WAT 10-K & 10-Q changes, risk factors and insider trading
Waters Corp. · NYSE · Laboratory Analytical Instruments · CIK 1000697 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Risk Factor Summary”
New heading “Risks Related to the BDS Business Acquisition”
New heading “Risks Related to the Macroeconomic Conditions”
New heading “Risks Related to our Business”
New heading “Risks Related to Human Capital Management”
New heading “Risks Related to Cybersecurity and Data Privacy”
New heading “Risks Related to Compliance, Regulatory or Legal Matters”
New heading “The Company’s failure to successfully integrate the BDS Business within the expected timeline could adversely affect the Company’s future results.”
New heading “In connection with the BDS Business Acquisition, the Company may incur additional costs and charges as a result of restructuring activities related to its manufacturing operations and supply chain as well as in order to streamline ancillary business functions that are intended to reduce ongoing costs, and those restructuring activities also may be disruptive to the Company’s business and may not result in anticipated cost savings.”
New heading “The amount of indebtedness that the Company assumed as a result of the BDS Business Acquisition is substantial. This increased level of indebtedness could adversely affect the Company’s operational flexibility and increase its borrowing costs.”
New heading “The Company and SpinCo are required to abide by potentially significant restrictions that could limit the Company’s ability to undertake certain corporate actions that otherwise could be advantageous.”
New heading “The Company may be unable to provide (or obtain from third parties) the same types and level of services to the BDS Business that historically have been provided by BD or may be unable to provide (or obtain) them at the same cost.”
New heading “Reductions in customers’ research budgets or government funding may adversely affect the Company’s business.”
New heading “Market dynamics, changes in reimbursement practices and coverage policies and third-party payer cost containment measures could affect the demand for the Company’s products and the prices at which they are sold.”
New heading “Changes in government priorities as it relates to healthcare could affect the revenue earned by the Company and the costs for obtaining such revenue.”
New heading “The Company’s growth can suffer if the markets into which it sells products and services decline, do not grow as anticipated or experience cyclicality.”
New heading “Defects or quality issues associated with the Company’s products, including software or hardware, could adversely impact their function, performance and security, and affect results of operations.”
New heading “The Company’s success is highly dependent on qualified and sufficient staffing. Our failure to attract or retain qualified personnel, including our senior management team and technical personnel, could lead to a loss of revenue or profitability.”
New heading “The Company may be subject to labor disruptions.”
New heading “The Company’s Amended and Restated Bylaws (the “Bylaws”) include exclusive forum provisions, which could limit shareholders’ ability to obtain a favorable judicial forum for disputes with the Company or its respective directors, officers or employees.”
New heading “The Charter and Bylaws contain certain provisions that will limit the ability of shareholders of the Company to take certain actions, and that could delay or discourage takeover attempts that shareholders may consider favorable.”
Removed heading “Public health crises, epidemics or pandemics have had, and could in the future have, a negative impact on the Company’s business and operations.”
Removed heading “The Company’s software or hardware may contain coding or manufacturing errors that could impact their function, performance and security, and result in other negative consequences.”
Removed heading “We may not be able to attract and retain qualified employees.”
Removed heading “The loss of key members of management and the risks inherent in succession planning could adversely affect the Company’s results of operations or financial condition.”
Removed heading “The Company’s financial condition and results of operations could be adversely affected if the Company is unable to maintain a sufficient level of cash flow.”
Removed heading “Debt covenants, and the Company’s failure to comply with them, could negatively impact the Company’s capital and financial results.”
Largest changes
“Most of the raw materials, components and supplies purchased by the Company are available from several suppliers; however, a number of items including specialized products are purchased from limited or single sources of supply. Consolidation among such suppliers could also result in other limited or sole-source suppliers for the Company in the future. …”see in full comparison
“The Company’s existing debt is, and future debt may be, subject to restrictive debt covenants that limit the Company’s ability to engage in certain activities that could otherwise benefit the Company. These debt covenants include restrictions on the Company’s ability to enter into certain contracts or agreements, which may limit the Company’s ability to make dividend or other payments, secure other indebtedness, enter into transactions with affiliates and consolidate, merge or transfer all or substantially all of the Company’s assets. …”see in full comparison
In particular, China’s government continues to play a significant role in regulating industry development by imposing sector-specific policies, and it maintains control over China’s economic growth through setting monetary policy and determining treatment of particular industries or companies. The U.S. government has called for substantial changes to foreign trade policy with China and hassee in full comparisonrecentlyraised, and has proposed to further raise in the future, tariffs onseveralChinese goods. China has retaliated with increased tariffs on U.S. goods, whichmayhasincreaseincreased our cost of doing business in China.AnyAdditionally,further changes inthe U.S. government announced new global tradepolicytariffscouldontriggerimportsretaliatorytoactionsthebyU.S.affectedduringcountries,fiscal 2025, includingChina,additionalresultingtariffsinontradevariouswarscountries from which the Company directly or indirectly imports and/orincreasedexportscostsproducts.forIngoodsresponse,importedseveralintocountries have imposed or threatened reciprocal tariffs on imports from the U.S. andimpactingotherourmeasures. Various modifications to the U.S. tariffs have been announced, and further changes are expected to be made in the future, including in response to litigation. On February 20, 2026, the U.S. Supreme Court rendered a decision invalidating tariffs imposed under the International Emergency Economic Powers Act. This decision introduces uncertainty regarding potential refund processes and future trade policy actions and could affect the Company’s cost structure and supply chain planning. The ultimate impact of tariffs and other trade policies on the Company’s business will depend on several factors, including future measures implemented by the U.S. government and the governments of other countries, the overall magnitude and duration of these measures, and the Company’s ability tosellmitigateoureffects,productswhich could include higher import costs and reduced sales in China and other affectedcountries.markets. Accordingly,ourthe Company’s financial position or results of operationscanmay be adversely influenced by political, economic, legal, compliance, social and business conditions inChinathegenerally.U.S. and in other countries.
“In connection with the BDS Business Acquisition, the Company may incur additional costs and charges as a result of restructuring activities related to its manufacturing operations and supply chain as well as in order to streamline ancillary business functions that are intended to reduce ongoing costs, and those restructuring activities also may be disruptive to the Company’s business and may not result in anticipated cost savings.”see in full comparison
“In addition, the Company’s credit facilities contain financial and restrictive covenants that could limit the Company’s ability to, among other things, make dividend or other payments, secure other indebtedness, enter into transactions with affiliates and consolidate, merge or transfer all or substantially all of the Company’s assets. The Company is also required to meet specified financial ratios under the terms of the Company’s credit agreements. The Company’s ability to comply with these financial and restrictive covenants is dependent on the Company’s future performance. …”see in full comparison
“Certain foreign employees of the Company are represented by works councils, unions or similar non-U.S. employee representative bodies in the United Kingdom, France, Germany, Brazil, Spain, China, Israel, Japan, Mexico and other foreign jurisdictions. Strikes, work slowdowns, work stoppages or the possibility of such actions in such jurisdictions could result in delays in production or cause the Company to incur higher costs. The Company may also lack practical control over the negotiations and terms of the agreements governing the employees’ labor.”see in full comparison
Full comparison: every changed paragraph (112)
Risk Factor Summary
Risks Related to the BDS Business Acquisition
Risks Related to the Macroeconomic Conditions
Risks Related to our Business
Risks Related to Human Capital Management
Risks Related to Cybersecurity and Data Privacy
Risks Related to Compliance, Regulatory or Legal Matters
RISKS RELATED TO THE BDS BUSINESS ACQUISITION
The Company’s failure to successfully integrate the BDS Business within the expected timeline could adversely affect the Company’s future results.
On July 13, 2025, the Company entered into an Agreement and Plan of Merger, dated as of July 13, 2025 (the “Merger Agreement”), by and among the Company, BD, SpinCo and Beta Merger Sub, Inc. and a Separation Agreement, dated as of July 13, 2025 (as amended, the “Separation Agreement”), by and among the Company, BD and SpinCo in order to give effect to the BDS Business Acquisition. The transaction was structured as a Reverse Morris Trust transaction, where the BDS Business was spun off to BD shareholders and simultaneously merged with a wholly-owned subsidiary of the Company. The BDS Business Acquisition involved numerous operational, strategic, financial, accounting, legal, tax and other risks, including potential liabilities associated with the integrated businesses. The success of the Company will depend, in significant part, on its ability to successfully integrate the BDS Business with the Company’s existing business and its ability to grow revenues and realize the anticipated strategic benefits and synergies from the BDS Business Acquisition. Difficulties in integrating the practices and operations of these two businesses may result in the Company performing differently than expected, operational challenges or the delay or failure to realize anticipated benefits and synergies, and could have an adverse effect on the Company’s business, financial condition, results of operations and/or cash flows.
Potential difficulties that may be encountered in the integration process include, among others:
Additionally, the success of the Company will depend, in part, on the Company’s ability to realize the anticipated benefits and synergies from combining the business of the Company and the BDS Business. Although the Company expects to generate cost synergies of approximately $200 million within three years of the completion of the BDS Business Acquisition as a result of manufacturing and supply chain optimization, commercial infrastructure, service and technology streamlining and indirect procurement savings and efficiencies, and revenue synergies of approximately $290 million within five years of the completion of the BDS Business Acquisition as a result of the similarities between the business models of the Company and the BDS Business, certain high-growth adjacencies and cross-selling opportunities, the Company’s ability to realize such anticipated synergies may be affected by a number of factors, including, but not limited to: the use of more cash or other financial resources on integration and implementation activities than anticipated; unanticipated increases in expenses unrelated to the BDS Business Acquisition, which may offset the expected synergies from the BDS Business Acquisition; slower customer adoption leading to lower actual sales than expected across our high-growth adjacencies and cross- selling opportunities. The anticipated benefits and synergies of the BDS Business Acquisition may not be realized fully or at all, may take longer to realize than expected or could have other adverse effects that the Company does not currently foresee. In addition, the anticipated benefits and synergies of the BDS Business Acquisition as well as the related integration costs are based on a number of estimates and assumptions that are inherently uncertain and subject to risks that could cause the actual results to differ materially from those contained in such anticipated benefits and synergies.
If the Company fails to realize the anticipated synergies or other benefits, or the estimated integration costs of the BDS Business Acquisition are exceeded, the business rationale of the BDS Business Acquisition might not be realized and the value of the shares of the Company’s stock could decrease.
In connection with the BDS Business Acquisition, the Company may incur additional costs and charges as a result of restructuring activities related to its manufacturing operations and supply chain as well as in order to streamline ancillary business functions that are intended to reduce ongoing costs, and those restructuring activities also may be disruptive to the Company’s business and may not result in anticipated cost savings.
Following the BDS Business Acquisition, the Company has undertaken and expects to undertake various measures with regard to its manufacturing and supply chain, including, without limitation, site rationalization, direct procurement savings and freight lane optimization. The Company has also begun to streamline commercial infrastructure, service and technology functions, inside sales, and sales operations and eliminate duplicative digital infrastructure and central service oversight. Additionally, the Company expects to leverage indirect procurement saving and efficiencies gains by utilizing capacity centers in non-U.S. jurisdictions. The Company has incurred and expects to incur additional costs and restructuring charges in connection with the measures described above as well as other cost reduction measures that could adversely affect the Company’s future earnings and cash flows. Furthermore, such actions may be disruptive to the Company’s business. Any prolonged disruption to the operations of the Company could adversely impact the Company’s business, financial condition and results of operations. In addition, the Company may not realize the cost savings that it expects to realize as a result of such actions.
These activities require substantial management time and attention and may divert management from other important work or result in a failure to meet operational targets. Moreover, the Company could encounter changes to, or delays in executing, any restructuring plans, any of which could cause disruption and additional unanticipated expense.
The amount of indebtedness that the Company assumed as a result of the BDS Business Acquisition is substantial. This increased level of indebtedness could adversely affect the Company’s operational flexibility and increase its borrowing costs.
