Hello, and welcome to BD’s Second Fiscal Quarter 2020 Earnings Call. At the request of BD, today’s call is being recorded. It will be available for replay through May 14, 2020, on the Investors page of the bd.com website or by telephone at (800) 585-8367 for domestic calls and area code (404) 537-3406 for international calls using confirmation number 2189907. I would like to inform all parties that your lines have been placed in listen-only mode until the question-and-answer segment. Beginning today’s call is Ms. Monique Dolecki, Senior Vice President of Investor Relations. Ms. Dolecki, you may begin.

Thank you, Stephanie. Good morning, everyone, and thank you for joining us to review our second quarter results. We hope that everyone is healthy and safe during these unprecedented times. With safety in mind, we are taking a more virtual approach today in exercising social distancing while conducting this call. Joining me in person, we have Tom Polen, our Chief Executive Officer and President; and Chris Reidy, Executive Vice President, Chief Financial Officer and Chief Administrative Officer. Joining by phone, we have Alberto Mas, Executive Vice President and President of the Medical segment, Simon Campion, Executive Vice President and President of the Interventional segment and Patrick Kaltenbach, Executive Vice President and President of the Life Sciences segment. As we referenced in our press release, we are presenting a set of slides to accompany our remarks on this call. The presentation is posted on the Investor Relations page of our website at bd.com. During today’s call, we will make forward-looking statements, and it is possible that actual results could differ from our expectations. Factors that could cause such differences appear in our second fiscal quarter press release and in the MD&A sections of our recent SEC filings. In particular, there’s significant uncertainty about the duration and contemplated impact of the COVID-19 pandemic. The data we are providing today is based on our preliminary April sales results and the trends we are seeing in our businesses. We have made certain assumptions in how we are managing our business, but that could change as we move forward. We will also discuss some non-GAAP financial measures with respect to our performance. Our second quarter results include a $39 million non-cash charge to write down the carrying value of developed technology related to the planned retirement of the BD Accuri flow cytometer platform within our Biosciences business. In addition, we are working with the FDA with respect to certain features of our Alaris infusion pump products that are additive to our current remediation efforts. As a result, we have recorded a charge of approximately $200 million to reflect the estimated probable future costs relating to remediating Alaris’ products. It is possible that this estimate could increase over time. Any remediation actions will continue to be guided by our proactive commitment to patient safety. In addition, due to challenges associated with the global COVID pandemic, among other factors, we no longer expect to submit our Alaris 510(k) filing in the fourth quarter. We are working closely with the FDA to assess how quickly we can get back to our previous plan and we will provide an update on our August earnings call. These items, along with details of purchase accounting and other adjustments can be found in the reconciliations to GAAP measures in the financial schedules, in our press release and in the appendix of the Investor Relations slides. A copy of the release including the financial schedule is posted on the bd.com website. It is now my pleasure to turn the call over to Tom.

Thank you, Monique, and good morning, everyone. I certainly hope you and your families are doing well as we navigate this unprecedented time. Our thoughts are particularly with those personally affected by COVID-19, including healthcare workers on the frontline who are caring for patients and battling this virus. As you’ve seen in our press release, our second quarter results were ahead of our expectations even though the Q2 impact for COVID-19 was larger than we anticipated. While we’ve seen strength in our portfolio that’s more directly tied to COVID-19 diagnosis and treatment, we’re also experiencing significant pressure in other areas such as products relied on elective procedures, research, and routine care. Chris will cover this in more detail later in the call. This remains a dynamic situation, and the timing and phasing of research and more elective healthcare returning is hard to predict. That’s why we’ve decided to withdraw our guidance for FY 2020. As I’ve shared in the past, you can expect transparency and straight talk, and so Chris will share with you what we know so far including what we saw in April, and he’ll give you more color on the many factors impacting recovery. Before we get into the impact to our business, I want to spend time on BD’s response to COVID-19, because I believe it embodies what we stand for and our purpose and what makes BD unique. And so on Slide 4, I’d like to start by sharing my deepest thanks to the BD team around the world. I’ve been with the company nearly 20 years and it never ceases to amaze me how our team rises to the occasion for our customers, especially during times of uncertainty. What I’ve seen in the last two months is truly inspirational, and I’m so proud to…

