Hello, and welcome to BD's Earnings Call for the Fourth Quarter and Full Year Fiscal 2022.

At the request of BD, today's call is being recorded and will be available for replay through November 17, 2022 on BD's Investor Relations website on bd.com or via phone at 866-342-8591 for domestic calls, and area code +1 (203) 518-9713 for international calls.

The replay bridges are now dedicated so you no longer need a conference ID to hear the replay. For today’s call, all parties have been placed in a listen-only mode until the question-and-answer session. I will now turn the call over to BD..

Good morning, and welcome to BD's earnings call. I'm Francesca DeMartino, Senior Vice President and Head of Investor Relations. On behalf of the BD team, thank you for joining us. This call is being made available via audio webcast at bd.com. Earlier this morning, BD released its results for the fourth quarter and full year of fiscal 2022.

We also posted an earnings presentation that provides additional details on our performance. The press release and presentation can be accessed on the IR website at investors.bd.com. Leading today's call are Tom Polen, BD's Chairman, Chief Executive Officer and President; and Chris DelOrefice, Executive Vice President and Chief Financial Officer.

Tom will provide highlights of our performance and the continued execution of our BD 2025 strategy. Chris will then provide additional details on our FY '22 financial performance and our guidance for fiscal 2023.

Following the prepared remarks, Tom and Chris will be joined for Q&A by our segment presidents, Mike Garrison, President of the Medical segment; Dave Hickey, President of the Life Sciences segment; and Rick Byrd, President of the Interventional segment. Before we get started, I want to remind you that we will be making forward-looking statements.

I encourage you to read the disclaimer in our earnings release and the disclosures in our SEC filings, which are both available on the IR website. Unless otherwise specified, all comparisons will be on a year-over-year basis versus the relevant period. Revenue percentage changes are on an FX-neutral basis unless otherwise noted.

In addition, the results and guidance we are presenting today are on a continuing operations basis, which excludes the historical results of Embecta, which are accounted for as discontinued operations. When we refer to any given period, we are referring to the fiscal period unless we specifically note it as a calendar period.

I would also call your attention to the basis of presentation slide, which defines terms you will hear today, such as base revenues and base margins, which refer to our results excluding estimated COVID-only testing. With that, I am very pleased to turn it over to Tom..

smart, connected care; enabling new care settings; and improving chronic disease outcomes. We believe our current pipeline is the most exciting in the history of the company. In addition, we deployed over $2 billion this year towards six tuck-in acquisitions, all of which were allocated towards higher growth markets.

This includes Parata Systems, our largest acquisition since Bard, which is aligned to our focus on smart, connected care and enabling new care settings. Parata makes BD the global leader in the fast-growing pharmacy automation market and enables us to provide solutions to help pharmacies address rising costs and labor shortages.

With today's transformative solutions from pharmacy automation to biotech drug delivery devices, to high-throughput molecular diagnostic systems and new dies and instruments for immuno-oncology and multi-omics research to at-home solutions for urinary incontinence, we are systematically creating a new wave of future growth for BD.

Third, we executed our simplification programs and managed our cost structure. Like every other company, we face tremendous inflationary pressure. We saw the pressure coming early on, and we took action immediately putting in place an inflation task force to attack it from every side.

We also prioritized our internal cost reduction programs and significantly leveraged our selling and G&A expense, driving strong operating leverage.

In addition, we actively managed our portfolio, including spinning Embecta, as well as exiting more than 2,500 SKUs as we accelerated our Project RECODE initiative to simplify our portfolio and exit products that add complexity in our plant.

A leaner portfolio and less complex manufacturing processes allowed us to improve output with the same fixed cost base and optimize our mix to produce more of the products most critical to our customers.

We furthered our investments in what matters to our customers, strengthening our supply chain, validating secondary suppliers and building key component inventory all factors that have been even more important in a supply-constrained environment.

And finally, as we drove strong revenue growth beyond our original expectations, we leveraged our scale and excellence in manufacturing as volumes in our plants recovered from FY '20 and '21 lows due to COVID disruptions and procedures.

As a result, in FY '22, we were able to absorb significant increases in inflation during the year and improved our margin profile back towards BD's pre-pandemic levels of 25% in FY '25. Fourth, we maintained a disciplined and balanced capital deployment strategy.

Over the last few years, we significantly strengthened our balance sheet and improved flexibility. This has allowed us to advance our balanced capital allocation framework and support growth-enhancing investments in capital R&D and tuck-in M&A.

We're now at 2.8x net leverage, and both Moody's and Fitch upgraded our debt this year, reflecting the strength of our business and disciplined approach on balance sheet management and capital deployment. Also, this framework gave us the flexibility to return capital to shareholders.

We just announced our 51st consecutive year of dividend increases, continuing our long-standing recognition as a member of the S&P 500 Dividend Aristocrats Index, a distinction that reflects the consistency and reliability of our dividend policy. And finally, our strong teams continue to execute and create value even during uncertain times.

Our execution in FY '22 is a testament to our growth mindset at BD, where we firmly believe there's nothing we can't do, only things we haven't done yet. And by navigating successfully the challenging macro environment, we are distinguishing BD and supporting our ability to consistently deliver strong performance.

These capabilities are now all embedded in our operating principles and with the strong execution abilities across our network. They're having a positive impact on our overall cost effectiveness, responsiveness and sustainability.

In summary, these proof points reflect how BD 2025 and the actions we've taken in FY '22 and over the past several years, uniquely position us to lead and deliver strong and consistent results. I'll now provide more detail on the progress we made this year on organic innovation, which is a key enabler to our growth strategy.

In FY '22, we significantly advanced our innovation pipeline, launching 25 key new products. We are on track to achieve our new product revenue contribution as outlined at Investor Day and are increasing our portfolio weighting in attractive, faster-growing markets.

Our product launches reinforce our leadership position in our durable core and expand our offering in higher-growth spaces across smart, connected care, enabling new care settings and improving outcomes for chronic disease.

These launches strengthened our position in strategic areas such as medication safety, immunology research reagents, molecular and point-of-care diagnostics, peripheral vascular disease and incontinence.

Examples include PosiFlush SafeScrub, our next-generation flush product; Prevue, our peripheral vascular access system; BD COR, our fully automated high throughput molecular system and related women's health and STI assays; and the PureWick Male External Catheter.

I'm excited by the progress we've made advancing our innovation-driven growth strategy and the strides we've made to improve outcomes for patients and providers and create value for our stakeholders. I'll now share a few updates on the progress our team made this year to advance our ESG strategy and goals.

