BAX - Earnings call transcript Q4 2018 | Baxter International Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen and welcome to Baxter International's Fourth Quarter 2018 Earnings Conference Call.

Your lines will remain in a listen-only mode until the question-and-answer session of today's call. [Operator Instructions] As a reminder, this call is being recorded by Baxter and is copyrighted material. It cannot be recorded or rebroadcast without Baxter's permission.

If you have any objections, please disconnect at this time. to call like to now would turn over the Ms. I at Vice President, Trachtman, Baxter Investor Clare Relations International. Ms. may you Trachtman, begin. Clare Trachtman Thanks, Candace. Good our call. morning, fourth quarter XXXX to and earnings welcome conference

Executive Almeida, Joining are Chief Baxter's Officer; and Chairman Financial me Officer. Jay Joe and today Baxter's Saccaro, Chief

materially related XXXX this for full-year presentation, new contain XXXX. uncertainties. morning's presentation financial under regarding Web non-GAAP complement our prepared results including at to risks let more and our the current accessed A News. materially. that results our remarks expectations. comments site. be actual from site quarter call product regulatory concerning factors refer along matters with discussing discussion fourth details business SEC With by outlook, our could our results can this that development could we supplemental This accessed morning, On Please forward-looking to along our reconciliations, cause can and statements on of Baxter's be in course, release and involve presentation, also with the Events this differ will that, our Web external differ And, Baxter's and reminding start financial filings press development, outlook be that Investors financial to today's everyone me for section &

today morning Baxter's Web discussed In release issued addition, being earnings performance. business ongoing on A is and understand the used on financial included available our reconciliation financial investors measures measures today's call, the our help non-GAAP be financial comparable measures this site. to in of non-GAAP GAAP will to

first exchange for adjust generic the the of which sales will two U.S and be the full-year foreign our competition impact products acquisition in for XXXX. morning, of XXXX this historical adjust operational impact quarter growth guidance for sales in discussing call and of the exchange, Claris U.S for X Mallinckrodt we operational sales from months cyclophosphamide. the surgical acquisition cyclophosphamide, of of of for XXXX, approximately generic foreign growth for periods July competition a from XXXX On

call to Now the I'd turn to like Joe. over Joe?

José E. Almeida

thank joining and morning you Good us. for

to begin provide XXXX. quarter quick our before share the a discuss more you review on with for will whole. fourth on then I our outlook. our XXXX a to our sharing pleased are detail expectations with quarter the We of results reflections today Jay my year as financials, including fourth will performance and

products benefit with Baxter both basis, Baxter's delivering basis. from our of which of to Pharmaceuticals, a strength helped BREVIBLOC the closed We quarter. offset constant driven fourth quarter. the will and rollout quarter, also Surgery million strong growth. XX% demand business, patient quarter. operational quarter premixed currency a on U.S cyclophosphamide Acute in in also services the the Delivery by strong digits with U.S., dialysis This manufacturing as the company's basis quarter. achieved performance on contribution year as for the Drivers to globally. in well a $X.XX, with continued increased Therapies performance the adjusted strength execution on multi up sales management therapies anesthesia, Renal was quarter, in for call. XX% Nutrition was growth contributed to volumes constraints patient expected in improving our Kaguya products of benefit increased growth And In $XX continues support of the demand CRRT guidance be for growth the contract line Medication with our helped the offset as and successful driven the a for performance globally to which with shared by in from to we businesses, as in all the This of care third experienced patients our including in contributing Growth sales highest quarter and portfolio PD globally, injectables, for growth compounding Care growth of Advanced the Renal the peritoneal year-over-year. we a financial across during increased performance Q&A. acute pharmacy Surgery, sales disciplined currency contributed and sales X% in the critical and constant well increased wrap utilization lower reported our to quarter of a approximately RECOTHROM In Japan, advancing of in EPS fourth growth the in quarter. Advanced businesses; on in in Pharmaceuticals, competitive up solid from of and in Performance included resulted Care, increasing strategic products. high-single of supply operational digits demand with mid-single year X% is A performance and organ

to Delivery are Finally, we the on for products and performance U.S in Nutrition in our pre-hurricane efforts Medication demand levels. of has stabilized, impacted and businesses return to process executing

user seeing end demand purchases In for between IV large unit unit are we financial alignment addition, a closer solutions. volume and

grow well businesses discussed new their last benefit we in expect as continue we forward As respective from quarter, product launches. market with to line growth to going these rates as

for on outstanding discipline, To previously, fourth the quarter with In Heather action to contributed efficiency, our superior skills operational unwavering announce Knight U.S business growth. momentum ongoing medical this will strategic effective so all market. important Heather bring long-term will device driving know she end, as the innovation, U.S insights February in mentioned XX. taking we progress our us I our addition, On to renew Baxter's Manager hospital in General and last hospital our I performance I decisive our and that that I’m new to on illustrates quarter were strategic financial that leadership join businesses. firsthand emphasis pleased worked increasing journey,

growth basis, on the X% an currency X% on X% constant of For XXXX, sales on reported operational a full-year achieved a Baxter and basis, basis.

note, across represented all currency highest the EMEA of three geographic and Americas, growth operational our year growth quarterly reflected was both for reporting strength sales of EMEA. achieved also digit we overall APAC and mid-single segments: Our regions. geographically, where our the QX Of constant APAC,

the Our line. momentum carried over to bottom

XX% cash dividend $X.XX, billion year-over-year. to XXXX, Baxter our through versus And repurchase in over flow model. was up Our adjusted by program. billion up Creating our we XXXX, essential increased our XX% is and XX% free quarterly business generated investors stockholders to XXXX. of over In $X.X for value EPS returned $X.X share

our early the research through we in organic demonstrate In future the announced and innovation. system. of achieved our had we generation that growth the for XXXX on-demand patient PD solution clinical U.S Earlier promising in this and addition, enrolled of we and commercial milestones first development XXXX a weeks in-home, month, trial

we a continuum It new businesses. be pursuing a potential creative weeks underway. performance. has serving patients care believe collaboration across patient opportunity of to are experience advance pivotal, and pathway a featured of the put all will few treatments other across our Mayo of launches therapy business collaborations product patient establish drive This range combined a drive improved for In this new also announced the to outcomes. a with from to Now, improve later, care an management. also simplify of technology We great XXXX, to Clinic with And Renal in a potential Care our the represents expertise Excellence, work and meaningful Center differentiated XXXX ways. to to six patient

acute CRRT leading-edge organ European now helping support multiple in markets. care treat technology is patients in PrisMax, Our

the cycler source and earlier, embedded therapy quickly I is share As APD embraced a being in-home mentioned Kaguya in is with technology compelling Japan, option.

