BAX - Earnings call transcript Q2 2021 | Baxter International Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Baxter International Second Quarter 2021 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Ms. Clare Trachtman, Vice President, Investor Relations at Baxter International. Ms. Trachtman, you may begin.

Clare Trachtman

to quarter welcome call. earnings and morning, our XXXX second conference Good

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

developments, XXXX, second we XXXX comments year and actual forward-looking outlook. our regarding product presentation, for to by differ and With new start outlook differ could be business morning, reminding filings and me to matters financial that this statements SEC the more contain materially. let from our refer for our and prepared development and that call of financial results financial cause the discussing On full regulatory detail today's third including actual Baxter's involve risks, our and facts quarter press that, current materially everyone XXXX full results results uncertainties, this expectations. Please our year will release quarter course, remarks could that concerning

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

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

Joe Almeida

versus driven from by X% dynamics prior on comparisons year, will with a it treatment quarter financial year. pandemic everyone, words will wrap us. thank overview a share in the investor affect the joining prior a favorable our operationally. reported, endemic results delivered And as performance ongoing as Growth we currency Q&A. about in constant XX% Thank an you, businesses the Clare. patient our recovery Good of Baxter second X% and basis morning, provide number begin few demand of for the resulted Jay and the I'll performance dive quarter conference. ill and then deeper and with you COVID-XX mix up in sales for outlook. global and primarily of second was upcoming growth a Baxter's our

the XX% our line, segments guidance. currency the our earnings achieved quarter the constant share digit On and growth exceeding achieved of All single $X.XX, geographic and high three Americas low per performance, growth, quarterly EMEA up positive second original adjusted contributed all and rates. bottom were double-digit APAC to year-over-year at

pandemic While we three of the are on geographies, from ground experienced the market. our across clearly varies considerably recovery in the by situation all

Baxter my I we who on ensure to always, to want we every express healthcare caregivers while workers also challenges vast enormous As salute personal portfolio. face life-sustaining clinicians tirelessly our of frontlines to continue gratitude needs of all to the patients care. across day helping supported the the these the and who addressed employees

volumes the product surgical us achieved growth which comparison XX% Turning our improving business. a to Surgery respectively. BPS measured Performance pandemic of of Solutions prior contracts a currency and Growth Five favorable by Advanced by advances manufacture seven was vaccines. COVID-XX currency categories recovery basis. constant globally. the spurred as year to our and on Advanced was Surgery, delivered growth growth, to in then XX% BioPharma constant by fueled performance reflects and by

hemostatic marks intraoperative options surgery surgeons passive across morning's in in us in patients acquisition on our momentum allow press PerClot will to bleeding even with to range segment, Hemostatic we control of an with are Polysaccharide our release, System. into powder this PerClot solutions. serve and entry As saw broader building advanced of active global which you the their the

comparison as Our of by the driven from admission rates, Medication business benefiting Delivery hospitals rates currency at prior XX% grew also at to favorable compared constant year. improving a

in infusion continuing Delivery Looking platform, IQ our our Digital IQ launch Enterprise U.S. Safety Novum for Software the is of Suite. Connectivity IQ position to Medication including ahead, Dose

up to agency. responding from an Following FDA information the additional our now recent requests of we're process submission, the in on

Novum IQ to U.S. expect before the to continue in We end the launch year. of the

ongoing at molecules Clinical category digits differentiated the on strength currency, We in at Our currency reflecting complex year-over-year, was formulations. continue single and/or grew flat pressures recent we adjusted expect single and remain this U.S. although rates, acquisition. Nutrition Pharmaceuticals also advanced presentations constant digit Caelyx with for to constant the Pharmaceuticals competitive marketplace. focused Doxil in launching

help in launches of the new business projected year the generic at and a to rates, in the of this mitigate off in years pressures the to several continues a Renal to international in will Care which competitive we by with diagnosis. higher new pandemic, mortality for to On have rates impact kidney growth coming the injectables lowing this the of be comparable basis, experiencing. across U.S. market was We prior dampened with disease, constant contributed decline patients markets. Performance patient by global combined that some fuel are growth has offset the with a

space, we been awareness the pre-COVID quarter, digit this last As globally, of one innovator its education, we two PD as mid to single has The in including more In patient access. vital PD has over next continue, growth and years. to quarter this leader importance urgent of in support return And homedialysis to pandemic recognized growth a never the patient the said start therapy it return expect this year-over-year to the recovery market highlighted U.S. the we option. dynamics positive and

home amid is has Safer clinicians, year, and care, about helping for been more underway global a campaign, conditions. at Home than other particularly benefits stakeholders pandemic learn Our more patients, dedicated to which the of

at given the for Lastly, light expected last surge historic treatment digits options the prospects challenging the extremely currency year's advanced performance was the decline CRRT continuous market. mid in excited This comparison in by for single rates in therapy replacement remain demand following pandemic. year-over-year. in Therapies We the constant renal Acute declined of

