Becton, Dickinson and Company (BDX) Q3 2018 Earnings Conference Call Transcript

Becton, Dickinson and Company (BDX 0.72%)
Q3 2018 Earnings Conference Call
Aug. 2, 2018, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Hello and welcome to BD's Third Fiscal Quarter 2018 Earnings Call. At the request of BD, today's call is being recorded. It will be available for replay through August 9th, 2018, on the Investors page of the BD.com website or by phone at 1 (800) 585-8367 for domestic calls and area code (404) 537-3406 for international calls, using confirmation number 2788137. I would like to inform all parties that your lines have been placed in a listen-only mode until the question and answer segment, and beginning today's call is Ms. Monique Dolecki, Senior Vice President of Investor Relations. Ms. Dolecki, you may begin your conference.

Monique Dolecki -- Senior Vice President, Investor Relations

Thank you, Crystal. Good morning, everyone, and thank you for joining us to review our third fiscal quarter results. 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 third fiscal quarter press release and in the MD&A sections of our recent SEC filings. We will also discuss some non-GAAP financial measures with respect to our performance. Reconciliations to GAAP measures can be found in our press release and its related financial schedules and in the slides. A copy of the release, including the financial schedules, is posted on the BD.com website.

As previously disclosed in April 2018, the company divested its remaining interest in the Vyaire medical joint venture. The company received gross cash proceeds of approximately $435 million and recognized a pre-tax gain on the sale of approximately $308 million. In addition, in the third quarter, the company recorded an $81 million non-cash charge to write down the carrying value of intangible assets related to the retiring of the BD CLiC system within our biosciences business. We have redeployed select resources within our biosciences business to allow us to better focus our genomic strategy on continued innovation and immunology research. These items, along with the details of purchase accounting and other adjustments, can be found in the reconciliations to GAAP measures in the financial schedules in our press release or the appendix of the Investor Relations slides.

As a reminder, our third quarter P&L results reflect the new BD, which includes the results of C.R. Bard for the full quarter. To provide additional revenue visibility into the new BD, we will speak to our revenue results and fiscal 2018 revenue on a comparable, currency-neutral basis. The comparable basis includes BD and Bard in the current and prior-year periods and excludes the revenues associated with our soft tissue core needle biopsy and Aspira drainage product lines that were divested in February.

Leading the call this morning is Vince Forlenza, Chairman and Chief Executive Officer. Also joining us are Chris Reidy, Executive Vice President, Chief Financial Officer, and Chief Administrative Officer, Tom Polen, President, and Alberto Mas, Executive Vice President and President of the Medical segment. It is now my pleasure to turn the call over to Vince.

Vincent A. Forlenza -- Chairman and Chief Executive Officer

Thank you, Monique, and good morning, everyone. Turning to Slide 4, at BD, our strategy is driven by our purpose: Advancing the world of health. As we stated in our press release, our strong performance this quarter demonstrates that our strategy is working. As I take a step back, I'm extremely proud of what our organization has been able to do so far. This is our second quarter together with Bard, and not only are we delivering on our financial commitments, but we have also demonstrated how nimble we can be as an organization while executing concurrently on two transformational acquisitions.

Our core remains strong and we are getting positive customer feedback and traction with our expanded portfolio and complete solutions, further solidifying our leadership position in medtech. As I look ahead, I'm increasingly confident that we will continue to deliver even more impactful, comprehensive solutions for our customers.

Turning now to Slide 5 and our third-quarter highlights, we're very pleased with our continued strong performance as the new BD. In our third fiscal quarter, our second quarter as a combined company, revenue growth was driven by mid-single-digit performance across the medical, life sciences, and interventional segments. As we expected, third-quarter margins were strong. Margin expansion was driven by the achievement of operational efficiencies and continuous improvement coupled with the positive impact of cost synergies.

We're also pleased with the progress the integration teams are making. In June, we brought together the new BD leadership team for our strategic planning process, and it was exciting to see our organizations come together as one to discuss our innovation agenda and how our combined solutions can make an even bigger difference in the lives of patients around the world. Our executive team includes a diverse mix of leaders from both legacy organizations as well as the broader medtech and pharma industry.

Yesterday, we appointed Simon Campion as President of our Interventional segment, effective September 4th. Simon is a proven leader with deep global experience, a demonstrated focus on results, and unique insight and breadth across the industry and the interventional segment, having been part of three of the four legacy Bard businesses. For the past five years, Simon has led the surgery business, formerly the Davol division, and we're confident he's well suited to drive the segment's innovation agenda and ensure we deliver our integration-related revenue and cost synergies.

We also recently appointed John DeFord as Chief Technology Officer to lead all R&D initiatives for the company and Betty Larson as our Chief Human Resource Officer to advance our organizational culture, capabilities, and talent agenda for the new BD. Simon, John, and Betty join Sam Khichi on our management team. Sam is also a legacy Bard leader and has been our general counsel since the close of the acquisition. Linda Tharby has moved into an important new commercial role, focused on improving the customer experience across all of BD.

Beyond these leadership appointments, we are also making progress with our portfolio. In early July, we were excited to announce the acquisition of TVA Medical, a privately held company that develops minimally invasive vascular access solutions for patients with end-stage renal disease, or ESRD, requiring hemodialysis. As many of you already know, this was our first tuck-in product acquisition since the Bard transaction. The addition of TVA Medical very much aligns with our M&A strategy and focus on innovations that meet clinical needs, deliver value to health systems, and improve patient lives.

Also, while we're on the topic of new product innovation, we were delighted to see last week that the U.S. House of Representatives voted to permanently repeal the Medical Device Tax. The Senate vote is expected later this year. The continuation of this relief is extremely important to BD as well as the patients, providers, and research communities we serve.

In summary, we're very pleased with our year-to-date performance. We continue to be impressed with the underlying momentum in both the BD and Bard businesses and anticipate an acceleration in the fourth quarter. And, as a result, we are raising our fiscal 2018 revenue guidance. We are narrowing our adjusted EPS guidance as we were already anticipating a very strong EPS growth in the fourth quarter, and we expect our increased revenue outlook will be offset by a reduced benefit from foreign currency, along with some other items, which Chris will discuss later in his comments. We remain confident in our plan for the new BD and are committed to achieving our fiscal 2018 and 2019 accretion targets. So, now, I'll turn things over to Chris for a more detailed discussion of our third-quarter financial performance and our fiscal year 2018 guidance.