is pump Canada. spectrum platform U.S the the IQ smart pump and being is And Evo now Our other in platform being IQ global markets. adopted in launched

pharmaceuticals, IV across and sealants the world nutritionals. hemostats, launches Additional U.S around include surgical the and and

As XXXX at are unfolds, ahead full we moving speed.

continuing our to products agencies with out building across needs, successfully launch are pipeline address customer and the and globe. We working to unmet patient regulatory our

to focused for We impact healthcare continue opportunities patients to providers and This we through expanding all on all our the remain across organization. to development. deliver further stakeholders. partnerships results quartile to efficiencies and thoroughly supports intently accelerate performance assess objective business And and top strategic our

pass it detail. Jay, Now to walk more the through who I will financials will in you

James K. Saccaro

everyone. Thanks, Joe good and morning,

with demonstrate results finish XXXX. As through business strong transformation a consistent performance strength Throughout our coupled to line ongoing of Joe the fourth bottom improved the operational we year mentioned, our delivered initiatives. quarter benefit

by beyond, well-positioned will global performance Care, start sales This in our billion XXXX businesses. outlook discussing increased quarter XXXX. for financial by reported our driven both Renal and with I and our operational quarter, to $X.X fourth and achieve on X% XXXX of Beginning to X% basis goals. our currency Moving a Advanced full-year and fourth on expectations our favorable long-term the be Surgery into to continue and financial results, we before Pharmaceuticals, was providing a basis. constant

a $X.XX to diluted per exceeded performance, share earnings by management of disciplined referenced XX% also benefit the Joe On per increased earlier. primarily $X.XX guidance $X.XX line, adjusted our from modest increased share, financial bottom which and share. sales previous This driven repurchase activity, to

growth currency for walk Advanced you for operationally. performance constant growth with the in a businesses constant I'll segments quarter Note, with Sales our of global regions basis. constant in is X% our first and to operational X% geographic advanced in business addition sales Now X% a through for all APAC Surgery the operational which currency Americas geographic in businesses Sales provide growth our Starting Pharmaceuticals basis equal growth. sales currency growth currency three the both this we and will exceptions constant units. for for sales our by and Americas EMEA to and on region, advanced on segments.

global $XXX X% Moving business constant units. Renal on for sales a were performance on million, Care to advancing currency basis. by Global

single-digit of was communicated margin Sales expectations to currency offsetting of $XXX globally. were As sales driven flat million HD, was quarter lower on medication by constant related primarily this a performance growth growth the basis line the therapies we with sales U.S high lower Joe bloodlines. in mentioned, distributed in for in quarter. last low PD of in-center delivery Partially

parenterals, end safety as align continue quarter, is to as to work We closely we're will efficiency our destocking and continue to we now reduce the with our levels. for on largely customers inventory their pre-hurricane distributors and user with track reinforce volume more they to small to With demand SVPs reconstitution. demand. that purchases efforts of distributor drug the respect our levels, to with return complete believe During we

in came expectations. sales pump Finally, below slightly

contributed hospital similar and point in well connectivity benefited sales gained and in operationally. injectable were a Baxter's Pharmaceutical the to for of increased critical care EMR, by Baxter's Despite Growth finally to X% way the was increasing sales we pharmacy and compounding from Scop of quarter discussed As cyclo sales recent the the these and the launches. customer with from BREVIBLOC Pharmaceutical pumps. growth quarter respectively, hospital IQ, and lower sales last of comp also and the in and just by Sevoflurane. purchases million as in new $XX XXXX. sales are drugs benefiting of expect seeing driven to quarter. given somewhat dynamics, our offset anesthesia strength as partially million, currency share XXXX -- sales constant also product quarter. This services in million, BREVIBLOC in for a Transderm premixed contributed quarter, XX% cyclo $XX a delaying cycle U.S two performance. under longer we products, during Spectrum demand gain market of Strong amount were And increased $XXX growth

million, Moving basis. currency sales X% down constant $XXX to a Nutrition, were total on

focus to education and through recovery We growth supply availability. reinforcement continue of market on driving

result regain approximately we $XXX of and pickup XX% and X% demand saw a track. to million, the efforts $XX currency quarter, hurricane the Advanced increasing in quarter. of market in contributed are Surgery RECOTHROM PREVELEAK in and a were slight the During loss on constant million Sales as the Sales operationally. our

benefited constant Strong Acute basis. growth for global RECOTHROM been continues a constraint. sales on Joe performance the fourth demand a in XX% renal continuous from Therapies competitor These business $XXX have Sales of million, business driven in mentioned, As our Baxter's to issues be were therapies. quarter increased since supply resolved. by representing currency replacement

quarter the primarily increased million, contracting of constant Finally, currency manufacturing an driven on Performance demand services were includes our manufacturing $XXX increase our XX% services. sales which Other was basis. in contract by for our category, in a

