Danaher Corporation (DHR) Q4 2025 Earnings Call Transcript

Danaher Corporation (NYSE: DHR) Q4 2025 Earnings Call dated Jan. 28, 2026

Corporate Participants:

Rainer M. Blair — President and Chief Executive Officer

Matt McGrew — Chief Financial Officer

John T. Bedford — Vice President-Investor Relations

Analysts:

Michael Ryskin — Analyst

Tycho Peterson — Analyst

Scott Davis — Analyst

Doug Schenkel — Analyst

Jack Meehan — Analyst

Patrick Donnelly — Analyst

Daniel Lerner — Analyst

Dan Brennan — Analyst

Presentation:

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Please stand by. Your meeting is about to begin. Good day everyone. My name is Nikki and I will be your conference facilitator this morning. At this time, I would like to welcome everyone to Danaher Corporation’s fourth quarter 2025 earnings results conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s 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 two on your telephone keypad.

I will now turn the call over to Mr. John Bedford, Vice President of Investor Relations. Mr. Bedford, you may begin your conference.

John T. Bedford — Vice President-Investor Relations

Good morning everyone and thanks for joining us on the call. With us today are Reiner 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, the slide presentation supplementing today’s call, the reconciliations and other information required by SEC Regulation G and a note containing details of historical and anticipated future financial performance are all available on the Investors section of our website, www.danaherd.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 dial in replay of this call will also be available until February 11, 2026. 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 fourth quarter of 2025, 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 Reiner.

Rainer M. Blair — President and Chief Executive Officer

All right John, thank you and good morning everyone. We appreciate you joining us on the call today. We delivered a strong finish to the year with better than expected performance across the portfolio. We were particularly encouraged by continued strength in our bioprocessing business along with improving momentum in diagnostics and life sciences. Our team’s disciplined execution also enabled us to exceed our fourth quarter margin earnings and cash flow expectations. Now, during the quarter end, market trends across our businesses were broadly consistent with what we saw through the first three quarters of the year. In pharma, global monoclonal antibody production remained robust and we were encouraged to see a modestly more favorable capital spending environment.

We also continued to see a recovery in pharma R and D spending while biotech demand remained stable. Academic and government demand remained muted but was stable sequentially while clinical and applied end markets continued to perform well. Now I’d like to take a moment to thank our associates for their efforts in 2025. They did a tremendous job leveraging the Danaher business system to navigate a dynamic geopolitical and policy environment while continuing to deliver for our customers and drive productivity gains across our businesses. Their dedication and passion for serving our customers enabled the launch of innovative therapies and diagnostic solutions, drove share gains in many of our businesses and reinforced Danaher’s reputation as a trusted leader in life sciences and diagnostics.

Now, looking ahead, we expect the gradual end market improvements we saw through 2025 to continue and we believe the combination of our differentiated portfolio, the power of the Danaher business system and the strength of our balance sheet positions Danaher for long term value creation as we move into 2026 and beyond. So with that, let’s take a closer look at our full year 2025 financial results. Sales were $24.6 billion and core revenue increased 2%. Our adjusted operating profit margin was 28.2% and adjusted diluted net earnings per common share of $7.80 were up 4.5%. We also generated $5.3 billion of free cash flow, resulting in a free cash flow to net income conversion ratio of approximately 145%.

Strong free cash flow generation is one of the most important metrics at Danaher, and 2025 marks the 34th consecutive year our free cash flow to net income conversion ratio exceeded 100%. Our earnings growth and strong free cash flow generation in the face of tariff related cost pressures and significant productivity investments underscore the differentiated quality of our earnings and business models. Now our continued investments in innovation drove an accelerated cadence of new product introductions across Danaher in 2025. These new technologies are helping customers develop and manufacture therapies and diagnostic tests faster and more efficiently, ultimately helping to improve healthcare outcomes in biotechnology.

Sativa launched more than 20 new products across the biologics workflow upstream. New 500 and 2,000 liter formats of the Accelerex X platform bioreactor are helping drive higher yields while reducing the time and cost of biologic drug manufacturing for our customers. Downstream. Sativa strengthened its purification portfolio with the launch of two new protein A resinstitute Mabselect Sure 70 and Mabselect Prisma X, delivering cost effective solutions for preclinical and clinical production without compromising quality. Now these launches reinforce Sativa’s commitment to helping customers improve yields and lower manufacturing costs while maintaining high performance across the drug development lifecycle.

