DHR - Danaher Corporation

Operator: My name is David, and I'll be your conference facilitator this morning. At this time, I'd like to welcome everyone to Danaher Corporation's Third Quarter 2025 Earnings Results Conference Call. [Operator Instructions] I would now like to turn the call over to John Bedford, Vice President of Investor Relations. Mr. Bedford, you may begin your conference. John Bedford: Good morning, everyone, and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer; and Matt McGrew, our Executive Vice President and Chief Financial Officer. I'd like to point out that our earnings release, quarterly report on Form 10-Q, the slide presentation supplementing today's call the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call and a note containing details of historical and anticipated future financial performance are all available on the Investors section of our website, www.danaher.com, under the heading Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events and Presentations and will remain archived until our next quarterly call. A dial-in replay of this call will also be available until November 4, 2025. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. Our Form 10-Q and the supplemental materials describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company-specific financial metrics relate to the third quarter of 2025 and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, and actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date that they are made, and we do not assume any obligation to update any forward-looking statements, except as required by law. And with that, I'd like to turn the call over to Rainer. Rainer Blair: All right. Thank you, John, and good morning, everyone. We appreciate you joining us on the call today. We're encouraged by our strong third quarter results. Our team's DBS-driven execution paired with continued momentum in our bioprocessing business and better-than-expected respiratory revenue at Cepheid enabled us to exceed our revenue, earnings and cash flow expectations. Across our end markets, underlying conditions in the third quarter were generally consistent with what we saw in the first half of the year. In pharma, global production of monoclonal antibodies, where the majority of our exposure lies, remained robust. We continue to see a modest recovery in pharma R&D spending, though it remains below historical levels. In academic and government, demand was stable sequentially but remained soft amid ongoing uncertainty around research funding despite some encouraging headlines late in the quarter. Clinical diagnostics and applied markets held up well. Now we remain intensely focused on what we can control to continue delivering for our customers, associates and shareholders. Our team is leveraging the Danaher Business System to mitigate ongoing geopolitical and policy-related pressures and drive meaningful productivity gains across our businesses. At the same time, we're continuing to invest in innovation to strengthen our long-term competitive position, including accelerating digital and artificial intelligence initiatives. We're accustomed to tackling challenges head on and turning them into opportunities, and we expect that mindset and momentum to continue as we move forward into 2026 and beyond. So with that, let's take a closer look at our third quarter 2025 results. Sales were $6.1 billion in the third quarter, and we delivered 3% core revenue growth. Geographically, core revenues in developed markets were up mid-single digits with North America up mid-single digits and Western Europe approximately flat. Core revenues in high-growth markets were up low single digits as solid performance outside of China was offset by a mid-single-digit decline in China. Growth in our Biotechnology and Life Sciences businesses in China was more than offset by declines in Diagnostics due to volume-based procurement and reimbursement policy changes implemented in the last 12 months. Our gross profit margin for the third quarter was 58.2%, and our adjusted operating profit margin of 27.9% was up 40 basis points year-over-year as the favorable impact of higher volume leverage and disciplined cost management more than offset the impact of productivity investments. Adjusted diluted net earnings per common share of $1.89 were up approximately 10% year-over-year. We generated $1.4 billion of free cash flow in the quarter and $3.5 billion in the first 3 quarters of the year, resulting in a year-to-date free cash flow to net income conversion ratio of 146%. Now during the quarter, we deployed approximately $2 billion of capital towards the repurchase of 10 million shares of Danaher common stock. Additionally, our Board of Directors approved a new share repurchase program authorizing the purchase of up to 35 million additional shares of Danaher common stock. Our substantial investments in innovation over the last several years led to the launch of several leading-edge products and technologies this quarter. Each one of these new solutions is designed to enhance our competitive positioning while enabling customers to improve quality and yield, lower costs and accelerate the delivery of life-changing therapies and diagnostics. So let me highlight a few examples and the tangible value they're creating for our customers. In biotechnology, Cytiva launched the ÄKTA readyflux TFF system 500, a fully automated benchtop tangential flow filtration system. Developed to meet growing demand for efficient low-volume processing, the readyflux TFF system 500 minimizes product loss, improves yields and enables effective process development with limited material. Importantly, the readyflux platform is now scalable from process development to commercial production, enabling customers to quickly and smoothly transition across different stages of drug development. This system is one of several planned launches, including the new TFF filter cartridges and our next-generation perfusion system. Together with our new Xcellerex X-platform platform bioreactors and differentiated filtration and cell culture media offerings, these solutions provide a powerful upstream package that helps customers improve yields and efficiency in the intensified biologic drug manufacturing process. It also underscores the breadth and the depth of Cytiva's leading portfolio and our ability to support customers across the bioprocessing workflow from early-stage process development through to commercial manufacturing. In Life Sciences, IDT announced a strategic expansion of its end-to-end translational gene editing portfolio with the launch of high-purity customizable guide RNAs. As scientists move from early research towards clinical applications, the need for greater purity and flexibility in CRISPR tools increases. These new guide RNAs, key components that direct CRISPR systems to specific genes give researchers more control over sequence design, length and modifications to meet their precise needs. These capabilities are especially valuable for scientists in preclinical testing who require high-quality materials for studies like toxicology ahead of clinical trials. In diagnostics, Beckman Coulter launched the Access and BD-tau assay. This is the industry's first fully automated research use-only immunoassay for brain-derived tau protein, a promising blood-based biomarker for researching neurodegenerative diseases such as Alzheimer's. This assay leverages the high-resolution DxI 9000 analyzer to bring automation and scalability to tau protein quantification. Ultimately, this powerful technology combination can help improve research efficiency, enhance consistency in long-term clinical trials and support accelerated regulatory pathways through stronger real-world evidence. Now let's take a closer look at our results across the portfolio and give you some color on what we're seeing in our end markets today. Core revenue in our Biotechnology segment increased 6.5%. Core revenue in Discovery and Medical grew low single digits in the quarter. Growth in medical and lab filtration was partially offset by declines in protein research instrumentation, where academic research customers continue to face funding constraints. Core revenue in bioprocessing grew high single digits with double-digit growth in consumables, partially offset by declines in equipment. Consumables growth was driven by robust demand for commercialized therapies at our large pharma and CDMO customers. Equipment revenue grew sequentially, but declined in the high teens versus prior year as expected. Now while we're seeing strong funnels and customers have a healthy pipeline of planned projects, this hasn't translated into equipment order growth as customers are awaiting additional clarity on the policy environment before finalizing their investment decisions. Based on what we're seeing today, we expect cautious equipment spending through the remainder of the year. Now that said, with several billions of dollars invested to expand capacity at Cytiva since 2020, including meaningful additions at our facilities in Florida, South Carolina, Utah and Michigan, we believe we are very well positioned to help customers execute in-region, for-region manufacturing strategies. Now the long-term outlook for the biologics market remains very healthy. The primary growth driver of Cytiva's bioprocessing business is the increasing global production of biological medicines, particularly monoclonal antibodies. Underlying biologic demand has grown double digits annually over the last 10-plus years, and we expect strong demand growth to continue in 2025 and beyond. This growth has been supported by a steady pace of new FDA drug approvals, building on several consecutive years with record-setting FDA approvals as well as a continued shift in pharmaceutical pipelines towards biologics. In fact, more than 2/3 of the world's top 100 drugs are projected to be biologics by 2030. At the same time, we've seen increased development of biosimilars and expanded indications for existing therapies both of which are expected to drive production volume growth. The substantial and sustained level of activity we have seen reinforces our conviction in the significant opportunity ahead in this market and supports the long-term core revenue growth trajectory for our leading bioprocessing franchise. Now turning to our Life Sciences segment. Core revenue decreased by 1%. Core revenue in our Life Sciences instrument businesses was up slightly in the quarter. By end market, clinical and applied markets held up well globally. Demand from academic and government customers remained soft but was stable sequentially. And as I mentioned earlier, we continue to see modest recovery in pharma spending with revenue from these customers growing in the quarter. In China, moderate improvements in the funding environment led to increased activity levels, which contributed to revenue growth in the quarter. Core revenue in our Life Sciences consumables businesses, which include IDT, Aldevron, Abcam and Phenomenex declined in the quarter, primarily due to lower demand for plasmids and mRNA from 2 of our larger customers as well as continued funding pressure across early-stage biotech and academic research. Declines related to these funding pressures were partially offset by growth in next-generation sequencing products at IDT and recombinant proteins at Abcam. Moving to our Diagnostics segment. Core revenue increased 3.5%. Core revenue in our clinical diagnostics businesses was up low single digits with high single-digit growth outside of China. Leica Biosystems delivered over 10% core growth with broad-based strength across core histology, advanced staining and digital pathology. Beckman Coulter Diagnostics also had another solid quarter with mid-single-digit growth outside of China. This marks Beckman's fifth consecutive quarter of mid-single-digit or better core growth outside of China, driven by continued uptake of recent innovations such as the DxI 9000 and strong momentum in commercial execution. In Molecular Diagnostics, Cepheid's core revenue was up mid-single digits in the quarter. High single-digit growth across Cepheid's core nonrespiratory test menu was led by approximately 20% growth in sexual health. Respiratory revenue exceeded expectations as customers began purchasing earlier than typical in preparation for the upcoming respiratory season. Cepheid continued to expand its global installed base in the third quarter. The sustained growth in Cepheid's installed base is driven in part by health care system and IDN customers adding new instruments at sites further out in their networks and closer to patients in order to provide faster diagnostic and treatment decisions. We believe this ongoing installed base expansion, combined with a leading test menu and workflow advantages provides a long runway ahead for durable long-term growth at Cepheid. Now let's frame how we're thinking about the fourth quarter and the full year 2025. For the full year 2025, we're maintaining our full year adjusted diluted net EPS guidance range of $7.70 to $7.80. In the fourth quarter, we expect core revenue to grow in the low single-digit percent range as we expect market conditions to be largely consistent with what we saw in Q3. Additionally, we expect the fourth quarter adjusted operating profit margin of approximately 27%, which importantly includes the impact of anticipated productivity investments aimed at further improving our cost structure. Now before we wrap up, I'd like to share our initial thoughts on next year. For the full year 2026, we expect core revenue growth in the 3% to 6% range as we are assuming modest recovery across our end markets. Looking across the portfolio, we're assuming bioprocessing growth trends remain at levels consistent with 2025, including continued strength in consumables driven by healthy growth in monoclonal antibody demand and our strong positioning across the biologics workflow. In Life Sciences, we're assuming a modest improvement in end markets, but assume growth will remain below historical levels given the current geopolitical and policy environment. And in Diagnostics, we're assuming higher growth in 2026 due to moving past headwinds from policy changes in China and our expectation that we will continue to execute well globally. Additionally, we anticipate respiratory revenue at Cepheid will be approximately $1.7 billion in 2026, consistent with our expectations for 2025. Turning to 2026 earnings. We expect the operating leverage on anticipated core revenue growth and the benefit of our 2025 productivity initiatives to drive more than 100 basis points of adjusted operating profit margin expansion, which would result in high single-digit adjusted earnings per share growth before any benefit from capital allocation. As always, we will provide more color and a formal guide with our Q4 earnings in January. So to wrap up, we're encouraged to deliver third quarter results ahead of expectations in what remains a dynamic operating environment. Our team's commitment to innovating and executing with DBS has driven meaningful improvements in our businesses and enabled us to deliver more breakthrough solutions to our customers. Now looking ahead, we remain focused on the areas we can control to drive results for our stakeholders. We're taking thoughtful actions to reduce structural costs, supporting earnings growth and margin expansion in 2026, while maintaining the right foundation to continue investing in opportunities that strengthen our long-term competitive advantages. We believe Danaher is well positioned for sustainable long-term value creation. Our businesses are well positioned in attractive end markets, supported by long-term secular growth drivers and share a common set of relatively durable, high recurring revenue business models. And on top of that, our strong balance sheet and free cash flow generation positions us well to strategically deploy capital going forward. So with that, I'll turn the call back over to John. John Bedford: Thank you, Rainer. Operator, that concludes our formal comments. We're now ready for questions. Operator: [Operator Instructions] We'll take our first question from Michael Ryskin with Bank of America. Michael Ryskin: Maybe just start where you left off, Rainer, on fiscal year '26. The 3% to 6% range, I think it's roughly where people were expecting, but it is a little bit of a wider range. I realize we're still in October, so still very, very early, a lot of uncertainty. But maybe you could just talk to the high points of what gets you there? And then maybe what the world looks like for a 3% versus a 6%, where do you need to see more improvement relative to this year to get there? I guess sort of like what's still up in the air to figure out if you come to the 3% or the 6%? Rainer Blair: Thanks, Mike, and good morning, everyone. Let me just dive right in. But before I get started, let me provide a little bit of context to this. We've come off a strong quarter with beats on the top and bottom lines and cash flow. I think it's important to see the -- how Q3 demonstrates the earnings power of our portfolio and the execution of the team even at a relatively modest growth rate. And we're taking that Q3 beat to really proactively invest in further meaningful cost measures in Q4 to set up 2026, Mike. So that's an important factor here in how we're thinking about '26. Now the market and the policy environment, whilst improving, is still fairly dynamic. And so we could see a range of outcomes in 2026, which we're ring-fencing between 3% to 6% top line growth and high single-digit earnings growth. So for planning purposes, we think it's prudent to assume modest recovery in our end markets. And let me talk about some of those. In biotechnology, we expect high single-digit core growth in bioprocessing and that's similar to what we've seen in 2025. We expect bioprocessing consumables to remain strong given the monoclonal antibody pipeline, the on-market momentum of those commercialized drugs as well as our leading position. Now we're assuming for planning purposes that equipment is flat next year, given that the order trajectory through Q3 has continued as it has in the first half. So the planning assumption is that, that remains flat. Now in Life Sciences, we're not planning for meaningful improvement in our end markets. In Q3, Life Sciences performed as expected and the activity levels were fairly positive, but we just didn't see that convert to orders that would provide an inflection. So we're assuming here that our growth would improve modestly as we work through some of the headwinds in our Life Science consumables business. And as we think about Diagnostics, here, we're assuming growth accelerates as we move past China policy headwinds, where we've taken a conservative view and continue to execute well globally. And then lastly, importantly, we need to think about respiratory for '26. And here, we believe that it's going to be similar to 2025 at sort of that endemic rate that we've talked about of $1.7 billion. So of course, we're going to provide more quantitative view to all of this in January when we provide our guide. But hopefully, this gives you a sense of how we're thinking about 2026 directionally. And maybe Matt can comment here a little bit more on the EPS side of it. Matt McGrew: Sure. Like Rainer said, we're kind of expecting 3% to 6% core growth here next year. I would anchor at the low end of that range to begin with, and we'll kind of see how the year plays out as we go and we kind of provide some updates as we go. But I would anchor at the low end to start. And then from the math on the EPS perspective, I'd assume 35% to 40% fall-through on the volume plus the impact of the cost actions, and that is going to equal 100 basis points -- north of 100 basis points of margin expansion like Rainer talked about in the prepared remarks. And so it gives you the high single-digit EPS growth even at the low end of the range. And then maybe just to give you a little bit of color around sort of the cost actions we talked about we're doing $150 million in the fourth quarter, but we're going to do $175 million in total here in 2025. And we do not expect these cost actions to repeat in '26, these are sort of onetime items. And we do expect the cost actions that $175 million to generate a net $75 million in savings. So all up, all in, you're talking about a $250 million type savings number in 2026 that gives you, call it, $0.30 of EPS tailwind as we head into the year. So I mean, as I think about 2025 and I think about what we're doing here in the fourth quarter to set ourselves up, I think we're going to be in a really good position to deliver high single-digit EPS growth even if we end up at the low end of that range, and we might do better in '26. And again, as Rainer said in the prepared remarks, all before we have any capital deployment either. Michael Ryskin: Okay. That's all really, really helpful. I appreciate the bridge. Maybe a quick follow-up, if I can. Rainer, you touched a little bit on China diagnostics and VBP. A lot of concern on that. So you just talked about as you move past the headwind, but you're still taking a conservative view. So just expand on what you're seeing in VBP. I think you're lapping the comps as you get into the fourth quarter, but there's concern of another wave down the road, maybe oncology and thyroid was called out by another player in the market. Just sort of how derisked is China diagnostics from a VBP perspective for 2022? Matt McGrew: Yes, Mike. I mean, I think we sort of have seen -- like you said, we are getting to the other side of the wave here that started in Q4 with the first reimbursement in China. So we will anniversary that. I think as we sort of have dealt with what has come VBP, the reimbursements, the various policy sort of changes during the year, I think we're pretty well dialed in. I mean I would say that for next year, our assumption is that we probably have maybe $75 million to $100 million of headwind here, which on a Danaher level is fairly modest and manageable. And so I think that's kind of where we were or where we are from a planning perspective. And I think that's a pretty good place to be given what we know today and have got visibility to some of the things that are coming and certainly have visibility to everything has already been announced. Operator: We'll take our next question from Tycho Peterson with Jefferies. Tycho Peterson: I want to probe on the biotech comments here a little bit. Just maybe talk about some of the puts and takes in the guide for the fourth quarter. And then I guess, what does it take for you to call an equipment recovery here? Can you just maybe talk about the order book, how the funnel is building and the odds that you could actually see an equipment pick up next year on the biotech side? Matt McGrew: Yes, Tycho, let me just give you -- for the fourth quarter, I can give you a little color on the numbers to make sure everybody's got those, and then Rainer can comment a little bit more on the equipment side and what it would take. So it is for modeling purposes, just so as everybody is on the same page here, biotechnology in the fourth quarter, we are going to be high single digits in bioprocessing, and we are seeing D&M down mid-single digits. And so Discovery and Medical, a lot of that has to do with a prior year comp, remember, they were up low double digits. And frankly, they continue to see softness. Remember, we've got the kind of a protein discovery business in there that acts a lot like a Life Science tool business. And so they're sort of seeing the same end market pressures as we see in Life Sciences there. And so hence, the reason they're down mid-single digits. But just to be very clear, bioprocessing in the fourth quarter is high single digits. Rainer Blair: Tycho, as it relates to the equipment question, I've been spending a fair amount of time with pharma customers here. I do that generally, but even more so here in the last several weeks to understand how they're thinking about reshoring and generally speaking, equipment investments. And first of all, the activity level in the end markets, so the manufacturing volumes continue to increase. So there is a need more generally to continue to invest in equipment, and that's probably been held up a little bit here due to some of the policy discussions that have been ongoing. And what I've noted here in these discussions with some of the senior pharma leaders is that there's more confidence now in making these investment decisions as some of these most favored nation negotiations are becoming to workable solutions and the tariffs are starting to dial in and remain somewhat consistent. So generally speaking, what we're seeing here is more activity, more discussions. While some of those -- that planning is still fairly high level, certainly for greenfield investments, what we're seeing is activity and quotations and so forth around more brownfield investments. We just haven't seen those turn into orders yet. But having said that, we're fairly constructive on equipment. But from a planning perspective, we thought it was prudent here to continue with what we've seen here up and through the third quarter. Tycho Peterson: Okay. That's helpful. And then maybe just flipping over to Diagnostics. I appreciate the China VBP commentary. Maybe just can you talk about what's baked in for next year for Beckman ex-VBP? Is that mid-single-digit plus? Is anything kicking in from Alzheimer's? Or is that too early? And then similarly for Cepheid away from respiratory, how do you think about the base business there next year? Matt McGrew: Yes. I mean I think it's too early for Alzheimer's, I think. I mean that's probably a longer-term play for us. I don't think we've got anything kind of built in or baked in for that. I would expect that for Beckman for next year, I mean, we can kind of get into a little bit more details when we give the formal numbers, if you will, in January, but they've been executing very well. They've got a good new product launch in the DxI 9000. They've been outside of China, that's been a mid-single-digit growth plus -- mid-single-digit growth business. And I would expect that, that would continue as we move into next year. And as far as Cepheid, again, outside of respiratory, our assumptions there will be essentially flat at $1.7 billion. And then outside of that, that's been a business that has done sort of high single, low double digits on a pretty consistent basis on nonrespiratory. I think with the installed base continuing to sort of expand and as we start to add more menu on to existing customers, I suspect that those levels are a good place to start as well. Operator: We'll take our next question from Scott Davis with Melius Research. Scott Davis: Things seem to be more stable in the last couple of quarters. It's nice to see that. But anyways. I was curious just on the mix between kind of respiratory and sexual health and Cepheid because you quoted some pretty strong growth numbers on the sexual health side, but then also kind of guiding to more flattish in 2026 versus '25 totally for Cepheid. So perhaps a little bit more granularity on that would be helpful. Matt McGrew: Yes. I mean I think we're sort of guiding to the respiratory to be flat year-over-year, which would not have sexual health in it. I think kind of we talked a little bit earlier on the question with Tycho that the outside of respiratory, which is where sexual health would reside, that we would expect -- we've seen that business kind of be low single -- or sorry, high single, low double digits and I would expect that, that would continue into next year. So sexual health will be a part of the growth there for sure, has been, and I suspect that it will be for a while as we go forward and expand that menu and drive penetration. Scott Davis: So to be clear, then Cepheid should grow in '26 versus '25. That's what you're expecting? Matt McGrew: I think so. Scott Davis: Okay. All right. Fair enough. And then the -- just a little bit of question, I guess, is on the contract structures that you have. Have they changed over the last few years, just given the tariff and cost inflation dynamics we've had supply chain, et cetera, and all kinds of headaches that many companies have had. But have your contract structures adapted in a way and clearly, this is more equipment and consumables, but is it adapted in a way that allows you to adjust pricing a little bit easier for core potential headwinds that could arise? Rainer Blair: Scott, over the years, we have brought more flexibility into that. Of course, each contract is specific to a given customer's needs, and we try to be responsive to those. But generally speaking, as you think about bioprocessing, for instance, we have a fair amount of both flexibility and to some degree, leverage there in order to drive differentiated pricing for differentiated solutions. Operator: Our next question from Douglas Schenkel with Wolfe Research. Douglas Schenkel: One quick one on recent events. Have you seen any change in activity over the last few weeks or even just -- even in the tone of discussions with biotech and pharmaceutical customers since the Pfizer MFN announcement came out. I'm guessing you didn't reflect anything in guidance based on the way you talked about your framework if things are improving, but I'm curious if you've seen any changes. Rainer Blair: Doug, I think I would say, yes. We -- and also correct that we have not reflected that in our guidance here neither for the fourth quarter nor for our initial thoughts on '26 because we like to see the shift in tone turn into demonstrated order patterns so that we actually see the trend. But having said that, and as I mentioned earlier, I've been out in the market a fair amount all over the globe here talking to various pharma executives. And there is more confidence that the policy environment is finding more balance and that some of these overhangs, whether that's the most favored nations discussions where, like I say, some of those are not always great, but they are workable and remove an overhang for our pharma customers on the one hand. And on the other hand, we do see the tariff situation stabilizing and becoming plannable. And in that context, we're starting to see more confidence regarding capital investment decisions and the location of those investments going forward. And so we're looking for that, of course, to now translate from activity and quotations into stronger order patterns, but we haven't seen that yet. And as a result of that, we're not reflecting that yet in any of our guide. Douglas Schenkel: Okay. Super helpful. And then thank you for the framework for 2026. I have a question on margins. So I think with this morning's announcement, by the end of this year, you will have invested, I think it's about $300 million in productivity enhancements in 2025. And unlike a lot of your peers, you don't onetime those out. So that actually depressed margin this year by over 100 basis points. So as we think about next year and the benefits of those initiatives rolling through, is there an argument that even though you talked about 100 basis points of margin expansion potential next year, if we think about kind of adjusting the base up this year and you guys getting maybe low single digits to even mid-single-digit top line growth that all in all, the error bar is probably skewed to the upside as we think about margins for next year, again, just rolling through the benefits of all the productivity enhancements that you're putting into place as we speak. Matt McGrew: Yes. I mean, well, first, I would just kind of anchor on this is -- I believe that a 35% to 45% fall-through and the impact of just the 250 I talked about, that's north of 100 basis points. Just want to -- because I think when you go to do your math, it's not going to be 100. So I think you're right on that point. As far as is there more than what we have sort of offered up here, this is a net number so that we can continue to invest in the business. We think this is the right balance of investing in the business, making sure that we're also delivering high single-digit or better EPS growth as we head into 2026, but we do want to leave ourselves some room for that investment. But as the year plays out, we can always kind of -- we always tweak and work with that. So -- but I think the frame that you've laid out of north of 100 basis points of margin expansion is very fair. And like I said, that $250 million of net savings gets us that $0.30 tailwind. And I feel pretty comfortable about high single-digit EPS even if we're at the low end of the guide of the range. Operator: We'll take our next question from Vijay Kumar with Evercore ISI. Vijay Kumar: My first one on -- if I wanted to touch on the fourth quarter Diagnostics assumptions. I think ex-respiratory and ex China, it looks like the business has done around mid-singles for the past 2 quarters. I think your guide implies for Q4 double digits. So maybe talk about what changes sequentially from 3Q to 4Q and what drives the optimism for Diagnostics ex China, ex respiratory? Matt McGrew: I think the uptick is VBP lapses. That's the delta. I don't think anything changes with the rest of the core business. I think that's mid-single digits, that base business, if you will. But remember, we took the first hit in respiratory in China with VBP and reimbursement in Q4. So I think it's the VBP that gets better, not the base business. Vijay Kumar: Sorry, Matt, I think -- am I correct in assuming ex respiratory and ex China, the business was mid-singles in 3Q? Matt McGrew: Yes. Vijay Kumar: And that assumption doesn't change for Q4, mid-singles? Or does it change ex respiratory ex China? Matt McGrew: Again, I think your ex China is the piece, Vijay. That is going to -- that China number is going to get better in the fourth quarter because we are lapsing reimbursement. Happy to kind of follow up with you on some numbers offline. Vijay Kumar: Understood. And then maybe, Rainer, one for you on capital deployment. A pretty big share repo in 3Q. With the new $35 million authorization, how are you thinking of M&A versus share repurchases, right, when you look at assets available in the deal pipeline? Rainer Blair: So Vijay, we maintain a strong bias towards M&A, and we continue to be very active on the M&A front. We're cultivating every day, and we continue to think about M&A in the context of our framework of attractive end market, attractive company with value reserves. And importantly, the valuation framework, the model has to work. And we're going to stick with that discipline. Now that said, and as we've demonstrated here, we're not opposed to buybacks. At current levels, the relative value of a buyback generates attractive financial returns, and we will continue to evaluate all our capital allocation using the same ROIC lens. So bias to M&A, clearly, but we're going to maintain the discipline because we want to see the returns. Operator: We'll take our next question from Dan Brennan with TD Cowen. Daniel Brennan: Maybe just going back to bioprocess and the equipment side. I know you talked about in the prepared remarks how Cytiva has built up a lot of capacity. You're ready for any demand that comes from this onshoring. Can you just kind of zoom out a little bit and give us a flavor how we might think about this? I know there's been hundreds of billions of announcements, but it's hard for us to parse what's really incremental, what's just shifting from one region to the other and kind of how it might impact you. So if we look out, like what should we be looking for? And could this actually drive some potential real demand benefit for you, whether it be in exiting '26 into '27, anything like that? Rainer Blair: Sure, Dan. I mean the investment announcements that we've heard from pharma differ in terms of what they include and exclude depending on which pharma company you're talking about. And then, of course, many times, the time lines were 5 and 10 years. So those numbers grow pretty quickly, especially if the research and development investments were considered in those investment numbers as well. But if we put that aside for a minute, there's 2 factors here that drive equipment demand. First, the manufacturing growth that is required to meet the market demand. And we have seen over the last quarters that the equipment investments have been fairly slow. While they've improved slightly, they've been below historical trends. While the end market and the production requirements have continued to be strong. So there is a general need around the world to start investing in equipment. That's sort of one factor. And then you add this trend of regionalization of manufacturing capacity. And of course, we think about that in terms of the reshoring discussions here in the United States, but other regions think about regionalizing their manufacturing network as well. And so that speaks positively to the general environment and the requirement for equipment investments going forward. And what has held that up here is the dynamic of policy changes, certainly in the U.S. but elsewhere in the world as well, as well as how do we need to think about tariffs and most favored nations pricing. And there, I've tried to provide a little bit of color that we see those overhangs starting to dissipate as, one, the tariffs have become more plannable and predictable; and two, the most favored nation pricing, which is a key factor when you're making these investment decisions as well, is starting to dissipate, as I said, with some workable deals being made. And generally speaking, that's provided more confidence to the most senior decision-makers here in the pharma industry. Daniel Brennan: Great. And then maybe just as a follow-up, just on the '26 guide, I think you discussed a lot about China and bioprocess. But just on the Life Science piece, it sounds like you're thinking about maybe starting that if Matt talked about 0 -- excuse me, 3% as the good starting point for the company. So Life Science is probably, I guess, 0. Could you unpack a little bit? I know you talked about you're not baking in any improvement just between instruments and genomics, like what would have to happen to get to 0? Do you think that's going to prove to be kind of a conservative number? Matt McGrew: Yes. No, I think you're right, spot on, on that being flat. And again, sort of -- that's where we've been now. I think part of the reason that we have the same thing, same dynamic in Q4 that we do in Life Sciences as for all of '26, it's been where we've been. It's been fairly flat as we have not seen that inflection in the market like Rainer has talked about. Maybe you want to talk about what might happen to get better? Rainer Blair: Sure. So I mean, let's start with the fact that the clinical and applied markets have remained fairly solid, and we don't expect that to change. And we've also seen a modest recovery in pharma research spending. It's below historical trends, but we've started to see a recovery there, and that was reflected in Q3 as well. It's really academic and government, which you know on a global basis is low single-digit exposure for Danaher overall that is anchoring and holding back some of the growth there and that's the market. Now if you think about our own business, we're performing well in these segments. We're less exposed to the academic and government side. And as it relates to the Life Science consumables businesses, that I talked to earlier, we also think that we're lapping some of those headwinds. You recall those 2 large customers that have come off their peak demand pretty significantly, and we've been working through that. And we would expect that then also to be reflected in a little bit more supportive and modest growth next year. But for planning assumptions, we think where we sit today, that it's best to consider flat growth for Life Sciences in the context of that 2026 guide that we gave you. And if they're upside, there is, but we want to see some of that playing through here in orders before we call that trend. Operator: We'll take our next question from Jack Meehan with Nephron Research. Jack Meehan: I want to focus on the Diagnostics business. The first question, in the quarter, the sales were about $60 million higher than what consensus was looking for. There was about $200 million of upside from respiratory. Everything sounds great in Beckman ex China and Leica. So it just wasn't obvious to me what might have fallen short at least versus what the Street was thinking. Is there anything that you would call out? Matt McGrew: No, I would say it was all respiratory kind of, if you will, a little bit earlier than we expected. I think customers were just kind of -- again, kind of coming earlier than we thought. I would say it was probably $125 million of pull forward, if you want to call it that, but it was nothing else to call out Diagnostics. Jack Meehan: Okay. Got it. Actually, I'll pivot to the biotechnology business just as a follow-up. Can you talk about the dialogue you're having in terms of reshoring? I know you mentioned kind of like the billions of dollars being talked about in manufacturing here in the U.S. How do you think this is going to play out over the next few years? Just any color around what that can mean for both capital demand and recurring for that business, that would be great. Rainer Blair: It's hard to put specific numbers around this, but we would expect that this reshoring in the U.S. particularly, but the regionalization of supply chains is going to result in continued investment in capital equipment. And we think the way that starts is with brownfield investments where customers are taking advantage of existing facilities in order to get those capacities in place more quickly and also demonstrate that they are investing in the respective regions, including the U.S., while in parallel planning sort of those larger greenfield investments that take a little bit more time. That is a different time line, which takes certainly a couple of years in the best of cases and can take a little bit longer. So once that gets rolling, we might see an extended capital cycle here over a number of years. But we haven't seen that flow through in orders yet, lots of discussions, some of them more near term, i.e., those brownfield investments, others at a higher level because those are larger investments that just take more time, not only to plan but to execute. Operator: And we'll take our last question today from Puneet Souda with Leerink Partners. Puneet Souda: So my first question is, I appreciate your qualitative comments on the mAbs and biologics growth and bioprocessing being high single digit. But just wondering if you could provide any color on the order growth or book-to-bill in the quarter. I believe it was about 1 last quarter. And we have seen weakness in the AAV segment and some of the innovative modalities. So just wondering what's your level of confidence on monoclonal antibody growth offsetting some of that to still deliver high single-digit growth? And I have a follow-up on China. Matt McGrew: Yes. I mean the book-to-bill was pretty similar to what we've seen all year around 1. So maybe, Rainer, you want to comment on that? Rainer Blair: Sure. Well, I mean, we continue to see monoclonal antibodies growth as strong, not only because the commercial volumes on existing indications are growing more quickly, but also because we see new applications of existing on-market drugs being approved. And then we also see biosimilars here that are pretty close to the launch as well. So we do think that, that very, very large part of our business, 75% of our business is in those monoclonal antibodies and the growth that's associated with that takes care of some of the volatility that we have seen here in some of the AAV business. Some of which has been around for some time, so it's also lapping. But just to say that it's really driven by protein and these nucleic acid therapies, while they are interesting and efficacious, they will continue to take time to find it into the first line of standard of care. And while we're very well positioned there, what's driving the growth here is really protein monoclonal antibodies going forward. Puneet Souda: Okay. That's helpful. And then just a brief question on localization policy in China that has emerged over the last few weeks. There is a 20% pricing rebate for those manufacturing locally. This is beyond the VBP and the DRG headwinds we have been hearing about. So maybe could you just remind us how much of your production and sales in China are manufactured locally and maybe both reagents and on the instrumentation side. Where do you have defensiveness? And where do you need to expand manufacturing if this was to spread broadly to other government agencies, including academics? Rainer Blair: So Puneet, that 20% that you heard about benefit for local manufacturers is actually not the newest of news. It's been out there informally, which is often how it works in China for some time. In fact, I was just in China for a couple of weeks here, taking a close look at what's happening and of course, talking to customers and government officials and, of course, our teams. And we think that we're very well positioned here as it relates to localization. By the end of the year, much of our diagnostic businesses, whether that's equipment or reagents will be localized. And that degree of localization plays well across the portfolio. So while we don't talk about percentages of localization, we think that we're very well positioned here and view this actually as advantageous as opposed to a short-term headwind. Operator: And with that, we'll turn the call back to John Bedford for any additional or closing remarks. John Bedford: Thank you, David, and thank you, everybody. We'll be around all day and the rest of the week for follow-ups. Have a good rest of your Tuesday here. Operator: This does conclude today's program. Thank you for your participation, and you may now disconnect.

Margaux: My name is Margaux, and I'll be your conference facilitator this morning. At this time, I'd like to welcome everyone to Danaher Corporation's second quarter 2025 earnings results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star. I will now turn the call over to John Bedford, Vice President of Investor Relations. Mr. Bedford, you may begin your conference. John Bedford: Required by SEC Regulation G, relating to any non-GAAP financial measures provided during the call and a note containing details of historical and anticipated future financial performance, we are all available on the Investors section of our website, www.danaher.com, under the heading quarterly earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading events and presentations, and will remain archived until our next quarterly call. A replay of this call will also be available until August 5, 2025. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. Our Form 10-Q and the supplemental materials describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company-specific financial metrics relate to the second quarter of 2025, and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, and actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date that they are made, and we do not assume any obligation to update any forward-looking statements except as required by law. And with that, I'd like to turn the call over to Rainer. Thank you, John. And good morning, everyone. Rainer Blair: We appreciate you joining us on the call today. Now before we get into the details of the quarter, I'd like to touch briefly on the announcement we made this morning regarding our CFO succession plan. As I'm sure many of you saw, we announced that Matt Gugino, the current group CFO of our life sciences innovation group, and vice president of corporate FP&A, will succeed Matt McGrew as chief financial officer of Danaher at the end of February 2026. As we've done with past transitions, Matt McGrew will continue on as an executive vice president as he begins his gradual path to retirement. Matt, it's been a privilege working with you. For more than two decades, we've all benefited from your outstanding financial leadership, your thoughtful guidance, and trusted partnership. And stepping into the CFO role in 2019, you've helped guide Danaher through pivotal moments, including launching in Vista and Baralso, at public companies, the acquisition of Sytiva, and the challenges of the pandemic. All while developing an exceptional internal finance talent pipeline. Matt, Danaher simply would not be the company it is today without your leadership, strategic vision, and humility. Thanks, buddy, for everything. Now many of you know Matt Gugino from his time as vice president of investor relations. Matt has had a number of important roles during his past twelve years with Danaher. And throughout Matt's time at Danaher, he has gained extensive experience in several key areas, including investor relations, FP&A, mergers and acquisitions, talent development, and most recently, operational experience as group CFO. He has consistently demonstrated exceptional leadership and has played a central role in shaping our financial strategy and portfolio evolution. I know he'll be an outstanding CFO as we continue to grow Danaher into one of the most respected science and technology leaders. We look forward to helping him transition to his important role at the end of February 2026. So with that, let's get to our results. Our team's strong execution with the Danaher business system drove solid second quarter results in what remains a dynamic operating environment. Strong growth in our bioprocessing business, paired with disciplined cost management, enabled us to exceed both our adjusted operating profit margin and cash flow expectations for the quarter. While global trade tensions have led to some uncertainty, market conditions in the second quarter were generally consistent with what we saw in the first quarter. In pharma, global production of monoclonal antibodies, where the majority of our exposure lies, remained robust, and we continued to see a modest recovery in pharma R&D spending. Academic and government demand remained soft as expected, with ongoing uncertainty around research funding. Clinical diagnostics and applied markets, meanwhile, remained stable. Now while the macro environment remains fluid, we're intensely focused on what we can control, and that's to continue delivering for our customers, associates, and shareholders. Now our team has done a nice job running the DBS playbook to offset cost pressures from tariffs, deliver meaningful productivity gains, and turn challenges into opportunities. At the same time, we're taking thoughtful actions to protect our financial and competitive positioning, including addressing structural costs, while continuing to invest in innovation for the long term. Our second quarter results also highlight the strength and resilience of our portfolio. We're well positioned in attractive end markets driven largely by nondiscretionary healthcare needs and supported by strong secular growth drivers. Our businesses share a common set of relatively durable high recurring revenue business models, with the majority of our revenues being consumables that are specified into regulated manufacturing processes or specific to the equipment that we supply. On top of this, our strong balance sheet and free cash flow generation positions us well to further enhance our portfolio going forward. So with that, let's take a closer look at our second quarter 2025 results. Sales were $5.9 billion in the second quarter, and we delivered 1.5% core revenue growth. Geographically, core revenues in developed markets were up low single digits, with North America up slightly, and a high single-digit increase in Western Europe. Core revenues in high-growth markets were flat overall. As solid performance outside of China was offset by a mid-single-digit decline in China. Growth in our biotechnology and life sciences businesses in China was more than offset by declines in diagnostics due to volume-based procurement and reimbursement changes implemented in late 2024. Our gross profit margin for the second quarter was 59.3%. Our adjusted operating profit margin of 27.3% was flat year-over-year, as the favorable impacts of higher volume leverage, product mix, and disciplined cost management were to reduce our structural cost. Adjusted diluted net earnings per common share of $1.80 were up approximately 5% year-over-year. We generated $1.1 billion of free cash flow in the quarter and $2.2 billion in the first half of the year. Resulting in a year-to-date free cash flow to net income conversion ratio of 143%. Now as I mentioned earlier, we're continuing to make significant investments in long-term growth initiatives across Danaher. The second quarter alone, those investments translated into several important new product and technology launches. Each reinforcing our long-term competitive position while delivering meaningful benefits to our customers. Let me highlight a few of these key introductions and how they're designed to help customers improve quality and yield, reduce costs, and bring new therapies and diagnostic tests to market more efficiently. In biotechnology, Syteva expanded its comprehensive purification portfolio with the launch of two new protein A resins, MabSelect Sure 70, and MabSelect Prisma X. Each stage of drug development presents unique purification needs. And these resins are designed to offer cost-effective solutions for preclinical and clinical production without compromising on quality. It also underscores Sytiva's commitment to delivering innovative solutions to help customers reduce manufacturing costs, increase flexibility, and maintain the high-performance standards they expect across all stages of the drug development process. Now life sciences reinforced their leadership position in mass spectrometry with the introduction of the Xenotov 8600 at June's American Society of Mass Spectrometry Meeting. XenoTOS 8600 expands, Sykes is high-resolution mass spectrometry footprint and delivers tangible performance improvements across proteomics, lipidomics, metabolomics, and small molecule workflows. The 8600 offers competitive molecular identification and superior quantification compared to other leading high-end platforms. Helping scientists better understand molecular structures, and measure more targets in complex samples with greater speed and confidence. With the ultimate goal of accelerating drug development times. And in diagnostics, we announced a new partnership with AstraZeneca to develop diagnostic tools that help clinicians identify which patients are most likely to benefit from precision medicine treatment. This collaboration is leveraging the newly launched Danaher Centers for enabling precision medicine to support a more streamlined end-to-end development process. The first product in development uses technologies from Leica Biosystems with a focus on digital and computational pathology, including AI-assisted algorithms to improve diagnosis, and enable more targeted therapy decisions. So now let's take a closer look at our results across the portfolio and give you some color on what we're seeing in our end markets today. Core revenue in our biotechnology segment increased 6% with bioprocessing up high single digits and discovery and medical down low single digits. In bioprocessing, we were pleased to see the positive trends in our order book continue through the second quarter. Revenue growth was led by low double-digit growth in consumables with particularly robust demand for commercialized therapy. Equipment declined as expected, as customers continue to absorb capacity added over the past several years and global trade uncertainty contributed to delays in some larger capital investment decisions. In addition to strong demand for commercial production, the number of therapies and development and clinical trials remains robust. Monoclonal antibodies, which comprise more than 75% of our bioprocessing revenues, remain the largest investment area for our customers and there is a healthy pipeline of new molecules development. At the same time, biosimilar development and production and demand for our solutions are increasing as patents on high-volume therapies expire making life-saving treatments more accessible and driving broader adoption. With our comprehensive portfolio and an innovation engine geared towards increasing yields, and enhancing manufacturing efficiencies, we're well positioned to support our customers as they advance these therapies through development, and into commercial production. The strength of the development pipeline paired with consistent growth in commercial production also reinforces our conviction in the high single-digit long-term growth outlook for our leading bioprocessing franchise. Now turning to our life sciences segment, core revenue decreased by 2.5%. Core revenue in our life sciences instrument businesses collectively declined low single digits in the quarter. Looking across our end markets, clinical and applied markets held up well globally while demand from academic and government customers remained weak. As I mentioned earlier, we continued to see modest recovery in pharma spending with revenue from these customers growing in the quarter. In China, we saw an improvement in demand at stimulus-related funding translated into new customer orders and revenue. Core revenue in our genomics consumables business declined in the quarter driven by lower demand for plasmids and mRNA, from two of our larger customers. Along with funding pressure across early-stage biotech and academic research customers. Now you likely saw IDT and Aldebaran in the headlines this quarter for their groundbreaking role in helping develop the world's first on-demand mRNA-based personalized in vivo CRISPR therapy. This achievement marks a major milestone for in vivo CRISPR-based therapies and serves as a powerful example of how our genomics businesses are helping advance the future of personalized medicine. Now moving to our diagnostics segment, core revenue increased 2%. Low single digits Core revenue in our clinical diagnostics businesses was up with mid-single-digit growth outside of China. Ekman Coulter Diagnostics led the way with high single-digit growth outside. This marks Beckman's fourth consecutive quarter of mid-single-digit or better core growth outside of China. And as a direct result of good traction from recent innovations such as the DXC 500 I integrated clinical chemistry and immunoassay analyzer and the DXi 9000 high-resolution amino assay analyzer and continued momentum in commercial execution. In molecular diagnostics, Cepheid's respiratory revenue was modestly better than expected. Though slightly below prior year levels. CFIUS core non-respiratory revenue grew double digits including double-digit or better growth in sexual health, virology, and hospital-acquired infections. This sustained growth in non-respiratory revenue reflects increasing menu adoption and system utilization across our installed base. Along with continued strength from newer assays such as the multiplex vaginitis panel which grew over 75% in the US this quarter. Afesia continues to expand its global installed base of more than 60,000 instruments. This expansion has been driven by notable wins across large healthcare systems, and integrated delivery networks that are standardizing testing on the gene export platform. As these customers look to allocate resources more efficiently, Cepheid's point-of-care molecular testing is proving increasingly valuable. Helping deliver greater efficiency, through fewer total tests higher rates of correct treatment, and ultimately, lower overall treatment cost compared to other testing strategies. So with that, now let's frame how we're thinking about the third quarter and the full year 2025. For the full year 2025, we continue to expect core revenue growth of approximately 3%. Additionally, we're raising our full-year adjusted diluted net EPS guidance to a range of $7.70 to $7.80 versus our previous range of $7.60 to $7.75. In the third quarter, we expect core revenue to grow in the low single-digit percent range and additionally, we expect the third quarter adjusted operating profit margin of approximately 25.5%. So to wrap up, we're encouraged by the momentum we've generated in the first half of the year, particularly in our bioprocessing business. Our team's focused execution and a dynamic operating environment enabled us to deliver financial results ahead of our expectations while advancing solutions that are at the forefront of improving patient and healthcare outcomes. Our solid second-quarter results also underscore the unique positioning of our portfolio. Our businesses are well positioned in end markets with long-term secular growth drivers and our businesses and our business models are resilient with more than 80% of our sales today comprised of consumables, and service revenue which is typically highly recurring. At the same time, the strength of our balance sheet and financial position allows us to invest for the future. Both organically and through strategic capital deployment. To further enhance our long-term competitive advantages. So looking ahead, we remain focused on what we can control, and what has become a more complex macro environment since the start of the year. We believe the combination of our talented team, the differentiation of our portfolio, and our strong financial profile, all powered by the Danaher business system. Will enable us to continue delivering strong results for the remainder of 2025 and beyond. So with that, I'll turn the call back over to John. John Bedford: Thank you, Rainer. Operator, that concludes our formal comments. We're now ready for questions. Margaux: Thank you. As a reminder, ladies and gentlemen, if you would like to ask a question, please press star then the number one on your telephone keypad. We'll take our first question from Michael Reiss with Bank of America. Please go ahead. Michael Ryskin: Thanks for taking my question, guys. And I want to be the first to congratulate both Matts on current and future roles before you're working with both of you and look forward to it. Rainer, I want to start on just I want to start on the order trends commentary real quick on bioprocess. You had some really positive commentary in terms of positive trends in the order book continuing, especially in the consumables. Wondering if you could dive into that a little bit more in terms of, you know, what the book to bill was, whether you saw orders accelerate from the first quarter. Just sort of expect or any color you can provide maybe by biotech versus pharma, just any additional color you can provide on bioprocess trends. Thanks. Rainer Blair: Thanks, Mike. Good morning. And let me put the order trend right into the context here of some of our comments. I think first, it's important to note that our biotechnology segment consists of two businesses. One is the bioprocessing business, which is the $6 billion annual revenue business that you were just asking about. And then the other is the discovery and medical business, which is a $1 billion business. And that business, the Discovery and Medical behaves a lot more like a life science tools business. Now to your point here, let's talk about bioprocessing and work through to the orders development here. So first of all, the performance and trends in Q2 were very consistent with what we saw in Q1. Consumables continued to lead the way globally with low double-digit growth in consumables really driven by commercial demand in large pharma CDMO customers. Smaller customers, while they were stable, are still below historical trends or historical levels. Now equipment remains below those historical trends. With funnels improving. So we're seeing better funnel activity but we continue to see order delays with trade policy creating some incremental noise here probably slowing some decision making. Now overall, our book to bill was consistent with prior quarters and around one, with some lumpiness in equipment orders. And overall orders activity in the first half and second quarter are fully supportive of a high single-digit core growth in the second half. So if you put all that together here and it's I think it's important also comment on the top line performance here, which continues to drive strong profitability with fall through of over 50% in bioprocessing in the first half. So when you put all that together, we're really encouraged by the strong first half. We expect high single-digit growth in the second half of the year. And all of this reaffirms our belief that bioprocessing is a high single-digit grower both in 2025 and the long term. Michael Ryskin: Okay. Thanks. I want to touch on something that you also brought up a couple of times. You mentioned global trade tensions. Few times in the prepared remarks. You just touched on it in your prior answer. If you could expand on that, where you're seeing it? Is it sort of what regions geographically and also what customer segments, whether it's pharma, or some of the more industrial or applied markets. Is it pausing of orders? Is it cancellation? Is it delays of new orders? Just sort of how are you seeing those dynamics play out? And do you expect a recovery in that or improvement in that as we go through the rest of the year and we have sort of continued discussion on the tariff front? Thanks. Rainer Blair: So, Mike, I mean, I think there's a general overlay here of trade uncertainty as it relates to how the tariffs will play out. If we think about the different end markets, in pharma, certainly, as we pointed out, this market continues to grow. Over time, there is going to be a need for capacity expansions. And now pharma companies have to ask themselves the critical question as to where they're going to build that new capacity. Of course, that's hard to do if you don't know yet what the tariff situation ultimately plays out to be, but we would expect that that overhang here clears here certainly in the next, you know, six to twelve months. That certainly our planning assumption. So that is an overlay on pharma. As it relates to the applied and clinical market. I think that's less of a factor. So clinical markets we see volumes remaining fairly consistent capacity increases are more incremental. In that regard. And as it relates to applied markets, I would say the same thing. Great. Thanks. I'll leave that. Margaux: And we'll next go to Doug Schnickner with Wolfe Research. Please go ahead. Doug Schenkel: Good morning. Matt and Matt, congrats, and thanks for all the help. And thanks for the broader team for giving us some time this morning. So I just want to talk about Bioprocess a little bit more. And I really just want to clarify your bioprocessing assumptions that are embedded into guidance. So first, you had previously told us to expect high single-digit bioprocessing revenue growth for the year. Is that still the case? Second, you got two and a half points of price in the biotech segment in Q2. What is your assumption for pricing for the second half within the segment, and what does that imply regarding volume pacing? And then third, really more to the point, it seems like you may have increased bioprocess and guidance while reducing D and M assumptions, and you kind of referenced this in your response to Mike. I just want to see if that's the case. Thank you. Matt McGrew: Maybe I'll take a first stab at it. So kind of to your first part of the question on how on bioprocessing, I think the simple answer is yes. High single digits is still our guide for the year for the bioprocessing piece. Again, just, you know, for folks, that's that $6 billion of the $7 billion in the segment. So that we are still expecting to see high single digits. I think your second question was around price and what we saw here. So I think we saw about, you know, call the first half one and a half two percent kind of prices what we saw in the segment. I think we're probably going to do roughly the same, maybe a little bit better here in the second half. From a price perspective in the segment. And so from a volume pacing perspective, which I believe you asked about as well, you know, we really know, we will see Q2 kind of step down in Q3, very traditional for us have a kind of a volume step down in Q3. You know, we do some work on some of our plants and we typically Q3 is our lowest volume quarter. And you see that both in you see it really in the margins too. You'll at in bioprocessing Q2 to Q3. But then you step right back up, Q4 is our best quarter in bioprocessing. So I would expect to see the same kind of cadence on that. And then lastly, I think it was on, you know, just sort of maintaining the full margin the full guide for the year on the segment. I think that's right. I think on the margin, probably a little bit lower at D and M. But we're probably a little bit better here in bioprocessing in that $6 billion piece. So again, it's on the margin. You know, it's not huge, but we are we would maintain the guide for the full year for the segment. Little better in bioprocessing, maybe a touch worse in D and M. And as Rainer said, that DNM piece is very different than bioprocessing. It kind of acts almost like a life science tools business. It's something they're. Margaux: Great. Thank you. Next, we'll go to Scott Davis with Melius Research. Please go ahead. Scott Davis: Hey. Good morning, guys. And I'll echo my congrats. Rainer, you're lucky to have two rock stars with you there. Three including John. Sorry, John. Rainer Blair: I totally agree. Totally agree. Thanks, Scott. Scott Davis: Just first, just to clarify something. Is the structural cost out part of the story? Is that behind us now? Rainer Blair: Yeah. I mean, I think it's we feel very comfortable and confident that we are going to get all of that $150 million. I think we've probably got about half already, Scott, and the other half will come as we work through the second half. But I feel very comfortable. Scott Davis: Okay. And I'm actually. Just kind of curious of your view here. I mean, early-stage biotech I'm just trying to get a sense of what you think this is gonna how this is gonna play out in the next, you know, couple of years. But is this a case of where kind of, you know, AI spend is crowding out perhaps some of the opportunities? Is there pent-up demand here? I mean, just kind of, you know, are we still gonna be talking about this in twelve months, I guess, is my question. And I'm just kind of curious how you guys view the market. Rainer Blair: Well, I would say that we just look where we are today, biotech is at lower activity level but stable. You know, the investment environment has been tough here with the amount of venture capital that goes into these biotechs flowing and those that are already out there really needing to focus on those therapeutic programs that show the best data. And I think that is representative of what has been going on here more generally in the sector that the enormous wave of investment that we saw during and just after the pandemic has waned and the market is now finding its footing. Now as it relates to AI, we really see that ultimately as a tailwind because we see then less money being spent on getting to compound ideas, if you will, and more money being spent taking great ideas, which have been validated in silico, as they say, through the development pipeline, ultimately, driving more manufactured and commercialized therapies. And, of course, that's where our business is. Where we have the most volume, of course, the most share. And so we view this really positively. But we have to say that we're at a low activity level currently. In the discovery phase of the biotech market. Scott Davis: Okay. Good color. Alright. I'll pass it on. Congrats again, Matt and Matt. Rainer Blair: Thanks, Scott. Margaux: Next, we'll go to Tycho Peterson with Jefferies. Please go ahead. Rainer Blair: Good morning, Tycho. Hey. Thanks. Good morning. Tycho Peterson: Wanna probe a little bit on the guide. So you're not slowing through the entire EPS beat. I'm just curious, you know, if there are areas of maybe incremental caution in the back half of the year. And then on 4Q specifically, you've got a step up in life sciences. I think kind of ramping to mid to high single digits, and the comps there are more difficult. So just curious if you can get us more comfortable with that. In particular. Is that, you know, contributions from the new Syex launches at ASMS? Matt McGrew: Yeah. That's a piece of it. Maybe I'll let Rainer kind of take the second half piece because he can talk about some of like you said, some of the new stuff that's out there. But maybe I'll take the first question, which is sort of on the guide and the flow through. So, you know, maybe I'm kind of sort of thinking about the guide like this. It's so we got off to a pretty good start in the first half. Both on, you know, cost actions like I said to Scott earlier, I feel very confident where we are on those. We had a little bit better FX. As well. Probably, you know, FX was maybe a nickel better for us. And like I said, I think we get the full cost actions, which is probably, you know, fifteen cents or so. So, you know, I kind of look at that, say, twenty cents, and that's what we flowed through to the full year. So all the cost actions in the better first half FX. So we started in January. We'd call it, you know, $7.60 as sort of the range. Put the twenty cents on top of that, and that's how you get kind of the high end of the range now at $7.80. So but there are two other things here that, I think you're right. We have not flowed through fully, and I think maybe the easiest way to think about it is one, we had a good start in respiratory in Q1 and Q2. And two, FX. In the second half, that's gonna be much more favorable than we thought in January. And so I think the combination of those two may be probably another fifteen, twenty cents that has not flowed through. And the reason we haven't flowed it through is one, we're gonna maintain the full year respiratory guide at $1.7 billion, see how that plays out in Q3 and Q4, you know, you know, that that is a variable number. And that FX is the same. Right? That could fluctuate. And come back. That has made a significant movement since January and, you know, that could very well come back. And so we've decided now to hold back on resettor, hold back on the second half FX, and just kind of see see what happens especially in a pretty dynamic, you know, policy and operating environment just felt felt like, you know, we'll we'll we'll sit and see how things play out before we commit to that final fifteen twenty seven. Rainer Blair: Yeah. And to the second part, Tycho, I mean, what we're really saying is the first half in the life science segment was down low singles. We expect the full year to be flat, so the second half needs to be up positive low singles. And what we're really seeing there is the impact of three factors. The first is and we're actually not assuming a significantly improved activity level. So in genomics, we expect to see better comps as an example. So in China, we're seeing it's incrementally firmer with some stimulus dollars following through. And then as you suggested, we have a number of new product introductions that are gaining track funnels here in the first half, including Ciox. And Beckman Coulter Life Sciences and some others. And so we expect those to gain traction here in the second half. Maybe to put some numbers around it for you, Tycho. Your sort of best step up from one half to two half to go from down low single to upload single life sciences. Call it $150 million. Roughly. And I think if you if you are kind of trying to bridge that I would say that genomics again, remember the first half, we had those two large customers really fall off. I think that's probably a third of it. I would say that we are assuming China, especially China and tools, with some comps, easier comps and a better funding environment is another third of it. And then lastly, you know, new products and kind of other things is the final third. So a third, a third, a third between China, genomics, new products, other. That's sort of what we're assuming and it baked into the model from StepUp. From one half to two half of roughly $150 million. Tycho Peterson: Okay. That's helpful. And then one quick follow-up sounds like you're not flagging any incremental headwinds on volume-based procurement. You know, obviously, one of your periods did last week. Maybe just give it get us comfortable you know, that's not a lingering issue that could get worse. Rainer Blair: So in China, volume-based procurement and the reimbursement changes, was essentially what we thought in Q2. And for the first half of the year. In fact, volume was consistent with Q1 and our expectations. So there's really no change to our expectations of a $150 million adverse impact from volume-based procurement in 2025. Tycho Peterson: Now under the hood there, there's been some recent policy changes. Rainer Blair: Which largely did not affect us. Because they're really geared to different aspects of the testing menu which we actually don't have. So it's possible that different companies experience different things here. But for us, we saw the quarter develop as expected. Volumes were consistent with Q1. And we don't have a different perspective on $150 million here for the year. On volume-based procurement. Tycho Peterson: Okay. That's helpful. Thank you. Rainer Blair: Thanks, Tycho. Margaux: Next, we'll go to Vijay Kumar with Evercore. Please go ahead. Rainer Blair: Good morning, Vijay. Vijay Kumar: Good morning, and thank you for taking my question. Congrats to both Regina and Maguire. Maybe one on biotech for you, Ryan. Guidance, 7% was maintained. You know, you look at your second quarter and third quarter assumptions here for 6%. Implied growth of Q4 should accelerate to, you know, high singles, maybe 8 to 9% as. What is the guidance you mean for Q4 acceleration in biotech? Is that maybe China coming back, small biopharma coming back or maybe Exxon turning around? Matt McGrew: No. I would say that we've got high single-digit core for both Q3 and Q4. I don't know that there's any real material changes that we have tried to bake in by a certain geography or in, you know, equipment. Or anything like that. I would say it's we're just assuming a fairly steady environment, which is, you know, we've seen really good, you know, double-digit type growth out of consumables, Equipment has been pretty muted, and we expect that to continue here throughout the back half of the year. As we work through. So I don't think it's a massive change for us. This is not about a step up in activity level this is just the normal seasonality, Vijay, that you see with Q3 being sort of the lowest level of activity in bioprocessing and some other markets as well. And then as the fourth quarter kicks in, that's always been and continues to be the largest order for us from an activity level. Vijay Kumar: Understood. Then maybe my follow-up sort of related question here. Was there any pull forward either in academic channels or biopharma channels, I think. You know, that question comes up. You know, because of tariffs, were there any customer changing customer behavior? And I think given all of these macro situations, right, is this biopassing sort of high single digits now a sustainable number or these macros dose or sort of overhang when we think about 2026. Rainer Blair: So, Vijay, we haven't seen any meaningful pull forward. We just haven't we're often asked and our numbers and our surveys and our customer conversations don't indicate that. We think the bioprocessing market has for years and the activity levels continue to confirm that this is a high single-digit growth market. And that'll continue now. As it relates to 2026, we obviously have still half a year ahead of us. In what is a pretty dynamic operating environment. With, you know, some questions that still need to be answered as I spoke to earlier. But it is our plan to provide some preliminary thoughts on 2026 for Danaher overall. During our October earnings call. So we just want to see here how the third quarter plays out and then in October, we'll give you our preliminary thoughts on 2026. Vijay Kumar: That's helpful. Thank you, guys. Rainer Blair: Thanks, Vijay. Margaux: Next, we'll go to Puneet Souda with Leerink Partners. Please go ahead. Rainer Blair: Good morning, Puneet. Hi. Puneet Souda: Hi. Thanks, Ronald. And Matt Matt, my congrats also. Just wondering, I know you talked about tariffs, but just I want to clarify, you previously sized at about $350 million in tariff costs with room to mitigate why supply chain and optimization. Can you talk to us about the updated number there? And just given the inter-quarter changes with US-China trade and the 145 tariffs going to now 30%. Matt McGrew: Yeah. I would say that from a number perspective, we're still at, you know, kind of a couple hundred million dollars of exposure right now today. That's what we would think of. As far as versus the 350, I mean and that obviously could change in very short order as far as, you know, kind of China and the tariff there, you know, we've got a lot of different things that we can do, both internally that we have control over and then also other levers that were available to us within the quarter that we're able to use to effectively, you know, not have to charge our customers in tariff. And so we took advantage of those levers and so therefore, from our perspective, as we've always said, we plan on offsetting all the tariffs and we only plan on offsetting them. If we have to pay it, we will try and pass that along somehow someway. But if we don't pay it, we're not gonna try and pass. It off. So that was a net neutral event for us in China. Puneet Souda: Got it. Thanks, Matt. And then just briefly on a question that is on the minds of investors just given the impact that has happened in the gene therapy market. One of your customers has seen a suspension of their therapies from FDA and safety concerns. The question is how broad is the exposure to gene therapies? And I totally recognize that, you know, innovation doesn't come without risk. So just how are you thinking about this risk overall and the AAV exposure that you have with respect to Alderon and also yours, the Cytiva segment as well. Rainer Blair: On gene therapy, so AAV-based gene therapy as you were just suggesting is really in the early innings, Puneet. And this is going to have, you know, its vacillations. Two steps forward, one step back. Of course, what we just saw here in the news is a step back. But it's not to say that that therapy is not a very interesting and important alternative here for all kinds of different disease forms that are out there. So specifically some genetic diseases. So I think as we think of the broader picture, genomics, is in the early innings and has the potential to be an exciting and effective treatment regimen. Now as we think about, you know, our own exposure here across Danaher, we're not talking about more than a couple hundred dollars. Keep in mind, we're a protein house here with, you know, really 85% of what we do focused on proteins. And, of course, that's a well-established market, and that's what drives our business and our earnings. Now we typically talk about these things more narrowly. But if we think about our guidance and you mentioned Sarepta here and Aldebron, you know, our guidance in the market is essentially playing out as we expected, but the Alderon Sarepta revenue we expect to be $30 million for the full year. With a minimal contribution here in the second half. So our guide contemplated and did not expect significant revenue contribution from that particular therapy. Vijay Kumar: Got it. Puneet Souda: Helpful. Alright. Thank you. Rainer Blair: Thanks, Puneet. Margaux: Thank you. And next, we'll go to Dan Leonard with UBS. Please go ahead. Rainer Blair: Good morning, Dan. Dan Leonard: Good morning. I was hoping, Rainer, that you could elaborate on trends in China out. Is that business. Turning a corner? And if you could elaborate further because you touched on it briefly a few times in the prepared remarks. Rainer Blair: So our China business outside of diagnostics has been firming up. The bioprocessing business has shown slight growth here in the quarter. And we see the biotech and pharma market there some more solid activity levels. So we do see that in bioprocessing. As we think of life science tools, we did see more stimulus activity and that's flowing through not just to orders, and the revenues. It's still not at normal activity levels, but we do see it firming up. So we're encouraged by what we see here. For those two businesses. And that's reflected here in our second-half view. You'll recall Tycho's question here the firming up of China in life science tools is a part of that. Dan Leonard: Thank you. And just a clarification question for Matt McGrew. Matt, did I hear you correctly that at current foreign exchange rates that your guide would be fifteen cents higher? Matt McGrew: With the rent both the respiratory and the current FX. Probably fifteen, twenty cents. I'm not sure I'd say the guide tire, but that's what the math would imply. That we have not, if you would, not flowed through. Dan Leonard: So yeah. Understood. Thanks a bunch. Margaux: Thank you. And next, we'll go to Dan Brennan with TD Cowen. Please go ahead. Dan Brennan: Ryan, I wanted to just go back to bioprocess orders, if you don't mind. I just wanted to confirm sort of Mike's earlier question. I think you said the book to bill was around one equipment more lumpy. Because, I mean, if I look back at the first quarter transcript, I think you talked about the seventh consecutive quarter of a book to bill that was solidly over one. I'm not trying to nitpick it. Just trying to clarify, maybe that was related to consumables. Just maybe if you can expand upon that a bit. Rainer Blair: This is so the trends are really very comparable. Here. I would tell you that this book to bill is not a perfect measure. And that lumpiness, especially with larger orders sometimes does not play through. So what we see here is consistent with what we've seen in prior quarters. It's around one. And, yes, we saw some lumpiness here in equipment and some larger orders. But the activity level is very okay. Dan Brennan: And then maybe moving over to Saffia, I know you had a nice quarter. It was low double digits. Ex-COVID. Could you just speak to kind of know, what's baked in for the 2025 guide, how we think about that low double digits continuing, or changing as we get in the back half of the year? I know you gave some color in the prepared remarks, but any further color there would be great. Thanks. Rainer Blair: As you said, overall, had exceeded our expectations on a little bit better rest and double-digit non-respiratory growth. And in fact, these non-respiratory reagents grew low double digits in the quarter, second quarter, and we did see strength across the test menu. With double-digit or better say, or better growth in sexual health for virology and hospital-acquired infections. And we actually expect that strong non-respiratory demand to continue in the low to mid-teens for the full year. And the reason is we continue to expand that installed base. Particularly at large IDNs, that are standardizing across their network as they go a little bit closer to patients in their satellite settings. And it just shows how Cepheid's strategy is playing out. I mean, we see increasing menu adoption and utilization of the existing installed base, and we continue to expand that. And then with that, we see the pull-through of, asset assays such as the hospital-acquired infections and virology. And then lastly, this recent menu expansion around our MVP so that's the multiple vaginitis test. That's up over 75% in the US. So we feel very good about the non-respiratory portfolio continuing to track at higher growth levels mid-teens. Margaux: Thank you. And next, we'll go to Rachel Vatsendale with JPMorgan for our last question. Rainer Blair: Good morning, Rachel. Great. Rachel Vatsendale: Good morning, you guys. Thanks for taking the questions. I wanted to echo everyone's earlier comments and congratulations to both of the maps here. So my first question, I just wanted to dig on to some of the trends on bioprocessing equipment. You've highlighted that revenues were weak and orders were lumpy in the quarter given some of that global trade uncertainty, but you said that the funnel remains strong as well. So if we look at some of these press releases on companies building on additional capacity. I just wanted to get your thoughts on how are you thinking about the timing of recovery on bio-processing equipment given those dynamics. Are you assuming recovery in equipment in the revenues basis? And then how are you thinking about the opportunity for onshoring and reshoring longer term? Rainer Blair: Thanks, Rachel. Well, it is as you suggested here, that larger projects are in discussion and their decisions are being delayed certainly the reason I talked earlier, trade policy, tariffs, couple other points. What's also important to note is that the reality of this is that it takes a number of years to build new pharma manufacturing plants. And that building, that capacity is gonna take some time. So it's really too early to determine what all these large announcements will how they play out and when that money flows. Now that said, I mean, Sytiva is very well positioned here to capitalize as these decisions start being taken and move through their capex processes. Because of the breadth of our portfolio, you know, our scale and, of course, the global footprint, we can do this anywhere in the world. Now to your point earlier about how do we think about the guide for 2025 here, we expect 2025 is gonna be a down year for equipment. And so we do not expect in our guide a significant step up here. When I talk about the improved funnel activity, what we do expect here is the continued small capacity expansions that you see where the decisions are much easier to make in existing plant footprints. And we'll see as we get to October here, we'll talk a little bit more about how we're thinking about 2026. Rachel Vatsendale: Great. And then for my follow-up, I wanted to dig on respiratory a little bit more. So you raised the endemic rate on respiratory to $1.7 billion earlier this year, you typically see that split roughly fifty fifty between the first half and back half. So just given your tracking to $900 million at this point, that's slightly ahead of expectations relative to the $1.7 billion assumption for the year. Now I know it's too early and you guys are kind of pushing towards that 3Q call in terms of how you're thinking about respiratory assumptions. But just can you walk us through, would you consider revisiting that endemic rate as we get towards your end? Would you potentially revisit it for a fifth time? And then can you remind us what are you currently assuming on that $1.7 billion number in terms of the mix on four in one versus COVID only test? Matt McGrew: Yeah. I mean, I think the way to think about, Russ, respiratory is we've got a guide that is $1.7. We've been kind of guiding to that really for the last probably three years. And, you know, it's been a little bit better the last couple of years. And I we are not, you know, that is not a number that we are completely bold to. I think if we start to feel as though that number is a little bit higher, we would sign up to that. So I think we've had those conversations. I think I'd like to see how this year goes, that this year started. In January. That felt much more like a typical, you know, sort of a typical respiratory season. It did get a little higher for a peak higher there, but it, you know, it followed us a more similar pattern, you know, than we had seen before. And, you know, so I think if we can get another year behind us, we'd be open to revisiting that number for sure. And as far as, you know, with the $1.7, like you said, we're a little north of $900 million. You know, we'll see how Q4 plays out. That's usually the big quarter, Q4 and Q1 as you know. And also the difficulty with respiratory straddling sort of two years. Does make it a little bit difficult. But so that's kind of where we're at in four in one, you know, I think we're at this point probably, you know, 75, 80% four in one. We do do some, regular, you know, regular COVID only. Typically, mostly I shouldn't say not some a lot of it is in Europe, but there is some in the US too that will do that. But, I mean, that's basically been our mix for the last couple of years. Margaux: Thank you. And I'd now like to turn the call over to John Bedford for any closing remarks. John Bedford: Thank you, Margo, and everybody. We'll be around all day for questions. Bye. Margaux: Thank you. Ladies and gentlemen, that does conclude today's program. We thank you for your participation. You may disconnect at any time.

