Q4 2021 Becton Dickinson and Co Earnings Call

November 4, 2021

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Hello, and welcome to Bd's fourth quarter and full year fiscal 2021 earnings call at the request of BD. Today's call is being recorded and will be available for replay through November 11th 2021 on the investors page of the BD dot com website or by phone.

And 808 391246 for domestic calls and area code plus 140 to 2200464 for international calls. The replay bridges are now dedicated you no longer need a conference I D to hear the replay I would like to inform all parties that your lines have been.

Placed in a listen only mode until the question and answer segment.

Today's call is Ms. Naughty I can call that senior director of Investor Relations. Mr. Goncalves. Please you may begin.

Good morning, and thank you for joining US today. This call is being made available via webcast or B D. Dot Com. This morning, <unk> released its results for the fourth quarter and full year of fiscal 'twenty 'twenty. One you can find the press release, along with an accompanying presentation on the Investor Relations website investors dumped.

D Dotcom, leading today's call are Tom Polen, He's chairman, Chief Executive Officer, and President and Crystal warfare, Executive Vice President and Chief Financial Officer. Following the prepared remarks, Tom and Chris will be joined for Q&A by our segment Presidents Alberto Mas President of the medical segment Simon.

<unk> I'm president of the Interventional segment, and Dave Hickey President of the life Sciences segment.

During the call, we will be making forward looking statements and it is possible actual results could differ from our expectations risks uncertainties and other factors that could cause such differences can be found in our earnings release, and our latest SEC filings, including our Form 10-K and 10 Qs.

We will also be discussing non-GAAP financial measures regarding our performance reconciliations to GAAP measures, including the details of purchase accounting and other adjustments can be found in our earnings release and financial schedule in the appendix to our investor presentation.

Otherwise specified all comparisons will be on a year over year basis versus the relevant period.

Revenue per cent changes are on an FX neutral basis, unless otherwise noted.

When we refer to any given period, we are referring to the fiscal period, unless we specifically noted as a calendar period I would also call your attention to the basis of presentation Slide which defines terms you will hear today, such as base revenues based margins Newco and marine manko with that I'm very pleased to turn it over.

Tom.

Thank you Nadia and good morning, everyone and thank you for joining us before.

Before I get started I would like to officially welcome Chris Dwarfish, Bd's recently appointed Chief Financial Officer, Chris brings deep health care in Med Tech experience to BD Cross both operations and corporate finance.

Many of you already know Chris from his most recent role as head of Investor Relations at J&J, We're thrilled to have Chris join the team and while he has only been with us for two months, he's already immersing himself and making a very positive impact.

I look forward to Chris sharing his perspective with you both today and at our Investor Day next week.

I would also like to welcome Dr. Cary Byington, who was recently appointed to the BT Board of Directors Doctor Byington as executive Vice President and head of the University of California Health, where she leaves the nation's largest academic health system.

Dr. Byington brings deep and highly relevant experience to be D. As we work to advance our BD 2025 strategy and accelerate innovation and smart connected care, enabling the transition to new care settings, and improving chronic disease outcomes.

On today's call I will provide highlights of our performance and the continued progress we have made on our BD 2025 strategy.

Turn it over to Chris for the financial review and outlook for fiscal 2020 two.

After our prepared remarks Christian I will open the call up for Q&A.

Now, let's jump into our results and key highlights for the year on slide seven.

We were very pleased with the strong close to fiscal 'twenty, 'twenty, one which drove full year revenues EPS and cash flow is ahead of our expectations. Despite a volatile environment.

This reflects our continued laser focus on execution and the strength and expansiveness of our diversified business and geographic model revenues grew over 15% to more than $20 billion in fiscal 'twenty, one with $2 billion in Covid testing revenues and strong eight 1% growth in our base business.

Our adjusted EPS increased 28%.

$13.08.

And through continued execution of cash flow initiatives, we instituted in fiscal 'twenty.

We further improved our operating cash flow by over $1.1 billion compared to the prior year.

Overall performance reflects strong momentum in our base business with a return to more normalized growth rates across all three segments versus pre pandemic revenue levels.

As hospitals have been able to return to serving both COVID-19 and non COVID-19 patients and the overall health care utilization levels increased we saw strong demand for our broad portfolio of products that were essential to patient care include.

Including new products delivered across our innovation pipeline.

At the same time, we were proud to have supported our customers and the patients they serve by bringing to market and scaling a broad range of innovations to help the world diagnose treat and prevent COVID-19.

Turning to slide eight.

At the highest level our strategy has been deeply rooted in helping health care systems balanced four key priorities and those are improving outcomes driving efficiencies expanding access to care and more important than ever improving the clinician experience.

BD is uniquely positioned to help our customers deliver against these three key priorities across discovery in diagnosis medication delivery and interventional treatment.

And through our innovation driven growth strategy, we're investing in our broad foundational durable core portfolio.

While also shifting a larger portion of our business into higher growth higher impact areas.

And those three higher growth higher impact areas that we're focused on that you've heard me talk about before our smart connected care, enabling the transition of treatments and new care settings, and improving chronic disease outcomes.

In addition by simplifying our product portfolio.

We're driving growth through increased efficiency and margin expansion.

Turning to slide nine.

Importantly, we significantly advanced our strategy this past fiscal year, taking bold steps to position BD for the long term beginning with the actions we took to strengthen our balance sheet and enhance our working capital and cash flows.

These actions have positioned our cash and net leverage well.

Giving us the capacity to increase investments in R&D and tuck in M&A accelerating our innovation pipeline and advancing our strategy to drive growth in fiscal 'twenty two and beyond.

In FY 'twenty, one we invested over $1.2 billion in R&D, 21% more than last year with.

With increased funding for key projects through our new growth and innovation fund.

We also continued our increased pace of tuck in acquisitions, completing seven acquisitions in fiscal 'twenty, one as well as a number of additional early phase investments as we also began to build our long term inorganic bolt.

In addition, we reinvested over $200 million in profits from Covid testing to drive our growth strategy.

Through investments in our commercial organization with deep and accelerate our simplification strategy by investing to speed up our re code portfolio and architecture program.

And today these investments are meaningfully advancing our strategy to expand in higher growth spaces across smart connected care, new care settings, and chronic disease outcomes.

And just a few recent accomplishments.

I can share here underscore our growing momentum we're looking forward to sharing a lot more of those accomplishments next week at our analyst day.

These include new manufacturing lines that are now operational and will support demand for vaccination devices globally and this investment is in addition to our 1.2 billion dollar commitment to expand capacity for our pre filled syringe and advanced drug delivery systems, which represent high growth opportunities in our durable court.

Emergency use authorization for BD Verity, we're at home, which is the first at home Covid antigen test to use a smartphone to interpret and report results. This platform is a great example of how we're applying digital capabilities to bring new first world innovations to market and expanding care to new settings.

We also received five 10-K clearance of expanded indications for Rotarix atherectomy system to include treatment of in stent Restenosis, which is a first of its kind label expansion and it's a great example of how we expand optionality for physicians and customers in the treatment of chronic disease.

We also received U S FDA approval of our new high throughput molecular system BD Cor.

In today's challenging labor environment, BD, Core's advanced robotics, and software algorithms provide customers a way to do more testing with less available staff.

While providing important new clinical insights for cervical cancer screening and management through our BD on clarity HPV assay.

Now beyond BD Cor as you know, we have a portfolio and pipeline of unique automated solutions that help our customers perform in a tight labor market from helping nursing staff and pharmacists to be more efficient with medication management to increasing efficiency in diagnostic testing for labs experiencing staffing shortages.

We're engaging with customers in these markets and are seeing great interest in our solutions.

At our Investor Day, we'll share more about how we are well positioned not only capitalize on this opportunity, but how we've been very actively optimizing our investment mix to both expand our durable core platforms and simultaneously add technology and platform innovation and higher impact and higher growth spaces.

The we expect to enhance our long term growth profile.

Through our disciplined capital allocation framework, we're balancing these investments in future growth with a return of capital to shareholders through our competitive dividend. While also resuming our share repurchasing program, having repurchased $1.75 billion in fiscal 'twenty one.

We also just announced our fifth year consecutive year of dividend increases and we're very proud to be one of only 16 companies across all industries.

To achieve that milestone.

Turning to slide 10.

We will remain disciplined in our approach to portfolio management, as we systematically advance and deliver against our strategy.

And earlier this year, we announced the decision to spin off our diabetes care business there.

The proposed spin represents a value creation opportunity for all stakeholders and.

It is intended to enable growth acceleration for both B D remain co and newco.

With more efficient business processes and allocation of resources and capital.

<unk> will be able to invest its capital and growth opportunities, including high growth geographies markets and next generation products.

We continue to make good progress and the spin off remains on track for the first half of calendar 2022.

Regarding our BD <unk> pump, we recently received CE, Mark and health, Canada approval for the updated BD alert system.

We also achieved a significant milestone earlier this year with the filing of our BD Alere has five 10-K submission.

We have dedicated resources supporting this and continue to make progress.

Well there is an important tool for clinicians and there continues to be strong demand for our platform during the pandemic.

Turning to slide 11.

I'd like to share some details about our enhanced ESG strategy together, we advance.

But he has been a long standing leader as a case study for sustainable business models and innovating for shared value.

Our strategy serves as a framework through which BD addresses the most relevant ESG issues for the company and its stakeholders and aims to further our leadership role and build on our commitment to improve and advance individual and public health at a global scale.

The health of our company our planet our communities and the people. We serve are directly connected and when we successfully address the health of one we often install for challenges of another.

And under our strategy, we announced a suite of goals for 2030 and beyond with commitments in five areas that are most important to BD and our stakeholders and where we have opportunities to create meaningful measured change over the next decade.

And those specifically our climate change product impacts responsible supply chain healthy work for Sun communities and transparency.

And we're acting on these commitments and for example, we recently signed on to the United Nations race for Zero campaign.

We look forward to sharing more about the advances and impact we are having in each of these areas.

Before I turn it over to Chris.

As we look ahead, we expect the greater resiliency exhibited by health care systems during Delta will continue.

Along with continued recovery in patient demand post delta.

Well there are inflationary pressures occurring across most every industry, we have been very active in addressing these challenges.

We have put specific defined actionable plans in place to help mitigate these pressures.

Which are coordinated through an inflation task force that we've established with work streams across procurement shipping cost structure and continuous improvements in our plants.

And in this environment, it's also required to initiate pricing actions, which we have begun.

Looking ahead, we believe there will be long longer term macro solutions like expanded shipping and resin capacity.

We're not waiting for those to occur.

Our aim is to be best in class and navigating the current environment. We believe we have a clear path to accelerating margin recovery.

We are proud of the progress we are making advancing our BD 2025, and ESG strategies.

We have excellent momentum in our base business heading into fiscal 'twenty to a stronger balance sheet and steadily increasing cash flows despite inflationary pressures.

All positioning us well for the future.

With that let me turn it over to Chris to review, our financials and outlook and again, Chris welcome.

Thanks, Tom appreciate it before I jump in let me first say I couldn't be more excited about joining BD BD as a purpose driven company that is both a deep and broad portfolio that includes leadership positions in many important areas in health care.

Combined with our innovative pipeline of products and solutions, we have a tremendous opportunity to shape the delivery of health care to make a meaningful impact on health care outcomes around the world.

I look forward to engaging with the investment community next week during our Investor day, and sharing more specifics around our strategy and the actions, we're taking to support our growth agenda and deliver long term value.

So with that let's get into our results echoing.

Echoing Tom's comments, we delivered on our commitments in 2021 have strong momentum as we enter 2022, and we were well positioned for the future.

Slide 13 summarizes our high level revenue performance fourth quarter revenues of $5 $1 billion increased seven 3% on a reported basis.

