Waters Corporation (NYSE: WAT) reported Q2 2026 revenue of $1.645 billion for the quarter ended July 4, up 113% from $771 million, while diluted GAAP EPS swung to a loss of $1.39 from earnings of $2.47. The acquisition of the Biosciences and Diagnostic Solutions businesses contributed $817 million, while organic revenue increased 7% as reported and 9% in constant currency. Adjusted EPS rose 3% to $3.05, and operating cash flow reached $200 million despite the GAAP net loss.
Core earnings results
The 113% reported revenue increase largely reflects the acquired businesses, making organic and prior-year comparable growth more useful measures of underlying performance. Organic revenue reached $828 million, while the acquired operations grew 4% against their prior-year comparable revenue.
Acquisition accounting was the primary reason reported profitability moved in the opposite direction from revenue. Waters recorded $399 million of purchased-intangible amortization and acquisition-related fair-value step-ups, along with restructuring, integration, and transformation expenses.
| Metric | Q2 2026 | Q2 2025 | Year-over-year change |
|---|---|---|---|
| Revenue | $1.645 billion | $771 million | +113% |
| Organic revenue | $828 million | $771 million | +7% reported; +9% constant currency |
| GAAP operating income (loss) and margin | $(86) million; (5.2%) | $188 million; 24.4% | Swung to a loss |
| Adjusted operating income and margin | $411 million; 25.0% | $225 million; 29.1% | Income up about 83%; margin down 4.1 points |
| GAAP net income (loss) | $(136) million | $147 million | Swung to a loss |
| Diluted GAAP EPS | $(1.39) | $2.47 | Swung to a loss |
| Adjusted EPS | $3.05 | $2.95 | +3% |
| Operating cash flow | $200 million | $41 million | Up $159 million |
| Adjusted free cash flow | $202 million | $159 million | +27% |
Business and division performance
Analytical Sciences produced 7% reported growth, including instrument revenue of $240 million, up 5% reported and 8% in constant currency. Chemistry consumables grew at a double-digit constant-currency rate, while both pharmaceutical and academic and government end markets posted low-double-digit growth.
The acquired Biosciences and Diagnostic Solutions operations generated $817 million, $15 million above company guidance and 4% higher on a prior-year comparable basis. Waters attributed the acceleration to commercial execution and operational improvements under its 180-day growth revitalization plan.
| Business | Q2 2026 revenue | Comparison period | Change and basis |
|---|---|---|---|
| Analytical Sciences Division | $669 million | $627 million | +7% reported |
| Biosciences Division | $368 million | $358 million | About +3% on a comparable basis |
| Diagnostic Solutions | $449 million | $425 million | About +6% on a comparable basis |
| Clinical Business Unit | $72 million | $62 million | About +16% reported |
| Materials Sciences Division | $87 million | $82 million | About +6% reported |
The reported 733% increase for the overall Advanced Diagnostics Division is not a like-for-like comparison because the current quarter includes the acquired Diagnostic Solutions business. The separate Diagnostic Solutions and Clinical Business Unit figures provide a clearer view.
Acquisition accounting widened the gap between GAAP and adjusted earnings
Waters reported a $136 million GAAP net loss but $301 million of adjusted net income. The largest adjustment was $399 million related to purchased-intangible amortization and acquisition-related fair-value step-ups, consisting of $155 million in cost-of-revenue adjustments and $244 million of intangible amortization. Other exclusions included $51 million of restructuring and certain other costs, $39 million of acquisition-related costs, and $9 million of ERP and transformation expenses.
Even after those exclusions, adjusted operating margin declined to 25.0% from 29.1%. Adjusted net income rose about 71%, but adjusted EPS increased only 3% because the adjusted diluted share count expanded to 98.5 million from approximately 59.7 million. Net interest expense also increased to $55 million from $10 million.
These figures show that the acquisition substantially increased Waters’ revenue and adjusted profit base, but the benefits translated into much slower per-share earnings growth during the quarter.
Cash flow and balance sheet
Operating cash flow increased to $200 million despite the GAAP net loss. The reconciliation included $301 million of depreciation and amortization and $155 million of noncash acquisition-related fair-value step-ups, partially offset by a $144 million use of cash from changes in operating assets, liabilities, and other items. After capital spending and specified adjustments, adjusted free cash flow was $202 million.
