Good day everyone and welcome to today’s Becton, Dickinson Q2 Fiscal Year 2023 Earnings Call. At the time, all participants are in a listen-only mode. [Operator Instructions] Please note, this call maybe recorded, and that I will be standing by should you need any assistance. It is now my pleasure to turn today’s program over to Francesca DeMartino. Ma’am please begin.

Good morning, and welcome to BD's earnings call. I'm Francesca DeMartino, 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 second 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 Polen, BD's Chairman, Chief Executive Officer, and President; and Chris DelOrefice, 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 Q2 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 Byrd, 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 will 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. Good morning, everyone. And thank you for joining us. Earlier today, we reported another consecutive quarter of strong financial performance and significant progress advancing our innovation pipeline. The results we have been delivering for multiple periods reflect our strategy in action. We are now about halfway through our BD 2025 plan to accelerate growth and simplify and empower our company, and I'd like to share how our team's strong execution of our strategy is driving our performance and will enable continued momentum through 2025 and beyond. We have made purposeful and strategic investments, which we're seeing contribute to consistent, higher growth, and strong financial performance. We have been and remain very intentional with how we are deploying our capital towards higher growth spaces and are pleased with the significant progress we continue to make increasing our WAMGR. These actions have evolved BD into an agile, innovative, and durable medical technology company with a compelling growth profile. Our innovation mindset is driving higher product development velocity and super cycles of innovation in many of our businesses. Through a focus on the most impactful programs, improved milestone achievement and launch excellence. To highlight a few examples of our strategy and investments, and how they're fueling strong results and momentum. First in Pharm Systems, due to the start of our BD 2025 journey, we made a bold decision to invest $1.2 billion in additional capacity. Today, we're seeing this capacity investment along with several new innovations we've brought to market, paying off as we are ideally positioned to enable delivery of the large wave of biotech drugs coming to market. We've built Pharm Systems into a $2 billion growth platform with 11 consecutive quarters of double-digit growth. With over 70% of the top 100 biopharma companies using BD's portfolio and 6x…

Thanks, Tom. Echoing Tom's comments our BD 2025 strategy is driving consistent performance and demonstrates our strong growth profile. With our year to date performance, we are well on track to achieve our FY 2025 long-term targets. Beginning with some color on our revenue performance, we delivered strong Q2 base revenue growth of 8.7% or 7% organic. This includes growing over prior year flu COVID combination sales, which negatively impact growth by over 200 basis points and an impact from one-time strategic portfolio exits of about 50 basis points. Adjusting for these impacts, organic volume growth was in the strong mid-single digits at nearly 6%. In addition to the inorganic revenue contribution from M&A, we continue to drive organic growth from acquisitions that have anniversaried, which was about 30 basis points in the quarter. COVID-only testing revenues were $16 million in the quarter, which as expected declined from 214 million last year. Total company base business growth was strong across BD Medical, and BD Interventional with growth of 12.2% and 9.3% respectively. Base revenue growth in BD Life Sciences of 2.2% includes a negative impact of about 800 basis points, due to the comparison to higher combination flu COVID testing sales last year attributable to the Omicron wave, coupled with the timing of this year's respiratory season that peaked earlier than normal during fiscal Q1 and then declined. Base revenue growth was strong across all regions with high-single-digit growth in the U.S. and double-digit growth internationally, including 9% growth in China. For the full-year, we expect to deliver high-single-digit growth in China. Our growth continues to reflect consistent performance of our durable core portfolio and our shift into attractive and higher growth end markets. Strong performance in our Medical segment reflects execution of our growth strategies across our key end…

Yes, sir. [Operator Instructions] Our first question will come from Robbie Marcus with JPMorgan. Your line is open.

