BAX - Earnings call transcript Q4 2021 | Baxter International Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to Baxter International's Fourth 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 rebroadcast without Baxter's permission.

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

Clare Trachtman

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

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

anticipated by Baxter's our that With including and outlook results the year impact presentation, our everyone along recent And for the On net expectations. statements of actual course, developments regulatory cost and new product discussing could pressures XXXX, Please financial development this prepared that, future factors anticipated uncertainties. full launches, cause acquisition results our and outlook we forward-looking financial reminding matters, differ contain synergies and today's actual morning, quarter targets, details call XXXX. let of from or results risks with SEC start me regarding year materially. that for our leverage our remarks press business concerning be the and could to inflationary this comments the this and our involve differ for more first to full Hillrom, refer will that fourth of outlook, including filings materially from on XXXX quarter COVID financial current release including

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

the existing XXXX in XX, on periods ended quarter full December results these three segment XXXX. and Baxter's Baxter's financial in the operating Hillrom days our mentioned Hillrom XX, press As to include results the fourth following segments. of addition new for this XX morning, last XXXX, reported Baxter's financial results for are financial quarter acquisition as Hillrom of December geographic release year

of call and this XXXX we Hillrom specified February outside be XXXX morning, U.S. Doxil XXXX discuss the to the Later exchange, been the of discussing and Jay of in fourth quarter growth, call, growth XXXX posted acquisition will year XXXX. acquisition quarter guidance will full will section operational quarterly exclude adjusts Investors full foreign for the Operational Hillrom for the year foreign website. first the for for of sales rights sales have our Hillrom. the to Caelyx our exchange territories the December for Historical and impact of of the On XXXX and the and the of which for acquisition sales impact the

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

Joe Almeida

joining Thank Good for you, morning, call. everyone, you today's and Clare. thank

morning performance take first always, take We look a and this our share our and ones year the financials As your healthy quarter start and are XXXX some your that and on year closer safe. at trajectory. and outlook future last perspective I loved hope questions. for you full then with we'll Jay will the

Hillrom, the continuum. reach, our acquiring inflection multiyear extends both know, further The opportunities our next transformation. and across since med portfolio diverse combination first the to geographically all already earnings in you As point and is broaden tech call care provides this Baxter's our

efficiencies. enhance clinicians our value from XX. Importantly, the greater of to holds increase it potential the also for spark and The workflow lines deal unlocks employees our on to and exciting and investors. all In of with patient innovation product it patients closed outcomes new short, connected insights, our December care possibilities across for clinical stakeholders promise

from Hillrom. XX reflect full So and our days QX year contribution financials XXXX of

were quarter. Fourth quarter of in per fourth $X.XX, quarter constant up at the reported of currency per year-over-year. and on earnings XX% at basis, company-wide Baxter sales rates. X% contributed $X.XX share share and $XXX XX% performance, million sales growth in delivered XX% at operational adjusted Looking XXXX adjusted Hillrom a earnings

growth For X% sales basis. XX% a an full on a year currency on constant XXXX, on operational X% was reported basis and basis,

per of line, variant increased while demand of sales reflect later also which earnings in certain the XX% quarter particularly the affected for others, line On $X.XX of fourth surged. erratic year reflects the fueling Growth impact the Hillrom. as the share ongoing which the for Omicron and somewhat year-over-year, COVID-XX, bottom top adjusted for quarter both negatively businesses contribution

growth year. performance businesses durability our our the Baxter is continues year to for allowed both diversity deliver legacy the portfolio, the of and of sales demonstrate Our line strong. Demand and for across top X% Hillrom to operational which us legacy

the and experiencing staffing-related this rates a quarter of higher supply orders have year, challenges through our chain fourth and been start of due absenteeism rate normal of to we continuing plants limitations COVID. than certain During resulting cases the back high of the rising from in amid

situation weeks. anticipate in improvement the and We the working to are continued address expeditiously coming

network, the year, cost has steps negatively as impacted components. of extraordinary times rising increasingly chain throughout an discussed have our at has challenging to procure necessary in we resulted As and structure which shipments as supply by inflation rates been well expedited

expected stay While the costs true expedite pressures, critical and prioritizing product life-saving products. means made we of our ensure patients our nature offset mission, our teams of have to these many who to higher needs which our to steady We worked to our our given fourth on depend decisions results diligently to access than and essential quarter to customers freight clinicians reflect of products. the

will We compromise commitment. on never this

forward. and as test the successfully We are industry about now a and supply the realistic addressing continue chain laser-focused that going them challenges whole on we are to global

this transformation through and operational in logistics, efficiency as the our success new stakeholders, foundation We're and costs our and off including will us the against near team opportunities multiyear giving choices these where the and solid tenacity pass building process long to tools in and in years. enhance run. making times implementing challenging to certain sound focused over procurement evaluating has remain selected has both that We're transformation. our promote of executing deliver on course enterprise. We demonstrated our last the of geographies growing to in measures viable navigate through the are two value term on bolstered the focused long-term and to a This resilience our performance

