Good morning. My name is Crystal and I will be your conference operator today. At this time, I would like to welcome everyone to the Danaher Corporation’s Third Quarter 2020 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 will now turn the call over to Mr. Matt Gugino, Vice President of Investor Relations. Mr. Gugino, you may begin your conference.

Thanks, Crystal. Good morning, everyone and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer, and Matt McGrew, our Executive Vice President and Chief Financial Officer. I would like to point out that our earnings release, the slide presentation supplementing today’s call, our third quarter 2020 Form 10-Q, and the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call 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 & Presentations and will remain archived until our next quarterly call. A replay of this call will also be available until November 5, 2020. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. 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 refer to results from continuing operations and relate to the third quarter of 2020 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 may differ materially from any forward-looking statements that we make today. As a result of the size of the Cytiva acquisition and its impact on Danaher’s overall core revenue growth profile, we are presenting core revenue on a basis that includes Cytiva sales, references to core revenue growth, including Cytiva sales and the calculation of period-to-period sales growth comparing to current period Cytiva sales to the historical period Cytiva sales prior to the acquisition. With that, I would like to turn the call over to Rainer.

Well, thanks Matt and good morning, everyone. We delivered an outstanding third quarter with results in the mid-teens core revenue, over 60% adjusted EPS growth and more than doubled our year-over-year free cash flow. This strong performance is a testament to our team’s dedication as they stay focused on executing for our customers during the COVID-19 pandemic. Since the onset of the pandemic, we have met the challenges presented and turned them into impactful opportunities to support patients, our customers and the global community. So, before we run through our third quarter results, I’d like to update you on how we are directly contributing to the global fight against COVID-19. Cepheid continues to be a leader in the global diagnostic testing effort and the team’s commitment to tackle this global health crisis was further demonstrated by the recent launch of a rapid 4-in-1 combination tests for COVID-19, Flu A, Flu B and RSV from a single patient sample. The symptoms for each of these viruses are very similar, but the treatments differ greatly. And this test will provide clinicians with critical answers in approximately 35 minutes to help ensure the best patient outcome. Now, as we head into flu season, we believe Cepheid’s easy-to-use rapid 4-in-1 test will be a critical tool in clinicians' testing arsenal and we are incredibly proud of the Cepheid team’s fast and innovative response to the pandemic. We further enhanced our diagnostic testing capabilities with Beckman Coulter Diagnostics’ new IgM serology and IL-6 assays. The IL-6 assay can help identify severe inflammatory response in COVID-19 patients, a crucial consideration as clinicians evaluate the risk of intubation with mechanical ventilation. The IgM serology assay can detect IgM antibodies to the virus, which typically begin to develop shortly after symptoms appear and it’s complementary to Beckman’s IgG tests, providing greater insight over the course of a patient’s infection and immune progression. While the use of COVID-19 antibody testing is relatively limited today, in the future, it may play a critical role pre and post-vaccination for population surveillance and clinical trial studies. We are also proud to support the scientific community’s pursuit of new vaccines and therapeutics for the virus. Pall and Cytiva’s products and solutions are involved in the majority of the more than 400 vaccine and therapeutic projects currently underway globally, including every Operation Warp Speed COVID-19 vaccine in the U.S. As the market leader across the bioprocessing workflow, the breadth of our offering and technical expertise are key differentiators that enable us to contribute meaningfully to the development and production of COVID-19 vaccines and treatments. So, now, let’s take a look at our third quarter results. We generated $5.9 billion of sales with 14% core revenue growth. COVID-related revenue tailwinds contributed approximately 1,000 basis points to third quarter core revenue growth, while our underlying base business was approximately up – was up approximately 4%, a sequential improvement from an approximate 3% decline in the second quarter. Geographically, revenue in the developed markets was up mid-teens led by North America and Western Europe. High growth markets were up approximately 10% driven by sequential improvement in China and India. Our gross profit margin was 54.8% and our operating profit margin of 18.5% was up 80 basis points. Our core operating profit margin was up 310 basis points, with each of the three segments achieving 75 basis points or more of core margin expansion. Adjusted diluted net earnings per common share of $1.72 were up 62% versus last year. We generated $1.5 billion of free cash flow in the quarter and $3.5 billion year-to-date, up 110% and 59% respectively, with 174% free cash flow to net income conversion in the quarter. This outstanding cash flow generation, combined with our strong balance sheet, positions us well to actively pursue strategic M&A opportunities. We also continue to accelerate organic growth investments across Danaher, with a particular focus on expanding production capacity at Cepheid, Cytiva, and Pall Biotech to support increasing demand driven by COVID-19. So, now, let’s take a more detailed look at our results across the portfolio. Life Sciences core revenue was up 18.5% led by core growth rates of 20% or more at Pall Biotech and Beckman Life Sciences, and more than 35% at Cytiva and IDT. We are continuing to see strong demand from customers building out their genomics and automation capabilities and from our biopharma customers working on COVID-19 vaccines and therapeutics. In our more instrument-oriented life science businesses, declines moderated as academic and research labs continued to reopen, driving increased installations and better order trends. SCIEX benefited from this improving environment achieving low single-digit core revenue growth driven in part by demand for new products, such as the Echo MS and the Triple Quad 7500, the most sensitive mass spectrometer on the market. Moving over to diagnostics, reported revenue was up 18% and core revenue was up 17.5% led by more than 100% core growth at Cepheid