Becton, Dickinson(BDX) - 2024 Q3 - Quarterly Results

Financial Performance Summary Q3 FY2024 Financial Highlights BD reported strong Q3 FY2024 results with adjusted revenue of $5.1 billion and adjusted diluted EPS of $3.50, driven by margin execution and organic growth, and over 100% year-to-date free cash flow growth Q3 FY2024 Key Financial Metrics | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue (Reported) | $5.0 billion | $4.88 billion | 2.3% | | Adjusted Revenue | $5.1 billion | $4.88 billion | 3.7% | | GAAP Diluted EPS | $1.68 | $1.36 | 23.5% | | Adjusted Diluted EPS | $3.50 | $2.96 | 18.2% | - Year-to-date cash flow demonstrated significant improvement: - Cash from Continuing Operations grew 60% to $2.7 billion - Free Cash Flow grew over 100% to $2.2 billion, an increase of $1.2 billion from the prior year[1] Recent Business and Corporate Sustainability Highlights Key strategic developments include acquiring Edwards Lifesciences' Critical Care Product Group for $4.2 billion, FDA approval for cervical cancer screening, and surpassing GHG emissions reduction targets - Announced a definitive agreement to acquire Edwards Lifesciences' Critical Care Product Group for $4.2 billion to enhance its portfolio of smart connected care and AI-based technologies[2] - BD Life Sciences received U.S. FDA approval for self-collection of samples for cervical cancer screening in a healthcare setting[2] - Commercially launched the BD Rhapsody™ ATAC-Seq Assay, expanding single-cell capabilities into the epigenomics research market[3] - Surpassed its Scope 1 and 2 science-based greenhouse gas (GHG) emissions reduction targets for FY 2023 by 5 percentage points, achieving an 18% reduction versus its fiscal 2019 baseline[3] Detailed Financial Results (Q3 FY2024) Overall Operating and Geographic Results Q3 FY2024 adjusted revenues reached $5.06 billion, a 3.7% increase, driven by 4.5% growth in the U.S. market and 2.6% internationally Q3 FY2024 Adjusted Revenue by Geography (in millions) | Region | Q3 2024 | Q3 2023 | Reported Change | Currency Neutral Change | | :--- | :--- | :--- | :--- | :--- | | United States | $2,897 | $2,772 | 4.5% | 4.5% | | International | $2,160 | $2,106 | 2.6% | 4.0% | | Total Adjusted Revenues | $5,057 | $4,878 | 3.7% | 4.3% | Segment Performance All segments contributed to Q3 FY2024 organic growth, with BD Medical up 5.6%, BD Interventional up 6.4%, and BD Life Sciences up 3.5% Q3 FY2024 Revenue by Segment (in millions) | Segment | Q3 2024 Revenue | Reported Change | Organic Revenue Change | | :--- | :--- | :--- | :--- | | BD Medical | $2,558 | 5.1% | 5.6% | | BD Life Sciences | $1,260 | 2.7% | 3.5% | | BD Interventional | $1,240 | 1.8% | 6.4% | | Total Adjusted Revenues | $5,057 | 3.7% | 5.2% | BD Medical BD Medical's revenue growth was driven by Medication Management Solutions and Medication Delivery Solutions, partially offset by China market dynamics and Pharmaceutical Systems de-stocking - Medication Management Solutions (MMS) performance was driven by high double-digit growth in Infusion, particularly from BD Alaris™ and higher utilization of infusion sets[6] - Medication Delivery Solutions (MDS) saw strong volume growth and increased market position in Vascular Access Management, though partially offset by anticipated market dynamics in China[6] - Pharmaceutical Systems (PS) performance was affected by customer inventory de-stocking in anti-coagulants and vaccines, which offset strong double-digit growth in Biologics and GLP-1s[6] BD Life Sciences BD Life Sciences' growth was led by Integrated Diagnostic Solutions' Specimen Management, while Biosciences performance was impacted by lower instrument demand - Growth was driven by the Integrated Diagnostic Solutions (IDS) business unit, which saw high-single digit growth in Specimen Management[7] - Biosciences (BDB) performance was impacted by lower market demand for instruments, which was partially offset by growth in