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Becton, Dickinson and Company (BDX - Free Report) , popularly known as BD, delivered adjusted earnings per share (EPS) of $2.96 in the third quarter of fiscal 2023, up 11.3% year over year. The figure surpassed the Zacks Consensus Estimate by 2.4%.
The adjustments include expenses related to purchase accounting adjustments and integration costs, among others.
GAAP EPS for the quarter was $1.36, reflecting an improvement of 6.3% from the year-earlier figure.
Revenues in Detail
BD registered revenues of $4.88 billion in the fiscal third quarter, up 5.1% year over year. The figure surpassed the Zacks Consensus Estimate by 1%.
At constant exchange rate (CER), revenues climbed 6.3%.
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 $4.87 billion in the fiscal third quarter, up 6.7% year over year on a reported basis and 7.9 % at CER.
Base organic revenue growth for the fiscal third quarter was 5.1% on a reported basis and 6.3% 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 $2.43 billion, up 11.1% from the year-ago quarter on a reported basis and 12.2% at CER. Per management, this upside can be attributed to strong double-digit growth in Medication Management Solutions and Pharmaceutical Systems business units. This compares to our projection of fiscal third-quarter segmental revenues of $2.31 billion.
Worldwide revenues in the BD Life Sciences segment totaled $1.23 billion, down 6.3% year over year on a reported basis and down 5% at CER. The decline resulted primarily from the segment's flat base business and Integrated Diagnostic Solutions (IDS) unit’s fall in COVID-only diagnostic testing revenues. The fiscal third-quarter revenues compare to our estimate of $1.32 billion.
The segment's base business performance reflects high-single-digit growth in the Biosciences business unit that was offset by a decline in base IDS revenues due to the comparison to higher prior-year flu/COVID respiratory testing revenues and the impact of U.S. distributor de-stocking in Specimen Management.
BD Interventional segment generated worldwide revenues of $1.22 billion, up 6.7% from the year-ago quarter on a reported basis and 8.1% at CER. This was owing to strong performance across the segment. The fiscal third-quarter revenues compare to our estimate of $1.16 billion.
Geographic Results
In the third quarter of fiscal 2023, revenues in the United States improved 4.9% to $2.77 billion. This compares to our estimate of $2.75 billion.
International revenues grossed $2.11 billion, up 5.4% from the year-ago quarter on a reported basis and 8.2% at CER. This compares to our estimate of $2.03 billion.
Becton, Dickinson and Company Price, Consensus and EPS Surprise
In the quarter under review, BD’s gross profit rose 1.6% to $2.10 billion. However, the gross margin contracted 149 basis points (bps) to 43.1%.
We had projected 44.7% of gross margin for the fiscal third quarter.
Selling and administrative expenses increased 3.6% to $1.19 billion. Research and development expenses decreased 2.9% year over year to $306 million. Adjusted operating expenses of $1.49 billion increased 2.2% year over year.
Adjusted operating profit totaled $604 million, reflecting a 0.2% uptick from the prior-year quarter. The adjusted operating margin in the fiscal third quarter contracted 61 bps to 12.4%.
Financial Position
BD exited the third quarter of fiscal 2023 with cash and cash equivalents and short-term investments of $931 million compared with $1.99 billion at the fiscal second-quarter end. Total debt (including current debt obligations) at the end of third-quarter fiscal 2023 was $16.78 billion compared with $18.22 billion at the fiscal second-quarter end.
Cumulative net cash flow from continuing operating activities at the end of third-quarter fiscal 2023 was $1.67 billion compared with $1.49 million a year ago.
Meanwhile, BD has a consistent dividend-paying history, with its five-year annualized dividend growth being 4.27%.
Fiscal 2023 Guidance
BD has revised its financial outlook for fiscal 2023.
BD now projects its full fiscal year revenues to be $19.3 billion compared with the earlier-provided projections of $19.2 billion-$19.3 billion. The Zacks Consensus Estimate for revenues is pegged at $19.29 billion.
The revenue projections for fiscal 2023 now include base-business revenue growth at CER of 6.8-7.1%, up from the earlier expectations of 6.5-7%. Base organic revenue growth is now expected to be 5.5-5.8%, up from the previously announced outlook of 5.25-5.75%.
For the full fiscal year, adjusted EPS is continued to be anticipated in the range of $12.10-$12.32. The Zacks Consensus Estimate for the same is pegged at $12.21.