as a result of COVID-19 testing volumes and record GeneXpert System placements. Radiometer and Leica Biosystems, our acute care and pathology businesses, delivered mid-single-digit core revenue growth. Declines at Beckman Coulter Diagnostics moderated as elective procedures and wellness checks continue to resume throughout the quarter. Moving to our Environmental & Applied Solutions segments, reported revenue and core revenue were down 1% with similar results at both our water quality and product identification platforms. Across our water quality businesses, municipal activity and projects continued to resume driving growth in North America and China and this was offset by softness in the industrial end-markets globally. Demand for our consumables and chemistries remained steady, supporting customers' mission-critical day-to-day water operations and equipment declines moderated and we were encouraged by equipment order trends in the quarter as more customer facilities got back up and running. Now, during the quarter, Hach closed the acquisition of Aquatic Informatics, a leader in water-focused software solutions. Aquatic Informatics Solutions collect, manage and analyze large volumes of water data and these capabilities combined with Hach’s deep applications expertise, will help us bring greater operational efficiencies to customers’ workflows. At our product identification platform, low single-digit core revenue growth at Videojet was driven by strong demand in North America, particularly across the consumer packaged goods, food and beverage and pharmaceutical end-markets. Consumables and services performed well globally as Videojet continued to help customers keep their essential businesses operating through the pandemic. Now with that as context for what we saw by segment during the quarter, let’s take a look at recent trends across our end-markets. Geographically, customer activity continues to increase in the U.S. and Europe as phased re-openings proceed across these regions. We are keeping an eye on areas that have recently experienced setbacks in the process of reopening, but we have not seen any material impact so far. And China is progressing well with activity in most regions approaching pre-pandemic levels. Within Life Sciences, bioprocessing demand continues to lead the way, COVID-19 vaccine and therapeutic activity increased meaningfully during the quarter with development and production scale occurring at an accelerated pace. Cytiva and Pall Biotech comprised most of our bioprocessing exposure and collectively these businesses increased orders by more than 60% in the quarter, driven by our comprehensive offering across the bioprocessing workflow. Non-COVID related bioprocessing activity remains healthy and in line with what we saw over the last several quarters. Now, as I mentioned earlier, academic and research labs around the world are continuing to reopen at reduced capacity as social distancing measures limit the number of people allowed in the lab at any one time and we estimate that approximately 60% to 70% of academic research labs are now open in some capacity. And in China, that number is closer to pre-pandemic levels. Moving to clinical diagnostics, we continue to see strong demand for molecular testing in both hospital lab and point-of-care settings. Since launching the first rapid molecular tests for COVID-19 in March, Cepheid has meaningfully increased production capacity and shipped more than 7 million test cartridges in the third quarter. The team continues to ramp test production and we now expect to ship more than 8 million tests in the fourth quarter. Cepheid also delivered another record number of new systems in the third quarter, expanding their market leading global installed base by approximately 35% over the past year. Across hospital and reference labs, patient volumes increased through the quarter as elective procedures and wellness checks resumed across much of the developed markets. We estimate that global patient volumes are currently 90% to 95% of pre-pandemic levels, with China slightly ahead of North America and Europe given its earlier reopening. In the applied markets, consumables remain solid as customers sustained essential business operations like testing and treating water and safely packaging food, medicine and consumer products. Previously delayed equipment installations are starting to resume and we are seeing our equipment order books improving as customers start to initiate new projects and capital investments. So as we look ahead, we expect to deliver low double-digit core revenue growth in the fourth quarter, modest sequential improvement across our businesses will be offset by the impact of 3 fewer selling days versus last year, which represents a core growth headwind of more than 300 basis points. We anticipate COVID-19 related revenue tailwinds will be similar to what we saw in the third quarter. So to wrap up, we are really pleased with our results this quarter and we are proud to play a pivotal role in tackling COVID-19 head on. Our team has turned unprecedented challenges into tremendous opportunities and our strong performance is a testament to our associates focused execution and commitment to our customers. With the Danaher business system as our driving force and the powerful combination of our talented team, exceptional portfolio of businesses and strong balance sheet, we believe Danaher will continue to outperform through the remainder of 2020 and well into the future. Now, before I go on to the Q&A, I just want to take a moment to share a few thoughts after my initial month as CEO. First, I always knew we had an exceptional portfolio and extraordinary team and that conviction has only been reinforced over the last few months as I have had the opportunity to spend more time with more of our businesses and leaders. And in doing so, a couple of things really stand out. One is the considerable amount of innovation happening across the organization. Our investments in R&D and commercial initiatives are allowing us to continue building sustainable competitive advantages all across our businesses. The other standout for me is the caliber and the depth of talent we have across Danaher. Our associates are innovative and passionate about their work and committed to the Danaher business system and our culture of continuous improvement. It’s clear that DBS is what drives it. It’s who we are. It’s how we do what we do. It’s our ultimate competitive advantage. And I see it alive and well, everywhere. So, our future is bright and I am excited about what lies ahead for Danaher. I believe that the combination of our investments and innovation, outstanding team, and strong balance sheet, powered by the Danaher Business System, will enable us to keep building an even better, stronger company as we move forward. So with that, I will turn the call back over to Matt.

