- Second-quarter revenues increased 3% on a reported basis and 4%
on a constant currency basis, ahead of the company’s previously
issued guidance1
- Second-quarter U.S. GAAP earnings (loss) per share (EPS)
(including discontinued operations) of ($0.28); adjusted EPS
(including discontinued operations) of $0.66
- Second-quarter U.S. GAAP EPS from continuing operations of
($0.39); adjusted EPS from continuing operations of
$0.55
Baxter International Inc. (NYSE:BAX), a global medtech leader,
today reported results for the second quarter of 2023.
“Baxter’s second-quarter performance reflects ongoing solid
demand for our diverse, durable portfolio of medically essential
products,” said José (Joe) E. Almeida, chairman, president and
chief executive officer. “We are making progress across the
transformational actions we announced at the start of 2023. These
initiatives are focused on enhancing strategic clarity, increasing
market responsiveness and accelerating innovation, in an effort to
drive greater value for our stakeholders.”
Second-Quarter Financial Results
Worldwide sales from continuing operations in the second quarter
totaled approximately $3.71 billion and sales from discontinued
operations totaled $142 million in the quarter. This performance
represented an increase of 3% on a reported basis and 4% on a
constant currency basis, both for continuing operations and in the
aggregate. Discontinued operations include Baxter’s BioPharma
Solutions (BPS) business, which is currently expected to be
divested in the second half of 2023, subject to the satisfaction of
customary closing conditions, as announced on May 8, 2023. See
“Recent Highlights” later in this release for more information
about the pending BPS divestiture.
U.S. sales from continuing operations in the second quarter
totaled approximately $1.75 billion and discontinued operations
totaled $64 million in the quarter, an increase of 3% on a reported
basis, both for continuing operations and in the aggregate.
International sales from continuing operations in the second
quarter totaled approximately $1.96 billion and discontinued
operations totaled $78 million in the quarter, representing
increases of 3% on a reported basis and 5% on a constant currency
basis for continuing operations, and 3% on a reported basis and 4%
on a constant currency basis in the aggregate.
Sales performance in the quarter came in ahead of Baxter’s
previously announced second-quarter 2023 guidance, driven by
overall positive demand for Baxter products, reflecting ongoing
recovery in patient and procedure volumes, alongside generally
stabilizing macroeconomic conditions and an ongoing abatement in
recent supply chain challenges. Sales growth in the second quarter
was driven primarily by high single-digit growth at constant
currency rates in Front Line Care, Surgical Solutions, Medication
Delivery, and Clinical Nutrition; and mid-single-digit growth at
constant currency rates in Acute Therapies and Advanced Surgery.
Second-quarter performance was partially offset by a low
single-digit decline in Patient Support Systems, primarily
resulting from lower rental revenues, as well as lower sales in BPS
(reported in discontinued operations) due to a reduction in COVID
vaccine manufacturing revenues.
Please see the attached schedules accompanying this press
release for additional details on sales performance in the quarter,
including breakouts by Baxter’s product categories and
segments.
For the second quarter, total net income attributable to Baxter
was ($141 million), or ($0.28) per diluted share, a decline of 156%
from the prior-year period on a U.S. GAAP (Generally Accepted
Accounting Principles) basis. Total U.S. GAAP diluted EPS includes
($0.39) from continuing operations and $0.11 from discontinued
operations. These results include special items totaling $476
million after tax, which were primarily related to business
optimization costs and intangible amortization, among other
factors. On an adjusted basis, total net income attributable to
Baxter was $335 million, or $0.66 per diluted share, a 24% decline
for the quarter as compared to the prior-year period. Total
adjusted diluted EPS includes $0.55 from continuing operations and
$0.11 from discontinued operations. Adjusted diluted EPS for the
quarter exceeded Baxter’s previously announced second-quarter 2023
guidance, driven by better-than-expected sales performance and
operational efficiencies.
Kidney Care Spinoff Update
As announced Jan. 6, 2023, Baxter is preparing to spin off its
Renal Care and Acute Therapies global businesses (Kidney Care) into
an independent, publicly traded company. The new company is poised
to launch with a leading product portfolio, geographically diverse
footprint, extensive commercial operations, and robust service
capabilities supporting its therapies, which are delivered in
homes, clinics, and intensive care units (ICUs) worldwide. As a
standalone entity, the company should benefit from heightened
management focus and the ability to pursue its unique investment
priorities, emerging better positioned to accelerate growth and
innovation and create incremental value for its patients,
clinicians, investors, and other stakeholder communities.
In May, Chris Toth was named as the inaugural chief executive
officer of the planned spinoff company. Mr. Toth most recently
served as chief executive officer of Varian, a Siemens Healthineers
company. He joined Baxter in June and will serve as executive vice
president and group president, Kidney Care, until completion of the
proposed spinoff.
Earlier this week, Baxter also announced that the new company
will be named Vantive, with the logo and full visual identity to be
unveiled at a later date. Until separation, the relevant businesses
will continue to operate as Baxter.
Beyond these critical milestones, the underlying work of the
spinoff continues. The new company’s operating model and
organizational design are being finalized, and progress is ongoing
across legal, regulatory, supply chain, and numerous other key
operational channels. The spinoff, which remains subject to the
satisfaction of customary conditions, is currently expected to
occur by July 2024 or earlier.
Recent Highlights2
Baxter continues to advance key strategic priorities in pursuit
of its Mission to Save and Sustain Lives. Among recent highlights,
the company:
- Signed a definitive agreement to divest its BioPharma Solutions
(BPS) business to Advent International, one of the largest and most
experienced global private equity investors, and Warburg Pincus, a
leading global growth investor. The pending divestiture of BPS will
further streamline Baxter’s strategic focus and represents an
important milestone in Baxter’s ongoing business transformation.
Baxter plans to deploy net after-tax proceeds of the transaction
for debt repayment, consistent with the company’s stated capital
allocation priorities. The transaction is currently expected to
close in the second half of 2023, subject to receipt of customary
regulatory approvals and satisfaction of other closing
conditions.
- Launched its next-generation Hillrom Progressa+ ICU bed
in the U.S. Progressa+ offers new technology and features to
help address complex critical care needs, including in-bed
pulmonary therapies designed to aid in the reduction of pulmonary
complications, improved protection of the patient’s skin to help
prevent pressure injuries, and support for early mobility
protocols. Baxter plans to launch Progressa+ in additional
global markets over the next 18 months.
- Announced the FDA Premarket Approval (PMA) and subsequent U.S.
launch of its PERCLOT Absorbable Hemostatic Powder.
PERCLOT is a passive, absorbable hemostatic powder that is
ready to use and designed for patients with intact coagulation to
address mild bleeding. This represents Baxter’s first passive
hemostat in the U.S. market, broadening Baxter’s portfolio to
include a full range of active and passive solutions.
Annual Corporate Responsibility Report
In June, Baxter released its 2022 Corporate Responsibility
Report, featuring performance updates on the company’s 2030
Corporate Responsibility Commitment and Goals. The report reflects
Baxter’s first year of integration with Hillrom, demonstrating how
the combined team has united in support of a shared commitment to
“Empower our Patients,” “Protect our Planet,” and “Champion our
People and Communities.”
Building on more than three decades of reporting environmental
performance, Baxter has announced plans to further enhance its
transparency and disclosures by reporting against the framework
established by the Task Force on Climate-Related Financial
Disclosures (TCFD) in a standalone publication later this year.
2023 Financial Outlook and Assumptions
For Full-Year 2023
The Company’s current expectation is that the pending sale of
BPS is likely to close towards the end of the third quarter.
