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Baxter (BAX) Q4 Earnings and Revenues Surpass Estimates

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Zacks Equity Research
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Baxter International Inc. BAX reported fourth-quarter 2020 adjusted earnings per share (EPS) of 80 cents, which outpaced the Zacks Consensus Estimate of 76 cents by 5.3%. However, the bottom line declined 17.5% from the year-ago quarter.

For the full-year 2020, the company reported adjusted EPS of $3.09, which fell 6.6% from 2019 but beat the consensus mark by 1.3%.

Revenue Details

Revenues of $3.18 billion beat the Zacks Consensus Estimate of $3.15 billion by 0.8%. The top line improved 4.7% year over year on a reported basis, while 3% and 2% on a constant currency (cc) and operational basis, respectively.

For the full-year 2020, the company reported revenues of $11.67 billion, which rose 2.7% from 2019 and outpaced the consensus mark by 0.2%.

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 reported revenues of $1.61 billion, down 1.1% on a year-over-year basis and flat at cc.

In EMEA, revenues totaled $867 million, up 9.9% from the year-ago quarter and 5% at cc.

In APAC, revenues of $700 million improved 13.3% from the prior-year quarter and 8% at cc.

Segmental Details

Renal Care

This segment reported revenues of $1.01 billion in the quarter under review, up 5.5% year over year. Revenues at the segment increased 4% at cc.

Baxter International Inc. Price, Consensus and EPS Surprise

Baxter International Inc. Price, Consensus and EPS Surprise
Baxter International Inc. Price, Consensus and EPS Surprise

Baxter International Inc. price-consensus-eps-surprise-chart | Baxter International Inc. Quote

Medication Delivery

Revenues at the segment amounted to $753 million, down 2.8% from the year-ago quarter and 3% at cc.

Pharmaceuticals

Revenues at the segment totaled $571 million, down 1.6% from the year-ago quarter and 4% at cc.

Clinical Nutrition

Revenues at the segment were $246 million, up 5.6% from the year-ago quarter and 4% at cc.

Advanced Surgery

Revenues at the segment totaled $260 million, up 12.5% from the year-ago quarter and 10% at cc.

Acute Therapies

This segment reported revenues of $221 million, up 53.4% from the prior-year quarter and 50% at cc.

Other

Revenues in the segment were $117 million, up 0.9% on a year-over-year basis but down 4% at cc.

Margin Analysis

Baxter reported gross profit of $1.19 billion in the fourth quarter, down 8.2% year over year. As a percentage of revenues, gross margin contracted 530 basis points (bps) on a year-over-year basis at 37.4% in the fourth quarter.

Operating income fell 24.3% year over year to $406 million in the quarter under review. As a percentage of revenues, operating margin contracted 480 bps to 12.8% in the quarter under review.

2021 Guidance

For first quarter of 2021 the company anticipates sales to grow around 3% on a reported basis but decline in low single digits at cc.

For the same period, adjusted EPS is estimated between 63 cents and 65 cents. The Zacks Consensus Estimate for the same is pegged at 75 cents.

For full-year 2021, Baxter anticipates sales growth in the range of 7-8% on a reported, and 4-5% at cc.

Adjusted earnings per share is estimated in the range of $3.35 to $3.43. The Zacks Consensus Estimate for the same is pegged at $3.43.

Summing Up

Baxter ended fourth-quarter 2020 on a strong note, with both earnings and revenues beating the Zacks Consensus Estimate. The company witnessed strong performance across five of its business units. Growth in EMEA and APAC instills optimism.

Number of regulatory approvals, buyout, completion of agreements, and increase in manufacturing capacity and production levels (in order to meet the high demand for a range of Baxter products related to COVID-19 patient care) are primary highlights.

Meanwhile, weak performance across Medication Delivery and Pharmaceuticals segments is a dampener. Also, contraction in both gross and operating margins raises concern. Further, cut-throat competition in the MedTech markets remains a woe.

Zacks Rank

Baxter currently carries a Zacks Rank #3 (Hold).

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks in the broader medical space that have already announced their quarterly results are PerkinElmer, Inc. PKI, Abbott Laboratories ABT and AngioDynamics, Inc. ANGO, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

PerkinElmer reported fourth-quarter 2020 adjusted earnings per share (EPS) of $3.96, which beat the Zacks Consensus Estimate of $3.61 per share by 9.7%. Revenues of $1.36 billion surpassed the consensus mark by 7.7%.

AngioDynamics reported second-quarter fiscal 2021 adjusted EPS of a penny against the Zacks Consensus Estimate of a loss per share of 2 cents. Revenues of $72.8 million beat the consensus mark by 8%.

Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which surpassed the Zacks Consensus Estimate by 6.6%. Fourth-quarter worldwide sales of $10.7 billion outpaced the consensus mark by 7.9%.

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