Kick-off for the Las Vegas BofA Healthcare Conference, and we're welcome to join Tom Polen, Chairman and CEO at Becton, Dickinson. Thanks for joining us. Good to be here. We're coming off the back of your fiscal Q2 earnings. Just kind of curious, looking at the fiscal Q2, there were some puts and takes, some one-time stuff, some ongoing stuff. Just kind of curious how you saw Q2 shape up versus kind of your expectations. Yeah. We feel really good about Q2 and the momentum that we're building as we go through the year. So if you think about Q2, we were basically right on revenue as expected. We saw a significant ramp-up in the second quarter, driven by our healthcare procedure-exposed businesses. Primarily, if you think about volume growth, we saw very strong volume growth related to procedures across businesses like PAS, our Vacutainer business, our MDS business, up 6%+ in the U.S. We saw the same thing. Procedures drive strong growth in our interventional businesses. And then we saw that the diversity of that portfolio be able to cover somewhat what we're seeing as transitory dynamics that's affecting everyone in the industry, in the biopharma research space and in the pharma systems drug delivery space on non-biologics. Again, we saw all of that come together with basically delivering on our ramp in Q2 as expected with strong 5.7% growth. As you walk down the P&L, we saw really strong margin beat versus our expectation, driven by continued momentum of BD Excellence. We've talked about that in the past. That's our approach, our business system that we use starting in operations. We've seen strong performance in reducing our CapEx spending, reducing our inventory levels, driving continuous improvement savings, including 30% reduction in our waste, for example, and seeing that benefiting our gross margin line. The momentum is just getting started there. We expect continued momentum from BD Excellence over the next several years on our gross margin line. As you continue to flow that down, obviously, we had a very positive EPS beat, which not only helped us raise EPS by about a full point for the year but also allowed us to de-risk the second half as we think about that. So we feel really good about the second quarter. The other thing I'd say is you saw really strong free cash flow growth in the second quarter. We've been signaling that all year, and it played out as expected, if not a bit better. We expect mid-teens free cash flow growth again for this year. We saw the same thing last year. And we expect continued outsized growth of our free cash flow as we march free cash flow conversion back up to 90% over the next year or two. And that's, again, driven in part through the BD Excellence work that we've been doing. We feel good about where we're at. Great. And so you got it to at least 6% revenue growth in Q2, which is applying a 9% in Q4 to hit the full-year guidance. So maybe just talk through some of the key drivers on the revenue side to kind of get to that ramp to the full year. Yeah. Obviously, so the number one factor in that, if you think about our base business performance, that guidance in the second half assumes base business performing at about 5%. And then you stack on top of the 5% the partial recovery of China in the second half, where we saw value-based procurement start in the second half of last year. And so we expect to have an easier comp in China. You saw China, by the way, step up from a certain growth rate in Q1. You saw that growth rate improve in Q2. We expect to see that improve further in Q3 and Q4, which, again, creates positive momentum on that growth number. And then the other more significant step-up is Alaris, which you also saw us on Q2 raise our outlook from the year. We started the year at $200 million expectation for Alaris. We then moved that up to a floor of $200 million at the end of our Q1. And then based on the momentum that we saw in Q2 and our confidence there, we raised it up to at least $300 million, goes between $300 million and $350 million if you do the math on that one. And we can talk about that in a moment. But we feel really good about the momentum on relaunching Alaris. So just to mention, Q2 was a record quarter for us. We produced the most Alaris units in the history of the company in a given quarter in Q2. And we shipped the most units of Alaris that's ever been shipped in the history of the company, actually in the history of Alaris as it's existed even before we acquired it. That just is a huge testimony to our manufacturing organization. I think everyone looks at BD as a manufacturing powerhouse. It's a deep core competency of ours. And to be able to ramp up from a certain level, a quarter of where we've been historically, to within 2 quarters to ramp up to a record number is not a simple task at all. That was a question we were getting going into the year. Can you ramp up? Obviously, the fact that we did it within 6 months of clearance, I think, is just a good testament to our confidence there. Yeah. And we'll jump into Alaris