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Becton Dickinson Attributes Q3 Core Growth to Macro Headwind Mitigation


NEW YORK – Becton Dickinson attributed 9 percent growth in its core business to strategies it has enacted to mitigate the macro headwinds impacting the medical technology industry.

On a call with investors Thursday morning, the firm boasted fiscal third quarter revenue growth of 1 percent, despite a decrease in COVID-19 related business and increasingly complex global financial pressures. BD also increased its full-year revenue and adjusted EPS guidance.

For the quarter ended June 30, BD's revenues were $4.64 billion, up approximately 1 percent from $4.61 billion in the year-ago period. On average, investors had estimated fiscal Q3 revenues of $4.47 billion.

BD's COVID testing revenues plummeted from $300 million a year ago to $76 million in the fiscal third quarter, but this was offset by base revenue growth of 6 percent as reported or approximately 9 percent on a currency-neutral basis.

"By successfully navigating the challenging macro environment, we are distinguishing BD," CEO Tom Polen said on the call.

Specifically, the firm has institutionalized improvements in its supply chain, which are now "having a positive impact on our overall cost effectiveness, responsiveness, and sustainability," Polen said.

BD has also validated secondary suppliers for its most critical products, invested in increasing inventory to secure raw materials and components like microprocessor chips, and contracted directly with shippers, Polen said.

Regarding inventory, BD CFO Christopher DelOrefice further noted on the call that the firm invested $400 million in outside inventory levels to procure strategic components and raw materials. The firm plans to ramp this down as the current supply chain pressures and shipping issues stabilize, Polen added.

The firm saw a 5 percent increase in its Medical business from $2.09 billion to $2.20 billion. In its Interventional business, it saw a 6 percent increase from $1.08 billion to $1.14 billion.

BD's Life Science business recorded a revenue drop of 9 percent from $1.43 billion to $1.31 billion. However, excluding the COVID-only sales, the core Life Science business grew 9 percent, the firm said.

In the quarter, BD launched the BD Cor instrument and a multiplex assay for the sexually transmitted infections chlamydia, gonorrhea, and trichomonas in the US.

The test gives BD access to the STI testing space, Polen said, adding that this category is expected to grow at a 7 percent CAGR to a $600 million addressable market by 2025. The BD Cor is also positioned to take advantage of projected CAGR of 9 percent and addressable market of $2.9 billion in high-volume molecular testing, he added.

"Our team has already received our first US orders of the BD Cor and it's getting very positive customer feedback," he said.

The firm also obtained the CE mark on a combination COVID, influenza, and respiratory syncytial virus test on the BD Cor and BD Max PCR instruments, and reported double-digit growth in its flow cytometry business attributed to reagents growth, including the new BD Horizon RealYellow dyes.

The company's net income applicable to its common shareholders for the quarter was $338 million, or $1.18 per share, down from $502 million, or $1.73 per share, in the prior-year period. Adjusted EPS was $2.66, beating the consensus analyst estimate of $2.50.

For full-year 2022, BD raised its revenue and adjusted EPS guidance. The company now expects fiscal year 2022 revenues to be in the range of approximately $18.75 billion to $18.83 billion compared to $18.5 billion to $18.7 billion previously announced. The firm assumes base business currency-neutral revenue growth of 8.75 percent to 9.25 percent compared to a range of 7.25 percent to 8.25 percent previously announced.

The revenue guidance range also now assumes up to $500 million in COVID-19-only diagnostic testing revenues, an increase of up to $50 million compared to approximately $450 million previously announced.

The company also now expects fiscal year 2022 adjusted diluted EPS to be $11.28 to $11.35 compared to an earlier estimate of $11.15 to $11.30. 

For fiscal year 2023, DelOrefice also said the firm is forecasting $100 million in COVID-only revenues, but that the decline in this business will be partially offset by revenues related to the recent acquisition of Parata, a manufacturer of automated pharmacy dispensing systems.

BD's shares were up nearly 2 percent at $249.55 in Thursday morning trading on the New York Stock Exchange.