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Becton Dickinson Q2 Revenues Down 3 Despite Life Sciences Growth

NEW YORK (GenomeWeb) – Becton Dickinson reported today that its fiscal second quarter revenues were down 3 percent year over year, reflecting the divestiture of its respiratory solutions business completed in October 2016. On a comparable, currency-neutral basis, Q2 revenues grew 5 percent, BD said.

For the three months ended March 31, BD posted revenues of $2.97 billion compared to $3.07 billion in the year-ago quarter, beating analysts' average estimate of $2.92 billion.

BD's Medical segment was down 7 percent to $1.99 billion from $2.13 billion a year ago. BD Life Sciences revenues rose 5 percent to $982.0 million from $936.0 million in the prior-year quarter. Within the segment, preanalytical systems revenues rose 7 percent to $363.0 million from $340.0 million, while diagnostic systems revenues rose 10 percent to $350.0 million from $319.0 million, and biosciences revenues declined 3 percent to $269.0 million from $277.0 million.

"Both segments contributed to revenue growth, demonstrating the breadth and diversity of the growth drivers within our portfolio," Vincent Forlenza, BD chairman, president, and CEO, said in a statement. He added in a conference call to discuss the firm's financial results that the company remains confident in its outlook for fiscal 2017, and that he expects the acquisition of CR Bard for $24 billion, announced in April, to be closed in the fall of this year.

On a conference call with analysts following the release of its financial results, BD's CFO Christopher Reidy said that the company is entering the transaction to acquire Bard "with strong momentum."

He noted that "growth was ahead of our expectations, driven by strength in medication management solutions; diagnostic systems, including a stronger than expected flu season; and preanalytical systems."

BD Life Sciences growth "was driven by strong performance in pre-analytical systems and diagnostic systems," Reidy said. "Revenue growth in diagnostic systems reflects a strong quarter for flu-related sales, as well as the continued strength of core microbiology, including blood cultures and Kiestra," its lab automation system. He said that the firm also "saw solid growth in BD Max driven by the recent introduction of new enteric and other assays."

"Within microbiology, we saw continued strength in blood culture, as well as growth in ID AST, driven in part by the recent introduction of the Phoenix M50," a next-generation diagnostic tool designed to help clinicians fight antibiotic resistance, he added. 

Forlenza said on the conference call that the BD FACSVIA flow cytometry system, which recently was cleared by the US Food and Drug Administration, "provides blood banks and clinical laboratories with an easy-to-use cell analysis solution to help determine and quantify the presence of residual white blood cells in their blood products." 

He noted that the addition of the system is aligned with the firm's larger strategy of "making flow cytometry easier to use with improved efficiency, simplified sample analysis, and higher quality diagnostic results." 

Revenues from the company's US business were down 5 percent to $1.63 billion from $1.72 billion a year ago, while revenues from international markets were trimmed a fraction of 1 percent to $1.34 billion from $1.35 billion in Q2 2016.

BD's net income for the quarter rose to $344.0 million, or $1.58 per share, from $338.0 million, or $1.56 per share, a year ago. Adjusted EPS for the recently completed quarter was $2.30, beating the consensus Wall Street estimate of $2.23.

BD's R&D expenses rose 3 percent to $187.0 million from $182.0 million for Q2 2016, and its SG&A costs fell 1 percent to $724.0 million from $732.0 million. The costs for products sold was trimmed 3 percent year over year to $1.54 billion from $1.58 billion, while costs associated with acquisitions and other restructurings dropped 27 percent to $76 million from $104 million.

BD said that it estimates an unfavorable impact to fiscal year 2017 revenues of about $50 million to $60 million and about $0.20 to $0.25 to adjusted earnings per share, as a result of a change in its accounting for revenue recognition. 

However, the firm noted that it continues to expect full fiscal year 2017 revenues to decrease 3.5 to 4.0 percent, as previously guided, primarily due to the divestiture of its respiratory solution business. BD expects that revenues for the full fiscal year 2017 will increase 4.5 to 5.0 percent on a comparable, currency-neutral basis that excludes respiratory solutions and other divestitures that closed in fiscal year 2016.

The firm said that it expects fiscal year 2017 diluted earnings per share to be between $7.73 and $7.83, which represents growth of approximately 72 percent to 74 percent. On an adjusted basis, EPS is anticipated to be in the range of $9.35 to $9.45.

BD shares were down almost 1 percent to $185.05 in afternoon trading on the New York Stock Exchange.