and the ESG to for earlier CRRT sustain governance our social our of month, this organ investors. and mission with all technology. digital and our This announced will Responsibility platform we QX launch which environmental, Commitment, next embedded latest next-gen XXXX From In is mark version from the fact, help community drive how PrisMax TrueVue lives the to of serve and support the Corporate beyond. our perspective, work an of decade patients' we over save to stakeholders advance our recognitions and backs integral pristine and to efforts health

fully Our XXXX pandemic to but geographic in in our continue and materials an and the Corporate rising healthcare our and found the undermine is impact to around baxter.com. overarching commodities. three inflation empower on be Responsibility patients, in Also environment companies, objectives; sustain, people champion XXXX fate, despair raw commitment We and Report can some slow of our would emerging our peers now planet, is in ahead, operating Full built and details pace. variant the of we protect communities. posted Baxter looking other cost broader of Briefly of subject anticipate our the recovery trend is other and like just countless uncertainty. fuel

the to will from opportunities to expenses. incremental offset look We these impact continue for

and At I conference on to that drive we up, want Monday, strategic Illinois. objectives enhance growth focus held plan wrap to I to key in investor As Deerfield, on innovation. our highlight XXth our conference, will September the XXXX be

of Senior driving President transformation, In expect Jim which improvement. addition our in Chief will supply to part effectiveness ongoing Borzi, enhance Supply critical is and journey, our business as manufacturing Vice a next operation our Officer, outline Chain of chain margin phase the

Jay I'll for our year. Now, a results closer pass it the and look outlook balance share who through our of at the

Jay Saccaro

Joe Thanks, and good morning, everyone.

pleased strong quarter we're performance. second mentioned, Joe our with As

X% billion on advanced Sales of a sales over badges basis $X.X in quarter reflects estimate basis, points and ongoing of XX% global surgical this the recovery operational of vaccines. $XX sales OUS Second an in million hospital volumes, Caelyx/Doxil just XXXX in basis. totaled quarter. on along X% a benefit basis reported currency COVID XXX growth the and quarter on contributed the with the quarter. from approximately sales We these growth constant

On the share, expected by guidance exceeding operational driven adjusted execution to and rate. line, per range, increased lower earnings our the tax disciplined than bottom XX% $X.XX

regional operational Starting with Sales increased the our Sales our both three currency key Now walk basis. regional and segments through X% performance in product constant I'll by segments. and the categories. on Americas in X% advanced basis basis and on and Africa region X% our XX% currency and sales operationally. in Europe, constant Asia-Pac an a X% and basis constant on operational a currency grew Middle East

and for this both observed except dialyzers, Moving outside quarter global for reflecting impact This U.S. onto HD by that the operational in were currency quarter operational growth $XXX performance pandemic well adjusted for Global the provide of currency basis. by improvement rights Caelyx constant million dynamics. the offset as sales our growth in the year-over-year PD flat currency is and sales partially in our Care international territories will where for constant patient and the on by we for sales category. Doxil. business, businesses, in-center equal we from to constant business, global which as of Real a competitive Note product was driven decline key sequential volumes. select was the for both all acquisition pharmaceuticals in growth or Performance

resulting to and the of We the mortality impact monitor new patients patient pandemic. in continue from delays diagnoses excess ESRD among

saw XX% currency quarter Medication PD in following quarter by down we which was increased parts to our an may last Sales activity and resurgences the from improvement quarter as a year in constant as COVID-XX second this on on as certain priorities estimate the faced international and approximately of the approximately of Asia-Pac the second of injectable hospital in in $XXX growth $XXX the patient although down to the markets headwind and currency X% of volumes admissions sales injectables pharmacy the business a patient on that well the This from partially in are a of molecules. procedures advanced competitive Caelyx/Doxil. Strong to by from particular, million year Pharmaceutical year, COVID our basis. and remains admissions. of Performance expectation for benefited select that of hospital market. monitoring constant business was the the flat treat which Delivery continue declines for Europe. pre-COVID from pace increased Our in Demand levels, year. U.S. course patients, surgical were market generic global In compounding a over of million will U.S. We admissions height the operational portfolio, used contribution many reflects in the XXXX, sales XX%. recovery U.S. admissions vary critical pandemic OUS basis. in hospital rate prior the in to sales the ramp basis growth recovery X% of drugs offset compared

international were was in from sales of Performance in by basis. constant total currency a sales Moving quarter on Advanced the million, to were lower Clinical currency growth offset $XXX U.S., a in the partially basis. Surgery Sales constant primarily X% resulting $XXX on constrains. vitamins Nutrition, XX% million, by supply increasing driven increasing

estimate or the challenging were this comparison Within in the Acute Sales X% COVID strength at time constant levels, to pandemic. we basis, Therapies in pre-COVID year declining million, to surgical to the reflecting above related slightly contributing in were product quarter, demand currency a business the surge on our procedures quarter. year-over-year due last $XXX

vaccines. CRRT As increased sales for manufacturing growth currency the time moderate BioPharma a new related $XXX demand XX% on were Joe mentioned, quarter COVID-XX in and representing of improve reflecting the million, awareness we basis, products incremental to over will year, the Solutions of sales anticipate this through constant but that the related launch COVID of therapy. will

