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Becton Dickinson & Co. (NYSE:BDX)
Q1 2021 Earnings Call
Feb 4, 2021, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Hello, and welcome to BD's First Fiscal Quarter 2021 Earnings Call. [Operator Instructions] It will be available for replay through February 11th 2021, on the Investors page of the bd.com website or by phone at 855-859-2056 for domestic calls and area code 404-537-3406 for international calls, using confirmation number 699-3448. [Operator Instructions]

Beginning today's call is Ms. Kristen Stewart, Senior Vice President of Strategy and Investor Relations. Ms. Stewart, you may begin.

Kristen Stewart -- Senior Vice President of Strategy and Investor Relations

Thanks, Stephanie, and welcome to BD's review of our first fiscal quarter results. Joining me today, we have Tom Polen, Chief Executive Officer and President; Chris Reidy, Executive Vice President, Chief Financial Officer and Chief Administrative Officer. During the Q&A portion of the call, we will have our three segment presidents joining us as well, Alberto Mas, President of the Medical segment; Dave Hickey, President of the Life Sciences segment; and Simon Campion, President of the Interventional Segment. A few logistics before we get into the call. This call is being made available via webcast at BD.com, where you can also find the accompanying slides for today's call.

During the call, we will be making some forward-looking statements. And it is possible that risks could differ -- Sorry, actual results could differ from our expectations. Risks, uncertainties and other factors that could cause such differences can be found in our earnings release and in our SEC filings, including our 2020 Form 10-K and subsequent Form 10-Qs. In particular, there continues to be significant uncertainties about the duration and contemplated impact of the COVID-19 pandemic. This commentary we are providing today includes our best estimate based upon the information that we currently have. We have made certain assumptions in how we are managing our business, but that could change as we move forward. We will also be discussing some non-GAAP financial measures with respect to our performance. The reconciliations to GAAP measures that include the details of purchase accounting and other adjustments can be found in our press release and its related financial schedules in the appendix of the Investor Relations slides. These are also available on the bd.com website. Unless otherwise specified, all comparisons will be on a year-over-year basis versus fiscal 2020. When we discuss revenue percent changes, they are on a FX-neutral basis unless otherwise noted.

With all that said, it is my pleasure to turn it over to BD's CEO and President, Tom Polen. Tom?

Tom Polen -- Chief Executive Officer and President

Thank you, Kristen. And good morning, everyone, and thank you for joining us. We are very pleased with our Q1 results, which were ahead of our expectations, reflecting the tremendous efforts and execution of BD's 70,000 associates, the central role of our products and solutions in healthcare and a greater resiliency of the healthcare system in treating both COVID and non-COVID patients. While our fiscal year has just started, I'm proud of the team for the momentum we are building and their dedication to our purpose of advancing the world of health. Revenues increased 25.8% on a reported basis or 24.3% on an FX-neutral basis with 20.3 percentage points of growth coming from our COVID-19 diagnostic revenues. While we did see some benefits from timing in the quarter, we are very pleased with the performance of the base business, which was up 4% against the backdrop of COVID resurgences around the world. We are seeing the early benefits of some of the actions we have taken to drive our base performance. Our adjusted EPS were $4.05 or up 72% versus the prior year. This was also well above our expectations, as a result of three factors. First, our revenues came in above our plan, driven by higher acuity driving increased demand, greater resiliency and procedural volumes and exceptional execution in COVID diagnostics. Second, we benefited from favorable product mix, like Veritor, but also from our higher acuity products. Third, our investment spending such as in R&D was lighter and earlier in ramping. So as you can see, we started this year with strong momentum and that is despite the COVID resurgence. We did start to see some impact of the resurgence on our more elective procedure related businesses late in December and that continued into January. However, we are feeling more confident in the resiliency of our base business relative to what we saw early on in the pandemic. While the healthcare markets continue to be dynamic with COVID-19, and there are number of moving parts, the momentum within BD and our conviction in our strategy lead us to raise our financial guidance for fiscal 2021. Our focus is not only on fulfilling our near-term commitments, but also on advancing our strategy and creating value for our shareholders over the longer term. And I'm feeling even greater confidence with the progress the BD team is making at advancing the BD 2025 grow, simplify and empower initiatives and our ability to create substantial shareholder value.

Today, I want to focus my remarks on three key topics and then I'll turn it over to Chris, who will provide additional remarks on our quarter's performance and comment on our outlook. Then, we'll take your questions. So, let's jump right in.

First, let me start with the Alaris remediation and our overall quality and compliance initiatives. Alaris remediation has and continues to be my number one priority. And the team is making strong progress. Our focus remains on submitting a comprehensive 5-10-K filing for the Alaris System, and we remain on track to submitted in late fiscal Q2 or early fiscal Q3 2021. We also continue to make progress on executing our holistic inspire quality initiatives throughout the organization. Second, as you know, we have a very strong focus on growth and ensuring a durable mid single-digit revenue growth profile. So, let me share some of the exciting highlights in our pipeline and other growth initiatives.

We continue to increase our investments and strengthen our pipeline across three innovation themes to leverage our core strengths. First, we're applying Smart Devices, robotics, analytics and AI to improve care processes. Second, we're enabling new care settings to enhance patient experience and lower costs. This includes investing in products designed for use in the home markets and in sales channels to support these patients. And third, we're investing to improve diagnosis and treatment of chronic disease. So, in line with these innovation and investment priorities, in Q1, we acquired the medical assets of Cubex, which expands our medication management offering by combining our cloud-based easy-to-deploy analytics platform with a smart tabletop dispensing device to create solutions for the fast-growing non-acute-care market. This extends our medication management solution from the hospital into the long-term care surgery centers and other non-acute locations. Another smart device we plan on launching this quarter is the Seneca automated urine output system, which leverages BD's leading position in Acute Urology, along with BD's broad EMR interoperability capabilities and installed base. Also within BD Interventional, the BD PureWick urine collection system and catheter continues to be a significant driver of growth for our Urology and Critical Care business. PureWick is a female external urinary catheter and urine collection system that we sell into the acute care and long-term care settings. But we're now actively extending that directly to patients with our new PureWick dry-dock system for the home. And this launch is exceeding our expectations and, in fact, PureWick revenues now exceed Lutonix. An exciting launch later this year, designed to improve the diagnosis and treatment of cervical cancer, is the U.S. launch of our new BD COR with our BD Onclarity HPV Assay with extended genotyping. With BD COR, BD is going to enter the high-throughput molecular testing market with a very unique fully automated sample-to-answer platform and a highly differentiated assay with unique claims that can improve risk stratification and support risk-based patient management. The system has been CE marked and has been very well received by our customers during our launch in Europe. These are just a few of the many products in our pipeline, and you can find further details on our new innovations in the supplemental earnings presentation posted to our website.

