10-QPeriod: Q1 FY2023

BECTON DICKINSON & CO Quarterly Report for Q1 Ended Dec 31, 2022

Filed February 2, 2023For Securities:BDX

Summary

Becton Dickinson and Company (BDX) reported revenues of $4.586 billion for the quarter ended December 30, 2022, a decrease of 2.8% compared to the prior year. This decline was primarily driven by a significant reduction in COVID-19 testing revenue and unfavorable foreign currency translation, which offset underlying volume and pricing improvements in certain segments. The company experienced a net income of $509 million, or $1.70 per diluted share, compared to $677 million ($2.28 per diluted share) in the same period last year. The year-over-year decrease in net income was impacted by the discontinuation of COVID-19 related testing revenue and ongoing inflationary pressures on raw materials, labor, and freight costs. Despite the top-line decline, BD demonstrated resilience with positive volume growth driven by acquisitions and strong demand in its Medical and Interventional segments, particularly in Medication Management Solutions, Pharmaceutical Systems, and Peripheral Intervention. The Life Sciences segment saw a notable decrease in revenue, largely attributable to the drop in COVID-19 testing sales. The company continues to manage costs and navigate macroeconomic challenges, including inflation and supply chain constraints, while also returning capital to shareholders through dividends. Significant ongoing legal matters and regulatory scrutiny, particularly related to the Alaris infusion pump, require continued monitoring.

Financial Highlights

54 data points
Beta

Revenue

$4.59B

46.5% Gross Margin

Net Income

$509.00M

11.1% Net Margin

EPS (Diluted)

$1.70

Total Assets

$53.13B

Cash & Equivalents

$612.00M

Free Cash Flow

$191.00M

Financial Statements
Beta
Revenue$4.59B
Cost of Revenue$2.45B
Gross Profit$2.13B
R&D Expenses$313.00M
SG&A Expenses$1.19B
Operating Expenses$4.00B
Operating Income$585.00M
Interest Expense$102.00M
Net Income$509.00M
EPS (Basic)$1.71
EPS (Diluted)$1.70
Shares Outstanding (Basic)283.89M
Shares Outstanding (Diluted)285.34M

Key Highlights

  • 1Total revenues decreased by 2.8% to $4.586 billion, primarily due to a significant decline in COVID-19 testing revenue and unfavorable foreign currency translation.
  • 2Net income decreased to $509 million ($1.70 diluted EPS) from $677 million ($2.28 diluted EPS) in the prior year, impacted by lower COVID-19 testing revenue and rising costs.
  • 3Medical segment revenue saw a modest 1.6% increase, driven by Medication Management Solutions and Pharmaceutical Systems, despite a decline in Medication Delivery Solutions.
  • 4Life Sciences segment revenue declined by 12.2%, heavily influenced by the reduction in COVID-19 diagnostic testing sales.
  • 5Interventional segment revenue grew by 1.3%, supported by strong performance in Surgery and Peripheral Intervention units.
  • 6The company paid $281 million in dividends during the quarter, demonstrating a commitment to returning capital to shareholders.
  • 7Significant legal and regulatory matters, including product liability claims and the Alaris infusion pump consent decree, continue to be disclosed and require ongoing management attention.

Frequently Asked Questions

The primary reason for the revenue decline was a significant decrease in revenue generated from COVID-19 diagnostic testing, which was a substantial contributor in the prior year. Additionally, unfavorable foreign currency translation rates negatively impacted reported revenues.

Becton Dickinson is implementing strategies to mitigate inflationary pressures, which include leveraging procurement, logistics, and manufacturing capabilities. The company has also implemented pricing actions and cost-saving initiatives such as simplification and efficiency improvements, though these efforts have not fully offset the rising costs of raw materials, labor, and freight.

The BD Alaris infusion pump unit is operating under an amended consent decree with the FDA. The company has submitted a 510(k) premarket notification for the Alaris System, intended to update regulatory clearance and address recall issues. Commercial operations in the U.S. cannot fully resume until this submission is cleared by the FDA, and the timing for this clearance remains uncertain.

The spin-off of the Diabetes Care business (Embecta Corp.) on April 1, 2022, means its historical results are now reported as discontinued operations for comparative periods (specifically, the three months ended December 31, 2021). Current period results reflect only continuing operations.