Baxter Exceeds Guidance in Third Quarter with Earnings of $1.01 Per Diluted Share
Company Provides Fourth Quarter and Updated Full-Year 2010 Guidance
DEERFIELD, Ill., October 21, 2010 - Baxter International Inc. (NYSE:BAX) today
announced its financial results for the third quarter of 2010, and provided its fourth
quarter and updated full-year 2010 financial outlook.
Baxter reported net income in the third quarter of $595 million, which
increased 12 percent from $530 million reported in the third quarter of 2009.
Earnings per diluted share of $1.01 advanced 16 percent and exceeded the
company's previously issued earnings guidance of $0.96 to $0.99 per diluted
share. On an adjusted basis, excluding special charges taken in the third quarter
of 2009, Baxter's net income declined 1 percent compared to the prior-year period
and earnings per diluted share increased 3 percent.
"We are pleased with our financial results in the third quarter which
exceeded our guidance," said Robert J. Hombach, chief financial officer. "We
effectively executed on our plans to drive operating margin expansion as a result
of continued momentum in the Medication Delivery business, improvement in the
plasma proteins business, and our disciplined focus on expense management."
Worldwide sales in the third quarter totaled $3.2 billion and increased
3 percent over the same period last year. Excluding the impact of foreign
currency, worldwide sales grew 4 percent. Sales within the United States
increased 4 percent to $1.4 billion and international sales grew 1 percent to
$1.8 billion. Excluding the impact of foreign currency, international sales
increased 4 percent.
By business, BioScience revenues totaled $1.4 billion, which was
comparable to the prior-year period. Excluding the impact of foreign currency,
BioScience sales increased 3 percent reflecting enhanced sequential growth
across the portfolio. Contributing to the improved performance was solid growth
of ADVATE [Antihemophilic Factor (Recombinant), Plasma/Albumin-Free Method]
for the treatment of hemophilia, strong demand for GAMMAGARD LIQUID
[Immune Globulin Intravenous (Human)] (marketed as KIOVIG outside of the
United States) and specialty plasma-based therapeutics such as FEIBA [Anti-
Inhibitor Coagulation Complex] and ARALAST [Alpha1-Proteinase Inhibitor], as
well as biosurgery products.
Medication Delivery sales grew 5 percent to $1.2 billion (or 7 percent
excluding the impact of foreign currency), driven primarily by growth of
intravenous therapies (including the company's parenteral nutrition products),
certain multi-source generic drugs, anesthesia products and sales of the Sigma
SPECTRUM infusion pump. Renal sales of $594 million increased 3 percent (and
increased 3 percent excluding the impact of foreign currency), as the company
continued to post solid gains in peritoneal dialysis patients, particularly in the
United States, Latin America and Asia.
Nine-Month Results
For the first nine months of 2010, Baxter reported net income of $1.1 billion
or $1.79 per diluted share, compared to net income of $1.6 billion or $2.66 per
diluted share from the same period last year. On an adjusted basis, excluding
special charges in both years, Baxter's net income for the nine-month period was
$1.7 billion and increased 1 percent, and earnings per diluted share increased
4 percent to $2.87 per diluted share.
Baxter's worldwide sales increased 3 percent and totaled $9.3 billion for
the first nine months of 2010, including a first-quarter revenue adjustment of
$213 million associated with the COLLEAGUE infusion pump recall. On an
adjusted basis, excluding the COLLEAGUE charge, Baxter's worldwide sales
totaled $9.6 billion, an increase of 5 percent over the prior year revenues of
$9.1 billion. Sales within the United States (excluding the COLLEAGUE
adjustment) increased 4 percent to $4.0 billion for the first nine months, and
international sales grew 6 percent to $5.5 billion. Excluding the impact of foreign
currency, international sales increased 2 percent on a year-to-date basis.
Through the first nine months of the year, Baxter generated strong cash
flow and has returned significant value to shareholders in the form of dividends
and share repurchases. Cash flows from operations through the first nine months
of 2010 totaled $2.1 billion (after a $300 million pension contribution to the
company's U.S. pension fund in the first quarter), reflecting an 8 percent increase
versus the same period last year. In addition, over the last nine months, Baxter
has returned approximately $1.8 billion to shareholders through dividends totaling $519 million and share repurchases of approximately $1.3 billion (or 26 million
shares).
"We continue to benefit from the diversified and medically-necessary
nature of our portfolio, broad geographic reach and strong financial position,
despite continued challenges presented by the evolving global macroenvironment,"
said Robert L. Parkinson, Jr., chairman and chief executive officer.
