Dive Brief:
- Baxter early Thursday announced third-quarter sales of $2.97 billion, a 4% increase on both a reported and constant currency basis, due to ongoing demand for its coronavirus-related medical products.
- While all three of Baxter's geographic segments saw sequential improvements in the quarter for hospital admissions and surgical procedures, CEO Joe Almeida told investors the volumes remain below pre-pandemic levels. The company's medication delivery business, which was hit with a low single-digit sales decline, continues to be impacted by lower rates of emergency room utilization and hospitalizations due to COVID-19.
- Baxter expects low single-digit sales growth for full-year 2020 on a reported, constant currency and operational basis. However, execs added the outlook assumes low double-digit declines in hospital admissions and mid single-digit declines in surgical volumes in the fourth quarter versus pre-pandemic levels.
Dive Insight:
Baxter returned to growth in the third quarter following a second-quarter sales decline of 4% reported in late July, at which time the company took a $180 million hit to revenue related to COVID-19, of which medication delivery was negatively impacted by $100 million.
CFO Jay Saccaro told investors Thursday medication delivery and pharmaceuticals continued to be affected in the third quarter due to lower ER utilization and fewer hospitalizations in the wake of the pandemic, particularly in the U.S.
Baxter estimates COVID-19 hurt net revenues by more than $65 million during the quarter, with medication delivery sales experiencing an approximately $40 million hit.
However, growth across all three of Baxter's regional segments and five of six global business units contributed to positive performance in the third quarter, led geographically by Asia Pacific which was up 7% in constant currency rates, and business-wise by acute therapies, up 35% year over year.
Almeida said Baxter's acute therapies business continues to experience higher demand for its continuous renal replacement therapy products for critically ill COVID-19 patients with acute kidney injury. CRRT mimics kidney functions by passing patient blood through an extracorporeal filter where fluid and uremic toxins are removed before the cleaned blood is returned to the body.
Baxter's renal care business reported mid single-digit growth at constant currency rates in the third quarter. Acute kidney injury, a complication of COVID-19, is driving the need for dialysis and other therapies. Almeida noted that CMS last month announced the finalization of the End-Stage Renal Disease Treatment Choices payment model, which he called a "key step forward" in increasing U.S. adoption of home-based dialysis.
The company in late August received FDA De Novo marketing authorization for its Theranova dialyzer, a type of membrane used in hemodialysis. The new class of dialyzer aims to expand hemodialysis by widening the range of molecules that get filtered from the blood during traditional therapy.
Almeida said Baxter has a payment application pending with CMS for the renal care technology and expects an update when a final rule is published in November, though he would not speculate on the agency's final determination.
Despite a low single-digit sales decline in the third quarter for Baxter's medication delivery business, Almeida said the company "remains optimistic" about its 510(k) applications for its Novum IQ smart infusion pump platform.
"We are making progress addressing the open questions from FDA," Almeida said. Baxter "remains on track to update the submissions within the next three months" and the company currently expects to launch the infusion pumps in the U.S. in 2021.
Looking ahead, Almeida said Baxter is "operating in a largely unpredictable environment" with the resurgence of the virus in the U.S. and Europe. In the near term, Saccaro said Baxter expects to see a "flat or slight decline" in the U.S business sequentially from the third quarter to the fourth quarter.