Thanks, Tom, and good morning, everyone. I’d like to begin my comments by addressing BD’s response for the COVID-19 pandemic. First, as the coronavirus emerged, I was very proud to see the response and collaboration across our team and the immediate focus on ensuring the safety and wellbeing of our BD associates around the world. Also vital to our crisis response was our focus on taking care of our customers and the communities we serve. Beyond the actions we took at a company level, I’ve been truly amazed by the reaction from our associates, from our frontline to our back office staff and everywhere in between our associates that put the wellbeing of our customers and our communities above their own personal priorities. Second, from a cash perspective, we took early and prudent actions to protect our business during the time when liquidity is paramount. And lastly, as we contemplated these actions, we did so with the continued focus on our long-term strategy. We’re confident that BD will emerge from this global health crisis from a position of strength and will continue to create and deliver value to all stakeholders. With that context, let’s move on to our results for the second quarter, including a review of the COVID-19 impacts. As Tom mentioned earlier, performance in the second quarter was ahead of our prior expectations. Revenues grew 2.4% on a currency neutral basis, despite a larger than anticipated impact from COVID. As you’re well aware, the virus worsened significantly in China during February and subsequently spread beyond China’s borders quickly becoming a global pandemic by mid-March. I’ll provide more color on second quarter revenue growth and the impact from COVID in a moment when I take you through the results by segment. Second quarter adjusted EPS was $2.55, which represents…

Floor is now open for questions. [Operator Instructions] Thank you. Our first question comes from Kristen Stewart with Barclays.

Good morning Kristen

Hey Kristen are you there?

Are you on mute?

Are we okay?

Yes we can now.

Oh good.

Hey Chris.

Hi, good morning. Thanks so much and thanks for all you guys are doing out there on the frontline. And really thank you for all the transparency, the slide deck is really fantastic. So I really appreciate all that you guys put into that. I’m sure that was a lot of work.

Thank you.

I just wanted to kind of ask a little bit more and dive into just kind of what you are seeing just kind of on the medication management side, just with the puts and takes there. So, I was just kind of curious just in terms of -- with medical necessity and just kind of what you are seeing with the increase on sets and whatnot. I know you talked about the $70 million and kind of inferred that that was not something we should extrapolate going forward. I’m just kind of curious as to, I guess, why not assume kind of a continued benefit for that kind of product line. I guess, we had all hoped that since you were getting medical necessity that that could be something that we could expect to continue for the rest of the year, and maybe just any additional details that you could give on that, a little bit of slippage on that 510 K. If there’s anything you can add, that’d be helpful. Thank you.

Hey Kristen, this is Tom. Good question. So let me talk about maybe the 510(k) piece first, and then I can turn it over to Chris to give a little bit more color on the financial components there. So, on the 510(k), the main factor there that really drove the commentary around the delay is, of course one of the biggest areas of testing which we have to complete as part of the filing is human factor testing. So that’s -- for those not familiar with it, that’s going to – all the variety of people who could be using the pump, training naive healthcare workers, people who aren’t familiar with using the pump, having them use the instructions for use and be able to successfully make infusions. Of course in a pandemic, it’s more challenging to access the nursing staff, et cetera, to get that testing done in a timely way. So that’s the number one main item. And then in addition, we are evaluating feedback that we got from that 483 to understand are there any implications to the 510(k) submission. It’s too early to comment or there’s nothing that’s specific from that, but it’s something that we’re evaluating. Again, we’re continuing to work very collaboratively with the FDA, and we’ll provide you an update on the August earnings call. Again, we’re very focused on getting that in as soon as possible, but we’re also extremely focused on making sure that it gets done right, so that once it does get submitted, it can go through the process as fast as possible. Right? So, let me turn it over to Chris just to give an update on the numbers. And just maybe one caveat is, I think the $70 million that you referred to, that’s a net number in MMS that has a higher number for infusion that’s partially offset by some takes in other areas.

That’s exactly right. So, I guess the way to think about this is, in the second quarter we had $10 million of medical necessity that really wasn’t COVID-related, that was kind of normal medical necessity that we would have expected when we gave guidance last quarter. We had something similar to that in the month of April as well. But above and beyond that, we had a spike in medical necessity for Alaris Pumps as you might imagine in the peak of the fight against the pandemic. And so that spiked, we did have a bit of offset from the Pyxis installations and Rowa installations, et cetera, but the bulk of that was the spike in the Alaris. Now, as we look going forward, we would expect that spike to abate somewhat. Not completely, but we would expect it to abate in May and in June and not be at the same levels as it was in April. We would also expect to see a little bit of a spike in the deferral of Pyxis and Rowa installations and keep that – that would keep going. So that would offset. So as you think about the next few months, we just wanted to make sure people were clear that we would expect that $70 million to come down in May and June.

Again, that’s just based on assumptions that COVID-19 will abate over that period of time and then hospitals may recognize that the need for this additional building of ICU beds may not need to continue at the same pace, but if that were to change, of course, the situation would change.

