Becton, Dickinson and Company — FY2022 Form 10-K
Reporting period: Fiscal year ended September 30, 2022. Although the request metadata refers to 2022 Q4, this filing reports full-year results, not standalone fourth-quarter results. BD is a global medical technology company operating through Medical, Life Sciences and Interventional segments.
Financial performance
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue from continuing operations | $18.870 billion | $19.131 billion |
| Operating income | $2.282 billion | $2.250 billion |
| Net income from continuing operations | $1.635 billion | $1.604 billion |
| Diluted continuing-operations EPS | $5.38 | $5.18 |
| Gross margin | 44.9% | 45.1% |
| Cash from continuing operating activities | $2.471 billion | $4.126 billion |
| Capital expenditures | $973 million | $1.194 billion |
| Total debt | $16.065 billion | $17.610 billion |
Revenue fell 1.4% as reported, but rose 0.9% excluding foreign-currency effects. Volume increased 6.2% and pricing contributed 2.2%, offset by a 7.5% decline associated with COVID-19-only testing and a 2.3% adverse currency impact. COVID-19-only diagnostic testing revenue was $511 million, down from $1.956 billion in FY2021. Continuing-operations operating margin was approximately 12.1%, versus 11.8% in FY2021. Total net income was $1.779 billion, including $144 million from discontinued operations; FY2021 total net income was $2.092 billion, including $488 million from discontinued operations.
Continuing operating cash flow declined 40% year over year, reflecting working-capital use, including higher inventory and prepaid expenses and lower accounts payable and accrued expenses, plus a $134 million discretionary pension contribution. Year-end cash, cash equivalents, restricted cash and short-term investments totaled $1.167 billion. Current debt obligations were $2.179 billion, including $230 million of commercial paper; the $2.75 billion revolving credit facility had no borrowings outstanding. BD paid $1.082 billion in dividends and repurchased $500 million of shares during the year.
Material changes and segment results
- Medical: Revenue increased 5.7% to $8.841 billion; segment operating income rose to $2.215 billion from $1.985 billion. Growth reflected core product demand and Parata Systems, acquired for $1.548 billion in July 2022.
- Life Sciences: Revenue declined 14.8% to $5.564 billion, primarily because COVID-19 testing sales receded. Segment operating income fell to $1.710 billion from $2.391 billion.
- Interventional: Revenue increased 5.3% to $4.464 billion; segment operating income rose to $1.081 billion from $933 million. Growth included demand in Surgery and Urology and Critical Care, partly offset by supply constraints and hospital labor shortages in Peripheral Intervention.
- On April 1, 2022, BD spun off its Diabetes Care business as Embecta. Prior-period Diabetes Care results are presented as discontinued operations, so continuing-operations comparisons reflect the separation.
Outlook, risks and unusual items
The filing does not provide a specific quantitative revenue or earnings forecast. Management says near-term performance may remain volatile amid inflation, supply constraints, labor shortages and logistics disruption. It describes continued investment in research and development, acquisitions, geographic expansion, productivity and quality initiatives as central to its growth strategy.
- Alaris infusion pumps: U.S. commercial shipments remain limited to medical necessity and recalled-software remediation pending FDA clearance of a 510(k) submission. The FDA’s review of quality-system observations and consent-decree compliance remains ongoing; BD cannot predict the timing of clearance or the matter’s ultimate cost or impact.
- Product liability: Product-liability reserves were approximately $2.1 billion at September 30, 2022. BD was defending approximately 31,445 hernia-device claims, in addition to pelvic mesh and IVC-filter litigation; future charges could exceed recorded accruals.
- Sterilization and supply: Georgia sterilization operations returned to normal in December 2021 but remain subject to final air-permit approval and possible restrictions. Broader ethylene-oxide regulation, supplier concentration, component shortages and transportation constraints could disrupt production or raise costs.
- Other risks: Inflation, foreign exchange, reimbursement and pricing pressure, healthcare staffing and budget constraints, cybersecurity, regulatory changes, and the uncertain effects of COVID-19 and geopolitical events could affect results.
- Reported items: FY2022 included $72 million in estimated Alaris remediation costs, a $54 million fixed-asset impairment, $73 million in pension settlement costs, $146 million in EU regulatory initiative costs and $174 million in transaction, litigation and other specified items. These items and substantial acquired-intangible amortization affect comparability.
The independent auditor issued unqualified opinions on the financial statements and internal control over financial reporting; management also concluded internal control was effective as of year-end.
Investor verification priorities
- Track FDA clearance, U.S. Alaris shipments, remediation spending and any action under the consent decree.
- Assess the progression and potential financial exposure of product-liability claims, including the adequacy of the $2.1 billion reserve.
- Compare underlying revenue and margins excluding COVID-19 testing, currency effects and specified items; confirm how the Embecta separation affects comparability.
- Monitor operating cash conversion, inventory and other working capital, near-term debt maturities and the integration and returns from Parata.
- Follow Georgia air permits, ethylene-oxide regulation and supply-chain capacity for any material production or cost effects.