Christopher R. Reidy -- Executive Vice President, Chief Financial Officer, Chief Administration Officer

Thanks, Vince, and good morning, everyone. Moving on to Slide 7, I'll review our third-quarter revenue and EPS results as well as key financial highlights. As Vince mentioned, our performance as the new BD continues to be strong. Third-quarter revenue growth was in line with our expectations and was driven by strong mid-single-digit growth across all three segments. On a comparable basis, revenues grew 5.5%. Our strong revenue performance includes a pricing decline of about 40 basis points in the third quarter, which is in line with our expectations. Year to date, pricing declined 35 basis points. I'll provide more color on revenue growth in the quarter in a moment when I take you through the results by segment and by geography.

Adjusted EPS of $2.91 grew 18.3%, or 11% on a currency-neutral basis. Growth was driven by strong performance from both the legacy BD and Bard businesses. Despite the more recent strengthening of the U.S. dollar, FX was again a tailwind this quarter. All in, we continue to be very pleased with our performance as a combined entity. In addition to strong year-to-date revenue growth of 5.8% on an underlying basis, we expect revenue growth to accelerate in the fourth quarter, which I'll speak to when I discuss our updated guidance. Before we move on, I'll also point out that as of June 30th, our gross leverage ratio declined to 4.2x, reflecting the paydown of approximately $400 million of debt. We are on target to achieve our commitment to deleverage to below 3x over three years.

Moving on to Slide 8, I'll review our Medical segment revenue growth on a comparable, currency-neutral basis. BD Medical third-quarter revenues increased 5.7%. Revenues in Medication Delivery Solutions, or MDS, grew 5.8% in the third quarter, driven by strength in vascular access and vascular care. Revenues in Medication Management Solutions, or MMS, grew 8.3%.

As a reminder, at the end of the second fiscal quarter, we reached the one-year anniversary of the change in the U.S. dispensing business model. As we anticipated and communicated to you last year, the financial impact of this change lasted four quarters and is now behind us. Customer response has been overwhelmingly positive to this successful transformation, as evidenced by the continued strong adoption of Pyxis ES in the quarter. Beyond dispensing, growth in MMS in the third quarter was also driven by strong performance in infusion.

Diabetes care revenues grew 2.4%, driven by growth in pen needles in the U.S., partially offset by the timing of tenders in emerging markets that occurred in the second quarter, as previously communicated. Year to date, diabetes care grew 3.4%. Revenues in pharmaceutical systems grew 3.8%. Results for the third quarter were impacted by the timing of customer orders. Year to date, pharmaceutical systems grew 5.2%.

Turning to Slide 9 and the BD Life Sciences segment, third-quarter revenues increased 5.6% with strong performance across the segment. Revenues in diagnostic systems grew 5% in the quarter. Performance was driven by core microbiology and continued growth in our BD MAX molecular platform. Preanalytical systems growth of 5.2% was driven by global strength in core products. Biosciences revenues grew 6.8% in the quarter, driven by performance in research reagents and advanced bioprocessing, as well as growth in newer instruments such as the FACSMelody FACSLyric.

Turning to Slide 10 and the BD Interventional segment, third-quarter revenues increased 5.1%. Year to date, revenues grew 4.9%, or 6.1% on an underlying basis, adjusted for the impact of the hurricane in Puerto Rico in our first fiscal quarter. Revenues in peripheral intervention grew 8.1% in the quarter. Performance reflects strength in drug-coated balloons driven by the AV indication and strong international growth in biopsy products, particularly in China.

Growth of 1.7% in surgery reflects strong international growth in infection prevention, partially offset by a continued hold on Progel that adversely impacted growth in surgery in the quarter by approximately 170 basis points. We remain on track to relaunch Progel by the end of this calendar year. Urology and critical care revenues grew 5.6% in the quarter, driven by strong performance in our acute care urology portfolio.

Moving on to Slide 11, I'll walk you through our geographic revenues for the third quarter on a comparable, currency-neutral basis. U.S. revenues grew 5.9% in the third quarter. Performance was strong across the Medical and Life Sciences segments. Within the BD Interventional segment in the U.S., strong performance in peripheral intervention and urology and critical care units was partially offset by a decline in the surgery unit that was driven by the continued hold on Progel, as previously mentioned.

Moving on to international, revenues grew 5.1% in the third quarter. Growth was driven by strong performance in the Life Sciences and Interventional segments. Growth in the Medical segment outside the U.S. reflects strong performance in the MDS and MMS units. Slower growth in the diabetes care and pharmaceutical systems units outside the U.S. reflects the timing of orders, as previously discussed.

Developed markets revenues grew 4.6% in the third quarter. Growth in developed markets was driven by strong performance in the U.S., as previously discussed, and strength in Europe in the surgery, MMS, and MDS units. Third-quarter emerging markets revenues grew 10.5%. Revenues in China grew 13.2%, driven by strong double-digit growth in the Life Sciences and Interventional segments. In addition, revenues in Latin America grew in the high single digits.

Turning to Slide 12, which recaps the third-quarter income statement, as discussed, revenues were in line with our expectations, growing 5.5% in the quarter. Moving down the P&L, as we expected, gross profit improved during the quarter, increasing 46.2% year over year. Gross profit margin was a strong 58%. I'll provide additional details on gross profit in just a moment.

SSG&A as a percentage of revenue was 25.2%, which reflects Bard's higher SSG&A spend profile, partially offset by the achievement of synergies. R&D as a percentage of revenues was 6%, which reflects our continued commitment to invest in innovation. Operating margin increased 260 basis points, or 180 basis points on a currency-neutral basis. We continue to deliver significant operating margin expansion, which reflects strong P&L leverage as the new BD.

Our tax rate was 18% in the quarter, which is in line with our full-year guidance range. As expected, we paid preferred dividends of $38 million in the quarter. As we discussed last quarter, the preferred shares are not included in the shares outstanding calculation. In the quarter, adjusted earnings per share were $2.91, which is an 18.3% increase versus the prior year or 11% on a currency-neutral basis.

Turning to Slide 13 and our gross profit and operating margins for the third quarter, as expected, gross profit margin was a strong 58% in the third quarter. On a performance basis, gross profit margin improved by 340 basis points. This reflects the inclusion of Bard's more robust gross margin profile as well as our continuous improvement initiatives and cost synergies. These items were partially offset by headwinds from raw materials, such as resins.

Currency had a positive impact of 70 basis points on gross profit margin. Operating margin grew 260 basis points in the quarter, or 180 basis points on a currency-neutral basis. This was driven by gross margin improvement, partially offset by the higher combined company SSG&A profile, as previously discussed.

