Fortive (NYSE:FTV) reported fourth-quarter and full-year 2025 results that executives said reflected “solid execution” in the company’s first two quarters operating as “New Fortive” following its July operating model reset. On the call, President and CEO Olumide Soroye and CFO Mark Okerstrom highlighted accelerating growth in the second half of the year, margin expansion, and a significant step-up in share repurchases, while introducing 2026 adjusted earnings guidance.
Fourth-quarter results come in ahead of expectations
Okerstrom said Fortive delivered fourth-quarter revenue of $1.1 billion, up just over 4.5% year over year on a reported basis and just over 3% on a core basis. Management pointed to “volume growth return” and “solid performance across all regions,” with core growth in both the Intelligent Operating Solutions (IOS) and Advanced Healthcare Solutions (AHS) segments.
Adjusted EBITDA in the quarter was $358 million, up about 8% year over year, with adjusted EBITDA margin expanding roughly 100 basis points to nearly 32%. Okerstrom said operating leverage and ongoing organizational streamlining, along with tighter corporate cost discipline, helped drive the improvement.
Adjusted EPS for the quarter was $0.90, up about 13% year over year, which management said marked its second consecutive quarter of double-digit adjusted EPS growth. Full-year adjusted EPS was $2.71, up just over 12% year over year and above the company’s guidance range of $2.63 to $2.67.
Fortive generated about $315 million of free cash flow in the fourth quarter and about $930 million for the full year. Okerstrom said full-year free cash flow conversion on adjusted net income was “nicely north of 100%.”
Segment performance: IOS acceleration, AHS navigating hospital spending delays
In IOS, fourth-quarter revenue grew just over 5% reported, with core growth of about 4%, which Okerstrom said was “nicely ahead” of expectations. Management cited solid performance across professional instrumentation, facility and asset lifecycle software, and gas detection.
Executives repeatedly pointed to Fluke as a key contributor. Soroye said Fluke point-of-sale trends were consistent with recent quarters, with North America the strongest region, alongside “encouraging improvements” in EMEA and Latin America and steady performance in APAC. He added that Fluke order growth continued in the fourth quarter, book-to-bill finished above 1 for the full year, and channel inventory outside the U.S. continued to improve—something management expects to continue through 2026.
In gas detection, the company said results benefited from strong demand and share gains, with particular strength in its hardware-as-a-service product line and broad strength in North America.
IOS adjusted gross margin was just under 67%, down about 130 basis points year over year, primarily due to product mix and tariffs net of countermeasures. Segment adjusted EBITDA grew 8% to $288 million, and adjusted EBITDA margin expanded to just over 37%, up about 100 basis points, driven by operating leverage and reduced organizational costs, partially offset by targeted growth investments.
In AHS, revenue was $353 million, up approximately 3% year over year and 1.6% on a core basis. Management reiterated that reimbursement and funding policy changes continued to pressure the segment through deferrals of U.S. hospital capital expenditures. Still, Soroye said demand trends improved again in the fourth quarter, and executives said they were encouraged by the commercial pipeline and customer feedback on the technical performance of the company’s low-temperature sterilization products.
AHS adjusted gross margin was 56%, down from roughly 58% a year ago, which management attributed to strategic investments to drive growth. Segment adjusted EBITDA was $92 million, with adjusted EBITDA margin of 26%. In response to analyst questions, Soroye described the margin pressure as “very localized in Q4” due to deliberate investments in areas including sales and marketing and R&D, while maintaining that the longer-term “path of margin improvement” remains intact.
Capital allocation: $1.3 billion in second-half repurchases
Fortive emphasized disciplined capital allocation as a central pillar of its strategy. In the fourth quarter alone, the company repurchased an additional $265 million of stock, bringing total second-half repurchases to $1.3 billion. Soroye said the company repurchased about 26 million shares in the second half of 2025, roughly 8% of diluted shares outstanding.
Okerstrom also said Fortive repurchased roughly 2.5 million shares since quarter-end, bringing fully diluted shares outstanding to approximately 315 million as of the call date. The company ended the year at 2.6x gross debt to adjusted EBITDA, which management said left ample capacity for 2026 priorities.
On M&A, executives said Fortive refined its funnel and processes to reflect its go-forward strategy, prioritizing accretive bolt-on transactions. The company closed two small deals in the second half of 2025 that met its criteria, and management said its priorities remain: invest in organic growth, pursue bolt-on M&A when returns justify it, return capital through repurchases, and maintain a modest growing dividend.
2026 outlook: adjusted EPS guidance of $2.90 to $3.00
Fortive initiated full-year 2026 adjusted EPS guidance of $2.90 to $3.00, which Soroye said represents roughly 9% year-over-year growth at the midpoint. Okerstrom said the outlook assumes a continuation of market dynamics experienced in the fourth quarter and reflects current tariff rates, with tariffs net of countermeasures “not currently expected to be meaningful to the bottom line in 2026.”
Additional 2026 modeling assumptions provided on the call included:
- Reported revenue of nearly $4.3 billion and core revenue growth of 2% to 3%
- Adjusted effective tax rate in the mid-teens for the year, with Q1–Q3 in the high teens and Q4 in the high single digits to low double digits
- Net interest expense of just over $120 million
- Diluted share count of roughly 315 million shares
Management also noted expected FX dynamics, including an estimated 300 basis-point tailwind in the first quarter that should ease through the year. In Q&A, Okerstrom said January had been “very solid” and that the company expected seasonality to broadly follow historical patterns.
Strategy and product updates: innovation, recurring revenue, and AI
Soroye framed the company’s strategy around three pillars: accelerating profitable organic growth, disciplined capital allocation, and building and maintaining investor trust. He cited product and software releases as evidence of innovation momentum, including Fluke’s CertiFiber Max data center testing solution and ServiceChannel’s third major product release of 2025, which management said enhanced maintenance workflows, onboarding, work order visibility, compliance, and payment efficiency.
Recurring revenue was another theme. Soroye said recurring revenue again grew faster than consolidated revenue in the quarter, driven by Fluke’s maintenance software and embedded data, along with “AI-enhanced software capabilities” across the portfolio.
In response to multiple questions about AI’s implications for software, Soroye said Fortive’s software products are mission-critical enterprise systems with deep workflow integration, proprietary data assets, and other “sticky” characteristics. He said customers are pulling for agentic AI and gen AI enhancements, and that the company is seeing strong annual recurring revenue growth, strong renewal metrics, improving net dollar retention, and rising customer usage as enhancements roll out.
Closing the call, Soroye said the company is “encouraged” by early progress but emphasized there is “significant unfinished business and untapped potential” as Fortive enters 2026 focused on execution.
About Fortive (NYSE:FTV)
Fortive Corporation (NYSE: FTV) is a diversified industrial technology company headquartered in Everett, Washington. The company was created through a spin‑off from Danaher Corporation in 2016 and has since focused on building a portfolio of professional instrumentation and industrial technology businesses. In 2020 Fortive completed a further portfolio separation with the spin‑off of Vontier, concentrating Fortive’s activities on higher‑margin instrumentation, software and services.
Fortive’s operations center on professional test and measurement, sensing and monitoring, software‑enabled solutions, and lifecycle services that support industrial and commercial customers.
