IDXX 10-K & 10-Q changes, risk factors and insider trading

You should consider carefully the risks and uncertainties described below in addition to the other information included or incorporated by reference in this Annual Report on Form 10-K in evaluating our company and our business. Our future operating results involve a number of risks and uncertainties, and actual events or results may differ materially from those discussed in this Annual Report on Form 10-K. Factors that could cause or contribute to such differences include, but are not limited to, the factors discussed below, as well as those factors discussed elsewhere herein. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results, prospects, and stock price. The disclosures below reflect our beliefs and opinions as to factors that could materially and adversely affect us in the future. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past.

Because ourOur business lines are highly attractive,attractive they are alsoand highly competitive. Our failure to successfully execute certain strategies withinin this competitive environment could have a material negative impact on our future growth and profitability

The companion animal healthcare industry is highly competitive, and we anticipate increasing levels of competition from both existing competitors and new sector entrants given our performance and the industry’s strong growth and returns. Our ability to maintainMaintaining or enhanceenhancing our growth rates and our profitability depends on our successful execution of many elements of our strategy, including:

•Developing, manufacturing, and marketing innovative new or improved and cost competitive in-clinicpoint-of-care laboratory analyzers that drive sales of IDEXX VetLab instruments, grow our installed base of instruments, and increase demand for related recurring sales of consumable products, services, and accessories;

•Developing and introducing new or improved innovative diagnostic tests and services for both our reference laboratories and in-clinicpoint-of-care applications that provide valuable medical information to our customers and effectively differentiate our products and services from those of our competitors;

•Developing and introducing new or improved innovative, data-insightful software solutions that enable our veterinary customers to improve practice management and efficiency, staff productivity, and client engagement and communications and that increase the value to our veterinary customers of our other companion animal products and services by enhancing the integration of the information and transactions of these products and services and supporting the interpretation and management of diagnostic information derived from these products and services;

•Providing our veterinary customers with the medical and business tools, information, and resources that enable them to grow their practices and increase utilization of our diagnostic products and services,services through increased pet visits,visits use ofand preventive care protocols,protocol use, enhanced practice of real-time care, and improved practice efficiency;

•Achieving cost improvements in our worldwide network of reference laboratorieslaboratory network by implementing global best practices, including lean processing techniques, incorporating technological enhancements,enhancements including laboratory(e.g., automation and a global laboratory information management system, employingsystem), purchasing strategies tothat maximize leverage offrom our global scale, increasing the leverage of existing infrastructureinfrastructure, and consolidating testing in high volume laboratory hubs;

•Achieving cost improvements in the manufacture and service of our in-clinicpoint-of-care laboratory analyzers by employing the benefits of economies of scale in both negotiating supply contracts and leveraging manufacturing overhead, and by improving reliability of our instruments;

•Continuing to expand, develop, and advance the effectiveness and productivity of our companion animal diagnostic sales, marketing, customer support, and logistics organizations in the U.S. and international regions in support of, among other things, our all-direct sales strategies and best-in-class customer experience goals;

•Strengthening our sales and marketing activities to continuereach tocustomers growand ourexpand profitabilitydiagnostic and software use both in and outside the U.S.;

•Identifying, completing, and integrating acquisitions that enhance our existing businesses, create new businesses for usus, or expand the geographic areas in which we do business;

•Continuing to responsibly incorporate AI, machine learning, and automation into our products and services and associated business processes, such as customer support and software development;

We rely on third-party suppliers to provide components and raw materials (including biological materials) for our manufactured products, manufacture some of the products that we sell, provide the cloud-based infrastructure through which we deliver our cloud-based software solutions, and perform certain services, including package-delivery services. Actions taken by third-party suppliers in operating their business, as well as any disruptions to their business operations (or their suppliers' business operations), could disrupt our supply chain or operations and materially negatively impact our ability to supply the market,market or deliver our cloud-based software solutions, substantially decrease sales, lead to higher costs, and damage our reputation with our customers. Longer-term disruptions could potentially result in the permanent loss of our customers, which could reduce our recurring revenues and long-term profitability.

We seek to mitigate sole and single-source supplierssupplier risks on a risk-prioritized basis and in a variety of ways, including, when possible, by identifying and qualifying alternative suppliers, developing applicable in-house manufacturing capabilities and expertise, and entering into escrow arrangements for manufacturing information for certain single or sole-sourced products.products, and strategically maintaining safety stock. We also seek to enter into long-term contracts that provide for an uninterrupted supply of products at predictable or fixed prices. However, there can be no assurance that we will successfully implement any of these mitigating activities or that, if implemented, any of them will be effective in preventing any delay or other disruption in our ability to supply our customers. In addition, suppliers may decline to enter into long-term contracts for any number of reasons, which would require us to purchase products, components, or raw materials via short-term contracts or on a purchase order basis. There can be no assurance that suppliers with which we do not have long-term contracts will continue to supply our requirements, will always fulfill their obligations under those contracts, or will not experience disruptions in their ability to supply our requirements. In cases where we purchase sole and single-source products, components, or raw materials under purchase orders, we are more susceptible to unanticipated cost increases or changes in other terms of supply. In addition, under some contracts with suppliers we have minimum purchase obligations, and our failure to satisfy those obligations may result in loss of some or all of our rights under these contracts or require us to compensate the supplier. If we are unable to obtain adequate quantities of products, components, or raw materials in the future from sole and single-source suppliers, or if such sole and single-source suppliers are unable to obtain the components or other materials required to manufacture the products, we may be unable to supply our customers, which could have a material adverse effect on our results of operations and damage our reputation, and any longer-term disruptions could potentially result in the permanent loss of customers, which could reduce our recurring revenues and long-term profitability.

