Thank you. Yes. One additional disclosure that we needed. This session is not open to the press. There you go. All right. Wanted to thank Tom Polen, Chairman and Chief Executive Officer from Becton Dickinson. Appreciate your making the time. I know you're on the, you have a lot of different priorities right now, so very much appreciate your making the time to be here. I want to kind of start with, I think maybe a strategic topic that I get a ton of questions on is like, where are we in the biosciences or life sciences separation process?
Sure. We had shared when we first announced the separation that we would expect to announce the actual form of the transaction this summer, which remains on track. We said that's kind of an American summer between Memorial Day and Labor Day, and that continues. The other things that we've shared in the context of that, which is no different from when we announced, is that as you think about forms of separation, academically, there are three kind of macro forms of separation: a spin, a sale, and a merger RMT. We view that obviously two of those three do not have standup costs and also have synergies that you have the opportunity to participate in, and those two could create outsized value versus the third option. Obviously, that would be a sale or an RMT.
We continue through our process.
As you think about setting that deadline, how do you have control over the timing of the, I mean, it seemed like spin you can total, you could decide right now we're gonna spin or we're gonna do nothing or the other two, how can you control the timing there and how do you have the certainty that you can get an answer by the summer?
I think the other things that we've shared before is that we didn't start the discussion with the press release, that we had already had dialogue with a number of parties at the time that we put out the press release. We have a process by which bids are due, et cetera, at certain phases along that, and we're progressing through that.
Okay. In a scenario where, you know, I, I had a group, we had a group of investors in your offices in early May.
Yep.
And one of the takeaways, or at least feedback that I got from that meeting was, either the way people re-read the comments was either you're gonna proceed with a sale or you're gonna do nothing and that spin is sort of off the table. How would you, how would you report that as a?
I would say that we're focused on, obviously we wouldn't be in a process if we were doing a spin.
Okay.
Or if that was the focus. Those three options all can create shareholder value, but we're clearly focused on creating outside shareholder value if that opportunity.
Has anything changed in your sort of assessment of what would be an appropriate valuation given the move down in Becton stock?
No. We still view it as, and we would look at anything in terms of not only where the stock's priced today, but also historical value for the assets. They're phenomenal assets, right? I think that's always important to recognize is that these are our blue chip phenomenal assets with biosciences having likely the, not likely the best innovation pipeline in its history. We invented the category of flow cytometry, of course, with Stanford University, which is where that business is still headquartered very nearby in San Jose. With the FACS Discover, which is really an entirely new class of flow cytometers that have the ability not just to measure fluorescence, but now imaging and combine all of that. The only thing that does it on the planet is our FACS Discover. We keep launching. We just launched the A8 very recently. We started getting orders for that already.
That's a great business, you know, the leader in the category, in a, in a very attractive category. Obviously, you know, a leader in infectious disease and in molecular testing, a very attractive asset as well too. No, we view those as both attractive assets and we look at it both ways, as I mentioned.
You've obviously, you've been on the acquirer side of a number of acquisition, at least from time that I spent in corporate development. It's hard to get the buyer to think about a business outside of its current performance. How do you get people to see, you know, biosciences is obviously facing some cyclical pressures right now, which probably doesn't impact a five-year view, but how do you get people to see beyond current performance and sort of give you, you know, fair value for the assets?
Yeah. Obviously, anyone that's looking at those sec is already in those sectors, so they know them very well and they're staying in those sectors most likely. You know, for us, diagnostic systems, obviously, again, you've got our molecular continuing to grow double digits, bactec recovery moving in a solid direction. And then even in our bioscience, you've got clinical continuing to grow at a certain rate, and you've got the life science, you know, basically reset of the base. We, as you know, we saw pressure in life sciences 12 to 18 months after most of the market did because we were launching FACS Discover and that had an outsized demand at launch. You're seeing that impact us more this year while it hit most people last year or the year before.
Again, I think people would view and say, we understand those dynamics and you're coming to a base, and you have the opportunity beyond that, so.
The other question I've gotten is, are you committed to the businesses being separated together or are you willing to separate them in some form or fashion?
