BECTON DICKINSON & CO — Call Transcript 2026

Travis Steed, the medical device analyst at Bank of America. Next up, we have BD, Tom Polen, CEO, and Vitor Roque, the newly announced CFO. I think he's been to Vegas couple times, but this is his first fireside chat as CFO. Welcome. Thank you. Thanks for having me. Maybe since it is your first fireside chat, maybe we'll start with, you know, you're just announced permanent CFO. Just kind of love to talk about your strategy as CFO. You know, what do you think is different? What do you think is the same, you know, as we, you know, see BDX in this role? Sure. No, thanks for the question, and thanks for having me. Very happy to be taking this new role as Chief Financial Officer in this crucial pivotal time for BD. We just closed the transaction with Life Sciences last quarter, and we couldn't be happier with the new strategy that BD is taking. From a CFO perspective, I think the philosophy here is to be making sure that we are, like, consistent and transparent. Making sure that we understand the business drivers. I actually feel that I'm very well positioned to do that, given my more than two decades with the organization. I can partner with Tom and the leadership team in order to drive that operation and unlock the growth that we are looking for while being very responsible. That's going to translate into kind of a clear guidance and a lot of transparency on what we do. Also, I think one very important topic for me as a CFO is making sure that we take care of our capital allocation strategy. We have been very clear on our priorities are from a capital allocation, focusing on the share buybacks, maximizing the shareholder return. I think based on the share prices today, I think that's one of the priorities that we have on capital allocation. Also we continue to invest on the business, focusing on tuck-in acquisitions to solidify our top-line growth and taking care of our balance sheets, delivering the leverage that we have been committing to this of 2.5x. Those are gonna be the priorities in supporting this strategy and unlocking the growth. I would not say it's a complete transformation from what we have in the past. I think it's more sharpening our focus and making sure we can deliver the numbers that we have been promising. I think we had dinner last night, obviously. I think, Tom, the two things that stood out to me at dinner was, one, the guide that BD is executing against now and has hit the last couple of quarters on, you were responsible for that guidance. two, you've been an operator and worked in a lot of the businesses. I don't know if you want to elaborate on those kind of two points. Sure. Of course, I have been interim. I was interim as a CFO since December, but I was integral part with Tom Polen and the leadership team in terms of building the expectations for this year. Again, the objective, as I said before, is getting that consistency and transparency on where are we seeing the markets. We have the three major headwinds that we have been communicating on Alaris, vaccines in China. We wanted to make sure that we put a guidance out there that reflects the underlying performance of the business, meanwhile being very clear on how are we gonna get there. From an operational perspective, I have been with the company for 20-plus years. I have worked in multiple regions in Europe and Latin America and North America. I have also had the chance to work in multiple businesses, even on our legacy BD Life Sciences business in biosciences, but also medication management, specimen management across the regions, and most recently, supporting segments as well as the medical segment. I feel that I'm very well positioned to drive that operational rigor that the company needs in order to drive the new BD 2025 strategy. Okay. Cool. Tom, kind of new BD, you've been at BD a long time and kind of have a new strategy, new BD, new portfolio. Like, where do you kind of see BD at today and kind of the path forward here? Is this the portfolio, the right portfolio for BD, and, you know, what's the plan to kind of execute? Yeah. We're extremely excited by the portfolio of new BD. We've spent the last five years being very active in reshaping our portfolio. Of course, starting with the separation of our diabetes care business, as that wasn't the category that we wanted to remain in. We then separated our B. Braun business on manual surgery products. Then obviously most recently, you know, really phenomenal transaction for our shareholders, separating our life science business to Waters. You just step back, you know, at the beginning of just 10 years ago, right? Our med tech business was about 60% of BD or about $4.5 billion 10 years ago. Today, that same med tech business, right, is now $19 billion. We've radically, you know, shaped that up. Life Sciences kind of was the same $3 billion business 10 years ago. Grew a little bit, but not tremendously. Now as you look at BD, I think also for the first time ever, and I've been with BD 25 years, the clarity of our portfolio strategy is exemplified in how we've organized our segments. Now, of course, with reporting requirements, you can see the profitability profile and the growth profile of each of those very clearly, and they're clearly distinct. Obviously, our Connected Care Business, right? We've got some phenomenal assets that we've built together there. Advanced Patient Monitoring, you saw that grow double digits in the quarter. Really phenomenal M&A deal for us. Well ahead of our deal model. Continues to have great momentum on the innovation side. We're integrating that, you know, with our medication management solutions by bringing in EPM and connecting it with Alaris and utilizing our AI platform, Incada, to do that. You go over to our Biopharma Solutions Business. First time that's ever been a standalone focus within the company. Extremely profitable, strong growth from biologics business. Biologics, as we showed in the last earnings call, has reached 55% of revenue for our Biopharma Solutions Business. Biologics growing double digits now. In large part by GLP-1s, but also, you know, through other biologics. Our Interventional Segment, obviously, where all of our kind of physician-preferred products. Double-digit growth in PureWick. Right now, that's, you know, well over $500 million platform for us. Double-digit growth last quarter in tissue regeneration, again, becoming a greater mix within the surgery business portfolio. Our PI business doing steady, and we've announced a series of new launches there, including Revello as an early launch in Europe. You've kind of got the fourth segment, which is what BD's been historically known for, which is our medical essentials business, right. Continues to be used by nine out of 10 patients that are entered into a hospital. Some people call it the anti-AI, you know, hedge program because it won't be impacted by AI. It's everyone that gets admitted to a hospital uses those products. 35 billion devices, 100% recurring revenue, you know, per year. That just generates a lot of cash that we end up utilizing to invest in those other three segments that we talked about, as well as, you know, utilizing that to do other things that are value creating, like share buybacks or focused tech and M&A. When you think about the portfolio, you've kinda called out these double-digit growth drivers, drug delivery, APM, PureWick, events, tissue regeneration. Like, what percent of your portfolio is growing double digits? What percent is growing kind of high single digits? How do you get more of the portfolio in those faster growing areas? Yeah. I'll turn it to Vitor in a second. The good news is that, of course, those elements, they're becoming a larger portion of the company, right? Just given their scale, each of those, right, are now scaled. Like biologics is over a $1 billion-dollar business. Advanced patient monitoring is a $1 billion-dollar business. All the other ones are north of $500 million businesses. If they're growing double digits, that's obviously weighting. I think the other thing that's really important to call out is each of those are accretive to the margin profile of the company. As they grow, there's also a very positive mix benefit that comes along with that versus some of the other areas. As you think about how we break up the portfolio in terms of that, those areas, the categories that are also high single digits, you know, versus then the low single digits category, maybe, Vitor, you can share. I think we mentioned before, like 10% of our portfolio right now is actually on that decline situation with China, Alaris, and the vaccines. I think if you break down the other 90%, I would say that about the double-digit growth at about 30% is growing at that double-digit rate, and we are investing behind those assets in order to continue to support that growth rate. We have another important piece of our businesses, around 25%-30%, also growing at solid mid-single digit growth, so 5%-6% in several other categories. We have, as Tom mentioned, our like another like 30% on medical essentials. That is more like the runway to the healthcare systems, which is more on the low single digits. All those are on the positive side, and we are investing on maximizing the double-digit growth markets that we are playing in, but also seeing how can we elevate the mid-single digit growth to an even higher growth rate going forward. Okay. The 10% declining, there's kind of the three discrete headwinds, China, vaccines, Alaris. Maybe kinda go through those. You always talk about your underlying growth, like 4.5%, you know, 5%, whatever. When do we start to see that to kinda show up? I'll start and then turn it over to Tom. From Alaris, we have very clear view on where the Alaris is going to end up. By the end of this year, we are finalizing the remediation that we have been committed to the FDA and the agency to do. It was three years, that's the end of it. In 2027, we are going to hit a new run rate from a revenue perspective, which is going to be about $100 million. Of course, we're going to have a comparison to this year because that was the last upside year from the Alaris perspective. We have very clear view on that. That's going to be the last year, and that's going to solidify there. From a vaccine perspective, we call out about 25% reduction this year. We have seen the pharma companies also suffering from that perspective. We are still not expecting necessarily the decline on the 25% continue because it will be a very dramatic situation for the healthcare system. We are working very closely with the pharma company, so we are not expecting that the level of decline, but we are still not expecting that to be like a growth driver for us in the near future. China is the one that we are still working very closely with. We are seeing what we had said before, that 80% of our portfolio is gonna go through VBP this year. That remains true. China government continues to look for other ways to contain costs, we are just monitoring this very closely. Tom. It's very well said. Okay. You'll likely have some visibility. Alaris you kinda have good visibility on, right? That's based on, right. That's extremely clear visibility. Yeah. It's going to go to about $100 million next year, and then it'll start growing, you know, from that. That creates that 200 basis point headwind next year. You know, what's interesting is we'll be having record market share as that's happening. It's just the reality that with 60% of the market that we have, you know, normally a normal cycle is you're replacing that every eight years or so. We just replaced it in three years. We replaced about 20% of the entire market every year. If you think about the competitors in that space, they're still on an eight-year replacement cycle. They collectively, across four competitors, have about 40%, the remaining 40% of the market. They're on an eight-year cycle, they're replacing about 5% of the market. All other competitors combined replace about 5% of the market every year. Again, we replaced 20% ourselves. 4x what everyone else does combined, we've done every year for the last three years. That's just a, you know, a unique dynamic. Again, put in perspective, 5% of the market comes up for grabs every year from competition. You know, we've been very clear. In the first six months of this year, we've taken 1.5 points of the market share. Think about, it's about 2.5 points have come up for grabs. We've taken a large portion of that. We're gonna continue to focus. You know, our entire sales team for Alaris moved because all Alaris customers essentially have brand new pumps that are less than three years old. They're not focused on defense, they're focused heavily on offense. We've got a great platform, obviously connected in with our new AI solution, and PAD creates significant benefits for our customers. You know, they're focused on helping, you know, customers advance care with Alaris. Okay. Vaccines, you have visibility kind of in the summer when contracts come up. That's more when the pharma company will start looking at placing their orders for next year. Again, I think as Vitor mentioned, we don't expect, and we have no signs, as we're watching that there be anywhere near another decrease like we saw this year, as that reset. What the exact level is, you know, it's too early to say that, but certainly we don't expect a repeat of this year. Okay. China is just kind of more the uncertain factor. I think it's just a recognition that anyone trying to peg China out, you know, a year from now, you should do so, you know, with caution. Just recognizing that the market is very dynamic and that it's continued to have a, you know, focus on cost constraints. We do know that, as we've said, 80% of our portfolio will have gone through VBP. It's very actively happening. We're seeing it play out as expected this year. We just also recognize that there's other, you know, whether or not it's DRG or other mechanisms that are in discussion that haven't been implemented yet. There's a lot of local companies and international companies lobbying against some of those, which is they've been put on pause, we want to continue to watch that play out. Okay. Yeah. Full. When I think about kind of the macro, you know, ACA utilization, there's MedTech investors, probably part of the reason why MedTech stocks haven't worked is some worries on utilization side, and you have pretty good visibility. Yeah. -and in utilization. What are you seeing from the utilization standpoint? Within our portfolio, we're seeing strong, you know, solid utilization. Obviously areas like blood collection sets, you know, are a good indicator of diagnostic testing. You compare that to the Quest Labcorp volumes. Diagnostic testing is pretty solid. That's a good indicator of just broad healthcare consumption. Products like, you know, IV sets, which we have 70%, you know, share of strong growth, right, in the U.S. You know, solid mid-single-digit, you know, 6% plus kind of growth you're seeing. Some of