for of in by quarter Strategic Growth XXXX. on the and priority. to totaled quarter operational the a XX the Adjusted investment reported transforming XXX helped our adjusted quarter fourth interest basis made mentioned points X% with a transformation of by constant $X.XX decreased the adjusted in on million, continues driven targeted balance constant $XX year. from reported our over currency of and quarter. third-party Adjusted was and operational and Moving gains the positions. to to received of per pension initiatives as our quarter, adjusted by effectively driven R&D manage U.S increase in benefit primarily earnings guidance XX.X%, versus which approximately were manufacturing efficiency, payments totaled was rest in were as XX.X% million more prior transition a diluted XX.X% through quarter reflecting of on on the per gross an offset expansion in Net margin sheet million, anniversaried on $X.XX milestone X% Shire $XXX adjusted a income fourth the points the on be benefit our we rate SG&A improving P&L, in we exceeded operating basis a our business certain changes in quarter basis largely how the $X.XX X% other prior year $X of previously the exchange offset year $XXX the decreasing certain loss prior a X% operational spending improvements and continued expense decreased innovation a share the cost margin share. $XX one-time and The basis, as million in pipeline service was million plan basis XXXX. tax of of in the foreign Adjusted from focus versus currency income a in and business. of our basis

calculation. trading repurchased million our Baxter our or repurchase the to approximately of $X.X shares at quarter reflecting intention intrinsic a value Within fourth to billion strategically discount we shares stated stock, XX.X

of and Turning sales currency increased to $XX.X basis. XXXX, X% by a basis, at X% reported on billion X% an constant operational on full-year

prior year line, than of ending more cash of On expected. million approximately $X.X of $XXX bottom the guidance $X.X free the $X.XX due XX% below we to or On XX% primarily share. adjusted generated slightly inventory is earnings marketing to diluted increased This balance an full-year higher than versus per flow a approximately billion, billion, basis, year. our improvement a we

conclude me full-year guidance our morning and my quarter providing comments Let the by this first for XXXX.

X% growth growth like XXXX. operational. flat approximately full-year sales some $XX points. to out reflected our $XXX $XX impact, generic of of related For the approximately globally, as competition Operational XXXX expect and were X% key sales. cyclophosphamide in as negatively we impact XXX impact constant approximately reported full-year full-year's the U.S approximately included versus sales $XX of I by growth HD million X% assumptions X% basis in adjust foreign for includes foreign and for and impact would to BREVIBLOC outlook, to U.S exchange factors XXXX, these to Operational basis XXXX. million U.S lower exchange of approximately sales currency, points XXX two in point to and sales growth million in-center of million lower sales Collectively, U.S which cyclophosphamide X% well

in otherwise to continued noted, partially enhancing of momentum PD Moving by of lower to lower to U.S exiting strategy of product performance stated guidance sales In approximately in-center margin we reflecting increase basis, constant growth Care we Medication Delivery, expect lines. X%. expect by X% except our business, for by currency with aligned sales in HD, X% on a Renal offset

decline We just Pharmaceuticals expect X% basis. constant XXXX, to Adjusting I business expected mentioned. our BREVIBLOC growth for lower a is the operational to be sales reflecting X% on U.S flat currency cyclo, to

of work patterns. to approximately return back X% growth in we to the U.S customers sales Moving to prescribing Nutrition, Clinical expect as we pre-hurricane

to constant our on sales basis. increase currency we For a to Surgery business, Advanced expect X% X%

in in we low XXXX approximately currently decline we growth digits X% XXXX. For sales to the expect repeat our don't the to Therapies business, business, as outperformance single Acute Other in anticipate of X%.Finally, we expect to

anticipate XXX we XX P&L, expansion to to basis operating down points. adjusted margin of Moving

approximately net We adjusted $XX expect million million $XX million $XX million income expense interest and to to approximately $XX of other of XXXX. for

Based XXX we X% expect to XXXX, an we $X.X of rate of count average call expect reported to $X.X approximately expect that, X% earnings for year, million open-up cash the approximately and free full-year now $X.XX Specific cash adjusted XXX we range operational and on of approximately basis. the expect And to growth adjusted per to million excluding diluted For of approximately items billion of decline the $X.XX and sales diluted to a for can And of a of shares. the operating excluding Q&A. to on basis, growth X% tax items factors, average flow the $X.XX billion. a $X.XX With to share we quarter we basis, expect an per of these special on XXXX constant first diluted X% between share. on we currency finally share. of generate earnings flow approximately adjusted year, special XX%

Operator

question Thank you. Stanley. from our first [Operator of Morgan comes Instructions] And David Lewis

open. is Your line now

José E. Almeida

Good morning, David.

Jon Demchick

Hello. IV medication love projections dive through questions. Would This the the that visibility saw the what bit see? the the Jon supply is you a actually Thanks XXXX? about year, to and solutions much of you for think expecting of business the David. today alignment for couple medical of quarters taking and of delivery is how how the during visibility think to to you’re first Like for the kind on financials little you of going there you're relative -- device now to kind Demchick the into part see

José E. Almeida

I’m saw going of hospitals to who then market and Jay, the which on is chain meaning now and us a the largely Good met, morning, that Listen, distributors, to and found we we I first more we have made inventory part balanced, think welcome that in conclude impact. we're we the our sales but financial or John. get inventory coming is have the inventory to that We financial market throughout largely pass QX, we share. results never will not in take dollars stable to out lost We will now, call. and balanced. see of that question right into the that so at while levels the

share contracts coming market the that a and Our some opportunities. is of some we about faster, little OEM stable are back we had and spoken have

there progression flu in last XXXX. of the the because have see to few significant reaction comp you in amount the a what that the quite So buy-in, a quarter in is tough quarters year was tough a remember first season late we very of a hurricane the was

to Delivery compare, quarter this business, for across have year, So you a a us X% to continue quarters be a will this business. plans is Medication which look you tells we a tough but And if the the and business, for well-established that. is other convert that to stable

We our new capture drive will new to pump will have of those more more The the coming great. and drive stats, will that volume pump ability launch in. the be

The and of two marketplace. the three other is very that of stable In are GPOs this makes IDNs XXX% we signed. are thing we in we out position about our comfortable with one the feel re-signed them, quite

a pass who me to Jay, bit financial let impact. more Now on of will the little talk