Operator: My name is Chelsy, and I will be your conference facilitator this morning. At this time, I would like to welcome everyone to Danaher Corporation's First Quarter 2025 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I will now turn the call over to Mr. John Bedford, Vice President of Investor Relations. Mr. Bedford, you may begin your conference. John Bedford: Good morning, everyone, and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive officer; and Matt McGrew, our Executive Vice President and Chief Financial Officer. I'd like to point out that our earnings release, quarterly report on Form 10-Q, the slide presentation supplementing today's call, the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call, and a note containing details of historical and anticipated future financial performance are all available on the Investors section of our website www.danaher.com under the heading Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events and Presentations and will remain archived until our next quarterly call. A replay of this call will also be available until May 6, 2025. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. Our Form 10-Q and the supplemental materials describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company specific financial metrics relate to the first quarter of 2025 and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices, which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, and actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date that they are made and we do not assume any obligation to update any forward-looking statements except as required by law. With that, I'd like to turn the call over to Rainer. Rainer Blair: Thank you, John, and good morning, everyone, and thank you for joining us on the call today. Our first quarter revenue, earnings and cash flow all came in ahead of our expectations, highlighted by continuing strong momentum in bioprocessing and higher than anticipated respiratory demand at Cepheid. And our team executed well, leveraging the Danaher Business System to accelerate innovation, drive share gains and deliver meaningful productivity improvements. Now as you all know, the macro backdrop has become more dynamic since the start of the year, with rising geopolitical and trade tensions contributing to greater uncertainty across global markets. So before we get into our first quarter results, I'd like to share a few thoughts on how we're approaching this environment. First off, we're navigating this evolving landscape from a position of strength, supported by our talented team and with the Danaher Business System as our driving force. Now it's early and the macro environment remains dynamic, but it's in times like these that Danaher's positioning and capabilities truly stand out. Our businesses are well-positioned in attractive, typically non-discretionary end markets with strong secular growth drivers, united by a common set of more durable business models. In fact, more than 80% of our revenues are recurring, the majority of which are consumables that are specified into regulated manufacturing processes or specific to the equipment that we supply. It's not just the relative durability of our portfolio, it's how we run the business using the Danaher Business System. We're leveraging DBS to proactively manage our supply chains and drive process improvements to help ensure we continue to reliably support our customers each and every day. Now at the same time, we're taking thoughtful actions to protect our financial position, including addressing structural costs, while continuing to invest for the long-term. Now looking into Q2 and beyond, our focus remains clear, delivering for our customers, supporting our associates, and creating long-term value for our shareholders. We've operated through uncertain times before and have come out stronger than we entered. Our team is accustomed to tackling challenges head-on and turning them into opportunities, and we expect that mindset and momentum to continue as we move forward. So with that, let's take a closer look at our first quarter 2025 results. Sales were $5.7 billion in the first quarter and core revenue was flat year-over-year. Geographically, core revenues in developed markets were down slightly, with a low-single digit decline in North America and a low-single digit increase in Western Europe. High growth markets were up low-single digits, with solid performance outside of China more than offsetting a high-single digit decline within China. Declines in China were primarily driven by volume-based procurement and reimbursement changes implemented in late 2024, which impacted our diagnostics businesses, while the rest of the portfolio collectively delivered modest growth. Our gross profit margin for the first quarter of 61.2% was up 100 basis points year-over-year and our adjusted operating profit margin of 29.6% was down 50 basis points as the favorable impact of higher volume leverage in our Biotechnology segment and disciplined cost management was more than offset by productivity investments to reduce our structural costs. Adjusted diluted net earnings per common share were $1.88. We generated $1.1 billion of free cash flow in the quarter, resulting in a free cash flow to net income conversion ratio of more than 110%. As I mentioned earlier, we're continuing to make significant investments in long-term growth initiatives across Danaher. During the first quarter, the investments we've made over the past several years resulted in several impactful new product launches. And these innovations are not only reinforcing our long-term competitive advantages, they're also helping customers improve quality, yields and reduce costs while helping bring new therapies and diagnostic tests to market faster and more effectively. So let me highlight a few of these key launches. In Biotechnology, Cytiva introduced the 500 and 2,000 liter formats of the Xcellerex X-platform bioreactor at the INTERPHEX trade show earlier this month. Now the X-platform is designed to increase cell culture productivity and process intensity, helping drive higher yields while reducing the time and cost of biologic drug manufacturing. With these next-generation technologies, scientists can now seamlessly scale from 50 to 2,000 liters to meet growing demands ranging from clinical trials to commercial production. In Life Sciences, Beckman Coulter Life Sciences added spectral flow cytometry capabilities to the CytoFLEX platform with the launch of the mosaic spectral detection module. The mosaic enables researchers to switch seamlessly between conventional and spectral flow cytometry, while leveraging machine learning assisted data analysis for more precise characterization of multiple parameters simultaneously. Now these capabilities are especially valuable in the fields of oncology, where they facilitate tumor cell profiling and may also help uncover novel therapeutic targets. And in Diagnostics, like a biosystem, leverage the capabilities of our newly established center for enabling precision medicine to launch two new primary antibodies, PD-L1 and HER2, widely used in studying breast, lung and other cancers, with the goal of helping customers accelerate cancer research and therapy development. So now let's take a closer look at our results across the portfolio and give you some color on what we're seeing in our end markets today. Core revenue in our Biotechnology segment increased 7%, with Bioprocessing up high-single digits and Discovery and Medical up low-single digits. In Bioprocessing, we were very encouraged by the better than expected start to the year. Consistent positive momentum in our order book continued into the first quarter, with orders increasing sequentially for the seventh consecutive quarter. Revenue growth in the quarter was led by low double-digit growth in consumables, with particularly robust demand for commercialized therapies. On the equipment front, funnel and order trends are improving, but revenue declined as expected. Now the long-term health of the biologic market is incredibly strong with a growing number of therapies advancing through development and into commercial production. Given the significant growth opportunities ahead, we're investing to help ensure our leading bioprocessing franchise continues supporting customers as they develop and deliver lifesaving therapies to patients. In addition to the new product innovation I mentioned earlier, we've invested approximately $2 billion since 2020 to expand capacity and help ensure supply security for both us and our customers. These additions include new single use technology facilities in South Carolina, filter capacity expansions in Florida and a cell culture media expansion in Utah, all of which are now online, as well as a resins manufacturing plant in Michigan that is nearing completion. Near term, this capacity is critical for supporting existing customer demand, but it's equally important to support Cytiva's robust long-term growth outlook and illustrates our in region, for region manufacturing strategy. Now turning to our Life Sciences segment. Core revenue decreased by 4%. Core revenue in our Life Sciences instrument businesses collectively declined low-single digits. Demand across pharma, clinical and applied markets, which make up the majority of our revenues in these businesses held up well globally, while academic and government demand softened through the quarter, particularly in the United States. In China, demand remained stable sequentially and we were encouraged to see a modest benefit from stimulus programs. Core revenue in our genomics consumables businesses declined in the quarter. We saw continued positive momentum in next-generation sequencing products, but this was more than offset by weaker demand for plasmids and mRNA at two of our larger customers. Now in March, IDT announced a partnership with Elegen, a leader in next-generation DNA manufacturing to offer customers early access to Elegen's ENFINIA Plasmid DNA. This collaboration enables IDT to deliver cost effective, long and high complexity clonal genes alongside its highly differentiated portfolio of custom synthetic biology solutions. With ENFINIA DNA, Life Science and drug discovery researchers can integrate high quality DNA directly into their synthetic biology workflows with minimal or no cloning, saving weeks or even months of development time. Now moving to our Diagnostics segment. Core revenue declined 1.5%. Core revenue in our clinical diagnostics businesses was essentially flat with mid-single digit growth outside of China. Beckman Coulter Diagnostics had a solid quarter with both instruments and consumables growing mid-single digits outside of China, reflecting strong demand and continued traction in commercial execution. Now during the quarter, Beckman Coulter received a 510(k) clearance from the U.S. Food and Drug Administration for the DxC 500i integrated chemistry and immunoassay analyzer. The DxC 500i is purpose built to improve efficiency and meet the unique workflow needs for low volume laboratories such as those in community hospitals. This approval strengthens Beckman's position across the healthcare network, enabling it to offer a comprehensive portfolio of solutions for low, mid and high throughput core labs. In molecular diagnostics, Cepheid's respiratory revenue exceeded our expectations, driven by elevated levels of circulating respiratory illness paired with continued share gains. Strong growth across Cepheid's non-respiratory test menu was led by mid-teens growth in virology. In sexual health, U.S. revenue for our multiplex vaginitis panel was up 40%, as women's health clinicians are increasingly recognizing the value that rapid diagnostics at the point of care brings to patients. Cepheid's healthcare system and integrated delivery network customers continue to increase instrument placements at alternative care sites such as clinics and urgent care centers. So as healthcare decision makers work to most efficiently allocate resources, Cepheid's point of care molecular testing is proving increasingly valuable, offering greater efficiency through fewer total tests, higher rates of correct treatment and ultimately lower treatment costs compared to other testing strategies. So now let's frame how we're thinking about the second quarter and the full year 2025. We expect end market demand remains relatively consistent with the first quarter for the remainder of 2025. Regarding tariffs, based on what is currently implemented, we believe we can largely offset the impact from these tariffs through a combination of supply chain adjustments, surcharges, manufacturing footprint changes and other cost actions. Now for the full year 2025, there is essentially no change to our previous expectations. We continue to expect core revenue growth of approximately 3%, which assumes better performance in our bioprocessing business will be offset by slightly more modest expectations for life sciences. Additionally, we're initiating full year adjusted diluted EPS guidance in the range of $7.60 to $7.75. Given the current environment, we believe providing adjusted EPS guidance offers the best anchor point for assessing business performance and will provide better clarity for our investors. In the second quarter, we expect core revenue to grow in the low-single digit percent range. And additionally, we expect a second quarter adjusted operating profit margin of approximately 25.5%, reflecting normal seasonality in Cepheid's respiratory business and continued productivity investments. So to wrap it up, we're confident in our positioning in what could be choppy waters and we're leveraging the Danaher Business System to ensure we navigate this environment from a position of strength. DBS is what enables us to turn challenges into opportunities, drive meaningful productivity gains and support our customers when it matters most. At the same time, the strength of our balance sheet and financial position allows us to invest for the future, both organically and through strategic capital deployment to further enhance our portfolio and our competitive positioning. Now as we move forward, we believe the combination of our talented team, the differentiation of our portfolio and our strong financial profile will enable us to continue generating sustainable long-term value for shareholders in 2025 and beyond. So with that, I'll turn it back over to you, John. John Bedford: Thanks, Rainer. Operator, that concludes our formal comments. We're now ready for questions. Operator: Thank you. [Operator Instructions] And our first question will come from Michael Ryskin with Bank of America. Your line is open. Michael Ryskin: Great. Thanks for taking the question and congrats on the strong start, guys. Rainer, first, I want to start-off on bioprocess. You just had a lot of comments there on the order strength you saw in the quarter. You're raising the full year bioprocess expectation modestly. Just wondering, is that coming more from the consumable side of things? Is it equipment? I think when we spoke on the fourth quarter call, you talked a little bit about how you want to see some of the trends continuing. So could you just talk about what you've seen over the last three months that gives you a little bit more confidence in bioprocess? And if there's any change that you've noticed from customer order behaviors in the last month or two, just given what's going on globally. Rainer Blair: Sure, Mike. Thank you, and good morning. Look, we had a solid start here to the year and the bioprocessing business is clearly a part of that. And we're really encouraged by the continued positive momentum we saw here in Q1. So to your point around orders, we saw strong orders and revenue performance, which we now expect to be high-single digits core revenue growth for 2025. And those orders grew sequentially now for the seventh consecutive quarter, with the book-to-bill solidly over one. Now consumables continue to lead the way globally. No doubt about that. And we saw low double-digit growth in consumables, which was driven by strong commercial demand at large pharma and CDMO customers and smaller customers were stable, but still below historical levels. Now, as we think about equipment, it's not quite back to normal, but our order and funnels are a little better and I suspect the current environment is probably causing a couple of order delays there. But our commercial programs here on the equipment side and the demand related to them remains healthy. Now, we haven't seen any meaningful change in demand from the current tariff situation or reshoring efforts, but we're really well positioned for that if and when that occurs. So if you put it all together, we're really encouraged by the strong start to the year. And we reaffirm our belief that bioprocessing is a high-single digit grower, both in 2025 and for the long-term. Michael Ryskin: Okay. Thanks. And for my follow-up, I mean, you just touched on tariffs, you spoke about it earlier. In the 10-Q, you called out several hundred million gross impact, but it sounds like you're offsetting most of it. Could you just -- between those various levers, you talked about supply chain, the pricing surcharges, the manufacturing footprint. Any sense you can give us for how you're using those levers, which ones are giving you a little bit more confidence in the ability to offset that? And I think the risk with tariffs is -- right now, we're in a little bit of a holding period. If that comes back or if additional tariffs are implemented, just give us some visibility into your confidence to offset that in this dynamic environment? Thanks. Rainer Blair: Mike, we have a number of levers there and it's important -- but it's important to think about this in the following frame. And including that we have to avoid some false precision here, given some of the assumptions involved. But, the way we sit here today, we think our tariffs could be several $100 million of impact, something like $350 million. But actually we don't think that the current state, so where we sit today is where things ultimately end up. But regardless, we're really well-positioned to largely offset these headwinds. And here are some of the levers that we think about. For instance, we've been executing to regionalize our manufacturing network of over 100 plants for several years now, which allows us to rebalance these trade flows over time. Think China for China, I talked about the billions that we've invested here to increase our U.S. capacity. So we have a combination of both short-term and long-term countermeasures, such as surcharges, supply chain management, again, cost actions, but also relocating manufacturing. And of course, DBS is a real advantage to us here as well as we're focused on this topic. So again, as things change here over time, we've got a number of levers that we can deploy to address the tariff situation. Matt McGrew: And if -- Mike, if things get worse here or higher or the actions that we find aren't enough, I mean, we can be much more aggressive if we need to be. We've got all those levers to pull. I would say everything is on the table here in that situation, if that's what we get to. So I think we'd be looking at more significant surcharges. I think we've been going after costs even harder and we'd probably be looking at our manufacturing footprint even harder. So everything would be on the table at that point, but we feel like if that's what we're given, that's what we're going to deal with. Then we'll make it work. Michael Ryskin: Great. Thanks a lot, guys. Appreciate it. Operator: Thank you. Our next question will come from Tycho Peterson with Jefferies. Your line is open. Tycho Peterson: Hey, thanks. I want to probe a little bit on the last point on tariff offsets, pricing in particular. I think, in the first quarter, obviously, you've got the VBP headwinds on the diagnostics side, but I think Biotech and Life Science pricing was a bit below what we had expected. Can you maybe just talk on your comfort and your ability to take price, areas where you think you can push it more and maybe the mechanism to do it, is this going to be kind of rolling over the course of the year and what is your pricing assumption for the year at this point? Matt McGrew: I mean, I think from a price perspective, yes, Tycho, like you said, you saw sort of a little bit below where we've been historically, but I'm not sure it's meaningfully below. So I think our price for the year is kind of flattish is the assumption at this point. And that's largely due to the VBP that we've got already baked in. So that kind of brings everything else from a little bit of growth in price down to flat. So, no, that would not include anything to do with surcharges or tariffs, that is sort of not included in that concept of that number. So that would be something in addition to that would be out there. But as you know, a surcharge, really sort of price with no OP associated with it. So I think from a normal perspective of how we think of price, that's kind of where I would put us. Tycho Peterson: Okay. And then following up on bioprocess, obviously, equipment has kind of lagged in terms of the recovery. We've seen, I think, $150 billion in new CapEx announced, including Roche today in the U.S. When do you think that becomes a tailwind for you guys? You're obviously in a great position. Is that '26 do you think you start to see some benefit from some of that new build out? Do you think it's '27? What's kind of the time horizon for you guys? Rainer Blair: Tycho, it's a little bit early to say right now, but generally speaking, where existing plants are being debottlenecked, so additional capacity being added to existing footprint, that will come a little bit quicker here. We're not yet seeing that in our orders. And then, as you think about greenfield investments, that's likely going to take a little bit longer. But as you say, we feel as though we're very well-positioned there to support those expansions right here where they're being built. Tycho Peterson: Okay. And then just last one, crazy, I have to ask this, given all the moving pieces, anything you can say on kind of the long range outlook in '26, the Street's got you just under 7%. I think that's the big debate for tools is, in general, can this group get back to high-single digit growth? So anything from your perspective, sitting here in April that concerns you for next year? Rainer Blair: There's nothing that we see in our end markets that makes us think differently about our long-range plans. And as we've talked about before, some of the headwinds that we've talked about for 2025, we believe to be transient. And once we comp those, we expect to be back at those higher growth rates for the long-term plan. So we believe the end markets and how we're dialed into those with our leading franchises, plus getting through some of these head -- one-time headwind leaves us well positioned here for the long-term. Tycho Peterson: Thank you. Rainer Blair: Thanks, Tycho. Operator: Thank you. Our next question will come from Scott Davis with Melius Research. Your line is open. Scott Davis: Hey. Good morning, Rainer, Matt, and John. Rainer Blair: Good morning, Scott. Scott Davis: Hey, guys. Can you give us a little bit more color on China? And when I think about the VBP and what it's done to your diagnostics business there, how do you guys think about the algorithm of kind of long-term growth there versus kind of the reality that maybe the pricing environment is never going to make it a very attractive business, but I suppose there's a certain level of scale where maybe it is again, but how do you guys think about China in that context? Rainer Blair: Well, Scott, I think longer-term, we believe China will be either the second or the largest diagnostic market in the world and we believe we have a real role to play there. The pricing adjustments that you've seen really bring China closer to what global pricing is in other market and continues to be an attractive end market for us. So, as we digest both the reimbursement as well as the volume based procurement topics here in 2025, we look forward to having a strong business development here in China. Scott Davis: Fair enough. And as for balance sheet optionality, guys, I think you bought back something like $1 billion in the quarter of stock. I think you did something like $6 billion last year. But what -- I mean, the market is re-rated lower. Presumably assets have re-rated lower in the M&A world, although, we -- it's -- we don't have a lot of data points there yet. How do you guys think about the -- that environment, I guess, just overall the balance sheet optionality and what your preferences are here in 2025? Rainer Blair: Well, Scott, I mean, as you know, our bias is to M&A and our capital allocation, we continue to evaluate all the capital allocation alternatives. They compete against each other for our investments. No doubt that the current environment has pulled in valuations and we're going to have to measure that the degree of uncertainty in relation to those valuations. But one thing is for sure, we're going to stick with our framework, attractive end market, outstanding asset and then of course, the valuation framework has to work as well. Matt McGrew: And Scott, we've seen this before. Back in the days, you get some shock like this, right? And there's sort of an initial freeze where everybody tries to figure out what's going to happen. And as we sort of work our way through the process of how this is all going to work itself out, that's when I think having the balance sheet that we've got from a position of strength here, we have seen historically that this is a really good time to do M&A once that -- the winds start to blow, if you will. So, I like where we're at. We've got the ability to be aggressive there when stuff does break itself free. Probably just the beginning here, but if we keep going down the path, likely a very good buying opportunity in the future. Scott Davis: Makes sense. Best of luck, guys. I'll pass it on. Thank you. Matt McGrew: Thanks, Scott. Rainer Blair: Thank you. Operator: Thank you. Our next question will come from Doug Schenkel with Wolfe Research. Doug Schenkel: Good morning, guys, and thank you for taking the questions. I wanted to talk about two topics. One is on the genomics segment and one is on earnings guidance. So first on genomics. It seems like Aldevron remains under pressure due to really stocking at one large gene therapy and one large mRNA customer. I just want to make sure this is a continuation of trend and not really anything new in terms of a further deterioration relative to recent quarters. I don't think there's anything new there, but just want to make sure. And you kind of building off of that, when do you move past that dynamic? So that's the first topic. The second is on earnings. You gave us top line guidance. You gave us a lot of detail below the operating line. I don't think you gave us full year operating margin targets, but I think mathematically, it looks like you're maintaining that 28.5% target that you talked about coming off of the Q4 call. If that's right, I'm just wondering kind of where the offsets are built into the P&L, especially given that in Q1, you came in, I think about 300 basis points ahead of operating margin target. So I just want to see what the offsets are? And is that a function of prudent conservatism, given the environment we're in or is there something else we should be contemplating? Thank you. Matt McGrew: Yeah. No, I think you're right, Doug. On the margin side, the part of the reason that we gave an EPS guidance, we just felt like in this environment, there was -- there are going to be moving pieces in your P&L depending on sort of how you tackle these tariffs, some surcharges, cost out, etc. So I just think we felt like an adjusted EPS guide was a place for us to anchor and make sure that as things move in the P&L as they play out during the year, there was a point of anchor, which is so why we sort of did the EPS guide for everybody. As far as what that margin translates to, you're about right with the 20.5% (ph) that you talked about. So I don't think that that's different. As far as offsets, I think if you sort of -- I think what you're kind of getting at is, look, we had a $0.25 beat here in Q1 and probably have some FX tailwinds. And we've got a little bit of cost out tailwind behind us too, and you start to add those up, you probably can get to a number that's above that range. And I think that's -- I think your math is correct there. But we do have some cushion in this environment that probably, I think Rainer and I believe that strikes the right balance given the uncertainty in the macro today. A lot of positives to start the year here. We told you guys we're going to get after that cost structure. We're making really good progress on that, got after the first quarter, gives us a head start as we head into the year. But in this current world we are in, I think it makes sense for us to frame the guide of $7.60 to $7.75. We've got some cushion there, obviously, to the degree things sort of get worse. And if they don't and we see there's probably further upside. I think you're right, if things don't get any worse from here. So let's see how things progress. Lots to do on the policy front to get us to some resolution, but that's sort of our full stop philosophy on how we're thinking about this guide. Rainer Blair: Doug, and as it relates to Aldevron, as you suggest, there's really nothing new there. We anticipated this to occur and we see those two customers progressing as we thought and we expect that to get better here to your question in the second half of the year as we comp through it. Doug Schenkel: Thanks, guys. Operator: Thank you. Our next question will come from Vijay Kumar with Evercore ISI. Your line is open. Vijay Kumar: Hi, Rainer. Good morning, and thanks for taking my question. Rainer Blair: Good morning, (ph) Vijay. Vijay Kumar: My first question on the tariff math here. The $350 million of that gross headwinds, is that a full year impact or a partial year impact? And maybe if you could parse out, is this majority of this coming from China? What is being assumed for ex-China? And is tariff the primary reason why second quarter margins are trending down Q-on-Q? Matt McGrew: Let me start with the last one, 2Q trend down that has nothing to do with tariffs. So the Q2 sequential trend down has everything to do with lower respiratory volume at Cepheid. We've got an assumption of Q2 revenue for respiratory of about $250 million, down from $625 million. Very similar dynamic to what we saw last year when respiratory had that same big step down. So it's -- unfortunately, that is just part of our seasonality now, if you do get a good start to the respiratory season in Q1. Also in Q2, there is some restructuring. As we talked about, we are getting after some of the cost structure, in particular in Diagnostics, which is probably where it will show up the most. Given the VBP headwinds there and some of the things that they're doing to globally re-center, if you will, some of their go-to-market exercises, that is where we're seeing the biggest piece. So that's sort of Q2. As far as I think about the $350 million, that is a rest of year tariffs in place now number. So that is -- that's just kind of what we expect for here in '25. As far as what we might see in '26 for a full year, I wouldn't take that and multiply it by two. We're a long way away from December or January of '26 or December of '25. So I think very difficult to kind of to just double that number and assume that's what it's going to be. We're going to need to get a little bit more information before we can validate that for next year. And then, sort of where is that exposure coming from was your other question. I think the easiest -- the frame that we sort of have is, it's kind of 50% of it is coming from -- of our headwind, if you will, is coming from U.S. to China. And most of that is diagnostics, where we sell into -- from an assay perspective. The other half of that exposure is mostly U.S. from Europe. So that's -- I mean, there's some others, obviously with the 10% global, but the easiest way to think about it is half is U.S. to China, the other half is U.S. from Europe. Vijay Kumar: That's extremely helpful, Matt. Rainer, maybe one for you on the Biopharma. There is some of the pharma customers talking about potential R&D cuts if they face some tariffs. What is Danaher's total exposure to pharma, pharma overall, including bioprocessing? And how much of that is a pure production or manufacturing, which shouldn't be impacted even if R&D goes down? Maybe some commentary on R&D versus production. Rainer Blair: As you think about Life Science R&D for pharma, that is really represented in our -- primarily in our instruments group there, and it probably represents a third of that. So this is relatively small exposure. Keep in mind, our Life Science instruments, so the research tools exposure overall for Danaher is less than 10% of sales. And then once again, now we're talking about a third of that. Also, if you think about our performance here in Q1, we actually saw that pharma segment be fairly robust here and we haven't seen yet any additional deterioration as it relates to that particular segment. So, pharma, we see steady and investing, independent of what one pharma company does versus another. But overall, we see the segment as fairly robust here from a research perspective. And we continue to see bioprocessing. As I mentioned, we took up the guide here. We're really encouraged by what we see there. Matt McGrew: And as far as, Vijay, it's kind of the exposure wise, I mean, maybe the easiest way to think about it is, bioprocessing is $6 billion of revenue and that's probably the one that you're most worried about given the size of how big that is versus anything else we might have in Life Sciences or elsewhere. And that's all essentially commercial, right? It's 75% of that is going to be on-market or Phase III. So I think that's kind of the frame of how I think about our pharma exposure. Scott Davis: That's helpful. Thank you, guys. Operator: Thank you. Our next question will come from Rachel Vatnsdal with J.P. Morgan. Your line is open. Rachel Vatnsdal: Great. Good morning, you guys. Thanks so much for taking the question. I wanted to dig into the Life Sciences' performance. So you took down your assumptions for the Life Sciences guidance to now be flat for the year versus the prior assumption of low-single digit growth. You also called out some of the weakness in U.S. academics and government. So I was wondering if you could unpack that for us a bit. What types of products are you seeing the most weakness in in that research market? And then specifically regarding U.S. academics and government, how much was it down in the quarter? And what are you assuming for the full-year for US academic and government, especially in light of the reports last week that the new administration is going to be proposing a 40% cut to NIH? Rainer Blair: So to start with, good morning, Rachel. And just a reminder, as I just mentioned to Vijay, we're talking Life Science tools here, which are less than 10% of our revenue. So keep that in mind as you read across. For Q1, our Life Sciences finished modestly better than anticipated. And the reasons are that the comps are beginning to ease. And to your point, outside of U.S. government and academic segment, the market conditions are stable and why is that? Because we've dialed our portfolio into what we believe are the more attractive market segments here. For the long term, pharma, clinical and applied are by far how we've positioned our business. Now again, to your point, academic and government demand did soften through the quarter, that's particularly a U.S. phenomenon. Other geographies were a little more stable there. So, as we think about the guide here in 2025, we have taken account of the fact that we expect the U.S. government and academic market to continue to soften with the noise that we're hearing. And that is basically offset by the strength that we're seeing in bioprocessing. The kinds of instruments and the kinds of products that we're talking about here are the instruments that you're familiar with in research, but also then some of the laboratory consumables and reagents that you would use in that research with some of these government – U.S. government-funded labs. Matt McGrew: Rachel, may I just add a word on that academic. I mean, this is not a huge number for us, obviously. I think you -- for Q1, it was kind of down mid-single digit type range, just to give you some sense of it. Now orders were getting worse than that. So I think that's the read-through, if you will, to why we've taken a bit more cautious stance. But again, this is a pretty small number for us. Rachel Vatnsdal: Yeah. Thank you. Rainer Blair: I mean, Direct NIH is -- Yeah. Direct NIH, Rachel, is less than a percent of our revenue and government and academic globally is low-single digits. Rachel Vatnsdal: Perfect. Yeah. Thanks for that color. Maybe just a follow-up on some of the earlier answers regarding bioprocessing. So you mentioned that book-to-bill was comfortably above one this quarter and that orders grew sequentially for the seventh quarter in a row. So, digging into that a little bit more. Last quarter you noted that bioprocessing orders grew high-single digits sequentially. So did you see orders grow high-single digits again this quarter sequentially or was order growth slightly less, given that standard seasonality that you typically see? And then on a go-forward basis, should we expect that bioprocessing orders continue to step up throughout the year or we kind of reset back to this normal order seasonality at this point? Thanks. Matt McGrew: Yeah. Maybe I'll say a word on orders and the expectations. We've got -- we guide to revenue here. So from an order perspective, we're not going to kind of have an order guide and a revenue guide. But like we said, we think it's going to be high-single digit from a growth perspective and the orders obviously will support that. So as far as this quarter, it was sort of in that range. From a sequential perspective, I think the really good news from my chair here is that a book-to-bill that was, as we said, solidly over one is encouraging. That is a good first step here to support the rest of the year. Operator: Great. Thank you. Our next question will come from Dan Brennan with TD Cowen. Your line is open. Daniel Brennan: Great. Thanks. Thanks for the questions. Maybe just on the Life Science guide, I know you gave some color earlier on Aldevron, but Q2 guide down low single. I think mid-single is a little bit below us. And then the full year guide would imply a nice step-up in the back half of the year. So just can you walk through some of the visibility and drivers of the step-up in the back half of the year? Matt McGrew: Yeah. I mean, from a number perspective, as I think about it, I mean, I think about the seasonality, both for Life Sciences, but just generally speaking for Danaher, I look at the seasonality last year and from a revenue perspective, it was kind of first half was 48% and the second half was something like 52%. So it's pretty similar here in what we're assuming on a revenue perspective in '25 at the Danaher level. So I think that's kind of the way I look at it. There's some puts and takes, I'm sure within the segments, but just in total, feel like we're kind of in the same zone that we were here last year. And it kind of has been that way historically, frankly, if we go way back, but those are different times. Daniel Brennan: Got it. Thanks, Matt. And then maybe just on China. I know you talked about I think ex-VBP things looked pretty good. Could you just unpack it a little bit how we're thinking about the rest of the year? We get a lot of questions on just the tit for tat here with the tariffs and kind of what China is doing, maybe to take a more sharper view against kind of Western vendors. So just if you can unpack a little bit how to think about the rest of the year and then kind of any activity from the government in -- kind of reaction to the tariff wars? Thank you. Rainer Blair: So we're seeing a fair amount of stability other than this volume based procurement and reimbursement issue for diagnostics and patient volumes. So patient volumes continue to be strong. We don't see China looking to move Western suppliers out of their supply chain. Certainly, like all customers around the world, customers are looking for supply chain security. They want to make sure they're going to be supplied. And as we think about bioprocessing, that continues to be stable as they've reached the bottom there and we're starting to see a little bit of life. And we talked about Life Sciences. Life Sciences is stable on the back of a little more stimulus than we've seen in the past, making up for some of the demand contraction that we had seen. So, generally speaking, we expect this to be stable. We're prepared with our supply chain to supply China. The majority of our supply is either China, for China or coming from non-U.S. plants. We've been working on that for years. And so, we'll continue to see what happens here on the policy front, but for now, we see China as stable and as anticipated. So we don't expect that to change that full year guide today. Daniel Brennan: Great. Thank you. Operator: Thank you. Our next question will come from Luke Sergott with Barclays. Your line is open. Unidentified Participant: This is Sam (ph) on for Luke. Thanks for taking our questions. Could you talk a little bit more about VBP headwinds this quarter? Any pull forward there or did that come in line with the expectation of it being like a $50 million headwind? And is the cadence of VBP still intact from what you stated last quarter, which was kind of the $50 million, $50 million, $30 million, then $15 million to $20 million framework? Matt McGrew: I think so, yeah. I wouldn't change off of that, come off of that. And VBP was very much in line with what we thought here in Q1. So I would not say, we have seen any change to what we thought would be our impact here from VBP. Unidentified Participant: Got you. And then just sticking to China, could you talk about the magnitude of the China stimulus as a tailwind for you guys this quarter? And then kind of what the expectations are for the rest of the year as you see it right now? Rainer Blair: I would call the stimulus measured. We saw that in the Life Science instruments primarily, that was with some government agencies, more specifically in food testing and we also see some of the Tier 2 universities starting to get their arms around that funding mechanism. So we also saw that as well. But I would call that measured -- a measured level of stimulus that is essentially making up for some of the demand contraction that we saw earlier. Unidentified Participant: Thanks for that. Appreciate it. Rainer Blair: Thanks, Luke. Operator: Thank you. Our next question will come from Dan Arias with Stifel. Your line is open. Daniel Arias: Hi. Good morning, guys. Thank you. Matt, the $7.60 to $7.75 EPS guide, does that assume the full $150 million of cost savings is captured this year? And then now that you're out of the gate, I think you said, should we just assume that the remainder of that gets layered fairly evenly across the next three quarters or is there a skew from a timing perspective there? Matt McGrew: No, I think the cadence is right. It kind of -- I think it will layer in fairly evenly. Might get a little bit more here in Q3 than Q4, but I'd have to -- but I would just put it for modeling, I'd do it evenly. I mean, maybe the way to think about the $150 million that we've talked about, we've incorporated into the guide what we've achieved so far. And so, of the $150 million, we think we got about $50 million in Q1 and that is incorporated in the guide. The other sort of $100 million is what might -- I might call cushion to see like I kind of talked to when -- I think Doug asked the question earlier around what the -- walking through the math to something that might be potentially a higher number, I would put that as part of that cushion that exists for what might go bump in the rest of the year. Daniel Arias: Okay. Is there any reason why you wouldn't capture that? I mean, it seems pretty, to hear you talk about, it seems pretty straightforward. So, is it just really well, we'll factor it in when we actually capture it or is there something that needs to develop in order to feel confident about that happening? Matt McGrew: No. I mean, I think we'll be able to capture it. I think it was more the general view of how we sort of outlined how we're thinking about the rest of the year in the current environment and wanting to sort of see how things play-out, especially from a policy perspective before we get too constructive, but we feel like we're in a pretty good spot here if things do go out to be able to talk about higher numbers if things do improve. But we're taking a little bit of a conservative approach, given we are 20 days into a new environment. Daniel Arias: Yeah. Sure. Okay. Thanks a bunch. Operator: Thank you. That does conclude the Q&A portion of today's call. I would now like to turn it back over to John Bedford for any additional or closing remarks. John Bedford: Thanks, everyone, for joining today. We'll be around the rest of the day and week for follow-up questions. Good day. Operator: Thank you, ladies and gentlemen. This concludes today's program and we appreciate your participation. You may disconnect at any time.

Operator: My name is Madison, and I will be your conference facilitator this morning. At this time, I would like to welcome everyone to Danaher Corporation's Fourth Quarter 2024 Earnings Results Conference Call. [Operator Instructions] I will now turn the call over to Mr. John Bedford, Vice President of Investor Relations. Mr. Bedford, you may begin your conference. John Bedford: Good morning, everyone, and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer; and Matt McGrew, our Executive Vice President and Chief Financial Officer. I'd like to point out that our earnings release, the slide presentation supplementing today's call, the reconciliations and other information required by SEC Regulation G, and a note containing details of historical and anticipated future financial performance are all available on the Investors section of our website www.danaher.com under the heading Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events and Presentations and will remain archived until our next quarterly call. A replay of this call will also be available until February 12, 2025. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. The supplemental materials describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company-specific financial metrics relate to results from continuing operations and relate to the fourth quarter of 2024, and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, and actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date that they are made, and we do not assume any obligation to update any forward-looking statements, except as required by law. With that, I'd like to turn the call over to Rainer. Rainer Blair: Well, thank you, John, and good morning, everyone, and we appreciate you joining us on the call today. So we finished the year strong with better-than-anticipated core revenue in all three of our segments and we were particularly encouraged by another quarter of positive momentum in our bioprocessing business and the improving performance in our Life Sciences instruments businesses. Our team's disciplined execution also drove solid cash flow and operating profit margin expansion. Now throughout 2024, our 63,000 associates demonstrated an unwavering commitment to leading and executing with the Danaher Business System, which enabled us to successfully navigate a dynamic operating environment. Now their dedication not only drove meaningful process improvements across our businesses, it also delivered impactful innovations for our customers, both of which are positioning Danaher for sustainable long-term success. Now, looking to 2025 and beyond, we believe Danaher is better positioned than at any point in our 40-year history. The transformation in our portfolio since the beginning of the pandemic has shaped us into a focused life sciences and Diagnostics innovator with a re-rated long-term growth, margin, and cash flow profile. Our differentiated science and technology portfolio paired with the power of DBS and our talented team positions us well to create long-term shareholder value, while making a meaningful positive impact on human health. So with that, let's take a closer look at our full-year 2024 financial results. Sales were $23.9 billion and core revenue declined 1.5%. Our adjusted operating profit margin of 28.6% was essentially flat year-over-year and adjusted diluted net earnings per common share were $7.48. We also generated $5.3 billion of free cash flow, resulting in a free cash flow to net income conversion ratio of approximately 135%. Strong free cash flow generation is one of the most important metrics at Danaher and 2024 marks the 33rd consecutive year of free cash flow to net income conversion which exceeded 100% and speaks to the differentiated quality of our earnings and business models. Now through 2024 and into the start of 2025, we deployed approximately $7 billion of capital towards the repurchase of 28 million shares of Danaher common stock. This includes approximately 20 million shares purchased in the second and third quarters and approximately 8 million shares purchased in the fourth quarter and into January 2025. We also remained active on the M&A front, completing several strategic acquisitions during the year. Now these acquisitions bring innovative technologies and solutions that further strengthen our competitive advantages and position us for sustained long-term success. Now we also continued to make substantial investments in innovation throughout the year, enabling the launch of several groundbreaking technologies that are advancing our customers' critical work. In Biotechnology, Cytiva introduced the Sefia cell therapy manufacturing platform, which is helping address critical cost and capacity constraints associated with CAR-T cell therapy manufacturing. The efficiencies customers gained through the Sefia platform have the potential to increase patient access to these life-saving therapies. In Life Sciences, Beckman Coulter Life Sciences introduced the Cydem VT Automated Cell Culture System, which simplifies and accelerates the cell line development process, enabling pharmaceutical researchers to bring therapies to market faster. And in Diagnostics, Beckman Coulter Diagnostics made significant strides in expanding the cardiac and blood virus menus on the DxI 9000, our next-generation high-resolution immunoassay analyzer. With sensitivity 100 times greater than traditional immunoassay systems, the DxI 9000 is enabling faster and more accurate patient diagnoses and ultimately paving the way for precision diagnostics. These are just a few examples of how our innovation engine is driving long-term growth and helping customers solve some of the most important health challenges impacting patients around the world. So now let's turn to our fourth quarter 2024 results in more detail. Sales were $6.5 billion in the fourth quarter and we delivered 1% core revenue growth. Geographically, core revenues in developed markets were essentially flat with a low-single-digit decline in North America and a low-single-digit increase in Western Europe. High-growth markets were up low single digits with solid performance outside of China, more than offsetting a mid-single-digit decline in China. Our gross profit margin for the fourth quarter increased 50 basis points year-over-year to 59.5%. Our adjusted operating profit margin of 29.6% was up 90 basis points, driven primarily by the positive impact of cost savings initiatives. Adjusted diluted net earnings per common share of $2.14 were up 2.4% year-over-year and we generated $1.5 billion of free cash flow in the quarter. So now let's take a closer look at our results across the portfolio and give you some color on what we're seeing in our end markets today. Core revenue in our Biotechnology segment increased high-single-digits year-over-year, with our bioprocessing business up high-single-digits and our discovery and medical business is up low-double-digits. In bioprocessing, the gradual recovery we saw through the year continued into the fourth quarter. We were particularly encouraged by the sustained positive momentum in our order book, which grew high-single-digits sequentially and this represents the sixth consecutive quarter of high-single-digit sequential order growth. Revenue growth in the quarter was primarily driven by consumables, supported by robust demand for commercialized therapies. Equipment demand, while improved remained subdued as customers continue to be cautious with their capital spending. Now in China, underlying activity levels were relatively stable, but weak as customers faced ongoing challenges in a difficult funding environment. But the continued progress we're making in our business, coupled with healthy underlying market trends reinforces our confidence in the long-term outlook for Cytiva's bioprocessing franchise. Monoclonal antibodies, which comprise more than 75% of our bioprocessing revenues remain the largest investment area for our customers and 2024 was a near-record year of FDA approvals for new monoclonal antibodies. At the same time, biosimilar development and production are increasing as patents on high-volume therapies expire, making life-saving treatments more accessible and driving broader adoption. With our comprehensive portfolio and an innovation engine focused on increasing yields and enhancing manufacturing efficiencies, we believe we're very well-positioned to support our customers today and for the long term. Now turning to our Life Sciences segment, core revenue increased by 1%. Core revenue in our Life Sciences instrument business was up slightly, exceeding our expectations. In the U.S. and Europe, we saw modest demand improvements at our pharma and applied customers. In China, while we did see a modest benefit from the ongoing stimulus program, market conditions continue to be challenging as customers remain cautious with their investments. In October, Leica Microsystems expanded its STELLARIS Confocal Microscope Platform with the introduction of SpectraPlex, a cutting-edge solution for 3D imaging in spatial biology. SpectraPlex, enables researchers to gain deeper insights into cellular organization, interactions and spatial phenotyping, advancing the understanding of disease progression and aiding in the identification of potential therapeutic targets. Now core revenue in our genomics consumables business declined in the quarter. Growth across next-generation sequencing products and basic research was more than offset by declines in proteins, plasmids, and gene writing and editing solutions. Moving to our Diagnostics segment, core revenue decreased 2%. Our clinical diagnostics businesses collectively delivered low-single-digit core revenue growth, like Biosystems led the way with nearly 10% growth driven by strength across core histology, advanced staining, and digital pathology. Notably, Leica placed a record number of its GT450 digital pathology slide scanners this quarter, as clinicians are increasingly looking to leverage its predictive algorithms and productivity gains to deliver more accurate and timely patient diagnoses. To further enhance the digital pathology capabilities, Leica recently established a strategic partnership with Indica Labs, a global leader in AI-powered digital pathology software. This partnership aims to accelerate the development of next-generation cancer diagnostics by combining Leica Biosystems expertise in instrumentation and extensive global footprint with Indica Labs' leadership in enterprise, software, and artificial intelligence. Core revenue at Beckman Coulter Diagnostics was essentially flat with mid-single-digit core revenue growth outside of China, offset by the impact of volume-based procurement in China. Earlier this month, Beckman introduced several cutting-edge research use-only assays for neurodegenerative disease research on the DxI 9000. Now these assays allow researchers to detect and quantify emerging neurodegenerative biomarkers with exceptional sensitivity and specificity, providing valuable insights into conditions such as Alzheimer's disease. In addition, the U.S. Food and Drug Administration granted breakthrough device designation to Beckman's p-tau217, beta-Amyloid 1-42 assay designed to aid clinicians in identifying patients with Alzheimer's. This designation reflects the potential of Beckman's test to transform how clinicians diagnose and manage Alzheimer's, ultimately leading to improved outcomes for patients and families affected by this devastating disease. In molecular diagnostics, increasing menu adoption and system utilization contributed to another quarter of mid-teens core revenue growth in Cepheid's core non-respiratory reagent portfolio. All of these product lines delivered double-digit growth in the quarter, led by over 20% growth in sexual health as customers are increasingly adopting our Multiplex Vaginitis Panel or MVP. The rapid growth of the MVP panel since its introduction highlights the value, rapid turnaround diagnostics brings to women's health clinicians at the point of care. Cepheid's Multiplex Panel enables physicians to quickly and accurately diagnose infections and prescribe targeted treatments, reducing the need for multiple office visits. Now beyond enabling improved clinical outcomes, MVP underscores the significant growth opportunities ahead as we continue to expand our women's health business and is also a great example of how Cepheid is unlocking long-term growth opportunities in outpatient settings. Cepheid's respiratory revenue of approximately $550 million in the quarter exceeded our expectation of $350 million as we saw both higher volumes and a favorable mix of our 4-in-1 test for COVID-19, Flu A, Flu B, and RSV. In 2024, Cepheid's installed base grew by high-single-digits and is now more than 60,000 instruments globally. In recent quarters, we've seen healthcare systems and integrated delivery network customers accelerating the placement of new instruments at alternate care sites such as clinics and urgent care centers. This expansion beyond the hospital helps customers improve clinical outcomes and reduce costs by standardizing care across their networks. With the continued expansion of our leading global installed base, the largest test menu on the market and a robust innovation pipeline, Cepheid is well-positioned for sustained long-term growth. Now let's briefly look ahead at expectations for the first quarter and the full year 2025. For the full year 2025, we anticipate core revenue growth of approximately 3%. In addition, we expect an approximately 2% revenue headwind due to recent strengthening of the U.S. dollar. We also expect a full-year adjusted operating profit margin of approximately 28.5%. In the first quarter, we expect core revenue to decline in the low-single-digit percentage range. Additionally, we expect the first quarter adjusted operating profit margin of approximately 26.5%. So to wrap up, we are pleased with our fourth-quarter performance and look forward to building on this momentum as we move into 2025. Our team successfully executed through a dynamic environment to deliver strong financial results, while continuing to invest for the future. Looking ahead, the transformation in our portfolio paired with our organic growth investments has created a lineup of outstanding franchises that are very well-positioned in highly attractive end markets. And we're a better, stronger company today positioned for higher long-term growth, expanded margins and stronger cash flow with tremendous opportunities to continue building upon this foundation. With the powerful combination of our leading portfolio, talented team and strong balance sheet, all powered by the Danaher Business System, we feel well-positioned to deliver long-term shareholder value for years to come. So with that, I'll turn the call back over to John. John Bedford: Thanks, Rainer. That concludes our formal comments. Operator, we're now ready for questions. Operator: Thank you. [Operator Instructions] And we will take our first question from Jack Meehan with Nephron Research. Please go ahead. Jack Meehan: Thank you. Good morning. Matt McGrew: Good morning. Rainer Blair: Good morning, Jack. Jack Meehan: Good morning. Wanted to start by digging more into the guide for Life Sciences in 2025, that's where I'm getting most of the questions, notably the pacing. So starting down mid-singles, getting to low-single digits up for the year. As you look at the operating businesses there, can you just call out, is there anything that stands out as one-off, or notable in terms of the ramp? I mean, just when in the year will you return to growth? Is 2Q reasonable or is it more back-half weighted? Rainer Blair: So, Jack, good morning, and thanks for the question. For 2025 in Life Sciences, it's the one segment where we see a little bit of noise right now with the external environment. But given that, we're trying to take a reasonably prudent approach to the guide for 2025 and we're assuming Life Science tools up for - up low-single digits and Pall and Genomics will be down. So we'll possibly do better, but where we sit today, this is probably a good starting point. As we think about the phasing, we would expect each quarter to get a little better. Matt McGrew: Okay. Jack, maybe - just Q1, like you said, it's kind of down mid-single digits. I think we probably are kind of flattish as we head into Q2, and then kind of ramp up from there. And really Q1, the big kind of comp issue is a lot of it really is Pall, in particular, some of the things in the industrial business, both year-over-year with some big projects that we saw there and then also sequentially kind of the step-down. If you will, from Q4 in Life Sciences, they were a double-digit grower here in Q4. I think they're going to be negative here in Q1. And given the size of that business, it's almost $2 billion. It does kind of move the needle. But the core tools we think is still in pretty good shape and kind of at the high end of low-single digits. Jack Meehan: Great. Okay. And then, Rainer, you alluded to this a little bit. Obviously, had the change in administration, and U.S. academic government funding has been a hot topic, a lot of headlines. I was curious if you could give us a state-of-the-state, what you're seeing in the market today and how, did that influence the way that you set the guide? Rainer Blair: So, well, it's only been a couple weeks here of the new administration, Jack, but in general, we'd expect the environment to be more business-friendly. And certainly, the election has not changed our view of our portfolio, which we know is positioned towards the most attractive secular growth trends in Life Sciences and Diagnostics. And sure, and we plan for this. And as you said, we've talked about that here in the Life Science guide for 2025. There's likely going to be some puts and takes, but we - we're confident we can leverage our portfolio and the Danaher Business System to continue to outperform. Matt McGrew: But Jack, I do think it's fair to call out that this is the one segment in Life Sciences where the noise around - like Rainer said, the noise around it is higher, because I think that's where we've seen most of the noise has been around that segment. So I think we're trying to take some of that noise into account. I think mostly it's going to be in Life Sciences, is where you see that. And I think it probably - it's probably fair to say that we took a fairly prudent approach, to how we thought about starting the year here, given some of the - kind of given some of the recent news. Jack Meehan: That all makes sense. Thank you, guys. Rainer Blair: Thanks, Jack. Operator: Thank you. And we will take our next question from Michael Ryskin with Bank of America. Please go ahead. Michael Ryskin: Yeah, thanks. Thanks for taking the question, guys. First, I want to touch on what you called out for the Diagnostics segment. I think there's a little bit of a shortfall there versus expectations in the guide. You called out specifically Cepheid respiratory, you're looking for $1.7 billion versus I think $1.95 billion in fiscal year '24. And then for volume-based procurement in China, you talked about $150 million for the year, versus previously you were expecting sort of a steady cadence of $50 per year. So just talk - can you just talk through those both pretty quickly? One is, what changed in the VBP? Sound like it changed a little bit in the fourth quarter, as well and just how you think VBP headwinds come through in 2025 and '26? And then for Cepheid respiratory, why is $1.7 billion the right number? I mean, we've talked about this for a while. It's sort of like, at what point do you say, okay, this is the new endemic. So you did $1.95 billion in 2024. Why isn't that just the new normal going forward where we're four years post-COVID, it feels like respiratory sort of like settled down a little bit. So what are you seeing in January that's making you revise that? Matt McGrew: Yes. Mike, let me see if I can capture all that. So first, VBP 150 versus the 50 that we thought before, that is correct. I think we think now and we saw 50 here in '20 in Q4. So probably 200 all-up, but 200 in two years instead of the three that we thought. So I think that's right. As far as why did, that and how did it accelerated in Q4, I mean, we just saw in Q4 a lot more aggressive stance in China. Particularly from the central government, to sort of really get after VBP and do some other things outside of just straight VBP, also going and doing some reimbursement cuts. And so, I think the combination of the tenders that we saw come through, the reimbursement cuts really accelerated here late in the quarter, frankly. This was kind of a November, almost in December phenomenon. So that kind of came through and informed our guide, as we think about going forward. From a respiratory perspective, you're right, we are here $1.7 billion. We've always thought that was about the normal range for a normal respiratory season in an endemic state. In the last two years, we did about $2 billion. And I think what we saw in the last couple years was we sort of had a bit of a double-dip, if you will. We had a big spike in September, October as people sort of return to school, and then return to work, return to school. And then we saw another one here, usually a typical respiratory season in January and February. And we didn't really see that this year. And so that was we're kind of assuming that we're going to go back to that normal respiratory pattern, where we see a bit of a spike up in the ILI, like we are seeing now. Did not see it as much here in Q3 like we normally do. And so, I feel pretty comfortable that $1.7 billion is the endemic rate. We did a little bit better the last couple of years. But that's no real different than, what it was like prior to COVID. We had respiratory season. Some are better than others, not better, but from a testing perspective, more testing versus not. So I feel pretty comfortable with the $1.7 billion still versus $2 billion being some sort of new number. I just - maybe we're proven wrong, but given what we've seen in the data, I think $1.7 billion is - it's probably going to be a pretty regular - pretty normal respiratory season. Michael Ryskin: Okay. And if I could squeeze in a follow-up on bioprocess and biotechnology, you talked about 6% to 7% for the year in biotechnology, same thing for the first quarter. So it seems like sort of pretty steady throughout the year. I think we talked about bioprocess being maybe more of a high single-digit business, so thinking more of like an 8%, maybe 7% to 8%. Is the delta there really just the instrumentation part of it? Sort of if it wasn't for that, would you be at that 8% rate for the year? And if so, if it is instrumentation, just any signs of that, any hope of that coming back as you go through the year, just sort of like what's holding that back? Why is that still so subdued if the consumables are really back and the demand continues to be there? Rainer Blair: I'll tell you, we were very encouraged by what we're seeing in the bioprocessing business and the orders growth, six consecutive orders now of high single-digit orders growth. We don't normally talk about the year-over-year numbers, but even in the fourth quarter, well over 30% orders growth there, and probably one of the biggest quarters that we've had in two years in terms of orders growth. So we think the bioprocessing sets up very nicely. Now to your point, look, we expect 6% to 7% core growth in 2025. That's essentially similar to what we saw in the fourth quarter. And what we're seeing in consumables, are essentially also back to normal here with large customers driving that. And we do see some improvement there with smaller customers as well, but they're still not back to normal, so to your question. And then as it relates to equipment, it's also better, but not quite back to normal. So we continue to be really encouraged, by what we're seeing and the recovery is clearly underway. Michael Ryskin: All right. Thank you. Operator: Operator: Thank you. And we will take our next question from Scott Davis with Melius Research. Please go ahead. Scott Davis: Hey, good morning, guys. Rainer Blair: Good morning, Scott. Scott Davis: So I'm going to go into a completely different direction, because guidance we can kind of fixate on for the rest of the call. I'm sure lots of people will. It was maybe a little disappointing. But I wanted to get a sense from you guys just in talking about seeing some of the build-out of test capability in Cepheid. What does AI do for you guys at - it could be broader than just Cepheid, but when you think about ability to kind of lever that computing power into something that maybe materially, or meaningfully increases your ability to broaden out those test kits, and really make them more ubiquitous? How do you guys think about that? Rainer Blair: Well, thanks for the question, Scott. We're well into the application of Artificial Intelligence throughout the corporation here and to your question, also in research and development. And essentially, how we're applying it is to accelerate the development time, not only of our assays, so certainly the technical and research aspect of R&D, but also in terms of how we get. The integrated evidence plan that you need, to get that assay to-market much more quickly and broadly on-top of, of course, the decision support systems that we're building. Another example is like a Biosystems where you just saw us do a deal with Indica Biolabs, where clearly the journey takes us to digital diagnostics in pathology that is supported by artificial intelligence. Helping those pathologists to make not only faster diagnoses, but to see things that they might not normally see. So we are definitely down the path here, and investing significantly in accelerating cycle times throughout the corporation, but certainly in R&D as well. Scott Davis: Okay. That's helpful. And guys, just as a completely different follow-up, but where does Abcam and Aldevron, however, you pronounce it,, where do they sit versus the deal model when you guys close those deals? Are we still ahead of the deal model on those? It sounds like we may have taken a little bit of a step backwards, but maybe I misheard that? Rainer Blair: No, I think on Abcam, we're still pretty close. That's still pretty new, Scott, that's only about a year-old. So I think we're pretty much tracking close there, Aldevron we're behind. I don't think there's any way to say it other than that. And largely, it has to do with the end-markets of genomics are proving to take a little bit longer sort of, to round themselves out. And but ultimately, while behind on the deal model, it's disappointing working hard to make sure that we try and close that gap. But it's still a business that we are going to want to own. We need to be in genomics, we're going to be in genomics. If you're in life sciences, you have to have that presence. We feel as though that business is a fantastic business with really well-positioned to take advantage of the genomics market. When it does sort of ramp beyond the current levels, and I think it will. So for the long-term, I think it's the right business to own for sure. But we're working hard to kind of catch back up on the deal model, but I would say that we are behind, yes. Scott Davis: Okay. Thank you for the integrity of that answer. I'll pass it on. Thank you, guys. Operator: Thank you. And we will take our next question from Dan Brennan with TD Cowen. Please go ahead. Daniel Brennan: Great. Thank you. Thanks for the questions. Maybe just starting on Bioprocess for a moment, just back to Mike's question. You talked about really strong order growth in the fourth-quarter. I think you had the same thing really in the third quarter, so call it, probably maybe north of 30 or north of 20. Can you just remind us, Rainer, of the linkage between orders and the forward growth for your Bioprocess business? And is our thinking that such strong second half order growth shouldn't portend for potentially much stronger growth in '25 for revenues? Rainer Blair: Well, I mean, it certainly sets us up well. Some of our customers get their orders in very early and it has implications for the second half of 2025, and others do that with the shorter lead times that we're able to deliver on for the first half. So again, as we think about our orders development, of course, that is what is in our guide and supports our guide for the year. And we really like where we're positioned here, both competitively, but also we are seeing the recovery here clearly underway, essentially in all segments. Daniel Brennan: Okay. Got it. Okay. And then maybe just kind of a big picture question. The next five years, I know pharma patent expirations are set to grow versus the prior five. I think '28 is a particularly big year. And in your prepared remarks, you talked about the benefit of biosimilars to your bioproduction business. Just how do we think about the impact of Danaher's kind of your overall growth from these patent expirations? Are these - are these going to be more of a tailwind, or a headwind if you want to think about maybe separating between bioprocess and more R&D related areas? Thank you. Rainer Blair: Yes. Well, as we think about bioprocessing, that business is driven by volume. And it's really critical to understand that the more volume there is, the more we benefit and drive growth both top and bottom. And we're so well-positioned there. We've talked about the number of monoclonal antibodies being approved, and you can expect that we are participating in all of those. And that momentum of monoclonal antibodies going forward, which represents 75% of the business is really what drives the train. So as you think about these biosimilars, starting to penetrate other patient groups that heretofore have not been able to candidly afford to buy these kind of therapies, or even payers have been unable to pay for those kinds of therapies, that's a tailwind for us. And so, biosimilars is an important category to understand. What's interesting about biosimilars, once again, in biologics, the end product cannot be perfectly characterized. So the regulators tend to lock down the process to ensure consistency there. And so, even biosimilar manufacturers, will try to use the inputs that have been previously approved by those regulators, to ensure speed to market and a minimum of delay to getting to patients. So biosimilars, higher volumes tailwind for Danaher. Daniel Brennan: Great. Thank you. Operator: Thank you. And we will take our next question from Doug Schenkel with Wolfe Research. Please go ahead. Douglas Schenkel: Hey, good morning, guys. Thank you for taking my questions. Rainer Blair: Good morning. Douglas Schenkel: So I want to start on diagnostics and then kind of pivot over to a philosophical question. So first on diagnostics. If I'm doing the math right on the respiratory headwind and the VBP incremental headwinds, I think this implies kind of what's embedded into your guidance, is an implied 5% core and normalized diagnostic growth rate. Is that right? And if not, why isn't this a little bit higher? And then when would we see evidence, of you getting back to that high-single-digit growth rate that, I believe you're still targeting? So that's the diagnostic topic. The second one, which I'll just get out of the way is the guidance philosophy question. So if you go back and look at how 2025 EPS expectations have progressed over time, if you go back to the beginning of 2023, the street was at 1,120. At the beginning of last year, the street was at around 880. Yesterday estimates were at 809. And if I'm doing the math right, I think you essentially guide it to around 760. So it's hard for a stock to work, when the estimates keep moving in the wrong direction. I'm just wondering how much does - do these things factor into your guidance philosophy this year, especially as it seems like your end markets are continuing to improve. And related to that, what are the bigger - biggest risks to guidance, from an earnings and EBITDA standpoint? And what are the biggest sources of potential upside? Thank you. Matt McGrew: Yes, sure. Let me see if I captured all that. As far as diagnostics goes, I think you're right, Doug. I mean, I think if you sort of think about diagnostics, maybe just outside of China, we are kind of mid-to-high single-digits here, for the guide. So I think you're right. I think we're pretty much in the zone of where we thought we would be. I mean, I think China is the big piece with VBP, and the respiratory headwinds. I think those are the two pieces. So I think we're pretty close to, where we thought we would be or where we aspire to be, which is, high-single-digits. So I feel pretty good about, where we are from a diagnostics perspective outside, of what we're seeing in China really and in respiratory. I guess, as far as guidance philosophy goes, I mean, I kind of - I don't necessarily look backwards. When we think about guidance and philosophy. I think we always try and do a bottoms up, what our businesses are telling us, what we are seeing and we try and incorporate that into the guidance. We do probably include some external factors like I talked about, I think in particular Life Sciences. Currently, there's been just kind of a lot of news, and maybe noise around that segment here. And I think we try to incorporate some of that news and noise into it, to be prudent, especially from a planning perspective early in the year. I want to make sure that not only for your purposes, but for my purposes internally, that we're setting the cost structure right, and we're setting expectations at a level that we can overdrive, if you will. So that's sort of our overall philosophy. I understand stock doesn't work when earnings are going down, but I would posit that there were some external things that, we had to work through in bioprocessing, as well as stimulus in China and some other things. I think we worked through them. I think we've done a pretty good job, of managing the cost structure. I think we - from a margin perspective, despite the fact that we've been down two years in a row, I really like where our margin profile is. So look, we try and build it from the bottom up. We try and tell you what we're seeing in the moment, and give you that information. That's how we've always thought about it and continue to do that. Douglas Schenkel: Okay. Thank you very much. Operator: Thank you. And we will take our next question from Vijay Kumar with Evercore. Vijay Kumar: Hi, guys. Thanks for taking my question. Maybe my first one - Rainer Blair: Good morning, Vijay. Vijay Kumar: Rainer, I think good morning to you. I think you mentioned something around Life Science at Q1. Was there anything one-off in Q1, maybe which is different versus the rest of the year? I think you mentioned, Pall, maybe if you could elaborate on what the Q1 headwind is. We'll stop there? Rainer Blair: Look, and Pall, in the prior year, so Q1 2024, we had a very, very large tens of millions energy project and that - that's giving us a one-off effect here in the first quarter along with some of the other things we talked about, more specifically. And again, looking at the first quarter guide here, in general, the trends really remain the same, as they were in the fourth quarter with the exception of diagnostics. Matt just talked about that. So, Bioprocessing, 6% to 7% core growth, that's consistent with the Q4 exit rate. Life Sciences, that they're expected to be consistent here in the tools sector. And here we go. Pall and the rest of the segment is getting off to a slower start in the first quarter, talked about the comp here just a minute ago. But we really saw two meaningful changes in diagnostics in the fourth quarter and Matt described some of those. One was the acceleration of volume-based procurement in China and the second is a slower start to the respiratory season. You bring that together between volume-based procurement and respiratory, that's about a 350 basis point headwind versus Q1 2024. But the underlying market as we just talked about in diagnostics everywhere, are growing mid-to-high single-digits with the exception of China. So we view this as an isolated topic, and we see that in the first quarter, and certainly expect every quarter thereafter to be better. Vijay Kumar: Understood. And maybe my one follow-up on - is on capital deployment. Looks like Q1 is assuming a big share repurchase. How much of that is being contemplated in Q1 and rest of the year? And can you just remind us on - of your M&A criteria? I think there's been some chatter about deal activity picking up in the tool space. So how is the pipeline looking for you guys? Matt McGrew: Yes, Vijay. So in Q4 and in Q1 collectively, we - so we started in Q4 and then kind of spilled over into Q1, if you will. We did buy back about 8 million shares for about $1.9 billion or so. So that's - that is complete. Rainer Blair: And on the deal front, we see more activity out there, no doubt, and we see that in our funnels as well. So we're very active across all three segments, cultivating assets. And as it relates to the environment, not everywhere, but we're starting to see some pockets where valuations are getting a little bit better. So we feel very well-positioned here, Vijay, with the way our balance sheet sets up and we're going to remain disciplined as we always do around our deal philosophy. Where we have to be in the right end-market, with those secular growth drivers. I've got to like the asset or the company. And then, of course, the valuation framework, the model has to work as well. So we feel good, about where we're positioned. Markets are a little more active. The balance sheet looks good, we're going to remain disciplined. Vijay Kumar: Okay. Understood. Thank you, guys. Rainer Blair: Thanks, Vijay. Operator: Thank you. And we will take our last question from Rachel Vatnsdal with JPMorgan. Please go ahead. Rachel Vatnsdal: Thanks. Good morning. Thanks so much for squeezing me in. So I wanted to ask on some of the export control headlines that, we got earlier this month surrounding flow cytometry and mass spec. Can you walk us through are you expecting Danaher to be impacted this - by this at all? And then more conceptually, life sciences were usually viewed as a sector that was more insulated from some of these export controls. So how are you thinking about the risk here going forward? And do you expect that we could see other instruments potentially added to the list as well? Rainer Blair: Good morning, Rachel. Thanks for the question. So the current export controls that have recently been published are really not meaningful for us. Our portfolio is positioned differently. And more generally speaking, this category has required export licenses for many years. So it's really not that new for life sciences, but what they've done is expanded the category a little bit to include some other technologies. So as we go forward, I think during the normal course of any administration, these kind of export controls are regularly reviewed and adjusted. But we don't expect anything particularly different than the standard process here, and at least to-date have not seen a meaningful impact to what we do. Rachel Vatnsdal: Got it. And then my follow-up, I just have a multipart question here on Bioprocessing. So you mentioned that the recovery is underway. So how should we think about the pace of recovery throughout the year on Bioprocessing, and really what could we be exiting this year at for growth in that portion? And then other areas, just how are you thinking about some of the comps embedded? Especially in the first part of the year, you have some easy one-year comps, but also appreciate some of the multi-year stacks. And then lastly, what are you guys assuming at this point for standard seasonality by quarter on bioprocessing? Now, that's a lot in there? Thanks so much, you guys. Rainer Blair: Thanks, Rachel. Let me start-off with one more time that the recovery in bioprocessing is well underway, and we're really seeing it in nearly every category of the bioprocessing portfolio. So we see a positive development here throughout the year. That said, the way we've set up the guide is 6% to 7% core growth, essentially on a quarterly basis. That's how we're starting our perspective on the year here. And then, we'll see how that plays out. If you look at the multiyear stacks and that makes sense to do, you'll see that the math shows that this is right in line, with sort of a high single-digit growth rate, which is what we've talked about this market long - as its long-term growth rate. So we think that this is the right perspective, and we sure like the fact that the momentum is building here. Matt McGrew: As far as seasonality goes, Rachel, we sort of Q1 in that business is usually the kind of the lightest. We see a bit of a step-up in Q2. And we do have a phenomenon there where Q3 is lower than Q2. That's always sort of been in that business. And some of the pandemic that didn't happen, but that is a normal trajectory where we see a step down Q2 to Q3, and then obviously a step-up in Q4. So sort of Q1, is your low-point, a little bit up in Q2, down in Q3, and then a big step-up in Q4. Rachel Vatnsdal: Great. Thank you, guys. Rainer Blair: Thanks, Rachel. Operator: Thank you. And it appears that we have reached our allotted time for questions. I will now turn the program back to our presenters, for any additional or closing remarks. John Bedford: Thanks, everybody. We're around all day for questions. Operator: Thank you. This does conclude today's presentation. Thank you for your participation. You may disconnect at any time.

Operator: My name is Ashley and I will be your conference facilitator this morning. At this time, I would like to welcome everyone to the Danaher Corporation's Third Quarter 2024 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I will now turn the call over to Mr. John Bedford, Vice President of Investor Relations. Mr. Bedford, you may begin your conference. John Bedford: Good morning, everyone, and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer; and Matt McGrew, our Executive Vice President and Chief Financial Officer. I'd like to point out that our earnings release, Form 10-Q, the slide presentation supplementing today's call, the reconciliations and other information required by SEC Regulation G relating to the non-GAAP financial measures we'll be discussing during the call, and a note containing details of historical and anticipated future financial performance are all available on the Investors section of our website www.danaher.com under the heading Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events and Presentations and will remain archived until our next quarterly call. A replay of this call will also be available until November 5, 2024. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. The supplemental materials describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company-specific financial metrics relate to results from continuing operations and relate to the third quarter of 2024, and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will make forward-looking statements within the meaning of the Federal Securities Laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties including those set forth in our SEC filings and actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date that they are made and we do not assume any obligation to update any forward-looking statements except as required by law. With that, I'd like to turn the call over to Rainer. Rainer Blair: Well, thank you, John, and good morning, everyone. We appreciate you joining us on the call today. Our team delivered strong third quarter results with revenue, adjusted net earnings per share and cash flow, all coming in ahead of our expectations. We were especially pleased with the continued positive momentum in bioprocessing and another exceptional quarter at Cepheid and we enhanced our long term competitive advantage with the release of several impactful new innovations across our businesses. Now we see a bright future ahead for Danaher. A transformation in our portfolio over the last several years has created a focused life sciences and diagnostics leader positioned for higher long term growth, expanded margins and stronger cash flow. Danaher is purpose-built to help customers solve some of the most important health challenges impacting patients around the world. Our proven ability to innovate is enabling faster, more accurate diagnoses and helping customers reduce the time and cost needed to sustainably develop and deliver life-changing therapies. Now, the unique combination of our talented team, our differentiated science and technology portfolio and the power of the Danaher Business System positions us well as we seek to maximize value for our customers, our associates and our shareholders. So with that, let's take a closer look at our third quarter 2024 results. Sales were $5.8 billion in the third quarter and we delivered 0.5% core revenue growth. Geographically, core revenues in developed markets increased low single-digits with low single-digit growth in North America and mid-single-digit growth in Western Europe. High-growth markets were down mid-single-digits including a high single-digit decline in China. Our gross profit margin for the second quarter was 58.7% and our adjusted operating profit margin of 27.5% was down 10 basis points as accelerated investments in innovation offset the favorable impact of cost saving initiatives. Adjusted diluted net earnings per common share of $1.71 were essentially flat year-over-year and we generated $1.2 billion of free cash flow in the quarter and $3.8 billion year-to-date, resulting in a year-to-date free cash flow to net income conversion ratio of 135%. Now, let's take a closer look at our results across the portfolio and give you some color on what we're seeing in our end markets today. Core revenue in our Biotechnology segment was flat year-over-year, with our bioprocessing business up low single-digits and our discovery and medical business down high single digits. In bioprocessing, we were encouraged with the continued positive momentum we saw in the quarter. Notably, orders increased high single-digits sequentially, which is the fifth consecutive quarter of sequential order improvement, and our book-to-bill ratio improved to approximately 1.0. Now geographically, we saw improving order trends in developed markets as large customers are returning to more normal ordering patterns. In China, orders and underlying activity levels remain weak, particularly for equipment, as customers continue to conserve their capital. Revenue growth in the quarter was driven by our larger pharma, biopharma and CDMO customers. Production volumes at these customers, who are primarily manufacturing monoclonal antibody therapies, has continued to grow in line with historical averages. Now we've seen demand at these customers steadily improve throughout the year as they're moving past inventory destocking and anticipate this gradual recovery will continue over the coming quarters. In contrast, we're not seeing the same level of improvement in underlying performance from our smaller customers. Despite a modest improvement in the funding environment, they continue to rationalize their therapeutic programs and remain cautious with their investments. Now, putting this all together, we continue to expect low single-digit core revenue decline in our bioprocessing business for the full year 2024 and this includes an assumption of high single-digit core revenue growth in the fourth quarter. Now, as destocking moves behind us, we're increasingly excited about the long term opportunities ahead for Cytiva's leading bioprocessing franchise. Monoclonal antibodies, which comprise the majority of our revenues, remain the largest investment area for our customers. We're also seeing accelerated adoption of these therapies and six of the top 10 highest revenue-generating drugs today are monoclonal antibodies. With our comprehensive portfolio, our best-in-class scientific services and innovation focused on increasing yields and enhancing manufacturing efficiencies, we believe we're very well positioned to support our customers today and well into the future. Now turning to our Life Sciences segment, core revenue decreased by 2%, in line with our expectations. Core revenue in our life sciences instruments businesses collectively declined mid-single-digits with market conditions in the third quarter largely consistent with what we saw in the first half of the year. Ongoing research and lab activity is driving growth in consumables and service, which was more than offset by a decline in capital equipment, particularly in China. Announced stimulus measures in China have not yet translated into meaningful order activity, as customers are still awaiting details on the implementation of these programs. Now, in the meantime, many customers are delaying purchasing decisions. Outside of China, our end markets are relatively stable, and we were encouraged to see early signs of improvement in demand among our pharma and biopharma customers, particularly in North America. Now, during the quarter, Beckman Coulter Life Sciences introduced the Cydem VT. Cydem VT is a fully automated, high-throughput cell culture system designed to simplify and accelerate the complex and lengthy process of clone screening and cell line development. Now, by harnessing the power of the Cydem VT, researchers can optimize workflows and reduce hands-on time by up to 90%, enabling them to efficiently identify the most promising clones and improve the success rate of their cell line development projects. In July, we completed the acquisition of Genedata, a leading provider of enterprise and workflow software used in drug discovery and development. Genedata's advanced software solutions automate complex R&D processes, enabling biopharma researchers to analyze and interpret samples more quickly. So we're really excited to welcome this innovative team to our Life Sciences segment. Now, Beckman Cydem VT and the acquisition of Genedata are both great examples of how we're strengthening our long term competitive advantage while helping our customers accelerate the drug discovery process. In our genomics consumables business, core revenue declined low single-digits, continuing the trends we saw in the second quarter. In August, IDT expanded its synthetic biology portfolio with the launch of Rapid Genes. These ready-to-use NGS-verified clonal genes are cost effective and offer fast turnaround, allowing pharmaceutical researchers to quickly pursue high-throughput experiments such as antibody development. IDT's long history of innovation is one of the key reasons the research community turns to IDT to help advance drug discovery and accelerate the pace of genomic medicine development. Now moving to our Diagnostics segment, core revenue increased 5%. Our clinical diagnostics businesses collectively delivered low single-digit core revenue growth. Beckman Coulter Diagnostics was up low single-digits, with strong global demand, partially offset by the impact of volume-based procurement in China. Outside of China, recurring revenue was up high single-digits, driven by recent new product introductions and installed base expansion. The Beckman team continued their accelerated cadence of new product innovation this quarter with the release of the DxC 500i integrated chemistry and immunoassay analyzer. Now, the DxC 500i is specifically designed to improve efficiency and meet the unique workflow needs of low-volume laboratory customers such as community hospitals. So this highlights Beckman's commitment to serving the entire healthcare network by providing a comprehensive portfolio of solutions for low, mid and high-throughput core labs. In molecular diagnostics, Cepheid's core revenue increased double digits with broad-based strength across respiratory and non-respiratory assays. Cepheid's respiratory revenue of approximately $425 million in the quarter exceeded our expectation of $200 million as we saw both higher volumes and a favorable mix of our four-in-one test for COVID-19, Flu A, Flu B and RSV. Favorable volume was driven in part by customers purchasing in preparation for the upcoming respiratory season. Now, based on activity in the third quarter and our expectation of a respiratory season with normal severity, we expect respiratory revenue of approximately $1.7 billion for the full year of 2024. Outside of respiratory, increasing menu adoption and system utilization helped drive another quarter of mid-teens growth in Cepheid's core non-respiratory reagent portfolio, including more than 20% growth in Group A Strep, sexual health and virology assays. We also saw strong installed base growth, particularly for our lower throughput systems, as customers continue to add GeneXpert instruments in their clinics and alternate care sites. So this expansion out of the hospital allows our customers to improve financial and clinical outcomes by standardizing care across their networks. I'd like to thank all of you who joined us last month for our Investor Day, where we had the opportunity to showcase our differentiated diagnostics portfolio. During the event, we highlighted how DBS-driven innovation and commercial execution have meaningfully improved the growth and margin profile of our diagnostics franchise over the last several years. We also talked about how we are uniquely positioned for long term growth opportunities in high-value, high-need areas such as neurodegenerative diseases, infectious diseases and oncology. And if you haven't had the chance to see the replay, I'd encourage you to watch it on our Investor Relations website. Now, let's briefly look ahead at expectations for the fourth quarter and the full year 2024. For the full year 2024, there is no change to our previous guidance and as a reminder, we anticipate a core revenue decline in low single-digit percent range and a full year adjusted operating profit margin of approximately 29%. In the fourth quarter, we expect core revenue to decline in the low single-digit percent range. Additionally, we expect the fourth quarter adjusted operating profit margin of approximately 30%. So to wrap up, we're pleased with our better-than-expected third quarter performance and expect the trends we're seeing today to continue into Q4. Our team's commitment to executing and innovating with the Danaher Business System enabled us to deliver strong results while continuing to accelerate growth initiatives across the portfolio. Our third quarter results also reflect the unique positioning of Danaher today. We have an outstanding group of businesses that serve attractive end markets with favorable long term, secular growth drivers. We're further enhancing our portfolio and competitive advantage with innovation that is helping customers solve some of the most important health challenges impacting patients around the world. So, looking ahead, we believe this powerful combination of our leading portfolio, proven ability to innovate, and our team's commitment to executing with the Danaher Business System provides a solid foundation for delivering differentiated long term financial performance. And so with that, I'll turn the call back over to John. John Bedford: Thanks, Rainer. That concludes our formal comments. Operator, we're now ready for questions. Operator: [Operator Instructions] We'll take our first question from Tycho Peterson with Jefferies. Please go ahead. Tycho Peterson: Hey, thanks. I want to probe into the instrument numbers a little bit, wondering if you can give us instrument growth ex-China and then just maybe talk a little bit about where it's worse and where it's getting better, whether it's flow, mass spec, lab automation, microscopy, and any leading indicators of funnel dynamics that make you feel better coming out of the quarter on the instrument side? Matt McGrew: Yeah. Tycho, it's Matt, I'll give you the kind of the number on what it is. It's probably low to mid-single-digit ex-China. And then, Rainer, you want to kind of give color on what we're seeing on the instrument side? Rainer Blair: Sure. No, absolutely. So -- and then, of course, in China, we would say that it's down high single-digits. But if you look at the developed markets, let's start with those. The end markets were relatively stable sequentially, but we haven't seen an inflection there yet, although in pharma and in biotech, while it remains soft, we're starting to see some early signs of improvement, especially in North America. On the academic research side, there we see it stable in North America, with Europe modestly weaker. But coming back to China, we're all aware, of course, of the announced stimulus, but that really hasn't translated into meaningful orders for us as customers continue to wait for those details. So -- and while they're waiting for those details, they tend to also delay perhaps the normal purchasing habits that they might have had. So the stimulus funding has yet to pick up here in the third quarter. Tycho Peterson: Okay. And then a follow-up. I know you don't want to talk about '25 yet, but if we look at kind of the run rate for guidance on life sciences that you're giving us for the fourth quarter, the Street is at 6% next year on life sciences. Is that realistic, kind of, given the run rate you're laying out for the fourth quarter? And then anything you can say on China bioprocess for next year? We've seen some of your peers talk down numbers as well? Rainer Blair: Tycho, we're still looking here to see how the fourth quarter plays out and to see whether we can see a pickup in the stimulus, particularly in China, while we do expect the developed markets to be stable along the lines that I just discussed for Q3. So we're looking to see how China's stimulus plays out here in Q4 before we can get to 2025 numbers. Now as it relates to bioprocessing, we continue to see there a low activity level, albeit stable, but at a lower level, and we expect that to take more time to play out here in the near term. Matt McGrew: Yeah, maybe just to kind of follow up, I think the comment on the China stimulus is for tools, Tycho, right, just kind of what we're seeing there for '25 overall. So that's kind of '25 overall for Danaher for tools, but for bioprocessing for '25, I think we've kind of talked about a gradual recovery here in '24 and that's pretty well played out like we thought. Like Rainer said, we do need to see sort of how Q4 plays out, but -- before we kind of give anything formal on '25. But that said, the Q4 exit rate of high single-digits, an important kind of building block for us as we build backlog and visibility heading into 2025. But given what we've seen here through Q3, I think we're going to see a gradual recovery continue into '25. Tycho Peterson: Okay. And then on the life science, the guidance, fourth quarter down low single-digit, but the Street next year is up 6%. I was trying to also reconcile whether that step-up is reasonable. Rainer Blair: Yeah, I mean, I think the biggest factor there for -- as we look to next year will be what happens with the China stimulus for life sciences. Tycho Peterson: Okay, understood. Thank you. Operator: Thank you. We'll take our next question from Michael Ryskin with Bank of America. Please go ahead. Michael Ryskin: Hey, thanks. I actually want to just follow up on exactly your last point there on bioprocess sort of exit rate and how to think about 2025 and just how you're feeling about that market developing, the gradual recovery. You talked about, I think, five consecutive quarters of order growth there. In the last couple of quarters, you've had high single-digit order growth. Revenues for bioprocess have done well this year as well, but they've lagged the growth level. So it seems like there's a little bit of a lag in terms of the orders translating to revenue, which you would expect, obviously. Do you think that lag is closing? Do you think that we're getting closer as we hit 4Q? You talked about high single-digit bioprocess where you're going to start to see some of that order growth we've seen over the last quarters -- couple of quarters start to translate and again translates into next year? Matt McGrew: Yeah, I mean, I think, it's a perfect frame. I mean you think about exiting the year at high single-digits, but you kind of take a step back and you look at, from a core growth perspective, in 2024, we're going to be down low single-digits. And so as you sort of think about where we kind of exit the totality of '24 with that gradual sort of kind of recovery in mind as we head to '25, I think that's kind of the way that we're thinking about it from a perspective of what revenue will do next year based on the fact that the order trajectory has gotten better over the last five quarters. But like I said, I mean, it would be great for us to see Q4 here before we go. But I do think going down low single-digits this year in revenue, be positive next year we believe. But let's see where the trajectory goes here, given the fact that I do believe this is going to kind of be a continuation of what we saw in '24, which is a pretty gradual recovery. Very encouraging, though. So we're very happy with where we are. Michael Ryskin: Okay. All right. And then, a follow-up, I want to ask on Cepheid, a couple quick questions, if I can. One is, you talked about timing of some purchasing of the kits in the quarter. Any chance you could quantify that? I know you did $425 million in respiratory versus the $200 million guide. Do you think that $225 million was timing or maybe was some of that organic beat and some of it was timing? Just trying to get a sense of how much pull forward there was from the fourth quarter. And in the press release, you also specifically called out Cepheid gaining market share in molecular testing. If you could expand on that, where are you gaining share in terms of customer or geographically? Any specifics there? Thanks. Matt McGrew: Yeah, I mean, Mike, it's a little hard to parse out to the dollar, how much of the beat was related to pull-forwards versus just sort of better than we thought. I think probably, anecdotally from what we heard from customers, I would say that we do believe that there was -- a good portion of that was probably due to wanting to make sure that they had kind of the security of supply heading into the fourth quarter, which is not a huge surprise, I guess. But as we sort of look forward to the fourth quarter then, we did take that into account as we thought about what we might see here in the fourth quarter. So, I'd say a significant portion of the beat was probably related to that. As far as market shares go, I think I'd probably put it in two categories. I'd probably say, one, it's largely in the US, though that's not an absolute statement. I would say largely in the US. As you know, we are entirely in sort of hospitals as well as at near point of care. We've been doing very, very well with IDNs as we've expanded beyond their core hospitals into other point of care settings closer to the patient. That has continued here in the quarter, and I expect that, that would continue as well again with the installed base that we've been able to drive. Michael Ryskin: Thanks a lot, guys. Operator: We'll move next to Doug Schenkel with Wolfe Research. [Technical Difficulty] Doug Schenkel: Hey, good morning, guys. I guess a couple of quick follow-ups. There's been a lot of questions that kind of dance around the 2025 question, which I'm sure you appreciate. When I look at numbers, the Street's looking for 8% core growth with bioprocessing growing double digits and life sciences growing 7%. You haven't said anything about anything resembling a snapback. Respiratory comps are going to be tough. VBP seems to be picking up in China. Stimulus activity follow-through seems unclear. And then just knowing you guys, you tend to be conservative. So cutting to the chase, am I missing anything? And should the street be modeling things at these levels recognizing you still want to see another quarter? But as we sit here today, the numbers look a smidge high to me. Am I missing anything? Rainer Blair: Well, I don't think you're missing much here. If we just take a look real quick on how we're thinking about 2025, it's important to know that we need to see how Q4 plays out here. I'll come back to that in a minute, Doug. But there's still a couple important variables in Q4 that's going to shape the next year. And those relate to really the trajectory of the order book in bioprocessing. It's so important. So certainly the high single-digit core growth that we expect in bioprocessing for the fourth quarter is fully supported by backlog and what we expect in orders. But we also want to see more deeply into 2025 by seeing that orders momentum here continue into Q4. So that's going to be key here for understanding how the second half of 2025 plays out in bioprocessing. As it relates to respiratory for Cepheid and other key variable here, as we just talked about, there's been some purchasing ahead here in Q3 and based on what we saw in the southern hemisphere, we do expect the northern hemisphere to have a more normal respiratory season. And as you know, that straddles the first respiratory season of the year, straddles Q4 and Q1. And then lastly, and this is important for life sciences, but also more generally, we need to see how this China stimulus plays out in 2025, and we'd like to see some indicators of that accelerating here in Q4. To date, we've not really seen anything meaningful in that regard. So we're going to put numbers all around us here and then update you in January. Doug Schenkel: Okay, super helpful, Rainer. And I guess another follow-up on just -- I mean, essentially trying to get at the question of the utility of the book-to-bill metric. Like, if we look at book-to-bill from Q3 of last year and this year and assume that bioprocessing accounts for roughly 85% of biotech sales, it seems like orders were up over 20% year-over-year. So I'm not sure if that math is right. That would be one question. But if it is, I'm just wondering how important is that as we think about the outlook for a return to robust bioprocessing growth, because I think there are some that are concluding that it's taking longer to convert. I think there's others that are assuming it's converting much more quickly than it used to. I guess we're just trying to get at how useful this metric is, especially keeping in mind, this is largely a consumable business at this point. Matt McGrew: Yeah. I mean, I think we've talked in the past about book-to-bill being -- it's an interesting number and can be helpful in certain businesses. But traditionally or historically, we have not really used book-to-bill to kind of run this business for the exact reasons you said, lots of consumables and the timing of when the shipments hit. So I think from our perspective, book-to-bill is not something we spend a lot of time thinking about. But we do think about the orders. And as you said, the orders here in the quarter were north of 20%. Now, that is off of a very easy comp. So I think we need to have a little bit of restraint on what that means. But five quarters of sequential order growth is important. I think it's also -- what gave me a lot of encouragement in this quarter was, typically, we do see some seasonality where we go down from Q2 to Q3, we did not see that in this environment. I was encouraged by that, that we actually went up again sequentially. And so I sort of look at everything and think about my order growth rate, the percentages, even though they're off low numbers. That's important. The fact that we've had five sequential quarters in a row coming off of where we've been on the destocking, I think that's an important factor. So, yeah, to your point, I'm not sure book-to-bill is super critical for us, but maybe triangulating that with those other two factors, I really do think we're really happy with the trajectory of what we've seen in 2024 and what that means heading into 2025. But again, I think we've seen a pretty gradual build-up here in revenue and in orders, and I suspect that, that continues. Doug Schenkel: Super helpful. All right, thanks, guys. Rainer Blair: Thanks, Doug. Operator: Thank you. We will take our next question from Vijay Kumar with Evercore ISI. Please go ahead. Vijay Kumar: Hi, Rainer. Good morning and thanks for taking my question. I guess, one -- I want to ask on genomics here, low singles, maybe in the past you spoke about the sequencing versus gene editing, writing. What were trends between those two segments? And I think this Rapid Genes that you mentioned, maybe talk about what Rapid Genes is. And would you expect some share gains here due to launch of this product? Rainer Blair: Sure, Vijay. We -- on the gene reading side of the house, we do still see the markets softer, as -- particularly in the smaller customer, emerging biotech segment, we see less activity. While the funding improved, those customers are still prioritizing their project quite a bit. And so we're seeing a bit less consumption in that area. Now in gene editing, of course, that's a different story, where we see a great deal of CRISPR and Guide RNA and other types of solutions doing very well. Having said that, and coming back to our new product launch here with Rapid Genes, we're very excited about that. This will offer whole genes to our customers at a quality and a turnaround time, which is highly differentiated in the market. We expect that, over time here, to provide us some tailwind. So we're very pleased here with how IDT is performing in this environment. Vijay Kumar: Understood. And maybe, Matt, one for you. Your Q4 operating margin assumption, it came down a tad versus the prior. I think we're looking at low-30s exit rates. Is there some timing of expenses or anything changed on margin assumption? And if it is, any change in investments and implications here as we look at incremental margins for fiscal '25? Matt McGrew: Yeah, I mean, our full year margin didn't change, approximately 29%. Q4 will be at approximately 30%. I mean, I think it's probably a function of a couple of things. One, we're going to have -- we anticipate at least lower revenue in respiratory in Q4. Obviously, that has some margin implications to it. I think we did have a little bit of sort of timing, a little bit better bioprocessing in Q3 than we thought. And probably some of that might be a little bit of timing-related as well, sort of impacting Q4 margins. And as you said, we've had a pretty good year here. And as we head into the fourth quarter, we're thinking about the cost structure, thinking about the investments that we want to make in the business, and we're taking an opportunity to make sure that we do some of those smartly here in the quarter. And I think you sort of add it all up and you kind of come up with that adjusted operating margin in the 30s, sort of holding the full year here as we head into the end of the year. Vijay Kumar: I'm sorry. The incremental margin implications for fiscal '25, should the fall-through be in the 35% to 40% range? Matt McGrew: Well, I mean, it's going to depend on volume, I think, Vijay. But like we've kind of talked about from a margin perspective that this is -- this business when it is operating sort of in a normal environment, the low-30s are where it should be. So, I mean, '25, we'll sort of update you that in January when we get there. But that'll be a function of volume and mix, depending on where it comes from, it'll be different. So we'll have to until we get a little bit further to give you that, but that's sort of how I'm thinking about '25. Vijay Kumar: Understood. Thank you, guys. Rainer Blair: Thanks, Vijay. Operator: Thank you. We'll take our next question from Scott Davis with Melius Research. Please go ahead. Scott Davis: Hey, good morning, fellas. Rainer Blair: Good morning, Scott. Scott Davis: You guys mentioned again this quarter that the smaller customers in bioprocessing not coming back as fast. At what point does it become such a small piece of the business that maybe we stop having that color or it's less material? Or maybe a different way to ask the question is, what percent of revenues is it now where it's kind of large versus small customers? Matt McGrew: Yeah, I mean, the larger versus small, roughly, Scott, is kind of 75% are larger and 25% are smaller. And I think we give the color primarily because those smaller customers have a little bit of a different dynamic than the larger customers. Larger customers typically have on-market or later-phase, Phase 3 trial kind of exposures, whereas the smaller customers tend to be earlier-stage, probably a little bit more related to, in some instances, the cell and gene therapies of the world. So a little bit different. They act differently in the funding environment as well. So I think it's -- we're just trying to kind of give color as to what we're seeing there, where we are seeing an improvement in the funding environment. It's not necessarily working its way through into orders and revenue at this point. And so just to kind of give a little bit of color. But, to your point, I think is, most of our customers are the larger customers with stuff that is on-market. When I look back at what has caused all the pain of the last kind of two years in this business, it was destocking at those customers, and I believe that is largely behind us. And so that's why I think it's really encouraging. As we stand here and look forward, though, the recovery has been gradual, it has happened, it has happened at the largest customers, gives me a lot of faith that the long term outlook of this business still is the high single-digits. When we get there, kind of a bit of a TBD, but I think that's the reason we sort of want to give a little bit of color on both of them. Scott Davis: Okay, that makes sense, Matt. And, guys, we didn't talk about the buyback or M&A or kind of your funnel or nothing mentioned in prepared remarks. Any update there as it relates to your confidence or size or any metrics around the funnel be helpful. Matt McGrew: Yeah, I'll just touch real quick on the buyback, and maybe Rainer can give some color on the funnel, the M&A funnel. But I mean, the buyback, I think if you see, we did complete it technically, that buyback was straddled, both Q2 and Q3. So if you see something in the queue, that's what it was related to, just so everybody's kind of clear, it was not a new issue. And so it was the final pieces, if you will, of the buyback that we talked about in Q2. Rainer Blair: Thanks, Matt. And as it relates to the M&A environment, Scott, as we do every day, we're out there cultivating across all of our segments, and we're fairly active there. Our funnels are pretty dynamic. It's fair to say that while the environment, though, is improving, valuations are still elevated. And so we feel great about our positioning both in terms of the assets that are attractive out there and, of course, our balance sheet. But we're going to maintain our discipline with our deals needing to meet our trifecta of attractive end market, attractive company and then, of course, the valuation framework, the model has to work as well. So active, but we still see that the valuations are elevated. Scott Davis: Makes sense, Rainer. Thank you. I'll pass it on. Appreciate it. Good luck, guys. Rainer Blair: Thanks, Scott. Operator: Thank you. We'll take our next question from Puneet Souda with Leerink Partners. Please go ahead. Puneet Souda: Yeah, hi, Rainer, Matt, thanks for taking my question. So, specifically on China, just following up on a few things, what's the right sort of jump-off point for China for -- as we think about 2025, just given the uncertainties here in the market and the backdrop of the stimulus? And also wondering if you can elaborate a bit on the China value-based pricing, how much of an impact are you baking there? And just lastly on China, how much is local bioprocess competition important in this market? And does that change your view for the long term growth of the worldwide bioprocess or biotech segment long term growth, just now that local competition has emerged and is being utilized more in some of those local maps? Matt McGrew: Yeah, maybe I'll start, because I think your first question and your third question sort of wrapped around China for next year, and bioprocessing, maybe I'll let Rainer take that. But just VBP, just to remind everybody, we sort of assumed that it was going to be kind of $150 million of impact over three years really starting this year as we ramp up. Our assumptions initially were sort of that, that would be linear over the next three years. We are starting to see a little bit more activity in China around VBP here at the end of this year. So I think we'll have a better sense of what that linearity looks like after we get through next couple of months, where it does look like the activity is sort of ramping up. So I still think the number is a good number. But how that rolls out and plays out will sort of be determined in the next couple of weeks. Rainer Blair: As it relates to the JOP, Puneet, really, I think we need to view China as stable and sort of bumping along the bottom. And we don't expect a change in that in the short term as we go through and think about 2025 unless we see a material change in the execution and rollout of the stimulus program in China. So we expect China to continue to develop as it has been here for most of the year in 2024. Now, as it relates to your question on local competition, certainly there's local competition out there, but we have to be clear that, particularly in biotech, there are many companies simply struggling to survive, and they're buying essentially the least expensive solution that they can to make it to the end of the month, and it's just going to have to be good enough. So that's sort of one section of the market. Then there's another segment that really is targeting the international sale of their therapeutic molecules. And they tend to want to have solutions from multinational companies, first and foremost from ourselves here and Cytiva in order to ensure that regulators around the world are comfortable with the inputs that are required to make these incredibly effective drugs. So, yes, there's local competition. We would see it more on the margin, especially as it relates to local molecules. Puneet Souda: Got it. Thank you. Very helpful. I'll leave it there. Rainer Blair: Thanks, Puneet. Operator: Thank you. We'll take our next question from Dan Leonard with UBS. Please go ahead. Dan Leonard: Thank you. I wanted to circle back to the trends in life science, instruments and equipment specifically, because I think you do have some consumables in that instrument reporting. Can you elaborate a bit further on what the equipment trends were in the quarter from a growth perspective? Rainer Blair: So just to talk about the quarter more generally, the market conditions in third quarter were essentially consistent with what we saw in the first half of '24, and capital equipment spending continued to be constrained, and to the last question, particularly in China. Now, in contrast to the equipment-constrained environment, consumables and service grew in the quarter as lab and research facilities and institutions activity has started to stabilize. So we do see equipment being constrained, but consumables are starting to move. Dan Leonard: And then a quick follow-up. Rainer, could you comment on the performance at Abcam? It seems like versus our numbers, the run rate there is improving. I'm unsure if that's the correct read or if it's just rounding, or if there's other M&A into that revenue mix? Rainer Blair: There's no other M&A in that revenue mix. But of course, we're working very hard to drive our hypothesis around Abcam. And right now, the focus is on transitioning into Danaher, of course, and the team is making great progress with that. They're implementing, actually pulling on our DBS capabilities to drive those growth accelerators and, of course, improve the cost positioning that we've talked about. So we feel very good about where we are with Abcam and, long-term, we absolutely believe that this meets our expectations, both in terms of growth and the bottom line. Dan Leonard: Thank you. Rainer Blair: Thanks, Dan. Operator: Thank you. And we will take our final question from Jack Meehan with Nephron Research. Please go ahead. Jack Meehan: Thank you. Good morning, guys. Rainer Blair: Hey, Jack. Jack Meehan: I wanted to ask about diagnostics in the China region. To start, for Matt, can you just check my math is, can you remind me, is this like 15% diagnostic sales? And I was trying to back into how Beckman might have done in the quarter in the region, it could have been to the tune of down 20% or so. And then for Rainer, would just be great to hear about your thoughts on regional dynamics in diagnostics. Is this all kind of price impact or any change in kind of share shift? Thank you. Matt McGrew: Yeah. So diagnostics, the total revenue for China diagnostics, I think you're in the ballpark on that. As far as what China was -- from China diagnostics perspective in the quarter, I don't think it would have been down that high, Jack. Probably it was down in overall diagnostics, which -- most of that's going to be Beckman. It was kind of down low double-digits. So I think that's probably a more -- a better place to anchor. But I think your total number is probably pretty close to right as far as percentage sales. Rainer Blair: We saw across the world here, really with one exception, strong performance in all of our clinical diagnostic businesses. And of course, you heard from Matt around Cepheid that we believe to be taking share there really at all levels. But coming back to our clinical diagnostic businesses, we saw a high single-digit recurring revenue growth in North America and Europe. On the other hand, we come back to China, and China, we see the impact of the volume-based procurement, which is what brings us down. We also had, in Beckman Coulter in particular, a high hardware sellout comp last year as we were burning down some backlog. But we're very pleased with how our clinical diagnostics businesses continue to develop, continue to take share, and volume-based procurement is sort of the topic right now for diagnostics in China. Operator: Thank you. And this will conclude our Q&A session. I'll turn the call over to John for closing remarks. John Bedford: Thank you, everybody, for joining today. We'll be around for follow-ups all day, rest of the week. Thank you. Operator: Thank you. And this does conclude today's program. Thank you for your participation. You may disconnect at any time.

