Diversified science and technology company Danaher (NYSE: DHR) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 3.4% year on year to $5.94 billion. On the other hand, next quarter’s revenue guidance of $5.94 billion was less impressive, coming in 1% below analysts’ estimates. Its non-GAAP profit of $1.80 per share was 9.5% above analysts’ consensus estimates.
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Danaher (DHR) Q2 CY2025 Highlights:
- Revenue: $5.94 billion vs analyst estimates of $5.84 billion (3.4% year-on-year growth, 1.7% beat)
- Adjusted EPS: $1.80 vs analyst estimates of $1.64 (9.5% beat)
- Revenue Guidance for Q3 CY2025 is $5.94 billion at the midpoint, below analyst estimates of $6.01 billion
- Management slightly raised its full-year Adjusted EPS guidance to $7.75 at the midpoint
- Operating Margin: 12.8%, down from 20.3% in the same quarter last year
- Free Cash Flow Margin: 18.4%, down from 19.7% in the same quarter last year
- Organic Revenue rose 3.5% year on year (-3.5% in the same quarter last year)
- Market Capitalization: $134.6 billion
Company Overview
Born from a real estate investment trust that transformed into a manufacturing powerhouse, Danaher (NYSE: DHR) is a global science and technology company that provides specialized equipment, software, and services for biotechnology, life sciences, and diagnostics.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, Danaher’s 4.9% annualized revenue growth over the last five years was mediocre. This fell short of our benchmark for the healthcare sector and is a rough starting point for our analysis.
Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Danaher’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 2.9% annually. 
We can better understand the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Danaher’s organic revenue averaged 3.2% year-on-year declines. Because this number aligns with its normal revenue growth, we can see the company’s core operations (not acquisitions and divestitures) drove most of its results. 
This quarter, Danaher reported modest year-on-year revenue growth of 3.4% but beat Wall Street’s estimates by 1.7%. Company management is currently guiding for a 2.5% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 5.1% over the next 12 months, an improvement versus the last two years. This projection is above the sector average and implies its newer products and services will catalyze better top-line performance.
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Operating Margin
Danaher has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, boasting an average operating margin of 25%.
Looking at the trend in its profitability, Danaher’s operating margin decreased by 9 percentage points over the last five years. The company’s two-year trajectory also shows it failed to get its profitability back to the peak as its margin fell by 7.9 percentage points. This performance was poor no matter how you look at it - it shows its expenses were rising and it couldn’t pass those costs onto its customers.
This quarter, Danaher generated an operating margin profit margin of 12.8%, down 7.5 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Danaher’s EPS grew at a solid 8.8% compounded annual growth rate over the last five years, higher than its 4.9% annualized revenue growth. However, we take this with a grain of salt because its operating margin didn’t improve and it didn’t repurchase its shares, meaning the delta came from reduced interest expenses or taxes.
In Q2, Danaher reported EPS at $1.80, up from $1.72 in the same quarter last year. This print beat analysts’ estimates by 9.5%. Over the next 12 months, Wall Street expects Danaher’s full-year EPS of $7.53 to grow 7.6%.
Key Takeaways from Danaher’s Q2 Results
We enjoyed seeing Danaher beat analysts’ organic revenue expectations this quarter. We were also happy its EPS outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next quarter slightly missed, and the stock traded down 2.2% to $184 immediately following the results.
Is Danaher an attractive investment opportunity at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
