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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION 
WASHINGTON, D.C. 20549 
FORM 10-Q 
 
(Mark One) 
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended September 30, 2024
OR 
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the transition period from _______________ to _______________. 

COMMISSION FILE NUMBER: 000-19271 

IDEXX Logo.gif
  IDEXX LABORATORIES, INC. 
(Exact name of registrant as specified in its charter) 
Delaware01-0393723
(State or other jurisdiction of incorporation 
or organization)
(IRS Employer Identification No.)
One IDEXX Drive WestbrookMaine04092
(Address of principal executive offices)(ZIP Code)
207-556-0300
(Registrant’s telephone number, including area code)

Securities Registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.10 par value per shareIDXXNASDAQ Global Select Market
    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨


    Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No  ¨

    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. The number of shares outstanding of the registrant’s Common Stock, $0.10 par value per share, was 81,884,664 on October 28, 2024.


GLOSSARY OF TERMS AND SELECTED ABBREVIATIONS

    In order to aid the reader, we have included certain terms and abbreviations used throughout this Quarterly Report on Form 10-Q below:
Term / Abbreviation
 
Definition
 
AOCIAccumulated other comprehensive income or loss
ASUAccounting Standards Update
CAGCompanion Animal Group, a reporting segment that provides veterinarians diagnostic products and services and information management solutions that enhance the health and well-being of pets.
Credit FacilityOur $1.25 billion five-year unsecured credit facility under an amended and restated credit agreement; consisting of i) $1 billion revolving credit facility, also referred to as line of credit, and ii) $250 million three-year term loan.
FASBU.S. Financial Accounting Standards Board
LPDLivestock, Poultry and Dairy, a reporting segment that provides diagnostic products and services for livestock and poultry health and to ensure the quality and safety of milk and improve producer efficiency.
OPTI Medical
OPTI Medical Systems, Inc., a wholly owned subsidiary of IDEXX Laboratories Inc. This business provides point-of-care and laboratory diagnostics (including electrolyte and blood gas analyzers and related consumable products) for the human medical diagnostics sector. We also manufacture electrolytes slides (instrument consumables) to run Catalyst One®, Catalyst Dx®, and blood gas analyzers and consumables for the veterinary sector; also referred to as OPTI. OPTI Medical is reported in our Other operating segment.
Organic revenue growthA non-GAAP financial measure and represents the percentage change in revenue, as compared to the same period for the prior year, net of the effect of changes in foreign currency exchange rates, certain business acquisitions and divestitures. Organic revenue growth should be considered in addition to, and not as a replacement for or as a superior measure to, revenue growth reported in accordance with U.S. GAAP, and may not be comparable to similarly titled measures reported by other companies.
Reported revenue growthRepresents the percentage change in revenue reported in accordance with U.S. GAAP, as compared to the same period during the prior year.
SaaSSoftware-as-a-service
SECU.S. Securities and Exchange Commission
Senior Note AgreementsNote purchase agreements for the private placement of senior notes, referred to as senior notes or long-term debt.
SOFRThe secured overnight financing rate as administered by the Federal Reserve Board of New York (or a successor administrator of the secured overnight financing rate).
U.S. GAAPAccounting principles generally accepted in the United States of America
WaterWater, a reporting segment that provides water microbiology testing products.



IDEXX LABORATORIES, INC. 
Quarterly Report on Form 10-Q 
Table of Contents 

  
Item No. Page
  
PART I—FINANCIAL INFORMATION 
 
PART II—OTHER INFORMATION
 





PART I— FINANCIAL INFORMATION 
Item 1.  Financial Statements  
IDEXX LABORATORIES, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED BALANCE SHEETS 
(in thousands, except per share amounts)
(Unaudited)

September 30, 2024December 31, 2023
ASSETS  
Current Assets:  
Cash and cash equivalents$308,636 $453,932 
Accounts receivable, net511,250 457,445 
Inventories389,804 380,282 
Other current assets224,054 203,595 
Total current assets1,433,744 1,495,254 
Long-Term Assets:
Property and equipment, net717,745 702,177 
Operating lease right-of-use assets121,053 115,499 
Goodwill412,071 365,961 
Intangible assets, net106,885 84,500 
Other long-term assets559,268 496,534 
Total long-term assets1,917,022 1,764,671 
TOTAL ASSETS$3,350,766 $3,259,925 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable$110,603 $110,643 
Accrued liabilities511,047 478,712 
Credit facility250,000 250,000 
Current portion of long-term debt99,140 74,997 
Current portion of deferred revenue38,434 37,195 
Total current liabilities1,009,224 951,547 
Long-Term Liabilities:
Deferred income tax liabilities5,658 7,235 
Long-term debt, net of current portion524,758 622,883 
Long-term deferred revenue, net of current portion26,773 28,533 
Long-term operating lease liabilities, net of current portion 103,420 99,671 
Other long-term liabilities62,879 65,526 
Total long-term liabilities723,488 823,848 
Total liabilities1,732,712 1,775,395 
Commitments, Contingencies and Guarantees (Note 16)
Stockholders’ Equity:
Common stock, $0.10 par value: Authorized: 120,000 shares; Issued: 107,705 shares in 2024 and 107,506 shares in 2023; Outstanding: 82,037 shares in 2024 and 83,032 shares in 2023
10,770 10,751 
Additional paid-in capital1,646,363 1,569,565 
Deferred stock units: Outstanding: 60 units in 2024 and 59 units in 2023
5,885 5,530 
Retained earnings5,116,289 4,444,571 
Accumulated other comprehensive loss(75,971)(71,206)
Treasury stock, at cost: 25,669 shares in 2024 and 24,474 shares in 2023
(5,085,282)(4,474,681)
Total stockholders’ equity1,618,054 1,484,530 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$3,350,766 $3,259,925 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3