Issues in theour use of AI in our product offerings may result in reputational harm or liability and adversely affect our business

We have built, and expect to continue to build, AI into many of our product and service offerings, and we expect this element of our business to grow. We also use and are investing in AI tools for our internal business operations, including to generate code, develop products and services, and increase operational efficiency. We envision a future in which responsible AI operating in our devices, applications, and the cloud,cloud helps our customers be more productive in their business activities and interactions with consumers.consumers, and we effectively use AI in our operations to improve innovation, efficiency, and customer experience and value. As with many disruptive innovations, AI presents risks and challenges that could affect its adoption, and therefore our business.challenges. AI algorithms and models may be flawed. Datasets may be insufficient or contain information that is non-representative, infringing, or otherwise subject to legal challenge. Our competitors may incorporate AI into their products, services, and operations more quickly, more successfully and more cost-effectively than us, which could impede our ability to compete. Existing and potential government regulation related to AI use may also foreclose certain areas of AI use, cause us to modify how we use AI, and increase the burden and cost of research and development and compliance in this area, and failurethere is uncertainty around the validity and enforceability of intellectual property rights related to the use, development, and deployment of AI. Our use of AI may also lead to novel cybersecurity or privacy risks, which may adversely affect our operations and reputation. Failure to properly remediate AI usage issues may cause public confidence in AI to be undermined, which could slow adoption of AI in our offerings. The rapid evolution of AI combined with the evolving and unharmonized legal and regulatory landscape will require the application of resources to develop, test, and maintain our products and services to help ensure that AI is implemented in a manner to minimize unintended, harmful impact and to comply with applicable law. Furthermore,Although overwe thecontinue lastto twoinvest years,in AI, those investments may be substantial, and there havecan beenbe multipleno classassurance actionthat lawsuitsour filedinvestments againstwill largebe languagebeneficial modelto developersour business. Further, while we strive to develop and use AI responsibly and in the Northern District of California, the Southern District of New York, and the Middle District of Tennessee concerning alleged copyright and other intellectual property violationscompliance with respectlaw, including through implementing strong governance processes, there can be no assurance that we will address all AI-related issues that may arise. The failure to theaddress informationsuch usedissues could damage our reputation, give rise to trainlegal AIand/or models.regulatory Theaction, outcomesor ofotherwise theseadversely litigations may impairaffect our ability to provide our AI technologies.business.

As a global business, we sell products and services in more than 175 countries and operate in an increasingly complex legal and regulatory environment. In the U.S., the manufacture and sale of certain of our products are regulated by federal agencies, such as the USDA, the FDA, and the EPA. Our diagnostic tests for animal health applications that involve the detection of infectious diseases, including most rapid assay canine and feline SNAP tests and livestock and poultry diagnostic tests, must be approved by the USDA prior to sale in the U.S. Our dairy testing products, as well as the manufacture and sale of our OPTI line of human point-of-care electrolytes and blood gas analyzers,products require approval by the FDA before they may be sold commercially in the U.S. The methods used by our water testing products must be approved by the EPA, as a part of its water quality monitoring program, before they can be used by customers in the U.S.

Delays by government agencies in approving new products or product upgrades or taking action with respect to other regulatory matters could have a negative impact on our growth and profitability. The ability of government agencies to review and approve new products or product upgrades or take other actions can be affected by various factors, including government budget and funding levels, ability to hire and retain key and other personnel, staffing shortages, public health emergencies, and statutory, regulatory, and policy changes. If a prolonged government shutdown or other disruption of normal business operations occurs, it could significantly impact the ability of the USDA, FDA, EPAEPA, and other agencies to timely review and process our regulatory submissions, including with respect to new product candidates, which could have a material adverse effect on our business. Similarly, a prolonged government shutdown or other disruption could prevent the timely review of patent applications by the U.S. Patent and Trademark Office, which could delay the issuance of U.S. patents to which we would otherwise be entitled.

We are also subject to chemical regulation in the U.S., such as California’s Proposition 65, which requires businesses to provide warnings to California residents about significant risk of exposures to chemicals in products that are known to cause cancer, birth defects, or other reproductive harm. In addition, governmental authorities in the U.S. are increasingly focused on preventing environmental contamination from per- and polyfluoroalkyl substances (“PFAS”), which may be contained in certain IDEXX products. For example, current law in Maine prohibits the sale in Maine of non-exempt products containing intentionally-added PFAS after January 1, 2032, unless the Maine Department of Environmental Protection has made an unavoidable use determination, and requires reporting after the applicable sales ban takes effect of the presence of PFAS in products that have received unavoidable use determinations. However, these bans and reporting requirements in Maine are currently subject to statutory exemptions for veterinary products and medical devices regulated by or under the jurisdiction of the FDA, USDAUSDA, or EPA, as well as products that are used for public health, or for environmental or water quality testing. In addition, federal and state governments and agencies are in various stages of considering and/or implementing laws and regulations requiring the reporting, restrictionrestriction, and/or phase-out of PFAS in products.

The manufacture, import, and sale of our products, as well as our research and development processes, are subject to similar and sometimes more stringent laws in many foreign countries. For example, the European Union regulates the use of certain substances that we currently use in our products or processes. These regulations include, but are not limited to, the Biocidal Products Regulation, which requires the use of approved biocides in our products prior to being manufactured, used, or sold in the European Union; the European Regulation for Registration, Evaluation, Authorization and Restriction of Chemical Substances, or REACH, which regulates and restricts the use of chemicals in the European Union; the Restriction of Hazardous Substances (“RoHS”) Directive, which regulates and restricts certain hazardous substances in electrical and electronic equipment; the Electromagnetic Compatibility Directive; and the Waste Electrical and Electronic Equipment Directive. In addition, European Union regulatory authorities and certain European countries are contemplating regulations to restrict and phase-out PFAS. Other countries have proposed similar regulations, including Australia, Canada, and Brazil.

