Danaher Corporation
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide material information relevant to an assessment of Danaher Corporation’s (“Danaher,” the “Company,” “we,” “us” or “our”) financial condition and results of operations, including an evaluation of the amounts and certainty of cash flows from operations and from outside sources. The MD&A is designed to focus specifically on material events and uncertainties known to management that are reasonably likely to cause reported financial information not to be necessarily indicative of future operating results or of future financial condition. This includes descriptions and amounts of matters that have had a material impact on reported operations, as well as matters that are reasonably likely based on management’s assessment to have a material impact on future operations. The Company’s MD&A is divided into five sections:
•Information Relating to Forward-Looking Statements
•Overview
•Results of Operations
•Liquidity and Capital Resources
•Critical Accounting Estimates
You should read this discussion along with the Company’s MD&A and audited financial statements and Notes thereto as of and for the year ended December 31, 2025, included in the Company’s 2025 Annual Report and the Company’s Consolidated Condensed Financial Statements and related Notes as of and for the three-month period ended March 27, 2026 included in this Quarterly Report on Form 10-Q (“Report”).
INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS
Certain statements included or incorporated by reference in this Report, in other documents we file with or furnish to the Securities and Exchange Commission, in our press releases, webcasts, conference calls, presentations, materials delivered to shareholders and other communications, are “forward-looking statements” within the meaning of the U.S. federal securities laws. All statements other than historical factual information are forward-looking statements, including without limitation statements regarding: projections of tariff or other trade-related impacts, revenue, expenses, profit, profit margins, asset values, pricing, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, our liquidity position or other projected financial measures; management’s plans and strategies for future operations, including statements relating to anticipated operating performance, customer demand, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions and the integration thereof (including our pending acquisition of Masimo Corporation, which is further described in Note 2), divestitures, spin-offs, split-offs, initial public offerings, other securities offerings or other distributions, strategic opportunities, stock repurchases, dividends, executive compensation and potential executive stock sales or purchases; growth, declines and other trends in markets we sell into; future, new or modified laws, regulations, accounting pronouncements or public policy changes; regulatory approvals and the timing and conditionality thereof; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; future currency exchange rates and fluctuations in those rates; the potential or anticipated direct or indirect impact of public health crises, climate change, military or geopolitical conflicts or other man-made or natural disasters on our business, results of operations and/or financial condition; general economic and capital markets conditions; the anticipated timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that Danaher intends or believes will or may occur in the future. Terminology such as “believe,” “anticipate,” “assume,” “continue,” “should,” “could,” “intend,” “will,” “plan,” “aim,” “expect,” “estimate,” “project,” “target,” “can,” “may,” “possible,” “potential,” “upcoming,” “forecast” and “positioned” and similar references to future periods are intended to identify forward-looking statements, although not all forward-looking statements are accompanied by such words.
Forward-looking statements are based on assumptions and assessments made by our management in light of their experience and perceptions of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Forward-looking statements are not guarantees of future performance and actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Important factors, risks and uncertainties that in the future could cause actual results to differ materially from those envisaged in the forward-looking statements, and that in some cases have affected us in the past, include the following:
Business and Strategic Risks
•Conditions in the global economy, the particular markets we serve and the financial markets can adversely affect our business and financial statements.
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•We face intense competition and if we are unable to compete effectively, we may experience decreased demand and decreased market share. Even if we compete effectively, we may be required to reduce the prices we charge.
•Our growth depends on the timely development and commercialization, and customer acceptance, of new and enhanced products and services (in this Report, references to products and services also includes software), based on technological innovation. Our growth also suffers when the markets into which we sell our products and services decline, do not grow as anticipated or experience cyclicality.
•The healthcare industry and related industries that we serve are undergoing significant changes in an effort to reduce (and increase the predictability of) costs, which can adversely affect our business and financial statements.
•Economic, political, geopolitical, legal, compliance, social and business factors, both in the U.S. and outside the U.S., can negatively affect our business and financial statements. For example, the 2025 change in the U.S. administration as well as recent Supreme Court decisions have resulted in policy, regulatory and economic changes, challenges and uncertainty, including with respect to tariffs and healthcare-related topics. In addition, recent escalation of conflict in the Middle East has heightened geopolitical instability and economic uncertainty.
•The development, deployment and use of artificial intelligence in our business and products, and uncertainties with respect thereto, may result in harm to our business and reputation.
•Global health crises, pandemics, epidemics or other outbreaks can adversely impact certain elements of our business and financial statements.
•Business partners and other third-parties we rely on for development, supply and/or marketing of certain products, potential products and technologies could fail to perform sufficiently.
Acquisitions, Divestitures and Investment Risks
•The inability to consummate acquisitions at our historical rate and appropriate prices, realize the economic benefits of consummated acquisitions or to make appropriate investments that support our long-term strategy, can negatively impact our business. Our acquisition of businesses (including our pending acquisition of Masimo Corporation), investments, joint ventures and other strategic relationships can also negatively impact our business and financial statements and our indemnification rights may not fully protect us from liabilities related thereto.
•Divestitures or other dispositions could negatively impact our business, and contingent liabilities from businesses that we or our predecessors have previously disposed could adversely affect our business and financial statements. For example, we could incur significant liability if any of the split-off or spin-off transactions we have previously consummated are determined to be a taxable transaction or otherwise pursuant to our indemnification obligations with respect to such transactions.
Operational Risks
•Significant disruptions in, or breaches in security of, our information technology (“IT”) systems or data; data privacy violations; other losses or disruptions to facilities, supply chains, distribution systems or IT systems due to catastrophe; and labor disputes can all adversely affect our business and financial statements.
