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A view shows the logo of Brazilian state-run oil firm Petrobras in Rio de Janeiro, Brazil June 5, 2025. REUTERS/Ricardo Moraes Purchase Licensing Rights, opens new tab

CompaniesRIO DE JANEIRO, Aug 4 (Reuters) - Brazil's Petrobras (PETR3.SA), opens new tab is reassessing a major natural gas infrastructure investment in Brazil amid regulatory uncertainty surrounding a proposed ​government program that could also impact a project by Norway's Equinor (EQNR.OL), opens new tab, sources told ‌Reuters.

The proposal led Petrobras to halt studies for a planned $1 billion gas pipeline linked to its deep waters project in Brazil's northeastern Sergipe state, said three sources.

The Reuters Power Up newsletter provides everything you need to know about the global energy industry. Sign up here.

Equinor's Raia project in the Campos Basin, expected ​to start operating in 2028, could also be impacted if the program is ​enacted, said an industry source.

The government proposal, which Brazil's energy regulator ANP ⁠is expected to discuss on Friday, would require large producers to make part of ​their gas available to third parties via auctions, in an effort to boost competition and ​lower prices.

Details of ANP's draft regulation are set to be unveiled on Friday, when the regulatory body opens a period for consultation with stakeholders, after which ANP's board of directors will hold a vote. ​Implementation could happen as soon as next year, after a final version is reached.

"Who would ​authorize a $1 billion pipeline investment without assurances that their rights are protected?" said a source, who requested ‌anonymity ⁠because the discussions are sensitive.

Petrobras did not reply to a request for comment.

Equinor said regulatory predictability and stable rules are essential for investments requiring billions of dollars and development timelines exceeding a decade.

The Petrobras pipeline is intended to transport gas from two planned floating production ​units in Sergipe to ​shore. Petrobras expects ⁠the units to process up to 22 million cubic meters of gas and 240,000 barrels of oil per day, with first oil ​expected in 2030.

Equinor's Raia project is designed to produce 16 million ​cubic meters of ⁠gas per day, meeting roughly 15% of Brazilian demand, and includes a pipeline to Macae in Rio de Janeiro state.

Keeping gas prices low for consumers and industry has been a major ⁠concern ​of President Luiz Inacio Lula da Silva's administration.

The sources ​said the proposal would not increase overall gas supply, but would merely redistribute volumes among market participants while creating ​uncertainty over project returns.

Reporting by Rodrigo Viga Gaier and Marta Nogueira, writing by Fabio Teixeira;

Our Standards: The Thomson Reuters Trust Principles., opens new tab

Marta Nogueira is a correspondent in Rio de Janeiro, covering Brazil’s oil and mining sectors and their impact on the economy, the environment, and people’s lives. She has been with Reuters since 2014, reporting on major developments in energy and natural resources, including Brazil’s energy policy, commodity markets, and environmental challenges tied to resource extraction. Previously, she worked at Brazilian newspapers Valor Economico and Jornal do Brasil.

Second Quarter Net Sales Up 14.4% Driven By 10.3% Organic GrowthSand States Sales Increased at a Double-Digit RateGross Profit Increased 9.6%; Surge in Demand Impacted Gross Margin by 140 Basis Points Due to Incremental Quarter-Specific Ramp-Up Costs Increasing Full-Year Guidance to 11.7% Net Sales Growth and 15.2% Adjusted EBITDA Growth at the Midpoints Second Quarter 2026 Financial Highlights:

Net sales of $197.5 millionNet income of $12.8 million / net income per diluted share of $0.11Adjusted EBITDA of $44.6 million / 22.6% of net sales
Six Months 2026 Financial Highlights:

Net sales of $314.8 millionNet income of $4.2 million / net income per diluted share of $0.04Adjusted EBITDA of $56.8 million / 18.0% of net sales
LATHAM, N.Y., Aug. 04, 2026 (GLOBE NEWSWIRE) -- Latham Group, Inc. (Nasdaq: SWIM), the largest designer, manufacturer, and marketer of in-ground residential swimming pools in North America, Australia, and New Zealand, today announced financial results for the second quarter 2026 ended June 27, 2026.

Commenting on the results, Sean Gadd, President and CEO, said, “Second quarter sales growth was driven by execution of our strategic priorities and supports our expectations of continued share gains across our product lines. Our in-ground pool sales increased 22.5%, or 13.6% organically, led by fiberglass pool sales, which are on track to account for approximately 80% of our full year in-ground pool sales in 2026. Cover sales were up 10% in the second quarter, led by growth in autocovers, indicating a steady increase in attachment rates on new pool installations.

“We continued to gain traction in the Sand States, a key growth market for Latham, where second quarter sales increased at a double-digit rate. As noted last quarter, we are moving ahead with several new initiatives to accelerate our growth in these geographies, which have the potential to drive a step-change in companywide sales. In the last several months, we have made considerable progress in building our commercial organization, identified multiple target micro-markets as part of a refined market development framework around segmentation by communities, and added sales resources in the field to facilitate the sales process in concert with our dealers.

“Second quarter gross profit increased, supported by higher volume and continued progress with lean manufacturing and value engineering initiatives. Demand for fiberglass pools accelerated faster than our typical seasonal ramp-up, resulting in approximately $2.8 million of incremental costs in the quarter, which represented a gross margin headwind of approximately 140 basis points. The majority of these costs are expected to be recovered in the second half of the year. Adjusted EBITDA increased 11.9% year-over-year, with adjusted EBITDA margin of 22.6%, reflecting the impact of lower gross margin and the timing of sales and marketing investments. We also completed a program to optimize certain operational and administrative functions, which is enabling us to redeploy resources to sales and marketing initiatives designed to accelerate growth.”

Second Quarter 2026 Results Compared to the Prior-Year Period

Net sales increased 14.4% to $197.5 million. The increase in net sales was primarily the result of organic growth in each of our product lines, particularly the growth of our in-ground pool sales, sales growth in the Sand States, the acquisition of Freedom Pools, and the full year benefit of the 2025 price increase.

Second Quarter & Six Month 2026 Net Sales by Product Line
(in thousands)   Fiscal Quarter Ended Two Fiscal Quarters Ended  June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025In-ground Swimming Pools $96,314 $78,601 $156,045 $136,335Covers  40,984  37,245  74,482  68,855Liners  60,176  56,793  84,262  78,869  $197,474 $172,639 $314,789 $284,059  Gross profit increased by 9.6% to $70.1 million. Gross margin was 35.5%, 160-basis points below year-ago levels. Gross profit and gross margin included quarter-specific ramp-up costs of approximately $2.8 million, or 140 basis points.

Selling, general, and administrative expenses (“SG&A”) increased by 17.8% to $37.6 million. The increase in SG&A was due to investments in our growth strategies, the timing of sales and marketing initiatives to accelerate the fiberglass conversion strategy in the Sand States, acquisition and integration related costs, which included $2.2 million of performance-based compensatory earn-out expenses related to our Coverstar Central acquisition in 2024, as well as our digital transformation efforts.

Net income was $12.8 million, or $0.11 per diluted share, compared to $16.0 million, or $0.13 per diluted share, in the prior year period. Net income margin was 6.5% compared to 9.3% and included an unfavorable change in net foreign currency transaction gains and losses associated with our international subsidiaries of $5.0 million.

Adjusted EBITDA increased by 11.9% to $44.6 million; adjusted EBITDA margin contracted by 50 basis points to 22.6%, due to lower gross margin and the timing of sales and marketing campaigns to accelerate market penetration in the Sand States.

Six Months 2026 Results Compared to the Prior-Year Period

Net sales increased 10.8% to $314.8 million, primarily due to organic growth of 7.5% with the acquisition of Freedom Pools contributing the remainder.

Gross profit increased by 10.7% to $107.2 million. Gross margin of 34.1% was in line with the prior year and included second-quarter-specific ramp-up costs that offset the benefits of lean manufacturing and value engineering initiatives.

Selling, general, and administrative expenses increased by 18.6% to $74.2 million. The increase in SG&A was primarily driven by increased sales and marketing investments to accelerate our fiberglass conversion strategy in the Sand States, acquisition and integration-related costs, which included $4.5 million of performance-based compensatory earn-out expenses related to our Coverstar Central acquisition in 2024, and costs related to our digital transformation program.

Net income was $4.2 million, or $0.04 per diluted share, compared to $10.0 million, or $0.08 per diluted share, in the prior year period. Net income margin was 1.3% compared to 3.5% and included an unfavorable change in net foreign currency transaction gains and losses associated with our international subsidiaries of $6.4 million.

Adjusted EBITDA increased by 11.3% to $56.8 million, and adjusted EBITDA margin remained flat at 18.0%.

Balance Sheet, Cash Flow, and Liquidity

Latham ended the second quarter of 2026 with cash of $43.5 million. Net cash provided by operating activities was $53.5 million in the second quarter. In the first half, net cash provided by operating activities was $5.8 million, representing seasonal trends in working capital requirements in line with the Company’s expectations.

Total debt was $279.8 million at the end of the second quarter, and the net debt leverage ratio was 2.2.

Capital expenditures totaled $5.6 million in the second quarter of 2026, compared to $6.8 million in the comparable quarter last year. First half capital expenditures were $28.1 million, inclusive of the purchase of the four key production sites. In last year’s first half, capital expenditures were $10.3 million. In addition, the Company completed the acquisition of Freedom Pools for a purchase price of $17.0 million in February 2026.

Summary and Outlook

“Our strong first-half results support our conviction that Latham has substantial growth opportunities, and that we are gaining share in a market that we expect to be flat versus the prior year. Based on our year-to-date performance and our current visibility into Q3, we are pleased to increase our full year guidance for sales and adjusted EBITDA growth. Our revised guidance for 2026, contained in the table below, anticipates net sales growth of 11.7% at the midpoint, of which 8.4% is expected to be organic growth, and adjusted EBITDA growth of 15.2% at the midpoint, while we continue to invest to grow our position in established markets and drive material conversion in the Sand States.

“As a leader in each of our product categories, Latham is well-positioned to continue to significantly outperform new U.S. pool starts, supported by the commitment to excellence that our people have consistently shown and the loyalty and trust of our dealers,” Mr. Gadd concluded.

FY 2026 Updated Guidance Ranges  UpdatedOriginalNet Sales$600-620 million$580-610 millionAdjusted EBITDA1$110-120 million$105-120 millionCapital Expenditures$40-45 million$42-48 million  1) A reconciliation of Latham’s projected Adjusted EBITDA to net income (loss) for 2026 is not available due to uncertainty related to our future income tax expense (benefit).

Conference Call Details

Latham will hold a conference call to discuss its second quarter 2026 financial results today, August 4, 2026, at 4:30 PM Eastern Time.

Participants are encouraged to pre-register for the conference call by visiting https://dpregister.com/sreg/10209873/1043c6f57f1. Callers who pre-register will be sent a confirmation e-mail including a conference passcode and unique PIN to gain immediate access to the call. Participants may pre-register at any time, including up to and after the call start time. To ensure you are connected for the full call, please register at least 10 minutes before the start of the call.

A live audio webcast of the conference call, along with related presentation materials, will be available online at https://ir.lathampool.com/ under “Events & Presentations.”

Those without internet access or unable to pre-register may dial in by calling:

PARTICIPANT DIAL IN (TOLL FREE): 1-833-953-2435
PARTICIPANT INTERNATIONAL DIAL IN: 1-412-317-5764

An archived webcast will be available approximately two hours after the conclusion of the call, through August 4, 2027, on the Company’s investor relations website under “Events & Presentations.” A transcript of the event will also be available on the Company’s investor relations website approximately three business days after the call.

About Latham Group, Inc.

Latham Group, Inc., headquartered in Latham, NY, is the largest designer, manufacturer, and marketer of in-ground residential swimming pools in North America, Australia, and New Zealand. Latham has a coast-to-coast operations platform consisting of approximately 1,900 employees on average across around 40 locations.

Non-GAAP Financial Measures

We track our non-GAAP financial measures to monitor and manage our underlying financial performance. This earnings release includes the presentation of Adjusted EBITDA, Adjusted EBITDA margin, net debt and net debt leverage ratio, which are non-GAAP financial measures that exclude the impact of certain costs, losses, and gains that are required to be included under U.S. GAAP. Although we believe these measures are useful to investors and analysts for the same reasons it is useful to management, as discussed below, these measures are neither a substitute for, nor superior to, U.S. GAAP financial measures or disclosures. Other companies may calculate similarly-titled non-GAAP measures differently, limiting their usefulness as comparative measures. In addition, our presentation of non-GAAP financial measures should not be construed to imply that our future results will be unaffected by any such adjustments. We have reconciled our historic non-GAAP financial measures to the applicable most comparable U.S. GAAP measures in this news release.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA and Adjusted EBITDA margin are key metrics used by management and our board of directors to assess our financial performance. Adjusted EBITDA and Adjusted EBITDA margin are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry, when considered alongside other GAAP measures. We use Adjusted EBITDA and Adjusted EBITDA margin to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, to utilize as a significant performance metric in our incentive compensation plans, and to compare our performance against that of other companies using similar measures. We have presented Adjusted EBITDA and Adjusted EBITDA margin solely as supplemental disclosures because we believe they allow for a more complete analysis of results of operations and assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance, such as (i) depreciation and amortization, (ii) interest expense, net, (iii) income tax expense (benefit) (iv), (gain) loss on sale and disposal of property and equipment, (v) restructuring charges, (vi) stock-based compensation expense, (vii) unrealized (gains) losses on foreign currency transactions, (viii) strategic initiative costs, (ix) acquisition and integration related costs and (x) other.

Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures and should not be considered as alternatives to net income (loss) as a measure of financial performance or any other performance measure derived in accordance with GAAP, and they should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. We encourage evaluation of these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA and Adjusted EBITDA margin, be mindful that in the future we may incur expenses that are the same as or similar to some of the adjustments in this earnings release. There can be no assurance that we will not modify the presentation of Adjusted EBITDA and Adjusted EBITDA margin in the future, and any such modification may be material. In addition, other companies, including companies in our industry, may not calculate Adjusted EBITDA and Adjusted EBITDA margin at all or may calculate Adjusted EBITDA and Adjusted EBITDA margin differently and accordingly, are not necessarily comparable to similarly entitled measures of other companies, which reduces the usefulness of Adjusted EBITDA and Adjusted EBITDA margin as tools for comparison.

Adjusted EBITDA and Adjusted EBITDA margin have their limitations as analytical tools, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are that Adjusted EBITDA and Adjusted EBITDA margin:

do not reflect every expenditure, future requirements for capital expenditures or contractual commitments;do not reflect changes in our working capital needs;do not reflect the interest expense, net, or the amounts necessary to service interest or principal payments, on our outstanding debt;do not reflect income tax (benefit) expense, and because the payment of taxes is part of our operations, tax expense is a necessary element of our costs and ability to operate;do not reflect non-cash stock-based compensation, which will remain a key element of our overall compensation package; anddo not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations. Although depreciation and amortization are eliminated in the calculation of Adjusted EBITDA and Adjusted EBITDA margin, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA and Adjusted EBITDA margin do not reflect any costs of such replacements.

Net Debt and Net Debt Leverage Ratio

Net Debt and Net Debt Leverage Ratio are non-GAAP financial measures used in monitoring and evaluating our overall liquidity, financial flexibility, and leverage. Other companies may calculate similarly titled non-GAAP measures differently, limiting their usefulness as comparative measures. We define Net Debt as total debt less cash and cash equivalents. We define the Net Debt Leverage Ratio as Net Debt divided by last twelve months (“LTM”) of Adjusted EBITDA. We believe this measure is an important indicator of our ability to service our long-term debt obligations. There are material limitations to using Net Debt Leverage Ratio as we may not always be able to use cash to repay debt on a dollar-for-dollar basis.

Forward-Looking Statements

Certain statements in this earnings release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this release other than statements of historical fact may constitute forward-looking statements, including statements regarding our future operating results and financial position, our business strategy and plans, business and market trends, our objectives for future operations, macroeconomic and geopolitical conditions, changes in U.S. trade priorities, policies, regulations and tariffs, the implementation of our cost reduction plans and expected benefits, and the sufficiency of our cash balances, working capital and cash generated from operating, investing, and financing activities for our future liquidity and capital resource needs. These statements involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside of our control, which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including: inflationary impacts, including on consumer demand for our products; the impact of trade policies on our global supply chain, the import or export of goods and their related costs, as well as on consumer confidence; natural disasters, public health issues or other catastrophic events; adverse weather conditions impacting our sales, which can lead to significant variability of sales in reporting periods; interruption of our production capability at our manufacturing facilities from accident, fire, calamity and other causes; unfavorable economic conditions and related impact on consumer spending and demand for our products; our ability to keep pace with technological developments and standards, such as generative artificial intelligence; compliance with government regulations; declining home ownership affecting demand for our products; our ability to source raw materials and components for manufacturing our products; competitive risks; product quality issues, warranty claims or safety concerns such as those due to the failure of builders to follow our product installation instructions and specifications; our ability to attract, develop and retain highly qualified personnel; our ability to collect accounts receivables from our customers; our ability and the cost to obtain transportation services; the protection of our intellectual property and defense of third-party infringement claims; international business risks; realizing anticipated benefits from acquisitions; possible asset impairments; and our ability to secure financing and our substantial indebtedness; and other factors set forth under “Risk Factors” and elsewhere in our most recent Annual Report on Form 10-K and subsequent reports we file with the SEC. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time that may impair our business, financial condition, results of operations and cash flows.

Although we believe that the expectations reflected in the forward-looking statements are reasonable and our expectations based on third-party information and projections are from sources that management believes to be reputable, we cannot guarantee future results, levels of activities, performance or achievements. These forward-looking statements reflect our views with respect to future events as of the date hereof or the date specified herein, and we have based these forward-looking statements on our current expectations and projections about future events and trends. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to update or review publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date hereof. We anticipate that subsequent events and developments will cause our views to change. Our forward-looking statements further do not reflect the potential impact of any future acquisitions, merger, dispositions, joint ventures or investments we may undertake.

