Personal Finance
BDX

Becton, Dickinson Sees Synergies From Bard With More to Come

Doctor with hand on shoulder of a patient

Just like last quarter , the year-over-year changes in Becton, Dickinson 's (NYSE: BDX) third fiscal quarter looked outstanding, but that's only because of the addition of revenue from C.R. Bard. Fortunately, management of the medical supply company was nice enough to provide comparable results as if the company owned Bard in the year-ago quarter, which showed BD continued its slow but steady approach while taking advantage of the cost savings from the acquisition.

Becton, Dickinson results: The raw numbers

Metric Q3 2018 Q3 2017 Year-Over-Year Change
Revenue $4.28 billion $3.04 billion 41%
Income from operations $513 million ($233 million) N/A
Earnings per share (EPS) $2.03 ($0.75) N/A
Adjusted EPS $2.91 $2.46 18%

Data source: Becton, Dickinson.

What happened with Becton, Dickinson this quarter?

  • On a comparable basis and ignoring changes in currency exchange rates, revenue grew 5.5%.
  • Year-over-year growth for the medical segment was slightly better than the whole company, at 5.7% on a comparable, currency-neutral basis. The company lapped the 2017 changes made to the U.S. dispensing business model for its medication management solutions (MMS) business, which were hampering growth of the segment. With that out of the way, MMS grew 8.3% year over year.
  • The life sciences segment grew 5.6% on a comparable, currency-neutral basis, with biosciences revenue from research reagents and advanced bioprocessing as well as new cell sorting machines helping drive sales of biosciences by 6.8% year over year.
  • The interventional segment was the laggard of the group, but only barely, with sales up 5.1% on a comparable, currency-neutral basis. Drug-coated balloons and growth of biopsy products overseas, especially in China, helped drive sales growth.
  • In July, BD bought TVA Medical, a privately held company developing minimally invasive vascular products for patients with end-stage renal disease.
  • The company continues to pay down debt from the Bard acquisition, helping to get its gross leverage ratio to 4.2 on the way to its goal of 3.
Doctor with hand on shoulder of a patient

Image source: Getty Images.

What management had to say

Chairman and CEO Vincent Forlenza noted that most of the synergies between BD and Bard have come from cost savings, but there's more to come:

So, I would say that from a revenue synergy standpoint, we're really in very early days. We're only two quarters into this, just training folks on that, so you're not seeing the revenue synergy piece of that yet. That's to come.

Forlenza also highlighted the potential for other smaller acquisitions like TVA Medical:

We are focused on debt reduction and meeting our commitment to get down to 3x, and we're on track so far, so we're feeling good about that. But, as we did our modeling and our planning, we did make allowance for tuck-in acquisitions. Just as we did under CareFusion, we did a few of them. We tightened the screening and said they have to be must-dos strategically. And, of course, we always have rigid criteria. But, you should expect that we will continue to do plug-in acquisitions, but also, at the same time, meet those deleveraging goals, and that's on track so far.

Looking forward

Management updated its 2018 fiscal year guidance and now expects revenue to increase by more than 5.5% on a comparable, currency-neutral basis, which is up from previous guidance of growth in the 5% to 5.5% range. Management also tightened its adjusted EPS guidance, upping the lower end of the range by $0.05 and now expects adjusted EPS to fall between $10.95 and $11.05.

Looking further ahead, management needs to keep working on the $300 million in annualized cost synergies it thinks BD can get from the Bard acquisition and start using its expanded sales force to drive revenue growth for products from both legacy companies.

10 stocks we like better than Becton, Dickinson

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Becton, Dickinson wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 6, 2018

Brian Orelli has no position in any of the stocks mentioned. The Motley Fool recommends Becton, Dickinson. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

BDX EPS MMS

Other Topics

Stocks

Latest Personal Finance Videos

    #TradeTalks: The Changing E-Commerce Landscape

    e-Commerce Consultant James Thomson joins Jill Malandrino on Nasdaq #TradeTalks to discuss the changing e-commerce landscape, what consumers should prepare for as we head into shopping season and why you shouldn’t do last minute shipping.

    2 days ago

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More