As of December 31, 2025, the Company had approximately $1.4 billion in total debt outstanding, approximately $588 million in cash and cash equivalents, and approximately $1.6 billion in available borrowing capacity under its existing revolving credit facility, after taking into account outstanding letters of credit. Upon consummation of the BDS Business Acquisition, the Company assumed $4.0 billion of indebtedness incurred by SpinCo in connection with the payment of the SpinCo Cash Distribution which consists of a $3.5 billion tranche maturing and payable in full on February 6, 2027 and a $500 million tranche maturing and payable in full on February 6, 2028. The Company plans to refinance the $3.5 billion tranche in the first quarter of 2026 with long-term bond financing and repay the $500 million tranche prior to maturity.
The Company’s ability to make required payments of principal and interest on its indebtedness levels will depend on its future performance, which, to a certain extent, is subject to general economic, financial, competitive and other factors that are beyond the Company’s control. The Company cannot provide any assurances that its business will generate cash flow from operations or that future borrowings will be available under its credit facilities in an amount sufficient to enable the Company to service its indebtedness or to fund its other liquidity needs.
In addition, the Company’s credit facilities contain financial and restrictive covenants that could limit the Company’s ability to, among other things, make dividend or other payments, secure other indebtedness, enter into transactions with affiliates and consolidate, merge or transfer all or substantially all of the Company’s assets. The Company is also required to meet specified financial ratios under the terms of the Company’s credit agreements. The Company’s ability to comply with these financial and restrictive covenants is dependent on the Company’s future performance. The Company’s failure to comply with such covenants could result in an event of default that, if not cured or waived, could result in the acceleration of all of the Company’s indebtedness or otherwise have a material adverse effect on the Company’s business, financial condition, results of operations and debt service capability.
In addition, the Company’s substantial indebtedness may have the effect of, among other things, reducing the Company’s flexibility to respond to changing business and economic conditions, lowering its credit ratings, increasing its borrowing costs and/or requiring the Company to reduce or delay investments, strategic acquisitions and capital expenditures or seek additional capital to refinance its indebtedness and there can be no assurance that the Company will be able to do so on commercially reasonable terms or at all.
The Company and SpinCo are required to abide by potentially significant restrictions that could limit the Company’s ability to undertake certain corporate actions that otherwise could be advantageous.
In connection with the BDS Business Acquisition, the Company entered into the Tax Matters Agreement, dated as of February 9, 2026 (the “Tax Matters Agreement”), by and among the Company, BD and SpinCo, which imposes certain restrictions on the Company and SpinCo during the two-year period following the SpinCo Cash Distribution, subject to certain exceptions, with respect to actions that could cause the Spin-Off and the SpinCo Cash Distribution to fail to qualify for their intended tax treatment. As a result of these restrictions, the Company’s ability to engage in certain transactions, such as the issuance or purchase of stock or certain business combinations, may be limited, which could adversely affect the Company’s business, results of operations, or financial condition.
If the Company or SpinCo take or omit to take any actions enumerated in the Tax Matters Agreement, or if certain events relating to SpinCo occur that would cause the Spin-Off or the SpinCo Cash Distribution to become taxable, the party whose actions or omissions (or event relating to) caused the Spin-Off or the SpinCo Cash Distribution to become taxable generally will be required to bear the cost of any resulting tax liability of BD (but not BD’s shareholders). Such taxes would be expected to be material, and could cause the Company’s business, financial condition and operating results to suffer.
The Company may be unable to provide (or obtain from third parties) the same types and level of services to the BDS Business that historically have been provided by BD or may be unable to provide (or obtain) them at the same cost.
As part of a separate reporting segment of BD, the BDS Business has been able to receive services from BD. Following the BDS Business Acquisition, the Company will need to replace these services either by providing them internally from our existing services or by obtaining them from unaffiliated third parties. These services include legal, accounting, information technology, human resources and other infrastructure support of which the effective and appropriate performance is critical to the operations of the Company following the BDS Business Acquisition. Upon consummation of the BDS Business Acquisition, the Company, SpinCo and BD entered into several transition services agreements (the “Transition Services Agreements”), pursuant to which BD will provide services to SpinCo on a transitional basis to facilitate the transition of the BDS Business to the Company. BD will provide to SpinCo various services, including legal, accounting, information technology, human resources and other infrastructure support, for a duration ranging from three months up to 24 months. Additionally, under manufacturing and supply agreements, BD will manufacture certain products for the BDS Business and its subsidiaries following the consummation of the BDS Business Acquisition. The Company may be unable to replace these services in a timely manner or on terms and conditions as favorable as those the BDS Business currently receives from BD. The costs for these services could in the aggregate be higher than the aggregate costs incurred by the Company and the BDS Business for these services. If the Company is unable to replace the services provided by BD or is unable to replace them at the same cost or is delayed in replacing the services provided by BD, the Company’s results of operations may be materially adversely impacted.
Approximately 68%69% and 69%68% of the Company’s net sales in 20242025 and 2023,2024, respectively, were outside of the United StatesU.S. and were primarily denominated in foreign currencies. In addition, the Company has considerable manufacturing operations in Ireland and the U.K., as well as significantkey subcontractors providing manufacturing and support that are located in Singapore. As a result, a significant portion of the Company’s sales and operations are subject to certain risks, including adverse developments in the political, regulatory and economic environment, in particular,including uncertainty regarding possible changes to foreign and domestic trade policy; trade protection measures, including embargoes, sanctions and tariffs; impact and costs of terrorism or war, in particular as a result of the ongoing conflict between Russia and Ukraine and in the Middle East, and the possibility of further escalation resulting in new geopolitical and regulatory instability; the financial difficulties and debt burden experienced by a number of European countries; sudden movements in a country’s foreign exchange rates due to a change in a country’s sovereign risk profile or foreign exchange regulatory practices; differing tax laws and changes in those laws; restrictions on investments and/or limitations regarding foreign ownership; nationalization of private enterprises which may result in the confiscation of assets; credit risk and uncertainties regarding the collectability of accounts receivable; the impact of global health crises, pandemics and epidemics; changes in inflation and interest rates; instability in the global banking industry; rising energy prices and potential energy shortages; difficulties in protecting intellectual property; difficulties in staffing and managing foreign operations; and associated adverse operational, contractual and tax consequences.
In 2024,2025, the Company generated $397 million ofCompany’s total net sales from China,China downincreased from10% $565as millioncompared to 2024 after decreasing by 10% in 2022.2024 Thisas significantcompared 30%to reduction2023. inThe 2024 sales fromdecrease in China resulted from lower customer demand for our products across all customer classes, driven by various factors. Such factors includeinclude, among other things, a decline in the economic conditions in China, trade tensions and tariffs between the U.S. and China and their impact on our business and particularly customers’ purchasing decisions, increased competition from local and international competitors in China, the Chinese government’s ongoing tightening of restrictions on procurement by government-funded customers and other regulatory and compliance challenges and uncertainties in the Chinese market, all of which had, and may continue to have, an adverse effect on our business and operations in China. For example, in March 2024, the Company had a reduction in workforce that impacted approximately 2% of its employees, primarily in China due to the significant decline in sales resulting from lower customer demand.
In particular, China’s government continues to play a significant role in regulating industry development by imposing sector-specific policies, and it maintains control over China’s economic growth through setting monetary policy and determining treatment of particular industries or companies. The U.S. government has called for substantial changes to foreign trade policy with China and has recently raised, and has proposed to further raise in the future, tariffs on several Chinese goods. China has retaliated with increased tariffs on U.S. goods, which mayhas increaseincreased our cost of doing business in China. AnyAdditionally, further changes inthe U.S. government announced new global trade policytariffs couldon triggerimports retaliatoryto actionsthe byU.S. affectedduring countries,fiscal 2025, including China,additional resultingtariffs inon tradevarious warscountries from which the Company directly or indirectly imports and/or increasedexports costsproducts. forIn goodsresponse, importedseveral intocountries have imposed or threatened reciprocal tariffs on imports from the U.S. and impactingother ourmeasures. Various modifications to the U.S. tariffs have been announced, and further changes are expected to be made in the future, including in response to litigation. On February 20, 2026, the U.S. Supreme Court rendered a decision invalidating tariffs imposed under the International Emergency Economic Powers Act. This decision introduces uncertainty regarding potential refund processes and future trade policy actions and could affect the Company’s cost structure and supply chain planning. The ultimate impact of tariffs and other trade policies on the Company’s business will depend on several factors, including future measures implemented by the U.S. government and the governments of other countries, the overall magnitude and duration of these measures, and the Company’s ability to sellmitigate oureffects, productswhich could include higher import costs and reduced sales in China and other affected countries.markets. Accordingly, ourthe Company’s financial position or results of operations canmay be adversely influenced by political, economic, legal, compliance, social and business conditions in Chinathe generally.U.S. and in other countries.
Additionally, the U.S. dollar value of the Company’s net sales, cost of sales, operating expenses, interest, taxes and net income varies with foreign currency exchange rate fluctuations. Significant increases or decreases in the value of the U.S. dollar relative to certain foreign currencies, particularly the euro,Canadian Dollar, Euro, Japanese yen, British pound and Chinese renminbi, could have a material adverse effect or benefit on the Company’s results of operations or financial condition.
From time to time, the Company enters into certain foreign currency exchange contracts that are intended to offset some of the market risk associated with sales denominated in foreign currencies. WeThere cannotcan predictbe theno effectivenessassurance ofthat these transactions orwill theirbe impacteffective uponat ourhedging futuresuch operatingmarket results,risk. andSuch transactions may negatively affect the Company’s quarterly earnings from time to time they may negatively affect our quarterly earnings.time.
The Company is a global business with operations, supply chains, suppliers and customers that may be adversely affected by changes in global economic conditions such as changes in the rate of inflation (including the cost of raw materials, commodities and supplies) and interest rates. Both our domestic and international markets experience varying degrees of inflationary and interest rate pressures. These changes in global economic conditions may affect the demand for, and supply of, the Company’s products and services. This may result in a decline in sales in the future, increased rate of order cancellations or delays, increased risk of excess or obsolete inventories, longer sales cycles and potential difficulty in collecting sales proceeds. There can be no assurance regarding demand for the Company’s products and services in the future.
Financial markets in the U.S., Europe and Asia have experienced times of extreme disruption, including, among other things, sharp increases in the cost of new capital, credit rating downgrades and bailouts, severely diminished capital availability and severely reduced liquidity in money markets. Financial and banking institutions have also experienced disruptions, resulting in large asset write-downs, higher costs of capital, rating downgrades and reduced desire to lend money. There can be no assurance that there will not be future deterioration or prolonged disruption in financial markets or financial institutions. Any future deterioration or prolonged disruption in financial markets or financial institutions in which the Company participates may impair the Company’s ability to access its existing cash, utilize its existing syndicated bank credit facility funded by such financial institutions or access sources of new capital,capital on favorable terms or at all, which it may need to meet its capital needs. The cost to the Company of any new capital raised and interest expense would increase if this were to occur.
Public health crises, epidemics or pandemics have had, and could in the future have, a negative impact on the Company’s business and operations.
Public health crises, epidemics or pandemics have had, and could in the future have, a negative impact on our business and operations, including Company sales and cash flow. Such public health crises, epidemics and pandemics have the potential to create significant volatility, uncertainty and worldwide economic disruption, resulting in an economic slowdown of potentially extended duration, as seen with the COVID-19 pandemic from 2020 to 2022. The Company’s global operations expose it to risks associated with such public health crises, epidemics and pandemics, which could have an adverse effect on its business, results of operations and financial condition. The degree to which such public health crisis, epidemics or pandemics ultimately affects the Company’s business, results of operations and financial condition is highly uncertain and cannot be predicted.
The demand for the Company’s products is dependent upon the size of the markets for its LC, LC-MS, light scattering, thermal analysis, rheometry and calorimetry products; the timing and level of capital spending and expenditures of the Company’s customers; changes in governmental regulations, particularly those affecting drug, food and drinking water testing; funding available to academic, governmental and research institutions;
The demand for the Company’s products is dependent upon the size of the markets for its products; the timing and level of capital spending and expenditures of the Company’s customers; changes in governmental regulations, particularly those affecting drug, food and drinking water testing and medical devices; funding, including government funding, available to academic, governmental and research institutions; health policy; export controls; general economic conditions and the rate of economic growth in the Company’s major markets; and competitive considerations. Policy, regulatory and enforcement changes introduced by the newcurrent presidential administration and regulatory leadership in the United States may impact the business and capital expenditure strategies of the Company’s customers, which in turn could adversely impact the Company’s results of operations or financial condition. The Company typically experiences seasonality in its orders that is reflected as an increase in sales in its fourth quarter as a result of purchasing habits for capital goods by customers that tend to exhaust their spending budgets by calendar year-end. However,Therefore, there can be no assurance that the Company will effectively forecast customer demand and appropriately allocate research and development expenditures to products with high growth and high margin prospects. Additionally, there can be no assurance that the Company’s results of operations or financial condition will not be adversely impacted by a change in any of the factors listed above or the continuation of uncertain global economic conditions.
