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BD (BDX) Q1 Earnings and Revenues Beat Estimates, Margins Down
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Becton, Dickinson and Company (BDX - Free Report) , popularly known as BD, delivered adjusted earnings per share (EPS) of $2.98 in the first quarter of fiscal 2023, down 5.9% year over year. The figure, however, surpassed the Zacks Consensus Estimate by 11.6%.
The adjustments include expenses related to purchase accounting adjustments and integration costs, among others.
We had projected the fiscal first-quarter adjusted EPS to be $2.64.
GAAP EPS for the quarter was $1.70, reflecting a decline of 10.5% from the year-earlier figure.
Revenues in Detail
BD registered revenues of $4.59 billion in the fiscal first quarter, down 2.8% year over year. However, the figure surpassed the Zacks Consensus Estimate by 0.9%.
The fiscal first-quarter revenue compares to our estimate of $4.51 billion.
At constant exchange rate (CER), revenues climbed 1.7%.
The top-line improvement primarily resulted from strength in BD Medical and BD Interventional segments. However, the overall top-line improvement was partially offset by a fall in worldwide COVID-19-only diagnostic testing revenues.
Base revenues were $4.55 billion in the fiscal first quarter, up 0.4% year over year on a reported basis and 5.2% at CER.
Base organic revenue growth for the fiscal first quarter was down 1.7% on a reported basis but up 3% at CER.
Segment Details
BD’s operations consist of three worldwide business segments — BD Medical, BD Life Sciences and BD Interventional.
For the quarter under review, BD Medical reported worldwide revenues of $2.15 billion, up 1.6% from the year-ago quarter on a reported basis and 6.1% at CER. Per management, this upside can be attributed to strong performances by the Medication Management Solutions and Pharmaceutical Systems business units.
This compares to our projection of fiscal first-quarter segmental revenues of $2.11 billion.
Worldwide revenues in the BD Life Sciences segment totaled $1.30 billion, down 12.2% year over year on a reported basis and down 7.3% at CER. The decline resulted primarily from the Integrated Diagnostic Solutions (IDS) unit’s fall in COVID-only diagnostic testing revenues. However, this was partially offset by the IDS unit’s strong growth in the base business (driven by strong demand for BD’s respiratory testing portfolio, which was partly aided by timing of dealer orders, strong BD Kiestra lab automation installations and leveraging its higher BD MAX installed base for molecular In Vitro Diagnostic assay growth) and strength in the Biosciences unit.
The fiscal first-quarter revenue compares to our estimate of $1.33 billion.
BD Interventional segment generated worldwide revenues of $1.13 billion, up 1.3% from the year-ago quarter on a reported basis and 5.6% at CER. This was owing to strength in the Peripheral Intervention business unit.
The fiscal first-quarter revenue compares to our estimate of $1.07 billion.
Geographic Results
In the first quarter of fiscal 2023, revenues in the United States improved 0.9% to $2.73 billion.
The fiscal first-quarter revenue compares to our estimate of $2.56 billion. International revenues grossed $1.86 billion, down 7.9% from the year-ago quarter on a reported basis but up 2.7% at CER.
The fiscal first-quarter revenue compares to our estimate of $1.95 million.
Becton, Dickinson and Company Price, Consensus and EPS Surprise
In the quarter under review, BD’s gross profit fell 3.9% to $2.13 billion. Gross margin contracted 54 basis points (bps) to 46.5%.
We had projected 44.9% of gross margin for the fiscal first quarter.
Selling and administrative expenses rose 0.2% to $1.19 billion. Research and development expenses declined 0.3% year over year to $313 million. Adjusted operating expenses of $1.50 billion increased 0.1% year over year.
Adjusted operating profit totaled $633 million, reflecting a 12.2% decline from the prior-year quarter. The adjusted operating margin in the fiscal first quarter contracted 148 bps to 13.8%.
Financial Position
BD exited the first quarter of fiscal 2023 with cash and cash equivalents, and short-term investments of $612 million compared with $1.01 billion at the end of fiscal 2022. Total debt (including current debt obligations) at the end of first-quarter fiscal 2023 was $16.46 billion compared with $16.07 billion at the end of fiscal 2022.
Net cash flow from continuing operating activities at the end of first-quarter fiscal 2023 was $399 million compared with $530 million a year ago.
Meanwhile, BD has a consistent dividend-paying history, with its five-year annualized dividend growth being 3.97%.
Fiscal 2023 Guidance
BD has revised its financial outlook for fiscal 2023.