Got you. And then I guess what can you tell us a little bit about what you are seeing in terms of early days now just across the country here in the United States? You guys are in a unique spot just with all your touch points at hospitals, just from a recovery perspective. Are you seeing signs that in some places that things are starting to get a little better, just in terms of surgeries, and what you’re seeing maybe within the Interventional business or just in terms of hospital census [ph] starting to pop back up, are you starting to get a little bit more optimistic, or are things -- I’m sure things are very regionalized and anything you can kind of add there that’d be helpful.

So good question. I think that your last comment there is very accurate, it is very regionalized. And we certainly – we’re doing a lot of primary research surveys of our customers directly to have that real time data. And what our data shows is again a very regionalized kind of healthcare recovery areas like Texas, a few other states we see elective procedures really ramping back up strongly. Again, you’ll see that though in pockets you’ll see certain hospitals could be back at 90% of elective procedures and in hernia to where they were before. And then the hospital down the road is saying we’re not doing that for another 30 days. And they’re basically still at a 90% drop-off. But we are seeing it generally begin to increase in certain regions early in late April in particular. And I think we’ve reflected that a bit. But it’s still early days. I think the other thing is I’m getting increasing calls, probably fair to say over the last couple of weeks if you step back a month or two, a lot of the dialogues that I was having with CEOs of many of our largest customers were around getting access for diagnostics for patients in need of coronavirus diagnosis today. Today, I get a lot more of those calls where those needs are being better met today and people are looking at now getting access to tests to start screening patients prior to them coming into elective surgery. And that is happening, I’d say much more on a national basis. So even if they haven’t actually started doing the procedures yet, pretty standard across the nation I see the people are starting to think about and putting in place timelines for how they are going to get those elective procedures back up and running. And they are thinking about how testing is going to be used to actually test people before they come in. And so we’re seeing that occur. And I think that’s a sign, a positive sign of people’s intentions and the timing of those intentions. So we’ll continue to keep you updated as that progresses but just a few of the things that may be helpful.

Thank you so much. Take care.

Okay, thanks Kristen. Be safe.

You too.

Our next question comes from line of David Lewis with Morgan Stanley.

Hey David.

Good morning David. There seems to be a pause David?

Good morning.

There you are.

Can you hear me?

Yes we can.

Great, that’s good news. I got one thing right this morning. So just a quick diagnostic question, a diagnostic follow-up, either for Tom or Roberto. So the first question is just on, I appreciate the update on Veritor this morning. I wonder, I know it’s kind of a fluid situation, but are we talking weeks away or months away? And then if you could get approved, what type of potential manufacturing capacity can we think about post EUA approval? Then I have a quick follow-up.

A good question, David. So it’s – we’re in clinical testing right now with patient samples. So at that phase we have an assay that we’ve developed and we’re testing for performance to generate data that if it works we could submit for EUA approval. So that’s where we are. I always – we’re cautious and one of the things we always talk about internally is of course typically it’s a three-year process to develop these assets and get them through clinical studies and approved. We are doing that in three months essentially. And so, even where it could be a couple of weeks away from submitting an EUA in the general timeline of what you can learn in that window. You are learning almost a year of what you had normally learned because that also includes manufacturing, scale-up, et cetera. And so that’s why we’re a bit cautious to give specifics yet because there’s still a lot to learn even though it’s a relative – could be a relatively short period of time. So more to come as we complete our clinical testing, we started that clinical testing last week. I can share that. And again, pending the results of that testing we have already had discussions with the FDA on pre-EUA filing discussions. And so we know what it takes to get that product through. And again, pending the testing results, the study results we’ll be in a position to file. Concurrently we have been working to ramp up our production of that assay. So our manufacturing teams are ready, we’ve actually started to invest in some additional equipment as well so that we would be in a position to scale that over the balance of the year in a meaningful way.

Okay. That’s very helpful.

We’re doing millions of tests, right, millions of tests, not a million millions a week.

Okay, so production capacity is not going to be limited there. Thank you. And then just kind of related questions for you, Tom or others, of BD MAX production right now is sort of a third of your peers within that testing, can anything be done to ramp up BD MAX production capacity? And then just, love to get your kind of macro views on serology or immunity testing, what do you think there’s significant demand for point-of-care immunity test or you think most of that demand is really going to get filled by some of the larger IVD analyzer companies? Thanks so much for all you are doing this morning.

