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Baxter International Inc. (BAX - Free Report) reported third-quarter 2024 adjusted earnings per share (EPS) of 80 cents, which beat the Zacks Consensus Estimate of 78 cents by 2.6%. The bottom line declined 2.4% from the year-ago quarter’s level.
On a GAAP basis, the company reported EPS of 27 cents compared with $4.93 in the prior-year quarter.
The company reported adjusted EPS from continuing operations, which include Medical Products & Therapies, Healthcare Systems & Technologies and Pharmaceuticals segments, of 49 cents compared with 43 cents in the year-ago period. Although the company reported Kidney Care business as discontinued operation, the divestment is yet to be completed.
Revenues totaled $3.85 billion, up 4% on a reported basis as well as at constant currency (cc). The figure beat the Zacks Consensus Estimate by 0.3%. Revenues from continued operations totaled $2.7 billion, up 4% reportedly as well as at cc.
Shares of BAX were down 0.1% in pre-market trading despite better-than-expected quarterly results. The company’s shares have lost 5.6% year to date against the industry’s growth of 13.5%. The broader S&P 500 Index has moved up 25.8% in the same period.
Image Source: Zacks Investment Research
Segmental Details
As part of its transformation plan announced in February 2023, Baxter established its new operating model, integrating its prior matrixed structure of nine businesses (operating across three geographic regions) into the aforementioned four verticalized global segments. The company started reporting under a new model since the third quarter of 2023.
Medical Products & Therapies
The segment includes Advanced Surgery and a new category, Infusion Therapies & Technologies. Total sales at this segment totaled $1.34 billion, up 7% year over year reportedly as well as at cc. The growth reflects strong demand across the portfolio, including the successful U.S. launch of the Novum IQ large-volume infusion pump with Dose IQ safety software.
Infusion Therapies and Technologies’ sales totaled $1.07 billion, up 7% year over year reportedly as well as at cc. Advanced Surgery category sales amounted to $272 million, up 7% year over year reportedly as well as at cc.
Healthcare Systems and Technologies
The segment includes the Front Line Care category. It also includes the Patient Support Systems and Surgical Solutions categories, which are clubbed as Care & Connectivity Solutions. Total sales in this segment were $752 million, up 1% year over year reportedly as well as at cc. The growth was led by higher demand for Care & Connectivity Solutions products in the United States, partially offset by weak Care & Connectivity Solutions sales internationally and lower sales in the U.S. Front Line Care division amid soft demand in the U.S. primary care market.
Front Line Care category sales totaled $296 million, down 2% year over year reportedly as well as at cc. Care & Connectivity Solutions category sales amounted to $456 million, up 3% year over year reportedly as well as at cc.
Pharmaceuticals
The segment presently includes two product categories — Injectables & Anesthesia and Drug Compounding. Total sales during the third quarter were $588 million, up 1% year over year reportedly as well as at cc. The growth was primarily driven by robust demand for Baxter's Drug Compounding services, partially offset by a decline in the Injectables & Anesthesia division due to the timing of certain orders shifting to the fourth quarter and supply constraints impacting international performance.
Injectables and Anesthesia category sales totaled $321 million, down 9% year over year reportedly as well as at cc. The Drug Compounding category sales amounted to $267 million, up 17% year over year reportedly and 14% at cc.
Kidney care
This segment includes BAX’s Renal Care category, which is now reported under Discontinued Operations. It also includes the Acute Therapies category. Total sales in this segment were $1.15 billion, up 4% year over year reportedly and 5% at cc. The growth was driven by positive demand and pricing for acute therapies and peritoneal dialysis products.
Baxter plans to spin off this segment, which will trade as an independent, publicly traded company under the proposed trade name of Vantive. The spin-off is expected to be completed by late 2024 or early 2025.
Other
Revenues in the segment amounted to $17 million, flat on a year-over-year basis but up 12% at cc.
Margin Analysis
Baxter reported an adjusted gross profit of $1.18 billion, up 1.3% year over year. As a percentage of revenues, the adjusted gross margin contracted 110 basis points (bps) to 43.7%.
