IDEXX Laboratories IDXX · USD

SEGMENT REPORTING We have three reportable segments: Companion Animal Group (“CAG”), water quality products (“Water”), and Livestock, Poultry and Dairy (“LPD”). CAG provides products and services for veterinarians and the biomedical research community, primarily related to diagnostics and information management. Water provides innovative testing solutions 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 operating segment combines and presents our human medical diagnostic business with our out-licensing arrangement because they do not meet the quantitative or qualitative thresholds for reportable segments. Our human medical diagnostic business develops, manufactures, and distributes human medical diagnostic products and services. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker (“CODM”) in assessing performance. The CODM, our president and Chief Executive Officer, evaluates the performance of operating segments based on revenues and gross profit. Our CODM reviews the budget and actual financial results of the operating segments and decides how to allocate resources to meet our strategic priorities, and he also meets with operating segment leaders on a periodic basis to determine the allocation of resources.The accounting principles used in the preparation of the segment information are the same as those used for the consolidated financial statements. Intersegment revenues, which are not included in the tables below, were not material for the years ended December 31, 2025, 2024, and 2023. Refer to “Note 3. Revenue” for a summary of disaggregated revenue by segment and by major product and service category for the years ended December 31, 2025, 2024, and 2023. Assets are not allocated to segments for internal reporting purposes and are not included in the review performed by the CODM for purposes of assessing segment performance and allocation of resources. Certain corporate expenses are allocated to the segments, including depreciation and amortization.

REVENUE Revenue RecognitionWe recognize revenue when, or as, performance obligations under the terms of a contract are satisfied, which occurs when control of the promised products or services is transferred to a customer, and it is probable that we will collect substantially all of the consideration to which we will be entitled, based on the customer’s intent and ability to pay the promised consideration. We exclude sales, use, value-added, and other taxes we collect on behalf of third parties from revenue. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or services to a customer. To accurately present the consideration received in exchange for promised products or services, we apply the five-step model outlined below:1.Identification of a contract or agreement with a customer2.Identification of our performance obligations in the contract or agreement3.Determination of the transaction price4.Allocation of the transaction price to the performance obligations5.Recognition of revenue when, or as, we satisfy a performance obligationWe enter into contracts where customers purchase combinations of IDEXX products and services, which are generally capable of being distinct and accounted for as separate performance obligations. The timing of revenue recognition, billings, and cash collections result in accounts receivable, lease receivables, and contract assets arising when revenue is recognized in advance of billings, and contract liabilities or deferred revenue as a result of receiving consideration in advance of revenue recognition within our consolidated balance sheets. Customer payment terms are typically 30 to 60 days, and these terms vary by location based on local business practices and by customer.Customer contracts are modified primarily to create new, or change existing, enforceable rights and obligations. Customer contract modifications typically create new performance obligations to deliver additional goods and/or services that are distinct from the goods and/or services transferred before the modification, and the related increase in consideration does not reflect the standalone selling price for the additional goods and/or services.

LEASE COMMITMENTS We determine if an arrangement is a lease at its inception. The majority of our facilities are occupied under operating lease arrangements with various expiration dates through 2067, some of which include options to extend the life of the lease, and some of which include options to terminate the lease within one year. In certain instances, we are responsible for the real estate taxes and operating expenses related to these facilities. Additionally, we enter into operating leases for certain vehicles and equipment in the normal course of business. We determine the expected term of executed agreements using the non-cancelable lease term plus optional renewal terms that we are reasonably certain to exercise. The derived expected term is then used in the determination of a financing or operating lease and in the calculation of straight-line rent expense for our operating leases. Rent escalations are considered in the calculation of minimum lease payments in our finance lease tests and in determining straight-line rent expense for operating leases. Minimum lease payments include the fixed lease component of the agreement, as well as fixed rate increases that are initially measured at the lease commencement date. Variable lease payments based on an index, payments associated with non-lease components, and short-term rentals (leases with terms less than twelve months) are expensed as incurred. Consideration is allocated to the lease and non-lease components based on the estimated standalone prices.Operating leases are included in operating lease right-of-use assets, accrued liabilities, and long-term operating lease liabilities in our consolidated balance sheets. Financing leases are not material to the financial statements.Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease liabilities and right-of-use assets are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an explicit rate, we generally use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Rent expense for lease payments is recognized on a straight-line basis over the lease term.

