Becton Dickinson Q1 2026 Becton Dickinson & Co Earnings Call | AllMind AI Earnings | AllMind AI
Q1 2026 Becton Dickinson & Co Earnings Call
Speaker #1: At the request of BD, today’s call is available for replay on BD’s Investor Relations website at investors.bd.com or by phone at 800-753-5212 for domestic calls and area code 1-402-220-2673 for international calls.
Speaker #1: For today's call, it is being recorded. All parties have been placed in a listen-only mode until the question and answer session.
Speaker #1: I will now turn the call over to Sean Bevec, Senior Vice President, Investor Relations. Please go ahead.
Speaker #2: Good morning, and welcome to BD's earnings call. I'm Sean Bevec, Senior Vice President of Investor Relations. Thank you for joining us. This call is being made available via audio webcast at bd.com.
Shawn Bevec: Good morning and welcome to BD's earnings call. I'm Sean Bevick, Senior Vice President of Investor Relations. Thank you for joining us. This call is being made available via audio webcast at bd.com. Earlier this morning, BD released its results for the first quarter of fiscal 2026. The press release and presentation can be accessed on the IR website at investors.bd.com. Leading today's call are Tom Polen, BD's Chairman, Chief Executive Officer, and President, and Victor Roque, Senior Vice President and Interim Chief Financial Officer. 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 in our SEC filings on our investor relations website. Unless otherwise specified, all comparisons will be made on a year-on-year basis versus the relevant fiscal period.
Shawn Bevec: Good morning and welcome to BD's earnings call. I'm Sean Bevick, Senior Vice President of Investor Relations. Thank you for joining us. This call is being made available via audio webcast at bd.com. Earlier this morning, BD released its results for the first quarter of fiscal 2026. The press release and presentation can be accessed on the IR website at investors.bd.com. Leading today's call are Tom Polen, BD's Chairman, Chief Executive Officer, and President, and Victor Roque, Senior Vice President and Interim Chief Financial Officer. 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 in our SEC filings on our investor relations website. Unless otherwise specified, all comparisons will be made on a year-on-year basis versus the relevant fiscal period.
Speaker #2: Earlier this morning, BEDI released its results for the first quarter of fiscal 2026. The press release and presentation can be accessed on the IR website at investors.bd.com.
Speaker #2: Leading today's call are Tom Polen, BD's Chairman, Chief Executive Officer and President, and Victor Roque, Senior Vice President and Interim Chief Financial Officer. Before we get started, I want to remind you that we will be making forward-looking statements.
Speaker #2: You can read the disclaimer in our earnings release and the disclosures in our SEC filings on our investor relations site. All comparisons will be made on the website.
Speaker #2: On a year-on-year basis versus the relevant fiscal period. Unless otherwise noted, revenue percentage changes are on an FX-neutral basis. Also, references to adjusted EPS refer to adjusted diluted EPS.
Shawn Bevec: Revenue percentage changes are on an FX-neutral basis unless otherwise noted. Also, references to adjusted EPS refer to adjusted diluted EPS. As a reminder, beginning 1 October, we began operating under our previously disclosed new BD segment structure that includes medical essentials, connected care, biopharma systems, and interventional, and a fifth life sciences segment comprised of biosciences and diagnostic solutions. The financials discussed here and included in the earnings release and 10-Q have been recast to reflect this reorganization. Reconciliations between GAAP and non-GAAP measures are included in the appendices of the earnings release and presentation. With that, I will turn it over to Tom.
Shawn Bevec: Revenue percentage changes are on an FX-neutral basis unless otherwise noted. Also, references to adjusted EPS refer to adjusted diluted EPS. As a reminder, beginning 1 October, we began operating under our previously disclosed new BD segment structure that includes medical essentials, connected care, biopharma systems, and interventional, and a fifth life sciences segment comprised of biosciences and diagnostic solutions. The financials discussed here and included in the earnings release and 10-Q have been recast to reflect this reorganization. Reconciliations between GAAP and non-GAAP measures are included in the appendices of the earnings release and presentation. With that, I will turn it over to Tom.
Speaker #2: First, we began operating under our previously disclosed new BEDI segment structure that includes Medical, Biopharma, Systems, and Interventional, and a fifth Life Sciences segment comprised of Biosciences and Diagnostic Solutions. The financials discussed here and included in Diagnostic Solutions.
Speaker #2: The earnings release and 10-Q have been recast to reflect this reorganization. Reconciliations between GAAP and non-GAAP measures are included in the appendices of the earnings release and presentation.
Speaker #2: With that, I will turn it over to Tom.
Tom Polen: Thank you, Sean, and good morning, everyone. Before we get started, I'd like to take a moment to welcome Sean to BD. We're very excited to have Sean join our team, and I look forward to partnering with him as we continue to communicate our strategy, performance, and growth opportunities. Turning to our Q1 performance, we delivered stronger-than-expected results, which reflect our disciplined execution, including accelerated commercial initiatives and strength in our key growth platforms. Revenues of $5.3 billion increased 0.4%. New BD grew 2.5% with broad-based growth across the markets where we've been doubling down on investments. This includes double-digit growth in biologic drug delivery, PureWick, advanced tissue regeneration, and pharmacy automation, and high single-digit growth in APM.
Tom Polen: Thank you, Sean, and good morning, everyone. Before we get started, I'd like to take a moment to welcome Sean to BD. We're very excited to have Sean join our team, and I look forward to partnering with him as we continue to communicate our strategy, performance, and growth opportunities. Turning to our Q1 performance, we delivered stronger-than-expected results, which reflect our disciplined execution, including accelerated commercial initiatives and strength in our key growth platforms. Revenues of $5.3 billion increased 0.4%. New BD grew 2.5% with broad-based growth across the markets where we've been doubling down on investments. This includes double-digit growth in biologic drug delivery, PureWick, advanced tissue regeneration, and pharmacy automation, and high single-digit growth in APM.
Speaker #3: We are very excited to have Sean join our team, and I look forward to partnering with him as we continue to communicate our strategy, performance, and growth opportunities.
Speaker #3: Turning to our Q1 performance, we delivered stronger-than-expected results, which reflect our disciplined execution, including accelerated commercial initiatives and strengthening our key growth platforms. Revenues of $5.3 billion increased 0.4%.
Speaker #3: New BEDI grew 2.5% with broad-based growth across the markets where we've been doubling down on investments. This includes double-digit growth in biologic drug delivery, PUREWIC, advanced tissue regeneration, and pharmacy automation.
Speaker #3: And high single-digit growth in APM. We delivered mid-single-digit growth across 90% of new BEDI's, offset by 10% of our portfolio: Alaris portfolio, partially undergoing challenging market dynamics that were in line with our expectations.
Tom Polen: We delivered mid-single-digit growth across 90% of new BD's portfolio, partially offset by 10% of our portfolio, Alaris, vaccines, and China undergoing challenging market dynamics that were in line with our expectations. We delivered adjusted gross margin of 53.4% and adjusted EPS of $2.91, both of which were also ahead of our expectations on the strength of revenue performance and operational execution. Later this morning, we expect to close the combination of our life sciences business with Waters via Reverse Morris Trust transaction. This is a significant milestone as we fully pivot to new BD and the next chapter of the company's growth. I want to thank both the BD and Waters team whose exceptional hard work and transaction experience are enabling us to close nearly two months ahead of schedule.
Tom Polen: We delivered mid-single-digit growth across 90% of new BD's portfolio, partially offset by 10% of our portfolio, Alaris, vaccines, and China undergoing challenging market dynamics that were in line with our expectations. We delivered adjusted gross margin of 53.4% and adjusted EPS of $2.91, both of which were also ahead of our expectations on the strength of revenue performance and operational execution. Later this morning, we expect to close the combination of our life sciences business with Waters via Reverse Morris Trust transaction. This is a significant milestone as we fully pivot to new BD and the next chapter of the company's growth. I want to thank both the BD and Waters team whose exceptional hard work and transaction experience are enabling us to close nearly two months ahead of schedule.
Speaker #3: We delivered adjusted vaccines, and China gross margin of 53.4%, and adjusted EPS of
Speaker #3: We were also ahead of our expectations on the strength of revenue performance and operational execution, with $2.91. Later this morning, we expect to close the combination of our Life Sciences business with Waters via a Reverse Morris Trust transaction.
Speaker #3: This is a significant milestone. As we fully pivot to new—As a reminder, beginning October, the company's growth—I want to thank both the BEDI and Waters team, whose exceptional hard work and transaction experience are enabling us to close nearly two months ahead of schedule.
Speaker #3: We believe this transaction unlocks significant value for our BEDI and the next chapter of the shareholders through both participation in the value creation in the new BEDI.
Tom Polen: We believe this transaction unlocks significant value for our shareholders through both participation in the new Waters entity and value creation in the new BD. As part of the transaction, we will receive a $4 billion cash distribution. I'm pleased to announce $2 billion will be deployed towards share repurchases through an ASR, and $2 billion will be deployed towards debt paydown. Both are expected to be executed in the near term, subject to market conditions. This is in line with our enhanced capital allocation strategy, which prioritizes share repurchases, a reliable and growing dividend, and focused tuck-in M&A in targeted high-growth markets, all designed to steadily increase return on invested capital. With the completion of our life sciences transaction, BD enters this next chapter as a far more focused, pure-play medtech company.
Tom Polen: We believe this transaction unlocks significant value for our shareholders through both participation in the new Waters entity and value creation in the new BD. As part of the transaction, we will receive a $4 billion cash distribution. I'm pleased to announce $2 billion will be deployed towards share repurchases through an ASR, and $2 billion will be deployed towards debt paydown. Both are expected to be executed in the near term, subject to market conditions. This is in line with our enhanced capital allocation strategy, which prioritizes share repurchases, a reliable and growing dividend, and focused tuck-in M&A in targeted high-growth markets, all designed to steadily increase return on invested capital. With the completion of our life sciences transaction, BD enters this next chapter as a far more focused, pure-play medtech company.
Speaker #3: As part of the transaction, we will receive a $4 billion cash distribution. I'm pleased to announce $2 billion will be deployed toward share repurchases through an ASR, and $2 billion will be deployed toward debt paydown.
Speaker #3: Both are expected to be executed in the near term, subject to market conditions. This is in line with New Waters entity and our enhanced capital allocation strategy, which prioritizes share repurchases, a reliable and growing dividend, and focused tuck-in M&A and targeted high-growth markets.
Speaker #3: All designed to steadily increase return on invested capital. With the completion of our Life Sciences transaction, BD enters this next chapter as a far more focused, pure-play med tech company.
Speaker #3: This transformation builds on several years of deliberate portfolio shaping, including divesting three substantial non-core assets and the more than 20 strategic tuck-ins we've completed to strengthen our presence in some of the most attractive areas of how the world of healthcare is evolving.
Tom Polen: This transformation builds on several years of deliberate portfolio shaping, including divesting three substantial non-core assets and the more than 20 strategic tuck-ins we've completed to strengthen our presence in some of the most attractive areas of healthcare. We recognized early on how the world of healthcare is changing rapidly. Providers everywhere are seeking partners who not only deliver high-quality products but who can help them transform care pathways, improve outcomes, and reduce cost. As we've previously discussed, we've identified three key trends shaping the future of healthcare that have guided our portfolio strategy. These include, one, the rise of smart, connected devices, robotics, AI, and informatics that transform the cost and quality of care; two, the shift of care towards lower cost, more convenient settings, including outpatient facilities and the home; and three, rapid growth in technologies to address chronic disease, one of the fastest-growing segments in healthcare.
Tom Polen: This transformation builds on several years of deliberate portfolio shaping, including divesting three substantial non-core assets and the more than 20 strategic tuck-ins we've completed to strengthen our presence in some of the most attractive areas of healthcare. We recognized early on how the world of healthcare is changing rapidly. Providers everywhere are seeking partners who not only deliver high-quality products but who can help them transform care pathways, improve outcomes, and reduce cost. As we've previously discussed, we've identified three key trends shaping the future of healthcare that have guided our portfolio strategy. These include, one, the rise of smart, connected devices, robotics, AI, and informatics that transform the cost and quality of care; two, the shift of care towards lower cost, more convenient settings, including outpatient facilities and the home; and three, rapid growth in technologies to address chronic disease, one of the fastest-growing segments in healthcare.
Speaker #3: Healthcare is changing rapidly. Providers not only deliver high-quality products, but also need partners who can help them transform care pathways, improve outcomes, and reduce cost. As we've previously discussed, we've identified three key trends shaping the future of healthcare that have guided our portfolio strategy.
Speaker #3: These include: one, the rise of robotics, AI, and informatics—smart, connected devices that transform the cost and quality of care; and two, the shift of care toward lower-cost, more convenient settings, including outpatient facilities and the home.
Speaker #3: And three, rapid growth in technologies to address chronic disease—one of the fastest-growing segments in healthcare. Over the last several years, we've built multiple growth platforms, each with billion-dollar-plus potential.
Tom Polen: Over the last several years, we've built multiple growth platforms, each with billion-dollar-plus potential, that position new BD squarely at the center of these trends. From our nearly $5 billion connected care business with AI-driven advanced patient monitoring and connected medication management, to advanced pharmacy robotics, to leading platforms for biologic drug delivery at home, urinary incontinence, vascular disease, and tissue regeneration, new BD is positioned to lead in advancing the future of care. We have leading positions in more than 90% of the markets we serve, with over 90% of our revenues driven by recurring consumables. Every year, we manufacture more than 35 billion devices that reach healthcare providers across more than 190 countries. Few companies in healthcare are as foundational to the daily delivery of care, and that scale powers the strong free cash flow that underpins our strategy.
Tom Polen: Over the last several years, we've built multiple growth platforms, each with billion-dollar-plus potential, that position new BD squarely at the center of these trends. From our nearly $5 billion connected care business with AI-driven advanced patient monitoring and connected medication management, to advanced pharmacy robotics, to leading platforms for biologic drug delivery at home, urinary incontinence, vascular disease, and tissue regeneration, new BD is positioned to lead in advancing the future of care. We have leading positions in more than 90% of the markets we serve, with over 90% of our revenues driven by recurring consumables. Every year, we manufacture more than 35 billion devices that reach healthcare providers across more than 190 countries. Few companies in healthcare are as foundational to the daily delivery of care, and that scale powers the strong free cash flow that underpins our strategy.
Speaker #3: The position of new BD is squarely at the center of these trends. From our nearly $5 billion connected care business with AI-driven advanced patient monitoring and connected medication management, to advanced pharmacy robotics, to leading platforms for biologic drug delivery at home, urinary incontinence, vascular disease, and tissue regeneration, new BD is positioned to lead in advancing the future, holding leading positions in more than 90% of the markets we serve, with over 90% of our revenues driven by recurring consumables.
Speaker #3: Every year, we manufacture more than 35 billion devices that reach healthcare providers across more than 190 countries. Few companies in healthcare are as foundational to the daily delivery of care.
Speaker #3: And that scale powers the strong free cash flow that underpins our strategy. While these trends guide where we innovate and invest, BD excellence guides how we execute.