James K. Saccaro

Yes, in the last of did therapy the $XX we That’s quarter. year. was a first IV -- the buy sales business, quarter first it positive million about in rough have substantial just thinking in, impact roughly a

discussed this low-single end a was that recognizing was demand -- certainly which So that we’ve digit user a is a the past. in departure

half this part of in the second the at of -- into because coming in the that out in as to we more decline benefit then But you so the we a quarter the as of do our have a U.S double-digits. the of channel. year, half it’s look the quarter see the we normal then business some with respect year plans will to large IV year, quarter, back comps first for of the back inventory easy therapy, And move of in and

during that the that’s expect the see year. we really So to sequencing

David Lewis

Okay. guys I’m is in for And stepping John. actually this David.

about that. Sorry

more for So the of two obviously, first questions for me, strategically. one, two Joe, focus items kind And is investors.

first fluids, The is think the addressed for 'XX that quarter. you’ve I and first and

can in sort into Joe. you are headwinds about obviously, you’ve is targets feel one next just hand, of important of On the almost the 'XX and those XXX XX year to guidance. urgent good BREVI your How LRP this a is relative your guiding for to those XXXX, you. business years guide? you HD, you about adjusting back to still about two talked this to about thinking to just deployment year. X%, Jay, think for basis get sheet balance get And margins, deployment, back M&A How obviously headwinds you opportunity do versus X%. deliver in about second, in 'XX the XXXX feeling deliver to to the The your margin just But I to about targets points how Thank 'XX? ability then over margin

José E. Almeida

was Good well, orchestrated. well morning, That David.

call. So three of out questions we’ve your got

understanding them You M&A, opportunities, said so to more we’re those base to our on only so is want of on for two, behind looking mistake we adjacencies the about I make with discipline but the aggressively don’t guys our looking sense and size company -- acquisitions, continue targets good are really but things I are and for It Baxter. properly. financials will for very you for aggressiveness -- returns think listen, unchanged. which questions, for answer our the that’ll going not in

are for We molecules. looking

in to the our because deliver to $X.X billion we the M&A augment part LRP. many the confident augment other Pharmaceuticals, not is We that. very Care, in great have to still done moment we we are adjacent our in still be molecules priority, Will a the that we’re to Critical have the and interested our require areas marketplace and -- our new M&A in of ability coming XXXX, Size is ability we're that plans. LRP. we augment interested We’ve LRP, but that I still business. in products the the in I’m at have

at half new was great. contribution in it development If look product sales second the XXXX, our you of

be products hung a think some have on that, I so but -- and really don't confident in, we’re in size. lot Now up coming new of augmented with we M&A, adjacencies,

not the deal want others, that our returns in But that would to return to financial us, is -- pass very, or on Jay very the a I would our will underscore may is negatively shareholders. shareholders to important like investors the I but to be to impact balance we to fact and our little the fringes a so on than understand we’re do I working our intensively. sheet. returns larger Some the

James K. Saccaro

terms Yes, but also referenced margin, Great. terms great. I Yes, actual you of in of it's David, do growth, in something. think sales important,

growth sales X% X%. year operational Our this is to

As is that’s we One you exiting know, also one excludes margin important mean, but business. discussed certain include BREVIBLOC, impact. $XX cyclo, But the million this I of does pursued businesses. is it of extensively, roughly impact roughly this two our of we’ve of where areas the talked a was lower impacts. historically little $XX we in-center million. items about margin HD kind idea shrinking But there in then,

exclusively going the will to growth, within growth to basis rate depress relative points thinking sales roughly to it includes we a So of about of expect normalized X% XXX see it X% forward. the XXXX in that impact

then XX basis BREVIBLOC XX impact, roughly impact. and points. is cyclo XX roughly roughly on see the exchange say is should as second I The significant this roughly this to that’s number. Of of And foreign BREVIBLOC, last will is of -- margin faced X% incredibly basis one we’ve this that’s this points. margin we several we’re over And Cyclophosphamide, focused growth, margin area margin sorry, headwinds been item, years. basis year delivering it with points highlight to but path I a the will year expansion. expansion, very margin is further that relates on

of number deliver. well. to if year about we together, and able as we of talking We’ve past that. expansion these we margin to those nice headwinds put the in discussed through basis the points that we XXX will face the headwinds So expansion margin we that deliver we’re This the again fight a way in had again items of a on were

deliver So expansion, a we to normal headwinds to expansion don’t but does point rate growth. of margin again it relative margin to as the depress not reason

David Lewis

so much. Thanks Great.

José E. Almeida

on? we questions further for move Right. off handle any or should David,

David Lewis

will I there. No, guys. Thanks, stop

José E. Almeida

Thank Thanks. you, David.

Operator

Thank from Marcus question next JPMorgan. of the you. And comes Robbie

Your line open. now is

Robbie Marcus

the considering I in, can little that. good factored especially models. headwinds bit all Great good the But into came pretty The weren't a line, in the quarter on on and congrats maybe on lighter. Jay, think, first quarter. I guidance top street came follow-up that

different maybe you puts maybe and second you or product factors that that of half and the takes us So can walk confidence of cadence the through acceleration. in some XXXX give the launches through

James K. Saccaro

Yes, Robbie, a acceleration three will quarters, half year is first see specific should the meaningful back And that you’re growth. correct. number quarter items in the This are of of towards we say. the impacting back a the there I

QX in moments basis factor $XX business. we it million. this pattern or is IV to I roughly believe, the ago. another of operational to in did sales in-center So million buying That’s then $XX going significant IV we growth of in the The points about buy-in, we’re growth. pointed X%. pursued roughly $XX sales XX to a roughly HD, see million percentage we referenced biggest Its X% the first see But I growth. included that That’s so impact very BREVIBLOC, that, roughly sales, depressing growth. is, quarter. in X.X exit that points heightened And that’s of

growth again, the points this X% So at first we’ve of as year. are first that we pronounced of quarter the almost look to X%, in X.X most sales headwinds quarter growth of

