As a reminder, this transaction is subject to market, regulatory and other conditions, including final approval by BDs Board of Directors and the effectiveness of a Form 10 registration statement that will be filed with the SEC.
Revenues totaled $4.9 billion, and our adjusted earnings per share was $2.74, both ahead of our expectations.
Total revenues were up 26.9% on a reported basis and up 22% on a currency-neutral basis.
Results included COVID diagnostic testing revenues of $300 million, which contributed 4.8% to growth.
Excluding COVID testing revenues, our base business revenues were up 17.6%, better than we expected across most business units.
Excluding COVID diagnostic revenues, base business revenues in Q3 fiscal 21 increased 3.9% relative to our pre-pandemic third quarter fiscal 2019 on a currency-neutral basis, which includes the impact of the Alaris ship hold.
If you exclude the U.S. infusion systems business, our total revenues would have increased 6.6% relative to our prepandemic third quarter fiscal 2019.
Our Pharmaceutical Systems and Urology and Critical Care franchises continue to be standout performers, where revenues are up 17% and 11%, respectively, over 2019 levels.
Bioscience revenues were up 9%.
Surgery and Peripheral Intervention revenues are both up 8%.
Elsewhere, we see opportunities for improvement ahead in fiscal 22 and beyond.
For example, our MDS revenues are up about 2% versus 2019 levels, reflecting the continued impact of COVID as well as the impact of China volume-based purchasing.
Also, as I mentioned, Medication Management Solutions revenues are impacted by the Alaris ship hold, and we expect our revenues to improve once we receive our 510(k) clearance for our BD Alaris system.
Year-to-date, cash flows from operations totaled $3.7 billion, an increase of 80% from the prior year period.
This improvement in our cash flows allowed us to advance our more balanced capital allocation strategy this quarter, which included the repurchase of $1 billion in BD stock at an average price of approximately $242.
Even with this repurchase activity, we ended the third quarter with nearly $3.2 billion in cash and an adjusted net leverage ratio of 2.4 times.
We now expect our base business to grow approximately 7.5% to 8% on an FX-neutral basis.
We continue to expect COVID diagnostic testing revenues of $1.8 billion to $1.9 billion, with more revenues coming from international markets than we previously anticipated.
We now expect currency-neutral revenue growth overall of approximately 14%.
Our positive base business momentum and a lower tax rate allows us to raise our adjusted earnings per share guidance by $0.10 while continuing to reinvest in our business and overcome lower COVID testing profits, including a provision for excess and obsolete COVID testing inventory.
We now expect our full year adjusted earnings per share range to be $12.85 to $12.95.
Working with the FDA, we are now initiating remediation of existing Alaris system devices in the field by updating the software to version 12.1.
2 following submission of the 510(k), which includes this software version.
As Chris will later discuss, we believe it is responsible to not definitively predict the FDA clearance in our FY 22 outlook.
And weve been purposely shifting more of our R&D and tuck-in M&A investments into these spaces, which are growing over 6%.
Its been further enhanced by our acquisitions over the past 18 months.
You can hear more about our Life Sciences strategy from Dave Hickey, our Executive Vice President of BD Life Sciences; and Puneet Sarin, our Worldwide President of BD Biosciences, at the upcoming UBS Genomics 2.0 and MedTech Innovation Summit on Wednesday, August 11.
Project Recode remains on track to achieve $300 million of cumulative savings by the end of FY 24.
In Q3, we completed our Voice of Associates survey with over 86% participation.
And what stood out was that our associates said were making strong progress with improvements in 95% of the metrics since our last survey in 2018.
Were also advancing our 2030 sustainability strategy, which addresses a range of challenges in our industry while helping to make a difference on relevant issues that affect society and the planet.
We are also progressing with the Form 10, which will have the carve-out financials, and we expect it to be publicly available around the end of the calendar year.
We expect that momentum to carry into fiscal 22 and beyond.
Ive been with BD for 20 years, and Ive never been more excited.
Third quarter revenues of $4.9 billion increased 26.9% on a reported basis and 22% on a currency-neutral basis and were ahead of our expectations.
Our current quarter results also include $300 million in COVID diagnostic testing revenues, compared to $98 million in the prior year period.
Excluding COVID diagnostic revenues in both periods, our base business revenues increased 17.6%.
The BD Medical segment revenues totaled $2.4 billion and were up 7.7% versus the prior year.
MDS revenues increased 24%, reflecting a strong recovery in the U.S., led by strong growth in catheters and vascular care devices.
Additionally, worldwide revenues included $18 million from COVID vaccination devices.
Pharm Systems continued to deliver strong growth with revenues up 12%, driven by demand for our prefilled devices.
BD Life Sciences revenues totaled $1.4 billion and were up 43%.
This included the $300 million in COVID diagnostic testing revenues, $212 million related to our BD Veritor system, with the remaining $88 million from BD MAX collection, transport and swabs.
Year-to-date, COVID diagnostic testing revenues were over $1.6 billion.
Despite lower average selling prices, driven in part by geographic mix, we are still on track to deliver on our target of total worldwide revenues of $1.8 billion to $1.9 billion for the fiscal year.
Excluding COVID diagnostic testing revenues, our Life Sciences segment grew revenues 27%, driven by strong performances in both Integrated Diagnostic Solutions and Biosciences.
