-
Fourth-quarter revenue of $2.8 billion increased 2 percent on a
reported basis and 5 percent on an operational basis
-
Fourth-quarter GAAP earnings per share (EPS) of $0.66; adjusted EPS
of $0.78 increased 22 percent
-
Full-year revenue of $11.1 billion increased 5 percent on a
reported basis and 3 percent on an operational basis
-
Full-year GAAP earnings per share were $2.99; adjusted EPS of $3.05
increased 23 percent
DEERFIELD, Ill.--(BUSINESS WIRE)--
Baxter International Inc. (NYSE:BAX), a leading global medical products
company, today reported results for the fourth quarter and full year
ended Dec. 31, 2018, and provided its financial guidance for 2019.
“Baxter continued building momentum in 2018, delivering solid top-line
and strong bottom-line performance for the year,” said José (Joe) E.
Almeida, chairman and chief executive officer. “Our focus on increased
innovation, combined with our diverse portfolio, global footprint and
unwavering financial discipline, helped us maintain our trajectory in a
dynamic marketplace.”
Almeida added, “Our ongoing business transformation will continue
throughout 2019 as we prepare to launch new products, pursue high-value
capital deployment opportunities and deliver on additional operational
excellence initiatives. Our goal remains to drive top quartile
performance for all stakeholders in line with our Mission to Save and
Sustain Lives.”
Fourth-Quarter Financial Results
Worldwide sales in the fourth quarter totaled approximately $2.8
billion, an increase of 2 percent on a reported basis and 5 percent on
both a constant currency basis and operational basis compared to the
prior-year period. Operational sales in the fourth quarter adjust for
the impact of foreign exchange and generic competition for U.S.
cyclophosphamide, as well as the company’s acquisition of two surgical
products from Mallinckrodt plc, which closed in March 2018.
Sales in the U.S. totaled $1.2 billion, increasing 4 percent on a
reported basis and 2 percent on an operational basis. International
sales of $1.7 billion increased 1 percent on a reported basis and 6
percent on both a constant currency and operational basis. Drivers of
growth in the quarter included Baxter’s Renal Care, Pharmaceuticals,
Advanced Surgery and Acute Therapies businesses. Increased demand for
Baxter’s contract manufacturing services also contributed to performance
in the quarter.
Please see the attached schedules accompanying this press release for
additional details on sales performance in the quarter, including
breakouts by Baxter’s three geographic segments and six global business
units (GBUs).
Baxter reported income from continuing operations of $354 million, or
$0.66 per diluted share, on a GAAP (Generally Accepted Accounting
Principles) basis for the fourth quarter. These results include special
items totaling $67 million after-tax, primarily related to business
optimization and intangible amortization. On an adjusted basis, Baxter’s
fourth quarter income from continuing operations totaled $421 million,
or $0.78 per diluted share. Adjusted earnings per diluted share advanced
22 percent in the quarter, driven by solid operational performance, an
ongoing benefit from the company’s business transformation efforts and
lower pension expenses.
Full-year Financial Results
Baxter’s 2018 worldwide sales totaled approximately $11.1 billion, an
increase of 5 percent on a reported basis, 4 percent on a constant
currency basis and 3 percent on an operational basis compared to 2017.
Operational sales for 2018 adjust for the impact of foreign exchange,
generic competition for U.S. cyclophosphamide, the company’s March 2018
acquisition of two surgical products from Mallinckrodt plc, and the
company’s July 2017 acquisition of Claris Injectables.
Sales in the U.S. totaled $4.7 billion, increasing 5 percent on a
reported basis and 3 percent on an operational basis. International
sales of $6.4 billion increased 6 percent on a reported basis and 4
percent on both a constant currency and operational basis.
For the year, Baxter’s Pharmaceuticals, Advanced Surgery and Acute
Therapies businesses delivered double-digit growth at constant currency
rates; and Renal Care achieved mid-single-digit growth on a constant
currency basis. This growth helped offset low-single-digit declines in
the company’s Medication Delivery and Clinical Nutrition businesses. The
accompanying schedules include additional details on sales performance
by geographic segment and GBU.
Baxter reported 2018 income from continuing operations of $1.6 billion,
or $2.99 per diluted share, on a GAAP basis. These results include
special items totaling $36 million after-tax, primarily due to business
optimization and intangible amortization, partially offset by a benefit
related to the company’s U.S. foreign credit deferred tax assets. On an
adjusted basis, Baxter’s 2018 income from continuing operations totaled
$1.7 billion, or $3.05 per diluted share, an increase of 23 percent over
the prior-year period.
In 2018, Baxter generated $2.1 billion in operating cash flow, driven by
improved operational performance and the continuing impact of programs
focused on improving the company’s working capital. As a result, the
company generated $1.4 billion in free cash flow (operating cash flow
less capital expenditures of $681 million) for the year.
“Baxter’s sustained improvement in cash generation gives us the
flexibility to evaluate and pursue a growing range of organic and
inorganic growth opportunities,” said Jay Saccaro, chief financial
officer. “It also augments our ability to return value directly to our
shareholders. In 2018, we increased our annual dividend rate by
approximately 19 percent, paid out $376 million in dividends and
repurchased over $2.4 billion in shares.”
Business Highlights
In 2018 Baxter achieved notable milestones in pursuit of its Mission for
patients as well as its emphasis on accelerating profitable growth.
Among highlights of the past year, the company:
-
Announced a collaboration with Mayo Clinic to establish a renal
care center of excellence that will serve patients across the
continuum of care, from chronic kidney disease (CKD) management
through transplant, to drive better outcomes. The center will be
located at Mayo Clinic’s Jacksonville, Fla., campus
-
Launched Baxter’s Kaguya automated peritoneal dialysis (APD)
system in Japan, incorporating several distinct features reflecting
local needs and patient demographics, providing a valuable new in-home
treatment option in a market that has historically emphasized
in-center hemodialysis
-
Received CE Mark for the PrisMax
system, Baxter’s next generation technology for continuous renal
replacement and organ support therapies
-
Launched two innovative drug infusion pumps meeting the unique needs
of markets around the world: the Spectrum
IQ Infusion System with Dose IQ Safety Software in the
U.S. and Canada, and the Evo
IQ Infusion System in other global markets
-
Expanded our generic injectable pharmaceuticals portfolio with
multiple new products, including dexmedetomidine hydrochloride in 0.9
percent sodium chloride using Baxter’s proprietary GALAXY container
technology, representing the first and only presentation of this
premixed formulation in a flexible, shelf-stable, ready-to-use
container
-
Launched eight new products expanding the breadth and impact of
Baxter’s Advanced Surgery portfolio, most recently including a new Disposable
Curved Applicator for the Floseal Hemostatic Matrix
product line providing surgeons with greater control during ENT
surgeries
-
Acquired
two products from Mallinckrodt plc, RECOTHROM Thrombin topical
(Recombinant) and PREVELEAK Surgical Sealant, further
broadening Baxter’s Advanced Surgery portfolio of hemostats and
sealants
-
Introduced OLIMEL
7.6%, an olive-based, standardized parenteral nutrition
solution with the highest protein and lowest glucose formulation
available today
-
Announced the appointment of two
new members to Baxter’s board of directors who bring leadership
and expertise that will support the company’s ongoing transformation:
-
Patricia (Patty) B. Morrison, former Cardinal Health executive
vice president and chief information officer, whose vast
information technologies expertise will help advance Baxter’s
digital health strategies
-
Amy A. Wendell, former Covidien senior vice president of strategy
and business development, whose experience will be an asset as
Baxter continues to evaluate potential inorganic growth
opportunities
Baxter’s progress continues into 2019, as reflected in additional
highlights to open the year. Most recently the company:
-
Began patient treatments in the U.S. clinical trial for Baxter’s on-demand
peritoneal dialysis (PD) solution generation system, an innovative
technology designed to improve the patient experience and simplify
therapy management by making PD solutions in small batches in the
patient’s home
-
Reached a milestone 5
million home dialysis treatments managed globally using Baxter’s Sharesource
remote patient management (telehealth) platform, which is embedded in
the company’s Amia, Kaguya and HomeChoice Claria
APD systems
In addition, Baxter continues to be recognized for its commitment to
corporate social responsibility and workplace excellence. The company
was recently:
-
Named by Forbes and Just Capital to the 2019 Just 100 list of
America’s Best Corporate Citizens
-
Named to Forbes’ list of The Best Employers for Diversity 2019
The company would also like to note that the United States Department of
Justice, Washington Criminal Section of the Antitrust Division, has
advised Baxter that it has officially closed its grand jury
investigation of the saline market, and Baxter is no longer a subject or
target of that investigation.