As we've previously shared, we're investing a portion of our Veritor profits to advance our BD 2025 strategy. We expanded the size of the BD innovation and growth fund. And additional innovation projects are being initiated on a rolling basis. We are investing to accelerate our simplification initiatives, including recode and enhancing our quality and compliance programs.

We're also increasing funding in our BD University to support advanced employee education and leadership development as part of our strategy. As we always do with our spending, we're taking a disciplined approach and the timing of the spending was lighter in Q1. And we expect it to step up in Q2 and remain higher for the balance of the fiscal year. As we've mentioned before, we continue to actively evaluate tuck-in acquisitions to supplement our growth strategy. And we executed on three strategic tuck-ins transactions so far this year, including Cubex's medical assets that I mentioned earlier. We continue to apply a disciplined financial and strategic evaluation process to these transactions, and have a robust funnel.

Lastly, I'd like to update you on our COVID diagnostics outlook and specifically, Veritor. Antigen testing continues to become more widely used in both traditional and non-traditional settings. We have been highly successful with our BD Veritor Plus COVID-19 launch. Veritor has been well received for the ease of use, performance and automated digital data and informatics capabilities that are provided with our handheld platform. We've nearly tripled our active reader base since the pandemic and now have more than 70,000 BD Veritor analyzers globally, which we intend to leverage in the future with planned non-COVID menu expansion, which we've already begun investing behind. As previously shared, we continue to make good progress on advancing new COVID diagnostics in our pipeline, including combination flu A, B and COVID-19 assays on both BD MAX and Veritor. We also continue to explore home testing on BD Veritor and has been our practice, we'll provide updates to these programs upon launch.

Turning to the quarter's performance. Our Q1 COVID-19 diagnostics revenues were higher than we expected at $867 million, which included better-than-expected BD Veritor rapid point-of-care antigen test revenues of $688 million and higher BD MAX COVID assays and collection swaps and transport devices. The higher-than-expected Veritor revenues were the result of our ability to scale our manufacturing faster, which is a testament to our manufacturing excellence, as well as realizing higher pricing than we anticipated. However, since we've been saying since last fall, we do expect pricing to move lower as capacity came online. And this is what's playing out. We've recently lowered our pricing to allow the broadest patient access to our best-in-class BD Veritor Plus system. We believe this price adjustment is in the best interest of our customers and patients around the world, as we've now ramped our manufacturing capacity and there are emerging mutations that are making it more transmissible. We also believe this is in the best interest of our shareholders, as we believe this move allows us to maintain a leadership position in the point-of-care market.

With respect to our fiscal 2021 Veritor revenue guidance, as we've been discussing, there continues to be many variables at play besides the evolving pricing environment, including the rollout and adoption of vaccines and the circulation of new variance. It's also difficult to pinpoint when the market supply for antigen tests will exceed market demand. For modeling purposes, we would suggest using an ASP in the low-to-mid teens. Given all of this, we expect Verito revenues to be toward the high end of our previous range of $1 billion to $1.5 billion. We continue to expect Veritor revenues to be more weighted to the first half of our fiscal year and given the evolving pricing and capacity environment, we would expect our fiscal Q2 revenues to be lower than our just reported Q1 results.

Before turning it over to Chris to review the financials, I want to close with the few thoughts. While we were very pleased with the performance of Veritor and other COVID diagnostic revenues in the quarter, what excites us more was the improving momentum and resiliency of the base business. While we saw some headwinds in our procedure-based businesses from the resurgence late in December and that continued into January, the impact was much more limited than at the start of the pandemic. Moreover, given the momentum in our base business, the investments we are making in our BD 2025 strategy, we believe, we are positioned to emerge strong. We remain on track to submit our Alaris 510(k) filing in late fiscal Q2 or early Q3 and we're making great progress in advancing our BD 2025 strategy. And I'm particularly pleased with the investment programs we've identified and initiated. These investments allow us to further fulfill our purpose of advancing the world of health, bring new innovations to patients and expand access. Increased spending will be more evident in our P&L later in this fiscal year, but we believe these initiatives will translate into revenue accretion beginning in late FY '22 and beyond. The investments we are making are also toward simplification initiatives, which reduce complexities, drive cost efficiencies, enhance our quality programs and improve cash flows. This quarter, we made several advancements on this front, including inventory reductions that we absorbed in our gross margin in the quarter that helped to strengthen our cash flows. Our recode efforts are on track to achieve our targeted $300 million in cost savings by the end of fiscal 2024. We're also advancing our sustainability initiatives, because we view sustainability as a strategic imperative. And we recently announced the first of our 2030 and beyond goals, our climate-change targets. We're committed to reducing scope one and two greenhouse gas emissions 46% by 2030 and to be carbon-neutral across direct operations by 2040. This science-based target is aligned with the 1.5-degrees C global emissions reduction pathway. And we look forward to sharing more detail behind our 2030 sustainability plan with you in future engagements. And finally, I'm very proud of the organization for being named for four consecutive years to the human right campaigns foundation's Best Place to Work for LGBTQ Equality List and for the second straight year to the Gender quality index. Inclusion and diversity is an important focus for BD as we continue to attract, develop and retain the best talent, as well as benefit from diversity of background and thought.

I look forward to answering your questions during the Q&A portion of this call. And I'll turn it over to Chris now.

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

Thanks, Tom. And good morning, everyone, and thanks for joining us today. We are very pleased with our fiscal first quarter revenue and adjusted earnings per share performance, both of which exceeded our expectations. Total revenues were over $5.3 billion, in line with our January 12th pre-announcement. Revenues increased 25.8% on a reported basis and 24.3% on an FX-neutral basis. COVID-19 diagnostic revenues accounted for 20.3 percentage points of growth. The better-than-expected performance came from three years. First, our base business performed better than expected. This was a result of stronger execution from our associates, greater resiliency in procedure volumes as healthcare facilities manage both COVID and non-COVID patients and higher acuity resulted in both favorable product mix and increased demand for several product lines. Keep in mind, though, that some of our business segments are still operating below pre-COVID volume levels. Second, our COVID diagnostic revenues were higher than expected. This included not only Veritor revenues, but also MAX and swab and transport revenues.

Lastly, we estimated about $100 million in revenues were attributable to stocking and timing. As COVID-19 surges were occurring, we observed some of our customers moving to more of a just-in-case level of inventory and maintaining higher levels of our critical need products on hand. We also saw some of our U.K. customers buying more ahead of Brexit. The $100 million includes higher-than-expected revenues in our MMS Infusion Systems business due to COVID-19.

BD Medical revenues totaled nearly $2.3 billion and grew 6.9% on an FX-neutral basis. Our outperformance was primarily in Medication Delivery Solutions, as well as in Medication Management Solutions. MDS revenues were up 5.6%. While hospital utilization remains below pre-COVID levels and has been an ongoing headwind, we benefited from the acuity of care associated with the treatment of COVID patients. We saw increased demand for PICCS, vascular prep and maintenance. As I mentioned, we believe stocking of critical need products helped the quarter. Finally, as expected, there was $37 million in revenues associated with COVID vaccination syringes and needles.