Tom Polen: While these trends guide where we innovate and invest, BD Excellence guides how we execute. Together, they shape our strategy for the new BD, excellence unleashed, which is expressed through our three strategic priorities: compete, innovate, and deliver. We've begun executing on these priorities and enhancing the speed and agility of the company. I'll share some examples of where we're seeing early positive momentum. Compete reflects how we're elevating our commercial capabilities to win in the fastest-growing parts of the market and deliver an exceptional customer experience. We made significant progress across our commercial initiatives this quarter, including planned Salesforce expansion and APM, PI, and advanced tissue regeneration, while accelerating initiatives to make PureWick at home available for our veterans. We're also seeing broad-based commercial success across the company. The Pyxis Pro launch is off to a good start, with 85% of initial orders coming from competitive conversions.
Tom Polen: While these trends guide where we innovate and invest, BD Excellence guides how we execute. Together, they shape our strategy for the new BD, excellence unleashed, which is expressed through our three strategic priorities: compete, innovate, and deliver. We've begun executing on these priorities and enhancing the speed and agility of the company. I'll share some examples of where we're seeing early positive momentum. Compete reflects how we're elevating our commercial capabilities to win in the fastest-growing parts of the market and deliver an exceptional customer experience. We made significant progress across our commercial initiatives this quarter, including planned Salesforce expansion and APM, PI, and advanced tissue regeneration, while accelerating initiatives to make PureWick at home available for our veterans. We're also seeing broad-based commercial success across the company. The Pyxis Pro launch is off to a good start, with 85% of initial orders coming from competitive conversions.
Speaker #3: Together, they shape our strategy for the new BEDI. Excellence unleashed, which is expressed through our three strategic priorities: compete, innovate, and deliver. We've begun executing on these priorities and enhancing the speed and agility of the company.
Speaker #3: I'll share some examples of where we're seeing early positive momentum. Compete reflects how we're elevating our commercial capabilities to win in the fastest-growing parts of the market and deliver an exceptional customer experience.
Speaker #3: We made significant progress across our commercial initiatives this quarter, including planned Salesforce expansion and APM, PI, and advanced tissue regeneration, while accelerating initiatives to make PUREWIC at home available for our veterans.
Speaker #3: We're also seeing broad-based commercial success across the company. The PIXIS Pro launch is off to a good start, with 85% of initial orders coming from competitive conversions.
Speaker #3: Alaris delivered our strongest quarter of competitive wins since the relaunch, increasing our category share by approximately 100 basis points. Our Medical Essentials business also gained share across multiple categories and with major US health systems, including in flush, PIV, and catheters.
Tom Polen: Alaris delivered our strongest quarter of competitive wins since the relaunch, increasing our category share by approximately 100 basis points. Our medical essentials business also gained share across multiple categories and with major U.S. health systems, including in flush, PICCs, and catheters. Pharma systems delivered significant GLP-1 wins, with now over 80 novel and biosimilar GLP-1 molecules contracted in BD delivery devices. BDI saw continued strength with notable conversions in oncology and peripheral arterial disease and strong adoption of recent launches of PureWick Flex and GalaFLEX. These results reflect the strong execution of our teams and the growing impact of our commercial initiatives. Turning to our second priority, innovate. Innovate focuses on how we bring high-impact solutions to market, executing a pipeline that's now stronger, more focused, and more productivity-driven than ever.
Tom Polen: Alaris delivered our strongest quarter of competitive wins since the relaunch, increasing our category share by approximately 100 basis points. Our medical essentials business also gained share across multiple categories and with major U.S. health systems, including in flush, PICCs, and catheters. Pharma systems delivered significant GLP-1 wins, with now over 80 novel and biosimilar GLP-1 molecules contracted in BD delivery devices. BDI saw continued strength with notable conversions in oncology and peripheral arterial disease and strong adoption of recent launches of PureWick Flex and GalaFLEX. These results reflect the strong execution of our teams and the growing impact of our commercial initiatives. Turning to our second priority, innovate. Innovate focuses on how we bring high-impact solutions to market, executing a pipeline that's now stronger, more focused, and more productivity-driven than ever.
Speaker #3: Pharma Systems delivered wins, with now over 80 novel and biosimilar GLP-1, significant GLP-1 molecules contracted devices. In BEDI delivery, continued strength with notable conversions in oncology and peripheral arterial disease, and strong adoption of recent launches of PureWick Flex and GalaFLEX.
Speaker #3: Results reflect the strong execution of our teams and the growing impact of our commercial initiatives. Turning to our second priority, innovate. Innovate focuses on how we bring high-impact solutions to market.
Speaker #3: Executing a pipeline that's now stronger, more focused, and more productivity-driven than ever. This quarter, we strengthened our innovation pipeline by completing the reallocation of $50 million of central R&D to the businesses.
Tom Polen: This quarter, we strengthened our innovation pipeline by completing the reallocation of $50 million of central R&D to the businesses to fund multiple new product innovations in our high-growth platforms. We also continued to scale BD Excellence into R&D, reducing development times and accelerating future launches by 6 to 12 months across several areas. In surgery, we entered several new markets, increasing our served markets by over $550 million in categories that offer higher growth, higher margin, and long-term strategic value. This includes the U.S. launch of Avitene Flowable, a next-generation flowable hemostat that strengthens our position in biosurgery and enters us into a nearly $400 million market, growing approximately 5% annually. We also advanced our global wound irrigation portfolio with the European launch of Surgiphor, a ready-to-use wound irrigation system that simplifies operating room workflows.
Tom Polen: This quarter, we strengthened our innovation pipeline by completing the reallocation of $50 million of central R&D to the businesses to fund multiple new product innovations in our high-growth platforms. We also continued to scale BD Excellence into R&D, reducing development times and accelerating future launches by 6 to 12 months across several areas. In surgery, we entered several new markets, increasing our served markets by over $550 million in categories that offer higher growth, higher margin, and long-term strategic value. This includes the U.S. launch of Avitene Flowable, a next-generation flowable hemostat that strengthens our position in biosurgery and enters us into a nearly $400 million market, growing approximately 5% annually. We also advanced our global wound irrigation portfolio with the European launch of Surgiphor, a ready-to-use wound irrigation system that simplifies operating room workflows.
Speaker #3: To fund multiple new product innovations in our high-growth platforms. We also continue to scale BEDI excellence into R&D, reducing development times and accelerating future launches by 6 to 12 months across several areas.
Speaker #3: In Surgery, we entered several new markets, increasing our served markets by over $550 million in categories that offer higher growth, higher margin, and long-term strategic value.
Speaker #3: Avitene Flowable. This includes the US launch of our next-generation flowable hemostat that strengthens our position in biosurgery and enters us into a nearly $400 million market growing approximately 5% annually.
Speaker #3: We also advanced our global wound irrigation portfolio. With the European launch of SURGIFOR, our ready-to-use wound irrigation system that simplifies operating, in addition, we submitted SURGIFOR PULSE to the FDA.
Tom Polen: In addition, we submitted Surgiphor Pulse to the FDA, a pulse lavage system which can expand BD's presence in this nearly $200 million market by approximately 40%. Finally, in connected care, HemoSphere Stream began targeted market release in the US and Europe following October's 510(k) clearance. Stream's smart cable compatibility can expand its addressable market tenfold, and early feedback has been very positive. Finally, our third priority, deliver, represents our commitment to operational excellence across safety, quality, delivery, and cash flow. As a result of the life sciences transaction and the network consolidation initiatives that we began in FY22, we've created a meaningfully simpler manufacturing network, reducing our network by nearly half to under 50 global sites, lowering costs, improving resiliency, and enabling scaled smart factories. We have actions underway to improve this even further.
Tom Polen: In addition, we submitted Surgiphor Pulse to the FDA, a pulse lavage system which can expand BD's presence in this nearly $200 million market by approximately 40%. Finally, in connected care, HemoSphere Stream began targeted market release in the US and Europe following October's 510(k) clearance. Stream's smart cable compatibility can expand its addressable market tenfold, and early feedback has been very positive. Finally, our third priority, deliver, represents our commitment to operational excellence across safety, quality, delivery, and cash flow. As a result of the life sciences transaction and the network consolidation initiatives that we began in FY22, we've created a meaningfully simpler manufacturing network, reducing our network by nearly half to under 50 global sites, lowering costs, improving resiliency, and enabling scaled smart factories. We have actions underway to improve this even further.
Speaker #3: A PULSE lavage system, which can room workflows. In expand BD's presence in this nearly $200 million market by 40%. Finally, in connected care, Hemisphere STREAM began targeted market release in the US and Europe following October's 510K clearance.
Speaker #3: STREAM's smart cable compatibility can expand its addressable market tenfold, and early feedback has been very positive. Finally, our third priority, Deliver, represents our commitment to operational excellence across safety, quality, delivery, and cash flow.
Speaker #3: As a result of the Life Sciences transaction and the network consolidation initiative that we began in FY22, we've created a meaningfully simpler manufacturing network.
Speaker #3: Reducing our network by nearly half to under 50 global sites, lowering costs, improving resiliency, and enabling scaled smart factories. We have actions underway to further improve this.
Speaker #3: BEDI excellence continued to drive meaningful productivity improvements of 8% in the quarter, contributing to gross margin and cash flow. Finally, we achieved good progress on the $200 million cost-out program communicated last quarter.
Tom Polen: BD Excellence continued to drive meaningful productivity improvements of 8% in the quarter, contributing to gross margin and cash flow. Finally, we achieved good progress on the $200 million cost-out program communicated last quarter, already executing actions representing $150 million, or 75% of the target, with clear line of sight to the balance. We are pleased with our strategic progress, yet we recognize there is more work to do. This is an exciting moment for the new BD as we focus actions and raise our standards to outcompete, outinnovate, and outdeliver. With that, I'll turn it over to Becton.
Tom Polen: BD Excellence continued to drive meaningful productivity improvements of 8% in the quarter, contributing to gross margin and cash flow. Finally, we achieved good progress on the $200 million cost-out program communicated last quarter, already executing actions representing $150 million, or 75% of the target, with clear line of sight to the balance. We are pleased with our strategic progress, yet we recognize there is more work to do. This is an exciting moment for the new BD as we focus actions and raise our standards to outcompete, outinnovate, and outdeliver. With that, I'll turn it over to Becton.
Speaker #3: Already executing actions representing $150 million, or 75% of the target, with clear line of sight to the balance. We are pleased with our strategic progress.
Speaker #3: Yet we recognize there's more work to do. This is an exciting moment for the new BD. As we focus actions and raise our standards to out-compete, out-innovate, and out-deliver.
Speaker #3: With that, I'll turn it over to Vitor.
Speaker #2: Thanks, Tom. Starting with revenue. Total company revenue of $5.3 billion grew 0.4% with BEDI. In Medical Essentials, MDS performance reflects expected order timing dynamics and volume-based procurement in China, which was partially offset by continued share gains in the US in our vascular access management portfolio.
[Interim CFO] (Becton Dickinson & Co): Thanks, Tom. Starting with revenue. Total company revenue of $5.3 billion grew 0.4%, with 2.5% growth in new BD. In medical essentials, MDS performance reflects expected order timing dynamics and volume-based procurement in China that was partially offset by continued share gains in the US in our vascular access management portfolio. Within specimen management, solid growth in BD Vacutainer portfolio in the US was offset by expected market dynamics in China, order timing, and a tough comparison to the prior year. Connected Care delivered solid mid-single-digit growth. Performance was led by APM, which grew high single digits on strong volume across the portfolio. In MMS, growth was led by pharmacy automation with double-digit growth in our BD Rowa platform. In our infusion business, growth was driven by sets, which were up strongly on increased utilization against last year's fluid supply shortage.
Victor Roque: Thanks, Tom. Starting with revenue. Total company revenue of $5.3 billion grew 0.4%, with 2.5% growth in new BD. In medical essentials, MDS performance reflects expected order timing dynamics and volume-based procurement in China that was partially offset by continued share gains in the US in our vascular access management portfolio. Within specimen management, solid growth in BD Vacutainer portfolio in the US was offset by expected market dynamics in China, order timing, and a tough comparison to the prior year. Connected Care delivered solid mid-single-digit growth. Performance was led by APM, which grew high single digits on strong volume across the portfolio. In MMS, growth was led by pharmacy automation with double-digit growth in our BD Rowa platform. In our infusion business, growth was driven by sets, which were up strongly on increased utilization against last year's fluid supply shortage.
Speaker #2: Within specimen management, solid growth in BEDI vacuum chamber portfolio expected market dynamics in China order timing and a tough comparison to the prior year.
Speaker #2: Connected Care delivered solid mid-single-digit growth. Performance was led by APM, which grew high single digits on strong volume across the portfolio. In MMS, growth was led by pharmaceutical automation, with double-digit growth in our ROA platform.
Speaker #2: In our infusion business, growth was driven by SETS, which were up strongly on increased utilization against last year's fluid supply shortage. Alaris 2.5% growth in new pumps performance was slightly ahead of our expectations, despite the expected revenue decline due to tough comparison to the prior systems, which grew low single digits year.
[Interim CFO] (Becton Dickinson & Co): Alaris pumps performance was slightly ahead of our expectations despite the expected revenue decline due to tough comparison to the prior year. Biopharma systems grew low single digits with continued double-digit growth in biologics led by GLP-1s. This was partially offset by lower demand for vaccine products in line with our expectations. Interventional delivered solid mid-single-digit growth. This includes high single-digit growth in UCC driven by double-digit growth in PureWick. In surgery, we deliver mid-single-digit growth led by strong performance in our advanced tissue regeneration and infection prevention portfolios. Low single-digit growth in PI reflects strength in peripheral vascular disease and oncology, partially offset by China market dynamics. Life Sciences decline in the quarter. In DS, results were impacted by US point-of-care headwinds, a difficult prior-year comparison, and market dynamics in China.
Victor Roque: Alaris pumps performance was slightly ahead of our expectations despite the expected revenue decline due to tough comparison to the prior year. Biopharma systems grew low single digits with continued double-digit growth in biologics led by GLP-1s. This was partially offset by lower demand for vaccine products in line with our expectations. Interventional delivered solid mid-single-digit growth. This includes high single-digit growth in UCC driven by double-digit growth in PureWick. In surgery, we deliver mid-single-digit growth led by strong performance in our advanced tissue regeneration and infection prevention portfolios. Low single-digit growth in PI reflects strength in peripheral vascular disease and oncology, partially offset by China market dynamics. Life Sciences decline in the quarter. In DS, results were impacted by US point-of-care headwinds, a difficult prior-year comparison, and market dynamics in China.
Speaker #2: Continued double-digit growth in Biopharma in the US was offset by biologics, led by GLP-1s. This was partially offset by lower demand for vaccine products, in line with our expectations. Interventional delivered solid single-digit growth.
Speaker #2: mid-single-digit growth. UCC, driven by double-digit growth This includes high in PURIC. In surgery, we delivered mid-single-digit advanced tissue regeneration and infection prevention portfolios. Low single-digit growth in PI reflects strength in peripheral vascular disease and oncology partially offset by China market dynamics.
