Becton Dickinson at Goldman Sachs Conference: Strategic Moves Ahead

On Monday, 09 June 2025, Becton Dickinson (NYSE:BDX) presented at the Goldman Sachs 46th Annual Global Healthcare Conference. The company shared its strategic plans, focusing on the biosciences separation and tackling macroeconomic challenges. While the company highlighted its growth trajectory and innovation, it also addressed concerns about global market pressures.

Key Takeaways

• Becton Dickinson plans to separate its biosciences division, potentially through a sale or Reverse Morris Trust, aiming for substantial shareholder value.
• Despite macroeconomic challenges, the company has maintained a 5.6% revenue CAGR since 2021, with strong margins.
• Tariffs and legislative changes could impact manufacturing, but the company remains focused on growth and innovation.

Financial Results

• Revenue CAGR: The company has achieved a 5.6% compound annual growth rate in revenue since 2021.
• FY’25 Guidance: Becton Dickinson has set a growth target of 3.25%.
• Tariff Exposure: Estimated $90 million impact for FY ’25, primarily affecting Q4.
• Gross Margin: Expanded by 190 basis points in the last quarter.
• EPS Growth: The company reported an 8% increase in earnings per share, despite headwinds.

Operational Updates

• Portfolio Simplification: The company continues to simplify its portfolio, including the separation of Invecta, V. Mueller, and life sciences.
• Macro Factors: Challenges include reduced research spending, pharma destocking, and China’s Volume-Based Procurement.
• Base Business Growth: The core business is growing at approximately 5%.
• Pharma Systems: Growth of $800 million in pharma systems since 2025.
• BD Interventional: Achieving about 7% CAGR since the acquisition of Bard.

Future Outlook

• Growth Drivers: Focus on new technologies such as the FactsDiscover A8 system and advancements in bioresorbable materials.
• Alaris Upgrade: A three-year upgrade cycle is on track.
• Biopharma Solutions: Long-term growth potential in the high single digits, with a $1.2 billion capacity expansion since COVID.
• Pharmacy Robotics: Now a $700 million business, following the acquisition of Parata.

Q&A Highlights

• Biosciences Separation: Announcement expected this summer, with a focus on maximizing shareholder value through strategic transactions.
• Share Buybacks: The company views current stock prices as an opportunity for share repurchases, aiming to maintain a midterm leverage ratio of 2.5x.
• Tariff Concerns: Potential impact on US manufacturing could lead to shifts in production locations.

For more detailed insights, refer to the full transcript below.

Full transcript - Goldman Sachs 46th Annual Global Healthcare Conference:

Unidentified speaker: Thank you. Yes, one additional disclosure that we needed. So, the session is not open to the press. There you go. All right.

So, I want to thank Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson. Appreciate you’re making the time. Know you have a lot of different priorities right now. So very much appreciate you’re making the time to be here. I wanna kind of start with, I think, maybe a strategic topic that I get a ton of questions on is like, where are we in the biosciences or life sciences separation process?

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: Sure. So we had shared when we first announced the separation that we would expect to announce the actual form of the transaction this summer, which remains on track. We said that’s kind of an American summer between Labor Day and Memorial Day, or Memorial Day and Labor Day. And that continues. So, the other things that we’ve shared in the context of that, which is no different from when we announced, is that as you think about forms of separation, right, academically there’s three kind of macro forms of separation.

A spin, a sale, and a merger RMT. We view that obviously two of those three don’t have stand up costs, and also have synergies that you have the opportunity to participate in. And so that those two could create outsized value versus the third option. Obviously, would be a sale or an RMT. And so again, we continue through our process.

Unidentified speaker: And as you think about setting that deadline, how do you have control over the timing of the, I mean, seemed like spin you can totally, you could decide right now, we’re going to spin, or we’re going to do nothing. Or the other two, how can you control the timing there? And how do you have the certainty that you can get an answer by the summer?

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: I think the other things that we’ve shared before is that we didn’t start the discussion with the press release. That we had already had dialogue with a number of parties at the time that we put out the press release. And so, again, we have a process by which bids are due, etcetera, at certain phases along that. And we’re progressing through that.

