01—Abstract
Summary
Summary of the 10-Q filed July 21, 2026. Cited figures are marked; the original filing is the authoritative source.
Danaher's second quarter 2026 results were shaped by the closing of its roughly $9.8 billiona cash acquisition of Masimo on June 10, 2026, which is now part of the Diagnostics segment.
Reported sales rose 5.5% year over year to $6.27 billionb, with core sales up 3.0% (4.5% excluding respiratory testing). Diluted EPS was $1.23 versus $0.77 a year earlier, but the comparison is flattered by a $432 million trade name impairment in Q2 2025. Operating margin expanded to 18.0% from 12.8%, though Q2 2026 absorbed about 175 basis points of Masimo-related charges (inventory step-up, transaction costs, and change-in-control and share-based payments).
Gross margin contracted to 57.6% from 59.3%, reflecting product mix, the inventory fair value adjustment, and acquired businesses. The balance sheet changed materially. Total assets rose to $92.4 billionc from $83.5 billion, goodwill increased to $47.4 billion, and intangibles to $21.4 billion.
Total debt reached about $26.6 billiond, up from $18.4 billion, funded by commercial paper and roughly $6.5 billion of new long-term notes in euros and Swiss francs. Cash fell to $4.3 billion. Operating cash flow was $2.9 billion for the first half, up 8%, while the company continued share repurchases ($903 million in Q2) and raised dividends.
Management expects a full-year 2026 effective tax rate of about 17%, and disclosed a new core sales measure excluding respiratory testing, along with plans to exclude tariff refunds from core sales beginning in Q3. Key risks for investors include the leverage increase and resulting interest expense, the integration of Masimo including its ongoing litigation (Apple, DOJ investigation, Kiani disputes, and Willow arbitration), a securities class action settlement awaiting final approval on September 3, 2026, uncertainty around IEEPA tariff refunds, and Middle East conflict effects on logistics and energy costs. China pricing pressure in Diagnostics and a weaker respiratory season also weighed on segment core sales.
02—Key points
Key Highlights
- Sales up 5.5% to $6.27B in Q2 2026 (core sales +3.0%; +4.5% excluding respiratory testing); H1 sales up 4.5% to $12.2B.
- Diluted EPS of $1.23 vs. $0.77 in Q2 2025, though the prior-year period included a $432M pretax trade name impairment (about $0.46 per share).
- Operating margin rose to 18.0% from 12.8%, but Q2 absorbed roughly 175 bps of Masimo acquisition-related charges; gross margin fell to 57.6% from 59.3%.
- Masimo acquisition closed June 10, 2026 for ~$9.8B cash; ~$5.0B preliminary goodwill and $4.8B of acquired intangibles added to Diagnostics.
- Total debt rose to ~$26.6B from ~$18.4B, with cash down to $4.3B; ~$3.0B euro and ~$3.0B CHF Masimo financing notes issued in April and June.
- H1 operating cash flow of $2.86B (+8%); Q2 share repurchases of $903M and a $0.40 quarterly dividend declared.
- Diagnostics core sales declined 1.0% in H1 on lower respiratory testing demand and China volume-based procurement pricing, while Life Sciences core sales grew 3.0%.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Danaher Corp kept $0.14.
- Revenue$6.26B100.0%
- Cost of revenue−$2.65B42.4%
- Gross profit$3.61B57.6%
- Operating costs−$2.48B39.6%
- Operating income$1.13B18.0%
- Interest, other & tax−$257.0M4.1%
- Net income$870.0M13.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed July 21, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $6.26B$5.94B | +5.5% |
| Cost of Revenue | $2.65B$2.41B | +10.0% |
| Gross Profit | $3.61B$3.52B | +2.5% |
| R&D Expenses | $412.00M$403.00M | +2.2% |
| SG&A Expenses | $2.07B$2.36B | −12.2% |
| Operating Income | $1.13B$760.00M | +48.3% |
| Net Income | $870.00M$555.00M | +56.8% |
| EPS (Basic) | $1.23$0.77 | +59.7% |
| EPS (Diluted) | $1.23$0.77 | +59.7% |
| Shares Outstanding (Basic) | 705.30M716.50M | −1.6% |
| Shares Outstanding (Diluted) | 707.60M719.10M | −1.6% |
05—Questions
Frequently Asked Questions
How did the Masimo acquisition affect Danaher's financial results and balance sheet this quarter?
Masimo was acquired on June 10, 2026 for about $9.8B in cash, funded with cash on hand, commercial paper and new long-term notes. It added goodwill of roughly $5.0B and intangibles of about $4.8B, and lifted Diagnostics sales. Q2 results also absorbed about $74M of nonrecurring fair value and change-in-control charges plus $34M of transaction costs. Total debt rose from about $18.4B to $26.6B, and the company's total assets increased to $92.4B.
Is the improvement in EPS and operating margin sustainable?
Part of the year-over-year improvement is due to lapping the $432M Q2 2025 trade name impairment. Excluding that, underlying growth was more modest, with core sales up 3.0% in Q2 and about 2.0% for H1. Margins are also pressured by acquired-business dilution and Masimo integration, and higher interest expense ($107M in Q2 vs. $71M) will weigh on earnings going forward.
What are the main risks highlighted in the filing?
Key risks include higher leverage and interest costs, integration of Masimo, and its legal matters, including the Apple litigation, a DOJ investigation into Masimo's Rad-G and Rad-97 products, and disputes with former Masimo executives. Other items are the Hawkins securities class action (final approval hearing September 3, 2026), uncertainty around IEEPA tariff refunds, Middle East conflict effects on logistics and energy costs, and a weaker respiratory testing season affecting Diagnostics.
How is Danaher returning capital to shareholders while carrying more debt?
In the first half of 2026 the company repurchased about 5.0M shares for $903M in Q2 and paid $509M in dividends. It declared a $0.40 quarterly dividend payable July 31, 2026, up from the prior year's rate. Approximately 32M shares remain under the 2025 repurchase authorization. Management says available cash, operating cash flow and debt capacity are sufficient to meet needs, and it has no borrowings under its $5.0B credit facilities.
What changed in how Danaher reports its results?
Beginning with this report, Danaher discloses a new non-GAAP measure, 'core sales excluding respiratory testing,' to show underlying Diagnostics trends without swings from flu season severity. Starting with the Q3 2026 10-Q, the company also plans to exclude tariff refunds returned to customers from its core sales measures.
06—Continue