Oh, great. Good morning everyone and thanks for taking the questions. Maybe to start, I wanted to ask on guidance. This is the second quarter in a row where you guys have had a really good performance on the top line, beat, and raised guidance, But on the bottom line, we're seeing guidance go up again by a little less than the beat on the bottom line. So, maybe spend a minute and talk through some of the puts and takes and how you're thinking about managing the rest of the year in guidance to be able to offset any headwinds. And it'd also be great – it looks like FX isn't changing on the top line, but it's getting worse on the bottom line. So, maybe throw that in there as well.

Yes. Thanks, Robbie. It's Chris. Appreciate the question. I think this is pretty straightforward. So first, just look, another strong quarter and our second increase in guidance, to your point. On revenue, we increased from 6.5% to 7% or 50 basis points on our base. So, at the midpoint, that's 6.75%. And I think important to note, right, our two-year average growth now, 8% or even 7% when you strip out the benefit from tuck-in M&A, so on a pure organic basis. So, really strong, well above our 5.5% profile. As you think of the increase, basically the increase in revenue 100% matched the outperformance in Q2. The way to think of that, if you recall last quarter, we communicated that our second half growth rate would be 6.6. That stayed intact. So, we're holding it to 6.6. Importantly, as you think of the first half to the second half, actually, the organic revenue growth accelerates from 5 to 6, and again, nicely above our 5.5% plus. So, really strong revenue story following a strong FY 2022. On earnings, where I think the core of your question is, so, one, building on the strong growth. We continue to execute against our margin goals. Hopefully, that hasn't gotten lost in this macro environment where you're seeing many in multiple industries with margins declining. So, we're committed to the 100 basis points of margin improvement. We had slight improvement in the quarter. So that holds intact. So basically, the way to think of the raise, you have to, kind of break it down and really understand the base business. So, on the base business, as we noted in the presentation, we raised by [$0.115] [ph]. It exactly equals, kind of margin drop-through on the 90 million increase on our base revenue. And…

Really helpful. Maybe just a quick follow-up. I could probably anticipate your answer here, but given the focus, any updates on Alaris or upcoming data points or catalysts we can be looking out for on the pathway to approval?

Hey, Robbie, good morning. This is Tom. Obviously, as we've discussed many times, getting Alaris back on the market is our number 1 priority. And we are confident in the resources that we have invested in our submission and the team and leadership tasked to prioritize this. As you expected and as we've said before, we're confident in our process and that we will get clearance, and we have been and want to remain prudent and thoughtful about the process with the FDA. And so therefore, we continue to not try to predict exact time lines just given how inherently complex these submissions are. So, obviously, once we get clearance, we'll immediately communicate at that point, and that has been and remains our strategy there. But we're fully focused on making sure that our number 1 job is making sure that the FDA has all the information they require to clear the product. Thanks for the question.

Thank you. Our next question will come from Larry Biegelsen with Wells Fargo. Your line is open.

Good morning. Thanks for taking the question. Tom, I think two for you. One, I just wanted to start at a high level, and congrats on a nice quarter here. The super cycle of new products you talked about, how are you feeling about your target of 5.5% organic growth beyond 2023? Chris mentioned a few times that the two-year CAGR for organic growth is 7% this year. So, could that 5.5% be higher beyond this year? And I had one follow-up.

Okay. Good morning, Larry and thanks for the great question. Great to connect as always. We're extremely excited about the pipeline that we have and our outlook going forward. We're not looking to adjust our long-term commitment at this time, but we are feeling very positive about the momentum that we have as you described. I think as we look at where we are today, what stands out, and hopefully it became clear in our discussions this morning, are the number of high-growth platforms that we've built and that we've continued to systematically progress across the company. And we talked about a few of those. Whether or not it's Pharm Systems, which is now the 11th quarter in a row of double-digit growth, and the macro environment of now biologics being – more biologics being in pharma's pipeline and small molecules today, first time in history, and some big blockbuster products coming down the pipe. And we are well-positioned as the leader in injectable drug delivery to benefit from that trend with the significant capacity we've added, as well as the innovation pipeline we have, both for professional delivery, but also enabling wearables and self-injection products that we've been investing in are coming to market now as well. Pharmacy automation, right now, a $500 million-plus platform growing in the teens. Huge trends that are going to continue to fuel that going forward, labor shortages, the need for pharmacists to move more front of the – front-off to be serving patients doing wellness checks, et cetera, we're going to continue to see strong demand for pharmacy automation, and we're really pleased with that platform that we've built. B2B, huge super cycle of innovation there. The FACSDiscover, we've started shipping to the early adopter sites and really a tremendous opportunity to help…

