Q3 2025 Becton Dickinson & Co Earnings Call

2025 earnings call.

Request of BD.

Today's call is being recorded and will be available for replay on bees investor relations website investors bd.com.

Or by phone at 800 8391246, for domestic calls an area. Code plus 1, 402, 220 0464 for international calls

For today's call all parties have been placed in a listen-only mode until the question and answer session.

I will now turn the call over to Greg Regina, Senior Vice President, Treasurer, and Head of Investor Relations.

Good morning and welcome to the biddies earnings call.

I'm Gregory Judas, senior vice president Treasurer ahead of investor relations.

Thank you for joining us.

this call is being made available there audio webcast at bd.com

Earlier this morning video released its results for the third quarter of fiscal 2025, the press release and presentation can be accessed on the IR website at investors.gov.

Leading today's call are Tom Poland, biddies, chairman chief executive officer and president and Crystal orifice Executive Vice President and Chief Financial Officer.

Following this morning's Preparatory. Barks Tommy Chris will be joined for Q&A by our segment, presidents. Mike Garrison, president of the medical segment. Mike Feld president of the life sciences segment. Rick Byrd, president of the Interventional segment and Below muscle president of our future connected care segment.

Before we get started, I want to remind you that we will be making forward-looking statements, you can read the disclaimer, in our earnings release, and the disclosures and our SEC filings on our investor relations website.

Unless otherwise specified all comparisons will be made on a year-on-year basis versus a relevant, fiscal period.

Revenue percentage changes are on an adjusted FX neutral basis unless otherwise noted

Reconciliations between gaap and non-gaap measures are included in the appendices of his earnings release and presentation with that, I am pleased to turn it over to Tom.

Thank you, Greg and good morning everyone.

As you saw in our press release in Q3 we sequentially improve gross. The company, we accelerated commercial initiatives and increased our organic growth trajectory through Market headwinds.

We continue our strong track record of executing BD Excellence to drive, gross margin upside.

Additionally, we fulfilled our commitment to announce a definitive agreement to separate our biosciences and diagnostics business.

Through a transaction that we believe will unlock meaningful value for our shareholders.

Turning to details of the quarter.

Revenue grew 8.5% to 5.5 billion dollars or 3% organic.

New BD. Organic growth was 4%.

Our BD Excellence Lean Operating System remains a flywheel for value creation. Delivering Q3 adjusted gross margin of 54.8%, up 50 basis points year-over-year, and an adjusted operating margin of 25.8%, up 60 basis points year-over-year, supported delivering $3.68 in adjusted diluted EPS.

Each exceeded our expectations.

As we communicated last quarter, we've been taking actions to accelerate revenue growth.

This includes further investing in growth opportunities by adding selling and marketing resources capitalizing on new product launches and continuing to drive, BD Excellence to optimize product Supply.

The combination of these actions has already begun, delivering results as you saw play out in a number of key areas.

Farm systems improved sequentially to nearly 5% growth as we delivered another quarter of double-digit growth in biologics.

BDI accelerated to nearly 7% growth in the quarter, with double-digit growth in UCC and mid-single-digit growth in PI and surgery.

APM delivered, double digit. Pro-forma growth ahead of our deal model.

As expected growth in both bdb and DSC increase sequentially by approximately 250 basis points.

This performance allowed us to deliver sequentially improved growth across the company through continued Market. Headwinds in China, certain sub-segments of farm systems such as vaccines and the life science research Market,

Building off our Q3 performance. We reaffirmed our organic Revenue guide range for the year and raised our our earnings guidance 18 cents at the midpoint

Turning to an update on several strategic initiatives.

With Waters through a tax efficient reverse Morris, Trust.

We strongly believe that Waters is the right partner and firmly believe in management strategy and ability to unlock the value of these assets.

The transaction is progressing. Well, towards an expected closing around. The end of the first quarter of calendar year 2026.

We're pleased to have named Brooks story to lead biddies integration and separation management office.

Brook's most recently led the integration of Edwards critical care which we she will continue to oversee as part of her expanded scope.

