Becton, Dickinson and Company - Q2 2023
May 4, 2023
Transcript
Operator (participant)
Good day, everyone, and welcome to today's Becton Dickinson Q2 fiscal year 2023 earnings call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question-and-answer session. You may register to ask a question at any time by pressing the star and one keys on your touch-tone phone. Please note this call may be recorded, and that I will be standing by should you need any assistance. It is now my pleasure to turn today's program over to Francesca DeMartino. Ma'am, please begin.
Francesca DeMartino (SVP and Head of Investor Relations)
Morning and welcome to BD's earnings call. I'm Francesca DeMartino, Senior Vice President and Head of Investor Relations. On behalf of the BD team, thank you for joining us. This call is being made available via audio webcast at bd.com. Earlier this morning, BD released its results for the second quarter of fiscal 2023. We also posted an earnings presentation that provides additional details on our business, strategy, and performance. The press release and presentation can be accessed on the IR website at investors.bd.com. Leading today's call are Tom Polen, BD's Chairman, Chief Executive Officer, and President, and Chris DelOrefice, Executive Vice President and Chief Financial Officer. Tom will provide highlights of our performance in the continued execution of our BD 2025 strategy. Chris will then provide additional details on our Q2 financial performance and our updated guidance for fiscal 2023.
Following the prepared remarks, Tom and Chris will be joined for Q&A by our segment presidents, Mike Garrison, President of the Medical Segment, Dave Hickey, President of the Life Sciences Segment, and Rick Byrd, President of the Interventional Segment. Before we get started, I wanna remind you that we will be making forward-looking statements. I encourage you to read the disclaimer in our earnings release and the disclosures in our SEC filings, which are both available on the IR website. Unless otherwise specified, all comparisons will be on a year-over-year basis versus the relevant period. Revenue percentage changes are on an FX neutral basis unless otherwise noted. When we refer to any given period, we are referring to the fiscal period unless we specifically note it as a calendar period.
I would also call your attention to the basis of presentation slide, which defines terms such as base revenues and the Non-GAAP reconciliations included in the appendix. With that, I am very pleased to turn it over to Tom.
Tom Polen (Chairman, CEO, and President)
Thanks, Francesca. Good morning, everyone, thank you for joining us. Earlier today, we reported another consecutive quarter of strong financial performance and significant progress advancing our innovation pipeline. The results we have been delivering for multiple periods reflect our strategy in action. We are now about halfway through our BD 2025 plan to accelerate growth and simplify and empower our company. I'd like to share how our team's strong execution of our strategy is driving our performance and will enable continued momentum through 2025 and beyond. We have made purposeful and strategic investments, which we're seeing contribute to consistent higher growth and strong financial performance. We have been and remain very intentional with how we are deploying our capital towards higher growth spaces and are pleased with the significant progress we continue to make increasing our WAMGR.
These actions have evolved BD into an agile, innovative, and durable medical technology company with a compelling growth profile. Our innovation mindset is driving higher product development velocity and super cycles of innovation in many of our businesses through a focus on the most impactful programs, improved milestone achievement, and launch excellence. To highlight a few examples of our strategy and investments and how they're fueling strong results and momentum. First, in Pharmaceutical Systems. Near the start of our BD 2025 journey, we made a bold decision to invest $1.2 billion in additional capacity. Today, we're seeing this capacity investment, along with several new innovations we've brought to market, paying off as we are ideally positioned to enable delivery of the large wave of biotech drugs coming to market.
We've built Pharmaceutical Systems into a $2 billion growth platform, with 11 consecutive quarters of double-digit growth. With over 70% of the top 100 biopharma companies using BD's portfolio and 6 times the capacity of the nearest competitor, we are well-positioned to continue delivering strong growth. Second, during COVID, we also made several strategic reinvestments of certain COVID-only testing proceeds, particularly in our BDB business, which is one of the areas with a super cycle of new breakthrough innovations coming to market over this and the next several years. We've already begun to see acceleration from some of the early new launches, notably in biopharma for cell therapy and immune oncology research. We're looking forward to the upcoming launch of our FACS Discover S8 cell sorter that was previously featured on the cover of the journal Science.
The S8 combines advanced spectral flow cytometry with novel CellView Image Technology. By combining the power of high-parameter spectral flow cytometry with an unprecedented picture of a cell and its inner workings, we are defining a new standard in flow cytometry, which will empower scientists to unlock life-changing discoveries across fields like immunology, cancer research, and cell biology. We recently shipped our first early access BD FACS Discover S8, and we remain on track for launch later this quarter. We've also already begun launching a new family of spectrally optimized BD Horizon reagents that together with the FACS Discover S8 will create a unique spectral solution inclusive of instruments, dyes, and informatics that only BD can offer. Third, as you know, we have been very purposeful in increasing tuck-in M&A to drive scale within high growth adjacent markets and have built strong M&A capabilities to successfully integrate assets.
Our most recent acquisition of Parata's Pharmacy Automation Solutions continues to exceed our expectations, we're already seeing an early impact from revenue synergies. The Parata acquisition expanded our offering to establish BD as a leader in pharmacy automation and created a new growth platform with revenues in excess of half a billion dollars growing double digits. This is an attractive growing market that uses automation to address a number of the critical issues faced by our customers, such as wage inflation, labor attrition, pharmacist burnout, and the need to reallocate pharmacists' valuable time to clinical care. Parata is just one example of the successful tuck-in acquisitions we've made over the last several years. These acquisitions are currently contributing about 30 basis points to our organic growth rate this year. Once Parata annualizes, we expect that contribution will increase to about 50 basis points.
Lastly, we continue to build on our strong competency of serially innovating on and expanding the application of new technologies we develop or acquire. This is exemplified in our urology and critical care business, where our acquisition of PureWick continues to provide significant benefits to patients and is also an impactful growth driver for UCC. We've already launched the home version of PureWick Female, which continues to be very well-received and is aligned with our focus on providing solutions in new care settings. At the end of FY 2022, we launched PureWick Male, the newest product in our planned portfolio expansion for managing incontinence. PureWick Male provides nurses with a non-invasive option for urine management in men, enabling early catheter removal and reduced risk of infection. We are receiving exceptional customer feedback, and the adoption of PureWick Male is exceeding our expectations.
We have multiple additional R&D programs in the pipeline to continue to expand our solutions in incontinence. These are just some of the examples of key investment decisions we have executed to strengthen our business, contributing to our performance today and over the long term. Turning to our quarterly financial results, we are seeing the strength of our BD 2025 strategy in action across all businesses and geographies in our Q2 performance. We delivered another quarter of outstanding results that exceeded our expectations with 8.7% base revenue growth and double-digit currency-neutral earnings growth. While we are excited by what we have achieved to date, we have much more to look forward to. Let me provide a few examples of how we progressed our pipeline this quarter. Starting with our recent launches.
In our BD Medical segment, we launched our PowerMe midline catheter in China. By the beginning of March, it was being used in the first patient. PowerMe was designed by our R&D center in China for China. We're excited about the opportunity it creates to develop a new category of vascular access in China. In our BD Life Sciences segment, we're really excited about how the BD COR platform is expanding us into the high-throughput, high-growth molecular diagnostics market. In Q2, we received 510(k) clearance for our new vaginal panel on BD COR, the world's first microbiome-based PCR assay that uses a single swab and test to simultaneously detect the 3 most common causes of vaginitis infections, enabling targeted, cost-effective treatment. In our BDI segment, we launched our Highlander 014 PTA balloon in Q2.
