Becton, Dickinson and Company (BDX) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Becton, Dickinson's BD Innovate Series webcast. [Operator Instructions] Please note that this call is being recorded. [Operator Instructions] It is now my pleasure to turn today's program over to Francesca DeMartino. Ma'am, please begin.

Thank you, and good morning, everyone. I'm Francesca DeMartino, Senior Vice President and Head of Investor Relations at BD. On behalf of the BD team, thank you for joining us for our second episode of BD Innovate highlighting single-cell analysis. Today's call will be recorded and will be available for replay on our website at investors.bd.com. BD Innovate is a deep dive into our end markets, business units, products and leadership. During each episode, we will spotlight an innovation topic, be it a business unit product, suite of products or growth initiatives. Additionally, we want to give you an opportunity to hear from and interact with the management teams leading these businesses and products. As a reminder, this call is intended for the investment community, including our sell-side analysts and institutional investors. If you were unable to join our inaugural webcast on pharmacy automation, you can find a replay available in the Events and Presentations section of the IR website. I also want to remind you that we will be making forward-looking statements. I encourage you to view Slide 3 in our presentation as well as the disclosures in our SEC filings, which are both available on the IR website. Finally, please mark your calendars for our next episode spotlighting our Farm Systems business within our BD Medical segment. We will host that call on December 11. Now for today's event, we are pleased to feature our single-cell analysis end market, which is part of our Biosciences business unit within the Life Sciences segment. I'm joined by Steve Conly, Worldwide President of Biosciences; and Eric Diebold, Worldwide Vice President of R&D for Biosciences. I have some prepared questions for Steve and Eric, and then we will leave time for our sell-side analysts to ask questions at the end. Before I have Steve and Eric join me, let me spend a moment introducing single-cell analysis, which is a $3 billion end market growing about 5.5%. At its core, single-cell analysis is driving a deeper understanding of the human immune system and is helping researchers and clinicians unlock its power to fight life-threatening diseases like cancer and infections. To further introduce this end market, I want to play a video we unveiled at the recent CYTO Conference, which is the largest global trade show focused on cell analysis. [Presentation]

Okay, so with that, let's jump right in. Steve and Eric, Happy Friday to both of you. Welcome to BD Innovate, and thank you for spending your morning with us. Let's start with some introductions. So if you can both introduce yourself and tell everybody about your current role at BD and the roles you've held in the past.

Thanks, Francesca. So I joined BD in 2010, following the acquisition of Dynacon's Lab Automation business. I then spent 10 years within the Diagnostics business unit, where eventually, I was the Vice President and General Manager of the $1 [ million ] microbiology business group responsible for leading the blood culture, ID/AST, TV, lab automation and informatics franchises. I then joined BD Biosciences in 2020 as the Vice President and General Manager of our Research and Clinical Solutions business and was then appointed as the Worldwide President of BD Biosciences in 2022.

Good morning. This is Eric Diebold. I joined BD in 2017 via the acquisition of Omega Biosystems, Inc., where I was the CEO and Founder. Been in BD Biosciences for 6 years, all that time with the R&D function, taking roles of increasing responsibility. And I was appointed Worldwide Vice President of R&D in 2020.

Great. Okay. So Steve, let's just start with you and talk about Biosciences, which is a tremendously important space. Can you introduce BD Biosciences, which we'll refer to as BDB? And while doing so, also take a moment to demystify the space. So what are some of the terms, for example, that we should have a basic understanding of when talking about Biosciences?

