William Blair 39th Annual Growth Stock ConferenceJun 05, 2019 · Pet Owners Appreciate the Mental Health Benefits of Their Pets, with Millennials and Gen Z even more so Millennials

Preventive Care KOL SummitJanuary 23, 2019William Blair 39th Annual Growth Stock ConferenceJonathan Ayers, Chairman and Chief Executive Officer June 5, 2019

2 © 2019 IDEXX Laboratories, Inc. All rights reserved.

Safe Harbor DisclaimerThe following information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations and beliefs, as well as a number of assumptions concerning future events. These statements are subject to risks, uncertainties, assumptions and other important factors. You are cautioned not to put undue reliance on such forward-looking statements because actual results may vary materially from those expressed or implied. The reports filed by the Company pursuant to United States securities laws contain discussions of these risks and uncertainties. The Company assumes no obligation to, and expressly disclaims any obligation to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to review the Company’s filings with the United States Securities and Exchange Commission (which are available from the SEC’s EDGAR database at www.sec.gov and via the Company’s website at www.idexx.com).

We refer in this presentation to projections communicated at our Investor Day on August 15, 2018 and our 2019 outlook communicated on May 1, 2019; these references speak only as of the respective dates on which they were communicated and shall not be deemed to be a reiteration or affirmation of the guidance or an indication that our expectations have not changed since that time.

Non-GAAP Financial MeasuresIn this presentation, we refer to some non-GAAP financial measures. For a reconciliation to the most comparable GAAP financial measures, we refer you to our footnotes and the Appendix to this presentation, which also refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2018, both available at www.idexx.com/investors.

Please refer to additional footnotes in the Appendix.

http://www.sec.gov/

http://www.idexx.com/

http://www.idexx.com/investors


IDEXX - Focus on Pet Healthcare Diagnostics and Software

• Long-term secular growth

• Global leadership

• Innovation driven

• Durable recurring revenue model

• Strong financial performance


Pet Owners Appreciate the Mental Health Benefits of Their Pets, with Millennials and Gen Z even more so

Millennials(22 yrs to 37 yrs)

Gen X(38 yrs to 53 yrs)

Gen Z(Up to 21 yrs)

* Source: Gen Z and Millennials as Pet Market Consumers: Dogs, Cats and Other Pets, Packaged Facts, February, 2018.

Percentage of U.S. Pet Owners Agreeing*:

“My pet has a positive impact on my mental health.” 76% 83% 86%


Millennials Better Appreciate Pets have Special Health Needs

“I rely on my veterinarian for advice about medicine and pet food”

Millennials & Gen Z(18 yrs to 39 yrs)

Baby Boomers(55 yrs to 74 yrs)

U.S. Pet Owner Survey*: % Agreeing with Statement

* Source: Gen Z and Millennials as Pet Market Consumers: Dogs, Cats and Other Pets, Packaged Facts, February, 2018.

“My pet has special health needs”

65%

19%

0% 20% 40% 60% 80% 100%

75%

42%

0% 20% 40% 60% 80% 100%


Millennials and Gen Z Own ~45% of Dogs Today, and Will Own Almost 60% of U.S. Dogs by 2025

2018 2025P

80 Million91 Million

Projected U.S. Canine Population by Age Segment of Owner (% of dogs)(1)

Gen Z

Millennials

Gen X

BuildersBaby Boomers

Total

(1) 2018 dog ownership based on analysis of data from APPA and Gen Z and Millennials as Pet Market Consumers: Dogs, Cats and Other Pets, Packaged Facts, February, 2018. Projection of pet owner number based on projected growth in the number of adults in each age segment over this period per the U.S. Census Bureau, Projections for the United States: 2017-2060, with adjustments

11%

34%

26%

3%

26%

27%

31%

22%

2%18%

45%58%


Total Pet Spending Remains a Very Low Proportion of Total Household Spending Across Household Income Segments

0.4%

0.5%

0.7%

0.6%

0.6%

U.S. Pet Spending as Percentage of Total Household Spending by Household Income Segment (%)(1)

2000

1.0%

1.0%

1.2%

1.1%

1.2%

2018

Lowest Quintile

Second Quintile

Third Quintile

Top Quintile

Fourth Quintile

Inco

me

Segm

ents

At 2018, total pet spending was still at 1.2% of

total household spending or less across income

segments.

