Waters (WAT) Wells Fargo 21st Annual Healthcare Conference summary

Business performance and growth drivers

• Achieved 9% organic growth in Q2, with high single-digit growth sustained over 7–8 quarters.

• Instruments, recurring revenue, and chemistry all posted strong results; chemistry grew 16% adjusted for timing.

• Pharma, academia, and government end markets delivered double-digit growth, with China pharma up 24%.

• Acquired businesses showed mid-single-digit growth, with further acceleration expected in the second half.

• Guidance allows for potential overachievement in Q4, with base business momentum expected to continue into 2027.

China market and localization strategy

• China, once expected to dilute growth, has become accretive due to biotech and pharma sector improvements.

• Localizing product portfolios and adjusting commercial strategies have driven significant gains in both bioscience and diagnostics.

• New government reimbursement policies now favor broader product use and analysis, benefiting the business.

• Anticipated stimulus in the second half of the year is not included in current guidance.

• Local supply chain requirements are being met to compete effectively for government and academic tenders.

Diagnostic and analytical segment updates

• Diagnostic solutions grew 15% in the quarter, with microbiology up 4% and molecular diagnostics high single digits.

• Pricing improvements and supply recovery for BACTEC bottles exceeded expectations.

• FXI instrument launch received strong customer feedback and is driving efficiency gains.

• Analytical science segment maintains high single-digit growth, with replacement cycles and innovation as key drivers.

• Replacement cycle expected to last through at least 2027, with reshoring adding further growth potential.