Spin-Off of Embecta Corp.

9 Months Ended

Jun. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

On April 1, 2022, the Company completed the spin-off of its Diabetes Care business as a separate publicly traded company named Embecta through a distribution of Embecta’s publicly traded common stock (listed on NASDAQ under the ticker symbol “EMBC”) to BD’s shareholders of record as of the close of business on March 22, 2022 (the “record date”). The Company distributed one share of Embecta common stock for every five common shares of BD outstanding as of the record date and shareholders received cash in lieu of fractional shares of Embecta common stock. BD retained no ownership interest in Embecta subsequent to the spin-off. The distribution is expected to qualify and has been treated as tax-free to the Company and its shareholders for U.S. federal income tax purposes. On March 31, 2022, Embecta used a portion of the proceeds from its financing transactions to make a cash distribution of approximately $1.266 billion to the Company.

The Company and Embecta entered into various agreements to effect the spin-off and provide a framework for the relationship between the Company and Embecta after the spin-off. Such agreements include the separation and distribution agreement, as well as the following ongoing agreements: a cannula supply agreement, an intellectual property matters agreement, a transition services agreement, manufacturing and supply agreements, a lease agreement, a distribution agreement to support commercial operations, a logistics services agreement and other agreements including an employee matters agreement and a tax matters agreement. Under these agreements, the Company will continue to provide certain products and services to Embecta following the spin-off. The agreements do not provide the Company with the ability to influence the operating or financial policies of Embecta subsequent to the spin-off date. Amounts included in the Company’s condensed consolidated statements of income during the three and nine months ended June 30, 2023 and the three months ended June 30, 2022 as a result of these agreements were immaterial.

Details of Income from Discontinued Operations, Net of Tax, which represent the historical results of the Diabetes Care business prior to the spin-off date of April 1, 2022, are as follows:


	Nine Months Ended June 30,
Millions of dollars		2022
Revenues		$	538
Cost of products sold		143
Selling and administrative expense		78
Research and development expense		32

Other operating expense, net		95
Total Operating Costs and Expenses		348
Operating Income		190
Interest expense		(4)


Income from Discontinued Operations Before Income Taxes		186
Income tax provision		42
Income from Discontinued Operations, Net of Tax		$	144

Other operating expense, net above includes $30 million of costs incurred by the Company to execute the spin-off and other costs for related residual activities during the three months ended June 30, 2022, as well as $78 million of separation costs incurred by the Company prior to the spin-off date, including those for consulting, legal, tax and other advisory services associated with the spin-off.

The amounts of Revenues and Cost of products sold from discontinued operations detailed above include previously eliminated intercompany transactions that occurred between BD and Embecta, which resulted in a third-party sale in the same period.

DivestitureThe Company completed the sale of its Interventional segment's Surgical Instrumentation platform in August 2023 pursuant to a definitive agreement that was signed in June 2023. Assets held for sale on the condensed consolidated balance sheet at June 30, 2023, subject to this agreement, were approximately $271 million. The Company received gross proceeds of approximately $540 million, which are subject to post-closing adjustments. The historical financial results for the Surgical Instrumentation platform have not been classified as a discontinued operation. Revenues attributable to the platform for the three and nine months ended June 30, 2023 were approximately $43 million and $126 million, respectively, and approximately $40 million and $123 million for the three and nine months ended June 30, 2022, respectively.