Five 9% on an FX neutral basis.

We're ahead of our expectations our.

Our base business revenues increased nine 8% driven by strong performance across all three segments.

In Q4, we saw continued improvement in overall health care utilization levels in routine testing and lab activity and higher acuity.

The breadth and diversification of the total beauty portfolio, including Covid diagnostic testing.

Insulation against Covid driven procedure fluctuations.

For the full fiscal year, our revenues grew 15, 6% or eight 1%, excluding COVID-19 testing, which demonstrates the strength of our business and momentum of our strategy across our segments.

With base growth of six 8% in the medical segment eight 4% in life Sciences, and 10, 7% in the interventional segment.

Base business growth was also strong regionally, particularly in the U S, China and Latin America.

Compared to fiscal 19 base business revenues grew four 5%, we're about 7% when adjusting for the Alere ship hold.

Turning to slide 14, our medical segment deliver $2 5 billion in revenues in the fourth quarter growing seven 7% led by our medication delivery solutions and pharmaceutical systems businesses.

M. D. S revenues increased 11, 3% that reflects strong demand for our core products.

Driven by higher acuity and increased utilization in the U S and Europe and competitive games in catheters vascular care devices.

M. M. S Q4 revenues were comparable to the prior year. Despite the high number of infusion pump placements in Europe last year to support hospital needs.

We continue to see solid growth in our dispensing platform and a high number of committed contracts with Q4 being one of our strongest quarters to date for committed contracts.

Revenue growth of five 4% in diabetes care benefited from the timing associated with certain sales.

And slightly better than expected market demand.

On a normalized basis, we see diabetes growth about flat.

Pharm systems growth of 12, 3% reflects continued strong growth driven by demand for our pre fill devices and enabled by capacity expansion.

Demand for pre fill devices is being aided by the SaaS based vial to Prefill device conversion for biologics vaccines and other injectable drugs.

Turning to slide 15.

BD life Sciences revenues totaled $1 5 billion in the fourth quarter, increasing one 5%.

However, excluding Covid testing life Sciences grew 15, 8%.

Performance reflects strong double digit growth in our base business in both integrated diagnostic solutions and biosciences, partially offset by a decline in COVID-19 testing revenues.

And I'd be a 16, 2% growth in the base business was driven by specimen management and microbiology lab utilization improved and demand increased for both core products and products used during the care of Covid patients.

We're also seeing strong growth in sales of BD, Max IBD assays, which were up about 20% year over year.

Oh Dear Oh.

Base revenues also included sales of our combination flu COVID-19 assays for both meritor in BD Max that began shipping in Q4.

Early demand is robust and we believe the combination test will become the standard of care for symptomatic testing across laboratory.

Point of care testing as we enter the flu season.

Despite increased demand driven by the Delta variant and shipping our highest quarterly volume of over 30 million tests Covid testing revenues declined in Q4 from 452 million to $316 million due to lower pricing in the market.

Biosciences revenues increased 14, 6% driven by research solutions as lab utilization is returning to normal levels. We continue to see solid demand for research reagents globally.

Our recently launched E Commerce site as a new vehicle for growth and it's been well received with strong traffic.

Turning to slide 16.

BD interventional revenues totaled nearly $1 1 billion in the fourth quarter growing eight 3%.

As we previously communicated we began to see an impact from the Delta variant on electric procedures and certain U S States in July and August.

While we contemplated some continuation of that impact was slightly greater than anticipated in our surgery and peripheral intervention businesses as hospitals reduced access a restricted elective procedures.

Our surgery business grew 16, 8%, reflecting the year over year recovery in elective procedures with double digit growth in infection prevention and biosurgery.

Strength in hernia, despite some impacts from adult ovarian.

Growth in infection prevention also reflects continued market adoption of our sterile for prep product.

Revenues in peripheral intervention increased five 5%. We saw continued strong performance in atherectomy is we have leverage the capabilities of RPI salesforce and even oncology as more people completed cancer screenings.

It also continues to be impacted by a product recall, which impacted growth by about 300 basis points.

Urology and critical care revenues grew three 8% driven by continued strong demand procure with as well as continued adoption of the recently launched Arctic Sun with our targeted temperature management platform.

Partially offsetting this growth was a temporary supply disruption within the acute urology that is now remedied.

We expect shipments to be caught up with within the first quarter of FY 'twenty two for.

For the full fiscal year in 2021, UCC grew seven 6%.

Turning to slide 17, and our Q4 and full year adjusted P&L.

For the quarter, we delivered adjusted net income and EPS above our expectations with net income of $770 million and diluted EPS of $2.59.

On a currency neutral basis net income declined seven 8% primarily by.

By lower Covid testing pricing and.

Testing related one time costs and reinvestment in the business.

As well as higher shipping costs due to inflation and increased R&D levels.

EPS declined slightly less or six 5%, reflecting a lower share count due to share repurchases.

Our full year, adjusted net income and EPS were $3 $9 billion and $13.08, respectively with growth of 31% and 28% driven by strong revenue growth in.

And operating margin expansion of over 100 basis points on an FX neutral basis.

We delivered Q4 and full year operating margins in line with your expectations. We previously communicated for the company and for the base business.

Turning to slide 18 cash flows from operations totaled $4 6 billion in fiscal 'twenty, one an increase of over 30% versus fiscal 'twenty.

This improvement in our cash flows allowed us to advance our balanced capital allocation framework and support our B D 2025 growth strategy through investments in capital for R&D and M&A.

During fiscal 'twenty, one we invested in capital expenditures to support high growth opportunities.

Putting the new manufacturing lines, Tom previously mentioned.

In addition to investing in R&D at over 6% of sales to advance our pipeline of innovative programs. We also invested $500 million in tuck in M&A across our businesses.

<unk> will support our strong growth profile in 2022 and beyond.

Beyond our investments in growth, we returned capital to shareholders through $1 billion in dividends and $1 7 billion in share repurchases.

We ended the fiscal year with $2 3 billion in cash and an adjusted net leverage ratio of two six times, our current cash and leverage position gives us flexibility to create value through multiple levers and I look forward to sharing more with you about our capital allocation strategy during our upcoming Investor day.

Now turning to our fiscal 'twenty two guidance on slide 20.

First the macro assumptions that support our guidance range.

We recognize there will continue to be some variability we assume there will be continued easing of COVID-19 restrictions as vaccination rates continue to increase and must expect to see continued stabilization of procedures and they're not assuming significant disruptions to procedure volumes.

Additionally, while we do not expect conditions to return to normal levels, we do not anticipate worsening macro supply chain constraints or inflationary pressures.

Finally, we've not assumed any impact of legislation changes that would impact the broader market.

Given the significant sales and income generated from testing in fiscal 'twenty one.

We previously provided a preliminary guidance for that excluded testing.

To help you model our underlying base business performance, we will continue to provide our revenue guidance split.

We base and Covid only testing through this year.

Along with context regarding testing margins relative to our base business.

So a few specific comments on testing assumptions.

Our base business revenue assumptions include sales of our combination fluid COVID-19 assays at a level comparable to a normal flu season, which you should think of a $75 million to $100 million.

For Covid only testing, which is in addition to our base business combo test revenues, we assume the demand would be significantly less in fiscal 'twenty two.

Given the variability in the Covid environment, driven by uncertainty around the length and the intensity of Brexit upgrades. Our current assumptions are largely based on confirmed orders.

We are assuming about $200 million of Covid only testing revenue.

If testing revenues were to be substantially higher we first would compensate for any resulting procedure softness impacting our base revenue and income.

Segments, with a balance and robust innovation pipeline, resulting from investments and increase productivity and R&D.

Growth will be further enabled by the strategic acquisitions, we've added to our portfolio that our position in high growth categories.

While we are providing segment specific guidance relative to total company based growth.

We do expect our medical segment growth to be slightly below.

Life Sciences growth to be in line and intervention to be slightly above.

Total company based growth.

And the medical segment, we are continuing to extend our leadership position with competitive games and significant categories.

Such as peripheral catheters, and Prefill devices, while investing solutions transforming healthcare through smart connected care and new care settings.

Life Sciences hold leadership positions and attractive and growing categories and is investing in higher growth spaces by enabling smart automated laboratory workflows with solutions such as BB core.

Improving chronic disease treatment, the clinically differentiated assays research tools and companion diagnostics, where we expect continued above market growth and research reagents.

And migrating point of care diagnostics to alternative care settings.

Intervention is continuing its strategy of evolving from product category leadership, and chronic disease treatment, while continuing to invest in accretive high growth spaces.

These investments include increased product offerings, both organic and inorganic expanded labeling and investments in the non acute care space.

Our <unk> product line and acquisition of straw medical are good examples of how we are driving growth through our BVI strategy.

Turning to slide 21 in our guidance for fiscal 2002 weeks.

We expect based revenues to grow 5% to 6% on an FX neutral basis compared to $18.3 billion in fiscal 21.

For Covid only testing, we are assuming $200 million in revenue.

Based on current spot rates for illustrative purposes currency would be a headwind of approximately 50 basis points or about $100 million to total company revenues.

All in base, plus Covid only testing and the illustrative currency, we expect reported revenues in the range of 19.3 to $19 $5 billion in fiscal 2002.

We expect operating margins in our base business to improve approximately 200 basis points over fiscal 21 based operating margin of 21.7%.

Due to the current Covid test pricing levels, we expect operating margin on Covid only testing to be modestly above our base business margins.

A few additional items for your models, we expect up to $50 million an improvement in interest other given that refinancing activities. We can't we completed in the fourth quarter of fiscal 21.

As you were aware interest other can fluctuate due to deferred compensation, which is offset NSS G&A.

We plan for an increasing effective tax rate of 12.5% to 13.5% given discrete tax items and.

In 2021 will not repeat.

And in terms of share count while priority remains tuck in M&A, we expect share repurchases to also be a consistent part of value creation.

In addition to the year over year benefit from share repurchases completed and fiscal 21, we're ending shares outstanding where 288 million.

Our guidance assume share repurchases that at minimum offset any dilution from share based compensation.

All in we expect adjusted EPS to be between $12 30.

And $12.50.

With EPS, excluding COVID-19 only testing being well above the $12 floor. We provided in August on our third call.

[noise] turning to slide 22.

Regarding margins, let me first take a minute to reground, everyone on where we are today.

There are a few key considerations that have resulted in some margin pressure.

Some of which will be naturally restored and others that will be addressed by existing margin improvement programs with further improvements through new initiatives we are pursuing.

Our total operating margin of 23.9% for the full year did improve versus 2020.

In 2021 are total margin profile benefited by over 200 basis points from the COVID-19 testing margin net of investments, we made to accelerate growth and other value creating programs.

So it's best to look at our base operating margins, excluding COVID-19 testing of 21.7%.

Which also improved on an FX neutral basis versus 2020.

However, they do lag prepandemic levels as our base operating margin was primarily impacted by four key factors the layer ship hold.

Negative COVID-19 related volume utilization above normal inflation and Cogs in shipping.

Along with currency headwinds.

Each of these items negatively impacted margin by under 100 basis points and averaged about 80 basis points. Each they collectively accounted for about 90% of the erosion from prepandemic levels.

The remaining impact with small and driven by a few items, including a decision to strategically increase R&D investments to more competitive levels at about 6% of sales to support long term growth.

As I share, we anticipate improving based operating margins by around 200 basis points in fiscal twenty-two driven by the following.

First like all companies, we experienced short term impacts from COVID-19, such as underutilized <unk> in our plans.

These impacts carried into physical 21, but.

So it will be more than fully restored in fiscal twenty-two given our strong base sales momentum and associated increased volumes and will drive about 100 basis points improvement in operating margin versus 2021.