Unidentified speaker: Okay. And in a scenario where, so I had a group we had a group of investors in your offices in early May. And one of the takeaways or at least feedback that I got from that meeting was either the way people read the comments was, either you’re gonna proceed with a sale, or you’re gonna do nothing, and that spin is sort of off the table.

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: Would you I say that we’re focused on, obviously we wouldn’t be in a process if we were doing a spin. Okay. Or if that was the focus. So those three options all can create shareholder value, but we’re clearly focused on creating outside shareholder value of that opportunity.

Unidentified speaker: And has anything changed in your sort of assessment of what would be an appropriate valuation given the move down in Becton stock?

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: No, we still view it as, and we would look at anything in terms of not only where the stock’s priced today, but also historical value for the assets. They’re phenomenal assets, right? I think that’s always important to recognize is that these are our blue chip phenomenal assets with biosciences having likely the not likely, the best innovation pipeline in its history. We invented the category of flow cytometry, of course, with Stanford University, which is where that business is still headquartered, very nearby in San Jose. With the FaxDiscover, which is really an entirely new class of flow cytometers that have the ability not just to measure fluorescence, but now imaging and combine all of that.

The only thing that does it on the planet is our fax system. We keep launching. We just launched the A8 very recently. We started getting orders for that already. That’s a great business.

The leader in the category, in a very attractive category. And then obviously, you know, leader in infectious disease and in molecular testing. A very attractive asset as well too. So, no, we view those as both attractive assets. And we look at it both ways, as I mentioned.

Unidentified speaker: And you’ve obviously, you’ve been on the acquirer side of a number of acquisition, at least from time that I spent in corporate development. It’s hard to get the buyer to think about a business outside of its current performance. So how do you get people to see bioscience is obviously facing some cyclical pressures right now, which probably doesn’t impact a five year view. But how do you get people to see beyond current performance sort of give you fair value for the asset?

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: Obviously, anyone that’s looking at those sec, is already in those sectors. So they know them very well. And they’re staying in those sectors, most likely. You know, for us, diagnostic systems obviously, again, you’ve got our molecular continuing to grow double digits. Back tech recovery moving in a solid direction.

And then in, even in our bioscience you’ve got clinical continuing to grow at a certain rate. And you’ve got the life science, you know, basically reset of the base. We, as you know, we saw pressure in life sciences twelve to eighteen months after most of the market did, Because we were launching Facts Discover and that had an outsized demand at launch. So you’re seeing that impact us more this year while it hit most people last year or the year before. Again, I think people would view and say we understand those dynamics.

And you’re coming to a base. And you have the opportunity beyond that.

Unidentified speaker: The other question I’ve gotten is, are you committed to the businesses being separated together? Or are you willing to separate them in some form or fashion?

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: Yeah, no new news. We’ve always shared that those businesses, they really have no commonalities from a separate headquarters, separate sales forces, separate service organizations, separate manufacturing plants. So, you know, we would, we can separate those. It’s obviously easier for a single transaction, but there’s no reason that they could not be.

Unidentified speaker: Because it would seem like that would open up the aperture of potential buyers.

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: There are people that could be interested in Holdco or separate, yeah.

Unidentified speaker: Okay. Last one, I promise we’ll talk about the business. But this topic is one of the ones we get the most questions on. So as you kind of do your own internal scenario planning and you contemplate one of these outcomes, what are some of the things you’re sketching out as the use of proceeds in a scenario where you do execute a sale? And how are you thinking about prioritizing use of that capital?

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: Yes. And obviously, the amount of capital would vary based upon the type of transaction. I think just a general statement on capital is that so first off, we are continuing to be committed over the midterm to leverage ratio of in that two and a half times. It doesn’t mean you need to go there immediately. But and we’re very much on track for that just naturally as well, too.

Just as a note, the event by itself is not a massive leveraging event. It’s about half a turn if we didn’t pay any down, any debt down, right? That’s what you’re talking about.

Unidentified speaker: Meaning a sale?

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: Yes. It was just a separation. Oh,

Unidentified speaker: a separation.

