Financial Data and Key Metrics Changes - Total revenue for Q1 2026 was $5.3 billion, reflecting a 0.4% increase year-on-year, with New BD growing by 2.5% [5][18] - Adjusted gross margin was 53.4%, down 140 basis points from the prior year, primarily due to tariffs [20] - Adjusted EPS was $2.91, a decrease of 15.2% year-on-year, mainly impacted by tariffs [21] - Free cash flow for the quarter was $548 million, with a conversion rate of 66%, up from 59% in the prior year [22] Business Line Data and Key Metrics Changes - Medical Essentials experienced expected order timing dynamics and volume-based procurement in China, partially offset by share gains in the US [18] - Connected Care delivered mid-single-digit growth, led by high single-digit growth in APM [18] - Biopharma Systems grew low single digits, with double-digit growth in biologics, particularly GLP-1s, offset by lower vaccine demand [19] - Interventional and surgery segments both delivered solid mid-single-digit growth, with strong performance in Advanced Tissue Regeneration [19] Market Data and Key Metrics Changes - The US market showed solid growth in the BD Vacutainer portfolio, while challenges persisted in China due to market dynamics [18] - Alaris performance was slightly ahead of expectations despite a revenue decline due to tough comparisons to the prior year [19] - The Life Sciences segment declined due to US point-of-care headwinds and market dynamics in China [20] Company Strategy and Development Direction - The company is focused on a balanced capital allocation strategy, prioritizing share repurchases and tuck-in M&A in high-growth markets [8][9] - Key trends shaping the future of healthcare include the rise of smart devices, the shift towards lower-cost care settings, and the growth in chronic disease technologies [9][10] - The company aims to enhance its commercial capabilities and operational excellence through its "Excellence Unleashed" strategy, focusing on competing, innovating, and delivering [11][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory of the business, with core growth drivers remaining intact [27] - The company anticipates low single-digit revenue growth for New BD in fiscal 2026, with a positive currency impact expected [23] - Management acknowledged known headwinds in 10% of the portfolio but emphasized strong fundamentals in the remaining 90% [33] Other Important Information - The company is set to close a significant transaction with Waters, receiving a $4 billion cash distribution, with plans to allocate $2 billion for share repurchases and $2 billion for debt paydown [8][24] - The company has reduced its manufacturing network by nearly half, enhancing operational efficiency and cost management [16][56] Q&A Session Summary Question: Guidance for Q2 revenue and EPS - Management indicated that Q2 guidance reflects modest timing benefits and that core growth drivers remain intact, with no ramp expected from Q1 to Q2 [27][28] Question: Structural changes affecting mid-single-digit growth - Management confirmed confidence in the portfolio, noting strong performance in high-growth areas despite known headwinds [33] Question: Impact of Alaris and vaccines in China - Management expects Alaris to step up in 2027, with vaccines anticipated to have a smaller revenue impact moving forward [40][42] Question: M&A opportunities under New BD strategy - The company remains focused on tuck-in M&A that is accretive to revenue and EPS, with a robust pipeline in high-growth sectors [78][80] Question: Pricing environment and potential for price premiums - Management noted a stable pricing environment with slight positive pricing expected outside of China, anticipating improvements as VBP dynamics lessen [91]

Financial Data and Key Metrics Changes - Total revenue for Q1 2026 was $5.3 billion, reflecting a 0.4% increase year-on-year, with new BD growing by 2.5% [5][18] - Adjusted gross margin was 53.4%, down 140 basis points from the previous year, primarily due to tariffs [20] - Adjusted EPS was $2.91, a decrease of 15.2% year-on-year, driven mainly by tariff impacts [21] - Free cash flow for the quarter was $548 million, with a conversion rate of 66%, up from 59% in the prior year [22] Business Line Data and Key Metrics Changes - Medical Essentials experienced mixed performance, with expected order timing dynamics affecting MDS, but continued share gains in the US vascular access management portfolio [18] - Connected Care delivered mid-single-digit growth, led by APM, which grew high single digits [18] - Biopharma Systems grew low single digits, with double-digit growth in biologics, particularly GLP-1s, offset by lower vaccine demand [19] - Interventional and surgery segments both delivered solid mid-single-digit growth, with advanced tissue regeneration and infection prevention portfolios performing well [19] Market Data and Key Metrics Changes - Growth in China was impacted by volume-based procurement (VBP) and market dynamics, but overall volume growth was positive despite price compression [42] - The US market showed strong performance in several categories, including pharmacy automation, which grew double digits [61] Company Strategy and Development Direction - The company is focused on a balanced capital allocation strategy, prioritizing share repurchases, dividends, and targeted tuck-in M&A in high-growth markets [8][80] - The strategic priorities include competing, innovating, and delivering, with significant investments in commercial capabilities