Baxter International (BAX) Q3 2024 earnings summary

Executive summary

• Q3 2024 sales grew 4% year-over-year on both reported and constant currency basis, with $3.85B total and $2.70B from continuing operations, in line with guidance.

• Adjusted EPS was $0.80 (total), exceeding guidance, driven by strong Medical Products & Therapies and Kidney Care performance, supply chain efficiency, and expense management; adjusted EPS from continuing operations was $0.49.

• Kidney Care segment classified as discontinued operations due to pending $3.8B sale to Carlyle, expected to close late 2024 or early 2025; historical results restated.

• Hurricane Helene significantly impacted North Cove facility, causing temporary shutdown and $25M in Q3 charges; phased production restart began ahead of schedule, with full recovery expected by year-end.

• Ongoing business optimization, cost-saving initiatives, and strategic transformation continue, including operating model realignment and BPS divestiture.

Financial highlights

• Q3 2024 total sales: $3.85B; continuing operations: $2.70B, up 4% year-over-year; nine-month sales: $7.88B, up 3%.

• Adjusted EPS: $0.80 (total, +18%); $0.49 (continuing ops, +14%); GAAP net income: $140M ($0.27/diluted share).

• Adjusted gross margin: 43.7% (continuing ops, down 110 bps); adjusted operating margin: 14.5% (down 90 bps); GAAP gross margin: 38.3%.

• Net interest expense: $88M, down $40M year-over-year due to debt repayment.

• Cash and cash equivalents at September 30, 2024: $1.42B; long-term debt: $12.94B.

Outlook and guidance

• Full-year 2024 sales growth expected at 1–2% reported, ~2% constant currency; adjusted EPS guidance: $2.90–$2.94 (total), $1.81–$1.84 (continuing ops).

• Q4 2024 sales expected to decline low single digits due to hurricane, with ~$200M impact; adjusted EPS guidance: $0.77–$0.81 (total), $0.50–$0.53 (continuing ops).

• 2025 guidance reaffirmed: 4–5% operational sales growth and ~16.5% adjusted operating margin post-Kidney Care sale.

• Additional cost-saving and restructuring initiatives planned to address dis-synergies post-divestiture.