My name is Ashley, and I will be your conference facilitator this morning. I would like to welcome everyone to the Danaher Corporation's Third Quarter 2024 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. John Bedford, Vice President of Investor Relations. Mr. Bedford, you may begin your conference.

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'd like to point out that our earnings release, Form 10-Q, the slide presentation supplementing today's call, the reconciliations and other information required by SEC Regulation G relating to the non-GAAP financial measures we'll be discussing 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 replay of this call will also be available until November 5, 2024. 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 relate to results from continuing operations and relate to the third quarter of 2024, 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. With that, I'd like to turn the call over to Rainer.

Well, thank you, John, and good morning, everyone. We appreciate you joining us on the call today. Our team delivered strong third quarter results with revenue, adjusted net earnings per share, and cash flow, all coming in ahead of our expectations. We were especially pleased with the continued positive momentum in bioprocessing and another exceptional quarter at Cepheid, and we enhanced our long term competitive advantage with the release of several impactful new innovations across our businesses. Now we see a bright future ahead for Danaher. A transformation in our portfolio over the last several years has created a focused life sciences and diagnostics leader positioned for higher long term growth, expanded margins, and stronger cash flow. Danaher is purpose-built to help customers solve some of the most important health challenges impacting patients around the world. Our proven ability to innovate is enabling faster, more accurate diagnoses and helping customers reduce the time and cost needed to sustainably develop and deliver life-changing therapies. Now, the unique combination of our talented team, our differentiated science and technology portfolio, and the power of the Danaher Business System positions us well as we seek to maximize value for our customers, our associates, and our shareholders. So with that, let's take a closer look at our third quarter 2024 results. Sales were $5.8 billion in the third quarter, and we delivered 0.5% core revenue growth. Geographically, core revenues in developed markets increased low single-digits with low single-digit growth in North America and mid-single-digit growth in Western Europe. High-growth markets were down mid-single-digits, including a high single-digit decline in China. Our gross profit margin for the second quarter was 58.7%, and our adjusted operating profit margin of 27.5% was down 10 basis points as accelerated investments in innovation offset the favorable impact of cost-saving initiatives. Adjusted diluted net earnings per common share of $1.71 were essentially flat year-over-year, and we generated $1.2 billion of free cash flow in the quarter and $3.8 billion year-to-date, resulting in a year-to-date free cash flow to net income conversion ratio of 135%. 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 was flat year-over-year, with our bioprocessing business up low single-digits and our discovery and medical business down high single digits. In bioprocessing, we were encouraged with the continued positive momentum we saw in the quarter. Notably, orders increased high single-digits sequentially, which is the fifth consecutive quarter of sequential order improvement, and our book-to-bill ratio improved to approximately 1.0. Now geographically, we saw improving order trends in developed markets as large customers are returning to more normal ordering patterns. In China, orders and underlying activity levels remain weak, particularly for equipment, as customers continue to conserve their capital. Revenue growth in the quarter was driven by our larger pharma, biopharma, and CDMO customers. Production volumes at these customers, who are primarily manufacturing monoclonal antibody therapies, have continued to grow in line with historical averages. Now we've seen demand at these customers steadily improve throughout the year as they're moving past inventory destocking and anticipate this gradual recovery will continue over the coming quarters. In contrast, we're not seeing the same level of improvement in underlying performance from our smaller customers. Despite a modest improvement in the funding environment, they continue to rationalize their therapeutic programs and remain cautious with their investments. Now, putting this all together, we continue to expect low single-digit core revenue decline in our bioprocessing business for the full year 2024, and this includes an assumption of high single-digit core revenue growth in the fourth quarter. Now, as destocking moves behind us, we're increasingly excited about the long term opportunities ahead for Cytiva's leading bioprocessing franchise. Monoclonal antibodies, which comprise the majority of our revenues, remain the largest investment area for our customers. We're also seeing accelerated adoption of these therapies, and six of the top 10 highest revenue-generating drugs today are monoclonal antibodies. With our comprehensive portfolio, our best-in-class scientific services, and innovation focused on increasing yields and enhancing manufacturing efficiencies, we believe we're very well positioned to support our customers today and well into the future. Now turning to our Life Sciences segment, core revenue decreased by 2%, in line with our expectations. Core revenue in our life sciences instruments businesses collectively declined mid-single-digits, with market conditions in the third quarter largely consistent with what we saw in the first half of the year. Ongoing research and lab activity is driving growth in consumables and service, which was more than offset by a decline in capital equipment, particularly in China. Announced stimulus measures in China have not yet translated into meaningful order activity, as customers are still awaiting details on the implementation of these programs. Now, in the meantime, many customers are delaying purchasing decisions. Outside of China, our