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Baxter (BAX) Q3 Earnings and Revenues Surpass Estimates

Baxter's (BAX) third-quarter results reflect robust performance across all its business units.

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This story originally appeared on Zacks

Baxter International Inc. BAX reported third-quarter 2021 adjusted earnings per share (EPS) of $1.02, which outpaced the Zacks Consensus Estimate of 94 cents by 8.5%. The bottom line improved 22.9% from the year-ago quarter.



GAAP EPS in the quarter was 89 cents, up 29% from the prior-year quarter.

- Zacks

Revenue Details

Revenues of $3.23 billion surpassed the Zacks Consensus Estimate by 0.1%. The top line improved 8.5% year over year on a reported basis, 7% on a constant currency (cc) basis and 6% on an operational basis.

Geographical Details

Baxter reports operating results through three geographic segments — Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific).



In Americas, Baxter reported revenues of $1.73 billion, up 8% on a year-over-year basis and 7% at cc.



In EMEA, revenues totaled $779 million, up 8% from the year-ago quarter and 8% at cc.



In APAC, revenues of $720 million improved 11% from the prior-year quarter and 8% at cc.

Segmental Details

It is worth mentioning that starting from the first quarter of 2021, the company's segmental details of revenues separately show net sales from its BioPharma Solutions business, which was previously included within Other.



Renal Care



This segment reported revenues of $981 million in the quarter under review, up 3% from the prior-year quarter and 1% at cc.



Medication Delivery



Revenues at the segment amounted to $747 million, up 12% from the year-ago quarter and 11% at cc.

Baxter International Inc. Price, Consensus and EPS Surprise

Baxter International Inc. Price, Consensus and EPS Surprise

Baxter International Inc. price-consensus-eps-surprise-chart | Baxter International Inc. Quote

Pharmaceuticals



Revenues at the segment totaled $589 million, up 9% from the year-ago quarter and 7% at cc.



Clinical Nutrition



Revenues at the segment were $244 million, up 4% from the year-ago quarter and 3% at cc.



Advanced Surgery



Revenues at the segment amounted to $249 million, up 6% from the year-ago quarter and 5% at cc.



Acute Therapies



This segment reported revenues of $185 million, up 5% from the prior-year quarter and 3% at cc.



BioPharma Solutions



This segment reported revenues of $206 million, up 46% from the prior-year quarter and 45% at cc.



Other



Revenues in the segment were $25 million, down 4% on a year-over-year basis and 8% at cc.

Margin Analysis

Baxter reported adjusted gross profit of $1.42 billion in the third quarter, up 12.2% year over year. As a percentage of revenues, gross margin expanded 140 basis points (bps) to 44% in the third quarter.



Selling, general and administrative expenses amounted to $680 million, up 13.1% from the year-ago quarter. Meanwhile, research and development expenses were $129 million, up 4.9% on a year-over-year basis.



Adjusted operating income rose 14.4% year over year to $652 million in the quarter under review. As a percentage of revenues, operating margin expanded 100 bps to 20.2% in the quarter under review.

2021 Guidance

For fourth-quarter 2021 the company anticipates sales to improve in the range of 3-4% on a reported basis, 4-5% at cc and 3-4% on an operational basis.



For the same period, adjusted EPS is expected between $1 and $1.04. The Zacks Consensus Estimate for the same is pegged at $1.03 per share.



For full-year 2021, Baxter anticipates sales growth to improve in the band of 7-8% on a reported basis, 5-6% at cc and 4-5% on an operational basis.



Adjusted earnings per share is estimated in the range of $3.58 to $3.62. The Zacks Consensus Estimate for the same stands at $3.53.

Hill-Rom Buyout

On Sep 2, 2021, Baxter inked a definitive agreement under which it will acquire Hill-Rom Holdings, Inc. HRC, subject to approval of the latter’s shareholders and the fulfilment of customary closing conditions (including regulatory approvals). Per the agreement terms, Baxter will acquire Hill-Rom for $156.00 per share in cash for a total equity value of approximately $10.5 billion and a total enterprise value of approximately $12.4 billion, including the assumption of debt. For investors’ note, the buyout, which was unanimously approved by management of both companies, is expected to close by early 2022.

Summing Up

Baxter ended third-quarter 2021 on a strong note, wherein both earnings and revenues beat the Zacks Consensus Estimate. The company witnessed strong performance across all of its business units. Growth in Americas, EMEA and APAC is encouraging. Expansion in both gross and operating margins fuels further optimism.



With respect to business highlights during the quarter under review, Baxter received FDA approval and announced the commercial launch of premix Norepinephrine Bitartrate in 5% Dextrose Injection (norepinephrine). For investors’ note, norepinephrine — indicated to raise blood pressure in adult patients with severe and acute hypotension or low blood pressure— is currently available from Baxter in the United States.



Apart from this, the company announced the CE marking of the NEPHROCLEAR CCL14 Test in collaboration with a global leader in in vitro diagnostics, while presenting data from three critical care studies at the 34th Annual European Society of Intensive Care Medicine (ESICM) LIVES virtual congress. Additionally, Baxter acquired certain assets associated with the PerClot Polysaccharide Hemostatic System from CryoLife, Inc.



Meanwhile, cut-throat competition in the MedTech markets remains a woe. Increase in selling, general and administrative expenses is concerning.

Zacks Rank

Baxter currently carries a Zacks Rank #4 (Sell).

Earnings of Other MedTech Majors at a Glance

Two better-ranked stocks in the broader medical space that have already announced their quarterly results are Quest Diagnostics Incorporated DGX and Abbott Laboratories ABT, both carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



Quest Diagnostics reported third-quarter 2021 adjusted EPS of $3.96, which beat the Zacks Consensus Estimate by 33.8%. Third-quarter revenues of $2.77 billion outpaced the consensus mark by 12.6%.



Abbott reported third-quarter 2021 adjusted EPS of $1.40, which surpassed the Zacks Consensus Estimate by 52.2%. Third-quarter revenues of $10.93 billion beat the Zacks Consensus Estimate by 15.3%.



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