The operator welcomes listeners to BD's First Fiscal Quarter 2024 Earnings Call, which is being recorded and will be available for replay. Greg Rodetis, Senior Vice President and Head of Investor Relations, introduces the BD team and provides access to the earnings presentation and press release. Tom Polen, CEO and President, and Chris DelOrefice, CFO, will discuss the company's performance and updated guidance for fiscal 2024, followed by a Q&A session with segment presidents. The operator reminds listeners of the forward-looking statements being made and encourages them to read the disclaimer and disclosures on the Investor Relations website.

In the first quarter, the company's revenue and adjusted EPS were in line with expectations, and strong cash flow was achieved. The team is credited for their execution and determination. The company's BD 2025 strategy is progressing well, with a focus on advancing innovation in high growth areas. The strategy is anchored against three forces reshaping healthcare.

In the first quarter, BD made significant progress in research and development, particularly in technologies that support the shift of care to new settings. This includes the PureWick portfolio, which is now the leading platform for non-invasive urine management, and the BD MiniDraw Capillary Blood Collection System, which has been shown to be preferred by patients over traditional venous blood draws. BD also initiated clinical trials for the BD Elience Point-of-Care Molecular platform, which will allow for rapid testing and treatment in-office. These developments are expected to drive growth, with the NextGen PureWick and BD MiniDraw set to launch later this fiscal year and the first 510(k) submission for the BD Elience system and assay anticipated as well.

In terms of Alaris, the company's top priority is servicing customers and bringing all pumps up to the cleared standard. Customer response has been positive and the company expects at least $200 million in revenue in fiscal year 2024. The company is also focused on simplification strategies to drive margin expansion and has implemented the BD Excellence Operating System to improve productivity. This system has been applied outside of factories to increase efficiency throughout the organization. The company is also making progress on Project Recode, which includes network optimization and site consolidations to reduce their footprint. These efforts are expected to contribute to the company's goal of 25% operating margins in fiscal year 2025. Additionally, the company's focus on cash flow is yielding results through working capital efficiencies and more efficient CapEx spending.

In the first quarter of the year, the company saw strong execution and growth in free cash flow, positioning them well for future M&A opportunities and returning cash to shareholders. They also made progress in their ESG strategy, with a recent collaboration in Kenya to improve access to cancer diagnostics. The company exceeded their margin and earnings goals and delivered strong cash flow growth, with revenue of $4.7 billion and organic growth of 2.4%. BD Interventional and BD Medical saw strong growth, but BD Life Sciences was impacted by the comparison to the previous year's respiratory season.

In the first quarter, China and respiratory were the main contributors to revenue growth, with the respiratory season alone accounting for about 150 basis points. The U.S., EMEA, and Latin America also saw organic growth, but this was offset by a decline in China. The divestiture of the surgical instruments platform also impacted revenue growth. In the BD Medical segment, growth was driven by medication management solutions and pharmaceutical systems, while BD Life Sciences saw a decline due to tough comparisons in the respiratory season.

The article discusses the financial performance of BD in the past quarter, highlighting strong growth in biosciences, offsetting tough comparisons in respiratory testing. The company's BD Interventional segment also saw growth, led by strong demand for Phasix hernia products and PureWick chronic incontinence solutions. Overall, the company's performance was in line with expectations and reflected growth across various platforms.

In the first quarter, the company exceeded expectations with adjusted gross and operating margins, as well as EPS. Cash flow from operations was strong, and the company remains focused on improving free cash flow conversion. They returned capital to shareholders and have a solid cash balance and net leverage ratio. Based on Q1 performance, the company has raised their guidance for organic revenue growth and adjusted EPS for fiscal year 2024.

The company has increased its organic revenue growth expectations to 5.5% to 6.25% for the year, with adjusted diluted EPS expected to be in the range of $12.82 to $13.06. Foreign currency is estimated to be a headwind for total company revenues and adjusted EPS growth. The second half of the fiscal year is expected to have higher organic sales growth, improved margins, and a strong operating performance. The company remains confident in achieving a 50 basis points improvement in adjusted operating margin for the year.

Tom expresses confidence in the company's performance, stating that the first half inventory impact is behind them and they expect to achieve their second half margin goals through a combination of moderating FX and inflation, continued margin improvement, and a strong simplification portfolio. He also mentions that they are on track to deliver their FY '24 revenue guide, which is above their target, and that they have a clear line of sight for growth in the next three years. Tom also highlights the company's strong execution, increased earnings outlook, and double-digit free cash flow growth. He concludes by stating that the company remains well positioned to deliver on their BD 2025 strategy and financial targets.

In this paragraph, Tom Polen discusses the drivers of sales acceleration and the factors that contributed to the company's confidence in their outlook. He mentions the impact of the flu compare and value-based procurement in China, which played out as expected in the first quarter. He also highlights the successful relaunch of Alaris, a key product for the company, and the positive feedback and engagement they have received from customers. This has led them to project a minimum of $200 million in sales for the year.

The company saw growth in several areas, including PureWick, Pharm systems, biologics, Flow, FACSDiscover, Molecular, Peripheral Vascular, and Pharmacy Automation. They expected slower growth in Q1 due to the anticoagulant topic, but the underlying business is doing well. The company is confident in their balance to go plans and expects Alaris to contribute to growth in the second half of the year. The company's strong underlying fundamentals in key areas such as biologics position them well for the rest of the year.