The acquisition also transformed the balance sheet. Debt stood at $5.086 billion on July 4, up from $1.407 billion at the end of 2025, while cash declined from $588 million to $539 million. Goodwill increased to $9.421 billion from $1.340 billion, and intangible assets rose to $8.521 billion from $558 million.
Earnings guidance
Waters raised every component of its full-year 2026 outlook after the better-than-expected quarterly performance and broader end-market recovery. The release did not provide the previous numerical ranges, so the size of each increase cannot be quantified from the available information.
| Period | Metric | Latest guidance |
|---|---|---|
| Full-year 2026 | Organic constant-currency revenue growth | 7%-9% |
| Full-year 2026 | Organic reported revenue | $3.370-$3.431 billion |
| Full-year 2026 | Acquired business revenue | Approximately $3.045 billion |
| Full-year 2026 | Total reported revenue | $6.415-$6.476 billion |
| Full-year 2026 | Adjusted EPS | $14.45-$14.65 |
| Q3 2026 | Organic constant-currency revenue growth | 8%-10% |
| Q3 2026 | Organic reported revenue | $850-$867 million |
| Q3 2026 | Acquired business revenue | Approximately $895 million |
| Q3 2026 | Total reported revenue | $1.745-$1.762 billion |
| Q3 2026 | Adjusted EPS | $3.95-$4.05 |
The full-year adjusted EPS range represents 10%-12% reported growth and 12%-14% constant-currency growth. Currency translation is expected to reduce organic reported growth by 0.6 percentage points for the full year and 1.7 points in Q3.
Recent insider transactions
The supplied transaction-level data lists two open-market purchases in March 2026 and eight zero-value stock awards among the latest 10 entries. A separate six-month aggregate in the same source reports no purchases or sales, creating a data inconsistency that prevents broader conclusions about insider activity.
| Date | Insider | Transaction | Reported value |
|---|---|---|---|
| June 30, 2026 | Heather Knight, Director | Stock award, direct | $0 |
| June 30, 2026 | Wei Jiang, Director | Stock award, direct | $0 |
| March 31, 2026 | Wei Jiang, Director | Stock award, direct | $0 |
| March 31, 2026 | Heather Knight, Director | Stock award, direct | $0 |
| March 16, 2026 | Wei Jiang, Director | Purchase at $289.46 per share | $144,730 |
| March 6, 2026 | Richard H. Fearon, Director | Purchase at $306.34 per share | $306,340 |
| February 25, 2026 | Richard H. Fearon, Director | Stock award, direct | $0 |
| February 25, 2026 | Wei Jiang, Director | Stock award, direct | $0 |
| February 25, 2026 | Heather Knight, Director | Stock award, direct | $0 |
| February 25, 2026 | Robert L. Carpio III, Executive | Stock award, direct | $0 |
Risks investors should watch
- Integration and comparable-growth risk: The acquired operations contributed nearly half of quarterly revenue. Their prior-year comparable figures reflect how the businesses were historically managed under BD and may not represent their future cost structure under Waters.
- Pressure on per-share profitability: Adjusted operating margin declined by 4.1 percentage points, while the larger share count limited adjusted EPS growth to 3% despite a much larger increase in adjusted net income.
- Higher debt and interest expense: Debt rose to $5.086 billion, and quarterly net interest expense increased to $55 million. These obligations could reduce the cash available for other corporate priorities.
- Foreign-exchange headwinds: Currency reduced Q2 organic growth by two percentage points and is incorporated as a drag in both the full-year and third-quarter outlooks.
- Continued GAAP and non-GAAP divergence: Acquisition-related amortization, restructuring, and integration costs produced a substantial gap between reported and adjusted earnings, and Waters said the timing and size of future adjustments are difficult to forecast.
Summary
Waters’ second-quarter results show a company operating at a much larger scale following the Biosciences and Diagnostic Solutions acquisition. Organic growth broadened across instruments, consumables, and end markets, while the acquired businesses reached mid-single-digit comparable growth. The main issues to monitor are whether Waters can convert its expanded revenue base into stronger margins and per-share earnings, execute the integration, manage higher debt, and deliver the raised full-year outlook.
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