Earnings call transcript: Danaher Q3 2025 earnings beat forecasts, stock rises

Danaher Corporation reported its third-quarter earnings for 2025, surpassing analyst expectations with an earnings per share (EPS) of $1.89, compared to the forecasted $1.72. The company’s revenue also exceeded predictions, reaching $6.05 billion against the anticipated $6.00 billion. Following the announcement, Danaher’s stock experienced a pre-market increase of 4.66%, reflecting investor optimism.

Key Takeaways

• Danaher exceeded EPS and revenue expectations for Q3 2025.
• The company reported core revenue growth of 3% and a gross profit margin of 58.2%.
• Danaher implemented significant cost-saving measures, expecting $250 million in savings by 2026.
• The stock rose by 4.66% in pre-market trading following the earnings announcement.

Company Performance

Danaher Corporation demonstrated robust performance in Q3 2025, with sales reaching $6.1 billion and a core revenue growth of 3%. The company’s adjusted operating profit margin improved by 40 basis points year-over-year to 27.9%. This performance is attributed to strategic cost actions and productivity investments, positioning Danaher favorably within the competitive bioprocessing and diagnostics markets.

Financial Highlights

• Revenue: $6.1 billion, up from $6.05 billion forecasted
• Earnings per share: $1.89, compared to $1.72 forecasted
• Core revenue growth: 3%
• Gross profit margin: 58.2%
• Adjusted operating profit margin: 27.9% (up 40 basis points YoY)
• Free cash flow: $1.4 billion in Q3, $3.5 billion year-to-date

Earnings vs. Forecast

Danaher’s Q3 2025 earnings per share of $1.89 surpassed the forecasted $1.72, resulting in a positive surprise of 9.88%. Revenue also exceeded expectations, amounting to $6.05 billion against the anticipated $6.00 billion, marking a 0.83% surprise. This performance reflects the company’s ability to navigate a dynamic operating environment effectively.

Market Reaction

Following the earnings announcement, Danaher’s stock rose by 4.66% in pre-market trading, reaching $218.10 from a previous close of $208.39. This increase reflects investor confidence in the company’s strong financial performance and strategic initiatives. The stock’s movement is notable given its 52-week range between $171 and $258.23.

Outlook & Guidance

Looking ahead, Danaher expects core revenue growth of 3-6% in 2026, with high single-digit earnings per share growth. The company anticipates bioprocessing to grow in the high single digits, while diagnostics are expected to overcome China policy headwinds for higher growth. Respiratory revenue is projected to remain flat at approximately $1.7 billion.

Executive Commentary

CEO Rainer Blair expressed satisfaction with the company’s performance, stating, "We’re encouraged to deliver third-quarter results ahead of expectations in what remains a dynamic operating environment." Blair also emphasized the company’s strategic focus, saying, "We believe Danaher is well positioned for sustainable long-term value creation."

Risks and Challenges

• Supply chain disruptions could impact production timelines and costs.
• Market saturation in core segments may limit growth potential.
• Macroeconomic pressures, including inflation, could affect consumer spending.
• Regulatory changes, particularly in China, may pose challenges.
• Competitive pressures in the bioprocessing and diagnostics markets could impact market share.

Q&A

During the earnings call, analysts inquired about Danaher’s equipment investment recovery and the implications of China localization policies. The company detailed its 2026 growth expectations across various segments and elaborated on cost-saving initiatives and potential margin expansion, providing insights into its strategic direction.

Full transcript - Danaher Corporation (DHR) Q3 2025:

David, Conference Facilitator: My name is David, and I’ll be your conference facilitator this morning. At this time, I’d like to welcome everyone to Danaher Corporation’s Third Quarter twenty twenty five Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. I would now like to turn the call over to John Bedford, Vice President of Investor Relations.

Mr. Bedford, you may begin your conference.

John Bedford, Vice President of Investor Relations, Danaher Corporation: Good morning, everyone, and thanks for joining us on the call. With us today are Reiner Blair, our President and Chief Executive Officer and Matt McGrew, our Executive Vice President and Chief Financial Officer. I’d like to point out that our earnings release, quarterly report on Form 10 Q, the slide presentation supplementing today’s call, the reconciliations and other information required by SEC Regulation G relating to any non GAAP financial measures provided during the call and a note containing details of historical and anticipated future financial performance are all available on the Investors section of our website, www.danaher.com, under the heading Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events and Presentations and will remain archived until our next quarterly call. A dial in replay of this call will also be available until 11/04/2025.

During the presentation, we will describe certain of the more significant factors that impacted year over year performance. Our Form 10 Q and the supplemental materials describe additional factors that impacted year over year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company specific financial metrics relate to the 2025 and all references to period to period increases or decreases in financial metrics are year over year. We may also describe certain products and devices which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will make forward looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future.

These forward looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, and actual results might differ materially from any forward looking statements that we make today. These forward looking statements speak only as of the date that they are made, and we do not assume any obligation to update any forward looking statements except as required by law. And with that, I’d like to turn the call over to Rainer.

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: All right. Thank you, John, and good morning, everyone. We appreciate you joining us on the call today. We’re encouraged by our strong third quarter results. Our team’s DBS driven execution paired with continued momentum in our bioprocessing business and better than expected respiratory revenue at Cepheid enabled us to exceed our revenue, earnings and cash flow expectations.

Across our end markets, underlying conditions in the third quarter were generally consistent with what we saw in the first half of the year. In pharma, global production of monoclonal antibodies, where the majority of our exposure lies, remain robust. We continue to see a modest recovery in pharma R and D spending, though it remains below historical levels. In academic and government, demand was stable sequentially but remained soft amid ongoing uncertainty around research funding, despite some encouraging headlines late in the quarter. Clinical diagnostics and applied markets held up well.

