BAX - Earnings call transcript Q1 2021 | Baxter International Inc.

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Operator

Good morning, ladies and gentlemen. And welcome to the Baxter International’s First Quarter 2021 Earnings Conference Call.

Your lines will remain in a listen-only mode until the question-and-answer segment 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 re-broadcasted without Baxter’s permission.

objections, at any time. have you please this disconnect If call to Ms. I like the over would now turn to Clare Trachtman, Vice President, Investor Relations at Baxter International. Ms. begin. may you Trachtman,

Clare Trachtman

Good our call. to morning. XXXX And conference earnings first quarter welcome

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

categories includes of our the morning, risk on With reconciliations. presentation, statements prepared that by reflecting schedule, factors business product our this forward-looking expectations. for results refer with presentation starting note, and BioPharma results the News. product be development, today’s Solutions sales by unit. second related this accessed Historical this presentation the our reminding regulatory course, under me financial matters that SEC complement the we website XXXX, our On breaks for the to contract new discussing quarter everyone regarding outlook contain XXXX our our out that, development involve a let non-GAAP release and to this quarter key schedules that financial Please concerning year current could press manufacturing full first and call materially. comments remarks section financial now morning’s and and cause more Please to be differ materially differ details uncertainties, filings and could of results outlook. this & from Investors including along actual start new which can in discussion sales structure financial full will Events supplemental include Baxter’s will year XXXX quarter This our actual

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

widely medication, with Pharmaceuticals European strengthen As the during the the rights for first mentioned prescribed Baxter This which closed as XXXX. the Baxter’s Global February year, in release press company our U.S. Caelyx, the and Doxil, to geographies, acquired several quarter, acquisition which certain this XXth outside portfolio acquisition, chemotherapy supplements in the in its of of U.S. also rights on to the territories Doxil this morning, U.S. previously known including existing strategic

this discussing the As Doxil. which as operational be the adjust result foreign a the of morning, will of Caelyx of impact acquisition, we sales sales and this growth, on as for exchange, call well international

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

Joe Almeida

joining Good year-over-year ago Baxter X% outlook of of sales as a in quarter as of operational a first basis take thank overview call. heightened experienced impact quarter COVID-XX. are morning, challenging growth I for on for comparison, Clare. begin will you a These performance of with X% an performance. Jay will your whole. our the first and year and QX for Baxter’s hope and safe. the financials everyone, today’s you closer including we healthy an that Then you, with ones Thank and I at will customers look loved close as reported Q&A. the and currency given the well as on we delivered both basis. prepared solid the our sales face pandemic, constant unprecedented a year represent a and

recovery. reflects year-over-year declined quarter. in On in impact the This X%. X% growth a reflects results segment constant at adjusted progressing delivered across much while region, Asia-Pacific the per strength of of is the This first quarter our $X.XX of of growth COVID rates. the bottomline, On share the on earnings basis, decrease negative its region the

rates. due the highest India, surgical admissions rates the were in in both by results volumes constant Americas around flat year-over-year decline of to hospital impacted in which monitor to segments be COVID currency lower is and rates the and continue continue EMEA Sales to X% these in experiencing infection the of pandemic. Sales also We situation at the world.

Looking sales increasing currency for were heightened on performance Results constant led basis. continuous Technology at by Baxter’s amid or XX% business. with ongoing product of replacement categories Acute driven by a all growth CRT therapy demand therapies across globally renal COVID-XX. our

last expect course discussed and we of typical As year. receive acute year, to therapies over pandemic to demand its the the more return peak we from levels

assist dialysis would Our I for ESRD center in Renal demand demand XX% businesses depressed constant currency. and to Pharmaceuticals Care a each be by grew Renal constant all higher that COVID-XX driven vaccines. HD out Growth partnerships our patients currency year-over-year BioPharma mortality on advanced driven dampened Care for both manufacturing Clinical low been digits business PD in wake globally. peritoneal by and volumes our point Solutions or from rates Nutrition pandemic. basis, has PD by the patient continues by driven of our the at the at in products single to

by should the patient’s and growth ESRD return next the stabilize HD is expect their vary base normal XX but volume growth PD recovery market wide for to to expected months, the XX market. outpace to may months over of We foreseeable the future. continue

the viral effect renal home option treatment PD, Beyond conditions into in CMS U.S. choices the therapy new in numerous disease in which year, will payment as to benefits a lifestyle stage treatment access HD at treatment and or therapies. home-based of the continues critical start option went markets. amid to general extended be model addition of supports this a recognized remain ATC to the pandemic

