BAXTER INTERNATIONAL INC Q4 FY2024 earnings call

• Brent Shafer mentioned the Board is actively searching for a permanent CEO, closed the sale of Vantive on Jan 31, 2025, and introduced Heather Knight as Chief Operating Officer. - Heather Knight talked about the recovery of MPT's North Cove site after Hurricane Helene and the successful launch of the Novum IQ infusion pump platform. - Joel Grade discussed fourth quarter and full year 2024 financial results, including segment performance details and the outlook for 2025.

Fourth quarter 2024 global sales from continuing operations were $2.75 billion, up 1% on a reported basis and 2% on a constant-currency basis. Full year 2024 sales from continuing operations were $10.6 billion, increasing 3% on both reported and constant-currency basis. Medical Products & Therapies (MPT) segment: Q4 sales were $1.3 billion, up 1%; full year 2024 sales totaled $5.2 billion, advancing 5%. Healthcare Systems & Technologies (HST) segment: Q4 sales were $784 million, down 1%; full year 2024 sales totaled $3 billion, declining 2%. Pharmaceuticals segment: Q4 sales were $643 million, increasing 8%; full year 2024 sales were $2.4 billion, advancing 7%.

For full year 2025, Baxter expects total sales growth of 5% to 6% on a reported basis, including ~200 basis points negative impact from foreign exchange and ~$345 million of anticipated MSA revenues from Vantive. Operationally, sales are expected to grow 4% to 5%. MPT is expected to increase sales approximately five percent, HST sales are expected to increase approximately 3%, and pharmaceuticals are expected to increase approximately 5% to 6%. Full year adjusted operating margin from continuing operations is expected to total approximately 16.5%, and full year adjusted earnings per share from continuing operations is anticipated to be $2.45 to $2.55 per diluted share.

Risks include the potential impact of the macroeconomic environment, regulatory and operational matters, and the impact of events like Hurricane Helene on results of operations. Also, potential tariffs and their effect on the business are mentioned as risks.

Q: Robbie Marcus asked about the cadence for 2025 and the confidence in turning around HST.

A: Joel Grade responded on sales cadence considerations and factors contributing to HST recovery, including market stabilization, resolution of supply constraints, and strong order book in CCS.

Q: David Roman inquired about the company's direction, strategic priorities, and CEO search.

A: Joel Grade discussed strategic priorities like customer-inspired innovation, targeted markets, optimizing structure, commercial excellence, and disciplined capital allocation, and Brent Shafer added on the CEO search process.

Q: Matt Miksic asked about new product investments and timing of benefits.

A: Joel Grade and Heather Knight talked about innovation across the portfolio, such as the success of the Novum pump, new product launches in pharma, and upcoming launches in HST.

Q: Vijay Kumar asked about margins, stranded costs, and Hurricane Helene impact.

A: Joel Grade explained margin components, including stranded costs, operational improvements, and pricing elements, and Heather Knight provided details on the Hurricane Helene impact on sales and the recovery of the North Cove site.

Q: Travis Steed asked about free cash flow generation and Frontline Care.

A: Joel Grade answered on free cash flow conversion expectations and the Frontline Care write-down as a one-time impact on 2024.

Q: Lawrence Biegelsen asked about CEO candidate selection and guidance re-evaluation.

A: Brent Shafer and Joel Grade discussed pros and cons of internal vs. external CEO candidates and the approach to guidance re-evaluation by a new CEO.

Q: Danielle Antalffy asked about 2025-2026 pipeline drivers.

A: Joel Grade and Heather Knight talked about product launches, momentum in existing products like the Novum pump, and upcoming launches in various segments.