Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following commentary should be read in conjunction with the consolidated financial statements and accompanying notes presented in this report. Within the tables presented throughout this discussion, certain columns may not add due to the use of rounded numbers for disclosure purposes. Percentages and earnings per share amounts presented are calculated from the underlying amounts. References to years throughout this discussion relate to our fiscal years, which end on September 30.
Company Overview
Description of the Company and Business Segments
Becton, Dickinson and Company (“BD”) is a global medical technology company engaged in the development, manufacture and sale of a broad range of medical supplies, devices, laboratory equipment and diagnostic products used by healthcare institutions, physicians, life science researchers, clinical laboratories, the pharmaceutical industry and the general public. The Company's organizational structure is based upon three principal business segments, BD Medical (“Medical”), BD Life Sciences (“Life Sciences”) and BD Interventional (“Interventional”).
BD’s products are manufactured and sold worldwide. Our products are marketed in the United States and internationally through independent distribution channels and directly to end-users by BD and independent sales representatives. We organize our operations outside the United States as follows: EMEA (which includes Europe, the Middle East and Africa); Greater Asia (which includes countries in Greater China, Japan, South Asia, Southeast Asia, Korea, Australia and New Zealand); Latin America (which includes Mexico, Central America, the Caribbean and South America); and Canada. We continue to pursue growth opportunities in emerging markets, which include the following geographic regions: Eastern Europe, the Middle East and Africa (collectively referred to below as “EMA”), as well as, Latin America and certain countries within Greater Asia.
As further discussed in Note 8 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data, effective October 1, 2025, we reorganized our organizational units into five distinct, separately-managed segments, based on the nature of our product and service offerings. BD’s new organizational structure is based upon the following five segments: Medical Essentials, Connected Care, BioPharma Systems, Interventional and Life Sciences, which remains a critical part of BD until the separation and combination of our Biosciences and Diagnostic Solutions business with Waters Corporation (“Waters”) is completed. Additional disclosures regarding the agreement to combine our Biosciences and Diagnostic Solutions business with Waters are provided in Note 1 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
Strategic Objectives
BD remains focused on delivering durable growth, creating shareholder value and making appropriate investments for the future. Our strategy is anchored in three key pillars: grow, simplify and empower. BD's management team aligns our operating model and investments with these key strategic pillars through continuous focus on the following underlying objectives:
Grow
• Accelerating innovation in smart devices, robotics, analytics, and artificial intelligence in order to enable new care settings, improve outcomes, streamline care workflows, and reduce costs within healthcare settings;
• Focusing on a strong portfolio of core leading products, solutions and services that deliver greater benefits to patients, healthcare workers and researchers;
• Investing in research and development that leads to and expands category leadership, as well as results in a robust product pipeline;
• Leveraging our global scale in order to provide equitable access to affordable medical technologies around the world, including in under-resourced markets;
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• Supplementing our internal growth through strategic acquisitions in faster growing market segments; and
• Focusing on cash management and an efficient capital structure in order to drive balance sheet productivity and strong shareholder returns.
Simplify
• Driving operating effectiveness and margin expansion through deployment of our BD Excellence program to increase factory productivity and asset efficiencies;
• Reducing complexity, increasing agility and improving customer experience by rationalizing our product portfolio, as well as by simplifying and optimizing our architecture and operating model;
• Making strategic investments that prioritize a culture of quality and our quality management system to ensure we are a best-in-class, proactive quality-driven organization;
• Enhancing customer experiences through the digitalization of internal processes and go-to-market approaches;
• Collaborating across our supply chain to responsibly source materials and goods, as well as to reduce environmental impacts; and
• Continuing our investments in an enterprise-wide renewable energy strategy to create more resilient operations.
Empower
• Fostering a purpose-driven culture with a focus on positive impact to all stakeholders–customers, patients, employees, shareholders and communities;
• Cultivating an inclusive work environment that welcomes and celebrates diverse backgrounds and perspectives;
• Growing and enabling talent through training, development and reskilling strategies; and
• Driving sustainability initiatives within our organizational units to support enterprise-wide collaboration towards our sustainability strategy.
In assessing the outcomes of these strategies as well as BD’s financial condition and operating performance, management generally reviews forecast data, monthly actual results, including segment sales, and other similar information. We also consider trends related to certain key financial data, including gross profit margin, selling and administrative expense, investment in research and development, return on invested capital, and cash flows.
Proposed Combination of Our Biosciences and Diagnostic Solutions Business with Waters
As noted above and as further discussed in Note 1 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data, we entered into a definitive agreement on July 13, 2025 to combine our Biosciences and Diagnostic Solutions business with Waters in a transaction that is expected to create an innovative life science and diagnostics leader with pioneering technologies.
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Acquisition of Edwards Lifesciences’ Critical Care Product Group
On September 3, 2024, we completed the acquisition of Edwards Lifesciences’ Critical Care product group, which we renamed as BD Advanced Patient Monitoring (“Advanced Patient Monitoring”), for total consideration of $3.914 billion. Advanced Patient Monitoring is a global leader in advanced monitoring solutions that expands BD’s portfolio of smart connected care solutions with its growing set of leading monitoring technologies, advanced AI-enabled clinical decision tools and robust innovation pipeline that complement our existing technologies serving operating rooms and intensive care units.
BD reports the results associated with Advanced Patient Monitoring’s product offerings as a separate organizational unit within our Medical segment and additional disclosures relating to this acquisition are provided in Notes 11 and 16 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
BD’s Divestitures
In August 2023, we completed the sale of the Interventional segment's Surgical Instrumentation platform. The historical financial results for this platform have not been classified as a discontinued operation.
In April 2022, we completed the separation and distribution of Embecta Corp., formerly BD's Diabetes Care business, into a separate, publicly-traded company. Historical financial results have been reflected as discontinued operations in our consolidated financial statements.
Additional disclosures regarding the sale and separation are provided in Note 2 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
Key Trends and Uncertainties Affecting Results of Operations
Our operations, supply chain, suppliers and customers are exposed to various global macroeconomic factors and other risks which we continually evaluate to assess their potential impact to our operations and financial results.
We have been experiencing, and may continue to experience, some adverse impact to our results of operations due to market dynamics in China, such as volume-based procurement programs (“VoBP”) and the government’s focus to improve compliance of healthcare practitioners. Also, reductions or delays in governmental research funding has caused customers for certain of our instruments to delay or forgo purchases of these products. Lower demand for vaccines has also adversely impacted our results of operations. The future demand for our products and services could be impacted by other factors including higher interest rates and the deterioration of healthcare systems’ budgets.
Additionally, we have experienced, and may continue to experience, temporary shortages in supply of certain materials or components that are used in our products. The stable flow of global transport is critical to our operations and as such, events affecting the flow of logistics around the globe may adversely impact our supply chain and distribution channels. In general, major disruptions in the sourcing, manufacturing and distribution of our products could adversely impact our results of operations. Also, tariffs, sanctions or other trade barriers imposed by the United States, or against the United States from countries in which we do business, could adversely impact our supply chain costs, results of operations and our financial condition. Based upon the latest published tariffs that are currently in effect, we expect tariffs to adversely impact our operating expense for fiscal year 2026 and potentially beyond, primarily relating to any products (or components) imported from countries across our global supply chain which have no exemption . We continue to monitor international trade policy-related developments to assess their potential impacts to our operations. The ultimate impact of any existing or new tariffs or other changes in international trade policies is subject to a number of factors including, but not limited to, the duration of such tariffs, changes in tariff rates, the amount, scope and nature of the tariffs, any that target countries may take, or any mitigating actions that may become available. While sourcing optimization and tariff exemptions for qualifying products are key
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aspects of our mitigation strategy, the timing of such or the ultimate results we will realize from these efforts are uncertain. In addition, our tariff mitigation strategies may be challenged, rejected or eliminated through legislation or other challenges, or may otherwise not be effective.