end markets are relatively stable, and we were encouraged to see early signs of improvement in demand among our pharma and biopharma customers, particularly in North America. Now, during the quarter, Beckman Coulter Life Sciences introduced the Cydem VT. Cydem VT is a fully automated, high-throughput cell culture system designed to simplify and accelerate the complex and lengthy process of clone screening and cell line development. Now, by harnessing the power of the Cydem VT, researchers can optimize workflows and reduce hands-on time by up to 90%, enabling them to efficiently identify the most promising clones and improve the success rate of their cell line development projects. In July, we completed the acquisition of Genedata, a leading provider of enterprise and workflow software used in drug discovery and development. Genedata's advanced software solutions automate complex R&D processes, enabling biopharma researchers to analyze and interpret samples more quickly. So we're really excited to welcome this innovative team to our Life Sciences segment. Now, Beckman Cydem VT and the acquisition of Genedata are both great examples of how we're strengthening our long term competitive advantage while helping our customers accelerate the drug discovery process. In our genomics consumables business, core revenue declined low single-digits, continuing the trends we saw in the second quarter. In August, IDT expanded its synthetic biology portfolio with the launch of Rapid Genes. These ready-to-use NGS-verified clonal genes are cost-effective and offer fast turnaround, allowing pharmaceutical researchers to quickly pursue high-throughput experiments such as antibody development. IDT's long history of innovation is one of the key reasons the research community turns to IDT to help advance drug discovery and accelerate the pace of genomic medicine development. Now moving to our Diagnostics segment, core revenue increased 5%. Our clinical diagnostics businesses collectively delivered low single-digit core revenue growth. Beckman Coulter Diagnostics was up low single-digits, with strong global demand, partially offset by the impact of volume-based procurement in China. Outside of China, recurring revenue was up high single-digits, driven by recent new product introductions and installed base expansion. The Beckman team continued their accelerated cadence of new product innovation this quarter with the release of the DxC 500i integrated chemistry and immunoassay analyzer. Now, the DxC 500i is specifically designed to improve efficiency and meet the unique workflow needs of low-volume laboratory customers such as community hospitals. So this highlights Beckman's commitment to serving the entire healthcare network by providing a comprehensive portfolio of solutions for low, mid, and high-throughput core labs. In molecular diagnostics, Cepheid's core revenue increased double digits with broad-based strength across respiratory and non-respiratory assays. Cepheid's respiratory revenue of approximately $425 million in the quarter exceeded our expectation of $200 million as we saw both higher volumes and a favorable mix of our four-in-one test for COVID-19, Flu A, Flu B, and RSV. Favorable volume was driven in part by customers purchasing in preparation for the upcoming respiratory season. Now, based on activity in the third quarter and our expectation of a respiratory season with normal severity, we expect respiratory revenue of approximately $1.7 billion for the full year of 2024. Outside of respiratory, increasing menu adoption and system utilization helped drive another quarter of mid-teens growth in Cepheid's core non-respiratory reagent portfolio, including more than 20% growth in Group A Strep, sexual health, and virology assays. We also saw strong installed base growth, particularly for our lower throughput systems, as customers continue to add GeneXpert instruments in their clinics and alternate care sites. So this expansion out of the hospital allows our customers to improve financial and clinical outcomes by standardizing care across their networks. I'd like to thank all of you who joined us last month for our Investor Day, where we had the opportunity to showcase our differentiated diagnostics portfolio. During the event, we highlighted how DBS-driven innovation and commercial execution have meaningfully improved the growth and margin profile of our diagnostics franchise over the last several years. We also talked about how we are uniquely positioned for long-term growth opportunities in high-value, high-need areas such as neurodegenerative diseases, infectious diseases, and oncology. And if you haven't had the chance to see the replay, I'd encourage you to watch it on our Investor Relations website. Now, let's briefly look ahead at expectations for the fourth quarter and the full year 2024. For the full year 2024, there is no change to our previous guidance, and as a reminder, we anticipate a core revenue decline in low single-digit percent range and a full year adjusted operating profit margin of approximately 29%. In the fourth quarter, we expect core revenue to decline in the low single-digit percent range. Additionally, we expect the fourth quarter adjusted operating profit margin of approximately 30%. So to wrap up, we're pleased with our better-than-expected third quarter performance and expect the trends we're seeing today to continue into Q4. Our team's commitment to executing and innovating with the Danaher Business System enabled us to deliver strong results while continuing to accelerate growth initiatives across the portfolio. Our third quarter results also reflect the unique positioning of Danaher today. We have an outstanding group of businesses that serve attractive end markets with favorable long-term, secular growth drivers. We're further enhancing our portfolio and competitive advantage with innovation that is helping customers solve some of the most important health challenges impacting patients around the world. So, looking ahead, we believe this powerful combination of our leading portfolio, proven ability to innovate, and our team's commitment to executing with the Danaher Business System provides a solid foundation for delivering differentiated long-term financial performance. And so with that, I'll turn the call back over to John.