•Defects, manufacturing problems and unanticipated use or inadequate disclosure with respect to our products or services, or allegations thereof, can adversely affect our business and financial statements.
•Climate change, legal or regulatory measures to address climate change and other sustainability topics and any inability to address regulatory requirements or stakeholder expectations with respect to climate change and other sustainability topics, may negatively affect our business and financial statements.
•Our financial results are subject to fluctuations in the cost and availability of the supplies we use in, and the labor we need for, our operations, as well as adverse changes with respect to key distributors and channel partners.
•Our success depends on our ability to recruit, retain and motivate talented employees.
Intellectual Property Risks
•Any inability to adequately protect or avoid third-party infringement of our intellectual property, and third-party claims we are infringing intellectual property rights, can adversely affect our business and financial statements.
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•The U.S. government has certain rights with respect to incremental production capacity attributable to, and/or the intellectual property we have developed using, government financing. In addition, in times of national emergency the U.S. government could also control our allocation of manufacturing capacity.
Financial and Tax Risks
•From time to time our outstanding debt has increased significantly as a result of acquisitions and other factors, and we expect to incur additional debt. For example, the Company expects to incur debt to finance a portion of the purchase price for our pending acquisition of Masimo Corporation. Our indebtedness may limit our operations and use of cash flow and negatively impact our credit ratings; and failure to comply with our indebtedness-related covenants could adversely affect our business and financial statements.
•Our business and financial statements can be adversely affected by foreign currency exchange rates, changes in our tax rates (including as a result of changes in tax laws) or income tax liabilities/assessments, the outcome of tax audits, recognition of impairment charges for our goodwill or other intangible assets and fluctuations in the cost and availability of commodities.
Legal, Regulatory, Compliance and Reputational Risks
•Significant developments or changes in national laws or policies to protect or promote domestic interests and/or address foreign competition can have an adverse effect on our business and financial statements.
•Our businesses are subject to extensive regulation (including those applicable to the healthcare industry). Failure to comply with those regulations (including by our employees, agents or business partners) or significant developments or changes in U.S. or non-U.S. laws or policies can adversely affect our business and financial statements.
•We are subject to, or otherwise responsible for, a variety of litigation and other legal and regulatory proceedings in the course of our business that can adversely affect our business and financial statements.
•With respect to the regulated medical devices we offer, product introductions or modifications can require regulatory clearance or authorizations and we can be required to recall or cease marketing such products; off-label marketing can result in penalties; and clinical trials can have results that are unexpected or are perceived unfavorably by the market, all of which can adversely affect our business and financial statements.
•Our operations, products and services also expose us to the risk of environmental, health and safety liabilities, costs and violations that can adversely affect our business and financial statements.
•Our By-law exclusive forum provisions could limit our stockholders’ ability to choose their preferred judicial forum for disputes.
See “Part I—Item 1A. Risk Factors” of the Company’s 2025 Annual Report and Part II-Item 1A of this report for further discussion regarding reasons that actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Forward-looking statements speak only as of the date of the report, document, press release, webcast, call, presentation, materials or other communication in which they are made. Except to the extent required by applicable law, we do not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.
OVERVIEW
General
As a result of the Company’s geographic and industry diversity, the Company faces a variety of opportunities and challenges, including rapid technological development (particularly with respect to computing, automation, artificial intelligence, mobile connectivity and digitization) in most of the Company’s served markets, the expansion and evolution of opportunities in high-growth markets, trends and costs associated with a global labor force, consolidation of the Company’s competitors, increasing regulation and a rapidly evolving global trade environment. The Company operates in a highly competitive business environment in most markets, and the Company’s long-term growth and profitability will depend in particular on its ability to expand its business in high-growth geographies and high-growth market segments, identify, consummate and integrate appropriate acquisitions and identify and consummate appropriate investments and strategic partnerships, develop innovative and differentiated new products and services with higher gross profit margins, expand and improve the effectiveness of the Company’s sales force, continue to reduce costs and improve operating efficiency and quality and effectively address the demands of an increasingly regulated global environment and the evolving trade environment. The Company is making significant investments, organically and through acquisitions and investments, to address the rapid pace of technological change in its served markets and to position its manufacturing,
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research and development and customer-facing resources to be responsive to the Company’s customers throughout the world and improve the efficiency of the Company’s operations.
Business Performance and Outlook
During the first quarter of 2026, the Company’s overall revenues and core sales increased 3.5% and 0.5%, respectively, compared to the comparable period of 2025. The increase in core sales is due to higher core sales in the Biotechnology and Life Sciences segments that were largely offset by lower core sales in the Diagnostics segment. In the three-month period ended March 27, 2026, the impact of foreign currency increased reported sales by 3.0%. Price changes did not have a significant impact on sales growth on a year-over-year basis during the three-month period ended March 27, 2026 and are reflected as a component of core sales above. For the definitions of “core sales” and “acquisitions” refer to “—Results of Operations” below.
Geographically, the Company’s sales in the three-month period ended March 27, 2026 in developed markets increased year-over-year by 3% and core sales in developed markets were down slightly as mid-single digit core sales decreases in North America were largely offset by a mid-single digit increase in Western Europe. The decrease in core sales in developed markets was primarily driven by decreases in the Diagnostics and Life Sciences segments, partially offset by increased year-over-year core sales in the Biotechnology segment. For the same period, sales in high-growth markets increased year-over-year by 6% and core sales were up low-single digits driven primarily by a mid-single digit increase in core revenue in China. In the high-growth markets, the Biotechnology and Life Sciences segments’ increase in demand was partially offset by core sales declines in the Diagnostics segment. High-growth markets represented approximately 27% of the Company’s total sales in the first quarter of 2026. For additional information regarding the Company’s sales by geographical region during the three-month periods ended March 27, 2026 and March 28, 2025, refer to Note 4 to the accompanying Consolidated Condensed Financial Statements.