There has been a recent focus in the U.S. on laws and regulations related to artificial intelligence,AI, which cover, among other things, algorithm accountability, privacy, and transparency. For example, use of artificial intelligenceAI and machine learning may be subject to laws and evolving regulations regarding, among other things, data bias and anti-discrimination. For example, the Federal Trade Commission (“FTC”) enforces consumer protection laws such as Section 5 of the FTC Act, which prohibits unfair and deceptive practices. AI-related legislation has also been introduced in a number of U.S. state legislatures.legislatures and enacted in some states, such as California and Colorado, but the current U.S. administration issued an executive order in December 2025 to establish a federal policy aimed at curbing the proliferation of state-level AI-related legislation. In August 2024, the European Union Artificial Intelligence Act, which establishes requirements for the provision and use of products that leverage artificial intelligence,AI, machine learning, and similar technologies was enacted.enacted Thisand will takebecome effectfully effective in stagesAugust beginning2026, inwith some provisions effective February 2025. Additionally, other countries have proposed legal frameworks to regulate artificial intelligence,AI, which is a trend that may continue to increase.increase, and Japan enacted AI-related legislation in May 2025. Any failure or perceived failure by us to comply with such requirements could have an adverse impact on our business.

We believe our future success significantly depends on our ability to continue, on a cost-effective and timely basis, to enhance our existing differentiated product and service offerings, to continue to incorporate AI, machine learning and automation into our products and services and associated business processes and to develop and introduce new and innovative differentiated products and services. As a result, we invest substantial funds and efforts into R&D,research and development, investigating new products and technologies being developed by third parties, and obtaining certain such new products and technologies through licenses or acquisitions. There can be no assurance that our R&D,research and development, licensing, or acquisition efforts will achieve expected results, when or whether any of our products or services now under development will be launched, or whether we may be able to develop, license or otherwise acquire new products or technologies or successfully incorporate AI capabilities into our products, services or associated business processes. We also cannot predict whether any product or service offering, once launched, will achieve market acceptance, or achieve sales and revenue consistent with our expectations.

We rely on a combination of patent, tradetrademark, secret, trademark,copyright, and copyrighttrade secret laws to protect our proprietary rights. We also license patents and technologies from third parties to enable the use of third-party technologies in the development, production, and provision of our products and services. If we do not have adequate protection of our proprietary rights or are unable to license third-party patents and technologies on reasonable terms, our business may be restricted or adversely affected by competitors who utilize substantially equivalent technologies to compete with us.

In the past, we have received notices claiming that our products or services infringe third-party patents, and we may receive such notices in the future. Patent litigation is complex and expensive, and the outcome of patent litigation can be difficult to predict. We cannot ensure that we will winbe successful in a patent litigation caseor orbe able to negotiate an acceptable resolution of such a case. If we lose,unsuccessful, we may be prohibited from selling certain products or services and/or we may be required to pay damages and/or ongoing royalties as a result of the lawsuit. Any such result could have an adverse effect on our results of operations.

We face intense competition, and we expect that future competition will becomefurther even more intenseintensify as new products, services and technologies become available, the use of AI and machine learning expands, and new competitors enter the space. Our competitors in the veterinary diagnostic sector in the United States and abroad include companies that develop, manufacture, and sell veterinary diagnostic tests; commercial veterinary reference laboratories; certain large and well-funded animal health pharmaceutical companies; and corporate hospital chains that operate reference laboratories that serve both their hospitals and unaffiliated hospitals, such as VCA Inc., which is wholly-owned by Mars, Incorporated, another operator of corporate hospital chains that also sells veterinary in-clinicpoint-of-care diagnostic instruments. Consolidation among our competitors and our customers may intensify the competition we face. While we believe that our offerings are competitively differentiated due to our innovative products and services that offer an integrated, comprehensive diagnostic solution and the quality of our technical and customer service, there can be no assurance that increased consolidation among our competitors or customers (as well as any resulting veterinary diagnostic vertical integration among our customers) would not have a negative impact on our ability to compete successfully. For more information regarding the risks presented by consolidation and reference laboratory vertical integration among our customers, refer to “Consolidation in our customer base, including through increased corporate hospital ownership, and prevalence of buying consortiums could negatively affect our business” below.

Competition could negatively affect our sales and profitability in a number of ways. New competitors may emerge through the development of innovative new technology (such as the use of AI and machine learning), the acquisition of rights to use existing technologies or the use of existing technologies when patents protecting such existing technologies expire. New or existing competitors may introduce new, innovative, and competitive products and services more quickly, successfullysuccessfully, and effectively, and these products and services could be superior, or be perceived by our customers to be superior, to our products and services or lead to the obsolescence of one or more of our products or services. Business combinations and mergers among our competitors may result in competitors that are better positioned to create, market, and sell more compelling product and service offerings. While an important aspect of our strategy is to continue, on a cost-effective and timely basis, to enhance our existing products and services (including through the incorporation of AI capabilities) and to develop and introduce new and innovative products and services, there can be no assurance that we will be able to successfully develop or introduce such products and services or that those products or services will be superior to our competitors’ products or services or otherwise achieve customer acceptance. Some of our competitors and potential competitors may choose to differentiate themselves by offering products and services perceived in the eyes of customers as similar, at substantially lower sales prices, which could have an adverse effect on our results of operations through loss of sales and/or revenues or a decision to lower our own sales prices to remain competitive. In addition, our ability to attract and retain customers depends on the effectiveness of our customer marketing and incentive programs, and multiple competitors could bundle product and service offerings through co-marketing or other arrangements, which could enhance their ability to compete with our broad product and service offerings. Certain of our competitors and potential competitors, including large diagnostic and pharmaceutical companies, also have substantially greater financial and managerial resources than us, as well as greater experience in manufacturing, marketing, research and development, and obtaining regulatory approvals than we do.