2019 Financial Outlook
For full-year 2019: Baxter expects sales
growth of 0 to 1 percent on a reported basis, 2 to 3 percent on a
constant currency basis and 3 to 4 percent on an operational basis. The
company expects adjusted earnings from continuing operations, before
special items, of $3.22 to $3.30 per diluted share.
For first-quarter 2019: The company expects
sales to decline approximately 3 percent on a reported basis, to
increase approximately 1 percent on a constant currency basis and to
grow approximately 1 to 2 percent on an operational basis. The company
expects adjusted earnings from continuing operations, before special
items, of $0.66 to $0.68 per diluted share.
Full-year and first-quarter operational sales estimates for 2019 have
been adjusted for the impact of foreign exchange and generic competition
for U.S. cyclophosphamide.
Please see the schedules accompanying this press release for
reconciliations of non-GAAP measures to the most closely related GAAP
measures.
A webcast of Baxter’s fourth-quarter 2018 conference call for investors
can be accessed live from a link on the company’s website at www.baxter.com
beginning at 7:30 a.m. CST on Jan. 31, 2019. Please see www.baxter.com
for more information regarding this and future investor events and
webcasts.
About Baxter
Every day, millions of patients and caregivers rely on Baxter’s leading
portfolio of critical care, nutrition, renal, hospital and surgical
products. For more than 85 years, we’ve been operating at the critical
intersection where innovations that save and sustain lives meet the
healthcare providers that make it happen. With products, technologies
and therapies available in more than 100 countries, Baxter’s employees
worldwide are now building upon the company’s rich heritage of medical
breakthroughs to advance the next generation of transformative
healthcare innovations. To learn more, visit www.baxter.com and
follow us on Twitter,
LinkedIn
and Facebook.
This release includes forward-looking statements concerning the
company’s financial results, business development activities, capital
structure, cost savings initiatives, R&D pipeline, including results of
clinical trials and planned product launches, and outlook for the first
quarter and full year 2019. The statements are based on assumptions
about many important factors, including the following, which could cause
actual results to differ materially from those in the forward-looking
statements: demand for and market acceptance of risks for new and
existing products; product development risks; product quality or patient
safety concerns; continuity, availability and pricing of acceptable raw
materials and component supply; inability to create additional
production capacity in a timely manner or the occurrence of other
manufacturing or supply difficulties (including as a result of a natural
disaster or otherwise); breaches or failures of the company’s
information technology systems or products, including by cyberattack,
unauthorized access or theft; future actions of regulatory bodies and
other governmental authorities, including FDA, the Department of
Justice, the New York Attorney General and foreign regulatory agencies;
failures with respect to compliance programs; future actions of third
parties, including payers; U.S. healthcare reform and other global
austerity measures; pricing, reimbursement, taxation and rebate policies
of government agencies and private payers; the impact of competitive
products and pricing, including generic competition, drug reimportation
and disruptive technologies; global, trade and tax policies; accurate
identification of and execution on business development and R&D
opportunities and realization of anticipated benefits (including the
acquisitions of Claris Injectables and two surgical products from
Mallinckrodt plc); the ability to enforce owned or in-licensed patents
or the patents of third parties preventing or restricting manufacture,
sale or use of affected products or technology; the impact of global
economic conditions (including potential trade wars); fluctuations in
foreign exchange and interest rates; any change in law concerning the
taxation of income (including current or future tax reform), including
income earned outside the United States and potential taxes associated
with the Base Erosion and Anti-Abuse Tax; actions taken by tax
authorities in connection with ongoing tax audits; loss of key employees
or inability to identify and recruit new employees; the outcome of
pending or future litigation; the adequacy of the company’s cash flows
from operations to meet its ongoing cash obligations and fund its
investment program; and other risks identified in Baxter’s most recent
filing on Form 10-K and other Securities and Exchange Commission
filings, all of which are available on Baxter’s website. Baxter does not
undertake to update its forward-looking statements.
Baxter, Amia, Dose IQ, Evo IQ, Floseal, Galaxy, HomeChoice Claria,
Kaguya, Olimel, Preveleak, Prismaflex, PrisMax, Recothrom, Sharesource,
and Spectrum IQ are registered trademarks of Baxter International Inc.
|
|
|
|
|
|
|
BAXTER INTERNATIONAL INC.