That's super helpful. Just one quick follow-up on Robbie's question on Alaris. It's great to hear the confidence you expressed today. My question is, are you confident you can get it within the – I know you're not talking about specifics, but within the BD 2025 plan? And I know you have 80 basis points of margin improvement in the – for Alaris in the BD 2025 plan. If you don't have it within that time line, can you – do you have other ways to offset the margin leverage you're expecting from it? Thank you.

Yes. Thanks, Larry. I'll take that one. Yes, to your point, if you recall, given that we made the decision to maintain investment in service, field support, et cetera, there was about that 80 basis point headwind to our margin as part of Alaris. We've been very clear, while we haven't been – said we weren't going to predict timing, we did say as part of our FY 2025 plan. The good thing about margin, and just if you step back again, we delivered 50% of our goal, right, through FY 2022. We're on-track this year. That would put us 70% towards our goal. We have multiple levers to deliver both. In essence, the way we think of it is how do we get to double-digit EPS growth on a consistent basis. We're not dependent on one variable. And given 70% of the way there, we feel really good between the strong growth profile that we expect to continue and natural leverage you get. The Recode initiatives we put in place, that will continue to accelerate through the back half of the year. We just announced kind of the third leg of Project Recode, operating model simplification. Those have been announced, continuing to drive portfolio mix as we've been doing. So, there's a host of things that I think give us confidence and the ability to actually, sort of navigate the balance between top line growth and margin improvement as we continue to progress through the back half of the year while delivering on both commitments, the 25% margin and double-digit EPS growth. So, I think we're really well-positioned when you think of it that way, gives us a lot of flexibility.

And just to add to Chris, as good comments is – so Alaris is included in our strategic plan. There's many other levers we have as mentioned. But we have been, as we've shared before, preparing so that when we do get Alaris clearance eventually, that we'll be well-positioned to serve our customers, right? And so, we've talked about that increased inventory levels that we've done on certain components, et cetera. We've talked about the continued investments we have, kept in service in our selling organization so that when clearance eventually comes, that we can both remediate the pumps that are on the market quickly, as well as support additional customers. So, thank you for the question.

Thank you. Our next question will come from Vijay Kumar with Evercore ISI. Your line is open.

Hey, guys. Congrats on the nice sprint here. My first one is for you. Appreciate all the colors, I think, on pharma, new product cycles, but can you just simplistically outline, what are the categories here that BD is gaining share? It looks like in a pharma, life science, flow cytometry, surgery within hernia, vascular. There's a number of categories. It feels like BD is gaining share. Is that true? And how sustainable is that? And within Life Sciences, any concerns on emerging biopharma funding cycles?

Yes. Great question, Vijay, and appreciate the comments. So, we'll go around. We've got the segment presence here in the room. I think you're right. What you're seeing is outperforming market growth rates in a number of categories, and we're really pleased with that, driven really through strong innovation, capacity investments that we've made and strong execution. Why don't we start with the Medical segment and Mike can speak to what we're seeing in both Pharm Systems, but also pharmacy automation and medication management overall.

