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Baxter International Inc.'s net profits have fluctuated over the past five quarters. First quarter net earnings of $552 million reflect a 6.1 percent drop from $588 million in the first quarter of 2012.

Baxter’s latest quarter pinched by acquisition costs

by Katie Peralta
Apr 18, 2013

Baxter International Inc., hit by a hefty acquisition-related charge, reported a slight dip in first quarter earnings -- but underlying profits strengthened in line with Wall Street forecasts.

The Deerfield-based medical products company reported net income of $552 million, or $1.00 per share, down 6.1 percent from last year’s $588 million, or $1.04 per share.

Sales rose 1.8 percent to $3.45 billion from $3.39 billion in the year-ago quarter.

Baxter’s latest quarter was crimped by a $29 million, or 5-cent-a-share charge related to its pending acquisition of the Swedish medical technology company Gambro AB.

Excluding that charge and certain other special items, adjusted EPS was $1.05, a penny above analysts’ forecasts.

“Baxter's portfolio remains strong and we continue to benefit from our focus on life-saving therapies,” CEO Robert Parkinson told analysts in a conference call.

Baxter’s BioScience business, which deals in treatments for hemophilia and other blood conditions, saw sales surge by 4.8 percent to $1.53 billion from last year’s $1.46 billion.

At the company’s Medical Products business, which manufactures medical devices and creates products to treat renal disease, sales slipped to $1.92 billion from last year’s $1.93 billion.

The $2.8 billion Gambro transaction, which is to close in June, will mark the largest acquisition in Baxter’s history.

Analysts expect that acquisition to facilitate sizable growth globally and boost Baxter’s sales long-term.

“Overall, following the acquisition of Gambro, we think Baxter is capable of 8 percent top-line growth and 10 percent bottom-line growth through 2017,” Morningstar senior analyst Karen Andersen said in a February report.

Confirming its earlier guidance, Baxter said Thursday that it continues to expect full-year 2013 earnings in the range of $4.60 to $4.70 per share.

In the conference call, Parkinson said Baxter’s four strategies to facilitate growth call for “optimizing” its core business portfolio; advancing the company's new product pipeline; developing new product models via public and private partnerships; and pursuing profitable business development initiatives.

In New York Stock Exchange trading Thursday, Baxter shares closed down $1.33, or 1.9 percent, at $68.90.