Medication our the as year comparison the Surgery low-single exciting seeing foreign surgical pandemic the by Last in well growth of growth rate clearance heightened proven demand over Novum as as in XX particularly to year-over-year, XXX(k) we compares clearance were APD In for year, gradual Cycler clinicians to U.S. Growth course and to as well the quarter rights business, across COVID supplies both on rates our volumes is Dose quarter. Baxter’s and the the portfolio the Clinical of was compounding due EMEA. recently, the as this of this way compound a was marked territories also the both mid-single strength up the improve highlighted driven as broadly, constant our APAC Pharmaceuticals earlier hospitalizations further the steady we reflects a in in platform, Nutrition more are That Pharmaceuticals recent growth business for in select month. countries are Doxil We Delivery potential procedures, Medication are system, markets, enabling of the year in declined particular, Pharmaceuticals to continued growth IQ acquisition of recovery their of more year. and sales in leading to IQ Novum U.S. lower in and Caelyx in continue XX globally. and as hospitals quarter, in distinct currency edge also this worldwide at Doxil and to Suite. digits FDA vaccinations by as offense Claria our surgical acquisitions declined launching to now used XXX(k) key XXX(k) technology in in that PD nutritional Infusion impacted benefit the Caelyx the the supporting the product nutrition FDA’s one AK our platform forward the and dialysis of IQ challenging the globally, As outside trends, tandem in rates this pharmacy challenging Delivery, U.S. we quarter in to clearance the the from expect excited of our hospitalizations including well Advanced U.S. we dialysis Adjusting introducing application in prior This platform the to choices IQ digits before pioneer and Multichamber Software committed received international with and right Baxter currently I this Europe. Safety second represents resubmitted acquisition our Enterprise a the strengthens emerged. advancing and reflects More needs. based in U.S. and by exchange, for as this said, than accelerate Digital anticipate Homechoice these as Connectivity is patients which as treatment decline businesses make look performance pandemic the half innovation prior occurred on modalities stocked and

region. Novum work also for committed broadening globally platform this IQ expect We offerings specific currently of to enhance the address to in our we introduce this and product as to presence remain to in needs XXXX, our Europe

reinforce wrap up, future. breadth the and like all and portfolio, our the sustained remain the agility. I both our prepared of any and The well a the essential to and advancing impact lines, industry. and product fuel our expansion on that in our in Baxter adaptability nature of durability well of would taken key transformation, diversity for positioned together As geographic resilience, focused innovation, our growth to footprint We is

We have to to across solutions. look new our digital therapeutics increasingly value-added a and new including lot businesses, forward

employees sooner, You opportunities conference our committed as as shareholders. absolutely our our we dedicated and And patients may organic our attractive our to pursue our many well in are even to hear our advancing that XX,XXX to ever of and continue returning at adjacencies, mission some we business. about core remain as upcoming and for supplement key these pipeline, investor will compliments portfolio PD and to to

outlook. Jay for dive into a pass financials will to Now I our and it deeper over

Jay Saccaro

and morning, everyone. good Joe, Thanks,

strength mentioned, where comparison we and have spread are pleased display the be to tough select performance, priorities began heightened are COVID-XX on our out. and set when particularly the light products a in first portfolio as the Joe ongoing of U.S. quarter to As to we experienced quarter The we other first pandemic and our for demand executing resilience with conditions geographies. to of XXXX continues we on

IQ. resubmitted this filing mentioned, Joe for Novum to quarter we XXX(k) FDA As

pumps Our suite Baxter. infusion a drive multiyear of next-generation for is growth promising

for to we new bolstered our portfolio our and we of with line in territories the future strategic objective, execute select recent businesses outside with that our U.S. rights allow launches and product acquisition particularly in Additionally, the EMEA to Pharmaceuticals continue across geographies. will region growth, our our

XXXX a of our basis, reported X% X% X% currency and global operational sales basis. on results, basis to Turning X.X advanced on on billion, constant first a quarter an

the the revenues. basis quarter. grow benefit For Sales operational approximately to quarter strength growth points. growth XXX the acquisition negatively XX impacted of by by estimate driven recent and we expectations vaccine the in sales did Also, our contributed from in basis exceed approximately Caelyx/Doxil manufacturing-related COVID the COVID quarter, year-over-year points first that

well growth and offset in impact On rate increased the $X.XX than X% more as adjusted a has declined the negative the bottomline, on operations, our tax as interest per operational higher COVID earnings and business share and quarter. expense from

both a starting regional walk flat our in segments. and declined on region product Now, declined key in Europe, regional currency by a basis Americas and a operational segments Middle on operational constant performance currency Sales three through Africa I the will on our advanced basis. And categories, and East X% in Sales basis. sales operational both our constant were currency X% constant and an on X% with basis. APAC in

quarter adjusting of sales by the Performance X% U.S. growth were rights business. this the provide business, currency both to all global Pharmaceuticals is advancing driven for was Global constant Care outside for with sales performance in which for for in product key currency constant select our of businesses, exception the constant for note basis. the on to and currency PD global now by $XXX operational acquisition a will our quarter growth for Caelyx/Doxil. in Moving million, category, territories growth equal the growth, operational we Renal

monitor which declined of notable particularly markets, is in impact saw among new excess from diagnoses and patients Latin ESRD pandemic. volumes delays mid-teens the We mortality the American in resulting during quarter. continue the select patient This to patient

impact difficult PD further current The be sales Delivery of Medication portfolio Delivery of market lower home on we from constant of leading ramp demand pace reflects X% a of of trajectory Joe our the impacted currency the longer by products over a recovery mentioned, certain patient full comparison with XXXX, experienced million for quarter decline where in and expectations as Our and will remain in to about rate procedures. year, basis. $XXX for surgical rate yet felt by volumes hospital particular excited the Care course first the hadn’t therapies. business, COVID to for vaccinations, were declined admissions vary Renal although the the tightened the Sales we term the Medication and our

