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Medical technology company Becton, Dickinson and Company (NYSE:BDX) missed Wall Street’s revenue expectations in Q1 CY2025 as sales rose 4.5% year on year to $5.27 billion. On the other hand, the company’s outlook for the full year was close to analysts’ estimates with revenue guided to $21.85 billion at the midpoint. Its non-GAAP profit of $3.35 per share was 2.1% above analysts’ consensus estimates.

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BD (BDX) Q1 CY2025 Highlights:

• Revenue: $5.27 billion vs analyst estimates of $5.35 billion (4.5% year-on-year growth, 1.5% miss)

• Adjusted EPS: $3.35 vs analyst estimates of $3.28 (2.1% beat)

• Adjusted EBITDA: $1.5 billion vs analyst estimates of $1.54 billion (28.5% margin, 2.4% miss)

• Adjusted EPS guidance for the full year is $14.20 at the midpoint, missing analyst estimates by 1.2%

• Operating Margin: 10.4%, down from 14.5% in the same quarter last year

• Free Cash Flow Margin: 0.7%, down from 7.6% in the same quarter last year

• Constant Currency Revenue rose 6% year on year (4.7% in the same quarter last year)

• Market Capitalization: $50.25 billion

StockStory’s Take

BD’s first quarter results reflected softer top-line performance, which management attributed mainly to reduced research funding in its Life Sciences segment and slower recovery in diagnostic testing volumes. CEO Tom Polen explained that changes in U.S. government policy led to a sharper decline in research instrument demand, while the diagnostics unit continued to face slower-than-expected normalization in blood culture testing. He also acknowledged that this quarter’s revenue growth did not match the mid-single-digit pace the company has delivered in recent years.

Looking ahead, management expects organic growth to improve in the second half as new product launches and a recovery in key businesses take hold. Polen noted that investments in U.S. manufacturing, ongoing supply chain optimization, and the planned separation of the Biosciences and Diagnostics businesses are intended to support future growth and margin stability. He cautioned, however, that macroeconomic factors such as tariffs and research spending trends remain significant variables for the remainder of the year.

Key Insights from Management’s Remarks

BD management cited a combination of external market pressures and internal actions as key influences on the latest quarter’s results, noting several operational and strategic developments across its portfolio.

• Life Sciences Funding Impact: Declines in government and research grant funding—particularly in the U.S.—drove lower-than-expected sales in the Biosciences segment, with CEO Tom Polen noting a "freeze on capital purchases for research use" following policy changes.

• Diagnostics Volume Recovery: The Diagnostics business, specifically blood culture testing, continued to see slower-than-anticipated normalization as customers remained cautious after last year’s supply disruptions. Management is working with customers to encourage a return to typical testing levels.

• Supply Chain and Tariff Mitigation: BD’s advanced supply chain and U.S.-centric manufacturing footprint helped limit the near-term impact of tariffs, with less than 1% of U.S. revenue sourced from China. The company plans $2.5 billion in U.S. manufacturing investments over five years to further mitigate risk and ensure supply resilience.

• Margin Expansion via BD Excellence: Gross margin expanded for the fourth consecutive quarter, attributed to BD Excellence—an internal productivity and process improvement initiative. Management highlighted nearly tripling the number of Kaizen events (structured efficiency workshops) year-over-year, which has begun to extend into R&D and commercial operations.

• Progress on Business Separation: The planned separation of the Biosciences and Diagnostics units remains on track, with strong external interest and further details expected in the summer. Management believes this move will allow BD to focus as a pure-play medical technology company.