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: It’s about a half a turn if one didn’t pay down debt. So it’s not a massive leveraging event in and of itself.

Unidentified speaker: Oh, your leverage ratio goes up because you lose profits, Correct. So as

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: you just think about what you need to do to. Yep. In any case, regardless of those proceeds or our organic proceeds, certainly any proceeds and available cash we would use to buy back stock. Certainly at this and around this price level, there’s no better investment that we can make than buying back shares.

Unidentified speaker: And would you leave any dry powder on the balance sheet? Or you would you be able to fund future M and A through?

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: I think we’d be hyper focused again in this environment, even regardless of a transaction, just with our organic cash flows of buying back shares. There’s no better investment than buying back our shares in and around this stock price, for sure. So we’ve done, of course, a number of we’ve done 20 tuck in acquisitions just since I’ve been CEO. And we’re integrating in the APM business. That’s going very well.

We’ve been funding additional sales reps in that business. We funded additional R and D in that business. Of course, combination is bringing together all the therapy information. We know what therapy people have been given through Alaris, through Pyxis, etcetera. Now we know the physiological response to the therapy.

And we’re beginning to put the two together to be able to close loop more the optimization of delivering that therapy. And so that’s a project we’ve put several million dollars in to fund. We’ve got a number of other new things that we’re moving through the pipeline on recent acquisitions that we’ve made. Whether or not it’s the acquisition of Tifa, for example, we’re launching. You know, we’ve been getting new hernia meshes that are bioabsorbable approved.

We just got umbilical approved a few months ago. We have the first GI application of using that biomaterial launching next year in peristomal. We just recently entered into the breast clinical, into a breast clinical study to expand there. And we’ve got two more indications for breast that we wanna move forward in there. And the same thing holds true like SurgiFore, which is a companion product to Chloroprep.

Got new products moving through the pipeline there. We’ve got them moving through, obviously, the PureWick acquisition that had happened. We’ve got innovations launching every year. And that list goes on through other products. Straub Medical, we’re in development for a below the knee indication for that smaller French size.

And so we’ve taken a number of the tuck ins that we’ve done. MedBank, our non acute Pyxis product. It’s a great product but you could never, it’s never been integrated into Pyxis. Launching next year, MedBank users will be able to see, and IDN will be able to see all of the medications out at their ambulatory surgery centers, etcetera, through the same portal of Pyxis. So we’ve been investing organically to start optimizing and getting more and more of a flywheel going from the tuck ins that we’ve been doing.

But I think we feel really good about that and a strong innovation pipeline for ’26. So again, I just use that to reiterate there’s no better use of any cash in terms of buying

Unidentified speaker: back

Very helpful. And I want to go into the pipeline a little in a little bit more detail. Because I think macro considerations now I think are overshadowing a lot of the underlying business dynamics. But I can’t not touch on the macro. Maybe we could start with kind of the way you’ve been characterized in the business.

Maybe paraphrasing a little, you’ve sort of three problem children franchises, and then you’ve got the rest of the So maybe kind of break down the performance for us over the past couple years. And then I’d love to get into kind of the back half of the year here. Sure.

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: So I think one of the things that we recognize and discuss is we have a complex portfolio. We probably have one of the more complex portfolios in medtech. And we’ve been simplifying that, whether or not it was the separation of Invecta, the separation of V. Mueller, now the separation of life sciences, really turning BD into a very focused medtech company. With that said, today, of course, we are the only med tech company with exposure to a few specific markets, right?

We’re the only med tech company with exposure to the life science market. There is no one else. There is no other med tech company with exposure to the pharma device market. We compete with pure play competitors in that space as well. Each of those spaces do have market macro factors going on.

And so, you look at kind of BD’s trend over the last many years, go back to BD 2025, the start of that. Know, first off, we’ve been growing about a 5.6% revenue, a 5.6% revenue CAGR since we launched BD 2025 and 2021. And that’s inclusive of the midpoint of our guide this year at 3.25. Our base business over that time period has been pretty stable, particularly the last three years. And the swing factor have been essentially three dynamics.

