
Baxter Announces Largely In-Line 3Q22; Streamlining Portfolio to Focus on Growth With Divestiture of BioPharma Solutions and Planned Spin-Off of Kidney Care
11-3-23 (by: Scott Gleason) Baxter International has announced its financial results for the third quarter of 2023 with revenue from continuing operations totaling $3.71 billion. This represented a 3% increase on a reported basis exceeding the company’s earlier guidance and consensus estimates of $3.69 billion. U.S. revenue from continuing operations reached $1.77 billion, while international revenue from continuing operations amounted to approximately $1.94 billion. Like with most med-tech companies this quarter, international growth outpaced U.S. growth with international revenue up 5% and U.S. revenue flat. The company’s Medical Products and Therapies segment grew 5% with its large infusion pump business growing 5% as well. Healthcare Systems and Technologies grew 1% year-over-year and the company’s Kidney Care franchise grew 1% as well. The company’s Pharmaceuticals division, its smallest, grew 10% in the quarter.
Baxter International Inc. has been actively expanding its pharmaceutical offerings, strengthening its focus on differentiated molecules in critical therapeutic areas. The company recently launched several injectable pharmaceutical molecules, including daptomycin premix and foscarnet premix, both introduced in the United States, and vancomycin, which was launched in Australia. These additions to Baxter’s pharmaceutical portfolio complement previous releases of important anti-infective and therapeutic medications like ZOSYN (piperacillin and tazobactam), bendamustine for oncolytic treatment, and norepinephrine, an anti-hypertensive medication.
In addition the company announced the launch of the iExaminer Pro System, designed for eye exams and integrated with the Welch Allyn PanOptic Plus Ophthalmoscope. Clinicians can connect a smart device to capture eye images, enabling further examination and analysis. By utilizing the iExaminer Pro app, healthcare professionals can save and share images for tracking and trending purposes and initiate more informed consultations with specialists, ultimately enhancing the quality of eye care. Furthermore, Baxter launched the SpotConnect electronic medical records (EMR) application, which is tailored for use with the Welch Allyn Spot Vision Screener device. The Spot Vision Screener allows healthcare providers to detect and treat six vision risk factors in children.
Baxter also recently completed the divestiture of its BioPharma Solutions (BPS) business to Advent International and Warburg Pincus. This divestiture is part of Baxter’s strategy to streamline its focus and realign its business for more significant growth opportunities. The company received cash proceeds of $3.96 billion and recognized a gain of $2.89 billion from the BPS divestiture. The company is also planning the spinoff of its Kidney Care segment into an independent, publicly traded company. The spinoff is expected to occur by July 2024 or earlier and will enable the Kidney Care segment to concentrate on its unique investment priorities, accelerating growth, and creating additional value for its stakeholders.
Adjusted operating margins declined by 50 basis points year over year to 15.2%. The company reported adjusted EPS of $0.68, in line with consensus estimates.
The company also updated its financial guidance for the year. The company expects expects sales growth from continuing operations of 1% to 2% on a reported basis and adjusted earnings from continuing operations of $2.57 to $2.60 per share.
José (Joe) E. Almeida, Chairman, President, and Chief Executive Officer of Baxter, stated, “These milestones are critical in building momentum on Baxter’s ongoing transformation journey.” This transformation includes a new operating model introduced at the beginning of 2023, with four verticalized global segments intended to enhance innovation and agility in response to market dynamics. The new structure seeks to promote a more resilient supply chain and better align with Baxter’s manufacturing footprint, allowing each segment and the company as a whole to achieve operational and investment priorities effectively.