3D Systems Corporation

03/09/2026 | Press release | Distributed by Public on 03/09/2026 14:04

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read together with our consolidated financial statements, and notes thereto, included in Item 8 of this Form 10-K. Certain statements contained in this discussion may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those reflected in any forward-looking statements. See "Risk Factors" in Part I, Item 1A and "Forward-Looking Statements." All amounts are in thousands, except share and per share amounts, or as otherwise indicated.
For discussion related to our results of operations and changes in financial condition for fiscal 2024 compared to fiscal 2023, refer to Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" ("MD&A") in our fiscal 2024 Form 10-K. Our fiscal 2024 Form 10-K was filed with the SEC on March 27, 2025.
Business Overview
3D Systems Corporation ("3D Systems" or the "Company" or "we," "our" or "us") markets our products and services through subsidiaries in North America and South America ("Americas"), Europe and the Middle East ("EMEA") and Asia Pacific and Oceania ("APAC"). We provide comprehensive 3D printing and digital manufacturing solutions, including 3D printers for plastics and metals, materials, software, and services, including maintenance, advanced manufacturing and applications engineering.
Our solutions support advanced applications in two key industry verticals which are our reportable segments: Healthcare Solutions (which includes dental, medical devices, personalized health services and regenerative medicine) and Industrial Solutions (which includes aerospace, defense, transportation and general manufacturing). We have more than 35 years of experience and expertise, which have proven vital to our development of an ecosystem and end-to-end digital workflow solutions that enable customers to optimize product designs, transform workflows, bring innovative products to market and drive new business models.
Recent Developments
2025 Restructuring Plan
In March 2025, the Company authorized the next phase of its multi-faceted cost savings and restructuring initiative (the "2025 Restructuring Plan"). The 2025 Restructuring Plan includes initiatives to deliver sustainable growth and profitability, enabled by a streamlining of both infrastructure and business processes, while consistently investing in core research and development ("R&D") activities to support long-term growth opportunities. Additionally, in May 2025, in response to the uncertain macroeconomic environment, the Company announced an incremental cost reduction initiative focused on labor force reductions to deliver incremental cost savings.
We incurred $8.5 million in severance and termination benefit costs related to headcount reductions during the year ended December 31, 2025. These costs were primarily cash charges and were generally recognized when probable and estimable consistent with the Company's past practices or statutory law. The Company does not expect to incur significant additional restructuring charges in 2026 related to the 2025 Restructuring Plan.
Divestitures
In December 2024, the Company entered into a definitive agreement with Hexagon AB for the sale of its Geomagic software business ("Geomagic"), which was included in our Industrial Solutions segment. On April 1, 2025, the Company completed the sale of Geomagic and received $119.4 million in cash, which reflected applicable purchase price adjustments. The Company recorded a pre-tax gain of $125.7 million from the sale of Geomagic in the year ended December 31, 2025.
In September 2025, the Company entered into a definitive agreement for the sale of its 3DXpert and Oqton businesses to Hubb Global Holdings, LLC. On October 31, 2025, the Company completed the sale of the 3DXpert and Oqton businesses for $3.3 million in cash, which reflected applicable purchase price adjustments, plus a revenue-based royalty receivable which had a present value of $7.1 million.
Neither of these divestitures is presented as discontinued operations in the consolidated financial statements because they do not represent a strategic shift that will have a major impact on the Company's operations.
Background
We earn revenue from the sale of products and services through our Healthcare Solutions and IndustrialSolutionssegments. The product categories include 3D printers and corresponding materials, digitizers, software licenses, 3D scanners and haptic devices. The majority of materials used in our 3D printers are proprietary. The services categories include maintenance contracts and services on 3D printers, software maintenance, software as a service subscriptions and healthcare solutions services.
Given the relatively high price of certain 3D printers and a corresponding lengthy selling cycle, as well as relatively low unit volume of the higher-priced printers in any particular period, a shift in the timing and concentration of orders and shipments from one period to another can materially affect reported revenue in any given period.
In addition to changes in sales volumes, there are two other primary drivers of changes in revenue from one period to another: (1) the combined effect of changes in product mix and average selling prices and (2) the impact of fluctuations in foreign currencies. As used in this MD&A, the price and mix effects relate to changes in revenue that are not able to be specifically attributed to changes in unit volume or changes in foreign exchange rates.