(1) ‘Pet Spending; includes all veterinary services, diagnostic, pharmaceutical, vaccine, boarding, grooming, retail and other pet spending. ‘Household’ assumed to be equivalent to a ‘consumer unit’ for this analysis. Average total pet spending per U.S. household is not adjusted for penetration of pet ownership, which contributed less than an average of 1% per year to this growth rate. 2018 is based on the midyear data tables for the 12 months ending June 30, 2018, released April 26, 2019.

Source: Consumer Expenditure Survey, U.S. Bureau of Labor Statistics, April, 2019.


IDEXX is Led by Companion Animal Diagnostics Recurring Revenue

Total IDEXX Revenue ($Billion)1,2

$

Other Recurring

Companion Animal Diagnostics Recurring

1,2 Please refer to the Appendix for descriptive footnotes.

Non-Recurring

75%

13%

67%

14%


Consistent, Strong CAG Diagnostics Recurring Revenue GainsAnnual CAG Diagnostics Recurring Revenue and Normalized Organic Revenue Growth1,2,3,7

($Billion)

*,7 Organic revenue growth normalized for a one-time growth rate benefit of 1.3% attributable to the adoption of ASU 2014-09, Revenue from Contracts with Customers (the "New Revenue Standard"), refer to Appendix for additional information.1,2 Please refer to the Appendix for descriptive footnotes. 3,7 Non-GAAP financial measure, please refer to Appendix for descriptive footnotes. ** All references to 2019E reflect the midpoint of 2019 outlook communicated May 1, 2019. Please refer to our Safe Harbor Disclaimer.

Q1’19 Highlights:

11.9% CAG Diagnostics recurring revenue organic growth

11% U.S. / 14% international organic growth

96 – 99.9% customer retention

12.0%12.8%

11.9%*

$11%-12%


CAG Diagnostics Recurring Revenue Growth is Supported by Healthy U.S. Market Clinical Visit Growth

Clinical Visit GrowthWeighted Average Year-over-Year % Change

2.7%2.4%

1.9%

1.3%

2.2%

3.7%3.4%

2.9%

2.3%

3.2%

0%

1%

2%

3%

4%

Q1 Q2 Q3 Q4 Q1

2018 2019

Clinical Visit Growth Per Practice*

Net New Practice Formation adds ~ 1 % of incremental market growth

• Growth rate estimate with margin of error of +/ - 0.4% at a 95% confidence level.Source: IDEXX Practice Intelligence data analysis.


IDEXX CAG Diagnostics Recurring Revenue is Growing Faster Than the U.S. Market

Q1 2019 U.S. CAG Diagnostics Recurring Revenue Organic Growth1,3

Clinical Visit Growth

~ 3%

~ 4%

~ 2%

~ 2% - 3%

+ Same Store Sales

+ Net CustomerAdditions

+ Net Price Realization

~ 11%

* Q1 2019 U.S. CAG Diagnostics recurring revenue organic growth net of ~1% equivalent days headwind 1,3 Please refer to the Appendix for descriptive footnotes.

*


Zoetis/Abaxis***

1

13

91

2

14

96

1

15

107

2

18

108

2

19

108

2

23

116

3

129

0

20

40

60

80

100

120

140

* * * * * * *

Comparison of Annual R&D Investment of Major Veterinary Diagnostics Companies9

($Million), calendar years shown

‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ’19E****‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ’19‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ’19‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19

VCA* Heska** IDEXX Laboratories9

* VCA does not report any R&D investments in its filings with the U.S. Securities and Exchange Commission (“SEC”). Following acquisition of VCA, Inc. by Mars in Oct, 2017, there are no further public disclosures.** Heska R&D expense based on public filings for 2012 through 2018.*** Reflects Abaxis, Inc. R&D investment in 2012 through 2017 based on public filings, and an estimate for 2018, following Zoetis acquisition of Abaxis July 31, 2018. 9 IDEXX’s annual R&D Cash Spending, including an estimate for 2019, Non-GAAP financial measure; please refer to the Appendix for descriptive footnotes. ****All references to 2019E reflect the 2019 outlook communicated May 1, 2019. Please refer to our Safe Harbor Disclaimer. No estimates available for the R&D of the other companies in 2019.

