Segment Reporting

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Segment Reporting

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”). Although our LPD segment does not meet the quantitative thresholds to be reported as a separate segment, we believe it is important to disaggregate these revenues as a major product and service category within our Other reportable segment given its distinct markets, and therefore we have elected to report LPD as a reportable segment. 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 nine months ended September 30, 2019, respectively:

(in thousands)	Three Months Ended September 30, 2019
	CAG		Water		LPD		Other		Unallocated
Cost of sales	$	(428)	$	(19)	$	(24)	$	(10)	$	481
Gross profit	428		19		24		10		(481)
Operating Expenses:
Sales and marketing	$	211	$	9	$	12	$	—	$	(232)
General and administrative	2,472		105		131		1,058		(3,766)
Research and development	4,544		20		25		—		(4,589)
Total operating expenses	$	7,227	$	134	$	168	$	1,058	$	(8,587)
Income from operations	$	(6,799)	$	(115)	$	(144)	$	(1,048)	$	8,106

(in thousands)	Nine Months Ended September 30, 2019
	CAG		Water		LPD		Other		Unallocated
Cost of sales	$	(266)	$	(12)	$	(15)	$	(6)	$	299
Gross profit	266		12		15		6		(299)
Operating Expenses:
Sales and marketing	$	322	$	14	$	18	$	—	$	(354)
General and administrative	1,377		(114)		(122)		2,222		(3,363)
Research and development	12,062		39		49		—		(12,150)
Total operating expenses	$	13,761	$	(61)	$	(55)	$	2,222	$	(15,867)
Income from operations	$	(13,495)	$	73	$	70	$	(2,216)	$	15,568

    

The following is a summary of segment performance:

	For the Three Months Ended September 30,
	CAG		Water		LPD		Other		Consolidated Total
2020
Revenue	$	638,017	$	33,272	$	36,971	$	13,529	$	721,789
Income from operations	$	139,434	$	15,243	$	10,505	$	6,674	$	171,856
Interest expense, net									(7,902)
Income before provision for income taxes									163,954
Provision for income taxes									17,633
Net income									146,321
Less: Net income attributable to noncontrolling interest									102
Net income attributable to IDEXX Laboratories, Inc. stockholders									$	146,219
2019
Revenue	$	533,130	$	34,906	$	31,370	$	5,897	$	605,303
Income from operations	$	117,691	$	16,930	$	4,850	$	331	$	139,802
Interest expense, net									(7,004)
Income before provision for income taxes									132,798
Provision for income taxes									23,960
Net income									108,838
Less: Net income attributable to noncontrolling interest									1
Net income attributable to IDEXX Laboratories, Inc. stockholders									$	108,837

(in thousands)	For the Nine Months Ended September 30,
	CAG		Water		LPD		Other		Consolidated Total
2020
Revenue	$	1,756,113	$	95,537	$	103,369	$	30,698	$	1,985,717
Income from operations	$	426,062	$	43,383	$	28,417	$	11,567	$	509,429
Interest expense, net									(24,880)
Income before provision for income taxes									484,549
Provision for income taxes									77,376
Net income									407,173
Less: Net income attributable to noncontrolling interest									187
Net income attributable to IDEXX Laboratories, Inc. stockholders									$	406,986
2019
Revenue	$	1,589,397	$	99,980	$	95,980	$	16,105	$	1,801,462
Income from operations	$	370,600	$	47,467	$	17,707	$	1,441	$	437,215
Interest expense, net									(23,503)
Income before provision for income taxes									413,712
Provision for income taxes									76,464
Net income									337,248
Less: Net income attributable to noncontrolling interest									24
Net income attributable to IDEXX Laboratories, Inc. stockholders									$	337,224

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 nine months ended September 30, 2020 and 2019.