The operator welcomes participants to BD's Second Fiscal Quarter 2024 Earnings Call, which is being recorded and will be available for replay. Greg Rodetis, Senior Vice President, Treasurer, and Head of Investor Relations, introduces Tom Polen, BD's Chairman, Chief Executive Officer, and President, and Chris DelOrefice, Executive Vice President, and Chief Financial Officer. They will be joined by Segment Presidents for Q&A. Forward-looking statements will be made and comparisons will be made on a year-over-year basis. Reconciliations between GAAP and non-GAAP measures are included in the appendices of the earnings release and presentation.

In the second quarter, BD experienced significant revenue growth, exceeding expectations and leading to an increase in adjusted EPS guidance for FY'24. This is a result of the company's execution of their BD 2025 strategy, which includes a strong innovation pipeline and successful launch of the new Alaris system. The company's manufacturing team has played a key role in scaling production and meeting demand for the new system, which has already surpassed sales expectations for FY'23. The recent 510(k) clearance for Alaris is just the beginning, with further growth expected in the second half of the year and into FY'25.

The company is excited about their innovation roadmap and upcoming Alaris 510(k) submissions that will improve interoperability and introduce new customer innovations. They also have a market-leading connected medication management portfolio and are planning future innovations, including a new Pyxis dispensing platform and advancements in cloud connectivity. In Q2, they made progress in their peripheral vascular disease platform, which is expected to deliver significant revenue growth. They have also enrolled patients in a pivotal IDE for their BD Liverty TIPS Stent Graft in their venous portfolio.

BD is launching a new self-expanding covered stent for portal hypertension, expanding their presence in the venous market and improving clinical outcomes for patients. They have also enrolled the first patient in a study for a low-profile arterial stent graft and filed a submission for a new drug platform for the treatment of peripheral arterial disease. Their simplification strategy is driving margin expansion and they have generated positive cash flow, positioning them for double-digit growth. They are also focused on corporate sustainability and were recently recognized as one of Fortune magazine's Most Innovative Companies.

In the second quarter, BD continued to see strong growth and exceeded performance goals. They announced a new option for women to self-collect cervical cancer screening samples and raised their adjusted diluted EPS guidance for fiscal 2024. BD also delivered strong revenue growth, margin performance, and free cash flow growth. In terms of revenue, organic growth was driven by strong volume in BD Interventional, with single-digit growth in BD Medical and Life Sciences. The U.S. saw the most growth, while China experienced expected market dynamics. BD Medical saw strong growth in Medication Management and infusion systems, as well as demand for pre-fill devices for biologic drugs.

BD Life Sciences saw high single-digit growth in Integrated Diagnostic Solutions and mid single-digit growth in specimen management, offsetting transitory market dynamics. BD Interventional had strong growth in UCC and Surgery, supported by global adoption of Phasix resorbable scaffold. Peripheral Intervention also had double-digit growth, driven by market penetration with Rotarex Atherectomy System and venous portfolio. Adjusted gross margin and operating margin exceeded expectations due to simplification and BD Excellence initiatives. Adjusted diluted EPS grew by 10.8% and year-to-date free cash flow increased by over $900 million.

The company has seen improvements in working capital and cash flow, and is on track to achieve its long-term cash goals. They have returned capital to shareholders and improved their debt position. The company is well-positioned for tuck-in M&A and is maintaining its organic revenue growth guidance for the year. They have raised their adjusted diluted EPS guidance and are confident in meeting their second-half earnings targets. There is a small impact from currency fluctuations, resulting in a 40 basis point headwind on full-year revenue.

In the second half of fiscal year 2024, the company expects 7.5% organic sales growth and a 250 basis points contribution from Alaris. They also anticipate achieving at least a 50 basis points improvement in adjusted operating margin and a 15% tax rate. The company is confident in meeting their revenue and margin goals, as well as increasing their earnings outlook and free cash flow growth. They also have the capacity to pursue M&A opportunities.