For Rich experience, including her tenure, as president of the Diagnostics business. Make sure the ideal choice for this role.

Upon closing, a new BD will be established as a scaled Pure Play medical technology company.

With uniquely leading positions and a best-in-class consumable revenue profile of over 90%.

A deep innovation pipeline and strong margin expansion, fueled by BD x ones.

The company strong growth and earnings profile will be supported by enhanced Capital, allocation with an emphasis on share BuyBacks. As we continue to pay competitive dividends and execute focused tuck in m&a.

As previously communicated and aligned with our emphasis on share BuyBacks. We intend to use at least half of the approximately 4 billion cash distribution from Waters.

To buy back shares with the balance for debt repayment as we continue to progress toward our 2.5 times. Long-term net, leverage Target,

Moving to an update on our Innovation pipeline.

We had some great launches and Milestones this quarter as investment decisions we made at the start of BD 202025 are now advancing to Market.

In BD Life Sciences, BDB's innovation super cycle continued in Q3.

We saw a strong traction with the successful launch of facts, discover A8, which features breakthrough spectral and real-time cell Imaging, Technologies and has exceeded our sales targets since launch.

we're also launching our first made in China for China, clinical analyzer, this quarter

Bdbs are in deep pipeline includes over 25. New product launches across instruments. Reagents and informatics as well as continued expansion in the high growth single cell multiomics segment.

In DS.

As blood culture momentum continues.

We are excited about the Next Generation, bactec launch in fiscal 2026, which is expected to drive renewal of Legacy systems and accelerate share gains.

In molecular innovation, we remain focused on leveraging the increased Speedy Max installed base, with continued growth of IBD revenue per system.

Most customers today, use just under 3 assays, while top users, adopt 5 or more of our 14, assay menu.

Our commercial team is focused on driving further menu, adoption supported by the upcoming launch of several new assays in 2026.

Also in molecular, our BD core platform is addressing a new 1 billion dollar market for HPV testing. And last week we submitted to FDA. The first ever at-home self collection kit for HPV screening using a simple dry swab.

We expect approval in mid FY, 26.

Today in the US, approximately 30% of women have not been screened as recommended and this population represents over 60% of cervical cancer deaths.

We Believe at home, self-collection can significantly improve access to screening and play an important role in reversing still Rising deaths from cervical cancer.

Moving to BD Medical.

We recently announced that our BD libertas wearable injector has entered into first into its first Pharma sponsored clinical trial,

This device is being used for self, injection of complex biologic drugs, by patients at home.

Rather than going to an infusion Clinic.

We also announced in another BD sponsored studies that 100% of study participants would likely use the liver toss device. If prescribed

Separately, we continue to expand signed agreements for GOP. Owns.

Now, reaching over 70 signed agreements for glp1. Biosimilars

Biologics now represents 50% of total farm system sales and we are exceptionally. Well, positioned to capitalize on the wave of new molecules coming to Market over the next decade.

Moving to our portfolio of connected Care Solutions within MMS. We began limited commercial release of our new BD pixus Pro.

With our BD and Kata Enterprise, AI software to follow this quarter.

Pixus Pro is our first redesigned Hardware platform and includes multiple new features designed to improve nurse workflow. Enhance drug availability for patients and transform productivity using artificial intelligence.

Pixus Pro is our first product line to feed data into our new inata, AI platform. And we'll be followed by aaris hemisphere Altima Monitor and other devices creating future data sets, which will be unique in our industry.

While still very early in our introduction. We are looking forward to this Innovative Journey over the next coming years.

Following the APM acquisition, we immediately began investing in capabilities to develop increased connectivity and interaction between our Aeris infusion system.

And our hemisphere, alt to the high hemodynamic monitoring system.

Recognizing that Critical Care. Nurses can spend 50% of their time manually adjusting infusions today.

we're advancing through early milestones in our Innovation process with prototypes now working in lab models,

We have a strong Cadence of new Solutions under Development, Across connected care that BD is uniquely positioned to deliver.

And I'm pleased to have the law moves thin EVP and president of our future connected care segment with us on the call today.

