Baxter Posts Mixed Q2 Earnings, Stock Falls On Lagging FY23 Outlook

Baxter International Inc (NYSE: BAX) posted Q2 revenue of $3.71 billion, which missed the consensus of $3.79 billion, up 3% Y/Y on a reported basis and up 4% on a constant currency.

Adjusted EPS of $0.66, down 24% Y/Y, surpassed the consensus of $0.60 and the management guidance of $0.59-$0.61.

Adjusted EPS from continuing operations stood at $0.55, down 25% Y/Y.

Discontinued operations include Baxter's BioPharma Solutions (BPS) business, which is expected to be divested by July 2024 or earlier.

Also Read: Advent, Warburg Pincus Lead Multi-Billion Buyout Bid For Baxter's BioPharma Solutions.

Sales performance came ahead of Baxter's previously announced Q2 2023 guidance, driven by overall positive demand for Baxter products, reflecting ongoing recovery in patient and procedure volumes, alongside generally stabilizing macroeconomic conditions and an ongoing abatement in recent supply chain challenges.

Guidance: Baxter has projected its adjusted EPS for Q3 FY23, including discontinued operations, of $0.78-$0.80, with $0.65-$0.67 coming from continuing operations, compared to a consensus of $0.80.

Suppose BPS remains part of Baxter for the entire 2023. In that case, the company expects sales growth from continuing operations of 1%-2% on a reported basis and approximately 2% on a constant currency basis, with adjusted EPS of $2.49-$2.57.

If BPS is divested in September, Baxter expects FY23 adjusted EPS of $2.87-$2.95 and adjusted EPS of $2.54-$2.62 from continuing operations.

This compares to the previous guidance of $2.85-$3.00 and the consensus of $2.94.

Price Action: BAX shares are down 3.78% at $47.10 on the last check Thursday.