We continue to invest in research and development, strategic tuck-in acquisitions, geographic expansion, and new product programs to drive further revenue and profit growth. Our ability to sustain our long-term growth will depend on a number of factors, including our ability to expand our core business (including strategic geographical expansion), and develop innovative new products, as well as continue to improve operating efficiency and organizational effectiveness.
For additional information on risk factors that may impact our business, results of operations, financial condition and cash flows, see Part I, Item 1A. Risk Factors.
Summary of Financial Results
Worldwide revenues in 2025 of $21.840 billion increased 8.2% from the prior-year period. This increase reflected the following impacts:
Increase (decrease) in current-year revenues
Volume/other (a)
Pricing
Foreign currency impact
Acquisition of Advanced Patient Monitoring
Other (b)
Increase in revenues from the prior-year period
(a) Volume/other includes revenues attributable to products, services and licensing.
(b) Represents the impact of accruals recognized in fiscal year 2024 relating to the Italian government medical device pay back legislation, as well as another legal matter, and which substantially relate to years prior to fiscal year 2024. Additional disclosures regarding these legislative and legal matters are provided in Note 6 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
Cash flows from continuing operating activities were $3.430 billion in 2025. At September 30, 2025, we had $859 million in cash and equivalents and short-term investments, including restricted cash. We continued to return value to our shareholders in the form of dividends and during fiscal year 2025, we paid cash dividends to common shareholders of $1.196 billion.We also repurchased approximately $1 billion of our common stock during fiscal year 2025.
Each reporting period and given our worldwide operations, we face exposure to our results of operations from changes in foreign currencies. We calculate translational foreign currency impacts by converting our current-period local currency financial results using the prior-period foreign currency exchange rates and comparing these adjusted amounts to our current-period results, which allows us to compare results between periods as if exchange rates had remained constant period-over-period. The fiscal year 2025 impact of foreign currency on our revenues, which is primarily translational, is provided above. The translational impact on our earnings is provided further below. We evaluate our results of operations on both a reported and a foreign currency-neutral basis. As exchange rates are an important factor in understanding period-to-period comparisons, we believe the presentation of results on a foreign currency-neutral basis, excluding translational foreign currency impacts, in addition to reported results helps improve investors’ ability to understand our operating results and evaluate our performance in comparison to prior periods. We use results on a foreign currency-neutral basis as one measure to evaluate our performance. These results should be considered in addition to, not as a substitute for, results reported in accordance with U.S. generally accepted accounting
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principles (“GAAP”). Results on a foreign currency-neutral basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with U.S. GAAP.
Results of Operations
Medical Segment
The following summarizes Medical revenues by organizational unit:
(Millions of dollars)
Total
Change
Estimated
Impact
FXN Change
Total
Change
Estimated
Impact
FXN Change
Medication Delivery Solutions
Medication Management Solutions
Pharmaceutical Systems
Advanced Patient Monitoring
Total Medical revenues
"NM" denotes that the percentage change is not meaningful.
The Medical segment’s revenue growth in 2025 primarily reflected the following.
• Volume growth attributable to the Medication Delivery Solutions unit’s Vascular Access Management portfolio and hypodermic products, partially offset by an expected VoBP impact in China.
• Growth in the Medication Management Solutions unit driven by continued strength in sales of infusion systems, partially offset by the timing of dispensing and pharmacy automation installations, based upon customer readiness, in the current year.
• Growth in the Pharmaceutical Systems unit due to high single-digit growth of prefillable solutions in the biologic drug category, partially offset by lower market demand for other product categories.
• Overall Medical segment revenue growth also reflected sales in the Advanced Patient Monitoring unit, which we acquired during the fourth quarter of fiscal year 2024.
The Medical segment’s revenue growth in 2024 primarily reflected the following.
• Strong global demand for the Medication Delivery Solutions unit’s Vascular Access Management portfolio, as well as strong U.S. demand for medication delivery products, partially offset by the impact of unfavorable market dynamics in China.
• Double-digit growth in sales of infusion systems, as well as higher utilization of infusion sets within the Medication Management Solutions unit, partially offset by an unfavorable comparison to stronger placements of dispensing solutions in 2023.
• Double-digit growth in sales of the Pharmaceutical Systems unit’s prefillable solutions in the biologic drug category, partially offset by customer order patterns relating to other drug categories.
• Overall Medical segment revenue growth in 2024 also reflected the acquired Advanced Patient Monitoring unit’s sales beginning on September 3, 2024.
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Medical segment operating income was as follows:
(Millions of dollars)
Medical segment operating income
Segment operating income as % of Medical revenues
(a) Prior-period segment income amounts have been recast to conform to the current year presentation, as further discussed in Note 8 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
The Medical segment's operating income as a percentage of revenues in 2025 and 2024, compared with the prior-year periods, reflected the following:
• Higher gross profit margin in 2025 compared with 2024 primarily reflected lower manufacturing costs, which resulted from continuous improvement projects, supply chain optimization and other productivity initiatives, as well as favorable product mix which was attributable to the Advanced Patient Monitoring unit’s products, partially offset by tariffs and higher labor costs.
• The Medical segment’s gross profit margin in 2024 was flat compared with 2023 and primarily reflected lower manufacturing costs, which resulted from the productivity initiatives noted above, offset by higher raw material and labor costs, as well as unfavorable foreign currency translation.
• Higher selling and administrative expense as a percentage of revenues in 2025 compared with 2024 primarily reflected costs attributable to the Advanced Patient Monitoring unit. Lower selling and administrative expense as a percentage of revenues in 2024 compared with 2023 primarily reflected revenue growth that outpaced spending and lower shipping costs.
• Higher research and development expense as a percentage of revenues in 2025 compared with 2024 which primarily reflected costs attributable to the Advanced Patient Monitoring unit, offset by the timing of project spending. Research and development expense as a percentage of revenues in 2024 was lower compared with 2023, which reflected revenue growth that outpaced project spending.
Life Sciences Segment
The following summarizes Life Sciences revenues by organizational unit:
(Millions of dollars)
Total
Change
Estimated
Impact
FXN Change
Total
Change
Estimated
Impact
FXN Change
Specimen Management (a)
Diagnostic Solutions (a)
Biosciences
Total Life Sciences revenues
(a) During the first quarter of fiscal year 2025, Life Sciences split its former Integrated Diagnostic Solutions organizational unit into two units to better align BD resources with the distinct needs of each business.
The Life Sciences segment’s revenue growth in 2025 primarily reflected the following:
• Growth in the Specimen Management unit’s BD Vacutainer TM portfolio, partially offset by a decline in China.
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• A decline in the Diagnostic Solutions unit driven by lower sales of BD BACTEC TM blood culture products as customer utilization continues to improve following the resolution of a supply disruption, as well as by lower sales of point-of-care products, partially offset by continued double-digit growth in sales of BD MAX TM IVD.
• A decline in the Biosciences unit due to continued market dynamics impacting sales of instruments, partially offset by strong sales of the recently launched BD FACSDiscover TM A8 Cell Analyzer.
The Life Sciences segment's revenues in 2024 primarily reflected the following:
• Sales driven by broad volume growth attributable to the Specimen Management unit’s portfolio.
• A decline in the Diagnostic Solutions unit driven by an unfavorable comparison to higher respiratory testing revenues in 2023, including COVID-19-only diagnostic testing revenues.
