Item 2. 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 Corporation’s (“Danaher,” the “Company,” “we,” “us” or “our”) 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:

• Information Relating to Forward-Looking Statements

• Overview

• Results of Operations

• Liquidity and Capital Resources

• Critical Accounting Estimates

You should read this discussion along with the Company’s MD&A and audited financial statements and Notes thereto as of and for the year ended December 31, 2022, included in the Company’s 2022 Annual Report and the Company’s Consolidated Condensed Financial Statements and related Notes as of and for the three and nine-month periods ended September 29, 2023 included in this Quarterly Report on Form 10-Q (“Report”).

INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS

Certain statements included or incorporated by reference in this Report, in other documents we file with or furnish to the Securities and Exchange Commission, in our press releases, webcasts, conference calls, materials delivered to shareholders and other communications, are “forward-looking statements” within the meaning of the U.S. federal securities laws. All statements other than historical factual information are forward-looking statements, including without limitation statements regarding: projections of revenue, expenses, profit, profit margins, pricing, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, asset values, our liquidity position or other projected financial measures; management’s plans and strategies for future operations, including statements relating to anticipated operating performance, customer demand, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions and the integration thereof, divestitures, spin-offs, split-offs, initial public offerings, other securities offerings, or other distributions, strategic opportunities, stock repurchases, dividends and executive compensation; growth, declines and other trends in markets we sell into; new or modified laws, regulations and accounting pronouncements; future regulatory approvals and the timing and conditionality thereof; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; future foreign currency exchange rates and fluctuations in those rates; the potential or anticipated direct or indirect impact of COVID-19 and military conflicts on our business, results of operations and/or financial condition; general economic and capital markets conditions; the anticipated timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that Danaher intends or believes will or may occur in the future. Terminology such as “believe,” “anticipate,” “should,” “could,” “intend,” “will,” “plan,” “expect,” “estimate,” “project,” “target,” “may,” “possible,” “potential,” “forecast” and “positioned” and similar references to future periods are intended to identify forward-looking statements, although not all forward-looking statements are accompanied by such words.

Forward-looking statements are based on assumptions and assessments made by our management in light of their experience and perceptions of historical trends, current conditions, expected future developments and other factors. Forward-looking statements are not guarantees of future performance and actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Important factors that in some cases have affected us in the past and that in the future could cause actual results to differ materially from those envisaged in the forward-looking statements include the following:

Business and Strategic Risks

• The COVID-19 pandemic, and declines in demand as the pandemic has evolved to endemic status, have adversely impacted and could in the future continue to adversely impact elements of our business and financial statements. Other conditions in the global economy, the particular markets we serve and the financial markets can also adversely affect our business and financial statements.

• We face intense competition and if we are unable to compete effectively, we may experience decreased demand and decreased market share. Even if we compete effectively, we may be required to reduce the prices we charge.

• Our growth depends on the timely development and commercialization, and customer acceptance, of new and enhanced products and services based on technological innovation. Our growth can also suffer if the markets into which we sell our products and services decline, do not grow as anticipated or experience cyclicality.

• The healthcare industry and related industries that we serve are undergoing significant changes in an effort to reduce (and increase the predictability of) costs, which can adversely affect our business and financial statements.

• Non-U.S. economic, political, legal, compliance, social and business factors (including military conflicts) can negatively affect our business and financial statements.

• Collaborative partners and other third-parties we rely on for development, supply and/or marketing of certain products, potential products and technologies could fail to perform sufficiently.

Acquisitions, Divestitures and Investment Risks

• Any inability to consummate acquisitions at our historical rate and appropriate prices, and to make appropriate investments that support our long-term strategy, could negatively impact our business.

• Our acquisition of businesses, investments, joint ventures and other strategic relationships could also negatively impact our business and financial statements and our indemnification rights may not fully protect us from liabilities related thereto. In addition, acquisitions (including Danaher’s pending acquisition of Abcam plc) can be difficult to complete on the anticipated timetable or at all for a number of reasons, including the uncertainty of regulatory approvals and the timing or conditionality thereof, and the parties' ability to satisfy the acquisition agreement conditions, including as applicable the receipt of shareholder approval.

• Divestitures or other dispositions (including the Veralto Separation) could negatively impact our business, and contingent liabilities from Veralto or from other businesses that we or our predecessors have disposed or will dispose in the future could adversely affect our business and financial statements. For example, we could incur significant liability if the Veralto Separation or any of the other split-off or spin-off transactions we have previously consummated are determined to be a taxable transaction or otherwise pursuant to our indemnification obligations with respect to such transactions.

Operational Risks

• Significant disruptions in, or breaches in security of, our information technology (“IT”) systems or data; data privacy violations; other losses or disruptions to facilities, supply chains, distribution systems or IT systems due to catastrophe; and labor disputes can all adversely affect our business and financial statements.

• Defects and unanticipated use or inadequate disclosure with respect to our products or services, or allegations thereof, can adversely affect our business and financial statements.

• Our financial results are subject to fluctuations in the cost and availability of the supplies (including commodities) we use in, and the labor we need for, our operations. Over the past year, we have at times experienced to varying degrees supply chain disruptions including in some cases shortages of supply, cost inflation and shipping delays, labor availability constraints and labor cost increases.

• Climate change, legal or regulatory measures to address climate change and any inability to address stakeholder expectations with respect to climate change, may negatively affect us.

• Our success depends on our ability to recruit, retain and motivate talented employees representing diverse backgrounds, experiences and skill sets.

• Our restructuring actions can have long-term adverse effects on our business and financial statements.

Intellectual Property Risks

• Any inability to adequately protect or avoid third-party infringement of our intellectual property, and third-party claims we are infringing intellectual property rights, can adversely affect our business and financial statements.

• The U.S. government has certain rights with respect to incremental production capacity attributable to, and/or the intellectual property we have developed using, government financing. In addition, in times of national emergency the U.S. government has authority to control our allocation of manufacturing capacity.

Financial and Tax Risks

• Our outstanding debt has increased significantly as a result of acquisitions, and we may incur additional debt. Such indebtedness may limit our operations and use of cash flow and negatively impact our credit ratings; and failure to comply with our indebtedness-related covenants could adversely affect our business and financial statements.

• Our business and financial statements can be adversely affected by foreign currency exchange rates, changes in our tax rates (including as a result of changes in tax laws) or income tax liabilities/assessments, the outcome of tax audits, financial market risks related to our defined benefit pension plans, health care costs and recognition of impairment charges for our goodwill or other intangible assets.

Legal, Regulatory, Compliance and Reputational Risks

• Significant developments or changes in national laws or policies to protect or promote domestic interests and/or address foreign competition can have an adverse effect on our business and financial statements.

• Our businesses are subject to extensive regulation (including those applicable to the healthcare industry). Failure to comply with those regulations (including by our employees, agents or business partners) or significant developments or changes in laws or policies can adversely affect our business and financial statements.

• With respect to the regulated medical devices we offer, product introductions or modifications may require regulatory clearance or authorizations and we could be required to recall or cease marketing such products; off-label marketing could result in penalties; and clinical trials may have results that are unexpected or are perceived unfavorably by the market, all of which could adversely affect our business and financial statements.