Beyond acquisition process this, the growth of The moving productively. integration crucial is Hillrom multiple across fronts. introduced forward drivers

advancing for and newly across are identifying geographic reduction as to expanded care we synergies our drive capabilities. connected cost opportunities We expansion. already well as expansion margin are And meaningful

commitment portfolio with which the long-term accelerate margins. to augmented strengthened strategic continue our clearly Hillrom our As with always, our underlying to are top-line we was and aligned demonstrated ensure acquisition, businesses objective and to expand This operate evaluate we the portfolio. growth

enhance with of our objectives, extent to exit ongoing this part we We not divest do new evolving core the any the is innovation As we future of or that look address these areas patients. performance. needs customers new successful and and to identify of that introducing opportunities while identify are long-term process, at recognize businesses focused also on to we our the will to to continuing enterprise, align products

as renal of as year solutions smart Obviously, include our as we NOVUM Middle X digital our in replacement and the a in IQ of dimensions our now continuous technology, continually therapy U.S. TrueVue Africa. right well launch our is our must strengthen resilient stage and East Some U.S. thriving performance launch for just which enterprise. Europe, assess we the connected as pump performance early and PrisMax this these anticipated multiple across

areas: for key Our leadership responsibility goals our people champion XXXX empower our mission commitment, also continued on the XX our action corporate our XXXX our demands marked protect comprising and corporate focused decade planet, and citizen. the communities. a as beyond, launch key patients, of three and next

Today, initiative and Activating advance the justice to taken We advance steps ACT, within across also year significant to and or the communities have we past Baxter in markets racial serve. our Change

to as the as is both achieved tirelessly in corporate This commitment stepping our progress a of worldwide. has in our employees entirely and phase outstanding building a COVID-XX. team much the of up several Our transformation to years so citizen from business due

I'm new to in proven With Now have it deliver worked confident and stands create. so we the ability momentum our on prepared to our this team's track opportunities of growth. hard record, chapter

more this much later sharing about strategic our conference at investor be our will year. We trajectory

it share outlook. look our and closer will a performance Now turn at to I Jay to over

Jay Saccaro

good and everyone. Joe, morning, Thanks,

associated Care, mentioned, $XX quarter basis, portfolio. quarter and with the and our in approximately range, Joe Sales fourth during million particularly we that high early quarter strength a disruptions Sales quarter. of light chain we're in line January operationally. is a and in at from $XXX X% reflects the OUS supply underscores benefits of manufacturing advanced sales the Delivery, Doxil, currency the revenues global guidance of pleased shared of reported Renal and we of XXXX basis billion results, COVID constant the with durability totaled experienced of Fourth our came of which contribution quarter, in on and this million Caelyx, $X.X Medication growth of our Hillrom. As XX% on a which end vaccines, commentary the sales in essential ongoing the nature with in pandemic global XX%

reflected bottom the of higher expected share per well On to totaling the $X.XX. costs than transaction expenses interest exchange $X.XX a $X.XX losses from of inclusive as to per $X.XX as adjusted line, share. foreign Hillrom, related unplanned contribution incremental earnings Results the of in increased quarter XX% and freight

as quarter of expedited we incurred surged. cases mentioned, late the COVID-XX in freight Joe As significant costs

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

reported geographic addition Hillrom's three Clare existing new as segments. operating mentioned, are to segment financial As results Baxter's a in

in patient growth sales sales HD improved representing dialyzers. global with of growth increased staffing QX PD by growth patient year-over-year pressures also Patient patient global despite in growth category. quarter by performance shortages. for from Caelyx, global this the diagnoses rates adjusting volumes year, new Renal persistent rights growth for Care by constant market-wide growth businesses. delays increasing from mid-single-digit all were highest the Performance U.S. $X businesses, Renal is select sales business, acquisition for in billion, was to Moving for the driven we growth Care currency of Global currency provide operational sales on to equal Pharmaceuticals outside on basis. operational in X% quarter, for patients, both for business international our in increased a the XXXX. from in and benefited throughout key benefited territories and mortality the in which constant and currency Note our both product will improvement ESRD except the that for driven sequentially constant in primarily in PD HD our Doxil. quarter

we higher patient levels. rate We expect growth on in and Delivery global infusion continue recovery will pumps mortality dampen to increased hospital the of anticipate as from of rates demand pandemic to reflects in the patient Strong delays growth rates for improve constant XXXX, $XXX and small as new compared in although that levels do from new XXXX basis. diagnoses million increased the volume this Medication resulting these to admissions business parenterals. in Sales volume well a of X% currency pace continued pre-COVID in large somewhat

