IDEXX LABORATORIES INC /DE

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The accompanying unaudited condensed consolidated financial statements of IDEXX Laboratories, Inc. and its subsidiaries have been prepared in accordance with U.S. GAAP for interim financial information and with the requirements of Regulation S-X, Rule 10-01 for financial statements required to be filed as a part of this Quarterly Report on Form 10-Q. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “IDEXX,” the “Company,” “we,” “our,” or “us” refer to IDEXX Laboratories, Inc. and its subsidiaries.

The accompanying unaudited condensed consolidated financial statements include the accounts of IDEXX Laboratories, Inc., and our wholly-owned subsidiaries. We do not have any variable interest entities for which we are the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation.

Changes in deferred revenue during the nine months ended September 30, 2025, were reclassified and aggregated with other assets and liabilities to reconcile net income to net cash provided by operating activities on the unaudited condensed consolidated statements of cash flows to conform to the current‑period presentation. The reclassification had no impact on net cash provided by operating activities for any period presented.

The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of our management, all adjustments necessary for a fair statement of our financial position and results of operations. All such adjustments are of a recurring nature. The condensed consolidated balance sheet data as of December 31, 2025, was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The results of operations for the three and nine months ended September 30, 2026, are not necessarily indicative of the results to be expected for the full year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”).

The preparation of our condensed consolidated financial statements requires us to make estimates, judgments, and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues, and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, judgments, assumptions, and methodologies. We base our estimates on historical experience and on various other assumptions that we believe are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities, and equity, and the amounts of revenues and expenses.

NOTE 2. ACCOUNTING POLICIES

Significant Accounting Policies

The significant accounting policies used in preparation of these unaudited condensed consolidated financial statements as of and for the three and nine months ended September 30, 2026, are consistent with those discussed in “Note 2. Summary of Significant Accounting Policies” to the consolidated financial statements in our 2025 Annual Report and as updated below.

New Accounting Pronouncements Adopted

In July 2025, the U.S. Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.” We adopted ASU 2025-05 effective January 1, 2026, with no material impact on our consolidated financial statements and related disclosures.

New Accounting Pronouncements Not Yet Adopted

In May 2026, the FASB issued ASU 2026-02, “Environmental Credits and Environmental Credit Obligations (Topic 818),” to clarify the accounting for and disclosure of environmental credits and environmental credit obligations. ASU 2026-02 is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period and should be applied on a retrospective basis. We do not expect the adoption of ASU 2026-02 to have a material impact on our consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-10, “Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities,” which establishes authoritative guidance on the recognition, measurement, and presentation of government grants received by business entities. Under the ASU, a government grant is recognized when (1) it is probable the business entity will comply with the conditions of the grant and the grant will be received, and (2) the business entity meets the recognition guidance for a grant related to an asset or to income. ASU 2025-10 is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods, with early adoption permitted. We are currently evaluating the timing of adoption and do not expect the adoption of ASU 2025-10 to have a material impact on our consolidated financial statements or related disclosures.

In September 2025, the FASB issued ASU 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” which amends the existing standard related to accounting for internal-use software development costs. The amendments modernize the recognition and capitalization framework to better align with current software development practices by removing references to project stages and clarify the criteria for capitalization, which begins when (1) management has authorized and committed to funding the software project, and (2) it is probable that the project will be completed and the software will be used to perform the function intended. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. We are currently evaluating the timing of adoption and do not expect the adoption of ASU 2025-06 to have a material impact on our consolidated financial statements or related disclosures.

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” to require disaggregated disclosures of specific expense categories underlying all relevant income statement expense line items on an annual and interim basis. The disclosure requirements will apply on a prospective basis, with the option to apply them retrospectively. This standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. We are evaluating ASU 2024-03 to determine its impact on the disclosures in our consolidated financial statements.

NOTE 3. REVENUE

Revenue by Product and Service Categories and by Principal Geographic Areas

We present disaggregated revenue for our Companion Animal Group (“CAG”) segment based on major product and service categories. Our Water and Livestock, Poultry and Dairy (“LPD”) segments each comprise a single major product category.

The following table presents revenue by major product and service categories:

The following table presents revenue by principal geographic area, based on customers’ domiciles:

Contracts with Multiple Performance Obligations

We enter into arrangements with multiple performance obligations where customers purchase a combination of IDEXX products and services. We apply judgment to determine whether products and services are considered distinct performance obligations that should be accounted for separately. We determine the transaction price for a contract based on the total consideration we expect to receive in exchange for the transferred goods or services. To the extent the transaction price includes variable consideration, such as volume rebates or expected price adjustments, we apply judgment in constraining the estimated variable consideration due to factors that may cause reversal of revenue recognized. We evaluate constraints based on our historical and projected experience with similar customer arrangements.

We allocate revenue to each performance obligation in proportion to the relative standalone selling prices and recognize revenue when control of the related goods or services is transferred for each obligation. 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 using relevant information available and apply suitable estimation methods including, but not limited to, the cost plus a margin approach. We recognize revenue as each performance obligation is satisfied, either at a point in time or over time. We do not disclose information about remaining performance obligations that are part of arrangements with an original expected duration of one year or less.

The following customer arrangements represent our most significant customer contracts that contain multiple performance obligations:

Customer Commitment Arrangements. We offer customers incentives upon entering into multi-year arrangements to purchase minimum annual amounts of products and services.

