UPDATED Oct. 27, 2015, with layoff news.
Baxter (NYSE:BAX) shares ticked up on Wall Street today after the medical products giant beat expectations with its 3rd-quarter results and raised its earnings outlook for the rest of 2015, despite a quarterly profit slide of nearly 100%.
Deerfield, Ill.-based Baxter also plans to cut about 1,400 jobs by the end of the year, or about 5% of its non-manufacturing workforce, with about ⅔ of the job cuts planned for outside the U.S., outgoing chairman & CEO Robert Parkinson Jr. told analysts during a conference call today.
The reduction is expected to save about $130 million a year, Parkinson said.
Baxter posted profits of $1 million and no earnings per share on sales of $2.49 billion for the 3 months ended Sept. 30, thanks to a $223 million hit from the spinout of its Baxalta biopharmaceuticals business. That amounts to an -8.2% top-line slide, compared with Q3 2014.
Adjusted to exclude the Baxalta charges and other 1-time items, however, earnings per share were 41¢, a full 12¢ ahead of expectations on Wall Street, where analysts were looking for sales of $2.46 billion. That and the raised earnings outlook prompted investors to send BAX shares up 1.5% to $36.46 apiece in mid-morning trading today.
“We are very pleased with the momentum that is building across the organization around execution of our strategic objectives to expand margins and enhance value for all our stakeholders,” Parkinson said in prepared remarks. “Our strong 3rd-quarter performance reinforces both our confidence in and commitment to accelerating profitable growth for the company over the near- and long-term horizons.”
“With the Baxalta spin-off behind us, the company is clearly focused on enhancing operational efficiency through disciplined financial execution and implementing discrete actions to drive savings from our cost structure, some of which we began to realize in the third quarter,” added CFO James Saccaro. “We are very pleased with the solid progress we achieved during the quarter to reduce operating expenses and expect additional improvements going forward.”
Baxter said it now expects adjusted EPS of 71¢ to 73¢ per share for the 2nd half of this year, up from prior guidance of 58¢ to 62¢. Sales growth is expected to be 1% on a constant-currency basis, the company said.
Fourth-quarter adjusted EPS are pegged at 30¢ to 32¢, on a constant-currency sales decline of -1%, Baxter said.
Material from Reuters was used in this report.