Alistair Berg/DigitalVision via Getty Images The following segment was excerpted from the Artisan Value Income Fund Q4 2025 Commentary. The portfolio returned 2.21% in Q4 and finished the year up 10.03% (investor class). Over the past three years, the portfolio has generated a ~10% annualized ...

Core Viewpoint - Baxter International Inc. is facing challenges in financial performance despite reporting strong sales growth, leading to a negative market reaction and a cautious outlook for 2026 [2][5][6] Financial Performance - Baxter reported fourth-quarter sales of $2.974 billion, an 8% increase year over year, exceeding the consensus estimate of $2.824 billion [3][6] - The adjusted earnings per share (EPS) for the quarter was 44 cents, which fell short of management's guidance and Wall Street expectations due to an unfavorable product mix [2][6] - The adjusted gross margin contracted by 900 basis points to 35.5%, and operating income decreased by 16% year over year [4] Market Reaction - Following the earnings report, Baxter's stock price declined by 12.5%, reflecting investor concerns over the company's performance [4] - The stock is currently priced at $18.71, representing a decrease of 15.99% over the past year [5] Future Outlook - Baxter's guidance for 2026 indicates flat sales growth or a slight increase of just 1%, with EPS projected between $1.85 and $2.05, which is below consensus estimates [5][6] - Ongoing disruptions at a crucial manufacturing unit are contributing to the negative outlook and market reaction [5]

Core Insights - Baxter International Inc. shares experienced a 15% decline intra-day following the release of fourth-quarter earnings that fell short of expectations and a weaker-than-anticipated guidance for 2026 [1] Financial Performance - The company reported adjusted EPS of $0.44, which was below analyst estimates of $0.54 [2] - Revenue reached $2.97 billion, surpassing the consensus estimate of $2.84 billion, marking an 8% increase on a reported basis and a 3% operational growth compared to the previous year [2] - Despite the revenue exceeding expectations, concerns regarding profitability negatively impacted investor sentiment [2] Future Guidance - Baxter projected fiscal 2026 adjusted EPS to be in the range of $1.85 to $2.05, significantly lower than the analyst consensus of $2.25 [2] Operational Challenges - President and CEO Andrew Hider acknowledged that while sales growth was achieved across all segments, the fourth-quarter performance did not meet internal expectations, highlighting the company's focus on operational improvements [3] - The company reported a U.S. GAAP net loss from continuing operations of $2.01 per diluted share, which included a $485 million goodwill impairment charge related to its Front Line Care reporting unit and a $330 million valuation allowance on U.S. deferred tax assets [3] Segment Performance - Medical Products & Therapies revenue increased by 6% to $1.39 billion [4] - Healthcare Systems & Technologies revenue rose by 5% to $827 million [4] - Pharmaceuticals revenue grew by 4% to $668 million [4]

Research and Development - R&D expenditures were $518 million in 2025, $590 million in 2024, and $518 million in 2023, focusing on enhancing future growth through clinical differentiation [43]. - The company aims to create a more resilient supply chain and align its manufacturing footprint with commercial activities, potentially consolidating R&D facilities [43]. Workforce and Employee Engagement - The company employed approximately 37,500 people globally as of December 31, 2025, with 15,100 employees in the United States and 22,400 employees outside the United States [52]. - Recruitment efforts include a tuition reimbursement program and an e-learning platform, BaxU, to foster a growth mindset among employees [55]. - The company conducts anonymous surveys to assess employee feedback on leadership confidence, compensation competitiveness, and career growth opportunities [55]. - The results of employee engagement surveys are reviewed by senior leaders and shared with the Board of Directors [55]. - The company is committed to improving its human resources programs based on survey feedback from its global workforce [55]. - The company emphasizes a zero-harm workplace and is focused on employee engagement and safety controls for high hazard work activities [55]. - The company’s compensation programs are designed to align employee compensation with performance, balancing short-term and long-term incentives [55]. Business Strategy and Portfolio Management - The company is actively managing its portfolio through acquisitions and divestitures, including the divestiture of its Kidney Care business [32]. - The company has established purchasing agreements with several major Group Purchasing Organizations (GPOs) in the United States, which are subject to renewal [34]. Regulatory and Legal Environment - The company is subject to extensive regulation by various government agencies, including the FDA and EMA, impacting product testing, safety, and marketing [49]. - The company is involved in ongoing patent litigation, which can result in significant financial implications and affect product sales [42]. - The company faces risks related to patent protection and potential litigation that could impact competitiveness and business prospects [334]. Financial Performance and Market Conditions - The company has decreased its quarterly dividend to $0.01 per share and cannot guarantee future increases or continuity in dividend payments [334]. - The company’s stock price has experienced significant fluctuations and may continue to do so [334]. - Changes in tax laws may negatively affect the company's operating results [334]. Competition and Market Position - The company faces substantial competition in each of its segments from both international and domestic healthcare and medical product companies [38]. Sustainability and Corporate Responsibility - The company is focused on sustainability and corporate responsibility, with a 2030 Corporate Responsibility Commitment anchored by three strategic goals [48].

