Agilent Q3 2026 Earnings: China and Pharma Strength Drive Raised Outlook

Agilent delivered a stronger-than-expected fiscal third quarter, with 7.3% core revenue growth and adjusted EPS growth of 14% excluding tariff refunds. China, pharma, advanced therapeutics and semiconductor-related applied markets were the main sources of upside, while operating leverage and pricing lifted margins.

The company raised its full-year growth and EPS outlook, signaling confidence that momentum can continue into fiscal year-end. The key question for investors is whether the broadening recovery in China and pharma, along with early reshoring orders and new product launches, can sustain growth after some unusually strong comparisons and tariff-refund benefits roll off.

Earnings Snapshot

All profitability metrics are non-GAAP unless otherwise noted by management.

The Bigger Story

The quarter was notable not only for the headline beat, but for the breadth of the growth drivers. Agilent’s largest end market, pharma, grew 12%, while China returned to 9% growth after management had expected a flat result. Applied markets also exceeded expectations, supported by semiconductor-related demand for spectroscopy and vacuum products.

Management attributed the performance partly to improving end markets, but also emphasized commercial execution, strategic pricing and operating improvements under its Ignite program. The financial evidence supports at least part of that argument: excluding tariff refunds, operating margin expanded 210 basis points year over year, materially faster than revenue growth.

Still, several of the most attractive opportunities remain forward-looking rather than current revenue contributors. Pharma reshoring orders, semiconductor fab investment, Train C capacity at the specialty CDMO business and newer products such as the 9500 ICP-MS could support growth beyond 2026, but their conversion into revenue will take time.

Revenue and Operating Performance

Agilent generated $1.88B of revenue, up 8.1% on a reported basis and 7.3% on a core constant-currency basis. Currency contributed 0.2 percentage points to reported growth.

Pharma Led End-Market Growth

Pharma grew 12%, ahead of management’s expectation for high-single-digit growth. Biotech grew at a double-digit rate, while small-molecule pharma grew in the mid-single digits. Management said improved funding conditions are beginning to translate into stronger spending among small and mid-sized biotech customers, though Agilent characterized its exposure to that customer group as relatively small.

The advanced therapeutics division, which includes NASD and BIOVECTRA specialty CDMO operations, grew nearly 30%. GLP-1-related revenue increased more than 70% year over year, with contributions from both CDMO and analytical laboratory businesses.

That growth rate will not carry directly into the fourth quarter. Management expects advanced therapeutics to be roughly flat in Q4 as it laps a comparison of more than 40% growth and as certain customer regulatory submissions affect timing. The company said Train C achieved mechanical completion in the prior quarter and is expected to begin generating revenue next spring. Management said about 75% of fiscal 2027 Train C capacity is already supported by purchase orders, although the facility is expected to take six to eight quarters to reach full capacity.

Applied Markets Outperformed Expectations

Applied Markets Group grew 7% organically, above management’s low-single-digit expectation. The strongest contributors were spectroscopy, up high single digits, and vacuum, which grew at a double-digit rate. Both businesses benefited from demand tied to semiconductor production.

Chemicals and advanced materials grew 7%, led by double-digit growth in advanced materials. Management pointed to ongoing semiconductor supply-chain investment and AI infrastructure spending as medium-term demand drivers. The semiconductor opportunity currently represents about 3% to 4% of Agilent revenue, according to management, and instrument demand typically arrives 18 to 24 months after fab construction.

Chemical and energy grew in the low single digits against a low-double-digit comparison. Demand was stronger in Asia, including refining, base chemicals and specialty chemicals, while Europe remained weaker amid geopolitical disruption and delayed capital spending.

China Was the Largest Source of Upside

China grew 9%, compared with management’s prior expectation for flat growth. Pharma and food were the principal contributors, with management citing demand from commercial accounts, CXOs, biotech customers, testing laboratories and food-safety workflows.

China’s improvement appeared broad-based rather than dependent on government stimulus, which management said provided minimal benefit during the quarter. The company highlighted competitive wins at two CXOs, an enterprise service contract with a local pharma customer, and a PFAS-related win at a commercial testing laboratory.

Americas revenue grew 10%, with broad-based strength in pharma, diagnostics and clinical, and environmental and forensics. Asia excluding China also grew 9%. Europe grew in the low single digits, held back by difficult comparisons, although diagnostics and clinical, chemicals and advanced materials, and academic and government each grew in the mid-single digits.

Profitability and Margins

Adjusted operating margin was 28.3%, including a $20M net benefit from tariff refunds. Excluding that benefit, operating margin was 27.2%, 210 basis points above the prior-year level and 80 basis points ahead of management’s implied guidance.

Gross margin was 56.4% including tariff refunds and 54.9% excluding them. The adjusted ex-refund gross margin improved 180 basis points year over year, driven by volume leverage and Ignite-related operational initiatives.

Adjusted EPS was $1.62, including a $0.06 benefit from tariff refunds. Excluding the refund, adjusted EPS was $1.56, up 14% year over year and $0.06 above the high end of Agilent’s guidance range.

Pricing was an important contributor. Management said strategic pricing added about 200 basis points to Q3 revenue growth and has exceeded the company’s initial full-year target of more than 100 basis points. That contribution helped offset inflationary pressures, although management also cited supply-chain productivity, procurement actions and inventory management as part of its cost response.

The tariff-refund benefit should not be viewed as recurring. Agilent’s Q4 guidance does not include any potential additional tariff refunds.