The Company’s net earnings for the three-month period ended March 27, 2026 totaled approximately $1.0 billion or $1.45 per diluted common share, compared to $954 million or $1.32 per diluted common share for the three-month period ended March 28, 2025. The increase in net earnings and diluted net earnings per common share for the three-month period ended March 27, 2026 compared to the three-month period ended March 28, 2025 was primarily driven by increased core sales and lower net interest expense.
Currency exchange rates increased reported sales by approximately 3.0% for the three-month period ended March 27, 2026, compared to the comparable period of 2025, primarily due to the exchange rates of the U.S. dollar compared to the euro and other major currencies. In future periods, strengthening of the U.S. dollar against other major currencies compared to the exchange rates in effect as of March 27, 2026 would adversely impact the Company’s sales and results of operations on an overall basis, and weakening of the U.S. dollar against other major currencies compared to the exchange rates in effect as of March 27, 2026 would positively impact the Company’s sales and results of operations. In addition to the translational exchange rate risk to sales, the Company also faces transactional exchange rate risk from transactions with customers in countries outside the U.S. and from intercompany transactions between affiliates. Transactional exchange rate risk (and any resulting gains or losses) arises from the purchase and sale of goods and services in currencies other than the Company’s functional currency or the functional currency of its applicable subsidiary.
Danaher operates a diversified global supply chain and sources parts and materials globally. In February 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act (“IEEPA”), which the U.S. administration relied on to impose certain tariffs, does not authorize the administration to impose tariffs. On March 4, 2026, the U.S. Court of International Trade ordered the U.S. Customs and Border Protection (“CBP”) to process refunds of the IEEPA tariffs, although the Court immediately suspended the order while the CBP determines a refund process. The IEEPA tariffs remain subject to ongoing litigation between the administration and other parties. In response to the U.S. Supreme Court ruling mentioned above, the administration announced plans to implement new tariffs under alternative statutory authority. The full impact of the U.S. Supreme Court’s ruling and the administration’s response, including the timing and extent of any refunds and the impact of the new tariffs, remain uncertain. The tariffs enacted in 2025 and in the first quarter of 2026 did not have a material impact on the Company’s business or financial statements in the periods presented.
While the Company did not experience material interruption to its supply chain or operations in the first quarter of 2026 as a result of the conflict in the Middle East, the Company did experience delays and higher logistics costs in the delivery of goods to customers in the region. The conflict has significantly reduced the export of oil and natural gas from the Persian Gulf, creating upward pressure on oil and natural gas prices, and has also disrupted and increased the costs of certain other supplies. Refer to “Part II - Other Information - Item 1A - Risk Factors” for a further discussion of the risks relating to the conflict in the Middle East. To the extent the conflict continues and/or escalates, the negative impacts noted above may continue or increase, the risks referenced above may eventuate and demand for the Company’s products could be adversely affected.
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RESULTS OF OPERATIONS
Non-GAAP Measures
In this Report, references to the non-GAAP measure of core sales (also referred to as core revenues or sales/revenues from existing businesses) refer to sales calculated according to U.S. GAAP, but excluding:
•sales from acquired businesses (as defined below); and
•the impact of currency translation.
References to sales or operating profit attributable to acquisitions or acquired businesses refer to sales or operating profit, as applicable, from acquired businesses recorded prior to the first anniversary of the acquisition less any sales and operating profit, during the applicable period, attributable to divested product lines not considered discontinued operations. The portion of revenue attributable to currency translation is calculated as the difference between:
•the period-to-period change in revenue (excluding sales from acquired businesses (as defined above)); and
•the period-to-period change in revenue (excluding sales from acquired businesses (as defined above)) after applying current period foreign exchange rates to the prior year period.
Core sales growth (decline) should be considered in addition to, and not as a replacement for or superior to, sales, and may not be comparable to similarly titled measures reported by other companies. Management believes that reporting this non-GAAP financial measure provides useful information to investors by helping identify underlying growth trends in Danaher’s business and facilitating comparisons of Danaher’s revenue performance with its performance in prior and future periods and to Danaher’s peers. Management also uses this non-GAAP financial measure to measure the Company’s operating and financial performance and uses core sales growth as one of the performance measures in the Company’s executive short-term cash incentive compensation program. The Company excludes the effect of currency translation from this measure because currency translation is not under management’s control, is subject to volatility and can obscure underlying business trends. The Company excludes the effect of acquisitions and divestiture-related items because the nature, size, timing and number of acquisitions and divestitures can vary dramatically from period-to-period and between the Company and its peers and can also obscure underlying business trends and make comparisons of long-term performance difficult.
Throughout this discussion, references to sales growth or decline refer to the impact of both price and unit sales and references to productivity improvements generally refer to improved cost-efficiencies resulting from the ongoing application of the Danaher Business System.
Sales Growth and Core Sales Growth
| % Change Three-Month Period Ended March 27, 2026 vs. Comparable 2025 Period | |||||||||
| Total sales growth (GAAP) | 3.5 | % | |||||||
| Impact of: | |||||||||
| Currency exchange rates | (3.0) | % | |||||||
| Core sales growth (non-GAAP) | 0.5 | % | |||||||
Operating Profit Performance
Operating profit margins increased 40 basis points from 22.2% during the three-month period ended March 28, 2025 to 22.6% for the three-month period ended March 27, 2026.
