Becton Dickinson and Co (BDX) 2014 Q1 法說會逐字稿

Welcome to BD's first fiscal quarter 2014 earnings call. At the request of BD, today's call is being recorded. It will be available for replay through February 11, 2014 on the Investors page of the BD.com website, or by phone at 800-585-8367 for domestic calls and area code 404-537-3406 for international calls, using confirmation number 31318159.

I would like to inform all parties that your lines have been placed in a listen-only mode until the question-and-answer segment. Beginning today's call is Ms. Barbara Infante. Ms. Infante, you may begin.

Thank you, Jackie. Good morning, everyone, and thank you for joining us to review our first 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 first 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. A reconciliation to GAAP measures can be found in our press release and its related financial schedules and slides. A copy of the release, including the financial schedules, is posted on the BD.com website.

Leading the call this morning is Vince Forlenza, Chairman, Chief Executive Officer and President. Also joining us are Chris Reidy, Chief Financial Officer and Executive Vice President of Administration; Bill Kozy, Executive Vice President and Chief Operating Officer; Tom Polen Group President and Linda Tharby, Group President. It is now my pleasure to turn the call over to Vince.

Thank you, Barb, and good morning, everyone. Before we get started I would like to extend congratulations on behalf of all of us here at BD to Monique Dolecki, our Vice President of Investor Relations, and her husband on the birth of their daughter. We understand that everyone is healthy and we wish them all the best. With that, let's get started on slide 4.

As we stated in our press release, we are pleased with our strong start to the year. We experienced growth across all three of our segments with particularly strong growth in Medical and continued improvement in Biosciences. Growth was also driven by continued emerging market expansion and sales of safety engineered products.

Our first-quarter results were also aided by a number of timing factors which Chris will speak to in more detail shortly.

We have been talking to you for a few years about our long-term strategy for investing and innovating for growth. Back in 2011 and 2012 we embarked on a strategy to reinvigorate our portfolio with new products and complete solutions to better meet our customers' needs. We've been working to enhance our core businesses across our portfolio and expanding the categories in which we compete by moving into near adjacencies.

Last year was the inflection point where we started to see the benefits of that strategy in our financial results and new products. In fiscal year 2014 we expect to continue ramping up our many recent new products and delivering on our strategy.

Additionally, we announced a small acquisition in our Diagnostics segment, Alverix. They've been a technology partner of ours since 2008 on the Veritor platform.

Our strong revenue and earnings growth in the first quarter, along with our revised full-year outlook, give us the confidence to raise the bottom end of our previous revenue and earnings guidance ranges for the full fiscal year.

Moving on to slide 5, we have outlined our first-quarter revenue and EPS results which I will speak to on a currency neutral basis. Total Company revenues were strong at 6.7%. This includes about 80 basis points from acquisitions and about 120 basis points contribution of timing items including an early flu season.

Fully diluted EPS grew 8.1% over the prior year to $1.37. Excluding the impact of the Medical Device Excise Tax, adjusted EPS was $1.42 or 11.9% growth.

Now I'd like to turn the call over to Chris for a more detailed review of our first-quarter financial performance and updated guidance.

Thanks, Vince, and good morning, everyone. I'd like to begin by discussing the key financial highlights of the first quarter which I will speak to on a currency neutral basis. As Vince just stated, results were ahead of our expectations and we experienced growth across all three of our segments.

Our strong growth of 6.7% includes about 200 basis points from acquisitions and timing. Acquisitions contributed 80 basis points of growth in the first quarter as anticipated; this was driven primarily by our Safety Syringe acquisition which continues to perform well. We also benefited by about 100 basis points from timing in our Medical segment in both our pharmaceutical systems and medical surgical units.

Additionally, we received the benefit of 20 basis points from an early flu season coupled with competitive gains in the Point of Care category. Positive pricing in the quarter of about 40 basis points was slightly ahead of our expectations; this was partially due to continued effective price management. I would like to note that, based on the number of tenders anticipated in the back half of the year, pricing remains on our radar for the full year.