Our Take
BD exited the third quarter of fiscal 2023 with better-than-expected results. Solid top-line and bottom-line results, along with improvements in the overall base revenues, were impressive. Robust performances by the majority of its segments and both geographic regions were encouraging. Strength in BD’s segment’s business units during the reported quarter was also promising.
BD received the FDA’s 510(k) clearance for the BD Respiratory Viral Panel for BD MAX System (August), the updated BD Alaris Infusion System (July) and the new BD Kiestra Methicillin-resistant Staphylococcus aureus imaging application that uses artificial intelligence (July). BD also launched a slew of products, like the worldwide commercial launches of BD FACSDuet Premium Sample Preparation System (June) and BD FACSDiscover S8 Cell Sorter (May). The company also announced expanded customer availability of BD PosiFlush SafeScrub in May. These developments also raise our optimism.
BD’s inking of a definitive agreement to sell its Surgical Instrumentation platform to STERIS to simplify its product portfolio and manufacturing network also looks promising.
However, the year-over-year decline in BD Life Sciences revenues was worrying. Lower COVID-only testing revenues in the quarter were discouraging from a business perspective. The contraction of both margins also does not bode well.
Zacks Rank and Other Key Picks
BD currently carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .
Abbott, carrying a Zacks Rank of 2, reported second-quarter 2023 adjusted EPS of $1.08, beating the Zacks Consensus Estimate by 3.8%. Revenues of $9.98 billion outpaced the consensus mark by 2.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 12.4%.
Integer Holdings reported second-quarter 2023 adjusted EPS of $1.14, beating the Zacks Consensus Estimate by 15.2%. Revenues of $400 million surpassed the Zacks Consensus Estimate by 8.9%. It currently carries a Zacks Rank #2.
Integer Holdings has a long-term estimated growth rate of 12.1%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 8.4%.
Intuitive Surgical reported second-quarter 2023 adjusted EPS of $1.42, beating the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the Zacks Consensus Estimate by 1.4%. It currently carries a Zacks Rank #2.
Intuitive Surgical has a long-term estimated growth rate of 15.7%. ISRG’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 4.2%.
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BD (BDX) Q3 Earnings Surpass Estimates, Margins Contract
Becton, Dickinson and Company (BDX - Free Report) , popularly known as BD, delivered adjusted earnings per share (EPS) of $2.96 in the third quarter of fiscal 2023, up 11.3% year over year. The figure surpassed the Zacks Consensus Estimate by 2.4%.
The adjustments include expenses related to purchase accounting adjustments and integration costs, among others.
GAAP EPS for the quarter was $1.36, reflecting an improvement of 6.3% from the year-earlier figure.
Revenues in Detail
BD registered revenues of $4.88 billion in the fiscal third quarter, up 5.1% year over year. The figure surpassed the Zacks Consensus Estimate by 1%.
At constant exchange rate (CER), revenues climbed 6.3%.
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 $4.87 billion in the fiscal third quarter, up 6.7% year over year on a reported basis and 7.9 % at CER.
Base organic revenue growth for the fiscal third quarter was 5.1% on a reported basis and 6.3% 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 $2.43 billion, up 11.1% from the year-ago quarter on a reported basis and 12.2% at CER. Per management, this upside can be attributed to strong double-digit growth in Medication Management Solutions and Pharmaceutical Systems business units. This compares to our projection of fiscal third-quarter segmental revenues of $2.31 billion.
Worldwide revenues in the BD Life Sciences segment totaled $1.23 billion, down 6.3% year over year on a reported basis and down 5% at CER. The decline resulted primarily from the segment's flat base business and Integrated Diagnostic Solutions (IDS) unit’s fall in COVID-only diagnostic testing revenues. The fiscal third-quarter revenues compare to our estimate of $1.32 billion.
The segment's base business performance reflects high-single-digit growth in the Biosciences business unit that was offset by a decline in base IDS revenues due to the comparison to higher prior-year flu/COVID respiratory testing revenues and the impact of U.S. distributor de-stocking in Specimen Management.
BD Interventional segment generated worldwide revenues of $1.22 billion, up 6.7% from the year-ago quarter on a reported basis and 8.1% at CER. This was owing to strong performance across the segment. The fiscal third-quarter revenues compare to our estimate of $1.16 billion.