approximately hospital $XX injectables OUS on operational in U.S. that basis. on levels. as contributed were estimate Caelyx/Doxil we quarter, digits to the Pharmaceutical high-single select declined and During million were sales volumes, international impacted million products, with rates quarter offset XXXX in quarter. $XXX of the sales this pre-pandemic hospital QX acquisition. pre-COVID both a Caelyx/Doxil currency high-single down pharmacy admissions partially Pharmaceutical an specialty compounding performance sales basis advanced for inhaled impact. by admissions digits, buying of was well to constant and as compared the X% of X% also the of lower benefit the Strength anesthetics declining the as negatively surgical and excluding our services

product approximately comparison, procedure sales competitor Performance the basis was by currency a constant EMEA. driven basis. as declined were were first products were total a million quarter basis. X% Surgery and currency included benefit resulting difficult the Multichamber bags XXXX of X% Sales points on constant year-over-year as Nutrition, to lower compounding surgical Moving demand impacted quarter shortages. from million $XXX $XXX by Advanced of on in in increased as within for quarter the nutrition XXX volumes, well Sales in increasing a

experienced Although, the therapies procedures year, XX% driven volumes COVID-related flat slow the constant we were sequential growth $XXX a to business representing in anticipate expect on to approximately with million, Sales demand. year basis and currency ongoing surgical by improvement procedure start our acute of pre-COVID quarterly level. ending

mentioned, COVID-related we demand this anticipate will as decline. and vaccination increase slow Joe As rates admissions

As we this associated manufacturing disclosing our was unit, beginning presented contract which our with are BioPharma mentioned, sales Solutions previously other in quarter, category.

a by representing sales $XXX basis. were COVID-XX quarter was currency manufacturing in of constant Solutions revenues basis. First in vaccines generated on a on contract the XX% quarter from BioPharma driven Performance million, growth

honored play a demand role vaccines. are in meet helping for global We to COVID-XX

the rest Moving P&L. through of the

R&D amid basis and constant the was adjusted margin also million driven lower flat The $XXX the expenses, X% from quarter supply over year, operations Both Adjusted the was basis points spending increased XXX a gross benefit a increased a on XX% operating of COVID. of higher quarter The chain as to totaled reflected increase million prior of Other points primarily prior decrease in lower sales $XX due Our currency R&D basis. our on on XX%, later margin spending X% in $XXX flat continued was basis. interest of a interest SG&A million products, and million of adjusted XX% debt tax expect year-over-year and from was was year. increased to the Net $XX well We by year. expense as resulting recognized this driven benefit increased benefit rates. occur favorable high declined non-operating the quarter, SG&A year, the basis and reported discretionary pandemic. in to interest decrease to prior interest balances, driven on by quarter. XXX currency was expense margin basis of expense adjusted versus constant the a and compared an $X income in the by tax outstanding million in rate would expectations from and quarter. the the discrete adjusted the quarter in in by Adjusted lower

the outlook XXXX. year quarter discussing and Let conclude our my comments second for me by full

XXXX, growth currency full global X% X% of topline impact For of year of XXX as on basis. assumes an basis, X% exchange on sales currency from benefit X% revenue the reported a expect growth. to both approximately acquisition to X% basis, basis to a growth X% operational as on on and we This XXX positive constant approximately constant a and Caelyx/Doxil, reported well basis of points points for foreign reported to

with below low-single rates procedures and procedures that year will pre-COVID fourth admission Our exiting quarter digits roughly throughout full improving levels, the basis, and admission down surgical rates hospital flat. remains a year and with expectation on stay the

anticipate basis of between adjusted we now and quarter XX Caelyx/Doxil P&L, points the strong expand points, XX to margin inclusion to to operating basis down OUS first the reflecting Moving performance the rights.

exchange. impact be to chain We commodity and benefit the transport, costs expect the as as this from by supply given negative increasing and well foreign offset increased pricing partially freight manufacturing-related

For tax factors, between XXXX $X.XX these approximately on $X.XX shares the XXX of the a share. year full special diluted diluted diluted average shares. expect and year share per share Based rate we we average expect million earnings items adjusted excluding XXX to of adjusted to count range of XX% an million per

Q&A. of Specifically, to to global XX% currency a XXXX, basis, reported on quarter a and X% growth can an expect basis, XX% of we operational the second we for per now the X% share call on items $X.XX share. to sales basis. And adjusted to of that, excluding up expect earnings we constant on per X% X% special With diluted $X.XX diluted open

Operator

participants Baxter Instructions] a XX remind I be to and at the available you. digital is like will website days recorded [Operator replay Thank being that for call www.baxter.com. the would International on

Our comes Marcus from JPMorgan. Robbie of first question

Your question, please.

Robbie Marcus

Oh! quarter thanks question. good a for Great. Congrats taking and on the

Joe Almeida

Thanks, Robbie.

Jay Saccaro

Thank you.