Yes, thanks David. So on MAX, you are right, there are peers that have much higher volume on very different platforms of course. They are high throughput platforms which are designed for that. Obviously the benefit of BD MAX is that it is more of a real time system that’s much more usable in select hospital settings that aren’t going to have those high throughput platforms. So, at this point in time, I’d say that million tests a month is where we’re at with our current systems and instrumentation that we have in manufacturing. We have approved and are proceeding to invest an additional capacity there. But the timing of that coming online, I’m not ready to share that, but we are investing for additional capacity recognizing that we’ll need that in the future as well. But about a million tests a month is what we’re saying right now. In terms of immunology testing, we are seeing strong demand for point-of-care immunology testing. And we think that will continue certainly a central lab based approach is a good one. It does use a different specimen, the whole blood, obviously the convenience of the finger stick we see interest in that from an employer’s, as well as healthcare providers being used from screening think about patients coming in and being able to do testing much more real time than having to send samples out and maybe a less invasive sample collection procedure as well. So we are seeing strong demand and we expect that will continue.

Thanks so much.

Your next question is from Richard Newitter. [SVB Leerink LLC]

Hi Richard, good morning.

Hi, can you hear me?

Yes we can.

Okay, great. Thank you. And thanks for all of the detail in this morning’s presentation or release. It was very helpful. I wanted to just maybe go back to the testing question, follow-up on David’s, the old line of questioning here. So very helpful on color with respect to how your portfolio fits in perhaps on the hospital testing side. Can you give us any sense as to how you think the back to work on the more of the private sector and just kind of employers in general, what the algorithm is potentially going to be either at a national level or whatever you’re seeing out there as a conversations are being had. Just trying to get a sense for how serology fits in with a point-of-care testing and/or kind of high-throughput testing, so what was other automated systems? Thanks.

It’s a great question, Rich. I don’t have the algorithm figured out specifically yet. I would say that that, again, as we’re thinking – as we’re talking to our customers, we’re getting a lot of interest on antigen testing to screen patients, at least before they come in for elective surgery. So I can make that comment that they’re more focused on antigen testing what I’m seeing then antibody for at least patients screening before they come in for surgery. Certainly as we think about employers getting their associates pace back to work, it’ll be a mix. I would imagine. We are of course spending a lot of time ourselves thinking through that question. And we were very focused on prioritizing. We actually just communicated yesterday some phasing for starting to get some of our associates back to work next phase of our commercial teams being able to support customers in the field starting this month in the U.S. as an example and then starting to get increasing numbers of R&D associates back to work as the priority after that. And then we’ll be working on more office based associates in extended period of time after that. And so I think you also expect regardless of the use of testing some phasing of people getting back to work based on the importance of them really being in what do they have to access in a work setting that they can’t access from home.

That’s helpful. Thank you. And just on the ramping production of the, the swab kits that you referenced, I think, you said millions per week by June. That’s a substantial ramp from where you had been. Do you think that that will no longer – or seems to be a bottleneck for the testing situation, at least in the U.S. by that point in time? Is that the right level? And can you go even further than that? Thank you.

Yeah. Good question. So just to clarify that’s three million a week by June is where we expect to be, that’s up from 500,000 a week at the start of the crisis so it’s a dramatic ramp. And of course we’re heading strongly in that direction where we already at a couple of million a week. So the big thing that’s happened there is – and we’ve been right in the middle of that working with the FDA, other partners from across the industry as well as organizations like the Gates Foundation. At the start of the pandemic, there were very few products that were validated for testing. And so that was clearly a constraint at the beginning. What’s happened now is there has been a lot of systematic work across the swab manufacturers as well as the test providers. And again organizations like the Gates Foundation who have been driving some of that testing in collaboration with the FDA to systematically expand to beyond viral transport media, which was limited to in the beginning to now other types of swabs including dry swabs and swabs in sailing, which have dramatically increased the capacity of the different types of devices that are available. And so, yes, I’m not hearing significant issues on swab stopping testing. Today, I was getting a ton of those calls a month ago and that was an issue and we were very actively managing to make sure that testing didn’t stop having our teams coming in at midnight on Sundays to package things up and drive them to the hospitals around the country and regionally to make sure the testing didn’t stop. And we were really proud of the work that we did there. We don’t get those calls anymore at this point in time or they are much more rare if they do occur.

Thank you very much.

Your next question is from the line of Bob Hopkins with Bank of America.

Great, thank you. And good morning.

Good morning Bob.

Yes good morning. Again I appreciate all the detail. So just maybe one follow-up on April. And I realized this is a little bit short term, but we’re also hungry for information. Regarding the $70 million, I realize you’re saying that probably won’t be sustained, but I’m just curious if we sum up everything for the month of April, the positives and negatives related to COVID and then just the other parts of the business by my math that may be suggested in April, the total company revenues maybe down high single digits year-over-year. Is that ballpark or am I missing something?

