Baxter International Inc
Summary
- Baxter International Inc. is a multinational healthcare company.
- Baxter's primarily focuses on products to treat kidney disease, and other chronic and acute medical conditions.
- In 2021 Baxter International acquired Hillrom
Baxter International Inc. (NYSE: BAX) is a multinational healthcare company that primarily focuses on products to treat kidney disease, and other chronic and acute medical conditions.
Recent Developments
Baxter to Divest its BioPharma Solutions Business to Advent International and Warburg Pincus for $4.25 Billion1
MAY 8, 2023; Baxter International Inc. announced that it has signed a definitive agreement to divest its BioPharma Solutions (“BPS”) business to Advent International (“Advent”), one of the largest and most experienced global private equity investors, and Warburg Pincus, a leading global growth investor.
Under the terms of the definitive agreement, Baxter will receive $4.25 billion in cash, subject to certain closing adjustments, with net after-tax proceeds currently estimated to be approximately $3.4 billion. The transaction is expected to close in the second half of 2023, subject to receipt of customary regulatory approvals and satisfaction of other customary closing conditions. Baxter intends to utilize the after-tax proceeds to reduce its debt, consistent with the company’s stated capital allocation priorities. For the full fourth quarter 2023, Baxter estimates the transaction to result in dilution of approximately $0.10 per share to the company’s earnings, the total amount depending on the time of close. This amount is expected to be partially offset through reduced interest expense payments following anticipated debt repayment.
Proposed spinoff of its Renal Care and Acute Therapies
This proposed spinoff of its Renal Care and Acute Therapies product categories (the proposed spinoff) is currently expected to be completed during the first half of 2024, approximately 12 to 18 months from the date of the related announcement. In 2022 the company generated $4.4 billion of combined net sales from its Renal Care and Acute Therapies product categories, representing approximately 29% of its consolidated net sales. The company intend for the proposed spinoff to qualify as tax-free to Baxter and its shareholders for U.S. federal income tax purposes.
Recent Acquisition
Zosyn
On March 22, 2022, the company entered into an agreement with a subsidiary of Pfizer Inc. to acquire the rights to Zosyn, a premixed frozen piperacillintazobactam product, in the U.S. and Canada. Zosyn is used for the treatment of intra-abdominal infections, nosocomial pneumonia, skin and skin structure infections, female pelvic infections and community-acquired pneumonia. Under the terms of the acquisition, the company paid the acquisition price of $122 million and received specified intellectual property, including patent rights, in the first quarter of 2022 and will receive additional intellectual property, including the product rights to Zosyn, in the first quarter of 2023. Under the arrangement, Baxter International is entitled to receive profit sharing payments from sales of Zosyn until the product rights transfer to it in March 2023.
Hillrom
On December 13, 2021, the company completed its acquisition of all outstanding equity interests of Hill-Rom Holdings, Inc. (Hillrom) for a purchase price of $10.5 billion. Including the assumption of Hillrom's outstanding debt obligations, the enterprise value of the transaction was approximately $12.8 billion. Hillrom was a global medical technology leader and its products and services help enable earlier diagnosis and treatment, optimize surgical efficiency, and accelerate patient recovery while simplifying clinical communication and shifting care closer to home. Hillrom made those outcomes possible through digital and connected care solutions and collaboration tools, including smart bed systems, patient monitoring and diagnostic technologies, respiratory health devices, advanced equipment for the surgical space and more, delivering actionable, real-time insights at the point of care. In 2022 the Patient Support Systems, Front Line Care and Global Surgical Solutions product categories of its Hillrom segment collectively generated net sales of $2.9 billion. During 2022, the company also recognized $2.8 billion of goodwill impairments and $332 million of indefinite-lived intangible asset impairments related to goodwill and trade name intangible assets that arose from the Hillrom acquisition.
PerClot
On July 29, 2021, the company acquired certain assets related to PerClot Polysaccharide Hemostatic System (PerClot), including distribution rights for the U.S. and specified territories outside of the U.S., from CryoLife, Inc. for an upfront purchase price of $25 million and the potential for additional cash consideration of up to $36 million, which had an acquisition-date fair value of $28 million, based upon regulatory and commercial milestones. PerClot is an absorbable powder hemostat indicated for use in surgical procedures, including cardiac, vascular, orthopedic, spinal, neurological, gynecological, ENT and trauma surgery as an adjunct hemostat when control of bleeding from capillary, venous, or arteriolar vessels by pressure, ligature, and other conventional means is either ineffective or impractical.
