Becton Dickinson at Bank of America Conference: Navigating Challenges and Opportunities

On Tuesday, 13 May 2025, Becton Dickinson and Company (NYSE:BDX) participated in the Bank of America 2025 Healthcare Conference, where CEO Tom Poland addressed the company’s strategic direction amidst a challenging business environment. The discussion highlighted both obstacles, such as revenue growth slowdown and market pressures, and opportunities like innovation and operational excellence.

Key Takeaways

• Becton Dickinson experienced a revenue growth slowdown in Q2, with a 0.9% increase, below expectations.
• The company is focusing on operational improvements and strategic investments to drive future growth.
• A significant focus is on mitigating tariff impacts and managing inflation through strategic pricing.
• The life sciences separation is on track, with an announcement expected this summer.
• Becton Dickinson remains optimistic about long-term growth, driven by innovation and market leadership.

Financial Results

Becton Dickinson reported a Q2 revenue growth of 0.9%, falling short of the initial expectation of 2.75%. This led to a reduction in the full-year guidance by $200 million. Despite this, the company has achieved a 5.6% compound annual growth rate (CAGR) in revenue since launching BD 2025. Notably, the gross margin increased by 190 basis points, attributed to the BD Excellence initiative. Tariffs have had a $90 million impact, equivalent to $0.25 of earnings.

Operational Updates

• China’s Volume-Based Procurement (VBP) has significantly impacted the peripheral vascular and surgical spaces, with China expected to see a high single to double-digit decline for the year.
• The life sciences market has declined, with expectations of a low single-digit to low mid-single-digit decrease this year.
• The farm systems market shows signs of recovery, with positive order movement.
• Recovery in the Bactech segment is slower than anticipated.
• Becton Dickinson is enhancing commercial operations to navigate market volatility, supported by a central group monitoring market factors.
• The company is increasing investments in R&D and sales, outpacing revenue growth.
• Manufacturing improvements have led to the production of 2.4 billion more units on the top 50 lines without additional capital investment.

Future Outlook

• Becton Dickinson anticipates a ramp-up in the second half, with projected growth of 3% in Q3 and 5% in Q4.
• The farm systems market is expected to continue its positive trajectory.
• Research spending in life sciences is assumed to remain flat.
• The annualization of the APM acquisition is expected to contribute a quarter point in the latter half of the year.
• The life sciences separation announcement is anticipated this summer, with a focus on maximizing shareholder value.
• Capital deployment will prioritize strategic acquisitions and internal investments, maintaining a disciplined approach.

Q&A Highlights

• The Q2 performance shortfall was attributed to reduced NIH funding, increased impact from China VBP, and slower recovery in the Bactech segment.
• Becton Dickinson is actively mitigating tariff impacts through sourcing changes and lobbying efforts.
• The company is exploring various options for the life sciences separation to maximize shareholder value, including sale, RMT, and spin.
• Post-separation, the RemainCo is expected to achieve mid-single-digit growth.
• Capital deployment will focus on deals with strong returns on capital and strategic alignment, aiming to maintain a leverage ratio of around 2.5x.

For further details, readers are encouraged to refer to the full conference call transcript provided below.

Full transcript - Bank of America 2025 Healthcare Conference:

Steve, Medical Device Analyst, Bank of America: Steve, the Medical Device Analyst at Bank of America, and fortunate to have Tom Poland up next, CEO at Beck and Dickinson. So welcome.

Tom Poland, CEO, Beck and Dickinson: Thank you for having me.

Steve, Medical Device Analyst, Bank of America: Good. So Tom, I think I just kind of wanted to start out kind of high level. You know, I was thinking this morning, kind of back at your last four years as CEO, you know, you’ve gotten Alaris kind of back on the market, back to the run rate. You’ve done portfolio stuff that’s secretive, the diabetes divestiture, added the Edwards Critical Care business, bought Parata. You know, you’ve made progress back to, you know, on the off margin progress, but the stock’s still down.

And, you know, I think a lot of that’s because Street kind of views, you know, revenue growth has slowed for the business. And so I’m just trying to think about like from here, like how are you thinking about looking forward and like creating shareholder value for Beck and Dickinson?