I'll take you through our fiscal 2018 guidance over the next several slides, but while we're discussing margins, I'd like to point out that we're well on our way toward delivering significant margin expansion of 200 to 250 basis points this fiscal year on a currency-neutral basis.

Moving on to Slide 15 and our full fiscal year 2018 revenue guidance, for the total company, based on strong performance across our businesses, we are increasing our revenue guidance. We now expect revenue growth to be above the high end of our previous guidance ranges, with total company revenue growth of over 5.5% on a comparable, currency-neutral basis. This represents strong growth of over 6% on an underlying basis excluding the estimated impact from the U.S. dispensing change and the hurricane in our first fiscal quarter. As a reminder, this also includes approximately 25 basis points of benefit from this year's severe flu season.

We are also increasing our Medical and Life Sciences segment revenue guidance. We now expect both segments to grow above the high end of our previous guidance ranges, with growth in the Medical segment of over 5% and growth in the Life Science segment of over 6%. We are also reaffirming our guidance of 5.5% to 6.5% growth in the Interventional segment. We continue to expect revenue growth to be driven by recent product launches across all three segments and strengthen both developed and emerging markets.

Our updated revenue guidance reflects developed-market growth of over 4.5% in fiscal 2018, or over 5% excluding the estimated 50 basis-point-impact from the U.S. dispensing change and the hurricane. In emerging markets, we continue to expect low double-digit growth driven by a diversified base with mid-teens growth in China and strength in EMA and Latin America.

Moving on to Slide 16 and our full fiscal year 2018 EPS guidance, we continue to expect strong earnings performance in fiscal 2018 and are narrowing our EPS guidance. As there are a number of moving parts that impact earnings per share in fiscal year 2018, for modeling purposes and to ensure consistency, I'd like to provide more color on EPS guidance. Starting on the left of the chart with our guidance as of last earnings call in May, we expected currency-neutral EPS growth of approximately 12%, driven by strong growth in operating income. This represented 14% to 15% growth on an underlying basis, excluding headwinds of 2% to 3% from the U.S. dispensing change. We also expected currency would provide an approximately 4% tailwind to earnings growth in fiscal 2018, which is now a smaller benefit than we initially anticipated.

Moving to the right half of the slide and our updated guidance, you will see that the impact of our increased revenue guidance is expected to be largely offset by a reduced currency benefit, as I just mentioned. In addition, we also have an impact from the acquisition of TVA Medical. Our FX assumptions assume a euro-to-dollar exchange rate of $1.17, down from $1.23 at the time of our May guidance. As a result, we are narrowing our adjusted EPS guidance range to a range of $10.95 to $11.05, which represents growth of approximately 15.5% to 16.5%.

We continue to expect the Bard acquisition to deliver low single-digit accretion in fiscal year 2018 and high single-digit accretion in fiscal year 2019. We are committed to fully realizing $300 million in annualized cost synergies as we exit fiscal year 2020.

Turning to Slide 17, I'd like to walk you through the balance of our guidance expectations for the full fiscal year 2018. As a reminder, this guidance includes the results of Bard as of January 1st, 2018, which is the beginning of our second fiscal quarter. On a reported basis, revenue growth for the total year is expected to be over 31.5%, which is above the high end of our previous guidance range. This reflects a currency tailwind of approximately 250 basis points.

For fiscal year 2018, we continue to anticipate our adjusted average fully diluted share count to be approximately 261 million shares. For modeling purposes, I'd like to remind you that net income reflects the deduction of approximately $114 million of preferred dividends. The preferred shares are excluded from the adjusted diluted shares outstanding. Beyond revenues and EPS, all other P&L guidance from May remains unchanged.

In summary, I'm really excited about our continued strong momentum as the new BD and I'm confident that we'll deliver on our commitments in fiscal year 2018 and beyond. Now, I'd like to turn the call back over to Vince, who will provide you with an update on our key initiatives and product portfolio.

Vincent A. Forlenza -- Chairman and Chief Executive Officer

Thank you, Chris. Moving on to Slide 19, as we have been discussing with you, our integration of CareFusion is largely complete. We have already achieved our cost synergy commitment of $350 million and are on track to realize our revenue synergy commitment. At the same time, as I mentioned in my opening remarks, we're very pleased with the progress we are making with the Bard integration. As previously communicated, we have started to realize our year-one cost savings and remain confident in achieving our target of approximately $300 million in annualized savings by fiscal year 2020.

We're also continuing to make progress with our investment in revenue synergies that we discussed with you previously. We recently completed cross-training of the sales force in MDS, where we brought together the BD and Bard vascular access portfolios, and we have also trained and activated the new surgical sales hires in Europe that we discussed with you last quarter. We look forward to sharing future updates with you as we make additional progress across our initiatives.

Turning to Slide 20 and our planned product launches by segment, starting with our Medical segment, recently, we released the first BD-branded Alaris PC unit and large-volume pump. This is the first new pump enhancement in more than ten years. The BD Alaris offers customers three key areas of value. First, customers will see improved quality and reliability through enhanced connectivity and cybersecurity. They will also benefit from clinical enhancements, such as a new alarm and loading features and various clinical efficiencies. Additionally, this new pump is helping us continue to expand enterprise interoperability through the BD HealthSight platform. So far, we've been very pleased with the customer adoption and feedback has been positive.

With respect to our Type 2 patch pump for diabetes, we remain on track for our initial launch in late FY '19. We have completed multiple clinical trials, which have allowed us to gather insights that are critical as we prepare for our initial limited launch and beyond. Our production preparedness continues to be on schedule to support the expected commercial demand and we anticipate submitting our regulatory approvals for the U.S. and E.U. later this year. We continue to be excited about bringing this differentiated solution to the market for people living with Type 2 diabetes.

In our Life Science segment, we have seen continued strong performance on our BD MAX platform, driven by enteric, CT, GT, as well as the recently launched MAX vaginal panel. We have seen strong customer adoption of our vaginal panel, a unique assay capable of directly detecting the three most common infections known to cause vaginitis. In addition, we will be expanding the assay menu further with the launch of MAX TP assay in the coming months.

We also continue to expand our additional capabilities in support of our BD Kiestra lab automation solutions platform, with instrument connectivity through our Synapsys informatics software. We have also released Synapsys version 2.1 in the U.S., which expands the ability of the software to establish secure connectivity across multiple instruments.

Moving on to the Interventional segment, as I discussed in my opening remarks, we recently acquired TVA Medical. The addition of TVA Medical expands our leading ESRD access portfolio with a new technology that will further improve our ability to serve physicians and their patients by providing a minimally invasive, non-surgical option for creating critical AV fistulas for hemodialysis procedures. Both BD and Bard have a rich history of commercializing innovative technologies, and we will leverage that skillset and our leading position in the ESRD access space to bring this new technology to our customers and their patients. We are currently in the process of training our sales reps and clinical teams and started hiring some additional salespeople in preparation for a Q1 fiscal 2019 launch in the U.S.