Second given our global manufacturing and distribution footprint.

We face the impact of currency fluctuations in our P&L, along with normal FX translation, the timing of inventory movements throughout our network can also impact our margins based on current spot rates in our inventory outlook, we expect to recapture about 50 basis points of the currency headwind to operating margin we reported in 2021.

Lastly, we realized unprecedented inflationary pressures in fiscal 21, driven by increased razzing inbound and outbound transportation and labor costs.

These inflationary pressures will carry into fiscal twenty-two and we intend to be best in class and how we navigate this environment.

We are expanding our existing simplification efforts such as project Recode and intend to drive additional margin improvements through new spend optimization initiatives using.

These include actions across procurement and shipping such as reduced air freight and supplier cost control.

In addition, we have actions in place to invest behind continuous improvement in our plans.

And inevitably this environment, we know we need to offset these pressures through pricing actions, which are already being implemented.

We also are focused on leveraging our SG&A investments, while maintaining competitive investments in R&D.

In 2022, we are forecasting additional impact to operating margin from inflation above normal levels from 2021, However, with a significant progress. We've made to date on margin initiatives that are already underway, we anticipate being able to more than mitigate the incremental inflationary pressures this year to dry.

Give an additional 50 basis points of operating margin improvement.

Increased utilization reversing FX pressure and initiatives to offset inflationary pressure will also play a key part in restoring our base gross margin to prepandemic levels.

Combined we expect these to drive around 100 basis points improvement.

We're committed to delivering against these goals and thus margin improvement will be a key measurement for performance in this year's compensation plan across the company.

Our fiscal 22 operating margin improvement will be a significant step towards recovery of Prepandemic margin levels. We look forward to sharing more about our longer term margin recovery initiatives next week at our Investor day.

Which includes exceeding prepandemic levels in fiscal 2004.

Turning to slide twenty-three our fiscal 2002, adjusted EPS guidance reflects the year over year decline in Covid only testing profit net of reinvestment.

And our base business as we just discussed we expect strong operational growth driven by revenue growth and margin improvement with EPS well above the $12 for provided on our August call.

Now turning to slide 24, our fiscal twenty-two guidance also includes our diabetes business. We continue to believe the spinoff is a significant value creating opportunity for our shareholders and both remain co a new co or well positioned for success.

Let me take a moment to reinforce some key items to make this compelling to all stakeholders new.

<unk> will be one of the largest pure play diabetes companies in existence today.

With an ability to focus on its strategic goals drive strong cash flow and allocate it's capital more efficiently and effectively to drive higher growth.

The proposed spin enhances remained goes revenue and EPS growth profile has diabetes cares revenue growth is slower than the corporate average.

Its margins are declining.

Carvel financials will be available with the form 10.

Remain co is expected to receive a cash distribution equivalent to multiple years of cash generated by the diabetes care unit, we plan to provide more details related to the proceeds and intended use at a later date.

The spin is intended to be tax free for use federal income tax purposes, and as an as is normal course with spends we plan to restate our financials. After the spins effective date to classify the diabetes business as a discontinued operation.

Given the higher mode margin profile of the diabetes care business. One should expect remained goes margins to be lower as a percent of sales after they are restated.

But with a higher rate of growth.

We are establishing transition services agreement that will offset stranded costs.

We remain excited for what's ahead for new co and making this a successful and value creating opportunity for all.

Now turning to slide 25, finally, I wanted to take a moment to share some phasing considerations for your models.

First we expect revenue growth to be normalised across the quarters with the exception of queue to where we expect higher growth due to the easier comp, resulting from the COVID-19 resurgence in queue to FY 21, primarily an intervention.

In addition, we expect Covid testing revenue to the weighted towards the first half of the year.

Second we expect gross margin to be lower in the first half given that increased inflation began earlier and fiscal 21 and the benefit of cost improvement initiatives. We have initiated will be on a lag as they flow through inventory we.

We expect the inflation flow through to inventory to be most prominent in queue too and approve across the balance of the year.

As we move past Covid variability, we expect SG&A and R&D expense dollars to be fairly rateable by quarter.

Fourth for full year for FY 2002, we anticipate are effective tax rate to be in the range of 12, and a half to $13 5%.

This right includes assumptions around our jurisdictional mix of income in certain potential discrete items of course, the timing of realisation of discrete items could result in variability in our right quarter to quarter, including a potentially lower Q1 race.

In summary fiscal 21 was a year marked by significant strategic progress and execution against our key priorities.

As we look forward.

And is reflected in our 2022 guidance, we are well positioned for growth with excellent momentum in our base business increased investments and our innovation pipeline.

In M&A momentum strong progress executing our balance sheet and cash flow initiatives and clear visibility to meaningful margin improvement.

We are excited to share a long term outlook with you at our Investor day.

Let me now turn it back to <unk> to leave the Q&A call. Thanks, Craig actually we're now ready to open up for Q&A.

And we and the floor is now open for your question at this time, if you have a question or comment please by Taiwan and your tech downtown if at any point of your question has been answered you may remove yourself when Nikki that pressing the pound key.

Extra allow.

Broad participation Prefunding yourself to one question and one follow at we ask that you. Please take your question, while you pick up your handset to allow.

Optimal.

Keep me to provide optimal anytime quality, we will take our first question fan VJ combined with <unk> nine. Please go ahead.

Hey, guys converse and a good friend this morning, and thanks for taking my question and Chris will come to BD.

I guess to start with that on the fiscal twenty-two guidance here, maybe a little bit more clarity on.

What is being assume for a vaccine contribution and I think you mentioned.

<unk> pump sales in line with fiscal 21, maybe clarify what those numbers are.

And on the combo test out is that.

What sort of assumptions should be having the ASP the combo tasks because.

Just curious on yoga pricing common for colon.

Physical looking for.

Yeah, Hey, Veejay. Good morning. This is Tom Thanks for the good questions here and make sure I address Holland. So I'll laris as we said we expect that to be essentially flat 221 thing about that is about $100 million.

Contribution in 22, and 21 put in perspective that's.

Chris mentioned, that's about 20 was closer to $300 million. So even in R. As we think about the $8, 1% growth. This past year that absorbs about a point of hilarious coming down from the when we were getting very large numbers of of additional medical necessity orders as people were adding to their fleets. So that's the assumption hilarious.

On vaccines, it's it's and we still are towards the high end of that 100 to 150 million dollar.

Range that we had expected for vaccination campaigns and so we expect and that's just kind of part of the Mds business now I don't know if we were going to call that out as a guide.

In that growth, but we don't see it as a notable headwind in the growth rate of that business in 22, we still have that.

Solid demand for those products and as we said, we now have visibility to or 2 billion 2 billion units.

Syringes, specifically for Covid vaccines, which were obviously proud of being able to help deliver 2 billion COVID-19 vaccines around the world and I think we've shipped about 1 billion to a 1 billion three of those so far so that gives you a little bit of color in terms of how much will left the ship in in 22 on the combo asked a great question, We've got Dave Hickey here, obviously, the president of our law.

Scientists businesses. So let me turn that question over to him.

Thank you Tom a VJ. Thanks for the question. So yeah, just to reiterate on the on the combo.

Just to reiterate will Christian said right. So if you think about what's come back into the base business for 22.

We do expect that as we get into the flu season, the respiratory season for both beady virtual and for BT Max that these combination tests will be disorder.

Go to test, but particularly for people who might be symptomatic and for people, who disorder, saying do I have flu or do I have to I have COVID-19. So we do expect not to be the combo test.

The installed base is there to support our testing and we've put into into the range for next year, an estimate of around 75 to 100 million back into the base business from a pricing perspective.

We do expect it to be a premium price.

The traditional tests indicated we're just not sharing specific pricing and this time.

Understood and Tom I think.

Chris mentioned the goal is exiting exiting.

<unk> physical 24 operating margins to be about prepandemic levels.

Yeah.

Fiscal 19 operating margins for 20 513, so when you say above prepandemic is that the target and.

Is exiting fiscal 24 are you expecting to be about 25.3 or is that.

The annual goal.

Fiscal 24, korol marches fee about 25 three.

Maybe just give us some broad strokes on that one.

Allow is coming back and then based business execution or something else.

I'll turn that to Chris Good question and I think that the exact term you used was above yeah.

That's right Yep.

Thanks for the welcome as well.

Yes, just to clarify so you're right to prepandemic level was just over 25%.

Fiscal year 2004 is our target to get above that level will certainly share more next week in terms of specific initiatives.

I think the way to think of it as we already had a lot of simplification efforts underway with project Recode those can contribute about $300 billion. That's that's one bucket. In addition to that I articulated on the call even as it relates to actions, we're taking and demonstrated at the end of 21 and heading into 22.

We're increasing our initiatives pricing mix portfolio optimization, and new initiatives on spend optimization as well.

And then certainly lastly, the dealership hold that was in 80 basis point drag on the business going back to them. So while we're not being committal as it relates to timing as you think through kind of a longer term timeframe and that will share next week, you would expect that to have a benefit over time.

Thanks for the info Jays.

Thank you thank you VJ.

Okay I'll take our next question Bob Hopkins with Bank of America. Please go ahead. Your line is open.

Oh, Thank you and good morning, and thanks for taking the questions and Chris.

Chris Welcome My one I really only have one question are one topic I wanted to cover.

And Christmas is probably for you because it seems like a key part of this call's your assumptions on the improvement.

This business operating margin is from 2021 to 2022, so a couple of things I'd Love you to to comment on Christof. Okay. One is I'm struggling a little bit with how to think about the starting point because Q4 based business operating margins are obviously a lot lower than full year of 2021. So maybe help me understand what's the right starting point and then.

Secondly, I'd love you to talk a little bit about how much of that 200 basis point improvement in base business, you're assuming for the full year is gross margin and just what are your assumptions on pricing embedded in that so it's a lot in there. That's my one question, but would love your address those things and thank you very much.

Yeah. Thanks, Bob I appreciate the question.

Great question. So look I think going forward, we're going to continue to provide transparency as it relates to kind of the base performance of the business.

I understand your question as it relates to kind of jump off points as it relates to quarter keep in mind. There were a lot of quarterly fluctuations as we navigate of 2020 through Covid and 2021 with.

With inflationary dynamics I think it's simplest to kind of normalized and just look at things on a full year basis.

So as you think of our operating margins.

From 2021 of 21.7% on the base business.

There's really a few key drivers one is we had talked about through this about having our utilization level. Some impacted due to pandemic are strong growth profile through 21, and 22, we know anticipate being well above and driving almost 100 basis points of utilization upside 21 to 22 four.

All year to full year. In addition to that last year, we had the impact of currency there was a headwind on earnings they.

They got <unk>.

Trapped in inventory and is that bleeds through we actually have about a 50 basis point improvement heading from 21 to 22 that goes through the operating margin.

Lastly, where we're investing a lot of our time of course is navigating the inflationary dynamics and we talked about a net 50 base basis point improvement in terms of outsized inflation.

Which we would anticipate being north of 200 basis points in full year 22, offsetting that will be a series of initiatives. There's not one thing it's actually a very well balanced plan.

We've talked about on the call, we're continuing to drive cost improvement in our plants.

We're taking a nap actions on the procurement side of the business as well in terms of spend.

We're looking at things from an S SG&A standpoint, as well and leveraging that.

And then there's going to be a strong focus on pricing portfolio mix driving growth through higher GP areas and the net of all of those we actually expect a 50 basis point improvement maybe.

Maybe lastly, just to give you some color and kind of where we are bizarre I think this is important.

We've entered the year with specific action plans against those goals. So we have risk adjusted plans very detailed targeted actions to deliver the improvement we need to mitigate against the inflation. If you go a step further and look where we are from kind of an execution standpoint eight.

