Danaher at TD Cowen Conference: Strategic Recovery and Future Growth

On Wednesday, 05 March 2025, Danaher Corporation (NYSE: DHR) presented at the TD Cowen 45th Annual Healthcare Conference, outlining its strategic vision for recovery and growth. CEO Reiner Blair discussed the company’s performance in 2024 and its ambitious goals for 2025, while addressing challenges such as cost impacts in China. Danaher aims to exceed its guidance for revenue and earnings, leveraging its innovation and strategic positioning.

Key Takeaways

• Danaher expects a 3% year-over-year increase in non-GAAP core revenue for 2025.
• The company is targeting at least $150 million in cost reductions to mitigate challenges in China.
• Danaher is focused on margin expansion and reinvestment in growth projects.
• Bioprocessing recovery is underway, with significant growth expected in the long term.
• The company is actively pursuing M&A opportunities aligned with strategic goals.

Financial Results

• 2024 Performance: Danaher concluded the year as anticipated, with a mid-year recovery following a contraction.
• 2025 Outlook: The company projects a 3% increase in core revenue, aiming to surpass initial guidance.
• Cost Reduction: Plans to reduce costs by $150 million, focusing on challenges in China.
• Margin Expansion: Committed to expanding margins while reinvesting in growth initiatives.
• Long-Term Growth: Targeting a long-term growth algorithm for 2026 and beyond, with operating margins in the low to mid-30s.

Operational Updates

• China Impact: Addressing a $150 million impact from volume-based procurement changes.
• Life Science: Anticipates improvement in the life science segment throughout the year.
• Bioprocessing Recovery: Recovery is progressing, with major customers returning to normal operations.
• Cytiva Innovation: Continues to innovate with new product launches.
• Cepheid Growth: Achieved a fivefold increase in revenue since acquisition.
• Genomic Medicines: Currently, less than 10% of sales; potential for growth.
• Capital Deployment: Actively seeking M&A opportunities with favorable valuations.

Future Outlook

• Long-Term Growth Algorithm: Clear path to sustained growth, with strong operating margins.
• Bioprocessing Growth: Expected to contribute significantly to long-term growth.
• China Additive: Anticipates China will positively impact overall growth.
• Biosimilars: Sees potential in biosimilars for increased manufacturing volumes.
• Cepheid Durability: Expects double-digit growth from the core portfolio in 2025 and beyond.

Q&A Highlights

• China VBP: Confident in managing the impact of China’s procurement changes.
• Macro Uncertainty: Adopting a cautious approach due to uncertainties in the life science segment.
• Bioprocessing Market: Optimistic about the ongoing recovery in the bioprocessing market.
• Cytiva Positioning: Strongly positioned with a comprehensive product portfolio.
• Biosimilars Opportunity: Positive outlook on the potential for biosimilars.

In conclusion, Danaher’s strategic focus on recovery and growth was evident at the TD Cowen Conference. For more detailed insights, please refer to the full transcript below.

Full transcript - TD Cowen 45th Annual Healthcare Conference:

Dan Brennan, Analyst, TD Cowen: Terrific. Welcome day three of the TD Cowen Global Healthcare Conference. I’m Dan Brennan, follow Tools and Diagnostics.

Pleased to be joined with me on stage, CEO of Danaher, Reiner Blair. So Reiner, welcome. Dan, thanks for having us. Appreciate it. Terrific.

Listen, I thought it’d be great to have you start out just with some high level comments, about, you know, how 2024 finished. You could talk a little bit about your 2025 priorities, and then we’ll get into some of the details here.

Reiner Blair, CEO, Danaher: Great. Thanks for that. Well, 2024 finished essentially the way we thought it would. In the first half of the year, we still had the contraction of the post pandemic reset, and then we started the recovery beginning here in the middle of the year and then returning to growth. And now as we think about 2025, really, the recovery is in full swing.

We see 2025 as a year of recovery on the way to our long term growth algorithm here for 2026 and beyond. As we think about our margins, we talked about our margins here more recently and have put out some information that we’re going to be taking out at least $150,000,000 of costs. And that’s just to recognize that what we saw in China here, in the last days of the year needs to be addressed and and we’ve sized it up and taken our decisions. And just to say that, look, we started with our guide in 2025 and we’re working every day to beat it both from the top and the bottom line.