Thanks, Rainer. That concludes our formal comments. Operator, we're now ready for questions.

We'll take our first question from Tycho Peterson with Jefferies. Please go ahead.

Hey, thanks. I want to probe into the instrument numbers a little bit, wondering if you can give us instrument growth ex-China and then just maybe talk a little bit about where it's worse and where it's getting better, whether it's flow, mass spec, lab automation, microscopy, and any leading indicators of funnel dynamics that make you feel better coming out of the quarter on the instrument side?

Yeah. Tycho, it's Matt, I'll give you the kind of the number on what it is. It's probably low to mid-single-digit ex-China. And then, Rainer, you want to kind of give color on what we're seeing on the instrument side?

Sure. In China, we are seeing a decline in the high single digits. In the developed markets, the end markets have been relatively stable sequentially, but we haven't observed any significant shifts yet. However, in the pharma and biotech sectors, while conditions remain soft, we are beginning to notice some early signs of improvement, particularly in North America. On the academic research front, North America appears stable, while Europe is showing some modest weakness. Returning to China, we are aware of the announced stimulus, but it hasn't yet resulted in significant orders as customers are waiting for more details. During this waiting period, they tend to postpone their usual purchasing patterns. Therefore, the impact of the stimulus funding has not yet been felt in the third quarter.

Okay. And then a follow-up. I know you don't want to talk about '25 yet, but if we look at kind of the run rate for guidance on life sciences that you're giving us for the fourth quarter, the Street is at 6% next year on life sciences. Is that realistic, kind of, given the run rate you're laying out for the fourth quarter? And then anything you can say on China bioprocess for next year? We've seen some of your peers talk down numbers as well?

Tycho, we're still looking here to see how the fourth quarter plays out and to see whether we can see a pickup in the stimulus, particularly in China, while we do expect the developed markets to be stable along the lines that I just discussed for Q3. So we're looking to see how China's stimulus plays out here in Q4 before we can get to 2025 numbers. Now as it relates to bioprocessing, we continue to see there a low activity level, albeit stable, but at a lower level, and we expect that to take more time to play out here in the near term.

Sure, I can follow up on the comment regarding the China stimulus for tools, which is relevant for our projections in 2025. For Danaher, this refers to our tools segment, while for bioprocessing in 2025, we anticipate a gradual recovery that we've discussed for 2024, and it seems to be unfolding as expected. As Rainer mentioned, we need to monitor how the fourth quarter develops before providing any formal outlook for 2025. Nevertheless, a high single-digit exit rate in Q4 serves as a crucial foundation for us as we build backlog and visibility heading into 2025. Based on what we've observed through Q3, we expect the gradual recovery to persist into 2025.

