BD (NYSE: BDX) announced today that it will spin off its Diabetes Care business as an independent, publicly traded company during the first half of 2022.
The Diabetes Care business saw $1.1 billion in sales during BD’s fiscal year ended Sept. 30, 2020, nearly half outside the U.S. The business manufactures roughly 8 billion injection devices annually, serving about 30 million patients. The new company will have manufacturing sites in the United States, Ireland and China and expected office locations in New Jersey and Massachusetts.
“The decision to spin off our Diabetes Care business is part of our active portfolio management and consistent with our BD 2025 strategy to Grow, Simplify and Empower,” BD CEO Tom Polen said in a news release. “The spinoff will allow BD to strengthen its growth profile, enables a greater investment focus on our other core businesses and high-growth opportunities, and makes a greater impact for our customers and patients.”
The news came on the same day that BD reported second-quarter results that beat the consensus forecast on Wall Street, with the company reaffirming its guidance for 2021.
The Franklin Lakes, N.J.–based medtech giant reported profits of $299 million, or 94¢ per share, on sales of $4.907 billion for the three months ended March 31, 2021, nearly doubling the bottom line on a 15.4% boost in sales compared with Q2 2020.
Adjusted to exclude one-time items, earnings per share were $3.19, 15¢ ahead of The Street, where analysts were looking EPS of $3.04 on sales of $4.89 billion.
Recent milestones included BD’s announcement that it has applied to the FDA for a new clearance for its recall-plagued Alaris infusion pump system. BD has had shipments of Alaris pumps on hold after the FDA called for a comprehensive 510(k) submission to cover a host of software fixes needed following a Class I-level recall in March 2020. Pumps are only going to health providers with an immediate medical need.
“We also continued our essential role in the fight against COVID-19 by developing innovative diagnostic solutions and supplying the frontline with products urgently needed for patient care and vaccination —all while continuing to advance our growth and reinvestment initiatives,” Polen said.
BD continues to expect fiscal year 2021 revenues to grow 12% to 14% on an as-reported basis, with EPS between $12.75 and $12.85.
Investors reacted by sending BDX shares down nearly –4% to $240.25 apiece this morning. MassDevice’s MedTech 100 Index — which includes stocks of the world’s largest medical device companies — was down slightly.