DEERFIELD, Ill., Jan. 24 /PRNewswire-FirstCall/ -- Baxter International Inc. today announced record sales and earnings for 2007, including strong financial results for the fourth quarter that met or exceeded previously issued guidance.
Summary of Fourth Quarter Results
For the fourth quarter, Baxter reported net income of $478 million and earnings per diluted share of $0.74, including after-tax special items totaling $10 million (or $0.02 per diluted share) for in-process research and development associated with the company’s recently announced collaborations with Nektar Therapeutics and Nycomed. On an adjusted basis, Baxter reported net income of $488 million, an increase of 13 percent over the same period last year. Adjusted earnings per diluted share of $0.76 increased 15 percent from $0.66 in the prior year period, and compared favorably to the earnings guidance the company previously provided of $0.72 to $0.74 per diluted share. Details of the special items recorded are outlined in the financial schedules that follow the text of this press release.
Worldwide sales totaled $3.0 billion in the fourth quarter, an increase of 9 percent compared to the same period last year. Excluding a 6 percentage point benefit from foreign exchange, sales grew 3 percent, in line with the company’s sales growth guidance of 2 to 3 percent. Sales within the United States increased 3 percent to $1.3 billion, and international sales increased 13 percent (including an 11 percentage point benefit from foreign exchange) to $1.7 billion. As previously announced, the company completed the divestiture of its Transfusion Therapies business during the first quarter of 2007. Excluding Transfusion Therapies revenues from both 2007 and 2006 for comparison purposes, Baxter’s global sales increased 13 percent (or 7 percent excluding foreign exchange) versus the prior year.
In the fourth quarter, all three of Baxter’s businesses posted solid revenue gains. Sales within Baxter’s BioScience business totaled $1.2 billion, an increase of 16 percent from the same period last year. This growth was driven by double-digit increases across all product categories, including record sales of ADVATE, Antihemophilic Factor (Recombinant), Plasma/Albumin Free Method (rAHF-PFM) for the treatment of hemophilia A, which exceeded $1.2 billion for the year. In addition, the business generated robust growth in sales of antibody therapy products used for the treatment of primary immunodeficiencies, specialty plasma therapeutics, biosurgery products and vaccines.
Medication Delivery revenues increased 11 percent to $1.2 billion, led by significant growth in Anesthesia as a result of the company’s broad product offering and end-user demand for Suprane, the company’s proprietary inhaled anesthetic. Revenues in the company’s Renal business totaled $601 million and increased 12 percent, reflecting further gains in peritoneal dialysis patients in developed markets, as well as in emerging markets where many people with end-stage renal disease are currently not treated.
“2007 was a very successful year for our company,” said Robert L. Parkinson, Jr., chairman and chief executive officer. “We met or exceeded expectations on all key financial metrics throughout the year. We are also particularly pleased with the improved profile of our earnings, the strength of our overall financial position, and most importantly, the progress we have made in accelerating innovation. We’re very well-positioned to continue to meet our commitments, leverage the benefits of our diversified healthcare model, and deliver enhanced value to our various stakeholders in 2008 and beyond.”
Summary of Full-Year 2007 Results
For full-year 2007, Baxter’s net income totaled $1.7 billion, or $2.61 per diluted share, including after-tax special items of $119 million or $0.18 per diluted share. On an adjusted basis, excluding special items, the company reported net income of $1.8 billion, or $2.79 per diluted share, an increase of 25 percent over last year. These results compare favorably to the earnings guidance the company previously provided of $2.75 to $2.77 per diluted share for full-year 2007. Details of the special items recorded in 2007 and 2006 are outlined in the financial schedules that follow the text of this press release.
Baxter’s worldwide sales in 2007 increased 9 percent to $11.3 billion. Excluding a 5 percentage point benefit from foreign exchange, sales grew 4 percent. Sales within the United States of $4.8 billion increased 5 percent and international sales of $6.4 billion increased 11 percent (including a 7 percent benefit from foreign exchange). Excluding revenues related to the Transfusion Therapies business, Baxter’s worldwide sales increased 12 percent (or 8 percent excluding foreign exchange) versus the prior year.
Baxter also generated strong cash flows in 2007, with cash flow from operations improving versus the prior year to $2.3 billion. In addition, Baxter returned more than $2.5 billion to shareholders through both share repurchases and dividends during the year. The company repurchased 34 million shares of common stock, for approximately $1.9 billion, and paid dividends totaling $704 million in 2007, an increase of $340 million versus the prior year. This significant increase was the result of paying the 2006 annual dividend in January 2007, reinstituting a quarterly schedule for payment of dividends in April, and increasing the annual dividend rate for 2007 by 15 percent.
“We are very pleased with our financial results for 2007, including our ongoing ability to generate strong cash flows,” said Robert M. Davis, chief financial officer. “We were able to return significant value to shareholders as a result of progress in rebuilding our financial flexibility, continuing with our capital allocation and financial management discipline, while investing in R&D and accelerating business development activities that will position us for future growth.”
