10-QPeriod: Q2 FY2021

BECTON DICKINSON & CO Quarterly Report for Q2 Ended Mar 31, 2021

Filed May 6, 2021For Securities:BDX

Summary

Becton, Dickinson and Company (BDX) reported solid revenue growth in its second quarter fiscal year 2021, with a 15.4% increase year-over-year, reaching $4.907 billion. This growth was largely driven by strong performance in the Life Sciences segment, fueled by COVID-19 diagnostic testing solutions, and continued strength in Medical and Interventional segments. The company also announced its intention to spin off its Diabetes Care business into a separate publicly traded entity, expected to be completed in the first half of calendar year 2022. This strategic move aims to position both BD and the standalone Diabetes Care business for enhanced capital allocation and focused growth. While overall financial performance appears positive, investors should remain aware of significant ongoing product liability matters, particularly concerning hernia repair and women's health devices, which resulted in a substantial $296 million charge during the quarter. The company continues to navigate these legal challenges and other regulatory matters.

Financial Highlights

52 data points
Beta

Revenue

$4.91B

45.8% Gross Margin

Net Income

$299.00M

6.1% Net Margin

EPS (Diluted)

$0.94

Total Assets

$54.92B

Cash & Equivalents

$3.90B

Free Cash Flow

$935.00M

Financial Statements
Beta
Revenue$4.91B
Cost of Revenue$2.66B
Gross Profit$2.25B
R&D Expenses$317.00M
SG&A Expenses$1.15B
Operating Expenses$4.47B
Operating Income$434.00M
Interest Expense$124.00M
Net Income$299.00M
EPS (Basic)$0.95
EPS (Diluted)$0.94
Shares Outstanding (Basic)291.10M
Shares Outstanding (Diluted)293.55M

Key Highlights

  • 1Total revenues increased by 15.4% to $4.907 billion for the three months ended March 31, 2021, compared to $4.253 billion in the prior year.
  • 2The Life Sciences segment saw significant growth of 42.5%, driven by COVID-19 diagnostic testing solutions.
  • 3Becton Dickinson announced its intention to spin off its Diabetes Care business, expected in the first half of calendar year 2022.
  • 4A substantial product liability charge of $296 million was recorded in Other operating expense during the quarter.
  • 5Operating income increased to $434 million, up from $370 million in the prior year's comparable period.
  • 6Net income applicable to common shareholders more than doubled to $277 million, from $145 million in the prior year.
  • 7The company maintained a strong cash position, with $3.922 billion in cash and short-term investments at the end of the quarter.

Frequently Asked Questions

Becton, Dickinson and Company announced its intention to spin off its Diabetes Care business as a separate publicly traded company. This strategic move is expected to be a tax-free transaction for U.S. federal income tax purposes and aims to allow both BD and the standalone Diabetes Care business to better allocate capital and pursue dedicated growth strategies. The spin-off is anticipated to be completed in the first half of calendar year 2022.

During the quarter ended March 31, 2021, Becton, Dickinson and Company recorded a pre-tax charge of $296 million to 'Other operating expense' related to certain product liability matters, including legal defense costs. This charge, based on additional information obtained during the quarter, reflects the ongoing litigation concerning hernia repair devices, women's health devices, and vena cava filters. While this significantly impacted operating expenses, the company's net income still showed substantial year-over-year growth.

The COVID-19 pandemic had a mixed impact. On the positive side, sales related to COVID-19 diagnostic testing on the BD VeritorTM Plus and BD MaxTM Systems contributed approximately $480 million in revenue to the Life Sciences segment. However, resurgences of COVID-19 infections globally also unfavorably impacted demand for certain products, particularly within the Interventional segment, due to a decline in medical procedures.

Becton, Dickinson and Company is actively involved in numerous product liability litigations and other legal and regulatory matters, including those related to hernia repair devices, women's health products, and infusion pumps. The company has recorded significant accruals for these matters and continues to defend itself vigorously. While some matters have been settled or are in settlement discussions, the company acknowledges the uncertainty and potential material adverse effects these issues could have on its financial condition and results of operations. Management does not expect certain other environmental proceedings to have a material adverse effect.