RESULTS OF OPERATIONS
Comparison of Results of Operations
Year Ended December 31,
(in thousands) 2025 2024 Change
Revenue $ 386,902 $ 440,121 $ (53,219)
Cost of sales 255,857 275,943 (20,086)
Selling, general and administrative expenses ("SG&A") 161,331 210,132 (48,801)
Research and development expenses ("R&D") 65,037 86,479 (21,442)
Asset impairment charges 760 144,967 (144,207)
Loss from operations $ (96,083) $ (277,400) $ 181,317
Revenue
The following table sets forth changes in our revenue for the year ended December 31, 2025.
(Dollars in thousands) Products Services
Total
Revenue - year ended December 31, 2024
$ 279,178 $ 160,943 $ 440,121
Change in revenue:
Volume (56,138) (20.1) % 439 0.3 % (55,699) (12.7) %
Price/mix (3,025) (1.1) % - - % (3,025) (0.7) %
Foreign currency translation 3,390 1.2 % 2,115 1.3 % 5,505 1.3 %
Net change (55,773) (20.0) % 2,554 1.6 % (53,219) (12.1) %
Revenue - year ended December 31, 2025
$ 223,405 $ 163,497 $ 386,902
For the year ended December 31, 2025, revenue decreased $53.2 million, or 12.1%, compared to the year ended December 31, 2024. The decrease in revenue was primarily due to a decline in product revenue of $55.8 million driven by lower materials volume to customers in the dental, service bureaus, and jewelry markets, and the impact of divestitures. Service revenue increased $2.6 million due to increased volume and the impact of foreign currency translation which was partially offset by the impact of the divestitures. Service revenue for the year ended December 31, 2024 was also impacted by an $8.7 million reversal of revenue due to a cumulative catch-up adjustment under a collaboration arrangement as the Company determined that incremental revenue attributable to milestone payments that are contingent upon the achievement of contractual development criteria are no longer probable of being earned.
Cost of sales and gross profit
Year Ended December 31,
2025 2024 Change in Gross Profit
Change in
Gross Profit Margin
(Dollars in thousands) Gross Profit Gross Profit Margin Gross Profit Gross Profit Margin $ %
Percentage Points
%
Products $ 72,260 32.3 % $ 103,319 37.0 % $ (31,059) (30.1) % (4.7) (12.7) %
Services 58,785 36.0 % 60,859 37.8 % (2,074) (3.4) % (1.8) (4.8)
Total $ 131,045 33.9 % $ 164,178 37.3 % $ (33,133) (20.2) % (3.4) (9.1) %
For the year ended December 31, 2025, cost of sales decreased to $255.9 million compared to $275.9 million for the year ended December 31, 2024. This decline was primarily attributable to a lower volume of printer and material sales. Gross profit for the year ended December 31, 2025 decreased $33.1 million, or 20.2%, compared to the year ended December 31, 2024. The decrease in gross profit was primarily due to a combination of lower materials sales volumes and the impact of the divestitures. Gross profit margin decreased to 33.9% for the year ended December 31, 2025 compared to 37.3% for the year ended December 31, 2024, primarily due to the divestitures and lower sales volumes.
Selling, general and administrative expenses
For the year ended December 31, 2025, SG&A decreased $48.8 million, or 23.2%, compared to the year ended December 31, 2024. The year-over-year decline in SG&A was primarily due to:
•$21.3 million decrease in compensation and benefits expense primarily related to lower compensation expense due to the impact of our restructuring actions and lower stock-based compensation expense;
•$19.0 million decrease in third-party service provider and consulting costs due to the increased cost to complete our fiscal 2023 audit during the year ended December 31, 2024, and decreased legal fees; and
•$10.2 million decrease in intangible asset amortization expense due to lower intangible asset balances in 2025 because of the impairment charges assessed during the quarter ended September 30, 2024, as described further below;
•partially offset by a $4.7 million increase due to severance costs associated with our restructuring actions.
Research and development expenses
For the year ended December 31, 2025, R&D decreased $21.4 million, or 24.8%, compared to year ended December 31, 2024. The year-over-year decline in R&D was primarily due to:
•$15.8 million decrease in compensation and benefits expense and other R&D expenses primarily due to improved operating efficiency and cost reductions realized from our restructuring activities.
Asset impairment charges
During the year ended December 31, 2025, the Company recognized a $0.6 million impairment of a right of use asset related to a lease of a facility that was exited as part of its 2025 Restructuring Plan and could not be subleased. The impairment is included within Asset impairment charges in our consolidated statements of operations.
During the year ended December 31, 2024, the Company recognized a goodwill impairment charge of $101.4 million related to the Healthcare Solutions reporting unit. This charge resulted from an interim impairment test performed during the three months ended September 30, 2024, which indicated the reporting unit's carrying value exceeded its fair value due to revised long-range cash flow forecasts prepared during the Company's annual planning process. The impairment is included within Asset impairment charges in our Consolidated Statements of Operations.