In life sciences, sciex reinforced their leadership in mass spectrometry with the introduction of the XenoTOF 8600. The 8600 delivers up to 30 times increased sensitivity versus previous platforms, accelerating proteomic research and enabling faster identification of disease pathways to help accelerate drug development timelines. Meanwhile, Beckman Coulter Life Sciences expanded its flow cytometry portfolio with the Mosaic Spectral detector module, bringing spectral capabilities to the Cytoflex platform that enable flexible, high precision multi parameter characterization for pharmaceutical researchers.

Rainer M. Blair — President and Chief Executive Officer

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Rainer M. Blair — President and Chief Executive Officer

Diagnostics, Beckman Coulter Diagnostics expanded the DXI9000 assay menu highlighted by progress in neurodegenerative disease, including the first to market automated high throughput BD tau research use only immunoassay while continuing to expand cardiac and blood virus menus. These advances, combined with sensitivity up to 100 times greater than traditional immunoassay systems, enable faster, more accurate patient diagnoses and help pave the way for precision diagnostics. Finally, last week Cepheid received FDA clearance for its Expert GI panel, a multiplex PCR test that quickly detects 11 common gastrointestinal pathogens from a single patient sample. Leveraging Cepheid’s advanced 10 color multiplexing technology on its GeneXpert and solid base, this test simplifies GI testing workflows, helps guide appropriate treatment for high risk patients, and can aid in reducing the risk of outbreaks in health care and community settings.

This panel marks another step forward in Cepheid’s multiplex testing strategy, building on momentum from the four in one Respiratory Panel, the MVP Panel, and Women’s Health, with further multiplex introductions planned over time. So these are just a few of the innovations from across Danaher that are delivering meaningful customer impact while also driving clear financial results, including approximately 25% year over year growth in new product revenue. So with that, let’s Turn to our fourth quarter 2025 results in more detail. Sales were $6.8 billion in the fourth quarter and we delivered 2.5% core revenue growth. Geographically, core revenues in developed markets increased low single digits with North America essentially flat and Western Europe up mid single digits.

High growth markets were up mid single digits with solid growth outside of China more than offsetting a low single digit decline in China. Our fourth quarter adjusted gross profit margin of 58.2% and our adjusted operating profit margin of 28.3% were both down 130 basis points as the impact of cost savings initiatives more than offset the positive impact of volume leverage. Adjusted diluted net earnings per common share of $2.23 were up 4% year over year and we generated $1.8 billion of free cash flow in the quarter. So now let’s take a closer look at our fourth quarter results across the portfolio and give you some color on our end markets today.

Core revenue in our biotechnology segment increased 6%. Core revenue and discovery in medical declined at a high single digit rate in the quarter, driven by a difficult prior year comparison in our medical filtration business and by declines in protein research instrumentation. As academic research customers continued to face funding constraints. Core revenue and bioprocessing grew high single digits with high single digit growth in consumables and mid single digit growth in equipment. Consumables growth was supported by continued robust demand for commercialized therapies, particularly monoclonal antibodies, and we were also encouraged by the return to equipment revenue growth in the quarter and by third consecutive quarter of sequential equipment order growth.

The orders remain below historical levels. Current momentum in our equipment order book and funnels is concentrated around shorter cycle projects such as line additions and brownfield expansions with US Reshoring related greenfield investments expected to provide incremental upside over time. Now, given the sustained and substantial activity levels at our customers over the last year, we anticipate high single digit core revenue growth in bioprocessing for the full year 2026. Growth is expected to be led by consumables with our current backlog and order trajectory supporting equipment revenue improving to approximately flat for the year, so we see a bright future ahead for Sativa.

Underlying biologic demand, which is the primary growth driver of our business, has grown at double digit rates annually for more than a decade and we expect strong demand growth to continue into 2026 and beyond. This outlook is supported by another year of robust FDA approvals for biologic medicines in 2025 and increased uptake of existing therapies during this year which taken together drove global biologic revenues to surpass small molecule drugs for the first time. The development pipeline also remains strong with biologics expected to represent more than two thirds of the top 100 drugs by 2030, so these positive trends reinforce our confidence in the durability of long term growth in the bioprocessing market and for Sativa’s leading franchise.

Turning to our life sciences segment, core revenue increased 0.5%. Core revenue in our life sciences instrument businesses was essentially flat in the quarter. Looking across end markets, we continue to see a modest recovery in pharma, particularly in Europe, while biotech demand remains stable. Academic and research demand was muted, especially in the US and China, but was generally stable on a sequential basis and clinical and applied markets remained healthy. Core revenue in our life sciences consumables businesses declined in the quarter primarily due to lower demand for plasmids and MRNA from two of our larger customers as well as continued funding pressure across early stage biotech and academic research.