Veterinarians are our primary customers for our CAG products and services, and the veterinary services industry in the U.S. and abroad has become increasingly consolidated in recent years.consolidated. In the United States, the number of owners of veterinary hospitals has been declining, and an increasing percentage of veterinary hospitals are owned by corporations that are in the business of acquiring veterinary hospitals and/or opening new veterinary hospitals nationally or regionally.corporations. Major corporate hospital owners in the U.S. include Mars, Incorporated (owner of Banfield Pet Hospitals, Blue Pearl Veterinary Partners, and VCA Inc.), and National Veterinary Associates, and are joined by dozens of other consolidators.Associates. A similar trend exists in other regions such as Canada, the United Kingdom, Europe, Australia, New Zealand, China, and Brazil. Furthermore, an increasing percentage of individually owned veterinary hospitals in the U.S. are participatingparticipate in buying consortiums. Corporate owners of veterinary hospitals and buying consortiums often seek to improve profitability by leveraging the buying power they derive from their scale to obtain favorable pricing from suppliers, which could have a negative impact on our profitability and results of operations. While we have strong supplier relationships with several corporate hospital groups and buying consortiums, decisions by larger corporate owners and buying consortiums to shift their purchasing of products and services away from us andpurchases to a competitor would have a negative impact on our results of operations from the loss of future business. Under these circumstances, we may receive customer contract resolution payments, which would generally be recorded in other operating income in the period received. Nonetheless, the loss of future revenue may still be significant and adversely affect our future revenue growth rate and profitability. In addition, certain corporate owners also operate reference laboratories that serve both their hospitals and unaffiliated hospitals and, in some cases, sell veterinary in-clinicpoint-of-care diagnostic instruments. Any hospitals acquired by these companies generally attempt to shift all or a large portion of their testing to the reference laboratories operated by these companies, and may attempt to shift their in-clinicpoint-of-care diagnostic testing, as well, and there can be no assurance that hospitals that otherwise become affiliated with these companies would not shift all or a portion of their diagnostic testing. Furthermore, because these companies compete with us in the reference laboratory services marketplace, hospitals acquired by these companies or those that establish other affiliations with these companies may cease to be customers or potential customers of our other companion animal products and services, which would cause our sales of these products and services to decline.

Demand for our companion animal, livestock and poultry diagnostic tests and our dairy and water testing products could be negatively impacted by a number of factors impacting testing practices. The introduction or broad market acceptance of vaccines or preventatives for the diseases and conditions for which we sell diagnostic tests and services could result in a decline in testing. Changes in accepted medical protocols regarding the diagnosis of certain diseases and conditions could have a similar effect. Eradication or substantial declines in the prevalence of certain diseases also could lead to a decline in diagnostic testing for such diseases. Our livestock and poultry products business in particular is subject to fluctuations resulting from changes in disease prevalence. The outbreak of certain diseases (such as African swine fever) among livestock or poultry, or the adverse impact of climate change-related events (such as hurricanes, earthquakes, fires, and floods), could lead to the widespread death or precautionary destruction of such animals in the affected regions, reducing herd or flock sizes, which could reduce the demand for our testing products for such animals. Changes in government regulations or in the availability of government funds available for monitoring programs could negatively affect sales of our products that are driven by compliance testing, such as our livestock and poultry, dairydairy, and water products. In addition, changes and trends in local dairy, poultry, or other food sectors around the world could negatively affect the related production markets resulting in a decline in demand for our testing products. The growth of our CAG business relies in part on a stable pet population and evolving testing patterns of increasing frequency and depth of diagnostic testing. Significant reductions to the pet population or to veterinary protocols that reduce the frequency of diagnostic testing, due to macroeconomic conditions or other reasons, could have an adverse effect on our results of operations. Actual or perceived economic weakness, whether due to inflation or other factors, may also reduce demand for our companion animal, water, livestock, poultry, and dairy products and services, and public health-related guidance and directives, including stay-at-home orders that may be deployed to combat public health issues, and severe weather conditions could result in a decrease in companion animal clinical visits, the delay of elective procedures and wellness visits and disruption of veterinary clinic operations, all of which would have a negative effect on veterinary service providers and result in declines in demand for our CAG products and services. Declines in testing for any reason, including the reasons described above, along with lost opportunities associated with a reduction in the pet population or veterinary visits, could have an adverse effect on our results of operations.

Our continued success is substantially dependent on our ability to attract, develop, and retain highly capable and skilled employeesleaders, and leaders. As we continue to grow our business, expand our geographic scope, and develop and offer innovative, new products and services, we require an engaged, qualified workforce and the organizational talent necessary to ensure effective succession for our senior leadershipemployees, and other key personnel. Competition for experienced leaders and employees, particularly for persons with specialized skills, such as software and AI, can be intense. Our ability to recruit and retain such talent will depend on a number of factors, including compensation and benefits, work location, flexibility regarding virtual and hybrid work arrangements, work environment, corporate culture, and development opportunities. Furthermore, a more competitive labor market has made it more difficult and costly to attract qualified labor, and prolonged shortages could adversely affect our ability to achieve our business objectives.

The loss of the services of, or our failure to recruit or develop and implement effective succession plans for, our senior leadership, other key personnel, and employees may significantly delay or prevent the achievement of our strategic objectives, disrupt our operations, and adversely affect our business and our future success. In addition, even if we effectively develop and implement succession plans and make key leadership transitions, such as our planned CEO transition in May 2026 that we announced on January 13, 2026, we cannot provide assurances as to whether we may experience management or other challenges in connection with any of those leadership transitions that could adversely affect our future success and could otherwise materially adversely affect our business, reputation, results of operations, and financial condition.

