Core Insights - Becton, Dickinson and Company (BD) reported stronger than expected first fiscal quarter 2026 results, highlighting the completion of its Life Sciences business combination with Waters through a Reverse Morris Trust transaction [2] Quarterly Results - BD posted total revenue of $5.3 billion, reflecting a 0.4% year-over-year increase on an FX-neutral basis; "new BD" grew 2.5% with broad-based growth across most of the portfolio, partially offset by challenges in approximately 10% of the business, including Alaris, vaccines in China, and market dynamics in China [3] - The quarter demonstrated "disciplined execution" with accelerated commercial initiatives and strength in several growth platforms, including double-digit growth in biologic drug delivery, PureWick, advanced tissue regeneration, pharmacy automation, and high single-digit growth in advanced patient monitoring [3] Profitability - BD reported an adjusted gross margin of 53.4% and adjusted EPS of $2.91, both exceeding management's expectations; however, adjusted EPS was down 15.2% year-over-year, primarily due to tariffs [4] Segment Performance - Growth was led by Connected Care and Interventional, with details provided on performance across the company's recast segment structure, which includes Medical Essentials, Connected Care, Biopharma Systems, Interventional, and Life Sciences [5] Transaction and Financial Strategy - BD closed the Waters transaction, receiving a $4 billion cash distribution, which will be allocated as $2 billion for accelerated share repurchases and $2 billion to pay down debt; net leverage ended the quarter at 2.9x, with a long-term target of 2.5x [6] - Management maintained fiscal 2026 guidance for low single-digit revenue growth and adjusted EPS of $12.35 to $12.65, while cautioning about ongoing headwinds from China, vaccines, Alaris, and a multi-hundred-basis-point tariff impact [6]

Financial Data and Key Metrics Changes - Total revenue for Q1 2026 was $5.3 billion, reflecting a 0.4% increase year-on-year, with New BD growing by 2.5% [5][18] - Adjusted gross margin was 53.4%, down 140 basis points from the prior year, primarily due to tariffs [20] - Adjusted EPS was $2.91, a decrease of 15.2% year-on-year, mainly impacted by tariffs [21] - Free cash flow for the quarter was $548 million, with a conversion rate of 66%, up from 59% in the prior year [22] Business Line Data and Key Metrics Changes - Medical Essentials experienced expected order timing dynamics and volume-based procurement in China, partially offset by share gains in the US [18] - Connected Care delivered mid-single-digit growth, led by high single-digit growth in APM [18] - Biopharma Systems grew low single digits, with double-digit growth in biologics, particularly GLP-1s, offset by lower vaccine demand [19] - Interventional and surgery segments both delivered solid mid-single-digit growth, with strong performance in Advanced Tissue Regeneration [19] Market Data and Key Metrics Changes - The US market showed solid growth in the BD Vacutainer portfolio, while challenges persisted in China due to market dynamics [18] - Alaris performance was slightly ahead of expectations despite a revenue decline due to tough comparisons to the prior year [19] - The Life Sciences segment declined due to US point-of-care headwinds and market dynamics in China [20] Company Strategy and Development Direction - The company is focused on a balanced capital allocation strategy, prioritizing share repurchases and tuck-in M&A in high-growth markets [8][9] - Key trends shaping the future of healthcare include the rise of smart devices, the shift towards lower-cost care settings, and the growth in chronic disease technologies [9][10] - The company aims to enhance its commercial capabilities and operational excellence through its "Excellence Unleashed" strategy, focusing on competing, innovating, and delivering [11][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory of the business, with core growth drivers remaining intact [27] - The company anticipates low single-digit revenue growth for New BD in fiscal 2026, with a positive currency impact expected [23] - Management acknowledged known headwinds in 10% of the portfolio but emphasized strong fundamentals in the remaining 90% [33] Other Important Information - The company is set to close a significant transaction with Waters, receiving a $4 billion cash distribution, with plans to allocate $2 billion for share repurchases and $2 billion for debt paydown [8][24] - The company has reduced its manufacturing network by nearly half, enhancing operational efficiency and cost management [16][56] Q&A Session Summary Question: Guidance for Q2 revenue and EPS - Management indicated that Q2 guidance reflects modest timing benefits and that core growth drivers remain intact, with no ramp expected from Q1 to Q2 [27][28] Question: Structural changes affecting mid-single-digit growth - Management confirmed confidence in the portfolio, noting strong performance in high-growth areas despite known headwinds [33] Question: Impact of Alaris and vaccines in China - Management expects Alaris to step up in 2027, with vaccines anticipated to have a smaller revenue impact moving forward [40][42] Question: M&A opportunities under New BD strategy - The company remains focused on tuck-in M&A that is accretive to revenue and EPS, with a robust pipeline in high-growth sectors [78][80] Question: Pricing environment and potential for price premiums - Management noted a stable pricing environment with slight positive pricing expected outside of China, anticipating improvements as VBP dynamics lessen [91]

