# DANAHER CORP /DE/ (DHR) FY 2024 MD&A Verbatim Item 7 Management's Discussion and Analysis from DANAHER CORP /DE/'s 10-K for fiscal year 2024. SEC filing source: https://www.sec.gov/Archives/edgar/data/313616/000031361625000043/dhr-20241231.htm Accession: 0000313616-25-000043 Filing date: 2025-02-20 Report date: 2024-12-31 Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high Company profile: /company/DHR/ All MD&A years: /company/DHR/mda/ Previous year: /company/DHR/mda/fy2023/ (FY 2023) Next year: /company/DHR/mda/fy2025/ (FY 2025) ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide material information relevant to an assessment of Danaher’s financial condition and results of operations, including an evaluation of the amounts and certainty of cash flows from operations and from outside sources. The MD&A is designed to focus specifically on material events and uncertainties known to management that are reasonably likely to cause reported financial information not to be necessarily indicative of future operating results or of future financial condition. This includes descriptions and amounts of matters that have had a material impact on reported operations, as well as matters that are reasonably likely based on management’s assessment to have a material impact on future operations. The Company’s MD&A is divided into five sections: •Overview •Results of Operations •Liquidity and Capital Resources •Critical Accounting Estimates •New Accounting Standards This discussion and analysis should be read together with Danaher’s audited financial statements and related Notes thereto as of December 31, 2024 and 2023 and for each of the three years in the period ended December 31, 2024 included in this Annual Report. Management's discussion and analysis of financial condition and results of operations for 2022 is included in Item 7 of the Company’s Annual Report on Form 10-K with respect to the year ended December 31, 2023 filed with the Securities and Exchange Commission, and should be referred to for information regarding that period. Unless otherwise indicated, all financial results in this report refer to continuing operations. OVERVIEW General Refer to “Item 1. Business—General” for a discussion of Danaher’s strategic objectives and methodologies for delivering long-term shareholder value. Danaher is a multinational business with global operations. During 2024, approximately 58% of Danaher’s sales were derived from customers outside the United States. As a diversified, global business, Danaher’s operations are affected by worldwide, regional and industry-specific economic, political and geopolitical factors. Danaher’s geographic and industry diversity, as well as the range of its products and services, help mitigate the impact of any one industry or the economy of any single country, other than the United States, on its consolidated operating results. The Company’s individual businesses monitor key competitors and customers, including to the extent possible their sales, to gauge relative performance and the outlook for the future. As a result of the Company’s geographic and industry diversity, the Company faces a variety of opportunities and challenges, including rapid technological development (particularly with respect to computing, automation, artificial intelligence, mobile connectivity and digitization) in most of the Company’s served markets, the expansion and evolution of opportunities in high-growth markets, trends and costs associated with a global labor force, consolidation of the Company’s competitors and regulatory changes. The Company operates in a highly competitive business environment in most markets, and the Company’s long-term growth and profitability will depend in particular on its ability to expand its business in high-growth geographies and higher-growth market segments, identify, consummate and integrate appropriate acquisitions and identify and consummate appropriate investments and strategic partnerships, develop innovative and differentiated new products and services with higher gross profit margins, expand and improve the effectiveness of the Company’s sales force, continue to reduce costs and improve operating efficiency and quality, and effectively address the demands of an increasingly regulated global environment. The Company is making significant investments, organically and through acquisitions and investments, to address the rapid pace of technological change in its served markets and to globalize its manufacturing, research and development and customer-facing resources (particularly in high-growth markets) in order to be responsive to the Company’s customers throughout the world and improve the efficiency of the Company’s operations. Business Performance Consolidated revenues for the year ended December 31, 2024 were flat and core sales decreased 1.5% as compared to 2023. Acquisitions contributed 2.0% to sales in 2024 compared to 2023, and were largely offset by core revenue declines led by the Biotechnology segment, and to a lesser extent the Life Sciences segment, partially offset by higher core sales in the Diagnostics segment. The impact of currency translation decreased reported sales by 0.5% in 2024 compared to 2023. For the definition of “core sales” refer to “—Results of Operations” below. 35 Table of Contents Geographically, the Company’s sales in developed markets in 2024 increased 2% compared to 2023 driven primarily by increased sales in North America. For the same period, core sales in developed markets were essentially flat, primarily due to increased core sales in North America offset by decreased core sales in Western Europe. Increased demand in the Diagnostics segment, offset by decreased demand in the Biotechnology and Life Sciences segments, contributed to the year-over-year flat core sales growth in developed markets. For the same period, sales in high-growth markets decreased year-over-year by 4% and core sales in high-growth markets decreased at a mid-single digit rate, due primarily to low double-digit core revenue declines in China. The decline in core sales in high-growth markets was primarily driven by lower demand across all segments, due to weakness in capital spending and generally lower underlying activity levels. High-growth markets represented approximately 29% of the Company’s total sales in 2024. The Company’s net earnings from continuing operations for the year ended December 31, 2024 totaled approximately $3.9 billion, compared to approximately $4.2 billion for the year ended December 31, 2023. Net earnings attributable to common stockholders for the year ended December 31, 2024 totaled approximately $3.9 billion or $5.29 per diluted common share compared to approximately $4.7 billion or $6.38 per diluted common share for the year ended December 31, 2023. 2024 intangible asset impairments and increased operating expenses, net of increased other income, drove the year-over-year decline in net earnings from continuing operations and diluted net earnings per common share from continuing operations. In addition to the above factors, net earnings from discontinued operations for 2024 compared with 2023 contributed to the lower net earnings attributable to common stockholders in 2024. Refer to “—Results of Operations” for further discussion of the year-over-year changes in net earnings and diluted net earnings per common share for the years ended December 31, 2024 and 2023. In response to current economic conditions, the Company expects to review and adjust its cost structure. In the first quarter of 2025, the Company commenced an initiative to identify productivity improvement and cost savings opportunities that we anticipate would generate annual pre-tax savings of at least $150 million. The Company expects these opportunities to be broad-based, including opportunities within China and the Diagnostics segment. Acquisitions During 2024, the Company acquired 3 businesses for total consideration of $558 million in cash, net of cash acquired. The businesses acquired complement existing units of the Company’s Life Sciences segment. The Company preliminarily recorded an aggregate of $305 million of goodwill related to these acquisitions. Refer to Note 2 to the Consolidated Financial Statements for discussion regarding the Company’s acquisitions. Veralto Corporation Separation On September 30, 2023 (the “Distribution Date”), the Company completed the separation (the “Separation”) of its former Environmental & Applied Solutions business by distributing to Danaher stockholders on a pro rata basis all of the issued and outstanding common stock of Veralto Corporation (“Veralto”), the entity Danaher incorporated to hold such businesses. To effect the Separation, Danaher distributed to its stockholders one share of Veralto common stock for every three shares of Danaher common stock outstanding as of September 13, 2023, the record date for the distribution. Fractional shares of Veralto common stock that otherwise would have been distributed were aggregated and sold into the public market and the proceeds distributed to Danaher stockholders who otherwise would have received fractional shares of Veralto common stock. The accounting requirements for reporting the Separation as a discontinued operation were met when the Separation was completed. Refer to Note 3 to the Consolidated Financial Statements for further discussion. RESULTS OF OPERATIONS In this report, references to the non-GAAP measure of core sales (also referred to as core revenues or sales/revenues from existing businesses) refer to sales from continuing operations calculated according to generally accepted accounting principles in the United States (“GAAP”) but excluding: •sales from acquired businesses (as defined below); and •the impact of currency translation. References to sales or operating profit attributable to acquisitions or acquired businesses refer to sales or operating profit, as applicable, from acquired businesses recorded prior to the first anniversary of the acquisition less any sales and operating profit, during the applicable period, attributable to divested product lines not considered discontinued operations. The portion of revenue attributable to currency translation is calculated as the difference between: •the period-to-period change in revenue (as defined above); and •the period-to-period change in revenue (as defined above) after applying current period foreign exchange rates to the prior year period. 