Tom Poland, CEO, Beck and Dickinson: That’s a great question and looking forward to a great discussion here. So, you know, I think maybe just to step back and appreciate those comments on the journey that we’ve been on over the last five years, which of course was right as we had finished two large transformational acquisitions of CareFusion and BART. You know, I think the other things that we’re proud of that we did over that time was, of course, we reinvented the quality and capabilities of the company to run a, what’s in a nearly a $22,000,000,000 company this year that was falling on Alaris. We redid all of those systems to move from a syringe company to a true med tech company. As you mentioned, we’ve been very active on the portfolio.

We doubled down on innovation, most exciting innovation pipeline that that we’ve ever had. And I think more recently, and we’ve delivered, I mean, look over the last five year CAGR period of time since we launched BD 2025 at least, about 5.6% CAGR, including this year on revenue on our base business. I’d say there’s some, you know, as we look at revenue growth right now, there’s a cycle which highly confident that we will move out of that cycle, where there’s three different macro forces that are uniquely impacting BD because of our unique portfolio. Right? And so you’ve got the dynamics of China VBP, which really started in ’23 going into ’24.

We’ve obviously recently taken China to be, you know, basically right at high single digit to double digit decline this year. You’ve got the impact of life sciences. I think we’re the only med tech company with a life science portfolio today. Obviously, again, you go back to ’23, we were growing about 11% in biosciences that year. Last year, it was flat.

This year, it will be down low single digits, low mid single digits as that market, you know, has gone through research funding constraints. And kind of in the middle, the farm systems business, which again had been posting 12% growth, you know, in ’22, ’20 ’3. We saw the market come down. Again, I think we’re the only med tech company with exposure in that sector. We saw the market come down last year flat, this year starting to come back up.

Right? And you saw last quarter start ticking up and we we have confidence you’re gonna continue to see that move in a positive direction. So, you know, what we’re focused on is obviously navigating those periods with excellence. I think, obviously, we’re not happy at all with Q two. We are confident that that is a low point in the combination of things.

And we’ve got a lot of exciting, you know, actions going on, whether or not it’s our focus on commercial excellence that we’re driving and actions that we’ve taken there, extremely exciting innovation pipeline that we’ve been investing in and focusing our investments in area like biologic drug delivery, smart connected care, products like PureWick, our phasics, resorbable mesh and tissue reconstruction, and other areas that we’re quite excited about, connected medication management, and at the same time, we’ve been, of course, driving BD Excellence, which we just created about two years ago, and the whole purpose of BD Excellence is to enable accelerated investments in R and D and in selling, which you’re seeing us do this year as well while continuing to deliver strong bottom line performance.

Steve, Medical Device Analyst, Bank of America: And thank you for opening with that. I when you think about focused on Q2, growth was 0.9%. Originally, you were thinking 2.75%. But you kind of gave guidance kind of middle all the way through the quarter. You were doing investor conferences, you know, throughout the quarter.

I guess, first of all, like, what changed? When did the channel change in the quarter? Why was it such a surprise kind of versus what you were thinking, you know, halfway through the quarter and towards the end of the quarter?

Tom Poland, CEO, Beck and Dickinson: Yeah. Again, we’re not pleased with the performance in Q2, and we’ve taken a number of actions, you know, related to that. I think we definitely saw mid quarter. February is when Trump put out the reductions in NIH funding, right, and you saw an immediate hold on instrument spending at that time. So that was right mid quarter, and we, you know, have assumed that that’s going to continue for the balance of the year.

At the same time, we saw China VBP also increase as, you know, economic conditions in China continue to be constrained, you’re seeing VBP move into our peripheral vascular and surgical space at a bit higher level. So those were the two major, you know, factors, China and that, and think then also just recognizing the recovery rate on Bactech, which was the third part as we’re back to market, that taking a bit longer and we’ve assumed that’s going to continue for the back half of the year, so.

Steve, Medical Device Analyst, Bank of America: When was the Bactech thing kind of surprising at this point, right? What was the visibility not in that business there?

Tom Poland, CEO, Beck and Dickinson: So from that perspective, so the product had just come back on the market, right? There’s been one other situation like that that existed in the history of that market space. It was not ours, it was a competitor’s, who’s off had had a similar length of time, and when that product came back, it ran at this very specific curve, an uptake curve, and we had assumed a similar uptake curve with what had happened in a almost identical type situation, but for a different reason. And in this environment with health care pressure, I think what we saw was health care practitioners stick to a, reduced utilization mode. You actually saw even other peers in the space site in their earnings that the impact of us, their customers were also actually reduced utilization.