The analytical instrument market, and, in particular, the portion related to the Company’s HPLC, UPLC, LC-MS, light scattering, thermal analysis, rheometry and calorimetry product lines, is highly competitive. The Company encounters significant competition from several international instrument suppliers and other companies in both domestic and foreign markets. SomeSuch competitors may have instrument businesses that are generally more diversified than the Company’s business but are typically less focused on the Company’smarkets chosenthat markets.the Company chooses to focus on. Over the years, some competitors have merged with other competitors for various reasons, including increasing product line offerings, improving market share and reducing costs. There can be no assurance that the Company’s competitors will not introduce new, disruptive technologies that displace the Company’s existing technologies or more effective and less costly products than those of the Company or that the Company will be able to increase its sales and profitability from new product introductions. There can be no assurance that the Company’s sales and marketing forces will compete successfully against the Company’s competitors in the future.
This industry is also subject to rapid technological change, discovery and frequent product introductions. There can be no assurance that the Company’s competitors will not introduce new, disruptive technologies that displace the Company’s existing technologies or more effective and less costly products than those of the Company or that the Company will be able to increase its sales and profitability from new product introductions. There can be no assurance that the Company’s sales and marketing forces will compete successfully against the Company’s competitors in the future.
A significant component of the Company’s success is dependent in part on its ability to focus on innovation and new product development in order to increase revenue. The results of the Company’s product development efforts may be affected by a number of factors, including its ability to anticipate customer needs, dedicate sufficient time to innovate and develop new products and technologies, successfully complete clinical trials, obtain regulatory approvals and reimbursement in the U.S. and abroad, manufacture products in a cost-effective manner, obtain appropriate intellectual property rights and gain and maintain market acceptance of its products. In addition, patents attained by others can preclude or delay the Company’s commercialization of a product.
The Company’s corporate strategy is fundamentally based on winning through organic innovation and deep application expertise. The Company is in the process of developing new products with recently acquired technologies. The future development of these new products will require a significant amount of spendingtime overand thespending, nextincluding fewon yearsresearch and development, production and marketing, before any significant, robust sales will be realized. For example, the Company expects to bring new microbiology products to market, which may take three to five years to generate significant sales. Furthermore, these new products will be sold into both the non-clinical and clinical markets, and any new products requiring FDA clearance may take longer to bring to market. There can be no assurance giventhat asany products now in development, or that the Company may seek to the timing of these new product launches and the ultimate realization of sales and profitabilitydevelop in the future.future, will achieve technological feasibility, obtain regulatory approval or gain market acceptance.
In addition, the Company’s products are subject to rapid changes in technology. Rapidly changing technology could make some or all of our product lines obsolete unless the Company is able to continually improve our existing products and develop new products. If the Company fails to develop and introduce products in a timely manner in response to changing technology, market demands or the requirements of our customers, the Company’s product sales may decline, and we could experience an adverse effect on our results of operations or financial condition. Even if the Company successfully develops new products or enhancements or new generations of existing products, they may be quickly rendered obsolete by changing customer preferences, changing industry or regulatory standards, or competitors’ innovations.
Reductions in customers’ research budgets or government funding may adversely affect the Company’s business.
The Company supplies products to researchers at pharmaceutical and biotechnology companies, academic institutions, government laboratories and private foundations. Research and development spending of such customers can fluctuate based on spending priorities and general economic conditions. A number of these customers are also dependent for their funding upon grants from U.S. government agencies, such as the U.S. National Institutes of Health, and similar agencies in other countries. Other customers, such as pharmaceutical companies, may self-fund but will have budgets affected by macro-economic events. The level of government funding of research and development may vary significantly due to factors that can be difficult to forecast, including changes in spending authorizations and budgetary priorities. The availability of governmental research funding has been and may in the future be adversely affected by economic conditions and governmental spending reductions, particularly during periods of economic uncertainty. Accordingly, the timing and amount of revenue from customers that rely on government or research funding may also vary significantly and be difficult to forecast, and any reductions or delays in governmental or other research funding have caused and may in the future cause the Company’s customers to delay or forgo product purchases.
Market dynamics, changes in reimbursement practices and coverage policies and third-party payer cost containment measures could affect the demand for the Company’s products and the prices at which they are sold.
The sale of the Company’s products and services, as well as access to them, depends, in part, on the healthcare funding landscape and how healthcare providers and facilities are reimbursed by public and private payers. Coverage policies and reimbursement levels can vary across the payer community globally, regionally, and locally, and may affect which products customers purchase, the market acceptance rate for new technologies and the prices customers are willing to pay for those products in a particular jurisdiction. In addition, third-party payers are increasingly challenging the reimbursement models and prices charged for medical products and services. Any changes to the reimbursement landscape, or adverse decisions relating to the Company’s products by administrators of these systems could significantly reduce reimbursement for procedures using the Company’s products or result in denial of reimbursement for those products, which could adversely affect customer demand, or the price customers are willing to pay for such products.
Changes in government priorities as it relates to healthcare could affect the revenue earned by the Company and the costs for obtaining such revenue.
A global trend towards limiting growth of healthcare costs may also put industry-wide pressure on the Company’s products that are subject to reimbursement. In the U.S., these include value-based purchasing, group purchasing organizations and managed care arrangements. Governments in China and other countries continue to use various mechanisms to control healthcare expenditures, including increased use of competitive bidding and tenders, price regulation (such as volume-based procurement programs), government imposed payback provisions, and changes in reimbursement practices and policies on average selling prices for the Company’s products, which unfavorably impact the Company’s revenues and may continue to impact the Company’s results of operations in certain countries. In addition, changes in regulatory enforcement priorities and efforts by governments in countries in which the Company does business, including China, may increase compliance and monitoring costs that could have an adverse impact on the Company’s business. Group purchasing organizations and integrated health delivery networks have also served to concentrate purchasing decisions for some customers, which has led to downward pricing pressures. Further consolidation in the industry could intensify competition and exert additional pressure on the demand for and prices of the Company’s products.
The Company’s growth can suffer if the markets into which it sells products and services decline, do not grow as anticipated or experience cyclicality.
The Company’s growth depends in part on the growth of the markets which the Company serves, and visibility into the Company’s markets can be limited (particularly for markets into which it sells through distribution). The Company’s quarterly sales and profits depend substantially on the volume and timing of orders received during the quarter, which are difficult to forecast. Any decline or lower than expected growth in the Company’s served markets can diminish demand for the Company’s products and services and adversely affect the Company’s business and financial statements. Certain of the Company’s businesses operate in industries that experience seasonality, or industries that have experienced and may continue to experience periodic, cyclical downturns.
In addition, in certain of the Company’s businesses demand depends on customers’ capital spending budgets, government funding policies and interest rates, and matters of public policy and government budget, fiscal and monetary dynamics as well as product and economic cycles can affect the spending decisions of these entities. Demand for the Company’s products and services is also sensitive to changes in customer order patterns, which may be affected by announced price changes, marketing or promotional programs, new product introductions, the timing of industry trade shows and changes in distributor or customer inventory levels due to distributor or customer management thereof or other factors. Any of these factors could adversely affect the Company’s business and financial statements in any given period.
Defects or quality issues associated with the Company’s products, including software or hardware, could adversely impact their function, performance and security, and affect results of operations.
The design, manufacture and marketing of the Company’s products involve certain inherent risks. Manufacturing or design defects, component failures, unapproved or improper use of the Company’s products or inadequate disclosure of risks or other information relating to the use of the Company’s products can lead to injury or other serious adverse events or non-reliable customer research. Such events have in the past and could in the future lead to recalls or safety alerts relating to the Company’s products (either voluntary or as required by the FDA or similar governmental authorities in other countries), and could result, in certain cases, in the removal of a product from the market. A recall could result in significant costs, lost sales and customers, enforcement actions and/or investigations by state and federal governments or other enforcement bodies, as well as negative publicity and damage to the Company’s reputation that could reduce future demand for its products. Personal injuries relating to the use of the Company’s products can also result in significant product liability claims being brought against the Company, which, if in excess of, or outside the coverage of, the Company’s insurance coverage could have a material adverse effect on our business, financial condition and results of operations. Further, the Company may not be able to maintain product liability insurance on acceptable terms, if at all, and insurance may not provide adequate coverage against potential liabilities.
Despite testing prior to the release and throughout the lifecycle of a product or service, the detection and correction of any manufacturing errors, or errors in released software or hardware, can be time consuming and costly. This could delay the development or release of new products or services, or new versions of products or services, expose security vulnerabilities in the Company’s products or services, and adversely affect market acceptance of products or services. If the Company experiences errors or delays, its sales could be affected, and revenues could decline. Manufacturing errors, or errors in released software or hardware, could expose the Company to product liability, performance and warranty claims, regulatory enforcement and fines as well as harm to brand and reputation, which could impact future sales. In some circumstances, such adverse events could also cause delays in regulatory approval of new products or the imposition of post-market approval requirements. In addition, inaccurate data produced from the Company’s products could result in faulty clinical decisions or treatments that could have an adverse effect on the Company’s clients and their patients.
The Company is beginningcontinues to integrate artificial intelligence (“AI”), including generative AI, into its business operations and products and continues to research further uses and opportunities for AI development. As AI is a rapidly developing technology that is still in the early stages of being researched and understood, the development, deployment and use of AI presents novel risks and challenges that have the potential to adversely impact the Company’s business. The premature use of inadequate AI or the use of deficient AI, including flawed or biased algorithms, could harm the Company’s brand, reputation or competitive advantage or result in regulatory penalties or legal liability. The input of confidential information or trade secrets into AI systems may result in the loss of intellectual property, proprietary rights or attorney-client privilege in such information or trade secrets. The use of AI technologies for developing products or services may adversely affect or preclude the Company’s intellectual property rights in such products or services, or may expose the Company to liability related to the infringement, misappropriation or other violation of third-party intellectual property. Failures in AI functionality could result in delays in new product offerings and services and have an adverse impact on other business activities. Delays or disruptions in successfully developing and implementing AI as part of the Company’s business activities, products or services could have a negative impact on the Company’s competitiveness, particularly if competitors are successful in making and leveraging such advancements, and the development of adequate AI technology will require significant investment. The use of AI with personally identifiable information may also result in liability. Further, particularly given the nascent stage of the technology, the use of AI can lead to unintended consequences, including the generation of outputs that appear correct but are factually inaccurate or misleading, or that result in unintended biases and discriminatory outcomes, or are otherwise flawed, which could harm our reputation and business and expose us to risks related to such inaccuracies or errors in these outputs. Due to the novelty of AI technology, the Company may also experience additional risks that cannot yet be predicted.
Laws and regulations arising from the use and development of AI technology present additional uncertainties and risks to the Company. In particular, the use and development of AI implicates risks related to intellectual property, data protection and privacy laws and regulations.regulations and may also cause compliance issues or raise ethical concerns. Due to the rapid developments being made in AI technology, the legal and regulatory landscape related to AI is constantly evolving. Complying with developing laws, regulations and standards could significantly burden the Company, and failures to comply could result in legal liability, regulatory action or reputational harm.
In the normal course of business, the Company may engage in discussions with third parties relating to possible acquisitions, strategic investments, joint ventures and divestitures. The Company may pursue transactions that complement or augment its existing products and services, such as the Wyatt acquisition that was completed in May 2023.services. Such transactions involve numerous risks, including difficulties in integrating the acquired operations, technologies and products; diversion of management’s attention from other business concerns; inability to predict financial results; potential departures of key employees of the acquired company; and difficulties in effectively transferring divested businesses and liabilities. If the Company successfully identifies acquisitions in the future, completing such acquisitions may result in new issuances of the Company’s stock that may be dilutive to current owners; increases in the Company’s debt and contingent liabilities; and additional amortization expense related to intangible assets. For example, the Company financed the Wyatt acquisition, in part, through borrowings under its revolving credit facility, resulting in a significant increase in the Company’s outstanding debt. Acquired businesses may also expose the Company to new risks and new markets, and the Company may have difficulty addressing these risks in a cost-effective and timely manner. Any of these transaction-related risks could have a material adverse effect on the Company’s profitability. In addition, the Company may not be able to identify, successfully complete, or integrate potential acquisitions in the future. Even if the Company can do so, it cannot be sure that these acquisitions will have a positive impact on the Company’s business or operating results.