However, as the ultimate timing is uncertain, and to provide
comparability to prior guidance, it is providing a financial
outlook that also contemplates a scenario in which the transaction
does not close in 2023. Under either scenario, BPS is reflected as
a discontinued operation, consistent with its presentation
throughout this release and the accompanying tables. Adjusted
diluted earnings per share amounts referred to below exclude
special items.
Scenario 1: BPS Remains a Part of Baxter Through Full-Year
2023
- Under this scenario, Baxter expects full-year 2023 sales growth
from continuing operations of 1% to 2% on a reported basis and
approximately 2% on a constant currency basis. Under this scenario,
sales growth in aggregate (including discontinued operations) would
be the same as continuing operations on both a reported and
constant currency basis.
- Under this scenario, Baxter expects full-year 2023 adjusted
earnings on an aggregate basis (including discontinued operations)
of $2.92 to $3.00 per diluted share and adjusted earnings from
continuing operations of $2.49 to $2.57 per diluted share.
Scenario 2: The Pending BPS Sale is Completed on September
30, 2023
- Under this scenario, there is no change to sales growth for
continuing operations and sales growth in aggregate (including
discontinued operations) would be approximately flat to 1% on a
reported basis and approximately 1% on a constant currency basis,
reflecting the absence of BPS sales in the fourth quarter.
- Under this scenario, Baxter expects full-year 2023 adjusted
earnings of $2.87 to $2.95 per diluted share in the aggregate
(including discontinued operations) and adjusted earnings from
continuing operations of $2.54 to $2.62 per diluted share. Baxter’s
full-year 2023 adjusted earnings per diluted share outlook in the
aggregate reflects a $0.10 per share negative impact from the
absence of BPS earnings in the fourth quarter. The company’s
outlook for adjusted earnings per diluted share in the aggregate
and for continuing operations both reflect a net benefit of
approximately $0.05, primarily due to reduced interest expense
after giving effect to anticipated debt repayment plans.
For Third-Quarter 2023
- The company expects third-quarter sales growth from continuing
operations of approximately 2% on a reported basis and 1% on a
constant currency basis.
- The company expects third-quarter adjusted earnings in
aggregate (including discontinued operations) of $0.78 to $0.80 per
diluted share and adjusted earnings from continuing operations of
$0.65 to $0.67 per diluted share.
Second-Quarter 2023 Earnings Conference Call
A webcast of Baxter’s second-quarter 2023 conference call for
investors can be accessed live from a link on the company’s website
at www.baxter.com beginning at 7:30 a.m. CDT on July 27, 2023.
Please see www.baxter.com for more information regarding this and
future investor events and webcasts.
About Baxter
Every day, millions of patients, caregivers and healthcare
providers rely on Baxter’s leading portfolio of diagnostic,
critical care, kidney care, nutrition, hospital and surgical
products used across patient homes, hospitals, physician offices
and other sites of care. For more than 90 years, we’ve been
operating at the critical intersection where innovations that save
and sustain lives meet the healthcare providers who make it happen.
With products, digital health solutions and therapies available in
more than 100 countries, Baxter’s employees worldwide are now
building upon the company’s rich heritage of medical breakthroughs
to advance the next generation of transformative healthcare
innovations. To learn more, visit www.baxter.com and follow us on
Twitter, LinkedIn and Facebook.
Non-GAAP Financial Measures
Net sales growth rates on a constant currency basis are non-GAAP
financial measures that provide information on the percentage
change in net sales growth as if foreign currency exchange rates
had remained constant between the prior and current periods.
Other non-GAAP financial measures included in this release and
the accompanying tables (including within the tables that provide
the company’s detailed reconciliations to the corresponding U.S.
GAAP financial measures) are: adjusted gross margin, adjusted
selling, general, and administrative expenses, adjusted research
and development expenses, adjusted other operating income, net,
adjusted operating income, adjusted income before income taxes,
adjusted income tax expense, adjusted income (loss) from continuing
operations, adjusted income from discontinued operations, net of
tax, adjusted net income, adjusted net income attributable to
Baxter stockholders, adjusted diluted earnings per share from
continuing operations, adjusted diluted earnings per share from
discontinued operations and adjusted diluted earnings per share.
Those non-GAAP financial measures exclude the impact of special
items. For the quarters and six months ended June 30, 2023 and
2022, special items for one or more periods included intangible
asset amortization, business optimization items, acquisition and
integration items, divestiture-related costs, expenses related to
European medical devices regulation, product-related items, a
pension curtailment gain, non-marketable investment impairments and
tax matters. These items are excluded because they are highly
variable or unusual and of a size that may substantially impact the
company’s reported operations for a period. Additionally,
intangible asset amortization is excluded as a special item to
facilitate an evaluation of current and past operating performance
and is consistent with how management and the company’s Board of
Directors assess performance.
This release and the accompanying tables also include free cash
flow, a non-GAAP financial measure that Baxter defines as operating
cash flow less capital expenditures. Free cash flow is used by
management and the company’s Board of Directors to evaluate the
cash generated from Baxter’s operating activities each period after
deducting its capital spending.
This release also includes forecasts of certain of the
aforementioned non-GAAP measures on a forward-looking basis as part
of the company’s financial outlook for upcoming periods. Non-GAAP
financial measures may enhance an understanding of the company’s
operations and may facilitate an analysis of those operations,
particularly in evaluating performance from one period to another.
Management believes that non-GAAP financial measures, when used in
conjunction with the results presented in accordance with U.S. GAAP
and the company’s reconciliations to corresponding U.S. GAAP
financial measures (which are included in the tables accompanying
this release), may enhance an investor’s overall understanding of
the company’s past financial performance and prospects for the
future. Accordingly, management uses these non-GAAP measures
internally in financial planning, to monitor business unit
performance, and, in some cases, for purposes of determining
incentive compensation. This information should be considered in
addition to, and not as substitutes for, information prepared in
accordance with U.S. GAAP.