So I think that that’s definitely a learning and as we look going forward, I think healthcare practitioners, their ability to change practice in this type of environment and stick with it when they see an opportunity, I think what we saw is that if there’s an opportunity for them to be more efficient, they’ll jump on it and stick with it, much more disciplined than perhaps in the past.

Steve, Medical Device Analyst, Bank of America: Right. And then the full year guidance, came down $200,000,000 and help us unpack how much of that was related to back tech versus the China versus the the biosciences spending, resource spending?

Tom Poland, CEO, Beck and Dickinson: I haven’t necessarily split those, but those are the three, you know, major factors. So we’ve assumed, China, we increased from down mid single digits to down near double digits, for the year high single digits. It was mid single digits to high single digits, low double digits. We’ve assumed that research spending will stay suppressed more in line with what where it exited q two. We haven’t assumed a worsening of that environment.

That’s something that we watch very closely and and are monitoring, but we haven’t assumed a worsening of that environment. And and obviously then we’ve readjusted the back tech ramp in the second half.

Steve, Medical Device Analyst, Bank of America: And you said you you’ve taken some actions after q two. Maybe talk a little bit more about those specific actions. Anything else to add on the actions that you took?

Tom Poland, CEO, Beck and Dickinson: Yeah, I think so as, again, as you look back, you know, over the last many years, you know, we’ve been, our revenue growth has been in that five to 6% range consistently, actually, up until even last year it was five, it was six, seven, in the years before that, and so we’ve been executing in those dynamics, in general, on impacted market environment. I think as we saw those three factors, China VBP acceleration, life science research funding crunch, and farm systems squeeze in that marketplace, those were three factors that as we look at it, the importance of commercial excellence becomes that much more important when you’re dealing with multiple factors hitting simultaneously. And so, you know, we’ve done a number of things and recognizing that the marketplace can stay more volatile going forward. So we’ve put, for example, a central group that’s focused just on looking at around the corner on those market factors outside of the business units. We actually had, prior to Q2, just recently earlier this year, brought in a new Chief Marketing Officer as part of that.

We continue to double down on our R and D investments, growing R and D faster than revenue, and we also continue to double down on our selling investments, growing selling also faster than than revenue, and that’s even more pronounced in the back half of the year as we’re putting more feet on the street behind key growth catalysts like PureWick, like our peripheral vascular business, like our surgery business in new categories of innovations that we’ve been launching.

Steve, Medical Device Analyst, Bank of America: When you think about the full year guidance after the, you know, updated guidance, you kind of now need kind of 3% growth Q3, ’5 percent growth in Q4. Like, what’s the confidence that you have, you know, in hitting that, you know, that second half ramp? You know, what gives you that confidence, if you will?

Tom Poland, CEO, Beck and Dickinson: Yeah. So, what we do assume that farm systems continues to move in a positive direction and we’re seeing that in our orders already and you saw that in Q2, right, so you saw a flat to negative in Q1, you saw two and a half plus, you saw really farm systems, We indicated this when we gave guidance, we expected that kind of dynamic of those three dynamics, that’s the first one that’s moving through the system and we have good visibility that that’s moving through the system. We’ve hit the the base, kind of the low point there. We hit that late last year, q one, and it’s starting to move up. So that’s that’s one catalyst.

Again, life science research spending, we’ve assumed to stay flat with with where it’s been. We don’t have a worsening of that environment. Again, that’s something we’re watching. We obviously had the APM acquisition annualizing in our numbers, which is about a quarter point in the back half, and that that had a very light September, and so that’s a that’s a little bit unusually large benefit in q four. And then, you know, we have the continue, obviously, the lack of the head to head litigation settlements that we had in q two and in the first half in the interventional business.

So, as an example, if you look at UCC, you know, it posted a, you know, a low single digit growth rate in the quarter in Q two. You take out litigation settlement, that was nearly a 10% growth, you know, going on, which has been a continuation of very strong growth in that business. So those are a number of the factors as we look at in the back half.

Steve, Medical Device Analyst, Bank of America: Okay, that’s helpful. When do you think about the margins in the back half, like in this last quarter, you actually did a great job holding the margins, but how should we think about the second half, you know, margin ramp, especially calling out more investments in R and D and selling?