IDEXX LABORATORIES, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME 
(in thousands, except per share amounts)
(Unaudited)

For the Three Months Ended
September 30,		For the Nine Months Ended
September 30,
2024202320242023
Revenue:
Product revenue$567,987 $521,489 $1,688,308 $1,568,111 
Service revenue407,556 394,038 1,254,908 1,191,241 
Total revenue975,543 915,527 2,943,216 2,759,352 
Cost of Revenue:
Cost of product revenue176,271 178,527 533,683 532,136 
Cost of service revenue203,234 189,018 601,266 563,413 
Total cost of revenue379,505 367,545 1,134,949 1,095,549 
Gross profit596,038 547,982 1,808,267 1,663,803 
Expenses:
Sales and marketing146,281 135,698 438,399 424,034 
General and administrative91,887 89,034 341,154 248,804 
Research and development53,978 47,967 162,063 139,139 
Income from operations303,892 275,283 866,651 851,826 
Interest expense(7,697)(8,647)(23,707)(32,316)
Interest income2,714 1,255 10,500 1,998 
Income before provision for income taxes298,909 267,891 853,444 821,508 
Provision for income taxes66,068 55,660 181,726 170,987 
Net income$232,841 $212,231 $671,718 $650,521 
Earnings per Share:
Basic$2.83 $2.55 $8.12 $7.83 
Diluted$2.80 $2.53 $8.05 $7.75 
Weighted Average Shares Outstanding:
Basic82,304 83,097 82,675 83,058 
Diluted83,056 83,993 83,478 83,990 
The accompanying notes are an integral part of these condensed consolidated financial statements.

4

IDEXX LABORATORIES, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 
(in thousands)
(Unaudited)
For the Three Months Ended
September 30,		For the Nine Months Ended
September 30,
2024202320242023
Net income$232,841 $212,231 $671,718 $650,521 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments26,397 (12,949)(1,261)(6,939)
Reclassification adjustment for defined benefit plans included in net income, net of tax of $21 and $50 in 2024 and $21 and $75 in 2023
122 98 269 395 
Unrealized gain (loss) on Euro-denominated notes, net of tax expense (benefit) of $(957) and $(228) in 2024 and $727 and $152 in 2023
(3,068)2,331 (732)488 
Unrealized gain (loss) on investments, net of tax expense (benefit) of $0 and $0 in 2024 and $0 and $2 in 2023
— (1)1 6 
Reclassification adjustment on investments included in net income, net of tax of $0 and $51 in 2024 and $0 and $0 in 2023
— — 163 — 
Unrealized gain (loss) on derivative instruments:
Unrealized gain (loss) on foreign currency exchange contracts, net of tax expense (benefit) of $(2,868) and $228 in 2024 and $2,765 and $2,785 in 2023
(7,702)7,645 444 7,305 
Unrealized gain (loss) on cross currency swaps, net of tax expense (benefit) of $(1,171) and $(116) in 2024 and $579 and $(361) in 2023
(3,754)1,858 (370)(1,158)
Unrealized gain (loss) on interest rate swap, net of tax expense (benefit) of $(560) and $310 in 2024 and $545 and $1,638 in 2023
(1,793)1,749 997 5,254 
Reclassification adjustments for (gain) loss included in net income, net of tax (expense) benefit of $(380) and $(1,563) in 2024 and $(701) and $(945) in 2023
(992)(1,957)(4,276)(2,446)
Unrealized gain (loss) on derivative instruments(14,241)9,295 (3,205)8,955 
Other comprehensive income (loss), net of tax
9,210 (1,226)(4,765)2,905 
Comprehensive income$242,051 $211,005 $666,953 $653,426 
The accompanying notes are an integral part of these condensed consolidated financial statements.
5

