Conferencia de resultados del 4T del año fiscal 2026 de BDX: el BPA sube un 27%, previsiones para el año fiscal 2027

Puntos clave

• BD reportó unos ingresos de 5.300 millones de dólares en el cuarto trimestre del año fiscal 2026, lo que supone un aumento del 5,6% a tipo de cambio constante, mientras que el BPA diluido ajustado creció un 27,3%, hasta los 4,15 dólares.
• Los ingresos de todo el ejercicio aumentaron un 3,9%, hasta los 19.500 millones de dólares. El BPA ajustado creció un 6,7%, hasta los 12,70 dólares, y el flujo de caja libre aumentó un 42%, hasta los 2.900 millones de dólares.
• Excluyendo la base de comparación de Alaris del ejercicio anterior, los ingresos del cuarto trimestre crecieron a una tasa de un dígito alto. La monitorización avanzada de pacientes, PureWick, la regeneración tisular avanzada, la administración de fármacos biológicos y la automatización de farmacias registraron, cada una, un crecimiento de dos dígitos.
• El margen operativo ajustado del cuarto trimestre se amplió en 280 puntos básicos, hasta el 28,6%, respaldado por la productividad de BD Excellence y un mix favorable. El margen de todo el ejercicio se redujo en 20 puntos básicos, hasta el 25,0%, lo que incluye un impacto arancelario de 90 puntos básicos.
• La dirección prevé un crecimiento de los ingresos en el rango bajo de un solo dígito y un BPA ajustado de entre 13,10 y 13,30 dólares para el año fiscal 2027. Si se excluye el viento en contra de aproximadamente 200 puntos básicos procedente de Alaris, se espera que el crecimiento de los ingresos se sitúe en el rango medio de un solo dígito en el punto medio de las previsiones.
• BD completó la escisión de su negocio de Life Sciences e inició el año fiscal 2027 como una compañía de tecnología médica más focalizada. La dirección continúa teniendo como objetivo un crecimiento sostenible en el rango medio de un solo dígito, la expansión de los márgenes y una mayor conversión de efectivo a lo largo del tiempo.

Datos financieros principales

Rendimiento comercial y operativo

Medical Essentials creció un 5,9% en el 4T. Medication Delivery Solutions registró un sólido crecimiento en el rango medio de un solo dígito, impulsado por las ganancias de cuota en gestión de acceso vascular y la utilización de servicios sanitarios. Specimen Management creció a una tasa de un dígito alto gracias a las ganancias de cuota de BD Vacutainer, la capacidad adicional y la demanda derivada de las interrupciones en los competidores.

Connected Care creció un 2,1%. La monitorización avanzada de pacientes registró un crecimiento de dos dígitos tanto en bienes de equipo como en consumibles. Medication Management Solutions retrocedió a una tasa de un dígito bajo debido a la base de comparación del gasto en bienes de equipo de Alaris del ejercicio anterior; excluyendo ese efecto, el negocio creció a una tasa de un dígito medio. Alaris ganó más de 250 puntos básicos de cuota en el conjunto del año.

La automatización de farmacias se benefició de una ejecución más sólida en centros de dispensación centralizada (central-fill). BD se adjudicó las seis oportunidades de dispensación centralizada en las que compitió durante el cuarto trimestre, con VMAX incorporado en cada venta. Los pedidos de Pyxis Pro también se mantuvieron sólidos, mientras que la nueva plataforma de IA alcanzó una tasa de vinculación del 95%.

Biopharma Systems creció un 7%, impulsado por el crecimiento de dos dígitos en productos biológicos, incluidas las terapias GLP-1. La dirección señaló que la presión sobre las vacunas continuó moderándose y prevé que deje de ser un viento en contra en el año fiscal 2027.

Los ingresos del área Interventional aumentaron un 7,6%. Peripheral Intervention y Urology and Critical Care registraron un crecimiento de un solo dígito alto, mientras que Surgery creció a una sólida tasa de un solo dígito medio. Tanto PureWick como la regeneración tisular avanzada registraron un crecimiento de dos dígitos.

BD recibió la aprobación de la FDA para la endoprótesis vascular (stent graft) Liverty TIPS y la autorización 510(k) para Phasix ST Parastomal, una malla reabsorbible diseñada para la reparación de hernias paraestomales. El lanzamiento de Phasix ST Parastomal está previsto para el primer semestre del año fiscal 2027.

En el plano operativo, BD reportó aproximadamente un 8% de productividad bruta en sus plantas, con niveles de servicio al cliente superiores al 90%. Más de 2.000 eventos Kaizen respaldaron la eficiencia de fabricación y el ahorro en materias primas. Asimismo, la compañía ha identificado el 100% de los ahorros contemplados en su programa de reducción de costes de 200 millones de dólares.

Previsiones de la dirección

La dirección prevé que el crecimiento de los ingresos en el primer trimestre se sitúe en la parte baja del rango para todo el año, y que el crecimiento del primer semestre esté en línea con el punto medio anual. Se espera que el crecimiento de los beneficios se acelere en el segundo trimestre y en la segunda mitad del ejercicio.

La compañía indicó que Alaris presionará el margen operativo ajustado del año fiscal 2027 en aproximadamente 60 puntos básicos y el crecimiento del BPA ajustado en unos 500 puntos básicos. Sin contar a Alaris, la dirección prevé una expansión del margen operativo en el año fiscal 2027.

Las previsiones de BD asumen unos aranceles ampliamente en línea con los del año fiscal 2026 y no contemplan beneficios derivados de su colaboración con el Gobierno de Estados Unidos. Cualquier alivio arancelario bajo la Sección 232 sigue estando condicionado al alcance final de los productos, los plazos de implementación y el cumplimiento de los hitos acordados por parte de BD.