Becton, Dickinson and Company (NYSE:BDX) Q1 2026 Earnings call February 09, 2026 08:00 AM ET Company ParticipantsJayson Bedford - Managing Director in Equity ResearchPatrick Wood - Managing Director in Equity ResearchRick Wise - Managing DirectorShawn Bevec - Senior Vice President of Investor RelationsTom Polen - Chairman, CEO and PresidentTravis Steed - Managing Director in Equity ResearchVitor Roque - SVP and Interim CFOConference Call ParticipantsJoanne Wuensch - Managing Director and Senior Equity Resea ...

Financial Data and Key Metrics Changes - Total revenue for Q1 2026 was $5.3 billion, reflecting a 0.4% increase year-on-year, with new BD growing by 2.5% [4][15] - Adjusted gross margin was 53.4%, down 140 basis points from the previous year, primarily due to tariffs [17] - Adjusted EPS was $2.91, a decrease of 15.2% year-on-year, driven mainly by the impact of tariffs [17][20] - Free cash flow for the quarter was $548 million, with a conversion rate of 66%, up from 59% in the prior year [18] Business Line Data and Key Metrics Changes - Medical Essentials saw mixed performance, with expected order timing dynamics affecting MDS, but continued share gains in the US vascular access management portfolio [15] - Connected Care delivered mid-single-digit growth, led by APM with high single-digit growth [15] - Biopharma Systems grew low single digits, with double-digit growth in biologics, particularly GLP-1s, offset by lower vaccine demand [16] - Interventional business experienced solid mid-single-digit growth, driven by high single-digit growth in UCC and double-digit growth in PureWick [16] Market Data and Key Metrics Changes - Growth was pressured by market dynamics in China, particularly in the life sciences segment, which declined due to headwinds in US point-of-care and difficult comparisons from the prior year [17] - The company expects the value-based procurement (VBP) in China to impact 80% of its portfolio by the end of 2026, with a projected headwind of about 250 basis points for the full year [36] Company Strategy and Development Direction - The company is focused on a balanced capital allocation strategy, prioritizing share repurchases and tuck-in M&A in high-growth markets [6][73] - The transformation into a pure-play med tech company is supported by divesting non-core assets and enhancing its portfolio through strategic acquisitions [7] - The company identified three key trends shaping healthcare: the rise of smart devices, the shift towards lower-cost care settings, and the growth in technologies addressing chronic diseases [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory of the business, maintaining a prudent approach to guidance for fiscal 2026, expecting low single-digit revenue growth [20] - The company anticipates that pricing dynamics will improve as VBP in China abates, potentially leading to positive pricing in the future [85] - Management highlighted strong execution in commercial initiatives and a robust innovation pipeline, which are expected to drive future growth [9][68] Other Important Information - The company completed a significant transaction with Waters, receiving a $4 billion cash distribution, with plans to allocate $2 billion for share repurchases and $2 billion for debt paydown [6][19] - The company has reduced its manufacturing network by nearly half, which is expected to lower costs and improve operational efficiency [13][50] Q&A Session Summary Question: Guidance for Q2 revenue and EPS - Management confirmed that Q2 guidance reflects modest timing benefits and remains aligned with Q1 performance, with no fundamental changes expected [23][44] Question: Structural changes affecting mid-single-digit growth - Management reassured that the fundamentals across the majority of the portfolio remain strong, with continued investment in high-growth areas [28] Question: Impact of Alaris and vaccines in China - Management indicated that Alaris is expected to improve in 2027, while vaccine impacts are anticipated to lessen over time [36][71] Question: Pricing environment and innovation impact - Management noted a stable pricing environment with slight positive trends expected, particularly as new product innovations are introduced [84][85]