Highlander is the first and only non-compliant fiber-based balloon designed to treat peripheral artery disease in below-the-knee anatomy. We are proud to be leading in this space, building on our history of continuous innovation in the higher growth PVD market. We've also hit several crucial milestones this quarter. These include regulatory submissions of the Pivo Pro, as well as BD Nexiva with NearPort IV Access, which are core elements of our one-stick hospital stay and vascular access management strategy in our MDS business. In our Biosciences business, we completed the early access program for our BD Rhapsody HT Xpress, and in fact, I'm pleased to report that just in the last few days, we announced the launch. The HT Xpress is a single-cell analysis system that increases the throughput of the BD Rhapsody platform eightfold while maintaining compatibility with our existing single-cell assays and reagents.
This new instrument enables access to the fast-growing translational single-cell multi-omics market with a high-throughput research solution. In our surgery business, we completed testing for our Phasix ST Umbilical product to support a 510(k) submission later this fiscal year. Phasix ST Umbilical is designed to provide patients a reliable alternative to permanent mesh, bringing the benefits of the category-leading bioresorbable Phasix material into one of the most common abdominal wall hernia procedures. Phasix ST Umbilical will be the first fully resorbable product customized for open umbilical repairs, which represents the majority of umbilical procedures. This is another example of a technology we acquired and are now expanding and accelerating the growth of. These launches and milestones are good examples of how we are strengthening our position in attractive end markets across our portfolio.
While we advance our growth strategy, we also remain focused on our number 1 priority to bring the Alaris pump back to market. We are confident in the resources invested in our submission, the team and leadership tasked to prioritize this, and that we will get clearance. As we have stated in the past, the relaunch of Alaris is included in the BD 2025 strategic plan. While we cannot predict clearance timelines, we can ensure that we are prepared for the relaunch with the proper operational capacity and functional capabilities so that we can provide our customers with the best experience. As a reminder, we've launched an updated Alaris pump in several international markets and continue to receive very positive feedback from customers. In Q2, we continued to simplify our company with programs across our manufacturing network, our portfolio, and our operating model.
We made further progress on our Recode portfolio simplification program, which reduces SKUs in order to improve customer service and focus on the most important products needed to deliver care. We remain on track to remove 20% of our total portfolio by 2025, having achieved more than half of these SKU reductions thus far. We have numerous initiatives underway to consolidate our manufacturing footprint, improve cost and service while delivering on our ESG goals to address climate change and carbon neutrality. Earlier this year, we expanded our Recode initiative to include our operating model to drive efficiency and effectiveness and simplify our organization to improve agility. These actions resulted in us reducing our overall headcount by about 2% this year.
We also recently made the strategic decision to partner with a leading business process and professional services firm and are transitioning certain BD shared service center business processes. They will be working to optimize our back-office processes and services using automation, data, and process excellence that they have implemented very successfully with other large companies. Collectively, our simplification programs are a core part of our strategy to drive efficiency and enable impactful growth. To share some perspective on the macro environment, overall the environment continues to stabilize and is in line with our view that challenges will persist, not escalate. While we're seeing signs of inflation cooling off, it is still more than 2x the historical average. We see continued labor pressure with different market dynamics impacting hiring and increasing wages for certain roles, particularly in our supply chain organization.
Across raw materials, some categories such as resins used in finished goods are beginning to show signs of stabilization, but overall, they have not come down universally and remain well above prior cost levels. In terms of supply availability, we have seen significant improvements across materials, supplies, and labor, which are driving our backorder reduction, leading us to recover towards pre-pandemic supply levels. Broadly speaking, we are seeing stabilization and continued overall procedure volume recovery and volume momentum. Specific to China, we delivered strong performance despite some impact from increased COVID cases in the region and reduced hospital capacity that carried into Q2. We experienced a strong recovery in March and remain well positioned for continued growth in China.
Our strategy has proven to enable strong results in some of the most challenging times, by successfully navigating the macro environment, we are distinguishing BD and remain well positioned to deliver continued strong performance. Before I turn it over to Chris, I'll provide an update on the progress our team is making to advance our ESG strategy and goals. We continue to be proud of our leading focus on reducing the environmental impact of our product portfolio, we recently announced the launch of our new circular economy pilot in several regions, where we are partnering with healthcare facilities and waste management companies to recycle used materials, including BD syringes in the U.S. and BD Vacutainers in Denmark.
In addition to launching our 2022 cybersecurity annual report in early Q2, we also established the BD Cybersecurity Risk Committee, which serves as the management-level governance body for oversight of all cybersecurity risk across the company. The committee is chaired by the chief risk officer, and its members include cybersecurity leaders across enterprise, manufacturing, and product cybersecurity, as well as key functional leaders. We are also proud to receive continued recognition for our ongoing commitment to talent and culture. Most recently, we were named a noteworthy company for the fourth straight year in DiversityInc's annual ranking of the top U.S. companies for diversity. We look forward to providing further updates on the commitments, disclosures, and progress on the four pillars of our ESG strategy: company health, planet health, community health, and human health, as we publish our 15th annual ESG report later this year.
In summary, I'm proud of our progress and the positive impact our associates are delivering for our customers and patients around the world. Our purposeful and strategic investments in attractive end markets are driving higher growth and creating value. Our innovation mindset is improving our pipeline execution and launch excellence and creating the most exciting product pipeline in the company's history. Our simplification efforts are reducing complexity and driving business process excellence and agility. Our increased guidance for fiscal 23 reflects our strategy in action, strong execution by our team, and a strengthened growth profile. We will continue to increase investments to support profitable growth through 2025 and beyond. With that, let me turn it over to Chris to review our financials, guidance, and outlook.
Christopher DelOrefice (EVP and CFO)
Thanks, Tom. Echoing Tom's comments, our BD 2025 strategy is driving consistent performance and demonstrates our strong growth profile. With our year-to-date performance, we are well on track to achieve our FY 25 long-term targets. Beginning with some color on our revenue performance, we delivered strong Q2 base revenue growth of 8.7% or 7% organic. This includes growing over prior year flu COVID combination sales, which negatively impacted growth by over 200 basis points and an impact from one-time strategic portfolio exits of about 50 basis points. Adjusting for these impacts, organic volume growth was in the strong mid-single digits at nearly 6%. In addition to the inorganic revenue contribution from M&A, we continue to drive organic growth from acquisitions that have anniversaried, which was about 30 basis points in the quarter.
COVID-only testing revenues were $16 million in the quarter, which, as expected, declined from $214 million last year. Total company base business growth was strong across BD Medical and BD Interventional, with growth of 12.2% and 9.3% respectively. Base revenue growth in BD Life Sciences of 2.2% includes a negative impact of about 800 basis points due to the comparison to higher combination flu COVID testing sales last year attributable to the Omicron wave, coupled with the timing of this year's respiratory season that peaked earlier than normal during fiscal Q1 then declined. Base revenue growth was strong across all regions, with high single-digit growth in the U.S. and double-digit growth internationally, including 9% growth in China. For the full year, we expect to deliver high single-digit growth in China.
Our growth continues to reflect consistent performance of our durable core portfolio and our shift into attractive and higher growth end markets. Strong performance in our BD Medical segment reflects execution of our growth strategies across our key end markets. This includes our durable core, where we continue to drive growth in vascular access management with our BD PosiFlush and catheter solutions. In Medication Management Solutions, our investments in high growth areas like pharmacy automation are driving strong growth led by our Parata acquisition and BD Rowa. In our dispensing platform, continuous innovations in BD Pyxis, including the recent launch of BD Pyxis ES 1.7 and the BD HealthSight portfolio, drove double-digit growth.
