Becton Dickinson Q3 2026 Earnings Call: Complete Transcript

Becton Dickinson (NYSE: BDX ) held its third-quarter earnings conference call on Thursday. Below is the complete transcript from the call. This content is powered APIs. 4%, driven by growth across key platforms such as biologic drug delivery and advanced patient monitoring.

The company updated its full-year guidance, expecting revenue growth towards the high end of the low single-digit range and raised the midpoint of adjusted EPS guidance. Strategic priorities include enhancing commercial execution, focusing on innovation in high-growth markets, and maintaining operational excellence through cost efficiencies and AI implementation. Key product launches and partnerships, such as the Liberty Tip stent graft and collaborations in the biopharma sector, are expected to drive future growth.

Management emphasized continued investment in growth platforms and productivity improvements as part of their long-term strategy, with a focus on margin expansion and cash flow enhancement. Full Transcript OPERATOR Hello and welcome to BD's third fiscal quarter 2026 earnings call. com, or by phone at 800-688-9445 for domestic calls and area code 140-2220-1371 for international calls. For today's call, all parties have been placed in a listen-only mode until the question-and-answer session.

I will now turn the call over to Sean Bevik, Senior Vice President, Investor Relations. Please go ahead. Sean Bevik, Senior Vice President, Investor Relations Good morning and welcome to BD's earnings call. I'm Sean Bevik, Senior Vice President of Investor Relations.

Thank you for joining us. This call is being made available via audio webcast. Earlier this morning Becton Dickinson released its results for the third quarter of fiscal 2026. 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. Before we get started, I want to remind you that we will be making forward-looking statements. You can read the disclaimer in our earnings release and the disclosures in our SEC filings on our investor relations website. Unless otherwise specified, all comparisons will be made on a year-on-year basis versus the relevant fiscal period.

Revenue percentage changes are on an FX-neutral basis unless otherwise noted. Also, references to adjusted EPS refer to adjusted diluted EPS. Financials discussed here and included in the earnings release and 10-Q are presented on a continuing operations basis. Prior periods have been recast to reflect the spin-off of our Life Sciences business in combination with Waters, which is now accounted for as discontinued operations.

Reconciliations between GAAP and non-GAAP measures are included in the appendices of the earnings release and presentation. With that, I will turn it over to Tom. Tom Polen, Chairman, CEO and President Thank you, Sean, and good morning, everyone. We delivered a strong third quarter with revenue, adjusted operating margin and adjusted EPS all ahead of our expectations.

This was our first full quarter operating as new BD and, more importantly, the quality of this performance reflects our more focused portfolio beginning to demonstrate the growth and earnings potential we designed it to deliver. Performance was broad-based, reflecting commercial momentum across our key growth platforms, strong operational execution and the expanding impact of BD Excellence. 4%, with more than 90% of the portfolio delivering high single-digit growth. Performance continues to be driven by ongoing structural improvements across our key growth platforms where we've been focused on enhancing commercial execution and driving product innovation.

This includes double-digit growth across biologic drug delivery, Advanced Patient Monitoring, PureWIC and advanced tissue regeneration, along with strong performance in peripheral vascular disease and Rowa pharmacy automation. As these platforms continue to scale and growth outpaces the broader portfolio, they're becoming more meaningful drivers of top- and bottom-line performance. S. performance in MDS and specimen management driven by broad underlying utilization as well as share gains.

Growth was partially offset by known dynamics concentrated in less than 10% of our portfolio, primarily the difficult prior-year comparison in Alaris as well as vaccines in China, which all played out as expected. 23 reflecting the increasing revenue contribution from our growth platforms as well as strong operational execution through BD Excellence. Based on our Q3 performance, strong year-to-date execution and confidence in the continued momentum of new BD, we are updating our full-year guidance. We now expect revenue growth toward the high end of our low single-digit range and are raising the midpoint of our adjusted EPS guidance.

Turning to our new BD strategy, we are increasing momentum across three strategic priorities: Compete, Innovate and Deliver. Starting with Compete, we continue advancing commercial excellence with greater customer focus, stronger accountability and faster decision-making. Our goal is simple: it's to convert the strength of BD's portfolio into faster growth, deeper customer partnerships and sustainable share gains. In Q3, this translated into strong outcomes across our growth platforms, and a few to highlight.

