Baxter International Inc.
) posted a decent 9.2% rise in adjusted net earnings to $1.19 per
share for the first quarter of 2014 from $1.09 per in the same
quarter a year back. With this, the company not only surpassed
its previously issued guidance of $1.06 to $1.09 per share but
also the Zacks Consensus Estimate by 9 cents per share.
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Net earnings improved 8.5% to $652 million from $601 million in
the first quarter of 2013. The adjustments include intangible
asset amortization and costs associated with the integration of
its Gambro AB acquisition, business development and business
Revenues and Margins
Revenues for the quarter went up 14.6% to $3,951 million globally
and exceeded the Zacks Consensus Estimate of $3,885 million.
Excluding the contribution from Gambro, revenues in the quarter
grew 3% to $3.55 billion (or 5% excluding the impact of foreign
Revenues within the U.S. escalated 12.0% to $1,660 million while
international revenues rose 16.5% (19% excluding the impact of
foreign currency) to $2,291 million in the quarter.
Adjusted gross profit rose 13.1% to $2,016 million while adjusted
gross margin grew 70 basis points to 51.0% in the quarter.
Adjusted pre-tax earnings rose 8.65% to $829 million in the
zoomed 5.1% (6% excluding the impact of foreign currency) to
$1,608 million in the quarter. The increase was attributable to
double-digit growth of ADVATE (Antihemophilic Factor
[Recombinant], Plasma/Albumin-Free Method) and FEIBA (an
inhibitor therapy), higher U.S. sales of plasma-based
therapeutics including GAMMAGARD LIQUID (Immune Globulin
Intravenous [Human]), and a benefit from accelerated timing of
milestone payments related to the company's ongoing
collaborations with governments on the development of influenza
surged 22.2% (or 24% excluding the impact of foreign currency) to
$2,343 million. Revenues from Gambro acquisition and strong sales
of peritoneal dialysis products and certain injectable drugs led
to the improvement in revenues. Excluding contributions from
Gambro acquisition, segment revenues inched up 1% (or 4% percent
excluding the impact of foreign currency).
BAX had cash and cash equivalents of $2,049 million as of Mar 31,
2014, down from $2,689 million as of Mar 31, 2013. Total debt
stood at $8,694 million as of Mar 31, 2014, up significantly by
48.2% from $5,867 million as of Mar 31, 2013.
In the quarter, BAX generated cash flow from operations of $559
million, up 44.8% from $386 million in the 2013-quarter. Capital
expenditures soared 44.2% to $421 million from $292 million in
the first quarter of 2013.
For the second quarter of 2014, Baxter expects revenues to grow
between 12 and 13%, barring the impact of foreign currency. The
company also expects adjusted earnings in the range of $1.18 to
$1.22 per share for the quarter, which is lower than the current
Zacks Consensus Estimate of $1.28.
BAX reiterated its outlook for full-year 2014. The company
continues to expect revenues growth in the range of 9 to 10%,
excluding the impact of foreign exchange, for the year. The
company also expects adjusted earnings between $5.05 and $5.25
per share and operating cash flow of $3.5 billion for the year.
The Zacks Consensus Estimate of $5.16 for the year lies within
the guided range.
Currently, BAX has a Zacks Rank #3 (Hold). Some better-ranked
stocks in the medical products industry include
Edwards Lifesciences Corp.
St. Jude Medical Inc.
). Enzymotec sports a Zacks Rank #1 (Strong Buy), while both
Edwards Lifesciences Corp. and St. Jude Medical retain a Zacks
Rank #2 (Buy).