In Pharm Systems, in the higher growth pharma and biotech drug delivery end market, our capacity investments and newer innovations in products such as BD Effivax, BD Hylok, and BD Neopak are driving continued double-digit growth. Strong underlying performance in our Life Sciences segment reflects growth in our durable core in specimen management and execution of our growth strategies across our key end markets, including single-cell analysis, microbiology, and molecular diagnostics. In our IDS business, growth in microbiology reflects demand for our BD Kiestra lab automation solution, including adoption of the recently launched IdentifA and Total Modular Track solutions. Double-digit growth in molecular IVD assays reflects continued leverage of our large install base.
In Biosciences, high teens growth was driven by new innovations in BD Horizon dyes and our expanded antibody portfolio that drove double-digit growth in research reagents and continued strong demand for our BD FACSymphony flow cytometry analyzers. Strong performance in our Interventional segment reflects execution of our growth strategies across our key end markets, including advanced repair and reconstruction, PVD, oncology, and incontinence. Our newer innovations in higher growth areas are all contributing nicely to growth. Our surgery business unit delivered strong double-digit growth with continued market adoption of Phasix hernia resorbable scaffold, driving double-digit growth in advanced repair and reconstruction, and double-digit growth in biosurgery that was aided by Arista. In our PI business unit, the relaunch of the Novo and global penetration of Rotarex are driving high single-digit growth.
In our UCC business unit, high single-digit growth continues to be driven by strong double-digit growth of the PureWick franchise that was aided by the recent launch of PureWick Male. Across BDI, procedure volumes were also strong in the quarter, contributing to growth, particularly in our surgery business unit. Further details regarding each segment's performance in the quarter can be found in today's earnings announcement and presentation. Moving to our P&L. We reported Q2 adjusted diluted EPS of $2.86, which included gross margin of 54.2% that was slightly ahead of our expectations, an operating margin of 22.7% that was in line with expectations.
Our margin performance reflects leveraging our strong revenue growth, the benefit of our simplification and inflation mitigation initiatives, and strategic portfolio exits that enabled our ability to more than overcome nearly 200 basis points of outsized inflation, which was in line with our expectations. Gross margin also reflects negative FX, which was slightly higher than anticipated. SSG&A expense increased 5% year-over-year. Half of the SSG&A increase was driven by the unfavorable impact of an employee benefit-related item that gets recorded in G&A and is offset in other income with no resulting impact to EPS. Excluding the employee benefit-related item, we drove about 50 basis point of leverage in SSG&A, with shipping growth in line with revenues and good leverage in selling expense.
As expected, our phasing of R&D continues to be weighted to the first half of the year, with R&D as a percent of sales of 6.5% in Q2. Our R&D investments are aligned to our long-term growth strategy and have been a catalyst to increased velocity of product development. In summary, we continue to execute well and fully delivered our Q2 operating margin goal with operating improvement, excluding the employee benefit item, nicely leveraged by 80 basis points, including absorbing a 30 basis point headwind from lower COVID-only testing. Our tax rate in Q2 was lower than anticipated due to the timing of certain discrete items that were contemplated to occur during the year. Regarding our cash and capital allocation, cash flows from operations totaled $584 million year-to-date.
Operating cash flow reflects an elevated inventory balance that has enabled our strong performance and ability to meet peak demands and support our customers' needs while navigating the complexity of the macro environment. We remain focused on reducing our inventory balance and have several initiatives underway to do so. As a result, while we saw peak inventory levels during the quarter, we exited the quarter with positive progress towards reducing inventory. We expect inventory to continue to decline over the balance of the year, with the most prominent reduction expected in Q4 to levels similar to the prior year. We're also driving more effective capital expenditures for the full year and expect expenditures to be similar to the prior year.
We ended the quarter with a cash balance of approximately $2 billion, which includes the proceeds from debt refinancing during the quarter that will be utilized to repay maturing debt over the balance of the year. We ended Q2 with a net leverage ratio of 3.1 times. We expect to pay down our commercial paper over the balance of the year and move towards our net leverage target of 2.5 times. As the year progresses and we build cash, we will increase our capacity to deploy cash towards tuck-in M&A. Moving to our guidance for fiscal 2023. For your convenience, the detailed assumptions underlying our guidance can also be found in our presentation. Given our quarter performance, we are confident in raising the midpoint of our revenue and adjusted EPS guidance ranges.
The strength of our base revenue growth and consistent execution of our margin goals is enabling our ability to offset lower COVID-only testing revenues and the latest FX rates while reinvesting in the business to drive future growth. Starting with revenues, I will provide some insights into some of our key guidance assumptions. First, we are well positioned for strong growth across our three segments, which are delivering at or above our expectations, and thus we are increasing our base revenue guidance. On a currency-neutral basis, we now expect base revenues to grow 6.5%-7%. This is an increase of 50 basis points at the midpoint from our prior guidance of 5.75%-6.75% and is driven by our Q2 revenue outperformance and the confidence we have in our team's continued strong execution and our consistent growth profile.
Following our strong FY 2022 growth of 9.4%, we again increased our revenue guidance in FY 2023, which at the midpoint brings our two-year average growth to about 8% or 7% organic, which is well above our 5.5%+ target. Increased base revenue guidance includes both higher organic and inorganic growth expectations for the full year. We now expect inorganic revenue to contribute approximately 125 basis points of base revenue growth for the full year, which is an increase of 25 basis points driven by the strong execution of Parata. Organic base revenue growth is now expected to be 5.25%-5.75%, an increase of 25 basis points at the midpoint.
Both our base revenue and base organic revenue growth continue to include a reduction of approximately 100 basis points resulting from our planned one-time strategic portfolio exits. While we aren't providing segment-specific guidance, we are on track to deliver strong performance across our segments this fiscal year in line with our long-term plan commitments. We expect Medical segment growth to be above the total company range, which includes the acquisition of Parata. Life Sciences growth to be below, given strong prior year comparisons, and Interventional to be above the total company range. For COVID-only testing, we are now assuming about $50 million in revenue versus our previous expectation of about $50 million-$100 million, driven by the reduced testing volumes as a result of the early peak and rapid decline of the respiratory season.
All in, we are increasing our reported revenue guidance by approximately $50 million at the midpoint to a range of $19.2 billion-$19.3 billion, compared to $19.1 billion to $19.3 billion previously. Regarding Alaris, we continue to only model shipments related to medical necessity in line with fiscal 2022 demand. Regarding our assumptions on earnings, we continue to expect operating margins to improve by at least 100 basis points for the full year. The actions required for the year to drive margin improvement remain unchanged.
Our focus on driving profitable revenue growth, combined with the significant simplify actions in place, including the previously planned operating model programs that we recently announced, gives us the confidence that we will again deliver meaningful margin expansion this year while absorbing about 200 basis points of outsized inflation and the incremental decline in COVID-only revenue, which has a higher margin profile. Below operating income, our assumptions regarding interest other remains unchanged, and we have narrowed our effective tax rate guidance to 13.25%-14%. We expect adjusted EPS to be between $12.10 and $12.32, which represents an increase of $0.015 at the midpoint.
