Becton, Dickinson and Company BDX, popularly known as BD, delivered adjusted earnings per share (EPS) of $2.86 for the second quarter of fiscal 2023, up 2.9% year over year. The figure surpassed the Zacks Consensus Estimate by 4%.
The adjustments include expenses related to purchase accounting adjustments and integration costs, among others.
We had projected the fiscal second-quarter adjusted EPS to be $2.73.
GAAP EPS for the quarter was $1.53, reflecting an improvement of 19.5% from the year-earlier figure.
Revenues in Detail
BD registered revenues of $4.82 billion in the fiscal second quarter, up 1.5% year over year. The figure surpassed the Zacks Consensus Estimate by 3.5%.
The fiscal second-quarter revenues compare to our estimate of $4.64 billion.
At constant exchange rate (CER), revenues climbed 4.1%.
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 $4.81 billion in the fiscal second quarter, up 6% year over year on a reported basis and 8.7% at CER.
Base organic revenue growth for the fiscal second quarter was 4.3% on a reported basis and 7% at CER.
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 $2.36 billion, up 9.6% 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 second-quarter segmental revenues of $2.19 billion.
Worldwide revenues in the BD Life Sciences segment totaled $1.28 billion, down 14.2% year over year on a reported basis and down 11.5% 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 growth in Microbiology, aided by the adoption of BD Kiestra IdentifA and Total Modular Track solutions, and Specimen Management, and continued double-digit growth from Molecular In-Vitro Diagnostic assays leveraging the incremental BD Max installed base. The Biosciences business unit’s continued double-digit growth in Research Reagents enabled by BD’s BD Horizon dyes and strong performance in Instruments (driven by continued demand for BD FACSymphony A1/A5 SE research analyzers and improved BD FACSLyric product availability for BD’s clinical customers) also aided the BD Life Sciences segment.
The fiscal second-quarter revenue compares to our estimate of $1.33 billion.
BD Interventional segment generated worldwide revenues of $1.19 billion, up 6.8% from the year-ago quarter on a reported basis and 9.3% at CER. This was owing to strong performance across the segment.
The fiscal second-quarter revenue compares to our estimate of $1.11 billion.
In the second quarter of fiscal 2023, revenues in the United States improved 2.4% to $2.73 billion.
The fiscal second-quarter revenue compares to our estimate of $2.66 billion.
International revenues grossed $2.09 billion, up 0.4% from the year-ago quarter on a reported basis and 6.3% at CER.
The fiscal second-quarter revenue compares to our estimate of $1.98 billion.
Becton, Dickinson and Company Price, Consensus and EPS Surprise
Becton, Dickinson and Company price-consensus-eps-surprise-chart | Becton, Dickinson and Company Quote
In the quarter under review, BD’s gross profit rose 5.8% to $2.24 billion. Gross margin expanded 188 basis points (bps) to 46.4%.
We had projected 45.9% of gross margin for the fiscal second quarter.
Selling and administrative expenses increased 1.1% to $1.21 billion. Research and development expenses increased 3.1% year over year to $337 million. Adjusted operating expenses of $1.54 billion increased 1.5% year over year.
Adjusted operating profit totaled $693 million, reflecting a 16.7% uptick from the prior-year quarter. The adjusted operating margin in the fiscal second quarter expanded 187 bps to 14.4%.
BD exited the second quarter of fiscal 2023 with cash and cash equivalents and short-term investments of $1.99 billion compared with $612 million at the fiscal first-quarter end. Total debt (including current debt obligations) at the end of second-quarter fiscal 2023 was $18.22 billion compared with $16.46 billion at the end of the fiscal first quarter.
Cumulative net cash flow from continuing operating activities at the end of second-quarter fiscal 2023 was $584 million compared with $820 million a year ago.
Meanwhile, BD has a consistent dividend-paying history, with its five-year annualized dividend growth being 4.18%.
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 $19.2 billion to $19.3 billion, narrowed from the earlier-provided projections of $19.1 billion-$19.3 billion. The Zacks Consensus Estimate for revenues is pegged at $19.14 billion.
The revenue projections for fiscal 2023 now include base-business revenue growth at CER of 6.5-7%, up from the earlier expectations of an uptick of 5.75-6.75%.
The outlook now estimates around $50 million in COVID-only diagnostic testing revenues compared with the earlier projections of $50 million-$100 million.
For the full fiscal year, adjusted EPS is now anticipated to be $12.10-$12.32, narrowed from the earlier estimate of $12.07-$12.32. The Zacks Consensus Estimate for the same is pegged at $12.19.
BD exited the second 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. The expansion of both margins also bodes well.
In March, BD received the FDA’s 510(k) clearance for the BD Vaginal Panel on the BD COR System. In February, BD received the FDA’s approval for the BD Onclarity HPV Assay to be used with the ThinPrep Pap Test.
In February, BD unveiled a new instrument for single-cell multiomics analysis — BD Rhapsody HT Xpress System.
These developments, among a few others, also raise our optimism.
However, the year-over-year decline in BD Life Sciences revenues was 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.
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 Edwards Lifesciences Corporation EW, Intuitive Surgical, Inc. ISRG and Merit Medical Systems, Inc. MMSI.
Edwards Lifesciences, carrying a Zacks Rank #2 (Buy), reported first-quarter 2023 adjusted EPS of 62 cents, beating the Zacks Consensus Estimate by 1.6%. Revenues of $1.46 billion outpaced the consensus mark by 4.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Edwards Lifesciences has a long-term estimated growth rate of 6.9%. EW’s earnings surpassed estimates in two of the trailing four quarters, missed the same in one and broke even in the other, the average being 1.2%.
Intuitive Surgical, having a Zacks Rank #2, reported first-quarter 2023 adjusted EPS of $1.23, which beat the Zacks Consensus Estimate by 3.4%. Revenues of $1.70 billion outpaced the consensus mark by 6.9%.
Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 1.9%.
Merit Medical reported first-quarter 2023 adjusted EPS of 64 cents, beating the Zacks Consensus Estimate by 16.4%. Revenues of $297.6 million surpassed the Zacks Consensus Estimate by 5.9%. It currently carries a Zacks Rank #2.
Merit Medical has a long-term estimated growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.
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