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Baxter International Inc. (BAX - Free Report) reported first-quarter 2018 adjusted earnings per share of 70 cents, which beat the Zacks Consensus Estimate by 12.9% and improved from the year-ago quarter’s figure of 58 cents.
The figure came above the company’s guidance of 60-62 cents. In the last four quarters, the company delivered positive earnings surprises, the average being 10.3%.
Baxter posted sales of $2.68 billion, edging past the Zacks Consensus Estimate of $2.62 billion. At constant currency (cc), revenues rose 4% on a year-over-year basis.
Baxter has a Zacks Rank #2 (Buy). The company has outperformed its industry in a year's time. Baxter’s shares have returned 24.7%, higher than the industry’s rally of roughly 14.7%.
Geographical Details
Baxter reports its operating results based on three reportable geographic segments: Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific).
As a whole, U.S. sales inched up 2% year over year to $1.1 billion on an operational basis. International sales increased 3% to almost $1.5 billion on an operational basis. Strong demand for the company’s continuous renal replacement therapies (“CRRT”), sales of injectable pharmaceuticals, advanced surgery products, U.S. IV solutions and peritoneal dialysis therapies boosted sales worldwide.
In Americas Baxter reported sales of $1.44 billion, up 4% at cc on a year-over-year basis.
In EMEA, Baxter reported sales of $724 million, up 3% at cc on a year-over-year basis.
In APAC, Baxter reported sales of $511 million, up 3% at cc on a year-over-year basis.
Baxter International Inc. Price, Consensus and EPS Surprise
Sales in the segment increased 4% at cc to $868 million on a year-over-year basis.
Renal products sales were supported by improved performance in all major product lines and therapies, globally. Notably, solid performance in chronic and acute renal therapies drove sales in the segment.
Medication Delivery
Sales at the segment were $676 million, remaining constant year over year at cc.
Notably, the segment includes company’s IV therapies, infusion pumps, administration sets and drug reconstitution devices.
Pharmaceuticals
Sales in the segment were $496 million, up 13% year over year at cc.
Notably, Pharmaceuticals include the company’s premixed and oncology drug platforms, inhaled anesthesia as well as critical care products and pharmacy compounding services.
Nutrition
Sales in the segment were $223 million, in line year over year at cc. Notably, the segment includes sales of the company’s parenteral nutrition (PN) therapies.
Advanced Surgery
Sales in the segment were $182 million, up 4% year over year at cc.
The segment includes of the company’s biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention.
In March, Baxter completed the acquisition of two hemostat and sealant products from Mallinckrodt plc to expand its existing surgical portfolio, especially for intraoperative bleeding. Notably, the company bought RECOTHROM Thrombin topical and PREVELEAK Surgical Sealant product lines from Mallinckrodt.
Notably, these developments were not accretive to first-quarter 2018 adjusted earnings. However, Baxter expects the deal to be modestly accretive to its 2018 adjusted earnings.
Acute Therapies
Sales in the segment were $129 million, up 14% year over year at cc.
Sales of the CRRT and other organ support therapies focused in the ICU boosted segmental revenues in the quarter under review.
Other
Sales in the segment were $103 million, down 12% year over year at cc.
Baxter’s pharmaceutical partnering business is included in the segment.
Margin Analysis
Baxter registered gross profit of $1.11 billion in the first quarter, up 7% year over year. As a percentage of revenues, adjusted gross margin contracted 60 basis points (bps) to 43.8% in the first quarter.
Adjusted operating income increased 8% year over year to $448 million in the quarter. As a percentage of revenues, operating margin contracted 10 bps to 16.7% in first-quarter 2018.
Guidance
Baxter raised its financial outlook for 2018.
The company expects sales growth of 5% at cc. It expects adjusted earnings from continuing operations in the range of $2.85-$2.93 per share for the full year.
For the second quarter of 2018, the company expects sales growth of approximately 5% at cc. The company expects adjusted earnings from continuing operations in the band of 69-71 cents.
