IDEXX Laboratories, Inc. (NASDAQ:IDXX)
May 08, 2013 10:00 am ET
Jonathan W. Ayers - Chairman, Chief Executive Officer and President
Jeffrey A. Fiarman - Executive Vice President, General Counsel and Secretary
Jonathan W. Ayers
Thank you, all, for coming to the IDEXX Laboratories 2013 Annual Meeting of Stockholders, and I'd also like to welcome those who are listening to the meeting via webcast or live via webcast. Everyone should have received the meeting agenda, as well as the set of procedures for today's meeting. And we'll start the meeting by considering the proposals that have described in our proxy statement. The votes will be followed by my presentation regarding our business. And finally, we'll open up the floor to your questions, and I'd be grateful if the audience here withhold their business-related questions until after my presentation of the business and the QA period.
Before we get to the proposals, I'd like to introduce the members of our Board of Directors and our officers who are here at the meeting. And so I'd like to ask each of the members of the board to stand as I go through them, and I'll just do it in the order here. Bob Murray, Rebecca Henderson, Tom Craig, Brian McKeon, Barry Johnson, Anne Szostak and Bill End. Thank you.
We also have our officers here today, and I'd like to ask each of them to stand as they're introduced in alphabetical order: Bill Brown, our Executive Vice President, Overseas Research And Development. He's our Chief Scientific Officer; George Fennell, Corporate Vice President, who leads the Companion Animal Group Commercial Organization in North America; Jeff Fiarman, Executive Vice President, General Counsel and Secretary; Jay Mazelsky, Executive Vice President, that oversees the Companion Animal Group and a variety of functions and businesses; Dan Meyaard, Corporate Vice President, who leads the company's worldwide operations; Ali Naqui, Corporate Vice President, who leads the company's Asia Pacific and Latin American operations in the Water business line; Jim Polewaczyk, Corporate Vice President, who leads the company's Companion Animal Group Reference laboratory and Telemedicine lines of business; Johnny Powers, Executive Vice President, overseeing another set of important lines of business and functions within the company; Merilee Raines, Executive Vice President and Chief Financial Officer; Giovani Twigge, Corporate Vice President and Head of Human Resources; and Michael Williams, Executive Vice President, who oversees our international operations and the Livestock and Poultry Diagnostics, Dairy, Water and OPTI Medical Systems. So welcome, everybody, here.
Representatives of our auditors are also here today and will be available for questions here from PriceWaterhouseCoopers. PWC is Kevin Burney and Jhon Charters. Welcome.
At this point, I'll turn the meeting over to Jeff Fiarman, who will conduct the formal part of the meeting. After that, I'll give a presentation regarding our business. And then following the presentation, the webcast portion of the meeting will conclude, and we'll open it up for the local Q&A period. Thank you.
Jeffrey A. Fiarman
Thank you, Jon. Good morning, everyone. We have 4 matters to be voted upon today. First, before we proceed, we need to confirm we have a quorum. We've received an affidavit from the company's transfer agent, American Stock Transfer & Trust Company, certifying that the notice of the annual meeting was sent to all stockholders of record as of March 11, 2013. This affidavit and list of stockholders entitled to vote at this meeting are available for inspection by any stockholder. As always, we have a representative with American Stock Transfer & Trust Company here at 's the meeting. This year, Terry Hasett [ph] has been appointed to act as inspector of election.
I would now like to ask Mr. Hasett to furnish us with the count of the number of shares present at this meeting in person or through representation in proxy.
There are present at this meeting in person or through representation by proxy 51,646,403 shares of common stock.
Jeffrey A. Fiarman
Thank you. There being 51,646,403 shares of common stock represented at this meeting. And at the total of 54,441,902 shares of common stock entitled to vote, I should hereby declare that a quorum exists.
Are there any stockholders present who neither, one, have not submitted a proxy who wish vote in person; or two, have submitted a proxy but wish to revoke the proxy or change their vote? If so, please raise your hand.
Please proceed to the table where Mr. Hasett is seated, and he will distribute ballots to you. To each stockholder who wishes to vote in person or revoke a proxy or change his/her vote, please mark your votes on the ballot after each item has been presented at the meeting. We will collect the ballots after the polls close and include them in the final tabulation of your votes.