In addition, we recently launched the Echo 2, our next-generation positioning system within our hernia business. Echo 2 is a technology that works very well on robotics and laparoscopic surgery and expands our Echo first-generation technology. As you can see, we have a very rich pipeline of new products across our businesses, and we look forward to sharing additional updates with you along the way.

Before I move on, I would like to speak for a moment about our commitment to sustainability, which is a key component of our strategy. We're pleased to have recently published an update on our progress toward achieving our 2020 sustainability goals. These goals provide the framework for how we manage and make an impact on the most relevant social and environmental issues for our company. We remain focused on supporting priority health needs that are aligned with the U.N. sustainability goals, or SDGs, and we contribute to the SDGs through our collaboration with the public and nonprofit sectors across the four key areas that comprise our 2020 goals: Innovation, access, efficiency, and empowerment.

We just recently joined PEPFAR to celebrate their 15-year anniversary and the global impact they've had on 14 million men, women, and children with HIV/AIDS. Building strong health systems is essential for control of the HIV/AIDS epidemic, and BD is proud to be in the 11th year of its public/private partnership with PEPFAR, which focuses on strengthening laboratories and improving clinical practice in several countries across sub-Saharan Africa and Asia.

As much as BD has been able to effect positive change in healthcare for the past 120 years, we continue to strengthen our ability and leadership in our industry. With this leadership comes even greater responsibility. Our integration with Bard will bring a renewed look at our key sustainability issues and goals, and we will communicate more about how sustainability at BD will evolve in future reports. We look forward to our progress with you along the way. We have also included a slide in the appendix of today's presentation that provides you with some details on our sustainability initiatives. We hope you find the information useful in understanding BD's commitment to this important topic.

Now, before I move on to my summary, I would like to thank Bill Tozzi for his great work in running the Interventional segment on an interim basis while continuing his work leading the integration. Thanks very much, Bill. We really appreciate it, and so do our shareholders and all of our associates.

Moving on to Slide 21, I would like to reiterate the key messages from our presentation today. First, our strong performance year to date reflects our early progress and momentum as the new BD. Our core remains strong and our expanded portfolio and complete solutions have further solidified our leadership position in medtech. This is evidenced by our financial performance across businesses and regions. Second, the integration of Bard is off to a strong start and we have key leaders in place. We're confident in achieving our cost synergy and accretion commitments.

Third, we have increased our revenue guidance and narrowed our EPS guidance as a result of our strong year-to-date performance and our expectation for acceleration in the fourth quarter. Lastly, I have increasing confidence in our outlook as we move forward as the new BD. We will continue to deliver comprehensive solutions for our customers and value to shareholders around the world. Thank you. We will now open the call to questions.

Questions and Answers:

Operator

Thank you. The floor is now open for your questions. At this time, if you have a question or a comment, please press *1 on your touchtone phone. If at any point your question is answered, you may remove yourself from the queue by pressing #. In order to allow for broad participation, please limit your question to one and one follow-up, and we ask that while you pose your question, please pick up your handset to provide for optimal sound quality. Thank you. Our first question comes from the line of David Lewis with Morgan Stanley.

David Lewis -- Morgan Stanley -- Managing Director

Good morning. Maybe one for Vince and one for Tom. Vince, I just want to focus on guidance into next quarter. So, guidance for the year is very solid. Fourth quarter implies acceleration to 6.5% organic by our math, so, is there any momentum deceleration this quarter and some acceleration built into next quarter? Any timing issues that you talk about as you roll into this quarter and next quarter? And, I really just want to get you to express your confidence in getting to that next-quarter number.

Vincent A. Forlenza -- Chairman and Chief Executive Officer

Sure. I'd start out by saying I'm very confident in our next-quarter number, and yes, there were some things this quarter -- some timing issues in this quarter that did affect us. I'll point them out to you. So, No. 1, of course, was in the surgery business, where we've got Progel, and that comparison costing us about 25 basis points. Then, we have about 25 basis points of pharm systems' timing. We expect pharm systems to be very strong in the fourth quarter. And, we expect in the surgery business that you're going to see an acceleration in the surgery business also in the fourth quarter.

There was a little bit of channel dynamics going on there in terms of the hurricane and whatnot. We see that reversing itself in the fourth quarter. And then, timing of diabetes tenders. So, that's about another 10 basis points. So, if you do the math on all of that, you're basically at about a 6%, maybe 6.1% underlying. So, we actually feel better about this quarter than you would look at it at first pass.

But, moving on to the next quarter, we feel quite good across all three businesses. First, the pipeline that we're seeing in MMS and strength in both the Pyxis product line, drug administration, and, of course, on the pump side, too. I mentioned in my remarks the first advancement on the pump side in ten years, and I mentioned that we're seeing very strong adoption there. We're feeling good about that business. I think on the Life Science side, I mentioned BD MAX, but also, Kiestra is -- we're going to see strong growth in Kiestra in the fourth quarter. So, we've got really good visibility, and then you saw biosciences doing quite well. I expect that continuation.

So, if I go through each one of the businesses, we're looking good across all three segments, so I feel very good about this guidance that we're giving you with going beyond the top end of the range. Chris has got a couple other comments.

Christopher R. Reidy -- Executive Vice President, Chief Financial Officer, Chief Administration Officer

The only thing I would add is that pharm systems and MMS -- MMS grew 8.3% this quarter, but we expect both pharm systems and MMS to be double digits in the fourth quarter, and I would correct one thing you said, David. By our math, the fourth-quarter implication is over 7% to get to our guidance range, so we feel really good about the revenue and the acceleration into the fourth quarter and the guidance range that we've put out.

David Lewis -- Morgan Stanley -- Managing Director

Okay, very helpful and very clear, guys. And then, to Tom or Vince, just thinking about the Interventional business -- growth last quarter of 7.8% to 5.1% this quarter, a little bit of a deceleration. Every outlook was raised. That's the one business we did not raise the outlook. Anything you'd call out on how you're feeling about the core Bard growth here? Thanks so much.

Thomas Polen -- President

Good morning, David. So, we feel very good about the overall core Bard business growth. So, as you saw, we had 5.1% or 5.7% excluding Progel for the overall segment, which is right in line with the overall guidance we've given for the year -- the 5.5% to 6.5% -- and we're 6.1% year to date, so, right in the middle of the range. Again, we feel good about that. Obviously, quite strong performance out of the peripheral Interventional business. We continue to see well north of 25% growth in DCBs driven by that AV fistula launch that we've talked about. Oncology is also doing extremely well.

