Danaher (DHR): Q3 adjusted profit per share up 11.5% to $2.11 and full-year outlook raised to $8.57 to $8.62
Danaher, which makes the instruments, supplies and tests used in laboratories and hospitals, said third-quarter sales rose 8.5% to $6.55bn and adjusted profit per share rose 11.5% to $2.11, ahead of the $1.92 analysts expected. It raised its forecast for full-year adjusted profit per share to $8.57 to $8.62.
What happened
On 21 October 2026 Danaher published results for the three months to 25 September 2026, in a release filed with the US Securities and Exchange Commission (SEC). Sales were $6,554m, up 8.5% from a year earlier. Profit after all costs and taxes from continuing operations, the businesses Danaher still owns, was $1,207m, or $1.71 per diluted share (profit divided by all shares, including those that could be created from options). Danaher also reports adjusted profit per share, its own measure that removes items such as the amortisation of acquired intangible assets, and that was $2.11. Chief executive Julie Sawyer Montgomery said the company "delivered better-than-expected third quarter revenue, earnings and cash flow" and was encouraged by improving trends in its end markets.
The numbers, explained
Headline sales growth of 8.5% overstates how fast the existing business grew. Danaher also reports "core" sales growth, which removes the effect of acquisitions and disposals and currency moves, and in this release also removes tariff refunds paid back to customers. Core growth was 3.0%. The company's own reconciliation runs: 8.5% total, less 6.5 points from acquisitions, plus 1.0 point for tariff refunds, no currency effect, giving 3.0%. Excluding sales of respiratory tests, which have been falling since the pandemic peak of infection testing, core growth was 5.5%, so respiratory testing took 2.5 percentage points off. By segment, core growth was 5.0% in Biotechnology, 4.5% in Life Sciences and 0.5% in Diagnostics (7.0% excluding respiratory). All of these are company-reported.
Profit per share needs more care. Under US accounting rules (GAAP), profit per share from continuing operations was $1.71 against $1.27 a year earlier, up about 34.6% (0.44 / 1.27), which the company reports as 34.5%. But $0.37 of that gain came from a one-off tax benefit, mostly from releasing money set aside for tax disputes after audits were settled. The bridge to the adjusted figure in the release is: $1.71 + $0.73 (amortisation of acquired intangibles) + $0.02 (investment value changes) + $0.12 (acquisition-related items) + $0.07 (impairments, write-downs of asset values) + $0.02 (special share awards) - $0.01 (a settlement) - $0.17 (tax effect of these) - $0.37 (one-off tax items) - $0.01 (rounding) = $2.11. Adjusted profit per share was up from $1.89, which is 11.6% on rounded figures and 11.5% as reported; the gap is rounding. Adjusted EPS is not a GAAP measure.
Cash tells a similar story. Cash from operations was $1,886m against $1,662m, up 13.5% (224 / 1,662). Free cash flow, the cash left after spending on equipment and buildings, was $1,632m against $1,370m, up 19.1% (262 / 1,370), which the company reports as 19.0%. The $2.11 was about 9.9% above the $1.92 average estimate of seven analysts surveyed by Zacks Investment Research, as reported by the Associated Press (0.19 / 1.92). Analyst estimates are third-party numbers, not company figures. Sales of $6.55bn were in line with the roughly $6.56bn analysts expected, according to Investing.com.
Why it matters
Danaher earns most of its money from things customers use up and replace: the filters, chemicals and equipment drug makers need to produce medicines (Biotechnology), the instruments and supplies used in research labs (Life Sciences), and diagnostic tests and machines for hospitals (Diagnostics). Because these are bought repeatedly, results work as a gauge of how much drug makers and researchers are spending. This quarter points to demand recovering after a weak period: core growth excluding respiratory has been accelerating, in the company's words, and the full-year core growth forecast excluding respiratory is mid-single digit. For rivals in lab tools, it is one data point, not a verdict on the sector.
The raised forecast is the company's own view, not a fact. Danaher now expects full-year adjusted profit per share of $8.57 to $8.62, up from $8.45 to $8.60. Investing.com noted that the midpoint of about $8.60 sits above the $8.51 analysts had expected. Our working: nine-month adjusted profit per share was $6.11 (against $5.57 a year earlier), so the forecast implies $2.46 to $2.51 for the fourth quarter (8.57 - 6.11 and 8.62 - 6.11). The release also shows how acquisitions are changing the company: interest costs were higher because Danaher borrowed to fund its purchase of Masimo, a maker of patient-monitoring devices, and amortisation of acquired intangibles was $513m in the quarter.
What to watch next
The fourth quarter ends on 31 December 2026, and Danaher's guidance for it is: core sales growth of 4.0% to 5.0% excluding respiratory, about 3.0% including it, because respiratory testing is expected to subtract roughly 1.5 percentage points, and an adjusted operating margin of about 29.5%. The company will also file its quarterly report on Form 10-Q for the third quarter, which the release says will first apply the new treatment of tariff refunds. We could not confirm a date for the fourth-quarter results, so we do not state one. When they arrive, readers can compare the actual figures with the ranges above, and see whether Diagnostics core growth moves beyond 0.5% as guided ("up slightly" in Q4).
- Core sales growth: growth excluding acquisitions, disposals, currency and (now) tariff refunds paid to customers
- Adjusted EPS: Danaher's own profit-per-share measure, which removes some items; not a GAAP measure
- Free cash flow: operating cash flow minus spending on equipment and buildings
- Respiratory testing: tests for infections such as flu and COVID, demand for which has fallen
Sources
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