Speaker #2: Life Sciences declined in the quarter. In the U.S., results were impacted by U.S. point-of-care headwinds, a difficult prior year comparison, and market dynamics in China.
Speaker #2: In China, lower Life Science BDB growth was pressured by market dynamics compared to prior-year licensing research funding, and a difficult 53.4% was down 140 basis points versus approximately 170 basis points of revenue.
[Interim CFO] (Becton Dickinson & Co): In BDB, growth was pressured by market dynamics in China, lower life science research funding, and a difficult compare from prior-year licensing revenue. Turning to the P&L, adjusted gross margin of 53.4% was down 140 basis points versus the prior year driven by approximately 170 basis points of tariffs, partially offset by productivity initiatives through BD Excellence. Adjusted operating margin of 21.2% was down 240 basis points versus the prior year due to the impact of tariffs and increased commercial investments in key growth areas. Despite these declines, both adjusted gross and operating margins were ahead of our expectations. Adjusted EPS of $2.91 was down 15.2% driven primarily by the impact of tariffs. However, earnings exceeded our expectations on the strength of both revenue performance and operational execution. Free cash flow was $548 million in the quarter.
Victor Roque: In BDB, growth was pressured by market dynamics in China, lower life science research funding, and a difficult compare from prior-year licensing revenue. Turning to the P&L, adjusted gross margin of 53.4% was down 140 basis points versus the prior year driven by approximately 170 basis points of tariffs, partially offset by productivity initiatives through BD Excellence. Adjusted operating margin of 21.2% was down 240 basis points versus the prior year due to the impact of tariffs and increased commercial investments in key growth areas. Despite these declines, both adjusted gross and operating margins were ahead of our expectations. Adjusted EPS of $2.91 was down 15.2% driven primarily by the impact of tariffs. However, earnings exceeded our expectations on the strength of both revenue performance and operational execution. Free cash flow was $548 million in the quarter.
Speaker #2: P&L, adjusted gross margin the prior year driven by tariffs, partially offset by productivity. Turning to the initiatives through BEDI excellence, adjusted operating margin growth, led by strong performance, was 21.2% versus the prior year, due to the impact of tariffs and increased commercial investments in key growth areas. Down 240 basis points, declines in both adjusted gross and operating margins were ahead of expectations.
Speaker #2: of our expectations. Adjusted EPS of $2.91 was down 15.2% tariffs. However, earnings Despite these exceeded our expectations on the strength of both revenue performance and operational execution.
Speaker #2: Free cash flow, driven primarily by the impact of was $548 million in the quarter. Free cash flow conversion improved to 66% versus 59% in the prior year.
[Interim CFO] (Becton Dickinson & Co): Free cash flow conversion improved to 66% versus 59% in the prior year driven by working capital discipline and capital efficiency. During the quarter, we returned approximately $550 million to shareholders, including dividends, and $250 million in share buybacks. We ended the quarter with net leverage of 2.9 times and remained committed to our 2.5 times long-term net leverage target. Moving to our Fiscal 2026 guidance for new BD. All guidance we are providing today is on a continuing operations basis and reflects the expected closing of the combination of our Life Sciences business with Waters. Following the closing, the separated business will be treated as discontinued operations for the full fiscal year. Our guidance includes deployments of $4 billion cash distribution we will receive as part of the transaction. For Fiscal 2026, we continue to expect new BD to deliver low single-digit revenue growth.
Victor Roque: Free cash flow conversion improved to 66% versus 59% in the prior year driven by working capital discipline and capital efficiency. During the quarter, we returned approximately $550 million to shareholders, including dividends, and $250 million in share buybacks. We ended the quarter with net leverage of 2.9 times and remained committed to our 2.5 times long-term net leverage target. Moving to our Fiscal 2026 guidance for new BD. All guidance we are providing today is on a continuing operations basis and reflects the expected closing of the combination of our Life Sciences business with Waters. Following the closing, the separated business will be treated as discontinued operations for the full fiscal year. Our guidance includes deployments of $4 billion cash distribution we will receive as part of the transaction. For Fiscal 2026, we continue to expect new BD to deliver low single-digit revenue growth.
Speaker #2: Driven by working capital discipline and capital efficiency. During the quarter, we returned approximately $550 million to shareholders, including dividends and $250 million in share buybacks.
Speaker #2: We ended the quarter with net leverage of 2.9 times and remain committed to our 2.5 times long-term net leverage target. Moving to our fiscal '26 guidance for new BEDI.
Speaker #2: All guidance we are providing today is on a continuing operations basis and reflects the expected closing of the combination of our Life Science business with Waters.
Speaker #2: Following the closing, the separated business will be treated as discontinued operations for the full fiscal year. Our guidance includes deployments of $4 billion cash distribution we will transaction.
Speaker #2: 26, we continue to expect new BEDI to deliver low single-digit For fiscal receive as part of the revenue growth. Based on current spot rates, currency is estimated to be a tailwind to revenue of about $120 basis points.
[Interim CFO] (Becton Dickinson & Co): Based on current spot rates, currency is estimated to be a tailwind to revenue of about 120 basis points. Moving down to the P&L, we continue to expect adjusted operating margin of about 25% inclusive of impact of tariffs. Interest and other net is expected to be between $600 and $620 million. Our adjusted effective tax rate is expected to be between 16% and 17%. Weighted shares outstanding for the full year are expected to be approximately 282 million shares. Given these considerations, we are establishing an adjusted EPS guidance for new BD in a range of $12.35 to $12.65. This reflects growth of approximately 6% at the midpoint, including an impact of 370 basis points from tariffs. The net estimated impact of the closing of the Waters transaction, including the deployment of associated $4 billion cash distribution, is approximately $2.40.
Victor Roque: Based on current spot rates, currency is estimated to be a tailwind to revenue of about 120 basis points. Moving down to the P&L, we continue to expect adjusted operating margin of about 25% inclusive of impact of tariffs. Interest and other net is expected to be between $600 and $620 million. Our adjusted effective tax rate is expected to be between 16% and 17%. Weighted shares outstanding for the full year are expected to be approximately 282 million shares. Given these considerations, we are establishing an adjusted EPS guidance for new BD in a range of $12.35 to $12.65. This reflects growth of approximately 6% at the midpoint, including an impact of 370 basis points from tariffs. The net estimated impact of the closing of the Waters transaction, including the deployment of associated $4 billion cash distribution, is approximately $2.40.
Speaker #2: Moving down to the P&L, we continue to 25%, inclusive of the impact of tariffs. Interest, order net, is expected to be between $600 million and $620 million.
Speaker #2: The effective tax rate is expected to be [missing value]. Our adjusted operating margin is expected to be about 17%. Weighted shares outstanding for the full year are expected to be approximately 282 million shares.
Speaker #2: Given these considerations, we are establishing an adjusted EPS guidance for new BEDI in a range of $12.35 to $12.65. This reflects growth of approximately 6% at the midpoint, including an impact of 370 basis points from tariffs.
Speaker #2: The net estimated impact of the closing of the Waters transaction, including the deployment of the associated approximately $4 billion cash distribution, is $2.40. Therefore, our adjusted EPS guidance for new BEDI remains operationally unchanged.
[Interim CFO] (Becton Dickinson & Co): Therefore, our adjusted EPS guidance for new BD remains operationally unchanged. As you think about Fiscal 2026 phasing, we expect Q2 revenue growth of approximately 2%, consistent with our full-year guidance assumption, with the balance of the year also expected to be within the low single-digit range. We expect Q2 adjusted EPS to be in the range of $2.72 to $2.82. Finally, we are pleased with our Q1 performance. However, with just one quarter behind us, we are maintaining a prudent approach to our guidance for new BD. With that, let's start the Q&A session. Operator, can you please assemble the queue?
Victor Roque: Therefore, our adjusted EPS guidance for new BD remains operationally unchanged. As you think about Fiscal 2026 phasing, we expect Q2 revenue growth of approximately 2%, consistent with our full-year guidance assumption, with the balance of the year also expected to be within the low single-digit range. We expect Q2 adjusted EPS to be in the range of $2.72 to $2.82. Finally, we are pleased with our Q1 performance. However, with just one quarter behind us, we are maintaining a prudent approach to our guidance for new BD. With that, let's start the Q&A session. Operator, can you please assemble the queue?
Speaker #2: As you think about fiscal 2026 phasing, we expect Q2 revenue growth of approximately 2%, consistent with our full-year guidance assumption, with the balance of the year also expected to be within the low single-digit range.
Speaker #2: We expect Q2 adjusted EPS to be in the range of $2.72 to $2.82. Finally, we are pleased with our Q1 performance. However, with just one quarter behind us, we are maintaining a prudent approach to our guidance for new BEDI.
Speaker #2: With that, let's start the Q&A session. Operator, can you please assemble the queue?
Speaker #1: Absolutely. And at this time, if you have a question, please press star one. If at any point your question is answered, you may remove yourself from the queue by pressing star two.
Operator: Absolutely. And at this time, if you have a question, please press star one. If at any point your question is answered, you may remove yourself from the queue by pressing star two. In order to allow for broad participation, please limit yourself to only one question. Lastly, to provide optimal sound quality, please pick up your handset while you ask your question. Thank you. Our first question is coming from Travis Steed with Bank of America. Please go ahead. Your line is open.
Operator: Absolutely. And at this time, if you have a question, please press star one. If at any point your question is answered, you may remove yourself from the queue by pressing star two. In order to allow for broad participation, please limit yourself to only one question. Lastly, to provide optimal sound quality, please pick up your handset while you ask your question. Thank you. Our first question is coming from Travis Steed with Bank of America. Please go ahead. Your line is open.
Speaker #1: In order to allow for broad participation, please limit yourself to only one question. Lastly, to provide optimal sound quality, please pick up your handset while you ask your question.
Speaker #1: Thank you. Our first question is coming from Travis Steed with Bank of America. Please go ahead, your line is open.
Speaker #3: Hi everybody. Congrats on the RMT and getting that done. I had a schedule. I wanted to ask about the guidance—both the Q2 revenue guide, the step down in Q2, and the EPS guide—as well as kind of the full year and the assumptions on the cadence of the year, and how you're going from Q2 to the second half on both revenue and earnings.
Travis Steed: Hi everybody. Congrats on the RMT and getting that done ahead of schedule. I wanted to ask about the guidance, both the Q2 revenue guide, the step down in Q2, and the EPS guide, as well as kind of the full year and the assumptions on the cadence of the year and how you're going from Q2 to the second half on both revenue and earnings.
Travis Steed: Hi everybody. Congrats on the RMT and getting that done ahead of schedule. I wanted to ask about the guidance, both the Q2 revenue guide, the step down in Q2, and the EPS guide, as well as kind of the full year and the assumptions on the cadence of the year and how you're going from Q2 to the second half on both revenue and earnings.
Speaker #4: Yeah, thanks for the question, Travis, and good morning. So we're really pleased with the start of the year and Q1 performance. I think you saw our team executed well, and we saw strength across several of the high-growth areas of the portfolio.
Tom Polen: Yeah, thanks for the question, Travis, and good morning. So we're really pleased with the start of the year and Q1 performance. I think you saw our team executed well, and we saw strength across several of the high-growth areas of the portfolio. We can talk about those in just a bit. When it comes to Q2, nothing's fundamentally changed in our Q2 outlook. As you mentioned, the core growth drivers supporting new BD growth in Q1, they all remain intact, and we feel really good about the trajectory of the business. Our Q2 outlook does reflect some modest timing benefits in biopharma systems and MMS that we saw in Q1. And if you adjust for that, basically Q1 and Q2 are in line with each other. I think a few things we're really pleased to be starting the year at our full-year run rate.
Tom Polen: Yeah, thanks for the question, Travis, and good morning. So we're really pleased with the start of the year and Q1 performance. I think you saw our team executed well, and we saw strength across several of the high-growth areas of the portfolio. We can talk about those in just a bit. When it comes to Q2, nothing's fundamentally changed in our Q2 outlook. As you mentioned, the core growth drivers supporting new BD growth in Q1, they all remain intact, and we feel really good about the trajectory of the business. Our Q2 outlook does reflect some modest timing benefits in biopharma systems and MMS that we saw in Q1. And if you adjust for that, basically Q1 and Q2 are in line with each other. I think a few things we're really pleased to be starting the year at our full-year run rate.
Speaker #4: We can talk about those in just a bit. When it comes to Q2, nothing's fundamentally changed in our Q2 outlook. As you mentioned, the core growth drivers supporting new BEDI growth in Q1, they all remain intact.
Speaker #4: And we feel really good about the trajectory of the business. Our Q2 timing benefits in the Biopharma Systems outlook do reflect some modest MMS that we saw in Q1.
Speaker #4: And if you adjust for that, basically Q1 and Q2 are in line with each other. I think a few things—we're really pleased to be starting the year at our full-year run rate.
Speaker #4: Q2 has no ramp versus Q1. And really importantly, there's no ramp first half to second half either, which is a much better spot and something that we really wanted to have this year that, as you know, we had that topic last year.
Tom Polen: Q2 has no ramp versus Q1. Really importantly, there's no ramp first half to second half either, which is a much better spot and something that we really wanted to have this year that, as you know, we had that topic last year. So just where we want to be, no ramp in the year, strong start to Q1, and executing, as you said, the RMT transaction ahead of schedule. Really excited about the new BD.
Tom Polen: Q2 has no ramp versus Q1. Really importantly, there's no ramp first half to second half either, which is a much better spot and something that we really wanted to have this year that, as you know, we had that topic last year. So just where we want to be, no ramp in the year, strong start to Q1, and executing, as you said, the RMT transaction ahead of schedule. Really excited about the new BD.
Speaker #4: And so, just where we want to be—no ramp in the year, strong start to Q1. And executing, as you said, the RMT transaction ahead of schedule. Really excited about the new BEDI.
Speaker #3: Great. Thanks a
Travis Steed: Great. Thanks a lot.
Travis Steed: Great. Thanks a lot.
Speaker #3: lot. Thank
Speaker #1: Thank you. We will move next to Patrick Wood with Morgan Stanley. Please go ahead, your line is open.
Operator: Thank you. We will move next with Patrick Wood with Morgan Stanley. Please go ahead. Your line is open.
Operator: Thank you. We will move next with Patrick Wood with Morgan Stanley. Please go ahead. Your line is open.
Speaker #3: Fabulous. Thank you so much. Tom, maybe just a midterm one around the categories that you're looking at. Obviously, this year is a bit of a transition year.
Patrick Wood: Fabulous. Thank you so much. Tom, maybe just a mid-term one around the categories that you're looking at. Obviously, this year, a bit of a transition year. There's a few things like China VBP and Alaris that are kind of affecting numbers. But I guess as you look across BD's categories, is there any structural change that's happened recently or in the past that would preclude you from sort of hitting that normalized mid-single-digit growth rate as a general framework? Anything that's changed one way or the other that would make you feel better or worse about that and how you feel about that? Thanks.
