Segment Reporting

6 Months Ended

Jun. 30, 2020

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 medical diagnostics (“OPTI Medical”) market with our out-licensing arrangements. Assets are not allocated to segments for internal reporting purposes.

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 previously were 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 primarily consist 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 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 within our Other reporting segment.

The following table reflects adjustments to previously reported costs in our Unallocated segment, that are now allocated to our CAG, Water, LPD and Other segments for the three and six months ended June 30, 2019, respectively:


(in thousands)	Three Months Ended June 30, 2019
	CAG		Water		LPD		Other		Unallocated

Cost of sales	$	344	$	15	$	19	$	8	$	(386)
Gross profit	(344)		(15)		(19)		(8)		386

Operating Expenses:
Sales and marketing	$	(18)	$	(1)	$	(1)	$	—	$	20
General and administrative	(893)		(179)		(206)		949		329
Research and development	3,960		10		13		—		(3,983)
Total operating expenses	3,049		(170)		(194)		949		(3,634)
Income from operations	$	(3,393)	$	155	$	175	$	(957)	$	4,020


(in thousands)	Six Months Ended June 30, 2019
	CAG		Water		LPD		Other		Unallocated

Cost of sales	$	162	$	7	$	9	$	4	$	(182)
Gross profit	(162)		(7)		(9)		(4)		182

Operating Expenses:
Sales and marketing	$	111	$	5	$	6	$	—	$	(122)
General and administrative	(1,095)		(219)		(253)		1,164		403
Research and development	7,518		19		24		—		(7,561)
Total operating expenses	6,534		(195)		(223)		1,164		(7,280)
Income from operations	$	(6,696)	$	188	$	214	$	(1,168)	$	7,462

The following is a summary of segment performance:


	For the Three Months Ended June 30,
	CAG		Water		LPD		Other		Consolidated Total
2020
Revenue	$	566,100	$	28,116	$	32,244	$	11,132	$	637,592

Income (loss) from operations	$	167,969	$	12,258	$	8,249	$	4,772	$	193,248
Interest expense, net									(9,426)
Income before provision for income taxes									183,822
Provision for income taxes									34,826
Net income									148,996
Less: Net income attributable to noncontrolling interest									56
Net income attributable to IDEXX Laboratories, Inc. stockholders									$	148,940

2019
Revenue	$	547,349	$	34,764	$	33,104	$	4,886	$	620,103

Income (loss) from operations	$	141,190	$	16,722	$	6,568	$	(205)	$	164,275
Interest expense, net									(8,153)
Income before provision for income taxes									156,122
Provision for income taxes									30,421
Net income									125,701
Less: Net loss attributable to noncontrolling interest									(5)
Net income attributable to IDEXX Laboratories, Inc. stockholders									$	125,706


(in thousands)	For the Six Months Ended June 30,
	CAG		Water		LPD		Other		Consolidated Total
2020
Revenue	$	1,118,096	$	62,265	$	66,398	$	17,169	$	1,263,928

Income from operations	$	286,628	$	28,140	$	17,912	$	4,893	$	337,573
Interest expense, net									(16,978)
Income before provision for income taxes									320,595
Provision for income taxes									59,743
Net income									260,852
Less: Net income attributable to noncontrolling interest									85
Net income attributable to IDEXX Laboratories, Inc. stockholders									$	260,767

2019
Revenue	$	1,056,267	$	65,074	$	64,610	$	10,208	$	1,196,159

Income from operations	$	252,909	$	30,537	$	12,857	$	1,110	$	297,413
Interest expense, net									(16,499)
Income before provision for income taxes									280,914
Provision for income taxes									52,504
Net income									228,410
Less: Net income attributable to noncontrolling interest									23
Net income attributable to IDEXX Laboratories, Inc. stockholders									$	228,387

See “Note 3. Revenue Recognition” for a summary of disaggregated revenue by reportable segment and by major product and service category for the three and six months ended June 30, 2020 and 2019.