filings.toolsItem 1. FINANCIAL STATEMENTS
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Item 1. FINANCIAL STATEMENTS
BECTON, DICKINSON AND COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Millions of dollars, except per share data
(Unaudited)
| Three Months Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Revenues | $ | 5,252 | $ | 5,168 | |||||||||||||||||||
| Cost of products sold | 2,841 | 2,933 | |||||||||||||||||||||
| Selling and administrative expense | 1,393 | 1,318 | |||||||||||||||||||||
| Research and development expense | 306 | 343 | |||||||||||||||||||||
| Integration, restructuring and transaction expense | 111 | 92 | |||||||||||||||||||||
| Other operating expense, net | 50 | 28 | |||||||||||||||||||||
| Total Operating Costs and Expenses | 4,700 | 4,715 | |||||||||||||||||||||
| Operating Income | 552 | 453 | |||||||||||||||||||||
| Interest expense | (153) | (155) | |||||||||||||||||||||
| Interest income | 4 | 23 | |||||||||||||||||||||
| Other expense, net | (10) | (16) | |||||||||||||||||||||
| Income Before Income Taxes | 393 | 306 | |||||||||||||||||||||
| Income tax provision | 11 | 3 | |||||||||||||||||||||
| Net Income | $ | 382 | $ | 303 | |||||||||||||||||||
| Basic Earnings per Share | $ | 1.34 | $ | 1.05 | |||||||||||||||||||
| Diluted Earnings per Share | $ | 1.34 | $ | 1.04 | |||||||||||||||||||
| Dividends per Common Share | $ | 1.05 | $ | 1.04 |
Amounts may not add due to rounding.
See notes to condensed consolidated financial statements
BECTON, DICKINSON AND COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Millions of dollars
(Unaudited)
| Three Months Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Net Income | $ | 382 | $ | 303 | |||||||||||||||||||
| Other Comprehensive Income, Net of Tax | |||||||||||||||||||||||
| Foreign currency translation adjustments | 17 | 46 | |||||||||||||||||||||
| Defined benefit pension and postretirement plans | 11 | 8 | |||||||||||||||||||||
| Cash flow hedges | 10 | 2 | |||||||||||||||||||||
| Other Comprehensive Income, Net of Tax | 37 | 56 | |||||||||||||||||||||
| Comprehensive Income | $ | 419 | $ | 359 |
Amounts may not add due to rounding.
See notes to condensed consolidated financial statements
BECTON, DICKINSON AND COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
Millions of dollars, except per share amounts and numbers of shares
| December 31, 2025 | September 30, 2025 | ||||||||||
| Assets | (Unaudited) | ||||||||||
| Current Assets: | |||||||||||
| Cash and equivalents | $ | 740 | $ | 641 | |||||||
| Restricted cash | 284 | 210 | |||||||||
| Short-term investments | 11 | 8 | |||||||||
| Trade receivables, net | 2,508 | 2,994 | |||||||||
| Inventories: | |||||||||||
| Materials | 940 | 860 | |||||||||
| Work in process | 495 | 490 | |||||||||
| Finished products | 2,650 | 2,544 | |||||||||
| 4,085 | 3,894 | ||||||||||
| Prepaid expenses and other | 1,560 | 1,508 | |||||||||
| Total Current Assets | 9,189 | 9,255 | |||||||||
| Property, Plant and Equipment | 15,237 | 15,113 | |||||||||
| Less allowances for depreciation and amortization | 8,265 | 8,116 | |||||||||
| Property, Plant and Equipment, Net | 6,972 | 6,997 | |||||||||
| Goodwill | 26,620 | 26,612 | |||||||||
| Developed Technology, Net | 6,376 | 6,651 | |||||||||
| Customer Relationships, Net | 2,128 | 2,231 | |||||||||
| Other Intangibles, Net | 521 | 523 | |||||||||
| Other Assets | 3,035 | 3,056 | |||||||||
| Total Assets | $ | 54,841 | $ | 55,325 | |||||||
| Liabilities and Shareholders’ Equity | |||||||||||
| Current Liabilities: | |||||||||||
| Current debt obligations | $ | 2,623 | $ | 1,560 | |||||||
| Payables, accrued expenses and other current liabilities | 6,138 | 6,753 | |||||||||
| Total Current Liabilities | 8,761 | 8,313 | |||||||||
| Long-Term Debt | 16,916 | 17,621 | |||||||||
| Long-Term Employee Benefit Obligations | 1,067 | 1,069 | |||||||||
| Deferred Income Taxes and Other Liabilities | 2,815 | 2,933 | |||||||||
| Commitments and Contingencies (See Note 5) | |||||||||||
| Shareholders’ Equity | |||||||||||
| Common stock — $1 par value; authorized — 640,000,000 shares; issued — 370,594,401 shares in December 31, 2025 and September 30, 2025 | 371 | 371 | |||||||||
| Capital in excess of par value | 20,103 | 20,075 | |||||||||
| Retained earnings | 16,704 | 16,622 | |||||||||
| Deferred compensation | 25 | 25 | |||||||||
| Treasury stock | (10,064) | (9,808) | |||||||||
| Accumulated other comprehensive loss | (1,857) | (1,895) | |||||||||
| Total Shareholders’ Equity | 25,282 | 25,390 | |||||||||
| Total Liabilities and Shareholders’ Equity | $ | 54,841 | $ | 55,325 |
Amounts may not add due to rounding.
See notes to condensed consolidated financial statements
BECTON, DICKINSON AND COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Millions of dollars
(Unaudited)
| Three Months Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Operating Activities | |||||||||||
| Net income | $ | 382 | $ | 303 | |||||||
| Adjustments to net income to derive net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 614 | 607 | |||||||||
| Share-based compensation | 91 | 90 | |||||||||
| Deferred income taxes | 29 | (151) | |||||||||
| Change in operating assets and liabilities | (415) | (370) | |||||||||
| Pension obligation | (2) | (2) | |||||||||
| Other, net | (43) | 216 | |||||||||
| Net Cash Provided by Operating Activities | 657 | 693 | |||||||||
| Investing Activities | |||||||||||
| Capital expenditures | (108) | (105) | |||||||||
| Maturities and sales of investments, net | — | 411 | |||||||||
| Acquisitions, net of cash acquired and adjustments | — | (8) | |||||||||
| Other, net | (75) | (94) | |||||||||
| Net Cash (Used for) Provided by Investing Activities | (183) | 204 | |||||||||
| Financing Activities | |||||||||||
| Change in short-term debt | 317 | 75 | |||||||||
| Payments of debt | — | (875) | |||||||||
| Repurchases of common stock | (250) | (750) | |||||||||
| Dividends paid | (299) | (302) | |||||||||
| Other, net | (69) | (76) | |||||||||
| Net Cash Used for Financing Activities | (302) | (1,928) | |||||||||
| Effect of exchange rate changes on cash and equivalents and restricted cash | 2 | (12) | |||||||||
| Net increase (decrease) in cash and equivalents and restricted cash | 174 | (1,043) | |||||||||
| Opening Cash and Equivalents and Restricted Cash | 851 | 1,856 | |||||||||
| Closing Cash and Equivalents and Restricted Cash | $ | 1,025 | $ | 813 | |||||||
Amounts may not add due to rounding.
See notes to condensed consolidated financial statements
BECTON, DICKINSON AND COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2025
Note 1 – Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, in the opinion of the management of Becton, Dickinson and Company (the "Company" or "BD"), include all adjustments which are of a normal recurring nature, necessary for a fair presentation of the financial position and the results of operations and cash flows for the periods presented. However, the financial statements do not include all information and accompanying notes required for a presentation in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s 2025 Annual Report on Form 10-K.