Patrick Wood: Fabulous. Thank you so much. Tom, maybe just a mid-term one around the categories that you're looking at. Obviously, this year, a bit of a transition year. There's a few things like China VBP and Alaris that are kind of affecting numbers. But I guess as you look across BD's categories, is there any structural change that's happened recently or in the past that would preclude you from sort of hitting that normalized mid-single-digit growth rate as a general framework? Anything that's changed one way or the other that would make you feel better or worse about that and how you feel about that? Thanks.
Speaker #3: There are a few things like China BBP and Alaris that are kind of affecting numbers. But I guess as you look across new co-BEDI's categories, is there any structural change that's happened recently, or in that normalized mid-single-digit growth rate as a general framework?
Speaker #3: I think it's changed one way or the other that would make you feel better or worse about that, and how you feel about that.
Speaker #3: Thanks.
Speaker #4: Yeah, good morning,
Tom Polen: Yeah. Good morning, Patrick, and thanks for the question. Absolutely not. We feel really good about our portfolio. As we talked about, we've been extremely active over the last several years in very purposely reshaping our portfolio. We've done three significant divestitures, starting with diabetes, obviously V. Mueller, and most recently our life science business. We've very purposely brought in 20 tuck-in acquisitions, everything from our Parata Pharmacy Automation to APM and a number of others, all reshaping the portfolio in those high-growth areas that we've been talking about that we identified some time ago. Today, as you mentioned, we do have some known headwinds that are in 10% of our portfolio. The fundamentals across the remaining 90% remain very strong, and they continue to perform at a solid mid-single-digit growth. We're continuing to lean in behind those areas.
Tom Polen: Yeah. Good morning, Patrick, and thanks for the question. Absolutely not. We feel really good about our portfolio. As we talked about, we've been extremely active over the last several years in very purposely reshaping our portfolio. We've done three significant divestitures, starting with diabetes, obviously V. Mueller, and most recently our life science business. We've very purposely brought in 20 tuck-in acquisitions, everything from our Parata Pharmacy Automation to APM and a number of others, all reshaping the portfolio in those high-growth areas that we've been talking about that we identified some time ago. Today, as you mentioned, we do have some known headwinds that are in 10% of our portfolio. The fundamentals across the remaining 90% remain very strong, and they continue to perform at a solid mid-single-digit growth. We're continuing to lean in behind those areas.
Speaker #4: Patrick, and thanks for the question. Absolutely not. We feel really good about our portfolio. As we talked about, we've been extremely active over the last several years in very purposely reshaping our portfolio.
Speaker #4: We've done three significant divestitures, starting with diabetes, obviously V. Mueller and, most recently, our Life Sciences business. We've very purposely brought in 20 tuck-in acquisitions, everything from our Prata pharmacy automation to APM and a number of others.
Speaker #4: All reshaping the portfolio in those high growth areas that we've been talking about, that we identified some time ago. Today, as you mentioned, we do have some known portfolio.
Speaker #4: The fundamentals across the remaining headwinds that are in 10% of our 90% remain very strong, and they continue to perform at a solid mid-single-digit growth.
Speaker #4: We're continuing to lean in behind those areas. You're seeing us put meaningful commercial investment behind those—the $30 million of incremental sales investments, all 100% on track.
Tom Polen: You're seeing us put meaningful commercial investment behind those, the $30 million of incremental sales investments, all 100% on track. You heard that update on the call, investing behind areas like the Veterans Administration, PureWick now that's fully reimbursement for veterans, launching a number of plastic surgery products in Europe and Brazil, expanding our sales forces by 15% in PI and APM, all investing behind those growth areas, which is, again, you saw strong growth, double-digit growth, in fact, this past quarter in areas like PureWick, biologics, tissue reconstruction, and others. You saw high single-digit growth in areas like APM. Pharmacy automation grew double digits in the quarter. So again, we feel really good. Those aren't slowing down. We don't expect them to; we expect them to continue strong through the year.
Tom Polen: You're seeing us put meaningful commercial investment behind those, the $30 million of incremental sales investments, all 100% on track. You heard that update on the call, investing behind areas like the Veterans Administration, PureWick now that's fully reimbursement for veterans, launching a number of plastic surgery products in Europe and Brazil, expanding our sales forces by 15% in PI and APM, all investing behind those growth areas, which is, again, you saw strong growth, double-digit growth, in fact, this past quarter in areas like PureWick, biologics, tissue reconstruction, and others. You saw high single-digit growth in areas like APM. Pharmacy automation grew double digits in the quarter. So again, we feel really good. Those aren't slowing down. We don't expect them to; we expect them to continue strong through the year.
Speaker #4: You heard that update on the call. Investing behind areas like VA, the Veterans Administration, PureWick—now that's purely, fully reimbursement for veterans. Plastic surgery products in Europe, launching a number of—and Brazil, expanding our sales forces by 15% in PI and APM—all investing behind those growth areas, which is, again, you saw strong growth, double-digit growth, in fact, this past quarter in areas like PureWick, Biologics, tissue reconstruction, and others.
Speaker #4: You saw high single-digit growth in areas like APM and pharmacy automation, which grew double digits in the quarter. So again, we feel really good—those aren't slowing down.
Speaker #4: We don't expect them to. We expect them to continue strong through the year. And we've got a great innovation pipeline that's going to continue to fuel growth in those over the next—
Tom Polen: We've got a great innovation pipeline that's going to continue to fuel growth in those over the next several.
Tom Polen: We've got a great innovation pipeline that's going to continue to fuel growth in those over the next several.
Speaker #3: Love it. Thank
Patrick Wood: Love it. Thank you.
Patrick Wood: Love it. Thank you.
Speaker #3: you.
Tom Polen: Thanks for the question.
Tom Polen: Thanks for the question.
Speaker #4: question. Thanks for the
Speaker #1: Thank you. Our next question comes from Larry Beagleson with Wells Fargo. Please go ahead, your line is open.
Operator: Thank you. Our next question comes from Larry Biegelsen with Wells Fargo. Please go ahead. Your line is open.
Operator: Thank you. Our next question comes from Larry Biegelsen with Wells Fargo. Please go ahead. Your line is open.
Larry Biegelsen: Good morning. Thanks for taking the question. Congrats, Tom, on the closing of the Waters deal. Tom, maybe we can talk about the other 10% of the portfolio that's not growing mid-single digits. China VBP, what's the expected impact in Fiscal 2026? When do the vaccine headwinds lap in pharma systems? And any change to the Alaris expectations this year and next year that you gave us on the last call? Thanks for taking the question.
Larry Biegelsen: Good morning. Thanks for taking the question. Congrats, Tom, on the closing of the Waters deal. Tom, maybe we can talk about the other 10% of the portfolio that's not growing mid-single digits. China VBP, what's the expected impact in Fiscal 2026? When do the vaccine headwinds lap in pharma systems? And any change to the Alaris expectations this year and next year that you gave us on the last call? Thanks for taking the question.
Speaker #3: Congrats, Tom, on the closing of the Good Morning Waters deal. Hey Tom, thanks for taking the question. Maybe we could talk about the other that's not growing mid-single, 10% of the portfolio.
Speaker #3: Digits. China VBP—what's the expected impact in fiscal '26? When do the vaccine headwinds lap in Pharm Systems? And any change to the Alaris expectations since the last call?
Speaker #3: Thanks for taking the
Speaker #3: question. Yeah, thanks for the
Tom Polen: Yeah, thanks for the questions, Larry. Everything's playing out as we expected it in Q1, and we expect that to continue for the balance of the year. China was in line with our expectations in the quarter. Vaccines were relatively in line with expectations in the quarter, as was Alaris. If anything, we're seeing some really strong competitive momentum in Alaris. I think as we shared on the prepared remarks, we had a record in new competitive wins in the quarter. We gained about a full point of share just in the quarter. Those take some time to come through in our run rate as we implement those and see the consumables revenue pick up. But in terms of actual contract signed, deals closed, it was a really strong quarter in Alaris, which is exactly what we want to see. We're coming to the tail end of, of course, remediation.
Tom Polen: Yeah, thanks for the questions, Larry. Everything's playing out as we expected it in Q1, and we expect that to continue for the balance of the year. China was in line with our expectations in the quarter. Vaccines were relatively in line with expectations in the quarter, as was Alaris. If anything, we're seeing some really strong competitive momentum in Alaris. I think as we shared on the prepared remarks, we had a record in new competitive wins in the quarter. We gained about a full point of share just in the quarter. Those take some time to come through in our run rate as we implement those and see the consumables revenue pick up. But in terms of actual contract signed, deals closed, it was a really strong quarter in Alaris, which is exactly what we want to see. We're coming to the tail end of, of course, remediation.
Speaker #4: Questions, Larry. Everything's playing out as we expected.
Speaker #4: It was in Q1 and we expect that to continue for the balance of the year. China year and next year that you gave us on that was in line with our expectations in the quarter.
Speaker #4: Vaccines were relatively in line with expectations in the quarter, as was Alaris. If anything, we're seeing some really strong competitive momentum in Alaris. I think, as we shared in the prepared remarks, we had a record in new competitive wins in the quarter.
Speaker #4: We gained about a full point of share just in the quarter. Those take some time to come through in our run rate as we see consumables revenue pick up.
Speaker #4: But in terms of actual contract signed, deals closed, it was a really strong quarter in Alaris, which is exactly what we want to see.
Speaker #4: We were coming to the tail end of, of course, remediation. So our whole sales force is focused now on competitive gains, just as we said, and so we're pleased with that.
Tom Polen: So our whole sales force is focused now on competitive gains, just as we said. So we're pleased with that. Vaccines, on the counter side of vaccines, we continue to see biologics grow very solidly. Vaccines, we expect that will continue to play out for the year as we expected, and we'll have to look at that as we go into 2027. Certainly, it'll be a smaller portion of our revenue, and biologics will be a larger portion of our revenue. So its absolute impact in 2027 likely will not be anywhere near what it would be in 2026, but we'll continue to monitor that very closely. And China, the market, I was just there at the beginning of January. I think we've shared before that we expect that VBP will have gone through 80% of our portfolio by the end of 2026.
Tom Polen: So our whole sales force is focused now on competitive gains, just as we said. So we're pleased with that. Vaccines, on the counter side of vaccines, we continue to see biologics grow very solidly. Vaccines, we expect that will continue to play out for the year as we expected, and we'll have to look at that as we go into 2027. Certainly, it'll be a smaller portion of our revenue, and biologics will be a larger portion of our revenue. So its absolute impact in 2027 likely will not be anywhere near what it would be in 2026, but we'll continue to monitor that very closely. And China, the market, I was just there at the beginning of January. I think we've shared before that we expect that VBP will have gone through 80% of our portfolio by the end of 2026.
Speaker #4: Vaccines, on the counterside of vaccines, we continue to see biologics grow, implement those, and see that very solidly. Vaccines—we expect that will continue to play out for the year as we expected, and we'll have to look at that as we go into '27.
Speaker #4: It'll be a smaller portion of, certainly, our revenue, and biologics will be a larger portion of our revenue. So '27 likely will not be anywhere near what it would be in '26, but we'll continue to monitor that very closely.
Speaker #4: And China, the market—I was just there at the beginning of January. I think we've shared before that we expect that VOBP will have gone through 80% of our portfolio by the end of '26.
Speaker #4: We don't see any change to that assumption, and we do continue to see positive volume growth happening in China, despite the price compression in the few areas that we've discussed where VOBP is happening.
Tom Polen: We don't see any change to that assumption. We do continue to see positive volume growth happening in China despite the price compression in the few areas that we've discussed where VBP is happening. So overall, we said at the beginning of the year when we gave guidance for the old BD, we expected those combined areas to be about 250 basis points of headwind in the full year. That's consistent with what we outlined and how we think about it going forward.
Tom Polen: We don't see any change to that assumption. We do continue to see positive volume growth happening in China despite the price compression in the few areas that we've discussed where VBP is happening. So overall, we said at the beginning of the year when we gave guidance for the old BD, we expected those combined areas to be about 250 basis points of headwind in the full year. That's consistent with what we outlined and how we think about it going forward.
Speaker #4: So, overall, we said at the beginning of the year, when we gave guidance for the old BD, we expected those combined areas to be about 250 basis points for the full year.
Speaker #4: And that's consistent with what we outlined, and how we think about it going.
Speaker #4: forward. Thank of headwind in
Speaker #3: you. Thank
Larry Biegelsen: Thank you.
Larry Biegelsen: Thank you.
Speaker #1: You. Our next question comes from Roby Marcus with JP Morgan. Please go ahead.
Speaker #1: You. Our next question comes from Roby Marcus with JP Morgan. Please go ahead, your line is open. Oh,
Operator: Thank you. Our next question comes from Robbie Marcus with JP Morgan. Please go ahead. Your line is open.
Operator: Thank you. Our next question comes from Robbie Marcus with JP Morgan. Please go ahead. Your line is open.
Speaker #3: Great. Good morning, and thanks for taking the questions. I'll add my congratulations on the RMT going effective today. Two quick ones for me—I'll ask them both up front.
Robbie Marcus: Oh, great. Good morning, and thanks for taking the questions. I'll add my congratulations on the RMT going effective today. Two quick ones for me. I'll ask them both up front. One, just on Q2, it's the easiest comps of the year, both on a one-year and a two-year stack basis. So a lot of people just wanted to get help on why 2% is the right starting point for fiscal Q2 and any considerations there. And then as we get to the 25% operating margin, which I think is a touch better than people were thinking, any one-time considerations or TSAs, MSAs, anything we should be aware of as we try and build up our models to get there? Thanks a lot.
Robbie Marcus: Oh, great. Good morning, and thanks for taking the questions. I'll add my congratulations on the RMT going effective today. Two quick ones for me. I'll ask them both up front. One, just on Q2, it's the easiest comps of the year, both on a one-year and a two-year stack basis. So a lot of people just wanted to get help on why 2% is the right starting point for fiscal Q2 and any considerations there. And then as we get to the 25% operating margin, which I think is a touch better than people were thinking, any one-time considerations or TSAs, MSAs, anything we should be aware of as we try and build up our models to get there? Thanks a lot.
Speaker #3: One, just on second quarter, it's the year both on a one- and a two-year stack basis. So a lot of people, just easiest comps, wanted to get help on why 2% is the right starting point for fiscal Q2 and any considerations there.
Speaker #3: And then as we get to the 25% operating margin, which I think is a touch better than people were thinking, any one-time considerations or TSAs, MSAs, anything we should be aware of as we try and build up our models to get there?
Speaker #3: Thanks a
Speaker #3: lot. Hi, Robbie.
Speaker #4: We'll turn that to Vitor.
[Company Representative] (Becton Dickinson & Co): Well, turn that to Victor.
Tom Polen: Well, turn that to Victor.
[Interim CFO] (Becton Dickinson & Co): Hi, Robbie. This is Victor. So regarding Q2, so first, I think we were very pleased with Q1 performance. I think we started the year solidly, and it puts us in very sound grounds for the rest of the year. But for the Q2, as Tom mentioned on his remarks, nothing fundamentally changed on Q2. We have our core drivers supporting the new BD growth in Q1 actually continuing in Q2, and we expect that trajectory to continue for the rest of the year as well. In Q2, the only thing that happened is slight change timing situations in both pharma systems and MMS. But if you normalize for those factors, we actually had a little bit of a more normalized growth between Q1 and Q2. But I think the most important piece is that nothing fundamentally changed on our Q2.
