marshfield acquisition.

Operating margin was 23.0% in the quarter, 10 basis points lower than the prior year period results on

a reported basis and 30 basis points higher on a constant currency basis, supported by operating

expense leverage on high revenue growth. Operating expenses increased 9% on a reported and

constant currency basis, driven by increases in our CAG segment's sales and marketing costs and higher

general and administrative costs.

2020 Financial Outlook

The Company is withdrawing its previously announced full year 2020 guidance due to the

unpredictability of the duration and the magnitude of impacts from the COVID-19 pandemic on

veterinary service providers.

Conference Call and Webcast Information

IDEXX Laboratories, Inc. will be hosting a conference call today at 8:30 a.m. (EDT) to discuss its first

quarter 2020 results and management’s outlook. To participate in the conference call, dial 1-877-336-

4441 or 1-409-207-6985 and reference confirmation code 1103408. Individuals can access a live

webcast of the conference call through a link on the IDEXX website, www.idexx.com/investors. An

https://www.idexx.com/en/about-idexx/investors/


archived edition of the webcast will be available after 1:00 p.m. (EDT) on that day via the same link and

will remain available for one year.

2020 Annual Meeting of Shareholders

IDEXX Laboratories, Inc. will hold its 2020 Annual Meeting of Shareholders (the “2020 Annual

Meeting”) on Wednesday, May 6, 2020 at 10:00 a.m. (EDT). The 2020 Annual Meeting will be a virtual

meeting via an audio webcast at www.virtualshareholdermeeting.com/IDXX2020. The online pre-

meeting forum can be accessed before the 2020 Annual Meeting at www.proxyvote.com for beneficial

owners and www.proxyvote.com/idxx for registered shareholders. At this online pre-meeting forum,

you can submit questions in writing in advance of the 2020 Annual Meeting, vote, view the Rules of

Conduct and Procedures relating to the 2020 Annual Meeting and access copies of the Company's

proxy materials and annual report.

Shareholders as of the close of business on March 9, 2020 are entitled to attend the 2020 Annual

Meeting, vote their shares electronically and submit questions before and during the audio webcast.

The Company will publish the answer to each question submitted by our shareholders on the

Company's Investor Relations website as soon as practicable after the meeting. An archived replay will

also be available at www.virtualshareholdermeeting.com/IDXX2020 after the conclusion of the 2020

Annual Meeting and will remain available for one year. Further information on the 2020 Annual

Meeting can be found in the Company’s proxy materials.

About IDEXX Laboratories, Inc.

IDEXX Laboratories, Inc. is a member of the S&P 500® Index and is a leader in pet healthcare

innovation, serving practicing veterinarians around the world with a broad range of diagnostic and

information technology-based products and services. IDEXX products enhance the ability of

veterinarians to provide advanced medical care, improve staff efficiency and build more economically

successful practices. IDEXX is also a worldwide leader in providing diagnostic tests and information for

livestock and poultry and tests for the quality and safety of water and milk and point-of-care and

laboratory diagnostics for human medicine. Headquartered in Maine, IDEXX employs more than 9,000

people and offers products to customers in over 175 countries. For more information about IDEXX,

visit: www.idexx.com.

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About OPTI Medical Systems

OPTI Medical Systems, a subsidiary of IDEXX Laboratories, Inc., specializes in the design and

manufacturing of point-of-care and laboratory diagnostics for human medicine. OPTI Medical Systems

leverages advanced diagnostic technologies to develop reliable, cost-effective products that combine

accuracy with convenience, ease of use and clinical flexibility.

Note Regarding Forward-Looking Statements

This earnings release contains statements about the Company’s business prospects and estimates of the Company’s financial results for future periods that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are included above under "First Quarter Results", "COVID-19 Pandemic Update", "Operating Cost and Liquidity Management", "Product Updates", and elsewhere and can be identified by the use of words such as "expects", "may", "anticipates", "intends", "would", "will", "plans", "believes", "estimates", "projected", "should", and similar words and expressions. Our forward-looking statements include statements relating to, among other things, the impact of the COVID-19 pandemic; the estimated amount and impact of certain cost control measures; the impact of certain debt financing transactions and cash flow management measures; the working capital and liquidity outlook; and new products. These statements are intended to provide management's expectation of future events as of the date of this earnings release; are based on management's estimates, projections, beliefs and assumptions as of the date of this earnings release; and are not guarantees of future performance. These forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, among other things, the adverse impact, and the duration, of the effects of the ongoing COVID-19 pandemic on our business, results of operations, liquidity, financial condition and stock prices, as well as the other matters described under the headings "Business," "Risk Factors," "Legal Proceedings," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosures About Market Risk" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and in the corresponding sections of the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, as well as those described from time to time in the Company’s other filings with the U.S. Securities and Exchange Commission available at www.sec.gov. The Company specifically disclaims any obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

Statement Regarding Non-GAAP Financial Measures

The following defines terms and conventions and provides reconciliations regarding certain measures used in this earnings release and/or the accompanying earnings conference call that are not required by, or presented in accordance with, generally accepted accounting principles in the United States of America ("GAAP"), otherwise referred to as non-GAAP financial measures. To supplement the Company’s consolidated results presented in accordance with GAAP, the Company has disclosed non-GAAP financial measures that exclude or adjust certain items. Management believes these non-GAAP financial measures provide useful supplemental information for its and investors’ evaluation of the Company’s business performance and liquidity and are useful for period-over-period comparisons of the performance of the Company’s business and its liquidity and to the performance and liquidity of our peers. While management believes that these non-GAAP financial measures are useful in evaluating the Company’s business, this information should be considered as supplemental in nature and should not be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly titled measures reported by other companies. Constant currency - Constant currency references are non-GAAP financial measures which exclude the impact of changes in foreign currency exchange rates and are consistent with how management evaluates our performance and comparisons with prior and future periods. We estimated the net impacts of currency on our revenue, gross profit, operating profit, and EPS results by restating results to

IDEXX Announces First Quarter Results April 30, 2020 of 15 the average exchange rates or exchange rate assumptions for the comparative period, which includes adjusting for the estimated impacts of foreign currency hedging transactions and certain impacts on our effective tax rates. These estimated currency changes impacted first quarter 2020 results as follows: decreased gross profit growth by approximately 1.5%, decreased gross profit margin growth by 20 basis points, had an immaterial impact on operating expense growth, decreased operating profit growth by 3%, decreased operating profit margin growth by 40 basis points, and decreased EPS growth by 4%. Constant currency revenue growth represents the percentage change in revenue during the applicable period, as compared to the prior year period, excluding the impact of changes in foreign currency exchange rates. See the supplementary analysis of results below for revenue percentage change from currency for the three months ended March 31, 2020. Growth and organic revenue growth - All references to growth and organic growth refer to growth compared to the equivalent prior year period unless specifically noted. Organic revenue growth is a non-GAAP financial measure that excludes the impact of changes in foreign currency exchange rates and revenue from certain business acquisitions. See the supplementary analysis of results below for a reconciliation of reported revenue growth to organic revenue growth for the three months ended March 31, 2020. The percentage change in revenue resulting from acquisitions represents incremental revenues attributable to business acquisitions that have occurred since the beginning of the prior year period. We exclude only acquisitions that are considered to be a business from organic revenue growth. For more detail on what acquisitions we consider to be a business in computing organic growth, please see Management’s Discussion and Analysis of Financial Conditions and Results of Operations, Non-GAAP Financial Measures, contained in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020. Comparable constant currency EPS growth - Comparable constant currency EPS growth is a non-GAAP financial measure that excludes the impact of changes in foreign currency exchange rates and the tax benefits of share-based compensation activity under ASU 2016-09. Management believes comparable constant currency EPS growth is a more useful way to measure the Company’s business performance than EPS growth because it enables better period-over-period comparisons of the fundamental financial results by excluding items that vary independent of performance and provides greater transparency to investors regarding a key metric used by management. Share-based compensation tax benefits increased first quarter 2020 EPS by $0.08 per share compared to $0.06 per share in the first quarter of 2019. These impacts and those described in the constant currency note above reconcile reported EPS growth to comparable constant currency EPS growth for the first quarter of 2020. Free cash flow - Free cash flow is a non-GAAP financial measure and means, with respect to a measurement period, the cash generated from operations during that period, reduced by the Company’s investments in property and equipment. Management believes free cash flow is a useful measure because it indicates the cash the operations of the business are generating after appropriate reinvestment for recurring investments in property and equipment that are required to operate the business. See the supplementary analysis of results below for our calculation of free cash flow for the three months ended March 31, 2020 and 2019. Debt to Adjusted EBITDA (Leverage Ratios) - Adjusted EBITDA, gross debt, and net debt are non-GAAP financial measures. Adjusted EBITDA is a non-GAAP financial measure of earnings before interest, taxes, depreciation, amortization, non-recurring transaction expenses incurred in connection with acquisitions, share-based compensation expense, and certain other non-cash losses and charges. Management believes that reporting Adjusted EBITDA, gross debt and net debt in the Debt to Adjusted EBITDA ratios provides supplemental analysis to help investors further evaluate the Company's business performance and available borrowing capacity under the Company's credit facility. For further information on how Adjusted EBITDA and the Debt to Adjusted EBITDA ratios are calculated, see the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.