|
Consolidated Statements of Income
|
Three Months Ended December 31, 2018 and 2017
|
(unaudited)
|
(in millions, except per share and percentage data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
2018
|
|
2017
|
|
Change
|
|
|
|
|
|
|
|
|
NET SALES
|
|
$2,841
|
|
$2,774
|
|
2%
|
|
|
|
|
|
|
|
|
COST OF SALES
|
|
1,649
|
|
1,610
|
|
2%
|
|
|
|
|
|
|
|
|
GROSS MARGIN
|
|
1,192
|
|
1,164
|
|
2%
|
% of Net Sales
|
|
42.0%
|
|
42.0%
|
|
0.0 pts
|
|
|
|
|
|
|
|
|
MARKETING AND ADMINISTRATIVE EXPENSES
|
|
629
|
|
692
|
|
(9%)
|
% of Net Sales
|
|
22.1%
|
|
24.9%
|
|
(2.8 pts)
|
|
|
|
|
|
|
|
|
RESEARCH AND DEVELOPMENT EXPENSES
|
|
175
|
|
181
|
|
(3%)
|
% of Net Sales
|
|
6.2%
|
|
6.5%
|
|
(0.3 pts)
|
|
|
|
|
|
|
|
|
OTHER OPERATING INCOME
|
|
(10)
|
|
-
|
|
NM
|
|
|
|
|
|
|
|
|
OPERATING INCOME
|
|
398
|
|
291
|
|
37%
|
% of Net Sales
|
|
14.0%
|
|
10.5%
|
|
3.5 pts
|
|
|
|
|
|
|
|
|
NET INTEREST EXPENSE
|
|
11
|
|
14
|
|
(21%)
|
|
|
|
|
|
|
|
|
OTHER INCOME, NET
|
|
(58)
|
|
(16)
|
|
NM
|
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
|
445
|
|
293
|
|
52%
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE
|
|
91
|
|
354
|
|
(74%)
|
% of Income from Continuing Operations before Income Taxes
|
|
20.4%
|
|
120.8%
|
|
(100.4 pts)
|
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM CONTINUING OPERATIONS
|
|
354
|
|
(61)
|
|
NM
|
|
|
|
|
|
|
|
|
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX
|
|
(6)
|
|
(10)
|
|
NM
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
$348
|
|
($71)
|
|
NM
|
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM CONTINUING OPERATIONS PER COMMON SHARE
|
|
|
|
|
|
|
Basic
|
|
$0.67
|
|
($0.11)
|
|
NM
|
Diluted
|
|
$0.66
|
|
($0.11)
|
|
NM
|
|
|
|
|
|
|
|
|
LOSS FROM DISCONTINUED OPERATIONS PER COMMON SHARE
|
|
|
|
|
|
|
Basic
|
|
($0.01)
|
|
($0.02)
|
|
NM
|
Diluted
|
|
($0.01)
|
|
($0.02)
|
|
NM
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER COMMON SHARE
|
|
|
|
|
|
|
Basic
|
|
$0.66
|
|
($0.13)
|
|
NM
|
Diluted
|
|
$0.65
|
|
($0.13)
|
|
NM
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
|
|
|
|
|
|
Basic
|
|
528
|
|
543
|
|
|
Diluted
|
|
538
|
|
556
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED OPERATING INCOME (excluding special items)
|
|
$496
|
A
|
$428
|
A
|
16%
|
ADJUSTED PRE-TAX INCOME FROM CONTINUING OPERATIONS (excluding
special items)
|
|
$519
|
A
|
$430
|
A
|
21%
|
ADJUSTED INCOME FROM CONTINUING OPERATIONS (excluding special
items)
|
|
$421
|
A
|
$354
|
A
|
19%
|
ADJUSTED DILUTED EPS FROM CONTINUING OPERATIONS (excluding
special items)
|
|
$0.78
|
A
|
$0.64
|
A
|
22%
|
A
|
|
Refer to page 9 for a description of the adjustments and a
reconciliation to GAAP measures.
|
NM -
|
|
Not Meaningful
|
|
|
|
|
BAXTER INTERNATIONAL INC.
|
Note to Consolidated Statements of Income
|
Three Months Ended December 31, 2018 and 2017
|
Description of Adjustments and Reconciliation of GAAP to Non-GAAP
Measures
|
(unaudited)
|
(in millions, except per share and percentage data)
|
|
|
|
|
|
|
|
|
The company's GAAP results for the three months ended December 31,
2018 and 2017 included special items which impacted the GAAP
measures as follows:
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
December 31,
|
|
|
|
|
|
2018
|
|
2017
|
|
Change
|
Gross Margin
|
|
$1,192
|
|
$1,164
|
|
2%
|
|
Intangible asset amortization expense 1 |
|
42
|
|
42
|
|
|
|
Business optimization items 2 |
|
19
|
|
11
|
|
|
|
Hurricane Maria (benefits) costs³
|
|
(9)
|
|
11
|
|
|
|
Acquisition and integration expenses⁴
|
|
11
|
|
4
|
|
|
|
Product-related items ⁵
|
|
(3)
|
|
-
|
|
|
|
European medical devices regulation ⁶
|
|
6
|
|
-
|
|
|
Adjusted Gross Margin
|
|
$1,258
|
|
$1,232
|
|
2%
|
% of Net Sales
|
|
44.3%
|
|
44.4%
|
|
(0.1 pts)
|
|
|
|
|
|
|
|
|
Marketing and Administrative Expenses
|
|
$629
|
|
$692
|
|
(9%)
|
|
Business optimization items2 |
|
(23)
|
|
(42)
|
|
|
|
Separation-related costs 7 |
|
-
|
|
(2)
|
|
|
|
Acquisition and integration expenses ⁴
|
|
(9)
|
|
(4)
|
|
|
|
Litigation and contractual disputes⁸
|
|
-
|
|
(21)
|
|
|
Adjusted Marketing and Administrative Expenses
|
|
$597
|
|
$623
|
|
(4%)
|
% of Net Sales
|
|
21.0%
|
|
22.5%
|
|
(1.5 pts)
|
|
|
|
|
|
|
|
|
Research and Development Expenses
|
|
$175
|
|
$181
|
|
(3%)
|
|
Business optimization items 2 |
|
(3)
|
|
-
|
|
|
|
Acquisition and integration expenses ⁴
|
|
(7)
|
|
-
|
|
|
Adjusted Research and Development Expenses
|
|
$165
|
|
$181
|
|
(9%)
|
% of Net Sales
|
|
5.8%
|
|
6.5%
|
|
(0.7 pts)
|
|
|
|
|
|
|
|
|
Other Operating Income
|
|
$(10)
|
|
$-
|
|
NM
|
|
Hurricane Maria benefits ³
|
|
10
|
|
-
|
|
|
Adjusted Other Operating Income
|
|
$-
|
|
$-
|
|
NM
|
% of Net Sales
|
|
0.0%
|
|
0.0%
|
|
0 pts
|
|
|
|
|
|
|
|
|
Operating Income
|
|
$398
|
|
$291
|
|
37%
|
|
Impact of special items
|
|
98
|
|
137
|
|
|
Adjusted Operating Income
|
|
$496
|
|
$428
|
|
16%
|
% of Net Sales
|
|
17.5%
|
|
15.4%
|
|
2.1 pts
|
|
|
|
|
|
|
|
|
Other Income, Net
|
|
$(58)
|
|
$(16)
|
|
NM
|
|
Acquisition and integration benefits ⁴
|
|
24
|
|
-
|
|
|
Adjusted Other Income, Net
|
|
$(34)
|
|
$(16)
|
|
NM
|
|
|
|
|
|
|
|
|
Pre-Tax Income from Continuing Operations
|
|
$445
|
|
$293
|
|
52%
|
|
Impact of special items
|
|
74
|
|
137
|
|
|
Adjusted Pre-Tax Income from Continuing Operations
|
|
$519
|
|
$430
|
|
21%
|
|
|
|
|
|
|
|
|
Income Tax Expense
|
|
$91
|
|
$354
|
|
(74%)
|
|
Impact of special items ⁹
|
|
7
|
|
(278)
|
|
|
Adjusted Income Tax Expense
|
|
$98
|
|
$76
|
|
29%
|
% of Adjusted Pre-Tax Income from Continuing Operations
|
|
18.9%
|
|
17.7%
|
|
1.2 pts
|
|
|
|
|
|
|
|
|
Income (loss) from Continuing Operations
|
|
$354
|
|
$(61)
|
|
NM
|
|
Impact of special items
|
|
67
|
|
415
|
|
|
Adjusted Income from Continuing Operations
|
|
$421
|
|
$354
|
|
19%
|
|
|
|
|
|
|
|
|
Diluted EPS from Continuing Operations
|
|
$0.66
|
|
($0.11)
|
|
NM
|
|
Impact of special items
|
|
0.12
|
|
0.75
|
|
|
Adjusted Diluted EPS from Continuing Operations
|
|
$0.78
|
|
$0.64
|
|
22%
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
|
|
|
|
|
|
Diluted
|
|
538
|
|
556
|
|
|
1
|
|
The company's results in 2018 and 2017 included intangible asset
amortization expense of $42 million ($33 million, or $0.06 per
diluted share, on an after-tax basis) and $42 million ($27 million,
or $0.05 per diluted share, on an after-tax basis), respectively.
|
|
|
|
2
|
|
The company's results in 2018 included charges of $45 million ($35
million, or $0.07 per diluted share, on an after-tax basis)
related to business optimization initiatives. This included a
charge of $21 million related to restructuring activities, $20
million of costs to implement business optimization programs which
primarily included external consulting and project employee costs,
and $4 million of accelerated depreciation associated with
facilities to be closed. The $21 million of restructuring charges
included $14 million of employee termination costs, $4 million of
contract termination and other costs and $3 million of asset
impairment costs.
|
|
|
|
|
|
The company's results in 2017 included charges of $53 million ($35
million, or $0.06 per diluted share, on an after-tax basis) related
to business optimization initiatives. This included charges of $20
million related to restructuring activities, $31 million of costs to
implement business optimization programs which primarily included
external consulting and project employee costs and $2 million of
accelerated depreciation associated with facilities to be closed.