Demand, Customers and Pricing

Instrument revenue grew at a high-single-digit rate, supported by replacement cycles in liquid chromatography and gas chromatography. LC revenue grew at a low-double-digit rate despite a mid-teens comparison, while GC revenue grew in the low single digits against a high-single-digit comparison.

Instrument book-to-bill was above 1 for the 10th consecutive quarter, meaning orders continued to meet or exceed revenue. This supports near-term demand visibility, although it does not establish the duration of the replacement cycle.

New product activity was also encouraging. Management said the funnel for the recently launched 9500 Triple Quad ICP-MS exceeded $60M, while orders for the 8890B and 8860B gas chromatography systems exceeded internal expectations by more than two times during their first two months of shipments. These are demand indicators, not booked revenue.

In pathology, management said orders grew at a double-digit rate and the company entered Q4 with a robust backlog. Companion diagnostics grew in the mid-teens and genomics returned to high-single-digit growth. Biocare contributed $10M of revenue after closing in late June and is expected to contribute about $23M in Q4.

CrossLab’s consumables business grew at a high-single-digit rate and service grew in the mid-single digits. Management said the growing installed base should support service-contract opportunities, but the normal warranty period means the more meaningful conversion into recurring service revenue generally occurs 12 to 18 months after an instrument placement.

What is Agilent Technologies’ guidance and outlook?

Agilent raised its fiscal 2026 revenue outlook to $7.49B to $7.51B. The revised range implies 5.8% to 6.0% core growth, up 65 basis points at the midpoint from prior guidance.

The company also raised adjusted EPS guidance. Excluding the Q3 tariff-refund benefit, management now expects fiscal-year EPS of $6.12 to $6.15, up $0.09 at the midpoint from its prior outlook and representing 10% growth at the midpoint. Including tariff refunds, adjusted EPS is expected to be $6.18 to $6.21.

For Q4, Agilent expects reported revenue of $1.98B to $2.0B, implying core growth of roughly 5.2% to 6.2%. Adjusted EPS is expected to be $1.71 to $1.74, representing 8% to 9% growth.

Management raised its full-year outlook for chemicals and advanced materials to high-single-digit growth and now expects both Life Sciences and Diagnostics and Applied Markets to grow at a mid- to high-single-digit rate. China is now expected to grow in the mid-single digits for the year, while Asia excluding China is expected to grow at a double-digit rate.

Balance Sheet, Cash Flow and Capital

Operating cash flow was $519M in Q3, while capital expenditures totaled $80M, producing free cash flow of $439M. Management said cash generation benefited from improved collections and tariff refunds.

The company repurchased $78M of shares and paid $72M in dividends during the quarter. It also completed a $600M senior-notes offering in late June in connection with the Biocare acquisition.

Net leverage ended the quarter at 1.0x. Agilent maintained full-year operating cash flow guidance of $1.6B to $1.7B and expects about $450M of capital expenditures for fiscal 2026.

What Investors Should Watch

1. China’s Growth Durability

China was the largest source of upside in Q3, growing 9% against a flat internal expectation. Investors should watch whether pharma, food-safety testing and semiconductor-related demand can maintain that momentum without a material stimulus contribution.

2. Advanced Therapeutics Growth After Q4

The specialty CDMO business grew nearly 30%, but management expects a flat Q4 because of difficult comparisons and customer regulatory timing. Train C’s spring revenue start and its subsequent ramp will be an important test of whether the business can return to its targeted mid-teens long-term growth profile.

3. Pharma Reshoring Order Conversion

Management said it booked initial reshoring-related orders from five of the world’s 10 largest pharma companies and expects more meaningful orders around year-end. Revenue is not expected to build until fiscal 2027 and beyond, making order conversion and installation timing the relevant milestones.

4. Margin Performance Without Tariff Refunds

The Q3 tariff refund added $0.06 to adjusted EPS and roughly 110 basis points to operating margin. Investors should focus on whether Ignite efficiencies, pricing and volume leverage can sustain margin expansion without this one-time support.

5. Replacement Cycles and CrossLab Pull-Through

LC and GC replacement demand remains a key driver of instrument growth. The eventual conversion of the expanded installed base into consumables and post-warranty service revenue will determine how much of the current instrument strength becomes recurring growth for CrossLab.

AlgovestIQ Takeaway

Agilent’s third quarter was stronger than the headline revenue beat alone suggests. Growth was broad enough to include pharma, advanced therapeutics, applied markets, China and the Americas, while ex-refund operating margin expansion showed that revenue gains were translating into earnings leverage.

The most meaningful change is the improved outlook for China and the increasingly visible contribution from semiconductor-related applied markets. China had been an area of uncertainty, and its return to 9% growth, driven by commercial demand rather than meaningful stimulus, improves the near-term picture. Pharma also remains resilient, with 12% growth supported by replacement cycles, biotech recovery and GLP-1-related activity.

However, some of the quarter’s EPS strength was non-recurring. Tariff refunds added $20M to operating profit and $0.06 to EPS, while Q4 advanced therapeutics growth is expected to flatten on regulatory timing and a difficult comparison. Management’s confidence in Train C, reshoring and new products is constructive, but those drivers are still largely future revenue opportunities.

The central investment question is whether Agilent can turn its current commercial and operational momentum into a more durable mid- to high-single-digit growth profile while maintaining margin expansion. Continued China growth, sustained pharma instrument demand, conversion of reshoring orders, and a disciplined Train C ramp would strengthen that case. A renewed slowdown in China, weaker biotech spending, delayed CDMO customer programs or margin pressure after tariff refunds would weaken it.