IDXXIdexx Laboratories

We rely on our information systems, as well as systems and 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 include are 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), services) and some our 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, may have not always been effective, and there can be ineffective no assurance that these (or any future efforts) will be effective, in preventing any information system or inadequate to 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 acquisition network damage, disruption, 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, which could enable or create AI and other emerging technologies by threat actors is growing, enabling more sophisticated and effective cybersecurity attacks and increase phishing and social engineering schemes and further increasing attack volume and frequency.

Under the As of December 31, 2025, we had $398.0 million in borrowings outstanding under our Credit Facility, the net repayment and borrowing activity resulted in increased cash used of $329.0 which $250.0 million during 2024, compared to 2023. was on our Term Loan under our Credit Facility. As of December 31, 2024, we had $250.0 million in borrowings outstanding on under our line of credit, Credit Facility, all of which was on our $250.0 million Term Loan under the Credit Facility. As of December 31, 2023, we had $250.0 million outstanding on our line of credit and a $250.0 million Term Loan, all of which was on our $250.0 million Term Loan under the Credit Facility. The general availability of funds under the our Credit Facility was further reduced by $1.9 $1.8 million and $1.5 $1.9 million for letters of credit that were issued primarily in connection with our workers' compensation policy as of December 31, 2024, 2025, and December 31, 2023, 2024, respectively. The Our Credit Facility contains affirmative, negative, and financial covenants customary for financings of this type. The negative covenants include restrictions on liens, indebtedness of subsidiaries of the Company, fundamental changes, investments, transactions with affiliates, and certain restrictive agreements and violations of laws and regulations. The financial covenant is a consolidated leverage ratio test that requires our ratio of debt to earnings before interest, taxes, depreciation, amortization, and share-based compensation not to exceed 3.5-to-1. As of December 31, 2024, we were in compliance with the covenants of the Credit Facility. The obligations under the Credit Facility may be accelerated upon the occurrence of an event of default under the Credit Facility, which includes customary events of default including payment defaults, defaults in the performance of the affirmative, negative and financial covenants, the inaccuracy of representations or warranties, bankruptcy and insolvency related defaults, defaults relating to judgments, certain events related to employee pension benefit plans under the Employee Retirement Income Security Act of 1974, (“ERISA”), the failure to pay specified indebtedness, cross-acceleration to specified indebtedness, and a change of control default.

In November 2024, July 2025, the FASB issued ASU 2024-03, “Disaggregation 2025-05, “Financial Instruments - Credit Losses (Topic 326): Measurement of Income Statement Expenses”, Credit Losses for Accounts Receivable and Contract Assets.” This amendment provides an optional practical expedient to provide disaggregated disclosures assume that the current conditions as of specific expense categories underlying all relevant income statement expense line items on an annual and interim basis. The disclosure requirements the balance sheet date will be applied on a prospective basis, with the option to apply it retrospectively. The effective date remain unchanged for the standard remaining life of the asset when estimating expected credit losses on current accounts receivable and contract assets arising from transactions accounted for under Topic ASC 606 - Revenue from Contracts with Customers. The amendment is effective for fiscal years annual reporting periods beginning after December 15, 2026, 2025, and interim reporting periods within fiscal years beginning after December 15, 2027. Early those annual reporting periods, with early adoption is permitted. We are evaluating anticipate the adoption of this ASU 2024-03 to determine its will not have a material impact on our consolidated financial statements. statements and related disclosures.

We are In 2018, a defendant in an ongoing litigation matter 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, and the state supreme court granted the plaintiff’s petition for review. 2022. In June 2024, the state supreme court reversed the appellate court, reinstated the trial court decision regarding the royalty payments, and remanded the case to the appellate court to address the remaining issues, including issues related to applicable interest. We will continue to vigorously defend ourselves in this matter; however, litigation is inherently unpredictable, and we cannot predict with certainty On April 3, 2025, the ultimate outcome, timing, or amount of actual loss for this matter. During appellate court affirmed the second quarter of 2024, we increased our previously established accrual of $ 27.5 million relating to this matter to $ 89.0 million, which represents our best estimate at this time trial court’s decision regarding all remaining issues. In light of the amount of the probable loss, based appellate court’s decision, on the current status of the case and associated estimated interest. The accrual is included in accrued