Danaher Corp /De/ Q2 FY2026 Earnings Call

my name is chelsea and i will be your conference facilitator this morning at this time i would like to welcome everyone to the danaher corporation's second quarter 2026 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 if you would like to ask a question during that time simply press star then the number one on your telephone keypad If you would like to withdraw your question, please press star, then the number 2 on your telephone keypad. I will now turn the call over to Ms. Rachel Vottenstahl, Vice President of Investor Relations.

Ms. Vottenstahl, you may begin your conference. ...provided during the call, available on the Investor's section of our website, www.dannerher.com, ...presentations, and factors that impacted your form 10Q and impacted year-over-year performance. ...materials to company-specific financial metrics are year-over-year. There are several security laws, including statements regarding events or developments that lead to a number of risks and improvements, long-term value creation opportunities ahead

for us, in markets with strong secular growth drivers, and our capital deployment flywheel is active, out sheet optionality, team our powerful differentiators, meaning our competitive

changing therapies and diagnostics, core 8S SPR system, characterization platform that that helps researchers evaluate how potential drug candidates interact with their targets.

By combining rapid screening with high-quality molecular characterization and AI-powered the most promising of the NOVA's commentary meeting, volume-based procurement, 0.1% revenue year-over-year. We generated one value proposition by bringing together approximately $250 million in revenue as an attractive business model with more than 85% recurring revenue. We expect the business to grow high single digits over the long term and to be accretive to adjusted EPS in our first full year. While the transaction remained subject to customary closing conditions, including regulatory approving order trends, both in automation structure needed to support new and our life sciences consumables businesses, was up in the quarter led by demand for MRD testing solutions, And ASCAM's growth continued to accelerate, delivering its best quarter as academic markets have started to improve, and commercial initiatives and diagnostic end markets gained further traction. As end market conditions continue to improve, we expect commercial and go-to-market executions, including autonomous lab catalysts in the 2026 course, by the underlying momentum that is built across our portfolio toward a mid-single-digit exit rate this year. As markets recover, we expect our growth initiatives to gain further traction.

Thank you. If you would like to ask a question, please press star 1 on your keypad. To leave the queue at any time, press star 2. We ask that you please limit yourself to one question and one follow-up. Once again, that is star 1 to ask a question. And our first question will come from Michael Ryskin with Bank of America. Please go ahead.

Good morning, Mike. Good morning, Rainer. Thanks for taking the question. Not a surprise. I'm going to start on the bioprocess business and biotechnology segment. I think that was the biggest surprise for us in 2Q. I hear you on all your comments on commercial customer delays, timing. I think certainly that's a little bit unpredictable. But why is that revenue not coming back in 3Q and 4Q? We'd love to dig into that a little bit more. By our math, 2Q came in about $75 million light. but then if i look at the full year bioprocess guide it goes from high single to mid single um that's about 150 million plus so you're not catching it back in 3q 4q is this a multi-quarter rebase sort of walk us through the timing of that and when we could expect that to come back thanks sure mike thanks so to recap uh our bioprocessing a business grew low single digits this quarter, and that was both for equipment and consumables.

And as I said earlier, bioprocessing consumables revenue was lighter than we thought. Later in the quarter, we had a few large chromatography resin shipments that were slated primarily for Q2 and Q3 move out of the year. So as a reminder, these shipments tend to be about 10 to 30 million dollars and are destined to large batch manufacturing and these delays were at our customers request due to production schedule changes and site readiness challenges which we have seen occasionally now these shipments were primarily for commercial programs that were specced into so so there's really no change to the underlying trends even given what we saw in the quarter, and we think our portfolio is differentiated, and that's supported by our strong order book trends as consumables and equipment orders both grew mid-teens in the second quarter.

