Danaher Corp Earnings - Q4 2025 Analysis & Highlights

Danaher Corp.'s Q4 2025 earnings call highlighted a strong finish to the year with better-than-expected performance across its portfolio, particularly in bioprocessing, Diagnostics, and Life Sciences. The company exceeded margin, earnings, and cash flow expectations, driven by disciplined execution. Key discussions included the company's financial results, segment performance, capital allocation, industry trends, macroeconomic factors, growth strategies, and financial guidance for 2026.

Key Financial Results

  • Sales were $6.8 billion in the fourth quarter.
  • Core revenue growth was 2.5% in the fourth quarter.
  • Adjusted gross profit margin was 58.2% in the fourth quarter, down 130 basis points year-over-year.
  • Adjusted operating profit margin was 28.3% in the fourth quarter, down 130 basis points year-over-year.
  • Adjusted diluted net earnings per common share were $2.23, up 4% year-over-year.
  • Free cash flow generated was $1.8 billion in the fourth quarter.
  • Full year 2025 sales were $24.6 billion.
  • Full year 2025 core revenue increased 2%.
  • Full year 2025 adjusted operating profit margin was 28.2%.
  • Full year 2025 adjusted diluted net earnings per common share were $7.80, up 4.5%.
  • Full year 2025 free cash flow was $5.3 billion, with a free cash flow to net income conversion ratio of approximately 145%.

    • Business Segment Results

  • Biotechnology segment core revenue increased 6%.
  • Discovery and medical core revenue declined at a high-single-digit rate due to a difficult prior year comparison in medical filtration and declines in protein research instrumentation.
  • Bioprocessing core revenue grew high-single digits, with high-single-digit growth in consumables and mid-single-digit growth in equipment.
  • Consumables growth was supported by robust demand for commercialized therapies, especially monoclonal antibodies.
  • Equipment revenue growth returned in the quarter, with the third consecutive quarter of sequential equipment order growth.
  • Life Sciences segment core revenue increased 0.5%.
  • Life Sciences instrument businesses core revenue was essentially flat.
  • Life Sciences consumables businesses core revenue declined due to lower demand for plasmids and mRNA from two large customers, and continued funding pressure in early-stage biotech and academic research.
  • Abcam showed sequential improvement with solid growth in pharma and recombinant proteins, partially offsetting softness in academic research.
  • Diagnostics segment core revenue increased 2%.
  • Clinical diagnostics businesses core revenue grew mid-single digits, with high-single-digit growth outside of China.
  • Leica Biosystems and Radiometer were each up nearly 10%.
  • Beckman Coulter Diagnostics delivered mid-single-digit growth globally, led by high-single-digit growth in immunoassay.
  • Molecular diagnostics respiratory revenue was approximately $500 million, exceeding expectations.
  • Cepheid's core non-respiratory test menu showed low double-digit growth, highlighted by nearly 30% growth in sexual health and mid-teens growth in hospital-acquired infection assays.

    • Capital Allocation

  • The M&A environment is more constructive, with some valuations moving in the right direction and moderated interest rates.
  • The company's cash flow generation and strong balance sheet position it to act on M&A opportunities.
  • The company will maintain its discipline in looking at end markets with long-term tailwinds, attractive assets with defensible value, and a working financial model.

    • Industry Trends and Dynamics

  • Global monoclonal antibody production remained robust.
  • Pharma R&D spending continued to recover.
  • Biotech demand remained stable.
  • Academic and government demand remained muted but was stable sequentially.
  • Clinical and applied end markets continued to perform well.
  • Underlying biologic demand has grown at double-digit rates annually for over a decade and is expected to continue into 2026 and beyond.
  • Robust FDA approvals for biologic medicines in 2025 and increased uptake of existing therapies drove global biologic revenues to surpass small molecule drugs for the first time.
  • Biologics are expected to represent more than two-thirds of the top 100 drugs by 2030.
  • Equipment investment has been muted for the last couple of years despite strong consumables demand, suggesting a need for catch-up to meet existing demand.
  • The reshoring topic continues to advance, indicating a potential long-term investment cycle.

    • Competitive Landscape

  • Cytiva launched more than 20 new products across the biologics workflow, strengthening its purification portfolio with new protein A resins.
  • SCIEX reinforced its leadership in mass spectrometry with the introduction of the ZenoTOF 8600, delivering increased sensitivity.
  • Beckman Coulter Life Sciences expanded its flow cytometry portfolio with the mosaic spectral detection module.
  • Beckman Coulter Diagnostics expanded the DxI 9000 assay menu, including the first-to-market automated high throughput BD-Tau research use only immunoassay.
  • Cepheid received FDA clearance for its Xpert GI Panel, a multiplex PCR test, and is building on momentum from other multiplex introductions.
  • New product revenue showed approximately 25% year-over-year growth.

    • Macroeconomic Environment

  • The company navigated a dynamic geopolitical and policy environment in 2025.
  • Tariff-related cost pressures were a factor in 2025.
  • Policy changes in China created headwinds in Diagnostics, which are expected to moderate through 2026.
  • Academic and government demand in the US and China was muted.
  • Biotech funding environment has shown improvement over the last two to three quarters.

    • Growth Opportunities and Strategies

  • The company expects gradual end market improvements to continue in 2026.
  • The combination of a differentiated portfolio, the Danaher Business System, and a strong balance sheet positions Danaher for long-term value creation.
  • Continued investments in innovation drove an accelerated cadence of new product introductions in 2025.
  • Cytiva's commitment to helping customers improve yields and lower manufacturing costs while maintaining high performance across the drug development life cycle.
  • Cepheid's robust pipeline for future menu additions and anticipated continued expansion of its global install base offers a long runway for durable growth.
  • The company's long-term expectation is for high-single-digit core growth with a differentiated margin and cash flow profile, supported by strong positioning in attractive end markets and high recurring revenue business models.

    • Financial Guidance and Outlook

  • Full year 2026 core revenue growth is anticipated in the 3% to 6% range.
  • Full year 2026 adjusted diluted EPS guidance is in the range of $8.35 to $8.50.
  • First quarter 2026 core revenue is expected to be up low-single digits.
  • First quarter 2026 adjusted operating profit margin is expected to be approximately 28.5%.
  • Bioprocessing growth in 2026 is assumed to be similar to 2025, with continued strength in consumables.
  • Life Sciences is assumed to have a modest improvement in end markets, but growth will remain below historical levels.
  • Diagnostics is assumed to have higher growth in 2026 due to moderating headwinds from policy changes in China.
  • Respiratory revenue is expected to be approximately $1.8 billion for the full year 2026, assuming a normal respiratory season.
  • The $0.30 benefit from 2025 cost actions is included in the 100 basis points of margin expansion.