The law joined BD in July from masimo and is known for his deep knowledge of the sector, a strong track record of transformative Innovation and his commercial focus on driving growth.

This is an exciting next step in our journey to becoming the new BD. And I look forward to bol's partnership

In MDS. We recently received FDA clearance for Central. Vina 1, our rapid insertion, Central catheter and we're on track to launch this quarter.

This is biddies first entry into the 500 million central line market and Central VA is designed to transform the efficiency and safety of insertion and reduce the risk of serious complications.

In our BD Interventional segment and advanced tissue regeneration, platform. We continue to expand indications for physics.

with the EU launch of the world's first reservable scaffold with broad indications to prophylactically prevent incisional, hernas,

With more than 2.5 million laparotomy across the US and Europe.

Incisional. Hernas affect an estimated 30% of patients and up to 50% among high-risk populations.

These preventable hernas often lead to a cycle of complications such as recurrence, surgical site, infections and reoperations.

The US clinical trial is ongoing with full patient, enrollment anticipated in FY, 26.

Lastly, our BD Excellence operating system continues to be a key enabler of our strong margin execution and is expanding our competitive advantage in manufacturing.

Streamlining internal processes and optimizing our supply chains in today's tariff environment.

In Q3 customer service levels, measured, as on-time, in full deliveries or Otis, reached their highest level in over 5 years and continued positive momentum into Q4.

Over the last 2 years, BD Excellence, has been used to reduce manufacturing waste by more than 35% and oee or efficiency of equipment is up significantly creating capacity to produce an additional 2.5 billion units on the same production lines.

We continue to be in the early Innings of BD excellence and see a long Runway ahead across operations commercial R&D and process excellence.

This also applies to our life science businesses, which are being separated, where BD Excellence has accelerating momentum and margin expansion. Initiatives are progressing. Well,

We'll be transitioning these capabilities to Waters to continue this progress.

In closing.

We achieved our objectives in Q3 and are fully engaged in executing. Our commercial initiatives to ensure, we accelerate organic Revenue growth through market dynamics.

Simultaneously.

We are focused on closing the transaction with Waters that will position BD for its next chapter of long-term success.

With that. I'll turn it over to Chris.

Thanks, Tom. Starting with our Q3 revenue performance, revenues of $5.5 billion grew 8.5%, or 3% organic.

Newbie, to the organic growth was 4%.

Out of China.

Partially offset by China.

In BD medical as we expected Farm systems showed sequential improvement with 4.8% growth as we anniversary the impact of customer inventory, destocking, and delivered. Another quarter of double-digit growth in biologics driven by increased orders. For glp owns, we continue to monitor market dynamics as volatility and subcategories such as generic anti-coagulants and vaccines remain.

MMS delivered solid mid-single-digit growth as we continue to secure competitive wins at several large health systems in the quarter across both infusion and dispensing. We are tracking ahead of our goals for upgrading and securing our Aeris installed base.

MDS grew low, single digits, as volume growth in vascular, access management and hypodermics in the US was offset by ongoing change in clinical. Practice following the fluid shortage and volume based procurement pressure in China as expected.

APM delivered, 13% pro-forma growth in the quarter. This was driven by strong commercial execution, incremental selling investment made as part of our acquisition thesis and new product Innovation, including the recent launch of the hemasphere Ulta monitor.

Our Interventional segment delivered, nearly 7% growth in the quarter with 12% growth in UCC supported by the recent launches of purewick flex at home and purewick male which continued to outpace the new product ramp of purewick female.

Surgery delivered mid single-digit. Growth driven by double-digit growth in our Advanced tissue regeneration platform from incremental investments in our physics. Sales force our recent physics umbilical launch and continue to adoption of goflex for plastic and reconstructive surgery.

Peripheral intervention. Also grew mids. Single digits our focus on Commercial execution and new accounts. And the creation of a dedicated Woman's Health sales team all contributed to improved sequential performance in the business.

Lastly, in BD Life Sciences, as expected by a sciences and diagnostic Solutions, decreased low. Single digits with each demonstrating, significant sequential positive momentum of approximately 250 basis points in the quarter.