Dan Brennan, Analyst, TD Cowen: Maybe. Terrific. My next question was actually going to be on China, given the 10 ks 10 ks disclosure post the fourth quarter results, the cost out actions there. So so so I guess the first question would be maybe walk through your confidence what the visibility is that this, you know, material diagnostic price pressure that occurred in China, will cease after 2025.

Reiner Blair, CEO, Danaher: Well, we spent a fair amount of time, on this question. What actually happened is the Chinese government wanted to really accelerate what was going on with the volume based procurement. You recall our original timing considerations around, BBP were $50,000,000 a year, ’24, ’20 ’5, and ’26. And the Chinese government stepped in and changed the mechanism to an a reimbursement reduction. And so then it changed to a hundred and $50,000,000 impact in 2025 on top of the $50,000,000 impact in ’24.

So we had to really go assay by assay to understand what the impact would be, what the phasing would be. And we feel comfortable that we have our arms around that. And that’s why we’re also addressing it with the cost actions that we’re taking. And if there’s anything, any any tail, left for ’26, we we don’t believe it’ll be, meaningful and that we would

Dan Brennan, Analyst, TD Cowen: be talking about it. Okay. So Trump administration is certainly bringing forth a substantial amount of policy change. Much of it, you know, kind of directed or not directed towards, but certainly influencing the life science tools industry, a policy towards China. You’ve got tariffs, reciprocal tariffs that these countries are reacting with and then you have the pressure that they’re, the government’s looking to seek to apply to NIH funding, creating a lot of volatility.

So, your first quarter guide, of low single digit organic growth, you talked about contemplating some impact from macro uncertainty. I was hoping you can elaborate a little bit on kind of what you’re baking in in that first quarter and or for the 2025 outlook and how you just think about all these policy initiatives and the potential impact of down there.

Reiner Blair, CEO, Danaher: Well, as you said, there certainly is a lot going on and and we did think, for the ’25 guide, it would be very prudent to start paying attention to what was an elevated noise level, if you will, that we see concentrated in our life science segment for the most part. And just as a reminder, our direct sales to the NIH are less than 1% of total Danaher sales. And if you think about the extramural and intramural spending and the differences there, our total academic exposure is less than 5% of our global sales. So it’s important to keep that in mind because our business and portfolio really focuses on pharma, clinical and the applied markets. And so we see a bit less exposure there, but we still did think it was prudent to be a little more conservative here at the beginning of the year.

And we would actually expect our life science segment to continue to

Dan Brennan, Analyst, TD Cowen: improve as the year progresses. Terrific. Maybe shifting over to bioproduction, you know, fourth quarter growth for Danaher came in at high single digit bookings growing high single digit quarter to quarter, biomass of over 30% year over year. Just walk through where the broader market stands today versus being back to normal. How close are we?

Are we already back to normal? Just kind of walk through some of the factors.

Reiner Blair, CEO, Danaher: Well, I mean, from our perspective in bioprocessing, the recovery is in full swing. We see large customers, large CDMOs, really those that have commercial drugs essentially back to normality. Nobody’s talking about inventory to stocking anymore. That’s just not a factor. As you think about the smaller biotech segment, we’re starting to see a little bit more activity there.

Those smaller companies have gotten organized around which programs they really want to focus on. They’ve got a little bit more money, and we’re starting to see movement there as well. And then lastly, we need to think about equipment. Equipment orders have gotten better. We still think that equipment might be shrinking slightly here in ’twenty five, but that’s really only a timing delay, right?

Some of these large equipment orders have lead times that vary between three months, six months, twelve months. And so what we’re seeing today from a revenue perspective is really from six to twelve months ago. But from an order activity, we’re also seeing improvement there. So we’re very encouraged with what we’re seeing in the bioprocessing market.

Dan Brennan, Analyst, TD Cowen: Just give me just as a follow-up. So so so your six to 7% organic growth expectations for this year in bioproduction, like if we do it like a four or five year CAGR before COVID, it looks to come up with something in the mid single digit, maybe mid single digit plus. So it certainly feels like a gap still below the high single digit long term guide for the segment that you’ve discussed. So how do we think about and you know you just addressed some of it with the equipment piece, but how do we think about, the potential components into that guide and you know is our math on the gap correct?

