01—Abstract
Summary
Summary of the 10-K filed November 25, 2015. Cited figures are marked; the original filing is the authoritative source.
Becton, Dickinson and Company (BDX) reported significant growth in fiscal year 2015, largely driven by the transformative acquisition of CareFusion in March 2015.
This acquisition positioned BD as a leader in medication management and patient safety solutions. Despite a substantial increase in debt to fund the CareFusion deal, the company demonstrated revenue growth across both its Medical and Life Sciences segments, with the Medical segment showing particular strength due to the inclusion of CareFusion's operations. While the company faced increased interest expenses and integration costs related to the acquisition, its strategic focus on innovation, emerging markets, and operational efficiency remains.
Investors should note the impact of acquisition-related costs and purchase accounting adjustments on the current year's profitability, which obscured the underlying operational performance. The company's commitment to returning shareholder value through dividends was maintained, though share repurchases were suspended to manage debt levels post-acquisition. Overall, the report signals a strategic shift with the CareFusion integration being the primary focus, aiming for long-term growth and market leadership.
02—Key points
Key Highlights
- Completed the significant acquisition of CareFusion for approximately $12.5 billion in March 2015, creating a combined entity with a leading position in medication management and patient safety.
- Reported a 21.7% increase in worldwide revenues to $10.282 billion, primarily due to the inclusion of CareFusion's sales for the latter half of the fiscal year.
- The Medical segment saw substantial revenue growth (41.3%) driven by the CareFusion acquisition, while the Life Sciences segment experienced a slight revenue decrease of 1.3%.
- Invested $632 million in Research and Development (R&D), an increase from prior years, with a notable portion attributed to the CareFusion integration.
- Total debt significantly increased to $11.370 billion at year-end 2015, up from $3.768 billion in 2014, reflecting the financing of the CareFusion acquisition.
- The company maintained its dividend payments, distributing $485 million in fiscal year 2015, while suspending its share repurchase program.
- Operating income decreased by 33.1% to $1.074 billion in 2015 compared to $1.606 billion in 2014, largely due to acquisition-related costs and purchase accounting adjustments.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Becton Dickinson & Co kept $0.07.
- Revenue$10.28B100.0%
- Cost of revenue−$5.59B54.3%
- Gross profit$4.70B45.7%
- Operating costs−$3.62B35.2%
- Operating income$1.07B10.4%
- Interest, other & tax−$379.0M3.7%
- Net income$695.0M6.8%
Where FY2015 revenue went
$10.28B- Cost of revenue: $5.59B, 54% of revenue
- SG&A: $2.56B, 25% of revenue
- Net income: $695.0M, 6.8% of revenue
- R&D: $632.0M, 6.1% of revenue
- Other operating costs: $426.0M, 4.1% of revenue
- Interest, other & tax: $379.0M, 3.7% of revenue
Kept 6.8% as net incomeNet income $695.0M · 6.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed November 25, 2015Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $10.28B$8.45B | +21.7% |
| Cost of Revenue | $5.59B$4.14B | +34.8% |
| Gross Profit | $4.70B$4.30B | +9.2% |
| R&D Expenses | $632.00M$550.00M | +14.9% |
| SG&A Expenses | $2.56B$2.15B | +19.5% |
| Operating Expenses | $9.21B$6.84B | +34.6% |
| Operating Income | $1.07B$1.61B | −33.1% |
| Interest Expense | $371.00M$135.00M | +174.8% |
| Net Income | $695.00M$1.19B | −41.4% |
| EPS (Basic) | $3.43$6.13 | −44.0% |
| EPS (Diluted) | $3.35$5.99 | −44.1% |
| Shares Outstanding (Basic) | 202.54M193.30M | +4.8% |
| Shares Outstanding (Diluted) | 207.51M197.71M | +5.0% |
05—Questions
Frequently Asked Questions
What was the primary driver of BD's financial performance in fiscal year 2015?
The primary driver of BD's financial performance in fiscal year 2015 was the acquisition of CareFusion Corporation, completed on March 17, 2015. This significantly boosted revenues and reshaped the company's operational structure and market position.
How did the CareFusion acquisition impact BD's financial statements?
The CareFusion acquisition led to a substantial increase in revenues, operating costs (including acquisition-related costs and amortization of intangibles), and total debt. The company incurred significant financing, transaction, integration, and restructuring costs related to the deal, which impacted profitability measures for the year.
What is the outlook for BD's debt levels following the CareFusion acquisition?
BD's total debt increased significantly to $11.370 billion in fiscal year 2015 due to the financing of the CareFusion acquisition. The company's stated focus post-acquisition is on debt reduction, and it maintained an investment-grade credit rating, although its ratings were downgraded by major agencies as a result of the increased leverage.
How did the company manage shareholder returns during this period of significant investment?
BD continued to return value to shareholders by paying cash dividends totaling $485 million in fiscal year 2015. However, the company suspended its share repurchase program to prioritize debt reduction following the CareFusion acquisition.
06—Continue