Performance U.S. was estimate our partially as compared advanced was our molecules. the X% operationally. mid-single sales of to competitive currency anesthesia constant portfolio contribution we pharmacy COVID-XX $XXX offset on business, by procedures admissions a digits sales pre-COVID injectables were from activity recover business certain and million the and growth quarter levels. for and growth demand our related international generic OUS that continue of declines in Doxil. for to basis compounding Caelyx, surgical international lower year, in by in down markets U.S. This from X% increased driven For Pharmaceutical the hospital to

or broad Moving to new in $XXX basis. within were in total X% the constant offering. currency on of Clinical flat a product million, on our Advanced product multi-chamber Surgery basis. the million by Nutrition, Performance currency $XXX a launches benefit sales were Sales quarter constant increasing driven was

Solutions staffing Acute the strong our Within of business but below of growth X% in a due on cases as in sales performance in in variants. did COVID Sales our $XXX expectations for Despite second comparison. performance this, some quarter, half associated see the quarter. the offset rise the a was in a declining businesses, elevated to quarter with were to in from CRRT in exceed the vaccines, given we basis, the incremental in this currency new manufacturing constant as came saw by reflecting challenging our U.S. surgical currency along constant of expectations with BioPharma of demand totaled in pandemic December, our the particularly we quarter XX% impact the were international $XXX $XX Therapies million, year-over-year to shortages. million, procedures, the representing related million on which approximately reflecting COVID growth a sales basis, continue

results to for the difficult of within as surgical $XXX products full constraints, ability following our supply quarter include ship quarter. period for December the the quarter, the the well for million. completeness year some financial their Hillrom's sales comparison represented for which only sales as quarter quarter year While exit significant Hillrom the first we're have the a from would final ended results days in Unaudited full Hillrom's XXXX. transparency fiscal XX commentary providing quarter and which were of prior OEM of Sales Hillrom's international reflect XX, impacted business

the P&L. rest Moving to the of

represented margin by and Our mix, the quarter Adjusted incremental adjusted the the improvements represented XX% year X% reflecting the results. the prior of SG&A $XXX in operational product XX.X% year, X.X of contribution percentage to basis increased $XXX contribution our from both a XX.X the spend include of of prior Adjusted Hillrom. versus financial manufacturing Adjusted percent as in compared prior and XXX to from as and favorable of sales. gross million year R&D R&D and over increased spending as increased SG&A Hillrom points sales. a the million

accruals financing absorbed The million reflects year earnings the tax the subsidiary Baxter. mix earnings was inclusion by quarter compared as Adjusted The freight SG&A our of I of expectations year the totaled from million as an related versus driven rate foreign primarily losses XXXX increase of XXX prior in result mentioned, in in Adjusted reflects employee Hillrom incentive expense margin on In the driven XX.X%, bonus $X operating million reflecting balances period. our carries as in in by under basis quarter expenses rate debt well in the year, $X.XX annual non-operating rate to XX% quarter the prior as increase [indiscernible] higher the higher acquisition. income, reflects compared well a Turkey above prior the related of in quarter net year, an in addition, higher quarter expense which the versus $X lira outstanding And adjusted quarter the to quarter. to in an in Turkish Hillrom's period. prior our compensation plan. quarter the factors as points exchange also the the the share per the the adjusted was adjusted mentioned. we expenses the versus year tax of advanced an expense tax of unrealized of prior higher of the a the legacy million just Fourth loss the interest as investment. than $XX to Other $XX totaled XX.X%, quarter, devaluation equity previously

XX% increased a on $XX.X reported X% year and to Sales billion of Turning operationally. on basis currency by a full basis, constant X% XXXX.