IDEXX LABORATORIES, INC.  AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except per share amounts) 
(Unaudited)  
Common Stock
Number of Shares
$0.10 Par Value
Additional Paid-in Capital
Deferred Stock Units
Retained EarningsAccumulated Other Comprehensive
(Loss) Income		Treasury StockTotal Stockholders’ Equity
Balance December 31, 2023107,506 $10,751 $1,569,565 $5,530 $4,444,571 $(71,206)$(4,474,681)$1,484,530 
Net income— — — — 235,579 — — 235,579 
Other comprehensive loss, net— — — — — (9,191)— (9,191)
Repurchases of common stock, net— — — — — — (177,192)(177,192)
Common stock issued for share-based compensation plans, including excess tax benefit
161 16 20,792 (28)— — — 20,780 
Share-based compensation cost— — 14,392 8 — — — 14,400 
Balance March 31, 2024107,667 $10,767 $1,604,749 $5,510 $4,680,150 $(80,397)$(4,651,873)$1,568,906 
Net income— — — — 203,298 — — 203,298 
Other comprehensive loss, net— — — — — (4,784)— (4,784)
Repurchases of common stock, net— — — — — — (208,246)(208,246)
Common stock issued for share-based compensation plans, including excess tax benefit
19 2 4,983 375 — — — 5,360 
Share-based compensation cost— — 15,719 — — — — 15,719 
Balance June 30, 2024107,686 $10,769 $1,625,451 $5,885 $4,883,448 $(85,181)$(4,860,119)$1,580,253 
Net income— — — — 232,841 — — 232,841 
Other comprehensive loss, net— — — — — 9,210 — 9,210 
Repurchases of common stock, net— — — — — — (225,163)(225,163)
Common stock issued for share-based compensation plans, including excess tax benefit
19 1 4,994 — — — — 4,995 
Share-based compensation cost— — 15,918 — — — — 15,918 
Balance September 30, 2024107,705 $10,770 $1,646,363 $5,885 $5,116,289 $(75,971)$(5,085,282)$1,618,054 

6

Common Stock
Number of Shares
$0.10 Par Value
Additional Paid-in Capital
Deferred Stock Units
Retained EarningsAccumulated Other Comprehensive
(Loss) Income		Treasury StockTotal Stockholders’ Equity
Balance December 31, 2022107,193 $10,719 $1,463,215 $5,182 $3,599,529 $(77,796)$(4,392,112)$608,737 
Net income— — — — 214,054 — — 214,054 
Other comprehensive income, net— — — — — 1,181 — 1,181 
Repurchases of common stock, net— — — — — — (9,554)(9,554)
Common stock issued for share-based compensation plans, including excess tax benefit
128 13 12,765 (25)— — — 12,753 
Share-based compensation cost— — 13,923 7 — — — 13,930 
Balance March 31, 2023107,321 $10,732 $1,489,903 $5,164 $3,813,583 $(76,615)$(4,401,666)$841,101 
Net income— — — — 224,236 — — 224,236 
Other comprehensive income, net— — — — — 2,950 — 2,950 
Repurchases of common stock, net— — — — — — (77)(77)
Common stock issued for share-based compensation plans, including excess tax benefit
57 6 9,938 345 — — — 10,289 
Share-based compensation cost— — 15,356 6 — — — 15,362 
Balance June 30, 2023107,378 $10,738 $1,515,197 $5,515 $4,037,819 $(73,665)$(4,401,743)$1,093,861 
Net income— — — — 212,231 — — 212,231 
Other comprehensive income, net— — — — — (1,226)— (1,226)
Repurchases of common stock, net— — — — — — (35,301)(35,301)
Common stock issued for share-based compensation plans, including excess tax benefit
74 7 12,611 — — — — 12,618 
Share-based compensation cost— — 15,216 8 — — — 15,224 
Balance September 30, 2023107,452 $10,745 $1,543,024 $5,523 $4,250,050 $(74,891)$(4,437,044)$1,297,407 
The accompanying notes are an integral part of these condensed consolidated financial statements.
7

IDEXX LABORATORIES, INC.  AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

For the Nine Months Ended
September 30,
20242023
  
Cash Flows from Operating Activities:  
Net income$671,718 $650,521 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization96,230 85,171 
Impairment charge250 — 
Provision for credit losses5,080 5,464 
Deferred income taxes(28,870)(14,749)
Share-based compensation expense46,037 44,516 
Other1,034 (12)
Changes in assets and liabilities:
Accounts receivable(56,087)(54,557)
Inventories(24,756)(31,647)
Other assets and liabilities(45,272)(17,902)
Accounts payable2,347 (6,799)
Deferred revenue(735)(3,347)
Net cash provided by operating activities666,976 656,659 
Cash Flows from Investing Activities:
Purchases of property and equipment(91,667)(101,075)
Acquisition of a business
(76,694)— 
Proceeds from net investment hedges1,142 6,256 
Net cash used by investing activities(167,219)(94,819)
Cash Flows from Financing Activities:
Repayments under credit facility, net— (329,000)
Payments of senior notes
(75,000)— 
Payments of acquisition-related contingent consideration and holdbacks — (1,879)
Repurchases of common stock, net(591,042)(35,070)
Proceeds from exercises of stock options and employee stock purchase plans31,237 35,704 
Shares withheld for statutory tax withholding payments on restricted stock(10,486)(9,907)
Net cash used by financing activities(645,291)(340,152)
Net effect of changes in exchange rates on cash238 (2,538)
Net (decrease) increase in cash and cash equivalents(145,296)219,150 
Cash and cash equivalents at beginning of period453,932 112,546 
Cash and cash equivalents at end of period$308,636 $331,696 
  
Supplemental Cash Flow Information:
Unpaid property and equipment, reflected in accounts payable and accrued liabilities$10,405 $11,328 
The accompanying notes are an integral part of these condensed consolidated financial statements.
8

IDEXX LABORATORIES, INC. AND SUBSIDIARIES 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)


NOTE 1. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION 

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

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

The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of our management, all adjustments necessary for a fair statement of our financial position and results of operations. All such adjustments are of a recurring nature. The condensed consolidated balance sheet data as of December 31, 2023, was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The results of operations for the three and nine months ended September 30, 2024, are not necessarily indicative of the results to be expected for the full year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, (the “2023 Annual Report”).