Now, turning to our MMS business. Revenues grew 8.4% with growth in both medication dispensing and infusion systems. In dispensing. we had strong growth internationally and, once again, exited the quarter with strong committed contracts in the U.S. In infusion systems, we continue to support U.S. customers' response during the pandemic on the medical necessity and experienced another quarter of strong demand in Europe. And Diabetes Care revenue growth of 5.4% was above our expectations, reflecting distributor inventory stocking, in addition to an easy comparison to last year. We still view this business to be more of a flattish business on a normalized basis. Farm system sales remained strong, growing 9.5%, driven by ongoing demand for our market-leading pre-filled syringe portfolio. BD Life Science revenues totaled nearly $2 billion and were up 74.1% on an FX-neutral basis. As I mentioned previously, COVID diagnostic revenues were $867 million in the quarter. Excluding COVID diagnostic revenues, BD Life Science revenues were down 2.4%, which was better than we expected. Integrated Diagnostic Solution revenues increased by 106% due to COVID-19 diagnostic testing revenues. Excluding these COVID diagnostic testing revenues, IDS revenues were down just 1.2%.

There were several puts and takes in the base business. We saw a stronger-than-expected performance in our specimen management, blood culture and women's health and cancer product lines. We also saw some element of distributor stocking of critical to healthcare testing. However, while we have seen improvements, routine diagnostic testing activities are not fully back to pre-COVID 19 levels and a significantly lighter flu season negatively impacted the base revenue growth in the quarter on a year-over-year basis.

Now, turning to Biosciences. Revenue declined by 5.2% due to a difficult comparison, as a result of prior year licensing revenue. In addition, clinical and research activities are not yet fully back to pre-COVID-19 levels. Overall, operational performance and Biosciences was better than expected. BD Interventional revenues totaled nearly $1.1 billion and were up 5% on an FX-neutral basis, with all business units posting growth. We observed that elective procedures, particularly those conducted in an outpatient setting, had greater resiliency in Q1 compared to the initial wave of COVID. This was likely driven by processes and care settings that enabled elective procedures to continue despite the resurgence and a greater willingness on the part of patients to attend to their scheduled elective procedures. Surgery sales were up 1.3%, as strong sales growth in our infection prevention business was offset by the ongoing headwinds related to lower procedures due to the pandemic. Peripheral Intervention sales were up 5.9%, growth was driven by strong performance across our peripheral arterial disease platforms. Urology and Critical Care turned in another quarter of strong growth, with revenues up 8%. PureWick continues to fuel the growth in our Acute Urology franchise, while our new Connected Arctic Sun system is driving double-digit growth in our targeted temperature management business. This is another example of BD leveraging our digital capabilities and broad EMR interoperability footprint to bring new innovations to market.

Now, turning to the P&L. We were really pleased with our gross margin performance in the quarter. Our adjusted gross margins were 58.2%, which expanded a 170 basis points year-over-year on a reported basis. On an FX-neutral basis, our gross margin expanded 250 basis points, which was primarily driven by COVID diagnostics and higher acuity products. While SG&A and R&D spending were both higher on a year-over-year basis, the level of spending was lower than we anticipated, particularly R&D, reflecting mainly timing. Operating margins were 31.6%, up 830 basis points on an FX-neutral basis, which was driven by higher gross margins and reduced SG&A and R&D spending. Net interest expense was $118 million, down slightly on a sequential basis. Other income was $30 million versus $27 million a year ago. And the adjusted tax rate came in at 14.6%, which was in line with our expectations. Our adjusted non-GAAP EPS were $4.55.

In fiscal Q1, the preferred shares are dilutive. Therefore, in calculating the adjusted non-GAAP EPS, preferred dividends amount of $23 million was excluded from the numerator, while the diluted share count would be adjusted to include the dilutive impact of the convertible preferred shares and it would be $299.1 million. As we've been discussing, our BD 2025 strategy includes a focus on driving cash flow and we were really pleased with the continued progress of these initiatives in our cash flow performance. We generated $1.5 billion in cash flow from operations in the quarter and $1.3 billion in free cash flows. We have also been focused on strengthening our balance sheet. As we previously communicated, we paid down $265 million of debt in the first fiscal quarter. Our net leverage ratio declined to 2.5 times as of December 31st 2020 from 3.0 times at the end of September 2020. A few weeks ago. Moody's upgraded our credit to an investment-grade rating. And we are committed to maintaining a full investment grade credit rating across the major credit rating agencies.

We believe we're approaching a turning point in our capital allocation. In the past, a significant amount of our cash was dedicated to repaying the debt. But looking ahead, we expect to have greater flexibility to refocus our cash deployment and growth opportunities, including tuck-in M&A and other capital deployment options.

Next, I want to address fiscal 2021 guidance. While we observed greater resiliency in Q1 as it relates to procedure volumes, we still view COVID-19 resurgences to be a significant risk factor to our forward outlook as it could impact general healthcare utilization procedure volumes and diagnostic testing, including COVID testing. In the latter weeks of December, as the resurgences picked up, we started to see pressure on some of our procedure-based products. This trend continued into January. We have updated our guidance to incorporate some impact from the resurgence into our forecast for fiscal Q2, and we continue to monitor the trends. Our guidance continues to assume no major systemwide shutdowns of elective procedures. Given the strength of our Q1 performance, along with our outlook for the remainder of the fiscal year, we are comfortable forecasting FX-neutral revenue growth in the range of 10% to 12% compared to our prior range of high-single to low-double digits. This would include our assumption of Veritor revenues being toward the high end of our original guidance range of $1 billion to $1.5 billion. Using current exchange rates, we expect FX to add approximately 200 basis points to revenue growth, versus our prior guidance of about 100 basis points. We expect our non-GAAP EPS for fiscal 2021 to be in the range of 12.75 to 12.85, which is above our prior guidance range of 12.40 to 12.60, a raise of $0.30 at the midpoint of the range. So, for these reasons, while we are extremely pleased with our strong execution in fiscal Q1, we want to caution against extrapolating our fiscal Q1 revenue margin and EPS performance going forward. While we are not giving quarterly guidance, we thought it might be helpful to provide some context on this quarter's strength as you contemplate phasing for the rest of the year. Our Q1 revenues, operating margins and adjusted EPS, are likely to be the highest absolute levels for the year due to two factors, Veritor pricing and the ramp of our planned investment spending. In addition, the stocking of $100 million will unwind in the remainder of the year.

