Becton, Dickinson(US:BDX)2026-02-09 14:02Financial 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]