We expect continued positive momentum into Q4.

In bdb reagents and service which represented about 75% of bdb revenues. In Q3 grew a healthy, mid single digits, excluding the impact from the planned exit of a legacy platform.

This was offset by a year-over-year, decrease in instrument sales, driven by continued market dynamics in China and Europe.

Sequentially research instruments, improved in the US and AMA by approximately 40% and 80% respectively driven by the launch of the facts discover 88 with sales. Well ahead of our initial plans and strong demand heading into Q4.

While research funding in Europe continued to be constrained within our prior expectations. The US is showing early signs of stabilization in the academic and biofarma and markets

While year-over-year performance in diagnostic Solutions reflects the decrease, in our point of care business. And in bactec due to the previous Supply disruption, we are very encouraged by the sequential improvements that played out and expect the business to return to growth next quarter.

In Q3 bactec utilization increased, over 20 percentage points sequentially, exiting the quarter, at over, 80% of historic levels and already in line with our Q4 planning assumptions.

EDD Max ivd continue to grow double digits amid. Favorable, reimbursement, Dynamics playing out in the molecular diagnostic space.

That are a growth tailwind for this platform.

As these positive Trends continue to take hold and temporary growth headwinds. Continue to fade, the biosciences and diagnostic Solutions, business is on a sound, trajectory back to its historic mid single digit plus growth rate.

Rounding out the life sciences segment year of your growth and specimen management was led by the BD vacutainer portfolio, partially offset by China market dynamics.

Turning to the p&l.

68 cents.

We deliver strong adjusted gross margin of 54.8% and adjusted operating margin of 25.8% which increased by 50 and 60 basis points year-over-year respectively.

Gross margin expansion, continued to be primarily fueled by momentum in BD Excellence driven by manufacturing productivity, waste Improvement and network optimization.

Further. Leverage in operating margin was driven by active management of shipping and GNA costs while investing in selling and marketing to drive growth.

Regarding cash and capital allocation year to date. Free cash. Flows were approximately 1.7 billion dollars which increase sequentially by 1 billion dollars.

BD Excellence continue to drive productivity gains allowing us to leverage Capital expenditures we also realize sequential cash benefits from improved Collections and the timing of payables

This was partially offset by increased inventory levels and cash payments related to tariffs.

We ended the quarter with net leverage of 2.8 times and continue to make progress towards our 2.5 times, net, leverage Target

We also see Sherry purchases, as a value creating opportunity, given our view of the intrinsic value of BD.

We expect to complete our 1 billion dollar buyback by the end of September which is ahead of our original commitment.

Moving to our updated fiscal, 25 guidance.

Building off our Q3 performance, we reaffirmed our currency neutral, Revenue guidance, including total revenue growth of 7.8% to 8.3% and organic Revenue growth of 3 to 3.5%.

While uncertainty from Market headwinds continue to persist. We expect year-over-year organic growth to improve sequentially. In Q4 this Improvement, is largely driven by the expected contribution from apm's organic growth and continued momentum in bactec, as well as a favorable comparison to the prior year in DS.

Regarding foreign currency, based on current spot rates for illustrative purposes. We now expect translational FX to be immaterial or approximately a 10 million dollar increase year-over-year to revenue.

We raised our adjusted EPS guidance by 18 cents at the midpoint to arrange a 14.300, to 14.45 this reflects growth of about 9.4% at the midpoint, which is an increase of approximately 1.4% compared to our prior guidance.

and reflects strong, Q3 performance and incremental Q4 investments in selling and marketing to accelerate our organic growth trajectory

Based on current spot rates, we expect the FX impact to EPS to be about neutral for the full year.

our EPS guidance continues to include an estimated tariff impact of about 90 million or 2% to EPS growth, for the full year, which is a reminder is predominantly weighted to Q4,

For the full fiscal year, given the strength of our continued gross margin expansion, including additional investments in selling and the impact from tariffs, we remain on track to deliver our goal of 25% operating margins by 2025.

as you think about the full year impact of tariffs in fiscal 2026, the landscape remains fluid, but based on policies in place today

we currently anticipate a full year 2026, tariff impact of around 275 million.