Thanks, Rainer. That concludes our formal comments. Crystal, we are now ready for questions.

Thank you. Your first question comes from the line of Tycho Peterson with JPMorgan.

Hey, good morning. Congrats on the quarter. Rainer, 50% order growth in Pall Cytiva was certainly impressive and a notable acceleration from last quarter. So, could you maybe just touch on the manufacturing scale-up you alluded to and how quickly can additional capacity come online and where are you making those investments?

Sure. So, first of all, good morning, Tycho and thanks for the question. As I think about the larger opportunity here, particularly in the vaccines and therapeutics, it might be helpful just to back up one second and think about the scale and the breadth of our unique portfolio. We are incredibly well-positioned through the combination of course of Pall and Cytiva, but also upstream with many of our companies being involved in the development of the actual drugs themselves. And then, of course, the process scale-up, the upstream solutions, including cell culture media, single-use bioreactors and then all the downstream fluid management filtration and chromatography solutions. And so I think what you saw there and that step up here, quarter-over-quarter was the breadth of that portfolio and the capability of those teams really moving forward and gaining traction. We are on top of well over 400 vaccines and therapeutics that are in the pipeline and we are playing in the great majority of those in one capacity or another. And so, the nature of our portfolio, the focus of our teams, the trust that the customers have in us is giving us an extraordinary number of add-backs. And so as you think about that portfolio positioning here, going forward, we think that as the capacity needs of our customers continue to ramp, certainly as we think about ‘21 and beyond, we expect to play very, very well there and just to give you a sense of that, we year-to-date have $1 billion, well over $1 billion of COVID-orders in the combination of Cytiva and Pall Biotech. And that’s before any vaccines have been officially approved by the FDA. So again, we really see an opportunity here for the long term to really capture an extraordinary amount of opportunity and share going forward.

Great. And then maybe I guess a similar question on Cepheid. I know you have been committed to scaling up the manufacturing there and you talked about 8 million tests in the fourth quarter, but can you talk about where you think that needs to go from a capacity standpoint? And any headwinds we need to think about from a lighter flu season here for you guys in the fourth quarter and early next year? The flu trends early on are still kind of light. Thanks.