Reiner Blair, CEO, Danaher: Well, our math starts in 2019 if you look at a five year CAGR and, what we see there in our business is high single digit growth. So that is in line with what we expect this business to grow in the long term. And as we now accelerate out of this recovery period into normality, sort of bridging into ’26, we think that this is rational and along the lines of what we expect.

Dan Brennan, Analyst, TD Cowen: Maybe just one more on China related to bioproduction because, you know, a few maybe it was couple of quarters ago, a year ago, you kind of kind of quantify the size of your China business and how that had taken a step down. And and I’m just wondering where China stands today for bioproduction for Danaher. How big that business is? Is that business stabilizing? Just how is that factored into this outlook?

Reiner Blair, CEO, Danaher: I mean, this we see China stable today at that lower activity level. It’s going to take some time for China to work through some of the incentives for ultimately pharmaceutical production and marketing in China. But like I said, we see that business stabilizing. Maybe it’s down a little bit by the end of the year here based on some equipment comps, But fundamentally, the activity level is stable. And we continue to expect China really for the long term to be additive to the overall growth rate of Danner.

Dan Brennan, Analyst, TD Cowen: Terrifically. And then just kind of zooming out on Cytiva, You had the Investor Day there a few years ago. Just speak strategically, Cytiva, like how do you think Cytiva is doing? What are the areas maybe you’re gaining share? What are the areas you’re investing in, strategically?

Like, you know, you look out the next few years, you know, we’ll get you excited about Cytiva.

Reiner Blair, CEO, Danaher: I get excited about Cytiva every single day. Look, we are really well set up and very well positioned. We have the broadest portfolio that is on the equipment side, as well as the consumable side. We have the deepest portfolio. So independent of what modality you’re looking to produce, while 75% of our business today is in monoclonal antibodies and less than 10%, let’s say, in nucleic acid based, we’re able to accompany our partners, our customers throughout all of those modalities.

So first of all, we’ve got you covered. Second, we have a global team that has a technical depth and a scientific depth that is unrivaled in the marketplace, and that’s driving our innovation engine in Cytiva as well. And we continue to launch new products. That’s the case here just in the fourth quarter. We talked about the Cepheid platform.

We’re launching new products here in the first quarter and throughout the year. So the innovation engine is very much alive at Cytiva in driving real progress there. And then lastly, as you think about our exposure here, we are specked in on 90% of monoclonal antibodies that are manufactured today. We are a true partner to our customers and being able to deliver on their need of getting safe products out as fast as possible to patients. So we’re pretty pumped up about Cytiva.

Dan Brennan, Analyst, TD Cowen: Exciting. So biosimilars, there’s gonna be a number of large patent expirations coming up over the next few years. The company has largely talked about this being a positive opportunity for Danaher. If you’re on the innovator platforms, good news that you’ll likely be on the biosimilar platforms. Just kind of talk about maybe some of the early experience with some biosimilars and how we might think about the opportunity going forward for Danner?

I know you’ve also talked about maybe increasing volumes from biosimilars. Could this actually be an uplift to the growth rate of your bioprocess business?

Reiner Blair, CEO, Danaher: We think biosimilars are a very important part of the industry, starting with ensuring that these biologic drugs gain greater penetration in the patient populations that are out there. And we see nothing but upside as it relates to biosimilars that are increasingly finding their way in the manufacturing. And we support that. And as we’ve talked about before, it’s most often the case that biosimilars are made with the same equipment and consumables in order to accelerate the path to approval, reduce the risk for patients and regulatory reviews. And and that’s that’s really the key in that market.

So biosimilars is a positive all around. Perfect.

Dan Brennan, Analyst, TD Cowen: How about the drug titers? We just did a report and, it’s interesting to try to find data on this, and it looks like titers and really the yield that you can pull out of a, you know, kind of bioreactor or just how much goes in versus how much goes out. And to the extent maybe technological advantages have driven a greater kind of yield expansion, you know, that could create opportunities for some players enabling it and also risk for others because there’s less consumption of product, if you will. Have tighters, you know, when you think about, like, your long term growth rate for Cytiva and you think about where we are, is this just been a constant steady march? Is there anything changing the industry that would create an opportunity or a risk for Cytiva?