share. a returned focused repurchases flow $XX We fuel performance to our year on bottom $X.X the flow success. and approximately our acquisition and Hillrom. to line, basis, future investments earnings increased On for of remain billion including and strategically continuing to $X.XX Baxter diluted capital adjusted growth, redeploying we generated operations from of advance shareholders XXXX, position to through inorganic dividends billion XX% share cash over On billion $X.X approximately $X.X operating to full deployed and we Throughout billion. of cash free per

reach post years capital through the now will X.XX to allocation of to target acquisition priority be year delever leverage net closed, aggressively by times our close. two next two our the With

the discussing and chain results, across around and manufacturing staffing Let inflationary including conclude network quarter that our assumptions the XXXX, full our my me year We weigh the including for comments globally. disruptions, pronounced and of and sales on quarter. increased ramp many in year. expeditiously the the order impact into impact strong continue the to anticipate ongoing pandemic, currently launches supply address to We're fourth quarter anticipate new most product by of XXXX challenges quarter remainder by in will expected for to a of second our anticipated and first driven be easing outlook the backlog COVID-XX factors that key with performance fractures, first of impacted the phasing working some dynamics

the and well improving the In the half chain actions, within compared second expansion supply pass with as earnings opportunities of effectiveness We network evaluating margin the to as to anticipate to as addition, will to implement particularly operational through in result year select of we're costs for integrated increase growth certain first sales meaningful these company, in continuing half the coupled performance, in actions geographies. XXXX. our

quarter And global XX% on dynamics a single-digit per currency diluted a adjusted to on of special of these for we basis on expect Given basis. operational constant XXXX, reported the growth revenue to share. an $X.XX expect we and low excluding earnings, first sales growth $X.XX of basis, to XX% XX% items, XX%

For currency XXXX, X% XX% we on a expect operational on full and basis, global constant on of to reported to basis. sales year an growth approximately XX% basis XX% a XX%

we for and margin year. throughout performance with XX% the we half to second approximately above adjusted Moving as operating estimate expect year the of improve margins first the half down below significantly P&L, expect margins this

With open to XXX XXXX. expect up we call XX% these and that, we excluding earnings, to year, adjusted diluted of special we now tax expect consistent Q&A. on the count stay share. approximately $X.XX items, factors, share $X.XX of the million adjusted exiting per with Based XXXX an expect For average rate diluted can to shares

Operator

Thank you.

Marcus question-and-answer of first begin Robbie now Instructions] question please. comes your the question [Operator JPMorgan, session. will from Our We

Robbie Marcus

everyone. morning, Good Hello.

Joe Almeida

Good morning, Robbie.

Jay Saccaro

morning. Good

Robbie Marcus

the I if teens accretion you've about EPS low base X% for which for below use LRP. is the start, talked somewhere it gets Hillrom, growth me to to Maybe around Baxter,

driving with to just touched So off You and ask a on chain start question inflation, maybe then it? as it. but point finer be issues the what's I'll first put important on I upfront well. think supply it'd And second

gives the good issues in side confidence is today. supply you into quarter, and the that resolve coming discrepancy? below quarter second the coming Thanks. sell drivers in and first the for sitting What that the chain where will The acceleration is big a clip see could you

Jay Saccaro

LRP Sure. The our Robbie, in relative perspective there them from and a manufacturing facilities term are related in the issues Omicron that's challenges a to of previous are XXXX news of my short good is supply the few we're expectations. in that seeing impacts lot nature, these created to variant some and chain. of many

more in So, if in increases last about related think expectations around freight. costs, six both to We've the in seen that also then the plants. expectations side Hillrom you a the seen. on chain the some that situation inflation. a it, orders, had really bit finally, ever Baxter highest is of part we've to back-order in we've expedited and we've absenteeism seen We've levels seen related increases back And side weeks, of our the over some supply labor

that result, our weathered clearly environment, the for from expectations But have we some And XXXX. a of short-term in a QX our impacts standpoint, featured results. so, as and my full QX challenging very it

our seeing plants. levels so, in what's we absentee And at is improvements interesting are

improve also speak. supply as situation we chain are We seeing

and the and expectations are we more of margin in quarter believe, our first second before trajectory quarter. with to also in normal quarter definitely they we which and all line much then the in third back things, a So, from more but short a fourth impact term much standpoint is get these the nature,

some the along back, short over we look, term, as the acknowledge really, we of the like we this the year business future step the the think there pathway in is durability with going I really have then years. course of and take disruption but forward a

more until centered are out and freight expedited most that Furthermore, the we QX. months to – situation in issues it pronounced really We few a point an at relates and QX. on here. for as the of really So won't QX, get won't issues back-order resolve some then

So see forward. it is, as that's where and why is to really we QX start we move improvements then

Robbie Marcus

a thanks Great, lot.

Joe Almeida

Thank you.