Victor Roque: Hi, Robbie. This is Victor. So regarding Q2, so first, I think we were very pleased with Q1 performance. I think we started the year solidly, and it puts us in very sound grounds for the rest of the year. But for the Q2, as Tom mentioned on his remarks, nothing fundamentally changed on Q2. We have our core drivers supporting the new BD growth in Q1 actually continuing in Q2, and we expect that trajectory to continue for the rest of the year as well. In Q2, the only thing that happened is slight change timing situations in both pharma systems and MMS. But if you normalize for those factors, we actually had a little bit of a more normalized growth between Q1 and Q2. But I think the most important piece is that nothing fundamentally changed on our Q2.
Speaker #5: This is Q2, so first, I think we were very pleased with Vitor. So regarding Q1 performance, I think we started the year solidly, and it puts us on very sound grounds for the rest of the year.
Speaker #5: But for the Q2, as Tom mentioned in his remarks, nothing fundamentally changed on Q2. We have our core drivers supporting the new continuing in Q2.
Speaker #5: And we had BD growth in Q1. Actually, we expect that trajectory to continue for the rest of the year as well. In Q2, the only thing that happened is a slight change in timing situations in both Farm Systems and MMS.
Speaker #5: But if you normalize for those factors, you actually had a little bit of a more normalized growth between Q1 and Q2. But I think the most important piece is that nothing fundamentally changed on our Q2.
Speaker #5: We feel very confident about the numbers going forward, as
[Interim CFO] (Becton Dickinson & Co): We feel very confident about the numbers going forward as well.
Victor Roque: We feel very confident about the numbers going forward as well.
Speaker #5: well.
Speaker #4: Both very much in line
[Company Representative] (Becton Dickinson & Co): Both very much in line with our full-year guidance.
Tom Polen: Both very much in line with our full-year guidance.
Speaker #5: Exactly. Very aligned with with our full year guidance. our full year guidance. And from a margin perspective, there is no specific one-timers that we're expecting to we are still holding the 25% as we is in the basis of our margin performance with the strong execution of our BD excellence.
[Interim CFO] (Becton Dickinson & Co): Exactly. Very aligned with our full-year guidance. From a margin perspective, there is no specific one-timers that we are expecting. We are still holding the 25% as we committed before. This is on the basis of our margin performance with the strong execution of our BD Excellence and also the favorable mix that we are driving through intentional investments in strategic areas like high growth, high margin areas like APM, UCC, surgery, among others. We feel good about the 25%, and there is nothing specific that changes the number from 25.
Victor Roque: Exactly. Very aligned with our full-year guidance. From a margin perspective, there is no specific one-timers that we are expecting. We are still holding the 25% as we committed before. This is on the basis of our margin performance with the strong execution of our BD Excellence and also the favorable mix that we are driving through intentional investments in strategic areas like high growth, high margin areas like APM, UCC, surgery, among others. We feel good about the 25%, and there is nothing specific that changes the number from 25.
Speaker #5: And also the favorability committed before. And this mix that we are driving through intentional investments in strategic areas like high-growth, high-margin UCC, surgery, among others.
Speaker #5: So we feel good about the '25, and there is nothing specific that changes.
Speaker #4: Okay. And Robbie, maybe just to share a little bit more color on the margin performance. We're continuing
Tom Polen: Okay. And Robbie, maybe just to share a little bit more color on the margin performance. We're continuing to be very focused. Our innovation pipeline and the areas where we're putting commercial investment are all both the innovation pipeline has a notably higher gross margin than our average portfolio, and the areas that we're putting commercial investment behind that we've talked about also have a notably higher gross margin than our broader portfolio. So those help fuel margin. At the same time, obviously, BD Excellence in our operations organization is continuing to gain momentum. We've been at it for a couple of years. We're still in relatively early innings. You saw us talk about 8% productivity improvements in the quarter. That's world-class levels. We're really proud of the teams there and how they're executing.
Tom Polen: Okay. And Robbie, maybe just to share a little bit more color on the margin performance. We're continuing to be very focused. Our innovation pipeline and the areas where we're putting commercial investment are all both the innovation pipeline has a notably higher gross margin than our average portfolio, and the areas that we're putting commercial investment behind that we've talked about also have a notably higher gross margin than our broader portfolio. So those help fuel margin. At the same time, obviously, BD Excellence in our operations organization is continuing to gain momentum. We've been at it for a couple of years. We're still in relatively early innings. You saw us talk about 8% productivity improvements in the quarter. That's world-class levels. We're really proud of the teams there and how they're executing.
Speaker #4: To be very focused. Our innovation pipeline and the areas where we're putting commercial innovation pipeline has notably areas like KPM—higher gross margin than our average portfolio.
Speaker #4: And the areas that we're putting commercial investment behind, that we've talked about, also have a notably higher gross margin than our broader portfolio. So those help fuel margin.
Speaker #4: At the same time, obviously, BD excellence in our—to gain momentum. We've been at it for a couple of years. We're still in relatively early innings.
Speaker #4: You saw us talk about 8% productivity improvements in the quarter. That's world-class levels, really proud of the teams there and how they're executing. You also heard us talk about, I think for the first time, share some statistics around our plant started the last phase of BD strategy, we talked network.
Tom Polen: You also heard us talk about, I think for the first time, share some statistics around our plant network. When we started the last phase of BD strategy, we talked about investing behind the network, simplification. You're seeing the outputs of that combined with, obviously, the separation of our life science business more than cutting our manufacturing network in half. So when we started the journey several years ago, we had a little over 90 manufacturing plants. We're under 50 today. And so these are fewer plants, more scaled plants where we're getting more leverage, more costs being spread over, higher volume in these sites, also all helping to contribute to our operating margin. So that's been something systematic that we've been working on. We're really pleased with that.
Tom Polen: You also heard us talk about, I think for the first time, share some statistics around our plant network. When we started the last phase of BD strategy, we talked about investing behind the network, simplification. You're seeing the outputs of that combined with, obviously, the separation of our life science business more than cutting our manufacturing network in half. So when we started the journey several years ago, we had a little over 90 manufacturing plants. We're under 50 today. And so these are fewer plants, more scaled plants where we're getting more leverage, more costs being spread over, higher volume in these sites, also all helping to contribute to our operating margin. So that's been something systematic that we've been working on. We're really pleased with that.
Speaker #4: Simplification. And you're seeing the outputs of that, of our Life Science combined with, obviously, the Separation business. More than cutting our manufacturing network in half.
Speaker #4: So when we started the journey several years ago, we had a little over 90 manufacturing plants. We're under 50 today. And so these are fewer plants where we're getting more spread over higher volume in these sites.
Speaker #4: Leverage more costs being our operating margin. So that's been something systematic that we've been working on. We're really, plants more scaled, pleased with that.
Speaker #4: And when you think about that drop from nearly 90 to under 50 plants, about half of that, over 20, that's over 20 plant closures.
Tom Polen: When you think about that drop from nearly 90 to under 50 plants, about half of that, over 20, that's over 20 plant closures and a little over 20 plants going to Waters as part of the RMT, but a dramatically simplified network that we're investing behind as we go forward as well, which just helps us further on the op margin. Thanks for the question.
Tom Polen: When you think about that drop from nearly 90 to under 50 plants, about half of that, over 20, that's over 20 plant closures and a little over 20 plants going to Waters as part of the RMT, but a dramatically simplified network that we're investing behind as we go forward as well, which just helps us further on the op margin. Thanks for the question.
Speaker #4: A little over 20 plants going, and ATO waters as part of the RMT. But a dramatically simplified network that we're investing in just helps us further on the out margin.
Speaker #4: Thanks for the question.
Speaker #3: Thanks a
Robbie Marcus: Thanks a lot.
Robbie Marcus: Thanks a lot.
Speaker #3: lot. Thank you.
Operator: Thank you. We will move next with Joanne Wuensch with Citibank. Please go ahead. Your line is open.
Operator: Thank you. We will move next with Joanne Wuensch with Citibank. Please go ahead. Your line is open.
Speaker #1: Wench with Citibank, please go ahead. Your line is open.
Joanne Wuensch: Good morning and congrats on getting to this phase. 2 questions. The first one has to do more macro, if you're seeing anything in the quarter on things like nursing shortages, weather impacts, or anything on the ACA. And then I was hoping you could maybe flesh out some of the contracts you have for the GLPs and if there's anything noteworthy you can share with us there. Thank you.
Joanne Wuensch: Good morning and congrats on getting to this phase. 2 questions. The first one has to do more macro, if you're seeing anything in the quarter on things like nursing shortages, weather impacts, or anything on the ACA. And then I was hoping you could maybe flesh out some of the contracts you have for the GLPs and if there's anything noteworthy you can share with us there. Thank you.
Speaker #6: Shortages, weather impacts, or anything on the ACA, and then I was hoping you could maybe flesh out some of the contracts you have in for the GLPs and if there's anything noteworthy you can share with us there.
Speaker #6: Thank you.
Speaker #4: Yeah. Good morning, Joanne. And thanks for the question. So utilization, as we think about just the broader hospital demand trends, we continue to see steady utilization levels in line with hospital surveys that we monitor.
Tom Polen: Yeah. Good morning, Joanne, and thanks for the question. So utilization, as we think about just the broader hospital demand trends, we continue to see steady utilization levels in line with hospital surveys that we monitor. I'd say the CapEx environment, we also see remaining solid. We haven't seen any weather effects through January and into February. And then I would just say overall, too, as we think about utilization, over 90% of our revenue is consumables, particularly for new BD, which provides a very resilient base. And the portion that is CapEx, we're seeing that solid as well. You saw that come through very clearly in MMS. If you exclude kind of the dynamic of Alaris and the growth, MMS grew nearly 6% in the quarter, and that includes CapEx there. So really strong.
Tom Polen: Yeah. Good morning, Joanne, and thanks for the question. So utilization, as we think about just the broader hospital demand trends, we continue to see steady utilization levels in line with hospital surveys that we monitor. I'd say the CapEx environment, we also see remaining solid. We haven't seen any weather effects through January and into February. And then I would just say overall, too, as we think about utilization, over 90% of our revenue is consumables, particularly for new BD, which provides a very resilient base. And the portion that is CapEx, we're seeing that solid as well. You saw that come through very clearly in MMS. If you exclude kind of the dynamic of Alaris and the growth, MMS grew nearly 6% in the quarter, and that includes CapEx there. So really strong.
Speaker #4: We haven't seen, through January and into February, any weather effects. And then I would just say overall too, as we think about utilization, over 90% of our resilient base.
Speaker #4: BD. Which provides a very—again, that's a big labor savings play and that's a big part of our CapEx spending, as well as helping where there are—we will move next with Joanne—shortages of pharmacists or other clinicians.
Speaker #4: And the portion that is CapEx, we're seeing that solid as well. You saw that come through very clearly in MMS. If you exclude kind of the dynamic of Alaris and the grow over MMS grew nearly So really strong pharmacy automation is actually one of our largest percent businesses of
Tom Polen: Pharmacy automation is actually one of our largest percent businesses of CapEx, and it grew double digits, 10% in the quarter. That's a mix of both strong CapEx purchases in Europe and in the US there as we think about pharmacy automation. Again, that's a big labor savings play, and that's a big part of our CapEx spending as well as helping where there are shortages of pharmacists or other clinicians. A lot of our solutions help in that environment. When it comes to GLP-1s, we're in a really good position there. Certainly, it's a modest portion of our business today, about 2% of our revenue, but it's a high-growth area and certainly a growth opportunity as we look forward. Today, we support some of the largest molecules that are on the market.
Tom Polen: Pharmacy automation is actually one of our largest percent businesses of CapEx, and it grew double digits, 10% in the quarter. That's a mix of both strong CapEx purchases in Europe and in the US there as we think about pharmacy automation. Again, that's a big labor savings play, and that's a big part of our CapEx spending as well as helping where there are shortages of pharmacists or other clinicians. A lot of our solutions help in that environment. When it comes to GLP-1s, we're in a really good position there. Certainly, it's a modest portion of our business today, about 2% of our revenue, but it's a high-growth area and certainly a growth opportunity as we look forward. Today, we support some of the largest molecules that are on the market.
Speaker #4: CapEx. And it grew double digits, 10% in the quarter, and that's a mix of both strong CapEx purchases and revenue in consumables, particularly for new Europe and in the US there as we think about pharmacy automation.
Speaker #4: A lot of our solutions help in that environment. When it comes to GLP ones, we’re at 6% in the quarter, and that includes CapEx there.
Speaker #4: A really good position there. Certainly, it's a modest portion of our business today, about 2% of our revenue. But it's a high-growth area and certainly a growth opportunity as we look forward.
Speaker #4: Today, we support some of the market. We continue to have a very high win rate on both new, novel molecules that are coming to market.
Tom Polen: We continue to have a very high win rate on both new novel molecules that are coming to market and on biosimilars. We updated some information today on the call. We now have more than 80 novel and biosimilar GLP-1s contracted in our devices. And we're continuing to see momentum in injectables. Obviously, there's always the question in the news. I know some investors of ours have asked a question about how do we think about oral injectables. Reality is we're seeing continued momentum in injectable GLP-1s. We continue to see the largest pharma companies putting billions of dollars, some very recent announcement in multi-billion-dollar investments in injectable capacity, including in the US. And people really view that orals as complementary rather than displacing injectables at scale.
Tom Polen: We continue to have a very high win rate on both new novel molecules that are coming to market and on biosimilars. We updated some information today on the call. We now have more than 80 novel and biosimilar GLP-1s contracted in our devices. And we're continuing to see momentum in injectables. Obviously, there's always the question in the news. I know some investors of ours have asked a question about how do we think about oral injectables. Reality is we're seeing continued momentum in injectable GLP-1s. We continue to see the largest pharma companies putting billions of dollars, some very recent announcement in multi-billion-dollar investments in injectable capacity, including in the US. And people really view that orals as complementary rather than displacing injectables at scale.
Speaker #4: Market and on biosimilars. We updated some information today on the Good Morning call. We now have more than 80 novel and biosimilar GLP-1s contracted in our devices network.
Speaker #4: And we're continuing to see always the question in the news—momentum in injectables. I know, obviously, some investors of ours have asked the question: oral injectables?
Speaker #4: Reality is, is we're seeing continued momentum in about how do we think about injectable GLP-1s. We continue to see the billions of dollars, largest pharma companies putting multi-billion dollar investments in injectable U.S.
Speaker #4: capacity, including in the—thanks for the
Speaker #4: And people really view that orals as complementary, rather than displacing—continuing to be bullish on that, some very recent announcement in having a very high win rate on both, and continue to focus on new novel and biosimilar molecules in the space.
Speaker #4: So we're growth rate continues to be very strong as still feel very much with that on track, our we share double digits. today? point on that journey now.