Within Connected Care, we're seeing the power of our portfolio with continued share gains in Alaris this quarter and over 200 basis points year to date. APM continued to grow above market supported by expanded adoption of Hemisphere Alta and double-digit growth in both Smart Recovery and legacy consumables. Our incremental commercial investments going into this year are contributing roughly 100 to 150 basis points to APM's growth rate. In Biopharma Systems, we continue to see pipeline momentum with new customer agreements signed across the portfolio.

We're achieving high win rates across the biologics market, including GLP-1s, and we now have approximately 100 agreements signed across novel and biosimilar GLP-1 programs. That demand is being supported by the capacity investments and innovative drug delivery technologies we've built over time. This includes a new collaboration with EMS, one of Brazil's leading pharmaceutical companies, and the launch of a semaglutide therapy utilizing our Vistra injection pen in one of the region's largest healthcare markets.

In Interventional, our incremental commercial investments coming into the year are translating to stronger growth, with PI demonstrating another consecutive quarter of acceleration. In UCC, our incremental investments in the VA channel for PureWIC continue to build momentum and contributed to another quarter of double-digit growth in the platform. Together, these results demonstrate that our Compete strategy is a positive accelerator for new BD. We're winning more consistently, scaling our growth platforms faster and strengthening our position with customers around the world.

Our second priority is Innovate. We're focusing our pipeline in attractive markets where healthcare needs BD most: Connected Care, enabling the shift to lower-cost settings and advancing treatment of specific chronic diseases. Our innovation momentum continued in Q3 with BD Excellence increasing the cadence and the speed of launches. We expanded our vascular portfolio in PI with the early European launch of the differentiated Liberty Tip stent graft.

Entering a market that's seen limited innovation for many years, BD Liberty brings enhanced ease of use, the broadest range of lengths available and compelling clinical trial results. This launch broadens BD's presence in the approximately $2 billion global venous market, which is growing high single digits. We also launched the Alira Thulium fiber laser system, expanding our kidney stone portfolio and presence in endourology. Early customer reception has been strong, with placements accelerating since launch.

5 billion and increasingly driven by disposables, a model that plays to BD's strengths. Finally, we continue to expand our noninvasive monitoring portfolio in APM with the launch of the Acumen IQ Finger Cuff and Smart Pressure Controller, which pairs with our Hemisphere Alta platform and brings enhanced usability and advanced AI features to customers. This advancement in our noninvasive portfolio allows us to continue expanding our reach to underserved OR and ICU patients. S.

and Europe. We're investing behind markets with attractive growth, strong clinical demand and clear competitive advantages. Collectively, these launches demonstrate a more focused innovation model that's strengthening the long-term growth profile of the company. Our third priority, Deliver, is about operational excellence at scale, improving quality, service, productivity, margin and cash flow.

Through BD Excellence, we've built one of the most resilient supply chains in our industry with back orders at record lows and service levels at record highs. Our scale combined with BD Excellence embedded across our manufacturing network is a growing competitive advantage that translates into efficiency, resiliency and consistency for our customers. Again this quarter we delivered approximately 8% gross productivity in our plants with service levels above 90%. That progress was driven by plant consolidations, raw material savings, waste reduction and higher efficiencies on our critical lines and processes.

We've also begun investing in the deployment of a standardized digital platform designed to run AI across BD's end-to-end supply chain, and we believe this represents another meaningful runway for productivity and service improvement over time. Turning to capital allocation, our disciplined framework remains unchanged and our improving free cash flow is giving us more firepower to execute. We remain committed to returning capital to shareholders, including through share repurchases, investing selectively in high-growth tuck-in M&A and driving towards our 90% free cash flow conversion target over time.

With that, I'll turn it over to Vitor to provide more detail on our financial performance and updated guidance. Vitor Roque, Executive Vice President, Chief Financial Officer Thanks, Tom, and good morning, everyone. 4%, reflecting broad-based growth across the portfolio and disciplined execution through a dynamic environment. , partially offset by a difficult prior-year comparison in Alaris and continued pressure in vaccines in China, all consistent with our expectations.

2% in MDS. S. performance benefited from share gains across the Vascular Access Management portfolio and utilization recovery related to last year's fluid shortage. This was partially offset by continued pressure in China in specimen management.

