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What changed in Idexx Laboratories's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Idexx Laboratories's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+380 added−359 removedSource: 10-K (2025-02-21) vs 10-K (2024-02-22)

Top changes in Idexx Laboratories's 2024 10-K

380 paragraphs added · 359 removed · 312 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

79 edited+25 added−12 removed74 unchanged
Biggest changeThe SediVue Dx analyzer is designed to provide automated real-time results in a fraction of the time of manual microscope analysis, which allows veterinary staff to perform a urine sediment analysis in approximately 3 minutes. The IDEXX VetLab UA analyzer provides rapid, automated capture of semi-quantitative chemical urinalysis from IDEXX UA strips and is validated specifically for veterinary use.
Biggest changeThe IDEXX VetLab UA Analyzer provides rapid, automated capture of semi-quantitative chemical urinalysis from IDEXX UA strips and is validated specifically for veterinary use. Cytology . During the fourth quarter of 2024, we launched in North America our new cellular analyzer, IDEXX inVue Dx, which detects the most common cytologic changes found in blood.
Our primary products and services are: • Point-of-care veterinary diagnostic products, comprised of instruments, consumables, and rapid assay test kits; • Veterinary reference laboratory diagnostic and consulting services; • Practice management and diagnostic imaging systems and services used by veterinarians; • Health monitoring, biological materials testing, laboratory diagnostic instruments, and services used by the biomedical research community; • Diagnostic, health-monitoring products for livestock, poultry, and dairy; • Products that test water for certain microbiological contaminants; and • Point-of-care electrolytes and blood gas analyzers.
Our primary products and services are: • Point-of-care veterinary diagnostic products, comprised of instruments, consumables, and rapid assay test kits; • Veterinary reference laboratory diagnostic and consulting services; • Practice management and diagnostic imaging systems and services used by veterinarians; • Health monitoring, biological materials testing, laboratory diagnostic instruments, and services used by the biomedical research community; • Diagnostic and health-monitoring products for livestock, poultry, and dairy; • Products that test water for certain microbiological contaminants; and • Point-of-care electrolytes and blood gas analyzers.
We also support the VetStat Electrolyte and Blood Gas analyzer. Sales of consumables to customers who use our chemistry analyzers provide the majority of our instrument consumables revenues from our installed base of IDEXX VetLab instruments. 6 Hematology .
We also support the 6 VetStat Electrolyte and Blood Gas analyzer. Sales of consumables to customers who use our chemistry analyzers provide the majority of our instrument consumables revenues from our installed base of IDEXX VetLab instruments. Hematology .
In addition, certain states have their own chemical regulations, 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 14 harm.
In addition, certain states have their own chemical regulations, such as California's Proposition 65, which requires businesses to provide warnings to California residents 14 about significant risk of exposures to chemicals in products that are known to cause cancer, birth defects, or other reproductive harm.
Foreign Corrupt Practices Act and the UK Bribery Act, import and export laws and regulations, including U.S. import and export control and sanctions laws, and laws and regulations governing the collection, use, retention, sharing and security of data such as the EU General Data Protection Regulation.
Foreign Corrupt Practices Act and the UK Bribery Act, import and export laws and regulations, including U.S. import and export control and sanctions laws, and laws and regulations governing the collection, use, retention, sharing and security of data such as the EU General Data Protection Regulation and the EU Data Act.
We compete primarily on the basis of ease of use and speed of our products, diagnostic accuracy, product quality, breadth of our product line and services, differentiated product innovations, fully integrated technology, information management capability, enhancement of veterinary practice efficiency, availability of medical consultation, effectiveness of our sales and distribution channels, quality of our technical and customer service, and our pricing relative to the value of our products and services in comparison with competitive products and services.
We compete primarily on the basis of ease of use and speed of our products, diagnostic accuracy, product quality, breadth of our product line and services, differentiated product 12 innovations, fully integrated technology, information management capability, enhancement of veterinary practice efficiency, availability of medical consultation, effectiveness of our sales and distribution channels, quality of our technical and customer service, and our pricing relative to the value of our products and services in comparison with competitive products and services.
We have a facility license for our manufacturing facility in Westbrook, Maine which also covers our distribution center in Memphis, Tennessee. Our LPD manufacturing facility in Montpellier, France is a USDA-permitted site, and has been approved by APHIS to manufacture specified USDA-licensed products. Water testing products . Our water tests are generally not subject to formal premarket regulatory approval.
We have a facility license for our manufacturing facility in Westbrook, Maine which also covers our distribution center in Memphis, Tennessee. Our LPD manufacturing facility in Montpellier, France is a USDA-permitted site, and has been approved by APHIS to manufacture specified USDA-permitted products. Water testing products . Our water tests are generally not subject to formal premarket regulatory approval.
IDEXX VetLab Station . The IDEXX VetLab Station (“IVLS”) connects and integrates the diagnostic information from all the IDEXX VetLab analyzers, and thus, provides reference laboratory information management system capability. IVLS also sends all results created on connected instruments instantly to VetConnect PLUS. We sell IVLS as an integral component for our in-clinic analyzer suite. Integrated Diagnostic Information Management .
The IDEXX VetLab Station (“IVLS”) connects and integrates the diagnostic information from all the IDEXX VetLab analyzers, and thus provides reference laboratory information management system capability. IVLS also sends all results created on connected instruments instantly to VetConnect PLUS. We sell IVLS as an integral component for our in-clinic analyzer suite.
IDEXX Web PACS is our cloud-based software-as-a-service (“SaaS”) offering for viewing, accessing, storing, and sharing multi-modality diagnostic images. IDEXX Web PACS is integrated with Cornerstone, ezyVet, IDEXX Neo, DVMAX, and IDEXX VetConnect PLUS to provide centralized access to diagnostic imaging results alongside patient diagnostic results from any internet-connected device.
IDEXX Web PACS is our cloud-based software-as-a-service (“SaaS”) offering for viewing, accessing, storing, and sharing multi-modality diagnostic images. 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.
Other countries, including China, Russia, the United Arab Emirates, and Turkey, have implemented or anticipate implementing regulatory regimes similar to the RoHS Directive. Our veterinary diagnostic instrument systems are not subject to regulation under the EU Medical Device Regulation or In Vitro Diagnostic Medical Device Regulation, which are both strictly applicable to human use products.
Other countries, including China, the United Arab Emirates, and Turkey, have implemented or anticipate implementing regulatory regimes similar to the RoHS Directive. Our veterinary diagnostic instrument systems are not subject to regulation under the EU Medical Device Regulation or In Vitro Diagnostic Medical Device Regulation, which are both strictly applicable to human use products.
The agreements also prohibit Ortho from promoting and selling these chemistry slides in the veterinary sector, excluding the EU, other than to IDEXX. 11 We purchase other analyzers and consumables under supply agreements with terms extending through 2034, which in some cases may be extended at our option.
The agreements also prohibit Ortho from promoting and selling these chemistry slides in the veterinary sector, excluding the EU, other than to IDEXX. We purchase other analyzers and consumables under supply agreements with terms extending through 2034, which in some cases may be extended at our option.
Compliance with these regulations (and similar regulations that have been or may be adopted elsewhere, such as Australia, China, Russia, Turkey, Korea, and other countries) may require registration, notification, or certification regarding regulated substances, imposition of import restrictions, or in certain cases the redesign or reformulation of our products.
Compliance with these regulations (and similar regulations that have been or may be adopted elsewhere, such as Australia, China, Turkey, Korea, and other countries) may require registration, notification, or certification regarding regulated substances, imposition of import restrictions, or in certain cases the redesign or reformulation of our products.
However, compliance with extensive country-specific regulatory processes is required in connection with importing and marketing diagnostic products in Japan, Germany, Canada, Brazil, the Netherlands, China, and many other countries. We are also required to have a facility license from APHIS to manufacture USDA-licensed products.
However, compliance with extensive country-specific regulatory processes is required in connection with importing and marketing diagnostic products in Japan, Germany, Canada, Brazil, the Netherlands, China, and many other countries. We are 13 also required to have a facility license from APHIS to manufacture USDA-licensed products.
In addition, we offer cloud-based client communication (Pet Health Network Pro and Pet Health Network 3D) and preventive care plan management software (Petly Plans) designed to strengthen the relationship between the veterinarian and the pet owner. To support the communication needs between general practices and specialty referral practices, IDEXX offers rVetLink software.
In addition, we offer cloud-based client communication (Pet Health Network Pro, Pet Health Network 3D, and Vello) and preventive care plan management software (Petly Plans) designed to strengthen the relationship between the veterinarian and the pet owner. To support the communication needs between general practices and specialty referral practices, IDEXX offers rVetLink software.
In addition, APHIS requires special approval to market products where test results are used in part for government-mandated disease management programs. A number of foreign governments accept APHIS approval to support product registration for sale, distribution, and use within their countries.
In addition, APHIS requires special approval to market products where test results are used for government-mandated disease management programs. A number of foreign governments accept APHIS approval to support product registration for sale, distribution, and use within their countries.
We market and sell two diagnostic imaging systems primarily used in small animal veterinary applications: the IDEXX ImageVue DR50 and the IDEXX ImageVue DR30. Our diagnostic imaging systems employ picture archiving and communication system (“PACS”) software called IDEXX-PACS, which facilitates radiographic image capture and review.
We market and sell two diagnostic imaging systems primarily used in small animal veterinary applications: IDEXX ImageVue DR50 and IDEXX ImageVue DR30. Our diagnostic imaging systems employ picture archiving and communication system (“PACS”) software called IDEXX-PACS, which facilitates radiographic image capture and review.
Our manufacturing and distribution facilities in Westbrook, Maine; Roswell, Georgia; Memphis, Tennessee; and the Netherlands, Switzerland, France, and the United Kingdom are certified to the ISO 9001 quality standard, and certain of our other facilities are certified to the environmental (ISO 14001) and testing and calibration laboratory (ISO 17025) quality standards.
Our manufacturing and distribution facilities in Westbrook, Maine; Scarborough, Maine; Roswell, Georgia; Memphis, Tennessee; and the Netherlands, Switzerland, France, and the United Kingdom are certified to the ISO 9001 quality standard, and certain of our other facilities are certified to the environmental (ISO 14001) and testing and calibration laboratory (ISO 17025) quality standards.
Our SmartFlow cloud offering works in conjunction with major veterinary practice management systems, including ezyVet, Cornerstone, Animana, IDEXX Neo, DVMAX, and certain third-party practice management systems, and VetRadar provides workflow capability for ezyVet. Client marketing and wellness plan management .
Our SmartFlow cloud offering works in conjunction with major veterinary practice management systems, including ezyVet, Cornerstone, Animana, IDEXX Neo, and certain third-party practice management systems, and VetRadar provides workflow capability for ezyVet. Client marketing and wellness plan management .
The EPA approval process involves submission of extensive product performance data in accordance with an EPA-approved protocol, evaluation of the data by the EPA, and publication for public comment of any 13 proposed approval in the Federal Register before final approval.
The EPA approval process involves submission of extensive product performance data in accordance with an EPA-approved protocol, evaluation of the data by the EPA, and publication for public comment of any proposed approval in the Federal Register before final approval.
In addition, VetConnect PLUS provides instant mobile or browser-based access to results, which can be printed or emailed to pet owners and other veterinarians. Outside Reference Laboratory Diagnostic and Consulting Services .
In addition, VetConnect PLUS provides instant mobile or browser-based access to results, which can be printed or emailed to pet owners and other veterinarians. Reference Laboratory Diagnostic and Consulting Services .
GOVERNMENT REGULATION Many of our products are subject to comprehensive regulation by U.S. and foreign regulatory agencies that relate to, among other things, product approvals, product registrations, manufacturing, import, export, distribution, marketing and promotion, labeling, recordkeeping, testing, quality, storage, product disposal, environmental compliance, and workplace safety. The following is a description of the principal regulations affecting our businesses.
GOVERNMENT REGULATION Many of our products are subject to comprehensive regulation by U.S. and foreign regulatory agencies that relates to, among other things, product approvals, product registrations, manufacturing, import, export, distribution, marketing and promotion, labeling, recordkeeping, testing, quality, storage, product disposal, environmental compliance, and workplace safety. The following is a description of the principal regulations affecting our businesses.
Sales of our canine vector-borne disease tests are greater in the first half of our fiscal year due to seasonality of disease testing in the veterinary practices in the Northern Hemisphere.
Sales of our canine vector-borne disease tests are typically greater in the first half of our fiscal year due to seasonality of disease testing in the veterinary practices in the Northern Hemisphere.
Industry pharmaceutical and nutrition partners leverage our data to understand channel market performance and to develop behavioral insights. Software applications that extend workflow capabilities for practices and groups . We are able to improve overall patient management and workflow optimization through coordination and tracking of every step of a patient during a hospital stay.
Industry pharmaceutical and nutrition partners leverage our data to understand channel market performance and to provide behavioral insights. Software applications that extend workflow capabilities for practices and groups . We are able to improve overall patient management and workflow optimization through coordination and tracking of every step of a patient during a hospital stay.
Our Colilert, Colilert-18, Colisure, Quanti-Tray, Filta-Max xpress , Enterolert, and SimPlate for heterotrophic plate counts products have been approved by the EPA for use under various regulatory programs. Water testing products are subject to similarly extensive regulatory processes in other countries around the world. Dairy testing products .
Our Tecta Systems, Colilert, Colilert-18, Colisure, Quanti-Tray, Filta-Max xpress , Enterolert, and SimPlate for heterotrophic plate counts products have been approved by the EPA for use under various regulatory programs. Water testing products are subject to similarly extensive regulatory processes in other countries around the world. Dairy testing products .
To the extent some of our products may now, or in the future, embody technologies protected by patents, copyrights, or trade secrets of others, we may be required to obtain licenses to such technologies in order to continue to sell our products. These licenses may not be available on commercially reasonable terms or at all.
To the extent some of our products and services may now, or in the future, embody technologies protected by patents, copyrights, or trade secrets of others, we may be required to obtain licenses to such technologies in order to continue to sell our products and services. These licenses may not be available on commercially reasonable terms or at all.
Our failure to obtain any such licenses may delay or prevent the sale of certain new or existing products. Refer to “Part I, Item 1A. Risk Factors.” PRODUCTION AND SUPPLY Many of the instruments that we sell are manufactured by third parties.
Our failure to obtain any such licenses may delay or prevent the sale of certain new or existing products and services. Refer to “Part I, Item 1A. Risk Factors.” PRODUCTION AND SUPPLY Certain instruments that we sell are manufactured by third parties.
For more information about the risks associated with various U.S. and foreign government regulation, refer to “ Various U.S. and foreign government regulations could limit or delay our ability to market and sell our products or otherwise negatively impact our business” under “Part I, Item 1A.
For more information about the risks associated with various U.S. and foreign government regulation, refer to “Various U.S. and foreign government regulations could limit or delay our ability to market and sell our products or otherwise negatively impact our business” under “Part I, Item 1A.
We sell our OPTI products and services both directly and through independent human medical product distributors. RESEARCH AND DEVELOPMENT Our business includes the development and introduction of new products and services and may involve entry into new business areas. We maintain active research and development programs in each of our business segments.
We sell our OPTI products and services both directly and through independent human medical product distributors. RESEARCH AND DEVELOPMENT Our business includes the development and introduction of new products and services and may involve entry into new business areas. We maintain active research and development programs in each of our three primary business segments.
Our principal products are the Colilert, Colilert-18, and Colisure tests, which detect the presence of total coliforms and E. col i in water. These organisms are broadly used as microbial indicators for potential fecal contamination in water. Our products utilize nutrient-indicators that produce a change in color or fluorescence when metabolized by target microbes in the sample.
Our principal products are the Colilert, Colilert-18, and Colisure tests, which detect the presence of total coliforms and E. coli in water. These organisms are broadly used as microbial indicators for potential fecal contamination in water. Our products utilize nutrient-indicators that produce a change in color or fluorescence when metabolized by target microbes in the sample.
In the U.S., the EPA has published a PFAS rule under the Toxic Substance Control Act, requiring manufactures of PFAS and importers of products containing PFAS to file certain information from January 1, 2011 including PFAS chemical identity and structure, production, use, byproducts, exposure, disposal, and health and environmental effects.
In the U.S., the EPA has published a PFAS rule under the Toxic Substance Control Act, requiring manufacturers of PFAS and importers of products containing PFAS to file certain information from January 1, 2011, including PFAS chemical identity and structure, production, imports of products containing PFAS, use, byproducts, exposure, disposal, and health and environmental effects.
We sell three hematology analyzers that assess the cellular components of blood, including red blood cells, white blood cells, and platelets (also called a complete blood count). These analyzers include the ProCyte One and ProCyte Dx hematology analyzers. We also sell the Coag Dx analyzer, which permits the detection and diagnosis of blood clotting disorders.
Our hematology analyzers assess the cellular components of blood, including red blood cells, white blood cells, and platelets (also called a complete blood count). These analyzers include the ProCyte One and ProCyte Dx hematology analyzers. We also sell the Coag Dx Analyzer, which permits the detection and diagnosis of blood clotting disorders.
Our Quanti-Tray Sealer PLUS, and Quanti-Tray Sealer 2X are used with the Quanti-Tray products for the determination of bacterial density in water samples. Our SimPlate and EasyDisc for HPC products detect the total number of the most common bacteria in a water sample.
Our Quanti-Tray Sealer PLUS, and Quanti-Tray Sealer 2X are used with the Quanti-Tray products for the determination of bacterial density in water samples. Our SimPlate and EasyDisc for HPC products detect the total number of the most common bacteria in a water sample. IDEXX Tecta Systems .
Our in-clinic diagnostic solutions are comprised of our IDEXX VetLab suite of in-clinic chemistry, hematology, immunoassay, urinalysis, and coagulation analyzers, as well as associated consumable products that provide real-time reference lab quality diagnostic results.
Our in-clinic diagnostic solutions are comprised of our IDEXX VetLab suite of in-clinic chemistry, hematology, immunoassay, electrolyte, urinalysis, cytology, blood gas, and coagulation analyzers, as well as associated consumable products that provide real-time reference lab quality diagnostic results.
The principal feline SNAP rapid assay tests include SNAP Feline Triple, which tests for feline immunodeficiency virus (“FIV”) (which is similar to the virus that leads to AIDS in humans), feline leukemia virus (“FeLV”) and heartworm, and SNAP FIV/FeLV Combo Test, which tests for FIV and FeLV. Urinalysis .
The principal feline SNAP rapid assay tests include SNAP Feline Triple, which tests for feline immunodeficiency virus (“FIV”) (which is similar to the virus that leads to AIDS in humans), feline leukemia virus (“FeLV”) and heartworm, and SNAP FIV/FeLV Combo Test, which tests for FIV and FeLV. IDEXX VetLab Station .
We also compete in certain international geographies with Zoetis Inc.; Mars, Incorporated brands including Heska, Antech Diagnostics, Scil, and Asia Veterinary Diagnostics; Fujifilm Holdings Corporation; Samsung Electronics, Arkray, Inc.; Mindray; and BioNote, Inc. 12 • Water, livestock, poultry, and dairy testing products.
