Baxter International Inc.
) third-quarter 2013 adjusted earnings per share grew 4% to
$1.19, but were in line with the Zacks Consensus Estimate. The
third-quarter results were also within the company's earlier
stated guidance of $1.18-$1.21.
Reported net income in the quarter decreased 6.7% year over
year to $544 million or 99 cents per share compared with $583
million or $1.06 per share in the prior-year quarter. Baxter's
results in the reported quarter include an unusual after-tax
amount of $111 million or 20 cents per share pertaining to the
takeover of Gambro AB, which was completed as scheduled in the
Revenues for the quarter went up 9% to $3,774 million but
slightly missed the Zacks Consensus Estimate of $3,795 million.
On an organic basis (excluding Gambro that contributed $100
million), revenues climbed 6%. Foreign currency did not impact
revenues in the quarter. On a geographic basis, revenues in the
U.S. as well as internationally improved 9% to $1,642 million and
$2,132 million, respectively.
Third-quarter adjusted gross margin decreased 10 basis points
(bps) to 52.0%. Adjusted marketing and administrative expenses
rose 11% to $827 million, while adjusted research and development
expenses increased 10% to $265 million in the quarter.
Bioscience revenues came in at $831 million, up 5%. Revenues
were primarily driven by higher demand for Advate used in
Hemophilia and Feiba, along with benefits from government
collaborations and the timing of international tenders.
Hemophilia, the largest sub-unit, accounted for $851 million,
up 9% from the prior year. BioTherapeutics revenues grew 3% (2%
at constant exchange rate or CER) year over year to $532 million.
Revenues from BioSurgery increased 5% to $173 million and from
Vaccines escalated 8% (up 5% at CER) to $64 million.
Revenues from Medical Products improved 10% (11% in constant
currency) to $2,154 million on the back of the Gambro
acquisition. Barring foreign currency and the contribution from
the acquisition, Medical Products revenues grew 6%. Peritoneal
dialysis products along with anesthesia offerings and injectable
therapies led to growth in revenues.
The four sub-units are: Fluid Systems with sales of $792
million, up 13% at CER; Renal with sales of $746 million, up 21%
at CER; Specialty Pharmaceuticals with revenues of $372 million,
up 1% at CER; and BioPharma Solutions with sales of $244 million,
down 4% at CER.
Baxter's cash and cash equivalents were $,376 million as of
Sep 30, 2013, down from $3,191 million as of Sep 30, 2012. Total
debt stood at $9,066 million as of Sep 30, 2013, compared with
$5,947 million as of Sep 30, 2012.
During the first three quarters of 2013, Baxter generated cash
flow from operations of $2.1 billion. It returned an impressive
over $1.6 billion to shareholders through share repurchases of
12.4 million shares worth $863 million and dividends totaling
$757 million, reflecting more than 35% increase in dividend
payments from the prior-year period.
For the fourth quarter of 2013, the company expects revenue
growth in the range of 14% to 15% (12% to 13% at CER). This
includes the impact of the Gambro AB acquisition, amounting to
$400 million. Adjusted earnings per share are expected to be in
the band of $1.24 to $1.26. The Zacks Consensus Estimate for
revenues and earnings per share are pegged at $4,336 million and
$1.26 respectively, for the quarter.
Baxter confirmed its earnings forecast for 2013, which
includes the impact of its Gambro acquisition. For 2013, Baxter
expects reported revenue growth of 6% (7% at CER). Excluding the
impact of foreign exchange rate and the Gambro acquisition,
Baxter continues to expect sales growth of approximately 4% (or
3% including the impact of foreign currency). The company expects
to generate revenues from the Gambro acquisition of approximately
$500 million for the year.
Moreover, the company anticipates adjusted earnings per share
in the range of $4.65 to $4.67 for 2013. The Zacks Consensus
Estimate for 2013 earnings per share of $4.67 lies at the top end
of the guided range. Baxter continues to expect cash flow from
operations to be $3,300 million for 2013.
We remain on the sidelines regarding Baxter's mixed
third-quarter results with earnings in line with, and revenues
missing the Zacks Consensus Estimate. However, long-term
prospects of the company appear to be accretive following the
strategic acquisitions and collaborations. Further, milestone
achievement for pipeline products represents significant future
top line acceleration for BAX.
Baxter has a Zacks Rank #3 (Hold). While we choose to remain
on the sidelines regarding BAX, medical product companies such as
INSYS Therapeutics, Inc.
Bio-Rad Laboratories, Inc.
Boston Scientific Corp.
) are also expected to do well. While INSY and BIO carry a Zacks
Rank #1 (Strong Buy), BSX has a Zacks Rank #2 (Buy).
BAXTER INTL (BAX): Free Stock Analysis Report
BIO-RAD LABS -A (BIO): Free Stock Analysis
BOSTON SCIENTIF (BSX): Free Stock Analysis
INSYS THERAP (INSY): Free Stock Analysis
To read this article on Zacks.com click here.