Contact:
Lynn Morgen
Casey Kotary
ADVISIRY Partners
[email protected]
212-750-5800

Latham Group, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)   Fiscal Quarter Ended Two Fiscal Quarters Ended  June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025Net sales $197,474 $172,639  $314,789 $284,059 Cost of sales  127,396  108,676   207,554  187,215 Gross profit  70,078  63,963   107,235  96,844 Selling, general, and administrative expense  37,620  31,940   74,209  62,560 Amortization  7,366  7,299   14,535  14,491 Income from operations  25,092  24,724   18,491  19,793 Other expense:            Interest expense, net  5,930  7,149   10,686  13,520 Other expense (income), net  1,376  (3,047)  2,194  (3,355)Total other expense, net  7,306  4,102   12,880  10,165 Earnings from equity method investment  1,081  488   1,916  1,441 Income before income taxes  18,867  21,110   7,527  11,069 Income tax expense  6,113  5,130   3,307  1,051 Net income $12,754 $15,980  $4,220 $10,018 Net income per share attributable to common stockholders:            Basic $0.11 $0.14  $0.04 $0.09 Diluted $0.11 $0.13  $0.04 $0.08 Weighted-average common shares outstanding – basic and diluted            Basic  117,476,605  116,466,736   117,191,888  116,181,404 Diluted  119,541,000  119,389,997   119,732,620  119,624,905   Latham Group, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)   June 27, December 31,  2026
 2025
Assets      Current assets:      Cash $43,480  $71,043 Trade receivables, net  95,230   39,914 Inventories, net  79,610   74,926 Income tax receivable  9,283   12,178 Prepaid expenses and other current assets  13,024   20,943 Total current assets  240,627   219,004 Property and equipment, net  136,331   118,820 Equity method investment  28,397   26,482 Deferred tax assets  1,056   718 Operating lease right-of-use assets  30,332   30,723 Goodwill  161,519   155,189 Intangible assets, net  258,225   268,073 Other assets  3,885   4,214 Total assets $860,372  $823,223 Liabilities and Stockholders’ Equity      Current liabilities:      Accounts payable $37,992  $19,283 Current maturities of long-term debt  3,250   3,250 Income tax payable  387   — Current operating lease liabilities  6,892   7,630 Accrued expenses and other current liabilities  63,006   48,979 Total current liabilities  111,527   79,142 Long-term debt, net of discount, debt issuance costs, and current portion  276,563   276,591 Deferred income tax liabilities, net  34,270   34,269 Non-current operating lease liabilities  24,314   23,964 Other long-term liabilities  2,266   3,396 Total liabilities $448,940  $417,362 Commitments and contingencies      Stockholders’ equity:      Preferred stock, $0.0001 par value; 100,000,000 shares authorized as of both June 27, 2026 and December 31, 2025; no shares issued and outstanding as of both June 27, 2026 and December 31, 2025  —   — Common stock, $0.0001 par value; 900,000,000 shares authorized as of June 27, 2026 and December 31, 2025; 117,535,232 and 116,766,927 shares issued and outstanding, as of June 27, 2026 and December 31, 2025, respectively  12   12 Additional paid-in capital  473,660   473,423 Accumulated deficit  (59,472)  (63,692)Accumulated other comprehensive loss  (2,768)  (3,882)Total stockholders’ equity  411,432   405,861 Total liabilities and stockholders’ equity $860,372  $823,223   Latham Group, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)   Two Fiscal Quarters Ended  June 27, June 28,  2026
 2025
Cash flows from operating activities:      Net income $4,220  $10,018 Adjustments to reconcile net income to net cash (used in) provided by operating activities:      Depreciation and amortization  26,739   25,097 Gain on insurance proceeds received for capital      Unrealized foreign currency loss (gain)  2,227   (4,059)Amortization of deferred financing costs and debt discount  860   860 Non-cash lease expense  3,815   3,569 Change in fair value of interest rate swap  (1,076)  601 Stock-based compensation expense  2,713   3,352 Bad debt expense  1,137   1,372 Other non-cash, net  (556)  674 Earnings from equity method investment  (1,916)  (1,441)Changes in operating assets and liabilities:      Trade receivables  (56,080)  (57,447)Inventories  (1,201)  (900)Prepaid expenses and other current assets  (2,996)  (2,706)Income tax receivable  2,895   (4,924)Other assets  (484)  (151)Accounts payable  17,833   13,069 Accrued expenses and other current liabilities  7,707   2,351 Other long-term liabilities  (54)  (240)Net cash provided by (used in) operating activities  5,783   (10,905)Cash flows from investing activities:      Purchases of property and equipment  (16,053)  (10,344)Acquisition of business, net of cash acquired  (14,250)  (4,934)Net cash used in investing activities  (30,303)  (15,278)Cash flows from financing activities:      Payments on long-term debt borrowings  (813)  (813)Proceeds from borrowings on revolving credit facility  35,000   25,000 Payments on revolving credit facilities  (35,000)  (25,000)Repayments of finance lease obligations  (441)  (404)Common stock withheld for taxes on restricted stock units  (2,476)  (2,363)Net cash used in financing activities  (3,730)  (3,580)Effect of exchange rate changes on cash  687   308 Net decrease in cash  (27,563)  (29,455)Cash at beginning of period  71,043   56,398 Cash at end of period $43,480  $26,943 Supplemental cash flow information:      Cash paid for interest $11,387  $14,683 Income taxes paid, net  304   379 Supplemental disclosure of non-cash investing and financing activities:      Purchases of property and equipment included in accounts payable and accrued expenses $1,056  $400 Right-of-use operating and finance lease assets obtained in exchange for lease liabilities  10,400   1,272 Purchase of property and equipment through settlement of deposit  12,000   —   Latham Group, Inc.
Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation
(Non-GAAP Reconciliation)
(in thousands)  Fiscal Quarter Ended Two Fiscal Quarters Ended  June 27, 2026  June 28, 2025 June 27, 2026  June 28, 2025 Net income$12,754  $15,980  $4,220  $10,018  Depreciation and amortization 13,672   12,697   26,739   25,097  Interest expense, net 5,930   7,149   10,686   13,520  Income tax expense 6,113   5,130   3,307   1,051  Loss on sale and disposal of property and equipment —   115   —   46  Restructuring charges(a) —   145   —   160  Stock-based compensation expense(b) 1,609   1,381   2,713   3,352  Unrealized losses (gains) on foreign currency transactions(c) 1,231   (3,643)  2,227   (4,059) Strategic initiative costs(d) 509   918   959   1,562  Acquisition and integration related costs(e) 2,798   16   5,925   283  Other(f) —   (1)  —   (3) Adjusted EBITDA$44,616  $39,887  $56,776  $51,027  Net sales$197,474  $172,639  $314,789  $284,059  Net income margin 6.5 % 9.3 % 1.3 % 3.5 %Adjusted EBITDA margin 22.6 % 23.1 % 18.0 % 18.0 %  (a) Represents costs that include severance and other expenses for our executive management changes.
(b) Represents non-cash stock-based compensation expense.
(c) Represents unrealized foreign currency transaction (gains) losses associated with our international subsidiaries.
(d) Represents fees paid to external consultants and other expenses for our strategic initiatives.
(e) Represents acquisition and integration costs, as well as other costs related to potential transactions.
(f) Other costs consist of other discrete items as determined by management, primarily including: (i) fees paid to external advisors for various matters and (ii) other items.

Latham Group, Inc.
Net Debt Leverage Ratio
(Non-GAAP Reconciliation)
(in thousands)    June 27, 2026 Total Debt $279,813     Less:   Cash  (43,480)Net Debt  236,333     LTM Adjusted EBITDA(1)  105,580 Net Debt Leverage Ratio  2.24x   (1) LTM Adjusted EBITDA is defined as Adjusted EBITDA for the most recent 12-month period.

DENVER--(BUSINESS WIRE)--Healthpeak Properties, Inc. (NYSE: DOC) ("Healthpeak"), a leading owner, operator, and developer of real estate for healthcare discovery and delivery, today announced results for the quarter ended June 30, 2026.

SECOND QUARTER 2026 FINANCIAL PERFORMANCE AND RECENT HIGHLIGHTS

Net income of $0.08 per share and FFO as Adjusted of $0.46 per share Second quarter Outpatient Medical and Lab new and renewal lease executions totaled 1.6 million square feet: Outpatient Medical new lease executions totaled 327,000 square feet and renewal lease executions totaled 916,000 square feet Subsequent to the second quarter, we have entered into approximately 204,000 square feet of Outpatient Medical leases and have another approximately 882,000 under signed letters of intent ("LOIs") Lab new lease executions totaled 222,000 square feet and renewal lease executions totaled 159,000 square feet Subsequent to the second quarter, we have entered into approximately 20,000 square feet of Lab leases and have another approximately 480,000 square feet under signed LOIs Total occupancy increased sequentially by +20 basis points ("bps") in Outpatient Medical to 90.7% and by +80 bps in Lab to 78.5% Janus Living (NYSE: JAN) reported year-over-year revenue and Adjusted EBITDAre growth of 45% and 34%, respectively Entered into a new $20 million outpatient medical development agreement to support Northside Hospital’s continued expansion in the Atlanta market Generated $1.4 billion of proceeds from Outpatient Medical recapitalizations, seller financing loan repayments, and dispositions during the second quarter and through August 3, bringing year-to-date proceeds to $1.75 billion As previously disclosed, in July 2026, closed on the recapitalization and sale of a 49% joint venture interest in an 86-asset, 5.6 million square foot outpatient medical portfolio to affiliates of Brookfield at a gross valuation of $2.1 billion, generating proceeds of approximately $1.025 billion Net Debt to Adjusted EBITDAre was 4.7x for the quarter ended June 30, 2026 Authorized new $500 million share repurchase program Published 15th annual Corporate Impact Report highlighting Healthpeak's continued focus on building a resilient portfolio, advancing sustainability goals, fostering a workplace culture guided by our WE CARE core values, and promoting sound corporate governance and transparency To learn more and view the Corporate Impact Report, please visit www.healthpeak.com/corporate-impact

SECOND QUARTER RESULTS

Three Months Ended June 30,

2026

2025

Diluted Net income (loss) per common share

$

0.08

$

0.05

Diluted FFO as Adjusted per common share

0.46

0.46

Year-Over-Year Same-Store ("SS") Adjusted NOI Growth

Three Month

SS Growth %

% of SS

Outpatient Medical

2.5

%

56.4

%

Lab

(3.2

%)

34.0

%

Senior Housing

19.2

%

9.6

%

Total

1.8

%

100.0

%

JANUS LIVING SECOND QUARTER FINANCIAL AND OPERATING HIGHLIGHTS

Revenue of $216 million, up 45% compared to the prior year quarter Adjusted EBITDAre of $79 million, up 34% compared to the prior year quarter Total Adjusted Net Operating Income of $58 million, up 37% compared to the prior year quarter Same-store Adjusted NOI increased 19.2% and margin expanded 250 basis points During the second quarter, acquired two senior housing communities for approximately $105 million Subsequent to quarter end, and through August 3, 2026, completed approximately $1.0 billion of senior housing acquisitions As of August 3, 2026, and subsequent to closing the acquisitions referenced above, Janus Living had approximately $558 million of unrestricted cash and no outstanding debt Under purchase agreement for approximately $59 million incremental senior housing acquisition Janus Living, Inc. is a pure-play senior housing real estate investment trust that owns high-quality communities across the United States, and is majority owned by Healthpeak. Healthpeak owns 214.7 million shares of Janus Living common stock and operating partnership common units, representing a 73.6% equity ownership as of June 30, 2026. Janus Living is consolidated into Healthpeak’s financial statements, with the approximately 26.4% not owned by Healthpeak reported as noncontrolling interest.

NORTHSIDE OUTPATIENT MEDICAL DEVELOPMENT

In June 2026, Healthpeak entered into a development agreement for a new $20 million, 33,000 square foot outpatient medical building in the Sugar Hill submarket of Atlanta, Georgia.

The development is 84% pre-leased to Northside Hospital and affiliated physician groups supporting a range of clinical services and extends Northside’s network in a high-growth submarket connecting its Forsyth and Gwinnett hospital campuses.

The development represents Healthpeak’s fifth ground-up project totaling 565,000 square feet supporting Northside Hospital’s continued outpatient expansion in the Atlanta market.

OUTPATIENT MEDICAL JOINT VENTURE RECAPITALIZATION

As previously disclosed, in July 2026, Healthpeak entered into a joint venture with affiliates of Brookfield Asset Management (“Brookfield”) through the contribution of an 86-property outpatient medical portfolio valued at approximately $2.1 billion. The portfolio comprises approximately 5.6 million square feet and is located across 11 states including Kentucky, Indiana, Pennsylvania, Arkansas, Illinois, Minnesota, New Jersey, and New York. The portfolio is 95% leased with a weighted average remaining lease term of six years.

Under the terms of the joint venture, Brookfield owns a 49% non-controlling equity interest and Healthpeak retains a 51% interest in the joint venture and serves as managing member, providing asset and property management services and earning customary fees.

Healthpeak received proceeds of approximately $1.025 billion for the sale of the 49% interest. The transaction implies a trailing cash capitalization rate of approximately 5.9% and a valuation of approximately $380 per square foot. Healthpeak retains a call right for a finite period beginning after year seven to repurchase Brookfield’s interest at a price sufficient to provide Brookfield with a 6.5% net annual rate of return excluding initial transaction expenses.

The joint venture advances Healthpeak’s capital allocation strategy by generating proceeds to strengthen its balance sheet, fund investment opportunities, and support long-term growth. The transaction establishes a structure by which the parties can expand their relationship over time and also underscores the differentiated platform Healthpeak has built, including deep health system relationships and ongoing investments across the enterprise in technology, systems, and innovation that enhance long-term portfolio performance.

SELLER FINANCING LOAN REPAYMENT AND OTHER DISPOSITIONS

In June 2026, Healthpeak received approximately $400 million of gross proceeds from the partial repayment of a seller financing loan. The remaining $20 million loan balance was extended by 12 months pursuant to contractual extension rights. The repayment resulted in a one-time $9 million increase in interest income from the accelerated recognition of the remaining fair value discount.

During the second quarter of 2026, Healthpeak closed on $40 million of non-core outpatient medical dispositions at a trailing cash capitalization rate of 4.9%.

BALANCE SHEET

In June 2026, Healthpeak repaid $142 million of mortgage debt.

Subsequent to the end of the second quarter, Healthpeak used proceeds from the Brookfield joint venture to repay $650 million of 3.25% senior notes at maturity and approximately $375 million of borrowings under its commercial paper program.

As of August 3, 2026, Healthpeak had $3.4 billion of liquidity including cash and available credit facility capacity.

SHARE REPURCHASE ACTIVITY AND NEW SHARE REPURCHASE AUTHORIZATION

As previously disclosed, in April 2026, Healthpeak repurchased 5.9 million common shares at a weighted average share price of $16.81 for approximately $100 million under its $500 million share repurchase program.

In July 2026, Healthpeak's Board of Directors authorized a new $500 million share repurchase program, replacing the existing $500 million authorization. The shares may be repurchased through various methods, including in the open market at Healthpeak's discretion and subject to market conditions, regulatory requirements, and other customary conditions.

DIVIDEND

On July 9, 2026, Healthpeak's Board of Directors declared a monthly common stock cash dividend of $0.10167 per share for each of July, August, and September of 2026, representing cash dividends totaling $0.305 per share for the third quarter, and an annualized dividend amount of $1.22 per share. The dividend is payable on the payment dates set forth in the table below to stockholders of record as of the close of business on the corresponding record date. Future dividends are at the discretion of Healthpeak's Board of Directors.

Record Date

Payment Date

Amount

July 20, 2026

July 31, 2026

$0.10167 per common share

August 17, 2026

August 28, 2026

$0.10167 per common share

September 14, 2026

September 25, 2026

$0.10167 per common share

GUIDANCE

Healthpeak's 2026 guidance ranges are updated as follows:

Full Year 2026

As of 5/5/26

As of 8/4/26

Mid-Point Change

Diluted earnings per common share

$0.46

-

$0.50

$0.48

-

$0.52

$0.02 increase

Diluted FFO as Adjusted per share

$1.71

-

$1.75

$1.73

-

$1.77

$0.02 increase

Total Same-Store Cash (Adjusted) NOI

(1)%

-

1%

0%

-

1.5%

75 bps increase

These estimates are based on our current view of existing market conditions, transaction timing, and other assumptions for the year ending December 31, 2026. For additional guidance ranges, details, and assumptions, please see page 10 in our corresponding Supplemental Report and the Discussion and Reconciliation of Non-GAAP Financial Measures, both of which are available in the Investor Relations section of our website at http://ir.healthpeak.com.

CONFERENCE CALL INFORMATION

Healthpeak has scheduled a conference call and webcast for Wednesday, August 5, 2026, at 10:00 a.m. Eastern Time.

Healthpeak’s website: https://ir.healthpeak.com/news-events Webcast: https://events.q4inc.com/attendee/933204731. Joining via webcast is recommended for those who will not be asking questions. Telephone: The participant dial-in number is (833) 461-5787. The international dial-in is (585) 542-9983. The conference ID number is 933 204 731. A webcast replay will be available on Healthpeak’s website for 30 days.

ABOUT HEALTHPEAK

Healthpeak Properties, Inc. is a fully integrated real estate investment trust (REIT) and S&P 500 company. Healthpeak owns, operates, and develops high-quality real estate focused on healthcare discovery and delivery.

NON-GAAP FINANCIAL MEASURES

Nareit FFO, FFO as Adjusted, Total Same-Store Cash (Adjusted) NOI, Adjusted EBITDAre, and Net Debt to Adjusted EBITDAre are supplemental non-GAAP financial measures that we believe are useful in evaluating the operating performance and financial position of real estate investment trusts. See "June 30, 2026 Discussion and Reconciliation of Non-GAAP Financial Measures" for definitions, discussions of their uses and inherent limitations, and reconciliations to the most directly comparable financial measures calculated and presented in accordance with GAAP, available in the Investor Relations section of our website at http://ir.healthpeak.com/quarterly-results. See also the "Funds From Operations" section of this release for additional information. Additionally, as used herein with respect to Janus Living, Adjusted EBITDAre, Total Adjusted Net Operating Income, and Same-Store Adjusted NOI are supplemental non-GAAP financial measures that we believe are useful in evaluating the operating performance and financial position of Janus Living. See "June 30, 2026 Discussion and Reconciliation of Non-GAAP Financial Measures" for definitions, discussions of their uses and inherent limitations, and reconciliations to the most directly comparable financial measures calculated and presented in accordance with GAAP, available in the Investor Relations section of the Janus Living website at https://ir.janusreit.com/financials/quarterly-results.