Okay. And then on the life science, the guidance, fourth quarter down low single-digit, but the Street next year is up 6%. I was trying to also reconcile whether that step-up is reasonable.

I think the main factor we need to consider for next year is the impact of the China stimulus on life sciences.

Okay, understood. Thank you.

Thank you. We'll take our next question from Michael Ryskin with Bank of America. Please go ahead.

Thank you. I want to follow up on your last point regarding the bioprocess exit rate and your perspective on the market's development for 2025 and its gradual recovery. You mentioned five consecutive quarters of order growth, and in the last few quarters, there has been high single-digit order growth. Revenues from bioprocess have performed well this year, although they have not matched the growth rate. It appears there is a delay in how orders are translating into revenue, which is expected. Do you believe this gap is narrowing? Are we getting closer as we approach the fourth quarter? You indicated that high single-digit bioprocess growth may start to reflect some of the order growth we have observed in the recent quarters and into next year?

Yeah, I mean, I think it's a perfect frame. I mean you think about exiting the year at high single-digits, but you kind of take a step back and you look at, from a core growth perspective, in 2024, we're going to be down low single-digits. And so as you sort of think about where we kind of exit the totality of '24 with that gradual sort of kind of recovery in mind as we head to '25, I think that's kind of the way that we're thinking about it from a perspective of what revenue will do next year based on the fact that the order trajectory has gotten better over the last five quarters. But like I said, I mean, it would be great for us to see Q4 here before we go. But I do think going down low single-digits this year in revenue, be positive next year we believe. But let's see where the trajectory goes here, given the fact that I do believe this is going to kind of be a continuation of what we saw in '24, which is a pretty gradual recovery. Very encouraging, though. So we're very happy with where we are.

Okay. All right. And then, a follow-up, I want to ask on Cepheid, a couple of quick questions, if I can. One is, you talked about timing of some purchasing of the kits in the quarter. Any chance you could quantify that? I know you did $425 million in respiratory versus the $200 million guide. Do you think that $225 million was timing or maybe was some of that organic beat and some of it was timing? Just trying to get a sense of how much pull forward there was from the fourth quarter. And in the press release, you also specifically called out Cepheid gaining market share in molecular testing. If you could expand on that, where are you gaining share in terms of customer or geographically? Any specifics there? Thanks.

It’s a bit challenging to determine exactly how much of the performance exceeded expectations due to pull-forwards compared to a stronger overall demand. From what we've gathered from our customers, it seems that a significant part of the success was driven by their desire to secure supply leading into the fourth quarter, which isn't particularly surprising. As we look ahead to the fourth quarter, we factored this consideration into our expectations. Therefore, I would say that a considerable amount of the positive results can be attributed to this situation. In terms of market share, I would categorize it primarily as being strong in the US, although that isn’t a strict rule. We are focused on hospitals and near patient care settings and have been seeing great success with Integrated Delivery Networks as we expand beyond core hospitals into other care settings that are closer to patients. This trend has continued this quarter, and I anticipate it will persist, supported by our growing installed base.

Thanks a lot, guys.

We'll move next to Doug Schenkel with Wolfe Research.

Hey, good morning, guys. I guess a couple of quick follow-ups. There's been a lot of questions that kind of dance around the 2025 question, which I'm sure you appreciate. When I look at numbers, the Street's looking for 8% core growth with bioprocessing growing double digits and life sciences growing 7%. You haven't said anything about anything resembling a snapback. Respiratory comps are going to be tough. VBP seems to be picking up in China. Stimulus activity follow-through seems unclear. And then just knowing you guys, you tend to be conservative. So cutting to the chase, am I missing anything? And should the street be modeling things at these levels recognizing you still want to see another quarter? But as we sit here today, the numbers look a smidge high to me. Am I missing anything?