Robbie Marcus

more second street. I’d more your a on beat. little little in to that’s in it the a did quarter EPS assumed guidance you the the Maybe a cadence coming quarter But off, love than to get start first Jay, here, below raise touch color guidance is

I hoping of from the there about inventory how year? think the of So lag to through second items cost half still margin on get high to back flowing is of et COGS, was the cetera, a the some sense expansion quarter, impacting and

Jay Saccaro

relates costs, to the that expect relates of And part different the admissions the being subside first part, we very part as procedures. second Robbie, the shape guidance -- at a really of with outlined when at gave different the performance tale beginning of originally, how Sure. two in year. do to shape surgical of we -- halves, In back to consistent half the manufacturing we it which the of to see we than the and this half. with certain

quarter, expect standpoint, market admissions, first to roughly of we X% we we roughly down. respect to assumption will starts levels. up. have to down quarter half So, with to to particular place. down quarter, in improvement pre-COVID second see And the X% year, that that about kind the performance it margin half second half see are see saw X%, the working expecting the then margin we will That’s of as topline. year, in drive the benefits gross see relative admissions, In our back But a first, to and in do the incremental second the first from second in in we we so our assumption of relates half improvements the from that to

so, XX% little bit in average guidance margin that second the of a north in implied have the range half we the will or that And be fact, as by shared.

Now, are specific Doxil quarter, sequential to I included in to maybe contributes related in What impact of moving couple improvement approximately a the all the few there is have pieces. that say in second is, sales earnings we that $X.XX of cents would acquisition. a and roughly do

is Now, second things but for we quarter, that’s acceleration the setting as stage think successful about XXXX. of one important second stage really us half and setting the a successful for in the the the for

are second meaningful quarter acceleration. that support the We in to making investments OpEx

we quarter seeing We take a tax roughly tick-up. expect bit of roughly the the discrete the repeat quarter saw in quarter there’s And rate place a second to don’t item We from year. the ticked in then first first a We second second see a there’s the a So tax to $X.XX. the up so that of of or Therefore, $X.XX OpEx that quarter. the in quarter. are from investments statement rate. about financial standpoint,

we the year. you second of more a view the -- for the solid the really as pleased stage bit It’s performance year. the first I to really setter are sets throughout a way QX of stage speaking, a say, to with broadly But on successful think, little half as of the start a It rest nice quarter year. I performance. the So, really

Robbie Marcus

guide, Jay, Day. go over you rate anything that that bringing in for the way I puts next your are try know, a at and get know to margin, But will talk Is that taking the year? XX% half second September able us some in this could maybe are you street year. So am to great. just I is sitting throughout going you that would next and from what’s Thanks. and going the with be XX.X% a second answer that there Analysts That’s takes prevent the full phrase about it. forward? I the operating in about a margin, year good and maybe half long-term exit to exiting maybe we the

Jay Saccaro

so -- stay things. On two tuned. One is

Investor We are our excited really Day. for upcoming

conduct on We folks that I we And area, are excited to Deerfield hopeful with platform it’s last where enhancements been on can team XXXX to share. to of and that the margin share be in the for in attendance take beyond thoughts so that we at we very are business. we as And it’s will as the some the safe believe years. long-term be and going incredibly to in terms five of will person say in we a point, have able focused

QX, whole a are QX to you seasonality some reasons. host needs exit But So be is, would always definitely than in thing of The seasonality at and for there in you typically are I QX considered is some there of lower play rates be QX a QX, the that caution will that. remember, look typically have year. which highest margins, discussion factor one when we of

Robbie Marcus

a Great. Thanks lot.

Jay Saccaro

you. Thank

Operator

online question. Bob with a state Hopkins is Security Please of question. BofA your

Bob Hopkins

I taking Yeah. it’s on really to I for thanks Robbie’s a questions margins, Great. Good wanted think question. the just follow-up and on operating topic. because morning And important

of in happen at the and So on directly over will the the you you the and dependent manufacturing year, course How control the the of are on your versus year XXXX cost trajectory over course starting half. is the side? of mentioned back of the what things in the that are including rest much growth revenue improvement kind XX% of

Jay Saccaro

because question to question. difficult -- for the some to do that’s Bob, go they extent, thanks It’s hand-in-hand. a answer,

the specific programs have both we have we on Now margin cost and earmarked side. that gross the

led under our the by and our Talvis, digital last we a earnings little in that’s you bit Andy way recall CIO. If transformation about call, will Frye talked

related work and accelerating that enormous terms an in of of has efficiency Operations, cost ongoing of the to of terms Head performance Jim also, in Borzi, of enhancements got and Manufacturing in And lot have operating the improvements half our transformation. second year. amount We a

of all falling QX always the SG&A look But look will a we we you -- challenge those real need challenge and and if the at at of case, prominently absorption manufacturing as So, are revenue short expectations, It beyond. real you like is fixed it things things QX, do creates facilities. feature in as creates a as absorption R&D costs.

So see there expectations important we line is on it’s us for the what some -- deliver that order do in revenue the are. acceleration to our

do that, the in and over think said have I having last XX revenues highly to improved Now light forecast in of our I substantially right really volatile has we environment believe ability quite months. projection that this the revenue place

think that support prove have see. reasonable I outlined second So and to that half the but the assumptions hopefully I will wait we

Bob Hopkins

if long-term, if -- just a we little point then, thinking you am up you operating actually that are are follow-up should that around and the end looking sure us off? just But we there forward that. September that we specifics -- and and considering year to roughly will in be XXXX all you you XXXX, and on way things at are there numbers starting is guiding, improvement are are Street would those as directionally, And margins, Okay. suggest all I give in is basis model this successful XXX up XX.X% a end the