The Company’s software or hardware may contain coding or manufacturing errors that could impact their function, performance and security, and result in other negative consequences.
Despite testing prior to the release and throughout the lifecycle of a product or service, the detection and correction of any errors in released software or hardware can be time consuming and costly. This could delay the development or release of new products or services, or new versions of products or services, create security vulnerabilities in the Company’s products or services, and adversely affect market acceptance of products or services. If the Company experiences errors or delays in releasing its software or hardware, or new versions thereof, its sales could be affected, and revenues could decline. Errors in software or hardware could expose the Company to product liability, performance and warranty claims as well as harm to brand and reputation, which could impact future sales.
A successful product liability claim brought against the Company in excess of, or outside the coverage of, the Company’s insurance coverage could have a material adverse effect on our business, financial condition and results of operations. The Company may not be able to maintain product liability insurance on acceptable terms, if at all, and insurance may not provide adequate coverage against potential liabilities.
Management's Discussion & Analysis (MD&A)
Removed heading “Wyatt Acquisition”
Removed heading “Acquired In-Process Research & Development”
Removed heading “Other (Expense) Income, net”
Largest changes
“The Company sells and services its customers in over 35 countries outside of the U.S. and we have manufacturing operations in the U.S., Ireland, U.K. and in Singapore where we utilize subcontractors with worldwide capabilities. In 2025, the U.S. …”see in full comparison
“On May 22, 2025, the Company and certain of its subsidiaries, as guarantors, entered into an Amendment and Restatement Agreement in respect of that certain Amended and Restated Credit Agreement, dated as of September 17, 2021 and amended as of March 3, 2023, with the lenders and issuing banks party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, pursuant to which the Company, among other things, reduced the aggregate total borrowing capacity of its existing senior unsecured revolving credit facility (the “Credit Facility”) by up to $200 million for an aggregate principal …”see in full comparison
“In 2024, sales to pharmaceutical customers increased 1% as compared to 2023, as the 18% increase in India’s sales was offset by the 11% decline in China’s sales. Combined sales to industrial customers, which include material characterization, food, environmental and fine chemical markets, were flat in 2024 as the 7% sales growth in the U.S. was primarily offset by a 9% decline in China’s sales. Combined sales to academic and government customers decreased 6% in 2024, as sales declined in most major geographies, except in Europe and India, where sales grew 1% and 27%, respectively. …”see in full comparison
“On May 22, 2025, the Company and certain of its subsidiaries, as guarantors, entered into an Amendment and Restatement Agreement in respect of that certain Amended and Restated Credit Agreement, dated as of September 17, 2021 and amended as of March 3, 2023, with the lenders and issuing banks party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, pursuant to which the Company, among other things, reduced the aggregate total borrowing capacity of its existing senior unsecured revolving credit facility by up to $200 million for an aggregate principal amount of up to $1.8 billion. …”see in full comparison
“In 2024, sales to pharmaceutical customers increased 1% as compared to 2023 as the 18% increase in India’s sales was offset by the 11% decline in China’s sales. Combined sales to industrial customers, which include material characterization, food, environmental and fine chemical markets, were flat in 2024 as the 7% sales growth in the U.S. was primarily offset by a 9% decline in China’s sales. Combined sales to academic and government customers decreased 6% in 2024 as sales declined in most major geographies, except for Europe and India where sales grew 1% and 27%, respectively. …”see in full comparison
“In 2024, sales growth was flat as compared to 2023 and sales declined by 1% in 2023 as compared to 2022. During these periods, the Company’s sales in most geographies grew positively, except in China and Japan. The sales growth outside of China was led by India where sales increased 15% and 2% in 2024 and 2023, respectively. …”see in full comparison
Full comparison: every changed paragraph (78)
The Company has two operating segments: Waters™ and TA.TA™. Waters products and services primarily consist of high-performance liquid chromatography (“HPLC”), ultra-performance liquid chromatography (“UPLC™” and, together with HPLC, referred to as “LC”), mass spectrometry (“MS”), light scattering and field-flow fractionation instruments (Wyatt), and precision chemistry consumable products and related services. TA products and services primarily consist of thermal analysis, rheometry and calorimetry instrument systems and service sales. The Company’s products are used by pharmaceutical, biochemical, industrial, nutritional safety, environmental, academic and government customers. These customers use the Company’s products to detect, identify, monitor and measure the chemical, physical and biological composition of materials and to predict the suitability and stability of fine chemicals, pharmaceuticals, water, polymers, metals and viscous liquids in various industrial, consumer goods and healthcare products. Operations of the recently acquired Wyatt business are part of the Waters operating segment.
On February 9, 2026, the Company completed the acquisition of the BDS Business. The transaction was structured as a Reverse Morris Trust transaction, where the BDS Business was spun off to BD shareholders and simultaneously merged with a wholly-owned subsidiary of the Company. The 2025 financial results of the BDS Business are not included in the Company’s 2025 consolidated financial results presented herein.
Tariffs
The Company sells and services its customers in over 35 countries outside of the U.S. and we have manufacturing operations in the U.S., Ireland, U.K. and in Singapore where we utilize subcontractors with worldwide capabilities. In 2025, the U.S. government issued varying levels of tariffs on all imported goods into the U.S., including a baseline 10% tariff, subject to certain exceptions, which have also prompted retaliatory tariffs by a number of countries, including tariffs and export restrictions on certain manufacturing components imposed by China and tariffs pursuant to trade agreements the U.S. has entered into with certain countries. In addition, a number of new tariffs have been threatened, and the U.S. and other countries continue to negotiate trade arrangements and tariff levels. In August 2025, the U.S. Court of Appeals for the Federal Circuit ruled against certain of the U.S. tariffs that have been implemented. On February 20, 2026, the U.S. Supreme Court rendered a decision invalidating tariffs imposed under the International Emergency Economic Powers Act. This decision introduces uncertainty regarding potential refund processes and future trade policy actions and could affect the Company’s cost structure and supply chain planning. The Company continues to monitor developments around the Supreme Court’s decision and evaluate its potential impact on the Company’s future financial results and business.
These tariffs, any resulting retaliatory tariffs and any related supply-chain disruptions could have a significant impact on the Company’s consolidated statement of operations and statement of cash flows. In response to currently applicable and potential future tariffs, the Company is continuing to evaluate and implement a series of actions and policies that are intended to offset a portion of the impact of the tariffs on the Company’s financial position and results of operations. While the Company believes that these actions and policies will mitigate a substantial portion of the impact of the tariffs, the Company cannot provide any assurances that the tariffs or any resulting impediments to trade will not have a material effect on the Company’s consolidated statement of operations and statement of cash flows.
In addition to changes in trade policy, the new U.S. administration has implemented a number of other regulatory, policy and personnel changes, including the elimination, downsizing and reduced funding of certain government agencies and programs and the cancellation or delay of government contracts and research grants. In addition, the administration has changed the composition of and guidance from advisory panels on healthcare practices.
Wyatt Acquisition
On May 16, 2023, the Company completed the acquisition of Wyatt Technology, LLC and its three operating subsidiaries, Wyatt Technology Europe GmbH, Wyatt Technology France and Wyatt Technology UK Ltd. (collectively, “Wyatt”), for a total purchase price of $1.3 billion in cash. Wyatt is a pioneer in innovative light scattering and field-flow fractionation instruments, software, accessories and services. The acquisition has expanded Waters’ portfolio and increased our exposure to large molecule applications. The Company financed this transaction with a combination of cash on its balance sheet and borrowings under its revolving credit facility. The Company’s financial results for the year ended December 31, 2024 include the financial results of Wyatt for the full year, while the financial results for the year ended December 31, 2023 only included seven-and-a-half months of Wyatt’s financial results as the closing of the acquisition occurred during the second quarter of 2023.
The Company’s net sales wereincreased 7% in 2025 following a flat performance in 2024 as comparedrelative to 20232023. andThe decreased 1% in 2023 as compared to 2022 as the Company’snet sales growth in 2025 reflected strong customer demand for the Waters Division products and services across most major geographiesgeographies, wasend offsetmarkets and product lines. By contrast, 2024 sales were impacted by athe 10% and a 22% reduction in sales in China, respectively. The decline in China sales weredue primarily driven byto lower demand for our instrument systems and chemistry products as a result of increased government regulations and lower spending by our customers due to macroeconomic conditions. ExcludingForeign China,currency thetranslation Company’shad a minimal impact on sales growth increasedin 2%2025 and 5% in 2024 and 2023, respectively. Foreign currency translation decreased sales growth by 1% in both 2024 and 2023. Wyatt sales increased the Company’s sales growth by 1% and 3% in 2024 and 2023, respectively.2024.
Instrument system sales increased 5% in 2025 as compared to 2024 reflecting broad-based customer demand across most global regions. Instrument system sales declined 6% in 2024, primarily due to softer demand across most geographies and a 15% decrease in China instrument sales. Foreign currency translation had minimal impact on instrument system sales performance in both 2025 and 2024.
Instrument system sales decreased 6% in 2024 as compared to 2023 and 7% in 2023 as compared to 2022 as a result of weaker customer demand in most geographies, driven primarily by the 15% and 30% decline in our China instrument sales, respectively. Excluding China, the Company’s instrument system sales declined 4% in 2024 and grew 1% in 2023. Wyatt’s instrument system sales added 2% and 4% to the Company’s instrument system sales growth in 2024 and 2023, respectively.
Recurring revenues (combined sales of precision chemistry consumables and services) increased 8% and 5% in 2025 and 2024, respectively. Service revenues increased 7% and 6% in 20242025 and 2023,2024, respectively. Chemistry sales growth increased 12% and 4% in 2025 and 2024, respectively. The double-digit chemistry sales growth can be attributed to the uptake in columns and application-specific testing kits to pharmaceutical customers. Foreign currency translation decreasedhad a minimal impact on recurring revenues sales growth in 2025 and decreased sales growth by 1% in both 2024 and 2023.2024.
Operating income of $803 million in 2025, decreased $23 million from the operating income of $826 million in 2024 primarily due to the impact of the higher sales volume, which was offset by the change in sales mix, the impact of merit increases on the Company’s annual payroll in 2025 and approximately $82 million of transaction, integration and other internal costs associated with the BDS Business Acquisition. In addition, operating income for 2025 included the impact of $20 million of expenses associated with the Company’s new ERP system implementation. The effect of foreign currency translation had minimal impact on operating income in 2025.
Operating income wasof $826 million in 2024,2024 upincreased $8 million from operating income of $818 million in 2023 asprimarily thedue to cost savings from recent workforce reductions and the absence of the $26 million in severance costs associated with the workforce reduction incurred in 20232023, which were offset by higher annual incentive compensation, a full year of amortization associated with the Wyatt acquisition and the impact of merit increases on the Company’s annual payroll in 2024. In addition, the negative effect of foreign currency translation lowered operating income by approximately $43 million.million during 2024.
Operating income of $818 million in 2023 declined $55 million from the operating income of $873 million in 2022 as a result of the $26 million severance costs associated with the workforce reductions and the additional expenses associated with the Wyatt acquisition relating to purchased intangible amortization of $27 million, retention agreement costs of $19 million and due diligence costs of $13 million. These costs were partially offset by the cost savings from the workforce reductions and lower electronic components costs and freight costs. In addition, the negative effect of foreign currency translation lowered operating income by approximately $23 million during 2023.
In 2025, the Company’s interest expense included approximately $16 million of financing costs incurred by the Company on behalf of SpinCo in connection with financing activities related to the BDS Business Acquisition.
