Thomas E. Polen
President, Chief Executive Officer and Chairman at Becton, Dickinson and Company
Thanks, Francesca. Good morning, everyone, and thank you for joining us. We are very pleased with our strong Q3 results. We exceeded our revenue, operating margin and earnings goals and delivered another quarter of consistent strong performance in our base business, with revenue growth of 9.3%. Our results continue to demonstrate the durability of BD's performance even during an uncertain market environment, with year-to-date base business growth of 9.6%. I want to thank our team of over 75,000 talented associates, who continue to deliver on the Growth, Simplify and Empower pillars of our BD2025 strategy.
Our performance reflects the team's agility and strong execution, which puts us ahead of the curve in our ability to manage inflationary pressure, mitigate supply chain challenges and optimize supply for our customers. BD 2025 continues to serve as our true north and is proving to be the right strategy to reinvent and transform health care now and positions us to continue to deliver strong performance in the years to come. This is evident in our year-to-date results and the proof points of our performance, which include: one, a reliable and strengthened growth profile; two, our reshaped innovation and M&A strategy; three, an improving margin profile; four, disciplined capital deployment; and five, our continued execution during uncertain times.
First, we've strengthened our growth profile as evidenced by our accelerating performance over the past two years. In part, this reflects the durability of our COR products as BD is often referred to as the backbone of health care. Our durable COR remains in high demand and creates a stable business, particularly in times of uncertainty. Second, we've been enhancing our growth by reshaping our portfolio through our innovation pipeline, tuck-in M&A and the embecta spin, all increasing BD's waiting in higher growth spaces.
Our investments in innovation are targeted across three irreversible forces that we believe will continue to transform health care over the next 10-plus years in the areas of smart connected care, the shift in new care settings and improving outcomes for patients with chronic disease. In fact, over 60% of our R&D is now invested in these high-growth areas. Third, we've taken actions to improve our margin profile. This includes simplifying our business by reducing complexities and increasing efficiencies through initiatives like Project RECODE. Through RECODE, we're simplifying our portfolio to optimize our mix, enabling plant efficiency and producing more of the products most critical to our customers.
We started this work in mid-FY 2020 as part of our BD2025 strategy, and it's been a critical contributor to navigating and performing in this challenging environment. Fourth, we've built significant balance sheet flexibility that has enabled our disciplined capital deployment strategy to support our investments in growth, while also returning capital to shareholders. For example, with the close of the Parata acquisition, 90% of our M&A spend over the past two years has been in transformative solutions. Fifth, we continue to execute during uncertain times. By successfully navigating the challenging macro environment, we're distinguishing BD and supporting our ability to deliver strong performance in today's environment. Let me share some examples of these macro factors that are impacting health care and what BD has been focused on to stay ahead of the curve.
While our industry continues to face supply chain constraints and increased inflationary pressure, we determined early on that we would be best-in-class in navigating the environment and not take a wait-and-see approach. Over the past 2-plus years, we made investments to institutionalize improvements in supply chain resilience, which are having a positive impact on our overall cost effectiveness, responsiveness and sustainability. For example, we've continued our long-standing investments to systematically validate secondary suppliers for our most critical products. We've made additional investments to increase inventory to secure availability of critical raw materials and componentry.
This includes chips that have allowed us to deliver strong growth in areas such as BDB instruments. And we're contracting directly with shippers to ensure continuity of supply for our customers. These capabilities are now embedded in our operating principles, and our teams are doing an extremely good job navigating the environment and largely offsetting these pressures. Regarding China. While the impact from restrictions lasted longer into Q3, our recovery has been faster than anticipated with a strong rebound in June. Beyond the recovery of hospital patient flow, we initiated several actions to continue manufacturing and keep warehousing largely operational by working closely with our stakeholders in China to help secure key logistics capacity for ourselves and our suppliers. I'd like to thank a number of BD China associates, who made exceptional sacrifices to ensure product supply for our customers. As a result of the team's efforts, we expect continued strength in China in Q4 and for the full fiscal year, we're on track to deliver double-digit revenue growth, assuming no additional waves occur.
Finally, there's talk of constrained capital spending amidst recessionary concerns. And as a reminder, BD's revenue base is 85% recurring. As it relates to revenue generated by capital spending, BD is well positioned with only a small percentage of our revenues attributed to capital placements or instruments. In addition, in terms of hospital capex, we have seen many of our solutions prioritized due to the role in delivering patient outcomes, while addressing acute challenges, such as optimizing nursing workflow and reducing labor costs.
These proof points are a reflection of how our BD2025 strategy and the actions we have taken uniquely position us to lead and deliver strong results. I'll now provide more detail on the progress we are making on organic innovation, which is a key enabler to our growth strategy. We continue to drive very strong R&D execution and deliver on the exciting opportunities in our pipeline, achieving over 90% year-to-date on both our critical milestones and launches, which is well into top quartile performance within our industry. Our increased investments in strong execution and organic innovation continue to contribute to our performance.
Recent examples of how we're progressing our pipeline to drive future growth include the commercialization of the IntelliVault Controlled Substance Management System, which is part of the BD Pyxis RapidRx Solutions family that extends our connected medication management offering across new care settings. That's a $700 million space growing about 10%. IntelliVault is an RFID-enabled pharmacy automation solution that provides storage and prescription filling of controlled substance medications, while reducing outpatient pharmacy labor costs. Additionally, in Q3, we received FDA approval for the BD COR MX module and a CT/GC/TV2 molecular assay on BD COR, meeting the milestones we disclosed on the Q2 call. Clearance of this assay in the U.S. gives BD access to the STI testing category, which is expected to grow at a 7% CAGR to $600 million by 2025.