The company's strategy is showing positive momentum and they are well-positioned to meet their growth objectives. The Q&A session is about to begin. The first question is about the second-half ramp in terms of revenue and margin. The company expects strong growth in the second-half, driven by increased demand for Alaris products. They also expect solid performance from the rest of their portfolio. The company's core consumables, such as PureWick and PVD, are seeing strong growth due to increased utilization in the healthcare system.

The company has seen pockets of strength in various areas and has had strong execution in the quarter. This has been driven by cost improvement initiatives and momentum on BD Excellence. The company has over-delivered for two consecutive quarters and is on track to meet its goal of at least 50 basis points increase in margin for the full year. The company's first-half gross margin was 52%, but this was influenced by one-time items such as FX and inventory level reductions. These factors will not impact the second-half performance, and the company is well-positioned to continue improving margin through cost reduction and leveraging revenue from Alaris. OpEx expenditures are expected to remain flat or slightly increase.

The speaker explains that the company's focus is on top-line leverage rather than cost reductions. They feel confident about their portfolio and see strengths in medical and intervention and life science businesses. The company is seeing strong growth in volumes and has a strong innovation pipeline. They are able to overcome market dynamics in certain areas and are seeing double-digit growth in biologics.

The speaker is discussing the growth and performance of BD's portfolio, specifically in the biologic sales area. They mention that the percentage and weighting towards a billion dollars of sales is increasing and that BD is able to deliver strong revenue performance in multiple environments. The speaker also mentions that the Q2 growth rate is representative of what is needed and that there were some negative comps and timing dynamics affecting the results. They also mention that Alaris had a modest contribution in Q2 and will be a strong driver in the second half of the year. When asked about the implied exit rate for Alaris in Q4, the speaker did not provide a specific number but mentioned that the $300 million guidance was raised from $200 million and the organic growth was maintained due to conservatism.

Tom Polen and Chris DelOrefice of BD are pleased with the progress they have made in delivering on their goals for the Alaris system. They have set a record for production and shipment numbers and have received positive customer feedback. They have plans for future innovations and are confident in meeting their previously stated goal for FY '25. For Q3, they expect total growth of at least six and a sequential step-up in Q4.

Chris DelOrefice and Tom Polen of BD discuss the company's expected growth in the coming years, including a portion from the Alaris acquisition and a favorable comp in China. They also mention the company's commitment to achieving a 25% operating margin by 2025, with a focus on improving gross margin through waste and yield improvements. They assure investors that any potential challenges, such as TSAs rolling off or tax rate changes, are being monitored and will not significantly impact their goals.

The company expects to see growth and reinvestment in the second half of the year, which will drive top-line growth. The CEO was asked about potential risks to this plan, and he mentioned that they have strong confidence in their margin and cost improvement initiatives. They will also benefit from natural leverage on top of the growth from Alaris. They will continue to monitor market dynamics, but overall, they are feeling good about their progress so far.

The speaker discusses the recent submissions for Alaris and Pyxis, highlighting the importance of these enhancements. They mention the next 510(k) submission for Alaris later this year, which will include features such as over-the-air software upgrades and advanced cybersecurity. Additionally, they mention the new Pyxis hardware platform, which will advance their cloud strategy and connectivity, as well as include advanced analytics and hardware features. The speaker expresses excitement for these new platforms and plans to continue innovating upon them in the future.

The company is focused on investing in their connected medication management portfolio, which is unique in the industry. They use data and connected solutions to transform major healthcare processes. They have a range of products including software for compounding and inventory management, Pyxis for the floor, and Alaris for data visibility. They are continuing to innovate on these products and are integrating them with recent acquisitions to provide end-to-end visibility of medications across the care continuum. This sets them apart as a company that enables IDNs to manage their assets and processes effectively.

The speaker asks about the strong growth and margin improvement in the company, and wonders if there were any unexpected challenges. The company's diverse portfolio has helped offset challenges in the life science research space and destocking in vaccines and anticoagulants. The speaker is pleased with the company's strong growth in biologics and pharmaceutical systems.

The speaker, Tom Polen, discusses key launches and positive signs in the B2B market for BD. He mentions the FACSDiscover platform and its success compared to competitors. He also talks about the company's diversified portfolio and its impact on revenue and margins. He concludes by thanking the audience and expressing excitement for future progress and goals.

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