Within the financial statements and tables presented, certain columns and rows 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. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.
Combination of Biosciences and Diagnostic Solutions Business with Waters
On February 9, 2026, the Company completed the spin-off to BD shareholders of the Company’s Biosciences and Diagnostic Solutions business and the combination of the business with Waters Corporation (“Waters”) in a Reverse Morris Trust transaction. In the transaction, BD's shareholders received shares of Waters common stock representing 39.2% of the combined company on a fully diluted basis. In connection with the transaction, BD received a cash distribution of $4 billion from the spin-off entity, which was funded by $4 billion of indebtedness incurred by that entity. BD has received a favorable Private Letter Ruling from the Internal Revenue Service regarding matters relating to the U.S. federal income tax consequences of the transaction. Subsequent to the separation and combination, the historical results of the Biosciences and Diagnostic Solutions business will be reflected as discontinued operations in the Company’s consolidated financial statements.
In connection with the separation and combination, the Company and Waters entered into various agreements to effect the transaction and provide a framework for the relationship between the Company and Waters after the transaction close. Such agreements include the separation agreement, a transition services agreement, an employee matters agreement, a tax matters agreement, manufacturing agreements, and various lease agreements. Under these agreements the Company will continue to provide certain products and services to Waters following the completion of the transaction.
Note 2 – Accounting Changes
New Accounting Principles Not Yet Adopted
In September 2025, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update to amend the criteria for capitalizing internal-use software costs. This update is intended to modernize the accounting for software costs by replacing the legacy guidance under which capitalization is based on the nature of costs and the project development stage. This update requires software capitalization to begin when (1) management has authorized and committed funding to the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. The update is effective for the Company beginning in its fiscal year 2029, with early adoption permitted. The Company is currently assessing the potential impact of this update on its consolidated financial statements.
In November 2024, the FASB issued an accounting standard update that requires the Company to disclose more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, and amortization) included in each relevant income statement expense caption. The update is effective for the Company beginning with its fiscal year 2028 reporting and for interim reporting beginning with its fiscal year 2029. Early adoption is permitted. The Company is currently evaluating the impact that this update will have on its disclosures.
In December 2023, the FASB issued an accounting standard update that requires more disaggregated information to be included annually in the income tax rate reconciliation and income taxes paid disclosures. This update is effective for the Company for its fiscal year 2026, and the Company expects to include the required disclosures in its 2026 Annual Report on Form 10-K.
Note 3 – Shareholders' Equity
Changes in certain components of shareholders' equity for the first quarter of fiscal years 2026 and 2025 were as follows:
| Common Stock Issued at Par Value | Capital in Excess of Par Value | Retained Earnings | Deferred Compensation | Treasury Stock | |||||||||||||||||||||||||||||||
| (Millions of dollars) | Shares (in thousands) | Amount | |||||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | 371 | $ | 20,075 | $ | 16,622 | $ | 25 | (85,192) | $ | (9,808) | ||||||||||||||||||||||||
| Net income | — | — | 382 | — | — | — | |||||||||||||||||||||||||||||
| Common dividends ($1.05 per share) | — | — | (299) | — | — | — | |||||||||||||||||||||||||||||
| Issuance of shares under employee and other plans, net | — | (63) | — | — | 660 | (2) | |||||||||||||||||||||||||||||
| Share-based compensation | — | 91 | — | — | — | — | |||||||||||||||||||||||||||||
| Common stock held in trusts, net (a) | — | — | — | — | (5) | — | |||||||||||||||||||||||||||||
| Repurchase of common stock (b) | — | — | — | — | (1,315) | (254) | |||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | 371 | $ | 20,103 | $ | 16,704 | $ | 25 | (85,853) | $ | (10,064) | ||||||||||||||||||||||||
| Common Stock Issued at Par Value | Capital in Excess of Par Value | Retained Earnings | Deferred Compensation | Treasury Stock | |||||||||||||||||||||||||||||||
| (Millions of dollars) | Shares (in thousands) | Amount | |||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | 371 | $ | 19,893 | $ | 16,139 | $ | 25 | (81,493) | $ | (8,807) | ||||||||||||||||||||||||
| Net income | — | — | 303 | — | — | — | |||||||||||||||||||||||||||||
| Common dividends ($1.04 per share) | — | — | (302) | — | — | — | |||||||||||||||||||||||||||||
| Issuance of shares under employee and other plans, net | — | (65) | — | — | 679 | (12) | |||||||||||||||||||||||||||||
| Share-based compensation | — | 90 | — | — | — | — | |||||||||||||||||||||||||||||
| Common stock held in trusts, net (a) | — | — | — | — | (8) | — | |||||||||||||||||||||||||||||
| Repurchase of common stock (b) | — | (150) | — | — | (2,637) | (606) | |||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | 371 | $ | 19,768 | $ | 16,141 | $ | 25 | (83,459) | $ | (9,425) | ||||||||||||||||||||||||
(a)Common stock held in trusts consists of the Company’s shares held in rabbi trusts in connection with deferred compensation under the Company’s employee salary and bonus deferral plan and directors’ deferral plan.
(b)Amounts recorded to Treasury stock include excise tax on share repurchases.
Share Repurchases
In the first quarter of fiscal year 2026, the Company repurchased 1.315 million shares of its common stock for total consideration of $250 million through open market repurchases, which was recorded as an increase to Treasury stock.
In the first quarter of fiscal year 2025, the Company executed an accelerated share repurchase agreement for the repurchase of 3.256 million shares of its common stock for total consideration of $750 million. During the first quarter of fiscal 2025, (1) the initial delivery of 2.637 million shares was recorded as an increase to Treasury stock to recognize the acquisition of common stock acquired in a treasury stock transaction, and (2) the remaining 619 thousand shares, which were received and settled for $150 million during the second quarter of 2025, were recorded as a decrease to Capital in excess of par value to recognize a net share-settled forward sale contract indexed to the Company's own common stock. Upon final settlement of the repurchase agreement and the forward sale contract, the Company’s receipt of additional shares was recorded as an increase to Treasury stock and an offsetting increase to Capital in excess of par value.
The share repurchases discussed above were made pursuant to the repurchase program authorized by the Board of Directors on November 3, 2021, for 10 million shares of BD common stock, for which there is no expiration date. On January 28, 2025, the Board of Directors authorized BD to repurchase an additional 10 million shares of BD common stock, for which there is also no expiration date. As of December 31, 2025, 11 million shares remained unused under the programs authorized in prior periods. On January 27, 2026, the Board of Directors authorized BD to repurchase an additional 10 million shares of BD common stock, for which there is also no expiration date.
The Company expects to use approximately $2 billion of the cash distribution received in connection with the transaction with Waters, as further discussed in Note 1, for share repurchases through an accelerated share repurchase program that is expected to be executed in the second quarter of fiscal year 2026.
The components and changes of Accumulated other comprehensive income (loss) for the first quarter of fiscal years 2026 and 2025 were as follows:
| (Millions of dollars) | Total | Foreign Currency Translation (a) | Benefit Plans | Cash Flow Hedges (b) | Available-for-Sale Debt Securities | |||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | (1,895) | $ | (1,353) | $ | (636) | $ | 94 | $ | — | ||||||||||||||||||||||
| Other comprehensive income before reclassifications, net of taxes | 28 | 17 | — | 11 | — | |||||||||||||||||||||||||||
| Amounts reclassified into income, net of taxes | 9 | — | 11 | (1) | — | |||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | (1,857) | $ | (1,336) | $ | (625) | $ | 104 | $ | — | ||||||||||||||||||||||
| (Millions of dollars) | Total | Foreign Currency Translation (a) | Benefit Plans | Cash Flow Hedges (b) | Available-for-Sale Debt Securities | ||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | (1,732) | $ | (1,244) | $ | (557) | $ | 70 | $ | (1) | |||||||||||||||||||
| Other comprehensive income before reclassifications, net of taxes | 49 | 46 | — | 3 | — | ||||||||||||||||||||||||
| Amounts reclassified into income, net of taxes | 6 | — | 8 | (2) | — | ||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | (1,676) | $ | (1,199) | $ | (549) | $ | 72 | $ | (1) | |||||||||||||||||||
(a)Includes net (losses) gains relating to net investment hedges and amounts relating to intercompany balances of a long-term investment nature.