In Conclusion
Baxter ended the first quarter on a solid note, beating the consensus mark on both the counts. Strong demand for CRRT, sales of injectable pharmaceuticals, advanced surgery products, U.S. IV solutions and peritoneal dialysis therapies boosted sales worldwide.
Latest strategic buyouts of RECOTHORM and PREVELEAK are noteworthy.
Recently, the company got FDA approval of Bivalirudin in 0.9 percent Sodium Chloride Injection.
On the flip side, Baxter expects its pharmaceutical business to be flat on a year-over-year basis in 2018 due to increased competition for select products in the segment. Further, foreign currency headwinds and intense competition have been dampening the company’s performance since long.
Baxter’s cyclophosphamide performance over the last five years lacked luster. Lower cyclophosphamide sales pose threats to the Integrated Pharmacy Solutions franchise business.
Q1 Earnings of MedTech Majors at a Glance
A few other top-ranked stocks in the broader medical space, which reported solid earnings this season are, Laboratory Corporation of America Holdings (LH - Free Report) , Chemed Corporation (CHE - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) . While Intuitive Surgical sports a Zacks Rank #1 (Strong Buy), LabCorp and Chemed carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
LabCorp, reported adjusted earnings of $2.78 per share, beating the Zacks Consensus Estimate by 5.3%. Revenues were $2.85 billion, exceeding the Zacks Consensus Estimate of $2.78 billion.
Chemed posted adjusted earnings of $2.72 per share, outpacing the Zacks Consensus Estimate of $2.37. Revenues came in at $439.2 million, beating the Zacks Consensus Estimate of $420 million.
Intuitive Surgical reported adjusted earnings of $2.44 per share, which surpassed the Zacks Consensus Estimate by 22.6%. Revenues totaled $848 million, also surpassing the Zacks Consensus Estimate by 10.6%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Baxter (BAX) Beats on Q1 Earnings & Revenues, Raises '18 View
Baxter International Inc. (BAX - Free Report) reported first-quarter 2018 adjusted earnings per share of 70 cents, which beat the Zacks Consensus Estimate by 12.9% and improved from the year-ago quarter’s figure of 58 cents.
The figure came above the company’s guidance of 60-62 cents. In the last four quarters, the company delivered positive earnings surprises, the average being 10.3%.
Baxter posted sales of $2.68 billion, edging past the Zacks Consensus Estimate of $2.62 billion. At constant currency (cc), revenues rose 4% on a year-over-year basis.
Baxter has a Zacks Rank #2 (Buy). The company has outperformed its industry in a year's time. Baxter’s shares have returned 24.7%, higher than the industry’s rally of roughly 14.7%.
Geographical Details
Baxter reports its operating results based on three reportable geographic segments: Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific).
As a whole, U.S. sales inched up 2% year over year to $1.1 billion on an operational basis. International sales increased 3% to almost $1.5 billion on an operational basis. Strong demand for the company’s continuous renal replacement therapies (“CRRT”), sales of injectable pharmaceuticals, advanced surgery products, U.S. IV solutions and peritoneal dialysis therapies boosted sales worldwide.
In Americas Baxter reported sales of $1.44 billion, up 4% at cc on a year-over-year basis.
In EMEA, Baxter reported sales of $724 million, up 3% at cc on a year-over-year basis.
In APAC, Baxter reported sales of $511 million, up 3% at cc on a year-over-year basis.
Baxter International Inc. Price, Consensus and EPS Surprise
Baxter International Inc. Price, Consensus and EPS Surprise | Baxter International Inc. Quote
Segmental Details
Renal Products
Sales in the segment increased 4% at cc to $868 million on a year-over-year basis.
Renal products sales were supported by improved performance in all major product lines and therapies, globally. Notably, solid performance in chronic and acute renal therapies drove sales in the segment.
Medication Delivery
Sales at the segment were $676 million, remaining constant year over year at cc.