Now we remain intensely focused on what we can control to continue delivering for our customers, associates, and shareholders. Our team is leveraging the Danaher business system to mitigate ongoing geopolitical and policy related pressures and drive meaningful productivity gains across our businesses. At the same time, we’re continuing to invest in innovation to strengthen our long term competitive position, including accelerating digital and artificial intelligence initiatives. We’re accustomed to tackling challenges head on and turning them into opportunities, and we expect that mindset and momentum to continue as we move forward into 2026 and beyond. So with that, let’s take a closer look at our third quarter twenty twenty five results.

Sales were $6,100,000,000 in the third quarter and we delivered 3% core revenue growth. Geographically, core revenues in developed markets were up mid single digits with North America up mid single digits and Western Europe approximately flat. Core revenues in high growth markets were up low single digits as solid performance outside of China was offset by a mid single digit decline in China. Growth in our biotechnology and life sciences businesses in China was more than offset by declines in diagnostics due to volume based procurement and reimbursement policy changes implemented in the last twelve months. Our gross profit margin for the third quarter was 58.2% and our adjusted operating profit margin of 27.9% was up 40 basis points year over year as the favorable impacts of higher volume leverage and disciplined cost management more than offset the impact of productivity investments.

Adjusted diluted net earnings per common share of $1.89 were up approximately 10% year over year. We generated $1,400,000,000 of free cash flow in the quarter and $3,500,000,000 in the first three quarters of the year, resulting in a year to date free cash flow to net income conversion ratio of 146%. Now during the quarter, we deployed approximately $2,000,000,000 of capital towards the repurchase of 10,000,000 shares of Danaher common stock. Additionally, our Board of Directors approved a new share repurchase program authorizing the purchase of up to 35,000,000 additional shares of Danaher common stock. Our substantial investments in innovation over the last several years led to the launch of several leading edge products and technologies this quarter.

Each one of these new solutions is designed to enhance our competitive positioning while enabling customers to improve quality and yield, lower costs, and accelerate the delivery of life changing therapies and diagnostics. So let me highlight a few examples and the tangible value they’re creating for our customers. In biotechnology, SITIVA launched the ACTA ReadyFlex TSF System 500, a fully automated benchtop tangential flow filtration system. Developed to meet growing demand for efficient low volume processing, the ReadyFlex TFF System 500 minimizes product loss, improves yield, and enables effective process development with limited material. Importantly, the ReadyFlex platform is now scalable from process development to commercial production, enabling customers to quickly and smoothly transition across different stages of drug development.

This system is one of several planned launches, including the new TFF filter cartridges and our next generation perfusion system. Together with our new AcelRx X platform bioreactors and differentiated filtration and cell culture media offerings, these solutions provide a powerful upstream package that helps customers improve yields and efficiency in the intensified biologic drug manufacturing process. It also underscores the breadth and the depth of Citeva’s leading portfolio and our ability to support customers across the bioprocessing workflow, from early stage process development through to commercial manufacturing. In life sciences, IDT announced a strategic expansion of its end to end translational gene editing portfolio with the launch of high purity customizable guide RNAs. As scientists move from early research towards clinical applications, the need for greater purity and flexibility in CRISPR tools increases.

These new guide RNAs, key components that direct CRISPR systems to specific genes, give researchers more control over sequence design, length, and modifications to meet their precise needs. These capabilities are especially valuable for scientists in preclinical testing who require high quality materials for studies like toxicology ahead of clinical trials. In diagnostics, Beckman Coulter launched the ACCESS BD Tau assay. This is the industry’s first fully automated research use only immunoassay for brain derived tau protein, a promising blood based biomarker for researching neurodegenerative diseases such as Alzheimer’s. This assay leverages the high resolution DXi9000 analyzer to bring automation and scalability to tau protein quantification.

Ultimately, this powerful technology combination can help improve research efficiency, enhance consistency on long term clinical trials, and support accelerated regulatory pathways through stronger real world evidence. Now let’s take a closer look at our results across the portfolio and give you some color on what we’re seeing in our end markets today. Core revenue in our biotechnology segment increased 6.5%. Core revenue in discovery and medical grew low single digits in the quarter. Growth in medical and lab filtration was partially offset by declines in protein research instrumentation where academic research customers continue to face funding constraints.

Core revenue in bioprocessing grew high single digits with double digit growth in consumables, partially offset by declines in equipment. Consumables growth was driven by robust demand for commercialized therapies at our large pharma and CDMO customers. Equipment revenue grew sequentially but declined in the high teens versus prior year as expected. Now while we’re seeing strong funnels and customers have a healthy pipeline of planned projects, this hasn’t translated into equipment order growth as customers are awaiting additional clarity on the policy environment before finalizing their investment decisions. Based on what we’re seeing today, we expect cautious equipment spending through the remainder of the year.

Now that said, with several billions of dollars invested to expand capacity at SITIVA since 2020, including meaningful additions at our facilities in Florida, South Carolina, Utah, and Michigan, we believe we are very well positioned to help customers execute in region, for region manufacturing strategies. Now the long term outlook for the biologics market remains very healthy. The primary growth driver of SITIVA’s bioprocessing business is the increasing global production of biological medicines, particularly monoclonal antibodies. Underlying biologic demand has grown double digits annually over the last ten plus years and we expect strong demand growth to continue in 2025 and beyond. This growth has been supported by a steady pace of new FDA drug approvals, building on several consecutive years with record setting FDA approvals, as well as a continued shift in pharmaceutical pipelines towards biologics.