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

NOTE 2. ACCOUNTING POLICIES

Significant Accounting Policies

The significant accounting policies used in preparation of these unaudited condensed consolidated financial statements as of and for the three and nine months ended September 30, 2024, are consistent with those discussed in “Note 2. Summary of Significant Accounting Policies” to the consolidated financial statements in our 2023 Annual Report, and as updated below.

New Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments will require disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within segment profit and loss. The amendments are effective for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements. The implementation of ASU 2023-07 is not expected to have a material impact on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of income tax rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for annual periods beginning after December 15, 2024, with early adoption permitted, and may be applied either prospectively or retrospectively. We are currently evaluating ASU 2023-09 to determine its impact on our consolidated financial statements.

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NOTE 3.      REVENUE

Revenues by Product and Service Categories and by Principal Geographic Areas

We present disaggregated revenue for our CAG segment based on major product and service categories. Our Water and LPD segments are comprised of a single major product category.

The following table presents revenue by major product and service categories:
(in thousands)For the Three Months Ended
September 30,		For the Nine Months Ended
September 30,
2024202320242023
CAG segment revenue:  
CAG Diagnostics recurring revenue:$783,443 $733,958 $2,372,041 $2,223,336 
IDEXX VetLab consumables329,128 296,042 971,405 890,891 
Rapid assay products92,774 87,562 282,379 266,934 
Reference laboratory diagnostic and consulting services328,383 320,294 1,020,094 973,580 
CAG Diagnostics services and accessories33,158 30,060 98,163 91,931 
CAG Diagnostics capital - instruments$29,528 $32,254 $98,912 $99,452 
Veterinary software, services and diagnostic imaging systems:
$79,019 $70,948 $232,620 $208,303 
Recurring revenue
64,644 54,607 187,461 160,039 
Systems and hardware
14,375 16,341 45,159 48,264 
CAG segment revenue$891,990 $837,160 $2,703,573 $2,531,091 
Water segment revenue50,162 44,450 139,959 126,362 
LPD segment revenue28,992 29,747 87,503 88,866 
Other segment revenue4,399 4,170 12,181 13,033 
Total revenue$975,543 $915,527 $2,943,216 $2,759,352 

The following table presents revenue by principal geographic area, based on customers’ domiciles:
(in thousands)For the Three Months Ended
September 30,		For the Nine Months Ended
September 30,
2024202320242023
United States$638,058 $603,046 $1,929,213 $1,815,066 
Europe, the Middle East and Africa198,605 177,852 599,125 532,526 
Asia Pacific Region80,972 77,666 237,711 236,932 
Canada36,927 35,612 114,630 113,209 
Latin America & Caribbean20,981 21,351 62,537 61,619 
Total revenue$975,543 $915,527 $2,943,216 $2,759,352 

Contracts with Multiple Performance Obligations

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

We allocate revenue to each performance obligation in proportion to the relative standalone selling prices, and recognize revenue when transfer of the related goods or services has occurred for each obligation. We utilize the observable standalone selling price when available, which represents the price charged for the promised product or service when sold separately. When standalone selling prices for our products or services are not directly observable, we determine the standalone selling prices using relevant information available and apply suitable estimation methods including, but not limited to, the cost
10

plus a margin approach. We recognize revenue as each performance obligation is satisfied, either at a point in time or over time, as described in the revenue categories above. We do not disclose information about remaining performance obligations that are part of arrangements with an original expected duration of one year or less.

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

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

Free or Discounted Instruments and Systems. Many of our customer commitment arrangements, such as our IDEXX 360 program, provide customers with free or discounted instruments or systems upon entering into multi-year arrangements to purchase annual minimum amounts of products and services. We allocate total consideration, including future committed purchases and expected price adjustments, based on relative standalone selling prices to identified performance obligations and recognize instrument revenue and cost at the time of installation and customer acceptance in advance of billing the customer, which is also when the customer obtains control of the instrument based on legal title transfer. Our right to future consideration related to instrument revenue is recorded as a contract asset within other current and long-term assets. The contract asset is transferred to accounts receivable when customers are billed for products and services over the term of the arrangement. We have determined that these arrangements do not include a significant financing component.

On December 31, 2023, our contract assets were $223.1 million, of which approximately $13.7 million and $42.4 million was reclassified to accounts receivable when customers were billed for related products and services during the three and nine months ended September 30, 2024, respectively. Furthermore, as a result of new placements under commitment arrangements, net of subsequent amounts reclassified to accounts receivable and allowances established for credit losses, our contract assets were $247.3 million as of September 30, 2024. We monitor customer purchases over the term of their arrangement to assess the realizability of our contract assets and review estimates of variable consideration. Impairments and revenue adjustments that relate to performance obligations satisfied in prior periods, including cumulative catch-up adjustments to revenue arising from contract modifications, during the three and nine months ended September 30, 2024, were not material.