Shares of Baxter International Inc. ( BAX ) were battered following soft Q4 numbers and an ugly FY 2026 guide on Thursday, Feb. 12. Once a stalwart in the Healthcare Equipment industry, the now $9.6 billion market cap stock trades with a single-digit price-to-earnings ratio andFreelance Financial Writer | Investments | Markets | Personal Finance | RetirementI create written content used in various formats including articles, blogs, emails, and social media for financial advisors and investment firms in a co ...

Shares of Baxter International Inc. ( BAX ) were battered following soft Q4 numbers and an ugly FY 2026 guide on Thursday, Feb. 12. Once a stalwart in the Healthcare Equipment industry, the now $9.6 billion market cap stock trades with a single-digit price-to-earnings ratio andFreelance Financial Writer | Investments | Markets | Personal Finance | RetirementI create written content used in various formats including articles, blogs, emails, and social media for financial advisors and investment firms in a co ...

Baxter reported a fourth-quarter adjusted EPS of 44 cents, below the management guidance of 52-57 cents and the Wall Street estimate of 54 cents. The decrease was driven primarily by an unfavorable product mix.The medical device maker reported sales of $2.974 billion, up 8% year over year on a reported basis and 3% on an operational basis, beating the consensus of $2.824 billion.Management expected fourth-quarter sales growth of approximately 2% on a reported basis and a decline of approximately 2% on an op ...

Core Insights - Baxter International Inc. reported fourth-quarter 2025 adjusted earnings per share (EPS) of 44 cents, missing the Zacks Consensus Estimate of 53 cents by 17% and declining 24% from the previous year [1][7] - On a GAAP basis, the company reported a loss per share of $2.19 compared to a loss of 95 cents in the prior-year quarter [1] Revenue Performance - Revenues from continuing operations totaled $2.97 billion, reflecting an 8% increase on a reported basis and a 3% increase on an operational basis, surpassing the Zacks Consensus Estimate by 6.5% [3] - U.S. sales from continuing operations were $1.55 billion, up 3% on a reported basis but down 1% on an operational basis [3] - International sales from continuing operations reached $1.42 billion, showing a 14% increase on a reported basis and an 8% increase on an operational basis [3] Segment Analysis - Medical Products & Therapies segment sales totaled $1.39 billion, up 6% reported and 4% operationally, driven by strong demand in Infusion Therapies & Technologies and Advanced Surgery products [5] - Infusion Therapies and Technologies sales were $1.06 billion, up 4% year over year reported and 1% operationally [8] - Healthcare Systems and Technologies segment sales were $827 million, up 5% year over year reported and 4% operationally [9] - Pharmaceuticals segment sales were $668 million, up 4% year over year reported and 2% operationally, with growth driven by Drug Compounding [10] Margin and Expense Analysis - Adjusted gross profit was $1.06 billion, down 13.9% year over year, with adjusted gross margin contracting 900 basis points to 35.5% [11] - Adjusted operating income from continuing operations totaled $352 million, down 16% year over year, with adjusted operating margin contracting 340 basis points to 11.8% [12] 2026 Guidance - Baxter expects 2026 sales to be flat to up 1% on a reported basis, with adjusted EPS projected in the range of $1.85-$2.05, below the Zacks Consensus Estimate of $2.33 [13]