Free or Discounted Instruments and Systems. Many of our customer commitment arrangements provide customers with free or discounted instruments or systems upon entering into multi-year arrangements to purchase minimum annual amounts of products and services. We allocate total consideration, including future committed purchases and expected price adjustments, based on relative standalone selling prices to identified performance obligations and recognize instrument revenue and cost at the time of installation and customer acceptance in advance of billing the customer, which is also when the customer obtains control of the instrument based on legal title transfer. Our right to future consideration related to instrument revenue is recorded as a contract asset within other current and long-term assets. The contract assets are reclassified to accounts receivable when customers are billed for products and services over the term of the arrangement. We have determined that these arrangements do not include a significant financing component.

On December 31, 2025, our contract assets were $312.7 million, of which approximately $19.9 million and $60.9 million were reclassified to accounts receivable when customers were billed for related products and services during the three and nine months ended September 30, 2026, respectively, compared to $15.5 million and $47.7 million during the three and nine months ended September 30, 2025, respectively. Furthermore, as a result of new instrument placements under commitment arrangements, net of subsequent amounts reclassified to accounts receivable, and allowances established for credit losses, our contract assets were $348.9 million as of September 30, 2026. We monitor customer purchases over the term of their arrangement to assess the realizability of our contract assets and review estimates of variable consideration. Impairments and revenue adjustments that relate to performance obligations satisfied in prior periods, including cumulative catch-up adjustments to revenue arising from contract modifications, during the three and nine months ended September 30, 2026 and 2025, were not material.

Up-Front Consideration Paid to Customers. We provide customers with incentives in the form of IDEXX Points upon entering into multi-year arrangements to purchase minimum annual amounts of future products and services. If a customer breaches their agreement, they are required to refund all or a portion of the up-front consideration, or make other repayments, remedial actions, or both. Up-front incentives to customers in the form of IDEXX Points or, to a lesser degree, cash payments, are not made in exchange for distinct goods or services and are capitalized as consideration paid to customers within other current and long-term assets, which are subsequently recognized as a reduction to revenue over the term of the customer arrangement. If these up-front incentives are subsequently utilized to purchase instruments, we allocate total consideration, including future committed purchases less up-front incentives and estimates of expected price adjustments, based on relative standalone selling prices, to identified performance obligations, and recognize instrument revenue and cost at the time of installation and customer acceptance. To the extent invoiced instrument revenue exceeds recognized instrument revenue, we record deferred revenue as a contract liability, which is subsequently recognized upon the purchase of products and services over the term of the contract. We have determined these arrangements do not include a significant financing component.

On December 31, 2025, our capitalized consideration paid to customers was $250.1 million, of which approximately $18.2 million and $56.0 million was recognized as a reduction of revenue during the three and nine months ended September 30, 2026, respectively, compared to $15.2 million and $47.5 million during the three and nine months ended September 30, 2025, respectively. Furthermore, as a result of new payments to customers, net of subsequent recognition, our capitalized consideration paid to customers was $276.9 million as of September 30, 2026. We monitor customer purchases over the term of their arrangement to assess the realizability of capitalized consideration paid to customers and review estimates of variable consideration. Impairments and revenue adjustments that relate to performance obligations satisfied in prior periods, including cumulative catch-up adjustments to revenue arising from contract modifications, during the three and nine months ended September 30, 2026 and 2025, were not material.

Rebate Arrangements. Our rebate arrangements provide customers the opportunity to earn future rebates based on the volume of products and services they purchase over the term of the arrangement. Rebate incentives are typically offered in multi-year arrangements that include customer commitments to purchase minimum annual amounts of products and services, or, to a lesser extent, are sometimes offered without future purchase commitments. We account for the customer’s right to earn rebates on optional future purchases that are determined to be a material right as a separate performance obligation and estimate the standalone selling price, which represents the expected value to the customer, based on historical rebate experience, the contractual rebate structure and terms, and other relevant information. Total consideration allocated to identified performance obligations is limited to goods and services that the customer is presently obligated to purchase and does not include estimates of future purchases that are optional. We allocate total consideration to identified performance obligations, including the customer’s right to earn rebates on future purchases, which is deferred and subsequently recognized upon the customer’s purchase of eligible products and services.

On December 31, 2025, our deferred revenue related to rebate and up-front consideration arrangements was $35.3 million, of which approximately $2.6 million and $7.8 million were recognized when customers purchased eligible products and services during the three and nine months ended September 30, 2026, respectively, compared to $2.5 million and $7.9 million during the three and nine months ended September 30, 2025, respectively. Furthermore, as a result of new customer purchases under rebate and up-front consideration arrangements, net of subsequent recognition, our deferred revenue was $35.5 million as of September 30, 2026, of which approximately 8%,29%,23%,18%, and 22% are expected to be recognized during the remainder of 2026, the full years 2027, 2028, 2029, and thereafter, respectively.

For our customer commitment arrangements, we estimate future revenues related to multi-year arrangements to be approximately $5.3 billion, of which approximately 7%,28%,25%,18%, and 22% are expected to be recognized during the remainder of 2026, the full years 2027, 2028, 2029, and thereafter, respectively. These future revenues relate to performance obligations not yet satisfied, for which customers have committed to future purchases, net of the expected revenue reductions from consideration paid to customers and expected price adjustments, and as a result, are lower than stated contractual commitments by our customers.