that's share gain, at the same time, right, it's underlying utilization. That's the first thing you normally get when you go into a hospital is an IV set, right, put into your arm, most likely a BD catheter. I think from those indicators and then some of our other solutions in a world where people are looking to save money and navigate a challenging economic environment, right? Solutions like our Rowa pharmacy robotics platform or what we're seeing with Pyxis and our medication management suite, where it's helping with nursing workflow, you know, we're seeing strong demand for those types of solutions. Okay. kind of also on the macro side, inflation, you know, you know, that's probably another factor for worry on MedTech stocks. Just want to understand where you are. You talked about resins exposure. Do you have any computer chip exposure, memory exposure? how you kind of have visibility on hedges and on inflation? Yes. Go ahead. From a-- As we mentioned, I think the biggest topic for us that we are monitoring is the price of oil, which is connected with the resin price. The resin price, and the plastic, it's approximately 5% of our costs. I think we have been able to implement hedges along the way, which are gonna helping us this year to kind of absorb those costs and making sure that we do not get a lot of exposure. Of course, as this continued pressure on oil remains, those hedges are gonna start rolling off, then there will be pressures from a cost perspective coming from this. I think the team have been working on several levers in order to how to offset this heading into 2027. I think 2026 we feel very confident that we have everything protected. In 2027, I think the work is right now happening already with continued to work with our ISC team, which has been proven year-over-year, the capability of delivering high productivity. We're also working very heavily on the commercial aspect with price. That's something that we have done in the COVID times, and we actually have created a very strong discipline about price execution on the marketplace, and we continue to do that, and we are gonna looking into alternatives to do. Last but not least, I think our portfolio. I think we are investing on areas of high growth but also high margins, and that should help us continue to offset those type of pressures, inflation. Inflation is real, is there, but I think we have enough levers, and we know the path. We have done it in the past, and we're looking to continue to do that in the future. Okay. I think you saw us be top tier in navigating an inflationary environment last time that happened post-COVID. One of the things we said is internally, we said we're gonna act early, which we did, and that we were gonna be the best in the industry at navigating. I think we ultimately were, right? If you look at a three or a five-year basis, we were top two in med tech from both a gross margin, operating margin, you know, performance over that timeframe. That I think it was a large part due to some of the actions that we took early on during the last inflationary cycle. We're taking that exact same approach, you know, in this ecosystem. We're not sitting around thinking that oil is going to drop or we're gonna assume it's gonna stay high, and we're gonna take actions accordingly. Okay. There are what kind of levers to offset, let's say things do get worse, kind of your levers to kind of offset that? I think you heard Vitor talk about, you know, a few of them. One is, again, BD Excellence has become a tremendous competitive advantage for us. We've been operating at 8% productivity last year. We're operating it again this year. We announced that was again our productivity this past quarter. That's at our top decile level for sure within this industry and most, you know, other, pretty much every other industry. That's a big competitive advantage in those types of environments. The other one is pricing, right? We flex, you know, pricing as appropriate, and we have open discussions with our customers, right? Where we have products that are primarily made of resins. We talk about those. May go up. We actually have put in during the last inflationary cycle, we changed most of our contracts to have annual price increase clauses in them as well related to CPI. You know, we saw some numbers this morning. Obviously, CPI is up, you know, in the 3's, deeper in the 3's now. You know, we have that ability within most of our agreements. Again, we actually have time later this week after we leave the conference, you know, reviewing that with our team. You know, they've been given tasks, and we're following up with them on those actions. Okay, that's helpful. Just in total, kind of the margin opportunity, you're at kind of 25% margins, which is your goal. You got there. Does it get harder going forward to continue to extend margins at the same rate? What are some of the levers on gross margin, R&D, SG&A to kind of get leverage? Yeah. In the P&L? I can start. Please. As we started BD 2025, the first couple years, most of our operating margin expansion came from leverage in OpEx. Then you've seen in the last two years, this being the third, that leverage really come from gross margin. We called it beforehand. Those who have known the BD story, we said, "Get ready. You're gonna start seeing as BD Excellence starts really hitting full steam. You're gonna see operating margin expansion come from gross margin expansion." It played out exactly as we said. It's gonna continue down that path, right? We expect operating margin leverage to come primarily from gross margin. I think even this past quarter, obviously this was we didn't have tariffs in Q2 of last year, so there's a tariff headwind. If you take tariffs out and just say, "How did BD operationally perform ex tariffs?" It was 70 basis points of gross margin expansion and 50 basis points of op margin expansion with us reinvesting, you know, into selling as part of our growth strategy in between. Again, it was coming from gross margin. Why is it coming from gross margin? It's a combination of productivity that we talked about, and it's coming from our plant consolidation strategy, right? We've talked about we've cut our manufacturing plants in the last five years in half, right? We were near 100. We're now, you know, in the 50, about 50 range, and we still have some further consolidation that would go into the 40s. Those are projects we've been investing in over the last several years, and they're really just continuing to flow through, and those will hit the gross margin line in exclusively as well. Then obviously the mix that you touched on. Yeah. Again, I think this year we have been talking about the 25% despite the tariff impact. We're being able to kind of deliver that. Excluding the tariff, we actually had an underlying expansion of our margins. We are monitoring the inflation, which is gonna be the next topic, heading into Tuesday. I think we have, as Tom said, the BD Excellence and the commercial execution will be the key drivers for us going forward. When you think about this year, you know, you've had kind of low single-digit revenue growth, mid-single digit EPS growth. We've kind of already talked about low single-digit revenue growth next year. I don't think that's changing given the discrete headwinds we talked about earlier. Otherwise, the base is growing like 7%, which is not possible. Is there any factors or I guess the way to phrase it next year that why EPS would again still be in the mid-single digit growth range? It's too early. Obviously, we're not giving guidance on 27, EPS, but what we're focused on is obviously optimizing that. More to come. Okay. Yeah. All right. I had to ask. Yeah. The, if you go look at this year, kind of first half, second half growth, like one question we addressed and talked about last night at dinner, you know, what you see in our models, just looking last year comps looked tougher until wood steps up in the back half of the year, on an underlying basis. I just wanted to kind of address the underlying acceleration in the growth rates. Sure. From a revenue perspective, I think we feel very good. I think we demonstrated the capacity of execution of our revenue. We overachieve our expectations in Q1 and also Q2. We see the comparisons on the back half of the year fairly similar. We know, of course, that the Alaris situation is more acute and more pronounced on the Q4, given that last year was the largest number of Q4 of Alaris for us. This year we are coming down to the end of the remediation by the end of Q4. I think if you think about our recurring business, we continue to see good progress. We share gains across businesses like in MDS and specimen management in the U.S. market. Also our capital business continues to see very strong backlog. That gives us confidence on the back half of the year. As we said, our growth on the back half of the year is going to be similar to the first half of the year, and that gives us confidence that we can continue to deliver on that number. The comparisons are fairly easy, not easy, but similar to the first half. Q2, you can argue, because last year we actually had a tough Q2, but it was actually because of an event that happened the prior year. The baseline is fairly similar, so we feel very confident about the revenue on the back half of the year. Okay. The same thing, we stare at our models and there's the margins going higher from Q1, Q2, Q3, Q4. I just wanna understand, like the Q4 step up looks really big. On margins. I just want to get the confidence. I think the margin story is very similar. We have been implementing our BD Excellence operations, so driving volumes and savings on materials and other productivity factors. We have high visibility to those because of the what we call the cap and roll, so everything gets capitalized and amortized. We have very clear visibility on when that's gonna happen. We also have the situation on tariffs that naturally because of the actions we have been taking, the dollar amount comes a little bit down and it becomes an easy comparison in Q4 because we didn't have tariffs on the first three quarters of the year. In Q4 actually was the highest quarter of tariffs that we have seen so far, was about $90 million last year. We see those factors. The revenue continues to improve on the areas we are investing on because we are putting sales force behind like APM, which is high growth, high margins. Also in surgery, advanced tissue regeneration, which is also high growth, high margin. Yeah. Peripheral interventional also drives significant above company average margins. Those are actually the sales forces gaining productivity as we go through, which is gonna give us confidence from increasing margin from a mix perspective and the productivity that we have seen our plants already operating are gonna generate the P&L impact heading into the Q4 numbers. It's fair to say that, as Vitor said, essentially the $90 million in Q4 of last year, it's going to be a lower because of all the offsetting. Yes. Actions that we've done. We'll have a favorable number in Q4 for tariffs year-over-year because of all those offsetting actions that we've taken. Yeah. Last but not least, I think if you see our revenue sequential, our revenue is actually higher on the back half of the year compared to the first half of the year. Our expenses are actually pretty steady with Q4 coming a little bit down, which is part of the execution of the $200 million cost out program that we have already implemented. It's already well underway. We have already $150 million in motion, and that's expenses as they exit the organization in the back half of the year. We see the benefit on the operating margin as well. It's a combination of the productivity of the clients, our higher operating expenses, efficiency and the leverage from the revenue perspective. Okay, that's helpful. Another factor I wanted to make sure we addressed is the ChloraPrep triple. I think that's like a $480 million product. Is that right? Well, we said it's about 3% of revenue. Okay. Two and a half of U.S. ChloraPrep of total BD revenue. Yes. Okay. just there's a 3-week ship hold, kind of the confidence that with the warning letter out there that that, you know, comes back on the market. Yeah. As we said, pending the testing, you know, we're quite confident. We haven't stopped making ChloraPrep, right? There's never been a pause in our manufacturing. It's safe. There's no patient issues, no safety signals at all. We stand by the safety of the product. It's obviously our one large pharmaceutical manufacturing plant that's considered a pharmaceutical as a skin cleansing agent. Essentially what we're doing is we're doing the exact same testing that we do for product that we ship to Europe. The exact same product is made on the exact same lines, gets a label for Europe. We typically do an additional testing loop on that product post terminal sterilization, and we're adding in that same testing loop on U.S. product. That product is the exact same product that we have been testing that goes to Europe, that we haven't had any issues with. That's kind of why we, you know, adding in that same testing that's always gone well, it's already been started. We continue to manufacture the product and as soon as that testing would be completed, we'd resume shipping each of those batches. Those shipments don't go to the end user for the most part, right? It's filling shelves at the distributor as well. We're not expecting end user back orders at this time. It would be refilling shelves at our distributors. Yeah. That's what's going to be from our revenue. What gives us confidence on the revenue is exactly what Tom just mentioned. We have inventories on the channel with distributors. Those are gonna continue to feed the hospital for utilization. Once we start releasing the product after the testing, that is a very well-known test that we have high confidence on. We are gonna start shipping back to distributors to replenish that inventory. We do not see right now the revenue impact from it. It's an extremely important product, obviously. We take it very seriously. It's used in about 95% of all U.S. surgeries. Do you see the risk of FDA saying, "Hey, you can't ship this or restart that in three weeks? This was a completely voluntary, you know, action upon our part. We did that completely on our own, our quality department took that action with no request from the FDA. Okay. Then, one last question. PowerPort. PowerPort litigation. You won the first trial. I don't know if there's anything you wanted to say on that before we close. Again, we'll fight that litigation vigorously. That's, you know, that product's been on the market for 40 or 50 years, has helped, you know, tens or hundreds of thousands of cancer patients, you know, navigate very safely. It's a safe and effective product. That's what the jury obviously found. It's well designed and again, and has a decades, many decades of success. Great. Well, thanks a lot. We're out of time. Thank you. Thank you. Thank you.

