Revenue and EPS guidance
In its investor presentation, Bristol-Myers Squibb (BMY) guided for revenues of $41.3 billion, $44.2 billion, $47.5 billion, $48.5 billion, and $51.4 billion, for fiscal year 2019, 2020, 2021, 2022, and 2023, respectively, if its acquisition of Celgene (CELG) is completed.
The company has not assumed any contribution from Celgene’s unapproved drugs to the combined company’s revenues in fiscal 2019. After that, Bristol-Myers Squibb expects Celgene’s research pipeline to contribute 0% to 5%, less than 5%, less than 10%, and 10% to 15% of the combined company’s revenues in fiscal 2020, fiscal 2021, fiscal 2022, and fiscal 2023, respectively.
In its investor presentation, Bristol-Myers Squibb guided for more than 40% EPS accretion in the first full year after the completion of the acquisition of Celgene. After that, the company expects EPS accretion every year until fiscal 2025. The company has guided for an 800-basis-point accretion to operating margins, even before realization of the deal synergies that are projected to be worth $20 billion.
Free cash flow, dividend, and debt trends
Bristol-Myers Squibb has guided for more than $45 billion of free cash flow in the first three years after completion of the deal, which could further strengthen the combined company’s ability to return value to shareholders in the form of dividends. Bristol-Myers Squibb’s current dividend yield is 3.56%.
In its investor presentation, Bristol-Myers Squibb has also guided for a debt-to-EBITDA ratio of lower than 2.5x in fiscal 2020 and lower than 1.5x in fiscal 2023 for the combined company. The company expects to utilize its free cash flows to reduce debt and to explore business development opportunities. Bristol-Myers Squibb also projects an “A3/A” credit rating for the combined company.