This reflects a base business increase of $0.115 that is driving our ability to offset incremental headwinds of approximately $0.05 each from COVID-only testing and foreign currency. Our adjusted EPS guidance reflects currency neutral growth that is around double digits and within a range of approximately 9.5%-11%. This includes very strong mid-teens base business growth of approximately 14%-15.5%, which is over 100 basis points higher than we previously anticipated and is driving our ability to absorb the decline in COVID-only testing. Our updated guidance reflects significant progress towards delivering the BD 2025 financial targets we laid out at our Investor Day, including a strong 2-year organic base revenue CAGR of about 7%, which is well above our 5.5%+ long-term target.
At least 380 basis points, or about 70% of our targeted 540 basis points of base operating margin expansion toward our targeted 25% margin levels in FY 2025, and a strong high teens two-year base business EPS CAGR, which is also well above our double-digit long-term target. As we think of fiscal 2023 phasing, let me provide some comments for you to consider as you model out the balance of the year. We've outlined more detail in the accompanying presentation slides, but the following are key areas to note. First, regarding base revenues, the midpoint of our updated guidance continues to reflect strong organic growth of about 6% in the second half of the year. We expect organic growth to be fairly ratable over the quarters, with some different prior year comparisons in each quarter.
As a reminder, we will anniversary the inorganic contribution from the Parata and MedKeeper acquisitions in Q3, which means that Q4 base revenue will be all organic. Second, as you think about margins, as we have described throughout the year, most of the full year improvement will come from SSG&A expense leverage, with the balance from slight improvement in gross margin, which is muted because of outsized inflation in fiscal year 2023. We've seen that play out over the first two quarters, where gross margin was slightly below the prior year margin in Q1 and slightly above in Q2. We expect a similar dynamic in Q3, where you should be slightly ahead of the prior year's 52.6%.
For operating margin, our expectation is for Q3 year-over-year margin improvement similar to our full year operating margin expansion expectation and slight improvement sequentially from the 22.7% in Q2. R&D as a percent of revenue will moderate down towards our expected full year average of about 6% in Q3, while Q4 will be the low at about 5% of sales. Lastly, the midpoint of our full year effective tax rate guidance indicates an estimated tax rate of about 16.5% for the balance of the year, which is best to assume occurs evenly in Q3 and Q4, as the exact timing of any other discrete items is hard to predict. In closing, as we approach the halfway point, our BD 2025 strategy has consistently delivered multiple periods of strong financial performance.
As we look forward, and as reflected in our FY 2023 guidance and our progress towards our BD 2025 long-term targets, we are well positioned for continued growth. With that, let's start the Q&A session. Operator, can you assemble our queue, please?
Operator (participant)
Yes, sir. At this time, if you have a question, please press star one. If at any point your question is answered, you may remove yourself from the queue by pressing star two. In order to allow for broad participation, please limit yourself to one question and one related follow-up. Lastly, to provide optimal sound quality, please pick up your handset while you ask your question. Our first question will come from Robbie Marcus with J.P. Morgan. Your line is open.
Robbie Marcus (Senior Analyst)
Great. Good morning, everyone, thanks for taking the questions. Maybe to start, I wanted to ask on guidance. This is the second quarter in a row where you guys have had a really good performance on the top line beat and raised guidance.
On the bottom line, we're seeing guidance go up again by a little less than the beat on the bottom line. Maybe spend a minute and talk through some of the puts and takes and how you're thinking about managing, you know, the rest of the year and guidance to be able to offset any headwinds. It'd also be great, it looks like FX isn't changing on the top line, but it's getting worse on the bottom line. Maybe throw that in there as well.
Christopher DelOrefice (EVP and CFO)
Yep. Yeah. Thanks, Robbie. It's Chris. Appreciate the question. I think this is pretty straightforward. First, just, you know, look, another strong quarter and our second increase in guidance to your point. On revenue, we increased from 6.5% to 7% or 50 basis points on our base. At the midpoint, that's 6.75%. I think important to note, right, our two-year average growth now, 8% or even 7% when you strip out the benefit from tucking M&A, on a pure organic basis. Really strong, well above our 5.5% profile. As you think of the increase, basically the increase in revenue 100% matched the outperformance in Q2.
The way to think of that, if you recall last quarter, we communicated that our second half growth rate would be 6.6. That stayed intact, so we're holding at the 6.6. Importantly, as you think of the first half to the second half, actually the organic revenue growth accelerates from 5% to 6%, and again, nicely above our 5.5%+. Really strong revenue story following a strong FY 2022. On earnings, where I think the core of your question is, so one, building on the strong growth, you know, we continue to execute against our margin goals. Hopefully that hasn't gone lost in this macro environment where you're seeing many in multiple industries with margins declining.
We're committed to the 100 basis points of margin improvement. We had slight improvement in the quarter, so that holds intact. Basically, the way to think of the raise, you have to kind of break it down and really understand the base business. On the base business, as we noted in the presentation, we raised by 11 and a half cents. It exactly equals kind of margin drop through on the $90 million increase on our base revenue. You notice we slightly modified our the midpoint of our tax guide. The revenue accounts for about 60% of it. The tax accounts for the best. I think also important to note, we're not getting any year-over-year benefit on tax. It's actually still a year-over-year headwind that's absorbed in our full year guidance.
I think it reflects really strong base performance. I think another important reminder. Anyway, that eleven and a half cents, it basically absorbs two factors. You notice that we moderated down the COVID-only testing by about $25 million. That has strong drop through in a margin because there's very little commercial investment, and it has a higher GP as we've shared in the past. We more than absorbed that. We did absorb some FX pressure on EPS, which was pretty modest. That was $0.05 in lieu of actually dropping for FX like we normally do, and adjusting our guide range, it was $0.05. We absorbed that on the strong base performance.
You know, FX, there was a little bit, if you remember in the quarter, the dollar strengthened significantly and the euro, and the euro recovered. You actually have to look at the average in the quarter. There was a little bit in the quarter with the euro. You also had the yuan and the yen were the other two currencies. Just, you know, modest impacts there. Net-net, it's a raise by a penny and a half at the midpoint. I think the most important thing for everyone to keep in mind, when you just look at our base EPS growth year-over-year, knowing that we're absorbing significant year-over-year declines in COVID-only testing, our actual EPS growth on the base business is nearly 15%, well above our double-digit EPS.
We feel really good about where we sit the halfway through the year. We haven't changed any of our kinda core commitments around margin. With that said, we wanna make sure we solidify the future, we wanna keep investing, we continue to invest at R&D at higher levels, and this isn't about one quarter, one year. We think this is what you're seeing here is a great growth story play out that'll happen over multiple periods and will be durable.
Robbie Marcus (Senior Analyst)
Really helpful. Maybe just a quick follow-up. I could probably anticipate your answer here, but, given the focus, any updates on Alaris or upcoming data points or catalysts we can be looking out for, in the pathway to approval?
Tom Polen (Chairman, CEO, and President)
Hey, Robbie. Good morning. This is Tom. Obviously, as we've discussed many times, getting Alaris back on the market is our number one priority. We are confident in the resources that we have invested in our submission and the team and leadership tasked to prioritize this. You know, as you expected, and as we've said before, we're confident in our process and that we will get clearance, and we have been and wanna remain prudent and thoughtful about the process with the FDA. Therefore, we continue to not try to predict exact timelines just given how inherently complex these submissions are. Obviously, once we get clearance, we'll immediately communicate at that point, and that has been and remains our strategy there.
We're fully focused on making sure that, you know, our number 1 job is making sure that the FDA has all the information they require to clear the product. Thanks for the question.
Operator (participant)
Thank you. Our next question will come from Larry Biegelsen with Wells Fargo. Your line is open.
