Healthcare company Baxter International Inc. (BAX), Thursday reported a rise in profit for the fourth quarter, reflecting better sales from all major product lines. Earnings also came in line with analysts' estimates. The company provided guidance for the next quarter and full year 2010 as well.
The Deerfield, Illinois-based company's net income attributable to the company for the fourth quarter was $572 million or $0.94 per share, compared to $569 million or $0.91 per share in the fourth quarter of 2008. Results for the quarter include an after-tax special charge of $56 million or $0.09 per share for costs and asset impairments associated with the company's optimization of its manufacturing and business operations.
On an adjusted basis, Baxter's net income was $628 million or $1.03 per share, up from $574 million or $0.91 per share in 2008. The company had previously given fourth-quarter earnings guidance in the range of $1.02 to $1.04 per share.
On average, 14 analysts polled by Thomson Reuters expected earnings per share of $1.03 for the quarter. Analysts' estimate typically excludes one-time items.
In the preceding third quarter, the company recorded a 12% increase in net income to $530 million or $0.87 per share helped by margin expansion and lower expenses, despite near-flat revenues.
Baxter's net sales of $3.47 billion advanced 11% from the $3.13 billion reported in the same period last year. Excluding the impact of foreign currency, sales increased 6%.
Eleven analysts estimated revenues of $3.39 billion for the quarter.
For the fourth-quarter, Baxter expected sales growth, excluding the impact of foreign currency, of 6% to 8%. Reported sales including the impact of foreign currency were expected to increase 8% to 10% in the fourth quarter over the prior-year period.
The company's third quarter net sales were $3.14 billion, compared to $3.15 billion in the prior-year quarter.
Sales within the United States increased 5% to $1.4 billion in the fourth quarter, while international sales grew 15% to $2.1 billion. Excluding the impact of foreign currency, Baxter's international sales grew 7%.
By product line, sales from BioScience increased 12% to $1.52 billion from a year ago as a result of double-digit growth across multiple product categories. Excluding foreign currency, BioScience sales advanced 7%. Key drivers of sales performance include continued growth of recombinant therapies, such as Advate for the treatment of hemophilia, antibody therapies and several specialty plasma therapeutics, as well as biosurgery products..
Medication delivery sales improved 12% to $1.31 billion from last year, reflecting solid growth across its global portfolio that includes intravenous and nutritional therapies, infusion systems, injectable drugs and anesthesia products. Excluding foreign currency sales improved 7%.
Renal sales rose 12% to $625 million from the previous year due to the expanded use of peritoneal dialysis in many developed and emerging markets around the world, and the contribution of sales associated with the acquisition of the hemofiltration business from Edwards Lifesciences Corp. Excluding foreign currency sales increased 6%.
Transfusion Therapies sales declined 63% to $15 million from the previous year. Transfusion Therapies represents revenues associated with manufacturing, distribution and other services provided by the company to the buyer of the TT business after the February 2007 divestiture.
Robert Parkinson, Jr., chairman and chief executive officer, said, "Each of our businesses and regions contributed to our strong financial performance in the fourth quarter and for the full year, which reinforces the value of the diversified business model, the medically-necessary nature of the portfolio, and our strong global presence."
Gross margin was $1.77 billion or 50.9% sales, compared to $1.60 billion or 51.2% of sales in the comparable quarter last year.
For the fiscal year 2009, Baxter's net income totaled $2.20 billion or $3.59 per share, compared to $2.01 billion or $3.16 per share reported in 2008. Adjusted net income increased to $2.33 billion or $3.80 per share from $2.15 billion or $3.38 per share last year. Net sales increased 2% to $12.56 billion from $12.34 billion a year ago.
Analysts expected earnings of $3.80 per share, on revenues of $12.47 billion for the fiscal year.
The company increased its investments in R&D by 6% to $917 million in 2009. During the year, Baxter advanced 14 Phase III clinical trials and numerous early-stage programs that have the potential to profoundly impact the treatment and delivery of care for chronic diseases like Alzheimer's disease, hemophilia, end-stage renal disease, immune deficiencies, as well as public health threats like pandemic and seasonal influenza.
Looking ahead to the first quarter of 2010, the company sees earnings per share of $0.92 - $0.94, before any special items. Sales growth, excluding the impact of foreign exchange, is expected to be about 5 to 7%. Including the benefit of foreign exchange, the company expects reported sales growth of about 10 to 12%, compared to the first quarter of 2009, based on current exchange rates.
Analysts anticipate first-quarter 2010 earnings per share of $0.95, on revenues of $3.09 billion. For full-year 2010, the company expects earnings per share of $4.20 - $4.28, before any special item. Sales, excluding the impact of foreign exchange, are expected to grow from 5% to 7%. Including the benefit of foreign exchange, Baxter expects 2010 reported sales growth of 7% to 9% based on current exchange rates.
Analysts expect 2010 earnings of $4.28 per share, on revenues of $13.50 billion.
BAX is currently trading at $57.67, down 1.24 or 2.10%, on a volume of 3.19 million shares on the NYSE. In the past 52-week period, the stock traded in a range from $45.46 to $61.88, on a 3-month average volume of 4.28 million shares.
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