IDEXX Laboratories, Inc. and Subsidiaries Condensed Consolidated Statement of Operations Amounts in thousands except per share data (Unaudited)

Three Months Ended

March 31, 2020

March 31, 2019

Revenue: Revenue $626,336 $576,056 Expenses and Income: Cost of revenue 266,746 244,459

Gross profit 359,590 331,597 Sales and marketing 116,143 106,584 General and administrative 65,812 60,361 Research and development 33,310 31,514 Income from operations 144,325 133,138 Interest expense, net (7,552 ) (8,346 )

Income before provision for income taxes 136,773 124,792 Provision for income taxes 24,917 22,083 Net Income: Net income 111,856 102,709

Less: Noncontrolling interest in subsidiary's earnings 29 28

Net income attributable to stockholders $111,827 $102,681

Earnings per share: Basic $1.31 $1.19

Earnings per share: Diluted $1.29 $1.17 Shares outstanding: Basic 85,427 86,204 Shares outstanding: Diluted 86,705 87,549

IDEXX Laboratories, Inc. and Subsidiaries Selected Operating Information (Unaudited)

Three Months Ended

March 31, 2020

March 31, 2019

Operating Ratios Gross profit 57.4 % 57.6 % (as a percentage of revenue): Sales, marketing, general and administrative expense 29.1 % 29.0 %

Research and development expense 5.3 % 5.5 %

Income from operations1 23.0 % 23.1 %

1Amounts presented may not recalculate due to rounding.


IDEXX Laboratories, Inc. and Subsidiaries Segment Information Amounts in thousands (Unaudited)

Three Months Ended Three Months Ended

March 31, 2020

Percent of Revenue

March 31, 2019

Percent of Revenue

Revenue: CAG $551,996 $508,918 Water 34,149 30,310 LPD 34,154 31,506 Other 6,037 5,322 Total $626,336 $576,056 Gross Profit1: CAG $309,343 56.0 % $287,670 56.5 %

Water 24,749 72.5 % 22,147 73.1 %

LPD 22,312 65.3 % 19,049 60.5 %

Other 3,186 52.8 % 2,731 51.3 %

Total $359,590 57.4 % $331,597 57.6 %

Income from Operations1: CAG $118,659

21.5 % $111,719

22.0 %

Water 15,882 46.5 % 13,815 45.6 %

LPD 9,663 28.3 % 6,289 20.0 %

Other 121 2.0 % 1,315 24.7 %

Total $144,325 23.0 % $133,138 23.1 %

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


IDEXX Laboratories, Inc. and Subsidiaries Revenues and Revenue Growth Analysis by Product and Service Categories and by Domestic and International Markets Amounts in thousands (Unaudited)

Three Months Ended

March 31,

2020

March 31,

2019

Dollar

Change

Reported Revenue Growth1

Percentage

Change from

Currency

Percentage

Change from

Acquisitions

Organic Revenue Growth1 Net Revenue

CAG $551,996 $508,918 $43,078 8.5 % (0.9 %) 0.8 % 8.6 % United States 373,275 337,874 35,401 10.5 % — 1.1 % 9.3 % International 178,721 171,044 7,677 4.5 % (2.6 %) — 7.1 %

Water 34,149 30,310 3,839 12.7 % (2.8 %) — 15.4 % United States 16,941 14,604 2,337 16.0 % — — 16.0 % International 17,208 15,706 1,502 9.6 % (5.3 %) — 14.9 %

LPD 34,154 31,506 2,648 8.4 % (3.6 %) — 12.0 % United States 3,777 3,263 514 15.8 % — — 15.8 % International 30,377 28,243 2,134 7.6 % (4.0 %) — 11.6 %

Other 6,037 5,322 715 13.4 % — — 13.4 %

Total Company $626,336 $576,056 $50,280 8.7 % (1.1 %) 0.7 % 9.2 % United States 396,783 358,288 38,495 10.7 % — 1.1 % 9.7 % International 229,553 217,768 11,785 5.4 % (3.0 %) — 8.4 %

Three Months Ended

March 31, 2020

March 31, 2019

Dollar Change

Reported Revenue Growth1

Percentage Change

from Currency

Percentage Change

from Acquisitions

Organic Revenue Growth1 Net CAG Revenue

CAG Diagnostics recurring revenue: $487,925 $443,791 $44,134 9.9 % (0.9 %) 0.9 % 10.0 % IDEXX VetLab consumables 188,713 167,211 21,502 12.9 % (1.3 %) — 14.1 % Rapid assay products 57,430 54,431 2,999 5.5 % (0.5 %) — 6.1 % Reference laboratory diagnostic and consulting services 220,261

202,658

17,603

8.7 % (0.7 %) 1.9 % 7.5 %

CAG Diagnostics services and accessories 21,521

19,491

2,030

10.4 % (1.2 %) —

11.6 %

CAG Diagnostics capital – instruments 23,833

28,749

(4,916 ) (17.1 %) (1.3 %) —

(15.8 %)

Veterinary software, services and diagnostic imaging systems 40,238

36,378

3,860

10.6 % (0.2 %) —

10.8 %

Net CAG revenue $551,996 $508,918 $43,078 8.5 % (0.9 %) 0.8 % 8.6 %

1See Statements Regarding Non-GAAP Financial Measures, above. Amounts presented may not recalculate due to rounding.


IDEXX Laboratories, Inc. and Subsidiaries Condensed Consolidated Balance Sheet Amounts in thousands (Unaudited) March 31,

2020 December 31,

2019 Assets: Current Assets:

Cash and cash equivalents $81,395 $90,326 Accounts receivable, net 299,983 269,312 Inventories 211,644 195,019 Other current assets 128,329 124,982 Total current assets 721,351 679,639 Property and equipment, net 546,158 533,845 Other long-term assets, net 618,736 618,991 Total assets $1,886,245 $1,832,475 Liabilities and Stockholders' Equity: Current Liabilities:

Accounts payable $74,210 $72,172 Accrued liabilities 247,179 322,938 Line of credit 486,824 288,765 Deferred revenue 38,028 41,462 Total current liabilities 846,241 725,337 Long-term debt 697,363 698,910 Other long-term liabilities, net 234,586 230,403 Total long-term liabilities 931,949 929,313 Total stockholders' equity 107,674 177,473 Noncontrolling interest 381 352 Total stockholders' equity 108,055 177,825 Total liabilities and stockholders' equity $1,886,245 $1,832,475

IDEXX Laboratories, Inc. and Subsidiaries Select Balance Sheet Information (Unaudited)

March 31,

2020 December 31,

2019 September 30,

2019 June 30,

2019 March 31,

2019

Selected Balance Sheet Information: Days sales outstanding1 41.5

40.5 41.8

41.7 42.0

Inventory turns2 1.9 2.2 2.0 2.1 2.0

1Days sales outstanding represents the average of the accounts receivable balances at the beginning and end of each quarter divided by revenue for that quarter, the result of which is then multiplied by 91.25 days.

2Inventory turns represent inventory-related cost of product revenue for the twelve months preceding each quarter-end divided by the average inventory balances at the beginning and end of each quarter.