• We are subject to or otherwise responsible for a variety of litigation and other legal and regulatory proceedings in the course of our business that can adversely affect our business and financial statements.

• Our operations, products and services also expose us to the risk of environmental, health and safety liabilities, costs and violations that could adversely affect our business and financial statements.

• Our By-law exclusive forum provisions could limit our stockholders’ ability to choose their preferred judicial forum for disputes.

See “Part I—Item 1A. Risk Factors” of the Company’s 2022 Annual Report for further discussion regarding reasons that actual results may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Forward-looking statements speak only as of the date of the report, document, press release, webcast, call, materials or other communication in which they are made. Except to the extent required by applicable law, we do not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.

OVERVIEW

General

As a result of the Company’s geographic and industry diversity, the Company faces a variety of opportunities and challenges, including rapid technological development 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 increasing regulation. 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 high-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) to be responsive to the Company’s customers throughout the world and improve the efficiency of the Company’s operations.

Business Performance and Outlook

During the third quarter of 2023, the Company’s overall revenues decreased 10.5% compared to the comparable period of 2022. Core sales decreased 11.5% in the third quarter of 2023 compared to the comparable prior year period due primarily to the decline of demand for COVID-19-related products, and to a lesser extent declines in demand for other products and services. The impact of currency translation increased reported sales 0.5% in the third quarter of 2023 compared to the comparable prior year period. For the nine-month period ended September 29, 2023, overall revenues decreased 8.0% and core sales decreased 7.5% compared to the comparable prior year period due primarily to the decline of demand for COVID-19-related products, partially offset by increases in demand for other products and services. The impact of currency translation decreased reported sales by 1.0% in the nine-month period compared to the comparable prior year period. For the definition of “core sales” refer to “—Results of Operations” below.

Geographically, the Company’s sales in the three-month period ended September 29, 2023 in developed markets decreased year-over-year by 11% driven primarily by decreased sales in North America, and to a lesser extent in Western Europe. For the same period, core sales in developed markets declined at a low-double digit rate, with the declines primarily attributable to the same geographic regions. The decline in core sales was primarily driven by reduced demand for products and services related to diagnostic testing associated with COVID-19 in North America and Western Europe and a reduction in year-over-year demand in the Biotechnology segment. For the same period, sales in high-growth markets decreased year-over-year by 9% due primarily to mid-teens core revenue declines in China, led by declines in the Biotechnology segment due to deterioration in the funding environment and lower underlying activity levels. For the same period, core sales in high-growth markets declined at a high-single digit rate, with the declines primarily attributable to the same geographic factor. High-growth markets represented approximately 31% of the Company’s total sales in the third quarter of 2023. For additional information regarding the Company’s sales by geographical region during the three and nine-month periods ended September 29, 2023 and September 30, 2022, refer to Note 5 to the accompanying Consolidated Condensed Financial Statements.

The Company’s net earnings for the three and nine-month periods ended September 29, 2023 totaled approximately $1.1 billion and $3.7 billion, respectively, compared to approximately $1.6 billion and $5.0 billion, respectively, for the three and nine-month periods ended September 30, 2022. Net earnings attributable to common stockholders for the three and nine-month periods ended September 29, 2023 totaled approximately $1.1 billion or $1.51 per diluted common share and approximately $3.7 billion or $4.94 per diluted common share, respectively, compared to approximately $1.6 billion or $2.10 per diluted common share and approximately $4.9 billion or $6.67 per diluted common share, respectively, for the three and nine-month periods ended September 30, 2022. Decreased core sales in the 2023 period drove the year-over-year decrease in net earnings and diluted net earnings per common share for both the three and nine-month periods ended September 29, 2023.

In an effort to moderate inflationary pressure, the U.S. Federal Reserve and other central banks around the world have raised interest rates, which has tightened the global credit environment. While the Company’s interest costs and liquidity were not significantly impacted during the three and nine-month periods ended September 29, 2023 by this credit tightening due to the significant cash flow generated from the Company’s operations and the predominantly fixed-interest rates of the Company’s outstanding borrowings, the credit tightening has adversely impacted demand from certain of the Company’s customers, including emerging biotechnology companies.

In response to the attack in Israel and the subsequent hostilities, the Company is continuing to monitor the social, political and economic environment in Israel and in the region for any impact on its operations and value chain. As of December 31, 2022, the Company’s net investment in property, plant and equipment in Israel was less than $1 million. For the year ended December 31, 2022, sales to Israel were less than $100 million. While we are monitoring the conflict, as of the date of this report we do not expect the conflict will have a material impact on our business.

The COVID-19 Pandemic

Overall conditions related to COVID-19 have improved in 2023 compared to 2022 (including the announcement on April 10, 2023 that the U.S. public health emergency related to COVID-19 ended). The Company has deployed our capabilities, expertise and scale to address the critical health needs related to COVID-19, including making available diagnostic tests for the rapid detection of COVID-19 and support for production of vaccines and therapies for COVID-19. Demand for the Company’s products that support COVID-19 related vaccines and therapeutics (including related to research and development that seeks to prevent or mitigate similar, future pandemics) decreased in both the three and nine-month periods ended September 29, 2023 versus the comparable periods of 2022. The Company expects overall demand for these products to continue to decrease in the fourth quarter of 2023 compared to the fourth quarter of 2022 in response to COVID-19 evolving to an endemic status. Additionally, demand for the Company’s products that support COVID-19 testing is expected to continue to fluctuate, corresponding to fluctuations in COVID-19 cases in particular geographies. Demand for the Company’s COVID-19 related testing products decreased in the three and nine-month

periods ended September 29, 2023 versus the comparable periods of 2022. In response to COVID-19 evolving to an endemic status, the Company continues to review and adjust its cost structure.

For additional information on the risks of COVID-19 to the Company’s operations, refer to the “Part I—Item 1A. Risk Factors” section of the Company’s 2022 Annual Report and “Information Relating to Forward-Looking Statements” in Part I, Item 2 of this Report.

Pending Acquisition

On August 28, 2023, the Company entered into a definitive agreement to acquire all of the outstanding shares of Abcam plc (“Abcam”) for a cash purchase price of approximately $5.7 billion, including assumed indebtedness and net of acquired cash (the “Abcam Acquisition”). Abcam is a leading global supplier of protein consumables, including highly validated antibodies, reagents, biomarkers and assays to address targets in biological pathways that are critical for advancing drug discovery, life sciences research and diagnostics. Abcam generated revenues of £362 million in 2022. The Company expects to include the Abcam business within its Life Sciences segment. The transaction is subject to customary closing conditions, including receipt of applicable regulatory approvals and Abcam shareholder approval.

The Company expects to finance the Abcam Acquisition using cash on hand and/or the proceeds from the issuance of commercial paper.

