# Becton, Dickinson and Company (BDX) — Fiscal 2026 Third Quarter Narrative BD's fiscal year ends September 30. The Business, Risk Factors and full-year discussion come from the Annual Report on Form 10-K for fiscal year 2025 (year ended September 30, 2025; accession 0000010795-25-000099). The current-quarter discussion comes from the Form 10-Q for the quarter ended June 30, 2026 (accession 0000010795-26-000035) and the Form 8-K filings cited inline. **Two reporting bases.** The fiscal 2025 10-K was filed before BD separated its Biosciences and Diagnostic Solutions business on February 9, 2026. It reports that business inside continuing operations, under three segments, with fiscal 2025 revenue of $21.840 billion. The fiscal 2026 10-Q and BD's 2026 earnings releases report the separated business as discontinued operations for every period shown, and recast prior periods into four segments. On that basis, fiscal 2025 revenue from continuing operations was $18.544 billion. Every figure below is labelled with its basis. Per-share amounts are shown as reported. The Waters transaction was a spin-off, not a stock split, and BD's issued share count (370,594,401 shares) was the same at September 30, 2025 and June 30, 2026. --- ## Business *Source: FY2025 10-K (accession 0000010795-25-000099), Item 1; segment structure and revenue from the Q3 FY2026 10-Q (accession 0000010795-26-000035), Notes 2 and 8.* BD is a large medical technology company that makes and sells high-volume medical supplies and devices. Its products include IV catheters, syringes and needles, blood-collection tubes, infusion pumps and their disposable sets, automated medication-dispensing cabinets, hemodynamic monitors, prefillable syringes for drug makers, and peripheral-vascular, urology and surgical products. Its customers are hospitals, clinics, alternate-site and home-care providers, clinical laboratories and pharmaceutical companies. BD's chief executive describes the business as a "highly recurring consumables model" (8-K of February 9, 2026, accession 0001193125-26-042827). Alongside disposables, BD sells capital equipment such as infusion and dispensing systems, along with service and software contracts. At June 30, 2026, BD expected to recognize about $2.3 billion of revenue from installations and service contracts that had not yet been fulfilled, mostly within three years. Minimum consumable-purchase commitments in Medication Management Solutions and Medication Delivery Solutions contracts add another $2.0 billion. In the first nine months of fiscal 2026, revenue from continuing operations was $14.183 billion. About 62% came from the United States: $8.857 billion in the U.S. and $5.326 billion internationally. BD reorganized into five segments on October 1, 2025, then eliminated the Life Sciences segment when the separation closed, leaving four. The reorganization did not change the principal product lines of any business unit. Revenue for the nine months ended June 30, 2026 is shown in brackets: - **Medical Essentials ($4.918 billion).** - *Medication Delivery Solutions:* peripheral and central IV catheters, vascular-access imaging, prefilled flush syringes and disinfecting caps, needle-free connectors, closed-system drug-transfer devices, hypodermic syringes and needles, anesthesia needles, and sharps disposal. - *Specimen Management:* BD Vacutainer blood-collection systems, wingsets, arterial blood-gas devices and urine-collection kits. - **Connected Care ($3.475 billion).** - *Medication Management Solutions:* BD Alaris infusion pumps with dedicated disposables and IV fluids, BD Pyxis automated dispensing, compounding workflow, pharmacy automation and medication-management informatics. - *Advanced Patient Monitoring:* hemodynamic and tissue-oximetry monitoring, pulmonary artery catheters and pressure-monitoring products. This unit is the former Critical Care product group of Edwards Lifesciences, which BD acquired on September 3, 2024 for consideration of $3.914 billion. - **BioPharma Systems ($1.689 billion).** This is the former Pharmaceutical Systems unit. It makes prefillable syringes, safety and shielding devices and self-injection systems that pharmaceutical companies use as containers for injectable drugs, including biologics and GLP-1 therapies. - **Interventional ($4.101 billion).** - *Peripheral Intervention:* angioplasty balloons, drug-coated balloons, stents and stent grafts, ports, biopsy and dialysis products, vena cava filters, and the Rotarex atherectomy system. - *Urology and Critical Care:* PureWick external urine-management products, urinary catheters, kidney-stone devices, targeted temperature management and fecal management. - *Surgery:* hernia and soft-tissue repair, biological and bioresorbable grafts, biosurgery, the BD Surgiphor irrigation system and ChloraPrep surgical skin preparation. **How BD sells.