Baxter's (BAX) Earnings, Revenues Beat Estimates In Q4

Baxter International Inc. (NYSE:BAX) reported fourth-quarter 2018 adjusted earnings of 78 cents per share, which surpassed the Zacks Consensus Estimate of 73 cents. The bottom line also improved 22% from the year-ago quarter number.

Revenues of $2.84 billion exceeded the Zacks Consensus Estimate of $2.80 billion. The top line improved 2% year over year on a reported basis and 5% on operational basis.

Revenue growth was aided by solid revenues from the company’s Renal Care, Pharmaceuticals, Advanced Surgery and Acute Therapies businesses. The stock has a Zacks Rank #3 (Hold).

Full-Year Results

Baxter reported net revenues of $11.13 billion in 2018, up 5% year over year on a reported basis. The metric outpaced the Zacks Consensus Estimate of $11.09 billion. Adjusted earnings of $3.05 per share, improved 23% year over year and outshined the Zacks Consensus Estimate of $3.

Baxter International Inc. Price and Consensus

Geographical Details

Baxter reports operating results through three geographic segments: Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific).

In Americas, Baxter recorded revenues of $1.50 billion, up 3% on a year-over-year basis and 4% at constant currency (cc).

In EMEA, revenues totaled $772 million, up 3% from the year-ago quarter and 6% at cc.

In APAC, revenues of $574 million increased 2% from the prior-year quarter and 5% at cc.

Segmental Details

Renal Care

This segment recorded revenues of $953 million in the reported quarter, up 1% year over year. Revenues at the segment increased 5% at cc.

Medication Delivery

Revenues at the segment grossed $660 million, down 2% from the year-ago quarter. Revenues at the segment remainedflat at cc.

Pharmaceuticals

Revenues at the segment amounted to $540 million, up 6% from the year-ago quarter and 9% at cc.

Clinical Nutrition

Revenues at the segment were $215 million, down 7% from the year-ago quarter’s tally. At cc, revenues fell 5%.

Advanced Surgery

Revenues at the segment totaled $214 million, up 15% from the year-ago quarter and 17% at cc.

Acute Therapies

This segment recorded revenues of $137 million, up 9% from the prior-year quarter and 12% at cc.

Other

Revenues in the segment grossed $122 million, up 11% on a year-over-year basis. At cc, revenues increased an impressive 14% in the quarter under review.

Margin Analysis

Baxter registered adjusted gross profit of $1.19 billion in the fourth quarter, up 2% year over year. As a percentage of revenues, gross margin remained flat on a year-over-year basis at 42% in the fourth quarter.

Operating income increased 37% year over year to $398 million in the quarter. As a percentage of revenues, operating margin expanded 350 bps to 14% in fourth-quarter 2018.

Guidance

For 2019, Baxter expects growth in the range of 0-1% on a reported basis, 2-3%at cc and 3-4% on an operational basis. Adjusted earnings are anticipated to be in the band of $3.22-$3.30 per share. The Zacks Consensus Estimate stands at $3.24, within the guided range.

For the first quarter of 2019,management at Baxter expects revenues to decline approximately 3% on a reported basis, up approximately 1%at cc and grow in the range of 1-2% on an operational basis. Adjusted earnings are projected to be in the range of 66-68 cents per diluted share. The Zacks Consensus Estimate is pegged at 70 cents, which lies above the guided range.

Summing Up

Baxter ended the fourth quarter of 2018 on a solid note, beating the Zacks Consensus Estimate on both counts. The stock continues to benefit from its core Advanced Surgery, Renal Care and Acute Therapies units.

Growth in the United States and EMEA buoys optimism. The company has received approvals for its PrisMax system, Actifuse and ALTAPORE bone graft systems, which is an added positive. Its alliance with Mayo Clinic is commendable as well. In the last reported quarter, the company witnessed solid operating margin expansion. For 2019, Baxter issued a new guidance.

On the flip side, Baxter’s Medication Delivery and Clinical Nutrition units have been witnessing sluggishness in recent times. Cutthroat competition in the MedTech markets is indicative of dull prospects.

Earnings of Other MedTech Majors at a Glance

Some better-ranked MedTech stocks which posted solid results in their respective quarters are Varian Medical Systems (NYSE:VAR) , Surmodics, Inc. (NASDAQ:SRDX) and AngioDynamics (NASDAQ:ANGO) .

Varian’s fiscal first-quarter adjusted EPScame in at $1.06 in line with the Zacks Consensus Estimate. Revenues of $741 million outpaced the consensus mark of $717.9 million. The stock has a Zacks Rank #2 (Buy).

Surmodics reported adjusted earnings per share (EPS) of 12 cents in first-quarter fiscal 2019, comparing favorably with the Zacks Consensus Estimate of a loss of a penny. Earnings rose 20% from the year-ago quarter’s figure.The stock has a Zacks Rank #2.

AngioDynamics’ fiscal second-quarter adjusted EPS of 22 cents surpassed the Zacks Consensus Estimate by a penny. Revenues totaled $91.5 million, which outshined the consensus estimate by 2.9%. The stock sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

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