As Tom mentioned, we expect Veritor revenues in fiscal Q2 to be lower than Q1. As we have discussed in the past, we expected our COVID test pricing to decline and this is playing out. We expect Veritor it to be well positioned for broad access as we look ahead. Regarding our operating margins, our fiscal Q1 EPS benefited from the higher Veritor revenues and margin profile as well as the timing of investment spending. We expect investment spending, particularly in R&D, to be meaningfully step up in Q2. The combination of these two factors will result in our operating margins moving into the low to mid 20s in our fiscal Q2. In the second half of the year, given our expectations for lower Veritor revenues and for investment spending to continue to ramp at a similar rate to fiscal Q2, we would expect operating margins in the low 20s. We are also seeing some impact from the resurgence in January and like many others, we are also continuing to see pressure from higher shipping costs, as well as some other headwinds. However, due to the strength of our Q1 results, we're able to offset these headwinds and raise our full-year EPS guidance.

With that, I'll turn it back to Kristen, who will help moderate our Q&A.

Kristen Stewart -- Senior Vice President of Strategy and Investor Relations

Thanks so much, everybody. And with that, I'm going to open it up to the operator, Stephanie. Stephanie, could you please read the instructions?

Questions and Answers:

Operator

The floor is now open for questions. [Operator Instructions] Thank you. Our first question is coming from David Lewis from Morgan Stanley. Good morning, and thanks for taking the questions and congrats on a nice start to the year. Just two from me, team. So, first, just, earnings reconciliation. Chris, obviously, beat by more than above 50, raised by $0.30 and I know you gave some parameters there, but we had pricing reductions in our model. We had 20% reinvestment of that upside in the model. Even when you make those kind of adjustments as well as stocking, it's still a little hard to reconcile the upside in the quarter relative to the guide. So, I appreciate it's a less visible environment, but is there anything else? Is that investment going higher, or anything else we may not be thinking about that would explain why we're not getting this sort of that pull through in the second-third quarter, because I think that's going to be the key question this morning of the call.

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

Sure, David. Thanks for the question. And I would say, first of all, it's early in the year, obviously. So, we're raising. But some of the fact is that, you mentioned, we do see playing out in the remainder of the year. So, we had a few things going on. Obviously, we mentioned that Veritor, we would expect that revenue to come down in the remainder of the year and moderate as we talked about. We also had timing in the base business that we would expect to moderate. And to your point, we do expect the investment spending, both in the Veritor reinvestment program that we've discussed as well as R&D and quality to ramp. So, we started those programs in Q1. We watched those that spending with some prudence as we looked at the pandemic playing out. And so, we got started. But the ramp really comes in the second, third and fourth quarter. And so, when you put all of that into context, you also have to take into consideration a little bit of impact from the resurgence that we saw that we mentioned we have playing out in Q2. So, with all of those factors coming into play, we felt that it was prudent to think about the guidance that we gave as appropriate at this point. Okay.

Tom Polen -- Chief Executive Officer and President

It is Tom. Good morning, and thanks for the comment. Just to reiterate what Chris mentioned, that other topic is that we still are in the middle of a pandemic. We want to be prudent, but we did see some increases on impacts in procedure volumes in late December and throughout January was certainly less than what we had seen earlier in the pandemic. But there are new strains under way, etc. And when we gave guidance at the beginning of the year, we said it excluded, right, the impact of a resurgence. Well, there's been a resurgence and we've been navigating that very well and have -- actually are raising our outlook in the middle the resurgence. So, we'll continue to evaluate as things go forward, but we're certainly pleased with how we started the year.

David Lewis -- Morgan Stanley -- Analyst

Okay. So, the stated factors you've mentioned, but we're not missing anything, it doesn't sound like. Okay. The second question for you, maybe Tom, more strategic. This is obviously going to be very good year. We'll see significant upside. The balance sheet is obviously in dramatically better shape now than it was a year ago. As you think about 2022, Tom, how are you thinking about the durability of COVID testing. I know it's a challenging question. And then, the ability to sort of manage through what's likely going to be sort of a volatile or void-driven earnings period as you head into '22, and how are you thinking about sort of '22 and beyond COVID wise and sort of managing the earnings process? Thanks so much.

Tom Polen -- Chief Executive Officer and President

Yeah. I'll start on that and then I'll turn it to Chris as well to share some comments. Let me maybe focus on specifically COVID testing and then Chris can make some broader comments on the broader business. And we've shared it, by the way, in the past, we still remain very confident and expect our revenues, excluding COVID diagnostic testing and Alaris Pump revenues, to grow in those mid-single digits on an FX-neutral basis for '22. And that remains our aim and our expectation. In terms of COVID testing as we go into '22, certainly, as I had shared before, as we got into COVID rapid testing in last July, obviously, we didn't have a high expectation that there would be much testing in '22. And as kind of each quarter has gone -- has passed since that launch in July, we've said we're feeling more confident there is going to be some level of testing in FY '22 and that certainly remains the case, I think what -- one of the ways to think about, as our capacity has gone up in this space, as we recognize the new streams coming in the market, as antigen testing continues to increase in its receptivity and people understand now the value and increasing ways of getting a test result in 15 minutes. You saw us take some actions this quarter to get pricing in that low-to-mid teen level, which we think will be more -- actually position us well, as I said, to maintain a leadership position for whatever market continues to evolve going into FY '22. Right? That's part of the thinking. Where the actual market ends up in '22? I don't know at this point in time. I think there definitely should be some level of testing and our aim is to make sure that we're positioned to be a leader in however that testing evolves. And other things that we're investing in as well, be it our combination assay, which is progressing well in our pipeline; the flu COVID assay; or our exploration of home testing are all aimed with that thought in mind as well.

So, maybe, Chris, just maybe some broader comments on FY '22?

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

So, yeah. So, obviously, we're not going to go through '22 with any level of precision. But I think it is important to give some high-level comments on it. And as Tom mentioned, the level of COVID testing is a variable that will have a big impact on '22. We do see the sustainability of testing, but at what level? It's really hard to guess at this point. In addition, there is a lot of other uncertainty around COVID in general, the resurgences, mutations, the uptake of the vaccines. And in our business, obviously Alaris and when that comes back in '22, will have an impact. I would remind you that on our November call, we said we expected our revenues, excluding COVID diagnostic testing and the Alaris Pump revenues, to grow in mid-single digits on an FX-neutral basis. And we continue to see that as a reasonable assumption. We can't predict when the FDA clearance for Alaris and our focus on making a comprehensive filing to support the timely approval is there, but we would expect some clearance sometime in fiscal '22. We'd also not look at the second half of '21 as a proxy of what to expect in '22, because both the gross and operating margins are impacted by several factors. Our operating margin in fiscal '21 reflects these incremental investments we're making as part of the reinvestment program of Veritor that really helps drive durable growth were aligned with our 2025 strategy. And we don't expect those investments to continue into '22. So, they will exit -- exiting '21, they'll roll off and we -- that should help margins going into '22.

The other thing I'd point out is that Q1 fiscal '22 will obviously be the most difficult time from a margin perspective, given the very strong quarter we just reported. For example, most likely, face the most difficult comparison with COVID revenues, as well as from the impact of the timing and stocking that we talked about. So, we would expect our operating margin to compress year-over-year from the 31.6% that we just achieved. So, we'll update you more on our thoughts on '22 as we progress through the year, but we just thought it's important to provide some of those highlights.