80% to 90% of those have been fully identified in the plans are moving and some of them are just more timing dynamics in terms of when we may take price or when will evolve our portfolio and all of that number almost half of that is actually already banked coming in tears flowing through our inventory and P&L now.

That's quite a testament to the work that we did in the back half of 21 and already have strong progress. So we look forward to sharing more as the year progresses, but we feel good about the plan and the progress that will achieve through here.

[noise] helpful detail. Thank you.

Well, we'll take our next question fan robbing my case with J P. Morgan. Please go ahead.

Okay.

Nice quarter and thanks for taking my questions I appreciate it.

Maybe just on the diabetes spend you talked about higher than company margins is there any color you could add to how my Chen well, we have to form 10 by the analyst day next week.

Hey, Ravi how you doing Chris.

As we said the form Tan will be later this year that will we don't anticipate that being out by next week.

It's a good question, it's premature to share we have to wait until the form 10 is out there will be much more detail, there, but but I really think the more important dynamic here is right. This is actually just a portfolio transaction and there's going to be sort of a reset of margin and by definition. We are sure that it is accretive there will be a reset.

Out of margin, but more importantly it.

It's been dilutive to both growth.

And margin growth top line growth and margin growth so.

It can be an acceleration from that.

And as we get into Investor day, we can certainly share more as it relates to kind of the longer term.

Impact as it relates to margin than what I just shared in terms of our longer term margin improvement Kohl's.

We still feel really good about where we're going to position margin over time and all of these efforts going against that and lastly, I think just the value creation opportunity. This creates I talked about the cash infusion of multiple years, we get that gives us additional flexibility.

To think through how to reinvest in utilize those.

Cash infusion, we can talk more about that as well overtime.

Great appreciate it and then maybe just.

One out there you talked about doing seven acquisitions this year 500 million total.

How do we think about the contribution of those too.

Revenues in 2021, and 2022, and where do you put M&A in terms of capital allocation priority and Ah How do you view the the <unk>.

Market right now in terms of asset availability and valuations it'd be great to get your take on that thanks.

Robbie this is Tom.

And good morning, So, we'll we'll try not to share.

Too much of the Thunder from the front of next week, but it's good good question and we'll get more into this but.

We've spent so about 500 this year if you look at the acquisitions that we've made last year think about over the last 20 months or so we've invested about $900 million.

That drives about 100, this year and $200 million next year roughly from those tuck in M&a's. If you do the math.

About a little under five times.

What we're paying in terms of revenue that we're getting from those acquisitions next year and as you know that that's.

That's good value that we're getting in and we're obviously performing above our cost of capital on those acquisitions were clearly.

At those levels of multiples that were being able to get those assets for we're not buying growth absolutely growing what we by leveraging our channels are global positioning our manufacturing capabilities et cetera to scale. These assets in ways that we are uniquely positioned to do so.

I'll also share with you next week, the nicks of how those break out into.

The amount of spend in acquisitions that are going towards have that durable core based portfolio that we have versus those more transformative solution areas that I've talked about those three categories that we discussed and you'll see the waiting of those.

They are highly waited in high growth markets.

That revenue that I described is growing north of double digits. As we go forward. We continue to see opportunities as we look ahead, we have a robust funnel.

You can expect us to continue to drive that strategy forward. Obviously it has been an important part of why we focus so heavily on cash flow.

Actually if you look at our cash flow over the last two years since 19, it's grown at 18% CAGR does not by accident. We've had very focused programs driving that that's something we're very proud of in the positions us as Chris mentioned to drive a balanced strategy between the tuck in M&A strategy to drive our growth as well as continue to return van.

To shareholders as you've seen us doing so.

Thank you for the question Robyn looking forward to more discussion next week.

Grant maybe just to clarify is there any.

<unk> Avenue is associated with the deals we should be thinking about and the model for for next year.

It's obviously, it's built into our guidance.

Any other comments.

I think Tom shared the directional right vs.

We're about 100 million.

In the current year 21, and we talked about.

Essentially doubling that so on an incremental basis, you can think of about another $100 million. So it's a contributor to growth of 30 to 40 40 bps.

It gives us a lot of confidence in our in our growth profile and then the capacity to do more of that over time will certainly talk more about next year.

Great. Thanks, Thanks, a lot.

And we'll take our next question found that Matthew Mehan with Keybanc. Please go ahead, you're lying is I think.

Hi, good morning, and thank you for taking my questions.

First how should we be thinking about the return on.

The $200 million of investments.

You guys made from the policy of Covid testing.

And when you would expect to see something like that and then just one of those really one time costs.

A successful programs, maybe his folding into more traditional at this point.

And the answer what social R&D at this point sorry.

Matthew This is Tom good morning, the good.

Quite so we're not that spend is done so we're not that's not recurring spend as we've always communicated that got cut off.

Last year in queue for so that is out of our P&L going forward and will share more details actually about exactly where that money was spent and you'll see throughout the discussions next week at at.

That are investor day, each of the different businesses highlighting the programs that they've invested in and you will see how that helped to accelerate our growth outlook as we go forward over the long term.

It is mixed across both innovation as well as accelerating our simplification strategy.

As well and we will share more details on that next next week, but there it is balanced across both of those categories and when we say the the growth agenda has balanced on that side. It is majority of the growth money that we're spending as in R&D, but there is money that we spend on expanding channels. So spit.

Typically telesales in Europe, non acute sales channels in the U S and you'll hear more about those specific investments from our leaders in the U S region and from our our European leaders.

Next week as well and we're excited to be able to share that I know there's been Ah we've been busy over this last year, we're really proud of the progress that we've made on our strategy and we're really looking forward to having our leaders share with you those details of that progress next week.

Thanks for the question.

Just on the pharmacy and the pharmacy.

Pharma systems business.

I think you've announced.

That's been a very successful business for you I think you can have some capacity additions just wondering when do you wish to capacity issues such a road.

Benefit that.

Yeah, obviously, it's it's a great business already I think were three or four years of consecutive acceleration in that business. We have Alberto Moss on the line maybe Alberto if you could just comment on when do we start seeing some of that that capacity benefit the business and.

Where that stands.

Yes, Hello, good morning.

We're going to see it along the way so it's not it's.

Not lumpy it's.

Because that is.

What we're going to see in capacity and 22.

In this business you need about two to three years so.

Advance planning on these things so we're going to see the along the way is not going to be a.

Lumpy, so you're going to see that in the next three to four years.

But it's starting to is it fair to say Alberto there is a little bit of.

Benefit assuming that some of that business continues to come online. The early phase does come online in the back half of next year.

Orange throughout next year, that's what I'm trying to say it's.

I think of it as a smooth over the next three or four years, it's gonna be coming online.

Quarterback water.

And Matthew.

Yep, we see that helping to continue to fuel what is that high single digit double digit growth profile of that business.

Perfect that exact answer I was looking for thank you.

We will have to take our next question from Le <unk> Wells Fargo. Please go ahead.

Good morning, Thanks for taking the question welcome Chris So one question for Chris One question for Tom I'll ask them both now.

Chris maybe I'll ask Bob question, a different way can you talk a little bit about the margin in ETS cadence and physical twenty-two how much below the operating the base operating margin of about 23 seven do you expect you wanted to be as 100 basis points. The right way to think about it and consensus is I think 284.

For EPS right now love to get your reaction to that just to calibrate us correctly to start the year.

You guys are doing really well in China, there are a lot of investor concerns about.

Multinational companies ability to continue to grow they're.

Given the value based purchasing and the recent document 551.

How are you feeling about your ability to continue to grow.

Strongly in China in any reaction to some of those initiatives. Thanks for taking the questions guys.

Start with Chris.

Thanks, a lot I appreciate the question Yeah, I'll try to amplify some of the color that I provided earlier.

So as we think of the year as the year progresses.

First from a top line just to reiterate we we do actually expect relatively normalized growth with the exception of Q2 like I had shared because of the comparable and then there's a dynamic of.

Covid only testing, which you would expect to be more first half.

So I would consider that that dynamic from a margin standpoint.

Certainly first half.

We anticipate to be lower this is simply a matter of the inflationary dynamics that started in 2021 rolling through inventory.

And the peak of when that rolls through and those costs actually hit is more like cute too so kind of first half definitely.

Less favorable margins versus the second half and Q2 in particular being kind of the high mark of that low so to speak.

Then obviously is the initiatives that we've already taken again, there's a lot of that banks right. If you recall I had shared about 50% of it's already happening, but again you get the dynamic of it flowing through inventory. So you end up with kind of a second half dynamic in the margin improvement throughout the back half. So the last item was just more of the discretionary.

Tax item I alluded to that.

Could actually end up with some favorability in Q1, but those are very difficult to predict.

So hopefully that helps some.

And Larry This is Tom Thanks for the question and good morning create to connect.

For China, you're going to hear from teams Dang, our president of China actually next week and so I know he's looking forward to share in the progress there as you said, we we had a good very good year in China. This year and we think we're we're kind of back to to a strong growth rate looking forward 551 for us.

We don't see specific impacted in our categories. It's something that we've spent a lot of time talking about.

Basically we have four plants in China. They are focused almost exclusively in China for China, and particularly focused in some of the categories that there is more local competition and like catheters.

Vacutainer tubes, 10, needles et cetera, but we make those businesses those products, mostly in China for China as well. So we can compete as a local organization in those.

The other thing is we have a record number of new product launches coming out in China over the next three years.

You'll hear from from Simon and team in China. We're really pleased that we ended 21, having doubled the size of the Bard business in China. Since acquisition now that was a big focus of hours on revenue synergies and there continues to be.

The impact of those registrations that we've been making over the last several years the impact of those will be continuing to roll out with new launches as we look forward I know again Simon will talk.

Next week, maybe you could share a couple of comments now on some of the launches that you are having nine in China.

That are occurring so we feel good about the outlook for China work as all we're watching the situation very cautiously.

Being prudent and our investments there, but we've got a great team.

Strong performance this year and we do have a strong outlook in China next year as well.

Yes, Thanks, Tom So just just some color.

Over the next three years.

The intervention segment expect too commercialized further 22% to 25 new products.

In in China, just an example of how we have been successful there. In addition to what Thompson about doubling our business, but we recently just got approval or clearance for our target attempt to our management technology in China, We've actually just got too hard disorders. This month some of that.

Margins that are accretive to.

<unk> to be Dx.

And the sustained and I would say prolific growth of our business in China.

Spect to continue over the next next period of time.

Okay, what kind of questions.

And we'll take our next question from Josh standings with Palin. Please go ahead. Your line is open.

Hi, good morning. Thanks.

Thanks for taking the questions and.

Have have one sorry to.

Focusing on the margin progression here, but wanted to better understand the impact in fiscal 21, and then how to think about the impact in fiscal 2002 of China value based pricing.

I felt like that was a bucket that was called out on the on the third quarter call is a big headwind for margin and this year.

And just wanted to understand better.

The impact this year and whether that with all the positive men have you experiencing whether that turns into a margin tailwind in fiscal 2002, thanks for taking the questions.

Hey, Josh maybe you can just let me comment on database for carrying I'll turn it over to Chris for other other items.

We saw the bigger impact.

VP kind of has is behind US there is still some impact going forward, but at the business and the market is that China is challenged with restructuring their cost base to manage through any of that and so and that's exactly what they've been doing is restructuring cost basis, we think about that going forward to offset those headwinds.

So.

Hey, Chris any other comments and Josh I would just add.

Yes. It was an impact that was previously discussed it was smaller relative to the main drivers that I framed as it relates to the progression from 2019 to 21.