The $20 million of restructuring charges were comprised of $19
million of employee termination costs and $1 million of asset
impairment charges primarily related to facility closures.
|
|
|
|
3
|
|
The company's results in 2018 included a benefit of $19 million ($13
million, or $0.03 per diluted share, on an after-tax basis) related
to insurance recoveries as a result of losses incurred due to
Hurricane Maria.
|
|
|
|
|
|
The company's results in 2017 included charges of $11 million ($11
million, or $0.02 per diluted share, on an after-tax basis) related
to the impact of Hurricane Maria on the company's operations in
Puerto Rico. The costs primarily included idle facility costs.
|
|
|
|
4
|
|
The company's results in 2018 included acquisition and integration
costs related to the company's acquisitions of Claris Injectables
Limited and the RECOTHROM and PREVELEAK products of $20 million ($16
million, or $0.03 per diluted share, on an after-tax basis), upfront
payments related to R&D collaborations and license agreements of $7
million ($6 million, or $0.01 per diluted share, on an after-tax
basis) and a gain of $24 million ($24 million, or $0.04 per diluted
share, on an after-tax basis) from remeasuring its previously held
investment to fair value upon acquisition of a controlling interest
in its joint venture in Saudi Arabia.
|
|
|
|
|
|
The company's results in 2017 included acquisition and integration
costs of $8 million ($6 million, or $0.01 per diluted share, on an
after-tax basis) related to the company's acquisition of Claris
Injectables Limited.
|
|
|
|
5
|
|
The company's results in 2018 included a net benefit of $3 million
($2 million, or $0.00 per diluted share, on an after-tax basis)
related to an adjustment to its accrual for SIGMA SPECTRUM infusion
pump inspection and remediation activities.
|
|
|
|
6
|
|
The company's results in 2018 included costs of $6 million ($4
million, or $0.00 per diluted share, on an after-tax basis) specific
to updating its quality systems and product labeling to comply with
the new medical device reporting regulations and other requirements
of the European Union's regulations for medical devices that will
become effective in 2020.
|
|
|
|
7
|
|
The company's results in 2017 included costs incurred related to the
Baxalta separation totaling $2 million ($1 million, or $0.00 per
diluted share, on an after-tax basis).
|
|
|
|
8
|
|
The company’s results in 2017 included charges of $21 million ($13
million, or $0.03 per diluted share, on an after-tax basis) related
to litigation and contractual disputes for businesses or
arrangements in which the company is no longer engaged or a party
thereto.
|
|
|
|
9
|
|
Reflected in this item for 2018 is the tax impact of the special
items identified in this table as well as net tax expense of $12
million, or $0.02 per diluted share, primarily related to an update
to the estimated impact of U.S. federal tax reform previously made
by the company. The tax effect of each adjustment is based on the
jurisdiction in which the adjustment is incurred and the tax laws in
effect for each such jurisdiction.
|
|
|
|
|
|
Reflected in this item for 2017 is the tax impact of the special
items identified in this table as well as a net tax expense of $322
million, or $0.58 per diluted share, related to the estimated impact
of U.S. tax reform on the company's tax-related assets and
liabilities. The tax effect of each adjustment is based on the
jurisdiction in which the adjustment is incurred and the tax laws in
effect for each such jurisdiction.
|
|
|
|
For more information on the company's use of non-GAAP financial
measures in this presentation, please see the company's Current
Report on Form 8-K filed with the Securities and Exchange Commission
on the date of this presentation.
|
|
NM -
|
|
Not Meaningful
|
|
|
|
|
BAXTER INTERNATIONAL INC.
|
Consolidated Statements of Income
|
Twelve Months Ended December 31, 2018 and 2017
|
(unaudited)
|
(in millions, except per share and percentage data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
|
|
|
|
December 31,
|
|
|
|
2018
|
|
2017
|
|
Change
|
|
|
|
|
|
|
NET SALES
|
$11,127
|
|
$10,561
|
|
5%
|
|
|
|
|
|
|
COST OF SALES
|
6,346
|
|
6,091
|
|
4%
|
|
|
|
|
|
|
GROSS MARGIN
|
4,781
|
|
4,470
|
|
7%
|
% of Net Sales
|
43.0%
|
|
42.3%
|
|
0.7 pts
|
|
|
|
|
|
|
MARKETING AND ADMINISTRATIVE EXPENSES
|
2,617
|
|
2,566
|
|
2%
|
% of Net Sales
|
23.5%
|
|
24.3%
|
|
(0.8 pts)
|
|
|
|
|
|
|
RESEARCH AND DEVELOPMENT EXPENSES
|
655
|
|
613
|
|
7%
|
% of Net Sales
|
5.9%
|
|
5.8%
|
|
0.1 pts
|
|
|
|
|
|
|
OTHER OPERATING INCOME
|
(90)
|
|
-
|
|
NM
|
|
|
|
|
|
|
OPERATING INCOME
|
1,599
|
|
1,291
|
|
24%
|
% of Net Sales
|
14.4%
|
|
12.2%
|
|
2.2 pts
|
|
|
|
|
|
|
NET INTEREST EXPENSE
|
45
|
|
55
|
|
(18%)
|
|
|
|
|
|
|
OTHER (INCOME) EXPENSE, NET
|
(139)
|
|
19
|
|
NM
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
1,693
|
|
1,217
|
|
39%
|
|
|
|
|
|
|
INCOME TAX EXPENSE
|
63
|
|
493
|
|
(87%)
|
% of Income from Continuing Operations before Income Taxes
|
3.7%
|
|
40.5%
|
|
(36.8 pts)
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS
|
1,630
|
|
724
|
|
125%
|
|
|
|
|
|
|
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX
|
(6)
|
|
(7)
|
|
(14%)
|
|
|
|
|
|
|
NET INCOME
|
$1,624
|
|
$717
|
|
126%
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE
|
|
|
|
|
|
Basic
|
$3.05
|
|
$1.33
|
|
129%
|
Diluted
|
$2.99
|
|
$1.30
|
|
130%
|
|
|
|
|
|
|
LOSS FROM DISCONTINUED OPERATIONS PER COMMON SHARE
|
|
|
|
|
|
Basic
|
($0.01)
|
|
($0.01)
|
|
NM
|
Diluted
|
($0.02)
|
|
($0.01)
|
|
NM
|
|
|
|
|
|
|
NET INCOME PER COMMON SHARE
|
|
|
|
|
|
Basic
|
$3.04
|
|
$1.32
|
|
130%
|
Diluted
|
$2.97
|
|
$1.29
|
|
130%
|
|
|
|
|
|
|
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
|
|
|
|
|
Basic
|
534
|
|
543
|
|
|
Diluted
|
546
|
|
555
|
|
|
|
|
|
|
|
|
ADJUSTED OPERATING INCOME (excluding special items)
|
$1,936
|
A
|
$1,719
|
A
|
13%
|
ADJUSTED PRE-TAX INCOME FROM CONTINUING OPERATIONS (excluding
special items)
|
$2,006
|
A
|
$1,678
|
A
|
20%
|
ADJUSTED INCOME FROM CONTINUING OPERATIONS (excluding special
items)
|
$1,666
|
A
|
$1,376
|
A
|
21%
|
ADJUSTED DILUTED EPS FROM CONTINUING OPERATIONS (excluding
special items)
|
$3.05
|
A
|
$2.48
|
A
|
23%
|
|
|
|
|
|
|
A
|
|
Refer to page 11 for a description of the adjustments and a
reconciliation to GAAP measures.