in a minute. But before we do, on the margin side, so Q2, really strong margin quarter. And just think about how much do you kind of de-risk the second-half ramp-on to hit the full-year margin guide. If you look at the margin in Q2, so basically, the underlying margin in Q2 is exactly at the run rate that we need to be at for the rest of the year. We had about 70 basis points of headwind from the inventory destocking, which we'd signaled last year actually was going to hit us in Q1 and Q2, just as a reminder to folks not familiar with that. Many companies saw inventories increase during COVID as people were managing complex supply chains and made decisions to increase inventory levels to prevent service disruptions to customers. We made a decision, again, as part of our BD Excellence strategy, that we could, as those supply chains stabilized, you can make a decision, do you care about free cash flow the most, which gives you flexibility to do things like we've, for example, we returned over $1 billion to shareholders in the first half between our dividend and $500 million share buyback. Tuck-in M&A, having strong free cash flow allows you to do that. We saw we could take inventories down notably. At the end of last year, we did that. That obviously creates unabsorbed overhead in the manufacturing plants as you do that. That CapEx rolled into Q1, Q2. It was a very defined, very quantitative number that we knew going into the year. And that rolled out in Q1, rolled out in Q2 exactly as expected. It's out of the system now. So as we look at Q3, Q4 in the back half, continuing that margin that we've got underlying is basically where we need to be, along with inflation that impacted and CapEx enrolled into Q1, Q2. We know that alleviates in the second half too. Great. And going back to Alaris, so you came out. You'd had a floor of $200 million and post this quarter, kind of raised it to almost $350 million. Just the visibility you have in the Alaris business a couple quarters out. And then when you think about the exit rate, we're modeling about $150 million of Alaris in Q4. That's implying you're kind of back to that $400 million run rate in 2025. I think that's a very appropriate observation. We feel good about being at least that $400 million run rate going into 2025. Just to put it in perspective, so before the ship hold, whenever we would go into a new fiscal year, we would have about 60% of our revenues for that year already booked. Think about for Alaris, the sales cycle is about nine months. And so as you're going into a year, you have visibility to about 60% of the revenue in a normal year. This year, because we were on ship hold and we weren't allowed to promote or sell prior to clearance, which happened at the very end of Q4, we went into FY 2024 with basically zero visibility to our revenue in 2024 on Alaris, right? So we had to literally go take what's normally a 9-month sales process, accelerate that, close business, install it to be able to start recognizing revenue. And so what we saw was, and thus we said, let's start with $200 million. Then as we went through Q1, we started seeing substantial contracting and really good progress in a much faster rate than that 9-month historical time frame. By the end of Q1, we started going into Q2 with a certain% visibility to the rest of the year. As we ended Q2 now, we have double that rate of visibility into Q3 revenue. And we expect to exit FY 2024 with close to that 60% visibility to our FY 2025 revenue. Of course, contracts that we're signing today, many of them, if not most of them, not only have revenue for FY 2024, but especially for the large IDNs, they have a very specific rollout strategy. If there's 20 hospitals, they may say, we want 10 hospitals upgraded in FY 2024. We want another 10 upgraded in FY 2025. And so that gives us that multi-year visibility that, again, gives us confidence as we go into the back half of this year and into next year. When you think about Alaris, kind of you're under medical necessity for three years but not kind of selling $100 million a year, which implies there's some sort of backlog in this business. And just kind of think about your ability to capture the backlog and how likely we could see that come through in 2025, 2026. Yeah. So I'd say based on the exact same dynamic that I just shared, by the end of this fiscal year, we'll have a much better sense of that as we go through. We're still in that nine-month window now of building. We had early movers and adopters who were pent up. And then we have others that will be in that six-month, nine-month. So I think we'll have a better sense by the end of this year. But we certainly feel confident in going into 2025, at least at that run rate that we talked about before. And we're seeing really positive customer feedback. Do you think the competitors' approval in their pump recently changes the dynamics at all? No. We feel really confident in our platform. I'd say a couple things that we look at around Alaris. So number one, it remains the only