Moving through the of the rest P&L.

was on as the pipeline. Adjusted increased R&D Our in somewhat exchange basis, were spend and impact reflect year certain in in $XXX Adjusted foreign in a favorable of XX% reflecting points the quarter Both margin result impact related manufacturing points Net employee million normalized non-operating basis $X SG&A interest The a quarter increased million the versus totaled increased commissions year. reflecting gross in an particularly and operating other of the million of prior basis the XX.X%, and sales on the bonus $XXX from was of level quarter And income prior the exchange, the million adjusted SG&A Adjusted and XX.X% year the pandemic, compensation of investments diluted to as in increase product mix, earnings improvements the XXX COVID quarter. product guidance year, of a operational tax adjusted expectations of XX.X%, mix. of a quarter the those the the resulting per reported favorable $X.XX $XX in awards our in and expense from by of rate XXX accruals. last over in in basis, change expense launches. the over to the impact contributed previously The new our adjusted depressed support period. increase XX% receipts. stock-based as mentioned, $X.XX lower prior adjusted year, share. deductions by our improvement an increase promotional to reported increased new favorable more margin spend by of R&D earnings product as categories foreign to spending prior tax driven compared was as exceeded share driven in driven $X.XX a by rate spending per and

by a second the approximately of have or the our which of repurchased basis, quarter, by On common offset X.X net share repurchased million outstanding has we $XXX X or been Within second X.X partially $XXX shares count million million through shares stock. auction we quarter. approximately common Year-to-date, declined dilution. million shares million related has stock,

a during of position dividend addition, our cash ability year. rate. The company's for the our increase our quarterly basis second XX% announced is In annual an financial to quarterly the in rate we strength on quarter, consecutive dividend sixth increase fueled the

We with returning objective the flow. $XXX value continue is in expanding cash of to to XXXX, and accelerating of capital balanced generated first that margins, cash we've million million cash the allocation a flow innovation to With and of strategic organic our driving between and to shareholders. approach $XXX operating In and flow. free inorganic respect initiatives, growth half follow

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

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

will rates of that in remains expectation the continue the data below low the for XXX% on expect stay year to-date, year. a levels exiting levels and basis, full the pre-COVID Our of remainder a on with procedures pre-COVID admission procedure throughout down hospital be Based digits. year to rates surgical U.S. single improving now will we surgical

expect Moving down to the adjusted XX to P&L, to between operating points. margin basis we continue expand XX

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

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

Operator

you. Thank

Bank will from We begin America now Hopkins comes Bob [Operator of session. of the Our with first question-and-answer Instructions] Securities. question line the

Bob Hopkins

Thank and you morning. hear you okay? me good Can

Joe Almeida

Good Bob. can we Yes, morning.

Bob Hopkins

Good morning. Great.

the I'll just questions two have just state I interest and them time. yeah, -- of So upfront in

much if I get market you I So, think Renal about for one. won't for number back to two realize question bit that quarter important appreciated. it'd things was for, happened the how maybe performance circumstances pursue what could would Jay, improved I wondering speculation. first a have to that maybe an How more? growth larger a the of is investors helpful little then, update flush is to talk thinking quickly just you that's and better what to thoughts in do be there, on M&A hear nature, the number would just talk on little for Joe, guess, maybe And But about Renal growth out question So, company's I more and be for think an it of for And be you a your rate, deal. Joe. internationally strategic you bit generally, update rates? to the M&A

are and questions thank those So, my you very much. two

Jay Saccaro

standpoint, the second historically internationally. solid headwind quarter, couple that over Overall, were and from of it first a we've kind we're the the QX patient question. drivers the a facing expect census to challenges in the of is, a of performance mentioned, continue. turn which second do U.S. decline There And pronounced a normal as Joe about you in Great. question Renal I'll little has excess that. One performance a of we quarter. ended right, for X%. not address then growth orderly that and had internationally contending being the that to PD with talked in we this in was year, HD see and disrupted then below which growing X%, that. we that the a cadence you're of patient that Renal slightly -- business was And bit up We with had and