Operator: Good morning. My name is Todd, and I will be your conference facilitator this morning. At this time, I would like to welcome everyone to Danaher Corporation's Second Quarter 2024 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]. I will now turn the call over to Mr. John Bedford, Vice President of Investor Relations. Mr. Bedford, you may begin your conference. John Bedford: Good morning, everyone, and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer; and Matt McGrew, our Executive Vice President and Chief Financial Officer. I'd like to point out that our earnings release, the slide presentation supplementing today's call, the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call and a note containing details of historical and anticipated future financial performance are all available on the Investors section of our website, www.danaher.com under the heading, Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events & Presentations and will remain archived until our next quarterly call. A replay of this call will also be available until August 6, 2024. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. The supplemental materials describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company-specific financial metrics relate to results from continuing operations and relate to the second quarter of 2024 and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will make forward-looking statements within the meaning of the Federal Securities Laws including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, and actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date that they are made, and we do not assume any obligation to update any forward-looking statements, except as required by law. With that, I'd like to turn the call over to Rainer. Rainer M. Blair: Thank you, John, and good morning, everyone. We really appreciate you joining us on the call today. Our team executed well during the second quarter, delivering better than expected revenue, earnings, and cash flow. We were particularly pleased with the sustained positive momentum in our bioprocessing business, and with the strong performance of Cepheid, which we believe gained market share in molecular testing again this quarter. Now across the portfolio, market conditions were largely as we anticipated. In our bioprocessing business, conditions in the U.S. and Europe continued to improve, and we were encouraged to see orders increase high single digits sequentially this quarter. In China, bioprocessing demand and underlying activity levers were stable sequentially, but remained weak as customers continued to manage liquidity. In Life Sciences, capital equipment investments remained constrained while recurring revenue was relatively stable. And in Diagnostics, we saw healthy demand globally across our businesses. As we move through this transitional period, we believe Danaher is well positioned for sustainable long-term value creation. Our strong positioning and attractive end markets coupled with durable, high-recurring revenue business models, and the power of the Danaher business system supports our long-term expectations of high single-digit core revenue growth with a differentiated margin and cash flow profile. So with that, let's take a closer look at our second quarter 2024 results. Sales were $5.7 billion in the second quarter and core revenue declined 3.5%. Geographically, core revenues in developed markets were down low single digits with strength across Diagnostics offset by declines in Biotechnology and Life Sciences. High growth markets declined high single digits, including a high-teens decline in China. Our growth profit margin for the second quarter was 59.7% and our adjusted operating profit margin of 27.3% was up 60 basis points as the favorable impact of cost savings initiatives more than offset lower volume. Adjusted diluted net earnings per common share of $1.72 were essentially flat year-over-year. We generated $1.1 billion of free cash flow in the quarter and $2.6 billion a year-to-date, resulting in a year-to-date free cash flow to net income conversion ratio of 129%. Now additionally, through the second quarter and into July, we repurchased approximately 19 million shares. While M&A remains our bias for capital deployment, we believe these repurchases will provide an attractive return given the strength of our long-term organic growth, earnings, and cash flow outlook. Now let's take a closer look at our results across the portfolio and give you some color on what we're seeing in our end markets today. Core revenue in our biotechnology segment declined 7% with the bioprocessing business down high single digits and the discovery and medical business down mid-single digits. In our bioprocessing business, revenue declines moderated from the first quarter as we believe our larger customers in the U.S. and Europe have worked through the majority of their excess inventories and are returning to normal ordering patterns. Many of these customers are also seeing strong momentum for therapeutics in their late stage pipelines, which is promising for our future growth. Our emerging biotech customers continue to prioritize projects, particularly for cell and gene therapies in an effort to manage liquidity. However, we are encouraged by the improvement in the overall funding environment, which is a positive leading indicator for these customers. So based on the trends we saw through the first half of the year, we continue to expect a low single digit core revenue decline in our bioprocessing business for the full year of 2024. There is also no change to our assumption of a bioprocessing core revenue growth rate of high single digits or better as we exit the year. Biologics market remains very healthy as evidenced by the increasing number of treatments both in development and production. Notably, the number of new FDA approvals for biologic and genomic medicines in the first half of this year nearly doubled compared to the first half of 2023, and the full year 2024 is on track to set a new record. Underlying demand for biologic medicines also remains on track to grow at a high single digit or better rate again for the full year 2024. So given this substantial and sustained increase in approvals and production volumes, we expect the growth rate in bioprocessing to remain very robust for many years to come. We continue to make substantial investments in innovation to support our customers as they pursue these life-changing therapeutics. To support monoclonal antibody production, which comprises the majority of our bioprocessing revenues, Cytiva expanded its comprehensive filtration portfolio with the launch of Supor Prime. Now Supor Prime filters are specifically designed to address key challenges associated with high concentration biologic drugs whose complex formulations and high particle loads make them prone to premature filter blockage and costly drug product losses. We're also developing innovative solutions for emerging modalities. In May, Cytiva introduced the Cepheid Cell Therapy manufacturing platform, which is helping address critical cost and capacity constraints associated with CAR-T Cell Therapy manufacturing. The Cepheid platforms fully automated manufacturing process can increase productivity by up to 50% per year compared to the industry standard, reducing our customers' costs and increasing throughput. Addressing these key manufacturing challenges, will help improve patient access and facilitate wider adoption of these important therapeutics. Now, turning to our Life Sciences segment, core revenue decreased by 5.5%. Core revenue in our Life Sciences Instrument businesses collectively declined high single digits as expected, with trends in the second quarter largely consistent with what we saw in the first quarter. Global pharma and biotech demand remained weak, academic markets were weaker sequentially, and applied markets performed comparatively better, particularly for our advanced solutions which provide critical capabilities needed by our customers. In China, we're seeing improving sales models and coding activity driven by the recently announced stimulus measures. However, we don't anticipate this to convert to orders until 2025, as these programs are in early stages of implementation. So in the meantime, many customers are delaying purchasing decisions as they await funding. Now, last month at the American Society of Mass Spectrometry Meeting, SCIEX reinforced their market leadership in Quantitative Mass Spectrometry with the release of the 7,500-plus triple-quad mass spectrometer. The 7,500-plus pairs the ultra-high sensitivity of the 7,500 with faster acquisition speeds and the ability to maintain the highest sensitivity quantitation and the ability to maintain the highest sensitivity quantitation for up to twice as many sample runs. This makes the 7,500 plus particularly well-suited for complex applications such as PFAS analysis where customers need to test more samples across diverse sample types with high precision to meet challenging new regulations. In our genomics consumables business, core revenue declined mid-single digits in the quarter. High-single digit growth in gene writing and editing solutions was more than offset by declines in next generation sequencing and the impact of project timing in our plasmids business. During the quarter, IDT opened a new manufacturing facility at their Coreville, Iowa campus which enabled the team to manufacture differentiated new offerings such as rapid gene synthesis. This is the second facility expansion for IDT within the last 12 months and provides the capacity needed to support the rapidly expanding global DNA synthesis market and related drug development activities. Now moving over to our Diagnostic segment, core revenue increased 3%. Our Clinical Diagnostics businesses collectively delivered mid-single digit core revenue growth led by high-single digit growth at Radiometer. Leica Biosystems was up mid-single digits with notable strengths in digital pathology driven by a Aperio GT 450 diagnostics digital pathology slide scanner which recently received its FDA 510K clearance. Beckman Colter Diagnostics was up low single digits with balanced strengths across both developed and high growth markets. Now in May Beckman received FDA 510K clearance of its Access NT ProBNP on the DxI 9000 immunoassay analyzer. This important expansion of Beckman's cardiac testing menu allows clinicians to quickly and accurately diagnose and assess the condition severity of patients suspected of having acute heart failure. Now this clearance is just the latest confirmation of the DxI 9000 platform’s capability to develop increasingly more sensitive and clinically relevant diagnostics. In molecular diagnostics, Cepheid’s respiratory revenue of approximately $300 million in the quarter exceeded our expectation of $200 million driven by both higher volumes and a favorable mix of our 4-in-1 tests for COVID-19, Flu A and B and RSV. So we continue to expect respiratory revenue of approximately $1.6 billion for the full year 2024. Now as I mentioned earlier, we believe the Cepheid team continued to gain market share during the quarter. Increasing menu adoption and system utilization helped drive mid-teens growth in our core non-respiratory reagent portfolio, including more than 20% growth in sexual health and virology assays. We also continued to expand our nearly 60,000 system installed base as many existing healthcare systems and integrated delivery network customers are adding new instruments at sites further out in their networks and closer to patients. In June, the FDA granted Cepheid marketing authorization for its Hepatitis C RNA test. Hepatitis C diagnosis has traditionally been a multi-step process requiring follow-up appointments and leading to treatment delays. With Cepheid's tests, which is the first molecular-based point of care test for Hepatitis C, patients can be tested and receive treatment during the same healthcare visit. So this is a great example of how bringing accurate, easy to use molecular testing closer to patients is improving treatment outcomes and driving long-term growth at Cepheid. Now before we move on to our expectations for the remainder of the year, I'd like to highlight our recently released 2024 Sustainability Report, which detailed several important milestones across the three pillars of our sustainability program. Starting with building the best team, innovating products that improve lives and our planet, and protecting our environment. Notably, we have committed to setting science-based greenhouse gas emission reduction targets in line with the science-based target initiative, including reaching net zero value chain emissions by 2050. So I encourage you all to read through the report to learn more about the depth and scope of Danaher’s commitment to sustainability and the important work we're doing to make a positive, holistic impact on the world around us. So now let's briefly look ahead at expectations for the third quarter and the full year 2024. In the third quarter, we expect core revenue to decline in the low single-digit percent range. Additionally, we expect a third-quarter adjusted operating profit margin of approximately 26%. For the full year 2024, there is no change to our previous guidance. As a reminder, we anticipate a core revenue decline in the low single-digit percent range and a full-year adjusted operating profit margin of approximately 29%. So, to wrap up, we're pleased with our better-than-expected second quarter results and are encouraged by the continued momentum in our bioprocessing business. Our strong performance is a testament to our team and their commitment to innovating and executing with the Danaher business system. And they have done a tremendous job navigating the current environment to support our customers' life-changing work today, while also delivering breakthrough innovation that is reinforcing our long-term competitive advantage. The transformation in our portfolio over the last several years has created a focused Life Sciences and Diagnostic leader positioned for higher long-term growth, expanded margins, and stronger cash flow. And our recent share repurchases reflect our conviction in a bright future ahead for Danaher. So looking ahead, the unique combination of our incredibly talented team, the strength and differentiation of our portfolio, and a leading financial profile provides us with a strong foundation to create sustainable, long-term shareholder value. And with that, I'll turn the call back to John. John Bedford: Thanks, Rainer. That concludes our formal comments. We're now ready for questions. Operator: [Operator Instructions]. Our first question will come from Jack Meehan with Nephron Research. Please go ahead. Jack Meehan: Thank you. Good morning. And Rainer I appreciate all the color on Bioprocessing. Two follow-ups. First is on the consumables. Can you elaborate on what's giving you the confidence that the stock is drawing to a conclusion here? And then on the capital equipment side, just thoughts on how long this will remain depressed, when you might start to see some improvement there? Rainer M. Blair: So Jack, on the consumable side, we've really seen ordering patterns back to normal with very, very few exceptions and with pretty clear visibility through the measures that we put in place to stay close to our customers here during the destocking period. We feel that we're very close to normal order patterns. And keep in mind, we actively monitor our customers on a customer-by-customer basis. And in addition to that, we really took active measures here to ensure that inventories were normalized. And you'll recall that we took decisions to ensure that we took the dysfunction in the supply chain out to ensure that we had a true demand signal. And we think that's paid off here, and we know where our customers sit in terms of their stock levels on consumables. Now equipment is a slightly different picture. We're seeing good activity there at some of our larger customers, and that played out here in the second quarter as well, with the sequential order growth being high single digits and being positive for both equipment and consumables. And so, those larger customers really do have a higher activity level, whereas the smaller customers probably remain a little bit more constrained. Jack Meehan: Awesome. And then, we're just trying to piece together the mosaic here. So your bioprocessing orders increased high single digits when your peers declined sequentially. I think there's a lot of plausible explanations being thrown around for why the results in the quarter diverged. I was just curious if you could weigh in on what you think is the right signal, what's the noise? Rainer M. Blair: Well, from a competitive perspective, Jack, everyone has slightly different positioning, whether it's by product category or geography or even customer type. Now, if you look at us, we're probably the broadest and the deepest in terms of our portfolio, both upstream and downstream, while some others are perhaps a little bit more concentrated. So, given that, it's always going to be hard to really line up the various players in the industry to have a perfect read-across. But again, the good news here is that this is a great business, and it's recovering as we expected, and we're confident about the future. Jack Meehan: Excellent. Thank you. Rainer M. Blair: Thanks, Jack. Operator: Thank you. Our next question is from Rachel Vatnsdal with J.P. Morgan. Please go ahead. Rachel Vatnsdal: Perfect. Hey, good morning, you guys, and thanks for taking the questions. So another one here just on bioprocessing. So on the 3Q guidance, can you just walk us through what's contemplated in 3Q guide, we've seen a few quarters of sequential progression on orders during the last three quarters in a row sequentially. So walk us through how much of this is just seasonality on the step down into 3Q versus is there some conservatism in there? And then also on orders, should we expect seasonality to also impact on the order book for bioprocessing in 3Q as well? Matt McGrew: Yeah. No, I think that's in bioprocessing in particular. We probably should talk about bioprocessing and respiratory for Q3. So if you think about sort of revenue, we've got bioprocessing is going to be down low single digits, which is again kind of a continued improvement versus what we saw in Q1 and Q2. We were down kind of high teens in Q1, high single digits in Q2, and we think that that goes to kind of low single digits here in Q3. Given like Rainer just said, I think we're largely through the destocking sort of on the consumable side. A little bit easier comps in China as well, so that probably helps a little. But if you think about sort of the two big drivers of Q3, outside of even Bioprocessing, when you think about sort of the guide in totality, you have two issues or two things to think about. We've got lower volume in Biotechnology like I just talked about and in respiratory as well. So Biotechnology prior to the pandemic, we sort of had sort of a step down between Q2 and Q3 seasonally. That was always the case for the business and we're kind of monitoring -– we're putting that in sequentially again here in our guide. We were about down mid-single digits prior to the pandemic from a revenue perspective. And so, that's kind of what we assumed in the guide, that we would have that sort of step down that we normally have seen. Given the fact that we're back at normal order patterns, we sort of believe that we're going to have a normal seasonality as well. So, you kind of factor that in for bioprocessing. And then on respiratory, we're assuming $200 million of revenue versus $300 million here in the quarter. So, the two of those kind of combined are the reason that you've got the Q3 revenue where it is. And I might also add, just to kind of get out in front of them, maybe the next question on margins, that's a big reason why we're kind of guiding to approximately 26% adjusted operating margin in the quarter. Those two businesses sort of being a little bit lower sequentially here, given their margin profile, that's the big driver, if not the full driver of what's happening on the margin perspective as well. Rachel Vatnsdal: Great, thanks. And then my follow-up here, just on 2025, there's been a lot of noise across the industry on 2025 and where we'll be at from an underlying market growth standpoint as well. So, you reiterated exiting this year in bioprocessing at high single digits or above, but could you just walk us through how are you thinking about the total business in terms of 2025 in relation to that underlying market? And then you've also talked a lot about the incremental margins on bioprocessing and some of that durability on the margin expansion and diagnostics as well. So, Street's currently at $8.70 or so in EPS $1.25, how are you feeling about that number, any early takes there would be helpful? Thanks. Matt McGrew: Yeah. We just finished the second quarter year of 2024, so we still have a lot of work left to do in 2024 before we think about 2025. We have always sort of guided here in January. I think that is still the plan. Plenty of work left to do here in the quarter from a top-line perspective, but clearly we are seeing the improvements. We thought clearly, this is playing out, at least in bioprocessing, like we thought on the top line. And so, maybe what we should do is let's just get through Q3 here, and then we can kind of revisit the fourth quarter and 2025 as we get there. From a margin perspective, I think we have sort of historically talked, both -- like I talked on the last call, Q4 and Q1 will typically be better margin quarters for us, given like you said, the operating leverage that we get out of bioprocessing and respiratory, I don't think that, that will be any different here in this year. But as far as over the long term, as I think about next year from a margin perspective, we've talked about this business being a 35% to 40% kind of incremental fall through. I don't see any reason why that would not be the case, especially as we sort of return to growth in bioprocessing. I think we've been close to those levels here as we've been shrinking, frankly. So I think we've done a lot on the cost structure to be able to make sure that we can continue to do that. But I think over time, 35%, 40% fall through, and this is a business in a normal time that our adjusted operating margin should be in the low 30s. Operator: Thank you. Our next question will come from Scott Davis with Melius Research. Please go ahead. Rainer M. Blair: Good morning Scott. Scott Davis: Hey, good morning Rainer and Matt and John. The buyback, I don't recall seeing one at least one of this size in the past. What's -- just a little color, is it maybe a statement that M&A is a little slow or is it -- should you guys think about it as a little bit more like housekeeping, what slow color on how you thought through the buyback? Thanks. Rainer M. Blair: Well Scott, first, it's important to note that this is not a change on our view on capital allocation. So we maintain a strong bias towards M&A, and we're going to continue to be active on the M&A front. Now having said that, as always, we evaluate capital allocation using the same ROIC lens, whether it's M&A, buyback, R&D projects, CAPEX and so forth. So we evaluate all of these investment options based on the expected returns. And specifically in today's environment, the relative value of a buyback generates attractive financial returns. So we're buying a great business, one we know very well. We have strong conviction about its future while maintaining a meaningful M&A envelope. And I put out there this, this is important that our free cash flow is nearly $6 billion and our net leverage is about two turns. So we feel well positioned here with various alternatives. Scott Davis: Makes sense, Rainer. Guys, well the book-to-bill in Cytiva, will that cross 1 in 3Q or maybe said a different way, has it already crossed 1 since we're already a month into the quarter? Rainer M. Blair: Well, our book-to-bill is 0.9, Scott. And as we've said, in order to make our full year guide here of bioprocessing being down low single digits we have to maintain the 0.9. And that's certainly how the first half has played out here, and we're confident that, that will continue to be the case. As you know, we don't guide to book-to-bills or orders, but basically the guide is built on the assumption that as we have 0.9 here for the year, we'll exit our year with high single-digit or better growth. Scott Davis: Thanks a lot Rainer, thank you guys. Appreciate it. Rainer M. Blair: Thanks Scott. Operator: Thank you. Our next question will come from Vijay Kumar with Evercore ISI. Please go ahead. Vijay Kumar: Hi Rainer. Good morning to you and congrats on a nice finish here. One, maybe a high level on -- maybe talk about the competitive pricing environment. Any change, I think where I'm going with the question is given the mix it signals from different players, there is some fear whether competitive pricing environment could be great, so maybe talk about what you're seeing in the market? Rainer M. Blair: Vijay, look for the second quarter, all up for Danaher, our pricing was up 100 basis points right around there. And for 2024 as a whole, we think we will likely be a little above our historical average of 75 to 100 basis points. So we feel good about our positioning, the leverage in our portfolio, and how we've positioned here price-wise. Matt McGrew: As far as -- I think you're probably referring to bioprocessing price, Vijay. We did about 2.5% here in the quarter. It's probably a pretty good marker for the full year. We were getting better price in the last couple of years, probably 4%, 5% type price, but that was also in an environment where we had supply chain and other challenges from an inflationary perspective that we're getting more price to offset some of that. So some of those concerns sort of fall off, if you will, the price comes down. But fundamentally, from a competitive perspective, I don't think we're seeing significant price pressures. It's much more a function of just coming back to where we used to be, which is in bioprocessing, 100 to 200 basis points. Vijay Kumar: Okay. That's helpful, Matt. Rainer, one more and a bigger picture on China. What's been the historical relationship between code activity and when that translates to orders and revenues, is there any way to quantify when you say China code activity has picked up, is that above trend versus historical averages above trend, any framework would be helpful? Rainer M. Blair: Sure. Well, in China, what we're seeing is increased activity levels in our funnel. So the volumes that we see in our funnel has been growing and that's all related to people in the market getting ready for this stimulus funding, if you will, with sort of shovel-ready projects. But what we're also seeing is a decrease in the funnel velocity as naturally market players are looking to see what the financing terms and conditions for the stimulus are. So we have watched this development. This is expected for us. This is not new news. We expected that the market would hold up to see what the funding alternatives would be. And we don't expect to see the funnel convert into orders in any meaningful way here in 2024. We view that more as a 2025 event that people are waiting for their shovel-ready projects to receive funding. Vijay Kumar: Understood, thanks guys. Rainer M. Blair: Thanks Vijay. Operator: Thank you. Our next question will come from Michael Ryskin with Bank of America. Please go ahead. Michael Ryskin: Great, thanks for taking the questions. I want to ask on Life Sciences segment. I think you flagged instruments still down high single digits. And that's a small part of the business, but it still seems like Life Sciences as a whole isn't seeing a lot of improvement yet. You also called out NGS, I think being a little bit weaker. So some parts of consumables are impacted. So just as a whole for Life Sciences, both instruments and consumables, can you dive a little bit more in terms of what you're seeing in the end market, any improvement in order trends there, just how should we expect the second half to play out? Rainer M. Blair: Sure, Mike. Well, let's start with the quarter. So overall, the second quarter came in, as expected, down high single digits with the market conditions largely consistent with what we saw in the first quarter, with capital equipment more constrained, particularly in China, while consumables and services held up comparatively better. Now in developed markets, pharma and biotech remain soft but stable sequentially, while academic markets were modestly weaker and applied markets continue to hold up well, particularly for more advanced instrumentation that you need for complicated applications such as PFAS, clinical, and so forth. And coming back to China here, and to build on my comments to Vijay's question, the recent stimulus measures are really driving improved funnels and coding activity, but we don't expect that to convert to orders until 2025. So as expected, we're starting to see customers delaying their purchasing decisions there as they await the stimulus funding. Now as you think about the second quarter -- the second half, excuse me, we're going to see the comps easing a bit, and that will certainly contribute to some stabilization. But we would expect this normalization process for Life Science tools and consumables to continue through 2024. Michael Ryskin: Okay. 2025 is it? Rainer M. Blair: Through 2024. Michael Ryskin: The end of 2024, okay, alright, thank you. And then on Cepheid on the Diagnostics side. I mean you talked about respiratory coming in a little bit stronger at $300 million. But the rest of Diagnostics and the rest of major diagnostics specifically, still seem a little bit choppy in the Q you called out a decline in core sales [indiscernible]. So could you talk about what you're seeing in Diagnostics outside of respiratory business? Rainer M. Blair: Sure. We saw mid-single-digit growth in our non-respiratory businesses with good customer activity around the world. And in particular, if you think about Cepheid, both respiratory and non-respiratory reagents were up. So non-respiratory was actually up mid-teens. And here you see the Cepheid strategy playing out, increasing that installed base, increasing menu adoption and utilization; virology, a relatively new assay, up 20% in the second quarter. And we're, of course, benefiting from recent menu expansion such as in sexual health, which is also up 20%. And then you heard us launch the new assay and receive approvals for Hepatitis C, and we look forward to seeing its growth journey going forward. So as you look at Cepheid, that strategy plays out. We continue to take share and grew both in respiratory and non-respiratory testing. We have there a little bit of a year-over-year with equipment being a little bit down and that nudged it just into a small negative growth here for the second quarter. Now as you look at the remaining businesses, Beckman grew low single digits. But really, the Beckman Diagnostics continues with this momentum with recurring revenue growing at mid-single digits again this quarter, and the overall moderation there for Beckman is really related to some challenging equipment comps. We had a lot of backlog that we needed to ship out last year, and that's affecting the compare here a little bit. But Beckman Diagnostics really is a mid-single-digit long-term grower. It's got a full innovation pipeline. The commercial execution is outstanding. We've got great instrument placement. And we've done a lot on the innovation front. We just talked about the Access NT proBNP, which has expanded our cardiac menu in the second quarter. And we've done a full refresh of our product line with the immunoassay DxI 9000; on chemistry, the DxC 500 and in automation, the DxA 5000. So coupled with our execution, we see our diagnostics businesses poised and positioned very well here, both competitively and for the long term. Michael Ryskin: Great, thanks. Operator: Thank you. Our next question will come from Dan Brennan with TD Cowen. Please go ahead. Daniel Brennan: Hey, great, thanks. Good morning Rainer, how are you doing. And Matt thanks for the questions here. Maybe just going back to Scott's question on the buyback. The Danaher stock has been one of the best performers over the past 5 and 10-year period. So arguably, you could say the ROIC on buybacks was consistently attractive during the period of time. And as mentioned, you guys historically don't really buy back stock and your business model is really predicated on M&A and deploying DBS. So could you just elaborate a bit on the M&A environment today, maybe what's holding things back, and what's your confidence in employing meaningful capital for M&A as we look out over the next few years? Matt McGrew: Yes, Dan, maybe I'll start. I mean, look, we sort of maybe -- maybe this is the way to think about it. We like this portfolio. We like how we're positioned for the future. We like the growth where we're going to be here. The portfolio moves through the last five years have been sort of -- the fog of COVID, if you will, has really sort of made it hard to see what we think this business is capable of. We've talked about it with everybody in the past. I mean this is a high single-digit growth business, 60% gross margins, 30% OP with free cash flow conversion north of 100%. We like our business. And when I see what we trade at, today and then I kind of look out at what some of the still current M&A multiples are, it's just from a return perspective, we're getting as good of a return, if not better, on some of -- on the buyback than we would at some of these levels. And we just think that in today's environment, the buyback made sense. But that is in today's environment. Our bias still is towards M&A, but I do believe that we've got a bit of a disconnect here still in today's environment. And we are kind of making a bet, if you will, on a business that we know well and that we think has got a lot of upside. Daniel Brennan: Great, thanks Matt for that. And maybe just one, if I could just go back to the Q3 guide for Bioprocess and the normal seasonality. Q2 did come in ahead of expectations and you're maintaining the full year guide. So is there anything in Q2 in terms of a pull forward or timing or is there any change to your view that as inventories normalize, which I think you've said in the past, you would see a real nice recovery as I think you guys have talked about the math of seeing like a nice kind of growth rate as things normalize? Matt McGrew: Yes. No, nothing, I would say, for bioprocessing and the same for respiratory. I would say there's nothing that we saw in Q2 that is causing us consternation about the normal seasonality. I think this is really about returning to a normal seasonal pattern, where typically in bioprocessing, we are seeing mid-single-digit decline sequentially from Q2 to Q3. And for planning purposes, because we are largely past destocking and because we see the customer order patterns sort of coming back to normal, for planning purposes we are going to plan on that same mid-single-digit decline from a revenue perspective sequentially, but that does not change anything in the underlying what we've seen in the business. So I wouldn't read too much into it other than this is a sequential normal historical revenue pattern, and we are assuming that in the guidance. Daniel Brennan: Great, thanks Matt. Operator: Thank you. Our next question will come from Doug Schenkel with Wolfe Research. Please go ahead. Rainer M. Blair: Hi Doug. Douglas Schenkel: Good morning guys, thanks for taking the questions. First, I got a two parter on bioprocessing, and then I want to pivot back to China. So on bioprocessing, it seems like you need continued improvement in the end market to exit the year growing high single digits, meaning this is more than just year-over-year comparisons. It does seem like you're expecting continued improvement there. Just given how the last couple of years have gone in the market, even acknowledging what you talked about in terms of encouraging trends, I'm just wondering how you got comfortable with any risk to that assumption? So that's the first question. The second is on new modalities. In the near term and then just looking ahead, how has your business associated with new modalities performed recently and what's your expectation for mix, new modalities versus MAB contributions moving forward based on what you're seeing in the market right now, that obviously could be an accelerator to growth over the coming quarters? And then finally, on China, just regarding the slowdown in purchasing related to stimulus -- pending stimulus. I'm just wondering how broad based this is and where you're seeing the most headwinds as folks basically try to get better clarity on where the money is going to be allocated and when? Thank you very much. Rainer M. Blair: Sure. Let's start with how we get comfortable with our view on bioprocessing and its future. And I think it's important to level set one more time on the performance that we've seen here in the first half. Starting with the second quarter which, again, it has played out as we thought. We saw improvement in revenue and orders, second quarter in a row in both consumables and equipment. And you'll recall from our commentary in the last quarter's comments that we wanted to see that improvement in equipment, and we did. And our core revenue improved nearly 1,000 basis points from down high teens, Matt talked about this, to down high single digits. And again, orders grew high single digits sequentially from Q1, which is an acceleration from the mid-single digit. So we do see strength there. And that's because destocking is largely behind us, and there are very few exceptions, and those order patterns are more and more similar to the pre-pandemic levels, which is also why in our guide here for Q3, we've talked about seasonality again, something that we haven't seen and we'll consider the anomalous last eight quarters or so. So those ordering patterns are returning to what we saw in the pre pandemic level. And again, important to note here, large customers with on-market drugs continue to grow because that underlying large molecule demand remains at historical growth rates, and we talked about that high single digits maybe even low double digits, but certainly at the historical rates, which continues to provide that demand signal through the entire value chain. At the same time, development pipelines remain very solid across the board. But if we look at Phase III, that's particularly strong. In fact, we would say it is stronger than it had been prior to the pandemic, and that further underwrites our long-term growth expectations. Now we talked about some of the smaller biotech customers, and that's where you tend to see some of these advanced modalities. Let's just call them for the sake of argument right now nucleic acid-based therapies, and perhaps a couple of other type bispecifics ADCs. And what we see there is that they have been over proportionately impacted by some of the funding contraction that we saw in the venture capital market, but that's improved, which is encouraging. But again, those smaller players really do need to focus on their most promising projects to play that. And that's going to have an effect on how much capital they spend on equipment. So if a particular player is positioned and their portfolio is skewed more towards these advanced therapies and the smaller customers where cash remains fairly tight, then that's going to impact the order book. With our broader portfolio, particularly with our skew towards commercialized drugs and those in late phases, we see that strength, and that's another reason why we feel good about exiting 2024 at high single digits or better. Now coming back to your question here on new modalities. New modalities are exciting. They're a small part of our business, and they're a small part of the overall market. Keep in mind, our business is driven by protein therapies in their various forms. And of course, we also are a leading player for the advanced therapies. But if you calibrate, this is a much smaller part of both our business and the market, and it's going to have a fair amount of variability, both in success rates in terms of the approvals that these advanced therapies received, but also in terms of the uptake and the reimbursement dynamics associated with those. So I think we're just at the very beginning of that trend to these advanced modalities going on. Lastly, China. The slowdown that we're seeing is really fairly broad-based. As you look at our portfolio, Life Science Equipment, in particular, has a research and more academic focus, and that's where you see a lot of waiting for the stimulus funds to be dispersed. And that segment is ready. The applications are filed. They're in the funnel, so to speak, but we need to see the disbursement of that. And we're not counting on that happening in any material form here in 2024. Operator: Thank you. Our last question will come from Tycho Peterson with Jefferies. Please go ahead. Rainer M. Blair: Hey Tycho, welcome back. Tycho Peterson: Thank you, thank you. Rainer, I want to go back to instruments for just a minute and kind of your background, obviously, in SCIEX back in the day. Just thinking about the replacement cycle, we get a lot of questions on that for mass spec. How do you think about that potentially kicking in over the next couple of years, because I think there's some debate that some of that got pulled forward during COVID and maybe it's going to be more muted this cycle when you do start to see the replacement cycle from that aspect [ph]? Rainer M. Blair: So I think we would support that hypothesis that the additional funding and the various market subsidies pulled forward demand and replaced a lot of equipment out there during the pandemic and immediately following that. And that's why we've talked about the need, and we're experiencing that normalization period right now. And that replacement cycle is going to remain intact. And that's why we would say we're probably sort of in the early innings, mid-innings here of that recovery, the first step that we're probably going to see here are the lower comps in the second half. And it's probably going to take 2025 to start approaching that normal replacement cycle again, Tycho. Tycho Peterson: Okay. And then on bioprocess, I appreciate all the color. We started to get more questions on yield improvements. I'm wondering how you think about that, just your customers getting more efficient and then how do you think about capacity kind of freeing up in the industry, whether it's Novo selling off some of the talent capacity or Wushi [ph] having to get rid of some capacity in the U.S. Just curious how you think about that playing into kind of the equipment side of things? And then maybe the last part, just what's your view on kind of doing more on the services side, CDMO type work and adding your own capacity? Rainer M. Blair: So starting with yields and improving customer yields, that's what we do. Our focus in bioprocessing is to help our customers improve the yields and there's plenty of opportunity for that to ultimately lower the total cost of manufacturing of these life-saving certainly quality of life improving drugs and to improve accessibility to these drugs around the world. So that's what we do. And we don't view that as an inhibitor to growth. On the contrary, through creating more value for our customers, we see more opportunity for growth there and differentiation and believe that we're very well positioned. Now as we think about capacity here in the marketplace, we actually believe that capacity certainly for commercial production and what is in Phase III needs to increase. We don't believe that in the large manufacturers, pharma or CDMO, that ultimately there is sufficient capacity for the long term, and we would expect that capacity to continue to increase, and there's moves in the marketplace that demonstrate that. And that underwrites also our perspective on equipment orders growth. Now as it relates to services, we've talked about that at length. We're very focused on the scope of the businesses that we have. We're excited about investing in those businesses and helping our customers do what they do. We do provide services in order to help them with some of their most complex and new therapies and then ultimately the tech transfers to either the pharma company itself or its CDMO partner. Tycho Peterson: Okay, very helpful. Thanks. Operator: Thank you. At this time, I would like to turn the call back to John Bedford for any additional or closing remarks. John Bedford: Thank you everybody for joining. We'll be around all day and rest of the week for questions. Have a good day. Operator: Thank you. This does conclude Danaher Corporation's second quarter 2024 earnings results conference call. You may disconnect your line at this time, and have a wonderful day.

Michael Ryskin: Everyone will kick things off for our next session. My name is Mike Ryskin. I'm on the Bank of America Life Science Tools and Diagnostics teams and I'm thrilled to host Danaher and I'm joined by Rainer Blair, CEO. Rainer, thanks so much for coming. Rainer Blair: Mike, thanks for having us. Michael Ryskin: We'll do a fireside chat as usual, but just kick things off. You reported 1Q a couple of weeks ago, first name out of the gate, set the tone for tools. Pretty impressive quarter, good start to the year. Anything you want to call out, any opening remarks you want to make? Rainer Blair: We did have a good start to the year and it started really with our top line performance. We contracted only 4% versus our guide of high single digits and delivered very strong operating margins of 30%, which also exceeded our guide. All that, of course, drove a very strong cash flow of $1.4 billion for the quarter. So, we're gratified and encouraged by the start to the year and look forward to the rest of the year as it develops. Q - Michael Ryskin: So, first question, obligatory, has to be about bioprocessing. A lot of debate there, a lot of focus there. Decline was high teens, but slightly better than expected. You had a nice sequential improvement in book-to-bill, order growth. So, could you give us a little bit more color on what's going on in the bioprocess end markets, inventory destocking, and just sort of visibility over the last couple quarters? Rainer Blair: We did have a moderate beat here versus our expectations in bioprocessing. What we found particularly encouraging was the sequential orders growth of mid single digits. Typically, when we go from Q4 to Q1 of any year, we see a decline in orders, but we thought it was noteworthy and encouraging that we saw a mid single digit growth here in the sequential orders development. I think another point which was encouraging in the quarter for bioprocessing is that our book-to-bill moved from the prior quarter's book-to-bill, which was around 0.8, 0.85, to in the first quarter of this year, 0.95. So that's encouraging. That's a significant step up there. But in addition to that, we also saw a reduction in cancellation requests. In fact, they weren't significant at all. And you'll recall in prior quarters, we have been trying to ensure that we improve the quality of the signal-to-noise ratio, in other words, the visibility to our customers' ordering patterns by allowing for these cancellations. And it's a signal to the positive that those cancellations are no longer significant. Now as it relates to the inventory destocking, for us, we believe that we'll largely be behind -- have the destocking behind us here at the end of the second quarter. And what's driving that really are in North America and in Europe, the large pharma and CDMO customers who are increasingly returning to their normal ordering patterns. And that's encouraging because we're starting to get that regular order traffic. And those customers are clearly with that signaling that they have come into an inventory equilibrium. And that supports our hypothesis there. Now as we think about the Biotech segment, which represents about 10% to 15% of our business in bioprocessing. We have seen the improvement of the funding levels. And they're just above, I would say, the 2019 levels now after the peak between the two years here. And that's also an encouraging signal, but it's a little too early to see that have an effect right now in order rates. It typically takes two, three quarters before we start seeing that improved funding level play out in actual orders. And lastly, I would say China, China remains as we have forecast at a low activity level and is not really contributing from a tail or headwind. It is as we have projected and guided with a relatively low level of activity. Michael Ryskin: Okay. That's all really helpful context. I think one of the things we've noticed in the last couple quarters, last year, is that between yourselves and Sartorius and Merck KGaA and Avantor and Repligen and Thermo, everyone's got slightly different book to bills. Everyone got slightly different order trends, seasonality, pacing. How would you characterize high level, where your portfolio stacks up versus the others? And what should we keep in mind when we're making those read-throughs from company to company? Rainer Blair: So, there's a couple things to consider when comparing companies. First of all, everybody has slight differences in how they calculate a book-to-bill. So that's sort of one point. The second point would be that there are differences in the portfolios. For instance, at Danaher, we have the broadest and deepest portfolio in bioprocessing. And as you think about our product mix, that will be different than any given other player. And then the geographic and customer mix is also different. So that will lead to different patterns in the recovery. But I would say the large picture, if we take a step back, is actually fairly consistent. It appears that the industry is seeing a slow and gradual recovery here through the first half of the year with an expectation that things get better here in the second half, certainly off of the basis of easier comps, but also because we have largely put the destocking issue behind us. Michael Ryskin: Okay. And most of those comments, I think, really touch on the short term. But can we think about bioprocessing longer term? I think as you exit this year, you talked about mid single digit, high single digit growth or better. That sets you up well for 2025. So, when we think about the long-term bioprocess algorithm, what's your latest view on underlying market demand and just sort of how sustainable is that growth? Rainer Blair: That's right, Michael. So, we are saying that in the second half in bioprocessing, we'll see mid to high single digits with an exit rate of high single digits or better. And that supports our long-term thesis that the bioprocessing market really is growing at high single digits. And that's our expectation here for the long-term. 2025 is a ways away for us yet. We want to make sure that we deliver what we have to do in 2024. But our long-term hypothesis remains intact. And that's really based on a number of supporting factors. If we think about the lower penetration, relatively speaking, of biologic drugs around the world and the opportunity to reach more patients with different approaches such as biosimilars. If we think about the size and the speed of development in the development funnel with the various types of modalities, certainly monoclonal antibodies, but also different proteins such as ADCs, bispecifics, and then, of course, nucleic acids as they make their way into the therapeutic arsenal for clinicians. So, all of that we view as very positive and supportive of our long-term hypothesis. Michael Ryskin: And you don't think -- just to be clear, you don't think there's been any change in competitive dynamics over the last year in terms of market share, market gains and losses. You don't think there's really any new entrants that have popped up in the space. When we go into 2025, it will still be relatively similar market to what it was pre-inventory glut. Rainer Blair: By and large, there have been small share shifts. We believe that we're a beneficiary of those. Of course, there are always new entrants with new ideas and innovations at the margin. But if we view the large picture here, essentially the industry structure and hypothesis remains intact and we view ourselves as a determinant player in that industry. Michael Ryskin: Okay. That's helpful. And then maybe shifting away from bioprocess specifically, let's talk about the biopharma end market. You touched briefly on biotech funding and emerging biotech and sort of early funding levels in 1Q and how that will play out. Let's talk about large pharma. I think broadly the comments were that 1Q was a little bit slow out of the gate. Could you expand on that a little bit in terms of budget releases and how have things trended in terms of conversations through March and April? Rainer Blair: So, large pharma for us actually was not slow out of the gate here in the first quarter. In fact, as we look at prescription rates here from 2018 forward, we continue to see in biologics a growth rate of 9%, 10%. And that is sustained here. And we actually believe a net of any inventory correction that we're starting to see that demand signal, more of it certainly in the first quarter. And we would expect to see more of it as we go through the year. So, there are a number of things that are going on in big pharma. But what one has to see as the key takeaway is that the pace of innovation in large pharma has never been faster. The investments and the bets that are being made have never been larger or more exciting. And all of that speaks well not only to what clinicians will have to treat patients around the world, but for the industry's health as a whole. So, we're very bullish on the long-term future here and how large pharma plays out in the long-term. Michael Ryskin: What about factors like IRA, the Inflation Reduction Act? I mean, that's been a hotly debated topic for the past year. Are you seeing any changes tied to that? I know it's still years away. Rainer Blair: Well, it's a little early for there to be an impact. But as we tease apart the different elements that are applicable to us, I think the first thing to note is that biologic drugs versus small molecule drugs are treated differently in the IRA. Biologic drugs receive protection, relatively speaking, for 12 years and small molecules for five years. And so, as you think that through, while that's perhaps shorter than it has been, it actually advantages the development of biologic drugs going forward as they would have longer protection. Secondly, should the pricing of these drugs be lower through Medicare or other programs? The expectation would be that the volume of the prescription and the consumption of those drugs to patients who need them would increase. And of course, our business is volume-driven. So, as the production of these drugs increases in volume, whether as a result of the IRA or whether because a biosimilar has been launched, that's a net positive for the tools industry and of course, as we're the largest player in bioprocessing, certainly for us as well. Michael Ryskin: Okay. That's helpful. And then, sort of sticking on pharma, but maybe expanding things a little bit, let's talk about instrumentation. It's a small part of your business. It's not the biggest needle mover, but still instrumentation was a little bit challenged in the quarter. Again, you saw relatively similar commentary from some of your peers. How should we think about instruments recovering or progressing as you go through the year? Rainer Blair: So, what we've seen in the instrument business, and recall our instrument business is about 10% of our total business. So, as you suggested, it's not our largest segment. But nonetheless, what we have seen here, and we've called it out some time ago, is really a normalization process of an industry which is typically a mid single digit growing industry. And what we've seen in the past through subsidies, whether they be in China or by other countries in various different forms, is the pull forward of demand. And what we're seeing now is really the overhang of that pull forward as this industry normalizes. We would say this is still in the earlier stages of that normalization process, but expect to start seeing improvements in the second half, not only because of better or easier comps, but also because we would expect the activity level to return here as pharma companies and other researchers and applied markets start replacing their installed base and getting back to a normal rhythm. Michael Ryskin: And are you seeing any difference across your portfolio? You've got exposure there from Leica, from Beckman, from Sciex. Any parts of the business doing a little bit better than others? And sort of what differentiates that? Rainer Blair: I would say what we see, and this is to be seen as a nuance as opposed to a large trend, is that the larger scientific instruments that are really about pushing scientific inquiry forward at the leading edge of science are doing better than those that are more the traditional lab workhorses where there's still, I would say, some opportunity for improved growth going forward. But we're not there yet. Michael Ryskin: Okay. All right. That's helpful. Next, I want to run through a couple specific business segments. Let's start with Cepheid. Business did really well in 1Q, but then again, it's done very, very well for a number of quarters in a row. It's been a number of years since you closed that deal. If you could just sort of take a step back and evaluate where Cepheid was when you brought it in versus what it is now. What really has driven that outperformance? Rainer Blair: This is an acquisition, certainly for the history books. We're working every day, of course, to put others in there. And there's a couple other examples. But Cepheid truly is an extraordinary example of that. And really, the acquisition was about acquiring an outstanding team, first and foremost, that had developed a differentiated technology that is defensible and that delivers, first and foremost, real clinical value. The secret sauce of Cepheid's success is tied directly to the value it offers to clinicians to help their patients. And so, of course, as Cepheid entered Danaher, we helped Cepheid to become more profitable and with that profitability to be able to reinvest more in the business. And with that, we're then able to fully take advantage of the pandemic with our installed base now post-pandemic being more than two and a half times the size it was prior to the pandemic. We've invested significantly in R&D and the assay development flywheel that we drive there and that has us now with 30-plus approved assays in the U.S., with 40-plus approved assays outside of the U.S. And those are delivering differentiated value in various care settings. At the point-of-care, where doctors are making calls about therapeutics. I was asked just the other day about the 4-in-1 test and why it is such a popular respiratory test solution. And you'll recall the 4-in-1 is for Flu A, Flu B, RSV, and COVID. And the reason is that when a patient presents with flu-like symptoms, it's really a crapshoot as to what this patient has. And ultimately, with the 4-in-1 test, the doctor is not only able to identify what it is not, it specifically identifies what the ailment is and allows a therapeutic decision. And this is done with ease-of-use. This is done at a short turnaround time and its high performance, meaning it's the right answer. And that combination has really been attractive to hospital systems and clinicians throughout the world and really defines how Cepheid continues to move forward and take share. Michael Ryskin: So, with all that being said, where does Cepheid go next? You talked about the massive growth in the install base. You talked about the menu expansion. Margins have really taken a huge leap forward. So, what's your view of Cepheid over the next couple of years? Rainer Blair: We're going to continue to take share. There's plenty of opportunity for share gain, not just in respiratory testing. On the contrary, we have many more tests available. So, we continue with ensuring that the utilization of more menu assays per instrument, as well as introducing additional assays. And then, of course, we still have the opportunity of geographic expansion. So, we're going to continue to invest in the right clinical decision-making for the hospital systems and doctors out there by providing them this outstanding solution. Michael Ryskin: So, net-net, above company growth, margin accretive at this point, right? Rainer Blair: So, we think the long-term growth rate of the non-respiratory business is in the low double-digits. That is above the fleet's growth rate, which we believe to be high single digits. And this is a very profitable business at scale and will contribute and be accretive to the fleet average. Michael Ryskin: Okay. A couple of other assets I want to touch on real quick. Aldevron, you acquired that asset a couple of years ago. When you acquired it, I believe $400 million in revenue, growing healthy, healthy double-digits, very strong margins, really positioned you for nucleic acids, cell and gene therapy, some of the new modalities, so affiliated with bioprocessing. Could you give us an update on that deal, how that's fared since the acquisition post? Rainer Blair: So, first, when we acquired it, it was more like $250 million in revenues. But nonetheless, it has continued to grow at very attractive growth rates here and is meeting our expectations. As you would expect, there's a bit of a tail post-COVID here for Aldevron as they were involved in the manufacture of various solutions here used during the pandemic. But nonetheless, they are the gold standard as it relates to supplying plasmids and other types of proteins to the gene editing market. And that, of course, is a very interesting market, not just today, but for the very long-term. And that was the principal reason for us making that acquisition to ensure that we not only had a beachhead, but a gold standard for the development of gene editing solutions going forward. Michael Ryskin: And then your most recent acquisition was Abcam, just closed in December. So, you've had it for a total of maybe five months now, but you've already taken some early steps in terms of integrating that and sort of taking it down the road of becoming a Danaher OpCo. So, give us an update on how that deal is going. Rainer Blair: So, early days. We closed in December as you mentioned, and we just also closed on our first quarter with ownership there. We've installed a Danaher President and CFO so that they start playing out the playbook that we put together here during diligence, which is specifically tailored to Abcam and the opportunities there to both accelerate growth and improve the cost position. So, it's early days, but we believe certainly that this really another gold standard company that is really the standard in proteomic research reagents is going to meet its high single digit long-term growth rate. Michael Ryskin: Okay. All right. And where I'm going with these questions is, Cepheid, Aldevron, Abcam, we kind of talked about Cytiva when we talked about bioprocessing. You take all these together and Danaher exiting COVID, exiting 2024 is going to look like a very, very different company than it looked like in 2016, '17, '18. The last couple of years between COVID and inventory stocking, it's really obscured the underlying performance of the company. So, taking all of that together, how would you characterize, what are we going to be looking at in the next couple of years going forward in terms of the new, new Danaher? Rainer Blair: You're right. The fog of the pandemic has obscured the true power and the rerating of both our growth and earnings trajectory post-pandemic. And just to give you a sense of the power of this transformation, if we just sort of take 2018 as a base year prior to the pandemic, and we look to the end of 2023, we're a $20 billion company that was a mid single digit grower with low 20s operating margins. And since then, we have spun off in different forms over $7 billion of our revenue and nearly replaced it through other acquisitions. What we spun off Envista as well as Veralto, which was just in last October had dilutive growth and earnings profiles. And what we acquired had accretive growth and earnings profiles. And of course, our acquisitions were the GE biopharma business, which we've since combined with the Pall Life Sciences business to form Cytiva. And you all know that as being the premier franchise in bioprocessing in the world, we acquired Aldevron and Abcam both once again accretive to both growth and earnings. And those each gave us a beachhead in genomic medicines as well as proteomic research. And then lastly, if you think about how the respiratory testing market has developed back in 2018, roughly we were a $250 million respiratory testing business. And if you think about where we are today in an endemic state, we're well over a $1 billion. We've talked about $1.6 billion here in the guide for 2024. And we believe that to be a sustainable level of respiratory testing. So, when you put all that together, you're looking at a $24 billion business that is dialed into the most attractive segments in the life science industry with a high single digit long-term growth rate, a margin profile, so VCM of 35% to 40%. You all are familiar with our operating system, the Danaher Business System. That allows us to drive cash flow above our net income. And all of that, of course, then allows us to execute on M&A and capital allocation in general. And that's what ultimately drives that earnings accretion of double-digit EPS growth. So, when you see all of this, you can see that our objective to exit the pandemic stronger than entering it, we believe that's been achieved. And as the fog continues to rise here and the pandemic gets further and further into the rearview mirror, you're going to start seeing that portfolio play itself out. Michael Ryskin: Okay. You just touched on it there in terms of the earnings accretion and the operating leverage, but I want to touch on that a little bit more. Given the business shift, given where you're seeing the fastest growth opportunities in Cepheid and bioprocess, those are really accretive incremental margins. You've got really high-volume leverage. So, as the business recovers exiting this year, as you look forward to 2025, how should we think about that incremental flow through to the bottom line? Rainer Blair: So that flow through, of course, as we've been contracting, was very high on the negative side, but you can expect that we've done a lot of work on the cost side during the pandemic. We have not sat idly by here and we've taken full advantage of this time to continue to drive our fixed cost base down to be able to benefit from the volume leverage, which we expect over time. So that's going to be a very attractive incremental flow through as volumes recover going forward. Michael Ryskin: Okay. Just a couple minutes left, so I want to make sure we touch on capital deployment at M&A. As you said, you just did Abcam last year, but given your free cash flow, given your balance sheet, you could probably do an Abcam sized deal every year, if not more. So, your balance sheet remains really robust, free cash flow strong. There's a lot of opportunities out there. So, how would you characterize your appetite for M&A now or for other capital deployment? Rainer Blair: Well, we are skewed in our thinking. We have a bias, if you will, towards M&A with our cash flow and that remains unchanged. But we do have to say that the current environment with high interest rates and high valuations are such that it makes it, of course, more difficult. The one thing that we're not going to compromise is our discipline around return expectations on acquisitions. And what that likely means in the shorter term is that we're more likely to do smaller bolt-ons and medium sized deals, which for a company of our size, $25 billion roughly revenue, continues and will continue to move the needle. So, to give you a sense, you used Abcam as an example that adds 2% to our growth in one year. And of course, if we hadn't done the spins of past and we were much larger, say nearly double, of course, that would be only half that growth rate and it becomes much harder to move the needle. So lastly, to the topic of other forms of capital allocation, we always look at all types of capital allocation. And we do that, of course, in relation to the alternatives that we have and on the basis of return on invested capital. So, we have a bias towards M&A, but of course, we always see what other alternatives we might have in capital allocation. Michael Ryskin: Okay. And talking about the M&A angle, could you talk us through your framework in terms of how you consider targets? What's the roadmap you take when you're evaluating something? Rainer Blair: So, this is the way we operate. First of all, we get out of bed in the morning and are canvassing markets essentially 24x7 with our teams to understand markets and to understand companies. And it's on the basis of our strategy, which is to apply science and technology to improve human health, that we set a frame and then look for those markets that have the most attractive long-term secular growth drivers. We're not talking about three years. We're not talking about five years. We're talking about 10-plus years of strong secular growth that supports an investment hypothesis. Then within that, we, of course, look for the most attractive targets. And in that case, we try to develop a proprietary perspective on any given asset to see whether it has a competitive advantage, value, reserves that we might mine or that we can expand, leveraging our experience in the Danaher Business System in order to improve that asset. And then, of course, in parallel to that, the financial model has to work. We will not compromise on our earnings metrics and return on invested capital and our cash flow expectations. Michael Ryskin: Great. I think if you if you frame it that way, you think back between Cytiva, Cepheid, Abcam and Aldevron, they all check the box in terms of long-term secular growth, company-specific advantage, valuation. So, it's a clear way of thinking about it. We got about a minute left. So, just sort of our last concluding question is the standard. Danaher has pretty well understood and pretty well followed, but is there anything that you think is still underappreciated? Is there anything that people misunderstand or misinterpret? Sort of what are the questions you're getting that you want to clarify? Rainer Blair: I would just say it comes back to this fog lifting. We have done a -- I believe, a tremendous amount of work to transform our portfolio and position this company with a competitive advantage, not just in terms of the kinds of companies that we have and the technologies that we use to innovate within any given segment, but also with the Danaher Business System and our teams. We just believe that this is a really unique company. The combination of those markets that we operate in, the lighthouse, leading assets that we own in those markets, the tried and true Danaher Business System, which allows us to execute at scale for nearly 40 years now, nearly 40 years now. This is -- that's unique. It's our culture along with the tool set on how we operate and drive improved performance. And then lastly, I believe we bring a discipline to the market with how we operate that is truly differentiated and it shows in our cash flow. If you compare our cash flow to other companies in the sector or elsewhere, it truly does identify where the real power and multiplier is of the Danaher Business System and our portfolio. End of Q&A: Michael Ryskin: Great. Thanks so much. And with that, we're out of time. Rainer Blair: Thanks, Mike. Michael Ryskin: Rainer, appreciate it. Rainer Blair: Appreciate it. Thank you. Michael Ryskin: Thank you, everyone. Rainer Blair: Thank you, everybody.