On the urology critical care side, we see very good growth -- 5.6% for the quarter, which is quite strong for that business -- driven by the global acute urology portfolio as well as some timing on the temperature management business, but overall, that's been doing very well as well. And then, obviously, on surgery, as Vince mentioned, it was a 1.7% in the quarter or a 3.5% excluding Progel, and we expect some rebound of that as we go into Q4 with some timing as people balance inventory pickup in the prior quarter with this quarter as they're stabilizing post-hurricane, but we expect that to start stabilizing on a go-forward basis as we go into Q4.

Christopher R. Reidy -- Executive Vice President, Chief Financial Officer, Chief Administration Officer

I would just add as well that if you looked at things on a legacy basis, legacy Bard -- our full-year guidance would imply about 7% growth and legacy BD nearly 6% growth, and that's at the high end of the range, as we would have anticipated. So, good momentum.

Vincent A. Forlenza -- Chairman and Chief Executive Officer

Thanks for the questions, David.

Operator

Our next question comes from the line of Vijay Kumar with Evercore ISI.

Vijay Kumar -- Evercore ISI -- Managing Director

Hey, guys. Congratulations on a really nice quarter here and thanks for taking my questions. Maybe I'll start off on that guidance question. A really strong Q4. It looks like most of this was strengthening the underlying business, and I think for most of us, the question is when you look at FY '19, how should we be thinking about underlying trends in some of the business segments? Are there any areas where you see some new products gaining momentum or any areas where comps might be an issue? Any color on '19 would be helpful.

Vincent A. Forlenza -- Chairman and Chief Executive Officer

I think you've got to look at 2018 and how we're doing across the entire company. It's very difficult for me to point to anything specifically. I just walk through good momentum across all three of the segments' top line. That's how I'm thinking about that from a demand side. If I think about it from a regional standpoint, I think all the regions are doing well, whether it's Asia -- we haven't talked about China yet, but China had a good quarter, Asia has done well, Latin America is doing well. Europe is strong. You're seeing strong momentum in both -- in the developed markets. So, it's difficult for me to call out anything in particular at this point in time. I'll refine that, obviously, when we get to our guidance, but I think you should look at the strength this year and use that as a basis.

Christopher R. Reidy -- Executive Vice President, Chief Financial Officer, Chief Administration Officer

I would just add that we do obviously have a little bit of a headwind from the flu because that was such a strong season for us, but we also have a little bit of a tailwind compare from the hurricane, which is a little bit smaller than that headwind, but roughly offset one another.

Vijay Kumar -- Evercore ISI -- Managing Director

That's helpful, Chris. Maybe one on margins. I think when you look back at when the Bard deal was announced, we expected 500 to 600 basis points of margin expansion. Given where we are in the cycle now, close to 300 bps of margin expansion, when you look at '19 and '20, we're still expecting 250 to 300 basis points of margin expansion. 1). Is that correct? 2). When you think about your comments on FX benefiting margins this year, how should we think about the interplay between FX and synergies for '19? Thank you.

Christopher R. Reidy -- Executive Vice President, Chief Financial Officer, Chief Administration Officer

Sure. You're absolutely right. We are delivering on the first piece of the margin improvement. Really, the deal model assumptions that we laid out don't change, and so, we're right in line with that, we're executing on that, and delivering in 2018, and we would expect 2019 to be in line, as you laid that out. So, that 500 basis points of improvement is what we had laid out, and we're delivering on that. If you look at the results this year, we were getting some benefit from FX, but it was above and beyond. So, we delivered 410 basis points this quarter, for example, 340 underlying and the rest coming from FX. So, that's kind of like the icing on the cake was the FX piece. Going forward, obviously, we won't get that tailwind from FX. We'll have to watch the dollar, the euro, and some other currencies to see, so it might be a slight headwind going forward. We'll see how that plays out.

Vijay Kumar -- Evercore ISI -- Managing Director

Thank you, guys.

Vincent A. Forlenza -- Chairman and Chief Executive Officer

Thanks, Vijay.

Operator

Our next question comes from the line of Bob Hopkins with Bank of America.

Bob Hopkins -- Bank of America Merrill Lynch -- Managing Director

Oh, thanks very much for taking the question. Just wanted to address a couple quick things. First -- and, this is really big-picture, but I was just wondering if you could talk a little bit about the global trade rhetoric that's going on over the last couple of months, today, and how BD's position relative to what you know today about the numbers that are out there -- I think a bit of an update there would be welcome. Thank you.

Vincent A. Forlenza -- Chairman and Chief Executive Officer

I'll start out and maybe Chris will want to add a few things. Of course, like everyone, we are concerned about the global trade rhetoric, especially with China. Things with Europe seem to be calming down a bit. Tariffs for us this year are not material. It's a small number. It'll be a little bit of a headwind going into next year as long as we stay where we are in terms of what's happening with China. Do you want to add anything else?

Christopher R. Reidy -- Executive Vice President, Chief Financial Officer, Chief Administration Officer

Just to be specific on that, in the fourth quarter, we got about $0.01 of impact from the tariffs as enacted now, and that's typically some electronic parts, particularly related to our MMS and biosciences business. So, really, de minimus, but about $0.01. That annualizes next year, so think $0.04 next year or thereabouts, but not particularly meaningful as it relates now. If you look at the next set of rounds, I think it's about the same, and we'll see if that happens at all. They're constantly changing, so we'll watch that, but not particularly significant.

Thomas Polen -- President

Just to add to Vince and Chris's comments, one thing to consider is we've had a very systematic strategy over the last couple of years to migrate manufacturing for China in China. And so, today, over 50% of the BD medical products that we sell in China are manufactured in China. That obviously is good related to the tariffs. We've been doing that now in Life Science. We've been very purposely moving products into China for China there, and now, as part of our integration work with Bard, we've got a number of products already started under way to transition manufacturing -- again, for China in China. So, we see that as probably a position that we're maybe more advantaged than other companies within the sector. That positions us well from a tariff perspective.

Vincent A. Forlenza -- Chairman and Chief Executive Officer

It gives us a very balanced global network with a lot of manufacturing in the U.S., but very balanced around the globe.

