Earnings
Danaher raises its 2026 profit forecast as the Masimo deal lifts quarterly sales 8.5%
The life sciences and diagnostics group nudged up its adjusted earnings range to $8.57 to $8.62 a share, though core growth slowed to 3% as respiratory testing weighed.
HedgeWeekly News Desk ·
Danaher raised the low end of its full-year earnings forecast on Wednesday after third-quarter revenue rose 8.5% to $6.55 billion, with its Masimo acquisition supplying most of the increase. The company now expects 2026 adjusted earnings of $8.57 to $8.62 a share, up from a previous range of $8.45 to $8.60.
Adjusted earnings per share climbed 11.5% to $2.11 from $1.89 a year earlier. GAAP net earnings rose to $1.24 billion from $908 million, a jump flattered by $263 million of net discrete tax benefits, mainly reserve releases after audit settlements, which Danaher excludes from its adjusted figure. Free cash flow increased to $1.63 billion from $1.37 billion. Chief executive Julie Sawyer Montgomery said revenue, earnings and cash flow all came in ahead of the company's expectations.
Underlying demand was more modest. Core sales, which strip out acquisitions and currency, grew 3.0%, or 5.5% excluding respiratory testing. Diagnostics sales rose 17%, but acquisitions accounted for 16.5 points of that, leaving core growth at 0.5%. Core sales rose 5.0% in Biotechnology and 4.5% in Life Sciences. For the fourth quarter Danaher guided to core growth of about 3% and an adjusted operating margin of about 29.5%, with the respiratory drag narrowing to about 150 basis points.
For investors, the quarter shows the cost side of the deal starting to bite. Danaher's 10-Q shows it closed the Masimo purchase on June 10 for about $9.8 billion net of cash, or $180 a share, and placed it in Diagnostics. Interest expense roughly doubled to $135 million from $67 million, noncurrent long-term debt stood at $24.4 billion at quarter-end, and the company bought back no stock in the quarter after $903 million of repurchases earlier in the year. Bioprocessing-led Biotechnology growth and the pace of deleveraging are the items to track into 2027.