FORWARD-LOOKING STATEMENTS

Statements contained in this release that are not historical facts are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, among other things, statements regarding our and our officers' intent, belief or expectation as identified by the use of words such as "may," "will," "project," "expect," "believe," "intend," "anticipate," "seek," "target," "forecast," "plan," "potential," "estimate," "could," "would," "should" and other comparable and derivative terms or the negatives thereof. Examples of forward-looking statements include, among other things: (i) statements regarding timing, outcomes and other details relating to pending or contemplated acquisitions, dispositions, developments, redevelopments, joint venture transactions, leasing activity and commitments, financing activities, or other transactions discussed in this release; (ii) the payment of a monthly cash dividend; and (iii) the information presented under the heading "Guidance." Pending acquisitions, dispositions, joint venture transactions, leasing activity, and financing activity, including those subject to binding agreements, remain subject to closing conditions and may not be completed within the anticipated timeframes or at all. Forward-looking statements reflect our current expectations and views about future events and are subject to risks and uncertainties that could significantly affect our future financial condition and results of operations. While forward-looking statements reflect our good faith belief and assumptions we believe to be reasonable based upon current information, we can give no assurance that our expectations or forecasts will be attained. Further, we cannot guarantee the accuracy of any such forward-looking statement contained in this release, and such forward-looking statements are subject to known and unknown risks and uncertainties that are difficult to predict. As more fully set forth under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission ("SEC"), these risks and uncertainties include, but are not limited to: changes to regulatory, funding, staffing, trade, and other policies and actions by the U.S. political administration; macroeconomic trends that may increase borrowing, construction, labor and other operating costs; changes within the life science industry, and significant regulation, funding requirements, and uncertainty faced by our lab tenants; factors adversely affecting our tenants’, operators’, or borrowers’ ability to meet their financial and other contractual obligations to us; the insolvency or bankruptcy of one or more of our major tenants, operators, or borrowers; our concentration of real estate investments in the healthcare property sector, which makes us more vulnerable to a downturn in that specific sector than if we invested across multiple sectors; the illiquidity of real estate investments; our ability to identify and secure new or replacement tenants and operators; our property development, redevelopment, and tenant improvement risks, which can render a project less profitable or unprofitable and delay or prevent its undertaking or completion; the ability of the hospitals on whose campuses our outpatient medical buildings are located and their affiliated healthcare systems to remain competitive or financially viable; operational risks associated with our senior housing properties managed by third parties, including our properties operated through structures permitted by the Housing and Economic Recovery Act of 2008, which includes most of the provisions previously proposed in the REIT Investment Diversification and Empowerment Act of 2007 (commonly referred to as “RIDEA”); the failure of our tenants, operators, and borrowers to comply with federal, state, and local laws and regulations, including resident health and safety requirements, as well as licensure, certification, and inspection requirements; required regulatory approvals to transfer our senior housing properties; compliance with the Americans with Disabilities Act and fire, safety, and other regulations; the requirements of, or changes to, governmental reimbursement programs such as Medicare or Medicaid; economic conditions, natural disasters, weather, and other conditions that negatively affect geographic areas where we have concentrated investments; uninsured or underinsured losses, which could result in a significant loss of capital invested in a property, lower than expected future revenues, and unanticipated expenses; our use of joint ventures may limit our returns on and our flexibility with jointly owned investments; our use of rent escalators or contingent rent provisions in our leases; competition for suitable healthcare properties to grow our investment portfolio; our ability to exercise rights on collateral securing our real estate-related loans; any requirement that we recognize reserves, allowances, credit losses, or impairment charges; investment of substantial resources and time in transactions that are not consummated; our ability to successfully integrate and/or operate acquisitions or internalize property management; the potential impact of unfavorable resolution of litigation or disputes and resulting rising liability and insurance costs; environmental compliance costs and liabilities associated with our real estate investments; environmental, social and governance and sustainability commitments and changing requirements, as well as stakeholder expectations; epidemics, pandemics, or other infectious diseases, and health and safety measures intended to reduce their spread; our past participation in the Coronavirus Aid, Relief, and Economic Security Act Provider Relief Fund and other Covid-related stimulus and relief programs; laws or regulations prohibiting eviction of our tenants; human capital risks, including the loss or limited availability of our key personnel; our reliance on information technology and any material failure, inadequacy, interruption, or security failure of that technology; the use of, or inability to use, artificial intelligence by us, our tenants, our vendors, and our investors; volatility, disruption, or uncertainty in the financial markets; increased interest rates and borrowing costs, which could impact our ability to refinance existing debt, sell properties, and conduct investment activities; cash available for distribution to stockholders and our ability to make dividend distributions at expected levels; the availability of external capital on acceptable terms or at all; an increase in our level of indebtedness; covenants in our debt instruments, which may limit our operational flexibility, and breaches of these covenants; volatility in the market price and trading volume of our common stock; adverse changes in our credit ratings; the initial public offering of Janus Living, and may not achieve the intended benefits; our economic exposure to shifts in the price of Janus Living common stock and our ability to control the assets and activities of Janus Living; potential conflicts of interest in our relationship with Janus Living; our ability to maintain our qualification as a real estate investment trust (“REIT”); our taxable REIT subsidiaries being subject to corporate level tax; tax imposed on any net income from “prohibited transactions”; changes to U.S. federal income tax laws, and potential deferred and contingent tax liabilities from corporate acquisitions; calculating non-REIT tax earnings and profits distributions; tax protection agreements that may limit our ability to dispose of certain properties and may require us to maintain certain debt levels; ownership limits in our charter that restrict ownership in our stock, and provisions of Maryland law and our charter that could prevent a transaction that may otherwise be in the interest of our stockholders; conflicts of interest between the interests of our stockholders and the interests of holders of Healthpeak OP, LLC (“Healthpeak OP”) common units; provisions in the operating agreement of Healthpeak OP and other agreements that may delay or prevent unsolicited acquisitions and other transactions; our status as a holding company of Healthpeak OP; and other risks and uncertainties described from time to time in our SEC filings.

Moreover, other risks and uncertainties of which we are not currently aware may also affect our forward-looking statements, and may cause actual results and the timing of events to differ materially from those anticipated. The forward-looking statements made in this communication are made only as of the date hereof or as of the dates indicated in the forward-looking statements, even if they are subsequently made available by us on our website or otherwise. We do not undertake any obligation to update or supplement any forward-looking statements to reflect actual results, new information, future events, changes in its expectations or other circumstances that exist after the date as of which the forward-looking statements were made.

Healthpeak Properties, Inc.

Consolidated Balance Sheets

In thousands, except share and per share data

June 30,
2026

December 31,
2025

Assets

Real estate:

Buildings and improvements

$

17,211,536

$

16,593,535

Development costs and construction in progress

969,495

1,010,657

Land and improvements

3,225,957

3,007,346

Accumulated depreciation

(4,543,382

)

(4,512,443

)

Net real estate

16,863,606

16,099,095

Loans receivable, net of reserves of $8,165 and $11,345

261,398

606,020

Investments in unconsolidated joint ventures

526,780

802,601

Accounts receivable, net of allowance of $3,523 and $2,018

72,134

78,327

Cash and cash equivalents

1,626,827

467,457

Restricted cash

91,858

70,245

Intangible assets

717,494

654,516

Assets held for sale

37,101

80,621

Right-of-use asset

395,124

412,198

Deferred tax assets

122,320

111,248

Goodwill

68,529

68,529

Other assets

896,875

885,161

Total assets

$

21,680,046

$

20,336,018

Liabilities and Equity

Bank line of credit and commercial paper

$

1,495,994

$

1,078,850

Term loans

1,646,282

1,647,113

Senior unsecured notes

6,785,697

6,772,722

Mortgage debt

104,213

349,209

Intangible liabilities

155,466

173,697

Liabilities related to assets held for sale

594

11,900

Lease liability

288,194

296,260

Accounts payable, accrued liabilities, and other liabilities

678,687

718,509

Deferred revenue

1,026,479

985,307

Total liabilities

12,181,606

12,033,567

Commitments and contingencies

Redeemable noncontrolling interests

27,695

159,581

Common stock, $1.00 par value: 1,500,000,000 shares authorized; 689,465,312 and 695,036,731 shares issued and outstanding

689,465

695,037

Additional paid-in capital

13,273,880

12,767,914

Cumulative dividends in excess of earnings

(6,129,129

)

(5,952,920

)

Accumulated other comprehensive income (loss)

10,534

(9,937

)

Total stockholders’ equity

7,844,750

7,500,094

Public investors of Janus Living, Inc.

979,186

—

Joint venture partners

291,294

295,455

Non-managing member unitholders

355,515

347,321

Total noncontrolling interests

1,625,995

642,776

Total equity

9,470,745

8,142,870

Total liabilities and equity

$

21,680,046

$

20,336,018

Healthpeak Properties, Inc.

Consolidated Statements of Operations

In thousands, except per share data

Three Months Ended

June 30,

Six Months Ended

June 30,

2026

2025

2026

2025

Revenues:

Rental and related revenues

$

533,354

$

529,687

$

1,071,790

$

1,067,828

Resident fees and services

216,456

148,855

416,801

297,782

Interest income and other

21,769

15,806

35,940

31,627

Total revenues

771,579

694,348

1,524,531

1,397,237

Costs and expenses:

Operating

333,123

276,181

656,984

549,324

Depreciation and amortization

283,390

265,916

573,124

534,462

Interest expense

92,280

75,063

179,572

147,756

General and administrative

22,517

20,764

47,108

46,882

Transaction costs

9,172

10,215

33,321

15,749

Impairments and loan loss reserves (recoveries), net

(1,479

)

3,499

(3,754

)

(63

)

Total costs and expenses

739,003

651,638

1,486,355

1,294,110

Other income (expense):

Gain (loss) on sales of real estate, net

9,988

1,636

60,657

1,636

Gain (loss) on debt extinguishments

—

—

(403

)

—

Other income (expense), net

16,766

(4,692

)

156,545

(10,818

)

Total other income (expense), net

26,754

(3,056

)

216,799

(9,182

)

Income (loss) before income taxes and equity income (loss) from unconsolidated joint ventures

59,330

39,654

254,975

93,945

Income tax benefit (expense)

1,402

(2,382

)

1,148

(4,462

)

Equity income (loss) from unconsolidated joint ventures

2,509

1,747

6,774

(400

)

Net income (loss)

63,241

39,019

262,897

89,083

Noncontrolling interests’ share in earnings

(10,423

)

(7,346

)

(16,446

)

(14,582

)

Net income (loss) attributable to Healthpeak Properties, Inc.

52,818

31,673

246,451

74,501

Participating securities’ share in earnings

(150

)

(115

)

(299

)

(579

)

Net income (loss) applicable to common shares

$

52,668

$

31,558

$

246,152

$

73,922

Earnings per common share:

Basic

$

0.08

$

0.05

$

0.36

$

0.11

Diluted

$

0.08

$

0.05

$

0.36

$

0.11

Weighted average shares outstanding:

Basic

689,885

695,188

692,508

697,117

Diluted

689,885

695,194

692,843

697,146

Healthpeak Properties, Inc.

Funds From Operations

In thousands, except per share data

Three Months Ended

June 30,

Six Months Ended

June 30,

2026

2025

2026

2025

Net income (loss) applicable to common shares

$

52,668

$

31,558

$

246,152

$

73,922

Real estate related depreciation and amortization

283,390

265,916

573,124

534,462

Healthpeak’s share of real estate related depreciation and amortization from unconsolidated joint ventures

7,644

12,530

14,856

24,730

Noncontrolling interests’ share of real estate related depreciation and amortization

(15,421

)

(4,426

)

(20,123

)

(8,879

)

Loss (gain) on sales of depreciable real estate, net

(9,988

)

(1,636

)

(60,657

)

(1,636

)

Healthpeak’s share of loss (gain) on sales of depreciable real estate, net, from unconsolidated joint ventures

1,793

—

1,793

—

Noncontrolling interests’ share of gain (loss) on sales of depreciable real estate, net

973

—

973

—

Loss (gain) upon change of control, net(1)

(226

)

—

(138,343

)

—

Taxes associated with real estate dispositions

(1,863

)

(335

)

(1,805

)

(335

)

Nareit FFO applicable to common shares

318,970

303,607

615,970

622,264

Distributions on dilutive convertible units and other

4,384

4,560

8,930

9,183

Diluted Nareit FFO applicable to common shares

$

323,354

$

308,167

$

624,900

$

631,447

Diluted Nareit FFO per common share

$

0.46

$

0.43

$

0.88

$

0.89

Weighted average shares outstanding - Diluted Nareit FFO

704,472

709,839

707,066

711,828

Impact of adjustments to Nareit FFO:

Transaction, merger, and restructuring-related costs(2)

$

7,734

$

10,215

$

28,302

$

15,749

Other impairments (recoveries) and other losses (gains), net(3)

(1,479

)

3,499

(3,754

)

179

Loss (gain) on debt extinguishments

—

—

302

—

Casualty-related charges (recoveries), net(4)

(4,191

)

3,919

(4,381

)

8,145

Recognition (reversal) of valuation allowance on deferred tax assets(5)

—

—

(3,058

)

—

Total adjustments

2,064

17,633

17,411

24,073

FFO as Adjusted applicable to common shares

321,034

321,240

633,381

646,337

Distributions on dilutive convertible units and other

4,382

4,545

8,916

9,161

Diluted FFO as Adjusted applicable to common shares

$

325,416

$

325,785

$

642,297

$

655,498

Diluted FFO as Adjusted per common share

$

0.46

$

0.46

$

0.91

$

0.92

Weighted average shares outstanding - Diluted FFO as Adjusted

704,472

709,839

707,066

711,828

Other operating data:

Amortization of deferred financing costs and debt discounts (premiums)

$

8,900

$

7,875

$

17,264

$

15,727

Non-refundable entrance fee sales in excess of (less than) the related GAAP amortization

12,866

19,042

20,621

23,739

Stock-based compensation amortization expense

4,351

1,738

8,853

6,365

Deferred income taxes

48

2,597

3,101

5,168

AFFO capital expenditures

(42,105

)

(25,729

)

(66,061

)

(48,864

)

Straight-line rents

(12,183

)

(5,401

)

(23,088

)

(16,554

)

Amortization of above (below) market lease intangibles, net

(6,308

)

(10,085

)

(12,905

)

(20,296

)

Other items(6)

(3,055

)

(1,069

)

(5,662

)

381

_______________________________________

Refer to footnotes on the next page.

(1)

  The six months ended June 30, 2026 includes a gain upon change of control related to (i) the acquisition of the remaining 46.5% interest in the SWF SH JV which held 19 senior housing properties and (ii) the disposition of an 80% interest in six outpatient medical buildings to a third-party. These gains upon change of control are included in other income (expense), net in the Consolidated Statements of Operations.

(2)

  The three and six months ended June 30, 2026 includes costs incurred related to the Janus Living IPO and investment pursuit costs. The three and six months ended June 30, 2025 includes costs related to the merger with Physicians Realty Trust, which are primarily comprised of severance, legal, accounting, tax, information technology, and other costs of combining operations with Physicians Realty Trust that were incurred during the period. The three and six months ended June 30, 2025 also included $6 million of costs incurred related to investments we are no longer pursuing.

(3)

  The three and six months ended June 30, 2026 and 2025 includes reserves and (recoveries) for expected loan losses recognized in impairments and loan loss reserves (recoveries), net in the Consolidated Statements of Operations.

(4)

  Casualty-related charges (recoveries), net are recognized in other income (expense), net, equity income (loss) from unconsolidated joint ventures, and noncontrolling interests’ share in earnings in the Consolidated Statements of Operations.

(5)

  The six months ended June 30, 2026 includes the income tax impact related to the change in tax status of certain entities in connection with the Janus Living IPO.

(6)

  Primarily includes: (i) amortization of deferred revenue, (ii) noncontrolling interests’ share of senior housing entrance fees in excess of (less than) the related GAAP amortization, and (iii) our proportionate share of AFFO capital expenditures and straight-line rents from unconsolidated joint ventures.

More News From Healthpeak Properties, Inc.

The Warner Bros. Water Tower is pictured at Warner Bros. Studios in Burbank, California, U.S. February 27, 2026. REUTERS/Daniel Cole Purchase Licensing Rights, opens new tab

CompaniesAug 4 (Reuters) - Lawsuits challenging Paramount Skydance's (PSKY.O), opens new tab acquisition of Warner Bros. Discovery (WBD.O), opens new tab will ​go to trial in March 2027, ‌a federal judge in California ruled on Tuesday.

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The ruling is a win for California Attorney ​General Rob Botna, who had sought ​an April trial. Paramount had asked ⁠for trial to start in November.

Paramount ​has agreed not to close the deal ​until a judge rules in the case, or until June 2027, whichever comes sooner.

The trial will ​last 12 days on claims by ​the California-led group of states and the Writers Guild ‌of ⁠America.

The states say the deal would harm competition in film and television distribution. The union says it would decrease competition ​for writing ​work.

Paramount ⁠has defended the deal, saying it will lead to more content ​production and a stronger Hollywood.

Paramount ​could ⁠owe as much as $1.7 billion in ticking fees it promised to Warner Bros. shareholders ⁠if ​the deal is delayed ​until next summer.

Reporting by Jody Godoy in New York; ​Editing by Mark Porter and Nick Zieminski

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Jody Godoy reports on tech policy and antitrust enforcement, including how regulators are responding to the rise of AI. Reach her at [email protected]

Record quarterly revenue of $392.4 million, up 27% QoQ and up 104% year-over-yearQ2 revenue strength reflects diversified growth across AI fabrics and signal conditioningQ3 revenue inflection to be driven by Scorpio™ X-Series 320-lane fabric switch production ramp SAN JOSE, Calif., Aug. 04, 2026 (GLOBE NEWSWIRE) -- Astera Labs, Inc. (Nasdaq: ALAB), a leader in semiconductor-based connectivity solutions for rack-scale AI infrastructure, today announced preliminary financial results for the second quarter of fiscal year 2026, ended June 30, 2026.

“Astera Labs delivered outstanding Q2 2026 results, with record revenue of $392.4 million, up 27% sequentially and 104% year-over-year, driven by broad-based strength across our portfolio, including record quarterly revenue for our Aries product line,” said Jitendra Mohan, Astera Labs’ Chief Executive Officer. “We expect momentum to accelerate in Q3 as Scorpio fabric switches become our largest product family, one quarter ahead of our prior expectations. This milestone will mark our evolution into a complete AI fabric infrastructure provider. New design wins across a broadening set of customers coupled with our expansion into optical interconnects and custom solutions further expand our growth opportunity in 2027 and beyond.”

Second Quarter of Fiscal 2026 Financial Highlights
GAAP Financial Results:  

Revenue of $392.4 million, up 27% sequentially and up 104% year-over-yearGAAP gross margin of 73.3%GAAP operating income of $89.2 millionGAAP operating margin of 22.7%GAAP net income of $153.1 millionGAAP diluted net income per share of $0.83 Non-GAAP Financial Results (1):

Non-GAAP gross margin of 73.7%Non-GAAP operating income of $153.5 millionNon-GAAP operating margin of 39.1%Non-GAAP net income of $145.8 millionNon-GAAP diluted net income per share of $0.80 ____________________
(1) See “Reconciliation of GAAP to Non-GAAP Financial Measures” table included below.

Q2 2026 and Recent Business Highlights

Expanded Taurus signal conditioning portfolio to include 3.2T Smart Retimers and Smart Redrivers for 224G Ethernet and UALink connectivity, purpose-built for AI infrastructure. The new Taurus Smart Signal Conditioners are the industry’s first OCP standard footprint compatible design to enable Smart Swap, which will give architects the flexibility to choose between low-power Smart Redrivers and long-reach Smart Retimers without board re-design. The expanded portfolio leverages Astera Labs’ Unified COSMOS software capabilities and will integrate telemetry, diagnostics, and intelligent link management to deliver advanced observability across high-speed interconnects.Showcased comprehensive portfolio updates at Computex 2026 in Taiwan highlighting current AI rack-scale connectivity strategy and the first public demonstration of the Scorpio X-Series 320 Lane Smart Fabric Switch. Additional demonstrations included ultra-low latency optical connectivity, NVIDIA MGX-based reference designs, 200G/lane technology with SerDes diagnostics, COSMOS-enabled rack-level validation, and production ready systems from Astera Labs and ecosystem partners.Demonstrated ecosystem partnership and compatibility at AMD Advancing AI 2026 with multiple exhibits highlighting Astera Labs’ solutions to resolve data movement bottlenecks across PCIe, CXL, and Ethernet. Joint architectures included AMD Instinct platforms operating with Scorpio P-Series 320L for fabric optimization, Leo CXL memory controller for smart memory tiering, and Taurus 1.6T Smart Ethernet Retimers for scale-out connectivity, all with full-stack interop validated from end to end.Announced significant expansion of Astera Labs’ Taiwan operations and Cloud-Scale Interop Lab, deepening the company’s presence within one of the world’s most important semiconductor ecosystems. Astera Labs’ expanded Taiwan footprint positions the company to bring together broader engineering, cross-functional support, and closer business coordination with key AI platform providers including AMD, Arm, Intel, and NVIDIA. Third Quarter of Fiscal 2026 Financial Outlook
Based on current business trends and conditions, Astera Labs estimates the following:

GAAP Financial Outlook:

Revenue within a range of $540 million to $560 millionGAAP gross margin of approximately 72%GAAP operating expenses within a range of approximately $232 million to $236 millionGAAP tax rate of approximately 4%GAAP diluted net income per share of approximately $0.87 to $0.92 on weighted-average diluted shares outstanding of approximately 185 million Non-GAAP Financial Outlook(2):

Non-GAAP gross margin of approximately 72%Non-GAAP operating expenses within a range of approximately $156 million to $160 millionNon-GAAP tax rate of approximately 12%Non-GAAP diluted net income per share of approximately $1.16 to $1.21 on weighted-average diluted shares outstanding of approximately 185 million ____________________
(2) See “Reconciliation of GAAP to Non-GAAP Outlook” table included below.