We also compete in certain international geographies with Zoetis Inc.; Mars, Incorporated brands including Heska, Antech Diagnostics, scil animal care, and Asia Veterinary Diagnostics; Fujifilm Holdings Corporation; Arkray, Inc.; Mindray; and BioNote, Inc. • Water, livestock, poultry, and dairy testing products .
Risk Factors.” HUMAN CAPITAL As innovation and customer focus are important parts of our strategy to create long-term value, we aim to attract, motivate, develop, and retain talented employees at all levels who are aligned with and passionate about our Purpose by: • Building and sustaining an inclusive, ethical culture that values diversity, equity, and inclusion (“DEI”); • Offering competitive and locally relevant compensation and benefits; and • Providing growth and development opportunities.
Risk Factors.” HUMAN CAPITAL As innovation and customer focus are important parts of our strategy to create long-term value, we aim to attract, motivate, develop, and retain talented employees at all levels who are aligned with and passionate about our Purpose by: • Building and sustaining an inclusive, ethical culture that welcomes, respects and supports all employees; • Offering competitive and locally relevant compensation and benefits; and • Providing growth and development opportunities for all our employees.
We also sell our Alertys Ruminant Pregnancy Test, Rapid Visual Pregnancy Test and Alertys On-Farm Pregnancy Test for cattle, which can detect pregnancy 28 days after breeding using whole blood samples. We also offer herd health screening services to livestock veterinarians and producers. Dairy products .
We also sell our Alertys Milk Pregnancy Test, Alertys Ruminant Pregnancy Test, Alertys On-Farm Pregnancy Test, and Rapid Visual Pregnancy Test for cattle and other ruminants, which can detect pregnancy 28 days after breeding using milk, serum, or whole blood samples. We also offer herd health screening services to livestock veterinarians and producers. 9 Dairy products .
Our well-being programs have strong utilization by our employee base, and are reviewed to ensure they are achieving the anticipated outcomes. We provide free counseling for employees and their dependents globally through our mental wellness partner.
Accordingly, our well-being programs have strong utilization by our employee base, and we review these programs from time to time to ensure they are achieving the anticipated outcomes. We provide free counseling for employees and their dependents globally through our mental wellness partner.
These factors include publications, including peer-reviewed third-party studies, that demonstrate the accuracy of our products; our brand strength and reputation in the marketplace; the breadth, quality and integration of our product offerings; our existing customer relationships and our customer support; our sales force; our online ordering platform that enables direct ordering of (including establishing automatic reorder schedules for) our consumables, tests and other products by our customers; the applicable regulatory approval status for certain products; our continued investments in innovative product improvements that often result in new technologies and/or additional patents; our investment in diagnostic innovations that results in new product offerings that often are patentable and that expand the test menu for our in-clinic instruments and/or reference laboratory business; and our significant know-how, scale and investments related to manufacturing processes of associated product offerings and certain supply arrangements for consumables that are compatible with our instruments.
These factors include, but are not limited to: • publications, including peer-reviewed third-party studies, that demonstrate the performance and benefits of our products and services; • our brand strength and reputation in the marketplace; • the breadth, quality and integration of our product and service offerings; • our existing customer relationships and our customer service and support; • our sales force; • our online ordering platform that enables direct ordering of (including establishing automatic reorder schedules for) our consumables, tests and other products by our customers; • the applicable regulatory approval status for certain products; • our continued investments in innovative product and service improvements that result in new technologies, features, functionalities, enhancements, integrations, and/or additional patents and other intellectual property rights; • our investment in diagnostic innovations that results in new product and service offerings that are patentable and that expand the test menu for our in-clinic instruments and/or reference laboratory business; and • our significant know-how, scale and investments related to the product design and manufacturing processes of associated product offerings and certain supply arrangements for consumables that are compatible with our instruments.
We also encourage employees to enhance their career development through job-related courses and degree programs. Employee Turnover and Engagement . We monitor employee turnover and engagement to identify opportunities to strengthen our approach to human capital management. During 2023, our overall voluntary employee turnover rate was approximately 10%. Our voluntary turnover among managerial employees was approximately 4.5%.
We also encourage employees to enhance their career development through individual development plans, job-related courses and degree programs. Employee Turnover and Engagement . We monitor employee turnover and engagement to identify opportunities to strengthen our approach to human capital management. During 2024, our overall voluntary employee turnover rate was approximately 8.5%. Our voluntary turnover among managerial employees was approximately 5%.
All test methods used for the drug residue testing require validation by the FDA and acceptance by the NCIMS, and are included on a Memorandum of Interpretation issued by the FDA. IDEXX has two FDA-validated test products, SNAP NBL and SNAP Tetra, for sale in the U.S. Human point-of-care electrolyte and blood gas analyzers .
All test methods used for drug residue testing require validation by the FDA and acceptance by the NCIMS. IDEXX has two FDA-validated test products, SNAP NBL and SNAP Tetra, for sale in the U.S. Human point-of-care electrolyte and blood gas analyzers .
Although we have certain patents and licenses of patents and technologies from third parties that are expected to expire in future years, the expiration of these patents and licenses, individually or in the aggregate, is not expected to have a material effect on our financial position or future operations.
Although certain of these patents and licenses are expected to expire in future years, the expiration of these patents and licenses, individually or in the aggregate, is not expected to have a material effect on our financial position or future operations.
Significant products supplied by sole and single-source providers include certain Catalyst Dx and Catalyst One consumables (other than electrolyte consumables and the fructosamine, thyroxine, canine C-reactive protein, progesterone, SDMA, and Bile Acid slides), LaserCyte Dx consumables, ProCyte Dx analyzers and consumables, SediVue Dx urinalysis instruments and consumables, and certain components of our internally manufactured analyzers.
Significant products supplied by sole and single-source providers include certain Catalyst Dx and Catalyst One consumables (other than electrolyte consumables and the fructosamine, thyroxine, canine C-reactive protein, progesterone, SDMA, and Bile Acid slides), LaserCyte Dx consumables, ProCyte Dx Analyzers and consumables, InVue Dx cytology consumables, SediVue Dx urinalysis instruments and consumables, and certain components of our internally manufactured analyzers. 11 Certain Catalyst chemistry slides are supplied by Ortho-Clinical Diagnostics, Inc.
Livestock, Poultry, Herd Health Screening and Production Management . Our livestock and poultry diagnostic products are purchased by government and private laboratories that provide testing services to livestock veterinarians, producers, and processors, and also directly by livestock veterinarians and producers.
Our livestock and poultry diagnostic products are purchased by government and private laboratories that provide testing services to livestock veterinarians, producers, and processors, and also directly by livestock veterinarians and producers.
Veterinary diagnostic products . Our veterinary diagnostic products including instruments, such as Catalyst One and ProCyte One, as well as their corresponding consumables, are veterinary medical devices under the jurisdiction of the FDA under the Food, Drug and Cosmetics Act (the “FDC Act”). Other products under FDA jurisdiction include our rapid assay products such as SNAP devices and ELISA plates.
Veterinary diagnostic products . Our veterinary diagnostic products, including instruments, such as Catalyst One and ProCyte One, as well as their corresponding consumables, are veterinary medical devices under the jurisdiction of the FDA under the Food, Drug and Cosmetics Act (the “FDC Act”).
These OPTI products are also subject to the regulations governing the manufacture and marketing of medical devices in other countries in which they are sold, including the EU Medical Device Regulation and In Vitro Diagnostic Medical Devices Regulation. Human COVID-19 test products .
These OPTI products are also subject to the regulations governing the manufacture and marketing of medical devices in other countries in which they are sold, including the EU Medical Device Regulation and In Vitro Diagnostic Medical Devices Regulation. Other Chemical, Environmental, and Human Health Safety Regulations .
Our practice management systems offerings include cloud-based ezyVet, Animana, IDEXX Neo, and on-premises Cornerstone. To support the software system needs of practices, IDEXX provides integrated services including Payment Solutions, Data Backup & Recovery, and Practice Supplies. Third-party integrations strengthen our practice management systems value proposition by improving user workflows and can quickly add new functionality to the practice management systems.
To support the software system needs of practices, IDEXX provides integrated services including Payment Solutions, Data Backup & Recovery, and Practice Supplies. Third-party integrations strengthen our practice management systems value proposition by improving user workflows and can quickly add new functionality to the practice management systems.
We have three blood and urine chemistry analyzers that are used by veterinarians to measure levels of certain enzymes and other substances in blood or urine for monitoring health status and assisting in diagnosing physiologic conditions. We actively sell the Catalyst One Chemistry analyzer. We continue to support our Catalyst Dx and VetTest Chemistry analyzers.
Our blood and urine chemistry analyzers are used by veterinarians to measure levels of certain enzymes and other substances in blood or urine for monitoring health status and assisting in diagnosing physiologic conditions. We actively sell the Catalyst One Chemistry Analyzer and continue to support the Catalyst Dx Analyzer, both of which perform chemistry, immunoassay, and electrolyte tests.
Beginning in 2020, with the onset of the COVID-19 pandemic, we provided human testing solutions for the detection of SARS-CoV-2, the virus that causes COVID-19. During the first quarter of 2023, we discontinued actively marketing our COVID-19 testing products and services. Other Activities.
Previously we also provided human testing solutions for the detection of SARS-CoV-2, the virus that causes COVID-19. During the first quarter of 2023, we discontinued actively marketing our COVID-19 testing products and services. Other Activities .
This menu of tests also includes a number of specialized tests that we have developed that allow practitioners to diagnose increasingly relevant diseases and conditions in dogs and cats, including parasites, heart disease, allergies, pancreatitis, diabetes, renal disease, and infectious diseases. We also offer cancer screening to aid in diagnosis, assist in therapy selection, and support therapy management and monitoring.
This menu of tests also includes a number of specialized tests that we have developed that allow practitioners to diagnose increasingly relevant diseases and conditions in dogs and cats, including parasites, heart disease, allergies, pancreatitis, diabetes, renal disease, and infectious diseases.
We leverage the insights gained from the survey to develop a roadmap for improving engagement and retention. 16 ENVIRONMENTAL MATTERS, SUSTAINABILITY AND CLIMATE CHANGE Our operations are subject to various environmental, health, and safety laws and regulations concerning, among other things, the generation, handling, transportation, and disposal of hazardous substances or wastes, the cleanup of hazardous substance releases, emissions or discharges into the air or water, and occupational safety and health.
ENVIRONMENTAL, HEALTH, AND SAFETY AND CLIMATE CHANGE MATTERS Our operations are subject to various environmental, health, and safety laws and regulations concerning, among other things, the generation, handling, transportation, and disposal of hazardous substances or wastes, the cleanup of hazardous substance releases, emissions or discharges into the air or water, and occupational safety and health.
This device improves medical care by allowing veterinarians to share the test results with the pet owner on the SNAP Pro Analyzer screen, or via VetConnect PLUS. Our SNAPshot Dx analyzer can run multiple patient samples at once.
This device improves medical care by allowing veterinarians to share the test results with the pet owner on the SNAP Pro Analyzer screen, or via VetConnect PLUS.
We are steadfast in our focus on cultivating the diverse leaders of tomorrow and making career development opportunities more accessible across the company. Much of our training programs are 100% virtual and available in multiple languages. Our career development programs are designed to build capabilities and enable career progression.
We are steadfast in our focus on cultivating the leaders of tomorrow and making career development opportunities more accessible across the company. We offer in-person and virtual training; our goal is to ensure robust training development options are accessible to all levels, geographies, and in multiple languages. Our career development programs are designed to build capabilities and enable career progression.
Our primary product lines are SNAP Beta-Lactam ST and SNAPduo ST Plus, which detect certain beta-lactam and tetracycline antibiotic residues. 9 Other - 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. OPTI Medical.
Other - 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. OPTI Medical .
Development or acquisition of new products and technologies may subject us to additional areas of government regulation. These may involve medical device, water-quality and other regulations of the FDA, the EPA, the USDA, the FTC, and other federal agencies, as well as state, local and foreign governments.
These may involve medical device, water-quality and other regulations of the FDA, the EPA, the USDA, the FTC, and other federal agencies, as well as state, local and foreign governments.
Our principal dairy products use our SNAP test platform and are used by dairy producers and processors worldwide to detect antibiotic drug residue in milk.
Our principal dairy products use our SNAP test platform and are used by dairy producers and processors worldwide to detect antibiotic drug residue in milk. Our primary product lines are SNAP Beta-Lactam ST and SNAPduo ST Plus, which detect certain beta-lactam and tetracycline antibiotic residues.
We strive to build a collaborative culture through in-person and virtual events, including town halls, in-office celebrations, and employee-led communities. Ensuring the health, safety, and well-being of our employees is a top priority at IDEXX. We provide our employees with the training, tools, and resources they need to safeguard their health and we empower them to put safety first.
Ensuring the health, safety, and well-being of our employees is a top priority at IDEXX. We provide our employees with the training, tools, and resources they need to safeguard their health, and we empower them to put safety first.
Certain of these in-clinic analyzers, including the Catalyst One Chemistry analyzer, ProCyte One hematology analyzer, SediVue Dx analyzer, and IDEXX inVue Dx cellular analyzer, utilize proprietary artificial intelligence (“AI”) capabilities in their image capture systems to analyze samples.
Several of these in-clinic analyzers, including the Catalyst One Chemistry analyzer, ProCyte One hematology analyzer, SediVue Dx Analyzer, and IDEXX inVue Dx Cellular Analyzer, utilize proprietary artificial intelligence (“AI”) capabilities in their image capture systems to analyze samples. IDEXX in-clinic analyzers feature load-and-go sample handling and integration with a cloud-enabled software ecosystem, including the IDEXX VetLab Station and VetConnect PLUS.
Our research and development expenses, which consist of salaries, employee benefits, certain licensing agreements, materials and external consulting and development costs, were $191.0 million for the year ended December 31, 2023, or 5.2% of our consolidated revenue, $254.8 million for the year ended December 31, 2022, or 7.6% of our consolidated revenue and $161.0 million for the year ended December 31, 2021, or 5.0% of our consolidated revenue. 10 PATENTS AND LICENSES We actively seek to obtain patent protection in the U.S. and other countries for inventions covering our products and technologies.
Our research and development expenses, which consist of salaries, employee benefits, certain licensing agreements, materials and external consulting and development costs, were $219.8 million for the year ended December 31, 2024, or 5.6% of our consolidated revenue, $191.0 million for the year ended December 31, 2023, or 5.2% of our consolidated revenue and $254.8 million for the year ended December 31, 2022, or 7.6% of our consolidated revenue.
In addition, all employees have access to financial education and our employees, their spouses, and adult dependents in North America, can engage with a financial coach for help reaching their personal financial goals. We continue to strengthen our approach to maximize the contributions of all through our commitment to flexible work options.
In addition, all employees have access to financial education and our employees, their spouses, and adult dependents in North America can engage with a financial coach for help reaching their personal financial goals. We are committed to enabling managers, teams, and employees to identify the most effective work arrangements to accomplish their goals.
The ongoing costs of complying with such laws and regulations is significant and may increase in the future, particularly in the European Union, where we are required to comply with increasingly extensive regulations to disclose and address climate change impacts and resource conservation matters.
The ongoing costs of complying with such laws and regulations is significant and may increase in the future, particularly in the European Union, 16 where we are required to comply with increasingly extensive regulations. We continue to monitor legislative and regulatory actions and their potential impacts on the areas where we conduct business.
We develop, market, and sell a portfolio of software and services for independent veterinary clinics and corporate groups. This portfolio includes: Practice management systems . 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.
This portfolio includes: Practice management systems . We provide 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. Our practice management systems offerings include cloud-based ezyVet, Animana, and IDEXX Neo, and on-premises Cornerstone.
We also offer the IDEXX Tecta System, which is an instrument that automates several steps in water testing workflow. Livestock, Poultry and Dairy (“LPD”) - 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 ensure the quality and safety of milk.
Livestock, Poultry and Dairy (“LPD”) - 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 ensure the quality and safety of milk. Livestock, Poultry, Herd Health Screening and Production Management .
The FDA’s Quality System regulations further set forth standards for product design and manufacturing processes, require the maintenance of certain records, and provide for inspections of our facilities by the FDA. New OPTI products fall into FDA classifications that require notification of and review by the FDA via a 510(k) application before marketing or sale of such products.
The FDA’s Quality System regulations set forth standards for our product design and manufacturing processes, require the maintenance of certain records, and provide for inspections of our facilities by the FDA.
We continue to offer consumables to support analyzers that are not actively marketed including the LaserCyte Dx and IDEXX VetAutoread hematology analyzers. Rapid Assay . The SNAP rapid assays are single-use, handheld test kits that can work without the use of instrumentation, although many kits may also be activated with results automatically captured and interpreted by the SNAP Pro Analyzer.
The IDEXX inVue Dx Cellular Analyzer uses advanced optics and AI technology in a slide-free, load-and-go platform. Rapid Assay . The SNAP rapid assays are single-use, handheld test kits that can work without the use of instrumentation, although many kits may also be activated with results automatically captured and interpreted by the SNAP Pro Analyzer.
This allows managers, teams, and employees to work together to identify the most efficient way to accomplish goals. For some teams this consists of 100% onsite work, while others employ remote or hybrid models. Our goal is to promote a positive workplace environment where everyone can contribute to their fullest potential.
For some teams this consists of 100% onsite work, while others employ remote or hybrid models. Our goal is to promote a positive workplace environment where everyone can contribute to their fullest potential. We strive to build a collaborative culture through in-person and virtual events, including town halls, in-office celebrations, and employee-led communities.
We recognize that climate change has had and will continue to have significant impacts on our environment and have developed and are implementing a greenhouse gas emissions reduction strategy. To monitor our progress in meeting our environmental goals, we track and publicly report our environmental impact metrics, including greenhouse gas emissions and energy consumption.
To monitor our progress in meeting our environmental goals, we track and publicly report our environmental impact metrics, including greenhouse gas emissions and energy consumption.
Certain Catalyst chemistry slides are supplied by Ortho under supply agreements that are currently set to expire in December of 2033. We are required to purchase all of our requirements for our current menu of Catalyst chemistry slides from Ortho to the extent Ortho is able to supply those requirements.
We are required to purchase all of our requirements for our current menu of Catalyst chemistry slides from Ortho to the extent Ortho is able to supply those requirements. The agreements provide for pricing based on purchase volumes and a fixed annual inflationary adjustment.
Our principal livestock and poultry diagnostic products include tests for Bovine Viral Diarrhea Virus (“BVDV”), Porcine Reproductive and Respiratory Syndrome (“PRRS”), and African Swine Fever (“ASFV”). BVDV is a common and contagious viral infection that suppresses the immune system, making the animal susceptible to a host of other infections, and impacting beef and dairy production yields as a result.
