Global science and technology innovator Danaher (DHR 0.98%) reported second quarter 2025 results on Tuesday, July 22, that topped analysts' consensus expectations. Q2 revenue of $5.94 billion came in above the $5.84 billion estimate, and adjusted EPS reached $1.80 versus the $1.64 analysts expected. On the bottom line, net earnings fell to $555 million from $907 million in the prior year quarter, while adjusted EPS rose 4.7% year over year.
Ongoing operational discipline and some ongoing challenges in Life Sciences and Diagnostics were noted. Overall, the quarter saw moderate growth and improved profitability, allowing leadership to increase its full-year adjusted EPS outlook. However, several metrics, including cash flow and Life Sciences performance, showed pressure.
| Metric | Q2 2025 | Analysts' Estimate | Q2 2024 | Change (YOY) |
|---|---|---|---|---|
| Adjusted EPS | $1.80 | $1.64 | $1.72 | 4.7% |
| Revenue | $5.94 billion | $5.84 billion | $5.74 billion | 3.5% |
| Free cash flow | $1.09 billion | $1.13 billion | (3.3%) | |
| Net earnings | $555 million | $907 million | (38.8%) |
Source: Danaher. Note: Analyst consensus estimates for the quarter provided by FactSet.
About Danaher and Its Key Business Drivers
Danaher operates across three main segments: Biotechnology, Life Sciences, and Diagnostics. The company manufactures tools and products for medical researchers, pharmaceutical companies, and clinicians. Its offerings include bioprocessing systems that help produce therapies, analytical instruments for scientific research, and medical labs’ diagnostic platforms.
The company’s growth depends on several critical factors. These include its ability to drive cost efficiency and steady improvement through the Danaher Business System -- a management toolkit focused on lean operations and innovation. Acquisitions and integration of new technologies help fuel expansion, especially in Biotechnology, as seen with prior purchases like Pall and Cytiva. Prioritizing research and development, maintaining diversified global operations, and adhering to regulatory standards also remain essential to Danaher’s long-term strategy.
Q2 Highlights, Segment Trends, and One-Time Events
The quarter saw Danaher margin performance stay relatively steady compared to Q2 2024. Gross profit reached $3.52 billion, with gross margin of 59.4% down 30 basis points year over year. Adjusted free cash flow dipped from $1.13 billion in Q2 2024 to $1.09 billion, while operating cash flow fell to $1.34 billion from $1.42 billion in Q2 2024, potentially reflecting some pressure on converting profits into cash.
The Biotechnology segment saw the most robust growth, with core sales up 6% year over year and reported sales up 8% (which can include impacts from currency and acquisitions). This outperformance was driven mainly by Bioprocessing products -- equipment and supplies used in making biological medicines and gene therapies. Management highlighted “robust growth in our Bioprocessing business.”
The company continues to benefit from past acquisitions that have added strength to this segment. In contrast, the Life Sciences segment saw core revenue decline by 2.5% (non-GAAP), despite a slight 0.5% reported sales growth. A key notable event was a $432 million impairment charge in Life Sciences, due to the revaluation of a trade name in the portfolio. This write-down directly reduced earnings and signaled ongoing pressure in that segment. The Diagnostics segment, which offers laboratory testing platforms for disease detection, posted 2.0% year-over-year growth in both core (non-GAAP) and reported sales. However, growth remained modest, as diagnostics continues to face regulatory scrutiny and market softness in some geographies, especially China.
On the operational front, the company continued focusing on core strengths. Management cited disciplined execution of the Danaher Business System, prioritizing margin management and cost control. R&D expenses were $403 million, up 3% from $391 million in Q2 2024. The impairment charge in Life Sciences represented a one-time adjustment tied to a trade name’s reduced value. This directly reduced net earnings for the quarter, but adjusted EPS excluded this impact, reflecting ongoing business performance. SG&A, or selling, general, and administrative expenses, increased 26% year over year.
At the segment level, Bioprocessing product lines helped drive Biotechnology’s recovery, leveraging growth from prior M&A and ongoing demand for advanced therapies. Meanwhile, performance in Life Sciences, which provides analytical tools and lab equipment, saw revenue pressure and a sizeable one-time impairment. Diagnostics, covering laboratory analyzers and clinical testing products, continued to deliver stable if limited growth amid regulatory tension, especially in China, as noted by outside analysts, with Diagnostics segment revenue declining 1.5% organically in Q1 2025.
Outlook and Things to Watch
Management increased its guidance for full-year adjusted earnings per share to a range of $7.70 to $7.80, up from the prior $7.60 to $7.75 outlook. The outlook for core revenue, which strips out currency and acquisition effects to measure organic growth, remains at approximately 3% for the full year (non-GAAP). For Q3 2025, leadership expects non-GAAP core revenue growth in the low-single-digit percent range. The company noted that currency effects are expected to boost reported revenue by 1.5% for Q3 2025 and by 1% for FY2025.
The large impairment and negative core revenue in Life Sciences could indicate ongoing competitive or regulatory headwinds. Investors should monitor a few evolving trends over the coming periods. Persistent modest growth in Diagnostics, in the face of global regulatory scrutiny, also warrants attention. Operating cash flow declined from $1.42 billion in Q2 2024 to $1.34 billion in Q2 2025, and free cash flow declined from $1.13 billion to $1.09 billion over the same period.
Note: Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