** In the U.S., BD sells its disposables through acute-care, non-acute, laboratory and drug wholesalers, and sells capital equipment mostly direct to customers. Outside the U.S., it sells directly or through distributors, depending on the country. Sales are generally not seasonal, apart from some flu-related products. At fiscal 2025 year-end, before the separation, BD had manufacturing operations in the U.S. and 18 other countries. Since fiscal 2026 it has grouped its international operations into Europe, META (Middle East, Turkey and Africa), Greater Asia, Latin America and Canada. At September 30, 2025, before the separation, BD had about 72,000 employees. BD's 2026 releases describe the company after the separation as having more than 60,000 employees. **How the portfolio reached its current shape.** - April 1, 2022: BD spun off its Diabetes Care business as Embecta Corp. - August 2023: BD sold the Surgical Instrumentation platform for a pre-tax gain of about $268 million. - September 2024: BD added Advanced Patient Monitoring. - February 9, 2026: BD completed a Reverse Morris Trust transaction with Waters Corporation. It spun off its Biosciences and Diagnostic Solutions business, which had been the Life Sciences segment, and merged it into Waters. Terms and proceeds are covered under the current quarter below. BD now calls itself "New BD". Its strategy, "Excellence Unleashed", has three priorities: - **Compete:** gain share in the fastest-growing areas of medtech. - **Innovate:** build a more focused innovation pipeline. - **Deliver:** improve safety, quality, supply reliability and cash flow, helped by the BD Excellence operating system. **Regulatory constraints on operations.** - **Alaris infusion pumps.** The U.S. infusion-pump business (CareFusion 303, Inc.) operates under an amended FDA consent decree. The FDA can order BD to stop making and selling pumps and can levy damages of up to $15 million a year. BD Alaris devices in the U.S. are being remediated or replaced with the version cleared by the FDA in July 2023, and the 10-Q says BD expects that work to be substantially complete in calendar 2026. - **Pyxis dispensing.** A November 2024 FDA warning letter covers the dispensing quality system. The 10-Q says BD has completed its commitments under that letter. - **El Paso plant.** An FDA warning letter on April 30, 2026 covers the El Paso plant, which makes ChloraPrep and PurPrep. This is discussed under the current quarter. - **Sterilization.** BD relies on ethylene-oxide sterilization, which is subject to EPA emissions and pesticide rules. --- ## Risk factors *Source: FY2025 10-K (accession 0000010795-25-000099), Item 1A. The Q3 FY2026 10-Q reports no material changes to these risk factors. The developments noted from it are disclosures elsewhere in the 10-Q.* - **Tariffs and trade policy.** BD expected tariffs to raise operating expense in fiscal 2026 and possibly beyond, especially on imported components with few mitigation options. A U.S. Section 232 investigation into imports of medical consumables and equipment adds uncertainty. By the third quarter of fiscal 2026, tariffs had hurt gross margin in every segment except Connected Care, whose lower margin the 10-Q attributes to lower sales volumes and higher labor costs. BD has received some tariff refunds, but the 10-Q warns that the remaining receivable for exemption claims may not be collected in full. - **China pricing and reimbursement pressure.** China's volume-based procurement (VoBP) has cut sales in Medication Delivery Solutions and Peripheral Intervention. Other pressures include payback provisions such as Italy's medical-device payback law and a proposed expansion of the U.S. CMS competitive-bidding program. Changes to Medicare, Medicaid and the Affordable Care Act could reduce demand or prices. - **Competition and new therapies.** BD competes against large diversified device makers, specialists, technology companies and distributors that also manufacture. Consolidated hospital systems and group purchasing organizations push prices down. Drug-only alternatives can replace device-delivered therapy; the 10-K cites oral GLP-1 medicines, which matters for BioPharma Systems. Lower vaccine demand has already hurt results. - **Quality and regulatory enforcement.