Yeah, Mike, and just on the numbers here, I think your numbers you quoted may be a touch high, but in the ballpark. I think in the second quarter, we saw about a 500 basis points impact to that overall bioprocessing growth, given the dollars probably more in that $50, $60 million type range. And then for the full year, we saw a little bit north of $100 million that shifted out of that Q2, Q3 into next year. So that's a couple hundred basis points to our bioprocessing growth for the full year. Obviously, there's some chance of this moving back into Q4. That's not within our planning assumption today. I think the other thing just to note here on Q2 is that outside of chromatography resins that Ryan referenced, we saw pretty good performance in the quarter in consumables, and that included strong double-digit growth in our upstream consumables business. So no change to our view that bioprocessing is high single-digit over the long term, as we noted.

All right. I mean, I'll use my follow-up on the same topic then. I guess just, is there anything that's changed with visibility in the business? Is there anything, I mean, you kind of alluded to that this happens from time to time, but it is a pretty meaningful um pretty meaningful swing i know we you know we spent a couple years worrying about destocking and it seems like we've moved past that but still there's a lot of questions on visibility confidence in the pipeline i mean you've got a strong order funnel you've been talking about for a while so it's still a little bit of a surprise and how quickly um by process can swing given you know expectations that's stabilized so if you could just talk about you know maybe funnel ability to backfill with other customers um you know given the order strength you've seen elsewhere.

Mike, I mean, this delay in shipments is really fairly concentrated around a few commercial customers. We don't see any broad-based change in the demand here, as you can see by the order data, which refers to both equipment as well as consumables. And And to be sure, if we reflect back on the days of the post-pandemic inventory glut, you'll recall that we put in a great deal of process to ensure that we have great visibility across our customer base and to understand their inventory positions. And those processes are in place. They are functioning appropriately, and they are part of our forecasting mechanism. And what that data shows is, in fact, that the inventory levels more broad-based in the market are actually quite a bit lower than they have been in prior years. And that makes a lot of sense to us. One, the market continues to be robust. We see scripts continuing at their strength. We see phase two and three molecules continue to move through. And of course, the lead times that we had as an industry, but also that we had at Cytiba, are significantly shorter now, allowing those safety stocks to come down. So we really, from the perspective of the demand and the broad-based inventory in the market, don't see any change in the dynamic, and that's what the data shows.

Thank you. Our next question will come from Tycho Peterson with Jeffries. Please go ahead.

Hey, thanks. Reiner, I want to actually pick up on the bioproduction theme on just the equipment side. It was nice to see the return in equipment revenues. You know, we've been kind of waiting for that. You've had four quarters in a row prior to this of order growth. Maybe just talk a little bit about whether you're ready to call the turn in equipment. You know, are these, you know, any reshoring data points you can point to? And I guess how are you feeling about the bioproduction equipment piece in the back half of the year and into uh 27.

Morning Tyco and thanks for the question so in fact we we are uh pleased with the fact that we starting we're starting to see revenue growth here uh on the equipment side and and in fact uh we do believe that this is a two-fold uh signal that we are starting to see some of that reshoring uh brownfield expansion, not just playing through in the order strength that you've seen over previous quarters, but we're also starting to see some of that in the revenue line. That's one aspect. The other aspect, and this comes back to Mike's question a little bit, you know, there continues to be robust demand for biologic molecules, therapeutics, and we haven't had a lot of investment, as you know, in capacity expansions over the last several years. And so there is this need to continue to invest in capacity expansion coupled with the reshoring dynamic. Now, as it relates to the greenfield investments, we're quoting for those. Those are out there being looked at by our customers, but that's going to take two or three years until we see that play through. But we continue to believe that we're in the early innings here of a multi-year CapEx cycle that is required both to support the growing volumes of biologic therapeutics, but also the reshoring dynamic.

And then for the follow-up, I want to dig into the life science consumable piece. You know, it was good to hear the commentary on APCAM IDT. I don't think you called out Aldebaran, but, you know, you're talking about increased confidence overall in the life sciences. Is this biotech funding converting to spending? Is it pharma starting to train LLMs? it doesn't sound like academic is really picking up so maybe just talk on the drivers for the increased you know enthusiasm on the life science side on the consumables.