|
NM -
|
|
Not Meaningful
|
|
|
|
|
BAXTER INTERNATIONAL INC.
|
Note to Consolidated Statements of Income
|
Twelve Months Ended December 31, 2018 and 2017
|
Description of Adjustments and Reconciliation of GAAP to Non-GAAP
Measures
|
(unaudited)
|
(in millions, except per share and percentage data)
|
|
|
|
|
|
|
|
|
The company's GAAP results for the twelve months ended December 31,
2018 and 2017 included special items which impacted the GAAP
measures as follows:
|
|
|
|
|
Twelve Months Ended
|
|
|
|
|
December 31,
|
|
|
|
|
|
2018
|
|
2017
|
|
Change
|
Gross Margin
|
|
$4,781
|
|
$4,470
|
|
7%
|
|
Intangible asset amortization expense 1 |
|
169
|
|
154
|
|
|
|
Business optimization items 2 |
|
49
|
|
53
|
|
|
|
Acquisition and integration expenses 3 |
|
27
|
|
8
|
|
|
|
Litigation and contractual disputes4 |
|
8
|
|
-
|
|
|
|
Product-related items5 |
|
(6)
|
|
17
|
|
|
|
Separation-related costs 6 |
|
-
|
|
1
|
|
|
|
Hurricane Maria (benefits) costs ⁷
|
|
(32)
|
|
32
|
|
|
|
European medical devices regulation ⁸
|
|
6
|
|
-
|
|
|
Adjusted Gross Margin
|
|
$5,002
|
|
$4,735
|
|
6%
|
% of Net Sales
|
|
45.0%
|
|
44.8%
|
|
0.2 pts
|
|
|
|
|
|
|
|
|
Marketing and Administrative Expenses
|
|
$2,617
|
|
$2,566
|
|
2%
|
|
Business optimization items2 |
|
(145)
|
|
(116)
|
|
|
|
Separation-related costs6 |
|
-
|
|
(18)
|
|
|
|
Acquisition and integration expenses 3 |
|
(23)
|
|
(20)
|
|
|
|
Historical rebate and discount adjustments ₉ |
|
-
|
|
12
|
|
|
|
Litigation and contractual disputes 4 |
|
(2)
|
|
(21)
|
|
|
Adjusted Marketing and Administrative Expenses
|
|
$2,447
|
|
$2,403
|
|
2%
|
% of Net Sales
|
|
22.0%
|
|
22.8%
|
|
(0.8 pts)
|
|
|
|
|
|
|
|
|
Research and Development Expenses
|
|
$655
|
|
$613
|
|
7%
|
|
Business optimization items 2 |
|
(26)
|
|
-
|
|
|
|
Acquisition and integration expenses 3 |
|
(7)
|
|
-
|
|
|
|
European medical devices regulation ⁸
|
|
(3)
|
|
-
|
|
|
Adjusted Research and Development Expenses
|
|
$619
|
|
$613
|
|
1%
|
% of Net Sales
|
|
5.6%
|
|
5.8%
|
|
(0.2 pts)
|
|
|
|
|
|
|
|
|
Other Operating Income
|
|
$(90)
|
|
$-
|
|
NM
|
|
Claris settlement ¹⁰ |
|
80
|
|
-
|
|
|
|
Hurricane Maria benefits ⁷
|
|
10
|
|
-
|
|
|
Adjusted Other Operating Income
|
|
$-
|
|
$-
|
|
NM
|
% of Net Sales
|
|
0.0%
|
|
0.0%
|
|
0.0 pts
|
|
|
|
|
|
|
|
|
Operating Income
|
|
$1,599
|
|
$1,291
|
|
24%
|
|
Impact of special items
|
|
337
|
|
428
|
|
|
Adjusted Operating Income
|
|
$1,936
|
|
$1,719
|
|
13%
|
% of Net Sales
|
|
17.4%
|
|
16.3%
|
|
1.1 pts
|
|
|
|
|
|
|
|
|
Other (Income) Expense, Net
|
|
$(139)
|
|
$19
|
|
NM
|
|
Venezuelan deconsolidation ¹¹
|
|
-
|
|
(33)
|
|
|
|
Acquisition and integration benefits 3 |
|
24
|
|
-
|
|
|
Adjusted Other Income, Net
|
|
$(115)
|
|
$(14)
|
|
NM
|
|
|
|
|
|
|
|
|
Pre-Tax Income from Continuing Operations
|
|
$1,693
|
|
$1,217
|
|
39%
|
|
Impact of special items
|
|
313
|
|
461
|
|
|
Adjusted Pre-Tax Income from Continuing Operations
|
|
$2,006
|
|
$1,678
|
|
20%
|
|
|
|
|
|
|
|
|
Income Tax Expense
|
|
$63
|
|
$493
|
|
(87%)
|
|
Impact of special items 12 |
|
277
|
|
(191)
|
|
|
Adjusted Income Tax Expense
|
|
$340
|
|
$302
|
|
13%
|
% of Adjusted Pre-Tax Income from Continuing Operations
|
|
16.9%
|
|
18.0%
|
|
(1.1 pts)
|
|
|
|
|
|
|
|
|
Income from Continuing Operations
|
|
$1,630
|
|
$724
|
|
125%
|
|
Impact of special items
|
|
36
|
|
652
|
|
|
Adjusted Income from Continuing Operations
|
|
$1,666
|
|
$1,376
|
|
21%
|
|
|
|
|
|
|
|
|
Diluted EPS from Continuing Operations
|
|
$2.99
|
|
$1.30
|
|
130%
|
|
Impact of special items
|
|
0.06
|
|
1.18
|
|
|
Adjusted Diluted EPS from Continuing Operations
|
|
$3.05
|
|
$2.48
|
|
23%
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
|
|
|
|
Diluted
|
|
546
|
|
555
|
|
|
|
|
|
|
|
|
|
1
|
|
The company's results in 2018 and 2017 included intangible asset
amortization expense of $169 million ($133 million, or $0.25 per
diluted share, on an after-tax basis) and $154 million ($108
million, or $0.19 per diluted share, on an after-tax basis),
respectively.