(b)Relates primarily to foreign exchange contracts. Additional disclosures regarding the Company's derivatives are provided in Note 11.
The tax impacts for amounts recognized in other comprehensive income before reclassifications and for reclassifications out of Accumulated other comprehensive income (loss) relating to benefit plans and cash flow hedges during the three months ended December 31, 2025 and 2024 were immaterial to the Company's consolidated financial results.
Note 4 – Earnings per Share
The weighted average common shares used in the computations of basic and diluted earnings per share (shares in thousands) were as follows:
| Three Months Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Average common shares outstanding | 285,582 | 289,505 | |||||||||||||||||||||
| Dilutive share equivalents from share-based plans | 263 | 884 | |||||||||||||||||||||
| Average common and common equivalent shares outstanding – assuming dilution | 285,845 | 290,389 | |||||||||||||||||||||
| Share equivalents excluded from the diluted shares outstanding calculation: | |||||||||||||||||||||||
| Share-based plans (a) | 4,181 | 2,758 |
(a)Excluded from the diluted earnings per share calculation as the exercise prices of these awards were greater than the average market price of the Company’s common shares.
Note 5 – Contingencies
The Company is 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.
Given the uncertain nature of litigation generally, the Company is 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. Even if the Company believes it has meritorious defenses, from time to time the Company engages in settlement discussions and mediation and considers settlements, taking into account various factors including, among other things, developments in such legal proceedings and the resulting risks and uncertainties. These activities have resulted in settlements for certain matters and going forward could result in further settlements, which may be confidential and could be significant and result in charges in excess of accruals.
In accordance with U.S. GAAP, the Company establishes accruals to the extent losses are probable and reasonably estimable. With respect to putative class action lawsuits and certain tort actions in the United States and certain of the Canadian lawsuits described below or in its other Securities and Exchange Commission (“SEC”) filings, the Company may not be able to determine if a probable loss exists or estimate a range of reasonably possible losses for the following reasons: (i) all or certain of the proceedings are in early stages; (ii) the Company has not received and reviewed complete information regarding all or certain of the plaintiffs and their medical conditions; and/or (iii) there are significant factual issues to be resolved. In addition, there is uncertainty as to the likelihood of a class being certified or the ultimate size of any class. With respect to certain of the civil investigative demands (“CIDs”) served by the Department of Justice, which are discussed below, the Company may not be able to determine if a probable loss exists, unless otherwise noted, for the following reasons: (i) all or certain of the proceedings are in early stages; and/or (ii) there are significant factual and legal issues to be resolved.
Product Liability Matters
As of December 31, 2025 and September 30, 2025, the Company was defending approximately 6,905 product liability claims involving its line of hernia repair devices (collectively, the “Hernia Product Claims”). In the fourth quarter of fiscal year 2024, the Company entered into a settlement agreement to resolve the vast majority of its existing hernia litigation, and the amounts payable pursuant to this settlement agreement are included within the Company’s recorded accrual for this matter and will be paid out over a multi-year period.
The majority of the claims are currently pending in a coordinated proceeding in Rhode Island State Court and in a federal multi-district litigation (“MDL”) established in the Southern District of Ohio, but claims are also pending in other state and/or federal court jurisdictions. In addition, outstanding claims include multiple putative class actions in Canada. Generally, the Hernia Product Claims seek damages for personal injury allegedly resulting from use of the products. The Company believes that it has meritorious defenses and is vigorously defending itself in these matters. There are no trials currently scheduled.
The Company also continues to be a defendant in certain other mass tort litigation. As of December 31, 2025, the Company is defending product liability claims involving the Company’s line of pelvic mesh products, the majority of which are pending in a coordinated proceeding in New Jersey Superior Court, and the Company’s line of inferior vena cava filter products, which are pending in various jurisdictions. As of December 31, 2025, the Company is defending approximately 2,765 product liability claims involving the Company’s line of implantable ports, the majority of which are pending in an MDL in the United States District Court for the District of Arizona, with the first scheduled trial to commence in April 2026 and the next in July 2026. The Company believes that it has meritorious defenses and is vigorously defending itself in these matters.
In most product liability litigations like those described above, plaintiffs allege a wide variety of claims, ranging from allegations of serious injury caused by the products to efforts to obtain compensation notwithstanding the absence of any injury. In many of these cases, the Company has not yet received and reviewed complete information regarding the plaintiffs and their medical conditions and, consequently, is unable to fully evaluate the claims. The Company expects that it will receive and review additional information regarding any remaining unsettled product liability matters.
Government Matters
In December 2024, the Company reached an agreement to resolve a matter with the Enforcement Division of the SEC relating to, among other things, certain reporting issues involving BD AlarisTM infusion pumps included in SEC disclosures prior to 2021. Per the terms of the settlement, BD paid the SEC $175 million in the first quarter of fiscal year 2025, which was previously accrued as of September 30, 2024. Also, as part of its settlement, the Company engaged and worked with an independent compliance consultant to review practices and procedures relating to the evaluation of product recalls and remediation under U.S. GAAP and its disclosure controls and procedures, including but not limited to controls and procedures relating to collection and assessment of information concerning potential risks, contingencies, operating events, trends, and uncertainties. That process is complete, concluding this matter.
In April 2019, the Department of Justice served the Company and CareFusion with CIDs seeking information regarding certain of CareFusion’s contracts with the Department of Veteran’s Affairs, some dating back more than 10 years, for certain products, including AlarisTM and PyxisTM devices, in connection with a civil investigation of possible violations of the False Claims Act,
and the government later expanded the investigation to include several additional contracts. The government has made several requests for documents and interviews or depositions of Company personnel and set forth a preliminary case assessment. The Company is cooperating with the government, responding to its requests and the assessment.
In April 2023, the Department of Justice served the Company with a CID seeking information regarding the Company’s GenesisTM container products in connection with an investigation of possible violations of the False Claims Act. The government has requested documents and set forth a preliminary case assessment, and the Company is cooperating with the government, responding to these requests and the assessment.
Other Matters
The Company was sued in state and federal courts in Georgia by plaintiffs who work or reside near Company facilities in Covington, Georgia, where ethylene oxide (“EtO”) sterilization activities take place. The federal cases have been dismissed and refiled in state court. The plaintiffs in the cases seek compensatory and punitive damages. Pursuant to Georgia statute, punitive damages in these cases are generally capped at $250,000 per claimant, unless the plaintiff can prove that the Company acted, or failed to act, with a specific intent to cause harm, which the court to date has cast as a jury issue, meaning that the jury could negate the cap. The cases allege a variety of injuries, including but not limited to multiple types of cancer, allegedly attributable to exposure to EtO. As of December 31, 2025, the Company has approximately 420 of such suits involving approximately 430 plaintiffs asserting individual personal injury claims; approximately 50 of the cases also allege injury caused by exposure to a chemical of another defendant entirely unrelated to the Company. The Company believes that it has meritorious defenses and is vigorously defending itself in these matters.