~150

IDEXX’s Consistent Investment in Innovation Creates a Growing,Proprietary Competitive Gap, Drives Growth


IDEXX VetLab Differentiated by Performance, Menu and SoftwareTechnology for Life Strategy Enabled by Ongoing Silent Software Updates

Catalyst One®

Chemistry, SDMA, T4, Progesterone

ProCyte Dx®

Complete CBC, Retics & Bands

SNAP Pro®

Infectious Diseases

IDEXX Reference Lab Results

Practice Management

System

IDEXX VetLab® Station

Embedded Integration

SediVue Dx®

Urine SedimentNN 4.0


CRP Inflammation

Total T4Thyroid

FructosamineDiabetes

PhenobarbitalSeizures

2011 2013 2015 2017 2018 2019

Catalyst Chemistry Platform with Expanding, Unique MenuSeven Chemistry Tests in Seven Years

SDMAKidney

ProgesteroneReproduction

SDMA/Total T4

New Tests - Combine with Any ProfileSame sample

Same patient runMore results

Core Profiles One sample

One patient runUp to 22 standard tests


Pets age 7x faster than people

Expectations for pet care are growing

IDEXX Preventive Care bundles together proprietary tests

In 2019 IDEXX’s Preventive Care Comes of Age

4Dx®

Plus


IDEXX Preventive Care Profiles Frequently Indicate Need for Follow-up

28% 27% 26% 27% 25% 26% 26%30%

36%41%

44%

54%

64%

3 4 5 6 7 8 9 10 11 12 13 14 15+Dog age (years)

1 in 3 canine wellness profiles indicate the need

for follow-up† ADULT SENIOR GERIATRIC

*Due to “clinically significant findings,” which would indicate the need for follow-up, further consideration, or a change in action by the clinician. Clinical significance based on rules determined by IDEXX veterinarian panel. †On average, across all age groups represented in the study data.

Source: Data on file at IDEXX Laboratories, Inc. Westbrook, Maine USA. Data based on analyses of 29,750 canine wellness profiles (Chem 22 including IDEXX SDMA® Test, IDEXX CBC testing with reticulocyte parameters, the Lab 4Dx® Plus Test, and Fecal Dx® Antigen Panel) associated with wellness visits; testing performed at IDEXX Reference Laboratories on July 13, 2016–February 28, 2019. Represented U.S. regions by proportion of included profiles: Northeast (36.9%), South (36.9%), Midwest (19.1%), West (7.1%).

Percentage of wellness profiles indicating the need for follow-up*


IDEXX SDMA is a Key Element of IDEXX Preventive Care


IDEXX Fecal Dx Antigen: Improved Detection in Adult Preventive Care

* Analysis based on a sample of 442,884 canines, presenting for preventive care visits with fecal exams sent to IDEXX Reference Labs between December, 2015 and June, 2018. Adult canine defined as >2 years old.

Double the detection and lower cost

Detects actual parasite presence –not influenced by egg production

Permits earlier detection

Endorsed by industry experts

1.7%

3.4%

Hookworm, Roundworm and Whipworm Infections

ConventionalMicroscopy

(O&P)IDEXX

Reference Labs

IDEXX Fecal

AntigenPanels

IDEXX Reference Labs

Uncovers

2xUnderlyinginfections


Practices Adopting IDEXX Preventive Care Exhibit Higher Dx Recurring Revenue Growth

Source: Analysis of 2,777 PCC Enrollees and over 20k Other IDEXX Practices. * Represents total number of customers enrolled since program inception.

11%

Other IDEXX Practices

15%

Preventive Care Enrollees

Growth in IDEXX CAG Dx Recurring Revenue per Practice Twelve Months ending Q1 2019

U.S. Preventive Care Challenge Enrollments(number of customers end of quarter*)

+1,200 ~2,800

~1,600


Chemistry & Hematology

Fecal Testing Urinalysis Total

$1.0B

$0.6B

$1.2B

$3.0BIDEXX realizes ~10% of this

potential today

Vector-borne Disease &

Feline Viral Testing

$0.2B

IDEXX’s Unique Preventive Care Runway is SignificantPreventive Care Total Addressable U.S. Market Estimated ~$3.0B


Tremendous Untapped Opportunity to Grow Diagnostics

IDEXX Loyal Practices: Percentage of 2018 Clinical Visits Including a Chemistry Panel*

BottomDecile

TopDecile

23456789 Top5%

Top2%

Mean 15%

The practice locations with the best demonstrated

utilization (n=39) is 2.2x the average

* Data for practices that use IDEXX for both their in-house chemistry and reference lab testing. Figures rounded to nearest 1%. 2018 based on trailing twelve months ending December, 2018.Source: Analysis of IDEXX Practice Intelligence and IDEXX Internal Data for sample of 1,966 U.S. practices.


