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

Yes. One additional disclosure that we needed. So the session is not open to the press. There you go. All right. So I want to thank Tom Polen, Chairman and Chief Executive Officer of Becton, Dickinson. I appreciate you're making the time. I know you're on the -- you have a lot of different priorities right now. So very much appreciate your making the time to be here.

I want to kind of start with, I think, maybe a strategic topic that I get a ton of questions on is like where are we in the biosciences or life sciences separation process?

Sure. So we had shared when we first announced the separation that we would expect to announce the actual form of the transaction this summer, which remains on track. We said that's kind of an American summer between Labor Day and Memorial Day or Memorial Day and Labor Day, and that continues. So the other things that we've shared in the context of that, which is no different from when we announced is that as you think about forms of separation, right, academically, there's 3 kind of macro forms of separation: a spin, a sale and a merger of RMT. We view that -- obviously, 2 of those 3 don't have stand-up costs and also have synergies that you have the opportunity to participate in and so that those 2 could create outsized value versus the third option. Obviously, that would be a sale or an RMT. And so again, we continue through our process.

And as you think about setting that deadline, how do you have control over the timing of the -- I mean, it seemed like spin, you can total -- you could decide right now we're going to spin or we're going to do nothing or the other 2. How can you control the timing there? And how do you have the certainty that you can get an answer by the summer?

I think the other things that we've shared before is that we didn't start the discussion with the press release that we had already had dialogue with a number of parties at the time that we put out the press release. And so again, we have a process by which bids are due, et cetera, at certain phases along that, and we're progressing through that.

Okay. And in a scenario where -- so I had a group of -- we had a group of investors in your offices in early May. And one of the takeaways or at least feedback that I got from that meeting as well, either -- the way people read the comments was either you're going to proceed with a sale or you're going to do nothing and that spin is sort of off the table? How would you respond to that?

I would just say that we're focused on -- obviously, we wouldn't be in a process if we were doing a spin or if that was the focus. So those 3 options all can create shareholder value, but we're clearly focused on creating outside shareholder value for that opportunity.

And has anything changed in your sort of assessment of what would be an appropriate valuation given the move down in Becton stock?

No, we still view it as -- and we would look at anything in terms of not only where the stock is priced today but also historical full value for the assets. They're phenomenal assets, right? I think that's always important to recognize is that these are blue-chip phenomenal assets with biosciences having likely the -- not likely, the best innovation pipeline in its history. We invented the category of flow cytometry, of course, with Stanford University, which is where that business is still headquartered very nearby in San Jose. With the FACSDiscover, which is really an entirely new class of flow cytometers that have the ability not just to measure fluorescence, but now imaging and combine all of that. The only thing that does it on the planet is our FACSDiscover. We keep launching. We just launched the A8 very recently. We started getting orders for that already. That's a great business. The leader in the category in a very attractive category, and then obviously, a leader in infectious disease and in molecular testing, a very attractive asset as well, too. So we view those as both attractive assets, and we look at it both ways, as I mentioned.

And you've obviously -- you've been on the acquirer side of a number of acquisitions, at least from the time that I spend in corporate development, it's hard to get the buyer to think about a business outside of its current performance. So how do you get people to see biosciences obviously facing some cyclical pressures right now, which probably doesn't impact a 5-year view. But how do you get people to see beyond current performance and sort of give you fair value for the assets?

Obviously, anyone that's looking at those sectors, is already in those sectors. So they know them very well, and they're staying in those sectors, most likely. For us, Diagnostic Systems, obviously, again, you've got our molecular continuing to grow double digits. BACTEC recovery moving in a solid direction. And then even in our bioscience, you've got clinical continuing to grow at a certain rate, and you've got the life science, basically reset of the base. We -- as you know, we saw pressure in life sciences 12 to 18 months after most of the market did because we were launching FACSDiscover and that had an outsized demand at launch. So you're seeing that impact us more this year while it hit most people last year or the year before. Again, I think people would view and say, we understand those dynamics and you're coming to a base and you have the opportunity beyond that.

