Diversified science and technology company Danaher (NYSE:DHR) announced better-than-expected revenue in Q1 CY2025, but sales were flat year on year at $5.74 billion. Guidance for next quarter’s revenue was better than expected at $5.92 billion at the midpoint, 1.4% above analysts’ estimates. Its non-GAAP profit of $1.88 per share was 14.4% above analysts’ consensus estimates.
Revenue: $5.74 billion vs analyst estimates of $5.59 billion (flat year on year, 2.7% beat)
Adjusted EPS: $1.88 vs analyst estimates of $1.64 (14.4% beat)
Adjusted EBITDA: $1.88 billion vs analyst estimates of $1.66 billion (32.7% margin, 13.3% beat)
Revenue Guidance for Q2 CY2025 is $5.92 billion at the midpoint, above analyst estimates of $5.83 billion
Adjusted EPS guidance for the full year is $7.68 at the midpoint, roughly in line with what analysts were expecting
Operating Margin: 22.2%, in line with the same quarter last year
Free Cash Flow Margin: 18.4%, down from 25% in the same quarter last year
Organic Revenue fell 4% year on year, in line with the same quarter last year
Market Capitalization: $137.5 billion
Danaher’s first quarter results were shaped by resilient bioprocessing demand and stronger-than-expected respiratory testing volumes at Cepheid. Management credited the company’s recurring revenue streams and diversified end markets for stabilizing performance despite flat overall sales. CEO Rainer Blair highlighted ongoing investments in innovation and capacity, noting, “The Danaher Business System continues to help us deliver productivity and share gains even as global markets remain dynamic.”
Looking ahead, Danaher’s guidance for the next quarter is supported by anticipated stability in end markets and continued operational discipline. The company expects to offset current tariff impacts by adjusting supply chains, implementing surcharges, and optimizing manufacturing locations. Blair emphasized that, “We believe providing adjusted EPS guidance offers the best anchor point for assessing business performance,” reflecting a preference for cautious optimism given the uncertain macroeconomic environment.
Key Insights from Management’s Remarks
Danaher’s leadership focused on the durability of its business model and execution of its long-term strategy, particularly as macroeconomic and geopolitical conditions remain fluid. The flat revenue trend was offset by notable outperformance in bioprocessing and higher-than-anticipated demand in diagnostics, while ongoing cost discipline and new product launches also shaped results.
Bioprocessing Segment Momentum: The bioprocessing division delivered high-single digit growth, driven by strong commercial demand for consumables, particularly from large pharmaceutical and contract manufacturing customers. Order momentum remained positive for the seventh consecutive quarter, reinforcing management’s confidence in the business’s ability to deliver high-single digit growth in 2025 and beyond.
Diagnostics Resilience and Product Launches: Cepheid’s respiratory testing business exceeded expectations due to elevated illness levels, while new diagnostic products targeting cancer research (PD-L1, HER2 antibodies) and point-of-care molecular tests supported growth. Beckman Coulter’s FDA clearance for a new chemistry analyzer expanded offerings for lower-volume laboratories.
Life Sciences Mixed Performance: Life Sciences instruments saw stable demand in pharma, clinical, and applied markets, but softness in academic and government spending, especially in the United States, weighed on results. Management noted that government and academic revenue comprises a small portion of total sales, limiting overall impact.
Tariff and Supply Chain Strategy: Danaher is proactively addressing tariff headwinds—estimated in the hundreds of millions of dollars—by regionalizing manufacturing, adjusting trade flows, and deploying surcharges. CFO Matt McGrew highlighted that these actions are designed to largely offset current tariff impacts.
Disciplined Capital Allocation and M&A: The company maintains a preference for mergers and acquisitions as its primary use of capital but remains cautious given valuation uncertainty in the current environment. Management emphasized that a strong balance sheet positions Danaher to act when attractive opportunities arise.
Drivers of Future Performance
Danaher’s outlook for the next quarter and full year centers on stable end market demand, with low-single digit revenue growth expected in Q2 and full-year adjusted EPS guidance set at $7.60 to $7.75.
Bioprocessing and Consumables Growth: Management expects continued high-single digit growth in bioprocessing, underpinned by robust demand for consumables and a steady order pipeline. New capacity expansions are set to support both current and future customer needs.
Tariff Mitigation Measures: The company’s ability to offset tariff impacts through supply chain shifts, surcharges, and manufacturing changes is expected to help protect margins, though management cautioned that further escalation could require more aggressive actions.
Life Sciences and Diagnostics Trends: While academic and government demand may remain soft, management anticipates stability in pharma and clinical segments, with new product launches and commercial execution in diagnostics providing incremental growth drivers.
Top Analyst Questions
Michael Ryskin (Bank of America): Asked whether bioprocessing growth was more consumables or equipment-driven; management replied that consumables led growth, while equipment orders and funnels are improving but remain below historical levels.
Tycho Peterson (Jefferies): Inquired about Danaher’s ability to pass on price increases in the context of tariffs; CFO Matt McGrew explained that pricing is expected to be flat due to volume-based procurement in diagnostics, and surcharges for tariffs are not included in base pricing assumptions.
Scott Davis (Melius Research): Sought color on China’s long-term margin structure after procurement changes; CEO Rainer Blair said China remains an attractive diagnostics market, with pricing now in line with global averages.
Doug Schenkel (Wolfe Research): Questioned the sustainability of margin guidance and sources of cushion; management confirmed some conservatism in guidance, with cost savings and FX tailwinds providing flexibility if macro conditions remain stable.
Rachel Vatnsdal (J.P. Morgan): Asked about weakness in U.S. academic and government demand in Life Sciences; management noted this segment is a small revenue contributor and further softness is already factored into guidance.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) sequential bioprocessing order growth and capacity utilization as indicators of continued demand, (2) the company’s effectiveness in mitigating tariff-related cost pressures through operational actions, and (3) the trajectory of academic and government spending within Life Sciences. Progress on new product rollouts and any M&A activity will also serve as important signals for Danaher’s execution against its strategic plans.
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