Financial Trends -- 6/10
Stable, inflecting up off a trough -- not a clean acceleration story. Revenue swung from negative
into a +3.4%/+4.4%/+4.6% acceleration through 2025 as the bioprocessing/biotech destock lapped
(Biotech +11.5% YoY in Q1'26), the share count is steadily shrinking via buybacks, FCF is robustly
positive (~$5.3B/yr, ~18-26% margins), and Q1'26 adjusted operating margin expanded +60bps YoY to
30.2%. But full-year adjusted margin was down ~40bps, FCF was essentially flat (FY25 -0.3%),
Diagnostics is still contracting, and headline revenue ticked down to +3.7% in the latest quarter.
Above the "5 = stable" anchor, below the "10". No penalty modifiers.
Weight: 25%
Quarterly Revenue Trajectory ($M)
Revenue inflecting up off a trough, then a modest step-down.
YoY swung from -0.9% (Q1'25) into a +3.4% / +4.4% / +4.6% acceleration through 2025 as the
bioprocessing destock lapped, then ticked down to +3.7% in Q1'26. Net direction is improving vs.
the 2023-24 contraction, led by the Biotechnology recovery (+11.5% YoY in Q1'26) -- but this is a
stabilization, not a clean acceleration.
Gross Profit ($M)
Gross margin runs ~60%; the cleaner adjusted operating margin
inflected up +60bps YoY in Q1'26 to 30.2%. GAAP operating margin is noisy
(restructuring/charge-driven, e.g. the depressed 2025Q2), so the adjusted line is the better read
on underlying profitability. Q1'26's +60bps YoY expansion is the positive recent-quarter signal
against a full-year adjusted margin that was actually down ~40bps (28.6% to 28.2%).
Annual Financial Summary (FY ends December, continuing operations)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $29,453M | $26,643M | $23,890M | $23,875M | $24,568M |
| Rev YoY | — | -9.5% | -10.3% | -0.1% | +2.9% |
| Gross Margin % | 60.9% | 60.8% | 58.7% | 59.5% | 59.1% |
| Adj. Op Margin % | — | — | — | 28.6% | 28.2% |
| Adj. Diluted EPS | $10.05 | $9.71 | $7.58 | $7.48 | $7.80 |
| Adj. EPS YoY | — | -3.4% | -21.9% | -1.3% | +4.3% |
| Free Cash Flow ($M) | $7,077M | $6,504M | $5,119M | $5,309M | $5,293M |
| FCF YoY | — | -8.1% | -21.3% | +3.7% | -0.3% |
| Diluted Shares (M) | 736.8 | 737.1 | 743.1 | 737.2 | 716.1 |
| Total Debt ($M) | $22,176M | $19,677M | $18,402M | $16,005M | $18,418M |
2021-2023 figures reflect restated continuing operations post-Veralto spin; the 2021-22 revenue
decline is largely Veralto deconsolidation and the COVID-era diagnostics/bioprocessing roll-off, not
organic deterioration.
Key trends
- Revenue: base reset, now inflecting. Off a $29.5B (2021) COVID/Veralto high, revenue troughed at ~$23.9B (2023-24) and returned to growth (+2.9%) in 2025 as the bioprocessing destock lapped
- Adj EPS returning to growth: $7.48 (FY24) → $7.80 (FY25), +4.3% — the cleanest earnings-power signal, and FY2026 is guided to $8.35-8.55 (+7%)
- FCF robustly positive but flat: ~$5.3B/yr at ~18-26% margins; FY2024 +3.7% then FY2025 −0.3% — the "growing" half of the quality gate does not hold
- Share count declining: 743.1M (2023) to 716.1M (2025) via buybacks, no dilution
Segment Revenue ($M, Quarterly)
| Segment | Q2'24 | Q3'24 | Q4'24 | Q1'25 | Q2'25 | Q3'25 | Q4'25 | Q1'26 | YoY |
|---|---|---|---|---|---|---|---|---|---|
| Biotechnology | $1,713M | $1,653M | $1,869M | $1,612M | $1,850M | $1,798M | $2,033M | $1,797M | +11.5% |
| Life Sciences | $1,770M | $1,782M | $2,032M | $1,680M | $1,777M | $1,792M | $2,085M | $1,737M | +3.4% |
| Diagnostics | $2,260M | $2,363M | $2,637M | $2,449M | $2,309M | $2,463M | $2,720M | $2,417M | -1.3% |
Biotechnology is the swing factor -- reaccelerated to
+11.5% YoY in Q1'26, lapping the COVID-vintage destock trough. Diagnostics is the soft spot
(-1.3% YoY) on weak respiratory-testing comps and China VBP pressure. Life Sciences is modestly
positive (+3.4%) after a 2025 trough.
Segment Operating Profit ($M, Quarterly)
The 2025Q2 Life Sciences operating loss reflects a one-time charge, not operational deterioration.
Segment Mix (FY2025)
Free Cash Flow ($M)
FCF is positive but flat, not accelerating. ~$5.3B/yr at
~18-26% margin, converting at ~145% of net income -- the 34th consecutive year of >100% conversion.
But FY FCF was +3.7% (2024) then -0.3% (2025), and the quarterly YoY pattern recovered to
+11.7%/+17.6% in 2H'25 before decelerating to just +2.4% in Q1'26. This is the lone quality-gate
NO: FCF is clearly positive, but the "growing" half does not hold convincingly.
Penalty Check
| Modifier | Detail | Penalty |
|---|---|---|
| Negative FCF | FCF positive every period (~$5.3B/yr) | None |
| Share Dilution >10% YoY | Shares declining via buybacks (-1.3% to -3.7% YoY) | None |
| Revenue Up, Op Income Down | Borderline on FY GAAP (2025 rev +2.9%, GAAP op profit -3.6%) but adjusted op profit rises with revenue; GAAP dip is charge-driven | None |
| Debt Outpacing Revenue 3Q+ | Debt fell through 2024, only ticked up in 2025Q4/2026Q1 (Masimo financing build); not a 3+ quarter trend | None |
Score Rationale
Score of 6/10 reflects a financial profile best characterized as "stable, inflecting up off a trough" rather than a clean acceleration. This sits above the "5 = stable" anchor (revenue is accelerating off trough and shares are declining, both better than flat) but well below the "10" (margins are not expanding 100+bps and FCF is not accelerating). No penalty modifiers triggered.
Supports the upside:
- Revenue YoY swung from -0.9% (Q1'25) into a +3.4%/+4.4%/+4.6% acceleration through 2025 as the bioprocessing destock lapped (Biotech +11.5% YoY in Q1'26)
- Share count steadily shrinking via buybacks (-1.3% to -3.7% YoY), no dilution
- FCF robustly positive with ~18-26% margins and >100% conversion (34th straight year)
- Q1'26 adjusted operating margin expanded +60bps YoY to 30.2%; adj. EPS returned to growth (+4.3% FY25)
Caps it at 6:
- Full-year adjusted operating margin actually down ~40bps (28.6% → 28.2%)
- FCF essentially flat in both 2024 (+3.7%) and 2025 (-0.3%), decelerating to +2.4% YoY in Q1'26
- Diagnostics still contracting (sales -1.3%, op profit -6.1% YoY)
- Headline revenue ticked down from +4.6% to +3.7% in the most recent quarter
Quality gate — positive AND growing FCF: NO. FCF is clearly positive but only marginally growing/flat, so the "growing" half does not hold convincingly.
Data sourced from Daloopa. Fiscal year ends December 31. All fundamentals on a continuing-operations basis (post-Veralto spin). All financials in USD.