Bob Hopkins -- Bank of America Merrill Lynch -- Managing Director

Great, very helpful. And then, quickly, I wanted to come back to something that a couple of people have asked about. You're commenting on exiting the year at over 7% growth, which is obviously very robust, and I know it's a little early to be talking about this, but if you could at least talk qualitatively about sustainability, does that strength exiting the year suggest that there may be a little bit of upside to the LRP that you guys have been talking about, or just a bunch of things coming together, particularly in that fourth quarter? So, it's really a question on sustainability.

Christopher R. Reidy -- Executive Vice President, Chief Financial Officer, Chief Administration Officer

I think we feel really good about the way we're exiting the year, but I think there is some timing that we talked about that shows up in the fourth quarter. So, it's early to be talking about next year at this point, but we feel like we're going in with strong momentum and executing on the range that we talked about at the time of the deal model. So, more to come.

Bob Hopkins -- Bank of America Merrill Lynch -- Managing Director

Great. Thanks for taking the questions.

Operator

Our next question comes from the line of Isaac Ro with Goldman Sachs.

Isaac Ro -- Goldman Sachs -- Vice President

Good morning, guys. Thanks very much. Just hoping you could talk a little bit more about U.S. surgical volume trend. I'm kind of curious what you saw in the quarter and what's baked into the guidance the rest of the year. The reason I ask is it does look like across the industry, things have gotten a little bit better, but maybe not to the degree you would hope for given seasonality and economic backdrop here. So, I'd be interested in your take on that dynamic.

Vincent A. Forlenza -- Chairman and Chief Executive Officer

I'll just make an overall comment first and then I'll turn it over to Tom, but I don't think we've seen any real change in the surgical dynamics broadly across the product line -- the legacy BD piece or the Bard piece -- other than a little bit of confusion from the hurricane, which is kind of clouding things. Tom, is there anything else you want to add?

Thomas Polen -- President

Vince, I think you said it well.

Vincent A. Forlenza -- Chairman and Chief Executive Officer

Thanks.

Isaac Ro -- Goldman Sachs -- Vice President

And then, just a follow-up on the gross margin dynamic, just to continue on that topic -- it'd be helpful if you could maybe deconstruct a little bit more the key drivers of improvement. You said to us you had multiple factors at play here. I'm trying to figure out which of those are likely to sustain on a normalized basis if we put aside FX.

Vincent A. Forlenza -- Chairman and Chief Executive Officer

Sure. So, we obviously get a nice lift from the mix with the Bard gross margins, so that's about 300 basis points this particular quarter, for example. We had 100 basis points of improvement from synergies, and that was partially offset by headwinds from raw materials about 30 bps, mostly resins, and pricing was about 20 bps or thereabouts.

Isaac Ro -- Goldman Sachs -- Vice President

Got it. Thank you very much.

Operator

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

Lawrence Biegelsen -- Wells Fargo -- Analyst

Good morning. Thanks for taking the question. One on Bard, one on some new products. So, first, on Bard, any update on revenue synergies and tax synergies and timing, and maybe just qualitatively, the potential benefit? And then, I had one follow-up.

Vincent A. Forlenza -- Chairman and Chief Executive Officer

Tom will talk about the revenue synergies. I think we're feeling pretty good. Tom?

Thomas Polen -- President

So, we do continue to expect revenue synergies that are going to be measurable starting in FY '19 and larger than the CareFusion revenue synergies that we've shared in the past. More to come on specifically what those dollars are. I think we've always hinted that would come as we give FY '19 revenue guidance, and we expect that that's the exact timing that we're on. Maybe the other thing I could add is that we've shared already that we're investing about $15 million this year toward revenue synergies, most of that falling in SSG&A expenses as we're ramping up our efforts in a few areas, and those are around vascular access. So, driving synergies across that broadened portfolio of picks, midlines, and catheters.

And then, the other major area is in surgery, particularly the U.S. and Europe, where there were opportunities to double down on a channel to leverage the biosurgery and the infection prevention platforms. So, those investments are rolling out -- actually, Q3 was kind of the peak of those investments. Q4 will continue at a similar rate and continue to roll into '20, but we are seeing positive momentum.

Vincent A. Forlenza -- Chairman and Chief Executive Officer

The only other thing I would add is that we have piloted the vascular access value proposition in a few accounts, and the response from the accounts has been excellent. We just saw that in the last couple of weeks. So, we think we're on the right track here.

Lawrence Biegelsen -- Wells Fargo -- Analyst

Chris, on the tax synergies -- I'll ask the product question -- so, Lutonix BTK still filing by year-end 2018. Any update on the data presentation? And, lastly, TVA -- the opportunity seems underappreciated to me. Any color on how big that could be? Thank you for taking the questions.

Christopher R. Reidy -- Executive Vice President, Chief Financial Officer, Chief Administration Officer

I'll go with the tax rate first and then I'll pass it over to Tom. It's still a little bit early on the tax synergies, and the reason for that -- first of all, it's complicated, but it's secondly complicated by tax reform. And so, there's a lot of folks that are helping us dive through that as we speak, so, more to come in the future on that. I think we feel good about where the tax rate is now. We're looking at the low end of our range -- so, in that 17% range. The original range we gave was 17% to 19%, so we're looking pretty good from that standpoint.

The one other point I want to remind people of is you do get a bit of a grow-over next year because of the tax on foreign earnings from tax reform kicks in next year, so we're getting a little benefit this year, and it erodes a little bit next year, but we're pretty confident that we can offset that. Just something to think about.

Thomas Polen -- President

On BTK and TVA -- BTK is right on track with what we had shared historically. We are finishing the six-month follow-up and preparing the submission of the PMA in Q1 of '19. That's 100% on track. And, we expect to be able to talk about the BTK data, just as we'd shared before, probably at the beginning of the calendar year in some scientific forums.

On TVA, I think you're 100% right on. We're really excited about that technology. If you've seen the current methods for creating a fistula and the invasiveness of the surgery versus the minimally invasive nature, what that looks like, and time to having a mature fistula, it's a radical difference versus the current state of care. And so, that gives us what we think is going to be an early lead in minimally invasive vascular access solutions for patients with end-stage renal disease. It's really a disruptive innovation that we do think presents a significant opportunity for BDPI, and it's really going to just further add to our full range of solutions for supporting IV access for patients undergoing hemodialysis.

Vincent A. Forlenza -- Chairman and Chief Executive Officer

The other exciting thing about this is it enables the creation of new fistula sites -- two sites. So, from a patient standpoint, this is extremely important. So, as Tom was saying, we agree with you that this is a really good opportunity to convert to current procedures.

Thomas Polen -- President

I would just say our sales teams are being trained now and we're planning for a launch in Q1.