36 Table of Contents Core sales growth (decline) should be considered in addition to, and not as a replacement for or superior to, sales, and may not be comparable to similarly titled measures reported by other companies. Management believes that reporting this non-GAAP financial measure provides useful information to investors by helping identify underlying growth trends in Danaher’s business and facilitating comparisons of Danaher’s revenue performance with its performance in prior and future periods and to Danaher’s peers. Management also uses this non-GAAP financial measure to measure the Company’s operating and financial performance and as one of the performance measures in the Company’s executive short-term cash incentive program. The Company excludes the effect of currency translation from this measure because currency translation is not under management’s control, is subject to volatility and can obscure underlying business trends, and excludes the effect of acquisitions and divestiture-related items because the nature, size, timing and number of acquisitions and divestitures can vary dramatically from period-to-period and between the Company and its peers and can also obscure underlying business trends and make comparisons of long-term performance difficult. Throughout this discussion, references to sales growth or decline refer to the impact of both price and unit sales and references to productivity improvements generally refer to improved cost efficiencies resulting from the ongoing application of DBS. The Company deems acquisition-related transaction costs incurred in a given period to be significant (generally relating to the Company’s larger acquisitions) if it determines that such costs exceed the range of acquisition-related transaction costs typical for Danaher in a given period. Sales Growth (Decline) and Core Sales Decline [[GREPCENT_TABLE]] [["","2024 vs. 2023","","2023 vs. 2022"],["Total sales growth (decline) (GAAP)","\u2014","%","","(10.5)","%"],["Impact of:"],["Acquisitions","(2.0)","%","","(0.5)","%"],["Currency exchange rates","0.5","%","","1.0","%"],["Core sales decline (non-GAAP)","(1.5)","%","","(10.0)","%"]] [[/GREPCENT_TABLE]] 2024 Sales Compared to 2023 Total sales were flat on a year-over-year basis in 2024 as sales from acquired businesses, which increased reported sales by 2.0%, were largely offset by a 1.5% decrease in core sales resulting from the factors discussed below by segment. The impact of changes in currency exchange rates decreased reported sales by 0.5% on a year-over-year basis in 2024 primarily due to the impact of the strengthening of the U.S. dollar against most other major currencies in 2024. Price increases contributed 1.0% to sales growth on a year-over-year basis and are reflected as a component of core sales decline above. Operating Profit Performance Operating profit margins decreased 140 basis points from 21.8% for the year ended December 31, 2023 to 20.4% for the year ended December 31, 2024. The following factors impacted year-over-year operating profit margin comparisons. 2024 vs. 2023 operating profit margin comparisons were unfavorably impacted by: •The incremental dilutive effect in 2024 of acquired businesses - 85 basis points •2024 impairment charges related to a trade name in each of the Life Sciences and Diagnostics segments, net of 2023 impairment charges related to technology-based intangible assets in the Diagnostics segment and technology-based intangible assets and other assets in the Biotechnology segment. Refer to Note 10 to the accompanying Consolidated Financial Statements for additional information regarding the impairments - 75 basis points •Full year 2024 loss on the termination of a commercial arrangement in the Diagnostics segment - 25 basis points •2023 gain from the resolution of a litigation contingency in the Life Sciences segment - 5 basis points 2024 vs. 2023 operating profit margin comparisons were favorably impacted by: •Acquisition-related transaction costs deemed significant, settlement of pre-acquisition share-based payment awards and fair value adjustments to inventory in 2023, net of acquisition-related fair value adjustment to inventory in 2024, in each case related to the acquisition of Abcam plc (“Abcam”) - 30 basis points •Increased leverage and productivity in the Company’s operational and administrative cost structure, net of lower 2024 core sales and the impact of product mix - 20 basis points 37 Table of Contents Business Segments Sales by business segment for the years ended December 31 are as follows ($ in millions): [[GREPCENT_TABLE]] [["","2024","","2023","","2022"],["Biotechnology","$","6,759","","","$","7,172","","","$","8,758"],["Life Sciences","7,329","","","7,141","","","7,036"],["Diagnostics","9,787","","","9,577","","","10,849"],["Total","$","23,875","","","$","23,890","","","$","26,643"]] [[/GREPCENT_TABLE]] For information regarding the Company’s sales by geographical region, refer to Note 5 to the Consolidated Financial Statements. BIOTECHNOLOGY The Biotechnology segment includes the bioprocessing and discovery and medical businesses and offers a broad range of equipment, consumables and services that are primarily used by customers to advance and accelerate the research, development, manufacture and delivery of biological medicines. The Company’s solutions support a broad range of biotherapeutics including monoclonal antibodies, recombinant proteins, replacement therapies such as insulin and vaccines, as well as novel cell, gene, mRNA and other nucleic acid therapies. Biotechnology Selected Financial Data [[GREPCENT_TABLE]] [["","Year Ended December 31"],["($ in millions)","2024","","2023","","2022"],["Sales","$","6,759","","","$","7,172","","","$","8,758"],["Operating profit","1,685","","","1,909","","","3,008"],["Depreciation","151","","","162","","","190"],["Amortization of intangible assets","863","","","864","","","812"],["Operating profit as a % of sales","24.9","%","","26.6","%","","34.3","%"],["Depreciation as a % of sales","2.2","%","","2.3","%","","2.2","%"],["Amortization as a % of sales","12.8","%","","12.0","%","","9.3","%"]] [[/GREPCENT_TABLE]] Sales Decline and Core Sales Decline [[GREPCENT_TABLE]] [["","2024 vs. 2023","","2023 vs. 2022"],["Total sales decline (GAAP)","(6.0)","%","","(18.0)","%"],["Impact of:"],["Currency exchange rates","1.5","%","","\u2014","%"],["Core sales decline (non-GAAP)","(4.5)","%","","(18.0)","%"]] [[/GREPCENT_TABLE]] 2024 Sales Compared to 2023 Price increases in the segment contributed 2.5% to sales growth on a year-over-year basis during 2024 as compared with 2023 and are reflected as a component of core sales above. During 2024, total Biotechnology segment sales decreased 6.0% primarily as a result of decreased core sales in the bioprocessing business, and to a lesser extent the impact of currency exchange rates. Total segment core sales decreased across most major geographic regions, including weak demand in China as customers were cautious with their investments. Year-over-year core sales in the bioprocessing business decreased as core sales declines in the first half of the year more than offset core sales growth in the second half. The revenue decline in the first half of the year was primarily due to lower demand as customers reduced their inventory levels. The bioprocessing business returned to core growth in the second half of 2024 primarily driven by improved consumables demand, primarily in North America and Europe. Core sales in the discovery and medical business decreased year-over-year due primarily to lower demand for equipment, partially offset by an increase in demand for consumables. 38 Table of Contents Operating Profit Performance Operating profit margins declined 170 basis points during 2024 as compared to 2023. The following factors impacted year-over-year operating profit margin comparisons. 