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Baxter International: Baxter Reports Strong Third Quarter Financial Results EXCEEDING PREVIOUSLY ISSUED GUIDANCE

The following excerpt is from the company's SEC filing.

Company Well-Positioned to Deliver Solid, Sustained Growth as Leading

Medical Products Enterprise

Momentum Continues with Clear Focus on Expanding Margins and Value


DEERFIELD, Ill., October 27, 2015 Baxter International Inc. (NYSE:BAX) today reported strong results for the third quarter of 2015, exceeding the companys previously issued guidance.

For the third quarter of 2015, Baxter reported income from continuing operations of $2 million on a GAAP basis (Generally Accepted Accounting Principles). These results included net after-tax special items totaling $223 mil lion (or $0.41 per diluted share) primarily related to costs associated with the companys July 1 spin-off of Baxalta Incorporated, debt extinguishment, business optimization initiatives and intangible asset amortization. Third quarter 2014 results included net after-tax charges totaling $66 million (or $0.12 per diluted share).

On an adjusted basis, excluding special items, Baxters third quarter income from continuing operations totaled $225 million, or $0.41 per diluted share, exceeding the companys guidance of $0.29 to $0.31 per diluted share.

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Worldwide sales totaled $2.5 billion, declining 8 percent as compared to the prior year period driven by a negative impact from foreign exchange. Excluding the impact of foreign exchange, Baxters worldwide sales grew 2 percent in the quarter and exceeded the companys guidance of comparable year-over-year sales. Sales within the United States declined 1 percent to $1.0 billion, while international sales of $1.5 billion declined 12 percent, primarily as a result of the effects of foreign exchange. Excluding the impact of foreign exchange, Baxters international sales grew 3 percent in the quarter. Excluding the impact of both foreign exchange and increased competition in the United States for the companys generic oncology injectable, cyclophosphamide, Baxters sales rose 3 percent globally.

By business, sales within Hospital Products totaled $1.5 billion, a decline of 7 percent. Excluding the impact of foreign exchange and increased competition for cyclophosphamide, Hospital Products sales grew 4 percent from the prior year. Hospital Products performance in the quarter benefited from strong sales of infusion pumps, anesthetic and parenteral nutritional products, and increased demand for the companys injectable drug compounding services.

Baxters Renal Products sales totaled $943 million, declining 11 percent. Excluding the impact of foreign exchange, sales of Renal Products rose 1 percent, driven by demand for peritoneal dialysis products and continuous renal replacement therapies.

These results represent Baxters performance as a standalone entity, having spun-off the BioScience business on July 1

, which is presented as a discontinued operation for prior period results.


We are very pleased with the momentum that is building across the organization around execution of our strategic objectives to expand margins and enhance value for all our stakeholders, said Robert L. Parkinson, Jr., chairman and chief executive officer. Our strong third quarter performance reinforces both our confidence in and commitment to accelerating profitable growth for the company over the near- and long-term horizons.

Consistent with the companys previously announced plans to increase margins through disciplined portfolio management, implementation of cost reduction initiatives and the near-term launch of innovative new products, Baxter achieved more than two points in operating margin improvement in the quarter relative to previous guidance. This performance was supported by positive product mix and disciplined expense management. As part of Baxters on-going efforts to optimize its expense base, during the quarter the company initiated a global workforce reduction that will generate approximately $130 million in annual savings.

With the Baxalta spin-off behind us, the company is clearly focused on enhancing operational efficiency through disciplined financial execution and implementing discrete actions to drive savings from our cost structure, some of which we began to realize in the third quarter, explained James K. Saccaro, corporate vice president and chief financial officer. We are very pleased with the solid progress we achieved during the quarter to reduce operating expenses and expect additional improvements going forward.


Recent Highlights

Innovation remains core to Baxters future success and in recent months, the company achieved a number of pipeline and commercial milestones, including:

U.S. Food and Drug Administration 510(k) clearance of Baxters AMIA automated peritoneal dialysis (APD) system with SHARESOURCE remote connectivity. The AMIA APD system is the only system cleared in the United States that incorporates innovative, patient-centric features such as voice guidance, a touchscreen control panel and SHARESOURCE. SHARESOURCE is a two-way, web-based remote connectivity platform for home therapy that allows physicians to more readily access their home patients historical treatment data and deliver individual treatment settings remotely.

Successful introduction of the recently CE-marked HOMECHOICE CLARIA APD system for home therapy in several markets across Europe. The CLARIA APD system builds on the strength of Baxters market-leading HOMECHOICE cycler, now incorporating advanced technology and the benefits of SHARESOURCE web-based remote connectivity, among other patient- and provider-centric enhancements.

Continued progress in the launch of Baxters next-generation SIGMA SPECTRUM infusion pump in the U.S., Puerto Rico and Canada. The latest generation pump includes a number of innovative features, including an enhanced Master Drug Library, which helps to reduce pump-related adverse drug events and improve patient safety. Customer response has been very positive, and within the first six months of its launch earlier this year, more than four million infusions have been delivered to patients through the new SIGMA SPECTRUM infusion pump.

U.S. Food and Drug Administration approval for Cefazolin injection in GALAXY Container (2 g/100 mL). Cefazolin injection is a cephalosporin antibacterial indicated for preoperative prophylaxis treatment. The availability of Cefazolin in GALAXY Container (2 g/100 mL) in an efficient, ready-to-use, flexible premix provides additional supply options of an important antibiotic. Cefazolin injection has been on the FDAs drug shortage list for more than one year due to high demand. This represents the first of nine molecules that Baxter expects to launch in the coming years. The second molecule has been submitted to the FDA for review and is expected to launch in early 2016.