In fact, more than two thirds of the world’s top 100 drugs are projected to be biologics by 02/1930. At the same time, we’ve seen increased development of biosimilars and expanded indications for existing therapies, both of which are expected to drive production volume growth. The substantial and sustained level of activity we have seen reinforces our conviction in the significant opportunity ahead in this market and supports the long term core revenue growth trajectory for our leading bioprocessing franchise. Now turning to our life sciences segment, core revenue decreased by 1%. Core revenue in our life sciences instrument businesses was up slightly in the quarter.

By end market, clinical and applied markets held up well globally. Demand from academic and government customers remained soft but was stable sequentially. And as I mentioned earlier, we continue to see modest recovery in pharma spending with revenue from these customers growing in the quarter. In China, moderate improvements in the funding environment led to increased activity levels which contributed to revenue growth in the quarter. Core revenue in our life sciences consumables businesses, which include IDT, Aldevron, Abcam and Phenomenex declined in the quarter primarily due to lower demand for plasmids and mRNA from two of our larger customers as well as continued funding pressure across early stage biotech and academic research.

Declines related to these funding pressures were partially offset by growth in next generation sequencing products at IDT and recombinant proteins at Abcam. Moving to our Diagnostics segment, core revenue increased 3.5%. Core revenue in our clinical diagnostics businesses was up low single digits with high single digit growth outside of China. Leica Biosystems delivered over 10% core growth with broad based strength across core histology, advanced staining, and digital pathology. Beckman Coulter Diagnostics also had another solid quarter with mid single digit growth outside of China.

This marks Beckman’s fifth consecutive quarter of mid single digit or better core growth outside of China driven by continued uptake of recent innovations such as the DXi9000 and strong momentum in commercial execution. In molecular diagnostics, Cepheid’s core revenue was up mid single digits in the quarter. High single digit growth across Cepheid’s core non respiratory test menu was led by approximately 20% growth in sexual health. Respiratory revenue exceeded expectations as customers began purchasing earlier than typical in preparation for the upcoming respiratory season. Cepheid continued to expand its global installed base in the third quarter.

The sustained growth in Cepheid’s installed base is driven in part by healthcare system and IDN customers adding new instruments at sites further out in their networks and closer to patients in order to provide faster diagnostic and treatment decisions. We believe this ongoing installed base expansion combined with a leading test menu and workflow advantages provides a long runway ahead for durable, long term growth at Cepheid. Now let’s frame how we’re thinking about the fourth quarter and the full year 2025. For the full year 2025, we’re maintaining our full year adjusted diluted net EPS guidance range of 7.7 to $7.8 In the fourth quarter, we expect core revenue to grow in the low single digit percent range as we expect market conditions to be largely consistent with what we saw in Q3. Additionally, we expect the fourth quarter adjusted operating profit margin of approximately 27%, which importantly includes the impact of anticipated productivity investments aimed at further improving our cost structure.

Now before we wrap up, I’d like to share our initial thoughts on next year. For the full year 2026, we expect core revenue growth in the 3% to 6% range as we are assuming modest recovery across our end markets. Looking across the portfolio, we’re assuming bioprocessing growth trends remain at levels consistent with 2025, including continued strength in consumables driven by healthy growth in monoclonal antibody demand and our strong positioning across the biologics workflow. In life sciences, we’re assuming a modest improvement in end markets, but assume growth will remain below historical levels given the current geopolitical and policy environment. And in diagnostics, we’re assuming higher growth in 2026 due to moving past headwinds from policy changes in China and our expectation that we will continue to execute well globally.

Additionally, we anticipate respiratory revenue at Cepheid will be approximately $1,700,000,000 in 2026 consistent with our expectations for 2025. Turning to 2026 earnings, we expect the operating leverage on anticipated core revenue growth and the benefit of our 2025 productivity initiatives to drive more than 100 basis points of adjusted operating profit margin expansion, which would result in high single digit adjusted earnings per share growth before any benefit from capital allocation. As always, we will provide more color and a formal guide with our Q4 earnings in January. So to wrap up, we’re encouraged to deliver third quarter results ahead of expectations in what remains a dynamic operating environment. Our team’s commitment to innovating and executing with DBS has driven meaningful improvements in our businesses and enabled us to deliver more breakthrough solutions to our customers.

Now looking ahead, we remain focused on the areas we can control to drive results for our stakeholders. We’re taking thoughtful actions to reduce structural costs supporting earnings growth and margin expansion in 2026 while maintaining the right foundation to continue investing in opportunities that strengthen our long term competitive advantages. We believe Danaher is well positioned for sustainable long term value creation. Our businesses are well positioned in attractive end markets, supported by long term secular growth drivers and share a common set of relatively durable, high recurring revenue business models. And on top of that, our strong balance sheet and free cash flow generation positions us well to strategically deploy capital going forward.

So with that, I’ll turn the call back over to John.

John Bedford, Vice President of Investor Relations, Danaher Corporation: Thank you, Rainer. Operator, that concludes our formal comments. We’re now ready for questions.

David, Conference Facilitator: We’ll take our first question from Michael Riston with Bank of America. Please go ahead. Your line is open.

Michael Riston, Analyst, Bank of America: Great. Thanks for the question, guys.

Matt McGrew, Executive Vice President and Chief Financial Officer, Danaher Corporation: Good morning, Mike.