We

Reiner Blair, CEO, Danaher: view yield improvement as a significant part of our value proposition. We’re helping our customers to get as much yield at the end of the line, not just at the front of the line, but at the end of the line where it matters and goes into the vial. That’s a key part of the value proposition. And that along with safety, speed and reliability is exactly what our customers need. So there’s so much potential still to improve yields and the value equation here is for every incremental milligram of active ingredient of the drug, this is so much more valuable to our pharmaceutical partners than the incremental cost that you’re investing to get that higher productivity.

So what that means is more productivity means more value for us as we help our partners get the most out of their bioreactors and ultimately into the bio.

Dan Brennan, Analyst, TD Cowen: So you talked about monoclonal 75%, cell and gene therapy, kind of what’s been happening there, that business. Give us a sense of the size of that today for Danaher and Sativa and, you know, what’s kind of baked in for the ’25 outlook as it as it relates to selling gene therapy?

Reiner Blair, CEO, Danaher: So genomic medicines are less than 10% of Danaher’s sales today, but it’s an exciting field and the promise of curative therapies is enormous and the science is delivering on that promise and we continue to expect that promise to make progress. What I would tell you is it’s early days much like the biologic drugs think monoclonal antibodies in the early 80s. Well, that’s just about where we’re at here with genomic medicines as well, meaning that there’s going to be some ups and downs and two steps forward and one step back and adoption rates and reimbursement rates, but they continue to make progress. They’re gaining approvals by the regulators and they are helping patients and we’re very well positioned in this field, but it’s early days and it’s going to take some time for that to develop. But it’s going to be exciting and over time today it’s a bit at the margin in terms of our business, but over time it’s going to become more important in its contribution to our growth rate.

Dan Brennan, Analyst, TD Cowen: Great. Well, maybe we’ll jump over to diagnostics. Give us a sense of your assumptions for a normal respiratory season of, like, a billion seven. Cepheid had a, obviously, tremendous run through COVID. Post COVID, the numbers have been really strong.

But, you know, what underpins that, you know, $1,700,000,000 estimate that Danner lays out?

Reiner Blair, CEO, Danaher: You know, I was just looking at our Cepheid numbers. Again, refreshing, sort of my my memory. We we have increased Cepheid’s revenue by a factor of five since we acquired this company. Since the COVID pandemic, we have increased our installed base by over three times positioning our installed base, the GeneXpert, and other solutions with customers throughout the world. And this has been incredibly important for us to be able to expand not only our business, but along with our menu expansion provides a great deal of leverage.

So if you think about more points of care along with more menu, that’s really driving our growth. And as you think about the $1,700,000,000 look, we watch the curves and we analyze the curves. And as you know, the respiratory season can vary. And as you think about those 1,700,000,000, we think that’s properly dialed in for the year. Could it be more?

Well, it depends on the respiratory season. And the respiratory season here in the first quarter has shown some strength here more recently. But as you know, with that, that strength can be followed by some weakness after that. And that’s why we think the 1,700,000,000 is the right way to think about it here in 2025.

Dan Brennan, Analyst, TD Cowen: So ex COVID flu, you know, the outlook for underlying Cepheid growth, it was pretty impressive at the Diagnostic Investor Day. Just speak to the durability of what that underlying Cepheid growth could look like. And you talked about the instrument base, obviously there’s an opportunity to generate more poultry. Just what are you seeing in the field that kind of gives you support for that growth rate?

Reiner Blair, CEO, Danaher: Well, so the non respiratory, so the core portfolio grew mid teens in 2024 and is really been a beneficiary of the strategy that we had in COVID when we were placing our instruments. You’ll recall us talking about really focusing on the points of care that would have a broader application of our menu once COVID started to normalize and ultimately turn endemic. And that strategy along with our menu expansion is playing out as we see more and more usage of that expanded menu on the far larger 3x installed base. And that’s what’s driving that. And so we expect double digit plus growth out of the core portfolio in ’25 and for the long term.

Dan Brennan, Analyst, TD Cowen: How does it compare, Brian, to what you think the underlying growth rate or the market growth rate you’re assuming? Is it like a high single digit molecular growth and you’re just outpacing it just given Cepheid’s positioning and the pull through opportunity or I don’t know if you think about it that way.