Tom Polen: So we're continuing to be bullish on that and continue to focus on having a very high win rate on both new novel and biosimilar molecules in the space. Thanks for the question.
Tom Polen: So we're continuing to be bullish on that and continue to focus on having a very high win rate on both new novel and biosimilar molecules in the space. Thanks for the question.
Speaker #4: question.
Speaker #1: Thank you. We will move next with Matt.
Operator: Thank you. We will move next with Matt Taylor with Jefferies. Please go ahead. Your line is open.
Operator: Thank you. We will move next with Matt Taylor with Jefferies. Please go ahead. Your line is open.
Speaker #1: Taylor with Jefferies. Please go ahead, your line is
Speaker #3: Hi. Thanks for taking the open. question. Thomas, a follow-up to that question. I think previously you had talked about the GLP one franchise within BD to injectables at scale.
Matt Taylor: Hi. Thanks for taking the question. Tom, as a follow-up to that question, I think previously had talked about the potential for the GLP-1 franchise within BD to get to about $1 billion by the end of the decade. Do you still feel the same way about the trajectory long-term given all these deals that you've signed? And maybe you could address that and where it is now, where it is today.
Matt Taylor: Hi. Thanks for taking the question. Tom, as a follow-up to that question, I think previously had talked about the potential for the GLP-1 franchise within BD to get to about $1 billion by the end of the decade. Do you still feel the same way about the trajectory long-term given all these deals that you've signed? And maybe you could address that and where it is now, where it is today.
Speaker #3: the decade. Do you still feel the same way about the trajectory long term given all these deals that you've signed and maybe you could address that and where it is now and where it is
Speaker #4: Yeah. We
Tom Polen: Yeah. We still feel very much with that on track. Our growth rate continues to be very strong as we share double digits. We're nearing that halfway point on that journey now. And again, you haven't seen the number of new novel molecules coming to market that will be over the next several years. And of course, as you look at the back half of this decade, you start really hitting stride on the biosimilars. And when we talk about our biosimilar portfolio, it's very broad geographically, right? So our biosimilar portfolio includes biosimilars across China, Southeast Asia, Europe, Latin America, Canada, and the US. It's a very broad global. And so as you think about certain patent expertise varying geographically, we have good exposure across those different time points. Thank you for the question.
Tom Polen: Yeah. We still feel very much with that on track. Our growth rate continues to be very strong as we share double digits. We're nearing that halfway point on that journey now. And again, you haven't seen the number of new novel molecules coming to market that will be over the next several years. And of course, as you look at the back half of this decade, you start really hitting stride on the biosimilars. And when we talk about our biosimilar portfolio, it's very broad geographically, right? So our biosimilar portfolio includes biosimilars across China, Southeast Asia, Europe, Latin America, Canada, and the US. It's a very broad global. And so as you think about certain patent expertise varying geographically, we have good exposure across those different time points. Thank you for the question.
Speaker #4: So, and again, you haven't seen the number of new novel molecules coming to market that will be over the next several years. And of course, as you look at the back half of this decade, you start really hitting stride on the biosimilars.
Speaker #4: And when we talk about our biosimilar portfolio, it's very broad geographically. So our biosimilar portfolio includes biosimilars across China, Southeast Asia, Europe, Latin America, Canada, and the US.
Speaker #4: It's a very broad global. And so, as you think about certain patent expiries varying geographically, we have good exposure across those different—
Speaker #4: question. Thank you,
Matt Taylor: Thank you, Tom.
Matt Taylor: Thank you, Tom.
Speaker #3: Thomas.
Speaker #1: Thank
Speaker #1: Thank you. We will move next with Matt Mixik with Barclays. Please go ahead, your line is open.
Operator: Thank you. We will move next with Matt Miksic with Barclays. Please go ahead. Your line is open.
Operator: Thank you. We will move next with Matt Miksic with Barclays. Please go ahead. Your line is open.
Speaker #4: Good morning,
Matt Miksic: Good morning, Matt.
Matt Miksic: Good morning, Matt.
Speaker #4: Matt. Thanks.
Speaker #5: Hey, good morning, Tom. Thanks so much for taking the questions, and congrats on getting to the starting line—I guess that's one way to think about it.
[Interim CFO] (Becton Dickinson & Co): Hey, good morning, Tom. Thanks so much for taking the questions and congrats on getting to the starting line, I guess, is one way to think about it. So, when you mentioned just a question on the Innovate part of your plan and the investments you're making in R&D, maybe some sense of when, I understand, the commercial investments this year execute and compete, but when do you think we'll start to see things come through the pipeline or maybe come through at a faster pace from these R&D investments that you're making in the kind of Innovate segment of your strategy? Thanks.
Victor Roque: Hey, good morning, Tom. Thanks so much for taking the questions and congrats on getting to the starting line, I guess, is one way to think about it. So, when you mentioned just a question on the Innovate part of your plan and the investments you're making in R&D, maybe some sense of when, I understand, the commercial investments this year execute and compete, but when do you think we'll start to see things come through the pipeline or maybe come through at a faster pace from these R&D investments that you're making in the kind of Innovate segment of your strategy? Thanks.
Speaker #5: mentioned just a question on the
Speaker #5: Innovate part of your plan and the investments you're making in R&D, maybe some. So when you—we're nearing that halfway sense of when I understand the commercial investments this year, execute and compete.
Speaker #5: But when do you think we'll start to see the pipeline, or maybe come through at a faster pace—see things come through the kind of 'Innovate' segment of your strategy?
Speaker #4: Yeah.
Tom Polen: Yeah. Thank you. You're going to see those continue to come through. This year, we've got a lot of great launches happening. We talked about some of the very recent ones that are just ramping up like Pyxis Pro. We couldn't be more pleased with how that one's been going as we mentioned, really strong competitive share gain. HemoSphere Stream just launching now. You're going to continue to see throughout this year and into next. 2027 is quite a big year for launches as is 2028 across the portfolio. At the same time, we've shared we've put $50 million that we took from efficiencies and shifting from corporate expenses, moving that into R&D.
Tom Polen: Yeah. Thank you. You're going to see those continue to come through. This year, we've got a lot of great launches happening. We talked about some of the very recent ones that are just ramping up like Pyxis Pro. We couldn't be more pleased with how that one's been going as we mentioned, really strong competitive share gain. HemoSphere Stream just launching now. You're going to continue to see throughout this year and into next. 2027 is quite a big year for launches as is 2028 across the portfolio. At the same time, we've shared we've put $50 million that we took from efficiencies and shifting from corporate expenses, moving that into R&D.
Speaker #4: Thanks. Thanks to come through this year. We've got a lot of great launches happening. We talked about some of the very recent ones that are just ramping up, like Pixis Pro.
Speaker #4: We
Speaker #4: couldn't be more pleased with how mentioned. Really strong competitive share from these R&D investments that you're making and now. You're going to continue to into next '27 is quite a big year for launches as is time points.
Speaker #4: '28 across the portfolio. At that one's been going as we the same time, we've shared we've put $50 million that we gain. Chemosphere Stream just launching you.
Speaker #4: took from efficiencies and shifting from corporate see throughout this year and Thank you for the You're going to see those continue expenses moving that into R&D.
Tom Polen: We just started quite a few new R&D programs as well this fiscal year, not only what we would normally start with our traditional increase, but that bolus of money starting more projects in tissue regeneration, some adjacencies in PureWick that we're really excited about, additional biologic drug delivery investments, and also in the connected care space. The other thing that we're seeing: some really positive, still early, but very positive results. As we shared, we're taking BD Excellence into commercial and into innovation. We actually have some dedicated resources now that go across working with our different R&D teams, doing Kaizens to accelerate our innovation timelines. We've been doing quite a few of those. We started that really in late last year. We've been doing those throughout Q1.
Tom Polen: We just started quite a few new R&D programs as well this fiscal year, not only what we would normally start with our traditional increase, but that bolus of money starting more projects in tissue regeneration, some adjacencies in PureWick that we're really excited about, additional biologic drug delivery investments, and also in the connected care space. The other thing that we're seeing: some really positive, still early, but very positive results. As we shared, we're taking BD Excellence into commercial and into innovation. We actually have some dedicated resources now that go across working with our different R&D teams, doing Kaizens to accelerate our innovation timelines. We've been doing quite a few of those. We started that really in late last year. We've been doing those throughout Q1.
Speaker #4: R&D programs as well this fiscal year. Not only have we just started quite a few new ones—what we would normally start with our traditional increase—but that bolus of money is starting more projects in tissue regeneration, and some adjacencies in PureWick that we're really excited about.
Speaker #4: Additional biologic drug delivery investments and also in the connected care some really positive still early, but very positive results as we shared, we're taking BD excellence into commercial and into innovation.
Speaker #4: Some dedicated resources now that go across working with our different R&D, and we actually have teams doing Kaizens to accelerate our innovation last year.
Speaker #4: those we started that really in late We've been doing those timelines. And we've been doing quite a few of throughout Q1. And we've seen a number of R&D space.
Tom Polen: And we've seen a number of R&D projects where we've accelerated timelines to launch by 6 and even up to 12 months on that. And so we're going to continue to get after that. We've got a goal to do all of our key development programs. We're focused on driving those Kaizens and accelerations this year. They're all scheduled with the teams. And so that capability and that momentum that we saw in operations through BD Excellence, we're really pleased with some of the early signs that we're seeing, taking those same processes and systems into innovation and also into our commercial organization. So we'll continue to provide updates on that as it progresses. And we'll look forward to sharing more through the year and eventually at an analyst day in the future on that innovation pipeline. Thanks for the question, Matt.
Tom Polen: And we've seen a number of R&D projects where we've accelerated timelines to launch by 6 and even up to 12 months on that. And so we're going to continue to get after that. We've got a goal to do all of our key development programs. We're focused on driving those Kaizens and accelerations this year. They're all scheduled with the teams. And so that capability and that momentum that we saw in operations through BD Excellence, we're really pleased with some of the early signs that we're seeing, taking those same processes and systems into innovation and also into our commercial organization. So we'll continue to provide updates on that as it progresses. And we'll look forward to sharing more through the year and eventually at an analyst day in the future on that innovation pipeline. Thanks for the question, Matt.
Speaker #4: Projects where we've accelerated timelines to launch by—the other thing that we're seeing—six and even up to 12 months on that. And so we're going to continue to get after that.
Speaker #4: We've got a goal to do all of our key development programs. We're focused on driving those Kaizens and accelerations this year. They're all scheduled.
Speaker #4: With the teams. And so that capability and that momentum that we saw in operations through BD excellence, we're really pleased with some of the early signs that we're seeing taking those same processes and systems into innovation and also into our commercial organization.
Speaker #4: So, we'll continue to provide updates on that as it progresses, and we'll look forward to sharing more through the year and eventually at an Analyst Day in the future on that innovation pipeline.
Speaker #4: Thanks for the question,
Speaker #4: Matt. Thank
Speaker #1: you. We will move next with Shagun Singh with RBC Capital Markets. Please go ahead.
Operator: Thank you. We will move next with Shagun Singh with RBC Capital Markets. Please go ahead.
Operator: Thank you. We will move next with Shagun Singh with RBC Capital Markets. Please go ahead.
Shagun Singh: Thank you so much. I just wanted to get a better handle on the three areas of headwind: Alaris vaccines in China. It seems like vaccines in China will hopefully be behind us this year. But how should we think about Alaris beyond this year? Do you get to that 5% or mid-single digits next year, or will Alaris be a headwind? And then just very quickly on M&A, is there an opportunity for you guys to be more aggressive under the new BD strategy on M&A to help raise the weighted average market growth here? Thank you for taking the questions.
Shagun Singh: Thank you so much. I just wanted to get a better handle on the three areas of headwind: Alaris vaccines in China. It seems like vaccines in China will hopefully be behind us this year. But how should we think about Alaris beyond this year? Do you get to that 5% or mid-single digits next year, or will Alaris be a headwind? And then just very quickly on M&A, is there an opportunity for you guys to be more aggressive under the new BD strategy on M&A to help raise the weighted average market growth here? Thank you for taking the questions.
Speaker #6: Better handle on the three areas of so much headwind. Hilarious, vaccines will hopefully be behind. I just wanted to get to China. It seems like vaccines in China are us this year.
Speaker #6: But how should we think about Halyard beyond this year? Do you get to that 5% off its single digits next year, or will Halyard be a headwind?
Speaker #6: And then just very quickly on M&A, is there an opportunity for you guys to be more aggressive under the new BD strategy on M&A to help raise the weighted average market growth here?
Speaker #6: Thank you for taking the
Speaker #6: questions. Yeah.
Speaker #4: Thank you for the question. China, you described those. Hilarious, we communicated at the end of—as we gave the guide to start this year, the whole COBD guide—that we do expect Hilarious to step up in Shagun.
Tom Polen: Yeah. Thank you for the question, Shagun. So on vaccines in China, you described those. Alaris, we communicated at the end of, as we gave the guide to start this year, the whole BD guide, that we do expect Alaris to step up in 2027, 100 basis points headwind this year, stepping up to a 200 basis point headwind in 2027. That's just, again, as we've fully completed the remediation. We expect to actually be at record share levels as that dynamic is happening. It's just the carryover from the remediation that's happening there, but we expect to be in a stronger than ever competitive position on Alaris. As it comes to tuck-in M&A, so as we've communicated, for new BD, we're very focused on a balanced capital allocation strategy.
Tom Polen: Yeah. Thank you for the question, Shagun. So on vaccines in China, you described those. Alaris, we communicated at the end of, as we gave the guide to start this year, the whole BD guide, that we do expect Alaris to step up in 2027, 100 basis points headwind this year, stepping up to a 200 basis point headwind in 2027. That's just, again, as we've fully completed the remediation. We expect to actually be at record share levels as that dynamic is happening. It's just the carryover from the remediation that's happening there, but we expect to be in a stronger than ever competitive position on Alaris. As it comes to tuck-in M&A, so as we've communicated, for new BD, we're very focused on a balanced capital allocation strategy.
Speaker #4: headwind this year, stepping up to a 200 basis point headwind in '27. That's just, again, as we've fully So on vaccines in completed the remediation, we expect to actually be at record share levels as that dynamic is happening.
Speaker #4: It's just the growth over from the remediation be stronger than ever. Competitive position on hilarious. As it comes to communicated, for new BD, we're very focused on a balanced capital allocation strategy.
Speaker #4: We're pleased, that's happening there. But we expect to between the 200 million dollar plus share buyback that we did, 250 million dollar buyback that we did in Q1, plus the 2 billion dollar buyback that we're doing now for through the ASR.
Tom Polen: We're pleased, obviously, this year between the $200 million-plus share buyback that we did, the $250 million buyback that we did in Q1, plus the $2 billion buyback that we're doing now through the ASR, but that's significant return of capital to our shareholders. As part of that balanced capital allocation strategy, we have communicated that we're focused on focused tuck-in M&A. Our focus remains on tuck-in M&A, not transformational M&A. We do have a robust pipeline from that perspective. When it comes to the criteria for those tuck-in M&A, they remain unchanged versus what we've shared in the past. That means accretive to revenue growth and accretive from an EPS perspective. We're not looking at dilutive M&A. We do see with the new BD, there's a number of very attractive high-growth sectors that we're in that we see the opportunity to supplement that WAMGR with tuck-in M&A.