Speaker 2: Travis Steed, the medical device analyst at Bank of America. Next up, we have BD, Tom Polen, CEO, and Vitor Roque, the newly announced CFO. I think he's been to Vegas couple times, but this is his first fireside chat as CFO. Welcome. Travis Steed, the medical device analyst at Bank of America. travis steed the medical device analyst at bank of america Next up, we have BD, Tom Polen, CEO, and Vitor Roque, the newly announced CFO. next up we have bd tom polen ceo and vitor roque the newly announced cfo I think he's been to Vegas couple times, but this is his first fireside chat as CFO. i think he's been to vegas couple times but this is his first fireside chat as cfo Welcome. welcome

Speaker 3: Thank you. Thanks for having me. Thank you. thank you Thanks for having me. thanks for having me

Speaker 2: Maybe since it is your first fireside chat, maybe we'll start with, you know, you're just announced permanent CFO. Just kind of love to talk about your strategy as CFO. You know, what do you think is different? What do you think is the same, you know, as we, you know, see BDX in this role? Maybe since it is your first fireside chat, maybe we'll start with, you know, you're just announced permanent CFO. maybe since it is your first fireside chat maybe we'll start with you know you're just announced permanent cfo Just kind of love to talk about your strategy as CFO. just kind of love to talk about your strategy as cfo You know, what do you think is different? you know what do you think is different What do you think is the same, you know, as we, you know, see BDX in this role? what do you think is the same you know as we you know see bdx in this role

Speaker 3: Sure. No, thanks for the question, and thanks for having me. Very happy to be taking this new role as Chief Financial Officer in this crucial pivotal time for BD. We just closed the transaction with Life Sciences last quarter, and we couldn't be happier with the new strategy that BD is taking. From a CFO perspective, I think the philosophy here is to be making sure that we are, like, consistent and transparent. Making sure that we understand the business drivers. I actually feel that I'm very well positioned to do that, given my more than two decades with the organization. I can partner with Tom and the leadership team in order to drive that operation and unlock the growth that we are looking for while being very responsible. Sure. sure No, thanks for the question, and thanks for having me. no thanks for the question and thanks for having me Very happy to be taking this new role as Chief Financial Officer in this crucial pivotal time for BD. very happy to be taking this new role as chief financial officer in this crucial pivotal time for bd We just closed the transaction with Life Sciences last quarter, and we couldn't be happier with the new strategy that BD is taking. we just closed the transaction with life sciences last quarter and we couldn't be happier with the new strategy that bd is taking From a CFO perspective, I think the philosophy here is to be making sure that we are, like, consistent and transparent. from a cfo perspective i think the philosophy here is to be making sure that we are like consistent and transparent Making sure that we understand the business drivers. making sure that we understand the business drivers I actually feel that I'm very well positioned to do that, given my more than two decades with the organization. i actually feel that i'm very well positioned to do that given my more than two decades with the organization I can partner with Tom and the leadership team in order to drive that operation and unlock the growth that we are looking for while being very responsible. i can partner with tom and the leadership team in order to drive that operation and unlock the growth that we are looking for while being very responsible That's going to translate into kind of a clear guidance and a lot of transparency on what we do. Also, I think one very important topic for me as a CFO is making sure that we take care of our capital allocation strategy. We have been very clear on our priorities are from a capital allocation, focusing on the share buybacks, maximizing the shareholder return. I think based on the share prices today, I think that's one of the priorities that we have on capital allocation. Also we continue to invest on the business, focusing on tuck-in acquisitions to solidify our top-line growth and taking care of our balance sheets, delivering the leverage that we have been committing to this of 2.5x. That's going to translate into kind of a clear guidance and a lot of transparency on what we do. that's going to translate into kind of a clear guidance and a lot of transparency on what we do Also, I think one very important topic for me as a CFO is making sure that we take care of our capital allocation strategy. also i think one very important topic for me as a cfo is making sure that we take care of our capital allocation strategy We have been very clear on our priorities are from a capital allocation, focusing on the share buybacks, maximizing the shareholder return. we have been very clear on our priorities are from a capital allocation focusing on the share buybacks maximizing the shareholder return I think based on the share prices today, I think that's one of the priorities that we have on capital allocation. i think based on the share prices today i think that's one of the priorities that we have on capital allocation Also we continue to invest on the business, focusing on tuck-in acquisitions to solidify our top-line growth and taking care of our balance sheets, delivering the leverage that we have been committing to this of 2.5x . also we continue to invest on the business focusing on tuck-in acquisitions to solidify our top-line growth and taking care of our balance sheets delivering the leverage that we have been committing to this of 2.5x Those are gonna be the priorities in supporting this strategy and unlocking the growth. I would not say it's a complete transformation from what we have in the past. I think it's more sharpening our focus and making sure we can deliver the numbers that we have been promising. Those are gonna be the priorities in supporting this strategy and unlocking the growth. those are gonna be the priorities in supporting this strategy and unlocking the growth I would not say it's a complete transformation from what we have in the past. i would not say it's a complete transformation from what we have in the past I think it's more sharpening our focus and making sure we can deliver the numbers that we have been promising. i think it's more sharpening our focus and making sure we can deliver the numbers that we have been promising

Speaker 2: I think we had dinner last night, obviously. I think, Tom, the two things that stood out to me at dinner was, one, the guide that BD is executing against now and has hit the last couple of quarters on, you were responsible for that guidance. two, you've been an operator and worked in a lot of the businesses. I don't know if you want to elaborate on those kind of two points. I think we had dinner last night, obviously. i think we had dinner last night obviously I think, Tom, the two things that stood out to me at dinner was, one, the guide that BD is executing against now and has hit the last couple of quarters on, you were responsible for that guidance. two, you've been an operator and worked in a lot of the businesses. i think tom the two things that stood out to me at dinner was one the guide that bd is executing against now and has hit the last couple of quarters on you were responsible for that guidance two you've been an operator and worked in a lot of the businesses I don't know if you want to elaborate on those kind of two points. i don't know if you want to elaborate on those kind of two points

Speaker 3: Sure. Of course, I have been interim. I was interim as a CFO since December, but I was integral part with Tom Polen and the leadership team in terms of building the expectations for this year. Again, the objective, as I said before, is getting that consistency and transparency on where are we seeing the markets. We have the three major headwinds that we have been communicating on Alaris, vaccines in China. We wanted to make sure that we put a guidance out there that reflects the underlying performance of the business, meanwhile being very clear on how are we gonna get there. From an operational perspective, I have been with the company for 20-plus years. I have worked in multiple regions in Europe and Latin America and North America. Sure. sure Of course, I have been interim. of course i have been interim I was interim as a CFO since December, but I was integral part with Tom Polen and the leadership team in terms of building the expectations for this year. i was interim as a cfo since december but i was integral part with tom polen and the leadership team in terms of building the expectations for this year Again, the objective, as I said before, is getting that consistency and transparency on where are we seeing the markets. again the objective as i said before is getting that consistency and transparency on where are we seeing the markets We have the three major headwinds that we have been communicating on Alaris, vaccines in China. we have the three major headwinds that we have been communicating on alaris vaccines in china We wanted to make sure that we put a guidance out there that reflects the underlying performance of the business, meanwhile being very clear on how are we gonna get there. we wanted to make sure that we put a guidance out there that reflects the underlying performance of the business meanwhile being very clear on how are we gonna get there From an operational perspective, I have been with the company for 20-plus years. from an operational perspective i have been with the company for 20-plus years I have worked in multiple regions in Europe and Latin America and North America. i have worked in multiple regions in europe and latin america and north america I have also had the chance to work in multiple businesses, even on our legacy BD Life Sciences business in biosciences, but also medication management, specimen management across the regions, and most recently, supporting segments as well as the medical segment. I feel that I'm very well positioned to drive that operational rigor that the company needs in order to drive the new BD 2025 strategy. I have also had the chance to work in multiple businesses, even on our legacy BD Life Sciences business in biosciences, but also medication management, specimen management across the regions, and most recently, supporting segments as well as the medical segment. i have also had the chance to work in multiple businesses even on our legacy bd life sciences business in biosciences but also medication management specimen management across the regions and most recently supporting segments as well as the medical segment I feel that I'm very well positioned to drive that operational rigor that the company needs in order to drive the new BD 2025 strategy. i feel that i'm very well positioned to drive that operational rigor that the company needs in order to drive the new bd 2025 strategy

Speaker 2: Okay. Cool. Tom, kind of new BD, you've been at BD a long time and kind of have a new strategy, new BD, new portfolio. Like, where do you kind of see BD at today and kind of the path forward here? Is this the portfolio, the right portfolio for BD, and, you know, what's the plan to kind of execute? Okay. okay Cool. cool Tom, kind of new BD, you've been at BD a long time and kind of have a new strategy, new BD, new portfolio. tom kind of new bd you've been at bd a long time and kind of have a new strategy new bd new portfolio Like, where do you kind of see BD at today and kind of the path forward here? like where do you kind of see bd at today and kind of the path forward here Is this the portfolio, the right portfolio for BD, and, you know, what's the plan to kind of execute? is this the portfolio the right portfolio for bd and you know what's the plan to kind of execute

