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Becton Dickinson Q3 Revenues Down 5 Percent, Reflecting Divestiture

This article has been updated from a previous version to include comments from Becton Dickinson's earnings call.

NEW YORK (GenomeWeb) – Becton Dickinson reported today that its fiscal third quarter revenues decreased 5 percent year over year, primarily reflecting the divestiture of its respiratory solutions business in October 2016. On a comparable, currency-neutral basis, revenues grew 2 percent, the firm said.

For the three months ended June 30, BD posted revenues of $3.04 billion compared to $3.20 billion in the year-ago quarter, missing analysts' average estimate of $3.06 billion.

"We continue to deliver consistent, solid results while driving toward the successful closing of the C.R. Bard acquisition," BD Chairman and CEO Vincent Forlenza said in a statement.

Revenues from BD's medical segment fell 9 percent to $2.04 billion from $2.24 billion a year ago, primarily due to the aforementioned divestiture. BD life science revenues rose 4 percent to $997.0 million from $963.0 million in the prior-year quarter. Within the segment, revenues from preanalytical systems rose 3 percent to $376.0 million from $366.0 million, while diagnostic systems revenues rose 3 percent to $335.0 million from $327.0 and biosciences revenues rose rose 6 percent to $286.0 million from $270.0 million in Q3 2016.

In a conference call following the release of the financial results, Forlenza said that "the consistent performance of our businesses, combined with operating efficiencies, cost leverage, and cost synergy capture, is driving continued underlying operating margin expansion."  

"Strength in core-microbiology was driven by blood culture and IDAST, partially offset by the timing of BD Kiestra installations, which we expect to occur in the fourth quarter," BD added in the conference call.

CFO Christopher Reidy added  that the firm saw strength in its  core microbiology business, driven by blood culture products, and "saw strong accelerated growth in BD Max molecular platform, driven by the recent introduction of new Enterix and women's health assays."

Revenues from the company's US business were down 8 percent to $1.60 billion from $1.74 billion a year ago, while revenues from international markets dropped 2 percent to $1.43 billion from $1.46 billion in Q3 2016.

BD recorded a net loss for the quarter of $165.0 million, or $.75 per share, from net income of $390.0 million, or $1.80 per share in Q3 2016. This is primarily due to a non-cash charge resulting from a modification to dispensing lease contracts with customers as a result of the announced change in the US dispensing business model, the company said. Adjusted EPS for the recently finished quarter was $2.46, beating the consensus Wall Street estimate of $2.44.

Reidy noted that "as expected, EPS was impacted by the divestiture of the respiratory systems business, as well as the US dispensing business model change, which resulted in a combined headwind of approximately 600 basis points to EPS growth."

BD's R&D expense for the quarter dropped 10 percent to $186.0 million from $207.0 million for Q3 2017, and its SG&A cost fell 1 percent to $719.0 million from $728.0 million.

The firm noted that it now expects full fiscal year 2017 revenues to decrease 3 percent to 4 percent, due to the divestiture of the respiratory solutions business. This is an improvement from previous guidance which suggested a revenue decrease of 3.5 percent to 4 percent. BD expects that revenues for full fiscal year 2017 will increase 4.5 percent to 5 percent on a comparable, currency-neutral basis that excludes respiratory solutions and other divestitures that closed in fiscal year 2016.

The firm said it expects fiscal year 2017 diluted earnings per share to be between $5.10 and $5.15. On an adjusted basis, the firm raised its EPS guidance to a range of $9.42 to $9.47 from a previous guidance of $9.35 to $9.45. Analysts are expecting 2017 EPS of $9.45.

BD shares were down more than 2 percent to $198.54 in Wednesday afternoon trading on the New York Stock Exchange.