BVDV is a common and contagious viral infection that suppresses the immune system, making the animal susceptible to a host of other infections, and impacting beef and dairy production yields as a result. PRRS is a contagious virus causing reproductive problems and respiratory diseases in swine, leading to increased piglet mortality, reduced growth, and vulnerability to secondary infections.
While we consider these technology rights to be important to us, a range of factors help to mitigate the future effects of patent and license expiration on our results of operations and financial position.
In addition, a range of factors help to mitigate the future potential effects of the expiration of any of our patents, licenses, and other intellectual property rights on our results of operations and financial position.
Our competitors include highly-focused smaller companies and multibillion-dollar companies with livestock and poultry diagnostics and water testing solution franchises. • Veterinary Software, Services and Diagnostic Imaging Systems .
Our competitors include smaller regional companies and larger companies with livestock and poultry diagnostics and water testing solution products, such as Neogen Corporation, Charm Sciences, Inc., BioChek, Innovative Diagnostics and Thermo Fisher Scientific Inc. • Veterinary Software, Services and Diagnostic Imaging Systems .
VetConnect PLUS is a cloud-based technology that enables veterinarians to access and analyze patients’ data from all of IDEXX’s diagnostic modalities.
In 2024, we upgraded our IVLS to work easier and faster than our previous version, providing two times faster performance on common workflows and access to historical results five times faster. Integrated Diagnostic Information Management . VetConnect PLUS is a cloud-based technology that enables veterinarians to access and analyze patients’ data from all of IDEXX’s diagnostic modalities.
In addition, we already face robust competition as other companies have been successful in bringing competitive products to market, despite the protections afforded by these technology rights.
In addition, we face robust competition as other companies have been successful in bringing competitive products and services to market, despite the protections afforded by these patent and license rights. In addition to seeking patent protection as appropriate, we also protect certain intellectual property (such as software and our manufacturing know-how) through U.S. and international trade secret and copyright laws.
PRRS is a contagious virus causing reproductive problems and respiratory diseases in swine, leading to increased piglet mortality, reduced growth, and vulnerability to secondary infections. Our RealPCR ASFV Test is a real-time polymerase chain reaction (“PCR”) assay that provides early and accurate detection of ASFV supporting prevention, control, and eradication programs by veterinarians and producers.
TSE is a transmissible disease in which infected animals exhibit behavioral disturbances and a progressive loss of physical condition that precedes death. Our RealPCR ASFV Test is a real-time polymerase chain reaction (“PCR”) assay that provides early and accurate detection of ASFV supporting prevention, control, and eradication programs by veterinarians and producers.
Additionally, we provide specialized veterinary consultation, telemedicine, and advisory services, including radiology, cardiology, internal medicine, and ultrasound consulting. These services enable veterinarians to obtain readings and interpretations of test results transmitted by telephone and over the Internet. 7 Veterinary Software and Services & Diagnostic Imaging Systems Veterinary Software and Services.
We also offer cancer screening to aid in diagnosis, assist in therapy selection, and support therapy management and monitoring. 7 IDEXX Telemedicine . Additionally, we provide specialized veterinary consultation, telemedicine, and advisory services, including radiology, dental radiography, cardiology, internal medicine, and ultrasound consulting. These services enable veterinarians to obtain diagnostic interpretations, and radiology and cardiology assessments.
Because our strategy includes developing strong, deep relationships with our veterinary customers, we have focused on growing our companion animal diagnostics field-based organization globally. Diversity, Equity, and Inclusion . We believe that promoting DEI among our employees helps drive both innovation and a better understanding of our increasingly global customer base.
Because our strategy includes developing strong, deep relationships with our veterinary customers around the world, we have focused on growing our companion animal diagnostics field-based organization globally. Inclusive, Ethical Culture. IDEXX promotes an inclusive, ethical culture that values the different skills, perspectives and backgrounds that each employee brings in pursuit of our Purpose.
We employ inclusive recruitment practices to source diverse candidates and mitigate potential bias. We encourage and promote an inclusive culture at IDEXX, including through executive sponsorship of our employee-led communities that support our employees with diverse backgrounds.
We encourage and promote an inclusive culture at IDEXX, including through executive sponsorship of employee-led communities that support all our employees. As of December 31, 2024, we had approximately 11,000 regular full-time and part-time employees in roughly 32 countries around the world.
IDEXX Web PACS uses proprietary AI capabilities to enable optimal sharing, analysis, and storage of diagnostic images. IDEXX I-Vision Mobile is a software application that allows veterinarians with IDEXX digital radiography systems the ability to request, view and send images using an iPad ® mobile tablet. This application integrates with our IDEXX-PACS software.
IDEXX Web PACS uses proprietary AI capabilities to enable optimal sharing, analysis, and storage of diagnostic images.
We continue to monitor legislative and regulatory actions and their potential impacts on the areas where we conduct business. In addition to monitoring and managing compliance with environmental, health and safety laws and regulations, we also strive to reduce our environmental footprint.
In addition to monitoring and managing compliance with environmental, health and safety laws and regulations, we strive to reduce our environmental footprint, although our greenhouse gas emissions from our operations are not significant. We have developed and are implementing a greenhouse gas emissions reduction strategy.
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We also license patents and technologies from third parties.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, even if we effectively develop and implement succession plans and make key leadership transitions, 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. 24 We are increasingly dependent on the continuous and reliable operation of our information technology systems, and a disruption of these systems or significant security breaches could adversely affect our business We rely on our information systems, as well as our third-party business partners’ and suppliers’ information systems, to provide access to our web-based products and services, keep financial records, analyze results of operations, process customer orders, manage inventory, process shipments to customers, store confidential or proprietary information, and operate other critical functions.
Biggest changeWe depend on the continuous and reliable operation and security of our information technology systems and our products and services that incorporate or rely on information technology, and any disruption or significant cybersecurity breach or other incident could adversely affect our business We rely on our information systems, as well as third-party information 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.
Even if products, components, and materials were to become available to us from alternative suppliers, we likely would incur additional costs and delays in identifying or qualifying replacement materials, and there can be no assurance that replacements would be available to us on acceptable terms, or at all.
Even if products, components, and materials were to become available to us from alternative suppliers, we likely would incur additional costs and delays in identifying and qualifying replacement materials, and there can be no assurance that replacements would be available to us on acceptable terms, or at all.
Although we maintain security policies, employ system backup measures, and engage in redundancy planning and processes, such policies, measures, planning and processes, as well as our current disaster recovery plans, may be ineffective or inadequate to address all eventualities.
Although we maintain security policies and measures, employ system backup measures, and engage in redundancy planning and processes, such policies, measures, planning and processes, as well as our current disaster recovery plans, may be ineffective or inadequate to address all eventualities.
Various risks associated with foreign operations may impact our international sales and operations, including, but not limited to, disruptions in transportation of our products or our supply chain; fluctuations in oil prices; increased border protection and restriction on travel; the differing product and service needs of foreign customers; difficulties in building, staffing, and managing foreign operations (including a geographically dispersed workforce); differing protection of intellectual property; trade protection measures, quotas, embargoes, import/export restrictions, capital controls, tariffs, duties, and regulatory and licensing 26 requirements; natural and other disasters; public health issues (such as outbreaks, epidemics, or the prospect of a pandemic); ongoing instability or changes in a country’s or region’s regulatory, economic, or political conditions, including inflation, recession, interest rate fluctuations, and actual or anticipated military or political conflicts; geopolitical crises, including terrorism, war, armed conflict, or civil or military unrest; other unfavorable geopolitical conditions; security concerns; and local business and cultural factors that differ from our normal standards and practices, including business practices prohibited by the Foreign Corrupt Practices Act and other anti-corruption laws and regulations.
Various risks associated with foreign operations may impact our international sales and operations, including, but not limited to, disruptions in transportation of our products or our supply chain; fluctuations in oil prices; increased border protection and restriction on travel; the differing product and service needs of foreign customers; difficulties in building, staffing, and managing foreign operations (including a geographically dispersed workforce); differing protection of intellectual property; trade protection measures, quotas, embargoes, import/export restrictions, capital controls, tariffs, duties, and regulatory and licensing requirements; natural and other disasters; public health issues (such as outbreaks, epidemics, or the prospect of a pandemic); ongoing instability or changes in a country’s or region’s regulatory, economic, or political conditions, including inflation, recession, interest rate fluctuations, and actual or anticipated military or political conflicts; geopolitical crises, including terrorism, war, armed conflict, or civil or military unrest; other unfavorable geopolitical conditions; security concerns; and local business and cultural factors that differ from our normal standards and practices, including business practices prohibited by the Foreign Corrupt Practices Act and other anti-corruption laws and regulations.
Our ability to maintain or enhance 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-clinic 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-clinic 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 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; • Maintaining premium pricing, including by effectively implementing price increases, for our products and services through, among other things, effective communication and promotion of the value of our products and services in an environment where many of our competitors promote, market, and sell lesser offerings at prices lower than ours; • 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, through increased pet visits, use of preventive care protocols, enhanced practice of real-time care, and improved practice efficiency; • Achieving cost improvements in our worldwide network of reference laboratories by implementing global best practices, including lean processing techniques, incorporating technological enhancements, including laboratory automation and a global laboratory information management system, employing purchasing strategies to maximize leverage of our global scale, increasing the leverage of existing infrastructure and consolidating testing in high volume laboratory hubs; • Achieving cost improvements in the manufacture and service of our in-clinic 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 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; • Attracting, developing, and retaining key leadership and talent necessary to support all elements of our strategy; • Strengthening our sales and marketing activities to continue to grow our profitability both in and outside the U.S.; • Identifying, completing, and integrating acquisitions that enhance our existing businesses, create new businesses for us or expand the geographic areas in which we do business; 18 • Continuing to incorporate AI, machine learning, and automation into our products and services and associated business processes, such as customer support and software development; • Developing and implementing new technology and licensing strategies; and • Continuing to effectively manage our growth and expansion on a global scale through, among other things, designing and implementing cost-effective improvements to our processes, procedures, and infrastructure.
Our ability to maintain or enhance 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-clinic 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-clinic 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 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; • Maintaining premium pricing, including by effectively implementing price increases, for our products and services through, among other things, effective communication and promotion of their value in an environment where many of our competitors promote, market, and sell lesser offerings at lower prices; • 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, through increased pet visits, use of preventive care protocols, enhanced practice of real-time care, and improved practice efficiency; • Achieving cost improvements in our worldwide network of reference laboratories by implementing global best practices, including lean processing techniques, incorporating technological enhancements, including laboratory automation and a global laboratory information management system, employing purchasing strategies to maximize leverage of our global scale, increasing the leverage of existing infrastructure and consolidating testing in high volume laboratory hubs; • Achieving cost improvements in the manufacture and service of our in-clinic 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 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; • Attracting, developing, and retaining key leadership and talent necessary to support all elements of our strategy; • Strengthening our sales and marketing activities to continue to grow our profitability both in and outside the U.S.; • Identifying, completing, and integrating acquisitions that enhance our existing businesses, create new businesses for us or expand the geographic areas in which we do business; • Continuing to incorporate AI, machine learning, and automation into our products and services and associated business processes, such as customer support and software development; 18 • Developing and implementing new technology and licensing strategies; and • Continuing to effectively manage our growth and expansion on a global scale through, among other things, designing and implementing cost-effective improvements to our processes, procedures, and infrastructure.
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 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 technologies and have a material adverse effect on the Company, our business strategy, financial condition, results of operations or prospects.
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 technologies and have a material adverse effect on the Company, our business strategy, financial condition, results of operations or prospects.
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.
If we are unable to obtain 19 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.
In addition, if we fail to comply with applicable ESG regulations, or our ESG practices do not meet evolving investor, customer or other stakeholder expectations and standards, then our reputation, our ability to attract or retain employees, our relationships with some customers, and our attractiveness as an investment, business partner, acquiror or product or service provider could be negatively impacted, which could adversely affect our business, results of operations, financial condition, reputation, or stock price.
In addition, if we fail to comply with applicable regulations, or our practices do not meet evolving investor, customer or other stakeholder expectations and standards, then our reputation, ability to attract, retain employees, relationships with some customers and attractiveness as an investment, business partner, acquiror or product or service provider could be negatively impacted, which could adversely affect our business, results of operations, financial condition, reputation, or stock price.
Any failure or perceived failure by us, the third parties with whom we work or our products and services to comply with all applicable privacy-related laws and regulations, as well as our contractual obligations, could result in damage to our reputation or legal proceedings or actions against us by governmental entities or others, any of which could have an adverse effect on our business.
Any failure or perceived failure by us, the third parties with whom we work or our products and services to comply with all applicable privacy-related laws and regulations, as well as our contractual obligations, could result in damage to our reputation or legal proceedings or actions against us by governmental entities or others, any of which could have an adverse 29 effect on our business.
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 leadership and other key personnel. Competition for experienced leaders and employees, particularly for persons with specialized skills, can be intense.
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 leadership and other key personnel. Competition for experienced leaders and 24 employees, particularly for persons with specialized skills, can be intense.
In addition, public health issues and crises may adversely impact our customers’ businesses due to business lockdowns, decreased companion animal clinical visits, labor shortages, the delay of elective procedures and wellness visits, and disruption of veterinary clinic and other customer operations, all of which could cause a decline in demand for our products and services.
In addition, public health issues and crises may adversely impact our customers’ businesses due to business lockdowns, decreased companion animal clinical visits, labor shortages, the delay of elective procedures and wellness visits, and disruption of veterinary clinic and other customer operations, all of which 28 could cause a decline in demand for our products and services.
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 in this area, and 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.
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 in this area, and 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.
Further, use of artificial intelligence 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.
For example, use of artificial intelligence 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.
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 risk and reputational risk) and social and human effects (such as harm to health and well-being) associated with 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 27 technology, market risk and reputational risk) and social and human effects (such as harm to health and well-being) associated with climate change.
Factors that may impact the market price of our common stock include the factors described in this “Risk Factors” section and elsewhere in this Form 10-K, as well as: • Our stock repurchase program and changes in our capital structure or cost of capital, including the issuance of additional debt; • Public announcements (including the timing of these announcements) regarding our business, financial performance and prospects or new products or services, product enhancements or technological advances by our competitors or us; • Trading activity in our stock, including portfolio transactions in our stock by us, our executive officers and directors, and significant stockholders; trading activity that results from the ordinary course rebalancing of stock indices in which we may be included, such as the S&P 500 Index; trading activity related to our inclusion in, or removal from, any stock indices; and short interest in our common stock, which could be significant from time to time; • Investor perception of us and the industry and sectors in which we operate, including changes in earnings estimates or buy/sell recommendations by securities analysts; and whether or not we meet earnings estimates of securities analysts who follow us; and • General financial, domestic, international, economic, and market conditions, including overall fluctuations in the U.S. equity and credit markets, which may experience extreme volatility that, in some cases, is unrelated or disproportionate to the operating performance of particular companies. 32
Factors that may impact the market price of our common stock include the factors described in this “Risk Factors” section and elsewhere in this Form 10-K, as well as: • Our stock repurchase program and changes in our capital structure or cost of capital, including the issuance of additional debt; • Public announcements (including the timing of these announcements) regarding our business, financial performance and prospects or new products or services, product enhancements or technological advances by our competitors or us; • Trading activity in our stock, including portfolio transactions in our stock by the company, our executive officers and directors, and significant stockholders; trading activity that results from the ordinary course rebalancing of stock indices in which we may be included, such as the S&P 500 Index; trading activity related to our inclusion in, or removal from, any stock indices; and short interest in our common stock, which could be significant from time to time; • Investor perception of the company and the industry and sectors in which we operate, including changes in earnings estimates or buy/sell recommendations by securities analysts; and whether or not we meet earnings estimates of securities analysts; and • General financial, domestic, international, economic, and market conditions, including overall fluctuations in the U.S. equity and credit markets, which may experience extreme volatility that, in some cases, is unrelated or disproportionate to the operating performance of particular companies. 32
Our operations and reputation may be impaired if we, our products, or our services do not comply with our global privacy policy or evolving laws and regulations regarding data privacy and protection The nature of our business involves the receipt, storage and use of information, including personal data, about our customers, pet owners, suppliers, and employees.
Our operations and reputation may be impaired if we, our products, or our services do not comply with our global privacy policy or evolving laws and regulations regarding data privacy and protection Our business operations involves the receipt, storage and use of information, including personal data, about our customers, pet owners, suppliers, and employees.
We, and some of our third-party vendors, have experienced cybersecurity attacks in the past and will likely experience further attacks 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, and some of our third-party vendors, have experienced cybersecurity attacks and incidents in the past and will likely experience further attacks 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.
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 markets; 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).
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).
Significant judgment is required in determining our worldwide provision for income taxes. We regularly assess our exposures related to our worldwide provision for income taxes to determine the adequacy of our provision for taxes. Any reduction in these contingent liabilities or additional assessments would increase or decrease income, respectively, in the period such determination is made.
Significant judgment 30 is required in determining our worldwide provision for income taxes. We regularly assess our exposures related to our worldwide provision for income taxes to determine the adequacy of our provision for taxes. Any reduction in these contingent liabilities or additional assessments would increase or decrease income, respectively, in the period such determination is made.
Our failure to adequately update, accomplish or accurately track and report on these goals and targets on a timely basis, or at all, could adversely affect our reputation and expose us to increased scrutiny from the investment community, special interest groups and enforcement authorities.
Our failure to adequately update, accomplish or accurately track and report on these goals on a timely basis, or at all, could adversely affect our reputation and expose us to increased scrutiny from the investment community, special interest groups and enforcement authorities.
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 23 decline in testing. Changes in accepted medical protocols regarding the diagnosis of certain diseases and conditions could have a similar effect.
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.
For more information regarding personal data and 25 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 laws and regulations regarding data privacy and protection” below.
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 laws and regulations regarding data privacy and protection” below.
In addition, some of our products and services include information systems that collect and use data on behalf of customers (e.g., veterinary practice management systems and customer communication tools and services), and some of these products and services rely on third-party providers for cloud computing and storage.
In addition, some of our products and services include information systems that collect and use data on behalf of customers (e.g., veterinary practice management systems and customer communication tools and services), and some products and services rely on third-party providers for cloud computing and storage.
In addition, under some contracts with suppliers we have minimum purchase obligations, and our failure to satisfy those obligations may result in 19 loss of some or all of our rights under these contracts or require us to compensate the supplier.
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.
GENERAL RISKS We depend on the efforts of key personnel and talent to succeed and compete effectively Our continued success is substantially dependent on our ability to attract, develop, and retain highly capable, skilled, and diverse employees and leaders.
GENERAL RISKS We depend on the efforts of key personnel and talent to succeed and compete effectively Our continued success is substantially dependent on our ability to attract, develop, and retain highly capable and skilled employees and leaders.
We have adopted measures to mitigate potential risks associated with information technology disruptions and cybersecurity threats; however, given the unpredictability of the timing, nature 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 that impacts any of our critical functions, or our customers were to experience a system disruption, attack or security breach via any of our connected 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 acquisition or disclosure of confidential or otherwise protected information, destruction or corruption of data, security breaches, other manipulation or improper use 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.