2024 vs. 2023 operating profit margin comparisons were unfavorably impacted by: •Lower 2024 core sales, reduced leverage in the segment’s operational and administrative cost structure and the impact of product mix, net of 2023 inventory write-offs - 245 basis points 2024 vs. 2023 operating profit margin comparisons were favorably impacted by: •2023 impairment charges related to technology-based intangible assets and other assets - 75 basis points Amortization of intangible assets as a percentage of sales increased in 2024 as compared with 2023 due to the decrease in sales and relatively consistent amortization expense year-over-year. LIFE SCIENCES The Life Sciences segment offers a broad range of instruments, consumables, services and software that are primarily used by customers to study the basic building blocks of life, including DNA and RNA, nucleic acid, proteins, metabolites and cells, in order to understand the causes of disease, identify new therapies, and test and manufacture new drugs, vaccines and gene editing technologies. Additionally, the segment provides products and consumables used to filter and remove contaminants from a variety of liquids and gases in many end-market applications. Life Sciences Selected Financial Data [[GREPCENT_TABLE]] [["","Year Ended December 31"],["($ in millions)","2024","","2023","","2022"],["Sales","$","7,329","","","$","7,141","","","$","7,036"],["Operating profit","879","","","1,209","","","1,414"],["Depreciation","167","","","129","","","112"],["Amortization of intangible assets","576","","","429","","","419"],["Operating profit as a % of sales","12.0","%","","16.9","%","","20.1","%"],["Depreciation as a % of sales","2.3","%","","1.8","%","","1.6","%"],["Amortization as a % of sales","7.9","%","","6.0","%","","6.0","%"]] [[/GREPCENT_TABLE]] Sales Growth and Core Sales (Decline) Growth [[GREPCENT_TABLE]] [["","2024 vs. 2023","","2023 vs. 2022"],["Total sales growth (GAAP)","2.5","%","","1.5","%"],["Impact of:"],["Acquisitions","(6.0)","%","","(1.5)","%"],["Currency exchange rates","1.5","%","","1.0","%"],["Core sales (decline) growth (non-GAAP)","(2.0)","%","","1.0","%"]] [[/GREPCENT_TABLE]] 2024 Sales Compared to 2023 Price increases in the segment contributed 1.0% to sales growth on a year-over-year basis during 2024 as compared with 2023 and are reflected as a component of core sales above. During 2024, total Life Sciences segment sales increased 2.5% primarily as a result of acquisitions, partially offset by decreased core sales and to a lesser extent the impact of currency exchange rates. The decrease in core sales was led by China and Western Europe. Core sales declined year-over-year in the mass spectrometry and flow cytometry and lab automation solutions businesses primarily as a result of weaker demand for equipment, partially offset by increased demand for consumables and service. Core sales declined year-over-year in the microscopy business across most major end-markets. Core sales in the filtration business increased year-over-year driven by increased core sales from aerospace customers, partially offset by decreased core sales from food and beverage customers. Core sales declined year-over-year in the genomics consumables business across most product lines, led by lower core sales in the gene reading and plasmids product lines. 39 Table of Contents Operating Profit Performance Operating profit margins declined 490 basis points during 2024 as compared to 2023. The following factors impacted year-over-year operating profit margin comparisons. 2024 vs. 2023 operating profit margin comparisons were unfavorably impacted by: •2024 impairment charge related to a trade name. Refer to Note 10 to the accompanying Consolidated Financial Statements for additional information regarding the impairment - 305 basis points •The incremental dilutive effect in 2024 of acquired businesses - 245 basis points •Lower 2024 core sales and the impact of product mix, net of improvements in the segment’s operational and administrative cost structure - 25 basis points •2023 gain from the resolution of a litigation contingency - 15 basis points 2024 vs. 2023 operating profit margin comparisons were favorably impacted by: •Acquisition-related transaction costs deemed significant, settlement of pre-acquisition share-based payment awards and fair value adjustments to inventory in 2023, net of acquisition-related fair value adjustment to inventory in 2024, in each case related to the acquisition of Abcam - 100 basis points Depreciation and amortization of intangible assets increased as a percentage of sales during 2024 as compared with 2023, primarily as a result of acquisitions. DIAGNOSTICS The Diagnostics segment offers clinical instruments, consumables, software and services that hospitals, physicians’ offices, reference laboratories and other critical care settings use to diagnose disease and make treatment decisions. Diagnostics Selected Financial Data [[GREPCENT_TABLE]] [["","Year Ended December 31"],["($ in millions)","2024","","2023","","2022"],["Sales","$","9,787","","","$","9,577","","","$","10,849"],["Operating profit","2,625","","","2,406","","","3,436"],["Depreciation","394","","","379","","","387"],["Amortization of intangible assets","192","","","198","","","203"],["Operating profit as a % of sales","26.8","%","","25.1","%","","31.7","%"],["Depreciation as a % of sales","4.0","%","","4.0","%","","3.6","%"],["Amortization as a % of sales","2.0","%","","2.1","%","","1.9","%"]] [[/GREPCENT_TABLE]] Sales Growth (Decline) and Core Sales Growth (Decline) [[GREPCENT_TABLE]] [["","2024 vs. 2023","","2023 vs. 2022"],["Total sales growth (decline) (GAAP)","2.0","%","","(11.5)","%"],["Impact of:"],["Currency exchange rates","1.0","%","","1.0","%"],["Core sales growth (decline) (non-GAAP)","3.0","%","","(10.5)","%"]] [[/GREPCENT_TABLE]] 2024 Sales Compared to 2023 Price increases in the segment did not have a significant impact on sales growth on a year-over-year basis during 2024 as compared with 2023. During 2024, total segment sales increased 2.0% primarily as a result of increased core sales resulting from the factors discussed below. Changes in currency exchange rates negatively impacted sales year-over-year. Overall segment core sales growth was driven primarily by North America, partially offset by lower year-over-year demand in high-growth markets. During the year, core sales in the molecular diagnostics business grew on a year-over-year basis primarily driven by increased sales of both respiratory and non-respiratory disease tests in North America. In the segment’s clinical diagnostics businesses, core sales grew on a year-over-year basis led by the clinical lab business, and to a lesser extent by the pathology and acute care businesses. The increased core sales in the clinical diagnostics businesses were driven by core sales growth in developed markets. 40 Table of Contents Operating Profit Performance Operating profit margins increased 170 basis points during 2024 as compared to 2023. The following factors impacted year-over-year operating profit margin comparisons. 2024 vs. 2023 operating profit margin comparisons were favorably impacted by: •Higher 2024 core sales, improvements in the segment’s operational and administrative cost structure and the impact of product mix - 250 basis points 2024 vs. 2023 operating profit margin comparisons were unfavorably impacted by: •2024 loss on the termination of a commercial arrangement - 60 basis points •2024 impairment charge related to a trade name, net of a 2023 impairment charge related to a technology-based intangible asset - 20 basis points COST OF SALES AND GROSS PROFIT [[GREPCENT_TABLE]] [["","Year Ended December 31"],["($ in millions)","2024","","2023","","2022"],["Sales","$","23,875","","","$","23,890","","","$","26,643"],["Cost of sales","(9,669)","","","(9,856)","","","(10,455)"],["Gross profit","$","14,206","","","$","14,034","","","$","16,188"],["Gross profit margin","59.5","%","","58.7","%","","60.8","%"]] [[/GREPCENT_TABLE]] The year-over-year decrease in cost of sales during 2024 as compared with 2023 was due primarily to the impact of lower year-over-year sales volumes and $87 million of charges incurred in the second quarter of 2023, primarily related to inventory in the Biotechnology segment. The decrease in cost of sales was partially offset by an acquisition-related charge of $25 million incurred in 2024 associated with the fair value adjustment to inventory recorded in connection with the acquisition of Abcam. The year-over-year increase in gross profit margin during 2024 as compared with 2023 was favorably impacted by the 2023 inventory charges referenced above, the net positive impact from the gross profit margin of recent acquisitions, and incremental year-over-year cost savings associated with productivity improvement actions, net of the impact of product mix and an acquisition-related charge in 2024. OPERATING EXPENSES [[GREPCENT_TABLE]] [["","Year Ended December 31"],["($ in millions)","2024","","2023","","2022"],["Sales","$","23,875","","","$","23,890","","","$","26,643"],["Selling, general and administrative (\u201cSG&A\u201d) expenses","(7,759)","","","(7,329)","","","(7,124)"],["Research and development (\u201cR&D\u201d) expenses","(1,584)","","","(1,503)","","","(1,528)"],["SG&A as a % of sales","32.5","%","","30.7","%","","26.7","%"],["R&D as a % of sales","6.6","%","","6.3","%","","5.7","%"]] [[/GREPCENT_TABLE]] SG&A expenses as a percentage of sales increased 180 basis points on a year-over-year basis for 2024 compared with 2023. The year-over-year increase was primarily driven by $265 million of intangible asset impairment charges recorded in 2024 and the impact of recent acquisitions, including the associated amortization expenses, and the 2024 loss on the termination of a commercial arrangement of $56 million. These increases were partially offset by acquisition-related costs for the acquisition of Abcam of $87 million and intangible asset impairment charges of $64 million in 2023. Refer to Note 10 to the accompanying Consolidated Financial Statements for additional information regarding the impairments. R&D expenses (consisting principally of internal and contract engineering personnel costs) as a percentage of sales increased in 2024 as compared with 2023, primarily due to increased spending on R&D activities, including the impact of recent acquisitions. NONOPERATING INCOME (EXPENSE) Nonoperating income (expense) consists primarily of net unrealized and realized gains and losses resulting from changes in the fair value of the Company’s investments in equity securities and investments in partnerships, the non-service cost components of net periodic benefit costs, gains on the sale of product lines and impairments of equity method investments. Refer to Note 8 to the Consolidated Financial Statements. 