Danaher Corp (DHR) 2025 Q4 法說會逐字稿

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. (Operator Instructions)

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

Good morning, everyone, and thanks for joining us on the call. With us today are Rainer 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 the note containing details of historical and anticipated future financial performance, are all available on the Investors section of our website, www.danaher.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 Rainer.

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&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 reinforce 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, Cytiva launched more than 20 new products across the biologics workflow, upstream new 500- and 2,000-liter formats of the Xcellerex X-platform bioreactor are helping drive higher yields while reducing the time and cost of biologic drug manufacturing for our customers.

Downstream, Cytiva strengthened its purification portfolio with the launch of two new Protein A resins: MabSelect SuRe 70 and MabSelect PrismA X, delivering cost-effective solutions for preclinical and clinical production without compromising quality. Now these launches reinforce Cytiva's commitment to helping customers improve yields and lower manufacturing costs while maintaining high performance across the drug development life cycle.

In Life Sciences, SCIEX reinforced their leadership in mass spectrometry with the introduction of the ZenoTOF 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 detection module, bringing spectral capabilities to the CytoFLEX platform that enable flexible, high-precision multiparameter characterization for pharmaceutical researchers.

In Diagnostics, Beckman Coulter Diagnostics expanded the DxI 9000 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 diagnosis 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 gene expert installed 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 healthcare and community settings.

This panel marks another step forward in Cepheid's multiplex testing strategy, building on momentum from the 4-in-1 respiratory panel, the MVP panel in women's health, with further multiplex introductions planned over time. So these are just a few of the innovations from across banner 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 in discovery and 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 continue to face funding constraints.

Core revenue in 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 a third consecutive quarter of sequential equipment order growth, though 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 Cytiva, 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. For these positive trends reinforce our confidence and the durability of long-term growth in the bioprocessing market and for Cytiva'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 remained 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 Abcam 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-based strength across both instruments and consumables. Beckman Coulter 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 that our customers remain broadly consistent with what we've seen the last few years.

Low-double-digit growth across Cepheid's core nonrespiratory 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 in Women's Health enabling entry into new care settings and existing customers continuing to add both menu and instruments across their health care 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 as 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 the 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.

Thank you, Rainer. That concludes our formal comments. We're now ready for questions.

(Operator Instructions) Michael Ryskin, Bank of America.

Congrats on a -- maybe just to kick things off, you're going -- you're opening with a 3% to 6% core revenue guide that's consistent with kind of 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 you hinted 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 6%, where you see a potential for upside as you go through the year? If there's one segment or another kind of (inaudible).

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 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 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 should -- 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.

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 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 end 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 mat production increasing t. Tse would be two areas that could produce additional upside to the guide.

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 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've got -- you still have easy comps and equipment, but a little bit tougher comps in 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.

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-bill 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.

All right. Thanks so much.

Tycho Peterson, Jefferies.

Rainer, I would love to just hear a little bit more about the strength on SCIEX 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?

So SCIEX did nicely with 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 getting 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 a growth. The clinical and applied markets were robust as well.

As you know, SCIEX 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 sizes in the instruments group performance there in the fourth quarter.

Okay. And then maybe one for Matt on margins. We got the first quarter operating margin guide, obviously, but how should we think about kind of 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?

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 Rainer just alluded to, put in 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 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 second half is certainly building up, but that's largely almost all the benefit from the cost actions in the fourth quarter.

Okay. And then just lastly, quickly on bioproduction. I appreciate all the incremental color. Any commentary specifically on China. 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?

We're not -- our fourth-quarter bioprocessing business in China coming off of a large comp. But the underlying activity level continues to strengthen there. You know that the biotech market there in particular is -- 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.

Thank you.

Scott Davis, Melius Research.

Seems a pretty encouraging commentary, particularly around bioprocess. But guys, I want to back up a little bit, like you did a fair amount of 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 margin impact kind of what did you actually do as it relates to kind of either rooftops or head count? Is there a tangible change in fixed assets or anything that you can kind of talk about publicly here?

Scott, I mean, this is a traditional Danaher business system type of productivity improvement where we're certainly consolidating rooftop but also driving process efficiencies. 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.

