Fortive's Q2 2026 sales rose 7.9% (6.7% core) to $1.10B and continuing-ops EPS jumped to $0.51 from $0.33, helped by lower one-off costs, a lower tax rate and a 10% smaller share count; full-year adjusted EPS guidance was raised to $2.95–$3.05.
Revenue
$1.1B
+7.9% YoY
Net income
$157M
+40.9% YoY
Diluted EPS
$0.51
+54.5% YoY
Operating margin
19.1%
Overview
Fortive's second quarter of 2026 (the three months ended July 3, 2026) was its first full year-over-year comparison as a two-segment company after spinning off Ralliant, its former Precision Technologies business. Sales rose 7.9% to $1,096.8 million, operating profit rose 23.6% to $209.9 million, and diluted earnings per share (EPS) from continuing operations climbed from $0.33 to $0.51. Three things did the work: faster underlying sales growth, fewer and cheaper cost items (lower restructuring charges, lower amortization, a tariff refund), and about 10% fewer shares after heavy buybacks. A lower tax rate also helped. On July 29 management raised its full-year adjusted EPS guidance to $2.95–$3.05.
Key metrics (continuing operations)
Metric
Q2 2026
Q2 2025
YoY Change
Revenue
$1,096.8M
$1,016.4M
+7.9%
Core revenue growth (non-GAAP)
6.7%
—
—
Gross margin
63.4%
63.5%
-0.1 pts
Operating profit
$209.9M
$169.8M
+23.6%
Operating margin
19.1%
16.7%
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Adjusted diluted EPS (non-GAAP, per earnings release)
$0.74
$0.58
+28.5%
Effective tax rate
12.4%
20.1%
-7.7 pts
Diluted shares outstanding (average)
307.6M
341.7M
-10.0%
Free cash flow (per earnings release)
$270.6M
$180.0M
+50.3%
Net earnings and EPS in this table and in the headline figures are for continuing operations. That is the only fair comparison, because the 2025 quarter still included Ralliant's results, reported below the line as discontinued operations.
The Ralliant spin-off and why "total" earnings look worse
Fortive distributed all Ralliant shares to its own shareholders on June 28, 2025. Every period in the filing therefore shows Ralliant as a discontinued operation: its results are removed from sales and operating lines and shown as a single "earnings from discontinued operations" figure. In Q2 2025 that line added $55.0 million ($0.16 per share) on sales of $502.4 million. In Q2 2026 it is zero.
This is why the two bottom lines point in different directions:
Total net earnings fell from $166.6 million to $157.3 million (-5.6%), because the year-ago figure still included Ralliant.
Continuing-operations net earnings, the business Fortive still owns, rose 40.9%.
Total diluted EPS still edged up from $0.49 to $0.51 because the share count shrank. The spin-off is otherwise nearly finished in the accounts. Assets tied to discontinued operations are down to $4.9 million, mostly tax-related receivables from Ralliant. The restructuring plan launched for the separation cost $2.4 million this quarter, against $7.9 million a year ago, and is due to finish by the end of 2026.
Where the growth came from
"Core revenue" is Fortive's measure of underlying growth. It strips out currency swings and businesses bought or sold. Core revenue grew 6.7%: 4.3 points came from selling more units (volume) and 2.4 points from price increases. Currency added about 0.9 points on top of that, and acquisitions and divestitures about 0.3 points, which takes reported growth to 7.9%. Year-to-date core growth was 6.1%, so the quarter was faster than the first half as a whole.
Segment
Q2 2026 sales
Q2 2025 sales
Reported growth
Core growth
Operating margin (Q2 26 vs Q2 25)
Intelligent Operating Solutions (IOS)
$758.2M
$696.9M
+8.8%
+7.4%
26.8% vs 24.5%
Advanced Healthcare Solutions (AHS)
$338.6M
$319.5M
+6.0%
+5.3%
11.3% vs 11.2%
IOS sells professional instruments, gas-detection equipment, and facilities and asset-lifecycle software. It drove most of the improvement. Volume rose 4.8% and price 2.7%. The 10-Q attributes the volume gains to "professional instrumentation, facilities and asset lifecycle software, and gas detection." Operating profit jumped 19.1% to $203.5 million. The segment's 230-basis-point margin gain (100 basis points = 1 percentage point) came mostly from lower one-off costs: 80 bps from reduced restructuring spending, 45 bps from lower amortization and 45 bps from tariff refunds. Pricing, volume and productivity added only 70 bps net of product mix and higher pay costs.
AHS covers sterilization and other hospital workflow products. Volume grew 3.4%, which the filing credits to "increased demand for sterilization products," and price added 1.9%. Its margin barely moved, and the underlying trend was negative. Price and volume gains were more than offset by product mix, higher employee costs and growth investments, a 75 bps drag. Lower amortization (+120 bps) and tariff refunds (+25 bps) covered that drag. On the company's adjusted EBITDA measure (earnings before interest, tax, depreciation and amortization, excluding one-off items), the AHS margin fell from 26.9% to 26.1% according to the earnings release. During the quarter AHS also made a small euro-denominated bolt-on acquisition for about $58 million (€51 million), with up to €20 million more due in 2029 for the remaining stake.