This quarter we experienced negative gross margin impacts from currency, raw materials and startup costs as anticipated. EPS in the quarter of $1.37 reflects 8.1% growth versus the prior year or about 11.9% excluding the Medical Device Tax. EPS was ahead of our expectations this quarter largely due to our increased revenues.

We repurchased about $190 million of our anticipated $450 million full-year 2014 share repurchase program.

Our first-quarter results and revised full-year outlook give us the confidence to raise the bottom end of our revenue and EPS guidance ranges. We now expect revenues between 4.5% and 5% with adjusted EPS now expected between 9.5% and 10%, excluding the Medical Device Tax. I will talk more specifically about guidance in a moment.

Now let's move on to slide 8 where I will review the revenue growth by segment on a currency neutral basis. As I just mentioned, revenue growth was 6.7% for the total Company. BD Medical first-quarter revenues increased 8.6%, our results in the segment were driven by strong double-digit international growth across all business units and continued growth of safety engineered products.

Within the Medical segment diabetes care growth of 10.1% reflects continued strong sales of our Nano pen needle products. Medical Surgical's growth was 9.1% this quarter aided in part by a timing of orders as I previously mentioned. Pharmaceutical systems growth of 5.5% reflects the strong contribution from our Safety Syringe acquisition and a benefit from timing of orders.

BD Diagnostics' first-quarter revenues increased 4.2%. The segment's growth was primarily driven by continued international expansion in both the pre-analytical and diagnostic systems units.

BD Biosciences revenue growth was slightly ahead of expectations at 5.7%. This was due to double-digit emerging market growth and clinical reagent sales. We also saw solid instrument placements in both the US and Western Europe aided by improved stability in research market funding. We continue to see signs of stabilization in the Biosciences market.

Moving on to slide 9 I will walk you through our geographic revenues for the first quarter. Overall we saw stability in the US markets and an improvement in European end markets. Particularly strong growth in Western Europe was driven by safety sales, bioscience growth, the benefit of timing and pharmaceutical systems and a favorable comparison to the prior year.

BD's reported US revenues increased 2.3% versus the prior year. US growth in our Medical segment was 3.8%; strong growth in our US Diabetes care unit of 8.4% continues to be driven by our BD Nano pen needle products. Medical Surgical growth partially benefited from some onetime items.

Pharmaceutical systems growth benefited from the SSI acquisition which was more than offset by an unfavorable comparison to the prior year and the variability in our customers' geographic ordering patterns.

US Diagnostics segment growth was about flat in the quarter due to the impact of the loss customer contract that we discussed on our last earnings call. We also saw continued declines in women's health as we have been communicating with you for some time. This was partially offset by steady sales in microbiology which includes KIESTRA and the Point of Care categories.

US Biosciences growth was 3.3% driven by strong instrument placements, clinical reagents and continued stability in the marketplace. International revenues grew 10% with double-digit emerging market growth and strong performance across the segments, particularly our Medical and Diagnostics segments.

On a currency neutral basis the Medical segment grew 12.2%, Diagnostics grew 8.1% and Biosciences grew 6.8%. Medical growth was driven by strong safety sales and the benefit of timing of orders and pharmaceutical systems that I mentioned previously. Diagnostics growth was solid across both the pre-analytical and diagnostic systems units. BD Biosciences growth benefited from solid instrument placements in Western Europe.

Moving on to slide 10, we continue to see strong growth in emerging markets which accounted for approximately 25% of our total revenues in the first quarter. Emerging markets revenues grew 13.4% currency neutral over the prior year.

We have been making strategic investments in emerging markets over the last few years which have helped deliver robust emerging-market growth. We saw double-digit growth in a number of our key markets with China growing over 25% currency neutral. Emerging markets continue to deliver significant safety growth with an increase this quarter of about 15%.

Moving on to slide 11, we have outlined our global safety revenues for the quarter. Currency neutral safety sales increased 9.8% and grew to $557 million in the quarter. Revenues in the US increased by 8.1% and include the contribution from our SSI acquisition. International sales grew 12% on a currency neutral basis with Western Europe and emerging markets both growing double digits.