platform that actually has all modalities for patients, right? There's no other system that can do large volume infusion, injection, and pain management. And as you think about the buttons, right, that you press to manage pain in a hospital, all in one user interface, we remain the only system there. We remain significantly differentiated when it comes to interoperability, i.e., connecting an infusion pump to the electronic medical record in a bidirectional interface. We have over 700 sites across the U.S. Our expectation is actually just in Q1, we installed more new interoperability sites in, I'm sorry, in the first half than all of the rest of the market has done in their history combined, just what we installed in the first half, right? We have exponential levels, more hospitals interoperability than everyone else combined. That's a deep competency and expertise. It's not easy to do. And that's something we've built over years. The third thing is we now have over 1,000 HealthSight accounts throughout the U.S. Now remember, we take a very unique approach to medication management. When I say very unique, we're the only ones who take this approach to medication management, which is really taking our manufacturing expertise and mindset and looking at the process of delivering medications in the hospital as a process, right? So the process of building inventory and buying drugs and storing them in the pharmacy to compounding them safely in the pharmacy to moving them up to the ward into our Pyxis cabinets and making sure that the right drugs are available for the right patients at the right time for nurses, right on through to administering those to the patients on the pump. That's a process that you look to make sure that drugs are always available, that you're not stock-lossing drugs, that you're not having too much inventory and using too much of your cash flow in a hospital, improving nursing efficiency, making sure that nurses are being compliant on protocols, not overriding Guardrails, not diverting narcotics by any clinicians. Our HealthSight platform sits across all of those different pieces of the puzzle that we own across that end-to-end workflow. What we allow hospitals to do is actually improve that end-to-end process. Those 1,000 and fast-growing number of hospitals who use HealthSight today, they clearly believe in the power of connected medication management. We're just getting started with many more things coming out that as we innovate on each of the different feeds into that data set, it makes the whole collective entity stronger. That's helpful. On Pharma Systems, that's a business that has been putting up double-digit growth. Just trying to think through the GLP-1s, other biologics. You've got the capacity 5-6 times some of your competitors. The durability of that double-digit growth and some of the drivers behind that. Yeah. Sure. So put in perspective, when we started a little before we started BD 2025, go back to FY 2019 when I took over, Pharma Systems was a $1.4 billion business. It's now slightly over $2.2 billion. So we grew it over $800 million since FY 2019. It's been a really positive success for us. You've also seen us invest the $1.2 billion in capacity to help fuel that. That you have seen over the last quarter and this quarter, you see it across essentially every other player in the marketplace, some destocking that's happening in the non-biologic space. We've shared very clearly our biologic business continues to grow right at about that double-digit growth level in biologics as there's some destocking in low molecular weight heparin and the vaccine space. With that, as we look at that going forward, we certainly see that being a creative growth driver to the company. I'd say high single digits, low double-digit growth over the long term. A couple things there. We certainly see biologics, not only GLP-1s, which we have a critical role in, but new drugs for Alzheimer's, et cetera, are going to continue to fuel growth in those categories. And not just in the prefilled syringe space, which we participate in, but we're really excited about a number of the new wearable platforms that we have as well as our self-injection devices. So for example, some of the early GLP-1s that are coming in auto injectors and pens, we already have a number of deals that they'll be going into our devices. As you look at the new classes of Alzheimer's drugs, for example, that are coming out in the future, you'll see those types of drugs start going into devices like our wearable Libertas platform, which is essentially a wearable auto injector. Auto injectors, let's say for GLP-1s, are good if you want to inject something in a couple seconds, like 2.5 mL of a not thick drug. You can do that very quickly. Many of the new drugs, like in the Alzheimer's class, are thick. And they could be 5 mL or 10 mL. And so you really get into, do I need to infuse the patient and bring them in? Or is there a device that can be a wearable that can allow that patient to infuse themselves over 10 