In addition, during the year ended December 31, 2024, the Company recorded an aggregate impairment charge of $42.3 million, within Asset impairment charges in our Consolidated Statements of Operations, as a result of concluding that the carrying value of the primary asset group underlying the Company's core operations exceeded the fair value of the asset group as of September 30, 2024. Of this amount, $31.2 million was allocated to intangible assets, $5.9 million to property and equipment and $5.2 million to right-of-use assets.
Non-operating income
The following table sets forth the components of non-operating income:
Year Ended December 31,
(in thousands) 2025 2024
Change
Foreign exchange gain, net
$ 3,637 $ 2,452 $ 1,185
Interest income 3,956 7,302 (3,346)
Interest expense (5,162) (2,564) (2,598)
Gain on disposition 139,590 - 139,590
Other income, net
3,654 20,214 (16,560)
Total non-operating income $ 145,675 $ 27,404 $ 118,271
Foreign exchange gain, net
Foreign exchange gain, net increased by $1.2 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to realized and unrealized gains resulting from the settlement of receivables and payables in a currency other than the subsidiaries functional currency.
Interest income
Interest income decreased $3.3 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 due to the Company's lower cash and cash equivalent balances.
Interest expense
Interest expense increased by $2.6 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to interest expense related to the 5.875% convertible senior secured notes due 2030 (the "2030 Notes") entered into in the second quarter of 2025.
Gain on disposition
The gain on disposition of $139.6 million for the year ended December 31, 2025 was due to the sale of the Geomagic business on April 1, 2025 ($125.7 million) and the 3DXpert and Oqton businesses on October 31, 2025 ($13.9 million).
Other income, net
Other income, net, decreased $16.6 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to a higher gain on the repurchase of debt in the year ended December 31, 2024.
Income Taxes
For the years ended December 31, 2025 and 2024, we reported income tax expense of $14.9 million and $2.2 million, respectively. The Company's effective tax rates for both years were significantly below blended U.S. and foreign jurisdictions' statutory tax rates primarily due to the Company's reported losses and the recognition of a full deferred tax asset valuation allowance in various jurisdictions in both years. Additionally, the year ended December 31, 2025 was impacted by a gain recognized in connection with the divestiture of Geomagic and some foreign return to provision adjustments recorded in the period.
Segment Results
The following table presents the revenue and gross profit amounts reported by each of our segments for the years ended December 31, 2025 and 2024:
Segment Revenue
Segment Gross Profit
Year Ended Year Ended
(in thousands) December 31, 2025 December 31, 2024 Change December 31, 2025 December 31, 2024 Change
Healthcare Solutions $ 179,589 $ 189,736 $ (10,147) $ 71,806 $ 73,499 $ (1,693)
Industrial Solutions 207,313 250,385 (43,072) 59,239 90,679 (31,440)
Total Company $ 386,902 $ 440,121 $ (53,219) $ 131,045 $ 164,178 $ (33,133)
Healthcare Solutions
Revenue
For the year ended December 31, 2025, Healthcare Solutions revenue decreased $10.1 million, or 5.3%, compared to the year ended December 31, 2024. This decrease in segment revenue was primarily due to a decline in product revenue of $22.4 million. The decline in product revenue was primarily due to lower material sales in the dental market, driven by lower volumes with a key customer. The decline in product revenue was partially offset by a $12.3 million increase in services revenue driven by higher personalized healthcare solutions revenue and parts manufacturing which was partially offset by a decline in printer services. Service revenue for the year ended December 31, 2024 was impacted primarily by an $8.7 million reversal of revenue due to a cumulative catch-up adjustment under a collaboration arrangement as the Company determined that incremental revenue attributable to milestone payments that are contingent upon the achievement of contractual development criteria are no longer probable of being earned.
Gross Profit
For the year ended December 31, 2025, Healthcare Solutions gross profit decreased $1.7 million, or 2.3%, compared to the year ended December 31, 2024. The decrease in segment gross profit was primarily due to lower sales volumes which was partially offset by favorable price/mix.
Industrial Solutions
Revenue
For the year ended December 31, 2025, Industrial Solutions revenue decreased $43.1 million, or 17.2%, compared to the year ended December 31, 2024. The decrease in revenue was related to a decrease in printer and materials revenue of $33.3 million primarily related to reduced volumes in the service bureaus and jewelry markets and the impact of divestitures, partially offset by increased sales in the aerospace and defense market. Service revenue decreased by $9.8 million primarily due to the impact of divestitures in the year ended December 31, 2025.