|
|
|
|
2
|
|
The company's results in 2018 included a charge of $220 million
($174 million, or $0.32 per diluted share, on an after-tax basis)
related to business optimization initiatives. This included a charge
of $117 million related to restructuring activities, $94 million of
costs to implement business optimization programs which primarily
included external consulting and project employee costs, and $9
million of accelerated depreciation associated with facilities to be
closed. The $117 million of restructuring charges included $100
million of employee termination costs, $10 million of contract
termination and other costs and $7 million of asset impairment
charges primarily related to facility closures.
|
|
|
|
|
|
The company's results in 2017 included a charge of $169 million
($119 million, or $0.21 per diluted share, on an after-tax basis)
related to business optimization initiatives. This included a charge
of $70 million related to restructuring activities, $89 million of
costs to implement business optimization programs which primarily
included external consulting and project employee costs, and $10
million of accelerated depreciation associated with facilities to be
closed. The $70 million of restructuring charges included $59
million of employee termination costs, $5 million of contract
termination costs, and $6 million of asset impairment charges
primarily related to facility closures.
|
|
|
|
3
|
|
The company's results in 2018 included acquisition and integration
costs related to the company's acquisitions of Claris Injectables
Limited and the RECOTHROM and PREVELEAK products of $50 million ($40
million, or $0.07 per diluted share, on an after-tax basis), upfront
payments related to R&D collaborations and license agreements of $7
million ($6 million, or $0.01 per diluted share, on an after-tax
basis) and a gain of $24 million ($24 million, or $0.04 per diluted
share, on an after-tax basis) from remeasuring its previously held
investment to fair value upon acquisition of a controlling interest
in its joint venture in Saudi Arabia.
|
|
|
|
|
|
The company's results in 2017 included acquisition and integration
costs of $28 million ($20 million, or $0.04 per diluted share, on an
after-tax basis) related to the company's acquisition of Claris
Injectables Limited.
|
|
|
|
4
|
|
The company's results in 2018 included a charge of $10 million ($9
million, or $0.01 per diluted share, on an after-tax basis) related
to certain product litigation.
|
|
|
|
|
|
The company’s results in 2017 included charges of $21 million ($13
million, or $0.03 per diluted share, on an after-tax basis) related
to litigation and contractual disputes for businesses or
arrangements in which the company is no longer engaged or a party
thereto.
|
|
|
|
5
|
|
The company's results in 2018 included a net benefit of $6 million
($4 million, or $0.01 per diluted share, on an after-tax basis)
related to an adjustment to its accrual for SIGMA SPECTRUM infusion
pump inspection and remediation activities.
|
|
|
|
|
|
The company's results in 2017 included a net charge of $17 million
($11 million, or $0.02 per diluted share, on an after-tax basis)
related to SIGMA SPECTRUM infusion pump inspection and remediation
activities, partially offset by a benefit related to an adjustment
to historical product reserves.
|
|
|
|
6
|
|
The company's results in 2017 included costs incurred related to the
Baxalta separation totaling $19 million ($13 million, or $0.02 per
diluted share, on an after-tax basis).
|
|
|
|
7
|
|
The company's results in 2018 included a benefit of $42 million ($31
million, or $0.06 per diluted share, on an after-tax basis) related
to insurance recoveries as a result of losses incurred due to
Hurricane Maria.
|
|
|
|
|
|
The company's results in 2017 included charges of $32 million ($31
million, or $0.06 per diluted share, on an after-tax basis) related
to the impact of Hurricane Maria on the company's operations in
Puerto Rico. The costs primarily included inventory and fixed asset
impairments as well as idle facility costs.
|
|
|
|
8
|
|
The company's results in 2018 included costs of $9 million ($7
million, or $0.01 per diluted share, on an after-tax basis) specific
to updating its quality systems and product labeling to comply with
the new medical device reporting regulations and other requirements
of the European Union's regulations for medical devices that will
become effective in 2020.
|
|
|
|
9
|
|
The company's results in 2017 included a benefit of $12 million ($9
million, or $0.02 per diluted share, on an after-tax basis) related
to an adjustment to the company's historical rebates and discount
reserve.
|
|
|
|
10
|
|
The company's results in 2018 included a benefit of $80 million ($78
million, or $0.14 per diluted share, on an after-tax basis) for the
settlement of certain claims related to the acquired operations of
Claris Injectables Limited.
|
|
|
|
11
|
|
The company's results in 2017 included a charge of $33 million ($24
million, or $0.04 per diluted share, on an after-tax basis) related
to the deconsolidation of its Venezuelan operations.
|
|
|
|
12
|
|
Reflected in this item in 2018 is the tax impact of the special
items identified in this table as well as a net tax benefit of $196
million, or $0.36 per diluted share, primarily related to an update
to the estimated impact of U.S. federal tax reform previously made
by the company. The tax effect of each adjustment is based on the
jurisdiction in which the adjustment is incurred and the tax laws in
effect for each such jurisdiction.
|
|
|
|
|
|
Reflected in this item in 2017 is the tax impact of the special
items identified in this table as well as a net tax expense of $322
million, or $0.58 per diluted share, related to the estimated impact
of tax reform on the company’s tax related assets and liabilities.
The tax effect of each adjustment is based on the jurisdiction in
which the adjustment is incurred and the tax laws in effect for each
such jurisdiction.
|
|
|
|
For more information on the company's use of non-GAAP financial
measures in this presentation, please see the company's Current
Report on Form 8-K filed with the Securities and Exchange Commission
on the date of this presentation.
|
|
|
|
NM -
|
|
Not Meaningful
|
|
|
|
BAXTER INTERNATIONAL INC.
|
Sales by Operating Segment
|
Periods Ending December 31, 2018 and 2017
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4
|
|
|
|
Q4
|
|
|
|
% Growth @
|
|
|
|
% Growth @
|
|
|
|
YTD
|
|
|
|
YTD
|
|
|
|
% Growth @
|
|
|
|
% Growth @
|
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
Actual Rates
|
|
|
|
Constant Rates
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
Actual Rates
|
|
|
|
Constant Rates
|
Americas
|
|
|
$1,495
|
|
|
|
$1,456
|
|
|
|
3%
|
|
|
|
4%
|
|
|
|
$5,959
|
|
|
|
$5,720
|
|
|
|
4%
|
|
|
|
5%
|
EMEA
|
|
|
772
|
|
|
|
753
|
|
|
|
3%
|
|
|
|
6%
|
|
|
|
2,961
|
|
|
|
2,732
|
|
|
|
8%
|
|
|
|
4%
|
APAC
|
|
|
574
|
|
|
|
565
|
|
|
|
2%
|
|
|
|
6%
|
|
|
|
2,207
|
|
|
|
2,109
|
|
|
|
5%
|
|
|
|
4%
|
Total Baxter
|
|
|
$2,841
|
|
|
|
$2,774
|
|
|
|
2%
|
|
|
|
5%
|
|
|
|
$11,127
|
|
|
|
$10,561
|
|
|
|
5%
|
|
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BAXTER INTERNATIONAL INC.
