Healthcare giant Becton Dickinson & Co. (NYSE:BDX) posted some ups and downs for its 2nd quarter of 2013, exceeding analysts’ expectations on earnings but taking some hits with lowered medical device sales and a nearly 4% cut in earnings growth due to the medical device tax.
Excluding special charges and the impact of the medtech tax, Becton reported adjusted per-share earnings of $1.44, blowing away analysts’ consensus estimate of $1.35. The medical device tax alone was responsible for cutting nearly 4% from the company’s revenue growth, president, chairman & CEO Vincent Forlenza said in a conference call with investors.
"Fully diluted EPS came in at $1.39, growing at 7.6% over the prior year," Forlenza said. "Excluding the impact of the medical device tax, which went into effect in January of this year, adjusted earnings per share grew 11.5% in the quarter."
"The medical device tax impacted SG&A by about $14 million," acting CFO Suketu Upadhyay added. "This had a negative effect of about 4 percentage points on our operating income growth in the quarter."
In total, Becton reported $2 billion in revenues in the 3 months ended March 31, 2013, a 3.7% increase from revenues of $1.93 billion reported for the same period last year. Profits dropped 5.3% to $275.6 million, or $1.39 per diluted share, compared with profits of $291 million, or $1.31 per share, during Q2 2012. The slide was due in part to a $483 million decrease due to discontinued operations, according to the SEC filing.
The healthcare company posted a 1.4% slide in sales for its BD Medical division, which includes medical surgical systems, which slid 0.4%, and diabetes care, which slid 0.7% during the quarter. Diabetes care saw a 0.9% uptick in U.S. sales, but a 1.5% drop in international sales.
Becton also entered the pharmaceutical manufacturing arena during the quarter with its BD Simplist line of pre-filled generic injectables, the company noted. Becton plans to launch with 20 to 30 drugs over the next few years. Last month the company announced that it plans before the end of this year to increase its North Carolina workforce by about 25 employees in efforts to keep up with projected demand for the pre-filled syringes.
The Franklin Lakes, N.J.-based healthcare company completed its closed-doors acquisition of pharmaceutical management systems maker Cato Software Solutions during its 2nd quarter. Cato has a suite of medication safety solutions that aim to automate drug delivery documentation and prevent potential medication errors in the pharmacy and in clinical settings. BD has said it hopes to use the merger to better position itself in the pharmacy market. The financial terms of the acquisition were not disclosed.
"We think this is going to be a big growth-driver for BD, and we think it’s the future of the injectables marketplace," Mark Sebree, president of the BD’s wholly owned subsidiary BD Rx, said at the time.
The healthcare giant raised its guidance for the year, now expecting revenue growth of between 4.5-5% and diluted earnings per share in the range of $5.72-$5.75, a projected increase of 3¢ from previous guidance and a 6.5-7% boost over last year, according to the company report.
Excluding the impact of the medical device tax, Becton expects per-share earnings to grow 11-11.5%.
"We expect the unfavorable impact of the medical device tax to be about $45 million for the fiscal year," according to Upadhyay. "This represents a 300-basis-point impact to operating income and a 250-basis-point impact to EPS."
The new earnings report stirred some affection from Wall Street, where BDX shares were up 3.1% to $96.47 as of about 2 p.m. today.
