Baxter International Inc. (NYSE:BAX), a global medtech leader, today reported results for the third quarter of 2023.
“Baxter continues to successfully execute upon the slate of strategic actions we announced at the outset of 2023,” said José (Joe) E. Almeida, chairman, president and chief executive officer. “These initiatives are centered on enhancing business performance and increasing innovation, to drive incremental value for all of our stakeholders. This progress is demonstrated across several actions this quarter, including the completion of the BioPharma Solutions divestiture, verticalization of our four business segments and solid third-quarter performance. These milestones are critical in building momentum on Baxter’s ongoing transformation journey.”
New Operating Model
On Jan. 6, 2023, Baxter announced a plan to streamline its operating model as part of a wider range of transformational initiatives. This new model establishes four verticalized global segments, replacing the prior matrixed structure of nine businesses operating across three geographic regions. Beginning this quarter, Baxter is reporting performance across its four new segments, comprised as follows:
| Segment | Medical Products & Therapies | Healthcare Systems & Technologies | Pharmaceuticals | Kidney Care |
| Product Categories | Infusion Therapies & Technologies*Advanced Surgery | Care & Connectivity Solutions**Front Line Care | Injectables & AnesthesiaDrug Compounding | Chronic Therapies***Acute Therapies |
| *Includes former Medication Delivery and Clinical Nutrition businesses. **Includes former Patient Support Systems and Surgical Solutions businesses. ***Includes former Renal Care business. |
This new structure represents an integrated, streamlined framework for Baxter’s diverse range of market-leading businesses, designed to drive heightened innovation and improved agility in response to marketplace dynamics. Through enhanced simplification and verticalization, the model is intended to promote a more resilient supply chain and greater alignment with Baxter’s manufacturing footprint by segment, better positioning each segment and the company as a whole to deliver on its operational and investment priorities.
Note that the Kidney Care segment forms the basis for Baxter’s proposed spinoff of its Chronic Therapies (Peritoneal Dialysis, Hemodialysis) and Acute Therapies businesses to form an independent, publicly traded company. This planned separation of the Kidney Care business is another core element of Baxter’s broader transformation (see below for a progress update on the proposed spinoff).
Third-Quarter Financial Results
Baxter worldwide sales from continuing operations in the third quarter totaled approximately $3.71 billion, an increase of 3% on a reported basis and 2% on a constant currency basis. Sales from discontinued operations in the third quarter totaled $191 million, an increase of 16% on a reported basis and 11% on a constant currency basis. Sales in the aggregate, including discontinued operations, increased 3% on a reported basis and 2% on a constant currency basis. Discontinued operations include Baxter’s BioPharma Solutions (BPS) business, which was acquired by Advent International and Warburg Pincus and closed at the end of the third quarter. See the next section of this press release for additional information.
U.S. sales from continuing operations in the third quarter totaled approximately $1.77 billion, comparable with Q3 2022 performance. U.S. sales from discontinued operations totaled $79 million. U.S. sales in the aggregate were also comparable to the prior year. International sales from continuing operations in the third quarter totaled approximately $1.94 billion, an increase of 5% on a reported basis and 3% at constant currency rates. International sales from discontinued operations totaled $112 million. International sales in the aggregate advanced 7% on a reported basis and 4% on a constant currency basis.
Third-quarter sales performance from continuing operations and in the aggregate exceeded Baxter’s previously announced guidance, driven by new product launches in Pharmaceuticals, solid demand for Medical Products & Therapies products, and continued improvement in product availability in Healthcare Systems & Technologies. Sales performance in Kidney Care came in better than the company’s expectations, but growth in the quarter reflected a difficult comparison due in part to certain discrete items that benefited sales in the third quarter of 2022 as well as the ongoing impact of lower sales in select markets outside the U.S.
Please see the attached schedules accompanying this press release for additional details on sales performance in the quarter, including breakouts by Baxter’s segments.
For the third quarter, total net income attributable to Baxter was $2.51 billion, or $4.93 per diluted share. Total U.S. GAAP diluted EPS includes $0.09 from continuing operations and $4.83 from discontinued operations. These results include special items totaling $2.09 billion, primarily related to Baxter’s gain upon the divestiture of its BPS business as well as the impact of intangible amortization and business optimization costs, among other factors. On an adjusted basis, total net income attributable to Baxter was $415 million, or $0.82 per diluted share. Total adjusted diluted EPS includes $0.68 from continuing operations and $0.14 from discontinued operations. Adjusted diluted EPS for the quarter exceeded Baxter’s previously announced third-quarter 2023 guidance, driven by better-than-expected sales performance and operational efficiencies.
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