41 Table of Contents INTEREST COSTS Interest expense of $278 million for 2024 was $8 million lower than in 2023, due to lower balances on borrowings in 2024 compared to 2023, partially offset by higher average interest rates on the Company’s commercial paper borrowings. Interest income of $117 million for 2024 was $186 million lower than in 2023, due to lower average cash balances in 2024 primarily as a result of the use of cash for share repurchases and acquisitions. For a further description of the Company’s debt and cross-currency swap derivative contracts related to the debt as of December 31, 2024 refer to Notes 13 and 14 to the Consolidated Financial Statements. INCOME TAXES General Income tax expense and deferred tax assets and liabilities reflect management’s assessment of future taxes expected to be paid on items reflected in the Company’s Consolidated Financial Statements. The Company records the tax effect of discrete items and items that are reported net of their tax effects in the period in which they occur. The Company’s effective tax rate can be affected by changes in the mix of earnings in countries with different statutory tax rates (including as a result of business acquisitions and dispositions), changes in the valuation of deferred tax assets and liabilities, accruals related to contingent tax liabilities and period-to-period changes in such accruals, the results of audits and examinations of previously filed tax returns (as further discussed below), the expiration of statutes of limitations, the implementation of tax planning strategies, tax rulings, court decisions, settlements with tax authorities, changes in tax laws and regulations, and legislative policy changes that may result from the OECD’s initiative on Base Erosion and Profit Shifting. For a description of the tax treatment of earnings that are planned to be reinvested indefinitely outside the United States, refer to “—Liquidity and Capital Resources—Cash and Cash Requirements” below. The amount of income taxes the Company pays is subject to ongoing audits by federal, state and non-U.S. tax authorities, which often result in proposed assessments. Management performs a comprehensive review of its global tax positions on a quarterly basis. Based on these reviews, which take into account the results of discussions and resolutions of matters with certain tax authorities and the other factors referenced in the prior paragraph, reserves for contingent tax liabilities are accrued or adjusted as necessary. For a discussion of risks related to these and other tax matters, refer to “Item 1A. Risk Factors”. Year-Over-Year Changes in the Tax Provision and Effective Tax Rate [[GREPCENT_TABLE]] [["","Year Ended December 31"],["","2024","","2023","","2022"],["Effective tax rate from continuing operations","16.1","%","","16.3","%","","11.4","%"]] [[/GREPCENT_TABLE]] The Company operates globally, including in certain jurisdictions with lower tax rates than the U.S. federal statutory rate. Therefore, the impact of Danaher’s global operations and benefits from tax credits and incentives contributes to a lower effective tax rate compared to the U.S. federal statutory tax rate. For each period presented, the effective tax rate differs from the U.S. federal statutory rate of 21.0% principally due to the impact of the Company’s global operations, research tax credits, foreign-derived intangible income and aggregate net discrete benefits or charges. For the year ended December 31, 2024, the effective tax rate included the tax effect from intangible asset impairments in a jurisdiction with a higher statutory tax rate than the Company’s effective tax rate and discrete tax benefits from excess tax benefits from stock-based compensation, the release of reserves for uncertain tax positions due to the expiration of statutes of limitation and changes in estimates related to prior year tax filing positions, net of charges related to changes in estimates associated with prior period uncertain tax positions. These items decreased the reported rate on a net basis by 1.4%. For the year ended December 31, 2023, the effective tax rate included discrete tax benefits from changes in estimates related to prior year tax filing positions, the release of reserves for uncertain tax positions due to the expiration of statutes of limitation and excess tax benefits from stock-based compensation, net of charges related to tax costs related to the Separation, tax costs from legal and operational actions undertaken to realign certain of its businesses and changes in estimates associated with prior period uncertain tax positions. These items decreased the reported rate on a net basis by 0.9%. The Company conducts business globally and files numerous consolidated and separate income tax returns in the U.S. federal and state and non-U.S. jurisdictions. The non-U.S. countries in which the Company has a significant presence include China, Denmark, Germany, Singapore, Sweden, Switzerland and the United Kingdom. Excluding these jurisdictions, the Company believes that a change in the statutory tax rate of any individual non-U.S. country would not have a material effect on the Company’s Consolidated Financial Statements given the geographic dispersion of the Company’s taxable income. 42 Table of Contents The Company and its subsidiaries are routinely examined by various U.S. and non-U.S. taxing authorities. The IRS has completed substantially all of the examinations of the Company’s federal income tax returns through 2015 and is currently examining certain of the Company’s federal income tax returns for 2016 through 2022. In addition, the Company has subsidiaries in Canada, China, Denmark, France, Germany, India, Italy, Switzerland, the United Kingdom and various other countries, states and provinces that are currently under audit for years ranging from 2004 through 2023. In the fourth quarter of 2022, the IRS proposed significant adjustments to the Company’s taxable income for the years 2016 through 2018 with respect to the deferral of tax on certain premium income related to the Company’s self-insurance programs. For income tax purposes, the recognition of premium income has been deferred in accordance with U.S. tax laws related to insurance. The proposed adjustments would have increased the Company’s taxable income over the 2016 through 2018 periods by approximately $2.5 billion. In the first quarter of 2023, the Company settled these proposed adjustments with the IRS, although the audit is still open with respect to other matters for the 2016 through 2018 period. The impact of the settlement with respect to the Company’s self-insurance policies was not material to the Company’s financial statements, including cash flows and the effective tax rate. As the settlement with the IRS was specific to the audit period, the settlement does not preclude the IRS from proposing similar adjustments to the Company’s self-insurance programs with respect to periods after 2018. Management believes the positions the Company has taken in its U.S. tax returns are in accordance with the relevant tax laws. Tax authorities in Denmark have issued tax assessments related to interest accrued by certain of the Company’s subsidiaries for the years 2004 through 2015, totaling approximately DKK 2.1 billion including applicable accrued interest (approximately $288 million based on the exchange rate as of December 31, 2024). Management believes the positions the Company has taken in Denmark are in accordance with the relevant tax laws and is actively defending them under appeal to the Danish National Tax Tribunal. The Company intends on pursuing this matter to the Danish High Court and Danish Supreme Court should the current appeal be unsuccessful. While the ultimate resolution is uncertain and may take years to resolve, taking into account the provisions and payments the Company has previously made related to these assessments to mitigate further interest accrual claims, the Company does not expect the resolution of this matter to have a future material adverse impact on the Company’s financial statements, including its cash flow and effective tax rate. The Company expects its 2025 effective tax rate to be approximately 17.5% which is higher than the 2024 rate due primarily to the impact of net discrete tax benefits on the 2024 effective tax rate. The OECD introduced Global Anti-Base Erosion and Profit Shifting (“BEPS”) Pillar 2 rules with new taxing mechanisms under which multi-national entities would pay a minimum level of tax. Numerous countries, including European Union member states, have enacted or are expected to enact related legislation, with general implementation of a global minimum tax as of January 1, 2025. The Company continues to monitor the impact of these new rules but does not anticipate that they will have a material impact on the Company’s effective tax rate. Any future legislative changes in the United States and/or potential tax reform in other jurisdictions could cause the Company’s effective tax rate to differ from this estimate. Refer to Note 7 to the Consolidated Financial Statements for additional information related to income taxes. DISCONTINUED OPERATIONS As further discussed in Note 3 to the Consolidated Financial Statements, discontinued operations includes the results of the Veralto business which was disposed on the first day of the fourth quarter of 2023. In 2023, earnings from discontinued operations, net of income taxes, were $543 million and reflected the operating results of the Veralto businesses prior to the Separation, net of certain costs associated with the Separation including costs related to establishing Veralto as a stand-alone entity and related legal, accounting and investment banking fees. In 2022, earnings from discontinued operations, net of income taxes, were $881 million and reflect the operations of Veralto. COMPREHENSIVE INCOME Comprehensive income decreased by approximately $2.5 billion in 2024 as compared to 2023, primarily driven by the impact of losses from foreign currency translation adjustments in 2024 compared to gains in 2023 and lower net earnings in 2024 compared to 2023, partially offset by an increase in income from pension and postretirement plan benefit adjustments in 2024 compared to 2023. The Company recorded a foreign currency translation loss of approximately $1.5 billion for 2024 compared to a gain of $215 million for 2023. The foreign currency translation losses recorded in 2024 were primarily driven by the change in the exchange rates between the U.S. dollar and the Swedish krona. Foreign currency translation adjustments reflect the gain or loss resulting from the impact of the change in currency exchange rates on the Company’s foreign operations as they are translated to the Company’s reporting currency, the U.S. dollar. The Company recorded a pension and postretirement plan benefit gain of $101 million for 2024 compared to a loss of $51 million for 2023. The Company recorded losses from cash flow hedge adjustments related to the Company’s derivative contracts in 2024 of $113 million compared to $14 million in 2023. 