First quarter 2026 vs. first quarter 2025 operating profit margin comparisons were favorably impacted by:
•Higher first quarter 2026 core sales and improvements in leverage in the Company’s operational and administrative cost structure, net of the impact of product mix - 40 basis points
•First quarter 2025 impairment charge related to a facility in the Biotechnology segment - 25 basis points
First quarter 2026 vs. first quarter 2025 operating profit margin comparisons were unfavorably impacted by:
•First quarter 2026 transaction costs related to the anticipated acquisition of Masimo Corporation (“Masimo”) in the Diagnostics segment - 25 basis points
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Business Segments
Sales by business segment for each of the periods indicated were as follows ($ in millions):
| Three-Month Period Ended | |||||||||||||||||||
| March 27, 2026 | March 28, 2025 | ||||||||||||||||||
| Biotechnology | $ | 1,797 | $ | 1,612 | |||||||||||||||
| Life Sciences | 1,737 | 1,680 | |||||||||||||||||
| Diagnostics | 2,417 | 2,449 | |||||||||||||||||
| Total | $ | 5,951 | $ | 5,741 | |||||||||||||||
For information regarding the Company’s sales by geographical region, refer to Note 4 to the accompanying Consolidated Condensed Financial Statements.
BIOTECHNOLOGY
The Biotechnology segment offers a broad range of equipment, consumables, software and services that are primarily used by customers to advance and accelerate the research, development, manufacture and delivery of biological medicines. The Company’s solutions support a broad range of biotherapeutics including monoclonal antibodies, recombinant proteins, replacement therapies such as insulin and vaccines, as well as novel cell, gene, mRNA and other nucleic acid therapies.
Biotechnology Selected Financial Data
| Three-Month Period Ended | |||||||||||||||||||
| ($ in millions) | March 27, 2026 | March 28, 2025 | |||||||||||||||||
| Sales | $ | 1,797 | $ | 1,612 | |||||||||||||||
| Operating profit | 534 | 441 | |||||||||||||||||
| Depreciation | 40 | 34 | |||||||||||||||||
| Amortization of intangible assets | 234 | 213 | |||||||||||||||||
| Operating profit as a % of sales | 29.7 | % | 27.4 | % | |||||||||||||||
| Depreciation as a % of sales | 2.2 | % | 2.1 | % | |||||||||||||||
| Amortization as a % of sales | 13.0 | % | 13.2 | % | |||||||||||||||
Sales Growth and Core Sales Growth
| % Change Three-Month Period Ended March 27, 2026 vs. Comparable 2025 Period | |||||||||||||
| Total sales growth (GAAP) | 11.5 | % | |||||||||||
| Impact of: | |||||||||||||
| Currency exchange rates | (4.5) | % | |||||||||||
| Core sales growth (non-GAAP) | 7.0 | % | |||||||||||
Price increases in the segment contributed 2.0% to sales growth on a year-over-year basis during the three-month period ended March 27, 2026 and are reflected as a component of core sales above.
Total segment sales increased 11.5% during the three-month period. The increase in segment sales in the three-month period was led by increased core sales, and to a lesser extent by the impact of currency exchange rates. The year-over-year increase in total segment core sales was led by increased sales of consumables, partially offset by lower equipment sales. Geographically, the increase in core sales was led by Western Europe and China, partially offset by North America.
The year-over-year increase in core sales in the segment was led by high-single digit increases in core sales in the bioprocessing business and was primarily driven by improved consumables demand from large pharmaceutical customers, partially offset by lower equipment sales. Core sales in the discovery and medical business decreased year-over-year as increased core sales of medical filtration and research consumables was more than offset by lower core sales in protein research equipment, as academic customers continued to face funding constraints.
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Operating Profit Performance
Operating profit margins increased 230 basis points during the three-month period ended March 27, 2026 as compared to the comparable period of 2025. The following factors favorably impacted year-over-year operating profit margin:
•Higher first quarter 2026 core sales, net of the impact of changes in leverage from the Company’s operations and administrative cost structure and the impact of currency exchange rates - 140 basis points
•First quarter 2025 impairment charge related to a facility - 90 basis points
Amortization of intangible assets as a percentage of sales decreased during the three-month period ended March 27, 2026 as compared to the comparable period of 2025, primarily as a result of the increase in sales.
LIFE SCIENCES
The Life Sciences segment offers a broad range of instruments, consumables, services and software that are primarily used by customers to study the basic building blocks of life, including DNA and RNA, nucleic acid, proteins, metabolites and cells, in order to understand the causes of disease, identify new therapies, and test and manufacture new drugs, vaccines and gene editing technologies. Additionally, the segment provides products and consumables used to filter and remove contaminants from a variety of liquids and gases in many end-market applications.
Life Sciences Selected Financial Data
| Three-Month Period Ended | |||||||||||||||||||
| ($ in millions) | March 27, 2026 | March 28, 2025 | |||||||||||||||||
| Sales | $ | 1,737 | $ | 1,680 | |||||||||||||||
| Operating profit | 225 | 201 | |||||||||||||||||
| Depreciation | 48 | 45 | |||||||||||||||||
| Amortization of intangible assets | 152 | 149 | |||||||||||||||||
| Operating profit as a % of sales | 13.0 | % | 12.0 | % | |||||||||||||||
| Depreciation as a % of sales | 2.8 | % | 2.7 | % | |||||||||||||||
| Amortization as a % of sales | 8.8 | % | 8.9 | % | |||||||||||||||
Sales Growth and Core Sales Growth
| % Change Three-Month Period Ended March 27, 2026 vs. Comparable 2025 Period | |||||||||
| Total sales growth (GAAP) | 3.5 | % | |||||||
| Impact of: | |||||||||
| Currency exchange rates | (3.0) | % | |||||||
| Core sales growth (non-GAAP) | 0.5 | % | |||||||
Price changes in the segment did not have a significant impact on sales growth on a year-over-year basis during the three-month period ended March 27, 2026 and are reflected as a component of core sales above.