So on the consumable side we do see biotech funding stronger we're seeing that funding that we see in all the announcements starting to play through previously it was just in in the funnel now we're starting to see some some orders there and also on the margins we're starting to see some revenue and that does in fact, play into what you see here in our consumables business. But I think what's really driving it is IDT continues to be making real progress and MRD as one end market to call out here. We see Aldebron continuing to make progress aside from those two large customers that we've talked about previously, and that is supported by increased biotech funding. There are more projects going on there. That's certainly encouraging. And then on AppCam, we've had the best quarter here that we've had since the acquisition, where you see not only the work that we're doing, driving growth and share capture, but we're also seeing some more stability in academic markets. I wouldn't say they're back to normal. And then lastly, at AppCam, they're making real progress in diversifying that end market from primarily academic to also pharma and diagnostic end markets. So, we're encouraged by all the progress that we're making there in the consumable side.

Thank you. Our next question will come from Dan Leonard with RBC. Please go ahead.

Morning, Dan. Thank you. Morning, Reiner. Circling back to biotech for a moment, Is there any common thread you can call out between those few customers that delayed shipments, whether it be, you know, decisions on where to put manufacturing or inventory drawdowns, anything that would unite the few?

So this is primarily related to resin shipments, Dan. That's about the one commonality that we can see here. And then, look, building new plants and site readiness and so forth just is not – it's a complex business. It's not that scientific. So there are delays in that regard. But this is not related, let's say, on the back end to any one molecule that's out there in the market or just one customer, although it is just a few large commercial manufacturers where we're specced into those molecules. and, of course, supporting their needs.

Okay, that's clear. And then just shifting to a diagnostics follow-up of, you know, the flat assumption for Q3, given the magnitude of the respiratory headwind that you're going to face, implies a step up in the core growth rate to high single digits from that 5% figure in Q4—I'm sorry, in Q2. Could you elaborate on what drives that acceleration?

Sure, Dan. So, obviously, we have some variability here with the respiratory headwinds from quarter to quarter, but I think if you unpack it, excluding respiratory diagnostics was solid mid-single digits in the second quarter. I think we're encouraged by some of that execution we're seeing commercially across the platform, as well as some of those new product innovations that are driving accelerated growth, like that DXi 9000 at Beckman, the improved, the contingent menu expansion at Saffiet. So I think our view is these trends, underlying trends continue, and as respiratory headwinds moderate in Q4, we'll exit at that overall mid-single-digit rate. Also, remember here, Dan, we do have China policy that is starting to, those headwinds are starting to lessen. So, you see a little bit lower of a headwind here in Q3 and Q4, which are driving a bit more of the overall step up as well.

Thank you. Our next question will come from Scott Davis with Amelia's Research. Please go ahead.

Reiner and Matt and Rachel. Hey, you only own Massimo for, I guess, a month, but can we get a little bit of an early read on it? Would you be willing to give us maybe the growth rate that they put up for the quarter or any information about it that would be helpful?

Sure. First of all, Scott, thanks. We're really excited by the fact that we were able to get that acquisition closed a little bit earlier than we thought. And in our initial operating reviews, this is every fit. The company that we thought it was. You might have heard there that we are already launched with a new 510 on a new assay, and so that's gone very well for us. And as we think about the growth rate, we validated that that was high single digits here for the quarter, and that's certainly very encouraging, and there's potential upside there as we go forward.

Okay, that's super helpful. And I guess I want to back up a little bit and go into like the academic and the government outlook and what is their pent-up demand they're like what is the shape of that recovery look like when we get to the other side of it and and and what is the other side is it do we have to wait till 2028 is it can we get a bigger snapback in 2027 and it is a is it a v-shape or is it just too hard to say well it is it is difficult to say because what we're seeing in the academic funding area, Scott, is related to government policies.

And if those government policies become more constructive to supporting the research industry, if we can call it that, universities, the central labs that are out there, of course, the NIH, but also as we think about around the world, we need to see a more constructive perspective on academic funding before we're ready to call an inflection point. So what we see for now, and I think that's what we're going to see for a while, is stability in the academic markets, and we can build off of that. You may recall that for ourselves, academia as an end market is less than 5% of our revenues. And so we watch that with great interest because in many ways it's a catalyst to innovation going forward, but as an economic driver to Danaher's growth and earnings flywheel, the impact is fairly limited.

