Press releases

Baxter Reports Strong Third Quarter Financial Results and Confirms Full-Year Guidance

Baxter Reinforces Commitment to Innovation with Increased Investment in Research and Development and Advancements in New Product Pipeline

DEERFIELD, Ill., October 20, 2011 - Baxter International Inc. (NYSE:BAX) today reported third quarter net income of $576 million, an increase of 10 percent from $525 million reported in the third quarter of 2010.  Earnings per diluted share of $1.01 advanced 13 percent from $0.89 per diluted share reported in the prior-year period.  Baxter's third quarter financial results included an after-tax special charge of $48 million (or $0.08 per diluted share) for the resolution of long-standing litigation pertaining to average wholesale prices (AWP) and certain historical rebate and discount adjustments.  Baxter's third quarter 2010 financial results included an after-tax special item of $70 million (or $0.12 per diluted share) related to the impairment of assets associated with the divestiture of the U.S. multi-source generic injectables business.

On an adjusted basis, excluding special items from both periods, Baxter's third quarter net income of $624 million rose 5 percent from $595 million reported in 2010.  Adjusted earnings per diluted share of $1.09 increased
8 percent from $1.01 per diluted share reported last year and were in-line with the guidance the company previously provided of $1.07 to $1.09 per diluted share.

Worldwide sales totaled $3.48 billion compared to sales of $3.22 billion in the third quarter of 2010, representing an increase of 8 percent (or 3 percent excluding the impact of foreign currency).  Adjusting for the divestiture of the U.S. multi-source generic injectables business which was completed in the second quarter 2011, worldwide revenues advanced 10 percent (or 4 percent excluding the impact of foreign currency).  Sales within the United States of $1.40 billion grew 1 percent (or 5 percent adjusting for the divestiture).  International sales of $2.08 billion advanced 13 percent (or 4 percent excluding the impact of foreign currency), driven by solid performance across the portfolio, particularly in emerging markets.  

BioScience revenues totaled $1.52 billion and rose 9 percent (or 4 percent excluding the impact of foreign currency), reflecting robust demand for GAMMAGARD LIQUID [Immune Globulin Intravenous (Human)] (marketed as KIOVIG outside of the United States), certain plasma-based therapeutics, and vaccines.  Medical Products sales of $1.95 billion increased 7 percent (or
1 percent excluding the impact of foreign currency).  Adjusting for the divestiture, Medical Products sales increased 10 percent (or 4 percent excluding the impact of foreign currency), reflecting strong growth of intravenous therapies and injectable drugs, as well as peritoneal dialysis therapy and anesthesia products in international markets. 

Nine-Month Results
For the first nine months of 2011, Baxter reported net income of $1.76 billion or $3.06 per diluted share, compared to net income of $997 million or $1.67 per diluted share in the same period last year.  On an adjusted basis, excluding special items, Baxter's net income for the nine-month period of $1.81 billion increased 5 percent from the $1.72 billion reported in the prior-year period, and earnings of $3.14 per diluted share increased 9 percent from $2.87 per diluted share reported in the same period last year.

Baxter's worldwide revenues totaled $10.30 billion and increased 10 percent (or 7 percent excluding the impact of foreign currency) compared to sales of $9.35 billion in the same period of 2010.  Excluding the prior-year COLLEAGUE revenue adjustment and the divestiture of the U.S. multi-source generic injectables business, Baxter's worldwide sales increased 9 percent over the prior-year period (or 5 percent excluding the impact of foreign currency). 

Through the first nine months of the year, Baxter generated strong cash flows from operations of $1.93 billion and has returned significant value to shareholders in the form of dividends and share repurchases.  Through the third quarter 2011, Baxter has returned $1.95 billion to shareholders through dividends totaling $534 million and share repurchases of approximately
$1.41 billion (or 26 million shares), a 9 percent increase versus the prior-year period.

"The evolving global macro-environment will exert ongoing pressures on our business, creating challenges that we will manage through disciplined execution of our strategies," said Robert L. Parkinson, Jr., chairman and chief executive officer.  "We continue to benefit from the diversified and medically-necessary nature of our portfolio, broad geographic reach and strong financial position, and remain committed to innovation through clinical differentiation, enhanced operational and cost effectiveness, improved earnings growth, and delivering sustained value for our shareholders."