Riesgos y aspectos a vigilar

• Se espera que la base de comparación del gasto en bienes de equipo de Alaris reduzca el crecimiento de los ingresos del año fiscal 2027 en aproximadamente 200 puntos básicos, con un impacto más acusado de cerca de 250 puntos básicos en el primer trimestre.
• Las previsiones para el año fiscal 2027 contemplan un entorno inflacionario. La dirección tiene previsto mitigar esta presión mediante precios, mix de productos e iniciativas de BD Excellence.
• El negocio de monitorización avanzada de pacientes está completando la integración y migración de sistemas. La dirección adoptó una previsión prudente para los envíos del primer trimestre, aunque señaló que la demanda y los pedidos se mantuvieron intactos.
• Se espera que el efecto divisa reduzca el crecimiento de los ingresos del año fiscal 2027 en aproximadamente 70 puntos básicos sobre la base de los tipos de cambio al contado actuales.
• El alcance y los plazos de los posibles aranceles de la Sección 232 no se han definido definitivamente. Por tanto, no se incluye ningún alivio arancelario relacionado en las previsiones.

Puntos destacados del turno de preguntas y respuestas con analistas

Inversión frente a expansión de márgenes: La dirección señaló que las inversiones comerciales y de I+D focalizadas están generando un crecimiento más sólido en la monitorización avanzada de pacientes, Peripheral Intervention y Urology and Critical Care. Estas plataformas presentan márgenes brutos que mejoran el margen global, mientras que se espera que BD Excellence y la simplificación de G&A respalden el apalancamiento operativo a más largo plazo.

Previsiones para el año fiscal 2027: El director financiero, Vitor Roque, calificó las perspectivas de responsables y prudentes. La dirección atribuyó el menor ritmo de crecimiento del primer trimestre principalmente a la comparativa de Alaris y a la migración de los sistemas de monitorización avanzada de pacientes, y no a una menor demanda.

Fabricación en Estados Unidos y aranceles: BD se comprometió a invertir 19.000 millones de dólares en Estados Unidos a lo largo de varios años, incluidos 3.000 millones de dólares para la ampliación de la capacidad productiva. La dirección enfatizó que se trata de una reordenación de prioridades de la inversión planificada y no de un gasto incremental. Un posible alivio en virtud de la Sección 232 representaría un potencial alcista respecto a las previsiones actuales si llegara a aplicarse.

Fármacos biológicos y GLP-1: La dirección prevé un crecimiento continuo en la administración de fármacos biológicos durante el año fiscal 2027 y en adelante. BD destacó una alta tasa de éxito en nuevas moléculas y biosimilares, y afirmó haber firmado cerca de 100 acuerdos relacionados. Las oportunidades en biosimilares pueden incluir tanto jeringas precargadas como formatos de mayor valor añadido, como autoinyectores o plumas.

Marco para el año fiscal 2028: La dirección indicó que espera que el viento en contra de la comparativa de Alaris desaparezca en el año fiscal 2028, lo que favorecerá la vuelta a un crecimiento de los ingresos reportados en el rango medio de un solo dígito y una renovada expansión de márgenes.

Asignación de capital: BD planea continuar equilibrando las recompras de acciones, la reducción de deuda y adquisiciones complementarias selectivas. La compañía también elevó su dividendo por 55.º año consecutivo y mantiene como objetivo una conversión del flujo de caja libre del 90% a largo plazo.

Transcripción completa de la conferencia de resultados

Transcripción completa de la conferencia de resultados

Comentarios de la dirección

Operator

Hello, and welcome to BD's Fourth Quarter and Full Year Fiscal 2026 Earnings Call. At the request of BD, today's call is being recorded, and will be available for replay on BD's Investor Relations website, investors.bd.com or by phone at (800) 677-7085 for domestic calls and area code plus +1 402-220-0665 for international calls. [Operator Instructions]

I will now turn the call over to Shawn Bevec, Senior Vice President, Investor Relations.

Shawn Bevec

Good morning, and welcome to BD's earnings call. I'm Shawn Bevec, Senior Vice President of Investor Relations. 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 fiscal '26 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 Vitor Roque, Executive Vice President and Chief Financial Officer.

Before we get started, I want to remind you that we will be making forward-looking statements. You can read the disclaimer in our earnings release and the disclosures in our SEC filings on our Investor Relations website. Unless otherwise specified, all comparisons will be made on a year-on-year basis versus the relevant fiscal period. revenue percentage changes are on an FX-neutral basis, unless otherwise noted. Also, references to adjusted EPS refer to adjusted diluted EPS. The financials discussed here and included in the earnings release are presented on a continuing operations basis. Prior periods have been recast to reflect the spin-off of our Life Sciences business in combination with Waters, which is accounted for as discontinued operations. Reconciliations between GAAP and non-GAAP measures are included in the appendices of our earnings release and presentation.

With that, I will turn it over to Tom.

Thomas Polen

Thank you, Shawn, and good morning, everyone. Earlier today, we reported strong Q4 results with revenue of $5.3 billion, up 5.6% and 27.3% growth in adjusted EPS to $4.15. For the full year, we delivered $19.5 billion in revenue, up 3.9% and 6.7% growth in adjusted EPS to $12.70. Growth remained broad-based with momentum across all our businesses. Excluding the Alaris prior year comparison, we delivered high single-digit revenue growth in Q4 and solid mid-single-digit growth for the full year. Growth was led by the key platforms where we've been investing, including advanced patient monitoring, PureWick, advanced tissue regeneration, biologic drug delivery and roll a pharmacy automation, all of which delivered double-digit growth with accretive margins in both Q4 and the full year.

Importantly, fiscal '26 marks a significant milestone. completing BD's transformation to a more focused med tech company with the separation of our Life Sciences business. New BD is doing exactly what we designed it to do. demonstrating the growth and earnings potential of our focused portfolio through commercial and innovation momentum across our key growth platforms, delivering strong operational execution and the expanding impact of BD excellence. Before we get into more details on the quarter, I want to highlight our recent landmark partnership with the U.S. government, which reflects BD's important role in the U.S. health care infrastructure and a shared commitment to expand domestic manufacturing capacity and strengthen access to essential medical technologies. Through this agreement, we committed to invest $19 billion in the U.S. over several years with $3 billion of the overall investment directed toward manufacturing expansion.

Importantly, this does not represent incremental investment for BD, rather a reprioritization of investments toward the U.S. to support domestic manufacturing and supply chain resiliency. The partnership also provides relief from future tariffs imposed under Section 232 on covered BD products and inputs, subject to the final scope and implementation of any future Section 232 actions and BD's achievement of agreed milestones. We've already mobilized the organization and begun taking action to deliver on these commitments.