We have adopted measures to mitigate potential risks associated with information technology disruptions and cybersecurity threats; however, given the unpredictability of the timing, nature 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 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 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.
Pillar Two is designed to ensure large multinational enterprises pay a minimum effective tax of at least 15% on income in each jurisdiction. As of December 31, 2023, various countries have enacted aspects of Pillar Two while committing to enact additional aspects in future years.
Pillar Two is designed to ensure large multinational enterprises pay a minimum effective tax of at least 15% on income in each jurisdiction. As of December 31, 2024, various countries have enacted aspects of Pillar Two while committing to enact additional aspects in future years.
A weak worldwide economy, or economic weakness in any significant geography, could result in reduced demand for our products and services or increased customer credit risk A substantial percentage of our sales are made worldwide to the companion animal veterinary industry.
A weak worldwide economy, or actual or perceived economic weakness in any significant geography, could result in reduced demand for our products and services or increased customer credit risk A substantial percentage of our sales are made worldwide to the companion animal veterinary industry.
Strengthening of the rate of exchange for the U.S. dollar has a negative effect on our business We are a global business, with 35% of our revenue during the year ended December 31, 2023, attributable to sales of products and services to customers outside of the U.S.
Strengthening of the rate of exchange for the U.S. dollar has a negative effect on our business We are a global business, with 35% of our revenue during the year ended December 31, 2024, attributable to sales of products and services to customers outside of the U.S.
Furthermore, over the last year, there have been multiple class action lawsuits filed against large language model developers 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 violations with respect to the information used to train AI models.
Furthermore, over the last two years, there have been multiple class action lawsuits filed against large language model developers 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 violations with respect to the information used to train AI models.
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 reference laboratory 22 vertical integration among our customers) would not have a negative impact on our ability to compete successfully.
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.
Our collection, transfer, protection, security, retention, storage, disclosure, sharing and use of personal data described above are subject to expanding and increasingly complex laws and regulations in the U.S. and abroad.
Our collection, transfer, protection, security, retention, storage, disclosure, sharing and use of personal data are subject to expanding and increasingly complex laws and regulations in the U.S. and abroad.
Our supply chain and our cost of goods also may be adversely impacted by unanticipated price increases due to factors such as inflation (including wage inflation), supply restrictions beyond our control or the control of our suppliers, or regulatory requirements regarding the importation, exportation, composition, or production processes of the goods or materials provided by our suppliers.
Our supply chain and our cost of goods also may be adversely impacted by unanticipated price increases due to factors such as inflation (including wage inflation), supply restrictions beyond our control or the control of our suppliers, the imposition of tariffs or duties, or regulatory requirements regarding the importation, exportation, composition, or production processes of the goods or materials provided by our suppliers.
Our competitors in the veterinary diagnostic sector in the United States and abroad include companies that develop, manufacture, and sell veterinary diagnostic tests and commercial veterinary reference laboratories, certain large and well-funded animal health pharmaceutical companies, as well as 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.
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-clinic diagnostic instruments.
Similarly, our future operating results may vary 31 significantly from quarter to quarter or year to year due to these and other factors. If our operating results or projections of future operating results do not meet the expectations of securities analysts or investors in future periods, our stock price may fall.
Similarly, our future operating results may vary significantly from quarter to quarter or year to year due to these and other factors. If our operating results or projected operating results do not meet the expectations of securities analysts or investors in future periods, our stock price may fall.
Failure to manage the risks associated with our use of distributors outside of the U.S. may reduce sales, increase expenses, and weaken our competitive position, any of which could have a negative effect on our operating results.
Failure to manage the risks associated with our use of distributors may reduce sales, increase expenses, and weaken our competitive position, any of which could have a negative effect on our operating results.
Economic weakness and the other factors described above have caused and could continue to cause our customers to reduce their investment in such testing, which could have an adverse effect on our results of operations.
Actual or perceived economic weakness and the other factors described above have caused and could continue to cause our customers to reduce their investment in such testing, which could have an adverse effect on our results of operations.
There can be no assurances made that we will be successful in maintaining and strengthening our relationships with our distributors or establishing relationships with new distributors who have the ability to market, sell, and support our products effectively.
There can be no assurance that we will be successful in maintaining and strengthening our relationships with our distributors or establishing relationships with new distributors who have the ability to market, sell, and support our products effectively.
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 security breaches, including, among other things, computer viruses and malware, ransomware, denial of service actions, the compromise, misappropriation and/or unauthorized acquisition 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.
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 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.
Economic weakness 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.
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.
For the year ended December 31, 2023, approximately 21% of our consolidated revenue was derived from products manufactured or sourced in U.S. dollars and sold internationally in local currencies, compared to 21% for the year ended December 31, 2022, and 23% for the year ended December 31, 2021.
For the year ended December 31, 2024, approximately 22% of our consolidated revenue was derived from products manufactured or sourced in U.S. dollars and sold internationally in local currencies, compared to 21% for the years ended December 31, 2023, and December 31, 2022.
In addition, security industry experts and government officials have warned about the risks of hackers and cybersecurity attacks targeting U.S. organizations, such as IDEXX, and recent developments in the cyber threat landscape include the growing use of AI, which could enable or create more sophisticated cybersecurity attacks and increase the volume and frequency of attacks.
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 more sophisticated cybersecurity attacks and increase attack volume and frequency.
Since our business is global in nature, geopolitical risks and other risks associated with doing business internationally could negatively affect our business, financial condition, and operating results For the year ended December 31, 2023, approximately 35% of our overall revenue and approximately 32%, 84% and 50% of our CAG, LPD, and Water revenues, respectively, were attributable to sales of products and services to customers outside the U.S.
Since our business is global in nature, geopolitical risks and other risks associated with doing business internationally could negatively affect our business, financial condition, and operating results For the year ended December 31, 2024, approximately 35% of our overall revenue and approximately 33%, 82% and 48% of our CAG, LPD, and Water revenues, respectively, were attributable to sales of products and services to customers outside the U.S.
Should we elect to repay some or all of the outstanding principal balance on our senior notes, the prepayment penalty we incur could adversely affect our results of operations and cash flows.
Should we elect to repay some or all of the outstanding principal balance on our senior notes prior to their stated maturity dates, the prepayment penalty we incur could adversely affect our results of operations and cash flows.
As information systems and the use of software and related applications by us, our business partners, suppliers, and customers become more cloud-based and connected to the “Internet of Things,” which is inherently susceptible to cyberattacks, there has been an increase in global cybersecurity vulnerabilities and threats, including more sophisticated and targeted cyber-related attacks that pose a risk to the security of our information systems and networks and the security, confidentiality, availability and integrity of data and information.
As information systems and the use of software and related applications by us, our business partners, suppliers, and customers become more cloud-based and connected to the “Internet of Things” (“IoT”), there has been an increase in global cybersecurity vulnerabilities and threats, including more sophisticated and targeted cyber-related attacks that pose a risk to the security of our information systems and networks and the security, confidentiality, availability and integrity of data and information.
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 there can be no assurance that hospitals that otherwise become affiliated with these companies would not shift all or a portion of their testing to such reference laboratories.
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-clinic 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.
While we have implemented network security and internal control measures, especially for the purpose of protecting our connected products and services from cyberattacks, and invested in our data and information technology infrastructure, these efforts have not always been successful in preventing, and there can be no assurance that these efforts will in the future prevent, a system disruption, attack, or security breach and, as such, there continues to be risk of system disruptions and security breaches from a cyberattack.
While we have implemented network security and internal control measures, especially for the purpose of protecting our connected products and services from cyberattacks, and invested in our data and information technology infrastructure, these efforts have not always been successful in preventing, and there can be no assurance that these efforts (or any future investments or efforts) will prevent, a system disruption, attack, or security breach.
Economic weakness in any of our significant geographies could cause pet owners in those regions to forgo or defer 27 visits to veterinary hospitals or affect their willingness to approve certain diagnostic tests, comply with a treatment plan or, even more fundamentally, continue to own a pet.
Actual or perceived economic weakness, whether due to inflation or other factors, in any of our significant geographies could cause pet owners in those regions to forgo or defer visits to veterinary hospitals or affect their willingness to approve certain diagnostic tests, comply with a treatment plan or, even more fundamentally, continue to own a pet.
Failure to meet environmental, social and governance (“ESG”) regulations, standards, or expectations or to achieve our ESG goals or targets could adversely affect our business, results of operations, financial condition, reputation, or stock price U.S. and international regulators, as well as our investors, customers, employees, and other stakeholders, are increasingly focused on ESG matters, including climate-related issues; diversity, equity, and inclusion; human capital matters; and responsible sourcing, human rights, and supply chain.
Failure to meet current or evolving environmental, social, and governance regulations, standards, or expectations or to achieve our environmental, social, or governance goals could adversely affect our business, results of operations, financial condition, reputation, or stock price Regulators, as well as our investors, customers, employees, and other stakeholders, are increasingly focused on environmental, social, and governance matters, including climate-related issues; human capital matters; and responsible sourcing, human rights, and supply chain.
Our dependence on third-party suppliers could limit our ability to sell certain products or negatively affect our operating results 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, and perform certain services, including package-delivery services.
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 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.
Consolidation in our customer base, including through increased corporate hospital ownership, and prevalence of buying consortiums could negatively affect our business Veterinarians are our primary customers for our CAG products and services, and the veterinary services industry in the U.S. and abroad has been consolidating at an accelerating rate in recent years.
Consolidation in our customer base, including through increased corporate hospital ownership, and prevalence of buying consortiums could negatively affect our business 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.
The continued use of remote working and hybrid work-from-home arrangements may additionally result in some increased risk of attacks associated with a number of our employees accessing our data and systems remotely.
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.
Increased competition from and technological advances by our competitors could negatively affect our operating results We face intense competition, and we expect that future competition will become even more intense as new products, services and technologies become available, the use of AI and machine learning expands, and new competitors enter the space.
Any such result could have an adverse effect on our results of operations. 22 Increased competition from and technological advances by our competitors could negatively affect our operating results We face intense competition, and we expect that future competition will become even more intense as new products, services and technologies become available, the use of AI and machine learning expands, and new competitors enter the space.
For examples of some of the events that could result in disruption to our supply chain or operations, and negatively impact our operating results, refer to “Various U.S. and foreign government regulations could limit or delay our ability to market and sell our products or otherwise negatively impact our business,” “We are increasingly dependent on the continuous and reliable operation of our information technology systems, and a disruption of these systems or significant security breaches could adversely affect our business” and “Factors and events beyond our control could disrupt our operations, supply chain, and logistics network and adversely affect our business” below.
For examples of some of the events that could result in disruption to our supply chain or operations, and negatively impact our operating results, refer to “Various U.S. and foreign government regulations could limit or delay our ability to market and sell our products or otherwise negatively impact our business,” “We depend on the continuous and reliable operation and security of our information technology systems and our products and services that incorporate or rely on information technology, and any disruption or significant cybersecurity breach or other incident could adversely affect our business” and “Factors and events beyond our control could disrupt our operations, supply chain, and logistics network and adversely affect our business” below.
We process credit card payments electronically over secure networks and also offer products and services that connect to and are part of the “Internet of Things,” such as our connected devices (e.g., IDEXX VetLab instruments). Any such attack or breach could compromise our networks and the information stored thereon could be accessed, publicly disclosed, lost, or stolen.
We process credit card payments electronically over secure networks and offer IoT products and services, such as our connected devices (e.g., IDEXX VetLab instruments). Any such attack or breach could compromise our networks and the information stored thereon could be accessed, publicly disclosed, lost, or stolen.
For more information about the risks related to the protection of our proprietary rights in our products and services, refer to “Our success is heavily dependent on our continued differentiated product and service innovation” below. There has been a recent focus on laws and regulations related to artificial intelligence, including the current U.S. presidential administration, the U.S.
For more information about the risks related to the protection of our proprietary rights in our products and services, refer to “Our success is heavily dependent on our continued differentiated product and service innovation” below. 21 There has been a recent focus in the U.S. on laws and regulations related to artificial intelligence, which cover, among other things, algorithm accountability, privacy, and transparency.
We also manufacture certain of our livestock and poultry testing products in Bern, Switzerland and Montpellier, France. In addition, we maintain major distribution facilities in North America and in the Netherlands and reference laboratories in multiple locations, including Memphis, Tennessee; Kornwestheim, Germany; West Sacramento, California; Elmhurst, Illinois; North Grafton, Massachusetts; Brisbane, Australia; Markham, Ontario; Wetherby, U.K.; and Tokyo, Japan.
In addition, we maintain major distribution facilities in North America and in the Netherlands and reference laboratories in multiple locations, including Memphis, Tennessee; Kornwestheim, Germany; West Sacramento, California; Elmhurst, Illinois; North Grafton, Massachusetts; Brisbane, Australia; Markham, Ontario; Wetherby, U.K.; and Tokyo, Japan.
Regulators in the U.S., Europe, and elsewhere are considering or have proposed or adopted various laws, directives or regulations regarding ESG matters, which include specific, target-driven disclosure requirements or obligations, including the EU Corporate Sustainability Reporting Directive and the proposed EU Corporate Sustainability Due Diligence Directive.
Regulators in the U.S., Europe, and elsewhere are considering or have proposed or adopted various laws, directives or regulations regarding these matters, which include specific, target-driven disclosure requirements or obligations, including the European Union’s Corporate Sustainability Reporting Directive and Corporate Sustainability Due Diligence Directive and California’s Climate Corporate Data Accountability Act and Climate-Related Financial Risk Act.
We have publicly established certain ESG goals and targets aligned with our business strategy. Our ability to achieve any ESG goal or target is subject to numerous risks, many of which are outside of our control and depend in part on third-party performance or data, and there can be no assurance that we will achieve them.
Our ability to achieve any of these goals is subject to numerous risks, many of which are outside of our control and depend in part on third-party performance or data, and there can be no assurance that we will achieve them.
Examples of laws and regulations that have impacted and could, in the future, impact our business include (but are not limited to): • The California Consumer Privacy Act, as amended by the California Privacy Rights Act (“CPRA”), as well as other similar U.S. state laws that may apply to our business operations within a respective state and/or a U.S. federal privacy law that may be passed in the future, all of which may have conflicting requirements that would make compliance challenging. • The European Union’s General Data Protection Regulation (“GDPR”) and similar requirements adopted by the United Kingdom (“UK”) following the UK’s withdrawal from the European Union (“EU”) and the European Economic Area (“EEA”), which impose stringent operational requirements for controllers and processors of personal data of individuals in the EEA and UK. • The China Personal Information Protection Law, the Brazilian General Data Protection Law, the South African Protection of Personal Information Act, the Amendments to the Japanese Act on the Protection of Personal Information, the New Zealand Privacy Act, and the India Digital Personal Data Protection Act.
Some examples of privacy laws include (but are not limited to) the California Consumer Privacy Act, as amended by the California Privacy Rights Act (“CPRA”), various U.S. state consumer privacy laws that apply to our business operations within a respective state and/or a U.S. federal privacy law that may be passed in the future; and the European Union’s General Data Protection Regulation (“GDPR”) and similar requirements adopted by the United Kingdom (“UK”) following the UK’s withdrawal from the European Union (“EU”) and the European Economic Area (“EEA”), which impose stringent operational requirements for controllers and processors of personal data of individuals in the EEA and UK.
In addition, we currently purchase many products, components, and materials from sole or single sources, such as Ortho. Some of these products are proprietary and, therefore, cannot be readily or easily replaced by alternative sources.
In addition, we currently purchase many products, components, and materials from sole or single sources, such as Ortho. Some of these products are proprietary and, therefore, cannot be readily or easily replaced by alternative sources. These products, components, and materials are used in our instruments, consumables and accessories; livestock and poultry diagnostic tests, dairy testing products; and water testing products.
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.
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 particular, we expect the EU-U.S. DPF adequacy decision to be challenged and international transfers to the U.S. and to other jurisdictions more generally to continue to be subject to enhanced scrutiny by regulators.
Data Privacy Framework (the “Swiss-U.S. DPF”), and the UK Extension to the EU-U.S. DPF. We expect the EU-U.S. DPF adequacy decision, adopted in July of 2023, to be challenged and international transfers to the U.S. and to other jurisdictions more generally to continue to be subject to enhanced scrutiny by regulators.
Moreover, any future public health issue such as a resurgence in COVID-19 infections, including due to new variants of the virus for which current vaccines may not be effective, could result in the imposition of new governmental restrictions, quarantine requirements or other measures to slow the spread of the virus, which could result in closures or other restrictions that significantly disrupt our operations or those of our third-party distributors, suppliers or other service providers, or otherwise adversely affect our customers’ businesses or operations, or result in economic weakness or slowdowns in one or more of our key geographies, any of which could adversely affect our financial condition.
Moreover, any future public health issue, pandemic, or outbreak could result in the imposition of new governmental restrictions, quarantine requirements or other public health measures, which could result in closures or other restrictions that significantly disrupt our operations or those of our third-party distributors, suppliers or other service providers, or otherwise adversely affect our customers’ businesses or operations, or result in actual or perceived economic weakness or slowdowns in one or more of our key geographies, any of which could adversely affect our financial condition.
In addition, adverse changes in credit markets could increase our cost of borrowing and make it more difficult for us to obtain financing, which could limit our ability to execute certain strategies and have an adverse effect on our revenue growth and profitability.
In addition, adverse changes in credit markets could increase our cost of borrowing and make it more difficult for us to obtain financing, which could limit our ability to execute certain strategies and have an adverse effect on our revenue growth and profitability. 31 Our senior notes require payment of a prepayment penalty in the event that we elect to repay the notes prior to their stated maturity dates.
The accumulated impacts from any continued, longer-term growth in the value of the U.S. dollar against foreign currencies may have a material adverse effect on our operating results. Refer to “Part II, Item 7A.
The accumulated impacts from any continued, longer-term growth in the value of the U.S. dollar against foreign currencies may have a material adverse effect on our operating results. 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.
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 in obtaining regulatory approvals for new products or product upgrades could have a negative impact on our growth and profitability.
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.
We currently rely on a mixture of mechanisms to transfer certain personal data from the EEA, Switzerland, and the UK to the U.S. and other third countries including the EU-U.S. DPF, the Swiss-U.S. DPF, and the UK Extension to the EU-U.S. DPF. We expect the existing legal complexity and uncertainty regarding international personal data transfers to continue.
An additional area of complexity concerns the restrictions on transfers of personal data from certain countries to others. We currently rely on a mixture of mechanisms to transfer certain personal data from the EEA, Switzerland, and the UK to the U.S. and other third countries including the EU-U.S. Data Privacy Framework (the “EU-U.S. DPF”), the Swiss-U.S.
In addition, these laws and regulations continue to develop and are subject to frequent revisions (and generally have become more stringent over time), are subject to differing interpretations, may be applied inconsistently from jurisdiction to jurisdiction and could be deemed to be inconsistent with our current global privacy policy and data protection practices. 28 While we maintain a program to monitor, assess, and comply with applicable global data privacy laws, compliance with these evolving requirements can be costly, require us to change our business practices in a manner adverse to our business or delay or impede the development and offering of innovative products and services.