• Strong demand for the Biosciences unit’s clinical reagents, offset by a decline in sales of the unit’s instrumentation due to a decline in life science research funding, primarily in the United States and China.
Life Sciences segment operating income was as follows:
(Millions of dollars)
Life Sciences segment operating income
Segment operating income as % of Life Sciences revenues
(a) Prior-period segment income amounts have been recast to conform to the current year presentation, as further discussed in Note 8 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
The Life Sciences segment's operating income as a percentage of revenues in 2025 and 2024, compared with the prior-year periods, reflected the following:
• The Life Sciences segment’s gross profit margin in 2025 was higher compared with 2024, which primarily reflected lower manufacturing costs resulting from continuous improvement projects, supply chain optimization and other productivity initiatives, partially offset by unfavorable impacts from higher labor costs, tariffs and foreign currency translation.
• The Life Sciences segment’s lower gross profit margin in 2024 compared with 2023 primarily reflected higher raw material and labor costs, as well as declines in respiratory illness-related revenues and unfavorable foreign currency translation, partially offset by lower manufacturing costs resulting from the productivity initiatives noted above.
• Selling and administrative expense as a percentage of revenues in 2025 was higher compared with 2024, which primarily reflected the current-period decline in revenues and higher shipping, selling, general and administrative costs. Selling and administrative expense as a percentage of revenues in 2024 was higher compared with 2023, which primarily reflected consistent spending on slower revenue growth.
• Lower research and development expense as a percentage of revenues in 2025 compared with 2024, and in 2024 compared with 2023, primarily reflected the timing of project spending and product launches.
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Interventional Segment
The following summarizes Interventional revenues by organizational unit:
(Millions of dollars)
Total
Change
Estimated
Impact
FXN Change
Total
Change
Estimated
Impact
FXN Change
Surgery
Peripheral Intervention
Urology and Critical Care
Total Interventional revenues
The Interventional segment’s revenue growth in 2025 primarily reflected the following:
• Strong growth in sales of the Surgery unit’s advanced tissue regeneration portfolio, as well as the unit’s biosurgery and infection prevention products, partially offset by lower U.S. revenues attributable to legacy hernia products.
• Strong growth in the Peripheral Intervention unit’s peripheral vascular disease portfolio that was particularly driven by sales of the unit’s Rotarex TM Atherectomy System, partially offset by an expected VoBP impact in China.
• Continued double-digit growth in sales of the Urology and Critical Care unit’s PureWick TM offerings.
The Interventional segment’s revenue growth in 2024 primarily reflected the following:
• Strong growth in sales across the Surgery unit’s advanced repair and reconstruction platforms, as well as its infection prevention products; the prior-year period’s revenues included $140 million attributable to the unit’s former Surgical Instrumentation platform, which was sold in the fourth quarter of fiscal year 2023.
• Double-digit growth attributable to the Peripheral Intervention unit’s peripheral vascular disease platform, partially offset by a decline in sales of our oncology products due to customer ordering patterns and market dynamics in China.
• Double-digit growth in sales of the Urology and Critical Care unit’s PureWick TM offerings and current-year licensing revenue.
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Interventional segment operating income was as follows:
(Millions of dollars)
Interventional segment operating income
Segment operating income as % of Interventional revenues
(a) Prior-period segment income amounts have been recast to conform to the current year presentation, as further discussed in Note 8 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
The Interventional segment's operating income as a percentage of revenues in 2025 and 2024, compared with the prior-year periods, reflected the following:
• The Interventional segment’s higher gross profit margin in 2025 compared with 2024 primarily reflected lower manufacturing costs resulting from continuous improvement projects, supply chain optimization and other productivity initiatives, partially offset by unfavorable impacts from tariffs, as well as higher labor and raw material costs.
• The Interventional segment’s higher gross profit margin in 2024 compared with 2023 primarily reflected favorable impacts from product mix and pricing.
• Selling and administrative expense as percentages of revenues in 2025 was flat compared with 2024. Higher research and development expense as a percentage of revenues in 2025 compared with 2024 primarily reflected the timing of project spending.
• Lower selling and administrative expense, as well as research and development expense, as percentages of revenues in 2024 compared with 2023, primarily reflected revenue growth that outpaced spending.
Geographic Revenues
BD’s worldwide revenues by geography were as follows:
(Millions of dollars)
Total
Change
Estimated
Impact
FXN Change
Total
Change
Estimated
Impact
FXN Change
United States
International
Total revenues
U.S. revenue growth in 2025 was largely driven by the acquired Advanced Patient Monitoring unit’s sales. U.S. revenue growth also reflected strong sales in the Medical segment’s Medication Delivery Solutions and Medication Management Solutions units, as well as the Interventional segment’s Urology and Critical Care unit. U.S. revenue growth in 2025 was partially offset by a decline in the Life Sciences segment’s Diagnostic Solutions unit, as further discussed above.
U.S. revenue growth in 2024 reflected strong sales in the Medical segment’s Medication Delivery Solutions and Medication Management Solutions units, as well as in the Interventional segment’s Urology and Critical Care unit.
International revenue growth in 2025 was largely driven by the acquired Advanced Patient Monitoring unit’s sales. International revenue growth was also driven by sales in the Medical segment’s Medication Delivery Solutions unit, as well as by sales in all of the Interventional segment’s units. International revenue
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growth also reflected a favorable comparison to the prior-period, which was unfavorably impacted by $62 million of accruals related to the Italian government medical device pay back legislation, as further discussed above. International revenue growth in 2025 was partially offset by a decline in the Life Sciences segment’s Biosciences unit, as further discussed above.
International revenue growth in 2024 was driven by the Medical segment’s Pharmaceutical Systems unit, the Life Sciences segment’s Specimen Management and Diagnostic Solutions units and the Interventional segment’s Peripheral Intervention unit. International revenue growth in 2024 also reflected the unfavorable impact of a $62 million accrual related to the Italian government medical device pay back legislation, as noted above. Additional disclosures regarding this matter are provided in Note 6 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
Emerging market revenues were as follows:
(Millions of dollars)
Total
Change
Estimated
Impact
FXN Change
Total
Change
Estimated
Impact
FXN Change
Emerging markets
Emerging market revenue growth in 2025 and 2024 primarily reflected strong sales in certain countries within Greater Asia and Latin America. Emerging market revenue growth in 2025 also reflected strong sales in EMA. Emerging market revenue growth in 2025 and 2024 was partially offset by declines in China, as further discussed above.
Specified Items
Reflected in the financial results for 2025, 2024 and 2023 were the following specified items:
(Millions of dollars)
Integration costs (a)
Restructuring costs (a)
Transaction costs (b)
Financing impacts (b)
Separation-related items (c)
Purchase accounting adjustments (d)
Product, litigation, and other items (e)
European regulatory initiative-related costs (f)
Total specified items
Less: tax impact of specified items
After-tax impact of specified items
(a) Represents amounts associated with restructuring and acquisition integration activities which are recorded in Integration, restructuring and transaction expense and are further discussed below.
(b) Represents transaction costs, which are recorded in Integration, restructuring and transaction expense , and financing impacts, which are recorded in Interest income and Interest expense , associated with the Advanced Patient Monitoring acquisition.
(c) Represents costs recorded to Other operating expense (income), net and incurred in connection with the proposed combination of our Biosciences and Diagnostic Solutions business with Waters, as well as with the fiscal year 2022 separation of BD's former Diabetes Care business.
(d) Includes amortization and other adjustments related to the purchase accounting for acquisitions. BD’s amortization expense is recorded in Cost of products sold . The amount in 2025 also includes
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$336 million recorded due to a fair value step-up adjustment relating to Advanced Patient Monitoring's inventory on the acquisition date.