As indicated in notice of meeting and proxy statement, we are here today to consider 4 business items: One, the election of 3 Class III directors for 3-year term; two, the approval of a nonbinding advisory resolution on the company's executive compensation program; three, the approval of proposed amendments to the company's 2009 stock incentive plan; and four, to ratify the selection of PriceWaterhouseCoopers as the company's independent registered public accounting firm for the current fiscal year.
What I'll now do is go through each of the 4 items on the ballot and ask if any -- if there's any discussion. At the conclusion of discussion, we will collect any ballots. Following discussion, we'll proceed to vote on each item. As we go through the proposals, I ask that discussion be limited to the specific proposal under consideration.
The first item of business is election of 3 Class III directors within the company's proxy statement. The nominees for election are Jonathan Ayers, Robert Murray, Anne Szostak. Do I hear a motion at the nominees be elected as Class III directors of the company to serve until the 2016 Annual Meeting and until their successors are duly elected and qualified? Is there a discussion on this item?
I second the motion.
Jeffrey A. Fiarman
Voting will commence after all proposals have been presented. We now move to proposal number two.
The second item of business is the approval of a nonbinding advisory resolution on the company's executive compensation program which reads: Resolve that the compensation paid to the company's named executive officers as disclosed pursuant to Item 402 of Regulation S-K, including the compensation discussion and analysis, compensation tables and narrative discussion is hereby approved. Do I hear a motion that the nonbinding advisory resolution regarding the company's executive compensation program be approved? Compensation programs be approved?
I so move.
I second the motion.
Jeffrey A. Fiarman
Is there any discussion on this matter? Voting in this item will commence after all proposals have been presented. We now proceed to proposal number three.
The third item of business is the proposed amendments to the 2009 stock incentive plan. Do I hear motion that these amendments to our 2009 stock incentive plan be approved?
I so move.
I second the motion.
Jeffrey A. Fiarman
Is there any discussion on this matter? Voting on this item as well will commence after all proposals have been presented.
We now move to proposal number four. The fourth item of business is the ratification on the selection of PriceWaterhouseCoopers as the company's independent registered public accounting firm for the current fiscal year. Do I hear a motion that the selection of PriceWaterhouseCoopers as the company's independent registered public accounting firm for the current fiscal year be ratified?
I so move.
I second the motion.
Jeffrey A. Fiarman
Is there any discussion on this matter before we proceed to vote?
We now proceed to vote on all items. If there is any stockholders voting by ballot, could you please raise your hand and we'll collect the ballot?
Jeffrey A. Fiarman
The polls are now closed. The minutes of the meeting will reflect the time at 's which the polls were closed. We'll now announce the preliminary results of the votes. The votes made today by ballot will be reflected in the final report by the inspector. I'd like to ask Mr. Hasett to read the report -- to read his report on the voting.
On the motion that the 3 nominees be elected as Class III directors of the company to serve until the 2016 Annual Meeting of Stockholders or until their successors are duly elected and qualified: For Mr. Jonathan Ayers, 45,294,596 shares have voted in favor of his election, with the number of shares withheld and broker non-votes being 6,351,807; for Mr. Robert Murray, 45,637,982 shares have voted in favor of his election, with the number of shares withheld and broker non-votes being 6,008,421; for Ms. Anne Szostak, 45,460,609 shares have voted in favor of her election, with the number of shares withheld and broker non-votes being 6,185,794.
Jeffrey A. Fiarman
I hereby declare that Mr. Ayers, Mr. Murray and Ms. Szostak have been elected as Class III directors.
On the motion that a nonbinding advisory resolution on the company's executive compensation program be approved, the holders of 45,709,136 shares have voted in favor of this resolution; 519,697 shares have voted against this resolution; 59,617 shares have abstained from voting on this resolution, and there were 5,357,953 broker non-votes.
Jeffrey A. Fiarman
I hereby declare the nonbinding advisory resolution on the company's executive compensation program is approved.
on the motion that the proposed amendment to the 2009 stock incentive plan be approved, the holders of 39,882,105 shares have voted in favor of this resolution; 6,368,032 shares have voted against this resolution; 38,313 shares have abstained from voting on this resolution, and there were 5,357,953 broker non-votes.
Jeffrey A. Fiarman
I hereby declare the amendments to the 2009 stock incentive plan approved.
On the motion that the selection of PriceWaterhouseCoopers, LLP as the company's independent auditors for the current fiscal year be ratified, the holders of 39,882,105 shares have voted in favor of this resolution; 6,368,032 shares voted against this resolution; 38,313 shares have abstained from voting on this resolution, and there were broker non-votes 5,357,952.