PD do patients, quarter and in procedures actually markets these of the have the in decline slightly this quarter. expect the quarter. And We impact the business, things in in from example, time with time. patient that for see to seen PD business of rate fourth do Our expect certain like, in census all frankly, say, to declined, Japan, quarter. in starting X% came the pricing And we've together to did along then, in of return new the third establishing issue, and to We that about solid some so in dialyzers. we competition that. on half we feel year, second I growth the HD an the see Like acceleration, delays

to So, year. declined the the we single half HD in mid of business and normalize digits, expect that the will second

over some the business other address confidence it internationally, internationally, for multiple you questions. think to been over of of we'll can -- in while can I'll X%. to half that gain I turn Joe the quarters, look Renal roughly second business performer grow the has a a that you at series year, So, the fairly and you consistent us expect

Joe Almeida

Jay. you, Thank

I Let to me give about you your answer question, how think Bob. M&A

First size conversation. secondary is, being a

for the going. growth First We is in where the where look the strategically We going, bucket's is now is Baxter future. what company. going fit at healthcare of to years this to areas a XX this difference five look for make

as a were make getting in is to we attached things to well area, and the connected got have and health. deploy as we need times of are. are adjacencies. rates we in Some We've to things look doing that where Baxter going, growth sure capital things And where to that ability lot

no off challenging presenting of company do more but for terms areas impossible Baxter into is much this to Going M&A, it, environment the lack in correlation more new create to a tool, that to it’s of difficult. something not

flow for is better cash return do well which we a the companies way years on We we out deal. and company all capital as multiple how of our ability And and is, to about getting confident cost at are opportunities bringing look Second ROIC digital is ability in The deal post see at same, few and look that one as same. times. to our third very similarly integrating much five-year base the I that always the our the hundred look bring ability is returns? the returns be basis the Baxter, have generate above we through not transformation a ago. points, last to company a returns the feel every we so We created that of examine few the

-- amount back against of the goes significant deals, doesn't we buybacks, form the cash go done. and in a has in it it to terms of as company have the So, of shareholders

this for just we and saw did You around million. year $XXX we are quarter some the buyback

about this So, M&A. I how think is

Bob Hopkins

guys. Thank Great. you,

Joe Almeida

Bob. Thanks,

Operator

Morgan JP with state the Please on question. line your a is question. with Marcus Robbie

Robbie Marcus

guidance. could with to Appreciate wanted it. Thanks. touch Great. start on you. I maybe I Jay,

You in guys piece a EPS really the quarter. had nice

levels towards the trending just admissions updated of us how year. Maybe have could walk up you the you part pre-COVID back did, through where ended EPS? guidance especially and the You over you on

Jay Saccaro

Sure.

the fourth guidance, our particularly far, variant, and we're but carefully admissions of watching, expecting watched stable that, about at that in given in we've Underlying admissions course, past. Delta around hands the around year. of roughly got fairly environment this risk You're the that the quarter XX% relative I've Robbie. talked We the feel Thus we're States our right, seeing And we're the a sensitivity expectations. this our the in very of United to and point. solid

that comments pharmaceuticals me let year translate to so And year then a the the make full related the P&L, the are as basis, business full rest second some about then, half. we seeing talk to challenges and and basis, we maybe of some competition on On pricing. first a in

a of it business, pharma, expectation. And year a basis, from of so, which our performing than BioPharma on Solutions better a is benefit our by offset $X.XX from headwind $X.XX full probably is

global contending roughly of chain items full counteract so kind each supply on we had year then, other. costs, those of And with. So sort basis -- or $X.XX a that of we're

substantial manner. things ensuring We expeditious company. course, inflation is And so, as -- an in in variations, couple products country Columbia. that, there roughly have and the we're which to offsetting $X.XX. But costs of committed some from the Columbia of rounding our have -- we're there's and price really efficiently purchase to that out seeing And a then, resources cents of some freight using essentially, facility unrest, as impact actually freight we out premium $X.XX. manufacturing in a of patients fairly we're like getting a had product We've

of able vast counteract we're the so, to that. And majority

to measures of have we're sure that ourselves at $X.XX expectations, spending we enhanced as categories, really are that the So, versus make roughly place, looking using as and challenging in possible. our resources benefit that efficiently of from all

possible. when we really don't quality touch but look like do offsetting base at being or efficient, cost we're the R&D hard and to course, Of programs, we ensure critical exercises, we where do things those

look have actually at I'll FX of some number on if we in We it $X.XX half But think year second about in the assumptions of say then there's if then is benefit standpoint, and impact. basis. a exclusively a it some assumptions of wash had first really the financial and that's a that the you But kind headwinds you from half out. second -- story So, from half. full that

the performance. dollar one really is of seen the drivers that second So, of big strengthening. We've half

that roughly our on have And of impact BPS pharma half. in out an And $X.XX. the kind we of has overseas business. wash our so second That's translation again, then and cents this impact I second half think that, the of exchange we're couple is notable with supply chain foreign right of really now. a on the of but that expenses, most contending back impact

Robbie Marcus

Great. don't want you this know Joe. And Jay, I to if or take

a I great. overcome the what think $X.XX and time it that, worthwhile detail, pharma drugs, you is half, in would driving makes more spending be What's just what little the headwind. on any could feel that Thanks. better? it You second