Michael Riston, Analyst, Bank of America: Good morning. Maybe just start where you left off, Ryan, around fiscal year twenty twenty six. The 3% to 6% range, and it’s roughly where people were expecting, but it is a little bit of a wider range. I realize we’re still in October, so still very, very early. A lot of uncertainty.

But maybe you could just talk to the the high points of what gets you there, and then maybe, you know, what the world looks like for a 3% versus a 6%. Where do you need to see more improvement relative to this year to get there? I guess sort of, like, what’s still up in the air to figure out if you come to the three or the six?

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Thanks, Mike, and good morning, everyone. Let me just dive right in. But before I get started, let me provide a little bit of context to this. We’ve come off a strong quarter with beats on the top and bottom lines and cash flow. I think it’s important to see the how Q3 demonstrates the earnings power of our portfolio and the execution of the team even at a relatively modest growth rate.

And we’re taking that Q3 beat to really proactively invest in further meaningful cost measures in Q4 to set up 2026, Mike. So that’s an important factor here in how we’re thinking about 2026. Now the market and the policy environment, while it’s improving, is still fairly dynamic. And so we could see a range of outcomes in 2026, which were ring fencing between 3% to 6% top line growth and high single digit earnings growth. So for planning purposes, we think it’s prudent to assume modest recovery in our end markets.

And let me talk about some of those. In biotechnology, we expect high single digit core growth in bioprocessing, and that’s similar to what we’ve seen in 2025. We expect bioprocessing consumables to remain strong given the monoclonal antibody pipeline. The on market momentum of those commercialized drugs, as well as our leading position. Now we’re assuming for planning purposes that equipment is flat next year given that the order trajectory through Q3 has continued as it has in the first half.

So the planning assumption is that that remains flat. Now in life sciences, we’re not planning for meaningful improvement in our end markets. In Q3, life sciences performed as expected and the activity levels were fairly positive, but we just didn’t see that convert to orders that would provide an inflection. So we’re assuming here that our growth would improve modestly as we work through some of the headwinds in our Life Science consumables business. And as we think about diagnostics, here we’re assuming growth accelerates as we move past China policy headwinds where we’ve taken a conservative view and continue execute well globally.

And then lastly, importantly, we need to think about respiratory for ’26 and here we believe that it’s going to be similar to 2025 at sort of that endemic rate that we’ve talked about of $1,700,000,000 So of course we’re going to provide more quantitative view to all of this in January when we provide our guide. But hopefully this gives you a sense of how we’re thinking about 2026 directionally. And maybe Matt can comment here a little bit more on the EPS side of it.

Matt McGrew, Executive Vice President and Chief Financial Officer, Danaher Corporation: Sure. Like Reiner said, we’re kind of expecting three to 6% core growth here next year. Excuse me. I would anchor at the low end of that range to begin with, and we’ll kind of see how the year plays out as we go. And we can kinda kinda provide some updates as we go.

But I would I would anchor at the low end to start. And then from the math and the EPS perspective, I’d assume 35% to 40% fall through on volume plus the impact of the cost actions. And that is gonna equal a 100 basis points north of a 100 basis points margin expansion like Reiner talked about in in the prepared remarks. And so gives you the high single digit EPS growth even at the low end of the range. And then maybe just to give you a little bit of color around sort of the cost actions we we talked about, we’re doing a 150,000,000 in the fourth quarter, but we’re gonna do a 175,000,000 in total here in 2025.

And we do not expect these cost actions to repeat in ’26. These are sort of one time one time items. And we do expect the cost actions, that January, to generate a net 75,000,000 in savings. All up, all in, you’re talking about a $250,000,000 type savings number in 2026 that gives you, call it, $30.30 cents of EPS tailwind as we head into the year. So I mean, as I think about 2025 and I think about what we’re doing here in the fourth quarter to set ourselves up, I think we’re gonna be in a really good position to deliver high single digit EPS growth even if we end up at the low end of that range.

And we might do better in ’26. And again, as Rainer said in the prepared remarks, all before we have any capital deployment either.

Michael Riston, Analyst, Bank of America: Okay. That’s all really, really helpful. Appreciate the bridge. Maybe a quick follow-up if I can. Rainer, you touched a little bit on China diagnostics and VBP.

A of concern on that. So you just talked about as you move past the headwind, but you’re still taking a conservative view. So just expand on what you’re seeing in VBP. I think you’re lapping the comps as you get into the fourth quarter, but there’s concern of another wave down the road, maybe oncology and thyroid was called out by another, player in the market. Just sort of how derisked this China Diagnostics from a VDP perspective Yeah.

For 2020?

Matt McGrew, Executive Vice President and Chief Financial Officer, Danaher Corporation: Yeah, Mike. I mean, I think, you know, we sort of have seen, like you said, we are getting to the other side of the of the the wave here that started in q four with the first reimbursement in China. So we will anniversary that. I think as we sort of have dealt with what has come VBP, the reimbursements, the various policy sort of changes during the year, I think we’re pretty well dialed in. I mean, would say that for next year, our assumption is that we probably have maybe 75 to $100,000,000 of headwind here, which, you know, on a on a Danaher level is is fairly modest and and manageable.

And so I think that’s kind of where we were or where we are as from a planning perspective. And and I think that’s I think that’s a pretty good place to be given what we know today, and have got visibility to some of the things that are coming and certainly have visibility to everything that’s already been announced.

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Great. Thank you.

Matt McGrew, Executive Vice President and Chief Financial Officer, Danaher Corporation: Thanks, Mike.

David, Conference Facilitator: We’ll take our next question from Tycho Peterson with Jefferies. Please go ahead. Your line is open.

