• Revenue: First-quarter 2025 global sales from continuing operations totaled $2.63 billion, increasing 5% on both a reported and operational basis.
• Adjusted Earnings Per Share (EPS): $0.55, exceeding prior guidance of $0.47 to $0.50.
• Gross Margin: Adjusted gross margin from continuing operations was 41.8%, a decrease of 160 basis points compared to the prior year.
• Operating Margin: Adjusted operating margin of 14.9%, improving 260 basis points compared to the prior-year period.
• SG&A Expenses: $608 million or 23.2% of sales, a decrease of 310 basis points from the prior-year period.
• R&D Spending: $138 million, representing 5.3% of sales, an increase of 50 basis points compared to the prior-year period.
• Interest Expense: Net interest expense from continuing operations totaled $64 million, a decrease of $14 million versus the prior-year period.
• Tax Rate: Adjusted tax rate for the quarter was 17.4%.
• Medical Products and Therapies (MPT) Sales: $1.3 billion, increasing 6% in the quarter.
• Healthcare Systems & Technologies (HST) Sales: $704 million, increasing 6%.
• Pharmaceuticals Sales: $581 million, increasing 3%.
• Full-Year 2025 Sales Growth Guidance: 7% to 8% on a reported basis.
• Second-Quarter 2025 Sales Growth Guidance: 4% to 5% on a reported basis.
• Second-Quarter 2025 EPS Guidance: $0.59 to $0.63.

• Warning! GuruFocus has detected 7 Warning Signs with BAX.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Baxter International Inc (NYSE:BAX) exceeded its first-quarter guidance on both the top and bottom lines, showcasing strong financial performance.
• Sales from continuing operations grew by 5% on both a reported and operational basis, driven by strong performance across all segments.
• The company reported adjusted earnings per share from continuing operations of $0.55, surpassing prior guidance.
• Baxter International Inc (NYSE:BAX) is leveraging its verticalized operating model to enhance agility, focus, and innovation, contributing to profitable growth.
• The Healthcare Systems & Technologies (HST) segment showed significant strength, with a 6% increase in sales, driven by strong order growth and competitive wins.

Negative Points

• The global macroeconomic environment remains volatile, creating uncertainty in the marketplace, which could impact future performance.
• Newly enacted global tariffs and potential future tariffs pose a risk to Baxter International Inc (NYSE:BAX)'s operations and financial results.
• The company faces challenges in mitigating the impact of tariffs, with an estimated net impact of $60 million to $70 million in 2025.
• Adjusted gross margin from continuing operations decreased by 160 basis points compared to the prior year, reflecting higher expenses and other factors.
• The search for a permanent CEO is ongoing, creating potential uncertainty in leadership and strategic direction.

Q & A Highlights

Q: How is Baxter managing the impact of tariffs, and what should we expect for 2026? A: Joel Grade, Baxter's EVP & CFO, explained that Baxter is implementing several mitigation strategies, including optimizing supply chains, negotiating with suppliers, and seeking exemptions. These efforts are expected to phase in over time, impacting 2026 as well. Heather Knight, EVP & COO, added that the HST business is showing strong momentum, with a healthy backlog and competitive wins, although they are cautious about the capital environment.

Q: What is the outlook for Baxter's IV solutions business, considering hospital conservation efforts? A: Heather Knight, EVP & COO, noted that while some hospitals are conserving IV solutions, others are using more than pre-hurricane levels. Baxter expects conservation to continue, with a 10%-12% range by year-end. The company is focused on stabilizing inventory and rebuilding customer confidence, with allocations expected to be removed by mid-May.

Q: Can you clarify the impact of tariffs on Baxter's financials and potential exposure to pharmaceutical tariffs? A: Joel Grade, EVP & CFO, stated that the impact from tariffs is estimated at $60 million to $70 million for 2025, with mitigation efforts underway. Regarding pharmaceutical tariffs, Baxter is monitoring the situation and engaging in scenario planning, but no specific impact has been detailed yet.

Q: What are the drivers behind the strong performance in the Healthcare Systems & Technologies (HST) segment? A: Heather Knight, EVP & COO, highlighted strong order growth, competitive wins, and the launch of new products like Voalte Linq with Scotty. The segment's performance was broad-based, with significant contributions from the Care & Connectivity Solutions division and stabilization in Front Line Care.

Q: How is Baxter planning to achieve margin expansion in the future? A: Joel Grade, EVP & CFO, outlined several strategies for margin expansion, including continued growth, innovation, pricing strategies, product mix optimization, and supply chain improvements. The company also plans to address stranded costs from the Kidney Care business sale by 2027.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.