clinical reagents[7] BD Interventional BD Interventional delivered strong organic growth across Surgery, Peripheral Intervention, and Urology & Critical Care, with double-digit increases in key platforms - Surgery performance reflected double-digit organic growth across Advanced Repair & Reconstruction, Infection Prevention, and Biosurgery platforms[8] - Peripheral Intervention (PI) performance was led by double-digit growth in the Peripheral Vascular Disease portfolio[8] - Urology & Critical Care (UCC) performance was highlighted by strong double-digit growth in the PureWick™ franchise[8] Fiscal Year 2024 Outlook Updated Guidance BD updated its FY2024 guidance, lowering organic revenue growth to 5.0-5.25% due to market dynamics, but increasing adjusted diluted EPS to $13.05-$13.15 due to strong margin performance Fiscal 2024 Guidance Update | Metric | New Guidance (Aug 1, 2024) | Previous Guidance (May 2, 2024) | | :--- | :--- | :--- | | Organic Revenue Growth (FXN) | 5.0% to 5.25% | 5.5% to 6.25% | | Adjusted Diluted EPS | $13.05 to $13.15 | $12.95 to $13.15 | | Adjusted Diluted EPS Growth | 6.9% to 7.7% | 6.1% to 7.7% | Financial Statements Condensed Consolidated Income Statements For Q3 FY2024, BD reported revenues of $4.99 billion and net income of $487 million, with nine-month revenues at $14.74 billion and net income of $1.31 billion Income Statement Summary - Three Months Ended June 30 (in millions) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Revenues | $4,990 | $4,878 | | Operating Income | $602 | $549 | | Net Income | $487 | $407 | | Diluted EPS | $1.68 | $1.36 | Income Statement Summary - Nine Months Ended June 30 (in millions) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Revenues | $14,741 | $14,285 | | Operating Income | $1,775 | $1,762 | | Net Income | $1,305 | $1,376 | | Diluted EPS | $4.49 | $4.60 | Condensed Consolidated Balance Sheets As of June 30, 2024, total assets were $55.58 billion, with cash and equivalents at $4.46 billion, total liabilities at $29.71 billion, and shareholders' equity at $25.87 billion Balance Sheet Summary (in millions) | Account | June 30, 2024 | Sept 30, 2023 | | :--- | :--- | :--- | | Cash and equivalents | $4,459 | $1,416 | | Total Current Assets | $12,207 | $8,676 | | Total Assets | $55,582 | $52,780 | | Long-term debt | $18,131 | $14,738 | | Total Shareholders' Equity | $25,868 | $25,796 | Condensed Consolidated Statements of Cash Flows For the nine months ended June 30, 2024, net cash from continuing operating activities increased 60% to $2.67 billion, resulting in free cash flow of $2.24 billion, up 106.2% year-over-year Cash Flow Summary - Nine Months Ended June 30 (in millions) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash from Continuing Operating Activities | $2,666 | $1,665 | | Capital Expenditures | ($429) | ($580) | | Net Cash Used for Investing Activities | ($1,577) | ($853) | | Net Cash Provided by (Used for) Financing Activities | $1,963 | ($959) | Free Cash Flow Reconciliation - Nine Months Ended June 30 (in millions) | Metric | 2024 | 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Free Cash Flow | $2,237 | $1,085 | $1,152 | 106.2% | Supplemental Information and Reconciliations Reconciliation of Non-GAAP Measures Q3 reported revenue growth of 2.3% was adjusted to an organic growth rate of 5.2%, and reported diluted EPS of $1.68 was adjusted to $3.50 for various items - The reconciliation from reported revenue to organic revenue for Q3 shows adjustments for legal matters (+$67 million) and inorganic divestitures (-$43 million), resulting in an organic revenue growth rate of 5.2%[42] Q3 FY2024 EPS Reconciliation (Reported to Adjusted) | Description | Per Share Amount | | :--- | :--- | | Reported Diluted EPS | $1.68 | | Purchase accounting adjustments | $1.21 | | Restructuring costs | $0.33 | | Product, litigation, and other items | $0.60 | | Other adjustments (net) | ($0.32) | | Adjusted Diluted EPS | $3.50 |