Total segment sales increased 3.5% during the three-month period ended March 27, 2026. The sales increase was primarily driven by currency exchange rates, and to a lesser extent an increase in core sales. The year-over-year increase in total segment core sales in the three-month period ended March 27, 2026 was driven by an increase in consumables sales, partially offset by decreased demand for equipment. Demand from academic and government customers was muted in the first quarter, with some areas of improving activity. The Company continues to see a gradual improvement in large pharma and biopharma customers. Geographically, the core sales increase was led by China.
The year-over-year increase in segment core sales in the three-month period was led by the filtration business and the life sciences consumables businesses. The year-over-year core sales increase in the filtration business was driven by increased demand in the microelectronic end-market, primarily in China. In the life sciences consumables businesses the year-over-year core sales increase was primarily driven by increased demand for plasmids products, partially offset by lower demand for gene reading and gene writing and editing products. In the life science instruments businesses, core sales decreased year-over-year as lower equipment demand more than offset increased demand for consumables, driven by the microscopy and mass spectrometry businesses.
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Operating Profit Performance
Operating profit margins increased 100 basis points during the three-month period ended March 27, 2026 as compared to the comparable period of 2025. Year-over-year operating profit margin was favorably impacted by higher first quarter 2026 core sales, improvements in leverage in the segment’s operational and administrative cost structure and the impact of currency exchange rates, net of the impact of product mix.
DIAGNOSTICS
The Diagnostics segment offers clinical instruments, consumables, software and services that hospitals, physicians’ offices, reference laboratories and other critical care settings use to diagnose disease and make treatment decisions.
Diagnostics Selected Financial Data
| Three-Month Period Ended | |||||||||||||||||||
| ($ in millions) | March 27, 2026 | March 28, 2025 | |||||||||||||||||
| Sales | $ | 2,417 | $ | 2,449 | |||||||||||||||
| Operating profit | 674 | 718 | |||||||||||||||||
| Depreciation | 102 | 100 | |||||||||||||||||
| Amortization of intangible assets | 48 | 48 | |||||||||||||||||
| Operating profit as a % of sales | 27.9 | % | 29.3 | % | |||||||||||||||
| Depreciation as a % of sales | 4.2 | % | 4.1 | % | |||||||||||||||
| Amortization as a % of sales | 2.0 | % | 2.0 | % | |||||||||||||||
Sales Decline and Core Sales Decline
| % Change Three-Month Period Ended March 27, 2026 vs. Comparable 2025 Period | |||||||||
| Total sales decline (GAAP) | (1.5) | % | |||||||
| Impact of: | |||||||||
| Currency exchange rates | (2.5) | % | |||||||
| Core sales decline (non-GAAP) | (4.0) | % | |||||||
Price decreases in the segment of 2.0%, attributable to the volume-based procurement program in China and the impact of sales promotions, negatively impacted the year-over-year change in sales during the three-month period ended March 27, 2026 and are reflected as a component of core sales above.
Total segment sales decreased 1.5% during the three-month period primarily as a result of decreased core sales, partially offset by the impact of currency exchange rates. The decrease in segment core sales was primarily driven by decreased year-over-year demand for respiratory tests in the molecular diagnostics business, partially offset by increased demand in the clinical diagnostics businesses. Geographically, the core sales decrease was led by North America and China. The core sales decrease in China was partially attributable to the pricing impact of China’s volume-based procurement program and healthcare reimbursement changes.
During the three-month period ended March 27, 2026, core sales in the molecular diagnostics business declined year-over-year as increased core sales of non-respiratory tests were more than offset by decreased core sales of respiratory tests. The decreased demand for respiratory tests was driven primarily by a less severe respiratory season in the first quarter of 2026 compared to the comparable period of 2025. The relative severity of the upcoming respiratory season and the timing of customer purchases in the first quarter of 2026 in preparation of such respiratory season could adversely impact demand for such tests over the remainder of 2026. In the segment’s clinical diagnostics businesses core sales increased year-over-year in the first quarter of 2026, led by the clinical lab business, and to a lesser extent by the pathology diagnostics business. In the clinical lab businesses, increased year-over-year core sales outside of China, led by North America, more than offset core sales declines in China in the three-month period.
Operating Profit Performance
Operating profit margin decreased 140 basis points during the three-month period ended March 27, 2026 as compared to the comparable period of 2025. The following factors unfavorably impacted year-over-year operating profit margin:
•Lower first quarter 2026 core sales and the impact of product mix, net of improvements in leverage in the segment’s operational and administrative cost structure - 75 basis points
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•First quarter 2026 transaction costs related to the anticipated acquisition of Masimo - 65 basis points
COST OF SALES AND GROSS PROFIT
| Three-Month Period Ended | |||||||||||||||||||
| ($ in millions) | March 27, 2026 | March 28, 2025 | |||||||||||||||||
| Sales | $ | 5,951 | $ | 5,741 | |||||||||||||||
| Cost of sales | (2,360) | (2,230) | |||||||||||||||||
| Gross profit | $ | 3,591 | $ | 3,511 | |||||||||||||||
| Gross profit margin | 60.3 | % | 61.2 | % | |||||||||||||||
Cost of sales increased year-over-year during the three-month period ended March 27, 2026 as compared to the comparable period in 2025. The increase was primarily due to the impact of higher year-over-year sales volumes and currency exchange rates. These increases were partially offset by a $15 million impairment charge related to a facility in the Biotechnology segment recorded in 2025.