Forward-Looking Statements
This release includes forward-looking statements concerning the
company’s financial results (including the outlook for
third-quarter and full-year 2023) and business development and
regulatory activities (including anticipated cost savings). These
forward-looking statements are based on assumptions about many
important factors, including the following, which could cause
actual results to differ materially from those in the
forward-looking statements: the company’s ability to execute and
complete strategic initiatives, asset dispositions and other
transactions, including the proposed spinoff of the company’s Renal
Care and Acute Therapies product categories; the company’s plans to
simplify the company’s operating model and manufacturing footprint
and the pending sale of the company’s BioPharma Solutions product
category, the timing for such transactions, the ability to satisfy
any applicable conditions and the expected proceeds, consideration
and benefits; failure to accurately forecast or achieve the
company’s short- and long-term financial improvement performance
and goals (including with respect to the company’s strategic
actions); the company’s ability to execute on its capital
allocation plans, including the company’s debt repayment plans, the
timing and amount of any dividends, share repurchases and
acquisition proceeds and the capital structure of the public
company that the company expects to form as a result of the
proposed spinoff (and the resulting capital structure for the
remaining company); the impact of global economic conditions
(including, among other things, inflation levels, interest rates,
financial market volatility, banking crises, the potential for a
recession, the ongoing war in Ukraine, the related economic
sanctions being imposed globally in response to the conflict and
potential trade wars) and continuing public health crises,
pandemics and epidemics, such as the COVID-19 pandemic, or the
anticipation of any of the foregoing, on the company’s operations
and on the company’s employees, customers and suppliers, including
foreign governments in countries in which the company operates;
downgrades to the company’s credit ratings or ratings outlooks, and
the related impact on the company’s funding costs and liquidity;
product development risks, including satisfactory clinical
performance and obtaining and maintaining required regulatory
approvals (including as a result of evolving regulatory
requirements), the ability to manufacture at appropriate scale, and
the general unpredictability associated with the product
development cycle; product quality or patient safety issues leading
to product recalls, withdrawals, launch delays, warning letters,
import bans, sanctions, seizures, litigation, or declining sales,
including the focus on evaluating product portfolios for the
potential presence or formation of nitrosamines; future actions of
(or failures to act or delays in acting by) FDA, the European
Medicines Agency or any other regulatory body or government
authority (including the SEC, Department of Justice, the Federal
Trade Commission, Centers for Medicare & Medicaid Services or
the Attorney General of any State) that could delay, limit or
suspend product development, manufacturing, sale or reimbursement
or result in seizures, recalls, injunctions, monetary sanctions or
criminal or civil liabilities, including the lifting of the warning
letters at the company’s Ahmedabad facility; demand for and market
acceptance risks for and competitive pressures related to new and
existing products (including challenges with the company’s ability
to accurately predict changing consumer preferences and future
expenditures, which have led to and may continue to lead to
increased inventory levels, and needs and advances in technology
and the resulting impact on customer inventory levels), and the
impact of those products on quality and patient safety concerns;
breaches, including by cyber-attack, data leakage, unauthorized
access or theft, or failures of or vulnerabilities in the company’s
information technology systems or products; the continuity,
availability and pricing of acceptable raw materials and component
parts (and the company’s ability to pass some or all of these costs
to the company’s customers through recent price increases or
otherwise), and the related continuity of the company’s
manufacturing and distribution and those of the company’s
suppliers; inability to create additional production capacity in a
timely manner or the occurrence of other manufacturing,
sterilization or supply difficulties (including as a result of
natural disaster, public health crises and epidemics/pandemics,
regulatory actions or otherwise); the company’s ability to finance
and develop new products or enhancements on commercially acceptable
terms or at all; loss of key employees, the occurrence of labor
disruptions or the inability to identify and recruit new employees;
failures with respect to the company’s quality, compliance or
ethics programs; future actions of third parties, including
third-party payers and the company’s customers and distributors
(including group purchasing organizations and integrated delivery
networks), the impact of healthcare reform and its implementation,
suspension, repeal, replacement, amendment, modification and other
similar actions undertaken by the United States or foreign
governments; the outcome of pending or future litigation, including
the ethylene oxide or other claims; the impact of competitive
products and pricing, including generic competition, drug
reimportation and disruptive technologies; global regulatory, trade
and tax policies (including with respect to climate change and
other sustainability matters); the ability to protect or enforce
the company’s owned or in-licensed patent or other proprietary
rights (including trademarks, copyrights, trade secrets and
know-how) or patents of third parties preventing or restricting the
company’s manufacture, sale or use of affected products or
technology; the impact of any goodwill or other intangible asset
impairments on the company’s operating results; fluctuations in
foreign exchange and interest rates; any changes in law concerning
the taxation of income (whether with respect to current or future
tax reform); actions by tax authorities in connection with ongoing
tax audits; and other risks identified in Baxter’s most recent
filings on Form 10-K and Form 10-Q and other SEC filings, all of
which are available on Baxter’s website. Baxter does not undertake
to update its forward-looking statements unless otherwise required
by the federal securities laws.
Baxter, Vantive, Hillrom, Perclot and Progressa+ are registered
trademarks of Baxter International Inc. or its subsidiaries.
Any other trademarks or product brands appearing herein are the
property of their respective owners.
1 See tables to the press release for reconciliations of
non-GAAP measures used in this press release to the corresponding
U.S. GAAP measures.
2 See links to original press releases for additional product
information.
BAXTER INTERNATIONAL
INC.
Consolidated Statements of
Income (Loss)
(unaudited)
(in millions, except per share
and percentage data)
Three Months Ended June
30,
2023
2022
Change
NET SALES
$
3,707
$
3,594
3%
COST OF SALES
2,596
2,223
17%
GROSS MARGIN
1,111
1,371
(19)%
% of Net Sales
30.0
%
38.1
%
(8.1 pts)
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES
964
970
(1)%
% of Net Sales
26.0
%
27.0
%
(1.0 pts)
RESEARCH AND DEVELOPMENT
EXPENSES
165
148
11%
% of Net Sales
4.5
%
4.1
%
0.4 pts
OTHER OPERATING INCOME, NET
(1
)
(11
)
(91)%
OPERATING INCOME (LOSS)
(17
)
264
NM
% of Net Sales
(0.5
)%
7.3
%
(7.8 pts)
INTEREST EXPENSE, NET
124
89
39%
OTHER (INCOME) EXPENSE, NET
42
(44
)
NM
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES
(183
)
219
NM
INCOME TAX EXPENSE
10
34
(71)%
% of Income (Loss) from Continuing
Operations Before Income Taxes
(5.5
)%
15.5
%
(21.0 pts)
INCOME (LOSS) FROM CONTINUING
OPERATIONS
(193
)
185
NM
INCOME FROM DISCONTINUED OPERATIONS,
NET OF TAX
54
70
(23)%
NET INCOME (LOSS)
(139
)
255
NM
NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
2
3
(33)%
NET INCOME (LOSS) ATTRIBUTABLE TO
BAXTER STOCKHOLDERS
$
(141
)
$
252
NM
INCOME (LOSS) FROM CONTINUING
OPERATIONS PER COMMON SHARE
Basic
$
(0.39
)
$
0.36
NM
Diluted
$
(0.39
)
$
0.36
NM
INCOME FROM DISCONTINUED OPERATIONS PER
COMMON SHARE
Basic
$
0.11
$
0.14
(21)%
Diluted
$
0.11
$
0.14
(21)%
NET INCOME (LOSS) PER COMMON
SHARE
Basic
$
(0.28
)
$
0.50
NM
Diluted
$
(0.28
)
$
0.50
NM
WEIGHTED-AVERAGE NUMBER OF SHARES
OUTSTANDING
Basic
506
504
Diluted
506
508
ADJUSTED OPERATING INCOME (excluding
special items)1
$
489
$
529
(8)%
ADJUSTED INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES (excluding special items)1
$
343
$
473
(27)%
ADJUSTED INCOME FROM DISCONTINUED
OPERATIONS (excluding special items)1
$
55
$
70
(21)%
ADJUSTED NET INCOME ATTRIBUTABLE TO
BAXTER STOCKHOLDERS (excluding special items)1
$
335
$
443
(24)%
ADJUSTED DILUTED EPS FROM CONTINUING
OPERATIONS (excluding special items)1
$
0.55
$
0.73
(25)%
ADJUSTED DILUTED EPS FROM DISCONTINUED
OPERATIONS (excluding special items)1
$
0.11
$
0.14
(21)%
ADJUSTED DILUTED EPS (excluding special
items)¹
$
0.66
$
0.87
(24)%
1 Refer to page 11 for a description of the adjustments and a
reconciliation to U.S. GAAP measures. NM - Not Meaningful
BAXTER INTERNATIONAL
INC.
