- Third-quarter revenue from continuing operations of $3.71
billion increased 3% on a reported basis and 2% on a constant
currency basis, ahead of the company’s previously issued
guidance1
- Third-quarter U.S. GAAP earnings per share (EPS) from
continuing operations of $0.09; adjusted EPS from continuing
operations of $0.68 exceeded guidance
- Third-quarter U.S. GAAP EPS in the aggregate (including
discontinued operations) totaled $4.93; adjusted EPS in the
aggregate (including discontinued operations) of $0.82 exceeded
guidance
- Starting this quarter, Baxter is reporting performance
according to four verticalized business segments, reflecting the
strategic realignment announced in Jan. 2023
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 & Anesthesia
Drug 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.
BioPharma Solutions Divestiture
At the end of the third quarter, Baxter completed the
divestiture of its BPS business. This milestone serves to further
streamline Baxter’s strategic focus in line with the
transformational initiatives outlined at the start of 2023. The BPS
business was acquired by Advent International, a global private
equity investor, and Warburg Pincus, a global growth investor, and
will now operate under the name Simtra BioPharma Solutions. Under
the terms of the definitive agreement, Baxter received total
proceeds of $4.25 billion, subject to adjustment for specified
items. After giving effect to those items, Baxter received cash
proceeds of $3.96 billion and recognized a gain of $2.89 billion,
which is reported within discontinued operations. The estimated net
after-tax proceeds of approximately $3.7 billion are being deployed
towards debt repayment, consistent with the company's stated
capital allocation priorities.
Kidney Care Spinoff Update
Baxter’s preparations are progressing for the planned spinoff of
its Chronic Therapies (Peritoneal Dialysis, Hemodialysis) and Acute
Therapies businesses (collectively, Baxter’s Kidney Care segment)
into an independent, publicly traded company. As a standalone
entity, the new company is expected to benefit from a heightened
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.
The new company's operating model and organizational design are
close to being finalized, and separation progress is ongoing across
legal, regulatory, supply chain, and numerous other key operational
channels. Baxter currently expects the Kidney Care spinoff to occur
by July 2024 or earlier, subject to the satisfaction of customary
conditions.
Recent Highlights2
Baxter continues to advance key strategic priorities in pursuit
of its Mission to Save and Sustain Lives. Among recent highlights,
the company:
- Launched multiple injectable pharmaceutical molecules,
including: the anti-infective daptomycin premix and the antiviral
foscarnet premix, both in the U.S.; and the anti-infective
vancomycin, in Australia. These launches complement those of the
anti-infective ZOSYN (piperacillin and tazobactam),
oncolytic bendamustine and anti-hypertensive norepinephrine earlier
this year. Collectively, these injectables reinforce Baxter’s focus
on differentiated molecules and expand the Pharmaceuticals segment
portfolio in critical therapeutic areas.
- Announced the launch of digital image capture capability for
eye exams using Baxter’s current Welch Allyn PanOptic Plus
Ophthalmoscope. The iExaminer Pro System adds the ability
for a clinician to connect a smart device to capture eye images for
further examination. When used with the iExaminer Pro app,
clinicians can save and share images for tracking and trending, and
initiate more informed consultations with specialists.
- Launched SpotConnect, an electronic medical records
(EMR) application for the Welch Allyn Spot Vision Screener
device. Spot Vision Screener allows healthcare providers to
detect and treat six vision risk factors in children, and
SpotConnect helps streamline clinical workflows through
secure EMR connectivity and allows access to screening results
across the care team.
2023 Financial Outlook
For Full-Year 2023
The company expects adjusted earnings from continuing
operations, before special items, of $2.57 to $2.60 per share.
The company expects sales growth from continuing operations of
1% to 2% on a reported basis and approximately 2% on a constant
currency basis.
For Fourth-Quarter 2023
The company expects adjusted earnings from continuing
operations, before special items, of $0.85 to $0.88 per share.
Baxter expects sales growth from continuing operations of 1% to
2% on a reported basis and approximately 1% on a constant currency
basis.
Third-Quarter 2023 Earnings Conference Call
A webcast of Baxter’s third-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 Nov. 2, 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
X/Twitter, LinkedIn and Facebook.
Non-GAAP Financial Measures
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.
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 (loss), adjusted other income (expense),
net, adjusted income from continuing operations before income
taxes, adjusted income tax expense (benefit), adjusted income
(loss) from continuing operations, adjusted income from
discontinued operations, net of tax, adjusted net income (loss),
adjusted net income (loss) 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
nine months ended Sept. 30, 2023 and 2022, special items for one or
more periods included intangible asset amortization, business
optimization items, acquisition and integration items,
separation-related costs, expenses related to European medical
devices regulation, product-related items, a pension curtailment
gain, non-marketable investment impairments, goodwill and
long-lived asset impairments, a loss on a product divestiture
arrangement, the reclassification of cumulative translation losses
to earnings upon the substantial liquidation of a subsidiary, the
gain on the sale of the BPS business 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 and the accompanying tables also include 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. 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 provides useful
information for the reasons noted above. Baxter has not provided
reconciliations of forward-looking adjusted EPS guidance to
forward-looking GAAP EPS guidance because the company is unable to
predict with reasonable certainty the impact of legal proceedings,
future business optimization actions, separation-related costs,
integration-related costs, asset impairments and unusual gains and
losses, and the related amounts are 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.