Yes. Thanks for the question. There's three sort of growth drivers that we've built in Medical. First, Pharm Systems, as Tom mentioned in the opening comments, 11 straight quarters of double-digit growth. And both the combination of our capacity investments, which we built a few years ago and continue to implement, plus our innovation, really to support the sensitive biologics and the requirements that those – that pipeline has coming towards us. We feel really good about that durable growth continuing. In MMS, we're really happy with the way that the teams have come together in pharmacy automation and our dispensing business. That connected med management and the tie around clinical efficiency both in the hospital as the hospitals start to shift care outside of the hospitals and how that ties into the retail markets, the long-term care markets. This is just a really ripe area for innovation, and we're really well-positioned now with that acquisition. It's going really well. And then in MDS, the Vascular Access Management strategy continues to do really well. Continues to resonate with customers, especially those aspects where it makes both the patient experience and the clinical experience a positive one. And so, we see – we don't necessarily look at it in terms of market position. We don't really comment on that. But we do look at it in terms of our WAMGRs. And we tend – we're showing growth over WAMGR. So, we feel good in that area as well. I'll turn it over to Rick or Dave.

Great. So thanks, Mike. Thanks, Vijay, for the question. And Tom, for the opportunity to talk about BDI. So, first off, really pleased with the results in the quarter, 9.3% growth overall with all businesses contributing. And like you said, you pointed out surgery at almost 14%. And so, this strong performance across the segment really reflects the execution of our growth strategy across those key end markets that Chris pointed out, advanced repair and reconstruction, PVD, oncology, incontinence, and our newer innovations in higher growth areas are all really contributing nicely to growth. So, in UCC, we continue to see the growth of the PureWick franchise, aided by the recent launch of PureWick Male. PureWick continues to have really a strong presence in the acute and the alternate care setting for us for chronic incontinence and surgery. Like you said, growth is really driven by continued market adoption of Phasix, our hernia resorbable scaffold. Biosurgery growing double digits, aided by Arista. So, really good there. And then finally, in PI business, we're really – we're seeing improvements across our global supply chain as well as benefits of a lot of the strategic investments that we've made in the past. We have strong global penetration of Rotarex. We're really pleased with the relaunch of Venovo. And then our global expansion strategy is paying off, oncology in China is really strong. So, we feel confident with the overall external market conditions, including the recovery of elective procedures, improving their supply chain. And then you combine that with the success of, again, the strategic investments we've made, whether they be tuck-in M&A or products like as Tom mentioned, Rotarex, Phasix or with our new product launches such as PureWick Male. Team is executing extremely well, and we believe we have the right strategy to drive continued success.

And maybe just to add to Rick's good comments there. I think something that stands out for particularly the PI business is a number of the investments and new launches that are happening there are in entirely new markets for BD. And so, they're almost exclusively share gains that are happening that are driving growth, right? So, you think about atherectomy and thrombectomy, that's 100% share gain. I think about the Venclose acquisition that we did and the growth that's coming from that, that's all share gain because we hadn't been in the category. And of course, Venovo stent, we have been off the market. And so, the relaunch of that is regaining – is all regaining market share. And just to more specifically address that question very as well, and maybe, Dave?

Yes, for sure. Vijay, it's Dave. Great question. So, again, I mean, just to reiterate for the segment. So, I mean, as you saw in the in the release, just a tremendous strong quarter for BDB at 18.7% and even good core growth in IDS, if you strip away the headwind from the 800 bps of respiratory climb over from same period last year. I'll maybe pick a couple of highlights. I mean, in BDB, we continue to see really strong growth across the board, whether it's the Life Science research reagents, clinical reagents, the demand for the new instruments. Actually, from a Life Science research reagent perspective, so this is the dyes, the Horizon dyes that Tom talked about, that's actually our tenth successive quarter of double-digit growth now. You've heard us talk about BD Max before, which was obviously instrumental in the COVID, sort of pandemic from a respiratory perspective. But how do we now leverage the BD Max for take-up of IVDs and assay utilization and assay penetration? And again, we continue to see really good growth in molecular reagents, eight successive quarters of IVD double-digit growth, which is great. And then maybe on the automation side, we – when you think about the staffing challenges that the labs are facing, we're really starting to see the traction for BD Kiestra, BD COR that Thomas talked about. If you think – you asked a specific question on the sustainability and the customers relative to BDB. The good thing about BDB and just the breadth of platform and reagents that we have is, we've got a very strong diversity of customer base, so not just by a pharma, for sure biopharma, but academia, large academic medical centers, big research institutions. So, I think the diversity of base really helps us there and the types of research that they're doing, right? So, you think about cell therapy, gene therapy, immuno-oncology, all the stuff in terms of fighting that chronic disease in oncology. So, I think we feel really good about that base. And then from that sustainability, I was just reflecting back as we were getting ready for today, and when you look at the segment overall, even for the first half of this year, we've actually had two PMA supplements approved and eight 510(k)s in the first 6 months of this year. So, that all builds to the momentum as we go forward here. Hope that helps.

