NEW YORK – Becton Dickinson reported today that its fiscal year 2020 first quarter revenues rose 2 percent year over year. However, the firm lowered its guidance for the year due to evolving regulatory strategies for upgrades to its Alaris pump system.
For the three months ended Dec. 31, the company posted revenues of $4.23 billion compared to $4.16 billion in the year-ago quarter, and beat Wall Street analysts' average estimate of $4.18 billion. On a currency-neutral basis, revenues grew 2.5 percent, the firm said.
Tom Polen, BD's new CEO as of Jan. 28, said on a call with analysts and investors to discuss the Q1 results that the adjusted revenue guidance was due to evolving conversations with the US Food and Drug Administration regarding whether software improvements to its BD Alaris pump system for infusion therapies require 510(k) clearance.
"Let me just say that resetting expectations is certainly not how I want to start my first call as CEO," Polan said, adding that the firm now plans to submit its upgraded Alaris for 510(k) clearance in the fourth quarter of 2020. "Based on this situation, we've reduced our guidance range by approximately $400 million in revenue and $.60 in EPS for fiscal year '20," Polan said.
The company's life sciences business recorded $1.12 billion in revenues, up from $1.06 billion in Q1 2019, an increase of 6 percent. Within the life sciences segment, pre-analytical systems revenues were up around 1 percent to $398 million from $393 million, while diagnostic systems revenues were up 5 percent to $402 million from $382 million, and biosciences revenues rose 14 percent to $323 million from $281 million.
Growth in the life sciences segment was aided by flu-related revenues in the diagnostic systems unit as a result of a stronger flu season in comparison to the prior year, the firm said in a statement.
In diagnostics, growth was broad-based across point-of-care, flu, molecular diagnostic platforms, and microbiology solutions, as well the firm's women's health and cancer portfolios, CFO Chris Reidy said on the call. "We continue to see over 20 percent growth in BD Max and are receiving very positive feedback on our BD Cor launch in Europe," Reidy said.
The firm launched the BD Cor molecular system last year in Europe with an assay for human papillomavirus, Onclarity HPV. "We're still very early in this launch, but we feel really good about the progress we've made so far having already signed 10 high-volume accounts in Q1," Polan said. "Of course, we're new to the HPV market, so all of that is new business for BD," he added.
Polan also said that the firm has received and installed "several urgent orders" for additional BD Max molecular systems in China which are being used for coronavirus testing.
Revenues from the company's US business rose 2 percent to $2.43 billion from $2.39 billion a year ago, while revenues from international markets were up 1 percent to $1.80 billion from $1.77 billion. International revenue growth was driven by strong performance in China and the Asia Pacific.
BD recorded a net income for the quarter of $278 million, or $.87 per share, compared to net income of $599 million, or $2.05 per share, a year ago. On an adjusted basis, the company reported Q1 EPS of $2.65, beating the consensus Wall Street estimate of $2.63 per share.
Q1 R&D expenses rose 5 percent year over year to $270 million from $258 million while SG&A costs were up 5 percent to $1.12 billion from $1.07 billion a year earlier.
For fiscal year 2019, the firm said it is lowering its guidance to reflect the impact of remediation efforts with the FDA and anticipated loss of sales for its Alaris infusion system. It now expects revenues to increase 1.5 to 2.5 percent as reported, or 2.5 to 3.5 percent on a currency-neutral basis, and expects fiscal year diluted earnings per share of between $11.90 and $12.10. Analysts are expecting earnings of $12.69 per share in fiscal 2020.
BD shares nosedived 11 percent to $254.75 in Thursday morning trading on the New York Stock Exchange.