Forward-Looking Statements
This release includes forward-looking statements concerning the
company’s financial results (including the outlook for
fourth-quarter and full-year 2023) and business development and
regulatory activities. 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 Kidney Care segment and the company’s plans to simplify
its manufacturing footprint, 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 wars in Ukraine, Israel and Gaza and other
geopolitical events, the related economic sanctions being imposed
globally in response to the conflicts and potential trade wars and
the expansion of such conflicts) 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 or the withdrawal or resubmission of any pending
applications), 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, the
impact of competitive products and pricing, including generic
competition, drug reimportation and disruptive technologies
(including pharmacological advances such as SGLT2 antagonists,
GLP-1 agonists and selective mineralocorticoid receptor
antagonists); 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, iExaminer Pro, PanOptic Plus, SpotConnect, Spot Vision
Screener, Welch Allyn and Zosyn 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 link to original press release for
additional product information.
BAXTER INTERNATIONAL
INC.
Consolidated Statements of
Income (Loss)
(unaudited)
(in millions, except per share
and percentage data)
Three Months Ended
September 30,
2023
2022
Change
NET SALES
$
3,708
$
3,609
3
%
COST OF SALES
2,591
2,564
1
%
GROSS MARGIN
1,117
1,045
7
%
% of Net Sales
30.1
%
29.0
%
1.1 pts
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES
1,002
941
6
%
% of Net Sales
27.0
%
26.1
%
0.9 pts
RESEARCH AND DEVELOPMENT
EXPENSES
166
151
10
%
% of Net Sales
4.5
%
4.2
%
0.3 pts
GOODWILL IMPAIRMENTS
—
2,785
NM
OTHER OPERATING INCOME, NET
—
48
NM
OPERATING INCOME (LOSS)
(51
)
(2,880
)
NM
% of Net Sales
(1.4
)%
(79.8
)%
78.4 pts
INTEREST EXPENSE, NET
128
104
23
%
OTHER (INCOME) EXPENSE, NET
(7
)
61
NM
LOSS FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES
(172
)
(3,045
)
NM
INCOME TAX BENEFIT
(223
)
(54
)
NM
% of Income (Loss) from Continuing
Operations Before Income Taxes
129.7
%
1.8
%
NM
INCOME (LOSS) FROM CONTINUING
OPERATIONS
51
(2,991
)
NM
INCOME FROM DISCONTINUED OPERATIONS,
NET OF TAX
2,460
57
NM
NET INCOME (LOSS)
2,511
(2,934
)
NM
NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
3
3
0
%
NET INCOME (LOSS) ATTRIBUTABLE TO
BAXTER STOCKHOLDERS
$
2,508
$
(2,937
)
NM
INCOME (LOSS) FROM CONTINUING
OPERATIONS PER COMMON SHARE
Basic
$
0.09
$
(5.94
)
NM
Diluted
$
0.09
$
(5.94
)
NM
INCOME FROM DISCONTINUED OPERATIONS PER
COMMON SHARE
Basic
$
4.85
$
0.11
NM
Diluted
$
4.83
$
0.11
NM
NET INCOME (LOSS) PER COMMON
SHARE
Basic
$
4.95
$
(5.83
)
NM
Diluted
$
4.93
$
(5.83
)
NM
WEIGHTED-AVERAGE NUMBER OF SHARES
OUTSTANDING
Basic
507
504
Diluted
509
504
ADJUSTED OPERATING INCOME (excluding
special items)¹
$
565
$
568
(1
)%
ADJUSTED INCOME FROM CONTINUING
OPERATIONS (excluding special items)¹
$
347
$
365
(5
)%
ADJUSTED INCOME FROM DISCONTINUED
OPERATIONS (excluding special items)1
$
71
$
52
37
%
ADJUSTED NET INCOME ATTRIBUTABLE TO
BAXTER STOCKHOLDERS (excluding special items)¹
$
415
$
414
0
%
ADJUSTED DILUTED EPS FROM CONTINUING
OPERATIONS (excluding special items)¹
$
0.68
$
0.71
(4
)%
ADJUSTED DILUTED EPS FROM DISCONTINUED
OPERATIONS (excluding special items)¹
$
0.14
$
0.10
40
%
ADJUSTED DILUTED EPS (excluding special
items)¹
$
0.82
$
0.82
0
%
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 September 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
Operating Income (Loss)
Loss From Continuing Operations
Before Income Taxes
Income Tax Expense (Benefit)
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
$
1,117
$
1,002
$
166
$
(51
)
$
(172
)
$
(223
)
$
51
$
2,460
$
2,511
$
2,508
$
0.09
$
4.83
$
4.93
Reported percent of net sales (or
effective tax rate for income tax expense (benefit))
30.1
%
27.0
%
4.5
%
(1.4
)%
(4.6
)%
129.7
%
1.4
%
66.3
%
67.7
%
67.6
%
Intangible asset amortization1
111
(51
)
—
162
162
35
127
—
127
127
0.25
0.00
0.25
Business optimization items2
26
(50
)
(5
)
81
81
19
62
1
63
63
0.12
0.00
0.12
Acquisition and integration items3
1
(1
)
—
2
2
1
1
—
1
1
0.00
0.00
0.00
Separation-related costs4
10
(67
)
—
77
77
—
77
4
81
81
0.15
0.01
0.16
European medical devices regulation5
14
—
—
14
14
4
10
—
10
10
0.02
0.00
0.02
Legal matters6
—
(13
)
—
13
13
3
10
—
10
10
0.02
0.00
0.02
Long-lived asset impairments7
267
—
—
267
267
62
205
—
205
205
0.40
0.00
0.40
Gain on BPS Sale8
—
—
—
—
—
—
—
(2,603
)
(2,603
)
(2,603
)
0.00
(5.11
)
(5.11
)
Tax matters13
—
—
—
—
—
196
(196
)
209
13
13
(0.39
)
0.41
0.03
Adjusted
$
1,546
$
820
$
161
$
565
$
444
$
97
$
347
$
71
$
418
$
415
$
0.68
$
0.14
$
0.82
Adjusted percent of net sales (or
effective tax rate for income tax expense (benefit))
41.7
%
22.1
%
4.3
%
15.2
%
12.0
%
21.8
%
9.4
%
1.9
%
11.3
%
11.2
%
Reported
Adjusted
Income (loss) from continuing
operations
$
51
$
347
Less: Net income attributable to
noncontrolling interests
3
3
