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Becton Dickinson Q3 Revenues Up Nearly 3 Percent

NEW YORK (GenomeWeb) – Becton Dickinson reported today that its fiscal third quarter revenues rose nearly 3 percent year over year, as reported, and 4 percent on a currency-neutral, organic adjusted basis.

For the three months ended June 30, the company posted revenues of $3.20 billion compared to $3.12 billion in the year-ago quarter, coming in just under Wall Street analysts' average estimate of $3.21 billion.

BD's Medical segment made up the greatest share of the quarter's revenues, bringing in nearly $2.24 billion, a 1 percent increase over the $2.20 billion reported a year ago. BD Life Sciences recorded $963 million in revenues, up 5 percent from $921 million in Q3 2015. Within the segment, pre-analytical systems revenues were up almost 5 percent at $366 million from $349, while diagnostic systems revenues were up 8 percent to $327 million from $302 million, and biosciences was relatively flat at $270 million versus $269 million.

"Performance in both segments drove solid organic revenue growth and strong EPS," said BD Chairman and CEO Vincent Forlenza on a conference call to discuss Q3 earnings. "In the area of women's health, we continue to make good progress," he said. "We have already submitted our vaginitis and GC CT assays and are now in the process of submitting our HPV assay to the [US Food and Drug Administration] for clearance. This assay is designed to provide the physicians with access to broader, high-risk HPV genotype information beyond types 16 and 18 to guide informed treatment decisions for patients.

"As part of our menu expansion of BD Max, we've completed an agreement with Check-Points, a Netherlands company that is focused on the development of rapid molecular tests for the detection of carbapenem-resistant organisms," he added. "Check-Points currently has a CE-marked product optimized for the BD Max that incorporates our open systems reagents."

In June, BD announced a development and global distribution agreement with Check-Points that will integrate its screen with a BD assay within a real-time PCR kit that detects carbapenem-resistant organisms (CRO), a healthcare-associated infection, from rectal swabs.

"Within strategic and business initiatives, we're pleased with the progress of the creation of a respiratory solutions joint venture and remain on track to close late in FY 2016 or early in FY 2017," Forlenza said. "We also continue to make good progress with our CareFusion product registration process. We remain on track with our plans to achieve revenue synergies and continue to expect them to materialize in FY 2017 in our medication and procedural solutions business. ... We remain on track for broad commercial release in early FY 2017."

Diagnostic systems revenues were driven by strong growth in molecular, including BD Max and core blood culture, according to the firm's CFO Christopher Reidy.

"Diagnostic systems had strong growth in Western Europe driven by key installations in the quarter," he said. "Overall strength in core microbiology and cervical cancer related sales also contributed to growth in diagnostic systems. The biosciences business was negatively impacted by a decline in the HIV business and funding delays."

Revenues from the company's US business rose almost 3 percent to $1.74 billion from $1.69 billion a year ago, while revenues from international markets were also up almost 3 percent at $1.46 billion from $1.43 billion in Q3 2015.

BD's net income for the quarter rose to $390 million, or $1.80 per share, from $62 million, or $0.29 per share, a year ago. On an adjusted basis, the company reported Q3 EPS of $2.35 compared to $2.05 in the prior-year period, beating the consensus Wall Street estimate of $2.21 per share.

BD's R&D expenses rose 16 percent year over year to $207 million from $178 million, and SG&A costs declined 3 percent at $728 million from $751 million. "We continue to invest in new products and innovation and expect to incrementally reinvest approximately $25 million of the medical device tax (into R&D) in the fourth quarter," Reidy said on the call.

For FY 2016, the firm expects 21 percent to 21.5 percent revenue growth, a decrease from previous issued guidance of 24.5 to 25 percent growth, due to incremental currency headwinds. Excluding the impact of foreign currency, the firm continues to estimate that as reported, and as adjusted, revenues for FY 2016 will increase 24.5 to 25 percent, including accretion from the acquisition of CareFusion.

The firm maintained its adjusted EPS forecast for FY 2016 at between $8.50 and $8.57. Analysts, on average, expect EPS of $8.55 for the year.

In Thursday morning trade on the New York Stock Exchange, shares of BD dropped around 4 percent to $168.13.