(e) Includes certain (income) expense items which are not part of ordinary operations and affect the comparability of the periods presented. Such items may include certain product remediation costs, amounts related to certain legal matters, certain investment gains and losses, certain asset impairment charges, and certain pension settlement costs. The amounts presented include the following:
• The amounts in 2025, 2024 and 2023 included charges related to product liability and certain other legal matters which were recorded to Other operating expense (income), net as detailed further below. The amount in 2024 also reflected accruals related to legislative and legal matters that were recorded to Revenues , as further discussed above in our geographic revenue discussion. Additional disclosures regarding these legal and legislative matters are provided in Note 6 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
• The amounts in 2025, 2024 and 2023 included charges within Cost of products sold of $98 million, $38 million and $653 million, respectively, to record or adjust future costs estimated for product remediation efforts.
• The amount in 2025 included a non-cash $30 million charge recorded within Research and development expense to write down certain assets in the Life Sciences segment, as further discussed below.
• The amounts in 2025 and 2023 included pension settlement costs of $38 million and $57 million, respectively, which were recorded to Other expense, net, as further discussed in Note 10 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data .
• The amount in 2023 additionally included a gain of $268 million related to the sale of our Surgical Instrumentation platform recorded to Other operating expense (income), net.
(f) Represents costs incurred to develop processes and systems to establish initial compliance with the European Union Medical Device Regulation and the European Union In Vitro Diagnostic Medical Device Regulation, which represent a significant, unusual change to the existing regulatory framework. We consider these costs to be duplicative of previously incurred costs and/or one-off costs, which are limited to a specific period of time. These expenses, which are recorded in Cost of products sold and Research and development expense , include the cost of labor, other services and consulting (in particular, research and development and clinical trials) and supplies, travel and other miscellaneous costs.
Gross Profit Margin
The comparisons of gross profit margins in 2025 and 2024 with the prior-year periods reflected the following impacts:
Gross profit margin % prior-year period
Impact of purchase accounting adjustments and other specified items
Operating performance
Foreign currency impact
Gross profit margin % current-year period
The unfavorable impact on gross margin from specified items in 2025 compared with 2024 primarily reflected an impact of $336 million resulting from a fair value step-up adjustment relating to Advanced Patient Monitoring's inventory on the acquisition date, as well as the impact from amortization of intangibles acquired in the transaction which occurred on September 3, 2024.
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The favorable impact on gross margin from specified items in 2024 compared with 2023 primarily reflected a favorable comparison to specified items recorded in 2023, which included $653 million of charges recorded in the Medical segment to adjust the estimate of future product remediation costs, partially offset by an unfavorable impact of $59 million due to a fair value step-up adjustment recorded by the Medical segment in 2024 relating to Advanced Patient Monitoring's inventory on the acquisition date.
Operating performance in 2025 primarily reflected lower manufacturing costs resulting from our ongoing continuous improvement projects, supply chain optimization and other productivity initiatives, partially offset by higher labor costs and tariffs. Operating performance in 2024 primarily reflected lower manufacturing costs from our productivity initiatives and a favorable impact from pricing, partially offset by higher raw material and labor costs and an unfavorable absorption impact of planned inventory reductions.
Operating Expenses
Operating expenses in 2025, 2024 and 2023 were as follows:
Increase (decrease) in basis points
(Millions of dollars)
Selling and administrative expense
% of revenues
Research and development expense
% of revenues
Integration, restructuring and transaction expense
Other operating expense (income), net
Selling and administrative
Selling and administrative expense as a percentage of revenues in 2025 was flat compared with 2024, which primarily reflected higher revenues, offset by higher selling costs and higher administrative costs in the current-year period. Selling and administrative expense as a percentage of revenues in 2024 was lower compared with 2023, which primarily reflected higher revenues and lower shipping costs in 2024, partially offset by higher selling costs.
Research and development
Research and development expense as a percentage of revenues in 2025 was flat compared with 2024, which primarily reflected the timing of project spending, offset by a $30 million write-down of certain assets in the Life Sciences segment in the current-year period which is further discussed in Note 15 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data. Lower research and development expense as a percentage of revenues in 2024 compared with 2023, primarily reflected the progression of current projects and revenue growth that outpaced project spending. Spending in 2025, 2024 and 2023 reflected our continued commitment to invest in new products and platforms.
Integration, restructuring and transaction expense
The amount in 2025 included integration, restructuring and transaction costs relating to our acquisition of the Advanced Patient Monitoring unit and the amount in 2024 included transaction costs, such as legal, advisory and other costs, relating to this acquisition. Integration expense in 2024 and 2023 additionally included costs related to system integrations. Restructuring expense in 2025, 2024 and 2023 additionally included restructuring costs related to simplification and other cost-saving initiatives. For further disclosures regarding the costs
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relating to restructurings, refer to Note 12 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
Other operating expense (income), net
Other operating expense (income) in 2025, 2024 and 2023 included the following items which are further discussed in the Notes to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data:
(Millions of dollars)
Amounts recorded for product liability and certain other legal matters (see Note 6)
Charge to accrue an estimated liability for the SEC investigation (see Note 6)
Separation-related items (See Note 1)
Gain recognized on sale of business (see Note 2)
Other
Other operating expense (income), net
Net Interest Expense
(Millions of dollars)
Interest expense
Interest income
Net interest expense
Higher interest expense in 2025 compared with 2024, and in 2024 compared with 2023, primarily reflected higher total debt outstanding due to the issuance of debt in our third quarter of fiscal year 2024 to fund the cash consideration payable upon our acquisition of Advanced Patient Monitoring. Additional disclosures regarding our financing arrangements and debt instruments are provided in Note 16 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
Lower interest income in 2025 compared with 2024 primarily reflected lower levels of cash on hand and lower overall interest rates, compared with the prior-year period. Higher interest income in 2024 compared with 2023 primarily reflected higher overall interest rates and levels of cash on hand during 2024, compared with the prior-year period.
Income Taxes
The income tax rates for continuing operations in 2025, 2024 and 2023 were as follows:
Effective income tax rate for continuing operations
Impact, in basis points, from specified items
The effective income tax rate for continuing operations in 2025 compared with 2024 primarily reflected more favorable discrete items recorded in 2025 and an unfavorable impact to the 2024 rate that was attributable to non-deductible costs. The higher effective income tax rate for continuing operations in 2024 compared with 2023 primarily reflected the unfavorable impact attributable to non-deductible costs recorded in 2024 and the recognition of more favorable discrete items in 2023. Additional disclosures regarding the effective tax rates in
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2025, 2024 and 2023 are provided in Note 17 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
Net Income and Diluted Earnings per Share from Continuing Operations
Net income and diluted earnings per share from continuing operations in 2025, 2024 and 2023 were as follows:
Net income from continuing operations (Millions of dollars)
Diluted earnings per share from continuing operations
Unfavorable impact-specified items
Favorable (unfavorable) impact-foreign currency translation
Financial Instrument Market Risk
We selectively use financial instruments to manage market risk, primarily foreign currency exchange risk and interest rate risk relating to our ongoing business operations. The counterparties to these contracts are highly rated financial institutions. We do not enter into financial instruments for trading or speculative purposes. Additional disclosures regarding our derivative instruments are provided in Note 14 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
Foreign Exchange Risk
BD and its subsidiaries transact business in various foreign currencies throughout Europe, Greater Asia, Canada and Latin America. We face foreign currency exposure from the effect of fluctuating exchange rates on payables and receivables relating to transactions that are denominated in currencies other than our functional currency. These payables and receivables primarily arise from intercompany transactions. We hedge substantially all such exposures, primarily through the use of forward contracts. We have also hedged the currency exposure associated with investments in certain foreign subsidiaries with instruments such as foreign currency-denominated debt and cross-currency swaps, which are designated as net investment hedges, as well as currency exchange contracts. In order to mitigate transactional foreign currency exposures resulting from anticipated intercompany purchases and sales, we have hedged a portion of this currency risk with certain instruments such as foreign exchange forward and option contracts, which are designated as cash flow hedges. We also face currency exposure that arises from translating the results of our worldwide operations, including sales, to the U.S. dollar at exchange rates that have fluctuated from the beginning of a reporting period. We did not enter into contracts to hedge cash flows against these foreign currency impacts in fiscal year 2025 or 2024.