The Company generated $762$653 million, $603$762 million and $612$603 million of net cash flow from operating activities in 2024,2025, 20232024 and 2022,2023, respectively. The decrease in cash flows from operating activities in 2025 was driven by $24 million in additional tax payments associated with the final 2018 Tax Reform Transition payment, $52 million of costs related to the implementation of the Company’s new ERP system and $29 million of payments made in connection with transaction and integration costs associated with the BDS Business Acquisition. The increase in cash flows from operating activities in 2024 was driven by lower annual incentive bonus payments and an improvement in working capital in the current year. The decrease in 2023 operating cash flow was primarily a result of lower sales volumes, higher income tax payments and higher incentive compensation payments in 2023 as compared to 2022.2023.
Net cash used in investing activities included capital expenditures related to property, plant, equipment and software capitalization of $113 million, $142 million,million and $161 million in 2025, 2024 and $1762023, millionrespectively. Net cash used in 2024,investing 2023activities andin 2022,2025 respectively.also included the payment related to the acquisition of Halo Labs. The decline in investing activities in 2025 and 2024 iswas primarily due to the completion of the Company’s new manufacturing facilities. In addition,2023, net cash used in investing activities in 2023 included $1.3 billion forassociated with the Wyatt acquisition.
On May 22, 2025, the Company and certain of its subsidiaries, as guarantors, entered into an Amendment and Restatement Agreement in respect of that certain Amended and Restated Credit Agreement, dated as of September 17, 2021 and amended as of March 3, 2023, with the lenders and issuing banks party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, pursuant to which the Company, among other things, reduced the aggregate total borrowing capacity of its existing senior unsecured revolving credit facility (the “Credit Facility”) by up to $200 million for an aggregate principal amount of up to $1.8 billion. The Credit Facility will mature on May 22, 2030 subject to the Company’s ability to request, subject to customary conditions, a one-year extension to which each lender may, in its discretion, agree.
In connection with the BDS Business Acquisition, on January 8, 2026, SpinCo entered into a Term Loan Credit Agreement with the lenders named therein, Barclays Bank PLC, as administrative agent (the “Agent”), and the other parties party thereto (the “SpinCo Credit Agreement”). On February 6, 2026 (the “Funding Date”), SpinCo borrowed $4.0 billion of unsecured term loans under the SpinCo Credit Agreement, consisting of a $3.5 billion tranche which will mature and be payable in full 364 days after the Funding Date (“Tranche A”) and a $500 million tranche which will mature and be payable in full on the second anniversary of the Funding Date (“Tranche B”), and such funds were used by SpinCo on the Funding Date to finance the SpinCo Cash Distribution. Upon consummation of the BDS Business Acquisition, all of this indebtedness was assumed by Waters. Tranche A is expected to be refinanced with long-term bond financing, while Tranche B is expected to be repaid prior to maturity.
In July 2024, the Company entered into a private Master Note Facility Agreement (the “Shelf Agreement”) with NYL Investors LLC (“NYL”) pursuant to which the Company may, at its option, authorize the issuance and sale of senior promissory notes (the “Shelf Notes”) up to an aggregate principal amount of $200 million. The purchase of any Shelf Notes is in the sole discretion of NYL. Any Shelf Notes sold or issued pursuant to the Shelf Agreement will mature no more than 15 years after the issuance date and will bear interest on the unpaid balance from the issuance date at the rates specified in the Shelf Agreement.
In 2025, sales growth increased by 7% as compared to 2024. Sales growth was flat in 2024 as compared to 2023. Geographically, the 2025 sales increase was broad based across most major regions and led by the sales growth in China and Europe which both grew 10%. In 2024, China sales decreased 10% and Europe’s sales increased 4%. Sales in the U.S. increased 3% in 2025 and 1% in 2024, while sales in Asia Other increased 5% and 1% in 2025 and 2024, respectively. Foreign currency translation had a minimal overall impact on 2025 sales growth as the 6% favorable currency impact on Europe sales was offset by a 5% unfavorable impact on Asia sales. Foreign currency translation decreased sales growth by 1% in 2024.
In 2024, sales growth was flat as compared to 2023 and sales declined by 1% in 2023 as compared to 2022. During these periods, the Company’s sales in most geographies grew positively, except in China and Japan. The sales growth outside of China was led by India where sales increased 15% and 2% in 2024 and 2023, respectively. China’s sales declined by 10% and 22% in 2024 and 2023, respectively, and were primarily driven by lower demand for our instrument systems and chemistry products resulting from increased government regulations and lower spending by our customers due to macroeconomic conditions. Excluding China, the Company’s sales increased 2% and 5% in 2024 and 2023, respectively. Foreign currency translation decreased sales growth by 1% in both 2024 and 2023. Wyatt sales increased the Company’s sales growth by 1% and 3% in 2024 and 2023, respectively, and added 3% to the U.S. sales.
In 2023, sales increased 5% in the U.S. and 7% in Europe, while decreasing 11% in Asia, with the effect of foreign currency translation increasing sales growth in Europe by 2% and decreasing sales growth in Asia by 4%, which includes a 9% decrease in sales in Japan resulting from foreign currency translation. Wyatt’s sales contributed 5% and 3% of sales growth to the U.S. and Europe in 2023, respectively.
In 2024, sales to pharmaceutical customers increased 1% as compared to 2023 as the 18% increase in India’s sales was offset by the 11% decline in China’s sales. Combined sales to industrial customers, which include material characterization, food, environmental and fine chemical markets, were flat in 2024 as the 7% sales growth in the U.S. was primarily offset by a 9% decline in China’s sales. Combined sales to academic and government customers decreased 6% in 2024 as sales declined in most major geographies, except for Europe and India where sales grew 1% and 27%, respectively. Sales to our academic and government customers are highly dependent on when institutions receive funding to purchase our instrument systems and, as such, sales can vary significantly from period to period.
In 2023,2025, sales to pharmaceutical customers decreasedincreased 3%,9% primarilyas compared to 2024, driven by weaknesssales growth in customermost demandregions. in China, with foreignForeign currency translation decreasinghad a minimal impact on pharmaceutical sales growth byin 1% and Wyatt sales contributing 3% to the Company’s pharmaceutical sales growth.2025. Combined sales to industrial customers, which include material characterization, food, environmental and fine chemical markets, wereincreased flat6% in 2023,2025, withprimarily foreigndriven by the broad-based sales growth in most regions except for the U.S., where industrial sales declined by 5% on lower demand for TA instrument systems. Foreign currency translation decreasinghad a minimal impact on industrial sales growthin by 1% and Wyatt contributing 1% to industrial sales growth.2025. Combined sales to academic and government customers increasedwere 13%flat in 2023,2025, withas foreignsales growth in the Americas and China was offset by declines in Asia Other. Foreign currency translation decreasingin 2025 increased academic and government sales growth by 1% and Wyatt sales contributing 4% to academic and government sales growth.1%.
In 2024, sales to pharmaceutical customers increased 1% as compared to 2023, as the 18% increase in India’s sales was offset by the 11% decline in China’s sales. Combined sales to industrial customers, which include material characterization, food, environmental and fine chemical markets, were flat in 2024 as the 7% sales growth in the U.S. was primarily offset by a 9% decline in China’s sales. Combined sales to academic and government customers decreased 6% in 2024, as sales declined in most major geographies, except in Europe and India, where sales grew 1% and 27%, respectively. Sales to our academic and government customers are highly dependent on when institutions receive funding to purchase our instrument systems and, as such, sales can vary significantly from period to period.
Waters products and service sales were flat and decreased by 1% in 2024 and 2023, respectively, with the effect of foreign currency translation decreasing Waters sales growth by 1% in both 2024 and 2023. Wyatt sales increased Waters products and service sales by approximately 1% in 2024. Waters instrument system sales (LC and MS technology-based) decreased 7% in 2024, primarily driven by weaker customer demand in China where Waters instrument sales declined 12%. Excluding China, the Company’s instrument system sales decreased 4% as compared to 2023. In addition, Wyatt’s instrument system sales contributed 3% to Waters instrument system sales growth in 2024. Waters chemistry consumables sales growth was due to the continued demand in most major geographies driven by the uptake in columns and application-specific testing kits to pharmaceutical customers, partially offset by weaker demand in China and the negative impact from foreign currency translation, which decreased chemistry sales growth by 1% in 2024.
Waters service sales increased 6% in 2024 due to higher service demand billing, partially offset by the negative impact from foreign currency translation, which decreased service sales growth by 1% in 2024. Wyatt service revenues added 1% to Waters service revenue growth in 2024.
In 2023, Waters products and service sales decreasedincreased 1%8% and were flat in 2025 and 2024, respectively, with the effect of foreign currency translation decreasinghaving a minimal impact on Waters sales growth in 2025 and decreasing sales growth by 1% in 2023. Wyatt products and service sales increased Waters products and service sales by approximately 3% in 2023.2024.
Waters instrument system sales (LC and MS technology-based) increased 7% in 2025, primarily driven by higher customer demand for our instrument systems. The effect of foreign currency translation had a minimal impact on sales growth for 2025.
Waters chemistry consumables’ double-digit sales growth was due to the continued demand in most major geographies driven by the uptake in columns and application-specific testing kits to pharmaceutical customers. Foreign currency had a minimal impact on chemistry sales growth in 2025.
Waters service sales increased 7% in 2025 due to higher service demand billing in most major regions, which was minimally impacted by foreign currency translation in 2025.
In 2024, Waters products and service sales were flat, with the effect of foreign currency translation decreasing Waters sales growth by 1%.
Waters instrument system sales (LC and MS technology-based) decreased 8%7% in 2023,2024, primarily driven by weaker customer demand in China.China where Waters instrument sales declined 12%. Excluding China, the Company’s instrument system sales weredecreased flat4% as compared to 2022.2023. In addition, Wyatt’s instrument system sales contributed 5%3% to Waters instrument system sales growth in 2023.2024. Waters chemistry consumables sales were significantly impacted by the lower customer demand in China for our products. Excluding China, the Company’s chemistry sales grew 7% in 2023. This sales growth was primarily due to the continued strong demand in most major geographies,geographies driven by the uptake in columns and application-specific testing kits to pharmaceutical customers, partially offset by weaker demand in China and the negative impact from foreign currency translation, which decreased chemistry sales growth by 1% in 2023.2024. Waters service sales increased 7%6% in 20232024 due to higher service demand billing, partially offset by the negative impact from foreign currency translation, which decreased service sales growth by 1% in 2023.2024. Wyatt service revenues added 2%1% to Waters service revenue growth in 2023.2024.
TA instrument system and service sales growth decreased 1% in 2025 and was flat and grew 3% in 2024 and 2023, respectively.2024. Foreign currency translation decreased sales growth by 1% and had a minimal impact on sales growth in 2023.2025 and decreased sales growth by 1% in 2024. In 2025, double-digit sales growth in Asia, which was offset by weakness in the U.S., was primarily driven by strong customer demand for our thermal analysis and rheology instrument systems and services. In 2024, sales growth was broad-based across most major geographies, partially offset by weakness in China. The growth outside of China was primarily driven by strong customer demand for our thermal analysis instruments and services.
In 2025, cost of sales increased 7% as compared to 2024, primarily due to higher sales volume. In 2024, cost of sales were flat as compared to 2023, primarily due to the change in sales mix and the impact of foreign exchange.
Cost of sales were flat in 2024 as compared to 2023, primarily due to the change in sales mix and the impact of foreign exchange. In 2023, cost of sales decreased 4% as compared to 2022, primarily due to the change in sales mix and the lower material and freight costs.
Cost of sales is affected by many factors, including, but not limited to, foreign currency translation, product mix, product costs of instrument systems and amortization of software platforms. At current foreign currency exchange rates, the Company expects foreign currency translation to be negativeneutral to gross profit during 2025.2026.
Selling and administrative expenses increased 20% and decreased 6% in 2025 and 2024, respectively. The increase in 2025 is primarily due to an increase in costs associated with merit compensation to the Company’s employees as well as $81 million of transaction, integration and other internal costs associated with the BDS Business Acquisition. In addition, selling and administrative expenses for 2025 included $20 million of expenses associated with the Company’s new ERP system implementation.
SellingThe and administrative expenses decreased 6% and increased 12%decrease in 2024 andis 2023,primarily respectively,driven as theby cost savings from the recent workforce reductions and the absence of costs incurred in the prior year relating to severance charges in connection with the 2023 workforce reduction and the Wyatt acquisition-related due diligence costs which were partially offset by an increase in annual incentive compensation expenses.