This is a notable Improvement compared to initial expectations and reflects the results of our team's ongoing, active mitigation efforts and tariff rates that moderated on a net basis since our last update

In closing, we remain focused on navigating the current environment to deliver on our revenue and increased earnings commitments, while positioning BD with continued momentum beyond 2025.

With that, let's start the Q&A session. Operator, can you please assemble our queue?

Thank you.

Star 1.

If at any point, your question is answered. You may remove yourself from the queue, by pressing star 2.

In order to allow for broad participation, please limit yourself to only one question.

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Our first question will come from Patrick wood with Morgan Stanley.

Beautiful. Uh, thank you so much for taking the question. Um,

You know, I'd love on the Romaine Co side, the the plus 4 growth, you know, if we think about flowing into Q4 and then to your point APM drops into being organic and we're seeing you know that biologics pipe flowing through into PS and neurology strong. You know I know we're not talking about 26 yet in the kind of midterm but is it the right framework? Is there any reason we would be wrong to think that remain Co should be stable in that kind of mid single digit plus kind of a range uh as a just a conceptual framework is there anything that will be wrong with that thought process? When we're looking a little bit more midterm. Yes guys.

Yep, thank you for the question, Patrick, and, and good morning. Um, you know, we are pleased with the performance, as you mentioned, across a number of of areas. Um, whether or not in in the, uh, the BD Interventional business continued strength of of UCC, which was, you know, underlying about 10 last quarter continued that this quarter strong performance across to MMS. And as you mentioned, um,

Good to see as we expected the, uh, recovery in in farm systems driven by double digit biologic growth. And as you shared, we also continue to secure more and more contracts for, uh, biosimilars in that category in glp 1's. Uh, which has been a key strategic, focus of ours. Um, you saw that continue to play out as you mentioned, um,

in areas across, uh,

Also, the sequential improvements in the life science business, particularly 250 basis points in bdb. And and DS as you said 4% growth, uh, for the new BD, um, which is also about where we expect to be for the full year. Um and so those trends that that you're seeing across BD Interventional across um

Across the connected care. Um, you know, medical segment, we expect those largely to continue, um, there's nothing different that we would, you know, expect fundamentally from those. I think as we as you also mentioned, we saw very strong growth. In APM ahead of our deal model, um, 12% growth, you know, sorry, 13% growth for the quarter. Um, and that's really driven by strong execution, uh, from that team, um, with some great Innovations, hitting the market. And then, as part of our, our deal thesis to start with, um, and we had shared this at the time of the announcement, we were going to make incremental, investments, in selling in certain areas of innovation. And the team's been executing, those really well on those sales investments in APM, and you're starting to see that come through. Um, you also saw us announce that we're making some, some outsized continued Investments, more broadly in the company behind areas of opportunity in Q4 specifically in our selling organization, you know, think about areas like uccc, other areas in Interventional.

And in the medical segments, connected care. Um, on some big new product launches like uh the pixus pro that we're doubling down and investing behind as we go into Q4 to help set us up for for FY 26 and Beyond. So thank you Patrick for the question.

Thanks so much.

Thank you.

Our next question will come from Rick Wise, with steeple.

Uh, uh, good morning, uh, to you both. Um, uh, it thinking about 1 question, uh, I I guess I'm going to focus on, uh, the just something nearer term. Um, uh, and maybe Chris, you can talk a little about, uh, your implied. Uh, uh, operating margin guide for the fiscal fourth quarter. Uh, uh, the, my initial back of the envelope calculation suggests that. Uh, it just as I do the math, that that implies sort of a step down in operating margins relative, uh, flat or down. I should say, relative to the prior quarter just help us think through the headwinds or the mix issues, that might relate to that. Is it China? Is it conservatism is this tariffs. Uh, just help us think through the sequential margin Dynamics. Given your excellent, uh, performance in our performance.

This quarter. Thank you.