Gross Profit
For the year ended December 31, 2025, Industrial Solutions gross profit decreased $31.4 million, or 34.7%, compared to the year ended December 31, 2024. The decrease in segment gross profit was primarily due to the impact of the divestitures, unfavorable price/mix and lower sales volumes.
Liquidity and Capital Resources
The following table sets forth the Company's operating working capital at December 31, 2025, and 2024.
Change
(Dollars in thousands) December 31, 2025 December 31, 2024 $ %
Cash and cash equivalents $ 95,635 $ 171,324 $ (75,689) (44.2) %
Accounts receivable, net 83,806 101,471 (17,665) (17.4) %
Inventories 127,496 118,530 8,966 7.6 %
306,937 391,325 (84,388) (21.6) %
Less:
Current operating lease liabilities 11,583 9,514 2,069 21.7 %
Accounts payable 41,017 41,833 (816) (2.0) %
Accrued and other liabilities 46,656 45,488 1,168 2.6 %
99,256 96,835 2,421 2.5 %
Operating working capital $ 207,681 $ 294,490 $ (86,809) (29.5) %
We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. In doing so, we review and analyze our current cash on hand, the number of days our sales are outstanding, inventory turns, capital expenditure commitments and accounts payable turns. Our cash requirements primarily consist of funding working capital and capital expenditures. Differences between the amounts of working capital item changes in the cash flow statement and the balance sheet changes for the corresponding items are primarily the result of foreign currency translation adjustments.
At December 31, 2025, cash and cash equivalents totaled $95.6 million and decreased $75.7 million since December 31, 2024. This decrease resulted primarily from the repayment of long-term debt of $170.0 million, cash used in operations of $87.8 million, share repurchases of $15.0 million and capital expenditures of $9.9 million, which were partially offset by proceeds from sales of assets and businesses of $122.7 million and proceeds from borrowings of $92.0 million.
In order to reduce our current debt obligations, in December 2025, the Company entered into separate, privately negotiated agreements with a limited number of existing holders (the "Transaction Participants") of the Company's 2026 Notes to exchange $30.8 million aggregate principal amount of 2026 Notes held by the Transaction Participants for an aggregate of 16,625 thousand shares of the Company's common stock, par value $0.001 per share ("the Exchange"). Immediately following the Exchange, $3.9 million in aggregate principal amount of the 2026 Notes remained outstanding. The Exchange was primarily a non-cash transaction.
Cash held outside the U.S. at December 31, 2025 was $33.0 million, or 34.5% of total cash and cash equivalents, compared to $63.8 million, or 37.3% of total cash and cash equivalents at December 31, 2024. As our previously unremitted earnings have been subjected to U.S. federal income tax, we expect any repatriation of these earnings to the U.S. would not incur significant federal and state taxes. However, these dividends are subject to foreign withholding taxes that are estimated to result in the Company incurring tax costs in excess of the cost to obtain cash through other means. Cash equivalents are comprised of funds held in money market instruments and are reported at their current carrying value, which approximates fair value due to the short-term nature of these instruments. We strive to minimize our credit risk by investing primarily in investment grade, liquid instruments and limit exposure to any one issuer depending upon credit quality. See "Cash flow"discussion below.
Cash flow
The Company currently funds its operations, including working capital requirements, capital expenditures and investments by using cash; cash equivalents; cash flow from operations, which can vary widely from quarter to quarter; and financing activities, as necessary. We expect that cash flow from operations, cash and cash equivalents, and other sources of liquidity, such as issuing equity or debt securities, subject to market conditions, will be available and sufficient to meet all our cash requirements over the next twelve months. Cash requirements for periods beyond the next twelve months will depend on, among other things, the Company's profitability and its ability to manage working capital requirements and, if needed, its ability to identify and secure other potential sources to fund future working capital needs and meet capital expenditure requirements. See "Risk Factors-Operational & Financial Risk Factors-If we do not generate net cash flow from operations and if we are unable to raise additional capital, our financial condition could be adversely affected and we may be unable to execute our business strategy."
We are subject to a financial covenant under the 2030 Indenture (as defined below) requiring us to maintain at least $20.0 million in qualified cash. As of December 31, 2025, we were in compliance with the covenants included in the 2030 Indenture. However, if we are unable to generate sufficient cash flow in the future, we may be non-compliant which could result in an event of default making the 2030 Notes, with an outstanding principal balance of $92.0 million as of December 31, 2025, due immediately. See "Risk Factors-Operational & Financial Risk Factors-Servicing or refinancing our debt may require a significant amount of cash, and we may not have sufficient cash or the ability to raise the funds necessary to settle conversions of the 5.875% convertible senior secured notes due 2030 (the "2030 Notes") and the 0% convertible senior notes due 2026 (the "2026 Notes") (collectively the "Notes") in cash, repay the Notes at maturity, or repurchase the Notes as required following a fundamental change."