Earnings Webcast and Conference Call
Astera Labs will host a conference call to review its financial results for the second quarter of 2026 and to discuss our financial outlook today at 1:30 p.m. Pacific Time. Interested parties may join the conference call by dialing 1-833-461-5787 and using conference ID 622 676 657. The call will also be webcast and can be accessed at the Astera Labs website at https://ir.asteralabs.com/. The webcast will be recorded and available for replay on the company’s website for the next six months.

Discussion of Non-GAAP Financial Measures
We use certain non-GAAP financial measures, including those concerning our financial outlook, to supplement the performance measures in our consolidated financial statements, which are presented in accordance with GAAP. A reconciliation of these non-GAAP measures to the closest GAAP measure can be found later in this release. The timing and impact of any adjustments to arrive at the corresponding GAAP financial measures concerning our financial outlook are inherently dependent on future events that are typically uncertain or that may be outside of our control. These non-GAAP financial measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margin, non-GAAP tax rate, non-GAAP net income, and non-GAAP diluted net income per share. We use these non-GAAP financial measures for financial and operational decision-making and as a means to assist us in evaluating period-to-period comparisons. By excluding certain items that may not be indicative of our recurring core operating results, we believe that, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margin, non-GAAP tax rate, non-GAAP net income, and non-GAAP diluted net income per share provide meaningful supplemental information regarding our performance. Accordingly, we believe these non-GAAP financial measures are useful to investors and others because they allow for additional information with respect to financial measures used by management in its financial and operational decision-making and they may be used by our institutional investors and the analyst community to help them analyze the health of our business. However, there are a number of limitations related to the use of non-GAAP financial measures, and these non-GAAP measures should be considered in addition to, not as a substitute for or in isolation from, our financial results prepared in accordance with GAAP. Other companies, including companies in our industry, may calculate these non-GAAP financial measures differently or not at all, which reduces their usefulness as comparative measures.

We adjust the following items from one or more of our non-GAAP financial measures:

Stock-based compensation expense
We exclude non-cash stock-based compensation expense from certain of our non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance. In particular, companies calculate non-cash stock-based compensation expense using a variety of valuation methodologies and subjective assumptions. Moreover, stock-based compensation expense is a non-cash charge that can vary significantly from period to period for reasons that are unrelated to our core operating performance, and therefore excluding this item provides investors and other users of our financial information with information that allows meaningful comparisons of our business performance across periods.

Acquisition-related costs
We exclude acquisition-related costs incurred in connection with our acquisitions, which we generally would have not otherwise incurred in the periods presented as part of our continuing operations. Acquisition-related costs include certain incremental expenses incurred to effect a business combination such as third-party costs: advisory, legal, accounting, valuation, and other professional fees. We believe that providing the non-GAAP measures excluding these costs assists our investors because such costs are not reflective of our ongoing operating results.

Income tax effect
This represents the impact of the non-GAAP adjustments on an after-tax basis and one-off discrete tax adjustments that are unrelated to our core operating performance in connection with the presentation of non-GAAP net income and non-GAAP net income per diluted share. This approach is designed to enhance investors’ ability to understand the impact of our non-GAAP tax expense on our current operations, provide improved modeling accuracy, and substantially reduce fluctuations caused by GAAP to non-GAAP adjustments.

Other
We exclude other adjustments, including non-cash fair value adjustments related to equity investments without readily determinable fair values. These investments are measured at cost and adjusted for observable price changes or impairment on a nonrecurring basis only upon the occurrence of certain events. Accordingly, these adjustments are not indicative of our core operating performance. 

Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements based on Astera Labs' current expectations. The words “accelerating,” “advance,” “ahead,” “aim,” “anticipate,” “beginning,” “believe," “capabilities,” “coming,” “commence,” “committed,” “confidence,” “continue,” “could,” “deliver,” “designed,” “drive,” “early stages,” “enable,” “estimates," “expanding,” “expect," “forecasting,” “forthcoming,” “forward,” “future,” “goal,” “going forward,” “growth,” “guidance,” “intend," “interest,” “long-term,” “look,” “may,” “mission,” “momentum,” “multi-year,” “next,” “on track,” “opportunity,” “outlook,” “paths,” “planning,” “poised,” “positions,” “potential,” “progressing,” “project,” “proliferate,” “proposed,” “prospects,” “provide,” “pursuing,” “ramp,” “represent,” “roadmap,” “should,” “strategy,” “targeted,” “track,” “trajectory,” “trends,” “upcoming,” “upside,” “ultimately,” “vision,” “well positioned,” “will,” “would,” and similar phrases as they relate to Astera Labs are intended to identify such forward-looking statements. These forward-looking statements reflect the current views and assumptions of Astera Labs as of August 4, 2026, and are subject to various assumptions, beliefs, risks and uncertainties that could cause actual results to differ materially from expectations. These forward-looking statements include, but are not limited to, statements regarding market trends, dynamics and expectations (including cloud and AI infrastructure and connectivity market trends and the industry’s build out); our and our ultimate customers’ future demand, product purchases, deployment of systems incorporating our products, business, operating results, cash flow, financial position, outlook and guidance (and any underlying drivers), including for the third quarter of fiscal 2026; our business strategy, plans and market, revenue or other forms of opportunities, our absolute or relative market share or growth profile or rate and our timing and ability to further build upon our revenue base, expand our product offerings, portfolio and features or performance, increase and service our market opportunity (including the timing and extent of such market opportunities), remain at the forefront of an AI infrastructure transformation, and scale or expand our connectivity platform; our objectives or strategies for future operations (such as our optical and custom solutions businesses), organizational investments and changes, and the drivers, timing and impacts associated therewith; our production, development, shipping/shipments and delivery of (including timing and customers), activity, applications and demand for, availability of, as well as absolute and relative revenue, growth (including the drivers), ramping and roadmap (e.g., optical) for, existing, new, growing or enhanced (whether technologically or otherwise) products or software, including the high volume deployment of Scorpio X-Series solutions, production volume deployment of Scorpio X-Series 320-L, additional growth catalysts across our Scorpio P-Series, Aries, Taurus and Leo portfolios, and the comparative capabilities, performance and results of those products or software for our customers; the benefits, timing, impact, proliferation and customer adoption of different connectivity standards and demands; the design wins at and diversification, activity, engagements and expectations of our customers; the plans and potential success of our announced and ongoing collaborations, partnerships and strategic relationships, including our warrant agreement with Amazon; the ability of UALink 2.0 to provide for a purpose-built AI compute fabric capable of scaling with industry needs over time and the timing of any initial programs; our competitive positioning and the impacts thereof; our R&D, technology and strategic IP plans; our expanded global footprint with our new Israel Design Center, and the anticipated effects and benefits associated with the design center; the strategies associated with, investments in and size of our team, as well as the associated impacts; and maximize and future industry and macroeconomic conditions, events and trends such as in cloud and AI infrastructure as well as our preparedness and solutions for them. A variety of risks and factors that are beyond our control could cause actual results to differ materially from those in the forward-looking statements including, without limitation: the competitive and cyclical nature of the semiconductor industry; the concentration of our customer base; the changes in demand for AI; the macroeconomic and/or geopolitical environment, including economic uncertainty and volatility in the capital markets; risks that demand for our products and the supply chain may be adversely affected, including by the imposition of tariffs by the United States or any other jurisdiction and any corresponding retaliatory tariffs, changes in political policies, military conflict (such as between Russia/Ukraine and in Israel, Iran and the Middle East), terrorism, sanctions or other geopolitical events globally (including conflict between Taiwan and China); quarterly fluctuations in revenues and operating results; difficulties developing new products that achieve market acceptance; risks associated with managing international activities (including trade barriers, particularly with respect to China); our ability to successfully complete acquisitions and to integrate newly acquired businesses and offerings; absence of long-term commitments from customers; risks that Astera Labs may not be able to manage strains associated with its growth; credit risks associated with its accounts receivable; stock price volatility; information technology risks, including cyber-attacks against Astera Labs' products and its networks; and other risks and uncertainties that are detailed under the caption “Risk Factors” and elsewhere in our Annual Report on 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on February 20, 2026, and in subsequent Quarterly Reports on Form 10-Q filed with the SEC and the other SEC filings and reports Astera Labs may make from time to time. Moreover, we operate in a very competitive and rapidly changing environment, and new risks may emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor(s) may cause actual results or outcomes to differ materially from those contained in any forward-looking statements we may make. Accordingly, you should not unduly rely on any of the forward-looking statements. Astera Labs disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

About Astera Labs
Astera Labs (Nasdaq: ALAB) provides rack-scale AI infrastructure through purpose-built connectivity solutions. By collaborating with hyperscalers and ecosystem partners, Astera Labs enables organizations to unlock the full potential of modern AI. Astera Labs' Intelligent Connectivity Platform integrates CXL®, Ethernet, NVLink Fusion, PCIe®, and UALink™ semiconductor-based technologies with the company's COSMOS software suite to unify diverse components into cohesive, flexible systems that deliver end-to-end scale-up and scale-out connectivity. The company's custom connectivity solutions business complements its standards-based portfolio, enabling customers to deploy tailored architectures to meet their unique infrastructure requirements. Discover more at www.asteralabs.com.

  ASTERA LABS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)

   As of June 30,
2026 December 31,
2025Assets   Current assets   Cash and cash equivalents$111,453  $167,611Marketable securities 1,141,505   1,021,205Accounts receivable, net 192,469   83,202Inventory 113,781   58,979Prepaid expenses and other current assets 92,687   31,033Total current assets 1,651,895   1,362,030Property and equipment, net 119,284   92,038Goodwill 91,557   19,015Other assets 68,765   58,740Total assets$1,931,501  $1,531,823    Liabilities and Stockholders’ EquityCurrent liabilities   Accounts payable$53,930  $42,362Accrued expenses and other current liabilities 110,377   90,680Total current liabilities 164,307   133,042Other liabilities 41,490   35,147Total liabilities 205,797   168,189    Stockholders’ equity   Common stock 17   17Additional paid-in capital 1,485,320   1,348,969Accumulated other comprehensive (loss) income (3,369)  4,310Retained earnings 243,736   10,338Total stockholders’ equity 1,725,704   1,363,634Total liabilities and stockholders’ equity$1,931,501  $1,531,823        ASTERA LABS, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)

     Three Months Ended Six Months Ended June 30,
2026 March 31,
2026 June 30,
2025 June 30,
2026 June 30,
2025Revenue$392,400 $308,361 $191,925 $700,761 $351,367Cost of revenue 104,833  73,220  46,362  178,053  86,393Gross profit 287,567  235,141  145,563  522,708  264,974          Operating expenses         Research and development 135,898  125,634  66,724  261,532  131,278Sales and marketing 26,372  21,899  18,609  48,271  40,311General and administrative 36,049  25,775  20,456  61,824  42,326Total operating expenses 198,319  173,308  105,789  371,627  213,915Operating income 89,248  61,833  39,774  151,081  51,059Interest and other income 13,577  11,581  10,885  25,158  21,317Income before income taxes 102,825  73,414  50,659  176,239  72,376Income tax benefit 50,263  6,896  560  57,159  10,662Net income$153,088 $80,310 $51,219 $233,398 $83,038          Net income per share attributable to common stockholders:    Basic$0.89 $0.47 $0.31 $1.36 $0.51Diluted$0.83 $0.44 $0.29 $1.28 $0.47Weighted-average shares used in calculating net income per share attributable to common stockholders:         Basic 172,378  170,726  165,428  171,557  164,316Diluted 183,340  181,157  178,100  182,254  178,281                ASTERA LABS, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)

   Six Months Ended
June 30,  2026   2025 Cash flows from operating activities   Net income$233,398  $83,038 Adjustments to reconcile net income to net cash provided by operating activities   Stock-based compensation 112,905   77,920 Depreciation and amortization 7,639   2,517 Non-cash operating lease expense 2,718   1,522 Warrants contra revenue 12,313   2,136 Accretion of discounts on marketable securities (2,180)  (4,489)Other, net (2,961)  734 Changes in operating assets and liabilities:   Accounts receivable, net (109,461)  14,491 Inventory (53,127)  (14,577)Prepaid expenses and other assets (41,422)  (18,474)Accounts payable 2,811   4,607 Accrued expenses and other liabilities (357)  (3,555)Net cash provided by operating activities 162,276   145,870 Cash flows from investing activities   Purchases of property and equipment (28,054)  (6,562)Purchases of marketable securities (359,732)  (404,682)Sales and maturities of marketable securities 233,933   343,611 Payments for business combinations, net of cash acquired (69,214)  — Other investing activities (2,500)  — Net cash used in investing activities (225,567)  (67,633)Cash flows from financing activities   Proceeds from exercises of stock options 836   778 Proceeds from employee stock purchase plan 6,294   4,345 Net cash provided by financing activities 7,130   5,123 Net (decrease) increase in cash, cash equivalents, and restricted cash (56,161)  83,360 Cash, cash equivalents, and restricted cash   Beginning of the period 167,684   80,044 End of the period$111,523  $163,404          ASTERA LABS, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited)
(In thousands, except percentages and per share amounts)

     Three Months Ended Six Months Ended June 30,
2026 March 31,
2026 June 30,
2025 June 30,
2026 June 30,
2025GAAP gross profit$287,567  $235,141  $145,563  $522,708  $264,974 Stock-based compensation expense 1,692   499   353   2,191   315 Non-GAAP gross profit$289,259  $235,640  $145,916  $524,899  $265,289           GAAP gross margin 73.3%  76.3%  75.8%  74.6%  75.4%Stock-based compensation expense 0.4   0.2   0.2   0.3   0.1 Non-GAAP gross margin(1) 73.7%  76.4%  76.0%  74.9%  75.5%          GAAP operating income$89,248  $61,833  $39,774  $151,081  $51,059 Stock-based compensation expense 63,992   48,913   35,474   112,905   77,920 Acquisition-related costs(2) 232   983   —   1,213   — Non-GAAP operating income$153,472  $111,729  $75,248  $265,199  $128,979           GAAP operating margin 22.7%  20.1%  20.7%  21.6%  14.5%Stock-based compensation expense 16.3   15.9   18.5   16.1   22.2 Acquisition-related costs(2) 0.1   0.3   —   0.2   — Non-GAAP operating margin(1) 39.1%  36.2%  39.2%  37.8%  36.7%          GAAP net income$153,088  $80,310  $51,219  $233,398  $83,038 Stock-based compensation expense 63,992   48,913   35,474   112,905   77,920 Acquisition-related costs(2) 232   983   —   1,213   — Other(3) (1,500)  —   —   (1,500)  — Income tax effect(4) (69,996)  (20,137)  (8,670)  (90,133)  (23,308)Non-GAAP net income$145,816  $110,069  $78,023  $255,883  $137,650           Net income per share attributable to common stockholders:    GAAP - basic$0.89  $0.47  $0.31  $1.36  $0.51 GAAP - diluted$0.83  $0.44  $0.29  $1.28  $0.47 Non-GAAP - diluted$0.80  $0.61  $0.44  $1.40  $0.77           Weighted average shares used to compute net income per share attributable to common stockholders:GAAP - basic 172,378   170,726   165,428   171,557   164,316 GAAP - diluted 183,340   181,157   178,100   182,254   178,281                      ____________________
(1) Total may not sum due to rounding.
(2) Acquisition-related costs included certain incremental expenses incurred to effect a business combination such as third-party costs: advisory, legal, accounting, valuation, and other professional fees.
(3) Other included non-cash and nonrecurring fair value adjustments on equity investments without readily determinable fair values.
(4) Income tax effect is calculated based on the tax laws in the jurisdictions in which we operate and is calculated to exclude the impact of stock-based compensation expense and one-off discrete tax adjustments that are unrelated to our core operating performance. For the three months ended June 30, 2026, March 31, 2026, and June 30, 2025, the non-GAAP tax expense rate was approximately 12%, 11%, and 9%, respectively. For the six months ended June 30, 2026 and 2025, the non-GAAP tax expense rate was approximately 11% and 8%, respectively.   

ASTERA LABS, INC.,RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK (Unaudited)
(In millions, except percentages and per share amounts)

   Outlook for
Three Months Ending
September 30, 2026 Low HighGAAP gross margin 72%  72%Stock-based compensation expense —   — Non-GAAP gross margin 72%  72%    GAAP operating expense$232  $236 Stock-based compensation expense (76)  (76)Non-GAAP operating expense$156  $160     GAAP tax rate 4%  4%Income tax effect 8   8 Non-GAAP tax rate 12%  12%    GAAP net income per share - diluted$0.87  $0.92 Stock-based compensation expense 0.40   0.40 Income tax effect (0.11)  (0.11)Non-GAAP net income per share - diluted$1.16  $1.21          ASTERA LABS, INC.SUPPLEMENTAL FINANCIAL INFORMATION

STOCK-BASED COMPENSATION EXPENSE (Unaudited)
(In thousands)

     Three Months Ended Six Months Ended June 30,
2026 March 31,
2026 June 30,
2025 June 30,
2026 June 30,
2025Cost of revenue$1,692 $499 $353 $2,191 $315Research and development 36,413  29,404  17,852  65,817  37,038Sales and marketing 11,419  9,892  9,194  21,311  21,513General and administrative 14,468  9,118  8,075  23,586  19,054Total stock-based compensation expense$63,992 $48,913 $35,474 $112,905 $77,920                               IR CONTACT: Leslie Green
[email protected]

• SpaceX stock is among today’s top performers. What’s behind SPCX gains?

According to S3 Partners data cited by Bloomberg, short interest in SpaceX has surged to 219.3 million shares, representing about 34% of the public float and a bearish position worth roughly $24.6 billion.

That exceeds the dollar value of short bets against Tesla, Inc (NASDAQ:TSLA), underscoring growing skepticism ahead of two major catalysts this week.

Bearish Bets Continue to BuildThe recent decline in inverse ETFs reflects SpaceX’s rebound from its July lows. At the same time, short interest has continued to climb, highlighting that many investors remain bearish despite the stock’s recovery.

SpaceX is scheduled to report second-quarter earnings after Tuesday’s closing bell, with options markets pricing in an implied move of roughly 14%, pointing to a potential post-earnings trading range of about $94 to $126.

The bigger catalyst may come on Thursday, when roughly 911.5 million insider-held shares become eligible for trading under the company’s staggered lockup schedule. The release will more than double the publicly tradable share count, potentially increasing selling pressure if insiders decide to cash out.

According to S3 Partners, the anticipated increase in share supply, rather than earnings alone, has been the primary driver behind the recent surge in short interest. Borrowing costs have also risen as demand to short the stock increased.

What It Means For Leveraged ETFsFor ETF investors, the combination of elevated short interest, earnings and the lockup expiration could drive significant trading activity across both bullish and bearish leveraged products.