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

On December 31, 2023, our capitalized consideration paid to customers was $168.9 million, of which approximately $13.2 million and $41.5 million was recognized as a reduction of revenue during the three and nine months ended September 30, 2024, respectively. Furthermore, as a result of new payments to customers, net of subsequent recognition, our capitalized consideration paid to customers was $189.0 million as of September 30, 2024. We monitor customer purchases over the term of their arrangement to assess the realizability of our capitalized consideration paid to customers and review estimates of variable consideration. Impairments and revenue adjustments that relate to performance obligations satisfied in prior periods, including cumulative catch-up adjustments to revenue arising from contract modifications, during the three and nine months ended September 30, 2024, were not material.

11

Rebate Arrangements. Our rebate arrangements provide customers the opportunity to earn future rebates based on the volume of products and/or services they purchase over the term of the arrangement. Rebate incentives are typically offered in multi-year arrangements that include customer commitments to purchase annual minimum amounts of products and services, or, to a lesser extent, are sometimes offered without future purchase commitments. We account for the customer’s right to earn rebates on 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. Total consideration allocated to identified performance obligations is limited to goods and services that the customer is presently obligated to purchase and does not include estimates of future purchases that are optional. We allocate total consideration to identified performance obligations, including the customer’s right to earn rebates on future purchases, which is deferred and subsequently recognized upon the purchase of products and/or services.

On December 31, 2023, our deferred revenue related to rebate and up-front consideration arrangements was $32.9 million, of which approximately $2.7 million and $8.5 million was recognized when customers purchased eligible products and services during the three and nine months ended September 30, 2024, respectively. Furthermore, as a result of new customer purchases under rebate and up-front consideration arrangements, net of subsequent recognition, our deferred revenue was $29.8 million as of September 30, 2024, of which approximately 9%, 32%, 25%, 17%, and 17% are expected to be recognized during the remainder of 2024, the full years 2025, 2026, 2027, and thereafter, respectively.

For our customer commitment arrangements, we estimate future revenues related to multi-year arrangements to be approximately $4.2 billion, of which approximately 7%, 27%, 24%, 19%, and 23% are expected to be recognized during the remainder of 2024, the full years 2025, 2026, 2027, and thereafter, respectively. These future revenues relate to performance obligations not yet satisfied, for which customers have committed to future purchases, net of the expected revenue reductions from consideration paid to customers and expected price adjustments, and as a result, are lower than stated contractual commitments by our customers.

Instrument Rental Arrangements. Revenues from instrument rental and reagent rental arrangements are recognized either as operating leases on a ratable basis over the term of the arrangement or as sales-type leases at the time of installation and customer acceptance. Customers typically pay for the right to use instruments under rental arrangements in equal monthly amounts over the term of the rental arrangement. For some arrangements, customers are provided with the right to purchase the instrument at the end of the lease term. Our reagent rental arrangements provide customers the right to use our instruments upon entering into multi-year arrangements to purchase annual minimum amounts of consumables. These types of arrangements include an embedded lease for the right to use our instrument, and we determine the amount of lease revenue allocated to the instrument based on relative standalone selling prices. Lease revenues are presented in product revenue on our consolidated income statement. Lease revenue was approximately $3.5 million and $10.6 million for the three and nine months ended September 30, 2024, respectively, compared to $5.3 million and $15.3 million for the three and nine months ended September 30, 2023, respectively, including both operating leases and sales-type leases.

Sales-type Reagent Rental Arrangements. Our reagent rental arrangements that effectively transfer control of instruments to our customers are classified as sales-type leases, and we recognize instrument revenue and cost in advance of billing the customer, at the time of installation and customer acceptance. Our right to future consideration related to instrument revenue is recorded as a lease receivable within other current and long-term assets, and is transferred to accounts receivable when customers are billed for products and services over the term of the arrangement. On December 31, 2023, our lease receivable assets were $23.1 million, of which approximately $1.4 million and $4.3 million was reclassified to accounts receivable when customers were billed for related products and services during the three and nine months ended September 30, 2024, respectively. Furthermore, as a result of new placements under sales-type reagent rental arrangements, net of subsequent amounts reclassified to accounts receivable, and allowances established for credit losses, our lease receivable assets were $21.2 million as of September 30, 2024. The impacts of discounting and unearned income as of September 30, 2024, were not material. Profit and loss recognized at the commencement date and interest income during the three and nine months ended September 30, 2024, were not material. We monitor customer purchases over the term of their arrangement to assess the realizability of our lease receivable assets. Impairments during the three and nine months ended September 30, 2024, were not material.


12

Operating-type Reagent Rental Arrangements. Our reagent rental arrangements that do not effectively transfer control of instruments to our customers are classified as operating leases and we recognize instrument revenue and costs ratably over the term of the arrangement. The cost of the instrument is capitalized within property and equipment. During the three and nine months ended September 30, 2024, we transferred instruments of $3.9 million and $10.5 million, respectively, compared to $3.6 million and $12.2 million during the three and nine months ended September 30, 2023, respectively, from inventory to property and equipment.

We estimate future revenue to be recognized related to our reagent rental arrangements of approximately $72.1 million, of which approximately 7%, 24%, 22%, 19%, and 28% are expected to be recognized during the remainder of 2024, and the full years 2025, 2026, 2027, and thereafter, respectively. These future revenues relate to performance obligations not yet satisfied for which customers have committed to future purchases, net of expected price adjustments, and as a result, may be lower than stated contractual commitments by our customers.