Joe Almeida

Robbie, when value in we pharma, what's pharma think and the our formulations novel delivery about business ways. of complex proposition is

launched pre-mixes have yet in or of been ways Our both. combination that not

see just has delivery of months, geologists you Then foot has confuse declined the pharmaceutical whole and XX we gas that are has over because gases systems. gases the from businesses. two as we have off this One So, our as today? across whole spend that which separate we with market in our that of category business have pricing the themselves look business. don't are the and at our using conditions off instead consistently budget globe patients headwinds process back deteriorating we business We as very have, when a pharmacists, the The that not it where Anesthesia COVID thing, of see are that right? gone in hospital still delivering portfolio. headwinds, the the So, and do of well to which last that is

three products months. conditionally three be to approved. just So, had six going nine are the [indiscernible], next in we launching We're to

We of same are difficult excited follows formulate of recipe and delivering. the that novel by to ways portfolio and

that, very think still So, you very, and goodbusiness, very, healthy strong profitability. has about is if PD

working I'm good contribution, do of go of in Remember, business the growth put then, on innovation wheel some a this portfolio very products to day understanding has products. off as keep launch still deliver they can the in will and our together, to them scientists on as portfolio the competition. well then that. bring to United Baxter able stop be as sometimes often need of XX the to new be we ahead group States, every what down pharmaceutical inorganically organic, products. sure probably make have of product to drugs and to the competition. launches augment have So able portfolio, India together continue the to this are that doesn't are we we and to is XX we're in that based new able that year, hours around headwinds on half stand tandem to so on But and

not when issue that So, -- have the business, coming so see last often but you so future XX for long-term this we do every more just in your you have has a competition happened that months. into market

Robbie Marcus

Thank you. Appreciate it.

Joe Almeida

Thanks Robbie.

Operator

question. Pito Bank state on a the is Chickering with your line of Deutsche Please question.

Pito Chickering

morning. Hey, Two good Thanks for taking questions. my on Renal.

PD from much COVID growth about excess $X walk you sequential how And the us versus mortality The that sequential growth. first sequentially impact non-PD? million. one is, the through by Can grew U.S. January

Joe Almeida

So, from I will Pito, up will Jay there. pick and start

XXXX XXXX, QX and was U.S. patients about the the of the in, the which for single growth, good the across to in growth performance overall Our -- post happens on we're the probably growth globe, terms of to QX of optimistic have which U.S. death the overall business which to to a able patient market COVID. to that QX sequential the vector very hit towards really year, the is a in of still much that, end in hard X% has digit from I grown dialysis XXXX, very it to double-digit new growth patients to and above about market in the market still is then and in good in particularly expect QX all into would PD return renal XXXX. patient on high has a on this be year and going say pretty despite X% X.X% the improved peak growth going to from

Clare Trachtman

a Pito, percent. dialysis the we of end in that basically the to the population would expect just And year, Yeah. to U.S. under add just the by grow

this return it So, starting grow being more so to population to XXXX and the than treated beyond. faster is even Again, year down in it continue recover XXXX, dialysis to growth this will X%. after in is then and

Pito Chickering

that then, from understand mentioned And Great. saw procedures did a quarter some like that much on question the in Okay. the this in like how follow-up COVID, nature. temporary, normalized to year. the just half to back PD Bob Japan I -- the purely excess for from guys like they Renal impact you permanent OUS, of wanted was versus is mortality more it's much how

Jay Saccaro

Yeah.

decline, I would is, a for a we that don't -- say two The the half to but in And So, internally. patient normalized. the expect second we're to reasons, year, X% start different we out of really mortality situation. those understand we split number X% going drivers the growth of see And to it unfortunate those of then, procedures we mix headwind lap start differentiate what to the is very as don't see items. of

basis So, the and on again, Renal earlier, XX-month a for solid internationally, I you at us. PD a business at look if growth rolling as in if you look commented international it's --

continue forward. We moving expect that story to

Pito Chickering

much. Great. Thanks so

Jay Saccaro

you. Thank

Operator

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

Vijay Kumar

fundamentally I fundamental, these all margin obviously about at when changed, about high anything Maybe And temporary a at has think one, a your level, question. level, in by question solvable, pre-pandemic when pre-and-post-pandemic the has for you but high guys. my mean, look workable, be -- business, for picture issues the Hey, to seem Joe. there markets, but Thanks my nature, post-pandemic, temporal are changed business when fundamentally for Joe, you big some anything here, think you universe. structure? whether end very taking first the versus

