Fortive 2025-26: Spinoff Reset, FY26 EPS $2.90-$3.00 (+9%), iOS +5%
FY25 revenue $5.14B (post-Ralliant spinoff); op income $909M; NI $579M; EPS $1.74. FY adj EPS $2.71 (above guide high end). iOS Q4 revenue growth +5% (+4% core); Q4 adj EBITDA $288M (+8%); margin >37% (+100bp). AHS Q4 revenue $353M (+3% YoY / +1.6% core); adj EBITDA $92M; margin 26%. Repurchased ~26M shares (8% of diluted) FY25. 2 small M&A deals H2 2025. FY26 adj EPS $2.90-$3.00 (+9% midpoint). Fortive Accelerator pillars: organic growth + capital discipline + investor trust.
Key takeaways
- First full year as standalone Fortive post-Ralliant spinoff. FY25 revenue $5.14B (vs $6.23B FY24 reflecting Ralliant carve-out). The two-segment focus (iOS + AHS) post-spinoff is cleaner. iOS represents the bulk of revenue + earnings.
- iOS (Intelligent Operating Systems) Q4 +5% revenue / +4% core / +8% adj EBITDA / +100bp margin. Fluke (testing equipment), ServiceChannel (facility software), Industrial Scientific (gas detection), Tektronix (oscilloscopes), Pacific Scientific Aerospace. Q4 EBITDA margin >37%. The structural premium-margin compounder.
- AHS (Advanced Healthcare Solutions) Q4 +3% revenue / +1.6% core / 26% adj EBITDA margin. Healthcare instrument disinfection, sterilization, surgical instrument workflow. Margin under pressure from growth investments — long-term thesis intact but near-term margin investment.
- 8% of diluted shares repurchased FY25 (~26M shares). Aggressive buyback post-spinoff — capital allocation discipline + reduced share count supports EPS growth. FY26 Investor Day 2025 financial framework underpins capital priorities.
- FY26 adj EPS $2.90-$3.00 (+9% midpoint). From $2.71 FY25 → $2.95 midpoint = +9% YoY. Tariffs net of countermeasures expected immaterial. Mid-teens effective tax rate; $120M+ net interest expense. Conservative + achievable.
Business
Fortive Corporation is a US industrial technology company spun off from Danaher (2016) and itself spun off Ralliant (2025). Two reportable segments + Fortive Accelerator operating model:
- Intelligent Operating Systems (iOS) (~70% of revenue / ~75% of EBITDA). Fluke (electrical + electronic testing), Tektronix (oscilloscopes + instrumentation), ServiceChannel (facility services software), Industrial Scientific (gas detection), Pacific Scientific Aerospace. Q4 revenue +5%; core +4%; adj EBITDA $288M (+8%); margin >37% (+100bp). Premium economics + recurring revenue + software mix.
- Advanced Healthcare Solutions (AHS) (~30% of revenue / ~25% of EBITDA). Censis (healthcare workflow), Fluke Biomedical (medical device test + service), Provation (procedural reporting), ASP (sterilization). Q4 revenue $353M (+3% / +1.6% core); adj EBITDA $92M; margin 26% — affected by growth investments.
Strategic moves FY25:
- Ralliant spinoff completed
- Fortive Accelerator operating model: Accelerate Profitable Organic Growth + Allocate Capital with Discipline + Build and Maintain Investor Trust
- Fluke Certified Max data center testing solution launched
- ServiceChannel third major product release
- Targeted investments in growth markets
- Recurring revenue grew faster than consolidated revenue
- 26M shares repurchased (8% of diluted shares outstanding) FY25
- 2 small M&A deals closed H2 2025
- Q3 + Q4 performance ahead of expectations
- Investor Day 2025 — 2026-2027 financial framework
FY25 financial performance
| Metric (FY) | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue ($B) | 5.83 | 6.07 | 6.23 | 5.14 |
| Revenue YoY | n/a | +4% | +3% | -17% (post-Ralliant spinoff) |
| Op income ($M) | 1,005 | 1,134 | 1,177 | 909 |
| Op margin | 17.3% | 18.7% | 18.9% | 17.7% |
| Net income ($M) | 755 | 866 | 833 | 579 |
| Diluted EPS ($) | 2.09 | 2.43 | 2.36 | 1.74 |
| Adj EPS ($) | n/a | n/a | ~$2.55 | $2.71 |
| FCF ($M) | 1,207 | 1,246 | 1,406 | 978 |
| Capex ($M) | -96 | -108 | -120 | -105 |
| Total debt ($B) | 3.42 | 3.81 | 3.88 | 3.21 |
| Dividends ($M) | -100 | -102 | -111 | -92 |
| Buyback ($B) | -0.44 | -0.27 | -0.89 | -1.61 |
The FY25 numbers reflect post-Ralliant spinoff structure. Total debt $3.21B (-17% YoY) reflects spinoff-related debt allocation. Buyback $-1.61B (+81% vs $-890M FY24) — aggressive capital return.