A disappointing earnings report, weaker-than-expected guidance or heavy insider selling could validate the bearish thesis, potentially helping inverse ETFs such as SPCQ, SSPC and SNK recover from their recent losses.

On the other hand, stronger-than-expected results or a muted market reaction to the lockup expiration could spark a sharp short squeeze. With about one-third of SpaceX’s public float sold short, bearish traders may be forced to cover positions, accelerating gains in the stock while extending losses for inverse ETFs and boosting leveraged long funds.

Long-Term Growth Meets Near-Term UncertaintyDespite the surge in bearish positioning, Wall Street remains constructive on SpaceX’s longer-term outlook. Analysts expect second-quarter revenue of approximately $6.8 billion and forecast revenue to nearly double between 2026 and 2027, reflecting optimism around the company’s artificial intelligence infrastructure, satellite internet and launch businesses.

That disconnect between strong long-term growth expectations and mounting near-term bearish bets has created an unusually uncertain setup for leveraged ETF investors.

Trading volumes and fund flows across the growing lineup of SpaceX single-stock ETFs are likely to remain elevated this week as investors position for what could be a significant volatility event since the company’s public debut.

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Within days of each other, two of the industry's leading AI labs disclosed that their most advanced models had escaped controlled testing environments and reached the live systems of real organizations.

The episodes land at an awkward moment for Microsoft NASDAQ: MSFT and Amazon NASDAQ: AMZN, both of which are racing to put autonomous AI agents in front of enterprise customers.

Get Amazon.com alerts:

What OpenAI and Anthropic DisclosedOpenAI said on July 21 that its models chained together several vulnerabilities, including at least one flaw nobody had previously identified, to break out of an isolated evaluation setup and reach the production infrastructure of Hugging Face, an AI hosting platform, in an attempt to pull the answers to a benchmark test. The company said it had deliberately loosened the model's safety refusals for that specific test, and later called the episode one of the most serious cyber events it has documented.

Anthropic followed on July 30. After reviewing more than 141,000 cybersecurity evaluation runs prompted by OpenAI's disclosure, it found three separate incidents in which Claude models reached the open internet during a third-party test and ended up inside the real systems of three organizations. Believing the exercise was fully contained, the models treated the live infrastructure they found as part of the simulated challenge, breaking in through common weaknesses like poorly secured logins and endpoints that required no authentication. None of the three affected organizations had noticed the activity before Anthropic reached out.

Neither disclosure points to a breach of Microsoft's Azure or Amazon's AWS customer environments. Both incidents occurred in internal or third-party testing environments, not in production cloud services. Still, the timing matters. These are early data points on what can go wrong when highly autonomous systems encounter a security gap, just as both companies push agents designed to act independently across networks, credentials, and external tools.

Microsoft: Deepening Ties to OpenAI Right as Scrutiny RisesMicrosoft kept its position as OpenAI's lead cloud provider when the two companies reworked their partnership in April, and OpenAI's models still reach Azure before other platforms.

Microsoft Today

$492.81 +5.16 (+1.06%)

As of 04:00 PM Eastern

52-Week Range$349.20▼

$553.72Dividend Yield0.74%

P/E Ratio27.44

Price Target$558.64

That relationship sits at the center of Microsoft's own enterprise AI push through Copilot and its Azure AI Foundry agent tools. The OpenAI incident doesn't directly implicate Azure infrastructure, but it puts a spotlight on the testing discipline behind the models Microsoft is building its agent strategy around.

The disclosure lands during a strong stretch for Microsoft. Shares jumped more than 16% after fiscal fourth-quarter 2026 earnings on July 29, driven by 43% Azure growth and capital spending guidance investors viewed as sustainable. The stock closed at $487.65 on Aug. 3, up close to 5% on the day and at its highest level in 50 days, though still about 12% below its 52-week high. Microsoft carries a Moderate Buy consensus rating with an average price target of $558.64, implying almost 15% additional upside.

Amazon: Exposure on 2 FrontsAmazon's connection to this story runs deeper than its relationship with Anthropic alone. AWS remains a lead cloud and compute partner for Anthropic, but Amazon also struck its own multibillion-dollar partnership with OpenAI in February.

Amazon.com Today

$277.42 -6.60 (-2.32%)

As of 04:00 PM Eastern

52-Week Range$196.00▼

$287.20P/E Ratio22.32

Price Target$322.56

The company agreed to invest up to $50 billion in the company alongside OpenAI's pledge to run two gigawatts of workloads on Amazon's Trainium chips. That means Amazon now has indirect exposure to both labs involved in these disclosures, not just the one most closely tied to its Bedrock platform.

Amazon's stock has been on a tear of its own. Shares closed at $284.02 on Aug. 3, up close to 5% that day and near their 52-week high. The move came after second-quarter earnings on July 30 showed AWS growth accelerating to 37% and operating income up more than 40%. The stock is up close to 23% year-to-date. Amazon carries a Moderate Buy rating with an average price target of $322.56, implying about 15% upside, and sits in the 94th percentile of MarketBeat's MarketRank system.

What to Watch From HereNeither incident has shown up in either stock's price action so far, and both companies just delivered blowout cloud growth numbers that are driving the current rally. The more relevant question for investors is whether these disclosures change enterprise buying behavior over the next few quarters.

Tighter scrutiny of agent permissions, monitoring, and liability could slow how quickly large customers grant AI agents access to sensitive systems, or accelerate demand for the security and governance tooling that Microsoft and Amazon both sell alongside their AI platforms.

Trust is becoming a competitive differentiator in enterprise AI. Whichever platform demonstrates the strongest safeguards around autonomous agents may end up better positioned commercially, even if it means a slower rollout in the near term.

Should You Invest $1,000 in Amazon.com Right Now?Before you consider Amazon.com, you'll want to hear this.

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Here are the earnings estimates, what analysts are saying ahead of the report and the key items to watch.

• Walt Disney stock is showing downward pressure. What’s next for DIS stock?

Disney Q3 Earnings EstimatesAnalysts expect Disney to report third-quarter revenue of $25.40 billion, up from $23.65 billion in last year’s third quarter, according to data from Benzinga Pro.

The company has beaten analyst estimates for revenue in two straight quarters and in six of the past 10 quarters overall.

Analysts expect Disney to report quarterly earnings per share of $1.86, up from $1.61 in the past year’s third quarter.

The company has beaten analyst estimates for earnings per share in 12 straight quarters.

Disney Analyst Ratings and Price TargetsWhile some may see the streaming segment as a strength for Disney, Wells Fargo analyst Steven Cahall recently wrote that exiting the streaming business could boost Disney’s share price by 40%.

The analyst maintained an Overweight rating on the stock and lowered the price target from $146 to $125.

Cahall said the move would allow Disney to refocus on licensing and content creation, two of its key strengths.

"We lay out the case for DIS to return to its old biz model of producing versus distributing," Cahall said.

The analyst said Disney could earn around $4 billion annually from global licensing rights alone, along with $15 billion or more for the company’s content library. The items together would be a better cash generator than Disney’s direct-to-consumer business, the analyst said.

Here are other recent analyst ratings on Disney stock and their price targets:

Citigroup: Maintained Buy rating, lowered price target from $145 to $135 UBS: Maintained Buy rating, lowered price target from $138 to $133 Barclays: Maintained Overweight rating, lowered price target from $135 to $110 Benchmark: Initiated with Buy rating, price target $115 Key Items to WatchInvestors and analysts have priced Disney stock for more negativity ahead with lower price targets and the stock nearing a 15-month low.

"Star Wars: The Mandalorian and Grogu" didn’t fare as well, with $177.7 million domestically and $345.1 million globally. This ranks among the lowest totals in Star Wars history. The film still ranks as the 10th highest domestic-grossing film.

Also ranking in eighth place is "The Devil Wears Prada 2" with $220.6 million domestically.

Those three films were all released in May and June and will go up against a 2025 period that had "Lilo & Stitch," which grossed $423.8 million domestically and over $1 billion worldwide.

The three films should come in higher than last year’s comparable period and could provide some upside depending on the cost of "Star Wars: The Mandalorian and Grogu.”

Disney could also get investors excited with commentary on the record-breaking "Spider-Man: Brand New Day." The film comes from Sony, but Disney gets a portion of revenue and the performance could also set up a strong prediction for "Avengers: Doomsday."

The latest Avengers film will be released in theaters on Dec. 18. The film took in $16.5 million in ticket sales on its first day, as reported by Variety.

"Avengers: Endgame," released in 2019, brought in $858.4 million domestically and $2.80 billion worldwide, ranking second all-time for both categories.

Avengers ensemble films have performed among the best Marvel films and "Doomsday" could be just the spark that Disney stock needs going forward. Expect Disney to highlight this upcoming film slate.

Another area that could be a key topic, but might not be good for the stock, would be politics.

Disney recently issued a 109-page letter alleging the Federal Communications Commission has launched a "retaliation" campaign against the company on behalf of President Donald Trump.

Investors and analysts will also be looking at networking and DTC segments to see if advertising revenue is strong and how Disney+ is performing.

Another weak quarter for those areas could see renewed pushes for Disney to consider spinning off or splitting up units to unlock shareholder growth.

Disney Stock Price ActionDisney stock is up 0.29% to $98.43 on Tuesday versus a 52-week trading range of $92.19 to $119.78. Disney stock is down 12.1% year-to-date in 2026 and down over 17% in the last 52 weeks.

Photo Courtesy: Miguel Lagoa On Shutterstock.com

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Starbucks announced on Monday that its classic Pumpkin Spice Latte will be returning to store menus later this month.

The popular drink will be joined by new beverages and food items and as limited-time merchandise collections.

While the classic Pumpkin Spice Latte returns Aug. 25, Starbucks will add new pumpkin spice-flavored drinks, including the Iced Pumpkin Cream Shaken Espresso, Pumpkin Spice Chai and Iced Pumpkin Cream Matcha. The Pumpkin Cream Cold Brew, Iced Pumpkin Cream Chai and Pumpkin Spice Frappuccino blended beverage will also return.

STARBUCKS TO CUT 300 US JOBS, CLOSE SOME REGIONAL SUPPORT OFFICES

The Pumpkin Spice Latte is returning to Starbucks' menu Aug. 25. (Christina Tkacik/Baltimore Sun/Tribune News Service via Getty Images)

A new iced banana bread-flavored latte and chai drink will join the company's fall menu, as will the Chaider, a beverage featuring a blend of chai and cider-inspired flavors.

A new Chicken Bacon Protein Pocket and a Hedgehog Cake Pop will also join store menus this fall. The protein pocket is the latest addition to Starbucks' broader push to expand its protein offerings.

The new Chicken Bacon Protein Pocket contains 20 grams of protein. (Starbucks)

Starbucks is offering new drinkware and a hat as part of its PSL Society collection.

The announcement comes after the company reported third-quarter results last week.

SEATTLE COULD LOSE HUNDREDS OF MILLIONS IN TAX REVENUE AS STARBUCKS EXPANDS IN TENNESSEE

Starbucks raised its annual sales and profit forecasts for the second time as CEO Brian Niccol's years-long turnaround efforts reignite demand at the world's largest coffee chain.

Under Niccol, the company has aimed to improve customer experience through a simplified menu and shortened wait times, fueling four straight quarters of comparable sales growth.

Starbucks CEO Brian Niccol's turnaround plan is called "Back to Starbucks." (Michael Reaves/Getty Images)

"We have more work to do," Niccol said in a statement Wednesday, while finance chief Cathy Smith said the company is focused on what it can control amid a "dynamic operating environment."

WHY STARBUCKS PICKED NASHVILLE OVER SEATTLE FOR EXPANSION, ACCORDING TO LOCAL BUSINESS REPORTER

The Seattle-based company forecast global same-store sales growth of near 6%, above its prior forecast of about 5% or above. It expects adjusted earnings per share to be between $2.55 and $2.65, compared with its previous forecast of $2.25 to $2.45.

Ticker Security Last Change Change % SBUX STARBUCKS CORP. 103.37 -1.88 -1.79% "Starbucks has begun to experience market share stabilization in recent months, most notably with younger diners," Consumer Edge analyst Michael Gunther said.

"Consumers may be shifting dining dollars toward in-home eating but are leaving room in the budget for daily drink habits," he added.

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The Back to Starbucks strategy had been squeezing margins, as it involved heavy investments in staffing and store operations, which the company has looked to tackle with cost cuts through layoffs, office consolidation and streamlining its operations.

Reuters contributed to this report.

, /PRNewswire/ -- Emerson (NYSE: EMR) today reported results1 for its third quarter ended June 30, 2026 and updated its full year outlook for fiscal 2026. Emerson also declared a quarterly cash dividend of $0.555 per share of common stock payable September 10, 2026 to stockholders of record on August 14, 2026.

(dollars in millions, except per share)     

     2025 Q3     

     2026 Q3     

     Change     

Underlying Orders2

7 %

Net Sales

$4,553

$4,873

7 %

Underlying Sales3

6 %

Pretax Earnings

$734

$916

Margin

16.1 %

18.8 %

270 bps

Adjusted Segment EBITA4

$1,232

$1,387

Margin

27.1 %

28.5 %

140 bps

GAAP Earnings Per Share

$1.03

$1.28

24 %

Adjusted Earnings Per Share5

$1.52

$1.71

13 %

Operating Cash Flow

$1,062

$1,425

34 %

Free Cash Flow

$970

$1,323

36 %

Management Commentary

"Emerson had an outstanding third quarter with sales, margin expansion, earnings and cash flow all exceeding expectations," said Emerson President and Chief Executive Officer Lal Karsanbhai. "Demand was robust, with underlying orders up 7%, led by Software & Systems and broad-based growth in North America and Asia. The conflict in the Middle East remains fluid, and I am proud of our team's ability to deliver results and support our customers around the world."

Karsanbhai continued, "We are raising our full year guidance, reflecting our strong third quarter performance and healthy demand. Secular tailwinds continue to support sustained investment in our growth verticals and provide a solid foundation as we finish 2026 and look ahead to 2027."

2026 Outlook

The following tables summarize the fiscal year 2026 guidance framework. As we pivot capital allocation to returning cash to shareholders, the 2026 outlook assumes returning ~$2.2B through ~$1B share repurchases and ~$1.2B of dividends.

                        Guidance figures are approximate.             

     2026 Q4    

      2026‌     

Net Sales Growth

~5%

~5%

Underlying Sales Growth

~5%

~3.5%

Earnings Per Share

~$1.45

~$4.89

Amortization of intangibles

~$0.34

~$1.39

Restructuring and related costs

~$0.03

~$0.24

Acquisition/divestiture fees and related costs

~$0.01

~$0.09

Discrete taxes

~$0.02

~$0.05

IEEPA tariff refunds

-

~($0.11)

Adjusted Earnings Per Share

~$1.85

~$6.55

Operating Cash Flow

~$4.1B

Free Cash Flow

~$3.6B

1

Results are presented on a continuing operations basis. 

2

Underlying orders do not include AspenTech.

3

Underlying sales excludes the impact of currency translation, and significant acquisitions and divestitures.

4

Adjusted segment EBITA represents segment earnings excluding restructuring and intangibles amortization expense.

5

Adjusted EPS excludes intangibles amortization expense, restructuring and related costs, first year purchase accounting related items and transaction-related costs, discrete taxes and certain gains, losses or impairments.

Conference Call

Today, beginning at 3:30 p.m. Central Time / 4:30 p.m. Eastern Time, Emerson management will discuss the third quarter results during an investor conference call. Participants can access a live webcast available at https://ir.emerson.com at the time of the call. A replay of the call will be available for 90 days. Conference call slides will be posted in advance of the call on the company website.

About Emerson

Emerson (NYSE: EMR) is a global automation leader delivering solutions for the most demanding technology challenges. Headquartered in St. Louis, Missouri, Emerson is engineering the autonomous future, enabling customers to optimize operations and accelerate innovation. For more information, visit Emerson.com.

Forward-Looking and Cautionary Statements

Statements in this press release that are not strictly historical may be "forward-looking" statements, which represent management's expectations, based on currently available information. Actual results, performance or achievements could differ materially from those expressed in any forward-looking statement. Any forward-looking statements in this press release speak only as of the date of this press release. Emerson undertakes no obligation to update any such statements to reflect new information or later developments. Examples of risks and uncertainties that may cause our actual results or performance to be materially different from those expressed or implied by forward looking statements include the scope, duration and ultimate impacts of the Russia-Ukraine, Middle East and other global conflicts, as well as economic and currency conditions, market demand, pricing, protection of intellectual property, cybersecurity, tariffs, competitive and technological factors, inflation, among others, as set forth in the Company's most recent Annual Report on Form 10-K and subsequent reports filed with the SEC. The outlook contained herein represents the Company's expectation for its consolidated results, other than as noted herein.

Emerson uses our Investor Relations website, https://ir.emerson.com, as a means of disclosing information which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our Investor Relations website, in addition to following our press releases, SEC filings, public conference calls, webcasts and social media. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

Investors:

Media:

Doug Ashby

Joseph Sala / Greg Klassen

(314) 553-2197                                   

Joele Frank, Wilkinson Brimmer Katcher

(212) 355-4449

(tables attached)

Table 1

EMERSON AND SUBSIDIARIES

CONSOLIDATED OPERATING RESULTS

(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED)

Quarter Ended June
30,

Nine Months Ended
June 30,

2025

2026

2025

2026

Net sales

$  4,553

$  4,873

$ 13,161

$ 13,781

     Cost of sales

2,160

2,218

6,161

6,393

     SG&A expenses

1,266

1,343

3,773

3,902

     Other deductions, net

298

311

944

744

     Interest expense, net

95

85

145

258

Earnings from continuing operations before income taxes

734

916

2,138

2,484

Income taxes

154

198

536

542

Earnings from continuing operations

580

718

1,602

1,942

Discontinued operations, net of tax

6

—

7

—

Net earnings

586

718

1,609

1,942

Less: Noncontrolling interests in subsidiaries

—

—

(48)

1

Net earnings common stockholders

$     586

$     718

$  1,657

$  1,941

Earnings common stockholders

   Earnings from continuing operations

580

718

1,650

1,941

   Discontinued operations

6

—

7

—

Net earnings common stockholders

$     586

$     718

$  1,657

$  1,941

Diluted avg. shares outstanding

564.7

561.1

567.1

562.7

Diluted earnings per share common stockholders

Earnings from continuing operations

$    1.03

$    1.28

$    2.91

$    3.45

Discontinued operations

0.01

—

0.01

—

Diluted earnings per common share

$    1.04

$    1.28

$    2.92

$    3.45

Quarter Ended June
30,

Nine Months Ended
June 30,

2025

2026

2025

2026

Other deductions, net

     Amortization of intangibles

$     219

$     204

$     677

$     613

     Restructuring costs

37

87

70

141

     Other

42

20

197

(10)

          Total

$     298

$     311

$     944

$     744

Table 2

EMERSON AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(DOLLARS IN MILLIONS, UNAUDITED)

Sept 30, 2025

June 30, 2026

Assets

     Cash and equivalents

$         1,544

$             2,180

     Receivables, net

3,101

3,057

     Inventories

2,213

2,513

     Other current assets

1,725

1,905

Total current assets

8,583

9,655

     Property, plant & equipment, net

2,871

2,861

     Goodwill

18,193

18,122

     Other intangible assets

9,458

8,686

     Other

2,859

2,884

Total assets

$       41,964

$            42,208

Liabilities and equity

     Short-term borrowings and current maturities of long-term debt

$         4,797

$             5,587

     Accounts payable

1,384

1,613

     Accrued expenses

3,616

3,572

Total current liabilities

9,797

10,772

     Long-term debt

8,319

7,526

     Other liabilities

3,550

3,516

Equity

     Common stockholders' equity

20,282

20,379

     Noncontrolling interests in subsidiaries

16

15

Total equity

20,298

20,394

Total liabilities and equity

$       41,964

$            42,208

Table 3

EMERSON AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN MILLIONS, UNAUDITED)

Nine Months Ended June 30,

2025

2026

Operating activities

Net earnings

$         1,609

$         1,942

Earnings from discontinued operations, net of tax

(7)

—

Adjustments to reconcile net earnings to net cash provided by operating activities:

        Depreciation and amortization

1,139

1,105

        Stock compensation

198

181

        Changes in operating working capital

(80)

(320)

        Other, net

(195)

(6)

            Cash from continuing operations

2,664

2,902

            Cash from discontinued operations

(576)

—

            Cash provided by operating activities

2,088

2,902

Investing activities

Capital expenditures

(263)

(284)

Purchases of businesses, net of cash and equivalents acquired

(36)

—

Other, net

(94)

(38)

    Cash used in investing activities

(393)

(322)

Financing activities

Net increase in short-term borrowings

1,419

1,434

Proceeds from short-term borrowings greater than three months

5,292

6,229

Payments of short-term borrowings greater than three months

(1,349)

(7,028)

Proceeds from long-term debt

1,544

—

Payments of long-term debt

(503)

(588)

Dividends paid

(895)

(935)

Purchases of common stock

(1,147)

(898)

Purchase of noncontrolling interest

(7,244)

—

Settlement of AspenTech share awards

(76)

—

Other, net

(60)

(134)

    Cash used in financing activities

(3,019)

(1,920)

Effect of exchange rate changes on cash and equivalents

(45)

(24)

Increase (decrease) in cash and equivalents

(1,369)

636

Beginning cash and equivalents

3,588

1,544

Ending cash and equivalents

$         2,219

$         2,180

Table 4

EMERSON AND SUBSIDIARIES

SEGMENT SALES AND EARNINGS

(DOLLARS IN MILLIONS, UNAUDITED)

The following tables show results for the Company's segments on an adjusted segment EBITA basis and are intended to supplement the Company's results of operations, including its segment earnings which are defined as earnings before interest and taxes. The Company defines adjusted segment and total segment EBITA as segment earnings excluding intangibles amortization expense, and restructuring and related expense. Adjusted segment and total segment EBITA, and adjusted segment and total segment EBITA margin are measures used by management and may be useful for investors to evaluate the Company's segments' operational performance.