We rely on our information systems,systems as well asand third-party information systems,systems to provide access to our web-based products and services, keep financial records, analyze results of operations, process orders and shipments, manage inventory, store confidential or proprietary information, and operate other critical functions. In addition, some of our products and services includeare cloud-based and connect to the “Internet of Things” (“IoT”), including information systems that collect and use data on behalf of customers (e.g., veterinary practice management systems and customer communication tools and services), and someour connected IoT devices (e.g., IDEXX VetLab Stations and analyzers) that enable our integrated, comprehensive diagnostic solution for veterinary practices, and these products and services rely on third-party providers for cloud computing and storage. These information systems and networks are susceptible to damage, disruption, or shutdown from multiple factors, including failures during the process of upgrading or replacing software, databases, or components; power outages; telecommunications or system failures; terrorist attacks; natural disasters; individual error or malfeasance; server or cloud provider breaches; computer viruses or cyber security attacks or other breaches or incidents. Although we maintain security policies and measures,measures and internal controls, employ system backup measures, and engage in redundancy planning and processes, and invest in our data and information technology infrastructure, such policies, measures, controls, planning processes, and processes,investments, as well as our current disaster recovery plans, mayhave not always been effective, and there can be ineffectiveno assurance that these (or any future efforts) will be effective, in preventing any information system or inadequatenetwork todamage, address all eventualities. Further, our information systems and our business partners’ and suppliers’ information systems have experienced, and will likely continue to experience, attacks by hackers and other threat actors and other cybersecurity breaches and incidents, including, among other things, computer viruses and malware, ransomware, denial of service actions, phishing schemes, the compromise, misappropriation and/or unauthorized acquisitiondisruption, or disclosure of confidential or otherwise protected information and similar events through the internet (including via devices and applications connected to the internet), and through email attachments and persons with access to these information systems, such as our employees or third parties with whom we do business.shutdown. The continued use of remote and hybrid work arrangements may additionally result in some increased risk associated with our employees accessing our data and systems remotely. In addition, security industry experts and government officials have warned about the risks of threat actors, such as hackers, nation state actors, and organized groups, targeting U.S. organizations, and recent developments in the cyber threat landscape include the growing use of AI,AI whichand couldother enableemerging ortechnologies createby threat actors is growing, enabling more sophisticated and effective cybersecurity attacks and increasephishing and social engineering schemes and further increasing attack volume and frequency.

We, and some of our third-party vendors, have experienced cybersecurity attacks by threat actors (which may include state-sponsored organizations or nation state actors) and other cybersecurity breaches and incidents in the pastpast, including, among other things, computer viruses and malware, ransomware, denial of service actions, phishing schemes, social engineering, the compromise, misappropriation and/or unauthorized access to (or acquisition or disclosure of) confidential or otherwise protected information, and similar events, and will likely experience further attacksattacks, breaches and incidents in the future, potentially with more frequency. To our knowledge, none have resulted in any material adverse impact to the Company, our business strategy, results of operations or financial condition. We have adopted measures to mitigate potential risks associated with information technology disruptions and cybersecurity threats; however, given the unpredictability of the timing, naturenature, and scope of such disruptions and the evolving nature of cybersecurity threats, which vary in technique and sources, if we or our business partners or suppliers were to experience a system disruption, attack or security breach or incident that impacts any of our critical functions, or our customers were to experience a system disruption, attack or security breach or incident via any of our software or connected IoT products and services, we could potentially be subject to production downtimes, operational and/or productivity delays, other detrimental impacts on our operations or ability to provide products and services to our customers, the compromise, misappropriation and/or unauthorized access to (or acquisition or disclosure of) confidential or otherwise protected information, destruction or corruption of data, security breaches, other manipulation or misuse of our systems or networks, financial losses and additional costs from remedial actions, repairs to infrastructure, physical systems or data processing systems, increased cybersecurity and information technology protection costs, loss of business or potential liability, and/or damage to our reputation, any of which could have a material adverse effect on our business strategy, competitive position, results of operations, cash flows, financial condition, or prospects. Additionally,We, our customers, and other users of our products and services also may not promptly learn of or have the post-acquisitionability integrationto processfully assess the magnitude or effects of acquireda security vulnerability in connected IoT devices and networks, including the extent, if any, to which a vulnerability has been exploited. Additionally, we have acquired, and in the future may acquire, companies or assets that may have less sophisticated information systems, cybersecurity practices, or training, which may result in an increased risk of cybersecurity attacks, breaches, or incidents. Our customers and/or employees could also face negative consequences such as the compromise of sensitive or critical information or systems. Furthermore, access to, public disclosure of, or other loss of data or information (including any of our confidential or proprietary information or personal data or information) as a result of an attack or security breach or incident has given, and in the future may give, rise to notification obligations to individuals, regulators, customers, employees, and others, and could result in governmental actions or private claims or proceedings, any of which could damage our reputation, cause a loss of confidence in our products and services, damage our ability to develop (and protect our rights to) our differentiated technologiestechnologies, and have a material adverse effect on the Company, our business strategy, financial condition, results of operationsoperations, or prospects. While we maintain a cyber risk insurance policy intended to address risk of loss due to certain types of cybersecurity events,policy, it may not cover any or all claims, costs or losses associated with suchall cybersecurity events. For more information regarding personal data and information privacy and data protection risks, refer to “Our operations and reputation may be impaired if we, our products, or our services do not comply with our global privacy policy or evolving lawslaws, regulations, and regulationsindustry standards regarding data privacy and protection” below.

Our business and results of operations could be negatively affected by certain factors and events beyond our control, such as natural disasters, severe weather conditions and/or climate change-related events (such as hurricanes, earthquakes, fires, and floods); public health issues (such as outbreaks, epidemics, or pandemics); civil or military unrest; geopolitical conditions and developments; war, terrorism, armed conflict, or other man-made disasters (including cyberwar, cyberterrorism, or state-sponsored attacks); disruption or loss of service from our cloud service providers; inflationary pressures, which may increase costs for materials and finished goods; adverse or uncertain macroeconomic conditions, including fears of a global economic downturn or recession; increases in wages that drive up prices; rising interest rates; workforce disruptions; labor shortages or stoppages; the imposition of regulations, trade protection measures, tariffs, duties, import/export restrictions, quotas or embargoes on key components; transportation failures affecting the supply and shipment of materials and finished goods; and the unavailability of raw materials. Any of these events could result in, among other things, damage to or the temporary closure of one or more of our manufacturing or distribution facilities or reference laboratories (damage to one of our facilities or the manufacturing equipment we use could be costly and may require substantial lead-time to repair or replace); damage to or closure of one or more facilities of our third-party business partners or suppliers on which we rely; a temporary lack of an adequate work force in one or more sites; an interruption in power supply; a temporary or long-term disruption in our supply chain or logistics network (including a disruption to our ability to obtain critical components for the manufacture of our products); a temporary disruption in our ability to deliver (or delays in the delivery of) our products or services; and short- or long-term damage to our customers’ businesses (which would adversely impact customer demand for our products and services). For our veterinary customers, these events may negatively affect the number of patient visits and elective procedures, and the volume of diagnostic utilization, and may otherwise disrupt clinical operations, which could adversely affect our revenues. For more information regarding the risks presented by disruption to our suppliers’ operations and supply chain, refer to “Our dependence on third-party suppliers could negatively affect our ability to sell certain products or deliver our cloud-based software solutions, which could negatively affect our operating results” above.