Description of Adjustments and
Reconciliation of U.S. GAAP to Non-GAAP Measures
(unaudited, in
millions)
The company’s U.S. GAAP results for the
three months ended June 30, 2023 included special items which
impacted the U.S. GAAP measures as follows:
Gross Margin
Selling, General and
Administrative Expenses
Other Operating Income, Net
Operating Income (Loss)
Other (Income) Expense, Net
Income (Loss) From Continuing
Operations Before Income Taxes
Income Tax Expense
Income (Loss) From Continuing
Operations
Income From Discontinued
Operations, Net of Tax
Net Income (Loss)
Net Income (Loss) Attributable to
Baxter Stockholders
Diluted Earnings Per Share from
Continuing Operations
Diluted Earnings Per Share from
Discontinued Operations
Diluted Earnings Per Share
Reported
$
1,111
$
964
$
(1
)
$
(17
)
$
42
$
(183
)
$
10
$
(193
)
$
54
$
(139
)
$
(141
)
$
(0.39
)
$
0.11
$
(0.28
)
Reported percent of net sales (or
effective tax rate for income tax expense)
30.0
%
26.0
%
0.0
%
(0.5
)%
1.1
%
(4.9
)%
(5.5
)%
(5.2
)%
1.5
%
(3.7
)%
(3.8
)%
Intangible asset amortization1
105
(52
)
—
157
—
157
38
119
—
119
119
0.23
0.00
0.23
Business optimization items2
266
(27
)
—
293
—
293
43
250
—
250
250
0.49
0.00
0.49
Acquisition and integration items3
—
(8
)
1
7
—
7
2
5
—
5
5
0.01
0.00
0.01
Divestiture-related costs4
4
(33
)
—
37
37
—
37
8
45
45
0.07
0.02
0.09
European medical devices regulation5
12
—
—
12
—
12
4
8
—
8
8
0.02
0.00
0.02
Investment impairments6
—
—
—
—
(20
)
20
5
15
—
15
15
0.03
0.00
0.03
Tax matters8
—
—
—
—
—
—
(41
)
41
(7
)
34
34
0.08
(0.01
)
0.07
Adjusted
$
1,498
$
844
$
—
$
489
$
22
$
343
$
61
$
282
$
55
$
337
$
335
$
0.55
$
0.11
$
0.66
Adjusted percent of net sales (or
effective tax rate for income tax expense)
40.4
%
22.8
%
0.0
%
13.2
%
0.6
%
9.3
%
17.8
%
7.6
%
1.5
%
9.1
%
9.0
%
Reported
Adjusted
Income (loss) from continuing
operations
$
(193
)
$
282
Less: Net income attributable to
noncontrolling interests
2
2
Income (loss) from continuing operations
attributable to Baxter stockholders
$
(195
)
$
280
Weighted-average diluted shares as
reported
506
Effect of dilutive securities that were
anti-dilutive to dilutive EPS as reported
2
Weighted-average diluted shares as
adjusted
508
The company’s U.S. GAAP results for the three months ended June
30, 2022 included special items which impacted the U.S. GAAP
measures as follows:
Gross Margin
Selling, General and
Administrative Expenses
Other Operating Expense, Net
Operating Income (Loss)
Other (Income) Expense, Net
Income (Loss) From Continuing
Operations Before Income Taxes
Income Tax Expense
Income (Loss) From Continuing
Operations
Income From Discontinued
Operations, Net of Tax
Net Income (Loss)
Net Income (Loss) Attributable to
Baxter Stockholders
Diluted Earnings Per Share from
Continuing Operations
Diluted Earnings Per Share from
Discontinued Operations
Diluted Earnings Per Share
Reported
$
1,371
$
970
$
(11
)
$
264
$
(44
)
$
219
$
34
$
185
$
70
$
255
$
252
$
0.36
$
0.14
$
0.50
Reported percent of net sales (or
effective tax rate for income tax expense)
38.1
%
27.0
%
(0.3
)%
7.3
%
(1.2
)%
6.1
%
15.5
%
5.1
%
1.9
%
7.1
%
7.0
%
Intangible asset amortization1
112
(81
)
—
193
—
193
47
146
—
146
146
0.29
0.00
0.29
Business optimization items2
6
(36
)
—
42
—
42
11
31
—
31
31
0.06
0.00
0.06
Acquisition and integration items3
9
(20
)
11
18
—
18
4
14
—
14
14
0.03
0.00
0.03
European medical devices regulation5
12
—
—
12
—
12
3
9
—
9
9
0.02
0.00
0.02
Pension curtailment7
—
—
—
—
11
(11
)
(2
)
(9
)
—
(9
)
(9
)
(0.02
)
0.00
(0.02
)
Adjusted
$
1,510
$
833
$
—
$
529
$
(33
)
$
473
$
97
$
376
$
70
$
446
$
443
$
0.73
$
0.14
$
0.87
Adjusted percent of net sales (or
effective tax rate for income tax expense)
42.0
%
23.2
%
0.0
%
14.7
%
(0.9
)%
13.2
%
20.5
%
10.5
%
1.9
%
12.4
%
12.3
%
Reported
Adjusted
Income (loss) from continuing
operations
$
185
$
376
Less: Net income attributable to
noncontrolling interests
3
3
Income (loss) from continuing operations
attributable to Baxter stockholders
$
182
$
373
1
The company’s results in 2023 and 2022
included intangible asset amortization expense of $157 million
($119 million, or $0.23 per diluted share, on an after-tax basis)
and $193 million ($146 million, or $0.29 per diluted share, on an
after-tax basis), respectively.
2
The company’s results in 2023 and 2022
included charges of $293 million ($250 million, or $0.49 per
diluted share, on an after-tax basis) and $42 million ($31 million,
or $0.06 per diluted share, on an after-tax basis), respectively,
associated with its execution of programs to optimize its
organization and cost structure. These restructuring and other
business optimization costs included actions related to its current
implementation of a new operating model intended to simplify and
streamline its operations, its integration of Hill-Rom Holdings,
Inc. (Hillrom), the decision to cease production of dialyzers at
one of its U.S.-based manufacturing facilities later this year,
which resulted in a $243 million noncash impairment of property,
plant and equipment in the second quarter of 2023, rationalization
of certain other manufacturing and distribution facilities and
transformation of certain general and administrative functions.
3
The company’s results in 2023 included $7
million ($5 million, or $0.01 per diluted share, on an after-tax
basis) of acquisition and integration-related items. That amount
includes $8 million of integration costs, which primarily included
third party consulting costs related to its integration of Hillrom,
partially offset by a $1 million benefit from changes in the
estimated fair values of contingent consideration liabilities. The
company’s results in 2022 included $18 million ($14 million, or
$0.03 per diluted share, on an after-tax basis) of acquisition and
integration-related items. That amount includes $29 million of
integration costs, which primarily included third party consulting
costs related to its integration of Hillrom, partially offset by an
$11 million benefit from a change in the estimated fair value of
contingent consideration liabilities.
4
The company's results of continuing
operations in 2023 included $37 million ($37 million, or $0.07 per
diluted share, on an after-tax basis) of divestiture-related costs.
This amount includes costs of external advisors supporting its
activities to prepare for the proposed spinoff of its Renal Care
and Acute Therapies product categories, which are reported in
continuing operations. The company's results of discontinued
operations in 2023 included $8 million ($8 million, or $0.02 per
diluted share, on an after-tax basis) of divestiture-related costs
related to the pending sale of its BioPharma Solutions (BPS)
product category.
5
The company’s results in 2023 and 2022
included costs of $12 million ($8 million, or $0.02 per diluted
share, on an after-tax basis) and $12 million ($9 million, or $0.02
per diluted share from continuing operations, on an after-tax
basis), respectively, of incremental costs to comply with the
European Union’s medical device regulations for previously
registered products, which primarily consist of contractor costs
and other direct third-party costs. The company considers the
adoption of these regulations to be a significant one-time
regulatory change and believes that the costs of initial compliance
for previously registered products over the implementation period
are not indicative of its core operating results.
