Snapshot

Revenue was $44.3 billion in FY2025, compared with $42.0 billion in FY2024. Gross profit was $25.0 billion in FY2025, operating income was $8.1 billion in FY2025, and net income was $6.5 billion in FY2025; diluted EPS was $3.72 in FY2025.

In Q2 FY2026, revenue was $12.6 billion, gross profit was $7.3 billion, operating income was $1.7 billion, net income was $928.0 million, and diluted EPS was $0.53. Over the TTM to Q2 FY2026, revenue was $46.6 billion, net income was $5.4 billion, operating cash flow was $9.9 billion, and free cash flow was $7.8 billion.

Growth

Revenue growth was 5.67% in FY2025 against FY2024, while the revenue compound annual growth rate was 0.51% in FY2022–FY2025 and 5.08% in FY2020–FY2025. Diluted EPS growth was −51.3% in FY2025 against FY2024; its compound annual growth rate was −1.65% in FY2022–FY2025 and 8.27% in FY2020–FY2025. Free cash flow growth was 16.4% in FY2025 against FY2024, with compound annual growth of −1.78% in FY2022–FY2025 and 5.26% in FY2020–FY2025.

Revenue was $12.6 billion in Q2 FY2026, up 12.8% against Q1 FY2026 and 13.0% against Q2 FY2025. Diluted EPS was $0.53 in Q2 FY2026, down −13.1% against Q1 FY2026 and −47.5% against Q2 FY2025. Free cash flow was $2.0 billion in Q2 FY2026, up 117.4% against Q1 FY2026 and 28.9% against Q2 FY2025.

Profitability

Gross margin was 56.4% in FY2025, an increase of 1.0 percentage point in FY2024–FY2025, while the change was −0.2 percentage points in FY2020–FY2025. Operating margin was 18.2% in FY2025, up 1.9 percentage points in FY2024–FY2025 and 2.7 percentage points in FY2020–FY2025. Pre-tax margin was 19.1% in FY2025, up 2.4 percentage points in FY2024–FY2025 and 4.7 percentage points in FY2020–FY2025.

Net margin was 14.7% in FY2025, a change of −17.2 percentage points in FY2024–FY2025 and 1.7 percentage points in FY2020–FY2025. Return on equity was 13.0% in FY2025, return on assets was 7.76% in FY2025, and return on invested capital was 8.87% in FY2025. In Q2 FY2026, gross margin was 57.7% and operating margin was 13.4%.

Balance sheet

Total debt was $12.9 billion in FY2025, compared with $14.1 billion in FY2024. Net debt was $4.0 billion in FY2025, cash and short-term investments were $8.9 billion in FY2025, shareholders’ equity was $52.8 billion in FY2025, and working capital was $9.5 billion in FY2025.

Net debt was $27.0 billion in Q2 FY2026, compared with $26.8 billion in Q1 FY2026. The current ratio was 1.4× in Q2 FY2026, and debt to equity was 0.6× in Q2 FY2026. Management attributes the first-half reduction in cash and working capital to funding the cash portion of the Exact Sciences acquisition, repaying assumed debt, and other uses of cash.

Cash flow & capital return

Operating cash flow was $9.6 billion in FY2025, rising 11.8% in FY2025 against FY2024. Capital expenditure was $2.2 billion in FY2025, unchanged from $2.2 billion in FY2024. Free cash flow was $7.4 billion in FY2025, up 16.4% in FY2025 against FY2024, and free cash flow represented 113.4% of net income in FY2025.

Dividends paid were $4.1 billion in FY2025, while net share repurchases were $497.0 million in FY2025. Capital returned to shareholders was $4.6 billion in FY2025 and $26.3 billion in FY2021–FY2025. Weighted average shares were 1.7 billion shares in FY2025, and the share count changed by −1.80% in FY2020–FY2025. Management declared a quarterly dividend of $0.63 per share in each of Q1 FY2026 and Q2 FY2026.

Valuation

As of September 28, 2026, market capitalisation was $175.7 billion. As of September 28, 2026, P/E was 32.7×, below the five-year median of 33.7× and the ten-year median of 38.9×. As of September 28, 2026, P/S was 3.8×, below the five-year median of 4.8× and the ten-year median of 4.7×. As of September 28, 2026, P/B was 3.4×, below the five-year median of 4.9× and the ten-year median of 4.5×.

As of September 28, 2026, EV/Sales was 4.4×, below the five-year median of 5.0× and the ten-year median of 4.9×; EV/Cash flow was 25.9×, below the five-year median of 30.0× and the ten-year median of 29.9×. As of September 28, 2026, P/E was higher than the industry median of 22.4×, P/S was higher than the industry median of 2.7×, P/B was higher than the industry median of 2.4×, and EV/Sales was higher than the industry median of 2.4×.

What changed since last quarter

Revenue was $12.6 billion in Q2 FY2026, increasing 12.8% against Q1 FY2026 and 13.0% against Q2 FY2025. Gross margin was 57.7% in Q2 FY2026, up 1.5 percentage points against Q1 FY2026 and 1.3 percentage points against Q2 FY2025. Operating margin was 13.4% in Q2 FY2026, up 1.4 percentage points against Q1 FY2026 but down −5.0 percentage points against Q2 FY2025.

Management attributes second-quarter sales growth to the Exact Sciences acquisition and growth in Medical Devices and Established Pharmaceutical Products, partly offset by lower Nutritional Products sales. Management attributes higher R&D and SG&A expense to Exact Sciences, integration expenses, legal reserves, selling and marketing spending, and foreign exchange. Diluted EPS was $0.53 in Q2 FY2026, down −13.1% against Q1 FY2026 and −47.5% against Q2 FY2025. Net debt was $27.0 billion in Q2 FY2026, up $253.0 million against Q1 FY2026 and $20.9 billion against Q2 FY2025; management cites acquisition-related debt as increasing interest expense.

Open questions

• How much of the latest-quarter revenue increase came from Exact Sciences relative to existing businesses?
• What portion of the increase in operating expenses was attributable to integration costs, legal reserves, and selling and marketing spending?
• What factors explain the difference between the reported gross-margin measure and the gross-profit-margin percentage discussed by management?
• How will the acquired business and related financing affect the balance sheet and cash flow over time?

Sources

• Form 10-Q filed July 28, 2026 — management’s discussion and analysis