Year-over-year gross profit margin decreased during the three-month period ended March 27, 2026 as compared to the comparable period in 2025 primarily due to product mix, the impact of currency exchange rates and tariff costs, partially offset by the impact of continued productivity improvement initiatives and higher year-over-year sales volumes. Gross margin was also impacted by the facility impairment recorded in 2025, referenced above.
OPERATING EXPENSES
| Three-Month Period Ended | |||||||||||||||||||
| ($ in millions) | March 27, 2026 | March 28, 2025 | |||||||||||||||||
| Sales | $ | 5,951 | $ | 5,741 | |||||||||||||||
| Selling, general and administrative expenses | 1,860 | 1,858 | |||||||||||||||||
| Research and development expenses | 387 | 379 | |||||||||||||||||
| SG&A as a % of sales | 31.3 | % | 32.4 | % | |||||||||||||||
| R&D as a % of sales | 6.5 | % | 6.6 | % | |||||||||||||||
SG&A expenses as a percentage of sales decreased year-over-year during the three-month period ended March 27, 2026 as compared to the comparable period in 2025. Total SG&A expenses remained essentially flat year-over-year, as incremental year-over-year cost savings and lower year-over-year costs incurred for productivity improvement actions were offset by transaction costs incurred in 2026 of $17 million associated with the anticipated Masimo acquisition.
R&D expenses (consisting principally of internal and contract engineering personnel costs) as a percentage of sales declined slightly during the three-month period ended March 27, 2026 as compared to the comparable period of 2025.
OTHER INCOME (EXPENSE), NET
For a description of the Company’s other income (expense), net during the three-month periods ended March 27, 2026 and March 28, 2025, refer to Note 7 to the accompanying Consolidated Condensed Financial Statements.
INTEREST COSTS AND FINANCING
For a discussion of the Company’s outstanding indebtedness, refer to Note 10 to the accompanying Consolidated Condensed Financial Statements.
Interest expense of $63 million for the three-month period ended March 27, 2026 was $9 million lower than the comparable period of 2025, due primarily to the impact of currency exchange rates and interest rates, partially offset by higher average borrowings.
Interest income of $27 million for the three-month period ended March 27, 2026 was $21 million higher than the comparable period of 2025, due primarily to higher average cash balances in 2026 compared to 2025.
INCOME TAXES
The following table summarizes the Company’s effective tax rate:
| Three-Month Period Ended | |||||||||||||||||||
| March 27, 2026 | March 28, 2025 | ||||||||||||||||||
| Effective tax rate | 16.7 | % | 15.5 | % | |||||||||||||||
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The Company operates globally, including in certain jurisdictions with lower tax rates than the U.S. federal statutory rate. Therefore, the impact of Danaher’s global operations and benefits from tax credits and incentives contributes to a lower effective tax rate compared to the U.S. federal statutory tax rate. For each period presented, the effective tax rate differs from the U.S. federal statutory rate of 21.0% principally due to the impact of the Company’s global operations, research tax credits, foreign-derived intangible income and aggregate net discrete benefits or charges.
For the three-month period ended March 27, 2026, there was no net discrete tax impact, as the release of reserves for uncertain tax positions due to the expiration of statutes of limitations was offset by charges related to changes in estimates associated with prior period uncertain tax positions.
For the three-month period ended March 28, 2025, net discrete tax benefits of $10 million reduced the effective tax rate by 0.9% and related primarily to changes in estimates of prior year tax filing positions, release of reserves for uncertain tax positions due to the expiration of statutes of limitations and excess tax benefits from stock-based compensation, net of charges related to changes in estimates associated with prior period uncertain tax positions.
The Company (including its subsidiaries) conducts business globally, and files numerous consolidated and separate income tax returns in federal, state and foreign jurisdictions. In addition to the Company’s significant presence in the U.S., the Company also has a significant presence in China, Denmark, Germany, Singapore, Sweden, Switzerland and the United Kingdom. Excluding these jurisdictions, the Company believes that a change in the statutory tax rate of any individual foreign country would not have a material impact on the Company’s financial statements given the geographical dispersion of the Company’s taxable income.
The Company and its subsidiaries are routinely examined by various U.S. and non-U.S. taxing authorities. The IRS has completed substantially all of the examinations of the Company’s federal income tax returns through 2015 and is currently examining certain of the Company’s federal income tax returns for 2016 through 2022. In addition, the Company has subsidiaries in Canada, China, Denmark, France, Germany, India, Italy, Switzerland, the United Kingdom and various other countries, states and provinces that are currently under audit for years ranging from 2004 through 2024.
In the fourth quarter of 2022, the IRS proposed significant adjustments to the Company’s taxable income for the years 2016 through 2018 with respect to the deferral of tax on certain premium income related to the Company’s self-insurance programs. For income tax purposes, the recognition of premium income has been deferred in accordance with U.S. tax laws related to insurance. The proposed adjustments would have increased the Company’s taxable income over the 2016 through 2018 periods by approximately $2.5 billion. In the first quarter of 2023, the Company settled these proposed adjustments with the IRS, although the audit is still open with respect to other matters for the 2016 through 2018 period. The impact of the settlement with respect to the Company’s self-insurance policies was not material to the Company’s financial statements, including cash flows and the effective tax rate. As the settlement with the IRS was specific to the audit period, the settlement does not preclude the IRS from proposing similar adjustments to the Company’s self-insurance programs with respect to periods after 2018. Management believes the positions the Company has taken in its U.S. tax returns are in accordance with the relevant tax laws.
The Company expects its effective tax rate for the remainder of 2026 to be approximately 17.0% based on its projected mix of earnings. The Company’s effective tax rate could vary as a result of many factors, including but not limited to the following:
•The expected rate for the remainder of 2026 includes the anticipated discrete income tax benefits from excess tax deductions related to the Company’s stock compensation programs, which are reflected as a reduction in tax expense, though the actual benefits (if any) will depend on the Company’s stock price and stock option exercise patterns.