One is the slowdown in research spending, the destocking in the pharma medical device channel, and then China, the OBP. And if you look back at BD historically, those three areas have typically been 70 to 130 basis points of tailwind. They’ve always, those three areas have always been accretive growth drivers to the company: BDB, farm systems, and China. And this year, those three factors are about 180 basis points headwind. And so, it’s basically kind of the base BD growing at about five.

And those three factors, 180 negative to get you to 3.25. And historically, so you go back to ’23, the rest of BD was growing 4.5. Those three added 130 basis points, and we were growing 5.8. So they swung in that period of time. And they swung across the sectors, right?

Life sciences is down versus where it was in ’23. Pharma destocking, you see that across the peers. And China, the OBP, we see going through BDI. I think what’s most important is, is kinda, you know, where does it go from here? So again, we feel good about the base business and what we’re doing.

We can talk about some of the drivers there. But obviously we’re in the process of separating life sciences, which will change our exposure to that segment. It also will change our exposure in China. Today, we’re 5% to 6% of our revenue is in China. That will go down to about 4%.

As we look forward, the largest segment in China is life sciences. And then you’ve got, and China overall, I would say within BDI, we’d continue to expect VOBP this year, where China’s growing, declining about double digits. Continue through ’26 for VOBP pressure, particularly as it finishes through the BDI business, ’27 then being a year for rebound. And in farm systems, we’re already starting to see improvements there sequentially. We saw sequential improvements last quarter.

We strongly expect to see, and we can see it now in our numbers, sequential improvement in Q3, and that can continue. As now, of course, since we launched BD 2025, we’ve grown farm systems about $800,000,000 It’s now about half of that business is biologics drug delivery. We are the world leader in biologic drug delivery fueled by GLP-1s. Just as a note, we do not include vaccines in, when we say biologics. Number of our peers do use that within their biologics number.

We do not. And so, it’s a, you know, a sizable scaled business there. So, that’s how we think about those three factors and how they come off. Life science being separated, farm systems, you know, back half of this year beginning to improve. And China still, still some time for VOBP to finish going through this.

Unidentified speaker: And then as you think about first half performance of the business, I think, you know, I appreciate, I think we all appreciate the royalty dynamic in Q2. But if you took at the first half of the year growing, I think roughly 2.5% -ish between the two quarters, you need a pretty big ramp to get into the back half of the year. And I it seems like two of those three businesses are facing incremental headwinds, especially like biosciences, every headline you read about the NIH seems to be worse than the prior one. Now who knows, Bark versus Byte. But how should we think about the ramp from the 2.5% in the first half to sort of the implied 4.5 ish percent in the back half of the year to get to the full year guide?

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: China’s likely similar, right? Farm systems, we expect some recovery in the back half of the year. Not back to double digit growth, but beginning to get back towards at least BD median growth rate versus being dilutive to that growth rate. We do have facts, the AA launch in which now. And I would say, while the market remains constrained for overall instrument placements in the sector, what we see at that allowing and as we can see it now already is increasing our win rate among that.

One of the things that we can’t control is the market environment for spending. What we can control is our win rate within that environment, right? And new technologies allow us to win. They’re going to, so and so group’s going to have 100 things that they’re going to buy. You want that to be close to 100 of BD devices.

Unidentified speaker: And why does your win rate go up when the market’s more constrained?

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: Because of our new innovation. Because of the fact, A8, again, it’s the first system that you can actually see the cells of, that you’re analyzing versus just the fluorescent dyes. And we can see that already. We were seeing, this Friday, we got a big pharma client, for example, who’s standardizing on that platform. And it’s putting in a number of purchase orders for those because they recognize there’s new science that I never knew about.

And, and new things about cells that I can only see with facts discover. AA. If I want a sorter, I can get an S8 for sorting technology. So those are the main things along with Bactech, continued recovery in the back tech franchise. Those are the main drivers.