43 Table of Contents FINANCIAL INSTRUMENTS AND RISK MANAGEMENT The Company is exposed to market risk from changes in interest rates, currency exchange rates, equity prices and commodity prices as well as credit risk, each of which could impact its Consolidated Financial Statements. The Company generally addresses its exposure to these risks through its normal operating and financing activities. The Company also periodically uses derivative financial instruments to manage currency exchange risks and interest rate risks. In addition, the Company’s broad-based business activities help to reduce the impact that volatility in any particular area or related areas may have on its financial statements as a whole. Interest Rate Risk The Company manages interest cost using a mixture of fixed-rate and at times variable-rate debt. A change in interest rates on fixed-rate debt impacts the fair value of the debt but not the Company’s earnings or cash flow because the interest on such debt is fixed. Generally, the fair market value of fixed-rate debt will increase as interest rates fall and decrease as interest rates rise. As of December 31, 2024, an increase of 100 basis points in interest rates would have decreased the fair value of the Company’s fixed-rate long-term debt by approximately $1.2 billion. As of December 31, 2024, the Company had no variable-rate debt obligations, however, the interest rates of the Company’s euro-based commercial paper borrowings are fixed based on short-term market rates at the time of issuance (refer to Note 13 to the Consolidated Financial Statements for information regarding the Company’s outstanding commercial paper balances as of December 31, 2024). As these shorter duration obligations mature, the Company expects to issue additional short-term commercial paper obligations to refinance all or part of these borrowings, to the extent commercial paper markets are available. As a result, the Company’s primary interest rate exposure results from changes in short-term interest rates. In 2024, the average annual interest rate associated with the Company’s outstanding commercial paper borrowings was approximately 4.0%. A hypothetical increase of this average by 100 basis points would have increased the Company’s 2024 interest expense by approximately $11 million. Refer to Note 14 for discussion of the Company’s cross-currency swap derivative contracts and interest rate swap agreements. Currency Exchange Rate Risk The Company faces transactional exchange rate risk from transactions with customers in countries outside the United States and from intercompany transactions between affiliates. Transactional exchange rate risk arises from the purchase and sale of goods and services in currencies other than Danaher’s functional currency or the functional currency of its applicable subsidiary. The Company also faces translational exchange rate risk related to the translation of financial statements of its foreign operations into U.S. dollars, Danaher’s functional currency. Costs incurred and sales recorded by subsidiaries operating outside of the United States are translated into U.S. dollars using exchange rates effective during the respective period. As a result, the Company is exposed to movements in the exchange rates of various currencies against the U.S. dollar. In particular, the Company has more sales in European currencies than it has expenses in those currencies. Therefore, when European currencies strengthen or weaken against the U.S. dollar, operating profits are increased or decreased, respectively. The effect of a change in currency exchange rates on the Company’s net investment in non-U.S. subsidiaries is reflected in the accumulated other comprehensive income (loss) component of stockholders’ equity. Currency exchange rates negatively impacted 2024 reported sales on a year-over-year basis primarily due to the strengthening of the U.S. dollar against most major currencies during 2024. Strengthening of the U.S. dollar against other major currencies in 2025 compared to the exchange rates in effect as of December 31, 2024 would adversely impact the Company’s sales and results of operations on an overall basis. Any weakening of the U.S. dollar against other major currencies in 2025 compared to the exchange rates in effect as of December 31, 2024 would positively impact the Company’s sales and results of operations. The Company has generally accepted the exposure to exchange rate movements without using derivative financial instruments to manage this transactional exchange risk, although the Company has used foreign currency-denominated debt and cross-currency swaps to hedge a portion of its net investments in non-U.S. operations against adverse movements in exchange rates. Both positive and negative movements in currency exchange rates against the U.S. dollar will continue to affect the reported amount of sales and net earnings in the Company’s Consolidated Financial Statements. In addition, the Company has assets and liabilities held in foreign currencies. A 10% depreciation in major currencies relative to the U.S. dollar as of December 31, 2024 would have reduced foreign currency-denominated net assets and stockholders’ equity by approximately $1.6 billion. Refer to Note 14 to the Consolidated Financial Statements for information regarding the Company’s hedging of a portion of its net investment in non-U.S. operations. 44 Table of Contents Equity Price Risk The Company’s investment portfolio from time to time includes publicly-traded equity securities that are sensitive to fluctuations in market price. As of December 31, 2024, the Company held $3 million of publicly-traded equity securities, excluding equity-method investments. Additionally, the Company holds non-marketable equity investments in privately held companies that may be impacted by equity price risks. These non-marketable equity investments are accounted for under the Fair Value Alternative method with changes in fair value recorded in earnings. Volatility in the equity markets or other fair value considerations could affect the value of these investments and require losses or gains to be recognized in earnings. Refer to Note 11 to the Consolidated Financial Statements for additional information regarding the Company’s equity investments. Commodity Price Risk For a discussion of risks relating to commodity prices, refer to “Item 1A. Risk Factors.” Credit Risk The Company is exposed to potential credit losses in the event of nonperformance by counterparties to its financial instruments. Financial instruments that potentially subject the Company to credit risk consist of cash and temporary investments, receivables from customers and derivatives. The Company places cash and temporary investments with various high-quality financial institutions throughout the world and exposure is limited at any one institution. Although the Company typically does not obtain collateral or other security to secure these obligations, it does regularly monitor the third-party depository institutions that hold its cash and cash equivalents. The Company’s emphasis is primarily on safety and liquidity of principal and secondarily on maximizing yield on those funds. In addition, concentrations of credit risk arising from receivables from customers are limited due to the diversity of the Company’s customers. The Company’s businesses perform credit evaluations of their customers’ financial conditions as deemed appropriate and also obtain collateral or other security when deemed appropriate. The Company enters into derivative transactions infrequently and typically with high-quality financial institutions, so that exposure at any one institution is limited. LIQUIDITY AND CAPITAL RESOURCES Management assesses the Company’s liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities. The Company continues to generate substantial cash from operating activities and believes that its operating cash flow, cash on hand and other sources of liquidity will be sufficient to allow it to continue investing in existing businesses (including capital expenditures), consummating strategic acquisitions and investments, paying interest and servicing debt, paying dividends and funding restructuring activities, as well as to repurchase common stock when deemed appropriate and manage its capital structure on a short-term and long-term basis. The Company has relied primarily on borrowings under its commercial paper program to address liquidity requirements that exceed the capacity provided by its operating cash flows and cash on hand, while also accessing the capital markets from time to time including to secure financing for more significant acquisitions. Subject to any limitations that may result from market disruptions, the Company anticipates following the same approach in the future. 