And the other question I've gotten is, are you committed to the business as being separated together? Or are you willing to separate them in some form or fashion separately?

Yes. No new news. We've always shared that those businesses -- they really have no commonalities from a separate headquarters, separate sales forces, separate service organization, separate manufacturing plants. So we would -- we can separate those. It's obviously easier for a single transaction, but there's no reason they could not be separated.

Because it would seem like that would open up the aperture of potential buyers?

So there are people that could be interested in holdco or separate.

Okay. Last one, I promise, we'll talk about the business. But the -- this topic is one of the ones we get the most questions on. So as you kind of do your own internal senior planning and you contemplate one of these outcomes, what are some of the things you're stretching out as use of proceeds in a scenario where you do execute a sale? And how are you thinking about prioritizing use of that capital?

Yes. And obviously, the amount of capital would vary based upon the type of transaction. I think just a general statement on capital is that -- so first off, we are continuing to be committed over the midterm to leverage ratio of in that 2.5x. It doesn't mean you need to go there immediately, but -- and we're very much on track for that just naturally as well, too. Just as a note, the event by itself is not a massive leveraging event. It's about half a turn if we didn't pay any debt down, right? That's what you're talking about.

Meaning the sale?

It was just a separation.

Oh, just a separation.

It's about half a turn if one didn't pay down debt. So it's not a massive leveraging event in and of itself.

Oh, your leverage ratio goes up, because you lose profits, right?

Correct. So as you just think about what you need to do.

Yes.

In any case, regardless of those proceeds or our organic proceeds, certainly, any proceeds and available cash we would use to buy back stock. Certainly at this and around this price level, there's no better investment that we can make than buying back shares.

And would you leave any dry powder on the balance sheet? Or you would be able to fund future M&A through...

I think we'd be hyper focused again in this environment even regardless of a transaction, just with our organic cash flows of buying back shares. There's no better investment than buying back our shares in and around the stock price for sure. So we've done, of course, a number of -- we've done 20 tuck-in acquisitions just since I've been CEO. And we're integrating in the APM business. That's going very well. We've been funding additional sales reps in that business. We funded additional R&D in that business. Of course, combination is bringing together all the therapy information. We know what therapy people have been given through Alaris, through Pyxis, et cetera. Now we know the physiological response to the therapy and we're beginning to put the 2 together, to be able to close loop more, the optimization of delivering that therapy. And so that's a project we've put several million dollars into fund. We've got a number of other new things that we're moving through the pipeline on recent acquisitions that we've made, whether or not it's the acquisition of TVA, for example, we're launching. We've been getting new hernia meshes that are bioabsorbable approved. We just got umbilical approved a few months ago. We have the first GI application of using that biomaterial launching next year in parastomal. We just recently entered into the breast clinical -- into a breast clinical study to expand there. And we've got 2 more indications for breast that we want to move forward in there. And the same thing holds true like Surgiphor, which is a companion product to ChloraPrep. We've got new products moving through the pipeline there. We've got them moving through, obviously, the PureWick acquisition that had happened. We've got innovations launching every year. And that list goes on through other products. STROBE Medical, we're in development for a below-the-knee indication for that smaller French size. And so we've taken a number of the tuck-ins that we've done. MedBank, our non-acute Pyxis product. It's a great product, but you could never -- it's never been integrated into Pyxis. Launching next year, MedBank users will be able to see an IDN, will be able to see all the medications out of their ambulatory surgery centers, et cetera, through the same portal of Pyxis. So we've been investing organically to start optimizing and getting more and more of a flywheel going from the tuck-ins that we've been doing. So I think we feel really good about that and a strong innovation pipeline for '26. So again, I just used that to reiterate there's no better use of any cash in terms of buying back shares.

Got it. Very helpful. And I want to go into the pipeline in a little bit more detail because I think macro considerations now, I think, are overshadowing a lot of the underlying business dynamics, but I can't not touch on the macro. So maybe we could start with kind of the way you've been characterizing the business and maybe paraphrasing a little, sort of 3 problem children franchises and then you've got the rest of the business. Maybe kind of break down the performance for us over the past couple of years? And then I'd love to get in kind of the back half of the year here?