Derivative financial instruments are recorded on our balance sheet at fair value. For foreign currency derivatives, market risk is determined by calculating the impact on fair value of an assumed change in foreign exchange rates relative to the U.S. dollar. Fair values were estimated based upon observable inputs, specifically spot currency rates and foreign currency prices for similar assets and liabilities.
With respect to the foreign currency derivative instruments outstanding at September 30, 2025 and 2024, the impact that changes in the U.S. dollar would have on pre-tax earnings was estimated as follows:
Increase (decrease)
(Millions of dollars)
10% appreciation in U.S. dollar
10% depreciation in U.S. dollar
These calculations do not reflect the impact of exchange gains or losses on the underlying transactions that would substantially offset the results of the derivative instruments.
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Interest Rate Risk
When managing interest rate exposures, we strive to achieve an appropriate balance between fixed and floating rate instruments. We may enter into interest rate swaps to help maintain this balance and manage debt and interest-bearing investments in tandem, since these items have an offsetting impact on interest rate exposure. For interest rate derivative instruments, fair values are measured based upon the present value of expected future cash flows using market-based observable inputs including credit risk and interest rate yield curves. Market risk for these instruments is determined by calculating the impact to fair value of an assumed change in interest rates across all maturities.
The impact that changes in interest rates would have on interest rate derivatives outstanding at September 30, 2025 and 2024, as well as the effect that changes in interest rates would have on our earnings or cash flows over a one-year period, based upon our overall interest rate exposure, were estimated as follows:
Increase (decrease) to fair value of interest rate derivatives outstanding
Increase (decrease) to earnings or cash flows
(Millions of dollars)
10% increase in interest rates
10% decrease in interest rates
Liquidity and Capital Resources
Our strong financial position and cash flow performance have provided us with the capacity to accelerate our innovation pipeline through investments in research and development, as well as through strategic acquisitions. We believe that our available cash and cash equivalents, our ability to generate operating cash flow, and if needed, our access to borrowings from our financing facilities provide us with sufficient liquidity to satisfy our foreseeable operating needs. The following table summarizes our consolidated statement of cash flows in 2025, 2024 and 2023:
(Millions of dollars)
Net cash provided by (used for) operations
Continuing operating activities
Investing activities
Financing activities
Net Cash Flows from Continuing Operating Activities
Cash flows from operating activities in 2025 were largely driven by our net income, adjusted by a change in operating assets and liabilities that was a net use of cash. This net use of cash primarily reflected higher levels of inventory and prepaid expenses, as well as lower levels of accrued expenses. The decrease in accrued expenses included our payment of $175 million relating to the SEC investigation as further discussed in Note 6 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
Cash flows from operating activities in 2024 was largely driven by our net income, adjusted by a change in operating assets and liabilities that was a net source of cash. This net source of cash primarily reflected higher levels of accounts payable and accrued expenses, as well as lower levels of inventory, which reflects our continued efforts to optimize inventory levels, partially offset by higher levels of trade receivables. Cash flows from operating activities in 2024 additionally reflected a discretionary cash contribution of $150 million to fund our pension obligation.
Cash flows from continuing operating activities in 2023 reflected net income, adjusted by a change in operating assets and liabilities that was a net use of cash, which was significantly lower than the net use of cash
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in 2022 due to efforts in 2023 to optimize inventory levels. The net use of cash in 2023 primarily reflected lower levels of accounts payable and accrued expenses, as well as higher levels of trade receivables, partially offset by lower levels of prepaid expenses.
Net Cash Flows from Investing Activities
Capital expenditures
Our investments in capital expenditures are focused on projects that enhance our cost structure and manufacturing capabilities, as well as support the objectives of our growth strategy. Capital expenditures of $760 million, $725 million and $874 million in 2025, 2024 and 2023, respectively, primarily related to manufacturing capacity expansions. Details of spending by segment are contained in Note 8 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
Investments
Cash inflows from investing activities in 2025 included a $422 million net inflow attributable to the maturity of time deposits, compared with a $421 million outflow from investing activities in 2024 attributable to the net purchases of investments, primarily in time deposits.
Acquisitions
Cash outflows for acquisitions in 2024 was attributable to the acquisition of Advanced Patient Monitoring in the fourth quarter of 2024. For further discussion, refer to Note 11 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
Divestitures
Cash inflows relating to our divestiture of the Interventional segment's Surgical Instrumentation platform in 2023 were $540 million. For further discussion, refer to Note 2 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
Net Cash Flows from Financing Activities
Net cash flows from financing activities in 2025, 2024 and 2023 included the following significant cash flows:
(Millions of dollars)
Cash inflow (outflow)
Change in short-term debt
Proceeds from long-term debt
Payments of debt
Share repurchases
Dividends paid
In November 2025, we repurchased $250 million of our common stock through open market repurchases. Additional disclosures regarding the equity and debt-related financing activities detailed above are provided in Notes 4 and 16 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
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Debt-Related Activities
Certain measures relating to our total debt were as follows:
Total debt (Millions of dollars)
Weighted average cost of total debt
Total debt as a percentage of total capital (a)
(a) Represents shareholders’ equity, net non-current deferred income tax liabilities, and debt.
Additional disclosures regarding our debt instruments are provided in Note 16 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
Cash and Short-term Investments
At September 30, 2025, total worldwide cash and equivalents and short-term investments, including restricted cash, were $859 million and were primarily held outside of the United States. We regularly review the amount of cash and short-term investments held outside of the United States and our historical foreign earnings are used to fund foreign investments or meet foreign working capital and property, plant and equipment expenditure needs. To fund cash needs in the United States, we rely on ongoing cash flow from U.S. operations, access to capital markets and remittances from foreign subsidiaries of earnings that are not considered to be permanently reinvested.
Financing Facilities
During the fourth quarter of fiscal year 2025, the Company refinanced its senior unsecured revolving credit facility that was to expire in September 2027, with a new senior unsecured revolving credit facility that will expire in September 2030. The credit facility provides borrowings of up to $2.750 billion, with separate sub-limits of $100 million and $236 million for letters of credit and swingline loans, respectively. The expiration date of the credit facility may be extended for up to two additional one-year periods, subject to certain restrictions (including the consent of the lenders). The credit facility provides that we may, subject to additional commitments by lenders, request an additional $500 million of financing, for a maximum aggregate commitment under the credit facility of up to $3.250 billion. Proceeds from this facility may be used for general corporate purposes and Becton Dickinson Euro Finance S.à r.l., an indirect, wholly owned finance subsidiary of BD, is authorized as an additional borrower under the credit facility. There were no borrowings outstanding under the revolving credit facility at September 30, 2025.
The agreement for our revolving credit facility contains the following financial covenants. We were in compliance with these covenants, as applicable, as of September 30, 2025.
• We are required to have a leverage coverage ratio of no more than:
◦ 4.25-to-1 as of the last day of each fiscal quarter following the closing of the credit facility; or
◦ 4.75-to-1 for the five full fiscal quarters following the consummation of a material acquisition.