Recent Highlights
Baxter continued its commitment to innovation with further investments in research and development and advancements in the new product pipeline, augmented by business development initiatives.  The company's research and development expenditures accelerated 15 percent in the third quarter reflecting progress of investigational therapies in late-stage clinical development and success in obtaining approvals and launching innovative products to the global marketplace.  Recent achievements include the following:

  • U.S. Food and Drug Administration (FDA) approval and launch of GAMMAGARD LIQUID 10% [Immune Globulin Infusion (Human)] for subcutaneous administration in patients with primary immunodeficiency (PI).  This approval allows patients to self-administer their therapy at home on a weekly basis and offers patients an option to administer GAMMAGARD LIQUID therapy either intravenously or subcutaneously, depending on their individual needs. The subcutaneous clinical trial in PI patients demonstrated efficacy with limited adverse reactions (mostly local site reactions, which occurred in only 2.7% of infusions). 
  • Submissions to the United States and European regulatory bodies seeking approval for HyQ, Baxter's investigational immunoglobulin (IG) therapy administered subcutaneously and facilitated by recombinant human hyaluronidase for patients with PI.  The filings were supported by the completion of the phase III clinical study which met both primary and secondary endpoints.  Final data will be presented at the 2011 Annual Meeting of the American College of Allergy, Asthma and Immunology in Boston, MA in November.
  • FDA approval of an expanded indication for ARTISS [Fibrin Sealant (Human)] to include adhering tissue flaps during facial rhytidectomy (face-lift) surgery.  ARTISS is the only premixed, ready-to-use fibrin sealant specifically indicated for tissue adherence in both facial rhytidectomy and burn surgeries. It was first approved by the FDA in 2008 to adhere autologous skin grafts to surgically prepared wound beds resulting from burns in adult and pediatric populations one year of age or older.  
  • Initiation of a global Phase III clinical trial to evaluate the safety and effectiveness of BAX 111, Baxter's investigational recombinant von Willebrand factor (rVWF), for the treatment and prevention of bleeding episodes in patients with von Willebrand disease.  This condition is the most common type of inherited bleeding disorder, affecting both men and women, the vast majority of whom are undiagnosed and not treated due to mild symptoms.  BAX 111 is the first and only recombinant von Willebrand product in clinical development. 
  • Clearance under the Hart-Scott-Rodino Antitrust Improvements Act for Baxter's previously announced $380 million acquisition of Baxa Corporation.  Baxter expects to close the acquisition before the end of 2011.  Annual sales for Baxa were approximately $150 million in 2010, and Baxter expects the future top-line growth of this business to be accretive to the company's future sales growth.  Nutrition is recognized as an important element of patients' therapy, and both Baxter and Baxa have sought to advance the delivery of IV nutrition with innovative technologies. The addition of Baxa's product lines will complement Baxter's portfolio of nutrition products and drug delivery systems and support patient safety.

Outlook for Fourth Quarter and Full-Year 2011
Baxter also confirmed previously-issued guidance and expects earnings, before special items, of $4.29 to $4.32 per diluted share for full-year 2011.  Baxter continues to expect sales growth of 3 to 4 percent excluding the impact of foreign currency and the COLLEAGUE revenue adjustment in 2010 (or
5 to 6 percent including the impact of foreign currency).   In addition, the company expects to generate cash flows from operations of approximately $2.8 billion.

For the fourth quarter of 2011, the company expects earnings per diluted share of $1.15 to $1.18, before any special items, and sales growth of 2 to 3 percent excluding the impact of foreign currency (or 1 to 2 percent including the impact of foreign currency).

A webcast of Baxter's third quarter conference call for investors can be accessed live from a link on the company's website at beginning at 7:30 a.m. CDT on October 20, 2011.  Please visit Baxter's website for more information regarding this and future investor events and webcasts.

Baxter International Inc., through its subsidiaries, develops, manufactures and markets products that save and sustain the lives of people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions.  As a global, diversified healthcare company, Baxter applies a unique combination of expertise in medical devices, pharmaceuticals and biotechnology to create products that advance patient care worldwide.

This release includes forward-looking statements concerning the company's financial results, outlook for 2011 and R&D pipeline. 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 with respect to the company's implementation of the COLLEAGUE recall, that could delay, 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; Sigma's ability to build production capacity to meet customer demand; future actions of governmental authorities and other third parties as U.S. healthcare reform legislation and other austerity measures are implemented; additional legislation, regulation and other governmental pressures, which may affect pricing, reimbursement and rebate policies of government agencies and private payers or other elements of the company's business; 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; the availability of acceptable raw materials and component supply; fluctuations in supply and demand and the pricing of plasma-based therapies; 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; any impact of the current economic conditions on Baxter and its customers; foreign currency fluctuations and other risks identified in the company's most recent filing on Form 10-K and other Securities and Exchange Commission 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.