And we always are doing continuous cost improvement initiatives that offset some of these things that happen is Tom noted China's well position and we're thinking of that market more holistically. They are strong double digit growth in 2021 actually it over 20% and so when you think of it from a total portfolio standpoint, we feel real nice.

<unk> position as it relates to both the growth profile.

And then have nice actually margin enhancement as a result of that as we go forward. So.

Thanks, Josh.

It's helpful. Thank you.

Yeah final question will come from Matthew Taylor with UBS. Please go ahead. Your line is open.

[noise] Hi Mack.

Good morning on how you doin' good.

Okay and Cook welcome.

Congrats on your new royalty.

I just wanted to ask to <unk>.

Questions are currently.

Especially when Davis, the update and the $12 for a few months ago could you just talk about what's changed could give you the confidence to now put out.

The guidance and the mid $12 range and how things developed here over the last couple of months.

Okay sure I'll turn that's great.

Yeah.

Thanks Man I appreciate the question I think it really starts with our focus on growth.

I think a strong base growth profile that we guided on.

Coupled with if you look at the cash flow that we share through 21 that gives us a lot of flexibility on tuck in M&A right. So we are strong organic growth profile. The enhancement, we're making two R&D portfolio and then that coupled with the tuck in emanating capability that we will now be able to have it on an ongoing basis.

Tom earlier talked about the acceleration of deals that we've done recently those alone can contribute about 40 basis points to growth. So one I think there and I think there's just a very strong growth profile there.

Two is just the disciplined focus on margin improvement.

We knew that was subject to focus on in addition to the cash management approach we've taken over time, that's enhanced growth.

And so those are the two main drivers as a matter of fact, we're actually.

[noise] cycling over a headwind on tax that's been offset by some of the capital deployment, we've been able to put it work with share repurchases. So.

You'll see us be more discipline, there with other value, creating levers to due to the strong cash flow that we have maybe also were finishing the year both stronger right.

Thought that time, so were we.

Had a really strong queue for we're seeing that that strong demand in our base for us. So we're going in the beat that we're seeing here is a combination of not only stronger COVID-19 diagnostics, but stronger performance in our base business as we wrap up the year. So I think that's an important point too.

And contributed to that as well.

Okay. Thanks, Thanks for a comprehensive answer.

Okay, well operator, there's no more.

I'm sorry go ahead.

I apologize I tend to fall back over to Tom pollen for any closing remarks.

I just thanks, everyone for the good discussion today, we obviously are really looking forward to discussing all the great work that the team has been doing here over the last.

20, plus months as we've been advancing are beady 2025 strategy I personally I'm really excited to four.

For next week's event, where.

Be able to share with you would have been investing how we've been refining and.

Making significant changes in our portfolio to optimize growth and margins and you'll hear from a wide range of leaders on how they're executing and bringing to life or 2025 strategy to create value for our customers and shareholders.

Next week, so everyone stay well and we'll look forward to.

Continued great dialogue next week.

Thank you.

Today's teleconference disconnect yelling at the time and have a wonderful day.

[music].

Uh-huh.

Oh.

Okay.

Mhm.

Okay.

[noise].

[music].

Hello, and welcome to the B These fourth quarter and full year fiscal 2021 earnings call at the request of BD. Today's call is being recorded and will be available for replay through November 11th 2021 on the investors page of the BD dot com website or by phone at 808.

91246 for domestic calls and area code plus 140 to 2200464 for international calls. The replay bridges are now dedicated you no longer need a conference I D to hear the replay I would like to inform all parties that your lines have been placed in a listen only mode.

Until the question and answer segment. Thank you.

Today's call is Ms <unk> Goncalves senior director of Investor Relations. Please go on Collins. Please you may begin.

Good morning, and thank you for joining US today. This call is being made available via webcast. Our BD Dot Com. This morning, <unk> released its results for the fourth quarter and full year of fiscal 2020. One you can find the press release, along with an accompanying presentation on the Investor Relations website investors W.

D Dotcom, leading today's call are Tom Polen, B, These chairman Chief Executive Officer, and President and Crystal Warfare, Executive Vice President and Chief Financial Officer. Following the prepared remarks, Tom and Chris will be joined for Q&A by our segment Presidents Alberto Mas President of the medical segment Simon.

I'm President of the Interventional segment, and Dave Hickey President of the life Sciences segment.

During the call, we will be making forward looking statements and it is possible actual results could differ from our expectations risks uncertainties and other factors that could cause such differences can be found in our earnings release and in our latest SEC filings, including our Form 10-K and 10 Qs.

Otherwise specified all comparisons will be on a year over year basis versus the relevant period.

Revenue per cent changes are on an FX neutral basis, unless otherwise noted when.

When we refer to any given period, we are referring to the fiscal period, unless we specifically noted as a calendar period I would also call your attention to the basis of presentation slides, which defined terms you will hear today, such as base revenues based margins Newco and marine manko with that I'm very pleased to turn it over to.

Tom.

Thank you Nadia and good morning, everyone and thank you for joining us.

Any of you already know Chris from his most recent role as head of Investor Relations at J&J.

We were thrilled to have Chris join the team and while he has only been with us for two months, he's already immersing himself and making a very positive impact.

Look forward to Chris sharing his perspective with you both today and at our Investor Day next week.

I would also like to welcome Dr. Cary Byington, who was recently appointed to the BT Board of directors.

Doctor Byington as executive Vice President and head of the University of California Health.

Where she leaves the nation's largest academic health system.

Doctor Byington brings deep and highly relevant experience to be deep as we work to advance our BD 2025 strategy and accelerate innovation and smart connected care, enabling the transition to new care settings, and improving chronic disease outcomes.

On today's call I will provide highlights of our performance and the continued progress we have made on our BD 2025 strategy.

Turn it over to Chris for the financial review and outlook for fiscal 2022.

After our prepared remarks Christian I will open the call up for Q&A.

Now, let's jump into our results and key highlights for the year on slide seven.

We were very pleased with the strong close to fiscal 2021, which drove full year revenues EPS and cash flow is ahead of our expectations. Despite a volatile environment.

Our adjusted EPS increased 28% to $13.08.

And through continued execution of cash flow initiatives, we instituted in fiscal 'twenty, we further improve their operating cash flow by over $1.1 billion compared to the prior year.

Overall performance reflects strong momentum in our base business with a return to more normalized growth rates across all three segments versus pre pandemic revenue levels.

As hospitals have been able to return to serving both COVID-19 and non COVID-19 patients and the overall health care utilization levels increased.

We saw strong demand for our broad portfolio of products that were essential to patient care.

Including new products delivered across our innovation pipeline.

At the same time, we are proud to have supported our customers and the patients they serve by bringing to market and scaling a broad range of innovations to help the world diagnose treat and prevent COVID-19.

Turning to slide eight.

BD is uniquely positioned to help our customers deliver against these three key priorities across discovery in diagnosis medication delivery and interventional treatment.

And through our innovation driven growth strategy, we're investing in our broad foundational durable core portfolio. While also shifting a larger portion of our business into higher growth higher impact areas.

In addition by simplifying our product portfolio.

We're driving growth through increased efficiency and margin expansion.

Turning to slide nine.

These actions have positioned our cash and net leverage well.

Giving us the capacity to increase investments in R&D and tuck in M&A accelerating our innovation pipeline and advancing our strategy to drive growth in fiscal 'twenty two and beyond.

In FY 'twenty, one we invested over $1 $2 billion in R&D, 21% more than last year with.

With increased funding for key projects through our new growth and innovation fund.

In addition, we reinvested over $200 million in profits from Covid testing to drive our growth strategy.

Through investments in our commercial organization with deep and accelerate our simplification strategy by investing to speed up our re code portfolio and architecture program.

And today these investments are meaningfully advancing our strategy to expand in higher growth spaces across smart connected care, new care settings, and chronic disease outcomes.

And just a few recent accomplishments.

I can share here underscore our growing momentum we're looking forward to sharing a lot more of those accomplishments next week at our analyst day.

These include a new manufacturing lines that are now operational and will support demand for vaccination devices globally and this investment is in addition to our 1.2 billion dollar commitment to expand capacity for our pre filled syringe and advanced drug delivery systems, which represent high growth opportunities in our durable core.

We also received five 10-K clearance of expanded indications for Rotarix atherectomy system to include treatment of in stent Restenosis, which is a first of its kind label expansion and it is a great example of how we expand optionality for physicians and customers in the treatment of chronic disease.

We also received U S FDA approval of our new high throughput molecular system BD Cor.

In today's challenging labor environment, BD, Core's advanced robotics, and software algorithms provide customers a way to do more testing with less available staff.

While providing important new clinical insights for cervical cancer screening and management through our BD on clarity HPV assay.

We're engaging with customers in these markets and are seeing great interest in our solutions.

At our Investor Day, we will share more about how we are well positioned not only capitalize on this opportunity, but how we've been very actively optimizing our investment mix to both expand our durable core platforms and simultaneously add technology and platform innovation and higher impact and higher growth spaces.

The we expect to enhance our long term growth profile.

Through our disciplined capital allocation framework, we are balancing these investments in future growth with a return of capital to shareholders through our competitive dividend, while also resuming our share repurchase program, having repurchased $175 billion in fiscal 'twenty one.

We also just announced our fifth consecutive year of dividend increases and we're very proud to be one of only 16 companies across all industries.

To achieve that milestone.

Turning to slide 10.

We will remain disciplined in our approach to portfolio management, as we systematically advance and deliver against our strategy.

And earlier this year, we announced the decision to spin off our diabetes care business.

The proposed spin represents a value creation opportunity for all stakeholders and is intended to enable growth acceleration for both BD remain co and newco.

With more efficient business processes and allocation of resources and capital.

<unk> will be able to invest its capital and growth opportunities, including high growth geographies markets and next generation products.

We continue to make good progress in the spin off remains on track for the first half of calendar 2022.

Regarding our BD Alere as pump, we recently received CE, Mark and health, Canada approval for the updated BD alert system.

We also achieved a significant milestone earlier this year with the filing of our BD hilarious five 10-K submission.

We have dedicated resources supporting this and continue to make progress.

Well there is an important tool for clinicians and there continues to be strong demand for our platform during the pandemic.

Turning to slide 11.

I'd like to share some details about our enhanced ESG strategy together, we advance.

But he has been a long standing leader as a case study for sustainable business models and innovating for shared value.

The health of our company our planet our communities and the people we serve are directly connected in.

When we successfully addressed the health of one we often saw for challenges of another.

And under our strategy, we announced a suite of goals for 2030 and beyond with commitments in five areas that are most important to BD and our stakeholders.

Where we have opportunities to create meaningful measured change over the next decade.

And those specifically our climate change product impacts responsible supply chain healthy work for Sun communities and transparency.

And we're acting on these commitments and for example, we recently signed on to the United Nations race for Zero campaign.

Look forward to sharing more about the advances and impact we are having in each of these areas.

Before I turn it over to Chris.

As we look ahead, we expect the greater resiliency exhibited by health care systems during Delta will continue.

Along with continued recovery in patient demand post delta.

Well there are inflationary pressures occurring across most every industry, we have been very active in addressing these challenges.

We have put specific defined actionable plans in place to help mitigate these pressures which are coordinated through an inflation task force that we've established with work streams across procurement shipping cost structure and continuous improvements in our plants.

And in this environment, it's also required to initiate pricing actions, which we have begun.

Looking ahead, while we believe there will be long longer term macro solutions like expanded shipping and resin capacity.

We're not waiting for those to occur.

Our aim is to be best in class and navigating the current environment. We believe we have a clear path to accelerating margin recovery.

We are proud of the progress we are making advancing our BD 2025, and ESG strategies.

We have excellent momentum in our base business heading into fiscal 'twenty to a stronger balance sheet and steadily increasing cash flows despite inflationary pressures.