Separation of the Environmental & Applied Solutions Business

Effective as of September 30, 2023, the Company completed the separation of its former Environmental & Applied Solutions business to Veralto Corporation (the “Separation”). As the disposition occurred during the fourth quarter of 2023, the Company will classify Veralto as a discontinued operation in its historical financial statements beginning with the fourth quarter of 2023. For additional information, refer to Note 3 to the accompanying Consolidated Condensed Financial Statements

Currency Exchange Rates

Currency exchange rates increased reported sales by approximately 0.5% for the three-month period and decreased reported sales by approximately 1.0% for the nine-month period ended September 29, 2023 compared to the comparable periods of 2022, primarily due to the exchange rates of the U.S. dollar compared to the euro and most other major currencies in 2023. If the currency exchange rates in effect as of September 29, 2023 were to prevail throughout the remainder of 2023, currency exchange rates would be essentially flat relative to the fourth quarter of 2022 and full year 2023 sales would decrease by approximately 0.5% on a year-over-year basis. Strengthening of the U.S. dollar against other major currencies compared to the exchange rates in effect as of September 29, 2023 would adversely impact the Company’s sales on an overall basis, and any weakening of the U.S. dollar against other major currencies compared to the exchange rates in effect as of September 29, 2023 would positively impact the Company’s sales and results of operations for the remainder of the year.

RESULTS OF OPERATIONS

Non-GAAP Measures

In this report, references to the non-GAAP measures of core sales (also referred to as core revenues or sales/revenues from existing businesses) refer to sales calculated according to U.S. GAAP, but excluding:

• sales from acquired businesses (as defined below, as applicable); 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 (excluding sales from acquired businesses (as defined above, as applicable)); and

• the period-to-period change in revenue (excluding sales from acquired businesses (as defined above, as applicable)) after applying current period foreign exchange rates to the prior year period.

Core sales growth 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 uses core sales growth as one of the performance measures in the Company’s executive short-term cash incentive compensation 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 the Danaher Business System.

Sales (Decline) Growth and Core Sales (Decline) Growth

			% Change Three-Month Period Ended September 29, 2023 vs. Comparable 2022 Period						% Change Nine-Month Period Ended September 29, 2023 vs. Comparable 2022 Period
Total sales (decline) growth (GAAP)			(10.5)		%				(8.0)		%
Impact of:
Acquisitions/divestitures			(0.5)		%				(0.5)		%
Currency exchange rates			(0.5)		%				1.0		%
Core sales (decline) growth (non-GAAP)			(11.5)		%				(7.5)		%

2023 Sales Compared to 2022

Total sales decreased 10.5% and 8.0% during the three and nine-month periods ended September 29, 2023 compared to the three and nine-month periods ended September 30, 2022, respectively, primarily as a result of the decrease in core sales due to the factors discussed below by segment. The impact of currency translation increased reported sales 0.5% on a year-over-year basis during the three-month period ended September 29, 2023, primarily due to the year-over-year impact of the weakening of the U.S. dollar against most other major currencies for the three-month period, and decreased reported sales 1.0% on a year-over-year basis during the nine-month period ended September 29, 2023, primarily due to the year-over-year impact of the strengthening of the U.S. dollar against the euro and most other major currencies for the nine-month period. Price increases contributed 3.0% to sales growth on a year-over-year basis during both the three and nine-month periods ended September 29, 2023 and are reflected as a component of core sales decline above.

Operating Profit Performance

Operating profit margins decreased 540 basis points from 26.3% during the three-month period ended September 30, 2022 to 20.9% for the three-month period ended September 29, 2023. The following factors unfavorably impacted year-over-year operating profit margin:

• Lower third quarter 2023 core sales, the impact of product mix and reduced leverage in the Company’s operational and administrative cost structure - 470 basis points

• Third quarter 2023 costs incurred related to preparation for the separation of the Company's Environmental & Applied Solutions business - 55 basis points

• Third quarter 2023 impairment charges related to a trade name in the Environmental & Applied Solutions segment - 10 basis points

• The incremental dilutive effect in 2023 of acquired businesses - 5 basis points

Operating profit margins decreased 570 basis points from 27.7% during the nine-month period ended September 30, 2022 to 22.0% for the nine-month period end September 29, 2023.

Year-to-date 2023 vs. year-to-date 2022 operating profit margin comparisons were unfavorably impacted by:

• Lower 2023 core sales, the impact of product mix, inventory write-offs and reduced leverage in the Company’s operational and administrative cost structure - 510 basis points

• First nine months of 2023 costs incurred related to preparation for the separation of the Company's Environmental & Applied Solutions business - 45 basis points

• Second quarter 2023 impairment charges related to technology and other assets in the Biotechnology segment and customer relationships in the Environmental & Applied Solutions segments and a third quarter 2023 impairment charge related to a trade name in the Environmental & Applied Solutions segment, net of a second quarter 2022 impairment charge related to technology and customer relationships in the Environmental & Applied Solutions segment - 20 basis points

• The incremental dilutive effect in 2023 of acquired businesses - 10 basis points

Year-to-date 2023 vs. year-to-date 2022 operating profit margin comparisons were favorably impacted by:

• First nine months of 2022 impairments of accounts receivable and inventory as well as accruals for contractual obligations in Russia - 15 basis points

Business Segments

Sales by business segment for each of the periods indicated were as follows ($ in millions):

			Three-Month Period Ended												Nine-Month Period Ended
			September 29, 2023						September 30, 2022						September 29, 2023						September 30, 2022
Biotechnology			$	1,664					$	2,053					$	5,413					$	6,535
Life Sciences			1,706						1,723						5,211						5,090
Diagnostics			2,254						2,679						6,861						7,884
Environmental & Applied Solutions			1,249						1,208						3,712						3,593
Total			$	6,873					$	7,663					$	21,197					$	23,102

For information regarding the Company’s sales by geographical region, refer to Note 5 to the accompanying Consolidated Condensed Financial Statements.

BIOTECHNOLOGY

The Biotechnology segment includes the bioprocessing and discovery and medical businesses and offers a broad range of tools, consumables and services that are primarily used by customers to advance and accelerate the research, development, manufacture and delivery of biological medicines. The biotherapeutics that the Company’s solutions support range from replacement therapies such as insulin, vaccines, recombinant proteins and other biologic drugs, to novel cell, gene, mRNA and other nucleic acid therapies.

Biotechnology Selected Financial Data

			Three-Month Period Ended												Nine-Month Period Ended
($ in millions)			September 29, 2023						September 30, 2022						September 29, 2023						September 30, 2022
Sales			$	1,664					$	2,053					$	5,413					$	6,535
Operating profit			417						691						1,493						2,315
Depreciation			40						40						119						127
Amortization of intangible assets			214						197						649						616
Operating profit as a % of sales			25.1		%				33.7		%				27.6		%				35.4		%
Depreciation as a % of sales			2.4		%				1.9		%				2.2		%				1.9		%
Amortization as a % of sales			12.9		%				9.6		%				12.0		%				9.4		%

Sales (Decline) Growth and Core Sales (Decline) Growth

			% Change Three-Month Period Ended September 29, 2023 vs. Comparable 2022 Period						% Change Nine-Month Period Ended September 29, 2023 vs. Comparable 2022 Period
Total sales (decline) growth (GAAP)			(19.0)		%				(17.0)		%
Impact of:
Acquisitions/divestitures			(0.5)		%				—		%
Currency exchange rates			(1.5)		%				0.5		%
Core sales (decline) growth (non-GAAP)			(21.0)		%				(16.5)		%

Price increases in the segment contributed 5.0% and 4.0% to sales growth on a year-over-year basis during the three and nine-month periods ended September 29, 2023, respectively, and are reflected as a component of core sales decline above.

