Baxter’s Q1 Revenue Rises 4 Percent

It’s been a good year so far for Baxter International Inc.

Revenue and earnings per share both increased in the first quarter, bolstered by strong U.S. sales and product innovation.
 
“Encouraged by a solid start to 2017 and the on-going momentum of our business transformation initiatives, we are raising our full-year sales and earnings outlook,” said José (Joe) E. Almeida, chairman and CEO. “We are driving growth through disciplined execution and particular strength across our U.S. businesses. We will continue to invest in evolving our portfolio through the introduction of innovative products and technologies along with geographic expansion to deliver future growth.”
 
First-Quarter Financial Results
In the first quarter (ended March 31), worldwide sales totaled $2.5 billion, an increase of 4 percent on a reported basis and 5 percent on a constant currency basis compared with Q1 2016. Operationally, Baxter’s sales rose 7 percent, which excludes the impact of foreign exchange, generic competition for U.S. cyclophosphamide and the previously communicated select strategic product exits the company is undertaking.
 
U.S. sales were $1.1 billion, advancing 11 percent on a reported basis. International sales of $1.4 billion declined 1 percent on a reported basis and were comparable to the prior year on a constant currency basis. Baxter’s operational sales increased 13 percent in the United States and 2 percent internationally.
 
Global sales for Hospital Products totaled $1.6 billion in the first quarter, increasing 7 percent on both a reported and constant currency basis and advancing 10 percent operationally as compared to the prior-year period. Contributing to performance in the quarter were strong U.S. sales of IV therapies, IV access sets, and select anesthesia and critical care products along with favorable demand for parenteral nutrition therapies and international biosurgery products.
 
Baxter’s Renal sales totaled $896 million, comparable to the first quarter of 2016 on a reported basis and grew 1 percent globally on a constant currency basis. Operationally, global Renal sales advanced 2 percent benefitting from increased sales of peritoneal dialysis therapies driven by the continued adoption of the company’s newest Automated Peritoneal Dialysis (APD) cyclers—AMIA in the United States and HOMECHOICE CLARIA in international markets. Additionally, sales of Baxter’s acute renal care products advanced globally, reflecting growing demand for continuous renal replacement therapies (CRRT).
 
Baxter reported income from continuing operations of $273 million, or 50 cents per diluted share, on a GAAP (Generally Accepted Accounting Principles) basis for the first quarter. These results included special items totaling $62 million ($45 million net after-tax), primarily related to business optimization and intangible asset amortization.
 
On an adjusted basis, excluding special items, Baxter’s first quarter income from continuing operations totaled $318 million, or 58 cents per diluted share, exceeding the company’s previously issued guidance of 50 cents to 52 cents per diluted share.
 
Baxter achieved a number of operational, pipeline and commercial milestones during the first quarter to support its strategy to drive accelerated growth and deliver meaningful innovation.
 
In Surgical Care:

• The company introduced customer-centric enhancements to Baxter’s hemostatic agents, FLOSEAL and TISSEEL, designed to enhance patient safety and ease of use for clinicians.
• Baxter published two health economic data analyses in the Journal of Medical Economics supporting FLOSEAL as a cost-effective hemostat that may contribute to broader cost savings at hospitals as compared to other options.
• The company acquired Wound Care Technologies Incorporated, manufacturer of the DERMACLOSE Continuous Tissue Expander, a wound closure technology that is complementary to Baxter’s surgical portfolio and directly leverages its existing expertise and channel strength.

In Renal:

• Surpassed 500,000 patient treatments administered globally utilizing Baxter’s SHARESOURCE Connectivity Platform. SHARESOURCE is the first and only two-way remote patient management system for home dialysis therapy and is available on both AMIA and HOMECHOICE CLARIA APD cyclers.
• Successful deployment of PRISMAX, Baxter’s next generation continuous renal replacement therapy platform, in several European locations as part of an initial limited distribution prior to the planned full-scale launch in 2018.

 
Based on the company’s strong first quarter, Baxter is raising its financial outlook for the year. The company now expects sales growth of approximately 1 percent to 2 percent on a reported basis or 2 percent to 3 percent on a constant currency basis, and earnings from continuing operations, before special items, of $2.20 to $2.28 per diluted share for the full year. Adjusting for the impact of generic cyclophosphamide competition (an estimated 1 percent) and selected strategic product exits (an estimated 1 percent), Baxter expects underlying constant currency sales growth of approximately 4 percent to 5 percent. This guidance does not include any impact from the company’s proposed acquisition of Claris Injectables, which is expected to close in the second half of 2017.
 
For the second quarter: The company expects flat sales growth on a reported basis, or approximately 2 percent on a constant currency basis. Adjusting for the impact of generic cyclophosphamide competition (less than an estimated 0.5 percent) and selected strategic product exits (less than an estimated 1 percent), Baxter expects underlying constant currency sales growth of approximately 3 percent. The company expects earnings from continuing operations, before special items, of 55 cents to 57 cents per diluted share.