** As described above, BD operates under the Alaris consent decree and FDA warning letters. If the FDA disagrees with BD's judgment that a product change did not need a new clearance, BD may have to stop selling or recall the product. EU MDR and IVDR rules add cost and approval delays. Product defects can lead to recalls, reserves and liability claims. Product-remediation charges were $653 million in fiscal 2023, $98 million in fiscal 2025, and $57 million in the first nine months of fiscal 2026. - **Litigation.** BD faces mass-tort claims over hernia repair devices, pelvic mesh, vena cava filters and implantable ports, and over ethylene-oxide emissions near its Covington, Georgia plant. It also faces Department of Justice civil investigative demands and antitrust and securities claims. Its accrual for product liability and certain other legal matters was about $1.6 billion at June 30, 2026, down from $1.8 billion at September 30, 2025. BD has limited remaining insurance for some claims, and charges could exceed accruals. - **Supply chain and sterilization.** Some materials come from a single supplier, and qualifying an alternative can take 3–18 months, or one to three years if clinical trials are needed. Some product lines are made in only one or a few plants. EPA ethylene-oxide rules (NESHAP and the January 2025 Interim Decision) require capital spending. BD's facilities have a presidential exemption that pushes NESHAP compliance to April 2028. The EPA proposed further NESHAP revisions on March 17, 2026. Interruptions at BD's own or third-party sterilizers could halt shipments. - **Cost inflation.** Resin, energy, freight, labor and duty costs affect margins. The 10-Q adds that the conflict in Iran and the Middle East could raise oil prices and disrupt shipping lanes, although it had not significantly affected BD's supply chain so far. - **Cybersecurity and AI.** BD's connected devices and enterprise systems face increasing cyberattacks. The growing use of AI in products and operations brings regulatory, liability and reputational risk. - **Indebtedness.** BD had $19.181 billion of debt at September 30, 2025, which had fallen to $16.808 billion at June 30, 2026. Its revolving credit facility caps leverage at 4.25 times (4.75 times after a material acquisition). BD lost its well-known seasoned issuer status when the fiscal 2025 10-K was filed, because of a December 2024 SEC order. That could make refinancing harder. - **Separation execution.** Before closing, the main risks were delay, disruption and benefits falling short. After closing, BD carries ongoing transition-services obligations to Waters. If the transaction failed to qualify as tax-free, BD and its shareholders could face significant U.S. federal tax liabilities. BD has received a favorable private letter ruling from the IRS, and the Embecta spin-off carries the same tax-qualification risk. The 10-Q also lists the ability to execute the "Excellence Unleashed" strategy and to obtain the expected benefits of restructuring as forward-looking risks. --- ## Management's discussion — fiscal 2025 (10-K basis, before the separation) *Source: FY2025 10-K (accession 0000010795-25-000099), Item 7. These figures include the Biosciences and Diagnostic Solutions business, which was then part of continuing operations in the Life Sciences segment.* Fiscal 2025 revenue was $21.840 billion, up 8.2% from fiscal 2024 (8.1% currency-neutral). The Advanced Patient Monitoring acquisition added 4.8 points of growth. Volume added 3.2 points, pricing subtracted 0.3 points, and a favorable comparison to fiscal 2024's Italian payback accruals added 0.4 points. U.S. revenue was $12.790 billion, up 9.7%. International revenue was $9.049 billion, up 6.3%. Emerging-market revenue was $3.133 billion, up 2.6% as reported and 3.8% currency-neutral, held back by declines in China. Segment results for fiscal 2025: - **Medical: revenue $11.456 billion, up 13.7%; segment operating income $4.140 billion, 36.1% of revenue.** - Advanced Patient Monitoring contributed $1.082 billion, its first full year. - Medication Delivery Solutions rose 3.3% to $4.575 billion on vascular-access and hypodermic volume, partly offset by VoBP in China. - Medication Management Solutions rose 5.4% to $3.474 billion on infusion-system sales, offset by the timing of dispensing installations. - Pharmaceutical Systems rose 2.2% to $2.324 billion. High-single-digit growth in biologic prefillables was partly offset by weaker demand in other product categories. - **Life Sciences: revenue $5.167 billion, down 0.5%; segment operating income $1.641 billion, 31.8% of revenue.