IDEXX Laboratories, Inc. Announces Acquisition Of The Critical Care Division Of Osmetech Plc For $44.9 Million

WESTBROOK, Maine, Dec. 18 /PRNewswire-FirstCall/ -- IDEXX Laboratories, Inc. , today announced that it has entered into an agreement with Osmetech plc to acquire Osmetech's Critical Care Division for $44.9 million. The Critical Care Division develops, manufactures, and sells a line of Point of Care electrolyte and blood gas analyzers and related consumable products for the human market while also serving as IDEXX's OEM supplier of the VetStat(R) analyzer and line of associated consumables. IDEXX launched the VetStat analyzer in June 2005, introducing combined electrolyte and blood gas analysis capabilities to the IDEXX VetLab(R) suite of in-clinic analyzers. In the last 18 months, IDEXX has placed more than 2000 VetStat analyzers in the veterinary market. In the human market, the Critical Care Division sells analyzers under the OPTI(R) name.

"The acquisition of Osmetech's Critical Care Division is a highly strategic transaction for IDEXX," said Jonathan Ayers, Chairman and Chief Executive Officer. "The transaction secures our long-term supply of VetStat analyzers and consumables, which are increasingly important components of our IDEXX VetLab suite of in-clinic instrumentation. Osmetech is also our supplier for the electrolyte module and associated electrolyte consumables, in the form of dry slides, for our next generation chemistry analyzer in development. The business provides us relevant and proprietary technology that may well enable IDEXX to further expand the menu and capability of our veterinary instrument line and adds world-class instrument development and manufacturing capabilities to our growing bench-top analyzer business. Finally, with the Critical Care Division, IDEXX will be acquiring an installed base of human Point of Care instruments that yields a growing annuity of profitable consumable revenue.

"We expect the margins from this business to expand over the next several years as the installed base of instruments in both the veterinary and human markets continues to grow and the associated instrument and consumable volumes create scale leverage in the Critical Care Division's manufacturing operations. Margin expansion is also generated by the shift toward higher relative sales of more profitable instrument consumables in relation to instruments."

For the six months ended June 30, 2006, revenues of Osmetech's Critical Care Division were approximately $8.6 million, of which approximately $2.9 million were sales of VetStat instruments and consumables to IDEXX.

The acquisition by IDEXX is a purchase of assets, subject to certain liabilities. The purchase price is subject to a post-closing adjustment based on the Division's net asset value as of the closing date. The completion of the transaction is contingent upon approval by Osmetech's shareholders and is subject to certain other customary conditions to closing. Closing is expected to occur on or around January 31, 2007.

Acquisition of Central Laboratory for Veterinarians Ltd.

IDEXX also recently acquired Central Laboratory for Veterinarians Ltd. (CLV), a veterinary reference laboratory in Vancouver, Canada, for $15.2 million. CLV is the largest provider of veterinary reference laboratory services in Western Canada, and adds to IDEXX's global network of reference laboratories.

Financial Impact of Acquisitions

Osmetech's Critical Care Division and CLV collectively are expected to add approximately $23 million to $25 million, after elimination of inter-company sales of VetStat analyzers and consumables, to IDEXX's revenues in 2007. The acquisitions are expected to have a negative effect on fully diluted earnings per share of approximately $0.08 to $0.10 in 2007, resulting primarily from one-time integration costs and amortization of intangibles. The transactions are expected to be approximately earnings neutral in 2008.

About IDEXX Laboratories

IDEXX Laboratories, Inc. is a leader in companion animal health, serving practicing veterinarians around the world with innovative, technology-based offerings, including a broad range of diagnostic products and services, practice-management systems and therapeutics. Our products enhance the ability of veterinarians to provide advanced medical care and to build more economically successful practices. IDEXX is also a worldwide leader in providing diagnostic tests and information for the production animal industry and tests for the quality and safety of water and milk. Headquartered in Westbrook, Maine, IDEXX Laboratories employs more than 3,500 people and offers products to customers in over 100 countries.

Note Regarding Forward-Looking Statements

This press release contains statements about the Company's business prospects and estimates of the Company's financial results for future periods that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management's expectations of future events as of the date of this press release, and the Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments. Actual results could differ materially from management's expectations. Factors that could cause or contribute to such differences include the following: the Company's ability to develop, manufacture, introduce and market new products and enhancements to existing products; the effectiveness of the Company's sales and marketing activities; the Company's ability to develop, license or obtain rights to new technologies; the Company's ability to identify acquisition opportunities, complete acquisitions and integrate acquired businesses; the impact of competition and technological change on the markets for the Company's products; the effect of government regulation on the Company's business, including government decisions about whether and when to approve the Company's products and decisions regarding labeling, manufacturing and marketing products; the impact of distributor purchasing decisions on sales of our products that are sold through distribution; changes or trends in veterinary medicine that affect the rate of use of the Company's products and services by veterinarians; the Company's ability to obtain patent and other intellectual property protection for its products, successfully enforce its intellectual property rights and defend itself against third party claims against the Company; disruptions, shortages or pricing changes that affect the Company's purchases of products and materials from third parties, including from sole source suppliers; the effects of government regulatory decisions, customer demand, pricing and other factors on the realizability of the Company's inventories; the Company's ability to manufacture complex biologic products; the effects of operations outside the U.S., including from currency fluctuations, different regulatory, political and economic conditions, and different market conditions; and the loss of key employees. A further description of these and other factors can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2005 and the Quarterly Report on Form 10-Q for the quarter ended September 30, 2006, in the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Contact: Merilee Raines, Chief Financial Officer, (207) 556-8155

CONTACT: Merilee Raines, Chief Financial Officer of IDEXX Laboratories,Inc., +1-207-556-8155

Web site: http://www.idexx.com//