Tom Polen -- Chief Executive Officer and President

Yeah. And as you mentioned, Dave, we feel really good about the progress of our strategy overall and the underlying business momentum that we continue to build upon. So, thanks for the question.

David Lewis -- Morgan Stanley -- Analyst

Thanks so much for the detail.

Tom Polen -- Chief Executive Officer and President

Thank you. Your next question comes from Robbie Marcus with JP Morgan. Hey, Robbie.

Robbie Marcus -- JPMorgan -- Analyst

Great. Good morning. Congrats on a good quarter also, and thanks for taking the question. I wanted to touch on -- On one of the slides in the back, you have that the underlying basis ex-COVID grew 4% in the quarter, which was a really healthy rate. How are you thinking about that base business ex-COVID growth through the cadence of the year here? That's a pretty healthy star in what was a tough quarter. How should we think about that component of the business throughout fiscal '21?

Tom Polen -- Chief Executive Officer and President

Okay. Thanks, Robbie. I'll let Chris answer that.

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

Yeah, I think one way to think about that, as what I mentioned about '22, is that we expect the base business to be ramping at a mid-single digit. So, that's consistent with that. So, I think that -- we feel the underlying business is solidly in that kind of perspective. And as we talked about the base business, we expect to be kind of in that low-to-mid single digit level for the full year. And so, there is some pressures in the second half of the year on a business-by-business basis. As you think about MMS, there will be some issues. It's going to be lumpy in the remaining quarters. MMS had a significant amount of revenue in the third quarter during the pandemic, last year. Other parts of the business will ramp nicely, China, for example, as we lap the COVID impact that really was in Q2 there in China, so we'll start seeing some revenue growth from that. But again, that's more of a compare. It's not an indication of the underlying business. But the underlying business really is in that low-to-mid single digit basis. We have some general issues with -- compared to the -- based on the Alaris ship hold. Some of that's been negated by medical necessity. So, there's a number of factors going on, but the bottom line of it all is, think about the base business for the remainder of this year in that low-to-mid single digits and exiting into '22 in the mid-single digit basis.

Robbie Marcus -- JPMorgan -- Analyst

Thank you, Robbie. Great. Maybe just a quick follow-up. You're generating a pretty significant amount of cash here. You got the balance sheet in a great spot last year, when things were looking pretty down for COVID. And now, things are looking... So, how are you approaching the uses of this cash, particularly as we go into next year? And to follow up on the last question, there is a question mark about how to bridge some of the earnings. What are you thinking about uses of cash, M&A opportunities across the business and how much of that might get returned to shareholders.

Tom Polen -- Chief Executive Officer and President

Robbie, I'll start with it and turn it over to Chris for some further details. Obviously, from -- You see us investing behind our growth strategy. You see us making investments in capacity; for example, capacity investments in rapid testing, capacity investments in helping the vaccination campaigns, whether not that's with needles and syringes or the $1.2 billion investment you saw us announce last quarter related to our pharmaceutical systems, pre-fillable devices. We're going to continue to invest in growth. Part of that investing for growth is also our tuck-in M&A strategy, and you saw us begin to accelerate our efforts in that last quarter. You're seeing that continue into this fiscal year. And you heard me mention, we have a robust funnel to continue that. We remain very focused with an emphasis on tuck-in M&A, as I have been iterating since transitioning into the role that I'm in today.

As we think about more broad deployment of capital to create shareholder value, maybe, Chris, comment on that.

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

Sure, absolutely. And I would just say a few things. First, we are very proud of the fact that we really focused on cash during the pandemic. And if you look back, in fact, at the third quarter of last year, our cash flow actually increased year-over-year despite the fact that the revenues were suppressed from COVID. That was the result of a number of actions that we took in the business around inventories, receivables, payables. And so, we are very proud of that. We're really focused on cash. As we mentioned at your conference last month, Robbie, we paid down $265 million of debt. That kind of gets us down to the target. So, we see the leverage ratio floating down naturally without the need to pay down debt, which really says that the $5 billion-ish that we've paid down debt over the last couple of years, that strong cash flow that we're generating will be available to allocate to other value enhancement. So, we've talked about primarily the tuck-in M&A and share repurchase. And as we get through this pandemic and as that safety net of cash that we've had to write out the pandemic isn't as necessary, we will have the ability, toward the end of this year. And you've seen our tuck-in M&A ramping up. The pipeline is good. We continue to look at a number of opportunities. And by the end of this year, I think, we'll be also talking about giving that cash back to shareholders, because once we get through this period, we don't see the need to build up cash on the balance sheet. And so, we would be returning that to shareholders after a certain amount of tuck-in M&A. So, this puts us in a very good position. We've got great cash flow generation and better than ever. And that puts us at a great position to allocate that appropriately.

Tom Polen -- Chief Executive Officer and President

And we continue -- just as Chris mentioned, these are all programs with momentum. We have a cash committee to meet basically every week and we continue to have teams dedicated to that work. So, appreciate the recognition there, Robbie, and we're going to continue that.

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

And I think that recognition also came from Moody's. We felt really good about the fact that they upgraded us to investment grade. In fact, not only did they upgrade us but they kept the positive outlook, which we really appreciate it as well. And so, that puts us full investment grade across all three rating agencies and we fully intend to stay that way.

Kristen Stewart -- Senior Vice President of Strategy and Investor Relations

Thanks for the question. Operator?

Operator

[Operator Instructions] Your next question comes from the line of Vijay Kumar with Evercore ISI. Good morning, Vijay.

Vijay Kumar -- Evercore ISI -- Analyst

Good morning, guys, and congrats on a solid [Indecipherable] year, Tom. So, maybe, I'll limit to one question, perhaps a two-parter. On the revenue guidance. Tom, did anything change out of -- outside of the Veritor coming in at the high end? And the reason I ask, as you guys just hit 680 in Q1, the guide of 1.5 implies a pretty drastic fall off in Veritor revenues in the back half.

And Chris, the margins here, I think, would imply a sub 25% op margins for 2Q to 4Q, to get to the guide. That's below your pre-pandemic level. So, I'm curious if there are any incremental expenses in the back half. Thank you.

