Christopher DelOrefice
Executive Vice President & Chief Financial Officer at Becton, Dickinson and Company
Thanks, Tom, and good morning, everyone. As Tom noted, we delivered competitive organic revenue growth for the fourth quarter and full year even while navigating market dynamics in China and bioscience pharma. And importantly, with strong execution of our BD Excellence programs, we exceeded our full year margin, earnings, and cash flow goals. I'll now provide some further insight into our Q4 revenue performance. BD Medical organic growth was led by MMS, with another quarter of exceptional performance in infusion systems driven by the BD Alaris return to market.
Higher pull-through and utilization of infusion sets also contributed to MMS growth. The unit's performance was partially offset by a tough prior year comparison in dispensing. Our MDS consumable portfolio also contributed to the segment's Q4 growth. We continue to advance our position in the U.S. with broad volume growth and share gains particularly in our hypodermic and vascular access management portfolios, where our quality and agility to meet increased demand has positively benefited healthcare delivery across our markets.
Pharm Systems performance reflects another quarter of double-digit growth in prefilled devices for biologic drugs, primarily GLP-1s, which was partially offset by market dynamics across the industry, including expected customer inventory destocking. Rounding out the BD Medical segment, in early September, we closed the acquisition of Edwards Critical Care, now Advanced Patient Monitoring, or APM, which contributed $74 million to BD Medical revenue.
BD Life Sciences performance was led by IDS. Strong mid-single-digit growth in specimen management was driven by volume growth as investment in our U.S. direct sales team drove increased demand and customer upgrades to higher value products to provide an enhanced patient experience. Within our Diagnostics business, our results reflect some tough prior year comparisons in lab automation and ID/AST. Offsetting these impacts was good traction, leveraging our molecular platform installed base with double-digit growth in both BD MAX and BD COR.
BD Life Sciences growth was partially offset by transitory market dynamics, biosciences that resulted in lower market demand for research instruments and reagents. Clinical Solutions grew double digits, led by our FACSLyric cell analyzer in cancer reagents. We continue to outperform our life science peers given our portfolio mix of leading instruments, including the BD FAX Discover, antibodies, dies and software. We remain excited about the growth opportunities in BDB as a number of new innovations are driving share gains.
Strong organic growth in BD Interventional was led by double-digit growth in UCC, with continued momentum in our PureWick franchise. PureWick Female grew double digits and PureWick Male delivered its strongest quarter since its launch in acute care. We are also very pleased with the male direct-to-consumer launch, where the first few months of revenues exceeded our expectations. Surgery delivered another quarter of above market growth. Within advanced repair and reconstruction, continued strong market adoption Phasix hernia resorbable scaffold drove double-digit growth. It was partially offset by a tough comparison to the prior year in synthetic mesh.
Performance in surgery was also driven by double-digit growth in infection prevention due to increased demand for ChloraPrep related to strong procedural volumes. BDI performance was also supported by peripheral intervention with double-digit growth in peripheral vascular disease and high single-digit growth in end-stage kidney disease. PI growth was partially offset by a decrease in oncology due to prior year distributor inventory stocking in the U.S.
Now moving to our P&L. Q4 adjusted diluted EPS of $3.81 reflects double-digit growth of 11.4%. Consistent with our commitments, we delivered strong margin progression in Q4, with adjusted gross margin up 30 basis points sequentially and 200 basis points year-over-year to 54.6%, and adjusted operating margin up 140 basis points sequentially and 120 basis points year-over-year to 26.6%. Margin expansion was driven by strong leverage on our revenue performance and simplification and efficiencies from BD excellence. For the full year, we delivered adjusted diluted EPS of $13.14, which represents growth of 7.6%.
Adjusted gross margin of 53.3% was in line with our expectations. As planned, strong execution of BD Excellence enabled us to absorb outsized inflation, transactional FX, and about 50 basis points from inventory optimization carryover that supported strong fiscal year '24 cash flow. Adjusted operating margin expanded 70 basis points to 24.2%, exceeding our margin goal for the year, driven by shipping and SG&A leverage. While delivering strong margin performance, we also invested $1.1 billion in R&D to advance our pipeline of innovative programs that will support future growth.
Regarding our cash and capital allocation, our strategic choices of strong execution on cash flow optimization drove a $1 billion or 47% increase in free cash flow to $3.1 billion and a larger-than-expected improvement in free cash flow conversion by 22 percentage points to 82%. Broad-based improvements in working capital, including our strategic choice to optimize inventory levels, continued expense management and our ability to leverage capital expenditures from BD Excellence productivity gains were all key factors driving strong execution this year. We also benefited from the timing of certain discrete cash items.