Tom Poland, CEO, Beck and Dickinson: Yeah, I think what’s exciting, one of the things, many things exciting about what’s going on in the company is that journey that we started two years ago with BD Excellence, and again, the purpose of BD Excellence is to accelerate investment in selling and innovation. And if you look at BD historically, compared to other med tech companies, gross margin has been towards the lower end of peer groups. A lot of that’s because of the portfolio that we have from a large medical essentials portfolio. Op margins are very competitive in the peer group, obviously, and that’s because, right, we are very tight, best in class, top quartile G and A and efficient on selling and innovation, efficient and effective. As we think about wanting to continue to invest smartly in selling and in innovation, the number one way for us to do that is through driving up gross margin, right, which is a really healthy thing to do.

I mean, obviously, any type of margin that you want to get, want get gross margin. And so you’re seeing we’re up 190 basis points, for example, in the quarter on gross margin. We called that last year, expect to see, that’s four quarters in a row of strong gross margin expansion driven by BD Excellence. And our whole strategy with that is to use that gross margin expansion, be able to invest at an accelerated way in selling and in innovation to drive revenue growth, still deliver strong EPS growth, not by pure cost focus, but through gross margin enhancement. And that’s what you saw in the quarter.

It was a great, actually, kind of flow through the P and L. It was literally all, you know, very strong leverage coming from gross margin with heightened investment in selling and R and D. So, we’ve got great momentum, a long runway ahead still on BD excellence And again, we use that to fuel growth. We call that internally, we refer that to our flywheel, right? Our flywheel is focused on driving gross margins to fuel r and d and selling investments to fuel revenue growth, which is that flywheel that we have.

Steve, Medical Device Analyst, Bank of America: And you assumed $90,000,000 on tariffs, kind of 25¢ of earnings. How does the China news over the weekend, you know, the mitigation of the trade deal there, kind of impact your thinking on tariffs at this point?

Tom Poland, CEO, Beck and Dickinson: It’s certainly a positive. It’s great news and we’ve been spending a lot of time on on that topic lobbying both in DC. I’ll be there again Thursday as well as in China on those same discussions. So for this year, modest, you know, relatively minor, just given the timing of our fiscal year. It has some favorability, but but smaller, right, just given the the cap and roll of manufacturing, etcetera.

As we think about next year, much more meaningful in terms of a benefit if that were to hold as we go forward. I know we’ve had investors looking at, can I annualize the 90, you know, multiply that times four? Obviously, with this news, you know, that would be way overstated to where we would actually be, so more to come on that. I think what we said is as we have gotten questions on ’26 from our earnings call, the one thing that I said on our earnings call and the post calls was the one thing I am positive of is it will change, and obviously, a week, you know, later it actually changed, I’m sure it will change further. As we approach, we’re also taking quite a few actions, which weren’t contemplated, you know, as we get into our ’26 outlook, but we’re taking a lot of actions around changing suppliers, around changing sourcing of products.

For example, we had shared some examples where China sources all of the vacutainer tubes from our plant in South Carolina. We’re moving for them to source from our Plymouth UK facility. They source all of their flush product from our Nebraska facility. We just opened up a brand new flush plant this year in China. We’re accelerating sourcing from that plant to avoid tariffs.

So all that work continues. I think the news this week doesn’t change any of the actions that we’re taking to mitigate tariffs. It’s still a positive thing to do. And so, you know, we’ve got dedicated teams still executing those plans, you know, aggressively every day.

Steve, Medical Device Analyst, Bank of America: If you take the $0.25 you know, annualized to $1 how much of that was is China, in total? Just trying to level set kind of the impact

Tom Poland, CEO, Beck and Dickinson: of the He said that it was the, the number one element is China. So as you think about, maybe I can give some broad color, is within The US, about 80% plus of our revenue from The US is either comes from product manufactured in The US or is tariff exempt in The US through North American agreements, etcetera, or other exemptions like Nairobi protocol, etcetera. The number one area of tariffs is actually we are a very large, we are the largest manufacturer of medical devices in The US. We are the largest manufacturer of medical devices in the world by quite a large margin. Right?

We make 40,000,000,000 medical devices a year. We have nearly 30 manufacturing plants here in America, and we export a lot of those around the world, including to China, and so the number one source of products that we sell in China are our US manufacturing plants, and therefore, when it was 125% tariffs on those goods, that was the single largest source of our tariff exposure as we go into ’26. So this news certainly improves that in a meaningful way, and we’ll share updates, you know, as we get towards ’26 on the actual number, but it’s certainly a positive, you know, a meaningful positive over the last week and the other actions we’re continuing to take will be positives as well. Okay.