Operator: Good morning. My name is Todd and I will be your conference facilitator this morning. At this time, I would like to welcome everyone to Danaher Corporation's Fourth Quarter 2023 Earnings Results Conference Call. [Operator Instructions] I will now turn the call over to Mr. John Bedford, Vice President of Investor Relations. Mr. Bedford, you may begin your conference. John Bedford: Good morning, everyone, and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer; and Matt McGrew, our Executive Vice President and Chief Financial Officer. I'd like to point out that our earnings release, the slide presentation supplementing today's call, the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call, and a note containing details of historical and anticipated future financial performance are all available on the investors section of our website www.danaher.com under the heading Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events & Presentations and will remain archived until our next quarterly call. A replay of this call will also be available until February 13, 2024. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. The supplemental materials describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company specific financial metrics relate to results from continuing operations and relate to the fourth quarter of 2023 and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices, which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, and actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date they are made and we do not assume any obligation to update any forward-looking statements except as required by law. With that, I'd like to turn the call over to Rainer. Rainer Blair: Thank you, John, and good morning, everyone. We appreciate you joining us on the call today. We delivered better than anticipated core revenue in each of our segments in the fourth quarter led by respiratory revenue at Cepheid. The combination of higher than expected revenues and our team's strong execution enabled us to exceed our margin and cash flow expectations in what remains a dynamic market environment. Now before I get into the details of our performance, I wanted to briefly reflect on the progress we made to enhance our portfolio and accelerate our strategy this year. 2023 was a transformational year for Danaher as we continued to strategically enhance our portfolio and strengthen our growth and earnings trajectory. With the successful spin-off of Veralto in September, we're now a focused Life Sciences and Diagnostics Innovator. Establishing Veralto as a standalone public company was one step in our portfolio transformation over the last several years, which has increased our exposure to end markets with durable secular growth drivers. The acquisition of Abcam, which closed in December, further increases our exposure to these highly attractive markets. Now over the long term, we believe Danaher will be a faster growing business with higher margins and stronger free cash flow generation. 2023 was also a challenging year operationally as pandemic tailwinds became headwinds in our businesses. Our team's commitment to executing with the Danaher Business System helped us navigate these challenges while maintaining a healthy cadence of growth investments and productivity initiatives geared towards improving our cost structure. While we expect this transitional period to continue through the first half of 2024, these proactive steps paired with the transformation in our portfolio provide a strong foundation for sustainable long-term revenue and earnings growth. So with that, let's take a closer look at our full-year 2023 financial results. Sales were at $23.9 billion and core revenue declined 10%, including core revenue in our base business which was down slightly and a COVID-19 revenue headwind of approximately 9.5%. Our adjusted operating profit margin was 28.7% and adjusted diluted net earnings per common share were $7.58. We also generated $5.1 billion of free cash flow resulting in a free cash flow to net income conversion ratio of more than 120%. Strong free cash flow generation is one of the most important metrics at Danaher and 2023 marks the 32nd consecutive year our free cash flow to net income conversion ratio exceeded 100%. We continued to accelerate investments in innovation throughout the year, which enabled us to deliver several impactful new technologies to our customers. In Biotechnology, Cytiva's new Xcellerex X-platform bioreactor is helping improve manufacturing yields and reduce the time and cost of biologic drug production. In Life Sciences, new products such as IDBS' Polar Insight and Molecular Devices' CellXpress.ai are helping accelerate the drug discovery process and bring life-changing therapies to market faster. And in Diagnostics, new solutions such as Beckman Coulter's DxI 9000 next generation immunoassay analyzer are enabling faster, more accurate patient diagnosis. These are just a few of the many examples across Danaher of how we're positioning our businesses for continued growth and delivering on our commitment to help customers solve some of the most important health challenges impacting patients around the world. Now let's turn to our fourth quarter results in more detail. Sales were $6.4 billion in the fourth quarter and core revenue declined 11.5%, including a 4.5% decline in our base business and a COVID-19 revenue headwind of approximately 7%. Geographically, core revenues in developed markets declined low double digits driven by lower respiratory and COVID-19 vaccine and therapeutic revenues coupled with ongoing investment normalization in pharma and biopharma end markets. High growth markets were down high single digits including a mid-teens decline in China where the economic landscape remains challenging. Our gross profit margin for the fourth quarter was 59%. Our adjusted operating margin of 28.7% was down 420 basis points primarily due to the impact of lower volume in our Biotechnology and Diagnostics segments and costs related to productivity initiatives. Adjusted diluted net earnings per common share were $2.09 and we generated $1.2 billion of free cash flow in the quarter. Now let's take a closer look at our results across the portfolio and give you some color on what we're seeing in our end markets today. Reported revenue in our Biotechnology segment declined 21% and core revenue was down 22.5%. Bioprocessing core revenue was down over 20% as anticipated and discovery and medical declined high teens. In bioprocessing, base business core revenue declined high teens in the fourth quarter and was down approximately 10% for the full-year 2023. Revenue and order trends were largely consistent with what we saw in the third quarter including our book-to-bill ratio. We were encouraged to see a modest sequential improvement in orders this quarter with some of our customers returning to normal ordering patterns, but we haven't yet seen a broad-based inflection in demand. The environment in North America and Europe is stable with customers still working through inventory built up during the pandemic. Demand and underlying activity levels in China remain weak as customers are continuing to conserve capital and prioritize programs. For the full-year 2024, we expect core revenue in our Bioprocessing business to be down low single digits. This includes an assumption of a mid to high teens revenue decline in the first half of the year followed by a gradual improvement to a core growth rate of high single digits or better as we exit 2024. Despite the near-term headwinds from destocking, our confidence in the health and long-term growth trajectory of the biologics market remains as strong as ever. Underlying demand for biologic medicines continues to rise. 2023 was another record year of FDA approvals for biologic and genomic medicines and the development pipeline is meaningfully higher than at any point in history. These positive market trends reinforce our conviction in the tremendous opportunity ahead and the high single-digit long-term growth trajectory for our leading bioprocessing franchise. Over the last several years, Cytiva has been accelerating investments in innovation to bring impactful new solutions to customers as they advance therapies from the lab through to commercial production. A great example is the recently launched Cytiva protein select technology, an affinity chromatography resin designed to optimize recombinant protein purification. This new technology simplifies the purification process in recombinant proteins, of which there are currently more than 1,800 in development, and enables faster and more efficient process development. Turning to our Life Sciences segment, reported revenue declined 1% and core revenue was down 4% including a low single-digit decline in our base business. Our life sciences instruments business collectively declined mid-single digits with trends in the fourth quarter largely consistent with the third quarter. We saw continued growth from academic and life science research customers globally while investment levels at pharma and biopharma customers remain constrained, particularly in China and in North America. We also expanded our capabilities and portfolio with the acquisition of Abcam, which closed in December 2023. The addition of Abcam to our Life Sciences segment expands our presence in the highly attractive proteomics market and is furthering our strategy to help map complex diseases and accelerate the drug discovery process. We couldn't be more pleased to welcome this highly talented and incredibly innovative team to Danaher. Our genomics consumables base business was essentially flat in the quarter. Robust demand across plasmids, proteins, and gene writing and editing solutions was offset by decline in next generation sequencing and basic research. During the quarter, IDT opened a new cGMP oligonucleotide manufacturing facility at their Coralville, Iowa campus. IDT can now offer a complete CRISPR workflow from design to analysis that supports cell and gene therapy customers in all stages of therapeutic development. This expansion of our capacity and capabilities is both enabling our customers important work today and fulfilling IDT's vision of improving patient lives by facilitating faster development and commercialization of life changing therapeutics. Moving now to our Diagnostics segment. Reported and core revenue both declined 8.5% with high single-digit growth in our base business more than offset by lower respiratory revenue at Cepheid. Our clinical diagnostics businesses collectively delivered high single-digit core revenue growth. Beckman Coulter Diagnostics led the way with over 10% core revenue growth, including double-digit growth in both instruments and consumables and notable strength in clinical, chemistry, and immunoassay. This strong performance in the fourth quarter rounds out a terrific year for Beckman where the team has been doing a fantastic job improving their competitive positioning through new product innovation and enhanced commercial execution. In molecular diagnostics at Cepheid, increased menu utilization by customers paired with recent new product innovation helped drive low teens core revenue growth in our non-respiratory business, including high teens or better core revenue growth in Group A Strep and sexual health. In our respiratory business, Cepheid's revenue of approximately $650 million in the quarter exceeded our expectation of $350 million. The high prevalence of circulating respiratory viruses drove both higher volumes and a preference for our 4-in-1 test for COVID-19, flu A, flu B, and RSV. Based on what we saw the last two years and discussions with customers and public health experts, we believe annual respiratory revenue in a typical respiratory season will be approximately $1.5 billion. This increase from our initial assumption of $1.2 billion per year is driven by an expectation of modestly higher volumes and a greater mix of our 4-in-1 tests. The durability and continued share gains at Cepheid are a testament to the significant value that Gene-Xpert provides customers at the point-of-care, close to patients where the most impactful diagnostic and treatment decisions are made. Cepheid's 4-in-1 test has become the standard of care for clinicians given its ability to provide a fast accurate lab quality diagnosis for four distinct respiratory illnesses with a single easy-to-use cartridge. Looking ahead with our differentiated positioning and respiratory testing, a leading installed base of more than 55,000 systems, and with growing adoption of the broadest molecular diagnostic test menu on the market; Cepheid is well-positioned to help customers meet their clinical needs and continue gaining market share. Now let's briefly look ahead at expectations for the first quarter and the full-year 2024. Beginning with the first quarter of 2024, we will provide guidance for core revenue growth, but will no longer report base business core revenue as the pandemic has transitioned to an endemic state. Now in the first quarter, we expect core revenue to decline in the high single-digit percent range. Additionally, we expect the first quarter adjusted operating margin of approximately 28%. Turning to the full-year 2024. We anticipate core revenue to decline in the low single-digit percent range, which assumes a core revenue decline in the first half of the year before returning to growth in the second half of 2024. Additionally, we expect our full-year adjusted operating profit margin to improve by approximately 50 basis points versus the full-year 2023. So to wrap up, we're pleased to deliver fourth quarter results ahead of our expectations in what remains a dynamic environment. Despite the challenges we saw throughout 2023, we continued to strengthen our portfolio with M&A and took proactive steps focused on improving our cost structure. Our team's consistent application of the Danaher Business System also drove lasting process improvements in our businesses and enabled the launch of several breakthrough solutions. Reflecting back on the past few years, it's clear that Danaher is exiting the pandemic a much better stronger company. We established our dental and environmental and applied solutions segments as standalone public companies in Invista and Veralto. We largely replaced their revenue contribution with higher growth, higher margin annuities with the acquisitions of Factiva, Aldevron, and Abcam. Additionally, Cepheid's respiratory franchise is now six times larger today than it was prior to the pandemic and we expect this to be sustainable. So putting it all together, we've improved our long-term growth trajectory, significantly expanded margins, and strengthened our free cash flow generation. So, our future is bright and I'm excited about what lies ahead for Danaher. The unique combination of our incredibly talented team, differentiated science and technology portfolio, and balance sheet optionality all powered by the Danaher Business System provides us with a strong foundation to maximize value for our customers, our associates, and our shareholders. So with that, I'll turn it back over to you, John. John Bedford: Thanks, Rainer. That concludes our formal comments. Operator, we're now ready for questions. Operator: [Operator Instructions] Our first question comes from Dan Brennan with TD Cowen. Please go ahead. Dan Brennan: Great. Thank you, guys. Thanks for the questions here. Rainer, maybe starting off just on bioprocess. Could you give us a little breakdown here in terms of the outlook that you're providing say for China and then rest of world? And then I was hoping as well you can give us a snapshot maybe of how much inventory do you think your customers have today and how much of that changed versus the peak and kind of what does your guidance assume kind of when that inventory reaches a normal state? Rainer Blair: Thanks, Dan. Good morning. And why don't I start off with sort of an overview here on how we've laid out the guide and then we can dig into your bioprocessing question in a little more detail. So, our guide for the full year of 2024 on revenue is down low single digits and now let me break that open and talk about the segments. Biotechnology will be down low to mid-single digits and that's different than bioprocessing. So, keep in mind I'm not talking about the Biotechnology segment in its entirety. The guide is down low to mid-single digits. Life Sciences down low single digits and Diagnostics up low single digits. And once again overall, that's then down low single digits. Now at a high level, we actually expect the dynamic to be opposite of 2023 with a slow first half returning to growth in the second half. And now let me talk just a little bit about the assumptions around our guidance. Starting with bioprocessing, which we're guiding to be down low single digits and we think the first half will look a lot like second half of 2023 down mid to high teens coming off of a fourth quarter which showed incrementally improved orders versus Q3. Second half we expect to return to mid to high single-digit growth and we believe by then that the destocking in North America and Western Europe will have largely been completed and of course the comps ease there as well. So importantly for bioprocessing, we think exit rate for the year will be high single digits or better core growth. Now if we look at Life Sciences, we expect Life Sciences to be down low single digits for the guide and we expect a slow start and we should see growth improve here through the second half given some of the comps that we have seen as the normalization, particularly in the instrument business, continues and we've been talking about that for some time and we expect that to continue into 2024 as well. Now if we look at that by end market and see pharma and biotech, stable but at lower levels of demand; and then academic and applied markets holding up comparatively better. Geographically, we see China weak with a slower macro and of course in Life Sciences in particular, we have some prior year comps related to the subsidized loan program there. And then lastly on Life Sciences, we expect developed markets to be relatively consistent with 2023. As we look at Diagnostics, which we are guiding up low single digits, we see no change to the underlying trends, patient volumes have normalized. And in the non-respiratory business, we expect growth of mid-single digits and of course that's offset by lower respiratory revenue, which was $1.9 billion in 2023 and we anticipate that that will be $1.6 billion in 2024. So Dan, that's how the year shapes up by segment and of course then we can now perhaps talk a little bit more detail around bioprocessing. Matt McGrew: Dan, maybe to just kind of to put some numbers around your question as well. So I think China for the year for bioprocessing, you should probably think about the first quarter being down similar to what we saw in Q2, Q3, and Q4 last year call it north of 40%. And then I think for the full year, I just think even that will still be down kind of mid-teens for bioprocessing in China. That's sort of what we've got dialed in. And as far as the rest of the world, I think we'll be down in the first half and then kind of return to growth here in the second half after we get past the destocking. And I know you asked how much kind of inventory is in China. It's kind of hard to say, Dan. I mean we've got a kind of a moving target, but we've got a good sense that what we will largely be through most of the destocking, particularly in North America and Europe where it was probably the biggest. I think we're going to be through that here in the first half, which then sort of speaks to why we think it gets a little bit better in the second half of the year. Dan Brennan: Got it. Thanks, guys. And then maybe a follow-up just on bioprocessing. That's such a huge focus. Just in terms of the guide that you've laid out, what does that assume from kind of a book-to-bill or bookings trajectory as we work through the year? And just kind of related to that, several peers have already pointed to book-to-bills kind of above one. Obviously, everyone's order books are, mix of business is different. But what's kind of unique about your business, do you think? Is it clinical versus commercial, or is it just the size of your book or just any color? Why do you think some of the peers have seen the turn in their business faster than what you guys have seen? Thank you. Matt McGrew: Yes, let me give you a little bit of color on how I'm thinking about the guide or how we're thinking about the guide. Maybe start with - this is for bioprocessing. Start with kind of a qualitative overview of what this guide sort of is, right? This guide calls for a slight improvement versus our demonstrated book-to-bill of the last couple quarters. We've been in that kind of 0.8, 0.85 range the last four or five quarters. And we are not calling for an inflection at any point in the year, but we are assuming some modest improvement as we move through the first half into the second half. Like I said before, as we think that North America and Europe destocking is largely behind us after the first half. So, no inflection, sort of just kind of gets a little bit better than where we were. As far as kind of some numbers around that, Dan, maybe start with the backlog. So, we're starting with about a quarter and a half of backlog. That's pretty consistent with where we were in 2018, 2019. So, I think we're back to backlog levels that are, relatively speaking, pretty much in line with history. And then you start with that backlog and add this book-to-bill assumption in there. We are assuming book-to-bills improve slightly, like I said, kind of from the 0.8, 0.85s into the 0.9s. And that those will get a little bit better every quarter, as we build through the year. But we are not assuming book-to-bills go above one in any given quarter. And so that kind of assumes that, we get past the inventory destocking in the first half. The second half gets a little bit better. And that we're kind of exiting here, like I said, the first half will be down mid-teens. Mid-to-high teens for the second half we exit with high single-digits or better without seeing an inflection. And I think maybe, I know that there's been some questions on that second half ramp as well. Maybe just to give people some quantitative numbers on that. So the second half ramp in bioprocess assumed in this guide is about a $250 million year-over-year second half increase. So that's on a, call it a $6.5 billion business. So yes, there is a step up. But I think it's relatively modest on a business with $6 billion to expect that we think we could do a couple hundred million dollars better year-over-year in the second half as we move past the destocking. So hopefully that helps frame the guide a little. Dan Brennan: Great. Thank you, guys. Operator: Our next question will come from Vijay Kumar with Evercore ISI. Please go ahead. Rainer Blair: Good morning, Vijay. Vijay Kumar: Good morning, Rainer. And thanks for taking my question. So I guess I'll start off with those last comments from Matt. The Q1 guidance here, Rainer, on biotech and bioprocess being down in low 20s, I guess we did see sequential order improvements in Q4 for bioprocess. What is driving, and comps to get easier for you for Q4 to Q1 on biotech comps to get easier. So what is driving the minus 20% maybe thought process around the Q1 guidance assumptions? And also have you - I know there was a no-fee cancellation policy. Has that stopped for Danaher? Matt McGrew: Yes, Vijay, it's Matt. Maybe I'll take a first stab at it. So, if we think about kind of the first half here, I think it's probably instructive to sort of remember where we were. If you remember, our base business core growth in Q1 last year was actually up low single-digits. And for the first half of 2023, we were only down kind of low to mid-single-digits in total, right? The second half, we were down mid-teens or high-teens, as everybody remembers. But we do have that comp coming in the first quarter. And so, when you think about year-over-year, that's really the biggest factor. As far as sequential goes, kind of Q4 to Q1, I would tell you that we would, you know, I think we talked about this in January. Our Q3 to Q4 sequential, that's pretty normal. That's a normal Q3 to Q4 step up. I think we attributed that to a normal seasonality when we were out at JPMorgan. And it's very also normal to see Q4 to Q1 step down. So, just maybe some numbers to that. Q4 is usually 27%, 28% of our year, and Q1 is usually 24% and 25% of revenue for the year. So, I mean, it's pretty normal for us to see it. I think we saw it even, in kind of a heyday of '21 to '22, we saw it step down. So, I think there's a normal seasonality. And I think the other big thing to remember is, and it kind of ties into your last question there, Vijay. We are actively trying to continue to destock and get as much of this behind us as we can. And so I think, we've been pretty aggressive with that. We're going to remain aggressive with that. I think you're seeing that hopefully, here in the first half that we are. And back to your kind of no-fees question, it depends is the answer. But rest assured, we are doing what we can to get to the second half of the year. Vijay Kumar: Understood. And I guess my follow-up here, Rainer, is when you look at customer activity levels or consumption, if you will, what's been the underlying activity at customer levels, when we think about drug volumes being up high singles in that space, is that still intact? And sort of, I guess, one on diagnostics, if you will, last year you guys did base diagnostics up double-digits. And I think you mentioned mid-singles for this year. So is that just a comp issue? Why diagnostics would slow down? Rainer Blair: Thanks, Vijay. Well, starting with the activity level here for bioprocessing. We've really seen no change in the activity level, which continues to be along the long-term growth rate that we've been talking about, high single-digits, 10%. And that's what's been important in terms of drawing the inventories down. So and it aligns with how we spoke about the regional developments here. Which Western Europe and North America are drawing down inventories more rapidly than perhaps regions that are more, small biotech, emerging biotech companies such as China. So, the activity level continues to be strong. I mentioned to you during the prepared remarks that we've seen a historic level of both approvals as well as number of projects in the biologic development pipeline. So, we continue to be very confident in a - continued positive development there. Vijay Kumar: Thank you. And sorry, on diagnostics, Rainer? Rainer Blair: Yes Vijay, I mean, I think it's just - it's all going to be mostly a comp issue. The base business, the business outside of, I should say, respiratory continues to do well for Cepheid. All of the other businesses in diagnostics, no real change, to the underlying demand. So it's going to be a comp issue. Vijay Kumar: Thanks, guys. Rainer Blair: All of diagnostics, yes. Vijay Kumar: Fantastic. Thank you. Rainer Blair: Thanks, Vijay. Operator: Our next question comes from Scott Davis with Melius Research. Please go ahead. Rainer Blair: Good morning, Scott. Scott Davis: Hi good morning, guys. Good morning, Rainer, Matt and John. Guys, can you help us, when volumes are kind of still moving negative in the first half of the year, it's hard to get your arms around kind of what you've done to the cost structure with the 50 basis point guide up. Is there anything we can look at, any KPIs you can share around, like, headcount reductions or rooftops or anything that you guys have kind of tangibly done internally on costs that, you can share that helps us understand, perhaps what that impact on margins will be and not just '24, but going forward? Thanks. Matt McGrew: Yes. Yes I mean, maybe the way to think about the OP kind of at a high level Scott, is we ended 2023 with an adjusted operating margin of call of, almost approximately 28.5%, and we think, like you said, it's going to be up 50 bps here in the year. We had $350 million of sort of one-time costs last year, some of that, if I think about what that was and the metrics around it, I would tell you that there's a lot of heads that did come out. And largely that was reflective of the lower volumes that we saw last year, particularly at Cepheid as we went from 70 million tests down to 35 million. We sort of knew there would come a day when we were going to need to pull back some of that capacity, and largely last year we did that. I think you also saw it at some of the other businesses in the second half as well in life sciences and some others that have seen a little bit more difficult growth profiles. I think largely it is heads. There are some rooftops here and there, but I think it's more trying to get after the cost structure to right-size it, for what's going to be a difficult first half, so that we're in a good spot. So, that $350 million of benefit that, would have been about 150 basis points on its own, Scott. But we do have the lower volumes, as you mentioned, in bioprocessing, respiratory, and that basically offset all of it. And so really the cost savings, if you will, from that $350 million that we deployed, is what we're getting and flowing through as the 50 bps of margin expansion. So that should be pretty durable as we go. And hopefully, with a little bit better volume here, and the gross and adjusted operating margins, we have, a little bit of volume is going to go a long way. Scott Davis: Got it. I would imagine so. Guys, can you help us understand China? I understand that, I guess consistent with last quarter and the guide and such, still pretty conservative. How do you kind of separate the cyclical versus kind of, what I'll call the secular, which is perhaps maybe government policy and other impacts are out there? I haven't been to China in a while, so perhaps maybe you guys can help us understand the puts and takes there, and is that market still attractive long-term, or has there been some sort of change at the margin there that perhaps makes it less interesting? I'll just kind of open it up to that. It's a lot of white space, if you will? Thanks. Rainer Blair: Sure. Scott China, let me start with this. We continue to believe China is an attractive market in the long-term that is going to be accretive to our overall growth, and the reason for that is that the Chinese government and frankly, the Chinese people are prioritizing, among very few priorities, they're prioritizing healthcare. More broadly, but also more specifically in terms of building their own pharmaceutical industry. With both generic and innovative and biosimilar type drugs. And that process, while it has taken a pause here, or certainly slowed as the funding environment has become more difficult in the short-term, we expect that process to work itself out here in the midterm. Now, for China this year, as it relates to our guide, we're assuming that China will be down high single-digits. Yes, because of the challenging macro. We actually expect that macro to be more challenging than perhaps even what we see in the healthcare market, but we're not planning in that guide, a stimulus from the Chinese government, but more of the same and then of course, the reversing of tough comps here in the second half. So it's going to be a tougher start to the year, as the activity level essentially remains where it has been here in the second half of 2023. Particularly in biotechnology and life sciences, and then as we get through those tougher comps in the first half, we'll see the second half where we're not assuming significantly higher activity levels, but we do see the math then working in our favor. Longer term, we believe the pull and the requirement in China for these innovative and highly effective drugs is intact and that the investment will continue. Scott Davis: Very helpful. Best of luck in 2024, guys. Thank you. Rainer Blair: Thanks, Scott. Operator: Our next question comes from Michael Ryskin with Bank of America. Please go ahead. Rainer Blair: Good morning, Michael. Michael Ryskin: Great. Hi, Rainer. Hi Matt. I want to follow-up on a couple of your comments from earlier in the Q&A just on bioprocessing to make sure I got it right. I mean first, I think you called out that, you don't expect a book-to-bill above one at any point during the year. So, I mean, that means you'll be continuing to deplete the backlog all year, but you already cited that the backlog, is sort of at a normal level with 1.5 quarters. So, I'm just wondering, how low is that going to get over the course of the year then if your book-to-bill doesn't break one? And then sort of related to that, if you've only gotten one to two quarters of backlog and yet you're calling for this gradual improvement as the year goes on, high single-digit growth rate, just sort of like what underpins that improvement from what you do see in 1Q, 2Q to start the year? Matt McGrew: Yes, I mean, I think the way we talked about the guide, I mean, I did say that it doesn't go over one, but it gets pretty close in the second half. I mean, if you do the math, it does get pretty close to one. So I think, it is still a little bit early to call what we're going to see in '25, but I think you're right. We are calling for gradual improvements in the book-to-bill through the year, and it will get pretty close to one, but not over one in the second half. That's kind of how we're thinking about it. And as far as the growth rate, first half to second half, I think was your question, is that right, Mike I want to make sure? Michael Ryskin: Yes, just visibility, not improvement? Matt McGrew: Yes well, I mean, like I said, it's not a huge number, right? First half to second half, you're talking about $250 million. So we are, I think the visibility, is improving a little bit here as we move into the year, and we expect that it will continue to do so, as we move past the inventory destocking in the first half. And so I think, with the assumption of a ramp, admittedly, but only on - only of a couple hundred million dollars. I just feel like, if we can get past the destocking, be aggressive with that, having a second half ramp that is, $250 million on $6 billion, it's not that steep in reality. And frankly, we constructed the guide to have no real, kind of step up, or inflection either in bioprocessing. It may not happen that way, right? And if it does happen, if we do see something, an inflection that's higher, we obviously will update the guide and update everybody. But we are trying to just lay out how we are thinking about not having an inflection, not calling an inflection. Things are getting a little bit better. They're going to get better through the year. And certainly given the math and the anticipated modest step up, that's how you sort of get to a second half of tight single-digits. Remember, we're also working on a comp of the second half that's going to be down high teens. So, I think that's what gives us sort of the confidence is, we've got a little bit better customer visibility. We think we're going to be behind the destocking, and we've got some comps that will help those numbers. Michael Ryskin: Okay. All right. I thought the $250 million was second half-to-second half, not first half to second half. But I can follow-up on that? Matt McGrew: No, that is second half-to-second half. Yes, that's second half-to-second half. I'm sorry yes, yes. Michael Ryskin: Okay. All right. We'll follow-up offline. Just a follow-up question. I want to ask a little bit on the Life Sciences segment and maybe put another way. I want to think about from a customer perspective, can you talk about pharma and biotech outside of bioprocessing, putting bioprocessing aside? For the rest of pharma and biotech, it seems like your outlook is still somewhat cautious. You're talking about low levels of demand. I'm just curious, any early signs? I know we're still in January, still early in the year, but just sort of how those companies are thinking about budgets for the year, how the Life Science segment and pharma and biotech specifically recovers post-2023? Thanks. Rainer Blair: So, Michael, just to level set then, coming off a Q4, which the life science tools were down mid-single digits, and that was largely consistent with Q3, and we anticipate that this normalization in life science instruments, which really began in the second half of 2023, will continue in 2024. And if we think about it by end market, we do see pharma and biotech stabilizing, but at these lower levels of demand. Just because we believe and saw in the numbers showed here, over the last two years or so, an anomalous level of buying and pulling forward of demand, whether that was China through loan subsidies or whether that was COVID dollars infused for additional research, we expect that normalization to continue here. Also, in the first quarter, where we expect life sciences to be down similarly to the fourth quarter. Now, keep in mind for us, life sciences instruments is only about 10% of the portfolio. So, we may not be a good read across here. Nonetheless, we do think it's going to take some time here in the first quarter, first half, in order for that normalization to occur. But we do believe that it's stabilizing at this lower activity level. Michael Ryskin: Thanks. Operator: Our next question will come from Rachel Vatnsdal with JPMorgan. Please go ahead. Rainer Blair: Good morning, Rachel. Rachel Vatnsdal: Thanks so much. Yes, good morning. Thanks for taking the questions. So, I wanted to push a little bit more on bioprocessing. You've noted that you're not modeling an inflection in that business this year, but can you talk about if you're seeing any of these green shoots from customers, signaling that they may have gotten too lean on inventory? And then if we look back at last year, you'd mentioned on the 4Q call that, you'd had conversations with customers that shifted your expectations around bioprocessing and order trends at the JPMorgan conference last year. So, can you talk to us about how those conversations with customers trended at the conference this year and how that's impacting the guide as well? Matt McGrew: Yes, maybe I can start, and Rainer can probably - he had more of the customer conversations than I did, if we're being honest. So yes, I mean, I think when we think about the guide and you think about green shoots, I think maybe the way I would characterize it, is we - you know, six months ago, there were no anecdotes. There were no customers coming and saying, I needed something quickly. There were no pull-forwards from out-quarters into this quarter. I think, we have started to see a little bit more of that here anecdotally. I don't think it is widespread enough to be able to say, we're going to be beyond this in the next two, three months, which is why we sort of have our - the first half tagged where we do. But combined with the - our tracking of the inventory, so we do know where it is at. We've got a much better handle on that. Combined with sort of some of these anecdotes and frankly, a little bit better sort of funnels that we are seeing, we do feel like we've got a little bit better visibility as we head into the year, which gives us the confidence, as we talked about earlier, to think that the de-stocking is going to be largely behind us as we get through the first half. And that's sort of how we modeled into the - into the book-to-bill slowly kind of getting up. But not wanting to get, real aggressive and call a big inflection anywhere. So that's sort of how we - what we've seen here over the course of the last probably three, four months. So anecdotally, a little bit better situation out there. Are hearing some good things that you want to call it a green shoot, I suppose you could, but I'd probably call it, a good anecdote that is now starting to see more of those and sort of less of the negative ones, if you will. And maybe, Rainer, you want to talk about the customer discussions at JPM? Rainer Blair: And just really just to confirm that we continue to see a trend of more positive conversations of customers returning to normal order patterns, thinking about how they're planning out not only the first, but the second half of the year. So all of these conversations are directionally, we believe, positive and sort of support what we saw also in the sequential improvement, which was partially seasonal certainly, but we also saw some improving order patterns there. So what we're looking for ultimately, and that's what Matt referred to previously, is a broad-based improvement in order patterns, at which point we will update accordingly. But where we sit today, we think that the first half will be slower also related to some of the comps that we talked about and that the positive development, which we've seen here in the past months, will continue and then manifest itself really in the second half where we then exit with high single-digits or better exit rate. Rachel Vatnsdal: Great. And then my follow-up, I wanted to just press a little bit more on this pace of recovery within bioprocessing. So, one of your peers has slowly been taking up their book-to-bill sequentially over the last few quarters. They just recently crossed that 1.0 level. That said, though, Danaher is really one of the few companies, or only that has been actively working with customers to manage their inventory levels. So while I appreciate the guidance, isn't modeling a massive inflection at some point this year in bioprocessing, how should we think about that impact in managing your customers' inventory levels on what that does to the pace of recovery? And is there some reason why we shouldn't see more of a V-paced recovery - V-shaped recovery excuse me for Danaher? Thank you. Matt McGrew: Well, I mean, I think it's a little bit tough. When everybody is going to be, while we are all in the same kind of boat, I think everybody will have a slightly different timing about when we get through sort of the inventory destockings. So, I think part of it is going to be the breadth of our portfolio. Part of it is going to be the geographic mix we have, and part of it is going to be just sort of our customers and where we were kind of heavier or not. So, I think there's a lot that goes into it. So I think, it will be a little bit different for everybody. I think kind of each modality might be different as well. So cell culture media might be different from chromatography and filtration. So, I think all of those things combined sort of, are what we're seeing. I think everybody is going to see it at a different time, and I think you saw that with us in the first half of last year. We were - only down low singles, and I think some other folks were down mid-teens or more, right. So I think, there is going to be a little bit of a lag in timing. Could - to your second question, could we see a V? I mean it's possible, but we did not want to kind of model that in for a lack of a better - we don't have enough confidence right now. We have not seen it in the order book of enough magnitude and duration, to be able to call a turn of a V-shaped recovery. Is it possible? Sure. Anything is possible. But if we see that, we obviously would talk about it. But we're going to exit the year here at high single-digits from a high single-digit plus, frankly, as we exit the year. And if we do better than this forecast that, we have here of in the nines, that will have obviously an impact on - at some point the exit trajectory. I suspect it depends on when it happens. Specifically if it happens earlier, I think it would have an impact. But again, we're not planning for it. When we see it, we will obviously update and let people know. But for this guide, it is - you're trying to be transparent with everybody. That's what we're expecting, or what we're guys planning for. Rachel Vatnsdal: Great. Thank you. Operator: Our next question comes from Puneet Souda with Leerink Partners. Please go ahead. Rainer Blair: Good morning. Puneet Souda: Yes hi, yes thanks, Rainer. My first question - I'm tempted to ask about bioprocessing, but let me stick with instrumentation first. Could you tell us what you're expecting for growth in instrumentation in 2024? And maybe if you could provide some context on the instrumentation recovery, and when can we potentially start to see that at a normalized sort of growth level? Rainer Blair: We think, our life science instrumentation business will, for the year, be down low single-digits. And that's based really on a softer first half of the year and then slow, but persistent improvement here in the second half of the year. What are some of the drivers of that? Well, first of all, here in the first half, we are looking at some pretty significant comps. You will recall the China loan program in particular in the first half of last year, put us into mid to high-teens growth. And of course, at the current activity levels, that will result in a softer first half here. We also talked about the fact that pharma, biopharma, are constraining their investment a bit more along the lines of just recently having changed out, their installed base, taking advantage of additional dollars available during the pandemic and normalizing here as we get through the first half of the year. If we think geographically, China remains weak and we don't expect that to improve here. If anything, that will be a second half of the year dynamic. So life science is starting to stabilize really at the activity levels of the second half of last year. We expect that to continue through the first and then see gradual improvement here in the second half of the year, also from a comp perspective. Puneet Souda: Got it. That's helpful. And then on Abcam, could you update us on the DBS efforts there? And what are you seeing in terms of the RU antibodies markets and expectations that you have for sort of Abcam in '24? And lastly, if I could just ask about after the Veralto spin, how are you thinking about capital deployment overall? Thank you. Rainer Blair: So, first of all, Abcam, we couldn't be more pleased than having closed that early here in December. They had a good finish to the year and we are working with the team and we're up and running. And of course, you can imagine the DBS implementation is proceeding, in a focused way where the team is really pulling. So Abcam is on the way. Then as it relates to capital deployment, you heard my comments earlier around our balance sheet optionality, which is strong, we believe, differentiated. And post the Veralto spin, we'll continue, as we always have, to work on deploying that capital to strengthen our portfolio and continue to be active as always. Puneet Souda: Great. Thank you. Operator: Thank you. This does conclude today's question-and-answer session. I will now turn the call back to John Bedford for any additional or closing remarks. John Bedford: Thanks, Todd. Everyone, we're around for follow-ups. Have a good rest of the day. Thanks. Operator: This does conclude today's call. We thank you for your participation. You may disconnect at any time.

Operator: Good morning. My name is Todd, and I will be your conference facilitator today. At this time, I would like to welcome everyone to Danaher Corporation's Third Quarter 2023 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I will now turn the call over to Mr. John Bedford, Vice President of Investor Relations. Mr. Bedford, you may begin your conference. John Bedford: Good morning, everyone, and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer; and Matt McGrew, our Executive Vice President and Chief Financial Officer. I'd like to point out that our Form 10-Q for the third quarter, our earnings release, the slide presentation supplementing today's call, the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call, and a note containing details of historical and anticipated future financial performance are all available on the Investors section of our website, www.danaher.com, under the heading Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events & Presentations, and will remain archived until our next quarterly call. A replay of this call will also be available until November 8, 2023. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. The supplemental materials describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company-specific financial metrics related to the third quarter of 2023 and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, and actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date that they are made, and we do not assume any obligation to update any forward-looking statements, except as required by law. Before turning the call over to Rainer, I'd also like to point out that since Veralto was part of Danaher through the end of the third quarter, our financial highlights will include the combined Danaher and Veralto results. We will then provide detail for the businesses remaining with Danaher. Veralto will be reporting their third quarter results separately later this week, and we'd like to ask that you please save any questions about the Veralto businesses until then. Our guidance for Danaher's continuing operations will exclude Veralto for the fourth quarter and the full year. I'd also like to mention that historical financial results reflecting only Danaher's continuing operations excluding Veralto are available on the Investors section of our website under the sub-heading Financial Reports. With that, I'd like to turn the call over to Rainer. Rainer Blair: Well, thank you, John, and good morning, everyone. We appreciate you joining us on the call today. Core revenue in the third quarter came in ahead of our expectations with Biotechnology performing as anticipated, and higher testing revenues more than offsetting slightly softer-than-expected demand in Life Sciences. Our team's consistent DBS-driven execution also enabled us to deliver better-than-expected earnings and cash flow in what remains a challenging and dynamic operating environment. This was also a transformative quarter for Danaher. On September 30, we completed the spin-off of Veralto Corporation, a global leader in water and product quality. The successful launch of Veralto is a testament to the team's execution focus and outstanding teamwork. We believe this separation creates exceptional opportunities for both Danaher and Veralto to better serve their customers, deliver on their respective strategic priorities and create greater long-term shareholder value in the years ahead. Now, I want to thank Jennifer Honeycutt and all the Veralto associates for their contributions to Danaher over the past two-plus decades. And we wish them the very best as they embark on their exciting endeavor to help safeguard the world's most vital resources. Now going forward, Danaher is a more focused life sciences and diagnostic innovator, committed to accelerating the power of science and technology to improve human health. We've got a great line-up of leading franchises, well positioned in attractive end markets with durable, high-recurring revenue business models, and our strong free cash flow generation positions us well to further enhance our portfolio going forward. This unique combination of our leading science and technology portfolio and financial strength all powered by the Danaher Business System, differentiates us, and reinforces our sustainable long-term competitive advantage. So with that, let's turn to our third quarter results in more detail. Now, as John mentioned, since Veralto was part of Danaher through the end of the third quarter, our financial highlights for the third quarter include Veralto's results. Sales were $6.9 billion in the third quarter and core revenue declined 11.5%, including a 3% decline in our base business and a COVID-19 revenue headwind of approximately 8.5%. Geographically, core revenues in developed markets declined low double digits, primarily driven by lower COVID-19 revenues. High growth markets were down high single digits, including a mid-teens decline in China, where the economic landscape remains challenging. Our gross profit margin for the third quarter was 58.2%. Our operating margin of 20.9% was down 540 basis points, primarily due to the impact of lower volume in our Biotechnology and Diagnostics segment and costs related to the separation of Veralto. Adjusted diluted net earnings per common share were $2.02. We generated $1.3 billion of free cash flow in the quarter and $4.6 billion year-to-date, resulting in a year-to-date free cash flow to net income conversion ratio of more than 120%. Strong free cash flow generation continues to be one of the most important metrics at Danaher and enables us to actively pursue high-impact organic growth and M&A opportunities. Now let's take a closer look at our results across the portfolio and give you some color on what we're seeing in our end markets today. Reported revenue in our Biotechnology segment declined 19% and core revenue was down 21%. Bioprocessing core revenue declined over 20%, as anticipated, while discovery and medical was down mid-single digits as a result of lower demand from our earlier-stage research and lab filtration customers. In bioprocessing, base business core revenue declined mid-teens and market conditions were consistent with our expectations coming into the third quarter. Our customers are still working through inventory built up during the pandemic, while also continuing to conserve capital as a result of funding pressures. China was down approximately 45% in the quarter, driven by a weak funding environment and lower underlying activity levels. Based on what we're seeing today, we're maintaining our full year outlook of approximately 10% base business decline in bioprocessing, which assumes that market conditions in the fourth quarter are consistent with what we saw in the third quarter. Although these market dislocations are impacting our recent performance, global demand for biologic medicines continues to increase. Since 2018, underlying demand for biologics has grown at an average annual rate of approximately 10%, and is continuing to grow in 2023. In addition to more patients using biologic medicine, this year is on pace to be a record year for FDA approvals of biologics, including approvals for meaningful indications, such as Alzheimer's disease and several cancer immunotherapies. These positive trends reinforce our conviction in the tremendous opportunity ahead in the biologics market and the high single-digit long-term growth outlook for our leading bioprocessing franchise. Now, the pace of innovation and advancement in biologic medicine is accelerating, and Cytiva is uniquely positioned to support customers as they pursue life-changing breakthroughs. Cytiva's recently launched NanoAssemblr, the industry's first end-to-end lipid nanoparticle formulation system, is a great example of how our investments in innovation are supporting customers' needs around quality, yields, and cost. The NanoAssemblr automates and streamlines the lipid nanoparticle manufacturing workflow, helping improve reproducibility and scalability in the nucleic acid therapy manufacturing process. Turning to our Life Sciences segment. Reported revenue declined 1% and core revenue was down 2.5%, including a low single-digit decline in our base business. Our Life Sciences instrument businesses collectively declined mid-single digits, in part driven by China, where an already challenging funding environment further deteriorated as the quarter progressed. Outside of China, we continued to see softness at pharma and biopharma customers, while demand remained stable in life science research and applied markets. Our genomics consumables based business declined low single digits in the quarter. Double-digit growth across plasmids, proteins, and gene writing and editing solutions, which are primarily used in projects that are in later stages of the drug development pipeline or have been commercialized, was more than offset by declines in next-generation sequencing and basic research. Our Life Sciences businesses continue to deliver innovative solutions that are helping accelerate the discovery and development of biologic medicine. Molecular Devices recently released the CellXpress.ai, an artificial intelligence driven cell culture system that automates traditionally manual cultivation processes. The CellXpress.ai is engineered to improve workflows and reproducibility in growing and scaling human-relevant cell lines, which can reduce reliance on animal models and fast-track potential therapeutics to preclinical trials. We're also actively leveraging strategic M&A to enhance our capabilities and bring greater value to our customers. In August, we announced our intention to acquire Abcam, a leading producer of protein consumables that are critical for advancing drug discovery, life science research, and diagnostics. Abcam has a long track record of innovation, outstanding product quality, and breadth of antibody portfolio, which positions them as a key partner for the scientific community. The addition of Abcam will give Danaher entry into this highly attractive market, furthering our strategy to help map complex diseases and accelerate the drug discovery process. We expect Abcam will be accretive on multiple levels, including core growth, earnings, and talent, and look forward to welcoming this incredibly innovative team to Danaher once the transaction closes. Now moving to our Diagnostic segment. Reported revenue declined 16% and core revenue declined 15.5%, with mid-single digit growth in our base business more than offset by lower COVID-related respiratory testing volumes at Cepheid. Our clinical diagnostics businesses collectively delivered mid-single digit core revenue growth. Radiometer led the way with high-single digit core growth and solid results across both blood gas and point-of-care immunoassay product lines. Beckman Coulter Diagnostics was up mid-single digits with double-digit growth in instrumentation and notable strength across clinical chemistry and immunoassay. Beckman's recent strong performance is a direct result of leveraging the Danaher Business System to improve commercial execution. We're seeing better win and retention rates globally, particularly in North America, which grew high-single digits in the third quarter. The team has also been accelerating new product innovation, and there's encouraging early traction in Europe for the DxI 9000, Beckman's next-generation immunoassay analyzer. In molecular diagnostics, increased menu utilization by customers paired with recent new product innovation helped drive over 20% core revenue growth in non-respiratory testing at Cepheid, including more than 25% core revenue growth in Group A strep and sexual health. In respiratory testing, Cepheid's revenue of approximately $350 million in the quarter exceeded our expectation of $100 million. A higher prevalence of COVID-19 drove both higher volumes and a preference for our 4-in-1 test for COVID-19, flu A, flu B, and RSV. As we move into the fourth quarter and our customers begin planning for the respiratory season, we now expect approximately $1.6 billion of respiratory testing revenue for the full year versus our previous expectation of $1.2 billion. The broad-based strength across Cepheid's testing menu is a result of the team's thoughtful approach to placing systems over the last few years. Customers who realized the benefit of accurate, easy-to-use molecular testing during the pandemic are increasingly consolidating their point-of-care testing platforms onto the GeneXpert and adding additional assays from our leading test menu. Their preference for the GeneXpert within their labs and across their healthcare networks has led to a more than 2.5 times increase in both our installed base and revenue since 2019. And we believe Cepheid is well positioned to continue gaining share and expanding our installed base in today's endemic environment. Now let's briefly look ahead at the expectations for the fourth quarter and the full year. As a reminder, both our fourth quarter and full year guidance include only Danaher's continuing operations and exclude Veralto. In the fourth quarter, we expect core revenue in our base business to be down mid-single digits year-over-year. We also expect total core revenue to decline in the high-teens percent range, primarily as a result of lower demand for COVID-19 testing, vaccines, and therapeutics. Additionally, we expect the fourth quarter adjusted operating profit margin of approximately 28%, which includes additional anticipated productivity initiatives to further adjust our cost structure. Turning to the full year 2023, we anticipate core revenues in our base business will be down slightly. And we also expect total core revenue to decline low double digits for the year as a result of lower demand for COVID-19 testing, vaccine, and therapeutics. Additionally, we expect a full year adjusted operating profit margin of approximately 29%. So, to wrap up, we're pleased with our third quarter results and believe the combination of our team's DBS-driven execution and differentiated portfolio enabled Danaher to outperform on a relative basis. With the successful spinoff of Veralto, we are now a more focused company committed to deploying leading-edge science and technology to improve human health. Danaher is purpose built to help customers solve some of the most important health challenges impacting patients around the world. Our proven ability to innovate is enabling faster, more accurate diagnoses and helping customers reduce the time and cost needed to sustainably develop and deliver life-changing therapies. So, as we look ahead, the unique combination of our talented team, differentiated science and technology portfolio, and balance sheet optionality, all powered by the Danaher Business System, positions us well to maximize value for our customers, our associates, and our shareholders. So, with that, I'll turn the call back over to John. John Bedford: Thanks, Rainer. That concludes our formal comments. Operator, we're now ready for questions. Operator: [Operator Instructions] Our first question will come from Dan Brennan with TD Cowen. Please go ahead. Rainer Blair: Good morning, Dan. Dan Brennan: Hey, guys. Hey, good morning, Rainer. How are you? Thanks for the questions here. Congrats on the quarter. Maybe just starting off with bioprocess, if you don't mind, since there's remains, obviously, as you know, a tremendous amount of focus here. I know with Q2, you guys talked about order trends being down modestly in the second half of the year. Sounds like what you're seeing is consistent with that, but I was hoping maybe you can unpack a little bit of color on kind of what's going on in the order side for bioprocess and kind of what you're seeing in the field and kind of what this might portend as we think about looking out to 2024. Rainer Blair: Sure, Dan. Let's start off with Q3 one more time here. So, Q3 results were consistent with what we expected. But also I have to be clear that we have not seen an inflection in orders. And I would say that we're sort of at the bottom here, bouncing along. And to give you a sense of this quantitatively, from -- our book-to-bill was at around 0.8, which is consistent with what we've been seeing here for the last few quarters. And for Q4, we think that looks a lot like Q3 with likely similar book-to-bill. But we do continue to expect our base business through the full year for bioprocessing to be down 10%, so as expected. Matt McGrew: Hey, Dan, maybe just a little bit of other color, too, just to give some sense of what we saw. Orders in dollar terms were actually down a little Q3 versus Q2. And like Rainer said, the book-to-bill here has been at 0.8. It's been like that for six quarters. I think we anticipate that it will be like that in Q4 as well. And I think kind of another triangulation that I look at is kind of on a two-year stack here. Orders have been kind of, call it, down 32%, 33%, 34% here for the last three quarters. So, like Rainer said, I think we're looking at Q4, it looks a lot like Q3, but no real change here. Dan Brennan: Got it. Thanks, guys. And then maybe just one just kind of zooming out a little bit, if you could. Just any way -- any helpful way to think about -- obviously, we have Q4 ahead of us, and you talked about the dynamic environment, which we all -- which we can all see, which we have better visibility, but we can all see it. But as we -- if you thinking about flipping the calendar to 2024, any early way to think about like a framework for revenue growth and earnings and margins as we get into the new year? Rainer Blair: Dan, I think as you look towards 2024, it's really important to understand the context here of the second half, so let me lay that out for you briefly. Once again, our Q3 exceeded expectations. Diagnostics was better than we expected, driven by strength at Beckman Diagnostics and respiratory testing at Cepheid. And bioprocessing was as expected, and we don't believe that changes here either. So, we do believe that we're at the bottom here in 2023 in bioprocessing. That's partially offset by weaker life science instruments. And as a reminder, life science instruments for us is less than 10% of our total business. So, Q3, all in, a solid outperformance in the quarter with what we think are some important markers around diagnostics, bioprocessing and life science instruments. And as you think about Q4, in there, bioprocessing and diagnostics, there's really no change to our prior expectations. We expect those to continue to perform similarly as we've talked about in the past in Q3. Now, as it relates to life science instruments, there we've seen some incremental weakness in Q3 and we would expect that to continue or step down slightly here in Q4. So, with that as a context, for the second half, there's really no change to revenue as Q3 offsets Q4. So, we're holding the full year here. And there's also no change to our bioprocessing expectations for the year, and we continue to believe that 2023 represents the bottom. Now, as it relates to 2024 and given where markets are today and the broader macro, we want to see how Q4 plays out before we provide a guide on our Q4 earnings call in January as we always do. We want to see the next couple of months here play out and then build the guide, as always, for our January earnings call. Dan Brennan: Got it. Thanks, Rainer. Thanks, Matt. Rainer Blair: Thanks, Dan. Operator: Thank you. Our next question will come from Vijay Kumar with Evercore ISI. Vijay Kumar: Hey, guys. Thanks for taking my question. Good morning, Rainer. Rainer Blair: Hi, Vijay. Vijay Kumar: One, I just wanted to go back to this bioprocessing. So, with book-to-bill of 0.8x, I guess, is bioprocessing going to grow next year if orders are below revenues in that '23? I don't know if there's a restocking phenomenon. Like, how should we generally broad strokes on bioprocessing, the plus and minuses as we look at the outlook, right? Should China inflect, or any levers that you have that could move bioprocess? Rainer Blair: So, I think I come back to the actual data, Vijay, that we see, which is Q3 really was very similar to Q2. The book-to-bill was the same. We saw the market develop as we had anticipated. You know from our prior call that we've been working with customers here to take some of the tension out of the system and try and ensure that as much inventory is burned off as possible here in the year. And that's why we're confident that this is the bottom. But as it relates to 2024, there's a lot of moving pieces here and it's quite hard to draw generalizations. And that's why it's so important for us also to see the data here for another quarter in Q4 before we talk about what it looks like in 2024. Now having said that, we do expect that this inventory dynamic and what's going on in China is going to also go into, if you will, impact into 2024 as well. This doesn't stop at midnight on the 31st of 2023. But we have seen a stabilization here with the last two quarters, and we want to see how Q4 develops before calling 2024 in January. Vijay Kumar: Understood. Matt, one for you. Thanks for giving the stand-alone numbers. I think it looks like the stand-alone margins here, ex-EAS for Danaher for fiscal '23 is about 28.5% sort of rough numbers, and that includes, I believe, perhaps $400 million of cost actions. What's the right way to think about cost actions, Matt? Is that -- should that all come out next year, so the right jump-off point for us ex cost actions is 30% and that's how we should be thinking about margins for next year? Matt McGrew: Yeah. I mean, I think we'll kind of give a complete update when we come out because the core growth is going to be a big driver of margins. But just on the cost action part, yeah, I think you're right. I think the way I'd probably characterize it is $350 million of one-time cost actions. We talked about $200 million in Q2 and Q3. So that would be, again, the kind of one-time cost actions. Another $150 million here in Q4, and like you said, that will roll forward and help next year. But that is sort of a net number, right, if you will. We will have other pieces, some of them pretty meaningful here that will impact margins. So think of, like I said, first core growth will have an impact. FX, as we sit here right now, is going to have an impact, and there will be some other cost headwinds. So, when we get to the guide here in January, we'll sort of take that net 150 basis points, if you will, of margin tailwind probably and see what those offsets are to end up where we are for '24. But that's $350 million is probably the right number to think about as one-timers that go away here for next year. Vijay Kumar: Understood. Thanks, guys. Operator: Thank you. Our next question will come from Scott Davis with Melius Research. Rainer Blair: Good morning, Scott. Scott Davis: Hey, good morning, guys. Good morning, everybody. Rainer, you mentioned in your prepared remarks, China, kind of down 45% on the biopharma side, I think you said. But could you walk us through, first of all, what is the materiality of China now that Veralto has gone, percent of sales? I don't think we have that number. And second, just kind of walk us through the different markets in China, and maybe any color or outlook or something on how that is bottoming out or hopefully bottoming out? Rainer Blair: Sure, Scott, and thanks for the question. So just to the materiality of China here post Veralto, I think 12% is a good number to think about as a total revenue. And now to your point, let me take you through what we saw across the portfolio here in the third quarter. So, let's start with bioprocessing. There, we did not see a change in market demand, which has been here now for several quarters impacted by a weaker funding environment and excess capacity, and that was down 45%, as mentioned previously. Life Sciences was worse than expected on a weaker macro as well as at the margin, not to overread this, but at the margin, some of the anti-corruption initiatives in the country, which slowed down some equipment tenders, some installation of equipment at the margin. And in Diagnostics, we're seeing consistent patient volumes, and it's largely back to normal. So, we expect -- we don't expect this to change here going forward in Q4, and also expect that this is going to continue into 2024. So, we haven't seen a change in bioprocessing, Life Sciences, the worse at the margin here in Diagnostics as expected and largely back to normal. Scott Davis: Okay. Very helpful. And just to switch gears, there's talk about M&A multiples. In this type of rate environment, you would expect at least some moderation. I didn't feel like Abcam was necessarily cheap despite some of the drama that is out there. It certainly seems fully priced even at higher rates. But as you look at the rest of your pipeline, is there some relief in multiples that kind of reflect the reality of the higher rate environment? Rainer Blair: Scott, I would tell you that we take it, as we always do, based on the end market, the asset and the financial model individually. And as we look at our funnel, which is very active, there's no doubt that some valuations still do not reflect what is a higher and likely for some time, sustained interest rate environment. When it comes down to the individual deal, we bring all aspects together and ensure that the deal model meets our expectations as well. And then, we -- as I've always said, we'll pull the trigger if all those lights flip green on end market, the actual target company, as well as the financial market -- financial model, excuse me. And then, lastly, to reiterate, we do think valuations still have some ways to go here on average in order to reflect the interest rate environment. Scott Davis: Helpful, Rainer. Best of luck. See you guys. See you, Matt and John. Thanks. Rainer Blair: Thank you, Scott. Operator: Thank you. Our next question comes from Michael Ryskin with Bank of America. Rainer Blair: Good morning, Michael. Michael Ryskin: Good morning, Rainer, Matt, thanks for taking the questions. Let me follow up a little bit on the Life Science weakness. It sounds like you guys are pretty clear that in 3Q, that was the biggest step down sequentially versus 2Q and versus your expectations. We have it in our notes that LS instruments grew mid-single digit 2Q and now declined mid-single digit 3Q. So, could you parse that out a little bit SCIEX versus Beckman by geographies, by customer? Where you're seeing the slowdown? Do you think it's tied to some of the broader weakness you're seeing in pharma biotech? And just any thoughts on -- you already provided some commentary on 4Q, but any thoughts longer term on when that could return to growth? Just because you think that LS instruments would have a slightly longer order books, you get -- you have a little bit more visibility there. So, some forward commentary would be helpful. Thanks. Rainer Blair: Thanks, Mike. So, let's level set on the numbers here. Our instrument portion of our Life Science tools is less than 10% of Danaher revenue, just to put that in context properly. And as we mentioned, our Q3 performance was modestly below our expectations, with higher-end instrumentation holding up better than the less specialized solutions. Now, if you think about this by end market, academic and life science research have held up well along with the service business that's associated with these instruments. Applied markets were also resilient, led by food and environmental. And within environmental, you are aware of the PFAS testing volumes out there. But pharma and biotech took a modest step down, and that was particularly the case in the U.S. In China, we see large pharma customers also tightening their belts as it relates to capital expenditures. We were just talking about the interest rate environment, and that's playing out here as well. And in China, what we're seeing there is just the sunsetting of the subsidized loan program of the first half of the year and very high comps, as well as the lower funding that's available in the marketplace today in China. So, just to wrap in geographically, our developed markets were down largely due to the softness in pharma and biotech. And China, as we just talked about, was really related to the weaker macro, and, like I said earlier, on the margin only some anti-corruption initiatives there. So, as we wrap up there, I think we remain cautious on LS tools and expect Q4 to be down in the high singles versus -- but still at the low singles for the full year. Now, as it relates to '24, like I said, I think Q4 is a very important quarter here for all kinds of reasons. As you know, in the Life Science business, a lot happens in Q4, and it's also going to tell us a lot as we dialogue with our customers about how to view 2024, which as I mentioned, we'll talk about in January. But I do think it's fair to say that we expect a weaker pharma and biopharma end market here going into 2024. Michael Ryskin: Great, thanks. That's really helpful. And then maybe as a quick follow up, I just want to touch on China a little bit. I'm not going to ask about '24 outlook, because I think you made it clear you're not going to address that. But just longer term, structurally, China has been a major part of the growth for tools as an industry and for Danaher over the last five, 10 years. Given everything that's happened over the last year, what's your view on China going forward on a multi-year basis? Will it still be accretive to total company, meaning above total company growth? Or do you think China, sort of, is really taking a step back here and it's going to be a multi-year process for it to return to that level? Thanks. Rainer Blair: We think China long-term continues to accrete to the fleet average from a growth perspective, Mike. The demand in China, we're just at the tip of the iceberg of the demand in China for biologic drugs. And there's no question that we're currently going through a reset that's based on many of the things that occurred during the pandemic, if you think about the funds that were spent in the Zero COVID effort over several years, if you look at how the pharmaceutical industry is playing out in China. But all those things over time moderate, and you come back to an end market which has an enormous demand of a population which has already a large and increasing middle class and is really demanding access to the most advanced medications in the world. So, we continue to see China as a opportunity here in the mid and long term, because the fundamentals are in the right place, although we are going through, if you will, a reset here with different funding sources and so forth in the short term. Operator: Thank you. We'll take our next question from Puneet Souda with Leerink Partners. Rainer Blair: Hi, Puneet Souda. Puneet Souda: Hey, Rainer, thanks for taking the questions. Quite a bit of coverage here, so maybe let me ask about something that is being discussed in healthcare markets and even now food and consumer markets, and that's the GLP-1s and the diabetes weight loss drugs whose indications are expanding here. So, I'm wondering if you can provide some context on if you see contributions from these drugs in sort of 2024, anything there that can potentially help you offset some of the headwinds? And maybe within that context, if you could also just talk about how should we weigh the GLP-1's opportunities versus Alzheimer's, which is also a very large market, I believe, for the mAbs? Rainer Blair: Thanks, Puneet. Let's start with the GLP-1, which are real and they are growing, and Danaher is represented into some extent, stacked into all of them, and we expect over time for those to contribute to our growth. Having said that, GLP-1s are a class of drugs where the intensity of the use of, if you will, the standard inputs of biologic processes, for instance, such as mAbs, and I'll come back to that part of your question in a second, is not as intense. So, you have synthetic processes for GLP-1s, you have biologic processes, and depending on how that mix develops, that also impacts the degree to which this contributes to our business. This will contribute to our business, and we think that, that provides a modest tailwind here over time. Now, as it relates to your question around Alzheimer's drugs, those are typically monoclonal antibodies, and the use of our industry's products there is far greater than, for instance, in GLP-1 processes. And as those continue to make their way through the development pipeline, through the regulators, and ultimately get reimbursed and then adopted by patients, we expect that to be a more significant tailwind certainly than GLP-1. Puneet Souda: Got it. Super. And then if I could follow up on Abcam, could you talk about where you see the biggest opportunities for cost reduction here in the antibodies business and the protein reagents business? And maybe where DBS can have the most impact? And wondering if -- what do you have in your algorithm longer term for the op margins for this business eventually? Thank you. Rainer Blair: So, Puneet, we have yet to close on this transaction, so we won't be able to talk about the model and its contents in any detail here. But I do want to take a second to reiterate that this acquisition, if that's an entry into a really highly attractive protein consumables market, we estimate that market to be over $8 billion and growing high single digits. And very importantly, because of new detection technologies and other approaches, protein detection is now moving from research to biopharma, and we believe over time to the clinic. And so, you can see how that fits our strategy of helping to map complex diseases, accelerate drug discovery, and hopefully someday even help identify these diseases earlier in their progression. Now, this is a differentiated company with a really terrific brand and a great long-term sustainable business model. We've talked about this, but this is accretive to us in growth, in earnings and also in talent. And we're looking forward to welcoming the team here. We're still focused right now, Puneet, on closing this transaction by mid-2024. Puneet Souda: I appreciate it. Thanks, Rainer. Operator: Thank you. Our next question comes from Rachel Vatnsdal with JPMorgan. Rainer Blair: Hi, Rachel. Good morning. Rachel Vatnsdal: Yeah, good morning. Thanks for taking the questions. So, I want to follow up with a few more nuanced questions on China. So, first you mentioned that anti-corruption had some impacts to the Life Sciences segment. So, could you quantify the impact there? And then, can you walk us through, are you just seeing that impact in the healthcare and diagnostic hospital settings, or has that started to bleed into pharma and biotech as well? And then, shifting over to more the Diagnostic side for China, another dynamic that we started hearing about in recent weeks is just China volume-based procurement. So, can you walk us through what you're hearing on that front and what your potential exposure to that would be? Rainer Blair: Sure, Rachel. Starting with anti-corruption, we really do see this as a transitory effect. There were some weeks, if I can say it that way, where we saw particularly equipment tenders being postponed, delayed, as well as the installation of hardware, so larger capital equipment. But frankly, we've seen that wane here, so come back to normal, if you will, in the last couple of weeks. And that applies both to what we saw there in Life Sciences, really, at the margin, as well as what we see in Diagnostics. So, I would not view the anti-corruption initiative as a shorter or even mid-term growth headwind. Frankly, in the long term, we think this is a positive as it levels the playing field for multinationals in China. Matt McGrew: As far as the value-based procurement, Rachel, I think the best way to kind of think about it is I think we think it's going to be about a $50 million kind of annual headwind here for us over the next couple of years. Most of that is at Beckman Diagnostics. So I mean maybe kind of a simple math is $800 million of Beckman revenues and maybe 40% of that is sort of subject to the VBP kind of assume a 50% type price reduction there and you get to $150 million. We think that's kind of two, three year kind of run rate here. So, pretty modest and manageable for us over the period. Rachel Vatnsdal: Great. And then, my follow up is just around Diagnostics. So, you guys listed that respiratory expectations for the year to $1.6 billion versus prior assumptions around $1.2 billion. So, how should we think about that endemic number for respiratory? Is $1.2 billion still on average the really way to think about this respiratory market? And then just heading into 2024, giving you guys listed expectations for this year by $400 million, should we expect a softer year next year for respiratory as well? Thank you. Rainer Blair: Yeah, I mean, I think it's a good question on the $1.2 billion. I think that's probably where my baseline would be, Rachel. And I think we did a little bit better this year because we had another respiratory season that started earlier than normal, right? Just like last year, similarly, we saw sort of September and October, the ILI kind of spiked up. That is usually something in the past that we have seen more in the January-February timeframe. So if I think about the last couple years and think about that, I think $1.2 billion would be sort of where I would base it as a planning kind of purpose going forward. But we sort of typically, as we look forward from planning perspective, do that. We look at the last couple years of ILI and try and mirror that. So that's kind of where I think I'd be. Operator: Thank you. And that was our last question today. I will now turn the call back over to John Bedford for closing remarks. John Bedford: Thank you everybody for joining. We'll be around the rest of the day for questions. Rainer Blair: Thanks, everyone. Operator: And this does conclude today's call. We thank you for your participation. You may disconnect at any time.

Operator: My name is Ashley, and I'll be your facilitator this morning. At this time, I would like to welcome everyone to the Danaher Corporation Second Quarter 2023 Earnings Conference Call. [Operator Instructions] I will now turn the call over to Mr. John Bedford, Vice President of Investor Relations. Mr. Bedford, you may begin your conference. John Bedford: Good morning, everyone, and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer; and Matt McGrew, our Executive Vice President and Chief Financial Officer. I'd like to point out that our Form 10-Q for the second quarter, our earnings release, the slide presentation supplementing today's call and the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call are all available on the Investors section of our website, www.danaher.com, under the heading Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events & Presentations, and will remain archived until our next quarterly call. A replay of this call will also be available until August 8, 2023. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. The supplemental materials describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company-specific financial metrics related to the second quarter of 2023 and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, and actual results may differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date that they are made, and we do not assume any obligation to update any forward-looking statements, except as required by law. With that, I'd like to turn the call over to Rainer. Rainer Blair: Well, thank you, John, and good morning, everyone. We appreciate you joining us on the call today. Our team executed well and delivered our quarterly revenue, earnings and cash flow expectations despite a more dynamic operating environment. The resilience of our portfolio showed through in the second quarter. High single-digit base business core revenue growth in Life Sciences and Diagnostics, paired with better-than-expected respiratory testing revenue, helped offset softer base business demand and bioprocessing. Our team's ability to navigate these challenging operating conditions is a testament to their commitment to leading and executing with the Danaher Business System. Their actions are helping mitigate supply chain constraints, enhance productivity and improve manufacturing throughput, and we're proactively addressing structural costs while maintaining a healthy cadence of growth investments. Now our second quarter results also highlight the durable balanced positioning of our portfolio. We have an exceptional group of businesses, all powered by DBS, that serve attractive end markets with favorable long-term secular growth drivers. This powerful combination of our talented team, the strength of our portfolio and balance sheet optionality differentiates Danaher and positions us well to operate through today's more dynamic operating environment. So with that, let's turn to our second quarter results in more detail. Sales were $7.2 billion in the second quarter and core revenue declined 7%. We delivered 2% growth in our base business, which was more than offset by a COVID-19 revenue headwind of approximately 9%. Geographically, core revenues in developed markets declined high single digits, primarily driven by lower COVID-19 revenues. High-growth markets declined low single digits, with China down approximately 10%. In China, our Diagnostics businesses benefited from continued recovery in hospital patient volumes, while stimulus initiatives helped drive strength in Life Sciences. This was more than offset by a decline in our Biotechnology business, where a significant deterioration in the funding environment during the quarter led to project delays and an increase in order cancellations. Our gross profit margin for the second quarter was 56.5%. Our operating margin of 20% was down 840 basis points due to the impact of lower volume in our Biotechnology and Diagnostics segments, and costs incurred to adjust our capacity and cost structure in response to COVID transitioning to an endemic state. These actions in this transition year are intended to ensure that we're in the best position to deliver on our long-term growth and margin objectives, while maintaining an accelerated cadence of innovation investments. Adjusted diluted net earnings per common share were $2.05. We generated $1.6 billion of free cash flow in the quarter and $3.3 billion year-to-date. This results in a year-to-date free cash flow to net income conversion ratio of more than 125%. Our notable strength in free cash flow generation differentiates Danaher and illustrates the quality of our portfolio, business models, and our team's consistent execution. Now let's take a closer look at our results across the portfolio and give you some color on what we're seeing in our end markets today. Reported revenue in our Biotechnology segment declined 17% and core revenue was down 16.5%. In bioprocessing, underlying market conditions weakened further as we move through the quarter, resulting in a high single-digit base business decline. Larger customers are still working through inventory they built during the pandemic, and emerging biotech customers, which we define as customers without a commercialized therapy, continued their efforts to conserve capital. In addition, we saw the ongoing biopharma market correction in China intensify as the second quarter progressed. Given these dynamics, where we can, we've started actively working with our larger customers to help them more quickly manage their inventory down to normalized levels. Now while market dislocations are impacting our near-term growth, recent positive developments have only strengthened our conviction in the tremendous long-term opportunity ahead in the biologics market and for our leading bioprocessing franchise. The number of biologic and genomic medicines in development is meaningfully higher than at any point in history. And during the quarter, we saw notable regulatory approvals for a novel gene therapy for Duchenne muscular dystrophy and the monoclonal antibody-based Alzheimer's therapeutic. These groundbreaking therapies are not only poised to improve quality of life for patients around the world, they're also serving as validation of these emerging therapeutic classes and reinforcing the potential of drugs currently in the development pipeline. Now in May, we completed the combination of Cytiva and Pall Life Sciences, creating a premier global bioprocessing franchise. The combined business, which will go to market under the Cytiva name, uniquely positions us to support customers as they pursue these life-changing breakthroughs. Cytiva's portfolio has the broadest offering in the industry with end-to-end solutions across all major therapeutic modalities and an innovation engine geared towards helping customers bring life-saving therapies to market faster and more efficiently. A great example is the Xcellerex X-Platform Bioreactor Cytiva launched in the second quarter. Now this new bioreactor is optimized to enhance cell culture productivity and increase process intensity to improve manufacturing yields. The X-Platform's modular design also enables customers to more predictively scale from the lab to production across all modalities, including monoclonal antibodies and cell and gene therapies, helping reduce time and cost in biologic drug production. Turning to our Life Sciences segment. Reported revenue grew 5.5% and core revenue was also up 5.5%, including high single-digit growth in our base business. Our Life Sciences instrument businesses collectively delivered mid-single-digit core revenue growth, led by nearly 10% growth at Leica Microsystems and high single-digit growth at SCIEX. Healthy demand across our life science, research, academic and applied markets, particularly for our more advanced instrumentation, helped offset softness at pharma and biopharma customers. Our genomics consumables based business was up low single digits in the quarter. Growth in plasmids, proteins and gene-writing and editing solutions, which are primarily used in projects that are commercialized or in later stages of the drug development pipeline, remained robust. This strength was partially offset by declines in next-generation sequencing and basic research. Our Life Sciences businesses continue to deliver innovative solutions that are helping accelerate the discovery and development of biologic medicines. IDBS recently released Polar Insight, a biopharma data management platform that is leveraging artificial intelligence to help researchers more quickly analyze datasets to accelerate drug discovery, regulatory filings and technology transfer in the therapeutic development process. And SCIEX launched the Intabio ZT, a front end to the ZenoTOF 7600 that enables researchers to more quickly and more securely identify and validate drug candidates, improving development workflows and pipeline yields. Now moving to our Diagnostics segment. Reported revenue declined 13% and core revenue declined 11.5%, with high single-digit growth in our base business, more than offset by lower COVID-related respiratory testing volumes at Cepheid. Our clinical diagnostics businesses collectively delivered mid-single-digit core revenue growth. Leica Biosystems led the way with high single-digit core growth driven by strength in core histology and advanced staining. Beckman Coulter Diagnostics was up mid-single digits again this quarter, with solid performance across both instruments and consumables and notable strength in immunoassay. In May, Beckman Coulter launched the DxI 9000, their next-generation immunoassay analyzer that automates up to 90% of standard daily maintenance routines while delivering best-in-class throughput. In addition to significantly improving laboratory workflows and efficiency, the DxI 9000 will enable Beckman to provide a full menu of blood virus assays over time, closing an important menu gap and further enhancing the breadth and clinical value of our test menu. That is just one example of how the Beckman team is improving their competitive positioning through innovation, which is helping drive consistent mid-single-digit growth rate. In Molecular Diagnostics, broad-based strength across Cepheid test menu drove another quarter of more than 30% core growth in non-respiratory testing. Customers who benefited from the workflow advantages, Cepheid's GeneXpert delivered for COVID-related testing, are increasingly adding additional assays from our leading test menu, most notably Group A Strep, and hospital-acquired infection assays. And strong momentum for our recently introduced multiplex vaginitis panel, the Xpert Xpress MVP, contributed to mid-teens growth in sexual health testing. In COVID-related testing, Cepheid's respiratory testing revenue of approximately $300 million in the quarter exceeded our expectation of $175 million. This was driven both by higher volumes and a preference for our 4-in-1 test for COVID-19, flu A, flu B and RSV. We continue to expect approximately $1.2 billion of respiratory testing revenue for the full year. With COVID now in endemic state, we believe Cepheid is continuing to take share as many customers look to consolidate their point-of-care, PCR, testing platforms on to the gene expert for both respiratory and non-respiratory testing. Their preference for the GeneXpert within their labs and across their health care networks is a testament to the significant value, the unique combination of fast, accurate lab quality results and the best-in-class workflow provides clinicians. Now moving to our Environmental & Applied Solutions segment. Reported revenue grew 2% and core revenue was up 1.5%. Water quality core revenue grew mid-single digits and product identification was down mid-single digits. In water quality, DBS-led execution drove solid growth on top of a double-digit prior year comparison. Strong performance at ChemTreat and Hach was balanced across industrial and applied end markets. At Trojan, equipment sales and order rates remained strong as customers are continuing to invest in larger municipal projects. At product identification, Videojet declined low single digits against the high single-digit prior year comparison. We're also seeing lower activity levels at our industrial and consumer packaged goods customers who are aligning their production schedules with end-use demand. The Videojet team continued their strong cadence of new product innovation this quarter with the release of the 3350 laser marking system. This impressive addition to Videojet's portfolio enables users to mark different sized products and multiple levels of the same product without adjusting the laser, resulting in increased uptime and higher throughput. This is one of several product introductions planned for the year that are helping position the product identification platform for success as they begin their journey as part of Veralto. So speaking of Veralto, we remain on track for a fourth quarter 2023 separation. Veralto will be well positioned in some of the most attractive areas of water quality and product identification. Their portfolio will be comprised of leading companies with durable high-margin business models, supporting customers' mission-critical operations. The Veralto team is looking forward to hosting an Analyst Day in Chicago on September 6, and we hope many of you will attend. So now let's briefly look ahead at expectations for the third quarter and the full year. In the third quarter, we expect core revenue in our base business to be down low single digits year-over-year. We also expect total core revenue to decline in the low to mid-teens percent range primarily as a result of lower demand for COVID-19 testing, vaccines and therapeutics. Additionally, we expect a third quarter adjusted operating profit margin of approximately 26%, which includes the impact of efforts to adjust our cost structure and capacity in response to COVID transitioning to an endemic state, particularly within our Diagnostics and Biotechnology businesses. Now turning to the full year 2023. Due to the near-term challenges within bioprocessing, we now anticipate low single-digit core revenue growth in our base business. We also expect total core revenue to decline high single to low double digits for the year as a result of lower demand for COVID-19 testing, vaccines and therapeutics. Additionally, we expect a full year adjusted operating profit margin of approximately 29%. So to wrap up, our team remains focused on consistent execution in the face of a challenging and more dynamic macroeconomic environment. We're confident about the bright future ahead for Danaher. Our talented associates are innovative and passionate about their work and committed to our culture of continuous improvement. Across our portfolio, we're helping customers solve some of the world's biggest health care challenges, including faster, more accurate disease diagnosis and accelerating the discovery, development and manufacture of therapies. Our solutions are at the forefront of improving patient outcomes and ensuring more patients around the world have access to quality care. Financially, we've got a great lineup of leading franchises in attractive end markets with durable, high recurring revenue business models, and our strong free cash flow generation positions us well to further enhance our portfolio going forward. The unique combination of our talented team, differentiated portfolio and balance sheet optionality, all powered by the Danaher Business System, provide a strong foundation for creating shareholder value, while helping to meaningfully improve human health. So with that, I'll turn the call back over to John. John Bedford: Thanks, Rainer. That concludes our formal comments. Operator, we're now ready for questions. Operator: [Operator Instructions] And we will take our first question from Mike Ryskin with Bank of America. Please go ahead. Rainer Blair: Good morning, Mike. Michael Ryskin: Good morning, Rainer. Thanks for taking the questions. I'll start on bioprocessing, the obvious one. You provided a lot of comments during the prepared remarks. But I'm just wondering if you could talk a little bit about order trends, anything that you're seeing from customers to give you a sense of when that destocking could continue. As part of that, you also talked a little bit about actively managing inventory with the larger customers. Could you just walk us through what that means exactly? And sort of how you see the rest of the year playing out? You gave the total percent number, but qualitatively, what are your thoughts on bioprocess as you go through the year? Rainer Blair: Sure. So let's start with orders. In the first half of the year, our orders were essentially down 20%. And as we look forward here to the second half of the year, we think that our orders will be down modestly. That's a combination of various factors. One being that our large customers, CDMOs, continue to work through inventories. We also see that China continues to deteriorate here from what we saw in the first quarter and certainly saw that deterioration in the second half of the second quarter, and we see that continuing. And then we are actively managing inventories down. While that is not new, we've intensified our efforts there really in order to get as much as possible of the stocking topic behind us here in 2023. Matt McGrew: Mike, maybe just - let me give you a little color on some numbers here, too. I think if you think about the first half, like Rainer said, we were sort of down 20% from an order perspective. And like you also said, I think we'll be down modestly in the second half. But I think it's important to remember, too, this is largely driven by the comps that we've got. So if you think last year, the first half, we had kind of a low double-digit comp, in the second half was more like 20%. So step up, get a little easier here in the second half. I think the important thing that Rainer just said is we have not seen in the order book enough to call an inflection in the market, but I think we will see a step up to a more modestly down number here in the second half. But I would really characterize that as very much comp driven, not some sort of market inflection that we're seeing. Michael Ryskin: Great. Thanks. Appreciate that. And if I could squeeze in a follow-up on China specifically. You talked a lot about China and 2Q deteriorated, particularly as it touched on biopharma market correction. Could you expand on that just how significant and how protracted do you believe that will be? And it seems like it's really mostly contains the bioprocess, you called out instrumentation in China actually holding in pretty well. What's the difference there? Why is it so specific to just that one part of your business? Rainer Blair: So we saw that continued deterioration in the second half of the second quarter. To give you a sense, China orders were down 20% in the first quarter, 40% in the second quarter, but really 50% in June. And frankly, we don't see that getting better here in the second half. And that's really related to two or three factors. One, the funding environment continued to deteriorate. The foreign investment in projects and capacity has dissipated, it has not returned. There are fewer projects there that are being funded. Also, over the last two, three years, a great deal of capacity has been built, particularly CDMO capacity, but also some with the smaller biopharmas there. And so there's not a lot of additional hardware required here in the short term in the second half, nor are there that many molecules that are being worked on by the CDMOs, meaning that the consumables requirements of that capacity are also lower than we saw here in the first half of the year. And then lastly, and part of this is related to our aggressively managing with our customers to get them to their target inventories, there are a fair number of order cancellations there. So when you put all that together here for China, that is a different picture here in the second half than we saw in the first half. And once again, we're working here, if you aggregate this to the total global biopharma business, to get as much of this as possible behind us in 2023. And just to give you a sense here, our China business in 2022 was about $1.3 billion, slightly over that. We expect that to be about an $800 million business by the end of 2023, which would be about 10% of the total bioprocessing business at Danaher. Michael Ryskin: Great. Thanks so much. Appreciate the color. Rainer Blair: Thanks Mike. Operator: And we will take our next question from Vijay Kumar with Evercore ISI. Please go ahead. Rainer Blair: Good morning, Vijay. Vijay Kumar: Hi Rainer. Good morning to you, and thanks for taking my questions. I guess on the bioprocessing commentary, Rainer, if you just simplify the various moving parts. It seems like large pharma was in-line-ish - early stage was in line-ish. What changed incrementally in 2Q was China? And if that is correct, I think you mentioned China was that down 50% in June, is the second half assuming down 50% for China bioprocessing? And I think you also mentioned Danaher's actively managing customer inventory levels, what does that mean? And what is the implication for fiscal '24? Should any of these issues be lower into '24? Matt McGrew: Vijay, it's Matt. Let me give - I just want to kind of set the numbers for everybody, so we've got what we're looking at for China. As you said, from a revenue perspective, in the first half, we were down, call it, 30%. And we did see May and June sort of get down into the more like 45%, 50% down. So as we sort of think about what we're thinking about for China going forward for the second half, we are kind of contemplating, if you will, for Q3 and Q4 both of those quarters to look like May and June, and call it, 50% plus down. With that, maybe, Rainer, you want to give some color on the commentary. Rainer Blair: Sure. Vijay, as it relates to '24, we have a lot to work through here still, I think, as an industry in the second half of 2023. We talked about the various puts and takes of the destocking that I think you correctly summarized with pharma and emerging biotech. You see the China piece that we're flagging here. And then, of course, actively managing those inventories with our customers here in order to get as much as possible behind us in 2023. And we think 2023 probably is the bottom. Having said all that, it is a little early to be talking about 2024. And as always, as we get closer here to the end of the year, we'll continue to update as we work through the second half here. Vijay Kumar: Understood, Rainer. And Matt, maybe one for you on margin share. I think if your second quarter came in slightly above guidance. But the sequential step down from Q1, that's 450 basis points, can you bridge us on what drove that 450 basis point step-down sequentially? I think some of this is cost actions Danaher undertook? And again, when I look at the annual guidance, I think you implied Q4 is perhaps 31%-ish. What drives the -- 31-ish. What drives that Q4 step-up? And does that assume your bioprocessing inventory levels to step up? Bioprocessing orders exiting Q4, is that assuming like a normalized trends? Thank you. Matt McGrew: Yes. No, I think that's right. You got that right. So Q1, we were kind of call a 31% margin, step down to 26.5% in Q2. I think, we're going to be more like 26% in Q3 and then a step up to 31% in Q4. If you remember, last quarter, we sort of talked about a bunch of capacity adjustment, if you will, measures, not only at Summit Biotech, but remember, significantly at Cepheid, as the volumes there ramp down, we are being pretty proactive about taking down that capacity as we talked about. So really, the step down in Q2, Q3 is largely due to: one, lower volumes; but two, remember, we had this big capacity reduction costs. Those are primarily Q2, Q3, and then they sort of go away here in Q4, combined with higher volume in Q4 is how we get to kind of 31%. That really has no bearing or impact on anything to do with the bioproduction inventory, et cetera. I mean, it just incorporates our guide of kind of bioproduction ex COVID down 10%. So really all about the higher volume and the capacity reduction stuff that we're working on kind of heading out of the P&L in Q2 and Q3. Vijay Kumar: Understood. Thanks guys. Operator: Thank you. We'll take the next question from Scott Davis with Melius Research. Please go ahead. Scott Davis: Good morning Rainer, Matt and John. Yes, I was hoping you could put a little bit more teeth into this cost out and just a little bit more color, even if you, I mean in a perfect world, I'd love to see what the actual - what the tailwinds might be for '24 or what the benefit is? But if you're not willing to go down that path, at least help us understand what's perhaps more rooftop versus labor versus - I know when times are tougher like this, maybe your comp accruals are down, but maybe you guys can give us a little detail will be helpful? Thanks. Matt McGrew: Yes. So Scott, the capacity reduction, we talked last quarter that we had about $350 million of cost that was going to come through in Q2 and Q3. We said probably about $250 that was going to be at Cepheid, and that is a rooftop effort, right? During the pandemic, we added some rooftops to kind of meet demand. Now, we're kind of scaling that back. So that is a little bit of a rooftop dynamic as well as a people dynamic as we scale down to where we are. About $100 million of that $250 million is over the same concept, but at BTG, given some of the lower demand there. I would characterize that less as rooftops and more sort of other actions around kind of demand levels, if you will, at BTG. So that's sort of the $350 million we talked about last quarter. Some of that $350 million is going to be sort of one-time, if you will, right? And then probably something in the range of a couple of hundred million of it will be a bit of a one-time cost that we are hitting and taking P&L in this year that probably should come back to us here next year as well, as the savings that we have moving forward. We haven't really talked about the savings, Scott. That's going to be a little bit dependent on how much we can get done here in Q4 or Q3 - Q2, Q3 and then what gets done in Q4 as well. And so, it will be a little bit dependent on how much we can get done as to what the savings, the annualized savings will be. So, we sort of told people last quarter that we kind of update that as we get towards the guide for next year to kind of bake in some of the savings number. So, I haven't really gotten that yet. I've got - I have a sense or an idea, but I do want to see if we can get everything done and kind of where we end up before we talk about how much is coming. But I do think we've talked last quarter about that sort of one-time benefit of, call it, a couple of hundred million dollars. Scott Davis: All right. That's helpful, Matt. And it wasn't clear to me why [AIS] margins were down. Is it kind of price cost, just because I'm assuming had maybe negative actual unit volumes with core up 1.5%? But is it mix price cost? Is there anything - I know there's probably some prep into the spin that may add some near-term costs as well, but some color there would help too? Thanks. Matt McGrew: Yes. Yes, I would say yes to probably all of the above, Scott. I think you're right. It was a little bit of a price cost. I think they are starting to see an environment where they had really good price actions as some of the supply chain issues and supplies and logistics issues, they were able to kind of cover with price. But I think you're right, we're starting to see a little bit of that come down, probably not terribly unusual. Some of it, they were able to offset with other measures. But you're right. I think you kind of look at what happened there in the quarter, it was a little bit of it. Volumes were on the margin sort of down, but the price side did hold us up. But that price is coming down a little bit from where it was, but that was kind of what happened in the quarter. And like you said, also ramping up into the spin here probably had an impact as well. Scott Davis: Yes, that makes sense. Thanks for the color. And best of luck to rest of you guys. Rainer Blair: Thanks Scott. Matt McGrew: Thanks Scott. Operator: Thank you. And we'll take our next question from Dan Brennan with TD Cowen. Please go ahead. Rainer Blair: Good morning, Dan. Daniel Brennan: Yes, thanks. Good morning Rainer, how are you doing? Thanks for the questions here. Maybe the first one just on - the company is obviously a superior executor, DBS is at your core. So the string of bioprocess guide down is pretty uncharacteristic, but it's also a situation that has plagued many peers. So I'm sure you're always doing forensic reviews, so you go - your future forecasting improves in terms of what you've learned? So can you just give us a sense of the latest bioprocess guide and what will provide confidence that the factors that surprised you here and led to the latest cuts won't surprise you again, and now the guide incorporates enough cushion. So that investors can have confidence at the bottom of the bioprocess guidance has been reached? Rainer Blair: Thanks, Dan. I appreciate that question. And as you can imagine and as you suggested, we are constantly, continuously improving our forecasting processes even when we get into these unusual circumstances. And I think one of the aspects here is that the demand situation, the production planning of our customers around the world in the short-term is very dynamic in the sense that production plans are being changed as our customers manage their own inventories as they deal with the demand patterns that they're exposed to. And what we have learned out of that is a more frequent touch point pattern that we have to have with our customers in order to ensure that we keep our finger on the pulse of what's going on there. We think that in the discussions that we've had, that taking the approach of aggressively helping our customers manage their inventories to their target levels in order to find what the true demand signal is. As well as thinking about the second half here, with some degree of conservatism, positions as well in what has been a very dynamic environment with a number of new factors influencing demand. So, we think we're well positioned here for the remainder of the year in terms of the bioprocessing guide. Matt McGrew: Maybe, Dan just a bit, maybe just my thoughts on that topic. I think like Rainer said, I think given what we saw in Q2, I think we feel like we've got sort of China in a pretty good place from a guidance perspective given what we saw. Given the fact that we began that active management in earnest in kind of the back half of Q2 and are going to be pretty aggressive with that to get everything, if possible, behind us that we can here in 2023. I think this guide puts us in a pretty good place for the rest of the year. Daniel Brennan: Great. And then maybe just thinking about the exit rates that are implied in the guidance. I know you already commented, Rainer, '24 official guidance will come later. But it'd be really helpful just to get some frame of reference about key inputs. I mean we're coming out somewhere in $930 million this year on earnings, and maybe a little below $10, maybe $980 for '24. I know consensus is still of 10/23 as of this morning. So just any help about how we think about the trajectory in '24, either from an earnings basis. And also even given the low single-digit base guide for this year, how we think about that comp and what that could translate into a starting point for base organic growth in '24? Rainer Blair: So Dan, I do think that it's early to talk about 2024, because we still have an entire half of the year in front of us here with a number of factors to work through. We talked about the destocking dynamic in China, as well as our efforts to actively get the destocking situation behind us here in 2023. And we think that ultimately, we're probably seeing, in 2023, the bottom here and what is the bioprocessing stocking dynamic. And we also - and I talked about this in the prepared comments, are positive about the long-term growth of this business and this industry. But it's just too early to be putting down a marker here in July on how we think about 2024, and do promise to come back here later in the year to update and then, of course, as always, provide our guide in January for 2024. Operator: We'll take our next question from Puneet Souda of Leerink Partners. Please go ahead. Rainer Blair: Good morning, Puneet. Puneet Souda: Yes, hi. Good morning, Rainer and Matt, thanks for taking the questions. So first one, on China, beyond the comments you made and the 50% expectation down for the rest of the year, orders being down. I'm wondering if there is anything fundamental in terms of the shift on the product portfolio? We heard one of your bioprocess peers talk about competition on the less technology-heavy products. Wondering if you're seeing any of that and any share shift there that is also happening in this market? Rainer Blair: Puneet, our point of view on China is that the continued deterioration is far more about demand and funding than it is about local competition. The local competition has always been there. No question during the pandemic local competition became more relevant as lead times extended. And where we do see that local competition, it tends to be more for local China for China therapeutics than for products that find global applications. So for us, this is really a topic at the margin. And the real story here is that the funding environment as well as the stocking situation in China requires further mediation here in the second half, and that's exactly what we're doing in order to get as much of this as possible behind us in 2023. Puneet Souda: Okay. That's super helpful. And then one on capital deployment, if I may. How are you thinking about capital deployment now with EAS spend and the backdrop of somewhat of a rather weak end market in the near term? I know historically, you've pursued leading assets that are usually gross margin accretive, wondering if any of that has changed and if you think services has gained more significance in your framework for capital deployment now? Thank you. Rainer Blair: Sure. So Puneet, for us, M&A require - continues to be the primary form of capital deployment. And we do that when we see the end market, the asset and the model, the financial model aligns with our requirements. And that is relevant for any end market or adjacency that we might be thinking about, and we maintain a consistent perspective there. Now having said that, you've likely noted that our balance sheet is in great shape and we are in a market that provides opportunity, and we continue, as we always do, to work our M&A funnels to find those opportunities where all three lights flip to green, if you will, market company as well as the business model. Puneet Souda: Got it. Okay. Thank you guys. Rainer Blair: Thank you. Operator: We'll take our next question from Rachel Vatnsdal with JPMorgan. Please go ahead. Rainer Blair: Good morning, Rachel. Rachel Vatnsdal: Good morning, thank you for taking the questions. So first off, just kind of shifting gears over to the Life Sciences business, that was much better than expected this quarter. And notably, instrument strength was pretty strong, with high single-digit growth at SCIEX and 10% growth at Leica? So could you just walk us through really what drove that strength in instruments this quarter? And then some of your peers have called out a meaningful slowdown when it comes to CapEx spending in some of the customer segments for instrumentation. So, are you seeing any of those same dynamics? And how are you thinking about instrument growth for the full year? Rainer Blair: Thanks for the question, Rachel. So as you suggested, our Q2 Life Sciences business finished, as expected, up mid-single digits. And we've been talking about a normalization process for some time now, and that's also what we're expecting going forward. And I'll come back to that in a minute. But if we look at the strength here of mid-single digits, geographically, the U.S. was okay. I would exclude large pharma there and sort of small biotech where that's relevant. The EU, Europe was solid. And we also saw a good level of activity in China on the remainder of the stimulus for the subsidized loan program that China had in place. Now from an end market perspective, we see the academic end market holding up well. We see the applied markets, if you think of food testing, environmental testing, with some strength. But as I mentioned, we see biotech and pharma softer. If you think about this from a product category perspective, we think lower and less-expensive, perhaps even operating cost versus capital expenditure type of equipment, is impacted more severely than the higher end, which we still see holding up, and you saw that with Leica Microsystems and SCIEX as well. So as we think about the second half here, we continue to be cautious for a couple of reasons. We mentioned that China market, while strong, the subsidies there have come sunset at the end of the first quarter. and we'll have to see how that continues. There's no news on that front going forward. And so we think really the second half ends up being flat for Life Science instrumentation, putting the full year at low single digits as the normalization process, if you will, from what has been over several years now, very elevated growth rate continues. Matt McGrew: And Rachel, that's sort of on the back, too, if you think about the bookings here. I mean our book-to-bill in Life Sciences in the Instruments businesses was a little bit less than one in the quarter. So I think to Rainer's point, we look at the first half year in China for Life Sciences instruments, that was largely a backlog play from stimulus. And as we sort of head into the second half, I think our assumption is that we're going to be flat in those businesses as China stimulus backlog kind of rolls off and not have the impact that it had in the first half. And we just don't see a real step up here in stimulus in the second half. Rachel Vatnsdal: Great. Thank you for all the color there. Maybe just a follow-up on pricing. Can you walk us through how much was pricing and impact for instruments in the quarter? And what are you assuming for pricing on instruments in the back half of the year? And then as a follow-up, just pricing on bioprocessing. For bioprocessing, it sounds like you took 350 basis points of pricing in 1Q. What was that pricing contribution in 2Q? And then how are you thinking about pricing evolving within bioprocessing in the back half of this year and also just heading into '24? Last year, you guys took 400 basis points of price in bioprocessing. Obviously, the industry is pretty dynamic right now. So any color there would be appreciated. Thank you. Rainer Blair: Rachel, overall, our pricing for the quarter, so overall banner, was up 350 basis points with all four segments remaining above the historical average. And specifically, you were talking about Life Science Instruments, there we saw in the quarter 450 basis points of price. Now as we look forward for the remainder of 2023, we do see that and expect that to moderate somewhat. But we do expect to be above our historical averages here for the remainder of the year. And as it relates to 2024, I think we'll come back to you on that as we get closer here to the end of the year. Operator: Okay. We'll take our final question from Luke Sergott with Barclays. Please go ahead. Rainer Blair: Good morning, Luke. Luke Sergott: Good morning. Thanks for squeezing me in here. This is just kind of - to follow up on Danny Brennan. I know you guys aren't going to give '24 given how everything is dynamic. But I think that the destocking is what it is, right? That's rolling off. That shouldn't be '24, but that sets up an easy comp. And so I was just trying to figure out right now what the industry demand is to support the type of overall industry growth. So typically, the market growth - the bioprocessing market is like high double to mid-teens, and that's in a normalized market. And so how quickly do you think we can get back to that level? And then on top of that, you have the comps, which would take you over that. Or do you think that there are going to be in a period of subdued contraction from a demand and capacity perspective, given COVID rolling off, you have China, the headwinds there? There are several other - the lack of biotech funding. So give us a sense what that normalized market looks like for you guys right now. Matt McGrew: Luke, I mean, I just keep coming back to - it's July. We're in a pretty dynamic market, where we are within the industry. And like you said, there's a number of dynamics that still need to be worked through. We mentioned some of them destocking, China, the fact that we're sort of actively managing through this inventory situation. I know why people are trying to get to a '24 number, but I just think it's too early. We just need to get through the second half. We'll get a better sense of how those dynamics play out, which will give us a lot better sense as we get later in the year and into what we normally guide and what that looks like. I just think that there's so many in parts right now that, unfortunately, I think we just do - we really do need to get through the second half here. Luke Sergott: Yes, I understand. And then, I guess, like can you quantify how much destocking was in the quarter for you guys and kind of year-to-date? Matt McGrew: I mean I could probably come up with some numbers, but it would be imprecise. I think the reality is that it's going to be very customer dependent. It's going to be manufacturing site depending. It's going to be drug dependent. I mean we don't really spend a lot of time trying to figure out how much was destocking as much as spending time with the customers in a pretty proactive way these days, to understand what's on hand, what's the real need that you've got site by site by site so that we can help them manage down to an inventory level they are comfortable with. Some are comfortable with getting down where they were pre-pandemic, some are trying to get below that and some are trying to be above that, actually. So it's not one number that we manage that we're really doing on a kind of neutral basis. I don't know that I've got a great answer for a number, but we are actively managing it and probably a way that was more active than we have been. Luke Sergott: Got you. All right. Fair enough. Thank you. Operator: Thank you. And I will now turn the call back over to Mr. John Bedford for closing remarks. John Bedford: Thanks, everyone, for joining us today. We'll be around the rest of the day and week for follow-up questions. Thanks. Operator: Thank you. And this does conclude today's program. Thank you for your participation. You may disconnect at any time.

