01—Abstract
Summary
Summary of the 10-Q filed April 21, 2026. Cited figures are marked; the original filing is the authoritative source.
Danaher's first quarter 2026 (ended March 27, 2026) showed modest top-line growth with GAAP sales up 3.5% to $5.95 billiona, but core sales grew only 0.5% after excluding a 3.0% currency tailwind.
Net earnings rose 8% to $1.03 billion, and diluted EPS increased to $1.45b from $1.32, helped by a 40 basis point improvement in operating margin to 22.6%, lower net interest expense, and a share count that fell about 1.3% year over year. Growth was uneven across segments: Biotechnology core sales rose 7.0% led by bioprocessing consumables, Life Sciences rose 0.5%, and Diagnostics declined 4.0% on weaker respiratory testing and China volume-based procurement pricing. Balance sheet and cash flow shifted notably.
Cash rose to $5.7 billionc from $4.6 billion, largely funded by about $1.7 billion of net commercial paper issuance, while total debt was roughly flat at $18.5 billion. Operating cash flow was $1.32 billion, up 2%. Management disclosed a pending $9.9 billion cash acquisition of Masimo Corporation, to be placed in the Diagnostics segment and financed with cash on hand and new debt.
Subsequent to quarter end, Danaher entered a $5.0 billiond 364-day credit facility to backstop commercial paper used toward that purchase, which signals significant incremental leverage ahead. Investors should weigh the strong earnings and cash generation against the thin underlying organic growth, the Diagnostics weakness, and the leverage and integration risk from Masimo. The filing also flags tariff uncertainty following the Supreme Court IEEPA ruling, Middle East conflict cost pressures, and a pending securities class action settlement subject to court approval.
02—Key points
Key Highlights
- GAAP sales rose 3.5% to $5.95 billion, but core sales grew only 0.5% after a 3.0% foreign currency benefit; Biotechnology core sales rose 7.0%, Life Sciences rose 0.5%, and Diagnostics fell 4.0%.
- Diluted EPS increased to $1.45 from $1.32 (about 10%), with net earnings up 7.8% to $1.03 billion; operating margin expanded 40 basis points to 22.6%, despite $17 million of Masimo transaction costs.
- Pending $9.9 billion cash acquisition of Masimo Corporation, expected to be added to the Diagnostics segment and financed with cash on hand and debt, with a $5.0 billion 364-day facility established April 16, 2026.
- Cash and equivalents increased to $5.7 billion from $4.6 billion, largely from $1.7 billion of net short-term borrowings; total debt was roughly flat at $18.5 billion, and the company repaid €1.3 billion of 2026 Biopharma Euronotes in March.
- Operating cash flow was $1.32 billion (up 2%), with free cash flow of about $1.09 billion after $237 million of capex, supporting dividends of $226 million in the quarter.
- Gross margin declined to 60.3% from 61.2% on product mix, currency, and tariff costs; effective tax rate rose to 16.7%, with guidance of about 17.0% for the rest of 2026.
- Diagnostics faced a less severe respiratory season, China volume-based procurement pricing (about 2% price decline), and a 140 basis point margin decline, creating risk for the remainder of 2026.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Danaher Corp kept $0.17.
- Revenue$5.95B100.0%
- Cost of revenue−$2.36B39.7%
- Gross profit$3.59B60.3%
- Operating costs−$2.25B37.8%
- Operating income$1.34B22.6%
- Interest, other & tax−$315.0M5.3%
- Net income$1.03B17.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed April 21, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $5.95B$5.74B | +3.7% |
| Cost of Revenue | $2.36B$2.23B | +5.8% |
| Gross Profit | $3.59B$3.51B | +2.3% |
| R&D Expenses | $387.00M$379.00M | +2.1% |
| SG&A Expenses | $1.86B$1.86B | +0.1% |
| Operating Income | $1.34B$1.27B | +5.5% |
| Net Income | $1.03B$954.00M | +7.9% |
| EPS (Basic) | $1.45$1.33 | +9.0% |
| EPS (Diluted) | $1.45$1.32 | +9.8% |
| Shares Outstanding (Basic) | 707.90M716.30M | −1.2% |
| Shares Outstanding (Diluted) | 711.20M720.80M | −1.3% |
05—Questions
Frequently Asked Questions
How strong was Danaher's underlying organic growth in Q1 2026?
Weak at the consolidated level. Reported sales grew 3.5%, but currency added 3.0%, leaving core sales growth of just 0.5%. Biotechnology (+7.0% core) drove growth, while Diagnostics declined 4.0% and Life Sciences grew 0.5%.
What is the Masimo acquisition and how will it affect the balance sheet?
Danaher agreed on February 16, 2026 to buy Masimo for about $9.9 billion in cash, including assumed debt and net of acquired cash. Masimo generated about $1.5 billion of 2025 revenue and will sit in Diagnostics. Funding will come from cash on hand and new debt, including commercial paper backed by a new $5.0 billion 364-day facility, which will increase leverage materially once closed.
Why did Diagnostics results weaken and what could affect it going forward?
Diagnostics core sales fell 4.0% due to lower respiratory testing demand after a milder season, and pricing pressure from China's volume-based procurement program. Operating margin fell 140 basis points to 27.9%, partly due to $17 million (65 basis points) of Masimo deal costs. The severity of the upcoming respiratory season and the timing of customer purchases could affect demand for the rest of 2026.
Are there any material legal or tax risks disclosed?
The Hawkins securities class action has a settlement agreement pending court approval, with an offsetting insurance receivable; management does not expect a material impact. Two new derivative suits were filed in March 2026 and the outcome cannot be estimated. The IRS audit for 2016 to 2022 remains open, and the company notes the IEEPA tariff ruling and Middle East conflict as uncertainties.
How did shareholder returns and capital allocation look this quarter?
No shares were repurchased in Q1 2026, compared with about $1.1 billion of buybacks in Q1 2025. Dividends increased to $226 million from $194 million, and a $0.40 quarterly dividend was declared. Remaining authorization totals about 37 million shares. Given the Masimo financing, buybacks may be deprioritized in the near term.
06—Continue