While we maintain a program to monitor, assess, and comply with applicable global data privacy laws, compliance with these evolving requirements can be costly, require us to change our business practices in a manner adverse to our business or delay or impede the development and offering of innovative products and services.
We manufacture many of our significant companion animal products, including our rapid assay products and certain instruments and consumables, many of our water testing products and certain of our livestock, poultry, and dairy testing products in Southern Maine. Certain of our companion animal products, as well as our human point-of-care products, are manufactured in Roswell, Georgia.
Certain of our companion animal products, as well as our human point-of-care products, are manufactured in Roswell, Georgia. We also manufacture certain of our livestock and poultry testing products in Bern, Switzerland and Montpellier, France.
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 limit our ability to sell certain products or negatively affect our operating results” above.
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. 26 We manufacture many of our significant companion animal products, including our rapid assay products and certain instruments and consumables, many of our water testing products and certain of our livestock, poultry, and dairy testing products in Southern Maine.
These disruptions could also cause economic slowdowns or increased economic uncertainty. A future public health issue, pandemic, or outbreak of COVID-19 could lead to delays in the manufacturing and supply of products, which could have a material adverse effect on our business and results of operations.
A future public health issue, pandemic, or outbreak could lead to delays in the manufacturing and supply of products, or adversely affect the ability of the USDA, FDA, EPA or other government agencies to timely review and process our regulatory submissions, which could have a material adverse effect on our business and results of operations.
Any failure or perceived failure by us to comply with such requirements could have an adverse impact on our business. 21 We are also subject to a variety of federal, state, local, and international laws and regulations governing our global business practices.
We are also subject to a variety of federal, state, local, and international laws and regulations governing our global business practices.
Furthermore, our investors, customers and other stakeholders have additional (and sometimes different) ESG expectations for companies such as IDEXX. Meeting these emerging and evolving regulations, standards and expectations will require us to make investments, incur compliance costs and create new practices, processes, and 29 procedures.
Meeting these emerging and evolving regulations, standards and expectations will require us to make strategic choices and investments, incur compliance costs, and create new practices, processes, and procedures.
Additionally, other countries have proposed legal frameworks to regulate artificial intelligence, which is a trend that may continue to increase.
Additionally, other countries have proposed legal frameworks to regulate artificial intelligence, which is a trend that may continue to increase. Any failure or perceived failure by us to comply with such requirements could have an adverse impact on our business.
Our customers and/or employees could also face negative consequences such as the compromise of sensitive or critical information or systems.
Additionally, the post-acquisition integration process of acquired companies that may have less sophisticated information systems, cybersecurity practices, or training, may result in an increased risk of cybersecurity incidents. Our customers and/or employees could also face negative consequences such as the compromise of sensitive or critical information or systems.
Quantitative and Qualitative Disclosures About Market Risk” included in this Annual Report on Form 10-K for additional information regarding currency impact. 30 Our foreign currency hedging activities (refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 19.
Our foreign currency hedging activities (refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 19.
In December 2023 the European Parliament and Council reached agreement on the European Union Artificial Intelligence Act, which will establish requirements for the provision and use of products that leverage artificial intelligence, machine learning, and similar technologies, and is expected to take effect in stages throughout 2025 and 2026.
AI-related legislation has also been introduced in a number of U.S. state legislatures. In August 2024, the European Union Artificial Intelligence Act, which establishes requirements for the provision and use of products that leverage artificial intelligence, machine learning, and similar technologies was enacted. This will take effect in stages beginning in February 2025.
For example, current law in Maine will require reporting of intentionally-added PFAS in products beginning in January 2025, and the sale in Maine of any product containing intentionally-added PFAS will be prohibited after 20 January 1, 2030 (subject to certain exceptions to be promulgated by the Maine Department of Environmental Protection).
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.
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These products, components, and materials are used in a majority of our instruments, including our Catalyst Dx, Catalyst One, ProCyte Dx, and ProCyte One analyzers; consumables and accessories used in our instruments; livestock and poultry diagnostic tests, dairy testing products; and water testing products.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRisk Factors, General Risks, We are increasingly dependent on the continuous and reliable operation of our information technology systems, and a disruption of these systems or significant security breaches could adversely affect our business .” Governance of our Cybersecurity Risk Management Program Role of Management Our cybersecurity risk management program and activities are led by our CISO, who reports to Ken Grady, our Senior Vice President and CIO, and oversees a team of information security professionals.
Biggest changeRisk Factors, General Risks, We depend on the continuous and reliable operation and security of our information technology systems and our products and services that incorporate or rely on information technology, and any disruption or significant cybersecurity breach or other incident could adversely affect our business.” Governance of our Cybersecurity Risk Management Program Role of Management Our cybersecurity risk management program and activities are led by a dedicated CISO who is also our Vice President of Information Technology.
Within our cybersecurity risk governance model, the steering committee, which includes our CIO, CISO, General Counsel, Chief Compliance Officer, Chief Audit Executive, Chief Human Resources Officer and other senior functional and business leaders, meets quarterly, and more frequently as warranted, to review and discuss, among other things, cybersecurity risk assessments, prioritization of initiatives, training plans and incident response plan, protocols and testing.
Within our cybersecurity risk governance model, the steering committee, which includes our CIO, CISO, General Counsel, Chief Compliance Officer, Chief Audit Executive, Chief Human Resources Officer and other senior functional and business leaders, meets quarterly, and more frequently as warranted, to review and discuss, among other things, our cybersecurity risk assessments, prioritization of initiatives, training plans and incident response plan, protocols and testing.
Features of our cybersecurity risk management program include: • An expectation, set forth in our Code of Ethics, that all employees are responsible for protecting our data, operations and environment from unauthorized access and use; • Regular cybersecurity risk assessments and benchmarking; • Policies and processes related to the detection and reporting of and response to cybersecurity events; • Cybersecurity training for all newly hired employees upon onboarding; • Individualized, biannual employee information security assessments, coupled with tailored follow-on employee trainings; • Phishing tests conducted at least quarterly on a global basis, with additional periodic phishing tests conducted with high-risk employee groups; • Channels for employees to report suspicious emails or other activity and the actual or suspected loss, theft, improper use of or access to IDEXX systems or information; • Deployment and ongoing assessment of the effectiveness of technological tools aimed at preventing, detecting, and mitigating cybersecurity threats; • Policies and procedures to assess third-party service provider cybersecurity risks and security controls and measures (as part of our procurement process and periodically/regularly thereafter); • Performance of cybersecurity tabletop exercises; • Regular review of and, as applicable, updates to our cyber incident response plan and protocols, system backup measures, redundancy planning and disaster recovery plans; and • Maintenance of a cyber risk insurance policy to help address risk of loss due to certain types of cybersecurity events.
Features of our cybersecurity risk management program include: • An expectation, set forth in our Code of Ethics, that all employees are responsible for protecting our data, operations and environment from unauthorized access and use; • Regular cybersecurity risk assessments and benchmarking; • Policies and processes related to the detection and reporting of and response to cybersecurity events; • Cybersecurity training for all newly hired employees upon onboarding; • Individualized, biannual employee information security assessments, coupled with tailored follow-on employee trainings; • Phishing tests conducted at least quarterly on a global basis, with additional periodic phishing tests conducted with high-risk employee groups; • Channels for employees to report suspicious emails or other activity and the actual or suspected loss, theft, improper use of or access to IDEXX systems or information; • Deployment and ongoing assessment of the effectiveness of technological tools aimed at preventing, detecting, and mitigating cybersecurity threats; • Policies and procedures to assess third-party service provider cybersecurity risks and security controls and measures (as part of our procurement process and periodically thereafter); • Periodic performance of cybersecurity tabletop exercises; • Regular review of and, as applicable, updates to our cyber incident response plan and protocols, system backup measures, redundancy planning and disaster recovery plans; and • Maintenance of a cyber risk insurance policy to help address risk of loss due to certain types of cybersecurity events.
Our CIO is responsible for our cybersecurity-related governance programs, overseeing testing of our compliance with standards and remediation of known risks, and leads our employee training program. Our CIO and CISO are responsible for providing information regarding our cybersecurity risk management program, as well as cybersecurity risks and incidents, to a senior management-level cybersecurity steering committee.
Our CISO, in close collaboration with our CIO is responsible for our cybersecurity-related governance programs, overseeing testing of our compliance with standards and remediation of known risks, and leads our employee training program. Our CISO is responsible for providing information regarding our cybersecurity risk management program, as well as cybersecurity risks and incidents, to a senior management-level cybersecurity steering committee.
The Audit Committee will provide reports to the Board at each regularly scheduled Board meeting of the matters it has recently addressed, including relating to the oversight of our cybersecurity risk management, and the full Board may participate from time to time, as warranted, in the Audit Committee’s sessions on cybersecurity risk management.
The Audit Committee provides reports to the Board at each regularly scheduled Board meeting of the matters it has recently addressed, including relating to the oversight of our cybersecurity risk management, and the full Board may participate, as warranted, in the Audit Committee’s sessions on cybersecurity risk management.
This committee regularly provides updates on its discussions and decisions to our Chief Executive Officer. Role of the Board of Directors In December 2023, the Board delegated responsibility for overseeing our cybersecurity risk management to the Audit Committee.
This committee regularly provides updates on its discussions and decisions to our Chief Executive Officer. Role of the Board of Directors The Audit Committee has responsibility for overseeing our cybersecurity risk management.
In addition, in accordance with the Audit Committee’s charter, the Audit Committee will throughout the year regularly review and discuss with management, including the CIO and CISO, cybersecurity program assessments and audits, planned improvements and the status of any information security initiatives, as well as risks from cybersecurity threats pertinent to us and any previous cybersecurity incidents experienced by us, including any material impact or reasonably likely material impact on the Company, our business strategy, results of operations, or financial condition.
In addition, the Audit Committee regularly reviews and discusses with management, including the CIO and CISO, cybersecurity program assessments and audits, planned improvements and the status of any information security initiatives, as well as risks from cybersecurity threats pertinent to us and any previous cybersecurity incidents experienced by us, including any material impact or reasonably likely material impact on the Company, our business strategy, results of operations, or financial condition.
In accordance with the Audit Committee’s charter, the Audit Committee will at least annually review and discuss with management, including the CIO and CISO, our processes, policies, procedures, and protocols related to cybersecurity and information security, and it is anticipated that the full Board will participate in this annual review.
In accordance with the Audit Committee’s charter, the Audit Committee at least annually reviews and discusses with management, including the CIO and CISO, our processes, policies, procedures, and protocols related to cybersecurity and information security.
Our cybersecurity risk management program includes processes that incorporate and utilize certain principles from the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework, the COBIT 2019 Framework and the IT Infrastructure Library (“ITIL”) Framework.
Our cybersecurity risk management program includes processes that incorporate and utilize certain principles from the National Institute of Standards and Technology Cybersecurity Framework and the Center for Internet Security – Top 18 Critical Security Controls – Control Level Framework.
Outside advisors also may meet from time to time with the Audit Committee or Board, as warranted, to review and discuss cybersecurity matters. Prior to December 2023, our entire Board oversaw cybersecurity risk management, and our CIO and CISO reviewed our cybersecurity risks and risk management program and activities with the Board at least annually.
Outside advisors also may meet from time to time with the Audit Committee or Board, as warranted, to review and discuss cybersecurity matters. 34
At this time, Mr. Grady is our acting CISO while we are conducting a search to hire a new CISO. Mr. Grady, who joined IDEXX as our CIO in 2014, has more than twenty years of experience leading information technology teams, including cybersecurity teams, at healthcare companies.
Our CISO reports to our Senior Vice President and CIO, and oversees a team of information security professionals within the Information Security Group. Our CISO joined IDEXX in 2024 and has more than twenty years of business and technical experience leading information technology teams, including cybersecurity teams, at high tech, marketing and healthcare companies.
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The Board also received additional updates on changes in our cybersecurity risks and related risk management program and activities from time to time throughout the year, as warranted. Management also shared, and will continue to share, the results of our annual enterprise risk assessment, which includes a review of cybersecurity risk, with our full Board. 34

Item 2. Properties

Properties — owned and leased real estate

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Biggest changePrimary Facility Locations Location Functions Own/Lease Westbrook, Maine Worldwide Headquarters, principal executive offices Own Hoofddorp, Netherlands Distribution center, warehousing, International administrative offices Lease Baar, Switzerland EMEA administrative offices Lease Scarborough, Maine Water, LPD and Supply Chain Own Memphis, Tennessee Distribution Center and Reference Lab Lease North Grafton, Massachusetts Reference Lab Own West Sacramento, California Reference Lab Own Kornwestheim, Germany Reference Lab Own Wetherby, United Kingdom Reference Lab Lease Newmarket, United Kingdom Water manufacturing Lease Bern, Switzerland LPD manufacturing Lease Montpellier, France LPD manufacturing Lease Roswell, Georgia OPTI Medical manufacturing Lease Including the locations above, we have over 50 reference laboratories throughout the United States and over 25 reference laboratories internationally, including locations in Europe, Canada, Australia, New Zealand, Asia, and South Africa.
Biggest changePrimary Facility Locations Location Functions Own/Lease Westbrook, Maine Worldwide Headquarters, principal executive offices Own Hoofddorp, Netherlands Distribution center, warehousing, International administrative offices Lease Baar, Switzerland EMEA administrative offices Lease Scarborough, Maine Water, LPD and Supply Chain Own Memphis, Tennessee Distribution Center and Reference Lab Lease North Grafton, Massachusetts Reference Lab Own West Sacramento, California Reference Lab Own Kornwestheim, Germany Reference Lab Own Wetherby, United Kingdom Reference Lab Own Markham, Ontario, Canada Reference Lab Lease Elmhurst, Illinois Reference Lab Lease Newmarket, United Kingdom Water manufacturing Lease Bern, Switzerland LPD manufacturing Lease Montpellier, France LPD manufacturing Lease Roswell, Georgia CAG and OPTI Medical manufacturing Lease Including the locations above, we have over 50 reference laboratories throughout the United States and over 25 reference laboratories internationally, including locations in Europe, Canada, Australia, New Zealand, Asia, and South Africa.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+1 added−1 removed4 unchanged
Biggest changePurchases of Equity Securities by the Issuer During the three months ended December 31, 2023, we repurchased shares of common stock as described below: Period Total Number of Shares Purchased (a) Average Price Paid per Share (b) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) (c) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) (d) October 1, 2023 to October 31, 2023 27,000 $ 404.85 27,000 2,936,817 November 1, 2023 to November 30, 2023 62,509 $ 426.15 62,509 2,874,308 December 1, 2023 to December 31, 2023 141 $ 482.60 — 2,874,308 Total 89,650 (2) 89,509 2,874,308 (1) As of December 31, 2023, our Board of Directors had approved the repurchase of up to 73 million shares of our common stock in the open market or in negotiated transactions pursuant to the Company’s share repurchase program.
Biggest changePurchases of Equity Securities by the Issuer During the three months ended December 31, 2024, we repurchased shares of common stock as described below: Period Total Number of Shares Purchased (a) Average Price Paid per Share (b) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) (c) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) (d) October 1, 2024 to October 31, 2024 177,643 $ 469.14 177,640 6,519,346 November 1, 2024 to November 30, 2024 183,300 $ 427.23 183,300 6,336,046 December 1, 2024 to December 31, 2024 202,602 $ 429.80 202,500 6,133,546 Total 563,545 (2) 563,440 6,133,546 (1) As of December 31, 2024, our Board of Directors had approved the repurchase of up to 78 million shares of our common stock in the open market or in negotiated transactions pursuant to the Company’s share repurchase program, which amount includes the approval of an additional 5 million shares on December 3, 2024.
Refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 20. Repurchases of Common Stock” to the consolidated financial statements for the year ended December 31, 2023, included in this Annual Report on Form 10-K for further information. 36 Dividends We have never declared or paid any cash dividends on our common stock.
Refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 20. Repurchases of Common Stock” to the consolidated financial statements for the year ended December 31, 2024, included in this Annual Report on Form 10-K for further information. 36 Dividends We have never declared or paid any cash dividends on our common stock.
During the year ended December 31, 2023, we repurchased approximately 0.2 million shares of our common stock in transactions made pursuant to our repurchase program and received approximately 0.02 million shares of our common stock that were surrendered by employees in payment for the minimum required withholding taxes due on the vesting of restricted stock units and settlement of deferred stock units.
During the year ended December 31, 2024, we repurchased approximately 1.74 million shares of our common stock in transactions made pursuant to our repurchase program and received approximately 0.02 million shares of our common stock that were surrendered by employees in payment for the minimum required withholding taxes due on the vesting of restricted stock units and settlement of deferred stock units.
This graph assumes the investment of $100 on December 31, 2018, in IDEXX’s common stock, the S&P 500 Index, the S&P 500 Health Care Index, and the NASDAQ Index and assumes dividends, if any, are reinvested. Measurement points are the last trading days of the years ended December 2018 to 2023.
This graph assumes the investment of $100 on December 31, 2019, in IDEXX’s common stock, the S&P 500 Index, the S&P 500 Health Care Index, and the NASDAQ Index and assumes dividends, if any, are reinvested. Measurement points are the last trading days of the years ended December 2019 to 2024.
There were no other repurchase programs outstanding during the three months ended December 31, 2023, and no repurchase programs expired during the period.
There were no other repurchase programs outstanding during the three months ended December 31, 2024, and no repurchase programs expired during the period.
(2) During the three months ended December 31, 2023, we received 141 shares of our common stock that were surrendered by employees in payment for the required withholding taxes due on the vesting of restricted stock units and settlement of deferred stock units.
(2) During the three months ended December 31, 2024, we received 105 shares of our common stock that were surrendered by employees in payment for the required withholding taxes due on the vesting of restricted stock units and settlement of deferred stock units.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is quoted on the NASDAQ Global Select Market under the symbol IDXX. Holders of Common Stock As of February 12, 2024, there were 362 holders of record of our common stock.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is quoted on the NASDAQ Global Select Market under the symbol IDXX. Holders of Common Stock As of February 18, 2025, there were 313 holders of record of our common stock.
The program was approved and announced on August 13, 1999, and the maximum number of shares that may be purchased under the program has been increased by the Board of Directors on numerous occasions. There is no specified expiration date for this repurchase program.
The initial program was approved and announced on August 13, 1999, and the maximum number of shares that may be purchased under the program has been increased by the Board of Directors on numerous occasions. There is no specified expiration date for this repurchase program and it may be suspended or discontinued at any time.