Operator: My name is Ashley and I will be your conference facilitator this morning. At this time, I would like to welcome everyone to Danaher Corporation’s First Quarter 2023 Earnings Results Conference Call. [Operator Instructions] I will now turn the call over to Mr. John Bedford, Vice President of Investor Relations. Mr. Bedford, you may begin your conference. John Bedford: Thank you, Ashley. Good morning, everyone and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer; and Matt McGrew, our Executive Vice President and Chief Financial Officer. I’d like to point out that our earnings release, the slide presentation supplementing today’s call and the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call are all available on the Investors section of our website, www.danaher.com, under the heading Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events and Presentations and will remain archived until our next quarterly call. A replay of this call will also be available until May 9, 2023. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. The supplemental materials describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company-specific financial metrics relate to the first quarter of 2023 and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties including those set forth in our SEC filings and actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date that they are made and we do not assume any obligation to update any forward-looking statements, except as required by law. With that, I’d like to turn the call over to Rainer. Rainer Blair: Thank you, John and good morning everyone. We appreciate you joining us on the call today. So we had a good start to the year. Our team successfully navigated a dynamic operating environment to deliver better-than-expected revenue earnings and cash flow. We are especially pleased with the strength of our base business, which grew 6% in the first quarter. Now across the portfolio, the quarter progressed largely as we anticipated. Our global supply chain has stabilized and component availability improved sequentially. Strong price realization helped offset inflationary pressures and disciplined cost management enabled us to continue our cadence of growth investments. So we believe these investments paired with DBS-driven execution contributed to market share gains in many of our businesses again this quarter. A prime example of the power of DBS and our commitment to continuous improvement at all levels of Danaher as the CEO Kaizen, which we kicked off 2 weeks ago. With this event, our most senior leaders are joining over 700 associates at 10 of our operating companies. We are focusing on the most significant opportunities for lasting competitive advantage across our businesses, including further reducing our best-in-class lead times at Aldevron and improving resin and filter throughput in the biotechnology group. The CEO Kaizen is just another terrific opportunity for our teams to come together and drive transformative change through DBS. In fact, once we wrap up here today, I will be joining the Cytiva team at our resin facility in Uppsala, Sweden, to contribute to these efforts. Now our results also reflect the unique positioning of Danaher’s portfolio. We just have an exceptional group of leading franchises serving attractive end markets with durable secular growth drivers. Additionally, the strength of our balance sheet provides us with the optionality to enhance our businesses both organically and through disciplined M&A. This powerful combination of our talented team, leading portfolio and strong financial position, differentiates Danaher and reinforces our sustainable long-term competitive advantage. So with that, let’s turn to our first quarter results. Sales were $7.2 billion in the first quarter and core revenue declined 4%. So as I mentioned earlier, we delivered 6% core revenue growth in our base business with three of our four reporting segments, up high single-digits or better in the quarter. COVID-19 revenues were a headwind of approximately 10%. Geographically, core revenues in developed markets declined mid single-digits, primarily as a result of lower COVID-19 revenues. High-growth markets were up low single-digits, with a low single-digit decline in China. Results in China were better than expected driven by a quicker-than-anticipated recovery in diagnostic testing and a more favorable life science research funding environment. We expect these positive trends to continue as we move through the year. Our gross profit margin for the first quarter was 61%. Our operating margin of 25% was down 330 basis points primarily due to the impact of lower COVID volume in our biotechnology and diagnostics businesses. Adjusted diluted net earnings per common share were $2.36 and we generated $1.7 billion of free cash flow in the quarter. Now, let’s take a closer look at our results across the portfolio and give you some color on what we are seeing in our end markets today. Reported revenue in our Biotechnology segment declined 16% and core revenue was down 13%. In bioprocessing, base business core revenue growth was in line with our expectations of low single-digits in the first quarter. Flying demand at our large customers, were primarily responsible for therapies in commercial production and later-stage clinical trials remains robust and they are steadily working through inventory they built during the pandemic. Based on our most recent customer conversations, we now expect the inventory normalization process to continue through the second half of the year. During the quarter, we also saw softer demand globally at many of our emerging biotech customers as more pronounced pressures on liquidity and funding accelerated their efforts to conserve capital leading to project delays and cancellations. In consideration of these factors, we anticipate second quarter and full year base business core growth in bioprocessing will be largely consistent with the first quarter. That said these short-term pandemic-related dislocations have not changed our assessment of the tremendous opportunity ahead in the biologics market and for our leading bioprocessing franchise. The number of biologic and genomic medicines in development is meaningfully higher than at any point in history. In fact, there are thousands of biologic therapies currently under development, including more than 750 in Phase 3 clinical trials. With these therapies, our customers are making significant strides in addressing diseases that affect large segments of the population. For example, GLP-1s have become blockbuster treatment for obesity and diabetes and antibody drug conjugates are meaningfully improving treatment outcomes for many types of cancer. And we are also seeing promising developments in the field of Alzheimer’s research where several novel monoclonal antibodies are nearing regulatory approval. Now to best support our customers as they pursue these life-changing breakthroughs, our biotechnology team has been accelerating investments and innovation over the last several years. Cytiva recently introduced the MabSelect VL, a new resin and ligand for bispecific antibodies and antibody fragments. The MabSelect VL’s best-in-class finding capacity and improved alkaline stability makes industrial scale purification more efficient, helping customers improve yields, decrease bioburden and reduced manufacturing costs. This is just one of the innovative solutions from our biotechnology team’s project pipeline aimed at helping customers bring more life-saving therapies to market faster and more efficiently. Turning to our Life Sciences segment, reported revenue grew 2.5% and core revenue was up 5%, including high single-digit growth in our base business. Our Life Sciences instruments businesses collectively delivered mid single-digit core revenue growth, consistent with our expectations. Funding levels and sales funnels remained healthy across most major geographies and end markets. The demand for our advanced solutions remains strong, notably for recent innovations such as the SCIEX ZenoTOF7600 and Leica Microsystems, Mica. Our genomics consumables business had another quarter of double-digit base business core revenue growth. Robust demand for plasmids, proteins and gene writing and editing solutions was partially offset by declines in next-generation sequencing and basic research. During the quarter, Aldevron brought together capabilities from Cytiva and Precision Nanosystems to create a streamlined offering for the development, production and release of mRNA drug substance and drug product. This new offering will be available to customers later this year and is a great example of how we are integrating solutions from across Danaher to create differentiated offerings and deliver even greater value to our customers. Moving to our Diagnostics segment, reported revenue declined 10% and core revenue declined 7.5% with double-digit growth in our base business, offset by lower COVID-related respiratory testing volumes at CES. Our clinical diagnostics businesses collectively delivered mid single-digit core revenue growth and saw healthy market volumes globally. At Radiometer, strong demand for blood gas testing in China drove double-digit core growth. Leica Biosystems grew mid single-digits, led by advanced staining and digital pathology. Strength across developed markets and China enabled Beckman Coulter Diagnostics to exceed expectations and deliver mid single-digit core growth. On Molecular Diagnostics, broad-based strength across Cepheid’s test menu drove more than 30% core growth in non-respiratory testing. As our customers look for ways to capitalize on the workflow advantages, the Cepheid GeneXpert delivered for COVID-related testing, they are increasingly adding additional assays from our market leading test menu. This increased menu utilization by our customers helped drive more than 50% growth in infectious disease testing in the first quarter. We also saw good momentum for our recently introduced vaginitis panel, the Xpert Xpress MVP, which contributed to nearly 30% growth in sexual health testing. In COVID-related respiratory testing, customers continued transitioning high throughput testing to the point of care and consolidating their point-of-care PCO testing platforms onto the GeneXpert. As a result, Cepheid’s respiratory testing revenue of approximately $550 million in the quarter exceeded our expectation of $450 million. This was driven both by higher volumes and the preference for our 4-in-1 test for COVID-19, Flu A and B and RSV. We continue to expect approximately $30 million respiratory tests and $1.2 billion of revenue for the full year. Cepheid’s strong results are a testament to the significant value and unique combination of fast, accurate lab quality results and the best-in-class workflow provides clinicians. Given Cepheid’s leading global installed base and growing adoption of the broadest molecular diagnostic test menu on the market, we are well positioned to help customers meet their testing needs and continue gaining market share for years to come. Moving to our Environmental & Applied Solutions segment, reported revenue grew 5% and core revenue was up 6.5%. Water quality core revenue grew low double-digits and product identification was up low single-digits. In water quality, Hach delivered their fourth consecutive quarter of double-digit growth, and ChemTreat was up double-digits for the eighth consecutive quarter. Strength was broad-based across both equipment and consumables, particularly in our industrial end markets. This performance highlights the resilience of the high-margin recurring revenue business model that make up water quality and the significant value our solutions provide in support of customers’ day-to-day mission-critical water operations. At Product Identification, marking and coding was essentially flat, while packaging and color management was up low single-digits. Videojet was up low single-digits despite a difficult year-over-year comparison as the business grew high single-digits in Q1 last year. Our growth investments are driving a healthy cadence of new product innovation at Videojet. In fact, in March, the team released the 15 ADC continuous inkjet printer the industry’s first dedicated soft pigmented solution. The 15 ADC uses soft pigmented inks to print codes with consistent quality, excellent contrast and strong durability to avoid degradation and fading during production runs, helping customers reduce production downtime. So this is the first of several new product introductions Videojet has planned for the year and is a great example of how our teams are bringing impactful solutions to our customers. In February, we announced that our environmental and applied segment will be named Veralto, when it is launched as a stand-alone company and that it will be headquartered in Waltham, Massachusetts. This is an exciting milestone for the team, and they are making considerable progress towards becoming a separately traded public company. And we remain on track for our fourth quarter 2023 separation and look forward to sharing more details in the coming months. So now let’s briefly look ahead to our expectations for the second quarter and the full year. In the second quarter, we expect core revenue in our base business to be up mid-single digits. We also expect total core revenue to decline high single digits as a result of lower demand for COVID-19 testing, vaccine and therapeutics. Additionally, we expect a second quarter adjusted operating profit margin of approximately 26% and which reflects efforts to adjust our cost structure and capacity in response to COVID transitioning to an endemic state, particularly within our Diagnostics and Biotechnology businesses. Now turning to the full year 2023. Despite the near-term and temporary challenges within bioprocessing, we anticipate mid-single-digit core growth in our base business. We also expect total core revenue to decline high single digits for the year as a result of lower demand for COVID-19 testing vaccines and therapeutics. Additionally, we expect a full year adjusted operating profit margin of approximately 30% and which reflects the previously mentioned efforts to adjust our cost structure and capacity in response to COVID-19 transitioning to an endemic state. So to wrap up. We’re pleased with our strong first quarter results. Our well-rounded performance is a testament to the durability and balanced positioning of our portfolio and our team’s commitment to leading and executing with the Danaher Business System. While the transition of COVID-19 from a pandemic to an endemic state is causing near-term disruption, there is no doubt that the past 3 years have helped shake Danaher into a better, stronger company. We meaningfully changed the scale of our bioprocessing business, with the addition of Cytiva and the creation of the biotechnology group and Cepheid’s expanded installed base that significantly improved their competitive advantage. We’ve also increased our cadence of innovation and strategically deployed capital through M&A, including the acquisition of Aldevron to accelerate our future growth trajectory. So there is a bright future ahead for Danaher, the combination of our talented team, differentiated portfolio of businesses and strong balance sheet, all powered by the Danaher Business System provide us with a strong foundation to create value for many years to come. And so with that, I’ll turn the call back over to John. John Bedford: Thank you, Rainer. That concludes our formal comments. Ashley, we are now ready for questions. Operator: [Operator Instructions] We will take our first question from Michael Ryskin with Bank of America. Please go ahead. John Bedford: Good morning, Michael. Michael Ryskin: Good morning. Thanks for taking the questions, guys. First, I want to start on the bioprocessing inventory challenges. You’ve been dealing with this issue for almost a full year now and you’ve had to revise your outlook lower for fiscal year ‘23 a number of times. Why is the visibility there into inventory is so challenging? And how do you know that this latest view of plus low single digits for the year is the right view and there is not further cuts going down the road? Rainer Blair: Thanks, Michael. Look, undoubtedly, visibility has been choppy here on the way up as COVID tailwinds fueled our growth. And now as we try to drive the soft landing visibility has been impacted. And I would tell you that normally, we have visibility of 9 to 12 months that’s very solid. But it is so that in the last quarters, that has been probably more like 3 to 6 months related to a number of factors. And let me lay some of those factors out for you here, Michael. Sort of starting with the first quarter. So in the first quarter, our base business in bioprocessing grew about 100 basis points, 1%. And if you unpack the growth there, large accounts that are responsible for commercial production and later-stage clinical trials are growing at mid-single digits. So they are burning off inventory. And I’ll come back to that. And then you have sort of emerging biotech and those companies that are more involved in discovery and earlier-stage clinical trial phases, which represent about 20% to 30% of our business and they are down mid-teens. So overall, this is what gets us to this sort of low single-digit growth view for the year. Now let me come back to the larger accounts here for just a second. We see in large biopharma that, in fact, the demand is there, the inventory is burning off, but it is slower than expected. And the reason for that is that we’re starting to see larger pharma companies as well as larger CDMOs replan and recalibrate their own production plans as they start to conserve working capital and cash. And we saw some of that also back in 2016. So we’re seeing larger customers also look at their own finished goods, if you will, inventories and starting to adjust their production plans in order to bring those down as well. So if you then transition over to, again, emerging biotech, so the companies that are working more in discovery and earlier stage. There – we have been observing funding headwinds for, call it, since the second half of the prior year. But those funding headwinds became significantly more pronounced here in the first quarter. And so we’re seeing these accounts looking to conserve cash by prioritizing projects. We see that with lower OpEx and CapEx expenditures, also see a number of layoffs happening in that particular segment. And that’s not just happening in the U.S. We also see that happening in China. And so we’re assuming that barring any other sort of wildcards here, that it doesn’t get significantly worse, but that this continues to play out for the remainder of the year. Matt McGrew: Mike, it’s Matt. Maybe we could give you a little bit of kind of context around January to kind of the guide in January to where we ended up. I know Rainer sort of mentioned it, but I think it’s important to kind of think about it in the two buckets. So we’ve got the larger biotech – or the larger customers that we’ve got, most of their stuff is sort of Phase 3 clinical on market. In January, our assumption was that, that was going to be kind of, call it, high single-digit growth from those customers. So 70% or so of our customers kind of growing at 7%, 8%. And then kind of the remaining 20%, 25% of the customers, which we’re sort of referring to as emerging biotech, not everything in there is probably technically emerging, but that other piece of the customers in January, we thought that was going to kind of be about low double digits to kind of low teens growth. And you add all that up and that would have been the high single-digit growth that we thought we were going to see here for the year. Like Rainer said, what we saw in Q1 was just, frankly, not that supportive of that kind of ramp as we think about what we would need to build in Q1 and Q2 be able to hit those types of numbers for the full year. And so if you think about what we’re looking at and seeing now in April, those large customers instead of being 7%, 8%, they have been growing still nicely, but more mid-single digits, right? And the big change here is this emerging biotech, another 20%, 25%. And instead of being up kind of mid-teens, they are actually down mid-teens and that comes back to everything that Rainer talked about with people really reprioritizing projects, conserving cash. That happened both in the U.S. and we saw it in China as well. And I think I’d probably say it we saw modest headwinds as we entered the year. And those are just more pronounced now as we move through the quarter. So just as a – to maybe put some numbers to what Reiner said. Rainer Blair: And then just to reiterate, to support a significant second half ramp, we would start to see that activity level increasing now and in the second quarter. And we’re just not seeing it to the degree that would support that. Michael Ryskin: Okay. Thanks. And on the emerging biotech, just really hope to clarify. Are you seeing that softness in bioprocessing specifically or across in the life sciences segment as well? And then maybe I could transition that to a question on the instrument. You saw 5% growth or mid-single-digit growth in instruments in the first quarter. What’s your expectation for the rest of the year? Any particular pockets of weakness or strength you can call out? Matt McGrew: Yes, I’ll comment on the bioprocessing broadly speaking, and maybe let Rainer talk about what we’re seeing in tools. The answer is yes. We’re seeing it in both. I would say that we have definitely seen the emerging biotech funding pressures here in the bioprocessing area. I would say we’re seeing it in the tool space or in life sciences as well. I would say that is a lesser portion, obviously, of our revenue. So it’s not quite as big of an impact. But are we seeing – yes, I would say we are seeing customers in those spaces conserving cash on both CapEx and OpEx. Michael Ryskin: Okay, thanks. Rainer Blair: So Michael, more generally on the Life Sciences here to your first question. So if we look at Q1, the life sciences based business finished as we thought at high single digits after low double-digit average growth over the last 3 years. And we’ve talked previously about the expected normalization of those growth rates here after having seen that elevated growth for the last 3 years. So that’s right within our expectations. If you look at that geographically, we saw strength in Western Europe and China, in fact, was up double digits on the back of some stimulus there. and North America was a little bit softer. And if you look at Life Sciences, from an end market perspective, large pharma R&D spending levels are still very quite healthy but they are starting to moderate just given the higher comps. And now just connecting the dots to Matt’s commentary here, emerging biotech is impacted by the current funding environment, and we see smaller purchases, if you will, so rather than buying six, four instruments and in other places, really impacted in the less differentiated segments, let’s say. So we are seeing in our own business is not as exposed to that segment in life sciences but we do see it at the margin. And then life science research and academic is holding up well globally for life sciences. So we continue to believe our growth rates moderate to the historical levels in ‘23, and that’s what our value reflects. And that’s not a change to any previous expectations. Michael Ryskin: Okay, thanks. I will get back in the queue. Rainer Blair: Thank you. Operator: Thank you. We will take our next question from Vijay Kumar with Evercore ISI. Please go ahead. Vijay Kumar: Hey, guys. Thanks for taking my question. And congrats on… Rainer Blair: Hi, Vijay. Vijay Kumar: Hi, Rainer. And congrats on a good start to the year. I guess, just a high-level question on the guidance here, Rainer. All of us are looking at – if I go back 2 months ago, we were assuming back half – perhaps normalization in the industry. And given your comments here on emerging small biotech, that’s where it changes. Is this guidance now be risk because we’re assuming bioprocessing in line with Q1. Are we confident that Q1 was a low point for the year? So just give us some color on the thought process behind the guidance here? I mean, is this now dearest from a back half perspective? Rainer Blair: So Vijay, I mean, we’re basing our view on the second half. Also based on what we’re seeing in the current market environment, which we just talked about as well as our order book. And like I said a minute ago, in order to support a higher guide for the second half, we need to see different activity levels here in Q1 and Q2. And that’s not the case for two reasons. One, the emerging biotech is quite significantly softer, down mid-teens as we just talked about. And then I would say on the margin, larger accounts are taking a little bit more time to burn through inventory, although they are doing that nicely. And those factors together have us believe unless there is any other sort of significant market disruption that the year will play out much as the first quarter has. Vijay Kumar: Understood. And then just one on – Cepheid was a bright spot here, 30% growth. I think you made some comments about infectious disease, different testing test being really strong. Can you give us some color on the customers are seeing this ramp? Are these new customers that bought a Cepheid system during the pandemic, I am just trying to think how sustainable is that 30% growth in sort of related one here on M&A, some chatter about Danaher on the M&A side. Would Danaher be interested in getting into services? Or how should – maybe just remind us on the M&A lens and criteria that Danaher processes that pipeline? Rainer Blair: Sure. So Vijay, on the Cepheid question, we’re really seeing a broad-based usage of the infectious disease menu. In fact, our broader menu in general, both at our existing installed base that’s been there for some time as well as with our newer customers as they start transitioning that COVID testing capacity that they have to take full advantage of that menu. So we see that 30% here as a good marker of how people appreciate the workflow advantages, the ease of use and the accuracy of the platform. Remember, we’re seeing two factors here. One, we see test transitioning from high throughput environment into the point of care on the one hand. And on the other hand, we see expanded usage of our testing menu. Matt McGrew: Yes, Vijay, maybe just to kind of – to put a real-life example to that, I think. So if you think about what we’re seeing, we’ve got customers – existing customers today, we kind of goes both ways, right? So we’ve got existing customers today that, for example, will use Group A Strep. And those customers now sort of are also moving everything over to the four to one or to COVID as well. And then you’ve got the other way, which is that sort of installed base going from kind of 2x growth here over the last 3 years. You have got people who have used these systems now for many, many years. And what they are doing is they are starting to bring in new menu and that new menu has been around infectious disease first, which is primarily right now, were largely Group A Strep. So, you are kind of having somebody who used the box throughout COVID testing, using it on for COVID four-and-one, and stand-alone. And now they are bringing on Group A Strep as well. And so that’s what we always kind of talked about with COVID being an anchor assay as we go forward, larger installed base, anchor assay, now you move into infectious disease, there will be other opportunities to pull in sort of other menu as we go forward. But that’s exactly the type of thing we are seeing play out here. And that’s – it is encouraging. Early days yet, I mean and also still some lower base these are off of lower numbers. But as we go forward, we have sort of talked about next year and the longer term. That’s why I think that installed base growth was so important because we have got the menu, be able to pull through and then the additions of the new menu are going to be only helpful on that larger installed base. Rainer Blair: So, on M&A, Vijay, obviously we don’t comment on chatter. But what I would tell you is we really like the way we are positioned. Our balance sheet is in great shape. Valuations continue to moderate, perhaps the one or the other Board is not quite there yet, but we do see more realism in the many discussions that we have across the board as always. And specifically, as we have said in the past should our customers tag on this and on our help and services, that’s not something that we are going to ignore. But once again, that’s just one of several opportunities. I think the most important thing to remember is that we are not going to deviate from our disciplined approach. It’s got to be the right end market. It’s got to be the right target and the model has to work. And it’s when those three lights flip green that we execute. Matt McGrew: Yes. I think Vijay, too, I mean I think as we sit here, I think it’s – not saying this is ‘08, ‘09, but having a balance sheet that we have got right now and being able to kind of be flexible, I think is important in times like these because as Rainer said, when the market company valuation all line up, we are ready to go. But we do need to see all three of those. And as things get a little choppier here as they might get a little job here, I think I really like how we are kind of set up here from a balance sheet perspective as well. Vijay Kumar: Thanks Matt. Rainer Blair: Thanks Vijay. Operator: We will take our next question from Scott Davis with Melius Research. Please go ahead. Rainer Blair: Good morning Scott. Scott Davis: Hey. Good morning guys. Rainer, Matt, and John good morning. Rainer, you have said – you made a reference in your prepared remarks to kind of incremental cost-out. I think I probably asked this question last quarter. But can you give us a little bit of granularity or color at least on what you are talking about? Is there a structural cost-out? Is it more of just taking out some of that – some of those kind of temporary costs that came in during COVID that now are unnecessary, or is there an actual attempt to go after some of the structural costs that perhaps you couldn’t have gone after before? Matt McGrew: Yes. Scott, maybe I will take a crack at it. Yes, like we talked about in the prepared remarks, we are sort of going from an adjusted OP – adjusted operating margins of 31 in our previous guide to 30. And I think the way to think about it is sort of twofold, half of that is just the volume, right. Like – and most of that is all of that activities in bioprocessing. But the other half is capacity reduction costs. I would say that that’s going to be two places. It’s going to be in biotechnology and then as importantly, and more importantly, probably at Cepheid. Like you said, we have always sort of known we were going to get to an inflection point here at some point where we were sort of making the call that we have moved into an endemic phase. And once we moved into an endemic phase, we were going to need to bring some of the capacity that we have been running at it Cepheid down. And so I think just as a reminder, in Q4 last year, we did 20 million respiratory tests, and that was only three months ago. But I think you have really seen a tail off here as we have entered into the last couple of months. And I think our team is pretty clear that we are now kind of entering a new phase of volumes that we will need. And so we are going to be getting after some of that. And I think what does that look like, it’s talking about closing and consolidating some of the plants that we have got. Some of those were frankly put up quickly in locations that were not ideal for the longer term because we are trying to meet the needs of a pandemic. So, we are going to get after a couple of those sites. We are going to reduce some of the headcount and then we are going to go after indirect and fixed overhead costs as well, reducing shifts, etcetera, etcetera. So, those are the types of things we are going to be going after here. That’s largely going to be in the second quarter and third quarter is when you are going to see the costs sort of roll through. So, you will see that in the margin in those two quarters and then to sort of pop back a little bit. And then maybe just to give you some sense of what’s that look like in – once we are done with that kind of in Q4 and as we head into ‘24, Scott, I think Cepheid in 2019 was a 20% to 25% OP business, during the peak of the pandemic here, it probably was north of 45%. And after we get through what we are going to do in the next couple of quarters, like I have said on the capacity reduction side, starting kind of in Q4 and heading into ‘24, they are going to be 35% to 40% margin, right. So, meaningfully up from where we were given the volumes that we have now, it’s a much bigger business, but not quite at the peak pandemic where I was getting a lot of volume leverage, but that gives you a sense of what we are going after, what we are trying to do and where we end up on the other side. Scott Davis: That’s super helpful, Matt. Can you guys just remind us what – where is your – the size of their installed base in Cepheid today versus pre-COVID, I know I have – I am sure having the note somewhere, but to just make a little easier on...? Matt McGrew: Yes. 2x, Scott, we are about 50,000 today. Started probably like 2019. Scott Davis: Alright. Perfect. I will pass it on. Thank you, guys. Good luck this year. Matt McGrew: Yes. Rainer Blair: Thanks Scott. Operator: We will take our next question from Dan Brennan with TD Cowen. Please go ahead. Rainer Blair: Good morning Dan. Dan Brennan: Great. Thank you. Good morning. Thanks for the questions guys. Maybe just one on bioprocess to start out, just – could you help us think through like what is the magnitude of that destock drag that’s kind of baked in guidance? I know you gave a lot of color earlier in the Q&A. And then related to that, or emerging bio, it’s certainly a bigger group than we thought as a percentage of that segment. Any color kind of what that grew in ‘22 and kind of the quick math to get to low single for the year? If it’s 30% of revenues, I guess you are assuming some improvement there because if we kept it down 15%, I don’t think we would get to up low single for the year. Matt McGrew: Yes. So, maybe – again, maybe the way to think about it, Dan, is that sort of the larger customers that are really where we are seeing the inventory drag. That was sort of – we initially thought we would see that in the high-single digits, call it, 7%, 8%, and that’s a little bit lower now, call it, 6% and change. And so I think the inventory destocking is flowing through in the larger customers, and you are seeing it at a slightly lower growth rate that we saw in Q1 and we are expecting them to see for the full year. So, that’s how I would sort of frame what the inventory destocking is. The rest is really, like I talked about earlier, emerging biotech and sort of the other 25% of our customers, we thought that, that would be a low teens type growth rate here for the year. Combine that with the 8% that we thought we would see in the larger, that’s how we get to high-single digits. That low teens is actually negative mid-teens, right, with all the pressures we talked about. So, I would say that we are just sort of assuming that that type of growth rate for the rest of the year for that customer base and that we are going to have – the larger customers will be more in the mid-single digit like I talked about. That’s what we are kind of assuming for the year. And based entirely on what we saw in Q1, the order book in Q1 sort of not being supportive, frankly, of, in our minds, at least, the ability with the limited visibility we have or more limited visibility, just not supportive of being able to say that we think we can get back to high-single digits. I think you asked a question of what those customers were there last year. That entire business largely was up in line with what we saw last year, which is as you remember, mid to high 20s. So, kind of you sort of look at mid to high-20s with that group of folks, now they are sort of down mid-teens, still a very solid growth on a 2-year basis, but it is what we are seeing right now. Dan Brennan: Got it. And then thanks Matt. And then may be on the margins and the earnings, so we are coming out somewhere kind of $925 million, $930 million for the year. Just wondering if you guys – you kind of put the pieces together. Is that kind of the rates of code? And given the cost actions you are taking this year, does that set yourself up in ‘24 for like potentially higher than normal operating leverage, depending on what the top line comes in at? Matt McGrew: Yes. No, I mean I think if you are going through the full year, the math is what it is at around 30% adjusted OP margins, I think sort of that takes care of itself. As far as what we are going to look like as we sort of get to the other side of this. I mean I talked a little bit about Cepheid kind of was 20% to 25% pre-pandemic, peaked up at 45% and 35% to 40%. I mean I think if you sort of use that frame plus what we have in diagnostics, that sort of gets you where we think roughly the margin profile will be. Biotech is probably the other one after we get through some of these costs. The same math there was biotech was, call it, high 30s prior to the pandemic. Again, it peaked at around, call it, 45% and change. And after we sort of get through what I think we are going to do there, they are probably going to be more like low-40s. So, again better than they were pre-pandemic given the fact that they are a bigger business. But those two pieces, I think you can slide into what ‘24 might look like. And then life sciences, that should be kind of plus or minus where we have been here. That has not been a margin that’s moved around quite a bit. A little bit of COVID stuff as we had in ‘22 and ‘21, but I think you can kind of get a sense of what the margins are there. So, maybe it’s just a high-level framework, you are probably high-30s, low-40s with Cepheid, you can kind of assume some other stuff for the diagnostics, biotech, probably low-40s than what we are seeing in LS. But we will obviously sort of come back to that later, still pretty early in ‘23, but just to give you a very high level view. Dan Brennan: Great. Thanks Matt. Thanks guys. Rainer Blair: Thanks Dan. Operator: And we will take our next question from Jack Meehan with Nephron. Please go ahead. Rainer Blair: Good morning Jack. Jack Meehan: Thanks. Good morning. Another question on bioprocessing. Can you share what was your total order rate in the quarter? Is there any color you can just share around how the quarter played out? Have things weakened throughout the quarter. Just curious about how things are trending. Rainer Blair: Sure, Jack. So, once again, first quarter, our orders were down modestly sequentially. So, relative to the fourth quarter, down modestly. But year-over-year, they declined 20%, okay. And so what we have been seeing is the inventory burn down that we have been talking about Matt and myself, is occurring, and we see that in our order book here for the first quarter. And then again, we have laid out why we believe that the current activity level supports sort of a similar progression of the quarters here throughout the year as we had in the first quarter. Jack Meehan: Great. Thank you. And then just as a follow-up, I was curious what impact, if any, did you see from the banking crisis, which took place in the quarter. I understand you probably didn’t have any direct exposure to that, but how are your customers reacting sort of across the business? Rainer Blair: Right. So, direct exposure was not material in any sense of the word. As it relates to the impact on our businesses, particularly in bioprocessing, to a much lesser extent in life sciences, we do think that, that provides that additional inflection point here in the first quarter for liquidity tightening up and that prioritization that we are seeing here in the emerging biotech segment, call it emerging biotech, and once again, those companies working on earlier stage projects. So, that’s where we have seen a more pronounced conservation of cash and that plays out in OpEx, CapEx and you can – and we talked about how that played out with mid-teens contraction as opposed to sort of a mid-teens growth versus prior periods. Jack Meehan: Thank you, Rainer. Rainer Blair: Thanks Jack. Operator: And we will take our final question from Rachel Vatnsdal with JPMorgan. Please go ahead. Rainer Blair: Good morning Rachel. Rachel Vatnsdal: Great. Good morning. Thank you for taking the questions you guys. And so I appreciate all the comments that you have given on emerging biotech softness in bioprocessing with that customer set really down mid-teens in 1Q. So first, just a clarifying question. Did you say that you expect that emerging biotech to remain at mid-teen declines for the year? And then kind of shifting more longer term, can you talk about your assumptions around when you expect emerging biotech to return to growth? And at what point can this funding issue really pressure the long-term growth outlook for the bioprocessing market? Rainer Blair: So, just to confirm on the topic of emerging biotech, our assumption is and our guide reflects that the activity level in emerging biotech stays for the remainder of the year as it played out in the first quarter. So, we are not assuming any change there including that it doesn’t get significantly worse. Now, as it relates to how that segment progresses here, that’s from today’s point of view, hard to predict. We need to see where capital markets go, liquidity availability and yes, a stabilization and return to some degree of normality in the banking sector. But for the visibility that we have today, we are not expecting an improvement in that segment for the remainder of the year. Rachel Vatnsdal: Got it. And then maybe a few questions on China here. So, one of your peers recently signed China bioprocessing, I think you also mentioned that in one of your answers to earlier question. So, can you talk about how did bioprocessing performed during 1Q in China? And can you just give us some context of how big China is for bioprocessing for Danaher? Looking forward, how are those orders trending within China, specifically around some of the localized manufacturers. And then last question, just stepping back, you previously had guided to low-single digit growth for China for the year. 1Q was well above expectations. So, what’s the total co-outlook for China? Thanks. Rainer Blair: Well, as it relates to bioprocessing in China, we have had a very good and strong business there in China for years. And it helped quite significantly in China in order to build the capacity for vaccines and for other biologics. And what we see today, much like we have seen in the U.S. is that the Emerging Biotech segment, which is an important part of China’s efforts to build a local biopharma industry is also impacted by capital constraints. So, we have seen that play out in China as well. And in fact, that’s what is the primary impact on our China numbers here. In the first quarter, which on the whole were better than expected, primarily because of the patient volumes and the diagnostic businesses being stronger. Now, as it relates to the full year in China, we expect our full year in China to be up low-single digits for Danaher overall based on the market recovery, exiting COVID as well as, if you will, a normalization of the activity level in bioprocessing. Rachel Vatnsdal: Great. Thank you. Rainer Blair: Thank you, Rachel. Operator: Thank you. And I will turn it over to the speakers for closing remarks. John Bedford: Thank you, Ashley. I appreciate everyone for joining us on the call today. We will be around all day and rest of the week for the follow-ups. Rainer Blair: Thanks everyone. Operator: Thank you. This does conclude today’s program. Thank you for your participation. You may disconnect at any time.

Operator: Good day, everyone. My name is Todd, and I will be your conference facilitator this morning. At this time, I would like to welcome everyone to Danaher Corporation's Fourth Quarter 2022 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there’ll be a question-and-answer session. [Operator Instructions]. I will now turn the call over to Mr. John Bedford, Vice President of Investor Relations. Mr. Bedford, you may begin your conference. John Bedford: Good morning, everyone, and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer; and Matt McGrew, our Executive Vice President and Chief Financial Officer. I'd like to point out that our earnings release, the slide presentation supplementing today's call and the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call are all available on the Investors section of our website, www.danaher.com, under the heading Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events and Presentations and will remain archived until our next quarterly call. A replay of this call will also be available until February 7, 2023. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. Supplemental materials describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company specific financial metrics refer to results from continuing operations and relate to the fourth quarter of 2022 and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices, which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, and actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date that they are made, and we do not assume any obligation to update any forward-looking statements, except as required by law. With that, I'd like to turn the call over to Rainer. Rainer Blair: Thank you, John, and good morning to all of you. We appreciate you joining us on the call today. Our terrific fourth quarter results rounded out another great year for Danaher. Broad-based strength across the portfolio drove nearly 10% core growth, strong earnings growth and free cash flow generation. We're particularly pleased with the performance of our base business, which grew high single digits for the year and has now grown high single digits or better each of the last 10 quarters. Our well-rounded results this year would not have been possible without the hard work and dedication of our more than 80,000 associates. The team overcame global supply chain challenges, logistics delays, COVID-driven lockdowns and inflationary pressures to reliably support our customers. We believe the DBS-driven execution, coupled with our proactive growth investments over the last several years contributed to meaningful market share gains in many of our businesses. Now looking to 2023 and beyond, we see a bright future ahead for Danaher. Our portfolio is made up of leading franchises of durable business models and attractive end markets that benefit from outstanding long-term secular growth drivers. We're well positioned financially with our strong free cash flow generation and balance sheet capacity, allowing us to actively pursue strategic M&A opportunities. So this unique combination of leading businesses and financial strength all powered by the Danaher Business System differentiates us and reinforces our sustainable long-term competitive advantage. So with that, let's take a closer look at our full year 2022 financial results. For the full year, we delivered nearly 10% core revenue and adjusted earnings per share growth, including 8% core revenue growth in our base business. We also expanded our core operating margins by 60 basis points and generated $7.4 billion of free cash flow. Our free cash flow to net income conversion ratio exceeded 100% for the 31st consecutive year. Our strong financial results allowed us to continue our cadence of high impact growth investments throughout the year. In fact, our investments in research and development of more than $1.7 billion in 2022 enabled us to accelerate innovation across Danaher. New products such as the Leica Microsystems, Beacon, Leica Biosystems automated advanced staining platform, Bond Prime; and Hach's Headquarter series portable meters are helping improve both human health and the environment, while enhancing our growth trajectory. Our capital expenditures of over $1 billion included substantial investments to expand production capacity in our bioprocessing and genomics businesses. These investments have been critical to support current customer demand but they're equally important to support the long-term growth opportunities and security of supply in these markets. With several of our customers' biologic therapies progressing through the regulatory approval process, we anticipate the size of our bioprocessing and genomics businesses to increase meaningfully here in the coming years. Now let's turn to our fourth quarter results in more detail. Sales were $8.4 billion, and we delivered 7.5% core revenue growth. Our base business core revenue growth was also 7.5% as our core revenue growth contribution from COVID-19 testing was neutral year-over-year. Geographically, core revenue growth in both North America and Western Europe was approximately 10%. We saw healthy demand across our major end markets with customer activity and funding levels largely consistent with the third quarter. High-growth markets core revenue was up slightly. China grew low single digits, driven by robust demand in our life sciences instruments and acute care diagnostic businesses. However, the reopening efforts associated with the ending of zero COVID policies and subsequent increase in COVID-19 infections resulted in reduced patients and testing volumes in our clinical diagnostics business. We anticipate lower testing volumes to continue through the first quarter of 2023 before gradually recovering through the balance of the year. Our gross profit margin for the fourth quarter was 59%, and our operating margin of 27.4% was up 100 basis points, including 105 basis points of core operating margin expansion. This strong margin performance was enabled by the disciplined cost management, productivity measures and price actions our teams implemented to help offset the impact of inflationary pressures across our business. While there continue to be supply chain disruptions and cost pressures, we saw a modest improvement in component availability again this year and this quarter. Adjusted diluted net earnings per common share of $2.87 was up 6.5% versus last year, and we also generated $2.2 billion of free cash flow in the quarter. Now before we get into the details of the quarter, I'd like to point out some updates we've made in our financial reporting. Due to changes in our organization resulting from the significant growth of our Life Sciences segment over the past several years, we have separated our former Life Science segment into two new reporting segments. Cytiva and Pall Life Sciences, which include bioprocessing and our discovery and medical businesses are now reported as the biotechnology segment. Our new life sciences segment is comprised of the remainder of the businesses in our former life sciences segment. The Diagnostics and Environmental & Applied Solutions segments are unchanged. Importantly, today's discussion reflects these changes. So now let's take a look at our fourth quarter results across the portfolio and give you some color on what we're seeing in our end markets today. Reported revenue in our Biotechnology segment declined 1% and core revenue was up 4%. In bioprocessing, robust customer activity across monoclonal antibodies, cell and gene therapies and antibody drug conjugates, or ADCs, drove another quarter of more than 20% growth in non-COVID revenue. Total core growth in bioprocessing was mid-single digits for the fourth quarter as customers continue to scale back their COVID-19 vaccine and therapeutic programs. For the full year 2022, core revenue growth in bioprocessing was high single digits, which included non-COVID revenue growth of more than 20%. Looking to 2023, we expect customers to further reduce their COVID-19-related programs. Vaccination and booster rates have been significantly lower than initially anticipated and the availability of alternative therapeutics has reduced the need for monoclonal antibody-based treatment. In light of these dynamics, we now anticipate COVID-19-related vaccine and therapeutic revenue will be approximately $150 million for the full year of 2023, down from approximately $800 million in 2022 and lower than our previous expectation of $500 million. Our non-COVID business has averaged more than 20% growth over the past two years. Given these elevated growth rates, we spent the past several weeks speaking with our customers to better understand their planning assumptions for 2023. And based on these discussions, we anticipate non-COVID bioprocessing core growth will be high single digits for the full year 2023. This includes low single-digit core growth in the first quarter as customers repurpose inventory purchased for COVID-19 vaccine and therapeutic programs to non-COVID projects. Now there is a bright future ahead for the biologics market and our leading bioprocessing business. The number of biologic and genomic-based therapies in development and production continues to rise, and we expect to see significant industry-wide investments in research, development and production capacity well into the future. With our differentiated portfolio, which is the broadest and deepest in the industry across upstream and downstream applications, our best-in-class scientific services and extensive global reach, we're exceptionally well positioned to support our customers as they undertake this complex life-changing work. Now moving to our Life Sciences segment. Reported revenue grew 8%, and core revenue was up 13%. Strength was broad-based across instruments and consumables with all major businesses delivering high single-digit or better core revenue growth. Our Life Sciences instrument businesses collectively delivered double-digit base business core revenue growth, led by Leica Microsystems and Beckman Coulter Life Sciences. Demand remains solid across our major geographies and end markets, and we're seeing good momentum in our opportunity funnels as we begin the new year. Our genomics consumables businesses had another quarter of double-digit core revenue growth, driven by strong demand for our plasmas, RNA and gene lighting and editing solutions. During the quarter, IDT strengthened its next-generation sequencing portfolio with the acquisition of Archer DX NGS assays. These assays are foundational in researching novel cancer fusions and bring new capabilities, including an enhanced bioinformatics platform to expand IDT's suite of sequencing solutions. Now moving to our Diagnostics segment. Reported revenue was up 3% and core revenue grew 7.5%, led by mid-teens growth at Cepheid. Radiometer grew double digits, led primarily by demand for blood gas testing in China. Leica Biosystems was also up double digits with growth across all major product lines. In our digital pathology business, we saw record placements of the GT 450, Leica's best-in-class digital pathology slide scanner, as customers are increasingly realizing the operational and clinical benefits of digitization. In Molecular Diagnostics, core revenue across Cepheid's non-respiratory chest menu grew more than 20% led by infectious disease testing, sexual health and hospital-acquired infections. The acceleration in growth this quarter was due in part to increased adoption of Cepheid's non-respiratory test menu across our nearly 50,000 instruments installed base, which has doubled since 2020. During the quarter, Cepheid expanded their competitively advantaged test menu with the launch of the Xpert Express MVP. The Express MVP rapidly diagnoses three distinct health conditions that cause overlapping vaginitis symptoms in women using a single sample. This addition to our sexual health portfolio enables physicians to quickly diagnose the patient's infection and prescribe a targeted treatment regimen, reducing the need for multiple office visits. Now this is a great example of how bringing accurate, easy-to-use molecular testing closer to patients is improving health care outcomes and driving long-term growth at Cepheid. In respiratory testing, global PCR testing volumes continued to moderate. The demand for Cepheid's point-of-care PCR testing remained robust. Cepheid's respiratory testing revenue of approximately $1.1 billion in the fourth quarter significantly exceeded our expectation of approximately $375 million. The respiratory season got off to an earlier-than-anticipated start with a high prevalence of circulating respiratory viruses, notably COVID-19, flu and RSV leading to both higher volume and a preference for our 4-in-1 test for COVID-19, Flu A&B and RSV. Now based on discussions with our customers, we believe COVID-19 will enter an endemic disease state in 2023, and as a result, expect to ship 30 million respiratory tests and generate $1.2 billion of revenue for the full year. As hospitals and health systems begin planning for their endemic testing needs, we're increasingly seeing customers consolidate their point-of-care PCR testing platforms on to Cepheid's GeneXpert. Our customers' preference for the GeneXpert for both respiratory and non-respiratory testing is a result of the significant value of the unique combination of fast, accurate lab quality results and a best-in-class workflow provide clinicians. The combination of these advantages, the broadest molecular diagnostic test menu on the market and our leading global installed base creates significant opportunities ahead for Cepheid's point-of-care solutions. Moving to our Environmental & Applied Solutions segment. Reported revenue grew 1% and core revenue was up 5.5%. Water quality core revenue growth was high single digits and product identification was flat. At product identification, marking and coding was up slightly while packaging and color management was down low single digits. Core revenue at Videojet was up slightly due in part to a difficult year-over-year comparison as the business grew low double digits in Q4 last year. In December, Pantone announced Viva Magenta as the 2023 Color of the Year. The color of the year and the billions of media impressions it generates solidifies Pantone's iconic brand and was one of the drivers of high single-digit full year core revenue growth in X-Rite [ph] color standards business in 2022. In water quality, Hach delivered their third consecutive quarter of double-digit growth. ChemTreat was also up double digits in the fourth quarter, capping its 54th consecutive year of growth, a remarkable accomplishment and a testament to the team's best-in-class execution and their commitment to continuous improvement. During the quarter, demand for analytical chemistries and consumables remained strong across municipal and industrial end markets, but we did see a slight moderation of larger project activity at Trojan. Throughout the year, our teams and EAS did a great job leveraging the Danaher Business System to overcome supply chain challenges and manage inflationary pressures. They were at the forefront of identifying potential constraints and quickly deployed DBS tools like daily management to work with suppliers and ensure production part availability. They also use visual project management to rapidly reengineer products and to reduce our reliance on hard-to-source electronic components. Also, strong price performance helped the team expand operating profit margins by more than 80 basis points in 2022, while continuing their cadence of growth investments. We believe this outstanding execution paired with our proactive growth investments drove market share gains and enhanced our long-term competitive advantage in both product identification and water quality. So with that color on what we're seeing in our businesses and end markets, let's now look ahead to our expectations for the first quarter and the full year. Beginning with the first quarter of 2023, we are updating our base business core revenue growth definition to exclude the impact of COVID-19-related testing and the impact of COVID-19 vaccine and therapeutic revenue. In the first quarter, we expect core revenue growth in our base business to be up mid-single digits. We also expect total core revenue growth to decline mid-single digits as a result of lower demand for COVID-19 testing, vaccines and therapeutics. Additionally, we expect the first quarter adjusted operating profit margin of approximately 30%. Now for the full year 2023. We expect high single-digit core growth in our base business. And we also expect total core revenue growth to decline mid-single digits for the year as a result of lower demand for COVID-19 testing, vaccines and therapeutics. Additionally, we expect the full year adjusted operating profit margin of approximately 31%. So to wrap up, 2022 was another terrific year for Danaher. Our team successfully executed through a challenging environment to reliably support our customers and deliver outstanding financial results, all while investing for the future. As we look ahead, we believe the combination of our talented team, differentiated portfolio of businesses and strong balance sheet, all powered by the Danaher Business System, position Danaher to outperform well into the future. So with that, I'll turn the call back over to John. John Bedford: Thanks, Rainer. That concludes our formal comments. Todd, we're now ready to open up the line for questions. Operator: [Operator Instructions] We'll take our first question from Derik De Bruin with Bank of America. Derik De Bruin: Hey, good morning. And thank you for taking my question. So, a couple of questions to start. I guess the first one would be just on the inventory situation and sort of like how we should think about that working through and just sort of your expectations on the bioprocessing front on the non-COVID bioprocessing. Just some sense of timing. Is this a 1Q, 2Q phenomenon? Just general thoughts there. Rainer Blair: Derik, as it relates to the inventory situation, let's think about sort of our Q1 guide here as a starting point and the context for that. We expect for our overall guide to have a base business growth of mid-single digits, and we expect COVID testing, including now vaccine and therapeutics to have high single-digit and low double-digit headwind, giving us that decline of mid-single digits in the first quarter. Now let me come back to the base business because, of course, that's where your question resides. And once more, we have to be clear that we have now excluded vaccine and therapeutic revenues from the base business, right? So our mid-single-digit base business is down from the comparable low double-digit core growth we saw in Q4 and most of 2022. And that's due mainly to bioprocessing, ex-COVID, and I want to dig into that a little bit, but also because we're expecting lower patient volumes here in China as zero COVID policies are ended. So that's what's happening there in that base business in Q1. Now if we look, and we dig in a little bit deeper into bioprocessing, we anticipate that our non-COVID bioprocessing business will be low single digits, and that's really for two reasons. One, we're coming off of 30% growth in Q1 of 2022. But we're also working through the inventory pockets that we spoke about that was related primarily to COVID programs. And we do expect Q1 to be an inflection point there that we work through the majority of that in Q1 and then after that, continue to see improvement. Derik De Bruin: Got it. Okay. And I have to ask the obligatory analytical instrumentation demand, SCIEX demand coming off of some really strong growth this year. What are your sort of expectations on instruments? And I would expect you would see some slowdown in the back half of the year is embedded in your numbers. Rainer Blair: I think that reflects our perspective. We saw low double-digit plus core growth in our instrument businesses here in 2022 and believe that we definitely took share there. And frankly our funnels are still very strong here going into the new year. But as we look to the total year, we would expect that low double-digit plus to moderate to the more normal growth of mid-single digit plus certainly towards the back end of the year. Derik De Bruin: And what's embedded in sort of like an overall pricing expectation just to get your sense of... Rainer Blair: So as you know, in the fourth quarter on pricing, Derik, we came in over 400 basis points, with the teams really executing very well. And that represents roughly where we were for all of 2022. As we look forward then into 2023, we continue to expect some cost pressures there, and we'll look to have pricing of 200 to 300 basis points, probably closer to 300 basis points. Matthew McGrew: Derik, that's for total Danaher, not just instruments. Derik De Bruin: Yes. Okay. Got it. Got it. Like that. Okay. I think I'll get back in the queue. I've got some other ones where I need to digest some stuff, but thank you. I'll get back in the queue. Thanks. Rainer Blair: Thanks, Derik. Operator: Our next question comes from Rachel Vatnsdal with JPMorgan. Rainer Blair: Good morning, Rachel. Rachel Vatnsdal: Good morning. So first up, just on China. So you mentioned that you're expecting some softness there. Can you just dig a little bit deeper, how much of the softness on that 1Q is going to be pressured there? And then what do you expect for China in total for the year as well? Thanks. Rainer Blair: So as I mentioned, China is -- and of course, everybody knows coming out of the zero COVID lockdowns and that's affecting patient volumes here. And we saw that in December, in particular, and have taken that as an indicator for how we should think about the first quarter in China, which we expect to be down around high single digits here in the first quarter, but then moderating as the Chinese population gets through sort of the various infection waves that are expected. And we expect that patient volumes then improve throughout the year and are expecting low single digits for the full year in China. Rachel Vatnsdal: Great. That's helpful. And then just a follow-up. You mentioned that Western Europe was 10% core during 4Q. Can you just talk about your expectations for Europe with this year? Have you seen any softness related to any budget constraints on your conversations with customers there? Thanks. Rainer Blair: I would tell you, if we think about non-COVID, we continue to see good demand in Western Europe. We have seen the cycle time of deals. So that period of time between lead, capture and capturing the order extending here in the fourth quarter, and we would expect that to continue. As you think about Western Europe, including COVID headwinds, we would expect that to be flat here in the first quarter and then up low single digits. But once again, that includes some COVID headwinds. Rachel Vatnsdal: Helpful. And then final question for me, just around bioprocessing. Can you just walk us through kind of the order book and how book-to-bill has trended within bioprocessing given some of the puts and takes there getting us to that low single digits in the first quarter and rounding out the year at high single digits on the non-COVID side? Rainer Blair: Sure. So as it relates to orders, and I talked about this in the past as well as book-to-bill. In fact, we don't really look at book-to-bill for the bioprocessing business because it may not be the best way, and we don't think it is the best way to really understand the underlying health of the business, particularly given the extended lead times that we had here in the prior period. So we've been looking at orders really on a two to three-year horizon to take out the lumpiness as well as the extended lead times. And over the last three years, really, both orders and revenues have grown at a mid-single teens average rate. Now from a current trend perspective, in the fourth quarter, our order rate improved by over 500 basis points sequentially but was still down mid-teens, which was as expected as customers continue to adjust for our shorter lead times. Now to be clear, our full year 2023 guide anticipates Q1 being the low point at low single digits for the bioprocessing non-COVID core growth. And that also takes account to any inventories that might be with some of our COVID program customers, which are now being repurposed. We're working with those customers to repurpose that inventory. So whatever these order dynamics are revenue forecast for bioprocessing non-COVID in first quarter low single digits, we expect that to be the low point of the inventory work off or burn off and then move forward to what is high single-digit bioprocessing, non-COVID core growth for the full year. Rachel Vatnsdal: Helpful. Thank you. Operator: Our next question comes from Vijay Kumar with Evercore ISI. Vijay Kumar: Good morning, Rainer. Thanks for taking my question. So I had my first question on bioprocessing here just about clarify some of these numbers here. I think a couple of months ago, Rainer, I think the expectation was for base bioprocessing, anywhere from high singles to teens. When you look at the high single, if it's at the low end of the range, did anything change? And when I think about that cadence throughout the year, I think first half is somewhere in the mid-single digits imply second half and double-digit range. Is there any risk out there in the back half? What gives you the visibility in the back half activation [ph] bioprocessing? Rainer Blair: Thanks, Vijay. So as early as the JPMorgan conference, we did talk about the bioprocessing growth range being from high single digits to mid-teens range. And as I mentioned then, and I'll confirm now, we have spent the last several weeks talking to our customers to understand their planning assumptions for the year. And the clear message is the underlying demand remains robust and unchanged. So we continue to see monoclonal antibodies, cell therapy and gene therapy activity continue to be strong, and we're even seeing more work on mRNA on the back of its success with COVID vaccine. So while the demand is remaining solid, customers are actually not anticipating a step-up in activity. So activity remains strong and as we've seen in prior quarters, but they're not anticipating a step-up versus what we've seen here in the last couple of years. And so as you look at the two, three, even four year stacks here, we've seen mid-teens growth CAGRs for bioprocessing non-COVID. So coming back then, if you take our high single-digit bioprocessing non-COVID full year guide on the back of an approximately 30% comp from 2022, it's right in the mid-teens range, both on a two and a three-year basis. So we think that's especially strong in light of the fact that in Q1, we do expect to burn off some inventory and will start low single digits. And in fact, if we had assumed the mid-teens to the higher part of the range for '23, that actually would have implied an acceleration of demand to over 20% on a two-year stack. And frankly, that's just not supported by our customer discussions. So as we think about burning off these inventories, you asked about the confidence in the later part of the year, and that confidence is based on our discussions with customers, the backlog that we have, the continued order activity that we see and that has improved over prior periods. And so we feel very good about the high single digits non-COVID bioprocessing growth for 2023. Matthew McGrew: And maybe, Vijay, just to give you a bit -- sorry, yes. Just to give you kind of numbers to it because I know we've talked about this a lot recently, just so that we kind of repeated here. If you look at bioprocessing, ex-COVID growth, right, over the last four years, inclusive of our '23 guide, you have 7%, 8% type growth in 2020 as we are sort of moving into and away from the core bioprocessing doing more COVID work. And then in 2021 and 2022, we grew, ex-COVID, 20% plus in each of those two years. And so now this year in '23, the high single-digit guide, it's sort of kind of an inverse barbell, if you will. But if you look at kind of high single digits to start in '20, high single digits as we get through the last of COVID in '23 with 20% and 25% growth in the middle in '21 and '22, that's sort of the period that we're looking back and over because I don't think you can look at just any one period or quarter, given everything Rainer said that happened in '21 and '22 with the extended lead times and what was happening with COVID. So just so that we're all on the same page on sort of the numbers historically on how we have sort of arrived at that mid-teens growth rate in discussion with our customers who say, Hey, look, if you look back over the last three, four years, my demand is about the same. My order pattern is going to be slightly different, but my end demand is about the same. Vijay Kumar: That's helpful color and perspective. And then one last question here for me, perhaps, Matt, this is you. The high single-digit guide for bioprocessing implies like the non-bioprocessing that's nearly 75% of Danaher revenues. That's also up high singles. That's a strong number. Again, any confidence here? I think there's been some concerns around capital order trends. So what's the order book shaping up for instruments? And margins here, 31% that's stepped down from Q4. Given that high single digits will resume and the pricing commentary, your volume leverage and pricing contribution should be pretty strong. So maybe if you could just comment on the non-bioprocessing high single-digit assumptions and margin assumptions? Matthew McGrew: Let me take margins. And I think we sort of covered the high-single digits bit, but maybe Rainer can kind of wrap it up on bioprocessing. Vijay Kumar: I'm sorry, non-bioprocessing, non-bioprocessing. Matthew McGrew: Non-bioprocessing. I'm sorry. So COVID? Vijay Kumar: No, no. Ex-bioprocessing, the other EAS diagnostics. I mean... Matthew McGrew: I'm sorry. I'm sorry. Okay. Everything outside of bioprocessing. Got you. So let me start with the margin question first because I think that's one that's topical here, too. So if you think about margins for the full year, and then I can kind of touch on '21 or Q1 as well. When you look at margins, we're talking about kind of 31% adjusted margin. And that's going to be a bit lower than we were in '23 on the margin, if you will, with the biggest factor going to be the value of leverage, like you alluded to there. We're going to lose, call it, $3.2 billion of COVID headwinds in the year, $700 million from the vaccines and therapeutics as we go from, call it, $800 million to a little over $150 million or a little under $150 million. And then we're going to have $2.5 billion of testing follow-up as we think we get to a more endemic state on Cepheid testing. So the margin profile on that stuff on the headwinds is basically the fleet average. I'd say that probably falls through at 40%. So kind of in line with our normal fall through, but that volume is pretty meaningful at $3.2 billion as you talked about. So we will offset some of that. High single-digit core and base business is going to be $1.7 billion in change, let's call it, falling through 35% to 40%, but just not enough to fully compensate what's happening with our COVID headwinds here. So I think you combine that the volume with sort of an overall macro backdrop, Vijay, that I still want to kind of be prudent here from a planning perspective as we head into the year. I want to see how the inflation of the supply chain kind of progresses through the year. China is still a bit of an unknown on how that bounces back. And I kind of I like to start the year with cost structure that's in the right place, and let's see how some of these things sort of play out. And as the year goes on, we'll obviously try to do better, but that's sort of how I'm kind of thinking about the margin for the year. And really, the only difference between Q1 and Q2 from 31% for the full year -- I'm sorry, in Q1, is FX in the first quarter. That's it. We'll have a $225 million FX headwind in Q1. And so, I would say that the same drivers, if you will, for the full year are for Q1. Vijay Kumar: That’s helpful. Rainer Blair: And then Vijay, just coming back to your question regarding the base business without Biotechnology growth here for 2023. We talked about Life Sciences instruments going from the low double digits or to the mid-single-digit plus here as we expect that to moderate during the course of the year. But in our Life Science businesses, we also have our genomics businesses, which are growing at double digits. So when you look at our under the new definition, Life Sciences business, so that would be the instrument businesses and genomics businesses, we expect high single-digit growth for the year. As it relates to our Diagnostics business, without COVID testing, we also expect high single-digit growth there, if you think about the growth in Leica Biosystems, Radiometer and as patient volumes normalize, supported also by solid growth at Beckman diagnostics, once again without COVID testing high single digits. And then as it relates to EAS, we would expect that now to normalize after having had just banner growth here in the last couple of years to be more the low to mid-single-digit growth, probably skewed more to mid-single digits for the year. Vijay Kumar: That’s extremely helpful, Rainer. Thank you, guys. Operator: Our next question comes from Scott Davis with Melius Research. Scott Davis: Hey, good morning, guys. Lots of detail already discussed here, so I'll try to go back to a little bigger picture. What assumptions are you guys using for kind of labor and material inflation for 2023? I assume this is mitigated a little bit from the high labor inflation you've had the last couple of years, but curious on your view there? Matthew McGrew: Yes, Scott. I think when I think about price cost, kind of back to that 200 to 300 basis points of price, we have been positive on price/cost the last, I guess, year here and probably a little bit more. So I think we -- that guide of 200 to 300 basis points would keep us at positive price cost. We are seeing -- I would say that we're seeing some things from a supply chain pressure come down. Freight lanes is probably the one the biggest one that I can think of from a cost perspective. I would tell you that other parts of the supply chain, we probably are seeing availability be better but not necessarily seeing costs come down yet. So I think we're sort of still in that 200 to 300 basis points of price to help offset what is still out there, but there are early signs of things may be turning. Scott Davis: Is that price, Matt, is that pretty much already out in the system? Or is that still to be... Matthew McGrew: No. No, it's out. Yes, it's already out there. If we need to if we need to -- we can go for more as we've done here, Scott, and you saw that as we built through the year this year. Scott Davis: And can you guys remind us what are the remaining steps you need for the EAS separation? Is there any kind of upside to getting that done on the earlier than planned? Matthew McGrew: I'd love to say that it's easy to do, but there's quite a bit of work to get through it, Scott. I mean we've got -- we're still in the early days of the audits, getting the audits done. And after that, we've got a lot of org work, obviously, to do and a whole work stream of people who are working on it. I think we are still very much on track for Q4, the ability to do something here in Q4. Anything earlier, I think just between the audits, the work that remains and the tax ruling, it just takes time for these. So I don't think that's probably a base case scenario for us right now, Scott. I still think Q4 is the way to think about it. Scott Davis: Okay. I’ll pass it on. Thank you, guys and best of luck in '23. Operator: Our next question comes from Dan Brennan with Cowen. Dan Brennan: Great. Good morning, Rainer, good morning, Matt. Thanks for taking my questions here. Maybe first one would just be on China. I know there was a question asked earlier, but just wondering, some peers have commented that obviously, there's a headwind right now as the COVID rates have spiked but that as the year plays out, you could see China actually turned out to be stronger than maybe you were -- than peers were anticipating, excuse me, given the benefits on the economy. So kind of what are you assuming in that low single? Is that -- do you think you need some cushion in there? Or just how do you contemplate China playing out for the year given the change of policy? Rainer Blair: Dan, so -- I mean, the near term, just to recap is, in fact, that we saw, particularly in our Diagnostics business, lower patient volumes related to the hospitals in China being overwhelmed with COVID-infected patients. And we expect that to continue here in the Q1. It's currently the Lunar New Year holiday, where we expect infections to spread here in the next 30 days or so. And then over time, that, that would start waning, reducing. With -- it's kind of unknown as to how many other waves follow that. But we do believe that during the course of the year, especially as it relates to our business, patient volumes start recovering. We've seen this again and again after severe lockdowns of large cities in the previous years. And so we expect that to be pretty resilient. And that's why we end up then with a full year China guide of low single digits. Now could there be upside? Potentially. There's clearly some pent-up demand in the Chinese economy. And it just depends now on how quickly people can get back to work and some normalcy returns to the markets in general. So we think from where we sit today, low single digits for the full year is a good way to think about it. And of course, we'll continue to update as we go through the year here. But it's a good starting point, and there may be some upside should in fact that pent-up demand be released here in 2023. Dan Brennan: Great. And then just on the M&A environment. We've heard some commentary in kind of recent weeks that there seems to be a more willing seller environment, maybe just a reflection of macro and interest rates. So there seems to be maybe more folks coming to the table. How would you characterize obviously, it's impossible to time M&A, but how would you characterize the current environment? And just any color in terms of the outlook, whether it be from private targets or public targets and obviously, I'm sure all the remaining businesses post the EAS spin, EAS and excuse me, are candidates for M&A, but just how would you characterize kind of the interest levels by your business? Thank you. Rainer Blair: So our perspective on M&A remains unchanged here. First of all, our funnels continue to be very active. As you know, our balance sheet, which is now at 1.5 turns is in great shape. We're starting to see in the marketplace some recognition and I'll even say some acceptance of the lower valuation levels that we have now seen for a good period of time. And I would say it is early days, but the environment for M&A continues to improve. And as you know, in the past, when there have been these kind of situations, Danaher has been able to deploy capital in a really value-creating way. And of course, it's our intention to do that here in the future as well. Dan Brennan: Great. Thanks, Rainer, thanks, Matt. Operator: Our next question -- I'm sorry, our last question will come from Patrick Donnelly with Citi. Rainer Blair: Good morning, Patrick. Patrick Donnelly: Good morning, Rainer. Thanks for taking my question. Maybe one on -- back to the Diagnostics business. On Cepheid, can you just talk about the non-COVID piece, what you're hearing customers in terms of utilization, usage, particularly those who bought instruments during COVID? Obviously, you saw the installed base double over a couple of years there. Would love just some perspective in terms of what you're seeing as COVID comes down a bit, respiratory comes down here shortly, what the expectations there are? Rainer Blair: I mean, Patrick, we're very encouraged by what we're seeing. As you mentioned, over 50,000 instruments placed, more than double than we've had; well into the mid-20s in the number of tests. Now as you can imagine here in the fourth quarter and sort of the beginning of the first quarter, our customers have been busy with respiratory testing. No question about that. But we're very encouraged by the fact that even in the fourth quarter, we saw that non-COVID testing growing at over 20%. And I think that's indicative of a couple of things. First of all, we were very strategic in how we thought about placing our instrument in the sense that we really stayed at the point of care with customers that would be able to standardize their larger IDNs around the GeneXpert architecture as well as leverage subsequent to the pandemic, the broad testing menu that we offer, and we continue to see that. Not only do we continue to see that, but we see continued consolidation of point-of-care molecular testing onto the GeneXpert platform, which is likely also another driver for us seeing the continued adoption of the non-respiratory menu. So very positive outlook here. We're encouraged and its still kind of early days. Patrick Donnelly: Okay. That's helpful. And then maybe just a follow-up on Dan's capital deployment one there. Can you just refresh us on kind of how you think about leverage ratios and if the current rate environment changes your perspective at all in terms of what size deal you guys would look at? Matthew McGrew: Yes, Patrick. Yes, I mean from a leverage perspective, we've been, I think, a couple of times in our history, we got to a little bit over four. So -- I mean, I think we've always said we don't have much of an appetite to be rated any lower than we are, for sure. So I think that's sort of the outer boundaries of what kind of think about. But we kind of -- we've been all over the place historically. We don't really have a target of two or three. It just sort of moves around with the deal activity, and we sort of take our time to it. And as far as the current rate environment, I don't think it changes it for us. I think we still think about sort of returns in the same way that we did. We've been doing this a long time. We've been in rate environments like this before. We've been in the rate environments that are worse. Last 10 or 12 years, obviously, had at close to zero was a very different time, but I don't think we have fundamentally any changes here given where we're at. Patrick Donnelly: Alright. Thanks, Matt, thanks, Rainer. Operator: Thank you. At this time, I would like to turn the call back over to John Bedford for any additional or closing remarks. Rainer Blair: Well, first of all, thanks again, everybody. We are thrilled with the way we closed out 2022, and we see a strong 2023 ahead with all the numbers, maybe just a quick recap. For 2023, we see our base business growing at high single digits. And in the first quarter, we see that base business despite the fact that we're working off some biotech and bioprocessing inventories at mid-single digits. Now we've talked at length about COVID testing and vaccine, therapeutic headwinds and I think those are real. But despite those headwinds, we feel great about the important role that we played in the pandemic. Keep in mind, we have reinvested COVID-related cash flows to create lasting annuities with acquisitions and breakthrough innovation while further strengthening our balance sheet. And so, we exit the pandemic much stronger than we entered with higher growth and higher margins in our base business. So with that, we thank you for the call. Wish you all the best for 2023. John Bedford: Thanks, everybody. We're around for follow-ups all day. Thanks. Operator: This concludes today's call. Thank you for your participation. You may disconnect at any time.