Thanks for that comprehensive answer. And just one quick on gross margin. Chris, is a gross margin performance in the [Q], despite 200 basis points of inflation impact, should we think of back half or third quarter being at or above second quarter levels?

Yes. So, a couple of things. One, if you remember, from a full-year standpoint, we're absorbing over 200 basis points. It's a second consecutive year of inflationary pressures. It was actually more prominent in the first half of the year. It will abate some combination of some moderation of inflation, coupled with, of course, the cost improvement actions and mitigation actions that we're taking in the second half. So, we expected modest improvement in GP through from a full-year standpoint. So, I think you would expect basically similar, to be slightly ahead of our Q3 FY 2022 gross margin, which was 52.6%. So, you'll see slight improvement. And then that will further expand as we move into Q4. But we're right on track. And I think the other thing to point out is, remember, we have about five months of inventory that flows through our sales. So, we have a strong line of sight to basically the inflation that is sitting in that inventory, all the cost improvement that has actually been driven that's part of that inventory cost. And as that sells through in the back half of the year, it gives us strong confidence in our cost base to achieve those goals.

Thank you. Our next question will come from Matt Miksic with Barclays. Your line is open.

Hey good morning. Thanks so much for taking the questions and congrats on a strong quarter here. I wanted to just – I want to go back to the guidance, Chris, if we could, just because there had been some changes. And I know, Robbie touched on this earlier. But maybe just to clarify a bit further on the bottom line just because a sensitivity around beats and raises this quarter is so significant, it seems. So, if I remember correctly, last quarter, a significant part of the raise was, sort of an FX tailwind. There was also the lower COVID – higher margin COVID headwind as well. But sort of a big part of that lift, offsetting that was an FX tailwind. In this quarter, you've actually got another [indiscernible] FX headwinds that you're absorbing. Is that the right way to think about, sort of the relative puts and takes last quarter or this quarter?

Yes, that's correct. Just one comment on FX, which is interesting, right. Our fiscal period starts earlier. We actually – our original guide started at the peak of the strength of the U.S. dollar, right? So, we had significant FX pressure when we gave our initial guide. And to your point, in Q1 the dollar weakened a bit. We adjusted up similar to most companies reporting sort of their first fiscal year. And so, we reversed a lot of that unfavorability in the quarter, gave that back. The base was strong, the base EPS actually expanded, and to your point, offset – we had a takedown in our COVID-only testing in Q1. This quarter is a little bit different. Again, you had strong base EPS. We actually raised by $0.115. It was offset by two things. Again, another $0.05 on the COVID-only testing dynamics, taking that down a bit to how we see the full year given that those dynamics and market has softened significantly, and then a little bit of FX pressure for the reasons I noted previously. So, net of those two items, it's [$0.015] [ph], but I will go back to just what I shared. So again, when you look at our base business, absorbing all the COVID-only year-over-year testing impacts, our base EPS is growing almost 15%, and that's while absorbing over 200 basis points of inflationary pressures. I think it's somewhat unprecedented performance in this environment. We're delivering really strong growth. And we want to make sure that we're maintaining investments to also continue this type of performance well into the future. So, that's how to think of it. Hopefully, that helps.

