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Becton Dickinson Q4 Revenues Up 6 Percent Despite Flat Diagnostics Sales Growth

NEW YORK (GenomeWeb) – Becton Dickinson reported today that its fiscal fourth quarter revenues rose 6 percent year over year, driven by strong growth in its medical segment that was partly offset by flat revenue growth in the diagnostics business.  

For the three months ended Sept. 30, the company posted revenues of $3.23 billion compared to $3.06 billion in the year-ago quarter, beating Wall Street analysts' average estimate of $3.22 billion.

BD's Medical segment brought in $2.24 billion, a 7 percent increase over the $2.08 billion reported a year ago. BD Life Sciences recorded $996.0 million in revenues, up 2 percent from $976.0 million in Q4 2015. Within the segment, pre-analytical systems revenues were up almost 3 percent at $359.0 million from $349.0 million, while diagnostic systems revenues were flat at $342.0 million, and biosciences revenues grew slightly to $296.0 million from $286.0 million.

"We closed the first full year as the new BD, having achieved all important milestones, and demonstrated that we are successfully executing on our acquisition of CareFusion," BD Chairman and CEO Vincent Forlenza said on a conference call to discuss Q4 earnings.

"The acquisition of CareFusion 18 months ago significantly accelerated our strategy, and the powerful combination of BD and CareFusion continues to deliver positive results,"

Legacy BD business performance was solid, the CareFusion portfolio performed in line with expectations, and emerging markets continue to be a key growth driver for the company, he added.

The company experienced headwinds in the Middle East and Africa, but Forlenza said that he remained confident that emerging markets are well positioned for continued growth.

"We also continue to create new growth opportunities for CareFusion products in these markets and expand their global reach by leveraging BD's international infrastructure," he said.

Diagnostics system revenues, which were about flat compared to the prior year, "reflects continued strength in core microbiology and BD Max, which grew double digits in the quarter," said the firm's CFO Christopher Reidy. "This growth was offset by the timing of Kiestra [automated systems] installations outside the US." However, for the year, Kiestra grew at about 19 percent, he added.

"Our US diagnostics business saw continued growth in microbiology, including Kiestra and the BD Max molecular platform," he added.

Revenues from the company's US business rose 7 percent to $1.75 billion from $1.63 billion a year ago, while revenues from international markets were also up almost 4 percent at $1.48 billion from $1.43 billion in Q4 2015.

BD's net income for the quarter fell to $19 million, or $.09 per share, from $181 million, or $0.84 per share, a year ago. On an adjusted basis, the company reported Q4 EPS of $2.12 compared to $1.94 in the prior-year period, beating the consensus Wall Street estimate of $2.09 per share.

BD's R&D expenses rose 29 percent year over year to $253 million from $196 million, and SG&A costs rose 5 percent to $796 million from $756 million.

The firm expects 2017 revenues to decrease 3.0 to 3.5 percent, primarily due to the divestiture of its Respiratory Solutions business that was completed in October 2016. BD estimates that 2017 revenues will increase 4.5 to 5.0 percent on a comparable, currency-neutral basis that excludes Respiratory Solutions and other closed divestitures in 2016 and 2017.

In 2017, the firm expects that earnings per share will be between $7.23 and $7.33, which represents growth of 61 to 63 percent, and that adjusted diluted earnings per share will be between $9.62 and $9.72 on a currency-neutral basis, which represents 12 to 13 percent growth and includes around 1.5 percent of dilution related to the Respiratory Solutions divestiture.

For the full fiscal year that ended on Sept. 30, BD reported revenues of $12.48 billion up from $10.28 billion in 2015, an increase of 21 percent. On a comparable, currency-neutral basis, 2016 organic adjusted revenues grew about 4 percent.

For 2016, BD's net income rose to $976.0 million, or $4.49 per share, from $695.0 million, or $3.35 per share, in 2015. The firm reported adjusted, full-year earnings per share of $8.59, an increase of 20 percent, or 29 percent on a currency-neutral basis, over the prior year.

BD's R&D expenses for 2016 rose 31 percent year over year to $828 million from $632 million, and SG&A costs rose 17 percent to $3.00 billion from $2.56 billion. 

Target debt levels and cash flow are at levels that "we believe that we now have the capability to do large [acquisitions] and we continue to have the capability to do tuck-ins, and we have a bit more flexibility to do tuck-ins, in the short run, than we've had over the last two years," Forlenza said.

In a research note this morning, Piper Jaffray analyst William Quirk said he believed BD had a "deceptively good quarter."

"BD remains on track with new product submissions and approvals," he wrote, "and the team expects the [CareFusion] international product introduction to benefit revenue in 2017."

In Thursday morning trade on the New York Stock Exchange, shares of BD were up almost 3 percent at $171.85.

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