IDEXX Laboratories, Inc. and Subsidiaries Condensed Consolidated Statement of Cash Flows Amounts in thousands (Unaudited)

Three Months Ended

March 31, 2020

March 31, 2019

Operating: Cash Flows from Operating Activities: Net income $111,856 $102,709 Non-cash charges 37,557 31,611 Changes in assets and liabilities (121,542 ) (99,942 )

Net cash provided by operating activities 27,871 34,378 Investing: Cash Flows from Investing Activities:

Purchases of property and equipment (49,002 ) (38,206 )

Acquisition of intangible assets (668 ) — Net cash used by investing activities (49,670 ) (38,206 ) Financing: Cash Flows from Financing Activities:

Repayments on revolving credit facilities, net 198,110 (52,024 )

Issuance of senior notes — 100,000 Debt issuance costs — (30 )

Payment of acquisition-related contingent consideration — (573 )

Repurchases of common stock (182,815 ) (54,302 )

Proceeds from exercises of stock options and employee stock purchase plans 10,210 11,551

Shares withheld for statutory tax withholding on restricted stock (8,604 ) (7,403 )

Net cash provided (used) by financing activities 16,901 (2,781 )

Net effect of changes in exchange rates on cash (4,033 ) (569 )

Net decrease in cash and cash equivalents (8,931 ) (7,178 )

Cash and cash equivalents, beginning of period 90,326 123,794 Cash and cash equivalents, end of period $81,395 $116,616

IDEXX Laboratories, Inc. and Subsidiaries Free Cash Flow Amounts in thousands except per share data (Unaudited)

Three Months Ended

March 31, 2020

March 31, 2019

Free Cash Flow: Net cash provided by operating activities $27,871 $34,378 Investing cash flows attributable to purchases of property and equipment (49,002 ) (38,206 )

Free cash flow1 ($21,131 ) ($3,828 )

1See Statements Regarding Non-GAAP Financial Measures, above.


IDEXX Laboratories, Inc. and Subsidiaries Common Stock Repurchases Amounts in thousands except per share data (Unaudited)

Three Months Ended

March 31, 2020

March 31, 2019

Shares repurchased in the open market 721 267 Shares acquired through employee surrender for statutory tax withholding 30 36 Total shares repurchased 751 303 Cost of shares repurchased in the open market $179,623 $53,862 Cost of shares for employee surrenders 8,604 7,403 Total cost of shares $188,227 $61,265 Average cost per share – open market repurchases $249.20 $201.41 Average cost per share – employee surrenders $288.78 $206.35 Average cost per share – total $250.77 $202.00

Jay Mazelsky

Thanks, and good morning, everyone. Welcome to the call. Today, we are pleased to report strong Q1

results, despite late quarter impacts from the COVID-19 crisis. As we will discuss, the COVID-19

pandemic is impacting our care customers in unusual ways, given broad based social distancing efforts,

which are changing the ways veterinarians are prioritizing and providing care.

We are working through these near-term dynamics, ensuring that we are fully supporting these essential

health services in a way that prioritizes our customers’ needs. We are doing this while we continue to

advance our business strategy.

Today, Brian will review our Q1 results and provide an update on current trends that we are seeing in our

markets and our business. He will also describe the steps that were taken to mitigate near-term impacts

and position ourselves for a strong and sustained recovery in the highly attractive pet health care market. I

will then talk more about how we are seeing trends evolve in the market and how we are managing our

business for the near-term and the long-term in this context.

Now, I will turn the call over to Brian.

Brian McKeon

Thanks, Jay, and good morning, everyone. We will be using a somewhat different format for today’s

financial review. I will begin with an overview of our first quarter financial results, which resulted in

solid revenue and profit gains despite late quarter impacts related to the COVID-19 pandemic. We will

then spend time discussing the near-term dynamics that we are seeing in the companion animal health

care market, including evolving impacts from COVID-19 containment approaches on clinical visits and

diagnostic testing levels. We will review how we plan to manage in this environment and highlight the

steps we have taken to mitigate near-term P&L impacts and strengthen our balance sheet and flexibility to

position our business for a strong recovery.

While we are optimistic about the ability of the pet health care market and IDEXX’s business in particular

to rebound strongly from near-term COVID-19 effects we are withdrawing our full-year financial

guidance as we work through these dynamics. As such, we won’t be providing an update on that front

today. Let’s start with an overview of our Q1 results.

IDEXX delivered 9% organic revenue growth in the first quarter, supported by 10% growth in CAG

Diagnostics recurring revenues, reflecting double-digit gains across both U.S. and international markets,

as well as solid gains in our Water and LPD businesses. Overall, organic revenue growth benefited by less

than 1% from accelerated stocking orders in our Water and LPD businesses related to the COVID-19

pandemic.

Through early March, global CAG Diagnostics recurring revenue gains were trending very strongly,

above the high end of our full-year goals for 11% to 12% organic growth. We were also tracking towards

an excellent instrument placement quarter driven by continued momentum in new and competitive

catalysts placements globally. These gains were against a backdrop of improved market trends, reflected

in 4% same-store growth in U.S. clinical visits through this period.

As social distancing policies advanced more broadly in Europe and the U.S. through March and as vet

clinics adapted to prioritize health care procedures to align with industry and government guidelines, we

saw significant declines in clinical visit activity and restriction on access to vet clinics, which moderated

our Q1 revenue gains. Despite these impacts, our business momentum enabled strong overall Q1 organic

revenue growth across our modalities.

Global Reference Lab revenues increased 9%, reflecting 8% organic gains and approximately 2% growth

benefit from acquisitions, offset by a 1% FX headwind. Through early March, Global Lab organic growth

rates were excellent, driven by continued mid teen organic revenue growth in the U.S. and high single-

digit gains in international markets. For Q1 overall, late quarter social distancing impacts constrained U.S.

lab organic growth to high single-digit rates and international lab organic growth to the low-to-mid

single-digit range.

IDEXX VetLab consumable revenues increased 14% on an organic basis, despite late quarter COVID-19

impacts, reflecting low double-digit gains in the U.S. and mid-teen growth in international markets.

Our consumable revenue growth results through early March were also very strong benefiting from an

expanded premium instrument installed base, sustained high levels of customer retention and continued

gains in testing utilization.

The quality of CAG instrument placements remained high in Q1 reflected in 238 catalysts placements at

new and competitive accounts in North America and 698 new and competitive placements in international

markets. We also benefited from 273 second catalyst placements driven by momentum with North

American customers.

These gains and sustained high customer retention levels supported a 17% year-on-year growth in our

global catalyst install base. We also achieved 760 premium hematology placements and 408 SediVue

placements bringing our global SediVue install base to over 9300 instruments, up 32% year-on-year.

Restriction on access to vet clinics in late March led to deferrals of quarter-end in placements, however,

which contributed to year-on-year instrument organic revenue declines of 16% overall in the first quarter.

Rapid Assay revenues increased 6% organically in Q1 despite late quarter COVID-19 impacts supported

by solid volume growth in SNAP 4Dx Plus first-generation and specialty products and moderate net price

gains. First quarter results reflected normal promotional and customer stocking activity, which supported

volume gains ahead of the peak testing season.

In other areas of our CAG business, our veterinary software and diagnostic imaging revenues achieved

11% organic growth, supported by continued strong gains in recurring service revenues, as well as

sustained solid sales of new Cornerstone and digital imaging systems, and strong growth in our Neo and

SmartFlow cloud-based software offerings. Overall gains were also constrained by COVID-19 related

impacts on vet clinics late in Q1, which led to a deferral of new software and digital system installations.

Turning to our other business segments, we saw a strong performance in our Water and LPD businesses

in Q1. Water revenues increased 15% organically, including an estimated $2 million or 8% growth rate

benefit from accelerated stocking orders. Overall, our Water business demand has remained solid globally

as drinking water testing remains an essential service and priority for local governments and utilities.

Livestock, poultry, and dairy revenue increased 12% organically in Q1, including approximately $3

million or 9% of growth rate benefit from accelerated stocking orders. LPD results benefited for demand

for -- from demand for diagnostic testing programs for African swine fever and improvement in core

swine testing volumes in China. We are also seeing continued solid growth for poultry testing.

Overall LPD gains were constrained in Q1 by lower herd health screening levels compared to strong prior

year results impacted by the rebuilding of herd populations in key Asia-Pacific markets, which is reducing

export supply. Livestock diagnostics are also considered essential services supporting continued demand

for LPD products.

Turning to the P&L, profit results were strong in Q1 benefiting from solid revenue gains and controlled

operating expense growth. Operating profit in Q1 increased 8% as reported and 11% on a constant

currency basis, driven by solid operating profit growth across our CAG Water and LPD segments.

