Thomas E. Polen
President, Chief ExecutiveOfficer & Chairman at Becton, Dickinson and Company
Thank you, Kristen. Good morning, everyone, and thank you for joining us. On todays call, I will provide highlights of the quarter and discuss the continued strong progress we have made on our BD 2025 strategy. Ill then turn it over to Chris for the financial review and outlook. After our prepared remarks, Chris and I will then open the call up for Q&A. But first, I want to comment on the other announcement we made this morning, regarding Chris intention to retire from BD and join the Board of our Diabetes spin-off. On behalf of the Board of Directors, the leadership team and the company, I want to express my gratitude to Chris for his leadership and service to BD. Im confident the CFO transition ahead will be seamless, and his leadership and experience will make him an excellent director for NewCos Board. Now lets jump into our results. We were very pleased with our third quarter performance, powered by strong growth and momentum in our base business across all three segments. Revenues totaled $4.9 billion, and our adjusted EPS was $2.74, both ahead of our expectations. Total revenues were up 26.9% on a reported basis and up 22% on a currency-neutral basis.
Results included COVID diagnostic testing revenues of $300 million, which contributed 4.8% to growth. Excluding COVID testing revenues, our base business revenues were up 17.6%, better than we expected across most business units. The strong growth reflected the anniversary of the initial COVID wave and the temporary halting of elective procedures and its impact on medical device utilization in the year ago quarter. But Q3s result also reflects the continued momentum driven by the successful execution of our BD 2025 strategy. Excluding COVID diagnostic revenues, base business revenues in Q3 fiscal 21 increased 3.9% relative to our pre-pandemic third quarter fiscal 2019 on a currency-neutral basis, which includes the impact of the Alaris ship hold. If you exclude the U.S. infusion systems business, our total revenues would have increased 6.6% relative to our prepandemic third quarter fiscal 2019. Our Pharmaceutical Systems and Urology and Critical Care franchises continue to be standout performers, where revenues are up 17% and 11%, respectively, over 2019 levels. Bioscience revenues were up 9%. Surgery and Peripheral Intervention revenues are both up 8%.
Elsewhere, we see opportunities for improvement ahead in fiscal 22 and beyond. For example, our MDS revenues are up about 2% versus 2019 levels, reflecting the continued impact of COVID as well as the impact of China volume-based purchasing. As hospital utilization improves, we should see further improvements here. Also, as I mentioned, Medication Management Solutions revenues are impacted by the Alaris ship hold, and we expect our revenues to improve once we receive our 510(k) clearance for our BD Alaris system. While Im pleased with how we are accelerating our revenue performance and profile, Im equally pleased with the process were making in improving our working capital and cash flows. Cash flow performance has been a key focus for us since I became CEO, and that is evident in our working capital metrics. Year-to-date, cash flows from operations totaled $3.7 billion, an increase of 80% from the prior year period. This improvement in our cash flows allowed us to advance our more balanced capital allocation strategy this quarter, which included the repurchase of $1 billion in BD stock at an average price of approximately $242.
This marks the first time we have repurchased shares since 2017 and the largest amount we have repurchased since 2012. Even with this repurchase activity, we ended the third quarter with nearly $3.2 billion in cash and an adjusted net leverage ratio of 2.4 times. Overall, Im really pleased with our performance in the quarter, particularly with the continued positive momentum in our base business. This gives us the confidence to raise our base revenue assumption. We now expect our base business to grow approximately 7.5% to 8% on an FX-neutral basis. This is higher than our previous expectation of mid-single-digit growth. We continue to expect COVID diagnostic testing revenues of $1.8 billion to $1.9 billion, with more revenues coming from international markets than we previously anticipated. We now expect currency-neutral revenue growth overall of approximately 14%. Our positive base business momentum and a lower tax rate allows us to raise our adjusted EPS guidance by $0.10 while continuing to reinvest in our business and overcome lower COVID testing profits, including a provision for excess and obsolete COVID testing inventory. We now expect our full year adjusted EPS range to be $12.85 to $12.95.