•The actual mix of earnings by jurisdiction could fluctuate from the Company’s projection.
•The tax effects of other discrete items, including accruals related to tax contingencies, the resolution of worldwide tax matters, tax audit settlements, statute of limitations expirations and changes in tax regulations.
•Any additional future changes in tax law or the implementation of increases in tax rates, the impact of future regulations and any related additional tax planning efforts to address these changes.
As a result of the uncertainty in predicting these items, it is reasonably possible that the actual effective tax rate used for financial reporting purposes will change in future periods compared to the estimate above.
Refer to Note 6 to the accompanying Consolidated Condensed Financial Statements for discussion regarding the Company’s significant tax matters.
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COMPREHENSIVE INCOME
Comprehensive income decreased by approximately $1.9 billion for the three-month period ended March 27, 2026 as compared to the comparable period of 2025. For the three-month period ended March 27, 2026, the decrease in comprehensive income was primarily driven by increased losses from foreign currency translation adjustments and decreased gains from cash flow hedge adjustments, partially offset by higher net earnings. The Company recorded foreign currency translation losses of $394 million and gains of approximately $1.4 billion for the three-month periods ended March 27, 2026 and March 28, 2025, respectively. The foreign currency translation losses in the three-month period ended March 27, 2026 were primarily driven by the change in the exchange rates between the U.S. dollar, Swedish krona and the euro. Foreign currency translation adjustments reflect the gain or loss resulting from the impact of the change in currency exchange rates on the Company’s foreign operations as they are translated to the Company’s reporting currency, the U.S. dollar. The Company recorded gains of $7 million and $156 million from cash flow hedge adjustments related to the Company’s cross-currency swap derivative contracts for the three-month periods ended March 27, 2026 and March 28, 2025, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Management assesses the Company’s liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities. The Company continues to generate substantial cash from operating activities and believes that its operating cash flow, cash on hand and other sources of liquidity will be sufficient to allow it to continue investing in existing businesses (including capital expenditures), consummating strategic acquisitions and investments (including the Company’s pending acquisition of Masimo, which is further described in Note 2), paying interest and servicing debt, paying dividends and funding restructuring activities, as well as to repurchase common stock when deemed appropriate and manage its capital structure on a short-term and long-term basis.
The Company has relied primarily on borrowings under its commercial paper program to address liquidity requirements that exceed the capacity provided by its operating cash flows and cash on hand, while also accessing the capital markets from time to time including to secure financing for more significant acquisitions or to take advantage of favorable interest rate environments or other market conditions. Subject to any limitations that may result from market disruptions, the Company anticipates following the same approach in the future.
Overview of Cash Flows and Liquidity
Following is an overview of the Company’s cash flows and liquidity ($ in millions):
| Three-Month Period Ended | |||||||||||
| March 27, 2026 | March 28, 2025 | ||||||||||
| Net cash provided by operating activities | $ | 1,322 | $ | 1,299 | |||||||
| Payments for additions to property, plant and equipment | $ | (237) | $ | (245) | |||||||
| Proceeds from sales of property, plant and equipment | — | 6 | |||||||||
| Payments for purchases of investments | (20) | (18) | |||||||||
| Proceeds from sales of investments | — | 5 | |||||||||
| Proceeds from sale of product line | — | 9 | |||||||||
| All other investing activities | 8 | 1 | |||||||||
| Total cash used in investing activities | $ | (249) | $ | (242) | |||||||
| Payments for the issuance of common stock in connection with stock-based compensation, net | $ | (9) | $ | (5) | |||||||
| Payment of dividends | (226) | (194) | |||||||||
| Net proceeds from (repayments of) borrowings (maturities of 90 days or less) | 1,743 | (3) | |||||||||
| Borrowings (maturities longer than 90 days) | — | 4 | |||||||||
| Repayments of borrowings (maturities longer than 90 days) | (1,434) | — | |||||||||
| Payments for repurchase of common stock | — | (1,078) | |||||||||
| All other financing activities | (28) | 21 | |||||||||
| Total cash provided by (used in) financing activities | $ | 46 | $ | (1,255) | |||||||
As of March 27, 2026, the Company held approximately $5.7 billion of cash and cash equivalents.
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Operating Activities
Cash flows from operating activities can fluctuate significantly from period-to-period as working capital needs and the timing of payments for income taxes, restructuring activities and productivity improvement initiatives and other items impact reported cash flows.
Operating cash flows were approximately $1.3 billion for the first three months of 2026, an increase of $23 million, or 2%, as compared to the comparable period of 2025. The year-over-year change in operating cash flows from 2025 to 2026 was primarily attributable to the following factors:
•2026 operating cash flows reflected an increase of $75 million in net earnings for the first three months of 2026 as compared to the comparable period in 2025.
•Net earnings for the first three months of 2026 also included $14 million higher year-over-year noncash charges primarily for intangible asset amortization and depreciation, net of 2025 impairment charges. Depreciation expense relates to the Company’s manufacturing and operating facilities as well as instrumentation leased to customers under OTL arrangements. Depreciation, amortization, impairments and stock compensation are noncash expenses that decrease earnings without a corresponding impact to operating cash flows. Unrealized investment gains/losses impact net earnings without immediately impacting cash flows as the cash flow impact from investments occurs when the invested capital is returned to the Company.
