Baxter(BAX) - 2025 Q4 - Annual Results

Financial Performance - Fourth-quarter sales from continuing operations totaled approximately $2.97 billion, an increase of 8% on a reported basis and 3% on an operational basis[4] - U.S. GAAP diluted earnings per share (EPS) from continuing operations was ($2.01), while adjusted diluted EPS was $0.44, a decrease of 24% from the prior year[8] - U.S. sales from continuing operations totaled approximately $1.55 billion, increasing 3% on a reported basis but declining 1% on an operational basis[8] - International sales from continuing operations totaled approximately $1.42 billion, increasing 14% on a reported basis and 8% on an operational basis[8] - Net sales for Q4 2025 were $2,974 million, an increase of 8% compared to $2,753 million in Q4 2024[28] - Cost of sales rose significantly by 34% to $2,397 million, leading to a gross margin decrease of 40% to $577 million[28] - Operating loss increased by 68% to $729 million, with an operating margin of -24.5%[28] - Net income loss attributable to Baxter stockholders was $1,128 million, compared to a loss of $512 million in the previous year[28] - Adjusted operating income (excluding special items) decreased by 16% to $352 million[28] - Adjusted net income attributable to Baxter stockholders (excluding special items) fell by 53% to $185 million[28] - The company reported a gross margin of 27.2%, with a decrease of 1.3% compared to the previous period[30] - The company reported a net loss of $638 million for 2025, compared to a net income of $1,494 million in 2024[40] - Adjusted net income for 2025 was $1,483 million, with diluted earnings per share of $1.89, compared to $2.90 in 2024[40] Segment Performance - Medical Products & Therapies segment sales reached approximately $1.39 billion, increasing 6% on a reported basis and 4% on an operational basis[7] - Healthcare Systems & Technologies sales for the fourth quarter totaled approximately $827 million, an increase of 5% on a reported basis and 4% on an operational basis[10] - Pharmaceuticals sales for the fourth quarter totaled approximately $668 million, an increase of 4% on a reported basis and 2% on an operational basis[10] - The Infusion Therapies & Technologies segment generated $4,101 million in revenue for 2025, showing a slight decline of 0% compared to $4,103 million in 2024[43] - The Advanced Surgery segment reported a revenue increase of 9% to $1,198 million in 2025, up from $1,104 million in 2024[43] - The Medical Products & Therapies segment achieved $5,299 million in revenue for 2025, a 2% increase from $5,207 million in 2024[43] - The Healthcare Systems & Technologies segment's revenue rose to $3,071 million in 2025, a 4% increase from $2,951 million in 2024[43] Cost and Expenses - Research and development expenses decreased by 40% to $126 million, representing 4.2% of net sales[28] - Selling, general, and administrative expenses were $577 million, representing 19.4% of net sales[30] - Research and development expenses were $761 million, accounting for 25.6% of net sales[30] - Research and development expenses decreased by 12% to $518 million, representing 4.6% of net sales[35] - Goodwill impairments increased by 14% to $485 million compared to $425 million in 2024[35] Future Outlook - The company provided full-year 2026 financial outlook with reported sales growth from continuing operations expected to be flat to 1%[14] - Projected sales growth for FY 2026 is expected to be flat to 1%, with adjusted diluted EPS guidance set between $1.85 and $2.05[57] - The company indicated a future outlook with a focus on business optimization and potential acquisitions[30] Special Items and Charges - Special items included $290 million in goodwill impairments and $485 million in losses from discontinued operations[30] - The company incurred restructuring and optimization costs related to the sale of its former Kidney Care segment, impacting its cost structure[33] - Integration costs associated with the acquisition of Hill-Rom Holdings, Inc. were reflected in the results for both 2025 and 2024[33] - The company faced additional costs to comply with the European Union's medical device regulations, which are considered a significant one-time regulatory change[33] - The company reported significant charges related to Hurricane Helene, impacting both continuing and discontinued operations[40] Dividend and Shareholder Information - The company recently reduced its quarterly dividend to $0.01 per share, with no guarantee of future increases[25] - The weighted-average diluted shares as reported were 514 million, with an adjusted figure of 515 million[30]