Becton, Dickinson and Company

Hello and welcome to BD's third fiscal quarter of 2023 earnings call. At the request of BD, today's call is being recorded and will be available for replay on BD's investor relations website, investors.bd.com, or by phone at 800-695-1564 for domestic calls and area code 402-530-9025 for international calls. For today's call, all parties have been placed in a listen-only mode until the question-and-answer session. I will now turn the call over to Francesca DiMartino, Senior Vice President, Investor Relations. Please go ahead.

Good morning, and welcome to BD's earnings call. I'm Francesca DiMartino, Senior Vice President and Head of Investor Relations. On behalf of the BD team, thank you for joining us. This call is being made available via audio webcast at BD.com. Earlier this morning, BD released its results for the third quarter of fiscal 2023. We also posted an earnings presentation that provides additional details on our business, strategy, and performance. The press release and presentation can be accessed on the IR website at investors.bd.com. Leading today's call are Tom Poland, BD's chairman, chief executive officer, and president, and Chris Delorifus, executive vice president and chief financial officer. Tom will provide highlights of our performance and the continued execution of our BD 2025 strategy. Chris will then provide additional details on our Q3 financial performance and our updated guidance for fiscal 2023. Following the prepared remarks, Tom and Chris will be joined for Q&A by our segment presidents, Mike Garrison, president of the medical segment, Dave Hickey, president of the life sciences segment, and Rick Bird, president of the interventional segment. Before we get started, I want to remind you that we will be making forward-looking statements. I encourage you to read the disclaimer in our earnings release and the disclosures in our SEC filings, which are both available on the IR website. Unless otherwise specified, all comparisons will be on a year-over-year basis versus the relevant period. Revenue percentage changes are on an FX-neutral basis unless otherwise noted. When we refer to any given period, we are referring to the fiscal period unless we specifically note it as a calendar period. I would also call your attention to the basis of presentation slide, which defines terms such as base revenues and the non-GAAP reconciliations included in the appendix. With that, I am very pleased to turn it over to Tom.