Operating margins increased approximately 30 basis points on a constant currency basis, reflecting

operating expense leverage on strong revenue gains. Gross profit increased 8% as reported or 10% on a

constant currency basis in Q1.

Gross margins were relatively flat year-on-year on a constant currency basis, as benefits from strong

Consumable and Water growth and continued moderate net price gains were offset by relatively lower

margins in our Reference Lab business, reflecting late quarter pressure on lab revenues related to COVID-

19 impacts, lab capacity investments advanced in 2019 and effects from the integration of the Marshfield

acquisition.

Operating expenses in Q1 increased 9% as reported and on a constant currency basis. Operating expense

increases were driven by cost related to the expansion of our Global CAG commercial capability

advanced in 2019 and growth in corporate, general, and administrative costs, including the on-boarding of

our Westbrook Maine headquarters expansion.

During the quarter, we benefited from early efforts to prioritize investments and controlled discretionary

spending to mitigate emerging COVID-19 impacts. EPS in Q1 was a $1.29 per share including tax

benefits of $6.6 million or $0.08 per share related to share-based compensation activity. On a comparable

constant currency basis, EPS increased 13%. Overall, we are pleased to have delivered strong financial

results in Q1, despite late quarter headwinds related to the COVID-19 pandemic.

Let’s now spend some time discussing how social distancing policies and associated restrictions on

business activity are impacting veterinary clinic visits and our CAG business in the near-term. Clinical

visits have been impacted significantly by the COVID-19 pandemic through the implementation of social

distancing protocols, as well as the industry guidelines for the prioritization of sick patient and emergency

procedures at vet clinics.

These dynamics can be seen in U.S. vet clinic tracking data, which is shown in the earnings snapshot on

our IR website. We have added weekly tracking data for 2020 clinical visits extended through the week

ended April 24th in the snapshot, as well as detail for wellness and non-wellness visits.

As shown in this data, for the first quarter through early March on a same-store basis, clinical visits were

up approximately 4% in the U.S., a solid improvement from 2019 trends. As social distancing procedures

expanded in March, we saw a sharp correction in these trends, with same-store U.S. clinical visits

declining approximately 25% for the weeks ended March 27th through April 10th with 15% to 20% year-

on-year declines in sick patient visits and 35% to 40% declines in wellness visits during this period.

We saw similar dynamics in European markets with more significant declines in severely impacted

regions like Italy and Spain, as well as markets which implemented more restrictive stay-at-home policies

like the U.K.

In addition to this clinical visit data, we have been monitoring rolling weekly averages for chemistry slide

run volumes and Rapid Assay runs through our global smart service connectivity, as well as rolling

weekly trends for accession volumes in our Reference Labs.

In the late March through the early to mid April period, we saw meaningful pressure on diagnostic testing

levels associated with the restrictions on veterinary clinical activity. These initial impacts were relatively

more significant in our Reference Lab and Rapid Assay businesses with average weekly volume declines

of approximately 30% in the U.S. and approximately 35% in Europe during this period, with more

moderate impacts in Asia-Pacific markets.

Testing volume in these modalities were impacted in part by the de-emphasis of wellness testing at clinics

as part of the pandemic response, consistent with industry guidelines. VetLab in clinic chemistry run

volumes to relatively less effective during this initial period reflected an approximately 20% run declines

in the U.S. and 25% declines in Europe. These metrics reflected lower test utilization levels, as well as

moderate reduction in the number of clinics actively operating during this initial high impact period.

Over the last two weeks, we have seen significant improvement in clinical visit and diagnostic testing

trends. These changes reinforced the high resilience of demand for companion animal health care and

may indicate that we work through the bottom of near-term COVID-19 effects on veterinary care.

For the most recent week ended April 24th, overall U.S. clinical visits declines have moderated to 15%

year-on-year with only 9% year-on-year declines for sick patient visits and 24% year-on-year declines for

wellness visits, with steady improvement across U.S. regions week by week. We are seeing similar

indications of improvement in European markets and in Asian regions which were impacted at an earlier

stage by the pandemic.

In terms of our business, we continue to see pressure on diagnostic testing levels. However, these impacts

have improved meaningfully. In the U.S. and Europe on a rolling seven-day basis, IDEXX VetLab

chemistry run declines have now moderated to approximately 5% year-on-year and Reference Lab

accession volume declines have moderated to 10% to 15% overall, with continued steady weekly

improvement across regions.

Chemistry slide runs in leading-edge markets like China have actually returned to double-digit growth

over the last eight weeks following the significant initial impacts on clinical activity. These changes vary

by region may change depending on region specific dynamics related to the COVID-19 pandemic, but

overall recent trends have been very encouraging.

As we track data on COVID-19 related impacts over time, some insights are emerging. One insight is that

most veterinary practices have sustained operations as an essential service through this initial high social

distancing period positioning the market for a strong recovery.

In the U.S., our tracking of the number of customers doing chemistry runs only declined to about 90% to

95% of prior year levels during the peak pressure period in early April and has now returned to prior

levels over the last two weeks.

Active customer tracking metrics have also rebounded strongly in Europe where we saw more meaningful

reduction in active clinic levels earlier in the COVID-19 expansion in lockdown regions like Italy and

Spain. We are seeing the same structural market strength in Asia-Pacific regions as well.

The second insight is that the effects on diagnostic testing levels appear to be heavily influenced by the

stage of development of COVID-19 case management and the associated stage of stay at home and social

distancing procedures.

There is a significant variation in the level of decline in diagnostic testing volumes by region. Regions

with higher relative COVID-19 cases and expanded lockdown policies have experienced much more

significant clinical visit and diagnostic testing volume declines.

As an example, clinical visits in the Northeast U.S. declined approximately 35% in late March to mid

April, while Southern U.S. regions decline approximately 20% during this period with more recent data

from Southern U.S. region showing year-on-year declines of less than 10% overall.

Internationally, near-term pressure and lab accession volumes in regions like Germany have been much

more moderate compared to markets with extended lockdown conditions like the U.K. and Canada.

In Asia-Pacific markets, we are also seeing moderated impact in regions that are farther along in terms of

managing pandemic effects, including recent solid growth in the IDEXX Lab chemistry runs in markets

like Australia, which has less restrictive social distancing controls.

This is dynamic we will continue to monitor and which is challenging to predict. Overall, it does appear

that as regions move past peak levels for COVID-19 cases and adjust stay at home and social distancing

procedures, near-term pressures on clinical visit activity and related diagnostic testing lessen significantly.

While we remain very optimistic about the health care market and IDEXX’s ongoing growth opportunity

reinforced by recent encouraging trends, COVID-19 pandemic effects will pressure our near-term revenue

results.

Given the high gross margin of our IDEXX VetLab and Rapid Assay products and our intent to sustain

our Reference Lab operating and service capability to position ourselves for recovery in demand as

market restrictions are lifted, we anticipate a high level of gross margin flow through impact from near-

term CAG Diagnostic recurring revenue pressures.

To mitigate these impacts, we have advanced prudent steps to reduce planned operating expenses by

approximately $25 million on a quarterly basis compared to the original plan levels. This includes

temporary reductions in salaries of 30% for the CEO, 20% for officers and senior executives, and 10% for

the majority of other salaried employees, which we plan to cease over time as business conditions

improve, as well as temporary freezing of 401(k) matching contributions and suspension of cash

compensation for IDEXX’s is Board of Directors

Our balance sheet is in a very strong position and we have taken additional steps to strengthen our

liquidity and flexibility to advance our business strategy and market position during this period. We

ended Q1 with leverage ratios of 1.70 times gross and 1.59 times net of cash, with $81 million in cash and

$360 million in capacity available on our then $850 million revolving credit facility.

In April we increase committed financing availability by $350 million by expanding our credit facility to

$1 billion under new three-year agreement and by issuing $200 million of 10-year 2.5% fixed rate notes.

In the current environment where prior to funding of our business operations and have suspended our

stock repurchase program.

Overall, we are very pleased with the strong momentum demonstrated in our business in Q1. We have got

a great business model and we are confident we can manage effectively through near-term impacts from

COVID-19 in our CAG business, while positioning ourselves for a strong recovery in the highly attractive

and resilient Companion Animal Health Care.

That concludes our financial review. I will now turn the call over to Jay for his comments.

