How Bard Acquisition Could Benefit BD



BD updated fiscal 2018 guidance during 1Q18 earnings release

Becton Dickinson (BDX) announced its fiscal 2018 guidance, which includes the company’s recently acquired Bard business, during the company’s 1Q18 earnings release. BD expects to register adjusted diluted EPS (earnings per share) of $10.85 to $11, which represents YoY (year-over-year) growth of 15% to 16%. This includes the EPS accretion from the Bard acquisition. On a currency-neutral basis, BD expects to register YoY sales growth of ~12%.

During BD’s 4Q17 earnings call in November 2018, the company provided adjusted diluted EPS guidance of $10.55 to $10.65. For details, read Why BD’s Earnings Growth Is Expected to Continue.

In fiscal 2018, BD’s peers Baxter International (BAX), Thermo Fisher Scientific (TMO), and Abbott Laboratories (ABT) are estimated to report adjusted diluted EPS of 11.9%, 14.1%, and 14.2%, respectively, in their next full fiscal year.

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Bard acquisition EPS accretion

Given the recently completed acquisition of Bard, the company has provided fiscal 2018 guidance for the combined company. BD expects an underlying EPS accretion of 3% to 4% from the acquisition. However, the divestment of Bard’s Aspira product line of tunneled home drainage catheters and accessories and BD’s soft tissue core needle biopsy product line in accordance with the terms of approval of the acquisition is expected to have a negative impact of 2%. Also, the timing of the Bard acquisition closure is expected to negatively impact the EPS accretion. Including the impact of these factors, BD expects the accretion from the Bard acquisition in fiscal 2018 to be in the low single digits.

Margin guidance

For full fiscal 2018, BD expects margin expansion of 200 basis points to 250 basis points in comparison to the company’s previous margin expansion guidance of 100 to 150 basis points. Over the four-year period through fiscal 2018, BD expects to deliver margin expansion of ~700 basis points. BD expects its operating margin to be in the range of 25% to 26% of total sales in fiscal 2018.

BD’s adjusted gross margin guidance for fiscal 2018 is 56% to 57% of the company’s total sales. With the inclusion of the Bard acquisition, the company has increased the guidance by ~200 basis points from its estimates provided in November for the standalone BD. The company also expects an increase in its SG&A (selling, general, and administrative) expenses, as Bard has a higher SG&A expenditure profile due to its direct sales approach.


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