So just to level set on that one, Tycho, we have had extraordinary demand for our COVID tests here from Cepheid. In fact, you noted in my comments that in Q2 we had 6 million tests shipped; in Q3, 7 million tests shipped; and now in Q4, we are looking at 8 million tests shipped. And we also at the same time, at the end of September, launched this 4-in-1 test, which really positions us uniquely and extraordinarily in order to be able to address the opportunity and the need in particular here as the flu season arrives. As you can imagine, as patients present, particularly in hospitals and points of care, that physicians will want to know the right answer quickly and the right answer needs to distinguish between COVID and the flu season. So we are really thinking of this as the flu season and COVID testing both being tailwinds as we go into Q4 and beyond.

And maybe just to put some numbers around that for you. So, if you think about sort of the capacity that we talked about at Cepheid, sort of to begin this, in Q2, we sort of had 6 million tests that we had. That increased to about 7 million here in Q3. And we expect that to go in Q4 to call it maybe closer to 8 million. And as we sort of ramp through ‘21, we are going to be adding additional capacity as well. Now, I am not sure exactly when we expect all of that to come online, but as that happens, we will sort of kind of keep people updated. But yes, for sure, we are going to add a little bit here in Q4 and then throughout 2021 as well.

Okay, thanks. I’ll hop off and let others step in. Thanks.

Your next question comes from the line of Derik de Bruin with Bank of America.

Hey, good morning. So, just to follow-up on Tycho’s question, just because I am getting some pings from investors. How are you thinking about pricing on the 4-in-1 test? And I mean, when we have done some calls with labs, I think there is some concern about how they are going to get reimbursed for some of these multiplex tests. Can you sort of talk through pricing and sort of like what’s – what is the strategy for your customers to get paid for these?

Sure, sure. So, let’s start off with, just to level set that we in fact have launched this 4-in-1 test here in September and are already shipping. And we are seeing great customer demand for that. So, customers are really recognizing what an incredible tool this is at the point of care and hospital, to be able to diagnose and help customers. Now, this test here – and, of course, this always depends on the type of customers. But the 4-in-1 test will be priced right around $55 to $60 per test, and that compares to the COVID-only of about $20 to $40. Once again, depends on the type of customer and volumes and so forth. But that gives you a sense of it. Now, from a reimbursement perspective, we feel very good about this for a number of reasons. As the 4-in-1 test is a multiplex test and that is going to be so useful for clinicians to determine what type of treatment will be suitable for that particular patient. And then – so, as you think about that, today already there are multiplex tests being used for respiratory type ailments and they are used all the time. And so, we see that our customers are very familiar with the reimbursement dynamics here and don’t see any issues as it relates to the Cepheid 4-in-1 multiplex test.

Great.

Derik, maybe just to give you a little bit of context, sorry as well on some numbers on that, on that 4-in-1, obviously, it’s got a higher price point, like we talked about. But just to make sure that we kind of level set on how we think about when that will come online. So, I think in Q4, thinking about maybe 60% of our test volume in Q4 is going to be COVID-only. And then the other 40% would be the 4-in-1. And I think the way to kind of think about that is that when you think about – we are still going to be producing COVID-only, and the kind of staggered adoption because – one, you have got high growth markets that really don’t experience seasonal flu. So, the demand for that is just not going to be as high if any. And Europe is going to be more of a staggered adoption. It is going to be country by country, it’s not going to be kind of uniform like it might be in the U.S. So, just maybe to think about from a modeling perspective, that split would be the way I think about that.

Great. And the – I guess on that one – well, actually, let me follow-up on something else. And so, I guess, can you talk a little bit about the pacing in SCIEX and academic labs? I mean – and basically the – talk about are you see any signs of any increased activity in terms of like a fourth quarter budget flush? Just sort of like the end market dynamics and sort of what is going? I mean, you talked about labs being open, but what is really the spend potential there, and just sort of like what does the, sort of, customer spending environment look like?