Larry Biegelsen (Senior Medical Technology Analyst)
Good morning. Thanks for taking the question. Tom, I think two for you. One, I just wanted to start at a high level, and congrats on a nice quarter here. The super cycle of new products you talked about, you know, how are you feeling about your target of 5.5% organic growth beyond 2023? You know, Chris mentioned a few times that the two-year CAGR for organic growth is 7% this year. Could that 5.5% be higher, you know, beyond this year? I have one follow-up.
Tom Polen (Chairman, CEO, and President)
Okay. Good morning, Larry, and thanks for the great question. Great to connect as always. You know, we're extremely excited about the pipeline that we have and our outlook going forward. You know, we're not looking to adjust our long-term commitment at this time, but we are feeling very positive about the momentum that we have, as you described. I think, you know, as we look at where we are today, what stands out, and hopefully became clear in our discussions this morning, are the number of high growth platforms that we've built and that we've continued to systematically progress across the company. We talked about a few of those.
Whether or not it's Pharmaceutical Systems, which is now the 11th quarter in a row of double-digit growth, and the macro environment of more biologics being in pharma's pipeline than small molecules today, first time in history, and some big blockbuster products coming down the pipe. We are well positioned as the leader in injectable drug delivery to benefit from that trend, with the significant capacity we've added as well as the innovation pipeline we have, both for professional delivery, but also, you know, enabling wearables and self-injection products that we've been investing in are coming to market now as well. Pharmacy automation, right now a $500+ million platform growing in the teens. Huge trends that are gonna continue to fuel that going forward.
Labor shortages, the need for pharmacists to move more of front of the front office to be serving patients, doing wellness checks, et cetera. We're gonna continue to see strong demand for pharmacy automation, and we're really pleased with that platform that we've built. BDB, huge super cycle of innovation there. The FACSDiscover, we've started shipping to early adopter sites and really a tremendous opportunity to help bring new insights and new discoveries in the areas of cell therapy and immune oncology and just understanding the immune system overall. When you think about who is getting Nobel Prizes in those fields that I just described, almost all of them were using flow cytometry, and I'm convinced you're gonna see whole new sets of discoveries being uncovered with the new technologies that we're rolling out there right now. I'm really excited.
Of course, that's complemented not only on the capital side with FACSDiscover, and the product we're launching now is just the first in a whole family that we're gonna be continuing to roll out. We're rolling out the high-end sorter first, but we're gonna be offering mid and lower end sorters or cell analyzers utilizing that same technology over the next several years. That's complemented by our new dye portfolio and expanding antibody portfolio, as well as informatics technologies that we have launched and will continue to launch. BD Interventional, you heard us talk about a number of great growth platforms that have been developed there, and we're seeing good, strong growth out of the BDI segment. This was another strong quarter there.
You're seeing a number of the acquisitions that we've done over the last few years, or had done just before BD and Bard came together, things like PureWick and the Shirole innovation that's happening there. Tepha, which we acquired over the last few years and how we're expanding that into new applications. We gave the example of umbilical hernia, Straub Medical and how that's being expanded globally. You're seeing the benefits of that in the PI business. We're really pleased with the growth momentum that's happening there. Of course, medication delivery, a continuing strong growth in our portfolio there from catheters to PICCs, and eventually through our planning horizon, you know, our aim to get Alaris back on market. We're really pleased with the momentum. We're really pleased with the launches we've done to date.
We've had about 10 key launches so far this fiscal year. That's coming off of 25 key launches last year, we continue to be on track for about that same number again, you know, this year and pretty much every year as we look forward. Thanks for the question.
Larry Biegelsen (Senior Medical Technology Analyst)
That's super helpful. Yep. Just one quick follow-up, on Robbie's question on Alaris. It's, it's great to hear, the confidence that you expressed today. My question is, you know, are you confident you can get it within the... I know you're not talking about specifics, but within the BD 2025 plan. I know you have 80 basis points, you know, of margin improvement, for Alaris in the BD 2025 plan. If you don't have it within that timeline, can you know, do you have other ways to offset, you know, the margin, of, you know, leverage you're expecting from it? Thank you.
Christopher DelOrefice (EVP and CFO)
Thanks, Larry. I'll take that one. Yeah, to your point, if you recall, given that we made the decision to maintain investment in service, field support, et cetera, there was about that 80 basis point headwind to our margin as part of Alaris. We've been very clear while we haven't been said we weren't gonna predict timing. We did say it's part of our FY 2025 plan. The good thing about margin and just if you step back again, you know, we've delivered 50% of our goal, right, through FY 2022. We're on track this year. That'll put us 70% towards our goal. We have multiple levers to deliver both. In essence, the way we think of it is how do we get to double digit EPS growth on a consistent basis.
We're not dependent on one variable. Given 70% of the way there, we feel really good between the strong growth profile that we expect to continue and natural leverage you get. The ReCode initiatives we put in place that'll continue to accelerate through the back half of the year. We just announced kind of the third leg of Project ReCode operating model simplification. Those have been announced, continuing to drive portfolio mix as we've been doing. There's a host of things that I think give us confidence and the ability to actually sort of.
navigate the balance between top line growth and margin improvement as we continue to progress through the back half of the year while delivering on both commitments, the 25% margin and double-digit EPS growth. I think we're really well positioned when you think of it that way, it gives us a lot of flexibility.
Tom Polen (Chairman, CEO, and President)
Just to add to Chris's good comments is, you know, Alaris is included in our strategic plan. There's many other levers we have, as mentioned, but, you know, we have been, as we've shared before, preparing so that when we do get Alaris clearance eventually, that we'll be well-positioned to serve our customers, right? We've talked about that increased inventory levels that we've done on certain components, et cetera. We've talked about the continued investments we have kept in service in our selling organization so that when clearance eventually comes, that we can both remediate the pumps that are on the market quickly as well as, you know, support additional customers. Thank you for the question.
Operator (participant)
Thank you. Our next question will come from Vijay Kumar with Evercore ISI. Your line is open.
Vijay Kumar (Senior Managing Director)
Hey, guys. Congrats on a nice sprints year. Thanks for taking my question. Tom, my first one is for you. Appreciate all the colors, I think, on pharma, new product cycles. Can you just simplistically, you know, outline what are the categories here that BD is gaining share? It looks like in the pharma, you know, Life Sciences, flow cytometry, surgery within hernia, vascular. There's a number of categories it feels like BD is gaining share. Is that true? Within Life Sciences, any concerns on emerging biopharma funding cycles?
Tom Polen (Chairman, CEO, and President)
Great, great question, Vijay, and appreciate the comments. We'll go around. We've got the segment presence here in the room. I think you're right. What you're seeing is outperforming market growth rates in a number of categories, and we're really pleased with that, driven really through strong innovation, capacity investments that we've made and strong execution. Why don't we start with the medical segment, and Mike can speak to, you know, what we're seeing in both Pharm Systems, but also pharmacy automation and medication management overall.
Michael Garrison (EVP and President of Medical Segment)
Yeah. The thanks for the question. There's, you know, three sort of growth drivers that we've built in medical. First, you know, Pharm Systems, as Tom mentioned in the opening comments, you know, 11 straight quarters of double-digit growth. Both the combination of our capacity investments, which we, you know, built a few years ago and continue to implement, plus our innovation really to support the sensitive biologics and the requirements that pipeline has coming towards us. We feel really good about, you know, that durable growth continuing. In MMS, you know, we're really happy with the way that the teams have come together in pharmacy automation and our dispensing business.