Joe Almeida

there think -- be influx when rates is XX% XXXX, are and that the end will recovery to a a we've patients I changes They year. flow into rest We back -- new the of the looking seeing admissions how in exit year. where before. of see had the probably year admission to XXX% that this the for going are towards think XXXX, being of year, all I XXX% treated are Vijay, you you saw, how how patients. and hospitals at you we about the see

if a Baxter our care acute that for say we market, of If about acute the So, from about many products have, And healthcare move think I with major are the a Baxter? the you would it's in independent with is follow supply to care. patient of you what the must your the as setting, less dynamics think the places. company impact products

tenure, advantage not If only medicines, were have Trump's also role a things you pump, for a a President no needed or need have PD the about dialysis to are by acute patient. to advantage. That U.S. need that have you that the you positive spoken the need sites that go a is transplant patients done the to sick the to injectables during matter less feed company, you if and but changes to acute fluids want that the in To don't site, dialysis what home the with be kidney place clinics. go you versus and that or will we site,

is forward When is positive. alter temporary, the Baxter logistics we're going changes inflation to a see those is and think hard only the well our as that believe cost. offset we that, as I seeing working supply disruption the look also that in of I that raw chain, don't dynamic will I costs, but material at not fundamental So are what

face headwinds will We area. in this

moment, to done of that quarter plan we a else, The everything fundamental and that? thing do very about spoken you that the have as don't change and offsetting are expensive, continue costs We the cost fuel, we're containers is the for structure? Is headwinds this and numbers. we our think there eventually see in us amount said, do see you the could year the it. is to We how have have have in In point at docs of telehealth numbers don't what Market-wise, that that information so. our chains we of we will think offsetting of I view. coming from the are We But significant as connecting from subside. ICUs. that in coming cost

with CRRT, we of be off, but with able products not think to it networks going to we mechanical year, be to we've half FDA companion forth. our a will that back with in TrueVue, will -- earlier we're doing this off better continue a that new mobile date, as just it’s about gateway So, pump, as is our be as a well health digital develop the better Sharesource launched companion, our the and our with and actually got software pump, to it, portfolio electrical manage the bring the as in hospitals is traffic that information installed to

forward. So not There's sailed. in be way market that's boat to has boat has the shipped, that going no connected

Vijay Kumar

Joe. one quick one for Jay, you. a extremely -- That's helpful.

I'm free think what a pride of the a here? should items flows, has there of back think lot Baxter cash to cash lot premium Baxter conversion a thoughts, obviously cash been about temporal conversion we free that we take XX%. company? when in should sub curious, getting -- pandemic, being are And free year-to-date moving of You

Jay Saccaro

Thanks for Vijay. question, the

As emerge. a years are And to cash both series flow last driving situations the protect flow we've decisions really over to and sub-optimize free performance driving sustainably. cash you against the could of that free couple know, I on of frankly, case Joe made focused and severe base

All absolutely extra of these carrying the inventory right were into pandemic. things to do, the thing

sit As incremental a we look of select which could product, we today, a challenge. be inventory here as hurricane season, carrying at

normal these relative had little to expectations. a And -- we've excess inventory so, bit things our have

towards As little we sales the a to by the bit in and optimize flow the carefully we've cash to year, more post-pandemic line able to improve move of of closely. able be product a as start we'll end been and predictability world, the

are optimize to working better, like bit continue on standpoint, sensitive be XXXX to more anomalous, to a And businesses I accounts make always with business. so, growth investments suppliers. we years product I to think, for to really furthermore, really able XXXX huge situation. those, to from CapEx certain our focus we'll on our finally enough payable, be normal there patients flow. that of, available receivable. very I the said, we again, then, think support XXXX, we'll our But those and a see continues XXXX And to just PD we as make that XXXX to optimize that and move closely in the having And and support especially because a as worked continue challenging emerged we'll cash a then inventory anomaly. days was in little XXXX, as start Obviously, being

So, continue those opportunities exist. to creating those and look we'll value for

a So, we'll starts for to in that XXXX a and future But year us more then become be beyond I have more area think continued CapEx normal will of that. and so more even great investment.

Vijay Kumar

Thank you, Jay. helpful, guys. That's

Operator

state is question. your with Biegelsen line the on question. Lawrence Fargo a Wells Please of

Lawrence Biegelsen

you for the Thanks quarter. vaccine, COVID question. on One, how morning. really one that opportunity? is? to and about Joe, I'd on sustainable million should was we -- vaccine. think contribution Joe, taking strong still $XXX a to Obviously, a Good partner with annual a contract BPS, year last $XX the non-COVID is And Novum IQ. this that BPS love million in understand How the signed on from

can when start for Just that outlook the we and understand contributing? to trying So, I follow-up. one see to BPS, had

Joe Almeida

The outlook the been necessity improving, because vaccine. for has

$XXX year BPS. contribution we're this of now, right from a looking million So, at a north of about

Clare Trachtman

vaccines. COVID the to Specific

Joe Almeida

that, not vaccine, just as BPS but a larger COVID of vaccine Specifically million. is business $XXX than north BPS a

Lawrence Biegelsen

there's I terms in this way the of point. that comment at guess sustainability to And Joe, that no of

Joe Almeida

need that file Yeah. produce one It’s to not, ever we don't hope vaccine. side We another on Larry. -- we of

the So normal. and to back disease world goes is away

what On help we we're the other hand, to the world can doing get this. through

as production that few have some weeks a the vaccine was overseas, remarkable. scarcity of is ago, in say to would can I going because you see, procedure it probably and but you So, XXXX,

So, world don't there's the there. have places of will eventually think vaccines. still vaccines reach And lot that those in I a

but So, residual we're there be production XXXX that not we in a for think XXXX, making prediction will vaccine.