Income (loss) from continuing operations
attributable to Baxter stockholders
$
48
$
344
The company’s U.S. GAAP results for the
three months ended September 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
Goodwill Impairment
Other Operating Expense, Net
Operating Income (Loss)
Other (Income) Expense, Net
Income (Loss) From Continuing
Operations Before Income Taxes
Income Tax Expense (Benefit)
Income (Loss) From Continuing
Operations
Income From Discontinued
Operations
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
$
1,045
$
941
$
151
$
2,785
$
48
$
(2,880
)
$
61
$
(3,045
)
$
(54
)
$
(2,991
)
$
57
$
(2,934
)
$
(2,937
)
$
(5.94
)
$
0.11
$
(5.83
)
Reported percent of net sales (or
effective tax rate for income tax expense (benefit))
29.0
%
26.1
%
4.2
%
77.2
%
1.3
%
(79.8
)%
1.7
%
(84.4
)%
1.8
%
(82.9
)%
1.6
%
(81.3
)%
(81.4
)%
Intangible asset amortization1
110
(58
)
—
—
—
168
—
168
42
126
—
126
126
0.25
0.00
0.25
Business optimization items2
13
(57
)
(3
)
—
—
73
—
73
21
52
—
52
52
0.10
0.00
0.10
Acquisition and integration items3
(2
)
(11
)
(1
)
—
6
4
—
4
2
2
—
2
2
0.00
0.00
0.00
European medical devices regulation5
12
—
—
—
—
12
—
12
3
9
—
9
9
0.02
0.00
0.02
Product-related items9
20
—
—
—
—
20
—
20
2
18
—
18
18
0.04
0.00
0.04
Long-lived asset impairments7
332
—
—
—
—
332
—
332
78
254
—
254
254
0.50
0.00
0.50
Goodwill impairments10
—
—
—
(2,785
)
—
2,785
—
2,785
—
2,785
—
2,785
2,785
5.49
0.00
5.49
Loss on product divestiture
arrangement11
—
—
—
—
(54
)
54
—
54
14
40
—
40
40
0.08
0.00
0.08
Reclassification of cumulative translation
loss to earnings12
—
—
—
—
—
—
(65
)
65
—
65
—
65
65
0.13
0.00
0.13
Tax matters13
—
—
—
—
—
—
—
—
(5
)
5
(5
)
—
—
0.01
(0.01
)
0.00
Adjusted
$
1,530
$
815
$
147
$
—
$
—
$
568
$
(4
)
$
468
$
103
$
365
$
52
$
417
$
414
$
0.71
$
0.10
$
0.82
Adjusted percent of net sales (or
effective tax rate for income tax expense)
42.4
%
22.6
%
4.1
%
0.0
%
0.0
%
15.7
%
(0.1
)%
13.0
%
22.0
%
10.1
%
1.4
%
11.6
%
11.5
%
Reported
Adjusted
Income (loss) from continuing
operations
$
(2,991
)
$
365
Less: Net income attributable to
noncontrolling interests
3
3
Income (loss) from continuing operations
attributable to Baxter stockholders
$
(2,994
)
$
362
Weighted-average diluted shares as
reported
504
Effect of dilutive securities that were
anti-dilutive to dilutive EPS as reported
3
Weighted-average diluted shares as
adjusted
507
1
The company’s results in 2023 and 2022
included intangible asset amortization expense of $162 million
($127 million, or $0.25 per diluted share, on an after-tax basis)
and $168 million ($126 million, or $0.25 per diluted share, on an
after-tax basis), respectively.
2
The company’s results in 2023 and 2022
included charges of $81 million ($62 million, or $0.12 per diluted
share, on an after-tax basis) and $73 million ($52 million, or
$0.10 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 $2
million ($1 million, or $0.00 per diluted share, on an after-tax
basis) of acquisition and integration-related items. That amount
includes $2 million of integration costs, which included costs
related to its integration of Hillrom. The company’s results in
2022 included $4 million ($2 million, or $0.00 per diluted share,
on an after-tax basis) of acquisition and integration-related
items. That amount includes $10 million of costs related to its
acquisition of Hillrom, partially offset by a $6 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 $77 million ($77 million, or $0.15 per
diluted share, on an after-tax basis) of separation-related costs.
This amount includes costs of external advisors supporting its
activities to prepare for the proposed spinoff of its Kidney Care
segment, which are reported in continuing operations. The company's
results of discontinued operations in 2023 included $4 million ($4
million, or $0.01 per diluted share, on an after-tax basis) of
separation-related costs related to the sale of its BioPharma
Solutions (BPS) business.
5
The company’s results in 2023 and 2022
included costs of $14 million ($10 million, or $0.02 per diluted
share, on an after-tax basis) and $12 million ($9 million, or $0.02
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
costs, including associated legal fees, of $13 million ($10
million, or $0.02 per diluted share, on an after-tax basis) related
to matters involving alleged violations of the False Claims Act
related to a now-discontinued legacy Hillrom sales line, and
alleged injury from environmental exposure.
7
The company's results in 2023 included
long-lived asset impairment charges of $267 million ($205 million,
or $0.40 per diluted share, on an after-tax basis) related to the
Hemodialysis business within its Kidney Care segment. The company's
results in 2022 included charges of $332 million ($254 million, or
$0.50) per diluted share, on an after-tax basis) related to
indefinite-lived intangible asset impairments.
8
The company's results of discontinued
operations in 2023 included a gain of $2.89 billion ($2.60 billion,
or $5.11 per diluted share, on an after-tax basis) from the sale of
its BPS business.