Overall, BD COR enables entry into the high-volume molecular diagnostics segment, which is expected to grow at a 9% CAGR to a $2.9 billion served market space by 2025. Our team has already received our first U.S. orders for the new BD COR and is getting very positive customer feedback. With COVID being a more endemic condition, we continue to expand our offering and have received CE Mark and launched combination respiratory panels on both BD COR and BD MAX for the detection of multiple respiratory pathogens from one sample. In BD Interventional, we received 510k clearance and launched the Aspirex mechanical aspiration thrombectomy system in the U.S., also meeting the milestone we disclosed on the Q2 call.
Customer feedback has been very positive, and there have already been several successful cases to date since launch. During Q3, we completed the relaunch of the Venovo venous stent in the U.S. and Europe. And last month, we launched for the first time in China. We're seeing strong demand and gaining share with Venovo driven by best-in-class clinical performance data. Beyond these achievements, we also hit several key milestones across our pipeline this quarter. We received 510k clearance for BD PosiFlush SafeScrub. This is a prefilled flush syringe with an integrated disinfection unit, which is designed to simplify nursing workflow and enhance compliance with infection prevention guidelines.
This is the first innovation in flush syringes in nearly a decade, and it's a really good example of how we're driving innovation to extend leadership in our durable COR in a $900 million addressable space. We expect to launch PosiFlush SafeScrub in the first half of fiscal 2023. In our flow cytometry business, our research reagents platforms continue to be a key driver with double-digit growth in this category. Innovation and new product development are helping to fuel research reagents growth as customers continually seek to better understand human biology in the very complex immune system through new and novel experiments. We continue to advance our innovation programs and are on track to launch more than 1,500 new flow cytometry reagent SKUs this year. The majority of these new products will expand our menu of fast-growing Sirigen reagents as well as our recently launched BD Horizon real yellow dies, allowing our customers to run higher parameter experiments with more reagent choice and flexibility. Finally, PureWick Male is the next new product in our planned portfolio expansion for managing incontinence.
And it's now authorized for release, and we're on track to launch this quarter. PureWick Male will provide nurses with a noninvasive option for urine management in men, enabling earlier Foley catheter removal and resulting in reduced risk of infection. Now as you're well aware, our strategy is driven by strong execution of both organic innovation and disciplined tuck-in M&A. And over this fiscal year, we continued to execute our tuck-in M&A strategy and have committed over $2 billion to the completion of six acquisitions.
A great example of our M&A playbook is our acquisition of Parata Systems completed just last month. Parata allows us to enter the new area of high-growth pharmacy automation in the U.S. and marks an important step towards advancing our BD2025 growth strategy around smart connected care and enabling new care settings. Parata's portfolio of innovative pharmacy automation solutions powers a growing network of pharmacies to reduce costs, enhance patient safety and improve the patient experience. By automating the more routine work within a pharmacy and implementing intelligent workflow solutions, pharmacists can focus more of their time on higher-value clinical work to improve medication adherence, patient safety and outcomes. And we're seeing macro trends across the industry accelerating and growing demand for pharmacy automation solutions, such as Parata's.
These trends include the centralization of pharmacy services in large fulfillment centers and increased clinical demands on pharmacists and hospital and retail settings. And of course, we're seeing increased wage inflation, labor attrition and a large percentage of pharmacists reporting burnout. And taken all together, these trends are driving a $600 million pharmacy automation market opportunity today that's expected to grow approximately 10% annually to a $1.5 billion opportunity in 10 years, and that's just in the U.S. alone. Parata's offering is complementary to our solutions in medication management. And together with BD, we expect Parata Solutions to outpace market growth as we leverage our commercial footprint, global scale and innovation capabilities.
Not only is Parata a strong strategic fit, but the company has an attractive financial profile that meets all of our rigorous investment criteria on growth, profitability and returns. The transaction is expected to be immediately accretive to revenue growth, adjusted operating margins and adjusted EPS. And it exceeds BD's 2025 sales growth and margin targets, thus enhancing the company's ability to achieve its long-range outlook. Given our current financial profile, we'll continue to deploy capital in a disciplined way to create value through tuck-in M&A. Now beyond our investments in R&D and M&A, our capital allocation framework gives us the flexibility to also return capital to shareholders through a competitive dividend and share repurchases when appropriate.
I'm excited by the significant progress we continue to make advancing our BD2025 innovation-driven growth strategy to deliver even more significant impact towards improving outcomes for patients and providers. Now before I turn it over to Chris, let me share a few updates on the strong progress our team is making to advance our ESG strategy and goals. We recently issued our 2021 ESG report, which highlights our first performance measurements and progress on our 2030 ESG commitments. This includes launching a sustainable medical technology institute, joining the race to 0 and increasing our investments in on-site renewable energy and much more.
We believe that the work we're doing today can make a lasting positive impact. We're also proud to receive continued recognition for our ESG efforts. Most recently, we're recognized as a Best Place to Work for Disability Inclusion for the fourth consecutive year. We achieved a perfect score on the 2022 Disability Equality Index, demonstrating our progress in removing barriers and creating employment opportunities for people with disabilities. In addition, we are also named as a Noteworthy Company for the third straight year in DiversityInc.'s annual ranking of the top U.S. companies for diversity. In summary, our BD2025 strategy continues to serve as our true north, allowing us to demonstrate: one, a reliable and strengthened growth profile; two, our reshaped innovation and M&A strategy; three, an improving margin profile; four, disciplined capital deployment; and five, our continued execution during uncertain times. With another strong quarter, our year-to-date performance gives us confidence to increase guidance, and we remain well positioned in the future to deliver sustainable, profitable growth.
With that, let me turn it over to Chris to review our financials, guidance and outlook.