Sure. So, Derik, we have seen lab activity around the world pick up. As we mentioned, we see China nearly at or at pre-pandemic level. And I would say in North America and Western Europe, we see those lab capacities at about 70% to 80%, which is a sequential improvement, and we saw that. And so, our teams are able to now get in to see the customers to install the systems, provide the services and so forth. But we still see some capacity limitations, as I mentioned earlier, related to social distancing measures and so forth. Now, having said that, in Q3, our tools business grew 10%, we are very happy about that. And that was driven certainly by IDT and Beckman Life Sciences, but also by new product launches which were incredibly important for us and our customers, for instance the Echo MS, which is the high throughput screening tool used in front of mass spectrometers which has been seeing an extraordinary uptake. The launch of the Triple Quad 7500, I mentioned that. That is the most sensitive Triple Quad on the market, seen great uptake for that. And that’s driving – that actually drove a positive low-single digit growth already for SCIEX in Q3. And then at Leica Microsystems, we had recently launched the Stellaris, a confocal microscope, which is the most versatile and powerful confocal microscope in the market. So, this combination of certainly sequential improvement in the marketplace, more labs being accessible, us being able to get in and install and provide services, has been helpful. But I think we have also been buffeted by these aggressive new product introductions that we have invested in here too for the future.

Great. Thank you very much.

Your next question comes from the line of Scott Davis with Melius Research.

Good morning. Good morning, Rainer. Welcome.

Thank you.

Hey, Rainer. Anything the board wants you to do kind of differently than your predecessor, anything to focus on differently?

That is a great question. And right now, I would also like to take this opportunity to start out with thanking Tom and the Board and all the associates for the fantastic transition that they have provided me here over the last months and getting me off to what is a great start here for Danaher in Q3. So, I have worked for Tom a decade, and with that, of course, also with our Board. And what you can expect there is a great deal of consistency and continuity for sure. And my plan, of course, is to build on the fantastic foundation that Tom and the board have laid and making us a stronger science and technology company, and you will see that I am very passionate about the topic of innovation. You heard me comment on that today already as well as talent. And so, you will see us continue investing here quite significantly in innovation and in our talent, in our scientific capabilities, whether those be internal or external, as we continue to chart our course here forward as a leading science and technology company. Now, having said that, with all the similarities, you can also expect to see no change as it relates to our capital allocation bias, which will continue to focus on M&A and, particularly, on making us a stronger innovation and growth company as we continue to move forward. And when I started this role, just after we had closed the Cytiva deal, I thought that perhaps I would be sitting here with the ability to make some smaller deals, but certainly, initially with the balance sheet, I mean, some rebuilding. And we find ourselves here in a great situation and that one, our free cash flow is stronger, Cytiva’s performance is even better than expected and we couldn’t be more pleased with how the team is transitioning and being a part of Danaher. And then you add the equity raise to that, and that’s really put us into a situation where we just have more degree of freedom. And so that from an M&A perspective also puts us in a position of being able to do certainly small and medium sized strategic deals, and then as we go forward, get back into a stronger position pretty quickly.

That’s helpful, Rainer. Is Aquatic the type of deal that we should expect going forward? I am not sure you guys sized that. Maybe you could help us understand if that’s material or not?

So, yes, Scott, – I can give you a little color on at least the size of it. I mean, this is a deal in water for the Informatics, and Rainer can talk a little bit about it. But it’s a pretty small deal. I mean, it’s a sub-$20 million in revenue and profitability, call it, $80 million to $100 million type deal, kind of deal for us. So, it’s not huge.

But it is exemplary of the deals that we continue to like. It’s nothing new. You have seen us do technology deals here that strengthen and round out our portfolio and we like Aquatic Informatics positioning and capability. So, certainly, you will see more of those types of deals and we consider that a smaller one.

Perfect. Well, good luck to you Rainer. We wish you well.

Thanks, Scott.

Your next question comes from the line of Doug Schenkel with Cowen.

Hey, good morning, guys. Thanks for taking the questions. I want to go back to Tycho’s first question on capacity build out. How do you balance the desire to fulfill acute RX and vaccine development demand related to the pandemic with the outlook for post-pandemic demand? I mean, I guess to be more to the point, do you believe the capacity you are building today will continue to be used even post-pandemic and thus, should we view the elevated revenue levels associated with your build out as being durable even after the surge in pandemic-related demand subsides? And I guess well on this topic along those same lines, you are placing a lot of GeneXperts today. They are going to be used for the foreseeable future as much as people can get those, at least in our opinion just given what’s going on. But post-pandemic, how do you think about the durability of these placements and the associated revenue potential?