Clare Trachtman

We can take question. our next

Operator

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

Vijay Kumar

there stand-alone the guidance morning, not operational Good question. Perhaps implied I'm here. math aware tailwinds was remind assumptions Hillrom, year-on-year plus. five Hillrom at businesses to Hillrom any then Thanks taking any look plus, look you two Baxter Joe be The there we the these my on if four Jay. any you it when be one, right. the this where I'm we're one on just perhaps guided revenue Baxter, I'm to because COVID at change clearly, Maybe your revenues, sure – us, can need has and implied are headwinds, Jay, year-on-year up, seems to doing math? and for for down Are if of doing I growth

Jay Saccaro

our Vijay. question, The Hillrom mid-single expectation Good Sure. growth. is currency business, digit constant

related said the I operational it in to is it's in prepared I the remarks, demand-related to year. with hope orders those throughout earlier approximately Baxter second resolve growth And really and a X% back As real first quarter. we said, the as not is my item, [indiscernible]

on Hillrom the think, we rounding Hillrom both and digits. Baxter that So, on, four. as some side, that reported approximately in the the going at looking look talking the it, growth, mid-single the And side side leads revenue you're growth that overall I the to But Baxter you mid-single-digit constant currency. at. there's is numbers we see then we're about reported

Vijay Kumar

there one rationale. was yes, when follow-up, the strategic or a And my And of lot announced, connected – COVID headwinds? then And a now one deal communications of peers questions I of sorry. deal. your just Are your any did think care the around

this rationale, on is Joe, this, big the look for connected care. of perhaps to deal five at you strategic as How Joe, years? three a elaborate, maybe So next

Joe Almeida

morning. good Vijay

let on me you we different our to are when to more we'll the Day. But on opportunities, those – examples. have that working give We and investors three at speak Investor our

into will our and two together home is remote a peritoneal midterm [indiscernible] one have us is a of systems, a short-term opportunity Bringing short-term give is proactive first them that bringing of more us to to we The The from management monitoring. of of years, dialysis the that accurate very is Bluetooth-enabled opportunity Baxter have, then and integrated overload insight very with delivery short for and alarm This digitalization infusion share together we one that pumps, CRT and fluid and a devices. patients platform workflow source, pharmacy med do the both. the Starling also allows patients analytics and PD search, the hospital. current to workflow potential vitals burden of Bringing monitoring instance, is together and the parts improves our other patients. for term. alarms in ICU, [indiscernible] reducing

benefits some to proactive. reaction fatigue Just reduction transition would be from

better things So, much you on can nursing what environment the a time, staff alarm versus who be overload. ahead focused of matters for will actually see creates

series is the management fluid and beds. bad our are to the and term, hourly monitoring we significant an How reduces amount get that arising do of of opportunity pumps and a some really information bringing three good more comes of the Those significant how we has. which environment think a clinician problems closed-loop that that clinician and going working a much specific these the that is So, happen? things And a very and when including had of there types to output, bring out we're alarms we both the of and with then of just are of and do both smart are long workshops preventing, ideas. platform inputs, is a urine infusion that are eventually together to amount system, to monitor load part is drugs, to actually create that preventing you significant Hillrom on to examples alarms from of that we the outcomes the on, all platforms important to the output, one

So, I'm that. excited about very

Giuseppe Accogli

million this angle having Giuseppe. devices add maybe do And devices of field I that, to the other of another can or we or that couple There the is the a of connected is companies a Maybe is two care. that would probably site connectable together. two lot Vijay, in hi –

can that Joe in lot the home but lot and environment. think on with touched a monitor do with based We collection cycle. about both Care the more a add can there and very Voalte at them care family in to now treatment the important. PD environment, involve in is critical with which there communicate we do signs involve So, the families, in hypertension. can we the we can way we we can that is And them, home a better of vital patient, can Communication, patients we acute the the can is together the

Vijay Kumar

helpful. That's

Jay Saccaro

low, we are a at first mid-single-digit and year. year-over-year out worth bit low, then close to And in the have just vaccines. DPS impacts they on Vijay, headwind the normalize to your those down roughly business of question, expect quarter procedures, perhaps in million as look throughout quarter, $XX the of to related our in we we admissions But year. first the

see So today. down we approximately as it X%

standpoint, XXXX. separately. in from issue. a plant. impacting situation impact items are that Now we've to the from that back-order I'm COVID speaking not and the those chain-related in sales demand a key a the It's the of situation supply seen But more standpoint, I'm viewing

Vijay Kumar

Thanks guys.