Operator: My name is Shelby, and I will be your conference facilitator this morning. At this time, I would like to welcome everyone to Danaher Corporation's Third Quarter 2022 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. [Operator Instructions] I will now turn the call over to Mr. John Bedford, Vice President of Investor Relations. Mr. Bedford, you may begin your conference. John Bedford: Thanks, Shelby. Good morning, everyone, and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer; and Matt McGrew, our Executive Vice President and Chief Financial Officer. I'd like to point out that our earnings release, the slide presentation supplementing today's call, our third quarter Form 10-Q, the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call and additional materials are all available on the Investors section of our website, www.danaher.com, under the heading Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events and Presentations and will remain archived until our next quarterly call. Replay of this call will also be available until November 3, 2022. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. The supplemental materials describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company-specific financial metrics refer to results from continuing operations and relate to the third quarter of 2022, and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, and actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date they are made, and we do not assume any obligation to update any forward-looking statements, except as required by law. With that, I'd like to turn the call over to Rainer. Rainer Blair: Well, thank you, John, and good morning to all of you. We appreciate you joining us on the call today. So let's jump right in. Our positive momentum continued in the third quarter with 10% core revenue growth and solid earnings and cash flow performance. This strength was based across the portfolio with high single-digit or better core growth in all three reporting segments. We're particularly pleased with the consistent performance of our base business which has grown high single digits or better for nine consecutive quarters. Now these well-rounded results were driven by our team's outstanding execution through a challenging operating environment. They've done a terrific job running the Danaher playbook to proactively reduce structural costs while continuing to accelerate high-impact growth investments. We believe our ability to deliver meaningful innovation and reliably serve customers, has contributed to market share gains in many of our businesses. Now during the quarter, we also announced our intention to separate our Environmental & Applied Solutions segment to create a publicly-traded company. This new company, which we'll refer to as EAS for now, will be well positioned in the most attractive areas of the water quality and product identification market. EAS will be comprised of outstanding businesses with strong ESG fundamentals, durable business models and a very attractive financial profile, averaging mid-single-digit core revenue growth over the last five years with 55% recurring revenue today and an adjusted EBITDA margin of approximately 25%. Now as a stand-alone company, EAS will have greater opportunities to meaningfully deploy capital towards M&A. And of course, EAS will have the Danaher Business System as its foundation, along with the commitment to continuous improvement that will support the same outstanding results EAS as a part of Danaher today. Of course, we look forward to sharing more details here in the coming months. As for Danaher, this separation will establish us as a more focused science and technology leader committed to innovation and making a profound impact on human health. We've got a great lineup of leading franchises positioned in highly attractive life sciences and diagnostics end markets, all united by a common set of durable, high recurring revenue business models. We remain focused on strengthening our portfolio and competitive advantage in these areas, and we see tremendous opportunities to continue delivering sustainable long-term performance. So with that, let's turn to our third quarter results in more detail. Sales were $7.7 billion, and we delivered 10% core revenue growth, including 8.5% core growth in our base business. Respiratory testing contributed an additional 150 basis points to core revenue growth in the quarter. Geographically, we continue to see strong demand across the developed markets despite current macroeconomic and geopolitical events. North America's core revenue was up high teens with all three segments delivering double-digit or better core revenue growth. Core revenue in Western Europe grew high single digits with customer activity and funding levels remaining healthy. High gross markets core revenues were up mid-single digits. In China, our teams effectively managed through ongoing COVID-19 headwinds to deliver high single-digit growth in the quarter. Our gross profit margin for the third quarter was 59.8%, and our operating margin was 26.3%. We had 50 basis points of core operating margin expansion, driven in part by disciplined cost management, productivity measures and price actions. The operating environment remains dynamic across our businesses globally, but we experienced fewer supply chain disruptions in the third quarter. Logistics improved as freight costs began to stabilize. We also saw modest improvements in material availability, though certain electronic components remained difficult to procure. Despite these challenges, our teams have done an outstanding job taking proactive measures and leveraging the DBS tool set to minimize the impact of supply chain constraints and inflationary pressures. Adjusted diluted net earnings per common share of $2.50 were up 7% versus last year. We also generated $1.7 billion of free cash flow in the quarter and $5.2 billion year-to-date. So now let's take a look at our results across the portfolio and give you some color on what we're seeing in our end markets today. In our Life Sciences segment, reported revenue grew 4% and core revenue was up 8%. Strength was broad-based with most businesses achieving high single-digit or better core revenue growth. In Bioprocessing, robust activity levels drove over 20% growth in our non-COVID business at Cytiva and Pall Biotech. As expected, our customers continue to transition away from COVID-19 vaccine and therapeutic program and into programs for other modalities. We expect these trends to continue through the fourth quarter resulting in high single-digit core revenue growth in our Bioprocessing business for the full year. In September, we hosted an Investor Day at Cytiva to showcase our Bioprocessing business and highlighted the tremendous long-term growth opportunities we're positioned for in biologics and genomic medicine. We also announced that we're bringing together Cytiva and Pall's Life Sciences as the biotechnology group. The combined portfolio has the broadest offering in the industry with end-to-end solutions across all major therapeutic modalities for monoclonal antibodies to emerging cell, gene and mRNA-based therapies. The biotechnology group will have unmatched global scale with the industry's largest commercial team, allowing us to further extend the reach of our best-in-class customer service. We also believe focused innovation across the joint portfolio will ensure our products and solutions are aligned to best meet customers' needs around quality, yield and cost. With Pall's Life Sciences and Cytiva joining forces, the Biotechnology Group is uniquely positioned to help our customers become more efficient and bring more life-saving therapies to market faster. Moving to our Life Sciences instrument businesses. They collectively delivered double-digit base business core revenue growth, led by SCIEX, Leica Microsystems and Beckman Coulter Life Sciences. Funding levels remains strong globally, and we saw solid customer demand across most major end markets. We continued our strong pace of innovation in life sciences with the introduction of Beckman Coulter's Biomet Ingenious. The Ingenious is a cost-effective easy-to-use sample preparation system that reduces manual transfers and hands-on time and next-gen sequencing library construction. This is a great example of how our investments in innovation are delivering impactful solutions to our customers. Our genomics businesses had another quarter of double-digit core revenue growth, led by strong demand for plasmic, RNA and next-generation sequencing solutions. This quarter, marked Aldevron's first anniversary as part of Danaher, and we couldn't be more pleased with the team's performance. Financially, the results speak for themselves, with more than 30% year-over-year revenue growth since acquisition. The team has done a tremendous job embracing DBS tools and processes to meaningfully reduce lead times and increase capacity. Now this capacity is certainly supporting customers' needs today, but it's equally important to support Aldevron the long-term growth outlook. With a view towards the future, we're excited about the opportunities to collaborate across our genomics businesses and create unique solutions to help our customers accelerate the development and commercialization of mRNA and other nucleic acid-based therapies. Moving to our Diagnostics segment. Reported revenue was up 9.5% and core revenue grew 13.5%, led by nearly 30% core revenue growth at Cepheid. Leica Biosystems grew mid-teens in the quarter, driven by strength in core histology and advanced staining. As customers seek to improve productivity within their labs, we're seeing strong early momentum for Leica innovation, BOND-PRIME, a fully automated advancing platform. Beckman Coulter Diagnostics delivered solid results with mid-single-digit core growth despite ongoing COVID-19 headwinds in China. In Molecular Diagnostics, core revenue across Cepheid's non-respiratory test menu grew approximately 10%, led by double-digit growth in virology and infectious disease testing. In respiratory testing, global PCR volumes have moderated, but demand is still elevated for symptomatic testing at the point of care where Cepheid is the gold standard. Cepheid's respiratory testing revenue of approximately $875 million exceeded our expectations of approximately $325 million. Higher prevalence of circulating respiratory viruses, combined with advanced purchases by customers in anticipation of a more severe respiratory season in the Northern Hemisphere, led to both higher volumes and a preference for our four-in-one test for COVID-19, Flu A, Flu B and RSV. Now we're starting to see our customers consolidate their point-of-care PCR testing platforms onto Cepheid gene expert. The gene expert provides significant value to clinicians with a unique combination of fast, accurate lab quality results and the best-in-class workflow. Customers are also increasingly interested in opportunities for broader utilization of Cepheid's leading testament. Our opportunity funnel for non-respiratory tests has increased significantly this year and we see opportunities to continue gaining market share moving forward. Moving to our Environmental & Applied Solutions segment. Reported revenue grew 5% and core revenue was up 10.5%. Water quality was up mid-teens, and product identification grew low single digits. Electronic identification, marking and coding was up low single digits and packaging and color management grew mid-single digits. Videojet was up low single digits, in part due to a difficult year-over-year comparison as the business grew low double digits in Q3 last year. Now during the quarter, we saw strength in food and beverage as well as the consumer end markets. In Water Quality, ChemTreat and Hach each grew high teens during the third quarter. Demand for analytical chemistries and consumables remain solid across our major end markets, municipal and industrial project activity was broadly consistent with the first half of the year, driving solid equipment growth. Now last week at WesTech, the annual wastewater trade show, the water quality team highlighted several solutions that are improving the efficiency and sustainability of the water treatment process. POC's Ultra Low Range Chlorine Analyzer raises the industry standard to parts per billion chemical detection levels, helping customers extend the membrane life of their treatment systems and reduce maintenance costs. At Trojan, innovative solutions such as Trojan UV Signa and Trojan UV 3000+ reduced environmental impact by treating water with ultraviolet light instead of traditional chemical disinfection method. Every day, over 1 billion people benefit from water treated by Trojan. So these are just a few examples of how our water quality platform is supporting customers day-to-day, mission-critical water operations and making a positive impact on the world. So with that color on what we're seeing in our businesses and end markets, let's now briefly look ahead at expectations for the fourth quarter and the full year. In the fourth quarter, we expect to deliver high single-digit core revenue growth in our base business. We expect a high single to low double-digit core revenue growth headwind from COVID-19 testing, resulting in a core revenue growth being flat to down low single digits in the fourth quarter. Additionally, we expect the fourth quarter adjusted operating profit margin of approximately 30%. Now for the full year 2022, there is no change to our previous guidance of high single-digit core revenue growth in our base business. We now expect high single-digit overall core revenue growth, which is up from our prior expectation of mid-single digits as a result of our strong COVID-19 testing performance in the third quarter. We continue to expect operating profit fall through of approximately 25% for the full year. So to wrap up, we're very pleased with our third quarter results. Our well-rounded performance really is a testament to our team's commitment to innovating and executing in support of our customers. These results also reinforce Danaher's strength and durability. Our differentiated portfolio is well positioned in attractive end markets with long-term secular growth drivers and our business models are resilient with nearly 75% of our revenue today being recurring. So putting it all together, the strength of our portfolio and balance sheet, combined with our talented team and the power of the proactive application of the Danaher Business System, provides an outstanding foundation for delivering sustainable long-term results. So with that, I'll turn it back over to John. John Bedford: Thanks, Rainer. Shelby, that concludes formal comments, and we're now ready for questions here. Operator: [Operator Instructions] We'll take our first question from Derik De Bruin with Bank of America. Derik De Bruin: So, obviously, there's a lot of questions on the Bioprocessing market given one of your competitors in that market was talking about inventory stocking yesterday and which hit the sector. Can you just sort of elaborate on what you're seeing in a little bit more detail on Bioprocessing inventories? Also, we've gotten the question -- you're talking about high single-digit growth for the full year. I think you commented high single to double-digit prior quarter. So can you sort of walk us through the dynamics? Are you still looking for like $1 billion in COVID vaccine for this year? Just a lot more color what's going on given that's going to be -- given how sensitive topic that is? Rainer Blair: Thanks, Derek. And let me get right after that question here. So First of all, let's talk about 2022, and I'll certainly speak about the inventory topic here as well. I think Important to reiterate that overall, we're seeing very strong customer demand in Bioprocessing, and we expect to finish 2022 with high single-digit core growth. Now that splits up in a number of sections. Let's start with the non-COVID Bioprocessing is growing well over 20%, and we continue to see that. And the underlying fundamentals here are the funding is there, the clinical trials continue to progress. The pipeline is strong. We're seeing product move into commercial production from Phase 3 and this has really accelerated across all modalities. So sure, monoclonal antibodies, but yes, we're even seeing cell and gene therapy starting to gain their approvals. Additionally, pricing is above historical levels, which is driving some incremental growth, if you will, on top of the underlying demand in the non-COVID areas. Now as I mentioned in my prepared remarks, customers do continue to move away from COVID-related projects. And I don't think that's a surprise to any of us. That's something that we have been speaking about for some time. And in fact, we can confirm that, that is happening. And I think it also reconciles with what we're seeing in the marketplace. We're seeing that vaccines, our uptake is relatively slow. People are unsure if the current vaccine inventories will address the newest variance. So, there's a bit of uncertainty there, I think, in the public as to where we go from a vaccine perspective. And that reflects naturally in what we have seen here with customers starting to move to the other modalities and drive the projects that they had on hold forward. And for us, that manifests here in for the full year that we see $800 million of COVID revenues in Bioprocessing as opposed to the $1 billion that we had been talking about previously. So, we do see customers moving away from these COVID projects and driving their energies, their efforts, and their financial resources into the other projects, and that helps explain why we see the larger part of the business growing at well over 20%. Now, we are not seeing significant stocking, but we do see pockets of stocking, particularly there where there were large COVID-related, either therapeutic or vaccine programs. So, those players that heavily invested in large programs here those players that, in fact, have higher inventories than is normally the case. Having said that, those large players also are those, which are best positioned to redeploy those inventories to other projects. So, we do expect an inventory burn down with those players here in the coming quarters. So that's the inventory situation there, Derik. And then as it relates to some of the other points here, I think we continue to be -- and I just want to reaffirm the high single-digit growth. We're high single digit here year-to-date, and that's how we see ourselves in Bioprocessing concluding the year. Derik De Bruin: Got it. And the order book, the growth in the order book for Bioprocessing on the non-COVID growth there? Rainer Blair: Sure. Sure, Derik. So for Q3, our orders are down over 20% as expected. And I think that's a number which bears some commentary and context. First of all, we're coming off of order comps that are well in excess of 50% in the prior year. And so it's important to take in order to be able to rationalize these numbers that sometimes are viewed in isolation with the right context. The three-year order stack is over 20%. And I think something that is perhaps not as well known and that bears some conversation is we and many others have meaningfully reduced our lead time. And we've done that through capacity investments. We've done that through productivity investments. We've been able to do that because the supply chain has become more secure. And that's a pretty significant impact on the order placement cadence of our customers. So just to mention an example here, if lead times go from 52 weeks, which has been the case in some product categories in the marketplace, to 12 weeks, customers fundamentally change their order patterns. To give you a sense of that, if a customer wanted to order over time four bioreactors, they would order all four bioreactors at one, if there's a 52-week lead time. But if it's a 12-week lead time, they would order one bioreactor and then follow up with other orders in the future. So what we're seeing right now is really the normalization of the marketplace coming from a red-hot pandemic fuel time of constraint a long lead times for orders ramped up significantly. So order rates ramped up significantly to the supply chain now normalizing and customers adjusting their order cadence. And then yes, of course, the COVID volumes are down. That's expected. We've been talking about that, but we also see the strength of the non-COVID market. And keep in mind, that's a much larger market. And currently, it is growing at well over 20% and there's a backlog to be burned down there because previously COVID had been prioritized. So, the orders were negative to repeat, but not unexpectedly and to be seen in the context of a market that is now readjusting. Matt McGrew: And Derik, you had asked about the non-COVID as well. So if you think about the book-to-bill there in the quarter, it was essentially 1.0. Derik De Bruin: I'm sorry, what? Matt McGrew: Essentially, 1, 1.0. Derik De Bruin: Okay. Got it. And do you still -- and just one final question. Do you still expect to take significant price across the portfolio next year? Rainer Blair: We continue to think about price as a lever for us. And we think that lever is available to us next year as well. We have taken the necessary steps to do that. We're over 400 basis points here in the quarter. That's up from 300 basis points in the first half of the year. We expect the fourth quarter to be similar, and we're going to try and keep that momentum going here in the new year as well. Matt McGrew: And that commentary is overall, Derik, but I don't think that, that would be any different for Bioprocessing numbers. Operator: We'll take our next question from Scott Davis with Melius Research. Scott Davis: Go back a little bit to Cepheid. Are there costs -- I would imagine that cost was not a main focus when you were supplying just extreme demand for quite the last couple of years. But are there costs or is there a playbook where cost can come out of the business and to give you a little bit of a tailwind on the margin side while growth kind of stabilizes? Rainer Blair: So we have, as you suggested, invested significantly in order to drive -- to be able to supply the demand here during the pandemic and watch very carefully where our capacity needs to be, one, to, of course, serve the needs of the pandemic, but also to fuel the growth in our non-COVID testing business. And that continues to grow very well here. You saw the very strong growth we had in COVID, but not to be underestimated, the very nice 10% growth in non-COVID off of a very strong comp in the prior year. So capacity for us is an area of great focus. And we're able to adjust that capacity up and downwards, both in terms of units of capacity, but also cost adds we need. So that is a relatively flexible lever for us, and we'll continue to adjust that lever up or down, both from a capacity perspective as well as a cost perspective as required. Scott Davis: So that's helpful. And let's -- if we can go a little bit bigger picture. Reiner, when you think about the M&A funnel, how wide is the lens. You guys obviously have a lot of big focus asking. Rainer Blair: I would characterize our lens as broad and not limited to cell and gene therapy. We want to have a profound impact on human health, Scott. We've talked about that here now for some time, and that allows us a very large space in order to identify investment opportunities, capital deployment opportunities. And as such, our funnel is wide and deep and very active as always. Operator: We'll take our next question from Vijay Kumar with Evercore ISI. Vijay Kumar: Congratulations on a good steady print here this morning. Just maybe back on the vaccine question. I appreciate all the color. And I know given that we don't have the order numbers, I know what you implied by the lead times coming down, but just maybe to put a finer point on that. Is your outlook for Bioprocessing including vaccines, I think Danaher expected high singles for '23. Has that changed? And I think prior expectation was $0.5 billion of vaccine revenue for next year. Has that changed? Rainer Blair: As you can imagine, we're very focused on delivering the fourth quarter here and the full year. But as we think about '23, and I say that because there's a lot of data points to collect here in the fourth quarter as well in such a dynamic environment. And so as we think about the Bioprocessing business for 2023, we still think that there is room for $500 million of COVID opportunity in order to support the needs of the population, the variance to replenish expired sell-by dates and all the things that you can think about. But of course, that's a number that we watch very closely. More importantly, we think that the non-COVID business, which, of course, will again proportionately be a much larger part of the business, will continue to be very robust. Funding levels are there, the number of modalities that continue to grow in the pipeline is broad, our own project activity in early, mid- and late stage is very strong. So, we do not have a different view on 2023 for Bioprocessing today. But of course, it's a fluid situation, and we continue to watch all of that, and we'll update in January when we speak again. Vijay Kumar: That's helpful, Rainer. And just to sort of clarify, any change here, that sensitivity would be on the vaccine side, but not on the base correct? Derik De Bruin: That's correct. That's the way we see it for sure today. And recall, I mentioned just a minute ago to Derik that in 2022, we were expecting $1 billion of COVID vaccine, therapeutic revenue. We've taken that down to $800 million. It is, of course, offset by the non-COVID business so that we deliver that high single digits here in 2023 for file process. And then looking forward to 2023, we would see that going from $800 million to $500 million. Vijay Kumar: Appreciate the color, Rainer. Matt, One quick one for you. Based on current FX rates, and I think your assumptions on pricing for next year, how should we think about incremental margins for '23? Matt McGrew: For '23? Vijay Kumar: Yes. Matt McGrew: I'm going to go ahead and ask that we get through Q4 here and see where it is. If I had to guess on the FX margins today, I would have been wrong a quarter ago and wrong the quarter before that. So we'll give you a full update on '23. I mean I think you've seen where the margins have gone to. You know that we're going to have an FX headwind next year on the top line of probably, call it, $800 million. So you can probably start there. I would say that the fall-through on that is probably going to be the pretty typical 35% to 40% fall through. And that could be a little bit better or worse depending on where that revenue actually comes in from a mix perspective. But that's probably the best I can give you now, what we know what the rates are. But from a full margin perspective, I'll have to wait until we get a little bit closer and to our guidance in '23. Operator: We'll take our next question from Dan Brennan with Cowen and Company. Dan Brennan: If I may, just Rainer, I know on the last call, and it was already addressed in some of the Bioprocessing information. But when you look more broadly, obviously, you see a lot of mixed signals on the macro. Last call, you had suggested all-in organic mid-single and if you factor in the COVID would roll off low single digits, like any updated thinking on how you think about that? I know you've already addressed the bioprocess side, but just wondering for the other parts of the business, kind of how those are playing out right now? Rainer Blair: Thanks, Dan. So, I think we are still in that ZIP code here, specifically, if we think about our base business without testing, so our business without COVID testing. For 2023, we still see that as mid-single-digit plus. And of course, we're watching. There's a lot of headlines in Western Europe and emerging markets, but to date, our business momentum does not indicate any dramatic slowdown here. And so we think mid-single-digit plus from today's point of view, for the base business is the right way to think about it. And as we go forward here and Matt mentioned this, of course, we're looking at all the data points daily here. And then in January, we'll update you again, but from today's perspective, mid-single-digit plus for the base business. And then as it relates to COVID testing, we do still anticipate that step down, the experts that we speak with, our customers still think that COVID is endemic by the end of '23, beginning of '24 and that will step down there from where we've been here, close to 50 million tests to about 30 million tests or the $1.2 billion roughly of COVID revenue. And then lastly, I'll say, the FX situation is very dynamic. We've been talking about that. And I think Matt covered that as well. Dan Brennan: Great. And then just maybe one more follow-up. I don't want to kind of continue to readdress Bioprocessing, but I'm just wondering, you talked about bringing in lead times dramatically, which suggests that customers aren't going to need to order as far in advance, right, because you've got them down significantly. The peer yesterday talked about inventories at 12 months versus six months and I know you addressed inventories in one of the prior questions. But can you just speak to it just one more comment, and I apologize, is on the base business. I believe you've done a better job from prior conversations about maybe managing and kind of avoiding some double ordering. But just kind of what do you see broadly on the inventory side for your base business? And kind of how does that kind of impact your outlook for the base power production business as we look forward to '23? Rainer Blair: We have been as a result of the pandemic, even closer than traditionally working with our customers to understand their production plans and to ensure that they are not overstocking at the expense of others who would need the product. And what was a time of constraint here for the last, call it, 18, 20 months. So as a result of that, we feel as though we are well positioned to understand the inventory situation. We do regular surveys with our customers. And as a result of that, we don't believe that there is a general overstocking in the market. Having said that, we do think there are pockets where inventories are high. And those are based on customers ultimately changing their production plans, in other words, canceling orders specifically for COVID. And so the large COVID players whether that be for vaccine production or whether that be for therapeutics production, they have larger inventories and those will likely exceed six months of inventory. But I think it's important to note that those large players have many programs, and they're able to redeploy that inventory. In most cases, these are not tailor-made solutions for any specific molecule and can be redirected and burn down using -- in the use for other modalities or other programs at the same modality. So we do see that the market is currently resetting itself from, as I mentioned, a red-hot pandemic era of constraint with long lead times to one where lead times and supply chain disruptions are starting to normalize and then add to that the cancellation of some COVID vaccine or therapeutic plans just because the uptake hasn't been the same or the variants have rendered them not usable for that application. So, we are confident that the strength of this market and its fundamentals, remain very, very strong. Biologics, in all the modalities that we've talked about are very underpenetrated in the market, and it is a matter of getting the penetration up launching the new products in the pipeline that we'll continue to drive the growth of this market despite the reset that we see going on in the supply chain. Operator: We'll take our next question from Dan Leonard with Credit Suisse. Dan Leonard: So my first question, Rainer, I was hoping you could elaborate on trends in China across your different OpCos? I think you said growth was high single digits in total, but flagged some weakness in diagnostic. So just wondering, if you could offer more color by OpCo? Rainer Blair: Sure. So as you just said, just to level set, you see high single-digit growth here in China, both for Q3 and we anticipate a similar level in Q4. And that's really a broad-based strength there. Let me start with Diagnostics where we did see patient volumes impacted by these rolling shutdowns. So this zero COVID policy shutdown that you're likely reading about in China. So that affected patient volumes and think of those as being 90% to 95% of what they were in 2021. And we're working through those and continue to see China as really a very, very strong market. Now lastly, the rest of our business continues to be very, very strong. As you think about life science instruments, as you think about EAS, as you think about the diagnostics, the other diagnostics companies, we continue to see robust demand there. And as patient volumes normalize, which we expect to happen sometime in the next year, we're confident that China continues to be a really strong growth lever here for the future. Matt McGrew: And Dan, just to give you some context, I mean, life sciences and EAS were both up high single digits in the quarter. And Diagnostics, while it did struggle a little on the patient volumes, I mean, it was still up mid-single digits. Dan Leonard: Appreciate that color. And Matt, just a quick follow-up. Can you talk about the impact of higher interest rates on the business? Did that change at all how you're managing the balance sheet or your capital allocation priorities? Matt McGrew: I don't think so. From a balance sheet perspective, we don't really have -- we've got no variable sort of debt, so that doesn't really impact us. I'm trying to think -- I mean, it might have spots here or there from things like currency swaps that we've done and interest income. But I mean those are pretty minor. I mean, I don't think we think of capital allocation in a different way. I mean, I think we still sort of go through the same processes from an M&A perspective and a return perspective and interest has always been a component of that. So I don't think it really changes all that much on how we're thinking about: A, running the business the balance sheet, given where we're at on fixed sort of mostly fixed debt here, and I don't think it really impacts us on our thinking about doing something different than what we do, which is allocate capital towards M&A largely. Operator: We'll take our next question from Luke Sergott with Barclays. Luke Sergott: So I want to talk about the instrument growth. It looks like another big quarter for SCIEX and LMS. This is following a very strong first half of the year. Can you just give us a sense of where all the demand is coming from? Is this like a new facility build-out? Or are these from upgrades? And then how does -- how do think about this from a comp perspective, how you guys are thinking about it for next year? Rainer Blair: Just a level set, our Life Science instrument business grew low double digits in Q3. And as you pointed out, this is really led by Leica Microsystems, SCIEX, Beckman Coulter Life Sciences with some very, very strong results. And I think the strength of that comes from two areas. The first is the end markets continue to be very strong. So especially pharma, CROs and academic research continues to be well funded, and we're seeing strong buying behavior there, especially towards instruments that provide the necessary answers here in the research. And that's really the newest generation of instruments. And that brings me really to the second pillar of the strength that we've seen there, which is our continued innovation performance there, with all of the operating companies really leaning in and launching leading edge really pushing science further instruments. And I'll give you some examples at SCIEX, ZenoTOF 7600 and the Triple Quad 7500. At LMS, you have the THUNDER widefield imaging system, and we talked about the Mika launch, which is doing extraordinarily well. And then we just talked about the Ingenious launch here at Beckman Life Sciences. So, we're really seeing strength from a funding perspective, and we believe that on top of that, we're outperforming because of the innovation strength that we've shown here, launching a number of great solutions. Now from a comp perspective, we really do think that the strength in the market is sustained. We expect that to be the case in the fourth quarter. And in 2023, like I said, we'll talk about that more in January, but we don't have reason to believe here that this will be significantly different. Luke Sergott: All right. That's helpful. And then when you're thinking about -- when you called out the supply chain, right, and things are starting to get better. Can you talk about where you're seeing the biggest relief in your end markets or businesses and where you're still seeing things constrained and not getting better? Rainer Blair: Sure. So I think the first place where you're starting to see some of the pressure dissipates is in the logistics area. So, logistic capacities have ramped. We're starting to see greater availability. We're also starting to see freight rates come down, specifically if you think of container freight Those, in particular, have come down quite significantly. And that, of course, is helpful with the global businesses that we have. At the same time, we do see continued pressure on a more limited set of electronic components. So with the Danaher Business System, call it, we've been able to really knock down 80% of the issues there. And I think with that, able to continue to take share because of the availability of our solutions. And with 20%, we're still in countermeasure mode. And I would say that number continues to get smaller every day, but there's still on the electronic component side, some tightness here. And then lastly, I would just say, what is still the same as labor continues to be tight. That is the case, practically everywhere we operate. And so that that's a constraint that we would expect to see get better here over the next 12 to 18 months, but currently still see that as an area to watch out for. Operator: We'll take our last question from Patrick Dolly with Citi. Patrick Dolly: Maybe just one. You touched on China, but maybe on Europe, a lot of macro concerns kind of popped up their heads there over the last couple of quarters. Can you just talk about what you're seeing, again, across the different OpCos there? Any change in terms of your expectations or any elevated concerns as we work away even into '23 with some of the kind the kind of power rationing and things that are happening there, maybe just your exposure, any customer conversations, how you're feeling in that region? Rainer Blair: Starting with Q3 here just to level set. We had high single-digit growth in Western Europe, and we would expect that comparable here going into the quarter. Our funnels continue to be strong. And I would say that we're starting to see deal velocity slow a little bit. So it is clear that people are starting to think about where they're going to invest their cash at least for Q3 and Q4, we're still seeing robust demand and robust funding. Having said that, and in view of everything we read in the news as to you, we continue to watch that very closely to see whether that sustains going forward into '23. And of course, we're going to talk to you about that again in January. Now as it relates to our own exposure, specifically as it relates to energy, we continue for many reasons to take a very close look at our energy consumption, so also from a sustainability perspective. But now particularly this becomes an area of focus for Europe. And in fact, we do not have a lot of heavy manufacturing, so energy-intensive manufacturing in Europe. It's mostly light assembly, and we have taken the measures to ensure energy supply continuity through the appropriate backup systems. And then in the event of, if you will, fuel rationing, whether that's gas oil or otherwise, we also have contingency plans there to ensure that we're able to reduce our demand, but still supply mission-critical capabilities, including manufacturing, should that become the case. So yes, it's something that we're closely focused on. Two, we've taken measures in order to ensure that we have supply and can provide supply continuity. And then lastly, we also have the contingency plans should the situation deteriorate. Matt McGrew: Patrick, this is Matt. We did a kind of bottoms-up analysis plant by plant, company by company, even factoring in higher costs that we might see here over the winter into the next year. I mean this is a very, very manageable number. It's just not a big number. Patrick Dolly: Okay. That's good to hear. And then maybe just a follow-up on Luke's instrument question. I guess just kind of wondering in terms of the visibility you guys have. I know the backlog has been elevated. Order growth has been really strong, particularly on SCIEX. There's kind of this -- is there a pull forward? Is there not? Maybe just talk a little bit about, again, the visibility you have, what the backlog looks like currently and just how durable some of that instrument strength is it's been elevated for a while now. So just trying to get a handle on the comfort level of the strength there? Rainer Blair: So as you suggest, the backlog is elevated. That is due to two factors. The strong demand that I referenced earlier, that's really broad-based, pharma, academic, and so forth. But also because there has been, over the last 18 months, some supply constraints around electronic components. So we see demand remaining strong across the board for all these research applications that I referenced. And as a result of that, we also see that in our order rates and backlog position, not just here for Q4 but also going into '23. Operator: It appears that we have no further questions at this time. I will turn the program back over to our presenters for any additional or closing remarks. John Bedford: Thanks, Shelby. We're around all day for questions and follow-ups. Have a good rest of the day. Rainer Blair: Thanks everyone. Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time.

Operator: My name is Gretchen and I will be your conference facilitator this morning. At this time, I would like to welcome everyone to the Danaher Corporation’s Second Quarter 2022 Earnings Results Conference Call. [Operator Instructions] I will now turn the call over to Mr. John Bedford, Vice President of Investor Relations. Mr. Bedford, you many begin your conference. John Bedford: Thank you, Gretchen. Good morning, everyone and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer; Matt McGrew, our Executive Vice President and Chief Financial Officer. I'd like to point out that our earnings release, the slide presentation supplementing today's call, the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call and additional materials are all available on the Investors section of our website www.danaher.com under the heading Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events and Presentations and will remain archived until our next quarterly call. A replay of this call will also be available until August 4, 2022. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. The supplemental materials describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company-specific financial metrics refer to results from continuing operations and relate to the second quarter of 2022 and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings and actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date they are made and we do not assume any obligation to update any forward-looking statements except as required by law. With that, I'd like to turn the call over to Rainer. Rainer Blair: Well thank you, John. And good morning to all of you. We really appreciate you joining us on the call today. So let me start with, we had a great quarter. In fact, our strong second quarter results rounded out a terrific first half of the year. Broad-based strength across the portfolio drove better than expected revenue, earnings and cash flow. And we were particularly pleased with the performance of our base business, which through high single digits and believe we gain market share in many of our businesses. Now these results are a testament to our team's strong commitment to executing in a challenging operating environment. They have done an incredible job, leveraging the Danaher business system to help mitigate supply chain constraints, manage inflationary pressures, and improve our competitive positioning with impactful new innovation. Our second quarter results also highlights the strength and resilience of the businesses that make up Danaher today. Our portfolio is comprised of leading franchises positioned in attractive end markets with strong, secular growth drivers, all united by a common set of durable business models. In fact, nearly 75% of our revenues today are recurring, the majority of which are consumables that are specified into highly regulated manufacturing processes or specific to the equipment that we supply. On top of that, our strong balance sheet and free cash flow generation positions us well to further enhance our portfolio going forward. We believe this powerful combination of our talented team and the strength of our portfolio, all powered by the Danaher Business System differentiates Danaher and reinforces our sustainable, long-term, competitive advantage. So with that, let's turn to our second quarter results in a little more detail. Sales were $7.8 billion and we delivered 9.5% core revenue growth, including 8% growth in our base business with strong contributions from all four of our operating platforms. COVID-19 testing contributed an additional 150 basis points to core revenue growth in the quarter. Geographically, core revenue in developed markets grew low double digits with broad based strengths across North America and Western Europe. High growth markets were up mid-single digits, including impressive high single digit growth in China. Our results in China significantly exceeded our expectations, which is particularly notable as lockdowns continued for longer than we anticipated. So now I'd like to take a moment to acknowledge our associates in China for their extraordinary efforts and commitment during such a challenging time, to the teams that managed the approvals necessary to reopen our facilities, the supply chain and logistics teams that kept parts moving and the manufacturing associates who spent several weeks away from their families, thank you. Thank you for supporting the reopening effort. And most importantly, thank you for supporting our customers. This is such a great example of one of our core values. The best team wins in action. Now, as we move through the rest of the year, we're keeping an eye out for further outbreaks and regional lockdowns, but we're currently seeing more normalized business operations in China and expect this positive trend to continue for the balance of the year. Gross profit margin for the second quarter was 60.9%. And our operating margin of 28.4% was up 60 basis points, including 100 basis points of core operating margin expansion. Our strong margin performance was a result of disciplined cost management and the proactive measures our teams have taken to address the inflationary pressures we've seen over the last several quarters. We're also using DBS tools to execute price actions, and we achieved approximately 400 basis points of price increases in the quarter, a significant acceleration from our historical price realization. Adjusted diluted net earnings per common share of $2.76 were up 12% versus last year. We also generated $1.7 billion of free cash flow in the quarter and $3.4 billion year-to-date. Now let's take a look at our results across the portfolio and give you some color on what we're seeing in our end markets today. In our Life Sciences segment reported revenue grew 6% and core revenue was up 7%. Strength was broad based across the segment with high single digit or better base business core revenue growth at each of our largest operating companies. In our bioprocessing business, we continue to see record activity levels from early-stage research to later stage development and production, which drove a combined core revenue growth rate of high single digits at Cytiva and Pall Biotech. Our backlog and our order levels remain very healthy. And as always, we're working closely with customers to ensure they have the right inventory levels to support their planned activity. We are seeing our customers continue the healthy transition away from COVID-19 vaccines and therapies, and into previously paused and new programs for other modalities. As a result, we now expect COVID-19 vaccine and therapeutic revenue of approximately $1 billion in 2022 down from approximately $2 billion in 2021. Now that said, there is no change to our high-single to low-double digit core revenue growth outlook in our bioprocessing business for the year as customers are accelerating their investments across all other major therapeutic modalities. This acceleration, paired with improving price realization, is driving more than 20% core growth in our non-COVID business, up from the low-double digit growth we've seen historically. The biologics market remains very healthy as evidenced by the increasing number of treatments and development and production. Today, there are over 1,500 monoclonal antibody based-therapies in development globally, which is up more than 50% from just five years ago. This is being driven by both novel molecules and development and the proliferation of biosimilars, which are helping to accelerate adoption and underserved markets as patents on higher volume therapies expire. There are also over 2,000 cell and gene therapy candidates in development today, a more than tenfold increase over the last several years. Now, given this backdrop of such a significant and sustained increase in activity, we expect the growth rate in this market to remain very strong for many years to come. Now as the complexity required to manufacture these life saving treatments increases, customers are looking to collaborate with us to help them solve their most challenging problems and assist them as they move from lab to production scale. Cytiva recently announced a collaboration with Bayer to develop the industry's first modular end-to-end manufacturing platform for allogeneic cell therapy, which will help to improve the treatment of a broad array of diseases, including cancer. This collaboration is just another great example of how our scientific expertise and leading positions in upstream and downstream applications are helping these cutting edge therapies advance from the laboratory to the clinic. Our more instrument oriented life science businesses collectively delivered high-single-digit base business core revenue growth. We're seeing a healthy funding environment and solid demand across most major end markets. SCIEX core revenue was up more than 10% in the second quarter driven by an acceleration of new projects at our biopharma, CRO and academic research customers. We continued our cadence of innovation with the introduction of several new solutions that improve the accuracy and efficiency of genomics and proteomics research. Notably SCIEX introduced the Zeno SWATH DIA, an innovative software solution, which doubles the number of proteins that can be discovered versus previous swath approaches. Helping researchers discover more potential biomarkers and better understand the cause and treatment of diseases. Now in our genomic businesses, customers are making significant investments in the development and production of cell and gene therapies, DNA and RNA vaccines, and gene editing. IDT had its 10th consecutive quarter of double-digit core revenue growth led by robust activity and NextGen sequencing and gene writing and editing. Aldevron grew more than 20% while also making significant progress on the capacity expansion projects needed to support their long-term growth outlook. Now moving to our diagnostic segment, reported revenue was up 9.5% and core revenue grew 12.5% led by nearly 30% growth at SCIEX. Our other diagnostic businesses including Beckman Coulter diagnostics, Radiometer and Leica Biosystems collectively delivered mid-single-digit core revenue growth despite headwinds from the COVID-19 related shutdowns in China. In China, our diagnostics core revenue was flat year-over-year. Site access and patient volumes slowly improved as the quarter progressed with a more pronounced recovery in June. Patient volumes remain slightly below normal levels, but we expect continued recovery as we progress through the remainder of the year. Now outside of China, patient volumes across hospital and reference labs held up well during the quarter and remain at or above pre-pandemic levels despite recent outbreaks of emerging COVID variants. Our diagnostics customers continue to face skilled labor shortages and are increasingly seeking to improve automation and productivity within their labs. This quarter Leica Biosystems introduced its next-generation fully automated advanced staining platform bond prime to help address these needs in the pathology lab. Bond prime facilitates a continuous pathology lab workflow and delivers the high resolution stains needed for a definitive diagnosis with an industry leading average turnaround time of only 90 minutes. Now, as I mentioned earlier, core revenue growth at Cepheid was up nearly 30% in the quarter. Low-teens growth across our non-respiratory test menu was led by sexual health, hospital acquired infections and virology. In respiratory testing, strong global demand persisted for Cepheid's point-of-care assays and we believe we continued to gain market share. Respiratory testing revenue of approximately $750 million in the quarter exceeded our expectations of approximately $400 million. The spread of highly transmissible COVID variants and greater incidents of other respiratory infections such as RSV and flu led to both higher testing volume and a preference for our 4-in-1 combination tests. As a result, our 4-in-1 test for COVID-19 Flu-A, Flu-B and RSV represented about 50% of the 16 million respiratory cartridges shipped in the quarter with COVID only tests accounting for the remaining 50%. Now as COVID-19 shifts to an endemic disease state, we're seeing more customers begin to consolidate their point-of-care PCR testing platform onto the Cepheid GeneXpert. This preference for the GeneXpert both within hospitals and across healthcare networks is evidence of the significant value, the unique combination of fast, accurate lab quality results and an easy-to-use best-in-class workflow provide clinicians. In addition, as our customers begin freeing capacity from respiratory testing, they are increasingly interested in discussing opportunities for broader utilization of Cepheid's leading point-of-care molecular testing menu. Now moving to our Environmental & Applied Solutions segment, reported revenue grew 6.5% and core revenue was up 10% with double-digit core growth at water quality and mid-single-digit core revenue growth at product identification. In water quality ChemTreat, Trojan and Hach each group double-digits during the second quarter. Robust growth in our analytical chemistries and consumables was broad-based across all major end markets. Equipment sales remained strong with healthy levels of project activity at both industrial and municipal customers. At product identification, marking and coding was up high-single-digit and packaging and color management grew mid-single-digit. Videojet was up high-single-digit led by North America where food and beverage sales were particularly strong. Our EAS team are leading the charge and writing the newest chapter in the DBS playbook to counter the supply chain and inflationary pressures we're seeing every day. They've been reengineering products to reduce our reliance on hard-to-source electronic components and using daily management to work closely with suppliers to ensure production part availability. These efforts along with our accelerated price actions are also helping improve our margin physician. We saw the impact on our results this quarter with more than 100 basis points of core operating margin expansion at EAS. Our strong performance also highlights the resiliency and the durability of the high margin recurring revenue business models that make up our EAS portfolio. With that color on what we're seeing in our businesses and end markets let's now briefly look ahead at expectations for the third quarter and the full year. In a third quarter, we expect to deliver high-single-digit core revenue growth in our base business. We expect a mid-single-digit core revenue growth headwind from COVID-19 testing resulting in low-single-digit core revenue growth overall. For the full year 2022 there is no change to our previous guidance of high-single-digit core revenue growth in our base business and mid-single-digit core revenue growth overall. Given our strong second quarter performance, we now expect operating fall through at the high end of our previously communicated range of 20% to 25% for the full year. So to wrap up, we're really pleased with our strong second quarter and first half performance. Our results are a testament to the team's consistent execution in a dynamic operating environment, and to the durable balanced position of our portfolio today. Looking ahead, our team's commitment to executing with the Danaher Business System, our differentiated portfolio of businesses serving attractive end markets and our strong balance sheet all positioned Danaher to continue delivering sustainable long-term performance. So with that I'll turn the call back over to John. John Bedford: Thanks Rainer. That concludes our formal comments. Gretchen, we're now ready for questions. Operator: [Operator Instructions] We'll take our first question from Derik De Bruin from Bank of America. Rainer Blair: Good morning, Derik. Mike Ryskin: Hey, thanks for taking the question. This is Mike Ryskin on for Derik. Rainer Blair: Hi Mike. Mike Ryskin: Hi. Couple of quick questions; one on the COVID versus non-COVID bioprocess you talked about, really appreciate the clarity on the reduction in COVID but then fully offsetting that with non-COVID strength. I want to ask on the non-COVID bioprocessing, your higher expectations for that. How durable do you think that is in the future years? Is that growth rate in those business sustainable for 2023 and beyond? Or are we seeing a little bit of a catch-up in 2022? Just due to some of those projects being put on hold the last couple of years? Rainer Blair: Thanks Mike. Look, I mean, I think the way we see it is the only way. What level set on 2022 here where in the COVID business we see revenues going from 2021, $2 billion to 2022, $1 billion? The non-COVID business as you suggested has accelerated here as customers are moving to non-COVID modalities and all sorts of them very broad based and of course on the margin price-ends up helping that as well. So we would expect certainly for 2023 to continue to see elevated levels of non-COVID activity probably above the low-double-digits that we have seen historically too early to say if it stays up over 20%, but certainly elevated in 2023 versus what it's been historically. Mike Ryskin: Great. Are you seeing any, any stocking or any change in purchasing patterns by any of your customers in particular CDMOs? And that's related to the by bioprocess, but then just overall anywhere across your portfolio? Rainer Blair: So we have very, very close relationships as a result of what we've just all passed through here in the last 18 months. With all of our customers we conduct regular surveys and while there is the one or the other customer that has canceled the large project, which by the way is not that unusual right in this business project sometimes fail even in late stage clinical trials, I would say generally speaking, we see healthy inventories across the sector and don't see any major pockets of build-up. Mike Ryskin: Okay. Thanks. And then one last one if I could squeeze it in. The feeling better about the operating margin fall through for the rest of the year, just to clarify, is that the effect of the beat in 2Q? Or is there anything else going into that in terms of pricing, supply chain, COVID contribution sort of like what's changed there? Rainer Blair: Yes. I mean, I think certainly Q2 is helpful, right? I mean, if you think about sort of where we ended up in the feed that gave us a lot of latitude to offset some of the FX headwinds, but I think if you think about what we're seeing in the businesses pricing is holding in very well kind of couple hundred basis points better than we did here in Q1. You look at the supply chain; I think we've done a really good job of managing that plus driving the pricing. So if you think about where we're at from a price cost perspective we like – we like where we're at. I mean, each of our segments was positive on the margin side here during the quarter. So I do think that as we sort of go forward that we've got – we've got our arms around the price cost and we feel pretty good. Mike Ryskin: Great. Thanks so much. Operator: We'll take our next question from Vijay Kumar from Evercore ISI. Rainer Blair: Good morning, Vijay. Vijay Kumar: Good morning, Rainer. Congrats on a terrific print here. Maybe one in a simplest question on the guidance here Rainer. 2Q revenue to be by 650 basis points, it looks like bioprocessing your orders are strong, instruments are strong, execution coming in about what the annual guidance’s we created; anything going on in second half or is this over to some given the macro? Rainer Blair: No, I think we feel continue to be really comfortable with our full year guide here. We've talked about the base business being high-single-digit here for some time. And we saw that play out here throughout the quarters. And we don't see any reason whether that is demand and the orders development or the backlog position that would give us pause as it relates to the high-single-digit base business guide that we have. Now as we talk about COVID testing I think you as many and all of us continue to do our best in terms of forecasting, what might be happening and testing at any given moment. But as we go forward with testing I think our perspective that Q3 in particular is sort of the slowest respiratory testing quarter of the year, is important to note. And then of course, as you go into Q4 respiratory season picks up again, and so we would expect to see that as well. And as I talked about there in my prepared remarks, we took up that that COVID testing number to about $2.5 billion here from around $2.2 billion. So we would also say it's important to think about China here. China recovered very well for us here in the second quarter after an unexpectedly long shutdown and we continue even today to see these sort of more limited spot shutdowns throughout the country. So we continue to watch that, but fundamentally expect the second half in China to be more constructive than it was here in the second quarter. Vijay Kumar: That's helpful comment from Rainer. Maybe one for McGrew here. Given increments were north of 40% in 2Q, I think the guide implies back half getting back to 25%. Any incremental inflation or FX impacts here on the back half that's dragging second half incrementals back to 25%. And I think in the past Matt you said LRP incremental should be 35% to 40%. Is that 35% to 40% applicable for a fiscal [indiscernible]? Matt McGrew: I'm sorry, was that fiscal 2023 you said? Vijay Kumar: Yes. It was a two-part question. One back half and [indiscernible], yes. Matt McGrew: Yes. So, I mean, maybe just – let me just be clear. We reiterate kind of what we said for the full year. I can give you a little bit of color on Q3, hopefully that sort of gets you where you need to be. I think, so let me recap what we said in the prepared remarks. Like Rainer just said, we reaffirmed high-single-digit core growth in the base business and overall kind of mid-single-digit core growth inclusive of test. Like we talked about a little bit earlier Q2, our performance gave us the ability to fully offset all over the second half FX headwinds. So you'll see that in sort of the margins. 400 million of incremental FX here since April talking about 1.3 billion, almost 5% for the full year from a revenue perspective, so no doubt for the second half will have. That FX will have an impact worse than it even did in the first half. But despite that additional FX headwind, we expect to be at the high-end of the range that we talked about earlier of 20% to 25% from a fall through perspective. So, I mean, just kind of give you that color of where we think we'll be here in the second half inclusive of FX headwind. And then for Q3, revenue is going to be down $200 million year-over-year, and that is all due to FX headwinds. So if you think about it, we're going to have, call it $400 million of FX headwinds, couple hundred million of core growth and acquisitions, but net-net we're going to be negative here in the year. And from a – I realize from a modeling perspective, it sort of fall through in a negative environment isn't all that meaningful. So I think maybe the easier way to think about where we're thinking about for Q3 is we're expecting our EBITDA margins to be about 30% in the quarter. And so hopefully with that, and then the full year frame, right on 20% to 25% you can kind of – it frames a little bit of what we're thinking about for sort of the back half from a margin perspective. Hopefully that's helpful. Vijay Kumar: That's helpful, Matt. I'm sorry that on 2023 is 35% to 40% still the right number to look at? Matt McGrew: Yes. I think barring any additional FX headwinds or something who knows what could happen out there these days, but barring anything else, barring FX or some sort of other macro event, yes, I think that's right 35% to 40% on our base business is a good way to think about margins as we head into 2023. We've talked about in the past how our margin profile has rerated from 30% to 35% to 35% to 40%, and there's no change to that. Vijay Kumar: That's helpful perspective. Thanks again gentlemen. Matt McGrew: Yes. Rainer Blair: Thanks Vijay. Operator: Our next question comes from Scott Davis from Melius Research. Rainer Blair: Good morning, Scott. Scott Davis: Hey, good morning guys. Now that we're on the topic of FX; Matt, is FX more of a concern on, I mean, is it more of a translation issue for you guys or, or is there a certain level where the competitive dynamic that [indiscernible] product around from dollar based regions to non-dollar based? Matt McGrew: No, I think it's more the former, I mean it's really what we're seeing now Scott is just – it's not just the Euro, right? I mean, I think that's, that's kind of the key. Yes, that's the one that gets a lot of the headlines with sort of going to parody, but we really are seeing a breadth of FX headwinds globally that is sort of impacting things as we think about Latin America, as we think about Southeast Asia, we think about even China. It's starting to hit us in places where we just we don't have a cost base but we've got some revenues and that's a little bit different than maybe in the past where it was a little bit more Eurocentric for us. It's just really the breadth of the FX headwinds that I think have been sort of quite – it's quite surprising frankly, but that's what we've been seeing here in the first half Scott Davis: Guys, help us understand the logistics of pricing and some of your business. I know its different business like Beckman. Do you have to wait until kind of contracts kind of renew to get the price? Is it, I mean the big step up in price you had quarter-to-quarter and just a function of time and diagnostics? Rainer Blair: So I would tell you, it really does vary around the businesses. Absolutely we have contracts out there that have notification periods. Those notification periods and the way we manage contracts with nearly 100% visibility to when we can proactively move those prices is a big part of our pricing standard work. And in all businesses, including diagnostics we have been able to move pricing in the right direction, talked about the 400 basis points here in Q3. And as we think about sort of the second half, the first half between first quarter, second quarter was about 300 basis points let's call it. And that's a good – that's a good placeholder here, I think for the second half as well. Now, as you come to some businesses where contract terms are longer, let's say as a result of freights and other types of inflationary pressures, we are able to talk about other types of fees and up charges that are not directly related to price and that ends up providing us with the requisite uplift as well. Scott Davis: Well good luck. I'll pass it on. Thank you guys. Rainer Blair: Thanks Scott. Matt McGrew: Thank you, Scott. Operator: Our next question comes from Dan Brennan from Cowen. Rainer Blair: Good morning, Dan. Dan Brennan: Great, thanks. Good morning. Thanks for taking the questions. I guess I wanted to discuss a little bit about the last downturn and what we're beginning to see happen now. Obviously the company is dramatically different no forward, no dental and you've got all these great structural growth businesses that you've kind of taken on and are growing, particularly across all the biopharma areas. In the last downturn you were down 12% in 2019, but again such a different business. So maybe while we don't know what the magnitude and duration and the moving pieces or what the slow down and the recession, if we enter one we'll entail, clearly you're preparing for a bunch of different scenarios. So I'm hoping you can just maybe help us think about a framework for Danaher, the Street right now has you growing call it like 7% or so on the base for next year? Like, can you give us a sense of how we should consider the different businesses faring as the economy slows here across LS, TX and EMEA and its mid-single-digit, a reasonable downside case to think about or low-single digit. Just anything you can help us frame and again we don't know what the downturn will look like, but you're in a better position than we are to give us a sense of how your businesses will do? Rainer Blair: Sure. Dan, first of all I think you hit it on the head. We are a very different company today than we were in 2009, and some of that you already saw in 2020 where even as the country and the world shutdown, we only had one negative quarter and ended up being obviously very positive for the year even in 2020. But let's talk about, why here first? I mean, the portfolio transformation that was purpose driven has made Danaher far more resilient today than ever before. And let's talk – let's tease out why that is. I mean, first of all, over 40% of our portfolio – well, over 40% is in biopharma, genomics, molecular diagnostics, and all of these are supported by very, very strong secular growth drivers. And you heard me talk about those in the prepared remarks with a number of therapeutic projects that are in the, in the pipeline that drive so much value creation and activity in our industry. We also see population increases access to medical care increasing. So when we think about patient volumes around the world, we see those continuing to increase. So also from a diagnostic perspective, we're very well positioned. You think about EAS, the positioning there is water is becoming scarcer, unfortunately more polluted and requires more testing. The food supply is under pressure and so PID is very much involved in these kind of macro drivers as well. So we feel that from a portfolio perspective it's nearly purpose built for the world that we're in and the pressures that we live under. Now, you add to that 70% of our revenues or I should say over 75% of our revenues are recurring. And most of those are captive, meaning they're specked in or they're specific to our equipment and instruments along with these super durable business models, razor – razor blade and high service levels. So that's a very different kind of business that once again, I'd say it's purpose built for these type of things. Now you add to that our scale and our DBS led execution where even in tough and choppy times we're able to focus on what matters, which is our customers and execute in that environment. On top of the strength of our balance sheet we actually see these challenging macro environments as opportunities. So rather than battening down hatches here and having our head down, we're focused on executing continuously improving and taking advantage of the opportunities that the crisis can offer us. And so, as you think about our balance sheet position today, less than 2x net debt-to-EBITDA we're well positioned there for sure. And so looking ahead should a recession be there, or should the times get choppier? We're looking to get to the other side of that even stronger than we would enter that. Now, as we think about our 2023 guide, which I think, is what part of your question was trying to tease out, we feel good about our mid-single digit plus positioning there where for, for the long term, which we have talked about in a number of occasions. And when you unpack that a little bit, we see bioprocessing could be up high single digit and that's consistent with what we've spoken of. And as you look at bioprocessing, there we continue to think that the non-COVID business is going to be growing very strong. You saw what we're doing here in the second half of the year with growth rates, well, over 20% in non-COVID, and then we've also, de-risked the discussion here relating COVID related therapeutics and vaccines. We see $1 billion of revenue in 2022, and that's down from $2 billion in 2021. And we'd probably say $500 million for 2023. So 2021, $2 billion, 2022, $1 billion and 2023 $500 million for COVID-related vaccine. And having said all that, we still see our biotechnology business growing at high single digits. And that leads you then with COVID testing. And we've talked about that at length. We speak to our customers about that. They still think that COVID goes endemic at the end of 2023, beginning of 2024. And we still think our framework of about $1.2 billion of COVID testing revenue in 2023, which is roughly around 30 million tests, is the right way to think about it. So when you put all that together we feel very good about the way we're positioned here from a core growth perspective, think mid-single digit plus on the base business. And then, from a COVID headwind perspective, think low-single, mid-single headwind overall giving you a solid low single digit 2023. Dan Brennan: Great, thanks Rainer. Maybe just one quick follow-up and just as it pertains to China, could you just flush out a little bit obviously the quarter progressed better than expect, and you gave some color about the [indiscernible] continuing. But kind of how do we think about implicit in your full year guide, like, what is China expected to do? And are you expecting or baking in a completely normal China, absent diagnostic for the back half? Rainer Blair: For a normal year, we would see China in the low double digits, low teen kind of growth. We'd say for the full year, this year in view of what we've seen in the first half, high single digits is the way to think about China, which we consider to be strong growth in view of some of the macro challenges that China is facing today. Dan Brennan: Great. Thank you. Rainer Blair: Thanks, Dan. Operator: Our next question comes from Jack Meehan from Nephron. Rainer Blair: Good morning, Jack. Jack Meehan: Good morning. First question I had is on bioprocessing. So just to follow-up the $1 billion updated COVID guide for the year, can you just provide how much was in the first half? And then the assumption for the second half, could you just talk about what you're assuming related to boosters or government contracts, just how you build up to the $1 billion? Rainer Blair: So just to repeat here, Jack, for everybody 2021, $2 billion of revenue, 2022, $1 billion of COVID-related vaccine and therapeutic revenue, I think, it's fair to say that that trails off here towards the second half of the year, getting you to for that 2023 run rate that I talked about we're $500 million for the year. So some of this stuff is lumpy. So it can go back and forth in a quarter, but that's the general downdraft. Matt McGrew: Maybe just to put some numbers to it, I'd say it's called a little over 500 in the first half, and then little around 400 or so a little under, in the second half, you can see that sort of the magnitude as the drop get to the $1 billion. Jack Meehan: Got it. Yes, that makes sense. Rainer Blair: In terms of boosters and annual shots, look as you know the public health official discussion there continues. Our belief is that it is likely that there is going to be a regular vaccination schedule. It remains to be seen what the uptake of that vaccination will be. But if it is on the order of what flu vaccination is in the country, the kind of numbers that we talked about for 2023 perhaps a little bit less much longer term is probably the order of magnitude in an endemic vaccination regime. Jack Meehan: That makes sense. And I also had a follow-up on China. So you grew high single digits, the guide was for down mid to high single digits. And that was despite the fact the lockdowns were longer than expected. I guess my question is simple. How do you pull it off? Can you just talk about instruments versus consumables, just what kind of the shape of the quarter will look like? Rainer Blair: Well, first and foremost, this is about a team stepping up to the plate and executing. Our associates were ahead of the game, proactively working with the various levels of government, municipal, province and then sometimes even national to ensure that we got the necessary approvals very, very quickly in order to be able to open up our facilities again. At the same time our supply chain associates were prepared ahead of the game understanding what it would take to make a quarter, the raw materials that needed to be available, the shift size that needed to be available and the number of shipment hours that they had in order to work through it. And then we have to say our manufacturing associates literally lived in the plants, literally lived in the plants. We built showers, they had cots, we had food and clothing brought in as well as the necessary services to what needed to come back out in order to facilitate what is nothing but extraordinary execution with the highest level of commitment. And as you think about that whether it's instruments or whether it is consumables, it was across the board, those things that were manufactured locally, I just talked about those people in the plants, but also those things that were imported and had the risk of being stuck in the ports as you know, you sort of unwound the congestion associated with the shutdown. Our people were at the front of the line, making sure that our goods got in first and got to the customers were installed, were signed off and are in use today. Jack Meehan: Very nice. Thank you, Rainer. Rainer Blair: Thanks Jack. Operator: Our next question comes from Rachel Vatnsdal from JPMorgan. Rainer Blair: Hi, Rachel. Good morning. Rachel Vatnsdal: Thanks. Good morning guys. Yes, congrats on the nice quarter. So first off on COVID testing, so those obviously came in higher than expected, but I'd like to really dig into the mix of fluid versus standalone. So you were anticipating 10% of the four-in-one test this quarter and 90% stand-alone, but that sounds like it came in about fifty-fifty. So that mix has increasingly been skewed towards the four-in-one product in recent quarters. So how are you thinking about that mix shift moving forward in the back half of the year? And then what's the mix that's anticipated in 30 million tests for next year? Matt McGrew: Yes, so as we think about – this quarter was you're right it was closer to fifty-fifty. As we sort of think about Q3 what we are sort of hearing, we think that it's going to look a little bit more like the mix we saw Q3 of last year, which was 80% COVID only, 20% four-in-one. So on that, on our 325 million call it 8 million tests or so that we think we do think it'll be kind of skewed a little bit more like it was last year. So like Rainer said too, just to give you some context, I mean, Q3 has historically been the slowest respiratory quarter of the year. And as we sort of talk to our customers, I think, that their expectation as well as we get into the summer here it does typically become sort of the slowest time and then picks back up in the winter. As we get into Q4, I would say that that mix assumption will be more like the fifty-fifty that we saw here and that we saw last winter as well. So I think if you think about Q4, we're talking about $525 million of revenue, maybe 11 million tests or something along those lines in a split of fifty-fifty. Rachel Vatnsdal: Great. Thank you. And then on biotech funding concerns, so obviously there has been a number of concerns about the potential slowdown in biotech funding leading to a smaller funnel at earlier stage biotech companies, as they try to rationalize candidates to conserve cash. And so you flagged a number of stats on the positive pipeline for monoclonal antibodies, cell and gene therapy, et cetera, the prepared remarks. So can you just walk us through, have you seen any impact or shift in demand from that mid-biotech customer segment as a result of these funding concerns? And then how should we think about – let's say that we face a prolonged constrained funding environment for these mid-biotechs. At what point do you think that could really start to impact that Phase 2, Phase 3 part of the pipeline where it starts to become meaningful from a volume perspective, which is obviously the main driver of that bioprocesing business. Thank you. Rainer Blair: Thanks, Rachel. Rachel, as you just suggested the majority of these biotech’s are either preclinical or in the very early stages of clinical. And it's really important to note that our business is driven by what's happening in Phase 3 and ultimately commercialized drugs. Over 75% of our business is in that later stage. And so then as you go upstream from that that has less of an impact. And now getting specifically to your point, we really haven't seen much of an impact of the biotech funding crunch here affecting the customer activity levels that we have. And frankly, we do look at these biotech’s and the proposals that they are pursuing whether there is proof-of-concept and data. And our sense is that the good projects, and where the data is solid and convincing, and proof-of-concept is given, they are continuing to attract funding. So we think that today's cash positions in the biotech’s, the quality of the projects that they are presuming as well as the funding environment still providing funding to those that are able to provide data continues to be quite positive and is not impacting our business. Now, of course, to your longer term question, we just have to see that the biotech area is a cauldron of innovation. That's where the risks are taken. That's where the out of the box thinking oftentimes occurs. And that's where the Genentechs and the Amgens and others started and many more that are huge public companies today. So, we of course longer term will want to see that the funding continues to support that kind of innovation environment. But today are not concerned about what we see here for the next call it 18, 24 months. Operator: Our next question – our last question comes from Patrick Donnelly from Citi. Rainer Blair: Hi Patrick. Good morning. Patrick Donnelly: Hey Rainer, how are you? Thanks for taking the question. Maybe another one just cleaning up on 2023. I really appreciate all the color you gave. It sounds like with all the moving pieces, in terms of COVID headwinds, we'll probably shake out maybe in a little more low-single than the mid-single for 2023. And I'm just trying to figure out, I guess, with all the mix changes again, being a little less, COVID more heavy on the core, what the right way to think about the incrementals is? I mean, it sounds like Matt earlier was talking about kind of getting back to that 35%, 40%. But just wanted to circle up in terms of the moving pieces. Again, given the mix shift, I assume FX will still be a bit of a headwind in the first half. I mean, it's still a bit away, but we'll see what the dollar does. But can you just talk through, I guess, that margin structure as we work our way into 2023, given again, the growth is looking a little more, low single with the COVID headwinds that you laid out? Matt McGrew: Yes, sure. I mean, I think, maybe just kind of, like you said, get everybody grounded that, that low single is overall the base business we think would be mid-single digit plus and the COVID headwinds which are all testing at this point would be sort of down low- to mid-single to get to a low single overall. And so, as I think about my 2023 margin profile, like I said before, it's difficult right now, given how dynamic things are, especially with the FX, and inflation and supply chains. But I think where we are from an execution perspective here in the quarter where we think we'll be, if we don't have any we might have some FX headwinds, but let's see where that ends up. But if we don't have any extra new headwinds that show up, I just think the normal VCM of 35% to 40% is the place to be. I mean, the COVID testing like you've seen, I mean, it's more or less at the fleet average, we've talked about how we sort of intentionally did that. We price it exactly the same as we price flu. So it's not as if it has a huge outsized necessarily impact. So I still think the right place to be from a margin perspective is that fall through of 35%, 40% on those single digits. But I think given that we're going to grow that base business mid-single digit plus, with that sort of fall through, I still think you would see even in that low-single digit environment, I still think we drive EPS growth. Patrick Donnelly: Okay. That's helpful, Matt. I appreciate that. And then Rainer you touched a little bit on the M&A landscape, obviously I don't think there is any doubt you guys have the capacity and the balance sheet is healthy. I think the questions are more around are the sellers ready? Or are valuation still kind of resetting in boardrooms? What are the conversations like for you guys? Again, it seems like your appetite is certainly high to your point, macro uncertainty tends to favor you guys, you tend to see a little bit of panic out there sometimes and sellers kind of hit the bid. So can you just talk about conversations? Are people starting to warm up a little bit, or is it still a lot of kind of pointing back six months and maybe we bounce back, maybe we don't, what are the conversations like on that front? Rainer Blair: Well, the 52-week high has not moved out of the window entirely. But I do think it's fair to say that people are understanding that we're entering into a new environment here that there's a change of the cycle here. We see COVID tailwinds dissipating, many were riding that wave. Higher interest rates are real for everyone. And then of course, these foreign exchange rate issues that Matt was talking about and inflation are real too. So I think that changed macro and the reality of valuations is starting to seep in to the boardroom discussions. But it's still early days. And we continue to watch that we're of course engaged, our funnels are very healthy and as always we are looking for those opportunities that align with our strategy and end market focus, as well as then, of course, premier assets in that particular area, along with the right valuation. So if you noted our balance sheet we're primed here and look at the market with opportunity. Patrick Donnelly: Great. Thank you guys. Rainer Blair: Thank you. Operator: And that is all the time we have for today. And I will turn the program back over to our speakers. Rainer Blair: Thanks, Gretchen. And thanks everyone for joining us today. We will be around all day for follow-ups. Bye. Operator: This does conclude today's program. Thank you for your participation. You may now disconnect. Have a great.