Instrument Rental Arrangements. Revenues from instrument rental and reagent rental arrangements are recognized either as operating leases on a ratable basis over the term of the arrangement or as sales-type leases at the time of installation and customer acceptance. Customers typically pay for the right to use instruments under rental arrangements in equal monthly amounts over the term of the rental arrangement. For some arrangements, customers are provided with the right to purchase the instrument at the end of the lease term. Our reagent rental arrangements provide customers the right to use our instruments upon entering into multi-year arrangements to purchase minimum annual amounts of consumables. These types of arrangements include an embedded lease for the right to use our instrument, and we determine the amount of lease revenue allocated to the instrument based on relative standalone selling prices. Lease revenues are presented in product revenue on our consolidated income statement. Lease revenues were approximately $5.8 million and $13.5 million for the three and nine months ended September 30, 2026, respectively, compared to $4.8 million and $11.8 million for the three and nine months ended September 30, 2025, respectively, including both operating leases and sales-type leases.

Sales-type Reagent Rental Arrangements. Our reagent rental arrangements that effectively transfer control of instruments to our customers are classified as sales-type leases, and we recognize instrument revenue and cost in advance of billing the customer at the time of installation and customer acceptance. Our right to future consideration related to instrument revenue is recorded as a lease receivable within other current and long-term assets, and is reclassified to accounts receivable when customers are billed for products and services over the term of the arrangement. On December 31, 2025, our lease receivable assets were $18.0 million, of which approximately $1.2 million and $3.8 million was reclassified to accounts receivable when customers were billed for related products and services during the three and nine months ended September 30, 2026, respectively, compared to $1.3 million and $4.0 million for the three and nine months ended September 30, 2025, respectively. Furthermore, as a result of new instrument placements under sales- type reagent rental arrangements, net of subsequent amounts reclassified to accounts receivable, and allowances established for credit losses, our lease receivable assets were $20.7 million as of September 30, 2026. The impacts of discounting and unearned income as of September 30, 2026 and 2025, were not material. Profit and loss recognized at the commencement date and interest income during the three and nine months ended September 30, 2026 and 2025, were not material. We monitor customer purchases over the term of their arrangement to assess the realizability of our lease receivable assets. Impairments during the three and nine months ended September 30, 2026 and 2025, were not material.

Operating-type Reagent Rental Arrangements. Our reagent rental arrangements that do not effectively transfer control of instruments to our customers are classified as operating leases, and we recognize instrument revenue and costs ratably over the term of the arrangement. The cost of the instrument is capitalized within property and equipment. During the three and nine months ended September 30, 2026, we transferred instruments of $2.3 million and $5.8 million, respectively, compared to $1.8 million and $7.9 million during the three and nine months ended September 30, 2025, respectively, from inventory to property and equipment.

We estimate future revenue to be recognized related to our reagent rental arrangements of approximately $139.1 million, of which approximately 5%,20%,19%,17%, and 39% are expected to be recognized during the remainder of 2026, and the full years 2027, 2028, 2029, and thereafter, respectively. These future revenues relate to performance obligations not yet satisfied for which customers have committed to future purchases, net of expected price adjustments, and as a result are lower than stated contractual commitments by our customers.

Deferred Extended Warranties and Post-Contract Support Revenue

On December 31, 2025, our deferred revenue related to extended warranties and post-contract support was $27.1 million, of which approximately $1.4 million and $19.7 million was recognized during the three and nine months ended September 30, 2026, respectively, compared to $1.3 million and $18.7 million during the three and nine months ended September 30, 2025, respectively. Furthermore, as a result of new arrangements, our deferred revenue related to extended warranties and post-contract support was $27.6 million at September 30, 2026. Deferred revenue related to extended warranties and post-contract support with an original duration of more than one year was $10.1 million at September 30, 2026, of which approximately 10%,38%,29%,14%, and 9% are expected to be recognized during the remainder of 2026, and the full years 2027, 2028, 2029, and thereafter, respectively. We have determined these arrangements do not include a significant financing component. We do not disclose information about remaining performance obligations that are part of contracts with an original expected duration of one year or less, and we do not adjust for the effect of the financing components when the period between customer payment and revenue recognition is one year or less.

Costs to Obtain a Contract

On December 31, 2025, our deferred commission costs, included within other current and long-term assets, were $21.4 million, of which approximately $1.9 million and $5.9 million of commission expense was recognized during the three and nine months ended September 30, 2026, respectively, compared to $1.7 million and $5.3 million during the three and nine months ended September 30, 2025, respectively. Furthermore, as a result of commissions related to new extended warranties and SaaS subscriptions, net of subsequent recognition, our deferred commission costs were $20.9 million at September 30, 2026. Impairments of deferred commission costs during the three and nine months ended September 30, 2026 and 2025, were not material.

NOTE 4. ACQUISITIONS, ASSET PURCHASES AND INVESTMENTS

We 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 reference laboratories, radiology practices, and other businesses or assets that we account for as either asset purchases or business combinations, depending on facts and circumstances. We also may acquire noncontrolling minority interests in business entities, which we recognize as equity investments, and commercial rights to certain technology and intellectual property through licensing agreements.

Business Acquisition

On September 15, 2026, we acquired 100% of the shares of CoVetAI Inc. (“CoVet”), a provider of AI-native ambient listening and clinical workflow software for veterinary practices, for approximately $250 million, including an estimated contingent payment of $20 million, and various holdbacks of approximately $4 million. The acquisition expands our software offerings to support our customers with technology solutions that raise the standard of care for patients, improve practice efficiency, and enable more effective communication with pet owners.

