Waters (NYSE: WAT) raises guidance, but quarterly adjusted free cash flow falls 57.5%

What happened

Waters Corporation (NYSE: WAT) raised every part of its 2026 guidance on Nov. 3. Third-quarter revenue came in $14 million above its guidance midpoint.

Total revenue was $1.77 billion. Organic sales were $871 million, up 9% as reported and 10% in constant currency from $800 million a year earlier. The acquired Biosciences and Diagnostic Solutions businesses, bought from Becton, Dickinson and Company, added $896 million, compared with $885 million on a prior-year comparable basis.

Adjusted EPS rose 21% to $4.10 from $3.40 and beat guidance. GAAP diluted EPS fell to $0.82 from $2.50.

Waters also said it has acquired MOBILion Systems, Inc., which the release calls the pioneer of SLIM high-resolution ion mobility separation technology. Waters expects the deal to broaden its entry into proteomics. Details are in a separate release.

Key numbers

Metric	Latest	Change	Source
Q3 total reported revenue	$1.77 billion	from $800 million, +121%	SEC 8-K, Exhibit 99.1
Q3 adjusted EPS	$4.10	from $3.40, +21%	SEC 8-K, Exhibit 99.1
Q3 GAAP diluted EPS	$0.82	from $2.50, -67.2%	Calculated from SEC 8-K
Q3 adjusted free cash flow	$68 million	from $160 million, -57.5%	Calculated from SEC 8-K
2026 adjusted EPS guidance	$14.60 to $14.70	+11% to +12%	SEC 8-K, Exhibit 99.1
2026 total revenue guidance	$6.48 billion to $6.5 billion		SEC 8-K, Exhibit 99.1

Read more: Waters (WAT) company research

The raised 2026 guidance

Waters lifted full-year revenue guidance by $43 million at the midpoint, to $6.48 billion to $6.5 billion. Organic reported revenue is expected at $3.43 billion to $3.45 billion. Acquired business revenue is expected at about $3.05 billion for the period Waters owns it. Organic constant currency growth guidance rose to 9.1% to 9.7%.

Full-year adjusted EPS guidance is $14.60 to $14.70, which the company puts at 11% to 12% growth. The fourth-quarter range of $4.58 to $4.68 implies 1% to 3% growth, slower than the third quarter.

Fourth-quarter revenue is guided to $1.8 billion to $1.82 billion, with organic constant currency growth of 7.0% to 9.0%. CEO Udit Batra said the guidance calls for double-digit growth in both the organic and acquired businesses on a days-adjusted basis.

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Where GAAP and adjusted results part

The release blames the lower GAAP EPS on acquisition-related purchase accounting charges, acquisition costs and restructuring costs. GAAP operating income was $128 million against $192 million a year earlier. GAAP operating margin was 7.2% against 24.0%.

Purchased intangibles amortization reached $244 million against $12 million a year earlier. Of that, $232 million relates to the acquired businesses. Cost of revenue also included $80 million of inventory and fixed-asset step-ups. Adding back those purchase accounting items accounts for $2.62 of the adjusted EPS.

Adjusted operating margin was 30.1% against 30.3%. Adjusted net income rose to $404 million from $203 million. The diluted share count grew to 98.7 million from 59.6 million. Over nine months, Waters booked a GAAP net loss of $127 million against net income of $417 million.

Cash flow and debt

Cash generation weakened. Net cash from operating activities was $98 million against $187 million. Adjusted free cash flow was $68 million against $160 million, a 57.5% drop by OptimistFi's calculation. The 2026 quarter includes the acquired businesses and the 2025 quarter does not.

Changes in operating assets and liabilities used $384 million of cash in the quarter, against $28 million a year earlier. Over nine months, adjusted free cash flow was $228 million against $552 million. Notes payable and debt stood at $5.13 billion on Oct. 3, up from $1.41 billion on Dec. 31, 2025. Cash was $593 million.

Why it matters

OptimistFi has argued that Waters compounds only if renewed instrument demand turns into margin-rich cash flow, and that proof of quality outweighs headline growth. The quarter supports the demand half. Analytical Sciences instrument revenue rose 10% and chemistry consumables 12% in constant currency. Batra pointed to instrument replacement, GLP-1s, PFAS and India generics as drivers. He also said integration and synergy commitments are ahead of schedule.

The cash half is unproven. Free cash flow fell while debt rose, and the adjusted growth leaves out charges that GAAP earnings still carry. The quarter is mixed for the case. Demand and the adjusted margin are holding, but cash has not yet followed.

What's next

Waters said management would give its 2027 starting growth framework on its conference call at 8:00 a.m. ET on Nov. 3. The company said the framework outlines how reshoring, synergies and AI-related demand are expected to shape next year's growth. A replay will be available through at least Dec. 1.

Cash is the result that would move the case. Free cash flow tracking back toward last year's level would support it. Another quarter well below that level would weaken it.

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