Illinois healthcare titan Baxter (NYSE:BAX) isn’t getting much Wall Street love today after posting Q1 adjusted per-share earnings that blew away expectations.
The company’s stock was down 0.6% to $72.97 as of about 12:05 p.m. EST following reports that Q1 adjusted EPS came in 9¢ higher than projected. The boost was reported alongside a 14.6% increase in sales and a modest 0.7% increase in profits for the 3 months ended March 31.
Rising sales were driven in large part by a surge in medical products revenues, which in turn were driven by a 68% spike in sales of renal products. That bodes well for Baxter’s $3.9 billion acquisition of dialysis giant Gambro AB, a deal that closed in September. Baxter’s profits took a hit in Q4 thanks in large part to that acquisition.
The medical products division grew 22% overall, compared with 5% growth in Baxter’s bioscience arm.
In total, the company posted $556 million in profit, or $1.01 per diluted share, on sales of $3.95 billion during the quarter. That compared with profits of $552 million, or $1 per share, on sales of $3.45 billion during the same period last year. Excluding special charges, adjusted EPS for the quarter amounted to $1.19, compared with $1.09 last year.
Baxter today confirmed its financial outlook for the year, still expecting sales growth of 9-10% and adjusted EPS of $1.18 to $1.22.
The report comes as Baxter prepares to split in 2, going the way of Abbott (NYSE:ABT) and Covidien (NYSE:COV) by dividing its core businesses into independent companies.
Baxter announced last month that it plans to separate its medical products and pharmaceuticals businesses into independent entities. The split is slated to close by mid-2015.
The move continues a trend among diversified healthcare conglomerates. In 2011, Abbott announced its plans for a similar split, saying it would carve out its pharma operation as a new, publicly traded company later named AbbVie (NYSE:ABBV). Later that year, Covidien said it would also divest its own pharmaceuticals division as Mallinckrodt plc (NYSE: MNK). And late last year Kimberly-Clark (NYSE:KMB) shares hit a 52-week high on the news of its plan to spin out its medical device and health products division as a separate public company called K-C Health Care.