We were encouraged to see another quarter of sequential improvement at APCAN as key commercial initiatives in pharma and recombinant proteins delivered solid growth, partially offsetting ongoing softness in academic research. Moving to our diagnostics segment, core revenue increased 2%. Core revenue in our clinical diagnostics businesses grew mid single digits with high single digit growth outside of China. Notably Leica Biosystems and Radiometer were each up nearly 10% with broad base strength across both instruments and consumables. Beckman Culture Diagnostics also delivered another strong quarter with mid single digit growth globally led by high single digit growth in immunoassay.

This is Beckman’s sixth consecutive quarter of mid single digit or better core growth outside of China and caps off a year of sustained momentum across its innovation and commercial engines in molecular diagnostics. Respiratory revenue of approximately $500 million exceeded our expectation as customers purchased in anticipation of an active respiratory season. Given the high prevalence of currently circulating respiratory viruses over the past several weeks, we worked closely with the team to better understand seasonal trends and revisit our assumption for respiratory revenue in a typical year, and as a result we expect respiratory revenue of approximately $1.8 billion for the full year 2026.

This assumes a normal respiratory season and that testing protocols at our customers remain broadly consistent with what we’ve seen the last few years. Low double digit growth across Cepheid’s core non respiratory test menu was highlighted by nearly 30% growth in sexual health and mid teens growth in hospital acquired infection assays. This strong performance reflects continued traction in Cepheid’s growth strategy, including new menu additions such as the MVP panel and Women’s Health enabling entry into new care settings and existing customers continuing to add both menu and instruments across their healthcare networks. So looking ahead, we’re excited about the long Runway for durable growth at Cepheid, supported by a robust pipeline for future menu additions and anticipated continued expansion of our leading global installed base.

Now let’s briefly look ahead at expectations for the first quarter and the full year 2026. Looking across the portfolio, we’re assuming bioprocessing growth will be similar to 2025, including continued strength in consumables driven by healthy growth in monoclonal antibody demand and our strong positioning across the biologics workflow in life sciences. We’re assuming a modest improvement in end markets, but assume growth will remain below historical levels. Given the current macro environment and in diagnostics, we’re assuming higher growth in 2026 due to moving past the peak of headwinds from policy changes in China and our expectation that we will continue to execute well globally for the full year 2026.

We anticipate core revenue growth in the 3 to 6% range. Additionally, we are initiating full year adjusted diluted EPS guidance in the range of $8.35 to $8.50 in the first quarter. We expect core revenue to be up low single digits and additionally we expect a first quarter adjusted operating profit margin of approximately 28.5%. So to wrap up, we’re pleased with our solid finish to the year and proud of the work our teams did in 2025 to reliably support our customers through a dynamic macro environment. They did a tremendous job staying focused on what we can control running the Danaher business system playbook to offset cost pressures and deliver productivity gains while continuing to invest in innovation for the long term.

So looking ahead, we’re encouraged by the momentum building across our portfolio and expect growth to accelerate as end markets continue to improve. Our strong positioning in attractive end markets and high recurring revenue business models support our long term expectation for high single digit core growth with a differentiated margin and cash flow profile. So with the powerful combination of our differentiated portfolio, talented team and strong balance sheet, all powered by the Danaher business system, we feel well positioned to create long term shareholder value while making a meaningful positive impact on human health. So with that, I’ll turn the call back over to John.

John T. Bedford — Vice President-Investor Relations

Thank you, Reiner. That concludes our formal comments. We’re now ready for questions.

Questions and Answers:

operator

Thank you. And if you would like to ask a question, please press Star one on your keypad. To leave the queue at any time, press Star two. Once again, that is Star and one to ask a question. Our first question comes from Michael Riskin with Bank of America. Please go ahead. Your line is open.

Michael Ryskin

Great. Thanks for taking the question, guys, and congrats on Morning Ryan. Maybe just to kick things off, you’re opening with a 3% to 6% core revenue guide that’s consistent with kind of how you know the framework you laid out on the 3Q call. But if you look at the various segment details you provided, it looks like the segment levels. If you kind of do the sum of the parts, it gets you closer to that 3%, which again you’ve hinted at in the past. I’m just curious if you could talk about how much conservatism is embedded in that or maybe what are the levers or what are the drivers you could see getting you closer to that six where you see potential for upside as you go through the year.