minutes or 15 minutes? That's exactly where Libertas comes in. It's a 5-10 mL injection volume designed for viscous drugs. And so that's something we're really excited about. We start shipping that for clinical studies within the next couple months here. And then our Evolve platform, which is similar, but it's an electromechanical device that's filled by the physician, attached to the patient. They can go home. And for example, something like the biosimilar EPOs that are coming out soon, those would go into that device. And at a preset time period, for example, for EPOs, it's 24 hours after they leave the doctor's office. The device that the patient already has affixed to them leaving will just auto inject them 24 hours later so they never need to come back to the doctors again. So we're excited about that momentum, which is, again, just catalysts for that business that are really positive over the long term. Great. So over the last few years, we've seen BD kind of do the 5.5 plus and do a lot of the plus side of that. And so you've got M&A going organic. You've got more of your business growing, high single digits. So just trying to think about the durability of the 5.5% plus and if we should be focused more on the plus or the 5.5%. Yeah. As you said, over the last three years, including this year, right, it would be 6.5+. We're not saying we'll continue at 6.5+. But we're very committed to the 5.5+. You can certainly see us very systematically increasing the weighted average market growth in which we participate, both through very active portfolio management on the divestiture side, whether or not it was the creation of Embecta or the separation of our V. Mueller business, but also then on the tuck-in M&A side. We've done some really attractive tuck-in M&A, whether or not it's building what's now one of the largest robotics businesses in med tech, a $750 million pharmacy robotics business that we really scaled up through the acquisition of Parata or products like Tepha that you can see strong double-digit growth in our surgery business over the last several quarters driven by that new resorbable mesh and our upgrade that we have there. We have plans to expand that into new categories. Many other areas in our peripheral vascular disease that we've done tuck-in M&A. We expect to continue to be very active on that tuck-in M&A front. Part of our strategy is we do see that focus on cash flow is not accidental. It's very purposeful to be able to continue to drive revenue growth and value creation, whether or not it's returning cash to shareholders as we've been active in or driving tuck-in M&A to continue to shift us into higher growth spaces. That very strong free cash flow performance that we have is a key enabler to that. And so we feel good about where we're at there. We feel good about our tuck-in M&A pipeline. We have a very active and strong pipeline on that front. So we feel good about that. Awesome. On the margin side, just trying to think through the levers you can pull to get beyond the 25% longer term. When you're thinking about what's probably going to be the BD 2030 strategy coming up. Yeah. More to come on that. We're spending a lot of time on 2030 and sharing that with our board. So expect to hear about 2030 strategy kind of in this time, a little bit earlier than this time next year. We'll have our next analyst day probably in that March-ish time frame. And we'll announce that in the coming months. That'll give us the guide in 2025 and be able to deliver on those commitments. And then we'll obviously share where we're heading next. Think about one of the couple things that we've talked about there. We certainly expect to continue to deliver strong revenue growth as we think about margin and continued expansion there. So if you think about where we're at today and we're in a good position, right? This past quarter, we delivered 24.3% op margin, well on track to our 2025 in 2025. That op margin even includes some of those headwinds, one-timers like the inventory takedown. There'll be tailwinds as we go into next year. Obviously, Alaris return and absorbing the overhead, the sales team, and the service costs that we always kept, that'll become a positive margin driver as we go into next year. We're one of the few companies. I think we're one of three large-cap companies that are back to FY 2019 operating margins. We were one of the first there. As we think about where we head at 2025 and beyond op margin, to get to where we've gotten today since the pandemic, about 70% of the increase from the low during the pandemic to today being back at or higher than pre-pandemic levels has come from operating expense efficiencies that we've driven, very systematic actions that we've taken, putting in central Global Business Services, Centers of Excellence, et cetera, driving costs out. So 70% has come from there. 