Jay Saccaro

we taken us Again, did guidance the guidance lot In the off And It to reasons. we was stale. of the because have context XXXX. for comment. was from it it’s The of a different table. of hard

a different have provided global pandemic we lot have and of things happened. a since guidance We that had

tell a little focus this a it’s it can committed energy because of that lot efficiency, to you our So what efficiency operations, margin of team efforts the by and the our anything, I enhancing and share We improvements. the of and culturally, stage. on is way, painful that center notion don’t we is, is

to and share -- on and I light I’d out some still reasons, commentary the in for those pandemic that the how to future fact And all what but plays want in of it’s margins, so on love the of we think of see our year’s off hold have of light on rest to little performance. And this margin assumptions and I difficult valid commenting XXXX. to year for that, will what happens future a

Joe Almeida

we I Jay, know not add. I are what comment going that want in expectations, levers. of the to and improvements few just do if is our to on But is focused listeners company And may street the margin September. on investors we Bob, really

The the XXX(k) first new one FDA in led Borzi. pump obtain is we we by products, good launching have hopeful also very the a Then supply including year XX momentum are are new to more on the than product This launches. Jim new platform. integrated we chain from

functions in finance completely company digital every the the and function me, artificial company the company excuse that touched the of have, that and intelligence and use will use also is other transformation We in the corner bots. be the of of redesign redesigned in with of significant

we of a have lot momentum going So on.

are specific not not discuss number, telling So we sitting to here. just we a going are folks that just

improve our margins. going a amount have continue on to of to Baxter We in significant work

Bob Hopkins

you. Thank Okay.

Jay Saccaro

Thanks, Bob.

Operator

Matt your your the question. with Crédit on with Miksic a Crédit Suisse, your And line question. line question. Suisse open. is Please state is Miksic of Please Matt state

Matt Miksic

Hi. Can you hear me okay?

Joe Almeida

Hi, Matt. are Yes. How you doing?

Matt Miksic

and much the for thanks. question. you, well, taking Thanks Thank so

gotten about had Baxter have are you So, that over couple -- and I -- you we months, the have that I that think, of last Jay, comments the made. some one I of

And that and things projections the you going environment sensors to and like process that assuming through. of et you where we and on to newness you going how help those of of describing confidence up follow-up. the make a And I hospitalizations. wind variability that first we today I you of thoughts on sort procedures in given a challenge whole to regarding you half visibility sort have comments made the and can us are the of your and little some year the to the get this are we in have of one as those guidance? know half, it’s your levels, have And are bit kinds second and But into all some kind is understand cetera projections, of get

Joe Almeida

hospitals sources. have that now Americas actual patients good a in by line lot I of really give Heather to of along of and by are to like sources with number starts we it And in an Guy and we will aggregation of proprietary Knight data area us a this There procedures. that a that lot place Sure. admitted team invested done work sight is tell data you with have of is led Jaeckel terms in surgical this and our

analytics a in big think in also could I that to the last QX other first more we So was spending a have sources, and a some level the little we low-single of sources do we anticipating effort of -- a on year, we a would this with for same the lot applied set we we available a in the with challenging. we perhaps terms the And and of quarter understanding and were concerning the was of year, in a But that each quarter What analytic information. acceptable variable because then, to over is, for was of us. predict of artificial intelligence, Because, a hospital that very we lens ultimately, the admissions our to of was expectations and range found didn’t model found that markets, pandemic, in and QX, that U.S., am the a course, data fourth at this something itself sources assessing the specifically if that’s Giuseppe looking it’s there’s frankly, availability was -- grow publicly their But It digits have energy was so some early we year, sources. number that data that forward. never year, variety most within always have of work started talking year then did looking us was QX to and and of a saw sources. behavior. we lends driver we a that that so and data second forecasting in it’s started decline, thing And discrete line lot the what I largely tolerance where XX% for last light rewind of built. of data

guarantee I be is sort course, would I point future the us in from our what once past through what throughout, admission going U.S. million was that what mistake think standpoint. could have and been that’s to the is no anticipate and performance. of quantified being X an But outcome we believe the we Now cost so in penalty QX the per $X ability the better month percentage a wrong, -- of year, of be, significantly past got and wrong. last of has to for performance we a

assessing this have job really But drivers statements at really, nice related know, of would anything. this feel I I forward-looking add a like to like that the outset We call. you Clare have shared caveats forward. to understanding don’t we and done Joe, going if

Jay Saccaro

Jay, I covered Thank very think, you you. have well.

Joe Almeida

Thank you.

Matt Miksic

your becoming and capacity I of call, sort follow-up is important, for super obviously. efficiency, on helpful. Yeah. bit your just one is it of And but a margins the focus topic and on a this know then That’s

this you R&D organizations the rethinking is shifting And if cetera? of A do et margin just up the out maybe anticipate of leg opportunities, let’s the your flex after of how budgeting opportunity I is end your say, that organization the where wondering, after couple those are of when back of -- coming you to spend, year? sort of get after next to to came, describe the years operating how some this of leading where fair get effort in or sorts could get -- pandemic. efficiencies amount and of on you all am resources you So put to of zero-based in a work and