Jeffrey A. Fiarman
I hereby declare that the selection of PriceWaterhouseCoopers as the company's independent registered public accounting firm for the current fiscal year has been ratified.
This concludes the formal portion of the meeting. Do I hear a motion to adjourn?
I so move.
I second the motion.
Jeffrey A. Fiarman
I declare that the formal portion of this meeting adjourned. At this time, I would like to turn the meeting back over to Jon for his presentation.
However, before doing so, before Jon begins, let me remind everyone that his presentation will contain forward-looking statements. Investors should be aware that any forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in the company's filings with the Securities and Exchange Commission. Please refer to these filings for more detailed discussion of forward-looking statements and the risks and uncertainties of such statements.
All forward-looking statements are made as of today and except as required by law, the company takes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Jon?
Jonathan W. Ayers
Thank you, Jeff. Congratulations to our newly elected or reelected members of the Board of Directors.
So I'd like to start off the presentation of our business with our purpose and guiding principles. These are important part of the DNA of the company, and they're meaningful, I think, to all the employees. It's our purpose, if you will: To be a great company that creates exceptional long-term value for our customers, employees and shareholders by enhancing the health and well being of pets, people and livestock.
We have 6 guiding principles that give us guidance on how to achieve this purpose: to achieve and sustain market leadership; to exceed the expectations of our customers, empower and reward our employees; innovate with intelligence; cultivate entrepreneurial spirit and contribute to our communities. So when we talk about enhancing the health and well being of pets, people and livestock, it's interesting to review the composition of our businesses in terms of the revenue that we achieved in the year 2012 of close to $1.3 billion. And the large majority of that is what we refer to as the continuum of growth. And I will come back to the other businesses, but I'd like to start first with the discussion of the largest segment here, which contributes 83% of our revenues. In this business, we serve pet health care providers. This is the veterinarian that's providing care for the family -- your family dog or cat or parrot or a ferret or whatever and with advanced -- helping provide that care with advanced diagnostics and information technology.
So we just look into that 83% revenue in a little bit more detail. We really have essentially 2 categories of product and services. The first is practice management client communications and digital imaging, a number of areas that really revolve around -- on the practice management of our customers; and the second is diagnostic information. I will come back of the diagnostic information in a minute. But I would just like to spend a little bit of time on the practice management side of the business. We are a leader in practice management software in the North American market with our leading Cornerstone product that not only helps practice manage -- advantage [ph] but also provides electronic medical records and number of related functionalities. And then we also recently, in the fourth quarter of last year, purchased another practice management software company, which we thought was a good product called DVMAX. And between those 2, we have over 7,000 customers in North America for practice management.
We're also in the segment a leader in digital radiography, which is an emerging trend. Probably about half of practices in North America now have moved from film radiography to digital in a -- this is, of course, in a medical context. But really, the benefits -- there are many medical benefits that you can think of them as the benefits of moving from film photography to digital photography. But these are large and more complex systems, and we're the leader. We're a leader in providing that with many information technology-related elements.
And then an area that we just formally launched, we developed over the course of late 2011 and over the course of 2012 and formally launched in a commercial way with hundreds of customers in the first quarter 2013 is what we called client communications, which is a Software-as-a-Service that allows our customers, the veterinarian, to have a deeper continuing relationship with their clients, the pet owner, between checkout and checkin. So if you think about visiting a practice, you obviously have a very important and intense relationship between check-in and checkout. But we're finding in this world that it's really important that, that be an ongoing relationship in order to provide full value and to ensure that the veterinary practice and veterinary care stays relevant in today's crowded world of messages and alternative ways of diverting attention. We know pet owners have strong bond with their pet. That is a fundamental and enduring aspect of the human condition, and of course, the need that we are addressing to veterinary care and providing the technologies. But it's also important for the pet owner to have a strong bond with their veterinarian in providing the care and of course, for veterinarian to have a strong bond with the pet.
So you could see that there's a more sophisticated way of thinking about veterinary care. And like in many other businesses, having an easy-to-use automated way of sharing information on the pet and reminding of appointments, of scheduling appointments, of providing other medical information, and electronically easy way is a valuable service. So we launched that to a great success this year as a subscription-based revenue generating service. And just to give you a sense from a pet owner, what we're talking about here, this is the -- this is an image of what our system provides as a pet owner, who is a client of the veterinary practice. And it's what we call Petly, which is a page that is, if you will, has all the relevant information on the pets that are being cared for by the veterinarian. So any kind of recent diagnostic or exam information is loaded here. The pet owner can add or the practices they have, they can add pictures of the pet, relevant medical information that would help educate the pet owner for caring for the pet is available.