70% has come from the gross margin line. As we go forward, expect that to flip, right? So we're hyper-focused on the gross margin line. We've been ramping up BD Excellence in a big, meaningful way. We launched BD Excellence last year. Just to put in perspective, we've more than tripled the number of Kaizen events that we've done so far this year. It's more than quadrupled, actually, versus what we did last year. We'll do over 700-800 Kaizen events this year and a number of large-scale Shingo events that are week-long. All of that contributes is laser-focused on gross margin, waste reduction, cost reduction, and labor. We're investing quite a bit in material changeouts where suppliers have increased prices and won't lower them. We change the lower-cost suppliers to be able to make sure that we're improving our gross margins over time. So expect that to be a key theme as we go into the next phase for BD 2030. Okay. Sorry. That's great. Great color. Stepping back to the quarter, when the Q came out, we noticed pricing this quarter was the lowest. It's been a long time, suggesting volume's also better. And it's been a while. And kind of what do you see that push and pull between price and volume over the course of this year and kind of longer term? Yeah. What we're seeing pricing play out exactly as we've shared through the year. We signaled very clearly last year. We expected last year to be the peak in pricing. It was 4%. I think we were definitely the first in the industry to take action in pricing during the pandemic. As we look forward, we said we expect to be 1%-2% price on an ongoing basis, positive price. And we're right there, right? I think we were 1.6 in the first quarter, roughly, 0.6 in the second. We're right there at that between 1 and 2 level. We expect to remain at that level on a full-year basis. And the capabilities and competencies that we built in on pricing during the pandemic will continue to benefit us as we go forward. So we have software systems that manage price all the business units have. We have a central pricing function. Just like we have a regulatory or a law function, we have a pricing function at BD with pricing experts in each business to maximize the value that we're capturing for our products and services and making sure it's not leaking at distributors or other channel approaches. That's a core competency that will allow us to do better. If you think pre-pandemic, within the industry, we're already pretty good. Pre-pandemic, we were flat to slightly down on price. We expect to be positive as we go forward because of those competencies. Some news recently, the U.S. government added syringes and PPE to the tariff list. Just trying to think about how that's going to play out for your business. Yeah. It's certainly only a positive, a potential effect. I would say that folks may be aware there were already quite a few letters issued by FDA around quality concerns of most of the competitors in the syringe space in the U.S. And so we had already started seeing increases in volumes on syringes coming in. I think most importantly, from a healthcare provider perspective, we have the capacity to ramp up. Our plants are all ramping up to meet that expected increase in demand. And we expect to make sure syringes are used in 70% of all hospital procedures. And so they're critical to care. And making sure that we can supply and make sure that there's no hiccups in healthcare is our number one focus. As you think about just the size of that opportunity, it's not going to be meaningful in the back half of the year. Certainly, we'll have a positive impact within MDS. But on the scale of BD and just given that we're halfway through the year, we don't expect it to be new. Yeah. That's helpful. And on the pipeline, you have a next-gen Pyxis and next-gen Alaris coming. Just the timing around that and kind of the impact that you see from those products on growth rates. Yeah. So obviously, we have even the new Alaris we just launched is kind of a next-gen. It's completely new, a lot of new components, new cybersecurity, new wireless standards. We did share, I think very importantly, was last year's number one goal was to get Alaris cleared. This year's number one goal was to get Alaris remediated and the sales ramp going. We also said part of this year's goal was to get back the innovation cadence on Alaris. And we expect to submit new 510(k)s on Alaris every year from here on out, continuing to innovate. And so the current Alaris not only does it have a lot of new capabilities versus what went on Ship Hold, but we'll have other new ones that we'll be submitting by the end of this calendar year, including new wireless software updates, advanced cybersecurity features, a number of other factors built in, making sure we continue to have the 510(k) to be highly compliant. We're obviously focused on making sure that never, ever happens again. And again, that annual cadence of 510(k)s is important to that. So we do have a next-gen Alaris in the pipeline. But we don't share any specific details on that timing. On Pyxis, that's next year for our next-gen Pyxis. And that's going to be the first new Pyxis hardware platform in 15 years. And certainly, since