"Over the long term, we remain committed to executing strategies necessary to
innovate through clinical differentiation, enhance earnings growth, and create
sustained value for our shareholders."
Recent Highlights
Baxter continued to enhance its portfolio and advance its pipeline with a
number of recent commercial and pipeline achievements including the following:
o A new five-year contract with Novation, a leading healthcare supply
contracting company of VHA Inc., the University HealthSystem Consortium
(UHC) and Provista. The agreement provides Novation members access
to Baxter's broad portfolio of products, including IV solutions, drug delivery
and parenteral nutrition products, large volume infusion pumps and IV
administration sets and components.
o A manufacturing, supply and distribution agreement with Kamada Limited
for GLASSIA(TM), the first and only liquid alpha1-proteinase inhibitor. Under
the agreement, Baxter acquired commercial rights to GLASSIA(TM) in the
United States, Australia, New Zealand and Canada. Under a separate
license agreement, Baxter has been granted the right to process
GLASSIA(TM) and will seek necessary regulatory approvals.
o The U.S. launch of TachoSil [Absorbable Fibrin Sealant Patch] for use as
an adjunct to hemostasis in cardiovascular surgery. TachoSil is the first
and only ready-to-use adjunctive hemostatic agent available in the United
States that combines a collagen patch with a coating of human coagulation
factors. Baxter holds exclusive rights to market and distribute TachoSil in
the United States.
o The approval of PREFLUCEL in Austria and Czech Republic, the first
approvals worldwide. PREFLUCEL is a seasonal influenza vaccine
manufactured using Baxter's proprietary Vero cell technology. Baxter
expects to submit for approval in additional European countries during
2010 through a Mutual Recognition Procedure.
o A collaboration between Baxter and Takeda for the development,
production and supply of cell culture-based pandemic influenza vaccines
for the Japanese market. During the quarter, Takeda was selected as a
recipient of a subsidy from the Japanese government to support an
investment associated with the development and production of pandemic
influenza vaccines.
o The completion of enrollment in a Phase 3 clinical trial of GAMMAGARD
LIQUID (marketed as KIOVIG outside of the United States) for the
treatment of Multifocal Motor Neuropathy (MMN). The trial includes
approximately 40 participants and is being conducted at clinical sites
across the United States, Canada and Europe. Upon completion, Baxter
intends to seek approval for GAMMAGARD LIQUID (marketed as KIOVIG
outside of the United States) for the treatment of MMN and has been
granted Orphan Drug Designation for this indication in the United States.
o The presentation of interim data from a Phase 3 clinical trial of HyQ at the
European Society for Immunodeficiencies meeting in Istanbul, Turkey.
HyQ is an immunoglobulin therapy facilitated subcutaneously by
recombinant human hyaluronidase, a dispersion and permeation
enhancer. Interim analyses showed that 28 out of 29 HyQ-treated study
participants with primary immune deficiency were able to infuse
immunoglobulin under the skin, using a single injection site, at infusion
volumes, intervals and rates equivalent to their previous IV administration
of immunoglobulin.
Fourth Quarter and Full-Year 2010 Outlook
Baxter also provided financial guidance for the fourth quarter and provided
updated guidance for the full-year 2010. For the fourth quarter of 2010, the
company expects sales growth of 1 to 2 percent, excluding the impact of foreign
currency, and earnings of $1.09 to $1.11 per diluted share, before any special
items.
For full-year 2010, Baxter's outlook now includes sales growth of 2 to
3 percent, excluding the impact of foreign exchange and the first quarter
COLLEAGUE adjustment, and earnings of $3.96 to $3.98 per diluted share,
before any special items. In addition, the company now expects to generate cash
flow from operations of approximately $2.8 billion.
A webcast of Baxter's third quarter 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 October 21, 2010. Please visit Baxter's website for more
information regarding this and future investor events and webcasts.
Baxter International Inc., through its subsidiaries, develops, manufactures
and markets products that save and sustain the lives of people with hemophilia,
immune disorders, infectious diseases, kidney disease, trauma, and other chronic
and acute medical conditions. As a global, diversified healthcare company,
Baxter applies a unique combination of expertise in medical devices,
pharmaceuticals and biotechnology to create products that advance patient care
worldwide.
Media Contact:
Deborah Spak,
(847) 948-2349
Investor Contacts:
Mary Kay Ladone,
(847) 948-3371
Clare Trachtman,
(847) 948-3085