Total segment sales decreased 19.0% and 17.0% during the three and nine-month periods, respectively, led by decreased core sales in both periods resulting from the factors discussed below, particularly lower year-over-year sales related to COVID-19 and lower core sales in the bioprocessing business. The impact of acquisitions and changes in currency exchange rates increased sales in the three-month period, while the impact of changes in currency exchange rates decreased sales in the nine-month period. In both periods, total segment core sales decreased in North America, China and Western Europe. Core sales in the bioprocessing business decreased year-over-year during both the three and nine-month periods primarily due to lower end-customer demand for COVID-19 related therapeutics and vaccines and the reduction of customer inventory levels. Bioprocessing business core sales decreased more than 20% in the three-month period and decreased approximately 45% in China in the same period. Core sales in the discovery and medical business decreased year-over-year during both the three and nine-month periods due to lower demand for lab filtration, medical and diagnostics and genomics product lines, partially offset by increased demand for protein research products. Additionally, the Company believes that the tightening credit environment also contributed to a reduction in year-over-year demand from emerging biotechnology companies during both periods as these customers continued to preserve capital. The Company expects the impact of reduced demand and reduction of customer inventory levels to continue at least through the remainder of the year.

Operating Profit Performance

Operating profit margins decreased 860 basis points during the three-month period ended September 29, 2023 as compared to the comparable period of 2022.

Third quarter 2023 vs. third quarter 2022 operating profit margin comparisons were unfavorably impacted by:

• Lower third quarter 2023 core sales, the impact of product mix, higher amortization expense and reduced leverage in the Company’s operational and administrative cost structure - 865 basis points

Third quarter 2023 vs. third quarter 2022 operating profit margin comparisons were favorably impacted by:

• Incremental accretive effect in 2023 of acquired businesses - 5 basis points

Operating profit margins decreased 780 basis points during the nine-month period ended September 29, 2023 as compared to the comparable period of 2022.

Year-to-date 2023 vs. year-to-date 2022 operating profit margin comparisons were unfavorably impacted by:

• Lower 2023 core sales, the impact of product mix, inventory write-offs, higher amortization expense and reduced leverage in the Company’s operational and administrative cost structure - 710 basis points

• Second quarter 2023 impairment charges related to technology and other assets - 80 basis points

• Incremental dilutive effect in 2023 of acquired businesses - 10 basis points

Year-to-date 2023 vs. year-to-date 2022 operating profit margin comparisons were favorably impacted by:

• First nine months of 2022 impairments of accounts receivable and inventory in Russia - 20 basis points

Amortization of intangible assets as a percentage of sales increased during both the three and nine-month periods ended September 29, 2023 as compared with 2022, primarily as a result of the decrease in sales and to a lesser extent increased year-over year amortization from the change of a trade name from indefinite-lived to definite-lived.

LIFE SCIENCES

The Life Sciences segment offers a broad range of instruments and consumables 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

			Three-Month Period Ended												Nine-Month Period Ended
($ in millions)			September 29, 2023						September 30, 2022						September 29, 2023						September 30, 2022
Sales			$	1,706					$	1,723					$	5,211					$	5,090
Operating profit			313						354						974						1,022
Depreciation			31						29						92						84
Amortization of intangible assets			104						103						313						315
Operating profit as a % of sales			18.3		%				20.5		%				18.7		%				20.1		%
Depreciation as a % of sales			1.8		%				1.7		%				1.8		%				1.7		%
Amortization as a % of sales			6.1		%				6.0		%				6.0		%				6.2		%

Sales Growth and Core Sales Growth

			% Change Three-Month Period Ended September 29, 2023 vs. Comparable 2022 Period						% Change Nine-Month Period Ended September 29, 2023 vs. Comparable 2022 Period
Total sales growth (GAAP)			(1.0)		%				2.5		%
Impact of:
Acquisitions/divestitures			(1.0)		%				(1.0)		%
Currency exchange rates			(0.5)		%				1.0		%
Core sales growth (non-GAAP)			(2.5)		%				2.5		%

Price increases in the segment contributed 4.0% to sales growth on a year-over-year basis during both the three and nine-month periods ended September 29, 2023 and are reflected as a component of core sales growth.

Total segment sales decreased 1.0% during the three-month period and increased 2.5% during the nine-month period. Total segment core sales decreased year-over-year in the three-month period as a result of the decline in COVID-19 related sales and weakness at pharma and biopharma customers, partially offset by the impact of acquisitions and currency exchange rates. Total segment core sales increased year-over-year in the nine-month period as a result of increased demand in the life science research, academic and applied end-markets and the impact of acquisitions, partially offset by the decline in COVID-19 related sales, weakness at pharma and biopharma customers and the impact of currency exchange rates. Geographically, overall segment core sales decreased in the three-month period in North America and to a lesser extent, China, partially offset by Western Europe. Core sales increased in the nine-month period in Western Europe and China, partially offset by declines in North America. In the three-month period, the decrease in core sales was driven by the flow cytometry, genomics, lab automation, centrifugation, particle counting and characterization business due to reduced demand across most product lines and in the genomics medicine business from reduced demand in next generation sequencing and basic research. These declines were partially offset by increased core sales in the industrial filtration business. In the nine-month period, the increase in core sales was driven by the industrial filtration business, the mass spectrometry business and the microscopy business. These increases were partially offset by lower core sales in the genomics medicine business as a result of reduced demand for COVID-19 related products and to a lesser extent from reduced demand in next generation sequencing and basic research, net of increased demand for plasmids, proteins and gene writing and editing solutions.

Operating Profit Performance

Operating profit margins decreased 220 basis points during the three-month period ended September 29, 2023 as compared to the comparable period of 2022. The following factors unfavorably impacted year-over-year operating profit margin:

• Lower third quarter 2023 core sales, the impact of product mix and reduced leverage in the Company’s operational and administrative cost structure - 195 basis points

• The incremental dilutive effect in 2023 of acquired businesses - 25 basis points

Operating profit margins decreased 140 basis points during the nine-month period ended September 29, 2023 as compared to the comparable period of 2022.