Yeah. No new news. We've always shared that those businesses, they really have no commonalities from a separate headquarters, separate sales forces, separate service organizations, separate manufacturing plants. You know, we can separate those. It's obviously easier for a single transaction, but there's no reason that they could not be separated.
'Cause it would seem like that would open up the aperture of potential buyers.
Sure. There are people that could be interested in holdco or separate. Yeah.
Okay. Last one, I promise we'll talk about the business, but this topic is one of the ones we get the most questions on.
Sure.
As you kind of do your own internal scenario planning and you contemplate one of these outcomes, what are some of the things you're sketching out as use of proceeds in a scenario where you do execute a sale, and how are you thinking about prioritizing use of that capital?
Yeah. Obviously the amount of capital would vary based upon the type of transaction. I think just a general statement on capital is that, you know, first off, we continue to be committed over the midterm to a leverage ratio of in that two and a half times. It does not mean you need to go there immediately, but we are very much on track for that just naturally as well too. Just as a note, the event by itself is not a massive leveraging event. It is about half a turn if we did not pay any debt down, right? That is what you are talking about.
Meaning a sale?
Yes. It was just a separation.
Oh, just a separation.
It's about half a turn if one didn't pay down debt. It is not a massive leveraging event in and of itself.
Oh, your leverage ratio goes up 'cause you lose, you lose profits, right?
Correct. So as you just think about what you need to do to.
Yep.
In any case, regardless of those proceeds or our organic proceeds, certainly any proceeds and available cash we would use to buy back stock. Certainly at this and around this price level, there's no better investment that we can make than buying back shares.
Would you leave any dry powder on the balance sheet or you would, you'd be able to fund future M & A through?
I think we'd be hyper-focused again in this environment, even regardless of a transaction, just with our organic cash flows of buying back shares. There's no better investment than buying back our shares in and around this stock price for sure.
Okay.
We have done, of course, a number of, we have done 20, you know, tuck-in acquisitions just since I have been CEO, and we are integrating in the APM business. That is going very well. We have been funding additional sales reps in that business. We funded additional R&D in that business. Of course, culmination is bringing together all the therapy information. We know what therapy people have been given through Alaris, through Pyxis, et cetera. Now we know the physiological response to the therapy, and we are beginning to, like, put the two together to be able to close loop more, the optimization of delivering that therapy. That is a project we have put several million dollars into fund.
We've got a number of other new things that we're moving through the pipeline on recent acquisitions that we've made, whether or not it's the acquisition of Tepha , for example, we're launching, you know, we've been getting new hernia meshes that are bioabsorbable approved. We just got umbilical approved a few months ago. We have the first GI application of using that biomaterial launching next year in peristomal. We just recently entered into the breast clinical, into a breast clinical study to expand there, and we've got two more indications for breast that we wanna move forward in there. The same thing holds true like Surgiphor, which is a companion product to ChloraPrep. We've got new products moving through the pipeline there. We've got them moving through, obviously, the PureWick acquisition that had happened.
We've got more innovations launching every year, and that list goes on through other products. Straub Medical, we're in development for a below the knee indication for that, a smaller French size. And we've taken a number of the tuck-ins that we've done, you know, MedBank, our non-acute Pyxis product. It's a great product, but you could never, it's never been integrated into Pyxis. Launching next year, MedBank users will be able to see, and IVN will be able to see all of the medications out at their ambulatory surgery centers, et cetera, through the same portal of Pyxis. We've been investing organically to start optimizing and getting more and more of a flywheel going from the tuck-ins that we've been doing. I think we feel really good about that and a strong innovation pipeline for 2026.
Again, I just use that to reiterate there's no better use of any cash in terms of.
Got it.
Just buying back shares.
Very helpful. I wanna go into the pipeline a little, in a little bit more detail, 'cause I think, you know, macro considerations now I think are overshadowing a lot of the underlying business dynamics, but I can't not touch on the macro. Maybe we could start with kind of the way you've been characterizing the business and maybe sort of, you know, paraphrasing a little, you have these sort of three problem children franchises, and then you've got the rest of the business. Maybe kind of break down the performance for us over the past couple of years, and then love to get in kind of the back half of the year here.
