BAXTER INTERNATIONAL INC Q1 FY2025 earnings call

Management Statement and Operational Highlights:

• Brent Shafer noted first quarter results exceeded guidance, leveraging verticalized operating model and strategic transformation.
• Heather Knight discussed segment sales outperformance, with HST and MPT driving top line growth.
• Joel Grade highlighted adjusted earnings per share from continuing operations of $0.55, driven by top line performance, lower SG&A expenses, and favorable tax and non-operational items. He also discussed P&L performance, reclassification of functional costs, TSA income, and adjusted margins by segment.

Segment Performance:

• Medical Products & Therapies (MPT): Sales were $1.3 billion, increasing 6% in the quarter. Infusion Therapies & Technologies division totaled $994 million, up 6%. Nutrition had mid-single digit global growth, IV Solutions saw low single-digit growth with improvement expected as allocations are removed. Advanced Surgery sales were $268 million, growing 4% globally.
• Healthcare Systems and Technologies (HST): Sales were $704 million, increasing 6%. Care and Connectivity Solutions division was $427 million, advancing 7% globally with 14% growth in the U.S. Front Line Care sales were $277 million, increasing 5%.
• Pharmaceuticals: Sales totaled $581 million, increasing 3%. Injectables and anesthesia were $335 million, up 4%. Drug compounding grew 2%, and other sales were $15 million. MSA revenue from Vantive totaled $63 million.

Guidance:

• Full year 2025: Total sales growth 7%-8% reported, 4%-5% operational. Adjusted earnings per share $2.47-$2.55. Operational sales guidance by segment: MPT ~5%, HST ~3%, Pharmaceuticals ~5%-6%. Tariff impact estimated $60-70 million in 2025.
• Second quarter 2025: Continuing operations sales growth ~4%-5% reported, 1%-2% operational. Foreign exchange expected to positively impact top line by ~50 basis points, MSA revenues ~$80 million, China IV Solutions exit to impact top line growth by ~70 basis points. Adjusted earnings per share $0.59-$0.63.

Risks:

• Global macroeconomic environment, including new and proposed tariffs.
• Foreign exchange impacts.
• Potential pharma tariffs and uncertainty around their impact.
• Uncertainty in the search process for Baxter's next permanent CEO.

Q: Joanne Wuensch asked about tariffs and 2026 outlook, and HST sustainability.

A: Joel Grade discussed tariff mitigation activities and that 2026 impact is phasing, Heather Knight highlighted HST's strong performance with healthy backlog and competitive wins.

Q: David Roman asked about IV side inventory management and tariff exposure on pharma.

A: Heather Knight discussed conservation and inventory recovery, Joel Grade said pharma tariff exposure is uncertain with proactive scenario planning.

Q: Travis Steed asked about margin and TSA impact.

A: Brent Shafer discussed gross margin drivers including reclassification, TSA, and planning/fulfillment costs.

Q: Vijay Kumar asked about Q2 guidance and operating margin path.

A: Joel Grade discussed Q2 drivers like conservation and FX, Heather Knight talked about Novum's share gains and downstream implications.

Q: Robbie Marcus asked about CEO timing and oil price impact.

A: Brent Shafer gave CEO search update, Joel Grade discussed oil price impact on Baxter.

Q: Larry Biegelsen asked about CEO timing and oil price impact.

A: Brent Shafer provided CEO search progress, Joel Grade talked about oil price impact on Baxter.

Q: Pito Chickering asked about EPS guidance bridge and CCS wins.

A: Joel Grade bridged EPS guidance, discussed CCS backlog and conservatism.

Q: Danielle Antalffy asked about organic vs inorganic investment.

A: Joel Grade discussed focus on organic and inorganic growth, net debt target, and capital allocation opportunities.