Year-to-date 2023 vs. year-to-date 2022 operating profit margin comparisons were unfavorably impacted by:

• The impact of product mix and reduced leverage in the Company’s operational and administrative cost structure, net of higher 2023 core sales - 155 basis points

• The incremental dilutive effect in 2023 of acquired businesses - 35 basis points

Year-to-date 2023 vs. year-to-date 2022 operating profit margin comparisons were favorably impacted by:

• First nine months of 2022 impairments of accounts receivable and inventory as well as accruals for contractual obligations in Russia - 50 basis points

DIAGNOSTICS

The Diagnostics segment offers clinical instruments, reagents, 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

			Three-Month Period Ended												Nine-Month Period Ended
($ in millions)			September 29, 2023						September 30, 2022						September 29, 2023						September 30, 2022
Sales			$	2,254					$	2,679					$	6,861					$	7,884
Operating profit			539						761						1,640						2,447
Depreciation			93						98						282						290
Amortization of intangible assets			49						50						149						151
Operating profit as a % of sales			23.9		%				28.4		%				23.9		%				31.0		%
Depreciation as a % of sales			4.1		%				3.7		%				4.1		%				3.7		%
Amortization as a % of sales			2.2		%				1.9		%				2.2		%				1.9		%

Sales (Decline) Growth and Core Sales (Decline) Growth

			% Change Three-Month Period Ended September 29, 2023 vs. Comparable 2022 Period						% Change Nine-Month Period Ended September 29, 2023 vs. Comparable 2022 Period
Total sales (decline) growth (GAAP)			(16.0)		%				(13.0)		%
Impact of:
Currency exchange rates			0.5		%				1.5		%
Core sales (decline) growth (non-GAAP)			(15.5)		%				(11.5)		%

Price increases in the segment contributed 1.0% to sales growth on a year-over-year basis during both the three and nine-month periods ended September 29, 2023 and are reflected as a component of core sales decline.

Total segment sales decreased 16.0% and 13.0% during the three and nine-month periods, respectively, primarily as a result of decreased core sales resulting from the factors discussed below, particularly lower year-over-year core sales of molecular diagnostics tests for COVID-19, and to a lesser extent due to the impact of changes in currency exchange rates. In both periods, overall segment core sales declines were driven primarily by year-over-year declines in North America, and to a lesser extent in Western Europe. During both the three and nine-month periods, core sales in the molecular diagnostics business decreased on a year-over-year basis as the business experienced declines in sales of diagnostic test solutions for COVID-19, partially offset by increased sales of non-respiratory disease tests, which increased over 20% in the three-month period. Core sales in the segment’s clinical diagnostics businesses grew on a year-over-year basis in both the three and nine-month periods, led by the clinical lab business in North America, and to a lesser extent, the acute care and pathology businesses.

Operating Profit Performance

Operating profit margins decreased 450 basis points during the three-month period ended September 29, 2023 as compared to the comparable period of 2022. The following factors unfavorably impacted year-over-year operating profit margin:

• Lower third quarter 2023 core sales, the impact of product mix and reduced leverage in the Company’s operational and administrative cost structure - 445 basis points

• The incremental dilutive effect in 2023 of acquired businesses - 5 basis points

Operating profit margins decreased 710 basis points during the nine-month period ended September 29, 2023 as compared to the comparable period of 2022.

Year-to-date 2023 vs. year-to-date 2022 operating profit margin comparisons were unfavorably impacted by:

• Lower 2023 core sales, the impact of product mix and reduced leverage in the Company’s operational and administrative cost structure - 710 basis points

• The incremental dilutive effect in 2023 of acquired businesses - 5 basis points

Year-to-date 2023 vs. year-to-date 2022 operating profit margin comparisons were favorably impacted by:

• First nine months of 2022 impairments of accounts receivable and inventory as well as accruals for contractual obligations in Russia - 5 basis points

Depreciation and amortization increased as a percentage of sales during both the three and nine-month periods ended September 29, 2023, primarily as a result of the decrease in sales.

ENVIRONMENTAL & APPLIED SOLUTIONS

The businesses that comprised Danaher’s Environmental & Applied Solutions segment prior to the Separation are a provider of essential technology solutions, unified under a common purpose of Safeguarding the World’s Most Vital Resources**TM, to support customers to address large global challenges including environmental resource sustainability, water scarcity, management of severe weather events, food and pharmaceutical security and the impact of an aging workforce.

The Company’s water quality business provides proprietary precision instrumentation and advanced water treatment technologies to help measure, analyze and treat the world’s water in residential, commercial, municipal, industrial, research and natural resource applications. In addition to instrumentation, the water quality businesses also provide chemical reagents, services and digital solutions. The Company’s product identification business provides marking and coding, and packaging and color instrumentation and related consumables for brand owners and consumer packaged goods companies that enable speed to market as well as traceability and quality control of their products. The product identification business’s solutions help customers across consumer, pharmaceutical and industrial sectors to bring products to market, mark packaging in compliance with industry and regulatory standards and convey the safety of products to their customers.

Effective as of September 30, 2023, the first day of the Company’s fourth quarter of 2023, the Company completed the separation of its former Environmental & Applied Solutions business to Veralto.

Environmental & Applied Solutions Selected Financial Data

			Three-Month Period Ended												Nine-Month Period Ended
($ in millions)			September 29, 2023						September 30, 2022						September 29, 2023						September 30, 2022
Sales			$	1,249					$	1,208					$	3,712					$	3,593
Operating profit			286						286						887						829
Depreciation			9						10						29						31
Amortization of intangible assets			12						11						36						38
Operating profit as a % of sales			22.9		%				23.7		%				23.9		%				23.1		%
Depreciation as a % of sales			0.7		%				0.8		%				0.8		%				0.9		%
Amortization as a % of sales			1.0		%				0.9		%				1.0		%				1.1		%

Sales Growth and Core Sales Growth

			% Change Three-Month Period Ended September 29, 2023 vs. Comparable 2022 Period						% Change Nine-Month Period Ended September 29, 2023 vs. Comparable 2022 Period
Total sales growth (GAAP)			3.5		%				3.5		%
Impact of:
Acquisitions/divestitures			(0.5)		%				(0.5)		%
Currency exchange rates			(2.0)		%				—		%
Core sales growth (non-GAAP)			1.0		%				3.0		%

Price increases in the segment contributed 3.5% and 4.5% to sales growth on a year-over-year basis during the three and nine-month periods ended September 29, 2023, respectively, and are reflected as a component of core sales growth.

Total segment sales increased 3.5% during both the three and nine-month periods. In the three-month period, the increase was a result of core sales growth driven by the factors discussed below, changes in currency exchange rates and acquisitions. In the nine-month period, the increase was primarily as a result of core sales growth driven by the factors discussed below, and to a lesser extent acquisitions.

Core sales in the segment’s water quality businesses increased at a low-single and mid-single digit rate during the three and nine-month periods ended September 29, 2023, respectively, compared to the comparable periods of 2022. The increase in core sales in the three-month period was driven primarily by the chemical treatment solutions and ultraviolet water disinfection product lines. The increase in core sales in the nine-month period was driven primarily by the analytical instrumentation product line, and to a lesser extent by the chemical treatment solutions product line. Geographically, the increase in core sales in both periods was led primarily by North America, and to a lesser extent by Western Europe, partially offset by China. Core sales in the business’ chemical treatment solutions product line increased year-over-year during both the three and nine-month periods as a result of increased core sales across most major end-markets. Core sales in the business’ ultraviolet water disinfection product line increased year-over-year during the three-month period, driven by demand in the municipal and residential end-markets. Year-over-year core sales in the analytical instrumentation product line increased in the nine-month period driven by the industrial and municipal end-markets in the developed markets, partially offset by lower demand in China.

