Baxter reports Q4 and full-year 2023 results

Baxter International Inc. reported results for the fourth quarter and full year ended Dec. 31, 2023, and provided its financial guidance for full-year and first-quarter 2024.

“Baxter’s performance in 2023 reflects our building momentum as we executed upon several strategic initiatives designed to enhance our future performance, including the implementation of a new operating model, the sale of our BioPharma Solutions business and steady progress on the proposed separation of our Kidney Care segment,” said José (Joe) E. Almeida, chair, president and chief executive officer. “Results for the fourth quarter and full year reflect solid demand for a range of our medically essential products, as well as continued improvement in the macroeconomic and supply chain environment. We plan to build on this momentum in 2024 as our dedicated employees work to advance Baxter’s ongoing business transformation and prepare for the proposed separation of our Kidney Care segment.”

Fourth-quarter financial results
Worldwide sales from continuing operations in the fourth quarter totaled approximately $3.89 billion, an increase of 4% on a reported basis and 3% on a constant currency basis. Continuing operations exclude Baxter’s BioPharma Solutions (BPS) business, which was acquired by Advent International and Warburg Pincus at the close of the third quarter of 2023.

U.S. sales from continuing operations in the fourth quarter totaled approximately $1.82 billion, increasing 2% on a reported basis. International sales from continuing operations in the fourth quarter totaled approximately $2.07 billion, an increase of 6% on a reported basis and 4% at constant currency rates.

Fourth-quarter sales performance exceeded Baxter’s previously announced guidance, driven by better-than-expected sales in the company’s Medical Products and Therapies, Kidney Care and Pharmaceuticals segments. Sales growth in the quarter was driven by strong performance in the Healthcare Systems and Technologies segment, reflecting strength in Care and Connectivity Solutions, as well as increased demand for Medical Products and Therapies and Pharmaceuticals products. Growth in the quarter was partially offset by a decline in Kidney Care sales, reflecting a difficult comparison to the prior year period due in part to certain discrete items that benefited the prior year as well as the impact of lower sales in select markets outside of 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 fourth quarter, total net income attributable to Baxter on a U.S. GAAP (Generally Accepted Accounting Principles) basis was $245 million, or $0.48 per diluted share. Total U.S. GAAP diluted EPS includes $0.14 from continuing operations and $0.34 from discontinued operations. These results include special items totaling $189 million, primarily related to the impact of intangible amortization, tax matters, separation-related costs and investment impairments, among other factors. On an adjusted basis, income from continuing operations was $0.88 per diluted share.

Full-year financial results
Baxter’s 2023 worldwide sales from continuing operations totaled $14.81 billion, an increase of 2% on a reported basis and 3% on a constant currency basis. Sales from continuing operations in the U.S. totaled $7.00 billion, growing 1% on a reported basis. International sales from continuing operations of $7.81 billion grew 3% on a reported basis and 4% at constant currency rates. The accompanying schedules include additional details on sales performance, including breakouts by Baxter’s segments.

For full-year 2023, net income attributable to Baxter on a U.S. GAAP basis totaled $2.66 billion, or $5.25 per diluted share. Total U.S. GAAP diluted EPS (loss) includes ($0.15) from continuing operations and $5.40 from discontinued operations. These results include special items totaling $1.18 billion after-tax, which primarily reflected the gain on the divestiture of Baxter’s BPS business offset by intangible amortization and business optimization costs, among other items. On an adjusted basis, 2023 income from continuing operations totaled $2.60 per diluted share. Total adjusted net income attributable to Baxter totaled $1.48 billion or $2.92 per diluted share, which included earnings of $0.32 from discontinued operations.

For the full year, Baxter generated $1.70 billion in operating cash flow from continuing operations and $1.01 billion in free cash flow (operating cash flow from continuing operations less capital expenditures of $692 million).

