In the wake of a 2021 that saw BD chart a whopping 18% increase in its year-over-year revenue, the medtech giant was unable to recreate that success.
For its fiscal year 2022, which ended Sept. 30, BD reported revenues of $18.9 billion. Leaving out any earnings from its diabetes business—which spun out into a standalone company, Embecta, earlier this year—that shakes out to a 1.4% year-over-year decrease.
As CEO Tom Polen noted on a call with investors Thursday, that modestly outstrips the company’s previous estimates for the year. Though it kicked off 2022 with much loftier goals, it had tempered those expectations in recent quarters, finally settling at the end of its third quarter on a forecast haul between $18.75 billion and $18.83 billion.
And the numbers look even better when you subtract all COVID-19 diagnostic revenues from the equation, leaving only the company’s base business. In that case, base revenues grew nearly 7% year over year.
The stark difference stems from the fact that 2022’s COVID-related revenue weighed in at barely a quarter of the previous year’s heft. The full year’s testing take totaled $511 million, Christopher DelOrefice, BD’s chief financial officer, said on the call—compared to the almost $2 billion it reported in 2021.
That steep drop-off was actually slightly less extreme than what BD was expecting. As the demand for coronavirus tests waned toward the end of 2021, the company entered this year expecting to take in just $200 million from the tests. After a surprisingly strong first quarter, however, it more than doubled that prediction. Going into the fourth quarter, the final forecast sat at $500 million in COVID-only revenues, setting up the company to surpass its own expectations.
Despite that turnaround, BD is once again kicking off the year with very conservative expectations. For all of 2023, it’s aiming to take in between $125 million and $175 million from COVID testing—once again, about a quarter of the previous year’s haul.
That, in turn, will likely lead to another overall revenue drop: Across the entire company, BD is planning for full-year revenues between $18.6 billion and $18.8 billion, with continued growth in the base business somewhat tempering the effects of the lost COVID revenues.
BD’s base business growth reflects the goals of its “BD 2025” strategy, Polen said on the earnings call. The five-year plan is focused on three pillars: growing its product portfolio, streamlining its operations and strengthening its employee and customer experiences.
In line with those aims, the CEO noted that BD “launched 25 key new products” in its fiscal year 2022 while also investing more than $2 billion in tuck-in acquisitions, led by its $1.525 billion offer in June for Parata Systems, which produces pharmacy workflow devices for filling medication bottles and blister packs, printing packaging and managing inventory and pickup.
One hundred percent of that M&A activity and about 60% of all product development for the year targeted three specific areas of healthcare innovation, per Polen: smart connected care, enabling new care settings and improving chronic disease outcomes.