All positioning us well for the future.

With that let me turn it over to Chris to review, our financials and outlook and again, Chris welcome.

Combined with our innovative pipeline of products and solutions, we have a tremendous opportunity to shape the delivery of health care that make a meaningful impact on health care outcomes around the world.

I look forward to engaging with the investment community next week during our Investor day, and sharing more specifics around our strategy and the actions we are taking to support our growth agenda and deliver long term value.

So with that let's get into our results are.

Echoing Tom's comments, we delivered on our commitments in 2021 have strong momentum as we enter 2022, and we are well positioned for the future.

Slide 13 summarizes our high level revenue performance fourth quarter revenues of $5 $1 billion increased seven 3% on a reported basis.

Five 9% on an FX neutral basis.

We're ahead of our expectations our.

Our base business revenues increased nine 8% driven by strong performance across all three segments.

In Q4, we saw continued improvement in overall health care utilization levels in routine testing and lab activity and higher acuity.

Breadth and diversification of the total beauty portfolio, including Covid diagnostic testing.

Provides insulation against Covid driven procedure fluctuations.

For the full fiscal year, our revenues grew 15, 6% or eight 1%, excluding COVID-19 testing, which demonstrates the strength of our business and momentum of our strategy across our segments.

With base growth of six 8% in the medical segment eight 4% in life Sciences, and 10, 7% and interventional segment.

Base business growth was also strong regionally, particularly in the U S, China and Latin America.

Compared to fiscal 19 base business revenues grew four 5%, we're about 7% when adjusting for the Alere ship hold.

Turning to slide 14, our medical segment deliver $2 5 billion in revenues in the fourth quarter growing seven 7% led by our medication delivery solutions and pharmaceutical systems businesses.

Mds revenues increased 11, 3% reflect strong demand for our core products.

Driven by higher acuity and increased utilization in the U S and Europe and competitive gains and catheters vascular care devices.

M. M. S Q4 revenues were comparable to the prior year. Despite the high number of infusion pump placements in Europe last year to support hospital needs.

We continue to see solid growth in our dispensing platform and a high number of committed contracts with Q4 being one of our strongest quarters to date for committed contracts.

Revenue growth of five 4% in diabetes care benefited from the timing associated with certain sales and slightly better than expected market demand.

Normalized basis, we see diabetes growth about flat.

Pharm systems growth of 12, 3% reflects continued strong growth driven by demand for our prefilled devices and enabled by capacity expansion.

Demand for Prefilled devices is being aided by the SaaS based vial to Prefill device conversion for biologics vaccines and other injectable drugs.

Turning to slide 15.

BD life Sciences revenues totaled $1 5 billion in the fourth quarter, increasing one 5%.

However, excluding Covid testing life Sciences grew 15, 8%.

Performance reflects strong double digit growth in our base business in both integrated diagnostic solutions and biosciences, partially offset by a decline in COVID-19 testing revenues.

In Ibs 16, 2% growth in the base business was driven by specimen management and microbiology lab utilization improved and demand increased for both core products and products used during the care of Covid patients.

We're also seeing strong growth in sales of BD, Max assays, which were up about 20% year over year.

Hi.

Base revenues also included sales of our combination fluid COVID-19 assays for both meritor in BD Max that began shipping in Q4.

Early demand is robust and we believe the combination test will become the standard of care for symptomatic testing across laboratory.

<unk> care testing as we enter the flu season.

Biosciences revenues increased 14, 6% driven by research solutions as lab utilization is returning to normal levels. We continue to see solid demand for research reagents globally.

Our recently launched E Commerce site as a new vehicle for growth and has been well received with strong traffic.

Turning to slide 16.

BD interventional revenues totaled nearly $1 1 billion in the fourth quarter growing eight 3%.

As we previously communicated we began to see an impact from the Delta variant on electric procedures and certain U S States in July and August.

Our surgery business grew 16, 8%, reflecting the year over year recovery in elective procedures with double digit growth in infection prevention and biosurgery and.

Strength in hernia, despite some impacts from the Delta variance.

This growth in infection prevention also reflects continued market adoption of our sterile for prep product.

Revenues in peripheral intervention increased five 5%. We saw continued strong performance in atherectomy is we have leverage the capabilities of our <unk> sales force and in oncology as more people completed cancer screenings.

<unk> also continues to be impacted by a product recall, which impacted growth by about 300 basis points.

Urology and critical care revenues grew three 8% driven by continued strong demand procure width as well as continued adoption of the recently launched Arctic Sun with our targeted temperature management platform.

Partially offsetting this growth was a temporary supply disruption within acute urology that is now remedied.

We expect shipments to be caught up with within the first quarter of FY 'twenty two for.

For the full fiscal year in 2021, UCC grew seven 6%.

Turning to slide 17, and our Q4 and full year adjusted P&L.

For the quarter, we delivered adjusted net income and EPS above our expectations with net income of $770 million and diluted EPS of $2 59.

On a currency neutral basis net income declined seven 8% primarily by.

By lower Covid testing pricing and testing related onetime costs and reinvestment in the business.

As well as higher shipping costs due to inflation and increased R&D levels.

EPS declined slightly less or six 5%, reflecting a lower share count due to share repurchases.

Our full year adjusted net income and EPS were $3 9 billion.

And $13 eight respectively with growth of 31% and 28% driven by strong revenue growth in.

And operating margin expansion of over 100 basis points on an FX neutral basis.

We delivered Q4 and full year operating margins in line with the expectations. We previously communicated for the company and for the base business.

Turning to slide 18 cash flows from operations totaled $4 6 billion in fiscal 'twenty, one an increase of over 30% versus fiscal 'twenty.

This improvement in our cash flows allowed us to advance our balanced capital allocation framework and support our BD 2025 growth strategy through investments in capital R&D and M&A.

During fiscal 'twenty, one we invested in capital expenditures to support high growth opportunities.

Putting the new manufacturing lines, Tom previously mentioned.

In addition to investing in R&D at over 6% of sales to advance our pipeline of innovative programs. We also invested $500 million in tuck in M&A across our businesses that will support our strong growth profile in 2022 and beyond.

Beyond our investments in growth, we returned capital to shareholders through $1 billion in dividends and $1 7 billion in share repurchases.

We ended the fiscal year was $2 3 billion in cash and an adjusted net leverage ratio of two six times.

Our current cash and leverage position gives us flexibility to create value through multiple levers and I look forward to sharing more with you about our capital allocation strategy during our upcoming Investor day.

Now turning to our fiscal 'twenty two guidance on slide 20.

First the macro assumptions that support our guidance range.

We recognize there will continue to be some variability we assume there will be continued easing of COVID-19 restrictions as vaccination rates continue to increase and months expect to see continued stabilization of procedures and theyre not assuming significant disruptions to procedure volumes.

Additionally, while we do not expect conditions to return to normal levels, we do not anticipate worsening macro supply chain constraints or inflationary pressures.

Finally, we have not assumed any impact of legislation changes that would impact the broader market.

Given the significant sales and income generated from testing in fiscal 'twenty one.

We previously provided a preliminary guidance floor that excluded testing.

To help you model our underlying base business performance, we will continue to provide our revenue guidance split.

We base and Covid only testing through this year.

Along with context regarding testing margins relative to our base business.

So a few specific comments on testing assumptions.

Our base business revenue assumptions include sales of our combination fluid COVID-19 assays at a level comparable to a normal flu season, which you should think of a $75 million to $100 million.

For Covid only testing, which is in addition to our base business combo test revenues, we assume the demand would be significantly less in fiscal 'twenty two.

Even the variability in the Covid environment, driven by uncertainty around the length and the <unk>.

Tensity a break to outbreaks our current assumptions are largely based on confirmed orders.

We are assuming about $200 million of Covid only testing revenue.

If testing revenues were to be substantially higher we first we compensate for any resulting procedure softness impacting our base revenue and income.

Which positions us well to manage through this period of uncertainty.

Any further upside will be used to create value through either reinvestment or allowing incremental profits to flow through.

Regarding alero as Tom noted we are confident in the progress we are making of the resources that we've invested behind this program as.

As we previously shared infusion pump clearances are inherently complex, particularly our filings unless it would not be prudent to predict timelines.

Consistent with what we shared previously we do not expect in our guidance does not include a five 10-K clearance in fiscal 2022.

Additionally, it is difficult to predict how things will play out of the shipments are only being made under the medical necessity process.

But at this time, we've assumed that our latest capital revenues will be generally in line with fiscal year 2021.

Let me now share some perspective on what is underlying our base guidance, we are well positioned for strong growth across our three segments with a balanced and robust innovation pipeline, resulting from investments and increased productivity in R&D.

Growth will be further enabled by the strategic acquisitions, we've added to our portfolio that are positioned in high growth categories.

While we arent providing segment specific guidance relative to total company base growth.

We do expect our medical segment growth to be slightly below life.

Life Sciences' growth to be in line and interventional to be slightly above.

Total company base growth.

In the medical segment, we are continuing to extend our leadership position with competitive gains and significant categories.

Such as peripheral catheters and pre fill devices, while investing in solutions transforming health care through smart connected care and new care settings.

Life Sciences hold leadership positions in attractive and growing categories and is investing in higher growth spaces by enabling smart automated laboratory workflows with solutions such as BD Cor.

Improving chronic disease treatment with clinically differentiated assays research tools and companion diagnostics, where we expect continued above market growth in research reagents.

Migrating point of care diagnostics to alternative care settings.

Interventional is continuing our strategy of evolving from product to category leadership in chronic disease treatment, while continuing to invest in accretive high growth spaces.

These investments include increased product offerings, both organic and inorganic.

$50 million an improvement in interest other given that refinancing activities. We <unk>, we completed in the fourth quarter of fiscal 21 [noise].

As you were aware interest other can fluctuate due to deferred compensation, which is offset and that's S. G&A.

We plan for an increasing effective tax rate of 12.5% to 13.5% given this street tax items in.

In 2021 will not repeat.

And in terms of share count while priority remains tuck in M&A, we expect share repurchases to also be a consistent part of value creation.

In addition to the year over year benefit from share repurchases completed and fiscal 21, we're ending shares outstanding where 288 million.

Our guidance assumed share repurchases that at minimum offset any dilution from share based compensation.

All in we expect adjusted EPS to be between $12 30.

And $12.50.

With EPS, excluding COVID-19 only testing being well above the $12 floor. We provided in August on our third quarter earnings call.

[noise] turning to slide 22.

Regarding margins, let me first take a minute to reground, everyone on where we are today. There are a few key considerations that have resulted in some margin pressure.

Some of which will be naturally restored and others that will be addressed by existing margin improvement programs with further improvements through new initiatives we are pursuing.

Our total operating margin of 23, 9% for the full year did improve versus 2020.

In 2021 are total margin profile benefited by over 200 basis points from the COVID-19 testing margin net of investments, we made to accelerate growth and other value creating programs.

So it's best to look at our base operating margins, excluding COVID-19 testing of 21.7%.

Which also improved on an FX neutral basis versus 2020.

However, they do lag prepandemic levels as our base operating margin was primarily impacted by four key factors the layer ship hold.

Negative COVID-19 related volume utilization.

Above normal inflation in Cogs in shipping.

Along with currency headwinds.

Each of these items negatively impacted margin by under 100 basis points and averaged about 80 basis points. Each they collectively accounted for about 90% of the erosion from prepandemic levels.

The remaining impact with small and driven by a few items, including a decision to strategically increase R&D investments to more competitive levels at about 6% of sales to support long term growth.

As I share, we anticipate improving based operating margins by around 200 basis points in fiscal 2002.

Driven by the following.

First like all companies, we experienced short term impacts from COVID-19, such as Underutilize Asian in our plans.