Reiner Blair, CEO, Danaher: Well, what we can tell for sure is that we’re taking share every day in Cepheid. We’re outpacing that market. Interesting. Then maybe for this year,

Dan Brennan, Analyst, TD Cowen: I think excluding China headwinds, the guide the guidance for diagnostics implies around, you know, mid single, maybe mid single plus type growth. This is more broadly, not just Cepheid, you know, across all your other diagnostic platforms. Like, how do you feel about, like, what the underpinnings for that outlook are?

Reiner Blair, CEO, Danaher: Well, we think the the end market secular growth drivers are very strong. We continue to see strong patient volumes. We see them increasing, those patient volumes. And as you said, if you take China aside, you really see Beckman Coulter driving accelerated growth, certainly better commercial execution, but also a great deal of innovation, which is driving that and the same holds for Cepheid. Cepheid continues to expand globally.

And then as you think about Radiometer and Leica Biosystems, those are high single digit growth businesses that continue to increase their penetration around the world. So we feel very good about positioning of our diagnostics business.

Dan Brennan, Analyst, TD Cowen: And kind of the stepping stone at the Investor Day, you talked about a high single digit growth target. I know that probably stacks some new products, but if we’re sitting here, if our math’s right, ex China, you know, maybe you’re at six to go from six to eight or six to nine, Like what would be some of the building blocks to get to that high single digit growth? I mean,

Reiner Blair, CEO, Danaher: I think we start with Beckman Coulter Diagnostics and then go to Cepheid. Beckman Coulter Diagnostics, as I mentioned, has had a veritable fireworks of new product introductions and that’s going to continue to improve the win rate as hospitals here go to their RFQs. We have closed menu gaps and introduced a great deal of innovation along with that improved commercial execution. So we really see Beckman Coulter moving along here at pace and over the long term also getting to that high single digit. And Cepheid, we talked about the core business growing at mid teens double digit plus for sure.

And as that business becomes a bigger part of the total Cepheid sales in relation to respiratory, you’ll start seeing that growth rate accelerate in total as well. And then as I mentioned, Radiometer and Leica Biosystems are already at high single digits. So they’re already at that level, which we look to at a minimum hold or accelerate. So that’s how that equation adds up.

Dan Brennan, Analyst, TD Cowen: Okay. Let’s jump over to life sciences. We talked about it early on the macro in terms of how you incorporated some uncertainty from what’s happening. But I just want to drill in a little bit more here. I think the guide for life sciences in the first quarter, we modeled down mid single digits.

That’s after, right, that’s after incorporating a tough poll industrial comp plus you have the headwind from Aldebaran. Just is that the right way to think about just kind of what goes into that first quarter guide for life sciences and just, you know, is there a cushion in that or is it just these one off factors that are driving it?

Reiner Blair, CEO, Danaher: There’s a couple of things to think about. Certainly, we thought in view of all the noise we’re hearing in the macro and some of the changes that you let off with here during our session, that is concentrated that noise more on the Life Science segment. And so we thought it’s a good idea to be a bit more conservative here. We’ve built certainly some cushion there to get out of the gates correctly

Dan Brennan, Analyst, TD Cowen: as

Reiner Blair, CEO, Danaher: we then move on to accelerating throughout the year the growth in life sciences. So as you think about Paul, Paul, this is truly a very large deal that we had last year. They’ll be growing for the year. We see our life science instrument group here returning to growth. And then lastly, in the second half will be through the genomic medicines cliff that we had here as some of our larger customers came off their peak volumes.

So we see life sciences to continue to improve throughout the year from a growth perspective.

Dan Brennan, Analyst, TD Cowen: And maybe just on that, the genomic medicine with Aldevon, like as we get through that kind of customer headwind, like what’s the right way to think about Aldevon? And maybe if you look back even to when you did the deal and where we are today, you know, if we’re thinking about 2026, like, how do you feel about the trajectory of that business?

Reiner Blair, CEO, Danaher: Well, like I said, once we, in the first half here, digest these peak volumes from our two largest customer in that business, the rest of the customers are growing. This, as I mentioned earlier, is an attractive area. It is growing. The base, of course, is a little bit smaller. Like I said, it’s less than 10% if you think of it from a total company perspective of what we do, a total bioprocessing and LS perspective from what we do.