235

490202

420

2013 2014 2015 2016 2017 2018

IDEXX Enhanced Direct Commercial Capability Drives Adoption of Our Proprietary Innovations

Total CAG Field-Based Professional Headcount*

* Includes all field-based sales and technical services headcount, excluding management. Figures as of December 31 of each calendar year.

U.S.

International

437 465

603674

775

910

2x


We Estimate ~76k Additional Worldwide Catalyst Placement Opportunities

* All figures are rounded. Excludes practices too small to be likely candidates for chemistry analyzer placement at this time.

Worldwide Catalyst Placement Opportunities by Type(as of end 2018)*

35,000

Competitor Analyzer

Greenfield (no analyzer)

IDEXX VetTest customers that could upgrade

13,000

IDEXX Catalyst

Customers

IDEXX VetTest

Customers

Potential IDEXX Chemistry Customers

~76kCatalyst Placement Opportunities

• 15.5k North America• 60.5k International

~6,800 Placements Last 12 months

39,500

23,000


Europe Diagnostics Market Would Double Its Current Size if the Standard of Care Matched the UK

UK Total Europe(1)

174M

Number of Dogs & Cats

$675M

$1.4B**

$130M

Companion Animal Dx Market Revenue(2)

17M

Number of Dogs & Cats

(1) Defined as Europe Region countries where IDEXX has direct presence.(2) Estimated 2018 sales of companion animal diagnostics products (excluding digital and veterinary software) to pet care providers.(3) Estimated 2018 sales of companion animal diagnostics products (excluding digital and veterinary software) to pet care providers, compared to estimated number of pets in Europe Region countries with direct IDEXX presence was ~$675M. Potential Total Europe

companion animal diagnostic market size estimated assuming the same diagnostic spending per pet as in the UK in 2018, and a 10% to 15% growth in spend per pet for those countries with a higher spend per pet than the UK in 2018.

Companion Animal Dx Market Revenue(3)


IDEXX Five-Year Potential for Continued 10%+ Annual Revenue GrowthDriven by Expansion of CAG Diagnostics Recurring Revenue

2018 Revenue

$2.213B

IDEXX Total Company Annual Revenue Growth Potential 2023 vs. 2018, Constant Currency*

CAG CapitalVeterinary Software & Digital

8% - 12%***

LPD, Water & Other

6% - 8%***

CAG Recurring1

International CAG Dx

12% - 16%***

9% - 13%***

U.S. CAG Dx

~2023Revenue

10%+ Compound Annual

Growth Rate

* These projections were communicated at Investor Day on August 15, 2018 and assume that foreign currency exchange rates will remain the same as in 2018. Please refer to our Safe Harbor Disclaimer.*** Estimated potential revenue compound annual growth rate for this business segment.1 Please refer to the Appendix for descriptive footnotes.


IDEXX is Delivering Against the Long-term Financial Goals

Multi-YearGoals 2017 2018 2019E*

Organic Revenue Growth3 10%+ 10.4% 11.6% 9.5% - 11%

Operating Margin Gain(Constant Currency)4 50 - 100 bps 140 bps 130 bps 80 - 110 bps

EPS Growth(Comparable Constant Currency)5 15% - 20% 21% 36% 16% - 19%

*All references to 2019E reflect the 2019 outlook communicated May 1, 2019. Please refer to our Safe Harbor Disclaimer. 3,4,5,8 Non-GAAP financial measure, please refer to Appendix for descriptive footnotes.

Delivered ROIC8 of 49% in 2018


IDEXX – Exceptional, Durable Growth and Financial Returns

An Enduring Recurring Revenue Business Model with . . .

. . . favorable long-term global growth dynamics . . .

. . . augmented by IDEXX’s unique innovation and commercial model . . .

. . . generating exceptional long-term financial returns.

Appendix


Footnotes1 Recurring Revenue: Annual recurring revenue for Livestock, Poultry and Dairy (“LPD”), Water, Veterinary Software Services and Diagnostic Imaging Systems, Rapid Assay and IDEXX VetLab include and exclude the following as applicable: LPD excludes government sponsored eradication programs and herd health screening revenues, Water excludes sealer and filtration instruments, Veterinary Software Services and Diagnostic Imaging Systems excludes client server based placements and radiography instruments, Rapid Assay excludes SNAP Pro instruments, and IDEXX VetLab includes consumables, service and accessories.

