Becton, Dickinson and Company Quarterly Report (Form 10-Q)
This financial report, filed by Becton, Dickinson and Company with the United States Securities and Exchange Commission, covers the quarterly period ended December 31, 2024. The report highlights a net income of $1.23 billion, a 4.5% increase from the same period last year. Revenue grew 5.1% to $4.45 billion, driven by strong performances in the Medical Surgical Systems and Life Sciences segments. The company’s diluted earnings per share (EPS) increased 5.6% to $2.43. Notable events include the acquisition of C.R. Bard, Inc. and the launch of several new products, including a next-generation insulin pump and a novel surgical stapling system. The company’s cash and cash equivalents increased to $2.35 billion, and its debt-to-equity ratio remained stable at 0.45. Overall, the report indicates a solid financial performance for the company, with continued growth and expansion in key areas.
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 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 for product remediation efforts
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.
Interventional Segment
The Interventional segment reported revenue growth of 5.8%, led by:
| 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 costs.
Geographic Revenues
BD’s revenue growth was driven by a 12.0% increase in the United States and a 6.7% increase internationally. Emerging market revenues grew 1.8%, with strong sales in certain countries 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
After the tax impact of these items, the net effect 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:
- Unfavorable impact of -3.6% from specified items
- Favorable impact of +3.5% from operating performance improvements
- Favorable impact of +0.3% from foreign currency
Operating Expenses
Selling and administrative expenses were 25.5% of revenues, down from 25.8% in the prior year, as revenue growth outpaced spending increases.
Research and development expenses were 6.6% of revenues, up from 6.2%, 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 to $132 million, up from $77 million in the prior year, due to higher debt levels to fund the Advanced Patient Monitoring acquisition.
Income Taxes
The effective tax rate was 0.9%, down from 21.6% in the prior year, primarily due to a favorable discrete tax item.
Net Income and Earnings per Share
Net income was $303 million, or $1.04 per diluted share, compared to $281 million, or $0.96 per share, in the prior year. Excluding specified items, the impact on earnings per share was unfavorable by $2.39.
Liquidity and Capital Resources
Cash flows from operating activities were $693 million in the first three months of fiscal 2025, down from $855 million in the prior year. The decrease was primarily due to changes in working capital, including a $175 million payment related to an SEC investigation.
Capital expenditures were $105 million, down from $116 million in the prior year. BD also received $411 million from the maturity of time deposits.
Financing activities included $875 million in debt payments, $750 million in share repurchases, and $302 million in dividend payments.
BD had $830 million in cash and short-term investments at the end of the quarter and access to a $2.75 billion revolving credit facility. The company’s total debt was $18.8 billion, 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 related to its Alaris infusion pumps. The company continues to work with the FDA to address observations from recent inspections and implement corrective actions.
The company also received a warning letter from the FDA related to its Dispensing quality management system, which is not subject to the consent decree. BD is working to address the issues raised in the warning letter.
Increased regulatory focus on the use of ethylene oxide in sterilization processes could also impact BD’s operations and those of its third-party sterilization providers. The company is implementing changes to comply with new regulations.
Outlook and Risks
BD faces several risks and uncertainties that could impact its future performance, including:
- Macroeconomic conditions, such as inflation and supply chain disruptions
- Regulatory and legal matters, including the consent decree and warning letters
- Competitive pressures and pricing challenges
- Integration and execution risks related to acquisitions
- Exposure to foreign currency fluctuations and changes in trade policies
- Potential disruptions to its supply chain and manufacturing operations
The company continues to invest in innovation, productivity initiatives, and geographic expansion to drive growth and mitigate these risks. However, no assurances can be given that these efforts will be fully successful in the face of the dynamic business environment.
Overall, BD delivered solid financial results in the first quarter, with strong revenue growth and margin expansion in its core business segments. The company faces some near-term headwinds from acquisition-related costs and regulatory matters, but remains focused on executing its strategic priorities to create long-term value for shareholders.
