First Quarter Sales Increased 11 Percent; EPS of $0.61 Increased 42 Percent
DEERFIELD, Ill., April 19, 2007 – Baxter International Inc. (NYSE:BAX) today reported sales and earnings above expectations for the first quarter of 2007, and raised its outlook for the full-year.
First quarter net income increased 43 percent to $403 million compared to $282 million in the first quarter of 2006. Earnings per diluted share of $0.61 increased 42 percent over the $0.43 per diluted share reported last year. Strong sales, improved margins, and lower interest expense drove the company’s financial performance, which compared favorably to the guidance previously provided for the first quarter of $0.54 to $0.56 per diluted share.
Baxter’s worldwide sales totaled $2.7 billion in the first quarter, an increase of 11 percent. Sales within the United States totaled $1.1 billion, an increase of 8 percent over the same period last year, while sales outside of the United States grew 14 percent (or 8 percent excluding the impact of foreign exchange) to $1.5 billion. Excluding the impact of foreign exchange, Baxter’s sales growth of 8 percent exceeded its guidance range of 5 to 6 percent.
During the quarter, momentum continued in Baxter’s BioScience business, with revenues totaling $1.1 billion, an increase of 22 percent. This increase was driven by strength across all product lines, including recombinant products used in the treatment of hemophilia A, antibody therapy products for the treatment of primary immunodeficiencies, and other specialty plasma therapeutics and biosurgery products. The company also posted strong vaccine sales in the quarter as a result of shipments of its candidate H5N1 vaccine for government stockpiles around the world, and strong demand in Europe for its vaccines that prevent tick-borne encephalitis and group C meningococcal meningitis. BioScience results exclude the Transfusion Therapies business, which was divested in the quarter.
Medication Delivery revenues increased 8 percent to $990 million as a result of strong international performance and sales of anesthesia products. Renal revenues increased 6 percent to $525 million as the company continued to post strong gains in peritoneal dialysis patients, primarily in developing countries.
“Our strong first quarter financial results reflect the building momentum in our business and our disciplined focus on driving margin improvements,” said Robert L. Parkinson, Jr., chairman and chief executive officer. “This performance continues to reflect the value inherent in optimizing our current business portfolio and allowed us to continue to accelerate our investment in research and development, which grew 15% in the quarter.”
Second Quarter and Full-Year 2007 Outlook
Given strong first quarter financial results, Baxter is raising its sales and earnings outlook for full-year 2007. The company now expects to achieve sales growth of 4 to 5 percent, excluding the impact of foreign exchange, and earnings per diluted share of $2.60 to $2.65, before any special items . In addition, Baxter continues to expect cash flow from operations for full-year 2007 to total approximately $2.3 billion. For the second quarter of 2007, Baxter expects sales growth of 3 to 4 percent, excluding the impact of foreign exchange, and earnings per diluted share, before any special items, of $0.66 to $0.68.
The financial outlook for the second quarter and full-year 2007 reflects the divestiture of the Transfusion Therapies business and excludes sales of the company’s COLLEAGUE infusion pump in the United States, which may resume before the end of 2007.
A webcast of Baxter's first 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 April 19, 2007. Please visit Baxter's website for more information regarding this and future investor events and webcasts, including investor presentations, and the company’s Annual Meeting for shareholders to be held in Chicago on May 1.
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-K 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.
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