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Historic stock price performance should not be relied on as being indicative of future stock price performance. 2018 2019 2020 2021 2022 2023 IDEXX Laboratories, Inc. $100.00 $140.38 $268.72 $353.97 $219.31 $298.38 NASDAQ Index $100.00 $136.69 $198.10 $242.03 $163.28 $236.17 S&P 500 Index $100.00 $131.49 $155.68 $200.37 $164.08 $207.21 S&P 500 Health Care Index $100.00 $120.82 $137.07 $172.89 $169.51 $172.99
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Historic stock price performance should not be relied on as being indicative of future stock price performance. 2019 2020 2021 2022 2023 2024 IDEXX Laboratories, Inc. $100.00 $191.43 $252.16 $156.23 $212.56 $158.33 NASDAQ Index $100.00 $144.92 $177.06 $119.45 $172.77 $223.87 S&P 500 Index $100.00 $118.40 $152.39 $124.79 $157.59 $197.02 S&P 500 Health Care Index $100.00 $113.45 $143.09 $140.29 $143.18 $146.87

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

119 edited+21 added−23 removed99 unchanged
Biggest changeThe decrease in Other revenue was primarily due to lower sales of OPTI COVID-19 PCR testing products and services, following the discontinuation of active marketing of such products and services in the first quarter of 2023.The impact of currency movements decreased total revenue growth by 0.2%, while the impact of acquisitions increased total revenue growth by 0.1%. 48 The following table presents our total Company results of operations: For the Years Ended December 31, Change Total Company - Results of Operations (dollars in thousands) 2023 Percent of Revenue 2022 Percent of Revenue Amount Percentage Revenues $ 3,660,953 $ 3,367,324 $ 293,629 8.7 % Cost of revenue 1,470,983 1,362,986 107,997 7.9 % Gross profit 2,189,970 59.8 % 2,004,338 59.5 % 185,632 9.3 % Operating Expenses: Sales and marketing 566,066 15.5 % 524,505 15.6 % 41,561 7.9 % General and administrative 335,825 9.2 % 326,248 9.7 % 9,577 2.9 % Research and development 190,951 5.2 % 254,820 7.6 % (63,869) (25.1 %) Total operating expenses 1,092,842 29.9 % 1,105,573 32.8 % (12,731) (1.2 %) Income from operations $ 1,097,128 30.0 % $ 898,765 26.7 % $ 198,363 22.1 % Gross Profit .
Biggest changeThe impact of a business acquisition increased total revenue growth by 0.4%, while the change in foreign currency exchange rates decreased total revenue growth by 0.3%. 48 The following table presents our consolidated Company results of operations: For the Years Ended December 31, Change Total Company - Results of Operations (dollars in thousands) 2024 Percent of Revenue 2023 Percent of Revenue Amount Percentage Revenues $ 3,897,504 $ 3,660,953 $ 236,551 6.5 % Cost of revenue 1,518,577 1,470,983 47,594 3.2 % Gross profit 2,378,927 61.0 % 2,189,970 59.8 % 188,957 8.6 % Operating Expenses: Sales and marketing 588,507 15.1 % 566,066 15.5 % 22,441 4.0 % General and administrative 442,291 11.3 % 335,825 9.2 % 106,466 31.7 % Research and development 219,792 5.6 % 190,951 5.2 % 28,841 15.1 % Total operating expenses 1,250,590 32.1 % 1,092,842 29.9 % 157,748 14.4 % Income from operations $ 1,128,337 29.0 % $ 1,097,128 30.0 % $ 31,209 2.8 % Gross Profit .
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. Comparisons to Prior Periods . Our fiscal years end on December 31.
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. Comparisons to Prior Periods . Our fiscal years end on December 31.
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 for viewing, accessing, 40 storing, and sharing multi-modality diagnostic images. We derive relatively higher margins from our subscription-based products.
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 for viewing, accessing, storing, and sharing multi-modality diagnostic images. We derive relatively higher margins from our subscription-based products.
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 such determination was made. We periodically assess our exposures related to our worldwide provision for income taxes and believe that we have appropriately accrued taxes for contingencies.
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 such determination was made. 43 We periodically assess our exposures related to our worldwide provision for income taxes and believe that we have appropriately accrued taxes for contingencies.
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, Animana, IDEXX Neo, and DVMAX practice management systems provide integrated information solutions, backed by customer support and education.
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.
Our customer commitment arrangements that include up-front consideration paid to customers provide customers with incentives in the form of IDEXX Points or, from time to time, cash, upon entering into multi-year arrangements to purchase annual minimum amounts of future products or services.
Our customer commitment arrangements that include up-front consideration paid to customers provide customers with incentives in the form of IDEXX Points or, from time to time, cash, upon entering into multi-year arrangements to purchase annual minimum amounts of future products and services.
Our latest generation of chemistry, hematology, and urinalysis instruments demonstrates this commitment by offering enhanced ease of use, faster time to results, broader test menu and connectivity to various information technology platforms that enhance the value of the diagnostic information generated by the instruments.
Our latest generation of chemistry, hematology, cytology, and urinalysis instruments demonstrates this commitment by offering enhanced ease of use, faster time to results, broader test menu, and connectivity to various information technology platforms that enhance the value of the diagnostic information generated by the instruments.
We leverage this facility’s know-how, intellectual property, and manufacturing capability to continue to expand the menu and instrument capability of the VetStat and Catalyst platforms for veterinary applications, while reducing our cost of consumables by leveraging experience and economies of scale.
We leverage this facility’s know-how, intellectual 41 property, and manufacturing capability to continue to expand the menu and instrument capability of the VetStat and Catalyst platforms for veterinary applications, while reducing our cost of consumables by leveraging experience and economies of scale.
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 43 determination was made.
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 against 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.
Organic revenue growth should be considered in addition to, and not as a replacement for, or as a superior measure to, revenues reported in accordance with U.S. GAAP, and may not be comparable to similarly titled measures reported by other companies.
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.
IDEXX Web PACS is integrated with Cornerstone, ezyVet, IDEXX Neo, DVMAX, and IDEXX VetConnect PLUS to provide centralized access to diagnostic imaging results alongside patient diagnostic results from any internet connected device. Systems and hardware .
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 .
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.
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 46 as employees or infrastructure.
For the year ended December 31, 2023, recurri ng diagnostic revenue, which is both highly durable and profitable, accounted for approximately 80% of our consolidated revenue. Our in-clinic diagnostic solutions, consisting of our IDEXX VetLab consumable products and SNAP rapid assay test kits, provide real-time reference lab quality diagnostic results for a variety of companion animal diseases and health conditions.
For the year ended December 31, 2024, recurri ng diagnostic revenue, which is both highly durable and profitable, accounted for approximately 80% of our consolidated revenue. Our in-clinic diagnostic solutions, consisting of our IDEXX VetLab consumable products and SNAP rapid assay test kits, provide real-time reference lab quality diagnostic results for a variety of companion animal diseases and health conditions.
We 42 estimate, based on historical experience, and apply judgment to predict the amounts of future customer purchases and expected price adjustments related to these multi-year arrangements.
We estimate, based on historical experience, and apply judgment to predict the amounts of future customer purchases and expected price adjustments related to these multi-year arrangements.
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.
If a customer breaches their agreement, they are required to refund 42 all or a portion of the up-front consideration, or make other repayments, remedial actions, or both.
We generate cash primarily through the payments made by customers for our companion animal veterinary, livestock, poultry, dairy, and water products and services, consulting services, and other various systems and services.
We generate cash primarily through the payments made by customers for our companion animal, livestock, poultry, dairy, and water products and services, consulting services, and other various systems and services.
We differentiate our practice management systems through enhanced functionality, ease of use, and embedded integration with in-clinic IDEXX VetLab instruments and outside reference laboratory test results. 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 differentiate our practice management systems through enhanced functionality, ease of use, and embedded integration with in-clinic IDEXX VetLab instruments and outside reference laboratory test results. We offer 40 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.
The financial covenant is a consolidated leverage ratio test that requires our ratio of debt to earnings before interest, taxes, depreciation, amortization, and share-based compensation, as defined in the Senior Note Agreements and Credit Facility, not to exceed 3.5-to-1. As of December 31, 2023, we were in compliance with the covenants of the Senior Note Agreements and Credit Facility.
The financial covenant is a consolidated leverage ratio test that requires our ratio of debt to earnings before interest, taxes, depreciation, amortization, and share-based compensation, as defined in the Senior Note Agreements and Credit Facility, not to exceed 3.5-to-1. As of December 31, 2024, we were in compliance with the covenants of the Senior Note Agreements and Credit Facility.
Summary of Significant Accounting Policies (v) and (w)” to the consolidated financial statements for the year ended December 31, 2023, included in this Annual Report on Form 10-K for a complete discussion of recent accounting pronouncements adopted and not adopted. 44 RESULTS OF OPERATIONS AND TRENDS Effects of Certain Factors on Results of Operations CAG Trends .
Summary of Significant Accounting Policies (v) and (w)” to the consolidated financial statements for the year ended December 31, 2024, included in this Annual Report on Form 10-K for a complete discussion of recent accounting pronouncements adopted and not adopted. 44 RESULTS OF OPERATIONS AND TRENDS Effects of Certain Factors on Results of Operations CAG Trends .
Revenue” to the consolidated financial statements for the year ended December 31, 2023, included in this Annual Report on Form 10-K for additional information about our revenue recognition policy and criteria for recognizing revenue. We enter into contracts where customers purchase combinations of IDEXX products and services.
Revenue” to the consolidated financial statements for the year ended December 31, 2024, included in this Annual Report on Form 10-K for additional information about our revenue recognition policy and criteria for recognizing revenue. We enter into contracts where customers purchase combinations of IDEXX products and services.
Financial Statements and Supplementary Data, Note 13 Debt” and “Part II, Item 8. Financial Statements and Supplementary Data. Note 16. Commitments, Contingencies and Guarantees” to the consolidated financial statements for the year ended December 31, 2023, included in this Annual Report on Form 10-K, respectively. 58 Financial Covenant .
Financial Statements and Supplementary Data, Note 13 Debt” and “Part II, Item 8. Financial Statements and Supplementary Data. Note 16. Commitments, Contingencies and Guarantees” to the consolidated financial statements for the year ended December 31, 2024, included in this Annual Report on Form 10-K, respectively. 58 Financial Covenant .
The discussion of our financial condition and results of operations and liquidity and capital resources for the year ended December 31, 2021, and year-over-year comparisons between 2022 and 2021, is included in our Annual Report on Form 10-K for the year ended December 31, 2022, within Item 7.
The discussion of our financial condition and results of operations and liquidity and capital resources for the year ended December 31, 2022, and year-over-year comparisons between 2023 and 2022, is included in our Annual Report on Form 10-K for the year ended December 31, 2023, within Item 7.
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.
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.
Segment Reporting” to the consolidated financial statements for the year ended December 31, 2023, 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.
Segment Reporting” to the consolidated financial statements for the year ended December 31, 2024, 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.
We believe that building and maintaining a well-managed and disciplined infrastructure have helped minimize impacts of supply chain constraints, including product and component availability issues, logistics challenges, including extended shipping periods and delays, and inflationary pressures.
We believe that building and maintaining a well-managed and disciplined infrastructure has helped minimize impacts of supply chain constraints, including product and component availability issues, logistics challenges, including extended shipping periods and delays, and inflationary pressures.
We account for the customer’s right to earn rebates on future purchases as a separate performance obligation and determine the standalone selling price based on an estimate of rebates the customer will earn over the term of the program.
We account for the customer’s right to earn rebates on future purchases as a separate performance obligation and determine the standalone selling price based on an estimate of rebates the customer will earn over the term of the arrangement.
If our judgment as to the likely resolution of the uncertainty changes, if the uncertainty is ultimately settled or if the statute of limitation related to the uncertainty expires, the effects of the change would be recognized in the period in which the change, resolution or expiration occurs.
If our judgment as to the likely resolution of the uncertainty changes, if the uncertainty is ultimately settled, or if the statute of limitations related to the uncertainty expires, the effects of the change would be recognized in the period in which the change, resolution, or expiration occurs.
Financial Statements and Supplementary Data, Note 16. Commitments, Contingencies and Guarantees.” For more information on our future lease payments, refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 8. Leases” for our minimum lease payment schedule.
Financial Statements and Supplementary Data, Note 16. Commitments, Contingencies and Guarantees.” For more information on our future lease payments, refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 8. Lease Commitments” for our minimum lease payment schedule.
The net effects of changes in foreign currency exchange rates are related to changes in exchange rates between the U.S. dollar and the functional currencies of our foreign subsidiaries. These changes will fluctuate each year as the value of the U.S. dollar relative to the value of the foreign currencies change.
The net effect of changes in foreign currency exchange rates are related to changes in exchange rates between the U.S. dollar and the functional currencies of our foreign subsidiaries. These changes will fluctuate each year as the value of the U.S. dollar relative to the value of foreign currencies changes.
The currency control restricted cash is generally available for use within the country where it is held. 55 The following table presents additional key information concerning working capital: For the Three Months Ended December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 Days sales outstanding (1) 46.1 45.6 43.9 42.9 43.4 Inventory turns (2) 1.3 1.3 1.3 1.3 1.3 (1) Days sales outstanding represents the average of the accounts receivable balances at the beginning and end of each quarter divided by revenue for that quarter, the result of which is then multiplied by 91.25 days.
The currency control restricted cash is generally available for use within the country where it is held. 55 The following table presents additional key information concerning working capital: For the Three Months Ended December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 Days sales outstanding (1) 47.1 48.9 47.3 45.7 46.1 Inventory turns (2) 1.3 1.3 1.4 1.3 1.3 (1) Days sales outstanding represents the average of the accounts receivable balances at the beginning and end of each quarter divided by revenue for that quarter, the result of which is then multiplied by 91.25 days.
Differences between estimated and actual customer purchases may impact the timing and amount of revenue recognition during the term of the customer arrangement, and a 10% change in these estimates would have increased or reduced contract assets and cumulative recognized revenue related to these programs by approximately $5.5 million at December 31, 2023.
Differences between estimated and actual customer purchases may impact the timing and amount of revenue recognition during the term of the customer arrangement, and a 10% change in these estimates would have increased or reduced contract assets and cumulative recognized revenue related to these programs by approximately $7.5 million as of December 31, 2024.
Differences between estimated and actual customer purchases may impact the timing and amount of revenue recognition during the term of the customer arrangement, and a 10% change in these estimates would have increased or reduced cumulative recognized revenue related to these programs by approximately $1.3 million at December 31, 2023.
Differences between estimated and actual customer purchases may impact the timing and amount of revenue recognition during the term of the customer arrangement, and a 10% change in these estimates would have increased or reduced cumulative recognized revenue related to these programs by approximately $1.1 million as of December 31, 2024.
Under the Credit Facility, we also pay quarterly commitment fees ranging from 0.075% to 0.25%, based on our leverage ratio, on any unused commitment. 57 Under the Credit Facility, the net repayment and borrowing activity resulted in increased cash used of $834.5 million during 2023, compared to 2022.
Under the Credit Facility, we also pay quarterly commitment fees ranging from 0.075% to 0.25%, based on our leverage ratio, on any unused commitment. 57 Under the Credit Facility, the net repayment and borrowing activity resulted in increased cash used of $329.0 million during 2024, compared to 2023.
Up-front incentives to customers are not made in exchange for distinct goods or services and are capitalized as consideration paid to customers (previously referred to as “customer acquisition costs”) within other current and long-term assets, which are subsequently recognized as a reduction to revenue over the term of the customer arrangement.
Up-front incentives to customers 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.
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 purchase of products and services, partly offsetting rebates as they are earned. We estimate, based on historical experience, and apply judgment to predict the amounts of future customer rebates related to these multi-year arrangements.
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 purchase of products and services. We estimate, based on historical experience, and apply judgment to predict the amounts of future customer rebates related to these multi-year arrangements.
Differences between estimated and actual customer rebates may impact the timing and amount of revenue recognition during the term of the customer arrangement, and a 10% change in these estimates would have increased or reduced deferred revenue and cumulative recognized revenue related to these programs by approximately $0.1 million at December 31, 2023.
Differences between estimated and actual customer rebates may impact the timing and amount of revenue recognition during the term of the customer arrangement, and a 10% change in these estimates would have increased or reduced deferred revenue and cumulative recognized revenue related to these programs by approximately $0.3 million as of December 31, 2024.
The general availability of funds under the Credit Facility was further reduced by $1.5 million for letters of credit that were issued primarily in connection with our workers' compensation policy at December 31, 2023, and 2022. The Credit Facility contains affirmative, negative, and financial covenants customary for financings of this type.
The general availability of funds under the Credit Facility was further reduced by $1.9 million and $1.5 million for letters of credit that were issued primarily in connection with our workers' compensation policy as of December 31, 2024, and December 31, 2023, respectively. The Credit Facility contains affirmative, negative, and financial covenants customary for financings of this type.
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, IDEXX Neo, and DVMAX practice management systems to customers primarily in North America, Australia, and New Zealand.
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.
We primarily fund our share repurchases with cash generated from operations, as well as from various capital market activities, including the committed available financing through our Credit Facility. C ash used to repurchase shares of our common s tock decreased by $747.8 million during 2023 , compared to 2022. Refer to “Part II, Item 8.
We primarily fund our share repurchases with cash generated from operations, as well as from various capital market activities, including the committed available financing through our Credit Facility. C ash used to repurchase shares of our common s tock increased by $765.1 million during 2024 , compared to 2023. Refer to “Part II, Item 8.
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 8% on a same-store basis during 2023, faster than approximately 6% growth in overall clinic revenues.
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% on a same-store basis during 2024, faster than approximately 3% growth in overall practice revenues.
The net proceeds of the Term Loan were used to repay previously incurred revolver borrowings under the Credit Facility. The Term Loan is subject to the same affirmative and negative covenants and events of default as the borrowings previously incurred pursuant to the Credit Facility.
The Term Loan matures on October 20, 2025. The net proceeds of the Term Loan were used to repay previously incurred revolver borrowings under the Credit Facility. The Term Loan is subject to the same affirmative and negative covenants and events of default as the borrowings previously incurred pursuant to the Credit Facility.
Accordingly, we did not record any liabilities for these obligations at December 31, 2023 and 2022, and do not anticipate any future payments for these guarantees. As of December 31, 2023, our remaining obligation associated with the deemed repatriation tax resulting from the Tax Cut and Jobs Act of 2017 is $21.8 million.
Accordingly, we did not record any liabilities for these obligations as of December 31, 2024, and 2023, and do not anticipate any future payments for these guarantees. As of December 31, 2024, we paid our remaining obligation associated with the deemed repatriation tax resulting from the Tax Cuts and Jobs Act of 2017 for $21.8 million.
For the year ended December 31, 2023, approximately 21% of our consolidated revenue was derived from products manufactured or sourced in U.S. dollars and sold internationally in local currencies, compared to 21% for the year ended December 31, 2022, and 23% for the year ended December 31, 2021.
For the year ended December 31, 2024, approximately 22% of our consolidated revenue was derived from products manufactured or sourced in U.S. dollars and sold internationally in local currencies, compared to 21% for both the years ended December 31, 2023, and December 31, 2022.
As of December 31, 2023, we had a remaining borrowing availability of $998.5 million under our $1.25 billion Credit Facility with $250.0 million outstanding borrowing under the Credit Facility. The general availability of funds under our Credit Facility is reduced by $1.5 million for outstanding letters of credit.