Deferred Extended Warranties and Post-Contract Support Revenue

On December 31, 2023, our deferred revenue related to extended warranties and post-contract support was $26.0 million, of which approximately $1.4 million and $18.9 million was recognized during the three and nine months ended September 30, 2024, respectively. Furthermore, as a result of new arrangements, our deferred revenue related to extended warranties and post-contract support was $25.8 million at September 30, 2024. We do not disclose information about remaining performance obligations that are part of contracts with an original expected duration of one year or less, and do not adjust for the effect of the financing components when the period between customer payment and revenue recognition is one year or less. Deferred revenue related to extended warranties and post-contract support with an original duration of more than one year was $9.1 million at September 30, 2024, of which approximately 11%, 39%, 26%, 13%, and 11% are expected to be recognized during the remainder of 2024, and the full years 2025, 2026, 2027, and thereafter, respectively. We have determined these arrangements do not include a significant financing component.

Costs to Obtain a Contract

On December 31, 2023, our deferred commission costs, included within other current and long-term assets, were $19.7 million, of which approximately $1.6 million and $5.0 million of commission expense was recognized during the three and nine months ended September 30, 2024, respectively. Furthermore, as a result of commissions related to new extended warranties and SaaS subscriptions, net of subsequent recognition, our deferred commission costs were $20.6 million at September 30, 2024. Impairments of deferred commission costs during the three and nine months ended September 30, 2024, respectively, were not material.


NOTE 4. ACQUISITIONS, ASSET PURCHASES AND INVESTMENTS

We believe that our acquisitions of businesses and other assets enhance our existing businesses by either expanding our geographic range, customer base, or existing product and service lines.

Business Combinations

On February 1, 2024, we acquired the assets of a privately-owned software and data platform business based in the U.S. that extends our practice management system cloud-native workflow and delivers strategic data solutions to our customers and their clients, for approximately $81.1 million, including an estimated contingent payment of $4.4 million. The fair values and the lives of the assets and liabilities acquired are as follows: completed technology of $17.1 million, with a life of 6 years; customer relationship intangibles of $12.5 million, with a life of 10 years; a non-compete agreement of $4.7 million, with a life of 5 years; and a trademark of $0.7 million, with a life of 10 years. We also recognized goodwill of $45.8 million, which represents synergies with our software business, and $0.3 million of net tangible assets, including accounts receivable. Goodwill related to this acquisition is expected to be deductible for tax purposes. Pro forma information has not been presented for this acquisition because such information is not material to the financial statements. The results of operations have been included in our CAG segment since the acquisition date. The acquisition expenses were not significant.
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NOTE 5. SHARE-BASED COMPENSATION 

The fair value of options, restricted stock units, deferred stock units, performance-based restricted stock units, and employee stock purchase rights awarded during the three and nine months ended September 30, 2024, totaled $1.2 million and $71.4 million, respectively, as compared to $1.5 million and $62.1 million for the three and nine months ended September 30, 2023, respectively. The total unrecognized compensation expense, net of estimated forfeitures, for unvested share-based compensation awards outstanding as of September 30, 2024, was $81.0 million, which will be recognized over a weighted average period of approximately 1.5 years. During the three and nine months ended September 30, 2024, we recognized share-based compensation expenses of $15.9 million and $46.0 million, respectively, as compared to $15.2 million and $44.5 million for the three and nine months ended September 30, 2023, respectively.

During the first quarter of 2024, we granted approximately $11.5 million of performance-based restricted stock units that are contingent upon our performance against pre-established financial performance metrics over a period beginning on January 1, 2024, and ending on December 31, 2026. Earned shares will vest on the later of the third anniversary of the grant date or the date of certification of our performance under the terms of the performance-based restricted stock units grant.

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

The weighted averages of the valuation assumptions used to determine the fair value of each option award on the date of grant and the weighted average estimated fair values were as follows:
For the Nine Months Ended
September 30,
20242023
Expected stock price volatility32 %32 %
Expected term, in years7.06.7
Risk-free interest rate4.3 %3.7 %
Weighted average fair value of options granted$239.49 $201.48 
NOTE 6. CREDIT LOSSES

We are exposed to credit losses primarily through our sales of products and services to our customers. We maintain allowances for credit losses for potentially uncollectible receivables. We base our estimates on a detailed analysis of specific customer situations and a percentage of our accounts receivable by aging category. Additionally, our estimates are developed based on historical credit loss experience, estimates of recoveries, current economic conditions, and future expectations.

Additional allowances may be required if either the financial condition of our customers were to deteriorate, or a strengthening U.S. dollar impacts the ability of foreign customers to make payments to us on their U.S. dollar-denominated purchases. We monitor our ongoing credit exposure through active review of counterparty balances against contract terms and due dates. We may require collateralized asset support or a prepayment to mitigate credit risk. Our activities include timely account reconciliations, dispute resolution, and payment confirmations. We may employ collection agencies and legal counsel to pursue recovery of defaulted receivables.

Account balances are charged off against the allowance when we believe it is probable the receivable will not be recovered. We do not have any off-balance sheet credit exposure related to our customers.


