Thursday, May 3, 2012

Baxter International (BAX) Q1 Earnings Call

         Baxter International reported earnings for the 3 months ended, March 31st, 2012, with better than anticipated results. First quarter revenue of $3.4 billion beat growth expectations by 2%. Overall, year-over-year revenue increased roughly 4% from $3.3 billion. Also, EPS increased by $0.06 to $1.04 from previously $0.98 in 2011, representing a 6% increase. Both revenue and EPS exceeded BAX’s previous guidance for the year, primarily due to their Bioscience division, which increased recombinant sales by 10%. The increase in this product line was a result of high demand for several hemophilia treatments and the revenue generated from the Synovis Life Technologies Inc. acquisition. Medical Products also grew to $1.9 billion, a 3% increase, driven by strong growth in anesthesia products and certain inject able and nutritional therapies. Unfortunately, the FDA delayed approval of HyQ, an investigational product or immune disorders. The new sent BAX shares down as much as 7%. However, CEO Bob Parkinson conveyed considered BAX’s extensive pipeline, he believes that the “reaction in the market is a total disconnect.” Nevertheless, BAX continued to expand its portfolio and pipeline through investments in R&D and pursuit of business development opportunities. For example, under the Hart-Scott-Rodino Antitrust Improvements Act, Baxter received clearance for its collaboration with Momenta to develop and commercialize follow-on biosimilars. In addition, the FDA approved TISSEL for an expanded indication for general homeostasis in surgery. Among other advancements, BAX has entered 2012 with strong momentum and is confident in their ability to continue their success. That being said, management forecasted even brighter projections for FY2012, including increased sales growth of 4-5% and earnings of $4.49-$4.57 per share.

- Shawn Laljit

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