BD announces intent to separate biosciences, diagnostic solutions business

BD announced its board of directors has unanimously authorized BD management to pursue a plan to separate BD's Biosciences and Diagnostic Solutions business from the rest of BD to enhance strategic focus and growth-oriented investments and capital allocation for both BD and the separated business and enhance value creation for shareholders.

"Our BD 2025 strategy has transformed the company into a faster-growing, more profitable organization positioned at the forefront of long-term growth trends in health care, and we believe today's announcement is an exciting next step in unlocking significant potential value for all our stakeholders," said Tom Polen, chairman, CEO and president of BD. 

Polen continued, "We believe the separation will position New BD as a differentiated MedTech leader and enable optimized investment to accelerate our innovation pipeline and ongoing margin enhancement through BD Excellence to further fund growth. We believe Biosciences and Diagnostic Solutions is expected to deliver substantial value as a pure-play leader in life sciences and will be well-positioned to execute on its unique and compelling solutions and growth opportunities. This transaction is designed to position both businesses to thrive in our respective sectors and deliver value for shareholders."

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The separation decision was the result of a comprehensive business portfolio evaluation launched by BD in early 2024. The company believes the separation is expected to unlock value on two fronts: The creation of a New BD that is recognized as a focused, innovative and growth-oriented medical technology leader with four attractive segments aligned to both essential needs and higher-growth trends in health care, and the Biosciences and Diagnostic Solutions business that is expected to become a differentiated leader in Life Sciences Tools and Diagnostics.

Following the separation, New BD will be a pure-play medical technology company with leading positions in large and growing end-markets. With this profile, New BD expects to drive concentrated investments in high-impact R&D and disciplined capital allocation including growth accretive M&A, which positions the company to deliver differentiated and durable growth rates in MedTech. New BD will have strong, leading positions across four new operating segments in attractive end-markets with significant headroom for growth:

• Medical Essentials, which includes BD's Medication Delivery Solutions and Specimen Management businesses that manufacture tens of billions of devices each year and represent the backbone of healthcare delivery through products such as IV catheters, PICCS, flush and other essential vascular access and management solutions, blood collection solutions, syringes and advanced needle technologies, resulting in durable, recurring revenue and strong cash generation.
• Connected Care, which includes BD's Medication Management Solutions and Advanced Patient Monitoring businesses with millions of smart devices that use automation, artificial intelligence and analytics to improve the efficiency and effectiveness of patient care and creates compelling growth potential in new areas of health care such as pharmacy automation.
• BioPharma Systems will bring a new name and increased focus to the Pharmaceuticals Systems business unit, which is the global leader in biologic drug delivery, developing and manufacturing drug delivery devices for the pharmaceutical industry. BioPharma Systems is uniquely positioned to enable the transition to more biologics, including GLP-1 treatments, and capitalize on the large growth potential of pharmaceutical industry trends, as more drug launches rely on patient self-injection.
• Interventional, which includes BD's Urology & Critical Care, Peripheral Intervention and Surgery businesses that advance the treatment of high-burden chronic conditions such as urinary incontinence, peripheral vascular disease, cancer and hernias—all of which are high-growth categories with attractive margin profiles and meaningful headroom for new innovation.

The New BD will focus on healthcare provider and patient end-markets. After the separation, the New BD is expected to have fiscal 2024 revenue of approximately $17.8 billion, with a $70+ billion addressable market growing at approximately 5%. New BD is expected to benefit from strong, durable cash flow and a best-in-class recurring revenue profile of over 90% that will help drive focused investment, accelerate New BD's innovation pipeline and systematically enhance growth and margin targets. Post-separation, New BD intends to focus on maintaining a strong balance sheet, making investments in innovation, returning capital to shareholders via dividend and share repurchases, and maintaining its investment grade credit rating, the company said.

The Biosciences and Diagnostic Solutions business also is expected to benefit from enhanced focus and investments as a pure-play Life Sciences Tools and Diagnostics company. The business is expected to have approximately $3.4 billion in fiscal 2024 revenue with a $22+ billion addressable market growing at mid- to high-single-digits, with more than 80% recurring revenue, and approximately 30% adjusted EBITDA margins. Biosciences is a leader in immunology and cancer research solutions and related clinical diagnostics, including flow cytometry instruments and reagents, and has innovative single-cell multiomics tools. Diagnostic Solutions is a leader in microbiology and infectious disease diagnostics, including molecular diagnostics, cervical cancer screening, microbiology automation and point-of-care offerings.

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BD said that both businesses have strong leadership teams with unparalleled commercial, engineering and R&D expertise, and are dedicated to bringing the next generation of high-quality innovations to researchers, clinicians and patients. The company believes that independent of BD, the business will be well-positioned to better meet the needs of research and laboratory customers and accelerate growth through more focused investment and capital allocation within the life sciences sector, potentially resulting in enhanced value for shareholders.

BD's board of directors said it s committed to exploring all opportunities to execute the separation in a manner that maximizes shareholder value, including possible options such as a Reverse Morris Trust, sale, spin-off or other transaction. The company expects to announce more specifics on the separation plans by the end of fiscal 2025 and intends to target completion of the transaction in fiscal 2026. 

The completion of any separation transaction will be contingent upon various conditions and approvals, including approval by BD's board of directors, receipt of requisite regulatory clearances and compliance with applicable U.S. Securities and Exchange Commission requirements. No assurance can be given regarding the form that a separation transaction may take or the specific terms or timing, or that a separation will in fact occur, BD said. 

Citi is acting as lead financial adviser, with Evercore also serving as a financial adviser. Additional advisers include Wachtell, Lipton, Rosen & Katz, PricewaterhouseCoopers, Skadden, Arps, Slate Meagher & Flom and FGS Global.