If there’s one segment or another that kind of sticks out to you.

Rainer M. Blair

Sure, Mike. Well, how about I level set first on the guide and then I can talk to those upside levers. So first of all, we had a good finish to 2025 with the business performing better across the board in Q4. And that really reinforced that 3 to 6% core growth outlook that we talked about in October. And now we’ve converted that into our core growth guide, which is based on the expectation of continued recovery in our end markets. And to your point, let me give you a little color on those. First of all, we expect bioprocessing to remain strong at high single digits.

We had an excellent finish to the year. In fact, I’ve just spent time out with customers and with our team. And things are going really well for us there in terms of spec wins and orders and of course sales as well. And this momentum should lead to continued strength in consumables and for equipment. We were encouraged by that momentum that we saw in the fourth quarter. But we’re assuming that equipment is flat for 2026, which is off of a mid teens decline in 25. But that is supported by our current backlog. Now as we think about life sciences and our discovery and medical businesses, we expect those to be flat and we’re assuming some modest improvement in our end markets there.

And that said, we do expect growth will improve through the year as our own comps ease, particularly in our life science consumables businesses. And then lastly, we expect diagnostics to grow in the low single digits. We’re assuming consistent mid single digit growth outside of respiratory in China. And with China, we think the volume based procurement headwinds will moderate as we move through the year. And Respiratory, we’ve taken a look at that number again here in terms of the endemic level and we think that’s probably fairly consistent with 2025. So this is how we’re setting up the year based on these improving end markets and some of the momentum that we saw coming out of Q4.

Now Mike, to your point as to upside levers, there’s probably two larger drivers that are most relevant there. One is to see continued improvement across our life science end markets. We’re seeing some of that, we want to see more of that, especially some of those policy headwinds that we’re seeing here in the US in particular. We’d like to see that improved biotech funding environment fall through now to an increasing order book in that particular segment. So encouraged, but we don’t see that yet. And then of course China continuing an acceleration in life science research would be helpful in those life science ed markets as well.

And then the other level is bioprocessing where seeing better than high single digit growth for the year with equipment potentially accelerating or even consumables accelerating more as we see more biosimilars and map production increasing. Those would be two areas that could potentially produce additional upside to the guide.

Michael Ryskin

Okay, that’s helpful. And if I could follow up just on that point on the bioprocessing outlook for 2026, can you talk a little bit about, you know, the order book maybe book to bill how that shaped up in the fourth quarter for consumables and for equipment. Just give us a little bit more clarity on the confidence that’s driving that 26 outlook. You know, you’ve got, you still have easy comps and equipment but a little bit tougher comps and consumables. So just for both the equipment and the consumable side, what the orders look like exiting the year and how that supports next year’s outlook.

Rainer M. Blair

Sure. The order book fully supports the high single digit growth that we’ve been talking about for 2026. As you know, the lead times have gotten much shorter on the consumable side. So having a book to build there of around one is exactly where it needs to. So we feel very good about that. We’ve talked about equipment orders increasing sequentially here the last three quarters in a row. And then of course we grew revenue in the fourth quarter. So we feel comfortable that we’re starting to head in the right direction there. Equipment as well. But 1/4 of growth, we’re not ready to call that a trend yet.

But the orders coming out of the the last three quarters are encouraging.

Michael Ryskin

All right, thanks so much.

Rainer M. Blair

Thanks, Mike.

operator

Thank you. We will move next to Tycho Peterson with Jefferies. Please go ahead. Your line is open.

Rainer M. Blair

Morning, Tycho.

Tycho Peterson

Hey, good morning, Reiner. Would love to just hear a little bit more about the strength on Cyax and how much of that is the new product versus maybe end market recovery. And where specifically are you seeing kind of end markets turn for the better there?

Rainer M. Blair

Cyax did nicely with mid single digit growth here in the fourth quarter and we’re seeing a number of factors contribute to that, certainly innovation with the XenoTop 8600 gaining some nice traction. But we also see continued improvement in the pharma end market there. It’s the third quarter in a row that we saw in life sciences, the pharmacist end market being at growth. The clinical and applied markets were robust as well. As you know, CYX is the gold standard there and PFAS testing as just one example. And then lastly I would say in the academic and government segment that continued to be muted.

So it’s stable but not growing in the last quarter. So generally speaking we see the end markets continuing to improve and that also contributed to Cyax’s and the instruments group performance there in the fourth quarter.