Jay Mazelsky

Thank you, Brian, for your comments on Q1 financial performance. We are pleased with our solid Q1

results despite late quarter impacts from the COVID-19 crisis. We went into the year with strong

momentum and through early March, global CAG Diagnostics recurring revenue gains were trending

above the high end of our full-year goals for 11% to 12% organic growth.

We were still able to deliver 10 percentage points CAG Diagnostics recurring organic growth in Q1,

supported by double-digit growth in the U.S. and international in spite of impacts from China in the early

part of the quarter, from Italy in early March, and then for much of Europe and North America shortly

thereafter.

Instrument placements were excellent in Q1 resulting in sustained year over year levels of Catalyst EBI.

Our catalyst installed base grew 10% in North America and 25% internationally with the overall premium

instrument installed base increasing 15%. We developed a new remote installation process for

instruments, which also supported placements in impacted regions.

The IDEXX Preventive Care program enrollments also achieved record levels with approximately 400

new enrollees and more than 4,200 cumulative enrollments since program inception. This was

accomplished despite late quarter impacts from COVID-19.

Customers continue to embrace the IDEXX Preventive Care turnkey solution in record numbers and

increasingly view it as a foundational element of their care offering. Though we expect in some cases for

implementation to take a bit longer due to COVID-19 impacts, the IDEXX Preventive Care program will

be a key element of what we and our customers see as a recover-together plan for North America.

Our product innovations announced at VMX were launched on schedule and were enthusiastically greeted

by customers. Our digital cytology placements starting in early March were primarily sold to larger

IDEXX customers via our IDEXX 360 program. Customers are enthusiastic about our test promise,

results, and expert interpretation in under two hours, 24 hours a day, seven days a week, 365 days a year.

Catalyst Bile Acids with Reference Lab quality performance was also launched in the quarter. We are

pleased with the adoption to date with over 340 customers. SediVue Neural Network 5.0 updates began

rolling out in March and advanced bacteria detection kits starting to ship in April.

Our innovation highlights also included the announcement in Q1 that we would begin monitoring

clinically symptomatic pets for COVID-19 infection. We then announced in April that we would offer

this test commercially throughout the world based on a small number of confirmed COVID-19 cases in

cats, experiments that demonstrated the susceptibility of cats and ferrets, and veterinarian demands for

testing option. We expect this veterinary test to not have an impact on human COVID-19 testing or test

availability.

Additionally, the company’s human health business OPTI Medical Systems is advancing support of

human COVID-19 testing with a validated PCR test kit enabled by IDEXX’s expertise in livestock PCR,

test development and manufacturing. It is intended for limited initial distribution to existing customers,

including labs serving animal production needs that have been repurposed for human COVID-19 testing.

Moving to software, we saw excellent ongoing momentum in our software business, which I will speak to

later, with over 10% growth in PIMS placements in North America, record orders for SmartFlow and

with now over 4,800 customers on Web PACS subscriptions.

Moving to a quick update on our European core lab located in Kornwestheim, Germany. We have begun

testing and it remains on track to transition by the end of Q2. We are excited by the world-class

capabilities in this facility, which is 50% larger than our next biggest lab will bring to our European

Reference Lab customers. Our team has done an amazing job to stay on track despite the pandemic.

Finally, our Water and Livestock, Poultry and Dairy businesses, both performed solidly in Q1. Demand

for livestock diagnostics testing is also considered essential and we are seeing sustained solid demand in

our LPD business.

Brian highlighted some of the dynamics we are seeing in the market and our testing volumes from

COVID-19. Next I will discuss how we are managing in this environment, helping our customers and

positioning ourselves for the future.

Let’s start with how the COVID-19 pandemic is impacting the IDEXX workplace and employee safety.

Approximately 60% of our employees are now working from home. We have invested heavily and in

telephony and IT infrastructure over many years, so that we were able to transition a majority of our

employees home without missing a beat.

Still other jobs require employees to be on site like those in manufacturing, distribution and the Reference

Labs. We have instituted practices at these locations to minimize risk like staggered shifts or frequent and

deeper cleaning and local social distancing procedures.

Our teams continue to stay highly engaged and productive. Not only have we launched products on

schedule, like the previously mentioned digital cytology service, Catalyst Bile Acids and advanced

bacteria detection for SediVue, but we continue to advance our product pipeline, as our teams are

adapting to the new circumstances in highly creative ways.

Moving to how veterinary practices are being impacted. They are experiencing similar challenges as other

businesses based on client visits. The good news is that veterinary practice has been designated as

essential businesses throughout the U.S. and in almost all countries. The vast majority are open and

operating, and we are still performing essential services for their clients caring for sick and injured pets in

need of attention.

Demand for other services, including wellness visits and elective activities have slowed due to

government policies and guidance from veterinary organizations designed to control COVID-19 spread.

Though our veterinary customers are consequently seeing fewer patient visits at this point, volumes

impacted are in line with the aggressiveness of social distancing procedures.

Many services are only deferred, and we believe we will return relatively quickly as in past downturns

once the recovery begins. We believe the bond between people and their companion animal family

members is as strong as ever.

As Brian noted, we have seen dampened demand relatively more in our Reference Lab business versus

testing in the clinic. This is related in part to fewer preventive care visits versus those involving a sick

patient.

Further, practices like all businesses are also concerned with workplace and employee safety. They have

instituted practices like curbside drop off and pickup, remote check in and bill pay, along with the

creation of modified shifts for veterinary staff to ensure care team well-being and continuity for clients.

Our field service organization has played an important role helping customers make these required

adjustments to their practice workflow in this new COVID-19 environment.

IDEXX sales professionals have also adjusted well to this dynamic, continuing to generate demand for

our products and services. Virtual visits than our standard can be highly sophisticated. Our sales

professionals are using tools like WebEx for demos and DocuSign to bring pipeline deals across the line.

We also continue to visit practices when requested by a customer and with an appointment, abiding by

necessary safety procedures. Our in-person availability has been welcomed by customers and in April,

constituted about 25% of total U.S. visits.

Veterinarians look to business partners at all times, but even more so now to have sufficient product

supply on hand and be able to supply services like Reference Lab testing in an uninterrupted manner.

They want to focus on their businesses and now that their partners can handle theirs.

IDEXX has performed exceptionally well in this regard and we have high confidence that we can

continue to do so in the future. Our manufacturing operations are largely based in the U.S. and we have

excellent visibility to secondary suppliers for key components and products that we do not directly

manufacture.

Our Reference Lab performance has been especially noteworthy in light of the disrupted flight schedules,

challenging logistics and more complex workplace procedures to keep lab employee safe.

With over 80 labs worldwide, not unexpectedly, there have been a handful of instances where it needed to

temporarily shut a facility for a short time due to an employee being or suspected of being infectious.

Because of our network lab capability across regions and geographies, we were able to seamlessly toggle

to an alternative lab without service disruption or deterioration.

These capabilities are unique in the industry and only possible because we have made significant

investments over a very long period of time in lab density, common lab’s information management

systems, and courier route and logistics capability. We also deployed a global lab digital cytology service

in the middle of all of this, another example of global agility and advantage.

Our commercial execution also continues to be noteworthy. Our expansion in the U.S. was completed

going into Q1 and the team seamlessly settled into the new territories and account assignments. Our

account managers continue to call on customers with similar frequency, but now the majority of visits are

virtual.

Our European commercial team continues to mature in the VDC model and is also performing at a high

level. We entered into the year with record customer loyalty across modalities and all actions taken to

date have been taken with the long-term view to continue to earn this loyalty for years to come.

IDEXX veterinary software and services are also playing an important customer enabling role in this

pandemic. Right now, customers are being forced to rethink how they deliver patient care, and IDEXX’s

software solutions both new and existing to help them adapt.

The IDEXX telehealth offering includes a multiple third-party -- includes multiple third-party telehealth

integrations into our global PIMS offering, 90-day free secure remote access for our Cornerstone

customers, the ability to use SmartFlow through an iPad from their parking lot for curbside check-in, and

contactless payment processing integrated with their IDEXX PIMS. These capabilities enable customers

to deliver remote care, as well as continue to see patients in their practices while abiding by social

distancing guidelines.

We also believe that in the medium term, telehealth can expand demand for diagnostics, the deeper pet

owner client connections enabled by real time, convenient communications that millennial pet owners

expect and pet owners of all ages appreciate. Further, telehealth has a potential to expand patient access,

especially for cats, who comprise only approximately 20% of practice visits today.