We may access commercial paper programs over the normal course of our business activities. Our U.S. and multicurrency euro commercial paper programs provide for a maximum amount of unsecured borrowings under the two programs, in aggregate, of $2.750 billion. Proceeds from these programs may be used for working capital purposes and general corporate purposes, which may include acquisitions, share repurchases and repayments of debt. We had $855 million of commercial paper borrowings outstanding as of September 30, 2025. We have additional informal lines of credit outside the United States. Also, over the normal course of our business activities, we transfer certain trade receivable assets to third parties under factoring agreements. Additional disclosures regarding sales of trade receivable assets are provided in Note 15 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
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Access to Capital and Credit Ratings
Our corporate credit ratings with the rating agencies Standard & Poor's Ratings Services (“S&P”), Moody's Investors Service (“Moody's”) and Fitch Ratings (“Fitch”) were as follows at September 30, 2025:
Moody’s
Fitch
Ratings:
Senior Unsecured Debt
BBB
Baa2
BBB
Commercial Paper
Outlook
Stable
Stable
Stable
Our corporate credit ratings at September 30, 2025 were unchanged compared with our ratings at September 30, 2024.
Lower corporate debt ratings and downgrades of our corporate credit ratings or other credit ratings may increase our cost of borrowing. We believe that given our debt ratings, our financial management policies, our ability to generate cash flow and the diversified nature of our businesses, we would have access to additional short-term and long-term capital should the need arise. A rating reflects only the view of a rating agency and is not a recommendation to buy, sell or hold securities. Ratings can be revised upward or downward at any time by a rating agency if such rating agency decides that circumstances warrant such a change.
Contractual Obligations
In the normal course of business, we enter into contracts and commitments that obligate us to make payments in the future. Information regarding our obligations under purchase, debt and lease arrangements are provided in Notes 6, 16 and 18, respectively, to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
Critical Accounting Estimates
The following discussion supplements the descriptions of our accounting policies contained in Note 1 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data. The preparation of the consolidated financial statements requires management to use estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Some of those judgments can be subjective and complex and, consequently, actual results could differ from those estimates. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. For any given estimate or assumption made by management, it is possible that other people applying reasonable judgment to the same facts and circumstances could develop different estimates. Actual results that differ from management’s estimates could have an unfavorable effect on our consolidated financial statements. Management believes the following policy areas require more significant judgment:
Revenue Recognition
Our revenues are primarily recognized when the customer obtains control of the product sold, which is generally upon shipment or delivery, depending on the delivery terms specified in the sales agreement. Revenues associated with certain instruments and equipment for which installation is complex, and therefore significantly affects the customer’s ability to use and benefit from the product, are recognized when customer acceptance of these installed products has been confirmed. For leases and for certain service arrangements, including extended warranty and software maintenance contracts, revenue is recognized ratably over the contract term. The majority of revenues relating to extended warranty contracts associated with certain instruments and equipment is generally recognized within a few years whereas deferred revenue relating to software maintenance contracts is generally recognized over a longer period.
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Our agreements with customers within certain organizational units, primarily Medication Management Solutions, Diagnostic Solutions and Biosciences, contain multiple performance obligations that include both products and certain services noted above. Determining whether products and services are considered distinct performance obligations that should be accounted for separately may require judgment. The transaction price for these agreements is allocated to each performance obligation based upon its relative standalone selling price. Standalone selling price is the amount at which we would sell a promised good or service separately to a customer. We generally estimate standalone selling prices using list prices and in consideration of typical discounts offered to customers. The use of alternative estimates could result in a different amount of deferred revenue.
Our gross revenues are subject to a variety of deductions, including rebates. These deductions represent estimates of the related obligations and require judgment when determining the impact on gross revenues for a reporting period. Additional factors considered in the estimate of our rebate liability include the quantification of inventory that is either in stock at or in transit to our distributors, as well as the estimated lag time between the sale of product and the payment of corresponding rebates.
Impairment of Assets
Goodwill assets are subject to impairment reviews at least annually, or whenever indicators of impairment arise. Intangible assets with finite lives, including developed technology, and other long-lived assets, are periodically reviewed for impairment when impairment indicators are present.
We assess goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component. Our reporting units represent one level below reporting segments. Our review of goodwill for each reporting unit compares the fair value of the reporting unit, estimated using an income approach, with its carrying value. Our annual goodwill impairment test performed on July 1, 2025 did not result in any impairment charges, as the fair value of each reporting unit exceeded its carrying value.
We generally use the income approach to derive the fair value for impairment assessments. This approach calculates fair value by estimating future cash flows attributable to the assets and then discounting these cash flows to present value using a risk-adjusted discount rate. We selected this method because we believe the income approach most appropriately measures the value of our income producing assets. This approach requires significant management judgment with respect to future volume, revenue and expense growth rates, changes in working capital use, appropriate discount rates, terminal values and other assumptions and estimates. The estimates and assumptions used are consistent with BD’s business plans. The use of alternative estimates and assumptions could increase or decrease the estimated fair value of the asset. Actual results may differ from management’s estimates.
Income Taxes
BD maintains valuation allowances where it is more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances are included in our tax provision in the period of change. In determining whether a valuation allowance is warranted, management evaluates factors such as prior earnings history, expected future earnings, carryback and carryforward periods, and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset.
BD conducts business and files tax returns in numerous countries and currently has tax audits in progress in a number of tax jurisdictions. In evaluating the exposure associated with various tax filing positions, we record accruals for uncertain tax positions based on the technical support for the positions, our past audit experience with similar situations, and the potential interest and penalties related to the matters. BD’s effective tax rate in any given period could be impacted if, upon resolution with taxing authorities, we prevailed in positions for which reserves have been established, or we were required to pay amounts in excess of established reserves.
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We have reviewed our needs in the United States for possible repatriation of undistributed earnings of our foreign subsidiaries and we continue to invest foreign subsidiaries earnings outside of the United States to fund foreign investments or meet foreign working capital and property, plant and equipment expenditure needs. As a result, we are permanently reinvested with respect to all of our historical foreign earnings as of September 30, 2025. Additional disclosures regarding our accounting for income taxes are provided in Note 17 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data.
Contingencies
We are involved, both as a plaintiff and a defendant, in various legal proceedings that arise in the ordinary course of business, including, without limitation, product liability and environmental matters in certain U.S. and international locations, as further discussed in Note 6 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data. We establish accruals to the extent losses for individual matters are probable and reasonably estimable based upon our assessment of the likelihood of any adverse judgments or outcomes relative to these matters, as well as the potential ranges of probable losses. Given the uncertain nature of litigation generally, we are not able in all cases to reasonably estimate the amount or range of loss that could result from an unfavorable outcome of litigation in which the Company is a party.
When appropriate, accruals are developed with the consultation of outside counsel regarding the nature, timing and extent of each matter. The accruals may change in the future as new information for an individual matter becomes available or due to changes in our litigation strategy. We record expected recoveries, up to the amount of loss recognized, from product liability insurance carriers or other parties when realization of recovery is deemed probable.
Given the uncertain nature of litigation, we could incur charges in excess of any currently established accruals and, to the extent available, liability insurance and any such future charges, individually or in the aggregate, could have a material adverse effect on BD’s consolidated results of operations, financial condition and/or consolidated cash flows.
Benefit Plans
We have significant net pension and other postretirement and postemployment benefit obligations and costs that are measured using actuarial valuations, which include assumptions for the discount rate and the expected return on plan assets. These assumptions have a significant effect on the amounts reported. In addition to the analysis below, see Note 10 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data for additional discussion.