By region, North America sales rose 8.7% to $660.5 million and Latin America 24.8% to $64.9 million. Asia-Pacific rose 8.2%. Europe, the Middle East and Africa were flat at $181.3 million in reported dollars, and management describes a core decline there.
Recurring software revenue: the 10-Q does not break out a recurring or software-revenue figure. The closest disclosed measure is remaining performance obligations, meaning contracted revenue not yet delivered, excluding contracts of one year or less. It stood at $824.8 million at July 3, 2026 ($714.9 million in IOS). Fortive says the majority relates to subscription software and service contracts.
How margin expanded: operations vs. one-offs
The company-wide operating margin (the share of sales left after running the business, before interest and tax) rose 240 bps to 19.1%. By management's own breakdown, only 80 bps came from operations: pricing, volume and productivity net of higher pay costs, product mix and growth investments. The other 160 bps came from lower amortization of acquired intangibles (+70 bps), less restructuring (+55 bps) and IEEPA tariff refunds (+40 bps). The refunds follow the Supreme Court ruling that struck down certain tariffs. The tariff refund ($4.5 million pretax this quarter) will not repeat indefinitely, and Fortive says its timing and size remain uncertain. Gross margin was flat at 63.4%. Product gross margin improved to about 67.2% from 65.9%, but services cost of sales rose 21.6% against 7.9% services revenue growth. The filing does not explain the services cost increase separately.
GAAP vs. adjusted EPS, and the tax tailwind
Adjusted EPS of $0.74 was 28.5% higher than a year ago. The gap to GAAP EPS of $0.51 is mostly $91.5 million of pretax amortization of acquisition-related intangibles ($0.30 per share). This is a non-cash accounting charge for past acquisitions, so it overstates how much cash the business consumes. The adjusted figure also removes this quarter's gains from the tariff refund and from euro-debt currency movements (about $0.01 each). As a result, adjusted EPS is not flattered by those one-offs.
GAAP EPS grew faster than adjusted EPS (54.5% vs 28.5%) partly because of tax. The effective tax rate fell to 12.4% from 20.1%, which the 10-Q attributes to "the mix of earnings between jurisdictions and changes in valuation allowances." Pretax earnings from continuing operations rose 28.6%. Had the tax rate stayed at 20.1%, net earnings would have been about $143 million rather than $157 million. The lower rate is not something to count on repeating.
Buybacks and balance sheet
Fortive bought back 3.4 million shares in Q2 at an average of $59.54, about $200 million, and 12.3 million shares for $700.3 million in the first half. That compares with $337.6 million in the first half of 2025. The earnings release says buybacks over the past four quarters total about $2 billion, around 11% of shares outstanding. That is why average diluted shares fell 10.0% to 307.6 million, and why per-share earnings grew faster than total earnings. The buybacks were partly funded with debt: $433.6 million of net commercial paper (short-term borrowing) in the first half. Fortive also refinanced $900 million of 3.15% notes that matured in June with new 2031 and 2036 notes (net proceeds $1,089 million). Net interest expense rose to $35.4 million from $32.1 million, and the 10-Q blames a higher average interest rate on the debt. Cash on hand was $374 million, about 91% of it held outside the US.
Cash generation was strong. First-half operating cash flow from continuing operations was $519.1 million, up $122 million. The earnings release puts Q2 free cash flow (operating cash flow minus capital spending) at $270.6 million and trailing-twelve-month free cash flow at $1,044.3 million.
Year to date
For the six months, sales were $2,166.2 million (+7.8%) and operating profit was $401.6 million (+19.8%), for an operating margin of 18.5% vs 16.7%. Net earnings from continuing operations were $293.7 million (+31.0%) and diluted EPS from continuing operations was $0.95, up from $0.65.
Takeaway: Underlying growth really did pick up: core revenue rose 6.7%, led by IOS volume. But most of the 54.5% jump in GAAP EPS came from lower amortization and restructuring costs, tariff refunds, a lower tax rate and a 10% smaller share count, not from operations. By management's own breakdown, operational margin gains were 80 bps out of 240. Healthcare (AHS) margins went backwards before those items.
Outlook
Management raised full-year 2026 adjusted EPS guidance to $2.95–$3.05, from $2.90–$3.00 reaffirmed in April. That implies roughly $1.51–$1.61 for the second half, against $1.44 adjusted in the first half ($0.70 in Q1 plus $0.74 in Q2, per the two earnings releases). No revenue or core-growth guidance figure was given in the release. The main things to watch are whether IOS keeps volume growth near 5% as the tariff-refund and restructuring tailwinds fade, whether AHS can turn its sterilization volume growth into margin, and how much further debt-funded buybacks can shrink the share count while interest costs rise.
Source: Fortive Form 10-Q for the quarter ended July 3, 2026. Adjusted EPS, adjusted EBITDA, free cash flow, buyback totals and guidance are from the Q2 2026 earnings release (Form 8-K Exhibit 99.1, July 29, 2026). The prior guidance range is from the Q1 2026 earnings release (April 30, 2026).