Tom Polen: We're pleased, obviously, this year between the $200 million-plus share buyback that we did, the $250 million buyback that we did in Q1, plus the $2 billion buyback that we're doing now through the ASR, but that's significant return of capital to our shareholders. As part of that balanced capital allocation strategy, we have communicated that we're focused on focused tuck-in M&A. Our focus remains on tuck-in M&A, not transformational M&A. We do have a robust pipeline from that perspective. When it comes to the criteria for those tuck-in M&A, they remain unchanged versus what we've shared in the past. That means accretive to revenue growth and accretive from an EPS perspective. We're not looking at dilutive M&A. We do see with the new BD, there's a number of very attractive high-growth sectors that we're in that we see the opportunity to supplement that WAMGR with tuck-in M&A.
Speaker #4: But that's significant return of capital to our tuck in M&A, so as we've shareholders. We obviously, this year, are as part of that balanced capital allocation strategy, we have communicated that we're focused on focused tuck in M&A.
Speaker #4: Our focus remains on tuck-in M&A, not transformational M&A. And we do have a robust pipeline from that perspective. When it comes to M&A, they remain unchanged versus what we've shared in the past.
Speaker #4: That means accretive to revenue growth and accretive from an EPS perspective. We're not looking at dilutive M&A. And we do see with the new BD, there's a number of very attractive, high-growth sectors that we're in that meet the criteria for those tuck-ins. We see the opportunity to supplement that WAMGR with tuck-in M&A.
Speaker #4: So more to come on that. But we'll continue to do the balanced capital allocation strategy that we've communicated. Thank you for the
Tom Polen: So more to come on that, but we'll continue to do it in a focused way and very much aligned with that balanced capital allocation strategy that we've communicated. Thank you for the question.
Tom Polen: So more to come on that, but we'll continue to do it in a focused way and very much aligned with that balanced capital allocation strategy that we've communicated. Thank you for the question.
Speaker #4: question.
Speaker #1: Thank
Operator: Thank you. Our next question comes from.
Operator: Thank you. Our next question comes from.
Speaker #1: Our next.
Speaker #4: By the way, just for you.
Tom Polen: By the way, just for those who had congratulated earlier on, the deal with Waters is officially closed now. Operator.
Tom Polen: By the way, just for those who had congratulated earlier on, the deal with Waters is officially closed now. Operator.
Speaker #4: For those who congratulated earlier on, the deal with Waters is officially closed now.
Speaker #4: Operator.
Operator: Thank you. Our next question comes from Rick Wise with Stifel. Please go ahead. Your line is open.
Operator: Thank you. Our next question comes from Rick Wise with Stifel. Please go ahead. Your line is open.
Speaker #1: Thank you. Our next question comes from Rick Weiss with Stifel. Please go ahead. Your line is open.
Speaker #5: Good Tom, you seem very well set up for the rest of the year. I think Vitor said it, and I apologize that
Rick Wise: Good morning. Hi, Tom. Tom, you seem very well set up for the rest of the year. I think Victor said it, and I apologize that these are not the exact words, but I think you said prudent guidance for fiscal 2026. You're well set up for a stable, predictable outlook without the usual second-half ramp we've seen in the past. That's great. And sort of a variation, a little bit of Matt's question. I can't believe you're investing in Salesforce the way that you are, the M&A you've done, the focus on faster growth businesses, the cost-cutting. My question is, if there would be some upside to this thoughtfully prudent guidance in the next 2, 4, 6 quarters, do you think it would be from all the above? Is it more likely from the new products? Is it more likely to come from the expanded sales efforts?
Rick Wise: Good morning. Hi, Tom. Tom, you seem very well set up for the rest of the year. I think Victor said it, and I apologize that these are not the exact words, but I think you said prudent guidance for fiscal 2026. You're well set up for a stable, predictable outlook without the usual second-half ramp we've seen in the past. That's great. And sort of a variation, a little bit of Matt's question. I can't believe you're investing in Salesforce the way that you are, the M&A you've done, the focus on faster growth businesses, the cost-cutting. My question is, if there would be some upside to this thoughtfully prudent guidance in the next 2, 4, 6 quarters, do you think it would be from all the above? Is it more likely from the new products? Is it more likely to come from the expanded sales efforts?
Speaker #5: these are not the exact words, but I think you said prudent guidance for fiscal '26. You're well set open. up for a stable predictable outlook without the usual morning.
Speaker #5: second-half ramp we've seen in the past. That's great. And sort of a variation a little bit of Matt's Hi, Tom.
Speaker #5: Question. I can't believe you're investing in Salesforce the way that you are. The M&A is in a focused way.
Speaker #5: Growth, businesses, what you've done, the focus on faster and very much aligned with that cost-cutting. So my question is, if there would be some upside to this thoughtfully prudent guidance in the next two, four, six quarters, do you think it would be from all of the above?
Speaker #5: Is it more likely from the new products? Is it more likely to come it that some of the growth drags are a little less?
Rick Wise: Is it that some of the growth drags are a little less? Just any color on how we should just reflect on that. And just since this is not exactly one question, I'll ask at a half. When are you going to, where are you with your CFO search announcement timing? And maybe talk to us a little bit about what you're looking for in your new partner. Thank you so much.
Rick Wise: Is it that some of the growth drags are a little less? Just any color on how we should just reflect on that. And just since this is not exactly one question, I'll ask at a half. When are you going to, where are you with your CFO search announcement timing? And maybe talk to us a little bit about what you're looking for in your new partner. Thank you so much.
Speaker #5: Just any color on how we should just reflect on that. And just since this is not exactly from the one question, I'll ask at a expanded sales efforts?
Speaker #5: Half. When are you going to—where are you with your CFO search announcement timing? And maybe talk to us a little bit about what you're looking for in your new partner?
Speaker #5: Thank you so much.
Speaker #4: Yeah, thank you for the questions. So, when it comes to the CFO search, we continue—that is well underway. And we'll look forward to providing an update when that's complete.
Tom Polen: Yeah. Thank you for the questions. So when it comes to the CFO search, we continue. That is well underway. And we'll look forward to providing an update when that's complete. In the meanwhile, of course, Victor is doing a great job stewarding the company and obviously doing a great job here on the call. So more to come on that. But we're running a thoughtful process focused on continuity of execution and financial discipline. And obviously, this is a really important moment in the company's evolution, and we're going to make sure we get the right person there. When it comes to upsides to guidance for the year, look, again, we're really pleased with how we started the year.
Tom Polen: Yeah. Thank you for the questions. So when it comes to the CFO search, we continue. That is well underway. And we'll look forward to providing an update when that's complete. In the meanwhile, of course, Victor is doing a great job stewarding the company and obviously doing a great job here on the call. So more to come on that. But we're running a thoughtful process focused on continuity of execution and financial discipline. And obviously, this is a really important moment in the company's evolution, and we're going to make sure we get the right person there. When it comes to upsides to guidance for the year, look, again, we're really pleased with how we started the year.
Speaker #4: In the meantime, of course, Vitor is doing a great job stewarding the company and obviously doing a great job here on the call. So, more to come on that.
Speaker #4: But we're running on continuity of execution and financial discipline. And obviously, this is a really important moment in the company's history. When it comes to upsides to guidance for the year, look, again, we're really pleased with how we started the evolution, and we're going to make sure we get the right person—areas that we're investing behind, those areas of high growth and higher margin, thoughtful process-focused automation, connected care, urinary incontinence, pharmacy APM, tissue regeneration, biologics—those are the areas that we're putting our efforts and disproportionately from an R&D perspective.
Tom Polen: As we think about the areas that we're investing behind, those areas of high growth and higher margin: urinary incontinence, pharmacy automation, connected care, APM, tissue regeneration, biologics, right? Those are the areas that we're putting our investments behind, both commercially and disproportionately from an R&D perspective. And so those are areas that could be natural areas of opportunity for us. I think as Mike Feld now also is Chief Revenue Officer who's been running the Life Sciences segment, essentially as of today, he's now full-time in that role. We see opportunity. The reason we created that role, it's never existed in the history of BD, is we've been very good commercially. You don't get to our category-leading shares in 90% of the markets in which we compete without being good commercially.
Tom Polen: As we think about the areas that we're investing behind, those areas of high growth and higher margin: urinary incontinence, pharmacy automation, connected care, APM, tissue regeneration, biologics, right? Those are the areas that we're putting our investments behind, both commercially and disproportionately from an R&D perspective. And so those are areas that could be natural areas of opportunity for us. I think as Mike Feld now also is Chief Revenue Officer who's been running the Life Sciences segment, essentially as of today, he's now full-time in that role. We see opportunity. The reason we created that role, it's never existed in the history of BD, is we've been very good commercially. You don't get to our category-leading shares in 90% of the markets in which we compete without being good commercially.
Speaker #4: And that could be natural areas, so those are areas—think as Mike Feld now also is Chief Revenue—of opportunity for us. I segment, essentially as of today, his role.
Speaker #4: We see opportunity. The reason we created that role—it's never existed in the history of BD—is we've been very good commercially. You don't get shares in 90% of the markets in which we compete.
Speaker #4: We've been good at getting to our category-leading commercials, but we think there's another level of performance that we can reach. Just like we've always been good at executing at levels that we've operationally.
Tom Polen: But we think there's another level of performance that we can reach, just like we've always been good operationally, but we're reaching and we're executing at levels that we've never executed at before operationally. We view that same opportunity exists commercially. And when we execute that, that will deliver higher growth, we're convinced of that. And so more to come there as Mike's now fully in that role. We'll provide more exposure to our investors on the programs that he's executing. It not only has to do with sales force expansion, but we've changed compensation plans for our selling organization around the world going into this year. We're putting in new tech stacks for our sales teams to help them be more effective. We're optimizing our management systems and processes with our selling organization, and Mike's leading that, working with our teams around the world.
Tom Polen: But we think there's another level of performance that we can reach, just like we've always been good operationally, but we're reaching and we're executing at levels that we've never executed at before operationally. We view that same opportunity exists commercially. And when we execute that, that will deliver higher growth, we're convinced of that. And so more to come there as Mike's now fully in that role. We'll provide more exposure to our investors on the programs that he's executing. It not only has to do with sales force expansion, but we've changed compensation plans for our selling organization around the world going into this year. We're putting in new tech stacks for our sales teams to help them be more effective. We're optimizing our management systems and processes with our selling organization, and Mike's leading that, working with our teams around the world.
Speaker #4: We view that same opportunity exists commercially. And when operationally, but we're reaching and we're we execute that, that will deliver higher growth. We're convinced of there as Mike's now fully in that never executed at before role.
Speaker #4: We'll provide more exposure to our investors on the programs that he's executing. It not only has to do with Salesforce expansion, but we've changed compensation plans for our selling this year.
Speaker #4: We're putting in new tech stacks for our sales teams to help them be more effective. We're optimizing our management systems and processes, with organization around the world going into our selling organization.
Speaker #4: And Mike's leading that, working with our teams around the world. So again, like we've seen in operations, we believe that there are opportunities, meaningful opportunities, to help accelerate growth as well through that commercial excellence, complementing the growth areas that we've been focusing on.
Tom Polen: So again, like we've seen in operations, we believe that there's opportunities, meaningful opportunities to help accelerate growth as well through that commercial excellence, complementing that with our innovation pipeline, the growth areas that we've been focusing on, and of course, complementary tuck-in M&A over time as well. So thanks for the question, Rick.
Tom Polen: So again, like we've seen in operations, we believe that there's opportunities, meaningful opportunities to help accelerate growth as well through that commercial excellence, complementing that with our innovation pipeline, the growth areas that we've been focusing on, and of course, complementary tuck-in M&A over time as well. So thanks for the question, Rick.
Speaker #4: With our innovation pipeline, thank you.
Speaker #4: And of course, complementary tuck-in M&A over time as well. So, thanks for the—
Speaker #4: question, Rick. Thank you,
Rick Wise: Thank you, Tom.
Rick Wise: Thank you, Tom.
Speaker #1: We will move next with Josh Jennings with TD Cowen. Please go ahead. Your line is open.
Operator: Thank you. We will move next with Josh Jennings with TP Cowen. Please go ahead. Your line is open.
Operator: Thank you. We will move next with Josh Jennings with TP Cowen. Please go ahead. Your line is open.
Speaker #6: Hi. Good morning. Thanks for taking the questions officially breaking through the tape there. On the Waters transaction. I wanted to just get help thinking about the pricing environment, concessions and just with all the hospitals, demands for versus whether that's stepped up help and congratulations on innovation that's on tap drive price premiums and pricing be a tailwind in fiscal '26 and into the out years and help with organic revenue growth and gross
Josh Jennings: Hi. Good morning. Thanks for taking the questions. And congratulations on officially breaking through the tape there on the Waters transaction. Wanted to just get help thinking about the pricing environment, hospitals' demands for concessions versus whether that's stepped up. And just with all the innovation that's on tap from BD, can that help drive price premiums and pricing be a tailwind in fiscal '26 and into the out years and help with organic revenue growth and gross margin expansion? Thanks for taking the question.
Josh Jennings: Hi. Good morning. Thanks for taking the questions. And congratulations on officially breaking through the tape there on the Waters transaction. Wanted to just get help thinking about the pricing environment, hospitals' demands for concessions versus whether that's stepped up. And just with all the innovation that's on tap from BD, can that help drive price premiums and pricing be a tailwind in fiscal '26 and into the out years and help with organic revenue growth and gross margin expansion? Thanks for taking the question.
Speaker #6: Margin expansion? Thanks for taking the
Speaker #6: question. Yeah.
Speaker #4: Thanks for the Tom. question, Josh. So we continue to see I'd say a stable pricing environment, relative there's always pressure we've obviously
Tom Polen: Yeah. Thanks for the question, Josh. So we continue to see, I'd say, a stable pricing environment relative. There's always pressure from our customers for pricing. That's something that we've obviously navigated for quite some time. And we're very focused on obviously articulating and delivering value to our customers and outcomes, both clinical outcomes and financial outcomes, through the technologies that we provide. Pricing, what we're seeing so far in Q1, details will come out further in the 10-Q that'll be filed later today. But overall, pricing, generally flat to slightly positive. That's up a little over 50 basis points ex-China positive price, offset by the pricing dynamic that we see in China. As we think about that going forward, we expect to continue to have positive pricing in the rest of the world.
Tom Polen: Yeah. Thanks for the question, Josh. So we continue to see, I'd say, a stable pricing environment relative. There's always pressure from our customers for pricing. That's something that we've obviously navigated for quite some time. And we're very focused on obviously articulating and delivering value to our customers and outcomes, both clinical outcomes and financial outcomes, through the technologies that we provide. Pricing, what we're seeing so far in Q1, details will come out further in the 10-Q that'll be filed later today. But overall, pricing, generally flat to slightly positive. That's up a little over 50 basis points ex-China positive price, offset by the pricing dynamic that we see in China. As we think about that going forward, we expect to continue to have positive pricing in the rest of the world.