As of December 31, 2024, we had a remaining borrowing availability of $998.1 million under our $1.25 billion Credit Facility, with $250.0 million in outstanding borrowings under the Credit Facility. The general availability of funds under our Credit Facility is reduced by $1.9 million for outstanding letters of credit.
We market our Animana offering to customers primarily throughout Europe. Our diagnostic imaging systems offer a convenient radiographic solution that provides superior image quality and the ability to share images with clients virtually anywhere. IDEXX imaging software enables enhanced diagnostic features and streamlined integration with our other products and services.
Our diagnostic imaging systems offer a convenient radiographic solution that provides superior image quality and the ability to share images with clients virtually anywhere. IDEXX imaging software enables enhanced diagnostic features and streamlined integration with our other products and services.
The increase in IDEXX VetLab consumables revenue was primarily due to higher price realization and higher sales volumes, supported by the expansion of our installed base of instruments and our expanded menu of available tests. The impact of currency movements decreased revenue growth by 0.3%.
The increase in IDEXX VetLab consumables revenue was primarily due to higher price realization and, to a lesser extent, higher sales volumes, supported by the expansion of our installed base of instruments and our expanded menu of available tests. The change in foreign currency exchange rates decreased revenue growth by 0.3%.
Although we have several patents and licenses of patents and technologies from third parties that expired during 2023, and several that are expected to expire in 2024 and beyond, the expiration of these patents or licenses, individually or in the aggregate, is not expected to have a material effect on our financial position or future operations due to a range of factors as described in “Part I, Item 1.
Although certain patents and licenses of patents and technologies from third parties periodically expire, the expiration of these patents or licenses, individually or in the aggregate, is not expected to have a material effect on our financial position or future operations due to a range of factors as described in “Part I, Item 1.
At December 31, 2023, we had $250.0 million outstanding on our line of credit, all of which was on our $250.0 million Term Loan under the Credit Facility. At December 31, 2022, we had $329.0 million outstanding on our line of credit and a $250.0 million Term Loan, for a total of $579.0 million outstanding 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.
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. 45 Economic conditions can also affect the purchasing decisions of our Water and LPD business 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.
Our cash disbursements are primarily related to compensation and benefits for our employees, inventory and supplies, taxes, research and development, capital expenditures, rents, occupancy-related charges, interest expense, and business acquisitions. At December 31, 2023, we had $453.9 million of cash and cash equivalents, compared to $112.5 million on December 31, 2022.
Our cash disbursements are primarily related to compensation and benefits for our employees, inventory and supplies, repurchase of our common stock, taxes, research and development, capital expenditures, rents, occupancy-related charges, interest expense, and business acquisitions. As of December 31, 2024, we had $288.3 million of cash and cash equivalents, compared to $453.9 million as of December 31, 2023.
At December 31, 2023, we were in compliance with the covenants of the Credit Facility.
As of December 31, 2024, we were in compliance with the covenants of the Credit Facility.
Cash and cash equivalents at December 31, 2023, included approximately USD $1.7 million in cash denominated in non-U.S. currencies held in countries with currency control restrictions, which limit our ability to transfer funds outside of the countries in which they are held.
Cash and cash equivalents as of December 31, 2024, included approximately USD $1.0 million in cash denominated in non-U.S. currencies held in a country with currency control restrictions, which limit our ability to transfer funds outside of the country in which they are held without incurring costs.
Our purchase obligations beyond 2024 are approximately $55.2 million. These purchase obligation amounts do not include amounts recorded in accounts payable as of December 31, 2023. The expected timing of payments of our purchase obligations is estimated based on current information.
As of December 31, 2024, we had approximately $211.0 million in purchase obligations due in 2025. Our purchase obligations beyond 2025 are approximately $168.7 million. These purchase obligation amounts do not 59 include amounts recorded in accounts payable, as of December 31, 2024. The expected timing of payments of our purchase obligations is estimated based on current information.
We have not incurred material expenses in discharging any of these indemnification obligations and, based on our analysis of the nature of the risks involved, we believe that the fair value of these agreements is minimal.
In many cases, we limit the maximum amount of our indemnification obligations, but in some cases those obligations may be theoretically unlimited. We have not incurred material expenses in discharging any of these indemnification obligations and, based on our analysis of the nature of the risks involved, we believe that the fair value of these agreements is minimal.
The following table presents cash, cash equivalents and marketable securities held domestically, and by our foreign subsidiaries: For the Years Ended December 31, Cash and cash equivalents (in thousands) 2023 2022 U.S. $ 324,434 $ 16,112 Foreign 129,498 96,434 Total $ 453,932 $ 112,546 Total cash, cash equivalents and marketable securities held in U.S. dollars by our foreign subsidiaries $ 13,170 $ 6,647 Of the $453.9 million of cash and cash equivalents held as of December 31, 2023, $163.1 million was held as bank deposits at a diversified group of institutions, primarily systemically important banks, and $290.8 million was held in a U.S. government money market fund.
The following table presents cash, cash equivalents, and marketable securities held domestically and by our foreign subsidiaries: For the Years Ended December 31, Cash and cash equivalents (in thousands) 2024 2023 U.S. $ 145,118 $ 324,434 Foreign 143,148 129,498 Total $ 288,266 $ 453,932 Total cash, cash equivalents and marketable securities held in U.S. dollars by our foreign subsidiaries $ 10,623 $ 13,170 Of the $288.3 million of cash and cash equivalents held as of December 31, 2024, $148.7 million was held as bank deposits at a diversified group of institutions, primarily systemically important banks, and $139.6 million was held in a U.S. government money market fund.
Our facility in Roswell, Georgia develops and manufactures the OPTI product lines using the same or similar technology to support the electrolyte requirements of certain CAG products.
During the first quarter of 2023, we discontinued actively marketing our COVID-19 testing products and services. Our facility in Roswell, Georgia, develops and manufactures the OPTI product lines using the same or similar technology to support the electrolyte requirements of certain CAG products.
The overall change in foreign currency exchange rates was not significant to operating expense growth. 52 Livestock, Poultry and Dairy The following table presents the LPD segment results of operations: For the Years Ended December 31, Change Results of Operations (dollars in thousands) 2023 Percent of Revenue 2022 Percent of Revenue Amount Percentage Revenues $ 121,659 $ 122,607 $ (948) (0.8 %) Cost of revenue 56,219 49,606 6,613 13.3 % Gross profit 65,440 53.8 % 73,001 59.5 % (7,561) (10.4 %) Operating Expenses: Sales and marketing 25,798 21.2 % 23,491 19.2 % 2,307 9.8 % General and administrative 17,174 14.1 % 17,119 14.0 % 55 0.3 % Research and development 12,493 10.3 % 12,582 10.3 % (89) (0.7 %) Total operating expenses 55,465 45.6 % 53,192 43.4 % 2,273 4.3 % Income from operations $ 9,975 8.2 % $ 19,809 16.2 % $ (9,834) (49.6 %) Revenue .
The change in foreign currency exchange rates was not significant to operating expense growth. 52 Livestock, Poultry and Dairy The following table presents the LPD segment results of operations: For the Years Ended December 31, Change Results of Operations (dollars in thousands) 2024 Percent of Revenue 2023 Percent of Revenue Amount Percentage Revenues $ 122,060 $ 121,659 $ 401 0.3 % Cost of revenue 59,500 56,219 3,281 5.8 % Gross profit 62,560 51.3 % 65,440 53.8 % (2,880) (4.4 %) Operating Expenses: Sales and marketing 28,027 23.0 % 25,798 21.2 % 2,229 8.6 % General and administrative 16,716 13.7 % 17,174 14.1 % (458) (2.7 %) Research and development 11,184 9.2 % 12,493 10.3 % (1,309) (10.5 %) Total operating expenses 55,927 45.8 % 55,465 45.6 % 462 0.8 % Income from operations $ 6,633 5.4 % $ 9,975 8.2 % $ (3,342) (33.5 %) Revenue .
This projected increase in the effective tax rate over the full year 2023 effective tax rate, is primarily due to the non-recurring reductions in our December 31, 2023, effective tax rate associated with the release of valuation allowances. 54 LIQUIDITY AND CAPITAL RESOURCES We fund the capital needs of our business through cash on hand, funds generated from operations, proceeds from long-term senior note financings, and amounts available under our Credit Facility.
This increase in the projected 2025 effective tax rate is primarily due to estimated reductions in tax benefits, compared to 2024, from share-based compensation and from the release of tax reserves related to uncertain tax positions. 54 LIQUIDITY AND CAPITAL RESOURCES We fund the capital needs of our business through cash on hand, funds generated from operations, proceeds from long-term senior note financings, and amounts available under our Credit Facility.
Our total capital expenditure plan for 2024 is estimated to be approximately $180.0 million, which includes capital investments in manufacturing and operations facilities to support growth, as well as investments in customer-facing software.
Our total capital expenditure plan for 2025 is estimated to be approximately $160.0 million, which includes capital investments in manufacturing and operations facilities to support growth, as well as investments in customer-facing software development. Financing Activities . Cash used by financing activities was $878.1 million during 2024, compared to $442.0 million used during 2023.
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.
Animana, ezyVet, and IDEXX Neo practice management systems are subscription-based SaaS offerings designed to provide flexible pricing and a durable, recurring revenue stream, while utilizing cloud technology instead of a client server platform. We also offer add-on subscription services such as Pet Health Network Pro, Vello, Petly Plans, and credit card processing.
The overall change in foreign currency exchange rates was not significant to operating expense growth. 51 Water The following table presents the Water segment results of operations: For the Years Ended December 31, Change Results of Operations (dollars in thousands) 2023 Percent of Revenue 2022 Percent of Revenue Amount Percentage Revenues $ 168,149 $ 155,720 $ 12,429 8.0 % Cost of revenue 52,148 45,861 6,287 13.7 % Gross profit 116,001 69.0 % 109,859 70.5 % 6,142 5.6 % Operating Expenses: Sales and marketing 21,249 12.6 % 18,564 11.9 % 2,685 14.5 % General and administrative 15,655 9.3 % 14,353 9.2 % 1,302 9.1 % Research and development 4,757 2.8 % 4,423 2.8 % 334 7.6 % Total operating expenses 41,661 24.8 % 37,340 24.0 % 4,321 11.6 % Income from operations $ 74,340 44.2 % $ 72,519 46.6 % $ 1,821 2.5 % Revenue .
The change in foreign currency exchange rates was not significant to operating expense growth. 51 Water The following table presents the Water segment results of operations: For the Years Ended December 31, Change Results of Operations (dollars in thousands) 2024 Percent of Revenue 2023 Percent of Revenue Amount Percentage Revenues $ 185,112 $ 168,149 $ 16,963 10.1 % Cost of revenue 55,101 52,148 2,953 5.7 % Gross profit 130,011 70.2 % 116,001 69.0 % 14,010 12.1 % Operating Expenses: Sales and marketing 23,149 12.5 % 21,249 12.6 % 1,900 8.9 % General and administrative 16,873 9.1 % 15,655 9.3 % 1,218 7.8 % Research and development 5,456 2.9 % 4,757 2.8 % 699 14.7 % Total operating expenses 45,478 24.6 % 41,661 24.8 % 3,817 9.2 % Income from operations $ 84,533 45.7 % $ 74,340 44.2 % $ 10,193 13.7 % Revenue .
Similar to our veterinary instruments and 41 consumables strategy, a substantial portion of the revenues from this product line is derived from the sale of consumables for use on the installed base of electrolyte and blood gas analyzers.
Similar to our veterinary instruments and consumables strategy, a substantial portion of the revenues from this product line is derived from the sale of consumables for use on the installed base of electrolyte and blood gas analyzers. Previously, we also provided human testing solutions for the detection of SARS-CoV-2, the virus that causes COVID-19.
On October 20, 2022, pursuant to the terms of the Credit Facility, the term lenders thereunder provided us, as borrower, an incremental term loan in an aggregate principal amount of $250.0 million (the “Term Loan”). The Term Loan matures on October 20, 2025.
Under the $1.25 billion Credit Facility, the $1.0 billion unsecured credit line matures on December 9, 2026, and requires no scheduled prepayments before that date. On October 20, 2022, pursuant to the terms of the Credit Facility, the term lenders thereunder provided us, as borrower, an incremental term loan in an aggregate principal amount of $250.0 million (the “Term Loan”).
We believe the efforts required to convert and retain these acquired customers are similar in nature to our existing customer base and therefore are included in organic revenue growth. 46 We also use Adjusted EBITDA, gross debt, net debt, gross debt to Adjusted EBITDA ratio and net debt to Adjusted EBITDA ratio, all of which are non-GAAP financial measures that should be considered in addition to, and not as a replacement for, financial measures presented according to U.S.
We also use Adjusted EBITDA, gross debt, net debt, gross debt to Adjusted EBITDA ratio, and net debt to Adjusted EBITDA ratio, all of which are non-GAAP financial measures that should be considered in addition to, and not as a replacement for, financial measures presented according to U.S. GAAP.
RECENT ACCOUNTING PRONOUNCEMENTS Refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 2.
Income Taxes” in the accompanying Notes to consolidated financial statements for more information. RECENT ACCOUNTING PRONOUNCEMENTS Refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 2.
(2) Inventory turns represent inventory-related cost of product revenue for the 12 months preceding each quarter-end divided by the average inventory balances at the beginning and end of each quarter.
(2) Inventory turns are calculated as the ratio our inventory-related cost of revenue for the quarter multiplied by four, divided by the average inventory balances at the beginning and end of each quarter.
With our SmartFlow and Vet Radar cloud technology, we are able to improve overall patient management through coordination and tracking of every step in a patient workflow.
With our SmartFlow and Vet Radar cloud technology, we are able 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 practice management system workflow.
The overall change in foreign currency exchange rates was not significant to operating expense growth. 49 Companion Animal Group The following table presents revenue by product and service category for CAG: For the Years Ended December 31, Net Revenue (dollars in thousands) 2023 2022 Dollar Change Reported Revenue Growth (1) Percentage Change from Currency Percentage Change from Acquisitions Organic Revenue Growth (1) CAG Diagnostics recurring revenue: $ 2,935,425 $ 2,660,280 $ 275,145 10.3 % (0.2 %) — 10.5 % IDEXX VetLab consumables 1,188,261 1,057,236 131,025 12.4 % (0.3 %) — 12.7 % Rapid assay products 344,494 313,667 30,827 9.8 % (0.2 %) — 10.0 % Reference laboratory diagnostic and consulting services 1,278,617 1,178,113 100,504 8.5 % (0.1 %) — 8.6 % CAG Diagnostics services and accessories 124,053 111,264 12,789 11.5 % (0.3 %) — 11.8 % CAG Diagnostics capital - instruments 137,603 147,326 (9,723) (6.6 %) (0.1 %) — (6.5 %) Veterinary software, services and diagnostic imaging systems: 279,328 251,187 28,141 11.2 % (0.2 %) — 11.4 % Recurring revenue 214,597 180,973 33,624 18.6 % (0.2 %) — 18.8 % Systems and hardware 64,731 70,214 (5,483) (7.8 %) (0.2 %) — (7.6 %) Net CAG revenue $ 3,352,356 $ 3,058,793 $ 293,563 9.6 % (0.2 %) — 9.8 % (1) Reported revenue growth and organic revenue growth may not recalculate due to rounding.
The change in foreign currency exchange rates was not significant to operating expense growth. 49 Companion Animal Group The following table presents revenue by product and service category for CAG: For the Years Ended December 31, Net Revenue (dollars in thousands) 2024 2023 Dollar Change Reported Revenue Growth (1) Percentage Change from Currency Percentage Change from Acquisitions Organic Revenue Growth (1) CAG Diagnostics recurring revenue: $ 3,129,492 $ 2,935,425 $ 194,067 6.6 % (0.2 %) — 6.8 % IDEXX VetLab consumables 1,303,250 1,188,261 114,989 9.7 % (0.3 %) — 10.0 % Rapid assay products 359,754 344,494 15,260 4.4 % (0.3 %) — 4.7 % Reference laboratory diagnostic and consulting services 1,336,121 1,278,617 57,504 4.5 % (0.1 %) — 4.6 % CAG Diagnostics services and accessories 130,367 124,053 6,314 5.1 % (0.4 %) — 5.5 % CAG Diagnostics capital - instruments $ 131,928 $ 137,603 $ (5,675) (4.1 %) (0.8 %) — (3.4 %) Veterinary software, services and diagnostic imaging systems: $ 312,624 $ 279,328 $ 33,296 11.9 % (0.1 %) 4.7 % 7.3 % Recurring revenue 250,359 214,597 35,762 16.7 % — 6.0 % 10.7 % Systems and hardware 62,265 64,731 (2,466) (3.8 %) (0.1 %) 0.3 % (4.0 %) Net CAG revenue $ 3,574,044 $ 3,352,356 $ 221,688 6.6 % (0.2 %) 0.4 % 6.4 % (1) Reported revenue growth and organic revenue growth may not recalculate due to rounding.
Financing Activities . Cash used by financing activities was $442.0 million during 2023, compared to $370.9 million used during 2022. The increase in cash used by financing activities was primarily due to $329.0 million cash used for repayments under our Credit Facility in the current year, compared to borrowings of $505.5 million under our Credit Facility in the prior year.
This increase in cash used by financing was partially offset by no borrowings or repayments under our Credit Facility during the current year, compared to repayments of $329.0 million under our Credit Facility during the prior year.
CAG Diagnostics Capital – Instrument Revenue . T he decrease in instrument revenue was primarily due to instrument sales mix, program pricing effects and the regional mix of instrument placements, partially offset by higher premium instrument placements. The impact of currency movements decreased revenue growth by 0.1%. Veterinary Software, Services, and Diagnostic Imaging Systems Revenue .
T he decrease in instrument revenue was primarily due to program effects on pricing, partially offset by higher ProCyte One and SediVue Dx placements. The change in foreign currency exchange rates decreased revenue growth by 0.8%. Veterinary Software, Services, and Diagnostic Imaging Systems Revenue .
The following details our consolidated leverage ratio calculation: (in thousands) Twelve Months Ended Trailing 12 Months Adjusted EBITDA: December 31, 2023 Net income attributable to stockholders $ 845,042 Interest expense 41,581 Provision for income taxes 216,134 Depreciation and amortization 114,908 Acquisition-related expense 27 Share-based compensation expense 59,739 Extraordinary and other non-recurring non-cash charges 1,484 Adjusted EBITDA $ 1,278,915 (dollars in thousands) Twelve Months Ended Debt to Adjusted EBITDA Ratio: December 31, 2023 Line of credit $ 250,000 Current and long-term portion of long-term debt 697,880 Total debt 947,880 Acquisition-related consideration payable 287 Deferred financing costs 308 Gross debt $ 948,475 Gross debt to Adjusted EBITDA ratio 0.74 Cash and cash equivalents $ (453,932) Net debt $ 494,543 Net debt to Adjusted EBITDA ratio 0.39 Commitments, Contingencies and Guarantees For more information regarding our commitments, contingencies and guarantees, refer to “Part II, Item 8.