Chris will provide you further details on our financial outlook later in the call. Next, I want to provide an update on our BD Alaris pump remediation, which remains my number one priority. Last week, we announced to our customers a positive step in our remediation efforts. Working with the FDA, we are now initiating remediation of existing Alaris system devices in the field by updating the software to version 12.1.2 following submission of the 510(k), which includes this software version. This new software version is intended to remediate the issues identified in the February 4, 2020, recall notice and provide programming, operational and cybersecurity updates to affected devices. However, the software update has not been reviewed or cleared by the FDA. To address the question on Alaris clearance timing, we remain confident in our submission and the process we are undertaking, including working closely with the FDA. As Chris will later discuss, we believe it is responsible to not definitively predict the FDA clearance in our FY 22 outlook. We believe this is a prudent approach given the inherent difficulty in predicting FDA clearance time lines.
Next, I want to update you on our BD 2025 strategy of grow, simplify and empower. First, Id like to focus on our growth pillar. We continue to strengthen our market leadership positions in our durable core business while purposely investing in new innovations that help accelerate and shape irreversible trends that we see transforming global health now and in the decade ahead. Ive spoken about these three innovation and growth focuses before. And weve been purposely shifting more of our R&D and tuck-in M&A investments into these spaces, which are growing over 6%. Through this, we aim to lift our weighted average market growth rate and performance over time. And this year, weve launched several innovative products and solutions across the continuum of care, across our business units and across the globe. And after completing our strategic portfolio review last month, I can share with you that our pipeline is very deep and wide across our businesses. Its been further enhanced by our acquisitions over the past 18 months. And youll hear much more about our innovation pipeline at our Investor Day on November 12. But let me highlight a few of our organic innovations that were advancing in the near term.
In our Life Sciences business, Im pleased that we will start shipping our BD MAX and BD Veritor combination flu COVID assays this month, in time for the upcoming respiratory season. Our BD Veritor combination test can detect and distinguish between COVID, flu A and flu B in a single rapid test with a digital readout. We see the combination test becoming the standard of care moving forward, advancing our strategy to enable better outcomes in nonacute settings. Another innovation area Id like to highlight is our Biosciences business. Biosciences has been a strong performer this year, and we expect the unit to deliver high single-digit growth for the full year. In June, we launched our new e-commerce site, bdbiosciences.com, which is an entirely new and innovative digital marketplace designed to provide a best-in-class online purchasing experience for our flow cytometry customers. Early feedback has been outstanding, and were already seeing excellent traction and early adoption. We also have an exciting wave of new product introductions this summer, with the launch of our FACSymphony A5 SE, which is our first BD spectral analyzer, and provides an even higher cellular parameter analysis. Weve launched our FACSymphony A1 as well, which offers high-end technology and a cost-effective bench top design.
In addition to these launches, we have a healthy innovation pipeline of modular, scalable new instruments and next-generation dyes that will allow our customers to fully leverage our complete and integrated solution suite of instruments, reagents, informatics, single-cell multiomics and scientific support services. Our products and solutions are being used to uncover new insights on the immune system and develop treatments for many related chronic diseases. You can hear more about our Life Sciences strategy from Dave Hickey, our Executive Vice President of BD Life Sciences; and Puneet Sarin, our Worldwide President of BD Biosciences, at the upcoming UBS Genomics 2.0 and MedTech Innovation Summit on Wednesday, August 11. Next, lets turn to our inorganic innovations that weve added to our portfolio. As you know, we continue to be focused on tuck-in M&A as a means of adding innovative products and solutions that leverage our core market leadership positions and advance us into higher-growth adjacencies. Year-to-date, weve completed seven tuck-in acquisitions. While at the same -- at the time of the acquisitions, these individual deals were not meaningful from a revenue perspective. As we integrate these transactions into our portfolio, we expect them to strengthen our growth profile.
Our three most recent transactions, Velano Vascular, Tepha, Inc. and ZebraSci are good examples of our M&A strategy. Let me begin with Velano Vascular, which is being added to our MDS business. Velano has an innovative needle-free technology that enables high-quality blood draws from existing peripheral IV catheter lines, eliminating the need for multiple needle sticks. This technology will help customers transform the patient experience through the vision of a 1-stick hospital stay. Velanos PIVO device will be integrated into our sales teams bag of broader catheter solutions initially in the U.S. This is a great example of how were expanding and strengthening our base business. The second transaction is Tepha, Inc., a leading manufacturer of a proprietary resorbable biopolymer technology. Over the past several years, through our long-standing relationship, weve been commercializing this platform via our Phasix resorbable hernia mesh platform. The acquisition benefits are twofold. First, it provides us with a vertical integration strategy for our current Phasix platform. But more importantly, it provides us with exciting new opportunities to expand our horizon into new high-growth areas of tissue repair, reconstruction and regeneration. Lastly, we acquired ZebraSci, a pharmaceutical services company.
