Baxter Q2 2023 Earnings Report
Key Takeaways
Baxter reported a 3% increase in second-quarter revenues on a reported basis and a 4% increase on a constant currency basis, exceeding previously issued guidance. U.S. GAAP EPS was ($0.28), while adjusted EPS was $0.66. The company is progressing with its transformational actions, including the planned spinoff of its Renal Care and Acute Therapies businesses and the divestiture of its BioPharma Solutions business.
Second-quarter revenues increased 3% on a reported basis and 4% on a constant currency basis, ahead of the company’s previously issued guidance.
Second-quarter U.S. GAAP earnings (loss) per share (EPS) (including discontinued operations) of ($0.28); adjusted EPS (including discontinued operations) of $0.66.
Second-quarter U.S. GAAP EPS from continuing operations of ($0.39); adjusted EPS from continuing operations of $0.55.
Baxter signed a definitive agreement to divest its BioPharma Solutions (BPS) business to Advent International and Warburg Pincus.
Baxter
Baxter
Baxter Revenue by Geographic Location
Forward Guidance
Baxter provided sales growth and adjusted earnings per share guidance for the third quarter and full year 2023. The guidance considers two scenarios: one where BPS remains part of Baxter through the full year and another where the BPS sale is completed on September 30, 2023.
Positive Outlook
- Third-quarter sales growth from continuing operations is expected to be approximately 2% on a reported basis and 1% on a constant currency basis.
- Third-quarter adjusted earnings in aggregate (including discontinued operations) are expected to be $0.78 to $0.80 per diluted share.
- Third-quarter adjusted earnings from continuing operations are expected to be $0.65 to $0.67 per diluted share.
- Full-year 2023 sales growth from continuing operations is expected to be 1% to 2% on a reported basis and approximately 2% on a constant currency basis (assuming BPS remains part of Baxter).
- Full-year 2023 adjusted earnings are expected to increase due to reduced interest expense after debt repayment.
Challenges Ahead
- The ultimate timing of the BPS sale is uncertain.
- If the BPS sale is completed on September 30, 2023, sales growth in the aggregate (including discontinued operations) would be approximately flat to 1% on a reported basis and approximately 1% on a constant currency basis.
- Full-year 2023 adjusted earnings are expected to be negatively impacted by $0.10 per share if the BPS sale is completed, due to the absence of BPS earnings in the fourth quarter.
- Baxter has not provided reconciliations of forward-looking adjusted EPS guidance to GAAP EPS guidance due to the uncertainty and difficulty in predicting the combined impact and timing of potential charges or gains.
- Such items could have a substantial impact on GAAP measures of financial performance.
Revenue & Expenses
Visualization of income flow from segment revenue to net income