The following is a summary of the changes in the Company's cash flows, followed by a brief discussion of these changes:
Year Ended
(in thousands) December 31, 2025 December 31, 2024
Change
Net cash used in operating activities
$ (87,828) $ (44,887) $ (42,941)
Net cash provided by (used in) investing activities
108,990 (19,025) 128,015
Net cash used in financing activities
(101,667) (91,265) (10,402)
Operating Activities
Cash flows used in operating activities were $87.8 million during the year ended December 31, 2025, an increase of $42.9 million, as compared to the year ended December 31, 2024. The year-over-year change in operating cash flows was primarily attributable to the following factors:
•Year-over-year decrease of $56.8 million in operating cash flows from net earnings, net of non-cash items due to unfavorable business performance and restructuring actions.
•The aggregate changes in trade accounts receivable, inventory, and trade accounts payable provided $0.5 million of cash during the year ended December 31, 2025 as compared to providing $3.6 million during the prior year comparable period. The amount of cash flow generated from or used by the aggregate of trade accounts receivable, inventories, and trade accounts payable depends upon how effectively we manage the cash conversion cycle, which generally represents the number of days that elapse from the day we pay for the purchase of raw materials and components to the collection of cash from our customers, and can be significantly impacted by the timing of collections and payments in a period.
•The aggregate change in prepaid expenses, other assets, accrued expenses, and other liabilities used $31.6 million in the year ended December 31, 2025 as compared to providing $2.6 million in the prior year comparable period. The year-over-year changes were driven by the timing of accruals and payments and tax-related amounts.
Investing Activities
Net cash provided by investing activities was $109.0 million during the year ended December 31, 2025, an increase of $128.0 million, as compared to the year ended December 31, 2024, driven primarily by proceeds from the sale of the Geomagic business.
Financing Activities
Net cash used in financing activities was $101.7 million during the year ended December 31, 2025, an increase of $10.4 million, as compared to the year ended December 31, 2024, driven primarily by net repayments of long-term debt of $84.1 million and stock repurchases of $15.0 million in the year ended December 31, 2025 as compared to net repayments of long-term debt of $87.2 million in the year ended December 31, 2024. There were no stock repurchases during the year ended December 31, 2024.
Material Cash Requirements
The Company's material cash requirements consist of the following contractual commitments and other obligations:
Indebtedness
Convertible senior secured notes due 2030
Pursuant to an indenture dated June 23, 2025 (the "2030 Indenture"), the Company issued $92.0 million aggregate principal amount of 5.875% convertible senior secured notes due 2030 (the "2030 Notes") in a private placement to a limited number of qualified institutional buyers. The net proceeds from the 2030 Notes, along with $78.0 million of cash on hand, were used to repurchase an aggregate principal amount of $179.7 million of the Company's outstanding 0% convertible senior notes due 2026 (the "2026 Notes").
The 2030 Notes are senior secured obligations, guaranteed by certain U.S. subsidiaries of the Company (the "Note Parties"), and bear interest semiannually at a rate of 5.875%, payable on June 15 and December 15 of each year, beginning December 15, 2025. The 2030 Notes are secured on a first-priority basis by substantially all assets of the Note Parties, subject to certain exceptions (including with respect to the intellectual property of the Note Parties; provided that, certain breaches by the Company or any of its subsidiaries of the limitation on liens covenant in the 2030 Indenture with respect to liens on its intellectual property will cause the 2030 Notes to automatically become secured by a prior security interest in all the intellectual property of the Note Parties). The 2030 Indenture also includes certain financial covenants, including a requirement for the Note Parties to maintain certain minimum cash, accounts receivable and inventory balances each quarter. Under the original 2030 Indenture, as of the last day of each fiscal quarter, the Note Parties were required to maintain at least $40.0 million in qualified cash and a minimum of $75.0 million in accounts receivable and inventory, and the Company was required to maintain at least $16.8 million in restricted cash until certain conditions were satisfied.
In December 2025, the Company entered into a second supplemental indenture (the "Second Supplemental Indenture") to the 2030 Indenture, where certain restrictions were amended in exchange for cash payments in an aggregate amount of approximately $1.8 million paid to the holders of the 2030 Notes. The Second Supplemental Indenture amended the minimum cash requirement to require the Note Parties to maintain at least $20.0 million in qualified cash as of the last day of each fiscal quarter, removed the restricted cash account covenant and released the related lien on the restricted cash amount.