2 IDEXX Reportable Segment Revisions and Divested Revenues: Prior to January 1, 2015, our Companion Animal Group (“CAG”) segment included herd testing diagnostic services processed within and managed by our CAG reference laboratories. We have transitioned the responsibility for these diagnostic services to our LPD segment to more effectively align our business with the nature and customers of these livestock services. Revenue and revenue growth calculations have been retrospectively revised to reflect this change in the composition of our reportable segments. The impact on CAG Diagnostics Recurring revenue growth was not material.

3 Organic Revenue Growth: Organic revenue growth is a non-GAAP financial measure and excludes the impact of changes in foreign currency exchange rates and revenue from business acquisitions. Management believes that reporting organic revenue growth provides useful information to investors by facilitating easier comparisons of our revenue performance with prior and future periods and to the performance of our peers. 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. Effective January 1, 2018, we exclude only acquisitions that are considered to be a business (consistent with ASU 2017‐01, “Business Combinations: (Topic 850) Clarifying the Definition of 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 – Results of Operations and Trends – Non‐GAAP Financial Measures, contained in the Company’s Annual Report on Form 10‐K for the year ended December 31, 2018 available at www.idexx.com/investors. See table below for impact of currency and acquisitions to CAG Diagnostics Recurring revenue for 2016-2018, and Q1 2019. Currency changes increased total company revenue growth by 0.3% in 2017 and 0.7% in 2018, and are expected to decrease total revenue growth and CAG Diagnostics recurring revenue growth by 1.5% in 2019. Revenue from acquisitions increased total company revenue growth by 0.2% in 2017, 0.1% in 2018, had an immaterial impact on total company and U.S. CAG Diagnostics recurring revenue in Q1 2019, and is expected to have an immaterial impact on total company revenue growth and CAG Diagnostics recurring revenue growth for the full-year 2019.

CAG Diagnostics Recurring Revenue (1) 2016 2017 2018 Q1 2019Reported Growth 12% 13% 14% 9%

Currency Impact (2) -1% 0% 1% -3%Acquisition Impact 0% 0% 0% 0%

Organic Growth 12% 13% 13% 12%

(2) See Footnote 4 for a description of constant currency. Note that all years are restated and currency impact will vary from previously reported figures.

(1) See Footnote 1 for a description of IDEXX recurring revenue



Footnotes4 Constant Currency: Constant currency references are non-GAAP financial measures and exclude the impact of changes in foreign currency exchange rates. Management believes that constant currency information provides valuable supplemental information regarding our revenue, operating margin and EPS results because it is consistent with how management evaluates our performance and facilitates comparisons with prior and future periods. We estimated the net impacts of currency on our revenue, operating margin, and EPS results by restating results to 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. Prior periods were restated to current rates and may vary from previously reported constant currency figures. Estimated currency changes are expected to decrease projected 2019 revenue growth by approximately 1.5%, increase projected operating profit margin growth by 20 basis points, and decrease projected EPS growth by approximately 1%. See Footnote 3, Organic Revenue Growth, for further details of currency impacts on revenue growth.

5 Comparable Constant Currency EPS growth: Comparable constant currency EPS growth is a non-GAAP financial measure. Comparable constant currency EPS growth represents the percentage change in earnings per share (diluted), as compared to the same period for the prior year, net of the impact of changes in foreign currency exchange rates and excluding non-recurring items. 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. Comparable constant currency EPS growth excludes the impact of the Company’s adoption of share-based compensation accounting change (ASU 2016-09) for the periods after its adoption on January 1, 2017, a one-time negative impact related to the 2017 Tax Cuts and Jobs Act (“U.S. Tax Reform”), and a discrete tax benefit related to the expected utilization of foreign tax credits in 2017. Share-based compensation activity is expected to increase projected EPS by $0.10 to $0.12 or the full year 2019. Estimated currency changes are expected to decrease projected EPS growth by approximately 1%.The reconciliation of this non-GAAP financial measure is as follows:

2016 2017 2018

Earnings per share (diluted) $2.44 $2.94 $4.26

Impairment charge - - - Impact of adoption of ASU 2016-09 - (0.30) (0.24)Impact of U.S. Tax Reform - 0.34 - Impact of foreign tax credit utilization - (0.04) - Comparable EPS $2.44 $2.94 $4.02 Change from currency 0.20 0.02 (0.01)Comparable constant currency EPS $2.64 $2.96 $4.01