Core sales in the segment’s product identification businesses decreased at a low-single digit rate during both the three and nine-month periods ended September 29, 2023 compared to the comparable periods of 2022. The decrease in core sales was primarily driven by the packaging and color solutions business in the three-month period and both the marking and coding business and the packaging and color solutions business in the nine-month period. Geographically, the decrease in core sales in the three-month period was led primarily by China and North America, partially offset by Latin America, and in the nine-month period was led by North America and China, partially offset by Latin America and Western Europe. For the packaging and color solutions business, core sales decreased in both the three and nine-month periods primarily driven by reduced capital spending across the consumer packaged goods and industrial end-markets. Core sales in the marking and coding business was essentially flat in the three-month period and decreased during the nine-month period driven by lower demand in the consumer packaged goods and industrial end-markets.

Operating Profit Performance

Operating profit margins decreased 80 basis points during the three-month period ended September 29, 2023 as compared to the comparable period of 2022.

Third quarter 2023 vs. third quarter 2022 operating profit margin comparisons were unfavorably impacted by:

• Third quarter 2023 impairment charges related to a trade name - 50 basis points

• The reduced leverage in the Company’s operational and administrative cost structure, net of higher third quarter 2023 core sales and the impact of product mix - 40 basis points

Third quarter 2023 vs. third quarter 2022 operating profit margin comparisons were favorably impacted by:

• The incremental net accretive effect in 2023 of acquired businesses - 10 basis points

Operating profit margins increased 80 basis points during the nine-month period ended September 29, 2023 as compared to the comparable period of 2022.

Year-to-date 2023 vs. year-to-date 2022 operating profit margin comparisons were favorably impacted by:

• Higher 2023 core sales, net of the impact of product mix - 75 basis points

• The incremental net accretive effect in 2023 of acquired businesses - 10 basis points

Year-to-date 2023 vs. year-to-date 2022 operating profit margin comparisons were unfavorably impacted by:

• Second quarter 2023 impairment charges related to customer relationships and third quarter 2023 impairment charges related to a trade name, net of a second quarter 2022 impairment charge related to technology and customer relationships - 5 basis points

COST OF SALES AND GROSS PROFIT

			Three-Month Period Ended												Nine-Month Period Ended
($ in millions)			September 29, 2023						September 30, 2022						September 29, 2023						September 30, 2022
Sales			$	6,873					$	7,663					$	21,197					$	23,102
Cost of sales			(2,873)						(3,079)						(8,786)						(9,092)
Gross profit			$	4,000					$	4,584					$	12,411					$	14,010
Gross profit margin			58.2		%				59.8		%				58.6		%				60.6		%

Cost of sales decreased year-over-year during both the three and nine-month periods ended September 29, 2023 as compared to the comparable periods in 2022, primarily due to lower year-over-year sales volumes, partially offset in the nine-month period by costs associated with restructuring and continuing productivity initiatives and $87 million of charges incurred in the second quarter of 2023, primarily related to excess inventory in the Biotechnology segment, due to reduced demand. In the first quarter of 2022, the Company incurred inventory charges related to the reduction of business activities in Russia.

Year-over-year gross profit margins decreased during both the three and nine-month periods ended September 29, 2023 as compared to the comparable periods in 2022 due primarily to lower core sales and the impact of product mix in both periods. Year-over-year gross profit margin for the nine-month period was unfavorably impacted by costs associated with restructuring and continuing productivity initiatives and the $87 million of charges in the second quarter of 2023 referenced in the preceding paragraph, net of an inventory charge taken during the first quarter of 2022 related to reduction of business activities in Russia.

OPERATING EXPENSES

			Three-Month Period Ended												Nine-Month Period Ended
($ in millions)			September 29, 2023						September 30, 2022						September 29, 2023						September 30, 2022
Sales			$	6,873					$	7,663					$	21,197					$	23,102
Selling, general and administrative (“SG&A”) expenses			2,145						2,149						6,486						6,326
Research and development (“R&D”) expenses			417						420						1,264						1,292
SG&A as a % of sales			31.2		%				28.0		%				30.6		%				27.4		%
R&D as a % of sales			6.1		%				5.5		%				6.0		%				5.6		%

SG&A expenses as a percentage of sales increased for both the three and nine-month periods ended September 29, 2023 as compared to the comparable periods in 2022, driven by the impact of decreased leverage of the Company’s general and administrative cost base, including amortization expense, resulting from lower 2023 sales. Costs incurred related to preparation for the separation of the Company’s Environmental & Applied Solutions business of $36 million and $101 million for the three and nine-month periods ended September 29, 2023, respectively, and impairment charges totaling $6 million and $40 million in the three and nine-month periods ended September 29, 2023, respectively, also negatively impacted SG&A expenses as a percentage of sales. These impairment charges consisted of $6 million in the three-month period in the Environmental & Applied Solutions segment related to a trade name, $28 million in the nine-month period in the Biotechnology segment related to technology and other assets, and $12 million in the nine-month period in the Environmental & Applied Solutions segment related to customer relationships and a trade name, net of a $9 million second quarter 2022 impairment charge related to technology and customer relationships in the Environmental & Applied Solutions segment. Increased labor costs also contributed to the year-over-year increase in SG&A expenses for the three and nine-month periods. Costs associated with restructuring and continuing productivity initiatives decreased year-over-year for the three-month period and increased year-over year for the nine-month period. For the nine-month period, these increases were partially offset by the impact of a charge related to impairments of certain accounts receivable and accrual of contractual obligations incurred in Russia during the first quarter of 2022.

R&D expenses (consisting principally of internal and contract engineering personnel costs) as a percentage of sales increased during both the three and nine-month periods ended September 29, 2023 as compared to the comparable periods of 2022, primarily due to the year-over-year sales decline and to a lesser extent the timing of new product development initiatives.

OTHER INCOME (EXPENSE), NET

For a description of the Company’s other income (expense), net during the three and nine-month periods ended September 29, 2023 and September 30, 2022, refer to Note 8 to the accompanying Consolidated Condensed Financial Statements.

INTEREST COSTS AND FINANCING

For a discussion of the Company’s outstanding indebtedness, refer to Note 11 to the accompanying Consolidated Condensed Financial Statements.

Interest expense of $73 million and $208 million for the three and nine-month periods ended September 29, 2023, respectively, was $31 million higher and $61 million higher than the comparable periods of 2022, due primarily to higher balances and higher average interest rates on the Company’s outstanding euro-denominated commercial paper borrowings in the three and nine-month periods in 2023 versus the comparable periods of 2022.

Interest income of $79 million and $186 million for the three and nine-month periods ended September 29, 2023, respectively, was $70 million higher and $174 million higher than the comparable periods of 2022, due primarily to higher average interest rates and higher average cash balances in 2023 compared to 2022.

INCOME TAXES

The following table summarizes the Company’s effective tax rate:

			Three-Month Period Ended												Nine-Month Period Ended
			September 29, 2023						September 30, 2022						September 29, 2023						September 30, 2022
Effective tax rate			19.2		%				18.6		%				19.7		%				18.4		%

The Company operates globally, including in certain jurisdictions with lower tax rates than the U.S. federal statutory rate. Therefore, the impact of operating in such jurisdictions contributes to a lower effective tax rate compared to the U.S. federal statutory tax rate.