Tom Polen -- Chief Executive Officer and President

Hey, Vijay, and nice approach with the two-part one question. So, on the revenue side on Veritor. So, I think the key thing to talk about there is, the pricing comment that I made is one big piece that drives that. Right? We said we're above 20 in the last quarter and we're -- as we think about looking forward, we talked about modeling low-to-mid teens. So, that's the number-one adjustment there. And again, we've been -- that's not new news at all and, in fact, we've been talking about that we expect pricing to head in that level as our capacity comes online and we're in better cost positions, etc. and as more capacity is coming into the marketplace. And so, we've taken actions as planned and that is why we gave guidance that said expect the revenues to be highly weighted to the first half of the year and we've said that from day one. I think there remains uncertainty around the effectiveness and timing of the vaccines, especially with additional variants that are out there, etc. But we can't predict what's going to happen there on the second half of the year. And so, we remain projecting that there will be very strong demand for antigen testing in the first half of the year and that the second half of the year is less certain. Obviously, if demand stays very high and depending on the dynamics with capacity and demand and how those curves crossover, maybe there could be opportunity in the back half of the year, but it's way too early for us to think about that, because it's far from certain or able to be confirmed. So, our aim is to position ourselves to be a leader in the space, however it ends up evolving. And as we go forward, there'll be more clarity there, but certainly, a very dynamic environment. Maybe, Chris, on part 2?

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

Sure. On margins, Vijay, Q1 margins were obviously very, very strong and that was a function of a number of things. First, the COVID testing, obviously. But the base business was very, very strong as well, and we drove some synergy and continuous improvement kind of margin improvements as well. So, all things were positive in Q1. As we think about the rest of the year, you would expect that COVID testing to moderate as you model that out, obviously. And then, don't forget you also have the unwind of the timing that we saw of $100 million in Q1 that unwinds in the remainder of the year. But the most important thing is the ramping of investments that we have discussed. So, we're investing in R&D. We're investing in quality. We're investing in the Veritor reinvestment program. And all of those things kind of ramp in Q2, Q3 and Q4. And so, don't think about that as an indication of our pre-pandemic margins; it's just completely different. And then, those investments go away into '22, the beauty of it is they begin to drive improvements in growth and revenue generation, in margin expansion and those things will kick in toward the latter half of FY '22. So, they -- you get a pickup in margins by them going away. And then the benefit of those investments in driving revenue growth and margin improvement going forward. So, it's -- you can't look at that as, well, those are different than pre-pandemic margins. So, that's the way to think about '21 as it plays out.

Vijay Kumar -- Evercore ISI -- Analyst

Thanks, guys.

Operator

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

Bob Hopkins -- Bank of America -- Analyst

Well, thanks for taking the question. And good morning.

Tom Polen -- Chief Executive Officer and President

Good morning, Bob.

Bob Hopkins -- Bank of America -- Analyst

Good morning, and I'll just stick to one topic. Especially, Tom, since you mentioned it's still your number one priority, on Alaris refiling, are you guys just waiting on FDA at this point, or is there more work that BD needs to do. And if there is more work, what still needs to be done? Just looking for a little more detailed update there. Thank you.

Tom Polen -- Chief Executive Officer and President

Sure. And thanks, Bob, and good to connect. So, as I mentioned, we remain on track for the submission in late fiscal Q2 or early Q3. And we're not waiting on anything specific from the FDA. These are very comprehensive submissions, right? Think thousand plus page filings that take time to prepare and have a lot of comprehensive data in them. And so, right, we've always said from the start, our focus isn't in rushing into a submission, but it's around ensuring a comprehensive submission that is going to achieve our ultimate goal, which is a timely FDA review and clearance. And so, that remains our focus on -- from that perspective. Obviously, Q2, Q3 is coming up upon us here. The teams are making great progress and we continue to iterate that timeline. We'll continue as we have in the past. As we get to that date -- those dates, we'll provide updates at public conferences or as appropriate.

Bob Hopkins -- Bank of America -- Analyst

Okay. So [Indecipherable] that everything is into the agency and you're just waiting to hear back from them. You guys are still putting the package together to submit?

Tom Polen -- Chief Executive Officer and President

Correct. You can expect that once we submit, we'll communicate that in appropriate form. But we haven't -- we're preparing to submit in the timeline that I mentioned.

Bob Hopkins -- Bank of America -- Analyst

Great, thanks very much.

Tom Polen -- Chief Executive Officer and President

Yeah.

Operator

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

Richard Newitter -- SVB Leerink -- Analyst

Thank you very much. Just given that you're clearly accelerating tuck-in M&A from a capital deployment standpoint, which makes a ton of sense, especially with the COVID windfall and your free cash flow generation, should we be thinking about the contribution for what you might do on a more aggressive kind of M&A front going forward as, maybe, bringing you more toward kind of upper mid-single digit kind of growth profile or even maybe high-single digits? I'm just trying to think through the shift in the reprioritization here. Clearly, more aggressive, more on offense. Is that where we're headed, once we return to a more normalized environment? Thanks.

Tom Polen -- Chief Executive Officer and President

Okay. Thanks for your question. Obviously, our number-one focus is on durable mid single-digit revenue growth and that's our aim here. And so, we really see -- we often refer to it inside as inorganic innovation. We look at our pipeline. We look at the market spaces that we participate in. I walked through three of our three key areas of innovation focus earlier in the call and we evaluate constantly what products and initiatives we can fund organically and drive in-house to advance that strategy and create shareholder value and value for patients and providers. And we also are constantly looking at the external landscape as well to see how -- what may be out there that could get to market sooner than we could or maybe has some great talent that created some really exciting innovations outside of BD that we can bring in-house. And so, we're going to continue to do that, but it's all in line with, I'd say, a more holistic approach to driving that durable mid single-digit revenue growth profile that people really come to appreciate from BD. Thanks for the question.

Operator

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

Brian Weinstein -- William Blair -- Analyst

Hey guys, good morning. Thanks for taking my question.

Tom Polen -- Chief Executive Officer and President

Good morning, Brian.

Brian Weinstein -- William Blair -- Analyst

Hey. Just some things on Veritor. Can you just talk about your capacity now? And you mentioned making additional investments in testing. So, where would that be in capacity there? Where would that get you and just how to reconcile the capacity expansion that you're going through with the thoughts on the slowdown in demand? How do I reconcile this? It's also about building for at-home testing in UT, some thoughts on exploration there. Can you just tell me what that means. Thanks.

Tom Polen -- Chief Executive Officer and President

Sure, Brian, and good to connect as always. So, the capacity is, as we've communicated in the past, right, that we are at -- going to 12 million tests in March is what we communicated on our last earnings call. And we're on track for that. We're also on track for the max capacity expansion that we have described before. I don't think it's a fair thing to say that we continue to sell all of that capacity as we look forward. That's not known to us, particularly in the back half of the year. But we're positioned -- it's a global pandemic, it's going on in the world. As we think about opening up businesses and schools and other things, people are going to look at what different types of testing technology they can use. And our aim is to make sure that things are available to healthcare systems as needed. So, we're doing that.

We've also shared, right, we're actually depreciating those assets within the year so that as things unfold in '22 and '23, those assets won't be burdened on our P&L because we're able to fund that within the profits that are generated within this fiscal year. So, that's our approach. Nothing more than that. We've -- At this point, we probably don't want to comment more on the home space, other than to mention that we are actively exploring that, has been our practice, as we advance our work in that and the combination assays, that we share that are in development. We'll really end up sharing more about those as we actually gain EUA and head toward launch, if those occur.