•The aggregate of trade accounts receivable, inventories and trade accounts payable used $107 million in operating cash flows during the first three months of 2026, compared to $138 million of operating cash flows used in the comparable period of 2025. The amount of cash flow generated from or used by the aggregate of trade accounts receivable, inventories and trade accounts payable depends upon how effectively the Company manages the cash conversion cycle, which effectively represents the number of days that elapse from the day it pays for the purchase of raw materials and components to the collection of cash from its customers and can be significantly impacted by the timing of collections and payments in a period.
•The aggregate of prepaid expenses and other assets, deferred income taxes and accrued expenses and other liabilities used $362 million of operating cash flows during the first three months of 2026, compared to $265 million of operating cash flows used in the comparable period of 2025. The timing of cash outflows related to fourth quarter 2025 productivity improvement actions and other operating charges drove the majority of this change.
Investing Activities
Cash flows relating to investing activities consist primarily of cash used for acquisitions and capital expenditures, including instruments leased to customers, cash used for investments and cash proceeds from divestitures of businesses or assets.
Net cash used in investing activities increased $7 million in the three-month period ended March 27, 2026 compared to the comparable period of 2025, primarily as a result of the 2025 sale of a product line and lower proceeds from the sales of investments and property, plant and equipment, net of lower purchases of property, plant and equipment. In addition, during the three-month periods ended March 27, 2026 and March 28, 2025 the Company invested $20 million and $18 million, respectively, in non-marketable equity securities and partnerships.
Though the relative significance of particular categories of capital investment can change from period to period, capital expenditures are typically made for increasing manufacturing capacity, the manufacture of instruments that are used in OTL arrangements, replacing equipment, purchasing buildings, supporting new product development and improving information technology systems. Capital expenditures decreased $8 million on a year-over-year basis for the three-month period ended March 27, 2026 compared to the comparable period in 2025.
Financing Activities and Indebtedness
Cash flows relating to financing activities can consist of cash flows associated with the issuance and repayments of commercial paper, issuance and repayment of long-term debt, borrowings under committed credit facilities, issuance and repurchases of common stock, issuance of preferred stock and payments of cash dividends to shareholders. Financing activities provided cash of $46 million during the three-month period ended March 27, 2026 compared to approximately $1.3 billion of cash used in the comparable period of 2025. The year-over-year decrease in cash used in financing activities was primarily due to higher proceeds from short-term borrowings in 2026 compared to 2025 and cash used to repurchase the Company’s common stock in 2025, partially offset by the 2026 repayments of long-term borrowings.
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For a description of the Company’s outstanding debt as of March 27, 2026, repayments of long-term borrowings in the first quarter of 2026, entrance into a new credit facility in the second quarter of 2026 and the Company’s commercial paper programs and credit facilities, refer to Note 10 to the accompanying Consolidated Condensed Financial Statements. As of March 27, 2026, the Company was in compliance with all of its respective debt covenants.
Stock Repurchase Program
For information regarding the Company’s stock repurchase program and repurchases of common stock, refer to Part II—Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds”.
Dividends
Aggregate cash payments for dividends on Company common stock during the three-month period ended March 27, 2026 were $226 million compared to $194 million for the three-month period ended March 28, 2025. The increase in dividend payments on the Company’s common stock compared to the comparable period of 2025 is due to the increase in the quarterly dividend rate for common stock beginning with respect to the dividends paid in the second quarter of 2025, partially offset by lower average common stock outstanding.
In the first quarter of 2026, the Company declared a regular quarterly dividend of $0.40 per share of Company common stock payable on April 24, 2026 to holders of record as of March 27, 2026.
Cash and Cash Requirements
As of March 27, 2026, the Company held approximately $5.7 billion of cash and cash equivalents on deposit with financial institutions or invested in highly liquid investment-grade debt instruments with a maturity of 90 days or less. Of the cash and cash equivalents, approximately $3.3 billion was held within the U.S. and approximately $2.4 billion was held outside of the U.S. The Company will continue to have cash requirements to support general corporate purposes, which may include working capital needs, capital expenditures, acquisitions and investments, paying interest and servicing debt, paying taxes and any related interest or penalties, funding its restructuring activities and pension plans as required, paying dividends to shareholders, repurchasing shares of the Company’s common stock and supporting other business needs. The Company intends to use a portion of its cash on hand to finance a portion of the purchase price for the Masimo Acquisition.
Next expected filings
- ~2026-07-21 10-Q expected by 2026-08-05 (in 81 days)
- ~2026-10-20 10-Q expected by 2026-11-04 (in 172 days)
- ~2027-02-23 10-K expected by 2027-03-04 (in 298 days)
- ~2027-04-20 10-Q expected by 2027-05-05 (in 354 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-04-29 8-K Material Agreement Entered; Other Events; Financial Statements and Exhibits
- 2026-04-21 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-21 10-Q Quarterly Report
- 2026-04-17 8-K Material Agreement Entered; Material Financial Obligation; Financial Statements and Exhibits
- 2026-02-24 10-K Annual Report
- 2026-02-17 8-K Other Events; Financial Statements and Exhibits
- 2026-02-10 8-K Officer/Director Change; Financial Statements and Exhibits
- 2026-01-28 8-K Earnings Release; Financial Statements and Exhibits
- 2026-01-12 8-K Earnings Release; Financial Statements and Exhibits
- 2025-11-06 8-K Officer/Director Change; Financial Statements and Exhibits
- 2025-10-21 10-Q Quarterly Report
- 2025-10-21 8-K Earnings Release; Financial Statements and Exhibits
- 2025-09-10 8-K Bylaws/Articles Amended; Other Events; Financial Statements and Exhibits
- 2025-07-31 8-K Officer/Director Change; Financial Statements and Exhibits
- 2025-07-24 8-K Officer/Director Change; Financial Statements and Exhibits