The initial conversion rate was 445.6328 shares per $1,000 principal amount, equivalent to a conversion price of approximately $2.24 per share, which reflected a 20% premium over the $1.87 closing price of the Company's common stock on June 17, 2025. The 2030 Notes are set to mature on June 15, 2030, unless earlier redeemed, repurchased, or converted in accordance with their terms.
Prior to March 15, 2030, the 2030 Notes are only convertible upon the occurrence of certain events and will be convertible thereafter at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.
The 2030 Notes are convertible into cash, shares of the Company's common stock or a combination of cash and shares of common stock, at the election of the Company.
Holders of the 2030 Notes have a one-time put right on June 23, 2028, to require the Company to repurchase all or a portion of their 2030 Notes for cash at 100% of the principal amount, plus accrued and unpaid interest. Additionally, upon a fundamental change (as defined in the 2030 Indenture), holders may require repurchase on the same terms. The Company is required to increase the conversion rate for holders who convert in connection with certain fundamental changes or in connection with a redemption.
On or after June 23, 2028 and prior to the 41stscheduled trading day immediately preceding the maturity date, the 2030 Notes will be redeemable, in whole or in part, at the Company's option, for cash, provided that the last reported sale price of the Company's common stock has been at least 130% of the conversion price then in effect for a specified period, as described in the 2030 Indenture.
The effective interest rate on the 2030 Notes is 8.6%, inclusive of original issue discounts, commissions, and offering expenses.
Convertible senior notes due 2026
The 2026 Notes were issued pursuant to an indenture dated November 16, 2021 (the "2026 Indenture") between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"), in an initial aggregate principal amount of $460.0 million. Although the 2026 Notes do not bear regular interest and their principal does not accrete, they have an annual effective interest rate of 0.594%, reflecting original issue discounts, commissions, and offering expenses. The 2026 Notes had an initial conversion rate of 27.8364 shares of common stock per $1 principal amount of Notes (which is subject to adjustment in certain circumstances). This is equivalent to an initial conversion price of approximately $35.92 per share. The conversion rate is subject to customary adjustments under certain circumstances in accordance with the terms of the 2026 Indenture. The 2026 Notes are scheduled to mature on November 15, 2026, unless earlier redeemed, repurchased, or converted in accordance with their terms.
Prior to August 15, 2026, the 2026 Notes are only convertible upon the occurrence of certain events and will be convertible thereafter at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the Company will pay cash for the principal portion of the 2026 Notes being converted and may elect to settle the remainder of its conversion obligation, if any, in excess of the principal amount in cash, shares of the Company's common stock or a combination of cash and shares of common stock.
The 2026 Notes are redeemable, in whole or in part, for cash at the Company's option at any time, and from time to time, on or after November 20, 2024 and before the 41stscheduled trading day immediately preceding the maturity date, but only if the last reported sale price per share of the Company's common stock has been at least 130% of the conversion price then in effect for a specified period of time.
At December 31, 2025, we had $96.0 million of outstanding principal, comprised of $3.9 million of 2026 Notes classified as a current liability and $92.0 million of the 2030 Notes classified as long-term debt. Management may consider pursuing additional long-term financing if it is appropriate in light of cash requirements for operations or strategic opportunities, which could result in higher financing costs.
Purchase Commitments
We have purchase commitments under legally enforceable agreements for goods and services with defined terms as to quantity, price and timing of delivery. The Company has purchase commitments in excess of a year primarily related to printer assemblies, inventory, capital expenditures, and software licenses. As of December 31, 2025, such purchase commitments totaled $15.9 million, with $8.1 million expected to be purchased within the next twelve months.
Leases
The Company had operating and financing lease obligations (inclusive of interest) of $87.5 million at December 31, 2025, primarily related to real estate and equipment leases, of which approximately $17.6 million in payments are expected over the next twelve months. For more information on the Company's leases, refer to the consolidated financial statements in Item 8 of this Form 10-K.
Indemnification
In the normal course of business, we periodically enter into agreements to indemnify customers or suppliers against claims of intellectual property infringement made by third parties arising from the use of our products. Historically, costs related to these indemnification provisions have not been significant. We are unable to estimate the maximum potential impact of these indemnification provisions on our future results of operations.