Yes. So Biosciences fits, as you mentioned, within the Life Sciences segment of BD, and we're a business unit that develops and manufactures sells and supports a range of products that help researchers, scientists and laboratorian analyze cells. And we like to say that the human body is just tremendously complex. There's trillions of cells, and each plays a specific role. And this is coded through DNA, RNA and protein. So while we've developed a very strong fundamental understanding of these cells over time, there's still so much to learn and uncover about these cells and the role that they play in both disease and in treatment. This includes the immune system, which is one of the most fundamental systems within the body as it plays a critical role in protecting the body from infection and disease, which was really on full display during the COVID pandemic. And at BDB, we offer instruments, reagents, assays and informatics solutions for both flow cytometry and single-cell multiomics that are used by our customers to analyze these cells. So researchers leverage our products to better understand cell function, what are the causes of disease, potential treatments and therapies and helps measure effectiveness during clinical trials. Disease areas include immunology, immuno-oncology and neurology and other applied immunology applications. Our clinical customers use BDB products for clinical diagnostics, including for diseases like HIV in blood cancers such as leukemia and lymphoma. Our flow cytometry portfolio includes cells orders and cell analyzers, single-vial reagents and informatics, and we support a broad range of experiments from basic and routine low parameter work to some of the most highly specialized complex and advanced multiparameter experiment. We also offer single-cell multiomic solutions with our BD Rhapsody product line, which includes the Rhapsody HT Xpress Instrument and Scanner as well as a broad range of assays for a whole transcriptome RNA analysis, immune repertoire and protein expression.

Great. Thanks, Steve. I think it's really helpful to have that foundation. So let's talk about our customers. So can you tell us who those customers are and what end markets and segments we serve.

Yes, that would be great. But let me first just start with a little history of our business. So BD actually played a key role in inventing flow cytometry technology almost 50 years ago, when we commercialized the world's first fluorescent-activated cell sorter, or FAC, in 1974 in collaboration with Stanford University. And as I mentioned, we plan a diverse set of areas, including instruments, reagents, assays informatics that are labeled both as RUO as well as for clinical diagnostics. And we market and sell these products to a broad range of customers. This includes government labs, academia, biopharma, biotech, hospitals and reference labs, to either solutions for discovery research, translational research, clinical diagnostics and patient monitoring. And really, our solutions are purchased within these customers and used by flow core labs, genomic core labs, primary investigators or PIs as well as clinical laboratory.

Great. And can you then size the end market for us, including the anticipated growth?

Yes. So today, Biosciences plays in what we estimate to be an approximately $3 billion end market growing mid-single digits. In FY '22, BD Biosciences revenue was approximately $1.4 billion, growing at 9% on an FX-neutral basis. Year-to-date in FY '23 through Q3, we have revenues of approximately $1.1 billion with growth of just over 11% also on an FX-neutral basis. And we are #1 or #2 in every category in which we play in. And as we stated at our Investor Day, we continue to target $100 million of annual growth by 2025, which represents a faster growth rate than the segments that we play in.

Okay. Great. So let's switch to the trends you're seeing within Biosciences and talk about those.

Sure. So I mentioned earlier that we addressed what I'll call bench to bedside. So this is really around basic research, translational research and clinical diagnostics, and each has its own unique trends, which let me just talk about quickly. So on the basic research side, this is really primarily driven by research budgets, and we do continue to see strong funding globally. I mentioned earlier about COVID, and I'd say COVID impacted our lives in many ways. But from a scientific perspective, it certainly made it very clear how important fundamental basic research is, and we continue to see government, universities and companies investing and funding life sciences research. Within translational research, this is where researchers take the learnings from early discovery and look to actually apply these learnings to developing new therapy. This means with drugs, vaccines as well as cell and gene therapies. We continue to see robust growth in translational research driven by a number of factors. The one application I want to reference here is around the growth in immuno-oncology, which is essentially using the body's own immune system to help fight and cure diseases, including cancer. This is very different than previous treatments where essentially, the only approaches were to flash poison and burn with surgery, chemotherapy and radiation. There are already a handful of CAR-T cell therapies approved by the FDA, while there's more than 1,000 in the pipeline. And flow cytometry is used for drug discovery, clinical trials and manufacturing QC for these immuno-oncology therapies. Finally, for clinical diagnostics, the incident of -- the incidence from blood cancers, including lymphoma and leukemia, expected to double over the next 20 years. And flow cytometry continues to be the gold standard as it relates to classification, diagnosis as well as treatment and monitoring.

Okay. So with that, I think we have a good foundation now on Biosciences. So now let's talk about why BD continues to be a leader in this space. So Steve and Eric, can you talk about how BD stands out from both the commercial and the product solutions offering perspective?

