Becton, Dickinson and Company (BDX) announced third-quarter adjusted earnings per share of $1.29, beating the Zacks Consensus Estimate of $1.25 while falling short of the year-ago figure of $1.30.
Becton Dickinson had revenues of $1.88 billion, up 3.2% year over year (or 3.9% in constant currency), ahead of expectations at $1.86 billion.
Domestic sales amounted to $830 million, up 3.0% year over year. Ex-U.S., revenues were $1.05 billion, up 3.3% (or 4.6% in constant currency). Becton Dickinson experienced higher growth in emerging markets, which was offset by the slowdown in European markets.
Segment-wise Results
In BD Medical, global revenues were $993 million, up 2.5% year over year (or 2.7% in constant currency). Higher revenues from Diabetes Care products were partially offset by lower revenues from Pharmaceutical Systems on account of timing of orders. The year-over-year comparison was negatively affected by about 100 basis points (bps) due to the H1N1 flu pandemic in the prior year.
In BD Diagnostics, global sales were $576 million, up 1.7% (or 2% in constant currency). The lackluster performance was due to the weak U.S. economy, which led to a decline in physician office visits. Also, economic problems in the EU led to a drop in diagnostic volumes. The year-over-year comparison was adversely affected by 160 bps due to the H1N1 flu pandemic in the prior year.
In BD Biosciences, global sales were $309 million, up 8.4% (or 11.6% in constant currency). The favorable outcome was driven by cell analysis instrument, as well as reagent sales in the U.S., and supplemental funding in Japan, along with a favorable base effect.
Becton Dickinson reported gross margin of 51.8% in the third quarter, compared with 52.8% in the year-ago quarter. It had an operating margin of 23.4% versus 23.7% in the prior-year quarter.
Other – Sale of Assets
Becton Dickinson decided in May 2010 to sell off its Ophthalmic Systems unit and certain operations of its Medical Surgical Systems unit, such as surgical blades, critical care and extended dwell catheter products. These businesses are expected to derive sales of $200 million in fiscal 2010. The units were not considered as discontinued operations in the third-quarter results. The company expects to record a gain on their sale in the fourth quarter results.
Outlook
Becton Dickinson forecasts revenue growth of 5% year over year in fiscal 2010, which represents a drop of 100 bps from its earlier guidance. Revenue is now expected to increase in the range of 5% to 6%, in constant currency, lower than the earlier guidance of 6% growth, on account of lower lab testing and reduced demand from hospitals.
Becton Dickinson projects earnings per share from continuing operations to grow about 3% from $4.92 in fiscal 2009. Excluding a charge of 4 cents on account of healthcare reform and Medicare Part D reimbursements, the company expects adjusted earnings per share to be up 3% to 4% in reported terms, or about 9% in constant currency, which is in accordance with the previous projection.
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