Baxter International (BAX) Q2 2024 earnings summary

Executive summary

• Q2 2024 sales from continuing operations reached $3.81 billion, up 3% reported and 4% constant currency, surpassing guidance, with all segments contributing positively and momentum from strategic transformation and new product launches.

• Adjusted EPS from continuing operations was $0.68, up 24% year-over-year and above guidance, driven by operational efficiencies, though GAAP EPS was ($0.62) due to $430–$659 million in special items, mainly a goodwill impairment in Kidney Care.

• Net loss attributable to stockholders was $314 million for Q2 2024, reflecting the goodwill impairment and separation-related costs.

• The company raised its full-year sales and adjusted EPS outlook, citing sustained business momentum and strong operational execution.

• The planned separation of the Kidney Care segment is progressing, with completion expected in late 2024 or early 2025, and ongoing separation costs.

Financial highlights

• Q2 2024 global sales were $3.81 billion, up 3% reported and 4% constant currency year-over-year; H1 2024 sales reached $7.4 billion, up 3%.

• Adjusted gross margin improved to 41.2% (+80 bps YoY); adjusted operating margin reached 13.7% (+50 bps YoY).

• Net interest expense decreased due to debt repayments from divestitures; Q2 2024 interest expense was $85 million, down from $124 million in Q2 2023.

• Free cash flow for H1 2024 was $452 million; operating cash flow was $278 million, impacted by higher incentive payouts and separation costs.

• Cash and equivalents at June 30, 2024, were $2.1 billion; long-term debt and finance lease obligations totaled $10.44 billion.

Outlook and guidance

• Full-year 2024 sales growth expected at approximately 3% reported and constant currency; adjusted EPS guidance raised to $2.93–$3.01.

• Q3 2024 guidance: sales growth of 3–4% reported and 4–5% constant currency; adjusted EPS of $0.77–$0.79.

• Segment guidance for FY 2024: Medical Products & Therapies ~5% growth, Pharmaceuticals ~7%, Kidney Care 1–2%, Healthcare Systems & Technologies ~0%.

• Growth in Healthcare Systems & Technologies expected to improve in H2 2024, supported by new product launches.

• The Kidney Care separation is expected to close in late 2024 or early 2025, with significant separation costs and some dis-synergies anticipated.