Operator: Good day. My name is Leo and I will be your conference facilitator this morning. At this time, I would like to welcome everyone to Danaher Corporation’s First Quarter 2022 Earnings Results Conference Call. [Operator Instructions] I will now turn the call over to Mr. John Bedford, Vice President of Investor Relations. Mr. Bedford, you may begin your conference. John Bedford: Good morning, everyone and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer; and Matt McGrew, our Executive Vice President and Chief Financial Officer. I’d like to point out that our earnings release, the slide presentation supplementing today’s call and the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call are all available on the Investors section of our website, www.danaher.com, under the heading Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events & Presentations and will remain archived until our next quarterly call. A replay of this call will also be available until May 5, 2022. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. Supplemental materials describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials, the company’s specific financial metrics relate to the first quarter of 2022 and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings and our actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date that they are made and we do not assume any obligation to update any forward-looking statements, except as required by law. With that, I’d like to turn the call over to Rainer. Rainer Blair: Well, thank you, John and good morning everyone. We appreciate you joining us on the call today. We are off to a good start in 2022 with the first quarter coming in ahead of our initial expectations. The team navigated a challenging operating environment to deliver strong revenue, earnings and cash flow growth. And our performance was broad-based with high single-digit or better core revenue growth in each of our three segments. Now during the first quarter, we continued to strengthen our competitive advantage through high-impact growth investments in innovation and bio-processing production capacity, both of which we believe are contributing to market share gains. Now, clearly, our well-rounded results are really a testament to our team’s commitment to continuous improvement and to the unique positioning of our portfolio. We just have an exceptional collection of businesses, all powered by the Danaher Business System that serve attractive end markets with durable secular growth drivers and it’s this combination that differentiates Danaher today and provides a strong foundation for the future. So with that, let’s turn to our first quarter results. Sales were $7.7 billion in the first quarter and we delivered 12% of core revenue growth. Our base business was up 8% and with broad-based strength across the portfolio and COVID-19 testing contributing 4%. Geographically, revenue in both the U.S. and Western Europe grew mid-teens, while high-growth markets were up low single-digits. China declined low single-digits, but was up high single-digits, excluding the impact of a previously called out significant bioprocessing project delivered in the prior year. The COVID-19 driven lockdowns that began in late March had a very modest impact on our first quarter results in China. However, as these lockdowns extend further into April, we are seeing more of an impact in our businesses. And we anticipate the situation will begin to ease in the coming weeks with an eventual return to normalized activity levels by the end of June. Our gross profit margin for the first quarter was 61.2%. The operating margin decline of 80 basis points to 28.3% is largely due to year-over-year changes in foreign currency exchange rates and product mix, primarily within our Life Sciences segment. Now, adjusted diluted net earnings per common share of $2.76 were up 9.5% versus last year and we generated $1.7 billion of free cash flow in the quarter. So, now let’s take a look at our results across the portfolio and give you some color on what we are seeing in our end markets today. Let’s start with Life Sciences where reported revenue grew 9.5% and core revenue was up 7.5% with broad-based strength across the segment. In bioprocessing, we are seeing very robust activity levels. Customers are accelerating their investments in research and production across all major therapeutic modalities. Core revenue in our bioprocessing business at Cytiva and Pall Biotech grew high single-digits and was up low double-digits, excluding the impact of that significant one-time project in China last year. The orders remain very healthy and we continued to build backlog across both businesses during the quarter. Now over the last 2 years, our customers prioritized the development of COVID-19 vaccine and therapies to rapidly accelerate their time to market. Today, these programs require less investment in manufacturing capacity as they mature and become a part of our customers’ core business. And as a result, our customers are starting to reallocate resources back to previously paused and new programs for other modalities, notably monoclonal antibody-based therapies or MAB cell and gene therapies and mRNA-based technologies. In bioprocessing today, monoclonal antibodies are the largest investment area for our customers as they are becoming the standard of care in the treatment of many diseases. Customers are adding manufacturing capacity to support both novel MABT in clinical trials and the rapid growth of approved treatment. Biosimilar development and production are also increasing as patents on higher volume therapies expire. This trend is making life-saving treatments more accessible and helping to accelerate adoption in underserved markets. Now, we continue to make substantial investments in manufacturing capacity to help meet our customers accelerating demand in bioprocessing. An important focus area of our expansion has been with single-use technology which are key enablers to scale the development and manufacturing of biologic and genomic-based medicines. In this first quarter, our newest plan dedicated to the manufacturing of single-use technology came online in Cardiff, Wales. Now, this plant, along with recently opened facilities in South Carolina and Beijing are critical to support our customers’ demand today. Long-term, they provide additional capacity for one of the fastest growing product categories within bioprocessing. So turning to our Life Sciences Instrument businesses, we are seeing strong levels of activity in all major end markets. Demand is particularly robust at our pharmaceutical CRO and academic research customers where a healthy funding environment is accelerating the initiation of new projects. In the first quarter, Leica Microsystems, IDT and SCIEX each grew over 10%. At SCIEX, the ZenoTOF 7600 and Triple Quad 7500 continue to perform well and are great examples of how our investments in innovation are driving market share gains and enhancing our growth trajectory. At Leica Microsystems, Mica is another example of impactful innovation for our customers. Mica integrates wide field and confocal imaging in a single instrument while leveraging machine learning and automation to dramatically simplify the imaging workflow for our researchers. So clearly, across the life sciences portfolio, we are investing in innovation to bring meaningful solutions to our customers and to strengthen our competitive position. Aldevron continued its great start as a part of Danaher, delivering over 40% growth in the first quarter. Since joining Danaher in late August, the team has embraced the Danaher Business System and is putting DBS tools to work. Recently completed Kaizen event which focused on increasing throughput further reducing lead times are already generating terrific results. So we are excited about the early progress at Aldevron and thrilled with the great work the team is doing. So now let’s move to Diagnostics, where reported revenue was up 21.5% and core revenue grew 22.5% led by over 50% growth at Cepheid. Our non-COVID clinical diagnostics businesses collectively grew mid single-digits. Notably, Leica Biosystems delivered their seventh consecutive quarter of double-digit order growth driven by strength in core histology, advanced staining and digital pathology. The clinical diagnostic market volumes remain at healthy levels in most geographies as patients are returning for wellness checks, routine screenings and other elective procedures. Our customers are effectively managing through periodic outbreaks by adapting their protocols and procedures allowing them to continue providing critical healthcare services. Now in China, we are currently seeing regional lockdowns impact patient volumes and we expect our Diagnostics business to be the most effective in the second quarter. In Molecular Diagnostics, respiratory testing volumes have moderated globally as the Omicron outbreak has subsided in most regions. However, demand for Cepheid testing at the point of care remains very strong and we believe we are taking market share. Our continued growth and share gains are a testament to the significant value the unique combination of fast, accurate lab results and a best-in-class workflow is providing to clinicians at the point of care. So, as COVID-19 moves towards an endemic disease state, we are seeing increased demand for Cepheid’s broader test menu. In the first quarter, non-respiratory testing revenue grew double-digits, led by hospital-acquired infection, urology and infectious disease testing. Customers, including several who initially purchased our GeneXpert system for COVID-19 testing, are expressing increased interest in expanding their menu utilization. As our customers free capacity from respiratory testing, we believe there are significant opportunities to leverage our market leading installed base and testing menu to drive broader utilization and demand for Cepheid’s point-of-care molecular testing solutions. Now, respiratory testing revenue of $900 million in the quarter exceeded our expectations as customers showed an increased preference for Cepheid’s 4-in-1 combination test during the respiratory season. Our combination test for COVID-19, Flu A, Flu B and RSV represented approximately 65% of the 17 million respiratory cartridges shipped in the quarter with COVID-only tests accounting for approximately 35%. So now, let’s move to our Environmental & Applied Solutions segment, where reported revenue grew 2.5% with core revenue up 6.5%, including [Technical Difficulty] water quality and mid single-digit growth at product identification. At water quality, ChemTreat delivered its fourth consecutive quarter of double-digit core growth, accelerating demand for our analytical chemistries and consumables was driven by activity across municipal, chemical, food and beverage end market. The equipment order rate also remained strong as customers are continuing to invest in larger municipal projects. Now Product Identification, our marking and coding business was up high single-digits partially offset by slight decline in our packaging and color management business. Videojet was up high single-digits with strong demand in food, beverage and industrial end markets. So stepping back, our water quality and product identification platforms have done an exceptional job of leveraging the Danaher Business System to improve their positioning both from a cost and growth perspective. While supply chain pressures have been modestly more pronounced than EAS, our teams are using DBS tools such as daily management to work with suppliers and ensure production component availability. We are also using visual project management to help us reengineer our products faster with a focus on moving from difficult to source electronic component to newer, more cost-effective next-generation chipsets. Now, we believe DBS enables us to deliver faster and more reliably than many of our competitors. Now, our teams are also using DBS growth tools to accelerate innovation and deliver more impactful solutions to the market, innovations such as Videojet, CIJ 1880 printer and HACH’s HQ series portable meters, are helping our customers solve the many challenges they face from increasing regulatory requirements to skilled labor shortages. And we are seeing the impact in our core growth, which has averaged mid single-digits annually over the past 10 years at EAS. So we believe this combination of the rigorous application of DBS tools, paired with our proactive growth investment is driving meaningful market share gains and enhancing our long-term competitive advantage. So now, let’s briefly look ahead to our expectations for the second quarter and the full year. In the second quarter, we expect to deliver mid single-digit core revenue growth in our base business, which includes a headwind of approximately 200 to 300 basis points from the ongoing COVID-19 related shutdowns in China. For the full year 2022, there is no change to our previous guidance of high single-digit core revenue growth in our base business as we expect the shutdowns in China to normalize as we move through the remainder of the year. We continue to expect both a low single-digit core growth headwind from COVID-19 testing and overall mid-single-digit core revenue growth. So to wrap up, we had a good start to the year and look forward to building on this foundation as we move through 2022. Our first quarter results are a testament to the dedication of our outstanding team and their commitment to executing with the Danaher Business System. And these results also reflect the unique positioning of our portfolio and the exceptional collection of high-quality franchises that comprise Danaher today. We believe the durability of our businesses where consumables now represent 75% of revenue, positions us exceptionally well in today’s dynamic operating environment. So this powerful combination of our talented team, the strength of our portfolio and the Danaher Business System differentiates Danaher and reinforces our sustainable, long-term competitive advantage. So with that, I’ll turn the call back over to you, John. John Bedford: Thanks, Rainer. That concludes our formal comments. Leo, we’re now ready for questions. Operator: [Operator Instructions] We will take our first question from Derik De Bruin of Bank of America. Rainer Blair: Hi, Derik. Good morning. Derik De Bruin: Hi, good morning. Thanks for taking my question. I got just a couple of sort of like incoming from clients. I think, first of all, just a little bit more on the difference between – I think you mentioned 19 million on the Cepheid guide, and it came in at 17. Just a little bit more color on the volume difference there? And I think also a related question, just are you seeing any sort of stockpiling in terms of either vendors for either bioprocessing or on the diagnostics side? And I’ve got more follow-up. Rainer Blair: 4-in-1 test: Derik De Bruin: Great. And just can you on the China headwind in the quarter, that 20 to 30 basis points, what’s supply versus demand? Rainer Blair: Well, this is entirely related to supply accessibility of customers. So the demand in China continues to be very robust. As you may have noted, without the – in the first quarter without this large project in the prior year, China was up high single digits for us, orders very strong. So this is really related to customer accessibility in hospitals, in labs and of course, the one or the other manufacturing plant that’s affected by these shutdowns. Now as we sit here today, we’re already receiving the news from our team that we’re able to open up not just our plant, and so those are starting to open up here as well slowly but surely, as well as we would expect throughout the quarter client – I’m sorry, as well as lab accessibility to improve already in May and then get back to more normal levels here by the end of the quarter. Derik De Bruin: Great. And if I can sneak one more in, the 2Q hit, nice to see you reiterating the full year guide with that. Is that expected as you expect all that China business to come back? Or do you think you’ll see stronger growth in other regions offsetting it? Thank you. I am done. Rainer Blair: This is mostly about China getting back to normal activity levels and both customers as well as our plants having the makeup capacity to make up for what we think are relatively short shutdown period. Having said that, the business is a large one, and there is always pockets that will grow faster. So between the two things, we feel confident that our guide for the full year holds. Operator: We will take our next question from Vijay Kumar of Evercore ISI. Rainer Blair: Good morning, Vijay. Vijay Kumar: Good morning, Rainer. Congrats on a solid Q1 print. Maybe one on the vaccine side. Rainer, I know it’s part of the base. But I guess yesterday, J&J did pull out their vaccine guidance. They are not guiding to vaccine. Not news anymore. Obviously, there is been a lot of questions on the vaccine side and base bioprocessing. So maybe just talk about the bioprocessing trends in the queue. What were order trends were orders above revenues? And are you still confident about the 2 billion of vaccine outlook for fiscal ‘22? Rainer Blair: Well, thanks, Vijay. So let’s just level set on the numbers briefly here. If we think about bioprocessing Q1, and as I mentioned during my opening commentary, we extract that very large Q1 shipment last year in China, our bioprocessing business was up low double digits here in Q1. Very, very strong order activity, and I’ll come back to that in a minute. Now if you look at our first quarter last year, our sales were up over 70%. And so if you look at the 2-year stack for Q1, we’re in the 35% to 40% growth area, which we think is very robust and more than representative of what is going on in the market and think that, that compares extremely well. In fact, we still think that we’re taking share there. So that’s sort of one marker that I want you to have. And then the second point is the order activity continues to be very, very strong. Last year, our orders in the first quarter were up over 90%. And so we anticipated that our orders in Q1 of this year would be down but nonetheless, we continue to build backlog here in Q1 as well in the bioprocessing area. And this is why we’re so confident in our core growth guide here for the year and bioprocessing of high single digit, low double digits between the robust growth that we’re seeing and the backlog that we have, that’s really important. So now let’s unpack that a little bit and think about what’s going on and why COVID is sort of one variable, but that there are other variables here that are incredibly important and explain why we talk about the bioprocessing business and its growth in aggregate. So first of all, as you think about the activity levels outside of COVID in the bioprocessing business, it’s important to see what’s going on in clinical trials. And I’ve talked about this, but you know that the project pipeline for monoclonal antibodies is 50% larger today than it was 5 years ago. For cell and gene therapy, it’s 10x larger, driving extraordinary activity here in the clinical trial area. And what you see, and as I mentioned in the opening comments, you see customers really starting to focus on these new projects across all modalities and not just allocating the resources to COVID, but to these new modalities. So that’s really important to note that customer activity level continues to be very, very high, and that plays through in the clinical trials. Now another point to take here is monoclonal antibodies are becoming the standard of care and the predominant class of biologic drugs. So what’s going on in monoclonal antibodies is the primary growth driver in the market and also for our business and recently launched products that are ramping to new treatment and new indications are driving an exceptional amount of volume here. And then you add to that, that emerging markets and high-growth markets, such as China and India, are starting to have access to these monoclonal antibody treatments that provides additional and significant volume leverage. At the same time, you have biosimilar growth, Vijay. So these biosimilars are leveraging the fact that some of the biologic drugs, monoclonal antibody that are higher volume are starting to come off patent, and that’s increasing the penetration of those drugs throughout the world where the penetration has been lower. And that’s providing another growth impetus. And then lastly, I’ll start with this now. We’ve been talking about single-use technology and their adoption for a while, which is an additional leverage growth vector within the bioprocessing business. So all that helped the activity that we talked about provides for volume, but SUT on top of that is substituting more traditional technologies and is growing even faster. And we have well over $1 billion of single-use technology. And we’ve just announced that our third new plant coming on for single-use technologies in Cardiff, Wales. So we feel very confident on the basis of what’s going on outside of COVID. And that’s why we look at it together because it’s the aggregate that we look at and that really ultimately count that, that will drive that high single-digit, low double-digit growth here for 2022 and also supports our high single-digit perspective beyond that. Vijay Kumar: That’s helpful, Rainer. And maybe one quick one for Matt McGrew, I think incremental margins we were looking at perhaps mid-30s. Q1 came in below. Matt, was this was this supply chain inflation impact in Q1 or perhaps FX or maybe just talk about incrementals and have expectations assuming for fiscal ‘22. Matt McGrew: Yes. No, for Q1, I mean, we kind of came through about 25%. I think that was pretty much in line with what we thought, Vijay. So no real difference, I think – from a year-over-year perspective, the difference between that $35 million to $40 million that we normally talk to in this 25, it was all FX, right? So in the quarter, I mean you think about it, it was kind of like a $0.07 headwind here for us. So I don’t think we saw anything. Obviously, supply chain is what it is, but I think we were able to kind of work our way through that. I really think it was all FX here – excuse me. In the quarter and first quarter. As far as – I think you bring up a good point then as far as the full year goes, so I would say there is no change to the full year fall through other than the FX impact that we’re seeing. And just to kind of lay that out. We continue to expect mid-single-digit core growth from kind of the core and acquisitions, and that will have that 35% to 40% fall through. In January, we thought that FX was going to bring that 35% to 40% down to, say, 30% to 35%. But given the currency moves we’ve seen since January, as we sit here today, I think it’s going to be more like 20%, 25% fall-through for the year versus the 30 to 35 that we sort of guided to the last time. So look, it still leaves us, if we deliver that, that still leaves low single-digit EPS growth for the year despite what I think is some pretty significant FX headwinds year-over-year. And maybe just to give you a color on the sizing of that headwind, I mean right now, FX is going to be a $0.35 EPS headwind year-over-year, and that’s a pretty meaningful number for us here during the year. It’s probably half of what we initially thought. So it’s a pretty big headwind here for the year, and it was a little bit here in the quarter, too. Vijay Kumar: That’s helpful, Matt. Thank you. Operator: We will take our next question from Scott Davis of Melius Research. Rainer Blair: Scott, good morning. Scott Davis: Good morning, guys. Thanks for all the detail here. The price dynamic, I mean, I know it’s FX is FX. I can’t do much about that perhaps. But – do you – are you still out there capturing additional price to offset the general inflation and general cost and logistics issues that are so prevalent? Rainer Blair: Scott, we have been working price directly and indirectly, and we’re seeing very good traction. Let me lay that out for you here. And let me start off with the fact that there are inflationary pressures out there. We’ve talked about that in the past. And that moves from sort of the classic topics of memory chips and other types of chipsets and freight and perhaps labor to seeing more broadly inflation. But nonetheless, with the Danaher Business System, our teams have been able to do a number of things here in order to contain this. One, of course, is related to ensuring the robustness of the supply. Many of our businesses today are gaining share because we are able to continue our supply, have shorter lead times because we’re able to access and secure the components necessary to drive our manufacturing in our business. So it’s an important aspect to this entire equation of growth and share gain. Secondly, the DBS toolset that we have been putting in place are also helping us offset costs in the sense, and as I mentioned in the introductory comments that, look, we are able to now reengineer more quickly to other types of – again, I’ll use the example of chipsets to next-gen chip set more broadly consolidate those and not only gain supply, but then also reduce our costs. So there is an entire DBS machine, if you will, that is driving to secure supply and to offset costs. At the same time, of course, we are driving price, and we see strong traction there. In fact, we are well over 200 basis points of price here in the first quarter, and that’s a quarter that still had a fair amount of, if you will, 2021 backlog in it, right. So, we have now worked through the majority of that backlog and expect to see continued momentum there. So, thinking about price at these levels of 200-plus basis points, that’s the right way to think about that. And it’s just another testament to the strength of our portfolio, the degree of differentiation of our product and the leverage that this razor/blade business model provides us with 75% consumables, many of which are specked in or keyed into the equipment or instruments that they supply. Operator: We will move next to Dan Brennan of Cowen. Rainer Blair: Hi Dan. Good morning. Dan Brennan: Good morning Rainer. Thanks for taking the questions. Congrats on the quarter. So, if I could just go back to bioprocess, obviously, a really nice quarter with a high-single digit growth against so extremely tough comp. I appreciate COVID is part of the base, and it’s great about all the robust demand, obviously, ex-COVID, which is a big driver long-term. But given the interest in kind of dissecting COVID at this point from investors, it would be helpful to learn if the 2022 high single, low-double digit guide continues to incorporate $2 billion from COVID. And if it does, any color you can provide there about like how much of that $2 billion is blocked in with firm orders? Rainer Blair: Thanks Dan. Really, the way we are thinking about that business is, again, in aggregate, and we do believe that both the underlying strength of the markets as I just laid out, as well as the strength of our backlog, which continues to grow, support both the high-single digit, low-double digit bioprocessing guide for the year. And as you think about COVID within that, COVID is going to do what it does, but there is a larger market that is growing rapidly and we are going to continue to see fluctuation as it relates to COVID volumes, whether there is a decision on booster for different age groups, whether it becomes part of an annualized immunization regimen. All of these are open questions. And our belief is that COVID is a part of our business, but there is another part of this business, which is larger, it is growing at a faster rate and we are making investments to ensure that we capture the appropriate shares here. So Dan, high-single digits, low-double digits bioprocessing growth for 2022. Dan Brennan: Thanks Rainer. So, I will get on a really strong quarter out of the gate. Maybe can you give us a little color on how the integration is going – and in light of the really strong first quarter, how do we think about Aldevron for the full year in 2022 and beyond? Rainer Blair: I mean we couldn’t be more pleased with the team. I have been up there several times working with the team, seeing how they are growing, bringing on capacity. We continue to invest in expansions there. And that 40% growth exceeded our expectations and gives you a sense of how quickly the Danaher Business System has gained traction. And that’s a combination of a couple of things. The first thing is the leadership and the team at Aldevron that is pulling and open to applying the Danaher Business System as fast as possible to fortify their competitive advantage in lead times, in quality and to ensure that we drive this business to the growth of its potential. And we think for 2022, we continue to think that the $500 million revenue number is a good number, 40% in Q1. We certainly expect to be in the first half year, well over our expectation of 20% plus that we previously talked about. So, $500 million for the year is a good number, and that team is firing on all cylinders. Dan Brennan: And if I could squeeze one more in. Just on China. Obviously, good news that you guys are managing through this and the full year guide is maintained. Maybe if you could just give us an update like in Q2, like what you are actually expecting for China? Maybe you said the number, I missed it. And kind of how do you think about China for the full year since you are expecting a nice rebound beginning Q2? Thank you. Rainer Blair: Sure. So, just to revisit, we have talked about China here. In the first quarter, it was really the end of March when we started to see the impact of some of these larger scale shutdowns, and we continue to see those here in the first week of April, although we have just spoken to the team here yesterday and they received approval to start opening up plants and we also see more activity at our customers. And so we do expect to work through the shutdowns here in the second quarter. Again, that was the 200 basis points to 300 basis point headwind that we included in our Q2 guide of mid-single digits. So, as we think about the quarter here and for China, remember, we had a very strong activity level in Q1, high-single digit growth minus that large transaction last year. And we expect that in China will probably be down in Q2, mid to high-single digit percentages for the quarter. Now once again, we expect that to unwind in Q2 and then continue to catch back up here through the year where we continue to see China as a high-single digit market. Dan Brennan: Great. Thank you. Operator: We will take our next question from Jack Meehan of Nephron Research. Rainer Blair: Good morning Jack. How are you? Jack Meehan: Thank you. Good. Good morning. So on Life Sciences, I wanted to turn to some of the capital heavy businesses, SCIEX, Leica Micro, Pall Industrial. Can you just talk about the durability of the growth you are seeing there? How are order trends – and any change to the growth expectations for the year? Rainer Blair: So, in Life Sciences, if we now pivot from bioprocessing and more to the life science analytical businesses, as you suggest, Jack, we are seeing very strong underlying activity in the various sectors of the business. If you think about the Pharmaceutical segment, CROs, academic research customers, our funnels are strong and continue to outpace quarter-over-quarter what we have seen in 2021. I think that buttressed for us, particularly because of the strong innovation track record and the recent launches that we have had. I have talked to those at SCIEX, the ZenoTOF, the accurate mAb instrument as well as the 7500 Triple Quad, those are class-leading innovations that are growing exceptionally well and driving market share gains. Beckman Life Sciences, with their CytoFLEX Benchtop sales order the most recent launch. And then of course, we talked about Mica, which is that combination of wide field and confocal leveraging machine learning. So, we are firing on all cylinders here in a strong investment environment. And we think that, that’s sustainable here for the foreseeable future as we continue to see investments from both the biotech sector, but also academic sectors, as well as institutions that are very, very bullish on the innovation and the science that they want to drive forward. Jack Meehan: Great. And then just a broader question on M&A. It’s been obviously a very choppy macro environment. You look at the cash flow statement, it was a light quarter for you on M&A. Just curious how you are seeing assets in the market, do you feel like expectations have changed at all from sellers and just your own willingness to do M&A kind of in a choppy environment? Thanks. Rainer Blair: Well, Jack, I will tell you, we have excelled in these kind of environments historically from an M&A perspective. These environments of dislocation inevitably show opportunity and we feel very good about how we are positioned with our funnel. Now having said that, the volatility that we are seeing today is while it might not feel that way relatively recent and it’s probably a little too early to see the full impact of that volatility. Having said that, we are sitting here with 2x a turn, very strong free cash flow of over $7 billion and over $10 billion of EBITDA. So, we feel like we are in a very good position both in terms of the strength of our balance sheet as well as the opportunities that lie ahead. Operator: We will take our next question from Patrick Donnelly of Citi. Rainer Blair: Good morning Patrick. Patrick Donnelly: Good morning Rainer. Thanks for taking the questions. Maybe you want to kind of jump from away from China on the geographic side. Over in Europe, obviously, a lot going on there on the geopolitical side. Can you just talk about if you have seen any change in customer behavior? Any change in funding over there, what your guys’ perspective is on that region as we work through this? Rainer Blair: So, Western Europe has continued to perform very well for us. As I mentioned in our opening comments here, we had strong growth in the mid-teens in Western Europe here in the first quarter. And while we think that moderates a little bit here in Q2 just because of some of the prior year performance is, the activity levels remain very strong. Certainly, in Western Europe, that is the case. And as you think about your reference to the geopolitical side, Eastern Europe just has not been that large of a factor in the life science research and bioprocessing area as an example. And from a diagnostics perspective, we continue to see a very high, let’s say, close to normal activity levels as well. So, Western Europe for us continues to perform as expected. Patrick Donnelly: Okay. That’s helpful. And then maybe on the diagnostics business, just looking at the core performance there ex-COVID, looks pretty strong. Can you just talk about that? And then maybe Matt can talk about the diagnostics margins also really strong, just the sustainability there. Rainer Blair: As we think about the business momentum really in all regions, with the exception of China, which I talked about, we are seeing patient levels, activity levels really at or very close to pre-pandemic levels. And so from a macro perspective and patient volume, it’s a positive environment for us. And then if you put on the back of that, the recent product launches that we have had, the DxH900 hematology as well as the DxA Fit and automation for small and medium-sized labs, we are also continuing to benefit from that NPI pace that we have invested in here over the past year. So for us, diagnostics continues to be a strong forward momentum. Matt, do you want to take this? Matt McGrew: Yes. I mean on the margin front, I mean I think you think about that that is going to be a big part of that will be Cepheid and the volume that we are seeing there. So, as long as we have got that volume and we expect to have a touch less here into next quarter. But I think those margins are pretty sustainable at that level. We have talked about and importantly, I think the margin profile of the Cepheid respiratory is no different than the margin profile of other Cepheid tests, right. It’s actually very similar to the flu. So, I think it’s a sustainable number here as we look forward. Patrick Donnelly: Thanks guys. Operator: We will take our final question from Luke Sergott of Barclays. Rainer Blair: Good morning Luke. Luke Sergott: Good morning. Thanks again for the question here. So, I guess I just wanted to kind of dig in on the long-term growth target, the biopharma high-single digits and really trying to figure out where the offsets are coming from? You talked about the mAbs. I know you are adding new capacity, but as COVID kind of is completely up in the air, and that rolls off, give us a sense of how much that could roll off and you guys continue to maintain that long-term growth target? Rainer Blair: Happy to. So Luke, the way we are thinking about that is – the strength of our underlying business, which I laid out here in some details, some clinical trials, mAbs, biosimilar volumes, keep in mind, it’s the commercialized drugs that really drive volume here in this business. And then of course that additional growth accelerator of the single-use technology adoption. Those are really the foundations that are driving the growth of this business. And the COVID business, it will do what it does, but that variation is within the realm of what we have been casting as the overall growth rate of the business. And so you take the backlog, which continues to grow quarter-over-quarter and you take the growth drivers that I have laid out. That is what supports the high-single digit, low-double digit growth for 2022 and the high-single digit longer term growth guide that we have talked about. Luke Sergott: Great. Thanks. It’s helpful. And on – so back to Aldevron here, I know they are continuing to add capacity. Is that still – is that coming in faster than you guys expected, or should we still expect that to pace out through ‘23 and ‘24? Rainer Blair: That’s going to continue to pace out as we add line after line after line. But I would say that these are programs that are coming on, on or better than schedule as the team continues to gain speed here not only with their subject matter expertise, which is differentiated. So, unique in the marketplace, but also with their adoption of the Danaher Business System. So, we look for that $500 million here in 2022. Luke Sergott: Okay. Great. That’s it all for me. Thank you. Operator: And this does conclude our question-and-answer session. I would be happy to return the call to our host for any concluding remarks. John Bedford: Thanks, everyone. We will be around the rest of the week for questions. Operator: This does conclude today’s call. You may now disconnect your lines and everyone, have a great day.

Operator: Hello. My name is Ashley, and I will be your conference facilitator this morning. At this time, I would like to welcome everyone to the Danaher Corporation Fourth Quarter 2021 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] I will now turn the call over to Mr. Matt Gugino, Vice President of Investor Relations. Mr. Gugino, you may begin your conference. Matthew Gugino: Thank you, Ashley. Good morning, everyone, and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer; Matt McGrew, our Executive Vice President and Chief Financial Officer; and John Bedford, our Director of Investor Relations. I'd like to point out that our earnings release, the slide presentation supplementing today's call and the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call are all available on the Investors section of our website, www.danaher.com, under the heading Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events and Presentations and will remain archived until our next quarterly call. A replay of this call will also be available until February 10, 2022. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. The supplemental materials describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company-specific financial metrics refer to results from continuing operations and relate to the fourth quarter of 2021, and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, and actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date they are made, and we do not assume any obligation to update any forward-looking statements, except as required by law. With that, I'd like to turn the call over to Rainer. Rainer Blair: Well, thanks, Matt, and good morning, everyone. We appreciate you joining us on the call today. 2021 was a tremendous year for Danaher capped off by a very strong finish to the fourth quarter. Our well-rounded performance throughout the year was highlighted by outstanding core revenue and earnings growth as well as strong free cash flow generation. We're particularly pleased with the strength of our base business across the portfolio, which was up low double digits for the year. And we believe our accelerated innovation and capacity expansion initiatives has helped us capture market share at a number of our businesses. Now these results are a testament to our team of 80,000 associates and their outstanding execution in what has been a challenging operating environment. Despite the uncertainty that has come to characterize life for all of us, throughout the pandemic, our associates are showing up big every day, working longer shifts, launching breakthrough products in record time and going above and beyond to support our customers, and they remain committed as ever to executing with the Danaher Business System. Really, their dedication to serving our customers and the global community is as humbling as it is inspiring, and we're grateful for their invaluable contribution. The circumstances over the last several years have also shined a light on the high-quality, market-leading franchises and technologies that now comprise Danaher. We're seeing the results of our purpose-driven portfolio transformation in action today through higher growth in margins, stronger cash flow and a higher percentage of recurring revenue. We're exceptionally well positioned to continue this trajectory going forward, and we see a very bright future ahead indeed. So with that, let's take a closer look at our full year 2021 financial results. We delivered 25% core revenue growth, 560 basis points of core operating margin expansion, nearly 60% adjusted earnings per share growth and over $7 billion of free cash flow. We deployed $11 billion of capital towards acquisitions, closing 14 deals across all four of our platforms. The largest acquisition, Aldevron, joined our Life Sciences segment in August, providing a fantastic beachhead for us in the important frontier of genomic medicine. It's just a great example of how we're using strategic M&A to enhance our capability and bring greater value to our customers. Now throughout the year, we also made significant organic investments to accelerate innovation across our businesses. Our R&D spend was up approximately 30% year-over-year and is now more than $1.7 billion annually. New products, which as the SCIEX ZenoTOF 7600 and Triple Quad 7500 and Leica Biosystems Aperio GT 450 digital pathology slide scanner are driving share gains in their respective markets through proprietary innovation while further enhancing our growth trajectory. Now total capital expenditures were $1.3 billion for the year, which reflects substantial investments to expand production capacity across our businesses, particularly at Cepheid, Pall and Cytiva. In bioprocessing, I'm really happy to report that our new single-use technology plants in South Carolina and Beijing and our cell culture media expansion in Utah all came online in the fourth quarter. And at Cepheid, we more than doubled our production capacity for respiratory tests in 2021. For near term, we believe these investments have been critical to support customer demand, and it helped us achieve meaningful market share gains. And they're equally important in the long term to support the significant growth opportunities we see ahead in these very attractive end markets. And now let's spend some time on the fourth quarter results. Our sales were $8.1 billion, and we delivered 19.5% core revenue growth with strong contributions from all three segments. We saw broad-based strength across our base business, which was up approximately 10% in the quarter. And geographically, both have developed and high-growth markets were up approximately 20% led by nearly 25% growth in North America and high teens growth in China. Gross profit margin was 60.7%, and our operating profit margin of 26.4% was up 270 basis points, including 240 basis points of core margin expansion. Adjusted diluted net earnings per share of $2.69 were up approximately 30%. And now for the full year, we generated more than $7 billion of free cash flow, up 30% year-over-year. In fact, our free cash flow to net income conversion was 112% from the full year and it marks the 30th consecutive year this figure has exceeded 100% for Danaher. So now let's go into more detail on our quarterly results across the segment. Life Sciences reported revenue increased 20.5% with core revenue up 17%. Now these strong results were broad-based with most major operating companies achieving low double-digit or better core growth. In fact, Aldevron delivered over 30% revenue growth in the quarter and finished the year with approximately $400 million in total revenue. That business is off to a great start as part of Danaher, and we couldn't be more pleased with the team's performance out of the gate. Our core revenue growth in our processing businesses continued to outpace segment level results with Cytiva and Pall Biotech, both up more than 25%. Non-COVID related bioprocessing trends remained strong with our businesses growing low double digits again this quarter. We continue to support significant customer activity across the development and production of COVID vaccines and therapeutics, which drove $2 billion of revenue in 2021. Moving to Diagnostics. Reported revenue was up 29.5% and core revenue grew 29% led by greater than 75% core growth at Cepheid. Non-COVID clinical diagnostic activity across all our operating companies, including Beckman Coulter Diagnostics, Radiometer, and Leica Biosystems collectively drove high single-digit core growth as patient and testing volumes largely remained at or near pre-pandemic levels. And we also saw an acceleration in demand that crosses non-respiratory menu, led by telehealth, hospital-acquired infections and urology testing. Cepheid produced and shipped approximately $19 million of respiratory test cartridges during the quarter. This dropped the total number of respiratory tests shipped in 2021 to approximately 16 million cartridges, more than 10x the number of tests produced and shipped in 2019 prior to the start of the pandemic. In fact, our four-in-one combination test for COVID-19, Flu A, Flu B and RSV represented approximately 50% of Q4 respiratory test shipments, while our COVID-only test accounted for the remainder. Now let's move on to our Environmental & Applied Solutions segment. Reported revenue was up 4%, with 7.5% core revenue growth. Our water quality and product identification platforms both delivered high single-digit core growth for the quarter. Now across our water quality businesses, strength was broad-based globally across industrial and municipal end markets. Customer activity accelerated with the support of a strong funding environment and many projects that were put on hold during the pandemic have now resumed. Country delivered low double-digit core revenue growth in the quarter to close out its 53rd consecutive year of growth. This is a tremendous accomplishment and a testament to the team's best-in-class commercial execution and commitment to continuous improvement, with truly a differentiating combination, which has driven consistent market outperformance. In Product Identification, our packaging and color management businesses were up mid-single digits and marking and coding was up approximately 10%. Videojet had its third consecutive quarter of double-digit core growth, led by strong demand in industrial and food and beverage end markets. So with that as a backdrop for what we saw in the quarter, let me highlight the trends we're seeing, both geographically and in our end markets. So a return to pre-pandemic levels of activity is driving healthy customer demand across most major geographies. This is reflected in the strong results we've seen throughout both the developed and high growth markets and our strong order book growth, which continues to trend above revenue growth. While certain regions have implemented targeted lockdowns to address recent COVID-19 outbreaks, we're not seeing any widespread decline in our customer activity. Now given the size and scope of our business, we're certainly not immune to ongoing supply chain constraints and inflationary pressures, but we're proactively addressing these challenges across Danaher, leveraging the Danaher Business System and tools such as daily management and working closely with our customers and suppliers to mitigate the impact. We're also using DBS to accelerate price action and manage cost pressures. In fact, we've achieved nearly 150 basis points of price each of the last three quarters, which is approximately double our historical price realization. Now in Life Sciences. We're seeing robust demand across all major end markets. Lab and customer site access is holding at pre-pandemic levels, evidenced by more normalized customer productivity, equipment installations and project initiation supported by a strong funding environment. Biopharma continues to be our strongest performing end market within the Life Sciences business, while shifts in treatment towards biologics as the standard of care and the accelerating focus on genomic therapies are driving significant investments in research, development and production capacity across the sector. And we believe we're well positioned to support this work across our $7.5 billion bioprocessing franchise. Now in addition, we continue see significant demand related to development and production of COVID-19 vaccines and therapeutics. And we expect this activity to persist longer term. Our customers are planning for ongoing production with the assumption that there will be an enduring need for effective treatment and prevention as the world transitions to approaching COVID-19 as an endemic virus. And more broadly, our customers increasingly view the potential applications of new mRNA modalities, including vaccines and other therapeutics as an important area for future investments. In the clinical diagnostics market, patient volumes remain at or near pre-pandemic levels. Our customers have largely adapted their protocols and procedures to manage through recurring outbreaks, allowing them to continue wellness checks, routine screening and other diagnostic procedures. While selective lockdowns are causing modest disruptions in certain regions like pockets of China and Europe, we're not experiencing any material widespread negative impact from these measures. In Molecular Diagnostics, global demand persists for Cepheid's point-of-care PCR respiratory test further heightened as a result of the recent global surge of the Omicron variant. Additionally, we're seeing a more active respiratory season in the Northern Hemisphere, driving customers' preference for our four-in-one combination test, and we expect both of these trends to continue into the first quarter. Now in light of these dynamics and conversations we're having with our customers about their expectations for the upcoming year, we anticipate shipping the same number of respiratory tests in the first quarter as we did in the fourth quarter and approximately 50 million sets for all of 2020. In 2021, Cepheid placed a record 10,000 new GeneXpert system bringing the total install base to more than 40,000 systems worldwide. The team's thoughtful approach to placing systems throughout the pandemic is focused on both the near and long-term value this technology can bring to our customers. More recently, we've seen several existing health care system and integrated delivery network customers adding new instruments at sites further out in their networks and closer to their patients, facilitating faster diagnostics and treatment decisions. The scalability and unique architecture of the GeneXpert where the same test cartridges are used on higher and lower throughput instruments with the broadest test menu in the market provides our customers with the confidence that they will achieve consistent reference lab quality results, whether they're testing in an urgent care clinic or a central hospital lab. So now looking ahead, with the assumption that COVID-19 will be in an endemic disease, we believe that the point-of-care molecular respiratory testing market will expand significantly from where it was prior to the pandemic. Given Cepheid's leading test menu and install base, combined with an advantaged positioning around speed, accuracy and workflow, we believe Cepheid will continue to gain share in an endemic environment. So moving on to the applied markets, customer activity is largely back to pre-pandemic levels, which we see a robust order rates for both consumables and equipment. In fact, project-oriented activity is accelerating with an improving funding environment and more normalized site access has prompted the resumption of many projects and installations that were put on hold in the throes of the pandemic. So now let's look ahead to our expectations for the first quarter and full year. Beginning with the first quarter of 2022, we will now include the impact of COVID vaccine and therapeutic-related revenue as part of our base business core revenue growth. This change is driven by our greater confidence in the durability of our COVID-related vaccine and therapeutic revenue as the virus turns endemic. So now for the first quarter and full year 2022, we expect our base business core revenue growth to be in the high single-digit percent range. Additionally, we expect to generate operating profit fall-through of 35% to 40% in the first quarter and for the full year 2022, up from historical and pre-pandemic rate between 30% and 35%. So now to wrap up, 2021 was another terrific year for Danaher. Our team successfully executed through a challenging environment to deliver outstanding financial performance, all while supporting our customers and directly contributing to the global fight against COVID-19. We're seeing the results of our purpose-driven portfolio transformation in action through faster growth, expanded margins, stronger cash flow and higher recurring revenue. We're a better, stronger company today and there is tremendous runway ahead for us to continue building upon this foundation. With the Danaher Business System as our driving force, our talented team and resilient portfolio of businesses, we believe Danaher will continue generating sustainable long-term shareholder value for years to come. And with that, I'll turn the call back over to Matt. Thank you. Matthew Gugino: Thanks, Rainer. That concludes our formal comments. Ashley, we're now ready to take questions. Operator: [Operator Instructions] We'll take our first question from Tycho Peterson with JPMorgan. Please go ahead. Tycho Peterson: Rainer, you guided for the base business to grow high single digit. Can you maybe just give us latest thoughts on vaccine and therapies? I know you previously talked about this $2 billion backlog heading into the year. So have any of the assumptions around vaccines and therapies changed? Rainer Blair: So just to confirm, that's right. For 2022, we're guiding the base business to high single digits. And no, our assumptions as it relates to the vaccine and therapeutics business have not changed. We saw continued strength in our orders. In fact, orders exceeded our sales here in Q4, and we continued to build backlog. At the same time, we have to say that from a roughly 70% comp, we were down about mid-teens in terms of the orders growth. Nonetheless, orders still outpace sales. We built backlog and we're looking forward to roughly flat sales in the bioprocessing business for vaccine and therapeutic revenues in 2022. Now the core business, so in other words, the non-vaccine and therapeutic-related business for COVID, we expect that to continue to grow, of course, in the low double-digit area as has been the case here for many quarters. Tycho Peterson: And have any of the Aldevron assumptions changed? I know you previously talked about $500 million this year, growing greater than 20%. Rainer Blair: They're right on the mark $500 million is a good number. That's kind of growth and slightly better than we expected here, closing the year off right around $400 million. So, Aldevron is right where we think we should be and performing at our expectations. Tycho Peterson: Okay. Maybe last one for McGrew. Environmental and applied operating margins were down quite a bit, I think, 410 basis points. Can you maybe just touch on what drove that decline? Matt McGrew: Yes, sure. Like you said, it was down 410 here in the quarter. It's probably three things. I would say, first, that's probably the area that we accelerated the investment spend the most in the fourth quarter, given obviously, a pretty strong print here across the entire portfolio. I think we took an opportunity in the fourth quarter to kind of overcharge a little bit of the investment there at EAS. So I think that's probably the first thing. I think the second thing is the supply chain. The challenges I would say there are probably modestly more pronounced at than they are elsewhere, Tycho. There's a kind of a high number of legacy products here that probably, I would say, have more components. And really what's happening is kind of the specialty components are a little bit harder to procure, especially in this environment that we're seeing. So largely offsetting that with daily management and doing some spot buys and some other product redesigns, et cetera, but I think a little bit more kind of supply chain issues there. And then lastly, I think if you think about -- there was a bit of mix issue here, too, with Trojan, which is a bit lower margin business being up, I think it was even north of 20% in the quarter. And so, I think despite that though, the good news is, like I said, I think teams doing a pretty good job using DBS to drive it from what we think and what we've seen here, it looks like even because of all that, I think we took some share here in Q4 and definitely in Q1, and that's really a result of being able to get through those challenges and still meet customer demand. Operator: And we would like to take our next question from Derik De Bruin with Bank of America. Please go ahead. Michael Ryskin: Thanks for taking my question. This is Mike calling for Derik. First of all, focus on Cepheid, both in '22 and post-pandemic. Given you're saying 19 million tests again in 1Q, it seems like you're assuming a pretty short drop off in 2Q, 3Q. And then you set up pretty confident duration, the COVID being endemic now, the POC market expanding spiffy going forward being to keep market share. So could you give us some more color on continued market share gains, the 10,000 boxes you place this year, so what are your expectations going forward? And just is that $50 million testing, does that sort of assume that that's going to be the run rate beyond that? Or do you expect continued sort of deterioration in COVID revenues offset by the other [indiscernible]? Rainer Blair: I'll start with, as you know, the situation around COVID is incredibly dynamic, right? It started with the assumptions that we made around Delta and then Delta spiked, and we thought that might become the dominant variant and then Omicron came 60 days ago, spiked. So the environment is incredibly dynamic. But in the discussions that we have both with public health officials, but also with our customers, I think there's a couple of takeaways. The first one is that we do think that COVID is going to turn endemic and a lot of public health officials will talk about the end of 2023, perhaps the beginning of '24, being that time frame when we call it endemic with greater confidence. As we look at our customer feedback and what they see happening here, that's where we're triangulating for 2022 into the 50 million test area. And as we've talked about, we see our base business in 2022 growing at high single digits and eventually having as a result of a step down from to 60 to 50 in 2022, at 200 to 300 basis point headwind there. Now as you think about that going forward beyond 2022, we think there's -- and once again, in the discussions with our customers that there's still a likelihood that there will be a large respiratory testing business, much larger than pre-pandemic in '23 and beyond. And once again, in the early days, and this could change. It's so dynamic. But we're thinking that, that probably steps down again in 2023. And our working number there for now is right around 30 million tests. So, as we think about the year 2023 and COVID testing, we see that going from 50 million in 2022 to perhaps 2023, 30 million. But that's a number that, of course, there's a lot of dynamic. There's a lot to happen between now and then, but that's sort of the planning number that we're working with. And at the same time, as you think about 2023, we see our base business, of course, the primary aspect of our total business continuing to grow off the strength of our portfolio. We've rated our growth rate and discussed that at several occasions, so we feel really good about how we're moving forward and like the setup. Michael Ryskin: Okay. Really appreciate the color there. And maybe one for Matt. You had some color on the pricing power going forward. I think you called out 100 basis points price in the fourth quarter and throughout the second half of the last three quarters. Could you comment on how much further runway do you see in '22 if we continue to be in an inflationary environment to pass on price to your customers? Any pushback you're seeing yet in any of the end markets? And just in general, the comments on how the fall-through in the business, labor pressure, logistics, obviously, in the news a lot. So how are you navigating that this year and implications for margins for the year? Matt McGrew: Yes. Sure. No, I mean I think as far as price goes, like you said, we saw kind of 150 basis points here in Q4. And I think that we've seen that for the last couple of quarters, I think that's a pretty good placeholder to put in for '22. Teams are obviously, over the last six months, we've been working harder to get that price. And I think you're seeing it show up. I mean it's basically 2x the price we used to get, kind of, call it, five, six quarters ago. So I guess it's a good place to start for '22. As far as margins go, just kind of maybe overall, I know we sort of put out a guide for '22, I call it, 35% to 40% fall through. And that's down a little bit from where we stand, kind of more in that 40% to 45%. I think that 35% to 40% kind of incorporates a little bit of what you're talking about. I think it's kind of in line with what we thought, frankly, our longer-term outlook was going to be. But if I think about year-over-year from '21 to '22, I think you're right I think a component of sort of the step down is going to be a little bit of the return to work and maybe some of the inflationary pressures that we see offset by price. The other piece really is going to be largely on the volume step-down that we see, and that's mostly going to be at kind of a mix type issue. So throw in some headwinds on share count and lets to sort of I'm thinking about the 40% to 45% in '21 going down to 35% to 40%. But I think the good news is that's pretty much in our long-term framework right where we thought. And I think it's also probably important to think about it. But even though we're seeing headwinds on the testing front this year, call it, 200 to 300 basis points, our COVID testing revenue is pretty much at the fleet average, right, which is why it's not a big step down for us. It's pretty much fleet average from a margin perspective. So I think that helps kind of as we navigate the headwinds. Operator: And we'll take our next question from Vijay Kumar with Evercore. Please go ahead. Your line is open. Vijay Kumar: Hi, Rainer. Congrats on a solid print here. I guess one on just the guidance here, fiscal '22, some clarification. So your definition of core now includes vaccines, and I think that's comparable to how your largest peer looks at core organic. But vaccines, if I just understood you correctly, it's flattish year-on-year, which means your base Danaher ex-vaccine, that's really growing at the very high end of high single. Is that right way to think about the guidance here on the base business? And what's driving this trend? It looks like it's assuming perhaps bioprocessing growing double digits, that's well above your LRP. So I'm curious some comments on bioprocessing. Rainer Blair: Sure. So once again, just to level set, the base business includes bioprocessing for COVID vaccines and therapeutics. It's important to note that. And in fact, we see the entire base business growing both for the quarter and the full year at high single digits. And that's driven by a number of factors. One, as you just suggested, of course, the non-COVID bioprocessing business is still growing at the low double digits that we have seen here, and that continues to be strong. We also see our non-bioprocessing business, so as you think about our diagnostic businesses, as you think about our life science instruments and so forth, we see them growing very strongly on the back of the investments that we've made around innovation, additional feet on the street, and really driving the growth here. Keep in mind that portfolio transformation that we've talked about has re-rated our base business growth, and we continue to see that. We saw that here in the two-year stack in 2021, and you're seeing that here in the guide for 2022. Vijay Kumar: Understood. So I guess now we have clarity on what the mid-single digit plus, what the plus means. That's helpful, Rainer. Maybe one for Matt. The 35% to 40% incremental margin share, Matt. Is that sustainable going forward? Should we -- I guess my question is most of your peers who benefited from COVID tailwinds? There is a cliff here or perhaps a transition year. It seems like Danaher does not have a cliff here. Maybe talk about the sustainability of incrementals and why perhaps the all the drop down and co-tails shouldn't be a headwind for Danaher? Matt McGrew: Yes, I mean, I think that's right, Vijay. I think like I just kind of said, I mean, our COVID kind of revenues, both vaccine, therapeutic and the testing, it's more or less a fleet average, right? And so what I think you're seeing here and part of the reason we talked about the re-rating of the portfolio from a growth perspective, as I just mentioned lot, we've also talked about the fact that the portfolio is rerated from a margin perspective, too, right? We used to be more 30%, 35%. Now, we're 35%, 40%. And I think what you see here is that as we go forward and think about kind of what a margin profile looks like, I think I feel very comfortable with the 35% to 40% and the fact that, like you said, we'll have some revenue headwinds. We're going to have some volume headwinds and testing like we sort of laid out, and we can talk about '23, maybe if you're interested. But I think as we get to those headwinds, it won't be above the fleet average headwind, if you will, from a decremental perspective. So while it will be a headwind, and I think you can -- you obviously see that a little bit here in '22, from a margin perspective, it's not going to be overly burdensome. Operator: We'll take the next question from Scott Davis with Melius Research. Please go ahead. Your line is open. Scott Davis: Good morning everybody. Congrats on a great year overall. But anyways, Rainer, I was hoping you could talk a little bit about M&A given that growth assets seemingly are out of favor in public markets fairly meaningfully. Is that kind of gone down into private markets at all and helped you out on the valuation side much? If you can talk about that in the pipeline, please. Rainer Blair: Sure. Well, I mean, first to the environment that we see out there, this is an environment that over our history, we have thrived in, whether you want to call that anxiety or uncertainty or even in times of dislocation. We've always viewed this as a time of opportunity for ourselves. And there's examples of that. If you think back to the financial crisis now going back some years, we acquired SCIEX at that period of time. That's turned out to be a fantastic asset. The team has done a wonderful job. Also, if you think about some of the anxiety around Cepheid or the Pall deals there, that has been -- we couldn't be more proud of how the teams have performed there and turn those businesses into really real powerhouses. And so, we sit here in this environment with a rock-solid portfolio, an outstanding team and a strong balance sheet, a great deal of optionality. And we like that set up. And so, as we think about our funnels and to your question, they continue to be adaptive as ever. They cover the gamut, whether that's public or private, and we'll continue driving our M&A strategy and our bias towards allocating capital towards M&A as we have in the past. And that will happen when that attractive end market, that first-class asset with competitive advantage meets our financial hurdles here as has always been the case. So we like where we sit, and we like the set up. Scott Davis: That's helpful, Rainer. And Rainer, you talked about new product launches like Beckman. How has COVID impacted those launches? Is there a -- were these things perhaps that were pushed back a little bit because of COVID? Were they on schedule with the customer response and ability to get out and see the customer with that product? Has that all been altered or changed? And just a little bit of color there would be helpful? And then I'll pass it on. Rainer Blair: Sure. In our case, COVID has actually accelerated innovation for us. Of course, in the obvious sense in that we were able to pull forward the GeneXpert COVID-only test subsequently and very quickly thereafter the four-in-one. Those are sort of the obvious examples. But at the same time, you've noted that we increased our R&D expenditures by 30% up to $1.7 billion, which has manifested in that pulling forward innovation, accelerating it and getting those into the market. And examples were mentioned, the Triple Quad 7500, most sensitive Triple Quad in the market, the ZenoTOF outstanding. And then, of course, the GT 450 pathology slide imaging, fantastic launches here, all of which was accelerated by the pandemic, and we were able to turn that into real opportunity for us. Operator: We'll take our next question from Dan Brennan with Cowen. Please go ahead. Your line is open. Dan Brennan: I guess the first question, just on the vaccine therapeutics outlook now that you're including it in the base. We were assuming our model a pretty steep drop off in '23 and '24 just as we go from initial two dose regimens down to boosters, and booster uptake looks good, probably not going to be nearly as good as the initial vaccine. So I guess, first, first question, I mean is that reasonable to think there's going to be a healthy step down, number one? And then number two, the fact that you're including it in the base, just wondering, I know previously you've discussed IT but kind of high single digits, is that still fair to think about the high single digits now that you've got vaccine and therapeutics in the base? Rainer Blair: Sure. Well, let's start off with the why vaccine and therapeutics in the base. And that just comes from our belief of two things. One, that COVID-19 will be endemic in that there will be a continuous requirement for vaccination, and that is going to be a global requirement. We also think that new age groups will receive vaccination more broadly in the world's kids in particular. And as such, there is a strong recurring demand there, and that was discussed at some of the previous questions. But if we back up a minute here and we think about this longer term, I talked about our '22 guide here with high single-digit growth in our base business, and we talked about the 200 to 300 basis points of headwind coming from testing. As you think forward now, how does all that play out, let's say, in 2023? And once again, it's important to start with the base, which is at the center of your question, which is, okay, well, we have this rock solid portfolio that's transformed over the years, that's going to be mid-single-digit plus growth and is going to have a different earnings profile as well, as Matt just talked about. And then inside of that, of course, you do have vaccine and therapeutic revenues from COVID and that will continue. There are new therapeutics being developed and there are also a lot of additional vaccines that are still in the pipe. And then as you think about COVID testing, as I talked about, we see that stepping down towards, we'll call it, a more endemic look from 50 million tests in 2022 to 30 million tests in 2023. Now when you wrap all of that up, and of course, there's a lot of things that are still up in the air in terms of the number of spikes you might have in between 2023 really looks a lot like 2022 in terms of how we think of the base growth going forward as well as our fall through. Dan Brennan: Excellent. And then maybe as a follow up, just one more on bioproduction, if you don't mind. Certainly, the low double digit is impressive growth, particularly on the side of your business. Some of the CapEx that we've seen in the industry that is really accelerating, Rainer has talked about, I think, the margins 40% cost type of CapEx growth in '22 on top of 40% in '21. So I'm just wondering, could you give a little color or maybe the order book there like on the base business, kind of what you're seeing? And are we in like a period of like hyper investment or maybe that low double digit, could have some upside here over the next couple of years? Rainer Blair: Sure. So we do continue to talk about the low double-digit growth rate for the non-COVID bioprocessing business. That's what we've seen for many quarters. But we also talked about the fact that our backlog continues to build there. And these announcements that you're seeing here out in the market, those are important indications of the strength of the industry and the market in and of itself. And of course, you can imagine with the breadth of our portfolio our global reach that we play, if not on all on the great majority of those kind of investments. And so could there be upside? Sure, there could be. But of course, we're looking at the order book and that's in hand and thinking about how that develops, and we'll continue to update. But for now, low double digits in the non-COVID processing business, is a good planning number. Operator: And we'll take our next question from Jack Meehan with Nephron Research. Please go ahead. Jack Meehan: So one of the big questions we've been getting is the Fed is looking to start raising rates. Just would be great to get your thoughts around durability demand from biopharma customers? And how much of a factor do you think higher rates could have on demand? And then finally, maybe any color on mix between development and commercial and interplay on those two sides of the market? Rainer Blair: Could you -- I'm sorry, could you repeat the second question, please? It came through a little garbled. Jack Meehan: Sure. Sorry. Just thoughts on how higher rates might influence demand from customers on the development side versus those with commercial products. Rainer Blair: Understood. Well, let's start with the rate. Well, it's early days, of course, and we'll see where those go. As we look at the markets that we play in or broadly, the impact of those rates could be different. But generally speaking, we see our end markets to be able to perform and drive growth even in a market where we see incrementally higher Fed rates. An example of that would be, if you look at biotech and aggregate, you see that the cash positions in these companies, is extraordinarily high. We continue to see investments going in there strongly. And so we don't anticipate any near-term impact due to Fed rate in that particular area. And that would, of course, overlap with the development part of your question. And as it relates to those that are already in commercial production, they are out there driving growth and ensuring the penetration of the incredibly efficacious biologic drugs, not just in the developed markets, but increasingly also in some of the higher growth markets. So we see really the demand drivers here going beyond any one country's monetary policy and continue to see that in a very positive light. So Fed policy is one thing. The specific markets that we play in, we would be less impacted by any of the incremental rate increases that are being discussed. Jack Meehan: Great. And then Dan just asked about CapEx going in on the CDMO side. I wanted to ask a similar question but focused all the CapEx going in from the bioprocessing players. Back at the Analyst Day, you talked about $1.5 billion of your own CapEx. Some of your peers are talking about a lot of more investment going in the single-use and just bioprocessing, broadly speaking. So, as you look across everything going on, just talk about supply versus demand and how you feel whether that -- just your views on that broadly speaking? Rainer Blair: Sure. Well, let me characterize that a little bit. So the large CDMO investments that you see there are really a derivative of what we talked about in your question before, which is the strength of the biotech market. These are typically smaller companies that don't want to invest their precious cash into manufacturing facilities, and we'll outsource that to CDMOs. And as we talked about, if you think about the fact that just in monoclonal antibodies over the last five years, we've seen a huge increase in the number of projects in the funnel. If you think about nucleic acid therapies, there we've seen a 10x increase in the development funnel. And now you're seeing those work their way through the clinical trial process and that requires capacity. So that's what the CDMO investments are about. And of course, the customer -- our customers are also CDMOs and we're helping them build those capacities so that they can take care of those developments going forward. And then we also continue to see drugs going commercial. And as these drugs go commercial, that's a 10 and 100x increase in production capacity requirement. And all of this then, if you aggregate that, is what's pulling on our demand and is why we are so confident in the investments that we've made. And I mentioned this not just for the short term, which, of course, is important to ensure that they're owning the supply bottlenecks as we work our way through the pandemic here, but also for the long term so that we continue to be that partner of choice that has the broadest portfolio, can integrate that portfolio horizontally and can deliver it to the point of impact around the globe with the necessary experts to help our customers get their drugs in the market more quickly and at a lower cost. Operator: We'll take the next question from Patrick Donnelly with Citi. Please go ahead. Patrick Donnelly: Hi, Rainer. Thanks for taking the question. I just wanted to follow up on the bioprocessing piece. I know you touched a little bit about what the cadence could look like going forward. But that's certainly the question I think we get the most from investors. So I just wanted to circle back on it. I mean it sounds like you feel really good about that underlying base business growing in the low double digits. And then the vaccine piece, maybe a little bit more of a variable. But can you just talk, I guess, about the trajectory? It sounded like '22 is a decent proxy where maybe COVID comes down, and you shake out somewhere in the mid-high single digits as a whole for that kind of $7.5 billion business. I was just hoping you could talk a little bit about the puts and takes as we go through kind of the next few years. And again, that vaccine piece comes down, but the base business seems like it's good enough to offset that and then some, but just wanted to get a better handle there. Rainer Blair: I think that's right. As we look at 2022, I mentioned the COVID-related vaccine and therapeutic bioprocessing business. They'll probably be roughly flat here in 2022. Again, the assumption being that we're starting to see the pandemic going endemic on the one hand. On the other hand, what you start seeing -- you start seeing to happen is, if you will, we're going from 1.0 compounds to 2.0. So some vaccines and therapeutics are viewed as less efficacious in the current environment with the current variance, and so those become less of a factor. On the other hand, you have new monoclonal antibodies as therapeutics starting to be proposed that show much higher efficacy here with the variance that you have. And then for those that are already in market and quite effective, we're starting to see the recurring revenue as those companies are starting to recognize the recurring need for booster shots, not just here but around the globe. So we think that that's a good baseline to move forward with and how to think about it. And we've continued to view, as we've said in our long-term guide around the bioprocessing business, that that's a high single-digit grower. And I think that's the way to think about it in '22. And as we said, we think '23 will look a lot like '22 as well. Patrick Donnelly: Okay. Great. No, that's helpful. And I know the order book typically you're taking orders for within a year. Is any of that building into '23 yet? Or should we think about that as mostly a 12-month order book and then maybe conversations beyond that? Rainer Blair: It's a 12-month order book in conversations beyond that. Patrick Donnelly: Okay. And last one, just the same topic for Matt. Margin profile, COVID versus not for the bioprocessing, it's pretty similar, right? I just want to double check on that. Matt McGrew: Yes. In bioprocessing, margin difference between COVID and not, is that what you're asking? Patrick Donnelly: Yes, exactly. Matt McGrew: Yes. No. No real difference. I mean we're -- I would say that it's all, again, just depending on mix of what goes in there, product-wise, but no margin profile wise it's the same.. Operator: And this will conclude today's Q&A portion for the call. I'll turn the call back over to Matt Gugino with any additional remarks. Matthew Gugino: Thanks, Ashley, and thanks, everyone, for joining us on the call today. We're around all day for questions. Rainer Blair: Thank you everybody. Operator: And this does conclude today's program. Thank you for your participation. You may disconnect at any time.

Operator: Good day, everyone. My name is Emma and I will be your operator today. At this time, I would like to welcome everyone to the Danaher Corporation Third Quarter 2021 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the call over to Mr. Matt Gugino, Vice President of Investor Relations. Mr. Gugino, please go ahead. Matthew Gugino : Thank you, Emma. Good morning, everyone. And thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer; Matt McGrew, our Executive Vice President and Chief Financial Officer, and John Bedford, our Director of Investor Relations. I'd like to point out that our earnings release, the slide presentation supplementing today's call, and the reconciliations and other information required by SEC Regulation G, relating to any non-GAAP financial measures provided during the call are all available on the Investors section of our website, www. danaher.com under the heading Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today, under the heading, Events and Presentations and will remain archived until our next quarterly call. A replay of this call will also be available until November 4th 2021. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. The supplemental materials describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to Company-specific financial metrics referred to results from continuing operations and relate to the third quarter of 2021. And all references to period-to-period increases or decreases in financial metrics are year-over-year. We also may describe certain products and devices which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will make Forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These Forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, and actual results might differ materially from any Forward-looking statements that we make today. These forward-looking statements speak only as of the date they are made, and we do not assume any obligation to update any forward-looking statements, except as required by law. As a result of the size of the Cytiva acquisition and its impact on Danaher's overall core revenue growth profile, we are presenting core revenue on a basis that includes Cytiva sales, references to core revenue growth including Cytiva sales and the calculation of period-to-period sales growth. With that, I'd like to turn the call over to Rainer. Rainer Blair : Matt, thank you and good morning everyone. We really appreciate you joining us on the call today. Our team delivered another outstanding result in our third quarter with over 20% core revenue growth, nearly 40% adjusted earnings per share growth, and strong free cash flow generation. This well-rounded performance is a testament to the unique positioning of our portfolio and our exceptional team who are committed to leading and executing with the Danaher Business System every day. I'd like to thank all of you who joined us last month for our Virtual Investor Day, where we had the opportunity to showcase the strong foundation we’ve built for generating sustainable, long-term outperformance. We highlighted our fantastic portfolio of market-leading franchises in highly attractive end markets, the exceptional team we have out on the field every day, and how we differentiate with the Danaher Business System. And we certainly saw this powerful combination in action during the third quarter as our results attest. Now we also talked about our sustainability efforts. And just last week, we published our 2021 sustainability report. This year's report reflects the measurable progress we've made across the three pillars of our sustainability program, which are innovation, people, and the environment, and how we use the Danaher Business System to execute on this increasingly important strategic priority. Now, I hope you all get a chance to read through the report and learn more about the important work that we're doing across Danaher, to positively impact the world around us for generations to come. With that, let's turn to our third quarter results. Our sales were $7.2 billion and we delivered 20.5% core revenue growth with portfolio-wide strength led by Diagnostics and Life Sciences. Geographically, high-growth markets grew approximately 25% and developed markets were up nearly 20%. In fact, revenue in each of our three largest markets; North America, Western Europe, and China, was up approximately 20% or more in the quarter. Our gross profit margin increased by 550 basis points to 60.3% primarily due to higher sales volumes, the favorable impact of higher margin product mix, and the impact of prior-year purchase accounting adjustments related to the Cytiva acquisition that did not repeat in 2021. Now, adjusted diluted net earnings per common share were $2.39 and were up 39% compared to 2020, and we generated $1.7 billion of free cash flow in the quarter, bringing our year-to-date total to 5.2 billion, which is up 46.5% year-over-year. We continue to accelerate organic growth investments across the entire portfolio, and increased our research and development spend by approximately 30% year-over-year. At our Investor Day recently, we highlighted how we use DBS growth tools and processes to accelerate innovation and bring more impactful solutions to our customers faster. In fact, recently launched products like the SCIEX, ZenoTOF 7600, and the Triple Quad 7500 and Beckman Life Sciences, CytoFLEX SRT Benchtop Cell Sorter are just a few great examples of how we're driving market share gains through proprietary innovation and enhancing our growth trajectory going forward. We're also making substantial investments to expand production capacity across our bio-processing businesses and at Cepheid. Near-term these investments are supporting existing customer demand and driving meaningful share gains. But they're equally important to support the long-term growth of these businesses where we see significant runway ahead given the underlying structural growth drivers in the sectors they serve. And we expect our total capital expenditures across Danaher to be approximately $1.5 billion in 2021 as we continue to invest in support of our customers' need today and well into the future. So, now let's go into more detail on our quarterly results across the segments. Life Sciences reported revenue increased 24.5% with core revenue up 20%. This growth was broad based across the segment with most major operating companies achieving high teens or better core growth. Now these strong results were led by continued demand for our bioprocessing solutions as in Cytiva bioprocessing and Pall Biotech, both grew more than 30% in the quarter, including low double-digit, non-COVID related core growth. COVID-related vaccine and therapeutic revenue continued to be strong and now exceeds $1.5 billion year-to-date. At Cytiva, we passed an important milestone last month when we exited the last of our transition services agreement with GE. We successfully completed this process ahead of schedule, which is a testament to the entire Cytiva and integration team and their collective commitment to the Danaher Business System. Cytiva also added more than 1,500 new associates to the global team since joining Danaher to help ensure that we are supporting our customers today and continue meeting their needs well into the future. Now, in August, we successfully closed our acquisition of Aldevron, and we're thrilled to officially welcome the team to Danaher. Aldevron is a leading producer of high-quality plasmid DNA, mRNA, and proteins, and provides a fantastic beachhead for us in our genomic medicine enterprise. We're seeing the rapid development of gene and cell therapies, DNA, and RNA vaccines, and gene editing technologies, and Aldevron expand our capabilities in these areas to ultimately help our customers bring more life-saving therapies and vaccines to market faster. We're really excited about the quality, the scale, the turnaround time, and the reputation that Aldevron brings to the Danaher portfolio. Now in Diagnostics, reported revenue was up 29.5% and core revenue grew 28.5% led by more than 60% growth at Cepheid. Each of our other major diagnostic businesses, Beckman Coulter, Radiometer, and Leica Biosystems grew low-to-mid teens in the quarter as clinical diagnostic activity and patient volumes around the world largely returned to pre -pandemic levels. In respiratory testing at Cepheid, we further expanded manufacturing capacity, which enabled the team to produce and ship approximately 16 million cartridges during the quarter. COVID-only test accounted for approximately 80% of those shipment, and our 4-in-1 combination tests for COVID-19, Flu-A and B, and RSV represented approximately 20%. In non respiratory core growth, Cepheid was up double-digits as well, led by demand for hospital acquired infections, sexual health, and urology testing. We also saw strong growth in our installed base, as system placements continue to exceed pre -pandemic rate. And we believe the team's thoughtful placement of the GeneXpert and Infinity systems over the last 18 months is setting up Cepheid very well for future growth opportunities. First move to our Environmental and Applied Solutions segment. Reported revenue was up 7% with core revenue up 7.5%. Water quality grew mid-single-digits, and our Product Identification platform was up low double-digits. Across our water quality businesses, we saw good underlying market strength, particularly in food and beverage and various industrial applications as activity returned to more normal level. Municipal projects picked up given the improving funding environment and as more customers return to in-person work. Now on product identification, both VIDEOJET and our packaging and color management businesses were up low double-digits in the quarter. Comparable stirrings across consumables, service, and installed base growth was driven by more normalized levels of customer activity and investments. We believe that our ability to meet our customers needs, particularly on the equipment side at VIDEOJET, enabled us to gain market share and expand our industry-leading installed base printers. So with that as a backdrop for what we saw this quarter, let's spend some time going through regional and end-market trends. Most major regions and countries around the world are largely back to pre -pandemic activity levels. Customers have adapted to the current operating environment and protocols and broadly resumed in-person commercial activities and site access. Now this is reflected in the strong results we've seen across the U.S., Europe, and China. And this momentum is also reflected in our strong order book growth w which is trending above revenue growth. Now we're mindful of potential COVID-19 variants or outbreaks and selective lockdown. But we're not currently seeing any material negative impact from these scenarios. And while we are seeing some global supply chain constraints, we're leveraging the Danaher Business System tools like daily management and actively working with our customers and suppliers to help mitigate any impact. Across Life Sciences, we're seeing robust customer activity and demand across all major end market. Lab and other site access is largely back to pre -COVID levels, and we're seeing this through more normalized productivity levels, installations, and project initiations driven by a strong funding environment. Now, Biopharma continues to lead the way as the number of life-saving biologic and genomic-based therapies and development and production continues to rise, and it's augmented by the ongoing work around COVID-19 vaccines and therapeutics. And at our recent Investor Day, we spent time covering how well-positioned we are to support this complex life changing work that our customers are pursuing. Our combined bio-processing portfolio across Cytiva and Pall Biotech is the broadest offering in the industry with leading positions in upstream and downstream applications. And we further support our customers with best-in-class scientific services, partnering to solve their most challenging problems as they move from the lab to production scale. And our global reach enabled us to reliably and consistently meet our customers' needs. Now, in addition to the industry-wide opportunities in biologics and genomic -based medicine, we continue to see significant demand related to the development and production of COVID-19 vaccines and therapeutics. Our customers are working to address emerging variants and increased global supply. And given that only about a third of the global population has been vaccinated, we believe we'll see durable growth in this Biopharma segment for the foreseeable future. We continue to expect about $2 billion of COVID-related vaccine and therapeutic revenue in 2021. And since we spoke at our Investor Day, we now expect to enter 2022 with approximately $2 billion in COVID-related backlog versus our previous expectation of $1.5 billion of backlog. This increase is driven by the recent enhanced visibility for booster shots and the likelihood of vaccine availability for children under 12 years old in the US. Moving to the clinical diagnostic market, non - COVID testing volumes are essentially back to pre -pandemic levels in most major regions as patients are returning for wellness checks, routine screening, and other elective procedures. In Molecular Diagnostics, strong global demand persists for Cepheid point-of-care PCR respiratory testing, as a result of the Delta variant and outbreak, along with lower vaccination rates in many regions. As I mentioned earlier, we shipped approximately 16 million respiratory tests during the third quarter, and we now expect to ship approximately 55 million tests in 2021 versus our prior expectation of 50 million. As we head into the traditional respiratory virus season, we're hearing from customers that they expect this to be a much more active season than last year's, in preparation their preferences for our four-in-one combination tests. So we're seeing an uptick in demand for those cartridges, particularly given the recent outbreak of RSV across the U.S. Cepheid 's 4-in-1 test was also recently approved with a third gene target for SARS-CoV-2 detection, ensuring it can continue to accurately detect future COVID-19 viral mutations and reinforcing Cepheid's competitive advantage in the respiratory testing market. Now moving to the applied market. Customer activity has largely rebounded to pre -pandemic levels, which we see in robust order rates across both consumables and equipment. In the global municipal market, consumables demand remained solid and the pace of instrument oriented project activity continues to pick up with the improving funding environment and broad return to work. Now, let's look ahead to our expectations for the fourth quarter and the full year. We expect to deliver fourth quarter core revenue growth in the low to mid-teens range with high single-digit core revenue growth in our base business, and a mid-to-high single-digit core growth contribution from COVID related revenue tailwind. Additionally, we expect to generate operating profit fall through of approximately 40% in the fourth quarter, a similar level to what we achieved in the third quarter. Now for the full-year of 2021, we now expect to deliver more than 20% core tail wind and our base business will each contribute more than 10% to our 2021 core revenue growth rate. So to wrap up, we're proud to deliver another terrific results here in the third quarter. Our performance is a testament to the power of our unique portfolio, the strength of our end markets and our team's commitment to leading and executing with the Danaher Business System. And this unique combination differentiates Danaher today, and it reinforces our opportunities ahead for sustainable, long-term, outperformance. So with that, back over to you, Matt. Matthew Gugino : Thanks, Rainer. That concludes our formal comments. Emma, we're now ready to take questions. Operator: [Operator Instructions] We will take our first question from Tycho Peterson with J.P. Morgan. Rainer Blair : Hey, good morning, Tycho. Tycho Peterson : Hey. Rainer, I'm wondering if you could talk a little bit more on China. There seems to be growing noise on pressure, local competition. It seems to particularly be impacting some of the Diagnostics tenders with that process getting pushed out from the provinces. Are you seeing anything there for Beckman or Cepheid? I know China was up 20% overall, but I'm just curious if there's any pressure on the Diagnostics business based on what you're seeing? Rainer Blair : Sure. So let me start with -- we are not seeing any material impact related to some of the tenders or some of the other things that we hear out of China. In fact, the Anhui Province tender is really an exception in diagnostics and actually more common in other industries, and we'll see this kind of thing from time-to-time, but it's neither unexpected nor do we see it as material. But what we're seeing generally in China is really very consistent with what we've seen over the past several years. China has been very forthcoming with its Made in China 2025 Initiative as well as several others, all of which we see quite aligned with our strategy. Starting with our portfolio, which is clearly aligned with the healthy China 2030 agenda, where you see the need for both improved Diagnostics solutions as well as Life Sciences research and bioprocessing, as well as the desire to protect the environment where water quality really plays big, as well as the desire to improve and protect the food supply where we see PID playing large as well. We think we're really ideally positioned here to meet the needs of where China is going. Now, at the same time for years, we have been investing in China as our business gains scale to ultimately localize our production. And that's been the case here for some time, positioning us very well in China, and that will continue to be the case going forward as our businesses continue to gain scale there. Tycho Peterson : Okay. That's helpful. Supply chain, you flagged some constraints, obviously, you guys are generally very good at kind of mitigating any impact here. But I'm curious as you look out over the next couple of quarters, are there areas where maybe you are more or less concerned around supply chain that you might flag? Rainer Blair : We haven't really seen a material impact on our ability to meet our customers' demand, but we are seeing some modest inflationary and supply chain pressures in certain areas just to name a couple, of course, electronic components, freight, and logistics and some labor shortages. But really this is where the Danaher Business System is a differentiator for us in this environment. In fact, despite the additional work that ensues, we see this really as an opportunity for ourselves to differentiate with our DBS toolset, for instance with daily management, which brings our cross-functional teams together on a daily basis, drive disciplined execution and accountability, as well as the sense of urgency in real-time problem solving. And at the same time of course, we're qualifying additional suppliers and building safety stocks. So, this is how we make sure that Danaher continues to not only meet its customer expectations, but also has opportunity to gain share. Now at the same time, of course, we see some inflationary pressures and we're offsetting those with more active cadence, of price increases, and those would also be incrementally larger than in the past, as well as freight and fuel surcharges. So, on the one hand, we're driving as always to reduce our cost of goods sold. At the same time, we take additional offsets with moving on some of these surcharges and price increases I mentioned. I think also importantly, to note here that this is not a top down process. The Danaher operating companies have this process muscle and are able to execute effectively whether that's ensuring the security of the supply chain or whether that's ensuring that we can offset cost increases via price and other methods. And ultimately, we think that differentiates us and we think we are gaining share as a result of that in PID water quality, Cytiva and Pall, Radiometer and elsewhere. Tycho Peterson: Okay. That's great. And then before I hop off, just one on Cepheid , you're exceeding your targets here in the near-term. Should we assume your estimates for 2022 are still intact? I think you talked about 45 million tests before or have you kind of revisited those as well? Rainer Blair : That's correct, Tycho. We're really pleased that the team was able to ship more again here in the third quarter with the capacity increases, and demand still exceeds our ability to supply. But for today's view, 45 million cartridges for 2022 is our point of view. Tycho Peterson : Perfect. Thank you. Rainer Blair : Thanks, Tycho. Operator: We'll go next to Vijay Kumar with Evercore ISI. Rainer Blair : Good morning, Vijay. Vijay Kumar : Good morning, Rainer. Congrats on another impressive print here. Just one on testing here. I think I heard the number 55 million tests for '21. The implied Q4 number, I think is about 15 million. That's a sequential step-down from 3Q. I'm curious, just given the testing trends, whether that step-down makes sense and any change to your -- I think your prior expectation was 45 million tests for fiscal '22. Is that still relevant given the current run-rate? Rainer Blair : Sure. Thanks Vijay. So, the way to think about the fourth quarter here in terms of testing, is we would expect also 16 million cartridges in the fourth quarter similar to what we saw in Q3. While we're always working to increase capacity, we think 16 million cartridges is the right way to think about it. And of course, if you add up the quarters, let's call it about 55 million, I wouldn't want you thinking about a step down here in Q4 for Cepheid. That's not the case. Now as you look forward to 2022, we still think that 45 million cartridges where we sit today, is the right way to think about it. And as we come to our fourth-quarter earnings call in January, we'll revisit the topic then. Vijay Kumar : Understood. And now my second question, Rainer. This is maybe a bigger picture question. I think at your Analyst Day, you updated Cytiva outlook as high singles. Now, when you look at your peers in the Biopharma space, most of them are in the double-digit range. Is there anything different about your Cytiva business mix versus your peers and correct me if I'm wrong, but isn't Cytiva gaining share versus peers? Rainer Blair : So to start with, the Cytiva and the Poll Biotech businesses together are by far the most complete portfolio in the marketplace. And we continue to see pockets where we're taking share because we've been able to invest not only in capacity, but our customers really appreciate the scientific capability and the help that they get from Cytiva and Pall in solving the challenges that are associated with making biologics of high-quality with high yields at the targeted costs. So we really see ourselves in an advantage position here and believe that we continue to take share whether that's on a quarterly or on an annual basis, that's for sure the case. Now, as we think about the long-term growth, and perhaps our timelines needs to be aligned here. As we think of long-term growth, you might recall, when we acquired Cytiva, we thought this was more of a fixed percent type of growth business. And what we've seen here is that certainly the growth of this business is rerated higher. And certainly in the pandemic, it's quite a bit higher. Once again, as we think about the long term, we think it's prudent to think about a business at that scale in a high single-digit. And we think that will compare very favorably with any other business out there in the short, medium, and long term. Vijay Kumar : That's helpful, Rainer. And just to summarize that, there's no reason to think Cytiva growth should be below market. Is that a fair summary? Rainer Blair : We continue to believe that we'll take share now and in the future. Vijay Kumar : Thank you, guys. Rainer Blair : Thanks, Vijay. Operator: We'll go next to Derik De Bruin with Bank of America. Rainer Blair : Derrick, good morning. Derik De Bruin: Hey. Good morning. Thanks for taking the question. So I have a couple of ones. Can we talk a little bit about operating leverage as we go into '22 and '23? You guys are investing really heavily in R&D. You're doing a lot to drive innovation in the business. How can we think about OP leverage as we go in there and then, just to get a sense of where the margins are going to come on? Rainer Blair : Sure. Derrick, as you know, we have been and as you just mentioned, investing very significantly in the business. This is not only the case in capital expenditures, where we're investing in our manufacturing network throughout the world. But we've also been investing significantly in research and development in feet on the street to drive proprietary innovation in the short and long-term, as well as to ensure that we can continue to drive share gains with our direct business model. Now as we think about the operating leverage, you know that our fall through here had been in the 40% range. And we think that's a good way to think about the quarter here as well. In the long term, historically, our fall-through has been more in the 35% range. And we think that's probably the better way to think about fall -through for the long term, just because we want to find that balance of reinvesting in the business, as well as driving profitability expansion. And we think that Flywheel works for us. Mid-single-digit plus growth on the one hand; on the other hand, 50 to 75 basis points of operating margin expansion, free cash flow conversion over net income over a 100%. All of that then to drive double-digit plus EPS growth. And when you couple that with our current balance sheet of positioning with our bias to deploy capital towards M&A, we think that sets us up very nicely here, both from an operating leverage perspective, as well as driving our growth franchise forward. Derik De Bruin: Great. Can we talk a little bit about the analytical instrumentation sales? I'm curious just on how SCIEX is comparing to 2019 and some of the other instrumentation. And specifically, I'd like to know developed world versus China and what that is -- just trying to gauge overall, are we seeing accelerating analytical demand from 2019 versus where we are today? Rainer Blair : Well, let me start with that. We are seeing accelerated analytical demand versus prior year today. That's the case in all of our more instrument bias -- businesses and that is certainly the case for SCIEX as well. We do see that the funding environment labs opening up are helpful here and have accelerated instrument demand going forward. And SCIEX has done very nice here with over mid-team core growth in the quarter and that also read through to China as well. SCIEX in particular, as you know, has been on a great streak of -- and continuous streak of innovation launching at the ZenoTOF 7600, as well as the 7500 Triple Quad an d Echo MS, and is not only benefiting from the tailwinds of and attractive funding environment, which we see here in this year and certainly in the second half of 2021. But they're also benefiting through this innovation that is really allowing our scientists to answer new questions and that's resulting in share gain. Matt Mc Grew : This is Matt. Just to put some numbers to what Rainer said. I mean, if you look at SCIEX in particular, on a two-year stack, you're talking about high single-digits here in ' 20and '21, which is that's actually better than where they were in '18 and '19 on a two-year stack. So I think like Rainer said, we're seeing some pretty nice acceleration, really new product-driven as well, but it's been a really good story here for the last couple of years. Derik De Bruin: Great. And if I can sneak in one more. The COVID vaccine backlog for '22. Is there even some additional upside there? Is that already committed orders, or is that more tied to your instrumentations on [Indiscernible] etc. Rainer Blair : We are close to those $2 billion of backlog and for the bio-process business for 2022 today and certainly expect to be there by the end of the year. We think that sets us up pretty well. We will see what 2022 brings and we'll talk more about that in January. But the fact that we've up that backlog by 500 million here going into 2022, we think is a good sign for things to come. Matt Mc Grew : Derik, so definitely, those are committed orders. That is not a -- Derik De Bruin: Great, Jack. Thank you. That's what we're working. Thanks. Matt Mc Grew : Yes. Operator: We'll go next to Scott Davis with Melius Research. Rainer Blair : Good morning, Scott. Scott Davis : Good morning. Rainer and Matt and Matt and John. Thanks for taking my question. I am kind of curious. I mean, logistics, prices, and labor cost, inflation or challenges and all the stuff doesn't seem to really have impacted you guys much. Maybe a little bit at ENAS. And you've made a comment, Rainer on capturing price, but it looks like price was sequentially flat. Is that something that you would expect price to be a little bit more dynamic going forward or is it just kind of a mix impact to some products where priced just doesn't need to go up? Rainer Blair : We're about a 150 basis points up year-over-year and we continue to move price increases through the system. So I think you're going to continue to see that filtering through here going forward, Scott. So mix plays a role as you suggest; timing is another one, but all of these actions are in the works and it takes some time to get through the system. Scott Davis : Okay. That's helpful. And the R&D -- the spend up 30%, is that -- is it headcount up 30% too or people are costing you more? How do you think about that and how do you think about getting productivity on that spend as making sure projects are focused and there's some sort of return on that investment? Rainer Blair : Scott, that's a great question. And the 30% increase is primarily related to a number of points. One, of course, you have more people working on more projects. But in terms of the productivity, the way to think about that is any project that we do, has its business case and we ensure that that productivity to the delivery of that business case makes sense for us. So we view this, of course, as an investment in the future that ultimately drive defensible proprietary share gain through research and development. And the increased comes in terms of people that comes in terms of additional equipment, testing equipment that's required. It comes in terms of additional alpha and beta system that are out in the field with our customers. So myriad ways that we invest that in order to drive innovation. Scott Davis : Okay. Good luck, Rainer. Thank you and congrats on a great year so far, guys. Thanks. That's [Indiscernible]. Rainer Blair : Thanks, Scott. Operator: We'll go next to Dan Brennan with Cowen. Rainer Blair : Morning, Dan. Dan Brennan: [Indiscernible], thanks for taking the question. Good morning. Thank you for taking the questions here. I wanted to ask as a follow-up to the first question on this bio process. You maintained the outlook for vaccine therapeutic contribution this year. Just wondering, is there capacity for you to exceed that in terms of is there demand for that or your capacity constrained for 2021? And then related to that, as we think about 2022, you've already discussed the 2 billion firm order book, but how do we think about the contribution within that from boosters and from kids to that. I think that in previously, you had boosters included in that. So maybe that's the first question. Thank you. Rainer Blair : Very good. Well, let's start with the topic of the contribution that's in the 2 billion. In fact, we did not include the kid 12 and below into our $1.5 billion original backlog estimate for 2022. That and, of course, now the approval of boosters for various groups of the population is really what is driving that increase from $1.5 to $2 billion of backlog for 2022. What it doesn't include is the approval of these vaccines for kids 12 and younger, for example, outside of the US. That's something that is still in the future, and there's not sufficient clarity for us to start thinking about that in quantitative terms, but that's something that would be excluded in that. Now coming back to your capacity question, as you likely are aware and as we talked about also in our Analyst Day, we have been investing in capacity expansions in the biotech business now, for some time. In fact, we ensured that the investment continued even prior to the closing of the acquisition from GE and we have continued with those investments that have come online here, nearly in a continuous fashion through the second half of 2020 and 2021. And we expect those capacities to continue to increase here going into 2022. So we feel very comfortable that we're able to meet our customers' requirements here now and going forward, and we think that differentiates us in the marketplace. And why, among other reasons, we are confident that we are taking share. Dan Brennan: Great, thanks, Rainer. And then as a follow-up, I know Matt discussed previously, a stack growth on, I believe is on Cytiva. I just wanted to understand a little bit in terms of stack-free overall business. I know the commentary throughout the conversation reflected business largely back to normal, which is great. But when we look at like the base growth ex - COVID then we consider like a stack, and this is clearly very imprecise. But in Q3, that base growth on a 2-year average basis was around 4, maybe a little bit below that. And I believe in Q4, the high single-digit base guidance implies like a 2-year stack that might be closer to 3. And this is compared against what we consider Danaher 's underlying growth rate probably somewhere in the 6% to 8% range when things get back to normal. So just trying to reconcile some of this underlying stack and is it just conservatism right now? Are things back to -- Rainer Blair : Yes. Dan Brennan: -- normal or maybe it's just too imprecise to do this analysis with COVID? Thank you. Matt Mc Grew : Yes. Dan, let me just give you the numbers because I think may be disconnect here. I think the simple frame for Q4 is like we, talked about, we increased our expectations from low double-digits to low to mid-teens. And like you said, we are up in the base business. We think the base business is going to be high-single-digits in Q4, which as you said, was probably a little closer to 10% here in Q3. And I would look at that delta between kind of high-single-digits and 10 and say that that's really just more a function of kind of prudent planning given the current operating environment and some of the things we've talked about. In particular, you think about Q4 and logistic challenges, etc. that might be there. So I think we're just trying to give a little bit of -- from a planning perspective, high-single-digits from about the10% we've seen, but really not much of a change here in the environment. Dan Brennan: Okay. Great, thanks, guys. Operator: We'll go next to Jack Meehan with Nephron. Rainer Blair : Morning, Jack. Jack Meehan: Thank you. Good morning. Just wanted to a little bit more color on the funding environment, was curious as you look into the fourth quarter, what customers might be telling you around the potential for a budget flush and what is the guidance assume versus historical patterns? Rainer Blair : So Jack, first of all, we see the funding environment across the board improving. So if we start with yes, we do see customer activity increasing, we do see more work occurring at the workplace, and with that, more projects being tackled both in the capital as well as operating investment categories. And we would expect that to continue to improve here going forward as the economy continues to pick up speed and return to normality. As we think about Life Sciences, research funding is up, whether that's government funding, whether that's venture capital funding, or whether that is Biopharma funding from the pharmaceutical companies. We've see n a step-up here in an effort to take advantage of the opportunities that new breakthroughs and technologies that you're all aware of, as a result of COVID, all -- creating a great deal more awareness of the possibilities here in therapeutics. We see, generally speaking, a great environment in the Life Science area. Bioprocess, we talked about with continued capacity increases to meet the needs of the very fast-growing therapeutic pipeline. We talked about the fact that monoclonal antibody pipeline is up 50% in terms of the number of projects over the last five-years. Genomic gene cell therapy pipeline is up an order of magnitude to 10x versus 5 years ago. That's creating very healthy drive here whether that's in the research - side of Life Sciences or in the bioprocessing. And then when you come back to diagnostics, patient volumes are nearly at full rate pre -pandemic rates, if you will, in nearly every geography. And we continue to, of course, the COVID driving additional diagnostic demand and so across the board a very positive funding environment. And we would expect that the one of the other budget is going to be taken advantage of here in the fourth quarter. We'll see. There are a number of different perspective there but the environment is generally very positive. Jack Meehan: That's great. And then as a follow-up, just curious on Aldevron on how the early integration feedback's going. And as I look at the fourth quarter, you've given us the core guidance. What do you have M&A contributing? 2.5 points or so? Does that sound right? Matt Mc Grew : Yeah that would be probably -- sorry. Go ahead, Rainer. Rainer Blair : No, go ahead. Go ahead, Matt, please. Matt Mc Grew : The M&A contribution is probably going to be about -- it was 40 here in Q3. But I think you're probably pretty close with what you've got, 40 million. Rainer Blair : So we -- actually coming back to the front end of your question there, we couldn't be happier with both Aldevron as an entity, but even more importantly, the team in Aldevron that have embraced joining the Danaher family are embracing and pulling hard on the Danaher Business System and are really focused on driving and growing their business. There's plenty of opportunity as you likely know, in the core businesses of Aldevron. And we see that. We see that in the order book. We see that in revenues. And we will see that also in their earnings contributions, all of which is running as we expected, when we updated during the acquisition. So we expect to see $400 million of revenue this year, growth rate in 20% plus range, and we expect to see $0.20 of EPS in year 1, growing to $0.30 of EPS in year 2. So Aldevron -- incredibly pleased with the motivation and the engagement of the team and the important work that they're doing. And proud to have them as a part of the Danaher family. Operator: We'll go next to Matt Sykes with Goldman Sachs. Matt Sykes: Good morning. Hey, good morning. Thanks for taking my question. Maybe just a follow up on Jack's question on Aldevron. You guys had mentioned when you made the acquisition that they were relatively underexposed to international and I know you're -- you've got a lot of things going on with the integration. But as you think about expanding Aldevron footprint internationally, how are you thinking about that and are there any kind of timelines that you have for that? Rainer Blair : Very much a part of the investment hypothesis is to expand Aldevron's activities, as you say, internationally. And we, of course, are focusing first and foremost now on the transition into Danaher and are helping the team with their number 1 priority which are to take care of the expansion that they are finalizing as we speak. And we're already in the process of the next set of those expansions. And so in terms of timeline, we'll talk about that when that becomes something that's on the top of the agenda. But currently it's all about ensuring an effective transition, taking care of our customers, transitioning the team on to DBS and they're incredibly excited about that. And of course, subsequent expansions as we go forward. Matt Sykes: Great, thanks and just maybe just one follow-up. You're obviously generating impressive amount of free cash flow and even very active in M&A, but what are your thoughts in terms of inorganic investments as you move forward, looking at where you are in terms of leverage and what you want to accomplish? Rainer Blair: We really like the way we're positioned. Both in terms of the franchises and the platforms that we have as well as how we're thinking about our earnings Flywheel. I talked about that earlier in the call. Driving that mid-single-digit plus growth, the double-digit EPS expansion, and of course then having a very strong balance sheet position in order to continue to prioritize capital allocation towards M&A. And as we think about our balance sheet position this year, after the Aldevron deal, by the end of the year, we should probably be back to about 2 times net debt -- 2 turns of EBITDA over net debt. And we think that puts us in great position and our funnels are active. And we continue to work as we always have at Danaher to ensure that we have the next deal ahead of us and take advantage of the balance sheet that we have. We're very well positioned there. We feel good about where we sit. Matt Sykes: Great. Thanks very much. Rainer Blair : Thank you. Operator: We will take our final question from Luke Sergott with Barclays. Rainer Blair : Good morning, Luke. Luke Sergott: Morning, how are you? Thanks for squeezing me in. So just quickly on the backlog, and you think you're raising your guidance there or your expectations of what you're expecting in 20 -- to exit the year. Can you give us a sense of the mix between the vaccine and the therapeutic revenue, or how that order book is shaping up? Rainer Blair : Sure. Sure. So rough numbers here, Luke, thinking about 85% vaccine, 15% therapeutics. That's roughly -- those are the rough numbers there. Luke Sergott: Okay, that's helpful. And then, we were expecting a little more balance between the 4-in-1 and the just pure COVID tests. Can you give us a sense of the order there, the -- how the orders are starting to shape up ahead of the flu season? It makes sense that we haven't had flu season yet, but -- and then really how -- trying to figure out how to think about the first half of '21 through that winter season. Rainer Blair : In terms of the mix here in Q3, we saw 80% COVID only 20% 4-in-1 test. And as you think about Q4 here, we see that heading towards the 50-50. A good way to think about it as 50% of the COVID -only test in Q4 and 50% of the 4-in-1. Now as we think about the first half of next year, I think the best way to think about it right now is the 45 million tests that we've been talking about. And generally speaking, the same kind of mix ratios that we have within flu seasons and outside of flu season. So within flu season, probably around 50/50 is the best way to think about it: 4-in-1 and COVID only. And then if we're outside of the flu season, probably closer to 80-20. Luke Sergott: Got you. That's really helpful. Thank you. Rainer Blair : Got it. Thank you. Operator: I will now turn the program back over to Matt Gugino. Matthew Gugino : Thanks, Emma. Thank you, everyone for joining us today, and we are around all day to get your questions. Rainer Blair : Thank you, everybody. Operator: This does conclude today's program. Thank you for your participation. You may disconnect at this time.

