Michael Ryskin — Managing Director, Bank of America
Great. Thanks for taking the question, guys, and congrats on the
Rainer Blair — President and CEO, Danaher Corporation
Morning, Mike.
Michael Ryskin — Managing Director, Bank of America
Morning, Rainer. Maybe just to kick things off, you, you're going you're opening with a 3%-6% core revenue guide. That's consistent with the kind of, 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, as you kind of do the, you know, the sum of the parts, it gets you closer to that 3%, which you, you know, you hinted at in the past. I'm just curious, you know, if you could talk about how much conservatism is embedded in that, or maybe, you know, what are the levers or what are the drivers you could see getting you closer to that six?
You know, where do 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 Blair — President and CEO, Danaher Corporation
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, that 3%-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 teams, 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 2025. But that is supported by our current backlog. Now, as we think about life sciences and our discovery in 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. In 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 U.S. 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 end markets as well. And then the other level is bioprocessing, where you know 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 mass production increasing. Those would be two areas that could produce additional upside to the guide.
Michael Ryskin — Managing Director, Bank of America
Okay. That, 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, more clarity on the confidence that's driving that 2026 outlook. You know, you've got, you still have easy comps in equipment, but a little bit tougher comps in consumables. So just for both the equipment on the consumable side, you know, what the orders look like exiting the year and how that supports next year's outlook.
Rainer Blair — President and CEO, Danaher Corporation
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 be. 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 in equipment as well. But one quarter of growth, we're not ready to call that a trend yet, but the orders coming out of the last three quarters are encouraging.
Michael Ryskin — Managing Director, Bank of America
All right. Thanks so much.
Rainer Blair — President and CEO, Danaher Corporation
Thanks, Mike.
Rainer Blair — President and CEO, Danaher Corporation
Good morning, Tycho.
Tycho Peterson — Managing Director of Global Equities, Jefferies
Hey, good morning. Rainer, would love to just hear a little bit more about, you know, the strength on SCIEX and, you know, 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 Blair — President and CEO, Danaher Corporation
So SCIEX 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 ZenoTOF 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 pharma end market, being at growth. The clinical and applied markets were robust as well. As you know, SCIEX is the gold standard there in 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, SCIEX's and the instruments group performance there in the fourth quarter.
Tycho Peterson — Managing Director of Global Equities, Jefferies
Okay. And then maybe one for Matt on margins. You know, we, 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, you know, initiatives on the call, but how should we think about kind of a full-year, you know, margin target and, and progression throughout the year?
Matt McGrew — EVP and CFO, Danaher Corporation
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, you know, 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 Rainer just alluded to. Put in the easier comps in China, DX and respiratory, I think what we'll see is sort of that low single digit growth kind of build through the year, and earnings is gonna 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 second half is certainly building out, but that's largely almost all the benefit from the cost actions in the fourth quarter.
Tycho Peterson — Managing Director of Global Equities, Jefferies
Okay. And then just lastly, quickly on bioprocessing. 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 bioprocessing. So curious if you're, you know, seeing anything abnormal there in terms of trend.
Rainer Blair — President and CEO, Danaher Corporation
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, it's 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 — Managing Director of Global Equities, Jefferies
Thank you.
Rainer Blair — President and CEO, Danaher Corporation
Thank you.
Rainer Blair — President and CEO, Danaher Corporation
Morning, Scott.
Scott Davis — Chairman and CEO, Melius Research
Good morning, guys.
Seems 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 the, 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 Blair — President and CEO, Danaher Corporation
Scott, I mean, this is traditional Danaher business system type of productivity improvement, where we're certainly consolidating rooftops, but also driving process efficiency, 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 — Chairman and CEO, Melius Research
Yeah. Okay. That's a good, a good non-answer, Rainer. 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, are you seeing a, a, a big pickup in orders here in January? Kind of, I, I know that you had a strong, you know, probably pre-order season and 4Q and such, but, have you seen a, a pretty sizable reload as you, as, as the cases have picked up?