The increase in 2023 is primarily driven by severance-related costs in connection with a reduction in workforce, which increased expenses by 4%; the Wyatt acquisition due diligence and integration costs, which increased expenses by 2%; and the Wyatt acquisition-related retention expense, which increased expenses by 3%. These increases were partially offset by lower incentive compensation costs. The increase in selling and administrative expenses in 2023 as compared to 2022 can be attributed to higher salary merit and variable incentive compensation costs due to an increase in the number of employees. The effect of foreign currency translation had minimal impact on selling and administrative expenses in 2024 and 2023.
Research and development expenses increased 5%7% and decreased 1%5% in 20242025 and 2023,2024, respectively. The increase in research and development expenses in 20242025 can be attributed to increases from costs associated with merit compensation to the Company’s employees and costs associated with new products and the development of new technology initiatives, being partially offset by lower incentive compensation costs.initiatives. The impact of foreign currency exchange decreased expenses by 1% and increased expenses by 3% and decreased expenses by 1% in 20242025 and 2023,2024, respectively.
Purchased intangibles amortization increased 1% in 2025. The increase in purchased intangible amortization of $15 million and $26 million in 2024 and 2023, respectively, can be attributed to the timing of the Wyatt acquisition in May of 2023 as 2024 includes a full year of the amortization from the Wyatt acquisition intangible assets.
The Company recorded $12 million of patent litigation settlement provisions and related costs in 2024. No litigation provisions were recorded by the Company in 2025.
The Company incurred $12 million of litigation provisions of 2024, primarily related to a patent litigation settlement.
Acquired In-Process Research & Development
In 2022, the Company completed an asset acquisition in which the CDMS technology assets of Megadalton were acquired for approximately $10 million in total purchase price, of which $5 million was paid at closing and the remaining $4 million will be paid in the future at various dates through 2029.
Other (Expense) Income, net
In 2022, the Company sold an equity investment for $10 million in cash and recorded a gain on the sale of approximately $7 million in other income, net on the statement of operations. The Company also incurred $6 million in losses on an equity investment in 2022 within other income, net on the statement of operations.
Interest expense, net in 2025 decreased $21 million as compared to 2024, primarily as a result of lower average outstanding debt as compared to 2024. The average outstanding debt in these periods was impacted by the timing of the repayment of outstanding debt associated with the Wyatt acquisition. Additionally, $16 million of costs were incurred by the Company on behalf of SpinCo in connection with financing fees associated with financing activities related to the BDS Business Acquisition.
NetInterest interestexpense, expensenet in 2024 decreased $10 million as compared to 2023 due to the average outstanding debt in these periods being impacted by the timing of the borrowings to fund the Wyatt acquisition, which closed in May 2023, as well as the timing of the repayment of $1 billion of debt since the completion of the Wyatt acquisition.
Net interest expense in 2023 increased $44 million as compared to 2022 due to the additional borrowings by the Company to fund the Wyatt acquisition in 2023.
The four principal jurisdictions in which the Company manufactures are the U.S., Ireland, the U.K. and Singapore, where the statutory tax rates were 21%, 12.5%, 25% and 17%, respectively, as of December 31, 2024.2025. The Company has a new Development and Expansion Incentive in Singapore that provides a concessionary income tax rate of 5% on certain types of income for the period April 1, 2021 through March 31, 2026. Prior to April 1, 2021, the Company had a tax exemption on income arising from qualifying activities in Singapore based upon the achievement of certain contractual milestones, which the Company met as of December 31, 2020 and maintained through March 2021. The effect of applying the concessionary income tax rates rather than the statutory tax rate to income arising from qualifying activities in Singapore increased the Company’s net income by $14$4 million, $16$14 million and $20$16 million, and increased the Company’s net income per diluted share by $0.24,$0.06, $0.27$0.24 and $0.33$0.27 for the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively. The Singapore 2025 benefit of $4 million and $0.06 per diluted share is reduced by $14 million and $0.24 per diluted share due to the global minimum tax under Pillar Two, respectively.
The 2025 effective tax rate differed from the 21% U.S. statutory tax rate primarily due to the jurisdictional mix of earnings, a discrete benefit of $14 million related to the enactment of OBBBA, a $3 million provision related to the GILTI tax and a tax benefit of $3 million on stock-based compensation.
The 2022 effective tax rate differed from the 21% U.S. statutory tax rate primarily due to the jurisdictional mix of earnings, an $18 million provision related to the GILTI tax and a tax benefit of $7 million on stock-based compensation.
Effective starting in 2024, various foreign jurisdictions are beginningbegan to implement aspects of the guidance issued by the Organization for Economic Co-operation and Development (“OECD”) related to the new Pillar Two system of global minimum tax rules. These changes in tax law did not have a material impact on the Company’s financial position, resultsresult of operations and cash flows in 2024.2025. AsThe ofOECD theissued dateadditional ofguidance thisin AnnualJanuary Report,2026 the Company does not anticipate thaton the Pillar Two system of global minimum tax rulesrules, willand havethe aCompany materialis impact onassessing future periods.impact.
On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act, (“OBBBA”), enacting changes to the United States federal tax code, including adjustments to effective tax rates on certain types of income and certain deduction limitations. The OBBBA did not have a material impact on the Company’s financial position, results of operations and cash flows for the year ended December 31, 2025. The Company will continue to monitor the impact of this Act in future periods.
Net cash provided by operating activities was $653 million, $762 million,million and $603 million and $612 million in 2024,2025, 20232024 and 2022,2023, respectively. The increasedecrease in 20242025 operating cash flow was primarily a result of lowerhigher inventorynet levels,income partiallybeing offset by lower$24 netmillion income.in additional tax payments associated with the final 2018 Tax Reform Transition payment as compared to the prior year, $52 million of costs related to the implementation of the Company’s new ERP system, and $29 million of payments made in connection with transaction and integration costs associated with the BDS Business Acquisition. The changes within net cash provided by operating activities include the following significant changes in the sources and uses of net cash provided by operating activities, in addition to the changes in net income:
Net cash used in investing activities totaled $144$152 million, $143 million and $1.4 billion and $108 million in 2024,2025, 20232024 and 2022,2023, respectively. Additions to fixed assets and capitalized software were $113 million, $142 million,million and $161 million and $176 million in 2024,2025, 20232024 and 2022,2023, respectively. The cash flows from investing activities in 2023 and 2022 include $16 million and $32 million, respectively, of capital expenditures related to the major expansion of the Company’s precision chemistry consumable operations in the United States.
What changed in the latest 10-Q
Risk Factors
Information regarding risk factors of the Company is set forth under the heading “Risk Factors” under Part I, Item 1A in the Company’s Annual Report on Form
for the year ended December 31, 2025, as filed with the SEC on February 23, 2026. The Company reviewed its risk factors as of July 4, 2026 and determined that there were no material changes from the ones set forth in the Annual Report on Form
10-K.
Note, however, the discussion of certain factors under the subheading “Special Note Regarding Forward-Looking Statements” in Part I, Item 2 of this Quarterly Report on Form
10-Q.
These risks are not the only ones facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial may have a material adverse effect on the Company’s business, financial condition and operating results.
Full comparison: every changed paragraph (1)
Information regarding risk factors of the Company is set forth under the heading “Risk Factors” under Part I, Item 1A in the Company’s Annual Report on Form for the year ended December 31, 2025, as filed with the SEC on February 23, 2026. The Company reviewed its risk factors as of AprilJuly 4, 2026 and determined that there were no material changes from the ones set forth in the Annual Report on Form 10-K.
Management's Discussion & Analysis (MD&A)
New heading “Restructuring Charges”
Removed heading “Analytical & Materials Sciences”
Removed heading “Advanced Diagnostics”
Largest changes
“In the second quarter and first half of 2026, the Company implemented a reduction in workforce that impacted approximately 3% of the Company’s employees. As a result, the Company incurred approximately $49 million and $52 million of severance-related costs for the second quarter and first half of 2026, respectively. During these periods, the Company paid $21 million and $23 million of severance-related costs in connection with the workforce reduction for the second quarter and first half of 2026, respectively. The accrued restructuring expense was approximately $29 million at July 4, 2026. …”see in full comparison
Operating loss wassee in full comparison$47$86 millioninand $134 million for the second quarter and firstquarterhalf of 2026, respectively, a decrease of$198$274 million and $474 million as compared to$151$188 million and $340 million of operating income in thefirstsecond quarter and first half of2025.2025,Therespectively.decreaseThesewasdecreases were primarily due to the impact of the higher sales volume from the legacy business and the BDS Business revenue since the Closing Date, being offset by$99$253 million of acquisition-related inventory and fixed asset fair value step-up expense in the first half of 2026 and$140$232 million and $372 million of purchased intangibles amortization related to the BDSBusiness.Business in the second quarter and first half of 2026, respectively. In addition, the second quarter and firstquarterhalf of 2026 operatinglosslosseswaswere impacted by$83$39 million and $121 million, respectively, of transaction, integration and other internal costs associated with the BDS BusinessAcquisitionAcquisition, $49 million andthe$52 million, respectively, of severance-related costs associated with a workforce reduction and $9 million and $18 million, respectively, of expenses associated with the Company’s new ERP system implementation.
In 2025, the U.S. government issued varying levels of tariffs on all imported goods into the U.S., including a baseline 10% tariff, subject to certain exceptions, which have also prompted retaliatory tariffs by a number of countries, including tariffs and export restrictions on certain manufacturing components imposed by China and tariffs pursuant to trade agreements the U.S. has entered into with certain countries. In addition, a number of new tariffs have been threatened, and the U.S. and other countries continue to negotiate trade arrangements and tariff levels. On February 20, 2026, the U.S. Supreme Court rendered a decision invalidating tariffs imposed under the International Emergency Economic Powerssee in full comparisonAct.Act (“IEEPA”). On March 4, 2026, the U.S. Court of International Trade ordered the U.S. Customs and Border Protection (“CBP”) to process refunds of the IEEPA tariffs, and the CBP has begun accepting and processing applications for refunds on certain IEEPA tariffs. This decision introduces uncertainty regarding potential refund processes and future trade policy actions and could affect the Company’s cost structure and supply chain planning. As a result of this ruling, the Company may be eligible for a refund of tariffs previously paid on imported goods. As the recoverability and timing of any such refund remains uncertain, the Company has not recognized any material amounts as ofAprilJuly 4, 2026. In response to the U.S. Supreme Court ruling mentioned above, the U.S. government implemented new tariffs under alternative statutory authority. The Company continues to monitor developments around the Supreme Court’s decision and evaluate its potential impact on the Company’s future financial results and business.
Full comparison: every changed paragraph (56)
The Company has four operating segments: Analytical Sciences, Biosciences, Advanced Diagnostics, and Materials Sciences. Analytical Sciences products and services primarily consist of high-performance liquid chromatography (“HPLC”), ultra-performance liquid chromatography (“UPLCTMUPLC” and, together with HPLC, referred to as “LC”), mass spectrometry (“MS”), light scattering and field-flow fractionation instruments (Wyatt), and precision chemistry consumable products and related services. Materials Sciences products and services primarily consist of thermal analysis, rheometry and calorimetry instrument systems and service revenue. Biosciences products and services primarily consist of instruments, software and informatics, reagents, and single cell multiomics solutions, supporting the advanced analysis of cell populations for use in fields such as immunology, oncology, and infectious disease research. Advanced Diagnostics products and services primarily consist of a broad range of diagnostic instrumentation, assays, consumables, automation, and informatics that support the detection, identification and drug susceptibility testing of infectious disease organisms.