We operate in many regions around the world where our businesses and the activities of our customers and suppliers could be disrupted by climate change. We are exposed to physical risks (such as extreme weather conditions or rising sea levels), risks in transitioning to a low-carbon economy (such as additional legal or regulatory requirements, changes in technology, market riskrisk, and reputational risk) and social and human effects (such as harm to health and well-being) associated with climate change. These risks can be either acute (short-term) or chronic (long-term).

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, 2022,2023, and year-over-year comparisons between 20232024 and 2022,2023, is included in our Annual Report on Form 10-K for the year ended December 31, 2023,2024, within Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, and is incorporated by reference herein.Operations.

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 ensuremeasure the quality and safety of milk and improve producer efficiency, which we refer to as Livestock, Poultry and Dairy (“LPD”). Our Other operating segment combines and presents our human medical diagnostic products and services business (“OPTI Medical”) with our out-licensing arrangements because they do not meet the quantitative or qualitative thresholds for reportable segments. 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, 2024,2025, 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.

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 veterinarianveterinary 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 in-clinicpoint-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 in-clinicpoint-of-care IDEXX VetLab suite of instruments and our SNAP Pro Analyzer are non-recurring in nature in thatbecause 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,instruments and our SNAP Pro Analyzer are recurring in nature, in thatbecause 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, in thatbecause 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.

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 continuouslycontinually 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 isare performing tests and sharing test results with the client at the time of the patient visit. Our latest generation of chemistry, hematology, cytology,cytology/morphology, and urinalysis instruments demonstrates this commitment by offering enhanced ease of use,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.

Our in-clinicpoint-of-care diagnostic solutions, consisting of our IDEXX VetLab consumable products and SNAP rapid assay test kits, provide real-time reference lablaboratory 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 in-clinicpoint-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 in-clinicpoint-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 useease-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.

The prevalence of in-clinicpoint-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 in-clinicpoint-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 in-clinicpoint-of-care offerings.

Profitability in our lablaboratory 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 laboratorieslaboratories, 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 lablaboratory revenue growth is achieved both through increased testing volumesvolumes, 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 in-clinicpoint-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, ServicesServices, 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 featuresfeatures, 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 servicesservices, 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.

With ourOur SmartFlow and Vet Radar cloud technology,technology we are ablehelp 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 workflow.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 forusing viewing,proprietary accessing,AI storing,capabilities to enable optimal sharing, analysis, and sharingstorage multi-modalityof 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.

Systems and Hardware. We differentiate our practice management systems through enhanced functionality, ease of use,ease-of-use, and embedded integration with in-clinicpoint-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 process,processes, which generally requiresrequire 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.

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 TestTest, 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 productsproducts, and budgetary constraints may lead to decreased demand for certain products. As a result, the performance in certain sectors of this business can fluctuate.

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

We allocate revenue to each performance obligation in proportion to the relativedetermine standalone selling prices andin recognizeorder revenueto when control ofallocate the relatedexpected goodsconsideration orfrom servicesa iscustomer transferredcontract forto eachthe obligation.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.

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 expected 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 suchin determinationwhich wasthe made.tax rate change is enacted.

We record a liability for uncertain tax positions that do not meet the more-likely-than-not standard as prescribed by theU.S. authoritative guidanceGAAP for income tax accounting. We record tax benefits for only those positions that we believe will more-likely-than-not be sustained. For positions that we believe that it is more-likely-than-not that we will prevail, we record a benefit considering the amounts and probabilities that could be realized upon ultimate settlement. If our judgment as to the likely resolution of thean uncertainty changes, if thean uncertainty is ultimately settled, or if the statute of limitations related to thean 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, and $22.3 million as of December 31, 2023.2024. We also accrue for estimated interest expense and penalties on our uncertain tax positions. Referpositions to “Part II, Item 8. Financial Statements and Supplementary Data, Note 14. Income Taxes” in the accompanyingextent Notes to consolidated financial statements for more information.possible.

CAG Trends. Global trends in companion animal healthcare, including growth in demand for clinical services, continue to support solid growth for companion animal diagnostic products and services across regions. In the U.S., average diagnostics revenue per practice grew approximately 4%6% on a same-store basis during 2024,2025, faster than approximately 3%2% growth in overall practice revenues. U.S. same-store clinical visits at veterinary practices declined approximately 2% in 2024,2025, impacted by ongoing veterinary practice capacity challenges from the influx of higher volumes during the pandemic,challenges, as well as macroeconomic headwinds. Our initial 20252026 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 andproductivity, create additional capacity at veterinary clinics. For example, during 2024, we upgraded our IDEXX VetLab Station softwareclinics, and alsoengage launchedand ourcommunicate newwith slide-freepet cellular analyzer, IDEXX inVue Dx.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,issues; logistics challenges, including extended shipping periods and delays,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 relatively 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 mitigatingmitigation 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 canmay also affect the purchasing decisions of our Water and LPD business 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.

Currency Impact. For the year ended December 31, 2024,2025, approximately 22%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 both the years ended December 31, 2023,2024, and December 31, 2022.2023, 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 effect.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 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.

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,factors which may not be directly related to underlying demand for our products by veterinary practices, which are the end users.practices. If during a quarter or year, distributors’ inventories grewgrow 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 grewgrow 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 forabout sales to endveterinary users.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.