Sure. So I think one of the things that we recognize and discuss is we have a complex portfolio. We probably have one more complex portfolios in med tech. And we've been simplifying that, whether or not it was the separation of embecta, the separation of V. Mueller and now the separation of Life Sciences, really turning BD into a very focused med tech company. With that said, today, of course, we are the only med tech company with exposure to a few specific markets, right? We're the only med tech company with exposure to the life science market. There is no one else. There is no other med tech company with exposure to the pharma device market. We compete with pure-play competitors in that space as well. Each of those spaces do have market macro factors going on. And so as you look at kind of BD's trend over the last many years, go back to BD 2025, the start of that. First off, we've been growing at about 5.6% revenue -- a 5.6% revenue CAGR since we launched BD 2025 in '21, and that's inclusive of the midpoint of our guide this year at [ 3.25% ]. Our base business over that time period has been pretty stable, particularly the last 3 years. And the swing factors have been essentially 3 dynamics. One is the slowdown in research spending, the destocking in the pharma medical device channel and then China, the OBP. And if you look back at BD historically, those 3 areas have typically been 70 to 130 basis points of tailwind. They've always -- those 3 areas have always been accretive growth drivers to the company, BDB, Pharm Systems and China. And this year, those 3 factors are about 180 basis points headwind. And so it's basically kind of the base BD growing at about 5%. And those 3 factors, 180 negative to get you to the 3.25%. And historically, if you go back to '23, the rest of BD was growing 4.5%. Those 3 added 130 basis points, and we were growing 5.8%. So they swung in that period of time. And they swung across the sectors, right? Life Sciences is down versus where it was in '23. Pharma destocking, you see that across the peers. And China, VoBP, we see going through BDI. I think what's most important is kind of where does it go from here? So again, we feel good about the base business and what we're doing. We can talk about some of the drivers there. But obviously, we're in the process of separating Life Sciences, which will change our exposure to that segment. It also will change our exposure in China. Today, we're -- 5% to 6% of our revenue is in China. That will go down to about 4%. As we look forward, the largest segment in China is Life Sciences. And then you've got -- and China, overall, I would say, within BDI, we continue to expect VoBP this year, where China is growing -- declining about double digits, continue through '26 for VoBP pressure, particularly as it finishes through the BDI business, '27 then being a year for rebound. And in Pharm Systems, we're already starting to see improvements there sequentially. We saw sequential improvements last quarter. We strongly expect to see -- and we can see it now in our numbers, sequential improvement in Q3 and that can continue. As now, of course, since we launched BD 2025, we've grown Pharm Systems about $800 million. It's now about -- half of that business is biologics drug delivery. We are the world leader in biologic drug delivery, fueled by GLP-1s. Just as a note, we do not include vaccines in when we say biologics, a number of our peers do use that within their biologics number, we do not, and so it's a sizable scaled business there. So that's how we think about those 3 factors and how they come off. Life Science being separated; Pharm Systems, back half of this year beginning to improve; and China still some time for VoBP to finish going through the.

And then as you think about first half performance of the business, I think -- I appreciate -- I think we all appreciate the royalty dynamic in Q2. But if you look at the first half of the year, growing, I think, roughly 2.5%-ish between the 2 quarters, you do need a pretty big ramp to get into the back half of the year. And it seems like 2 of those 3 businesses are facing incremental headwinds, especially biosciences, every headline you read about the NIH seems to be worse than the prior one. Now who knows bark versus bite. But how should we think about the ramp from the 2.5% in the first half to sort of the implied 4.5-ish percent in the back half of the year to get to the full year guide?

China is likely similar, right? Pharm Systems, we expect some recovery in the back half of the year, not back to double-digit growth, but beginning to get back towards at least BD median growth rate versus being dilutive to that growth rate. We do have FACS, the A8 launch, which is now. And I would say, while the market remains constrained for overall instrument placements in the sector, what we see is that allowing and we can see it now already, is increasing our win rate among that. One of the things that we can't control is the market environment for spending. What we can control is our win rate within that environment, right? And new technologies allow us to win. They're going to -- so and so group is going to have 100 things that they're going to buy. We want that to be close to 100 of BD devices.