9
The company's results in 2022 included
charges of $20 million ($18 million, or $0.04 per diluted share, on
an after-tax basis) related to warranty and remediation activities
from a field corrective action on certain of our infusion
pumps.
10
The company's results in 2022 included a
charge of $2.79 billion (2.79 billion, or $5.49 per diluted share,
on an after-tax basis) related to a goodwill impairment.
11
The company's results in 2022 included a
loss of $54 million ($40 million, or $0.08 per diluted share, on an
after-tax basis) related to an arrangement to divest certain
product rights for an amount that is less than the cost of those
product rights which was triggered by U.S. and European Union
regulatory approvals of the related products.
12
The company's results in 2022 included a
charge of $65 million ($65 million, or $0.13 per diluted share, on
an after-tax basis) related to cumulative translation adjustments
reclassified from accumulated other comprehensive income (loss) as
a result of the substantial liquidation of its operations in
Argentina.
13
The company's results of continuing
operations in 2023 included tax items totaling a $196 million
($0.39 per diluted share), primarily comprised of a $209 million
reallocation of income tax expense between discontinued operations
and continuing operations resulting from the application of
intraperiod tax allocation to the company's adjusted results. That
item was partially offset by $13 million of separation-related tax
costs. The company's results of continuing operations in 2022
included a $5 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)
Nine Months Ended September
30,
2023
2022
Change
NET SALES
$
10,928
$
10,761
2
%
COST OF SALES
7,425
7,083
5
%
GROSS MARGIN
3,503
3,678
(5
)%
% of Net Sales
32.1
%
34.2
%
(2.1 pts)
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES
2,961
2,958
0
%
% of Net Sales
27.1
%
27.5
%
(0.4 pts)
RESEARCH AND DEVELOPMENT
EXPENSES
495
448
10
%
% of Net Sales
4.5
%
4.2
%
0.3 pts
GOODWILL IMPAIRMENTS
—
2,785
NM
OTHER OPERATING INCOME, NET
(14
)
20
NM
OPERATING INCOME (LOSS)
61
(2,533
)
NM
% of Net Sales
0.6
%
(23.5
)%
24.1 pts
INTEREST EXPENSE, NET
369
278
33
%
OTHER (INCOME) EXPENSE, NET
33
1
NM
LOSS FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES
(341
)
(2,812
)
(88
)%
INCOME TAX EXPENSE
(199
)
(14
)
NM
% of Income (Loss) from Continuing
Operations Before Income Taxes
58.4
%
0.5
%
(57.9 pts)
LOSS FROM CONTINUING OPERATIONS
(142
)
(2,798
)
NM
INCOME FROM DISCONTINUED OPERATIONS,
NET OF TAX
2,559
192
NM
NET INCOME (LOSS)
2,417
(2,606
)
NM
NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
6
8
(25
)%
NET INCOME (LOSS) ATTRIBUTABLE TO
BAXTER STOCKHOLDERS
$
2,411
$
(2,614
)
NM
INCOME (LOSS) FROM CONTINUING
OPERATIONS PER COMMON SHARE
Basic
$
(0.29
)
$
(5.58
)
(95
)%
Diluted
$
(0.29
)
$
(5.58
)
(95
)%
INCOME FROM DISCONTINUED OPERATIONS PER
COMMON SHARE
Basic
$
5.06
$
0.38
NM
Diluted
$
5.06
$
0.38
NM
NET INCOME (LOSS) PER COMMON
SHARE
Basic
$
4.76
$
(5.20
)
NM
Diluted
$
4.76
$
(5.20
)
NM
WEIGHTED-AVERAGE NUMBER OF SHARES
OUTSTANDING
Basic
506
503
Diluted
506
503
ADJUSTED OPERATING INCOME (excluding
special items)¹
$
1,493
$
1,683
(11
)%
ADJUSTED INCOME (LOSS) FROM CONTINUING
OPERATIONS (excluding special items)¹
$
878
$
1,149
(24
)%
ADJUSTED INCOME FROM DISCONTINUED
OPERATIONS (excluding special items)1
$
175
$
187
(6
)%
ADJUSTED NET INCOME ATTRIBUTABLE TO
BAXTER STOCKHOLDERS (excluding special items)¹
$
1,047
$
1,328
(21
)%
ADJUSTED DILUTED EPS FROM CONTINUING
OPERATIONS (excluding special items)1
$
1.72
$
2.25
(24
)%
ADJUSTED DILUTED EPS FROM DISCONTINUED
OPERATIONS (excluding special items)1
$
0.35
$
0.37
(5
)%
ADJUSTED DILUTED EPS (excluding special
items)¹
$
2.07
$
2.61
(21
)%
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
nine months ended September 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 (Benefit)
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
$
3,503
$
2,961
$
495
$
(14
)
$
61
$
33
$
(341
)
$
(199
)
$
(142
)
$
2,559
$
2,417
$
2,411
$
(0.29
)
$
5.06
$
4.76
Reported percent of net sales (or
effective tax rate for income tax expense)
32.1
%
27.1
%
4.5
%
(0.1
)%
0.6
%
0.3
%
(3.1
)%
58.4
%
(1.3
)%
23.4
%
22.1
%
22.1
%
Intangible asset amortization1
326
(155
)
—
—
481
—
481
106
375
—
375
375
0.74
0.00
0.74
Business optimization items2
327
(169
)
(12
)
—
508
—
508
92
416
1
417
417