And then, in this world of social media, many practices now understand the importance of having an active and ongoing Facebook page. But what this does is invent their specific customized Facebook page into the Petly site. So it's really a place the pet owner can go to receive or have access to information on their pet that they may need for any variety of reasons. And it's also an -- a place that the veterinarian can deposit and can add additional information on the results of an exam or reminder of future appointments or maybe from the pet owner to automatically schedule an appointment, all done electronically and integrated it with our practice management software with the veterinarian.
So this is both of course, client-friendly and it helps the veterinarians grow their practice and ensure that a level of standard of care that can be provided is, in fact, provided through strong connection with the pet owner with relevant medical information about the pet. So we're really excited about it. It's really creative work that's been done by the team of IDEXXers who developed this, and we're really getting -- we're getting rave reviews about it in the field. So we think it's a growing area in where we call client communications, where electronic automated cloud-based service could be helpful.
Turning now to the other portion, much larger portion, our Companion Animal Group. This is what we referred to as diagnostic information. And what we're talking about here is that information -- this is the information that is of high value and medically relevant, and gets clues to the pet's health status, and also information that can be used by the veterinarian to help communicate that health status to the pet owner. And it turns out that communication is important because in our segment of the medical world, the pet owner pays for the medical care. So when they understand the value of that medical care, we know the bond is there and one understands the value of that medical care, they're more likely to comply with a follow-up with the appropriate medical recommendations for that pet owner.
So the information that -- or this diagnostic information that we're providing really has 2 interrelated and parallel purposes. One is medical insight for the medical professional, and the second is a communication tool to the pet owner. So our value here is information. And this is a new way of thinking about our business. And it's transforming our business and transforming, I think, the practice of veterinary medicine. In fact, I think, it has the potential of showing veterinary medicine the way it could be in all the medicine, and I'll come back to the proof points behind that.
But traditionally, perhaps we thought of ourselves in more specific businesses that we're the generators of this diagnostic information. So I'm going to take this same pie chart and look at it a little differently. And these are, if you will, the modalities that generate this information. So -- and we were generally talking about information on the pet that's derived from blood or urine or other body fluids or tissue samples or other things, the primary areas of blood, of course, but an analysis that provides information, and there are different ways, each with the relative advantages, and all of which are used by practices in some ways or shape or form in order to generate that information on the pet from these samples. So one of them is to send that sample to and outside the reference lab and for that reference lab to process that samples with a variety of diagnostic technologies, whatever a veterinary may choose for that particular set of tests or menu of tests for the -- and then -- for that patient and then to send that information back. And we'll refer to that historically as the reference laboratory diagnostic and consulting services. And sometimes, we've actually just thought about this as a separate business. But we now realize it's actually not a separate business. It's actually a modality to this larger, larger hole.
Second modality really is the set of technologies that allow that analysis to take place during -- within the practice and during actually the appointment. So the information is available towards the end of appointment for the medical professional to communicate the results and potential action plan coming out of that information combined with the history and the physical exam. And those 2 modalities, related modalities, are our instrument business, which generally is providing chemistry and hematology analysis of blood work. And we have a set of instruments and consumables that are part of that modality. And then the single-use test kits that don't require all the [indiscernible] and instruments to analyze the results and typically assay technologies.
So while these are the means, traditionally we have thought of these as the businesses. But they really are the means to provide this highly medical -- or highly valuable medical insight into the pet owner. Of course, they are different technologies. They are very different in terms of running these businesses. The needs are very different. But what we have built over the last 2 decades and we now really very recently have is the worldwide leadership position in each of these modalities.
And in addition, we're the only one who has anything close to a complete set of worldwide capabilities that provides diagnostic information. So when we put it all together, we believe that our customers receive more as a whole than even the value of the sum of the parts of these different services. As I said, customers use all of these services one way, shape or form or another. And we call that the IDEXX Diagnostic Advantage.