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Good morning, Tycho.

Tycho Peterson, Analyst, Jefferies: Hey, good morning. I want to probe on the biotech comments here a little bit. Just maybe talk about some of the puts and takes in the guide for the fourth quarter. And then I guess, what does it take for you to call an equipment recovery here? Can you just maybe talk about the order book, how the funnel is building and the odds that you could actually see an equipment pickup next year on the biotech side?

Matt McGrew, Executive Vice President and Chief Financial Officer, Danaher Corporation: Yes. Tycho, let me just give you the for the fourth quarter, I can give you a little color on the numbers to make sure everybody’s got those. And then Reinhard can comment a little bit more on the equipment side and what it would take. So it is for modeling purposes, so as everybody’s on the same page here. Biotechnology in the fourth quarter, we are gonna be high single digits in bioprocessing.

And we are seeing DNM down mid single digits. And so Discovery Medical, a lot of that has to do with a prior year comp. Remember, they were up low double digits. Frankly, they continue to see softness. Remember, we’ve got kind of a protein discovery business in there that acts a lot like a life science tool business.

And so they’re sort of seeing the same end market pressures as we see in life sciences there. And so hence, the reason they’re down mid single digit. But just to be very clear, bioprocessing in the fourth quarter is high single digits.

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Tycho, as it relates to the equipment question, I’ve been spending a fair amount of time with pharma customers here. I do that generally, but even more so here in the last several weeks to understand how they’re thinking about reshoring and generally speaking equipment investments. First of all, the activity level in the end market, so the manufacturing volumes continue to increase. There is a need more generally to continue to invest in equipment and that’s probably been held up a little bit here due to some of the policy discussions that have been ongoing. What I’ve noted here in these discussions with some of the senior pharma leaders is that there’s more confidence now in making these investment decisions as some of these most favored nation negotiations are becoming to workable solutions and the tariffs are starting to dial in and remain somewhat consistent.

So generally speaking, what we’re seeing here is more activity, more discussions. While some of that planning is still fairly high level, certainly for Greenfield investments, what we’re seeing is activity and quotations and so forth around more Brownfield investments. We just haven’t seen those turn into orders yet. But having said that, we’re fairly constructive on equipment. But from a planning perspective, we thought it was prudent here to continue with what we’ve seen here up and through the third quarter.

Tycho Peterson, Analyst, Jefferies: Okay. That’s helpful. And then maybe just flipping over to Diagnostics, appreciate the China VBP commentary. Maybe just can you talk about what’s baked in for next year for Beckman ex VBP? Is that mid single digit plus?

Is anything kicking in from Alzheimer’s, or is that too early? And then similarly for Cepheid, away from respiratory, how do you think about the base business there next year?

Matt McGrew, Executive Vice President and Chief Financial Officer, Danaher Corporation: Yeah. I mean, I think it’s too early for Alzheimer’s, I think. I mean, that’s probably a longer term play for us. I don’t think we’ve got anything kind of built in or baked in for that. I would expect that for Beckman for next year, mean, we can kind of get into a little bit more details when we give the formal numbers, if you will, in January.

But they’ve been executing very well. They’ve got a good new product launch in the DXi nine thousand. They’ve been outside of China, that’s been a mid single digit growth plus mid single digit growth business. And I would expect that that would continue as we move into next year. And as far as Cepheid, again, outside of respiratory, respiratory, our assumptions there will be essentially flat at $1,700,000,000 And then outside of that, that’s been a business that has done sort of high single, low double digits on a pretty consistent basis on non respiratory.

I think with the installed base continuing to sort of expand and as we start to add more menu onto existing customers, I suspect that those levels are a good place to start as well.

Tycho Peterson, Analyst, Jefferies: Okay. Leave it at that. Thanks, guys.

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Thanks, Tycho.

David, Conference Facilitator: We’ll take our next question from Scott Davis with Melius Research. Please go ahead. Your line is open.

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Good morning, Scott.

Scott Davis, Analyst, Melius Research: Hey. Good morning, guys. Things seem to be more stable the last couple quarters. It’s nice to see that. But, anyways, I was curious just on the the the mix between kind of respiratory and sexual health and Cepheid because you quoted some pretty strong growth numbers on the sexual health side, but then also kinda guiding to more flattish in 2026 versus ’25 totally for Cepheid.

So perhaps a little bit more granularity on that would be helpful.

Matt McGrew, Executive Vice President and Chief Financial Officer, Danaher Corporation: Yeah. I mean, I think we’re sort of guiding to the respiratory to be flat year over year, which would not have sexual health in it. I think kind of we talked a little bit earlier on the question with Tycho that the outside of respiratory, which is where sexual health would reside, that we would expect we’ve seen that business kind of be low single or sorry, high single, low double digits. I would expect that that would continue into next year. So sexual health will be a part of the growth there for sure.

It has been, and I suspect that it will be, you know, for for a while as we go forward and expand that menu and and drive penetration.

Scott Davis, Analyst, Melius Research: So to be clear then, Cepheid should grow in ’26 versus ’25. That’s what you’re expecting?

Matt McGrew, Executive Vice President and Chief Financial Officer, Danaher Corporation: I I think so.

Scott Davis, Analyst, Melius Research: Okay. Alright. Fair enough. And then the just just a little bit of question,

Dan Brennan, Analyst, TD Cowen: I guess, is

Scott Davis, Analyst, Melius Research: on the contract structures that you have. Have they changed over the last few years just given the tariff and cost inflation dynamics we’ve had, supply chain, etcetera? It’s been all kinds of headaches that many companies have had. But have your contract structures adapted in a way, and clearly, this is more equipment than consumables, but is it adapted in a way that allows you to adjust pricing a little bit easier for for potential headwinds that could arise?

