Becton Dickinson BDX Q1 2026 Earnings Transcript

Core Insights - The company reported a revenue of $5.3 billion for Q1, reflecting a 0.4% increase, with New Becton, Dickinson and Company growing by 2.5% due to broad-based growth across key markets [2][16] - The adjusted gross margin was 53.4%, and adjusted EPS was $2.91, both exceeding expectations due to strong revenue performance and operational execution [1][20] - The company is closing a significant transaction with Waters, which is expected to unlock substantial value for shareholders, including a $4 billion cash distribution [5][21] Financial Performance - The adjusted operating margin was 21.2%, down 240 basis points year-over-year, primarily due to tariffs and increased commercial investments [20] - Free cash flow for the quarter was $548 million, with a conversion rate improving to 66% from 59% in the prior year [20] - The company returned approximately $550 million to shareholders, including dividends and share buybacks [20] Business Segments and Growth - The new segment structure includes Medical Essentials, Connected Care, Biopharma Systems, Interventional, and Life Sciences, with financials recast to reflect this reorganization [3] - The Connected Care segment, particularly APM, saw high single-digit growth, while Pharmacy Automation experienced double-digit growth [17][18] - Biopharma Systems reported low single-digit growth, with double-digit growth in biologics, offset by lower demand for vaccine products [18] Strategic Initiatives - The company is focused on enhancing its capital allocation strategy, prioritizing share repurchases, dividends, and targeted tuck-in M&A to increase return on invested capital [6] - The company has identified three key trends shaping healthcare: the rise of smart connected devices, the shift towards lower-cost care settings, and the growth in technologies addressing chronic diseases [7] - The company aims to improve operational excellence through a simplified manufacturing network, reducing global sites by nearly half [15][42] Innovation and Market Position - The company has built multiple growth platforms, each with billion-dollar potential, positioning itself at the center of key healthcare trends [8] - The innovation pipeline has been strengthened with a reallocation of $50 million towards high-growth platforms, aiming to reduce development times and accelerate product launches [12][55] - The company has a strong competitive position, with over 90% of revenues driven by recurring consumables and leading positions in more than 90% of the markets served [9][10] Guidance and Future Outlook - For fiscal 2026, the company expects low single-digit revenue growth, with a positive currency impact estimated at about 120 basis points [21][22] - Adjusted EPS guidance for fiscal 2026 is set between $12.35 and $12.65, reflecting approximately 6% growth at the midpoint [22] - The company anticipates Q2 revenue growth of approximately 2%, consistent with full-year guidance assumptions [23]