Thank you. Our next question will come from Jack Meehan with Operon Research. Please go ahead.

Good morning, Jack. Good morning. I wanted to dig a little bit more into the life science business, specifically start with Paul Industrial.

So the 10% growth that had in the quarter is there any color you can give on the relative growth for semi versus the remaining customer classes and then just more broadly how are you feeling about the macro recovery with your industrial customers so we're pretty pleased with the nice growth that we have seen here at paul which has been ongoing for some time we would tell you that on the micro electronic side of semiconductors and memory customers that are driving the growth and we are mission-critical supplier there with our filtration solutions for highly purified solutions that are used throughout the process in fact we've invested quite significantly in the past years in this business both in innovation as well as capacity where we are currently in the startup mode of a new plant in Singapore, which is right in the middle of many of the demand centers there, along with our plants elsewhere in the world, including the U.S.

Yeah, and Jack, just for some numbers here, I mean, Paul was up about 10% in the quarter. Microelectronics was up north of that, and we also saw pretty good growth here in energy and aerospace. And I think as Reiner talked about the drivers there, but we also probably saw some shared games here at Paul overall.

Great. And then just zooming to the segment overall, you just did 5.5% core in the quarter. You're guiding the 3% to 4% in the third quarter. Maybe just talk about why that might soften sequentially. Is any of the comps or any company-specific dynamics at play?

Thank you. yeah jack i mean nothing nothing in terms of changing in the underlying trends i think we're very encouraged by what we saw here and reiner walked through some of the end market performance as well as some of the internal initiatives that are driving the performance we did have a little bit of timing dynamics at paul we just talked about that we think that growth moderates a bit here in q3 and in the second half but um but in general uh those underlying trends are pretty consistent you can have a little bit of project timing with with paul here but but overall pretty uh pretty good outlook here thank you our next question will come from vj kumar with evercore isi please go ahead hi vj hi reiner uh good morning and thank

you for taking my question uh maybe uh we have first one runner uh i'm getting to a q4 jump off of around 6% core. I know you brought up the 100 million of bioprocess and consumable push out to fiscal 27 in a given the Q4 jump off of six and you have some push out of revenues. How should we be thinking of fiscal 27? I know the product range was two to six. Should we be looking at the the upper end. I'm curious on early thoughts on fiscal 27.

Sure, Vijay. I'll jump in and take this one. I think, first off, there's no change on how we're thinking about mid-single-digit core growth. I think you may be a touch high there in what you're referencing, but mid-single-digit core growth in Q4. So for the full year, we're thinking that 3% to 4% core growth range. Continue to anchor to the low end of that range for modeling purposes. The puts and takes here are that we're assuming a little bit better life sciences given the performance we saw in the first half, and that offsets our a little bit more conservative bioprocessing outlook that we talked about. Respiratory, we're thinking given where infection rates have trended, about 1.6 billion or a touch below that for the full year. So as we're talking and you're thinking about the second half, it's important to look at the underlying trends in the business as well as the impact of respiratory from quarter to quarter. So, we actually included a table in our earnings presentation that illustrates this. We thought it'd be helpful to lay it out. So, excluding the impact of respiratory revenue, core growth was 4.5% in Q2. That's an acceleration versus what we saw in Q1. The Q3 guide assumes slight improvement off of Q2, call it 5%. The biggest swing factor is the impact of respiratory respiratory revenue. Respiratory was about 150 basis point headwind in Q2. We think it's about 250 basis point headwind in Q3. And that essentially, those headwinds essentially go away year on year in Q4. So that's why we're feeling comfortable with that Q4 mid-single digit core growth rate.

Understood, Matt. And maybe one more on this EPS raise, Matt. I think i think massey financing came in better maybe it's looking at 10 cents contribution close to 10 cents or north of it and i think 2q the beat x massey was probably seven eight cents right so when you look at second quarter performance plus massey coming in uh it's probably 17 18 cents um you know incremental versus prior expectations guide raises i think around eight cents is this some conservatism or maybe, or is this a reflection on Massey, maybe some investments needed in Massey? Thank you.