Turning to our new BD strategy. We're seeing clear progress against our 3 strategic pillars: compete, innovate and deliver. Our growing commercial innovation and operational capabilities are strengthening the quality of our growth while improving earnings power and cash flow. Starting with compete. We've been raising the bar on commercial execution across BD, investing in every part of the commercial flywheel. That spans talent, AI sales tools, a disciplined sales process and new pay-for-performance compensation plans, all powered by BD excellence and a relentless focus on solving customer challenges with speed and urgency. In Q4, this translated into measurable outcomes across the company. Within Connected Care, commercial execution continued to drive share gains and new adoption across all platforms. In advanced patient monitoring, sales force investments are driving uptake of HemoSphere Alta that contributed to strong capital growth in Q4. APM continues to perform well ahead of the deal model, generating one of its highest annual growth rates in the last 20 years. while significantly expanding margins under BD's ownership by applying BD excellence in APM manufacturing. Alaris finished the year with strong competitive momentum, gaining additional share in Q4 and more than 250 basis points for the full year.

Dispensing also continued to gain share. With strong Pyxis Pro order momentum and a 95% attachment rate of our new Incada AI platform. This strong early adoption reflects high customer interest in our new BD AI platform and supports our strategy to build recurring software, analytics and AI revenue. In pharmacy automation, incremental investments we made coming into the year are delivering results. We're seeing increased central fill win rates and an improving growth outlook aided by the recent U.S. launch of BDV MAX. We exited the year with strong commercial momentum, winning all 6 central fill opportunities we competed for in Q4 with VMAX attached to every sale, reinforcing the strength of our portfolio in the growing U.S. health care system central fill market.

In biopharma systems, we expanded our position in next-generation biologic drug delivery including continued momentum in delivering GLP-1 therapies. In interventional, incremental commercial investments are translating to stronger growth, with PI accelerating each quarter throughout the year. In UCC, PureWick delivered another quarter of double-digit growth, driven by continued adoption, competitive wins and momentum in the VA channel.

Across the portfolio, we're seeing our commercial investments translate into stronger growth and competitive performance. We've added resources in priority areas, introduced new tools, applied BD excellence to commercial execution and better aligned incentives with our growth priorities. These actions are raising execution across new BD.

Our second priority is innovate. We're concentrating investments in attractive markets where health care needs BD most and where we believe BD can create sustainable competitive advantage. This is in connected care, enabling the shift in newer, low-cost settings and advancing the treatment of chronic disease. Earlier this year, we moved more R&D resources and decision-making closer to the businesses. We increased investments behind our 6 key growth platforms and our pipeline is expanding. We also deployed BD excellence into R&D this year and are introducing new products faster, having compressed launch times by an average of 10 months.

In Q4, we received FDA approval for Liverty TIPS stent graft, and we're seeing strong customer interest. In a market that's seen limited innovation for many years Liverty brings enhanced ease of use, the broadest range of lengths and compelling clinical data, broadening BD's presence in the approximately $2 billion global venous market, which is growing high single digits.

We recently received 510(k) clearance for Phasix ST parastomal. a first-of-its-kind resorbable mesh designed specifically for peristomal hernia repairs. It's an underserved market with significant unmet clinical needs. With the launch expected in the first half of fiscal '27, this innovation further expands our advanced tissue regeneration portfolio and strengthens our position in the $1.8 billion served market.

We're increasingly seeing the benefits of the strategic choices and investments we've made over the last several years. Combined with our strength and innovation capabilities and execution, we're building a robust pipeline and look forward to sharing more at our upcoming Investor Day next month.

Our third priority delivered is about operational excellence at scale. It's about improving quality, service, productivity, margin and cash flow. Through BD Excellence, we've built one of the most resilient supply chains in our industry, which, combined with our scale, has become a meaningful competitive advantage. In fiscal '26, we delivered approximately 8% gross productivity in our plants with customer service levels above 90%. This was driven by more than 2,000 Kaizen events, resulting in higher manufacturing efficiencies and raw material savings as well as ongoing network optimization.

We are also generating value from the $200 million cost-out program launched at the beginning of fiscal '26 with 100% of the savings now identified.

Turning to capital allocation. Our disciplined framework remains unchanged. Importantly, we're seeing our operational progress translate into stronger cash generation. as free cash flow improves, so does our capacity to invest organically, return capital to shareholders and pursue focused tuck-in M&A. This will continue to increase as we drive towards our 90% free cash flow conversion target over time.

In summary, fiscal '26 was an important year for BD. We completed our portfolio transformation to a pure-play med tech company. We strengthened execution and increasingly saw the benefits of the strategic choices and investments we've made over the last several years. Our differentiated growth platforms are strengthening our portfolio and expanding our opportunities for growth. We enter fiscal '27 with a more focused portfolio, and we have confidence in the underlying trajectory of new BD and our path towards sustainable mid-single-digit growth.

Looking ahead, we see a compelling opportunity to combine that growth with continued earnings expansion and a step change in cash flow generation to drive long-term value creation. We are still early in realizing the full potential of new BD, and we look forward to laying out that opportunity in greater detail at our Investor Day on December 10.

With that, I'll turn it over to Vitor to provide more detail on our financial performance and guidance.

Vitor Roque

Thanks, Tom, and good morning, everyone. We delivered a strong quarter with $5.3 billion in revenue, up 5.6%. Excluding the Alaris prior year comparison, revenue growth was high single digits. As Tom highlighted, performance was broad-based, driven by continued double-digit growth across multiple key platforms and strong U.S. performance. .

Medical essentials grew 5.9%. In MDS, solid mid-single-digit growth was driven by share gains and health utilization across the vascular access management portfolio. In specimen management, high single-digit growth was driven by share gains across the BD Vacutainer portfolio, new supply capacity and incremental demand as customers continue to work through competitor disruptions. Connected Care grew 2.1%, led by double-digit growth in advanced patient monitoring with strength in both capital and consumables. MMS declined low single digits due to difficult prior year comparison in Alaris Capital. Excluding the Alaris comparison, MMS delivered mid-single-digit growth, driven by strong infusion set performance from Alaris share gain pull-through and strength in roof pharmacy automation.