Yeah, that connected med management and the tie around clinical efficiency, both in the hospital, as the hospitals start to shift care, you know, outside of the hospitals and how that ties into the retail markets, the long-term care markets. You know, this is just a really, you know, ripe area for innovation, and, you know, we're really well positioned now with that acquisition. It's going really well. In MDS, you know, the vascular access management strategy, you know, continues to do really well, continues to resonate with customers, especially, you know, those aspects where it makes both the patient experience and the clinical experience a positive one. We see, we don't necessarily look at it in terms of market position.
We don't really comment on that, but we do look at it in terms of, you know, our WAMGR, and we tend, you know, we're showing growth over WAMGR. We feel good in that area as well. I'll turn it over to, you know, Rick or Dave.
Tom Polen (Chairman, CEO, and President)
Okay.
Richard Byrd (EVP and President of Interventional Segment)
Great. Thanks, Mike. Thanks, thanks, Vijay, for the question, and Tom, for the opportunity to talk about, BDI. First off, really pleased with the results in the quarter. 9.3% growth overall with all businesses contributing. Like you said, you pointed out surgery at almost 14%. This strong performance across the segment really reflects the execution of our growth strategy across those key end markets that Chris pointed out. Advanced repair and reconstruction, PVD, oncology, incontinence, and our newer innovations in higher growth areas are all really contributing nicely to growth. In UCC, we continue to see the growth of the Purewick franchise, aided by the recent launch of Purewick Mal.
PureWick continues to have really a strong presence in the acute and the alternate care setting for us, for chronic incontinence and surgery. Like you said, growth is really driven by continued market adoption of Phasix, our hernia resorbable scalpel. Biosurgery, you know, growing double digits aided by Arista. Really good there. Finally, you know, in PI business, we're really seeing improvements across our global supply chain as well as benefits of, you know, a lot of the strategic investments that we've made in the past. We have strong global penetration of Rotarex. We're really pleased with the relaunch of Venovo. Our global expansion, you know, strategy is paying off. Oncology in China is really strong.
We feel confident with the overall external market conditions, including the recovery of elective procedures, improvement of supply chain. You combine that with the success of, again, the strategic investments we've made, whether they be tuck-in M&A on products like Tom mentioned in Rotarex, Phasix, or with our new product launches such as PureWick now. Team is executing extremely well and, you know, we believe we have the right strategy to put drive, you know, continued success.
Tom Polen (Chairman, CEO, and President)
Maybe just to add to Rick's good comments there. I think something that stands out for particularly the PI business is a number of the investments and new launches that are happening there are in entirely new markets for BD, so they're almost exclusively share gains that are happening, that are driving growth, right? You think about atherectomy and thrombectomy, that's 100% share gain. Think about the Venclose acquisition that we did and the growth that's coming from that. That's
All share gain because we hadn't been in the category. Of course, Venovo Stent, we had been off the market, the relaunch of that is all regaining market share, just to more specifically address that question as well. Maybe Dave.
Dave Hickey (President of Life Sciences Segment)
Yeah, for sure. Hey, Vijay, it's Dave. Great question. again, I mean, just to reiterate for the segment, I mean, as you saw in the, in the release, you know, just a tremendous, another strong quarter for BDB at 18.7%, you know, and even good core growth in IDS, if you, if you strip away the headwind from the 800 basis points of respiratory climb over from same period last year. I'll maybe pick a couple of highlights. I mean, in BDB, you know, we continue to see really strong growth across the board, whether it's the Life Sciences, you know, Life Sciences research reagents, clinical reagents, the demand for the new instruments. You know, actually, you know, from a Life Sciences research reagent perspective, this is the dyes, the BD Horizon dyes that Tom talked about.
That's actually our 10th successive quarter of double-digit growth now. You know, you've heard us talk about BD MAX before, which was obviously instrumental in the, you know, the COVID sort of pandemic from a respiratory perspective. How do we now leverage the BD MAX, you know, for take up of IBDs and assay utilization and assay penetration? Again, you know, we continue to see really good growth in molecular reagents, eight successive quarters of IVD double-digit growth, which is great. Maybe, you know, on the automation side, we, you know, when you think about the staffing challenges that the labs are facing, you know, we're really starting to see the traction for BD Kiestra, BD COR that Tom has talked about.
If you asked a specific question on the sustainability and the customers, you know, relative to BDB. You know, the good thing about BDB and just the breadth of platform and reagents that we have is we've got a very strong diversity of customer base. Not just biopharma, but for sure biopharma, but academia, large academic medical centers, big research institutions. I think the diversity of base really helps us there, and the types of research that they're doing, right? You think about cell therapy, gene therapy, immune oncology, all the stuff of, you know, in terms of fighting that chronic disease in oncology. I think we feel really good about that base. Then from that sustainability, I was just reflecting back as we were getting ready for today.
When you look at the segment overall, even for the first half of this year, we've actually had two PMA supplements approved and eight 510(k)s, you know, in the first six months of this year. That all builds to the momentum as we go forward here. Hope that helps.
Vijay Kumar (Senior Managing Director)
Thanks for that comprehensive answer. Just one quick on gross margin. Chris, is a gross margin performance in the queue despite 200 basis points of inflation impact, should we think of back half or third quarter being at or above second quarter levels?
Christopher DelOrefice (EVP and CFO)
Yeah. A couple of things. One, if you remember from a full year standpoint, we're absorbing over 200 basis points. It's the second consecutive year of inflationary pressures. It was actually more prominent in the first half of the year. It'll bait some combination of some moderation of inflation, coupled with, of course, the cost improvement actions and mitigation actions that we're taking in the second half. We expected modest improvement in GP through from a full year standpoint. I think you would expect basically similar to be slightly ahead of our Q3 FY 2022 gross margin, which was 52.6. You'll see slight improvement, and then that'll further expand as we move into Q4. We're right on track.
I think the other thing to point out is, remember, we have about five months of inventory that, you know, flows through our sales. We have strong line of sight to basically the inflation that is sitting in that inventory, all the cost improvement that has actually been driven that's part of that inventory cost. As that sells through in the back half of the year, it gives us strong confidence in our cost base to achieve those goals.
Operator (participant)
Thank you. Our next question will come from Matt Miksic with Barclays. Your line is open.
Matt Miksic (Senior Equity Research Analyst)
Hey, good morning. Thanks so much for taking the questions. Congrats on a strong quarter here. I want to go back to the guidance, Chris, if we could, just because there had been some changes, and I know Robbie touched on this earlier. Maybe just to clarify a bit further on the bottom line, just because the sensitivity around beats and raises this quarter is so significant, it seems. You know, so if I remember correctly, last quarter, you know, a significant part of the raise was sort of a, an FX tailwind. You know, there was also the lower COVID, higher margin COVID, headwind as well.
Sort of a big part of that lift, you know, offsetting that was an FX tailwind. This quarter, you've actually got, you know, another FX headwind that you're absorbing. Is that, you know, right way to think about sort of the relative puts and takes last quarter, this quarter?
Christopher DelOrefice (EVP and CFO)
Yeah, that's correct. Well, just one comment on FX, which is interesting, right? Our fiscal period starts earlier. We actually, our original guide started at the peak of the strength of the U.S. dollar, right? We had a significant FX pressure when we gave our initial guide. To your point, in Q1, the dollar weakened a bit, we adjusted up similar to, you know, most companies reporting sort of their first fiscal year. We reversed a lot of that unfavorability in the quarter, gave that back. The base was strong. The base EPS actually expanded, and to your point, offset, we had a takedown in our COVID-only testing in Q1. This quarter's a little bit different. Again, you had strong base EPS.