So let me give you the most specific proof point for how we're thinking differently about our business and how we're providing value in a transformative way to our customers, veterinarians. This is the most specific and visible example of diagnostic information as information, but it's not the only one. So stepping back, as when you think a little bit about it, if our product, if our value is information, it turns out not too hard to understand. Information technology can add value to that information, and that's indeed what we've done with something we call VetConnect PLUS. This is the most specific example of the IDEXX Diagnostic Advantage. And so we've got these 3 modalities, if you will, the reference lab, the in-house instruments and point-of-care assays that are feeding one place, where all this information is put together in a cloud-based service that we call VetConnect PLUS. And so VetConnect PLUS is taking advantage of technologies that are really changing the world and changing industries across the world in profound ways, technologies such as cloud computing, mobile -- mobile technologies, tablets and smartphones, if you will, and big data and other related technologies. And we are harnessing these technologies for the benefit of the veterinary profession and for pet owners.
So last year, we introduced VetConnect PLUS. It was one of our biggest innovations in 2012. We have over 6,700 practices who have adopted and activated VetConnect PLUS. And the key benefits here -- and what you can see here these are lab results for a single patient that are done over time. So this is all the diagnostic information that we have generated across our modalities in one place. It turns out it's very helpful to have everything in one easily accessed place, and you get a lot more medical insight when you see it all together. Think about tax time, when you got to pull together all your tax receipts and put it together, it's all helpful to have it in one place. Well, medical information is in the same way. So the first value, in one place.
Second, you have instant mobile access to this information. So let's just talk about how important and how profound that is. It doesn't sound that profound, but it is in the veterinary profession. Our instruments generate information. As soon as that information is generated, it's uploaded into the cloud, into this -- within seconds. Instant mobile access. We're the only company that actually provides equipment that can do that, that can actually, not only provide it, generate comprehensive information, and we'll talk about our equipment is different. But it's connected and can upload and provide that instant mobile access. And so previously, our competitors, they provide instruments but don't have any ability to connect with the cloud or provide that mobile access.
Third, software allows for further analysis of that combined data for greater medical insight. Now I'm going to come back to that further example, that analysis in a minute.
Fourth, because it's electronic, it's easy to share this information. Now why would you want to share this information? You might want to share it with other medical professionals in order to get a second opinion or a referral to a specialist. And so they have the same information that the pet owner has already paid for at the primary care. Or maybe want to share it with a board-certified internal medical consultant, like we provide, to have a better analysis of what might be the issue with this or how to look at this data from a professional point of view.
And then finally, another great example that how information technology can add value to information, we can adopt this information for different audiences. So we're going to talk here about how we've adopted it for the medical professional for an analysis. But you can take that same information and adopt it for the pet owner. The pet owner is not a medical professional, but the pet owner wants to know, wants to be empowered, and we need to use more simple common language the pet owner can understand, so they can easily understand the medical status of the pet. And so information technology can take that same data and reformat it and then provide it electronically or by report or paper or any variety of means to help the veterinarians have a great appreciation of value by the client for blood work or the diagnostics that they paid for on their pet.
So I'm going to give you an example of the analyzing. Just to show you how profound this change is and what information technology can do to diagnostic information, this is your typical result. By the way if you get your own blood work, this is how you're going to get your result. As a matter of fact, I have my blood work done earlier this week, and I got a number for each parameter. That was very nice. They got a number. I had no idea what that number meant, but they gave me a reference range. And you can see the reference range there. This is creatinine, happens to be parameter that determines the health of the kidney. And that's the normal range for the entire canine species is somewhere between 0.4 and 1.8, is 1.5. So then we innovated many years ago an IDEXX innovation, where we gave a different visual representation of that single data point within the reference range. And if it was within the reference range, it was black and inside those 2 lines. So we try to make it a little easier to understand where that 1.5 was within or outside the reference range. So those happen to be a number of innovations of a single data point. But as I -- if you recall what I said, what VetConnect PLUS does is it combines data, all the data on the pet, any data that had -- any diagnostic data had been generated by one of the IDEXX diagnostic modalities.
And so what we can do there is we can look at that result in the context of other results that will run on that pet. And in this particular example, this pet, which is a dachshund, I happen to have a lot of blood work, and we can actually show that graphically. And so here's that data point. And so while that data point is within the range, it actually turns out there's something going on there that will that -- that in this case would have been diagnostically significant, that kidney failure was happening. And everybody understands the story. Everybody looks to this chart, any pet owner, any veterinarian can understand there is something changing in this parameter. And that's the power of what information technology can do to add value to consolidate or [indiscernible]. It's just one of many, many examples of how we're adding value. We call this trending.
