So, created a bit of a tough compare. This was expected and our timing ramp of installs is weighted more towards the back half. So, those are sort of the things that, give me confidence around, MDS and MMS.
Lawrence Biegelsen: That’s helpful. And Tom, China was down 5% in this quarter in Q1. Talk about what you’re seeing there and you’re confidence. I think in the past, you said you expect China to be flat to up low-single digits this year. Thanks for taking the question.
Tom Polen: Yeah. Thanks, Larry. That expectation remains unchanged. China played out essentially exactly as we expected in the quarter was a little bit favorable to budget. What we saw and what we expected was VOBP, as Mike described, specifically within MDS which is where it’s remained, we didn’t see it expand to other areas at all. We’re not seeing that it’s — our view is as we had projected. And we also expected to see strong growth in BDI which we’ve had over the last several years. We saw that play out in the quarter, mid-teens growth in BDI in Q1 and we saw solid growth, high — very high single-digits on the cusp of double-digit growth in Life Sciences in China. And so that base business in China is continuing to do well. We’ll — we saw VOBP start in the back half of last year. And so again, that’s going to become a tailwind for us as we think about compare in China as we go over that, so. Thanks for the question.
Lawrence Biegelsen: Thank you.
Christopher DelOrefice: Thank you.
Operator: We’ll take our next question from Robbie Marcus with J.P. Morgan. Please go ahead. Your line is open.
Robbie Marcus: Great. Thanks for taking the question. I wanted to ask, I know we’re in fiscal ’24 here, but wanted to look out to ’25, and based on operating margin guidance, it implies about 100 basis points expansion next year to get to your long range plan target. So, I’m sure the answer is pretty similar to the ’24, but how do we think about the implied about 100 basis points next year and your confidence in that?
Christopher DelOrefice: Yeah, Robbie. Thanks for the question. Actually, at J.P. Morgan, as you know, we outlined a strong plan outlining all of our margin improvement initiatives. I think gross margin is the next stage of accelerated focus for us and we already have a great pipeline of margin improvement initiatives there through Project Recode, right? We actually already completed our 20% goal SKU rationalization. We’re actually going to go further there. The network architecture, Tom, highlighted in our prepared remarks the strong progress there with initiatives underway that reduced our network by 20%. As a matter of fact next year, the network architecture value we get out of that actually doubles going into ’25, you’re going to really start seeing the benefits of that.
BD excellence is another one. We’re getting great traction this year. It’s part of the momentum we have in this year on margin that will continue into next year. You also have the Alaris dynamic. As that fully ramps up and scales, we’ll get margin leverage there. So, all those things coupled with the continued strong growth profile of being able to consistently do 55 plus which we’ve been well above gives us strong confidence in 2025 and the 100 basis points, as a matter of fact, as we exit this year. Doing everything we did, we really should be well positioned to carry that kind of momentum into next year. It’s premature to kind of make a formal commitment and manage all the puts and takes but certainly high confidence in the ’25 and great momentum there.
Tom Polen: And maybe, Robbie and good morning. Just to add to Chris’s good comments, I think another way just to think about it is, as we’ve launched BD 2025 in ’22, it was a four-year road-map ahead, right? And so, the end of ’24 will be 75% of the way through BD 2025. As you think about the margin number that we’ve set out as our guide for FY ’24, that’s 80% of the way through our margin goal, right? So from a timing perspective, 75% of the way through BD 2025, 80% of our margin goal, we are clearly on track, slightly ahead. And we’re seeing really good momentum in our programs as evidenced this quarter. I think you’ve heard us talk about BD excellence. Obviously, as we started BD 2025, our focus was let’s get Alaris back.
Number one, take those learnings, apply them across the company to make sure we’re building capabilities. Second was optimize our portfolio for growth spinning back up. Obviously, we sold the V. Mueller. We drove tuck-in M&A that’s driving accretive growth, we rebalanced our R&D into high-growth spaces. And we’ve built our portfolio simplification programs starting with Recode which are on track and you’re seeing those play out. Along the way and starting last year, we began to develop capabilities for BD Excellence, right? And it’s our operating model — operating system to drive a whole new scale of lean capabilities across the company. And last year, we had thousands of associates across the company engaged in BD Excellence. This year, we’re really pressing the pedal on that program now as we’ve made progress on those first three areas that I mentioned.
And so, as we said in the prepared remarks, if you think about the Kaizens that we did all of last year through BD Excellence, we did just as many in Q1 of this year just completed and that’s going to continue to scale as we go through the year. And so, we see really good momentum there. It’s giving us visibility not only on our ’25 margin goal, those we also indicated, it’s giving us visibility beyond ’25 to continue, margin progression as we look ahead. So, thanks for the question, Robbie.
Robbie Marcus: Great. Really helpful. Just a quick follow-up. China VBP is a headwind you’ve talked about. How do we think about where that’s hitting each of the business units and the size, just so we can, kind of try and back out that headwind in our models? Thanks.
Tom Polen: Hey, Robbie. It’s almost all within MDS specifically. Essentially, it is all within MDS. That’s where we see it, so.
Robbie Marcus: Great. Thank you.
Tom Polen: Thanks.
Operator: We’ll take our next question from Patrick Wood with Morgan Stanley. Please go ahead. Your line is open.
Patrick Wood: Amazing. Thank you. Two quick ones. I guess the first is Pharmacy Automation completely get the timing of year end and that side of things, but just curious, how you think things on orders, whether it’s like order mix and kind of the outlook for the rest of the year based on, what you’re hearing from the customers right now from the order book?
Michael Garrison: Yeah. I’ll take that. So for pharmacy automation, yeah, we feel really good on that, like I mentioned, the tough compare because, they were incentivized Parata and the team there was incentivized to finish their Q4 strong. So, they had already lined up installations last year for their finishing. They had a record for them quarter last year. So, it’s a little bit of a tough compare. Order book looks good, especially in the sort of Retail Long-Term Care channels. Yeah. And we continue to leverage our BD Salesforce to talk to our acute-care customers about starting to transform the pharmacy in the acute care with our IDN customers. So, we see that continuing to grow throughout the year. Overall, it’s been — yeah, we’ve described it as sort of a low double-digit grower, and that’s sort of what we have projected and expected for the rest of the year.