Together We Advance serves as a framework for our ESG strategy. In July, we published our 2021 ESG report, which provides details about our ESG strategy and progress against our 2030 commitments.

Highlights include the launch of the BD Sustainable Medical Technology Institute, efforts to reduce our greenhouse gas emission, including joining the UN race to zero and increasing our investments in on-site renewable energy.

Just last month, BD in Sandy, Utah was awarded the Blue Sky Legacy Award for making significant strides towards Utah's environmental sustainability. We believe that the work we're doing today can make a lasting positive impact on our communities.

We also made progress on our workforce IDE goals, ending FY '22 with increased diversity at the executive and management levels, and we remain committed to having an inclusive workplace. We're proud to receive continued recognition for our ESG efforts.

Most recently, we were named to Forbes 2022 list of the world's best employers, a recognition of BD as a great place for the world's best talent to work as part of a healthy and inclusive community.

Before I turn it over to Chris, as we look forward to FY '23, I'd like to provide some perspective on the macro environment and BD 2025 as we move toward the second half of our strategic plan period. Starting with the macro environment.

Our BD 2025 strategy and the capabilities we have built over the past two years position us well to navigate what we expect to be some persistent macro challenges and uncertainty facing all companies. We reiterate our conviction in the three irreversible forces shaping health care and our strategy to address them.

For example, as it relates to smart, connected care, there's an increasing need for digitalization and automation of healthcare processes as providers look for ways to increase efficiency and address labor and inflationary challenges.

Regarding inflation and supply chain, our perspective continues to be that challenges are going to persist, not escalate at least through 2023. And although inflation could potentially start easing somewhat, we do expect that it will remain well above what we have seen historically.

Companies that have processes, systems and capabilities to navigate this environment will continue to thrive over the next couple of years. And as we move forward, you can expect to see continued relentless focus on execution of BD 2025, which will continue to serve as our true north.

This includes delivering impactful innovations for our customers by expanding our leadership positions in our durable core and continuing to invest to expand our portfolio in the higher growth areas that are transforming healthcare. In addition, Alaris remains our #1 priority, and we're making good progress.

While we don't comment on the status of the review or approval timing, we are taking all the steps necessary to provide the required regulatory information and support our customers upon clearance.

We will also continue our investments to increase manufacturing capacity, strengthen our supply chain and increase supplier redundancy to help ensure we continue to reliably supply our products for our customers. We will continue to focus on initiatives to return our margin profile to FY '19 pre-pandemic levels in FY '25.

This includes accelerating initiatives like Project RECODE, including our efforts around operating model simplification, resulting in BD becoming a more agile and less complex organization. We expect to continue our balanced approach to capital deployment. Our priorities include investing in our business through R&D and CapEx.

After investing organically and returning value through dividends, we will continue to execute our tuck-in M&A strategy and return value to shareholders through share repurchases.

And we expect to continue to stay ahead of the curve as we navigate the macro environment, leveraging the capabilities we have built that are now embedded in our operating principles.

We recently celebrated BD's 125th year anniversary as a company, demonstrating our durable model underpinned by our tradition of relentless focus on innovation and operational excellence. We're really excited about what the future holds.

And with the performance of our global teams, we'll continue to grow our impact on customers and patients and advance the world of health. With that, let me turn it over to Chris to review our financials, guidance and outlook..

Thanks, Tom. Echoing Tom's comments, we delivered strong, consistent results this fiscal year which reflects our growth strategy playing out as planned. Through execution of our BD 2025 strategy, we are fulfilling our short-term commitments while progressing towards our long-term goals. Beginning with our revenue performance.

We exceeded our revenue growth expectations for the fourth quarter and full year. We delivered $4.8 billion in revenue in Q4, with base business growth of 8.6% or 6.8% organic. Parata contributed about 140 basis points to growth in the quarter and about 40 basis points to the full year.

COVID-only testing revenues were $37 million, which is expected decline from $316 million last year. For the full fiscal year, we delivered $18.9 billion in revenue with base business growth of 9.4% and or 8.5% organic. COVID-only testing revenues were $511 million, which, as expected, declined from $2 billion last year.

Total company base business growth was strong across all three segments with double-digit growth in BD Life Sciences and high single-digit growth in BD Medical and BD Interventional. Base revenue growth was strong regionally as well with double-digit growth in the U.S., China and Latin America, along with high single-digit growth in EMEA.

Our revenue performance continues to be supported by our durable core portfolio and an increasing contribution from the transformative solutions we are bringing to the market through our innovation pipeline and tuck-in acquisitions.

We also continue to benefit from the organic contribution from tuck-in acquisitions we anniversaried, which was about 20 basis points for the full year. Let me now provide some high-level insight into each segment's performance in the quarter. Further detail can be found in today's earnings announcement and presentation.

BD Medical revenue totaled $2.4 billion in the fourth quarter, growing 10.2% with strong performance across the segment.

Growth was driven by strong growth in MDS of 8%, driven by continued execution of our comprehensive vascular access management strategy; MMS growth of 11.5%, driven by strong demand of our connected medication management and pharmacy automation strategies, including our recent acquisition of Parata as customers focus on automation to drive efficiency to help address the constrained labor market, and another quarter of double-digit growth of 12.8% in Pharmaceutical Systems based on our strong leadership position in prefillable solutions for biologics and vaccines.

BD Life Sciences revenue totaled $1.3 billion in the fourth quarter. The decline of 11.6% year-over-year is due to the expected lower COVID-only testing revenues previously discussed. Excluding COVID-only testing, Life Sciences base revenues grew 8.3% with strong growth across both IDS and Biosciences.

Base business growth was driven by IDS growth of 8.6%, enabled by continued leverage of our molecular testing menu across our expanded BD MAX installed base and continued demand for our leading clinical microbiology and specimen management platforms.

And lastly, BDB growth of 7.5%, driven by continued demand for our expanded suite of flow cytometry instruments as researchers are able to do even higher parameter cellular analysis for cancer and other immune-related conditions. BD Interventional revenues totaled $1.1 billion in the fourth quarter, growing 5.7%.

Growth was driven by surgery growth of 5.4% and supported by our Advanced Repair and Reconstruction portfolio with strong market adoption of our leading Phasix hernia products. PI growth of 4.8%, which reflects continued expansion of our venous portfolio highlighted by Venclose in the U.S. and the global relaunch of Venovo.