Yes. And I'm happy to start. So there's a few areas to highlight, which I think sets BDB apart from others in this space. The first is around just the breadth of our solutions and our unique capability to offer customers these integrated solutions which includes instruments, reagents, assays and informatics for both the RUO and clinical applications. The second area I want to mention is our commercial footprint. This includes the broad commercial coverage we have globally, including sales, application and service footprint. And finally, it's important to highlight the uniqueness of our technologies and the key differentiators that our products and solutions have, which I'll let Eric actually expand on more.

Yes. Thanks, Steve. So as Steve mentioned, since the 1970s, BD Biosciences has always been at the forefront of innovation in cell analysis. Today, we are a total solution provider offering products that are purposely designed to work together ranging from specially optimized dyes and reagents to instrumentation that's designed to provide optimal data quality from these reagents and assays, to software that extracts biological insights from experiments using machine learning techniques. We see our offerings really being differentiated from competitors and that we always are thinking about our products in terms of an ecosystem, integrating various technologies instead of just providing individual point solutions.

Eric, just to stay with you, I'd like to dig in a bit more here. Can you provide some more detail on these offerings that you just mentioned?

Sure. So we have differentiation across all of our major product platforms within this ecosystem. And maybe the best way to highlight this is to start with a short video that we prepared about our FACSDiscover S8 Cells Sorter. [Presentation]

So the FACSDiscover S8 Cells Sorter is a great example of our recent instrument innovation, bringing image-based sorting to the world, which enables scientists to sort cells based on cellular morphology and spatial characteristics, in addition to measuring the total amount of protein that each cell contains. This is a highly differentiated new-to-world capability that's going to really unlock new applications in immunology, cell biology and genomics. And beyond this imaging capability, also inside the system is a brand-new advanced spectral and mixing system in which high perimeter full cytometry experiments can be performed with ease and really with seamless integration of fluorescence and label-free image parameters. So you now can see inside cells measure more than 40 different proteins at once and sort cells based on all of this information simultaneously. If we move to our reagent side of our portfolio, BD Biosciences has been on a journey of releasing new flow cytometry reagents with new laser-specific dyes optimized for performance in spectral flow cytometry. Our new horizon real yellow and real blue reagents produce brighter, cleaner signals and even better performance versus legacy reagents that have been extended by the blue and yellow green lasers. And these are developed using novel BD dye technology in an AI-guided approach to selecting the optimal fluorochrome positions for high-parameter flow cytometry. Designed together computationally with our instrument hardware, this combination provides customers with an optimized suite of tools to perform flow cytometry experiments with enhanced resolution and allows them to design panels with much greater ease than before. These reagents really allow BD Biosciences to continue leading the irreversible trend of cell analysis that demands higher and higher parameter experimental capabilities. And to mention a third products, the Rhapsody HT Xpress system within our single-cell multiomics platform recently launched, with up to 8x the cellular throughput of the existing BD Rhapsody system, which addresses a major customer need of high throughput in the single-cell multiomics analysis market. This is an easy-to-use high-throughput single-cell analysis system that enables up to 320,000 cells per experiment versus the previous 40,000 with the same high-quality performance of the prior system, while also preserving compatibility with our existing venue of single-cell assays. The system is different in competition in its ability to provide unbiased gentle analysis of cells, which is designed to offer experimental results of high quality across all cell types.

Eric, thanks for that. Just to stay with you. So BD is known as the pioneer flow cytometry and a category leader. And we've also heard from Tom, our CEO, we heard him talk about the super cycle of innovation within Biosciences over the last couple of quarters. Can you talk about what is driving our innovation today and how you see innovation within the space evolving in the future?