Medical safety sales grew 14% and Diagnostics growth was 5.7% driven by a range of safety engineered products. Medical safety benefited from our SSI acquisition and strong growth in our Medical Surgical unit's international safety portfolio. At the conclusion of this first quarter our SSI acquisition has annualized and will be included in our base.

Moving to slide 12 and gross margin -- as expected and outlined for you in our last call, we experienced negative currency translation driven by the timing of inventory movements. On a foreign currency neutral basis benefits from our ReLoCo programs, favorable pricing and pension were more than offset by increased costs associated with raw materials, startup items and acquisitions. Our gross profit guidance remains on track for the full year.

Slide 13 recaps the first quarter income statement and highlights our foreign currency neutral results. Since I just discussed revenue and gross profit I will move to SSG&A which grew 7.9%. Excluding the Medical Device Tax, SSG&A grew about 5% reflecting continued investments in areas such as emerging markets and new products.

R&D increased just over 6% which is in line with our expectations. Our operating income increased 3.2%, but excluding the Medical Device Tax, operating income growth of 6.9% was slightly higher than the rate of sales this quarter.

Our tax rate improved 170 basis points over the prior year. As we noted in last year's first-quarter results, our tax rate was higher at that time due to some one-time items. In addition, there was a delay in the enactment of the R&D tax credit in the first quarter of last year. Both of those items contributed to a favorable comparison this quarter over the prior year.

These items resulted in earnings per share of $1.37 which is an 8.1% increase versus the prior year. Excluding the impact of the Medical Device Tax, earnings per share of $1.42 represents an 11.9% growth rate.

Now turning to slide 14, I would like to review our updated guidance in more detail, which I will speak to on a currency neutral basis. Our first-quarter results, along with our revised full-year outlook, give us the confidence to raise the bottom end of our fiscal year 2014 revenue guidance 50 basis points to 4.5 to 5% growth. This assumes a stable macroeconomic environment.

As we discussed last quarter, we had reserved the bottom end of our revenue guidance range for possible weakening in global macroeconomic conditions, unfavorable pricing impacts and/or other deteriorating factors and we are not seeing that. We have seen continued signs of stabilization in both the US and Western Europe. We're estimating a full-year euro exchange rate of $1.36.

Our full-year outlook on pricing has improved slightly. As we noted, pricing remains a concern for the back half of the year. Given the current pricing environment we are updating our pricing outlook to about 20 basis points of pressure for the year from our previous range of 20 to 40 basis points.

Within the segments we are increasing our guidance for the Medical and Bioscience segments. We now expect the Medical segment to grow 5% to 5.5% and the Bioscience segment to grow about 4% for the year. Diagnostics segment growth expectations remain between 3.5% and 4.5% for the year.

We remain on track to meet our goal of about 70 to 80 basis points of operating margin expansion for the fiscal year excluding the impact of foreign currency and the Medical Device Tax. About half of that benefit is expected from favorable pension assumptions along with 30 to 40 basis points of underlying margin expansion.

In addition to revenues we are raising the bottom end of our full fiscal year adjusted EPS guidance range by 50 basis points to between 9% and 9.5%. Excluding the Medical Device Tax we expect EPS to grow 9.5% to 10%.

As a reminder, with the conclusion of our first quarter the Medical Device Excise Tax has annualized and will be included in our base. Reported fully diluted EPS for the full year is now expected between $6.19 and $6.22. All other guidance components remain unchanged from what we provided on our year-end call in November.

The revenue and earnings profile that we outlined for you on our last call remains intact. Revenue growth is still expected to be stronger in the first half of the year accentuated by our accelerated first-quarter results. Earnings growth is still anticipated to be weighted in the back half of the year, although that effect is slightly muted by our first-quarter timing benefits.

Looking forward a good way to think about the balance of the year is that a number of the timing benefits that we experienced this quarter will reverse during the second and third quarters. Now I'd like to turn the call back over to Vince who will provide you with an update on our product portfolio.