Comparable constant currency EPS Growth 25% 21% 36%

For the Year Ended December 31,


Footnotes6 Constant Currency Operating Margin Gains: Constant currency operating margin gain represents the percentage change in operating margin, as compared to the same period for the prior year, net of the impact of changes in foreign currency exchange rates and excluding non-recurring items. Constant currency operating margin gain should be considered in addition to, and not as a replacement of or a superior measure to, operating margin improvement reported in accordance with GAAP. Estimated currency changes are expected to decrease projected operating profit margin gain by 20 basis points. Management believes that reporting constant currency operating margin gain provides useful information to investors by facilitating easier comparisons of our operating margin performance with prior and future periods. The reconciliation of this non-GAAP financial measure is as follows:

7 CAG Diagnostics Recurring Normalized Organic Revenue Growth: CAG Diagnostics recurring normalized organic revenue growth is a non-GAAP financial measure, and it represents CAG Diagnostics recurring organic revenue growth normalized for the effects of the adoption of ASU 2014-09, Revenue from Contracts with Customers (the "New Revenue Standard"), primarily related to the modified retrospective restatement. Management believes CAG Diagnostics recurring normalized organic revenue growth is a more useful way to measure business performance because it enables better period-over-period comparisons of the fundamental financial results by excluding one-time growth rate benefits. Effective January 1, 2018, we adopted the New Revenue Standard using the modified retrospective method for all contracts not completed as of the date of adoption. We recognized the cumulative effect of initially applying the New Revenue Standard as an adjustment to the opening balance of retained earnings. CAG Diagnostics recurring revenue included approximately $18.6 million in 2018 that was attributed to the New Revenue Standard.

Dollar amounts in thousands 2016 2017 2018Income from operations $350,239 $413,028 $491,335 Operating margin 19.7% 21.0% 22.2%Change from currency 24,180 1,051 (1,331)Constant currency income from operations $374,419 $414,079 $490,004 Constant currency operating margin (1) 20.9% 21.1% 22.3%

Constant currency operating margin gains 170 bps 140 bps 130 bps

For the Year Ended December 31,

(1) Amounts presented may not recalculate to constant currency operating margin or constant currency margin improvement due to rounding


Footnotes8 After-Tax Return on Invested Capital, Excluding Cash and Investments (“ROIC”): After-Tax Return on Invested Capital, Excluding Cash and Investments is a non-GAAP financial measure. After-tax return on invested capital, excluding cash and investments, represents our after-tax income from operations, divided by our average invested capital, excluding cash and investments, using beginning and ending balance sheet values. After-tax return on invested capital, excluding cash and investments, after-tax income from operations and average invested capital, excluding cash and investments, are not measures of financial performance under GAAP and should be considered in addition to, and not as replacements of or superior measures to, return on assets, net income, total assets or other financial measures reported in accordance with GAAP. Management believes that reporting after-tax return on invested capital provides useful information to investors for evaluating the efficiency and effectiveness of our use of capital. For further information on how After-Tax Return on Invested Capital, Excluding Cash and Investments is calculated, see the Company’s Definitive Proxy Statement filed March 25, 2019 available at www.idexx.com/investors.9 R&D Cash Spending: R&D Cash Spending is a non-GAAP financial measure. R&D Cash Spending, includes research and development expenses, capitalized R&D equipment costs net of depreciation expense included in research and development expenses, and certain capitalized costs incurred in connection with developing or obtaining customer-facing cloud software designated for internal use. R&D Cash Spending is not a measure of financial performance under GAAP and should be considered in addition to, and not as replacement of or superior measures to, R&D expense reported in accordance with GAAP. Management believes that reporting R&D Cash Spending provides useful information to investors for evaluating the magnitude of our R&D investments and provides greater transparency to investors regarding a key metric used by management. The reconciliation of this non-GAAP financial measure is as follows:

Dollar amounts in millions 2012 2013 2014 2015 2016 2017 2018R&D Expense $ 82 $ 88 $ 98 $ 100 $ 101 $ 109 $ 118 Capitalized R&D equipment less depreciation expense included above 9 7 6 4 (0) 0 4

Capitalized customer-facing cloud software development costs 1 0 1 3 4 7 7 7

R&D Cash Spending 91$ 96$ 107$ 108$ 108$ 116$ 129$ 1 Amortization expense related to capitalized computer software is included in cost of revenues


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William Blair 39th Annual Growth Stock ConferenceJun 05, 2019 · Pet Owners Appreciate the Mental Health Benefits of Their Pets, with Millennials and Gen Z even more so Millennials