And trending can have a number of different applications. What trending does is it actually helps tell a story when there's a story that needs to be told about a pet. So let me give you 2 examples that have happened within the last couple of weeks in the veterinary profession of where VetConnect PLUS added a lot of value. One was a particular patient called Precious. Precious was a dog that had a very unfortunate condition called -- and you don't need to know the name of it. It's called immune hemolytic anemia. In other words, a low red blood cell count as a result of very specific condition, which is treatable. And this was -- the pet kept on having -- coming in and having problems. And through VetConnect PLUS, the practice was able to actually, instead of just sort of understanding this pet, kept on getting better and then worse and better and worse in some kind of theoretical way without really being able to show that in the picture. It was actually able to show the picture of the red blood cell count being normal and then abnormal, then normal and abnormal. And what was happening was the pet owner was forgetting to provide the medication to the pet, and they crash and they come back in. Well, what this allowed the practice to do is to have a much more helpful and informed conversation with the pet owner, about what was happening and what the pet owner could do to ensure that Precious, which obviously was quite precious, so the pet owner would be able to stay healthy with this particular condition. Very, very powerful way, where we are indeed enhancing the health and well being of pets, people and livestock.
Let me give you a second example, which was not when we would have thought of when we introduced VetConnect PLUS. And this was an example of where the veterinarian was working with the pet owner with a very sick pet, very, very sick. In fact, the veterinarian had realized that this was an untreatable condition and the pet was in a very serious condition, and it was probably time medically to put that pet down. A very emotional decision, very difficult decision, a decision which the pet owner must make. And yet the pet owner doesn't have the information that the medical professional has other than the medical professional, the veterinarian's recommendation. So you can imagine and when you're a pet owner, you're playing God here. "Am I doing the right thing? Am I doing the wrong thing? Am I feeling guilty because I got to make decisions, or is this the right decision?" Extremely difficult decision. And what this veterinarian said was through VetConnect PLUS, they were able to have a conversation with the pet owner and show the pet owner the parameters and why that was the compassionate thing to do. That was how the pet owner could best communicate their love to their pet that that was the right decision. And this allowed the pet owner to make that decision feeling -- even though it was a very difficult decision and feeling the sense of loss, feeling it was also a compassionate thing to do.
So you can see in this situation, that information can have a tremendous impact on the whole pet-human bond in so many different ways, not just advancement in medical care and advancement in health and well being, but in many other examples like this one that I just mentioned. So it is a profound transformation as we move from static data to data that's in a dynamic system that we call VetConnect PLUS. In fact, we routinely now hear veterinarian who say, "Once I start looking at the patient information at VetConnect PLUS and I start to see some of these different advantages, I never want to go back to a piece of paper with a single result and set of reference ranges. I never want to go back because I realize how primitive, how extraordinarily primitive that is," which is by the way, how I received my blood work earlier this week, was in that very primitive fashion. We're not going to solve a human health care problems, but we would like to show in veterinary medicine the way it could be in all of the medicine.
However, we can't be successful in having a whole package unless we're world class in the individual mortalities. And in fact, we have established a worldwide leadership and also in different countries, a national leadership, particularly in North America, where we've built out a nationwide reference lab in the U.S. and another one in Canada. And we've also provided point-of-care instruments. So this is an example of really one of the value propositions that is unique to the IDEXX in-house instruments and rapid assays, and what we call is Real-Time Care. We're unique in the ability to be able to have a technician turn results around, have information within the 20- to 30-minute exam that can then be shared with the pet owner. So with the example, you're the 2 p.m. check-in, the exam, the blood work's taken, the test is run and by 2:21, the results are instantly available, in this case, on the electronic tablet or iPad. It doesn't even have to be brought back from the back of the practice to the front, and communicated to the pet owner all within that 30-minute exam and check out by 2:25, with that information further e-mailed or added to the pet owner's Petly site. This has allowed pet owner experience. But more importantly, when you have the answers and you can provide a more definitive follow-on set of recommendations and a face-to-face concept evidence is clear but that there is a greater pet owner standing and therefore compliance with follow-on recommendations, which is helpful to the economic success of the practice and helps the practice grow their income per visit, to reach the potential standard of care that's possible. And all this can be done with higher staff productivity because you're dealing with that pet always in that exam. And in this case, where the work can be done in-house, there's nothing to follow up, no incremental work that has to be done. And then, subsequently, in this case, where the testing could be done in-house, no need to actually call the pet owner back later and to finish that conversation. And that's actually a very, very inefficient where you break things up into a lot of different events that are spaced in time.