Sure. You know, I think one of the things that we recognize and discuss is we have a complex portfolio. We probably have one of the more complex portfolios in MedTech, and we've been simplifying that, whether or not it was the separation of Invetech, the separation of V. Mueller, now the separation of Life Sciences, really turning BD into a very focused MedTech company. With that said, today, of course, we are the only MedTech company with exposure to a few specific markets, right? We're the only MedTech company with exposure to the Life Sciences market. There is no one else. There is no other MedTech company with exposure to the pharma device market. We compete with pure play competitors in that space as well. Each of those spaces do have market, you know, macro factors going on.
As you look at kind of BD's trend over the last many years, go back to BD 2025, the start of that, you know, first off, we've been growing about a 5.6% revenue CAGR since we launched BD 2025 in 2021, and that's inclusive of the midpoint of our guide this year at 3.25%. Our base business over that time period has been pretty stable, particularly the last three years, and the swing factor has been essentially three dynamics. One is the slowdown in research spending, the destocking in the pharma, medical device channel, and then China, the VOBP. If you look back at BD historically, those three areas have typically been 70-130 basis points of tailwind, right? Those three areas have always been accretive growth drivers to the company, BDB, Pharma Systems, and China.
This year, those three factors are about 180 basis points headwind. It is basically kind of the base BD growing at about 5, and those three factors, you know, 180 negative to get you to the 3.25. Historically, if you go back to 2023, the rest of BD was growing 4.5. Those three added 130 basis points, and we were growing 5.8. They swung in that period of time, and they swung across the sectors, right? Life sciences is down versus where it was in 2023. Pharma destocking, you see that across the peers. In China, the VOBP, we see going through BD. I think what is most important is kind of, you know, where does it go from here? Again, we feel good about the base business and what we are doing.
We can talk about some of the drivers there, but obviously we're in the process of separating Life Sciences, which will change our exposure to that segment. It also will change our exposure in China. Today, 5%-6% of our revenue is in China. That will go down to about 4%. As we look forward, the largest segment in China is Life Sciences. And then you've got, and China overall, I would say within BD Interventional, we'd continue to expect the VOBP this year, where China's growing, declining about double digits, continue through 2026 for the VOBP pressure, particularly as it finishes through the BD Interventional business, 2027 then being a year for rebound. In Pharma Systems, we're already starting to see improvements there sequentially. We saw sequential improvements last quarter.
We strongly expect to see it, and we can see it now in our numbers, sequential improvement in Q3, and that can continue as, as now, of course, you know, since we've launched BD 2025, we've grown pharma systems about $800 million. It's now about half of that business is biologics, drug delivery. We are the world leader in biologic drug delivery fueled by GLP-1s. Just as a note, we do not include vaccines in when we say biologics, number of our peers do use that within their biologics number. We do not, and so it's a, you know, a sizable scale business there. That's how we think about those three factors and how they come off life science being separated, pharma systems, you know, back half of this year beginning to improve.
And China, still some time for VOBP to finish going through the.
As you think about the first half performance of the business, I think, you know, I appreciate, I think we all appreciate the royalty dynamic in Q2, but if you look at the first half of the year growing, I think roughly 2.5% ish between the two, between the two quarters, you do need a pretty big ramp to get into the back half of the year. It seems like two of those three businesses are facing incremental headwinds, especially like biosciences. Every headline you read about the NIH seems to be worse than the prior one. Now, who knows? Bark versus bite.
How should we think about the ramp from the 2.5% in the first half to sort of the implied 4.5%-ish percent in the back half of the year to get to the full year guide?
China's likely similar, right? Pharma systems, we expect some recovery in the back half of the year, not back to double-digit growth, but beginning to get back towards at least BD median growth rate versus being the lowest to that growth rate. We do have FACS, the A8 launch in which now, and I would say while the market remains constrained for overall instrument placements in the sector, what we see at that allowing, and we can see it now already, is increasing our win rate among that. One of the things that we can't control is the market environment for spending, but what we can control is our win rate within that environment, right? And new technologies allow us to win. They're gonna, so and so group's going to have a hundred things that they're going to buy.