And so as we digest that first half here, we believe that continues to accelerate and that we have that behind us as we go into ’26 as

Dan Brennan, Analyst, TD Cowen: well. Got it. And and then, you know, in terms of, back to NIH, if you don’t mind, even though it’s very small, I just wanna be clear, you talked about NIH one percent. It’s come up in all of our meetings today just so we can kind of put a bow on this. So 1% exposure, but you mentioned that maybe there’s I think that was a globally you’ve got very low exposure.

So so so did you bake in into that first quarter? Was that just assuming, listen, NAH spending could be down x and we’re just gonna kind of, you know, really take a conservative view on that or are there other other issues to think about for Downhill and NIH?

Reiner Blair, CEO, Danaher: I think it’s the NIH and the related academic spending where we wanted to be a little more conservative. We thought it’s prudent to be a little more conservative here in the first quarter to see how this plays out. And as we reflect on it, we think that’s the right call until things settle out here and as the year progresses.

Dan Brennan, Analyst, TD Cowen: How about pharma biotech? Obviously, much bigger customer base. We talked about bioproduction, which is where most of your exposure is, but across life sciences, clearly there’s exposure. Just kind of

Reiner Blair, CEO, Danaher: what are you seeing from those customers? We see strength in pharma. Pharma is investing to innovate. They’re bringing new products to market requiring more consumables, more equipment over time. And we see pharma really retrenching to the basics of driving business growth through innovation and investing forward after coming back out of this pandemic reset.

So pharma we see doing very well.

Dan Brennan, Analyst, TD Cowen: When you talked earlier too on biotech, Reiner, during the bioproduction part of the equation, I’m sure in the life sciences there are smaller piece, but it sounds like you said there the activity is getting a little bit better. Is that something more recent? Has it been getting better throughout the back half of twenty four? Just what are you seeing from that?

Reiner Blair, CEO, Danaher: That’s right. We started to see things improve in the middle of twenty twenty four. And that reversion to the norm, if you will, after the buying forward that we saw in life science tools during the pandemic, we’re starting to see that normalize here. And we expect that to progress throughout the year here in ’twenty

Dan Brennan, Analyst, TD Cowen: five. Got it. So revenues are flat in 2024, margins were largely flat. This year prior to the announcement in the K, the 150,000,000 cost out, we had margins kind of flat again on reported revenues up 1%. Maybe just talk about how you’re trying to manage investing for growth while at the same time delivering and protecting the bottom line.

Just give us a flavor on that.

Reiner Blair, CEO, Danaher: Well, this is the way this is central to the how we operate our businesses, right? We we drive for continuous improvement in productivity and we take the benefit of that productivity to reinvest in growth. And so as you think about cost of goods sold, as you think about G and A, we’re constantly looking to drive that down so that we have the room to invest. So certainly return margin expansion to investors and then of course to invest into the growth of our business. And as you think about the 100,000,000 we talked about a minimum $150,000,000 of cost savings.

That’s what that’s about. We, like I said, we’re hit a little bit late there in ’twenty four, but we’re now taking the actions necessary to reestablish margin expansion while at the same time being able to protect and reinvest in our growth projects.

Dan Brennan, Analyst, TD Cowen: And as Bioprocess comes back, that’s your highest margin business. Could there be an opportunity to have a greater drop through our margins than people are expecting? Because I mean that margin is really attractive.

Reiner Blair, CEO, Danaher: It is. And as bioprocessing and as Danner reverts to growth here in 2025, you know, we expect our fall through to do well. Like I said, we were hit with the volume based procurement and FX. Now we’re taking care of the costs there. So we’re driving for margin expansion.

Dan Brennan, Analyst, TD Cowen: Maybe just on cap deployment, just would love to hear how you characterize the relative attractiveness of the environment today, say versus a year ago?

Reiner Blair, CEO, Danaher: Well, I would say that there’s more activity in the market. We would also tell you that our funnels are active across all three segments. There are pockets where valuations, specifically multiples, are becoming more realistic. I won’t say incredibly attractive, but more realistic. And we continue to watch that.