Unidentified speaker: And as you kind of just thought about framing the outlook for the rest of the year, you’re still placing some onus on improvements in different parts of the business. So just in terms of internal organizational pressure to kind of hit the number, now hit a revised number, did you think about the balance between the 3% to 3.5% that you’ve articulated versus taking a more potentially conservative stance just to take the pressure off the organization and allow you to kind of navigate some of this uncertainty. Not saying you want to be unambitious in your targets, but how did you think about balancing that?

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: We take obviously the roll ups that the businesses have. We provide some level of rebate or discounting to those numbers from the businesses. And again, what we shared was that there’s certain assumptions that we have in that, right? So when we put out that guide, we made it clear that we’re assuming that this is based upon the research environment that we saw in Q2. Couldn’t dictate what was going to happen.

We didn’t assume some radical change in NIH funding versus what had happened in February and reduced funding. But there was still not visibility to that. So those are some of the baseline assumptions that we put into that.

Unidentified speaker: And on that point, it seemed like you exited Q2 at a worse place than how the market for research funding seemed probably worse in March than it was in January.

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: For sure.

Unidentified speaker: So have you kind of contemplated a continuation of the exit rate trends? Or kind of the average performance?

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: No, closer towards the exit of what we saw. And we did see, obviously in Q2, there was notable worsening in both February when the administration announced the reduction in spending. And then a little bit later than mid February when Europe, basically you saw a shift. We had purchase orders that literally got put on hold as governments were looking at redirecting towards defense spending. Okay.

And that was clear. Germany, UK, etcetera. A number of the governments there said we’re holding on purchasing instruments for research spending as we’re making decisions around defense.

Unidentified speaker: Maybe we can turn to the kind of future BD for a second. And I think most of that’s contained within the business that’s performing 5%. I know there’s the China piece and the farm systems component. But is 5% like a good baseline number for thinking about market growth for new BD separation? And how are you guys thinking about that?

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: So I think we’ve set our WAMGR overall is a right around or slightly under 5%. Now that’s a long term WAMGR. That includes, that’s not for new BD, that’s just BD current, what we say it is, And doesn’t, we don’t adjust WAMGR for temporary reductions in pharma destocking or life sciences. So, would be an applicable WAMGR today would be lower because of those macro dynamics. But overall, from a long term, that’s the growth rate.

As we think about the new BD, I mean, it’s a very exciting portfolio. As we look at, basically, if you walk through the three areas, we continue to have our medical essentials business, right? We treat three point nine million patients an hour are touched by our medical essentials business, right? Huge consumable portfolio, durable, recurring revenue, with specific, you know, types of innovations that we’re doing to continue to keep that fresh. As we then, and generate meaningful cash.

The other three segments then, and that has a much lower WAMGR than the rest of the business, right? Lower single digit profile. But has a specific role within the portfolio. Then we go into the connected care biopharma solutions and interventional sectors, which have higher WAMGRs and higher growth rates. If you look at, for example, let’s start with BD Interventional.

Since we bought Bard, we’ve been growing at about a 7% CAGR in that business. And we continue to expect that business to outperform. One is, think about UCC and PureWick. That’s now over a half a billion dollar franchise, up from essentially nothing when we bought bought Bard. It will soon become half of the UCC business in total.

And we’ve got a great pipeline there, right? We started with female only in hospitals. Now it’s men and women in hospitals, men and women at home. Later this calendar year, we’ll launch for men and women mobile, particularly in, specifically for people in wheelchairs. And then there’ll be a, after that in our pipeline is a product for people walking around mobile, like a with a fanny pack on walking around, managing urinary incontinence on the boardwalks here, right, as an example.

In the surgery space, what you’ve seen us do is take a plastic mesh business, settle major litigation, right, which we spent probably a billion and a half plus of cash over the last many years getting rid of legacy barred litigation that came at the time of the acquisition. Good to have that move behind us. And what we’ve been doing is then replacing plastic mesh with bioresorbable material, our P4HP material. And so that’s, no one should get plastic mesh from a hernia perspective. We have data that says seven years out the recurrence rate is just the same with something that disappears eighteen months from you having surgery.