BD now projects its full fiscal year revenues to be in the range of $19.1 billion-$19.3 billion, up from the earlier-provided projections of $18.6 billion-$18.8 billion. The Zacks Consensus Estimate for revenues is pegged at $18.88 billion.
The revenue projections for fiscal 2023 now include base-business revenue growth at CER of 5.75-6.75%, up from the earlier expectations of an uptick of 5.25-6.25%.
The outlook now estimates around $50 million-$100 million in COVID-19-only diagnostic testing revenues, down from the earlier projections of $125 million-$175 million.
For the full fiscal year, adjusted EPS is now anticipated to be $12.07-$12.32, up from the earlier estimates of $11.85-$12.10. The Zacks Consensus Estimate for the same is pegged at $11.94.
Our Take
BD exited the first quarter of fiscal 2023 with better-than-expected results. An improvement in the overall base revenues and robust performances by the majority of its segments and in the United States are impressive. Strength in BD’s segment’s business units during the reported quarter was also promising.
BD’s recent agreement with Biocorp and a co-exclusive commercial agreement with Magnolia Medical Technologies, Inc. look promising. BD’s recent launch of a new, robotic track system for the BD Kiestra microbiology laboratory solution — 3rd Generation BD Kiestra Total Lab Automation System — is encouraging. BD and CerTest Biotec’s receipt of the FDA’s Emergency Use Authorization for VIASURE Monkeypox Virus Real Time PCR (polymerase chain reaction) Reagents for BD MAX System, which is now available for BD MAX System users, also raises our optimism.
However, the year-over-year decline in reported revenues is disappointing. The fall in BD Life Sciences and international revenues is worrying. Lower COVID-only testing revenues in the quarter and BD’s expectations of its continued fall during fiscal 2023 are discouraging from a business perspective. The contraction of both margins also does not bode well.
Zacks Rank and Key Picks
BD currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Neogen Corporation (NEOG - Free Report) , McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Neogen, carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2023 adjusted EPS of 15 cents, beating the Zacks Consensus Estimate of a loss of 8 cents per share. Revenues of $230 million outpaced the consensus mark by 0.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Neogen has a return on equity of 5.6% against the industry’s negative return. NEOG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 70.1%.
McKesson, having a Zacks Rank #2, reported third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.1%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.
Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.
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BD (BDX) Q1 Earnings and Revenues Beat Estimates, Margins Down
Becton, Dickinson and Company (BDX - Free Report) , popularly known as BD, delivered adjusted earnings per share (EPS) of $2.98 in the first quarter of fiscal 2023, down 5.9% year over year. The figure, however, surpassed the Zacks Consensus Estimate by 11.6%.
The adjustments include expenses related to purchase accounting adjustments and integration costs, among others.
We had projected the fiscal first-quarter adjusted EPS to be $2.64.
GAAP EPS for the quarter was $1.70, reflecting a decline of 10.5% from the year-earlier figure.
Revenues in Detail
BD registered revenues of $4.59 billion in the fiscal first quarter, down 2.8% year over year. However, the figure surpassed the Zacks Consensus Estimate by 0.9%.
The fiscal first-quarter revenue compares to our estimate of $4.51 billion.
At constant exchange rate (CER), revenues climbed 1.7%.
The top-line improvement primarily resulted from strength in BD Medical and BD Interventional segments. However, the overall top-line improvement was partially offset by a fall in worldwide COVID-19-only diagnostic testing revenues.
Base revenues were $4.55 billion in the fiscal first quarter, up 0.4% year over year on a reported basis and 5.2% at CER.
Base organic revenue growth for the fiscal first quarter was down 1.7% on a reported basis but up 3% at CER.
Segment Details
BD’s operations consist of three worldwide business segments — BD Medical, BD Life Sciences and BD Interventional.
For the quarter under review, BD Medical reported worldwide revenues of $2.15 billion, up 1.6% from the year-ago quarter on a reported basis and 6.1% at CER. Per management, this upside can be attributed to strong performances by the Medication Management Solutions and Pharmaceutical Systems business units.
This compares to our projection of fiscal first-quarter segmental revenues of $2.11 billion.
Worldwide revenues in the BD Life Sciences segment totaled $1.30 billion, down 12.2% year over year on a reported basis and down 7.3% at CER. The decline resulted primarily from the Integrated Diagnostic Solutions (IDS) unit’s fall in COVID-only diagnostic testing revenues. However, this was partially offset by the IDS unit’s strong growth in the base business (driven by strong demand for BD’s respiratory testing portfolio, which was partly aided by timing of dealer orders, strong BD Kiestra lab automation installations and leveraging its higher BD MAX installed base for molecular In Vitro Diagnostic assay growth) and strength in the Biosciences unit.