Yeah, Rick thanks. Um look we've been

Uh, really strong this year in terms of quality P&L. You see the benefit of BD Excellence playing out in our margin profile, consistently quarter over quarter. I'd suggest, you know, we've been best-in-class in terms of margin EPS flow-through. If you look at our full year guide, now 9.4% at the midpoint, a significant raise in the quarter.

And that's why absorbing 2 points for the full year of growth from total tariffs.

So as you think of what to expect in Q4, as you squeeze the balance of the Year. First of all on gross margin, it's going to be about flat year-over-year and by the way, just as a reminder, right? Be 90 million of tariffs that are all flowing through in Q4, right? So that's nearly 150 basis points. So that shows the power of BD excellence and what we're getting in terms of net productivity offsetting inflation, um, that's fully absorbing in gross margin. Uh, the tariffs, the operating margin is as planned, there'll be a slight. Sequential step down quarter to quarter and it's largely driven by just the timing of our investments. And as you saw in our updated guidance, we're actually fueling the business with, with more investment to continue to, for, uh, fuel those areas of momentum, that Tom mentioned. So all in all I think, when you look at the print, um, it's extremely strong EPS, um, it really demonstrates, the power of BD to compound earnings at a compelling growth rate, despite macro Factor,

So we're very pleased with that.

Thank you, Chris, uh, congrats again on on the excellent performance, this quarter.

Thank you, Rick.

Thank you. Our next question will come from Larry biegelsen with Wells Fargo.

Uh good morning, thanks for taking the question. Hey Chris 2 2 for you. I'm going to try to ask them both uh together.

Um first usually on the Q3 call, you give some helpful commentary on on the following year, particularly on the p&l. So is there anything you can share with us today on, you know, whether you can increase the margins year-over-year in fiscal 26, given the Tariff impact, you know, color on FX today or, you know, high level thoughts on EPS growth and second. Um, what can you say about the post-separation margin Outlook? You, you've talked about it, the operating margin post-separation being similar to the current bdx operating margin. Does that include, you know, tsas and msas. And you know any color you can share with us today on, on below the line items like like tax rate. Obviously, you know, we're, we're all trying to, uh, you know, build, uh, remain coat p&ls here. Thanks for taking the question.

Yeah, thanks, Larry. I appreciate it. Maybe with the separation first—something that we shared. Um, there’s always a couple of ways to look at this. The key questions tend to be: do you have dislocation in margin? Um, we shared last time publicly that there will actually be very different terms of operating margin, you know, pre-separation and post-separation. So,

That's within a reasonable range, plus or minus. So you should see a healthy margin come out. Plus, you're going to continue to get the benefit of BD Excellence, um, carrying through. Um, so you'll continue to have those same dynamics, so that's very positive. Um, there's always a strand of cost when you have these things; there will be a TSA that largely offsets that.

So those 2 factors, um, coupled with the fact that with the 4 billion dollar cash we get, and at least half of that going to our share BuyBacks creates a another lever that will create some EPS secretion tied to that. Um, so we actually think when you kind of separate the pieces of BD and think of

The earnings that goes with the separation that you're getting uh meaningful value for and then the earnings that's left. Um,

And then the the TSA on top of that. Um, and then the the EPS, um, accretion from the share BuyBacks positions as well to not have any leakage as you think of the sum of the parts there. And so it sets up nicely for new VD, Tom talked about the, the new BD growth rate. Um, right. And, um, so that's, that's where we stand with separation. Well, obviously, provide more details. We give our November guide and help everyone try and buy for. Take those pieces and in more detail, it's still a bit early.

Um, as you think of 26, it look, it's it's early. Um, given various macro factors Etc, to give full color, but a couple things that 1 thing we shared on the call was our our, uh, tariff outlook for 26. Um, we know expectations out there, um, where we're set last quarter. Um, we said that it would be about 275 million in 26, which is a meaningful improvement from where you are. So as you think of

90 that we already have in our base, um, but it's a better Outlook. Uh, folks should see that as a better Outlook versus where we were last quarter. Um, you know, rough Mass, I think where most people were assuming that's about an 85 million benefit from from where folks were sitting. So I think those those 2 things are favorable things, you should think about as, as we head into 26.