And we’ve been extending that to different types of hernias. I mentioned before, just got umbilical. We now have the first GI application launching next year in peristomal. As I mentioned, we now have multiple new products in for breast reconstruction moving forward in our pipeline, including the first that’s already started clinical studies. And then in PI, and we continue to have serial innovation with next year having some really nice launches.

We’ve got one for a liver graft coming in for stenosis of a liver. We’ve got one for covered stents. A category that’s really led by one competitor with no new innovation in ten to fifteen years. And the first in world multi modality biopsy device launching there. So, excited by that.

In our connected care business, you know, one of the other things that I didn’t mention, but in Q4 APM becomes organic, And so that’s obviously a nice, you know, pop up of a business that’s growing 7% plus suddenly becoming organic in Q4. The, that business will continue as we think, you know, ahead within our connected care business. We’ve brought in innovations that are combining those insights with the therapy insights to start doing things that no other company on the planet can do. And that’s moving through our pipeline, right? Starting to close the loop on therapy management rather than nurses and doctors having to intervene every minute and trying to optimize that for the patient.

Pharmacy robotics and automation, now a $700,000,000 business that we built through the acquisition of Parata. And a number of other tuck ins like MedBank. That’s in early innings in that space. Of course, we just shipped our first new Pyxis since the launch of Pyxis.

Unidentified speaker: Oh, you just shipped the

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: We just shipped the first limited commercial release, went on the truck, I think last Thursday, which is great. A little bit ahead

Unidentified speaker: of Does the impact of that get blunted at all because of the leasing model? Like when Carifugen launched Pyxis CS way back in 2013, there was a huge bolus of revenue. And of course, the installed base is much smaller then. And I think the market dynamics were a little bit different. Then you move to the leasing model after you acquired it.

How should we think about the impact of a Pyxis refresh on the business here?

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: One is, I think it really it’s a great product, and we’ll share more about that in the future. But competitive gains, we expect to shift incrementally the number of share gains that we’re getting. There’s the opportunity for price premium. It holds 40 to 50% more medications than the current, any competitive system, with the exact same footprint. And it’s also connected from the cloud perspective.

And it’s the first product that will leverage our new Encada software, which is BD’s first enterprise wide AI platform. So we’ve got AI in a number of systems today, like our APM system has AI built in. And our Keystra system has AI built into it. But it’s in each platform. Encada is a cloud based platform that we’ve partnered with Amazon on.

And a large language model company that’s embedded in Encada that all of the data from future Alaris systems, Pyxis, APM will go into to allow users to do new things that they can’t do today. And the first launch of that software is with the new Pixis Pro, which is an AI enabled, cloud enabled Pixis system. So we really like what we have going on there.

Unidentified speaker: Can Pixis Pro offset the slowdown that will naturally occur when you complete the Solaris upgrade cycle?

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: There’ll be two things in that business. There’s obviously other things going on in BD. And that would be more of a 27 topic that when we complete that So

Unidentified speaker: the upgrade cycle on Alaris is still

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: We said it’s a three year cycle. Three year cycle. That’s what we committed to the FDA, a three year cycle. So we’re in year two

Unidentified speaker: Okay.

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: Of that upgrade cycle.

Unidentified speaker: And can that business still grow in fiscal twenty six?

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: Yeah, we’re not giving ’26 guidance. I know. But it will still be in the middle of upgrading in ’26, yeah. So it’s not

Unidentified speaker: like a bell curve where you have a lot in ’24, a little in ’24, a lot in ’25, and a little in ’26 in terms of

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: not getting into ’26 guidance. But it still has runway in ’26. And then, then obviously we have, we also have a next gen Alaris deep in the pipeline that we’ll focus on immediately afterwards.

Unidentified speaker: And that’ll be large volume pump syringe and PCA offering? Or it’ll

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: be? Correct. Okay. And then the last business of the new BD. So, I talked through medical essentials, the connected care, the interventional business.

Obviously, the last of that being our biopharma solutions business. Which again, we made some meaningful capital investments. In the middle of COVID, we invested $1,200,000,000 in capacity expansion. And that really played off. It allowed us, paid off.