Thanks, Doug. What I would like to do is take your question and even broaden it a bit to let you – to hear how we think about the long-term here. And the way we frame that is, what does the world look like post-vaccine versus what the world for Danaher looked like pre-vaccine or pre-COVID, call it. And let me start with our base business, through the portfolio moves that we have made and the investments, have already been transitioning to a higher growth and earnings profile with a higher degree of recurring revenues. And so, we feel very good about the growth profile that we had pre-COVID where we were already a 5% to 6% grower. And to your point, it’s included in that with Cepheid growing at low-double digits at the time, representing about 5% of our portfolio. And at that point we didn’t even own Cytiva yet, although we were thinking, as we were diligencing and going to close that this would be about a 6% to 7% grower. So, as we think now about a post-vaccine world, we actually really believe that our core growth is going to improve. And why is that? Well, first of all, our base business will continue to improve as activity picks up and markets recover and our innovation investments, some of which I talked about earlier, start paying off even more. But then also to your point, Cepheid, it might be back to low-double-digit and it will represent 10% of our portfolio in 2020, with what we think are some of the most durable testing revenues in the marketplace. Because we are at the point of care, because our workflow is so easy, because of the menu breadth we have with both multiplex or COVID, we really see this point of care positioning as unique. And then you add on top of that, and you mentioned this, our increase in the installed base, 35% increase over prior year just in 2020, we really see this as a long-term improvement. Then you add to that Cytiva, which we are seeing now with the leading positions in cell culture media, single-use technologies, including bioreactors, filtration process chromatography and many more things, that we are getting so many add backs with these over 400 vaccines and therapeutics in the pipeline that we see an extraordinary potential there for the traction and the capacity increases that are needed for the future, independent of the type of vaccine that will ultimately receive approval. And so, we think that that 6% to 7% growth assumption that we had here prior to the pandemic was likely conservative, and that for the long-term we really can think high single-digit there as well. Then lastly, you see our capital allocation strategy which is biased toward M&A. You add that on top here. And we really do believe that our growth profile as a result of the pandemic and the durability of our positioning in the aftermath of all of that is going to result in a higher growth profile. Now, there’s lots of things here to consider in terms of macro risks, think of government spending, taxes, there are a number of variables here. So, it’s a little bit early here to be conclusive. But what we see here is fundamentally stronger and more durable growth profile going forward.

Super helpful. And then just one more quick follow-up on, I think, it was one of Derik’s questions. Just keeping in mind how strong your business has been this year, it seems pretty clear that you are going to be in a position to get your debt-to-EBITDA ratio down in the neighborhood of 3x by the end of this year. You referenced M&A here in answering my last question. How ready is the organization for M&A given everything that’s going on? But – the balance sheet is clean, but there is just a ton of demand on your infrastructure. So, I am just wondering how you would characterize your M&A readiness right now? Thank you.

It’s a great question. First of all, speaking to the balance sheet, I think you are in the right neighborhood there, that those are numbers that we could confirm based on the free cash flow and the EBITDA that we see in our current debt profile, that our balance sheet is in a very good position. I would also say, we couldn’t be more pleased with the progress that we are making in the transition of the GE Biopharma business, now Cytiva, into Danaher, and they are firing on all cylinders and we continue to extricate ourselves there from the transition services that GE provides us and standing up this organization and see just extraordinary, not only efforts but real results there. So, we always, at Danaher, maintain leadership and management capacity to ensure that the opportunities that we generate, that the market provides us, we can take advantage of. And so, while we are transitioning Cytiva into Danaher and nearly complete with that, that doesn’t keep us from being ambidextrous here and keeping our eye and being able to take advantages – take advantage of the opportunities that market provides.

Okay, great. Thanks again.

Your next question comes from the line of Vijay Kumar with Evercore ISI.

Hey, guys. Congrats on a really strong quarter here. Rainer, maybe a question on our Cytiva, no surprise, but if I look at how the Q played out, so Cytiva was 500 basis points of contribution in 3Q and I am looking at the order trends which is accelerating. Maybe talk about the Q4 guidance here, which implies a modest step down here for Cytiva. Is that a timing element or perhaps flesh out why contribution perhaps steps down in the context of accelerating orders?