we've bought CareFusion in 2015, we're really excited by that. We've been innovating software on Pyxis. This is the first completely new hardware set. It will look different, modernize the platform significantly. It's going to be kind of like a Tesla where there'll also be a number of hardware features built into the Pyxis vehicle that will turn on over time with software that'll be really positive for clinicians and patients, we think. It's going to be cloud. The major other thing here is it's cloud-connected. So our ability to drive software innovation at a much faster cycle today, all Pyxis at this point is on-prem. The current gen is all on-prem. So software upgrades have to be done on-site. The new one will be able to have remote new features added real-time through the cloud, which, again, just helps drive that HealthSight ability and innovation cycle much faster. So we're excited about that coming out next year. On M&A, we talked about a little bit with the free cash flow. Just trying to think through how active is kind of the M&A portfolio, areas that you're trying to fill in the business. Should we still think about kind of chunkier tuck-ins at this point? Yeah. So we have a very active M&A pipeline. Maybe just a couple parameters as to how we think about M&A. First off, we're looking at we want revenue accretive, margin accretive, EPS accretive M&A. And we know we can find those, right? We're not looking for dilutive deals. We haven't done dilutive deals or any of the small early-stage things that we acquired. We just covered that's very, very small. And they immediately pop positive in the next year. That's something that we're going to continue at this point. We're also not looking at any transformational M&A. That's been something I've been very clear since I've taken over tuck-in M&A. For us, tuck-in M&A does span, right? Can be hundreds of millions. Could be a couple billion, right? For us and our size, $3-$4 billion, we'd still call that tuck-in M&A. The other thing is that we have a number of highly attractive spaces that we're in today, whether or not it's our flow cytometry and that whole immunology space around there, our peripheral vascular business, our whole connected care strategy that we've been building around. We've done three or four acquisitions in connected care, whether or not it's buying MedKeeper, which is kind of the Pyxis of the non-acute space, or Parata on the pharmacy automation space. We see a lot of opportunities there. And how we get that revenue accretive, margin accretive, EPS accretive deals with really strong ROICs and returns is going into spaces where we already have strong presence, right? We have dedicated sales channels that call on peripheral or interventional radiologists that call on pharmacies, that call on urologists, that call on a number of categories. And when we take new innovations and we put them into those channels and we spread it across BD's extremely broad global footprint and we apply our manufacturing powerhouse capabilities, that's when we really start seeing the value creation flywheel start to spin. And obviously, if it's data and a connected care platform and we can connect that into the rest of our platforms to make kind of 1 + 1 = 3 and innovate on the back of that, that's another way that we get outsized returns both near-term and over time. So those are just maybe a little bit of color on how we think about M&A and the types of spaces that you'll see us go after. Great. Next year is your last year of your BD 2025 LRP. Just trying to think through some puts and takes on next year, the 5.5% growth profile, 25% margins, that's 100 basis points of margin expansion. Kind of the confidence in getting to that and a double-digit EPS growth. Yeah. We feel very good on certainly on all of those fronts, both on the revenue side. We've been doing that. That's continuing the track record of what we've been doing. Margin performance, again, 75% of the way through. We're about 5 points ahead just in terms of the timeline of where you expect to be. At this point in the game, we're a little closer than kind of the timeline would say. We've got the tailwinds of Alaris that are going to fuel that. We've got the tailwinds of the inventory takedown not happening again going into 2025. So you start piecing those together, it shows we're very, very much on track to deliver 2025 in 2025 at least. And then the focus that we've been driving on BD Excellence starting last year, that momentum is going to continue as Recode, for example, the plant consolidations we've been working on, those haven't shown up in our margin yet. They really start popping going into 2025 as well. Those, of course, take many, many years. We've made those investments. Those plant closures and the benefits in our GP line, again, start hitting really next year and in the year after. So all of that combined, we feel very good about. All right. Great. Thanks for the discussion. Thanks for coming, Tom. Yeah. Very good seeing you. Thank you. Thank you, everyone.