It allowed us from twenty one to twenty three to grow that business at a 13% CAGR. We more than tripled our sales of biologic delivery devices. Became the world leader with more than a billion dollar biologic drug delivery business. That $800,000,000 that we’ve grown since we launched that capacity expansion, That’s mostly all been in the biologic space. And right, today we have strong presence with hundreds of millions of dollars of revenue in GLP-one drug delivery.

We have strong presence with new novel GLP-1s coming out in the future in our devices. And we have north of 60 biosimilar GLP-1s already signed in our devices as well as we think about a very large, you know, generic drug cycle that will be coming up in the future. And so, right, that business as it moves out of the destocking phase, again we see that returning towards high single digit growth long term business. And you’ll start seeing, won’t jump straight there, but you’ll see it start to improve.

Unidentified speaker: And I appreciate the opportunity for that to contribute to growth and the investments that you’ve made. But you started by sort of talking about the things that BD has that don’t look like a typical med tech company. And this is on that list. So why doesn’t Pharm Systems enter the discussion for separation also?

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: Well, we always look at what optimizes shareholder value. And that’s something we constantly look at. It’s a very distinct business than life sciences. Obviously there is no life science company those types of assets, med device. It also relies on BD.

It can’t live without BD, right? Most of the technologies in that business are shared across businesses. So for example, one of the biggest differentiators in farm systems is our needle technology. We’re the actually only competitor in that space who makes our own needles. And that technology, particularly when it comes to biologic drugs, for example, biologic drugs are becoming more viscous.

And the key concern is time to delivery, right? Can I even deliver it in time to use an injection, sub q, or do I need to move it to infusion? If I’m gonna move it to sub q, can I do it with a device I hold in my hand? Is it a device that I need to with a Libertas or our Evolve system, which we have? And one of the factors in that decision process is the needle technology.

And we’re the only company in the world with a ultra thin walled technology that allows us smaller gauge size with thinner needle, but a larger internal diameter because of very proprietary technology that we have. We use that same technology in our ultra thin wall needle push button, for example, that allows us to get blood out of your body very quickly and fill up the tubes. So you’re not sitting there watching the tubes fill up for a long time and fill up significantly We use that same technology in catheters. We use it in other things for the drug delivery. We also use it and apply it in our pharma systems.

There’s many other technologies that we share across, you know, our different drug delivery platforms, which is how that business was born, right? Out of sharing technology across Okay. Always, always looking at, actively looking at portfolio though.

Unidentified speaker: I want to switch gears over to the P and L. There are questions, obviously feel free to raise your hand. The I know you said you’re headed to DC after this. Tariffs obviously are still in focus, although maybe less in focus than they were a few months ago. I mean, gave guidance right before there was this temporary relief offered on China.

So maybe just remind us kind of what you said and what the assumptions were in your guidance, Where we are today. And maybe give us a little window of what you’re hoping to get out of your, your Navi Med time in DC. Sure.

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: So starting on the, what we announced last time, which was $90,000,000 of tariff exposure in the year, this year for FY ’25. We mentioned that’s essentially all in Q4 for us, just given we’re on a unique fiscal year of October through September. The changes don’t have a meaningful impact on that number within this year, right? Obviously this year we were able to make certain moves, move inventory in and out ahead of time to minimize. I think what it does definitely do is it’s, it’s a very, it’s a positive for ’26, the changes that have announced.

Because what we did share was that the the number one source of tariff costs for us in ’26 and beyond is the tariffs that China places on US imports. So that’s a much larger number when the tariffs were before they were cut down Right. In China. That was a much larger number because we only, we have very, we have one product that we really import from China into The US. We’re a very large US net exporter.

Right. With nearly 30 plants in The US. So, with China’s tariff rate coming down, I think after the last earnings call, were looking at the 90,000,000 and saying, okay, can we just multiply that times four and annualize it? Certainly a lower number than that today. So that’s a net positive for us.

And we continue to do a lot of work, as you mentioned.

Unidentified speaker: And why wouldn’t the 90,000,000 go down? It’s

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: just a factor of how you think about what’s coming in from, because the second biggest piece is where US is the number one place we manufacture, Europe is the number two, Mexico is the number three. And so Mexico inbound as well has a factor. That’s not gonna some They’re gonna be VA compliant? Correct. Okay.

