Note 15. Segment Reporting

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. Our CODM is our Chief Executive Officer. Our reportable segments include diagnostic and information technology-based products and services for the veterinary market, which we refer to as the Companion Animal Group (“CAG”), water quality products (“Water”) and diagnostic products and services for livestock and poultry health and to ensure the quality and safety of milk and improve dairy efficiency, which we refer to as Livestock, Poultry and Dairy (“LPD”). Our Other operating segment combines and presents products for the human point-of-care medical diagnostics market with our pharmaceutical product line and our out-licensing arrangements because they do not meet the quantitative or qualitative thresholds for reportable segments.

Certain costs are not allocated to our operating segments and are instead reported under the caption “Unallocated Amounts.” These costs include costs that do not align with one of our existing operating segments or are cost prohibitive to allocate, which primarily consist of our R&D function, regional or country expenses, certain foreign currency revaluation gains and losses on monetary balances in currencies other than our subsidiaries’ functional currency and unusual items. Corporate support function costs (such as information technology, facilities, human resources, finance and legal), health benefits and incentive compensation are charged to our business segments at pre-determined budgeted amounts or rates. Differences from these pre-determined budgeted amounts or rates are captured within Unallocated Amounts.

The following is a summary of segment performance for the three and nine months ended September 30, 2017 and 2016 (in thousands):


	For the Three Months Ended September 30,
		CAG	Water		LPD		Other		Unallocated Amounts		Consolidated Total
2017
Revenue	$	426,686	$	31,030	$	28,396	$	5,864	$	-	$	491,976

Income (loss) from operations	$	89,271	$	14,505	$	902	$	2,114	$	(6,379)	$	100,413
Interest expense, net												(8,364)
Income before provision for income taxes												92,049
Provision for income taxes												21,535
Net income												70,514
Less: Net income attributable to noncontrolling interest												3
Net income attributable to IDEXX Laboratories, Inc. stockholders											$	70,511

2016
Revenue	$	385,288	$	27,862	$	29,799	$	5,359	$	-	$	448,308

Income (loss) from operations	$	77,493	$	12,442	$	3,026	$	1,008	$	(5,510)	$	88,459
Interest expense, net												(6,935)
Income before provision for income taxes												81,524
Provision for income taxes												25,072
Net income												56,452
Less: Net income attributable to noncontrolling interest												(3)
Net income attributable to IDEXX Laboratories, Inc. stockholders											$	56,455



	For the Nine Months Ended September 30,
		CAG	Water		LPD		Other		Unallocated Amounts		Consolidated Total
2017
Revenue	$	1,269,861	$	85,531	$	91,266	$	16,279	$	-	$	1,462,937

Income (loss) from operations	$	277,857	$	38,421	$	9,880	$	3,275	$	(14,213)	$	315,220
Interest expense, net												(23,849)
Income before provision for income taxes												291,371
Provision for income taxes												66,392
Net income												224,979
Less: Net income attributable to noncontrolling interest												92
Net income attributable to IDEXX Laboratories, Inc. stockholders											$	224,887

2016
Revenue	$	1,143,150	$	79,243	$	93,511	$	16,523	$	-	$	1,332,427

Income (loss) from operations	$	229,858	$	34,864	$	12,665	$	(749)	$	(10,224)	$	266,414
Interest expense, net												(21,695)
Income before provision for income taxes												244,719
Provision for income taxes												75,036
Net income												169,683
Less: Net income attributable to noncontrolling interest												7
Net income attributable to IDEXX Laboratories, Inc. stockholders											$	169,676

The following is a summary of revenue by product and service category for the three and nine months ended September 30, 2017 and 2016 (in thousands):


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
		2017		2016		2017		2016
CAG segment revenue:
CAG Diagnostics recurring revenue:	$	364,937	$	324,603	$	1,091,936	$	969,097
IDEXX VetLab consumables		129,434		113,964		385,081		336,493
Rapid assay products		50,924		48,720		159,085		147,583
Reference laboratory diagnostic and consulting services		167,851		146,672		498,218		440,514
CAG Diagnostics service and accessories		16,728		15,247		49,552		44,507
CAG Diagnostics capital - instruments		29,119		31,255		83,018		86,063
Veterinary software, services and diagnostic imaging systems		32,630		29,430		94,907		87,990
CAG segment revenue		426,686		385,288		1,269,861		1,143,150

Water segment revenue		31,030		27,862		85,531		79,243
LPD segment revenue		28,396		29,799		91,266		93,511
Other segment revenue		5,864		5,359		16,279		16,523
Total revenue	$	491,976	$	448,308	$	1,462,937	$	1,332,427

During the fourth quarter of 2016, we modified our management reporting and reclassified the location of SNAP Pro service plans previously located in CAG Diagnostics capital - instruments to CAG Diagnostics service and accessories. The amount of revenue reclassified was $0.4 million during the three months ended September 30, 2016 and $1.1 million for the nine months ended September 30, 2016.