The effective tax rate for the three-month period ended September 29, 2023 differs from the U.S. federal statutory rate of 21.0% due to the geographic mix of earnings described above. Discrete tax benefits from excess tax benefits from stock-based compensation were offset by charges related to tax costs related to the separation of the Environmental & Applied Solutions business and changes in estimates associated with prior period uncertain tax positions.

The effective tax rate for the nine-month period ended September 29, 2023 differs from the U.S. federal statutory rate of 21.0% principally due to the geographic mix of earnings described above, partially offset by net discrete tax charges of $13 million. Net discrete tax charges related primarily to tax costs related to the separation of the Environmental & Applied Solutions business, tax costs related to legal and operational actions taken to realign certain businesses and changes in estimates associated with prior period uncertain tax positions, partially offset by excess tax benefits from stock-based compensation and interest on prior year tax refunds. The net discrete charges increased the effective tax rate by 0.3% for the nine-month period ended September 29, 2023.

The effective tax rate for the three-month period ended September 30, 2022 differs from the U.S. federal statutory rate of 21.0% principally due to the geographic mix of earnings described above and net discrete benefits of $3 million related primarily to excess tax benefits from stock-based compensation, partially offset by changes in estimates associated with prior period uncertain tax positions. The net discrete benefits reduced the effective tax rate by 0.2% for the three-month period ended September 30, 2022.

The effective tax rate for the nine-month period ended September 30, 2022 differs from the U.S. federal statutory rate of 21.0% principally due the geographic mix of earnings described above and net discrete benefits of $52 million related primarily to excess tax benefits from stock-based compensation and changes in estimates associated with prior period uncertain tax positions. The net discrete benefits reduced the effective tax rate by 0.9% for the nine-month period ended September 30, 2022.

The Company (including its subsidiaries) conducts business globally, and files numerous consolidated and separate income tax returns in federal, state and foreign jurisdictions. In addition to the Company’s significant presence in the U.S., the Company also has a significant presence in China, Denmark, Germany, Singapore, Sweden, Switzerland and the

United Kingdom (“UK”). Excluding these jurisdictions, the Company believes that a change in the statutory tax rate of any individual foreign country would not have a material impact on the Company’s financial statements given the geographical dispersion of the Company’s taxable income.

The Company and its subsidiaries are routinely examined by various domestic and international taxing authorities. The U.S. Internal Revenue Service (“IRS”) has completed the examinations of substantially all 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 2021. In addition, the Company has subsidiaries in Belgium, Canada, China, Denmark, France, Germany, India, Italy, Japan, Korea, Switzerland, the UK and various other countries, states and provinces that are currently under audit for years ranging from 2004 through 2022.

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 IRS challenged the deferral of premium income for certain types of the Company’s self-insurance policies. 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 subsequent to 2018. Management believes the positions the Company has taken in its U.S. tax returns are in accordance with the relevant tax laws.

As a result of the completion of the Separation in the fourth quarter of 2023, the Company expects its effective tax rate for the remainder of 2023 to be approximately 18.5% based on its projected mix of earnings. The Company’s effective tax rate could vary as a result of many factors, including but not limited to the following:

• The expected rate for the remainder of 2023 includes the anticipated discrete income tax benefits from excess tax deductions related to the Company’s stock compensation programs, which are reflected as a reduction in tax expense, though the actual benefits (if any) will depend on the Company’s stock price and stock option exercise patterns.

• The actual mix of earnings by jurisdiction could fluctuate from the Company’s projection, including as a result of the separation of the Environmental & Applied Solutions business.

• The tax effects of other discrete items, including accruals related to tax contingencies, the resolution of worldwide tax matters, tax audit settlements, statute of limitations expirations and changes in tax regulations.

• Any future changes in tax law or the implementation of increases in tax rates, the impact of future regulations and any related additional tax planning efforts to address these changes.

As a result of the uncertainty in predicting these items, it is reasonably possible that the actual effective tax rate used for financial reporting purposes will change in future periods.

Refer to Note 7 to the Consolidated Condensed Financial Statements for discussion regarding the Company’s significant tax matters.

COMPREHENSIVE INCOME

In 2023, comprehensive income increased $283 million and $448 million for the three and nine-month periods ended September 29, 2023, respectively, as compared to the comparable periods of 2022. For the three-month period, the increase in comprehensive income was primarily driven by decreased losses from foreign currency translation adjustments, partially offset by lower net earnings. For the nine-month period, the increase in comprehensive income was primarily driven by lower losses from foreign currency translation adjustments, partially offset by lower net earnings and increased losses from cash flow hedge adjustments. The Company recorded foreign currency translation losses of $303 million for the three-month period ended September 29, 2023 compared to losses of approximately $1.0 billion for the three-month period ended September 30, 2022. The Company recorded foreign currency translation losses of $982 million and approximately $2.8 billion for the nine-month periods ended September 29, 2023 and September 30, 2022, respectively. The foreign currency translation losses were primarily driven by the change in the exchange rates between the U.S. dollar and the Swedish krona in both periods, as well as the euro during the three-month period and the Chinese renminbi in the nine-month period. 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 losses of $81 million and $106 million from cash

flow hedge adjustments related to the Company’s cross-currency swap derivative contracts for the three and nine-month periods ended September 29, 2023, respectively, as compared to losses of $77 million and $31 million for the comparable periods of 2022.

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, funding restructuring activities, repurchasing common stock and managing 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.

Overview of Cash Flows and Liquidity

Following is an overview of the Company’s cash flows and liquidity ($ in millions):

			Nine-Month Period Ended
($ in millions)			September 29, 2023						September 30, 2022
Total operating cash provided by operations			$	5,545					$	5,978
Cash paid for acquisitions			$	—					$	(304)
Payments for additions to property, plant and equipment			(981)						(823)
Proceeds from sales of property, plant and equipment			8						9
Payments for purchases of investments			(152)						(354)
Proceeds from sales of investments			33						18
All other investing activities			28						36
Total cash used in investing activities			$	(1,064)					$	(1,418)
Proceeds from the issuance of common stock in connection with stock-based compensation, net			$	51					$	15
Payment of dividends			(621)						(615)
Net proceeds from borrowings (maturities longer than 90 days)			2,605						—
Net repayments of borrowings (maturities of 90 days or less)			(9)						(719)
Net repayments of borrowings (maturities longer than 90 days)			—						(265)
All other financing activities			(53)						(80)
Total cash provided by (used in) financing activities			$	1,973					$	(1,664)

• Operating cash flows decreased $433 million, or 7%, during the nine-month period ended September 29, 2023 as compared to the comparable period of 2022, due to lower net earnings (after excluding in both periods charges for depreciation, amortization, stock compensation and unrealized investment gains/losses) in the 2023 period compared to the 2022 period and lower cash used in aggregate for accounts receivables, inventories, trade accounts payable and prepaid and accrued expenses, including deferred taxes, in 2023 compared to the prior year.