Financial Data and Key Metrics Changes - The company reported a 9.5% EPS growth at the midpoint, driven by margin expansion despite macroeconomic challenges impacting revenue [8][10] - Total return to shareholders for the year is approximately $2.2 billion, with $1 billion through share buybacks and $1.2 billion through dividends [10] Business Line Data and Key Metrics Changes - The new BD grew about 4% in Q3, with expectations for mid-single digit growth for the full year [11][12] - BD Interventional saw double-digit growth in UCC and strong mid-single digit growth across other businesses [30] - Aleris is gaining market share and is expected to continue contributing positively to growth [45][46] Market Data and Key Metrics Changes - The company anticipates a decline in China operations by high single digits this year, stabilizing thereafter as 90% of the portfolio will have gone through value-based procurement (VBP) by the end of next year [42][43] - The Biosciences segment is expected to see sequential growth improvements as it transitions to Waters [37] Company Strategy and Development Direction - The primary focus for the next twelve months includes completing the separation from the Life Science business, executing a commercial strategy, and continuing margin expansion through BD Excellence [6][8] - The company is committed to utilizing at least half of the $4 billion cash from the separation for share buybacks [9][10] - The innovation pipeline is robust, with new products expected to drive growth in biologic drug delivery and AI solutions [12][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic challenges, emphasizing the importance of productivity improvements for customers facing tighter funding environments [73][75] - The company is taking a prudent approach to guidance for FY 2026, recognizing the dynamic macro environment while maintaining a mid-single digit growth outlook [58][60] Other Important Information - The company has completed a $1 billion share buyback for the year, contributing to a total capital return of $2.2 billion to shareholders [10] - The new AI-enabled Pyxis Pro system is expected to enhance medication management and improve operational efficiencies [47][50] Q&A Session Summary Question: What is the growth algorithm for the new BD? - The new BD is expected to grow mid-single digits, supported by a strong innovation pipeline and market positioning [11][12] Question: How does the company define similar margin profiles post-separation? - Management indicated that the operating margin post-separation would be similar, within 50 to 100 basis points [23][24] Question: What are the drivers for the acceleration in Q4 guidance? - The acceleration is driven by strong performance in BD Interventional and the organic growth of APM, which is expected to contribute over a point to growth [29][32] Question: How is the company addressing macroeconomic challenges? - The company is focusing on productivity improvements and forming partnerships with customers to navigate tighter funding environments [73][75] Question: What is the expected impact of pricing on growth? - Pricing is currently flattish but is expected to return as a tailwind as the company maintains pricing discipline globally [66]

Summary of Becton, Dickinson and Company (BDX) 2025 Conference Call Company Overview - **Company**: Becton, Dickinson and Company (BDX) - **Conference Date**: May 13, 2025 - **CEO**: Tom Poland Key Points Company Performance and Strategy - Over the past five years, BDX has transformed into a nearly $22 billion company, focusing on innovation and quality improvements [4][5] - The company has achieved a compound annual growth rate (CAGR) of approximately 5.6% in revenue since launching BD 2025 [5] - Current revenue growth is impacted by macroeconomic factors, including China's Value-Based Pricing (VBP) and life sciences funding constraints [5][6] Revenue Growth Challenges - Revenue growth has slowed, with a projected decline in China of high single digits to low double digits for the year [6][16] - Life sciences revenue growth was flat last year and is expected to decline in the low single digits this year due to research funding constraints [6][7] - The farm systems business, which previously saw 12% growth, is recovering after a flat performance last year [7][20] Q2 Performance and Guidance - Q2 growth was only 0.9%, significantly lower than the initial expectation of 2.75% [11][12] - Key factors for the decline included reduced NIH funding impacting instrument spending and increased VBP in China [12][13] - Full-year guidance was lowered by $200 million, reflecting the challenges in China, biosciences spending, and the ramp-up of Bactech [16][17] Actions Taken Post-Q2 - BDX has implemented several actions to address the challenges, including enhancing commercial excellence and increasing R&D investments [18][19] - The company is focusing on key growth catalysts such as PureWick and its peripheral vascular business [19][20] Margin and Cost Management - BDX has seen a gross margin expansion of 190 basis points, attributed to the BD Excellence initiative aimed at driving efficiency [24][25] - The company plans to continue investing in R&D and selling, with a focus on maintaining strong operating margins [24][26] Tariffs and Supply Chain Adjustments - The company is actively managing tariff impacts, with a focus on sourcing changes to mitigate costs [27][29] - Approximately 80% of U.S. revenue is derived from products manufactured domestically or tariff-exempt [32] Life Sciences Separation Update - The separation of the life sciences business is on track, with an announcement expected in summer 2025 [40][43] - The bioscience business is recognized for its innovative assets, including advancements in cancer research technology [41][42] Future Outlook - The RemainCo business is projected to maintain mid-single-digit growth, supported by strong market positions and recurring revenue from consumables [46][48] - BDX is focused on disciplined capital deployment, avoiding large transformational M&A, and prioritizing high-return investments [51][53] Conclusion - BDX is navigating a challenging macro environment while focusing on innovation, operational excellence, and strategic growth initiatives to enhance shareholder value [4][5][19]