Tycho Peterson

Okay. And then maybe one for Matt on margins. You know, we got the first quarter operating margin guide obviously, but how should we think about kind of, you know, the flow through of incrementals? You didn’t really touch on the incremental cost out initiatives on the call, but how should we Think about kind of a full year margin target and progression throughout the year.

Matt McGrew

Yeah, I think the way I sort of think about it is kind of very similar to core growth. Right. So I think we’re kind of starting out the year at low single digit core growth and very similar to what we saw here in Q4 and that is going to sort of accelerate through the year. So you’ll see kind of a little easier comps here in life science consumables in the second half, some modest end market improvements in life sciences that Reiner just alluded to, put in the easier comps in China, DX and respiratory. And I think what we’ll see is sort of that low single digit growth kind of build through the year and earnings is going to follow that.

I think you’ll see that follow the trajectory of the core growth with certainly the second half and the fourth quarter probably being the biggest beneficiary of the 2025 cost actions. And so if you kind of go through that, I think you’ll see the, the second half is certainly building up, but that’s largely almost all the benefit from the cost actions in the fourth quarter.

Tycho Peterson

Okay. And then just lastly quickly on bioproduction, I appreciate all the incremental color. Any commentary specifically on China? You know, there were some mixed data points earlier this week from one of the companies that reported on China bioprocess. So curious if you’re seeing anything abnormal there in terms of trend.

Matt McGrew

We’re not. Our fourth quarter bioprocessing business in China is coming off of a large comp, but the underlying activity level continues to strengthen there. You know that the biotech market there in particular has found some new momentum here as they are able to monetize some of those molecules that they’re developing there, some new to the world through licenses, through going public and other types of monetization opportunities. So for us, bioprocessing should continue to have a positive development and certainly we expect China bioprocessing to grow in 2026.

Tycho Peterson

Thank you.

Matt McGrew

Thank you.

operator

Thank you. Our next question comes from Scott Davis with Melius Research. Please go ahead. Your line is open.

Rainer M. Blair

Morning, Scott.

Scott Davis

Good morning guys. It’s pretty encouraging commentary, particularly around bioprocess. But guys, I want to back up a little bit like you did a fair amount of, you know, restructuring and such and that can be defined in a lot of different ways. But is that, can you help us understand a little bit of the postmortem other than just the, you know, the margin impact kind of. What did you actually do as it relates to kind of, you know, either rooftops or, you know, headcount. Was there tangible change in fixed assets or anything that you can kind of talk about publicly here.

Rainer M. Blair

Scott? I mean this is traditional Danaher business system type of productivity improvement where we’re certainly consolidating rooftops but also driving process efficiency. And yes, that has resulted in reducing associates as well. So we expect the cost savings that we’ve generated there to sustain here for the long term. And as we noted in previous calls, those are pretty significant.

Scott Davis

Yeah. Okay. That’s a good non answer, Reiner. I get it. Understood. The flu season has been pretty nasty. God knows it’s cold up here. Cold where you’re at too. But is there are you seeing a big pickup in orders here in January? Kind of. I know that you had a strong, you know, probably pre order season and 4Q and such, but have you seen a pretty sizable reload as you as the cases have picked up?

Rainer M. Blair

Well, we certainly in the at the second half of the fourth quarter saw the cases pick up quite significantly and you probably noted that the ILI being as high as as it’s nearly ever been. And that was manifested then also in the respiratory beat that we showed in the fourth quarter. Now since then we’ve seen that ILI come down, but testing continues to be robust and we put out the perspective that we expect our first quarter respiratory to be around $500 million of revenue.

Scott Davis

That’s helpful. Thank you, Reiner. Best of luck.

Scott Davis

See you guys.

operator

Thank you. We will move next with Doug Schenckel with Wolf Research. Please go ahead. Your line is open.

Rainer M. Blair

Morning, Doug.

Doug Schenkel

Morning, Reiner. Thanks for taking the questions starting on bioprocessing. Given the strength of equipment growth in the fourth quarter and favorable comparisons for really at least the first three quarters of 2026, it’s a smidge surprising you didn’t guide for maybe a little more growth at that line. Was there any pull forward of demand into Q4 and or is this just maybe some extra prudence as we sit here in January and what’s been a tough environment in an unpredictable environment over the last few years?