Geographic Results
In the third quarter of fiscal 2023, revenues in the United States improved 4.9% to $2.77 billion. This compares to our estimate of $2.75 billion.
International revenues grossed $2.11 billion, up 5.4% from the year-ago quarter on a reported basis and 8.2% at CER. This compares to our estimate of $2.03 billion.
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 rose 1.6% to $2.10 billion. However, the gross margin contracted 149 basis points (bps) to 43.1%.
We had projected 44.7% of gross margin for the fiscal third quarter.
Selling and administrative expenses increased 3.6% to $1.19 billion. Research and development expenses decreased 2.9% year over year to $306 million. Adjusted operating expenses of $1.49 billion increased 2.2% year over year.
Adjusted operating profit totaled $604 million, reflecting a 0.2% uptick from the prior-year quarter. The adjusted operating margin in the fiscal third quarter contracted 61 bps to 12.4%.
Financial Position
BD exited the third quarter of fiscal 2023 with cash and cash equivalents and short-term investments of $931 million compared with $1.99 billion at the fiscal second-quarter end. Total debt (including current debt obligations) at the end of third-quarter fiscal 2023 was $16.78 billion compared with $18.22 billion at the fiscal second-quarter end.
Cumulative net cash flow from continuing operating activities at the end of third-quarter fiscal 2023 was $1.67 billion compared with $1.49 million a year ago.
Meanwhile, BD has a consistent dividend-paying history, with its five-year annualized dividend growth being 4.27%.
Fiscal 2023 Guidance
BD has revised its financial outlook for fiscal 2023.
BD now projects its full fiscal year revenues to be $19.3 billion compared with the earlier-provided projections of $19.2 billion-$19.3 billion. The Zacks Consensus Estimate for revenues is pegged at $19.29 billion.
The revenue projections for fiscal 2023 now include base-business revenue growth at CER of 6.8-7.1%, up from the earlier expectations of 6.5-7%. Base organic revenue growth is now expected to be 5.5-5.8%, up from the previously announced outlook of 5.25-5.75%.
For the full fiscal year, adjusted EPS is continued to be anticipated in the range of $12.10-$12.32. The Zacks Consensus Estimate for the same is pegged at $12.21.
Our Take
BD exited the third quarter of fiscal 2023 with better-than-expected results. Solid top-line and bottom-line results, along with improvements in the overall base revenues, were impressive. Robust performances by the majority of its segments and both geographic regions were encouraging. Strength in BD’s segment’s business units during the reported quarter was also promising.
BD received the FDA’s 510(k) clearance for the BD Respiratory Viral Panel for BD MAX System (August), the updated BD Alaris Infusion System (July) and the new BD Kiestra Methicillin-resistant Staphylococcus aureus imaging application that uses artificial intelligence (July). BD also launched a slew of products, like the worldwide commercial launches of BD FACSDuet Premium Sample Preparation System (June) and BD FACSDiscover S8 Cell Sorter (May). The company also announced expanded customer availability of BD PosiFlush SafeScrub in May. These developments also raise our optimism.
BD’s inking of a definitive agreement to sell its Surgical Instrumentation platform to STERIS to simplify its product portfolio and manufacturing network also looks promising.
However, the year-over-year decline in BD Life Sciences revenues was worrying. Lower COVID-only testing revenues in the quarter were discouraging from a business perspective. The contraction of both margins also does not bode well.
Zacks Rank and Other Key Picks
BD currently carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .
Abbott, carrying a Zacks Rank of 2, reported second-quarter 2023 adjusted EPS of $1.08, beating the Zacks Consensus Estimate by 3.8%. Revenues of $9.98 billion outpaced the consensus mark by 2.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 12.4%.
Integer Holdings reported second-quarter 2023 adjusted EPS of $1.14, beating the Zacks Consensus Estimate by 15.2%. Revenues of $400 million surpassed the Zacks Consensus Estimate by 8.9%. It currently carries a Zacks Rank #2.
Integer Holdings has a long-term estimated growth rate of 12.1%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 8.4%.
Intuitive Surgical reported second-quarter 2023 adjusted EPS of $1.42, beating the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the Zacks Consensus Estimate by 1.4%. It currently carries a Zacks Rank #2.
Intuitive Surgical has a long-term estimated growth rate of 15.7%. ISRG’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 4.2%.