Adj EPS $2.71 FY25 vs ~$2.55 FY24 estimated = +6% growth. FY26 guide $2.90-$3.00 = +9% midpoint.
Capital allocation
- Capex $-105M FY25 (-13% YoY). Light-asset model.
- Dividends $-92M FY25 (-17% YoY).
- Buybacks $-1.61B FY25 (+81% YoY; 8% of shares).
- M&A 2 small deals H2 2025; selective bolt-ons.
- Debt $3.21B (-17% YoY).
- FCF $978M (-30% YoY reflecting Ralliant spinoff).
FY26 outlook (per Q4 2025 call, 2026-02-04)
| FY26 framework | Detail |
|---|---|
| Adj EPS | $2.90 to $3.00 (+9% midpoint) |
| Tariff impact | Net of countermeasures — not meaningful |
| Tax rate | Mid-teens effective |
| Net interest expense | Just over $120M |
| FX | Current rates assumed |
| 2026-2027 framework | From Investor Day 2025 |
| Capital priorities | Organic growth + accretive M&A + buybacks + modest dividend |
Implied FY26 revenue mid-single-digit growth on top of $5.14B FY25 base. The $2.95 midpoint adj EPS reflects continued operating leverage + buyback contribution + selective M&A.
Key risks
Macro / industrial demand cycle. iOS customer base affected by industrial demand cycle. Q4 +5% revenue / +4% core implies continued strength but cycle dynamics matter.
Healthcare segment investment cycle. AHS margin pressure from growth investments — multi-year payback. Underperformance compresses margin trajectory.
Tariffs. Q4 mgmt: net of countermeasures not meaningful. Trade policy + tariff regime change risk.
FX volatility. Multi-currency operations. Q4 guide assumes current rates.
Competitive landscape. Fluke + Tektronix + ServiceChannel face competition (Keysight, Tektronix, Rockwell, etc.). AHS competes with STERIS, Getinge.
Talent retention. Operating model + retention important post-spinoff.
Software vs hardware mix. iOS software mix growing; sustained mix shift requires continued execution.
Capital allocation balance. $1.61B FY25 buyback + dividend + capex + selective M&A — ongoing balance.
Investor Day execution. 2026-2027 framework requires execution against operational + financial targets.
Ralliant spinoff transition. Ongoing post-spinoff complexity (shared services + corporate function unwinding).
Recurring revenue mix. Growing recurring mix supports — but customer churn + competitive intensity matter.
Bottom line
Fortive FY25 is the post-Ralliant spinoff first year + Fortive Accelerator framework introduction: revenue $5.14B (post-spinoff), adj EPS $2.71 (above high end of guide), iOS Q4 +5% revenue / +4% core / +8% adj EBITDA / >37% margin, AHS Q4 +3% / 26% margin, 26M shares repurchased (8% of diluted), 2 small M&A deals H2 2025.
FY26 guide of adj EPS $2.90-$3.00 (+9% midpoint) on continued iOS strength + AHS recovery + capital allocation discipline + tax + interest assumptions. Conservative achievable framework.
The risks are real — macro / industrial demand cycle, healthcare investment cycle, tariffs, FX volatility, competitive landscape, talent retention, software vs hardware mix, capital allocation balance, Investor Day execution, Ralliant spinoff transition, recurring revenue mix.
But the structural thesis (Danaher heritage operating model + iOS premium economics + AHS growing healthcare + Fortive Accelerator framework + capital allocation discipline + buyback + selective M&A) is intact and FY25 print confirms.
Quality industrial technology compounder mid-Investor-Day-framework cycle. The iOS premium economics + AHS investment cycle + Fortive Accelerator framework + 8% share count reduction creates a multi-year compounding setup. Investors get exposure to industrial test + measurement + facility software + healthcare workflow + Danaher-style operating discipline + capital return. The conservative FY26 framework + Q1 starting point + capital allocation discipline provides multiple paths to outperformance. Iterations over multi-year horizon should compound modest revenue growth + margin expansion + buyback contribution into ~10% adj EPS growth annually.
Citations
- Fortive Corporation FY25 Form 10-K (filed February 2026, SEC EDGAR).
- FTV Q4 2025 earnings call, 2026-02-04 — Q4 iOS revenue +5% / core +4%; Q4 adj EBITDA $288M (+8%) / margin >37% (+100bp); AHS Q4 revenue $353M (+3% / +1.6% core); adj EBITDA $92M / margin 26%; FY adj EPS $2.71 (above guide high end); 26M shares repurchased (8% of diluted); 2 small M&A deals H2 2025; FY26 adj EPS $2.90-$3.00 (+9% midpoint); tariffs net of countermeasures not meaningful; mid-teens tax rate; $120M+ net interest expense.
- FTV Q3 2025 / Q2 2025 / Q1 2025 earnings calls — supporting Ralliant spinoff + iOS + AHS dynamics + Fortive Accelerator framework (assumed in line with Q4 trajectory).
- Internal financial_statements view (consolidated annual + cash flow + capital structure).