IDEXX Laboratories, Inc. (NASDAQ: IDXX), a global leader in veterinary diagnostics, veterinary practice software and water microbiology testing, reports revenues for the first quarter of 2017 of $462 million, an increase of 11% compared to the prior year period on both a reported and an organic basis. First quarter results were driven by robust global gains in Companion Animal Group ("CAG") Diagnostics recurring revenue, including double-digit organic revenue gains across consumable, reference lab and rapid assay revenues, as well as continued expansion of IDEXX's premium instrument installed base.

Earnings per diluted share ("EPS") was $0.77 for the first quarter, representing 51% growth year-over-year on a reported basis and 53% on a constant currency basis. These results include a $0.12 EPS benefit in the quarter from the adoption of the new accounting guidance related to share-based compensation (ASU 2016-09).

"Our strong business momentum continued in the first quarter, driven by strength in our companion animal business, reinforcing our strategic focus and sustained 10%+ annual revenue growth potential," said Jonathan Ayers, the Company's Chairman and Chief Executive Officer.

"The companion animal market fundamentals remain solid with tremendous global runway for growth. Our unique innovation-based, multi-modality global strategy, enabled by enhanced commercial capability, accelerated recurring CAG Diagnostics growth and drove an 18% year-over-year expansion of our global premium instrument base. In particular, our highly successful fully-direct commercial model in the U.S. has yielded high returns, while deepening our relationships with our customers. We're investing to expand our U.S. commercial organization over the next few months to further support our customers to advance the standard of care through usage of IDEXX's diagnostic solutions."

"Building from this robust start to the year, we're raising our 2017 guidance for revenue growth and constant currency operating margin expansion, while investing in enhanced capability, as we continue to deliver on our long-term goals for shareholder value creation."

First Quarter Performance Highlights

First quarter revenue increased 11% to $462 million. EPS for the quarter was $0.77, an increase of 51% compared to the first quarter 2016 on a reported basis, 53% on a constant currency basis and 29% when calculated to exclude the $0.12 of additional EPS attributable to the adoption of the new accounting guidance related to share-based compensation.

Companion Animal Group

CAG generated 13% revenue growth for the quarter, supported by CAG Diagnostics recurring organic revenue growth of 14%, as well as CAG instrument revenue growth of 16% on a reported basis, and 17% on an organic basis. High CAG Diagnostics recurring revenue growth was driven by double-digit revenue gains across major modalities, reflecting benefits from strong volume growth and solid net price realization.

• IDEXX VetLab® consumables reported revenue grew 14% and organic revenue grew 15%, propelled by an expanding premium instrument base in U.S. and international markets, including growth in competitive instrument placements, increasing utilization, and continued strong customer retention. IDEXX VetLab premium diagnostic instrument placements grew 18% to a first quarter record number of 2,340, including 1,131 Catalyst® instruments, 822 premium hematology instruments and 387 IDEXX SediVue® Dx analyzers.
• Reference laboratory diagnostic and consulting services revenue grew 13%, driven by increased testing volume in the U.S. and international regions, continued robust customer retention, and demand for IDEXX's innovative test menu, including IDEXX SDMA®, our unique kidney function test.
• Rapid assay products generated strong growth of 11%, driven by continued strong volume gains in SNAP 4Dx® Plus Test and specialty SNAP product lines, as well as solid net price improvement reflecting efficiency and timing of promotional programs.

Livestock, Poultry and Dairy ("LPD")

Revenue declined 5% for the quarter primarily driven by declines in herd health screening of Australia and New Zealand dairy cattle for export to China and pressure on the Dairy business, partially offset by growth in emerging market swine and poultry testing, and in bovine pregnancy testing.

Water

Reported revenue growth was 6% and organic revenue growth was 7% for the quarter, compared to 11% growth in the first quarter of 2016, supported by solid net price realization and volume growth in the core Colilert® product line.

Gross Profit and Operating Profit

Gross profit was $258 million for the quarter, an increase of 13% over the prior year period, and gross margin increased to 55.9%, up 140 basis points on a reported basis and 150 basis points on a constant currency basis. This improvement in gross margin reflects the net benefits of price increases and product cost leverage from strong consumable and reference lab volume growth.

Operating profit was $92 million, up 25% on a reported basis and 28% on a constant currency basis, with results driven by strong profit gains in our CAG business. Operating margins were 20.0% in the quarter, 230 basis points higher than the prior year period operating margin on a reported basis and 260 basis points higher on a constant currency basis, reflecting benefits from strong gross profit gains and operating expense leverage.

2017 Financial Outlook

The Company is raising its 2017 revenue outlook by $15 million to $1,925 million - $1,950 million, reflecting an expectation for organic revenue growth of 9.5% - 11% and approximately a $5 million revenue benefit from updated assumptions related to foreign exchange rates, as noted below. At these rates compared to rates in effect in 2016, we estimate that the stronger U.S. dollar will adversely impact 2017 reported revenue growth by approximately 1.0%, EPS growth by 2.0%, and reduce EPS by an estimated $0.05 per share, including the net impact from projected hedge gains of approximately $6 million in 2017 compared to $4 million in 2016.

The Company is also increasing its 2017 EPS outlook by $0.10 to $2.95 - $3.11 per share, reflecting an additional $0.10 benefit from the adoption of the new share-based compensation accounting guidance. A projected $0.03 incremental operating profit flow-through from its higher revenue outlook, net of incremental planned investments in the U.S. CAG business, and a $0.02 benefit due to reduced headwind from updated foreign exchange rate assumptions, will be offset by a negative $0.05 per share impact from a higher tax rate due to a change in geographic mix of profitability.

While making this incremental $10 million investment in U.S. commercial capability, lab capacity and research and development priorities to reinforce long-term U.S. growth, the Company is improving its outlook to approximately 75 – 100 basis points of full-year operating margin improvement on a constant currency basis. With updated assumptions for foreign exchange, this equates to a projected annual improvement of 60 – 85 basis points on a reported basis.

The updated outlook represents EPS growth of 21% - 27% on a reported basis and 23% - 29% EPS constant currency growth, including the impact of the adoption of the new accounting guidance related to share-based compensation, which we estimate will result in $0.22 - $0.26 of EPS benefit in 2017 (an increase of $0.10 compared to earlier estimates). While these impacts may vary significantly by quarter based on the timing of actual settlement activity, an estimated $0.10 of the projected full-year 2017 benefit reflects higher than normal stock option exercising in 2017, a level of activity that is not expected to continue in future periods. An estimate of $0.12 - $0.16 of annual EPS benefit is a reasonable expectation for future years, based on current settlement trends and stock price levels.

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. Headquartered in Maine, IDEXX Laboratories employs more than 7,000 people and offers products to customers in over 175 countries. For more information about IDEXX, visit: www.idexx.com.