Selling, general and administrative expenses amounted to $754 million, up 1.3% from the year-ago quarter’s figure. Research and development expenses totaled $129 million, down 3% on a year-over-year basis.
Adjusted operating income from continuing operations totaled $391 million, down 2.5% year over year. As a percentage of revenues, the adjusted operating margin declined 90 bps to 14.5%.
Baxter International Inc. Price, Consensus and EPS Surprise
For the fourth quarter 2024, Baxter anticipates sales to decline in the low single digits on both a reported basis and constant currency basis. Adjusted EPS is expected to be between 77 cents and 81 cents. The outlook includes the impact of Kidney Care’s discontinued operations and excludes the impact of BPS’ discontinued operations. In addition, the company’s updated guidance reflects the anticipated fourth-quarter negative impact of Hurricane Helene.
The storm hit western North Carolina on Sept. 27, flooding BAX’s North Cove manufacturing facility and causing a temporary production shutdown. The company restarted the facility last week, and new products from North Cove may be shipped to distributors and customers by the end of November. However, full restoration of the facility remains uncertain.
For full-year 2024, sales growth is expected to be 1-2% on a reported basis and 2% at cc. The Zacks Consensus Estimate for the metric is pegged at $15.22 billion, implying a year-over-year improvement of 1.8% reportedly. Adjusted EPS is projected to be in the band of $2.90-$2.91. The Zacks Consensus Estimate for the same is pegged at $2.96.
ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.
AngioDynamics’ shares have lost 5.5% year to date against the industry’s 6.3% growth.
Masimo, sporting a Zacks Rank of 1 at present, has an estimated growth rate of 10.4% for 2025. MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%.
Masimo’s shares have risen 43% year to date compared with the industry’s 6.3% growth.
Globus Medical, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 55.2% year to date compared with the industry’s 6.3% growth.
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BAX Stock Falls Despite Q3 Earnings & Sales Beat, Margins Decline
Baxter International Inc. (BAX - Free Report) reported third-quarter 2024 adjusted earnings per share (EPS) of 80 cents, which beat the Zacks Consensus Estimate of 78 cents by 2.6%. The bottom line declined 2.4% from the year-ago quarter’s level.
On a GAAP basis, the company reported EPS of 27 cents compared with $4.93 in the prior-year quarter.
The company reported adjusted EPS from continuing operations, which include Medical Products & Therapies, Healthcare Systems & Technologies and Pharmaceuticals segments, of 49 cents compared with 43 cents in the year-ago period. Although the company reported Kidney Care business as discontinued operation, the divestment is yet to be completed.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Revenue Details
Revenues totaled $3.85 billion, up 4% on a reported basis as well as at constant currency (cc). The figure beat the Zacks Consensus Estimate by 0.3%. Revenues from continued operations totaled $2.7 billion, up 4% reportedly as well as at cc.
Shares of BAX were down 0.1% in pre-market trading despite better-than-expected quarterly results. The company’s shares have lost 5.6% year to date against the industry’s growth of 13.5%. The broader S&P 500 Index has moved up 25.8% in the same period.
Image Source: Zacks Investment Research
Segmental Details
As part of its transformation plan announced in February 2023, Baxter established its new operating model, integrating its prior matrixed structure of nine businesses (operating across three geographic regions) into the aforementioned four verticalized global segments. The company started reporting under a new model since the third quarter of 2023.
Medical Products & Therapies
The segment includes Advanced Surgery and a new category, Infusion Therapies & Technologies. Total sales at this segment totaled $1.34 billion, up 7% year over year reportedly as well as at cc. The growth reflects strong demand across the portfolio, including the successful U.S. launch of the Novum IQ large-volume infusion pump with Dose IQ safety software.
Infusion Therapies and Technologies’ sales totaled $1.07 billion, up 7% year over year reportedly as well as at cc. Advanced Surgery category sales amounted to $272 million, up 7% year over year reportedly as well as at cc.