Operator: Good morning. My name is Crystaal and I'll be your conference operator this morning. At this time, I would like to welcome everyone to Danaher Corporation's Second Quarter 2021 Earnings Results Conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. I will now turn the call over to Mr. Matt Gugino, Vice President of Investor Relations. Mr. Gugino, you may begin your conference. Matthew Gugino: Thanks, Crystaal. Good morning, everyone, and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer, and Matt McGrew, our Executive Vice President and Chief Financial Officer. I'd like to point out that our earnings release, the slide presentation supplementing today's call and the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call are all available on the Investors section of our website, www.danaher.com, under the heading Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events & Presentations and will remain archived until our next quarterly call. A replay of this call will also be available until August 5, 2021. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. The supplemental materials describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company-specific financial metrics refer to results from continuing operations and relate to the second quarter of 2021, and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices, which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will be making forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, and actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date they are made, and we do not assume any obligation to update any forward-looking statements, except as required by law. As a result of the size of the Cytiva acquisition and its impact on Danaher's overall core revenue growth profile, we're presenting core revenue on a basis that includes Cytiva sales. References to core revenue growth includes Cytiva sales in the calculation of period-to-period sales growth. With that, I'd like to turn the call over to Rainer. Rainer Blair: Well, thanks, Matt. And good morning, everyone. We appreciate you joining us on the call today. We're very pleased with our strong start to the year with another terrific results in the second quarter. We saw broad-based strength across the portfolio, which helped us deliver over 30% core revenue growth, more than 70% adjusted earnings per share growth and outstanding free cash flow generation. This well rounded performance is a testament to the positioning of our portfolio and our exceptional team who are committed to leading and executing with the Danaher Business Systems every day. During the second quarter, we continued to strengthen our competitive advantage through significant high impact organic growth investments and enhanced our portfolio with strategic growth accelerating acquisitions. We prioritized innovation across Danaher and increased our production capabilities, all of which we believe contributed to the market share gains in several of our businesses. We also announced our pending acquisition about Aldevron, which will expand our presence into the fast growing and important frontier of genomic medicine. Putting it all together, we believe the combination of our leading portfolio and DBS driven execution differentiates Danaher today and provides a strong foundation for sustainable long-term outperformance. So, with that, let's turn to our second quarter results. Our sales were $7.2 billion and we delivered core revenue growth of 31.5%, with strong contributions from all three of our reporting segments. Geographically, high growth markets grew nearly 35% and developed markets were up more than 25%. Revenue in each of our three largest markets, North America, Western Europe, and China, was up 30% or more in the quarter. Our gross profit margin increased by 710 basis points to 60.9%, primarily due to higher sales volumes, the favorable impact of higher margin product mix and the impact of prior-year purchase accounting adjustments related to the Cytiva acquisition that did not repeat in 2021. Our operating profit margin increased to 27.8%, including 775 basis points of core operating margin expansion, primarily as a result of higher gross margin and continued lower operating expense as travel and other related costs remained below pre-pandemic levels. Adjusted diluted net earnings per common share of $2.46 were up to 71% compared to 2020. We generated $1.8 billion of free cash flow in the quarter, up over 40% year-over-year. In June, we announced our intention to acquire Aldevron, a producer of high quality plasmid DNA, mRNA and protein, serving academic, biotechnology and pharmaceutical customers. The addition of Aldevron will expand our capabilities into the important field of genomic medicine, where we're seeing the accelerated adoption of gene and cell therapies, DNA and RNA vaccines and gene editing technology. We anticipate Aldevron will be accretive to Danaher on multiple levels as we expect the business to generate $500 million of revenue in 2022, with more than 20% annual revenue growth and a strong margin profile. We look forward to welcoming this incredibly talented and innovative team to Danaher once the transaction closes. In addition to announcing Aldevron acquisition, we also accelerated several organic growth investments across the portfolio. One of our core values at Danaher is innovation defines our future. And we have made a significant commitment toward our research and development efforts, increasing our research and development spend by more than 30% year-over-year to bring more impactful solutions to our customers. At SCIEX, we launched the ZenoTOF 7600, a high resolution accurate mass spectrometry system that enables scientists to identify, characterize and quantify molecules at previously undetectable level, helping to advance the development of new biotherapeutics and precision diagnostics. At Beckman Coulter Diagnostics, we recently introduced the DxA 5000 Fit, a compact automation solution designed for small and mid-sized laboratories that reduces up to 80% of the manual steps typically required for sample preparation. These are just a few great examples of how we're continuing to invest for growth across Danaher to support our customers and enhancing our competitive advantage through innovation. Additionally, we're making substantial investments to expand capacity across our bioprocessing businesses and Cepheid. Near term, these investments are supporting existing customer demand, driven by both the market and meaningful share gains. But they're equally important to support the long-term growth of these businesses where we see tremendous runway ahead, given the underlying structural growth drivers in the market they serve. We expect our total capital expenditures across Danaher to be approximately $1.5 billion in 2021 as we continue to invest in support of our customers' needs today and well into the future. We believe the strategic combination of these organic and inorganic investments across our portfolio will reinforce our competitive advantage and accelerate our growth trajectory going forward. Now, let's go into more detail on our quarterly results across the segments. Life Sciences reported revenue increased 41.5%, with core revenue up 35%. This growth was broad based, with most of our major businesses in the platform delivering 30% or better core growth. We continue to see strong demand for our bioprocessing solutions with combined core revenue growth of more than 40% with Cytiva and Pall Biotech. Our non-COVID related bioprocessing business was up low double digit, where we saw robust customer activity and order rates. COVID-related vaccine and therapeutic revenues were consistent with the first quarter and exceeded $1 billion over the first six months of the year. So, I'd be remiss if I didn't take a moment to reflect on Cytiva's fantastic first year as part of Danaher. We've established a new company with a new brand name, added more than 1,500 associates and made substantial progress in the transition to Danaher, all while maintaining world class support of our customers, significantly ramping production capacity and growing revenue by more than 50%. When we announced the acquisition, we talked about the strategic and value creation opportunities we saw, and we're excited to welcome such a talented and engaged team to Danaher. I think it's fair to say they've exceeded our expectations in every way. And that's really a testament to the Cytiva team who've embraced Danaher and the Danaher Business System and continued to execute exceptionally in support of our customers. Moving to Diagnostics, reported revenue was up 40.5% and core revenue grew 37%, led by more than 50% core growth at Cepheid. Beckman Diagnostics and Leica Biosystems each grew more than 30% as patient volume and clinical diagnostic activity approached pre-pandemic levels around the world. At Cepheid, growth outside of respiratory testing was led by our sexual health and hospital acquired infection assays, particularly among newly acquired Cepheid customers. In respiratory testing, we believe we continued to gain market share as expanded manufacturing capacity enabled the team to produce and ship approximately 14 million cartridges in the quarter. As expected, COVID-only tests accounted for approximately 80% of these shipments, while our four-in-one combination test for COVID-19 Flu A, Flu B and RSV represented approximately 20%. This broad-based performance across Cepheid was driven by the team's thoughtful installed base expansion over the last 15 months and is evidence of the significant value Cepheid provides to clinicians with unique combination of fast, accurate lab quality results, and the best-in-class, easy-to-use workflow at the point of care. Moving to our Environmental & Applied Solutions segment, reported revenue grew 15.5% and core revenue was up 13%. Revenue growth accelerated across both platforms with water quality up high single-digit and product identification up approximately 20% in the quarter. In our water quality businesses, demand for our analytical chemistries and consumables was driven by improving activity across municipal, chemical, food and beverage end markets. Equipment order rates accelerated as customers got back up and running and began to invest in larger projects. In product identification, Videojet was up mid-teens and our packaging and color management businesses were up more than 25% in the quarter. This acceleration reflected a broad-based recovery with growth across most major geographies and end markets. So, with that as a backdrop for what we saw this quarter, let's spend some time going through trends geographically and across our end markets. Looking at conditions around the world, most major regions and countries have broadly returned to or are approaching normal operations. This is reflected in the strong results we've seen across the US, Europe and China. That said, we're mindful of the emerging COVID-19 variants driving further outbreaks, and have taken action to help minimize the potential impact on our respective businesses. And at this point, we've seen no material impact from recent variants or selective lockdowns. We saw positive momentum across our businesses with order growth trending above revenue growth. Most of our end markets have largely recovered, with growth rates at or above pre-pandemic levels as customers have adapted to the new environment. In-person commercial activity continues to rebound, and we're seeing our teams spend more time on site with their customers, a trend we expect to continue as we move through the year. Across Life Sciences, we're seeing healthy demand in most of our end markets, led by biopharma where the pace of customer activity remains elevated. Biotech funding levels are robust and the number of lifesaving biologic and genomic-based therapies in development and production continues to rise, and it's further augmented by the work around COVID-19 vaccines and therapeutics. Today, there are over 1,500 monoclonal antibody-based therapies in development globally, which is more than 50% increase from just five years ago. We also see over 1,000 gene therapy candidates in development today, a tenfold increase over the last several years as these technologies mature and therapies gain regulatory approval. Given that many of these candidates are still in early stage research, we expect the growth rate of this market to remain strong for many years to come. In addition to the growth in biologics and genomic-based medicines, there is significant demand related to COVID-19 vaccines and therapeutics, both on the market and in development today. Given the interest we're seeing from customers looking to address emerging variants and increased global supply, as well as evolving vaccination guidelines globally, we expect to see durable growth in this segment of the biopharma market for the foreseeable future. At the current pace of vaccination, it's clear that vaccine demand will continue well into next year. We expect to recognize $2 billion in COVID-related vaccine and therapeutic revenue in 2021 and anticipate entering 2022 with approximately $1.5 billion in COVID-related backlog. These assumptions do not include the potential contribution from booster shots or an expansion of availability to populations under 12 year old due to the level of uncertainty around each of these scenarios. Given the growing numbers of drugs being developed and the increasing scientific sophistication required to discover and manufacture these complex therapies, customers are looking to partner with vendors who can reliably supply them with solutions for their most challenging problems as they move from the lab to production scale. Our comprehensive bioprocessing portfolio and scientific expertise positions us well to do just that. And we're confident our proactive investments in innovation and capacity will help us meet this growing customer demand now and far into the future. In the clinical diagnostics market, patient volumes are at or near pre-pandemic levels in most major regions as patients are returning for wellness check, routine screening and other elective procedures. In molecular diagnostics, while PCR respiratory testing volumes in the US have declined, we're seeing persistent demand for Cepheid testing at the point of care. Outside of the US, which makes up approximately half of Cepheid's revenue, we continue to see strong demand for our testing as vaccination rates lag and emerging variants drive outbreaks. Now, as I mentioned earlier, we shipped approximately 14 million respiratory tests during the second quarter, up from 10 million shipped in the first quarter, and we now expect to ship approximately 50 million tests in 2021. Looking ahead, with the assumption that COVID-19 will be an endemic disease, we believe that the point of care molecular respiratory testing market will expand significantly from where it was prior to the pandemic. And given Cepheid's leading positioning around speed, accuracy, and the ease of use workflow advantages, we believe we'll continue to gain market share. The combination of these market share gains, the expansion of Cepheid's leading global installed base and the broadest molecular diagnostic test menu on the market creates significant opportunities ahead for broader utilization and demand for Cepheid point-of-care molecular testing solution. Moving to the applied markets, we're seeing a continuation of the steady improvement over the first half of the year. Customer activity is accelerating in line with broader economic activity, which we see in healthy order rates for consumables and increasing investment in equipment. Across municipal markets globally, consumable demand remains solid as customers continue to test and treat water and instrument-oriented project activity is accelerating with the improving funding environment. Now, let's look ahead to our expectations for the third quarter and the full year. We expect to deliver third quarter core revenue growth in the mid to high-teens range. We anticipate high single-digit core revenue growth in our base business and a high single-digit core growth contribution from COVID related revenue tailwind. Additionally, we expect to generate operating profit fall-through of approximately 40% in the third quarter and for the remainder of 2021. For the full-year 2021, we now expect to deliver approximately 20% core revenue growth. We anticipate that COVID-related revenue tailwind will be an approximately 10% contribution to the core revenue growth rate. And in our base business, we now expect that core revenue will be up 10% for the full year, an increase from our prior expectation of high single-digits. So, to wrap up, we've had a great start to the year and we've seen meaningful opportunities across Danaher to build upon this outstanding performance. Our second quarter results reiterate the power of our portfolio and our exceptional team, a unique combination that differentiates Danaher today and provides a strong foundation for sustainable long-term outperformance. With that, back to you, Matt. Matthew Gugino : Thanks, Rainer. That concludes our formal comments. Crystaal, we're now ready for questions. Operator: [Operator Instructions]. Your first question comes from the line of Tycho Peterson with J.P. Morgan. Tycho Peterson: Congrats on the quarter. Rainer, I think one of the debates around the stock is still around the testing outlook, in particular around 2022 for Cepheid. I know you came out in the first quarter and talked about the fact you thought trends would be sustainable heading into next year. Can you maybe just talk a little bit about what you're seeing in the field, how you're thinking about variants in the near term and what gives you confidence in the outlook for 2022? Obviously, you're more hospital with PCR, not antigen. So, we get all those dynamics. But I think there's still some debate as to whether testing could drop off more significantly next year. Rainer Blair: As we think about the remainder of 2021 and how that sets us up for 2022, just a couple of things to sort of set the baseline here. First of all, we now expect to ship 15 million tests in 2021 for COVID, either COVID only or four-in-one. And we've taken that up from the 45 million test guide before. And the confidence that we gain here is really through what we've seen. As we've ramped up our capacity here and shipped 14 million cartridges in Q2, you'll recall we originally expected to ship 11 million in Q2. 50% of that outside of the US, 50% of that inside the US. That really has given us the confidence that there's still plenty of demand for our solution at the point of care. And here's why? We're really not perceiving a slowdown currently in our testing demand, and we're shipping everything that we're producing. So, while it's true that we see core lab tests trending downwards, we continue to see strength in the demand for our testing solution. The other thing that we are considering here is we're a bit concerned about some of the RSV breakouts that we're seeing in the US, but also elsewhere in the world, which makes us think that we'll start seeing testing skew more towards the four-in-one solution which, of course, tests for RSV in addition of Flu A, B And COVID-19. So, as we think about where we sit today, we feel comfortable that we'll see 50 million tests this year, and we don't have anything that would indicate that our previous guide for 45 million tests in 2022 would be materially different. We continue to see plenty of opportunity. Keep in mind, we've increased our installed base by 40% since the beginning of the pandemic, and of course, have the largest testing menu with 30 plus tests outside the US and 20 plus tests in the US. So, we feel we feel strongly that that demand should be available to us once again because of that unique value proposition at the point of care. Tycho Peterson: A follow-up on Aldevron. I think you mentioned when we spoke on the deal that you've been looking at this asset for about five years. Can you just talk a little bit about how you're thinking about synergies? I know there's capacity expansion that's coming online next year. So, if you could talk to that. And then, I think to get to half a point of growth, the implied growth rate is closer to 35%. Definitely greater than 20%. But I'm just curious how you're thinking about growth outlook and synergies with Pall and Cytiva, in particular. Rainer Blair: As we look at Aldevron, we really see it as our entry into the genomic medicine market, and are seeing it really as a standalone in that regard, specifically with plasmid DNA, protein and mRNA, and are really not looking initially here at synergies related to Cytiva or Pall. There's plenty of opportunity inside that scope to invest, expand capacity in the existing product lineup, as well as to globalize that. The great majority of Aldevron's revenues are actually in the US. So, we see great opportunities to globalize that. And from a growth perspective, like we said, this is in 2022 going to be $0.5 billion business growing at 20%, adding about 50 basis points to Danaher's overall growth profile, as well as adding $0.20 of EPS in year one and $0.30 EPS in year two. Matt McGrew: Tycho, they have a little bit better growth historically than kind of that 20%. But I think, again, just sort of from our perspective, to be prudent from a planning perspective, that's sort of what we've laid out. I think we've had a lot of success with that type of setting up, if you will, for acquisitions in the past. That's sort of why we've kind of come to there versus where they have been a little bit more historically higher. Tycho Peterson: Matt, can you just comment on the bioprocessing order book? I think you said bioprocessing up 40%. I assume that was revenues. What was the order book up? Matt McGrew: It was north of 60%. Operator: Your next question comes from the line of Derik De Bruin with Bank of America. Michael Ryskin: Hey, this is Mike Ryskin on for Derik. A couple quick ones. Just to clarify, on the COVID contribution for the fiscal year, it sounds like you're saying 10%, which is roughly unchanged from prior, but you're seeing a lot more cartridges coming out. The four-in-one solution should have some better pricing if you're going with that versus the COVID-only. And the COVID vax is doing better and the order book is strong. So, are there some other moving pieces there? Or is this just some uncertainty back half of the year? Just want to reconcile that. Matt McGrew: I think the way to think about the COVID tailwind is we sort of took up the number for the full year, Mike. And I think what I would kind of think about that is that most of that is the $200 million better cartridge performance that we saw here in Q2 sort of rolling through for the full year. So, if you think about the COVID contributions, I think we're up $200 million versus where we thought we would be. All of that is just going to be sort of rolling that Q2 beat through to the full year for the COVID. side. As far as the four-in-one goes, as we think about the contribution kind of going forward, we still think Q3 is probably going to be pretty close to what we saw here in Q2, which was – 80% of that was COVID only, 20% was the four-in-one. Given what Rainer said and what we saw last year as well, but what Rainer said around the RSV sort of outbreak here that we're seeing in the south, we think we might have a little bit of a different or more of a respiratory season than we did last year. So, sort of as we move forward, we're sort of thinking, Q4, that split moves more to kind of a 50/50, 60/40. We'll see where it comes out, but something more like that in the fourth quarter. Michael Ryskin: Could you comment a little bit on instrument trends in some of the analytical markets? I didn't get a clean SCIEX number. Can you just talk a little bit about what you're seeing in LCMS markets as far as base business recovery? Rainer Blair: If we start with the topic of customer activity in these analytical markets, they're really at or very near pre-pandemic levels with the underlying recovery well underway. And we're seeing the customers adapting readily to new work environments that we're in there where it's still necessary or are fully back to normal where the infection rates are really low. So, that manifests itself in better order rates, our funnels are stronger, we see higher instrument and service sales. Keep in mind, SCIEX over 30% core growth here in Q2, just as a marker. But really, all of our major life science operating companies were at or over 30% core growth for the quarter. So, we're seeing some very nice momentum there. And if you look at the two-year growth stack there, we're really at or very near to pre-pandemic growth rate. While this is driven by more customer activity, but we also have to say, in our instrument areas is a place where we have been accelerating R&D investment and we've seen great traction for some of our new product introductions. I mentioned the SCIEX ZenoTOF, but we've also introduced the 7500. And at Beckman Life Sciences, we introduced the CytoFLEX cell sorter. So, those are all things that contribute to what we think is outperformance here in the instrumentation market. Matt McGrew: Mike, just to give you a sense, outside of life sciences, just overall, equipment was up north of 20% and consumables were north of 30%. So, just to give you a sense of – that's not all that different from what we saw elsewhere as well. Michael Ryskin: One last quick one if I can squeeze it in. I think you called out CapEx of $1.5 billion for the year. That's a pretty nice step up even with Cytiva in the numbers. Just wondering how much of that is specific to more cartridges for Cepheid, for COVID or more on the bioprocessing side? And is this a fair jumping off point for 2022 and beyond? Rainer Blair: I think, Mike, normally even inclusive of Cepheid or Cytiva, we'd probably be more like $850 million in CapEx. So, I think you can kind of size the delta on that $1.5 billion with that. I would say that the preponderance of the increase that you're seeing there is going to be at Cepheid and Cytiva as at Pall on the bioprocessing side. So, those would be the three big ones that will be sort of driving that increase. I suspect – you'll see that, obviously, this year. I suspect we might be at something in between those two numbers. Maybe we're at the higher end of that number, the $850 million and the $1.5 billion as we head into next year. But I think, over time, that probably does start to come down a touch. As we've talked about, we've been pulling forward a lot of the capacity increases that we were already planning for all of those businesses, just given the demand now, plus the longer-term secular growth drivers. This is sort of more of a pull forward is the way I think about it, and I think you'll have a little bit of a bolus [ph] here for a couple years and then probably come back down to a lower landing level. Operator: Your next question comes from the line of Vijay Kumar with Evercore ISI. Vijay Kumar: Congratulations on a solid print this morning. Maybe one on vaccines and bioprocessing, Rainer. The commentary around backlog, exit backlogs stepping up for the year in light of 2Q, it feels like maybe the order conversion, maybe that's stepping down in back half. And is that the right way? This is just more of a timing thing that we're thinking about on the vaccine side when you think about the revenue cadence? And then, ex vaccines, when you think about pace, bioprocessing, we just had a major Alzheimer's drug approval. I'm curious what it does to either industry growth or perhaps at your business. Rainer Blair: Let's start with bioprocess and how to think about that. So, just to level-set, we expect to do for vaccines and therapeutics this year $2 billion in revenue, and that second half is going to be consistent with what you saw in the first half. And so, the activity level remains elevated. And any decel that you're thinking about is purely related to comps. And now more broadly speaking, speaking really for total Danaher, the Q2, Q3 prior year step up is over 1,000 basis points. Right? So, if you keep that in mind, I think that characterizes the activity level appropriately. We continue to see strength in vaccine and therapeutic. Orders, Matt has talked about it with Tycho, 40% plus on the revenue side in Q2, 60% plus on the order side. So, the activity level remains very high. And we expect that this will continue, which is why we're confident in talking about $1.5 billion of backlog for 2022, which sitting here on July 20 looking forward is a good place for us to be. And it gives us, as you think about 2022, a number of quarters to continue to strengthen that. So, there's a great deal going on in the vaccine and therapeutic space. Keep in mind, the rollout that we've seen has been primarily a developed market story. We're starting now to see some of the emerging market vaccine manufacturers kicking in and ramping up. There's three in China to say an example. Another one in Russia, of course, and several more. And they're just starting to kick in. So, we expect that all to provide really some sustained strength for some period of time. Matt McGrew: Vijay, maybe just a 100,000 foot view, just to kind of think about – in each of the last five quarters in biotech, the bookings have been higher than revenue. And that was also true in Q2, just to kind of – there's all kinds of numbers and comps and everything else, just take a step back and just kind of keep that in mind as we head into the second half here. Rainer Blair: Now coming back to your Alzheimer drug question with Aduhelm, first of all, we can't comment specifically on any particular drug. But we're absolutely delighted to see that science and the pharmaceutical industry is making progress on this disease. Alzheimer's, as you know, afflicts so many around the world and there's a real need for a solution. At this point, it's early days. As you know, there's quite a bit of discussion around the efficacy of the drug, the size of the target population, reimbursement, and a number of other questions. But I might say that this is one drug. There are several others that are in late stage qualification and approval processes. And so, we do see here this indication of Alzheimer's disease becoming more and more relevant for monoclonal antibodies. Awfully early to say what impact it has, but we can say that with the breadth of our portfolio, the capability of our team and the penetration that we have in the market, it's fair to say that we're represented on all of those projects and are confident that we can supply those, should there be an elevated need. Vijay Kumar: Matt, one quick one for you. Appreciate you're trying to simplify the numbers. A lot of numbers flying around. With orders above revenue for five quarters, I think that's straightforward. Assuming mix is – ignoring the mix impact for 2022, any comments on margins or incremental margin for fiscal 2022 as expenses come back? Matt McGrew: Vijay, I'd love to have the crystal ball for 2022 for you, but I'm just still hoping to get some insight into the second half, frankly. Like you said, besides the mix, we are starting to – as we got into the quarter and we had pretty good fall through here in the quarter again, but we are starting to see activity resume a little bit, especially late in the quarter. A little bit more travel activity, a little bit more kind of people doing in-person things. And so, I think, in my mind, there's two things. It's when do the costs come back because I do believe we will have some costs come back, and how fast that happens. So, it's just really kind of balancing those two. And I think there's still enough uncertainty out there that it's difficult to pin that down. I'm hoping that as we get into the fall here that we get a bit more color on that, and hopefully be able to provide a little bit more when we talk about 2022 later in the year. But unfortunately, I think it's a little early for us to think about it. But that's where we are today. Operator: Your next question comes from the line of Scott Davis with Melius Research. Scott Davis: I was really surprised. I thought you might mention labor and logistics costs and some challenges there, particularly in E&AS. Is there a meaningful impact on margins, more broad based in E&AS, if so? I'd just leave it there. Matt McGrew: It's a fair point. We have definitely seen it. I think, again, similar to the travel sort of as we've moved through the quarter, I think we are definitely seeing inflationary pressures here and supply chain pressures. I would say that, right now, for us, it is modest. And we're able to manage through it, some of that with better price on our side and some of it just being able to on the daily work, if you will, from a DBS perspective, but we are definitely seeing that. We are seeing it in resins, in plastics, in metals. Again, not a huge part for us, but we do see it where that happens. I think the two biggest pieces for us, Scott, our freight is definitely an issue. Fewer cargo flights obviously means it's a little bit more expensive to move things by air. And then, I think as everybody has read and saw, electronics, particularly the supply chain around the chips globally, has been a challenge for us as well. So, again, haven't seen material impact. I do believe that as we move forward into the second half that that probably does not abate, if anything might step up a little bit and clearly a challenge here for us. But so far, we've been able to work through it with some hard work and a little bit of price and some PPV. Scott Davis: Just to follow-up on that, Matt. Does times like this really make looking at things like on-time delivery kind of wonky and hard to even think? Can you still use that metric with any real sense of confidence since orders are so high? Rainer Blair: We don't compromise on that. The core value, customers talk, we listen. And our focus on quality, delivery, and cost remains our Northstar. And we drive our processes. And with that, anybody who's associated with that, starting with what we can control internally, but also our supply partners who have been stepping up to the plate supporting us here and making the necessary investments. But we're not going to compromise on on-time delivery and meeting or exceeding our customer's expectation. Scott Davis: Well, congrats, guys. And congrats on a great start, Rainer, in your CEO tenure. Operator: Your next question comes from the line of Doug Schenkel with Cowen. Doug Schenkel: I want to go back and try to kind of take a different angle on some of the questions regarding durability of growth when it comes to all things post-COVID. So, on Cepheid, there was an earlier question on the outlook for testing volume in 2022. You've noted before, your GeneXpert install base increased by about 40% since the beginning of the pandemic. You've also previously talked about your efforts to be as smart as you can about where you place boxes. Essentially, the goal has been to as much as possible pull forward placements, especially in areas of the world where you may have been under indexed in an effort to make sure that these instruments are used durably over the long term. I was wondering if you could share some specific data on how you're having success with newer accounts driving utilization of these boxes for non-COVID-19 purposes? And additionally, is it possible that there are some new assays coming over the coming quarters that might move you into additional testing categories that also boost your confidence in the outlook for durability? I ask because right before the pandemic got going, we had picked up on some signs that there were some notable advancements being made on assay development initiatives, including some of those talked about in the past by old Cepheid management, which would greatly increase the TAM for the company. I think a lot of lingering concerns about this category would be further assuaged by combining what we saw in Q2, which was really strong with the outlook for assay menu expansion and some positive signs in terms of what's going on with newer accounts. Rainer Blair: I think you're on to a strong point here, which is – and we saw this in Q2, but just to level-set for everybody here on the phone. Once again, we've increased our installed base here since the beginning of the pandemic by 40% plus, and that's with thousands of instruments in places where they haven't been before. And we've tried to do that very strategically, always, of course, wanting to help with the COVID pandemic and the near-term requirements and needs, but also looking beyond that to see whether those care settings would be able to use the menu that we have available today and the one that, of course, we develop every day in order to launch new assays. And we have seen that starting to play out in places where perhaps the COVID need is not as strong and particularly at new customers. And that's manifested, for instance, in our sexual health or hospital acquired infections assays, which are up 30% plus, here in the second quarter, and provide us with an additional pillar of strength. And so, we're very pleased with that. And we expect that to continue here as we not only made progress in the US, but in the rest of the world. So, very important point. The menu is gaining traction, and we're starting to see that play out here in the second quarter and expect that to continue to be the case going forward. Now, as it relates to new assays, please know that we are working on new assays every day. And you can expect that, over time, to continue to broaden that lead in menu breadth, as well as depth over time. So, that's absolutely a part of our daily activity here. Doug Schenkel: Hopping over to really the Pall and the Cytiva side of the equation, as we've talked about it a few times, the expected backlog heading into 2022 is $1.5 billion. The potential for upside, I think, seems pretty clear specific to COVID. That said, there is still some investor uncertainty with regards to what happens if demand were to slow in this category. A basic but important question is if demand were to slow for COVID related products and services in this category, is it fair to say that you're comfortable that there was enough demand more broadly across biopharma to essentially compensate for that? Our thinking has been, this has been an area where there just hasn't been enough good supply of products and services, and that's presented you with a fantastic opportunity to basically solve that problem. Even if the COVID demand were to slow, presumably, you're still going to be able to essentially reallocate these products and services for other purposes. Is that a fair way of thinking about things? Rainer Blair: I think so. And before we move on to the non-COVID strength out there, let's reiterate in relation to that backlog number that we talked about what assumptions are in that and which assumptions are not in that number. So, in that $1.5 billion backlog, that's in addition to the $2 billion that we're shipping this year, that includes all the approved vaccines, whether those are approved in the US and Europe or elsewhere, as well as those in late stage trials, which you can imagine we're very close to. So, that's absolutely a part of how we're thinking about that. And it includes these emerging market vaccines that I was talking about. But what it doesn't include is the booster shot. And we know from Israel, we know from the UK, we know from China that those countries are now moving to booster shots, but we have not assumed that to be a part of our numbers here, nor have we included the younger kids, 12 and under, in a vaccination schedule, which you can imagine on a worldwide basis is a pretty big number. So, we've kept that out. And we think that that's an appropriate assumption. Now as we look to the non-COVID demand, which has consistently been in the low double digits here, with one or the other quarter perhaps even above, we feel very confident that the number of projects in the pipeline, we talked about it, over 1,500 monoclonal antibodies in the development pipeline, over 50% more than just five years ago. And then you add, related to that, the gene and cell therapies and genomic medicines where you have over 1,000 projects in the pipeline, which is an order of magnitude more than just five years ago, we feel quite strongly that the capacity utilization will remain very robust here for the mid and long term. Operator: And your last question will come from the line of Daniel Leonard with Wells Fargo. Daniel Leonard: Two, if I may. The first one on bioprocessing. We're still hearing about supply shortages in the market for filters and such. When do you think we're going to see more of an equilibrium, when supply catches up with demand? Is there any change in your thinking on customer inventory dynamics around stocking and such? Rainer Blair: Let me start with this. I think that, in general, there is a strong supply of filters, as you mentioned, perhaps single use products and such in the market and that there might be pockets where there's some shortages, but I think I would prescribe those to individual type product shortages as opposed to a broad-based shortage as the industry and, particularly, Danaher has continued to ramp capacities with some of the investments that we made. So, I think that what the industry has been able to do is accompany the growth here and continue to support that. Now, as it relates to your inventory question, here we have been very, very rigorous in our interactions with our customers who we've asked and encouraged to give us their orders as early as possible to give us the visibility that we need to ensure that they get what they need. And as such, we don't believe that there's pockets of inventory that are sitting here in the industry. You can never ignore that there might be one or two places that perhaps that might be the case, but it's really not material in the overall size of the industry. So, we think that the industry is tight on supply. Everybody is working through it with each other, we with our customers with a great deal of visibility, but of course also with our suppliers who we mentioned earlier, who have also had to ramp up to support us and the value chain. Daniel Leonard: My follow-up question is similar to Vijay's earlier on the margin side. Could you perhaps maybe bridge the expense base today when you have these COVID sales tailwinds to a world where those tailwinds might abate? Are there any expenses that that go away? Or just maybe the rate of expense increase starts to moderate? Matt McGrew: I think maybe the way to answer that is, today, we've been sort of seeing in the last, I guess, five quarters, our VCM has been kind of 50%. And as I look forward and think about the expenses coming back, and it's not just COVID, I would say it's kind of broadly speaking across the business, we think it's going to start to ramp here in the second half and be in the sort of 40% fall through. Dan, if you think about where we've been more historically, it's probably been more like 35%. And so, I think what we'll see is that the expenses – and here again, the uncertainty in the timing is what I'm still not sure on, but I think what we'll see is that that expense base will come back a little bit more closer to that normal, longer-term 35%. And part of that is not only are we – we're sort of seeing the benefits, I think, of the investments that we continue to make and we have been making in innovation and kind of go-to-market. And I think with that, if you think about today, our base business on a two-year stack for this year is going to be 6% to 7% core growth, which is 100 basis points plus where we were in 2019. And so, I think the investments that we're making are paying off on the growth side. And I think both Rainer and myself are inclined to want to kind of keep making those investments, while recognizing that we're going to have some costs that come back as we get back to the office and we start to travel again. So, maybe, Dan, the way to bridge it would be 50% today, I think, probably is a little bit more like 40% in the second half, and over time, I think it probably is something more like 35% if I had to guess. Operator: We have reached the allotted time for questions. I would like to turn the call back over to Mr. Gugino for closing remarks. Matthew Gugino : Thanks, Crystaal. Thanks, everybody, for joining us this morning. And we're around all day for questions. Take care. Operator: This concludes today's conference call. You may now disconnect.

Operator: My name is Lori, and I'll be your conference facilitator this morning. At this time, I would like to welcome everyone to Danaher Corporation's First Quarter 2021 Earnings Results Conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I will now turn the call over to Mr. Matt Gugino, Vice President of Investor Relations. Mr. Gugino, you may begin your conference. Matt Gugino: Thanks, Lori. Good morning, everyone, and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer; and Matt McGrew, our Executive Vice President and Chief Financial Officer. I'd like to point out that our earnings release, the slide presentation supplementing today's call and the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call are all available on the Investors section of our website, www.danaher.com, under the heading Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events & Presentations and will remain archived until our next quarterly call. A replay of this call will also be available until May 6, 2021. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. The supplemental materials describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company-specific financial metrics refer to results from continuing operations and relate to the first quarter of 2021, and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices, which have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, and actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date that they are made, and we do not assume any obligation to update any forward-looking statements, except as required by law. As a result of the size of the Cytiva acquisition and its impact on Danaher's overall core revenue growth profile, we're presenting core revenue on a basis that includes Cytiva sales. References to core revenue growth includes Cytiva sales and the calculation of period-to-period sales growth comparing the current period Cytiva sales to the historical period Cytiva sales prior to acquisition. With that, I'd like to turn the call over to Rainer. Rainer Blair: Well, thanks, Matt, and good morning, everyone. In the first quarter of 2021, we got off to a very strong start, delivering better-than-expected core revenue growth across our portfolio. Our broad-based performance was driven by double-digit core revenue growth in our base business, our ongoing contributions to the development and production of COVID-19 vaccines and therapeutics and strong demand for Cepheid's point-of-care molecular diagnostic tests. Our record top line performance also contributed to outstanding earnings per share growth and free cash flow generation. Our well-rounded first quarter results are a testament to the unique positioning of our portfolio and our commitment to continuous improvement. We have an exceptional collection of market-leading franchises and technologies all powered by the Danaher Business System, that serve attractive end markets with durable secular growth drivers. We believe that this powerful combination differentiates Danaher and reinforces our sustainable, long-term competitive advantage. So with that, let's turn to our first quarter results. We generated $6.9 billion of sales in the first quarter with 30% core revenue growth. All three of our reporting segments delivered better-than-expected growth, led by Life Sciences and Diagnostics. We believe we continue to capture market share, particularly at some of our larger businesses, including Cytiva, Pall, Radiometer, Leica Biosystems, Hach and Videojet. Over the last several years, we've prioritized high impact growth investments in innovation, sales and marketing, to ensure that we're well positioned both near and long term. Through new product introductions and the impact of our Danaher Business System growth tools, we've enhanced our competitive advantage and believe we've achieved notable market share gain. Geographically, revenue growth was broad-based across both developed and high-growth markets. We saw over 20% growth in the developed market, led by North America and Western Europe. High-growth markets were up more than 45%, largely driven by the recovery in China. Our gross profit margin increased 580 basis points year-over-year to 62% in the first quarter, largely due to higher sales volumes and the positive impact of higher-margin product mix. Our operating profit margin of 29.1% was up 1300 basis points year-over-year, including more than 900 basis points of core margin expansion as a result of higher gross margins and lower operating expenses, as we continue to see limited travel and other related costs. Adjusted diluted net earnings per common share of $2.52 were up 140% versus last year. We generated $1.6 billion of free cash flow in the quarter, an increase of 135% year-over-year. Now in the first quarter, we deployed more than $400 million of capital towards mergers and acquisitions across all three segments. Most notably, IDT and Cytiva completed their first bolt-on acquisition with IDT adding Swift Biosciences, which brings complementary capabilities and a broad portfolio of next-gen sequencing library preparation and enrichment solutions for DNA, RNA and methylated DNA samples. And Cytiva acquired Vanrx Pharmasystems, which provides innovative, automated aseptic tolling technologies used to fill vials, syringes and cartridges, a critical final step to complete the bioprocessing workflow. We also continued to make significant organic investments and high-impact growth initiatives across all of Danaher. Over the past six months, we've invested in a meaningful expansion of production capacity at Cepheid, Cytiva, Pall Biotech and Beckman Life Sciences. Near term, these investments will support COVID-related demand, but they're equally important to support the long-term growth of these businesses, where we see tremendous runway ahead given the underlying growth drivers and the durability of the markets they serve. Between these four businesses, we're investing more than $1 billion in 2021 to continue to meet our customer’s needs today and well into the future. So now let's take a look - a more detailed look at our results across the portfolio. Life Sciences reported revenue increased 115% as a result of the Cytiva acquisition, and core revenue was up 41.5%. We saw strong double-digit core revenue growth across all of our largest operating companies in the platform, led by Cytiva, Pall Life Sciences, Beckman Life Sciences and IDT. In our bioprocessing businesses, accelerating demand for COVID-related vaccines and therapeutic development and production drove a combined core revenue growth rate of more than 60% at Cytiva and Pall Biotech. Excluding the impact of COVID-related activity, our underlying biopharma business grew in the low 20s range. We believe that our ability to continue meeting customer’s needs across their bioprocessing workflows enabled us to gain market share in the quarter, particularly within our cell culture media and single-use product line. Moving to Diagnostics. Reported revenue was up 34%, and core revenue grew 31%. Each of our largest operating companies in the platform achieved high single digit or better core revenue growth, led by Cepheid, which achieved more than 90% core revenue growth. In response to the unprecedented demand for Cepheid's rapid point-of-care molecular test, the team again increased production capacity and shipped over 10 million respiratory test cartridges in the first quarter. Roughly half of the tests shipped were COVID-only tests, and the other half were 4-in-1 combination test for COVID-19 Flu A, Flu B and RSV. We also saw increasing demand for non-respiratory tests across Cepheid's market-leading test menu, including sexual health, hospital-acquired infections and urology, demonstrating the broad applicability of Cepheid's molecular diagnostic offering. Moving to our Environmental & Applied Solutions segment. Reported revenue grew 6.5% and core revenue was up 3.5%. Our Water Quality platform was up slightly and product identification was up high single digits. Our Water Quality businesses support customer’s day-to-day mission-critical water operations, providing water testing, treatment and analysis across a variety of applications around the world. We saw good underlying demand for our analytical chemistries and consumables during the quarter, and we're encouraged by the improvement in equipment sales, which returned to growth as customers got back up and running at more normalized levels. In Product Identification, we saw mid single digit core revenue growth in our marking and coding businesses and double-digit growth in packaging and color management. Esko and X-Rite benefited from the underlying market recovery and saw good momentum from customers initiating new projects and investments in the first quarter. So with that context from what we saw by segment during the quarter, let's take a look - walk through some of the trends we're seeing across our end markets and geographies. Customer activity around the world is approaching pre-pandemic levels as we all collectively adapt to working in this new environment. We're seeing this in the form of strong sales funnels and order book growth. Service levels at or near pre-pandemic levels and an uptick in equipment revenues. While some of this dynamic is a result of pent-up demand in the wake of widespread lockdowns, we're starting to see underlying recovery across most of our end markets that were impacted. Now if we take a closer look at these dynamics by geography, China appears to be the furthest along in terms of reopening, with activity levels largely back to normal. The US is not all the way back just yet, but is moving in the right direction. And an increase in vaccination rates across the country appear to be driving some of this progress. Europe is improving broadly. And while certain areas have recently experienced setbacks in the process of reopening, we've not seen any material impact. In Life Sciences, activity in the broader biopharma market remains robust. There has not been any slowdown in the double-digit growth trend we've seen over the last several quarters across non-COVID-related biopharma activity. Within COVID-related biopharma activity, the significant ramp-up of vaccines and therapeutics is driving record bioprocessing demand. We're involved in the majority of COVID-19 vaccine and therapeutic projects underway around the world today, including all of those in the US that are currently on the market or in later-stage clinical trials. Our operating companies are playing a significant role in the development and production of new therapies and vaccines across the biopharma pipeline. And given the breadth of our offering and the production capacity we're adding in 2021, we're uniquely positioned to support our customers in their mission today and well into the future, which is to make more life-saving treatment available to more patients faster. In clinical diagnostics, we continue to see heightened demand for rapid point-of-care molecular testing. As we look across the COVID-19 testing landscape and consider the durability of the demand that we're seeing, we believe that Cepheid's positioning is the strongest amongst the various testing modalities and settings. Cepheid's leading presence at the point of care, combined with the speed, accuracy and workflow advantages of their molecular offering, uniquely positions the business to support customer’s testing needs, not only for COVID-19, but beyond the pandemic as well. Across hospital and reference labs, patient volumes are at or near pre-pandemic levels in most major geographies as elective procedures and hospital visits have rebounded from last year. Consumables growth is accelerating as a result, and we're encouraged by the momentum of instrument placement. Finally, in the applied market, consumables remain solid across essential business operations like testing and treating water and safely packaging food and medicine. And growth is picking up on the equipment side as customers get back to more normal operations and initiate capital investments. Now let's briefly look ahead to our expectations for the second quarter and the full year. We expect to deliver second quarter core revenue growth in the mid-20s range. We anticipate low double-digit core revenue growth in our base business and a low double-digit core growth contribution from COVID-related revenue tailwind. Additionally, we expect to have operating profit fall-through of approximately 40% in the second quarter and for the remainder of 2021. For the full year 2021, we now expect to deliver high teens core revenue growth. We anticipate that COVID-related revenue tailwinds will be a high single-digit to low double-digit contribution to the core revenue growth rate. This would include an estimated $2 billion of 2021 revenue at Cytiva and Pall Biotech associated with vaccines and therapeutics, which is higher than our previous expectation of $1.3 billion. And at Cepheid, we'll continue ramping capacity through the year and now expect to ship approximately 45 million tests in 2021 compared to our prior estimate of 36 million tests. And in our base business, we now expect that core revenue will be up high single digits for the full year. So to wrap up, we had a very strong start to the year and feel good about the momentum we're seeing across all of Danaher. Our first quarter results are a testament to the commitment and capability of our team and a durable, balanced positioning of our portfolio. We believe this combination differentiates Danaher and sets us up well to outperform in 2021 and beyond. In our pursuit of continuous improvement, we'll strive to keep building an even better, stronger company and to positively impact the world around us in meaningful ways for all of our stakeholders. We see tremendous opportunities ahead to do just that. So with that, I'll turn the call back over to Matt. Matt Gugino: Thanks, Rainer. That concludes our formal comments. Lori, we're now ready for questions. Operator: Thank you. [Operator Instructions] Our first question comes from the line of Tycho Peterson of JPMorgan. Tycho Peterson: Hey, good morning. Rainer Blair: Good morning, Tycho. Tycho Peterson: I'll start with bioprocess. Obviously, very strong numbers there. Did you give the Pall, Cytiva order number? I didn't hear that, if you did. And then as we kind of think about the durability of the trends there, I appreciate your kind of raising guidance here for both the vaccine and the testing tailwinds. But how do you think about kind of the durability? And then also, was there any stockpiling? We've heard from one of your peers about customers building inventory given supply chain concerns? Thanks. Rainer Blair: Thanks, Tycho. So as it relates to orders growth for our vaccines and therapeutics businesses we're talking primarily here, Cepheid and - I'm sorry, Cytiva and Pall Biotech, first quarter orders growth was over 60%, just to give you a sense of the strength of that. And as we look towards the rest of the year here, you heard us talk about the fact that we're confident now that our total business for the vaccine and therapeutics for 2021 will be $2 billion rather than the originally estimated $1.3 billion. So we continue to see that order build here, as noted here in the first quarter, and that's really continuing to drive strength here for the full year. Now as it relates to stockpiling, we occasionally hear about that on certain and limited products. But in general, and certainly, as we run our business, we're in constant communication, both with our customers and our suppliers to ensure that we don't have pockets of inventory, either a finished product or raw materials sitting idly by holding up any manufacturing of vaccine or therapeutics. Tycho Peterson: Okay. That's helpful. And then maybe a follow-up on margins. Obviously, good upside here as well. In particular, on the Life Science side, you had 24% last quarter, now you're 33%. Can you maybe just talk to how you think about the durability of that margin improvement? Rainer Blair: Well, certainly, the volume ramp here has given us a great deal of volume leverage. And we also, of course, see through the increased consumption of our consumables, a skew in the mix towards the positive. So the margins are very strong. And as we look forward and the comps change and we continue to invest in our businesses, as well as we expect some costs to come back as we get to a more normalized travel situation, I would expect those margins to moderate a little bit. Tycho Peterson: Okay. And then before I hop off, just one last one on capital deployment. You mentioned the bolt-ons for IDT and Cytiva. Obviously, we're seeing M&A pick up in the space more broadly. Just curious your thoughts on the landscape appetite for something more meaningful? Rainer Blair: We continue to be excited about our balance sheet and how quickly we've been able to rebuild that. Now having said that, it's just a year ago that we actually closed the Cytiva acquisition, and there's certainly plenty of work to do there. But having said that, our funnels are very active across all four of our platforms, and we think that we have plenty of opportunity ahead of us. Matt McGrew: Tycho, its Matt. I just want to get - kind of going back to your first question, just to give you some numbers around sort of the order growth. You had asked about sort of, I think, kind of the continuation of it. Maybe the way to think about it, at least how I think about it is in - for Pall and Cytiva in the vaccine and therapeutics, we did, call it, $500 million in Q1. I think that's going to be pretty consistent here, Q2, 3 and 4. So I think we'll probably do $2 billion for the full year in the vaccines and therapeutics, which will be, like I said, pretty consistent. And then I think when you think about maybe sort of the rest of it, the Cepheid part, that's going to ramp up as we go through the year, given the fact that we've talked about we're going to be doing a little bit more kind of volume here than we initially thought. So that's probably another $2 billion revenue. So total revenue, $4 billion for kind of that COVID tailwind. And one piece, the Cepheid piece will ramp up and the other piece, the vaccine and therapeutics, pretty steady through the year. Tycho Peterson: Okay. That's helpful. Should we assume some of that vaccine work also spills over into 2022? I know it's only the first quarter of '21, but that's the obvious question we're all going to get is what we set up for 2022 looks like? Rainer Blair: Yeah. So I think the way we're thinking about that is that we continue to build and ramp on orders growth here. And after the $2 billion, again, vaccine and therapeutics, we expect to have $1 billion of backlog vaccine and therapeutics going into 2022. And that's assuming, right now, with the approved vaccines that are in the various jurisdictions, which are eight currently. So that's the assumption there. And that's not assuming any booster shots or vaccinations of kids under 16. So we do expect to see further vaccine and therapeutic production well into 2022. Matt McGrew: Yes maybe, Tycho, a simple frame on the numbers of that, too, just to kind of give you a sense of it because I know Rainer mentioned it was $1 billion backlog. But the way that I think I'd frame it is, if you think about '20 and '21, we're probably going to see orders of, call it, 3.6, 3.7 billion cumulatively. I think we did $650 million in sales last year. We think we're going to do $2 billion in sales this year. So that $3.6 less, call it, $2.6 billion in sales is why we end up with a backlog at December of this year to take into '22. And like Rainer said, that really sort of doesn't kind of - that's just where we stand today with the assumption, as Rainer mentioned, that we are not really assuming kind of a fall booster/third shot. We're not assuming that vaccines are going to be out there for kids at this point either. So that's really just what's on the market now, the eight that are cleared and the ramp that we're seeing here in the developed markets largely. Tycho Peterson: Okay. Very helpful. Thanks, guys. I’ll let others jump in. Rainer Blair: Thanks. Operator: Your next question comes from the line of Vijay Kumar of Evercore ISI. Rainer Blair: Hi, Vijay. Vijay Kumar: Hi, Rainer. Congrats on a pretty solid print this morning. Just to follow up on that last question. I appreciate all the color. So you guys did $650 million of revenues, vaccine and therapeutics in 2020, cumulative of, call it, $2.6, $2.7 in 2020 and '21. And that does not include children or booster. Just assuming booster, I think most people are leaning towards a third shot. Given that we've recognized about $2.7, a booster third shot would imply another $1.3, like half of the $2.7 as potential incremental perhaps in 2022. Would that math make sense? I'm curious. Matt McGrew: Yeah. I mean Vijay, I think it's a little early to tell. I mean I think you're right in the assumption that most people, I think, are assuming there's a third shot or a booster. But again, I think it's - the timing and the amount and what it looks like is just a little early to tell. So that's why we sort of wanted to kind of give you what we're seeing now, the framework that doesn't really include it because that's still a bit of an unknown, but just so that you know sort of how we're thinking about where we stand here early - still pretty early in '21. But as that plays out maybe in the second half and in '22, kind of give you an update, but that is not inclusive of the numbers that I just laid out for you. Vijay Kumar: Understood. And then I did have one follow-up on how to frame what the future could look like. And I'm not asking for guidance in fiscal '22. It's more perhaps broad strokes. And I think the debate has been for some of your peers with the exposure to COVID tailwinds. The debate has been whether companies can grow earnings in '22. I think you guys could end up being one of the few companies that can grow earnings off of fiscal '21 levels. I think Rainer, some of your comments on gaining share in biopharma. And you alluded to the fact, Cepheid, really strong demand. It looks like that increased installed base should flow through to other tests in post-pandemic. Am I right in thinking about some of those broad strokes about '22 earnings being above '21? Rainer Blair: So Vijay, let me lay out how we're thinking about '22 on the back of '21. And as Matt was just saying, it's a little early to get into specific specifics, as you can imagine. 2022 in this dynamic environment is a ways away. But having said that, we feel confident around the durability of our COVID revenues. So let me try and lay this out a little bit. As I mentioned, we think we entered 2022 with $1 billion in vaccine and therapeutic backlog. And the potential upside that we talked about based on the assumptions, not including boosters, not including kids being vaccinated, nor including at this point, other vaccine programs that might be earlier stage in the pipeline. If you think about that in our very, very broad portfolio, both in terms of upstream and downstream solutions, independent of the vaccine or therapeutic modality, we really see that we're very well positioned there. And that $1 billion backlog is sort of the beginning of that story. Now as we think about testing, so diagnostic testing for COVID, COVID is going to be or is already endemic, and we'll be testing at the point of care for a long time. And so while some folks are talking about 2021 being a peak year for testing for the market, we think Cepheid is uniquely positioned. You recall my example of the concentric circles with the highest durability tests being in the center, representing really Cepheid's point-of-care workflow. And as you think about Cepheid expanded installed base, the very strong menu that we have, we believe that we'll do roughly the same number of tests in 2022 as we are doing in 2021. And you'll recall, we just raised that from 36 million to 45 million tests. And then if you think about our base business, here, we really are and continue to be exposed to a number of attractive secular growth drivers. Biologics, more generally in life science research, along with molecular diagnostics and the decentralization of health care. And then, of course, environmental sustainability as you think about our water quality group and packaging needs continue to proliferate. So net-net, we feel we're uniquely positioned to outperform in 2021 and beyond. Vijay Kumar: Well, that is impressive. Thanks for the comments, guys. Congrats. Operator: Your next question comes from the line of Doug Schenkel of Cowen. Rainer Blair: Hi, Doug. Doug Schenkel: Hey. Good morning, guys. Thank you for taking my questions. I just want to go back to guidance. And I think it's a math question. I'm just wondering if you could help us bridge essentially the delta between your prior core revenue growth guidance for low double digits and the updated range of high-teens growth? More specifically, I'm wondering where you're seeing the most improvement from a business perspective relative to where we were at your last update. And along those lines, what are you now assuming for the core operating environment, particularly as we look ahead to the second half of the year? Rainer Blair: Sure, Doug. So let's come back to the full year guide going from mid to high teens. And a simple frame if we start at the top there would be that we see the full year base business now at high single-digit core growth and full year COVID tailwinds to be in the high single, low double digits. Now if we start with the base business, we see that sustaining certainly at the current levels with customer activity around the world continuing to resume and approaching pre-pandemic levels. And then, of course, customers are adapting to this new work environment, and we see that in the form of strong sales funnels and our order book growth. Even service levels are at or near normal as we have much better site access than we have had for more normalized operation. And we're also seeing an uptick in instrument revenue as customers are starting to initiate new projects, upgrading and doing some capital investments. Now as I've mentioned here just a minute ago, from a COVID testing perspective, we still see the point-of-care testing at Cepheid easy workflow, the right answer being in short turnaround being the solution, the durable solution. And we see Cepheid actually accelerating here to 45 million tests versus the 36 million tests that we've spoken about. So we're seeing no falloff in demand for Cepheid tests. And the way to think about that is we did about 10 million here in Q1 and expect to increase by one million about each quarter. So 11 million in Q2, 12 million in Q3 and 13 million in Q4. And an important point to recognize here is our mix in Q1, COVID only versus foreign one was 50-50. Now as we go into the summer months here in the Northern Hemisphere, we see that mix going from 50-50 in Q1 to 80-20, 80 COVID, only 20 for 1 [ph] for Q2 and Q3. And then for Q4, we see that going back to - as we enter flu season and so forth, back to 50-50. So keep that in mind from a mix assumption perspective. Now if you look at this by segment, we see the Life Sciences growing over 20% here for the full year. Of course, bioprocessing that's non-COVID related, remains robust in the low double digits. As we've talked about, we're seeing our instruments improving. So if you think of like a microsystem, think about SCIEX, trends improved through 2021 as these projects are resuming as we speak and return to work. And then of course, the COVID-related vaccine and therapeutics revenues we just talked about of about $2 billion. As you think about Diagnostics, here, we see ourselves in the high teens. Point of care, I talked about the expected 45 million tests at Cepheid as that capacity continues to build here through the year. And in our core and reference lab businesses, we see the volumes continuing to recover and the lockdown is really not having a material impact. So thinking about Beckman Diagnostics, Leica Biosystems in the low double digits here for the full year. And then from an EAS perspective, we see that in the mid single to high single digits as the consumables demand remains solid as it has been, but now we're starting to see equipment placements improving as well and in positive growth territories. And then lastly, if you build it out by geography, China, up over 20% for the year with a very strong recovery. North America, also in high teens, with Western Europe at low double digits. So that's how we're thinking about the frame here, by business as well as by geography, as well as base and COVID tailwind. Hopefully, that helps with that. Doug Schenkel: Yes. That is super helpful, and that's a lot of great detail. Maybe a very quick follow-up. And I think you sort of alluded to this or referred to this at the end, Rainer. But in terms of just high growth markets, growth was extremely strong in the first quarter. Some of that, I think, was just fundamental improvement. Some of that was favorable comps. But just kind of your last point, it does sound like you're expecting some sustained improvement in high growth market growth over the balance of the year, that kind of what we saw in Q1 is expected to be sustainable. Rainer Blair: We do. As you correctly point out, China, in particular, Q1 last year essentially was shut down. So the first quarter numbers we're very, very high. But having said that, not only in the market but also in our businesses, we see sustained, very strong growth in the high-growth markets, China being the best example of that with growth over 20% for the full year. Doug Schenkel: Great. okay. Thank you, again. Rainer Blair: Thanks, Doug. Operator: Our next question comes from the line of Scott Davis of Melius Research. Rainer Blair: Hi, Scott. Scott Davis: Good morning, Rainer and Matt. And Matt, good morning. Yes. Can you hear me, guys? Rainer Blair: Yes. Matt McGrew: Yes, we can hear you. You're good. Scott Davis: Okay. Okay. Good. I have a new headset, so I'm not sure if it works or not. So hopefully, it works. But anyways, Rainer, you talked a little bit about the capacity adds. Can you give us a little sense of the kind of the scope, how - I mean, you're talking about adding new lines in existing facilities? Are you talking about new facilities? And are you in process on this? Or is it done? Just a little bit of color around that would be helpful. Rainer Blair: So we are talking about all of that, Scott. We are opening up new facilities. For example, we're starting up a new plant in South Carolina. That will be targeted initially at single-use technologies, will be coming online, supporting both Pall Biotech as well as Cytiva. We've recently completed a small deal in China, buying out our joint venture partner and are expanding our single-use technology capacities on the ground in China as well. And then we have additional lines going in, in several facilities throughout the developed market. Once again, for single-use technologies, but also other biopharma-related portfolio increases. So all of the above and coming online here in the shorter term. Scott Davis: Now to the 40% incrementals that you're guiding to, which obviously seems conservative based on your history, is the new capacity - I mean, it probably comes in at a fairly low profit level at first. Does that play into this guidance at all? Or is it not really a big issue? Matt McGrew: No, Scott. It's not a huge issue for us in this year. I mean a lot of the stuff, too, when you think about what's coming online, think about capacity at Cepheid, that's pretty good margin for us. So if anything, it's probably on the margin, helpful, but it won't be a big drag. Scott Davis: Okay. All right. Good luck, guys. Congrats on a great quarter. Matt McGrew: Thanks, Scott. Operator: Your next question comes from the line of Dan Brennan of UBS. Dan Brennan: Great. Thanks for the questions. And congrats on the quarter. Maybe a two parter on COVID. So it's interesting, the outlook for 2022 that Cepheid will remain consistent with '21. Can you just share some of your assumptions around that? Like what's kind of implied here are you thinking? And how are you thinking about the overall testing market that kind of gets you to that number? And then b, just on the vaccine therapeutics. I know kind of maybe dovetailing on kind of Scott's question in terms of capacity. Just what - can you share with us kind of where you are today from a total capacity in terms of being able to meet the demand that you see? How tight things are? And then as eventually COVID flows with the additional capacity building out, kind of how does that filter into the base bioproduction business? Rainer Blair: So let's start with COVID testing and the durability of that, Cepheid coming back really to what we're seeing today. We see no slowdown in the demand for Cepheid tests for COVID. So while the market, as I mentioned earlier, might peak this year in terms of testing, and we'll see if that's the case. But if we take that assumption, we continue to see that the value proposition that Cepheid offers at the point of care and as those tests wander from more distant testing setting back to the point of care that Cepheid's value proposition there in terms of workflow, speed and accuracy are really in the center of that concentric circle, and it's really - that's so important here to keep in mind. Also, we've increased the installed base of the gene experts now since the beginning of last year by over 40%. So a significant installed base increase. And that's actually the largest installed base of molecular diagnostics point-of-care test around the globe. At the same time, our broad menu, 30 tests approved outside the US, 20 inside of the US, is getting us into a care setting that we expect to provide strong durability here for the future. So that's what allows us here as we continue to increase capacity quarter-over-quarter to continue to increase our shipments. And as you think about 2022 going forward, first of all, the vaccines will take likely years to roll out to the entire world. Secondly, their effectiveness is on a continuum, some of them as high as 95%, others in the mid-60s. And so we're already seeing breakthrough infection. And there's also a number of people around the world who prefer not to get vaccinated. So testing will be continuing and very likely so at the point of care. And that just gives us the confidence based also on our conversations with our customers who are giving us outlook here for the next 18 to 24 months, that we're going to be able to maintain in 2022, the level of test shipment that we had here in 2021. So 45 million is what we're looking for, for 2021. Now as we think about - to your question on total capacity, is capacity tight? I think certainly, we are running very hard. But as I've mentioned in other settings, we have invested continuously here over the last 18 months in expanding our capacity. If we think about Cytiva in particular, even prior to the close with GE, we had an arrangement where we continued to increase capacity, and we've continued to invest very significantly in those capacity increases. So we're working together with our customers and our suppliers to make sure that we're able to supply the needs here in 2021 and going forward. Now to the other aspect of your question, once you have this capacity online, should vaccination and therapeutics peak, how do we think about that capacity going forward? And here, again, we're very bullish based on the development pipeline of biologic drugs, which continues to grow significantly. So even if you put COVID-related vaccines and therapeutics aside, the capacity requirements going forward continue to be significant. We're very confident that the capacity investments that we make today and tomorrow are very much needed here to supply the future needs of our customers. And they're certainly in dialogue with us specifically on that point. Dan Brennan: Sounds terrific, Rainer. Maybe just one quick follow-up. Just on Cepheid, I know it's been asked in the past, but we did, did a survey that showed there's likely to be a continued high usage level for a lot of these boxes that are placed. Just as we get beyond COVID, just any way to think about what Cepheid was like the growth rate you were thinking about before COVID and what that could be now given this dramatically larger installed base in the sense of how much of these boxes going to continue to get used beyond COVID? Thank you. Rainer Blair: Well, you've heard us speak about our frame of pre-pandemic and sort of post-herd immunity or post vaccination, where we saw Cepheid really growing in the low double digits pre-pandemic based on the menu at that time, which we've since expanded and will continue to expand going forward. And so the way we think about it is, at the very minimum, we should be able to drive continued low double-digit growth at Cepheid on the one hand. On the other hand, we do have now an endemic disease, COVID-19, and you really need to layer that type of testing on top of sort of this base testing rate that we have seen in the past. So that's how we're thinking about it, and that's what gives us confidence in the durability here, both in the near term and in the future. Dan Brennan: Great. Thank you, Rainer. Operator: Your next question comes from the line of Dan Leonard of Wells Fargo. Rainer Blair: Hi, Dan. Dan Leonard: Hello. So a few questions. First off, on the guidance, I appreciate all the line item detail. But at a high level, how much conservatism do you think is still baked into that high single-digit view on the base business outlook given all of your commentary in the low single-digit comp? Rainer Blair: So as we look at our base business, we really see this as an appropriate view of what remains here of the year, and there's good reason for that. We continue to see labs opening up, patient volumes return. In the base business, we see in our Environmental & Applied Solutions business activity levels continue to pick up with our consumables running at a good strong rate and instrument continuing to be placed here as capital project go forward. And this is why we've increased that forecast on the base business from mid single to high single digits, and we think that's appropriate. As we look for the year, we still have a good part of the year ahead of us and think that's the appropriate way to think about it. Dan Leonard: Okay. I appreciate that. And then my follow-up. How are you thinking about prospects for inflation and your ability to offset inflationary pressures, maybe even from incremental efficiencies you've learned from operating during a lockdown? Rainer Blair: We've been in these kinds of environments before, and the Danaher Business System and the tool set that we apply every day really helps us to offset this. On the one hand, we're working closely with our suppliers and ensuring that we are working our price performance variations and the tool sets that we have there. Of course, we value engineer every day of the week. And then going forward, we also work on the pricing side to ensure that we're able to protect our margins and ensure that we capture the value of our differentiated and oftentimes IP-protected solutions going forward. Dan Leonard: Appreciate that. Thank you. Rainer Blair: Thank you. Operator: We have time for one more question. Your final question will come from the line of Patrick Donnelly of Citi. Rainer Blair: Hi, Patrick. Patrick Donnelly: Great. Hey, how are you guys? Thanks. Rainer, you touched on it a little bit a couple of questions ago, but I wanted to drill in on the bioprocessing piece outside of the vaccine. Obviously, vaccine demand gets a lot on the headlines understandably. But can you just talk about what you're seeing in the market, kind of the underlying demand in the bioprocessing, bioproduction world? What do you think that market growth rate looks like over the next few years? And then to your point, how confident you are in that demand being enough to kind of fill the capacity that you're building out in the post-vaccine world, which, again, to your point, feels like it's multiple years away? But just wanted to talk about that market a little bit Rainer Blair: Sure, Patrick. There is a number of data points to consider here. Let me start with the fact that biologic drugs are highly efficacious and in very great demand, and that the penetration of these drugs throughout the world is still in the single-digit percentages, again, speaking now outside of COVID vaccine. So the penetration of these highly efficacious drug is still relatively low. On the other hand, when you look at the surge of capital investment that we see going into drug development, whether that be in traditional pharma or small biotech and throughout the world, we see that the drug pipeline and the associated number of drugs in the clinical - in clinical trials continues to ramp very significantly. And even if you apply sort of traditional success rates to the number of projects in those pipelines, you have to expect a very, very solid and continued growth here for the future, and we certainly do. And we expect that growth to be in the low double digits here on a sustained basis. And if you have any sort of additional leverage here as it relates to the transition from, for instance, stainless steel manufacturing solutions to single-use technologies for greater flexibility and ease of use and lower risk of cross-contamination, that provides additional impulses and catalysts to the growth rate, which will require the capacity that you see coming online. So we're very confident that the capacity that we're putting in place for our customers and to support their future growth is required here in the future. Patrick Donnelly: That's really helpful. I appreciate it. And then I just wanted to follow up on one of the cap deployment questions from earlier. We've seen some peers kind of step into other industries like the CRO world. I know you've talked a little bit about your interest or lack thereof in that type of space previously, but some thinking has evolved in other places. So I was wondering, is that a market that you'd be interested in getting into? And just wanted to get your thoughts on that. Rainer Blair: So we obviously don't want to comment on specific things happening here in the market. But what I can say is that we're really happy with the approach that we've taken with the acquisitions of Cytiva, Pall, IDT and Phenomenex. We're providing very specific practical and material solutions to our customer’s pain points. These are all companies that are in the forefront of technologies with proprietary solutions, with high number of touch points and high customer intimacy and very importantly, recurring revenue, which is exactly the kind of businesses that we want to be in. And once again, coming back to the nature of this industry, in this industry, more often than not, scientists are making - or at the very minimum, heavily influencing the purchasing decision as opposed to economic bundles really being a point of leverage. And why is that? Because the value in getting a, for instance, biologic drug to market faster by just one week, if it's a $1 billion drug a year, is $20 million. The value of increasing your yield by 2% to 5% is several tens of millions of dollars. So that's how we think about the fact that our strategy and the way we're focused is, is the way to be. Patrick Donnelly: Very helpful. Appreciate the color. Operator: Thank you. I will now return the call to Matt Gugino for any closing comments. Matt Gugino: Thanks, Lori, and thanks, everybody, for joining us today. We're around all day for questions. Operator: Thank you. That does conclude the Danaher Corporation's first quarter 2021 earnings results conference call. You may now disconnect.