Matt McGrew

Yes, Doug, maybe I’ll take that. I think not too dissimilar to what we saw sort of on the consumable side maybe six or eight quarters ago. You know, it’s been, it’s encouraging to see some growth in the single digit growth out of the equipment, but it’s just one quarter and so one quarter a trend does not make I think, you know, we still are in that environment, similar environment like you talked about to where we’ve been. So while encouraging in the fourth quarter, I just think it’s until we have a little bit more, a few more data points to point to on the equipment side, I think it’s again kind of demonstrated ability over the past year that we’re just going to go ahead and guide the flat.

I think it’s a good place to start. Let’s see how the year progresses and we’ll go from there.

Doug Schenkel

Okay, that is helpful, Matt. And pivoting to capital deployment, the business is clearly stabilizing. You got solid free cash flow as always. Debt to EBITDA is below 2. Can you just describe the M and A environment and your readiness and your priorities to potentially get a little more aggressive than you’ve been recently? I guess I’m trying to get at whether or not you feel that you’re in a better spot now than maybe you were a couple quarters ago to, to move, you know, to move on something potentially more sizable and more aggressive if the opportunity were to present itself.

Thank you.

Matt McGrew

So Doug, I would say the M and A environment is more constructive. We’ve seen some valuations moving in the right direction. Interest rates have moderated a little bit and our cultivation and our bias towards M and A and our cultivation of those MA targets remains as strong as ever. And as you point out, our cash flow generation not only is differentiated, but puts our balance sheet in a place where we’re able to act on opportunities. And we’re going to stick with our discipline of looking at end markets that we believe have long term tailwinds, attractive assets within that market that have defensible value or value creation opportunities that we can compound over time.

And then of course the financial model has to work as well. And we do see that that continues to progress in the right direction. So we like the setup. We see improving end markets. Our team is executing well as manifested by the fall through that you see on the business and the cash flow. And of course the balance sheet is primed.

operator

Thank you. We will move next with Jack Meehan with Mefron Research. Please go ahead. Your line is open.

Rainer M. Blair

Morning, Jack.

Jack Meehan

Good morning. Hope you’re doing well. I want to push on a couple of the guidance assumptions a little bit. The first is in Life Sciences. So 2025 was obviously an unusual year in terms of customer spending patterns. I was curious about your thoughts on 4Q as a jumping off point for 2026 in so much that is it possible there were some push Outs from earlier in the year that might have come in around year end. So what can you build off of in 4Q versus what might be like an elevated base? Any thoughts on that, Jack?

Rainer M. Blair

I think we continue to see improvement in the pharma end market. That would be the third quarter in a row that we have seen that improvement and we would expect that to continue here going forward. The clinical and the applied markets have been solid and stable for several quarters and we would expect that to be the same. I think in academic and government that’s where the activity level has been muted. We could still have a bit of choppiness ahead of us with the discussions that we hear currently in the market. But over time we also expect that to moderate.

So generally speaking we would expect the life science end market to continue their gradual improvement here through 2026.

Jack Meehan

Sounds good. Okay. And then Matt, I wanted to push a little bit more on the margin puts and takes for 2026. So you talked about the $250 million cost actions. You also have the biotechnology segment, your highest margin segment, growing the fastest. There’s the vbp. Is there anything else that stands out? I’m just trying to think about the 100bps or more for the year.

Matt McGrew

Yeah, no, maybe. Let me give you just a little color on how we constructed the eps guide of 835 to 850. Just to give you a simple frame of what that is. I think that might be helpful. So we’re assuming the low end of the core growth like we’ve talked about. So think 3 to 4%. Assuming 35 to 40% fall through. We’re going to. We’ve got a 30 cent benefit from the 2025 cost actions. So that’s in that hundred basis points of margin expansion. It is inclusive of this 30 cent benefit that as you remember was the Q4 actions plus the savings.

So it’s $250 million. So that benefit is about 30 cents. And then there’s kind of some below the line stuff in FX which you know, obviously could go either way. So I just assume all that stuff kind of nets to zero. If you do that math, you get kind of 835 to 850. And so you know, if we do better from a core growth perspective than 30 to 3 to 4%, you know, there’s probably likely some upside here to EPS, but you know, we’re just going to kind of start the year with what I laid out, see how the year progresses and we’ll go from there.

Jack Meehan

Okay. Thank you, guys.

operator

Thank you. Our next question comes from Patrick Donnelly with Citi. Please go ahead. Your line is open.

Rainer M. Blair

Morning, Patrick.

Patrick Donnelly

Hey guys, thanks for taking the question. Maybe a follow up on Jack there. On the life side business, Reiner, it sounds like things are improving across the board. Abcam, Aldevaron, Cyax. Can you just run through what you saw into year end on that front? Was there a good budget flush? And then similarly, as we look at 26, it seems like that’s still flattish for the year. It feels like there’s some upside there. Can you just talk through what you need to see to get that number going to a few percent growth and again, would love to dig into some of those verticals.