On May 2, 2025, the compensatory phase of the first trial in these cases resulted in the jury awarding the plaintiff $20 million in compensatory damages with the matter proceeding to a punitive phase. On May 6, 2025, the jury made a punitive damages finding in the amount of $50 million, which was set aside by the court as the judge declared a mistrial as to this phase of the trial. The mistrial was declared because the jury was not unanimous regarding the issue of specific intent to cause harm, which is required in a case like this for a punitive damages award above a $250,000 cap. After declaring a mistrial in the punitive phase, the court asked for briefing as to potential broader ramifications of that declaration, ruling on September 15, 2025, that a retrial would only be on the issue of specific intent to cause harm and not a complete mistrial which the Company sought. The trial court also permitted the Company to seek appellate review, which the Georgia Court of Appeals accepted on October 23, 2025. At this time, no judgment has been entered in the case, which is still pending. No amounts have been accrued with respect to this individual case because there is no judgment and there are a multitude of strong appellate issues, which the Company is pursuing.
In December 2025, the Company was served with a complaint by competitor TELA Bio, Inc., making antitrust allegations relating to certain sales of hernia devices. The Company disputes the allegations and is vigorously defending itself in this matter.
In 2015, legislation was enacted in Italy which requires medical technology companies to make payments to the Italian government if Italy’s medical device expenditures exceed annual regional expenditure ceilings. The amount of these payments is based on the amount by which the regional ceilings for the given year were exceeded. Considerable uncertainty has existed regarding the enforceability and implementation of this payback legislation since it was enacted and the Company, as well as other medical device companies, have filed appeals which challenge the enforceability of this legislation. In July 2024, the Italian Constitutional Court affirmed the constitutionality of the medical device payback legislation. During its fourth quarter of fiscal year 2025, the Company made a payment to settle its obligations for calendar years 2015 through 2018 in accordance with an Economy Decree issued by the Italian government in June 2025 which allowed companies, upon their closure of all pending litigation relating to amounts due for calendar years 2015 through 2018, to pay 25% of the invoiced amounts for those years. No payment requests have been issued to the Company for any subsequent years and ultimate resolution for amounts that may be due for these later years is unknown at this time. As such, it is possible that the amount of the Company’s liability could differ from its currently accrued amount.
In May 2024, CareFusion 303, Inc., the Company’s subsidiary that manufactures its BD PyxisTM dispensing equipment, received a Form 483 Notice following an inspection from the U.S. Food and Drug Administration (“FDA”) that contained observations of non-conformance with the FDA’s Quality System and Medical Device Reporting (“MDR”) regulations. In November 2024, the Company received a Warning Letter following the inspection of its Dispensing quality management system at its facility located in San Diego, California, citing certain alleged violations of the quality system regulations, MDR regulation, the corrections and removals reporting regulation and law. The Company’s liability recorded for estimated future costs associated with certain actions required to respond to the Warning Letter and to address the non-conformities was $83 million as of December 31, 2025. Since receipt of the Warning Letter, the Company has continued to assess, based upon currently available information, the resources that will be required to address the non-conformities cited in the Warning Letter
while optimizing the customer experience and ensuring the Company’s remediation plans can be fully executed within its planned timelines. The Company submitted a comprehensive response to address the FDA’s feedback in the Warning Letter, which committed to implementing additional corrective actions; however, no assurances can be given regarding further action by the FDA as a result of the noted non-conformities, or that corrective actions proposed and taken by CareFusion 303, Inc. will be adequate to address the Warning Letter. Any failure to adequately address this Warning Letter may result in regulatory actions initiated by the FDA without further notice, which may include, but are not limited to, seizure, injunction and civil monetary penalties. As a result, the ultimate resolution of this Warning Letter and its impact on the Company’s operations is unknown at this time, and it is possible that the amount of the Company’s liability could exceed its currently accrued amount.
The Company is also involved both as a plaintiff and a defendant in other legal proceedings and claims that arise in the ordinary course of business. The Company believes that it has meritorious defenses and is vigorously defending itself in each of these matters.
The Company is a potentially responsible party to a number of federal administrative proceedings in the United States brought under the Comprehensive Environment Response, Compensation and Liability Act, also known as “Superfund,” and similar state laws. The Company also is subject to administrative proceedings under environmental laws in jurisdictions outside the United States. The affected sites are in varying stages of development. In some instances, the remediation has been completed, while in others, environmental studies are underway or commencing. For several sites, there are other potentially responsible parties that may be jointly or severally liable to pay all or part of cleanup costs. While it is not feasible to predict the outcome of these proceedings, based upon the Company’s experience, current information and applicable law, the Company does not expect these proceedings to have a material adverse effect on its consolidated results of operations and/or consolidated cash flows.
Litigation Accruals
Except as otherwise noted, the Company cannot predict the outcome of the other legal matters discussed above, nor can it predict whether any outcome will have a material adverse effect on the Company’s consolidated results of operations and/or consolidated cash flows. Further, the Company may not be able to determine if a probable loss exists for certain of the other legal matters discussed above, and accordingly, the Company has recorded no provisions for such matters in its consolidated results of operations.
The Company regularly monitors and evaluates the status of product liability and other litigated matters, and may, from time-to-time, engage in settlement discussions and mediations taking into consideration, among other things, developments in the litigation and the risks and uncertainties associated therewith. These activities have resulted in confidential settlements and going forward could result in further settlements, the terms of which may be confidential and could be significant and result in charges in excess of accruals. A determination of the accrual amounts for these contingencies is made after analysis of each litigation matter. When appropriate, the accrual is developed with the consultation of outside counsel regarding the nature, timing, and extent of each matter.
The Company considers relevant information when estimating its accruals for product liability and other legal matters, including, but not limited to: the nature, number, and quality of unfiled and filed claims; the rate of claims being filed; the status of settlement discussions with plaintiffs’ counsel; the allegations and documentation supporting or refuting such allegations; publicly available information regarding similar settlements; historical information regarding settlements involving the Company; and the stage of litigation. Because currently available information is often limited, there is inherent uncertainty and volatility relating to the Company’s estimates of liability. As additional information becomes available, the Company records adjustments to its accruals as required.
Accruals for the Company’s product liability claims and certain other legal matters, which are discussed above, as well as legal defense costs for certain of these matters, amounted to approximately $1.7 billion and $1.8 billion at December 31, 2025 and September 30, 2025, respectively. A substantial portion of these accruals are recorded within Deferred Income Taxes and Other Liabilities and the remainder are recorded within Total Current Liabilities on the Company’s condensed consolidated balance sheets. The Company’s accruals for product liability and certain other legal matters as of December 31, 2025, as compared with September 30, 2025, primarily reflected payments of settlements and legal fees.
The particular outcome in any one trial is typically not representative of potential outcomes of all cases or claims. Because any accrual already contemplates a wide range of possible outcomes, including those with a de minimis value, individual outcomes generally do not impact the value of other cases in the total case inventory or the overall product liability accrual.
In view of the uncertainties discussed above, the Company could incur charges in excess of any currently established accruals and, to the extent available, liability insurance. In the opinion of management, any such future charges, individually or in the
aggregate, could have a material adverse effect on the Company’s consolidated results of operations, financial condition, and/or consolidated cash flows.
Note 6 – Revenues
The Company’s policies for recognizing sales have not changed from those described in the Company’s 2025 Annual Report on Form 10-K. The Company sells a broad range of medical supplies, devices, laboratory equipment and diagnostic products, which are distributed through independent distribution channels and directly by BD through sales representatives. End-users of the Company's products include healthcare institutions, physicians, life science researchers, clinical laboratories, the pharmaceutical industry and the general public. Periodically, the Company generates revenues attributable to licensing, which includes consideration received in exchange for the use of BD intellectual property by third parties.