This acquisition provides the opportunity to expand our Pharmaceutical Systems business beyond injectable device design and manufacturing to include best-in-class testing for drug device combination products. ZebraSci allows us to further engage and collaborate with biopharmaceutical companies and particularly smaller companies, where a large amount of the pipeline is, to support the transition of their molecules into prefilled combination devices. Next, I want to update you on our Simplify initiatives, which are advancing well. Through Project Recode, we are optimizing our portfolio, optimizing our plant network and simplifying our business processes. Project Recode remains on track to achieve $300 million of cumulative savings by the end of FY 24. We are also continuing the rollout of our BD production system, which is a standardized BD approach to driving the next level of lean processes and continuous improvements across our plants. The BD production system is already helping to drive improvements in quality and reductions in our inventory days. We also continue to advance Inspire Quality, our quality, regulatory and risk mitigation program. The last pillar of our BD 2025 strategy is empower, which represents the changes in our culture and capabilities that were driving to empower our strategy.
In Q3, we completed our Voice of Associates survey with over 86% participation. And what stood out was that our associates said were making strong progress with improvements in 95% of the metrics since our last survey in 2018. And most notable were improvements in our focus areas of growth mindset, strong teams, quality and excitement about the future of BD. Were also advancing our 2030 sustainability strategy, which addresses a range of challenges in our industry while helping to make a difference on relevant issues that affect society and the planet. Our strategy will ensure we remain focused on shared value creation, meaning how we address unmet societal needs through business models and initiatives that also contribute to the commercial success of BD. Next, I want to provide a brief update on the progress of our proposed diabetes spin-off, which remains on track for the first half of calendar 2022. We are making steady progress with our separation activities. We recently announced that two directors from BDs Board will be appointed as future directors of the Diabetes NewCo. Retired Lieutenant General David Melcher will serve as the Non-Executive Chairman of the Board.
And Dr. Claire Pomeroy will serve as a director. Their appointments will be effective upon the completion of the spin, at which point they will transition from the BD Board to the Board of NewCo. Lieutenant General Melcher brings extensive experience in spin-offs, having served as the CEO of Exelis following its spin-off from ITT. And under his leadership, Exelis spun off its mission systems business as a separate public company. Dr. Pomeroy brings broad experience in health care delivery, administration, medical research and public health. Im confident their combined experience, along with future planned board members, will help to set NewCo well on its path to becoming a successful independent publicly traded company focused on growth. While continuing to evaluate additional Board members, we are also continuing to build a new Diabetes Care leadership team through a combination of current BD leaders and new hires, including Dev Kurdikar, who will be NewCos CEO; Jake Elguicze, who will be CFO, and most recently, Jeff Mann. Jeff Mann joined our Diabetes Care organization and will be General Counsel and Head of Corporate Development for NewCo. Jeff brings more than two decades of experience in M&A and transactions, securities law and corporate governance. Most recently, he served as General Counsel and Secretary of Cantel Medical group.
We are also progressing with the Form 10, which will have the carve-out financials, and we expect it to be publicly available around the end of the calendar year. Before turning it over to Chris, I will leave you with some key thoughts. First, our base business momentum and our recovery from COVID continues, and it is broad-based. We expect that momentum to carry into fiscal 22 and beyond. As Chris will share with you, todays results underscore our confidence in strong mid-single-digit top line growth for our base business next year. Second, we are executing well against our innovation-driven growth strategy, which includes our internal R&D as well as advancing our tuck-in M&A strategy. And third, Im proud of the substantial progress in advancing our BD 2025 strategy and how that will unleash our growth potential in the years to come. Well deliver innovations for our customers, empower our associates and create value for you, our shareholders. Ive been with BD for 20 years, and Ive never been more excited. We just completed our annual strategic review process, as I said, and the road ahead is looking more exciting than it did a year ago. We look forward to sharing our BD 2025 strategy in greater detail at our November 12 Investor Day. We hope you can join us. With that, let me turn it over to Chris to review our financials and our outlook.