Thank you, Chris. Now moving on to slide 16 we see the program and product launches in our Medical and Biosciences segments. In fiscal years 2012 and 2013 we launched about 30 new products. As we have been communicating with you, our percentage of revenue from new products has grown from about 8% of our overall revenues in 2011 to an expected 15% or 16% by the end of this fiscal year.

This year we will focus on the successful scale up of our recent year's new products and solutions while continuing to add products that complement these offerings. In the Medical segment we continue to look forward to the continued rollout of our new BD Simplist line of prefilled generic injectables.

We currently have four drugs approved by the FDA including our recent morphine approval which we expect to launch in the coming months. We have applied for four additional drug approvals with the FDA and we will update you as they complete the approval process.

As we've been sharing with you, this is still a very new initiative and it will take some time for these products to gain traction in the marketplace. Our Simplist initiative is a good example of our strategy of building on our expertise to move into adjacent spaces.

In our Biosciences segment we are looking forward to the launch of our BD FACSPresto CD4 analyzer in addition to additional product offerings in our Sirigen dye portfolio.

On slide 17 you will see the various product launches in Diagnostics. We recently received FDA approval on our Staph SR and MRSA XT assays on our BD MAX platform. We continue to focus on menu expansion and expect another four assays to be approved this fiscal year, including our enteric bacteria assay. We placed over 40 instruments in the first quarter bringing our total number of placements currently in excess of 300.

We remain very pleased with our BD Veritor Point of Care device. We have placed over 10,000 units to date driving competitive gains for us in this growing market. Our BD Totalys front-end automation launched in Europe recently and our early customer feedback has been very positive. We anticipate the US rollout of this instrument in 2015.

Both our new BD Viper LT platforms and BD Onclarity HPV assay are now CE marked and launched in Europe. Viper LT will provide fully integrated automated molecular test capability running both PCR and SDA amplification menu. These include CT/GC and high risk HPV. Our BD Onclarity HPV assay is the first DNA-based HPV assay that reports broad genotyping results for each patient with no additional processing.

These products support our women's health and cancer business and are fully compatible with our SurePath liquid-based cytology cancer screening test. We are particularly excited about our ability to provide broader HPV genotyping results as we see more clinical evidence that specific genotypes indicate a higher risk for developing cervical disease. Of course we will continue to update you as we make progress on our pipeline initiatives.

On slide 18, before we open the call to questions, I'd like to reiterate the key messages from our discussion today. First, we are pleased with our strong start to fiscal year 2014 with solid underlying growth. Growth across all of our segments contributed to this quarter's results with particular growth in Medical and continued improvement in Biosciences.

Second, our long-term strategy of investing and innovating for growth continues to deliver positive results. Key revenue opportunities will be driven by new products, tuck-in acquisitions, continued geographic expansion and sales of safety engineered products. We are continuing to build on our leading global position and enhance our already robust core across all six worldwide businesses.

Third, we are focusing on developing complete solutions to meet our customers' needs and improve clinical outcomes. We expect to expand the categories in which we currently compete by continuing to move into near adjacencies. We are raising the bottom end of our previous guidance ranges for revenue and EPS and have continuing confidence that we have built a solid foundation for future growth.

Finally, we remain committed to delivering continued value to our customer and our shareholders. Thank you. We will now open the call to questions.

(Operator Instructions). David Roman, Goldman Sachs.

I wanted to see if you could go into a little bit more detail just on emerging markets overall as well as some of the tenders that you referenced in your prepared remarks. And I guess more specifically on emerging markets and not to sort of be negative on a 13% growth rate, but China is growing 25%, maybe you could just give some perspective on what is happening elsewhere.

And obviously recently there have been a number of concerns as it relates to the macro environment in EM and healthcare spending. And then I guess lastly if you could just touch on the tenders you referenced in a little more detail.

So, David, this is Vince and good morning. Yes, we did have strong growth in emerging markets, China was up 25%. The only place where we had actually some negative timing is just a matter of when tenders come in is the Middle East. So we did well in Latin America, we did well in Asia-Pacific, but it was really some softness in the timing of tenders in EMA for us that was the difference. Thank you. Next question, please.

Kristen Stewart, Deutsche Bank.