We delivered high single-digit growth driven by share gains across the BD Vacutainer portfolio, improved supply, and incremental demand as customers work through competitor backorders. 4%, led by double-digit growth in Advanced Patient Monitoring on strength in consumables. MMS grew low single digits, led by double-digit growth in dispensing and continued strength in ROWA pharmacy automation. We also saw a strong infusion set performance due to higher utilization versus last year's fluid supply disruption and pull-through from Alaris share gains.

This was partially offset by a difficult prior-year comparison in Alaris capital. 2%, driven by continued double-digit growth in biologics and led by GLP-1s. This was partially offset by lower demand for vaccine products. Excluding the impact of vaccines, Biopharma Systems grew in the mid-teens.

5% with solid mid-single-digit growth across the segment. In PI, growth was led by oncology and peripheral vascular disease, reflecting strong commercial execution and new product launches, partially offset by China market dynamics. UCC was led by continued double-digit growth in pyrrhic surgery. Performance was driven by double-digit growth in infection prevention and advanced tissue regeneration.

9%, down 100 and 130 basis points respectively versus the prior year. Margins benefited from productivity gains through BD Excellence and favorable mix. These benefits were offset by approximately 110 basis points of tariff impact. We also continue to invest in selling and R&D to support our long-term growth strategy.

9% and ahead of our expectations, reflecting our strong revenue performance. 7 billion, an increase of 45% versus the prior year. This reflects improved working capital and lower non-operating cash items, including Alaris remediation outlays. 9 billion in dividends.

5 times long-term net leverage target. Moving to our updated fiscal ’26 guidance, we now anticipate revenue growth to be toward the high end of our low single-digit FX-neutral range. Based on current spot rates, currency is now estimated to be a tailwind to revenue of about 100 basis points. Moving down to the P&L, we continue to expect adjusted operating margin of approximately 25%, inclusive of the impact of tariffs.

Our adjusted effective tax rate is expected to remain between 16% and 17%. 72. With that, I'll turn it back to Tom. Tom Polen, Chairman, CEO and President Thanks, Vitor.

Before we open the call for questions, I want to recognize Mike Garrison, EVP and President of the Medical Essentials and Biopharma Systems segments, who recently announced his intention to retire after more than 20 years with BD. Mike has been an impactful leader and trusted partner, and we thank him for his many contributions to the company and wish him all the best in his retirement as we continue to lead BD into its next chapter. I also want to welcome Peter Menziuso, who joined BD on June 1 as EVP and President of BD Interventional.

Peter brings more than 30 years of global healthcare leadership, and his strong commercial and operational mindset is well aligned with the operating system we're scaling across new BD. I also want to recognize our associates. Our results reflect what we can deliver as a more focused med tech company. Operationalizing our new BD strategy following the Life Sciences separation has taken a tremendous amount of work across the organization, and all of this happens because of the dedication and execution by our associates.

And I want to thank them for their many contributions. With that, let's start the Q&A session. Operator, can you please assemble the queue? OPERATOR Thank you.

At this time, if you have a question, please press star one on your touchtone telephone. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. In order to allow for broad participation, please limit yourself to only one question. Lastly, to provide optimal sound quality, please pick up your handset while you ask your question.

We'll take our first question from Travis Steed with Bank of America. Travis Steed, Analyst at Bank of America Hey, everybody, thanks, and congrats on a really, really nice quarter here. I guess I wanted to ask about the strength in the quarter. There was a lot of momentum in a lot of the businesses here, and I think some of the 90% of the business that usually grows mid-single digits was above trend.

I don't know if there was anything one-time that you'd call out and kind of how you thought about the revenue guidance and being able to move that up to the high end of the low single-digit range, and how much of this kind of carries into ’27. Tom Polen, Chairman, CEO and President Hey, Travis, good morning, and thank you. Great to connect. We're really pleased with growth in the quarter, as you said.

And I think it's really exemplified by the momentum that you're seeing in our growth platforms. You know, those are areas that we've been very actively building over the last five years. I think you're really seeing them pay off and exemplify the power of the new BD. This is our first quarter as a focused med tech company.

Those growth platforms—we had actually four of them growing double digits, the rest all growing high single digits in the quarter.