Q3 Trends: Baxter International reported Thursday that sales of its renal care products increased in the third quarter, while its medication delivery business was comparable to the same period in 2021, excluding changes in exchange rates.
J.P. Morgan analyst Robbie Marcus called the segments “two bright spots in the quarter” in a Thursday research note, adding that the medication delivery business benefited from strong IV therapy growth that offset lower component availability.
Sales of the company’s pharmaceutical products declined in the quarter because of increased competition from generic drugs.
“We continue to navigate today’s challenging macro-environment and have taken decisive action on multiple fronts to mitigate ongoing macroeconomic headwinds, while remaining focused on the needs of all our stakeholders — from patients, clinicians and customers to our employees and shareholders,” CEO José Almeida said in a statement.
Hillrom acquisition:
Baxter’s quarterly results included a $3.1 billion impairment charge from its acquisition of connected care firm Hillrom in December 2021, which the company chalked up to rising interest rates and a decline in equity valuation.
In the third quarter, Hillrom contributed $735 million in sales to the combined company, which Baxter said was a mid-single-digit decline from the prior-year period after adjusting for foreign-exchange fluctuations. The company said it faced a difficult year-over-year comparison and electromechanical supply constraints.
Forecast lowered:
Baxter lowered its forecast for 2022 earnings and now expects a net loss of $4.52 to $4.45 per share. Last quarter, the company had set a forecast of a loss of $1.82 to $1.92 per share.
Baxter said it expects full-year revenue growth of 17% to 18% as reported, compared to “high-teens sales growth” it outlined last quarter.
The company added that its updated full-year forecast accounts for continued supply constraints, foreign-exchange pressures, increased interest expenses and a higher effective tax rate.
“While a soft quarter doesn’t surprise us, we had been hopeful the company would be able to hold the low end of its guidance following a significant cut to numbers following 2Q,” J.P. Morgan’s Marcus wrote.
Baxter’s stock fell 3.7% in mid-morning trading to $55.49.