Steve, Medical Device Analyst, Bank of America: Anything structurally you’re changing in the business like for, because of the tariffs, like, these things, like, if your supply chain things or, like, structurally, you know, that

Tom Poland, CEO, Beck and Dickinson: We always are so the answer is yes in a way. I just shared some examples of how we’re changing sourcing patterns across that. We had already looked at, for example, flush. We started that investment over four years ago recognizing that we wanted to move flush into China for local sourcing, And so that’s an investment we made four years ago that just happens to be well timed with this tariff situation. But that’s part of the strategic planning that we do, particularly for our high volume products where we’re making billions of them a year.

We very often have local manufacturing, so vacutainer tubes for Europe, we make in Europe vacutainer tubes for The US, we make in The US syringes for The US, we make almost all of our syringes for The US, in The US, catheters for The US we make in The US, catheters for Europe we make in Europe, so we have that network. When it comes to smaller volume products, many of the ones in BD Interventional, for example, high value, small volume, those tend to be more consolidated single source locations. But that’s always been part of our strategy. I think it’s a strength certainly as you look at our ability to rapidly deploy to other sites for our high volume consumables, we’re probably in a unique position to do that from within the industry.

Steve, Medical Device Analyst, Bank of America: There’s, you know, some concern that with all the inflation that you’re going to, or you’re going with the tariffs, you’re going get some secondary inflation and kind of move into a different inflationary environment. How are you thinking about, you know, BD’s ability? You just did a great job in the last inflationary environment, you know, is your ability in your in teams in place to raise pricing and kind of mitigate inflation, you know, going forward if we move into another environment like that?

Tom Poland, CEO, Beck and Dickinson: Yeah, I think, you know, obviously, BD is one of the companies that we’re very transparent in our pricing, right? We share that quarterly where we’re at. And if you go back and look, you’ll see BD historically, pre pandemic, was generally minus 50 bps, minus 40 bps, maybe in a great year flat pre pandemic, and then if you, you know, open up our annual reports and look, you’ll see that notably changed just after the pandemic as the inflation started happening as I was CEO, and that is not by accident. Right? We ended up, I put in capabilities in the organization, just like we have a law department and we have a regulatory department and we have a quality department, we have a pricing department.

It’s a function in BD just like any other function, and every business unit has pricing experts, company has pricing experts, and we have an IT system that just, that those pricing experts use called Mondavo, and so, that allowed us to help partially offset some of the dynamics Again, we were very proud of the work that we did navigating that. That work combined with BD excellence and other cost programs that we had from manufacturing and changing sourcing allowed us to, of course, we’ve improved operating margins over five fifty basis points, you know, over the last several years since we launched BD 2025, and that’s been part of, you know, our ability to do that. So, that will be a lever as we look going forward, you know, we take that prudently. We recognize, you know, the challenges of our customers.

We always first seek to offset through sourcing changes, through BD excellence. Price, obviously, is kind of the third lever that we do pull that.

Steve, Medical Device Analyst, Bank of America: I wanted to ask, switch gears to the life sciences separation. Maybe give us an update on how that’s progressing. There’s been a lot of changes in the macro environment. Valuations have changed and growth outlooks have changed and they continue to change. And there’s a lot of volatility, which maybe from the outside, things like it could slow things down a little bit.

But it seems like it hasn’t. I was just curious why not and where things stand.

Tom Poland, CEO, Beck and Dickinson: I think these are amazing assets, Our bioscience business, you may have seen there’s a launch this morning, we actually put out a press release for the AA first in world analyzer that uses our CellView technology and SpectralFX. Great quote and background from leading researchers at Memorial Sloan Kettering in that announcement around how it’s enabling to do things that they just were never able to do when they come to cancer research and discover new things. It’s truly a breakthrough technology. So we’re clearly the world leader in flow cytometry by a strong margin. We obviously invented the whole category with researchers at Stanford, which is why we’re still based very close to Stanford, and so whoever, people recognize that as something, even in a dynamic environment where there’s depressed research spending today, the use of that technology to discover new things in cancer and immunotherapies and new spaces, that is a one of a kind unique asset and there’s a high degree of interest.