Accelerating R&D and Business Development
In 2007, Baxter accelerated its investment in R&D to a record level of $760 million, representing an increase of 24 percent over the prior year. The company obtained approval or launched more than a dozen new products and therapies during the year, and achieved a number of important business and scientific milestones, including:
Baxter also accelerated business development activities in 2007, establishing a dozen new partnerships, collaborations or alliances that will enhance the company’s future growth, and completed the sale of its Transfusion Therapies business to an affiliate of TPG Capital L.P.
“Given our solid and improving financial, commercial and scientific foundation, we are very optimistic about our future prospects,” Parkinson continued. “We look forward to advancing many of the programs in our R&D pipeline and achieving additional product advancements that will help expand access to care, improve treatment for patients, and enhance the quality of life for many.”
First Quarter and Full-Year 2008 Outlook
Looking ahead to full-year 2008, Baxter expects to achieve sales growth, excluding foreign exchange, of 5 to 6 percent. Excluding Transfusion Therapies from both 2007 and 2008, the company expects sales growth, excluding foreign exchange, of approximately 6 to 7 percent. The company also expects earnings per diluted share, excluding special items, for full-year 2008 to be $3.10 to $3.18 per diluted share, and anticipates generating cash flow from operations in excess of $2.5 billion.
For the first quarter 2008, the company expects sales, excluding foreign exchange, to grow approximately 3 percent, and earnings of $0.71 to $0.73 per diluted share, excluding special items. Excluding Transfusion Therapies from both the first quarter of 2007 and 2008, Baxter’s sales growth is expected to approximate 5 percent.
“Our 2008 guidance continues to be aligned with our long-range strategic plans and financial expectations,” concluded Davis. “We are committed to meeting our short-term financial expectations, while continuing to invest in innovation and business development activities that position the company for enhanced growth in the future.”
A webcast of Baxter’s fourth 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. CST on January 24, 2008. Please visit Baxter’s website for more information regarding this and future investor events and webcasts.
Baxter International Inc., through its subsidiaries, assists healthcare professionals and their patients with the treatment of complex medical conditions, including hemophilia, immune disorders, cancer, infectious diseases, kidney disease, trauma and other conditions. The company applies its expertise in medical devices, pharmaceuticals and biotechnology to make a meaningful difference in patients’ lives.
This release includes forward-looking statements concerning the company’s financial results and outlook for 2008, including statements related to the company’s expected financial performance, its ability to generate cash flows, investment in R&D, business development activities, clinical studies and trials, and V-Link with VitalShield. The statements are based on assumptions about many important factors, including the following, which could cause actual results to differ materially from those in the forward-looking statements: demand for and market acceptance risks for new and existing products, such as ADVATE, V-Link with VitalShield, and other technologies; future actions of regulatory bodies and other governmental authorities; product quality or patient safety concerns leading to product recalls, withdrawals, launch delays, litigation or declining sales; the company’s ability to identify business development opportunities; product development risks; fluctuations in mix on the company’s sales; the impact of competitive products and pricing and disruptive technologies; reimbursement policies of government agencies and private payers; the ability to enforce company patents; patents of third parties preventing or restricting the company’s manufacture, sale or use of affected products or technology; and other risks identified in the company’s most recent filing on Form 10-Q and other SEC filings, all of which are available on the company’s website.
Non-GAAP Financial Measures: The non-GAAP financial measures contained in this press release (pre-tax income, income from continuing operations and per- share earnings, excluding certain items) adjust for factors that are unusual or nonrecurring. Unusual or nonrecurring items can be highly variable, difficult to predict, and of a size that may substantially impact the company’s reported operations for a period. Management believes that non-GAAP financial measures can facilitate a fuller analysis of the company’s results of operations, particularly in evaluating performance period over period. Management uses these non-GAAP financial measures internally in financial planning, to monitor business unit performance, and in evaluating management performance. Refer to the company’s filing on Form 8-K of today’s date for additional information.
Non-GAAP Financial Measures: The non-GAAP financial measures contained in this press release (pre-tax income, income from continuing operations and per- share earnings, excluding certain items) adjust for factors that are unusual or nonrecurring. Unusual or nonrecurring items can be highly variable, difficult to predict, and of a size that may substantially impact the company’s reported operations for a period. Management believes that non-GAAP financial measures can facilitate a fuller analysis of the company’s results of operations, particularly in evaluating performance period over period. Management uses these non-GAAP financial measures internally in financial planning, to monitor business unit performance, and in evaluating management performance. Refer to the company’s filing on Form 8-K of today’s date for additional information.
The company’s GAAP results for the twelve months ended December 31, 2006 included a charge related to COLLEAGUE infusion pumps. This charge impacted the GAAP results as follows:
CONTACT: Media, Deborah Spak, +1-847-948-2349; or Investors, Mary Kay
Ladone, +1-847-948-3371 or Clare Trachtman, +1-847-948-3085, all of Baxter
International Inc.
Web site: http://www.baxter.com//