Healthcare Systems and Technologies
The segment includes the Front Line Care category. It also includes the Patient Support Systems and Surgical Solutions categories, which are clubbed as Care & Connectivity Solutions. Total sales in this segment were $752 million, up 1% year over year reportedly as well as at cc. The growth was led by higher demand for Care & Connectivity Solutions products in the United States, partially offset by weak Care & Connectivity Solutions sales internationally and lower sales in the U.S. Front Line Care division amid soft demand in the U.S. primary care market.
Front Line Care category sales totaled $296 million, down 2% year over year reportedly as well as at cc. Care & Connectivity Solutions category sales amounted to $456 million, up 3% year over year reportedly as well as at cc.
Pharmaceuticals
The segment presently includes two product categories — Injectables & Anesthesia and Drug Compounding. Total sales during the third quarter were $588 million, up 1% year over year reportedly as well as at cc. The growth was primarily driven by robust demand for Baxter's Drug Compounding services, partially offset by a decline in the Injectables & Anesthesia division due to the timing of certain orders shifting to the fourth quarter and supply constraints impacting international performance.
Injectables and Anesthesia category sales totaled $321 million, down 9% year over year reportedly as well as at cc. The Drug Compounding category sales amounted to $267 million, up 17% year over year reportedly and 14% at cc.
Kidney care
This segment includes BAX’s Renal Care category, which is now reported under Discontinued Operations. It also includes the Acute Therapies category. Total sales in this segment were $1.15 billion, up 4% year over year reportedly and 5% at cc. The growth was driven by positive demand and pricing for acute therapies and peritoneal dialysis products.
Baxter plans to spin off this segment, which will trade as an independent, publicly traded company under the proposed trade name of Vantive. The spin-off is expected to be completed by late 2024 or early 2025.
Other
Revenues in the segment amounted to $17 million, flat on a year-over-year basis but up 12% at cc.
Margin Analysis
Baxter reported an adjusted gross profit of $1.18 billion, up 1.3% year over year. As a percentage of revenues, the adjusted gross margin contracted 110 basis points (bps) to 43.7%.
Selling, general and administrative expenses amounted to $754 million, up 1.3% from the year-ago quarter’s figure. Research and development expenses totaled $129 million, down 3% on a year-over-year basis.
Adjusted operating income from continuing operations totaled $391 million, down 2.5% year over year. As a percentage of revenues, the adjusted operating margin declined 90 bps to 14.5%.
Baxter International Inc. Price, Consensus and EPS Surprise
Baxter International Inc. price-consensus-eps-surprise-chart | Baxter International Inc. Quote
2024 Guidance
For the fourth quarter 2024, Baxter anticipates sales to decline in the low single digits on both a reported basis and constant currency basis. Adjusted EPS is expected to be between 77 cents and 81 cents. The outlook includes the impact of Kidney Care’s discontinued operations and excludes the impact of BPS’ discontinued operations. In addition, the company’s updated guidance reflects the anticipated fourth-quarter negative impact of Hurricane Helene.
The storm hit western North Carolina on Sept. 27, flooding BAX’s North Cove manufacturing facility and causing a temporary production shutdown. The company restarted the facility last week, and new products from North Cove may be shipped to distributors and customers by the end of November. However, full restoration of the facility remains uncertain.
For full-year 2024, sales growth is expected to be 1-2% on a reported basis and 2% at cc. The Zacks Consensus Estimate for the metric is pegged at $15.22 billion, implying a year-over-year improvement of 1.8% reportedly. Adjusted EPS is projected to be in the band of $2.90-$2.91. The Zacks Consensus Estimate for the same is pegged at $2.96.
Zacks Rank and Stocks to Consider
Currently, Baxter carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the medical industry are AngioDynamics (ANGO - Free Report) , Masimo (MASI - Free Report) and Globus Medical (GMED - Free Report) .
AngioDynamics, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 38.2% for 2025. You can seethe complete list of today’s Zacks #1 Rank stocks here.
ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.
AngioDynamics’ shares have lost 5.5% year to date against the industry’s 6.3% growth.
Masimo, sporting a Zacks Rank of 1 at present, has an estimated growth rate of 10.4% for 2025. MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%.
Masimo’s shares have risen 43% year to date compared with the industry’s 6.3% growth.
Globus Medical, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 55.2% year to date compared with the industry’s 6.3% growth.