Baxter International Inc. today posted solid financial results for the third quarter which met expectations as the company further augmented its portfolio with the acquisition of Gambro AB, and continued to advance its new product pipeline by launching new products, achieving multiple regulatory milestones, and establishing new collaborations. The company also provided guidance for the fourth quarter and confirmed its full-year 2013 financial outlook.
For the third quarter, Baxter reported net income of $544 million and earnings per diluted share of $0.99, compared to net income of $583 million and earnings per diluted share of $1.06 in the same period last year. These results include after-tax special items totaling $111 million (or $0.20 per diluted share), for costs associated with Baxter’s acquisition of Gambro, which was completed in the quarter, increased litigation reserves and payments associated with previously announced collaborations. Third quarter 2012 results included after-tax special items of $45 million (or $0.08 per diluted share).
On an adjusted basis, excluding special items in both periods, Baxter’s net income and earnings per diluted share advanced 4 percent to $655 million, or $1.19 per diluted share, which was in line with the company’s previously-issued earnings guidance.
Worldwide sales totaled $3.8 billion and increased 9 percent from prior-year levels. Excluding the contribution of Gambro revenues, which totaled $100 million, Baxter’s sales increased 6 percent. Foreign currency did not have a material impact on sales growth in the quarter. Sales within the United States exceeded $1.6 billion and advanced 9 percent, and international sales of $2.1 billion also increased 9 percent.
BioScience revenues of $1.6 billion rose 6 percent from the prior-year period driven primarily by improved demand for the company’s hemophilia therapies, including ADVATE [Antihemophilic Factor (Recombinant), Plasma/Albumin-Free Method] and FEIBA (an inhibitor therapy), as well as the benefit from government collaborations and the timing of international tenders.
Medical Products sales of $2.2 billion increased 10 percent from the prior-year period, and includes revenues associated with the Gambro acquisition. Excluding foreign currency and the contribution from the acquisition, Medical Products sales grew 6 percent. This performance was driven by gains in peritoneal dialysis patients, as well as growth of anesthetics and certain injectable therapies, specifically cyclophosphamide, a generic oncology drug.
For the first nine months of 2013, Baxter reported net income of $1.7 billion, or $3.06 per diluted share. Excluding special items in both periods, Baxter’s adjusted net income for the nine-month period increased 3 percent to $1.9 billion, and earnings per diluted share of $3.41 grew 4 percent from $3.27 per diluted share reported in the comparable prior-year period.
Baxter’s worldwide sales for the nine-month period totaled $10.9 billion and rose 4 percent. Excluding the impact of foreign currency and revenues associated with the Gambro acquisition, Baxter’s revenues also increased 4 percent. BioScience sales of $4.8 billion advanced 5 percent (and excluding foreign currency sales increased 6 percent), while Medical Products sales of $6.1 billion grew 4 percent from the prior-year period (and excluding foreign currency sales also increased 4 percent). Excluding foreign currency and revenues associated with the Gambro acquisition, Medical Products sales increased 2 percent on a year-to-date basis.
During the first three quarters of 2013, Baxter generated cash flows from operations of approximately $2.1 billion and returned significant value to shareholders. On a year-to-date basis, Baxter has returned over $1.6 billion to shareholders through share repurchases of $863 million (or approximately 12.4 million shares) and dividends totaling $757 million, reflecting more than a 35 percent increase in dividend payments versus the prior-year period.
”Our global presence and diversified healthcare model, together with the advancements we’ve made to our business portfolio and new product pipeline are focused on driving improved access to care, better outcomes for patients and enhanced value for our shareholders,” said Robert L. Parkinson, Jr., chairman and chief executive officer.
Baxter continued to advance its product pipeline and expand its business portfolio with the achievement of several milestones during the quarter, including:
•Launch of HyQvia as a replacement therapy for adults with primary and secondary immunodeficiencies in Germany. Additional EU market launches are scheduled for the coming months and U.S. regulatory activities remain on track.
•U.S. launch of RIXUBIS [Coagulation Factor IX (Recombinant)] for routine prophylactic treatment, control of bleeding episodes, and perioperative management in adults with hemophilia B. RIXUBIS is the first new recombinant factor IX (rFIX) approved for hemophilia B in more than 15 years and is the only rFIX indicated for both routine prophylaxis and control of bleeding episodes for adult patients living with this chronic condition.
•Continued global expansion of the company’s parenteral nutrition portfolio with the launch of CLINOMEL in China and OLIMEL in Brazil. Baxter also received U.S. Food and Drug Administration approval for its CLINOLIPID, (20% Lipid Injectable Emulsion), an olive oil-based lipid emulsion used in parenteral nutrition, indicated for adults.
•Approval from the EMA to include PK-guided dosing information in ADVATE’s EU label. This information is based on a Phase IV prophylaxis clinical study and offers some patients the option of a dosing schedule of every three days. In the study, PK-guided and standard prophylactic dosing regimens were comparably effective in reducing annual bleeding rates.
•Execution of an exclusive distribution and license agreement between Baxter and JW Holdings for parenteral nutritional products containing a novel formulation of omega 3 lipids. With this collaboration, Baxter will complement its leading global parenteral nutrition portfolio, and provide global commercial capabilities and clinical development.
•Announcement of an exclusive collaboration with Coherus Biosciences to develop and commercialize a biosimilar to etanercept in Europe, Canada, Brazil and other markets.
Outlook for Fourth Quarter and Full-Year 2013
Baxter also announced today its financial outlook for the fourth quarter and confirmed earnings guidance within its previously stated range for the full-year 2013. The company’s guidance for the quarter and the full-year includes the impact of the Gambro acquisition.
For the fourth quarter of 2013, Baxter expects sales growth, excluding the impact of foreign currency, of approximately 14 to 15 percent (or approximately 12 to 13 percent including the impact of foreign currency). This includes Gambro revenues of approximately $400 million. The company projects earnings per diluted share in the fourth quarter of $1.24 to $1.26, before any special items.
For the full-year 2013, Baxter expects sales growth, excluding the impact of currency, of approximately 7 percent (or approximately 6 percent including the impact of foreign currency). Excluding the impact of foreign currency and the Gambro acquisition, Baxter continues to expect sales growth of approximately 4 percent (or approximately 3 percent including the impact of foreign currency). The company expects to generate revenues associated with the Gambro acquisition of approximately $500 million for the full year 2013. In addition, the company expects earnings of $4.65 to $4.67 per diluted share, before any special items, and cash flows from operations of approximately $3.3 billion.