Non-GAAP Financial Measures. The following revenue analysis and discussion focuses onincludes organic revenue growth, and references in this analysis and discussion to “revenue,” “revenuesrevenues,” or “revenue growth” areapply referencesequally 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 year 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.” InWe do not consider acquired assets to be a business combination, if substantially all the fair value of the assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, we do not consider these assets to be a business.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. WeRevenue 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 and therefore are included in organic revenue growth.base.

Our fiscal quarter ended on MarchJune 31.30. Unless otherwise stated, the analysis and discussion of our financial condition and results of operations below, including references to growth and organic growth and increases and decreases, are being compared to the equivalent prior-year periods.

Description of Operating Segments. We operate primarily through three reportable segments: Companion Animal Group (“CAG”), Water quality products (“Water”), and Livestock, Poultry and Dairy (“LPD”). CAG provides diagnostics and information management products and services for the companion animal veterinary industry and the biomedical research community. Water provides testing solutions and related instrumentation for the detection and quantification of various microbiological parameters in water. LPD provides diagnostic tests, services, and related instrumentation that are used to manage the health status of livestock and poultry, to improve producer efficiency, and to measure the quality and safety of milk. Our Other operatingnon-reportable segment combinesresults combine and presentspresent our human medical diagnostic business with our out-licensing arrangement because they do not meet the quantitative or qualitative thresholds for reportable segments.

Global Conflicts. The current macroeconomic environment and current global conflicts, including the escalation of hostilities in the Middle East, could cause further disruption to global energy markets, fuel prices, transportation networks, and supply chains particularly in the Asia Pacific and European regions, which may indirectly impact our operating costs and consumer availability and demand for our products and services.

Other Items. Refer to “Part I, Item 1. Intellectual Property, Including Patents and LicenseLicenses” and “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2025 Annual Report for additional information regarding trends in companion animal healthcare, supply chain and logistics challenges, economic conditions, changes in tariff and trade policies, distributor purchasing and inventories, and patent expiration.

The discussion and analysis of our financial condition and results of operations is based upon our unaudited condensed 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 disclosures 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. The critical accounting policies and the significant judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements for the three and six months ended MarchJune 31,30, 2026, are consistent with those discussed in our 2025 Annual Report in the section under the heading “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates and Assumptions.”

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 three and six months ended MarchJune 31,30, 2026, 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 also usepresent 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.

Three Months Ended MarchJune 31,30, 2026, Compared to Three Months Ended MarchJune 31,30, 2025

Total Company Revenue. The increase in revenue primarily reflected growth in CAG Diagnostics recurring revenue, including benefits from higher volumes and the benefit from higher realized prices. Volume growth was supported by newhigh businesscustomer gains,retention rates with increased testing by existing customers, including our expanded menu of available tests, andas highwell as new customer retentionadditions. rates.Lower Instrumentinstrument revenue gains werewas primarily due to the lower placements of our IDEXX inVue DxTM Analyzer, compared to the firstbroad commercial availability during the second quarter of 2025 when we continued a controlled launch.2025. Higher volumes and realized prices in recurring veterinary software subscriptions, services, and diagnostic imaging also contributed to revenue growth. Revenue growth in our Water business was primarily due to thehigher benefitvolumes of higherand realized prices and volumes.prices. The increase in LPD revenue was primarily due to higher volumes and higher realized prices. The impact fromof changes in foreign currency exchange rates increased revenue growth by 3.1%.0.7%.

The following table presents totalour consolidated Company results of operations:

Gross Profit. Gross profit increased due to higher revenue and a 100140 basis point increase in the gross profit margin. The increase in the gross profit margin reflected benefits from highproportionally recurring revenue growth inhigher IDEXX VetLab consumable and reference laboratory volumes,volume growth, the business mix impact associated with lower premium instrument revenue, operational productivity improvements, and net price realization, which was offset by inflationary costs and investments.costs. The increase in gross margin also reflects favorability in our Water and Livestock, Poultry and Dairy operating segments. These increases in the gross profit margin were reduced by the business mix impact from higher premium instrument revenue. The changeChanges in foreign currency exchange rates increased the gross profit margin by approximately 1015 basis points, including the impact of lower hedge gainslosses during the current period compared to the prior period.

Operating Expenses. Sales and marketing expense increased primarily due to higher personnel-related costs.and travel costs, as well as higher costs related to commercial expansion. General and administrative expense increased primarily due to ahigher priorpersonnel-related periodcosts, reductionand inhigher accrueddepreciation expenseand of approximately $9 millionamortization related to a litigation matter concluded in April 2025, higher personnel-relatedtechnology and facilityinfrastructure costs, and a $5 million expense for the full impairment of an equity investment in the current period.investments. Research and development expense increased primarily due to higher personnel-related and project costs. The impact from changesChanges in foreign currency exchange rates increased operating expense growth by approximatelyless 2%.than 1%.

CAG Diagnostics Recurring Revenue. The increase in CAG Diagnostics recurring revenue was primarily due to higher sales volumes inof IDEXX VetLab consumables and reference laboratory testing, as well as benefits from higher realized prices. The impact of changesChanges in foreign currency exchange rates increased revenue growth by 3.1%.0.7%.

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 across major regions, reflecting the benefits from 12% growth in our installed base of premium instruments and growth in testing by existing customers, including sales of our expanded menu of available tests, asand wellthe asbenefits continuedfrom high11% customergrowth retentionin rates.our Theinstalled impactbase of changespremium instruments. Changes in foreign currency exchange rates increased revenue growth by 4.2%.1.1%.

Rapid assay revenue increased from higher realized prices, moderated by a decrease inlower volumes partiallyprimarily due to lower vector-borne disease testing, and a shift of customers’ pancreatic lipase testing to our Catalyst instrument platform, as well as sector headwinds. The impact of changes in foreign currency exchange rates increased revenue growth by 1.2%.platform.