And why does your win rate go up when the market is more constrained?

Because of our new innovation.

Because of innovation, okay.

Our FACS A8, again, is the first system that you can actually see the cells of -- that you're analyzing versus just the fluorescent dyes as an example. And we can see that already. We were seeing -- this Friday, we got a big pharma client, for example, who's standardizing on that platform, is putting in a number of purchase orders for those because they recognize there's new science that I never knew about and do things about cells that I can only see with FACSDiscover in A8. If want a sorter, I can get an S8 for sorting technology. So those are the main things along with BACTEC -- continued recovery in the BACTEC franchise. Those are the main drivers.

And as you kind of just thought about framing the outlook for the rest of the year, you're still placing some onus on improvements in different parts of the business. So just in terms of like internal organizational pressure to kind of hit the number, now hit a revised number? Like, how do you think about the balance between the 3% to 3.5% that you've articulated versus taking a more potentially conservative stance just to take the pressure off the organization and allow you to kind of navigate some of this uncertainty, not saying you want to be unambitious in your targets, but how do you think about balancing that?

We take, obviously, the roll-ups that the businesses have. We provide some level of rebate or discounting to those numbers from the businesses. And again, what we shared was that, there are certain assumptions that we have in that, right? So when we put out that guide, we made it clear, we're assuming that this is based upon the research environment that we saw in Q2 couldn't dictate what was going to happen. We didn't assume some radical change in NIH funding versus what had happened in February and the reduced funding, still not a visibility to that. So those are some of the baseline assumptions that we put into them.

And on that point, it seems like you exited Q2 at a worse place than how -- the market for research funding seemed probably worse in March than it was in January. So have you kind of contemplated a continuation of the exit rate trends or kind of the average performance?

No, closer towards the exit of what we saw. And we did see, obviously, in Q2, there's notable worsening in both February when the administration announced the reduction in spending and then a little bit later than mid-February when Europe, basically, you saw a shift. We had purchase orders that literally got put on hold as governments were looking at redirecting towards defense spending and that was clear in Germany, U.K., et cetera. A number of the governments there said we're holding on purchasing instruments for research spending and we're sort of making decisions around defense.

Okay. Maybe we can turn to the kind of future BD for a second, and I think most of that is contained within the business that's performing 5%. I know that's the China piece and the Pharm Systems component. But is 5% like a good baseline number for thinking about market growth for new BD post separation? And how are you guys thinking about that?