Biopharma Systems grew 7%, driven by continued double-digit growth in biologics led by GLP-1s and moderating vaccine headwind. Interventional grew 7.6%, with high single-digit growth in peripheral intervention and UCC and solid mid-single-digit growth in surgery. In PI, growth was led by peripheral vascular disease and oncology, reflecting strong commercial execution and new product launches. UCC was led by continued double-digit growth in PureWick while surgery benefited from double-digit growth in advanced tissue regeneration.

Turning to the P&L. Adjusted gross margin was 56.8% and adjusted operating margin was 28.6%, up 180 and 280 basis points, respectively, versus the prior year. Margins benefited from productivity gains through BD Excellence in favorable mix, while we continue to invest in selling and R&D to support our long-term growth strategy. Adjusted EPS was $4.15, up 27.3% and ahead of our expectations, reflecting our strong revenue performance and disciplined execution.

For the full year, adjusted gross margin was 55.1% and adjusted operating margin was 25%, down 10 and 20 basis points, respectively, versus the prior year. This was driven by a 90 basis point impact of tariffs, mostly offset by our work through BD Excellence in favorable mix. Adjusted EPS was $12.70, up 6.7%.

Turning to cash flow and capital allocation. We are encouraged by the progress we made in fiscal '26 and the momentum heading into Improving free cash flow conversion is expanding our financial flexibility, enabling us to invest in growth, return capital to shareholders and pursue focused tuck-in M&A. Full year free cash flow was $2.9 billion, an increase of 42% versus the prior year. This reflects lower working capital and nonoperating cash items such as Alaris remediation outlays. Including separation costs, free cash flow conversion increased from approximately 57% to 74% in fiscal '26, and we expect another meaningful step up this year.

In fiscal '26, we returned $3.6 billion to shareholders. This included approximately $2.4 billion in share repurchases with $183 million repurchased in Q4 using proceeds from recent tariff refunds. We also paid $1.2 billion in dividends, and earlier this morning announced our 55th consecutive year of dividend increases. Finally, we paid down $2.4 billion in debt and ended the year with 2.7x net leverage.

Moving to our fiscal '27 guidance. Starting with revenue, we expect low single-digit growth for the full year. Based on current spot rates, currency is estimated to be a headwind of about 70 basis points. As previously discussed, this reflects an approximate 200 basis point impact from the Alaris capital comparison. Excluding this impact, we expect mid-single-digit growth at the midpoint of our guidance.

Moving down to P&L. We expect adjusted operating margins to be roughly flat year-over-year. Our adjusted tax rate is expected to be between 16% and 17%. Weighted average shares outstanding for the full year are expected to be approximately $273 million. Adjusted EPS is expected to be in a range of $13.10 to $13.30.

As you think about fiscal 2017 phasing, we expect Q1 revenue growth to be at the low end of the range, with the first half expected to be in line with the midpoint of our full year guidance. As for earnings, given our Q1 revenue seasonality annualization of last year's commercial investments and inflationary impacts, we expect Q1 adjusted EPS to be between $2.32 and $2.37. We expect earnings growth to accelerate in Q2 and the second half of the year.

With that, I'll turn it back to Tom.

Thomas Polen

Thanks, Vitor. Before we open the call for questions, I want to take a moment to recognize our associates around the world. Completing the Life Sciences separation, while simultaneously executing against our new BD strategy, require tremendous focus and commitment across the organization. Our strong finish to fiscal '26 reflects their work, and I want to thank each of our associates for everything you've done. We enter fiscal '27 with a more focused portfolio, clear priorities and confidence in the long-term growth, earnings and cash flow potential of the new BD.

With that, let's begin the Q&A. Operator, please open the line for questions.

Operator

[Operator Instructions] Our first question is from Patrick Wood with UBS.

Preguntas y respuestas

Patrick Andrew Wood

If I take a step back and look at it, it looks like a decent chunk of the growth that you guys have is coming from investments, stuff like the sales force in PI and things like that, helping you to take share -- so I guess, I'm sure you'll chat about it more at the Investor Day. But big picture, how are you thinking about the rate of investment to help drive that top line relative to margins? And is it just that you've got a flywheel going on the excellence that enables that recycling? Just how are you thinking about the interplay between the investment for the top line and the multi structure, big picture.

Thomas Polen

Patrick, thanks for the question. And I'll start off and then I can turn it over to Vitor. We are, as you said, really pleased with the momentum that we're seeing, particularly in the growth drivers that we've been investing behind. You could see ex-Alaris, about 7% growth in the quarter. led across essentially all of our growth platforms performed very strong and where we've been investing. We invested in the APM sales team, you saw near 20-year high in the quarter. Certainly, those investments help fuel that. Same thing in PI, same thing in UCC. Obviously, capacity investments that we had made in the past in our biologic capacity in farm systems you're seeing play out with a strong quarter there at 7% growth, driven by our Biologics business and some stabilization of the vaccine space.

So we're going to continue focused investments there. Obviously -- we obviously absorbed tariffs this year, which was meaningful. We expanded margins outside of that, and we're going to continue to take a prudent approach to making targeted investments behind our growth levers. We've reallocated R&D as well behind those growth levers. We've been doing that over the last several years. We're seeing those pay off. We're going to look forward to sharing more. on our pipeline and the momentum in that at Analyst Day on December 10. But we expect that we will continue to -- we will continue to drive operating margin expansion as we go forward as well. Obviously, again, you've got a tariff dynamic this year and the Alaris grow over.

But as that normalizes, we're going to continue to see the mix benefits of that growth -- the growth drivers that we're investing behind because they all come with accretive gross margins to the company. So the larger that those growth platforms become a percentage of our revenue, actually, it has a flywheel effect on our gross margin. Obviously, BD Excellence has a flywheel effect on our gross margin, and then that flows through the P&L as we continue to be very prudent. You saw the cost actions that we took on G&A. We continue to do additional work there as we're streamlining and simplifying and focusing the company very aggressively as part of new BD and then making targeted investments in selling as well. So Vitor...

