Waters Q4 Earnings Call Highlights

• Waters closed Q4 with sales of $932 million (up 7%) and adjusted EPS of $4.53 (up 10%); full-year 2025 revenue rose 7% with adjusted EPS $13.13, recurring revenue grew ~8%, and full-year free cash flow was $677 million.

• The company completed the BD acquisition, reorganized into four divisions and expects about $55 million of 2026 cost synergies plus $50 million of revenue synergies (≈$25 million EBIT); management includes roughly $3.0 billion of BD revenue in its 2026 guidance of $6.405–$6.455 billion and targets pro forma net debt of ~2.4x EBITDA (below 2x within ~18 months).

• Key growth drivers—GLP-1 testing (revenue >2x), PFAS testing (+40%+), and India generics (low-teens)—added over 300 basis points in 2025, and Waters is expanding its framework to include biologics and informatics with a goal to grow informatics to about $500 million by 2030.

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Waters (NYSE:WAT) executives said the company closed out 2025 with a “strong finish” and entered 2026 with a major portfolio expansion following the completion of its acquisition of Becton, Dickinson and Company’s Biosciences and Diagnostic Solutions business.

On the company’s fourth quarter earnings call, President and CEO Dr. Udit Batra said Waters delivered high single-digit reported revenue growth and low double-digit adjusted EPS growth in the quarter, while also completing what he called a “transformative step forward” with the BD transaction. Senior Vice President and CFO Amol Chaubal added that fourth-quarter orders growth outpaced sales growth.

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Waters reported fourth-quarter sales of $932 million, up 7% on a reported basis and 6% in constant currency. Adjusted EPS rose 10% to $4.53, while GAAP EPS was $3.77.

By end market in the quarter, Chaubal said pharma revenue increased 7% and industrial revenue rose 8%, while academic and government declined 3%. Pharma growth was led by mid-teens performance in Asia, high single-digit growth in Europe, and low single-digit growth in the Americas.

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Recurring revenues increased 9% in the quarter, driven by 8% growth in service and 12% growth in chemistry. Instrument sales grew 3%, with high single-digit LCMS growth partially offset by a low single-digit decline in TA system sales. Executives also cited a low single-digit headwind to instrument growth from large pharma customers migrating to Empower subscription agreements, which shift revenue recognition from upfront licenses to recurring revenue over time.

For 2025, Waters said sales grew 7% on both a reported and constant currency basis. Adjusted EPS increased 11% to $13.13, while GAAP EPS was $10.76.

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Management highlighted strength in recurring revenue, which grew 8% for the year, including 12% growth in chemistry and 7% growth in service. Instrument revenue rose 5%, led by LCMS, which Batra said grew high single digits or better in every quarter of the year.

Within profitability, Chaubal reported gross margin of 61.1% for the quarter and 59.3% for the full year, which he said was better than expected. Adjusted operating margin was 35.2% in the quarter and 30.5% for the year, reflecting accelerated strategic R&D investments in chemistry and informatics, as well as mix and tariff surcharges. The operating tax rate was 15.7% for both the quarter and the year, including an estimated 50 basis points of discrete benefit tied to a change in U.S. tax legislation enacted in 2025.

Waters generated $125 million of free cash flow in the fourth quarter and $677 million for the full year. Net debt at year-end was $820 million.

Batra said Waters’ “idiosyncratic” growth drivers contributed more than 300 basis points of growth in 2025, with:

• GLP-1 testing-related revenue more than doubling, contributing about 100 basis points of growth.

• PFAS testing growth rising more than 40% year-over-year, adding roughly 80 basis points.

• India generics (excluding GLP-1) growing low teens and contributing about 130 basis points, which Batra tied to the ongoing patent cliff for blockbuster drugs.

He also pointed to growth in newer product platforms, including Alliance iS HPLC sales more than doubling in 2025, Xevo TQ Absolute mass spec platforms growing over 30%, and MaxPeak Premier chemistry growing over 35%.