|
Sales by GBU
|
Periods Ending December 31, 2018 and 2017
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4
|
|
|
|
Q4
|
|
|
|
% Growth @
|
|
|
|
% Growth @
|
|
|
|
YTD
|
|
|
|
YTD
|
|
|
|
% Growth @
|
|
|
|
% Growth @
|
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
Actual Rates
|
|
|
|
Constant Rates
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
Actual Rates
|
|
|
|
Constant Rates
|
Renal Care¹
|
|
|
$953
|
|
|
|
$941
|
|
|
|
1%
|
|
|
|
5%
|
|
|
|
$3,662
|
|
|
|
$3,480
|
|
|
|
5%
|
|
|
|
4%
|
Medication Delivery²
|
|
|
660
|
|
|
|
672
|
|
|
|
(2%)
|
|
|
|
(0%)
|
|
|
|
2,669
|
|
|
|
2,698
|
|
|
|
(1%)
|
|
|
|
(2%)
|
Pharmaceuticals³
|
|
|
540
|
|
|
|
508
|
|
|
|
6%
|
|
|
|
9%
|
|
|
|
2,092
|
|
|
|
1,883
|
|
|
|
11%
|
|
|
|
10%
|
Clinical Nutrition⁴
|
|
|
215
|
|
|
|
231
|
|
|
|
(7%)
|
|
|
|
(5%)
|
|
|
|
877
|
|
|
|
882
|
|
|
|
(1%)
|
|
|
|
(3%)
|
Advanced Surgery⁵
|
|
|
214
|
|
|
|
186
|
|
|
|
15%
|
|
|
|
17%
|
|
|
|
800
|
|
|
|
707
|
|
|
|
13%
|
|
|
|
12%
|
Acute Therapies⁶
|
|
|
137
|
|
|
|
126
|
|
|
|
9%
|
|
|
|
12%
|
|
|
|
517
|
|
|
|
456
|
|
|
|
13%
|
|
|
|
11%
|
Other⁷
|
|
|
122
|
|
|
|
110
|
|
|
|
11%
|
|
|
|
14%
|
|
|
|
510
|
|
|
|
455
|
|
|
|
12%
|
|
|
|
10%
|
Total Baxter
|
|
|
$2,841
|
|
|
|
$2,774
|
|
|
|
2%
|
|
|
|
5%
|
|
|
|
$11,127
|
|
|
|
$10,561
|
|
|
|
5%
|
|
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Includes sales of the company’s peritoneal dialysis (PD) and
hemodialysis (HD) and additional dialysis therapies and services.
|
2
|
|
Includes sales of the company’s IV therapies, infusion pumps,
administration sets and drug reconstitution devices.
|
3
|
|
Includes sales of the company’s premixed and oncology drug
platforms, inhaled anesthesia and critical care products and
pharmacy compounding services.
|
4
|
|
Includes sales of the company’s parenteral nutrition (PN) therapies.
|
5
|
|
Includes sales of the company’s biological products and medical
devices used in surgical procedures for hemostasis, tissue sealing
and adhesion prevention.
|
6
|
|
Includes sales of the company’s continuous renal replacement
therapies (CRRT) and other organ support therapies focused in the
ICU.
|
7
|
|
Includes sales primarily from the company’s pharmaceutical
partnering business.
|
|
|
|
BAXTER INTERNATIONAL INC.
|
GBU Sales by U.S. and International
|
Periods Ending December 31, 2018 and 2017
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2018
|
|
|
|
Q4 2017
|
|
|
|
% Growth
|
|
|
|
|
|
U.S.
|
|
|
|
International
|
|
|
|
Total
|
|
|
|
U.S.
|
|
|
|
International
|
|
|
|
Total
|
|
|
|
U.S.
|
|
|
|
International
|
|
|
|
Total
|
Renal Care
|
|
|
|
$207
|
|
|
|
$746
|
|
|
|
$953
|
|
|
|
$193
|
|
|
|
$748
|
|
|
|
$941
|
|
|
|
7%
|
|
|
|
(0%)
|
|
|
|
1%
|
Medication Delivery
|
|
|
|
410
|
|
|
|
250
|
|
|
|
660
|
|
|
|
408
|
|
|
|
264
|
|
|
|
672
|
|
|
|
0%
|
|
|
|
(5%)
|
|
|
|
(2%)
|
Pharmaceuticals
|
|
|
|
251
|
|
|
|
289
|
|
|
|
540
|
|
|
|
240
|
|
|
|
268
|
|
|
|
508
|
|
|
|
5%
|
|
|
|
8%
|
|
|
|
6%
|
Clinical Nutrition
|
|
|
|
78
|
|
|
|
137
|
|
|
|
215
|
|
|
|
84
|
|
|
|
147
|
|
|
|
231
|
|
|
|
(7%)
|
|
|
|
(7%)
|
|
|
|
(7%)
|
Advanced Surgery
|
|
|
|
127
|
|
|
|
87
|
|
|
|
214
|
|
|
|
106
|
|
|
|
80
|
|
|
|
186
|
|
|
|
20%
|
|
|
|
9%
|
|
|
|
15%
|
Acute Therapies
|
|
|
|
45
|
|
|
|
92
|
|
|
|
137
|
|
|
|
39
|
|
|
|
87
|
|
|
|
126
|
|
|
|
15%
|
|
|
|
6%
|
|
|
|
9%
|
Other
|
|
|
|
54
|
|
|
|
68
|
|
|
|
122
|
|
|
|
58
|
|
|
|
52
|
|
|
|
110
|
|
|
|
(7%)
|
|
|
|
31%
|
|
|
|
11%
|
Total Baxter
|
|
|
|
$1,172
|
|
|
|
$1,669
|
|
|
|
$2,841
|
|
|
|
$1,128
|
|
|
|
$1,646
|
|
|
|
$2,774
|
|
|
|
4%
|
|
|
|
1%
|
|
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BAXTER INTERNATIONAL INC.
|
GBU Sales by U.S. and International
|
Periods Ending December 31, 2018 and 2017
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD 2018
|
|
|
|
YTD 2017
|
|
|
|
% Growth
|
|
|
|
|
|
U.S.
|
|
|
|
International
|
|
|
|
Total
|
|
|
|
U.S.
|
|
|
|
International
|
|
|
|
Total
|
|
|
|
U.S.
|
|
|
|
International
|
|
|
|
Total
|
Renal Care
|
|
|
|
$816
|
|
|
|
$2,846
|
|
|
|
$3,662
|
|
|
|
$754
|
|
|
|
$2,726
|
|
|
|
$3,480
|
|
|
|
8%
|
|
|
|
4%
|
|
|
|
5%
|
Medication Delivery
|
|
|
|
1,690
|
|
|
|
979
|
|
|
|
2,669
|
|
|
|
1,698
|
|
|
|
1,000
|
|
|
|
2,698
|
|
|
|
(0%)
|
|
|
|
(2%)
|
|
|
|
(1%)
|
Pharmaceuticals
|
|
|
|
996
|
|
|
|
1,096
|
|
|
|
2,092
|
|
|
|
892
|
|
|
|
991
|
|
|
|
1,883
|
|
|
|
12%
|
|
|
|
11%
|
|
|
|
11%
|
Clinical Nutrition
|
|
|
|
321
|
|
|
|
556
|
|
|
|
877
|
|
|
|
359
|
|
|
|
523
|
|
|
|
882
|
|
|
|
(11%)
|
|
|
|
6%
|
|
|
|
(1%)
|
Advanced Surgery
|
|
|
|
466
|
|
|
|
334
|
|
|
|
800
|
|
|
|
403
|
|
|
|
304
|
|
|
|
707
|
|
|
|
16%
|
|
|
|
10%
|
|
|
|
13%
|
Acute Therapies
|
|
|
|
174
|
|
|
|
343
|
|
|
|
517
|
|
|
|
147
|
|
|
|
309
|
|
|
|
456
|
|
|
|
18%
|
|
|
|
11%
|
|
|
|
13%
|
Other
|
|
|
|
260
|
|
|
|
250
|
|
|
|
510
|
|
|
|
257
|
|
|
|
198
|
|
|
|
455
|
|
|
|
1%
|
|
|
|
26%
|
|
|
|
12%
|
Total Baxter
|
|
|
|
$4,723
|
|
|
|
$6,404
|
|
|
|
$11,127
|
|
|
|
$4,510
|
|
|
|
$6,051
|
|
|
|
$10,561
|
|
|
|
5%
|
|
|
|
6%
|
|
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BAXTER INTERNATIONAL INC.