No, we’re mid-teens down. So in total at the 240 level that’s mid-teens and then somewhat offset by the $70 million.

Okay. So that mid teens would not include the $70 million benefit that you are seeing. That’s right. Okay, okay. And then the other thing I want to ask about is thinking a little bit longer term Tom you mentioned, hopefully, the progress being made on vaccines obviously vaccine will be a part of the solution there. I’m just curious if we do get a vaccine do you guys have the capacity to meet that demand for J&J is out talking about a billion doses. Kind of how do you frame that for investors that BD being part of the solution and your ability to meet potential demand?

Hey, it’s a great question, Bob. And it’s something that we’ve been very active in talking to governments around the world. And what’s important here is, is that people have to be proactive in beginning to order and stockpile these devices now, it cannot be waited until the last minute and expect that those products will be able to be manufactured because to your point, that scale can’t be produced in that period of time. So we are seeing some governments around the world, we’ve gotten very large orders already beginning that stockpile to cover the citizens in their country of vaccines. Others haven’t done that yet. And we’ve been really pretty much on a daily basis working with our public policy team to create greater awareness in governments of the need to start doing larger scale buys now. We have presented our production capabilities over the next a year. There are opportunities for us to invest further in capital, some of that we’re doing proactively our self. But it needs to be done from a stockpiling perspective. And again, I think, there’s further actions needed to do that. And again, we’re working to help ensure that happens. That includes here in the U.S.

And just to be clear on your first question, Bob, when you adjust for that $70 million it comes out to low double digits impact on a year-over-year basis.

Thank you very much.

Your next question comes from the line of Larry Biegelsen with Wells Fargo.

Good morning. Thanks for taking the question. And yes, thank you for all the color. Just a couple of questions from me. One, Chris on the P&L I appreciate the color on the margin impact. Any other color you can provide on the P&L? For the second half it sounds like R&D you are going to maintain that spending. How should we think about SG&A and maybe some of the other lines of the P&L? And I had one follow-up.

Okay. Thanks, Larry it’s a good question. And the way to think about it is a lot of what’s being negatively impacting the business such as a surgery and PI we’re fortunate to have very high gross margin profiles. So, think in the 70 plus kind of range. In addition to that, as you think about the impact you’ve got to consider manufacturing variances which are going to impact the P&L as we adjust for the revenue and adjust our inventories accordingly which is the right thing to do. So, as we think about it, we’re also making investments in COVID-related ramping as we’ve talked about on the call here. So we’re making those investments. We’re also investing in the safety and health of our associates making our own PPNE which we talked about, facilities cleaning and those kinds of things. So those are additional costs. And then we’re also seeing higher shipping costs as you are probably not surprised by. So when you take that and then we’re taking – offsetting that we’ve taken cost mitigating actions that we talked about in our remarks. We limited travel and hiring freeze early in the second quarter and we saw the benefits of that. But we’ve also taken salary deductions for management and the Board, the 401k match, so that offsets things. So when you net all of that out, you should be thinking about the margin impact of the lost revenues going forward in that 75% kind of range when you net everything together. So hopefully that gives you some more color.

Very helpful thanks. For my follow-up, Tom, how are you thinking about the long-term implications of coronavirus. You mentioned for BD and the industry, you mentioned in the slides, the shift of care to the non acute settings, for example. How does that impact BD? Thank you for taking the questions.

So we’ve been – of course in our strategy, we’ve been very specifically developing additional solutions for the nonacute sector, be it our Rowa platform for retail pharmacy, our Veritor platform or even commercial teams that we’ve put in place, bringing our medication management solutions and including catheters, et cetera, into the surgery centers and non-acute. So we’ve been shifting our resources in that direction. It’s been a faster growing segment, but we’ll certainly only increase in that direction going forward. I think you heard some of the announcements that we talked about today on our new product development platforms like the acquisition of Nat DX, which will give us a point-of-care molecular platform, to supplement, right? So Veritor will be a lateral flow based. This platform will be molecular based similar time to resolve we would expect as Veritor. Again, that’s an investment that we’re making, seeing that we expect diagnostics will continue to shift in that direction. We’re making other investments even in our PAS business that allow self blood collection and other types of sample collection that are much more appropriate for the retail setting, et cetera. So we definitely see it a trend. It’s something we’ve been investing in and will only continue to double down on that as we go forward.

Thanks guys.

Thank you. Your next question comes from the line of Brian Weinstein with William Blair.