Sure, Vijay. I'll just give you the moving pieces here for, in terms of the guide raise. So, we're taking the guidance to 845 to 860 for the year. That increase reflects a better Q2 performance as well. Call it seven to eight cents from closing Massimo early. Remember that That initial range we gave for Massey EPS was assuming an end-of-the-year 26 close, so that was a 2027 number. But $0.78 for Massimo, off to a very good start here. As Reiner talked about core growth, high single digits, even a little bit better than we expected. There is some partial offset here from MIX and FX, and I think we wanted to build a little bit of a hedge here in the second half, given the current environment. So, EPS range at the midpoint, that implies nearly 10% EPS growth. We think that's a good place to be halfway through the year and balance a strong fall through while being able to reinvest for growth.

Thank you. Our next question will come from Dan Brennan with TD Cowan. Please go ahead.

Good morning, Dan. Good morning, Rainer. Good morning, Matt. Thanks for the questions. So, just on bioprocess, so, you know, the guide is mid-single for the year. so we assume five. And I think, Matt, you talked about a little over $100 million of a pushout, so that's just shy of 2%. So the five seems like maybe it's just under seven for the full year. I think your prior guide was high single, so maybe it was a bit higher than that, seven to eight. So I'm just trying to do the math. I mean, it could be a little in the weeds, but I think investors getting confidence in the bioprocess outlook is important. So I'm just wondering if, you know, these pushouts don't come back in the fourth quarter, as you guys don't expect. Like, is there some extra cushion in the bioprocess guide? Just want to get some color on that.

Yeah, Dan, I mean, like we talked about, we're a little bit north of $100 million that shifted primarily out of Q2 and Q3 into next year. That's a couple hundred basis points impact to bioprocessing growth for the full year. As we mentioned, there is some chance this moves back into Q4. That's not in our planning assumption today. But as you think about the progression through the year. We're talking about mid-singles here for Q3. We're probably exiting more in that mid-to-high single digits in Q4 as we go forward.

Got it. Okay, thanks, Matt. I mean, sorry for a double dip here in bioprocess, but, you know, I think it's, you know, fully important. Just kind of back to Dan's question, just on any commonality in the customers. I know, Ryan, you basically said it's a couple of resin pushouts, but is there anything from a therapeutic area or geographic area that's, you know, together, you know, you think it's more of a market issue or really specific to a few molecules that you guys specced in on? And is there any reason why next year that wouldn't come back? Like, I'm just thinking ahead if, you know, say these customers, you know, biologic script plans were coming in below plan, do they have recourse to say we're going to cut, you know, the expectation of what we need or any protections you guys might have on that? Thank you.

And the commonality is really just around the product resins, and, of course, these are just by the nature of this large batch production, large numbers for these commercial molecules. In this case, these are not the same molecules, and it's, you know, across a couple of geographies, so we don't see that really being the commonality. And we think it's highly unlikely that it does not return in 2027. So, we believe, without talking specifically to 2027, that these push-outs to 2027 would likely then ultimately ship in 2027.

Thank you. Our next question will come from Casey Woodring with JPMorgan. Please go ahead.

Morning, Casey. Morning. Yeah, thanks for taking my questions. so maybe just one more on bioprocessing not to beat a dead horse but i just wanted to clarify so the consumables order growth of mid-teens does that include the pushed out revenue here and then if you could just maybe elaborate on the lead time dynamics you mentioned earlier reiner like mid-teens order growth and consumables and 2q that theoretically has a much shorter turnaround time than equipment so just maybe walk us through how you're thinking about the consumables piece for the back half and into 27.

And so these larger orders, Casey, that we're referring to in terms of pushing out, weren't a in-quarter book and turn. These were on the books and in the backlog for shipment. And ultimately, late in the quarter, the customers made the decision to reprogram production schedules and some site readiness issues. So that's really not the case. So what we see is broad-based growth across our customer base of these in the mid-teens of both consumables as well as equipment. Consumable lead times are shorter than equipment, no doubts about that. It is rare that you get a consumable order, especially in these larger sized ones that book in the quarter and ship in the same quarter. It happens, but it's not really the nature of the business. The majority of the business is shipped in the quarter that comes out of backlog. At the margin, you'll get some orders and quick turns.