** - Specimen Management rose 2.0% to $1.871 billion. - Diagnostic Solutions fell 0.4% to $1.838 billion as BD BACTEC blood-culture sales normalized after a supply disruption and point-of-care sales fell. - Biosciences fell 3.6% to $1.458 billion because of weak instrument demand tied to research-funding cuts. - **Interventional: revenue $5.217 billion, up 4.8%; segment operating income $2.253 billion, 43.2% of revenue.** - Surgery rose 5.3% on tissue regeneration and infection prevention, offset by legacy hernia products. - Peripheral Intervention rose 3.3%, helped by Rotarex atherectomy and offset by VoBP in China. - Urology and Critical Care rose 6.1%, with double-digit PureWick growth. **Profitability.** Gross margin rose to 45.4% from 45.2%. Manufacturing productivity added 1.5 points. Specified items took away 1.1 points, mainly a $336 million inventory step-up charge for Advanced Patient Monitoring and amortization of intangibles from the acquisition. Currency took away 0.2 points. Selling and administrative expense was 24.2% of revenue, and R&D spending was $1.265 billion, or 5.8% of revenue. Other operating expense was $396 million. It included $297 million for product liability and other legal matters and $97 million of costs tied to the separation. Net interest expense rose to $575 million from $364 million because of the debt raised to buy Advanced Patient Monitoring. The effective tax rate fell to 10.8% from 15.0%. Net income from continuing operations was $1.678 billion, compared with $1.705 billion in fiscal 2024. Diluted EPS from continuing operations was $5.82, compared with $5.86. Specified items reduced diluted EPS by $8.59. **Cash and capital.** Cash from continuing operations was $3.430 billion, down from $3.844 billion. It included a $175 million payment relating to an SEC investigation. Capital expenditures were $760 million. BD paid $1.196 billion in dividends and repurchased $1.0 billion of stock. It repaid $1.789 billion of debt and raised no new long-term debt. Total debt was $19.181 billion at year-end. During the fourth quarter BD replaced its revolving credit facility with a $2.75 billion facility that runs to September 2030. Commercial paper outstanding was $855 million. BD repurchased another $250 million of stock in November 2025. --- ## Current quarter — third quarter of fiscal 2026 (three months ended June 30, 2026) *Source: Q3 FY2026 10-Q (accession 0000010795-26-000035), Notes 2, 4, 6, 8, 10, 13, 14, 15 and Item 2; guidance from the 8-K of August 6, 2026 (accession 0001628280-26-053790). Figures are on a continuing-operations basis, with the prior year recast.* This was the first full quarter after the separation. Revenue was $4.983 billion, up 5.4% from $4.726 billion, or 4.4% currency-neutral. Volume added 4.1 points, pricing 0.3 points and currency 1.0 point. U.S. revenue rose 6.9% to $3.081 billion. International revenue rose 3.2% to $1.902 billion, but only 0.6% currency-neutral. Emerging-market revenue rose 0.8% to $618 million but fell 2.6% currency-neutral, because declines in China and META outweighed strong sales in Latin America. All four segments grew, but segment margins fell in all except BioPharma Systems: - **Medical Essentials: $1.675 billion, up 4.5% (3.2% currency-neutral).** - Specimen Management rose 8.7% on U.S. BD Vacutainer share gains and demand from competitors' backorders. - Medication Delivery Solutions rose 2.8%. U.S. vascular-access share gains and higher infusion-set use, after a prior-year IV fluid supply disruption, were offset by VoBP in China. - Segment income was $617 million, or 36.8% of revenue, compared with 38.2%. Tariffs, labor costs, currency and inflation in selling and shipping costs weighed on the margin. - **Connected Care: $1.224 billion, up 4.9% (4.4% currency-neutral).** - Advanced Patient Monitoring rose 10.9% to $309 million on adoption of the Acumen IQ cuff and sensor and on consumables. - Medication Management Solutions rose 3.0% to $915 million on order backlog and a favorable U.S. lease mix. This was offset by a tough comparison with the prior year's U.S. Alaris return-to-market sales. - Segment income fell to $395 million, or 32.3% of revenue, from $417 million, or 35.8%. Lower volumes, labor costs, investment in growth regions and higher R&D drove the decline. - **BioPharma Systems: $670 million, up 6.6% (5.2% currency-neutral).** Double-digit growth in biologic prefillable syringes, led by GLP-1 delivery products, more than offset weaker vaccine demand. Segment income rose to $259 million, or 38.6% of revenue, from 38.1%. - **Interventional: $1.414 billion, up 6.4% (5.5% currency-neutral).