0.82
0.00
0.82
Acquisition and integration items3
1
(15
)
—
14
2
—
2
1
1
—
1
1
0.00
0.00
0.00
Separation-related costs4
15
(108
)
—
—
123
—
123
—
123
19
142
142
0.24
0.04
0.28
European medical devices regulation5
38
—
—
—
38
—
38
11
27
—
27
27
0.05
0.00
0.05
Investment Impairments6
—
—
—
—
—
(20
)
20
5
15
—
15
15
0.03
0.00
0.03
Legal matters7
—
(13
)
—
—
13
—
13
3
10
—
10
10
0.02
0.00
0.02
Long-lived asset impairments8
267
—
—
—
267
—
267
62
205
—
205
205
0.40
0.00
0.40
Gain on BPS Sale9
—
—
—
—
—
—
—
—
—
(2,603
)
(2,603
)
(2,603
)
0.00
(5.13
)
(5.13
)
Tax Matters15
—
—
—
—
—
—
—
152
(152
)
199
47
47
(0.30
)
0.39
0.09
Adjusted
$
4,477
$
2,501
$
483
$
—
$
1,493
$
13
$
1,111
$
233
$
878
$
175
$
1,053
$
1,047
$
1.72
$
0.35
$
2.07
Adjusted percent of net sales (or
effective tax rate for income tax expense)
41.0
%
22.9
%
4.4
%
0.0
%
13.7
%
0.1
%
10.2
%
21.0
%
8.0
%
1.6
%
9.6
%
9.6
%
Reported
Adjusted
Income (loss) from continuing
operations
$
(142
)
$
878
Less: Net income attributable to
noncontrolling interests
6
6
Income (loss) from continuing operations
attributable to Baxter stockholders
$
(148
)
$
872
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
nine months ended September 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
Goodwill Impairment
Other Operating Expense, Net
Operating Income (Loss)
Other (Income) Expense, Net
Income (Loss) From Continuing
Operations Before Income Taxes
Income Tax Expense (Benefit)
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
$
3,678
$
2,958
$
448
$
2,785
$
20
$
(2,533
)
$
1
$
(2,812
)
$
(14
)
$
(2,798
)
$
192
$
(2,606
)
$
(2,614
)
$
(5.58
)
$
0.38
$
(5.20
)
Reported percent of net sales (or
effective tax rate for income tax expense)
34.2
%
27.5
%
4.2
%
25.9
%
0.2
%
(23.5
)%
0.0
%
(26.1
)%
0.5
%
(26.0
)%
1.8
%
(24.2
)%
(24.3
)%
Intangible asset amortization1
344
(234
)
—
—
—
578
—
578
137
441
—
441
441
0.87
0.00
0.87
Business optimization items2
21
(171
)
(4
)
—
—
196
—
196
52
144
—
144
144
0.28
0.00
0.28
Acquisition and integration items3
171
(55
)
(1
)
—
34
193
—
193
36
157
—
157
157
0.31
0.00
0.31
European medical devices regulation5
35
—
—
—
—
35
—
35
8
27
—
27
27
0.05
0.00
0.05
Product-related items10
43
—
—
—
—
43
—
43
5
38
—
38
38
0.07
0.00
0.07
Pension curtailment11
—
—
—
—
—
—
11
(11
)
(2
)
(9
)
—
(9
)
(9
)
(0.02
)
0.00
(0.02
)
Long-lived asset impairments8
332
—
—
—
332
—
332
78
254
—
254
254
0.50
0.00
0.50
Goodwill impairments11
—
—
—
(2,785
)
—
2,785
—
2,785
—
2,785
—
2,785
2,785
5.48
0.00
5.48
Loss on product divestiture
arrangement13
—
—
—
—
(54
)
54
—
54
14
40
—
40
40
0.08
0.00
0.08
Reclassification of cumulative translation
loss to earnings14
—
—
—
—
—
—
(65
)
65
—
65
—
65
65
0.13
0.00
0.13
Tax matters15
—
—
—
—
—
—
—
—
(5
)
5
(5
)
—
—
0.01
(0.01
)
0.00
Adjusted
$
4,624
$
2,498
$
443
$
—
$
—
$
1,683
$
(53
)
$
1,458
$
309
$
1,149
$
187
$
1,336
$
1,328
2.25
0.37
2.62
Adjusted percent of net sales (or
effective tax rate for income tax expense)
43.0
%
23.2
%
4.1
%
0.0
%
0.0
%
15.6
%
(0.5
)%
13.5
%
21.2
%
10.7
%
1.7
%
12.4
%
12.3
%
Reported
Adjusted
Income (loss) from continuing
operations
$
(2,798
)
$
1,149
Less: Net income attributable to
noncontrolling interests
8
8
Income (loss) from continuing operations
attributable to Baxter stockholders
$
(2,806
)
$
1,141
Weighted-average diluted shares as
reported
503
Effect of dilutive securities that were
anti-dilutive to dilutive EPS as reported
5
Weighted-average diluted shares as
adjusted
508
1
The company’s results in 2023 and 2022
included intangible asset amortization expense of $481 million
($375 million, or $0.74 per diluted share, on an after-tax basis)
and $578 million ($441 million, or $0.87 per diluted share, on an
after-tax basis), respectively.
2
The company’s results in 2023 and 2022
included charges of $508 million ($416 million, or $0.82 per
diluted share, on an after-tax basis) and $196 million ($144
million, or $0.28 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
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
The company's results in 2023 included a
$2 million ($1 million, or $0.00 per diluted share, on an after-tax
basis) of acquisition and integration-related expenses. That amount
included $16 million of costs related to its integration of
Hillrom, partially offset by a $14 million benefit from changes in
the estimated fair values of contingent consideration liabilities.