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Scott, over the years, we have brought more flexibility into that. Of course, each contract is specific to a given customer’s needs and we try to be responsive to those. But generally speaking, as you think about bioprocessing for instance, we have a fair amount of both flexibility and to some degree leverage there in order to drive differentiated pricing for differentiated solutions.

Scott Davis, Analyst, Melius Research: Fair enough. Best of luck, guys. Thank you.

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Thanks, Scott. Thank you, Scott.

David, Conference Facilitator: We’ll take our next question from Doug Schenkel with Wolfe Research. Please go ahead.

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Good morning, Doug.

Doug Schenkel, Analyst, Wolfe Research: Good morning, Rainer. Good morning, everybody. Thanks for taking the questions. One quick one on recent events. Have you seen any change in activity over the last few weeks or even just even in the tone of discussions with biotech and pharmaceutical customers since the Pfizer MFN announcement, came out.

I’m I’m guessing you didn’t reflect anything in guidance based on the way you talked about your framework, if if things are improving, but I’m I’m curious if you’ve seen any changes.

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Doug, think I would say yes. And also correct that we have not reflected that in our guidance here, neither for the fourth quarter nor for our initial thoughts on ’26 because we like to see the shift in tone turn into demonstrated order patterns so that we actually see the trend. But having said that, and as I mentioned earlier, I’ve been out in the market a fair amount all over the globe here talking to various pharma executives and there is more confidence that the policy environment is finding more balance and that some of these overhangs whether that’s the most favored nation discussions where like I say, some of those are not always great but they are workable and remove an overhang for our pharma customers on the one hand. And on the other hand, we do see the tariff situation stabilizing and becoming planable. In that context, we’re starting to see more confidence regarding capital investment decisions and the location of those investments going forward.

And so we’re looking for that, of course, to now translate from activity and quotations into stronger order patterns, but we haven’t seen that yet. As a result of that, we’re not reflecting that yet in any of our guides.

Doug Schenkel, Analyst, Wolfe Research: Okay. Super helpful. And then thank you for the framework for 2026. I have a question on margins. So I think with this morning’s announcement, you know, by the end of this year, you will have invested, I think it’s about $300,000,000 in productivity enhancements in 2025.

And an unlike a lot of your peers, you you don’t one time those out. So that actually depressed margin this year by over 100 basis points. So as we think about next year and the benefits of those initiatives rolling through, is there an argument that even though you talked about 100 basis basis points of margin expansion potential next year, we think about kind of adjusting the base up this year and you guys getting maybe low single digits to even mid single digit top line growth that all in all, error bars probably skew to the upside as we think about margins for next year, again, just rolling through the benefits of all the productivity enhancements that you’re putting into place as we speak?

Matt McGrew, Executive Vice President and Chief Financial Officer, Danaher Corporation: Yeah. I mean, well, first, I I would just kind of anchor on this is I I believe that a 35% to 45% fall through and the impact of just the the two fifty I talked about, that’s north of a 100 basis points.

Jack Meehan, Analyst, Nephron Research: So Right.

Matt McGrew, Executive Vice President and Chief Financial Officer, Danaher Corporation: Because I think when you go to do your math, it’s not going to be 100. So I think you’re right on that point. As far as is there more than what we have sort of offered up here, this is a net number so that we can continue to invest in the business. We think this is the right balance of investing in the business, making sure that we’re also delivering high single digit or better EPS growth as we head into 2026. But we do want to leave ourselves some room for that investment.

But as the year plays out, we can always kind of we always tweak and work with that. But I think the frame that you’ve laid out of north of January basis points of margin expansion is very fair. And like I said, that $250,000,000 of net savings gets us that $0.30 tailwind. And I feel pretty comfortable about high single digit EPS even if we’re at the low end of the guide, of the range.

John Bedford, Vice President of Investor Relations, Danaher Corporation: Okay. All right. Thanks, guys.

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Thanks, Doug.

David, Conference Facilitator: We’ll take our next question from Vijay Kumar with Evercore ISI. Please go ahead. Your line is open.

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Good morning, Vijay.

John Bedford, Vice President of Investor Relations, Danaher Corporation0: Hi, Rainer. Good morning and thank you for taking my question. My first one on if I wanted to touch on the fourth quarter diagnostics assumptions, think ex respiratory and ex China. Looks like the business has done around mid singles for the past two quarters. I think your guide implies for q four double digits.

So maybe talk about what changes sequentially from 3Q to 4Q, and what drives the optimism for for diagnostics ex China, ex respiratory?

Matt McGrew, Executive Vice President and Chief Financial Officer, Danaher Corporation: I think that the uptick is VBP lapses. That’s the delta. I don’t think anything changes with the rest of the core business. I think that’s mid single digit, that base business, if you will. But remember, we took the first hit in respiratory in in China with b b p and reimbursement in q four.

So I think it’s the non I think it’s the reimburse it’s the PPP that gets better, not the base business.

John Bedford, Vice President of Investor Relations, Danaher Corporation0: Sorry, Matt. I think am I am I correct in assuming ex respiratory and ex China, the business is mid singles in 3Q?

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Yeah.

John Bedford, Vice President of Investor Relations, Danaher Corporation0: And that assumption doesn’t change for q four mid singles, or or does it change ex res pro or ex China?