Jay Saccaro

you. Thank

Operator

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

Pito Chickering

Hey questions. guys. good morning for Thanks my taking

What's The one year's midpoint first contribution actually the last the is a of first and backlog XQ? to first Baxter. the the quantify the in understand $X.XX assuming quarter within bridge the sort Hillrom quarter you can I on Can of was of from help XQ core the cost And you $X.XX? and guidance? pressures guidance sort of bridge. you're backlog versus trying us

Jay Saccaro

power But XXXX would what we good as we substantial normally really about $X.XX of the look negative in side from we that not expect offset of to From you think some sufficient at that. we're the really to contribution freight, and levels Baxter QX see about it's definitely is an price of Hillrom carry organic We And and impact, standpoint, volume normalized there it terms is some growth earnings if And day impacts between Sure. driving really business. to roughly see inflationary from the a on talking the EPS enough growth some actual impact. year-over-year. of expect that, $X.XX. but

$X.XX supply in is seeing in which, quarter, – And part of volume business by chain the is which the issues. because not impacted said, that is contribution that north situation, of should we're these it's then chain thought the of supply is The is a of pick something So, year. add. Hillrom organic terms up normalize great as some well in throughout I

accelerate growth throughout Hillrom's so And year the as well.

Pito Chickering

follow-up Great. And then a question.

passing geographies. inflationary on about costs? And the global ballpark percentage through Can sort can of through of those to customers can can you in be what you pricing revenues, of lines think some that? those costs expand of geographies you what as I and any on product and on of sort sort pass passed talked get about which You or some

Joe Almeida

Pito, this is something very little. that we comment

is strategy company Our the that has. a pricing

have to exceptional the built expedited cost our components carry get the inflation coming has an labor the amount in What freight, We the well the of components and into in. ability on as pricing is looking are we're to at door, here contracts. as extra company that

– have and forms, costs not to we will price to going where different on plan, them. executing putting increases. in come know in those will speak geography. selectively those that them but We about we They So specifically decide be we're our put we'll we're

Pito Chickering

Great. Thanks so much.

Operator

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

Larry Biegelsen

question the guys. Thanks for morning. taking Good

this on I NOVUM in U.S., about Joe, comments IQ, I believe. your year the first Just approval expecting upfront heard

some detail on. the cybersecurity more a and earlier you J.P. and there update this think IQ think, on on little you bit approval this that additional Could I had timing, please were, year, or NOVUM on in us year confidence information on timing issues I the submitting re-filing your follow-up? you at talked Morgan one about I

Joe Almeida

morning. the want documentations, last This us, provide the the good of the a Larry, file end. We beginning this is to is So will set XX days FDA to have not to response of this application. which okay?

it better. that application, make we Cybersecurity be sure looks top whole them have good. We So to of decile to that some end, we of we think But want one eyes. at looked set is the we do to there that that. were always to when it comes new want really we could areas

we So time. made and improvements, that back some went and adjustments and took

to volume will going apply with it the our we'll the And the end same and we're controls, XX answer to that days they the our following be days of way the that, large filing soon. will the FDA at be And be LVP on as software related enterprise as software the that well we parenteral work are hopefully the software syringe with for pumps, networks. have they pump that, expecting we're pump. after So XX

So pretty that's straightforward.

control days. to to get application internal of are best for we want our the control that as possible those probability make is high in it to we any can I get can One we I this that have sure the the goes the that have. quality be we FDA, And end, behalf I XX do. chance never before the increase that on We to doing on product. best the don't speak to thing we don't of process.

Larry Biegelsen

Joe. other I think, or think non-core and taking Thanks exiting about it? process thing And when potentially in about do the for Thanks remarks And that hear portfolio your you for you evaluating more divesting, businesses. we'll questions. How prepared talked was will long the about that, one take?

Joe Almeida

had would Larry, Baxter, we very three, improvement. say started when we of four. not four, transformation – I specific on we three areas

the company generate our bring state, to put is profitability cash First with flow. to to us ability free close the company's peers and – into transform

talent of the company culture culture importantly, the The the right to second the was bringing going. most get

is cash don't was do part Baxter other bump own. businesses that going. one on we that devices in here to May then that to we are about not to invest the unthinkable was few the do connected that allocation is always going the been that of sometimes capital we up them, the our look in FDA first that digital right can either serve, when internal innovation, right little bring any sitting acquired And that we company acquisition did we and health end, programs What Gambro. to changed third believe is Conversely, we increase the a we and we the to the That we people areas are they're do the have so direction, allocation the at that the area the for Baxter. can by couple have increase portfolio, into want we we we're of to of of capital profitability go that that probably brings the the Baxter to company a who a company our I portfolio They should really was acquisitions. legacy it and what than and down through more care, in then touched bring got we the much. some a innovation, in the way fourth we than have remove CAGR for here because was of tuck-in of about with with doing parts piece in or that portfolio. to the And puck invest, spoke thought freeing CAGR, have the businesses did businesses. markets not are a well. or any The analysis later how Hillrom, getting within just which middle want double how in flow Hillrom the haven't transform where that the And We to and adjust