** - Peripheral Intervention rose 7.8% on oncology products and Rotarex. - Urology and Critical Care rose 4.2%, with double-digit PureWick growth. - Surgery rose 7.0% on infection-prevention and tissue-regeneration products. - Segment income was $565 million, or 39.9% of revenue, compared with 41.3%. Costs of responding to the El Paso warning letter and tariffs drove the decline, partly offset by pricing. **Consolidated profitability.** Gross margin fell to 46.4% from 47.3%. Operating performance took away 0.8 points: tariffs, labor costs and El Paso charges outweighed BD Excellence productivity gains. Currency took away 0.2 points. Selling and administrative expense rose to 25.3% of revenue from 24.6%, and R&D rose to 5.2% from 4.9%. Other operating expense rose to $44 million from $7 million, mostly separation costs and legal charges. As a result, operating income fell 10.3% to $663 million. Lower debt cut interest expense to $132 million from $152 million. Other income was $19 million, compared with a $22 million expense a year earlier. It included $22 million of transition-services income from Waters. The tax rate fell to 18.5% from 20.8% on favorable discrete items. Net income from continuing operations was flat at $451 million. Diluted EPS from continuing operations rose to $1.64 from $1.57, helped by about 12 million fewer diluted shares (275.2 million, compared with 287.2 million). Adjusted diluted EPS, a non-GAAP measure, was $3.23, compared with $3.08. Discontinued operations lost $74 million, mainly foreign taxes associated with the separation. Total net income was therefore $377 million, compared with $574 million. **Nine months.** Revenue from continuing operations was $14.183 billion, up 4.8% (3.2% currency-neutral). Net income from continuing operations fell to $725 million from $755 million, and diluted EPS from continuing operations was $2.58, compared with $2.62. Three items explain the year-to-date result: - In the second quarter, BD booked $450 million of non-cash impairments after deciding to exit operations and projects that no longer fit "Excellence Unleashed". These cut property, plant and equipment by $238 million and developed technology by $134 million. In that quarter, GAAP diluted EPS from continuing operations was a loss of $0.13 (8-K of May 7, 2026, accession 0001628280-26-031638). - A $122 million net gain on retiring debt early partly offset the impairments. - The nine-month tax rate rose to 19.8% from 16.7% because BD recorded a deferred tax liability after deciding to distribute certain prior-year foreign earnings. Discontinued operations lost $276 million year to date. **Separation and capital deployment.** - **Waters terms.** On February 9, 2026, BD shareholders received about 0.135 Waters shares for each BD share held on the February 5 record date, giving them 39.2% of the combined company on a fully diluted basis. At Waters' February 6 closing price, the deal valued the separated business at $18.8 billion (8-K of February 9, 2026, accession 0001193125-26-042827). - **Cash proceeds.** BD received a $4 billion cash distribution funded by debt raised by the separated company. Net of a $143 million payment back to that company, the distribution was $3.857 billion. BD used $2 billion for an accelerated share repurchase, which delivered 12.531 million shares and settled in May 2026. It used the other $2 billion for tender offers in February 2026, which retired about $2.1 billion of principal across ten note series. The largest were $656 million of 4.669% notes due 2047, $472 million of 4.685% notes due 2044 and $445 million of 5.081% notes due 2029. - **Euro refinancing.** In May 2026, a BD finance subsidiary issued €600 million ($707 million) of 3.855% notes due May 20, 2033. Together with cash on hand, the proceeds repaid the €600 million ($696 million) of 1.208% notes that matured June 4, 2026. - **Returns and debt.** Year to date, BD spent $2.250 billion on share repurchases, including $250 million in the open market in the first quarter, and paid $875 million in dividends ($1.05 per share each quarter, compared with $1.04). At June 30, 2026, 8.3 million shares remained under the January 27, 2026 authorization. Total debt fell to $16.808 billion from $19.180 billion at September 30, 2025, or 40.3% of total capital compared with 42.6%. Of that debt, $3.297 billion was current, and commercial paper outstanding was $892 million. - **Cash flow.** Cash from continuing operations rose 33.3% to $2.104 billion. Capital expenditures were $376 million, so free cash flow, a non-GAAP measure, was $1.728 billion, up 44.6%. **Regulatory and legal developments in the period.