and R&D to drive growth [11][73] - The company aims to leverage trends in healthcare, such as the rise of smart devices and the shift towards lower-cost care settings, to position itself for future growth [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory of the business, maintaining a prudent approach to guidance for fiscal 2026, with expectations of low single-digit revenue growth [24][25] - The company anticipates that pricing dynamics will improve as VBP in China abates, potentially leading to positive pricing in the future [91] Other Important Information - The completion of the life sciences transaction with Waters is seen as a significant milestone, providing a $4 billion cash distribution, with plans for $2 billion in share repurchases and $2 billion for debt paydown [8][24] - The company has reduced its manufacturing network by nearly half, which is expected to lower costs and improve operational efficiency [16][56] Q&A Session Summary Question: Guidance for Q2 revenue and EPS - Management indicated that Q2 guidance reflects modest timing benefits and that core growth drivers remain intact, with no significant changes expected [27][28] Question: Structural changes affecting mid-single-digit growth - Management confirmed that the fundamentals across the majority of the portfolio remain strong, with ongoing investments in high-growth areas [33][34] Question: Impact of Alaris and vaccines in China - Management expects Alaris to improve in 2027, with vaccines anticipated to be a smaller portion of revenue moving forward [40][42] Question: Pricing environment and innovation impact - Management noted a stable pricing environment with slight positive pricing outside of China, and expects new product innovations to help drive pricing and organic revenue growth [91]

Financial Data and Key Metrics Changes - Total revenue for Q1 2026 was $5.3 billion, reflecting a 0.4% increase year-on-year, with new BD growing by 2.5% [4][15] - Adjusted gross margin was 53.4%, down 140 basis points from the previous year, primarily due to tariffs [17] - Adjusted EPS was $2.91, a decrease of 15.2% year-on-year, driven mainly by the impact of tariffs [17][20] - Free cash flow for the quarter was $548 million, with a conversion rate of 66%, up from 59% in the prior year [18] Business Line Data and Key Metrics Changes - Medical Essentials saw mixed performance, with expected order timing dynamics affecting MDS, but continued share gains in the US vascular access management portfolio [15] - Connected Care delivered mid-single-digit growth, led by APM with high single-digit growth [15] - Biopharma Systems grew low single digits, with double-digit growth in biologics, particularly GLP-1s, offset by lower vaccine demand [16] - Interventional business experienced solid mid-single-digit growth, driven by high single-digit growth in UCC and double-digit growth in PureWick [16] Market Data and Key Metrics Changes - Growth was pressured by market dynamics in China, particularly in the life sciences segment, which declined due to headwinds in US point-of-care and difficult comparisons from the prior year [17] - The company expects the value-based procurement (VBP) in China to impact 80% of its portfolio by the end of 2026, with a projected headwind of about 250 basis points for the full year [36] Company Strategy and Development Direction - The company is focused on a balanced capital allocation strategy, prioritizing share repurchases and tuck-in M&A in high-growth markets [6][73] - The transformation into a pure-play med tech company is supported by divesting non-core assets and enhancing its portfolio through strategic acquisitions [7] - The company identified three key trends shaping healthcare: the rise of smart devices, the shift towards lower-cost care settings, and the growth in technologies addressing chronic diseases [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory of the business, maintaining a prudent approach to guidance for fiscal 2026, expecting low single-digit revenue growth [20] - The company anticipates that pricing dynamics will improve as VBP in China abates, potentially leading to positive pricing in the future [85] - Management highlighted strong execution in commercial initiatives and a robust innovation pipeline, which are expected to drive future growth [9][68] Other Important Information - The company completed a significant transaction with Waters, receiving a $4 billion cash distribution, with plans to allocate $2 billion for share repurchases and $2 billion for debt paydown [6][19] - The company has reduced its manufacturing network by nearly half, which is expected to lower costs and improve operational efficiency [13][50] Q&A Session Summary Question: Guidance for Q2 revenue and EPS - Management confirmed that Q2 guidance reflects modest timing benefits and remains aligned with Q1 performance, with no fundamental changes expected [23][44] Question: Structural changes affecting mid-single-digit growth - Management reassured that the fundamentals across the majority of the portfolio remain strong, with continued investment in high-growth areas [28] Question: Impact of Alaris and vaccines in China - Management indicated that Alaris is expected to improve in 2027, while vaccine impacts are anticipated to lessen over time [36][71] Question: Pricing environment and innovation impact - Management noted a stable pricing environment with slight positive trends expected, particularly as new product innovations are introduced [84][85]