The company’s results in 2022 included $193 million ($157 million,
or $0.31 per diluted share, on an after-tax basis) of acquisition
and integration-related expenses. That amount includes $227 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 $34 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 $123 million ($123 million, or
$0.24 per diluted share, on an after-tax basis) of
separation-related costs. This amount includes costs of external
advisors supporting its activities to prepare for the proposed
spinoff of its Kidney Care segment, which are reported in
continuing operations. The company's results of discontinued
operations in 2023 included $19 million ($19 million, or $0.04 per
diluted share, on an after-tax basis) of separation-related costs
related to the sale of its BioPharma Solutions (BPS) business.
5
The company’s results in 2023 and 2022
included costs of $38 million ($27 million, or $0.05 per diluted
share, on an after-tax basis) and $35 million ($27 million, or
$0.05 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 of continuing
operations in 2023 included costs, including associated legal fees,
of $13 million ($10 million, or $0.02 per diluted share, on an
after-tax basis) are related to matters involving alleged
violations of the False Claims Act related to a now-discontinued
legacy Hillrom sales line, and alleged injury from environmental
exposure.
8
The company's results in 2023 included
long-lived asset impairment charges of $267 million ($205 million,
or $0.40 per diluted share, on an after-tax basis) related to the
Hemodialysis business within its Kidney Care segment. The company's
results in 2022 included charges of $332 million ($254 million, or
$0.50 per diluted share, on an after-tax basis) related to
indefinite-lived intangible asset impairments.
9
The company's results of discontinued
operations in 2023 included a gain of $2.89 billion ($2.60 billion,
or $5.13 per diluted share, on an after-tax basis) from the sale of
its BPS business.
10
The company's results in 2022 included
charges of $43 million ($38 million, or $0.07 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.
11
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.
12
The company's results in 2022 included
charges of $2.79 billion ($2.79 billion, or $5.48 per diluted
share, on an after-tax basis) related to goodwill and
indefinite-lived intangible asset impairments.
13
The company's results in 2022 included a
loss of $54 million ($40 million, or $0.08 per diluted share, on an
after-tax basis) related to an arrangement to divest certain
product rights for an amount that is less than the cost of those
product rights which was triggered by U.S. and European Union
regulatory approvals of the related products.
14
The company's results in 2022 included a
charge of $65 million ($65 million, or $0.13 per diluted share, on
an after-tax basis) related to cumulative translation adjustments
reclassified from accumulated other comprehensive income (loss) as
a result of the substantial liquidation of its operations in
Argentina.
15
The company's results of continuing
operations in 2023 included tax expense items totaling $152 million
($0.30 per diluted share), primarily comprised of a $199 million
reallocation of income tax expense between discontinued operations
and continuing operations resulting from the application of
intraperiod tax allocation to the company’s adjusted results. That
item was partially offset by 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 and $17 million of separation-related tax costs. The
company's results of continuing operations in 2022 included a $5
million reallocation of income taxes between continuing operations
and discontinued operations resulting from the application of
intraperiod tax allocation to the company's adjusted results.
For more information on the company's use of non-GAAP financial
measures, please see the Non-GAAP Financial Measures section of
this press release.
BAXTER INTERNATIONAL INC. Sales by
Operating Segment (unaudited) ($ in millions)
The Medical Products and Therapies segment includes sales of our
sterile IV solutions, infusion systems, administration sets,
parenteral nutrition therapies and surgical hemostat, sealant and
adhesion prevention products. The Healthcare Systems and
Technologies segment includes sales of our connected care solutions
and collaboration tools, including smart bed systems, patient
monitoring systems and diagnostic technologies, respiratory health
devices and advanced equipment for the surgical space, including
surgical video technologies, precision positioning devices and
other accessories. The Pharmaceuticals segment includes sales of
specialty injectable pharmaceuticals, inhaled anesthesia and drug
compounding. The Kidney Care segment includes sales of chronic and
acute dialysis therapies and services, including peritoneal
dialysis, hemodialysis, continuous renal replacement therapies
(CRRT) and other organ support therapies. Other sales not allocated
to a segment primarily include sales of products and services
provided directly through certain of our manufacturing
facilities.
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
% Growth @ Actual
Rates
% Growth @ Constant
Rates
2023
2022
% Growth @ Actual
Rates
% Growth @ Constant
Rates
Infusion Therapies and Technologies
$
1,003
$
956
5
%
4
%
$
2,918
$
2,829
3
%
4
%
Advanced Surgery
255
247
3
%
3
%
773
738
5
%
6
%
Medical Products and Therapies
1,258
1,203
5
%
4
%
3,691
3,567
3
%
4
%
Care and Connectivity Solutions
443
456
(3
)%
(4
)%
1,307
1,350
(3
)%
(3
)%
Front Line Care
301
279
8
%
8
%
911
855
7
%
7
%
Healthcare Systems and Technologies
744
735
1
%
0
%
2,218
2,205
1
%
1
%
Injectables and Anesthesia
351
325
8
%
7
%
987
961
3
%
4
%
Drug Compounding
229
200
15
%
13
%
665
613
8
%
12
%
Pharmaceuticals
580
525
10
%
9
%
1,652
1,574
5
%
7
%
Chronic Therapies
921
934
(1
)%
(3
)%
2,730
2,744
(1
)%
1
%
Acute Therapies
188
166
13
%
12
%
564
542
4
%
6
%
Kidney Care
1,109
1,100
1
%
0
%
3,294
3,286
0
%
2
%
Other
17
46
(60
)%
(61
)%
73
129
(43
)%
(46
)%
Total - Continuing Operations
$
3,708
$
3,609
3
%
2
%
$
10,928
$
10,761
2
%
3
%
In connection with our segment change in
the third quarter of 2023, we made the following reclassifications
of prior period sales amounts to conform to the current period
presentation. We reclassified $16 million of sales from the first
half of 2023 and $8 million and $23 million for the three and nine
months ended September 30, 2022, respectively, from Chronic
Therapies to Acute Therapies. Additionally, in connection with the
reclassification of our BPS business to discontinued operations
during the second quarter of 2023, we reclassified $2 million of
contract manufacturing revenues from the first quarter of 2023 and
$8 million and $26 million for the three and nine months ended
September 30, 2022, respectively, from BPS to Other (within
continuing operations), as the related manufacturing facility was
not part of that divestiture transaction.