Joe Almeida

of Mike, is, three to is focused. buy very areas the is -- we very -- there the raw way that are we raw specific material material integrated all are very, delivery supply chain. whatever the moment From the to customer. it One

team. just We that with I that’s coincidentally have specifics and reviewed the yesterday

which up. containers from clocked cost raw materials manufacturing predict the and around being the of a globe, the areas, all other the ability companies in of to headwind company for and for cost programs lanes with facilities, has shipping our in cost have We logistics, many been reductions to

reduction integrated of things of numbers And Baxter. that cost are a saw yesterday, the pleased I supply those the in So progressive focus net increase there’s chain me.

from but The did we We processes. need second G&A, remove now enough. redesign digital indeed point to because a our Baxter not thing cost that got transformation a is to

better things just to So give a example way. organizations we company, But the finance in and to an I does great job. concise Jay also is supplement group Bob’s much more question can a large a do within

looking products, put that. So spend have opportunity this we People out R&D research a are research into new within of develop the this we year, digital the this development effective ask money. that location we the for that the of in me come There’s don’t company to more to by brand we of that shifting money, play spend XX capability from quality We of lastly new doing becoming also new company. doing can as affairs, in product mix well this organizations, with now, as accretion. And never Always, the and but we but and why development. pumps development. we and research more are margin piping always had that will platform is are and transformation the labor, regulatory more our at more shift resources

and well So new there costs is to mix products. margin the gross integrated as as from in via reduction G&A in supply chain, opportunity due

Matt Miksic

Thanks, Very Joe. helpful color.

Operator

with Bank state is online a Deutsche of Chickering question. your Please question, Pito

Pito Chickering

Thanks morning, guys. for questions. my Good taking

tough are rates April and COVID and focusing exit But a for just due March into surgery the am on in to but is we therapies. the on color as within one are and first country in head versus follow-up and the some revenues I February the delivery, tailwinds headwinds of can seeing COVID on XQ? were XQ, surge understand that OpEx maybe us The advanced dynamics acute medication most you the trying the of that question, you cadence and spending storms. give January you to

Jay Saccaro

Sure.

QX this, an to our we has X% much in admissions the we think, outlined kind was QX delivery what impact medication in quarter. the saw overall, from down first maybe didn’t business low performance standpoint, then I that and -- So, on down And of way digits, roughly X% very and on but X% a the I surgery it there. from single mention

to are down the United to States. the We the X% maybe improvement year, a and second my quarter related sequential expecting see of comments specifically to are

so made. have And April and what speaking have our seen thus far that is comments -- the broadly of we supportive I trends,

the of well, the second represents you of Now medication that the reasons all a like very, very quarter delivery. that, know having said for year Pito, comp for easy areas

expect quarter easing standpoint. So, whereas we some are large in a and the admission then in of year fairly comp level the that easy of the see growth because the year, a globally, in we we U.S. of second the decline part saw and to first reasonable from the of seeing an in quarter the

Pito Chickering

Okay. increased How And the we Care, have your us the mid-teens. at keeping it also, give PD? what seeing increased within to you patients the more mortality the you are was you as and Europe I some then think markets? Renal LatAm should PD relates within seen versus they color mentioned are center PD believe would be as get about in rather as can in-center geographies ESRD on patients and those patients in our on that XXXX? And for in you U.S., home on demand products both products vaccinated, down other

Joe Almeida

Joe this is Pito, Almeida.

is the we was is in providers reduction hit number Mexico, American a decline to sensors because due And good outlook in X.X% issue that the sensors, the COVID-XX. sensors was off just the still momentum Europe. But COVID gain growth recover until see outlined U.S., the for we saw our fatalities, PD hit. look a the patients Europe significant there the in when was and and overall So, that Latin significant -- with to Brazil once was starting to well, really as year we as the death to patient The dampened us I start the therapy. of would in even in the primarily and reduction a until by at COVID X%. in due dynamics say market, also before patient some was by that, U.S.

PD even dynamics outlook different and in X.X% therapy point, increased for we a to therapies, ESRD be to And by your a shown clinic. the correct gaining change HD, therapy momentum. think the travel to safety So this an year. shows for year, the believe disease PD in the the are they to crisis value have of like are home are patient is that to I see the home And optimistic pandemic continue the than convenience state guidance U.S., going for I staying for in this that home you to a instead

year So forward. we though affecting of we U.S., lot in going areas good Thank see even had beginning of a in closed growth heavily the the still the you.

Pito Chickering

Great. much. Thanks so

Operator

of your Wells Fargo state a Biegelsen online Lawrence question. question. Please is with

Lawrence Biegelsen

One for BPS. on IQ, NOVUM one on Thanks the morning. taking Good question.

the three, follow-up. on And Joe, had that XXX(k)s confidence XXXX the in guidance? what’s XXXX second your I So, it just one half last and IQ, still Is approval? what’s that NOVUM in you year filed

Joe Almeida

lack were here. only me little the question. asking was Pito I a thanks for see the Larry, questions. to lag you ones of asking starting and

on the huffing call back I So again. am

we IQ, is, better a for So made believe of did lot questions what NOVUM clarify and NOVUM a we application IQ. the we much

So remember, NOVUM IQ is a platform.

products -- will accessory. launched still come that the PCA that other and more have pump, we have the back the We have this we or So also are end our three pump toward of ambulatory in three down year, XXX(k)s. two we products

when we -- don’t all, So first behalf we FDA. of of on the speak are we we at market, look this

second FDA, when application together FDA. FDA the of but that We XXX(k) approve, bit least we modest, are year, of they to and very wants Jay, way if, at mean the I behalf don’t in they that have half the we the ready know color are put will have do some the more the a on give speak do, for happy has The the on we but to doesn’t that. we sales FDA with what some.

