Baxter (NYSE:BAX) saw its 2nd-quarter profits slide some 12% on recall costs, the integration of its $3.9 billion Gambro AB buyout and the pending spinout of its pharmaceuticals business. But the medical products giant still managed to beat Wall Street’s expectations and its own earnings forecase, excluding 1-time items.
Deerfield, Ill.-based Baxter posted profits of $520 million, or 95¢ per share, on sales of $4.26 billion for the 3 months ended June 30. That amounts to a profit decline of -11.9% on sales growth of 16.2% compared with the same period last year.
Adjusted earnings per share, however, were $1.26, well ahead of the $1.22 consensus on The Street and the $1.18-$1.22 guidance from Baxter.
"We are driving solid performance across our entire business portfolio, and advancing care across our key franchises in both developed and emerging markets," chairman & CEO Robert Parkinson Jr. said in prepared remarks. "This provides a strong global foundation as we continue to improve our competitive position and performance, enhance operational, commercial and scientific effectiveness, meet challenges posed by the global marketplace, and create value for patients, healthcare providers, and other key stakeholders."
Parkinson said Baxter is on track to complete the pharma spinout by "mid-year 2015."
The Gambro acquisition, the recall of 2 models of its Spectrum infusion pump and "intangible amortization and costs associated with contingent revenue and product development milestone payments" combined for an after-tax charge of $69 million (13¢ per share), according to a press release.
But sales for Baxter’s medical products business, including contributions from Gambro, surged 24% to $2.5 billion, the company said; excluding Gambro’s contribution, sales grew 4%, according to the release.
Baxter narrowed the range of its guidance for 2014 adjusted EPS to $5.10 to $5.20, from $5.05 to $5.25, on sales growth of 10% to 11%. Third-quarter adjusted EPS are forecast to be between $1.28 and $1.32 on sales growth of 12% to 13%, according to the release.