And the same thing in our diagnostic space, right, there’s really just a few, two real companies in the microbiology sector, which we’re a leader in, with a great growth platform in both BD MAX and BD CORE as we look forward. So, good interest, we’re in the middle of that process moving through and we remain on track, as we’ve shared before, with the target to announce something this summer on the final form of the transaction.

Steve, Medical Device Analyst, Bank of America: Okay. So the timeline is announcement this summer, that’s not changed?

Tom Poland, CEO, Beck and Dickinson: That’s not changed.

Steve, Medical Device Analyst, Bank of America: Okay. How are you thinking about the different options you’re going to laid out in sell versus RMT versus spend and would you consider, you know, taking the business in two pieces or does it need to be one whole piece?

Tom Poland, CEO, Beck and Dickinson: Yeah, we’re obviously we’re focused on what creates most shareholder value. And so we had shared what we said before is that those are obviously the three theoretical options that exist. Two of those options obviously have the benefits of synergies in them, RMTs and sales, which can give outsized value creation versus a spin which doesn’t have those. And so just recognizing that as an opportunity for outsized value creation, again, we’re the middle of a process, so I don’t want to say anything more, but we’re continuing to proceed.

Steve, Medical Device Analyst, Bank of America: Okay, you know, strategically when you think about kind of the medical device business or what you may call RemainCo, like what do you think the growth outlook is of that business, you know, kind of post the separation and what kind of gives you the confidence that, you know, that growth is durable?

Tom Poland, CEO, Beck and Dickinson: Yeah. So it’s been, of course, it’s never not been mid single digit. I mean, last year, that business was about six. It was in that five to six range every year for the last five years. Even this year, inclusive of the pressure from China and inclusive of the recovery still underway in farm systems, it’s still mid single digit growth business even this year with our updated guide, right, the RemainCo BD.

So that’s, I think, you just say what’s the factual basis of of the performance of that, that’s that’s where it is. That’s also the area where we see BD excellence having the biggest impact from a gross margin expansion and the ability to reinvest that in selling and r and d. So there’s a really nice formula in the the RemainCo business. That’s, of course, because that’s where the scaled manufacturing is that you get that leverage as we deploy BD excellence. And there’s lot of exciting things going on in that business.

Of course, it’s a 90% consumable business with strong recurring revenue. It’s a business that is has wide moats in the market spaces in which we compete. We’re number one in north of 95% of the spaces in which we compete. That those moats are based upon significant manufacturing scale, often five plus times the size of the number two competitor, and the cost advantage and quality advantages that that comes with. Innovation and early market leadership advantages there.

We’re really excited about the pipelines, and I think if you look across those businesses, whether or not you’re talking about urinary incontinence, where we’re the leader, kind of, with Foley’s, and we’re reinventing the whole category with PureWick, which has been a phenomenal growth driver, or hernia in surgery, and how we’re reinventing that whole category now, leading the way to use resorbable mesh nothing left behind, right, and utilizing that same material for biosurgery to how we’re continuing to reinvent medication management with our new AI platform that will be coming out later this year with the launch of Pyxis Pro, with the first Pyxis hardware, I think, thirty years since it’s, certainly since we’ve bought it and I think even before CareFusion and maybe before it spun out of Cardinal, so we’re really excited by that coming, and that’s true across the board, right? I just shared a few examples, but that’s, as a market leader, right, we consistently innovate, expand into near adjacencies in our spaces, that creates those wide moats that creates that durable business profile. We’re really excited about, you know, the trajectory of the new BD. Okay. And then how do

Steve, Medical Device Analyst, Bank of America: you think about deploying capital kind of post separation in new BD, both internally? Which businesses are going get capital? Like, are you going to be investing in more growth? And then also kind of external, you know, capital deployment through acquisitions.

Tom Poland, CEO, Beck and Dickinson: Yeah. So I think if you look at BD, because we may be a little different than other companies within med tech. In a way, BD is a, of course, given our scale from a manufacturing perspective, we’re almost like a healthcare industrials company a way, and we behave that way when it comes to capital deployment. I think one of the things that I’m really proud of is the consistency and discipline that our team has when it comes to capital deployment. We have very rigorous models that we use when we look at deals.