6
The company's results in 2023 included
losses of $20 million ($15 million, or $0.03 per diluted share, on
an after-tax basis) from non-marketable investments in several
early stage companies, consisting of $23 million of noncash
impairment write-downs, partially offset by a $3 million gain from
the sale of an investment.
7
The company's results in 2022 included a curtailment gain of $11
million ($9 million, or $0.02 per diluted share, on an after-tax
basis) on an announced change for active non-bargaining
participants in our U.S. Hillrom pension plan.
8
The company's results of continuing operations in 2023 included tax
expense items totaling $41 million ($0.08 per diluted share),
consisting of a $30 million valuation allowance recorded to reduce
the carrying amount of a deferred tax asset for a tax basis step-up
related to previously enacted Swiss tax legislation, $4 million of
tax costs from divestiture-related activities, and a $7 million
reallocation of income taxes between continuing operations and
discontinued operations resulting from the application of
intraperiod tax allocation to the company's adjusted results.
For more information on the company's use of non-GAAP financial
measures, please see the Non-GAAP Financial Measures section of
this press release.
BAXTER INTERNATIONAL
INC.
Consolidated Statements of
Income (Loss)
(unaudited)
(in millions, except per share
and percentage data)
Six Months Ended June
30,
2023
2022
Change
NET SALES
$
7,220
$
7,152
1%
COST OF SALES
4,834
4,519
7%
GROSS MARGIN
2,386
2,633
(9)%
% of Net Sales
33.0
%
36.8
%
(3.8 pts)
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES
1,959
2,017
(3)%
% of Net Sales
27.1
%
28.2
%
(1.1 pts)
RESEARCH AND DEVELOPMENT
EXPENSES
329
297
11%
% of Net Sales
4.6
%
4.2
%
0.4 pts
OTHER OPERATING INCOME, NET
(14
)
(28
)
(50)%
OPERATING INCOME (LOSS)
112
347
(68)%
% of Net Sales
1.6
%
4.9
%
(3.3 pts)
INTEREST EXPENSE, NET
241
174
39%
OTHER (INCOME) EXPENSE, NET
40
(60
)
NM
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES
(169
)
233
NM
INCOME TAX EXPENSE
24
40
(40)%
% of Income (Loss) from Continuing
Operations Before Income Taxes
(14.2
)%
17.2
%
(31.4 pts)
INCOME (LOSS) FROM CONTINUING
OPERATIONS
(193
)
193
NM
INCOME FROM DISCONTINUED OPERATIONS,
NET OF TAX
99
135
(27)%
NET INCOME (LOSS)
(94
)
328
NM
NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
3
5
(40)%
NET INCOME (LOSS) ATTRIBUTABLE TO
BAXTER STOCKHOLDERS
$
(97
)
$
323
NM
INCOME (LOSS) FROM CONTINUING
OPERATIONS PER COMMON SHARE
Basic
$
(0.39
)
$
0.37
NM
Diluted
$
(0.39
)
$
0.37
NM
INCOME FROM DISCONTINUED OPERATIONS PER
COMMON SHARE
Basic
$
0.20
$
0.27
(26)%
Diluted
$
0.20
$
0.27
(26)%
NET INCOME (LOSS) PER COMMON
SHARE
Basic
$
(0.19
)
$
0.64
NM
Diluted
$
(0.19
)
$
0.64
NM
WEIGHTED-AVERAGE NUMBER OF SHARES
OUTSTANDING
Basic
506
503
Diluted
506
508
- ADJUSTED OPERATING INCOME (excluding
special items)1
$
928
$
1,115
(17)%
ADJUSTED INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES (excluding special items)1
$
667
$
990
(33)%
ADJUSTED INCOME FROM DISCONTINUED
OPERATIONS (excluding special items)1
$
104
$
135
(23)%
ADJUSTED NET INCOME ATTRIBUTABLE TO
BAXTER STOCKHOLDERS (excluding special items)¹
$
632
$
914
(31)%
ADJUSTED DILUTED EPS FROM CONTINUING
OPERATIONS (excluding special items)1
$
1.04
$
1.53
(32)%
ADJUSTED DILUTED EPS FROM DISCONTINUED
OPERATIONS (excluding special items)1
$
0.21
$
0.27
(22)%
ADJUSTED DILUTED EPS (excluding special
items)¹
$
1.25
$
1.80
(31)%
1 Refer to page 13 for a description of the adjustments and a
reconciliation to U.S. GAAP measures. NM - Not Meaningful
BAXTER INTERNATIONAL
INC.
Description of Adjustments and
Reconciliation of U.S. GAAP to Non-GAAP Measures
(unaudited, in
millions)
The company’s U.S. GAAP results
for the six months ended June 30, 2023 included special items which
impacted the U.S. GAAP measures as follows:
Gross Margin
Selling, General and
Administrative Expenses
Research and Development
Expenses
Other Operating Income, Net
Operating Income (Loss)
Other (Income) Expense, Net
Income (Loss) From Continuing
Operations Before Income Taxes
Income Tax Expense
Income (Loss) From Continuing
Operations
Income From Discontinued
Operations, Net of Tax
Net Income (Loss)
Net Income (Loss) Attributable to
Baxter Stockholders
Diluted Earnings Per Share From
Continuing Operations
Diluted Earnings Per Share from
Discontinued Operations
Diluted Earnings Per Share
Reported
$
2,386
$
1,959
$
329
$
(14
)
$
112
$
40
$
(169
)
$
24
$
(193
)
$
99
$
(94
)
$
(97
)
$
(0.39
)
$
0.20
$
(0.19
)
Reported percent of net sales (or
effective tax rate for income tax expense)
33.0
%
27.1
%
4.6
%
(0.2
)%
1.6
%
0.6
%
(2.3
)%
(14.2
)%
(2.7
)%
1.4
%
(1.3
)%
(1.3
)%
Intangible asset amortization1
215
(104
)
—
—
319
—
319
71
248
—
248
248
0.49
0.00
0.49
Business optimization items2
301
(119
)
(7
)
—
427
—
427
73
354
—
354
354
0.70
0.00
0.70
Acquisition and integration items3
—
(14
)
—
14
—
—
—
—
—
—
—
—
0.00
0.00
0.00
Divestiture-related costs4
5
(41
)
—
—
46
46
—
46
15
61
61
0.09
0.03
0.12
European medical devices regulation5
24
—
—
—
24
—
24
7
17
—
17
17
0.03
0.00
0.03
Investment Impairments6
—
—
—
—
—
(20
)
20
5
15
—
15
15
0.03
0.00
0.03
Tax Matters9
—
—
—
—
—
—
—
(44
)
44
(10
)
34
34
0.09
(0.02
)
0.07
Adjusted
$
2,931
$
1,681
$
322
$
—
$
928
$
20
$
667
$
136
$
531
$
104
$
635
$
632
$
1.04
$
0.21
$
1.25
Adjusted percent of net sales (or
effective tax rate for income tax expense)
40.6
%
23.3
%
4.5
%
0.0
%
12.9
%
0.3
%
9.2
%
20.4
%
7.4
%
1.4
%
8.8
%
8.8
%
Reported
Adjusted
Income (loss) from continuing
operations
$
(193
)
$
531
Less: Net income attributable to
noncontrolling interests
$
3
$
3
Income (loss) from continuing operations
attributable to Baxter stockholders
$
(196
)
$
528
Weighted-average diluted shares as
reported
506
Effect of dilutive securities that were
anti-dilutive to dilutive EPS as reported
1
Weighted-average diluted shares as
adjusted
507
The company’s U.S. GAAP results for the six months ended June
30, 2022 included special items which impacted the U.S. GAAP
measures as follows:
Gross Margin
Selling, General and
Administrative Expenses
Research and Development
Expenses
Other Operating Expense, Net
Operating Income (Loss)
Other (Income) Expense, Net
Income (Loss) From Continuing
Operations Before Income Taxes
Income Tax Expense
Income (Loss) From Continuing
Operations
Income From Discontinued
Operations, Net of Tax
Net Income (Loss)
Net Income (Loss) Attributable to
Baxter Stockholders
Diluted Earnings Per Share From
Continuing Operations
Diluted Earnings Per Share From
Discontinued Operations
Diluted Earnings Per Share
Reported
$
2,633
$
2,017
$
297
$
(28
)
$
347
$
(60
)
$
233
$
40
$
193
$
135
$
328
$
323
$
0.37
$
0.27
$
0.64
Reported percent of net sales (or