Speaker 1: Yeah. We're extremely excited by the portfolio of new BD. We've spent the last five years being very active in reshaping our portfolio. Of course, starting with the separation of our diabetes care business, as that wasn't the category that we wanted to remain in. We then separated our B. Braun business on manual surgery products. Then obviously most recently, you know, really phenomenal transaction for our shareholders, separating our life science business to Waters. You just step back, you know, at the beginning of just 10 years ago, right? Our med tech business was about 60% of BD or about $4.5 billion 10 years ago. Today, that same med tech business, right, is now $19 billion. We've radically, you know, shaped that up. Yeah. yeah We're extremely excited by the portfolio of new BD. we're extremely excited by the portfolio of new bd We've spent the last five years being very active in reshaping our portfolio. we've spent the last five years being very active in reshaping our portfolio Of course, starting with the separation of our diabetes care business, as that wasn't the category that we wanted to remain in. of course starting with the separation of our diabetes care business as that wasn't the category that we wanted to remain in We then separated our B. we then separated our b Braun business on manual surgery products. braun business on manual surgery products Then obviously most recently, you know, really phenomenal transaction for our shareholders, separating our life science business to Waters. then obviously most recently you know really phenomenal transaction for our shareholders separating our life science business to waters You just step back, you know, at the beginning of just 10 years ago, right? you just step back you know at the beginning of just 10 years ago right Our med tech business was about 60% of BD or about $4.5 billion 10 years ago. our med tech business was about 60% of bd or about $4.5 billion 10 years ago Today, that same med tech business, right, is now $19 billion. today that same med tech business right is now $19 billion We've radically, you know, shaped that up. we've radically you know shaped that up Life Sciences kind of was the same $3 billion business 10 years ago. Grew a little bit, but not tremendously. Now as you look at BD, I think also for the first time ever, and I've been with BD 25 years, the clarity of our portfolio strategy is exemplified in how we've organized our segments. Now, of course, with reporting requirements, you can see the profitability profile and the growth profile of each of those very clearly, and they're clearly distinct. Obviously, our Connected Care Business, right? We've got some phenomenal assets that we've built together there. Advanced Patient Monitoring, you saw that grow double digits in the quarter. Really phenomenal M&A deal for us. Well ahead of our deal model. Continues to have great momentum on the innovation side. Life Sciences kind of was the same $3 billion business 10 years ago. life sciences kind of was the same $3 billion business 10 years ago Grew a little bit, but not tremendously. grew a little bit but not tremendously Now as you look at BD, I think also for the first time ever, and I've been with BD 25 years, the clarity of our portfolio strategy is exemplified in how we've organized our segments. now as you look at bd i think also for the first time ever and i've been with bd 25 years the clarity of our portfolio strategy is exemplified in how we've organized our segments Now, of course, with reporting requirements, you can see the profitability profile and the growth profile of each of those very clearly, and they're clearly distinct. now of course with reporting requirements you can see the profitability profile and the growth profile of each of those very clearly and they're clearly distinct Obviously, our Connected Care Business, right? obviously our connected care business right We've got some phenomenal assets that we've built together there. we've got some phenomenal assets that we've built together there Advanced Patient Monitoring, you saw that grow double digits in the quarter. advanced patient monitoring you saw that grow double digits in the quarter Really phenomenal M&A deal for us. really phenomenal m&a deal for us Well ahead of our deal model. well ahead of our deal model Continues to have great momentum on the innovation side. continues to have great momentum on the innovation side We're integrating that, you know, with our medication management solutions by bringing in EPM and connecting it with Alaris and utilizing our AI platform, Incada, to do that. You go over to our Biopharma Solutions Business. First time that's ever been a standalone focus within the company. Extremely profitable, strong growth from biologics business. Biologics, as we showed in the last earnings call, has reached 55% of revenue for our Biopharma Solutions Business. Biologics growing double digits now. In large part by GLP-1s, but also, you know, through other biologics. Our Interventional Segment, obviously, where all of our kind of physician-preferred products. Double-digit growth in PureWick. Right now, that's, you know, well over $500 million platform for us. We're integrating that, you know, with our medication management solutions by bringing in EPM and connecting it with Alaris and utilizing our AI platform, Incada, to do that. we're integrating that you know with our medication management solutions by bringing in epm and connecting it with alaris and utilizing our ai platform incada to do that You go over to our Biopharma Solutions Business. you go over to our biopharma solutions business First time that's ever been a standalone focus within the company. first time that's ever been a standalone focus within the company Extremely profitable, strong growth from biologics business. extremely profitable strong growth from biologics business Biologics, as we showed in the last earnings call, has reached 55% of revenue for our Biopharma Solutions Business. biologics as we showed in the last earnings call has reached 55% of revenue for our biopharma solutions business Biologics growing double digits now. biologics growing double digits now In large part by GLP-1s, but also, you know, through other biologics. in large part by glp-1s but also you know through other biologics Our Interventional Segment, obviously, where all of our kind of physician-preferred products. our interventional segment obviously where all of our kind of physician-preferred products Double-digit growth in PureWick. double-digit growth in purewick Right now, that's, you know, well over $500 million platform for us. right now that's you know well over $500 million platform for us Double-digit growth last quarter in tissue regeneration, again, becoming a greater mix within the surgery business portfolio. Our PI business doing steady, and we've announced a series of new launches there, including Revello as an early launch in Europe. You've kind of got the fourth segment, which is what BD's been historically known for, which is our medical essentials business, right. Continues to be used by nine out of 10 patients that are entered into a hospital. Some people call it the anti-AI, you know, hedge program because it won't be impacted by AI. It's everyone that gets admitted to a hospital uses those products. 35 billion devices, 100% recurring revenue, you know, per year. Double-digit growth last quarter in tissue regeneration, again, becoming a greater mix within the surgery business portfolio. double-digit growth last quarter in tissue regeneration again becoming a greater mix within the surgery business portfolio Our PI business doing steady, and we've announced a series of new launches there, including Revello as an early launch in Europe. our pi business doing steady and we've announced a series of new launches there including revello as an early launch in europe You've kind of got the fourth segment, which is what BD's been historically known for, which is our medical essentials business, right. you've kind of got the fourth segment which is what bd's been historically known for which is our medical essentials business right Continues to be used by nine out of 10 patients that are entered into a hospital. continues to be used by nine out of 10 patients that are entered into a hospital Some people call it the anti-AI, you know, hedge program because it won't be impacted by AI. some people call it the anti-ai you know hedge program because it won't be impacted by ai It's everyone that gets admitted to a hospital uses those products. 35 billion devices, 100% recurring revenue, you know, per year. it's everyone that gets admitted to a hospital uses those products 35 billion devices 100% recurring revenue you know per year That just generates a lot of cash that we end up utilizing to invest in those other three segments that we talked about, as well as, you know, utilizing that to do other things that are value creating, like share buybacks or focused tech and M&A. That just generates a lot of cash that we end up utilizing to invest in those other three segments that we talked about, as well as, you know, utilizing that to do other things that are value creating, like share buybacks or focused tech and M&A. that just generates a lot of cash that we end up utilizing to invest in those other three segments that we talked about as well as you know utilizing that to do other things that are value creating like share buybacks or focused tech and m&a

Speaker 2: When you think about the portfolio, you've kinda called out these double-digit growth drivers, drug delivery, APM, PureWick, events, tissue regeneration. Like, what percent of your portfolio is growing double digits? What percent is growing kind of high single digits? How do you get more of the portfolio in those faster growing areas? When you think about the portfolio, you've kinda called out these double-digit growth drivers, drug delivery, APM, PureWick, events, tissue regeneration. when you think about the portfolio you've kinda called out these double-digit growth drivers drug delivery apm purewick events tissue regeneration Like, what percent of your portfolio is growing double digits? like what percent of your portfolio is growing double digits What percent is growing kind of high single digits? what percent is growing kind of high single digits How do you get more of the portfolio in those faster growing areas? how do you get more of the portfolio in those faster growing areas

Speaker 1: Yeah. I'll turn it to Vitor in a second. The good news is that, of course, those elements, they're becoming a larger portion of the company, right? Just given their scale, each of those, right, are now scaled. Like biologics is over a $1 billion-dollar business. Advanced patient monitoring is a $1 billion-dollar business. All the other ones are north of $500 million businesses. If they're growing double digits, that's obviously weighting. I think the other thing that's really important to call out is each of those are accretive to the margin profile of the company. As they grow, there's also a very positive mix benefit that comes along with that versus some of the other areas. Yeah. yeah I'll turn it to Vitor in a second. i'll turn it to vitor in a second The good news is that, of course, those elements, they're becoming a larger portion of the company, right? the good news is that of course those elements they're becoming a larger portion of the company right Just given their scale, each of those, right, are now scaled. just given their scale each of those right are now scaled Like biologics is over a $1 billion-dollar business. like biologics is over a $1 billion-dollar business Advanced patient monitoring is a $1 billion-dollar business. advanced patient monitoring is a $1 billion-dollar business All the other ones are north of $500 million businesses. all the other ones are north of $500 million businesses If they're growing double digits, that's obviously weighting. if they're growing double digits that's obviously weighting I think the other thing that's really important to call out is each of those are accretive to the margin profile of the company. i think the other thing that's really important to call out is each of those are accretive to the margin profile of the company As they grow, there's also a very positive mix benefit that comes along with that versus some of the other areas. as they grow there's also a very positive mix benefit that comes along with that versus some of the other areas As you think about how we break up the portfolio in terms of that, those areas, the categories that are also high single digits, you know, versus then the low single digits category, maybe, Vitor, you can share. As you think about how we break up the portfolio in terms of that, those areas, the categories that are also high single digits, you know, versus then the low single digits category, maybe, Vitor, you can share. as you think about how we break up the portfolio in terms of that those areas the categories that are also high single digits you know versus then the low single digits category maybe vitor you can share

Speaker 3: I think we mentioned before, like 10% of our portfolio right now is actually on that decline situation with China, Alaris, and the vaccines. I think if you break down the other 90%, I would say that about the double-digit growth at about 30% is growing at that double-digit rate, and we are investing behind those assets in order to continue to support that growth rate. We have another important piece of our businesses, around 25%-30%, also growing at solid mid-single digit growth, so 5%-6% in several other categories. We have, as Tom mentioned, our like another like 30% on medical essentials. That is more like the runway to the healthcare systems, which is more on the low single digits. I think we mentioned before, like 10% of our portfolio right now is actually on that decline situation with China, Alaris, and the vaccines. i think we mentioned before like 10% of our portfolio right now is actually on that decline situation with china alaris and the vaccines I think if you break down the other 90%, I would say that about the double-digit growth at about 30% is growing at that double-digit rate, and we are investing behind those assets in order to continue to support that growth rate. i think if you break down the other 90% i would say that about the double-digit growth at about 30% is growing at that double-digit rate and we are investing behind those assets in order to continue to support that growth rate We have another important piece of our businesses, around 25%-30%, also growing at solid mid-single digit growth, so 5%-6% in several other categories. we have another important piece of our businesses around 25%-30% also growing at solid mid-single digit growth so 5%-6% in several other categories We have, as Tom mentioned, our like another like 30% on medical essentials. we have as tom mentioned our like another like 30% on medical essentials That is more like the runway to the healthcare systems, which is more on the low single digits. that is more like the runway to the healthcare systems which is more on the low single digits All those are on the positive side, and we are investing on maximizing the double-digit growth markets that we are playing in, but also seeing how can we elevate the mid-single digit growth to an even higher growth rate going forward. All those are on the positive side, and we are investing on maximizing the double-digit growth markets that we are playing in, but also seeing how can we elevate the mid-single digit growth to an even higher growth rate going forward. all those are on the positive side and we are investing on maximizing the double-digit growth markets that we are playing in but also seeing how can we elevate the mid-single digit growth to an even higher growth rate going forward

Speaker 2: Okay. The 10% declining, there's kind of the three discrete headwinds, China, vaccines, Alaris. Maybe kinda go through those. You always talk about your underlying growth, like 4.5%, you know, 5%, whatever. When do we start to see that to kinda show up? Okay. okay The 10% declining, there's kind of the three discrete headwinds, China, vaccines, Alaris. the 10% declining there's kind of the three discrete headwinds china vaccines alaris Maybe kinda go through those. maybe kinda go through those You always talk about your underlying growth, like 4.5%, you know, 5%, whatever. you always talk about your underlying growth like 4.5% you know 5% whatever When do we start to see that to kinda show up? when do we start to see that to kinda show up