Rainer Blair — President and CEO, Danaher Corporation
Well, we certainly in the second half of the fourth quarter saw the cases pick up quite significantly, and you've probably noted that in the ILI being as high 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've put out the perspective that we expect our first quarter respiratory to be around $500 million of revenue.
Scott Davis — Chairman and CEO, Melius Research
That's helpful. Thank you, Rainer. Best of luck.
Rainer Blair — President and CEO, Danaher Corporation
Thank you.
Scott Davis — Chairman and CEO, Melius Research
See you guys.
Rainer Blair — President and CEO, Danaher Corporation
Yep.
Rainer Blair — President and CEO, Danaher Corporation
Morning, Doug.
Doug Schenkel — Managing Director of Life Science Tools and Diagnostics, Wolfe Research
Morning, Rainer. Thanks for taking the questions. Starting on bioprocessing, you know, 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 demands into Q4? And/or is this just, you know, maybe some extra prudence as we sit here in January in what's been, you know, a tough environment and an unpredictable environment, you know, over the last few years?
Matt McGrew — EVP and CFO, Danaher Corporation
Yeah, 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 encouraging to see some growth and it signals your 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, you know, 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 gonna go ahead and guide to 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 — Managing Director of Life Science Tools and Diagnostics, Wolfe Research
Okay, that that is helpful, Matt. And pivoting to capital deployment, you know, the business is clearly stabilizing. You got solid free cash flow as always, debt to EBITDA below two. Can you just describe, you know, the M&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 move, you know, to move on something potentially more sizable and more aggressive if the opportunity were to present itself. Thank you.
Rainer Blair — President and CEO, Danaher Corporation
So Doug, I would say the M&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&A and our cultivation of those M&A targets, remain, 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 gonna 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.
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 flow-through that you see on the business and the cash flow, and of course, the balance sheet is primed.
Rainer Blair — President and CEO, Danaher Corporation
Morning, Jack.
Jack Meehan — Analyst, Nephron Research
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. 2025 is 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. You know, in so much that, you know, is it possible there were some push outs from earlier in the year that might have come in, you know, around year-end? Like, what can you build off of in 4Q versus what, you know, might be like an elevated base? Any thoughts on that?
Rainer Blair — President and CEO, Danaher Corporation
So, Jack, 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, 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 — Analyst, Nephron Research
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? You know, I'm just trying to think about the 100 basis points
Matt McGrew — EVP and CFO, Danaher Corporation
Yeah.
or more for the year.
Yeah, no, maybe, maybe let me give you just a little color on how we constructed the EPS guide of $8.35-$8.50, just to give you a simple frame of kind 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%-4%. Assuming 35%-40% fall through, we're going to. We've got a $0.30 benefit from the 2025 cost actions. So that's in that 100 basis points of margin expansion. It is inclusive of this $0.30 benefit. And that, as you remember, was the Q4 actions plus the savings, so it's $250 million. So that benefit is about $0.30.
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-$850. And so, you know, if we do better from a core growth perspective than 30%-34%, 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 — Analyst, Nephron Research
Okay. Thank you, guys.
Rainer Blair — President and CEO, Danaher Corporation
Morning, Patrick.
Patrick Donnelly — Managing Director, Citi
Hey, guys. Thanks for taking the question. Maybe a follow-up on Jack there on the Life Sciences business. Rainer, it sounds like things are improving, you know, across the board, Abcam, Aldevron, SCIEX. Can you just run through what you saw into year end on that front? You know, was there a good budget flush? And then similarly, as we look at 2026, 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, would love to dig into some of those verticals, Abcam, Aldevron, in particular.
Rainer Blair — President and CEO, Danaher Corporation
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 SCIEX and Beckman Coulter Life Sciences. And so we saw the pharma end market in particular do a little bit better than anticipated. There was just 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 2026, we expect that end markets, such as pharma, will continue to improve, that clinical and applied markets will stay stable.
