Becton, Dickinson and Company (NYSE:BDX) Q1 2023 Earnings Call Transcript

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Chris DelOrefice: Well, just the way you started your question, Robbie. So if you think of us absorbing the COVID-only and increasing our base revenue guidance by the 50 basis points, it wasn’t like a swap out into combination testing. It was actually broadly based across the business. As Dave mentioned earlier, we still see the combo part of our portfolio at that 1.5 times, and we’ll continue to watch how it plays out. There was a little bit of strength there, but it wasn’t outsized relative to the other areas we also had stressed.

Tom Polen: Typically, yes. Just to add we typically wouldn’t raise unless it was a highly unusual situation, trying to predict expectations on a full year basis on flu or a flu combo test just because it can drop off so quickly. And in fact, we are seeing, right, that’s happening if you look at the CDC charts, those charts are showing significant drop-off like what happened in Australia. Rapid early peak and then a rapid drop, unclear if there could be second or third peaks in the future, but that’s not something we can easily predict. So typically in Q1, we try to be conservative around that €“ those outlooks in that specific product category. More after Q2, we get a sense of where the full year plays out.

Robbie Marcus: Great. I’ll leave it there. Thanks a lot.

Tom Polen: Thanks.

Operator: And we’ll go next on Matt Miksic with Barclays. Please go ahead.

Matt Miksic: Hey thanks. Wanted to follow-up with a couple of questions; one on sort of the margin side and then just a couple of clarifications on the revenue side. And just too sort of maybe summarize and make sure we’ve got a clear understanding of the sort of dynamics this year. I mean you have these significant restructuring efforts underway that you’ve talked about, that sounds like on a full year basis you’re expecting those to kind of offset the inflationary €“ outsized inflationary cost at the COGS line, at the gross margin line? I’m guessing you’re probably not fully offsetting those here in the first half. But as you pointed out, that 350 basis point of inflationary hedge or inflationary pressure are going to sort of ease in the back half.

So full year, you sort of manage that to sort of neutral and then the benefits that you’re getting here to get you to that 100 basis points really happened below the gross profit line in the form of leverage, in the form of timing as you pointed out. Is that the right way to think about the overall margin picture front half, back half, just to summarize and make sure I’m clear on it anyway? And then as €“ I have a couple of quick revenue follow-ups.

Chris DelOrefice: Yes. I think that €“ I mean, there’s other puts and takes within there. But generally speaking, yes, that’s how we see the year playing out.

Matt Miksic: Great. And then on the revenue side, just some other folks who have had some China pressure in the quarter as you did and obviously managed through that to deliver the beat here. But if you could maybe quantify that is sort of one clarification is give a sense of what the growth might have been if it’s a 50 basis point overall hit to growth on the clarification on the combo testing, COVID testing changes that you made in terms of your expectation of COVID-only testing. It sounds like that’s €“ that maybe not so much of an expectation that COVID testing in total is coming down, but it sounds like it’s a bit more of a mix shift that’s just €“ you’re getting COVID testing in the form of that combo testing. So not directionally inconsistent, it seems with what other folks are talking about. They just don’t have that combust exposure. And then I’ll leave it there just with those two clarifying points would be super helpful? Thanks.

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