So Real-Time Care is something that is part of our world-class instrument and Rapid Assay offering. Of course, we've got a number of other advantages. We do have a world-class set of equipment, and so our in-house modality that we call the instrument analyzers and consumables set of instruments that work together. It's a razor, razor-blade business model from a business point of view. In other words, the razor instrument and blade are the consumables that are used with each pet owner and they're very specific and proprietary to the instrument. And we have a couple of key technologies, the chemistry analyzer Catalyst. We're very excited to have announced the 10,000th Catalyst installation earlier this week. And we're also have a world-class hematology capability with ProCyte, which is the premier hematology point-of-care offering. And then the next generation LaserCyte, which is still several steps ahead of anything else. Even though it's our lower cost offering, it's still several steps of anything else on the market in terms of point-of-care hematology, in terms of its comprehensiveness and accuracy, and of course its ability to connect and communicate through the Internet those results. All of this is -- all of our instruments, these and our other instruments that are part of the IDEXX suite, are connected to what we call the IDEXX VetLab Station. And we've been selling the IDEXX VetLab Station since 2003, especially we have over 19,000 installed. One of the unique -- this is totally unique to the IDEXX VetLab Station and in fact, IDEXX's entire instrument offering, is this local information system has actually saved every single pet owner on the run ever done by that practice. And so when we activate a customer with VetConnect PLUS, they actually receive in the cloud all the information that they've saved on their local hard drive and they liberated that, for instance, mobile information access, where previously it was trapped inside this terminal. And then, of course, this is also the hub that allows that system to connect to third party and IDEXX practice management software like Cornerstone or DVMAX. And there are a number of important economic and work we'll benefit to having everything working back and forth and working together. And we are, by far, the leader in the field by doing that.
The other modality, as I mentioned, is the reference lab and consulting services. We have built a worldwide and the a nationwide network. And what we're talking about here is that these are a level of service that is generally pick up in the morning for twice-a-day service and results by the end of the day or pick up in the evening results generally available the next morning for most technology. So a very well-oil logistics network behind being able to do this in the different countries that we offer this. What's also important to know with our reference lab is that we have been big innovators in terms of advanced -- introducing a whole set of innovative and novel test technologies that are unique to the IDEXX reference labs that provide more medical information. These would be in the areas of vector-borne disease or other types of infectious diseases, organ conditions such as ones with the pancreas or cardiac or another difficult area for dog owners, allergy, itchy dog. And so these are just how we've continued to build out the testing technology that can be offered in the reference lab.
In addition, we've continued to build out the network. And we have established in Germany now a core lab that is aligned with the DHL logistics network in the same way that our Memphis lab is aligned with the Federal Express nationwide logistics networks, so that practices can have results picked up in the evening and results available by 8 a.m. the next day. And Leipzig is the location of this. It works closely with our partner lab in Ludwigsburg, Germany, which is a large core lab that has a lot of specialized testing capability.
Leipzig just opened in the fourth quarter, and the first quarter was the first full quarter, and we're really pleased in the early days. So even though it's small numbers, we have twice the number of anticipated incremental revenue especially with the new lab. And that new lab is now providing a world-class service to not just Germany but Italy, Sweden, Finland, Denmark, Norway and Belgium. And I might also mentioned, another thing that we've done in Europe, very exciting, is we've moved to a direct sales organization in the Nordic countries, Sweden, Denmark and Norway. And we've seen a 35% year-over-year growth in the revenues in those because we're doing a much better job of servicing those customers with our direct sales force.
