Fortive (NYSE: FTV) raises profit guidance but healthcare margins slip

What happened

Fortive Corporation (NYSE: FTV) raised its 2026 adjusted EPS guidance to $3.10 to $3.14 and reported third-quarter revenue of $1.11 billion.

Fortive said the new range is up 15% year over year at the midpoint. Revenue for the quarter ended Oct. 2 rose 7.8% from $1.03 billion a year earlier. Core revenue, which excludes acquisitions, divestitures and currency, rose 7.2%.

GAAP net earnings from continuing operations were $173 million, up 47.4% from $117 million. GAAP diluted EPS was $0.57 against $0.35. Adjusted EBITDA rose 9.5% to $339 million, with a margin of 30.6% against 30.1%. Fortive called it the fifth straight quarter of double-digit adjusted EPS growth.

Key numbers

Metric	Latest	Change	Source
Revenue	$1.11 billion	from $1.03 billion, +7.8%	SEC 8-K Exhibit 99.1
Adjusted diluted EPS	$0.77	from $0.68, +13.2%	SEC 8-K Exhibit 99.1
GAAP net earnings (continuing operations)	$173 million	from $117 million, +47.4%	SEC 8-K Exhibit 99.1
Adjusted EBITDA	$339 million	from $309 million, +9.5%	SEC 8-K Exhibit 99.1
Free cash flow	$284 million	from $266 million, +6.7%	SEC 8-K Exhibit 99.1
FY 2026 adjusted EPS guidance	$3.10 to $3.14	+15% at midpoint	SEC 8-K Exhibit 99.1

Read more: Fortive (FTV) company research

Where the growth came from

Intelligent Operating Solutions drove the quarter. Its revenue rose 9.8% to $767 million, with core growth of 9.1%. Its GAAP operating margin widened to 29.1% from 25.9%.

That margin gain includes $17.3 million of tariff refunds. Adjusted operating margin, which strips out the refunds and other items, was 33.6% against 32.8% a year earlier.

Advanced Healthcare Solutions went the other way. Its revenue rose 3.7% to $340 million and core revenue rose 3.1%. Operating profit fell 10.1% to $38 million from $43 million. Operating margin slipped to 11.2% from 12.9%, and adjusted EBITDA margin fell to 25.8% from 28.1%.

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How much of the profit jump is one-time

Fortive's adjusted figures leave out some items that help the GAAP comparisons. This quarter's GAAP results include an $18.0 million pretax gain from refunds of tariffs imposed under the International Emergency Economic Powers Act. Fortive recorded it in cost of sales after the Supreme Court struck down some of those tariffs on Feb. 20.

The year-earlier quarter carried $38.3 million of pretax acquisition, divestiture and separation-related items. These included some costs of separating the Precision Technologies business into Ralliant Corporation.

Adjusted results give a cleaner read, and OptimistFi's calculation shows how much of the per-share gain came from fewer shares. Adjusted EPS rose 13.2% to $0.77 from $0.68. Adjusted net earnings grew only 3.1%, to $235.4 million from $228.3 million. Average diluted shares fell 8.8%, to 303.9 million from 333.4 million. Adjusted EBITDA, which share count does not affect, grew faster.

Net interest expense rose to $38.8 million from $25.4 million. The nine-month cash flow statement shows $455.7 million of net commercial paper borrowings.

Cash and buybacks

Cash generation is growing, and Fortive is putting it into buybacks. Operating cash flow rose 6.3% to $313 million from $295 million. Free cash flow rose 6.7% to $284 million from $266 million. Trailing-twelve-month free cash flow was $1.06 billion, up 15.2% from $922 million.

Fortive repurchased $300 million of stock in the quarter, equal to 5 million shares and 2% of diluted shares. That was $16 million more than the quarter's free cash flow. Since the launch of what it calls new Fortive, buybacks total $2.3 billion, or 43 million shares and 13% of shares outstanding.

Why it matters

OptimistFi has argued that Fortive can compound value if its measurement, safety and productivity niches keep pricing power and cash conversion after the portfolio reshaping. The quarter supports that view. Free cash flow is growing at a double-digit rate over twelve months, and the larger segment is expanding margins.

The caveat is Advanced Healthcare Solutions, where profit and margin fell. The quarter was not strong across the whole portfolio. Per-share growth also leans on a shrinking share count, since adjusted net earnings grew far more slowly than adjusted EPS.

What's next

Fortive's next quarterly report will show whether full-year adjusted EPS lands inside the raised range. It will also show whether Advanced Healthcare Solutions margins recover from this quarter's decline.

Fortive also expects to finish the discrete restructuring plan it began in the fourth quarter of 2024 by the end of 2026.

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