COMMITMENTS, CONTINGENCIES AND GUARANTEES CommitmentsRefer to “Note 8. Lease Commitments” for more information regarding our lease commitments.In the ordinary course of business we enter into 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.ContingenciesWe are subject to claims that may arise in the ordinary course of business, including with respect to actual and threatened litigation and other matters. We accrue for loss contingencies when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. However, the results of legal actions cannot be predicted with certainty, and therefore our actual losses with respect to these contingencies could exceed our accruals. Our accruals with respect to actual and threatened litigation were not material as of December 31, 2025.In 2018, a lawsuit was filed against us involving an alleged breach of contract for underpayment of royalty payments made from 2004 through 2017 under an expired patent license agreement. The plaintiff asserted a claim of approximately $50.0 million, inclusive of interest through June 30, 2020, alleging that the incorrect royalty provision was applied to certain licensed products and services throughout the agreement term and that royalties were also due on non-licensed diagnostic services that were provided concurrently with licensed services. The trial court ruled in favor of the plaintiff in September 2020. The appellate court reversed the trial court’s decision regarding the royalty payments in August 2022.

DEBT Credit FacilityOn October 20, 2022, pursuant to the terms of the Existing Credit Agreement (as defined below), the term lenders thereunder provided us, as borrower, an incremental term loan in an aggregate principal amount of $250.0 million (the “Original Term Loan”). On October 20, 2025, upon the maturity of our three-year Original Term Loan under the Existing Credit Agreement, we repaid the principal amount of $250.0 million. On November 12, 2025, we, the administrative agent and certain lenders and other parties entered into Amendment No. 2 to our fourth amended and restated credit agreement, as amended by that certain Amendment No. 1 dated as of October 20, 2022 (the “Existing Credit Agreement”, as amended by Amendment No. 2, the “Credit Agreement”). Under our Credit Agreement, there remains an unsecured revolving credit facility in the principal amount of $1.0 billion, which matures on November 12, 2030, a three-year unsecured Term Loan in the principal amount of $250.0 million, which expires on November 12, 2028, and flexibility to incur incremental revolving credit commitments and/or term loans in the aggregate principal amount of up to $250.0 million. Borrowings in U.S. Dollars under our Credit Agreement bear interest at a per annum rate, determined at our option, equal to either: (1) a base rate (determined as the greatest of (i) the prime rate, (ii) the NYFRB Rate plus 0.50% and (iii) the Adjusted Term SOFR Rate for a one-month Interest Period plus 1% (but not less than 1%)), 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. In addition to U.S. Dollar borrowings, borrowings under our Credit Agreement are also available in certain specific foreign currencies, bearing interest based on rates customary for such foreign currencies and subject to the same applicable margin rates based on our consolidated leverage ratio as for our U.S. Dollar borrowings. 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.

INCOME TAXES The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes 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. We record a valuation allowance to reduce our deferred tax assets to the amount that is more-likely-than-not to be realized. In assessing the need for a valuation allowance, we consider future taxable income and ongoing prudent and feasible tax planning strategies. In the event that we determine that we would be able to realize our deferred tax assets in the future in excess of the net recorded amount, a reduction of the valuation allowance would increase income in the period such determination was made. Likewise, should we determine that we would not be able to realize all or part of our net deferred tax asset in the future, a reduction to the deferred tax asset would be charged to income in the period such determination was made.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. Unrecognized tax benefits are the differences between tax positions taken, or expected to be taken, in tax returns, and the benefits recognized for accounting purposes. We classify uncertain tax positions as long-term liabilities.Significant judgment is required in determining our worldwide provision for income taxes and our income tax filings are regularly under audit by tax authorities. Any audit result differing from amounts recorded would increase or decrease income in the period that we determine such adjustment is likely. Interest expense and penalties associated with the underpayment of income taxes are included in income tax expense.

