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.
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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.
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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.
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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.
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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.
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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.
Drivers of Future Performance
Looking forward, BD’s outlook is shaped by ongoing investments in manufacturing, commercial and R&D initiatives, as well as actions to offset external headwinds from tariffs and funding trends.
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New Product Launches: Management expects upcoming products such as the FACSDiscover A8 analyzer and CentroVena One catheter to support growth, particularly in the second half of the year as these offerings come to market.
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Tariff and Supply Chain Adjustments: The company is actively shifting supply flows, optimizing supplier locations, and leveraging dual-sourcing to reduce tariff exposure. These actions, combined with U.S. manufacturing investments, are expected to protect margins and sustain profitability.
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Separation of Business Segments: The planned spin-off of Biosciences and Diagnostics is expected to enable greater strategic focus and operational agility. Management sees this as a catalyst for improved growth and value creation in the core medical technology business.
Top Analyst Questions
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Larry Biegelsen (Wells Fargo): Asked about the timing and financial impact of tariffs, particularly regarding annualization into next year. CFO Chris DelOrefice clarified the $0.25 EPS impact is net of mitigation and described ongoing efforts to further limit exposure.
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Robbie Marcus (JPMorgan): Sought details on which business areas were underperforming relative to guidance. DelOrefice explained that most of the revised outlook was due to Life Sciences and China, with persistent research spending pressure and market-specific headwinds.
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Matt Taylor (Jefferies): Inquired about the specific levers BD is using to mitigate tariffs. CEO Tom Polen outlined approaches including inventory repositioning, alternative sourcing, new plant ramp-ups, and selective pricing adjustments if tariffs persist.
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Travis Steed (Bank of America): Questioned the company’s ability to achieve second-half growth acceleration. Management cited easier year-over-year comparisons, new launches, and improving momentum in key businesses as reasons for the expected improvement.
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David Roman (Goldman Sachs): Asked about market intelligence processes and whether BD has the right resources to anticipate demand shifts. Polen described a mix of central and business-level strategy teams and cited past success in anticipating macro trends, while acknowledging ongoing need for improvement.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the pace of recovery in Life Sciences and Diagnostics as research funding and blood culture testing normalize, (2) execution on new product launches and their adoption in key markets, and (3) progress on the planned separation of the Biosciences and Diagnostics businesses. Additionally, we will track the effectiveness of tariff mitigation strategies and the impact of ongoing U.S. manufacturing investments on operational resilience.
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