Thanks so much.

Thank you.

Our next question will come from Travis beef with Bank of America.

Hey, thanks for taking the question. Um I guess uh just a bigger picture question uh on on kind of the the growth outlook for the remaining code business. Kind of the new BD if you will, like, what do you, how do you kind of see this business growing? You know, kind of versus the 5 and a half plus longer term and then and also how should we think about kind of capital deployment? You know the the new strategy on on Capital deployment kind of posts. So post separation

Yeah, thanks Travis. I can start off with that and um, you know, obviously I made some earlier comments. Um, I think to Rick's question, uh, you know, earlier, similarly related, may, maybe I can, we're obviously very focused on executing in 25 and, and, and, and chopping wood through the balance of of the year. But I could give a little bit of of, um,

And it's too early to talk details about 26 of them being just give a little bit of thoughts to share related to that. So we're obviously encouraged by the recent sales performance across the portfolio. As we execute our commercial initiatives, the series of new innovations that you see that we talked about on the call. Um, particularly most of those, we actually started investing in at the start of BD 2025 as part of the portfolio strategy. We talked about then obviously it takes a couple years for those to come through, they're starting to hit Market, we're excited about those launches and you're seeing us take incremental some of the, the flywheel benefits of the efficiencies. We're getting from BD Excellence. We're reinvesting. A portion of those behind those launches behind our selling organization to, uh, to keep driving that growth. Um, and we're going to continue to lean into those Investments as we go into Q4, um, to build on that. Momentum obviously, as we think going forward, too, we're going to continue to look at at. What is a dynamic macro environment, as we go into next year, we're going to be prudent about that. We're going to monitor, we're going to study how certain markets

Dynamics play out.

Continuing to focus on China, certain sub segments of of Pharma delivery specifically vaccines and obviously life science, research Market will will actually give a whole coat guide as it comes to 26. Um and we'll incorporate all of those in as we've, we've talked about as well. Um, we see, BD Excellence still in early Innings, um, and we expect to continue to benefit from that momentum. Um, and its impact on our margins. We still see more, Runway ahead there, and we're going to continue chopping wood on

On tariffs too, right? We're pleased with the progress that we announced here this morning but we're not done. We have teams still working on that. Um,

Dedicated teams across each of the businesses assigned to keep willing that down and there's a very specific actions uh that we're taking on that. We've got obviously we've talked about changing, uh sourcing flows, um, things like that container and flush sourcing, those for China out of markets, other than the us, we've talked about changing components and kits to, uh, get more us made components in certain kits, to allow them to to uh, comply with usmca and tariff. Exemptions and of course we're working with suppliers to optimize, you know, our sourcing locations as as well too as part of that Matrix. Um, and that's something that we've got a steering team on top of. Um,

All over as we continue to, to look to offset that further. So hopefully, that gives a little bit of color of of how we're thinking about things. And, as we, as we look ahead, we'll obviously look forward to giving more updates as as we, uh, move in through Q4.

Great. Thank you. And Chris on the Q4 EPS. Um, I think there's some Investments there. Anything else? Going to driving the change in, in the Q4 Epps?

No, it's it's just I mean largely. Uh it's it's the investment profile really Travis or there's nothing else there again. I mean it was uh strong quarter. Um a significant raise. I mean we took the midpoint up above our our prior top end of the guide 9.5% EPS growth at the midpoint with with zero FX benefit for the

Year, um, super strong, um, margins remain intact. The only dynamic you have flowing through Q4, that's, that's nuanced, is, uh, really the tariff impact flowing through there, which is not new news that stays intact. And then want to continue to invest, uh, behind the business. Again, I think it's its best-in-class management of margin, EPS, leverage, and flow through, and uh, feel really good about that.

Great. Thanks a lot.

Thanks Travis.

Thank you.

Our next question will come from Robbie Marcus with JP Morgan?

