Danaher Corp.

Our stable outlook reflects belief that Danaher will remain acquisitive and that leverage may remain in the 3x-3.5x range longer term. The company continues to maintain various diverse leadership positions in life sciences. Its free cash flow generation is strong and it has history of conducting and integrating large acquisitions followed by steady deleveraging. We would consider revising the outlook to negative should Danaher accelerate its pace of debt-financed acquisitions, such that leverage exceeds 3.75x over an extended period. Alternatively, we would also consider a negative rating action if Danaher has unexpected missteps, such as an integration, that erode its competitive positions. We would consider a higher rating should the company maintain net adjusted leverage under 3x longer term. This

...Danaher maintains strong leadership positions in diverse areas, with solid growth potential. The company is one of the largest and most diverse players in life sciences, diagnostic testing, and applied applications. The company has significant product and customer diversity, global presence in both mature and higher-growth regions, very diverse addressable markets, and a significant proportion of recurring revenues (around 65%) from its aftermarket, consumables, and services segments. The company is acquisitive, but management has a strong track record of integration and deleveraging. Danaher continues to expand in the health care industry, making a number of large acquisitions, but reducing leverage quickly afterward. The 2020 acquisition of Cytiva is Danaher's largest. But given the company's track record of execution and the highly complementary nature of the business and strong growth prospects, we have limited concerns about it maintaining competitive positions and its ability to deleverage....

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