We have not finalized the valuation of certain assets acquired, including identifiable intangible assets, due to the short period of time from the close of the acquisition to the reporting date. The purchase price allocation is provisional and subject to revision during the measurement period, which will not exceed one year from the date of acquisition, as additional information becomes available regarding valuation of intangibles, working capital adjustments, contingent consideration valuation, and tax-related matters. The primary areas of the purchase price allocation that are not yet finalized relate to the fair values of intangible assets related to technology and customer relationships. We estimate the preliminary fair values and the lives of the assets acquired and liabilities assumed as follows: approximately $12 million in technology-related intangibles with an expected life ofthree years; approximately $13 million in customer-relationship intangibles with an expected life ofnine years; approximately $230 million in goodwill, representing the assembled workforce and synergies within our broader CAG portfolio; and approximately $5 million in net tangible liabilities assumed. The allocation of goodwill to reporting units within CAG is not complete. Goodwill related to this acquisition is not 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. The results of operations are included in our CAG segment since the acquisition date, and were not material to our CAG segment. Transactions recognized separately from the acquisition of assets and assumptions of liabilities include the replacement of unvested stock awards that were previously granted by CoVet, in the form of cash and stock awards of approximately $7 million, which will be recognized as compensation expense over athree-year period. The acquisition expenses, which were not significant, were recorded as general and administrative expenses. Refer to “Note 18. Fair Value Measurements” for a description of the contingent consideration.

Asset Purchase

During 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.

NOTE 5. SHARE-BASED COMPENSATION

The fair values of options, restricted stock units, deferred stock units, performance-based restricted stock units, and employee stock purchase rights awarded during the three and nine months ended September 30, 2026, were $3.7 million and $87.7 million, respectively (including replacement awards with a total fair value of $2.8 million that were issued in connection with the acquisition of CoVet), compared to $2.0 million and $70.2 million for the three and nine months ended September 30, 2025, respectively. The total unrecognized compensation expense, net of estimated forfeitures, for unvested share-based compensation awards outstanding as of September 30, 2026, was $90.7 million, which will be recognized over a weighted average period of approximately 1.5 years. During the three and nine months ended September 30, 2026, we recognized share-based compensation expenses of $16.2 million and $48.6 million, respectively, compared to $14.4 million and $43.9 million for the three and nine months ended September 30, 2025.

We determine the assumptions used in the valuation of option awards as of the date of grant. Differences in the expected stock price volatility, expected term, or risk-free interest rate may necessitate distinct valuation assumptions at those grant dates. As such, we may use different assumptions for options granted throughout the year. Option awards are granted with an exercise price equal to or greater than the closing market price of our common stock at the date of grant. We have never paid cash dividends on our common stock, and we have no intention to pay such a dividend at this time; therefore, we assume that no dividends will be paid over the expected terms of option awards.

NOTE 6. CREDIT LOSSES

We are exposed to credit losses primarily through our sales of products and services to our customers. We maintain allowances for credit losses for potentially uncollectible receivables. Additional allowances may be required if the financial condition of our customers was to deteriorate or a strengthening U.S. dollar impacts the ability of foreign customers to make payments to us for their U.S. dollar-denominated purchases. We monitor our ongoing credit exposure through active review of counterparty balances against contract terms and due dates, timely account reconciliations, dispute resolution, and payment confirmations. We may employ collection agencies and legal counsel to pursue recovery of defaulted receivables. Account balances are charged off against the allowance when we believe it is probable the receivable will not be recovered. We do not have any off-balance sheet credit exposure related to our customers.

Accounts Receivable

The allowance for credit losses associated with accounts receivable was $13.9 million and $11.3 million as of September 30, 2026, and December 31, 2025, respectively. The amount of accounts receivable reflected on the balance sheet is net of this allowance. As of September 30, 2026, approximately 87% of our accounts receivable had not yet reached the invoice due date, and approximately 13% were considered past due. As of December 31, 2025, approximately 87% of our accounts receivable had not yet reached the invoice due date, and approximately 13% were considered past due.

Contract Assets and Lease Receivables

The allowance for credit losses associated with contract assets and lease receivables was $9.6 million and $8.6 million as of September 30, 2026, and December 31, 2025, respectively. The assets reflected on the balance sheet are net of these allowances.

NOTE 7. INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out) or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation, and factors in assumptions of future demand, market conditions, remaining shelf life, or product functionality.

The components of inventories were as follows:

NOTE 8. LEASE COMMITMENTS

Maturities of operating lease liabilities were as follows:

Supplemental cash flow information for leases was as follows:

Total minimum future lease payments for leases that have not commenced as of September 30, 2026, are approximately $12.7 million, and they will commence between the remainder of 2026 and 2027.

NOTE 9. OTHER CURRENT AND LONG-TERM ASSETS

Other Current Assets

Other current assets consisted of the following:

(1) Contract assets, net, are net of allowances for credit losses. Refer to "Note 6. Credit Losses."

Other Long-Term Assets

Other long-term assets consisted of the following:

(1) Contract assets, net, are net of allowances for credit losses. Refer to "Note 6. Credit Losses."

NOTE 10. ACCOUNTS PAYABLE, ACCRUED LIABILITIES AND OTHER LONG-TERM LIABILITIES

Accounts Payable - Supplier Financing Program

We have an agreement with a third party to provide a supplier financing program, which facilitates participating suppliers’ ability to finance payment obligations from us with a designated third-party financial institution. Participating suppliers may, at their sole discretion, make offers to finance one or more of our payment obligations prior to their scheduled due dates at a discounted price. Our obligations to our suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under these arrangements. The terms of payments are consistent with the terms of our trade payables. Activity related to the obligations is presented within operating activities on the unaudited condensed consolidated statements of cash flows.