Thanks, Francesca, and good morning, everyone. Thank you for joining us. Earlier today, we reported another consecutive quarter of broad-based strong financial performance and significant progress advancing our innovation pipeline. Before we detail our quarterly performance, I want to highlight the 510 clearance we received on July 21st from the FDA for the updated BD Alaris Infusion System. This has been our number one priority since launching BD 2025, and we're pleased to deliver this important milestone. For more than 20 years, infusion pumps have represented the backbone of hospital operations. Over that time, Alaris was the first product that connected all patient modules into one integrated system and the first platform to introduce medication safety software, which led the way to interoperability with electronic medical records. And later, with the launch of BD HealthSite, Alaris again led the way with integration into the full suite of BD end-to-end connected medication management solutions from the pharmacy to the administration of drugs at the patient's bedside. Today, the Alaris system continues to advance new levels of innovation with enhanced cybersecurity protection, the latest wireless capabilities, and new features that enable various aspects of medication management and ultimately help clinicians deliver the best care. In short, We're proud of the Alaris Power of One that makes medication management safer, simpler, and smarter. With this clearance, we address all open recalls with the latest hardware and a new version of software, as well as provide important cybersecurity updates. We can now focus on bringing the updated system to the market, ensuring our installed base is upgraded so customers can realize the full benefits of our latest technology. As we return to market, we will start with upgrading or replacing the hardware and software of Valeris system devices in the US market with priority towards our existing customers. Given the breadth of our footprint, this effort will happen over a multi-year period. Just two weeks into clearance, we are well prepared. We immediately took action and contacted nearly all of our customers. We activated a dedicated team with daily stand-ups, and have completed product training for our service teams on the cleared Alera system. As we previously shared, we have prepared for clearance and our return to market. We have invested in and developed plans for operational capacity, and we've strengthened our supply chain. We have now activated those plans, which were dependent on clearance, and are moving quickly to help ensure we can reliably supply our market-leading BD Alera system and deliver for our customers. In parallel, We continue to engage with the FDA on how we intend to execute our remediation plans, which includes a combination of upgrades and replacements. We will provide more information as we progress. Before I move on, I would like to thank our customers for their loyalty and patience as we work through this challenging period. Our teams are ready and committed to provide the high-quality service and partnership that you've come to expect from us. And on behalf of the entire BD leadership team, I want to extend our deep appreciation to the BD associates who worked tirelessly to bring the updated BD Alaris system to market for their ongoing commitment to quality and ensuring we achieved this milestone in the right way, in line with our values. We'd also like to thank the FDA for their rigorous review and engagement as we went through the clearance process. Turning to our quarterly financial results, Our strategy and purposeful investments in innovation are driving consistent higher growth and fueling strong results and momentum. Our results are indicative of our leadership position and our durable core and intentional shifts towards higher growth and markets. And a highly motivated and talented global team whose focus on execution is helping our customers provide more efficient and effective care. We delivered another quarter of outstanding results. with 7.9% base revenue growth, or 6.3% base organic, and double-digit adjusted earnings growth. Once again, our results reflect our strategy in action and our strong consistent growth profile, which gives us the confidence to increase our FY23 organic growth rate. We also continue to make strong progress improving our on-time milestones and launches to another record level this year. starting with a few examples of our recent launches. In our medical segment, we introduced the BD Preview 2 system, a first-world technology that magnetizes the tip of certain existing BD catheters and allows them to be seen under the Preview ultrasound device. The software then guides clinicians to enter the vasculature with first-stick success. This novel approach enables BD peripheral IVs to deliver new value to patients and providers. In our biosciences business, we are seeing a super cycle of innovation this quarter with three key new product launches. In mid-May, we began shipping the BD Facts Discover S8 cell sorter. Our customers are utilizing this new standard in flow cytometry to unlock life-changing discoveries across immunology, cancer research, and cell biology by uncovering more detailed information about cells and how they interact that was previously invisible. The first installations are complete, Customer feedback has been excellent, and we are seeing strong demand. We also launched the BD Rhapsody HT Express, which enables access to the fast-growing single-cell multi-omics market with a high-throughput research solution. The HT Express can process up to 320,000 cells per run, eight-fold the throughput of the BD Rhapsody platform, while leveraging Rhapsody's microwell design to ensure high-quality results for all cell types. And most recently, we announced the launch of the BD FACS Duet Premium Sample Preparation System, a new robotic system to automate clinical flow cytometry, enabling the only walk-away automation for both HIV and leukemia and lymphoma testing. And in our BDI segment, we launched the BD-TREC Powered Bone Biopsy System, expanding our presence in oncology beyond the manual biopsy market. The BD-TREC system allows for faster sampling with sizes to accommodate a variety of procedural needs. Our differentiated offering enables the ability to collect large intact samples while providing the clinical versatility to biopsy delicate areas that require precise targeting as well as bones that require power. We've also achieved several crucial development milestones this quarter. These include 510K submission of the SiteRight 9 ultrasound system, which is part of our vascular access management strategy. The SiteRight 9 was developed to be the first integrated system that combines catheter and ultrasound navigation into a single device to simplify workflow, capital management, and training for clinicians for the placement of BD PICs. In our IDS business, we're expanding the strategy for our BD on Clarity HPV franchise to enable patients to self-collect samples with the aim to promote healthcare equity by making cervical cancer screening accessible to women who historically haven't participated or have had limited access to testing. This is already in use across Sweden, Denmark, the Netherlands, Australia, and New Zealand. Clinical trials are set to start in India, Africa, and the U.S. later this year. We are proud of this work and its ability to advance our efforts to reduce healthcare inequities around the world. And in our PI business, we submitted and received IDE approval for our TIPS, venous stent graft, and are on track to enroll the first patient in Q4. Used in the liver, this novel self-expanding covered stent continues to expand our leadership position and builds on our success in launching venous products that help deliver better clinical outcomes for patients. These launches and milestones are good examples of accelerated levels of innovation across our business and how we are strengthening our position in attractive end markets across our portfolio. We continue to simplify our company through programs across our manufacturing network and operating model while actively managing our portfolio. As such, we recently completed the divestiture of our surgical instruments platform. This value-creating transaction supports the achievement of our BD2025 financial goals and further advances the BDI segment's focus on high-growth end markets. This divestiture allows us to focus BD surgery strategic investments in advanced repair and reconstruction and surgical complications, which are driving results and helping to address unmet needs in healthcare. Proceeds from the sale strengthen our cash and net leverage position and support our tuck-in acquisition strategy. We also continue to make progress on our other simplification initiatives, including the reduction of 20% of our SKUs by FY25. ongoing network architecture optimization, and our operating model initiatives to transition certain BD shared service center activities to a third party to optimize our back office processes and services. Looking externally, let me share some perspective on the macro environment. Overall, the macro environment is in line with our view that challenges will persist, not escalate. However, uncertainty remains. We continue to monitor various factors, including how health systems, governments, distributors, and suppliers are managing inflation, inventory, and other supply chain dynamics. Broadly speaking, inflation is moderating but is still elevated. The supply chain has continued to stabilize, and we're very pleased with our progress to reduce back orders. We expect to exit the year at pre-pandemic levels, which is enabling us to shift our focus to reducing raw material and some finished goods inventory, which is contributing to our cash flow improvement. While overall procedure volumes are healthy, our portfolio has been more durable and less impacted by significant short-lived fluctuations in procedure volumes. Overall, the capabilities we have built and the durability of our portfolio have positioned us well. Before I turn it over to Chris, I'd like to share an update on our ESG strategy and goals. We recently issued our 15th annual ESG report that details our progress on the four pillars of our ESG strategy, company health, human health, community health, and planet health. The FY22 report highlights our notable progress in energy and waste reduction, healthcare access, and diversity. Key achievements include a reduction in greenhouse gas emissions of 10% from an FY19 baseline, an increase in the number of locations using renewable energy, the establishment of product recycling pilots around the world, and completion of our baseline assessment for Scope 3 emissions. The report also highlights our ongoing work in advancing health equity in under-resourced communities and the products, solutions, and programs we're investing in that directly address these inequities. BD has always played a tremendous role in addressing health disparities and access to healthcare around the world, and we're proud of our continued focus in this area. We are also proud to receive continued recognition for our commitment to talent and creating an inclusive culture. Most recently, we were recognized as the best place to work for disability inclusion for the fifth consecutive year, achieving a top score on the Disability Equality Index. And we were named to U.S. News & World Report's inaugural Best Companies to Work For list. In summary, we continue to deliver consistent, strong results Our teams are working unwaveringly to achieve key milestones that sets us up for continued growth and consistent performance. And this quarter is another reflection of our focus and determination in achieving our BD 2025 goals. We continue to grow, simplify, and empower BD and evolve into an agile, innovative medical technology company with a durable, compelling growth profile. With that, Let me turn it over to Chris to review our financials, guidance, and outlook.