Jay Saccaro

yeah. I -- Joe,

nothing similar but IQ sales of -- it’s In had NOVUM million, we sales included levels in of the of it’s of it’s sort do $XX sort expected that north to terms year. guidance, second last we have half, for

Lawrence Biegelsen

more love strategic helpful. now, out business that Why to break will continue this here a Joe, is That’s on kind Baxter. you I for give BPS. of

near-term, basis, it in you an just $XX vaccine annual think on high related COVID investment I but is not vaccine. also million more November million still So and to that on to other vaccine $XXX the -- $XX thoughts level COVID that have XXXX opportunity million

breaking few out of questions. now why So the quite in seem just it tailwinds taking a kind you for have that about and opportunities, to Thanks the talked near-term business?

Joe Almeida

the will business. I -- on management we for separate. have for others, did also And because number in I manage in large I to and Larry, open a in will We did it’s so the we prefer purpose. the was this chime way speak, this. let we So, that but Jay always other to there’s

color more on any the Jay, So, reason.

Jay Saccaro

Baxter. really in does No. right. leverage investments hiding important It for That’s in us, I It’s an one made numerous business competencies some unit on, it think category. this of other exactly was we that focused and core

other this we So for specific investors light being the the see performance clouded allow on items. it opportunity wanted to and by to without to take shed

Joe Almeida

$XX to $XXX million Larry, incremental vaccine for possibility has our guidance in XXXX. for And it million Yeah.

So number. made that in BPS. investments We we with stay

we believe facilities, from And that investment. two that place have some one in Europe, one right the that’s create We capabilities. in this U.S. to are the benefiting of

job. do there. We We very capabilities a have unique good

We happy have very customers.

that to SG&A is good a run. the for takes company to it accretive margin is believe little Baxter profit we it So and overall very

So a is group, reputation. it really customer have we business, good technical good good a

in-house. So invest have and such capability we not from why more benefit

Lawrence Biegelsen

much. very you Thank

Operator

Joanne Please question. with question. your Wuensch of Citi online state is a

Joanne Wuensch

for thank you have taking and morning questions. I the two. Good

in seems of COVID-XX ebbs The flows the couple and were there quarter. like one from is, it a first

for bit may highlight if you guidance could If looks -- be? more. just little to like year, you apart or there may of there number of this a And also then the could increased just the a those not sort are pull what Thanks. similarly drivers

Jay Saccaro

standpoint, Overall, seen we overall $X.XX a to guidance. if puts Sure. And I for Sure. will and the your operational quarters you first to relation year can our question take start with Joe, answer and full vaccines second in first, performance full with that chime respect to year the have in. I a the the then will roughly plus and some disregard from strong moment, Maybe adds takes sales -- incremental these, we guidance.

a chain In addition we short prices. resin was global highly have $X.XX. pricing the raw in of to have a we cost script one But that OpEx logistics some that’s the we with volatile from really the seen about that, environment supply things that highlighted standpoint, market savings materials in and the term standpoint, the from

is along by in the with impacted chain Some supply challenges Canal. global some the of this freeze Suez by Texas, impacted of this

items, north to We in stuff are of a do on full a little in although Doxil some little supply substantial characterized we year added full a upsides in that that’s acquisition those vast addition, impact. expecting increase a related chain $X.XX terms And of fairly that washes we kind movement and of discrete ago. basis, I among all bit the majority costs items other have really those and that quarters. FX of the see year of up then eats

of over performance the excited we faced several to the that have for year have that over alleviate given the the will very we very are at months acute I that the what projections expect drivers seen overall we the put the respect tried and last do We is say is cetera. et the container several performance, next and and costs, really months. time. environment situation in resin would we right of least current anticipate But mindful that with, So full with shipping about operational to costs, strong

Clare Trachtman

I take And of quarter. on question, or was Joanne, first in COVID the the will your the which the of part impact second

for to had the COVID-related So $XX from the we if quarter, year recall, hospitals million last pandemic. in a first you of about purchases prepared $XX benefit of million

had we of to million that. $XX $XX about million So

sales it $XX north this -- north Now million. by of negatively quarter, impacted of

impact our called this -- we XXX-basis this why COVID. on quarter a growth point about year that’s from So that

of our BPS. therapies. during from we quarter. impact again, in benefits positive a general the revenues we acute in vaccine-related the the COVID our negative in then saw Now remainder saw But We across saw some businesses,

So, hopefully, that question. addresses your

Joanne Wuensch

Thank you.