Vitor Roque

No, I will just complement, I think we are very happy with the investments we have made during FY '26. I think that clearly generating results from a top line perspective, but also on the bottom line perspective, given Tom was explaining, we were able to cover topics like tariffs and other types of pressures we had to navigate. But when we see our advanced patient monitoring business is growing double digit in FY '26, our PI sales force expansion continued to result very strong growth. Those are all going to be accretive for us as we move forward, not only in '27 but beyond '27 as well. '27 as we expected, we -- and it's part of our plan we are expecting to have an inflationary environment into our numbers, but our continued mix and efforts on BD Excellence will result the benefits of offsetting those and continue to expand our operating margins down the road. .

Operator

And we'll move next to Travis Steed with Bank of America.

Travis Steed

Congrats on the good quarter. Maybe I'll ask on the guidance. Q1, obviously, you focused this morning. I heard you say it was below the full year guide. I don't know if there's any more kind of quantification on the top line in Q1. But also just trying to understand I think your guidance philosophy, Vitor, you've been executing really well since you've been CFO. So how much of this is conservatism and then the Q1 being below, how much of this is just like functional stuff from like Alaris and other stuff that's kind of very explainable.

Vitor Roque

Sure. Thanks, Travis. So yes, so I'm completing now my first full year as the CFO, I'm very happy with the results we have delivered to the organization and to the shareholders. The philosophy continues to be the same. I want to make sure that we have a guidance that is responsible and prudent and we can deliver during the year with upsides to our shareholders. If we think about Q1 specifically, there are a few dynamics there that is -- that are important to explain. So first, we have very good momentum coming out of Q4, and that momentum is continuing as we head into Q1. If we see segments like biopharma or interventional or even medical essentials, we continue to see good momentum there.

What we have in Q1 is the dynamic with the Alaris as you mentioned. We mentioned that Alaris is about 200 basis points of pressure for the year. In Q1, Alaris is more acute than the rest of the year, about 250 basis points just in Q1. That includes a little bit of a pressure on the connected care number. We also have a dynamic happening because on our APM business first, we have very great momentum in APM. We continue to be solid. And we are coming to the conclusion of our integration and now we are going live with the systems inside APM. So we took a prudent approach to make sure that we reflect that like scale of the new system during that's another impact we had in Q1 that is putting our growth rate at about the low end of the range. But in general, the momentum is very positive. The orders are very -- is coming in. And the APM actually, we are tracking this on a daily basis now. We have very good momentum. We are seeing orders coming and actually shipments happening. We just took a conservative approach from an APM perspective. But other than the MMS situation and the APM, we feel very good about the numbers, the underlying -- of the other segments we have in the Q1 as well.

Thomas Polen

Travis, I think you know that clearly, and as Vitor shared, right, is it's really those 2 factors. We see strong momentum continuing across the company, a little bit higher grow over in Alaris and then the APM. And I think kudos to Vitor, as we -- again, we're really pleased. We've had a lot of focus. Vitor's brought around our forecasting process. And we want to make sure that we continue that and set it up right going into '27. And I think with APM, it's a big cutover from the Edwards system going live for us. Many times, companies don't kind of plan that in their numbers. We assumed, hey, we want to make sure if everything doesn't go perfectly smooth. We're going to assume that some room in that, and so orders are still coming in. There's no demand difference at all. It's just we may end up shipping a bit more in Q2 than in Q1 with that. Now with that said, we actually went live this week, and things are going as planned. So right, there could be actually -- we'll continue to play that out. And if it goes even better than we expected, we could see a little bit more rebalancing between Q1 and Q2 on the positive of Q1, but we'll -- again, we want to take a prudent approach to do that the right way starting FY '27. But those are the only -- those are the 2 dynamics.

Operator

And we'll move next to Vijay Kumar with Evercore ISI.

Vijay Kumar

Congrats on a nice print here. Tom, I just want to go back on this performance here in Q4, 5.5-ish, close to any onetimers or timing because this came in well about, I just look at the back half of '26 performance, you guys have done 5 organic inclusive of headwinds rates. So with that kind of execution why is 2% or 2.5% the right number for fiscal '27?

Vitor Roque

Vijay, it's Vitor. We are very pleased with the back half performance of the actually with the entire year performance in '26 with the acceleration of 5% in the back half of the year. from going into '27, as we mentioned, we want to make sure that we take a prudent approach from our guidance -- of course, we -- as Tom mentioned, I'm spending a lot of time with the teams in terms of forecasting, making sure we have the right processes in place and across in our numbers. As pressure increases, as I mentioned, 200 basis points with a more acute impact in the first half of the year. But it's a matter of making sure that we have a number that is a responsible guidance that we can deliver and even exceed during the year. That's what we are looking for heading into FY '27.

Thomas Polen

Thanks for the question, Vijay. But we are very pleased with how those -- our execution is playing out. And again, as part of our BD excellence strategy, we were really doubled down on commercial excellence in FY '26, right? Whether or not it's our comp plans our hiring approaches, our training approaches, our digital systems, we are seeing benefits of that coming through complemented by physical expansion of more people selling behind our key growth platforms. And you can see that momentum as it built through the back half of the year.

Operator

And we will move next to Robbie Marcus with JPMorgan.

Robert Marcus

Congrats on the quarter. Maybe a more macro-related one. Tom, you're very plugged in through AvMed into D.C. The sector was up a lot yesterday on the blue wave maybe speak to any of the immediate or intermediate term changes that you could foresee with Congress held by the Democrats. And then also maybe on the other side of the world, in Europe and China, just speak to any trends you're seeing from health care policy. We've heard a number of your competitors talk about negative pricing in China. It'd be great just to get a global overview.

Thomas Polen

Yes. Thanks for the question, Robbie. So just from a U.S. perspective, I can start with just some utilization comments and then I can mention on the political side and then we can go around to the rest of the world. Just from a utilization perspective, obviously, we've got a very unique view there, as you know very well, as our products are used across essentially all types of procedures in all care settings. And so particularly indicators like our blood collection tubes, syringes, catheters, kind of core products that have broad use, they're fantastic. utilization indicators. We -- in that regard, we continue to see strong utilization in the U.S. U.S. MDS, 4%. That's a solid number. And SM was 9% growth. A bit of that was because we've had new capacity come online and some competitive share gain. But underlying that, was still very solid, and we continue to see more tubes collected per patient, which is an indicator that we're seeing more testing going on, which is a good sign of health care utilization.