SHARE-BASED COMPENSATION We provide for various forms of share-based compensation awards to our employees and non-employee directors. Our share-based compensation plans allow for the issuance of a mix of stock options, restricted stock, stock appreciation rights, employee stock purchase rights, and other stock unit awards. With the exception of stock options, the fair value of our awards is equal to the closing stock price of IDEXX common stock on the date of grant. We calculate the fair value of our stock option awards using the Black-Scholes-Merton option-pricing model. For stock options, restricted stock units (“RSUs”), performance-based restricted stock units (“PBRSUs”), and deferred stock units (“DSUs”), share-based compensation expense is estimated based on awards ultimately expected to vest, reduced for estimated forfeitures, on a straight-line basis over the requisite service period of the award. Stock options permit a holder to buy IDEXX stock upon vesting at the stock option exercise price set on the day of grant. An RSU is an agreement to issue shares of IDEXX stock at the time of vesting. A PBRSU is an agreement to issue shares of IDEXX stock at the time of vesting upon achievement of certain performance goals. DSUs are granted under our Executive Deferred Compensation Plan, which was suspended in February 2013 (the “Suspended Executive Plan”), our non-employee Director Deferred Compensation Plan (the “Director Plan”), and our Deferred Compensation Plan adopted in December 2024 (the “Executive Plan”). DSUs may or may not have vesting conditions depending on the plan under which they are issued. We did not issue any restricted stock or stock appreciation rights during the years ended December 31, 2025, 2024, and 2023, nor were any restricted stock or stock appreciation rights outstanding as of those years then ended.We primarily issue shares of common stock to satisfy stock option exercises and employee stock purchase rights, and to settle RSUs, PBRSUs, and DSUs. We issue shares of treasury stock to settle certain RSUs and upon the exercise of certain stock options, which were not material for the years ended December 31, 2025, 2024, and 2023. The number of shares of common stock and treasury stock issued are equivalent to the number of awards exercised or settled.With the exception of employee stock purchase rights, equity awards are issued to employees and non-employee directors under the 2018 Stock Incentive Plan (the “2018 Stock Plan”).

ACQUISITIONS, ASSET PURCHASES AND INVESTMENTSWe believe that our acquisitions of businesses and other assets enhance our existing businesses by either expanding our geographic range, customer base, or existing product and service lines. From time to time, we acquire small reference laboratories or radiology practices that we account for as either asset purchases or business combinations, and we acquire noncontrolling minority interests in business entities, which we recognize as equity investments. We also acquire commercial rights to certain technology through licensing agreements.Asset Purchases and InvestmentsDuring September 2025, we acquired a customer relationship intangible asset of a privately-owned reference laboratory in the U.S. for approximately $15.6 million, including an estimated contingent payment of $2.3 million at the time of acquisition. The customer relationship intangible has an estimated life of 10 years. The revenue associated with the acquired customer relationships has been included in our CAG segment since the acquisition date.During 2024, we acquired a perpetual intellectual property license for $10.0 million. The license has an estimated useful life of 10 years, and is included in our CAG segment.Business CombinationsDuring the first quarter of 2024, we acquired the assets of a privately-owned software and data platform business based in the U.S. that extended our practice management system cloud-native workflow and delivers strategic data solutions to our customers and their clients, for approximately $81.1 million, including a contingent payment valued at $4.4 million at the time of purchase. The fair values and the lives of the assets and liabilities acquired were as follows: completed technology of $17.1 million, with a life of 6 years; customer relationship intangibles of $12.5 million, with a life of 10 years; a non-compete agreement of $4.7 million, with a life of 5 years; and a trademark of $0.7 million, with a life of 10 years. We also recognized goodwill of $45.8 million, which represents synergies with our software business, and $0.3 million of net tangible assets, including accounts receivable. Goodwill related to this acquisition is expected to be deductible for tax purposes. Pro forma information has not been presented for this acquisition because such information is not material to the financial statements.