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Accounts Receivable

The allowance for credit losses associated with accounts receivable was $12.4 million and $9.5 million as of September 30, 2024, and December 31, 2023, respectively. The amount of accounts receivable reflected on the balance sheet is net of this allowance. Based on an aging analysis, as of September 30, 2024, approximately 83% of our accounts receivable had not yet reached the invoice due date, and approximately 17% was considered past due. As of December 31, 2023, approximately 83% of our accounts receivable had not yet reached the invoice due date, and approximately 17% was considered past due.

Contract Assets and Lease Receivables

The allowance for credit losses associated with contract assets and lease receivables was $7.0 million and $6.4 million as of September 30, 2024, and December 31, 2023, respectively. The assets reflected on the balance sheet are net of these allowances. Historically, we have experienced low credit loss rates on our customer commitment programs and lease receivables. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.
NOTE 7. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The components of inventories were as follows:
(in thousands)September 30, 2024December 31, 2023
  
Raw materials$106,858 $106,392 
Work-in-process32,389 28,989 
Finished goods250,557 244,901 
Inventories$389,804 $380,282 

NOTE 8. LEASES

Maturities of operating lease liabilities were as follows:
(in thousands)September 30, 2024
 
2024 (remainder of year)$4,628 
202528,421 
202626,199 
202720,731 
202814,798 
Thereafter52,007 
Total lease payments146,784 
Less imputed interest(22,402)
Total$124,382 

Total minimum future lease payments of approximately $0.8 million for a lease that has not commenced as of September 30, 2024, are not included in the condensed consolidated financial statements, as we do not have control of the underlying asset. This lease is expected to commence during 2024, with a lease term of approximately 5.0 years.


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Supplemental cash flow information for leases was as follows:
(in thousands)For the Nine Months Ended
September 30,
20242023
Cash paid for amounts included in the measurement of operating lease liabilities$21,398 $20,304 
Right-of-use assets obtained in exchange for operating lease obligations, net of early
lease terminations (1)
$22,331 $18,219 

(1) Additions for the nine months ended September 30, 2024, include $1.0 million of right-of-use assets obtained in connection with a business acquisition in the first quarter of 2024.
NOTE 9. OTHER CURRENT AND LONG-TERM ASSETS

Other Current Assets

Other current assets consisted of the following:
(in thousands)September 30, 2024December 31, 2023
  
Contract assets, net (1)
$61,416 $55,111 
Consideration paid to customers
58,507 54,081 
Prepaid expenses57,222 48,370 
Taxes receivable14,405 16,972 
Other assets32,504 29,061 
Other current assets$224,054 $203,595 
(1) Contract assets, net, are net of allowances for credit losses. Refer to "Note 6. Credit Losses."


Other Long-Term Assets

Other long-term assets consisted of the following:
(in thousands)September 30, 2024December 31, 2023
Contract assets, net (1)
$185,863 $167,963 
Deferred income taxes134,677 107,364 
Consideration paid to customers
130,450 114,850 
Equity investments30,000 30,250 
Investments in long-term product supply arrangements25,228 25,943 
Other assets53,050 50,164 
Other long-term assets$559,268 $496,534 
(1) Contract assets, net, are net of allowances for credit losses. Refer to "Note 6. Credit Losses."

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

Accounts Payable - Supplier Financing Program

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

(in thousands)For the Three Months Ended
September 30,		For the Nine Months Ended
September 30,
2024202320242023
Payment obligations outstanding at the beginning of the period$8,747 $5,395 $9,057 $10,171 
  Payment obligation additions during the period11,725 9,332 35,049 34,706 
  Payment obligations settled during the period(14,968)(6,876)(38,602)(37,026)
Payment obligations outstanding at the end of the period$5,504 $7,851 $5,504 $7,851 

Accrued Liabilities

Accrued liabilities consisted of the following:
(in thousands)September 30, 2024December 31, 2023
  
Accrued expenses$175,397 $113,596 
Accrued employee compensation and related expenses158,985 174,375 
Accrued taxes80,073 86,553 
Accrued customer incentives and refund obligations75,630 84,386 
Current lease liabilities20,962 19,802 
Accrued liabilities$511,047 $478,712 

Other Long-Term Liabilities

Other long-term liabilities consisted of the following:
(in thousands)September 30, 2024December 31, 2023
Accrued taxes$30,504 $39,642 
Other accrued long-term expenses32,375 25,884 
Other long-term liabilities$62,879 $65,526 

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NOTE 11. DEBT

Credit Facility

At September 30, 2024, we had $250.0 million in outstanding borrowings under our Credit Facility, all of which is the $250.0 million Term Loan, with a weighted average effective interest rate of 6.3%, excluding any impact of our interest rate swap. At December 31, 2023, we had $250.0 million outstanding under our Credit Facility, all of which was the $250.0 million Term Loan, with a weighted average effective interest rate of 6.0%, excluding any impact of our interest rate swap. At September 30, 2024, we had remaining borrowing availability of $998.2 million under our $1.25 billion Credit Facility. The funds available under the Credit Facility reflect a reduction due to the issuance of letters of credit, which were primarily issued in connection with our workers’ compensation insurance policy, for $1.8 million.