The increase in reference laboratory diagnostic and consulting services revenue was due to higher testing volumes across all major regions and higher realized prices. TheVolume impactgrowth was supported by increased testing by existing customers, including sales of changesour inexpanded foreignmenu currencyof exchangetests, rates increased revenue growthand by 2.5%.new customers.

CAG Diagnostics Capital – Instrument Revenue. The increasedecrease in instrument revenue was primarily due to lower placements of our IDEXX inVue Dx Analyzer, compared to the firstbroad commercial availability in second quarter of 2025 when we continued a controlled launch, partially offset by lower placements of other premium instruments. The impact of changes in foreign currency exchange rates increased revenue growth by 4.7%.2025.

Veterinary Software, Services and Diagnostic Imaging Systems Revenue. The increase in recurring revenue was primarily due to higher subscription and integrated services volumevolumes from our expanded SaaS installed base and from higher realized prices. The increase in our systems and hardware revenue was primarily due to higher diagnostic imaging system sales. The impact of changes in foreign currency exchange rates increased revenue growth by 1.0% The following table presents the CAG segment results of operations:

Gross Profit. Gross profit increased due to higher revenue and ana 80120 basis point increase in the gross profit margin. The increase in the gross profit margin reflected benefits from recurringproportionally revenue growth inhigher IDEXX VetLab consumable and reference laboratory volumes,volumes growth, the business mix impact associated with lower premium instrument revenue, operational productivity improvements, and net price realization, which was offset by inflationary costscosts. and investments. These increases in the gross profit margin were reduced by the business mix impact from higher premium instrument revenue. The impact of changesChanges in foreign currency exchange rates increased the gross profit margin by approximately 10 basis points, including the impact of lower hedge gainslosses during the current period compared to the prior period.

Segment Operating Expenses. Sales and marketing expense increased primarily due to higher personnel-related costs.and travel costs, as well as higher costs related to commercial expansion. General and administrative expense increased primarily due to ahigher priorpersonnel-related periodcosts, reductionand inhigher accrueddepreciation expenseand of approximately $9 millionamortization related to a litigation matter concluded in April 2025, higher personnel-relatedtechnology and facilityinfrastructure costs, and a $5 million expense for the full impairment of an equity investment in the current period.investments. Research and development expense increased primarily due to higher personnel-related and project costs. The impact of changesChanges in foreign currency exchange rates increased operating expense growth by approximatelyless 2%.than 1%.

Revenue. The increase in revenue was primarily due to higher globalvolumes, particularly in the Americas and Europe, and, to a lesser extent, higher realized prices and higher volumes, primarily in North America.prices. The increase in volumes was primarily due tofrom higher demand for Colilert test products and related accessories used in coliform and E. coli testing. International volumes were unfavorablyfavorably impacted by shippingthe constraintstiming of shipments in the current period that had been delayed from the prior quarter as a result of the conflict in the Middle East. The impact of changesChanges in foreign currency exchange rates increased revenue growth by 3.8%.1.9%.

Gross Profit. Gross profit increased due to higher revenue,revenue as well asand a 190480 basis point increase in the gross profit margin. The net increase in the gross profit margin was primarily due to lower product costs, higher realized prices, partiallywhich reducedoffset byinflationary highercosts, distributionand costs.the Thefavorable impact of changes in product mix. Changes in foreign currency exchange rates decreasedincreased the gross profit margin by approximately 5030 basis points, including the impact of lower hedge losses during the current period compared to hedge gains in the prior period.

Segment Operating Expenses. Sales and marketing expense increased primarily due to higher personnel-related costs and commercial investmentsinvestments. General and administrative expense increased primarily due to higher bad debt costs and higher personnel-related costs. General and administrative and researchResearch and development expensesexpense increased primarily due to higher personnel-related costs. The impact of changesChanges in foreign currency exchange rates increased operating expense growth by approximately 3%.2%.

Revenue. The increase in revenue was primarily due to increases in test volumes, predominantlyparticularly in Europethe Americas, and, to a lesser extent, higher realized prices. The impactincrease ofin volumes was primarily due to growth in testing by existing customers, new customers, favorable timing impacts in Europe due to changes in customer ordering patterns compared to the prior year. Changes in foreign currency exchange rates increased revenue growth by 6.4%.1.8%.

Gross Profit. The increase in gross profit was primarily due to higher revenue as well asand a 190600 basis point increase in the gross profit margin. The increase in the gross profit margin was primarily due to lower productper-unit costs from higher sales volumes and higher realized prices.prices, Thewhich impactoffset ofinflationary changescosts. Changes in foreign currency exchange rates decreasedincreased the gross profit margin by approximately 170160 basis points, including the impact of lower hedge gains during the current period compared to hedge losses in the prior period.

Segment Operating Expenses. Sales and marketing expense increased primarily due to higher personnel-related costs and higher commercial activities.costs. General and administrative and research and development expensesexpense increased primarily due to higher personnel-related and technologyproject-related consulting costs. TheResearch impactand ofdevelopment changesexpense increased primarily due to higher personnel-related costs. Changes in foreign currency exchange rates increased operating expense growth by approximately 3%.1%.

Interest Expense and Income. Interest expense was relatively constant at $7.7$10.2 million for the three months ended MarchJune 31,30, 20262026, andcompared 2025.to $11.3 million for the same period during the prior year. Interest income was $0.6 million for the three months ended MarchJune 31,30, 2026, comparedand toJune $1.230, million for the three months ended March 31, 2025, primarily due to a decrease in money market investments.2025.

Provision for Income Taxes. Our effective income tax rates were 21.7%18.9% for the three months ended MarchJune 31,30, 20262026, and June 30, 2025. Compared to the same period in the prior period,year, favorableour impacts on thecurrent-period effective tax rate comprisedwas primarilyfavorably ofimpacted anby increasegeographic inearnings mix and higher tax benefits related to share-based compensation, whilewhich offsettingwere unfavorableoffset impactsby includeda higherprior-year non-deductibletax expenses.benefit from the resolution of international tax audits.