Baxter International Inc. (NYSE:BAX) took a $39 million hit to its bottom line during the first quarter, blaming the healthcare reform act’s added tax burden and lowering its full-year guidance.
The Deerfield Park, Ill.-based medical products giant posted sales of $3.14 billion during the three months ended March 31, up 11.2 percent compared with $2.82 billion during the same period last year. Net income was $525 million for the quarter, or 86 cents per diluted share, up 1.7 percent compared with $516 million (83 cents per diluted share) during Q1 2009.
But the bottom line suffered from a tax charge Baxter decided to absorb "as a result of a change in the tax treatment of reimbursements under the Medicare Part D retiree prescription drug subsidy program," according to a press release. Absent that charge, adjusted net income was $564 million, or 93 cents per adjusted diluted share.
The looming impact of the healthcare reform act prompted the company to lower its sales and earnings forecast for the full year. Baxter now expects sales growth of 1 percent to 3 percent for 2010, compared with its previous guidance of 5 percent to 7 percent. Earnings are now expected to be between $3.92 and $4.00 per diluted share, down from the $4.20 to $4.28 range.
"Our revised financial guidance primarily reflects the impact of recent healthcare reform legislation in the U.S. and our outlook for continued plasma market pressures," CFO Robert Davis said in prepared remarks.
Baxter said it expects second-quarter sales to be flat or grow up to 2 percent and Q2 earnings (excluding "any special items") of 90 cents to 93 cents.