Good morning, it is Rob in for Kristen. So I just wanted to touch on price. You guys obviously had a pretty good quarter, up 40 bps, and now you have taken your expectations up a little bit for the year. Can you just touch on what you are seeing more broadly in terms of price in developed and emerging markets?

Sure. Bill, would you like to handle that?

Sure. We had good solid price contribution particularly from our Medical segment in the quarter and that was driven in part by diabetes care, price improvement and favorable mix and price from the Pharm Systems side. And those two units were significant price contributors to the Company's overall price impact.

Mike Weinstein, JPMorgan.

Good morning, it is Kim in for Mike. So just to follow up on the price question as it pertains to diabetes. You saw some really nice strength in the US diabetes business it sounds like driven primarily by Nano. And maybe just talk about why we are seeing the pick up now, what kind of account conversion and partnership you are seeing on the Nano side. And maybe if you can tie it in a little bit here kind of longer-term strategy on the diabetes side. Thank you.

Kim, if I understood the question, the first question was around how is Nano doing and where are we kind of in the conversion of this, and does this set the stage for a broader play in diabetes care? And so, we are still early on in the conversion to Nano.

Yes, we are doing well in the US, but we're also doing well in other geographies with Nano. We do price Nano at a price premium. And so, you are seeing that in both the Medical segment's results, and Bill was referring to that, and in the Company's results.

And it is part of a broader strategy in diabetes care where we are continuing to refresh the core but we are also working on some new product areas that we touched on before. And, Bill, maybe you want to comment on some of the adjacencies that we are looking at in terms of moving into.

Sure, we are looking to explore other insulin delivery opportunities that we have in particular we have referenced before a project we have on insulin infusion and we are also actively looking at a longer-term program related to patch pen types of insulin delivery. Those would be at the top of our project list for adjacency moves over the next two to four years.

And of course we have the CGM which is still really in technology development. So a significantly broader play in the longer term in diabetes care. Thanks very much for much for your question.

Brian Weinstein, William Blair.

My question is was the Quest impact fully reflected in the first-quarter results or is there an incremental step-down coming? And can you also just comment broadly about some of the trends you are seeing in the US diagnostic markets as results there continue just to be a little bit lower than I guess what we thought even in light of some of the secular stuff going on. Thanks.

So, in terms of that account loss, it was in the first quarter, it's slightly weighted more towards the second half of the year, but it is not a major step change would be the way to think about it. It was significant in the first quarter for the Diagnostics business. Okay, thanks very much.

Richard Newitter, Leerink Partners.

Just I was curious on a broader macro question. We have heard from some other players that there could be some pull through and strength and seasonality in the calendar year fourth-quarter or year-end deductible, etc. Can you comment on anything that you may or may not be seeing on this front and any commentary there on what this might portend for kind of the quarter ahead and maybe the rest of the year?

So, we did talk about 120 basis points of timing within the quarter, but that was not seasonal timing. I'm going to ask Tom Polen to just comment on some of the timing that occurred on the Medical segment, which was a major piece of it for us.

This is Tom and, as Vince said, really the two businesses that we saw timing impact us in the quarter in the segment were in MedSurg specifically around that clearing of backorder in the US as well as in Pharm Systems, which tends to have some lumpiness associated with large customer purchases.

So if you exclude that as was commented earlier underlying growth was lower than reported and those we view as one-time activities that were just in the first quarter.

Okay, thank you.

Matthew Taylor, Barclays.

Thanks much for taking the question. It is actually Dan in for Matt. And I had a question on the kind of visibility you have in Biosciences. We have seen improvement there and you guys ticked up your expectation for the year.

But just taking into account conditions and the pressures that you talked about in the US research market, I was wondering if you can address without taking your expectations is that really function of both the US and OUS or just OUS?

Linda, would you like to take that?

Hi, Dan, it is Linda here. So as you noted, we are continuing to see in the US market with the recently released NIH funding continued stability in that market. But ex-US, we also some turnaround in Western Europe which was positive for us, and also we continued to see strength in emerging markets. So US stabilization and growth in Western Europe would have been the biggest turnaround. Thank you.