We want that to be close to 100% of BD devices.
Why does your win rate go up when the market's more constrained?
Because of our new innovations.
Because of innovations. Okay.
A8. Again, it's the first system that you can actually see the cells of, that you're analyzing versus just the fluorescent dyes as an example. We can see that already. We were seeing this Friday, we got a big pharma client, for example, who's standardizing on that platform and is putting in a number of purchase orders for those because they recognize there's new science that I never knew about and new things about cells that I can only see with FACS Discover. A8, if I wanna sort or I can get an S8 for sorting technology. Those are the main things along with BACTEC, continued recovery in the BACTEC franchise. Those are the main drivers in that.
As you kind of just thought about framing the outlook for the rest of the year, you're still placing some onus on improvements in different parts of the business. Just in terms of internal organizational pressure to kind of hit the number, now hit a revised number, how did you think about the balance between the 3%-3.5% that you've articulated versus taking a more potentially conservative stance just to take the pressure off the organization and allow you to kind of navigate some of this uncertainty? Not saying you, you know, you want to be unambitious in your targets, but, you know, how did you think about balancing that?
We take obviously the rollups that the businesses have. We provide some level of rebate or discounting to those numbers from the businesses. Again, what we shared was that we, there's certain assumptions that we have in that, right? When we put out that guide, we made it clear that we're assuming that this is based upon the research environment that we saw in Q2, couldn't dictate what was going to happen. We didn't assume some radical change in NIH funding versus what had happened in February and the reduced funding. There wasn't still, there's still not visibility to that. Those are some of the baseline assumptions that we put into the.
On that point, it seemed like you exited Q2 at a worse place than how the, how, you know, the market infra research funding seemed probably worse in March than it was in January.
For sure.
Have you kind of contemplated a continuation of the exit rate trends or kind of the average performance?
No, closer towards the exit of what we saw. We did see, obviously in Q2, there was notable worsening in both February when the administration announced the reduction in spending, and then a little bit later than mid-February when Europe basically you saw a shift. We had purchase orders that literally got put on hold as governments were looking at redirecting towards defense spending. That was clear. Germany, U.K., et cetera. A number of the governments there said, we're holding on purchasing instruments for research spending as we're making decisions around defense reality.
Okay. Maybe we can turn to the kind of future BD for a second. I think most of that's contained within the business that's performing 5%. I know there's the China piece and the pharma systems component, but is 5% like a good baseline number for thinking about market growth for new BD post-separation? How are you guys thinking about that?
I think we've said our WAMGRG overall is right around or slightly under 5%. Now, that's a long-term WAMGRG that includes, that's not for new BD. That's just BD current, what we say it is, COCO. We don't adjust WAMGRG for temporary reductions in pharma destocking or life sciences. It would be an applicable WAMGRG today would be lower because of those macro dynamics. Overall, from a long term, that's the growth rate. As we think about the new BD, I mean, it's a very exciting portfolio as we look at basically if you walk through the three areas, we continue to have our medical essentials business, right? We treat 3.9 million patients an hour are touched by our medical essentials business, right?
Huge consumable portfolio, durable, recurring revenue, with specific, you know, types of innovations that we're doing to continue to keep that fresh as we then generate meaningful cash. The other three segments then, and that has a much lower WAMGR than the rest of the business, right? Lower single digit profile, but has a specific role within the portfolio. Then we go into the connected care, biopharma solutions, and interventional sectors, which have higher WAMGRs and higher growth rates. If you look at, for example, let's start with BD Interventional. Since we've bought Bard, we've been growing at about a 7% CAGR in that business, and we continue to expect that business to outperform. One is to think about UCC and PureWick. That's now over a $500million franchise, up from essentially nothing when we bought Bard, right?