Uh, good morning and thanks for taking the questions. Um,

maybe on, um,

On Urology. That was, it was a great print, double digit percent growth. Um, maybe just speak to the trends. There was there anything 1 time in the quarter and, and how you're feeling about, um,

That and the Interventional business moving into next year.

Yep. Robbie this is Tom. Thanks for the uh, the question now. Urology is continuing. There's nothing 1 time there at all. It's, it's a continuation of the trends as we had said last quarter. Um, of course, Urology had a, a comp on a 1 time settlement they had in in Q2. But underlying that when you excluded the, the the settlement which wasn't related to business performance that business grew 10% last quarter. So this is really a continuation of that very strong momentum that they've been building, uh, as they've both been driving. Um, the male purewick which continues to scale even faster than the, the original female purewick is doing fantastic. Obviously continuing to expand purewick into the home. We continue to advance our our clinical study, um, aimed at getting at home, reimbursement. And so, the growth that we're getting at home is all out of pocket today. We see a meaningful opportunity to unlock additional upside there through the trial. That's progressing, very well. Um, and we expect to conclude in 26, uh, we also have a series of new launches,

Uh that will be coming up here very soon including the first mobile purewick um that next product that will be launching. Um,

In Q4 actually heading into uh into FY. 26 will be for patients who are in wheelchairs. But it'll be the first uh wireless battery driven version of of a mobile purewick. And then we have versions coming in the future that would allow people to be completely uh to walk around with uh kind of a f**** pack type version. So we've got a a strong Runway ahead in uh, continued innovation in that space. That we're really excited about. I think as you think about the broader areas of of the Interventional business, again the the acquisition we did, um, at the start of BD, 2025 of Tifa. The team's doing a really nice job, iterating serially, um, on new applications and indications with that biomaterial. So you saw Rick and the team start by getting, um, indications in the hernia space to replace plastic mesh there. You then saw a start to, um, you saw us get approval for the first, uh, application to prevent hernas after, uh, laparotomy surgery.

Surgeries first launching in Europe right now, we're investing behind that that's 1 of the areas of incremental investment, we're making, is investing behind that launch and Market shaping and we've got that clinical trial underway to bring that that Innovation to the US. I think actually the first indication of that same biomaterial for GI indications, launches next year in 26. So again, we're excited by what's happening there.

In the surgery, space. We like the The Innovation pipeline that we've built over the BD 2025 window here. And then, of course, in uh, in in pi, you know, solid solid growth there. They've obviously feel the impact of the OBP in China, but in in other areas, we're excited by some new launches coming up there, particularly 1 in the the breast biopsy space, as well as some new vascular. Um,

Indicate applications that we're going to be getting into that we haven't been in before, uh, that start to launch in 2016 that we've talked about in the past. So, uh, Rob, I hope that gives some color, but, um, really driven by innovation on the UCC side.

Great. Um may may be just to to follow on to the last question Chris it sounds like there's increased uh sgna investment in fourth quarter coming in below uh Street expectations on EPS. How do we think about where that is what its funding and should we carry that level of investment in SGA into next year? Thanks a lot.

Hey look, I I think a real positive thing we've talked about BD Excellence was, was not just the impact, it has on margin and the opportunity to compound earnings which we've done right again. Um, best-in-class margin and EPS flow through with almost 9 and a half percent, the, the midpoint. But importantly, we want to keep investing in both Innovation and Commercial execution. Um, you've seen us do that throughout the year and, um, we're going to continue to invest behind all

All the areas momentum, Tom has mentioned them a couple times, um, on the call. And that that's part of our strategy. Um, again, we, we feel really good about, uh, you know, almost double digit EPS number at, at the midpoint. Um, and this sets us up to continue some momentum. As we think about 2026 driving those areas of growth. Thanks, Robbie.

Thanks a lot.

Thank you.

I'd like to turn the floor back over to Tom Poland for any additional or closing remarks.

Okay, thank you, operator. And thanks everyone for joining today. And for your support of BD, we look forward to connecting with everyone again in November

Thank you. This does conclude this audio webcast on behalf of BD. Thank you for joining today. Please disconnect your lines at this time and have a wonderful day.