Constant currency growth is a non-GAAP measure. For more
information on the company’s use of non-GAAP financial measures,
please see the Non-GAAP Financial Measures section of this press
release.
BAXTER INTERNATIONAL
INC.
Segment Operating
Income
(unaudited)
($ in millions)
Three months ended September
30,
Nine months ended September
30,
(in millions)
2023
2022
2023
2022
Medical Products and Therapies
$
245
$
257
$
706
$
703
% of Segment Net Sales
19.5
%
21.4
%
19.1
%
19.7
%
Healthcare Systems and Technologies
115
108
327
367
% of Segment Net Sales
15.5
%
14.7
%
14.7
%
16.6
%
Pharmaceuticals
108
82
284
295
% of Segment Net Sales
18.6
%
15.6
%
17.2
%
18.7
%
Kidney Care
96
103
208
307
% of Segment Net Sales
8.7
%
9.4
%
6.3
%
9.3
%
Other
6
17
19
52
Total
570
567
1,544
1,724
Unallocated corporate costs
(5
)
1
(51
)
(41
)
Intangible asset amortization expense
(162
)
(168
)
(481
)
(578
)
Long-lived asset impairments
(267
)
(332
)
(267
)
(332
)
Legal matters
(13
)
—
(13
)
—
Goodwill impairments
—
(2,785
)
—
(2,785
)
Business optimization items
(81
)
(73
)
(508
)
(196
)
Acquisition and integration items
(2
)
(4
)
(2
)
(193
)
Loss on product divestiture
arrangement
—
(54
)
—
(54
)
Divestiture-related costs
(77
)
—
(123
)
—
European Medical Devices Regulation
(14
)
(12
)
(38
)
(35
)
Product-related items
—
(20
)
—
(43
)
Total operating income (loss)
(51
)
(2,880
)
61
(2,533
)
Interest expense, net
128
104
369
278
Other (income) expense, net
(7
)
61
33
1
Loss from continuing operations before
income taxes
$
(172
)
$
(3,045
)
$
(341
)
$
(2,812
)
BAXTER INTERNATIONAL
INC.
Operating Segment Sales by
U.S. and International
(unaudited)
($ in millions)
Three Months Ended September
30,
2023
2022
% Growth
U.S.
International
Total
U.S.
International
Total
U.S.
International
Total
Infusion Therapies and Technologies
$
570
$
433
$
1,003
$
567
$
389
$
956
1
%
11
%
5
%
Advanced Surgery
139
116
255
141
106
247
(1
)%
9
%
3
%
Medical Products and Therapies
709
549
1,258
708
495
1,203
0
%
11
%
5
%
Care and Connectivity Solutions
317
126
443
339
117
456
(6
)%
8
%
(3
)%
Front Line Care
234
67
301
209
70
279
12
%
(4
)%
8
%
Healthcare Systems and Technologies
551
193
744
548
187
735
1
%
3
%
1
%
Injectables and Anesthesia
195
156
351
173
152
325
13
%
3
%
8
%
Drug Compounding
—
229
229
—
200
200
0
%
15
%
15
%
Pharmaceuticals
195
385
580
173
352
525
13
%
9
%
10
%
Chronic Therapies
233
688
921
236
698
934
(1
)%
(1
)%
(1
)%
Acute Therapies
66
122
188
57
109
166
16
%
12
%
13
%
Kidney Care
299
810
1,109
293
807
1,100
2
%
0
%
1
%
Other
12
5
17
36
10
46
(67
)%
(50
)%
(63
)%
Total - Continuing Operations
$
1,766
$
1,942
$
3,708
$
1,758
$
1,851
$
3,609
0
%
5
%
3
%
BAXTER INTERNATIONAL
INC.
Operating Segment Sales by
U.S. and International
(unaudited)
($ in millions)
Nine Months Ended September
30,
2023
2022
% Growth
U.S.
International
Total
U.S.
International
Total
U.S.
International
Total
Infusion Therapies and Technologies
$
1,654
$
1,264
$
2,918
$
1,672
$
1,157
$
2,829
(1
)%
9
%
3
%
Advanced Surgery
433
340
773
428
310
738
1
%
10
%
5
%
Medical Products and Therapies
2,087
1,604
3,691
2,100
1,467
3,567
(1
)%
9
%
3
%
Care and Connectivity Solutions
926
381
1,307
991
359
1,350
(7
)%
6
%
(3
)%
Front Line Care
681
230
911
618
237
855
10
%
(3
)%
7
%
Healthcare Systems and Technologies
1,607
611
2,218
1,609
596
2,205
(0
)%
3
%
1
%
Injectables and Anesthesia
550
437
987
494
467
961
11
%
(6
)%
3
%
Drug Compounding
—
665
665
—
613
613
0
%
8
%
8
%
Pharmaceuticals
550
1,102
1,652
494
1,080
1,574
11
%
2
%
5
%
Chronic Therapies
689
2,041
2,730
675
2,069
2,744
2
%
(1
)%
(1
)%
Acute Therapies
194
370
564
194
348
542
0
%
5
%
4
%
Kidney Care
883
2,411
3,294
869
2,417
3,286
2
%
(0
)%
0
%
Other
56
17
73
98
31
129
(43
)%
(45
)%
(43
)%
Total - Continuing Operations
$
5,183
$
5,745
$
10,928
$
5,170
$
5,591
$
10,761
0
%
3
%
2
%
BAXTER INTERNATIONAL
INC.