Sure. So we're super proud of our history of innovation here at BD Biosciences. Many fundamental advances in this space have come directly from our business, but this super cycle really means innovation from BD Biosciences, enabling our customers to innovate and then their feedback giving us insights to produce the next innovations. Over the years, this process has actually enabled the work by scientists that's won multiple Nobel prizes. And I mean, this is the stuff that really gets me excited now that in the morning, the opportunity to help researchers and clinicians do something truly transformative for human health. And so if we look to our products, and while the genesis of our business was originally around instrument innovation, that's been evolving and maturing in a number of areas over the past half century. Today, we're investing not only in our instrument innovations, but also really heavily in our digital innovation, including in certain areas such as advanced spectral algorithm development for enhanced data quality from high-parameter experiments. We're leveraging machine learning and AI approaches for increasing the speed and reproducibility of flow cytometry data analysis. And we're using novel image processing techniques for image-based cell sorting to unlock answers to unproved biological questions. And while this all may sound very instrument heavy, even on the reagent side of our business, we're using computational modeling, machine learning and lab automation. Ultimately, these digital capabilities are helping us provide customers with enhanced experimental capabilities that leverage the integration of our instruments and reagents together. And as we look to the future, we really see this digital trend continuing as the sophistication of digital technologies continues to increase with a greater and greater fraction of our value of our solutions being driven by digital technologies and software versus more traditional improvements in hardware.

Eric, thanks. I'll give you a break, but that was very comprehensive, and thanks for that. So Steve, coming back to you. You talked earlier about our growth in BDB. Can you share the key drivers that will continue to drive strong growth for BD Biosciences?

Sure. Thanks, Francesca. Yes, the first piece of our growth story that I'll reference is just really related to the end markets and segments which we serve. We play in segments that are growing well and have strong fundamentals behind them. And as mentioned earlier, we are #1 or #2 in each category that we play in and expect to leverage this strength to help grow faster than the segments that we participate in. We also have a number of key growth levers, which we're driving, which includes like the first one, I'll say just innovation, right? Eric described, we recently launched several new products and have a robust innovation road map of new solutions, which we'll be bringing to market in the coming quarters. The second is around commercial execution and the investments we're making in both our core and new growth areas. This includes continuing to enhance our e-commerce channel, which makes it easier for customers to buy from us, as well as expanding our commercial footprint of sales, scientific and application support. We have hundreds of sales specialists and application scientists to support our customers and help drive loyalty to the BD brand and ensure repeat purchases. And finally, another growth lever is related to inorganic activities and opportunities, which we continue to assess, which would include partnerships or acquisitions in high-growth and strategic spaces.

Okay. Great, Steve. And Eric, how are we continuing to innovate to address the unmet needs of our customers? And what feedback are you getting from them on our new offerings?

Sure. So as I mentioned, the major area we're investing in is our digital capability. And included in this really building capabilities around rapid software deployment to efficiently address customer feedback with software updates; a cloud-based software ecosystem capability called BD Research Cloud that enables us to help simplify flow cytometry workflows; and overall software ecosystem to integrate these capabilities and enhance the customer experience of both designing experiments, purchasing reagents, running experiments and then performing data analysis. In terms of feedback, as you asked on our new offerings, we're seeing excellent uptake in orders of our recently launched products, and several publications come out in very high-profile journals that really highlight the work that our early adopters are being able to do with these new products. The improved ease of use, high data quality and novel capabilities that we're providing are all leading to very positive responses from our customers. And as always, with each new launch, we're acutely engaged in the continuous feedback we put them to understand where we can constantly improve and innovate, which is really part of our innovation culture here at BDB.

Okay. Great. So I just have a couple more questions here, and then we can turn to Q&A. So before we wrap up, and Steve, this one's for you. so before we wrap, you both have provided great details on the business and the innovation that will drive its future success. I want to ask you to just tie the BDB strategy to our BD2025 strategy and our vision to grow, simplify and empower our company.

Yes. So what we're doing is BD Biosciences is hyper aligned to the BD2025 strategy. First, I've made several references to our growth story, which is supported by playing in attractive end markets and outcompeting with a broad and differentiated portfolio with strong commercial execution. We expect to continue to grow above the segment growth rates by continuing to drive novel and differentiated innovation across our instruments, reagents and informatics portfolio while making strategic investments across the rest of our business. As it relates to simplify, we're in the process of executing several projects under our RECODE simplify program. This include initiatives that are simplifying our portfolio [ closely ] to well manage and strategic portfolio life-cycle decisions, while we're also executing several architectural projects in order to simplify and streamline our manufacturing and supply chain operations globally to increase efficiency while also improving customer service levels and quality. And finally, perhaps our greatest asset of BDB is the group of highly skilled and engaged associates who support the business. We continue to accelerate our cultural agenda under the Empower pillar and are seeing the benefits of these initiatives with high engagement, lower turnover and strong customer Net Promoter Scores.

