DEERFIELD, Ill., Oct. 18 /PRNewswire-FirstCall/ -- Baxter International Inc. today announced strong financial results for the period ended September 30, 2007 and raised its full-year outlook for the third consecutive quarter.
Third quarter net income of $395 million increased 6 percent compared to $374 million reported in the third quarter of 2006. Net earnings per diluted share of $0.61 increased 7 percent from $0.57 in the prior year period. These results include after-tax charges in the third quarter of 2007 totaling $63 million or $0.09 per diluted share. On an adjusted basis, excluding special items, Baxter reported net income of $458 million and net earnings per diluted share of $0.70, an increase of 22 percent and 23 percent, respectively. These results compare favorably to the earnings guidance previously provided by the company of $0.64 to $0.66 per diluted share.
In accordance with Generally Accepted Accounting Principles (GAAP), the company recorded an after-tax charge of $29 million ($0.04 per diluted share) for in-process R&D (IPR&D) associated with the company’s recently announced collaborations with DEKA Research & Development Corp. and HHD, LLC, and Halozyme Therapeutics, Inc. In addition, the company’s results include an after-tax charge of $34 million ($0.05 per diluted share) to establish reserves for previously disclosed Average Wholesale Pricing (AWP) litigation.
Baxter’s worldwide sales totaled approximately $2.8 billion in the third quarter of 2007, an increase of 8 percent (or 4 percent excluding the impact of foreign exchange). Sales within the United States totaled $1.2 billion, an increase of 9 percent over the same period last year, while international sales of $1.5 billion grew 7 percent. 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 11 percent to $2.7 billion from $2.4 billion recorded in the prior year.
Revenues from Baxter’s BioScience business totaled $1.1 billion and increased 14 percent over the prior-year period, driven by double-digit growth across multiple product categories. Sales of ADVATE [Antihemophilic Factor (Recombinant), Plasma/Albumin-Free Method], a therapy used in the treatment of hemophilia A, exceeded $300 million in the quarter as the company continued to drive global conversion to the therapy. Robust sales of plasma therapeutics, antibody therapy products for the treatment of immunodeficiencies, and biosurgery products used for hemostasis, tissue sealing and tissue repair also contributed to the business’ performance.
Revenues from Baxter’s Medication Delivery business grew 10 percent to $1.0 billion in the third quarter, primarily as a result of strong global sales of anesthesia, intravenous solutions and parenteral nutrition products. Renal revenues of $0.6 billion increased 8 percent, as the company continued to realize solid gains in the number of peritoneal dialysis patients it serves, particularly in developing countries.
“The company remains focused on executing our strategies and continuing to build shareholder value,” said Robert L. Parkinson, Jr., chairman and chief executive officer. “Our consistent, strong operational performance, driven by our focus on gross margin expansion affords us the opportunity to accelerate investments to grow our business for the longer-term, while at the same time, allowing us to meet or exceed our shorter-term objectives.”
Baxter’s investment in research and development increased 36 percent (or 13 percent on an adjusted basis) in the quarter; and the company announced several collaborations and agreements during the period, including:
“We are very pleased with the quality of our financial performance overall, and in particular the ongoing strength of our cash flow,” said Robert M. Davis, chief financial officer. “Our strong financial position allowed us the flexibility to invest in long-term growth through research and development and business development initiatives, as well as to increase our share repurchases in the quarter.”
During the third quarter, Baxter repurchased 15.3 million shares of common stock, for approximately $827 million. For the first nine months of 2007, the company repurchased a total of $1.6 billion in common stock, or 30.4 million shares. In addition, following the payment of the 2006 annual dividend in January, Baxter reinstituted a quarterly schedule for payment of dividends in April of this year and increased the annual dividend rate for 2007 by 15 percent. As a result of these activities, Baxter has returned more than $2.0 billion to shareholders year-to-date.
Nine-Month Results
For the first nine months of 2007, Baxter’s net income totaled $1.2 billion and increased 27 percent, with earnings per diluted share increasing 27 percent to $1.87. On an adjusted basis, excluding special items from both 2007 and 2006, Baxter’s year-to-date net income of $1.3 billion grew 30 percent from the $1.0 billion reported last year. Adjusted earnings per diluted share increased 29 percent to $2.03, from $1.57 per diluted share in the prior year period.
Baxter’s worldwide sales increased 8 percent in the first three quarters of the year to approximately $8.3 billion, up from $7.6 billion reported for the same period last year. Excluding the impact of foreign exchange, sales growth for the first nine months of 2007 was 5 percent. Sales within the United States totaled $3.5 billion, an increase of 6 percent over the same period last year, and international sales grew 11 percent to $4.7 billion. Excluding revenues related to the Transfusion Therapies business, Baxter’s worldwide sales of $8.1 billion increased 11 percent from $7.2 billion recorded in the prior year.
Cash flows from operations totaled $1.55 billion for the nine-month period, an improvement of approximately $130 million compared to $1.42 billion in the same period in 2006. Free cash flow (cash flows from operations, less capital expenditures of $424 million for the first nine months of 2007) was $1.1 billion for the first nine months of 2007.
Fourth Quarter and Full-Year 2007 Outlook
Given its strong financial results year-to-date, Baxter is raising its earnings outlook for full-year 2007. The company now expects to achieve earnings per diluted share of $2.75 to $2.77, compared to its previous range of $2.65 to $2.70, both excluding special items. Baxter continues to expect sales growth, excluding the impact of foreign exchange, of 4 to 5 percent for the year. Excluding the Transfusion Therapies business from both 2006 and 2007, sales growth (excluding foreign exchange) is expected to approximate 8 percent. In addition, Baxter continues to expect cash flows from operations for full-year 2007 to total approximately $2.3 billion.
For the fourth quarter of 2007, Baxter expects sales growth, excluding the impact of foreign exchange, of 2 to 3 percent, and earnings per diluted share, before any special items, of $0.72 to $0.74. Excluding the Transfusion Therapies business from both the 2006 and 2007 fourth quarters, sales growth (excluding foreign exchange) is expected to approximate 7 percent.
A webcast of Baxter’s third 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. CDT on October 18, 2007. Please visit Baxter’s website for more information regarding this and future investor events and webcasts, including investor presentations.
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. 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, and other technologies; future actions of regulatory bodies and other governmental authorities, including the FDA and foreign counterparts, that could limit or suspend product development, manufacturing or sales or result in sanctions; product quality or patient safety concerns leading to product recalls, withdrawals, launch delays, litigation, or declining sales; product development risks; inventory reductions or fluctuations in buying patterns by wholesalers or distributors; the impact of geographic and product mix on the company’s sales; the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies; reimbursement policies of government agencies and private payers; the availability of acceptable raw materials and component supply; 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. The company does not undertake to update its forward-looking statements. Financial schedules are attached to this release and available on the company’s website.
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/