$X.XX the phenomenon. way of half than transitioning FX first half second BREVIBLOC, an discussion, of a phenomenon Now and is more EPS cyclo, of a simply $X.XX by FX $X.XX quite to that of

the the furthermore, see significantly first accrue the great earlier. we’re of we’ve year. and EPS. we that of start number impact that the Furthermore, -- way really come in pleased some items U.S his second to the of of bigger You impacting do a to the to board, it's its benefit in on of but acceleration the XXXX. impact see in comps start mentioned the that the there. and across making overnight easier I and we’re even Medication bigger we the and put to to with benefits referenced the the of new a some products so quarter products Joe progress together script bear, half these half business Delivery We’ve an the Joe year, And that second in not then these

Robbie Marcus

helpful. quarter, generic really That’s did it One in the I thing wanted very Thanks. well into other out headwinds. even backing business the looks to like pharma dive the when is,

drivers. the Thanks. I business outperformance lot a part understand more how underlying give it's to don't think of the key a little insight driving into you about people think growth what’s a and of bit the 'XX? there in us the drivers Can

José E. Almeida

several driven is factors. the by being Robbie, performance

Let me the molecules highlighting themselves, the second from not API. been special the and start internally delivery of the that of those is are but our the molecules And we’ve the premix. molecules, success launching Baxter,

the shortages. is great the our and in substitute of made even substitute marketplace when of extremely Plus delivering lines premixes is have premixes premix safer doing and The efforts by MINI-BAG way So the that some to effective product medication is the we We fantastic. are and for more well. growth

growth XX% moving are We plus of in premixes. up

way are XX% has Medication conversion business. been that and recap and extremely MINI-BAG our know prefer the of go. some But plus into premixes is think that Delivery actually MINI-BAGS I XX%, we which and that of both that of the but So the we margins the higher recover by had success, and we to

our Pharmaceutical well. extremely doing So business is

will BREVIBLOC, is business move Thanks, injectables be is molecules onto the something medication. new Pharmaceutical more the with we off, leadership the have cyclo of can delivering and taking and we finally ex that which past you. that 'XX 'XX. this of Thank in generic And novel ways feel eventually which We coming up in business Robbie. and

Operator

our of America. of comes next And you. question from Bob Hopkins Thank Bank

Your now is open. line

Bob Hopkins

good and morning. you Thank Great.

me. is for your you XXXX if EPS last targets growth I guys a are I'm today operating sorry One missed clarification that reiterating you year? this. explicitly Just But two margin rev and questions and set

James K. Saccaro

Yes, we guidance are. Bob, numbers. yes no is those changes There to

Bob Hopkins

about just then And wanted I to other Delivery. Okay. the Medication thing ask was

on than for division of I for I anticipated talked this guidance seem that your And growth. about is happened a it a year pump given competitive quarters cause little have for your but X% some is it the in higher trouble comments what guidance but of here, landscape tough about like realize a And XXXX. that comps, obviously that now also the easy side. given was bit We just two little XXXX. you

could prospective, X% a adjusted accelerated maybe that through even you projecting new here growth bit in because gives confidence in what product comp a So you you’re from walk little XXXX.

José E. Almeida

So we're from and MINI-BAG in the or Plus, the MINI-BAG, some with stability to benefits campaigns some definitely LVPs. the getting recapture respect acceleration then

certain number categories. is of took lines, to rebates our are reality the of market place in able growth we in So that above because see rates product a product the

pay we signs campaign referenced we to continue very call, pleased solid dividend. some of will barring to that early XXXX, recapture in those the were fourth of in in the the progress made of first the so very, market above see dividends. that As And Again, quarter -- we areas paying quarter growth issue.

one that's factor. So

pump, comes of the which X pump year. is to the The do performance our the of back to into starts new spectrum see version towards we that -- second the start half factor play accelerate accelerated on

We pleased the longer clinicians pump expected. U.S., very with around has of cycle reception But by positive the have well this marketplace, in reception. received been we the so the than been sales

So all as pay that will XXXX. of that, to we result off start a in

pipeline We that. have us sight of able confidence we to be a will line to gives that that got do the

do the things one for And certainly then look level -- easier of a comps is performance have together I and as we where is half place. put say, those at we you -- that we the this this in like acceleration high of there. confidence a have second takes year some furthermore, So the in

Bob Hopkins

you. Thank Okay.

Clare Trachtman

to as as The U.S other the of make too, well comps. acceleration the we we’re anniversaried some outside comment well see some I going only is there, as would

took we the to have As Latin that you remember, volume back we going are U.S successfully well. of some successfully that -- American markets we to some as those volume to of bring now and

Bob Hopkins

Thanks very much.

Operator

our UBS. Thank comes from next you. And Taylor question Matt of

is open. line now Your

Matthew Taylor

Hi. taking Thanks for question. the

bit now you ask the to a Renal that bit the are is you what of XXXX little PD cyclers? that all and them. could using of wanted And first in PD more I more the any then, into because XXXX in pickup get that on you of people little about to one see your a around cyclers talk how world kind for business, I assumptions Can would up the you about of about was can love looking feeling on-demand terms tick and here was impact highlighted and color got So have? a you're

José E. Almeida

I will take that.

do color Renal X% are away is to PD in and of just in X% is to consciously bloodlines how to unprofitable we a was want from And little large connect some patient primarily We why guidance that our I business the Our and X% Care, product. were give growth walking geographies, X% to it. bit XXXX. a volume

So we money. because decision business our is -- were HD no our making artificially depressed

that in are As in going anymore. business a good a not it losing be money thing we that was are and that matter fact, we to of business

PD right and growth. of X% a are the The as This now in between X% Moving still we patient business, America business. is Japan parts healthy as to looking Asia, China. to best world very well the in North geographies are

very of parts different cycler. We many issue software to geographies which the difficult relaunched very we that but and have overcame for see time successful with to is old trying with monitoring. issues in in Similar in the updated had U.S., we in in HomeChoice SHARESOURCE, now Europe, of and launch with with Sharesource, here, CLARIA Europe, privacy CLARIA the we’re HomeChoice a Europe

well. Japan the there. patients is got business doing it Europe. will countries different beginning extremely [indiscernible], Kaguya there's that the to Japan, point several in how already going X,XXX Japan with now to We using in have a in is We on operate to well. now in with is privacy. home therapy been Europe software monitoring, We I that's struggled understand but So the difficult

in We really 'XX and business that expect accelerate to 'XX.

