Waters' revenue more than doubled to $1.645B in its first full quarter with BD's Biosciences and Diagnostics units, with 9% organic constant-currency growth, but purchase accounting drove a GAAP loss of $1.39 a share and adjusted EPS rose just 3% to $3.05 on a much larger share count.
Revenue
$1.6B
+113.4% YoY
Net income
-$136M
-192.5% YoY
Diluted EPS
$-1.39
-156.3% YoY
Operating margin
-5.2%
How WAT compares with Health Care peers
Figure
WAT
Peer median
Rank
Revenue growth (YoY)
+113.4%
+7.3%
1st of 53
Operating margin
-5.2%
15.1%
51st of 53
EPS growth (YoY)
-156.3%
+15.1%
48th of 48
Rank 1 = fastest revenue growth, highest operating margin, fastest EPS growth. Peers are the other Health Care companies with a 2026 report on this site, each at its latest period we've analyzed; fiscal calendars differ, so periods are not always the same months.
Waters' second quarter of 2026 (three months ended July 4) was its first full quarter owning the Biosciences and Diagnostic Solutions businesses it bought from Becton, Dickinson (BD) on February 9, and the deal dominates every headline figure. Reported revenue more than doubled to $1.645 billion (+113%), but the company posted a GAAP net loss of $136 million ($1.39 per share) because of accounting charges tied to the purchase. Underneath, the business Waters owned before the deal grew 9% in constant currency, the acquired businesses grew 4% on a like-for-like basis, and management raised every part of its full-year guidance.
At a glance
9% organic constant-currency growth ($828 million vs $771 million a year ago; 7% in dollars): the legacy liquid chromatography and mass spectrometry business is still growing well above a typical mid-single-digit rate, with chemistry consumables up 10%.
$3.05 adjusted EPS, up only 3% even though adjusted net income rose 71%: Waters issued 38.5 million new shares to BD's shareholders as part of the deal, so profits are now split across about 98.5 million diluted shares instead of 59.7 million.
$399 million of purchase-accounting charges (amortization of acquired intangibles plus inventory and fixed-asset "step-up") are the main reason a quarter with 25.0% adjusted operating margin shows a GAAP operating loss of $86 million.
The numbers
Metric
Q2 2026
Q2 2025
YoY Change
Revenue
$1,645M
$771M
+113.4%
Organic revenue (excl. acquired BD businesses)
$828M
$771M
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Recurring revenue (consumables + service) share of total
72.3% ($1,190M)
60.1% ($463M)
+12.2 pts
Legacy recurring revenue growth
+9%
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"Constant currency" strips out the effect of exchange-rate moves (here a 2-point drag from translating foreign sales into dollars). "Organic" excludes businesses acquired within the last twelve months. Recurring revenue is Waters' own definition: consumables plus service, the repeat purchases that follow each installed instrument. Adjusted figures are Waters' non-GAAP measures from its earnings release.
Why GAAP shows a loss
The GAAP loss is almost entirely the arithmetic of a $13 billion acquisition, not an operating problem. Per the 10-Q, operating income fell by $274 million year on year because of:
$232 million of extra amortization of acquired intangible assets (customer relationships, technology and similar assets recorded at fair value when the deal closed);
$154–155 million of inventory and fixed-asset step-up expense: BD's inventory was written up to fair value at closing, so selling it through carries a higher cost than normal. This charge is temporary and fades once the acquired inventory is sold;
$39 million of transaction and integration costs;
$49 million of severance from a workforce reduction affecting about 3% of employees; and
$9 million of ERP (enterprise software) system costs.
Net interest expense also rose to $55 million from $10 million, reflecting the debt taken on to fund the $4.0 billion cash distribution BD shareholders received as part of the deal. Waters excludes all of the above except interest from adjusted results, which is how a -5.2% GAAP margin becomes a 25.0% adjusted margin.
Legacy Waters: broad-based growth, led by chemistry and pharma
The Analytical Sciences Division (the core LC/MS business) grew revenue 7% to $669 million. Within it:
Instruments: legacy instrument revenue rose 5%, or 8% in constant currency ($240 million vs $229 million), which the 10-Q attributes to "higher customer demand for our Acquity and Xevo TQ-S instrument systems."
Chemistry consumables: up 10% excluding BD, "attributed to the uptake in columns and application-specific testing kits to pharmaceutical customers."
Service: up 8%, on "higher service demand billing in most major regions."
End markets: the earnings release says the division saw low-double-digit constant-currency growth in both pharma (its largest customer group) and academic & government. It gives no growth figure for industrial customers this quarter. Management describes the recovery as having "entered a broader phase, expanding across additional customer segments."
Geography: excluding BD, revenue grew 9% in Asia, 8% in the Americas and 5% in Europe, with the 10-Q noting growth was "led by China and the Americas."
The Materials Sciences Division (thermal analysis and rheology, formerly TA Instruments) grew 6% to $87 million, and the Clinical business, now reported inside Advanced Diagnostics, grew 16% to $72 million.
The acquired BD businesses
Waters now reports four divisions. The two acquired from BD:
Biosciences (flow cytometry and single-cell analysis tools, formerly BD Biosciences): $368 million, vs $358 million for the same period under BD (+3%).
Diagnostic Solutions (infectious-disease testing, now part of the Advanced Diagnostics Division): $449 million, vs $425 million (+6%).