Abcam, Aldebaran in particular.

Rainer M. Blair

Sure. I mean, let’s start with the fourth quarter. Like we said, the life science business was a little bit ahead of our expectations there. And that was led by Science and Spectrum, Life Sciences and so forth. Where we saw the pharma end market in particular do a little bit better than anticipated. There’s probably a little bit of a budget flush. We saw that especially in Europe, so not enormous, but we did see a little bit of a flush. We’re not a great read through, read across for that with the size of our instrument business there, but nonetheless we did see some.

Now as we think about 26, we expect that end markets such as pharma will continue to improve, that clinical and applied markets will stay stable. And I think the upside that we’re looking for in life sciences comes sort of out of two categories. One being in the academic and government area. We need to see more stabilization there around the spending discussions and the budgetary discussions. So that would be one point. And then we’d like to see biotech in particular take advantage of the improved funding environment that we’ve seen here over the last two, three quarters and start seeing that fall through into the order book.

So that I think would be what we’d like to see, to think about upside in the life sciences.

Patrick Donnelly

Yep.

Patrick Donnelly

And then maybe just the ABCAM piece. Reiner, you talked about seeing improvement throughout the quarter. It seemed like that was firming up a little bit. Just wanted to dig in there.

Rainer M. Blair

I mean, we’re really encouraged by what we’re seeing here at afcam. The business continued to improve here in the fourth quarter. In fact, we’ve seen now three months of growth, particularly driven by the recombinant protein and the pharma segment that we’ve been talking about. And of course the team has Been working very hard on. Right. Sizing the cost picture there to the business and to our earnings expectations going forward. And, and we see that in fact the operating margins are 500 basis points higher than when we acquired the business. And so we like what we see here for AFCAM and expect to continue to see that Trend here in 2026 as well.

Patrick Donnelly

Understood. And then maybe a little bit of a longer term one. I think as you build this year, it seems like again, Reiner, I think you touched on the gradual recovery a few times. As we exit this year and move forward, it certainly feels like we’re approaching more level of normalcy. What is the path back to the LRP that you guys have out there? Is that on the table as we look ahead? I know it’s January 26th, but as we look ahead to future years, what is the path there and what do you need to see to believe that that’s on the table next year?

Rainer M. Blair

Well, I mean, I would say it’s too early to comment on 2027 and beyond to the point you just made, but here’s how we’re thinking about it. I mean, fundamentally our businesses are in excellent end market and those growth drivers that we’ve talked about are very much intact and we expect those growth drivers to continue to recover here. And what are some of those? Well, the proliferation of biologics, some of the advancements that we see in life science research and then of course the diagnostics area bringing those diagnostics much closer to the patient. So we don’t see any change to our long term framework.

And as these end markets continue to recover, we’ll get back to that high single digit growth over time.

Patrick Donnelly

Understood.

Patrick Donnelly

Thank you guys.

Rainer M. Blair

Patrick.

operator

Thank you. We will move next with Dan Lernert with ubs. Please go ahead. Your line is open.

Daniel Lerner

Hi Dan, thank you very. Hi Reiner, thank you very much for taking the question. You’ve talked a couple of times about the importance of an improving biotech funding environment on your life sciences business. Can you remind us how sensitive would the biotech business segment be to an improvement in biotech funding?

Rainer M. Blair

So that emerging biotech sector for us has traditionally been in the sort of 15% of the business overall, a little.

Rainer M. Blair

Bit less, probably more like 5% of overall Danaher. 15% of bioprocessing 10. 15%. So I mean it’s not. There is some level of exposure, but it’s not the majority of what we do, obviously.

Rainer M. Blair

Yeah.

Rainer M. Blair

I mean just to reaffirm, most of our business in bioprocessing is driven by commercial volume, 75%. We talk about that. And then you have a mix of clinical and biotech in the remaining 25%. So let’s say 10 to 15% is probably in the biotech area and we have been seeing some improved orders there in bioprocessing out of that space. But early days.

Daniel Lerner

Understood, thank you. And a quick follow up. Reiner, you mentioned the reshoring topic as a longer term theme in bioprocessing. Can you update us on how any of those conversations with customers have been trending over the past three months?