The changes in our outstanding payment obligations under this arrangement, which are included inaccounts payable on the unaudited condensed consolidated balance sheets, were as follows:

Accrued Liabilities

Accrued liabilities consisted of the following:

Other Long-Term Liabilities

Other long-term liabilities consisted of the following:

NOTE 11. DEBT

Credit Facility

As of September 30, 2026, we had $474.0 million in outstanding borrowings under our $1.25 billion five-year unsecured credit facility (the “Credit Facility”), of which $250.0 million is athree-year, unsecured term loan (the “Term Loan”), compared to $398.0 million outstanding under the Credit Facility, of which $250.0 million is the Term Loan, at December 31, 2025. The Credit Facility’s interest rate and commitment fee terms are unchanged from those described in our 2025 Annual Report.

The weighted average effective interest rate, excluding the impact of our interest rate swap (refer to “Note 19 - Hedging Instruments”), as of September 30, 2026, was 4.7%, compared to 5.3% as of December 31, 2025. At September 30, 2026, we had remaining borrowing availability of $773.2 million, net of $2.8 million of letters of credit primarily issued in connection with our workers’ compensation insurance policy.

Senior Notes

The following table describes our outstanding unsecured senior notes issued and sold in private placements (collectively, the “Senior Notes”) as of September 30, 2026:

We refer to the MetLife 2014 Agreement and the Prudential 2015 Amended Note Agreement, collectively, as the “Senior Note Agreements.”

On September 4, 2026, we repaid the aggregate principal amount of our 3.72% Senior Notes (“2026 Senior Notes”) for $75.0 million at maturity. There have been no other changes to the principal, maturity dates, interest rates, or prepayment terms of the Senior Notes as compared to those described in our 2025 Annual Report.

Covenants

Our Credit Facility and Senior Note Agreements contain affirmative, negative, and financial covenants and events of default, customary for agreements of this type, in each case as described in our 2025 Annual Report. The sole financial covenant under each of these agreements is a consolidated leverage ratio test (debt to Adjusted EBITDA), calculated in accordance with the terms of each of these agreements, not to exceed 3.5-to-1. As of September 30, 2026, we were in compliance with all covenants under the Credit Facility and the Senior Note Agreements.

NOTE 12. REPURCHASES OF COMMON STOCK

We primarily acquire shares of our common stock by repurchases in the open market. We also acquire shares that are surrendered by employees in payment for the statutory withholding taxes due on the vesting of restricted stock units and the settlement of deferred stock units, otherwise referred to herein as employee surrenders. We issue shares of treasury stock upon the vesting of certain restricted stock units and upon the exercise of certain stock options. The number of shares of treasury stock issued during the three and nine months ended September 30, 2026 and 2025, was not material. We have recognized approximately $— and $3.9 million in accrued liabilities related to the timing of settlements for share repurchases as of September 30, 2026 and December 31, 2025, respectively.

The cost of treasury stock includes a 1% excise tax on the value of shares repurchased in the open market, net of a reduction for eligible stock issuances, which is included in the cost of treasury stock acquired in open market repurchases. During the nine months ended September 30, 2026 and 2025, we incurred applicable excise taxes of $5.4 million and $7.2 million, respectively, and paid excise tax, net of refunds, during the nine months ended September 30, 2026 and 2025, of $6.8 million and $8.4 million, respectively.

The following table is a summary of our open market common stock repurchases, reported on a trade date basis, and shares acquired through employee surrenders:

NOTE 13. INCOME TAXES

Our effective income tax rates were 20.6% and 20.3% for the three and nine months ended September 30, 2026, respectively, compared to 20.4% and 20.2% for the three and nine months ended September 30, 2025, respectively.

Our current-period effective tax rate for the three months ended September 30, 2026, increased compared to the prior-year period, primarily due to lower tax benefits from share-based compensation and higher international taxes on foreign earnings. These unfavorable impacts were partially offset by the favorable comparative impact from a prior-year reduction in our U.S. tax benefit associated with Foreign-Derived Intangible Income (“FDII”) that resulted from the acceleration of research and development deductions permitted under changes in U.S. tax law that were enacted in July 2025, and by lower state income tax expense.

Our current-period effective tax rate for the nine months ended September 30, 2026, increased compared to the prior-year period primarily due to lower tax benefits from share-based compensation and from the resolution of international tax audits in the prior year. These unfavorable impacts were partially offset by the favorable comparative impact from a prior-year reduction in our U.S. tax benefit associated with FDII that resulted from the acceleration of research and development deductions permitted under changes in U.S. tax law that were enacted in July 2025.

The effective tax rates for the three and nine months ended September 30, 2026, were lower than the U.S. federal statutory tax rate of 21% primarily due to tax benefits from share-based compensation, partially offset by U.S. state taxes.

Cash paid for income taxes, net of refunds, during the nine months ended September 30, 2026 and 2025, were $166.2 million and $150.1 million, respectively.

