Becton, Dickinson and Company logo Key Points BD closed the Waters transaction and will receive a $4 billion cash distribution, which management plans to deploy 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. Q1 results beat expectations with total revenue of $5.3 billion (new BD +2.5%) and adjusted EPS of $2.91, although EPS was down ~15% year‑over‑year and margins were pressured by tariffs (~170 ...

This includes double-digit growth in biologic drug delivery, PIRWIC, advanced tissue regeneration, Pharmacy Automation, and high single-digit growth in APM. We delivered mid-single-digit growth across 90% of New Becton, Dickinson and Company's portfolio. Partially offset by 10% of our portfolio Alaris vaccines in China undergoing challenging market dynamics that were in line with our expectations. We delivered an adjusted gross margin of 53.4%, and adjusted EPS of $2.91 both of which were also ahead of our ...

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]

Core Insights - Becton, Dickinson and Company (BDX) met Wall Street's revenue expectations for Q3 CY2025, achieving sales of $5.89 billion, reflecting an 8.3% year-on-year growth [1][3] - The company's non-GAAP profit was $3.96 per share, exceeding analysts' consensus estimates by 1.2% [1][6] - Management highlighted strong demand in Interventional, Biologics, and Advanced Patient Monitoring segments as key drivers of organic growth, despite challenges in vaccine demand and research funding [3][5] Financial Performance - Revenue for Q3 was $5.89 billion, slightly below analyst estimates of $5.91 billion, but still showing an 8.3% year-on-year growth [6] - Adjusted EPS was $3.96, beating analyst estimates of $3.91 by 1.2% [6] - Adjusted EBITDA stood at $1.78 billion, maintaining a 30.2% margin, in line with expectations [6] - Operating margin was reported at 11.8%, consistent with the same quarter last year [6] - Market capitalization reached $50.84 billion [6] Future Outlook - The company is adopting a cautious approach to ongoing headwinds in vaccines, China, and the Alaris pump segment, focusing on reallocating resources to high-growth and high-margin areas [4] - CEO Thomas Polen indicated plans for mid-single-digit growth in 90% of the portfolio unaffected by current macro pressures, alongside investments in commercial and innovation initiatives [4] - A $200 million cost reduction program is being executed, with a focus on internal investment and share repurchases [4]

Core Insights - Becton Dickinson and Co (BDX) reported fourth-quarter adjusted earnings of $3.96, surpassing the consensus estimate of $3.92 [1] - The company is facing challenges, with third-quarter 2025 sales of $5.89 billion, slightly below the consensus of $5.90 billion, but revenues increased by 8.3% as reported [2] Financial Performance - Medical segment sales rose by 11.2% to $3.16 billion, with a 4% organic growth [3] - Life Sciences sales reached $1.37 billion, up 2.1% [5] - Interventional sales increased by 8.5% to $1.37 billion [6] - The company declared a quarterly dividend of $1.05 per share, marking a 1.0% increase [9] Segment Analysis - Medication Delivery Solutions showed strong growth, particularly in Vascular Access Management, despite some volume-based procurement challenges in China [3] - Pharmaceutical Systems experienced high single-digit growth in Biologics, offset by lower vaccine demand, with notable performance from the HemoSphere Alta Monitor and Acumen IQ sensors [4] - Surgery segment reported double-digit growth in Advanced Tissue Regeneration and Biosurgery, while Urology and Critical Care saw strong growth in the PureWick franchise [7][8] Guidance and Future Outlook - For fiscal 2026, BDX expects adjusted earnings between $14.75 and $15.05 per share, above the consensus of $14.38, with low single-digit revenue growth anticipated [10] - The company expects first-quarter revenue growth to decline in low single digits, with adjusted earnings projected between $2.75 and $2.85 [10] - BDX plans to use at least half of the $4 billion cash distribution from the Waters RMT transaction for share repurchases [12] Strategic Developments - In July, BDX announced a merger of its Biosciences & Diagnostic Solutions business with Waters Corp, valued at approximately $17.5 billion, expected to close by the end of Q1 2026 [11]