Next, I will share a snapshot view of the health of the business. There are broad macroeconomic

uncertainties as to the depth and length of the impacts from COVID-19. Consequently, our focus has been

on what we can control in our plans for recovery.

We took quick and deliberate action to prudently control costs, while leaving us well-positioned for future

growth. These include a temporary salary reduction, reductions in our essential business and capital

expenses and a cessation of stock buybacks.

Our intent is to seize those reductions that are temporary like salary reductions as conditions improve.

Critically, these actions were taken in ways that allow us to preserve the considerable strategic

advantages, talent and organizational engagement we have as a company.

Our financial strength has allowed us to support veterinarians at a time when they need us most, and I

believe they will reward our approach with their business long into the future. We have taken practical

actions which extend payment terms for customers who need it, as well as to provide near term flexibility

for minimum commitments, while maintaining these long-term diagnostic partnership agreements with

customers.

Customers have given us and will continue to give us as much testing volume as possible. Our focus is

therefore to support the health of their practices and allow them to focus on delivering excellent medical

care in a challenging environment and when the time comes, support them as they quickly rebuild client

traffic.

We participate in great markets. Nothing has changed in this regard due to COVID-19 social distancing

practices that have temporarily limited veterinary visits. If anything, pet owners have become even more

attached to their companions as they spend even more time with them at home.

Pet adoptions and fostering at an all-time high and breeders in many instances report waiting list of 12 or

more months. And most importantly, pets still need to go to the veterinarian and most pet owners do not

consider these visits to be discretionary.

Diagnostics will continue to play a central and growing role in the care of the patient, as well as practice

health. Many practices have seen accelerating impact from e-tailers gains in online sales of food and

medicine. This is business that is not likely to come back at the same levels. Veterinarians will continue to

look for practice categories like diagnostics that are medically necessary, drive the care envelope and

almost always best done in the practice.

Our belief is that as a result of pent-up demand from COVID-19, which has constrained care that is

desired and needed, though perhaps not time critical, veterinary practices might experience a stronger V-

shape recovery than the vast majority of other market segments. We see some early evidence of this in

select markets like China and Australia and regions within the U.S. where these markets have begun to

relax strict shelter at home policies.

Practices will be in good shape to meaningfully take up where they left off, though they have reduced

hours and furloughed employees in some instances, we believe that there isn’t structural damage to the

industry or the balance sheet of practice owners.

As practices rebuild client traffic with a focus on wellness care, we will be there with our strategic

advantages fully impact. We are using this time wisely, continuing to advance our product pipeline,

strengthen relationships and provide exceptional day-to-day service. Unique capabilities that we bring are

now even more widely appreciated and keep in mind that this is a highly resilient business with a history

of outperforming in economic recovery periods.

While these are difficult times, they are an important reminder of our company purpose and that what we

do makes a big difference in the lives of pets, people and livestock. I would like to express my deep

appreciation and thanks to the team for their extraordinary support during this period.

Now, we will take questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question will be from Michael Ryskin with Bank of America. Go ahead

please.

Michael Ryskin

Thanks for taking the questions guys. I want to talk about some of the stuff you just touched on Jay, the

cost cuts and the salary reductions you implemented earlier in the quarter. Can you talk us through the

rationale of that move? It seem like it happen a little bit sooner and was more significant than initially

expected. You talked about the V-shaped recovery and the sharp rebound and yet those are some of the

meaningful cuts. Is there any concern that you could see increased employee turnover potentially to some

of your competitors as a result of this and what criteria are you using to determine when you are with

some of these measures, given the improvements you have noted and some end market.

Jay Mazelsky

Sure. I will cover some of the high level, high level thinking and philosophy behind us and then Brian

may want to talk through some of the specifics in terms of how we were thinking about that.

We have a great business. We have a great organization. We really approach shifts with the idea that we

want to, that we are going to come out of this that we are going to come out of this strong with the

market.

The pet owners love their pets that they believe that taking their pets to that veterinarians and getting

testing is the right thing to do. We know that the veterinarians believe that testing is good medicine and

uncovers disease.

And so we wanted to approach this in a way that allows us to maintain all of our strategic advantages.

These are advantages that we have built up, not just a year or two, but over decades. If you take a look at

the Reference Lab for example, 80 plus Reference Labs, common labs, information management systems,

courier route, service levels that are exceptional including weekends. We don’t want to lose any of that

capability.

We don’t want to -- we want to be able to continue to execute our product roadmap, maintain high

engagement in the organization, continue to deliver exceptional service levels, make sure that we have

supply when customers need it.

And most importantly, if you take a look at our customer facing organizations maintaining full staff levels

and being able to continue to serve customers is even more importantly. So we did this in a way that we

think it was prudent that maintains engagement that the organization understands and responded to

positively and so that as we come out of this, all of these strategic advantages, organizational capability,

and engagement remain intact. So, Brian do you want to address that.

Brian McKeon

Yeah. I think, we -- as I mentioned in some of the, the commentary we provided early on in this, I think

the stay at home policies and that were being implemented late March, very early April where we are

seeing significant impacts and we didn’t have clarity on how that might evolve and thought it was prudent

to get out in front of that.

And as Jay highlighted, we had a goal of protecting employment and trying to find ways to mitigate what

we were expecting in terms of some near-term impacts without damaging our underlying ability to

advance our business strategy or serve customers.

And I think the intent was to cease those cuts when it made sense, I think we are very encouraged by the

recent trends. It’s improving significantly day by day. And so I think we will keep an eye on this, but I

think that was, that was the intent, the changes were implemented at a time where I think the, the depth of

the impact from the social distancing policies was more significant.

Operator

Our next question will be from the line of Erin Wright with Credit Suisse. Go ahead.

Erin Wright

Great. Thanks. Are you seeing any sort of changes in the competitive landscape at this point? Can you

take advantage of any competitor disruption on either at the point of care side of the business or

Reference Lab, given that you can withstand this sort of volatility to be a little bit more nimble in this

environment? Thanks.

Jay Mazelsky

Thanks for the question, Erin. Yeah. We have always said that our markets that have historically been

very competitive. It’s no different now, even if it’s within the COVID-19 environment. They continue to

be very competitive.

We are very pleased with the way -- with the inroads that we continue to make in terms of, if you take a

look at the competitive catalyst placements globally, we were up 17% premium installed base year-over-

year, 15%. We continue to expand Reference Lab testing.

The point-of-care solutions like VetLab have held up relatively well in the COVID-19 environment. Now

part of that is due to the fact that they support more sick patient testing with real time results.

If you take a look at the Reference Lab for example, before the COVID-19 impact, we were at a solid

middle teens in the U.S. from a growth standpoint, high single-digits internationally. So we did see some

drop-off in volume in line with the visits and prioritizing case management, as Brian described it.

But we have also seen even now, with the drop-off and the beginnings of a recovery that customers have a

new appreciation, a far deeper appreciation for what we are bringing in terms of service levels, lab

network, density, courier, logistics, all of those things. And I think what they are seeing from some other

participants in the marketplace is they don’t have that capability in that footprint to be able to provide that

level of service.

Erin Wright

Okay. Great. And then can you remind us of the sustainability of pricing across your business in prior

economic downturns? And can you also speak to how minimum purchase agreements associated with

consumables are impacted from the COVID disruption as well? Thanks.

Jay Mazelsky

Yeah. So from -- in Q1, we continue to realize modest price realization of between 2% and 3%. Relative

to future pricing dynamics, we are certainly not going to forecast that today. The thing that I would point

out is that customers don’t just think about price per se. They look at price within the context of overall

value from what they get. We are always pressure testing the economics within that value construct.

In terms of actually the programs themselves, we do have volume. We do have volume-based commercial

programs and in some cases we are making allowances for rebalancing obligations where programs, just I

think reflect the reality that there is some reduced client traffic in testing volumes and what to be able to

support our customers through that.

Operator

And our next question will be from the line of Jon Block with Stifel. Go ahead.

Jon Block

Thanks guys. Good morning. Maybe for Jay or Brian, is there a way to think about how much sort of loss

versus deferred revenue. In other words, you are growth has been so consistent and durable every year

around 10% to 12% organic. If the growth just to throw out a number is up low-single digits this year,

when we think about 2021, can we sort of go back to that 10% to 12% off of that low single-digit number

or is there a chance for, call it, a big acceleration mid-teens growth as we think about the deferred coming

back? And I think that is just an important area that everyone is trying to get their arms around. I’m

defaulting to lost revenue because an emergency would have occurred and I don’t think you do to

wellness is in 1H ‘21, but maybe if you can go ahead and talk to that? That would be helpful.