NOTE 14. ACCUMULATED OTHER COMPREHENSIVE INCOME

The changes in Accumulated Other Comprehensive Income (“AOCI”), net of tax, consisted of the following:

The following table presents components and amounts reclassified out of AOCI to net income:

NOTE 15. EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income attributable to our stockholders by the weighted average number of shares of common stock and vested deferred stock units outstanding during the period. The computation of diluted earnings per share is similar to the computation of basic earnings per share, except that the denominator is increased for the assumed exercise of dilutive options, assumed issuance of unvested restricted stock units, and unvested deferred stock units using the treasury stock method unless the effect is anti-dilutive. The treasury stock method assumes that proceeds, including cash received from the exercise of employee stock options and the total unrecognized compensation expense for unvested share-based compensation awards, would be used to purchase our common stock at the average market price during the period. Vested deferred stock units outstanding are included in shares outstanding for basic and diluted earnings per share because the associated shares of our common stock are issuable for no cash consideration, the number of shares of our common stock to be issued is fixed, and issuance is not contingent. Refer to “Note 5. Share-Based Compensation” to the consolidated financial statements in our 2025 Annual Report for additional information regarding deferred stock units.

The following is a reconciliation of weighted average shares outstanding for basic and diluted earnings per share:

Certain awards and options to acquire shares have been excluded from the calculation of weighted average shares outstanding for diluted earnings per share because they were anti-dilutive. The following table presents information concerning those anti-dilutive awards and options:

NOTE 16. COMMITMENTS, CONTINGENCIES AND GUARANTEES

Commitments

Refer to “Note 8. Lease Commitments” for more information regarding our lease commitments.

Contingencies

We 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 September 30, 2026.

We were a defendant in a litigation involving an alleged breach of contract for underpayment of royalty payments made from 2004 through 2017 under an expired patent license agreement. In April 2025, at the conclusion of the proceedings at the trial and appellate courts, we paid a judgment in the amount of approximately $80.0 million, which was accrued in prior years, and the plaintiff executed a satisfaction and release of judgment, which was filed with the trial court, concluding this matter.

From time to time, we receive notices alleging that our products infringe third-party proprietary rights, although we are not aware of any pending litigation with respect to such claims. Patent litigation is frequently complex and expensive, and the outcome of patent litigation can be difficult to predict. There can be no assurance that we will prevail in any infringement proceedings that may be commenced against us. If we lose any such litigation, we may be stopped from selling certain products and/or we may be required to pay damages as a result of the litigation.

Guarantees

We enter into agreements with third parties in the ordinary course of business under which we are obligated to indemnify such third parties for and against various risks and losses. The precise terms of such indemnities vary with the nature of the agreement. In many cases, we limit the maximum amount of our indemnification obligations, but in some cases, those obligations may be theoretically unlimited. We have not incurred material expenses in discharging any of these indemnification obligations and, based on our analysis of the nature of the risks involved, we believe that the fair value of potential indemnification under these agreements is minimal. Accordingly, we have recordedno liabilities for these obligations as of September 30, 2026, and December 31, 2025.

When acquiring a business, we sometimes assume liability for certain events or occurrences that took place prior to the date of acquisition. As of September 30, 2026, and December 31, 2025, we have not recorded any material pre-acquisition liabilities.

NOTE 17. SEGMENT REPORTING

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 non-reportable segment results combine and present our human medical diagnostic business with our out-licensing arrangement because they do not meet the quantitative or qualitative thresholds for reportable segments.

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 revenue and gross profit. Our CODM reviews the budget and actual financial results of the operating segments, decides how to allocate resources to meet our strategic priorities, and 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 three and nine months ended September 30, 2026 and 2025. Refer to “Note 3. Revenue” for a summary of disaggregated revenue by segment and by major product and service category for the three and nine months ended September 30, 2026 and 2025. 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. Foreign currency transaction gains and losses for all operating segments are reported within Other and are reconciled in the tables below.

The following tables are a summary of reportable segment performance with Other to reconcile to our consolidated results for the three months ended September 30, 2026 and 2025:

The following tables are a summary of reportable segment performance with Other to reconcile to our consolidated results for the nine months ended September 30, 2026 and 2025:

NOTE 18. FAIR VALUE MEASUREMENTS

U.S. GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value.

We have certain financial assets and liabilities that are measured at fair value on a recurring basis, certain nonfinancial assets and liabilities that may be measured at fair value on a non-recurring basis, and certain financial assets and liabilities that are not measured at fair value in our unaudited condensed consolidated balance sheets, but for which we disclose the fair value. The fair value disclosures of these assets and liabilities are based on a three-level hierarchy, which is defined as follows:

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. We did not have any transfers between Level 1 and Level 2, or transfers in or out of Level 3, of the fair value hierarchy for the periods presented.

Our cross currency swap contracts are measured at fair value on a recurring basis in our accompanying unaudited condensed consolidated balance sheets and are classified as derivative instruments. We measure the fair value of our cross currency swap contracts using prevailing market conditions as of the close of business on each balance sheet date. The product of this calculation is then adjusted for counterparty risk.

Our foreign currency exchange contracts are measured at fair value on a recurring basis in our accompanying unaudited condensed consolidated balance sheets and are classified as derivative instruments. We measure the fair value of our foreign currency exchange contracts using an income approach, based on prevailing market forward exchange rates less the contract rate multiplied by the notional amount. The product of this calculation is then adjusted for counterparty risk.

Our interest rate swap contracts are measured at fair value on a recurring basis in our accompanying unaudited condensed consolidated balance sheets and are classified as derivative instruments. We measure the fair value of our interest rate swap contracts using current market interest rates for debt issues with similar remaining years to maturity, adjusted for applicable credit risk.