Heading into 2026, management said it is expanding its growth-driver framework from three to five, adding biologics (reflecting bioseparations and bioanalytical characterization) and informatics (the phased shift of Empower toward subscriptions). Batra reiterated the company’s expectation to grow informatics revenue from an approximate $300 million base to approximately $500 million by 2030, noting the transition changes revenue timing and is expected to become a more positive structural driver beginning in 2027.

With the BD Biosciences and Diagnostic Solutions deal closed, Waters outlined a new four-division operating structure:

• Waters Analytical Sciences (formerly Waters Division), led by Rob Carpio, spanning LCMS, light scattering, particle analysis, Empower, chemistry consumables and service.

• Waters Biosciences (formerly BD Biosciences), led by Steve Conley, including flow cytometry brands such as FACSDiscover and FACSLyric, Horizon Real dyes and reagents, and FlowJo software.

• Waters Advanced Diagnostics, led by Jianqing Bennett, including microbiology testing (BACTEC, Phoenix, Kiestra), molecular diagnostics (MAX, COR), LCMS-based solutions and point-of-care testing.

• Waters Material Sciences (formerly TA Division), led on an interim basis by Dan Rush, covering materials characterization techniques including thermal analysis, rheology and microcalorimetry.

Management said BD Biosciences and Diagnostic Solutions results in the most recent quarter were below expectations due to issues that emerged during the quarter, including weaker demand in China linked to a focus on reducing diagnostics consumption, delays in export approvals tied to a U.S. government shutdown, and a milder flu season that pressured the point-of-care business.

For 2026, Waters said it expects to realize approximately $55 million of adjusted EBIT from cost synergies and approximately $50 million in revenue synergies, equating to about $25 million of corresponding adjusted EBIT. Batra said early revenue-synergy priorities will focus on operational execution, forecasting discipline, pricing and discount discipline via a “deal desk,” and applying Waters’ playbook in instrument replacement, e-commerce adoption and service plan attachment.

As an example of the instrument-replacement opportunity, Batra said there are about 22,000 flow and BACTEC instruments “ripe for replacement,” alongside launches such as FACSDiscover A8, S8, A7, S7 and BACTEC FX.

Waters guided to 2026 total reported revenue of approximately $6.405 billion to $6.455 billion. Executives said this reflects standalone organic constant-currency growth of 5.5% to 7% plus an expected $3.0 billion revenue contribution from the acquired BD businesses, along with the company’s initial revenue synergy assumptions.

Chaubal said the company is assuming about 2.5% underlying constant-currency growth in the acquired BD businesses in 2026 (on an owned-period basis), before any benefit from execution and pricing improvements or organizational changes.

On profitability, Waters guided to an adjusted EBIT margin of approximately 28.1% for 2026 and adjusted EPS of $14.30 to $14.50. Management said the outlook includes $0.10 of adjusted EPS accretion versus Waters’ standalone non-GAAP EPS profile even before a full year of ownership.

For the first quarter of 2026, Waters projected total reported revenue of $1.198 billion to $1.211 billion and adjusted EPS of $2.25 to $2.35. Chaubal said the quarter will reflect the full burden of interest expense and a higher share count, while synergies begin to ramp in subsequent quarters. He also noted quarterly EPS figures are not additive to full-year EPS due to a significant change in average shares outstanding between the first quarter and the rest of the year.

On leverage, Chaubal said pro forma net debt is expected to be about $4.6 billion to $4.7 billion, or roughly 2.4x net debt to EBITDA, with an expectation to be below 2x within about 18 months. Net interest expense is expected to be approximately $179 million in 2026.

Waters Corporation is a global provider of analytical instruments, software and services for laboratory and research applications. The company designs, manufactures and sells technologies centered on liquid chromatography, mass spectrometry, separation science, and related sample preparation and detection systems. Its product portfolio includes chromatographs, mass spectrometers, columns and consumables, laboratory informatics and workflow software, as well as technical support and training services that help customers run and interpret complex analyses.

Waters serves a wide range of end markets that include pharmaceutical and biotechnology companies, contract research and testing laboratories, academic and government research institutions, clinical diagnostics, food and environmental testing, and industrial and chemical manufacturers.

The article “Waters Q4 Earnings Call Highlights” was originally published by MarketBeat.