Measurement of Revenues
The Company’s allowance for doubtful accounts reflects the current estimate of credit losses expected to be incurred over the life of its trade receivables. Such estimated credit losses are determined based on historical loss experiences, customer-specific credit risk, and reasonable and supportable forward-looking information, such as country or regional risks that are not captured in the historical loss information. The allowance for doubtful accounts for trade receivables is not material to the Company's consolidated financial results.
The Company's gross revenues are subject to a variety of deductions, which are recorded in the same period that the underlying revenues are recognized. Such variable consideration includes rebates, sales discounts and sales returns. The Company’s rebate liabilities are classified as an offset to Trade receivables, net, or as Payables, accrued expenses and other current liabilities, depending on the form of settlement and were $933 million and $905 million at December 31, 2025 and September 30, 2025, respectively. The impact of other forms of variable consideration, including sales discounts and sales returns, is not material to the Company's revenues.
Effects of Revenue Arrangements on Condensed Consolidated Balance Sheets
Capitalized contract costs associated with the costs to fulfill contracts for certain products in the Medication Management Solutions organizational unit are immaterial to the Company's condensed consolidated balance sheets. Commissions relating to revenues recognized over a period longer than one year are recorded as assets, which are amortized over the period over which the revenues underlying the commissions are recognized. Capitalized contract costs related to such commissions are immaterial to the Company's condensed consolidated balance sheets.
Contract liabilities for unearned revenue that is allocable to performance obligations, such as extended warranty and software maintenance contracts, which are performed over time, were approximately $457 million and $481 million and as of December 31, 2025 and September 30, 2025, respectively, and are included in Payables, accrued expenses and other current liabilities on the Company’s condensed consolidated balance sheets. The Company's liability for product warranties provided under its agreements with customers is not material to its condensed consolidated balance sheets.
Remaining Performance Obligations
The Company's obligations relative to service contracts and pending installations of equipment, primarily in the Company's Medication Management Solutions unit, represent unsatisfied performance obligations of the Company. The revenues under existing contracts with original expected durations of more than one year, which are attributable to products and/or services that have not yet been installed or provided are estimated to be approximately $2.5 billion at December 31, 2025. The Company expects to recognize the majority of this revenue over the next three years.
Within the Company's Medication Management Solutions, Medication Delivery Solutions, Diagnostic Solutions, and Biosciences units, some contracts also contain minimum purchase commitments of reagents or other consumables, and the future sales of these consumables represent additional unsatisfied performance obligations of the Company. The revenue attributable to the unsatisfied minimum purchase commitment-related performance obligations, for contracts with original expected durations of more than one year, is estimated to be approximately $2.4 billion at December 31, 2025. This revenue will be recognized over the customer relationship periods.
Disaggregation of Revenues
A disaggregation of the Company's revenues by segment, organizational unit and geographic region is provided in Note 7.
Note 7 – Segment Data
Effective October 1, 2025, the Company reorganized its organizational units into five worldwide business segments: BD Medical Essentials (“Medical Essentials”), BD Connected Care (“Connected Care”), BD BioPharma Systems (“BioPharma Systems”), BD Interventional (“Interventional”) and BD Life Sciences (“Life Sciences”). The Company's segments are strategic businesses that are managed separately because each one develops, manufactures and markets distinct products and services. The segment reorganization did not affect the principal product lines of any organizational unit.
The following table provides an overview of the Company’s reportable segments and their respective organizational units.
| Reportable Segment: | Organizational Units: | ||||
| Medical Essentials | Medication Delivery Solutions, Specimen Management | ||||
| Connected Care | Medication Management Solutions, Advanced Patient Monitoring | ||||
| BioPharma Systems | BioPharma Systems (formerly Pharmaceutical Systems) | ||||
| Interventional | Urology and Critical Care, Peripheral Intervention, Surgery | ||||
| Life Sciences (a) | Diagnostic Solutions and Biosciences |
(a)The Company’s Biosciences and Diagnostic Solutions business was separated from the Company and combined with Waters on February 9, 2026, as further discussed in Note 1. Subsequent to the separation and combination, the Life Sciences segment will be eliminated from the Company’s segment reporting, which will consist of the remaining four reportable segments.
The Company’s Chairman, Chief Executive Officer and President is its chief operating decision maker (“CODM”). The Company presents segment results on a consistent basis with internal reporting regularly reviewed by the CODM, on both a reported and a foreign currency-neutral basis, to evaluate business segment performance as compared to budget and allocate resources such as capital and headcount. Business segment performance is evaluated based on operating income before taxes excluding certain corporate expenses and other adjustments that are not considered part of ordinary operations. Such adjustments primarily include: amortization and other adjustments related to the purchase accounting for acquisitions; certain product remediation costs; amounts related to certain legal matters; costs associated with restructuring and integration activities; acquisition-related transaction costs; and separation-related items. These amounts are included in the reconciliation of segment operating income to the Company’s Income Before Income Taxes below.
The Company's prior-period segment amounts have been recast in the tables below to conform to the new segment structure and to the current-period segment income presentation.
Revenues by segment, organizational unit and geographical areas for the three months ended December 31, 2025 and 2024 are detailed below. The Company has no material intersegment revenues.
| Three Months Ended December 31, | |||||||||||||||||||||||||||||||||||
| (Millions of dollars) | 2025 | 2024 | |||||||||||||||||||||||||||||||||
| United States | International | Total | United States | International | Total | ||||||||||||||||||||||||||||||
| Medical Essentials | |||||||||||||||||||||||||||||||||||
| Medication Delivery Solutions | $ | 693 | $ | 435 | $ | 1,128 | $ | 694 | $ | 430 | $ | 1,124 | |||||||||||||||||||||||
| Specimen Management | 245 | 222 | 468 | 238 | 223 | 462 | |||||||||||||||||||||||||||||
| Total segment revenues | $ | 938 | $ | 658 | $ | 1,595 | $ | 932 | $ | 654 | $ | 1,586 | |||||||||||||||||||||||
| Connected Care | |||||||||||||||||||||||||||||||||||
| Medication Management Solutions | $ | 678 | $ | 156 | $ | 835 | $ | 659 | $ | 142 | $ | 801 | |||||||||||||||||||||||
| Advanced Patient Monitoring | 178 | 119 | 297 | 159 | 113 | 271 | |||||||||||||||||||||||||||||
| Total segment revenues | $ | 857 | $ | 275 | $ | 1,131 | $ | 818 | $ | 255 | $ | 1,073 | |||||||||||||||||||||||
| BioPharma Systems | $ | 150 | $ | 279 | $ | 429 | $ | 104 | $ | 314 | $ | 418 | |||||||||||||||||||||||
| Interventional | |||||||||||||||||||||||||||||||||||
| Peripheral Intervention | $ | 265 | $ | 220 | $ | 485 | $ | 253 | $ | 220 | $ | 473 | |||||||||||||||||||||||
| Urology and Critical Care | 339 | 88 | 427 | 306 | 83 | 389 | |||||||||||||||||||||||||||||
| Surgery | 310 | 108 | 418 | 303 | 92 | 395 | |||||||||||||||||||||||||||||
| Total segment revenues | $ | 914 | $ | 416 | $ | 1,330 | $ | 861 | $ | 396 | $ | 1,257 | |||||||||||||||||||||||
| Life Sciences | |||||||||||||||||||||||||||||||||||
| Diagnostic Solutions | $ | 176 | $ | 264 | $ | 439 | $ | 212 | $ | 262 | $ | 474 | |||||||||||||||||||||||
| Biosciences | 124 | 202 | 327 | 153 | 208 | 361 | |||||||||||||||||||||||||||||
| Total segment revenues | $ | 300 | $ | 466 | $ | 766 | $ | 365 | $ | 470 | $ | 836 | |||||||||||||||||||||||
| Total Company revenues | $ | 3,159 | $ | 2,093 | $ | 5,252 | $ | 3,080 | $ | 2,089 | $ | 5,168 |
The following tables include the significant expenses by segment that are regularly provided to the CODM and a reconciliation of segment operating income to Income before Income Taxes.