The following details our consolidated leverage ratio calculation: (in thousands) Twelve Months Ended Trailing 12 Months Adjusted EBITDA: December 31, 2024 Net income attributable to stockholders $ 887,867 Interest expense 31,205 Provision for income taxes 221,964 Depreciation and amortization 129,936 Acquisition-related expense 204 Share-based compensation expense 60,295 Extraordinary and other non-recurring non-cash charges 250 Adjusted EBITDA $ 1,331,721 (dollars in thousands) Twelve Months Ended Debt to Adjusted EBITDA Ratio: December 31, 2024 Line of credit $ 250,000 Current and long-term portion of long-term debt 617,573 Total debt 867,573 Acquisition-related consideration payable 2,587 Deferred financing costs 230 Gross debt $ 870,390 Gross debt to Adjusted EBITDA ratio 0.65 Cash and cash equivalents $ (288,266) Net debt $ 582,124 Net debt to Adjusted EBITDA ratio 0.44 Commitments, Contingencies and Guarantees For more information regarding our commitments, contingencies, and guarantees, refer to “Part II, Item 8.
The overall change in foreign currency exchange rates was not significant to operating expense growth. 53 Other The following table presents the Other results of operations: For the Years Ended December 31, Change Results of Operations (dollars in thousands) 2023 Percent of Revenue 2022 Percent of Revenue Amount Percentage Revenues $ 18,789 $ 30,204 $ (11,415) (37.8 %) Cost of revenue 12,686 15,303 (2,617) (17.1 %) Gross profit 6,103 32.5 % 14,901 49.3 % (8,798) (59.0 %) Operating Expenses: Sales and marketing 1,761 9.4 % 1,795 5.9 % (34) (1.9 %) General and administrative 3,295 17.5 % 6,030 20.0 % (2,735) (45.4 %) Research and development 974 5.2 % 1,588 5.3 % (614) (38.7 %) Total operating expenses 6,030 32.1 % 9,413 31.2 % (3,383) (35.9 %) Income from operations $ 73 0.4 % $ 5,488 18.2 % $ (5,415) (98.7 %) Revenue .
The change in foreign currency exchange rates was not significant to operating expense growth. 53 Other The following table presents the Other results of operations: For the Years Ended December 31, Change Results of Operations (dollars in thousands) 2024 Percent of Revenue 2023 Percent of Revenue Amount Percentage Revenues $ 16,288 $ 18,789 $ (2,501) (13.3 %) Cost of revenue 9,112 12,686 (3,574) (28.2 %) Gross profit 7,176 44.1 % 6,103 32.5 % 1,073 17.6 % Operating Expenses: Sales and marketing 1,160 7.1 % 1,761 9.4 % (601) (34.1 %) General and administrative 6,504 39.9 % 3,295 17.5 % 3,209 97.4 % Research and development 757 4.6 % 974 5.2 % (217) (22.3 %) Total operating expenses 8,421 51.7 % 6,030 32.1 % 2,391 39.7 % Income from operations $ (1,245) (7.6 %) $ 73 0.4 % $ (1,318) (1,805.5 %) Revenue .
Excluding the impact of foreign currency movements, the increase in the gross profit margin was primarily due to higher realized prices, partially offset by higher product costs. Operating Expenses . Sales and marketing expense increased p rimarily due to higher personnel-related and travel costs. General and administrative expense increased primarily due to higher personnel-related costs.
The change in foreign currency exchange rates on the gross profit margin was not significant. Operating Expenses . Sales and marketing expense increased p rimarily due to higher personnel-related costs and marketing expenses. General and administrative expense increased primarily due to higher personnel-related costs and an increase in bad debt expense.
Our net liability for uncertain tax positions was $25.0 million as of December 31, 2023, and $25.8 million as of December 31, 2022, which includes estimated interest expense and penalties. Refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 14. Income Taxes” in the accompanying Notes to consolidated financial statements for more information.
Our net liability for uncertain tax positions was $18.1 million as of December 31, 2024, and $22.3 million as of December 31, 2023. We also accrue for estimated interest expense and penalties on our uncertain tax positions. Refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 14.
Gross profit increased due to higher pricing and sales volumes, which supported a 30 basis point increase in the gross profit margin. The impact from foreign currency movements decreased the gross profit margin by approximately 60 basis points, primarily from the impact of lower hedge gains in the current year compared to the prior year.
The change in foreign currency exchange rates decreased the gross profit margin by approximately 30 basis points, including the impact of higher hedge gains in the current year compared to the prior year. Operating Expenses . Sales and marketing expense increased primarily due to higher personnel-related costs.
Unless otherwise stated, the analysis and discussion of our financial condition, results of operations and liquidity, including references to growth and organic growth and increases and decreases, are being compared to the equivalent prior year period. 47 Twelve Months Ended December 31, 2023, Compared to Twelve Months Ended December 31, 2022 Total Company The following table presents revenue by operating segment by U.S. and non-U.S., or international geographies: For the Years Ended December 31, Net Revenue (dollars in thousands) 2023 2022 Dollar Change Reported Revenue Growth (1) Percentage Change from Currency Percentage Change from Acquisitions Organic Revenue Growth (1) CAG $ 3,352,356 $ 3,058,793 $ 293,563 9.6 % (0.2 %) — 9.8 % United States 2,282,507 2,073,222 209,285 10.1 % — — 10.1 % International 1,069,849 985,571 84,278 8.6 % (0.6 %) — 9.1 % Water $ 168,149 $ 155,720 $ 12,429 8.0 % (0.3 %) 1.1 % 7.2 % United States 83,838 76,875 6,963 9.1 % — 0.5 % 8.5 % International 84,311 78,845 5,466 6.9 % (0.6 %) 1.6 % 5.9 % LPD $ 121,659 $ 122,607 $ (948) (0.8 %) — — (0.8 %) United States 18,961 16,633 2,328 14.0 % — — 14.0 % International 102,698 105,974 (3,276) (3.1 %) 0.1 % — (3.1 %) Other $ 18,789 $ 30,204 $ (11,415) (37.8 %) — — (37.8 %) Total Company $ 3,660,953 $ 3,367,324 $ 293,629 8.7 % (0.2 %) 0.1 % 8.8 % United States 2,391,427 2,182,959 208,468 9.5 % — — 9.5 % International 1,269,526 1,184,365 85,161 7.2 % (0.5 %) 0.1 % 7.6 % (1) Reported revenue growth and organic revenue growth may not recalculate due to rounding.
Unless otherwise stated, the analysis and discussion of our financial condition, results of operations and liquidity, including references to growth and organic growth and increases and decreases, are being compared to the equivalent prior year period. 47 Twelve Months Ended December 31, 2024, Compared to Twelve Months Ended December 31, 2023 Total Company The following table presents revenue by operating segment by U.S. and non-U.S., or international, geographies: For the Years Ended December 31, Net Revenue (dollars in thousands) 2024 2023 Dollar Change Reported Revenue Growth (1) Percentage Change from Currency Percentage Change from Acquisitions Organic Revenue Growth (1) CAG $ 3,574,044 $ 3,352,356 $ 221,688 6.6 % (0.2 %) 0.4 % 6.4 % United States 2,409,152 2,282,507 126,645 5.5 % — 0.6 % 5.0 % International 1,164,892 1,069,849 95,043 8.9 % (0.7 %) — 9.6 % Water $ 185,112 $ 168,149 $ 16,963 10.1 % (0.5 %) — 10.6 % United States 95,347 83,838 11,509 13.7 % — — 13.7 % International 89,765 84,311 5,454 6.5 % (1.0 %) — 7.5 % LPD $ 122,060 $ 121,659 $ 401 0.3 % (0.9 %) — 1.2 % United States 22,250 18,961 3,289 17.3 % — — 17.3 % International 99,810 102,698 (2,888) (2.8 %) (1.0 %) — (1.8 %) Other $ 16,288 $ 18,789 $ (2,501) (13.3 %) — — (13.3 %) Total Company $ 3,897,504 $ 3,660,953 $ 236,551 6.5 % (0.3 %) 0.4 % 6.4 % United States 2,533,174 2,391,427 141,747 5.9 % — 0.5 % 5.4 % International 1,364,330 1,269,526 94,804 7.5 % (0.8 %) — 8.2 % (1) Reported revenue growth and organic revenue growth may not recalculate due to rounding.
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.
Economic conditions can 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.
We believe that the diversity of our products and services and the geographic diversity of our customers partially mitigate the potential effects of the economic environment and negative consumer sentiment on our revenue growth rates. Distributor Purchasing and Inventories .
In addition, fiscal difficulties can also reduce government funding for water and herd health screening services. We believe that the diversity of our products and services and the geographic diversity of our customers partially mitigate the potential effects of the economic environment and negative consumer sentiment on our revenue growth rates. Effect of Geopolitical Conflicts .
We also have purchase obligations that include agreements and purchase orders to purchase goods or services that are contractually enforceable and that specify all significant terms, including fixed or minimum quantities, pricing, and approximate timing of purchases. As of December 31, 2023, we had approximately $196.3 million in purchase obligations due in 2024.
Debt” for more information about our Credit Facility and for more information on our repayment of our Senior Notes. We also have purchase obligations that include agreements and purchase orders to purchase goods or services that are contractually enforceable and that specify all significant terms, including fixed or minimum quantities, pricing, and approximate timing of purchases.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe following table presents the estimated foreign currency exchange impact on our revenues, operating profit, and diluted earnings per share for the current period and compared to the respective prior-year period: For the Years Ended December 31, (in thousands, except per share amounts) 2023 2022 2021 Revenue (decrease) increase $ (4,603) $ (108,812) $ 46,001 Operating profit (decrease) increase, excluding hedge activity and exchange impacts on settlement of foreign currency denominated transactions $ (5,489) $ (56,420) $ 28,557 Hedge gains (losses) - current period 3,512 25,733 (7,121) Exchange (losses) on settlements of foreign currency denominated transactions - current period (1,078) (3,408) (2,111) Operating profit (decrease) increase - current period $ (3,055) $ (34,095) $ 19,325 Hedge (gains) losses - prior period (25,733) 7,121 (829) Exchange losses (gains) on settlement of foreign currency denominated transactions - prior period 3,408 2,111 (699) Operating profit (decrease) increase - compared to prior period $ (25,380) $ (24,863) $ 17,797 Diluted earnings per share (decrease) increase - compared to prior period $ (0.24) $ (0.22) $ 0.16 At our current foreign exchange rate assumptions, we anticipate year-over-year changes will reduce our revenues, and increase our operating profit and diluted earnings per share in the year ended December 31, 2024, by approximately $1 million, $2 million, and $0.02 per share, respectively.
Biggest changeThe following table presents the estimated foreign currency exchange impact on our revenues, operating profit, and diluted earnings per share for the current period and compared to the respective prior-year period: For the Years Ended December 31, (in thousands, except per share amounts) 2024 2023 2022 Revenue (decrease) increase $ (9,471) $ (4,603) $ (108,812) Operating profit (decrease) increase, excluding hedge activity and exchange impacts on settlement of foreign currency denominated transactions $ (4,253) $ (5,489) $ (56,420) Hedge gains (losses) - current period 5,932 3,512 25,733 Foreign currency transaction (losses) - current period (4,527) (1,078) (3,408) Operating profit (decrease) increase - current period $ (2,848) $ (3,055) $ (34,095) Hedge (gains) losses - prior period (3,512) (25,733) 7,121 Foreign currency transaction losses - prior period 1,078 3,408 2,111 Operating profit (decrease) increase - compared to prior period $ (5,282) $ (25,380) $ (24,863) Diluted earnings per share (decrease) increase - compared to prior period $ (0.05) $ (0.24) $ (0.22) At our current foreign exchange rate assumptions, we anticipate year-over-year changes will reduce our revenues, decrease our operating profit, and diluted earnings per share in the year ending December 31, 2025, by approximately $80 million, $22 million, and $0.21 per share, respectively.
From time to time, we may also enter into other foreign currency exchange contracts or foreign-denominated debt issuances to minimize the impact of foreign currency fluctuations associated with specific balance sheet exposures, including net investments in certain foreign subsidiaries. Refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 19.
From time to time, we may also enter into other foreign currency exchange contracts, cross currency swaps, or foreign-denominated debt issuances to minimize the impact of foreign currency fluctuations associated with specific balance sheet exposures, including net investments in certain foreign subsidiaries. Refer to “Part II, Item 8. Financial Statements and Supplementary Data, Note 19.
As a result, no significant ineffectiveness has resulted or been recognized in the statements of income for the years ended December 31, 2023, 2022, and 2021. Our hedging strategy related to intercompany inventory purchases and sales is to employ the full amount of our hedges for the succeeding year at the conclusion of our budgeting process for that year.
As a result, no significant ineffectiveness has resulted or been recognized in the statements of income for the years ended December 31, 2024, 2023, and 2022. Our hedging strategy related to intercompany inventory purchases and sales is to employ the full amount of our hedges for the succeeding year at the conclusion of our budgeting process for that year.
Our foreign currency hedging strategy is consistent with prior periods and there were no material changes in our market risk exposure during the year ended December 31, 2023.
Our foreign currency hedging strategy is consistent with prior periods and there were no material changes in our market risk exposure during the year ended December 31, 2024.
The foreign currency exchange impacts on our revenue and operating income will be different from our 2024 estimates if actual foreign exchange rates are different from our assumptions.
The foreign currency exchange impacts on our revenue and operating income will be different from our 2025 estimates if actual foreign exchange rates are different from our assumptions.
Borrowings outstanding under the Credit Facility at December 31, 2023, were $250.0 million. 62 During 2023, we experienced inflationary pressure on our operating costs. During 2024, we expect to continue to face higher costs for labor, commodities, energy, and transportation, as well as increased prices from suppliers.
Borrowings outstanding under the Credit Facility as of December 31, 2024, were $250.0 million. During 2024, we experienced inflationary pressure on our operating costs. During 2025, we expect to continue to face higher costs for labor, commodities, energy, and transportation, as well as increased prices from suppliers.
Financial Statements and Supplementary Data, Note 2. Summary of Significant Accounting Policies.” Interest Rate Risk and Effects of Inflation We incur interest expense on our borrowings outstanding on our Senior Notes at a fixed rate. We have a Credit Facility with a syndicate of multinational banks, which matures on December 9, 2026, and requires no scheduled prepayments before that date.
Summary of Significant Accounting Policies.” Interest Rate Risk and Effects of Inflation We incur interest expense on our borrowings outstanding on our Senior Notes at a fixed rate. We have a Credit Facility with a syndicate of multinational banks, which matures on December 9, 2026, and requires no scheduled prepayments before that date.
For the year ended December 31, 2023, approximatel y 21% o f our consolidated revenue was derived from products manufactured or sourced in U.S. dollars and sold internationally in local currencies, compared to 21% and 23% for the years ended December 31, 2022 and 2021, respectively. The functional currency of most of our subsidiaries is their local currency.
For the year ended December 31, 2024, approximatel y 22% o f our consolidated revenue was derived from products manufactured or sourced in U.S. dollars and sold internationally in local currencies, compared to 21% for both the years ended December 31, 2023, and 2022. The functional currency of most of our subsidiaries is their local currency.
Risk Factors: “ Since our business is global in nature, geopolitical risks and other risks associated with doing business internationally could negatively affect our business, financial condition, and operating results” and “Strengthening of the rate of exchange for the U.S. dollar has a negative effect on our business ,” and “Part II, Item 8.
Risk Factors:” “Since our business is global in nature, geopolitical risks and other risks associated with doing business internationally could negatively affect our business, financial condition, and operating results” and “Strengthening of the rate of exchange for the U.S. dollar has a negative effect on our business,” and “Part II, Item 8. Financial Statements and Supplementary Data, Note 2.
These favorable impacts to our operating profit and diluted earnings per share includes net year-over-year impacts of foreign currency hedging activity, which is expected to increase total company operating profit by approximately $2 million and diluted earnings per share by $0.02 during the year ending December 31, 2024.
These unfavorable impacts to our operating profit and diluted earnings per share include net year-over-year impacts of foreign currency hedging activity, which is expected to increase total company operating profit by approximately $19 million and diluted earnings per share by $0.18 during the year ending December 31, 2025.
The above estimate assumes that the value of the U.S. dollar relative to other currencies will reflect the euro at $1.08, the British pound at $1.25, the Canadian dollar at $0.74, the Australian dollar at $0.66; the Japanese yen at ¥147, the Chinese renminbi at RMB 7.23, and the Brazilian real at R$4.95 to the U.S. dollar for the full year of 2024.
The above estimate assumes that the value of the U.S. dollar relative to other currencies will reflect the euro at $1.02, the British pound at $1.23, the Canadian dollar at $0.68, the Australian dollar at $0.61; the Japanese yen at ¥160, the Chinese renminbi at RMB 7.43, and the Brazilian real at R$6.21 to the U.S. dollar for the full year of 2025.
We may not be able to offset these higher costs through productivity initiatives and price increases, which may materially and adversely affect our business, results of operations, and financial condition.
Furthermore, additional tariffs on imported goods may increase our costs to purchase products, components, and materials. We may not be 62 able to offset these higher costs through productivity initiatives and price increases, which may materially and adversely affect our business, results of operations, and financial condition.
Excluding the impact of intercompany and trade balances denominated in currencies other than the functional subsidiary currencies, a 1% strengthening of the U.S. dollar would reduce revenue by approximately $13 million and operating income by approximately $4 million, net of hedge positions. 61 The primary purpose of our foreign currency hedging activities is to protect against the volatility associated with foreign currency transactions.
Excluding the impact of intercompany and trade balances denominated in currencies other than the functional subsidiary currencies, a 1% strengthening of the U.S. dollar would reduce revenue by approximately $13 million and operating income by approximately $5 million, net of hedge positions.
The notional amount of foreign currency exchange contracts to hedge forecasted intercompany purchases and sales totaled $294.0 million at December 31, 2023, and $258.2 million at December 31, 2022. At December 31, 2023, we had $2.4 million of net unrealized losses on foreign currency exchange contracts recorded in accumulated other comprehensive loss, net of related tax.
The notional amount of foreign currency exchange contracts to hedge forecasted intercompany purchases and sales totaled $325.7 million as of December 31, 2024, and $294.0 million as of December 31, 2023. As of December 31, 2024, we had $12.8 million of net unrealized gains on foreign currency exchange contracts reflected within accumulated other comprehensive income, net of related tax.
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.
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 61 instruments for purposes other than risk management. Our accounting policies for these contracts are based on our designation of such instruments as hedging transactions.
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Our accounting policies for these contracts are based on our designation of such instruments as hedging transactions.
Added
The primary purpose of our foreign currency hedging activities is to protect against the volatility associated with foreign currency transactions. We also utilize natural hedges to mitigate our transaction and commitment exposures. Our corporate policy prescribes the range of allowable hedging activity.

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