Okay. Great. So to wrap up before Q&A and take a forward view, I'll ask both of you, what most excites you about the cell analysis end market? And what is that in the space that you're looking forward to?

So maybe I'll start off with that. To me, it's really about the impact of our products, enabling our customers to make scientific and clinical discoveries in fields such as cell and gene therapy, immuno-oncology and drug discovery, these are the discoveries that can really truly improve human health, and it's helped us -- helping us really deliver on our purpose of advancing the world of health. So to use a recent example, I just saw a paper come out in Nature Communications recently where a customer of ours use the BD CellView technology, which is inside the FACSDiscover S8 Cell Sorter. And they use it to figure out the genetic pathway of the hereditary form of the disease called dilated cardiomyopathy. They actually use the image-based sorting capability to sort cells that were exhibiting the disease phenotype of a specific protein that was aggregating in the cytoplasm versus the nucleus. And after downstream functional genomic analysis, they uncovered both the disease pathway as well as the potential gene therapy strategy to treat this deadly commission. And while this is just one recent example of customers using our technology to make breakthrough discoveries, it's super exciting to me, and I think I can speak on behalf of the whole Biosciences business unit that we're super excited to see what comes next.

Yes. Let me just build on what Eric said. And I think what I want to reinforce is just to reiterate the fact that what we do matters. And the relevance of our technology has never been greater as both flow cytometry and single-cell multiomics are being used in the most impactful areas of research and clinical applications. It's not an exaggeration to say that we're helping current and future Nobel prize winners advance their scientific discoveries and help to shape the future of health care. To that point, the second area that excites me is the innovation pipeline and the future growth opportunities that we're working on. We're in a great position where we not only enjoy being a leader in this space for the past several decades, but with the innovations that we're bringing to market, we're helping shape the next 10 to 20 years of what scientific discovery can bring. And finally, building what I just said around being a leader in the cell analysis space, there also continues to be some amazing technology developments, which are complementary to what we do. And so there will be many exciting opportunities to expand our presence and enter into new adjacencies that will increase our addressable TAM and bring new growth opportunities.

Great. So thank you both for this in-depth view of BDB. I think many of us feel like the business that you're in and leading is a hit and done for BD, and we wanted to give everybody an opportunity to learn from you and engage with you and hopefully, sort of demystify it and understand it a little better. And so hopefully, that's what we accomplished today. So with that, I said we're going to turn to Q&A and give our analysts an opportunity to interact with you and ask their questions. So operator, if you could please assemble the queue.

[Operator Instructions] Our first question will come from Vijay Kumar with Evercore ISI.

This is Alexandra, on for Vijay. I just had 2 quick ones. I think the first, when you think about the end markets for cell analysis, how are you expecting that to kind of shift between academic versus clinical over the next couple of years, especially when you look at like companion diagnostics opportunities? And then my second question is kind of on the funding environment for pharma and biotech. We've seen a lot of tools companies revising their customer CapEx and expectations. What kind of line of sight do you have to this and how relevant are the concerns around earlier stage funding through BD Biosciences?