Larry Biegelsen

you. Thank

Operator

Cowen Please of a is line the Jennings with Joshua question. on question. your state

Joshua Jennings

with terms outlook of is commentary, fully any XXXX for the Jay for throughout and revenue ask, level for med-device as Hi. challenges organic [Technical through then that follow-up revenue we from business synergies. in it present your And the questions. the questions. to of into revenue potential change industry if XXXX and combined the sounds to and potential the are this I then I into Good wondering just was Difficulty] communicate wanted morning, Joe, there like taking sales combination. just sales that thanks the any synergies guidance synergies the are there cleared baked to of move the taking the Thanks beyond? XXXX growth accelerate just some are and

Jay Saccaro

Sure.

synergies As for our far none go, in XXXX. included we revenue as numbers have

revenue So synergies. there's no

some business, and the having we're really then long-term. to has talk about opportunity environment, that about Joe we Now we're as the we're excited, of think for and business about volatile the also the weathered very incredibly a And in drive some let see progress excited platform. Baxter I I'll and because making long-term this work, second I of ability revenue combined highlighted said growth how synergies a more learn that, we Giuseppe think the across about Hillrom we're very our confident

talk about generating So ideas we're of revenue Giuseppe, the the and some of why synergy you some don't there? excitement

Giuseppe Accogli

Sure, Jay.

So the synergies, the and regional very drivers the the see of we both GBU teams clearly. understanding work on sales teams them teams few of a are the themes diligently and which and

expansion before optimization, stronger presence will clear presence, care, But it synergies U.S. that in was of and home analytics synergies as The strengthening at much up Baxter synergies also to are end legacy home is geo are strengthening the position good forget first and the is there. our Hillrom Baxter alternate care and outside one, that acquisition, channel in connected in mainly synergies sales well. Europe services. that there than There our [indiscernible]. and for position in Don't

course. like respiratory, That like which cardiology very to are monitoring, of [indiscernible] therapies new have us. interesting very, monitoring, we Now

all. a at more as we offer well So have comprehensive

So drivers expansion, alternate home are recap, just geographic to main synergies. connected care the of and care,

Jay Saccaro

the Day, of outlook of and quantification company. revenue for refreshment combined We potential some more to about opportunity this the at will share including have Investor financial the the long-term upcoming some

Joshua Jennings

Thank Great. you.

Operator

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

Matt Miksic

then the chain Hi. one topic supply taking staffing. much Thanks of synergies on have and on and could if I this for follow-up just – question. so the I

begun? little seen side, the describing. the in of a terms positive and far the synergies appreciate talk side building cost near And logistics revenue on in you terms both the you've the operations, you bit on so have bring So outlook together color and dissynergies of just term? maybe were risks Can these about into you you're that what organizations as any your in integration here

Jay Saccaro

comfortable So on $XXX we procurement are getting opportunities so shared previously more, comfortable. And what of very the we as and with areas really by and three number million cost focusing in is as will side, we increasingly that part and certain on year I you we're G&A tell expectations on. learn

So there no negative cost we opportunity. synergy the been think surprises have about as

So this much to according very has one plan. been

processes. really Hillrom, think seen pleased that the the we've with I at talent we've been

line it leverage. positive. more trending even we goes, we a where hoped that cost there's great But there with be, as opportunity lot as So if not the of can far in and right would synergy thoughts its

Matt Miksic

for but That's we that. confidence to similar as and expect And visibility? you things It that now, other chain, staffing great. idea supply improve, supply the to Can the there's year chain terms outlook been been comment and presenting of a and couple stake backlog saying, both some know putting visibility back would in comments think. in questions, a guess think about talking earnings sense these ground some made this I about and things cost you about And and appreciated. like I then just and be of your QX of a I half. And inflationary made do just I on give in maybe of improvements that input the companies we've talking in a over costs and