Correct. Takes time. Okay. So, could it come down a little bit? Yes, but not from a mean.

Unidentified speaker: Okay. And then what are some of the other legislative considerations? We’re watching lots of headlines on cuts to Medicaid. Who knows what’s going happen with ACA, you know, extension of subsidies. What are some of the other things on the docket for you guys from a policy perspective?

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: We work closely with American Hospital Association, for example, on more of those funding for providers. And we’re very close, you know, as a company and as an industry with them and other organizations. I think as an industry, one of the things we’re very focused on is med tech is an industry that is a US powerhouse, right? The US is the largest manufacturing base for med tech globally. US companies are leaders globally in the space.

And we are very large net exporters. So med tech is an industry that never left The US. And I think it’s important to use, you know, med tech as a case study, and to not encourage it to go the other way around of needing to leave The US because of unintended consequences on tariffs. Again, for us as an example, you know, some of the tariff repercussions were in fact for us to move sourcing outside of The US, right? And we shared number one thing that we began to do, because we’re not importing a lot from China, was for products that we were selling into China.

We started sourcing vacutainer tubes, for example. We’ve always shipped from South Carolina, our plant there, to China. Now we’re shifting to source from our facility in The UK, where we happen to make the same thing. We have flush product that historically, our flush syringes always came out of Columbus, Nebraska, and we would ship those to China. We have a facility now in China that’s gonna source just for China for that.

And so, again, I think there’s more downsides to tariff impacts from a U. S. Manufacturing perspective in the med tech industry than there are in many others. And so making sure that that’s understood. And it’s not about getting med tech industry back to The US.

It’s about keeping a strong med tech industry from US companies and manufacturing in The US.

Unidentified speaker: Okay. We have just about a minute left. So maybe I’ll turn it back to you if any kind of closing or takeaway remarks that you want to make. It’s been a dynamic, I think, month or so since your earnings call. There’s been quite a bit of, I think, volatility around the stock and questions kind of about the direction of the business.

But maybe you wanna kind of wrap up any thoughts. I know you’ve been on the road a lot, meeting with investors and others. Some of your takeaways from those meetings, and what you’d like to lead people with.

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: I think obviously we’re hyper focused on navigating the near term macro challenges of China and life science spending and the pharma destocking, right, which we constructively see coming to a wrap. We’re hyper focused on revenue growth, right? And in that same time, obviously continuing to deliver, right, strong performance. And I think that’s one of the, you know, the important dynamics is that while there are, you know, challenging macro dynamics that we’re navigating this, and again, we are hyper focused on accelerating revenue growth despite those macro dynamics. And we talked about how we’re doing that.

At the same time, right, our other systems, our BD Excellence systems are allowing us to drive, we drove 190 basis points of gross margin expansion last quarter. Inclusive of tariffs, we’re delivering 8% EPS growth all in. And that’s absorbing, just put in perspective, right? China down 10% on a 1,300,000,000 business due to VOBP. That’s us absorbing about $135,000,000 of pricing headwind, negative price out of China this year.

So while we’re absorbing 135 basis points of negative pricing pressure, we’re still expanding gross margins well over 100 basis points. Because of pricing capabilities in the rest of the world that we built during COVID, the power of BD excellence and still driving strong margins. And so I think that’s the, the formula of BD is we’ve always been a mid single digit growth company, right? Literally up until this year with the temporary dynamics of those macro factors, the underlying business remains strong. We’ve built new capabilities with BD Excellence that are allowing us to navigate a challenging macro environment, and still continue to grow earnings in a meaningfully positive way.

And we’ve got a really exciting innovation pipeline with a lot of big launches happening here as we head into ’twenty six. So appreciate the time and the discussions we’ve had today. Excellent.

Unidentified speaker: Thanks Tom.

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: Okay, thank you.

Unidentified speaker: You too. Appreciate your making the trip.

Tom Poland, Chairman and Chief Executive Officer, Rim Beckton Dickinson: Of course.

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