Quarter Ended June 30,

2025

2026

Reported

Underlying

Sales

Control Systems & Software     

$         1,120

$         1,199

7 %

7 %

Test & Measurement

360

445

23 %

23 %

Software & Systems

$         1,480

$         1,644

11 %

11 %

Sensors

1,013

1,091

8 %

7 %

Final Control

1,522

1,586

4 %

3 %

Intelligent Devices

$         2,535

$         2,677

6 %

5 %

Safety & Productivity

$            538

$            552

3 %

2 %

Total

$         4,553

$         4,873

7 %

6 %

Sales Growth by Geography

Quarter Ended
June 30,

Americas

8 %

Europe

(1) %

Asia, Middle East & Africa            

8 %

Table 4 cont.

Nine Months Ended June 30,

2025

2026

Reported

Underlying

Sales

Control Systems & Software     

$         3,235

$         3,332

3 %

2 %

Test & Measurement

1,077

1,268

18 %

15 %

Software & Systems

$         4,312

$         4,600

7 %

5 %

Sensors

2,986

3,111

4 %

2 %

Final Control

4,315

4,469

4 %

2 %

Intelligent Devices

$         7,301

$         7,580

4 %

2 %

Safety & Productivity

$         1,548

$         1,601

3 %

2 %

Total

$       13,161

$       13,781

5 %

3 %

Sales Growth by Geography

Nine Months Ended
June 30,

Americas

6 %

Europe

(1) %

Asia, Middle East & Africa

1 %

Table 4 cont.

Quarter Ended June 30,

Quarter Ended June 30,

2025

2026

As Reported
(GAAP)

Adjusted
EBITA 
(Non-GAAP)

As
Reported
(GAAP)

Adjusted
EBITA 
(Non-GAAP)

Earnings

Control Systems & Software

$         271

$         393

$        285

$         391

 Margins

24.2 %

35.2 %

23.8 %

32.6 %

Test & Measurement

(26)

81

11

132

 Margins

(7.2) %

22.4 %

2.6 %

29.6 %

Software & Systems

$        245

$        474

$        296

$        523

 Margins

16.6 %

32.1 %

18.0 %

31.8 %

Sensors

246

259

303

323

 Margins

24.2 %

25.5 %

27.7 %

29.7 %

Final Control

351

389

349

424

 Margins

23.1 %

25.5 %

22.0 %

26.7 %

Intelligent Devices

$        597

$        648

$        652

$        747

 Margins

23.5 %

25.5 %

24.3 %

27.9 %

Safety & Productivity

$        103

$        110

$         93

$        117

 Margins

19.2 %

20.4 %

16.9 %

21.2 %

Corporate items and interest expense, net:

Stock compensation

(71)

(45)

(68)

(64)

Unallocated pension and postretirement costs

27

27

29

29

Corporate and other

(72)

(31)

(1)

(49)

Interest expense, net

(95)

—

(85)

—

Pretax Earnings / Adjusted EBITA

$        734

$      1,183

$        916

$      1,303

 Margins

16.1 %

26.0 %

18.8 %

26.7 %

Supplemental Total Segment Earnings:

Adjusted Total Segment EBITA

$      1,232

$      1,387

 Margins

27.1 %

28.5 %

Table 4 cont.

Quarter Ended June 30,

Quarter Ended June 30,

2025

2026

Amortization of 
Intangibles1

Restructuring 
and
Related Costs2

Amortization of

Intangibles1

Restructuring 
and
Related Costs2

Control Systems & Software                

$              114

$                  8

$              100

$                  6

Test & Measurement

107

—

108

13

Software & Systems

$              221

$                 8

$              208

$                19

Sensors

11

2

11

9

Final Control

30

8

27

48

Intelligent Devices

$                41

$                10

$                38

$                57

Safety & Productivity

$                 7

$                —

$                 7

$                17

Corporate

—

233

—

6

Total

$              269

$                41

$              253

$                99

1 Amortization of intangibles includes $50 and $49 reported in cost of sales for the three months ended June 30, 2025 and 2026, respectively.

2 Restructuring and related costs includes $4 and $12 reported in cost of sales and selling, general and administrative expenses for the three months ended June 30, 2025 and 2026, respectively.

3 Corporate restructuring and related costs of $23 for the three months ended June 30, 2025 includes $20 related to integration-related stock compensation expense attributable to AspenTech. 

Quarter Ended June 30,

Depreciation and Amortization

2025

2026

Control Systems & Software

$           135

$           128

Test & Measurement

119

120

Software & Systems

254

248

Sensors

32

34

Final Control

56

56

Intelligent Devices

88

90

Safety & Productivity

19

27

Corporate

11

12

Total

$           372

$           377

Table 5

EMERSON AND SUBSIDIARIES

ADJUSTED CORPORATE AND OTHER SUPPLEMENTAL

(DOLLARS IN MILLIONS, UNAUDITED)

The following table shows the Company's stock compensation and corporate and other expenses on an adjusted basis. The Company's definition of adjusted stock compensation excludes integration-related stock compensation expense. The Company's definition of adjusted corporate and other excludes corporate restructuring and related costs, first year purchase accounting related items and transaction fees, and certain gains, losses or impairments. This metric is useful for reconciling from total adjusted segment EBITA to the Company's consolidated adjusted EBITA.

Quarter Ended June 30,

2025

2026

 Stock compensation (GAAP)

$               (71)

$               (68)

 Integration-related stock compensation expense

261

4

 Adjusted stock compensation (non-GAAP)

$               (45)

$               (64)

Quarter Ended June 30,

2025

2026

 Corporate and other (GAAP)

$               (72)

$                 (1)

 Corporate restructuring and related costs

3

6

 Acquisition / divestiture costs

38

28

 IEEPA tariff refunds

—

(82)

 Adjusted corporate and other (non-GAAP)

$               (31)

$               (49)

1 Integration-related stock compensation expense for the three months ended June 30, 2025 includes $24 related to AspenTech of which $20 is reported as restructuring costs, and $2 related to NI

Table 6

EMERSON AND SUBSIDIARIES

ADJUSTED EBITA & EPS SUPPLEMENTAL

(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED)

The following tables, which show results on an adjusted EBITA basis and diluted earnings per share on an adjusted basis, are intended to supplement the Company's discussion of its results of operations herein. The Company defines adjusted EBITA as earnings excluding interest expense, net, income taxes, intangibles amortization expense, restructuring and related costs, first year purchase accounting related items and transaction fees, and certain gains, losses or impairments. Adjusted earnings per share excludes intangibles amortization expense, restructuring and related costs, first year purchase accounting related items and transaction-related costs, discrete taxes, and certain gains, losses or impairments. Adjusted EBITA, adjusted EBITA margin, and adjusted earnings per share are measures used by management and may be useful for investors to evaluate the Company's operational performance.

     Quarter Ended June 30, 

2025

2026

Pretax earnings

$           734

$           916

Percent of sales

16.1 %

18.8 %

Interest expense, net

95

85

Amortization of intangibles

269

253

Restructuring and related costs

41

99

Acquisition/divestiture fees and related costs

44

32

IEEPA tariff refunds

—

(82)

Adjusted EBITA

$        1,183

$        1,303

Percent of sales

26.0 %

26.7 %

                    Quarter Ended June 30,               

2025

2026

GAAP earnings from continuing operations per share

$          1.03

$          1.28

Amortization of intangibles

0.37

0.35

Restructuring and related costs

0.06

0.13

Acquisition/divestiture fees and related costs

0.06

0.05

Discrete taxes

—

0.01

IEEPA tariff refunds

—

(0.11)

Adjusted earnings from continuing operations per share                                    

$          1.52

$          1.71

Table 6 cont.

Quarter Ended June 30, 2026

Pretax 
Earnings

Income 
Taxes

Earnings
from Cont.
Ops.

Non-
Controlling
Interests 

Net 
Earnings 
Common 
Stockholders

Diluted 
Earnings 
Per 
Share

As reported (GAAP)

$       916

$       198

$       718

$         —

$         718

$      1.28

Amortization of intangibles

253

1

59

194

—

194

0.35

Restructuring and related costs

99

2

25

74

—

74

0.13

Acquisition/divestiture fees and related costs

32

2

30

—

30

0.05

Discrete taxes

—

(7)

7

—

7

0.01

IEEPA tariff refunds

(82)

(19)

(63)

—

(63)

(0.11)

Adjusted (non-GAAP)

$     1,218

$       258

$       960

$         —

$         960

$      1.71

Interest expense, net

85

Adjusted EBITA (non-GAAP)

$     1,303

1 Amortization of intangibles includes $49 reported in cost of sales.

2 Restructuring and related costs includes $12 reported in cost of sales and selling, general and administrative expenses.

Reconciliations of Non-GAAP Financial Measures & Other                                                                      

Table 7

Reconciliations of Non-GAAP measures with the most directly comparable GAAP measure (dollars in millions,
except per share amounts). See tables 4 through 6 for additional non-GAAP reconciliations.

2026 Q3 Underlying Sales Change

Reported

(Favorable) /
Unfavorable FX

(Acquisitions) /
Divestitures

Underlying

Control Systems & Software

7 %

— %

— %

7 %

Test & Measurement

23 %

— %

— %

23 %

Software & Systems

11 %

— %

— %

11 %

Sensors

8 %

(1) %

— %

7 %

Final Control

4 %

(1) %

— %

3 %

Intelligent Devices

6 %

(1) %

— %

5 %

Safety & Productivity

3 %

(1) %

— %

2 %

Emerson

7 %

(1) %

— %

6 %

Nine Months Ended June 30, 2026 Underlying Sales      
Change

Reported

(Favorable) /
Unfavorable FX

(Acquisitions) /
Divestitures

Underlying

Control Systems & Software

3 %

(1) %

— %

2 %

Test & Measurement

18 %

(3) %

— %

15 %

Software & Systems

7 %

(2) %

— %

5 %

Sensors

4 %

(2) %

— %

2 %

Final Control

4 %

(2) %

— %

2 %

Intelligent Devices

4 %

(2) %

— %

2 %

Safety & Productivity

3 %

(1) %

— %

2 %

Emerson

5 %

(2) %

— %

3 %

Underlying Growth Guidance     

2026 Q4
Guidance

2026

Guidance

Reported (GAAP)

~5%

~5%

(Favorable) / Unfavorable FX

-

~(1.5 pts)

(Acquisitions) / Divestitures

-

-

Underlying (non-GAAP)

~5%

~3.5%

2025 Q3 Adjusted Segment EBITA

EBIT

EBIT

Margin

Amortization

of

Intangibles

Restructuring
and Related
Costs

Adjusted
Segment
EBITA

Adjusted
Segment
EBITA
Margin

Control Systems & Software

$         271

24.2 %

$            114

$                 8

$         393

35.2 %

Test & Measurement

(26)

(7.2) %

107

—

81

22.4 %

Software & Systems

$         245

16.6 %

$            221

$                 8

$         474

32.1 %

Sensors

246

24.2 %

11

2

259

25.5 %

Final Control

351

23.1 %

30

8

389

25.5 %

Intelligent Devices

$         597

23.5 %

$              41

$               10

$         648

25.5 %

Safety & Productivity

$         103

19.2 %

$               7

$                —

$         110

20.4 %

2026 Q3 Adjusted Segment EBITA

EBIT

EBIT

Margin

Amortization
of
Intangibles

Restructuring
and Related
Costs

Adjusted
Segment
EBITA

Adjusted
Segment
EBITA
Margin

Control Systems & Software

$         285

23.8 %

$            100

$                6

$         391

32.6 %

Test & Measurement

11

2.6 %

108

13

132

29.6 %

Software & Systems

$         296

18.0 %

$            208

$               19

$         523

31.8 %

Sensors

303

27.7 %

11

9

323

29.7 %

Final Control

349

22.0 %

27

48

424

26.7 %

Intelligent Devices

$         652

24.3 %

$              38

$               57

$         747

27.9 %

Safety & Productivity

$          93

16.9 %

$               7

$               17

$         117

21.2 %

Total Adjusted Segment EBITA

2025 Q3

2026 Q3

Pretax earnings (GAAP)

$           734

$           916

Margin

16.1 %

18.8 %

Corporate items and interest expense, net

211

125

Amortization of intangibles

269

253

Restructuring and related costs

18

93

Adjusted segment EBITA (non-GAAP)

$         1,232

$         1,387

Margin

27.1 %

28.5 %

Free Cash Flow

2025 Q3

2026 Q3

2026E

($ in billions)

Operating cash flow (GAAP)

$         1,062

$         1,425

~$4.1

Capital expenditures

(92)

(102)

~(0.45)

Free cash flow (non-GAAP)

$           970

$         1,323

~$3.6

Note 1: Underlying sales and orders exclude the impact of currency translation and significant acquisitions and divestitures.

Note 2: All fiscal year 2026E figures are approximate, except where range is given.

SOURCE Emerson

TOPSHOT - Sections of the Enbridge Line 3 pipeline are seen on the construction site near La Salle Lake State Park in Solway, Minnesota on August 7, 2021. Climate activists and Anishinaabe tribal community members are taking 2 weeks to walk to the Minnesota State Capitol Building to raise awareness for water rights and to rally against Line 3, a proposed pipeline expansion to bringing tar sands from Alberta, Canada to Superior, Wisconsin. (Photo by Kerem Yucel / AFP) (Photo by KEREM YUCEL/AFP via Getty Images)

AFP via Getty Images

On Friday, July 31, 2026 the Michigan Supreme Court vacated a key permit for the tunnel project that allows Canadian pipeline company Enbridge to traverse its Line 5 Pipeline through the Straits of Mackinac between the Upper and Lower Peninsulas of Michigan. The ruling throws the project back into limbo, as the Michigan Public Service Commission now must redo its analysis, further delaying a process that began in 2018. (Source).

In a 6-1 ruling, the Michigan Court, per Justice Elizabeth Welch, stated that …”(t)o accurately assess the environmental consequences of the Replacement Project, the PSC should have determined whether the project would be the proximate cause of Line 5’s continued operation and its alleged attendant harms.”

Line 5, which is 73 years old, runs from Superior, Wisconsin, down through Michigan and into Ontario, ending at the refineries in Sarnia, Ontario. In response to growing concerns that the pipeline needed to be modernized, especially in the freshwaters of the Straits of Mackinac, Enbridge reached an agreement with then Michigan Governor Rick Snyder on its modernization. When Democrat Gretchen Whitmer replaced Rick Snyder in 2019, she sought to shut down the pipeline entirely, which among other things may violate the 1977 Canada-United States Transit Pipelines Treaty governing uninterrupted transmission of hydrocarbons between the two nations. (Source).

The attempt by Governor Whitmer to shut the pipeline down entirely has led to contentious litigation now both in Federal Appellate Court in Michigan and in Michigan State Court. Also on July 31, both the federal governments of the United States and Canada asked the court to block any attempt by Michigan to shut the pipeline down. This continues another part of this drama that goes back to the early days of the Whitmer Administration when her State Attorney General, Dana Nessel, filed a lawsuit in Michigan state court seeking closure of the pipeline. In April 2006 the United States Supreme Court ruled unanimously that the federal government had waited too long to try to transfer the lawsuit to federal court, returning the matter to Michigan state jurisdiction. (Source).

As if all of this wasn’t enough, on July 30, 2026 the U.S. Court of Appeals for the Seventh Circuit upheld a ruling that Enbridge trespassed on the Bad River Bend of Lake Superior Chippewa’s reservation in northern Wisconsin and ordered the pipeline rerouted. (Source).

MORE FOR YOU

The Court ruled that easements permitting the location of Line 5 across Tribal lands expired in 2013 and Enbridge in effect has been trespassing since.

Built in 1953, Line 5 transports up to 540,000 barrels of crude oil and natural gas liquids. It also is a critical conduit for jet fuel for airports such as Detroit Wayne County and Toronto’s Lester Pearson International Airport. As this drama plays out in all of its forms, the one thing that absolutely is clear is that the pipeline is not getting any younger.

, /PRNewswire/ -- DaVita Inc. (NYSE: DVA) announced financial and operating results for the quarter ended June 30, 2026.

"Thanks to the outstanding efforts of our teammates, we had another positive quarter for both patient outcomes and financial results," said Javier Rodriguez, CEO of DaVita Inc. "As we look to the rest of the year, we maintain our strategic focus on exciting new innovations in kidney dialysis to enhance the lives of our patients."