Hey guys, thanks for taking the questions. Probably not surprisingly coming from me, some very Veritor questions here for you. Just kind of rapid fire. So, Tom, I wanted to confirm did you say millions per week? I think that’s what you said I wanted to confirm that. And then are we talking about a COVID-19 assay and are there any plans for a combo flu AV COVID assay on that? Can you speak to the performance characteristics that you’re expecting to be seen on that, especially relative to, I know you have to compare relative to PCR when you’re doing these studies?

Sure. Good, questions, Brian. Good morning. So yes, you heard right on Veritor that would be where we would be ramping up towards. We wouldn’t have that available necessarily at launch. We will have that ramping up towards that way. We have plans and we’ll share those plans from a timing perspective later on. From a performance perspective, again, we’re in studies right now, so it’s inappropriate to say what our performance is. We’re getting actually that right now in clinical specimens, obviously we recognize the comparative to PCR is typical obviously for anything. We also recognize that these assays, they won’t be as sensitive as PCR, no lateral flow assay is as sensitive as PCR, but no PCR assay is as ease of use, cost base, mobile as what you see in a platform like Veritor, which is why you see wide used applications in flu and strep testing still today. And it has a very important role. We see and we hear also from be it the FDA, the White House, other key constituents, our customers see a very important role in need for a lateral flow based COVID assay. We are focused on getting the COVID asset out first, Brian, the antigen test. And then to your point, can we add in a – combine that with our flu test in a single strip. Absolutely we’ve started to think about that. That of course becomes much simpler to do once you confirm that the COVID assay is secure done, we’ve launched that, then the ability to put that down with a flu test, both of which are now well characterized assays would be a next phase for us to think about.

Okay, great. And then as a follow-up going back to the pump business for a second, would you be willing to share some of the bigger observations that you received in the 483, just a kind of broad stroke, the things that you are going to be kind of looking to deal with here?

Yes, Brian, we don’t share those at this point in time, obviously we’re in – we’re working very closely with the FDA in that response. We’ve actually already submitted our response plans on that. We’ve already started taking actions on many of those and we’ll share more as we go forward.

Understood, thank you.

Yes, okay, thanks Brian.

Your next question is from Rick Wise with Stifel.

Rick good morning.

Good morning, Tom. Good morning, Chris. Let me start again if I could with your excellent representation of what happened in April. Very clear. But I wanted to make sure I understood and pauses for the short term nature of it. Other large companies have been commenting on recent weekly trends and stuff like that. I’m looking for something specific but have it indeed, did things get less bad or improve somewhat state as you will that last week of April into May? Are you seeing that? And as we think about, the reason I ask is that that $240 million negative April impact shouldn’t we assume that that gets less bad? Yes, the $70 million positive will be less of a positive contribution, but shouldn’t we assume that in coming months as things reopen that the $240 million goes down month by month?

Yes, so it’s really hard to predict. There wasn’t enough in the last week of April differential to really give us a sense of that. And when you think about it’s really elective procedures. So we didn’t see enough of a change in the elective procedures to be able to call May and to get any sense of anything changing. To your point around what might be up and down, we think that the lab closures, the impact in May might get a little bit worse and capital spending levels over the next couple of months would also be something that could get a little worse. And so it’s just there’s so many variables, it’s what makes May and June, very, very hard to predict. And, I think we’ll learn more as time goes on as you said, but there was nothing about the last week of April, that would give us a sense of where this is going. It’s just too early to tell at this point.

And Rick, maybe we take advantage we’ve got. We do have Simon on the line. May be we turn over to Simon just for a quick comment on what you are seeing on the procedure side at a high level.

Yes, hey, Rick Eric, it’s a final so in certain pockets we did see an uptick certainly in England on the ventral hernia. They are heavily reimbursed. They are also England, in particular, is very much outpatient based. So, they get the patients in, they treat them, they get reimbursed nicely and the patients go home. So that’s been – that has picked up nicely at the back end of April. And also another point worth noting is something hit the back end of April, our salesforce began to receive more calls from their customers about beginning to re-attend cases. So, Tom said, we’re about to let those at those guys loose here again in the in the middle of the month. And in fact just yesterday we began as shipping them all their PPE so that they can attend cases and go back into hospitals where they’re allowed. So there are several things in certain pockets that are pointing in the right direction in respect to some aspects of our elective business.

And just to clarify, our reps will not be going in just to hospitals unless they are specifically requested to attend a case. And I think as we see that – while we’re seeing that in some very small subsets that Simon just described, I’d say as we think about medical and life sciences, as Chris commented on not seeing that at any real difference at the end of April. For example, I can specimen collection or MDS, anything notable there difference.

