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Baxter International (BAX)
Q2 2011 Earnings Call
July 21, 2011 8:30 am ET
Robert Parkinson - Chairman, Chief Executive Officer and President
Robert Hombach - Chief Financial Officer and Corporate Vice President
Mary Ladone - Vice President of Investor Relations
Sara Michelmore - Brean Murray, Carret & Co., LLC
Matthew Miksic - Piper Jaffray Companies
Michael Matson - Mizuho Securities USA Inc.
Michael Weinstein - JP Morgan Chase & Co
David Roman - Goldman Sachs Group Inc.
Kristen Stewart - Deutsche Bank AG
Frederick Wise - Leerink Swann LLC
David Lewis - Morgan Stanley
Rajeev Jashnani - UBS Investment Bank
Lawrence Keusch - Morgan Keegan & Company, Inc.
Previous Statements by BAX
» Baxter International's CEO Discusses Q1 2011 Results - Earnings Call Transcript
» Baxter International's CEO Discusses Q4 2010 Results - Earnings Call Transcript
» Baxter International CEO Discusses Q3 2010 Results - Earnings Call Transcript
Thanks, Sean. Good morning, everyone, and welcome to our Q2 2011 earnings conference call. Joining me today are Bob Parkinson, CEO and Chairman of Baxter International; and Bob Hombach, Chief Financial Officer.
Before we get started, let me remind you that this presentation, including comments regarding our financial outlook, new product developments and regulatory matters contain forward-looking statements that involve risks and uncertainties, and of course, our actual results could differ materially from our current expectations. Please refer to today's press release and our SEC filings for more details concerning factors that could cause actual results to differ materially.
In addition, in today's call, non-GAAP financial measures will be used to help investors understand Baxter's ongoing business performance. A reconciliation of the non-GAAP financial measures being discussed today to the comparable GAAP financial measures is included in our earnings release issued this morning and available on our website.
Now I'd like to turn the call over to Bob Parkinson.
Thanks, Mary Kay. Good morning. Thanks for calling in. We're pleased this morning to announce financial results for the second quarter and also provide you with an update on our full year 2011 outlook. As you all saw in the press release that was issued earlier this morning, adjusted EPS of $1.07 per diluted share exceeded guidance for the quarter and increased 15% versus the prior year. This performance was a result of double-digit sales growth, operational leverage, foreign currency favorability and the benefit from our ongoing share repurchase program. Second quarter sales growth, after adjusting for FX, was 6% as growth improved on a sequential basis across multiple categories in BioScience. Year-to-date, sales growth, again after adjusting for FX and the revenue adjustment in 2010, was 5% and EPS accelerated 10%.
While Bob will provide more details on Baxter's financial results for the first half of the year in just a few minutes, as indicated in the press release issued this morning, we have raised our full year sales guidance on a reported basis as well as our full year earnings guidance before special items. While we're pleased with improving fundamentals and enhanced financial performance as evidenced by our first half results, I highlight that we continue to navigate through a challenging macro environment that's evolving on a global basis and continues to absorb ongoing pressures on our business and the healthcare industry more broadly. Having said that, we're particularly vigilant in monitoring the external environment and remaining focused on accelerating future growth by leveraging the broad and diverse nature of our product portfolio, our geographic reach and capitalizing on the unique opportunities for expansion that our new product pipeline affords.
In fact, during the quarter, we did see the number of milestones that reflect enhancements to our commercial, operational and scientific effectiveness, and I'll mention just a few. For example, the SIGMA Spectrum Infusion pump received the "Best in KLAS" award for smart pumps in the 2011 Top 20 Best in KLAS Awards for Medical Equipment & Infrastructure report. This award represents the aggregate opinions of healthcare executives, purchasing managers and clinicians for more than 4,500 hospitals and reflects the high-level of customer satisfaction with the spectrum pump, which scored the highest in overall performance, reliability and delivery of technology.
We also completed the acquisition of Prism Pharmaceuticals and launched NEXTERONE, the first and only ready-to-use premixed formulation of the antiarrhythmic agent, amiodarone. Given this drug is typically administered to patients in extremely time-sensitive situations, the benefits of a ready to use premixed form allows for immediate use and reduces the potential risk of medication errors. We believe this unique product satisfies unmet clinical needs, offers an opportunity to expand the current market, enhance the potential for application in additional geographies outside the United States.
We're pleased that data from Baxter's Phase II CMI adult stem cell program was recently published in Circulation Research. Results demonstrate that injection of the patient's own CD34+ adult stem cells into targeted sites in the heart have therapeutic benefits such as reduced angina episodes and improved exercise tolerance. More than 850,000 individuals in the U.S. experienced refractory angina associated with CMI and have not responded to other therapeutic options. We look forward to moving in the Phase III clinical trial later this year.
We also continued to be successful in driving differentiation of GAMMAGARD LIQUID by offering various dosage presentations, enhancing delivery options and expanding the number of indications. For example, earlier in the quarter, we introduced the first and only 30-gram dose vial for GAMMAGARD LIQUID in the U.S. This new dosage form is the most frequently prescribed dose for primary immune deficiency patients and enhances user convenience, and we're pleased with the rapid pace of customer adoption since the launch.
I've mentioned that FDA approval for GAMMAGARD LIQUID 10% Sub-Q is imminent. We plan to launch Sub-Q in the U.S. during the third quarter and participate in this fast-growing segment of the market. We recently submitted the Biologics License Application to the FDA for approval of HyQ, allowing for the enhanced subcutaneous administration of immune globulin, with recombinant human hyaluronidase for patients with PID. The submission is based on results from a Phase III trial, which met both its primary and secondary endpoints. We're currently in the process of preparing our submission for approval in Europe and Canada and expect to communicate final results later in the year.