Agilent Technologies Q3 Earnings Call Highlights

Key Points

• Agilent exceeded expectations in Q3 fiscal 2026, reporting $1.88 billion in revenue, 7.3% core growth and adjusted EPS of $1.56, up 14% year over year. Operating margin expanded to 27.2% excluding tariff refunds.
• Growth was led by pharma, China and applied markets, including 12% pharma growth, more than 70% growth in GLP-1-related revenue and 9% growth in China. New instrument launches and replacement-cycle demand also supported a book-to-bill ratio above one for the 10th consecutive quarter.
• Agilent raised its fiscal 2026 outlook to $7.49 billion-$7.51 billion in revenue and adjusted EPS of $6.12-$6.15 excluding tariff refunds. Management also highlighted early pharmaceutical reshoring orders and a potential $1 billion reshoring opportunity through 2030.

Agilent Technologies NYSE: A reported third-quarter fiscal 2026 revenue of $1.88 billion, with core revenue growth of 7.3%, exceeding the high end of its guidance range. The company said earnings per share were $1.56 excluding tariff-refund benefits, up 14% from a year earlier and $0.06 above the top of its guided range. Including a $20 million net benefit from tariff refunds, EPS was $1.62.

CEO Padraig McDonnell said the results reflected improving conditions in key markets as well as gains from the company’s Ignite Operating System, which has focused on pricing, procurement, supply-chain agility, commercial execution and operational discipline. Operating margin was 27.2% excluding the tariff-refund benefit, up 210 basis points year over year. Including the refunds, operating margin was 28.3%.

Pharma, China and Applied Markets Drive Growth

Pharma revenue grew 12% during the quarter, led by double-digit biotech growth and mid-single-digit small-molecule growth. McDonnell said smaller and midsize biotechnology customers have begun increasing spending as funding conditions improve. Agilent’s Advanced Therapeutics division, which includes its NASD and BioVectra specialty CDMO operations, grew nearly 30%.

The company also reported more than 70% growth in GLP-1-related revenue, with contributions from both its CDMO and analytical laboratory businesses. Excluding the CDMO business, Agilent said biopharma revenue increased 9%.

Chemicals and advanced materials grew 7%, exceeding the company’s mid-single-digit expectation. Advanced materials posted double-digit growth, supported by semiconductor-related demand for spectroscopy and vacuum tools. Environmental and forensics revenue increased 5%, while PFAS-related revenue rose 20% despite a difficult comparison period.

Diagnostics and clinical revenue grew 6%, slightly below Agilent’s expectations, but the company said underlying pathology orders rose at a double-digit rate. McDonnell said companion diagnostics grew in the mid-teens and genomics returned to high-single-digit growth. Simon May, president of the Life Sciences and Diagnostics Markets Group, said pathology order entry was strong, with a robust backlog entering the fourth quarter and continued adoption of the Dako Omnis platform.

China was a major source of upside, with revenue increasing 9% against Agilent’s prior expectation for flat growth. Growth in the region was led by double-digit pharma and food performance, as well as strength in advanced materials. McDonnell said the company saw limited benefit from government stimulus during the quarter and attributed the results to commercial execution, local capabilities and competitive wins with CXOs, pharmaceutical customers and testing laboratories.

Product Launches and Replacement Cycle Support Demand

Agilent said its instrument revenue grew at a high-single-digit rate, with low-double-digit liquid chromatography growth and low-single-digit gas chromatography growth. The company recorded a book-to-bill ratio above one for the 10th consecutive quarter, indicating orders met or exceeded revenue.

McDonnell cited demand tied to liquid and gas chromatography replacement cycles, including customer upgrades to the Infinity III LC platform. He also highlighted the company’s newest product launches, including the 9500 Triple Quad ICP-MS, the 8890B and 8860B gas chromatography systems, and the Altura family of analytical columns.

The 9500 ICP-MS began shipping in late July and has already surpassed Agilent’s ramp-to-volume target, according to McDonnell. Its order funnel exceeds $60 million. Orders for the new gas chromatography systems exceeded company expectations by more than two times during their first two months of availability.

Agilent also said the number of new accounts adopting biopharma Altura columns increased 28% sequentially. The company completed its Biocare Medical acquisition in late June, and CFO Adam Elinoff said Biocare contributed $10 million in third-quarter revenue. The company expects about $23 million of Biocare revenue in the fourth quarter.

Reshoring Opportunity Begins to Produce Orders

Management said pharmaceutical reshoring is beginning to create instrument and service demand. Agilent booked its initial pharma reshoring orders during the third quarter, earlier than expected, including orders from five of the world’s 10 largest pharmaceutical companies.

McDonnell reiterated the company’s estimate of a roughly $1 billion reshoring opportunity through 2030 and said Agilent expects to capture at least one-third of that opportunity. He said revenue from the trend is expected to begin building in fiscal 2027, though quarterly contributions may not be linear.

Agilent also sees opportunity from semiconductor capacity investments and AI infrastructure spending. The company said semiconductor-related demand could support advanced materials growth over the medium term, with instrument demand typically emerging 18 to 24 months after fab construction. Management noted that semiconductor manufacturing also creates longer-term PFAS testing demand.

Margins, Cash Flow and Updated Outlook

Gross margin was 56.4% in the third quarter, or 54.9% excluding the net tariff-refund benefit. Elinoff said the ex-refund gross margin increased 180 basis points from the prior year due to incremental volume leverage and Ignite-related improvements.

Operating cash flow was $519 million and free cash flow was $439 million, representing a 96% conversion of non-GAAP net income. Agilent repurchased $78 million of stock and paid $72 million in dividends during the period. Following a $600 million senior-notes offering completed alongside the Biocare transaction, the company ended the quarter with net leverage of one turn.

For fiscal 2026, Agilent raised its outlook for reported revenue to $7.49 billion to $7.51 billion, representing 5.8% to 6.0% core growth. The revised midpoint is 65 basis points above its prior forecast. The company now expects full-year EPS of $6.18 to $6.21, including the third-quarter tariff-refund benefit. Excluding that benefit, it expects EPS of $6.12 to $6.15, representing 10% growth at the midpoint.

• Fourth-quarter reported revenue is projected at $1.98 billion to $2.0 billion.
• Fourth-quarter core revenue growth is expected to be approximately 5.2% to 6.2%.
• Fourth-quarter EPS is forecast at $1.71 to $1.74, representing growth of 8% to 9%.
• The fourth-quarter outlook does not include any potential future tariff refunds.

Elinoff said Agilent continues to expect $1.6 billion to $1.7 billion in operating cash flow for the full year and about $450 million in capital expenditures. He added that the company expects Ignite efficiencies to help offset inflationary pressures related to the Middle East conflict and memory-chip demand.

About Agilent Technologies (NYSE:A)

Agilent Technologies is a global provider of scientific instrumentation, consumables, software and services for laboratories across the life sciences, diagnostics and applied chemical markets. The company's product portfolio includes analytical instruments such as liquid and gas chromatographs, mass spectrometers, spectroscopy systems, and laboratory automation solutions, together with reagents, supplies and informatics tools that support measurement, testing and data analysis workflows. Agilent also offers instrument maintenance, qualification and laboratory services designed to help customers improve productivity and comply with regulatory requirements.

Founded as a corporate spin-off from Hewlett‑Packard in 1999, Agilent has evolved through a combination of strategic restructuring and acquisitions to concentrate on life sciences, diagnostics and applied laboratories.

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