The fiscal first-quarter revenue compares to our estimate of $1.33 billion.
BD Interventional segment generated worldwide revenues of $1.13 billion, up 1.3% from the year-ago quarter on a reported basis and 5.6% at CER. This was owing to strength in the Peripheral Intervention business unit.
The fiscal first-quarter revenue compares to our estimate of $1.07 billion.
Geographic Results
In the first quarter of fiscal 2023, revenues in the United States improved 0.9% to $2.73 billion.
The fiscal first-quarter revenue compares to our estimate of $2.56 billion.
International revenues grossed $1.86 billion, down 7.9% from the year-ago quarter on a reported basis but up 2.7% at CER.
The fiscal first-quarter revenue compares to our estimate of $1.95 million.
Becton, Dickinson and Company Price, Consensus and EPS Surprise
Becton, Dickinson and Company price-consensus-eps-surprise-chart | Becton, Dickinson and Company Quote
Margin Analysis
In the quarter under review, BD’s gross profit fell 3.9% to $2.13 billion. Gross margin contracted 54 basis points (bps) to 46.5%.
We had projected 44.9% of gross margin for the fiscal first quarter.
Selling and administrative expenses rose 0.2% to $1.19 billion. Research and development expenses declined 0.3% year over year to $313 million. Adjusted operating expenses of $1.50 billion increased 0.1% year over year.
Adjusted operating profit totaled $633 million, reflecting a 12.2% decline from the prior-year quarter. The adjusted operating margin in the fiscal first quarter contracted 148 bps to 13.8%.
Financial Position
BD exited the first quarter of fiscal 2023 with cash and cash equivalents, and short-term investments of $612 million compared with $1.01 billion at the end of fiscal 2022. Total debt (including current debt obligations) at the end of first-quarter fiscal 2023 was $16.46 billion compared with $16.07 billion at the end of fiscal 2022.
Net cash flow from continuing operating activities at the end of first-quarter fiscal 2023 was $399 million compared with $530 million a year ago.
Meanwhile, BD has a consistent dividend-paying history, with its five-year annualized dividend growth being 3.97%.
Fiscal 2023 Guidance
BD has revised its financial outlook for fiscal 2023.
BD now projects its full fiscal year revenues to be in the range of $19.1 billion-$19.3 billion, up from the earlier-provided projections of $18.6 billion-$18.8 billion. The Zacks Consensus Estimate for revenues is pegged at $18.88 billion.
The revenue projections for fiscal 2023 now include base-business revenue growth at CER of 5.75-6.75%, up from the earlier expectations of an uptick of 5.25-6.25%.
The outlook now estimates around $50 million-$100 million in COVID-19-only diagnostic testing revenues, down from the earlier projections of $125 million-$175 million.
For the full fiscal year, adjusted EPS is now anticipated to be $12.07-$12.32, up from the earlier estimates of $11.85-$12.10. The Zacks Consensus Estimate for the same is pegged at $11.94.
Our Take
BD exited the first quarter of fiscal 2023 with better-than-expected results. An improvement in the overall base revenues and robust performances by the majority of its segments and in the United States are impressive. Strength in BD’s segment’s business units during the reported quarter was also promising.
BD’s recent agreement with Biocorp and a co-exclusive commercial agreement with Magnolia Medical Technologies, Inc. look promising. BD’s recent launch of a new, robotic track system for the BD Kiestra microbiology laboratory solution — 3rd Generation BD Kiestra Total Lab Automation System — is encouraging. BD and CerTest Biotec’s receipt of the FDA’s Emergency Use Authorization for VIASURE Monkeypox Virus Real Time PCR (polymerase chain reaction) Reagents for BD MAX System, which is now available for BD MAX System users, also raises our optimism.
However, the year-over-year decline in reported revenues is disappointing. The fall in BD Life Sciences and international revenues is worrying. Lower COVID-only testing revenues in the quarter and BD’s expectations of its continued fall during fiscal 2023 are discouraging from a business perspective. The contraction of both margins also does not bode well.
Zacks Rank and Key Picks
BD currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Neogen Corporation (NEOG - Free Report) , McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Neogen, carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2023 adjusted EPS of 15 cents, beating the Zacks Consensus Estimate of a loss of 8 cents per share. Revenues of $230 million outpaced the consensus mark by 0.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Neogen has a return on equity of 5.6% against the industry’s negative return. NEOG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 70.1%.
McKesson, having a Zacks Rank #2, reported third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.1%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.
Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.