I think just to add to Chris' comment, obviously, the update here has COVID essentially out for the balance of the year, right? So, the number that we have now in COVID guidance is basically the COVID number that we have year-to-date.

The other, just given those FX dynamics, right, when FX improved, we only had three quarters to go, right? So when we cycle into our fiscal Q1, which is calendar Q4, there will actually be FX tailwind based on where spot rates are today. There's a lot of moving parts to calculate that directly. But on top line, it could be $75 million to $100 million. So, when you look at other people's guide that has a full true calendar year, that's included. We picked that up next year in ours.

Got it. That's super helpful. And the slides are also really helpful material to, sort of walk through this stuff. The other – again, on guidance on the top line. So, you did make a change, as you pointed out, you're expecting a heavier contribution, positive contribution from your inorganic adds, if you will specifically. And so, I know that last quarter, I don't want to say controversy, but there was this question of you have inorganic adds and you have a portfolio exits, which are basically discontinued products not sold to another company, but coming out of the – coming out of your revenue build. And the way I think you were describing it was those things are, kind of offsetting each – not exactly organic, but we're thinking about it organically. And I would agree with that. Now, you sort of shifted back to more traditional organic description, but you're still sitting those 100 basis points of portfolio exits. So, even though it's $5.25 to $6.25, it is – it seems to be a little bit stronger on the base business on the organic side. Is that a fair way to read the strength on the top line?

Yes, yes, exactly. The simple way to think of it is, so our all-in guide that includes the negative impact of portfolio exits and the positive impact of organic is [675] [ph] at the midpoint, right? But even if you strip out just the M&A contribution, we're still at 5.5 at the midpoint. Now, that's not taking any credit for the strategic portfolio exits. That was purely just to make sure you guys had context to – we were taking that bold action, it's helping improve margin given the strong growth profile we have. So, when you think of pure underlying against all the businesses we're investing in, if you want to adjust for that, that's about a point that would take it back up to that same range. But even if you get zero credit for that, our organic growth is 5.5%. And more importantly, our two-year, right, coming off a really strong year, we're 7% organic. None of those numbers give us a positive adjustment for those one-time strategic portfolio exits.

And I think we're seeing the benefits. Obviously, given the strength of the business, taking those actions on that portfolio is exactly the – it's the right time to be doing that. As a reminder, those products that we're just exiting have less than half of the average GP of the company. They're growing much less than the average of the company and are in areas that are just not strategic in terms of relevant growth platforms as we go forward. And so, they also come with operational efficiency benefits, organizational efficiency benefits, et cetera. And so, they're just going to make us that much stronger as we go forward and make sure that we're focusing our resources and investments in those areas that move the needle the most for customers and for us.

Yes. And the other – just one last comment. You mentioned Parata and the strength there. This is a little unique, right? You get the sort of onetime adjustment for what you acquired. This is a great example of us just strong execution in revenue synergies and taking up that forecast. So, again, I think it's just illustrative of how we're managing, kind of tuck-in and the benefits we're generating from that. As we anniversary Parata, the contribution from all the tuck-in acquisitions we will do on an organic basis, it will add about 50 basis points of growth to our portfolio as we exit this year.

Thank you. Our next question will come from Joanne Wuensch with Citi. Your line is open.

Good morning and thank you for taking the question.

Good morning and thank you for the taking the questions. A couple of miscellaneous things all at once. What was the impact of price in the quarter? If you stop planned exits, does that mean your organic revenue growth rate goes up 100 basis points? And is there a plan to stop planned exits? And then bigger picture, there were a lot of BD Veritor’s and BD MAX’s, et cetera, placed or sold during the pandemic for testing? What happens to all of those now? And how do you increase utilization on them for other things? Thank you.