So, I think that's it. Maybe we do have Dave Hickey on the phone. I can pause and, Dave, I don't know if there's any other comments to add from you?

Dave Hickey -- Executive Vice President and President, Life Sciences segment

No. I mean, Brian, hi. It's -- I mean, Tom, you've captured it eloquently. I think, capacity, we move to 12 million tests per month from next month. You mentioned MAX. So, MAX, actually, we did increase capacity to 1.9 million tests per month for the molecular assay from last month actually. And there are a variety of additional topics, like the claims, home testing, OTC that we're exploring right now, as well as additional menu to leverage this 70,000 plus Veritor's that they're going to be out there. And as -- As those decisions take place, we'll share more details as we get -- as we get those decisions.

Tom Polen -- Chief Executive Officer and President

Yeah. And those markets still are not well defined today, as you know, Brian. So, thank you for the question.

Brian Weinstein -- William Blair -- Analyst

Thanks.

Operator

Your next question comes from Larry Biegelsen with Wells Fargo.

Tom Polen -- Chief Executive Officer and President

Good morning, Larry.

Larry Biegelsen -- Wells Fargo -- Analyst

Good morning. Thanks for taking the question. Hey, just one for me on -- Good morning, Tom. You have the BTK panel coming up on February 17th. As you guys know, that tends to get outsized attention by investors. So, it sounds like you guys requested the panel. What do you think the hot topics or key issues are going to be, every every panel has them, as you expect FDA and the panel to debate whether it should be six-month efficacy, that's the focus, or 12-month data, your level of confidence in the outcome? And do you still see this as kind of $150 million opportunity, which is kind of what Bard thought it was before the acquisition? Thanks for taking the question.

Tom Polen -- Chief Executive Officer and President

Thanks, Larry. And good question -- great question. Let me maybe make a short comment here and then we have Simon Campion on the phone, and we'll turn it over to him who's actually much -- who is deeply versed in this. So first off, just as a reminder, we have nothing in our forward-looking plan for BTK approval. Right? It's not in our '21 plan. It's in no forward-looking outlook that we have as we think about how we model things within the company. Today, Lutonix revenues are less than 1% of our overall BD revenue and this indication specifically, again, is not included in our forecast. As we go into the panel, and Simon will share more detail on this, the one thing that we have is we know this is a highly underserved market and we know that our clinical trial data shows very strongly that it's safe -- that Lutonix is safe in this patient population. I think it's the first product that's gone through a trial in the U.S.; it has the ability to do that. Now, the question is, are the clinical outcomes that were shown in our trial sufficient enough for it to be warranted for an approval.

And so, Simon, let me turn it over to you to talk a bit more about that.

Simon D. Campion -- Executive Vice President and President, Interventional Segment

Yeah. Thanks, Tom. So, as Tom just reiterated that the safety profile of DCB is going to be [Indecipherable] in particular has been -- I think has been well discussed. And the data that we're providing is demonstrating continued safe deal of the Lutonix product. In relation to -- we did request the panel meeting, as you know. Below-the-knee patients with critical limb ischemia are in a very bad way. It's the most serious form of peripheral arterial disease. There are multiple co-morbidities, and some of the most important thing for this patient population are A options and B an opportunity to expand the gap between these frequent interventions that they will have.

So, as we move into panel, certainly there will be a debate around the clinical data that we've acquired. But I think more importantly, this is another tool in the armamentarium of about commission path for BTK intervention. If you think back to 20 years ago and SFA or popliteal Intervention, there were PTA balloons and off-label stents. And today, there's a wide range of technology available to them all the way up to drug-coated balloons and drug-eluting stents. But in BTK today, I looked at the most serious form of peripheral arterial disease, there's one product available on that PTA. So, we're not suggesting this is the silver bullet for all BTK patient; we're suggesting that this is another tool that can enhance the outcomes for different patients and equip physician to assess each and every patient and have a yet another tool to treat them with. So, the panel is on February 17th. We've gone through comprehensive preparation for it and we'll absolutely put our best foot forward on that day to present to panel the merits of our application.

Larry Biegelsen -- Wells Fargo -- Analyst

Thank you.

Tom Polen -- Chief Executive Officer and President

Okay, thank you for the question.

Larry Biegelsen -- Wells Fargo -- Analyst

Your next question is from Larry Keusch with Raymond James.

Tom Polen -- Chief Executive Officer and President

Hey. Good morning, Larry.

Larry Keusch -- Raymond James -- Analyst

Good morning, everyone. So, Tom, I wanted to just touch on the investment spend that you guys talked a lot about and certainly, you've really amped up the conversation around that over the past couple of quarters. And I guess, I'm really focusing on the R&D side of things. I feel like I've heard this story in the past year at BD and there has been some challenges with innovation and really getting products out onto the market that were considered to be more than just evolutionary. So, I get the sense that things are probably different this time around, but I'm just trying to understand if there is a new approach or are you investing differently or anything that you can kind of speak to help us get comfortable that these investments hopefully can lead to visible new product introductions.

Tom Polen -- Chief Executive Officer and President

Sure, Larry. And good and fair question. So, a couple of -- let me start with just overall R&D effectiveness and I can give a little bit of color on the types of initiatives that we're investing in here and also how we think about our overall innovation system. So, as you know, John DeFord joined us as our Chief Technology Officer, about three years ago and really under his leadership, there has been tremendous progress within the organization and with the segment teams and the business teams in advancing our ability to drive innovation. Actually over that time period, we've gone from kind of the mid point of not being where we wanted in terms of on-time milestone delivery or on-time launches to being -- as we benchmark ourselves, to being in the top quartile within the industry of hitting our milestones and most importantly, hitting our launches right. Our launches are now -- about 80% plus of our launches are on time, which is up very notably over the last three years, up over 30 percentage points or around 30 percentage points in fact.

So, we see the progress being made. And that's the result of a lot of system improvements, new capabilities brought in, taking some of the best practices actually from Bard and the acquisition and applying those across the company. So, that's something we're going to continue to build upon.

As we think about the innovations that we're investing in, as we look at those, there's not -- there's few, as I think about them, kind of new-to-world innovations that are in our pipeline. I mean, one -- some of the ones we've already talked about. Right? Non-COVID menu expansion on Veritor and MAX to take it -- to capitalize on our expanded footprint. We have a strong track record of developing new assays on MAX and Veritor, right, as just examples of that. Other initiatives are accelerating programs that we already had in our pipeline and allowing them to come to market in a year or two earlier than we originally projected. That's an area of investment that we're making. And there are a number of areas in each of the segments, which were accelerating new products into the pipeline, but they're all very much in line with our strategy and areas that we're confident that we have internal capabilities in. Of course, what we are also doing that's complementing that, is that tuck-in M&A strategy that I mentioned before. And we do think about often and we'll have those discussions internally, if technologies are better developed in-house or that we should be going outside because we have -- we don't have those capabilities in-house. And [Indecipherable] look at do they exist today in someone else's pipeline and is that an opportunity for tuck-in M&A, where do we need to be doing collaborations with outside groups. And many of -- there's many R&D programs that we have today. I think probably a record level of R&D programs, where we have external partnerships in place. Actually, the BD COR would be one that I mentioned before, we've very strong external partnerships with the robotics, because that's a very advanced automation system. And so, we've brought in robotic experts that helped us with that launch and it's going really well in Europe and we're bringing it to the U.S. here. But that's one that we probably wouldn't have been able to develop in the same way if we had tried to do it on our own, but we're seeing successes with that approach, and we're seeing it in many other areas as well.