Capital, we continue to see it constructive, I'd say, but selective and they're prioritizing high ROI investments. We're seeing that come through in really robust growth in our pharmacy automation business. We're seeing it come through with Pyxis Pro doing very well. And you heard us comment that we have a 100% attachment rate of our new AI platform, which is an upcharge from Pyxis Pro. Everyone's choosing it, though. And that AI platform is bringing new capabilities that help customers reduce their inventory levels, improve their cash flows, improve service levels for patients for drug availability. And I think that's also a new revenue stream from a SaaS model that we're going to continue to be focused on building. But I think it's an indicator that, again, the solutions that we have fit well with the needs of hospitals today, and we're seeing strong continued capital placements.

APM had a great capital quarter and actually significant acceleration. and we don't see a slowdown in that. As we think about the government, obviously, we've been around for 125-plus years. We work with any party levers and we're focused on helping patients and helping advance health care. I think clearly, there's been a perception that Democrats appreciate investing and the value of health care more broadly, I'm assuming that's what happened yesterday. But we're focused on continuing to do our work around optimizing access for our solutions and technologies. Obviously, we're focused on executing our tariff agreement with the government, which doesn't change and making that come through. And obviously, that opportunity is not in our guide for FY '27. And if 232 are implemented would be an upside option that exists within our current guide.

As we think about around the world and in China, China is pretty stable for us. So I know there's organizations that have talked about it in their earnings and maybe it's new for them. fortunately, unfortunately, it's not new for us. It's something we've been managing for a number of years. On a positive side, China now is a much smaller portion of BD. We really don't see it as a separate headwind this year. It's just part of our base business dynamic. It's kind of a continuation of last year. It's not an incremental item, and so we continue to -- we're just executing that, focusing on our commercial excellence and driving that, but we don't see that as anything incremental to us.

And then in Europe, well, we saw a strong performance in Europe. And again, we're seeing strong partnerships with governments, particularly around medication management. We've had some great performance there is pharmacy automation in Europe, you heard us call out ROA. It did exceptionally well double digits for both the quarter and the year. Again, that's a labor improvement, a cost improvement. We see Europe actively consolidating pharmacies, both in the hospital and health care systems to these mega centers, which are all requiring our pharmacy robots to get put in place. We're also seeing solid underlying demand on the consumables stream. And you can see that across our different businesses. So we expect that to continue. I think our team feels good as we're going into '27 in Europe as well. And we're not seeing a specific change against the solutions that we offer. So thank you for the question.

Operator

And we will move next to Matt Taylor with Jefferies.

Matthew Taylor

So I wanted to follow up on your partnership with the government. You noted the shift in spending and potential relief from 232. I know we don't know what the 232s are going to look like, but I wondered if you had any insight into that? And if they do come to pass, how does the relief work and what's contemplated in your forward guidance in regards to the agreement and the tariff treatment specifically?

Thomas Polen

Sure. Yes, thanks for the question, Matt. So a couple of things. One is just to reiterate, when we did receive refunds this year, they were not -- they were excluded from our adjusted results, right? So there is no growover for us from a tariff refund. So that's a positive, right? So any benefit on tariffs would flow through as a positive in our earnings. Our initial guide assumes tariffs generally in line with FY '26. So we have no benefit of that deal in our current guide. And the rationale for that, obviously, is just because the 232s tariffs, the product scope and the effective timing hasn't been finalized. We didn't think it's appropriate to include that in our outlook at this time. Obviously, the government has made commentary that they would expect that to be in place by the end of the calendar year. We're staying in touch on that, but we're watching that just like you. And if and when that is communicated, we'll look to provide an update our guide at that time.

Obviously, the Section 232 tariffs are intended to cover medtech overall, which would include many of the products. that we have and that we currently pay tariffs on. And as we've shared, our agreement would be that any products that are in those 232s that we would not pay any tariffs on. And so that would be an upside to what our current assumptions are. if and when that occurs. As you also said, it's not incremental spending for us. We're reallocating investments that we wouldn't typically make globally, and we've concentrated those in -- not only in the U.S., but often in areas where we already have focus. So in Nebraska in our Columbus plants; in Texas in our El Paso plant; in South Carolina and our Sutter plant, et cetera. And so we're going to continue to execute on those. There's also benefits even just from a global supply chain as much of that is going to be servicing the U.S. And that actually brings up our ratio of the products that we make in the U.S. and sell in the U.S. within our Medisentials portfolio. were those essential medical devices to about 80%, right? And so that's a positive as well, too, as we think about shipping, et cetera.

So we'll stay -- we'll keep everyone updated, obviously, as soon as anything is announced on the 232 we'll share implications of that for BD, but I would view it as a positive option that's kind of built into our outlook right now.

Operator

And we will move next to Larry Biegelsen with Wells Fargo.

Larry Biegelsen

Congrats on a nice quarter here. So Tom, you have an Analyst Day coming up in December, the first one in a while. I'd love to get a quick preview to help set expectations, I think the expectation is for return to mid-single-digit growth once the Alaris headwind goes away in fiscal '28. Is that fair? And do you think you can get leverage on the P&L after fiscal '27?

Thomas Polen

Yes. Thanks, Larry, for the question. I think to your point, and sometimes, we joke some of what we share financially may not be overly exciting because it's in line with just what you said, right? We will be communicating and expect we'll be back at mid-single-digit growth, just like we are -- we were in FY '26 ex-Alaris headwind. We were about 5% growth. Our current guide at the midpoint is mid-single-digit growth starting the year, ex-Alaris headwind and the Alaris headwind goes away as we go into next year. And with that, we will -- would expect just a straightforward all-in number will be ex-Alaris headwind, and it will be mid-single digit.