So expect the in X% to business patient Very X% healthy growth. U.S.

is customer. Our well, with great partner going and great partnership DaVita

Matthew Taylor

of Thank additional talk any the can on-demand in you with And Great. terms pipeline about color PD? you.

José E. Almeida

therapy. lined have the receiving up to Well, we few just patients start

say and not stance. and is is Baxter do something to we going would classic that something. he stuff We We far. this it And -- it. so well a is started I is do have tend one Early something say very not to say, but

on our So like we put therapy we promised. patient

that going going seven, far. iterations but homes, work complex, It's on making are you're be have And was going this I hard in to we so electric you because a years therapy. the eight the people's car several comparison this ago. are well to because what to drug of is it's forward, tell to almost We going technology going

evolve and you this going evolving we’re started and technology. evolving, You and to start

to continue leaders peritoneal in will for home be We therapy the dialysis.

Matthew Taylor

dynamic more Great. Thank mentioned I hoping on ask you. just And one of the be could You you can some I dynamics kind about the follow-up specific the molecules thinking pharma both in mean, in of but was business? Claris 'XX before, acceleration growth number we molecules in there. about launching the some see you're should in of 'XX? of really I the 'XX, versus terms the

José E. Almeida

Well, me in this pieces. -- let let's divide

are have We the to the part are know facility, we to And molecules, we -- the Claris. that warning we for plan we were promise of letter for FDA. doing Claris which you our do as have everything

times before for location. We we will can inspected a VAI clearance be couple get or that of

agency to be focus now warning that our So letter, is cleared that the we are the done. able for facility right being the efforts all and to of get promised Claris

we our continue because in we We to or that everything our doesn't will so we also be It to we is the Claris. B backups working have something would plan have our that contingency we and if at that can because B for like that letter -- make U.S., Plan no there that would sure Plan disruption every work. is to are operation warning means plant, the angle plan sold products for CMOs have most can of

addresses this So Claris. this is --

end has that the launched really molecules. have market. of molecule to molecules system molecules molecule delivery is but interesting the other have, some the 'XX, I'm not name we premix breakthrough important you that have and they’re the we going on. breakthrough, a give of telling but is 'XX I'm going that and at molecule, really nobody of the stuff we Not the in The itself some the

one year. a more year. The sales that launched to and the is higher give The molecules our last other XX% one we well not done them, launch with thing in launched name of have few last this I'm I the of going for in to is have we estimates molecule, year, extremely is are year, have say last

do to will that continue So well.

ways years and add products and multitude our last things this a to and to few deliver the to like for the plan Pharmaceutical the past is said, ago we moving our chief molecules to are are promised and that are as the year portfolio offset So were do absolutely going molecules we into, were we we do regions leaving XX BREVIBLOC and that we double for it. in almost company those on plan above and going to of cyclophosphamide

As of and that that I announce hopefully said, that by properly the will we have when we end 'XX molecule, will be an important happens. launched

Matthew Taylor

Joe. you, Thank Great.

José E. Almeida

Thank you.

Operator

And you. of next the comes from Evercore ISI. Thank Kumar Vijay question

now is open. line Your

Vijay Kumar

taking question. for my thanks Hey guys,

FDA LATAM a business. any So curious, happens resolution fluids, And couple warning I'm Jay, tenders? the IV I of curious of, to coming Claris. I should of I'm contribution, or Do I guess, here. assuming just contribution guidance, guidance housekeeping the guess a any questions have visibility? signed you you say Is the any that tender business mentioned for you back have be letter

James K. Saccaro

standpoint, our resolution an from the becomes important FDA XXXX our there no is assumed of letter. in numbers. that for warning of XXXX Claris resolution So component an Obviously, numbers

extent So along have are then get with range to the expect, we we the change. we intact resolved the that that long no frame that time plan

will we resolved. the mitigation that, be for looking at event us XXXX, does look get to that component But an tactics that in as not We important occur. for are

America, relates Latin markets. it is other a different America versus in dynamic certain in Latin As of there to certainly yes, terms tendering

moved have we volumes Latin to some so, America. And back

of to sales you one, tell a business. but going solid detail, sales what have level ability level I America to is have to we confidence IV our of will the in or Latin the a been lot of deliver in where high that's some some tenders through cases and sight to performance that line of opposed have We as in going clear go. a In

Vijay Kumar

That's helpful, Jay.

the up? curious, follow-up interest like just guidance. one just for because expense implication -- balance there Just or is up. cash capital looks what expense the Is It going is -- any on is interest ticking this deployment I'm

James K. Saccaro

-- really have environment. factors a year-over-year, impact. is we we And higher a interest-rate two that, have repurchased in of rising a But interest few have there significant One a expense shares. is do that's cents we the of number than play. more Yes, so

take the moment for That value, we past, of did we market meaningful have the the price, we the opportunities in was a fairly the intact. an vehicles but took produce long-term number very a our There intrinsic shares interest of fourth saw below in increased to terms We stock offset and the shares expense. said in of We opportunity is that, has full-year to the dislocation. a share see much of it's which count In XXXX. advantage we buy quarter, As benefit to the to share valuation repurchased is shares. in that.