That’s great. And Tom, maybe just one for you, your grow, simplify and empower initiatives, just focusing on the simplify aspect from a couple of angles, I know you’ve focused and prioritized optimizing manual factoring efficiencies, cost reduction initiatives, SKU reduction, et cetera. What’s happening to all those initiatives right now and you could – is this an appropriate time to accelerate those initiatives? Actually, ironically would that be helpful as we contemplate Becton’s potential fixed costs as you might – as we recover from this COVID period. Thank you.

Hey Rick, great question. Absolutely. So near term over the last two months, we’ve actually – the work on the SKU rationalization has in fact accelerated to your point with folks at home, the ability to engage actually the sales team in working through products – the product list of what we’re looking to remove from the portfolio, the substitute products actually been able to – number of teams have been able to engage them in a way which has been much more than we would have been able to do traditionally. Actually I think we had a number of businesses already starting that product simplification initiative. And that expanded pretty significantly across the company to other businesses during this window of time where the marketing teams, et cetera, were also had bandwidth to accelerate that work. So that’s been one that we’ve taken advantage of this period to double down on. In terms of the manufacturing, network consolidation that does continue to move forward. We haven’t been able to necessarily accelerate that during this period of time. Obviously manufacturing teams focus primarily on supply right now and navigating that. Of course you can imagine every day there’s items that we have to manage in our supply chain, as well as in our own facilities. But that is fully still moving forward in all ways and we’ll continue to keep you updated on that.

Thank you.

Your next question comes from Robert Marcus with JPMorgan.

Great. Thanks for taking the question. I’ll ask both of them all in one. I noticed you took down your CapEx for the year by about $200 million hoping you could just touch on your thoughts around pipeline delays that are potential coming out of this. What should and shouldn’t be effected. And then also, how are you thinking about your ability down the road, is this reduction in CapEx temporary? Could we see something more permanent come out of this? Really just how you are thinking about capital investing and your capital allocation in general plus the pipeline? Thanks.

Yes I’ll start with that Robert, thanks for the question. And as you might imagine, the first thing that we wanted to make sure of is that we were able to mitigate the cash impact from the headwinds from COVID. And we’ve made great progress on that in a few short weeks. And we are able to mitigate a substantial part of the, what we see as the capital impact. And we think that was the prudent thing to do. Now, one of those things that we did to get there in addition to some of the P&L items that we talked about that clearly impact P&L and cash. But from a cash perspective one of the items that we did take down was the CapEx. And we’re prioritizing mission critical capital spending, and we’re cutting and basically delaying some of the investments that we’re making that are more discretionary. And we’re being very careful on that because we want to make sure that we’re not cutting anything that would inhibit any capacity going forward So we’re being very targeted on that and it clearly is not a permanent adjustment in CapEx. We would expect that when we come out of this pandemic that we would, some of those things that we’re cutting, we will are just deferring and we’ll have to spend that. And so you can expect us to go back to the normal $900,000 to $1 billion kind of thing. And that is particularly true as we think about investing in areas that are necessary for COVID. We continue to invest in those areas, and ramp and make sure that we have capacity as terms articulated on a number of fronts. We’re ramping capacity. So think of that as a temporary reduction. Thanks for the question.

Your next question comes from Matt Taylor with UBS.

Hi. Good morning. Thank you for taking the question. So I just wanted to circle back and if we could revisit some of Bob’s question about the vaccine, given that could be a material ramp up, could you just remind us what kind of share you have, the global syringe market, how material that is for you today? And what it could mean if you were to get an order for, say, one billion syringes in Q1, would you be able to get there and how material would that be?

Good question, Matt. So we don’t share our specific shares on a global basis. We are, as we said, the leader in worldwide, we’re clearly the leader in the U.S. And we make billions and billions of syringes and needles a year. We make billions and billions of them specifically just for the U.S. market as well each year. So to be able to provide it, let’s just say in your example, a billion syringes spontaneously, there’s not capacity to just provide those in a month. We have provided plans to different governments around the world where we can provide hundreds of millions of product and over months, periods of time. And there is opportunity to go above that, but it needs to be done in partnership with those governments. So again, some of those governments we’ve engaged have strongly engaged with us to do that. Others are still working through their plans. On that point, what’s most important is you’ve got to get ahead of that and start to start to get those orders and things in now. The other thing is, it’s just a little caveat there is the reason I hesitate is there is global capacity as well, there’s certain products that we sell, for example, in the U.S. that we don’t sell ex-U.S. and there’s many products that we sell ex-U.S. that we don’t sell in the U.S. So for example, we pretty much exclusively sell safety devices in the U.S. We have a lot of capacity of non-safety devices ex-U.S. In a pandemic vaccine delivery situation one may not prioritize the need for safety needles on the end of a vaccine delivery. And so you can free up additional capacity to come into the marketplace. But those, again that’s working with the governments on the specific requirements. And the stockpiling, again, some governments have already started taking those actions aggressively, others we’re really focused on getting them to act sooner.