Next question, please.

Bill Quirk, Piper Jaffray.

Nice quarter, everybody. First off, obviously European safety did a nice growth driver here following the adoption of the safety directive last spring. I guess diligence, though, does suggest that there is a pretty significant proportion of hospitals that are not yet complying with the directive.

So, Vince, help us think a little bit about how'd you frame both the ongoing opportunity and then just think us help us think about the duration of the tailwind. Thanks.

Sure, Bill. Yes, we did see an uptick in European safety this quarter. And what was significant was we saw some uptick in Southern Europe for the first time. And so they are some of the first real orders, significant orders, in that geography. So there is a lot of runway here. There is still runway in Northern Europe as well. So we think the story has a few years to go in terms of ramping up.

We would continue to think that this is not a step change kind of game, that it is more of a hospital by hospital convert as these countries come online. So not a US step change situation, but kind of a steady movement in terms of conversion.

Tom, is there anything else you would like to add to that?

No, I think -- Bill, this is Tom. The only other thing to mention is we know the US is quite mature in the 90s, just to put it in perspective as Vince says. We see EU overall at about 60% converted for catheters, about 15% converted for injection systems and I think, about 45% for blood collection systems. So I think that just reinforces, as Vince mentioned, there is still some room and several years of conversion to go there.

Derik de Bruin, Bank of America.

Just two real quick ones. Could you -- was there any change to the tax rate guidance for 2014? Just remind us on that. And I guess do you expect any impact from the weather in the US in the second quarter?

I will take the tax rate. The tax rate guidance stayed the same, 23.5% to 23.7%, so there is no change in that. The tax rate in the first quarter was as anticipated.

In terms of the weather, very difficult to say whether we will see any impact from the weather or not. My guess is probably not, but who knows what is going to happen in February and the rest of the quarter. But, no so far.

Brandon Couillard, Jefferies.

Vince with the Simplist morphine product shipping in the second or third quarter could you quantify the addressable market size for that specific product? And do you think you have enough approvals under your belt at this point to broadly go to market and capture mind share? Or do you feel like you still need a few more approvals to make a broader push there?

So I will take a first shot and then I will just hand it over to Tom. We haven't broken it out drug by drug but it is one of the bigger ones now. And so, it is a step up for us in terms of addressable market. We said the market is about $1.2 billion in the US and we are targeting about 60% of that, so over $700 million. But Tom can comment on kind of the competitive dynamics and the menu in terms of where we are and how we seize that. Tom.

This is Tom. So I think maybe think about it in two ways -- one is just regarding morphine and its relevance. We have three drugs on the market today; if you think about the value of a prefilled drug delivery system and its ability to help reduce errors in the delivery process.

The drugs that we have on the market today are sizable -- some of them are sizable in terms of market size but are not necessarily high on the ranking of drugs associated with medication errors. Morphine really represents the first drug which is in the top 10 list of drugs associated with serious medication errors. And so, we see that the value proposition for morphine is really a key catalyst for us in that category.

Now are we still looking at a need to broaden out our menu within the prefilled space? Absolutely. And I think as was mentioned earlier from Chris, we do have four additional drug approvals pending with the FDA under varying stages of review. So overall, as we discussed previously, this is a very new initiative and it is going to take some time for these products to gain traction in the marketplace.

Thanks for your question.

Jeff Frelick, Canaccord.

Hey, Vince, could you share some reasons for acquiring the Alverix business? I assume you want to do more with the product menu. And then do you have plans for the Dx Mini? Thanks.

I didn't hear the last thing that you said.

Do you have plans for the Mini product that Alverix I think has?

So we bought Alverix, they were the supplier, I think as most people know, of the Veritor system and we were going to be co- developing a next-generation system with them. It made sense from a financial standpoint to bring that in-house and get complete control of it.

We are in the process of continuing to ramp up that menu. We are still waiting for RSV approval in terms of the CLIA waiver. But the product is now 10,000 placements and ramping up. So it just made a lot of sense as we expand the menu and continue to move into the PLC space that we brought that technology in-house. Any other comments from anybody on that? I guess not. I guess I covered it.