is look we a solid -- deployment. net situation, as grade long-term our to at what net I our we overall debt goal the at credit And Now are further flexibility is we’ve do as believe net EBITDA. Baxter, one you tell to will maintain we main look I while target is rating for the EBITDA, of still have said debt that and to believe investment turn capital we position we below I debt more significantly more have XX than

pursued doesn’t -- going increased forward, business to capital our extent about share fair not we does in deployment any or but really repo expense. the the strategy point that it development So significant interest fourth a it's quarter impact

José E. Almeida

sheet not Jay to Vijay sit the what I underscore folks unused. have that said, just to, balance cash said going just in to we let want were we and

in the are out we shareholders the we most a that way make that So to it. to can going return of

find to dividend. M&A, the with repurchase target if which two So more and but vehicles are have don't like are we buy the we share ideally to in return, we to going and we money money shareholders in right other return that spend the companies

said, be concurrently, one the make sure are sit those money They three will can the understand versus to unused. exclusive. be that other I want vehicles can I not as but accelerate we -- people done So in as mutually that balance not will sheet progress we

Vijay Kumar

Thank you, Joe.

José E. Almeida

Thanks, Vijay.

Operator

next Thank James. comes the Raymond from Keusch you. Larry And of question

Your now open. line is

Lawrence Keusch

the solutions. share Thank I stable you. being Good caught related to IV morning everyone. in comments obviously Joe,

market I through that to around concern think and could process is pricing go et pricing that we cetera, investors one contracting given the overall that have spot contract renewals, some as of down. the come start

guess into I perhaps So you factors with you have also some guys and that job little and that could of that tremendous bit provide in a of was just I hoping done resonates maybe discussions. creating redundancies given thoughts color some for around the how those supply,

José E. Almeida

were flexibility because sale, up which the benefactors in Americas, none. our supply market not create all we second the when Listen, in is chain today of -- we this spot we end having to before

penalties our to ability. that -- them with we have with are competitors sometimes guarantee not prices. the who have the product didn't can in that, okay? we selling customers, But so supply spot product, the customers when strong we selling market higher the We would contracts our It's other have were -- that to that their

from that. benefit mostly who ones the not are we So

in markets contracts. are I pricing So established say would the by

with have, can competitive a will a what of have But -- companies and stable in always pricing most that competitiveness manufacturing, of we those we have competing and into U.S. be function have Ireland, made but our Brazil. contracts where the so made marketplace. plant stable We and share. today products we volume in redundancy is don’t a We But we products Carolinas, the in sell are products made Mexico, in we -- approved in the plan. U.S about sell now sell in have can Think to out the our we of

a can So think flip I and we very of a inventory quickly Americas, build across the contingencies with is switch the position. very that important

price other how this markets. benefit control between does in that, who we listen, negotiations us play customers. not spot which given did -- are are from our and the this price than is We So don't

will that. a took ones we're spot decline are advantage seeing you jacked about contracts the if of price our be in not in thinking not and So those XXXX, in for who up price a there sale the because

Lawrence Keusch

I come then that just is permanent into to you've those Amy someone which clarification, Okay, Board to strategy. you question, in then hard M&A relative Joe, Wendels wanted just supply that with perfect. make impactful Directors, bring a And a the U.S. very, the bring way onto are want Covidien clearance she the of a for one to approvals been know of long with to -- FDA to follow-up. the just in. perhaps to is, She the sure clarification get very is a I time. on I M&A different second facilities worked the slightly those And at worked and has The touch for lot supply obviously,

your of pick the bit the And implications brain her so I joining to little a just Board? on wanted

José E. Almeida

Okay.

permanent. going as bring and inspections hook up But in wish. listen, humongous question we permanent that if to the places we we volume inspection are that terms Latin a of up going Mexico can about permanent Canada what the of from U.S and are as that's well expecting first into to we is us, Mexico, and is from as think as other line divert the you temporary we for amount to America soon after shortly. So is back into Mexico of right the in Brazil FDA. the second part is is FDA eventually permanent. now, going permanent Ireland a

of lot a is there So flexibility.

of Mexico supply -- by permanent gets flexibility status, in importation XX% brought XXXX. a you XXX% happen think were Ireland to brought Mexico to and the eventually chain. if brought Brazil So will when us about the other flexibility, And XX% which

Lawrence Keusch

Amy? then And Great.

José E. Almeida

joining at Oh, Covidien about with second and was years my part, colleague Amy for a Covidien. is of the happy so XX at I'm me plus Amy, years work many Amy Board. and well for the

So Kendall Company. and Healthcare and -- Tyco

great go on part very area excellent healthcare [technical is best a difficulty]. strategist, This that is Amy in shape well ever. a She she not be making sure XXXX. her excited and will M&A. is news we Dennis instrumental us be So team that the helping with will for strategist. as helping as that in of our strategy is only in are back the is is Board She we

Lawrence Keusch

Thank you, Joe.

Operator

Thank comes you. question Antalffy And from Danielle of our next Leerink.

is line Your now open.

Danielle Antalffy

good come flow about and a quarter. love to on for question talk everyone. To congrats I how Jay, quarter, cash Hey, the and but you morning, Thanks exit much taking on strong for cash nitpick so updated about the year, much not bit did flow in the the to know could for if the you the XXXX a guidance cash a talk little Wondering drivers the year. flow under bit QX Thanks what and guidepost so that for little much. are?