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, 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 — Managing Director, Citi
Yep, and then maybe just the Abcam piece, Rainer. 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 Blair — President and CEO, Danaher Corporation
I mean, we're really encouraged by what we're seeing here at Abcam. 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 in 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 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 Abcam and expect to continue to see that trend here in 2026 as well.
Patrick Donnelly — Managing Director, Citi
Understood. And then maybe a little bit of a longer term one. I think as you build this year, it seems like, again, Rainer, I think you touched on the gradual recovery a few times. You know, as we exit this year and move forward, it certainly feels like we're approaching more level of normalcy. You know, 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 twenty-sixth, but as we look ahead, you know, 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 Blair — President and CEO, Danaher Corporation
Well, I mean, I would say it's too early to comment on 2027 and beyond, to the point you just made. But here, here's how we're thinking about it. I mean, fundamentally, our businesses are in excellent end markets, 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 — Managing Director, Citi
Understood. Thank you, guys.
Rainer Blair — President and CEO, Danaher Corporation
Gotcha.
Rainer Blair — President and CEO, Danaher Corporation
Hi, Dan.
Dan Leonard — Analyst, UBS
Thank you very much, hi, Rainer. 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 Blair — President and CEO, Danaher Corporation
So that emerging biotech sector for us has traditionally been in the sort of 15% of the business overall.
Matt McGrew — EVP and CFO, Danaher Corporation
It's probably more like 5% of overall Danaher, or 15% of bioprocessing, 10%-15%. So, I mean, it's not. It, it's there in some level of exposure, but it's not the majority of what we do, obviously.
Rainer Blair — President and CEO, Danaher Corporation
Yeah. 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%-15% is probably in the biotech area. We have been seeing some improved orders there in bioprocessing out of that space, but early days.
Dan Leonard — Analyst, UBS
Understood. Thank you. A quick follow-up, Rainer. 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 Blair — President and CEO, Danaher Corporation
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. 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 demand. So 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 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.
Dan Leonard — Analyst, UBS
Thank you very much.
Rainer Blair — President and CEO, Danaher Corporation
Thank you.
Rainer Blair — President and CEO, Danaher Corporation
Hi, Dan.
Dan Brennan — Analyst, TD Cowen
Great, thanks. Hey, good morning, Rainer and Matt. Thanks for the question. Maybe to start just back to bioprocessing, if you don't mind. You know, with the biotech guide, it's 6% for the year, and I think you guys talked about diagnostics, MedTech flat. So that gets us to bioprocessing growth, I think, around 6%, which is a bit lower than what I think you guys did in 2025. So is that math correct? And, you know, 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 this is such a focus, I just want to kind of flesh out how you're thinking about the starting point for the 2026 guide.
Rainer Blair — President and CEO, Danaher Corporation
Yeah, I would make it very, very clear here. Bioprocessing on the consumable side for the year and for Q1, our assumption is that we'll grow high 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 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 gonna be flat, it might be up a bit. I think the rest of the year for discovery and medical is gonna be flat, maybe down a little.
And so to kind of balance that out, you know, you're gonna 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 — Analyst, TD Cowen
Okay, great. And then, and then maybe just a final question, just for life sciences. I know, [inaudible], 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%-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 easy comms 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 2026? Thank you.
Rainer Blair — President and CEO, Danaher Corporation
So our life science end markets, in order of priority and size, are pharma, clinical, applied, academic and government. Pharma has shown growth here for three quarters in a row in our business, and that's a recovery in investment that we've seen out of pharma 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 that represents another potential upside as the policy situation stabilizes and finds its momentum again.
Dan Brennan — Analyst, TD Cowen
Great. Thank you.
John Bedford — VP of Investor Relations, Danaher Corporation
Thank you, Nikki, and everybody. We're around for comments rest of the day. Thanks.