45 Table of Contents Overview of Cash Flows and Liquidity Following is an overview of the Company’s cash flows and liquidity for the years ended December 31: [[GREPCENT_TABLE]] [["($ in millions)","2024","","2023","","2022"],["Total operating cash flows provided by continuing operations","$","6,688","","","$","6,490","","","$","7,613"],["Cash paid for acquisitions","$","(558)","","","$","(5,610)","","","$","(582)"],["Payments for additions to property, plant and equipment","(1,392)","","","(1,383)","","","(1,118)"],["Proceeds from sales of property, plant and equipment","13","","","12","","","9"],["Payments for purchases of investments","(331)","","","(172)","","","(523)"],["Proceeds from sales of investments","253","","","61","","","18"],["All other investing activities","34","","","44","","","51"],["Total cash used in investing activities from continuing operations","(1,981)","","","(7,048)","","","(2,145)"],["Total investing cash used in discontinued operations","\u2014","","","(33)","","","(89)"],["Net cash used in investing activities","$","(1,981)","","","$","(7,081)","","","$","(2,234)"],["Proceeds from the issuance of common stock in connection with stock-based compensation","$","162","","","$","68","","","$","31"],["Payment of dividends","(768)","","","(821)","","","(818)"],["Net proceeds from (repayments of) borrowings (maturities of 90 days or less)","5","","","(1,006)","","","(723)"],["Repayments of borrowings (maturities longer than 90 days)","(1,674)","","","(620)","","","(965)"],["Distribution from discontinued operations","\u2014","","","2,600","","","\u2014"],["Payments for repurchase of common stock","(5,979)","","","\u2014","","","\u2014"],["All other financing activities","(131)","","","(67)","","","(95)"],["Net cash (used in) provided by financing activities for continuing operations","(8,385)","","","154","","","(2,570)"],["Cash distributions to Veralto Corporation, net","\u2014","","","(427)","","","\u2014"],["Net cash used in financing activities","$","(8,385)","","","$","(273)","","","$","(2,570)"]] [[/GREPCENT_TABLE]] As of December 31, 2024, the Company held approximately $2.1 billion of cash and cash equivalents. Operating Activities Cash flows from operating activities can fluctuate significantly from period-to-period as working capital needs and the timing of payments for income taxes, restructuring activities and productivity improvement initiatives, pension funding and other items impact reported cash flows. Operating cash flows from continuing operations were approximately $6.7 billion for 2024, an increase of $198 million, or 3%, as compared to 2023. The year-over-year change in operating cash flows from 2023 to 2024 was primarily attributable to the following factors: •2024 operating cash flows from continuing operations reflected a decrease of $322 million in net earnings from continuing operations in 2024 as compared to 2023. •Net earnings from continuing operations for 2024 also included $248 million higher noncash charges for impairments, intangible asset amortization, depreciation and amortization of an acquisition-related inventory step-up compared to 2023, net of a decrease in unrealized investment gains/losses and stock compensation expense in 2024 as compared to 2023. Amortization expense primarily relates to the amortization of intangible assets and inventory fair value adjustments. Depreciation expense relates to both the Company’s manufacturing and operating facilities as well as instrumentation leased to customers under operating-type lease (“OTL”) arrangements. Depreciation, amortization, impairments and stock compensation are noncash expenses that decrease earnings without a corresponding impact to operating cash flows. Unrealized investment gains/losses impact net earnings from continuing operations without immediately impacting cash flows as the cash flow impact from investments occurs when the invested capital is returned to the Company. 46 Table of Contents •The aggregate of trade accounts receivable, inventories and trade accounts payable provided $497 million in operating cash flows from continuing operations during 2024, compared to $358 million of operating cash flows generated in 2023. The amount of cash flow generated from or used by the aggregate of trade accounts receivable, inventories and trade accounts payable depends upon how effectively the Company manages the cash conversion cycle, which effectively represents the number of days that elapse from the day it pays for the purchase of raw materials and components to the collection of cash from its customers and can be significantly impacted by the timing of collections and payments in a period. •The aggregate of prepaid expenses and other assets, deferred income taxes and accrued expenses and other liabilities used $695 million in operating cash flows during 2024, compared to $828 million used in 2023. The timing of cash payments and refunds for taxes and the impact of deferred tax benefits and charges, various employee-related liabilities, customer funding and accrued expenses drove the majority of this change. Investing Activities Cash flows relating to investing activities consist primarily of cash used for capital expenditures, including instruments leased to customers, acquisitions, investments and cash proceeds from divestitures of businesses or assets. Net cash used in investing activities was approximately $2.0 billion during 2024 compared to approximately $7.1 billion of net cash used in 2023. Acquisitions, Divestitures and Sale of Investments For a discussion of the Company’s acquisitions and divestitures refer to “—Overview” and Notes 2 and 3 to the Consolidated Financial Statements. In addition, in 2024 and 2023, the Company invested $331 million and $172 million, respectively, in non-marketable equity securities and partnerships. Capital Expenditures Though the relative significance of particular categories of capital investment can change from period to period, capital expenditures are typically made for increasing manufacturing capacity, the manufacture of instruments that are used in OTL arrangements, purchases of buildings, replacing equipment, supporting new product development and improving information technology systems. Capital expenditures totaled approximately $1.4 billion in both 2024 and 2023. During 2021, certain agencies of the U.S. government, including the Biomedical Advanced Research and Development Authority (“BARDA”) within the U.S. Department of Health and Human Services, agreed to finance an expansion of production capacity related to chromatography, liquid cell culture media, buffers and cell culture powder media and single-use consumables at certain of the Company’s Biotechnology businesses and the development of diagnostics testing technologies and the expansion of testing production capacity at certain of the Company’s Diagnostics businesses. The Company’s businesses may enter into similar agreements in the future. In consideration of this financing, the U.S. government has certain rights, including rights with respect to the allocation of certain of the incremental production capacity associated with such expansion and/or rights in intellectual property produced with its financial assistance. The amount awarded pursuant to these grants in 2021 totaled $568 million and is being paid over periods ranging from one year to four years. In 2024 and 2023, the Company recorded amounts related to these grants and other government assistance that offset operating expenses of $43 million and $51 million, respectively, and purchases of property, plant and equipment of $198 million and $136 million, respectively. Property, plant and equipment purchased using funds provided by governments are recorded net of government assistance. Financing Activities Cash flows from financing activities consist primarily of cash flows associated with the issuance and repayments of commercial paper, issuance and repayment of long-term debt, borrowings under committed credit facilities, issuance and repurchases of common stock, issuance of preferred stock, payments of cash dividends to shareholders and proceeds from the Separation. Financing activities used cash of approximately $8.4 billion during 2024 compared to $273 million of cash used during 2023. The year-over-year increase in cash used by financing activities was due primarily to the repurchase of approximately $6.0 billion of the Company’s common stock in 2024, compared to the approximately $2.6 billion Veralto Distribution received in 2023 in connection with the Separation. In 2025, the Company anticipates paying approximately $60 million of excise tax related to the 2024 share repurchases. Total debt was approximately $16.0 billion and $18.4 billion as of December 31, 2024 and 2023, respectively, including notes payable and current portion of long-term debt of $505 million and approximately $1.7 billion as of December 31, 2024 and 2023, respectively. As of December 31, 2024, the Company had the ability to incur approximately $4.0 billion of additional indebtedness in direct borrowings or under the outstanding commercial paper facilities based on the amounts available under the Company’s $5.0 billion unsecured, multiyear revolving credit facility (“Credit Facility”) which were not being used to backstop outstanding commercial paper balances. As of December 31, 2024, the Company has classified 47 Table of Contents approximately $1.0 billion of its borrowings outstanding under the euro-denominated commercial paper program as long-term debt in the Consolidated Balance Sheet as the Company has the intent and ability, as supported by availability under the Credit Facility, to refinance these borrowings for at least one year from the balance sheet date. As commercial paper obligations mature, the Company expects to issue additional short-term commercial paper obligations to refinance all or part of these borrowings, to the extent commercial paper markets are available. Under the Company’s U.S. dollar and euro-denominated commercial paper program, the notes are typically issued at a discount from par, generally