| Three Months Ended December 31, 2025 | |||||||||||||||||||||||||||||||||||
| (Millions of dollars) | Medical | Connected | BioPharma | Life | |||||||||||||||||||||||||||||||
| Essentials | Care | Systems | Interventional | Sciences | Total | ||||||||||||||||||||||||||||||
| Revenues | $ | 1,595 | $ | 1,131 | $ | 429 | $ | 1,330 | $ | 766 | $ | 5,252 | |||||||||||||||||||||||
| Segment expenses: | |||||||||||||||||||||||||||||||||||
| Cost of products sold | 800 | 501 | 243 | 445 | 393 | 2,382 | |||||||||||||||||||||||||||||
| % of revenues | 50.1 | % | 44.3 | % | 56.6 | % | 33.5 | % | 51.3 | % | |||||||||||||||||||||||||
| Selling and administrative expense | 180 | 191 | 29 | 262 | 147 | 808 | |||||||||||||||||||||||||||||
| % of revenues | 11.3 | % | 16.9 | % | 6.6 | % | 19.7 | % | 19.2 | % | |||||||||||||||||||||||||
| Research and development expense | 47 | 85 | 18 | 63 | 66 | 279 | |||||||||||||||||||||||||||||
| % of revenues | 2.9 | % | 7.5 | % | 4.1 | % | 4.7 | % | 8.7 | % | |||||||||||||||||||||||||
| Other operating expense, net | — | 3 | — | — | — | 3 | |||||||||||||||||||||||||||||
| % of revenues | — | % | 0.3 | % | — | % | — | % | — | % | |||||||||||||||||||||||||
| Segment Operating Income | $ | 569 | $ | 352 | $ | 140 | $ | 561 | $ | 159 | $ | 1,780 | |||||||||||||||||||||||
| % of revenues | 35.6 | % | 31.1 | % | 32.6 | % | 42.1 | % | 20.8 | % | |||||||||||||||||||||||||
| Unallocated items | |||||||||||||||||||||||||||||||||||
| Net interest expense | (149) | ||||||||||||||||||||||||||||||||||
| Corporate administrative and other unallocated (a) | (690) | ||||||||||||||||||||||||||||||||||
| Specified items: | |||||||||||||||||||||||||||||||||||
| Purchase accounting adjustments (b) | (391) | ||||||||||||||||||||||||||||||||||
| Integration, restructuring and transaction expense | (111) | ||||||||||||||||||||||||||||||||||
| Product, litigation, and other items (c) | (8) | ||||||||||||||||||||||||||||||||||
| Separation-related items (d) | (38) | ||||||||||||||||||||||||||||||||||
| Income Before Income Taxes | $ | 393 |
| Three Months Ended December 31, 2024 | |||||||||||||||||||||||||||||||||||
| (Millions of dollars) | Medical | Connected | BioPharma | Life | |||||||||||||||||||||||||||||||
| Essentials | Care | Systems | Interventional | Sciences | Total | ||||||||||||||||||||||||||||||
| Revenues | $ | 1,586 | $ | 1,073 | $ | 418 | $ | 1,257 | $ | 836 | $ | 5,168 | |||||||||||||||||||||||
| Segment expenses: | |||||||||||||||||||||||||||||||||||
| Cost of products sold | 770 | 483 | 232 | 404 | 385 | 2,273 | |||||||||||||||||||||||||||||
| % of revenues | 48.5 | % | 45.0 | % | 55.4 | % | 32.1 | % | 46.1 | % | |||||||||||||||||||||||||
| Selling and administrative expense | 165 | 168 | 29 | 237 | 142 | 740 | |||||||||||||||||||||||||||||
| % of revenues | 10.4 | % | 15.7 | % | 6.8 | % | 18.9 | % | 17.0 | % | |||||||||||||||||||||||||
| Research and development expense | 44 | 80 | 17 | 56 | 68 | 265 | |||||||||||||||||||||||||||||
| % of revenues | 2.8 | % | 7.4 | % | 4.1 | % | 4.4 | % | 8.1 | % | |||||||||||||||||||||||||
| Other operating expense, net | — | 6 | — | — | — | 6 | |||||||||||||||||||||||||||||
| % of revenues | — | % | 0.6 | % | — | % | — | % | — | % | |||||||||||||||||||||||||
| Segment Operating Income | $ | 607 | $ | 336 | $ | 141 | $ | 561 | $ | 240 | $ | 1,884 | |||||||||||||||||||||||
| % of revenues | 38.3 | % | 31.3 | % | 33.7 | % | 44.6 | % | 28.7 | % | |||||||||||||||||||||||||
| Unallocated items | |||||||||||||||||||||||||||||||||||
| Net interest expense | (132) | ||||||||||||||||||||||||||||||||||
| Corporate administrative and other unallocated (a) | (682) | ||||||||||||||||||||||||||||||||||
| Specified items: | |||||||||||||||||||||||||||||||||||
| Purchase accounting adjustments (b) | (570) | ||||||||||||||||||||||||||||||||||
| Integration, restructuring and transaction expense | (92) | ||||||||||||||||||||||||||||||||||
| Product, litigation, and other items (c) | (102) | ||||||||||||||||||||||||||||||||||
| Income Before Income Taxes | $ | 306 |
(a)Primarily comprised of corporate general and administrative expenses, share-based compensation expense, and foreign exchange.
(b)Includes amortization and other adjustments related to the purchase accounting for acquisitions. The Company’s amortization expense is recorded in Cost of products sold. The amount in the three months ended December 31, 2024 includes $180 million due to a fair value step-up adjustment relating to Advanced Patient Monitoring's inventory on the acquisition date.
(c)Includes certain 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.
(d)Represents costs recorded to Other operating expense, net incurred in connection with the separation of BD’s Biosciences and Diagnostic Solutions business and the combination of the business with Waters, as further discussed in Note 1, for the three months ended December 31, 2025.
Segment information for both capital expenditures and depreciation and amortization is provided below.
| Three Months Ended December 31, | |||||||||||
| (Millions of dollars) | 2025 | 2024 | |||||||||
| Capital Expenditures | |||||||||||
| Medical Essentials | $ | 40 | $ | 35 | |||||||
| Connected Care | 12 | 16 | |||||||||
| BioPharma Systems | 29 | 21 | |||||||||
| Interventional | 17 | 23 | |||||||||
| Life Sciences | 6 | 9 | |||||||||
| Corporate and All Other | 3 | 1 | |||||||||
| Total Capital Expenditures | $ | 108 | $ | 105 | |||||||
| Depreciation and Amortization | |||||||||||
| Medical Essentials | $ | 141 | $ | 135 | |||||||
| Connected Care | 194 | 194 | |||||||||
| BioPharma Systems | 34 | 31 | |||||||||
| Interventional | 197 | 200 | |||||||||
| Life Sciences | 45 | 44 | |||||||||
| Corporate and All Other | 3 | 3 | |||||||||
| Total Depreciation and Amortization | $ | 614 | $ | 607 |
Note 8 – Benefit Plans
The Company has defined benefit pension plans covering certain employees in the United States and certain international locations. The measurement date used for these plans is September 30.
