Danaher Corporation (DHR)

Danaher Corporation Q1 2025 Financial Report

Report Date: 2025-04-30
Period Covered: Quarter ended March 31, 2025

Executive Summary

• Revenue: $5,741 million, roughly flat year-over-year (down 0.9%) as higher demand in Biotechnology was offset by softness in Life Sciences and Diagnostics.
• Net Earnings: $954 million, or $1.32 diluted per share, down from $1,088 million (−12.3%) due to higher operating expenses and lower non-operating income.
• Debt: Total debt of $16,477 million, up 2.9% since December 2024, driven by modest net borrowings and commercial paper issuance.

Profit and Loss Analysis

Danaher’s Q1 2025 operating profit margin was 22.2%, modestly below the 22.6% in Q1 2024. Higher selling, general and administrative costs and research & development spending, combined with an impairment charge in the Biotechnology segment, weighed on margin. Gross profit margin improved to 61.2% (from 60.2%) reflecting a more favorable product mix.

Segment Highlights

• Biotechnology: 11.0% core growth (to $1,612 million) driven by consumables. Operating margin expanded by 6.1 percentage points.
• Life Sciences: Core sales declined 3.7% (to $1,680 million) on softer demand in genomics consumables. Operating margin contracted 1.5 points.
• Diagnostics: Core sales declined 5.8% (to $2,449 million) mainly on China volume-based procurement headwinds. Operating margin fell 3.5 points.

Pros and Cons

Pros:

• Strong cash generation ($1,299 million from operations).
• Leading positions across high-growth bioprocessing and diagnostics platforms.
• Continued productivity improvements under the Danaher Business System.

Cons:

• Margin pressure from tariff increases, higher R&D and SG&A investments.
• Exposure to volume-based procurement in China and currency headwinds.
• Rising debt levels and interest costs weigh on leverage metrics.

Outlook and Recommendations

Management expects full-year organic growth in the mid-single digits, with operating margins gradually recovering as tariff impacts are offset by productivity and price increases. We recommend holding the stock pending clearer evidence of margin stabilization and further deleveraging.

Q1 2025 revenue by geography: North America $2,582 m (45%), Western Europe $1,344 m (23%), Developed Markets $400 m (7%), High-Growth Markets $1,537 m (27%).
By revenue type: Recurring $4,816 m (84%), Non-recurring $925 m (16%).

Danaher is positioned for long-term growth with diversified end markets and a robust innovation pipeline, particularly in bioprocessing and diagnostics. The company’s heavy investment in R&D and the Danaher Business System should drive margin expansion over time. Near-term, tariffs and China procurement pressures will test resilience. Management’s focus on productivity, pricing and strategic M&A can mitigate these headwinds. Leverage remains elevated; continued free cash flow conversion and disciplined buybacks/dividends will be key to improving financial flexibility.