Danaher

Danaher generated $23.9B in 2024 revenue through a strategy that mirrors horizontal gene transfer in bacteria. The company acquires underperforming industrial and life sciences companies, then inserts the Danaher Business System (DBS) into their operations. DBS derives from Toyota Production System principles: continuous improvement, waste reduction, standardized processes, and disciplined problem-solving. When Danaher bought Cytiva from GE Healthcare, Beckman Coulter, or Pall Corporation, it didn't just buy revenue streams. It bought organisms to transform. Within 12-24 months post-acquisition, operating margins typically expand 300-500 basis points as DBS implementation eliminates inefficiencies. This is horizontal gene transfer: bacteria that acquire new DNA from other cells can suddenly express traits they never evolved. Danaher-acquired companies suddenly express operational excellence they never developed internally.

The company achieved 33 consecutive years of free cash flow to net income conversion exceeding 100%, hitting 135% in 2024. This metric reveals metabolic efficiency: Danaher converts earnings to cash better than almost any industrial company. The mechanism: DBS optimizes working capital, reduces inventory, accelerates collections, and defers payables without straining supplier relationships. Every acquired company gets the same treatment. The Cytiva acquisition in 2020 added bioprocessing capabilities that now drive growth. In Q2 2025, Cytiva revenue grew 8% with core revenue up 6% and adjusted operating margin expanding 150 basis points to 41%. These margins reflect biological fitness. Companies that can't achieve similar efficiency die or get acquired by firms that can extract the value.

Danaher expects 3% core revenue growth in 2025 after flat revenue in 2024. The company deliberately slowed during the pandemic hangover rather than chasing growth that would compromise margins. This is K-selection strategy: optimize for efficiency in mature markets rather than pursuing explosive but unsustainable expansion. The company deployed $7B toward share buybacks through 2024 and into early 2025, repurchasing 28 million shares. It also completed strategic acquisitions including Abcam for $5.7B, adding proteomics capabilities to the life sciences portfolio. The pattern: use DBS to generate excess cash, redeploy cash into acquisitions and buybacks, apply DBS to new acquisitions, repeat. This feedback loop has compounded for 40 years. Since 1990, Danaher grew earnings per share roughly 10,000%. The insight: horizontal gene transfer works when you have superior genetic material to transfer. DBS is that material.