The amounts outstanding under our unsecured Credit Facility and our Senior Notes are measured at carrying value in our unaudited condensed consolidated balance sheets though we disclose the fair value of these financial instruments. We determine the fair value of the amount outstanding under our Credit Facility and Senior Notes using an income approach, utilizing a discounted cash flow analysis based on current market interest rates for debt issues with similar remaining years to maturity, adjusted for applicable credit risk. Our Credit Facility and Senior Notes are valued using Level 2 inputs. The estimated fair value of our Credit Facility approximates its carrying value. As of September 30, 2026, the estimated fair value and carrying value of our Senior Notes were $355.1 million and $375.0 million, respectively. As of December 31, 2025, the estimated fair value and carrying value of our Senior Notes were $444.8 million and $450.0 million, respectively.

The following tables set forth our assets and liabilities that were measured at fair value on a recurring basis by level within the fair value hierarchy:

(1)Cross currency swaps and foreign currency exchange contracts are included within other current assets, other long-term assets, accrued liabilities, or other long-term liabilities depending on the gain (loss) position and anticipated settlement date.

(2)Interest rate swaps are included within other current assets or other long-term liabilities.

The estimated fair values of certain financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable, approximate their respective carrying values due to their short maturity.

Investment in Limited Partnership Fund

We hold an investment in a limited partnership fund (the “Fund”) that invests in growth and early-stage businesses engaged in pet product and service businesses. We believe that fair value best reflects the economics of the underlying transaction. We estimate the fair value of our investment in the Fund under the Net Asset Value (“NAV”) practical expedient based on the most recent NAV reported by the general partner, adjusted for subsequent contributions, distributions, and significant events. Investments measured using the NAV practical expedient are not classified in the fair value hierarchy. The fair value of the investment was $4.0 million at September 30, 2026, compared to $1.8 million at December 31, 2025.

We recognize changes in the fair value of our investment in net income as non-operating gains (losses) on equity investment because the investment is not a core business activity. We realize proceeds from the Fund’s distributions when its underlying investments are sold, with liquidation of the Fund’s assets expected over a period of time of up to approximately 13 years from inception in 2024. We cannot redeem our interests until the Fund’s dissolution, our interest is non-transferable without general partner consent, and no public market exists.

During the three months ended September 30, 2026, we received proceeds distributed by the Fund of $4.1 million. Our unfunded commitment was approximately $2.6 million at September 30, 2026.

Contingent Consideration

We have classified our liabilities for contingent consideration related to acquisitions within Level 3 of the fair value hierarchy because the fair value is determined using significant unobservable inputs, which relates to the achievements of future revenue. The contingent consideration is included within other long-term liabilities.

We record changes in the estimated fair value of contingent consideration at each reporting date in the consolidated statements of income within general and administrative expense. Changes in contingent consideration liabilities are measured at fair value on a recurring basis using unobservable inputs (Level 3).

During the third quarter of 2026, we acquired CoVet. We estimate that the acquisition-date fair value of contingent consideration was $20.2 million, which we determined using a probability-weighted expected cash flow analysis of future revenue. The undiscounted amount that could be paid ranges from zero to a maximum of $47.5 million, based on annual revenue targets achieved during the years ended December 31, 2027, 2028, and 2029.

NOTE 19. HEDGING INSTRUMENTS

Disclosure within this note is presented to provide transparency about how and why we use derivative and non-derivative instruments (collectively “hedging instruments”), how the hedging instruments and related hedged items are accounted for, and how the hedging instruments and related hedged items affect our financial position, results of operations, and cash flows.

We recognize all hedging instrument assets and liabilities on the balance sheet at fair value at the balance sheet date. Hedging instruments that do not qualify for hedge accounting treatment are recorded at fair value through earnings. To qualify for hedge accounting treatment, hedging instruments must be highly effective in offsetting changes to expected future cash flows or fair value on hedged transactions. If the hedging instrument qualifies for hedge accounting, changes in the fair value of the hedging instrument from the effective portion of the hedge are deferred in AOCI, net of tax, and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. We immediately record in earnings the extent to which a hedging instrument is not effective in achieving offsetting changes in fair value. We de-designate hedging instruments from hedge accounting when the likelihood of the hedged transaction occurring becomes less than probable. For de-designated hedging instruments, the gain or loss from the time of de-designation through maturity of the instrument is recognized in earnings. Any gain or loss in AOCI at the time of de-designation is reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Refer to “Note 14. Accumulated Other Comprehensive Income” for further information regarding the effect of hedging instruments on the unaudited condensed consolidated statements of income for the three and nine months ended September 30, 2026 and 2025.

We enter into master netting arrangements with the counterparties to our derivative transactions, which permit certain outstanding receivables and payables to be offset in the event of default. Our derivative contracts do not require either party to post cash collateral. We elect to present our derivative assets and liabilities in the accompanying unaudited condensed consolidated balance sheets on a gross basis. All cash flows related to our foreign currency exchange contracts are classified as operating cash flows, which is consistent with the cash flow treatment of the underlying items being hedged.

Our subsidiaries enter into foreign currency exchange contracts to reduce the exchange risk associated with their forecasted intercompany inventory purchases and sales for the next year. We may also enter into other foreign currency exchange contracts, cross currency swaps, or foreign-denominated debt issuances to reduce the impact of foreign currency fluctuations associated with specific balance sheet exposures, including net investments in certain foreign subsidiaries.

The primary purpose of our foreign currency hedging activities is to protect against the volatility associated with foreign currency transactions, including transactions denominated in euro, British pound, Japanese yen, Canadian dollar, and Australian dollar. We also utilize natural hedges to mitigate our transaction and commitment exposures. Our corporate policy prescribes the range of allowable hedging activity. We enter into foreign currency exchange contracts with large, well-capitalized multinational financial institutions, and we do not hold or engage in transactions involving derivative instruments for purposes other than risk management. Our accounting policies for these contracts are based on our designation of such instruments as hedging transactions.