Financial and operating highlights for the quarter ended June 30, 2026:

Consolidated revenues were $3.554 billion. Operating income was $579 million. Diluted earnings per share was $4.02. Operating cash flow was $490 million and free cash flow was $256 million. Incurred an incremental Term Loan B-2 tranche in the aggregate principal amount of $500 million and used a portion of the proceeds to repay a portion of the balance then outstanding on our revolving line of credit. Repurchased 2.2 million shares of the Company's common stock at an average price paid of $154.95 per share.
Three months ended

Six months ended June 30,

June 30, 2026

March 31, 2026

2026

2025

Net income attributable to DaVita Inc.:

(dollars in millions, except per share data)

Net income

$         265

$         198

$         463

$         362

Diluted per share

$        4.02

$        2.87

$        6.86

$        4.57

Adjusted net income(1)

$         265

$         198

$         463

$         391

Adjusted diluted per share(1)

$        4.02

$        2.87

$        6.86

$        4.93

___________________

(1)

For definitions of non-GAAP financial measures, see the note titled "Note on Non-GAAP Financial Measures" and related reconciliations beginning on page 14.

Three months ended

Six months ended June 30,

June 30, 2026

March 31, 2026

2026

2025

Amount

Margin

Amount

Margin

Amount

Margin

Amount

Margin

Operating income

(dollars in millions)

Operating income

$   579

16.3 %

$   482

14.1 %

$ 1,061

15.2 %

$   977

14.8 %

Adjusted operating income(1)

$   579

16.3 %

$   482

14.1 %

$ 1,061

15.2 %

$   990

15.0 %

___________________

(1)

For definitions of non-GAAP financial measures, see the note titled "Note on Non-GAAP Financial Measures" and related reconciliations beginning on page 14.

U.S. dialysis metrics:

Volume: Total U.S. dialysis treatments for the second quarter of 2026 were 7,226,600, or an average of 92,649 treatments per day, representing a per day increase of 1.09% compared to the first quarter of 2026. Normalized non-acquired treatment growth in the second quarter of 2026 compared to the second quarter of 2025 was 0.3%.

Three months ended

Quarter
change

Six months ended

Year to date
change

June 30,
2026

March 31,
2026

June 30,
2026

June 30,
2025

(dollars in millions, except per treatment data)

Revenue per treatment

$    415.87

$      417.59

$      (1.72)

$     416.71

$    402.38

$        14.33

Patient care costs per treatment

$    277.40

$      280.11

$      (2.71)

$     278.74

$    270.05

$          8.69

General and administrative

$         331

$           320

$           11

$          651

$         595

$             56

Primary drivers of the changes in the table above were as follows:

Revenue: The quarter change was primarily driven by changes in payor mix and other normal fluctuations partially offset by seasonal impact of co-insurance and deductibles and an increase in average rates. The year to date change was driven by typical annual increases, including Medicare base rate and other normal fluctuations, partially offset by changes in payor mix.

Patient care costs: The quarter change was primarily due to decreases in payroll taxes and pharmaceutical costs, partially offset by increased health benefits expenses. Additionally, our fixed direct operating expenses favorably impacted patient care costs per treatment due to increased treatments in the second quarter. The year to date change was primarily driven by increased compensation expenses, insurance costs and health benefits expenses.

General and administrative: The quarter change was primarily due to increased professional fees. The year to date change was primarily driven by increases in IT-related costs and compensation expenses partially offset by costs related to the cybersecurity incident experienced by the Company in 2025.

Certain items impacting the quarter:

Debt transaction. In June 2026, we entered into the Ninth Amendment to our senior secured credit agreement. The Ninth Amendment extends an incremental Term Loan B-2 tranche in the aggregate principal amount of $500 million. A portion of the net proceeds from this transaction was used to repay a portion of the balance outstanding on our revolving line of credit and related accrued interest and fees. The remaining borrowings added cash to the balance sheet for general corporate purposes.

Share repurchases. During the three months ended June 30, 2026, we repurchased 2.2 million shares for $348 million, at an average price paid of $154.95 per share.

Subsequent to June 30, 2026 through August 4, 2026, the Company has repurchased 0.2 million shares of our common stock for $37 million at an average price paid of $199.55 per share.

Financial and operating metrics:

Three months ended

June 30,

Twelve months ended

June 30,

2026

2025

2026

2025

Cash flow:

(dollars in millions)

Operating cash flow

$         490

$         324

$       2,193

$       1,862

Free cash flow(1)

$         256

$         157

$       1,308

$          947

___________________

(1)

For definitions of non-GAAP financial measures, see the note titled "Note on Non-GAAP Financial Measures" and related reconciliations beginning on page 14.

Three months ended
June 30, 2026

Six months ended
June 30, 2026

Effective income tax rate on:

Income

21.1 %

20.4 %

Income attributable to DaVita Inc.(1)

25.6 %

25.4 %

___________________

(1)

For definitions of non-GAAP financial measures, see the note titled "Note on Non-GAAP Financial Measures" and related reconciliations beginning on page 14.

Center activity: As of June 30, 2026, we provided dialysis services to a total of approximately 298,500 patients at 3,266 outpatient dialysis centers, of which 2,671 centers were located in the United States and 595 centers were located in 14 countries outside of the United States.

Integrated kidney care (IKC): As of June 30, 2026, we had approximately 64,900 patients in risk-based integrated care arrangements representing approximately $5.8 billion in annualized medical spend. We also had an additional 5,700 patients in other integrated care arrangements; we do not include the medical spend for these patients in this annualized medical spend estimate. For an additional description of these metrics, see footnote 5 in the "Supplemental Financial Data" table below.

Outlook:

The following forward-looking measures and the underlying assumptions involve significant known and unknown risks and uncertainties, including those described below, and actual results may vary materially from these forward-looking measures. We do not provide guidance for operating income or diluted net income per share attributable to DaVita Inc. or operating cash flow on a basis consistent with United States generally accepted accounting principles (GAAP) nor a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures on a forward-looking basis because we are unable to predict certain items contained in the GAAP measures without unreasonable efforts. These current non-GAAP financial measures do not include certain items, including foreign currency fluctuations, which may be significant. The guidance for our effective income tax rate on adjusted income attributable to DaVita Inc. also excludes the amount of third-party owners' income and related taxes attributable to non-tax paying entities.

Current 2026 guidance

Low

High

(dollars in millions, except per share data)

Adjusted operating income

$2,150

$2,250

Adjusted diluted net income per share attributable to DaVita Inc.

$14.10

$15.20

Free cash flow

$1,000

$1,250

The following table outlines normalized treatment days by quarter for 2025 and 2026. Normalized treatment days are adjusted for the mix of days of the week for each quarter and serve as a means to more readily compare calendar effects on each quarter's treatment volume.

Normalized Treatment Days

2026

2025

Q1

76.5

76.9

Q2

78.0

78.0

Q3

79.2

78.8

Q4

78.8

79.5

Total

312.4

313.2

          Certain columns, rows or percentages may not sum or recalculate due to the presentation of rounded numbers.

We will be holding a conference call to discuss our results for the second quarter ended June 30, 2026, on August 4, 2026, at 5:00 p.m. Eastern Time. To join the conference call, please dial (877) 918-6630 from the U.S. or (517) 308-9042 from outside the U.S., and provide the operator the password "Earnings." This call is being webcast and can be accessed at the DaVita Investor Relations website investors.davita.com. A replay of the conference call will also be available at investors.davita.com.

Forward looking statements

DaVita Inc. and its representatives may from time to time make written and oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA), including statements in this release, filings with the Securities and Exchange Commission (SEC), reports to stockholders and in meetings with investors and analysts. All statements in this release, during the related presentation or other meetings, other than statements of historical fact, are forward-looking statements and as such are intended to be covered by the safe harbor for "forward-looking statements" provided by the PSLRA. These forward-looking statements could include, among other things, statements about our balance sheet and liquidity, our expenses, revenues, billings and collections, patient census, the impact of the cybersecurity incident experienced by the Company in 2025 (cyber incident), the impact of federal government policy changes or shutdowns on our business, including with respect to federal funding and reimbursement rates of Medicare, Medicare Advantage (MA), Medicaid and other government programs, availability or cost of supplies, including without limitation the impact of evolving trade policies and tariffs and any reduction in clinical and other supplies due to any disruptions experienced by third party vendors, including with respect to our ability to provide home dialysis services, treatment volumes, mix expectation, such as the percentage or number of patients under commercial insurance, including potential impacts to such mix as a result of U.S. administration policies, current macroeconomic, marketplace and labor market conditions, and overall impact on our patients and teammates, as well as other statements regarding our outlook, future operations, financial condition and prospects, capital allocation plans, expenses, cost saving initiatives, other strategic initiatives, use of contract labor, government and commercial payment rates, expectations related to value-based care (VBC), integrated kidney care (IKC), MA plan enrollment and our international operations, expectations regarding increased competition and marketplace changes, including those related to new or potential entrants in the dialysis and pre-dialysis marketplace and the potential impact of innovative technologies, drugs, or other treatments on the dialysis industry, and expectations regarding our share repurchase program. All statements in this release, other than statements of historical fact, are forward-looking statements. Without limiting the foregoing, statements including the words "expect," "intend," "will," "could," "plan," "anticipate," "believe," "forecast," "guidance," "outlook," "goals," and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on DaVita's current expectations and are based solely on information available as of the date of this release. DaVita undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of changed circumstances, new information, future events or otherwise, except as may be required by law. Actual future events and results could differ materially from any forward-looking statements due to numerous factors that involve substantial known and unknown risks and uncertainties. These risks and uncertainties include, among other things:

external conditions, including those related to general economic, political and global health conditions, including without limitation, the impact of global events and political or governmental volatility, including in the Middle East; the impact of the domestic political environment and related developments on the current healthcare marketplace, our patients and on our business; the impact of infectious diseases or other adverse conditions on our financial condition, the chronic kidney disease population and our patient population; supply chain challenges and disruptions, including without limitation, with respect to certain key services, critical clinical supplies and equipment we obtain from third parties, and including any impacts on our supply chain and cost of supplies as a result of global events, natural disasters or evolving trade policies, including tariffs; the impact on our patients and industry of continued increased competition from dialysis providers and others, including new or potential entrants in the dialysis and pre-dialysis marketplace; the impact of new or innovative technologies, drugs, or other treatments, including our ability to successfully implement new technologies, treatments or therapies in our business such as those related to middle molecule toxin clearance; elevated teammate turnover or labor costs; and our ability to respond to challenging U.S. and global economic and marketplace conditions, including, among other things, our ability to successfully identify cost saving opportunities; the concentration of profits generated by higher-paying commercial payor plans for which there is continued downward pressure on average realized payment rates; our ability to negotiate and maintain contracts with these payors on competitive terms or at all; a reduction in the number or percentage of our patients under commercial plans, including, without limitation, as a result of healthcare, immigration or other policies implemented by the U.S. administration, continuing legislative efforts to restrict or prohibit the use and/or availability of charitable premium assistance, as a result of payors implementing restrictive plan designs or resulting from negotiations with large commercial payors that we have in the past, and currently are, conducting on a concurrent basis; risks arising from laws, regulations or requirements applicable to us or changes thereto, including, without limitation, OBBBA and those related to trade policy, healthcare, privacy, antitrust matters, and acquisition, merger, joint venture or similar transactions and/or labor matters, and potential impacts of changes in interpretation or enforcement thereof or related litigation impacting, among other things, coverage or reimbursement rates for our services or the number of patients enrolled in or that select higher-paying commercial plans, and the risk that we make incorrect assumptions about how our patients will respond to any such developments; our ability to successfully implement our strategies with respect to IKC and VBC initiatives that may be impacted by, among other things, changes to the Comprehensive Kidney Care Contracting model and home based dialysis in the desired time frame and in a complex, dynamic and highly regulated environment; a reduction in government payment rates under the Medicare End Stage Renal Disease program, state Medicaid or other government-based programs and the impact of the MA benchmark structure and adjustment methodologies; our reliance on significant suppliers, service providers and other third party vendors to provide key support to our business operations and enable our provision of services to patients, including, among others, suppliers of certain pharmaceuticals, administrative or other services or critical clinical products; and risks resulting from a closure, reduction, disruption or transition in the services or products provided to us by such suppliers, service providers and third party vendors, which may, among other things, increase our costs or expenses; our ability to successfully maintain, operate or upgrade our information systems or those of third-party service providers upon which we rely and our ability to successfully adopt or adapt to new technologies, treatments or therapies, including technologies that utilize artificial intelligence; legal and compliance risks, such as compliance with complex, and at times, evolving government regulations and requirements, and with additional laws that may apply to our operations as we expand geographically or enter into new lines of business; noncompliance by us or our business associates with any privacy or security laws or any security breach by us or a third party, such as the cyber incident, including, among other things, any such non-compliance or breach involving the misappropriation, loss or other unauthorized use or disclosure of confidential information; our ability to attract, retain and motivate teammates, including key leadership personnel, our ability to manage potential disruptions to our business and operations, including potential work stoppages, and our ability to manage operating cost increases or productivity decreases that may be related to political unrest, legislative or other changes, union organizing activities, or volatility and uncertainty in the current challenging and highly competitive labor market that has experienced an ongoing nationwide shortage of skilled clinical personnel, among other things; changes in practice patterns, pricing, or reimbursement and payment policies or processes related to pharmaceuticals, medical equipment or supplies, including with respect to oral phosphate binders, among other things; our ability to develop and maintain relationships with physicians and hospitals, changing affiliation models for physicians, and the emergence of new models of care or other initiatives that, among other things, may erode our patient base and impact reimbursement rates; our ability to complete and successfully integrate and operate acquisitions, mergers, dispositions, joint ventures or other strategic transactions on terms favorable to us or at all; and our ability to continue to successfully expand our operations and services in markets outside the United States, or to businesses or products outside of dialysis services; the variability of our cash flows, including, without limitation, any extended billing or collections cycles that may be due to, among other things, defects or operational issues in our billing systems such as those experienced during the cyber incident, or defects or operational issues in the billing systems or services of third parties on which we rely; the risk that we may not be able to generate or access sufficient cash in the future to service our indebtedness or to fund our other liquidity needs; the effects on us or others of natural or other disasters, public health crises or severe adverse weather events such as hurricanes, earthquakes, fires or flooding; factors that may impact our ability to repurchase stock under our share repurchase program and the timing of any such stock repurchases, as well as any use by us of a considerable amount of available funds to repurchase stock; our goals and disclosures related to sustainability matters, including, among other things, evolving regulatory requirements affecting environmental, social and governance standards, measurements and reporting requirements; and the other risk factors, trends and uncertainties set forth in our Annual Report on Form 10-K for the year ended December 31, 2025 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, and the risks and uncertainties discussed in any subsequent reports that we file or furnish with the SEC from time to time. The financial information presented in this release is unaudited and is subject to change as a result of subsequent events or adjustments, if any, arising prior to the filing of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2026.

DAVITA INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited) 
(dollars and shares in thousands, except per share data)

Three months ended June 30,

Six months ended June 30,

2026

2025

2026

2025

Dialysis patient service revenues

$  3,366,377

$  3,206,871

$  6,639,174

$  6,309,864

Other revenues

187,707

172,655

330,458

293,191

Total revenues

3,554,084

3,379,526

6,969,632

6,603,055

Operating expenses:

Patient care costs

2,392,001

2,261,540

4,734,258

4,501,200

General and administrative

423,458

412,805

845,372

786,895

Depreciation and amortization

167,808

174,704

345,637

351,155

Equity investment income, net

(8,184)

(7,364)

(16,528)

(12,973)

Total operating expenses

2,975,083

2,841,685

5,908,739

5,626,277

Operating income

579,001

537,841

1,060,893

976,778

Debt expense

(150,256)

(146,062)

(295,387)

(281,117)

Debt extinguishment and modification costs

(2,035)

—

(2,035)

—

Other income (loss), net

8,300

(22,851)

12,773

(40,400)

Income before income taxes

435,010

368,928

776,244

655,261

Income tax expense

91,787

93,708

157,986

147,825

Net income

343,223

275,220

618,258

507,436

Less: Net income attributable to noncontrolling interests

(77,826)

(75,883)

(155,331)

(145,182)

Net income attributable to DaVita Inc

$    265,397

$    199,337

$    462,927

$    362,254

Earnings per share attributable to DaVita Inc.:

Basic net income

$         4.10

$        2.62

$        7.01

$         4.67

Diluted net income

$         4.02

$        2.58

$        6.86

$         4.57

Weighted average shares for earnings per share:

Basic shares

64,781

75,943

66,078

77,646

Diluted shares

66,092

77,362

67,476

79,309

DAVITA INC. 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
 (dollars in thousands)

Three months ended June 30,

Six months ended June 30,

2026

2025

2026

2025

Net income

$    343,223

$    275,220

$    618,258

$    507,436

Other comprehensive income (loss), net of tax:

Unrealized gains (losses) on interest rate cap agreements:

Unrealized gains (losses)

2,799

(6,405)

7,953

(14,940)

Reclassifications of net realized losses into net income

2,877

1,534

5,754

3,041

Unrealized gains on foreign currency translation

22,732

94,001

50,525

184,857

Other comprehensive income

28,408

89,130

64,232

172,958

Total comprehensive income

371,631

364,350

682,490

680,394

Less: Comprehensive income attributable to noncontrolling interests

(77,826)

(75,883)

(155,331)

(145,182)

Comprehensive income attributable to DaVita Inc.