The applicable interest rate for the Credit Facility is calculated at a per annum rate equal, at our option, to either (i) a prime rate plus a margin ranging from 0.0% to 0.375% based on our consolidated leverage ratio, (ii) an adjusted term SOFR rate, plus 0.10%, plus a margin ranging from 0.875% to 1.375% based on our consolidated leverage ratio, or (iii) an adjusted daily simple SOFR rate, plus 0.10%, plus a margin ranging from 0.875% to 1.375% based on our consolidated leverage ratio. In March 2023, we entered into an interest rate swap contract to manage the economic effect of $250.0 million of variable interest borrowings under our Credit Facility. Refer to “Note 19. Hedging Instruments” for a discussion of our derivative instruments and hedging activity.

The Credit Facility contains affirmative, negative, and financial covenants customary for financings of this type. The negative covenants include restrictions on liens, indebtedness of subsidiaries of the Company, fundamental changes, investments, transactions with affiliates, and certain restrictive agreements. The sole 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, which is defined as the consolidated leverage ratio under the terms of the Credit Facility, not to exceed 3.5-to-1. As of September 30, 2024, we were in compliance with the covenants of the Credit Facility.

Senior Notes

The following describes all of our currently outstanding unsecured senior notes issued and sold in private placements (collectively, the “Senior Notes”) as of September 30, 2024:
(Principal Amount in thousands)
Issue DateDue DateSeriesPrincipal AmountCoupon RateSenior Note Agreement
12/11/201312/11/20252025 Series B Notes$75,000 4.04 %NY Life 2013 Note Agreement
9/4/20149/4/20262026 Senior Notes$75,000 3.72 %NY Life 2014 Note Agreement
6/18/20156/18/20252025 Series C Notes€88,857 1.785 %Prudential 2015 Amended Agreement
2/12/20152/12/20272027 Series B Notes$75,000 3.72 %MetLife 2014 Note Agreement
3/14/20193/14/20292029 Series C Notes$100,000 4.19 %MetLife 2014 Note Agreement
4/2/20204/2/2030MetLife 2030 Series D Notes$125,000 2.50 %MetLife 2014 Note Agreement
4/14/20204/14/2030Prudential 2030 Series D Notes$75,000 2.50 %Prudential 2015 Amended Agreement

The Senior Note Agreements contain affirmative, negative, and financial covenants customary for agreements of this type. The negative covenants include restrictions on liens, indebtedness of our subsidiaries, priority indebtedness, fundamental changes, investments, transactions with affiliates, certain restrictive agreements, and violations of laws and regulations. The sole 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, not to exceed 3.5-to-1. As of September 30, 2024, we were in compliance with the covenants of the Senior Note Agreements.
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NOTE 12. REPURCHASES OF COMMON STOCK

We primarily acquire shares of our common stock by repurchases in the open market. We also acquire shares that are surrendered by employees in payment for the statutory withholding taxes due on the vesting of restricted stock units and the settlement of deferred stock units, otherwise referred to herein as employee surrenders. We issue shares of treasury stock upon the vesting of certain restricted stock units and upon the exercise of certain stock options. The number of shares of treasury stock issued during the three and nine months ended September 30, 2024, and 2023, was not material.

The Inflation Reduction Act of 2022 imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022, and is included in the cost of treasury stock acquired in open market repurchases.

The following is a summary of our open market common stock repurchases, reported on a trade date basis, and shares acquired through employee surrenders:
(in thousands, except per share amounts)
For the Three Months Ended
September 30,		For the Nine Months Ended
September 30,
2024202320242023
  
Shares repurchased in the open market459 65 1,177 65 
Shares acquired through employee surrenders for statutory tax withholding1 1 19 20 
Total shares repurchased460 66 1,196 85 
Cost of shares repurchased in the open market$224,945 $35,070 $600,216 $35,070 
Cost of shares for employee surrenders218 231 10,486 9,907 
Total cost of shares$225,163 $35,301 $610,702 $44,977 
Average cost per share - open market repurchases$490.23 $536.03 $509.81 $536.03 
Average cost per share - employee surrenders$465.27 $506.74 $557.64 $503.43 
Average cost per share - total$490.20 $535.83 $510.57 $528.49 
NOTE 13. INCOME TAXES 

Our effective income tax rate was 22.1% for the three months ended September 30, 2024, compared to 20.8% for the three months ended September 30, 2023, and 21.3% for the nine months ended September 30, 2024, compared to 20.8% for the nine months ended September 30, 2023. The increase in our effective tax rate for the three and nine months ended September 30, 2024, compared to the same period during the prior year, was primarily due to lower tax benefits related to share-based compensation, partially offset by the tax impact of differences in geographical income mix.

The effective tax rate for the three and nine months ended September 30, 2024, was higher than the U.S. federal statutory tax rate of 21% due to U.S. state taxes, partially offset by tax benefits from share-based compensation.

Cash paid for income taxes, net of refunds, during the nine months ended September 30, 2024, and 2023, was $233.1 million and $160.9 million, respectively.


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NOTE 14. ACCUMULATED OTHER COMPREHENSIVE INCOME

The changes in Accumulated Other Comprehensive Income (“AOCI”), net of tax, consisted of the following:
For the Nine Months Ended September 30, 2024
Unrealized Gain (Loss) on Cash Flow Hedges, Net of Tax