To the extent permitted under Delaware law, we indemnify our directors and officers for certain events or occurrences, when the director or officer is, or was, serving at our request in such capacity, subject to limited exceptions. The maximum potential amount of future payments we could be required to make under these indemnification obligations is unlimited; however, we
have directors' and officers' insurance coverage that may enable us to recover future amounts paid, subject to a deductible and to the policy limits. There is no assurance that the policy limits will be sufficient to cover all damages, if any.
Sources of Funding to Satisfy Material Cash Requirements
The Company believes it has the financial resources needed to meet its anticipated cash requirements during the next twelve months. Cash requirements for periods beyond the next twelve months will depend on, among other things, the Company's profitability and its ability to manage working capital requirements, and if needed, its ability to identify and secure other potential sources to fund future working capital needs and meet capital expenditure requirements.
Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). In doing so, we make estimates and assumptions that affect the amounts we reported as assets, liabilities, revenues, expenses, gains and losses, as well as related disclosures of contingent assets and liabilities. In some cases, we reasonably could have applied different estimates and/or assumptions and changes in our accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ materially from our estimates. To the extent that there are material differences between our estimates and actual results, our financial condition or results of operations will be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting estimates, which we discuss further below. We have reviewed our critical accounting estimates with the Audit Committee of our Board of Directors.
See Note 2 to the consolidated financial statements in Item 8 of this Form 10-K for a summary of our significant accounting policies.
Revenue recognition
Revenue is recognized for the amount of consideration we expect to receive in exchange for products or services when control of those promised products or services is transferred to customers, which generally occurs when the goods have been shipped or delivered to the customer, risk of loss has transferred to the customer, and we have a present right to payment.
We enter into contracts that include various combinations of products and services that are generally capable of being distinct and are accounted for as separate performance obligations. For such arrangements, we allocate revenue to each performance obligation based on its relative standalone selling price ("SSP"). Judgment is required to determine the SSP for each distinct performance obligation in a contract. For the majority of items, we estimate SSP using historical transaction data. We use a range of amounts to estimate SSP when we sell each of the products and services separately and need to determine whether there is a discount to be allocated based on the relative SSP of the various products and services. In instances where SSP is not directly observable, such as when the product or service is not sold separately, we determine the SSP using information that may include market conditions and other observable inputs.
In some circumstances, we have more than one SSP for individual products and services due to the stratification of those products and services by customers, geographic region or other factors. In these instances, we may use information such as the size of the customer and geographic region in determining the SSP. The determination of SSP is an ongoing process, and information is reviewed regularly in order to ensure SSP reflects the most current information or trends.
We enter into collaborative arrangements that we may be required to account for in accordance with Accounting Standards Codification ("ASC") Topic 606, "Revenue from Contracts with Customers," because our collaboration partner meets the definition of a customer. When these arrangements provide an opportunity for the Company to earn milestone payments based upon the achievement of agreed-upon contract objectives, we must assess if and when it is appropriate to include those milestone payments, which represent variable consideration, in the contract's transaction price. This assessment, which impacts the timing and the amount of revenue recognized under a collaborative arrangement accounted for in accordance with ASC 606, requires management to conclude that it is probable that a significant reversal of the amount of cumulative revenue recognized with respect to a collaborative agreement will not occur as a result of including one or more milestone payments in the arrangement's transaction price, including when any uncertainty associated with the achievement of such milestones is ultimately resolved. The evaluation of when it is appropriate to include amounts earned upon the achievement of milestones in a contract's transaction price requires the application of significant assumptions and judgments, which management reassesses at the end of each reporting period.
See Note 2 and Note 4 to the consolidated financial statements in Item 8 of this Form 10-K for further discussion.
Income taxes
We are subject to income taxes in the U.S. and foreign jurisdictions. Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes.
Although we believe we have adequately reserved for our uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes and the effective tax rate in the period in which such determination is made.
The provision for income taxes includes the effect of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest and penalties. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service ("IRS") and other tax authorities which may assert assessments against us. We regularly assess the likelihood of adverse outcomes resulting from these examinations and assessments to determine the adequacy of our provision for income taxes.
See Note 2 and Note 17 to the consolidated financial statements in Item 8 of this Form 10-K for further discussion.
Inventories
Inventories are stated at the lower of cost or net realizable value, with cost being determined using standard costing, which approximates the first-in, first-out method.
We maintain reserves to reduce the value of inventory based on the lower of cost or net realizable value, including allowances for excess and obsolete inventory. These reserves are based on management's assumptions about and analysis of relevant factors including current levels of orders and backlog, historical and forecasted demand, market conditions and new products or innovations that diminish the value of existing inventories. If actual market conditions deteriorate from those anticipated by management, additional allowances for excess and obsolete inventory could be required and may be material to our results of operations.
