IDEXX LABORATORIES INC DE

We believe that the long-term financial potential of our business is significant, as reflected in the model below:*

We aim to achieve these financial goals over the long term by successfully executing our Purpose-driven strategy:

+Focus on Developing the Highly Attractive Global Pet Healthcare Space – Global pet healthcare has excellent long-term secular growth characteristics. In fact, we estimate that the total global addressable companion animal diagnostics revenue opportunity is approximately $45 billion, with approximately two-thirds of this estimated opportunity located outside the U.S. We seek to expand and realize that opportunity by bringing innovative products and services to market and driving their broad adoption.

+Advancement of Innovation – We aim to advance global pet healthcare standards of care and support increased veterinary practice productivity through innovation, supporting the long-term development of global pet healthcare. Our sustained focus on research and development (R&D) and our customers’ needs enables us to introduce novel diagnostic and software products and services. For example, our most recently announced diagnostic innovations include a first-of-its-kind, slide-free cellular analyzer, important expansions to our vector-borne disease testing platform and our kidney health solutions and an innovative pet-owner engagement software solution – all of which are described in “Key Business Highlights” below. In addition, our innovative diagnostic solutions are fully backed by peer-reviewed and third-party studies, where possible, that objectively confirm their claims and capabilities.

+Customer Engagement – We have the largest and most-experienced companion animal diagnostics field-based professional organization in the world, which enables us to develop and strengthen our relationships with our customers, including individual veterinary professionals, and to drive broader and faster adoption of our innovations. We continue to invest in our customer engagement and commercial capabilities, both in the U.S. and key international regions.

+Expansion of Recurring Revenue Business Model – Our business is designed around a durable, recurring revenue business model, with robust growth and profit characteristics and supported by our extraordinary customer loyalty and high retention rates. The largest contributor to our total revenue is our CAG Diagnostics recurring revenue, which constituted approximately 80% of our total 2023 revenue. Another key driver of recurring revenue is our Veterinary Software, Services and Diagnostics Imaging recurring revenue, which represented 6% of our total 2023 revenue and grew approximately 19% in 2023, as compared to 2022.

+Commitment to Sustained Growth in Financial Performance – We have a track record over the long term of organic revenue growth and operating margin expansion, strong free cash flow generation and a disciplined approach to capital allocation. As a result, our investments in our business yielded a 47.5% ROIC in 2023.

Highly Attractive Global Pet Healthcare Factors and Trends+The enduring pet-owner bond, which is strengthening across successive generations of pet owners.+Pet owners’ ever-increasing desire to support the health and well-being of companions that many consider part of their families and their willingness to commit their time and money toward veterinary care.+Growth in the global pet population, which accelerated during the pandemic.+Increasing average life expectancy of dogs and cats.+Veterinary care providers’ ever-advancing ability and intent to provide a high medical standard of care, including increased focus on services offered within the clinic.+New veterinary care delivery models, such as curbside concierge service and telehealth, which increase access to patient care and support clinical visit growth. +Our diagnostic and software innovations that:◦Expand veterinarians’ medical toolkit, including artificial intelligence-powered diagnostic insights and support.◦Enable pets — who cannot speak for themselves — to communicate more precisely their health status and problems.◦Support increased productivity and efficiency in veterinary clinic practices and more effective, technology-enabled engagement with pet owners.

• Our long-term financial potential model represents our projected annual gains, assuming constant foreign currency exchange rates and excluding year-over-year changes in share-based compensation tax benefits and non-recurring or unusual items.

**Information regarding ROIC and its calculation is provided in Appendix A.