Speaker 3: I'll start and then turn it over to Tom. From Alaris, we have very clear view on where the Alaris is going to end up. By the end of this year, we are finalizing the remediation that we have been committed to the FDA and the agency to do. It was three years, that's the end of it. In 2027, we are going to hit a new run rate from a revenue perspective, which is going to be about $100 million. Of course, we're going to have a comparison to this year because that was the last upside year from the Alaris perspective. We have very clear view on that. That's going to be the last year, and that's going to solidify there. From a vaccine perspective, we call out about 25% reduction this year. I'll start and then turn it over to Tom. i'll start and then turn it over to tom From Alaris, we have very clear view on where the Alaris is going to end up. from alaris we have very clear view on where the alaris is going to end up By the end of this year, we are finalizing the remediation that we have been committed to the FDA and the agency to do. by the end of this year we are finalizing the remediation that we have been committed to the fda and the agency to do It was three years, that's the end of it. it was three years that's the end of it In 2027, we are going to hit a new run rate from a revenue perspective, which is going to be about $100 million. in 2027 we are going to hit a new run rate from a revenue perspective which is going to be about $100 million Of course, we're going to have a comparison to this year because that was the last upside year from the Alaris perspective. of course we're going to have a comparison to this year because that was the last upside year from the alaris perspective We have very clear view on that. we have very clear view on that That's going to be the last year, and that's going to solidify there. that's going to be the last year and that's going to solidify there From a vaccine perspective, we call out about 25% reduction this year. from a vaccine perspective we call out about 25% reduction this year We have seen the pharma companies also suffering from that perspective. We are still not expecting necessarily the decline on the 25% continue because it will be a very dramatic situation for the healthcare system. We are working very closely with the pharma company, so we are not expecting that the level of decline, but we are still not expecting that to be like a growth driver for us in the near future. China is the one that we are still working very closely with. We are seeing what we had said before, that 80% of our portfolio is gonna go through VBP this year. That remains true. China government continues to look for other ways to contain costs, we are just monitoring this very closely. Tom. We have seen the pharma companies also suffering from that perspective. we have seen the pharma companies also suffering from that perspective We are still not expecting necessarily the decline on the 25% continue because it will be a very dramatic situation for the healthcare system. we are still not expecting necessarily the decline on the 25% continue because it will be a very dramatic situation for the healthcare system We are working very closely with the pharma company, so we are not expecting that the level of decline, but we are still not expecting that to be like a growth driver for us in the near future. we are working very closely with the pharma company so we are not expecting that the level of decline but we are still not expecting that to be like a growth driver for us in the near future China is the one that we are still working very closely with. china is the one that we are still working very closely with We are seeing what we had said before, that 80% of our portfolio is gonna go through VBP this year. we are seeing what we had said before that 80% of our portfolio is gonna go through vbp this year That remains true. that remains true China government continues to look for other ways to contain costs, we are just monitoring this very closely. china government continues to look for other ways to contain costs we are just monitoring this very closely Tom. tom

Speaker 1: It's very well said. It's very well said. it's very well said

Speaker 2: Okay. You'll likely have some visibility. Alaris you kinda have good visibility on, right? Okay. okay You'll likely have some visibility. you'll likely have some visibility Alaris you kinda have good visibility on, right? alaris you kinda have good visibility on right

Speaker 1: That's based on, right. That's extremely clear visibility. That's based on, right. that's based on right That's extremely clear visibility. that's extremely clear visibility

Speaker 2: Yeah. Yeah. yeah

Speaker 1: It's going to go to about $100 million next year, and then it'll start growing, you know, from that. That creates that 200 basis point headwind next year. You know, what's interesting is we'll be having record market share as that's happening. It's just the reality that with 60% of the market that we have, you know, normally a normal cycle is you're replacing that every eight years or so. We just replaced it in three years. We replaced about 20% of the entire market every year. If you think about the competitors in that space, they're still on an eight-year replacement cycle. They collectively, across four competitors, have about 40%, the remaining 40% of the market. They're on an eight-year cycle, they're replacing about 5% of the market. It's going to go to about $100 million next year, and then it'll start growing, you know, from that. it's going to go to about $100 million next year and then it'll start growing you know from that That creates that 200 basis point headwind next year. that creates that 200 basis point headwind next year You know, what's interesting is we'll be having record market share as that's happening. you know what's interesting is we'll be having record market share as that's happening It's just the reality that with 60% of the market that we have, you know, normally a normal cycle is you're replacing that every eight years or so. it's just the reality that with 60% of the market that we have you know normally a normal cycle is you're replacing that every eight years or so We just replaced it in three years. we just replaced it in three years We replaced about 20% of the entire market every year. we replaced about 20% of the entire market every year If you think about the competitors in that space, they're still on an eight-year replacement cycle. if you think about the competitors in that space they're still on an eight-year replacement cycle They collectively, across four competitors, have about 40%, the remaining 40% of the market. they collectively across four competitors have about 40% the remaining 40% of the market They're on an eight-year cycle, they're replacing about 5% of the market. they're on an eight-year cycle they're replacing about 5% of the market All other competitors combined replace about 5% of the market every year. Again, we replaced 20% ourselves. 4x what everyone else does combined, we've done every year for the last three years. That's just a, you know, a unique dynamic. Again, put in perspective, 5% of the market comes up for grabs every year from competition. You know, we've been very clear. In the first six months of this year, we've taken 1.5 points of the market share. Think about, it's about 2.5 points have come up for grabs. We've taken a large portion of that. We're gonna continue to focus. You know, our entire sales team for Alaris moved because all Alaris customers essentially have brand new pumps that are less than three years old. All other competitors combined replace about 5% of the market every year. all other competitors combined replace about 5% of the market every year Again, we replaced 20% ourselves. 4x what everyone else does combined, we've done every year for the last three years. again we replaced 20% ourselves 4x what everyone else does combined we've done every year for the last three years That's just a, you know, a unique dynamic. that's just a you know a unique dynamic Again, put in perspective, 5% of the market comes up for grabs every year from competition. again put in perspective 5% of the market comes up for grabs every year from competition You know, we've been very clear. you know we've been very clear In the first six months of this year, we've taken 1.5 points of the market share. in the first six months of this year we've taken 1.5 points of the market share Think about, it's about 2.5 points have come up for grabs. think about it's about 2.5 points have come up for grabs We've taken a large portion of that. we've taken a large portion of that We're gonna continue to focus. we're gonna continue to focus You know, our entire sales team for Alaris moved because all Alaris customers essentially have brand new pumps that are less than three years old. you know our entire sales team for alaris moved because all alaris customers essentially have brand new pumps that are less than three years old They're not focused on defense, they're focused heavily on offense. We've got a great platform, obviously connected in with our new AI solution, and PAD creates significant benefits for our customers. You know, they're focused on helping, you know, customers advance care with Alaris. They're not focused on defense, they're focused heavily on offense. they're not focused on defense they're focused heavily on offense We've got a great platform, obviously connected in with our new AI solution, and PAD creates significant benefits for our customers. we've got a great platform obviously connected in with our new ai solution and pad creates significant benefits for our customers You know, they're focused on helping, you know, customers advance care with Alaris. you know they're focused on helping you know customers advance care with alaris

Speaker 2: Okay. Vaccines, you have visibility kind of in the summer when contracts come up. Okay. okay Vaccines, you have visibility kind of in the summer when contracts come up. vaccines you have visibility kind of in the summer when contracts come up

Speaker 1: That's more when the pharma company will start looking at placing their orders for next year. Again, I think as Vitor mentioned, we don't expect, and we have no signs, as we're watching that there be anywhere near another decrease like we saw this year, as that reset. What the exact level is, you know, it's too early to say that, but certainly we don't expect a repeat of this year. That's more when the pharma company will start looking at placing their orders for next year. that's more when the pharma company will start looking at placing their orders for next year Again, I think as Vitor mentioned, we don't expect, and we have no signs, as we're watching that there be anywhere near another decrease like we saw this year, as that reset. again i think as vitor mentioned we don't expect and we have no signs as we're watching that there be anywhere near another decrease like we saw this year as that reset What the exact level is, you know, it's too early to say that, but certainly we don't expect a repeat of this year. what the exact level is you know it's too early to say that but certainly we don't expect a repeat of this year

Speaker 2: Okay. China is just kind of more the uncertain factor. Okay. okay China is just kind of more the uncertain factor. china is just kind of more the uncertain factor

Speaker 1: I think it's just a recognition that anyone trying to peg China out, you know, a year from now, you should do so, you know, with caution. Just recognizing that the market is very dynamic and that it's continued to have a, you know, focus on cost constraints. We do know that, as we've said, 80% of our portfolio will have gone through VBP. It's very actively happening. We're seeing it play out as expected this year. We just also recognize that there's other, you know, whether or not it's DRG or other mechanisms that are in discussion that haven't been implemented yet. There's a lot of local companies and international companies lobbying against some of those, which is they've been put on pause, we want to continue to watch that play out. I think it's just a recognition that anyone trying to peg China out, you know, a year from now, you should do so, you know, with caution. i think it's just a recognition that anyone trying to peg china out you know a year from now you should do so you know with caution Just recognizing that the market is very dynamic and that it's continued to have a, you know, focus on cost constraints. just recognizing that the market is very dynamic and that it's continued to have a you know focus on cost constraints We do know that, as we've said, 80% of our portfolio will have gone through VBP. we do know that as we've said 80% of our portfolio will have gone through vbp It's very actively happening. it's very actively happening We're seeing it play out as expected this year. we're seeing it play out as expected this year We just also recognize that there's other, you know, whether or not it's DRG or other mechanisms that are in discussion that haven't been implemented yet. we just also recognize that there's other you know whether or not it's drg or other mechanisms that are in discussion that haven't been implemented yet There's a lot of local companies and international companies lobbying against some of those, which is they've been put on pause, we want to continue to watch that play out. there's a lot of local companies and international companies lobbying against some of those which is they've been put on pause we want to continue to watch that play out

Speaker 2: Okay. Okay. okay

Speaker 1: Yeah. Yeah. yeah

Speaker 2: Full. When I think about kind of the macro, you know, ACA utilization, there's MedTech investors, probably part of the reason why MedTech stocks haven't worked is some worries on utilization side, and you have pretty good visibility. Full. full When I think about kind of the macro, you know, ACA utilization, there's MedTech investors, probably part of the reason why MedTech stocks haven't worked is some worries on utilization side, and you have pretty good visibility. when i think about kind of the macro you know aca utilization there's medtech investors probably part of the reason why medtech stocks haven't worked is some worries on utilization side and you have pretty good visibility

Speaker 1: Yeah. Yeah. yeah

Speaker 2: -and in utilization. What are you seeing from the utilization standpoint? -and in utilization. -and in utilization What are you seeing from the utilization standpoint? what are you seeing from the utilization standpoint