Lawrence Biegelsen -- Wells Fargo -- Analyst

Thank you.

Operator

Our next question comes from the line of Robbie Marcus with JPMorgan.

Robert Marcus -- JPMorgan Chase -- Analyst

Great. Thanks for taking the question. Vince, I was hoping you could talk about your emerging markets growth. 15% to 20% of the business still growing, pretty strong double digits there. How much of that is from the addition of the Bard business? How did Bard do versus Becton? Any color on the sustainability there?

Vincent A. Forlenza -- Chairman and Chief Executive Officer

I would say it was very much where we expected it to be. If you backed up, underlying Bard and underlying BD, we're very much in line with historical trends. All in, China was around 13% or so, and the BD and Bard pieces were pretty much in line with what we expected. For me, the big bounce-back has been in EMA, which is doing quite well year to date, and very good growth in Latin America.

So, I would say that from a revenue synergy standpoint, we're really in very early days. We're only two quarters into this, just training folks on that, so you're not seeing the revenue synergy piece of that yet. That's to come. Now, the one place we're moving ahead is not emerging markets, as Tom mentioned. It's in Europe. We do have the sales force now in place on the surgery side of things. So, just getting started there this quarter. So, more to come next year on revenue synergies.

Christopher R. Reidy -- Executive Vice President, Chief Financial Officer, Chief Administration Officer

I would add that when you think about emerging markets growth, I would say Bard adds about 2% to emerging markets, which is in line with what we would have expected.

Robert Marcus -- JPMorgan Chase -- Analyst

Great. Maybe as a follow-up for Tom, on the Type 2 diabetes patch pump and the cannula infusion set with Medtronic, these are two that have significant potential. Can you give us any more in terms of the go-to-market strategy with the Type 2 pump? Any details around the product or how it compares to some of the other patch pumps out there, and is there any ability or willingness to take this into the Type 1 market? Thanks.

Thomas Polen -- President

Okay, Robbie. For Swatch, we continue to be very excited about the potential of that product and we continue to make good progress. We are progressing our clinical trials, as we had shared in the past. We've just completed the analysis of an in-human insulin infusion trial, and that went exactly to plan for us. It was a very positive response from patients on its ease of use and overall performance. So, right now, we're actually preparing to start up our next in-home safety trial -- again, using insulin -- and we're making good progress overall, gearing up our manufacturing. We're moving that to our Ireland location. That's going to be the permanent manufacturing location. And, we're building our commercial plans at this point in time.

It has been designed specifically for Type 2 patients, both from a feature set and extreme ease of use. What really differentiates this product from other types of patch pumps, we think, are the extreme simplicity of the user interface on the digital side and on the hardware side. And so, we've designed it to not necessarily have all the bells and whistles that someone with Type 1 would want, but that also allows us to have a cost position that is very specifically targeted for Type 2 patients. So, think about a cost position that's much more at parity with pen therapy than the significant premium that's typically associated with pump therapy, and that's one of the core value propositions that we hear a lot of excitement from payers on as well.

Alberto Mas -- Executive Vice President, President of Medical Segment

I just wanted to complement the fact that we are really advancing very well our production preparedness. It's on track and we'll be ready to go with a good ramp-up from a product production perspective, and we are expecting to submit our submission for the Type 2 patch pump later this year.

Vincent A. Forlenza -- Chairman and Chief Executive Officer

So, going toward Type 1 would make no sense, as Tom said, with the features that we have, and that's key, actually, to the regulatory strategy that we have, that this is focused on Type 2 patients. But, longer-term, I think about this maybe with other drugs for the home -- not in the short run, but that's where there's possible market expansion. We're already talking to pharma companies about that.

Thomas Polen -- President

I would just add that of course, we do have our pharmaceutical systems business, which does take devices from other business units and applies them for other disease states by selling those to other pharma companies, so we have had our first deals on a B2B basis with that product, and we think there's more opportunities there ahead. So, we really see an opportunity to leverage the platform, not running through our diabetes care business, but also through our pharmaceutical systems business unit, where we have relationships with essentially all the top pharma companies.

Vincent A. Forlenza -- Chairman and Chief Executive Officer

Thanks for your question.

Robert Marcus -- JPMorgan Chase -- Analyst

Thanks a lot.

Operator

Our next question comes from the line of Doug Schenkel with Cowen.

Doug Schenkel -- Cowen and Company -- Managing Director

Hi. Good morning and thank you for taking my questions. I want to ask a pricing question of Chris, but before we get there, a couple pump questions -- different types of pumps. So, Tom, maybe as a follow-up to that last question, on the diabetes side, would you ever consider collaborating with a CGM company to automate insulin delivery and tentatively manage patients who could potentially be using your pump?

Thomas Polen -- President

Yes, we would, over time, certainly look at CGM being integrated into the algorithms and collaborating with those types of organizations.

Doug Schenkel -- Cowen and Company -- Managing Director

Thank you for that. And then, on the new Alaris pump, I just wanted to talk about the sales strategy there. Is this largely replacing existing BD units, or do you think with this, you can get even more aggressive targeting competitive conversions? You've done an excellent job gaining share. I'm just wondering if this actually positions you even better.

Thomas Polen -- President

It does. Let me turn it over to Alberto Mas, who's taken over the Medical segment.

Doug Schenkel -- Cowen and Company -- Managing Director

That'd be great.

Alberto Mas -- Executive Vice President, President of Medical Segment

It certainly positions us better with the customer because there's an enhanced connectivity, cybersecurity, alarms, and so on. So, the features are more advanced. Where we're seeing most of our gains in the marketplace is when we put together our complete portfolio around the HealthSight capabilities and data and analytics, and when we put together our Alaris platform with our Pyxis, and from dispensing all the way to med management. The other driver here is interoperability. It's a very important component of our strategy. We think that we're ahead from that perspective from the competition and we have a track record of actually getting it implemented, which is a key component of interoperability.

Doug Schenkel -- Cowen and Company -- Managing Director

Okay. Thank you for that, Alberto. Chris, last one on pricing. You guys have done a great job over the last few years maintaining price. It does look like you've come under a little more pressure recently. I'm just wondering if there's anything more to talk about there, and looking ahead, how do we think about tariffs in the context of pricing moving forward?

Christopher R. Reidy -- Executive Vice President, Chief Financial Officer, Chief Administration Officer

Sure. I would say that it's pretty much in line with what we expected. We went into this year -- we mentioned we expected to see pressure and we're seeing a little bit of pressure, tens of basis points, and it's pretty consistent. We're taking some price in certain areas, as you know, and in other areas, we're bringing the prices down. So, not unlike what we've been doing over the last few years. We've been holding that fairly steady. So, it's very consistent with where we were. And, as it relates to tariffs, it's very small for us, so we don't see any implication on pricing at this point.