Understood, thanks for that. And then one follow-up, obviously you’re seeing increased demand for fusion pumps. I was just wondering if you could offer some thoughts given you touched so many points in the acute care setting, whether you think that hospitals and providers will in the medium term or the long run actually, permanently increase the size of their ICU or acute care capacity to be able to be responsive if there is a second wave or just ongoing COVID management.

It’s a good question. I honestly don’t know the answer of that. That’s something that I would imagine that that many hospitals are thinking about what it could be a second wave in the fall and next winter. And thinking about how they balance that, including some of these field hospitals that have been set up and how you think about those. In fairness, we haven’t had deep discussions with our customers on the long-term implications of ICU beds and how they may or may not maintain that over a longer period of time. Certainly, particularly in the U.S., I think, that may be a little different in some areas like in Europe where you’ve seen countries, you’ve seen the stats of ICU beds per capita in different countries in Europe and how disparate those are. What we have heard were some of those countries that did not have as many ICU beds may want to permanently maintain a higher ratio of ICU beds. But I think that’s on some that were well below benchmarking levels.

Great, thanks for the clarification.

Yes.

Thank you. Your next question comes from Josh Jennings with Cowen.

Hi, good morning. Thanks for taking the questions. I had a follow-up similar question to Matt’s most recent question. But just thinking about the potential need for hospitals to build out the capacity, maybe individual fleets, more Pyxis systems as they move forward to reopening and they are looking at distinct COVID-19 wards, or units, or floors versus non-COVID-19 units or floors and the potential to avoid cross-contamination even of medication delivery or these pumps?

Josh, we’re not seeing widespread requests for that at this point in time. And I think the question would be would they be reallocating? Remember, overall hospital utilization in the U.S. is still relatively low rate, it’s not 90% across the board in normal terms, so how much they would allocate to COVID-specific wards, et cetera. I think that’s still being figured out. Obviously all hospitals were being dedicated to that at this point in time. We don’t see – it’s not visible today that there would be some type of spike in pump or Pyxis growth as people are trying to build a separate COVID systems from their main wards. But something we’ll monitor but we’re not seeing that today.

Great. And then just to follow-up, I heard you mentioned that the Lutonix BTK submission was put forward or filed. Any incremental details you can share about back and forth with the FDA? What was required – what more was required from Becton for that submission? And any comments on just your confidence for approval? Thanks a lot.

Yes, we can’t comment really with many details at this point in time. Obviously it includes a number of additional clinical data studies that were generated on BTK. And we submitted those various data sets to the FDA. So again, we believe that there remains a significant unmet need for that patient population that there’s not strong alternatives for today. We strongly believe in the safety of the BTK product and it’s under active review. So we’ll continue to keep you updated as it progresses. But we’ve submitted the data that we believe isn’t complete and so it’s now under the review process. Thank you.

Thank you for your questions. We will now turn the floor back over to Tom Polen for your closing remarks.

Okay, well thanks everyone for the great discussion today. As I close today’s call, I’m reminded of something a mentor of mine once shared, which is that crisis doesn’t make character, it reveals character. And that’s truly the way, I think, that we’ve seen BD respond here that the COVID-19 crisis has really revealed the best of BD reinforcing the commitment of our associates who never forget that there’s a patient at the end of everything we do. It’s revealed the breadth, the depth and necessity of our product portfolio reinforcing the central role we play from discovery and diagnosis to the delivery of care and treatment of disease and it’s revealed our ability to adapt and innovate, mustering our resources to bring new solutions to help solve healthcare’s biggest problems. That track record is why healthcare providers and health officials worldwide have put their trust in us during the most significant health crisis in the past century. And it’s what gives us the confidence that we will continue to drive growth, innovation, and value creation in the many categories we serve long after COVID-19 has been contained. I think it’s fair to say that the road to recovery for the healthcare industry and global economy is going to take some time. It’s likely to have its own bumps, but I’m confident BD will navigate these near term challenges, take the necessary actions and execute our strategy to emerge strong. I’ve been so inspired by the response of BD associates. We have an incredibly dedicated and committed team. And I can’t thank the team enough for going above and beyond in these challenging times. I want to thank all of you for your time today. Stay well.

Thanks everyone.

Thank you. This does conclude today’s teleconference. Please disconnect your lines at this time and have a wonderful day.