Rainer M. Blair

Sure. I mean, as I mentioned earlier, I’ve been out in the market a great deal with our teams and meeting with our customers, pharma customers, CDMO, CEOs, you name it, to get a real sense of what’s going on here as it relates to the demand picture and the reshoring question. And I think the takeaway here is that one, equipment investment has been muted here for the last couple of years despite the fact that demand has been fairly strong as we see in the consumables. You have this aspect of the fact that there’s probably some catch up required here over time just to meet the existing demand.

And then you add on top of that the reshoring topic which continues to advance. There’s no question that that is going to happen. It’s just a matter now of bringing that timing together. And so again, it’s a little difficult to pinpoint the timing, but we’ve been encouraged certainly on the former aspect. So the need to keep up with demand in our order book here for equipment. And we want to see how this now plays out going forward. But we really believe we could be in the early innings of a long term investment cycle. And as you know, we’re really quite well positioned to support those investments going forward.

Daniel Lerner

Thank you very much.

Rainer M. Blair

Thank you.

operator

Thank you. And we have time for one more question. That question comes from Dan Brennan with TD Cowan. Please go ahead. Your line is open, Dan.

Dan Brennan

Great, thanks. Good morning, Reiner. I’m Matt. Thanks for the question. Maybe to start just back to bioprocess, if you don’t mind. You know, with the Biotech guide, it’s 6% for the year. And I think you guys talked about Discovery Medical flat that gets us to bioprocess growth, I think around 6%, which is a bit lower than what I think you guys did in 25. So is that math correct? And I’m just wondering, would that imply like a bit of a slowdown, that you’re starting the Year at for consumables given equipment is stronger. I know, Matt, you talked about conservatism, but it’s such a focus.

I just want to kind of flush out how you’re thinking about the starting point for the 26 guide.

Rainer M. Blair

Yeah. Make it very, very clear here. Bioprocessing on the consumable side for the year and for Q1, our assumption is that we’ll grow single digits and it’s probably going to be at the upper end of high single digits. We are assuming equipment is going to be flat for the year and that bioprocessing will be all up all in high single digits for the year. I think what we’re, what you’re probably referring to is if you look at bioprocessing, the segment you’ve got Discovery and medical in there as well. And so I think Discovery and medical for Q1 we’ve kind of said it’s going to be flat.

It might be up a couple bit. I think the rest of the year for Discovery and medical is going to be flat, maybe down a little. And so kind of balance that out. You know, you’re going to have high single digits out of, out of consumables or sorry, out of bioprocessing and consumables. No change whatsoever to what we’ve seen in the end markets and no change to what we have been talking about for a while now. So I think really the wild card is what does DNM do for the segment. But just to be perfectly clear, we are not seeing any sort of change or slowdown in bioprocessing.

Dan Brennan

Okay, great. And then maybe just a final question, just back to life sciences. I know Ryan, you gave a lot of color so far on the kind of moving pieces there. But you know, academic, I don’t know, Maybe it’s like 15 to 20% of life sciences, I’m guessing. So that remains muted. And I know in your guide you kind of mentioned ongoing macro pressure, but I would think pharma is a big part of life sciences and I would think with MFN and tariffs kind of behind us, hopefully you could see a really nice recovery on ezcoms from pharma.

So could you just unpack a little bit like on the pharma piece, kind of what you’re seeing in life sciences and kind of how you kind of guide it and you know, is there the chance for that to get better in 26? Thank you.

Rainer M. Blair

So our life science end markets in order of priority and size are pharma, clinical, applied, academic, and government. The pharmacist has shown growth here for three quarters in a row in our business. And that’s the recovery in investment that we’ve seen out of PhRMA. Once the most favored nation deals have come to fruition and more confidence has returned to that market. And when we say we expect end markets in life sciences to continue to improve, we’re referring specifically to the pharma end market. We expect the clinical. So think of research, use only testing, that sort of thing.

We expect that to remain stable, as do we expect the applied market to remain stable. So no significant change there. Those are robust, they’re doing fine. And then you have academic and government that’s muted, softer, there’s still some noise there. And then represents another potential upside as the policy situation stabilizes and finds its momentum again.

Dan Brennan

Great. Thank you.

operator

Thank you. And we have reached our allotted time for questions. I will now turn the call back to John Bedford for closing remarks.

Rainer M. Blair

Thank you, Nikki and everybody.

operator

We’re around for comments the rest of the day. Thanks.

operator

Thank you. This brings us to the end of Danaher Corporation’s fourth quarter 2025 earnings results conference call. We appreciate your time and participation.

operator

You may now disconnect.