The speaker is pleased with the margin progression and operating income delivery in the first quarter, which exceeded expectations. They have accelerated margin improvement in the second quarter and have a strong track record of delivering against margin expectations. They expect to see a moderation in outsized inflation in the back half of the year and are confident in their margin improvement portfolio.

The company is confident in their Q1 performance and their ongoing programs to raise revenue for the year. They saw expected growth in non-flu areas, such as pharm systems, and are actively engaged in meeting customer needs. They have also seen double-digit growth in biologics and have made successful developments in their innovation portfolio. This has led them to raise their revenue guidance for the year.

The pharm systems business is expected to continue growing at a high-single digit rate, despite potential headwinds in the early part of the year. Q1 saw a strong performance in margins due to execution and cost improvement programs. The 300 basis point step-up in margins from Q1 to Q2 is achievable due to the cycling over transitory items and moderating inflation.

The speaker is confident in the company's progression and expects a sequential step-up in growth. They feel good about their operating margin and have a clear line of sight for the rest of the year. In response to a question about the lower organic growth in Q1, the speaker explains that there were two main factors, including a 150 basis point impact from respiratory and COVID, and a timing issue with customer orders. Without these factors, the underlying growth would have been around 5%. The speaker also mentions strong growth in surgery and other areas, indicating that the underlying business is performing well.

The Alaris flu vaccine played out as expected, with a natural progression of engaging with customers and revenue recognition. The first quarter focused on engaging customers and getting agreements in place for remediation and upgrades, which will lead to growth in the back half of the year. The previous year's Certificate of Medical Necessity is no longer a factor, so the first quarter is starting from ground zero in terms of sales.

The speaker is pleased with the progress of their manufacturing ramp-up and the customer response to their product. They have exceeded expectations in terms of returning to the market and have built confidence that 200 is the minimum number they will reach. The margins are expected to improve in the second half of the year due to factors such as FX moderation, inventory dynamics, and cost improvement initiatives.

In response to a question about the expected growth of the medical division in fiscal year 2024, Mike Garrison explains that while the VOBP in China will be a headwind, there is strong momentum in the U.S. and new product launches are performing well. He also mentions that infusion is expected to return as a contributor to growth and the upcoming release of the BD neXus system is highly anticipated. The dispensing business is also performing well in both hospital and alternate site settings.

The company's MedBank acquisition performed well in the quarter, and the pharmacy automation proposition is resonating well. The timing of installs is weighted towards the second half, which may have contributed to a tough comparison to the previous year. The company remains confident in their MDS and MMS divisions. In China, VOBP did not expand to other areas as expected, but the base business and BDI saw solid growth. VOBP is expected to become a tailwind in the future.

Christopher DelOrefice, speaking at J.P. Morgan, discussed the company's strong plan for margin improvement. He outlined several initiatives that will contribute to a projected 100 basis points expansion in operating margin next year, including Project Recode, SKU rationalization, network architecture improvements, BD excellence, and the scaling of Alaris. DelOrefice expressed high confidence in achieving this goal, as the company has already seen strong momentum in margin growth and consistently exceeding their 55 plus growth profile. Tom Polen also chimed in, adding that they have a strong outlook for 2025 and are well positioned to carry this momentum into next year.

The company is making good progress towards its BD 2025 goals, with the end of 2024 marking 75% of the way through the roadmap and 80% of the margin goal. They have focused on getting the Alaris back and applying those learnings across the company, optimizing the portfolio for growth, and building capabilities for BD Excellence. They have engaged thousands of associates in BD Excellence and have seen good momentum in this program.

The company has good visibility on their margin goal beyond 2025, thanks to a question from Robbie. The headwind from China VBP is mostly seen in MDS. The company feels good about the order book for pharmacy automation, with a tough comparison due to strong Q4 last year. The order book looks good, especially in the Retail Long-Term Care channels, and the company is leveraging their BD Salesforce to talk to acute-care customers about transforming their pharmacies.

The company has projected low double-digit growth for the rest of the year. They see Elience, their Molecular Point-of-Care product, as fitting into the competitive market by addressing unmet needs and increasing access to testing for STIs.

The speaker discusses the benefits of using the CT/GC assay in decentralized settings, as it allows for quicker diagnosis and treatment for patients. They also mention plans to expand this technology to other areas such as respiratory and STI testing. The speaker then addresses questions about the peso and wage dynamics in their supply chain, stating that these factors are still playing out as expected. They also mention passing through favorable FX impacts on revenue and earnings.

The company is pleased with its operational performance and has seen success in finding new markets for its freed-up capacity. They have also made strategic decisions to convert some lines to biologics, which has resulted in increased demand. The company has made progress on leverage and is focused on cash flow performance, which was strong in the quarter. They feel confident about the rest of the year and potential M&A opportunities.

The company has been successful in leveraging their efforts to improve efficiency in various areas, including CapEx expenditures, inventory, and collection cycle. They are currently at their target for net leverage and remain disciplined in their M&A strategy, focusing on accretive growth and strong returns. They have a strong pipeline for potential acquisitions and are committed to achieving their 25% operating margin goal. The speaker thanks the audience for joining the call.

The speaker concludes the call by thanking the audience and mentioning the company's positive start to the year. They also mention the upcoming call in May where they will share progress towards their goals and an increased outlook for FY '24. The operator then thanks everyone for joining and ends the call.

This summary was generated with AI and may contain some inaccuracies.