PI performance also reflects increased back orders primarily related to a BDI specific European ERP system implementation. Urology growth of 7.2% reflects continued strong demand for our PureWick Female incontinence solutions in both acute and alternative care settings. Now moving to our P&L. Q4 adjusted diluted EPS of $2.75 increased 28%.

Base business gross margin of 52.5% was up 80 basis points and base operating margin of 22.5% was up 430 basis points year-over-year. Full year adjusted diluted EPS of $11.35 grew 0.6%. As we anticipated, we made significant progress towards achieving our pre-pandemic margin improvement goals despite increasing inflation pressures.

For the full year, base business gross margin of 53.4% was up 110 basis points and base operating margin of 22.4% was up 280 basis points. The key full year drivers of gross margin include our simplification and inflation mitigation initiatives and increased volume utilization given our strong base revenue growth.

In addition, as expected, we had favorable FX that was recorded in inventory that benefited our GP as it flowed through sales this year.

Base operating margin reflects strong operating expense leverage with base selling and G&A as a percent of sales, leveraging by 180 basis points, partially offset by significant inflationary impacts, primarily in shipping. To put this in perspective, shipping expense increased at a double-digit rate in our base business.

This increase in shipping was offset with focused efforts on cost management and leverage of selling and G&A which only grew at about 1/3 the rate of sales and was the primary driver of 21% currency-neutral growth in base operating income.

This is a testament to the tremendous work by our organization to mitigate inflation and execute our margin enhancement initiatives. This was also a key enabler in supporting continued investment in R&D at just over 6% of sales to advance our innovation pipeline. Regarding our cash and capital allocation.

Cash flows from operations totaled approximately $2.5 billion in FY '22. Operating cash flow reflects a higher inventory balance of about $600 million year-over-year. The increase reflects the impact of inflation, longer in-transit lead times and our strategic investments in raw materials to optimize product delivery and meet customer demand.

As expected, our free cash flow conversion this year was below our long-term target. We remain very focused on cash flow conversion and we are taking actions to moderate inventory down. But in the short term, we believe it's a prudent trade-off to ensure we support our customers while delivering strong results.

As we execute against our BD 2025 strategy and supply chain constraints normalize, we expect to migrate towards our long-term cash conversion target.

In addition to investing in R&D at over 6% of sales to advance our pipeline of innovative programs, we also invested over $2 billion in six tuck-in acquisitions across our businesses that will support our strong growth profile in 2023 and beyond.

Beyond our investments in growth, consistent with what we shared regarding the planned use of Embecta proceeds, we paid down $500 million in long-term debt this fiscal year and returned $1.6 billion in capital to shareholders through dividends and share repurchases. We ended the year with a cash balance of $1 billion and a net leverage ratio of 2.8x.

Moving to our guidance for fiscal '23. For your convenience, the detailed assumptions underlying our guidance can also be found in our presentation.

Our FY '23 guidance aligns with the framework we communicated last quarter and the value creation model and long-term targets we outlined at our Investor Day to deliver 5.5% plus base revenue growth, continued margin improvement and double-digit base earnings growth on a currency-neutral basis.

As a reminder, we manage our business on a currency-neutral basis to best represent underlying performance, consistent with what other companies are discussing in their forward outlook, we are accounting for a headwind to our reported results as we translate currency to a stronger U.S. dollar.

Beyond that change, our guidance has only strengthened in a complex macro environment, where we continue to see elevated inflation and geopolitical uncertainty. Starting with revenues. I'll provide you some insights into some of our key guidance assumptions.

First, on a currency-neutral basis, we expect base revenues to grow 5.25% to 6.25%, which is a strong growth of 5.75% at the midpoint. This midpoint is above our 5.5% plus target we outlined during our Investor Day, given the confidence we have in our strengthening growth profile.

Our revenue guidance includes two proactive strategic portfolio management actions that are consistent with our BD 2025 strategy and support our value creation goals. First, building on our FY '22 achievements.

Our base revenue guidance includes planned strategic portfolio exits as part of the acceleration of our portfolio simplification and RECODE programs. These actions will enable increasing manufacturing efficiency and capacity and ensure the reliable supply of the products that matter the most to our customers.

We expect these actions to impact revenue by approximately 100 basis points while being accretive to margin. Second, offsetting this revenue impact is a positive contribution of approximately 100 basis points from the full year benefit of our recent acquisitions with Parata being the predominant driver.

We will continue to be active in portfolio management as a lever to create value for all stakeholders. While we aren't providing segment-specific guidance, we are on track to achieve our long-range plan commitments, and we are assuming strong performance across the segments in FY '23.

And we expect Medical segment growth to be above the total company range, which includes the acquisition of Parata, Life Sciences growth to be below given strong prior year comparisons and Interventional to be at the high end of the range.

Consistent with what we shared, we expect COVID-only testing revenues and related earnings to be at a level significantly below FY '22, with revenues more in line with the annualization of our Q4 FY '22 results or approximately $125 million to $175 million for the full year.

Regarding Alaris, consistent with what we've done in the past, we are only modeling shipments related to medical necessity. While we will be prepared when clearance is received, we continue to anticipate a gradual ramp to revenues upon clearance. Regarding our assumptions on earnings.

We expect operating margins to improve by at least 100 basis points over the 22.6% reported in FY '22.

Despite the challenging macro environment persisting, our focused execution on driving profitable revenue growth, combined with our simplified programs, gives us the confidence that we will be able to continue to offset inflationary pressures and make meaningful progress to achieving pre-pandemic operating margin levels of about 25% and in FY '25.

First, to give you some color on inflationary assumptions. As a reminder, outsized inflation in FY '22 was a headwind of over 200 basis points we expect a similar level of incremental outsized inflation in FY '23. The primary drivers of the incremental inflation are raw material costs and labor, which are about equally weighted.

Even though we see some signs of cost normalizing in certain areas, a lot of the outsized inflation is from inventory we manufactured in FY '22 as there's about a four to six-month lag from production to sell-through. Labor costs, especially in our manufacturing plants, have continued to increase.

We have taken proactive actions to ensure we are differentiating BD to retain our skilled workforce. Lastly, transportation costs have stabilized, and we've begun to see some downward movement on certain rates. However, we are still above more normalized levels.

We remain committed to leading through the macro complexity while making investments to support our customers to offset these inflationary impacts we continue to leverage our strong growth profile and drive outsized cost reduction and other mitigation programs.

We expect over 80% of the improvement in operating margin to come from SSG&A driven by internal cost containment and leveraging. The balance is expected to come from slight improvement in gross margin and R&D as we normalize back closer to our target of 6% of sales. Our simplification initiatives include continuing to execute on Project RECODE.