Together that is $817 million, $15 million above the company's own guidance of about $802 million. The prior-year comparisons use BD's historical reporting, which carried BD's cost allocations and accounting choices, so they are a guide to direction rather than an exact like-for-like figure; the release says as much.
By segment profit, Biosciences earned a 34.2% segment operating margin and Advanced Diagnostics 22.8%, against 35.2% for the combined Analytical & Materials Sciences segment. The lower diagnostics margin is the main reason adjusted operating margin for the whole company fell from 29.1% to 25.0%: the combined company is a lower-margin mix than the old Waters. The legacy segment's own margin also slipped (39.4% to 35.2%), which the 10-Q attributes to currency translation, sales mix, merit pay and new-product development costs offsetting higher volume.
What the headline numbers hide
EPS growth came from a lower tax rate, not operations. Adjusted net income rose from $176 million to $301 million, but diluted shares rose about 65% because of the stock issued to BD shareholders. Waters bought back no shares on the open market in 2026. The adjusted tax rate fell to about 15.7% ($56M on $356M of adjusted pre-tax income) from about 17.8% ($38M on $214M). At last year's rate, adjusted EPS would have been roughly $2.97, about 1% growth. On a per-share basis, the deal is not yet adding to earnings in this quarter.
Cash conversion looks weak, but a settlement with BD explains most of it. First-half operating cash flow was $198 million vs $301 million a year earlier. The 10-Q attributes the drop to a net $157 million receivable due from BD for the initial cash settlement of activity since closing, and to $105 million of transaction and integration payments. Receivables due from BD reached $673 million, which pushed days sales outstanding (how long customers take to pay) to 110 days from 86; excluding the BD balance it was 73 days. Against that, trade payables include $516 million owed to BD for work done under the transition services agreement (the arrangement where BD keeps running some back-office functions during the handover). Q2 alone was healthier: $200 million of operating cash flow and $202 million of adjusted free cash flow, about two-thirds of adjusted net income. First-half adjusted free cash flow was $161 million vs $392 million a year ago.
The adjustments are large and some will recur for years. In Q2, adjustments added $4.45 per share to GAAP EPS. The step-up expense ($155M) is temporary. Intangibles amortization (about $244M a quarter at current rates) will continue for years. Restructuring and integration costs ($90M in the quarter) are labelled non-recurring, but integration spending will keep appearing while the businesses are combined.
Restructuring savings are real but small next to the deal. The 3% workforce reduction cost $52 million in the first half and is expected to save about $120 million a year in salaries: $14 million achieved through Q2, and about $67 million expected in 2026.
Leverage rose sharply. Debt is $5.1 billion (vs $1.4 billion at year-end 2025) against $539 million of cash. That includes $3.5 billion of senior notes issued in March to refinance a 364-day bridge loan, and a $500 million term loan due February 2028.
Guidance raised, but the EPS raise was small. Full-year organic constant-currency growth went to 7–9% from 6.5–8.0%, and acquired-business revenue to about $3.045 billion from $3.035 billion. Adjusted EPS guidance moved only 5 cents at each end, to $14.45–$14.65 from $14.40–$14.60. The release says early cost actions offset "unfavorable foreign exchange translation."
Takeaway: The legacy Waters business is doing what investors hoped (9% constant-currency growth, 10% chemistry growth, pharma up low double digits), and the acquired BD units beat guidance. On a per-share basis, though, the deal has not yet paid off. Adjusted net income rose 71%, but a 65% larger share count left adjusted EPS up only 3%, and a lower tax rate supplied most of that. The case for the deal now depends on the second half, where guidance implies a sharp step-up.
Outlook
Management's guidance (from the August 4 earnings release):
Q3 2026 guide
Full-year 2026 guide (new)
Full-year 2026 guide (May)
Organic constant-currency growth
8% to 10%
7.0% to 9.0%
6.5% to 8.0%
Acquired business revenue
~$895M
~$3.045B
~$3.035B
Total reported revenue
$1.745B to $1.762B
$6.415B to $6.476B
—
Adjusted EPS
$3.95 to $4.05 (+16% to 19%)
$14.45 to $14.65 (+10% to 12%)
$14.40 to $14.60
Our read. First-half adjusted EPS was $5.79, so the full-year range requires about $8.66–$8.86 in the second half, roughly 50% more than the first half. Three things have to come through: a full two quarters of the BD businesses (only about five months were owned in H1), the usual year-end lift in instrument orders, and the restructuring savings (about $53 million of the $67 million expected this year is still to come). The Q3 guide of 16–19% adjusted EPS growth is the first real test of whether the deal adds to per-share earnings. The main watch items are:
whether Q3 organic growth lands in the guided 8–10% range (Q2 came in at 9%);
whether the acquired businesses sustain mid-single-digit growth once the first "180-day" improvement plan has run its course;
whether the BD receivable and payable balances unwind, which would show up as a catch-up in operating cash flow; and
how quickly Waters pays down the $5.1 billion of debt, since interest is now about $55 million a quarter.
After quarter-end, Waters disclosed (8-K, August 21, 2026) that the head of the Analytical Sciences Division, Robert Carpio, resigned. Tina Wu, who joined in June 2026 to run Materials Sciences and China, is taking over that division.
Source: Waters Corporation Form 10-Q for the quarter ended July 4, 2026 (filed August 11, 2026), and the Q2 2026 earnings release (Exhibit 99.1 to Form 8-K, August 4, 2026) for adjusted figures, end-market commentary and guidance. May guidance is from the Q1 2026 earnings release (May 5, 2026).