I think we've said our WAMGR overall is right around or slightly under 5%. Now that's a long-term WAMGR that includes -- that's not for new BD. That's just BD current, what we say is holdco, and doesn't -- we don't adjust WAMGR for temporary reductions in pharma destocking or life sciences. So it would be -- an applicable WAMGR today would be lower because of those macro dynamics. But overall from the long term, that's the growth rate. As you think about the new BD, it's a very exciting portfolio as we look at -- basically, if you walk through the 3 areas, we continue to have our Medical Essentials business, right? We treat -- 3.9 million patients an hour are touched by our Medical Essentials business, right? Huge consumable portfolio, durable recurring revenue with specific types of innovations that we're doing to continue to keep that fresh, as we then -- and generates meaningful cash. The other 3 segments -- and that has a much lower WAMGR than the rest of the business, right, lower single-digit profile, but has a specific role within the portfolio. Then we go into the Connected Care biopharma solutions and interventional sectors, which have higher WAMGRs and higher growth rates. If you look at, for example, let's start with BD Interventional. Since we bought Bard, we've been growing at about a 7% CAGR in that business, and we continue to expect that business to outperform. One is the thing about UCC and PureWick. That's now over $0.5 billion franchise, up from essentially nothing when we bought Bard. It will soon become half of the UCC business in total. And we've got a great pipeline there, right? We started with female only in hospitals. Now it's men and women in hospitals, men and women at home. Later this calendar year, we'll launch for men and women mobile, particularly in -- specifically for people in wheelchairs. And then there'll be a -- after that in our pipeline is a product for people walking around mobile, like with fanny pack on walking around, managing urinary incontinence on the board walks here, right, as an example. In the surgery space, what you've seen us do is take a plastic mesh business, settle major litigation, right, which we spent $1.5 billion plus of cash of last many years, getting rid of legacy Bard litigation that came at the time of the acquisition, good to have that move behind us. And what we've been doing is then replacing plastic mesh with bioresorbable material, our P4HB material. And so that's -- no one should get plastic mesh from a hernia perspective. We have data that says 7 years out, the recurrence rate is just the same with something that disappears 18 months from you having surgery. And we've been extending that to different types of hernias. As I mentioned before, we just got umbilical. We now have the first GI application launching next year in parastomal. As I mentioned, we now have multiple new products in for breast reconstruction moving forward in our pipeline, including the first that's already started clinical studies. And then in PI, and we continue to have serial innovation with next year having some really nice launches. We've got one for a liver graft coming in for stenosis of the liver. We've got one for covered stents, a category that's really led by one competitor with no new innovation in 10 to 15 years and the first in the world, multimodality biopsy device launching there. So we're excited by that. In our Connected Care business, one of the other things that I didn't mention, but in Q4, APM becomes organic, right? And so that's obviously a nice pop of a business. That's growing 7%-plus, suddenly becoming organic in Q4. That business will continue as we think ahead within our Connected Care business. We've brought in innovations that are combining those insights with the therapy insights to start doing things that no other company on the planet can do. And that's moving through our pipeline, right, starting to close the loop on therapy management rather than nurses and doctors having to intervene every minute and trying to optimize that for the patient. Pharmacy robotics and automation, now a $700 million business that we've built through the acquisition of Parata and a number of other tuck-ins like MedBank that's in early innings in that space. Of course, we just shipped our first new Pyxis since the launch of Pyxis...

You just shipped.

We just shipped the first limited commercial release one on the truck, I think, last Thursday, which is great.

The impact of that gets blunted at all because of the leasing model? Like when CareFusion launched Pyxis ES way back in 2013, there was huge bolus of revenue. And of course, the installed base is much smaller than -- and I think the market dynamics were a little bit different. Then you move to the leasing model after you acquired it. How should we think about the impact of a Pyxis Refresh on the business here?

One is, I think it really -- it's a great product, and we'll share more about that in the future. But competitive gains, we expect to shift incrementally, the number of share gains that we're getting. There is the opportunity for price premium. It holds 40% to 50% more medications than the current -- any competitive system with the exact same footprint. And it's also connected from the cloud perspective, and it's the first product that will leverage our new [indiscernible] software, which is BD's first enterprise-wide AI platform. So we've got AI in a number of systems today like our APM system has AI built in, our Kiestra system has AI built into it, but it's in each platform. [indiscernible] is a cloud-based platform that we've partnered with Amazon on and a large language model company that's embedded in [indiscernible], that all of the data from future Alaris Systems, Pyxis, EPM will go into to allow users to do new things that they can't do today. And the first launch of that software is with the new Pyxis Pro, which is an AI-enabled, cloud-enabled Pyxis system. So we really like what we have going on there.

Can Pyxis Pro offset the slowdown that will naturally occur when you complete the Solaris upgrade cycle?

There'll be 2 things in that business. There's obviously other things going on in BD, and that would be more of a '27 topic that when we complete that cycle.

Okay. So the upgrade cycle on Alaris is still...

We said it's a 3-year cycle. That's what we committed to the FDA, is a 3-year cycle. So we're in year 2 of that upgrade cycle.

And can that business still grow in fiscal '26?

Yes, we're not giving '26 guidance, but...

Yes, I know.

But it will still be in the middle of upgrading in '26, yes.

So it's not like a bell curve where you have a lot in '24 -- a little in '24, a lot in '25 and a little in '26 in terms of the...

We're not giving the '26 guidance, but it still has runway in '26 and then obviously, we have -- we also have a next-gen Alaris deep in the pipeline that we'll focus on immediately afterwards...