You will recall when we announced RECODE, it was intended to deliver $300 million in savings by the end of fiscal year '24, with portfolio and network optimization representing about 70% of the savings.

We are accelerating these efforts and are also making significant progress with the third pillar of RECODE, operating model simplification, which will result in BD becoming a more agile and less complex organization.

In addition, to provide some color below operating income, we expect an increase of approximately $50 million to $75 million in interest/other. This is primarily driven by increased pension expense, which we fully covered in our guidance, and is a result of the negative movement in the financial markets.

For tax, based on what we know today, assuming no major legislative or regulatory changes, we expect our adjusted effective tax rate to be between 13.5% and 14.5%. It would not be unusual for our rate to fluctuate above or below this range on a quarterly basis given the timing of discrete items.

Our guidance assumes no material change in average common shares outstanding from our average FY '22 share balance.

This takes into account the conversion of all outstanding preferred shares on June 1, 2023, the benefit from the FY '22 share repurchase and associated with the use of the impacted distribution and our commitment to mitigate the dilution from share-based compensation.

So on an all-in basis, we expect adjusted EPS before the impact of currency to be around double-digit growth and within a range of approximately 9% to 11%.

This includes absorbing about a 300 basis point headwind from the anticipated decline in COVID-only testing; and as a result, implies a very strong low teens base earnings growth of approximately 12% to 14%. Let me now walk you through the estimated impact from currency.

As a reminder, we manage our business and provide guidance on an operational basis, but provide perspective on currency using current spot rates. Since our last call in August, the U.S. dollar strengthened against all major currencies.

Based on current spot rates, for illustrative purposes, currency is now estimated to be a headwind of approximately 450 basis points or about $850 million to total company revenues on a full year basis. This currency headwind has nearly doubled since our August call. Our guidance assumes the euro at 0.99, which is down about 4% since August.

The Chinese yuan, Japanese yen, British pound and Canadian dollar have also all declined even more than the euro since August by almost 2x the euro movement. For context, these four currencies combined are in line with our total euro exposure. The currency headwind to EPS growth has also nearly doubled since our August earnings call.

At current rates, currency would represent a total headwind of approximately 420 basis points to adjusted EPS growth. All in, including the estimated impact of currency, we expect revenues to be between approximately $18.6 billion to $18.8 billion and adjusted EPS to be in a range of $11.85 and to $12.10.

As you think of fiscal '23 phasing, there are three key items to consider. First, FX. At current spot rates, we expect the headwind to revenue will be over-indexed to the first half. For the full year, we expect the drop-through to earnings to be below our BDX operating margin.

Due to the expected benefit from inventory flow-through in Q1, the drop-through is expected to start well below the full year average and most significantly impact the second and third quarters. Second is the grow-over impact of COVID-related dynamics.

As a reminder, in FY '22, almost 80% of COVID-only testing revenue was realized in the first half of the year, with strong margin drop-through as reinvestment was weighted to the latter part of the year. In addition, there is also a comp to strong first half performance in FY '22 related to combo testing in the base business.

And the third is inflation. Nearly 40% of the full year inflation headwind is expected to occur in Q1 as we sell through inventory manufactured in FY '22 in the first half of the year.

As a result of these items, as you think of the progression of our total operating margin expansion through the year, for Q1, you should expect a year-over-year decline driven primarily by the year-over-year comparison of higher COVID-only testing.

We expect operating expansion to ramp over the remainder of the year with the majority occurring in the second half. As a reminder, there are some tough comparisons to the prior year in Q1, such as the benefit of about $50 million in licensing revenues in Life Sciences.

As a result of these dynamics, we expect Q1 base revenue growth and adjusted EPS to be under-indexed relative to an equal quarterly phasing of the full year.

So this guide, coupled with our FY '22 results, has us progressing very well towards our FY '25 goals, including a two-year revenue CAGR assuming the FY '23 midpoint of 5.75% that is well above the 5.5% plus target at around 7.5%, achievement of nearly 400 basis points of margin improvement or over 70% of the way towards our FY '25 objective and two consecutive years of strong double-digit adjusted earnings growth in our base business.

In closing, we are very pleased with our performance, particularly given the macro complexity and inflationary pressure we navigated. The consistent execution we delivered and our ability to mitigate these challenges through FY '22 enabled our results.

This gives us confidence in our ability to continue this momentum into FY '23 and create long-term value for all of our key stakeholders. With that, let me turn it back to Tom for a few additional comments..

Thanks, Chris. Our BD 2025 strategy is demonstrating strong momentum and performance positioning BD to be increasingly well positioned to drive long-term growth and value for all stakeholders and successfully navigate and differentiate in today's challenging environment. .

I'd like to thank our associates worldwide once again for their tireless commitment to our purpose of advancing the world of health. And before I turn it to Q&A, I want to officially congratulate and welcome Mike and Rick to their new roles, leading the Medical and Interventional segments, respectively.

Both Mike and Rick are highly effective leaders who have demonstrated strategic and operational excellence, and they're nearly two decades at BD.

Their focus on driving growth and meaningful outcomes has been critical as we pursue our BD 2025 strategy, and they are well-rounded seasoned leaders with a track record of developing strong teams that deliver impactful results.

Their broad experiences across multiple BD businesses and segments position them well for their new roles as we advance our growth agenda and build BD's future. With that, let's start the Q&A session.

Operator, can you assemble our queue?.

Certainly. The floor is now open for questions. [Operator Instructions] And our first question is coming from Larry Biegelsen with Wells Fargo..

Congratulations on a strong finish to the year. First for Chris on the top line guidance. It implies only about 4.75%, excluding Parata and testing. You just grew 6.8% organic in Q4, 8.5% for the full year. So why the deceleration in fiscal 2023? It seems conservative given the momentum.

And can you talk about assumptions for pricing and those divestitures? And I have 1 follow-up..

Yes. Sure, Larry. Thanks for the question. We're very pleased with our growth rate.

As you noted, I think what we're delivering is a testament to our strategy playing out, delivering consistent growth in both our durable core balanced with acceleration through transformative solutions, coupled with the actually organic contribution from the tuck-in M&A that we're starting to see as we anniversary acquisitions more than a year.

There's about a 20 basis point contribution to growth. So as you noted, 9.4 this year, really strong year, in a year by the way where we actually had an increasing complex environment. Our ability to grow double digits in China as an example with some of the dynamics we saw play out there, 8.5% organic.