James K. Saccaro

for Certainly, question. Danielle. the Thanks

always we on cash do growth and perspective a a nearly flow XXXX, -- cash cash actually focus actually good double us. growth to in quite $XXX a quarter, fourth for and XX% From million. As you critical it quarter number Operating over right? was $XXX know it's I million free grew flow essentially flow, of

lot in the of admittedly So December. to that whenever XX% very in in cash end loaded. in very a of year solid and is performance. the that cash the number to flow the a of roughly comes A month, performance quarter try But back And there comes is activity, flow a of lot that. choppiness a fourth component large you forecast it's

different expectations. point, did we we with less mix play. a so were more The in below few -- your little came And to devices. factors drugs is bit reality our comment bit little and sales The a in there

the some the receivable in day demand. get then factor inventory our don't no benefits go happens cash payoffs have anticipate to to whenever when And you January. out even to revenues, came in place like XX in devices long-term exactly a customer to sales is the if not implications one, going you collecting flow, performance but you over December sale in show DSO, solid which it's an to off QX December, get say, I the make you’re until a QX final and the with difficult to you collection that that -- had of Some if But earmarked we moved is of it's interesting door. devices will the

decent a tell for anytime, put I growth mean, these in is below I and cash flow expectations. did cash the was you which what factors bit largely it's you we I And line with so, in play, come grow a our But flow will in basically earnings it all year, little XX%, performance. think XX%, free

look sight. made And solid have to we of forward, What a a to are our some operations to This for extent. solid hope very better that have we to chain handle number we talk company. we with continues this will -- our December, as the process. so process our organization. and -- have improvements a to on chain, process And and really I But supply line we area, have planning the the have continuing word cash we good sales it about guidance say, S&OP some leader process a at when conversion remain like be supply to improvements and use I in brought And entire team, S&OP but that we is we volatile tends we new the on this focus on to fact, approximate I meeting reason, our a a for forecast. today, very ratios later in our discussing flow get most our Joe

opportunity a solid large, very So cash there, flow but, by year. and

Danielle Antalffy

much. explanation. Thank you so Great

James K. Saccaro

you Danielle. Thank

Operator

Thank Miksic you. question the final Suisse. Matt of And comes line of Credit our from

is line open. now Your

Matthew Miksic

for me Thanks squeezing everybody. in. Hey,

José E. Almeida

Hi, Matt.

Matthew Miksic

the end Hey, how you? strong a year. on congrats And of really are

deployment. one here of I So clarifications capital on and couple guidance just on

just are this ex I So items. on nonrecurring quarter maybe looking to X.X% would helpful. QX. of at I to sort just way, just on but could $X.XX I impact basis put I color growth in color growth be that would right, $X.XX, closer you flesh bottom for quantify about And The to as points that’s anything wondering, you then the just And deployment. a this or the Jay, to the one to underlying growth, the that If that want we to capital that, guidance right those XXX on do out look make items line. growth get at helpful? of say, X% the was for X% -- first X.X% true, I’m if extremely will, sure clarification maybe around if on question

James K. Saccaro

Certainly.

IV buy-in the in and million. The It's Matt, is X.X%. first about BREVIBLOC two are another HD quarter, factors, So adding you're $XX in-center right, like X%.

can impact. don't do short the to get to want to growth a is those will that, of to reported number. fictitious that but what I fairly representation it than So financial operational number with is the I standpoint, that, of do more it's rate adjusted certainly stop be. you a substantial come accurate this adding long-term a a $X.XX here. Cyclo an at because using will We to growth try be headwind BREVIBLOC measures judicious is then headwind. adjusted $X.XX But more headwind. actually EPS from up

that's it number, included but the of course, in is, included the growth number. EPS Now sales in not operational

is So also a that's headwind. a then $X.XX exchange $X.XX headwind. And foreign

the large, most the pronounced headwinds Now the number count by we’ve good to so and like in say, a year. of are first first $X.XX quarter quarter I the things and of specific But guys, share that, like on. those of are

do that. to impact impact in-center of low say we the But that EPS is less the that in buy-in about in really, acceleration. we point earnings a business. would the a quarter to first factors have with is IV HD you decline probably those it before also key of So the I see a that $X.XX is than the are because bit margin

really the overview. that’s So

Matthew Miksic

Okay.

guess guidance XXXX, you’ve clarify to is analysis, growth and way, similar And CAGR in businesses tracking least that of a and organic could to follow-up, XXX growth look I confirm through the your long-term argue already basis urgency growth taking But the X%. understand growth Now for X% a at of that of guidance the sort that’s your But kind if of your kind that's similar the a organic on and the points course. I we just to of of I on analysis the our is helpful. underlying super on X% one talked of to full-year, kind at deal. about want X% strategic into front, thoughts

perception to those growth long-term the to strategic get X% more whether X% to growth somehow and to urgent maybe goals. would I a and be a this deal -- enhancements that additive think is there's on, or investments portfolio potential to and so

thoughts call? clarifying of sort the you have any Just on wrap that we as up

José E. Almeida

Matt -- no Mike.

of now that deal Matt. I ones. any to called Mike. and And the make Matt, sure first that, helps short-term. ill-conceived are Matt can do to decisions for in Sorry know you I've just that is rush us you’re bad worst those us all, the usually it thing and into of Baxter here a at

desperate that’s for looking a We deal, for that onboard. team that why are a we're not. are while, doesn't mean for strong deals we’ve a we M&A But

down we've As may has a a has work be has turned a there. a be the to -- onboard. this down. tell It bring the Board has Baxter did we closely we not deals be strategic last to in with We've because to fact, of financially, quarters. to you terms in It It were turned strategic that financials it of we continue couldn’t company make long-term. opportunity. intent, I but will benefit drive we accretive. the return deals our strategic. when We in to We matter creating very -- can to many And ends three meet deals every explore

get our the Thank or 'XX it need we company urgency. we to at no to and this but deal 'XX mean we find even But the we of don't decisions there's them. know use it, line we -- something happen, to better, we because number make it the make you. a the a of that to like want will if help the stupid benefit cash. to of us investors doesn't have that thing else 'XX. having the end just get So bottom not make did happen for And will money I to

Matthew Miksic

Thank you.

José E. Almeida

Thanks, folks.

Operator

you concludes in session participating the Thank Ladies thank our today. This conclude you. does That gentlemen, program. question-and-answer and for conference. for today's

day. may great a all have disconnect. Everyone, You

Baxter International (BAX) 31 Jan 192018 Q4 Earnings call transcript