01—Abstract
Summary
Summary of the 10-K filed November 27, 2019. Cited figures are marked; the original filing is the authoritative source.
Becton, Dickinson and Company (BDX) reported fiscal year 2019 revenues of $17.29 billiona, an increase of 8.2% over the prior year.
This growth was primarily driven by the inclusion of results from the C.R. Bard acquisition, which closed in late 2017, and organic volume growth across its three key segments: Medical, Life Sciences, and Interventional. The company continues to focus on its core strategies of innovation, geographic expansion in emerging markets, and improving operational effectiveness.
BDX is actively managing its balance sheet and debt obligations following the Bard acquisition, with total debt at $19.39 billionb. The company generated strong operating cash flow of $3.33 billion, supporting its dividend payments and investments in research and development.
Management highlighted continued investment in new products and platforms to drive future revenue and profit growth. Investors should note the ongoing management of regulatory matters, including a consent decree related to infusion pumps and a warning letter for a Preanalytical Systems facility, as well as significant legal reserves related to product liability claims, particularly for hernia and women's health products.
02—Key points
Key Highlights
- Reported fiscal year 2019 revenues of $17.29 billion, an increase of 8.2% driven by the C.R. Bard acquisition and organic growth.
- Generated $3.33 billion in cash flows from operating activities, demonstrating strong cash generation.
- Maintained a diversified business across three segments: Medical, Life Sciences, and Interventional, all contributing to growth.
- Continued to invest in research and development to drive innovation and new product development.
- Actively managing a significant debt load of $19.39 billion, with efforts to optimize its capital structure.
- Facing ongoing regulatory scrutiny, including a consent decree for infusion pumps and a warning letter for a Preanalytical Systems facility.
- Significant product liability reserves of approximately $2.5 billion highlight ongoing legal challenges, particularly concerning hernia and women's health products.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Becton Dickinson & Co kept $0.07.
- Revenue$17.29B100.0%
- Cost of revenue−$9.00B52.1%
- Gross profit$8.29B47.9%
- Operating costs−$6.53B37.8%
- Operating income$1.76B10.2%
- Interest, other & tax−$527.0M3.0%
- Net income$1.23B7.1%
Where FY2019 revenue went
$17.29B- Cost of revenue: $9.00B, 52% of revenue
- SG&A: $4.33B, 25% of revenue
- Net income: $1.23B, 7.1% of revenue
- R&D: $1.06B, 6.1% of revenue
- Other operating costs: $1.13B, 6.6% of revenue
- Interest, other & tax: $527.0M, 3.0% of revenue
Kept 7.1% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed November 27, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $17.29B$15.98B | +8.2% |
| Cost of Revenue | $9.00B$8.71B | +3.3% |
| Gross Profit | $8.29B$7.27B | +14.0% |
| R&D Expenses | $1.06B$1.00B | +5.8% |
| SG&A Expenses | $4.33B$4.02B | +7.9% |
| Operating Expenses | $15.53B$14.47B | +7.3% |
| Operating Income | $1.76B$1.51B | +16.6% |
| Interest Expense | $639.00M$706.00M | −9.5% |
| Net Income | $1.23B$311.00M | +296.5% |
| EPS (Basic) | $4.01$0.62 | +546.8% |
| EPS (Diluted) | $3.94$0.60 | +556.7% |
| Shares Outstanding (Basic) | 269.94M258.35M | +4.5% |
| Shares Outstanding (Diluted) | 274.77M264.62M | +3.8% |
05—Questions
Frequently Asked Questions
What was the impact of the C.R. Bard acquisition on BDX's financial performance in 2019?
The acquisition of C.R. Bard, completed in December 2017, significantly contributed to BDX's revenue growth in fiscal year 2019. The Bard business was included for the full fiscal year, contributing approximately 6% to the overall revenue increase. The integration of Bard has been a key driver for the company's expanded product portfolio and market presence, particularly within the Interventional segment.
How is BDX managing its debt levels following the Bard acquisition?
BDX has a substantial debt load of $19.39 billion as of September 30, 2019, largely incurred to finance the Bard acquisition. The company is focused on managing this debt through various initiatives, including debt repayments and refinancing activities. Its strategy includes operating consistent with an investment-grade credit profile and ensuring access to debt markets for strategic opportunities, aiming to optimize its cost of capital.
What are the key risks and challenges BDX highlighted in its 2019 10-K?
BDX identified several key risks, including the competitive medical technology landscape, foreign currency exchange rate fluctuations, changes in third-party reimbursement practices, and the potential reinstatement of the medical device excise tax. Additionally, the company noted risks related to IT system breaches, product development success, the successful integration of acquisitions, and ongoing regulatory matters such as a consent decree with the FDA and a warning letter for one of its facilities. Significant product liability claims also represent a considerable risk and are reflected in substantial legal reserves.
How did BDX's different business segments perform in fiscal year 2019?
All three segments contributed to revenue growth. The Medical segment saw a 5.2% increase in revenue, driven by strong performance in Medication Management Solutions and Pharmaceutical Systems. The Life Sciences segment experienced a slight decrease of 0.7% in revenue, largely due to the divestiture of the Advanced Bioprocessing business and mixed performance in its units, though Biosciences showed growth. The Interventional segment reported robust growth of 29.3%, significantly boosted by the inclusion of Bard's operations and strong performance in its Surgery, Peripheral Intervention, and Urology and Critical Care units.
06—Continue