|
Free Cash Flow Reconciliation
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
|
|
|
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
|
2017
|
Cash flows from operations - continuing operations
|
|
|
|
$2,096
|
|
|
|
$1,853
|
|
Capital expenditures
|
|
|
|
(681)
|
|
|
|
(634)
|
Free cash flow - continuing operations
|
|
|
|
$1,415
|
|
|
|
$1,219
|
|
|
|
|
|
|
|
|
|
BAXTER INTERNATIONAL INC.
|
Reconciliation of Non-GAAP Financial Measure
|
Change in Net Sales As Reported to Operational Sales
|
From The Three Months Ended December 31, 2017 to The Three Months
Ended December 31, 2018
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2018 QTD*
|
|
|
|
|
|
Net sales
|
|
|
|
US
|
|
|
|
|
|
|
|
|
|
|
|
Operational
|
|
|
|
|
|
As Reported
|
|
|
|
Cyclophosphamide
|
|
|
|
Acquisitions
|
|
|
|
FX
|
|
|
|
Sales
|
Renal Care
|
|
|
|
|
1%
|
|
|
|
0%
|
|
|
|
0%
|
|
|
|
4%
|
|
|
|
5%
|
Medication Delivery
|
|
|
|
|
(2%)
|
|
|
|
0%
|
|
|
|
0%
|
|
|
|
2%
|
|
|
|
(0%)
|
Pharmaceuticals
|
|
|
|
|
6%
|
|
|
|
2%
|
|
|
|
0%
|
|
|
|
3%
|
|
|
|
11%
|
Clinical Nutrition
|
|
|
|
|
(7%)
|
|
|
|
0%
|
|
|
|
0%
|
|
|
|
2%
|
|
|
|
(5%)
|
Advanced Surgery
|
|
|
|
|
15%
|
|
|
|
0%
|
|
|
|
(11%)
|
|
|
|
2%
|
|
|
|
5%
|
Acute Therapies
|
|
|
|
|
9%
|
|
|
|
0%
|
|
|
|
0%
|
|
|
|
3%
|
|
|
|
12%
|
Other
|
|
|
|
|
11%
|
|
|
|
0%
|
|
|
|
0%
|
|
|
|
3%
|
|
|
|
14%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Baxter
|
|
|
|
|
2%
|
|
|
|
0%
|
|
|
|
(1%)
|
|
|
|
3%
|
|
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
4%
|
|
|
|
1%
|
|
|
|
(2%)
|
|
|
|
0%
|
|
|
|
2%
|
International
|
|
|
|
|
1%
|
|
|
|
0%
|
|
|
|
0%
|
|
|
|
5%
|
|
|
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Totals may not foot due to rounding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BAXTER INTERNATIONAL INC.
|
Reconciliation of Non-GAAP Financial Measure
|
Change in Net Sales As Reported to Operational Sales
|
From The Twelve Months Ended December 31, 2017 to The Twelve
Months Ended December 31, 2018
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2018 YTD*
|
|
|
|
|
Net sales
|
|
|
|
US
|
|
|
|
|
|
|
|
|
|
|
|
Operational
|
|
|
|
|
As Reported
|
|
|
|
Cyclophosphamide
|
|
|
|
Acquisitions
|
|
|
|
FX
|
|
|
|
Sales
|
Renal Care
|
|
|
|
5%
|
|
|
|
0%
|
|
|
|
0%
|
|
|
|
(1%)
|
|
|
|
4%
|
Medication Delivery
|
|
|
|
(1%)
|
|
|
|
0%
|
|
|
|
0%
|
|
|
|
(1%)
|
|
|
|
(2%)
|
Pharmaceuticals
|
|
|
|
11%
|
|
|
|
2%
|
|
|
|
(4%)
|
|
|
|
(1%)
|
|
|
|
8%
|
Clinical Nutrition
|
|
|
|
(1%)
|
|
|
|
0%
|
|
|
|
0%
|
|
|
|
(2%)
|
|
|
|
(3%)
|
Advanced Surgery
|
|
|
|
13%
|
|
|
|
0%
|
|
|
|
(7%)
|
|
|
|
(1%)
|
|
|
|
5%
|
Acute Therapies
|
|
|
|
13%
|
|
|
|
0%
|
|
|
|
0%
|
|
|
|
(2%)
|
|
|
|
11%
|
Other
|
|
|
|
12%
|
|
|
|
0%
|
|
|
|
0%
|
|
|
|
(2%)
|
|
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Baxter
|
|
|
|
5%
|
|
|
|
0%
|
|
|
|
(1%)
|
|
|
|
(1%)
|
|
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
5%
|
|
|
|
1%
|
|
|
|
(2%)
|
|
|
|
0%
|
|
|
|
3%
|
International
|
|
|
|
6%
|
|
|
|
0%
|
|
|
|
0%
|
|
|
|
(2%)
|
|
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Totals may not foot due to rounding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BAXTER INTERNATIONAL INC.
|
Reconciliation of Non-GAAP Financial Measures
|
Projected 2019 Adjusted Earnings Per Share and Projected GAAP
Earnings Per Share, and
|
Projected 2019 Adjusted Sales Growth and Projected GAAP Sales
Growth
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 Earnings Per Share Guidance
|
|
|
|
Q1 2019
|
|
|
|
FY 2019
|
Earnings per Diluted Share – Adjusted
|
|
|
|
$0.66 - $0.68
|
|
|
|
$3.22 - $3.30
|
Estimated intangible asset amortization
|
|
|
|
$0.07
|
|
|
|
$0.26
|
Estimated business optimization charges
|
|
|
|
$0.03 - $0.04
|
|
|
|
$0.12 - $0.15
|
Estimated Acquisition and integration expenses
|
|
|
|
$0.01
|
|
|
|
$0.04
|
Estimated European medical devices regulation
|
|
|
|
$0.02
|
|
|
|
$0.08
|
Earnings per Diluted Share - GAAP
|
|
|
|
$0.52 - $0.55
|
|
|
|
$2.69 - $2.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 Sales Growth Guidance
|
|
|
|
Q1 2019
|
|
|
|
FY 2019
|
Sales Growth – Operational
|
|
|
|
1% - 2%
|
|
|
|
3% - 4%
|
U.S. cyclophosphamide
|
|
|
|
(1%)
|
|
|
|
(1%) - 0%
|
Foreign exchange
|
|
|
|
(3%) - (4%)
|
|
|
|
(2%) - (3%)
|
Sales Growth - GAAP
|
|
|
|
(3%)
|
|
|
|
0% - 1%
|
View source version on businesswire.com:
https://www.businesswire.com/news/home/20190131005432/en/
Media Contact
Steve Brett, (224) 948-5353
media@baxter.com
Investor
Contact
Clare Trachtman, (224) 948-3085
Source: Baxter International Inc.