Joe Almeida

the want start. what this two buckets. will see costs. Jay actually also I answer. the then long-lasting I impact, my Matt, having I see supplement is of different and I effect inflationary the COVID or those to in short-term

and take labor could Omicron that So availability is had news didn't it and a the priority were significant, company's the employee of number and very infection, first and infected people of how our of or as read quality by infected the as people in patient the contact one took They safety created either curve with much, the safety. country was you plants. affects well from much lot acceleration

guidelines come we people towards other end, that [indiscernible]. to not this all which caused allow will came significant disruptions never follow So up with the we as end did that to end we work, and fourth have To quarter actually that freight actually products. the to of the we air let incur, patients we with

upping have inflation also the the significant are ships and and And retain long with to that making start company problem because Also, the labor of in there people, to will to the That fact cost we to escalation see you in we were go absenteeism cost we people. value that that will of we found our was to filling availability our we part efforts parcel going up one is rate is some as cost on of sure your flying plant. despite, salaries that of of be fact, of products starting in products and that and an Those the soon the the a inflationary employees the situation we that. As that place start have plants and that and labor subside; attract to resolved. and is for time. in

just very component is don't similar more do reduction get that to Hillrom, chain had like cost issues. offset being supply working automation managed. healthy offset And You Baxter reductions our The in pretty and they acquired We're What time. long this advance, create new. that, has and in actually availability buy beyond is buy our that. a for is increases. inflationary components, reverse XXXX to cost. you that And cost signaling salary and a loss program to nothing to been and things we're managing We've large we hard in

back way, want empty. quarter We to Omicron very are for product but that is I different itself, two from last a is throughout resolving our demand that strong shelves are also happen backlog XXXX. and lot of add we those consumption and alleviation our of variant One happened, point is and One along the the the products will of things. believe the

So you're have out year. going going products the throughout of those to probably replenishment

abating. don't we vantage moment, So our from demand point, at this see

issues other have short-term by taking that. care alleviate things that we're shifts and we that will adding some So capacity

we everything serve can doing mind to first we're in with the patient. thing always So the

Secondly, cost-effective it do a to in manner.

and and the to company. of pretty of based well done our think on I ability managed our best our have So we this the size footprint

reduction XXXX, these we we it's the into second and QX. is and make to throughout And alleviate will verified our to go through not and to Going continues cost that we immediate issue. to It's and want that quarter in we – component want solve very improve just throughout the healthy. an going sure year, our pressures sure QX make

of As say terms matter cost chain. reduction the is supply integrated would largest program of had a company XXXX our in for ever the I fact,

Matt Miksic

Thanks. helpful. Very

Joe Almeida

You welcome. are

Operator

is question. Citi of the the your question. state with Wuensch on line Joanne Please

Joanne Wuensch

Good your taking for us revenue In morning is? thank you COVID the share your and you XXXX question. what with guidance, vaccine could

Clare Trachtman

Joanne, north is $XXX revenues this it's about what Sure. year. million, COVID a little $XXX of million

Joanne Wuensch

But your calling thoughts on then And sort together you of a hospital historically of Okay. given and also and to normal you how sure we're thought putting could what us backdrop about of not anymore. you've us – census returns sort I'm the guidance? give that

Jay Saccaro

Sure.

relative a roughly down basis towards variants. the we're on year and full – the XXXX slightly of to significant on new not be a to banking end and have have throughout We year levels. on X% procedures perhaps normalized below year that surgical And We're admissions. the improving then we

disruption don't with. we our an and we underlies a that's hope We And that deal to on side banking with not revenue that important have supply line to be to guidance. phenomenon also through from from that certainly remainder we're of won't And a that's that, side. deal that assumption sight chain we both have any have going the a XXXX. So of

it balance the then improves So that of really, the and year. of story to relates is down X%, the a lot Omicron throughout

Clare Trachtman

And surgical specific Yes. that's Joanne. procedures, to

kind of quarter those kind year. course digits of this low- that that of versus have With first pre-COVID admission, year. and a of mid-single in levels kind respect digits we rest low-single down mid-single the plan in of again, throughout down really digit, improving to kind of to the the So throughout the

Joanne Wuensch

so Thank much. Terrific. you

Clare Trachtman

one We will take more question.

Operator

UBS with a question. Taylor state Matt question. is of Please the on your line

Matt Taylor

a launched? how you gets it revenue about of XXXX, to wanted wanted for the could clarify for guidance still the previously, there? Is in like gave Hi. guidance, doesn't NOVUM it thoughts just And provide thinking pump. contribution. you was QX once you're that. question. in sound taking that you any It clarify Thank I you're just to about think, I other then X% it when on that the Or any baking

Jay Saccaro

really included guidance for year the NOVUM included in half second – successful in reflects of we've prominently and the our of So that the product. revenues we've guidance the launch

that adjust to moving As happy changes always, we're if forward. that

other I sales specific that amounts. offset or too with volumes, of is on As would deferred, that the that specific detail far I we've get to able don't much either But spectrum into to product know as sales. pump the extent been

So in our guidance. it's definitely underlying

Matt Taylor

you, Thank Jay.

Jay Saccaro

Thanks Matt.

Operator

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

Baxter International (BAX) 17 Feb 222021 Q4 Earnings call transcript