Matt McGrew, Executive Vice President and Chief Financial Officer, Danaher Corporation: Again, I I think your your your ex China is the the the piece, Vijay. That China number is going to get better in the fourth quarter because we are lapsing reimbursement. Happy to follow-up with you on some numbers offline.

John Bedford, Vice President of Investor Relations, Danaher Corporation0: Understood. And then maybe, Brian, one for you on cap deployment. A pretty big share repo in CQ. With the new 35,000,000 authorization, how are you thinking of M and A versus share repurchases, right, when you look at assets available in the deal pipeline?

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: So, Vijay, we’ve maintained strong bias towards M and A, and we continue to be very active on the M and A front. We’re cultivating every day and we continue to think about M and A in the context of our framework of attractive end market, attractive company with value reserves, and importantly, the valuation framework, the model has to work. And we’re going to stick with that discipline. Now that said, and as we’ve demonstrated here, we’re not opposed to buybacks. At current levels, the relative value of a buyback generates attractive financial returns and we will continue to evaluate all our capital allocation using the same ROIC lens.

So biased to M and A clearly, but we’re going to maintain the discipline because we want to see the returns.

John Bedford, Vice President of Investor Relations, Danaher Corporation0: Understood. Thank you, guys.

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Thanks, Vijay.

David, Conference Facilitator: We’ll take our next question from Dan Brennan with TD Cowen. Please go ahead.

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Good morning, Dan.

Dan Brennan, Analyst, TD Cowen: Good morning, Rainer. Thanks for the questions here. Maybe just going back to bioprocess and the equipment side. I know you talked about in the prepared remarks how Saiteva has built up a lot of capacity. You’re ready for any demand that comes from this onshoring.

Can you just kind of zoom out a little bit and give us a flavor how we might think about this? I know there’s been hundreds of billions of announcements, but it’s hard for us to parse what’s really incremental, what’s just shifting from one region to the other, and kinda how it might impact you. So if we look out, like, what should we be looking for? And, you know, could this actually drive, you know, some potential, you know, real demand benefit for you, whether it be exiting ’26 into ’27, anything like that?

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Sure, Dan. The investment announcements that we’ve heard from pharma differ in terms of what they include and exclude depending on which pharma company you’re talking about. Then of course many times the timelines were five and ten years. So those numbers grow pretty quickly, especially if the research and development investments were considered in those investment numbers as well. But if we put that aside for a minute, there’s two factors here that drive equipment demand.

First, the manufacturing growth that is required to meet the market demand. And we have seen over the last quarters that the equipment investments have been fairly slow. While they’ve improved slightly, they’ve been below historical trends. While the end market and the production requirements have continued to be strong. So there is a general need around the world to start investing in equipment.

That’s sort of one factor. And then you add this trend of regionalization of manufacturing capacity And of course we think about that in terms of the reshoring discussions here in The United States. But other regions think about regionalizing their manufacturing network as well. And so that speaks positively to the general environment and the requirement for equipment investments going forward. And what has held that up here is the dynamic of policy changes certainly in The U.

S. But elsewhere in the world as well. As well as how do we need to think about tariffs and most favored nations pricing. There I’ve tried to provide a little bit of color that we see those overhangs starting to dissipate as one, the tariffs have become more planable and predictable and two, the most favored nation pricing which is a key factor when you’re making these investment decisions as well, is starting to dissipate, as I said, with some workable deals being made. Generally speaking, that’s provided more confidence to the most senior decision makers here in the pharma industry.

Dan Brennan, Analyst, TD Cowen: Great. Thank you. And then maybe just as a follow-up, just on the 26 guide, I think you discussed a lot about China and bioprocess. But just on the life science piece, Sounds like you’re thinking about maybe starting that if Matt, you know, Matt talked about 0% excuse me, 3% as the good starting point for the company. So life science is probably, I guess, zero.

Could you unpack a little bit? I know you talked about, you know, you’re not baking in any improvement just between instruments and genomics. What would have to happen to get to zero? Do you think that’s going to prove to be kind of a conservative number? Thank you.

Matt McGrew, Executive Vice President and Chief Financial Officer, Danaher Corporation: Yeah, no, I think you’re right, spot on, on that being flat. And again, sort of that’s where we’ve been now. I think part of the reason that we have the same thing, same dynamic in Q4 that we do in life sciences as for all of ’26, it’s been where we’ve been. It’s been fairly flat as we have not seen that inflection in the market like Ryan talked about. Maybe you want to talk about what might happen to get to the letter?

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Sure. So let’s start with the fact that the clinical and applied markets have remained fairly solid and we don’t expect that to change. And we’ve also seen a modest recovery in pharma research spending. It’s below historical trends but we’ve started to see a recovery there and that was reflected in Q3 as well. It’s really academic and government which you know on a global basis is low single digit exposure for Danaher overall.

Matt McGrew, Executive Vice President and Chief Financial Officer, Danaher Corporation: That

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: is anchoring and holding back some of the growth there. And that’s the market. Now if you think about our own business, we’re performing well in these segments. We’re less exposed to the academic and government side. And as it relates to the life science consumables businesses that I talked to earlier, we also think that we’re lapping some of those headwinds.

You recall those two large customers that have come off their peak demand pretty significantly and we’ve been working through that. And we would expect that then also to be reflected in a little bit more supportive and modest growth next year. But for planning assumptions, we think where we sit today that it’s best to consider flat growth for life sciences in the context of that 2026 guide that we gave you. And if there are upside, there is, but we want to see some of that playing through here in orders before we call that trend.

Dan Brennan, Analyst, TD Cowen: Great. Thank you.