One of the big changes that we are now undertaking in North America that is consistent with the strategy is changing our sales organization. And if you look at what we've done is we've had 2 specialized sales forces, and they've done a very good job in selling these specific modalities, the in-house instruments, in this case, in the reference lab. But actually the degree of customer overlap between the 2 is relatively small. In this case, only 36% of customers are actually using the full IDEXX Diagnostic Advantage. And so now that we have a nationwide lab network and of course, the nationwide in-house installed base, we've moved to a -- in the process -- over 2 quarters of moving to what we call a veterinary diagnostic consultant role. So previously, we had a variety of in-house equipment specialists that were very transactional in selling customers new equipments with in-house equipment systems, and we had 2 x the number of reps that we have there that we had outside lab, outside specialists who sold our reference lab services. So if we had, say, approximately 40, 50 in-house reference labs, we had approximately double that number of equipment specialists. And what we've done is we've now made them -- allow them to carry the whole bag and have a smaller territory, so they can have deeper customer intimacy and greater productivity because they don't have to drive as far to cover their territory. So this is a single point of content where we're now a diagnostic information provider with the IDEXX Diagnostic Advantage, and smaller territories, which allows for, we believe, up to a 60% increase in the customer call per sales professional because they don't have to drive as much and they can be more organized in their -- in the way they cover their territory. We're actually covering more customers with reps. We're able to -- and doing this, we coupled this with an expansion of our territory. And in that expansion, we actually redistrict the whole nation and we balance all the territory to get this greater productivity. And we believe that this is a role that our reps had told us is a more fulfilling role and one which allows them to have sales careers for a long time with IDEXX, which gives us greater tenure and retention and allows for deeper customer relationships, which customers want. This is a very customer-centric way. We believe that this transformation of our sales force will help us continue to have strong growth in the adoption of the IDEXX Diagnostic Advantage and the increased utilization of diagnostics in the veterinary practice all for the benefit of the practice, the pet and the pet owner.
So I'm going to turn very briefly to other parts of the business before we open it up to questions. We have some fabulous businesses where we're world leader in Livestock and Poultry Diagnostics. And we're introducing a number of new technologies in that area like the [indiscernible] diagnostics, pregnancy testing form, what we called fast form [ph], animal site testing. And we're also expanding into emerging markets that are appreciating the benefit of diagnostics for herd productivity. And we have -- we're the world leader in testing water, testing the quality of the water supply to ensure that it doesn't have microbial contamination.
In addition, when you look across the IDEXX portfolio, we are very international company, 59% of our revenues do go out from the U.S. But we're represented all over the world with strong country management organizations. And we see international growth as an important part of the IDEXX growth story going forward as it has been historically.
From a revenue point of view, we've had a good revenue growth over the years. It's allowed us to grow our employment, I think, over my tenure of 11 years. We've grown our employment in just -- in the Westbrook campuses from 800 to 1,800. And the same time, we've had good growth, double-digit growth in profitability over that period of time. Realizing our vision to be -- create exceptional long-term value for our shareholders as well as their employees and our customers.
Profitability wise, we've become more efficient and we've been able to expand our operating margins and generate strong cash coming out of that business, which we had generally -- we invested in a sustained multi-decade share repurchase program.
And then just a quick update on the first quarter results, continued good growth in the revenue and profitability. We're also relatively unlevered company. If you net out the cash from the debt, we have net debt of $34 million, which is very small for a $1.3 billion company. So very, very strong financially and stable organization.
Now those of you who are here local, when you drove in, you probably saw our new building that is nearing the end of its construction. We need this building for growth to house all the people that we've been hiring. And we're very proud of this because we are going for the gold, if you will, reaching gold-level LEED certification. As many of you know, LEED is a certification of sustainability and environmental friendliness by the U.S. Green Building Council. It stands for Leadership in Energy and Environmental Design. But there are many, many innovations associated with this building, which we think will lead to employee satisfaction, productivity and realization of our purpose. And we really are quite proud of this expansion to our operations here in Westbrook.
We also, as I mentioned, one of our guiding principles is to contribute to the communities. And one of those contributions is a greater and greater focus on sustainability. And this is really a grassroot separate across the company, and we have a number of examples of efforts where we're adhering to what we call the triple bottom line result, where it's good for the business and good for the society. But in this case, it's just one example of how we've been able to reduce our carbon footprint. And this metric, which looks like some physics equation, is actually tons of carbon dioxide equivalents per full-time equivalent employee, and you can see over this period of time from 2009 when we started auditing this information, we've been able to reduce this as a result of investment in environmentally friendly systems that reduce our carbon footprint. So it's just one of the great examples of our focus on sustainability, which will become more and more important part of the company going forward.
So with that, I'd like to conclude my remarks. It's really impossible talking about all the exciting things that are happening at IDEXX. But we really think we're at a transformative point in the company's history, where we're taking very, very strong biotechnology engineering and software, and we're putting it all together for a transformative way of providing medical care in the veterinary profession. And then we have some other great businesses that are also good growth vectors for us.
And with that, I'll conclude my remarks, and we will conclude the webcast portion of the presentation.
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