BD intends to separate its Biosciences and Diagnostic Solutions business to enhance strategic focus, investment, and growth opportunities.

Summary:

BD has announced plans to separate its Biosciences and Diagnostic Solutions business from the rest of the company, aiming to create two independent entities with enhanced strategic focus and investment opportunities. The separation will establish “New BD” as a dedicated medical technology company with four key segments, while the newly independent Biosciences and Diagnostic Solutions business will focus on life sciences tools and diagnostics. The company expects to finalize the separation by fiscal 2026, pending regulatory approvals and board decisions.

Key Takeaways:

  • BD to Separate Biosciences and Diagnostic Solutions – The company’s board has approved a plan to spin off the Biosciences and Diagnostic Solutions business, creating two independent entities.
  • New BD to Focus on Medtech Growth – Following the separation, New BD will concentrate on medical technology innovation across four key segments, including connected care and biopharma systems.
  • Separation Expected by Fiscal 2026 – BD aims to finalize the transaction by fiscal 2026, pending regulatory approvals, with further details expected by the end of fiscal 2025.

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,” says Tom Polen, chairman, CEO, and president of BD, in a release. “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.”

The separation decision was the result of a 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 company with four 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 company in life sciences tools and diagnostics.

New BD

Following the separation, New BD will be a pure-play medical technology company with positions in large and growing end-markets. With this profile, New BD expects to drive concentrated investments in research and development and capital allocation including growth accretive M&A. New BD will have positions across four new operating segments in end-markets with headroom for growth:

  • Medical Essentials, which includes BD’s medication delivery solutions and specimen management businesses that manufacture devices such as IV catheters, PICCS, flush and other vascular access and management solutions, blood collection solutions, syringes, and needle technologies.
  • Connected Care, which includes BD’s medication management solutions and advanced patient monitoring businesses with smart devices that use automation, artificial intelligence, and analytics to improve the efficiency and effectiveness of patient care and creates 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, specializing in biologic drug delivery, developing and manufacturing drug delivery devices for the pharmaceutical industry. BioPharma Systems is positioned to enable the transition to more biologics, including GLP-1 treatments, and capitalize on the growth potential of pharmaceutical industry trends, as more drug launches rely on patient self-injection.
  • Interventional, which includes BD’s urology and 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.

After the separation, the New BD is expected to have fiscal 2024 revenue of approximately $17.8 billion, with a $70-plus billion addressable market growing at approximately 5%. 

Biosciences and Diagnostic Solutions

The Biosciences and Diagnostic Solutions business is also expected to benefit from enhanced focus and investments as a pure-play life sciences tools and diagnostics provider. The business is expected to have approximately $3.4 billion in fiscal 2024 revenue with a $22-plus billion addressable market growing at mid- to high-single-digits, with more than 80% recurring revenue, and approximately 30% adjusted EBITDA margins. 

Biosciences specializes in immunology and cancer research solutions and related clinical diagnostics, including flow cytometry instruments and reagents, and has single-cell multiomics tools. Diagnostic Solutions specializes in microbiology and infectious disease diagnostics, including molecular diagnostics, cervical cancer screening, microbiology automation, and point-of-care offerings. 

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.

Separation Plan Overview and Timeline

BD notes in a release that its board of directors intends to explore 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 US Securities and Exchange Commission requirements. 

“As the company pursues this transaction, BD will remain focused on execution and continue to operate the Biosciences and Diagnostic Solutions business and the other BD businesses in alignment with its BD 2025 strategy, including continued investments in commercial growth, innovation, M&A, and other initiatives that are part of the company’s multi-year strategic operating plans,” the company notes in a release. 

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 LLP, and FGS Global.

Photo caption: 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.

Photo credit: BD