effective tax rate for income tax expense)
36.8
%
28.2
%
4.2
%
(0.4
)%
4.9
%
(0.8
)%
3.3
%
17.2
%
2.7
%
1.9
%
4.6
%
4.5
%
Intangible asset amortization1
234
(176
)
—
—
410
—
410
95
315
—
315
315
0.62
0.00
0.62
Business optimization items2
8
(114
)
(1
)
—
123
—
123
31
92
—
92
92
0.18
0.00
0.18
Acquisition and integration items3
173
(44
)
—
28
189
—
189
34
155
—
155
155
0.31
0.00
0.31
European medical devices regulation5
23
—
—
—
23
—
23
5
18
—
18
18
0.04
0.00
0.04
Product-related items7
23
—
—
—
23
—
23
3
20
—
20
20
0.04
0.00
0.04
Pension curtailment8
—
—
—
—
—
11
(11
)
(2
)
(9
)
—
(9
)
(9
)
(0.02
)
0.00
(0.02
)
Adjusted
$
3,094
$
1,683
$
296
$
—
$
1,115
$
(49
)
$
990
$
206
$
784
$
135
$
919
$
914
1.53
0.27
1.80
Adjusted percent of net sales (or
effective tax rate for income tax expense)
43.3
%
23.5
%
4.1
%
0.0
%
15.6
%
(0.7
)%
13.8
%
20.8
%
11.0
%
1.9
%
12.8
%
12.8
%
Reported
Adjusted
Income (loss) from continuing
operations
$
193
$
784
Less: Net income attributable to
noncontrolling interests
5
5
Income (loss) from continuing operations
attributable to Baxter stockholders
$
188
$
779
1
The company’s results in 2023 and 2022
included intangible asset amortization expense of $319 million
($248 million, or $0.49 per diluted share, on an after-tax basis)
and $410 million ($315 million, or $0.62 per diluted share, on an
after-tax basis), respectively.
2
The company’s results in 2023 and 2022
included charges of $427 million ($354 million, or $0.70 per
diluted share, on an after-tax basis) and $123 million ($92
million, or $0.18 per diluted share, on an after-tax basis),
respectively, associated with its execution of programs to optimize
its organization and cost structure. These restructuring and other
business optimization costs included actions related to its current
implementation of a new operating model intended to simplify and
streamline its operations, its integration of Hillrom, the decision
to cease production of dialyzers at one its U.S.-based
manufacturing facilities later this year, which resulted in a $243
million noncash impairment of property, plant and equipment in the
first half of 2023, rationalization of certain other manufacturing
and distribution facilities and transformation of certain general
and administrative functions.
3
Acquisition and integration-related items
included in the company’s results in 2023 included $14 million of
integration costs, which primarily included third party consulting
costs related to its integration of Hillrom, offset by a $14
million benefit from changes in the estimated fair values of
contingent consideration liabilities. The company’s results in 2022
included $189 million ($155 million, or $0.31 per diluted share, on
an after-tax basis) of acquisition and integration-related
expenses. That amount includes $217 million of costs related to its
acquisition of Hillrom, including $159 million of incremental costs
of sales from the fair value step-ups on acquired Hillrom inventory
that was sold in the first quarter. The acquisition and
integration-related expenses related to Hillrom were partially
offset by $28 million of benefits from changes in the estimated
fair value of contingent consideration liabilities.
4
The company's results of continuing
operations in 2023 included costs of $46 million ($46 million, or
$0.09 per diluted share, on an after-tax basis) of
divestiture-related costs. This amount includes costs of external
advisors supporting its activities to prepare for the proposed
spinoff of its Renal Care and Acute Therapies product categories,
which are reported in continuing operations. The company's results
of discontinued operations in 2023 included $15 million ($15
million, or $0.03 per diluted share, on an after-tax basis) of
divestiture-related costs related to the pending sale of its
BioPharma Solutions (BPS) product category.
5
The company’s results in 2023 and 2022
included costs of $24 million ($17 million, or $0.03 per diluted
share, on an after-tax basis) and $23 million ($18 million, or
$0.04 per diluted share, on an after-tax basis), respectively, of
incremental costs to comply with the European Union’s medical
device regulations for previously registered products, which
primarily consist of contractor costs and other direct third-party
costs. The company considers the adoption of these regulations to
be a significant one-time regulatory change and believes that the
costs of initial compliance for previously registered products over
the implementation period are not indicative of its core operating
results.
6
The company's results in 2023 included
losses of $20 million ($15 million, or $0.03 per diluted share, on
an after-tax basis) from non-marketable investments in several
early stage companies, consisting of $23 million of noncash
impairment write-downs, partially offset by a $3 million gain from
the sale of an investment.
7
The company's results in 2022 included
charges of $23 million ($20 million, or $0.04 per diluted share, on
an after-tax basis) related to warranty and remediation activities
from two field corrective actions on certain of its infusion
pumps.
8
The company's results in 2022 included a
curtailment gain of $11 million ($9 million, or $0.02 per diluted
share, on an after-tax basis) on an announced change for active
non-bargaining participants in our U.S. Hillrom pension plan.
9
The company's results of continuing
operations in 2023 included tax expense items totaling $44 million
($0.09 per diluted share), consisting of a $30 million valuation
allowance recorded to reduce the carrying amount of a deferred tax
asset for a tax basis step-up related to previously enacted Swiss
tax legislation, $4 million of tax costs from divestiture-related
activities, and a $10 million reallocation of income taxes between
continuing operations and discontinued operations resulting from
the application of intraperiod tax allocation to the company's
adjusted results.
For more information on the company's use of non-GAAP financial
measures, please see the Non-GAAP Financial Measures section of
this press release.
BAXTER INTERNATIONAL
INC.
Sales by Operating
Segment
(unaudited)
($ in millions)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
% Growth @ Actual
Rates
% Growth @ Constant
Rates
2023
2022
% Growth @ Actual
Rates
% Growth @ Constant
Rates
Americas
$
1,564
$
1,494
5
%
5
%
$
3,030
$
2,971
2
%
3
%
EMEA
762
738
3
%
3
%
1,476
1,437
3
%
6
%
APAC
638
647
(1
)%
4
%
1,240
1,274
(3
)%
3
%
Hillrom
743
715
4
%
4
%
1,474
1,470
0
%
1
%
Total - Continuing Operations
$
3,707
$
3,594
3
%
4
%
$
7,220
$
7,152
1
%
3
%
Constant currency growth is a non-GAAP measure. For more
information on the company’s use of non-GAAP financial measures,
please see the Non-GAAP Financial Measures section of this press
release.