$    293,805

$    288,467

$    527,159

$    535,212

DAVITA INC.
CONSOLIDATED BALANCE SHEETS
(unaudited) 
(dollars and shares in thousands, except per share data)

June 30, 2026

December 31, 2025

ASSETS

Cash and cash equivalents

$         668,963

$        676,438

Restricted cash and equivalents

82,895

81,309

Short-term investments

19,914

24,303

Accounts receivable

2,467,056

2,414,690

Inventories

151,535

160,627

Contract assets and other receivables

565,566

494,414

Prepaid and other current assets

149,113

156,285

Income tax receivable

84,597

49,937

Total current assets

4,189,639

4,058,003

Property and equipment, net of accumulated depreciation of $6,867,296 and $6,602,134, respectively

2,749,308

2,812,966

Operating lease right-of-use assets

2,430,055

2,397,179

Intangible assets, net of accumulated amortization of $38,030 and $37,751, respectively

228,817

222,125

Equity method and other investments

183,801

157,249

Long-term investments

38,365

40,966

Other long-term assets

298,538

246,520

Goodwill

7,590,966

7,545,095

$     17,709,489

$     17,480,103

LIABILITIES AND EQUITY

Accounts payable

$          715,872

$          696,148

Other liabilities

826,995

893,024

Accrued compensation and benefits

694,766

793,478

Current portion of operating lease liabilities

439,488

425,484

Current portion of long-term debt

117,177

109,201

Income tax payable

24,621

24,359

Due to related party

36,513

199,940

Total current liabilities

2,855,432

3,141,634

Long-term operating lease liabilities

2,185,973

2,175,658

Long-term debt

10,663,836

10,163,988

Other long-term liabilities

99,091

83,516

Deferred income taxes

825,719

756,869

Total liabilities

16,630,051

16,321,665

Commitments and contingencies

Noncontrolling interests subject to put provisions

1,561,416

1,532,166

Equity:

Preferred stock ($0.001 par value, 5,000 shares authorized; none issued)

—

—

Common stock ($0.001 par value, 450,000 shares authorized; 69,198 shares issued

 and 63,955 shares outstanding at June 30, 2026, and 68,549 shares issued and

 outstanding at December 31, 2025)

69

69

Additional paid-in capital

—

—

Accumulated earnings (deficit)

81,233

(328,428)

Treasury stock (5,243 and zero shares, respectively)

(787,847)

(199,940)

Accumulated other comprehensive loss

(58,551)

(122,783)

Total DaVita Inc. shareholders' equity deficit

(765,096)

(651,082)

Noncontrolling interests not subject to put provisions

283,118

277,354

Total equity deficit

(481,978)

(373,728)

$     17,709,489

$     17,480,103

DAVITA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)(dollars in thousands)

Six months ended June 30,

2026

2025

Cash flows from operating activities:

Net income

$       618,258

$       507,436

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

345,637

351,155

Stock-based compensation expense

54,189

62,567

Deferred income taxes

53,431

(9,838)

Equity investment loss, net

2,437

47,730

Other non-cash losses, net

16,721

6,948

Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:

Accounts receivable

(24,197)

(288,447)

Inventories

11,315

(9,592)

Other current assets

(58,339)

(70,945)

Other long-term assets

(22,803)

2,981

Accounts payable

7,639

35,612

Accrued compensation and benefits

(108,322)

(125,365)

Other current liabilities

(55,837)

(3,586)

Income taxes

(32,530)

9,462

Other long-term liabilities

3,301

(11,873)

Net cash provided by operating activities

810,900

504,245

Cash flows from investing activities:

Additions of property and equipment

(271,836)

(264,349)

Acquisitions

(38,540)

(10,596)

Proceeds from asset and business sales

4,392

22,400

Purchase of debt investments held-to-maturity

(298)

(27,475)

Purchase of other debt and equity investments

(12,867)

(3,002)

Proceeds from debt investments held-to-maturity

942

48,014

Proceeds from sale of other debt and equity investments

4,382

6,379

Purchase of equity method investments

(19,625)

(2,144)

Distributions from equity method investments

109

1,470

Net cash used in investing activities

(333,341)

(229,303)

Cash flows from financing activities:

Borrowings

2,768,259

4,189,716

Payments on long-term debt

(2,264,356)

(3,373,300)

Deferred and debt related financing costs

(4,645)

(25,133)

Purchase of treasury stock from related party

(382,805)

(200,261)

Other purchases of treasury stock

(377,852)

(793,834)

Distributions to noncontrolling interests

(149,892)

(151,087)

Net proceeds from issuance of common stock under employee stock plans

5,909

8,913

Payment of tax withholdings on net share settlements of equity awards

(63,814)

(30,477)

Contributions from noncontrolling interests

4,239

2,578

Proceeds from sales of additional noncontrolling interests

—

169

Purchases of noncontrolling interests

(18,571)

(5,378)

Net cash used in financing activities

(483,528)

(378,094)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

80

20,286

Net decrease in cash, cash equivalents and restricted cash

(5,889)

(82,866)

Cash, cash equivalents and restricted cash at beginning of the year

757,747

879,825

Cash, cash equivalents and restricted cash at end of the period

$       751,858

$       796,959

DAVITA INC.
SUPPLEMENTAL FINANCIAL DATA
(unaudited)
(dollars in millions and shares in thousands, except per treatment and patient data)

Three months ended

Six months ended
June 30, 2026

June 30,
2026

March 31,
2026

1. Consolidated business metrics:

Operating margin

16.3 %

14.1 %

15.2 %

General and administrative expenses as a percent of

 consolidated revenues(2)

11.9 %

12.4 %

12.1 %

Effective income tax rate on income

21.1 %

19.4 %

20.4 %

Effective income tax rate on income attributable to DaVita Inc.(1)

25.6 %

25.1 %

25.4 %

2. Summary of financial results:

Revenues:

U.S. dialysis patient services and other

$   3,012

$   2,942

$      5,954

Other—Ancillary services

Integrated kidney care

162

116

278

Other U.S. ancillary

9

10

19

International dialysis patient service and other

386

372

758

557

498

1,054

Eliminations

(14)

(24)

(38)

Total consolidated revenues

$   3,554

$   3,416

$      6,970

Operating income (loss):

U.S. dialysis

$      538

$      506

$      1,044

Other—Ancillary services

Integrated kidney care

40

(19)

21

Other U.S. ancillary

(8)

(6)

(13)

International

25

30

55

57

6

63

Corporate administrative support expenses

(16)

(30)

(46)

Total consolidated operating income

$      579

$      482

$      1,061

DAVITA INC.
SUPPLEMENTAL FINANCIAL DATA - continued
(unaudited)
(dollars in millions and shares in thousands, except per treatment and patient data)

Three months ended

Six months ended
June 30, 2026

June 30,
2026

March 31,
2026

3. Summary of reportable segment financial results and metrics:

U.S. dialysis

Financial results

Revenue:

Dialysis patient service revenues

$      3,005

$     2,935

$      5,941

Other revenues

7

6

13

Total operating revenues

3,012

2,942

5,954

Operating expenses:

Patient care costs

2,005

1,969

3,974

General and administrative

331

320

651

Depreciation and amortization

146

155

302

Equity investment income

(8)

(8)

(16)

Total operating expenses

2,474

2,436

4,910

Segment operating income

$         538

$        506

$      1,044

Metrics

Volume:

Treatments

7,226,600

7,029,525

14,256,125

Number of treatment days

78.0

76.7

154.7

Average treatments per day

92,649

91,650

92,153

Per day year-over-year change

0.6 %

(0.2) %

0.2 %

Number of normalized treatment days(3)

78.0

76.5

154.5

Average treatments per normalized day

92,649

91,889

92,273

Per normalized day year-over-year change

0.6 %

0.4 %

0.5 %

Normalized year-over-year non-acquired treatment growth(4)

0.3 %

0.1 %

Operating net revenues:

Average patient service revenue per treatment

$    415.87

$   417.59

$    416.71

Expenses:

Patient care costs per treatment

$    277.40

$   280.11

$    278.74

General and administrative expenses per treatment

$      45.79

$     45.49

$      45.64

Depreciation and amortization expense per treatment

$      20.26

$     22.07

$      21.16

Accounts receivable:

Receivables

$      1,719

$     1,695

DSO

52

52

4. IKC metrics:

Patients per integrated care arrangement type:

Risk-based(5)

64,900

62,600

Other(5)

5,700

6,300

Annualized aggregate risk based spend(5)

$     5,800

$     5,400

DAVITA INC.
SUPPLEMENTAL FINANCIAL DATA - continued
(unaudited)
(dollars in millions and shares in thousands, except per treatment and patient data)

Three months ended

Six months ended
June 30, 2026

June 30,
2026

March 31,
2026

5. Cash flow:

Operating cash flow

$       490

$       321

$           811

Operating cash flow, last twelve months

$    2,193

$    2,027

Free cash flow(1)

$       256

$       140

$           396

Free cash flow, last twelve months(1)

$    1,308

$    1,209

Capital expenditures:

Maintenance

$       123

$         74

$           197

Development

$         47

$         28

$             75

Acquisition expenditures

$           5

$         34

$             39

Proceeds from sale of self-developed properties

$         —

$           2

$               2

6. Debt and capital structure:

Total debt(6)

$  10,848

$  10,694

Net debt, net of cash and cash equivalents(6)

$  10,179

$  10,050

Leverage ratio(7)

3.37x

3.34x

Weighted average effective interest rate:

At end of the quarter

5.43 %

5.44 %

On the senior secured credit facilities at end of the quarter

5.76 %

5.79 %

Amount spent on share repurchases

$       348

$       403

$           751

Number of shares repurchased

2,238

3,005

5,243

Certain columns, rows or percentages may not sum or recalculate due to the presentation of rounded numbers.

________________

(1)

These are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to their most comparable measure calculated and presented in accordance with GAAP, and for a definition of adjusted amounts, see attached reconciliation schedules. Adjusted operating income margin is adjusted operating income divided by consolidated revenues.

(2)

General and administrative expenses include certain corporate support, long-term incentive compensation and advocacy costs.

(3)

Normalized treatment days reflect treatment days adjusted to normalize for the mix of days of the week in a given quarter.

(4)

Normalized non-acquired treatment growth reflects year-over-year growth in treatment volume, adjusted to exclude acquisitions and other similar transactions, and further adjusted to normalize for the number and mix of treatment days in a given quarter versus the prior year quarter.

(5)

Integrated care metrics: The aggregate amount of medical spend associated with risk-based integrated care arrangements that we disclose includes both medical costs included in our reported expenses for certain risk-based arrangements (such as our SNPs), as well as the aggregate estimated benchmark amount above or below which we will incur profit or loss from value-based care (VBC) arrangements under which third-party medical costs are not included in our reported results. A number of our VBC contracts are subject to complex or novel patient attribution mechanics and benchmark adjustments, some of which are based on information not reported to us until periods after we report our quarterly results. As a result, our estimates of our patients under, and the dollar amount of, our value-based contracts remain subject to estimation uncertainty.

(6)

The debt amounts presented as of June 30, 2026 and March 31, 2026 exclude approximately $66.5 and $68.1, respectively, of debt discount, premium and other deferred financing costs related to our senior secured credit facilities and senior notes in effect or outstanding at that time.

(7)

This is a non-GAAP measure. See "Calculation of Leverage Ratio" in non-GAAP reconciliations.

DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES
(unaudited)
(dollars in millions)

Calculation of the Leverage Ratio

Under our amended senior secured credit facilities (the Amended Credit Agreement) dated June 8, 2026 and our prior senior secured credit facilities, the leverage ratio is defined as (a) all funded debt, minus unrestricted cash and cash equivalents (including short-term investments) divided by (b) "Consolidated EBITDA." The leverage ratio determines the interest rate margin payable by the Company for its Term Loan A-2 and revolving line of credit under the Amended Credit Agreement by establishing the margin over the base interest rate (SOFR plus credit spread adjustment) that is applicable. The calculation below is based on the last 12 months of "Consolidated EBITDA" and "Consolidated net debt" at the end of each reported period, each as defined in the credit agreement that was in effect at the end of each such period (the Applicable Credit Agreement). The calculation of "Consolidated EBITDA" below sets forth, among other things, certain pro forma adjustments described in the Applicable Credit Agreement, including, pro forma adjustments for acquisitions or divestitures that occurred during the period and certain projected net cost savings, expense reductions and cost synergies. These pro forma adjustments are determined according to specified criteria set forth in the Applicable Credit Agreement, and as a result, the total adjustments calculated may not be comparable to the Company's estimates for other purposes, including as operating performance measures. The Company's management believes the presentation of "Consolidated EBITDA" is useful to investors to enhance their understanding of the Company's leverage ratio under the Applicable Credit Agreement and should not be evaluated for any other purpose. The leverage ratio calculated by the Company is a non-GAAP measure and should not be considered a substitute for the ratio of total debt to operating income, determined in accordance with GAAP. The Company's calculation of its leverage ratio might not be calculated in the same manner as, and thus might not be comparable to, similarly titled measures of other companies.

Twelve months ended

June 30,
2026

March 31,
2026

Net income from continuing operations attributable to DaVita Inc.

$          822

$          756

Income taxes

303

305

Interest expense

540

535

Depreciation and amortization

710

717

Net income attributable to noncontrolling interests

342

340

Stock-settled stock-based compensation

127

136

Debt extinguishment and modification costs

16

14

Expected cost savings and expense reductions

7

10

Other

149

194

Consolidated EBITDA

$        3,018

$        3,008

June 30,
2026

March 31,
2026

Total debt, excluding debt discount and other deferred financing costs(1)

$      10,848

$      10,694

Less: Cash and cash equivalents including short-term investments(2)

(685)

(664)

Consolidated net debt

$      10,162

$      10,031

Last twelve months Consolidated EBITDA

$        3,018

$        3,008

Leverage ratio

3.37x

3.34x

Maximum leverage ratio permitted under the Credit Agreement

5.00x

5.00x

Certain columns or rows may not sum or recalculate due to the presentation of rounded numbers.

________________

(1)

The debt amounts presented as of June 30, 2026 and March 31, 2026 exclude approximately $66.5 and $68.1, respectively, of debt discount, premium and other deferred financing costs related to our senior secured credit facilities and senior notes in effect or outstanding at that time.

(2)

This excludes amounts not readily convertible to cash related to the Company's non-qualified deferred compensation plans for all periods presented.

DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES
(unaudited)

Note on Non-GAAP Financial Measures

As used in this press release, the term "adjusted" refers to non-GAAP measures as follows, each as reconciled to its most comparable GAAP measure as presented in the non-GAAP reconciliations in the notes to this press release: (i) for income and expense measures, the term "adjusted" refers to operating performance measures that exclude certain items such as, but not limited to, cybersecurity costs, impairment charges, gains or losses on ownership changes, restructuring charges, accruals for legal matters, and debt extinguishment and modification costs; and (ii) the term "effective income tax rate on adjusted income attributable to DaVita Inc." represents the Company's effective tax rate excluding applicable non-GAAP items and the tax associated with them as well as noncontrolling owners' income, which primarily relates to non-tax paying entities.

These non-GAAP or "adjusted" measures are presented because management believes these measures are useful adjuncts to GAAP results. However, these non-GAAP measures should not be considered alternatives to the corresponding measures determined under GAAP. 

Specifically, management uses adjusted operating income, adjusted net income attributable to DaVita Inc. and adjusted diluted net income per share attributable to DaVita Inc. to compare and evaluate our performance period over period and relative to competitors, to analyze the underlying trends in our business, to establish operational budgets and forecasts and for incentive compensation purposes. We believe these non-GAAP measures also are useful to investors and analysts in evaluating our performance over time and relative to competitors, as well as in analyzing the underlying trends in our business. Furthermore, we believe these presentations enhance a user's understanding of our normal consolidated results by excluding certain items which we do not believe are indicative of our ordinary results of operations. As a result, adjusting for these amounts allows for comparison to our normalized prior period results.

The effective income tax rate on adjusted income attributable to DaVita Inc. excludes noncontrolling owners' income and certain non-deductible and other charges which we do not believe are indicative of our ordinary results. Accordingly, we believe these adjusted effective income tax rates are useful to management, investors and analysts in evaluating our performance and establishing expectations for income taxes incurred on our ordinary results attributable to DaVita Inc.

Finally, free cash flow represents net cash provided by operating activities less distributions to noncontrolling interests, development capital expenditures, and maintenance capital expenditures; plus contributions from noncontrolling interests and proceeds from the sale of self-developed properties. Management uses this measure to assess our ability to fund acquisitions and meet our debt service obligations and we believe this measure is equally useful to investors and analysts as an adjunct to cash flows from operating activities and other measures under GAAP.

It is important to bear in mind that these non-GAAP "adjusted" measures are not measures of financial performance or liquidity under GAAP and should not be considered in isolation from, nor as substitutes for, their most comparable GAAP measures.

The following reconciliations of the non-GAAP financial measures presented in this press release to their most comparable GAAP measures.

DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES - continued
(unaudited)
(dollars in millions, except per share data)

Adjusted net income and adjusted diluted net income per share attributable to DaVita Inc.:

Three months ended

Six months ended

June 30,
2026

March 31,
2026

June 30,
2026

June 30,
2025

Dollars

Per share

Dollars

Per share

Dollars

Per share

Dollars

Per share

Consolidated:

Net income attributable to DaVita Inc.

$  265

$  4.02

$  198

$  2.87

$  463

$  6.86

$  362

$  4.57

Cybersecurity incident-related charges(1)

—

—

—

—

—

—

13

0.17

Income tax impact related to prior legal matter(2)

—

—

—

—

—

—

19

0.24

Related income tax

—

—

—

—

—

—

(3)

(0.04)

Adjusted net income attributable to DaVita Inc.

$  265

$  4.02

$  198

$  2.87

$  463

$  6.86

$  391

$  4.93

Certain columns, rows or percentages may not sum or recalculate due to the presentation of rounded numbers.

Adjusted operating income:There were no non-GAAP adjustments during the three and six months ended June 30, 2026 or the three months ended March 31, 2026.

Six months ended June 30, 2025

U.S.
dialysis

Ancillary services

Corporate
administration

Consolidated

U.S. IKC

U.S. Other

International

Total

Operating income (loss)

$   999

$      (3)

$     (10)

$      67

$     54

$       (76)

$     977

Cybersecurity incident-related charges(1)

13

—

—

—

—

—

13

Adjusted operating income (loss)

$ 1,012

$      (3)

$     (10)

$      67

$     54

$       (76)

$     990

Certain columns or rows may not sum or recalculate due to the presentation of rounded numbers

Effective income tax rates:

Three months ended

Six months ended

June 30, 2026

June 30,
2026

March 31,
2026

Effective income tax rates on income attributable to DaVita Inc.:

Income before income taxes

$  435

$  341

$       776

Noncontrolling owners' income primarily attributable to non-tax paying entities

(78)

(78)

(156)

Income before income taxes attributable to DaVita Inc.

$  357

$  264

$       620

Income tax expense

$    92

$    66

$       158

Income tax attributable to noncontrolling interests

(1)

—

(1)

Income tax expense attributable to DaVita Inc.

$    91

$    66

$       157

Effective income tax rate on income attributable to DaVita Inc.

25.6 %

25.1 %

25.4 %

Certain columns, rows or percentages may not sum or recalculate due to the presentation of rounded numbers.

DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES - continued
(unaudited)
(dollars in millions, except per share data)

Free cash flow:

Three months ended

Six months ended

June 30, 2026

June 30,
2026

March 31,
2026

June 30,
2025

Net cash provided by operating activities

$       490

$       321

$       324

$         811

Adjustments to reconcile net cash provided by operating activities to

 free cash flow:

Distributions to noncontrolling interests

(64)

(85)

(58)

(150)

Contributions from noncontrolling interests

—

4

—

4

Maintenance capital expenditures(3)

(123)

(74)

(90)

(197)

Development capital expenditures(4)

(47)

(28)

(32)

(75)

Proceeds from sale of self-developed properties

—

2

12

2

Free cash flow

$       256

$       140

$       157

$         396

Certain columns or rows may not sum or recalculate due to the presentation of rounded numbers.

Twelve months ended

June 30,
2026

March 31,
2026

June 30,
2025

Net cash provided by operating activities

$     2,193

$     2,027

$     1,862

Adjustments to reconcile net cash provided by operating activities to free cash flow:

Distributions to noncontrolling interests

(323)

(317)

(381)

Contributions from noncontrolling interests

9

9

9

Maintenance capital expenditures(3)

(424)

(391)

(407)

Development capital expenditures(4)

(159)

(144)

(167)

Proceeds from sale of self-developed properties

12

24

30

Free cash flow

$     1,308

$     1,209

$       947

Certain columns or rows may not sum or recalculate due to the presentation of rounded numbers.

________________

(1)

Represents charges recognized to work to remediate a cybersecurity incident and restore systems following the occurrence of the incident in the second quarter of 2025. We have excluded these charges from our non-GAAP metrics as we do not believe they are indicative of our ordinary results of operations.

(2)

Represents the write-down of a tax receivable related to a 2014 tax refund claim. The claim related to estimated tax expense associated with a legal matter previously presented as a non-GAAP adjustment. We have excluded this charge from our non-GAAP metrics because, among other things, we do not believe it is indicative of our ordinary results of operations because the charge is significant and may obscure analysis of underlying trends and financial performance of our current business.

(3)

Maintenance capital expenditures represent capital expenditures to maintain the productive capacity of the business and include those made for investments in information technology, dialysis center renovations, capital asset replacements, and any other capital expenditures that are not development or acquisition expenditures.

(4)

Development capital expenditures principally represent capital expenditures (other than acquisition expenditures) made to expand the productive capacity of the business and include those for new U.S. and international dialysis center developments, dialysis center expansions and relocations, and new or expanded contracted hospital operations.

SOURCE DaVita