And we do expect -- obviously, there's about 500 basis points of earnings -- EPS pressure from the Alaris headwind this year. That also goes away as we go into next year. And so we will absolutely have margin expansion as part of what we'll share at earnings. That's in line with what we've been communicating, mid-single digits with solid continued margin expansion, increasing cash flow and a very disciplined approach to value creation with that cash flow. So we're excited for the upcoming event. It's an important moment for us to provide clarity on the next phase of growth for BD. We're going to provide you an update with a strategic update on overall our portfolio. We'll go deeper and highlight those key growth areas of the business that we've been investing behind. We'll reveal some new innovations in that space that we haven't shared to date that we're excited to buy.

We'll give an update on BD excellence and how we're applying it not just in operations and how it's going to drive continued gross and operating margin expansion over the mid and long term, but also how it's benefiting us in R&D and how it's going to be benefiting us increasingly in commercial, and you started seeing that happen this year. what will double-click into our capital allocation framework, which is in line with what we've already communicated. And we're going to give long-term financial targets that govern that strategy. So we've got a product showcase as well planned that folks will be able to walk through and touch and feel and discuss our innovation firsthand. And I'm confident that the event is going to only add conviction to our investment thesis. So we look forward to seeing you and everyone else there.

Operator

And we will move next to Josh Jennings from TD Cowen.

Joshua Jennings

Echo the congratulations on a strong quarter. I wanted to just touch on biologics, one of the largest potential long-term growth opportunities in health care. BD's very well positioned to capitalize. And how should investors think about the durability of growth for your at Biologics franchise, GLP-1s and then beyond GLP-1s?

Thomas Polen

Yes. Thanks, Josh. You saw strong performance in Biologics throughout FY '26, and we expect continued strong performance through '27 and beyond. I think we're really pleased, a, with the portfolio of GLP-1s that we have, both partners that we work with today who continue to do very well. but also the portfolio that we've built of the new novel molecules coming to market, which we have a very high share in from a win rate perspective and also the biosimilars. And we are starting to see benefits and we'll see a bit more of benefits of biosimilars in FY '27 than we saw in '26. And I think the first one of meaningful size is the -- is in Brazil. We put out a press release on that.

And what happens, we're going to see just what we've said, as products go to biosimilars we not only can capture the syringe itself inside, but we also have the opportunity to capture the auto injector, which is several times higher ASP. And for example, our Brazil partnership is for the pen, which again is several times higher per unit value that we capture them if we were just selling a syringe. So we've got more of those coming. Again, we've signed now nearly 100 deals in that space, and we'll expect those to continue to roll out over the years ahead. But we do see some of that starting in FY '27, and that will be a positive.

Now outside of GLP-1s, we continue to have strong success. We have a very high win rate in Biologics overall, one of the highest win rates of any product line in the company, in fact. Our solutions are very unique there, whether or not it's our SSI cross-link coatings that we use for biologics, our unique needle technology for biologics or Neopak product line, which is best-in-class there, and we see people standardizing on it for biologics. And obviously, we've got capacity that we invested in. We made a pretty bold decision a couple of years ago to put $1.2 billion in capacity. It was right during the middle of the pandemic. We got questions then when we did it. But we're seeing it pay off because we've got state-of-the-art lines now. that are producing really high-quality product, which is really important for these high-value biologics, and it's helping fuel that win rate.

So again, we saw a good performance in the quarter. We expect that to continue as we go into Q1, as Vitor mentioned, we expect farm systems to continue to have that very strong performance. I think maybe just one other thing I'd say on farm systems, and it wasn't in the question, but we did see -- we do expect vaccines to not be a topic that we're talking about in '27. It moderated in the quarter. It still had a decline. Vaccines declined about 11% in Q4. So basically, more than cut in half what we had seen prior in the year. but we expect that to basically totally dissipate in FY '27 and not be a headwind to the pharm systems business. So we see that as a positive. Really the only thing for 27 is Alaris grow over, and we're going to continue to gain share in Alaris. We continue to do extremely well there. It's not a performance topic, and we'll see that totally disappear as we go into '28. Thanks for the question, Josh.

Operator

Thank you. And we will move next to Joanne Wuensch with Citibank.

Joanne Wuensch

Two quick questions. Your guidance for fiscal year '27 is for operating margins to be flat year-over-year. And I appreciate the commentary that, that should resume expansion. -- in the following year. Can you tease out a little bit between gross margins and operating expenses, so we can really maybe think about the components of that? And then my second question has to do with AI. That those initials are being springed in here and there as I'm talking to are more medical technology companies and hoping you can sort of give your view on how that can help your business and your patience.

Vitor Roque

Sure. I'll start with the margin, Joanne. So we are very pleased with the efforts we did in '26, and those efforts are going to continue our margin -- gross margin and operating margin, as we mentioned, is going to be roughly flat, and it's going to be similar between gross profit and operating margin. So there's not going to be a big difference there. We continue to make some strategic investments on our commercial and R&D organizations to continue to kind of feed the flywheel of positive growth on the platforms we have. So we are not hindering any investments that are going to drive that future growth. We expect -- but we expect GP to be roughly at the same level as operating margin, roughly flat. And that's -- we have -- as we mentioned before, we expect '27 to be inflationary environments. And that's according to what we have said, nothing has changed from our assumptions there. So that was part of our guidance and plan all along. .

But our initiatives around BD excellence with supply chain, but also our capacity of increasing prices are going to be used in order to kind of mitigate those headwinds we have from an inflation perspective. In operating margin, we continue to do the investments. I think it's important to remember the Alaris impact on our margins. It's -- as Tom said, it's about 500 basis points on EPS, but also in margin, we are talking about 60 basis points of pressure from Alaris on our operating margins. So excluding that, we will be actually expanding the margins in FY '27 as well.

So we feel very good about the buckets of where we are heading into FY '27 from a margin perspective. We feel like we have all the plans in place, and we are going to continue to execute the during '27.