See Note 2 to the consolidated financial statements in Item 8 of this Form 10-K for further discussion.
Goodwill & other long-lived assets, including intangible assets
Long-lived assets, including intangible assets
We review long-lived assets (or asset groups), including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset (or asset group) may not be recoverable. We assess the recoverability of the carrying value of assets (or asset groups) held for use based upon a review of undiscounted projected cash flows. Impairment losses, where identified, are measured as the excess of the carrying value of a long-lived asset (or asset group) over its estimated fair value, as determined using discounted projected cash flows. Our estimation of discounted projected cash flows requires us to make certain assumptions, including long-term revenue and expense forecasts, profit margins, discount rates and terminal growth rates.
See Note 2, Note 6, Note 7, and Note 10 to the consolidated financial statements in Item 8 of this Form 10-K for discussion of the long-lived asset impairment charges recognized during the years ended December 31, 2024 and 2023.
Goodwill
Goodwill represents the amount by which the purchase price paid to consummate a business combination exceeds the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in the business combination. Goodwill is required to be assigned to a reporting unit for purposes of subsequent measurement and, as of December 31, 2025 and 2024, all of our reported goodwill was assigned to our Healthcare reporting unit.
We assess goodwill for impairment at least annually and, between annual impairment assessments, when circumstances indicate that there is a likelihood of greater than 50% that the carrying value of a reporting unit, inclusive of any assigned goodwill, exceeds the reporting unit's fair value. On a forward-looking basis, such circumstances may include (1) a significant and sustained decrease in the trading price of our common stock that may suggest that the fair value of the Company and, accordingly, the fair value of our Healthcare reporting unit has declined, (2) a significant adverse change in the business climate for our Healthcare reporting unit, (3) a significant adverse change in the performance of our Healthcare reporting unit and/or (4) a decision to dispose of a significant portion of our Healthcare reporting unit.
When required to be performed, a quantitative goodwill impairment test compares the carrying value of a reporting unit to its fair value, and a goodwill impairment charge results when the reporting unit's carrying value exceeds its fair value. The performance of a quantitative goodwill impairment test requires management to apply significant estimates and judgment - particularly to (1) estimate the fair value of the Company and each of our reporting units and (2) determine the carrying value of each of our reporting units, since we do not maintain separate balance sheets for our reporting units.
We estimate the fair value of our reporting units based primarily upon discounted cash flow projections for their underlying operations, which requires us to make significant assumptions regarding estimated cash flows, including long-term revenue and expense forecasts, profit margins, discount rates and terminal growth rates. We develop these assumptions based on the market risks unique to each reporting unit. In addition to the use of discounted cash flow projections, when appropriate, our estimates of the fair values of our reporting units include the results of applying the guideline company valuation method, which is a market approach. The application of the guideline company valuation method requires us to make judgments regarding (1) the appropriate set of comparable publicly traded guideline peer companies for which observable market multiples should be considered and (2) the appropriate multiple(s) to select from the range of multiples that may be observed for those guideline companies. We separately use reasonable and consistent allocation methodologies and approaches to allocate asset and liability balances to our reporting units when an account balance is not directly attributable to a specific reporting unit.
The remaining goodwill assigned to our Healthcare reporting unit could become subject to impairment upon any decrease in the estimated fair value of the Healthcare reporting unit or any increase in the estimated carrying value of the Healthcare reporting unit. Accordingly, over time, the key estimates, assumptions, and judgments that were used to estimate the fair value of our Healthcare reporting unit may change due to factors such as changes in market conditions and/or the actual performance of our Healthcare reporting unit. Similarly, over time, the carrying value of our Healthcare reporting unit could increase due to factors such as capital expenditures and/or the composition of the assets and liabilities of the Company and the underlying process and estimates required to allocate assets and liabilities that are not directly attributable to a specific reporting unit between/amongst our reporting units. Any unfavorable changes to the key estimates, assumptions, judgments or inputs utilized in our most recent quantitative goodwill impairment test - either on an individual basis or in the aggregate - could result in the recognition of impairment charges in the future.
See Note 2 and Note 8 to the consolidated financial statements in Item 8 of this Form 10-K for discussion of the goodwill impairment charges recognized during the years ended December 31, 2024 and 2023. Our annual goodwill impairment test performed for the year ended December 31, 2025 did not result in the recognition of a goodwill impairment charge.
Recent Accounting Pronouncements
See Note 2 to the consolidated financial statements in Item 8 of this Form 10-K for a discussion of recent accounting pronouncements.
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