Well, I don't think you're missing much here. If we just take a look real quick on how we're thinking about 2025, it's important to know that we need to see how Q4 plays out here. I'll come back to that in a minute, Doug. But there's still a couple important variables in Q4 that's going to shape the next year. And those relate to really the trajectory of the order book in bioprocessing. It's so important. So certainly the high single-digit core growth that we expect in bioprocessing for the fourth quarter is fully supported by backlog and what we expect in orders. But we also want to see more deeply into 2025 by seeing that orders momentum here continue into Q4. So that's going to be key here for understanding how the second half of 2025 plays out in bioprocessing. As it relates to respiratory for Cepheid and other key variable here, as we just talked about, there's been some purchasing ahead here in Q3 and based on what we saw in the southern hemisphere, we do expect the northern hemisphere to have a more normal respiratory season. And as you know, that straddles the first respiratory season of the year, straddles Q4 and Q1. And then lastly, and this is important for life sciences, but also more generally, we need to see how this China stimulus plays out in 2025, and we'd like to see some indicators of that accelerating here in Q4. To date, we've not really seen anything meaningful in that regard. So we're going to put numbers all around us here and then update you in January.

Thank you, Rainer. I have another follow-up regarding the utility of the book-to-bill metric. If we consider the book-to-bill from Q3 last year and this year, assuming that bioprocessing represents about 85% of biotech sales, it appears that orders have increased by over 20% year-over-year. I'm not certain if that calculation is accurate. If it is, I would like to know how significant this metric is as we anticipate a return to strong bioprocessing growth. Some may believe it’s taking longer to convert, while others think the conversion is happening more rapidly than before. We're trying to understand the relevance of this metric, especially given that this business is primarily consumable at this stage.

I think we've previously discussed that while book-to-bill can be an interesting metric and beneficial in certain industries, we traditionally haven't relied on it to manage our business for the reasons you mentioned, including the nature of consumables and shipment timing. From our viewpoint, we don't spend much time on book-to-bill. However, we do focus on orders, which grew over 20% this quarter. That figure is from an easy comparison, so we should be cautious about its implications. Nevertheless, five quarters of sequential order growth is significant. I'm also encouraged that we didn't experience the typical seasonal decline from Q2 to Q3 this time; we actually saw an increase. When I evaluate everything, including order growth rates and percentages, even if they're based on lower numbers, it's still important. Having five consecutive quarters of growth after the destocking phase is a crucial factor. So, while book-to-bill may not be vital for us, I believe considering it alongside those other two factors makes me optimistic about our trajectory for 2024 and what it means for 2025. Overall, we've observed a steady increase in both revenue and orders, and I believe this trend will continue.

Super helpful. All right, thanks, guys.

Thanks, Doug.

Thank you. We will take our next question from Vijay Kumar with Evercore ISI. Please go ahead.

Hi, Rainer. Good morning and thanks for taking my question. I want to ask about genomics. In the past, you've discussed sequencing versus gene editing. What are the trends between those two segments? Additionally, could you explain what Rapid Genes is and do you anticipate gaining market share with the launch of this product?

Sure, Vijay. On the gene reading side, we still observe softer markets, especially in the smaller customer and emerging biotech segment, where we see reduced activity. Despite improved funding, these customers are still prioritizing their projects significantly, leading to decreased consumption in this area. In contrast, gene editing is performing well, particularly with CRISPR, Guide RNA, and other solutions. Regarding our new product launch, Rapid Genes, we are very excited. This will provide whole genes to our customers with a quality and turnaround time that stands out in the market. We expect this to give us some momentum over time. Overall, we are pleased with how IDT is performing in this environment.

Understood. And maybe, Matt, one for you. Your Q4 operating margin assumption, it came down a tad versus the prior. I think we're looking at low-30s exit rates. Is there some timing of expenses or anything changed on margin assumption? And if it is, any change in investments and implications here as we look at incremental margins for fiscal '25?

Our full year margin remained stable at approximately 29%, and we expect Q4 to be around 30%. This variance likely results from a few factors, including anticipated lower revenue in respiratory for Q4, which affects margins. Additionally, we had slightly better bioprocessing results in Q3 than expected, potentially impacting Q4 margins due to timing. Overall, we've had a strong year, and as we approach the fourth quarter, we're evaluating our cost structure and the investments we plan to make in the business, ensuring that we execute these wisely this quarter. Taking everything into account, we anticipate an adjusted operating margin in the 30s as we conclude the year.

I'm sorry. The incremental margin implications for fiscal '25, should the fall-through be in the 35% to 40% range?