We’re well positioned with our balance sheet. You know how our algorithm works there. We like, have to like the end market, the asset in that end market, and then ultimately the financial model has to work as well. And so we’re constantly scanning for that opportunity to ultimately execute on what is our bias in capital allocation, which is M and A. So I think you’ve discussed an approach

Dan Brennan, Analyst, TD Cowen: kind of value you can create. So I wanted to kind of get your take on the pharma services landscape. You have a leading bioproduction tools business, not to mention strong life science business. And you know, a year ago, Bloomberg ran an article indicating potential interest in Catalan. I just wanted to get your take on your offering serving pharma today and if a pharma service deal, whether a CRO or CMO, can be a logical fit and kind of what are the criteria you would look through to evaluate such a deal?

Reiner Blair, CEO, Danaher: Well, our criteria haven’t changed. We continue to like high gross margins and strong cash flow as a part of our business. And as it relates to the logic, we look at that very careful and I’m not so sure that the logic plays out as suggested. We also think about whether we want to compete against our customers or not. And our conclusion here is that, look, we like these businesses that are the kind of business models we like, they’re razor blade, they’re high margin, there’s an opportunity through innovation to create defensible positions and some leverage, and of course strong cash flow so that we can reinvest in these businesses.

And that’s what we’re looking for.

Dan Brennan, Analyst, TD Cowen: So your diagnostics invested in the management expressed a preference to buy growth assets, maybe willing to pay a higher price, except the longer ROIC payback period in order to do so. Can you just elaborate on kind of that discussion point? Sure.

Reiner Blair, CEO, Danaher: I mean, we look at all kinds of assets to be clear. And the kind of acquisitions that you should expect of us are the type that you have seen in the past. If you think about Cepheid, if you think about Pall, IDT, those are the kind of acquisitions where one, our model here between market asset and financial model come together. But it’s also where we apply the Danaher business system to accelerate growth and improve margins. That’s really the sweet spot.

And then the valuation, like I said, that’s always a factor that’s based on the opportunity and ultimately the financial model has to work.

Dan Brennan, Analyst, TD Cowen: So before I ask the last question, maybe just go back to something in bioprocess in terms of China and, like, say, biosecure and just just kind of how do you think to the extent, you know, production moves from China, comes more local, either are you seeing that today? How does that impact down on here?

Reiner Blair, CEO, Danaher: Well, we’re seeing some of that. No doubt, new molecules in particular, sponsors of those pharmaceutical companies are looking to place those in an area where they feel that their manufacturing is secure and it’s assured and that they’re not going to run into ultimately tariff problems or regulatory restrictions. So we see some of that. And we view that honestly as a tailwind for Danaher because as manufacturing becomes more regional, of course, our partners reach out to us and we help them to construct those facilities and ultimately help them drive their business forward. So we view this as a tailwind.

Great.

Dan Brennan, Analyst, TD Cowen: So maybe just summing up, Danaher is a well analyzed company, but nonetheless sometimes there are misperceptions. Do you think there’s a misunderstanding or under appreciation of the Danaher story today?

Reiner Blair, CEO, Danaher: Well, I think it has to be clear that this portfolio transformation that we have done here over the last years has rerated both our long term growth profile as well as our long term earnings profile. And as you look at our 2025 guide, as I indicated, we work every day to beat that guide top and bottom and you heard about some of the measures that we take. But it’s in our mind, we have a clear path to that long term growth algorithm here, looking at 2026. If we just take the guide at 3% core growth and you look at some of the headwinds we talked about volume based procurement, the genomics and as well as the respiratory, which we view as transitory, you’re looking at 300 basis points of growth right there. So that puts you very, very close to our long term growth algorithm and just with the slightest market improvement and we’re seeing that recovery as I spoke of, we see as ourselves with a clear line of sight to our long term growth algorithm.

And when we have that, as you pointed out, our incrementals are very strong. We see our fall through our BCM at 35% to 40%. And if we’re growing at that high single digit rate, that puts out there operating margin percentages that are in the low to mid 30s. And that’s how we see ourselves and that’s the opportunity. And of course, you’ve got a management team and a board that’s totally dedicated to helping our customers and creating value for our shareholders.

Terrific, Manuel. Thank you

Dan Brennan, Analyst, TD Cowen: for being with us today. Dan. Appreciate it. Good to

Reiner Blair, CEO, Danaher: have you.

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