That's a good nonanswer, 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 you seeing a big pickup in orders here in January, kind of -- I know that you had a strong probably preorder season in 4Q and such. But have you seen a pretty sizable reload as you -- as the cases have picked up?

Well, we certainly at the second half of the fourth quarter, saw the cases pick up quite significantly. And you probably noted that the [IOI] 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 IOI 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.

That's helpful. Thank you, Rainer. Best of luck. See you, guys.

Doug Schenkel, Wolfe Research.

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 and an unpredictable environment over the last few years?

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. It's encouraging to see some growth in mid-single-digit growth out of the equipment, but it's just one quarter. And so one quarter a trend does not make. I think we still are in that environment, a 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 to flat. I think it's a good place to start. Let's see how the year progresses, and we'll go from there.

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&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 of quarters ago to move on something potentially more sizable and more aggressive if the opportunity were to present itself.

So Doug, I would say the M&A environment is more constructive. We saw -- 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 it 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 to set up. 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 prime.

Jack Meehan, Nephron Research.

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 and so much that -- is it possible there were some pushouts from earlier in the year that might have come in around year end.

So like what can you build off of in 4Q versus what might be like an elevated base? Any thoughts on that?

So Jack, I think we continue to see an 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 markets to continue their gradual improvement here through 2026.

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 [BBP]. Is there anything else that stands out? I'm just trying to think about the 100 bps or more for the year.

Yeah. No, maybe let me give you just a little color on how we constructed the EPS guide of $8.35 to $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 I think 3% to 4%, assuming 35% to 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 obviously could go either way. So I just assume all that stuff kind of nets to 0. If you do that math, you get kind of $8.35 to $8.50.

And so if we do better from a core growth perspective than 3% to 4%, there's probably likely some upside here to EPS. But if we're just going to kind of start the year with what I laid out, see how the year progresses, and then we'll go from there.

Okay. Thank you, guys.

Patrick Donnelly, Citi.

Maybe a follow up on Jack there on the Life Sci business. Rainer, it sounds like things are improving across the board, Abcam, Aldevron, SCIEX. 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 go into a few percent growth? And again, I would love the month to dig into some of those verticals, Abcam, Aldevron in particular?

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 tech and life sciences. And so where we saw the pharma end market, in particular, do a little bit better than anticipated. It was -- 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 Science is some 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.

Yeah. And then maybe just the Abcam, Rainer, you talked about seeing improvement throughout the quarter. It seems like that was firming up a little bit. I just wanted to dig in there.

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 and the pharma segment that we've been talking about -- and of course, the team has been working very hard on rightsizing 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.

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 as we exit this year and move forward, it seem 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 '26.

But as we look ahead to the future years, what is the path there? And what do you need to see to believe that that's on the table next year?

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 an 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.

Understood. Thank you.

Dan Leonard, UBS.

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?

So that emerging biotech sector for us has traditionally been in the sort of 15% of the business overall --

Probably more like 5% of overall an 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 of.

Okay. Thank you.

Yeah, I mean, Dan, 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 and bioprocessing out of that space, but early days.

Understood. Thank you. And 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?

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, CEO, as you name it, to get a real sense of what's going on here as it relates to the demand picture and the restoring 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 demand.

We 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.

Thank you very much.

Dan Brennan, TD Cowen.

Maybe to start just back to bioprocess, if you don't mind. With the biotech guide at 6% for the year, and I think you guys talked about discovery, medical flat. So 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 flesh out how you're thinking about the starting point for the '26 guide.

Yeah. We've been 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 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 bit. I think the rest of the year for discovery and medical is going to be flat, maybe down a little. And so to kind of balance that out, you're going to have high-single digits 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 wildcard is what does D&M do for the segment. But just to be perfectly clear, we are not seeing any sort of change or slowdown in bioprocess.

Okay. Great. And then maybe just a final question just to Life Sciences. I know, Rainer, you gave a lot of color so far on the kind of moving pieces there, but 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 coming on easy comps 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 guided -- and is there the chance to get better in '26?

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 the recovery in investment that we've seen out of pharma once the most favorite 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.

Great. Thank you.

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

Thank you, again, everybody. We're around for (inaudible) today. Thank you.

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. You may now disconnect.