Danaher Corporation Q1 FY2026 earnings call

• Team executed well in dynamic environment, leveraging Danaher business system for innovation, productivity gains, and adjusted EPS growth.
• Continued strength in bioprocessing and better than expected performance in life sciences offset Cepheid's lighter Q1 respiratory season.
• Trends in end markets were modestly better than expected, with acceleration in life sciences and biotechnology in China.
• Focused on controlling supply chain, mitigating inflation, and investing long term, with pending acquisition of Massimo.
• Organic growth initiatives like Cytiva's FibroDT, Beckman Coulter Life Sciences' partnership with Automata, and Beckman-Coulter Diagnostics' menu expansion.
• Encouraged by first quarter momentum across portfolio and expectation of growth acceleration throughout the year.

Sales were $6 billion in the first quarter. Core revenue was up 0.5% year over year with a 2.5% headwind from respiratory revenue partially offsetting 3% core revenue growth in the rest of the business. Biotechnology segment revenue increased 7%. Discovery and medical declined low single digits. Bioprocessing revenue grew high single digits in Q1, with consumables up due to robust demand globally (notably China) and equipment orders up over 30%. Life sciences segment core revenues increased by 0.5%, with instruments businesses down low single digits but early signs of order book momentum, and consumables businesses collectively grew low single digits. Diagnostic segment core revenue declined 4%, with clinical diagnostics growing low single digits outside China and Cepheid's revenue down due to lower respiratory season, but core non-respiratory test menu up mid-teens.

• Full-year 2026 core revenue growth expected in 3% to 6% range, with lower respiratory revenue outlook offset by better core growth in rest.
• Raised full-year adjusted diluted net EPS guidance to $8.35 to $8.55 from previous $8.35 to $8.50.
• Second quarter expected core revenue up low single digits and adjusted operating profit margin of approximately 26.5%.

• Global environment dynamic with ongoing Middle East conflict, though limited direct revenue or supply chain exposure, but mindful of potential pressures.
• Risks associated with forward-looking statements, including those in SEC filings where actual results may differ materially.

Q: Michael Riskin asked about progression through the year and drivers across segments.

A: Reiner Blair and Matt Pagino discussed that China diagnostic policy headwinds playing out as expected, patient volumes higher, strong momentum in rest of diagnostics, resilience of portfolio, bioprocessing strength with consumables and equipment order growth, and life sciences and consumables globally performing better than expected.

Q: Vijay Kumar asked about Massimo acquisition strategic rationale.

A: Reiner Blair explained Massimo as a typical Danaher deal, supportive of acute care strategy, geographic synergies, significant synergies, accretive at all levels, and value reserves for high single-digit ROIC in year five.

Q: Scott Davis asked about raw materials.

A: Matt Pagino said no meaningful pressure yet, but vigilant leveraging Danaher business system and contract positions, and Reiner Blair mentioned Middle East driving oil price volatility but supply chain not directly affected.

Q: Jack Meehan asked about AI.

A: Reiner Blair said AI is growth accelerator for pharma and biotech, accelerating drug development and commercialization flywheel, driving more demand in biologic models, and DBS and AI synonymous for accelerating cycle times and efficiencies.

Q: Tycho Peterson asked about bioprocessing and China opportunity.

A: Reiner Blair talked about China in recovery mode with double digit growth in bioprocessing, equipment orders growth underwriting hypothesis, and life sciences consumables expected to go from slightly negative to slightly positive for full year.

Q: Casey Woodring asked about equipment orders and Brownfield vs Greenfield.

A: Reiner Blair said first quarter orders growth was first positive year over year in nearly two years, funnel activity robust, and brownfield investments flowing through with greenfield expected to follow.

Q: Dan Brennan asked about M&A prioritization.

A: Reiner Blair said encouraged by funnel, bias to capital deployment in M&A, disciplined on end market, premier asset, and financial model, balance sheet strong post-Massimo acquisition.

Q: Doug Stinkle asked about guidance high end and M&A readiness.

A: Matt Pagino said need further improvement in life sciences markets, policy headwinds abate, biotech funding turn into orders, and bioprocessing growth acceleration, and Reiner Blair said have capacity and bandwidth for additional acquisitions in any segment