• Fourth-Quarter 2024 Global Sales: $2.75 billion, increased 1% on a reported basis and 2% on a constant currency basis.
• Full-Year 2024 Sales: $10.6 billion, increased 3% on both reported and constant currency basis.
• Fourth-Quarter Adjusted Earnings Per Share (EPS): $0.58, ahead of prior guidance of $0.50 to $0.53.
• Full-Year 2024 Adjusted EPS: $1.89, increased 11% over the prior year.
• Medical Products & Therapies (MPT) Sales: $1.3 billion in Q4, increased 1%; $5.2 billion for full year, advanced 5%.
• Healthcare Systems & Technologies (HST) Sales: $784 million in Q4, decreased 1%; $3 billion for full year, declined 2%.
• Pharmaceutical Segment Sales: $643 million in Q4, increased 8%; $2.4 billion for full year, advanced 7%.
• Adjusted Operating Margin: 15.2% for Q4, decreased 190 basis points year-over-year.
• Fourth-Quarter Adjusted Gross Margin: 44.5%, declined slightly by 10 basis points year-over-year.
• Full-Year 2024 Adjusted Gross Margin: 43.5%.
• Full-Year 2025 Sales Growth Outlook: 5% to 6% on a reported basis.
• Full-Year 2025 Adjusted EPS Outlook: $2.45 to $2.55 per diluted share.

• Warning! GuruFocus has detected 6 Warning Signs with BAX.

Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Baxter International Inc (NYSE:BAX) reported fourth-quarter 2024 global sales from continuing operations of $2.75 billion, which increased 1% on a reported basis and 2% on a constant currency basis, exceeding prior guidance.
• The company successfully launched the Novum IQ infusion pump platform in the United States, contributing to a 50% growth in their infusion business in 2024.
• Baxter International Inc (NYSE:BAX) completed the divestiture of its non-core BioPharma Solutions business, positioning the company to focus on core operations and drive profitable growth.
• The company reported a full-year 2024 adjusted earnings per share from continuing operations of $1.89, an increase of 11% over the prior year.
• Baxter International Inc (NYSE:BAX) anticipates full-year 2025 sales growth of 5% to 6% on a reported basis, with operational sales expected to grow 4% to 5%.

Negative Points

• Hurricane Helene negatively impacted Baxter International Inc (NYSE:BAX)'s sales by approximately $110 million in the fourth quarter of 2024.
• The Healthcare Systems & Technologies segment experienced a 1% decline in sales for the quarter, with Front Line Care sales declining 8%.
• The company faces a negative impact from foreign exchange, which is expected to reduce 2025 sales growth by approximately 200 basis points.
• Baxter International Inc (NYSE:BAX) is dealing with stranded costs following the divestiture of its Kidney Care business, which it aims to offset by 2027.
• The company is undergoing a CEO transition, which may introduce uncertainty in strategic direction and execution.

Q & A Highlights

Q: How should we think about the cadence for Baxter's 2025 financial performance given the various moving pieces? A: Joel Grade, Baxter's CFO, explained that the company anticipates a conservative approach in the first quarter due to ongoing recovery from Hurricane Helene. He noted that the fourth quarter is expected to be larger due to comparisons against the hurricane's impact. Earnings are expected to ramp up over the year, driven by cost-saving initiatives and operational improvements.

Q: What is the outlook for the Healthcare Systems & Technologies (HST) business, especially Front Line Care, which showed negative growth? A: Joel Grade expressed confidence in a turnaround for 2025, citing stabilization in primary care markets and resolution of supply constraints by Q1. He also mentioned new product launches expected to impact later in the year and into 2026, contributing to recovery in the HST segment.

Q: Can you discuss Baxter's strategic priorities moving forward, especially in light of recent challenges and the CEO search? A: Joel Grade highlighted priorities such as customer-inspired innovation, focusing on growth markets, optimizing company structure, driving commercial excellence, and disciplined capital allocation. Brent Shafer, Interim CEO, added that the CEO search is focused on finding a candidate with the right experience and vision to lead Baxter into its next chapter.

Q: How is Baxter's capital structure post-Vantive sale, and what are the target leverage ratios? A: Joel Grade stated that Baxter aims for a leverage ratio of around 3 times net debt to EBITDA by the end of 2025. The company has already paid down $3 billion of debt following the Vantive sale and plans to continue focusing on strategic investments and shareholder returns.

Q: What are the key drivers for Baxter's 2025 guidance, and how do new product launches fit into this? A: Joel Grade outlined strong growth expectations in the Medical Products & Therapies segment, driven by the Novum IQ pump and other innovations. Heather Knight, COO, added that Baxter is launching new products across its portfolio, including in Pharma and HST, which are expected to drive growth and improve margins.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.