Okay, thanks a lot. Thanks, Jeff.

Vijay Kumar, ISI Group.

I guess a two-part question, one on China, the 25% growth was really strong, I think it came in well above what some of your peers are reporting. Can you tell us what is driving the strength and sustainability of the strong double-digits?

And the second one was on the MAX. I know that you touched on the menu expansion. Are you seeing any pickup in system placements or give any color on installed base? Thanks.

Okay. China -- we continue to do well across the board with our entire portfolio. So it is balanced with Medical being the biggest part of that business and very strong performance in our infusion business. So strong across the board, Medical being the largest.

And I think we are seeing the benefits of our ability now to move into Tier 2, to expand the distribution in China. And all of that is going quite well. In terms of BD MAX, I think Bill Kozy will comment on that.

Sure. In terms of the quarter, we placed just north of 40 new MAXs particularly in the US and Europe and that would put our total placements to date just a little bit beyond 300. Of course when we get the menu, particularly the enteric and some of the other menu that Vince mentioned, that will continue to help us. But we are real comfortable with our placements for the quarter and our outlook for the year.

Doug Schenkel, Cowen and Company.

It seems like some of the competitors in the US microbiology market have been doing pretty well over the past few quarters. Can you just provide an update on competitive dynamics and market trends in the core I would say US microbiology market? And in light of MALDI-TOF and KIESTRA, has the increased capital equipment mix in microbiology had any effect on your visibility there? Thank you.

Sure. So I don't think the fact that we are selling more capital because of KIESTRA and whatnot, we have a very good view on that pipeline and we are doing well in core microbiology in the US and globally. And, Bill, anything else you would like to add?

No. Just to echo Vince's comment, we didn't have any KIESTRA placements yet in the US, so all of our growth in the US on that side was driven by very, very solid BACTEC and Phoenix activity, as well as the Point of Care reference.

So that total grouping of products that we tend to call infection prevention and management, you've got microbiology in there and point of care and KIESTRA. If you just looked at the US, we got nice mid-single-digit growth in the quarter, which we were real pleased with.

Jon Groberg, Macquarie.

Congratulations on another strong quarter, string here that is going on. So, Vince, can you -- on the emerging markets, if you strip it down, about half your growth is still coming from emerging markets, or organic growth.

And I guess what is the manager, given all the noise that we hear about, what are you looking at, what are the data points you are looking at to kind of track kind of I guess for your own internally just kind of how you are trying to track or what you're focusing on to see whether or not some of the growth slows down from these very high rates?

Obviously there is a long runway there over many years in terms of the investment that needs to be made. But just curious given some of the challenges what you are looking for internally. Thanks.

That is a great question. And so, the teams in the emerging markets will tend to have, think about them as scorecards and they are looking at what is happening with various GDP statistics. Then they are looking at healthcare spending and how healthcare spending is moving year on year whether it is capital, whether they are starting to move from bricks and mortar in supplying those hospitals and building them out.

So there is a number of different measures that they are looking at. And then things that are more tender driven they are looking at -- they will have a whole backlog -- not backlog I should say. I should say a funnel of tenders that they are looking at in terms of what is in the queue to be bought. But, Bill, is there anything else you want to add to that?

The only thing I'd throw into that is this government health needs and their priorities.

Yes.

Our focus on collaborating around the significant governmental agenda for their health programs for the coming years, and almost all governments around the world have got that, is a key point of engagement. If you link that to all the factors that Vince mentioned, we kind of get a constant rolling view of what we want to be doing in that particular targeted market.

And then lastly, we will be in contact with the NGOs in those regions in terms of what they are looking to do and the programs that they have so that we can stay on top of those. So those are kind of broadly what we look at. Operator, any more questions.

That was our final question. I would like to turn the floor back over to Vince Forlenza for any additional or closing remarks.

So thank you to all of you for participating in our call today. As we said, we were pleased with the strong start to the year. We were happy to take up the bottom end of our guidance and we look forward to moving ahead with the strategy as we have it and updating you on the next quarterly call. Thank you very much.

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