Speaker 1: Within our portfolio, we're seeing strong, you know, solid utilization. Obviously areas like blood collection sets, you know, are a good indicator of diagnostic testing. You compare that to the Quest Labcorp volumes. Diagnostic testing is pretty solid. That's a good indicator of just broad healthcare consumption. Products like, you know, IV sets, which we have 70%, you know, share of strong growth, right, in the U.S. You know, solid mid-single-digit, you know, 6% plus kind of growth you're seeing. Some of that's share gain, at the same time, right, it's underlying utilization. That's the first thing you normally get when you go into a hospital is an IV set, right, put into your arm, most likely a BD catheter. Within our portfolio, we're seeing strong, you know, solid utilization. within our portfolio we're seeing strong you know solid utilization Obviously areas like blood collection sets, you know, are a good indicator of diagnostic testing. obviously areas like blood collection sets you know are a good indicator of diagnostic testing You compare that to the Quest Labcorp volumes. you compare that to the quest labcorp volumes Diagnostic testing is pretty solid. diagnostic testing is pretty solid That's a good indicator of just broad healthcare consumption. that's a good indicator of just broad healthcare consumption Products like, you know, IV sets, which we have 70%, you know, share of strong growth, right, in the U.S. products like you know iv sets which we have 70% you know share of strong growth right in the u.s You know, solid mid-single-digit, you know, 6% plus kind of growth you're seeing. you know solid mid-single-digit you know 6% plus kind of growth you're seeing Some of that's share gain, at the same time, right, it's underlying utilization. some of that's share gain at the same time right it's underlying utilization That's the first thing you normally get when you go into a hospital is an IV set, right, put into your arm, most likely a BD catheter. that's the first thing you normally get when you go into a hospital is an iv set right put into your arm most likely a bd catheter I think from those indicators and then some of our other solutions in a world where people are looking to save money and navigate a challenging economic environment, right? Solutions like our Rowa pharmacy robotics platform or what we're seeing with Pyxis and our medication management suite, where it's helping with nursing workflow, you know, we're seeing strong demand for those types of solutions. I think from those indicators and then some of our other solutions in a world where people are looking to save money and navigate a challenging economic environment, right? i think from those indicators and then some of our other solutions in a world where people are looking to save money and navigate a challenging economic environment right Solutions like our Rowa pharmacy robotics platform or what we're seeing with Pyxis and our medication management suite, where it's helping with nursing workflow, you know, we're seeing strong demand for those types of solutions. solutions like our rowa pharmacy robotics platform or what we're seeing with pyxis and our medication management suite where it's helping with nursing workflow you know we're seeing strong demand for those types of solutions

Speaker 2: Okay. kind of also on the macro side, inflation, you know, you know, that's probably another factor for worry on MedTech stocks. Just want to understand where you are. You talked about resins exposure. Do you have any computer chip exposure, memory exposure? how you kind of have visibility on hedges and on inflation? Okay. kind of also on the macro side, inflation, you know, you know, that's probably another factor for worry on MedTech stocks. okay kind of also on the macro side inflation you know you know that's probably another factor for worry on medtech stocks Just want to understand where you are. just want to understand where you are You talked about resins exposure. you talked about resins exposure Do you have any computer chip exposure, memory exposure? how you kind of have visibility on hedges and on inflation? do you have any computer chip exposure memory exposure how you kind of have visibility on hedges and on inflation

Speaker 1: Yes. Go ahead. Yes. yes Go ahead. go ahead

Speaker 3: From a-- As we mentioned, I think the biggest topic for us that we are monitoring is the price of oil, which is connected with the resin price. The resin price, and the plastic, it's approximately 5% of our costs. I think we have been able to implement hedges along the way, which are gonna helping us this year to kind of absorb those costs and making sure that we do not get a lot of exposure. Of course, as this continued pressure on oil remains, those hedges are gonna start rolling off, then there will be pressures from a cost perspective coming from this. I think the team have been working on several levers in order to how to offset this heading into 2027. I think 2026 we feel very confident that we have everything protected. From a-- As we mentioned, I think the biggest topic for us that we are monitoring is the price of oil, which is connected with the resin price. from a-- as we mentioned i think the biggest topic for us that we are monitoring is the price of oil which is connected with the resin price The resin price, and the plastic, it's approximately 5% of our costs. the resin price and the plastic it's approximately 5% of our costs I think we have been able to implement hedges along the way, which are gonna helping us this year to kind of absorb those costs and making sure that we do not get a lot of exposure. i think we have been able to implement hedges along the way which are gonna helping us this year to kind of absorb those costs and making sure that we do not get a lot of exposure Of course, as this continued pressure on oil remains, those hedges are gonna start rolling off, then there will be pressures from a cost perspective coming from this. of course as this continued pressure on oil remains those hedges are gonna start rolling off then there will be pressures from a cost perspective coming from this I think the team have been working on several levers in order to how to offset this heading into 2027. i think the team have been working on several levers in order to how to offset this heading into 2027 I think 2026 we feel very confident that we have everything protected. i think 2026 we feel very confident that we have everything protected In 2027, I think the work is right now happening already with continued to work with our ISC team, which has been proven year-over-year, the capability of delivering high productivity. We're also working very heavily on the commercial aspect with price. That's something that we have done in the COVID times, and we actually have created a very strong discipline about price execution on the marketplace, and we continue to do that, and we are gonna looking into alternatives to do. Last but not least, I think our portfolio. I think we are investing on areas of high growth but also high margins, and that should help us continue to offset those type of pressures, inflation. Inflation is real, is there, but I think we have enough levers, and we know the path. In 2027, I think the work is right now happening already with continued to work with our ISC team, which has been proven year-over-year, the capability of delivering high productivity. in 2027 i think the work is right now happening already with continued to work with our isc team which has been proven year-over-year the capability of delivering high productivity We're also working very heavily on the commercial aspect with price. we're also working very heavily on the commercial aspect with price That's something that we have done in the COVID times, and we actually have created a very strong discipline about price execution on the marketplace, and we continue to do that, and we are gonna looking into alternatives to do. that's something that we have done in the covid times and we actually have created a very strong discipline about price execution on the marketplace and we continue to do that and we are gonna looking into alternatives to do Last but not least, I think our portfolio. last but not least i think our portfolio I think we are investing on areas of high growth but also high margins, and that should help us continue to offset those type of pressures, inflation. i think we are investing on areas of high growth but also high margins and that should help us continue to offset those type of pressures inflation Inflation is real, is there, but I think we have enough levers, and we know the path. inflation is real is there but i think we have enough levers and we know the path We have done it in the past, and we're looking to continue to do that in the future. We have done it in the past, and we're looking to continue to do that in the future. we have done it in the past and we're looking to continue to do that in the future

Speaker 2: Okay. Okay. okay

Speaker 1: I think you saw us be top tier in navigating an inflationary environment last time that happened post-COVID. One of the things we said is internally, we said we're gonna act early, which we did, and that we were gonna be the best in the industry at navigating. I think we ultimately were, right? If you look at a three or a five-year basis, we were top two in med tech from both a gross margin, operating margin, you know, performance over that timeframe. That I think it was a large part due to some of the actions that we took early on during the last inflationary cycle. We're taking that exact same approach, you know, in this ecosystem. I think you saw us be top tier in navigating an inflationary environment last time that happened post-COVID. i think you saw us be top tier in navigating an inflationary environment last time that happened post-covid One of the things we said is internally, we said we're gonna act early, which we did, and that we were gonna be the best in the industry at navigating. one of the things we said is internally we said we're gonna act early which we did and that we were gonna be the best in the industry at navigating I think we ultimately were, right? i think we ultimately were right If you look at a three or a five-year basis, we were top two in med tech from both a gross margin, operating margin, you know, performance over that timeframe. if you look at a three or a five-year basis we were top two in med tech from both a gross margin operating margin you know performance over that timeframe That I think it was a large part due to some of the actions that we took early on during the last inflationary cycle. that i think it was a large part due to some of the actions that we took early on during the last inflationary cycle We're taking that exact same approach, you know, in this ecosystem. we're taking that exact same approach you know in this ecosystem We're not sitting around thinking that oil is going to drop or we're gonna assume it's gonna stay high, and we're gonna take actions accordingly. We're not sitting around thinking that oil is going to drop or we're gonna assume it's gonna stay high, and we're gonna take actions accordingly. we're not sitting around thinking that oil is going to drop or we're gonna assume it's gonna stay high and we're gonna take actions accordingly

Speaker 2: Okay. There are what kind of levers to offset, let's say things do get worse, kind of your levers to kind of offset that? Okay. okay There are what kind of levers to offset, let's say things do get worse, kind of your levers to kind of offset that? there are what kind of levers to offset let's say things do get worse kind of your levers to kind of offset that

Speaker 1: I think you heard Vitor talk about, you know, a few of them. One is, again, BD Excellence has become a tremendous competitive advantage for us. We've been operating at 8% productivity last year. We're operating it again this year. We announced that was again our productivity this past quarter. That's at our top decile level for sure within this industry and most, you know, other, pretty much every other industry. That's a big competitive advantage in those types of environments. The other one is pricing, right? We flex, you know, pricing as appropriate, and we have open discussions with our customers, right? Where we have products that are primarily made of resins. We talk about those. May go up. I think you heard Vitor talk about, you know, a few of them. i think you heard vitor talk about you know a few of them One is, again, BD Excellence has become a tremendous competitive advantage for us. one is again bd excellence has become a tremendous competitive advantage for us We've been operating at 8% productivity last year. we've been operating at 8% productivity last year We're operating it again this year. we're operating it again this year We announced that was again our productivity this past quarter. we announced that was again our productivity this past quarter That's at our top decile level for sure within this industry and most, you know, other, pretty much every other industry. that's at our top decile level for sure within this industry and most you know other pretty much every other industry That's a big competitive advantage in those types of environments. that's a big competitive advantage in those types of environments The other one is pricing, right? the other one is pricing right We flex, you know, pricing as appropriate, and we have open discussions with our customers, right? we flex you know pricing as appropriate and we have open discussions with our customers right Where we have products that are primarily made of resins. where we have products that are primarily made of resins We talk about those. we talk about those May go up. may go up We actually have put in during the last inflationary cycle, we changed most of our contracts to have annual price increase clauses in them as well related to CPI. You know, we saw some numbers this morning. Obviously, CPI is up, you know, in the 3's, deeper in the 3's now. You know, we have that ability within most of our agreements. Again, we actually have time later this week after we leave the conference, you know, reviewing that with our team. You know, they've been given tasks, and we're following up with them on those actions. We actually have put in during the last inflationary cycle, we changed most of our contracts to have annual price increase clauses in them as well related to CPI. we actually have put in during the last inflationary cycle we changed most of our contracts to have annual price increase clauses in them as well related to cpi You know, we saw some numbers this morning. you know we saw some numbers this morning Obviously, CPI is up, you know, in the 3's, deeper in the 3's now. obviously cpi is up you know in the 3's deeper in the 3's now You know, we have that ability within most of our agreements. you know we have that ability within most of our agreements Again, we actually have time later this week after we leave the conference, you know, reviewing that with our team. again we actually have time later this week after we leave the conference you know reviewing that with our team You know, they've been given tasks, and we're following up with them on those actions. you know they've been given tasks and we're following up with them on those actions

Speaker 2: Okay, that's helpful. Just in total, kind of the margin opportunity, you're at kind of 25% margins, which is your goal. You got there. Does it get harder going forward to continue to extend margins at the same rate? What are some of the levers on gross margin, R&D, SG&A to kind of get leverage? Okay, that's helpful. okay that's helpful Just in total, kind of the margin opportunity, you're at kind of 25% margins, which is your goal. just in total kind of the margin opportunity you're at kind of 25% margins which is your goal You got there. you got there Does it get harder going forward to continue to extend margins at the same rate? does it get harder going forward to continue to extend margins at the same rate What are some of the levers on gross margin, R&D, SG&A to kind of get leverage? what are some of the levers on gross margin r&d sg&a to kind of get leverage