I think there's a few things that I think will give you some color to kind of understand. Our underlying growth rate remains extremely strong as it relates to our '23 guide.

If you think of it as a two-year period at 7.5% growth over a two-year period comping over that 9.4%, this is well above our 5.5-plus even if you adjust out, from an inorganic standpoint, the growth is still at about 7%. So we -- I also think it's a strong indication that we're actually consistently delivering this growth.

On the strategic portfolio exits, let me give some color on that. This is a bit different. It's certainly consistent with our simplification strategies. And really, it's the strength of our underlying business and the strong growth outlook that allows us to take these strategic bold actions to create value for our customers and our shareholders.

These are the kind of things that investors should want us to do, and we're very fortunate to be able to take this opportunity. It's consistent with our relentless focus on portfolio.

And what we're essentially doing different from SKU rationalization, which is really simplifying the SKUs that we go to market with, that require work, investment, reregistrations, et cetera. These are pure portfolio exits. You almost need to think of them.

It's a onetime kind of divestiture as we took a step back, looked at our portfolio, trying to understand where we could best create value, again, both through the lens of our customer and through the lens of our investors. So these are areas, for example, that would fit a typical divestiture growth profile. These are not accretive to growth.

These are significantly dilutive to margin, in many cases, well below half our existing margin rate and the right thing to do. I'd also point to the fact that while these were dilutive to margin, they did actually benefit our earnings.

And so we had absorbed that in a very strong earnings guide, right, when you think of our bottom line of 9% to 11% double digits at the midpoint on an FX-neutral basis. And that's on an all-in comping over the COVID-only lost revenue year-over-year. And so adjusting for that, we still delivered about 12% to 14% of base earnings growth.

So we think this is the right thing to do for the long term. It's the right thing to do. Our underlying business, I actually think it's fair to think of that 1% impact roughly differently, almost like an inorganic adjustment because the rest of our portfolio continues to perform strong.

As a matter of fact, we -- if you look at the 5.75, it's above the 5.5 midpoint. And then I'll go back to the two year, which is, again, on an organic basis, over 7%. So hopefully, that helps kind of explain that part of the guide. We feel great about our revenue and certainly feel good about the bottom line..

That's very helpful. And just, Tom, one follow-up. It's been about -- the comments on Alaris were encouraging in your prepared remarks. It's been about 1.5 years since you filed.

What can you share about the review process? And are you still confident you can bring Alaris back before 2025 since I think the BD '25 margin target assumes about 80 basis points contribution from Alaris..

Larry, as always, great to connect, and thanks for that question. So as we've mentioned on several occasions, getting Alaris back on the market is our #1 priority. We remain confident in the resources we've invested in our submission in the team and a leadership task to prioritize this in our process and we are confident that we will get clearance.

What we also want to be -- continue to be prudent on Larry and thoughtful about the process with the FDA.

And so therefore, that's why we're not predicting time lines given how inherently complex those submissions are -- as you said and as we've shared in the past, the relaunch of Alaris is included within our strategic plan as we provided at Investor Day, and there is no change to that.

We just -- as I mentioned before, we want to not predict those time lines, but we are prepared for launch when that clearance comes so that we can best support our customers. And as you know, we did launch Alaris -- the new Alaris pump in Canada this past year, and we're getting very positive feedback from customers there.

So thank you for the question. .

And we'll take our next question from Vijay Kumar with Evercore ISI..

One, Chris, maybe I want to start with guidance and I had one for Tom. On the guidance, what -- I guess, what are you assuming for vaccine? I think vaccines were $150 million-ish of contribution in fiscal '22.

Is that zero? Is that a headwind? And Alaris emergency use, is that similar to fiscal '22? Is that below? And related to that, I think in the past, you've said active discussions with the FDA, has that changed in active discussions with the FDA relative to Alaris?.

This is Tom. So no, we continue to have active discussions with the FDA on Alaris. And as I mentioned, things are progressing towards our process, and we'll obviously give an update when we get ultimately clearance on that, but we don't want to try to predict the timing on that.

And so therefore, again, as we have been being prudent, we haven't reflected that in our guidance specific approval timing. So we do have the same run rate of medical necessity in our guidance, which is about $100 million, same as '22. We've carried that forward into '23.

And to your question on vaccines, it is a headwind in '23 that we're jumping over there. There's relatively limited vaccination demand ongoing for COVID. And so that's definitely a headwind that we're jumping over in MDS, but we have that covered..

Understood. And Tom, sorry, can you quantify what the headwind is? And related to that, sorry, my second question here. Parata, it looks like your pro forma organic here was really strong, perhaps in the teens. Maybe talk about what's driving this strong contribution from Parata.

And is that part of your revenue synergies as part as the deal?.

Yes, VJ. So on the hypo, we won't share the specific number there. But it is a -- there's very limited revenue, vaccine-related in hypo that we have planned for '23. Related to Parata, you're right. We have very strong performance in Parata at/or slightly ahead of our deal model on that.

So we're off to a great start, and we're seeing really strong demand. And let me turn it over to Mike Garrison here, who, of course, led that acquisition when he was leading MMS and now continues to be over that as is leading the Medical segment.

So Mike?.

Hi, Vijay, thanks for the question on product. Parata, yes, we're very excited about Parata, also the MedKeeper, the Medbank acquisitions that are in the portfolio. They are just great teams with a passion for their craft.

And it may be the things that are differentiating it in our approach, the extensive diligence we did prior to the acquisition, a real focus on culture in the first 30 days of working with the teams.

And then we also set up an integration management office within MMS with some of our senior leaders to really guide and focus on each individual work stream across the functions to make sure that the acquisition goes well out of the gate. But I think the main thing is the value proposition is very strong and clear for Parata.

It directly addresses the labor shortages and the clinical efficiencies that customers are seeking, especially right now, and as well as their long-term goals around smart, connected care, data-driven decision making, things like that.

So it both addresses short-term needs and long-term needs, and that's why customers are reacting so favorably to it..

And we'll take our next question from Robbie Marcus with JPMorgan..

Great. Maybe to follow up on some of the '23 guidance questions. I was wondering if you could help us with some detail maybe around what you're assuming for the COVID flu combo tests. We're off to the worst start of flu in over a decade.

So what you're assuming in there or just for flu in fiscal '23? And remind us where those tests ended up on sales in fiscal '22? And also, how do we think about Parata down the P&L? It's 100 bps on the top line. Just remind us of what you're assuming on the bottom line for that..