BAXTER INTERNATIONAL
INC.
Sales by Product
Category
(unaudited)
($ in millions)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
% Growth @ Actual
Rates
% Growth @ Constant
Rates
2023
2022
% Growth @ Actual
Rates
% Growth @ Constant
Rates
Renal Care 1
$
936
$
931
1
%
2
%
$
1,828
$
1,825
0
%
3
%
Medication Delivery 2
761
710
7
%
7
%
1,448
1,416
2
%
4
%
Pharmaceuticals 3
550
528
4
%
6
%
1,074
1,049
2
%
6
%
Clinical Nutrition 4
243
230
6
%
7
%
467
457
2
%
5
%
Advanced Surgery 5
272
263
3
%
4
%
518
491
5
%
7
%
Acute Therapies 6
180
173
4
%
6
%
360
361
(0
)%
2
%
Patient Support Systems 7
359
364
(1
)%
(1
)%
707
747
(5
)%
(5
)%
Front Line Care 8
307
282
9
%
9
%
609
576
6
%
6
%
Global Surgical Solutions 9
77
69
12
%
9
%
158
147
7
%
8
%
Other 10
22
44
(50
)%
(50
)%
51
83
(39
)%
(39
)%
Total - Continuing Operations
$
3,707
$
3,594
3
%
4
%
$
7,220
$
7,152
1
%
3
%
1
Includes sales of the company’s peritoneal
dialysis (PD), hemodialysis (HD) and additional dialysis therapies
and services.
2
Includes sales of the company’s
intravenous (IV) therapies, infusion pumps, administration sets and
drug reconstitution devices.
3
Includes sales of the company’s premixed
and oncology drug platforms, inhaled anesthesia and critical care
products and pharmacy compounding services.
4
Includes sales of the company’s parenteral
nutrition therapies and related products.
5
Includes sales of the company’s biological
products and medical devices used in surgical procedures for
hemostasis, tissue sealing and adhesion prevention.
6
Includes sales of the company’s continuous
renal replacement therapies (CRRT) and other organ support
therapies focused in the intensive care unit (ICU).
7
Includes sales of the company's connected
care solutions: devices, software, communications and integration
technologies and smart beds.
8
Includes sales of the company's integrated
patient monitoring and diagnostic technologies to help diagnose,
treat and manage a wide variety of illness and diseases, including
respiratory therapy, cardiology, vision screening and physical
assessment.
9
Includes sales of the company's surgical
video technologies, tables, lights, pendants, precision positioning
devices and other accessories.
10
Includes sales of other miscellaneous
product and service offerings. Contract manufacturing revenues
earned by our manufacturing facility in Round Lake Illinois, which
totaled $2 million for the six months ended June 30, 2023 and $11
million and $18 million for the three and six months ended June 30,
2022, respectively, were historically presented as BPS sales. Those
sales transactions, which are not impacted by the pending
divestiture of our BPS business, continue to be presented as
continuing operations in the accompanying tables and have been
reclassified to our Other product category for all periods
presented.
Constant currency growth is a non-GAAP measure. For more
information on the company’s use of non-GAAP financial measures,
please see the Non-GAAP Financial Measures section of this press
release.
BAXTER INTERNATIONAL
INC.
Product Category Sales by U.S.
and International
(unaudited)
($ in millions)
Three Months Ended June
30,
2023
2022
% Growth
U.S.
International
Total
U.S.
International
Total
U.S.
International
Total
Renal Care
$
234
$
702
$
936
$
225
$
706
$
931
4
%
(1
)%
1
%
Medication Delivery
487
274
761
459
251
710
6
%
9
%
7
%
Pharmaceuticals
182
368
550
164
364
528
11
%
1
%
4
%
Clinical Nutrition
83
160
243
90
140
230
(8
)%
14
%
6
%
Advanced Surgery
150
122
272
151
112
263
(1
)%
9
%
3
%
Acute Therapies
60
120
180
58
115
173
3
%
4
%
4
%
Patient Support Systems
276
83
359
284
80
364
(3
)%
4
%
(1
)%
Front Line Care
227
80
307
202
80
282
12
%
0
%
9
%
Global Surgical Solutions
35
42
77
36
33
69
(3
)%
27
%
12
%
Other
17
5
22
31
13
44
(45
)%
(62
)%
(50
)%
Total - Continuing Operations
$
1,751
$
1,956
$
3,707
$
1,700
$
1,894
$
3,594
3
%
3
%
3
%
BAXTER INTERNATIONAL
INC.
Product Category Sales by U.S.
and International
(unaudited)
($ in millions)
Six Months Ended June
30,
2023
2022
% Growth
U.S.
International
Total
U.S.
International
Total
U.S.
International
Total
Renal Care
$
466
$
1,362
$
1,828
$
450
$
1,375
$
1,825
4
%
(1
)%
0
%
Medication Delivery
923
525
1,448
931
485
1,416
(1
)%
8
%
2
%
Pharmaceuticals
355
719
1,074
321
728
1,049
11
%
(1
)%
2
%
Clinical Nutrition
161
306
467
174
283
457
(7
)%
8
%
2
%
Advanced Surgery
294
224
518
287
204
491
2
%
10
%
5
%
Acute Therapies
121
239
360
126
235
361
(4
)%
2
%
(0
)%
Patient Support Systems
536
171
707
579
168
747
(7
)%
2
%
(5
)%
Front Line Care
448
161
609
409
167
576
10
%
(4
)%
6
%
Global Surgical Solutions
73
85
158
73
74
147
0
%
15
%
7
%
Other
41
10
51
62
21
83
(34
)%
(52
)%
(39
)%
Total - Continuing Operations
$
3,418
$
3,802
$
7,220
$
3,412
$
3,740
$
7,152
0
%
2
%
1
%
BAXTER INTERNATIONAL
INC.
Reconciliation of Non-GAAP
Financial Measure
Operating Cash Flow to Free
Cash Flow
(unaudited)
($ in millions)
Six Months Ended June
30,
2023
2022
Cash flows from operations – continuing
operations
$
780
$
369
Cash flows from investing activities -
continuing operations
(326
)
(457
)
Cash flows from financing activities -
continuing operations
(492
)
(1,017
)
Cash flows from operations - continuing
operations
$
780
$
369
Capital expenditures - continuing
operations
(328
)
(277
)
Free cash flow - continuing
operations
$
452
$
92
Six Months Ended June
30,
2023
2022
Cash flows from operations – discontinued
operations
$
50
113
Cash flows from investing activities -
discontinued operations
(17
)
(34
)
Cash flows from operations - discontinued
operations
$
50
$
113
Capital expenditures - discontinued
operations
(17
)
(34
)
Free cash flow - discontinued
operations
$
33
$
79
Six Months Ended June
30,
2023
2022
Cash flows from operations – Total
Baxter
$
830
$
482
Cash flows from investing activities -
Total Baxter
(343
)
(491
)
Cash flows from financing activities -
Total Baxter
(492
)
(1,017
)
Cash flows from operations - Total
Baxter
$
830
$
482
Capital expenditures - Total Baxter
(345
)
(311
)
Free cash flow - Total Baxter
$
485
$
171
Free cash flow is a non-GAAP measure. For more information on
the company’s use of non-GAAP financial measures, please see the
Non-GAAP Financial Measures section of this press release.