Speaker 1: Yeah. Yeah. yeah

Speaker 2: In the P&L? In the P&L? in the p&l

Speaker 1: I can start. I can start. i can start

Speaker 2: Please. Please. please

Speaker 1: As we started BD 2025, the first couple years, most of our operating margin expansion came from leverage in OpEx. Then you've seen in the last two years, this being the third, that leverage really come from gross margin. We called it beforehand. Those who have known the BD story, we said, "Get ready. You're gonna start seeing as BD Excellence starts really hitting full steam. You're gonna see operating margin expansion come from gross margin expansion." It played out exactly as we said. It's gonna continue down that path, right? We expect operating margin leverage to come primarily from gross margin. I think even this past quarter, obviously this was we didn't have tariffs in Q2 of last year, so there's a tariff headwind. As we started BD 2025, the first couple years, most of our operating margin expansion came from leverage in OpEx. as we started bd 2025 the first couple years most of our operating margin expansion came from leverage in opex Then you've seen in the last two years, this being the third, that leverage really come from gross margin. then you've seen in the last two years this being the third that leverage really come from gross margin We called it beforehand. we called it beforehand Those who have known the BD story, we said, "Get ready. those who have known the bd story we said "get ready You're gonna start seeing as BD Excellence starts really hitting full steam. you're gonna start seeing as bd excellence starts really hitting full steam You're gonna see operating margin expansion come from gross margin expansion." It played out exactly as we said. you're gonna see operating margin expansion come from gross margin expansion." it played out exactly as we said It's gonna continue down that path, right? it's gonna continue down that path right We expect operating margin leverage to come primarily from gross margin. we expect operating margin leverage to come primarily from gross margin I think even this past quarter, obviously this was we didn't have tariffs in Q2 of last year, so there's a tariff headwind. i think even this past quarter obviously this was we didn't have tariffs in q2 of last year so there's a tariff headwind If you take tariffs out and just say, "How did BD operationally perform ex tariffs?" It was 70 basis points of gross margin expansion and 50 basis points of op margin expansion with us reinvesting, you know, into selling as part of our growth strategy in between. Again, it was coming from gross margin. Why is it coming from gross margin? It's a combination of productivity that we talked about, and it's coming from our plant consolidation strategy, right? We've talked about we've cut our manufacturing plants in the last five years in half, right? We were near 100. We're now, you know, in the 50, about 50 range, and we still have some further consolidation that would go into the 40s. If you take tariffs out and just say, "How did BD operationally perform ex tariffs?" It was 70 basis points of gross margin expansion and 50 basis points of op margin expansion with us reinvesting, you know, into selling as part of our growth strategy in between. if you take tariffs out and just say "how did bd operationally perform ex tariffs?" it was 70 basis points of gross margin expansion and 50 basis points of op margin expansion with us reinvesting you know into selling as part of our growth strategy in between Again, it was coming from gross margin. again it was coming from gross margin Why is it coming from gross margin? why is it coming from gross margin It's a combination of productivity that we talked about, and it's coming from our plant consolidation strategy, right? it's a combination of productivity that we talked about and it's coming from our plant consolidation strategy right We've talked about we've cut our manufacturing plants in the last five years in half, right? we've talked about we've cut our manufacturing plants in the last five years in half right We were near 100. we were near 100 We're now, you know, in the 50, about 50 range, and we still have some further consolidation that would go into the 40s. we're now you know in the 50 about 50 range and we still have some further consolidation that would go into the 40s Those are projects we've been investing in over the last several years, and they're really just continuing to flow through, and those will hit the gross margin line in exclusively as well. Then obviously the mix that you touched on. Those are projects we've been investing in over the last several years, and they're really just continuing to flow through, and those will hit the gross margin line in exclusively as well. those are projects we've been investing in over the last several years and they're really just continuing to flow through and those will hit the gross margin line in exclusively as well Then obviously the mix that you touched on. then obviously the mix that you touched on

Speaker 3: Yeah. Again, I think this year we have been talking about the 25% despite the tariff impact. We're being able to kind of deliver that. Excluding the tariff, we actually had an underlying expansion of our margins. We are monitoring the inflation, which is gonna be the next topic, heading into Tuesday. I think we have, as Tom said, the BD Excellence and the commercial execution will be the key drivers for us going forward. Yeah. yeah Again, I think this year we have been talking about the 25% despite the tariff impact. again i think this year we have been talking about the 25% despite the tariff impact We're being able to kind of deliver that. we're being able to kind of deliver that Excluding the tariff, we actually had an underlying expansion of our margins. excluding the tariff we actually had an underlying expansion of our margins We are monitoring the inflation, which is gonna be the next topic, heading into Tuesday. we are monitoring the inflation which is gonna be the next topic heading into tuesday I think we have, as Tom said, the BD Excellence and the commercial execution will be the key drivers for us going forward. i think we have as tom said the bd excellence and the commercial execution will be the key drivers for us going forward

Speaker 2: When you think about this year, you know, you've had kind of low single-digit revenue growth, mid-single digit EPS growth. We've kind of already talked about low single-digit revenue growth next year. I don't think that's changing given the discrete headwinds we talked about earlier. Otherwise, the base is growing like 7%, which is not possible. Is there any factors or I guess the way to phrase it next year that why EPS would again still be in the mid-single digit growth range? When you think about this year, you know, you've had kind of low single-digit revenue growth, mid-single digit EPS growth. when you think about this year you know you've had kind of low single-digit revenue growth mid-single digit eps growth We've kind of already talked about low single-digit revenue growth next year. we've kind of already talked about low single-digit revenue growth next year I don't think that's changing given the discrete headwinds we talked about earlier. i don't think that's changing given the discrete headwinds we talked about earlier Otherwise, the base is growing like 7%, which is not possible. otherwise the base is growing like 7% which is not possible Is there any factors or I guess the way to phrase it next year that why EPS would again still be in the mid-single digit growth range? is there any factors or i guess the way to phrase it next year that why eps would again still be in the mid-single digit growth range

Speaker 1: It's too early. Obviously, we're not giving guidance on 27, EPS, but what we're focused on is obviously optimizing that. More to come. It's too early. it's too early Obviously, we're not giving guidance on 27, EPS, but what we're focused on is obviously optimizing that. obviously we're not giving guidance on 27 eps but what we're focused on is obviously optimizing that More to come. more to come

Speaker 2: Okay. Okay. okay

Speaker 1: Yeah. Yeah. yeah

Speaker 2: All right. I had to ask. All right. all right I had to ask. i had to ask

Speaker 1: Yeah. Yeah. yeah

Speaker 2: The, if you go look at this year, kind of first half, second half growth, like one question we addressed and talked about last night at dinner, you know, what you see in our models, just looking last year comps looked tougher until wood steps up in the back half of the year, on an underlying basis. I just wanted to kind of address the underlying acceleration in the growth rates. The, if you go look at this year, kind of first half, second half growth, like one question we addressed and talked about last night at dinner, you know, what you see in our models, just looking last year comps looked tougher until wood steps up in the back half of the year, on an underlying basis. the if you go look at this year kind of first half second half growth like one question we addressed and talked about last night at dinner you know what you see in our models just looking last year comps looked tougher until wood steps up in the back half of the year on an underlying basis I just wanted to kind of address the underlying acceleration in the growth rates. i just wanted to kind of address the underlying acceleration in the growth rates

Speaker 3: Sure. From a revenue perspective, I think we feel very good. I think we demonstrated the capacity of execution of our revenue. We overachieve our expectations in Q1 and also Q2. We see the comparisons on the back half of the year fairly similar. We know, of course, that the Alaris situation is more acute and more pronounced on the Q4, given that last year was the largest number of Q4 of Alaris for us. This year we are coming down to the end of the remediation by the end of Q4. I think if you think about our recurring business, we continue to see good progress. We share gains across businesses like in MDS and specimen management in the U.S. market. Also our capital business continues to see very strong backlog. Sure. sure From a revenue perspective, I think we feel very good. from a revenue perspective i think we feel very good I think we demonstrated the capacity of execution of our revenue. i think we demonstrated the capacity of execution of our revenue We overachieve our expectations in Q1 and also Q2. we overachieve our expectations in q1 and also q2 We see the comparisons on the back half of the year fairly similar. we see the comparisons on the back half of the year fairly similar We know, of course, that the Alaris situation is more acute and more pronounced on the Q4, given that last year was the largest number of Q4 of Alaris for us. we know of course that the alaris situation is more acute and more pronounced on the q4 given that last year was the largest number of q4 of alaris for us This year we are coming down to the end of the remediation by the end of Q4. this year we are coming down to the end of the remediation by the end of q4 I think if you think about our recurring business, we continue to see good progress. i think if you think about our recurring business we continue to see good progress We share gains across businesses like in MDS and specimen management in the U.S. market. we share gains across businesses like in mds and specimen management in the u.s market Also our capital business continues to see very strong backlog. also our capital business continues to see very strong backlog That gives us confidence on the back half of the year. As we said, our growth on the back half of the year is going to be similar to the first half of the year, and that gives us confidence that we can continue to deliver on that number. The comparisons are fairly easy, not easy, but similar to the first half. Q2, you can argue, because last year we actually had a tough Q2, but it was actually because of an event that happened the prior year. The baseline is fairly similar, so we feel very confident about the revenue on the back half of the year. That gives us confidence on the back half of the year. that gives us confidence on the back half of the year As we said, our growth on the back half of the year is going to be similar to the first half of the year, and that gives us confidence that we can continue to deliver on that number. as we said our growth on the back half of the year is going to be similar to the first half of the year and that gives us confidence that we can continue to deliver on that number The comparisons are fairly easy, not easy, but similar to the first half. the comparisons are fairly easy not easy but similar to the first half Q2, you can argue, because last year we actually had a tough Q2, but it was actually because of an event that happened the prior year. q2 you can argue because last year we actually had a tough q2 but it was actually because of an event that happened the prior year The baseline is fairly similar, so we feel very confident about the revenue on the back half of the year. the baseline is fairly similar so we feel very confident about the revenue on the back half of the year

Speaker 2: Okay. The same thing, we stare at our models and there's the margins going higher from Q1, Q2, Q3, Q4. I just wanna understand, like the Q4 step up looks really big. Okay. okay The same thing, we stare at our models and there's the margins going higher from Q1, Q2, Q3, Q4. the same thing we stare at our models and there's the margins going higher from q1 q2 q3 q4 I just wanna understand, like the Q4 step up looks really big. i just wanna understand like the q4 step up looks really big On margins. I just want to get the confidence. On margins. on margins I just want to get the confidence. i just want to get the confidence

Speaker 3: I think the margin story is very similar. We have been implementing our BD Excellence operations, so driving volumes and savings on materials and other productivity factors. We have high visibility to those because of the what we call the cap and roll, so everything gets capitalized and amortized. We have very clear visibility on when that's gonna happen. We also have the situation on tariffs that naturally because of the actions we have been taking, the dollar amount comes a little bit down and it becomes an easy comparison in Q4 because we didn't have tariffs on the first three quarters of the year. In Q4 actually was the highest quarter of tariffs that we have seen so far, was about $90 million last year. We see those factors. I think the margin story is very similar. i think the margin story is very similar We have been implementing our BD Excellence operations, so driving volumes and savings on materials and other productivity factors. we have been implementing our bd excellence operations so driving volumes and savings on materials and other productivity factors We have high visibility to those because of the what we call the cap and roll, so everything gets capitalized and amortized. we have high visibility to those because of the what we call the cap and roll so everything gets capitalized and amortized We have very clear visibility on when that's gonna happen. we have very clear visibility on when that's gonna happen We also have the situation on tariffs that naturally because of the actions we have been taking, the dollar amount comes a little bit down and it becomes an easy comparison in Q4 because we didn't have tariffs on the first three quarters of the year. we also have the situation on tariffs that naturally because of the actions we have been taking the dollar amount comes a little bit down and it becomes an easy comparison in q4 because we didn't have tariffs on the first three quarters of the year In Q4 actually was the highest quarter of tariffs that we have seen so far, was about $90 million last year. in q4 actually was the highest quarter of tariffs that we have seen so far was about $90 million last year We see those factors. we see those factors The revenue continues to improve on the areas we are investing on because we are putting sales force behind like APM, which is high growth, high margins. Also in surgery, advanced tissue regeneration, which is also high growth, high margin. The revenue continues to improve on the areas we are investing on because we are putting sales force behind like APM, which is high growth, high margins. the revenue continues to improve on the areas we are investing on because we are putting sales force behind like apm which is high growth high margins Also in surgery, advanced tissue regeneration, which is also high growth, high margin. also in surgery advanced tissue regeneration which is also high growth high margin