These impacts carried into fiscal 21.

Second given our global manufacturing and distribution footprint.

Lastly, we realized unprecedented inflationary pressures in fiscal 21, driven by increased razzing inbound and outbound transportation and labor costs.

These inflationary pressures will carry into fiscal twenty-two and we intend to be best in class and how we navigate this environment.

We are expanding our existing simplification efforts such as project Recode and intend to drive additional margin improvements through new spend optimization initiatives. These.

These include actions across procurement and shipping such as reduced air freight and supplier cost control.

In addition, we have actions in place to invest behind continuous improvement in our plans.

And inevitably this environment, we know we need to offset these pressures through pricing actions, which are already being implemented.

We also are focused on leveraging our SG&A investments, while maintaining competitive investments in R&D.

An additional 50 basis points of operating margin improvement.

Increased utilization reversing FX pressure and initiatives to offset inflationary pressure will also play a key part in restoring our base gross margin to prepandemic levels.

Combined we expect these to drive around 100 basis points improvement.

We are committed to delivering against these goals and thus margin improvement will be a key measurement for performance in this year's compensation plan across the company.

Which includes exceeding prepandemic levels in fiscal 2004.

Turning to slide twenty-three our fiscal 22, adjusted EPS guidance reflects the year over year decline in Covid only testing profit net of reinvestment.

And are based business as we just discussed we expect strong operational growth driven by revenue growth and margin improvement with EPS well above the $12 for provided on our August call.

Let me take a moment to reinforce some key items to make this compelling to all stakeholders new.

<unk> will be one of the largest pure play diabetes companies in existence today.

With an ability to focus on its strategic goals drive strong cash flow and allocate it's capital more efficiently and effectively to drive higher growth.

The proposed spin enhances remain COSE revenue and EPS growth profile has diabetes cares revenue growth is slower than the corporate average.

Its margins are declining.

Carvel financials will be available with the form 10.

Remain co is expected to receive a cash distribution the equivalent to multiple years of cash generated by the diabetes care unit, we plan to provide more details related to the proceeds and intended use at a later date.

The spin is intended to be tax free for use federal income tax purposes and as.

And as as normal course was spends we plan to restate our financials. After the spins effective date to classify the diabetes business as a discontinued operation.

Given the higher mode margin profile of the diabetes care business. One should expect remained goes margins to be lower as a percent of sales after they are restated.

But with a higher rate of growth.

We are establishing transition services agreement that will offset stranded costs.

We remain excited for what's ahead for new co and making this a successful and value creating opportunity for all.

Now turning to slide 25, finally, I wanted to take a moment to share some phasing considerations for your models.

In addition, we expect Covid testing revenue the weighted towards the first half of the year.

Second we expect gross margin to be lower in the first half given that increased inflation began earlier and fiscal 21.

And the benefit of cost improvement initiatives, we have initiated will be on a lag as they flow through inventory we.

We expect inflation flow through to inventory to be most prominent in queue too and approve across the balance of the year.

Third as we move past Covid variability, we expect SG&A and R&D expense dollars to be fairly rateable by quarter.

Fourth for full year for FY 22, we anticipate are effective tax rate to be in the range of 12, and a half to $13 5%.

This right includes assumptions around our jurisdictional mix of income in certain potential discrete items of.

Of course, the timing of realisation of discrete items could result in variability in our right quarter to quarter, including a potentially lower Q1 race.

In summary fiscal 21 was a year marked by significant strategic progress and execution against our key priorities.

As we look forward.

And is reflected in our 2022 guidance, we are well positioned for growth with excellent momentum in our base business increased investments and our innovation pipeline.

In M&A momentum strong progress executing our balance sheet and cash flow initiatives and clear visibility to meaningful margin improvement.

We are excited to share a long term outlook with you at our Investor day.

Let me now turn it back to <unk> to leave the Q&A call. Thanks, Okay.

Actually we are now ready to open up for Q&A.

And the and the floor is now open for your questions. At this time, if you have a question or comment please by Taiwan and your tech downtown if at any point in your question has been answered you may remove it's happened to keep that pressing the pound key.

Allow.

Broad participation. Please limit yourself to one question and one follow at we ask that you. Please.

And while you pick up your handset to allow.

Optimal.

Keep me to provide optimal and sound quality, we will take our first question from DJ combined with <unk>. Please go ahead.

Hey, guys combat sound good in this morning, and thanks for taking my question and credit <unk> welcome to BD.

I guess that to start on the fiscal 22 guidance there may be a little bit more clarity on.

What is being assume for a vaccine contribution and I think you mentioned.

<unk> pump sales in line with fiscal 21, maybe clarify what those numbers are.

And on the combo test out is that.

What sort of assumptions should be having the ASP. The combo task because I was curious on yoga pricing common for Covid and physical looking for.

Yeah, Hey, Veejay. Good morning. This is Tom Thanks for the good questions here and.

Sure I address all of them. So Ah laris as we said, we expect that to be essentially flat 221 thing about that is about $100 million.

Contribution in 22, and 21 put in perspective that's.

Chris mentioned, that's about 20 was closer to $300 million. So even in R. As we think about the 8.1% growth. This past year. It absorbs about a point of hilarious coming down from the when we were getting very large numbers of of additional medical necessity orders as people, we're adding to their fleets. So that's the assumption hilarious.

On vaccines, it's it's and we still are towards the high end of that $100 million to $150 million.

Range that we had expected for vaccination campaigns and so we expect and that's just kind of part of the Mds business now I don't know if we were going to call that out as a guide in that growth, but we don't see it as a notable headwind in the growth rate of that business in 22, we still have.

Solid demand for those products and as we said, we now have visibility to or 2 billion 2 billion units.

Syringes, specifically for Covid vaccines, which were obviously proud of being able to help deliver 2 billion COVID-19 vaccines around the world and I think we've shipped about 1 billion to 1 billion three of those so far that gives you a little bit of color in terms of how much will left the ship in in 22 on the combo as a great question, We've got Dave Hickey here, obviously, the president of our <unk>.

Life Sciences businesses. So let me turn that question over to him.

Thank you Tom VJ. Thanks for the question. So yeah, just to reiterate on the on the combo.

Just to reiterate will Christian said right. So if you think about what's come back into the base business for 22.

We do expect that as we get into the flu season, the respiratory season for both beady virtual and for BT Max that these combination tests will be disorder.

Go to test, but particularly for people who might be symptomatic and for people, who the Saudi saying do I have flu or do I have do have COVID-19. So we do expect that to be the combo test.

The installed base is there to support our testing and we put into into the range for next year, an estimate of around 75 to 100 million back into the base business from a pricing perspective.

We do expect it to be a premium price.

The traditional tests indicated we're just not sharing specific pricing and this time.

Understood and Tom I think.

Chris mentioned the goal is exiting exiting.

<unk> physical 24.

Cutting margins to be about prepandemic levels.

Fiscal 19 operating margins for 20 513, so when you say above prepandemic is that the target and.

Is exiting fiscal 24 are you expecting to be about 25.3 or is that.

The annual goal.

Fiscal 24 core all markets be about 25 three.

Maybe just give us some broad strokes and not what's your ancestor is that.

<unk> is coming back and then based business execution or something else, that's being done I'll turn that to Chris Good question and I think that the exact term you used was above.

That's right Yep.

Thanks for the welcome as well.

Yes, just to clarify so you're right to prepandemic level was just over 25%.

Fiscal year 2004 is our target to get above that level will certainly share more next week in terms of specific initiatives.

The way to think of it as we already had a lot of simplification efforts underway with project Recode those can contribute about $300 million. That's that's one bucket. In addition to that I articulated on the call even as it relates to actions, we're taking and demonstrated at the end of 21 and heading into twenty-two.

We're increasing our initiatives pricing mix portfolio optimization, and new initiatives on spend optimization as well.

And then certainly lastly, the dealership hold.

That was in 80 basis point drag on the business going back to them.

So while we're not being committal as it relates to timing as you think through kind of a longer term timeframe and that will share next week, you would expect that to have a benefit overtime.

Thanks for the info Jays.

Thanks, Thank you VJ.

Okay I'll take our next question Bob Hopkins with Bank of America. Please go ahead. Your line is open.

Oh, Thank you and good morning, and thanks for taking the questions and.

Chris Welcome My one I really only have one question are one topic I wanted to cover.

And Christmas is probably for you because it seems like a key part of this call's your assumptions on the improvement base business operating margin is from 2021 to 2022. So a couple of things I'd Love you to comment on Chris If okay. One is I'm struggling a little bit with how to think about the starting point because Q4 based business operating margins are obviously.

A lot lower than full year of 2021, So maybe helped me understand what's the right starting point and then secondly, I love you to talk a little bit about.

How much of that 200 basis point improvement in based business, you're assuming for the full year is gross margin and just what are your assumptions on pricing embedded in that so it's a lot in there. That's my one question, but would love your address those things and thank you very much.

Yeah. Thanks, Bob I appreciate the question.

Great question. So look I think going forward, we're going to continue to provide transparency as it relates to kind of the base performance of the business.

I understand your question as it relates to kind of jump off points as it relates to quarter keep in mind. There are a lot of quarterly fluctuations as we navigate of 2020 through Covid and 2021 with.

With inflationary dynamics I think it's simplest to kind of normalized and just look at things on a full year basis.

So as you think of our operating margins.

From 2021 of 21.7% on the base business.

There's really a few key drivers one is we talked about through this about having our utilization level. Some impacted due to pandemic are strong growth profile through 21, and 22, we know anticipate being well above and driving almost 100 basis points of utilization upside 21 to 22.

Year to full year. In addition to that last year, we have the impact of currency there was a headwind on earnings.

They got <unk>.

Trapped in inventory and is that bleeds through we actually have about a 50 basis point improvement heading from 21 to 22 that goes through the operating margin.

Lastly, where we're investing a lot of our time of course is navigating the inflationary dynamics and we talked about a net 50 base basis point improvement in terms of outsized inflation.

Which we would anticipate being north of 200 basis points in full year 22, offsetting that will be a series of initiatives. There's not one thing it's actually a very well balanced plan.

We've talked about on the call, we're continuing to drive cost improvement in our plants.

We're taking a nap actions on the procurement side of the business as well in terms of spend.

We're looking at things from an S SG&A standpoint, as well and leveraging that.

And then there's going to be a strong focus on pricing portfolio mix driving growth through higher GP areas and the net of all of those we actually expect that 50 basis point improvement maybe.

Maybe lastly, just to give you some color and kind of where we are bizarre I think this is important.

We've entered the year with specific action plans against those goals. So we have risk adjusted plans very detailed targeted actions to deliver the imprudently needs to mitigate against the inflation. If you go a step further and look where we are from kind of an execution standpoint eight.

80% to 90% of those have been fully identified in the plans are moving and some of them are just more timing dynamics in terms of when we may take price or when we will evolve our portfolio and all of that number almost half of that is actually already banked coming in tears flowing through our inventory and P&L now.

[noise] helpful detail. Thank you.

[noise] well, we'll take our next question fan rather in my case with J P. Morgan. Please go ahead Caroline.

Okay.

Nice quarter and thanks for taking the questions I appreciate it.

Maybe.

Maybe just on the diabetes spend you talked about higher than company margins is there any color you could add to how much and what we have to form 10 by the analyst day next week.

Okay, Ravi how Ya Davis, Chris Yes.

As we said the form Tan will be later this year that will.

We don't anticipate that being out by next week.

Look at it.

Importantly, it.

It's been dilutive to both growth.

And margin growth top line growth and margin growth. So it can be an acceleration from that.

And as we get into Investor day, we can certainly share more as it relates to kind of the longer term.

Impact as it relates to margin than what I just shared in terms of our longer term margin improvement Kohl's.