“Consistent with our focus on advancing Baxter’s transformation journey and creating value for our stakeholders, we made significant progress in 2023 in line with our capital allocation priorities,” said Joel Grade, executive vice president and chief financial officer. “Most notably, net after-tax proceeds from the sale of our BioPharma Solutions business were allocated towards debt repayment. During 2024, we will remain focused on deleveraging while also significantly enhancing our focus on cash flow generation.”

Kidney Care separation update
Baxter’s preparations are progressing for the proposed separation of its Kidney Care segment into a standalone company to be named Vantive. As a standalone entity, Vantive is expected to benefit from a heightened strategic focus and the ability to pursue its unique investment priorities, to emerge better positioned to accelerate growth and innovation, and to create incremental value for its patients, clinicians, investors, and other stakeholder communities.

Chris Toth, executive vice president and group president, Kidney Care, and designated chief executive officer of Vantive, continues to build out his senior management team. Recently, he named Matt Harbaugh as vice president, Finance, Kidney Care and designated chief financial officer of Vantive. Harbaugh was previously chief financial officer at NuVasive Inc.

Healthcare systems and technologies

• 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 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 continue launching Progressa+ in additional global markets in 2024.
• Commercially launched the new Baxter Patient Warming System, which minimizes risks associated with forced air warming, reduces noise and waste in the operating room, and lessens the burden on clinician workflows. The updated system eliminates the need for disposables, as the warming technology is built into the table pad and employs reusable conductive warming blankets that can reach temperatures of 43 degrees Celsius.
• 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. SpotConnect helps streamline clinical workflows through secure EMR connectivity and allows access to screening results across the care team.
• Introduced the ReadyConnect System for Baxter’s Centrella Smart+ Bed. This innovative system delivers reliable, cable-free connectivity between the hospital bed and most nurse call systems on the market, and requires no wireless network, incremental server software licenses, or other IT resources from the customer.

Medical products and therapies

• Announced the FDA Premarket Approval and subsequent U.S. launch of 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.
• Launched Floseal + Recothrom, the first and only active flowable hemostat with a recombinant thrombin, resulting in 1.5 times faster preparation. Floseal + Recothrom has a thrombin component manufactured using recombinant DNA technology, and therefore contains no human blood components, eliminating reliance on human blood donations.
• Advanced its intravenous (IV) bag recycling program pilot in the U.S. in conjunction with Chicago’s Northwestern Memorial Hospital, successfully demonstrating proof of concept with more than six tons of plastic IV bag waste diverted from landfill. Baxter is now expanding the pilot program to support scalability.

Pharmaceuticals

• Launched ZOSYN (piperacillin and tazobactam) in the U.S. Zosyn premix is indicated for the treatment of multiple infections caused by susceptible bacteria and is available in Baxter’s proprietary single-dose Galaxy containers, which enable premixed medications to have a longer shelf life. Its frozen premix formulation helps support patient safety, simplify medication preparation and improve operational efficiencies.
• Launched a range of additional injectable pharmaceutical molecules, including the anti-infective daptomycin premix, antiviral foscarnet premix, oncolytic bendamustine and anti-hypertensive norepinephrine in the U.S., and the anti-infective vancomycin in Australia. Collectively, these injectables reinforce Baxter’s focus on differentiated molecules and expand the Pharmaceuticals segment portfolio in critical therapeutic areas.

Kidney Care

• Announced new data at Kidney Week indicating Baxter’s Sharesource remote patient management digital platform, when used with an automated peritoneal dialysis (PD) system, is associated with a 77% reduction in the risk of PD technique failure.
• Announced a collaborative research agreement with life sciences company Miromatrix to help support additional treatment options for patients with acute liver failure.

2024 financial outlook
For full-year 2024: Baxter expects sales growth of approximately 2% on both a reported and constant currency basis. The company expects adjusted earnings, before special items, of $2.85 to $2.95 per diluted share.

For first-quarter 2024: The company expects sales growth of approximately 1% on a reported basis and 1% to 2% on a constant currency basis. The company expects adjusted earnings, before special items, of $0.59 to $0.62 per diluted share.
MB Bureau