Cash Flow Hedges

We have designated our foreign currency exchange contracts and our interest rate swaps as cash flow hedges because these derivative instruments reduce our exposure to variability in the cash flows of forecasted transactions attributable to foreign currency exchange and to interest rates on variable interest obligations of our Term Loan. Unless noted otherwise, we have also designated our derivative instruments as qualifying for hedge accounting treatment.

We did not de-designate any instruments from hedge accounting treatment during the nine months ended September 30, 2026, or 2025. Gains and losses related to hedge ineffectiveness recognized in earnings during the nine months ended September 30, 2026 and 2025, were not material. As of September 30, 2026, the estimated amount of gains, net of tax, from our foreign exchange contracts which are expected to be reclassified out of AOCI and into earnings within the next twelve months is $6.1 million if exchange rates do not fluctuate from the levels as of September 30, 2026. As of September 30, 2026, the estimated amount of gains, net of tax, from our interest rate swap contract which are expected to be reclassified out of AOCI and into earnings within the next twelve months is $1.9 million if interest rates do not fluctuate from the levels as of September 30, 2026.

Interest Rate Swaps: We have entered into an interest rate swap contract to reduce the effect of variable interest obligations of our Term Loan. Beginning in November 2025 through November 2028, the variable interest rate associated with the $250.0 million of borrowings outstanding under our Credit Facility became effectively fixed at 3.4% plus the applicable credit spread. We previously held an interest rate swap to reduce the effect of variable interest obligations of our Term Loan for the period from March 2023 through October 2025, associated with the $250.0 million of borrowings under our Credit Facility, which effectively fixed the interest rate at 3.9% plus the applicable credit spread.

Foreign Currency Exchange Contracts: We target to hedge approximately 75% to 85% of the estimated exposure from intercompany product purchases and sales denominated in the euro, British pound, Japanese yen, Canadian dollar, and Australian dollar. We have additional unhedged foreign currency exposures related to intercompany foreign transactions where it is not practical to hedge. We primarily utilize foreign currency exchange contracts with durations of less than 24 months. Quarterly, we enter into contracts to hedge incremental portions of anticipated foreign currency transactions for the current and following year. As a result, our risk with respect to foreign currency exchange rate fluctuations and the notional value of foreign currency exchange contracts may vary throughout the year. The U.S. dollar is the currency purchased or sold in all of our foreign currency exchange contracts. The notional amount of foreign currency exchange contracts to hedge forecasted intercompany inventory purchases and sales totaled $503.7 million and $397.6 million as of September 30, 2026, and December 31, 2025, respectively.

The following table presents the effects of cash flow hedge accounting on our unaudited condensed consolidated statements of income and comprehensive income, and provides information regarding the location and amounts of pretax gains or losses of derivatives:

Net Investment Hedges, Euro-Denominated Notes

In June 2015, we issued and sold through a private placement an aggregate principal amount of €88.9 million in euro-denominated 1.785% Series C Senior Notes that were due June 18, 2025. We designated these euro-denominated notes as a hedge of our euro net investment in certain foreign subsidiaries to reduce the volatility caused by changes in foreign currency exchange rates in the euro relative to the U.S. dollar. As a result of this designation, gains and losses from the change in the translated U.S. dollar value of these euro-denominated notes were recorded in AOCI rather than earnings. During the nine months ended September 30, 2025, we recorded losses of $9.0 million, net of tax, within AOCI as a result of these net investment hedges. At the maturity of the 1.785% Series C Senior Notes in June 2025, we paid the notional amount of €88.9 million, equivalent to $103.4 million at the date of payment. Refer to “Note 13. Debt” to the consolidated financial statements included in our 2025 Annual Report for further information regarding these euro-denominated notes.

Net Investment Hedges, Cross Currency Swaps

We have entered into cross currency swap contracts as hedges of our net investments in certain foreign subsidiaries to reduce the volatility caused by changes in foreign currency exchange rates relative to the U.S. dollar. The cross currency swaps outstanding as of September 30, 2026, have maturity dates beginning on March 31, 2028, through September 11, 2032.

The following table presents the outstanding cross currency swaps notional amounts that will be delivered to and received from the counterparties at maturity:

The changes in fair value of the cross currency swap contracts are recorded in AOCI and will be reclassified to earnings when the foreign subsidiaries are sold or substantially liquidated or all or a portion of the hedge no longer qualifies for hedge accounting treatment. During the three and nine months ended September 30, 2026, we recorded gains of $1.0 million and $6.3 million, net of tax, within AOCI as a result of these net investment hedges, compared to gains of $1.1 million and losses of $13.0 million during thethree and nine months ended September 30, 2025, respectively. We receive quarterly interest payments from the counterparties based on a fixed interest rate until maturity of the cross currency swaps. This interest rate component is excluded from the assessment of hedge effectiveness and is recognized as a reduction to interest expense over the life of the hedge instrument. We recognized appro ximately $1.0 million and $3.1 million related to the excluded component as a reduction of interest expense for the three and nine months ended September 30, 2026, respectively, and $0.8 million and $1.6 million for the three and nine months ended September 30, 2025, respectively.

Fair Values of Hedging Instruments Designated as Hedges in Consolidated Balance Sheets

The fair values of hedging instruments and their respective classification on our unaudited condensed consolidated balance sheets and amounts subject to offset under master netting arrangements consisted of the following: