IDEXX LABORATORIES INC /DE (IDXX)

CIK: 0000874716. SIC: 2835 In Vitro & In Vivo Diagnostic Substances. Latest 10-K as of: 2026-02-20.

SIC breadcrumb: Manufacturing > Chemicals And Allied Products > SIC 2835 In Vitro & In Vivo Diagnostic Substances

SEC company page: https://www.sec.gov/edgar/browse/?CIK=874716. Latest filing source: 0000874716-26-000038.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-20. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000874716.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

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Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-20. Report date: 2025-12-31.

ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10‑K. The discussion of our financial condition and results of operations and liquidity and capital resources for the year ended December 31, 2023, and year-over-year comparisons between 2024 and 2023, is included in our Annual Report on Form 10-K for the year ended December 31, 2024, within Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

We have included certain terms and abbreviations used throughout this Annual Report on Form 10-K in the “Glossary of Terms and Selected Abbreviations.”

Description of Business Segments. We operate primarily through three business segments: diagnostic and information management-based products and services for the companion animal veterinary industry, 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 measure the quality and safety of milk and improve producer efficiency, which we refer to as Livestock, Poultry and Dairy (“LPD”). Refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 3. Revenue and Note 17. Segment Reporting” to the consolidated financial statements for the year ended December 31, 2025, included in this Annual Report on Form 10-K, for financial information about our segments, including our product and service categories, and our geographic areas.

The following is a discussion of the strategic and operating factors that we believe have the most significant effect on the performance of our business.

Companion Animal Group

Our strategy is to provide veterinarians with the highest quality diagnostic information, software products and services, and medical evidence to support more advanced medical care and information management solutions that help demonstrate the value of diagnostics to pet owners and enable efficient and effective practice management. By doing so, we are able to build a mutually successful relationship with our veterinary customers based on healthy pets, loyal customers, staff efficiency, and expanding practice revenues. We also provide products and services that support veterinarians in engaging and communicating directly with pet owners.

CAG Diagnostics. We provide diagnostic capabilities that meet veterinarians’ diverse needs through a variety of modalities, including point-of-care diagnostic solutions and outside reference laboratory services. Veterinarians that utilize our full line of diagnostic modalities obtain a single view of a patient’s diagnostic results, which allows them to track and evaluate trends and achieve greater medical insight.

Our diagnostic capabilities generate both recurring and non-recurring revenues. Revenues related to capital placements of our point-of-care IDEXX VetLab suite of instruments and our SNAP Pro Analyzer are non-recurring in nature because they are sold to a particular customer only once. Revenues from the associated IDEXX VetLab consumables, SNAP rapid assay test kits, reference laboratory and consulting services, and extended maintenance agreements and accessories related to our IDEXX VetLab instruments and our SNAP Pro Analyzer are recurring in nature, because they are regularly purchased by our customers, typically as they perform diagnostic testing as part of ongoing veterinary care services. Our recurring revenues, most prominently IDEXX VetLab consumables and rapid assay test kits, have significantly higher gross margins than those provided by our instrument sales. Therefore, the sales mix of recurring and non-recurring revenues in a particular period will impact our gross margins.

Diagnostic Capital Revenue. Revenues related to the placement of the IDEXX VetLab suite of instruments are non-recurring in nature, because the customer will buy an instrument once over its respective product life cycle, but will purchase consumables for that instrument on a recurring basis as they use that instrument for diagnostic testing purposes. Many instruments are placed through our customer commitment arrangements in exchange for multi-year customer commitments to purchase recurring products and services.

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Below is a table showing the installed base units of our premium diagnostic instruments as of the years ended December 31, 2025, 2024, and 2023:

(units in thousands)

Installed Base

Instrument

December 31, 2025

December 31, 2024

December 31, 2023

Catalyst

78

74

69

Premium Hematology

56

52

48

SediVue Dx

24

21

18

IDEXX inVue Dx

6

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Our long-term success in the continuing growth of our CAG recurring diagnostic products and services is dependent upon: growing volumes at existing customers by increasing their utilization of existing and new test offerings, acquiring new customers, maintaining high customer loyalty and retention, and realizing price increases based on our differentiated products and the growing value of our diagnostic offering. We continually seek opportunities to enhance the care that veterinary professionals give to their patients and clients through supporting the implementation of real-time care testing workflows, which are performing tests and sharing test results with the client at the time of the patient visit. Our latest generation of chemistry, hematology, cytology/morphology, and urinalysis instruments demonstrates this commitment by offering enhanced ease-of-use, faster time to results, broader test menu, and connectivity to various information technology platforms that enhance the value of the diagnostic information generated by the instruments. In addition, we provide marketing tools and customer support that help drive efficiencies in veterinary practice processes and allow practices to increase the number of clients they see on a daily basis.

With all of our instrument product lines, we seek to differentiate our products from our competitors’ products based on time-to-result, ease-of-use, throughput, breadth of diagnostic menu, flexibility of menu selection, accuracy, reliability, ability to handle compromised samples, analytical capability of diagnostics software, integration with the IVLS and VetConnect PLUS, client communications capabilities, education and training, and superior sales and customer service. Our success depends, in part, on our ability to differentiate our products in a way that justifies a premium price.

Recurring Diagnostic Revenue. Revenues from our IDEXX VetLab consumable products, our SNAP rapid assay test kits, outside reference laboratory and consulting services, and extended maintenance agreements and accessories related to our CAG Diagnostics instruments are considered recurring in nature. For the year ended December 31, 2025, recurring diagnostic revenue, which is both highly durable and profitable, accounted for approximately 79% of our consolidated revenue.

Our point-of-care diagnostic solutions, consisting of our IDEXX VetLab consumable products and SNAP rapid assay test kits, provide real-time reference laboratory quality diagnostic results for a variety of companion animal diseases and health conditions. Our outside reference laboratories provide veterinarians with the benefits of a more comprehensive list of diagnostic tests and access to consultations with board-certified veterinary specialists and pathologists, combined with the benefit of same-day or next-day turnaround times for most tests.

We derive substantial revenues and margins from the sale of consumables that are used in IDEXX VetLab instruments, and the multi-year consumable revenue stream is significantly more valuable than the placement of the instrument. Our strategy is to increase diagnostic testing within veterinary practices by placing IDEXX VetLab instruments and increasing instrument utilization of consumables. Utilization can increase due to a greater number of patient samples being run or to an increase in the number of tests being run per patient sample. Our strategy is to increase both drivers. To increase utilization, we seek to educate veterinarians about best medical practices that emphasize the importance of chemistry, hematology, cytology/morphology, and urinalysis testing for a variety of diagnostic purposes, as well as by introducing new testing capabilities that were previously not available to veterinarians.

Our point-of-care diagnostic solutions also include SNAP rapid assay tests that address important medical needs for particular diseases prevalent in the companion animal population. We seek to differentiate these tests from those of other point-of-care test providers and reference laboratory diagnostic service providers based on critically important sensitivity and specificity, as demonstrated by peer-reviewed third-party research, as well as overall superior performance and ease-of-use by providing our customers with combination tests that test a single sample for up to six diseases at once, including the ability to utilize our SNAP Pro Analyzer. We further augment our product development and customer service efforts with sales and marketing programs that enhance medical awareness and understanding regarding certain diseases and the importance of diagnostic testing.

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The prevalence of point-of-care testing, as opposed to outside reference laboratories such as IDEXX Reference Laboratories, may vary by region. We attempt to differentiate our reference laboratory testing services from those of competitive reference laboratories and competitive point-of-care offerings primarily on the basis of a differentiated test menu, technology employed, quality, turnaround time, customer service, and tools such as VetConnect PLUS that demonstrate the complementary manner in which our laboratory services work with our point-of-care offerings.

Profitability in our laboratory business is supported, in part, by our expanding business scale globally. Profit improvements also reflect benefits from price increases and our ability to achieve operational efficiencies. When possible, we utilize core reference laboratories to service samples from other states or countries, expanding our customer reach without an associated expansion in our reference laboratory footprint. New laboratories may operate at a loss until testing volumes achieve sufficient scale. Acquired laboratories frequently operate less profitably than our existing laboratories, and acquired laboratories may not achieve the profitability of our existing laboratory network for several years until we complete the implementation of operating improvements and efficiencies. Therefore, in the short term, new and acquired reference laboratories generally may have a negative effect on our operating margin.

Recurring reference laboratory revenue growth is achieved both through increased testing volumes, including new test menu additions, with existing customers and through the acquisition of new customers, net of customer losses. We believe the increased number of customer visits by our sales professionals as a result of the growth in our field sales organization has led to increased reference laboratory opportunities with customers who already use one of our point-of-care diagnostic modalities. Recurring reference laboratory diagnostic and consulting revenues have also increased as a result of our customer commitment arrangements, and customer gains from reference laboratory acquisitions, customer list acquisitions, and the opening of new reference laboratories, including laboratories that are co-located with large practice customers.

Veterinary Software, Services, and Diagnostic Imaging Systems. Our portfolio of practice management offerings is designed to serve the full range of customers primarily within the North American, Australian, New Zealand, and European regions. Cornerstone, ezyVet, IDEXX Neo, and Animana practice management systems provide integrated information solutions, backed by customer support and education. These practice management systems support the veterinarian’s ability to practice better medicine and achieve the practice’s business objectives, including a quality client experience, staff efficiency, and practice effectiveness and profitability. We market Cornerstone, ezyVet, and IDEXX Neo practice management systems to customers primarily in North America, Australia, and New Zealand. We market our Animana offering to customers primarily throughout Europe.

Our diagnostic imaging systems offer a convenient radiographic solution that provides superior image quality and the ability to share images with clients virtually anywhere. IDEXX imaging software enables enhanced diagnostic features, including AI-powered tools, reduced manual steps, and time savings on diagnosis, as well as streamlined integration with our other products and services. Our digital radiography systems enable low-dose radiation image capture without sacrificing clear, high-quality diagnostic images, reducing the risk posed by excess radiation exposure for veterinary professionals.

Recurring Revenue. Animana, ezyVet, and IDEXX Neo practice management systems are subscription-based SaaS offerings designed to provide flexible pricing and a durable, recurring revenue stream, while utilizing cloud technology instead of a client server platform. We also offer add-on subscription services, such as Pet Health Network Pro, Vello, Petly Plans, and credit card processing. Our Cornerstone customer base continues to be an important driver of growth through diagnostic integrations and add-on subscription services. We continue to make investments to enhance the customer experience of all of our license-based software offerings. Our large practice management systems installed base provides access to veterinary channel transaction activity, enabling a syndicated data offering.

Our SmartFlow and Vet Radar cloud technology help to improve overall patient management through coordination and tracking of every step in a patient workflow. Our Pet Health Network Pro and Vello software provide online client communication and engagement functionality integrated into our practice management system workflows.

Placements of imaging systems are important to the growth of revenue streams that are recurring in nature, including extended maintenance agreements and IDEXX Web PACS, which is our cloud-based SaaS offering using proprietary AI capabilities to enable optimal sharing, analysis, and storage of diagnostic images. We derive relatively higher margins from our subscription-based products. IDEXX Web PACS is integrated with Cornerstone, ezyVet, IDEXX Neo, and IDEXX VetConnect PLUS to provide centralized access to diagnostic imaging results alongside patient diagnostic results from any internet connected device.

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Systems and Hardware. We differentiate our practice management systems through enhanced functionality, ease-of-use, and embedded integration with point-of-care IDEXX VetLab instruments and outside reference laboratory test results. We offer software, hardware, and integrated services that run key functions of veterinary clinics, including managing patient electronic health records, scheduling, client communication, billing, and inventory management. We also provide installation and advisory services associated with our systems and hardware placements.

Our diagnostic imaging systems capture radiographic images in digital form, replacing traditional x-ray film and the film development processes, which generally require the use of hazardous chemicals and darkrooms. We currently market and sell two diagnostic imaging systems primarily used in small animal veterinary applications: the IDEXX ImageVue DR50 and the IDEXX ImageVue DR30. The IDEXX ImageVue DR50 Plus, which launched in North America in January 2026, combines high definition, AI-powered imaging with a lower dose of radiation compared to our current IDEXX ImageVue DR50 system.

Water

Our strategy in the water testing business is to develop, manufacture, market, and sell products that test primarily for the presence of microbial contamination in water matrices, including drinking water supplies, with superior performance, supported by exceptional customer service. Our customers primarily consist of water utilities, government laboratories, and private certified laboratories that highly value strong relationships and customer support. We expect that future growth in this business will be partially dependent on our ability to increase international sales. Growth also will be dependent on our ability to enhance and broaden our product line. Most water microbiological testing is driven by regulation, and, in many countries, a test may not be used for compliance testing unless it has been approved by the applicable regulatory body and integrated into customers’ testing protocols. As a result, we maintain an active regulatory program that involves applying for a growing number of regulatory approvals in a number of countries, primarily in Europe. Further, we seek to receive regulatory approvals from governing agencies as a means to differentiate our products from the competition.

Livestock, Poultry and Dairy

We develop, manufacture, market, and sell a broad range of tests and perform services for various livestock diseases and conditions, and have active research and development and in-licensing programs in this area. Our strategy is to offer differentiated tests with superior performance characteristics for use in government programs to control or eradicate disease and disease outbreaks and in livestock and poultry producers’ disease, reproductive, and herd health and production management programs. Our Alertys Ruminant Pregnancy Test, Rapid Visual Pregnancy Test, and Alertys On-Farm Pregnancy Test for cattle can detect pregnancy 28 days after breeding. These tests provide a quick and accurate identifier using whole blood samples.

Disease outbreaks are episodic and unpredictable, and certain diseases that are prevalent at one time may be substantially contained or eradicated at a later time. In response to outbreaks, testing initiatives may lead to exceptional demand for certain products in certain periods. Conversely, successful eradication programs may result in significantly decreased demand for certain products. In addition, increases in government funding may lead to increased demand for certain products, and budgetary constraints may lead to decreased demand for certain products. As a result, the performance in certain sectors of this business can fluctuate.

Our strategy in the dairy testing business is to develop, manufacture, and sell antibiotic residue and contaminant testing products that satisfy applicable regulatory requirements or dairy processor standards for testing of milk and provide reliable field performance. The manufacture of these testing products leverages the SNAP platform and production assets that also support our rapid assay business, which also leverages the SNAP platform. The dairy SNAP products incorporate customized reagents for antibiotic and contaminant detection.

CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS

The discussion and analysis of our financial condition and results of operations is based upon the consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 2. Summary of Significant Accounting Policies” to the consolidated financial statements included in this Annual Report

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on Form 10-K for a description of the significant accounting policies used in preparation of these consolidated financial statements.

We believe the following critical accounting estimates and assumptions may have a material impact on reported financial condition and operating performance and involve significant levels of judgment to account for highly uncertain matters or are susceptible to significant change.

Revenue Recognition

Refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 3. Revenue” to the consolidated financial statements for the year ended December 31, 2025, included in this Annual Report on Form 10-K for additional information about our revenue recognition policy and criteria for recognizing revenue.

We enter into arrangements with multiple performance obligations where customers purchase a combination of IDEXX products and services. The total transaction price of the contractual arrangement is allocated to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. We recognize revenue as each performance obligation is satisfied, which is when control of the related goods or services is transferred, either at a point in time or over time.

We determine the transaction price for customer contractual arrangements based on the total consideration we expect to receive in exchange for the transferred goods or services. We apply judgment to estimate the transaction price that we expect to earn from multi-year customer contracts, including variable consideration such as certain customer rebates and other incentive payments, and price adjustments. Our estimates are based on historical and projected experience with similar customer contracts, predicted future customer purchases, expected price adjustments and incentive utilization over the term of these arrangements, changing trends and market conditions, and other relevant factors. Variable consideration is included in the estimated transaction price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Differences between estimated and actual customer purchases may impact the timing and amount of revenue recognition during the term of the customer arrangement, and would affect revenue recognized in the period that such differences are incurred, but would not affect the total revenue recognized over a contract term. Although the timing of revenue recognition for these customer arrangements is dependent on estimates and assumptions, historically our adjustments to actual results have not been material. Changes to assumptions used to estimate transaction prices and differences between estimated and actual customer purchases are not reasonably likely to have a material effect on revenue recognized in any annual period or on revenue growth trends.

We determine standalone selling prices in order to allocate the expected consideration from a customer contract to the individual performance obligations. We utilize the observable standalone selling price when available, which represents the price charged for the promised product or service when sold separately. When standalone selling prices for our products or services are not directly observable, we determine the standalone selling prices for products and services using relevant information available and apply suitable estimation methods including, but not limited to, the cost plus a margin approach. We estimate the standalone selling prices for customers’ rights to earn rebates on optional future purchases that are determined to be material rights, which represent the expected value to the customers, based on our historical rebate experience, the contractual rebate structure and terms, and other relevant information. Changes in standalone selling prices would affect the allocation of customer consideration amongst performance obligations, but would not affect the total revenue recognized over a contract term. Changes to assumptions used to determine standalone selling prices are not reasonably likely to have a material effect on revenue recognized in any annual period or on revenue growth trends.

Income Taxes

We are subject to income taxes in the United States and numerous foreign jurisdictions. Significant estimates and judgments are required to determine our worldwide income tax provision, deferred tax assets and liabilities, and any valuation allowances recorded against net deferred tax assets. Substantial changes to our estimates could result in increases or decreases in our income tax provision in the period in which we make the changes, which could have a material impact on our effective tax rate and net income.

Deferred tax assets and liabilities represent the estimated future tax effects of temporary differences between book and tax treatment of assets and liabilities and carryforwards to the extent they are realizable. Significant judgment is required to evaluate the need for a valuation allowance against deferred tax assets. For those jurisdictions where tax carryforwards are

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likely to expire unused or the projected operating results indicate that realization is not more-likely-than-not, a valuation allowance is recorded to offset some or all of the deferred tax asset within that jurisdiction. We apply judgment to assess the recoverability of future tax deductions and credits by estimating future expected taxable income and considering prudent and feasible tax planning strategies available in the relevant jurisdiction. Our realizability assessments are made at a given balance sheet date and are subject to change in the future, particularly if earnings of a subsidiary are significantly higher or lower than expected, or if we take operational or tax planning actions that could impact the future taxable earnings of a subsidiary. If our judgment as to realizability changes, the effects of the change would be recognized in the period in which the change occurs.

Our net taxable temporary differences and tax carryforwards are recorded using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax liability or asset is expected to be settled or realized. Should the applicable tax rates change in the future, an adjustment to our deferred taxes would be credited or charged, as appropriate, to income in the period in which the tax rate change is enacted.

The calculation of our tax liabilities involves uncertainties in the application of complex tax laws and regulations and the potential for future adjustment of our uncertain tax positions by government tax authorities in various jurisdictions. We periodically assess our exposures related to our worldwide provision for income taxes and believe that we have appropriately accrued taxes for contingencies.

We record a liability for uncertain tax positions that do not meet the more-likely-than-not standard as prescribed by U.S. GAAP for income tax accounting. We record tax benefits for only those positions that we believe will more-likely-than-not be sustained. If our judgment as to the likely resolution of an uncertainty changes, if an uncertainty is ultimately settled, or if the statute of limitations related to an uncertainty expires, the effects of the change would be recognized in the period in which the change, resolution, or expiration occurs. Our net liability for uncertain tax positions was $12.7 million as of December 31, 2025, and $18.1 million as of December 31, 2024. We also accrue for estimated interest expense and penalties on our uncertain tax positions to the extent possible.

Refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 14. Income Taxes” in the accompanying Notes to consolidated financial statements for more information.

RECENT ACCOUNTING PRONOUNCEMENTS

Refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 2. Summary of Significant Accounting Policies (v) and (w)” to the consolidated financial statements for the year ended December 31, 2025, included in this Annual Report on Form 10-K for a complete discussion of recent accounting pronouncements adopted and not adopted.

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RESULTS OF OPERATIONS AND TRENDS

Effects of Certain Factors on Results of Operations

Our financial results have been, and will continue to be, impacted by certain significant trends, including those which are described below. While these trends are important to understanding and evaluating our financial results, this discussion should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K, and the other transactions, events, and trends discussed in “Part I, Item 1A. Risk Factors” included in this Annual Report on Form 10-K.

CAG Trends. Global trends in companion animal healthcare, including growth in demand for clinical services, continue to support growth for companion animal diagnostic products and services across regions. In the U.S., average diagnostics revenue per practice grew approximately 6% on a same-store basis during 2025, faster than approximately 2% growth in overall practice revenues. U.S. same-store clinical visits at veterinary practices declined approximately 2% in 2025, impacted by ongoing veterinary practice capacity challenges, as well as macroeconomic headwinds. Our initial 2026 financial outlook anticipates a similar decline in U.S. same-store clinical growth levels as in 2025, reflecting these near-term sector and macroeconomic dynamics. Our products and services include solutions that help improve staff productivity, create additional capacity at veterinary clinics, and engage and communicate with pet owners.

Supply Chain and Logistics Challenges. We believe that building and maintaining a well-managed and disciplined infrastructure has helped minimize impacts of supply chain constraints, including product and component availability issues; logistics challenges, including extended shipping periods and delays; and inflationary cost pressures. Our proactive approach to managing our operational processes, including forward planning with a focus on working closely with our suppliers and logistics partners, enables us to maintain continued high levels of product and service availability and customer service. We believe we are well-positioned to enable sustained high growth in our businesses and to effectively manage the impacts of potentially higher costs in certain areas to support these growth plans. However, there can be no assurance as to the duration or severity of the supply chain and logistics challenges or the effectiveness of our mitigation activities.

Effects of Economic Conditions. Demand for our products and services is vulnerable to changes in the economic environment, including slow economic growth, inflationary pressure, geopolitical events, tariffs, high unemployment, and credit availability. Negative or cautious consumer sentiment can lead to reduced or delayed consumer spending, resulting in a decreased number of patient visits to veterinary clinics or lower use of diagnostics. Unfavorable economic conditions can impact sales of instruments, diagnostic imaging, and practice management systems, which are larger capital purchases for veterinarians. In the U.S., we monitor patient visits and clinic revenue data provided by a subset of our CAG customers. Although this data is a limited sample, and may be susceptible to short-term impacts, we believe that this data provides a fair and meaningful long-term representation of the trend in patient visit activity in the U.S., providing us insight regarding demand for our products and services.

Economic conditions may also affect the purchasing decisions of our Water and LPD customers. Water testing volumes may be susceptible to declines in discretionary testing for existing home and commercial sales and in mandated testing as a result of decreases in home and commercial construction. In addition, fiscal difficulties can also reduce government funding for water and herd health screening services.

We believe that the diversity of our products and services and the geographic diversity of our customers partially mitigate the potential effects of the economic environment and negative consumer sentiment on our revenue growth rates.

Currency Impact. For the year ended December 31, 2025, approximately 23% of our consolidated revenue was derived from products manufactured or sourced in U.S. dollars and sold internationally in local currencies, compared to 22% and 21% for the years ended December 31, 2024, and December 31, 2023, respectively. Strengthening of the rate of exchange for the U.S. dollar relative to other currencies has a negative impact on our revenues derived in currencies other than the U.S. dollar and on profits of products manufactured or purchased in U.S. dollars and sold internationally, and a weakening of the U.S. dollar has the opposite effects. Similarly, to the extent that the U.S. dollar is stronger in current or future periods relative to the exchange rates in effect in the corresponding prior periods, our growth rate will be negatively affected. The impact of foreign currency denominated operating expenses and foreign currency denominated supply contracts partly offsets this exposure. Additionally, our designated hedges of intercompany inventory purchases and sales help delay the impact of certain exchange rate fluctuations on non-U.S. denominated revenues. Refer to “Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk” included in this Annual Report on Form 10-K for additional information regarding currency impact. Our future

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income tax expense could also be affected by changes in the mix of earnings, including as a result of changes in the rate of exchange for the U.S. dollar relative to currencies in countries with differing statutory tax rates. Refer to “Part I, Item 1A. Risk Factors” included in this Annual Report on Form 10-K for additional information regarding tax impacts. 

Changes in Tariff and Trade Policies. We manufacture many of our companion animal and water quality products, as well as certain of our LPD testing products, in the United States. We rely on third-party suppliers located in the United States and other regions (such as Europe and Asia Pacific) for certain components, raw materials, and consumables used in or with our products. In addition, as a global business, our products and services are sold in more than 175 countries. For the year ended December 31, 2025, approximately 36% of our overall revenues were attributable to sales of products and services to customers outside the United States. Accordingly, changes in tariff and trade policies may adversely affect our business, financial condition, and operating results.

We aim to optimize operations and inventory management to help reduce the potential impact from changes in tariff and trade policies. However, imposed tariffs (including retaliatory tariffs) and our optimization activities may cause our cost of goods to increase, our profit margins to decrease, or our products to become less competitive or less available in the applicable region. We continue to monitor the dynamic trade environment and evaluate the potential impacts of changes in tariffs and trade policies, but there can be no assurance that any of our optimization activities will be successful in offsetting some portion of these costs or otherwise reducing the impact on our business, financial condition, and operating results.

Distributor Purchasing and Inventories. When selling our products through distributors, changes in distributors’ inventory levels can impact our reported sales, and these changes may be affected by many factors which may not be directly related to underlying demand for our products by veterinary practices. If during a quarter or year, distributors’ inventories grow by less than those inventories grew in the comparable period of the prior year, then changes in distributors’ inventories would have an unfavorable impact on our reported sales growth in the current period. Conversely, if during a quarter or year, distributors’ inventories grow by more than those inventories grew in the comparable period of the prior year, then changes in distributors’ inventories would have a favorable impact on our reported sales growth in the current period. 

In certain countries, we sell our products through third-party distributors and may be unable to obtain data about sales to veterinary practices. We do not believe the impact of changes in these distributors’ inventories have had or would have a material impact on our growth rates. Refer to “Part I, Item 1. Business, Marketing and Distribution” included in this Annual Report on Form 10-K for additional information regarding distribution channels.

Effects of Patent Expiration. Although certain patents and licenses of patents and technologies from third parties periodically expire, the expiration of these patents or licenses, individually or in the aggregate, is not expected to have a material effect on our financial position or future operations due to a range of factors as described in “Part I, Item 1. Intellectual Property, Including Patents and License.”

Non-GAAP Financial Measures. The following revenue analysis and discussion includes organic revenue growth, and references in this analysis and discussion to “revenue,” “revenues,” or “revenue growth” apply equally to revenue growth reported in accordance with U.S. GAAP and to “organic revenue growth.” Organic revenue growth is a non-GAAP financial measure and represents the percentage change in revenue during the current year, compared to the same period for the prior year, net of the effect of changes in foreign currency exchange rates, certain business acquisitions, and divestitures. Organic revenue growth should be considered in addition to, and not as a replacement for, or as a superior measure to, revenue growth reported in accordance with U.S. GAAP, and may not be comparable to similarly titled measures reported by other companies. Management believes that reporting organic revenue growth provides useful information to investors by facilitating easier comparisons of our revenue performance with prior and future periods and to the performance of our peers.

We exclude from organic revenue growth the effect of changes in foreign currency exchange rates because changes in foreign currency exchange rates are not under management’s control, are subject to volatility, and can obscure underlying business trends. We calculate the impact on revenue resulting from changes in foreign currency exchange rates by applying the difference between the weighted average exchange rates during the current period and the comparable prior year period to foreign currency denominated revenues for the prior year period. 

We also exclude from organic revenue growth the effect of certain business acquisitions and divestitures because the nature, size, and number of these transactions can vary dramatically from period to period, and because they either require or generate cash as an inherent consequence of the transaction, and therefore can also obscure underlying business and operating trends. We consider acquisitions to be a business when all three elements of inputs, processes, and outputs are present, consistent with ASU 2017-01, “Business Combinations: (Topic 805) Clarifying the Definition of a Business.” We do not consider acquired assets to be a business if substantially all the fair value of the assets acquired is concentrated in a single

45

identifiable asset or group of similar identifiable assets. A typical acquisition that we do not consider a business is a customer list asset acquisition, which does not have all elements necessary to operate a business, such as employees or infrastructure. Revenue from these customers acquired is included in organic revenue growth because we believe the efforts required to convert and retain these acquired customers are similar in nature to our efforts to obtain and retain our existing customer base.

We also use Adjusted EBITDA, gross debt, net debt, gross debt to Adjusted EBITDA ratio, and net debt to Adjusted EBITDA ratio, all of which are non-GAAP financial measures that should be considered in addition to, and not as a replacement for, financial measures presented according to U.S. GAAP. Management believes that reporting these non-GAAP financial measures provides supplemental analysis to help investors further evaluate our business performance and available borrowing capacity under our Credit Facility.

Segment Income from Operations. We report segment income from operations in our discussion of the results of the operations of our segments below. Segment income from operations is a non-GAAP financial measure that adjusts for the impact of foreign currency transaction gains and losses and should be considered in addition to, and not as a replacement for, or superior measure to, income from operations. We exclude foreign currency transaction gains and losses for each reportable segment (CAG, Water, and LPD) from segment income from operations and report the full amount of foreign currency transaction gains and losses in Other. We believe that reporting segment income from operations provides supplemental analysis to help investors further evaluate each reportable segment’s business performance by excluding foreign currency transaction gains and losses, which are centrally managed by our corporate treasury function and which we do not consider relevant for assessing the results of each reportable segment’s operations.

The reconciliation of these non-GAAP financial measures is as follows:

(dollars in thousands)

For the Years Ended December 31,

2025

2024

Income from Operations

Impact from Foreign Currency

Segment and Other Income from Operations

Income from Operations

Impact from Foreign Currency

Segment and Other Income from Operations

CAG

$

1,260,969 

$

3,604 

$

1,264,573 

$

1,034,539 

$

3,877 

$

1,038,416 

Water

92,999 

269 

93,268 

84,244 

289 

84,533 

LPD

2,942 

287 

3,229 

6,272 

361 

6,633 

Other

3,121 

(4,160)

(1,039)

3,282 

(4,527)

(1,245)

Total

$

1,360,031 

$

— 

$

1,360,031 

$

1,128,337 

$

— 

$

1,128,337 

Comparisons to Prior Periods. Our fiscal years end on December 31. Unless otherwise stated, the analysis and discussion of our financial condition, results of operations and liquidity, including references to growth and organic growth and increases and decreases, are being compared to the equivalent prior year period. 

46

Twelve Months Ended December 31, 2025, Compared to Twelve Months Ended December 31, 2024

Total Company

The following table presents revenue by operating segment by U.S. and non-U.S., or international, geographies: 

For the Years Ended December 31,

Net Revenue

(dollars in thousands)

2025

2024

Dollar Change

Reported Revenue Growth (1)

Percentage Change from Currency

Percentage Change from Acquisitions

Organic Revenue Growth (1)

CAG

$

3,953,285 

$

3,574,044 

$

379,241 

10.6

%

0.8

%

— 

9.8

%

United States

2,619,461 

2,409,152 

210,309 

8.7

%

— 

0.1 

%

8.7

%

International

1,333,824 

1,164,892 

168,932 

14.5

%

2.5

%

— 

12.0

%

Water

$

201,149 

$

185,112 

$

16,037 

8.7

%

0.6

%

— 

8.0

%

United States

101,314 

95,347 

5,967 

6.3

%

— 

— 

6.3

%

International

99,835 

89,765 

10,070 

11.2

%

1.3

%

— 

9.9

%

LPD

$

131,787 

$

122,060 

$

9,727 

8.0

%

1.8

%

— 

6.1

%

United States

25,453 

22,250 

3,203 

14.4

%

— 

— 

14.4

%

International

106,334 

99,810 

6,524 

6.5

%

2.2

%

— 

4.3

%

Other

$

17,481 

$

16,288 

$

1,193 

7.3

%

—

— 

7.3

%

Total Company

$

4,303,702 

$

3,897,504 

$

406,198 

10.4

%

0.8

%

— 

9.6

%

United States

2,752,785 

2,533,174 

219,611 

8.7

%

— 

0.1 

%

8.6

%

International

1,550,917 

1,364,330 

186,587 

13.7

%

2.3

%

— 

11.3

%

(1)Reported revenue growth and organic revenue growth may not recalculate due to rounding.

Total Company Revenue. The increase in revenue primarily reflected growth in CAG Diagnostics recurring revenue, including benefits from higher volumes and higher realized prices. Volume growth was supported by new business gains, our expanded menu of available tests, and higher utilization in our loyal customer base, partially constrained by macroeconomic and sector headwinds. Instrument revenue gains were primarily due to the placements of our new IDEXX inVue Dx Analyzer. Higher volume and price gains in recurring veterinary software, services, and diagnostic imaging also contributed to revenue growth. Higher revenue in our Water business was primarily due to the benefits from higher realized prices and higher volumes. The increase in LPD revenue was primarily due to higher volumes and higher realized prices. The impact from changes in foreign currency exchange rates increased total revenue growth by 0.8%.

47

The following table presents our consolidated Company results of operations:

For the Years Ended December 31,

Change

Total Company - Results of Operations

(dollars in thousands)

2025

Percent of Revenue

2024

Percent of Revenue

Amount

Percentage

Revenues

$

4,303,702 

$

3,897,504 

$

406,198 

10.4

%

Cost of revenue

1,644,123 

1,518,577 

125,546 

8.3

%

Gross profit

2,659,579 

61.8 

%

2,378,927 

61.0 

%

280,652 

11.8

%

Operating Expenses:

Sales and marketing

643,547 

15.0 

%

588,507 

15.1 

%

55,040 

9.4

%

General and administrative

404,794 

9.4 

%

442,291 

11.3 

%

(37,497)

(8.5

%)

Research and development

251,207 

5.8 

%

219,792 

5.6 

%

31,415 

14.3

%

Total operating expenses

1,299,548 

30.2 

%

1,250,590 

32.1 

%

48,958 

3.9

%

Income from operations

$

1,360,031 

31.6 

%

$

1,128,337 

29.0 

%

$

231,694 

20.5

%

Gross Profit. Gross profit increased due to higher revenue and an 80 basis point increase in the gross profit margin. The net increase in the gross profit margin reflected benefits from recurring revenue growth in IDEXX VetLab consumable and reference laboratory testing volumes, along with operational productivity and pricing benefits, which offset the impacts from higher product and labor costs due to, in part, inflationary cost effects. These increases in the gross profit margin were reduced by the business mix impact from higher instrument revenue. The impact from changes in foreign currency exchange rates on the gross profit margin was not significant, including the impact of hedge losses in the current year compared to hedge gains in the prior year.

Operating Expenses. Sales and marketing expense increased primarily due to higher personnel-related costs and higher expenses to support marketing outreach activities. General and administrative expense decreased primarily due to a $61.5 million expense in the prior year and a reduction in accrued expense of approximately $9 million in the first quarter of the current year, related to a now-concluded litigation matter, partially offset by higher personnel-related and information technology and security costs. Research and development expense increased due to development project costs for new products and services, including higher personnel-related costs. The impact from changes in foreign currency exchange rates increased operating expense growth by less than 1%.

48

Companion Animal Group 

The following table presents revenue by product and service category for CAG: 

For the Years Ended December 31,

Net Revenue

(dollars in thousands)

2025

2024

Dollar Change

Reported Revenue Growth (1)

Percentage Change from Currency

Percentage Change from Acquisitions

Organic Revenue Growth (1)

CAG Diagnostics recurring revenue:

$

3,407,199 

$

3,129,492 

$

277,707 

8.9

%

0.8

%

— 

8.1

%

IDEXX VetLab consumables

1,496,752 

1,303,250 

193,502 

14.8

%

1.1

%

— 

13.7

%

Rapid assay products

348,950 

359,754 

(10,804)

(3.0

%)

0.3

%

— 

(3.3

%)

Reference laboratory diagnostic and consulting services

1,424,073 

1,336,121 

87,952 

6.6

%

0.7

%

— 

5.9

%

CAG Diagnostics services and accessories

137,424 

130,367 

7,057 

5.4

%

1.0

%

— 

4.5

%

CAG Diagnostics capital - instruments

$

200,206 

$

131,928 

$

68,278 

51.8

%

2.5

%

— 

49.3

%

Veterinary software, services, and diagnostic imaging systems:

$

345,880 

$

312,624 

$

33,256 

10.6

%

— 

0.4 

%

10.2

%

Recurring revenue

276,338 

250,359 

25,979 

10.4

%

— 

0.4 

%

9.9

%

Systems and hardware

69,542 

62,265 

7,277 

11.7

%

(0.1

%)

0.4 

%

11.4

%

Net CAG revenue

$

3,953,285 

$

3,574,044 

$

379,241 

10.6

%

0.8

%

— 

9.8

%

(1) Reported revenue growth and organic revenue growth may not recalculate due to rounding.

CAG Diagnostics Recurring Revenue. The increase in CAG Diagnostics recurring revenue was primarily due to higher volumes of IDEXX VetLab consumables and reference laboratory testing, partially constrained by macroeconomic and sector headwinds, as well as benefits from higher realized prices. Volume growth was supported by new business gains, our expanded menu of available tests, and higher utilization in our loyal customer base. The impact from changes in foreign currency exchange rates increased CAG Diagnostics recurring revenue growth by 0.8%.

The increase in IDEXX VetLab consumables revenue was primarily due to higher volumes and higher realized prices. Volume gains were supported by increases in testing, including the benefits from 12% growth in our installed base of premium instruments, which reflected new customers and continued high customer retention rates, as well as our expanded menu of available tests. The impact from changes in foreign currency exchange rates increased revenue growth by 1.1%.

The decrease in rapid assay revenue resulted primarily from a shift of customers’ pancreatic lipase testing to our Catalyst instrument platform and macroeconomic and sector headwinds, partially offset by higher realized prices.

The increase in reference laboratory diagnostic and consulting services revenue was due to higher testing volumes in North America, Europe, and Asia Pacific and higher realized prices. The impact from changes in foreign currency exchange rates increased revenue growth by 0.7%.

The increase in CAG Diagnostics services and accessories revenue was primarily a result of the expansion of our installed base of premium instruments. The impact from changes in foreign currency exchange rates increased revenue growth by 1.0%.

CAG Diagnostics Capital – Instrument Revenue. The increase in instrument revenue was primarily due to placements of our new IDEXX inVue Dx Analyzer, partially offset by lower placements of other premium instruments. The impact from changes in foreign currency exchange rates increased revenue growth by 2.5%.

49

Veterinary Software, Services, and Diagnostic Imaging Systems Revenue. The increase in recurring revenue was primarily due to higher subscription and support services volume from our expanded SaaS installed base and higher realized prices. The increase in our systems and hardware revenue was primarily due to higher diagnostic imaging system sales. The impact of a business acquisition increased overall Veterinary Software, Services, and Diagnostic Imaging Systems revenue growth by 0.4%.

The following table presents the CAG segment results of operations:

For the Years Ended December 31,

Change

Results of Operations

(dollars in thousands)

2025

Percent of Revenue

2024

Percent of Revenue

Amount

Percentage

Revenues

$

3,953,285 

$

3,574,044 

$

379,241 

10.6

%

Cost of revenue

1,504,611 

1,394,864 

109,747 

7.9

%

Gross profit

2,448,674 

61.9 

%

2,179,180 

61.0 

%

269,494 

12.4

%

Segment operating expenses:

Sales and marketing

586,376 

14.8 

%

536,171 

15.0 

%

50,205 

9.4

%

General and administrative

364,864 

9.2 

%

402,198 

11.3 

%

(37,334)

(9.3

%)

Research and development

232,861 

5.9 

%

202,395 

5.7 

%

30,466 

15.1

%

Total segment operating expenses

1,184,101 

30.0 

%

1,140,764 

31.9 

%

43,337 

3.8

%

Segment income from operations

$

1,264,573 

32.0 

%

$

1,038,416 

29.1 

%

$

226,157 

21.8

%

Gross Profit. Gross profit increased primarily due to higher revenue and a 90 basis point increase in the gross profit margin. The net increase in the gross profit margin reflected benefits from recurring revenue growth in IDEXX VetLab consumable and reference laboratory testing volumes, along with operational productivity and pricing benefits, which offset the impacts from higher product and labor costs due to, in part, inflationary cost effects. These increases in the gross profit margin were reduced by the business mix impact from higher instrument revenue. The impact from changes in foreign currency exchange rates on the gross profit margin was not significant, including the impact of lower hedge gains in the current year, compared to the prior year.

Segment Operating Expenses. Sales and marketing expense increased primarily due to higher personnel-related costs and higher expenses to support marketing outreach activities. General and administrative expense decreased primarily due to a $61.5 million expense in the prior year and a reduction in accrued expense of approximately $9 million in the first quarter of the current year, related to a now-concluded litigation matter, partially offset by higher personnel-related and information technology and security costs. Research and development expense increased due to development project costs for new products and services, including higher personnel-related costs. The impact from changes in foreign currency exchange rates increased operating expense growth by less than 1%.

50

Water

The following table presents the Water segment results of operations:

For the Years Ended December 31,

Change

Results of Operations

(dollars in thousands)

2025

Percent of Revenue

2024

Percent of Revenue

Amount

Percentage

Revenues

$

201,149 

$

185,112 

$

16,037 

8.7

%

Cost of revenue

61,860 

55,101 

6,759 

12.3

%

Gross profit

139,289 

69.2 

%

130,011 

70.2 

%

9,278 

7.1

%

Segment operating expenses:

Sales and marketing

25,469 

12.7 

%

23,149 

12.5 

%

2,320 

10.0

%

General and administrative

14,827 

7.4 

%

16,873 

9.1 

%

(2,046)

(12.1

%)

Research and development

5,725 

2.8 

%

5,456 

2.9 

%

269 

4.9

%

Total segment operating expenses

46,021 

22.9 

%

45,478 

24.6 

%

543 

1.2

%

Segment income from operations

$

93,268 

46.4 

%

$

84,533 

45.7 

%

$

8,735 

10.3

%

Revenue. The increase in revenue was primarily due to higher realized prices and higher volumes. The increase in volumes was due to higher testing volumes in Europe, North America, and Asia Pacific, as well as higher sales volumes of our Tecta systems, our new UV Viewer Plus, and accessories. The impact from changes in foreign currency exchange rates increased revenue growth by 0.6%.

Gross Profit. The increase in gross profit for Water was primarily due to higher revenue, partially offset by a 100 basis point decrease in the gross profit margin. The net decrease in the gross profit margin was due to higher product and distribution costs, partially offset by higher realized prices. The impact from changes in foreign currency exchange rates decreased the gross profit margin by approximately 20 basis points, including the impact of lower hedge gains in the current year, compared to the prior year.

Segment Operating Expenses. Sales and marketing expense increased primarily due to higher personnel-related and higher trade show and sales meeting costs. General and administrative expense decreased primarily due to lower personnel-related costs and lower bad debt expense. Research and development expense increased primarily due to higher personnel-related costs, partially offset by lower project costs. The impact from changes in foreign currency exchange rates was not significant to operating expense growth.

51

Livestock, Poultry and Dairy

The following table presents the LPD segment results of operations:

For the Years Ended December 31,

Change

Results of Operations

(dollars in thousands)

2025

Percent of Revenue

2024

Percent of Revenue

Amount

Percentage

Revenues

$

131,787 

$

122,060 

$

9,727 

8.0

%

Cost of revenue

67,579 

59,500 

8,079 

13.6

%

Gross profit

64,208 

48.7 

%

62,560 

51.3 

%

1,648 

2.6

%

Segment operating expenses:

Sales and marketing

30,685 

23.3 

%

28,027 

23.0 

%

2,658 

9.5

%

General and administrative

18,174 

13.8 

%

16,716 

13.7 

%

1,458 

8.7

%

Research and development

12,120 

9.2 

%

11,184 

9.2 

%

936 

8.4

%

Total segment operating expenses

60,979 

46.3 

%

55,927 

45.8 

%

5,052 

9.0

%

Segment income from operations

$

3,229 

2.5 

%

$

6,633 

5.4 

%

$

(3,404)

(51.3

%)

Revenue. The increase in revenue was primarily due to volume growth in the Americas and Asia Pacific, and higher realized prices. The impact from changes in foreign currency exchange rates increased revenue growth by 1.8%.

Gross Profit. The increase in LPD gross profit was primarily due to higher revenues, partially offset by a 260 basis point decrease in the gross profit margin. The net decrease in the gross profit margin was primarily due to higher product costs, partially offset by higher realized prices and manufacturing efficiencies. The impact from changes in foreign currency exchange rates decreased the gross profit margin by approximately 90 basis points, including the impact of hedge losses in the current year, compared to hedge gains in the prior year.

Segment Operating Expenses. Sales and marketing expense increased primarily due to higher personnel-related and higher trade show and sales meeting costs. General and administrative expense increased primarily due to higher bad debt expense and personnel-related costs. Research and development expense increased primarily due to higher personnel-related costs in the current year. The impact from changes in foreign currency exchange rates increased operating expense growth by approximately 1%.

Non-Operating Items

Interest Expense and Income. Interest expense was $38.9 million for the year ended December 31, 2025, compared to $31.2 million for the prior year. The increase in interest expense was primarily due to higher average debt levels and higher interest rates. Interest income was $3.0 million for the year ended December 31, 2025, compared to $12.7 million for the prior year. This decrease in interest income is primarily due to a decrease in money market investments.

Provision for Income Taxes. Our effective income tax rates were 20.0% for the years ended December 31, 2025, and December 31, 2024. Our effective tax rate for the year ended December 31, 2025, was consistent with the prior year; the impact from an increase in tax benefits related to share-based compensation was largely offset by a reduction in our U.S. tax benefit associated with Foreign-Derived Intangible Income resulting from the acceleration of research and development deductions as allowed by recent U.S. tax law changes. Our projected effective tax rate for 2026 is approximately 21.3%. This increase in the projected 2026 effective tax rate is primarily due to estimated reductions in share-based compensation tax benefits, as compared to 2025.

52

LIQUIDITY AND CAPITAL RESOURCES

We fund the capital needs of our business through cash on hand, funds generated from operations, proceeds from long-term senior note financings, and amounts available under our Credit Facility. We generate cash primarily through the payments made by customers for our companion animal, livestock, poultry, dairy, and water products and services, consulting services, and other various systems and services. Our cash disbursements are primarily related to compensation and benefits for our employees, inventory and supplies, repurchase of our common stock, taxes, research and development, capital expenditures, rents, occupancy-related charges, interest expense, and business acquisitions. As of December 31, 2025, we had $180.1 million of cash and cash equivalents, compared to $288.3 million as of December 31, 2024. Working capital totaled $265.0 million as of December 31, 2025, compared to $332.0 million as of December 31, 2024. The change in working capital is primarily due to lower cash and higher borrowings on our Credit Facility, partially offset by higher receivables and lower outstanding borrowing on the current portion of our Senior Notes, as compared to the prior year. As of December 31, 2025, we had a remaining borrowing availability of $850.2 million under our $1.25 billion Credit Facility, with $398.0 million in outstanding borrowings under our Credit Facility, and an option for the Company to incur incremental revolving credit commitments and/or term loans in the aggregate principal amount of up to $250.0 million. The general availability of funds under our Credit Facility is reduced by $1.8 million for outstanding letters of credit. We believe that, if necessary, we could obtain additional borrowings to fund our growth objectives. We further believe that current cash and cash equivalents, funds generated from operations, and committed borrowing availability will be sufficient to fund our operations, capital purchase requirements, and anticipated growth needs for the next twelve months. We believe that these resources, coupled with our ability, as needed, to incur incremental revolving credit commitments and/or term loans under our Credit Facility and otherwise obtain additional financing, will also be sufficient to fund our business as currently conducted for the foreseeable future. We may enter into new financing arrangements or refinance or retire existing debt in the future depending on market conditions. Should we require more capital in the U.S. than is generated by our operations, for example to fund significant discretionary activities, we could elect to raise capital in the U.S. through the incurrence of debt or equity issuances, which we may not be able to complete on favorable terms or at all. In addition, these alternatives could result in increased interest expense or other dilution of our earnings.

We manage our worldwide cash requirements considering available funds among all of our subsidiaries. Our foreign cash and cash equivalents are generally available without restrictions to fund ordinary business operations outside the U.S.

The following table presents cash, cash equivalents, and marketable securities held domestically and by our foreign subsidiaries:

For the Years Ended December 31,

Cash and cash equivalents

(in thousands)

2025

2024

U.S.

$

1,606 

$

145,118 

Foreign

178,464 

143,148 

Total cash and cash equivalents

$

180,070 

$

288,266 

Total cash, cash equivalents, and marketable securities held in U.S. dollars by our foreign subsidiaries

$

24,571 

$

10,623 

As of December 31, 2025, more than 99% of the cash and cash equivalents held were held as bank deposits at a diversified group of institutions, primarily systemically important banks. Cash and cash equivalents as of December 31, 2025, included approximately USD $1.0 million in cash denominated in non-U.S. currencies held in a country with currency control restrictions, which limit our ability to transfer funds outside of the country in which they are held without incurring costs. The currency control restricted cash is generally available for use within the country where it is held.

53

The following table presents additional key information concerning working capital:

For the Three Months Ended

December 31, 2025

September 30, 2025

June 30,

2025

March 31, 2025

December 31, 2024

Days sales outstanding (1)

46.8 

46.5 

44.7 

45.7 

47.1 

Inventory turns (2)

1.6 

1.5 

1.5 

1.3 

1.3 

(1)     Days sales outstanding represents the average of the accounts receivable balances at the beginning and end of each quarter divided by revenue for that quarter, the result of which is then multiplied by 91.25 days.

(2)     Inventory turns are calculated as the ratio our inventory-related cost of revenue for the quarter multiplied by four, divided by the average inventory balances at the beginning and end of each quarter.

Sources and Uses of Cash

The following table presents cash provided (used): 

(in thousands)

For the Years Ended December 31,

2025

2024

Dollar Change

Net cash provided by operating activities

$

1,181,805 

$

929,001 

$

252,804 

Net cash used by investing activities

(136,239)

(207,062)

70,823 

Net cash used by financing activities

(1,164,964)

(878,073)

(286,891)

Net effect of changes in exchange rates on cash

11,202 

(9,532)

20,734 

Net change in cash and cash equivalents

$

(108,196)

$

(165,666)

$

57,470 

Operating Activities. Cash provided by operating activities during the year ended December 31, 2025, was $1.2 billion, which was a net increase in operating cash flows of $252.8 million, compared to the prior year. Cash was provided from net income of $1.1 billion, adjusted for net non-cash items of $349.9 million, partially offset by a net decrease from changes in operating assets and liabilities of $227.5 million.

The following table presents cash flow impacts from changes in operating assets and liabilities, excluding the effects of foreign exchange rate fluctuations: 

(in thousands)

For the Years Ended December 31,

2025

2024

Dollar Change

Accounts receivable

$

(68,722)

$

(28,280)

$

(40,442)

Inventories

(789)

(28,001)

27,212 

Accounts payable

(8,573)

8,086 

(16,659)

Deferred revenue

6,929 

(4,378)

11,307 

Other assets and liabilities

(156,359)

(80,665)

(75,694)

Total change in cash due to changes in operating assets and liabilities

$

(227,514)

$

(133,238)

$

(94,276)

Cash used due to changes in operating assets and liabilities during the year ended December 31, 2025, compared to the prior year, increased $94.3 million. Cash used for other assets and liabilities increased $75.7 million, compared to the prior year. During 2025, we paid approximately $80 million, which was accrued in prior years, to conclude a litigation matter, and the payment is included within the cash flow impacts from changes in other assets and liabilities. Cash used to fund contract assets and consideration paid to customers arising from customer commitment arrangements also increased in 2025, compared to the prior year. Increases in cash used for other assets and liabilities were partially offset by lower tax payments and lower annual employee incentive program payments in 2025. Cash used for accounts receivable increased $40.4 million, compared to the prior year, primarily due to the timing of customer payments received and higher revenue.

We have historically experienced proportionally lower net cash flows from operating activities during the first quarter and proportionally higher cash flows from operating activities for the remainder of the year and for the annual period, driven primarily by payments related to annual employee incentive programs in the first quarter following the year for which the bonuses were earned.

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Investing Activities. Cash used by investing activities was $136.2 million during 2025, compared to $207.1 million used during 2024. The decrease in cash used by investing activities during 2025, compared to 2024, was primarily due to the acquisition of a software business during the prior year.

Our projected capital expenditures for 2026 are estimated to be approximately $180.0 million, which includes capital investments in manufacturing and operations facilities to support growth, as well as investments in customer-facing software development.

Financing Activities. Cash used by financing activities was $1.2 billion during 2025, compared to $878.1 million used during 2024. The increase in cash used was primarily due to an increase of $379.9 million in cash used to repurchase shares of our common stock during 2025, compared to 2024, as well as the repayment in full upon the maturity of our 2025 Series C Notes for $103.4 million, and the repayment in full upon maturity of our 2025 Series B Notes for $75.0 million. These increases in cash used by financing were partially offset by borrowings of $148.0 million under our Credit Facility during 2025, compared to no borrowings or repayments under our Credit Facility during the prior year, and the repayment in full upon the maturity of our 2024 Series B Notes during the prior year for $75.0 million.

Repurchases of our common stock vary depending upon the level of other investing and deployment activities, as well as share price and prevailing interest rates. We believe that the repurchase of our common stock is a favorable means of returning value to our stockholders, and we also repurchase our stock to offset the dilutive effect of our share-based compensation programs. We primarily fund our share repurchases with cash generated from operations, as well as from various capital market activities, including the committed available financing through our Credit Facility. Refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 20. Repurchases of Common Stock” for additional information about our share repurchases. We currently anticipate a 1% to 2% reduction in diluted shares through share repurchases in 2026, subject to market conditions.

The aggregate principal amount of our 2026 Senior Notes will become due and payable on September 4, 2026. We anticipate funding the full repayment of our 2026 Senior Notes for $75.0 million when due in September 2026 with available cash on hand, borrowings under our Credit Facility, or proceeds from the issuance of new notes, or a combination thereof.

The obligations under our senior notes may be accelerated upon the occurrence of an event of default under the applicable Senior Note Agreements, each of which includes customary events of default including payment defaults, defaults in the performance of the affirmative, negative and financial covenants, the inaccuracy of representations or warranties, bankruptcy and insolvency-related defaults, defaults relating to judgments, certain events related to employee pension benefit plans under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the failure to pay specified indebtedness, and a change of control default.

Under the $1.25 billion Credit Facility, the $1.0 billion unsecured credit line matures on November 12, 2030, the $250.0 million Term Loan matures on November 12, 2028, and no scheduled principal prepayments are required before these respective dates. Our Credit Facility also includes an option for the Company to incur incremental revolving credit commitments and/or term loans in the aggregate principal amount of up to $250.0 million. Our Credit Facility contains affirmative, negative, and financial covenants customary for financings of this type. The applicable interest rate for borrowings in U.S. Dollars under our Credit Facility is calculated at a per annum rate equal to either (at our option) (1) a base rate (determined as the greatest of the prime rate, the NYFRB Rate plus 0.50%, and the Adjusted Term SOFR Rate for a one-month Interest Period plus 1.0% (but no less than 1.0%)), plus a margin rate ranging from 0.0% to 0.375% based on our consolidated leverage ratio, (2) the Adjusted Term SOFR Rate, plus a margin rate ranging from 0.875% to 1.375% based on our consolidated leverage ratio, or (3) the Adjusted Daily Simple SOFR Rate, plus a margin rate ranging from 0.875% to 1.375% based on our consolidated leverage ratio. Refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 13, Debt” for additional information about our applicable interest rates on our Credit Facility. Under our Credit Facility, we also pay on a quarterly basis commitment fees ranging from 0.075% to 0.25% per annum, based on our consolidated leverage ratio, on any unused commitment.

As of December 31, 2025, we had $398.0 million in borrowings outstanding under our Credit Facility, of which $250.0 million was on our Term Loan under our Credit Facility. As of December 31, 2024, we had $250.0 million in borrowings outstanding under our Credit Facility, all of which was on our $250.0 million Term Loan under our Credit Facility. The general availability of funds under our Credit Facility was further reduced by $1.8 million and $1.9 million for letters of credit that were issued primarily in connection with our workers' compensation policy as of December 31, 2025, and December 31, 2024, respectively. Our Credit Facility contains affirmative, negative, and financial covenants customary for financings of this type. The negative covenants include restrictions on liens, indebtedness of subsidiaries of the Company, fundamental

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changes, investments, transactions with affiliates, certain restrictive agreements, and violations of sanctions laws and regulations. The financial covenant is a consolidated leverage ratio test that requires our ratio of debt to earnings before interest, taxes, depreciation, amortization, and share-based compensation not to exceed 3.5-to-1. As of December 31, 2025, we were in compliance with the covenants of our Credit Facility. The obligations under our Credit Facility may be accelerated upon the occurrence of an event of default under our Credit Facility, which includes customary events of default including payment defaults, defaults in the performance of the affirmative, negative and financial covenants, the inaccuracy of representations or warranties, bankruptcy and insolvency related defaults, defaults relating to judgments, certain events related to employee pension benefit plans under ERISA, the failure to pay specified indebtedness, and a change of control default.

Refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 13, Debt” for additional information about our Senior Notes, Senior Note Agreements, and Credit Facility.

Effect of Currency Translation on Cash. The net effects of changes in foreign currency exchange rates are related to changes in exchange rates between the U.S. dollar and the functional currencies of our foreign subsidiaries with non-U.S. dollar functional currencies. These changes will fluctuate each year as the value of the U.S. dollar relative to the value of foreign currencies changes. The value of a currency depends on many factors, including interest rates, and the issuing governments' debt levels and strength of economy.

Off-Balance Sheet Arrangements. We have no off-balance sheet arrangements or variable interest entities except for letters of credit and third-party guarantees, as reflected in “Part II, Item 8. Financial Statements and Supplementary Data, Note 13 Debt” and “Part II, Item 8. Financial Statements and Supplementary Data. Note 16. Commitments, Contingencies and Guarantees” to the consolidated financial statements for the year ended December 31, 2025, included in this Annual Report on Form 10-K, respectively.

Financial Covenant. The financial covenant is a consolidated leverage ratio test that requires our ratio of debt to earnings before interest, taxes, depreciation, amortization, and share-based compensation, as defined in the Senior Note Agreements and Credit Facility, not to exceed 3.5-to-1. As of December 31, 2025, we were in compliance with the covenants of the Senior Note Agreements and Credit Facility. The following details our consolidated leverage ratio calculation:

(in thousands)

Twelve Months Ended

Trailing 12 Months Adjusted EBITDA:

December 31, 2025

Consolidated Net Income

$

1,059,464 

Consolidated Interest Charges

38,852 

Provision for income taxes

264,725 

Depreciation and amortization expense

145,183 

Non-recurring transaction expense incurred in connection with Acquisitions *

90 

Non-cash charges associated with Share Based Payments

60,013 

Extraordinary and other non-recurring non-cash losses and charges *

820 

Adjusted EBITDA

$

1,569,147 

 * Descriptions are contractually defined and may differ from U.S. GAAP definitions.

(dollars in thousands)

Twelve Months Ended

Debt to Adjusted EBITDA Ratio:

December 31, 2025

Credit Facility

$

398,000 

Current and long-term portion of long-term debt

449,837 

Total debt

847,837 

Acquisition-related consideration payable

1,800 

Deferred financing costs

163 

Gross debt

$

849,800 

Gross debt to Adjusted EBITDA ratio

0.54 

Cash and cash equivalents

$

(180,070)

Net debt

$

669,730 

Net debt to Adjusted EBITDA ratio

0.43 

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Commitments, Contingencies and Guarantees

For more information regarding our commitments, contingencies, and guarantees, refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 16. Commitments, Contingencies and Guarantees.”

For more information on our future lease payments, refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 8. Lease Commitments” for our minimum lease payment schedule. The expected timing of payments of our leases may be different in future years, depending on decisions to extend lease terms and/or enter into additional leases in the preceding years.

For more information on our future Swiss defined benefit pension plans payments, refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 23. IDEXX Retirement and Incentive Savings Plan” for our future benefits expected to be paid.

As of December 31, 2025, current liabilities include $398.0 million in outstanding borrowings under our Credit Facility and the current portion of long-term debt of $75.0 million recorded as current liabilities. Refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 13. Debt” for more information about our Credit Facility and Senior Notes.

We also have purchase obligations that include agreements and purchase orders to purchase goods or services that are contractually enforceable and that specify all significant terms, including fixed or minimum quantities, pricing, and approximate timing of purchases. As of December 31, 2025, we had approximately $207.3 million in purchase obligations due in 2026. Our purchase obligations beyond 2026 are approximately $136.7 million. These purchase obligation amounts do not include amounts recorded in accounts payable as of December 31, 2025. The expected timing of payments of our purchase obligations is estimated based on current information. Timing of payments and actual amounts paid may be different, depending on the time of receipt of goods or services, or changes to agreed-upon amounts for some obligations.

Additionally, we have agreements with third parties that we have entered into in the ordinary course of business under which we are obligated to indemnify such third parties for and against various risks and losses. The precise terms of such indemnities vary with the nature of the agreement. In many cases, we limit the maximum amount of our indemnification obligations, but in some cases those obligations may be theoretically unlimited. We have not incurred material expenses in discharging any of these indemnification obligations, and, based on our analysis of the nature of the risks involved, we believe that the fair value of these agreements is minimal. Accordingly, we did not record any liabilities for these obligations as of December 31, 2025, and 2024, and do not anticipate any future payments for these guarantees.

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