BAXTER INTERNATIONAL
INC.
Reconciliation of Non-GAAP
Financial Measure
Change in Net Sales Growth As
Reported to Constant Currency Sales Growth
From The Three Months Ended
June 30, 2022 to The Three Months Ended June 30, 2023
(unaudited)
Net Sales Growth As
Reported
FX
Constant Currency Sales
Growth*
Renal Care
1
%
1
%
2
%
Medication Delivery
7
%
0
%
7
%
Pharmaceuticals
4
%
2
%
6
%
Clinical Nutrition
6
%
1
%
7
%
Advanced Surgery
3
%
1
%
4
%
Acute Therapies
4
%
2
%
6
%
Patient Support Systems
(1
)%
0
%
(1
)%
Front Line Care
9
%
0
%
9
%
Global Surgical Solutions
12
%
(3
)%
9
%
Other
(50
)%
0
%
(50
)%
Total - Continuing Operations
3
%
1
%
4
%
Discontinued Operations
(7
)%
0
%
(7
)%
Total - Continuing and Discontinued
Operations
3
%
1
%
4
%
U.S. - Continuing Operations
3
%
0
%
3
%
U.S. - Discontinued Operations
0
%
0
%
0
%
U.S. Total - Continuing and Discontinued
Operations
3
%
0
%
3
%
International - Continuing Operations
3
%
2
%
5
%
International - Discontinued
Operations
(11
)%
0
%
(11
)%
International Total - Continuing and
Discontinued Operations
3
%
1
%
4
%
*Totals may not add across due to rounding
Constant currency sales growth is a non-GAAP measure. For more
information on the company’s use of non-GAAP financial measures,
please see the Non-GAAP Financial Measures section of this press
release.
BAXTER INTERNATIONAL
INC.
Reconciliation of Non-GAAP
Financial Measure
Change in Net Sales Growth As
Reported to Constant Currency Sales Growth
From The Six Months Ended June
30, 2022 to The Six Months Ended June 30, 2023
(unaudited)
Net Sales Growth As
Reported
FX
Constant Currency Sales
Growth*
Renal Care
0
%
3
%
3
%
Medication Delivery
2
%
2
%
4
%
Pharmaceuticals
2
%
4
%
6
%
Clinical Nutrition
2
%
3
%
5
%
Advanced Surgery
5
%
2
%
7
%
Acute Therapies
(0
)%
2
%
2
%
Patient Support Systems
(5
)%
0
%
(5
)%
Front Line Care
6
%
0
%
6
%
Global Surgical Solutions
7
%
1
%
8
%
Other
(39
)%
0
%
(39
)%
Total - Continuing Operations
1
%
2
%
3
%
Discontinued Operations
(8
)%
0
%
(8
)%
Total - Continuing and Discontinued
Operations
1
%
2
%
3
%
U.S. - Continuing Operations
0
%
0
%
0
%
U.S. - Discontinued Operations
20
%
0
%
20
%
U.S. Total - Continuing and Discontinued
Operations
1
%
0
%
1
%
International - Continuing Operations
2
%
4
%
6
%
International - Discontinued
Operations
(23
)%
0
%
(23
)%
International Total - Continuing and
Discontinued Operations
0
%
4
%
4
%
*Totals may not add across due to rounding
Constant currency sales growth is a non-GAAP measure. For more
information on the company’s use of non-GAAP financial measures,
please see the Non-GAAP Financial Measures section of this press
release.
BAXTER INTERNATIONAL INC.
Reconciliation of Non-GAAP Financial Measures
Projected Third Quarter and Full Year 2023 Continuing Operations
U.S. GAAP Sales Growth to Projected Continuing Operations Constant
Currency Sales Growth, and Projected Third Quarter and Full Year
2023 Adjusted Earnings Per Share
(unaudited)
The Company’s current expectation is that the pending sale of
BPS is likely to close towards the end of the third quarter.
However, as the ultimate timing is uncertain, and to provide
comparability to prior guidance, it is providing a financial
outlook that also contemplates a scenario in which the transaction
does not close in 2023. Under either scenario, BPS is reflected as
a discontinued operation, consistent with its presentation
throughout these tables and the accompanying release. Adjusted
diluted earnings per share amounts referred to below exclude
special items.
Sales Growth Guidance**
Q3 2023
FY 2023*
Continuing operations sales growth - U.S.
GAAP
~2%
1% - 2%
Foreign Exchange
~(1)%
~0.5%
Continuing operations sales growth -
Constant currency
~1%
~2%
Adjusted Earnings Per Share Guidance -
BPS Remains a Part of Baxter Through Full-Year 2023
Q3 2023
FY 2023
Adjusted diluted EPS - Continuing
operations
$0.65 - $0.67
$2.49 - $2.57
Adjusted diluted EPS - Discontinued
operations
~$0.13
~$0.43
Adjusted diluted EPS - Total Baxter
$0.78 - $0.80
$2.92 - $3.00
Adjusted Earnings Per Share Guidance -
The Pending BPS Sale is Completed on September 30, 2023
Q3 2023
FY 2023***
Adjusted diluted EPS - Continuing
operations
$0.65 - $0.67
$2.54 - $2.62
Adjusted diluted EPS - Discontinued
operations
~$0.13
~$0.33
Adjusted diluted EPS - Total Baxter
$0.78 - $0.80
$2.87 - $2.95
*Totals may not foot due to
rounding
**Assuming that BPS were to remain a part of Baxter
through year-end 2023, the outlook for sales growth in aggregate
(including discontinued operations) would be the same as continuing
operations growth on both a reported and constant currency basis.
If the pending BPS sale is completed on September 30, 2023, sales
growth in the aggregate (including discontinued operations) would
be approximately flat to 1% on a reported basis and approximately
1% on a constant currency basis, reflecting the absence of BPS
sales in the fourth quarter.
***If the pending BPS sale is completed on September 30, 2023,
the company's outlook for adjusted diluted EPS in the aggregate
(including discontinued operations) reflects a $0.10 per share
negative impact from the absence of BPS earnings in the fourth
quarter. In that scenario, the company's outlook for adjusted
earnings per diluted share in the aggregate and for continuing
operations both reflect a net benefit of approximately $0.05,
primarily due to reduced interest expense after giving effect to
anticipated debt repayment plans.
Baxter calculates forward-looking non-GAAP financial measures
based on forecasts that omit certain amounts that would be included
in GAAP financial measures. For instance, forward-looking adjusted
diluted EPS guidance excludes potential charges or gains that would
be reflected as Non-GAAP adjustments to earnings. Baxter provides
forward-looking adjusted diluted EPS guidance because it believes
that this measure, when viewed with Baxter’s guidance under GAAP,
provides useful information for the reasons noted above. As a
result of significant ongoing transformative initiatives including
the proposed spin-off of Baxter's Renal Care and Acute Therapies
businesses, the pending sale of its BPS business, and its
implementation of a new operating model, Baxter has not provided
reconciliations of forward-looking adjusted EPS guidance to GAAP
EPS guidance because the combined impact and timing of potential
charges or gains is inherently uncertain and difficult to predict
and is unavailable without unreasonable efforts (as specified in
the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K).
In addition, Baxter believes that such reconciliations would imply
a degree of precision and certainty that could be confusing to
investors. Such items could have a substantial impact on GAAP
measures of financial performance.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230725902854/en/
Media Contact Steve Brett, (224) 948-5353
media@baxter.com
Investor Contact Clare Trachtman, (224) 948-3020
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