Acquisition of BD Biosciences &and Diagnostic Solutions Businesses
In 2025, the U.S. government issued varying levels of tariffs on all imported goods into the U.S., including a baseline 10% tariff, subject to certain exceptions, which have also prompted retaliatory tariffs by a number of countries, including tariffs and export restrictions on certain manufacturing components imposed by China and tariffs pursuant to trade agreements the U.S. has entered into with certain countries. In addition, a number of new tariffs have been threatened, and the U.S. and other countries continue to negotiate trade arrangements and tariff levels. On February 20, 2026, the U.S. Supreme Court rendered a decision invalidating tariffs imposed under the International Emergency Economic Powers Act.Act (“IEEPA”). On March 4, 2026, the U.S. Court of International Trade ordered the U.S. Customs and Border Protection (“CBP”) to process refunds of the IEEPA tariffs, and the CBP has begun accepting and processing applications for refunds on certain IEEPA tariffs. This decision introduces uncertainty regarding potential refund processes and future trade policy actions and could affect the Company’s cost structure and supply chain planning. As a result of this ruling, the Company may be eligible for a refund of tariffs previously paid on imported goods. As the recoverability and timing of any such refund remains uncertain, the Company has not recognized any material amounts as of AprilJuly 4, 2026. In response to the U.S. Supreme Court ruling mentioned above, the U.S. government implemented new tariffs under alternative statutory authority. The Company continues to monitor developments around the Supreme Court’s decision and evaluate its potential impact on the Company’s future financial results and business.
The Company’s operating results are as follows for the three and six months ended AprilJuly 4, 2026 and MarchJune 29,28, 2025 (dollars in millions, except per share data):
Due to the acquisition of the BDS Business on February 9, 2026, period over period comparability of the Company’s financial results has been materially impacted. In addition, the Company’s first quarter 2026 results include the BDS Business’s financial results only from the Closing Date through the end of the period, further affecting comparability with prior periods and in the future.
Revenue
The Company’s revenue increased 91%113% in the firstsecond quarter of 2026, as compared to the second quarter of 2025 and 103% for the first quarterhalf of 2026 as compared to the first half of 2025, primarily driven by $520$817 million and $1.3 billion of revenue contributed by the BDS Business for the second quarter and since the Closing Date.Date for the first half of 2026, respectively. Excluding the BDS Business revenue, legacy revenue increased 13%,7% and 10% in the second quarter and first half of 2026, respectively, primarily due to broad-based growth across all product lines and geographical regions. Foreign currency translation increaseddecreased total revenue growth by 2%.2% for the second quarter of 2026 and had a minimal impact on total revenue growth for the first half of 2026. In addition, the first quarterhalf of 2026 had six more calendar days compared to the first quarterhalf of 2025.
Instrument system revenue increased 43% in the first quarter of 2026 primarily driven by the $96 million in instrument revenue contributed by the BDS Business. Excluding the impact of the BDS Business instrument revenue, legacy instrument revenue increased 7%. This revenue growth was primarily driven by higher customer demand for our LC & MS instrument systems across most major regions. Foreign currency translation increased instrument system revenue growth by 1% in the first quarter of 2026.
Recurring revenues (combined revenues of consumables and services) increased 123% in the first quarter of 2026, primarily driven by $424 million of revenue contributed by the BDS Business since the Closing Date. Excluding the BDS Business revenue, legacy recurring revenues increased 17%, primarily due to broad-based growth across all geographical regions. Foreign currency translation increased recurring revenue growth by 3%. Chemistry consumable revenue increased 17% in the first quarter of 2026. The double-digit chemistry growth can be attributed to the uptake in columns and application-specific testing kits to pharmaceutical customers. Foreign currency translation added 3% to chemistry revenue growth in 2026. In addition, the recurring revenues growth was also positively impacted by the six additional calendar days in the first quarter of 2026.
Cost of SalesRevenue
The cost of salesrevenue in the second quarter and first quarterhalf of 2026 increased 145%184% and 166%, respectively, as compared to the first quarter of 2025. This increase is primarily attributed to the $361$560 million for the second quarter and $921 million for the first half of 2026 of cost of salesrevenue from the BDS Business since the Closing Date as well as the increase in legacy business sales volume. In the first quarter of 2026,The cost of salesrevenue in the second quarter and first half of 2026 included $99$154 million and $253 million, respectively, of fair value inventory and fixed asset step-up expense recognized as a result of the BDS Business Acquisition.
Cost of salesrevenue is affected by many factors, including, but not limited to, foreign currency translation, product mix, product costs of instrument systems and amortization of software platforms. At current foreign currency exchange rates, the Company expects foreign currency translation to be neutral to gross profit during 2026.
Selling and administrative expenses increased 121%105% and 111% in the firstsecond quarter and first half of 20262026, respectively, as compared to the first quarter of 2025. The BDS Business increased selling and administrative expenses by $99$125 million and $224 million in the firstsecond quarter and first half of 20262026, respectively, since the Closing Date. The remaining increase in selling and administrative expenses is primarily due to an increase in costs associated with merit compensation for the Company’s employees as well as $82$37 million and $119 million of transaction, integration and other internal costs associated with the BDS Business.Business in the second quarter and first half of 2026, respectively.
Research and development expenses increased 104%149% and 129% in the firstsecond quarter and first half of 20262026, respectively, as compared to the first quarter of 2025. The BDS Business increased research and development expenses by $42$66 million and $108 million in the firstsecond quarter and first half of 20262026, respectively, since the Closing Date. The remaining increase in research and development expenses can be attributed to increases from costs associated with merit compensation to the Company’s employees and costs associated with new products and the development of new technology initiatives. In the second quarter and first quarterhalf of 2026, research and development expenses included $1 million and $2 million, respectively, of transaction, integration and other internal costs associated with the BDS Business.
Purchased intangibles amortization increased $140$232 million and $372 million in the firstsecond quarter and first half of 20262026, respectively, as compared to first quarter of 2025 due to the BDS Business Acquisition.
Restructuring Charges
In the second quarter and first half of 2026, the Company implemented a reduction in workforce that impacted approximately 3% of the Company’s employees. As a result, the Company incurred approximately $49 million and $52 million of severance-related costs for the second quarter and first half of 2026, respectively. During these periods, the Company paid $21 million and $23 million of severance-related costs in connection with the workforce reduction for the second quarter and first half of 2026, respectively. The accrued restructuring expense was approximately $29 million at July 4, 2026. This reduction in workforce will provide the Company with annual salary-related cost savings of approximately $120 million. The salary related cost savings achieved through the end of the second quarter 2026 was $14 million with the cost savings estimated to be approximately $67 million in 2026.
Operating loss was $47$86 million inand $134 million for the second quarter and first quarterhalf of 2026, respectively, a decrease of $198$274 million and $474 million as compared to $151$188 million and $340 million of operating income in the firstsecond quarter and first half of 2025.2025, Therespectively. decreaseThese wasdecreases were primarily due to the impact of the higher sales volume from the legacy business and the BDS Business revenue since the Closing Date, being offset by $99$253 million of acquisition-related inventory and fixed asset fair value step-up expense in the first half of 2026 and $140$232 million and $372 million of purchased intangibles amortization related to the BDS Business.Business in the second quarter and first half of 2026, respectively. In addition, the second quarter and first quarterhalf of 2026 operating losslosses waswere impacted by $83$39 million and $121 million, respectively, of transaction, integration and other internal costs associated with the BDS Business AcquisitionAcquisition, $49 million and the$52 million, respectively, of severance-related costs associated with a workforce reduction and $9 million and $18 million, respectively, of expenses associated with the Company’s new ERP system implementation.
Interest expense, net, increased $32 million inIn the second quarter and first quarterhalf of 2026, the Company’s interest expense increased $45 million and $80 million, respectively, which can be primarily attributed to the financing costs incurred by the Company related to the funding of the BDS Business Acquisition.
The Company’s effective tax raterates for the threesecond monthsquarter endedand Aprilfirst 4,half of 2026 andwere March 29, 2025 was 18.4%3.5% and 15.1%,9.2%, respectively, compared to 17.2% and 16.2% for the second quarter and first half of 2025, respectively. The change between the effective tax rates can primarily be attributed to the impact of discrete tax benefits, primarily transaction and restructuring costs, in the current period and differences in the proportionate amounts of pre-tax income, due to the BDS Business Acquisition, recognized in jurisdictions with different effective tax rates.
Effective in 2024, various foreign jurisdictions began implementing aspects of the guidance issued by the Organization for Economic Co-operation and Development related to the new Pillar Two system of global minimum tax rules. These changes in tax law did not have a material impact on the Company’s financial position, results of operations and cash flows for the threefirst monthshalf ended April 4,of 2026. The Company continues to monitor the adoption of the Pillar Two rules in additional jurisdictions.
On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill ActAct, (“OBBBA”), enacting changes to the United States federal tax code, including adjustments to effective tax rates on certain types of income and certain deduction limitations. The OBBBA did not have a material impact on the Company’s financial position, results of operations and cash flows for the period ended AprilJuly 4, 2026.
The decline in the net loss per diluted common share to $0.87$1.39 and $2.31 in the firstsecond quarter and first half of 20262026, respectively, as compared to the $2.03$2.47 and $4.50 of net income per diluted common share in the firstsecond quarter and first half of 20252025, respectively, is attributed to the following BDS Business Acquisition-related items: purchase accounting fair value step-up expense, increases in purchased intangibles amortization expense, restructuring charges, increase in interest expense, and various transaction, integration,integration and other internal costs.
Net cash usedprovided inby operating activities was $3$198 million asmillion, compared to net cash provided by operating activities of $260$301 million in the first three monthshalf of 2026 and 2025, respectively. The decline is primarily attributable to the net $140$157 million receivable due from BD, relating to net cash settlement for activity since the Closing Date, and $88$105 million of payments made in connection with transaction and integration costs associated with the BDS Business Acquisition.
Net cash provided by (used in) investing activities included capital expenditures related to property, plant, equipment and software capitalization of $39$87 million in the first quarterhalf of 2026 as compared to the $26$48 million of net cash used in investing activities in the first quarterhalf of 2025. The 2026 investing activities were impacted by the $144 million of cash acquired from the BDS Business Acquisition.
As part of the BDS Business Acquisition, a portion of the total consideration paid was reflected as a deposit asset on the opening balance sheet, which is attributable to the Company’s present right to the future economic benefits of the business in those foreign jurisdictions where legal and beneficial title had not transferred to the Company as of February 9, 2026. Changes in the deposit asset are driven by changes in the underlying assets and liabilities in those foreign jurisdictions, and the cash payments (or cash receipts) resulting from the changes in these assets are classified as investing cash flows. The change in the deposit asset of $51 million in the first half of 2026 is primarily related to the collection of third-party customer receivables that existed as of February 9, 2026.
Geographic revenue information is presented below for the three and six months ended AprilJuly 4, 2026 and MarchJune 29,28, 2025 (dollars in millions):
Geographically, BDS Business revenue for the second quarter and first quarterhalf of 2026 was $105$161 million and $266 million in Asia, $236$387 million and $623 million in the Americas and $179$269 million and $448 million in Europe.Europe, Inrespectively. Foreign currency translation had minimal impact on the firstBDS quarterBusiness ofsince 2026,the excludingClosing Date. Excluding the BDS Business revenue, legacy Waters revenue increased 11%9% and 10% in Asia, 5%8% and 7% in the Americas and 26%5% and 14% in Europe for the second quarter and first half of 2026, respectively, as compared to the second quarter and first quarterhalf of 2025. This revenue growth was broad-based across all major regions, led by China and Europe.the Americas. Foreign currency translation decreased Waters legacy revenue growth by 2% and had a positive overallminimal impact on revenue in the second quarter and first quarterhalf of 2026, growth as the 12% favorable currency impact in Europe was partially offset by a 4% unfavorable impact in Asia revenue.respectively.
Product revenue information is presented below for the three and six months ended AprilJuly 4, 2026 and MarchJune 29,28, 2025 (dollars in millions):
Instrument system revenue increased 47% and 46% in the second quarter and first half of 2026, respectively, primarily driven by the $131 million and $227 million, respectively, in instrument revenue contributed by the BDS Business. Excluding the impact of the BDS Business instrument revenue, legacy instrument revenue increased 5% in both the second quarter and first half of 2026. This revenue growth was primarily driven by higher customer demand for our LC & MS instrument systems across most major regions. Foreign currency translation decreased legacy instrument system revenue growth by 3% in the second quarter of 2026 and 1% for the first half of 2026.