And that will be a large volume pump syringe and PCA offering or it will be...

Right.

Okay.

And then the last business of the new BD. So I talked through Medical Essentials, the Connected Care, the Interventional business, obviously, the last of that being our Biopharma Solutions business, which, again, we made some meaningful capital investments. In the middle of COVID, we invested $1.2 billion in capacity expansion, and that really played off. It allowed us -- paid off. It allowed us from '21 to '23 to grow that business at a 13% CAGR. We more than tripled our sales of biologic delivery devices, became the world leader with more than a $1 billion biologic drug delivery business. That $800 million that we've grown since we launched that capacity expansion, that's mostly all been in the biologics space. And today, we have strong presence with hundreds of millions of dollars of revenue in GLP-1 drug delivery. We have strong presence with new novel GLP-1s coming out in the future in our devices, and we have north of 60 biosimilar GLP-1s already signed in our devices as well as we think about a very large generic drug cycle that will be coming up in the future. And so that business, as it moves out of the destocking phase, again, we see that returning towards high single-digit growth long-term business. And you'll start seeing -- won't jump straight there, but you'll see it start to improve.

And I appreciate the opportunity for that to contribute to growth and the investments that you've made, but you started by sort of talking about the things that BD has that don't look like a typical med tech company and this is on that list. So why doesn't Pharm Systems enter the discussion for separation also?

We always look at what optimizes shareholder value. And that's something we constantly look at. It's a very distinct business than Life Sciences. Obviously, there is no life science company with those types of assets, a med device. It also relies on BD. It can't live without BD, right? Most of the technologies in that business are shared across businesses. So for example, one of the biggest differentiators in Pharm Systems is our needle technology. We're the actually only competitor in that space who makes our own needles. And that technology, particularly when it comes to biologic drugs; for example, biologic drugs are becoming more viscous, and the key concern is time to delivery, right? Can I even deliver it in time to use an injection subcu or do I need to move it to infusion? If I'm going to move it to subcu, can I do it with a device I hold in my hand? Is it a device that I need to wear a Libertas or our Evolve system, which we have. And one of the factors in that decision process is the needle technology. And we're the only company in the world with an ultra-thin wall technology that allows a smaller gauge size to a thinner needle, a larger internal diameter because of very proprietary technology that we have. We use that same technology in our ultra-thin wall needle push button, for example. It allows us to get blood out of your body very quickly and fill up the tubes. So you're not sitting there watching the tubes fill up for a long time and they fill up significantly faster. We use that same technology in catheters. We use it in other things for the drug delivery. We also use it and apply it in our Pharma Systems. There's many other technologies that we share across our different drug delivery platforms, which is how that business was born, right, out of sharing technology across the other business. Always looking at -- actively looking at portfolio though.

I want to switch gears over to the P&L. There are questions. Obviously, feel free to raise your hand. But the -- I know you said you headed to D.C. after this. Tariffs obviously are still in focus, although maybe less in focus than they were a few months ago. I mean you gave guidance right before there was this temporary relief offered on China. So maybe just remind us kind of what you said and what the assumptions were in your guidance, where we are today and maybe give us a little window of what you're hoping to get out of your [indiscernible] time in D.C.?

Sure. So starting on the -- what we announced last time, which was $90 million of tariff exposure in the year for this year for FY '25. We mentioned that's essentially all in Q4 for us, just given we're on a unique fiscal year of October through September. The changes don't have a meaningful impact on that number within this year, right? Obviously, this year, we were able to make certain moves, move inventory in and out ahead of time to minimize. I think what it does definitely do is it's a very -- it's a positive for '26, the changes that have announced. Because what we did share was that the #1 source of tariff cost for us in '26 and beyond is the tariffs that China places on U.S. imports. So that's a much larger number when the tariffs were before they were cut down in China. That was a much larger number because we only -- we have very -- we have one product that we really import from China into the U.S. We're a very large U.S. net exporter with nearly 30 plants in the U.S. So with China's tariff rate coming down, I think after the last earnings call, people were looking at the 90 million and saying, okay, can we just multiply that times 4 and annualize it, certainly a lower number than that today. So that's a net positive for us, and we continue to do a lot of work, as you mentioned.