It's going to depend on volume, I think, Vijay. As we've discussed, from a margin perspective, this business should operate in the low-30s under normal conditions. We'll update you on fiscal '25 in January when we get there. However, that will depend on volume and mix, which could vary based on the sources. We'll need to wait until we have more information to provide further details, but that's my current thinking regarding fiscal '25.

Understood. Thank you, guys.

Thanks, Vijay.

Thank you. We'll take our next question from Scott Davis with Melius Research. Please go ahead.

Hey, good morning, fellas.

Good morning, Scott.

You guys mentioned again this quarter that the smaller customers in bioprocessing not coming back as fast. At what point does it become such a small piece of the business that maybe we stop having that color or it's less material? Or maybe a different way to ask the question is, what percent of revenues is it now where it's kind of large versus small customers?

The larger customers make up about 75% of our business, while smaller customers account for around 25%. We highlight this difference because the dynamics for smaller customers can vary significantly from those of larger ones. Typically, larger customers are involved in later-stage trials, while smaller ones are more likely to be engaged in earlier-stage processes, often related to cell and gene therapies. Their behavior in terms of funding also differs. We're trying to provide insight into what we observe regarding improvements in the funding environment, although these improvements have not yet translated into orders and revenue. Most of our customers are indeed larger ones with products already on the market. Reflecting on the challenges of the past two years, which were largely driven by destocking among these larger customers, I believe that situation is mostly resolved now. This gives me confidence in a gradual recovery, which has primarily occurred with our larger clients. I am optimistic about the long-term prospects for the business, which I still believe will trend towards high single-digit growth. When we will reach that growth remains to be determined, but that's the context for the insights we've shared.

Okay, that makes sense, Matt. And, guys, we didn't talk about the buyback or M&A or kind of your funnel or nothing mentioned in prepared remarks. Any update there as it relates to your confidence or size or any metrics around the funnel be helpful.

Yeah, I'll just touch real quick on the buyback, and maybe Rainer can give some color on the funnel, the M&A funnel. But I mean, the buyback, I think if you see, we did complete it technically, that buyback was straddled, both Q2 and Q3. So if you see something in the queue, that's what it was related to, just so everybody's kind of clear, it was not a new issue. And so it was the final pieces, if you will, of the buyback that we talked about in Q2.

Thanks, Matt. And as it relates to the M&A environment, Scott, as we do every day, we're out there cultivating across all of our segments, and we're fairly active there. Our funnels are pretty dynamic. It's fair to say that while the environment, though, is improving, valuations are still elevated. And so we feel great about our positioning both in terms of the assets that are attractive out there and, of course, our balance sheet. But we're going to maintain our discipline with our deals needing to meet our trifecta of attractive end market, attractive company, and then, of course, the valuation framework, the model has to work as well. So active, but we still see that the valuations are elevated.

Makes sense, Rainer. Thank you. I'll pass it on. Appreciate it. Good luck, guys.

Thanks, Scott.

Thank you. We'll take our next question from Puneet Souda with Leerink Partners. Please go ahead.

Hi, Rainer, Matt, thanks for taking my question. Specifically regarding China, what do you see as the best starting point for discussing the market as we approach 2025, considering the current uncertainties and the stimulus backdrop? Additionally, can you provide more details on the value-based pricing in China and its anticipated impact? Lastly, how significant is the local bioprocess competition in this market, and how does it affect your perspective on the long-term growth of the global bioprocess and biotech sectors now that local competition is becoming more prevalent?

Yeah, maybe I'll start, because I think your first question and your third question sort of wrapped around China for next year, and bioprocessing, maybe I'll let Rainer take that. But just VBP, just to remind everybody, we sort of assumed that it was going to be kind of $150 million of impact over three years, really starting this year as we ramp up. Our assumptions initially were sort of that, that would be linear over the next three years. We are starting to see a little bit more activity in China around VBP here at the end of this year. So I think we'll have a better sense of what that linearity looks like after we get through the next couple of months, where it does look like the activity is sort of ramping up. So I still think the number is a good number. But how that rolls out and plays out will sort of be determined in the next couple of weeks.