Brian McKeon

Yeah. I think, as you point out, Jon, it’s a little difficult to estimate at the moment. I think our feeling is

that there will be a level of pent-up demand here for care that will come back as people are able to access

vet clinics.

It’s likely there is a level of kind of sick patient care that is just going to be lost in terms of the impacts at

this time and it is just until we kind of work through this, and going to get back to what we think is going

to be a rebound to a good place in terms of the industry’s health. It’s a little tough to project that out,

which is why we are moving away from guidance at the moment.

But I think the under -- we feel the underlying fundamentals of the industry are very sound. We think that

working through the dynamics with our customers will only reinforce these advantages that we have as a

business, and I think, we will be very well positioned to grow as we come out of this.

Jay Mazelsky

Yeah. I will share with you, Jon, a couple of things we are hearing from veterinarians. Let me focus on

and well this that because to your point, if the patient is sick and or needs a surgery, they have obviously

still have the opportunity to do that.

If you take at look at Q1, we had a record number of preventive care enrollments in the first quarter, 400.

So, that puts the overall program at 4,200 to-date, as I indicated earlier. But the important thing about

preventative care, just as a category, is pet owners see that as something that’s not discretionary,

something that they truly prioritize for their pet.

And more and more what practice owners in veterinarians are telling us is not only do they consider this

is good medicine because it uncovers more and drives the care above. It’s important to their practice

economics. It is important to client engagement. So I see it from both the medical necessity and practice

health standpoint.

So, they are chomping at the bit. That speaks to what Brian had indicated, where we are relatively

optimistic around sort of this pent-up demand and more of a V-shaped recovery. It’s part of our -- it’s

going to be part of our recovery strategy, Recover Together strategy to emphasize that. There’s still tons

of work to do on sick patient testing in addition to preventative care. So we are relatively optimistic.

Jon Block

Okay. And Jay, maybe just a follow-up on that last point. The one thing that we are hearing about

COVID-19 is just the change of workflow within the practice, curbside pickup sort of spacing out the

visits more. At the end of the day, it is reducing the overall number of visits, just from a workflow

perspective and I think it’s unclear how long this hangs around, right. How it plays out over time. So you

talk about this V-shape recovery, but do you have any concerns that this altered workflow as a lasting

impact sort of which results in a more protractive return to normal for the industry? Thanks.

Jay Mazelsky

Yeah. I mean just that -- just a couple of observations. Yeah. The first couple of weeks, veterinary

practices, they may struggle to adapt workflow. I mean, partly it was drop off in visits, but partly as you

describe it, the extent -- they had to extend appointment blocks, and it was more challenging for them.

That we worked with customers through our field service organization to be able to help them design new

workflows in terms of curbside drop off and pick up, and remote check in and contactless payment

processes.

They have gotten much better at it, just like you would expect that over time you begin to optimize your

processes. So, different states, different regions are in different stages of recovery and so initially it was

only from the parking lot. I think over time, we will see that relaxation.

Yeah, there is a point that I would make just tying together your two questions is that when you take a

look at what’s happened within the practices, with the e-tailers and a lot of product sales, both food and

medicines going online.

The -- a lot of that business is not going to return at least at the same levels that they experienced before.

That’s going to put even more focus on getting the patient into the practice, having checkups using

diagnostics. So, again, we will see how this develops over time, but I think all the trends are positive.

Jon Block

Okay. Thanks for the color, guys.

Operator

We have a question in queue from the line of Ryan Daniels with William Blair. Go ahead.

Ryan Daniels

Yeah, guys. Thanks for taking the questions. Jay, can you talk a little bit more about Recover Together. It

sounds like you have developed specific blueprint for kind of the bounce back. So I’m curious what that

involves and how your marketing that.

Jay Mazelsky

Yeah. I mean, it’s really comes out with the fact that, even within this COVID-19 environment, we are

still highly engaged with our customers. Our customer facing folks are our visiting customers 75% just

take the U.S. for example is virtual, but 25% when requested were present and fully decked out and its

safety care. So there is a high level of engagement. We are building pipeline. We are working with -- our

customers in terms of developing strategies that as we recover they rebuild client traffic.

We saw coming out of the great recession in 2009 that a lot of really good our clients or pet owners

returned almost immediately. Where the veterinarian’s I think need it needed some help and assistance is

for those relatively new clients to help build the muscle memory of semi-annual or annual visits.

So we are looking at programs that we have for example our preventive care program is perfect for that.

And even the sick patient visits are allowed are advised, there are still some things that people are likely

pet owners and likely deferring. So we are looking at all of our programs to be able to support that.

Just one word on the IDEXX 360, because it’s really tailor-made for this type of environment. Yeah, if

you think about IDEXX 360 you are able to get capital purchases with zero money down. So if you are

veterinary practice if you are in this constrained environment from an economic standpoint, you can still

purchase instruments and you pay on a monthly basis and you are able to match invoicing to the customer

with testing volumes. So in some ways it’s really tailor-made to test for this type of environment. So we

are looking at all of those things in terms of how to support customers.

Ryan Daniels

Okay. That’s very helpful. Thank you. And then a little bit more color on OPTI Medical. I know that

doesn’t get a lot of airtime, an acquisition you did to benefit the companion animal business. But what’s

the potential for that if you get FDA approval and kind of how will that process go. I assume you will

have a distribution partner for that in the human market, any color there? Thanks guys.

Jay Mazelsky

Yeah. So we have developed and validated a human real-time PCR test for COVID-19 and really to your

question, we leveraged the capability we have in OPTI, which is our human health business from a

regulatory standpoint and channels, but also our experience in developing and manufacturing livestock

infectious disease kits in our current business.

So this is a test, it is a PCR test. It is highly effective in terms of sensitivity and specificity from a

performance standpoint. Results -- you typically get results in well under four hours, so it’s fairly quick,

and we have used, OPTI is used or is in a process of using the FDA’s Emergency Use Authorization

process. We are waiting for approval, as well as we have applied for CE Mark in the European Union.

And so we are advancing our ability to manufacture these in our Livestock, Poultry, and Dairy business,

and really targeting for initial distribution existing IDEXX customers. So not necessarily using external

channel, so these include things like livestock, laboratories, public health laboratory, state CDC labs, stuff

entities like that.

Operator

Our next question, we will go to Nathan Rich with Goldman Sachs. Go ahead.

Nathan Rich

Hi. Good morning. Thanks for the question. I guess to start, I think, Jay you mentioned, vet services are

tended to be pretty resilient during past downturns and obviously consumers are going to be facing kind

of uncertain economic conditions coming out of this. I guess I’d be curious just, when you look at

wellness visit in recent weeks, I mean has there been any change in metrics like the percentage of those

visits that include blood work, the number of test orders that might provide an indication of the

consumer’s ability to spend on diagnostics for their pets?

Jay Mazelsky

Yeah. So let me -- I will answer that question in a couple of levels, because you had mentioned the

recessionary environment and the resilience of the business, which is absolutely true. When you take a

look at the great recession in 2009, we performed extremely well growing 5%, coming out of the trough

of that and if you now, we say, 10 years later, we are even I think better positioned to be able to perform

strongly in a V-shaped recovery. So you think about the business as a whole.

we are extremely well diversified, geography across businesses like CAG, Water, livestock, poultry and

dairy across different modalities and plus lots of shapes. So just a couple of things that I would emphasis,

which includes our commercial organization with, if you take a look at a decade ago, we were represented

primarily through distributors and now we have more direct representation and so we are not reliant on

others.

I think the fact that our portfolio is far broader and includes sick and some of the wellness pieces that you

emphasized. And I think the role of diagnostics is far more appreciated and how important it is and really

how it feeds into not only good medical care but practice health.

In terms of the component of diagnostics over the recent couple of weeks and what that looks like. Not

sure we have visibility to that data yet. That’s something that we will continue to look at on a weekly

basis in terms of both lab accessions as well as the smart service, what the testing piece is, but still too

early to comment specifically on that question.