Speaker #4: Some time. And we're, for BD, focused on articulating and delivering value to our customers—obviously, we're very focused on that—especially in terms of pricing. That's something that comes from our customers and outcomes.
Speaker #4: Both clinical outcomes and financial outcomes through the technologies that we provide. Pricing Q1, details will come out further in the 10Q. That'll be filed later positive.
Speaker #4: That's up a little over 50 basis points ex-China, positive price. Offset by the pricing dynamic that we're generally seeing as flat to slightly down in China.
Speaker #4: As we think about that today, going forward, we expect to continue. But overall, we expect to have positive pricing in the rest of what we're seeing so far in the world.
Speaker #4: And as China VOBP abates, as we move into '27, we would expect—and beyond—that pricing dynamic to continue to be more of a positive for us as we go forward, as VOBP lessens.
Tom Polen: As China VBP abates as we move into 2027, we would expect and beyond that pricing dynamic to continue to be more of a positive for us as we go forward, as VBP lessens from that perspective. I think as we think about new product innovations and pricing there, we're entering into a lot of new product categories with our products, probably more so than ever before. Historically, we've done a lot of serial innovations where we're upgrading base products. We're continuing to do that in a number of cases. But more so than ever before, we're entering into new spaces. I think actually all of the new products that we shared today are brand new spaces for us. Avitene Flowable, a brand new biosurgery space for us that we've never been in before, a $400 million market.
Tom Polen: As China VBP abates as we move into 2027, we would expect and beyond that pricing dynamic to continue to be more of a positive for us as we go forward, as VBP lessens from that perspective. I think as we think about new product innovations and pricing there, we're entering into a lot of new product categories with our products, probably more so than ever before. Historically, we've done a lot of serial innovations where we're upgrading base products. We're continuing to do that in a number of cases. But more so than ever before, we're entering into new spaces. I think actually all of the new products that we shared today are brand new spaces for us. Avitene Flowable, a brand new biosurgery space for us that we've never been in before, a $400 million market.
Speaker #4: From that perspective, I think as we think about new product there, we're entering into a lot of with our products, probably more innovations and pricing so than ever before.
Speaker #4: new product categories Historically, we've done a lot of serial of cases. But in more innovations where we're upgrading so than ever before, we're entering into new base products.
Speaker #4: The new products that we shared—we're continuing to do that in a number of ways. Today are brand new spaces for us: Avatene Flowable, a brand new biosurgery space for us, that market; Surgifor, which is complementary to ChloraPrep but it's for a space we've never been in before—a $400 million market once you're in the surgery.
Tom Polen: Surgiphor, which is complementary to ChloraPrep, but it's for once you're in the surgery. ChloraPrep's before the surgery. That's a whole new market for us. And HemoSphere Stream is really extending the HemoSphere platform into the general ward, expanding it to about 300,000 monitors that we don't tap into today, so a brand new market space for us with HemoSphere Stream. So there we make sure that pricing equals the value of the products and what they're delivering to our customers. I think the other thing is in areas and we have a number of new products launching in pharmacy automation, for example, for Central Fill, where the Pyxis Pro, which by the way, Pyxis Pro launched at a premium to the base Pyxis. But it's all associated with very clear data that we have that it's delivering greater economic value to our customers, right?
Tom Polen: Surgiphor, which is complementary to ChloraPrep, but it's for once you're in the surgery. ChloraPrep's before the surgery. That's a whole new market for us. And HemoSphere Stream is really extending the HemoSphere platform into the general ward, expanding it to about 300,000 monitors that we don't tap into today, so a brand new market space for us with HemoSphere Stream. So there we make sure that pricing equals the value of the products and what they're delivering to our customers. I think the other thing is in areas and we have a number of new products launching in pharmacy automation, for example, for Central Fill, where the Pyxis Pro, which by the way, Pyxis Pro launched at a premium to the base Pyxis. But it's all associated with very clear data that we have that it's delivering greater economic value to our customers, right?
Speaker #4: ChloraPrep is before the surgery. That's a whole new stream, the market for us. Hemisphere platform into the general, and 30,000, 300,000 spaces. I think actually all of monitors brand new market space for us with Hemisphere Stream.
Speaker #4: So there we make sure we're expanding it to about that pricing equals the value of the products and what they're delivering to our customers.
Speaker #4: I think that there are areas that we don't tap into today. So, a number of new products are launching in pharmacy automation, for example, for central fill, where the Pyxis Pro—which, by the way, Pyxis Pro launched at a premium to the base Pyxis.
Speaker #4: But we have that it's delivering greater economic value to our workflow by reducing drug shortages. One other thing is in areas—and we have the floor.
Speaker #4: customers. Those areas, for
Tom Polen: Those areas, for example, it's meaningfully helping with nursing workflow by reducing drug shortages on the floor. Or in the case of pharmacy automation, it's reducing labor costs associated with preparing medications and pills. And it's enabling many places, let's say, like online pharmacies that are delivering to your home, for them to do that in warehouses, and they're starting from scratch. They never even hired pharmacists in the first place. They go straight to the robots and automation in their warehouses and are delivering medications to home, and they're able to do that in a cost-effective manner. So I think our solutions are well tailored to this environment that we're in and expect we'll continue to see, as is our innovation pipeline. So thanks for the question.
Tom Polen: Those areas, for example, it's meaningfully helping with nursing workflow by reducing drug shortages on the floor. Or in the case of pharmacy automation, it's reducing labor costs associated with preparing medications and pills. And it's enabling many places, let's say, like online pharmacies that are delivering to your home, for them to do that in warehouses, and they're starting from scratch. They never even hired pharmacists in the first place. They go straight to the robots and automation in their warehouses and are delivering medications to home, and they're able to do that in a cost-effective manner. So I think our solutions are well tailored to this environment that we're in and expect we'll continue to see, as is our innovation pipeline. So thanks for the question.
Speaker #4: Or, in the case of pharmacy automation, costs associated with its reducing labor preparing medications and pills. And it's online pharmacies that are delivering to your home; for them to do that, they never even hired pharmacists in the first place.
Speaker #4: They go straight to the robots, enabling many places—let's say like automation in their warehouses—and are delivering medications to the home and able to do that in a cost-effective manner.
Speaker #4: So, I think our solutions are good.
Speaker #4: well-tailored to this environment that we're in. And expect we'll continue to see, as is our innovation pipeline. So thanks for the
Speaker #4: question. Thank
Speaker #1: Thank you. We will move next with James. Please go ahead, your line is open.
Operator: Thank you. We will move next with Jason Bedford with Raymond James. Please go ahead. Your line is open.
Operator: Thank you. We will move next with Jason Bedford with Raymond James. Please go ahead. Your line is open.
Speaker #1: Jason Bedford with Raymond
Jason Bedford: Good morning. And congrats on the progress here. So I had a question on Alaris. It was down year-over-year, but you mentioned you gained 100 basis points of category share. I'm guessing the share commentary is on an installed base basis. So my questions are, one, is your expectation that you continue to gain share at this rate? And then two, just to level set, what is your share position today? Thanks.
Jayson Bedford: Good morning. And congrats on the progress here. So I had a question on Alaris. It was down year-over-year, but you mentioned you gained 100 basis points of category share. I'm guessing the share commentary is on an installed base basis. So my questions are, one, is your expectation that you continue to gain share at this rate? And then two, just to level set, what is your share position today? Thanks.
Speaker #7: Oleris. It was morning. And congrats on the progress here. So I had a question on—you gained 100 basis points, with example, it's meaningfully helping with nursing category share.
Speaker #7: I'm guessing
Speaker #7: Base basis. So my questions are, one, is your expectation that you continue to gain share at this rate? And then, two, just to level set, what is your share position today?
Speaker #4: Yeah, thanks. Thanks, Jason, for the question and for bringing us home here on the call. Our share position is nearing 60% overall. And yes, you're right.
Tom Polen: Yeah. Thanks, Jason, for the question and bringing us home here on the call. Our share position is nearing 60% overall. And yes, you're right. So obviously, through the remediation efforts that we've been doing over the last 3 years, we've been upgrading about 20% of the market per year. And so as this is now coming to the tail end of that and peaked last year, you physically can't, even if we took all competitive share that's opening up this year, we still would see declining growth. And the same dynamic would happen next year just because of what it means for us in terms of the scale in which we just upgraded the marketplace. But yes, we are pleased with our performance on share capture in Q1. We have a very strong funnel as we go forward.
Tom Polen: Yeah. Thanks, Jason, for the question and bringing us home here on the call. Our share position is nearing 60% overall. And yes, you're right. So obviously, through the remediation efforts that we've been doing over the last 3 years, we've been upgrading about 20% of the market per year. And so as this is now coming to the tail end of that and peaked last year, you physically can't, even if we took all competitive share that's opening up this year, we still would see declining growth. And the same dynamic would happen next year just because of what it means for us in terms of the scale in which we just upgraded the marketplace. But yes, we are pleased with our performance on share capture in Q1. We have a very strong funnel as we go forward.
Speaker #4: So obviously, through the remediation efforts, that we've been doing over the been upgrading about 20% of the market per year. And so as this is now coming to the
Speaker #4: Year, you physically can't. Even if we took all competitive share that's opening up this year, we still would see declining growth. And the same dynamic would happen next year. Last three years, we've been down year over year, but you mentioned just because of what it means for us in terms of the scale in which we just upgraded the marketplace.
Speaker #4: But yes, we are pleased with our performance on share capture in the first quarter. We have a very tail end of that and peaked last forward.
Speaker #4: And we continue to innovate very rapidly on Oleris. Not only on the current platform, we've had, of course, had new 510Ks approved since the original one that allowed us to relaunch the platform.
Tom Polen: We continue to innovate very rapidly on Alaris, not only on the current platform. We've of course had new 510(k)s approved since the original one that allowed us to relaunch the platform. But we're continuing to bring new features to Alaris. We have another one planned for submission late this year that'll add further new features to that. And of course, we also continue to, and we've shared in the past a whole new Alaris platform, which is moving forward very nicely through our innovation pipeline. And we'll look forward to sharing more details on in the future. But we feel good about Alaris. We feel good about our overall connected medication management platform. It's great to have Alaris and our new Pyxis Pro out there together as well, as we also shared Pyxis had a really strong competitive quarter in Q1 with the launch of Pyxis Pro.
Tom Polen: We continue to innovate very rapidly on Alaris, not only on the current platform. We've of course had new 510(k)s approved since the original one that allowed us to relaunch the platform. But we're continuing to bring new features to Alaris. We have another one planned for submission late this year that'll add further new features to that. And of course, we also continue to, and we've shared in the past a whole new Alaris platform, which is moving forward very nicely through our innovation pipeline. And we'll look forward to sharing more details on in the future. But we feel good about Alaris. We feel good about our overall connected medication management platform. It's great to have Alaris and our new Pyxis Pro out there together as well, as we also shared Pyxis had a really strong competitive quarter in Q1 with the launch of Pyxis Pro.
Speaker #4: We continue to bring new features to Oleris. We have another one planned for submission late this year, and that'll add further new features to that.
Speaker #4: And of course, we also continue to have—and we’ve shared in the past—a whole new Oleris platform, which is moving forward very nicely through our innovation pipeline.
Speaker #4: And then we'll look forward to sharing more. But we feel good about Oleris. We feel good about our overall connected medication management platform. It's great to have Oleris and our new Pyxis Pro out there together as well.
Speaker #4: details on in the future.
Speaker #4: As we also shared Pyxis had a really strong competitive quarter in Q1 with the launch of Pyxis forward as well. So thank you for the question, Pro.
Tom Polen: It has a really strong pipeline as we look forward as well. Thank you for the question, Jason.
Tom Polen: It has a really strong pipeline as we look forward as well. Thank you for the question, Jason.
Speaker #4: Jason.
Operator: Thank you. And that will conclude today's question and answer session. At this time, I would like to turn the floor back over to Tom Polen for any additional or closing comments.
Operator: Thank you. And that will conclude today's question and answer session. At this time, I would like to turn the floor back over to Tom Polen for any additional or closing comments.
Speaker #1: That will conclude today's question and answer session.
Speaker #1: Answer session. At this time, I would like to turn the floor back over to Thomas Polen for any additional or closing remarks. And it has a really strong pipeline as we look ahead.
Speaker #1: comments. Okay.
Speaker #4: Thank you, operator. In summary, we delivered a solid Q1 results that exceeded our expectations. And we believe positions us well to achieve our full-year guidance.
Tom Polen: Okay. Thank you, operator. In summary, we delivered a solid Q1 results that exceeded our expectations, and we believe positions us well to achieve our full-year guidance. As we navigate transitory headwinds in contained areas within our business, our broader portfolio continues to perform well, and we're actively investing in high-growth, high-margin areas. To our Biosciences and Diagnostic Solutions colleagues transitioning to Waters, I want to thank you for your passion, professionalism, and the tremendous contributions you've made to BD. You're stepping into an exciting new opportunity with a strong growth-driven life science leader. We're proud of all you've accomplished and wish you every success in this next chapter. Of course, with the completion of the transaction this morning, we're very excited to fully pivot to our strategy for the new BD. We look forward to updating you on our progress next quarter.
Tom Polen: Okay. Thank you, operator. In summary, we delivered a solid Q1 results that exceeded our expectations, and we believe positions us well to achieve our full-year guidance. As we navigate transitory headwinds in contained areas within our business, our broader portfolio continues to perform well, and we're actively investing in high-growth, high-margin areas. To our Biosciences and Diagnostic Solutions colleagues transitioning to Waters, I want to thank you for your passion, professionalism, and the tremendous contributions you've made to BD. You're stepping into an exciting new opportunity with a strong growth-driven life science leader. We're proud of all you've accomplished and wish you every success in this next chapter. Of course, with the completion of the transaction this morning, we're very excited to fully pivot to our strategy for the new BD. We look forward to updating you on our progress next quarter.
Speaker #4: As we navigate transitory headwinds and contained areas portfolio continues to perform well. And we're actively investing within our business, our broader
Speaker #4: in high-growth, high-margin Thank you.
Speaker #4: Areas and Diagnostic Solutions colleagues, transitioning to Waters, I want to thank you for your passion, professionalism, and the tremendous contributions you've made to BD. You're stepping into an exciting new opportunity with a strong, growth-driven life. You've accomplished so much, and I wish you every success in this next chapter. I'm excited to fully pivot to our strategy for the new BD.
Speaker #4: chapter. Of course, with the completion of the transaction this morning, we're very
Speaker #4: We look forward to updating you on our progress next quarter. And thank you all for your time, and we're proud of all today.
Tom Polen: Thank you all for your time today.
Tom Polen: Thank you all for your time today.
Speaker #1: you. These thoughts conclude this audio webcast.
Operator: 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.
Operator: 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.
Speaker #1: On behalf of BD, thank you for joining today. Please