Okay. Great question. Why don't we start on the first two with Chris and then Dave can take for the Veritor, MAX.

Yes. So, pricing, Joanne, so the Q will come out this evening and we – aftermarket. And pricing will be disclosed in there as we consistently have. What we've shared is it's the last thing we think about, right, as it relates to inflation mitigation. And so, what we're really focused on is driving cost improvement, portfolio mix, the strength of growth and volume leverage. All of those dynamics are significant contributors to mitigating the 200 basis point inflation. You'll probably see something consistent in terms of what we've done last year. If you think of how last year played out, it accelerated through the year. But you'll be able to see that at the end of the day. In terms of portfolio, I mean, the simple answer to the question is, these were onetime in nature. There's always smaller adjustments you make in your portfolio, but we made a decision to really take a deep look at our portfolio this year, as Tom described. These weren't strategic products. There's market alternatives. The GP profile is significantly reduced. Removing these freeze up capacity and other costs. All of those products, not being sure they still require quality support, regulatory support, there's a lot of tie up as it relates to shipping and thinking of other infrastructure support. So, there's benefit beyond just the GP lift you get. But to answer your question simply, yes, if we stopped doing that, our results would have been better by roughly 100 basis points this year. This quarter was a little light. It was closer to 50 basis points in the quarter. But from a full-year, we're still estimating about 100 basis points. We do view these as one-time in nature this year. We don't anticipate doing that in the future beyond smaller things that we would just absorb and not even talk about.

Yes. And obviously, we continue to focus on delivering on our 5.5% plus, but as Chris said, we do not have plans to do that again. These are very discrete products. We've given some examples before things like [indiscernible] or washing instruments for orthopedic procedures that, again, we just don't have a relevant role in those spaces and so we've exited those revenues. And we would not see that repeating in the future. Just one thing as you see price after the close of the market today, just to reinforce a comment that Chris made in the opening comments is that we did see very strong volume this quarter as we think about price and volume and the role of those two together. As we look at volume, we look at it organic volume, and then we take out flu-COVID sales as well, right? Because that's something that's not really indicative of, kind of our ongoing business. And when you look at that organic volume growth, excluding COVID-flu, it's strong mid-single digits, nearly 6% overall volume in the quarter. And so, that's something you'll also see as those further reports come out, something very positive that we're continuing to see across the business. When it comes to Veritor and MAXs, I know Dave had made some earlier comments about the very strong double-digit growth that we continue to see in MAX reagent absorption. But why don't you share some more color on that?

Yes, Joanne, thanks for the question. And you're right. I mean, through the pandemic, obviously, Veritor and BD MAX installed base did increase. We've not given specifics around exactly what those numbers are. We're very pleased. We continue to ship those platforms today. And if I break it down, so for Veritor right now, a lot of our focus is actually on converting the emergency authorizations that we got for COVID and our combination assays to 510(k). And obviously, once that is done, that would leave the Veritor, if you like, with approved assays for flu A, flu B, COVID, RSV, Strep A, which will really create a really nice anchor point of care clearway platform for infectious disease testing. So that is our focus there. For BD MAX, one of the big benefits of that platform that labs sees an attribute is its complete sample-to-answer automation and integration within a two to three hour window from sample to result. We placed many MAXs during the pandemic just for COVID and combination testing. And then when you think about the rest of the menu, we're now starting to drive adoption of our regular IVD assays. So, there are really two strategies. One is to increase assay utilization and assay penetration of our regular IVDs onto that BD MAX installed base and where we got emergency use authorization on BD MAX during the pandemic, like our quad assay for BD MAX, moving those EUAs to 510(k) as well. And [it's that] [ph] IVD traction and momentum that you've seen us sort of perform eight quarters double-digit growth.

Thank you for the question, Joanne.

Thank you. Our last question will come from Rick Wise with Stifel. Your line is open.

Good morning, Rick.