** - **El Paso warning letter.** On April 30, 2026, the FDA's drug center issued a warning letter to the El Paso plant after an October 2025 inspection. The letter cited deficiencies in investigations, laboratory controls and sterility assurance, cleaning and contamination control, and the authority of the plant's quality unit. BD committed to independent quality assessments and certain product recalls, and recorded charges for the remediation in the third quarter. Until the FDA confirms the plant complies, it is likely to withhold export certificates and approvals of new applications that list the plant as a drug manufacturer. BD placed ChloraPrep and PurPrep on ship hold on May 6, 2026 while it added release testing. It later resumed ChloraPrep shipments in the U.S., reporting acceptable test results and no patient-safety signals (8-K of May 29, 2026, accession 0001628280-26-039005). - **Implantable ports.** BD faces about 3,850 claims. The first trial began in April 2026 and ended with a defense verdict on two claims and a mistrial on two. - **Hernia devices.** Claims rose to about 7,090 from 6,905 at September 30, 2025. In fiscal 2024 BD agreed to a settlement resolving the vast majority of its then-existing hernia litigation, payable over several years. - **Covington ethylene oxide.** About 435 suits involving about 445 plaintiffs are pending. The Georgia Court of Appeals heard oral argument on May 14, 2026 in BD's appeal of the 2025 trial, which produced a $20 million compensatory award. No judgment has been entered. - **TELA Bio.** In December 2025, competitor TELA Bio, Inc. sued BD alleging antitrust violations in hernia-device sales. - **Legal charges.** Legal charges were $12 million in the quarter and $75 million year to date. **Guidance.** BD updated its fiscal 2026 guidance for New BD on August 6, 2026. It now expects reported revenue growth of "low single-digit plus" and currency-neutral growth of "low single-digit", toward the high end of the range. These growth rates are measured against fiscal 2025 continuing-operations revenue of $18.544 billion. It narrowed adjusted diluted EPS guidance to $12.62–$12.72, raising the midpoint, compared with $11.90 in fiscal 2025 (up 6.1% to 6.9%). Adjusted EPS guidance through the year: - November 6, 2025: $14.75–$15.05, before the separation. - February 9, 2026: $12.35–$12.65, for New BD after the separation. - May 7, 2026: $12.52–$12.72. - August 6, 2026: $12.62–$12.72. BD's chief executive said the quarter's revenue, adjusted operating margin and adjusted EPS were all ahead of expectations. **Leadership.** - **CFO.** Christopher DelOrefice left as CFO on December 5, 2025. Vitor Roque became interim CFO and was named permanent Executive Vice President and CFO effective May 7, 2026. - **Interventional.** Richard Byrd, president of the Interventional segment, announced in April 2026 that he would retire, staying in the role through June. - **Board.** Claire Fraser left BD's board to join Waters' board when the separation closed. --- ## Subsequent events *Sources: the 8-Ks of July 22, 2026 (accession 0001628280-26-049103) and August 6, 2026 (accession 0001628280-26-053790); scheduled proceedings from the Q3 FY2026 10-Q (accession 0000010795-26-000035), Note 6.* The third-quarter 10-Q has no subsequent-events note. The 10-Q and the 8-Ks filed through August 6, 2026 disclose no acquisition, divestiture or financing after the quarter. During the quarter, BD made one acquisition that it called not material. It added $26 million of goodwill to Medical Essentials, and the target was not named. Post-quarter disclosures are: - **Leadership change (July 19–22, 2026).** Michael Garrison, Executive Vice President and President of the Medical Essentials and BioPharma Systems segments, told BD on July 19, 2026 that he will retire. He will stay through the end of fiscal 2026, and the press release gives October 2 as the effective date. BD is searching for a new Medical Essentials president. BioPharma Systems now reports directly to Chairman and CEO Thomas Polen, which BD says reflects the segment's importance as a growth driver. - **Third-quarter results and updated guidance (August 6, 2026).** BD reported the results and raised the guidance midpoint described above. - **Scheduled litigation.** The next implantable-port trials were set for August 18, 2026 and October 13, 2026, and the next Covington ethylene-oxide trial for September 14, 2026. The Georgia Court of Appeals had not yet ruled on BD's appeal of the first Covington verdict when the 10-Q was filed. The filings cited here do not disclose the outcomes of these proceedings.