The discount rate is selected each year based on investment grade bonds and other factors as of the measurement date (September 30). Specifically for the U.S. plans, we will use a discount rate of 5.25% for 2026, which was based on an actuarially-determined, company-specific yield curve to measure liabilities as of the measurement date. To calculate the pension expense in 2026, we will apply the individual spot rates along the yield curve that correspond with the timing of each future cash outflow for benefit payments in order to calculate interest cost and service cost. Additional disclosures regarding the method to be used in calculating the interest cost and service cost components of pension expense for 2026 are provided in Note 10 to the consolidated financial statements contained in Item 8. Financial Statements and Supplementary Data. The expected long-term rate of return on plan assets assumption, although reviewed each year, changes less frequently due to the long-term nature of the assumption. This assumption does not impact the measurement of assets or liabilities as of the measurement date; rather, it is used only in the calculation of pension expense. To determine the expected long-term rate of return on pension plan assets, we consider many factors, including our historical assumptions compared with actual results; benchmark data; expected returns on various plan asset classes, as well as current and expected asset allocations. We will use a long-term expected rate of return on plan assets assumption of 7.5% for the U.S. pension plan in 2026. We believe our discount rate and expected long-term rate of return on plan assets assumptions are appropriate based upon the above factors.
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Sensitivity to changes in key assumptions for our U.S. pension and other postretirement and postemployment plans are as follows:
• Discount rate — A change of plus (minus) 25 basis points, with other assumptions held constant, would have an estimated $3 million favorable (unfavorable) impact on the total U.S. net pension and other postretirement and postemployment benefit plan costs. This estimate assumes no change in the shape or steepness of the company-specific yield curve used to plot the individual spot rates that will be applied to the future cash outflows for future benefit payments in order to calculate interest and service cost.
• Expected return on plan assets — A change of plus (minus) 25 basis points, with other assumptions held constant, would have an estimated $4 million favorable (unfavorable) impact on U.S. pension plan costs.
Cautionary Statement Regarding Forward-Looking Statements
This report includes forward-looking statements within the meaning of the federal securities laws. BD and its representatives may also, from time to time, make certain forward-looking statements in publicly released materials, both written and oral, including statements contained in filings with the SEC, press releases, and our reports to shareholders. Forward-looking statements may be identified by the use of words such as “plan,” “expect,” “believe,” “intend,” “will,” “may,” “anticipate,” “estimate” and other words of similar meaning in conjunction with, among other things, discussions of future operations and financial performance (including volume growth, pricing, sales and earnings per share growth, and cash flows) and statements regarding our strategy for growth, liquidity, future product development, regulatory approvals, competitive position and expenditures. All statements that address our future operating performance or events or developments that we expect or anticipate will occur in the future are forward-looking statements.
Forward-looking statements are, and will be, based on management’s then-current views and assumptions regarding future events, developments and operating performance, and speak only as of their dates. Investors should realize that if underlying assumptions prove inaccurate, or risks or uncertainties materialize, actual results could vary materially from our expectations and projections. Investors are therefore cautioned not to place undue reliance on any forward-looking statements. Furthermore, we undertake no obligation to update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events and developments or otherwise, except as required by applicable law or regulations.
The following are some important factors that could cause our actual results to differ from our expectations in any forward-looking statements. For further discussion of certain of these factors, see Item 1A. Risk Factors in this report and our subsequent Quarterly Reports on Form 10-Q.
• General global, regional or national economic downturns and macroeconomic trends, including heightened inflation, capital market volatility (including volatility resulting from the imposition of (and changing policies around) tariffs and related countermeasures), import or export licensing requirements, other governmental restrictions, interest rate and currency rate fluctuations, and economic slowdown or recession, that may result in unfavorable conditions that could negatively affect demand for our products and services, impact the prices we can charge for our products and services, disrupt aspects of our supply chain, impair our ability to produce our products, or increase borrowing costs.
• The impact of inflation, tariffs, and disruptions in our global supply chain on us and our suppliers (particularly sole-source suppliers and providers of sterilization services), including fluctuations in the cost and availability of oil-based resins and other raw materials, as well as certain components, used in the production or sterilization of our products, transportation constraints, disruptions and delays, product shortages, energy shortages or increased energy costs, labor shortages or disputes, and increased operating and labor costs.
• The risks associated with the proposed combination of our Biosciences and Diagnostic Solutions business with Waters, including factors that could delay, prevent or otherwise adversely affect the
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completion, timing or terms of the proposed transaction, or our ability to realize the expected benefits of the proposed transaction.
• Conditions in international markets, including social and political conditions, geopolitical developments such as the continuation and/or escalation of the situation in Ukraine, the Middle East and Asia, civil unrest, political conflict, terrorist activity, governmental changes, restrictions on the ability to transfer capital across borders, economic sanctions, export controls, tariffs and other protectionist measures, barriers to market participation (such as local company and products preferences), difficulties in protecting and enforcing our intellectual property rights, and governmental expropriation of assets. Our international operations also increase our compliance risks, including risks under the Foreign Corrupt Practices Act and other anti-corruption and bribery laws, as well as regulatory and privacy laws.
• The impact of changes in U.S. federal or foreign laws and policies that could affect fiscal and tax policies, taxation (including tax reforms such as the Pillar Two framework) and international trade, including import and export licensing regulation and international trade agreements. In particular, tariffs, sanctions or other trade barriers imposed by the U.S. (and countermeasures by non-U.S. governments) could adversely impact demand for our products and services, our supply chain costs or otherwise adversely impact our results of operations and future growth. The ultimate impact of any existing or new tariffs or other changes in international trade policies is subject to a number of factors including the duration of such tariffs, changes in tariff rates, the scope and nature of the tariffs, any countermeasures that target countries may take and the availability of any mitigating actions. In addition, our tariff mitigation strategies may be challenged, rejected or eliminated through legislation or other challenges, or may otherwise not be effective.
• Cost-containment efforts in the U.S. or in other countries in which we do business, such as alternative payment reform, government-imposed pay back provisions, increased use of competitive bidding and tenders, including, without limitation, any expansion of the volume-based procurement process in China or the Center for Medicaid Services’ Competitive Bidding Program, reimbursement policy changes or the implementation of similar cost-containment efforts.
• Competitive factors that could adversely affect our operations, including new product introductions and technologies, including the use of emerging technologies (such as AI) by our current or future competitors, consolidation or strategic alliances among healthcare companies, distributors and/or payers of healthcare to improve their competitive position or develop new models for the delivery of healthcare, increased pricing pressure due to the impact of low-cost manufacturers, patents attained by competitors (particularly as patents on our products expire), new entrants into our markets, changes in the practice of medicine or the development of alternative therapies for disease states that may be delivered without a medical device.
• Product efficacy or safety concerns, changes to the labeled use of our products, non-compliance with applicable regulatory requirements regarding our products (such as non-compliance of our products with marketing authorization or registration requirements resulting from modifications to such products, or other factors, including, but not limited to, with respect to BD Alaris™ System and infusion sets and BD Vacutainer TM , resulting in product recalls, lost revenue or other actions being taken with respect to products in the field or the ability to continue selling new products to customers (including restrictions on future product clearances and civil penalties), product liability or other claims and damage to our reputation, including products we acquire through acquisitions.
• As a result of the CareFusion acquisition, our U.S. infusion pump business is operating under a Consent Decree with the FDA. The Consent Decree authorizes the FDA, in the event of any violations in the future, to order our U.S. infusion pump business to cease manufacturing and distributing products, recall products or take other actions, and order the payment of significant monetary damages if the business subject to the decree fails to comply with any provision of the Consent Decree. In accordance with our commitments to the FDA, the overall timing of replacement of the BD Alaris™ Infusion Systems and
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return to market in the U.S. may be impacted by, among other things, customer readiness, supply continuity and our continued engagement with the FDA.