Yes. Thanks, Robbie. Appreciate it. Yes, I can take the Parata question as it relates to the margin, and then either Dave and/or Tom can maybe talk about COVID flu, how we're thinking about it. Parata, what we've shared publicly is it was immediately accretive to BD. We weren't specific with the amount.

But actually, we did say it's actually even accretive to our long-range outlook, which is think of it as that about 25% from an operating margin. So it is certainly a positive contributor on the bottom line. I will just reinforce, remember, as you think of our total all in.

So Parata, I think, is a great example of adding a strategic asset with a strong growth profile, strong accretion on the margin standpoint. We did have to jump over the COVID-only, which was a $300 million-plus drag on the top line that also had a higher, slightly higher margin profile.

So I think when you look at our total guide at 9% to 11%, that's very strong, and we kind of reversed into the math we had shared that the COVID-only was about 300 basis points headwind in total. It implies a 12% to 14% base earnings growth profile.

This is really strong, well, very consistent with what we shared at Investor Day, especially again in an inflationary environment, where we're going to have similar levels of inflation year-over-year..

Robbie, this is Tom. Good to connect this morning. We've got Dave on the call down in -- with our Latin America team at their kickoff meeting. But I'll tag Dave into the conversation here in just a moment. But related to flu combo.

So we are in our assumptions, we do have that moderating a bit versus this past year, where we saw a lot of demand for the flu COVID combo driven by COVID. To your point, there is a potential. We don't see it as significant of a demand driven by the COVID side of the combo test necessarily as we look going forward in '23.

Certainly, there can be a greater potential for the flu side demand and differentiating between flu and COVID. I think as you said, it's off to an early start, the flu season, still to be determined the scale of it. In Australia, we saw an early start to the season, but we saw a very narrow onetime peak in that demand.

And so actually, the area under the curve was less than normal. And so there was a severe very short flu season in Australia that did not end up creating significant demand and testing because it was such a short duration still to be determined how that rolls out in the U.S., and so we want to be prudent upfront.

Maybe Dave, I'll turn it to you to share some more comment here..

Yes. Thanks, Tom. And Robbie, thanks for the question. And just as I get into answering that, I just, given this is my first chance on the Q&A here, I do want to just recognize and thank the Life Sciences team globally and all the associates for another outstanding year in fiscal '22.

I mean you saw the quarter growth of over 8% there, a record base growth of 13.8% for the year. So Life Sciences continues to be strong. On flu respiratory, I'll just build upon what Tom has said is, if you think about it pre-pandemic, we were always in this range right of the $75 million to $100 million, we were considering the normal flu season.

I think also to remember that, that was on Veritor only. We have not really anticipated or seen a normal flu season during the pandemic at all. Definitely in October, we are seeing more visits to urgent care centers and things on influenza-like illness.

But again, when you look at it, we think the season has started, it's about eight to nine weeks early. It peaked very quickly in Australia. So it's a little bit early to call what it would look like.

I think if we were looking at the range for this year, based on just leverage of the Veritor installed base, we would expect that sort of that flu range of that Veritor base to be about 130 million to 150 million..

Great. Really helpful. And maybe a follow-up. Chris and Tom, 100 bps margin expansion is really healthy, given all the headwinds.

Maybe you gave some good color on the slides, but was hoping for maybe just a little more details on how do we think about inflation and raw materials costs? Or any of those other headwinds? If you could put any frameworks around -- and then how do we think about FX on the operating margin line as a negative?.

Yes, Robbie. Thanks. So yes, as it relates to 100 basis points, as you noted, definitely another strong year of margin enhancement. That would put us about 70% on track to deliver against our FY '25 goal of about 25%. So really strong progress, having delivered almost half of that in the first year.

So not only do we feel good about what we delivered last year, continuing that momentum and driving towards our long-term objectives. Yes, there's a couple of ways to think of it.

One, the predominant driver of margin improvement this year is really going to be leveraging our strong growth profile, focused on cost containment more at the operating margin level, in selling and G&A. So that's about 80% plus of that 100 basis points improvement that we're expecting.

The balance is really, there's a little bit of moderating R&D back to our 6% goal. We've actually been over-indexed two years in that area. So obviously, like other areas, you'd expect to, without impacting project spend, just leverage your base with a strong growth profile, 6% is a good outcome there. The balance, which is really minor then, is in GP.

So GP, you're going to kind of see that's where we're experiencing most of the inflationary impacts. As a matter of fact, you're seeing a little bit of relief in shipping. It's still above historic what we call normal levels. You're seeing some benefit there as well that's playing out mostly in the operating margin side.

As it relates to where we're seeing the most inflationary pressures, it's still raw materials. It's shifted a bit more from kind of resins to other materials, such as packaging would be an example. We do have a carryover effect, too, of the inventory that was built in '22. And so a lot of that will hit in the first half of the year.

And the other big area where you still continue to say, I would say, escalating pressures is labor. So labor and raw materials is about 50-50 each of what we're realizing in GP. Obviously, we're taking a ton of action within GP probably in this order in terms of how we think of them.

not necessarily size, but as we always think of driving cost improvement, one, it starts with our growth profile, outsized volume in our plants, leveraging our plants portfolio, favorable mix to the extent we can drive that outsized cost improvement, again, going back to our plant mindset as it relates to growth mindset and driving more efficiency and then other factors such as price as well would be part of that equation lastly.

So that's how we're thinking of inflation this year and what we're doing to mitigate it. And we're very pleased with the progress that we've had year-to-date. As it relates to FX, we gave some color. Certainly, the team can support you through that in more detail.

The drop-through from sales to earnings is slightly lower as consistent with what we've shared in the past on a full year basis. You're going to see sort of quarterly phasing dynamics play out differently because you have the nuance of how FX impacts cost and inventory and how that flows through. You got that four to six-month lag.

So you'll see a little bit more favorability in the first half, and it normalized to the full year drop-through that we shared by the end..

That's great. Maybe just to add to Chris' comment, and it's a good question, Robbie. Back to -- we are facing, as all companies are, serious inflationary pressures, right, that are happening across the industry and all industries. I think just want to call out our plants. They're doing a phenomenal job.

The last thing that we look to do in any situation is price. And so as you heard Chris walk through the order of priorities for us, our plants really have risen and almost doubled the level of normal continuous improvement that we've done historically, they've risen to that task and working to offset as much of that cost as possible.

The other thing is the action that we talked about earlier around that strategic portfolio exit, as we're bringing in M&A, and we have strong underlying growth, taking this time to evaluate our portfolio and look at where they're nonstrategic products that are diluting our operational effectiveness in our plants that we can get better performance out of our lines, out of our staffing, out of our resource deployment, and take those actions set us up for strength in the long term.