Reconciliation of Non-GAAP
Financial Measure
Operating Cash Flow to Free
Cash Flow
(unaudited)
($ in millions)
Nine Months Ended September
30,
2023
2022
Cash flows from operations – continuing
operations
$
1,097
$
594
Cash flows from investing activities -
continuing operations
(489
)
(634
)
Cash flows from financing activities -
continuing operations
(554
)
(1,319
)
Cash flows from operations - continuing
operations
$
1,097
$
594
Capital expenditures - continuing
operations
(502
)
(438
)
Free cash flow - continuing
operations
$
595
$
156
Nine Months Ended September
30,
2023
2022
Cash flows from operations – discontinued
operations
$
98
178
Cash flows from investing activities -
discontinued operations
3,932
(41
)
Cash flows from operations - discontinued
operations
$
98
$
178
Capital expenditures - discontinued
operations
(27
)
(41
)
Free cash flow - discontinued
operations
$
71
$
137
Nine Months Ended September
30,
2023
2022
Cash flows from operations – Total
Baxter
$
1,195
$
772
Cash flows from investing activities -
Total Baxter
3,443
(675
)
Cash flows from financing activities -
Total Baxter
(554
)
(1,319
)
Cash flows from operations - Total
Baxter
$
1,195
$
772
Capital expenditures - Total Baxter
(529
)
(479
)
Free cash flow - Total Baxter
$
666
$
293
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
September 30, 2022 to The Three Months Ended September 30,
2023
(unaudited)
Net Sales Growth
As Reported
FX
Constant Currency Sales
Growth*
Infusion Therapies and Technologies
5
%
(1
)%
4
%
Advanced Surgery
3
%
0
%
3
%
Medical Products and Therapies
5
%
(1
)%
4
%
Care and Connectivity Solutions
(3
)%
(1
)%
(4
)%
Front Line Care
8
%
(0
)%
8
%
Healthcare Systems and
Technologies
1
%
(1
)%
0
%
Injectables and Anesthesia
8
%
(1
)%
7
%
Drug Compounding
15
%
(2
)%
13
%
Pharmaceuticals
10
%
(1
)%
9
%
Chronic Therapies
(1
)%
(2
)%
(3
)%
Acute Therapies
13
%
(1
)%
12
%
Kidney Care
1
%
(1
)%
0
%
Other
(63
)%
2
%
(61
)%
Total - Continuing Operations
3
%
(1
)%
2
%
Discontinued Operations
16
%
(5
)%
11
%
Total - Continuing and Discontinued
Operations
3
%
(1
)%
2
%
U.S. - Continuing Operations
0
%
0
%
0
%
U.S. - Discontinued Operations
(13
)%
0
%
(13
)%
U.S. Total - Continuing and Discontinued
Operations
0
%
0
%
0
%
International - Continuing Operations
5
%
(2
)%
3
%
International - Discontinued
Operations
53
%
(12
)%
41
%
International Total - Continuing and
Discontinued Operations
7
%
(3
)%
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 Nine Months Ended
September 30, 2022 to The Nine Months Ended September 30,
2023
(unaudited)
Net Sales Growth
As Reported
FX
Constant Currency Sales
Growth*
Infusion Therapies and Technologies
3
%
1
%
4
%
Advanced Surgery
5
%
1
%
6
%
Medical Products and Therapies
3
%
1
%
4
%
Care and Connectivity Solutions
(3
)%
0
%
(3
)%
Front Line Care
7
%
0
%
7
%
Healthcare Systems and
Technologies
1
%
0
%
1
%
Injectables and Anesthesia
3
%
1
%
4
%
Drug Compounding
8
%
4
%
12
%
Pharmaceuticals
5
%
2
%
7
%
Chronic Therapies
(1
)%
2
%
1
%
Acute Therapies
4
%
2
%
6
%
Kidney Care
0
%
2
%
2
%
Other
(43
)%
(3
)%
(46
)%
Total - Continuing Operations
2
%
1
%
3
%
Discontinued Operations
1
%
(1
)%
0
%
Total - Continuing and Discontinued
Operations
2
%
0
%
2
%
U.S. - Continuing Operations
0
%
0
%
0
%
U.S. - Discontinued Operations
6
%
0
%
6
%
U.S. Total - Continuing and Discontinued
Operations
0
%
0
%
0
%
International - Continuing Operations
3
%
2
%
5
%
International - Discontinued
Operations
(3
)%
(2
)%
(5
)%
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 Measures
Projected Fourth Quarter and
Full Year 2023 Continuing Operations U.S. GAAP Sales Growth to
Projected Continuing Operations Constant Currency Sales Growth and
Projected Fourth Quarter and Full Year 2023 Adjusted Earnings Per
Share
(unaudited)
Sales Growth Guidance**
Q4 2023
FY 2023*
Continuing operations sales growth - U.S.
GAAP
1 - 2%
1 - 2%
Foreign Exchange
~(0.5)%
~ 0.5%
Continuing operations sales growth -
Constant currency
~ 1%
~ 2%
Adjusted Earnings Per Share
Guidance
Q4 2023
FY 2023
Adjusted diluted EPS - Continuing
operations
$0.85 - $0.88
$2.57 - $2.60
*Totals may not foot due to
rounding
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 provides useful information for the reasons noted
in the accompanying release. Baxter has not provided
reconciliations of forward-looking adjusted EPS guidance to
forward-looking GAAP EPS guidance because the company is unable to
predict with reasonable certainty the impact of legal proceedings,
future business optimization actions, separation-related costs,
integration-related costs, asset impairments and unusual gains and
losses, and the related amounts are 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/20231031561228/en/
Media Contact Steve Brett, (224) 948-5353
media@baxter.com
Investor Contact Clare Trachtman, (224) 948-3020
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