Net pension cost included the following components for the three-month periods:
| Three Months Ended December 31, | |||||||||||||||||||||||
| (Millions of dollars) | 2025 | 2024 | |||||||||||||||||||||
| Service cost | $ | 9 | $ | 12 | |||||||||||||||||||
| Interest cost | 31 | 42 | |||||||||||||||||||||
| Expected return on plan assets | (40) | (56) | |||||||||||||||||||||
| Amortization of loss | 8 | 10 | |||||||||||||||||||||
| Net pension cost | $ | 7 | $ | 8 |
The amounts provided above for amortization of loss represent the reclassifications of net actuarial losses that were recognized in Accumulated other comprehensive income (loss) in prior periods. All components of the Company’s net periodic pension and postretirement benefit costs, aside from service cost, are recorded to Other expense, net on its condensed consolidated statements of income.
Note 9 – Business Restructuring Charges
The Company incurred restructuring costs during the three months ended December 31, 2025, primarily in connection with the Company's simplification and other cost-saving initiatives, which were recorded within Integration, restructuring and transaction expense. These simplification and other cost-saving initiatives are focused on reducing complexity, organizational realignment related to the separation of the Company’s Biosciences and Diagnostic Solutions business, optimizing the Company’s supply chain efficiency, streamlining its global manufacturing footprint, enhancing product quality, refining customer experience, and improving cost efficiency across all of the Company’s segments.
Restructuring liability activity for the three months ended December 31, 2025 was as follows:
| (Millions of dollars) | Employee Termination | Other (a) | Total | ||||||||||||||
| Balance at September 30, 2025 | $ | 33 | $ | 30 | $ | 63 | |||||||||||
| Charged to expense | 41 | 33 | 75 | ||||||||||||||
| Cash payments | (27) | (31) | (58) | ||||||||||||||
| Non-cash settlements | — | (3) | (3) | ||||||||||||||
| Balance at December 31, 2025 | $ | 47 | $ | 29 | $ | 76 |
(a) Primarily consists of non-employee-related costs associated with the execution of the Company’s cost efficiency and restructuring programs, such as incremental project management costs.
Note 10 – Intangible Assets
Intangible assets consisted of:
| December 31, 2025 | September 30, 2025 | ||||||||||||||||||||||||||||||||||
| (Millions of dollars) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||
| Amortized intangible assets | |||||||||||||||||||||||||||||||||||
| Developed technology | $ | 15,883 | $ | (9,507) | $ | 6,376 | $ | 15,876 | $ | (9,225) | $ | 6,651 | |||||||||||||||||||||||
| Customer relationships | 5,522 | (3,395) | 2,128 | 5,522 | (3,291) | 2,231 | |||||||||||||||||||||||||||||
| Patents, trademarks and other | 1,268 | (763) | 505 | 1,251 | (745) | 507 | |||||||||||||||||||||||||||||
| Amortized intangible assets | $ | 22,673 | $ | (13,665) | $ | 9,009 | $ | 22,649 | $ | (13,261) | $ | 9,389 | |||||||||||||||||||||||
| Unamortized intangible assets | |||||||||||||||||||||||||||||||||||
| Acquired in-process research and development | $ | 14 | $ | 14 | |||||||||||||||||||||||||||||||
| Trademarks | 2 | 2 | |||||||||||||||||||||||||||||||||
| Unamortized intangible assets | $ | 16 | $ | 16 |
Intangible amortization expense was $397 million and $395 million for the three months ended December 31, 2025 and 2024, respectively.
The following is a reconciliation of goodwill by business segment:
| (Millions of dollars) | Medical Essentials (a) | Connected Care (a) | BioPharma Systems (a) | Interventional (a) | Life Sciences (a) | Total | |||||||||||||||||||||||||||||
| Goodwill as of September 30, 2025 | $ | 7,011 | $ | 6,093 | $ | 96 | $ | 12,764 | $ | 648 | $ | 26,612 | |||||||||||||||||||||||
| Currency translation | 4 | 1 | — | 3 | 1 | 9 | |||||||||||||||||||||||||||||
| Goodwill as of December 31, 2025 | $ | 7,015 | $ | 6,093 | $ | 96 | $ | 12,767 | $ | 648 | $ | 26,620 |
(a)Effective October 1, 2025, the Company reorganized its organizational units into five distinct, separately-managed segments, based on the nature of its product and service offerings, as further discussed in Note 7.
Note 11 – Derivative Instruments and Hedging Activities
The Company uses derivative instruments to mitigate certain exposures. The Company does not enter into derivative financial instruments for trading or speculative purposes. The effects these derivative instruments and hedged items had on the Company’s balance sheets and the fair values of the derivatives outstanding at December 31, 2025 and September 30, 2025 were not material. The effects on the Company’s financial performance and cash flows are provided below.
Foreign Currency Risks and Related Strategies
The Company has foreign currency exposures throughout Europe, Greater Asia, Canada and Latin America. Transactional currency exposures that arise from entering into transactions, generally on an intercompany basis, in non-hyperinflationary countries that are denominated in currencies other than the functional currency are mitigated primarily through the use of forward contracts.
In order to mitigate transactional foreign currency exposures resulting from anticipated intercompany purchases and sales denominated in a currency other than local functional currencies, the Company has 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.
In order to mitigate foreign currency exposure relating to its investments in certain foreign subsidiaries, the Company has hedged the currency risk associated with those investments with certain instruments, such as foreign currency-denominated debt and cross-currency swaps, which are designated as net investment hedges, as well as currency exchange contracts.
The notional amounts of the Company’s foreign currency-related derivative instruments as of December 31, 2025 and September 30, 2025 were as follows:
| (Millions of dollars) | Hedge Designation | December 31, 2025 | September 30, 2025 | ||||||||||||||
| Foreign exchange contracts (a) | Undesignated | $ | 2,906 | $ | 5,710 | ||||||||||||
| Foreign exchange contracts (b) | Cash flow hedges | 898 | 1,170 | ||||||||||||||
| Foreign currency-denominated debt (c) | Net investment hedges | 2,644 | 2,630 | ||||||||||||||
| Cross-currency swaps (d) | Net investment hedges | 1,054 | 1,054 |
(a)Represents hedges of transactional foreign exchange exposures resulting primarily from intercompany payables and receivables. Gains and losses on these instruments are recognized immediately in income. These gains and losses are largely offset by gains and losses on the underlying hedged items, as well as the hedging costs associated with the derivative instruments. Net amounts recognized in Other expense, net, during the three months ended December 31, 2025 and 2024 were immaterial to the Company's consolidated financial results.
(b)Represents foreign exchange contracts related to anticipated intercompany purchases and sales, which generally have durations of less than eighteen months.
(c)Represents foreign currency-denominated long-term notes outstanding which were effective as economic hedges of net investments in certain of the Company's foreign subsidiaries.
(d)Represents cross-currency swaps, which were effective as economic hedges of net investments in certain of the Company’s foreign subsidiaries.
Net gains or losses resulting from the change in fair value of the foreign exchange contracts designated as cash flow hedges are initially recorded within Other comprehensive income (loss) and reclassified into earnings upon the occurrence of the related underlying third-party transaction. If foreign exchange contracts designated as cash flow hedges are terminated prematurely as a result of the hedged transaction being probable of not occurring, the balance in Accumulated other comprehensive income (loss) attributable to those derivatives is immediately reclassified into Revenues or Cost of products sold (depending on whether the hedged item is an intercompany sale or purchase).