Yes, I'm happy to answer that. So to the first part of your question, maybe I'll just bring back -- take you back to a comment that I made around one of the key differentiators about BD Biosciences that we're very proud in and that we're able to play really from early-stage discovery to translational diagnostics to clinical and being able to actually address needs across this continuum, I think, puts us in a great position to take advantage of opportunities, including, as you referenced, even the opportunity for companion diagnostics. So we -- I'd say we see the areas that we play in a very complementary, and really the science kind of moves along that pathway as well. So what we've had as Eric started, mentioned a very long and successful history in flow starting in research instruments, it's now moved even further towards clinical diagnostics and applications, and we see companion diagnostics as being a new area of opportunity for us in flow. Continuing diagnostics is a large space, which is primarily using other technologies. But through some of the advancements that Eric mentioned around standardization and reproducibility, we've seen a lot of excitement in terms of using flow. And obviously, just see some of the new therapies that are being developed are very amenable to that. So that is an area that we're working on in partnership with several different players. Related to the -- maybe the second part of your question, the biopharma space, look, as I mention, we have a very diverse set of customers, and we're very aware and continue to monitor the areas of funding. Maybe the comment that I'll just make is that it's also important that we're -- even within those customers, we're in a diverse set of areas. We research -- discovery research for those biopharma and biotech as it relates to actually finding and discovering new biomarkers, all the way to supporting clinical trials with some of our more standardized products as well as doing manufacturing QC. So just even the diversity that we have within those spaces, I think, helps us just understand the space and position ourselves as partners for them. So yes, we're continuing to monitor the space, but we do continue to see strength in terms of the technology demand given its applicability and relevance in the translational research and clinical trial space.

Our next question will come from Matt Miksic with Barclays.

So the first, it might be helpful to get a sense given that -- mostly that sort of [indiscernible] right analyst and not so much tools and diagnostic analysts to sort of maybe frame the business here in terms of equipment and reagents. I guess looking back at some of the disclosures you made in the past, it seems like maybe half of the business is reagents. Wondering if you could talk about sort of the dynamics of some of the product launches and what that means in terms of pull-through reagents and growth of reagents on the back of some of these new platforms? And then I have one follow-up, if I could.

Yes, sure. Thanks, Matt. So yes, you're right. The business -- the breadth of our instruments, reagents, assays and informatics in both research and clinical. And if you look at our business, both in terms of research versus clinical as well as instruments versus reagents, and clearly, there's a connection. I'd say the connection is even tighter just given your experience in the medtech space around just given the razor blade model for clinical assays. The connection is also tight on research, but there's -- it's a little bit different in terms of an open -- a more open system, but we see the presence of our instrumentation being ubiquitous in early-stage discovery as well as translational research laboratories, really enabling us to create those relationships with customers to partner with them and drive experimental design, panel design, which supports the reagent pull-through for both our research and our clinical assays. And obviously, on the clinical side, we've got a range of CE-IVD as well as FDA-approved assays that go along with our equipment. So as installed base grows, we obviously continue to support and drive the -- the associated pull-through with those equipment placements.

Okay. And then in terms of just the pipeline, and I appreciate the color on the sorter and I guess the analyzer. There were some products in your pipeline that you talked about at your last analyst meeting for '24 and beyond. I guess maybe talk a bit more about those with the fourth quarter results and your outlook for next year. But you could give maybe as a sense of how some of the upcoming launches will sort of complement or enhance the launches that are underway that you've been describing over the next, say, 12, 18 months?

Sure. So I won't discuss time line specifically, but just building on some of the communication we shared previously. And I'll let Eric build on this after I just give a high-level overview. So we showed a video of the FACSDiscover S8, which Eric said we're obviously very proud about and getting some very strong feedback from customers. I referenced sort of our research instruments in the fact that we've got cells sorters and cell analyzers. So the FACSDiscover S8 is -- helps with -- well, it's kind of the landmark FACSDiscover sorter. And we are continuing to develop a complementary impaired analyzer, which we've referenced as the FACSDiscover [ A8 ]. And obviously, having as well to address the analyzers segment. It's something that we're focused on and executing and very excited for when that launch is. And I was just going to reference also in addition to the instruments, we'll also -- we've got a pipeline of complementary reagents. And we've referenced our horizon real yellow and real blue dyes, which really complements our research instrument as well as it allows for customers to do more parameter and higher parameter analysis with some novel techniques to really enable new discoveries that weren't able to be done before and are really optimized for these spectral instrumentations.

We'll now take our next question from Patrick Wood with Morgan Stanley.

I guess for me, I'm curious to say how you think of Rhapsody and how it stacks up relative to, say, some of the transcriptomic approaches? Or even there's obviously some tech that's touted to be kind of instrument-free stuff like Parse and Fluent, how you see that competitive landscape evolving in the puts and takes of the different systems, that would be really helpful.