Brian McKeon

Yeah. I would highlight, I think the, as we are looking at this data day by day literally, it’s very

encouraging to see how quickly it’s coming back. So, I think, it’s -- we think that’s reinforcing the

willingness that we have seen for a long time of the pet owners spend on critical care and that for their

what is now a member of the family, I think this was even more powerful than it was over 10 years ago

when the last great recession. So early indications are we are very encouraged by and those areas we will

continue to monitor.

Nathan Rich

Great. Thank you. Just a quick follow-up, as you have seen restrictions start to ease in some areas, have

you also seen kind of reps visits pick back up, I’m just curious to know if there could maybe be more

prolonged impact there. Is that’s kind of one of limit the number of sales reps that they see in the clinic,

just due to the concerns around COVID?

Jay Mazelsky

I’m sorry, I missed that part where you said the number of what visits pick back.

Nathan Rich

Well, I’m sorry. Yeah. Have your sales reps, I guess, been able to start to go, call on customers in areas

where restrictions have eased and could that have a more prolonged impact on -- which is their ability to

kind of get back in and see customers.

Jay Mazelsky

Yeah. Okay. I got it. Absolutely. The way we conduct visits today is when customers ask us to be present

or that differs than a lot of other companies out there that have essentially 100% virtual visit policy. So if

you take a look at April, for example, 25% of the visits of the field organization was actually physically

visiting the practice.

Now, if you break that down by states and regions, it did differ based on the how strict the social

distancing procedures were in the practice. What we saw in places like Texas and the South relatively

more visits, relatively higher visit levels in terms of clients and more testing. Impacted - higher impacted

regions like the Northeast and the Great Lakes, for example, a bit lower. So, very much in line and

proportional to what the local guidelines are per se per region.

Nathan Rich

Thank you.

Operator

We have a question in queue from the line of David Westenberg. Just one moment please while we open

his line.

David Westenberg

All right. Thank you for taking the questions. So I’m just a layer on some of the questions that have

already been asked. Can you talk about your balance sheet right now, some of the rationale between

taking on the additional debt. Is that at all sense, can we expect at the practice level, maybe there is some

liquidity needs, and right now it’s your opportunity to help those practices that need to preserve cash?

And then, just related to that, do you think that they are going to be more likely to avoid the cash flow and

sign the contract or do you think there might actually be some hesitancy on that contract? And then as a

follow-up on the near term, can you quantify the pent-up demand. I know VCA used to say in their

practice, they have an 80% recovery rate in a snowstorm kind of environment of those appointments. Is

that a good way to think about it in terms of when social distancing ends and I will take these questions

offline? Thank you.

Brian McKeon

Thanks, David. Just on your balance sheet question. I think we have some of the work out and we

highlighted was in flight before the pandemic really started impacting the business. We were in the

process of securing some of the terminal financing at low rates and we are able to execute that effectively

in our revolver -- was up for renegotiation this year regardless. So I think we just advanced that and we

are able to extend it and actually upsize it.

And I think we, we were in an excellent position. We are in an even better position. And I think you

raised a very good point. It enables us to continue to be highly supportive of our customers, and we are

helping independent practices in the U.S. and Europe with some payment term dynamics in the near-term

and trying to be as helpful as we can.

As Jay mentioned, I think, our programs are very well suited to helping people through if they have near-

term concerns about cash flow management to continue to advance their businesses and we will continue

to be leaning in on that front and helping practices in ways that makes sense for us all to move back to

normal over time together.

Jay Mazelsky

I mean, I would just also again reemphasize the IDEXX 360 program is ideal in many respects for new

customer acquisition and its environment. No cash outlays matching customer invoices with the use of

consumables.

And the other thing David is we are able to calibrate future commitment expectations for customers in

terms of how we use this. So, I think, we all recognize that this is a unique environment and we can

highly configure these type of volume commitment programs for that environment.

David Westenberg

And then if I could just get on that the recovery rate, if there is any way to quantify like if VCA’s 80%

recovery on weather related thing that used to give five years ago when they were public, but…

Brian McKeon

We don’t have benchmarks like that. I’m not sure snowstorm is the best analogy at the moment. This is --

it’s very dynamic region by region, but I think as a theme, we are very encouraged by how quickly we see

demand coming back as policies are less restrictive and we are optimistic about how this will play out

over time.

David Westenberg

Thank you.

Operator

We will go next to the line of Andrew Cooper with Raymond James. Go ahead please.

Andrew Cooper

Hey, everybody. Thanks for the questions. A lot is uncovered. So I will maybe just ask one kind of

attacking something a little bit differently. But as we think about the transition to virtual visits and

obviously you are still doing a number of in-person, but when we think about installs, you have done a lot

of second instruments and things like that as a portion of your growth. When we think about demand for

that, obviously, it’s a little bit different than sort of a net new competitive placement, but how do we think

about exiting when clinics aren’t necessarily seeing the same volumes that they were? Does that delay

that need or potentially our clinics that are well capitalized sitting there saying, hey, we can get an

installing without really disrupting as busy of a day where we are kind of working at full capacity as it is.

Any comment there just kind of on the pace of instrument installations would be great as you come out of

this.

Jay Mazelsky

Yeah. Let me -- yeah. There is a couple of questions in that. Let me just address the question around or

the point you made around second catalyst placements at practices. These tend to go to higher volume

customers. So it’s not like we are placing a second catalysts and it’s just sitting there. I mean, the reason

they may want a second catalyst as they are growing their practice, growing client visits. It is a highly

modular system.

So this represents a real volume driven decision on the part of customers. We think from a recovery

standpoint, as well as longer term trends. The diagnostics utilization will continue to be robust for sick

patient, preventive care, menu offering our product roadmap and the different assays we are launching

continue to drive, continue to drive usage, continue to drive utilization, though it’s somewhat lower now

because of this environment. We think that all the dynamics and all sort of the value drivers are still

intact. So we don’t expect through the recovery for that to change.

Brian McKeon

We have time for one more question.

Andrew Cooper

I will stop there if anybody else is in the queue. Thank you.

Operator

That will come from the line of Michael Ryskin with Bank of America. Go ahead please.

Michael Ryskin

Hey, guys. Thanks. I think I dropped off the initial one. Thanks for the follow-up. Just real quick, I want

to go back to some of my concern sort of longer term about the vet dynamic. As we think through this

impact sort of what’s forefront of my mind is that, that’s going to be economically challenged here in

potentially for an extended period of time. Both from economic recession and potentially some, some tail

risk here in terms of volumes. So how do you think about vets being a little bit more price sensitive

around their offerings and we know that IDEXX is definitely the premium brand in the space in terms of

pricing compared to Heska and Abaxis and the cheaper alternatives. Are you concerned that would be

while diagnostics utilization overall and visits made holding pretty well due to the economic challenges

and some of the pressures on them, they may trade down to some of the cheaper offerings?

Jay Mazelsky

So here’s I would -- here’s how at least we think about it, Mike. Customers have always been concerned

with the economics of the solution. I mean that hasn’t changed. Price is a component of it. The value that

we deliver is the other component of it. And as I indicated, we are always testing to make sure that the

value and economics line up.

From a customer standpoint, what we work to do through our programs is to make sure that based on their

environment and based on the circumstances, we provide the appropriate program that allows them to

purchase what they think are the best tools and allow them to deliver the best medicine.

From that standpoint, nothing has changed in terms of our solutions and what they perceive to be the best

solutions for their needs. And as I indicated, we have programs that allow them to get that, get the

products, get the service offerings they want and do it in a way that works for them, works from an

economic standpoint and matches and aligns the invoices that they collect or charge to the client and what

they have to in turn pay us. So we are confident that we can continue to meet their dates and do it in a

way that’s economically sensitive to the environment.

Michael Ryskin

Great. Thanks so much.

Jay Mazelsky

And with that, I want to thank everybody for calling in. I know we have some employees who are also on

the call and I’d like to express my gratitude for their extraordinary performance there in these unsettling

times. We run the company in a way that both delivers the day and takes a long-term view designed to

maintain and grow the strategic advantages of our business. I couldn’t be more proud of the IDEXX team

and the purpose, which animates our work. And so with that, we will conclude the call. Thank you.

Operator

Ladies and gentlemen, that will conclude your conference call for today. Thank you for your participation

and for using AT&T Event Teleconferencing. You may now disconnect.

IDEXX Laboratories Announces First Quarter Results€¦ · IDEXX VetLab® consumables generated 13%...

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