Thomas Polen

Thanks for the question also on AI. Joanne. I can address that. So we do see significant opportunities from AI, and we've spent a lot of time focusing specifically where we want to apply that to maximize return and value creation. On the R&D innovation, we'll share more at Investor Day, but obviously, the launch of our [indiscernible] AI platform for all of our products in BD is a major milestone in that. And again, we're seeing 100% attachment right now on all new Pyxis placements, which is going to be embedding that across health care systems quite rapidly. All BD products, right, will end up feeding their data into Ankata. And we have plans to continue to not only have that be a solution for our customers to reduce costs but also improve clinical outcomes. And we'll share more about our road map and the types of indications that we'll be going after there. But imagine some of that will be in line with what we've talked about in the past, including taking data from sensors on patients that we have now access to from APM with all of the drug delivery information that we have from our platforms and looking to improve patient outcomes there while also improving costs from drug inventory, drug waste and availability to improve nursing workflow.

Beyond what we're doing in AI in products and APM is -- that's actually a big part of their growth is -- are all the APM AI algorithms that they've been deploying that are helping improve patient care. But we're also applying AI within the company. to make us more efficient and to deliver better outcomes. We've focused on a few specific areas there rather than just peanut butter spreading it. And one of the #1 areas is in manufacturing. We've communicated that we've recently begun deploying a new AI platform across the company. We shared our product name for it. It's the Cognite platform, though, is the AI platform that we're deploying across manufacturing. And that really is an end-to-end platform that is going to help us automate and improve everything from the demand planning to the production planning to the inventory levels to supply levels to our customers. We've begun deploying that across our manufacturing plants, and we see that in partnership with BD Excellence as helping to catalyze the next phase of opportunity for us from a cost efficiency perspective and a cash flow perspective.

So -- and it's also allowing us to get rid of a lot of other platforms at the same time as we consolidate that from an IT tech stack perspective. The second major area that we're focused on is our tech stack within our sales organization. And we've started using AI and everything from our hiring and screening practices. We've got this really interesting new tool that we're using and standardizing on that uses AI to understand the behaviors of sales reps that we're hiring and making sure that they match the characteristics that we've done research on that match with the highest performing reps and making sure that we're systematically bringing those on with no bias. We're using AI for sales planning so that they can practice and prep before they go visit with customers. as well as helping them analyze the sales performance data and identifying information to tee up to our sales team where there's opportunities or anything that they need to address, so we can be faster paced and more on top of the information.

So we're really excited about what we can do there on the commercial side. We're doing some things on the R&D side where we set some goals using AI, where we can remove inefficiencies, particularly on our sustained engineering work that we do. We see there's a lot, obviously, across the breadth of our portfolio and simplifying that with AI. We have plans on being able to reallocate more sustaining engineering spend into new innovation spend and AI is a piece of that. And then obviously, over time, there's opportunities on just G&A efficiencies. But as part of that, I'd also just call out that we spent a lot of time making sure that we have the capabilities to advance the new BD in a way that fully leverages the opportunities of the technology that's becoming available today. And for us to be at the forefront of that within medtech. And so this past year, we reallocated actually all of our central R&D resources that we're doing anything digital. We moved into the Connected Care business, and we actually created an AI COE in Irvine, California, that's under below, and that's off to a great start. And we also brought in a new CIO or who joined us from Lenovo, where he's got a ton of experience in this, obviously, coming from the tech industry, which I think is certainly more advanced than we see med tech overall. And we're really pleased to have Art with us sharing his experience and his bar of excellence an opportunity that he sees in leveraging AI to improve business performance and competitive advantage.

So we're looking forward to continuing to provide more updates on that, but we certainly see opportunity there. And we'll share more at Analyst Day. Thanks, Joanne.

Operator

And we will move next to Michael Polark with Wolfe Research.

Unknown Analyst

Tom, I appreciate all the color already on biopharm systems. I'm going to ask 1 follow-up. One of your large competitors earlier this week in glass packaging caution. -- on GLP-1 revenue in 2027, personally, suggesting it will be down. Personally, I was done category -- injectable category is growing a lot, even with rise of orals and format shifts. -- you sound more optimistic here on GLP-1s for that business. Can you help further square this? Are you taking share? Is it something about customer mix or product mix. I'd welcome any further color about kind of the -- your enthusiasm still and the message from one of your competitors.

Thomas Polen

Yes. Thanks for the question, Michael. We don't obviously comment on specific competitors. But what I can say is, again, we're really pleased with our very high win rate in the category. It is exceptionally high for new molecules coming to market. It's very high for biosimilars. And customer mix is very important here, right? Obviously, there's companies in GLP-1 that are winning differentially than others. And the mix that you have is really important there. So just leave it at that, we continue to see solid growth in GLP-1s looking forward.

Operator

And we will move next to Chris Pascal with Barclays.

Unknown Analyst

Wanted to ask about capital allocation priorities in FY '27. You got some more debt coming due this year. this morning, you also announced an incremental share repurchase authorization. And it looks like maybe there's a little bit of buyback assumed in the guidance. Can you walk through what's in the outlook in terms of use of cash and how you're going to prioritize debt paydown versus buybacks versus maybe getting a little bit more aggressive on the M&A front this year?

Vitor Roque

Thanks, Chris. So we continue to be very focused on our capital allocation strategy. Earlier in '26, we mentioned that we are going to focus -- one of the top priorities of our capital allocation and share buyback and that has not changed. We will continue to execute that. In '26, as we mentioned in the prepared remarks, we returned more than $2 billion to shareholders via share buybacks and dividends. We plan to continue to dedicate a big -- an important part of our cash flow into share buybacks and return to the shareholders. Of course, that pay down, it's also like achieving the net leverage that we have been committing to is important. It's going to be a mix between debt paydown and increase on our income. But also we are leaving power for us to do focused tuck-in M&A, which is a very important topic for us. We're going to continue to build our portfolio in order to be that mid-single digit -- sustainable mid-single-digit growth company. But the priorities on capital allocation have not changed since we started this year in '26. We continue to focus on share buybacks and focus on taking M&A going forward as well. Thanks for the question.

Operator

And that will conclude today's question-and-answer session. At this time, I'd like to turn the floor back over to Tom Polen for any additional or closing remarks.

Thomas Polen

Okay. Thank you, operator, and thanks, everyone, for your questions and your continued interest and support in BD. We look forward to seeing you all on December 10 at our Investor Day in New York City and hope you have a great rest of the day. Thank you.

Operator

Thank you. This does conclude this audio webcast. On behalf of BD. Thank you for joining today. Please disconnect your lines at this time, and have a wonderful day.