It will soon become half of the UCC business in total. We have got a great pipeline there, right? We started with female only in hospitals. Now it is men and women in hospitals, men and women at home. Later this calendar year, we will launch for men and women mobile, particularly in, specifically for people in wheelchairs. After that, in our pipeline is a product for people walking around mobile, like people with a fanny pack on walking around, managing urinary incontinence on the boardwalks here, right? As an example. In the surgery space, what you have seen us do is take a plastic mesh business, settle major litigation, right? Which we spent probably $1.5 billion plus of cash over the last many years getting rid of legacy Bard litigation that came at the time of the acquisition.
Good to have that move behind us. What we've been doing is replacing plastic mesh with bioresorbable material, our P4HB material. That is, right? No one should get plastic mesh from a hernia perspective. We have data that says seven years out, the recurrence rate is just the same with something that disappears 18 months from you having surgery. We've been extending that to different types of hernias. I mentioned before, we just got umbilical. We now have the first GI application launching next year, in peristomal. As I mentioned, we now have multiple new products in for breast reconstruction moving forward in our pipeline, including the first that's already started clinical studies. In PI, we continue to have serial innovation with next year having some really nice launches.
We've got one for a liver graft coming in for stenosis of the liver. We've got one for covered stents, a category that's really led by one competitor with no new innovation in 10-15 years, and the first in the world multimodality biopsy device launching there. We are excited by that. In our connected care business, you know, one of the other things that I didn't mention, but in Q4, APM becomes organic, right? That's obviously a nice, you know, pop of a business that's growing, you know, 7% plus suddenly becoming organic in Q4. That business will continue as we think, you know, ahead within our connected care business. We've brought in innovations that are combining those insights with the therapy insights to start doing things that no other company on the planet can do. That's moving through our pipeline, right?
Starting to close the loop on therapy management rather than nurses and doctors having to intervene, you know, every minute and trying to optimize that for the patient. Pharmacy robotics and automation, now a $700 million business that we've built through the acquisition of Parata and a number of other tuck-ins like MedBank, that's, you know, in early innings in that space. Of course, we just shipped our first new Pyxis since the launch of Pyxis.
You just shipped the.
We just shipped the first, limited commercial release went on the truck, I think last Thursday, which is great. A little bit ahead of time.
Did the impact of that get blunted at all because of the leasing model? Like when CareFusion launched Pyxis ES way back in 2013, there was a huge bolus of revenue. Now, of course, the install base was much smaller then, and I think there, you know, the market dynamics were a little bit different. You moved to the leasing model after you acquired it. How should we think about the impact of a Pyxis refresh on the business here?
One is, I think it really, it's a great product and we'll share more about that in the future. Competitive gains, we expect to shift incrementally, the number of share gains that we're getting. There's the opportunity for price premium. It holds 40-50% more medications than the current any competitive system, with the exact same footprint. It's also connected from the cloud perspective, and it's the first product that will leverage our new Incada software, which is BD's first enterprise-wide AI platform. We've got AI in a number of systems today, like our APM system has AI built in it. Our Kestra system has AI built into it, but it's in each platform.
Incada is a cloud-based platform that we've partnered with Amazon on, and a large language model company that's embedded in Incada that all of the data from future Alaris systems, Pyxis, APM will go into to allow users to do new things that they can't do today. The first launch of that software is with the new Pyxis Pro, which is an AI-enabled, cloud-enabled Pyxis system. We really like what we have going on there.
Can Pyxis Pro offset the slowdown that will naturally occur when you complete this Alaris upgrade cycle?
There'll be two things in that business. There's obviously other things going on in BD, and that would be more of a 27 topic that when we complete that cycle.
So on the upgrade cycle on Alaris is still.
We said it's a three-year cycle.
Three-year cycle.
Is what we committed to the FDA is three-year cycle. So we're in year two of that, that upgrade cycle.
Can that business still grow in fiscal 2026?
Yeah. We're not giving 2026 guidance, but yeah.
I know.
It will still be in the middle of upgrading in 2026. Yeah.
It's not like a bell curve where you have a lot in 2024, a little in 2024, a lot in 2025, and a little in 2026 in terms of the.
We're not getting into 2026 guidance, but it still has runway in 2026. Then obviously we also have a next-gen Alaris deep in the pipeline that we'll focus on immediately after.
