Q4 insights: Becton Dickinson, one of the top 10 medtech firms by revenue, is grappling with many of the same economic challenges as its peers including rising inflation and increased supply and transportation costs.
“Like every other company, we faced tremendous inflationary pressures,” CEO Tom Polen said in an earnings call on Thursday, adding that the Franklin Lakes, NJ-based company created an inflation task force and prioritized internal cost-reduction programs.
CFO Christopher DelOrefice said the company is seeing the greatest cost pressure in raw materials, particularly for packaging.
Keybanc Capital Markets Analyst Matthew Mishan wrote in a note that revenue at BD’s medical segment, which includes medication delivery and medication management solutions, outperformed growth estimates in the fourth quarter ended Sept. 30, while sales in its interventional surgery business came in below expectations, .
Revenue at medical segment increased 5.8% from a year earlier, and includes pharmacy automation business Parata, which BD acquired in July for $1.5 billion. BD’s interventional sales climbed 2.4%, “likely reflecting the softer procedural volume backdrop in July and August,” Mishan wrote.
COVID testing declines: COVID-19 testing sales totaled $37 million in the quarter, beating J.P. Morgan analysts’ estimates. Still, that compares to $316 million in revenue a year earlier.
COVID-19 testing aside, the business was helped by a larger install base of its BD Max instruments, better specimen management product availability and incremental clinical microbiology instrument installation, J.P. Morgan Analyst Robbie Marcus wrote in a research note.
BD’s life sciences segment, which includes diagnostics, posted a 16% drop in revenue compared to the year-ago period.
Alaris update: Becton Dickinson filed for 510(k) clearance in 2021 for changes made to its Alaris infusion pump, after the device faced multiple software and hardware recalls. The company did not say when it expects the Food and Drug Administration to make a decision, but Polen said “we are confident that we will get clearance.”
“We also want to continue to be prudent on Alaris and thoughtful about the process with the FDA,” the CEO said. “That's why we're not predicting timelines, given how inherently complex those submissions are.”
Forecast: BD forecasts 2023 fiscal year revenue between $18.6 billion and $18.8 billion, including about $125 million to $175 million from COVID-19 testing. That would represent overall sales growth of 5.25% to 6.25%.
That also includes an $850 million cut in revenue from foreign-currency rates, an amount that has almost doubled since BD’s August earnings call, DelOrefice said.
Shares in Becton Dickinson rose 2.2% to $223.10 in mid-morning trading on Thursday.