Baxter(BAX) - 2025 Q2 - Quarterly Results

Baxter Q2 2025 Earnings Release Q2 2025 Performance Highlights Baxter's Q2 2025 sales from continuing operations reached $2.81 billion, up 4% reported and 1% operational, with adjusted diluted EPS at $0.59 Q2 2025 Key Financial Metrics | Metric | Value | Basis | Growth (vs. Q2 2024) | | :--- | :--- | :--- | :--- | | Sales from Continuing Operations | $2.81 billion | Reported | +4% | | Sales from Continuing Operations | $2.81 billion | Operational | +1% | | GAAP Diluted EPS from Continuing Operations | $0.24 | GAAP | +26% | | Adjusted Diluted EPS from Continuing Operations | $0.59 | Non-GAAP | +28% | - The company appointed Andrew Hider as the new President and CEO to accelerate innovation, growth, and operational effectiveness[3][4] Second-Quarter 2025 Segment Performance Q2 2025 segment performance was mixed, with Medical Products & Therapies flat at $1.32 billion, Healthcare Systems & Technologies up 3% to $767 million, and Pharmaceuticals up 2% to $612 million Q2 2025 Sales by Segment (Continuing Operations) | Segment | Sales (approx.) | Reported Growth | Operational Growth | | :--- | :--- | :--- | :--- | | Medical Products & Therapies | $1.32 billion | 0% | +1% | | Healthcare Systems & Technologies | $767 million | +3% | +2% | | Pharmaceuticals | $612 million | +2% | +1% | - Medical Products & Therapies performance was impacted by softness in IV solutions demand due to fluid conservation efforts post-Hurricane Helene[8] - Pharmaceuticals growth was driven by Drug Compounding strength, partially offset by a 1% decline in Injectables and a low double-digit decline in Anesthesia sales[9] Recent Business Highlights Baxter restored IV solution inventory post-Hurricane Helene, partnered with Vizient for supply reliability, and published its 2024 Corporate Responsibility Report - Inventory levels for IV solutions from the North Cove, N.C. site were restored, and all product allocations removed post-Hurricane Helene[9] - Partnered with Vizient to include IV fluids in its Vizient Reserve Program, ensuring reliable access during supply disruptions[9] - Published the 2024 Corporate Responsibility Report, detailing progress on 2030 sustainability goals[10] 2025 Financial Outlook Baxter updated its full-year 2025 forecast to 6-7% reported sales growth and adjusted diluted EPS of $2.42-$2.52, with similar Q3 expectations Full-Year 2025 Financial Guidance | Metric | Guidance Range | | :--- | :--- | | Sales Growth (Reported) | 6% to 7% | | Sales Growth (Operational) | 3% to 4% | | Adjusted Diluted EPS | $2.42 to $2.52 | Third-Quarter 2025 Financial Guidance | Metric | Guidance Range | | :--- | :--- | | Sales Growth (Reported) | 6% to 7% | | Sales Growth (Operational) | 3% to 4% | | Adjusted Diluted EPS | $0.58 to $0.62 | Financial Statements & Reconciliations Consolidated Statements of Income (Loss) Q2 2025 net sales from continuing operations grew 4% to $2.81 billion, with GAAP income at $122 million, reflecting Kidney Care exclusion Q2 2025 vs Q2 2024 Income Statement Highlights (Continuing Operations) | Metric (in millions, except EPS) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $2,810 | $2,694 | 4% | | Gross Margin | $991 | $1,031 | (4)% | | Operating Income | $191 | $179 | 7% | | Income from Continuing Operations | $122 | $95 | 28% | | Diluted EPS from Continuing Operations | $0.24 | $0.19 | 26% | Six Months 2025 vs 2024 Income Statement Highlights (Continuing Operations) | Metric (in millions, except EPS) | YTD 2025 | YTD 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $5,435 | $5,184 | 5% | | Gross Margin | $1,852 | $1,992 | (7)% | | Operating Income | $249 | $294 | (15)% | | Income from Continuing Operations | $186 | $101 | 84% | | Diluted EPS from Continuing Operations | $0.36 | $0.20 | 80% | Segment Performance Analysis For H1 2025, Medical Products & Therapies sales grew 1% to $2.58 billion, Healthcare Systems & Technologies 4% to $1.47 billion, and Pharmaceuticals 1% to $1.19 billion Six Months Ended June 30, 2025 Sales by Segment | Segment | Sales (in millions) | Actual Growth | Operational Growth | | :--- | :--- | :--- | :--- | | Medical Products & Therapies | $2,582 | 1% | 3% | | Healthcare Systems & Technologies | $1,471 | 4% | 4% | | Pharmaceuticals | $1,193 | 1% | 2% | | Total - Continuing Operations | $5,435 | 5% | 3% | Six Months Ended June 30, 2025 Segment Operating Income | Segment | Operating Income (in millions) | % of Segment Net Sales | | :--- | :--- | :--- | | Medical Products & Therapies | $483 | 18.7% | | Healthcare Systems & Technologies | $211 | 14.3% | | Pharmaceuticals | $127 | 10.6% | Six Months Ended June 30, 2025 Sales by Geography (Continuing Ops) | Region | Sales (in millions) | % Growth | | :--- | :--- | :--- | | U.S. | $3,026 | 7% | | International | $2,409 | 3% | | Total | $5,435 | 5% | Reconciliation of GAAP to Non-GAAP Measures Baxter reconciled Q2 2025 adjusted diluted EPS of $0.59 from GAAP EPS of $0.24, operational sales growth of 1% from 4% reported, and reported negative free cash flow of $144 million for H1 Q2 2025 GAAP to Adjusted EPS Reconciliation (Continuing Operations) | Item | Per Diluted Share | | :--- | :--- | | Reported GAAP EPS | $0.24 | | Intangible asset amortization | $0.23 | | Business optimization items | $0.03 | | Product related reserves | $0.03 | | Hurricane Helene costs | $0.03 | | Separation-related costs | $0.02 | | Other items | $0.01 | | Adjusted Non-GAAP EPS | $0.59 | Q2 2025 Reported to Operational Sales Growth Reconciliation | Item | Impact on Growth | | :--- | :--- | | Net Sales Growth As Reported | 4% | | Kidney Care MSA | (4)% | | Exit of IV Solutions in China | 1% | | Foreign Exchange (FX) | (0)% | | Operational Sales Growth | 1% | Free Cash Flow Reconciliation (Six Months Ended June 30, 2025) | Item (in millions) | Amount | | :--- | :--- | | Cash flows from operations - continuing operations | $118 | | Less: Capital expenditures - continuing operations | ($262) | | Free cash flow - continuing operations | ($144) | Other Information Non-GAAP Financial Measures Baxter utilizes non-GAAP measures like operational sales growth and adjusted diluted EPS to clarify core performance by excluding variable or unusual items - Management uses non-GAAP measures internally for financial planning, monitoring business unit performance, and determining incentive compensation[16] - Operational sales growth is a non-GAAP measure excluding Kidney Care MSA impact, IV solutions exit in China, and calculated at constant currency rates[17] - Special items excluded from adjusted earnings include intangible asset amortization, business optimization charges, acquisition costs, separation costs, Hurricane Helene costs, and certain legal and tax matters[19] Forward-Looking Statements This report contains forward-looking statements subject to risks including global economic conditions, supply chain disruptions, regulatory actions, and integration of acquisitions - Forward-looking statements cover the financial outlook for Q3 and full-year 2025 and operational activities[22] - Major risks include impacts from global economic conditions, supply chain disruptions, inflation, and geopolitical events[23] - Other cited risks include regulatory actions by the FDA, raw material availability, quality program failures, and IT system breaches[23][24]