We still feel really good about where we're going to position margin over time and all of these efforts going against that and lastly, I think just the the value creation opportunity. This creates I talked about the cash infusion of multiple years, we got that gives us additional flexibility.

To think through how to reinvest in utilize those.

That cash infusion, we can talk more about that as well overtime.

Great appreciate it and then maybe just.

One out there you talked about doing seven acquisitions this year $500 million total.

How do we think about the contribution of those too.

Revenues in 2021, and 2022, and where do you put M&A in terms of capital allocation priority and Ah How do you view the the <unk>.

Market right now in terms of asset availability and valuations that would be great to get your take on that thanks.

Robbie this is Tom.

And good morning, So, we'll we'll try not to share it.

Too much of the Thunder from the from the next week, but it's good good question and we'll get more into this but.

We've spent so about 500 this year if you look at the acquisitions that we've made last year think about over the last 20 months or so we've invested about $900 million.

That drives about 100, this year and $200 million next year roughly from those tucking M&a's if you do the math.

About a little under five times.

What we are paying in terms of revenue that we're getting from those acquisitions next year and as you know that that's.

That's good value that we're getting in and we're obviously performing above our cost of capital on those acquisitions were clearly.

At those levels of multiples that were being able to get those assets for we're not buying growth were absolutely growing what we by leveraging our channels are global positioning our manufacturing capabilities et cetera to scale. These assets in ways that we are uniquely positioned to do so.

I'll also share with you next week the mix of how those break out into.

They are highly waited in high growth markets.

That revenue that I described is growing north of double digits. As we go forward. We continue to see opportunities as we look ahead, we have a robust funnel.

You can expect us to continue to drive that strategy forward. Obviously, it's been important part of why we focus so heavily on cash flow.

Tucking M&A strategy to drive our growth as well as continue to return value to shareholders as you've seen us doing so.

Thank you for the question Robyn looking forward to more discussion next week.

Grant maybe just to clarify is there any.

Revenues associated with the deals we should be thinking about and the model for for next year. It's.

It's obviously, it's built into our guidance Chris any other comments.

I think Tom shared the direction Alright, these were about 100 million.

In the current year 21, and we talked about.

Essentially doubling that so on an incremental basis, you can think of about another $100 million. So it's a contributor to growth of 30 to 40 40 bps.

Gives us a lot of confidence in our in our growth profile and the capacity to do more of that over time will certainly talk more about next year great.

Great. Thanks, Thanks, a lot.

And we'll take our next question found that Matthew Mehan with Keybanc. Please go ahead, you want anything.

Okay. Good morning, and thank you for taking my questions.

How should when you're thinking about the return on the $200 million of investments.

You guys made from the policy Koval testing.

And when you would expect to see something like that and then just one of those really one time costs.

A successful programs, maybe just folding into more traditional M&A at this point.

Onsite, what's initial R&D at this point sorry, yeah.

Yeah.

Matthew This is Tom good morning the.

Quite so we're not that spend is done we're not that's not recurring spend as we've always communicated that got cut off last year in queue for so that is out of our P&L going forward.

And will share more details actually about exactly where that money was spent and you'll see throughout the discussions next week at at.

It is mixed across both innovation as well as accelerating our simplification strategy.

As well and we will share more details on that next next week, but there it is balanced across both of those categories and when we say the growth agenda, how it's balanced on that side. It is majority of the growth money that we're spending as in R&D, but there is money that we spend on expanding channels. So specific.

Civically telesales in Europe, non acute sales channels in the U S and you'll hear more about those specific investments from our leaders in the U S region and from our our European leaders.

Thanks for the question the engine.

Just on the pharmacy and the.

Pharma systems business.

I think you've announced.

That's been a very successful business for you I think you can have some capacity additions you wanted one of those classic editions centrally.

Benefit that.

Where that stands.

Yes, Hello, good morning.

We're going to see it along the way so it's not it's not lumpy it's.

Because.

What we're going to see in capacity and 22.

This business you need about two to three years so.

Advance planning on these things so we're going to see the along the way is not going to be.

Lumpy, so you're going to see that in the next three to four years.

But it's starting to is it fair to say Alberto you there is a little bit of.

Benefit assuming that some of that business continues to come online. The early phase does come online in the back half of next year.

Or throughout next year, that's what I'm trying to say it's.

I think of it as a smooth over the next three or four years, it's gonna be coming online.

Quarter by quarter.

And Matt.

Yep, we see that helping to continue to fuel what is that high single digit double digit growth profile of that business.

Perfect that exact answer I was looking for thank you.

You will have to take our next question from Le <unk> Wells Fargo. Please go ahead.

Good morning, Thanks for taking the question welcome Chris. So one question for cruise one question for Tom I'll ask them both now.

Chris maybe I'll ask Bob question, a different way can you talk a little bit about the margin in ETS cadence and fiscal twenty-two how much below the operating the base operating margin of about 23 seven do you expect you wanted to be as 100 basis points. The right way to think about it and consensus is I think 284.

For EPS right now love to get your reaction to that just to calibrate us correctly to start the year.

You guys are doing really well in China, there are a lot of investor concerns about.

Multinational companies ability to continue to grow their gear.

Given the value based purchasing and the recent document 551.

How are you feeling about your ability to continue to grow.

Strongly in China in any reaction to some of those initiatives. Thanks for taking the questions guys.

Start with Chris.

Thanks, a lot I appreciate the question Yeah, I'll try to amplify some of the color that I provided earlier.

So as we think of the year as the year progresses.

First from the top line just to reiterate we we do actually expect relatively normalized growth with the exception of Q2 like I had shared because of the comparable and then there's the dynamic of.

Covid only testing, which you would expect to be more first half.

So I would consider that that dynamic from a margin standpoint.

Certainly first half.

We anticipate to be lower this is simply a matter of the inflationary dynamics that started in 2021 rolling through inventory.

And the peak of when that rolls through and those costs actually hit is more like cute too so kind of first half definitely.

Less favorable margins versus the second half and Q2 in particular being kind of the high mark of that low so to speak.

And then obviously is the initiatives that we've already taken again, there's a lot of that banks right. If you recall I had shared about 50% of it's already happening, but again you get the dynamic of it flowing through inventory. So you end up with kind of a second half dynamic in the margin improvement throughout the back half. So the last item was just more of the discretionary.

Tax item I alluded to that could actually end up with some favorability in Q1, but those are very difficult to predict.

So hopefully that would help some.

And Larry This is Tom Thanks for the question and good morning create to connect.

For China, you're going to hear from James Dang, Our president of China actually next week, and so I know he's looking forward to share in the progress. There as you said we were we had a good very good year in China. This year and we think we're we're kind of back to to a strong growth rate looking forward 551 for us.

We don't see specific impacted in our categories. It's something that we've spent a lot of time talking about.

Vacutainer tubes, 10, needles et cetera, but we make those businesses those products, mostly in China for China as well. So we can compete as a local organization in those.

The other thing is we have a record number of new product launches coming out in China over the next three years.

You will hear from from Simon and team and China were really pleased that we ended 21, having doubled the size of the bar business in China since acquisition that that was a big focus of hours on revenue synergies and there continues to be.

Next week, maybe you could share a couple of comments now on some of the launches that you are having nine in China.

That are occurring so we feel good about the outlook for China were.

As all we're watching the situation very cautiously.

Being prudent and our investments there, but we've got a great team.

Strong performance this year and we do have a strong outlook in China next year as well.

Yes, Thanks, Tom So just just some color.

Over the next three years.

The intervention segment expect too commercialized further 22 to 25 new products.

In in China, just an example of how we have been successful there. In addition to what Thompson about doubling our business. We recently just got approval or clearance for our target Attempter management technology in China, We've actually just got our first two part disorders. This month some of that.

Margins that are accretive to beady-eyed to Bds.

And the sustained and I would say prolific growth of our business in China we.

Expect to continue over the next next period of time.

And what kind of questions.

And we'll take our next question from Josh standings with Palin. Please go ahead. Your line is open.

Hi, good morning.

Thanks for taking the questions and.

Have have one sorry to.

Focusing on the on the margin progression here, but wanted to better understand the impact in fiscal 21, and then how to think about the impact and physical 22 of China value based pricing.

I felt like that was a bucket that was called out on the on the third quarter call is a big headwind for margin and this year.

And just wanted to understand better.

The impact this year and whether that with all the positive men have you experiencing whether that turns into a margin tailwind in fiscal twenty-two thanks for taking the questions.

Hey, Josh maybe just let me comment on value base for carrying I'll turn it over to Chris for other other items.

We saw the bigger impact.

VP kind of is behind US there is still some impact going forward, but at the business and the market is.

<unk> is challenged with restructuring their cost base to manage through any of that and so and that's exactly what they have been doing is restructuring cost basis, we think about that going forward to offset those headaches.

So.

Hey, Chris any other comments and Josh I would just add.

Yes. It was an impact that was previously discussed it was smaller relative to the main drivers that I framed as it relates to the progression from 2019 to 21.

And we always are doing continuous cost improvement initiatives that offset some of these things that happen is Tom noted China's well position and we're thinking of that market more holistically, there's strong double digit growth in 2021 and actually it over 20% and so when you think of it from a total portfolio standpoint, we feel real.

<unk> position as it relates to both the growth profile.

And then have nice actually margin enhancement as a result of that as we go forward. So.

Thanks, Josh.

It's helpful. Thank you.

Yeah final question will come from Matthew Taylor with UBS. Please go ahead. Your line is open.

[noise], Hi, Mac and went ahead.

Good morning, Tom How're you doing good.

Good good and quick welcome.

Alright, congrats on your neuropathy.

I just wanted to ask to <unk>.

Questions are kind of related.

Especially when you gave us the update and the $12 for a few months ago could you just talk about what's changed continue the confidence to now put out.

The guidance in the mid $12 range in helping to develop here over the last couple of months.

Okay sure I'll turn that is Christian.

Yeah.

Thanks Man I appreciate the question, Okay, I think it really starts with our focus on growth.

I think a strong base growth profile that we guided on.

Coupled with if you look at the cash flow that we share through 21 that gives us a lot of flexibility on tuck in M&A right. So we are strong organic growth profile. The enhancement, we're making sure R&D portfolio and then that coupled with the tuck in emanating capability that we will now be able to have it on an ongoing basis.

Two is just the disciplined focus on margin improvement.

We knew that was subject to focus on in addition to the cash management approach we've taken over time, that's enhanced growth.

And so those are the two main drivers as a matter of fact, we're actually.

[noise] cycling over a headwind on tax that's been offset by some of the capital deployment, we've been able to put it work with share repurchases. So.

You'll see us be more discipline, there with other value, creating levers to due to the strong cash flow that we have maybe also were finishing the year both stronger right then.

Thoughts of time, so were we.

We had a really strong queue for we're seeing that that strong demand in our base business. So we're going in the beat that we're seeing here is a combination of not only stronger COVID-19 diagnostics, but stronger performance in our base business as we wrap up the year. So I think that's an important point too.

And contributed to that as well.

Okay. Thanks, Thanks for a comprehensive Panther.

Okay, well operator, there's no more.

I'm sorry go ahead.

Now I apologize to Nintendo.

As far back over to Tom pollen for any closing remarks.

I just thanks, everyone for the good discussion today, we obviously are really looking forward to discussing all the great work that the team has been doing here over the last.

<unk> 20, plus months as we've been advancing are beady 2025 strategy I personally I'm really excited to four.

For next week's event, where.

Be able to share with you would've been investing how we've been refining and.

Next week, so everyone stay well and we'll look forward to.

Continued great dialogue next week.

Thank you.

Today's teleconference disconnect yelling at the time and have a wonderful day.

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