Clare Trachtman

[indiscernible] well. have for as XXXX And some we do of out our

Lawrence Biegelsen

a bit nature you'll for Thanks product XXXX Joe, timing the important into for you. of obviously, about if of questions you Thank that. I'm talk little taking you a for confidence IQ, received and the And very the response and wondering the it's on the your Novum approval. questions.

Joe Almeida

they engineers answers, sure that a to a are want the getting we I'm have paper, little I the you of and FDA. on happy on is piece But not sure the put as don't I and The of answers moment. that as going FDA. we the say them I current not agents outside we and nature, we agency. overall, all complexity, scientists would this I'll give the too answerable. get to on will get focused will call those I also you do. We the to on make regulatory planning our pump. will the with folks comment launch What our pump, agents into that questions let that call what the a you out this can know we behalf questions on and an of for can -- but good all that it. the know to in do is, product questions at are of make focus be have the a demand have do of our comment, in world pretty the people year the Larry, much just don't terms spectrum I'll and hope know update are lot are

So, very it's really for demand large good our nothing. about. or all pump, have not coming do We contracts

with responses FDA. technical we we our So, make with to want the comfortable it. we think where I very We sure just have himself feel that are to

We holds three technology, happy very by a yet with Novum X, as that FDA. bring different the platform Baxter pumps, the has hopefully pump as is that level approved, industry approved very with have of of a because IQ, of Spectrum the and markets different but hit be the different Version nevertheless, well design when pump will the that future the and this to groups

Lawrence Biegelsen

you, Thank Joe.

Operator

line state SVB Leerink is with of the Please a your on Antalffy question. question. Danielle

Danielle Antalffy

Hi. the for much so Good morning, taking Thanks everyone. question.

follow-up Vijay's question. this is changed. on Jay, to to you Just fundamentally what's for

going And be just more into SG&A forward? control wondering, meaningful level about a analyst And did should have that thinking going the something forward is I lever head pretty we meeting, this we quarter. follow-up one have sustainable as and higher more strong You that's that as

Jay Saccaro

Sure.

OpEx in our on line. amount sure. the save worldwide I year, part our the spending there's we pleased in second is optimize able But relative that the this were face for to the expectations think, quarter, second relative more that full And we to challenging to that environment that place, were were expectations. of an the there roughly that we cents we are we as quarter. in probably slower supply substantial what pleased activity. moved we a resumption of year to savings a of a couple drive And we experienced look to $X.XX impact were able chain always a had to controls We'll in the related to

And had a substantial sort anticipated so, look increase we of we at in very as SG&A. second quarter, the

SG&A, we it that increase anticipated. we quite that size the pace just in but nice not did know at have a was You'll

we'll that expect to So, resume.

say is of and SG&A would and chain, approach other manufacturing that really optimize digital cutting is September. what that Here's Investor thing pleased But a we'll we'll spending in together meantime, tell I that In that about we're Jim that's transformation supply in to feature ones about the really across the all and we're like forward, to undertaking, the that a the the the were think of edge work about changes think then, doing taking talk I arena. cost making things you I that and result. going and are Day, other categories spending that we'll company. And the be we that And talking Borzi at short-term nice when about goods get you don't prominently. we'll drive a impact with have we really in terms will something the

Danielle Antalffy

Understood. that, consider long-term are pricing conversations the for that site And guess care, fundamentals, versus again, care, How is hospital we ambulatory inpatient? something to I much outpatient look and so talking as more Baxter? two that between and you over Jay. of -- And different the or the mentioned need we sites to Thanks like Thanks shifting conversations for that. back Joe, is for or contracting of you, things then, question

Joe Almeida

are They're a say of large would and the are sites of just some that I The of than these using hospital systems. Danielle, hospitals. by those lot sites. sites configuration products, not a different owned independent

products going are supply believe So the to that we as We with of not are used for step non-acute down products so we not is priced that price intent -- -- for conversations stepped chain derivatives part consistently differ And different the much every a no beneficial But in that or integrated hospital. across may our can points there's significant have campus. two that concept customers. on. single get negotiate hospital

and So, price is availability think best of usually about about negotiations if and the you no our products wins. of deal, quality and are big products class all evidently price a

So, I distinction. don't tremendous see

Danielle Antalffy

you. Okay. Thank

Joe Almeida

welcome. are You

Operator

Credit Suisse is your state of line Miksic Matt on a the with Please question. question.