Thanks, Vijay, and good to hear you. So, Q4 Cytiva, perhaps it’s helpful to back up and come back to what Matt was talking about earlier. It’s really important to see that we continue to expect a similar growth tailwind from COVID in Q4 as we did in Q3, and we expect our base business to perform similarly or incrementally better. But it is important to keep in mind that we had three working days less, and particularly for the consumer-oriented businesses that’s been impactful in the calculation. And having said that, if you think about the bioprocess industry today, already these companies are producing vaccines. So, if you think about operation work speed and where BARDA is involved, not only are the biopharmaceutical companies producing clinical trials quantities, they are already ramping up capacities for those vaccines that they see – vaccines and therapeutics that they see very near to approval and are hopeful for. And of course, this is financed oftentimes through the federal government. And so, there’s a great deal of aggressiveness there. And so, that’s already happening here at the back end of Q3 and you will see that also in Q4. And then as approvals start coming in, and we are hopeful that that happens at the end of the fourth quarter or in the first quarter, then I would expect to see an additional ramp there as well.

Vijay, maybe just as a kind of some context around it, I mean, we have talked about sort of year-to-date we have got north of $1 billion of COVID orders between Cytiva and Pall Biotech. The way to think about that is that those are orders that we have already gotten, that are booked, probably 50% of those orders are going to ship here in 2020, but the rest are going to move to 2021. Just to give you some idea of sort of how that order book is played out and it’s going to move its way through the P&L, like Rainer was just talking about.

That’s helpful, Matt. Rainer, one more follow-up on that, you spoke about the order book. As vaccine manufacturing ramps up, do you need to make incremental investments? And I am just thinking about incremental margins here. It’s been really strong the last two quarters, mid-40s, well above historical trends. How should we be thinking about spend levels and incremental margins? Because I am assuming travel steps up as the economy reopens. Thank you.

Yes. So, Vijay, I will start here and then I will pass it on to Matt. So, first of all, we absolutely are and continue to invest in capacity expansions. In fact, we were in the capacity expansion program at Cytiva as we brought the company into the Danaher fold and are, of course, accelerating that. And you can expect additional investments here in Q4, that are capacity related certainly but also related to standing up the organization. And then as we continue to go into 2021, you will see continued investment, and of course that has – that plays out in our margin assumptions as well. And I think, Matt, you were just about to jump in on that.

Yes, I think for Q4, I think you are right, Vijay. We have seen sort of Q2, Q3, we have had really good fall through on the growth. I think as we sort of look at Q4 though, I think probably a 30% to 35% fall through is a better number to use. Like you said, we kind of, as we look at where that’s come from in Q2 and Q3, and we have had some really, really good mix, on where the growth’s come from Pall Biotech, think about Cytiva and Cepheid. And now that some of the other businesses are contributing more, I think we are going to have a bit of a mix impact. And then as you mentioned, the lower OpEx and less travel and trade show is certainly a part of it. Things are sort of getting going again as you saw with the growth rates. And then, Rainer talked about the accelerated growth spend we are going to do that in Q4. We have got some projects already that we have got underway. I think that will have an impact on it. And probably lastly frankly, we are – given where we have seen some of the growth and we have got some pretty outstanding growth in, for example, Cytiva, for example, Cepheid, there is going to be some sort of year-end accruals, if you will, around bonuses and things like that. It will be a bit of a headwind year-over-year for us. So I think it probably moderates a little bit here, as we get into Q4 from where we have been, but still feel even with that, I still think we are going to be able to put up some pretty good EPS growth here.

That’s helpful context. Thanks, guys.

Your next question comes from the line of Dan Brennan with UBS.

Good morning. Thanks for taking the questions. So I know you just kind of outlined the $500 million plus or so for the vaccine opportunity or therapeutics for your biologics business, I am just wondering if you can kind of raise the scope up a little bit higher and just help us think through ultimately like the addressable opportunity for Cytiva and Pall just given the magnitude of therapeutic and vaccine development that’s ongoing. So, it’s nice that you got the orders in hand, but kind of how big is the market you feel that you are addressing as we look out for both vaccines and therapeutics related to COVID?