Transderm Scop
On March 31, 2021, the company acquired the rights to Transderm Scop (TDS) for the U.S. and specified territories outside of the U.S. from subsidiaries of GlaxoSmithKline for an upfront purchase price of $60 million including the cost of acquired inventory and the potential for additional cash consideration of $30 million, which had an acquisition-date fair value of $24 million, based upon regulatory approval of a new contract manufacturer by a specified date. The company previously sold this product under a distribution license to the U.S. institutional market. TDS is indicated for post-operative nausea and vomiting in the U.S. and motion sickness in European markets.
Caelyx and Doxil
On February 17, 2021, the company acquired the rights to Caelyx and Doxil, the branded versions of liposomal doxorubicin, from a subsidiary of Johnson & Johnson for specified territories outside of the U.S for approximately $325 million in cash. The company previously acquired the U.S. rights to this product in 2019. Liposomal doxorubicin is a chemotherapy medicine used to treat various types of cancer.
Financial Highlights
First-Quarter 2023 Results2
APRIL 27, 2023; Baxter International Inc. reported results for the first quarter of 2023.
Worldwide sales in the first quarter totaled approximately $3.65 billion, a decrease of 2% on a reported basis and an increase of 2% on a constant currency basis, exceeding the company's previously issued guidance.
Sales in the U.S. totaled $1.73 billion, decreasing 1% on a reported basis. International sales of $1.92 billion decreased 2% on a reported basis and increased 4% at constant currency rates.
Sales performance at constant currency rates reflects overall positive demand across the portfolio, supported by a continued recovery in patient and procedure volumes following the height of the COVID-19 pandemic, in combination with generally stabilizing macroeconomic conditions and an improvement in recent supply chain challenges. Sales growth in the quarter was primarily driven by strength in Advanced Surgery, Front Line Care, Pharmaceuticals and Renal Care. First-quarter performance was partially offset by expected declines in Acute Therapies and BioPharma Solutions as well as in Patient Support Systems, which reflected a slowdown in capital spending for certain healthcare products.
For the first quarter, net income attributable to Baxter was $44 million, or $0.09 per diluted share, a decline of 36% on a U.S. GAAP (Generally Accepted Accounting Principles) basis. These results include special items totaling $253 million after tax, which were primarily related to intangible asset amortization, business optimization and separation costs. On an adjusted basis, net income attributable to Baxter totaled $297 million, or $0.59 per diluted share, a 37% decrease. Results in the quarter exceeded the company's previously issued guidance, driven primarily by better-than-expected sales performance.
For full-year 2023: Baxter now expects U.S. GAAP earnings of $1.16 to $1.31 per diluted share and adjusted earnings, before special items, of $2.85 to $3.00 per diluted share. The company expects sales growth of 1% to 2% on a reported basis and approximately 1% on a constant currency basis.
Full Year 2022 Results
Global net sales totaled $15.1 billion in 2022, an increase of 18% over 2021 on a reported and 23% on a constant currency basis. International sales totaled $7.9 billion in 2022, an increase of 4% compared to 2021 on a reported basis and 12% on a constant currency basis. Sales in the United States totaled $7.2 billion in 2022, an increase of 39% compared to 2021. Refer to the Net Sales discussion in the Results of Operations section below for more information related to changes in net sales on a constant currency basis.
Net income (loss) attributable to Baxter stockholders totaled a loss of $2.4 billion, or $(4.83) per diluted share, in 2022. Net income (loss) in 2022 included special items which adversely impacted its results by $4.2 billion, or $8.33 per diluted share. The company's financial results included R&D expenses totaling $605 million in 2022, which reflects its focus on balancing investments to support its new product pipeline with efforts to optimize overall R&D spending. Capital expenditures totaled $679 million in 2022 as the company continue to invest across its businesses to support future growth, including additional investments in support of new and existing product capacity expansions.