based on the ratings assigned to the Company by credit rating agencies at the time of the issuance and prevailing market rates measured by reference to the Secured Overnight Financing Rate or Euro Interbank Offer Rate, depending on the applicable currency of the borrowing. Refer to Note 13 to the Consolidated Financial Statements for additional information regarding the Company’s financing activities and indebtedness, including the Company’s outstanding debt as of December 31, 2024, and the Company’s commercial paper program and Credit Facility. Shelf Registration Statement The Company has filed a “well-known seasoned issuer” shelf registration statement on Form S-3 with the SEC that registers an indeterminate amount of debt securities, common stock, preferred stock, warrants, depositary shares, purchase contracts and units for future issuance. The Company expects to use net proceeds realized by the Company from future securities sales off this shelf registration statement for general corporate purposes, including without limitation repayment or refinancing of debt or other corporate obligations, acquisitions, capital expenditures, share repurchases, dividends and/or working capital. Stock Repurchase Program Please see Note 18 to the Consolidated Financial Statements for a description of the Company’s stock repurchase program and repurchases of common stock. Dividends The Company declared a regular quarterly cash dividend of $0.27 per share of Company common stock that was paid on January 31, 2025 to holders of record on December 27, 2024. Aggregate 2024 and 2023 cash payments for dividends on Company common stock were $768 million and $778 million, respectively, and 2023 cash payments for the dividends on the Company’s MCPS were $43 million. The year-over-year decrease in dividend payments in 2024 primarily related to lower dividends paid on the MCPS Series B as a result of their conversion into common shares in April 2023 and lower average common stock outstanding, partially offset by an increase in the quarterly dividend rate on common stock beginning with the dividend paid in the second quarter of 2024. Cash and Cash Requirements As of December 31, 2024, the Company held approximately $2.1 billion of cash and cash equivalents that were on deposit with financial institutions or invested in highly liquid investment-grade debt instruments with a maturity of 90 days or less with an approximate weighted average annual interest rate of 2.2%. Of the cash and cash equivalents, $631 million was held within the U.S. and approximately $1.5 billion was held outside of the U.S. The Company will continue to have cash requirements to support general corporate purposes, which may include working capital needs, capital expenditures, acquisitions and investments, paying interest and servicing debt, paying taxes and any related interest or penalties, funding its restructuring activities and pension plans as required, paying dividends to shareholders, repurchasing shares of the Company’s common stock and supporting other business needs. The Company generally intends to use available cash and internally generated funds to meet these cash requirements, but in the event that additional liquidity is required, the Company may also borrow under its commercial paper programs (if available) or borrow under the Company’s Credit Facility, enter into new credit facilities and either borrow directly thereunder or use such credit facilities to backstop additional borrowing capacity under its commercial paper programs (if available) and/or access the capital markets. The Company also may from time to time seek to access the capital markets to take advantage of favorable interest rate environments or other market conditions. While repatriation of some cash held outside the U.S. may be restricted by local laws, most of the Company’s foreign cash could be repatriated to the U.S. Following enactment of the TCJA, in general, repatriation of cash to the U.S. can be completed with no incremental U.S. tax; however, repatriation of cash could subject the Company to non-U.S. taxes on distributions. The cash that the Company’s non-U.S. subsidiaries hold for indefinite reinvestment is generally used to finance non-U.S. operations and investments, including acquisitions. The income taxes, if any, that would be applicable to the repatriation of such earnings (including basis differences in our non-U.S. subsidiaries) are not readily determinable. As of December 31, 2024, management believes that it has sufficient sources of liquidity to satisfy its cash needs, including its cash needs in the U.S. 48 Table of Contents During 2024, the Company contributed $8 million to its U.S. defined benefit pension plans and $37 million to its non-U.S. defined benefit pension plans. During 2025, the Company’s cash contribution requirements for its U.S. and its non-U.S. defined benefit pension plans are forecasted to be approximately $8 million and $35 million, respectively. The ultimate amounts to be contributed depend upon, among other things, legal requirements, underlying asset returns, the plan’s funded status, the anticipated tax deductibility of the contribution, local practices, market conditions, interest rates and other factors. Contractual and Other Obligations For a description of the Company’s debt and lease obligations, commitments, and litigation and contingencies, refer to Notes 9, 13, 16 and 17 to the Consolidated Financial Statements. Legal Proceedings Refer to Note 17 to the Consolidated Financial Statements for information regarding legal proceedings and contingencies, and for a discussion of risks related to legal proceedings and contingencies, refer to “Item 1A. Risk Factors.” CRITICAL ACCOUNTING ESTIMATES Management’s discussion and analysis of the Company’s financial condition and results of operations is based upon the Company’s Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The Company bases these estimates and judgments on historical experience, the current economic environment and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ materially from these estimates and judgments. The Company believes the following accounting estimates are most critical to an understanding of its financial statements. Estimates are considered to be critical if they meet both of the following criteria: (1) the estimate requires assumptions about material matters that are uncertain at the time the estimate is made, and (2) material changes in the estimate are reasonably likely from period-to-period. For a detailed discussion on the application of these and other accounting estimates, refer to Note 1 to the Consolidated Financial Statements. Acquired Intangibles—The Company’s business acquisitions typically result in the recognition of goodwill, developed technology and other intangible assets, which affect the amount of future period amortization expense and possible impairment charges that the Company may incur. The fair values of acquired intangibles are determined using information available near the acquisition date based on estimates and assumptions that are deemed reasonable by the Company. Significant assumptions include the discount rates and certain assumptions that form the basis of the forecasted results of the acquired business including earnings before interest, taxes, depreciation and amortization (“EBITDA”), revenue, revenue growth rates, royalty rates and technology obsolescence rates. These assumptions are forward looking and could be affected by future economic and market conditions. The Company engages third-party valuation specialists who review the Company’s critical assumptions and calculations of the fair value of acquired intangible assets in connection with significant acquisitions. In connection with the acquisitions that occurred during the year ended December 31, 2024, the Company recognized aggregate goodwill of $305 million and intangible assets of $419 million. Refer to Notes 1, 2 and 10 to the Consolidated Financial Statements for a description of the Company’s policies relating to goodwill, acquired intangibles and acquisitions. In performing its goodwill impairment testing, the Company estimates the fair value of its reporting units primarily using a market-based approach which relies on current trading multiples of forecasted EBITDA for companies operating in businesses similar to each of the Company’s reporting units to calculate an estimated fair value of each reporting unit. In evaluating the estimates derived by the market-based approach, management makes judgments about the relevance and reliability of the multiples by considering factors unique to its reporting units, including operating results, business plans, economic projections, anticipated future cash flows, and transactions and marketplace data as well as judgments about the comparability of the market proxies selected. There are inherent uncertainties related to these assumptions and management’s judgment in applying them to the analysis of goodwill impairment. As of December 31, 2024, the Company had five reporting units for goodwill impairment testing. Reporting units resulting from recent acquisitions generally present the highest risk of impairment. Management believes the impairment risk associated with these reporting units generally decreases as these businesses are integrated into the Company and better positioned for potential future earnings growth. The Company’s annual goodwill impairment analysis in 2024 indicated that in all instances, the fair values of the Company’s reporting units exceeded their carrying values and consequently did not result in an impairment charge. The excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the respective reporting unit) for each of the Company’s reporting units as of the annual testing date ranged from approximately 70% to approximately 450%. To