David, Conference Facilitator: We’ll take our next question from Jack Meehan with Nephron Research. Please go ahead. Your line is open.

Jack Meehan, Analyst, Nephron Research: Thank you. Good morning, everyone. Good morning, Jack. I want to focus on the Diagnostics business. The first question, in the quarter, the sales were about $60,000,000 higher than what consensus was looking for.

You know, there’s about 200,000,000 of upside from respiratory. Everything sounds great in Beckman ex China and Leica, so it just wasn’t obvious to me what might have fallen short at least versus what the street was thinking. Is there anything that you would call out?

Matt McGrew, Executive Vice President and Chief Financial Officer, Danaher Corporation: No. I would say it was all respiratory, kind of, if you will, a little bit earlier than we expected. I think customers were just kind of, again, kind of coming earlier than we thought. I would say it was probably $125,000,000 of pull forward, if you want to call it that. But it was nothing else to call out and diagnose.

Jack Meehan, Analyst, Nephron Research: Okay. Got it. Actually, I’ll pivot to the biotechnology business just as a follow-up. Can you talk about the dialogue you’re having in terms of reshoring? I know you mentioned kind of like the billions of dollars being talked about in manufacturing here in The U.

S. How do you think this is going to play out over the next few years? Just any color around what that can mean for both capital demand and recurring for that business, that would be great.

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: It’s hard to put specific numbers around this, but we would expect that this reshoring in The U. S. Particularly, but the regionalization of supply chains is going to result in continued investment and capital equipment. And we think the way that starts is with brownfield investments where customers are taking advantage of existing facilities in order to get those capacities in place more quickly and also demonstrate that they are investing in the respective regions including to The US. While in parallel planning sort of those larger greenfield investments that take a little bit more time.

That is a different timeline which takes certainly a couple of years in the best of cases and can take a little bit longer. So once that gets rolling, we might see an extended capital cycle here over a number of years. But we haven’t seen that flow through in orders yet. Lots of discussions, some of them more near term, I. E.

Those Brownfield investments. Others at a higher level because those are larger investments that just take more time, not only to plan but to execute.

Jack Meehan, Analyst, Nephron Research: Great. Okay. Thank you, guys.

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Thank you.

David, Conference Facilitator: And we’ll take our last question question today from Puneet Souda with Leerink Partners. Please go ahead. Your line is open.

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Good morning, Puneet.

John Bedford, Vice President of Investor Relations, Danaher Corporation1: Thanks, Rainer. So my first question is, I appreciate your qualitative comments on the mAbs and biologics growth and bioprocessing being high single digit. But just wondering if you could provide any color on the order growth or book to bill in the quarter. I believe it was about one last quarter. And we have seen weakness in the AAV segment and some of the innovative modalities.

So just wondering, what’s your level of confidence on monoclonal antibody growth offsetting some of that to still deliver high single digit growth? And I have a follow-up on China.

Matt McGrew, Executive Vice President and Chief Financial Officer, Danaher Corporation: Yeah, I mean book to bill was pretty similar to what we’ve seen all year round one. Maybe, Ryan, you wanna comment on it?

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Sure. Well I mean we continue to see monoclonal antibodies growth as strong, not only because the commercial volumes on existing indications are growing more quickly, but also because we see new applications of existing on market drugs being approved. And then we also see biosimilars here that are pretty close to the launch as well. So we do think that that very, very large part of our business, 75 of our business is in those monoclonal antibodies and the growth that’s associated with that takes care of some of the volatility that we have seen here in some of the AAP business. Some of which has been around for some time so it’s also lapping.

But just to say that it’s really driven by protein and these nucleic acid therapies, while they are interesting and efficacious, they will continue to take time to find it into the first line of standard of care. And while we’re very well positioned there, what’s driving the growth here is really protein monoclonal antibodies going forward.

John Bedford, Vice President of Investor Relations, Danaher Corporation1: Okay, thanks. That’s helpful. And then just a brief question on localization policy in China. That has emerged over the last few weeks. There is a 20% pricing rebate for those manufacturing locally.

This is beyond the BBP and the DRG headwinds we’ve been hearing about. So maybe could you just remind us how much of your production and sales in China are manufactured locally and maybe both reagents and on the instrumentation side? Where do you have defensiveness? And where do you need to expand manufacturing if this was to spread broadly to other government agencies including academics? Thank you.

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: So Puneet, that 20% that you heard about benefits for local manufacturers is actually not the newest of news. It’s been out there informally, which is often how it works in China for some time. In fact, I was just in China for a couple of weeks here taking a close look at what’s happening and of course talking to customers and government officials and of course our team. And we think that we’re very well positioned here as it relates to localization. By the end of

Matt McGrew, Executive Vice President and Chief Financial Officer, Danaher Corporation: the

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: year much of our diagnostic businesses, whether that’s equipment or reagents will be localized. And that degree of localization plays well across the portfolio. So while we don’t talk about percentages of localization, we think that we’re very well positioned here and view this actually as advantageous as opposed to a short term headwind.

John Bedford, Vice President of Investor Relations, Danaher Corporation1: Got it. Okay. Thank you.

Rainer Blair, President and Chief Executive Officer, Danaher Corporation: Thank you.

David, Conference Facilitator: And with that, we’ll turn the call back to John Bedford for any additional or closing remarks.

John Bedford, Vice President of Investor Relations, Danaher Corporation: Thank you, David, and thank you, everybody. We’ll be around all day and the rest of the week for follow ups. Have a good rest of your Tuesday here.

David, Conference Facilitator: This does conclude today’s program. Thank you for your participation, and you may now disconnect.

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