Becton, Dickinson(BDX) - 2025 Q3 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements (Unaudited) This section presents unaudited condensed consolidated financial statements, highlighting a 10.4% revenue increase to $5.5 billion and $2.08 billion in operating cash flow Condensed Consolidated Statements of Income Q3 2025 revenues increased 10.4% to $5.51 billion, with net income rising to $574 million, while nine-month net income decreased Q3 & Nine Months Financial Performance (YoY) | Metric | Q3 2025 | Q3 2024 | YoY Change | Nine Months 2025 | Nine Months 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenues | $5,509M | $4,990M | +10.4% | $15,949M | $14,741M | +8.2% | | Operating Income | $882M | $602M | +46.5% | $1,882M | $1,775M | +6.0% | | Net Income | $574M | $487M | +17.9% | $1,185M | $1,305M | -9.2% | | Diluted EPS | $2.00 | $1.68 | +19.0% | $4.10 | $4.49 | -8.7% | | Dividends per Share | $1.04 | $0.95 | +9.5% | $3.12 | $2.85 | +9.5% | Condensed Consolidated Balance Sheets Total assets decreased to $54.9 billion as of June 30, 2025, with total debt at $19.34 billion Balance Sheet Summary | Account | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total Current Assets | $8,997M | $10,468M | | Cash and equivalents | $735M | $1,717M | | Total Assets | $54,902M | $57,286M | | Total Current Liabilities | $8,160M | $8,956M | | Long-Term Debt | $17,531M | $17,940M | | Total Liabilities | $29,430M | $31,396M | | Total Shareholders' Equity | $25,472M | $25,890M | Condensed Consolidated Statements of Cash Flows Nine-month operating cash flow decreased to $2.08 billion, with $2.81 billion used in financing activities Nine-Month Cash Flow Summary (YoY) | Activity | Nine Months 2025 | Nine Months 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $2,076M | $2,666M | | Net Cash Used for Investing Activities | ($324M) | ($1,577M) | | Net Cash (Used for) from Financing Activities | ($2,808M) | $1,963M | | Net (Decrease) Increase in Cash | ($1,058M) | $3,006M | Notes to Condensed Consolidated Financial Statements Notes detail the proposed Reverse Morris Trust transaction, $750 million share repurchase, and $1.5 billion product liability accruals - The company entered a definitive agreement to combine its Biosciences and Diagnostic Solutions business with Waters Corporation via a Reverse Morris Trust transaction. BD shareholders will own ~39.2% of the new entity, and BD will receive a ~$4 billion cash distribution[19][20] - In Q1 2025, the company executed a $750 million accelerated share repurchase (ASR) agreement. As of June 30, 2025, 13 million shares remained available for repurchase under authorized programs[26][28] - Product liability accruals, primarily for hernia repair devices, stood at approximately $1.5 billion as of June 30, 2025, down from $1.7 billion at the start of the fiscal year due to settlement payments[48] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q3 2025 financial results, highlighting 10.4% revenue growth driven by segment performance and regulatory matters Results of Operations Q3 2025 revenue growth was driven by Medical and Interventional segments, while Life Sciences saw a slight decline Q3 2025 Revenue by Segment (YoY) | Segment | Q3 2025 Revenue | Q3 2024 Revenue | Total Change | FXN Change | | :--- | :--- | :--- | :--- | :--- | | Medical | $2,927M | $2,558M | +14.4% | +14.0% | | Life Sciences | $1,254M | $1,260M | -0.5% | -1.1% | | Interventional | $1,328M | $1,240M | +7.2% | +6.8% | | Total Company | $5,509M | $4,990M | +10.4% | +9.9% | - The Medical segment's growth was primarily driven by the acquisition of Advanced Patient Monitoring, which contributed $278 million in revenue for the quarter[110][113] - The Interventional segment's 7.2% growth was led by a 12.5% increase in the Urology and Critical Care unit, fueled by double-digit growth in PureWick™ offerings[119][121] - The Life Sciences segment's slight decline was due to lower sales of point-of-care products in Diagnostic Solutions and market dynamics impacting instrument sales in Biosciences[115][117] Liquidity and Capital Resources The company maintains strong liquidity with $2.08 billion in operating cash flow and $1.65 billion returned to shareholders Capital Allocation (Nine Months Ended June 30, 2025) | Item | Amount | | :--- | :--- | | Net Cash from Operations | $2,076M | | Capital Expenditures | ($408M) | | Dividends Paid | ($899M) | | Repurchases of Common Stock | ($750M) | - Total debt stood at $19.34 billion with a weighted average cost of 3.3%. The total debt as a percentage of total capital was 42.7%[146] - The company has a $2.75 billion senior unsecured revolving credit facility expiring in September 2027, with no borrowings outstanding as of June 30, 2025[148] Regulatory Matters The company addresses ongoing FDA Consent Decree for Alaris pumps, a Warning Letter for BD Pyxis, and EtO emission regulations - The U.S. infusion pump unit (CareFusion 303, Inc.) continues to operate under an amended FDA Consent Decree. The company is addressing observations from a May 2024 Form 483 notice related to its Infusion quality management system[156][159] - A Warning Letter was received in November 2024 for the Dispensing quality management system (BD Pyxis™ products). The company has accrued costs for remediation efforts[164] - BD's ethylene oxide (EtO) sterilization facilities received a two-year Presidential compliance exemption from the EPA's revised NESHAP to allow time to install new control technology[165] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk disclosures were reported since September 30, 2024 - No material changes in market risk information were reported since the fiscal year-end of September 30, 2024[176] Item 4. Controls and Procedures Disclosure controls were effective as of June 30, 2025, excluding the Advanced Patient Monitoring business from evaluation - Management concluded that disclosure controls and procedures were effective as of the end of the reporting period[177] - The evaluation of internal control over financial reporting excluded the recently acquired Advanced Patient Monitoring business, which will be incorporated into the annual assessment for fiscal year 2025[178] Part II. Other Information Item 1. Legal Proceedings Information on legal proceedings, including product liability and environmental matters, is referenced from Note 5 - Information regarding legal proceedings is incorporated by reference from Note 5 of the Notes to Condensed Consolidated Financial Statements[180] Item 1A. Risk Factors New risk factors relate to the proposed combination with Waters Corporation, including completion, disruption, and benefit realization - A new risk factor highlights that the proposed combination with Waters is subject to closing conditions and may not be completed on the expected timeline, or at all[182] - The announcement and pendency of the transaction could divert management attention and disrupt relationships with customers and employees[183] - There is a risk that the anticipated operational, financial, and strategic benefits of the transaction may not be achieved if it is completed[184] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No public share repurchases occurred in Q3 2025, with 13,426,039 shares remaining available for repurchase Issuer Purchases of Equity Securities (Q3 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Publicly Announced Programs | | :--- | :--- | :--- | :--- | | April 2025 | 1,268 | $202.80 | — | | May 2025 | 174 | $167.95 | — | | June 2025 | — | — | — | | Total | 1,442 | $198.60 | — | - As of June 30, 2025, the company had authorization to repurchase up to 13,426,039 additional shares under its programs[186][188]