Matt Miksic

I'm so had on I of in some or throughout ask seeing. question and you Hi. one of wondering that in I what that then, confidence Thank follow-up. high follow-up Joe your performance one rest the where stay where to this of wanted you if And Jay, kind you of the surgical for Jay, you're -- gives environmental volume I I of the could. U.S. expecting you're visibility much. mentioned will sustained as year. for level And well, trends the that sort that's remarks mentioned just

Jay Saccaro

level. we we're roughly roughly surgical levels commented prepared my Sure. Yeah. of prior In that historic remarks, procedures, at XXX% of seeing

sight term, gets clear. our short as of murky in we year-end. line some towards crystal but have very We the ball look That's

And roughly so, per in I volume the half month. point U.S. is million would one a of that, say procedure of impact dollars

carefully. that's so watch we And something that

the kind a on the we've I've that on but we've year, we and is guidance surgical sales softness a the together relates procedures that an to talked not also modeling, and done I have it little But forecasting put withstand as think of the about historically When we Delta with, bit admissions side. when ability and uncertainty work admissions of done the variant. of to think side, in I for terms surgical lot contending watch the have only procedures move enormous. the we're downside in are this this in be course numbers job believe don't have risk, of to volatile we'll world this these rest case, good year, virus fundamental as we're will the really not good through we today. At the you're point, a the There drivers, is that the change of its to of a substantially. but living about that we business the right. and if any to -- upside, carefully, And relating feel reason some our

So, we're I shape. okay in think

Matt Miksic

one then, great. just And Joe. That's for follow-up

you mentioned asset with I One or supplies conversation But It's acquisition capital pricing some that of see, had or that pluses this not done med of that putting size determinant. making a consideration the you a the in on sense think of to face years. your is challenges a tuck-in before. the also, for in the and question love of large or sort a device minuses was the environment. deal, M&A I'd part two much that -- so things environment. Bob's of is get for risks balance of that in more acquisitions then the and continuing the And work a with you number you've of to associated Baxter been

Joe Almeida

going adjacencies. If lines that and We just be for as announced you good of actually the it's one think acquisition about a there, product us a tuck-in that of to don't always kind augment have product way kind to we need and to We they way. product compete. is because our today,

the of But is in confluences would by we that. discuss a you at something the we saw size the to healthcare unachievable, forward never really So, doesn't our and about force do itself need look quick, enormous where with thing a it. Caelyx, how of about, we for then But good where don't will future you our if the be the portfolio there's role, coming portfolio? and the obviously be So pharmaceutical Doxil think a business good a there's so going play going, and is what size need compliment determinant.

before, a strategic strategy -- said I strategic, a a field. is As

returns. the is Second

The the anything cash shareholders. to well. if And third deploy cash, we the to be bask to integrate don't would find we our ability the deploy

and being of strategic healthcare. So, don't determinant, future ever fit about a size think the think about

Matt Miksic

Got it. Thank you.

Joe Almeida

Thank you.

Operator

Last Wuensch Please Joanne the line of question comes Citigroup. your state from with question.

Joanne Wuensch

for taking my question. Thank you

dollar basis? quarter the in couple of pieces clarification. COVID a vaccine the a benefit was on Just What of

Clare Trachtman

million. over just was It $XX

Joanne Wuensch

$XX I'm million sorry,

Clare Trachtman

X, the X for reporting. just million, $XX

Joanne Wuensch

Excellent. is in Novum the and IQ at And current how cents guidance? dollars much

Jay Saccaro

$XX of a fourth approximately in north little had We million quarter. the

Joanne Wuensch

Thank just confirm, year. you. expecting And to you're pre-COVID volumes levels to exiting the hospital be at

Jay Saccaro

the in At No. XX% quarter. fourth

run basically we if the to prior would it end rate at be the very were so, at year the split the level. And year, of

year. So, into QX of next

Joanne Wuensch

Excellent. and a you so appreciate Thank have it I much. … great

Joe Almeida

just predictors sure make we're rate. you to of here know that all our disease infection neither I want not -- that

in based So, we our and models our numbers putting do the that. We we best place. can on

smaller But We will the will per change, all see contained were but admissions XXXX can move is Delta in rates, XXX%. hoping much we can the by you expect at there too death world a in the and infection U.S. the at the year, Things the than to variant cost most on. exiting XX% hopefully be places as moment, in before. the

we So, can happen. at going we the when think is is we looking do best numbers to this what

Clare Trachtman

will call. our Thank conclude That you.

Operator

for you Thank Baxter participating. Ladies International. and today's conference gentlemen, that call concludes with

Baxter International (BAX) 29 Jul 212021 Q2 Earnings call transcript