Notably, the segment includes company’s IV therapies, infusion pumps, administration sets and drug reconstitution devices.
Pharmaceuticals
Sales in the segment were $496 million, up 13% year over year at cc.
Notably, Pharmaceuticals include the company’s premixed and oncology drug platforms, inhaled anesthesia as well as critical care products and pharmacy compounding services.
Nutrition
Sales in the segment were $223 million, in line year over year at cc. Notably, the segment includes sales of the company’s parenteral nutrition (PN) therapies.
Advanced Surgery
Sales in the segment were $182 million, up 4% year over year at cc.
The segment includes of the company’s biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention.
In March, Baxter completed the acquisition of two hemostat and sealant products from Mallinckrodt plc to expand its existing surgical portfolio, especially for intraoperative bleeding. Notably, the company bought RECOTHROM Thrombin topical and PREVELEAK Surgical Sealant product lines from Mallinckrodt.
Notably, these developments were not accretive to first-quarter 2018 adjusted earnings. However, Baxter expects the deal to be modestly accretive to its 2018 adjusted earnings.
Acute Therapies
Sales in the segment were $129 million, up 14% year over year at cc.
Sales of the CRRT and other organ support therapies focused in the ICU boosted segmental revenues in the quarter under review.
Other
Sales in the segment were $103 million, down 12% year over year at cc.
Baxter’s pharmaceutical partnering business is included in the segment.
Margin Analysis
Baxter registered gross profit of $1.11 billion in the first quarter, up 7% year over year. As a percentage of revenues, adjusted gross margin contracted 60 basis points (bps) to 43.8% in the first quarter.
Adjusted operating income increased 8% year over year to $448 million in the quarter. As a percentage of revenues, operating margin contracted 10 bps to 16.7% in first-quarter 2018.
Guidance
Baxter raised its financial outlook for 2018.
The company expects sales growth of 5% at cc. It expects adjusted earnings from continuing operations in the range of $2.85-$2.93 per share for the full year.
For the second quarter of 2018, the company expects sales growth of approximately 5% at cc. The company expects adjusted earnings from continuing operations in the band of 69-71 cents.
In Conclusion
Baxter ended the first quarter on a solid note, beating the consensus mark on both the counts. Strong demand for CRRT, sales of injectable pharmaceuticals, advanced surgery products, U.S. IV solutions and peritoneal dialysis therapies boosted sales worldwide.
Latest strategic buyouts of RECOTHORM and PREVELEAK are noteworthy.
Recently, the company got FDA approval of Bivalirudin in 0.9 percent Sodium Chloride Injection.
On the flip side, Baxter expects its pharmaceutical business to be flat on a year-over-year basis in 2018 due to increased competition for select products in the segment. Further, foreign currency headwinds and intense competition have been dampening the company’s performance since long.
Baxter’s cyclophosphamide performance over the last five years lacked luster. Lower cyclophosphamide sales pose threats to the Integrated Pharmacy Solutions franchise business.
Q1 Earnings of MedTech Majors at a Glance
A few other top-ranked stocks in the broader medical space, which reported solid earnings this season are, Laboratory Corporation of America Holdings (LH - Free Report) , Chemed Corporation (CHE - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) . While Intuitive Surgical sports a Zacks Rank #1 (Strong Buy), LabCorp and Chemed carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
LabCorp, reported adjusted earnings of $2.78 per share, beating the Zacks Consensus Estimate by 5.3%. Revenues were $2.85 billion, exceeding the Zacks Consensus Estimate of $2.78 billion.
Chemed posted adjusted earnings of $2.72 per share, outpacing the Zacks Consensus Estimate of $2.37. Revenues came in at $439.2 million, beating the Zacks Consensus Estimate of $420 million.
Intuitive Surgical reported adjusted earnings of $2.44 per share, which surpassed the Zacks Consensus Estimate by 22.6%. Revenues totaled $848 million, also surpassing the Zacks Consensus Estimate by 10.6%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>