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01/10 16:38
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A reflect a positive sentiment. The company reported strong financial performance, including high single-digit growth in key areas and margin expansion. The guidance was conservative yet confident, with raised EPS expectations and strategic share buybacks. Despite some uncertainties, the overall outlook is optimistic, with a focus on innovation and commercial excellence. The market strategy and shareholder return plans are likely to be well-received, leading to a positive stock price movement.
Q4 Revenue $5.9 billion, increased 7% and 3.9% organic. New BD delivered strong organic growth of 4.9%, accelerating 90 basis points sequentially.
Full Year Revenue $21.8 billion, increased 7.7% and 2.9% organic. New BD grew 3.9% organic.
Adjusted Diluted EPS (Q4) $3.96, representing 9.6% earnings growth including a 2-point impact from tariffs.
Adjusted Diluted EPS (Full Year) $14.40, representing 9.6% earnings growth including a 2-point impact from tariffs.
Shareholder Returns $2.2 billion returned to shareholders, inclusive of a $1 billion share buyback.
Adjusted Gross Margin 54.7% for the full year, up 140 basis points year-over-year.
Adjusted Operating Margin 25% for the full year, up 80 basis points year-over-year.
Free Cash Flow $2.7 billion for fiscal 2025, with a free cash flow conversion of 64%.
Net Leverage 2.8x at the end of fiscal year 2025, progressing towards a target of 2.5x.
Pharm Systems Vaccines Vaccines are approximately 20% of Pharm Systems business. Demand declined rapidly late in Q4, impacting overall performance.
Biosciences Academic and Government Research Research funding remains subdued, but sales in the U.S. and EMEA improved sequentially, led by strong demand for the new FACSDiscover platform.
Diagnostic Solutions Returned to positive growth in Q4 as BD BACTEC utilization continued to recover.
BD Interventional High single-digit growth driven by double-digit growth in PureWick and advanced tissue regeneration.
Advanced Patient Monitoring (APM) Double-digit pro forma growth in the first year of integration, performing well ahead of the deal model.
Pharm Systems Biologics High single-digit growth driven by GLP-1s.
MMS (Medication Management Solutions) Record quarter for Alaris pump installations, including several new competitive wins.
Adjusted Operating Margin Expansion 80 basis points expansion, supported by adjusted gross margin improvement and investments in selling and innovation.
FACSDiscover platform: Strong demand in the U.S. and EMEA, contributing to sequential improvement in Biosciences.
BD Incada AI-enabled platform: Recently launched to unify BD device data into one intelligent ecosystem.
BD Pyxis Pro medication dispensing platform: Planned new product launch.
HemoSphere Stream: Received 510(k) clearance for continuous noninvasive blood pressure monitoring module, with commercial launch planned for 2026.
Sales force expansion: Investing $30 million to expand sales force in high-growth markets, including a 15% increase in PI and APM sales forces.
PureWick at home: Capitalizing on recent VA reimbursement and new surgery innovations launching in Europe.
BD Excellence operating model: Drove strong P&L leverage, with adjusted gross margin up 140 basis points and adjusted operating margin expansion of 80 basis points.
Cost optimization program: Initiated a 2-year $200 million cost-out program to address stranded corporate costs.
Free cash flow: Achieved $2.7 billion in fiscal 2025, with a conversion rate of 64%.
Waters transaction: On track to close by the end of Q1 2026, combining Biosciences and Diagnostic Systems with Waters to unlock significant strategic and financial value.
New BD strategy: Focused on creating a pure-play MedTech company with a deep innovation pipeline and a consumables revenue profile of over 90%.
Macroeconomic Impact: Greater-than-anticipated impact in macro areas, specifically in Pharm Systems vaccines and Biosciences academic and government research, leading to reduced demand.
Vaccine Demand: Rapidly evolving reductions in vaccine demand, particularly in Q4, impacting approximately 20% of the Pharm Systems business.
Research Funding: Subdued research funding in Biosciences, although some sequential improvement was noted in the U.S. and EMEA.
China Market Dynamics: Mid-teens decline expected in China due to government policies, including volume-based procurement, impacting growth by about 100 basis points.
Tariffs: Incremental $185 million or 80 basis points year-over-year headwind from tariffs, impacting adjusted operating margin.
Alaris Capital Installations: FY '26 is the last year of a 3-year remediation commitment, with expected sales above historical run rates but creating a growth headwind of over 100 basis points.
Regulatory Approvals: Pending regulatory approvals and customary closing conditions for the Waters transaction, which could impact timelines and strategic execution.
Revenue Growth: BD expects low single-digit revenue growth for fiscal 2026, with mid-single-digit growth over the long term. The guidance includes headwinds from reduced Alaris capital installations, mid-teens decline in China due to government policies, and a 25% decline in Pharm Systems Vaccines revenue. Excluding these headwinds, the remaining 90% of the portfolio is expected to grow mid-single digits.
Adjusted Operating Margin: The adjusted operating margin is expected to remain consistent with fiscal 2025 at about 25%, despite an incremental $185 million or 80 basis points year-over-year headwind from tariffs. Margin expansion will primarily come from gross margin improvements driven by BD Excellence.
Adjusted Diluted EPS: Initial adjusted diluted EPS guidance is set at $14.75 to $15.05 for fiscal 2026. Excluding the year-over-year tariff headwind, EPS growth at the midpoint is expected to be high single digits.
Capital Allocation Strategy: BD plans to execute a $250 million share buyback in the first quarter of fiscal 2026 and use at least half of the $4 billion in cash proceeds from the Waters transaction for share repurchases, with the balance for debt repayment.
Innovation and Product Launches: BD is investing nearly $50 million in R&D and businesses to fuel future innovation and growth in high-growth markets. Planned product launches include the BD Incada AI-enabled platform, BD Pyxis Pro medication dispensing platform, and HemoSphere Stream for continuous noninvasive blood pressure monitoring, among others.
Cost Optimization: A 2-year $200 million cost-out program has been initiated to address stranded corporate costs, with approximately half expected to be realized in fiscal 2026.
New BD Strategy: Post the Waters transaction, New BD is expected to deliver similar revenue growth and margin profiles as WholeCo, with pro forma adjusted EPS growth over 200 basis points higher than WholeCo.
Dividend Increases: BD announced its 54th consecutive year of dividend increases.
Share Buyback: BD returned $2.2 billion to shareholders, inclusive of a $1 billion share buyback.
Future Share Buyback Plans: BD plans to execute another $250 million share buyback this quarter and use at least half of the $4 billion in cash proceeds from the Waters transaction for share repurchases following the closing.
The earnings call summary and Q&A reflect a positive sentiment. The company reported strong financial performance, including high single-digit growth in key areas and margin expansion. The guidance was conservative yet confident, with raised EPS expectations and strategic share buybacks. Despite some uncertainties, the overall outlook is optimistic, with a focus on innovation and commercial excellence. The market strategy and shareholder return plans are likely to be well-received, leading to a positive stock price movement.
The earnings call highlights strong financial performance with revenue and EPS growth, improved margins, and effective cost management. The company is actively investing in growth through product launches and strategic initiatives, including a significant share buyback plan. While there are some concerns about tariffs and Q4 EPS, the overall sentiment remains positive due to optimistic guidance and strategic investments in innovation and market expansion. The positive momentum in key business segments and capital allocation strategy supports a positive outlook for the stock price.
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