They’re standardized. Only our corporate team does those models so that they’re not variable by business unit. We have very specific scorecards that we look at. We do deals that give strong returns on capital, advance our strategic position and growth, but we’re not doing part of our algorithm is not going out and doing I’ve made it very clear. I’m not doing large transformational m and a.

We’re not going in we’ve not been chasing doing 20% billion dollar growth things that are gonna be highly dilutive to EPS either. That’s not what we’ve done. We’ve done really great assets. I think the Edwards acquisition very recently is a great example of that. That’s a great 7% growth business, market leader in its space, 90% category share, New technologies with AI continuing to drive its margin profile up, immediately accretive to revenue growth, immediately accretive to gross margin, immediately accretive to EPS, immediately accretive to op margin, strong double digit ROIC profile.

Like, it’s we’ve had a number of investors say that looks like it’s probably one of the best financial deals in the last five years in med tech, and I think it is. Many of our deals have fit that profile, and it’s been prudent deployment of of capital in that way, you know, continuing to keep BD’s durable growth profile while also keeping that earnings cash flow profile as well that we have. But it’s it’s, again, it’s not in in a we’re not seeking to do large disruptive things that are in in a pursuit of of Matt, of, you know, a stepwise change to high single digit growth. That’s not our agenda. Yep.

Steve, Medical Device Analyst, Bank of America: And how are thinking about the balance sheet kind of post separation? Is there still kind of wanna be in that two and a half times leverage or, like, and any thinking on changing

Tom Poland, CEO, Beck and Dickinson: the depend upon the form of the transaction. At this share price, obviously, we we, you know, share buybacks as well too. It’s a great value. Hard to beat that from a return perspective, but that’ll all depend, right, on the form of the transaction, so some more to come there. We’re happy at at two and a half.

We would obviously look to maintain that and continue to delever over time, but, again, we’ll look at the form of that transaction.

Steve, Medical Device Analyst, Bank of America: Okay, perfect. Kind of one other question I had on the kind of the RemainCo, I think you’ve talked a lot about as total BD, you’ve got a lot of margin expansion opportunity, especially with the gross margin line. How much of that was in Life Sciences versus RemainCo? Is there still a lot of margin expansion in the RemainCo business left kind of post separation?

Tom Poland, CEO, Beck and Dickinson: The majority of the margin expansion is in RemainCo or is in new BD. And that’s, again, the large scale manufacture. Just to put it in perspective, so as we’ve been driving, and let me just step back a little bit. So when we started BD Excellence, you know, about two years ago, we did a number of structural changes that we haven’t talked about that much. So as an example, we took all of our manufacturing from our businesses and we centralized it.

And so as we think about BD excellence, we want the business presidents focused on selling, innovating on that side, all of our manufacturing reports up to a central group that also has a central BD excellence team so that they’re driving that one person central, all the business unit manufacturing reports to, and they drive all those systems and processes. They wake up every day doing that while the businesses are driving, right, deep insights into the market, driving their innovation agenda, driving the commercial. And so that’s really allowed us to accelerate that BD excellence deployment and and that focus. As we look at it, like the productivity improvements we’re seeing on the line since we started just in the last two years, and with the same capital that we had two years ago, if you look at the same lines, the top 50 lines, today we’re making 2,400,000,000.0 more units on those lines with zero additional capital investment. We’ve obviously put other lines in over that time.

That’s $2,400,000 more of things that we’re selling, or not dollars, but units that we’re selling, getting more value out of that capital, as an example, and we can deploy that, you know, any capital savings that we get because we don’t need a new line for that, the other purposes. Obviously, we’re still investing heavily in many areas. Biologic drug delivery is a great area that we’re we’ve been investing heavily in capital to help fuel, you know, our growth in GLP-1s, which has been a big, you know, positive for us over the last several years and will continue to be as we’re growing double digits there. But overall, BD Excellence is driving, I mean, 30% improved safety rates, 35% better, you know, quality metrics from a non conformances, improvements dramatically in OEE productivity, revenue per associates in our manufacturing plants, all up in very strong double digits, which is all comes together to drive that margin expansion at the gross margin level, which ends up again allowing us to reinvest that money in selling, in innovation, fuel the flywheel Okay. And still deliver, you know, strong EPS performance.

Steve, Medical Device Analyst, Bank of America: Great. Thank you. I think we’re out of time, and thanks for joining us.

Tom Poland, CEO, Beck and Dickinson: Okay. Thank you. Great seeing you.

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