That's helpful. And then maybe just in the diagnostics business, can you just elaborate on updated expectations for radiometer and Leica and some of the more instrument-heavy focused businesses there, how you're thinking about the back half of the year. Thank you.

So these continue to be radiometer and Leica Biosystems are specialty diagnostics businesses for us that continue to grow in the high single digit range. And we really like what we see there, continued innovation, continued commercial excellence. And I might add the StatLab acquisition that really strengthens Leica Biosystems offering across the entire workflow and provides leverage across that entire workflow. So it's very compatible, StatLab, with the existing portfolio. It's 85% consumables. It's got great economics, and we expect that to grow high single digits here in the long term as well so leica biosystems and radiometer are solidly into the high single digits here and we believe that continues for the long term thank you we will take our last question from patrick donnelly with city please go ahead morning patrick hey guys thank hey runner thanks for taking the question um maybe another one on the bioprocessing piece just in terms of seeing multiple customers all push out, you know, within a few weeks of each other, seemingly all into 27, you know, I guess the confidence that it's just resin, you know, is it not leaking into

single use? And I guess why would multiple customers all essentially at the same time do this push out? I mean, what were you hearing in terms of, I understand the resin piece, but any other common themes that you were picking up that drove this, this push out?

So I wouldn't characterize it as multiple customers. I would really characterize it as a few customers that happen to be very, very large, and from time to time, they'll make these kind of calls. I think it's important to note, again, on the orders that we see broad-based orders here growth in the mid-teens in the consumable area and in the equipment area. You're speaking of consumables. And we really believe that this is limited to this subset of special circumstances. And as it relates to our other consumables, whether that's single use, whether that's upstream in the bioreactor area and so forth, our growth is very strong there in the upstream area, uh, as well.

Understood. Um, and then maybe just, just another one on the life side, again, encouraging result there. Can you just talk a little more about what you're seeing from the customer base confidence that, that, that market's turning on. He's been a little bit challenging for you guys in the past with Cyax and some of the ACA goes, um, weights, but it does seem like this result is, is pretty encouraging. So I guess the confidence in the life side, you talked a little bit about the second half conservatism. Um, but you know, whether it's MassSpec, Chrome, we'd love just a little more details on what you saw in the quarter and profits moving forward there. Thank you so much.

Yeah, I mean, we agree. This is a really encouraging result and exceeded our expectations. You know, we finished at 5.5% growth, and that was really across the portfolio. So if we start with end markets, they're getting a little better across the portfolio. Large pharma and biopharma customers are progressing back to normal, so we continue to see that. Better biotech funding is starting to read through. I saw a little bit more of that in Q2 than we had seen previously, so I think that's noteworthy. And academic, as we mentioned with Scott here, remains below normal, but we did see some improvement in the back half of the quarter. But generally speaking, we don't see as large of a recovery dynamic in academia. And as I mentioned, that's less than 5% of what we do. And then we did see continued strength in clinical and in the applied markets. We talked a little bit about fall, but also in our other applied end markets, we saw that continued strength. I think it's also important to say that we see good traction on our recent commercial and growth initiatives. Abcam delivered their strongest quarter since acquisition, and they benefited from, you know, improved commercial execution, certainly, but we're also taking some share here and making headway in other end markets to skew away a little bit from academics. And then we also think the new products are contributing to our growth and our life science instrument businesses, flow cytometry at Beckman, the Novus VVS55 and 8600 at CyEx. So all those things are helpful. And then we're starting to see these little green shoots around the AI dynamic. So we are seeing demand across our portfolio, including at Beckman, with increased automation for these lab-in-a-loop or autonomous science applications. So we're starting to see that as well. So we expect this momentum continues in the second half. And that's what gave us confidence here to raise our full-year life science guide.

Thank you. We have now reached our allotted time for questions. I will now turn the call back over to Rachel Vattenstahl for final comments.

Thank you, everyone, for joining us this morning. We'll be around the rest of the day and the rest of the week as well for follow-ups.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.