Expenses outpaced revenue in the third quarter at Becton Dickinson and Co. as the medical-device maker included its newly acquired CareFusion subsidiary for the first time in its earnings report.
BD reported $3.1 billion in revenue in the three months ended June 30, up 44.6% from the year before. That includes CareFusion's results after the acquisition closed in March of this year. On a pro-forma basis, third-quarter revenue grew by 2.3%, even with a 2.2% decline at CareFusion.
Nine-month pro-forma results were even stronger, with 4.6% revenue growth. Carefusion, which makes devices for infusion, anesthesia delivery and respiratory care, among other products, kept up with BD's growth.
But profit suffered as operating expenses significantly increased with the acquisition of CareFusion, leaving the company with $62 million in net income, down 80.9% from $326 million the year before. Gains were offset by a 84.7% jump in product-related costs and a 44.8% jump in selling and administrative expenses, plus $108 million in acquisition-related costs.
An 86.7% jump in U.S. pharmaceutical revenues carried the medical segment beyond gains from the CareFusion acquisition, though the surge reflects ordering patterns, executives said during a conference call. There was slight growth in the life sciences segment, mostly from bioscience products.
Though international revenue grew with help from the CareFusion acquisition, BD's overseas businesses have been significantly affected by unfavorable currency rates, like many healthcare organizations operating overseas.
Nonetheless, Chief Financial Officer Christopher Reidy said emerging markets helped boost revenue this quarter and are becoming a larger and more developed portion of BD's overall revenue base, driven by growth in Latin America and China. BD expects 10% growth in emerging markets this fiscal year.
BD just slightly lowered its revenue growth guidance to reflect concerns over unfavorable foreign currency exchange rates. The company expects revenue to grow 21% to 21.5% in fiscal 2015, just slightly lower than 21% to 22% previously reported. The company raised its guidance for fiscal 2015 adjusted diluted earnings per share to a range of $7.08 to $7.12, which would represent growth of 8.5% to 9.5% when taking into account unfavorable foreign currency exchange rates.