And why wouldn't the $90 million go down?

It's just a factor of how you think about what's coming in from -- because the second biggest piece is U.S. is the #1 place we manufacture, Europe is the #2, Mexico is the #3. And so Mexico inbound as well has a factor.

That's not US FDA compliant.

Correct, correct, takes time. Could it come down a little bit? Yes, but not from a mean.

Okay. And then what are some of the other legislative considerations? We're watching lots of headlines on cuts to Medicaid. Who knows what's going to happen with extension of subsidies. What are some of the other things on the docket for you guys from a policy perspective?

We work closely with American Hospital Association, for example, on more of those funding for providers and that we're very close as a company and as an industry with them and other organizations. I think as an industry, one of the things we're very focused on is med tech is an industry that is a U.S. powerhouse, right? The U.S. is the largest manufacturing base for med tech globally. U.S. companies are leaders globally in this space, and we are very large net exporters. So med tech is an industry that never left the U.S. And I think it's important to use med tech as a case study and to not encourage it to go the other way around of needing to leave the U.S. because of unintended consequences on tariffs. Again, for us, as an example, some of the tariff repercussions were, in fact, for us to move sourcing outside of the U.S., right? And we shared #1 thing that we began to do because we're not importing a lot from China, was for products that we are selling into China. We started sourcing vacuutainer tubes. For example, we've always shipped from South Carolina, our plant there to China. Now we're shifting to source from our facility in the U.K., where we happen to make the same thing. We have flush product that historically our flush syringes always came out of Columbus, Nebraska, and we would ship those to China. We have a facility now in China that's going to source just for China for that. And so again, I think there's more downside to tariff impacts from a U.S. manufacturing perspective in the med tech industry than there are in many others. And so making sure that, that's understood, and it's not about getting med tech industry back to the U.S., it's about keeping a strong med tech industry from U.S. companies and manufacturing in the U.S.

Okay. We have just about a minute left. So maybe I'll turn it back to you for any kind of closing or takeaway remarks that you want to make. It's been a dynamic, I think, month or so since your earnings call. There's been quite a bit of, I think, volatility around the stock and questions kind of about the direction of the business. But maybe you want to kind of wrap up any thoughts? I know you've been on the road a lot meeting with investors and others, kind of some of your takeaways from those meetings and what you'd like to leave people with?

I think, obviously, we're hyper focused on navigating the near-term macro challenges of China and Life Science spending and the pharma destocking, which we constructively see coming to a wrap. We're hyper focused on revenue growth, right? And in that same time, obviously, continuing to deliver strong performance. And I think that's one of the important dynamics is that while there are challenging macro dynamics that we're navigating, and again, we are hyper focused on accelerating revenue growth despite those macro dynamics, and we talked about how we're doing that. At the same time, right, our other systems, our BD Excellence systems are allowing us to drive -- we drove 190 basis points of gross margin expansion last quarter. Inclusive of tariffs, we're delivering 8% EPS growth all in and that's absorbing, just to put it in perspective, right? China down 10% on a $1.3 billion business due to VoBP. That's us absorbing about $135 million of pricing headwind, negative price out of China this year. So while we're absorbing 135 basis points of negative pricing pressure, we're still expanding gross margins well over 100 basis points because of pricing capabilities in the rest of the world that we built during COVID, the power of BD Excellence and still driving strong margins. And so I think that's the -- the formula of BD is we've always been a mid-single-digit growth company, right, literally up until this year with the temporary dynamics of those macro factors. The underlying business remains strong. We've built new capabilities with BD Excellence that are allowing us to navigate a challenging macro environment and still continue to grow earnings in a meaningfully positive way. And we've got a really exciting innovation pipeline with a lot of big launches happening here as we head into '26. So I appreciate the time and the discussions we've had today.

Excellent. Thanks, Tom.

Okay. Thank you.