We actually raised by $0.115. It was offset by two things. Again, another, $0.05 on the COVID-only testing dynamics, taking that down a bit to how we see the full year given that, those dynamics, and market has softened significantly. A little bit of FX pressure for the reasons, I noted previously. Net of those two items, it's $0.015. I will go back to just what I shared. Again, when you look at our base business absorbing all the COVID-only year-over-year testing impacts, our base EPS is growing almost 15%, and that's while absorbing over 200 basis points of inflationary pressures. I think it's somewhat unprecedented performance in this environment.
We're delivering really strong growth, and, we wanna make sure that we're maintaining investments to also continue this type of performance, well into the future. That's how to think of it. Hopefully, that helps.
Tom Polen (Chairman, CEO, and President)
I think just to add to Chris' comment that obviously the update here has COVID essentially out for the balance of the year, right? The number that we have now in COVID guidance is basically the COVID number that we have year to date.
Christopher DelOrefice (EVP and CFO)
The other thing, given those FX dynamics, right when FX improved, we only had three quarters to go, right. When we cycle into our fiscal Q1, which is calendar Q4, there will actually be an FX tailwind based on where spot rates are today. You know, it's there's a lot of moving parts to calculate that directly, but on top line, you know, it could be $75 million to $100 million. When you look at other people's guides that has a full true calendar year, that's included. We pick that up next year in ours.
Matt Miksic (Senior Equity Research Analyst)
Got it. No, that's super helpful. The slides are also really helpful, material to sort of walk through this stuff. The other, you know, again, on guidance on the top line, you did make a change, as you pointed out, you know, expecting a heavier contribution, positive contribution from, you know, your inorganic adds, if you will, Parata specifically. You know, so I know that last quarter, I don't wanna say controversy, but there was this question of, you know, you have inorganic adds and you have portfolio exits, which are basically discontinued products, you know, not sold to another company, but coming out of your revenue bill.
The way I think you were describing it was, you know, those things are kind of offsetting each other, not exactly organic, but we're thinking about it organically, and I would, I would agree with that. Now you sort of shifted back to more traditional organic description, but you're still exiting those 100 basis points of portfolio exits. Even though it's 5.25%-6.25%, it seems to be a little bit stronger on the base business and the organic side. Is that a fair way to read the strength on the top line?
Christopher DelOrefice (EVP and CFO)
Yeah. Yeah, yeah. Yeah, exactly. The simple way to think of it is, our all-in guide that includes the negative impact of portfolio exits and the positive impact of organic is 6.75% at the midpoint, right? Even if you strip out just the M&A contribution, we're still at 5.5% at the midpoint. That's not taking any credit for the strategic portfolio exits. That was purely just to make sure you guys had context to we were taking that bold action. It's helping improve margin given the strong growth profile we have. When you think of pure underlying against all the businesses we're investing in, if you wanna adjust for that's about a 1 percentage point that would take it back up to that same range.
Even if you get zero credit for that, our organic growth is 5%, 5.5%. More importantly, our two-year, right, coming off a really strong year, we're 7% organic. None of those numbers give us a positive adjustment for those one-time strategic portfolio exits.
Tom Polen (Chairman, CEO, and President)
I think we're seeing the benefits, obviously given the strength of the business, taking those actions on that portfolio is exactly it's the right time to be doing that. As a reminder, those products that we're just exiting have less than half of the average GP of the company. They're growing much less than the average of the company and are in areas that are just not strategic in terms of, you know, relevant growth platforms as we go forward. They also come with operational efficiency benefits, organizational efficiency benefits, et cetera. They're just gonna make us that much stronger as we go forward and make sure that we're focusing our resources and investments in those areas that move the needle the most for customers and for us.
Christopher DelOrefice (EVP and CFO)
Yeah. The other, just one last comment. You know, you mentioned Parata and the strength there. This is a little unique, right? You, you get the sort of one-time adjustment for what you acquired. This is a great example of us, just strong execution and revenue synergies and taking up that forecast. Again, I think it's just illustrative of how we're managing kind of tuck-in and the benefits we're generating from that. As we anniversary Parata, the contribution from all the tuck-in acquisitions we will do on an organic basis, it'll add about 50 basis points of growth to our portfolio as we exit this year. Thanks for the question.
Matt Miksic (Senior Equity Research Analyst)
Thanks, Tom.
Christopher DelOrefice (EVP and CFO)
Yep. Thanks, Tom.
Operator (participant)
Thank you. Our next question will come from Joanne Wuensch with Citibank. Your line is open.
Tom Polen (Chairman, CEO, and President)
Good morning, Joanne.
Joanne Wuensch (Managing Director)
Good morning, and thank you for taking the question. A couple of miscellaneous things, all at once. What was the impact of price in the quarter? If you stop planned exits, does that mean your organic revenue growth rate goes up 100 basis points, and is there a plan to stop planned exits? Bigger picture, there were a lot of BD Veritors and BD MAXs, et cetera, placed or sold during the pandemic for testing. What happens to all of those now, and how do you increase utilization on them for other things? Thank you.
Tom Polen (Chairman, CEO, and President)
Okay, great question. Why don't we start on the first two with, Chris, and then Dave can take the Veritor MAX.
Christopher DelOrefice (EVP and CFO)
Pricing, Joanne. The Q will come out this evening, and we just after market, and pricing will be disclosed in there as we consistently have. What we've shared is it's the last thing we think about, right, as it relates to inflation mitigation. What we're really focused on is driving cost improvement, portfolio mix, the strength of growth and volume leverage. All of those dynamics are significant contributors to mitigating the 200 basis point inflation. You'll probably see something consistent in terms of what we've done last year. If you think of how last year played out, it accelerated through the year, you'll be able to see that at the end of the day.
In terms of portfolio, I mean, the simple answer to the question is these were a one-time in nature. There's always smaller adjustments you make in your portfolio, but we made a decision to really take a deep look at our portfolio this year, as Tom described. These weren't strategic products. There's market alternatives. The GP profile is significantly reduced. Removing these frees up capacity and other costs, all of those products, not being sure they still require quality support, regulatory support. There's a lot of, you know, tie up as it relates to shipping and thinking of other infrastructure support. There's benefit beyond just the GP lift you get. To answer your question simply, yeah, if we stopped doing that, our results would have been better by roughly 100 basis points this year.
This quarter was a little light. It was closer to 50 basis points in the quarter. From a full year, we're still estimating about 100 basis points. We do view these as one time in nature this year. We don't anticipate doing that in the future beyond smaller things that we would just absorb and not even talk about.
Tom Polen (Chairman, CEO, and President)
Yeah. Obviously, we continue to focus on, you know, delivering on our 5.5%+. As Chris said, we do not have plans to do that again. These are very discreet products. We've given some examples before of things like mastectomy bras or, you know, washing instruments for orthopedic procedures that, again, we just don't have a relevant role in those spaces. So we've exited those revenues. We would not see that repeating in the future. Just one thing as you see price, you know, after the close of the market today, just to reinforce a comment that Chris made in the opening comments is that we did see very strong volume this quarter as we think about price and volume, you know, and the role of those two together.
As we look at volume, you know, we look at it organic volume, and then we take out flu COVID sales as well, right? Because that's something that's not really indicative of kind of our ongoing business. When you look at that organic volume growth, you know, excluding COVID flu, it's strong mid-single digits, nearly 6% overall volume in the quarter. That's, you know, something you'll also see as those further reports come out, something very positive that we're continuing to see across the business. When it comes to Veritor and MAX, as I know Dave made some earlier comments about the very strong double-digit growth that we continue to see in MAX reagent absorption, but why don't we share some more color on that?
