Baxter(US:BAX)2022-02-17 17:20Financial Data and Key Metrics Changes - Baxter reported fourth quarter 2021 sales growth of 10% on a reported basis, 12% at constant currency, and 4% at operational rates [12] - Adjusted earnings per share for the fourth quarter were $1.04, up 30% year-over-year, with Hillrom contributing $0.08 to this figure [12][21] - For the full year 2021, sales increased by 10% on a reported basis, 7% on a constant currency basis, and 5% operationally, with adjusted earnings per share of $3.61, a 17% increase year-over-year [31] Business Line Data and Key Metrics Changes - Renal Care sales were $1 billion, increasing 4% on a constant currency basis, driven by growth in both HD and PD businesses [23] - Medication Delivery sales of $784 million increased 6% on a constant currency basis, reflecting recovery in hospital admissions and demand for infusion pumps [24] - Pharmaceutical sales of $604 million advanced 8% on a constant currency basis, driven by international pharmacy compounding and anesthesia growth [25] - Clinical Nutrition sales were $249 million, increasing 4% on a constant currency basis, while Advanced Surgery sales were flat at $255 million [26] - Acute Therapies sales declined 7% on a constant currency basis, but exceeded expectations due to elevated demand for CRRT [27] - Hillrom's unaudited sales for the full quarter were $724 million, reflecting supply constraints impacting product shipments [28] Market Data and Key Metrics Changes - Sales in the Americas increased 5% on both constant currency and operational basis, while Europe, Middle East, and Africa grew 5% on a constant currency basis and 1% operationally [22] - APAC region sales advanced 6% on a constant currency basis and 5% operationally [22] Company Strategy and Development Direction - The acquisition of Hillrom is seen as a pivotal point in Baxter's transformation, enhancing its med tech portfolio and enabling connected care innovations [11][16] - The company is focused on operational efficiency and addressing supply chain challenges while exploring cost pass-through opportunities in select geographies [15][33] - Baxter aims to innovate and introduce new products, including the anticipated U.S. launch of the NOVUM IQ smart pump and TrueVue connected digital solutions [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain disruptions and inflationary pressures impacting performance, particularly in the first quarter of 2022 [32][33] - The company expects a strong ramp in sales into the second quarter, driven by new product launches and easing COVID-19 dynamics [33] - For 2022, Baxter anticipates global sales growth of 24% to 25% on a reported basis and adjusted earnings of $4.25 to $4.35 per diluted share [34] Other Important Information - Baxter's adjusted gross margin for the fourth quarter was 44.3%, reflecting operational improvements and favorable product mix [29] - The company returned approximately $1.1 billion to shareholders through dividends and share repurchases in 2021 [32] Q&A Session Summary Question: What is driving the lower EPS growth for base Baxter? - Management noted short-term impacts from supply chain issues and inflation, with expectations for improvement as the year progresses [37][39] Question: Are there any COVID headwinds affecting revenue guidance? - Management indicated that COVID-related impacts are primarily supply chain-related, with expectations for normalization throughout the year [41][49] Question: What is the contribution from Hillrom in the first quarter guidance? - Hillrom is expected to contribute over $0.10 to EPS in the first quarter, despite facing supply chain challenges [52] Question: Can you elaborate on passing inflationary costs to customers? - Management stated that pricing strategies are in place, and selective cost increases will be implemented based on exceptional circumstances [54] Question: What is the status of the NOVUM IQ approval? - The company is in the final stages of documentation submission to the FDA, expecting a response within 31 days [57] Question: When will the portfolio evaluation process conclude? - Management anticipates providing updates on portfolio adjustments by May or later, focusing on increasing CAGR and profitability [62] Question: Are there any revenue synergies included in the 2022 guidance? - No revenue synergies are included in the 2022 guidance, but management is optimistic about long-term growth opportunities from the Hillrom acquisition [65]