Hey, Tom. Hi, Chris. Listen, I'm just listening to everything you're saying today, and I keep hearing you both say in many different ways that – and Chris said it, you're well on track to hit your fiscal 2025 long-term targets. Gosh, I accept it. I believe. I think this quarter supports that notion. So, my question is, is it right for us to believe, and I feel like everything you're saying today is suggesting it, that you're now approaching sustainably perhaps a 6% plus top line territory? Is it right for us – again, I accept that you're going to hit the 25 and 25 on the operating margin. My question on operating margin is more, how are you getting ready, Tom, it's a crazy question, for the next target, which I think it's going to be 30%? I don't know if it's – if that's going to take another 5 years. But is that conceptually the wrong way to think about what you're trying to do, where Becton is going? And maybe just as part of that, you're role in your – just your latest thoughts on the role that tuck-in M&A is going to play? You're doing all these great things internally. What role is tuck-in M&A going to play in this journey? Thank you.

Thanks for the question, Rick, and it's a good question. We're focused obviously on continuing to execute our strategy, and we are very pleased with our progress, both on our portfolio and the reshaping that we've been doing. Of course, that includes an – and Embecta spin just not that long ago as well, which we're pleased with how that's turned out and is allowing each organization to focus. As we look ahead, I'll just go back to the growth platforms that we've been systematically building and are continuing to gain momentum in, right? We talked about areas like Pharm Systems, like pharmacy automation, like BDB flow cytometry, innovation super cycle, like our Interventional Solutions, our Medication Delivery Solutions and our continued innovation focus, our continued outperforming of WAMGR and how we've been supplementing that with strong tuck-in M&A that, as Chris mentioned, as Parata anniversaries this summer, we'll be contributing 50 basis points of underlying growth. We continue to have a very strong funnel, we continue to be exclusively on tuck-in. M&A has been part of our strategy. And obviously, we've been very focused. Mike and team have been heads down executing the integration of Parata exceptionally well. To see revenue synergies this early in the game is quite unique. And just as a reminder, that was accretive to our operating margins right from the start, and they're getting expense synergies going now as well, too, right, which only improves that dynamic. So, we're really happy with how we've been executing tuck-in M&A, the capabilities that we've – and track record that we've developed there, which gives us the right to continue to make that an important part of our strategy as we go forward. And I think we've talked about in the past, this is really a new…

Yes. Just maybe a few small adds. I mean, one, look, I do think the value proposition that BD offers is unique. And we're not changing in our commitments. We talked about 5.5 plus, but to your point, what's been clear, right, our two-year growth, 7% organic. We're clearly in the plus side of the equation. I think for all the reasons Tom noted, we have a portfolio that has the ability that we want to continue to try and drive the plus. But our commitment is 5.5%. I think the nice thing about that is that is maybe underappreciated. There's very few companies in med tech that can deliver that outsized growth, but still have this nice durable profile. It's very de-risked. So, you get this benefit of strong mid-single digits, it's extremely reliable, while we're posting outsized growth and improving margin in a very complex environment and haven't even fully capitalized maybe on some of the levers Tom talked about, like the firepower we'll have with tuck-in M&A going forward, or margin, really, I'll go back to – we're committed to double-digit earnings growth, which isn't easy to do. Obviously, we can moderate that depending on the growth profile, what we want to make sure we do is, consistently invest in the right areas to drive that growth, right? We continue to increase R&D, et cetera. So, all those factors would be sort of contemplated, but certainly confident in double-digit EPS growth, being able to consistently do that. So, I think it's a nice balance of you're seeing an inflection in growth and really strong growth that's differentiated. You're seeing differentiation and execution and you have a de-risked portfolio. It's hard to find all those pieces. It should make people feel good.

Thanks to you both.

Thanks for the question, Rick.

Thank you. There are no further questions. This does conclude this audio webcast. On behalf of BD, thank you for joining today. Please disconnect your lines at this time, and have a wonderful day.