Becton, Dickinson and Company (NYSE:BDX) reported first fiscal quarter 2026 results that management said were stronger than expected, while also highlighting the completion of its previously announced combination of its Life Sciences business with Waters through a Reverse Morris Trust transaction.
Quarterly results came in ahead of expectations
BD posted total revenue of $5.3 billion, up 0.4% year over year on an FX-neutral basis. Management said “new BD” grew 2.5%, with broad-based growth across most of the portfolio, partially offset by headwinds in areas management characterized as about 10% of the business, including Alaris, vaccines in China, and China market dynamics.
On profitability, BD reported an adjusted gross margin of 53.4% and adjusted EPS of $2.91, both ahead of management’s expectations. Interim CFO Vitor Roque said adjusted EPS was down 15.2% year over year, driven primarily by tariffs.
Segment performance: growth led by Connected Care and Interventional
Roque provided detail on performance across the company’s recast segment structure, which began October 1 and includes Medical Essentials, Connected Care, Biopharma Systems, Interventional, and Life Sciences (with the Life Sciences business expected to be treated as discontinued operations for the full year following the Waters transaction close).
- Medical Essentials: Management said performance reflected expected order timing dynamics and volume-based procurement in China, partially offset by continued U.S. share gains in vascular access management. In specimen management, solid U.S. BD Vacutainer growth was offset by China dynamics and order timing.
- Connected Care: Delivered mid-single-digit growth, led by APM, which grew high single digits on strong volume. In medication management solutions (MMS), growth was led by pharmacy automation, with double-digit growth in the Rowa platform. In infusion, growth was driven by sets, which increased due to higher utilization following last year’s fluid supply shortage. Alaris was “slightly ahead” of expectations despite an expected decline due to a tough prior-year comparison.
- Biopharma Systems: Grew low single digits, with continued double-digit growth in biologics, led by GLP-1s, partially offset by lower vaccine demand that management said was in line with expectations.
- Interventional: Delivered mid-single-digit growth, including high single-digit growth in urinary continence care (UCC) driven by double-digit PureWick growth. Surgery grew mid-single digits, led by advanced tissue regeneration and infection prevention. Pharmaceutical Interventions (PI) grew low single digits, with strength in peripheral vascular disease and oncology, partially offset by China dynamics.
- Life Sciences: Declined in the quarter, with headwinds including U.S. point-of-care pressures, a difficult comparison, China dynamics, lower research funding, and a tough compare related to prior-year licensing revenue.
Waters transaction closes and BD outlines capital deployment
Polen said the Waters transaction was expected to close “later this morning,” and later confirmed on the call that it had officially closed. Management described the deal as a milestone in BD’s pivot to a more focused “pure-play med tech” profile.
As part of the transaction, BD expects to receive a $4 billion cash distribution. Polen said BD plans to deploy:
- $2 billion toward share repurchases through an accelerated share repurchase (ASR) program
- $2 billion toward debt paydown
Roque said the company ended the quarter with net leverage of 2.9x and reiterated a long-term target of 2.5x.
BD also reported $548 million of free cash flow in the quarter, with free cash flow conversion improving to 66% from 59% a year ago, driven by working capital discipline and capital efficiency. The company returned approximately $550 million to shareholders in the quarter through dividends and $250 million in share buybacks.
Tariffs and investment spending weighed on margins
While results exceeded expectations, Roque said profitability comparisons were pressured by tariffs. Adjusted gross margin declined 140 basis points year over year, driven by approximately 170 basis points of tariffs, partially offset by productivity improvements under BD Excellence. Adjusted operating margin was 21.2%, down 240 basis points, reflecting tariffs and increased commercial investments in growth areas.
Management highlighted progress on operational initiatives, including an 8% productivity improvement in the quarter and progress against a $200 million cost-out program announced previously. Polen said BD is already executing actions representing $150 million of that target.
Polen also emphasized manufacturing network simplification, saying BD has reduced its manufacturing footprint “by nearly half” to under 50 global sites, down from “a little over 90” several years ago, aided by both site closures and the Life Sciences separation.
Guidance maintained; management expects steadier phasing
For fiscal 2026, BD maintained its outlook for “new BD” on a continuing operations basis, reflecting the closing of the Waters transaction and treating the separated business as discontinued operations for the full year.
Key guidance items included:
- Revenue: low single-digit growth for fiscal 2026; currency expected to be a ~120 basis point tailwind based on current spot rates
- Adjusted operating margin: about 25%, inclusive of tariffs
- Adjusted EPS: $12.35 to $12.65, with ~6% growth at the midpoint and an estimated 370 basis point tariff impact
- Q2 outlook: revenue growth of approximately 2% and adjusted EPS of $2.72 to $2.82
In response to questions about quarterly cadence, management said Q2 reflects modest timing benefits that favored Q1 in Biopharma Systems and MMS, but emphasized there is “no ramp” expected from the first half to the second half of the year.
Polen said headwinds in China, vaccines, and Alaris are playing out in line with expectations. He reiterated BD’s prior assumption that China’s volume-based procurement (VBP) would cover about 80% of BD’s China portfolio by the end of 2026 and said the combined headwinds (China, vaccines, and Alaris) were expected to represent about 250 basis points of impact for the year, consistent with earlier guidance.
On Alaris specifically, management highlighted competitive momentum, noting the “strongest quarter of competitive wins since the relaunch,” category share gains of about 100 basis points during the quarter, and an overall share position “nearing 60%.”
Management also discussed GLP-1 drug delivery, stating it currently represents about 2% of BD revenue and that BD has more than 80 novel and biosimilar GLP-1 molecules contracted in its devices. Polen said BD still expects the GLP-1 franchise to be on track toward prior longer-term expectations, citing continued momentum in injectable formats and a broad global biosimilar exposure.
BD said its CFO search is “well underway,” with Roque serving as interim CFO.
About Becton, Dickinson and Company (NYSE:BDX)
Becton, Dickinson and Company (BDX) is a global medical technology company that develops, manufactures and sells a broad range of medical devices, instrument systems and reagents. BD’s products are used by healthcare institutions, clinical laboratories, life science researchers and the pharmaceutical industry to enable safe, effective delivery of care, specimen collection and diagnostic testing. The company’s operations span multiple business areas focused on medical devices, life sciences research tools and interventional technologies.
BD’s product portfolio includes single-use medical devices such as syringes, needles, needlesafety and injection systems, infusion therapy and medication management solutions, as well as vascular access, urology and oncology devices acquired through its interventional business.