Net after tax amounts recognized in Other comprehensive income (loss), as well as amounts reclassified from Accumulated other comprehensive income (loss) into earnings relating to these cash flow hedges during the three months ended December 31, 2025 and 2024 were immaterial. Net realized gains of $32 million, net of tax, related to these cash flow hedges are expected to be reclassified from accumulated other comprehensive income into earnings within the next 12 months of December 31, 2025.
Net gains or losses relating to the net investment hedges, which are attributable to changes in the foreign currencies to U.S. dollar spot exchange rates, are recorded as foreign currency translation in Other comprehensive income (loss), net of tax. Upon the termination of a net investment hedge, any net gain or loss included in Accumulated other comprehensive income (loss) relative to the investment hedge remains until the foreign subsidiary investment is disposed of or is substantially liquidated.
Net (losses) gains recorded to Accumulated other comprehensive income (loss) relating to the Company's net investment hedges for the three-month period were as follows:
| Three Months Ended December 31, | |||||||||||||||||||||||
| (Millions of dollars) | 2025 | 2024 | |||||||||||||||||||||
| Foreign currency-denominated debt | $ | (9) | $ | 145 | |||||||||||||||||||
| Cross-currency swaps (a) | — | 67 | |||||||||||||||||||||
(a)The amount for the three months ended December 31, 2024 includes a loss, net of tax, of $18 million recognized on terminated cross-currency swaps.
Interest Rate Risks and Related Strategies
The Company uses a mix of fixed and variable rate debt to manage its interest rate exposure, and periodically uses interest rate swaps to manage such exposures. Under these interest rate swaps, the Company exchanges, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. These swaps are designated as either cash flow or fair value hedges.
Changes in the fair value of the interest rate swaps designated as cash flow hedges (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk) are recorded in Other comprehensive income (loss), net of tax. If interest rate derivatives designated as cash flow hedges are terminated, the balance in Accumulated other comprehensive income (loss) attributable to those derivatives is reclassified into earnings, within Interest expense, over the remaining life of the hedged debt.
For interest rate swaps designated as fair value hedges (i.e., hedges against the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), changes in the fair value of the interest rate swaps offset changes in the fair value of the fixed rate debt due to changes in market interest rates. Amounts recorded during the three months ended December 31, 2025 and 2024 were immaterial to the Company's consolidated financial results.
The notional amounts of the Company’s interest rate-related derivative instruments as of December 31, 2025 and September 30, 2025 were as follows:
| (Millions of dollars) | Hedge Designation | December 31, 2025 | September 30, 2025 | ||||||||||||||
| Interest rate swaps (a) | Fair value hedges | $ | 700 | $ | 700 | ||||||||||||
(a)Represents fixed-to-floating interest rate swap agreements the Company entered into to convert the interest payments on certain long-term notes from the fixed rate to a floating interest rate based on secured overnight financing rates (“SOFR”).
Other Risk Exposures
The Company purchases resins, which are oil-based components used in the manufacture of certain products. Significant increases in world oil prices that lead to increases in resin purchase costs could impact future operating results. From time to time, the Company has managed price risks associated with these commodity purchases through commodity derivative forward contracts. The Company's commodity derivative forward contracts at December 31, 2025 and September 30, 2025 were immaterial to the Company's consolidated financial results.
Note 12 – Financial Instruments and Fair Value Measurements
The following reconciles cash and equivalents and restricted cash reported within the Company's condensed consolidated balance sheets at December 31, 2025 and September 30, 2025 to the total of these amounts shown on the Company's condensed consolidated statements of cash flows:
| (Millions of dollars) | December 31, 2025 | September 30, 2025 | |||||||||
| Cash and equivalents | $ | 740 | $ | 641 | |||||||
| Restricted cash | 284 | 210 | |||||||||
| Cash and equivalents and restricted cash | $ | 1,025 | $ | 851 |
Cash equivalents consist of all highly liquid investments with a maturity of three months or less at time of purchase. Restricted cash consists of cash restricted from withdrawal and usage except for certain product liability matters.
The fair values of the Company’s financial instruments are as follows:
| (Millions of dollars) | Basis of fair value measurement | December 31, 2025 | September 30, 2025 | ||||||||||||||
| Institutional money market accounts (a) | Level 1 | $ | — | $ | 18 | ||||||||||||
| Current portion of long-term debt (b) | Level 2 | 1,445 | 700 | ||||||||||||||
| Long-term debt (b) | Level 2 | 15,952 | 16,745 |
(a)These financial instruments are recorded within Cash and equivalents on the condensed consolidated balance sheets. The institutional money market accounts permit daily redemption. The fair values of these investments are based upon the quoted prices in active markets provided by the holding financial institutions.
(b)Long-term debt is recorded at amortized cost. The fair value of long-term debt is measured based upon quoted prices in active markets for similar instruments.
Short-term investments are held to their maturities and are carried at cost, which approximates fair value. The short-term investments primarily consist of time deposits with maturities greater than three months and less than one year. All other instruments measured by the Company at fair value, including derivatives, contingent consideration liabilities and available-for-sale debt securities, are immaterial to the Company's condensed consolidated balance sheets.
Nonrecurring Fair Value Measurements
In the first quarter of fiscal year 2025, the Company recorded a non-cash asset impairment charge of $30 million to Research and development expense to write down the carrying value of certain assets in the Life Sciences segment. The amount recognized was recorded to adjust the carrying amounts of assets to the assets' fair values, which were estimated, based upon a market participant's perspective, using Level 3 measurements, including values estimated using the income approach.
Transfers of Trade Receivables
Over the normal course of its business activities, the Company transfers certain trade receivable assets to third parties under factoring agreements. Per the terms of these agreements, the Company surrenders control over its trade receivables upon transfer. Accordingly, the Company accounts for the transfers as sales of trade receivables by recognizing an increase to Cash and equivalents and a decrease to Trade receivables, net when proceeds from the transactions are received. The costs incurred by the Company in connection with factoring activities were not material to its consolidated financial results. The amounts transferred and yet to be remitted under factoring arrangements are provided below.
| Three Months Ended December 31, | |||||||||||||||||||||||
| (Millions of dollars) | 2025 | 2024 | |||||||||||||||||||||
| Trade receivables transferred to third parties under factoring arrangements | $ | 431 | $ | 360 |
| December 31, 2025 | September 30, 2025 | ||||||||||
| Amounts yet to be collected and remitted to the third parties | $ | 393 | $ | 389 |
Supplier Finance Programs
The Company has agreements where participating suppliers are provided the ability to receive early payment of the Company’s obligations at a nominal discount through supplier finance programs entered into with third party financial institutions. The Company is not a party to these arrangements, and these programs do not impact the Company’s obligations or affect the Company’s payment terms, which generally range from 90 to 150 days. The agreements with the financial institutions do not require the Company to provide assets pledged as security or other forms of guarantees for the supplier finance programs. The Company had $208 million and $234 million of outstanding payables related to supplier finance programs as of December 31, 2025 and September 30, 2025, respectively, which were recorded within Payables, accrued expenses and other current liabilities on the Company's condensed consolidated balance sheets.
Note 13 – Income Taxes
Income Tax Expense
The Company’s effective income tax rates were 2.8% and 0.9% for the three months ended December 31, 2025 and 2024, respectively. The effective income tax rate for the three months ended December 31, 2025 reflected a less favorable net impact from discrete items compared with the prior-year period.
Note 14 – Subsequent Event
Combination of Biosciences and Diagnostic Solutions Business with Waters
On February 9, 2026, the Company completed the spin-off of its Biosciences and Diagnostic Solutions business and the combination of the business with Waters. Additional disclosures regarding this transaction are provided in Note 1.
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