Yes, it's a great question. Again, maybe I'll start, and Eric, if you've got anything, happy to...

Just give us a sec.

[Technical Difficulty]

Yes, we can't hear you, Steve. I don't know your audio just went out. Eric, do you think you can jump in and comment while Steve's fixing it? Okay.

Yes, I'll -- look, the BD Rhapsody, I think the thing that we are most proud of and most excited by is the data quality, right? The ability of the Rhapsody system to provide a gentle processing of cells across all cell types is one of its key differentiators, and we really expect that to ultimately sort of win the day as the key thing that experiments are after is that unbiased high data quality. The ability now to go to much higher throughput than we could before into the hundreds of thousands of cells per experiment with the Rhapsody HT Xpress I think really closes that gap between us and other competitors that we previously had. So the combination of high throughput plus high data quality, I think, is really the key value driver for that product.

And our next question will come from Rick Wise with Stifel.

Steve, a couple of questions for you. I'll just ask them both upfront. One, margin improvement is a priority for Becton for sure. Clearly, you're innovating. I would guess that the new products are, in a general sense, strongly margined or maybe even better margin. But maybe talk about how Bioscience or Biosciences fits in with the margin improvement story. Is it volume? Is it mix? Is it the innovation? Is it simplification? How do you -- how does your business fit in with this larger sterling?

Yes. Let me see. Check, check. Okay, I can...

You're back.

I think you can hear me. So apologies for having some technical difficulties. So I think that there's a number of themes that you touched on that I'll highlight and because it's more than just one pillar that helps with margins. So first, I'd just say is we think that even the markets that we serve, we continue to see accelerated growth in some of the end segments that have higher margins, mainly as we think of the places that we play in, whether it be reagent pull-through, et cetera, which are contributing to opportunities around mix improvement. The second is tied to innovation. And as we're innovating and launching new products, we focus on developing products that help to drive accretion within our overall business. And the third pillar I'd reference is I talked about the simplify and RECODE pillar, and we continue to be very focused and drive investments around improving efficiency and effectiveness while also, with those same programs, helping to drive just even quality improvements, while maintaining an extremely strong customer experience, which is something that really helps customers continue to return to BD Biosciences as their partner.

That's great. And I didn't -- I didn't ask my second question because I talked so much for the first time. But I'm curious, again, you talked about adjacencies, and I think you mentioned companion diagnostics. Are there -- and I say this now I believe more as a sort of a general medtech analyst. Are there a lot of adjacencies that you could bring in? So again, beyond the internal innovation that could create over time a bigger TAM and yes, maybe faster growth and maybe talk about, is partnering the most attractive way or just outright M&A and there are opportunities like that? I'd appreciate any color or perspective.

So obviously, I won't discuss too many specifics. But as I will share with you how we think of it strategically. So first is that even within our core space of instruments and reagents and informatics within flow and single cell, there are adjacencies by which we're investing in. And you referenced one of them around companion diagnostics is one. Another example I'll highlight is we acquired a company called Cytognos not that long ago, just over about 1.5 years ago, which gave us access to the world's first and only flow-based CE-IVD test for minimal residual disease for some blood cancers, including multiple myeloma. And so again, this is just an additional application for flow cytometry in an area that very exciting and from a business opportunity perspective, but also with large health care needs. So there's the adjacencies that I'd say we look at within our core space. similar within single cell, continuing to launch new assays that address additional just understanding of the biology of the space. So that's really the adjacencies organically and closer to our core. But of course, I mentioned that -- I mean cell analysis is an area that continues to be exciting, and many others are excited about it. And so there are new technologies and applications that are adjacent to even flow cytometry and single-cell multiomics that emerge, and it's something that we continue to dedicate some of our time from a business development perspective to better understand where those technologies are going, what unmet needs they may address and then leverage the right structure to be able to take advantage of that.

Thank you. There are no further questions. This does conclude this audio webcast. A replay of this webcast will be available on investors.bd.com later today. On behalf of BD, thank you for joining today. Please disconnect your lines at this time, and have a wonderful day.