Dan, that’s a great question. And let me refrain just a little bit and give a little bit of background on this topic. It’s so important to remember that there are very different types of vaccines. In fact, there are a number of unknowns here that still makes very solid and defined projections, pretty challenging. You know there is a lot of questions around which kinds of vaccines and therapeutics ultimately get approved and we have seen more recently with Lilly and J&J that these approvals are not given, these are rigorous processes that these companies go through with the FDA and there are number of wildcards, including adverse reactions and so forth, that at any given time can derail efforts that we think are very close to the finish line. So, it’s really important to understand that prior to approval, picking what are the future “winners” is very difficult. The other thing that’s also hard is that these vaccines are produced in very different ways. While there are a number of similarities, how they are produced is very, very important in terms of the amount of doses that you get per batch as an example, which can materially and by orders of magnitude change the kinds of inputs that are required for any production. We also have a lot of questions around the number of doses. Is it going to be a one-time shot with a booster for life or is it going to be much like we see for influenza, an annual type injection that everybody needs, these are big questions that of course affect any kind of estimates that you make. And then lastly, there is a great deal of discussion about to what degree will the population actually accept vaccines and use them and get vaccinated in order to get to that ultimate goal of herd immunity. So, we see that – we see that it’s very, very challenging to come to a good number there. But having said that, as we get closer here in the next month and perhaps quarter or so, we will start seeing approvals were very helpful. And this picture will become much more clear as we get the data out of the clinical trials, know about doses, whether booster shots are required and that sort of thing. And then I come back to what Matt said, if you look at the $1 billion that we have year-to-date in orders, we see that prior to FDA approval, so we certainly feel very positive about what the future holds here in the next year or so, but again coming down to hardcore and highly defined numbers, it’s tough.

Well, and remember too, Dan, that, that 1 billion is for orders that we have got today as of the end of the third quarter. So while Rainer sort of talking about you guys are talking about what’s the opportunity as we go forward sort of longer term, anything that we have here in the short-term in Q4 from an order perspective, we will just keep adding to it. So sort of the near-term, I think we still have some upside here as we get kind of into Q4 and then as the vaccines get approved and then as we start to learn some of these unknown variables that we can start to give you guys a bit better kind of view of it. But so far, I think it gives you a frame of what we have got. We have got the Q4 how that plays out. And then as we know more, I think as we get into early next year, we will probably have a better frame for you hopefully to get some clarity on that.

Great, thank you. Thanks for that. And then maybe just one more on Cepheid, I know you have kind of addressed it a couple of times, but I think there is similarly a moving target to figure out how testing evolves, particularly related to COVID as we get into 2021 with a vaccine and as potentially, there is a lot more testing done as point-of-care and you know the kind of the rapid antigens and much cheaper faster alternatives. So anyway, to give us just an early sneak kind of framework to think about how we should be contemplating Cepheid as we look out to ‘21 under some of those scenarios, because I think you are in the interesting position where you are not the kind of batch-based testing sitting between two different areas. So any color on that would be great?

Yes. Sorry, go ahead, Rainer.

Yes. I was just going to say that, Dan this is a really critical question, right. Lot of people talk about the antigen tests and most of those are used in different care settings are the Cepheid solution, GeneXpert that is used at the point of care in critical care environments and in the hospital when speed, workflow and accuracy really count. So, those clinicians on the basis of that test are going to make a call as to what therapy they prescribe. So, it has to be right, it just has to be right. And so that’s why the GeneXpert and the Cepheid testing approach is the gold standard. And that’s why we see that really as a very, very durable testing modality that is at the right place at the right time with the right answer at the right cost for the system. And we expect independent of the number of infections that we see other types of modalities really breathing either higher or lower depending on the infection rates. But as you think about the point-of-care hospitals, in particular and other point-of-care settings, that’s what we see this gold standard, along with this multiplex 4-in-1 test to have an extraordinary amount of durability. And we see that right and you see us continuing to ramp up from 6 to 7 in the fourth quarter, 8 million and you can expect more tests per quarter as we go through 2021. So I feel very strongly about the unique and durable positioning of our Cepheid, GeneXpert approach. And add on top of that is the fact that we have increased the installed base by 35% this year, that really puts us in a very strong position and that installed base continues to grow.

Great, thank you.

We have reached the end of the allotted time for questions. I will now turn the call back to our presenters for closing remarks.

Thanks, Crystal and thanks everyone for joining us today. We are around all day for questions.

Thanks everybody. Stay safe and healthy.

This concludes today’s conference call. You may now disconnect.