Baxter International 4Q profit rises 1 percent
WASHINGTON -- Baxter International reported a 1 percent profit increase for the fourth-quarter on Thursday, meeting Wall Street expectations but failing to impress analysts accustomed to bigger gains from the medical products maker.
The company's broad mix of medically necessary products -- including blood plasma, kidney dialysis treatments and cancer drugs -- continued to post solid returns, though analysts said its guidance for 2010 appeared conservative.
Baxter earned $572 million, or 94 cents per share, up from $569 million, or 91 cents per share, a year prior. Revenue rose 11 percent to $3.47 billion from $3.13 billion.
Excluding charges, the Deerfield company said it earned $1.03 per share, in-line with estimates by analysts polled by Thomson Reuters.
While the company successfully met Wall Street projections, Leerink Swann analyst Rick Wise noted that the company has beat such estimates the last 20 consecutive quarters. The last period when the company achieved in-line results was in 2004, according to an investment note from Wise.
Shares of Baxter fell $1.25, or 2 percent, to $57.65 in morning trading.
For the full year, the company earned $2.21 billion, or $3.59 per share, up from profit of $2.01 billion, or $3.16 per share, in 2008. Revenue rose 2 percent to $12.56 billion from $12.35 billion.
Looking ahead, Baxter said it expects to earn $4.20 to $4.28 per share in 2010, generally lower than the average analyst estimate of $4.28 per share. But Wise said Baxter is likely to raise that guidance.
"We are inclined to think Baxter's generally conservative management has set the bar low, setting the stage to beat and raise earnings per share guidance throughout the year," Wise stated.
The company posted double-digit sales gains across all three of its divisions: plasma drugs, drug pumps and kidney dialysis treatments.
Plasma medication sales rose 12 percent to $1.52 billion while drug pump sales rose 12 percent to $1.31 billion. Kidney treatments grew 12 percent to $625 million.
The company's gross margins improved, and it increased research and development spending by 9 percent to $246 million.
"I would say that building momentum of our pipeline, continuing strong financial results, reinforce the strength of the diversified health care model," Chief Executive Robert Parkinson told analysts on a conference call.
Parkinson also disclosed that the company received a warning letter from the Food and Drug Administration over conditions at a Belgium manufacturing plant. The letter cites certain quality controls and processes at Baxter's plant that did not meet FDA standards. The facility makes a liquid form of Gammagard, an injectable treatment for patients with weakened immune systems.
"We're taking it seriously, as we should," Parkinson said. "But I don't think there's anything here to be alarmed about -- there's been no discontinuation of supply."
The FDA regularly issues warning letters to companies that do not follow regulations for manufacturing and marketing. The letters are not legally binding, but the agency can take companies to court if they are ignored.