We're doing that this year, and that's helping us also have a role in offsetting those inflationary pressures at making us more efficient in our plants and helping make sure that we can deliver the products that matter most that we're focusing our resources on delivering those products that matter most for our customers that are going to be driving value for us and our shareholders long term..

And we'll take our next question from Matt Taylor with Jefferies. .

So I had two questions. I guess the first one I wanted to ask was, I know you probably won't comment on litigation, but I was hoping you could address some of the ethylene oxide issues from two angles.

One is maybe just talk about some of the things that you have done already with the regulatory agencies to work with them to mitigate risk there to improve the plans? And then any commentary you can make on litigation to get investors comfortable with that risk would be helpful..

Sure. Good question, Matt, and I appreciate it. So as you know, BD is among the world's largest producers of medical products that are critical for patient care. And our devices and products, they have to meet FDA sterilization standards.

And just as background, I think everyone is aware that numerous types of devices and other sensitive medical products, for many of them, EtO is the only type of sterilization that can be used. In fact, about 50% of all medical products across the industry use EtO for sterilization.

And the majority of those products that use EtO for sterilization, other sterilization methods will damage the products like radiation or steam or chloride dioxide or vaporized hydrogen peroxide, they actually would damage those products. That's why EtO is used.

And you wouldn't be able to ensure the required level of sterility given the materials that are used in those products. And so we're very confident in the systems we've been investing in for decades and can say that our sterilization facilities use the best available EtO emissions control technology in the industry.

We achieved more than 99.95% destruction of EtO from our stack admissions. And in accordance with the broad FDA challenge, we continue to invest in cycle optimization and EtO technology upgrades, extending outside of our plants now.

And so we take the safety of our associates and the communities we're in very seriously and therefore, have a long history of proactively upgrading our emissions control technology supported by continuous investments back to your good question. So if you go all the way back to -- even let's go back to 1997.

We proactively upgraded our emissions control equipment in Georgia to thermal oxidizers all the way back then and began routing back then exhaust in Georgia to the primary emissions control equipment. It's something that still isn't necessarily routine across the industry today. We're at the forefront of that.

Today, we have programs and procedures in place to ensure compliance with all applicable regulatory requirements, including EPA, OSHA, state environmental protection agencies, FDA. Our facilities are at least 20x more efficient at removing EtO per cubic meter of air than what's currently required by the Clean Air Act.

And we're working with the FDA and other industry leaders to develop, look at new sterilization cycles that could even take emissions down further than what's ever been possible before.

Just as it relates to our outstanding litigation, there are no new cases that have been brought since the third quarter, and we have not taken any accrual in connection with any of the outstanding EtO cases.

We've gone through a rigorous process internally and externally, and we do intend to vigorously defend any such cases, given our strong position in the way that we operate..

And we will take our next question from Josh Jennings with Cowen..

Probably two for Chris, just on Alaris. I was hoping to just review just the run rate of Alaris revenues in the U.S.

on medical necessity shipments and where premediation or remediation, that revenue run rate sat? And also I want to just think about what you're absorbing on the margin side without -- assuming that Alaris is not going to be back in play in the U.S.

in fiscal '23, what was the margin drag in 2022 and that there is a margin drag in '23? And just how you're maintaining the structure of Alaris franchise to be ready for launch once remediation is over and you're able to fully commercialize again?.

Yes. Thanks, Josh. Appreciate it. Yes. So I'll just -- I'll share some things that we've shared in the past. One, from a total sales point, we had always talked about that business being roughly $400 million is the way to think of it. From a medical necessity standpoint, we've talked about $100 million per year.

That's what we had last year roughly, and we're planning sort of consistently this year. So that gives you that kind of frame as you think of the size. I will remind you when upon clearance, you would expect a gradual ramp over time. We have not shared a specific timeline that's hard to predict.

But maybe just to give a little context, some folks have sort of asked like, okay, are we talking less than a year-over-year. It wouldn't be less than a year, it would ramp up over some time frame, probably over a 12-month period that should help you a little bit. But certainly well within our LRP time period.

Margin, we haven't shared specifics by year. What we did share, if you go back to the deleveraging that occurred from our FY 2019, there was about an 80 basis point headwind to our margin. And it's -- that largely stays the same, and we'll adjust as the product comes back.

If you think of it, we -- one, we made investments in regulatory quality, of course, we maintained our service and field organization. And so as the sales come back, you would get natural leveraging to occur as we've made those investments to continue to support our installed base and customers..

And maybe just 1 other thing to add, Josh, is, as Chris mentioned, so we kept our commercial team. We kept our service team, which as we relaunch again, we'll see the positive flow through since those expenses are already on the P&L and the recovery of that. That 80 bps of dilution that we currently have on the P&L.

Just on there is a benefit that we're seeing right now is we're seeing very strong demand on other capital areas within MMS, particularly in the Pyxis area, where we're able to utilize some of those additional service capabilities that we have to actually help us in the installs on the Pyxis side, and maybe since we have Mike here today who again was recently leading that business, maybe Mike, if you just want to comment on some of the broader demand we're seeing on the capital side on the MMS..

Yes. Thanks, Tom. Even though there's a -- we recognized a tough economic environment, the uncertainty there, we're not experiencing the same degree of capital pressure that maybe have been communicated elsewhere.

In fact, we finished Q4 with a record year for bookings, have a strong implementation schedule planned for, and I think there's a couple of reasons for that.

One is the strategy continues to resonate with the Connected Med Management Solutions, again, addressing the labor shortages and our ability to flex and implement both with business model, but also these highly skilled service, a lot of ex-nurses, ex-IT people.

These are people that our customers are increasingly seeing the value of partnering with us because we can flex to meet their needs. So both of those things, I think, are really helping, and we're getting a lot of utilization out of the infusion side of the business. .

We'll take our next question from Matthew Mishan with KeyBanc..

Just a clarification for me. I think last quarter, you said that you would expect some organic revenue growth around like 5.5-plus percent base growth, not including Parata.

At that time, were the strategic electrics included in that number? Or are those new? And if they were included, does that mean that there was a little bit of softness over the last three months versus what you were thinking?.

No. I appreciate the question. Yes. No, that hadn't been contemplated at that point. Again, we took a hard look at our portfolio in the spirit of simplification. This is different from our core Recode program that has a different lens. Similar principles, but a very different lens in terms of a pure exit.