Dave Hickey (President of Life Sciences Segment)
Yeah, Joanne, thanks for the question. you're right. I mean, through the pandemic, obviously, Veritor and BD MAX install base did increase. We've not given specifics around exactly what those numbers are. You know, we're very pleased. You know, we continue to ship those platforms today. If I break it down, so for Veritor right now, a lot of our focus is actually on converting the emergency use authorizations that we got for COVID and our combination assays to 510(k). You know, and obviously once that is done, that would leave the Veritor, if you like, with approved assays for flu A, flu B, COVID, RSV, Strep A, you know, which would really create a really nice anchor point of care, clear way platform for infectious disease testing. That is our focus there.
For BD MAX, you know, one of the big benefits of that platform that labs see as an attribute is its complete sample to answer automation and integration within a 2 to 3-hour window from sample to result. We place many MAXs during the pandemic just for COVID and combination testing. When you think about the rest of the menu, we're now starting to drive adoption of our regular IBD assays. There are really two strategies. One is to increase assay utilization and assay penetration of our regular IBDs onto that BD MAX install base. Where we got emergency use authorization on BD MAX during the pandemic, like our quad assay for BD MAX, moving those EUAs to 510(k) as well.
It's that IBD traction and momentum that you've seen us sort of, perform 8, 8 quarters double-digit growth.
Tom Polen (Chairman, CEO, and President)
Great. Thank you for the question, Joanne.
Joanne Wuensch (Managing Director)
Thank you.
Operator (participant)
Thank you. Our last question will come from Rick Wise with Stifel. Your line is open.
Tom Polen (Chairman, CEO, and President)
Good morning, Rick.
Operator (participant)
Hey, Tom. Hi, Chris. Listen, I'm just listening to everything you're saying today, I keep hearing you both say in many different ways that, and Chris said it, that you're well on track to hit your fiscal 25 long-term targets. Gosh, I accept it, I believe. I think this quarter supports that notion. My question is it right for us to believe, and I feel like everything you're saying today is suggesting it, that you're now approaching sustainably perhaps a 6%+ top-line territory? Is it right for us... Again, I accept that you're gonna hit the 25 in 25 on the operating margin.
Rick Wise (Managing Director)
My question on operating margin is more how are you getting ready, Tom, it's a crazy question, for the next target, which I think it's gonna be, you know, 30%. I don't know if it's, you know, if that's gonna take another five years. Is that conceptually the wrong way to think about what you're trying to do, where Becton's going? Maybe just as part of that, your role and just your latest thoughts on the role that tuck-in M&A is gonna play? You're doing all these great things internally. Well, what role is tuck-in M&A gonna play in this journey? Thank you.
Tom Polen (Chairman, CEO, and President)
Thanks for the question, Rick, it's a good question. You know, we're focused obviously on continuing to execute our strategy, we are very pleased with our progress, both on our portfolio and the reshaping that we've been doing. Of course, that includes, you know, an Embecta spin just not that long ago as well, which we're pleased with how that's turned out and is allowing each organization to focus. As we look ahead, I'll just go back to the growth platforms that we've been systematically building and are continuing to gain momentum in, right?
We talked about areas like Pharmaceutical Systems, like pharmacy automation, like BDB, flow cytometry, innovation super cycle, like area interventional solutions or medication delivery solutions, and our continued innovation focus, our continued outperforming of WAMGR, and how we've been supplementing that with strong tuck-in M&A that as Chris mentioned, as Parata anniversaries this summer, you know, we'll be contributing 50 basis points of underlying growth. We continue to have a very strong funnel. We continue to be focused exclusively on tuck-in M&A as been part of our strategy. Obviously, we've been very focused. Mike and team have been, you know, heads down executing the integration of Parata exceptionally well. You know, to see revenue synergies this early in the game is quite unique.
Just as a reminder, that was accretive to our operating margins right from the start, and they're getting expense synergies going now as well too, right? Only improves that dynamic. We're really happy with how we've been executing tuck-in M&A, the capabilities that we've, and track record that we've developed there, which gives us the right to continue to make that an important part of our strategy as we go forward. I think we've talked about in the past, this is really a new lever for BD, right? We're a 125-year-old company, and tuck-in M&A had not been a systematic part of our strategy historically. Obviously back in 2015, you saw the beginning of 2 large transformational M&A deals.
We obviously did not do tuck-in M&A during that period of time as all the cash was going to pay down debt. This era where we've done quite a number over the last three years, how you're seeing those build systematically stronger business profiles and growth platforms and how we're gonna continue with our focus on cash and profitability to drive that going forward is a new part of our equation that's complemented by our strong organic innovation. One thing we didn't mention on this call is, but we've been talking about historically, is that when it comes to innovation, we've made really strong progress in improving our on time launches and our on time milestone delivery, getting into the top quartile, and we had exited FY 2022 with our best ever performance.
We're beating FY 2022 again in the first half of this year, right? We're hitting new records in on time milestone delivery and on time launches. We're getting that productivity out of our organic investments as well, which is really positive as we look ahead. When it comes to margin, and Chris can jump in further to this. Yes, we feel confident our 25 margin by 25, and we've talked about that. Could be opportunity to exceed that, we would make decisions on do we let that flow through or do we, you know, further invest that? I think our first priority will continue to be making sure that we invest in strong growth. We have a lot of exciting opportunities in markets that we participate in.
We've described a number of them today on the call and have been discussing them, you know, for some time. We're gonna continue to invest behind that, creating a durable growth organization, that's supporting transforming the future of healthcare in the areas that we've consistently talked about around smart connected care, around enabling the shift to new care settings and around improving outcomes for patients with chronic disease. You know, that's our focus. Let's get to 25 first percent margin, and then we can look at optionalities from there. Chris, any other?
Christopher DelOrefice (EVP and CFO)
Yeah, just maybe a few small adds. I mean, one, I do think the value proposition that BD offers is unique. We're not changing in our commitments. We talked about 5+, to your point, what's been clear, right, our two-year growth, 7% organic. We're clearly in the plus side of the equation, I think for all the reasons Tom noted. We have a portfolio that has the ability that we wanna continue to try and drive the plus, our commitment is 5. I think the nice thing about that is that is maybe underappreciated. There's very few companies in med tech that can deliver that outsized growth but still have this nice durable profile that's very de-risked.
You get this benefit of strong mid-single digits that's extremely reliable, while we're posting outsized growth and improving margin in a very complex environment and haven't even fully capitalized maybe on some of the levers Tom talked about, like the firepower we'll have with tuck-in M&A going forward. Margin, really, I'll go back to we're committed to double-digit earnings growth, which isn't easy to do. Obviously, we can moderate that depending on the growth profile. What we wanna make sure we do is consistently invest in the right areas to drive that growth, right? We continue to increase R&D, et cetera. All those factors would be sort of contemplated, but certainly confident in double-digit EPS growth, being able to consistently do that.
I think it's a nice balance of, you're seeing an inflection in growth and really strong growth that's differentiated. You're seeing differentiation in execution, and you have a de-risked portfolio. It's hard to find all those pieces that should make people feel good. Thanks to you both.
Tom Polen (Chairman, CEO, and President)
Thanks for the question, Rick.
Operator (participant)
Thank you. There are no further questions. 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.