Company Reports

Baxter reported second-quarter results that included 5% organic revenue growth and adjusted EPS of $0.56, which was well above FactSet consensus of $0.37 even when excluding a one-time tariff refund benefit of $0.11. Management increased its top- and bottom-line outlooks for 2026, too.

Although the 2015 Baxalta spinoff was successful, Baxter's financial results fell substantially in 2022-23 on external pressures, including inflation and weak medical utilization trends just after making the large Hillrom acquisition. However, elevated medical utilization, supply chain pressures easing, and new contracts with group purchasing organizations coming online since then, Baxter's profits should be in turnaround mode.

Baxter's first-quarter results included a 1% sales decline on an organic basis, against a tough comparable period, and adjusted earnings per share of $0.36 on a continuing basis, which came in above FactSet consensus of $0.31. Management maintained its guidance for 2026.

Although the 2015 Baxalta spinoff was successful, Baxter's financial results fell substantially in 2022-23 on external pressures, such as inflation and weak medical utilization trends. With medical utilization rising, supply chain pressures easing, and new contracts with group purchasing organizations coming online, Baxter's profits remain in turnaround mode.

In the fourth quarter, Baxter turned in 3% operational sales growth and adjusted EPS of $0.44, a 24% decline and below prior guidance of $0.52 to $0.57. The firm also provided 2026 guidance of flat to 1% reported sales growth and $1.85 to $2.05 of adjusted EPS, or a decline of 7% to 16%.

Although the 2015 Baxalta spinoff was successful, Baxter's financial results fell substantially in 2022-23 on external pressures, such as inflation and weak medical utilization trends. With medical utilization rising, supply chain pressures easing, and new contracts with group purchasing organizations coming online, Baxter's profits remain in turnaround mode.

Baxter reported third-quarter results that included 41% growth in adjusted earnings per share to $0.69, which exceeded FactSet's consensus of $0.60. New management reduced its 2025 EPS guidance by 3% at the midpoint, which implies a much weaker fourth quarter than expected, and cut the dividend.

Although the 2015 Baxalta spinoff was successful, Baxter's financial results fell substantially in 2022-23 on external pressures, such as inflation and weak medical utilization trends. With medical utilization rising, supply chain pressures easing, and new contracts with group purchasing organizations coming online, Baxter's profits remain in turnaround mode.

The US Commerce Department has launched an investigation into the national security impacts of importing personal protective equipment, medical consumables, and medical devices. Various medical technology companies' shares were down by low to mid-single digits in Sept. 25 intraday trading.

Although the 2015 Baxalta spinoff was successful, Baxter's financial results fell substantially in 2022-23 on external pressures, such as inflation and weak medical utilization trends. With medical utilization rising, supply chain pressures easing, and new contracts with group purchasing organizations coming online, Baxter's profits remain in turnaround mode.

In the second quarter, Baxter turned in 1% operational sales growth and 28% adjusted EPS growth. Also, management reduced its guidance for 2025, including operational sales growth of 3% to 4% (down from 4% to 5% previously) and adjusted EPS of $2.42 to $2.52 (down from $2.47 to $2.55).

Although the 2015 Baxalta spinoff was successful, Baxter's financial results fell substantially in 2022-23 on external pressures, such as inflation and weak medical utilization trends. With medical utilization rising, supply chain pressures easing, and new contracts with group purchasing organizations coming up, Baxter's profits looked set for a turnaround until new US tariffs cast uncertainty around those prospects.

Baxter's first-quarter results exceeded management's guidance, including operational revenue growth of 5% (higher than the 4% expectations) and an increase in adjusted EPS on a continuing basis of 53% to $0.55 (higher than guidance of $0.47 to $0.50).

Over the past week, tariff-related news has created significant volatility in the US market, including in medical services-related firms like managed care organizations, caregivers, and medical suppliers.

Despite headwinds in its manufacturing capacity following Hurricane Helene, Baxter turned in 2% revenue growth in constant currency. Adjusted EPS of $0.58 in the fourth quarter was down 11% but above management's previous guidance of $0.50 to $0.53.

Baxter announced that long-time CEO, Joe Almeida, was retiring immediately without a successor in place, while suggesting that its 2025 guidance would likely decline due to new US tariffs on China, Mexico, and Canada. Shares declined about 2% on this news.

Although the 2015 Baxalta spinoff was successful, Baxter's financial results fell substantially in 2022-23 on external pressures, such as inflation and weak medical utilization trends. With medical utilization rising, supply chain pressures easing, and new contracts with group purchasing organizations coming up, Baxter's profits looked set for a turnaround until new US tariffs cast uncertainty around those prospects.

Although the 2015 Baxalta spinoff was successful, Baxter's financial results fell substantially in 2022-23 on external pressures, such as inflation and weak medical utilization trends. With medical utilization rising and supply chain pressures easing, we suspect Baxter's financial prospects will improve, especially in 2025 and beyond, as Baxter renegotiates significant contracts with group purchasing organizations.

Narrow-moat Baxter turned in solid third-quarter results, but other events such as Hurricane Helene's effect on its North Carolina manufacturing facility, the pending kidney care division, and guidance for 2024 and 2025 took center stage. At first glance, we intend to keep our $62 fair value estimate intact and still view Baxter's shares as steeply undervalued.

Narrow-moat Baxter announced plans to sell its kidney care segment to Carlyle, a private equity investor, for $3.8 billion. To reflect the planned divestiture of its kidney care segment below intrinsic value, we are reducing our fair value estimate on Baxter to $62 per share from $67 previously. Baxter shares remain materially undervalued.