Becton, Dickinson and Company Q3 FY2025 earnings call

• Sequentially improved growth across the company, accelerated commercial initiatives, and increased organic growth trajectory through market headwinds. - Continued strong execution of BD Excellence to drive gross margin upside, with Q3 adjusted gross margin 54.8% and adjusted operating margin 25.8%. - Announced definitive agreement to separate Biosciences and Diagnostics business with Waters, expected to unlock value for shareholders. - Innovation pipeline had great launches: FACSDiscover A8 successful launch, BD Libertas Wearable Injector in clinical trial, BD COR platform for HPV testing with at-home self-collection kit submitted to FDA. - BD Excellence operating system continued to drive margin execution, with OTIF reaching 5-year highs and manufacturing waste reduced by over 35%.

In Q3, revenue grew 8.5% to $5.5 billion or 3% organic. New BD organic growth was 4%. BD Medical: Pharm Systems had 4.8% growth with double-digit biologics growth; MMS mid-single-digit growth; MDS low single digits; APM delivered 13% pro forma growth. Interventional segment: Nearly 7% growth, UCC 12% growth. Life Sciences segment: Biosciences and Diagnostic Solutions decreased low single digits but showed 250 basis points sequential improvement. BDB reagents and service grew mid-single digits excluding legacy platform exit; DS had BACTEC utilization increase. Future Connected Care segment: Pyxis Pro launched, APM investing in connectivity, MDS CentroVena One cleared.

• Reaffirmed currency-neutral revenue guidance: total revenue growth 7.8%-8.3%, organic revenue growth 3%-3.5%. - Raised adjusted EPS guidance to $14.30-$14.45, midpoint up $0.18. - Anticipated FY26 tariff impact of around $275 million, a notable improvement from initial expectations. - Expect year-over-year organic growth to improve sequentially in Q4, driven by APM's organic growth, BACTEC momentum, and favorable DS comparison.

• Market headwinds in China, subsegments of Pharm Systems (e.g., generic anticoagulants, vaccines), and fluid shortage/volume-based procurement pressure in China. - Tariff uncertainties and their impact on margins, though active mitigation efforts are being made.

Q: On the RemainCo side, plus 4% growth and midterm outlook.

A: Tom Polen noted strong performance across various segments, continued strength in UCC, Pharm Systems recovery, and sequential improvements in Life Sciences, expecting trends to continue.

Q: Implied operating margin guide for Q4.

A: Chris DelOrefice said Q4 operating margin will have a slight sequential step down due to investment timing, with BD Excellence offsetting tariffs.

Q: FY26 margins, EPS growth, post-separation margin outlook.

A: Chris DelOrefice discussed post-separation margin outlook with TSA and share buybacks providing EPS accretion, and FY26 tariff impact better than prior expectations.

Q: RemainCo growth outlook and Q4 EPS.

A: Tom Polen talked about continued investment in innovation and commercial execution, and Chris DelOrefice said Q4 EPS change is driven by investment profile.

Q: Urology trends and Q4 SG&A investment.

A: Tom Polen discussed urology growth from PureWick expansion and new product launches, and Chris DelOrefice said Q4 SG&A investment is part of strategy to drive growth.