evaluate the sensitivity of the 49 Table of Contents fair value calculations used in the goodwill impairment test, the Company applied a hypothetical 10% decrease to the fair values of each reporting unit and compared those hypothetical values to the reporting unit carrying values. Based on this hypothetical 10% decrease, the excess of the estimated fair value over carrying value (expressed as a percentage of carrying value for the respective reporting unit) for each of the Company’s reporting units ranged from approximately 55% to approximately 395%. The Company reviews identified intangible assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Determining whether an impairment loss occurred for finite-lived intangibles requires a comparison of the carrying amount to the sum of undiscounted cash flows expected to be generated by the asset. These analyses require management to make judgments and estimates about future revenues, expenses, market conditions and discount rates related to these assets. Indefinite-lived intangibles are subject to impairment testing at least annually or more frequently if events or changes in circumstances indicate that potential impairment exists. Determining whether an impairment loss occurred for indefinite-lived intangible assets involves calculating the fair value of the indefinite-lived intangible assets and comparing the fair value to their carrying value. If the fair value is less than the carrying value, the difference is recorded as an impairment loss. If actual results are not consistent with management’s estimates and assumptions, goodwill and other intangible assets may be overstated and a charge would need to be taken against net earnings which would adversely affect the Company’s financial statements. The Company estimates the fair value of acquired trade names through the use of a relief from royalty method, which values an indefinite-lived intangible asset by estimating the royalties saved through the ownership of an asset. Under this method, an owner of an indefinite-lived intangible asset determines the arm’s length royalty that likely would have been charged if the owner had to license the asset from a third party. The royalty rate, which is based on the estimated rate applied against forecasted sales, is tax-effected and discounted at present value using a discount rate commensurate with the relative risk of achieving the cash flow attributable to the asset. Management judgment is necessary to determine key assumptions, including revenue growth rates, perpetual revenue growth rates, royalty rates and discount rates. As further described in Note 10 to the accompanying Consolidated Financial Statements, the Company recorded noncash impairment charges of $265 million pretax ($201 million after-tax) for the year ended December 31, 2024 related to an indefinite-lived trade name within the genomics consumable business included in the Life Sciences segment and an indefinite-lived trade name in the Diagnostics segment, which are included in selling, general and administrative expenses in the Consolidated Statement of Earnings. Following these impacts, if the fair values of the trade names declined by 10%, the Company estimates it would record additional impairment charges of $59 million. Contingent Liabilities—As discussed in “Item 3. Legal Proceedings” and Note 17 to the Consolidated Financial Statements, the Company is, from time to time, subject to a variety of litigation and similar contingent liabilities incidental to its business (or the business operations of previously owned entities). The Company recognizes a liability for any legal contingency or contract settlement expense that is known or probable of occurrence and reasonably estimable. These assessments require judgments concerning matters such as litigation developments and outcomes, the anticipated outcome of negotiations, the number of future claims and the cost of both pending and future claims. In addition, because most contingencies are resolved over long periods of time, liabilities may change in the future due to various factors, including those discussed in Note 17 to the Consolidated Financial Statements. If the reserves established by the Company with respect to these contingent liabilities are inadequate, the Company would be required to incur an expense equal to the amount of the loss incurred in excess of the reserves, which would adversely affect the Company’s financial statements. Income Taxes—For a description of the Company’s income tax accounting policies, refer to Notes 1 and 7 to the Consolidated Financial Statements. The Company establishes valuation allowances for its deferred tax assets if it is more likely than not that some or all of the deferred tax asset will not be realized. This requires management to make judgments and estimates regarding: (1) the timing and amount of the reversal of taxable temporary differences, (2) expected future taxable income and (3) the impact of tax planning strategies. Future changes to tax rates would also impact the amounts of deferred tax assets and liabilities and could have an adverse impact on the Company’s financial statements. The Company provides for unrecognized tax benefits when, based upon the technical merits, it is “more likely than not” that an uncertain tax position will not be sustained upon examination. Judgment is required in evaluating tax positions and determining income tax provisions. The Company re-evaluates the technical merits of its tax positions and may recognize an uncertain tax benefit in certain circumstances, including when: (1) a tax audit is completed; (2) applicable tax laws change, including a tax case ruling or legislative guidance; or (3) the applicable statute of limitations expires. 50 Table of Contents In addition, certain of the Company’s tax returns are currently under review by tax authorities including in Denmark and the United States (refer to “—Results of Operations—Income Taxes” and Note 7 to the Consolidated Financial Statements). Management believes the positions taken in these returns are in accordance with the relevant tax laws and does not expect the resolution of these matters to have a future material adverse impact to the Company’s financial statements, including its cash flows and effective tax rate. However, the outcome of these audits is uncertain. An increase of 1.0% in the Company’s 2024 nominal tax rate would have resulted in an additional income tax provision for continuing operations for the year ended December 31, 2024 of $46 million. Valuation of Investments in Equity Securities—For a description of the Company’s investments in equity securities and partnerships refer to Notes 1, 8 and 11 to the Consolidated Financial Statements. The Company invests in publicly-traded securities, non-marketable securities of early-stage companies and equity method investments, including partnerships that invest primarily in early-stage companies. Investments in early-stage companies have significant risks, including uncertainty regarding the investee company’s ability to successfully develop new technologies and services, bring these new technologies and services to market and gain market acceptance, maintain adequate capitalization and access to cash or other forms of liquidity, and retain critical management personnel. Refer to “Item 1A. Risk Factors” for a further discussion of the risks related to investing in early-stage companies. The Company’s investments in publicly traded securities are measured at fair value based on quotes in active markets. For investments in non-marketable equity securities where the Company does not have influence over the investee, the Company has elected the measurement alternative and records these investments at cost and adjusts the carrying value for impairments and observable price changes with a same or similar security from the same issuer adjusted to reflect the specific rights and preferences of the securities, if applicable. Valuations of non-marketable equity securities are complex and require judgment due to the absence of market prices, lack of liquidity and the risks inherent in early-stage companies. The uncertainty in the process of valuing securities for which a ready market does not exist may cause our estimated values of these securities to differ significantly from the values that would have been derived had a ready market for the securities existed, and those differences could be material. The Company accounts for its investments in the partnerships using the equity method. Accordingly, the investments are initially recorded at cost and adjusted each period for the Company’s share of the partnership’s income or loss and distributions received. The partnerships’ investments are recorded by the partnerships on an estimated fair value basis and pose the same risks and require the same valuation judgments discussed above. As a result, changes in the value of investments in the partnership will have a direct impact on the Company’s earnings. Impairment losses for the partnerships are recognized to reduce the investment’s carrying value to its fair value if there is a decline in fair value below carrying value that is considered to be other-than-temporary. To determine whether there is an other-than-temporary impairment, the Company uses qualitative and quantitative valuation methods. Realized and unrealized gains and losses for these investments in equity securities and partnerships are recorded in other income (expense), net, in the Consolidated Statements of Earnings. A 10% decrease in the carrying value of the Company’s investments in equity securities and partnerships as of December 31, 2024 would result in a loss of approximately $156 million. NEW ACCOUNTING STANDARDS For a discussion of the new accounting standards impacting the Company, refer to Note 1 to the Consolidated Financial Statements.