Recurring revenues (combined sales of precision chemistry consumables and services) increased 157% and 141% for the second quarter and first half of 2026, respectively, primarily driven by $686 million and $1.1 billion, respectively, of revenue contributed by the BDS Business since the Closing Date. Excluding the BDS Business revenue, legacy recurring revenues increased 9% and 13%, in the second quarter and first half of 2026, respectively, primarily due to broad-based growth across all geographical regions. Foreign currency translation decreased recurring revenues growth by 1% and increased by 1% for the second quarter and first half of 2026, respectively. Excluding the BDS Business revenue, chemistry consumable revenue increased 10% and 13% for the second quarter and first half of 2026, respectively. The double-digit chemistry growth can be attributed to the uptake in columns and application-specific testing kits to pharmaceutical customers. Foreign currency translation decreased 2% and had minimal impact on chemistry consumable revenue growth in the second quarter and first half of 2026, respectively. In addition, the recurring revenues growth was positively impacted by the six additional calendar days in the first half of 2026.
Revenues by segment were as follows for the three and six months ended AprilJuly 4, 2026 and MarchJune 29,28, 2025 (dollars in millions):
Segment operating (loss) income were as follows for the three and six months ended AprilJuly 4, 2026 and MarchJune 29,28, 2025 (dollars in millions):
Analytical & Materials Sciences
Analytical Sciences products and service revenue increased 13%7% and 10% in the second quarter and first quarterhalf of 2026, with the effect of foreign currency translation increasingdecreasing sales growth by 2%.2% and having a minimal impact, respectively. Instrument system revenue (primarily LC and MS technology-based) increased 8%5% and 6% in the second quarter and first quarterhalf of 2026, respectively, primarily driven by higher customer demand for our Acquity and Xevo TQ-S instrument systems.
Analytical Sciences consumables’ double-digit revenue growthgrew wasdouble-digits due to the continued demand across all major geographies driven by the uptake in columns and application-specific testing kits to pharmaceutical customers. Foreign currency increaseddecreased chemistry revenue growth by 3%2% and had a minimal impact in 2026.the second quarter and first half of 2026, respectively. Service revenue growth increased 17%8% and 12% in 2026the second quarter and first half of 2026, respectively, due to higher service demand billing in most major regions. Foreign currency translation increaseddecreased sales growth by 3%1% and increased service sales growth by 1% in the firstsecond quarter and first half of 2026.2026, respectively.
Materials Sciences revenue increased 6% in both the second quarter and first quarterhalf of 2026, which was primarily driven by customer demand for our thermal analysis and rheology instrument systems and services. Foreign currency translation increaseddecreased revenue growth by 4%2% and increased by 1% in the firstsecond quarter and first half of 2026.2026, respectively.
The Analytical & Materials Sciences segment operating income as a percentage of revenues decreased in the second quarter and first quarterhalf of 2026 as compared to the second quarter and first quarterhalf of 2025 as a result of the higher sales volumes being offset by the impact of foreign currency translation, sales mix, merit compensation costs and additional new product development costs.
The Biosciences revenues of $232$368 million and $600 million in the firstsecond quarter and first half of 20262026, respectively, includes only revenue from the Closing Date through the end of the reporting period. The Biosciences cost of salesrevenue was $147 million and $244 million and operating costs were $97$96 million and $52$148 million, respectively, for the firstsecond quarter and first half of 2026.2026, respectively.
Advanced Diagnostics
The Advanced Diagnostic Solutions revenues of $349$521 million and $870 million in the firstsecond quarter and first half of 20262026, respectively, includes $61$72 million and $53$133 million of total revenue attributed to the Waters Clinical Business in the firstsecond quarter of 2026 and the first quarterhalf of 2025,2026, respectively, which was recast into the Advanced Diagnostics segment. The remaining revenue for 2026 is attributed to BDS Business revenue from the Closing Date through the end of the reporting period.
The Advanced Diagnostics segment operating income as a percentage of revenue in the second quarter and first half of 2026 was 20.1%.22.8% and 21.7%, respectively. Advanced Diagnostics cost of salesrevenue was $279 million and $482 million and operating costs were $203$122 million and $76$198 million, respectively,million for the firstsecond quarter and first half of 2026.2026, respectively.
Net cash used in operating activities was $3 million as compared to $260 million of cash provided by operating activities was $198 million and $301 million during the first quarterhalf of 2026 and 2025, respectively. The decrease in 2026 operating cash flow was primarily caused by the BDS Business Acquisition. This decrease in operating cash flow can be attributed to the $88$105 million of payments made in connection with BDS Business acquisition transaction closing; integration and transformation cost as well as the lower net income, higher accounts receivables balances due to an increase in sales volume and the timing of the BDS Business initial net cash settlement for activity since the Closing Date. The changes within net cash provided by operating activities include the following significant changes in the sources and uses of net cash provided by operating activities, aside from the changes in net income:
Net cash provided by investing activities includedtotaled capital expenditures related to property, plant, equipment and software capitalization of $95$97 million in the first quarterhalf of 2026 as compared to the $26 million of net cash used in investing activities of $85 million in the first quarterhalf of 2025. The 2026 investing activities were impacted by the $144 million of cash acquired from the BDS Business Acquisition.Acquisition and the 2025 investing activities were impacted by the $35 million of cash used to complete the acquisition of Halo Labs. Additions to fixed assets and capitalized software were $39$87 million and $26$48 million in the first three monthshalf of 2026 and 2025, respectively.
As part of the BDS Business Acquisition, a portion of the total consideration paid was reflected as a deposit asset on the opening balance sheet. Changes in the deposit asset are driven by changes in the underlying assets and liabilities in those foreign jurisdictions. The change in the deposit asset of $51 million in the first half of 2026 is primarily related to the collection of third-party customer receivables that existed as of February 9, 2026.
As of AprilJuly 4, 2026, the Company had a total of $5.3$5.1 billion in outstanding debt, which consisted of $1.1$0.9 billion in outstanding senior unsecured notes, $3.5 billion in outstanding Senior Notes, $0.5 billion borrowed under the SpinCo Credit Agreement and $0.2$0.3 billion borrowed under the credit agreement governing its $1.8 billion revolving credit facility. The Company’s net debt borrowings asduring ofthe Aprilthree months ended July 4, 2026 were $170$298 million higher than as of MarchJune 29,28, 2025, which reflects the proceeds from debt issuances of $3.5$3.7 billion and payments on debt of $3.7$4.0 billion, respectively, primarily related to the funding of the BDS Business Acquisition.
As of AprilJuly 4, 2026, the Company hashad entered into interest rate cross-currency swap derivative agreements with durations up to three years with aan aggregate notional value of $1.2$1.3 billion to hedge the variability in the movement of foreign currency exchange rates on a portion of its euro-denominated and yen-denominated net asset investments. As a result of entering into these agreements, the Company lowered net interest expense by approximately $4$8 million and $2$5 million in the first quarterhalf of 2026 and 2025, respectively. The Company anticipates that these swap agreements will lower net interest expense by approximately $14$15 million in 2026.
In December 2024, the Company’s Board of Directors authorized the extension of its existing share repurchase program through January 21, 2028. The Company’s remaining authorization is $1.0 billion. The Company did not make any open market share repurchases in 2026 or 2025. The Company repurchased $12$14 million and $14 million of the Company’s common stock related to the vesting of restricted stock units during the threefirst monthshalf ended April 4,of 2026 and March 29, 2025, respectively.
In connection with the BDS Business Acquisition, the Company issued 38,542 thousand shares of the Company’s common stock to BD shareholders with an approximate fair value of $12.8 billion. Additionally, the Company received $3$15 million and $8$13 million of proceeds from the exercise of stock options and the purchase of shares pursuant to the Company’s employee stock purchase plan during the first three monthshalf of 2026 and 2025, respectively.
The Company had cash andcash, cash equivalents and investments of $462$539 million as of AprilJuly 4, 2026. The majority of the Company’s cash and cash equivalents are generated from foreign operations, with $425$488 million held by foreign subsidiaries atas Aprilof July 4, 2026, of which $321$365 million was held in currencies other than U.S. dollars.
In connection with the BDS Business Acquisition, the Company issued 38,542 thousand shares of the Company’s common stock to BD shareholders with an approximate fair value of $12.8 billion, which is presented as an adjustment to reconcile net income in the consolidated statement of cash flows for the first half of 2026.
TSA: In connection with the BDS Business Acquisition, the Company entered into a Transition Services Agreement (“TSA”) with BD, under which the Company receives certain back-office and fulfillment support services, including finance, accounting, information technology, human resources and other administrative functions. The TSA is intended to provide continuity of operations during the post-transaction integration for a period of up to three years at an annual cost of approximately $90 million. The Company has incurred $14$40 million of TSA costs for the threesix months ended AprilJuly 4, 2026. The majority of the TSA costs are included in selling and administrative expenses in the accompanying consolidated statement of operations.
Senior Notes: As of AprilJuly 4, 2026, the Company had $3.5 billion of cash requirements for the outstanding Senior Notes that will mature as follows: $650 million in 2027; $600 million in 2029; $750 million in 2031; $750 million in 2033; and $750 million in 2036. The Senior Notes require payment of principal at maturity and interest semi-annually in cash and in arrears on March 23 and September 23 of each year, commencing on September 23, 2026. See also Note 6 in the Condensed Notes to the Consolidated Financial Statements for further information.
SpinCo Term Loan: As of AprilJuly 4, 2026, the SpinCo Term Loan had $500$450 million outstanding and a maturity date of February 5,4, 2028.
A summary of the Company’s remaining contractual obligations and commercial commitments is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on February 23, 2026. The Company reviewed its contractual obligations and commercial commitments as of AprilJuly 4, 2026 and determined that there were no material changes outside the ordinary course of business from the information set forth in the Annual Report on Form 10-K.
In the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on February 23, 2026, the Company’s most critical accounting policies and estimates upon which its financial status depends were identified as those relating to revenue recognition, valuation of long-lived assets, intangible assets and goodwill, income taxes, uncertain tax positions and business combinations and asset acquisitions. The Company reviewed its policies and determined that those policies remain the Company’s most critical accounting policies for the threesix months ended AprilJuly 4, 2026. Refer to Note 1 Basis of Presentation and Summary of Significant Accounting Policies, in the Condensed Notes to Consolidated Financial Statements for any changes in those policies during the threesix months ended AprilJuly 4, 2026.
WAT insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 1 filing (1 insider, 1 trade date, 3,626 shares, about $1.4M). Net open-market shares: -3,626 (purchases minus sales); net value about -$1.4M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-30 | Knight Heather |
Grant/award | 57 | — | — |
| 2026-09-30 | Jiang Wei |
Grant/award | 57 | — | — |
| 2026-08-06 | Kuebler Christopher A |
Option exercise | 3,626 | $136.43 | $494.7K |
| 2026-08-06 | Kuebler Christopher A |
Open-market sale | 3,626 | $397.94 | $1.4M |
| 2026-06-30 | Knight Heather |
Grant/award | 63 | — | — |
| 2026-06-30 | Jiang Wei |
Grant/award | 67 | — | — |
| 2026-06-24 | Carpio Robert L Iii |
Shares withheld for tax | 189 | $369.18 | $69.8K |
| 2026-05-12 | Chaubal Amol |
Shares withheld for tax | 239 | $352.21 | $84.2K |
Well-known investors holding WAT (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Fundsmith (Terry Smith) | 2026-06-30 | 2,273,632 | $852.7M | 6.25% | Reduced 29% |
| Viking Global Investors (Andreas Halvorsen) | 2026-06-30 | 1,662,140 | $623.4M | 1.78% | Added 32% |
| First Eagle Investment Management | 2026-06-30 | 1,335,108 | $500.7M | 0.84% | Reduced 15% |
| D. E. Shaw & Co. | 2026-06-30 | 948,639 | $355.8M | 0.22% | Reduced 7% |
| Millennium Management (Israel Englander) | 2026-06-30 | 894,660 | $335.5M | 0.23% | Added 383% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 444,225 | $166.6M | 0.25% | Added 25% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 135,686 | $50.9M | 0.03% | Reduced 35% |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 65,443 | $24.5M | 0.06% | Reduced 8% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 52,650 | $19.4M | 0.01% | Added 2% |
| PRIMECAP Management | 2026-06-30 | 38,647 | $14.5M | 0.01% | Reduced 1% |
| Harris Associates (Oakmark Funds) | 2026-06-30 | 18,413 | $6.9M | 0.01% | Reduced 94% |
| Two Sigma Investments | 2026-06-30 | 10,720 | $4.0M | 0.0% | Reduced 19% |