IDS revenues increased 49%.
Excluding COVID diagnostic testing, IDS revenues increased 27%, driven by strong double-digit performance across specimen management and microbiology.
Biosciences increased 27%, driven by both research and clinical solutions.
BD Interventional sales totaled nearly $1.1 billion and were up nearly 35%, reflecting the COVID anniversary impact on elective procedures.
Surgery revenues increased 68%, and Peripheral Intervention increased 32%.
Urology and Critical Care revenues were up approximately 14%, driven by continued growth in our PureWick and Targeted Temperature Management franchises.
Our gross margin was 51.5%.
However, this included a net negative 90 basis point impact from COVID testing and reinvestments.
The 90 basis point impact includes a negative 140 basis point impact from an inventory provision related to COVID testing.
Adjusting for the net impact of COVID testing and reinvestments, our underlying base business gross margin was 52.4%.
On a sequential basis, our base business gross margin declined from our second quarter rate of 53.7% due to three factors: 70 basis points of incremental FX headwinds; 40 basis points from inflationary pressures, including higher raw material costs and inbound freight as these costs roll through our inventory; and 20 basis points of other expenses, including Alaris quality remediation.
Our total SSG&A spending increased 21% on a currency-neutral basis to $1.2 billion or 25.2% of revenues.
As a reminder, the COVID testing reinvestments we made in FY 21 will not reoccur.
Our R&D spending totaled $321 million, an increase of 31.1% on a currency-neutral basis.
Our R&D spending was 6.6% of revenues, which is higher than our long-term target of 6%.
On a currency-neutral basis, our operating income increased 26.5% as compared to our revenue growth of 22%.
Our operating margin of 19.8% was slightly below our guidance of below 20%.
The inventory provision related to COVID testing I referenced earlier negatively impacted operating margins by approximately 150 basis points.
Interest and other expenses were essentially flat year-over-year at $98 million.
The adjusted tax rate was 5.8%, lower than we previously expected due to discrete tax items that occurred this quarter.
The average diluted share count used to calculate our earnings per share in the quarter was 291.9 million.
We repurchased a total of 4.1 million shares for a total of $1 billion at an average price of approximately $242.
Our adjusted earnings per share increased 24.5% over the prior year to $2.74 on a reported basis and were up 25.9% on a currency-neutral basis.
However, we did start to see some impact on elective procedures from the COVID delta variant in the last one to two weeks in certain U.S. states and have assumed some continuation of this in our guidance.
That said, given the continued positive momentum of the base business, we are pleased to be able to cover this and still raise our currency-neutral revenue growth to about 14%, up from our previous range of 10% to 12%.
Our revised revenue range would incorporate a base business currency-neutral growth assumption of 7.5% to 8%.
Further, we reaffirm our previously communicated COVID diagnostic test revenue range of $1.8 billion to $1.9 billion.
We now expect a favorable 250 to 300 basis point impact from currency.
This brings our total reported revenue growth to approximately 16.5% to 17.5%.
For the full year, we now expect our fiscal 2021 adjusted earnings per share to be in the range of $12.85 to $12.95.
Next, I want to share with you our expectations for gross operating margins for full year fiscal 21 and provide you with an estimate of the net impact of COVID testing and the related reinvestments of profits on our margins.
We expect our full year adjusted gross margins to be in the range of 53.5% to 54%, and this range includes a net neutral to slight positive impact from COVID testing reinvestments.
We expect our full year adjusted operating margin to be in the range of 23.5% to 24%.
This range includes a 200 basis point contribution from the net impact of COVID testing and reinvestments.
Finally, Id like to address FY 22.
To give you a sense as to what a floor could look like in fiscal 22, we have taken the following approach: As you know, there is a great deal of uncertainty around the level of COVID testing.
With the continued momentum we are seeing, we have increased confidence in our ability to deliver strong mid-single-digit revenue growth in fiscal 22 over our fiscal 21 base revenues, which, as a reminder, adjusts for COVID diagnostic testing revenues.
We are not assuming Alaris 510(k) clearance.
At this time, we have incorporated the assumption that revenues associated with Alaris will be approximately similar to FY 21.
That said, we remain confident in our submission and the process we are undertaking, including working closely with the FDA to obtain comprehensive 510(k) clearance.
We expect the operating margins for our base business to expand more than our traditional annual target of at least 50 basis points and translate into double-digit operating income growth.
For reference, we expect our base business operating margins to be between 21.5% to 22% in fiscal 2021.
With these assumptions, we expect an adjusted earnings per share floor of at least $12.

Summary:
Revenues totaled $4.9 billion, and our adjusted earnings per share was $2.74, both ahead of our expectations.
Our adjusted earnings per share increased 24.5% over the prior year to $2.74 on a reported basis and were up 25.9% on a currency-neutral basis.
However, we did start to see some impact on elective procedures from the COVID delta variant in the last one to two weeks in certain U.S. states and have assumed some continuation of this in our guidance.
That said, given the continued positive momentum of the base business, we are pleased to be able to cover this and still raise our currency-neutral revenue growth to about 14%, up from our previous range of 10% to 12%.
This brings our total reported revenue growth to approximately 16.5% to 17.5%.
For the full year, we now expect our fiscal 2021 adjusted earnings per share to be in the range of $12.85 to $12.95.