That'll be large volume pump syringe PCA offering or it'll be.
Correct.
Okay.
And then the last business of the new BD, so I talk through medical essentials, the connected care, the interventional business, obviously the last of that being our biopharma solutions business, which again, we made some meaningful capital investments in the middle of COVID. We invested $1.2 billion in capacity expansion, and that really paid off. It allowed us from 2021 to 2023 to grow that business at a 13% CAGR. We more than tripled our sales of biologic delivery devices, became the world leader with more than a $1 billion biologic drug delivery business. That $800 million that we've grown since we launched that capacity expansion, that's mostly all been in the biologic space. And right today we have strong presence with hundreds of millions of dollars of revenue in GLP-1 drug delivery.
We have strong presence with new novel GLP-1s coming out in the future in our devices. And we have north of 60 biosimilar GLP-1s already signed in our devices as well as we think about a very large, you know, generic drug cycle that will be coming up in the future. And so, right, that business as it moves out of the destocking phase, again, we see that returning towards, you know, high single digit growth long-term business. And, and you'll start seeing, won't jump straight there, but you'll see it start to improve.
I appreciate the opportunity for that to contribute to growth and the investments that you've made, but you started by sort of talking about the things that BD has that don't look like a typical MedTech company. This is on that list. Why doesn't pharma systems enter the discussion for separation also?
We always look at what optimizes shareholder value, and that's something we constantly look at. It's a very distinct business than life sciences. Obviously, there is no life science company with those types of assets, a med device. It also relies on BD. It can't live without BD, right? Most of the technologies in that business are shared across businesses. For example, one of the biggest differentiators in pharma systems is our needle technology. We're actually the only competitor in that space who makes our own needles. That technology, particularly when it comes to biologic drugs, for example, biologic drugs are becoming more viscous, and the key concern is time to delivery, right? Can I even deliver it in time to use an injection sub-Q or do I need to move it to infusion?
If I'm gonna move it to sub-Q, can I do it with a device I hold in my hand? Is it a device that I need to wear, a Libertas or our Evolve system, which we have? One of the factors in that decision process is the needle technology. We're the only company in the world with an ultra thin walled technology that allows a smaller gauge size with a thinner needle, but a larger internal diameter because of very proprietary technology that we have. We use that same technology in our ultra thin walled needle push button, for example, that allows us to get blood out of your body very quickly and fill up the tubes. You're not sitting there watching the tubes fill up for a long time. They fill up significantly faster. We use that same technology in catheters.
We use it in other things for the drug delivery. We also use it and apply it in our pharma systems. There's many other technologies that we share across, you know, our different drug delivery platforms, which is how that business was born, right? Out of sharing technology across the other business.
Got it. Okay.
Always, always looking at, actively looking at portfolio though.
I wanna switch gears over to the P&L. There are questions. Obviously, feel free to raise your hand. I know you said your head is DC. After this, tariffs obviously are still in focus, although maybe less in focus than they were a few months ago. I mean, you gave guidance right before there was this temporary relief offered on China. Maybe just remind us kind of what you said and what the assumptions were in your guidance, where we are today, and maybe give us a little window of what you're hoping to get out of your and ABA meds time in DC.
Sure. Starting on what we announced last time, which was $90 million of tariff exposure in the year, right? This year for FY2025. We mentioned that's essentially all in Q4 for us, just given we're on a unique fiscal year of October through September. The changes don't have a meaningful impact on that number within this year, right? Obviously, this year we were able to make certain moves, move inventory in and out ahead of time to minimize. I think what it does definitely do is it's a very, it's a positive for 2026, the changes that have announced. Because what we did share was that the number one source of tariff costs for us in 2026 and beyond is the tariffs that China places on U.S. imports.
That's a much larger number when the tariffs were before they were cut down in China. That was a much larger number because we only, we have very, we have one product that we really import from China into the U.S. We're a very large U.S. net exporter.
Right.
With nearly 30 plants in the U.S. With China's tariff rate coming down, I think after the last earnings call, people were looking at the $90 million and saying, okay, can we just multiply that times four and annualize it? Certainly a lower number than that today. That is a net positive for us. We continue to do a lot of work, as you mentioned.
