Baxter(US:BAX)2025-10-30 13:32Financial Data and Key Metrics Changes - Third quarter 2025 global sales from continuing operations totaled $2.8 billion, increasing 5% on a reported basis and 2% on an operational basis [17] - Total company adjusted earnings from continuing operations were $0.69 per share, reflecting a 41% increase versus the prior year [31] - Adjusted operating margin from continuing operations was 14.9%, improving 40 basis points compared to the prior year [28] Business Line Data and Key Metrics Changes - Sales in the Medical Products & Therapies (MPT) segment were $1.3 billion, declining 1% due to softness in Infusion Therapies and Technologies [18] - Infusion Therapies and Technologies division sales totaled $1 billion, declining 4% primarily due to lower infusion pump sales [18] - Advanced Surgery sales grew 11% globally, totaling $306 million, driven by strong demand for hemostats and sealants [20] - Healthcare Systems & Technologies (HST) sales increased 2% to $773 million, with Care and Connectivity Solutions growing 3% [23] - Pharmaceuticals segment sales totaled $632 million, increasing 7%, with Injectables and Anesthesia division growing 3% [25] Market Data and Key Metrics Changes - U.S. demand for IV Solutions remains below pre-Hurricane Helene levels, with expectations for further recovery at a moderate pace [20] - Total U.S. capital orders for Care and Connectivity Solutions increased 30% compared to the prior year [24] - The company has not observed a slowdown in U.S. hospital capital spending despite broader macroeconomic uncertainty [24] Company Strategy and Development Direction - The company is focusing on stabilizing business areas that require increased attention, strengthening the balance sheet, and driving a culture of continuous improvement [11][14] - A new growth and performance system, Baxter GPS, has been launched to drive continuous improvement and efficiency [14] - The company plans to reduce the quarterly dividend to $0.01 per share to free up cash for deleveraging [13][32] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that current performance is unsatisfactory and emphasizes the need for immediate actions and long-term solutions [9] - The company expects operational sales growth of 1%-2% for 2025, reflecting a reduction from prior expectations [34] - Management remains confident in the strength of the IV Solutions business over the medium and long term [20][76] Other Important Information - The company is actively working to resolve issues related to the Novum IQ Large Volume Pump, which has led to a hold on deliveries and installations [12][19] - The adjusted tax rate for the quarter was 5.1%, driven by the release of reserves and discrete benefits [31] Q&A Session Summary Question: Vision for Baxter and future changes - Management emphasizes a focus on stabilizing business areas, strengthening the balance sheet, and driving continuous improvement through the new GPS system [40][41] Question: Potential for growth in 2026 - Management anticipates growth but does not provide specific guidance for 2026, highlighting the importance of customer relationships and market dynamics [44] Question: Impact of Novum on guidance - The hold on Novum is affecting sales, and management is working urgently to address outstanding field actions [58] Question: Free cash flow generation - Management expects continued positive free cash flow, particularly in the fourth quarter, and is focused on improving working capital [63][64] Question: Hospital CapEx trends - Management has not observed a slowdown in hospital capital spending, with robust order growth in the capital business [78]