Baxter Reaps Benefits Of Gambro Acquisition

Baxter International has reported financial results for Q413, and provided its financial outlook for Q114 and full FY2014. Revenue was driven in Q413 by the addition of sales from Gambro, which contributed to 25% revenue growth within Baxter's Medical Products segment in Q114, and 9% growth in the segment for the full year. Baxter completed its acquisition of Gambro in September 2013 (Q313) and was fully realised in Q413.

Q413 Results

For Q413, Baxter reported net income of US$326mn and earnings per diluted share of US$0.59, compared with net income of US$494mn and earnings per diluted share of US$0.89 in Q412. These results included after-tax special items totalling US$366mn (or US$0.67 per diluted share), primarily for costs associated with Baxter's acquisition of Gambro, business optimisation programmes and recent collaborations with Coherus Biosciences and Cell Therapeutics (CT). Q412 results included after-tax special items of US$206mn (or US$0.37 per diluted share).

On an adjusted basis, excluding special items, Baxter's net income totalled US$692mn, or US$1.26 per diluted share, in line with the company's earnings guidance.

Worldwide sales totalled US$4,368mn and increased by 16% from Q412 levels. Excluding the contribution of Gambro revenues in Q413, Baxter's sales increased by 5% to US$4.0bn (or 6% excluding the impact of foreign currency). Sales within the US totalled US$1,781mn and grew by 13%, while international sales of US$2,587mn increased by 19% (or 20% excluding the impact of foreign currency).

BioScience revenues of US$1,776mn represented an increase of 5% from Q412 period (or 6% excluding the impact of foreign currency), PRIMARLY driven by double-digit growth and solid demand for the company's haemophilia therapies, including Advate (antihaemophilic factor [recombinant], plasma/albumin-free method) and Feiba (an inhibitor therapy) in the US and Europe, as well as for biosurgery products.

Medical products sales of US$2,592mn increased BY 25% from Q412 (or 27% excluding the impact of foreign currency), and included revenues associated with the Gambro acquisition of US$413mn. Excluding foreign currency and the contribution from the acquisition, medical products sales grew by 7%, driven by strong growth across the entire business portfolio.

Full Year Results

Baxter's net income totalled US$2,012mn or US$3.66 per diluted share in FY13. Excluding special items, the company's adjusted net income increased by 2% to US$2,567mn, and earnings per diluted share of US$4.67 advanced by 3%.

Baxter's worldwide sales in FY13 totalled US$15,259mn and rose by 8%. Excluding revenues of US$513mn associated with the Gambro acquisition, Baxter's revenues increased BY 4% to US$14,746mn. BioScience sales of US$6,564mn advanced by 5% (or 6% excluding the impact of foreign currency), while medical products sales of US$8,695mn grew by 9% compared with FY12. Excluding revenues associated with the Gambro acquisition, medical products sales increased by 3% (or 4% excluding the impact of foreign currency) on a full-year basis.

During 2013, Baxter generated cash flows from operations of approximately US$3,198mn and returned significant value to shareholders. Baxter returned more than US$1.9bn to shareholders throughout the year, through share repurchases of US$913mn (or approximately 13mn shares) and dividends totalling more than US$1.0bn, reflecting a 27% increase in dividend payments versus FY12.

FY 2013 Highlights

In 2013, Baxter continued to transform its product pipeline into a portfolio of products and therapies that improve the quality of care and address key, high-potential areas of unmet medical need, while also expanding its business portfolio. This was evidenced by:

  • Increased spending in R&D by 8%, investing more than US$1,246mn for both internal programmes and new collaborations.

  • Achieving a number of clinical and regulatory milestones, including the progression of several key programmes into late stage clinical trials; completion of regulatory submissions for new haemophilia and immune globulin products; and approval of an array of new indications and treatments for end-stage renal disease and haemophilia, as well as immune globulin, biosurgery and parenteral nutrition products.

  • Establishing several collaborations that leverage Baxter's expertise and extend the company's pipeline in new therapeutic areas including haematology, oncology and immunology.

  • Enhancing Baxter's global leadership in renal therapies with the acquisition of Gambro, providing the company with a comprehensive product and therapies portfolio.

Outlook for Q114 and Full-Year 2014

Baxter expects sales growth for FY14 of 9-10%, before the impact of foreign exchange. Also, for the full year, Baxter expects earnings, before special items, of US$5.05 to US$5.25 per diluted share and cash flows from operations of approximately US$3.5bn.

For Q114, the company expects sales growth of approximately 13-14%, excluding the impact of foreign currency. The company further expects earnings, before special items, of US$1.06 to US$1.09 per diluted share in Q114.

Baxter International - Revenue by Business Segment
Period Ended December 31 (US$mn) Q412 Q413 % chg reported % chg CC FY2012 FY2013 % chg reported % chg CC
Medical Products 2,066 2,592 25 25 7,953 8,695 9 10
US 747 890 19 19 2,969 3,174 7 7
International 1,319 1,702 29 31 4,984 5,521 11 12
BioScience 1,687 1,776 5 6 6,237 6,564 5 6
US 825 891 8 8 3,087 3,277 6 6
International 862 885 3 4 3,150 3,287 4 5
Total Baxter 3,753 4,368 16 17 14,190 15,259 8 8
CC = constant currency. Source: Baxter International
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Related sectors of this article: Medical Devices, Patient Aids, MIW
Geography: United States

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