Q3 2026 Becton Dickinson and Co Earnings Call Transcript
Key Points
- Revenue of $5 billion grew 4.4% on an FX-neutral basis, exceeding expectations with broad-based growth across the portfolio.
- Key growth platforms delivered strong performance, including double-digit growth in biologic drug delivery, advanced patient monitoring, PureWick, and advanced tissue regeneration.
- Adjusted EPS of $3.23 increased 4.9% year-over-year, beating expectations and leading to a raised full-year EPS guidance midpoint.
- BD Excellence initiatives drove approximately 8% gross productivity in plants, with service levels above 90% and back orders at record lows.
- Free cash flow improved significantly, up 45% year-to-date to $1.7 billion, supporting capital returns and investment in growth.
- Commercial investments are yielding results, contributing 100-150 basis points to APM growth and driving share gains in Alaris and other platforms.
- Innovation pipeline is robust with new product launches like Liverty TIPS Stent Graft and Elyra Thulium Fiber Laser, expanding into high-growth markets.
- BioPharma Systems grew 5.2% despite vaccine headwinds, with strong GLP-1 momentum and approximately 100 signed agreements for novel and biosimilar programs.
- The company raised its full-year revenue growth outlook to the high end of the low single-digit range, reflecting confidence in continued momentum.
- China exposure is reduced to only 4% of New BD revenue, mitigating future market volatility risks.
- Adjusted operating margin declined 130 basis points year-over-year to 24.9%, impacted by tariffs and increased investments.
- Tariffs had an approximately 110 basis point negative impact on margins, with ongoing uncertainty around trade policies.
- Alaris capital sales faced a difficult prior-year comparison, creating a 200 basis point headwind to revenue growth in fiscal 2027.
- Vaccine demand in China remained weak, though stabilizing, with continued pressure on BioPharma Systems growth.
- China market dynamics continue to pose challenges, particularly in Interventional and Medical Essentials segments.
- The company expects a sequential deceleration in Q4 revenue growth due to Alaris comps, with growth slowing to approximately 2.5%.
- Fiscal 2027 revenue growth is expected to be low single-digit, with Alaris remediation end creating a 200 basis point headwind.
- Oil price volatility and resin costs present potential COGS headwinds, requiring proactive pricing actions to offset.
- The company faces a modest EPS leverage outlook for fiscal 2027, with limited margin expansion expected due to Alaris flow-through and investments.
- Management noted a conservative posture for fiscal 2027, with no formal guidance provided yet, creating uncertainty for investors.
Hello, and welcome to BD's third fiscal quarter 2026 earnings call. At the request of BD, today's call is being recorded and will be available for replay on BD's Investor Relations website, investors.bd.com, or by phone at (800) 688-9445 for domestic calls and area code +1 402-220-1371 for international calls. (Operator Instructions)
I will now turn the call over to Shawn Bevec, Senior Vice President, Investor Relations. Please go ahead.
Good morning, and welcome to BD's earnings call. I'm Shawn Bevec, Senior Vice President of Investor Relations. Thank you for joining us. This call is being made available via audio webcast at bd.com.
Earlier this morning, BD released its results for the third quarter of fiscal 2026. The press release and presentation can be accessed on the IR website at investors.bd.com. Leading today's call are Tom Polen, BD's Chairman, Chief Executive Officer and President; and Vitor Roque, Executive Vice President and Chief Financial Officer.
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