We really wanted to make sure we were focusing on our organization in higher value-creating areas. And so this was an add. And again, I think there's so many puts and takes across the year. Looking at this two-year metric, however you look at it, 7-plus percent growth on an organic basis is extremely strong.

And we think this is an appropriate action to think we could easily put that back in, right? And our base growth would go up by 100 bps, but this is the right thing to do for all stakeholders over the long term. And we'll be creating significant value and has not impacted our bottom line performance at all..

And they're onetime in nature?.

Yes. .

We'll take our final question from Rick Wise with Stifel..

Tom, you highlighted multiple times your focus on -- among other things, on transformative solutions, M&A, the portfolio. And you and Becton's excellent Chief Financial Officer, both highlighted the balance sheet strength as maybe I think the language was new lever right now.

What's your sense of urgency on the external technology M&A front? How do you view your current opportunities? And does the collapse in med tech valuations and multiple compression, does that present more opportunities? Just how are you thinking about it?.

Great question, Rick, and great to connect. So -- and I agree, we have a very strong CFO, by the way, as well, too. But so we do have a very strong funnel, and we continue to be very focused specifically on tuck-in M&A. No change to our strategy there, as we've articulated many times.

We're going to continue to focus our M&A as we have over 95% of our M&A to date has been in those transformative solution categories, as you called out, smart, connected care, enabling the shift to new care settings and improving outcomes in chronic disease. We've also shared that expect more Parata like in size tuck-in M&As as we look forward.

So it may not be -- we've done 19 in the last 2.5 years, maybe fewer deals going forward, but of larger scale and impact, given the benefits that we have and the execution that the businesses are focused on and the ones that we've done to date. I'd say that the other thing is we're going to continue our very disciplined approach to M&A.

Really proud of the team, not just for the deals that we've done, but from the deals that we've walked away from. That's something we've -- we're really pleased with, the work that we've done and how our deals are executing to plan and the return that they're delivering for our shareholders in a meaningful way.

And so we're going to keep that discipline as well. But we do see opportunities will continue to be paced and appropriate about it as we go forward and staying very true to advancing our strategy, continuing to move us into those higher-growth markets. And you see us being very active.

One of our portfolio management, not only through M&A, but obviously, completing the spin of Inventor earlier this year and some of the very targeted onetime portfolio exits that we shared today that are basically puts and takes with the inorganic growth that we see coming this year..

Yes. And maybe just one final one from me. I thought it would be interesting to hear from Mike and Rick, since you throw them under the bus a little bit by mentioning their names, Mike, in your new role at BD Medical and Rick on the Interventional side, the boss just said growth and meaningful outcomes is a priority.

But I'd be curious to hear about your key priorities and when we speak this time next year, what are your priorities for this year? And what should we expect to see over the coming year? We can pretend Tom is not listening..

Thanks, Rick. This is Mike. Yes. So the -- my priority is the same as it was in the MMS role, is that getting Alaris back to market. It's a top priority for the company. And so it remains my top priority.

Beyond that, a lot of it has to do with making sure that our innovation is productive, that dollars that we're spending in R&D get value out to customers. And because innovation that never makes it to a customer isn't productive at all.

I think that constantly creating a culture where we're developing and coaching our talent to be better each day and have a continuous improvement mentality. I think that's really critical, especially in the current environment, the same way that our customers are facing labor pressures, we are, too.

And so if we're the best place to work and people feel that they can belong a greater purpose that we provide, I think that's really, really important. And then finally, I think that there's just an approach to leadership that I hope that we have a performance-based culture of commitment.

So whenever we make a commitment, we meet the commitment and we keep our mindset around that. So maybe a bit of a lean processes, but in an abundant mindset would be the way that I think about it. And I'm really -- last thing is Rick actually interviewed me and hired me 18 years ago. So everything I have, I owe to Rick. So thanks, Rick..

Too kind, Mike, thanks. So Rick, thanks for the question. So as I round out pretty much 60 days in the role, I'm truly inspired by the opportunity that we have in BDI to collectively enhance patient lives. So innovations like PureWick, Phasix, Venovo, just to name a few, are truly life changers for patients.

And then also, as I go around the business, the commitment, the capability of the team, from our salesperson, R&D, manufacturing technicians in the plants, doesn't matter. Everyone is really focused on the patient. And so first, as Chris mentioned, and we had a great year, right? BDI grew at 7.1%, which is at the high end of our long-range plan.

And again, as we said, our commitment there for next year is right there again. So we're on track for that long-range plan.

So my priority is keep driving these innovations, keep meeting our commitments as a segment and continue to have a difference in chronic disease treatment and then on the associates within BD and then all the customers that we serve. So really a great opportunity, and I appreciate the question. Thanks..

I think, Rick, maybe just to share one of the other things is, as we said, within the quarter, we saw some backorders in BDI.

One of the things that I know, Rick, just you're focusing on helping the team is bringing some of the operational excellence from having led MDS for many years, bringing some of those capabilities from the broader BD operating side into the BDI segment. And maybe just a couple of comments there because that's a big focus. .

Great. No, I think we have a great opportunity to improve the supply chain to give an example of the ERP system upgrade, finally, bringing in fully integrating BDI into the beauty system as well. These are going to provide efficiencies to hold deliver products to our customers reliably, on time and things like that.

So again, I've spent a lot of my time first off in BDI, looking at opportunities that we can continue to streamline things, drive operational effectiveness. Exactly. So thanks, Tom, for that..

The great benefits of obviously being able to rotate talent across diverse groups of businesses.

And I think Rick's background, as everyone knows, MDS is probably the most operationally heavy business within the company, just given the billions of products we make on syringes and catheters and bringing that where the BDI businesses have been very innovation-driven and growth driven.

It's a very nice complementary skill and leadership to be able to bring in those capabilities over. So great question. ..

Yes. Thanks, Rick, for the question. .

And there are no further questions at this time. I'll turn the call back over to Tom Polen for any closing remarks..

Okay. Thank you, everyone, for the very good questions today. I just want to take a moment and thank our team again around the world for an extremely strong FY '22, a challenging macro environment.

And all of the work and sacrifice that all of our 75,000 associates around the world have made this past year to deliver for our customers and the patients that we mutually serve.

Obviously, we've outlined a very strong outlook for FY '23, and we look forward to continuing to focus relentlessly on executing our BD 2025 strategy and bringing that to life. So thank you very much, and have a great rest of the day..

Thank you. And this does conclude today's teleconference. You may disconnect your line at this time, and have a wonderful day..