Danaher Adjusted EPS Rises 11.5%, Sees Slower Growth Outside Respiratory Business
Key Facts
Danaher reported an 11.5% year-on-year increase in adjusted diluted earnings per share from continuing operations in the third quarter of 2026. The company said in its earnings statement issued on October 21 that adjusted earnings per share reached $2.11. Quarterly revenue rose 8.5% from the same period a year earlier, according to the company's earnings summary. Revenue totaled about $6.6 billion during the quarter, alongside accelerating core business growth outside respiratory operations. Management attributed the improvement in profitability to faster growth in those businesses and operational execution through the Danaher Business System, alongside improving trends in its end markets.
Year-on-year core revenue growth excluding respiratory revenue reached 5.5% in the third quarter, according to the company's statement. That compares with growth of 4.5% in the second quarter, when Danaher reported its previous results in July. Total core revenue growth, including respiratory operations, was 3.0% in the third quarter. Growth outside respiratory operations thus exceeded both the overall core growth rate and its pace in the previous quarter. The chief executive said end markets were seeing "improving trends," describing demand conditions accompanying the quarterly results.
Danaher generated operating cash flow of $1.9 billion in the third quarter, according to the earnings statement. Free cash flow totaled $1.6 billion over the same period, a measure the company reports outside U.S. generally accepted accounting principles. Alongside those cash flows, adjusted earnings per share rose from $1.94 in the second quarter. Strong earnings results in that quarter were among the reasons Danaher cited for raising its previous earnings guidance. The company said in its July disclosure that completing the Masimo acquisition earlier than expected was another reason for that revision.
The results follow Danaher's completion of its acquisition of Masimo, announced on June 10, adding the company to its portfolio. Under the deal, Masimo became a wholly owned subsidiary of Danaher, according to the acquisition completion announcement. The acquired company operates independently within the group's diagnostics segment, under the arrangement outlined by Danaher. Management also underwent a transition, with Julie Sawyer Montgomery taking over as president and chief executive in early October. Montgomery also joined the board as she assumed the roles, according to the company's leadership transition announcement.
In another development during October, Danaher announced a collaboration with Nvidia to integrate artificial intelligence technologies into its scientific and laboratory operations. The company said in its October 14 collaboration announcement that the agreement combines Nvidia's AI technologies with Danaher's tools. Areas identified in the announcement include the company's scientific instruments, as well as laboratory workflows. The collaboration also extends to data, as part of the combination of technologies, instruments and laboratory processes described by Danaher. The collaboration follows the expansion of the diagnostics segment through the Masimo acquisition and comes in the same month that Montgomery took over leadership of the group.
For the fourth quarter of 2026, Danaher expects core revenue growth excluding respiratory revenue of between 4.0% and 5.0%. That range is below the third-quarter pace, signaling an expected slowdown in growth outside respiratory operations. It also expects respiratory revenue to reduce core growth by about 150 basis points in the fourth quarter. In a nearer-term development for shareholders, Danaher announced a quarterly cash dividend of $0.40 per common share. The dividend is scheduled to be paid on October 30, 2026, according to the company's dividend announcement.