Press release·03/01/2025 03:52:02

Overview of Financial Results and Financial Condition

For the three months ended December 31, 2024, Becton Dickinson (BD) reported worldwide revenues of $5.168 billion, an increase of 9.8% from the prior-year period. This increase was driven by several factors:

• Volume growth and share gains in the Medication Delivery Solutions and Medication Management Solutions units
• Strong sales of infusion systems and the acquisition of the Advanced Patient Monitoring unit
• Partially offset by a decline in sales of prefillable syringes in the Pharmaceutical Systems unit

Cash flows from continuing operations were $693 million in the first three months of fiscal year 2025. BD had $830 million in cash and equivalents and short-term investments at the end of the quarter. The company continued to return value to shareholders through $302 million in dividend payments.

BD faces exposure to foreign currency fluctuations due to its global operations. The company evaluates its results on both a reported and foreign currency-neutral basis to provide investors a better understanding of underlying performance.

Results of Operations

Medical Segment

The Medical segment reported revenue growth of 17.3% in the first quarter, driven by:

Unit	Revenue Change
Medication Delivery Solutions	+6.9%
Medication Management Solutions	+7.3%
Pharmaceutical Systems	-3.2%
Advanced Patient Monitoring	N/A (new acquisition)

The segment’s operating income margin declined from 24.0% to 18.8%, primarily due to:

• $180 million in fair value adjustments and higher amortization related to the Advanced Patient Monitoring acquisition
• A $22 million charge to adjust future product remediation costs

These were partially offset by lower manufacturing costs and favorable product mix.

Life Sciences Segment

The Life Sciences segment reported revenue growth of 0.7%, with mixed performance across the units:

Unit	Revenue Change
Specimen Management	+3.3%
Diagnostic Solutions	+1.7%
Biosciences	-3.7%

The segment’s operating income margin improved from 28.9% to 29.6%, driven by lower manufacturing costs, partially offset by higher administrative and R&D expenses.

Interventional Segment

The Interventional segment reported revenue growth of 5.8%, with strong performance across the units:

Unit	Revenue Change
Surgery	+7.0%
Peripheral Intervention	+4.1%
Urology and Critical Care	+6.6%

The segment’s operating income margin improved from 24.5% to 30.8%, reflecting favorable manufacturing variances and lower operating expenses.

Geographic Revenues

BD’s revenue growth was driven by:

• 12.0% growth in the United States, reflecting strong sales in Medical and Interventional
• 6.3% growth internationally, with the Advanced Patient Monitoring acquisition contributing to the increase

Emerging market revenues grew 2.9% on a foreign currency-neutral basis, with strong sales in certain countries within Greater Asia and EMEA, partially offset by a decline in China.

Specified Items

The financial results included several specified items that impacted earnings, including:

• $570 million in purchase accounting adjustments, primarily related to the Advanced Patient Monitoring acquisition
• $102 million in product litigation and other items, including a $22 million charge for product remediation efforts

After the tax impact of these items, the total after-tax impact was $693 million.

Gross Profit Margin

Gross profit margin was 43.3% in the first quarter of 2025, compared to 43.1% in the prior-year period. The increase was driven by:

• 3.5 percentage point improvement in operating performance, reflecting lower manufacturing costs
• Partially offset by a 3.6 percentage point unfavorable impact from purchase accounting adjustments and other specified items

Operating Expenses

• Selling and administrative expense as a percentage of revenues declined from 25.8% to 25.5%, as revenue growth outpaced the increase in costs.
• R&D expense as a percentage of revenues increased from 6.2% to 6.6%, primarily due to a $30 million asset write-down in the Life Sciences segment.
• Integration, restructuring, and transaction expenses were $92 million, related to the Advanced Patient Monitoring acquisition and other initiatives.

Nonoperating Income

• Net interest expense increased from $77 million to $132 million, reflecting higher debt levels to fund the Advanced Patient Monitoring acquisition.

Income Taxes

• The effective tax rate declined from 21.6% to 0.9%, primarily due to a favorable discrete tax item.

Net Income and Diluted Earnings per Share

• Net income was $303 million, or $1.04 per diluted share, compared to $281 million, or $0.96 per diluted share, in the prior-year period.
• The unfavorable impact of specified items was $2.39 per share, compared to $1.71 per share in the prior-year period.

Liquidity and Capital Resources

• Cash flows from operating activities were $693 million, compared to $855 million in the prior-year period.
• Capital expenditures were $105 million, down from $116 million.
• BD repaid $875 million in debt and repurchased $750 million of common stock during the quarter.
• Total debt was $18.758 billion at December 31, 2024, with a weighted average cost of 3.3%.

Regulatory Matters

• BD’s U.S. infusion pump business is operating under a consent decree with the FDA, which authorizes the FDA to take certain actions if the company fails to comply.
• The company received a warning letter from the FDA related to its Dispensing quality management system, which could result in further regulatory action.
• Increased regulatory focus on the use of ethylene oxide in sterilization processes could lead to additional requirements that impact BD or its third-party sterilization providers.

Outlook and Risks

The financial report highlights several key risks and uncertainties facing BD, including:

• Macroeconomic conditions, such as inflation and supply chain disruptions, that could impact demand, costs, and operations
• Regulatory and legal matters, including the consent decree and warning letters
• Competitive pressures and pricing challenges
• Integration and performance risks related to acquisitions
• Exposure to foreign currency fluctuations and changes in trade policies
• Potential disruptions to operations from public health crises or natural disasters

Overall, BD delivered solid financial results in the first quarter, with growth across its major business segments. However, the company faces a number of headwinds and regulatory challenges that could impact its performance going forward. Investors will need to closely monitor the company’s ability to navigate these issues and execute on its strategic initiatives.