Operator

online of state a your with question. is Taylor question. Matt Please UBS

Matt Taylor

the Thank Hi. for taking question. you

out So to for The CRT. really you or strong quarter? you quarter big down the it’s of expect there you strong continued Do do just off I to the in persist? demand are long I expect called acute the the wanted ask here a a fall over there’s about still be you to second the therapies or going one saying to How as that business. you go think course do know year. two growth

Joe Almeida

still ranging across COVID unfortunately we Matt, globe. see the

and things once two One do is on. have have being more you before, think more the this globe, across benefits. expanded than I we even it’s going understood therapy

can you people demand because United technology in still COVID. have you which number of States, and have this a coming see Second, countries unfortunately even you in have still good treated being issues, still the with

with year expect a So, that see reduction we of double-digit sometimes but to more as we as come low year. is and line growth to by as the a the next digits this into product a down. goes time current what’s high-single technology single-digit, normal This high a levels expect very to

Jay Saccaro

very Matt, that, comp add QX. to substantial the QX declines and in issues of And Yeah. because will just we see to

But this single-digit the it. an quarter, unbelievable peculiarities continued just COVID for a we high demand despite year, of to of in year. second QX So kind QX this starting saw engine growth and And us. we we a That’s is view in will of point, last see decline unprecedented in how Joe’s the solid level QX. demand of

to does declines. lead So it

Matt Taylor

of one it of Got licensing you that, for also of in like Got sides got BioPharma house, Can And context you. right, you. I nice in two a pickup of little the you see it on the pharma investments the Maybe ask the like we just Solutions, in more that you. speaking. investing seems device and been the just in you strategically last talk are to kind going about fitting side and on how just those increases together there? broadly pharma is see or couple have

Joe Almeida

we way also way more very sides are two market. to becoming we they devices are Matt, they but the we devices the go understand body. The are The and are intelligent, have that contracts do fluid but transporting to point connected. our house, from of A

into sometimes core with our the always combination development today. going is from business the that of injectables thinking adjacencies, development the and really and the of where our Baxter, company benefit devices objective our development go an the short is area up across adjacencies of in instead the puck come at So right, we look the puck pharmaceuticals into expand spectrum business, When of what future, may it where is together. away business at going, and the is of to

philosophy So M&A. that’s our in

to groups. the going are are our well the and good marketing leverage You to for our as because see those company, tuck-ins, sales continue as manufacturing organizations,

there. and So version very Doxil to add structure these pharmaceuticals beneficial. two us of Caelyx were primarily Europe in One, a create tuck-ins help more organically inorganically

going tuck the look So and in the make stronger, [ph] core what makes adjacencies our also is to miss philosophy healthcare enforced is that and always don’t we trend. sure going and that

Matt Taylor

Great. insights. Thanks, Thanks. helpful Joe. That’s

Operator

Vijay on a ISI your Kumar is question. Evercore with the state Please line of question.

Vijay Kumar

guess, currency and expectation was a guide Hey here. apologies the I been you guidance will for nice asked. Maybe beat low one I guys. understand right? up Congrats Jay, on the single. was single on this Caelyx. currency, if in mostly has annual decline came And constant start of a if The low the start raise quarter, guide I function the correctly, constant guys you

question expectations in back the business guess the why wouldn’t than I my in coming through So half? is underlying is, QX, in better that flow

Jay Saccaro

in than did and some a better strength so to that little of some challenges is this bit a better the difficult given with experienced at performance originally see in Sure. where It’s to this the we see the we given point. stage. a the call patient had operational in are year sensors a full quarter Vijay, as faced we first But renal the quarter. result, strength year, at first of little little did slightly than relates in the admissions -- bit we of that and modeled, we

if think, than we We our watch. come this If procedures renal to balance will what it will at in for guidance admissions stabilizes, to have or sensors line surgical of the in modeled, and I the continue certainly better reasonable point have patient update. time, But the was we year.

Vijay Kumar

has around but you capital stock if wasn’t could around around for over to sure past one on back changed, Joe, the the months? the how Then, if mostly you your guys quarter, Maybe you, in deployment, process larger philosophy. has any it just Understood. thought few question M&A recap bought I M&A us

Joe Almeida

doing? Vijay, good to you from hear you. are How

Vijay Kumar

you. thank Well,

Joe Almeida

So philosophy deploy has how disciplined we not we the how changed. cash about are in

of As continue, I and because in tuck-ins businesses, to little bit couple to actually just our not the continue business. will answered we question pharmaceuticals area a look we find of for of very your we in core our them, the a ones before, businesses small particular easy size our the of will did businesses,

opportunities. for to We look will those continue

into going are We adjacencies.

moving, importantly and things at But with anticipate to healthcare have devices. also, always direction Baxter and looking are where theater about I we talked advantage. starting what look last general at go? can up is year how trying in intelligent saw in healthcare to more is the we said, shore to the should moving have we We are we where And

We our the about new the of hospital are integration pumps. own the the for systems, with gateway talking with deployment

tuck actually company how if the today, not think where the going, so you is about as So revitalize can is tuck you well. the participate do itself

look. areas all are these that So we

cash our to right are eager to on opportunity, I hole and opportunities. in as cash not We always not pockets. if to going But we say, do have sit very continue a find are we explore burn the

will increase dividends. in We as well either bring buyback, as share

Vijay Kumar

guys. Thanks, Understood.

Jay Saccaro

we And quarter. in $XXX Vijay, million approximately repurchased the in shares

Vijay Kumar

That’s helpful, Jay.

Operator

conference call no Baxter with this are Ladies further and for concludes There you at Thank today’s International. questions this participating. gentlemen, time.

now may You disconnect.

Baxter International (BAX) 29 Apr 212021 Q1 Earnings call transcript