Doug Schenkel -- Cowen and Company -- Managing Director

Okay, thanks, guys.

Operator

Our next question comes from the line of Bill Quirk with Piper Jaffray.

William Quirk -- Piper Jaffray -- Managing Director

Great. Thanks. Good morning, everybody. So, Vince, you highlighted the TVA Medical transaction. How should we think about the pacing of capital deployment for additional M&A activity as compared to debt reduction?

Vincent A. Forlenza -- Chairman and Chief Executive Officer

Sure. We are focused on debt reduction and meeting our commitment to get down to 3x, and we're on track so far, so we're feeling good about that. But, as we did our modeling and our planning, we did make allowance for tuck-in acquisitions. Just as we did under CareFusion, we did a few of them. We tightened the screening and said they have to be must-dos strategically. And, of course, we always have rigid criteria. But, you should expect that we will continue to do plug-in acquisitions, but also, at the same time, meet those deleveraging goals, and that's on track so far.

Christopher R. Reidy -- Executive Vice President, Chief Financial Officer, Chief Administration Officer

I feel really good about the fact that we're at 4.2x already, and also did a very exciting acquisition like TVA, and we were able to do both. It goes back to what Vince said. We had planned to leave some room because we knew we didn't want to be out of the tuck-in acquisition business, so we were able to accomplish both.

William Quirk -- Piper Jaffray -- Managing Director

Very good. And then, Tom, circling back to an earlier question, can you help us think a little bit about how you're thinking about the TVA Medical contributions here following the 1Q launch?

Thomas Polen -- President

I don't think we necessarily are giving any guidance by product line by quarter, but we would expect -- obviously, it's a new market we're going to have to develop, and over time, it will become a meaningful contributor to the peripheral intervention business, but we don't comment much more than that by product line.

William Quirk -- Piper Jaffray -- Managing Director

Got it. Thank you.

Christopher R. Reidy -- Executive Vice President, Chief Financial Officer, Chief Administration Officer

Just remember the old adage that this is a company built on singles. Keep that in perspective.

William Quirk -- Piper Jaffray -- Managing Director

Thanks, Chris.

Operator

Our next question comes from the line of Richard Newitter with Leerink Partners.

Jaime Morgan -- Leerink Partners -- Analyst

Hi. This is Jaime on for Rich. Thanks for taking my questions. Following up on capital deployment and the M&A landscape, what are you thinking about size-wise for any potential tuck-ins and what are you most focused on for areas that you feel would benefit such a deal?

Vincent A. Forlenza -- Chairman and Chief Executive Officer

These are smaller transactions. TVA is kind of -- they've got the technology developed, they got an FDA approval. It wasn't a science project; it was a complete product. In the Interventional segment, you see a lot of that. If you look back over our history, you saw us buying companies that were in the $50 million range, that sort of stuff. Smaller things are generally what we're talking about. A good example is FlowJo, a small software company. It enhances the growth rate. It's another single, like Chris was saying, but really grounded our solutions portfolio over there. Those kinds of things are what we're talking about here.

Jaime Morgan -- Leerink Partners -- Analyst

Okay, great. And then, just a follow-up. I know you guys are commenting on how the Bard acquisition is on track and progressing very well. Just a question that I had there -- are there any changes that have surprised you either to the positive or negative since the deals closed? If you could share any color there.

Vincent A. Forlenza -- Chairman and Chief Executive Officer

That's a good question. The interesting thing is that I don't think there has been any significant surprises in terms of when we step back and look at the fundamental assumptions that we had driving the acquisition, starting on the strategy side, and how these things fit together, and then, on the financial side. If there's been an upside, it's on how similar the cultures have been, how quickly the teams have come together. I'm delighted -- as I mentioned in my remarks -- to have several members now on my leadership team out of Bard, not that I didn't think they were great people ahead of time, but the way this has come together, as I mentioned, from a cultural standpoint has been really good. So, that has been fine.

I think the differences between CareFusion and this one -- CareFusion was put together through acquisition. It had a bunch of different cultures, so we had to integrate a bunch of different cultures, and then you were actually integrating a bunch of different businesses. Now, at Bard, it's one culture, though it's run very decentralized, and so, integration challenge -- the complexity of that integration challenge comes from the differences in the business units and the business systems across them. Of course, that's just a different way of having opportunity and getting at the opportunities across the two businesses. But, pretty much, that's it. Very happy with the way the integration is going. Thanks for the question.

Jaime Morgan -- Leerink Partners -- Analyst

Thanks.

Operator

At this time, there are no further questions. I will now turn the call back to Mr. Forlenza for closing remarks.

Vincent A. Forlenza -- Chairman and Chief Executive Officer

Thank you very much for your participation. Just some final comments: As you saw in the quarter, the core BD performance is very strong, and we see acceleration in the fourth quarter. I just mentioned that the Bard integration, the synergy capture, the base business performance is also right on track. Very happy about that. This year has been a very challenging year because of the amount of things that we have had on our plate, integrating two businesses -- as I said, we're in great shape on CareFusion, pretty much done with that. The Bard piece is going well. Of course, we throw on top of that the hurricane and having to deal with that across both organizations, and I'm really proud of the way people have stepped up to those challenges. And, at the end of the day, this is an organization that's come together quite nicely, that's working extremely hard to meet our own expectations and your expectations. So, thank you very much.

Christopher R. Reidy -- Executive Vice President, Chief Financial Officer, Chief Administration Officer

Thanks, everyone.

Operator

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

Duration: 68 minutes

Call participants:

Monique Dolecki -- Senior Vice President, Investor Relations

Vincent A. Forlenza -- Chairman and Chief Executive Officer

Christopher R. Reidy -- Executive Vice President, Chief Financial Officer, Chief Administration Officer

Thomas Polen -- President

Alberto Mas -- Executive Vice President, President of Medical Segment

David Lewis -- Morgan Stanley -- Managing Director

Vijay Kumar -- Evercore ISI -- Managing Director

Bob Hopkins -- Bank of America Merrill Lynch -- Managing Director

Isaac Ro -- Goldman Sachs -- Vice President

Lawrence Biegelsen -- Wells Fargo -- Analyst

Robert Marcus -- JPMorgan Chase -- Analyst

Doug Schenkel -- Cowen and Company -- Managing Director

William Quirk -- Piper Jaffray -- Managing Director

Jaime Morgan -- Leerink Partners -- Analyst

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