And why wouldn't the $90 million go down? So just.
It, it's just a factor of how you think about what's coming in from, 'cause the second biggest piece is where U.S. is the number one place we manufacture, Europe is the number two, Mexico is the number three. And so Mexico inbound as well as a factor.
That's not FDA compliant.
Correct.
Okay.
Correct. FaceTime.
Okay.
It could have come down a little bit, yes, but not, not from a meeting.
Okay. What are some of the other legislative considerations? We're watching lots of headlines and cuts to Medicaid. Who knows what's gonna happen with ACA, you know, extension of subsidies? What are some of the other things on the docket for you guys from a policy perspective?
We work closely with the American Hospital Association, for example, on more of those funding for providers. We are very close, you know, as a company and as an industry with them and other organizations. I think as an industry, one of the things we're very focused on is MedTech is an industry that is a U.S. powerhouse, right? The U.S. is the largest manufacturing base for MedTech globally. U.S. companies are leaders globally in the space, and we are very large net exporters. MedTech is an industry that never left the U.S. I think it's important to use, you know, MedTech as a case study and to not encourage it to go the other way around of needing to leave the U.S. because of unintended consequences on tariffs.
Again, for us as an example, you know, some of the tariff repercussions were in fact for us to move sourcing outside of the U.S., right? We shared number one thing that we began to do because we're not importing a lot from China was for products that we were selling into China. We started sourcing vacuum tubes, for example. We've always shipped from South Carolina, our plant there to China. Now we're shifting to source from our facility in the U.K. where we happen to make the same thing. We have flush product that historically our flush syringes always came out of Columbus, Nebraska, and we would ship those to China. We have a facility now in China that's gonna source just for China, for that. Again, I think there's more downsides to tariff impacts from a U.S..
Manufacturing perspective in the MedTech industry than there are in, in many others. Making sure that that's understood and it's not about getting MedTech industry back to the U.S., it's about keeping a strong MedTech industry from U.S. companies and manufacturing in the U.S..
Okay. We're just about a minute left, so maybe I'll turn it back to you if any kind of closing or takeaway remarks that you wanna make. It's been a dynamic, I think, month or so since your earnings call. There's been quite a bit of, I think, volatility around the stock and questions kind of about the direction of the business. Maybe you wanna kind of wrap up any thoughts. I know you've been on the road a lot meeting with investors and others, kind of some of your takeaways from those meetings and what you'd like to leave people with.
I think obviously we're hyper-focused on navigating the near-term macro, you know, challenges of China and life science spending and the pharma destocking, right? Which we constructively see coming to a wrap. We're hyper-focused on revenue growth, right? In that same time, obviously continuing to deliver, right, strong performance. I think that's one of the, you know, the important dynamics is that while there are, you know, challenging macro dynamics that we're navigating, and again, we are hyper-focused on accelerating revenue growth despite those macro dynamics. We talked about how we're doing that. At the same time, our other systems, our BD Excellence systems are allowing us to drive. We drove 190 basis points of gross margin expansion last quarter. Inclusive of tariffs, we're delivering 8% EPS growth all in. That's absorbing, just put in perspective, right?
China down 10% on a $1.3 billion business due to VOBP. That is us absorbing about $135 million of pricing headwind, negative price out of China this year. While we are absorbing 135 basis points of negative pricing pressure, we are still expanding gross margins well over 100 basis points because of pricing capabilities in the rest of the world that we built during COVID, the power of BD Excellence, and still driving strong margins. I think that is the, right, the formula of BD, is we have always been a mid-single digit growth company, right? Literally up until this year with the temporary dynamics of those macro factors, the underlying business remains strong. We have built new capabilities with BD Excellence that are allowing us to navigate a challenging macro environment and still continue to grow earnings in a meaningfully positive way.
We have got a really exciting innovation pipeline, with a lot of big launches happening here as we head into 2026. I appreciate the time and the discussions we have had today.
Excellent. Thanks, Tom.
Okay. Thank you.
You too. Appreciate your making the trip.
Of course.