Our strong cash position supported our acquisition of APM, while also returning $1.6 billion of capital to shareholders through dividends and share repurchases. Cash and short-term investments at September 30 totaled $2.2 billion, inclusive of about $900 million in proceeds from February's debt refinancing. After closing the Advanced Patient Monitoring acquisition, we ended the year with net leverage of 3x, which was in line with our expectations. We believe we are well positioned to deleverage to our 2.5x target over the next 12 to 18 months.
We remain focused on underlying cash flow improvements. Despite the timing impact of some discrete cash items, we expect next year's organic free cash flow conversion to be consistent with this year due to strong execution in working capital. As expected, due to integration-related investments for APM, we anticipate a moderate step back in free cash flow conversion to around 75%. However, we expect this will still result in another strong year of free cash flow dollars, which will support investments in growth, debt repayment and returning capital to shareholders.
Given the outperformance this year and our confidence in next year's plans, we believe we are in a strong position to execute our net leverage commitments and plan to deploy about $1 billion towards share repurchases over the next 12 to 18 months while still delivering on our deleveraging target of about 2.5x within this time frame. We see this as a value-creating opportunity based on our view of BD's intrinsic value. Moving to our guidance for fiscal year '25. Our initial fiscal year '25 guidance is anchored on high single-digit revenue growth, driven by the contribution from APM, and a broad-based competitive organic revenue growth profile that captures a prudent view of market dynamics in China, in bioscience pharma.
We expect increasing momentum from BD Excellence to drive significant margin expansion, which will enable delivery of strong adjusted EPS growth of about 10% at the midpoint. This growth includes increased acquisition-related interest expense and a higher tax rate inclusive of Pillar Two. We expect to deliver total revenues in the range of $21.9 billion to $22.1 billion in fiscal year '25, which reflects a modest foreign currency translation impact of 25 basis points and currency neutral adjusted revenue growth of 8.8% to 9.3%. This includes strong performance from our newly acquired APM business consistent with what we previously shared, plus organic revenue growth of 4% to 4.5%.
This includes absorbing about 125 basis points impact from China and Bioscience Pharma, with China expected to decrease by mid-single digits. Across the balance of our portfolio, which represents about 75% of our total organic revenue, we expect to deliver mid-single-digit growth around our 5.5% plus growth profile. Moving to margins and earnings. We are confident in delivering another year of strong operational performance, particularly our ability to expand adjusted operating margin by about 100 basis points and exceed our 25% margin goal we set over two years ago.
The primary driver of margin expansion in fiscal year '25 is expected to come from gross margin with an increasing benefit from accelerating BD Excellence momentum. The low gross margin we expect some leverage primarily in shipping and G&A, offset by increasing investments in selling and R&D to further support our growth profile. We expect interest other to be up year-over-year primarily due to the debt issued in connection with the Advanced Patient Monitoring acquisition.
For tax, we expect our adjusted effective tax rate to be between 14% and 15.5%, which includes the impact of Pillar Two. As a reminder, it would not be unusual for our tax rate to fluctuate on a quarterly basis given the timing of discrete items. Given these considerations, we expect to deliver adjusted diluted EPS of $14.25 to $14.60, inclusive of a modest foreign currency translation headwind. As you think about fiscal 2025 phasing, we expect first half revenue growth to be modestly below the low end of our total revenue guidance and the second half to be modestly above the high end.
This includes our expectation of a heavier impact to first half revenue growth from the expected decrease in China revenues, a larger impact from Bioscience Pharma dynamics in Q1 and in comparison to prior year licensing revenue in Q2. As revenue dollars increase sequentially throughout the year, we expect to benefit from BD Excellence and strong opex leverage to result in increasing adjusted gross and operating margin throughout the year. This results in strong year-over-year growth in OIBT each quarter.
Based on a ratable tax rate, we expect first half and second half adjusted EPS growth rate to be ratable, which implies about 10% growth at the midpoint of our full year guidance range and is a nicely balanced phasing profile. In closing, our strategy is demonstrating positive amount. We expect to deliver competitive growth that appropriately plans for market dynamics in China, in Bioscience Pharma. Accelerating momentum in BD Excellence is supporting strong margin expansion, enabling investment in R&D to support further growth. This, coupled with strong cash generation and a disciplined approach to capital allocation, is expected to drive continued value creation for all of our stakeholders. With that, let's start the Q&A session. Operator, can you please assemble our queue?