分组1 - Baxter International reported quarterly earnings of $0.44 per share, missing the Zacks Consensus Estimate of $0.53 per share, and down from $0.58 per share a year ago, representing an earnings surprise of -17.42% [1] - The company posted revenues of $2.97 billion for the quarter, surpassing the Zacks Consensus Estimate by 6.44%, compared to year-ago revenues of $2.75 billion [2] - Baxter shares have increased approximately 16.5% since the beginning of the year, outperforming the S&P 500's gain of 1.4% [3] 分组2 - The current consensus EPS estimate for the coming quarter is $0.50 on revenues of $2.64 billion, and for the current fiscal year, it is $2.33 on revenues of $11.28 billion [7] - The Zacks Industry Rank indicates that the Medical - Products sector is currently in the bottom 33% of over 250 Zacks industries, suggesting potential challenges for stock performance [8]

Financial Data and Key Metrics Changes - In Q4 2025, global sales from continuing operations totaled $3 billion, representing an 8% increase on a reported basis and a 3% increase on an operational basis [8][18] - Adjusted earnings from continuing operations were $0.44 per diluted share, which fell short of expectations despite exceeding top-line forecasts [8][18] - Adjusted gross margins from continuing operations were 35.5%, a decrease of 900 basis points compared to the prior year [26] - Adjusted operating margin was 11.8%, a decrease of 340 basis points compared to the prior year [27] Business Line Data and Key Metrics Changes - Medical Products and Therapies (MPT) segment sales were $1.4 billion, increasing 4% in the quarter, driven by growth in Infusion Therapies and Technologies [18][19] - Advanced Surgery sales totaled $328 million, growing 11% due to strong demand for hemostats and sealants [20] - Healthcare Systems and Technologies (HST) sales were $827 million, increasing 4%, with Care and Connectivity Solutions growing 4% globally [21] - Pharmaceuticals segment sales totaled $668 million, increasing 2%, but the Injectables and Anesthesia division saw a decline of 9% [23][24] Market Data and Key Metrics Changes - Total U.S. capital orders for Care and Connectivity Solutions increased nearly 30% compared to the prior year, indicating strong demand [22] - The company has not observed a slowdown in U.S. hospital capital spending, although macroeconomic uncertainty is being monitored closely [22] Company Strategy and Development Direction - The company is focused on three main priorities: stabilizing business areas, strengthening the balance sheet, and driving a culture of continuous improvement [11][12] - A new operating model has been announced to simplify the organization, accelerate innovation, and improve performance by delayering leadership and embedding critical functional roles [12][62] - Continuous investment in R&D is expected to remain at or above historical levels to drive innovation [10][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in Q4 2025 and emphasized the need for improvement in performance and execution [9][10] - The outlook for 2026 anticipates total sales growth to be flat to 1% on a reported basis, with organic sales growth expected to be approximately flat [30][32] - The first quarter of 2026 is expected to be the most challenging, with improvements anticipated in the second half of the year [35][36] Other Important Information - Free cash flow generation exceeded $450 million in Q4 2025, with full-year free cash flow reaching $438 million [29] - The company plans to deploy cash towards reducing leverage in line with its capital allocation framework [29] Q&A Session Summary Question: Strategic review and sustainability of the business - Management emphasized the importance of accountability at lower levels and the need for continuous improvement to enhance customer support and performance [41][42] Question: Progress on reducing G&A and support costs - Management confirmed that they are on track with cost takeout and streamlining operations, with a commitment to eliminate stranded costs by the end of 2027 [46][48] Question: Earnings growth as TSAs roll off - Management indicated that while they anticipate growth in 2027, specific guidance is not being provided at this time [51][52] Question: Q4 gross margin decline factors - Management identified unfavorable sales mix, higher manufacturing costs, and non-recurring items as key contributors to the gross margin decline [70][71] Question: Improving margins in the Pharmaceuticals business - Management expressed confidence in the fundamentals of the Pharmaceuticals business and outlined ongoing efforts to improve operational execution and address supplier challenges [76][78]