• In September 2023, Veralto received approximately $2.6 billion of cash proceeds from the issuance of debt (refer to Note 11 of the accompanying Consolidated Condensed Financial Statements), of which approximately $2.6 billion was distributed to the Company as partial consideration for the contribution to Veralto of the businesses comprising the Company’s former Environmental & Applied Solutions segment. The Company intends to use a portion of the cash distribution proceeds it received from Veralto to meet upcoming commercial paper and bond maturities and to use the balance of the proceeds to partially fund certain of the Company’s regular, quarterly cash dividends to shareholders.

• Net cash used in investing activities in the 2023 period consisted primarily of capital expenditures and investments and decreased year-over-year largely as a result of lower cash paid for acquisitions and investments in the 2023 period compared to 2022.

• As of September 29, 2023, the Company held approximately $12.3 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 were approximately $5.5 billion for the first nine months of 2023, a decrease of $433 million, or 7%, as compared to the comparable period of 2022. The year-over-year change in operating cash flows from 2022 to 2023 was primarily attributable to the following factors:

• 2023 operating cash flows reflected a decrease of approximately $1.3 billion in net earnings for the first nine months of 2023 as compared to the comparable period in 2022.

• Net earnings for the first nine months of 2023 also includes $102 million lower noncash charges for depreciation, intangible asset amortization, stock compensation expense and unrealized investment gains/losses as compared to the comparable period of 2022. Amortization expense primarily relates to the amortization of intangible assets. Depreciation expense relates to the Company’s manufacturing and operating facilities as well as instrumentation leased to customers under operating-type lease (“OTL”) arrangements. Depreciation, amortization and stock compensation are noncash expenses that decrease earnings without a corresponding impact to operating cash flows. Unrealized investment gains/losses impact net earnings without immediately impacting cash flows as the cash flow impact from investments occurs when the invested capital is returned to the Company.

• The aggregate of trade accounts receivable, inventories and trade accounts payable provided $285 million in operating cash flows during the first nine months of 2023, compared to approximately $1.0 billion of operating cash flows used in the comparable period of 2022. 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 $436 million of operating cash flows during the first nine months of 2023, compared to $69 million of operating cash flows used in the comparable period of 2022. The timing of cash payments for various employee-related liabilities, higher income tax payments, realized investment returns, customer funding and changes in accrued expenses drove the majority of this change.

Investing Activities

Cash flows relating to investing activities consist primarily of cash used for acquisitions and capital expenditures, including instruments leased to customers, cash used for investments and cash proceeds from divestitures of businesses or assets.

Net cash used in investing activities decreased $354 million in the nine-month period ended September 29, 2023 compared to the comparable period of 2022, primarily as a result of a decrease in cash used for the purchase of investments. In the first nine months of 2023 and 2022, the Company invested $152 million and $354 million, respectively, in non-marketable equity securities and partnerships.

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, replacing equipment, the manufacture of instruments that are used in OTL arrangements that certain of the Company’s businesses enter into with customers, supporting new product development and improving IT systems. Capital expenditures increased $158 million on a year-over-year basis for the nine-month period ended September 29, 2023 compared to the comparable period in 2022. For the full year 2023, the Company forecasts capital spending to be approximately $1.5 billion (excluding capital spending during 2023 with respect to the businesses contributed to Veralto in the Separation), driven primarily by continued expenditures to support customer demand.

Financing Activities and Indebtedness

Cash flows relating to financing activities consist 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 and payments of cash dividends to shareholders. Financing activities provided cash of approximately $2.0 billion during the nine-month period ended September 29, 2023 compared to approximately $1.7 billion of cash used in the comparable period of 2022. The year-over-year increase in cash provided by financing activities was due primarily to approximately $2.6 billion of cash proceeds received from Veralto’s debt issuance in September 2023 (which Veralto subsequently distributed to the Company prior to the Separation), partially offset by lower repayments of borrowings in 2023.

For a description of the Company’s outstanding debt as of September 29, 2023 and the Company’s commercial paper programs and credit facility, refer to Note 11 to the accompanying Consolidated Condensed Financial Statements. As of September 29, 2023, the Company was in compliance with all of its respective debt covenants.

As discussed in Note 15 in the accompanying Consolidated Condensed Financial Statements all outstanding shares of the Company’s 4.75% MCPS Series A and 5.00% MCPS Series B were converted to common shares on April 15, 2022 and April 17, 2023, respectively. The Company’s 4.75% MCPS Series A converted to common shares at a rate of 6.6632 common shares per share of preferred stock. The Company’s 5.00% MCPS Series B converted to common shares at a rate of 5.0175 common shares per share of preferred stock.

Stock Repurchase Program

For information regarding the Company’s stock repurchase program, refer to Part II—Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds”.

Dividends

Aggregate cash payments for dividends on Company common stock during the nine-month period ended September 29, 2023 were $578 million and aggregate cash payments for dividends on the Company’s MCPS during the nine-month period ended September 29, 2023 were $43 million. The increase in dividend payments on the Company’s common stock over the comparable period of 2022 primarily relates to the increase in the quarterly dividend rate for common stock beginning with respect to the dividend paid in the second quarter of 2023. The decrease in MCPS dividend payments compared to the comparable period of 2022 primarily relates to the conversion of all outstanding shares of the Company’s 4.75% MCPS Series A and the 5.00% MCPS Series B to common shares on April 15, 2022 and April 17, 2023, respectively.

In the third quarter of 2023, the Company declared a regular quarterly dividend of $0.27 per share of Company common stock payable on October 27, 2023 to holders of record as of October 12, 2023.

Cash and Cash Requirements

As of September 29, 2023, the Company held approximately $12.3 billion of cash and cash equivalents that were held on deposit with financial institutions or invested in highly liquid investment-grade debt instruments with a maturity of 90 days or less. Of the cash and cash equivalents, approximately $6.8 billion was held within the United States and approximately $5.5 billion was held outside of the United States. The Company will continue to have cash requirements to support general corporate purposes, which may include working capital needs, capital expenditures, acquisitions (including the Company’s pending acquisition of Abcam) 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 (if available). 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. With respect to the commercial paper and other notes scheduled to mature during the remainder of 2023, the Company expects to repay the principal amounts when due using available cash, proceeds from new issuances of commercial paper (if available), drawing on its Credit Facility and/or proceeds from other debt issuances. With respect to the pending acquisition of Abcam, Danaher expects to fund the acquisition using cash on hand and proceeds from the issuance of commercial paper.

While repatriation of some cash held outside the United States may be restricted by local laws, most of the Company’s foreign cash could be repatriated to the United States. Following enactment of the Tax Cuts and Jobs Act and the associated Transition Tax, in general, repatriation of cash to the United States 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 foreign operations and investments, including acquisitions. The income taxes, if any, applicable to such earnings including basis differences in our foreign subsidiaries are not readily determinable. As of September 29, 2023, management believes that it has sufficient sources of liquidity to satisfy its cash needs, including its cash needs in the United States.

During 2023, the Company’s cash contribution requirements for its U.S. and non-U.S. defined benefit pension plans are forecasted to be approximately $10 million and $39 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.

CRITICAL ACCOUNTING ESTIMATES

There have been no material changes to the Company’s critical accounting estimates as described in the 2022 Annual Report.