So, that's kind of maybe just a little bit of color, Larry, in how we think about it overall. But with the progress that we've made and the way that we've thought through making these investments and how we also think about where it's smarter for us to do tuck-in M&A, we're confident in those investments.

Larry Keusch -- Raymond James -- Analyst

Okay, very good. Thank you for that.

Tom Polen -- Chief Executive Officer and President

Yeah.

Operator

Your next question comes from Matt Taylor with UBS.

Matt Taylor -- UBS -- Analyst

Hi, and thank you for taking the question. So, I just wanted to ask about the Veritor pricing from the standpoint of how that came about. Usually, we would think about it as being more of a competitive dynamic. But it seems like, from your comments, you being a little bit more proactive to lower price to make it a better value proposition for stakeholders. And so, I wanted to understand, A, how that came about, and B, do you expect it to go down further in the future, or do you think this is a point of equilibrium?

Tom Polen -- Chief Executive Officer and President

Yeah. Good question, Matt. So, yes, you're right, it's a combination of -- we do -- we've always said that we believe the pricing would head in this direction. Our capacity is increasing and we want to be proactive in maintaining that leadership position. There is -- But there is additional capacity coming in the industry now as well, too. And there will be further capacity coming in. We're not the only company who is adding in capacity. And so, we think about that holistically and where pricing as a result of that is going today. And we're -- we best position our products to remain a leader in that and that's how we develop and we spend a lot of time thinking those things through as to when and how we optimize our pricing, again, to also serve what is a continue evolving customer base as more non-traditional areas of healthcare get into wanting to do antigen testing and making sure that it's appropriately priced to enable the [Indecipherable] access to the product while we're still in the middle of a pandemic. And so, we've gotten very positive receptivity for the pricing. We already had started -- We've already started to roll that out a couple of weeks ago, at last month. And so, good question. Thank you, Matt.

Matt Taylor -- UBS -- Analyst

Thanks. Your next question is from Josh Jennings with Cowen.

Josh Jennings -- Cowen -- Analyst

Hi, good morning. Thanks for taking the question.

Tom Polen -- Chief Executive Officer and President

Good morning.

Josh Jennings -- Cowen -- Analyst

Just one -- Good morning. Just one quick one on Veritor, just with the U.K. and South African variants. I think U.K. ran some studies on rapid antigen testing and confirmed that there was no change in sensitivity or specificity. But we [Indecipherable] South African variant and the U.K. variant and future variants, what is vaccine doing to just monitor those variants and ensure that the sensitivity and specificity aren't altered by some of the mutations in the virus and then a sense of what antigens that you guys are testing for? Thanks.

Tom Polen -- Chief Executive Officer and President

Yeah. Good question, Josh. And it's certainly something that our teams are all over it. Let me turn it over to Dave Hickey who we've got on the line, the President of our Life Science segment.

Brian Weinstein -- William Blair -- Analyst

All right. Thank you, Tom. And Josh, great question. So, to your point, there'd been obviously several newly identified variants reported recently and they could well be others, right, recognizing that this is an RNA virus, very much like influenza and HIV that are known to mutate. And for us, we've got two different types of platforms. Right? So, we've obviously got the BD Veritor antigen test. We've got the BD MAX molecular PCR test. So, let me take MAX first. So, for BD MAX and for the assays that we have on the MAX, we've already completed, I mean, silico analysis, which is a computer model based on sequencing to look at those mutations. And from everything that we can see around those mutations and on the lineage of the sequence, we have no impact on the BD MAX assays.

For BD Veritor, which is obviously more amino asset based on the top of the protein based on early analysis, again, we have no evidence to show that the U.K., South Africa and indeed, Brazilian variant will have an impact on the test, but we continue to take actions to look at that so to confirm and monitor the performance. And again, we've done that for the ones that are already out there and any potential new emergent strains. And this is a critical topic for us, because I think the thing to remember here is as these come online and come out, which is reportedly more transmissible, it makes the importance of rapid testing and access to testing as important, if not more important, than ever. Thanks for the question, Josh.

Josh Jennings -- Cowen -- Analyst

Thanks.

Tom Polen -- Chief Executive Officer and President

Okay.

Operator

Thank you. There are no further questions at this time. I would like to turn the floor back over to Tom Polen for closing remarks.

Tom Polen -- Chief Executive Officer and President

Okay. Well, thank you and thanks, obviously, to everyone, for your questions. Just before we sign off, I would be remiss if I did not thank BD's 70,000 associates around the globe who everyday rally around our purpose of advancing the world of health. Your efforts and achievements this quarter were noticed. You continue to work tirelessly to make sure that our needed products reach the front line to combat this pandemic, while executing on our strategic agenda. I'm proud of how we've started our fiscal 2021, and I'm looking forward to continuing to deliver on our goals of developing innovative devices and making meaningful health impacts to people around the world. On behalf of the entire executive team, thank you for your efforts and sacrifices. Onward we go together and, like you, I'm proud to be BD.

Thank you for listening today, and we look forward to connecting at in future investor meetings with everyone who's joined the call. And until then, I hope everyone stays safe and healthy. Thank you.

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

Thanks, everyone.

Kristen Stewart -- Senior Vice President of Strategy and Investor Relations

Thank you.

Operator

Thank you. [Operator Closing Remarks]

Duration: 72 minutes

Call participants:

Kristen Stewart -- Senior Vice President of Strategy and Investor Relations

Tom Polen -- Chief Executive Officer and President

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

Dave Hickey -- Executive Vice President and President, Life Sciences segment

Simon D. Campion -- Executive Vice President and President, Interventional Segment

David Lewis -- Morgan Stanley -- Analyst

Robbie Marcus -- JPMorgan -- Analyst

Vijay Kumar -- Evercore ISI -- Analyst

Bob Hopkins -- Bank of America -- Analyst

Richard Newitter -- SVB Leerink -- Analyst

Brian Weinstein -- William Blair -- Analyst

Larry Biegelsen -- Wells Fargo -- Analyst

Larry Keusch -- Raymond James -- Analyst

Matt Taylor -- UBS -- Analyst

Josh Jennings -- Cowen -- Analyst

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