As it relates to the JOP, Puneet, really, I think we need to view China as stable and sort of bumping along the bottom. And we don't expect a change in that in the short term as we go through and think about 2025 unless we see a material change in the execution and rollout of the stimulus program in China. So we expect China to continue to develop as it has been here for most of the year in 2024. Now, as it relates to your question on local competition, certainly there's local competition out there, but we have to be clear that, particularly in biotech, there are many companies simply struggling to survive, and they're buying essentially the least expensive solution that they can to make it to the end of the month, and it's just going to have to be good enough. So that's sort of one section of the market. Then there's another segment that really is targeting the international sale of their therapeutic molecules. And they tend to want to have solutions from multinational companies, first and foremost from ourselves here and Cytiva in order to ensure that regulators around the world are comfortable with the inputs that are required to make these incredibly effective drugs. So, yes, there's local competition. We would see it more on the margin, especially as it relates to local molecules.

Got it. Thank you. Very helpful. I'll leave it there.

Thanks, Puneet.

Thank you. And we will take our next question from Dan Leonard with UBS. Please go ahead.

Thank you. I wanted to circle back to the trends in life science, instruments and equipment specifically, because I think you do have some consumables in that instrument reporting. Can you elaborate a bit further on what the equipment trends were in the quarter from a growth perspective?

So just to talk about the quarter more generally, the market conditions in the third quarter were essentially consistent with what we saw in the first half of '24, and capital equipment spending continued to be constrained, and to the last question, particularly in China. Now, in contrast to the equipment-constrained environment, consumables and service grew in the quarter as lab and research facilities and institutions activity has started to stabilize. So we do see equipment being constrained, but consumables are starting to move.

And then a quick follow-up. Rainer, could you comment on the performance at Abcam? It seems like versus our numbers, the run rate there is improving. I'm unsure if that's the correct read or if it's just rounding, or if there's other M&A into that revenue mix?

There's no other M&A in that revenue mix. But of course, we're working very hard to drive our hypothesis around Abcam. And right now, the focus is on transitioning into Danaher, of course, and the team is making great progress with that. They're implementing, actually pulling on our DBS capabilities to drive those growth accelerators and, of course, improve the cost positioning that we've talked about. So we feel very good about where we are with Abcam and, long-term, we absolutely believe that this meets our expectations, both in terms of growth and the bottom line.

Thank you.

Thanks, Dan.

Thank you. And we will take our final question from Jack Meehan with Nephron Research. Please go ahead.

Thank you. Good morning, guys.

Hey, Jack.

I wanted to ask about diagnostics in the China region. To start, for Matt, can you just check my math? Is this like 15% diagnostic sales? And I was trying to back into how Beckman might have done in the quarter in the region; it could have been to the tune of down 20% or so. And then for Rainer, would just be great to hear about your thoughts on regional dynamics in diagnostics. Is this all kind of price impact or any change in kind of share shift? Thank you.

The total revenue for China diagnostics is in the right range. Regarding the performance of China diagnostics in the quarter, I believe it wasn't as low as you mentioned, Jack. It likely saw a decline in overall diagnostics, which is mostly attributed to Beckman. The decrease was probably in the low double digits. Therefore, your total number for percentage sales is likely close to accurate.

We saw across the world here, really with one exception, strong performance in all of our clinical diagnostic businesses. And of course, you heard from Matt around Cepheid that we believe to be taking share there really at all levels. But coming back to our clinical diagnostic businesses, we saw a high single-digit recurring revenue growth in North America and Europe. On the other hand, we come back to China, and China, we see the impact of the volume-based procurement, which is what brings us down. We also had, in Beckman Coulter in particular, a high hardware sellout comp last year as we were burning down some backlog. But we're very pleased with how our clinical diagnostics businesses continue to develop, continue to take share, and volume-based procurement is sort of the topic right now for diagnostics in China.

Thank you. And this will conclude our Q&A session. I'll turn the call over to John for closing remarks. Thank you, everybody, for joining today. We'll be around for follow-ups all day, rest of the week. Thank you.

Thank you, and this does conclude today's program. Thank you for your participation. You may disconnect at any time.