• Policy and regulatory changes implemented by the U.S. federal government, including the downsizing and reduced funding of certain government agencies and programs as well as changes in the policy positions of such agencies, including the FDA, may affect the approach of agencies with which we typically engage and make regulatory approval processes and ongoing compliance with all applicable rules and regulations more challenging.
• Deficit reduction efforts, policy changes, or other actions that reduce or freeze the availability of government funding for healthcare and research, which could weaken demand for our products and result in additional pricing pressures, as well as create potential collection risks associated with such sales.
• Fluctuations and pauses in university or U.S. and international governmental funding and policies for research.
• Competitive factors that could adversely affect our operations, including new product introductions and technologies, including the use of emerging technologies (such as AI) by our current or future competitors, changes in demand as a result of changes to U.S. federal and state policies (affecting products such as pharmaceuticals and vaccines), consolidation or strategic alliances among healthcare companies, distributors and/or payers of healthcare to improve their competitive position or develop new models for the delivery of healthcare, increased pricing pressure due to the impact of low-cost manufacturers, patents attained by competitors (particularly as patents on our products expire), new entrants into our markets and changes in the practice of medicine.
• Changes in the way healthcare services are delivered, including transition of more care from acute to non-acute settings and increased focus on chronic disease management, which may affect the demand for our products and services. Additionally, budget constraints and staffing shortages, particularly shortages of nursing staff, may affect the prioritization of healthcare services, which could also impact the demand for certain of our products and services.
• Our ability to achieve our projected level or mix of product sales, as our earnings forecasts are based on projected sales volumes and pricing of many product types, some of which are more profitable than others.
• Changes in market dynamics, coverage policies or reimbursement practices, or adverse third-party payer cost containment measures relating to our products and services, which could reduce demand for our products or the price we can charge for such products.
• Changes in the domestic and foreign healthcare industry, in medical or clinical practices or in patient preferences that result in a reduction in procedures using our products or increased pricing pressures, including cost-reduction measures instituted by and the continued consolidation among healthcare providers.
• The effects of regulatory or other events that adversely impact our supply chain, including our ability to manufacture or sterilize our products (particularly where production of a product line or sterilization operations are concentrated in one or a few plants), source materials or components or services from suppliers (including sole-source suppliers) that are needed for such manufacturing or sterilization, or provide products to our customers, including events that impact key distributors. In particular, there has been increased regulatory focus on the use and emission of ethylene oxide in sterilization processes, and additional regulatory requirements may be imposed in the future that could adversely impact us or our third-party sterilization providers.
• IT system disruptions, breaches or breakdowns, including through cyberattacks, ransom attacks or cyber-intrusion, which could impair our ability or that of our customers, suppliers and other business partners to conduct business, result in the loss of our trade secrets or otherwise compromise sensitive information
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of BD or its customers, suppliers and other business partners, or of patients, including sensitive personal data, or result in efficacy or safety concerns for certain of our products, and result in investigations, legal proceedings, liability, expense or reputational damage or actions by regulatory bodies or civil litigation.
• Difficulties inherent in product development, including the potential inability to successfully continue technological innovation, successfully complete clinical trials, obtain and maintain regulatory approvals, clearances and registrations in the U.S. and abroad, obtain intellectual property protection for our products, obtain coverage and adequate reimbursement for new products, or gain and maintain market approval of products, as well as the possibility of infringement claims by competitors with respect to patents or other intellectual property rights, all of which could preclude or delay commercialization of a product. Delays in obtaining necessary approvals or clearances from the FDA or other regulatory agencies due to government shutdowns or reductions in government staffing or changes in the regulatory process may also delay product launches and increase development costs.
• The impact of business combinations or divestitures, including any volatility in earnings relating to acquisition-related costs, and our ability to successfully integrate any business we may acquire.
• Risks relating to our overall level of indebtedness, including our ability to service our debt and refinance our indebtedness, which is dependent upon the capital markets and the overall macroeconomic environment and our financial condition at such time.
• The risks associated with the qualification of the spin-off of our former Diabetes Care business as a tax-free transaction for U.S. federal income tax purposes.
• Risks associated with our development, deployment and use of AI in our products and business operations.
• Our ability to penetrate or expand our operations in emerging markets, which depends on local economic and political conditions, and how well we are able to make necessary infrastructure enhancements to production facilities and distribution networks.
• Our ability to recruit and retain key employees and the impact of labor conditions which could increase employee turnover or increase our labor and operating costs and negatively affect our ability to efficiently operate our business.
• Fluctuations in the demand for products we sell to pharmaceutical companies that are used to manufacture, or are sold with, the products of such companies, as a result of funding constraints, consolidation, the development of alternative therapies for disease states that may be delivered without a medical device, or otherwise.
• The impact of climate change, legal, regulatory or market measures to address climate change, such as regulation of greenhouse gas emissions, zero-carbon energy and sustainability mandates and related disclosure requirements, and additional taxes on fuel and energy, or related sustainability efforts, and changing customer and other stakeholder preferences and requirements, such as those regarding the use of materials of concern, shifting demand for products with lower environmental footprints, and for progress toward sustainability goals and greenhouse gas reduction targets.
• Natural disasters, including the impacts of hurricanes, tornadoes, windstorms, fires, earthquakes and floods and other extreme weather events, public health crises (such as pandemics and epidemics), war, terrorism, labor disruptions and international conflicts that could cause significant economic disruption and political and social instability, resulting in decreased demand for our products, adversely affect our manufacturing and distribution capabilities or cause interruptions in our supply chain, and our response may involve the implementation of measures which may not be successful.
• Pending and potential future litigation or other proceedings asserting, and/or investigations concerning and/or subpoenas and requests seeking information with respect to, alleged violations of law (including in connection with federal and/or state healthcare programs (such as Medicare or Medicaid), government contracts and/or sales and marketing practices (such as investigative subpoenas and the civil
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investigative demands received by us)), potential anti-corruption and related internal control violations under the Foreign Corrupt Practices Act, antitrust claims, securities law claims, environmental and product liability matters (including pending claims relating to ethylene oxide, our hernia repair implant products, surgical continence and pelvic organ prolapse products for women, vena cava filter products and implantable ports, which involve, or could involve in the future, lawsuits seeking class action status or seeking to establish multi-district or other consolidated proceedings), data privacy breaches and patent infringement, and the availability or collectability of insurance relating to any such claims.
• New or changing laws and regulations affecting our domestic and foreign operations, or changes in enforcement practices, including, without limitation, laws relating to sales practices, healthcare, environmental protection and reporting, price controls, privacy, data protection, cybersecurity, AI, employment, labor and licensing and regulatory requirements for new products and products in the post-marketing phase. In particular, the U.S. and other countries may impose new requirements regarding registration, labeling or prohibited materials that may require us to re-register products already on the market or otherwise impact our ability to market our products. New environmental laws, particularly with respect to the emission of greenhouse gases, may also increase our costs of operations or necessitate changes in our manufacturing plants or processes or those of our suppliers, or result in liability to us.
• The effect of adverse media exposure or other publicity regarding our business or operations, including the effect on our reputation or demand for its products.
• The effect of market fluctuations on the value of assets in our pension plans and on actuarial interest rate and asset return assumptions, which could require us to make additional contributions to the plans or increase our pension plan expense.
• Our ability to obtain the anticipated benefits of restructuring programs, if any, that we may undertake.
The foregoing list sets forth many, but not all, of the factors that could impact our ability to achieve results described in any forward-looking statements. Investors should understand that it is not possible to predict or identify all such factors and should not consider this list to be a complete statement of all potential risks and uncertainties.
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