Financial Data and Key Metrics Changes - Q4 revenue reached $5.9 billion, representing a 7% increase and 3.9% organic growth, while full-year revenue was a record $21.8 billion, up 7.7% and 2.9% organic [4][5] - Adjusted diluted EPS for Q4 was $3.96, with a full-year record of $14.40, reflecting a 9.6% growth, including a two-point impact from tariffs [5][17] - Adjusted gross margin for Q4 was 54.2%, and adjusted operating margin was 25.8%, with a full-year adjusted gross margin of 54.7% and operating margin of 25% [16][17] Business Line Data and Key Metrics Changes - New BD achieved strong organic growth of 4.9% in Q4, with significant contributions from various segments [4] - BD Interventional experienced high single-digit growth, driven by double-digit growth in PureWick and advanced tissue regeneration [7][14] - Pharma systems saw high single-digit growth in biologics, offset by lower vaccine demand, which constitutes about 20% of pharma systems revenue [15][23] Market Data and Key Metrics Changes - The biosciences business showed sequential improvement in sales in the U.S. and EMEA, led by demand for the new FACSDiscover platform [7][15] - Research funding in biosciences remained subdued, impacting growth, while diagnostic solutions returned to positive growth due to recovering BD BACTEC utilization [7][15] - China is expected to decline in the mid-teens due to government policies, impacting growth by about 100 basis points [23][51] Company Strategy and Development Direction - The company is focused on accelerating its strategy as it transitions into new BD, emphasizing commercial excellence and innovation [10][20] - A two-year $200 million cost-out program has been initiated to address stranded corporate costs, with approximately half expected this year [12] - The company plans to enhance its capital allocation strategy, prioritizing internal investment, share repurchases, and a reliable dividend [21][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term mid-single digit growth despite transitory market dynamics expected to continue into fiscal 2026 [9][24] - The company is taking a prudent approach to guidance, incorporating updated views on the operating environment, particularly regarding vaccines and China [31][32] - Management highlighted the importance of BD Excellence in driving margin expansion and cash generation, with expectations for continued strong performance [20][56] Other Important Information - The company announced its 54th consecutive year of dividend increases and returned $2.2 billion to shareholders, including a $1 billion share buyback [5][17] - The Waters transaction is seen as a significant strategic opportunity to unlock value for investors, with expected closure around the end of Q1 2026 [18][27] Q&A Session All Questions and Answers Question: How does the guidance for new BD reflect conservatism? - Management emphasized a prudent approach to guidance, incorporating macro dynamics and not assuming improvements in the operating environment [31][32] Question: What are the expectations for Q1 compared to the full year? - Q1 guidance reflects full-year headwinds, with expectations for growth to step up in Q2 and Q3, which are anticipated to be the strongest quarters [36][37] Question: Why not be more aggressive in returning capital to shareholders? - Management stated the focus remains on cash generation and disciplined capital allocation, with plans for significant share buybacks post-Waters transaction [41][42] Question: What was the organic growth in China for Q4? - China experienced high single-digit organic growth in Q4, with a cautious outlook due to volume-based procurement policies [51] Question: Can new BD grow EPS double digits? - Management expressed confidence in the new BD's ability to achieve high single-digit EPS growth, supported by strong cash generation and margin expansion [55][56]

Financial Data and Key Metrics Changes - Q4 revenue reached $5.9 billion, an increase of 7% and 3.9% organic growth, while full-year revenue was a record $21.8 billion, up 7.7% and 2.9% organic [4][5] - Adjusted diluted EPS for Q4 was $3.96, with a full-year record of $14.40, representing a 9.6% growth, including a two-point impact from tariffs [5][18] - Adjusted gross margin for Q4 was 54.2%, and adjusted operating margin was 25.8%, with a year-over-year increase of 140 and 80 basis points respectively [17][18] Business Line Data and Key Metrics Changes - BD Interventional experienced high single-digit growth, driven by double-digit growth in PureWick and advanced tissue regeneration [7][15] - Pharma systems saw high single-digit growth in biologics, but lower demand for vaccine products impacted overall performance [16] - The biosciences and diagnostic solutions segments returned to positive growth, with a significant improvement in BD BACTEC utilization [16][17] Market Data and Key Metrics Changes - Research funding in the biosciences business remained subdued, but sales in the U.S. and EMEA improved sequentially [7][16] - The China market is expected to decline in the mid-teens due to government policies, impacting growth by about 100 basis points [23][50] - Vaccines, which account for approximately 20% of pharma systems revenue, are projected to decline by about 25%, impacting growth by approximately 50 basis points [23] Company Strategy and Development Direction - The company is focused on creating a more agile, vertical organization to enhance commercial excellence and drive growth [10][76] - A two-year $200 million cost-out program has been initiated to address stranded corporate costs, with approximately half expected this year [12] - The company aims to deliver consistent mid-single digit revenue growth over the long term, supported by a strong innovation pipeline and BD Excellence initiatives [21][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term mid-single digit growth profile despite transitory market dynamics [9][24] - The company is taking a prudent approach to guidance, incorporating updated views on the operating environment and specific portfolio areas [30][31] - The upcoming combination with Waters is seen as a significant strategic opportunity to unlock value for investors [19][28] Other Important Information - The company returned $2.2 billion to shareholders, including a $1 billion share buyback, and announced its 54th consecutive year of dividend increases [5][18] - The adjusted effective tax rate is expected to be between 14% and 15% [25] Q&A Session Summary Question: How does the guidance for new BD reflect conservatism? - Management emphasized a prudent approach to guidance, incorporating macro dynamics and specific portfolio areas, while maintaining confidence in growth [30][31] Question: What are the implications of the Q1 guide versus the full year? - The Q1 guide reflects full-year headwinds, with expectations for growth to step up in Q2 and Q3 [34][35] Question: Why not be more aggressive in returning capital to shareholders? - The focus remains on cash generation and disciplined capital allocation, with plans for significant share buybacks post-Waters transaction [39][40] Question: What is the expectation for China market performance? - The company anticipates a mid-teens decline in China, with a prudent approach to future guidance [50] Question: Can new BD grow EPS double digits? - Management is confident in the potential for double-digit EPS growth driven by strong cash generation and margin expansion [52][56]

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]