Company Overview
Baxter International Inc., through its subsidiaries, provides a broad portfolio of essential healthcare products, including acute and chronic dialysis therapies; sterile intravenous (IV) solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; surgical hemostat and sealant products, advanced surgical equipment; smart bed systems; patient monitoring and diagnostic technologies; and respiratory health devices. These products are used by hospitals, kidney dialysis centers, nursing homes, rehabilitation centers, doctors’ offices and by patients at home under physician supervision. The company's global footprint and the critical nature of its products and services play a key role in expanding access to healthcare in emerging and developed countries. As of December 31, 2022, the company manufactured products in over 20 countries and sold them in over 100 countries.3
Business Segments
The company currently manage its global operations based on four segments, consisting of the following geographic segments related to legacy Baxter business: Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia-Pacific), and a global segment for its recently acquired Hillrom business.
The Americas, EMEA and APAC segments provide a broad portfolio of essential healthcare products, including acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products.
Company History
Baxter was founded in 1931.4
| Year | Milestone |
| 1930s | The company introduced the TRANSFUSO-VAC container for blood collection and storage, which made blood banking practical and allowed storage for up to 21 days. |
| 1941 | The company brought to market the PLASMA-VAC container, which for the first time allowed plasma to be separated from whole blood for storage. |
| 1948 | The company launched an unbreakable plastic container for blood storage. |
| 1950 | The company's second U.S. manufacturing facility opened in Cleveland, Mississippi. Two years later, the company became the first U.S. company to make commercially available human plasma following its acquisition of Hyland Laboratories. |
| 1970 | The company introduced Viaflex, the first flexible, plastic IV container. This medical breakthrough allowed infusions within a closed system, which reduced the chance for contamination. |
| 1971 | The company's company joined the Fortune 500 list of the largest American corporations. The company also opened an IV solutions manufacturing facility in North Carolina – to this day one of its largest. |
| 1985 | The company acquired American Hospital Supply Corporation, a healthcare distribution company. |
| 1991 | The company's Interlink IV Access System launched, introducing the first "needleless" system for IV therapy. |
| 1994 | Homechoice, its automated peritoneal dialysis (APD) system, launched. The company also opened a plant in Singapore to make peritoneal dialysis solutions for the Asian market. |
| 1998 | The company's acquisition of Ohmeda's Pharmaceutical Products Division made Baxter a leader in inhaled anesthetics. That same year, the company introduced the first triple-chamber flexible container for total parenteral nutrition and gained approval for its Tisseel product, the first fibrin sealant in the U.S. |
| 2005 | Trumpf Medical developed the world's first operating room lights with Light Emitting Diode (LED) technology, providing optimal and consistent lighting for surgeons and clinicians. Breathe Technologies manufactures the Life2000®Ventilation System, the first wearable ventilator on the market that was designed to provide continuous ventilation and support improved patient mobility. |
| 2007 | The company introduced V-Link, the first IV connector with an antimicrobial coating. A few years later, the company received FDA clearance for Artiss, the first commercially available slow-setting fibrin sealant used to adhere skin grafts in burn patients. |
| 2008 | Voalte's unique mobile platform was designed to simplify communications and improve collaboration, workflows and outcomes across the entire healthcare system. |
| 2011 | Baxter Ventures launched and became a new way for it to identify and fund healthcare innovation. The company also acquired Baxa Corporation to enhance its pharmacy automation offerings. |
| 2012 | The company acquired Sigma, a manufacturer of smart infusion pumps, and Synovis Life Technologies, Inc., a leading microsurgery products company. |
| 2013 | The company acquired GAMBRO AB, a global innovator in renal care. |
| 2015 | The company spun off its BioScience business to focus on hospital, nutrition, renal and surgical care. |
| 2016 | In Europe, the company launched Numeta G13E, the only triple-chamber, ready-to-use parenteral nutrition system approved for preterm infants. |
| 2021 | Baxter completed its acquisition of all outstanding equity interests of Hill-Rom Holdings, Inc. (Hillrom) for a purchase price of $10.5 billion. |
| 2022 | Baxter acquire the rights to Zosyn a premixed frozen piperacillintazobactam product, in the U.S. and Canada. |
References
- ^ https://www.baxter.com/baxter-newsroom/baxter-signs-definitive-agreement-divest-its-biopharma-solutions-business-advent
- ^ https://www.baxter.com/baxter-newsroom/baxter-reports-first-quarter-2023-results
- ^ https://fintel.io/doc/sec-baxter-international-inc-10456-10k-2023-february-09-19397-2525
- ^ https://www.baxter.com/our-story/our-history