Speaker 2: Yeah. Yeah. yeah

Speaker 3: Peripheral interventional also drives significant above company average margins. Those are actually the sales forces gaining productivity as we go through, which is gonna give us confidence from increasing margin from a mix perspective and the productivity that we have seen our plants already operating are gonna generate the P&L impact heading into the Q4 numbers. Peripheral interventional also drives significant above company average margins. peripheral interventional also drives significant above company average margins Those are actually the sales forces gaining productivity as we go through, which is gonna give us confidence from increasing margin from a mix perspective and the productivity that we have seen our plants already operating are gonna generate the P&L impact heading into the Q4 numbers. those are actually the sales forces gaining productivity as we go through which is gonna give us confidence from increasing margin from a mix perspective and the productivity that we have seen our plants already operating are gonna generate the p&l impact heading into the q4 numbers

Speaker 1: It's fair to say that, as Vitor said, essentially the $90 million in Q4 of last year, it's going to be a lower because of all the offsetting. It's fair to say that, as Vitor said, essentially the $90 million in Q4 of last year, it's going to be a lower because of all the offsetting. it's fair to say that as vitor said essentially the $90 million in q4 of last year it's going to be a lower because of all the offsetting

Speaker 3: Yes. Yes. yes

Speaker 1: Actions that we've done. We'll have a favorable number in Q4 for tariffs year-over-year because of all those offsetting actions that we've taken. Actions that we've done. actions that we've done We'll have a favorable number in Q4 for tariffs year-over-year because of all those offsetting actions that we've taken. we'll have a favorable number in q4 for tariffs year-over-year because of all those offsetting actions that we've taken

Speaker 3: Yeah. Last but not least, I think if you see our revenue sequential, our revenue is actually higher on the back half of the year compared to the first half of the year. Our expenses are actually pretty steady with Q4 coming a little bit down, which is part of the execution of the $200 million cost out program that we have already implemented. It's already well underway. We have already $150 million in motion, and that's expenses as they exit the organization in the back half of the year. We see the benefit on the operating margin as well. It's a combination of the productivity of the clients, our higher operating expenses, efficiency and the leverage from the revenue perspective. Yeah. yeah Last but not least, I think if you see our revenue sequential, our revenue is actually higher on the back half of the year compared to the first half of the year. last but not least i think if you see our revenue sequential our revenue is actually higher on the back half of the year compared to the first half of the year Our expenses are actually pretty steady with Q4 coming a little bit down, which is part of the execution of the $200 million cost out program that we have already implemented. our expenses are actually pretty steady with q4 coming a little bit down which is part of the execution of the $200 million cost out program that we have already implemented It's already well underway. it's already well underway We have already $150 million in motion, and that's expenses as they exit the organization in the back half of the year. we have already $150 million in motion and that's expenses as they exit the organization in the back half of the year We see the benefit on the operating margin as well. we see the benefit on the operating margin as well It's a combination of the productivity of the clients, our higher operating expenses, efficiency and the leverage from the revenue perspective. it's a combination of the productivity of the clients our higher operating expenses efficiency and the leverage from the revenue perspective

Speaker 2: Okay, that's helpful. Another factor I wanted to make sure we addressed is the ChloraPrep triple. I think that's like a $480 million product. Is that right? Okay, that's helpful. okay that's helpful Another factor I wanted to make sure we addressed is the ChloraPrep triple. another factor i wanted to make sure we addressed is the chloraprep triple I think that's like a $480 million product. i think that's like a $480 million product Is that right? is that right

Speaker 1: Well, we said it's about 3% of revenue. Well, we said it's about 3% of revenue. well we said it's about 3% of revenue

Speaker 2: Okay. Okay. okay

Speaker 1: Two and a half of U.S. ChloraPrep of total BD revenue. Two and a half of U.S. two and a half of u.s ChloraPrep of total BD revenue. chloraprep of total bd revenue

Speaker 2: Yes. Okay. just there's a 3-week ship hold, kind of the confidence that with the warning letter out there that that, you know, comes back on the market. Yes. yes Okay. just there's a 3-week ship hold, kind of the confidence that with the warning letter out there that that, you know, comes back on the market. okay just there's a 3-week ship hold kind of the confidence that with the warning letter out there that that you know comes back on the market

Speaker 1: Yeah. As we said, pending the testing, you know, we're quite confident. We haven't stopped making ChloraPrep, right? There's never been a pause in our manufacturing. It's safe. There's no patient issues, no safety signals at all. We stand by the safety of the product. It's obviously our one large pharmaceutical manufacturing plant that's considered a pharmaceutical as a skin cleansing agent. Essentially what we're doing is we're doing the exact same testing that we do for product that we ship to Europe. The exact same product is made on the exact same lines, gets a label for Europe. We typically do an additional testing loop on that product post terminal sterilization, and we're adding in that same testing loop on U.S. product. Yeah. yeah As we said, pending the testing, you know, we're quite confident. as we said pending the testing you know we're quite confident We haven't stopped making ChloraPrep, right? we haven't stopped making chloraprep right There's never been a pause in our manufacturing. there's never been a pause in our manufacturing It's safe. it's safe There's no patient issues, no safety signals at all. there's no patient issues no safety signals at all We stand by the safety of the product. we stand by the safety of the product It's obviously our one large pharmaceutical manufacturing plant that's considered a pharmaceutical as a skin cleansing agent. it's obviously our one large pharmaceutical manufacturing plant that's considered a pharmaceutical as a skin cleansing agent Essentially what we're doing is we're doing the exact same testing that we do for product that we ship to Europe. essentially what we're doing is we're doing the exact same testing that we do for product that we ship to europe The exact same product is made on the exact same lines, gets a label for Europe. the exact same product is made on the exact same lines gets a label for europe We typically do an additional testing loop on that product post terminal sterilization, and we're adding in that same testing loop on U.S. product. we typically do an additional testing loop on that product post terminal sterilization and we're adding in that same testing loop on u.s product That product is the exact same product that we have been testing that goes to Europe, that we haven't had any issues with. That's kind of why we, you know, adding in that same testing that's always gone well, it's already been started. We continue to manufacture the product and as soon as that testing would be completed, we'd resume shipping each of those batches. Those shipments don't go to the end user for the most part, right? It's filling shelves at the distributor as well. We're not expecting end user back orders at this time. It would be refilling shelves at our distributors. That product is the exact same product that we have been testing that goes to Europe, that we haven't had any issues with. that product is the exact same product that we have been testing that goes to europe that we haven't had any issues with That's kind of why we, you know, adding in that same testing that's always gone well, it's already been started. that's kind of why we you know adding in that same testing that's always gone well it's already been started We continue to manufacture the product and as soon as that testing would be completed, we'd resume shipping each of those batches. we continue to manufacture the product and as soon as that testing would be completed we'd resume shipping each of those batches Those shipments don't go to the end user for the most part, right? those shipments don't go to the end user for the most part right It's filling shelves at the distributor as well. it's filling shelves at the distributor as well We're not expecting end user back orders at this time. we're not expecting end user back orders at this time It would be refilling shelves at our distributors. it would be refilling shelves at our distributors

Speaker 3: Yeah. That's what's going to be from our revenue. What gives us confidence on the revenue is exactly what Tom just mentioned. We have inventories on the channel with distributors. Those are gonna continue to feed the hospital for utilization. Once we start releasing the product after the testing, that is a very well-known test that we have high confidence on. We are gonna start shipping back to distributors to replenish that inventory. We do not see right now the revenue impact from it. Yeah. yeah That's what's going to be from our revenue. that's what's going to be from our revenue What gives us confidence on the revenue is exactly what Tom just mentioned. what gives us confidence on the revenue is exactly what tom just mentioned We have inventories on the channel with distributors. we have inventories on the channel with distributors Those are gonna continue to feed the hospital for utilization. those are gonna continue to feed the hospital for utilization Once we start releasing the product after the testing, that is a very well-known test that we have high confidence on. once we start releasing the product after the testing that is a very well-known test that we have high confidence on We are gonna start shipping back to distributors to replenish that inventory. we are gonna start shipping back to distributors to replenish that inventory We do not see right now the revenue impact from it. we do not see right now the revenue impact from it

Speaker 1: It's an extremely important product, obviously. We take it very seriously. It's used in about 95% of all U.S. surgeries. It's an extremely important product, obviously. it's an extremely important product obviously We take it very seriously. we take it very seriously It's used in about 95% of all U.S. surgeries. it's used in about 95% of all u.s surgeries

Speaker 2: Do you see the risk of FDA saying, "Hey, you can't ship this or restart that in three weeks? Do you see the risk of FDA saying, "Hey, you can't ship this or restart that in three weeks? do you see the risk of fda saying "hey you can't ship this or restart that in three weeks

Speaker 1: This was a completely voluntary, you know, action upon our part. We did that completely on our own, our quality department took that action with no request from the FDA. This was a completely voluntary, you know, action upon our part. this was a completely voluntary you know action upon our part We did that completely on our own, our quality department took that action with no request from the FDA. we did that completely on our own our quality department took that action with no request from the fda

Speaker 2: Okay. Then, one last question. PowerPort. PowerPort litigation. You won the first trial. I don't know if there's anything you wanted to say on that before we close. Okay. okay Then, one last question. then one last question PowerPort. powerport PowerPort litigation. powerport litigation You won the first trial. you won the first trial I don't know if there's anything you wanted to say on that before we close. i don't know if there's anything you wanted to say on that before we close

Speaker 1: Again, we'll fight that litigation vigorously. That's, you know, that product's been on the market for 40 or 50 years, has helped, you know, tens or hundreds of thousands of cancer patients, you know, navigate very safely. It's a safe and effective product. That's what the jury obviously found. It's well designed and again, and has a decades, many decades of success. Again, we'll fight that litigation vigorously. again we'll fight that litigation vigorously That's, you know, that product's been on the market for 40 or 50 years, has helped, you know, tens or hundreds of thousands of cancer patients, you know, navigate very safely. that's you know that product's been on the market for 40 or 50 years has helped you know tens or hundreds of thousands of cancer patients you know navigate very safely It's a safe and effective product. it's a safe and effective product That's what the jury obviously found. that's what the jury obviously found It's well designed and again, and has a decades, many decades of success. it's well designed and again and has a decades many decades of success

Speaker 2: Great. Well, thanks a lot. We're out of time. Great. great Well, thanks a lot. well thanks a lot We're out of time. we're out of time

Speaker 1: Thank you. Thank you. thank you

Speaker 3: Thank you. Thank you. thank you

Speaker 2: Thank you. Thank you. thank you