BAXTER INTERNATIONAL INC (BAX) Q4 2024 Earnings Summary

Executive Summary

Q4 2024 delivered modest top-line growth and an upside EPS surprise vs company guidance: revenue $2.75B (+1% y/y; +2% cc) and adjusted diluted EPS from continuing ops $0.58 (vs guide $0.50–$0.53) as Novum IQ pumps, PN, Advanced Surgery and Specialty Injectables offset Hurricane Helene headwinds and a Front Line Care goodwill impairment on GAAP results .
FY 2025 outlook reaffirms a return to profitable growth: reported sales +5% to +6% (operational +4% to +5%), adjusted EPS $2.45–$2.55; Q1 2025 guide calls for reported sales +3% to +4% and adjusted EPS $0.47–$0.50 .
Key operational drivers: pump platform momentum (Novum IQ) with share gains; high-single-digit growth in Pharmaceuticals (double-digit Specialty Injectables and strong Drug Compounding); U.S. CCS strength; hurricane impact smaller than feared; favorable tax rate .
Strategic/capital catalysts: Kidney Care sale closed (net after-tax ~$3.4B; above prior view), proceeds earmarked for deleveraging toward ~3.0x net leverage by end-2025; CEO transition; quarterly dividend declared at $0.17 per share .

What Went Well and What Went Wrong

What Went Well
- “Our 2024 performance and related strategic milestones reflect Baxter’s growing momentum…”; Q4 and FY exceeded guidance, Kidney Care sale complete, positioning for profitable growth .
- Novum IQ infusion pump rollout driving strong infusion systems growth and share gains; Advanced Surgery and PN also strong; Pharmaceuticals grew high-single digits with double-digit Specialty Injectables; Drug Compounding solid .
- North Cove (IV solutions) production restored to pre-hurricane levels faster than expected; hurricane headwind smaller than feared aiding outperformance .
What Went Wrong
- GAAP results hit by $425M goodwill impairment in Front Line Care; Q4 GAAP diluted EPS from continuing ops was ($0.95) amid multiple special items ($908M after-tax) including Helene costs and amortization .
- Healthcare Systems & Technologies declined low-single digits; Front Line Care down 8% on difficult comps, select product/market exits, supply constraints (~$15M impact) and international softness (China/France) .
- Hurricane Helene still meaningful: ~-$110M revenue and ~$0.10 EPS headwind in Q4; adjusted gross margin y/y slightly lower as Helene and FX partially offset mix and program benefits .

Financial Results

Overall P&L vs prior year and prior quarter (continuing operations)

Metric	Q4 2023	Q3 2024	Q4 2024	Consensus (S&P Global)
Revenue ($B)	$2.729	$2.699	$2.753	N/A
GAAP Diluted EPS – Cont. Ops	$0.43	$0.12	($0.95)	N/A
Adjusted Diluted EPS – Cont. Ops	$0.65	$0.49	$0.58	N/A
Adjusted Gross Margin %	44.6%	43.7%	44.5%	N/A
Adjusted Operating Margin %	17.1%	14.5%	15.2%	N/A

Note: S&P Global consensus was unavailable at time of writing due to provider rate limits.

Segment sales (continuing operations)

Segment ($M)	Q4 2023	Q3 2024	Q4 2024
Medical Products & Therapies	1,320	1,342	1,314
– Infusion Therapies & Technologies	1,042	1,070	1,022
– Advanced Surgery	278	272	292
Healthcare Systems & Technologies	795	752	784
– Care & Connectivity Solutions (CCS)	492	456	504
– Front Line Care (FLC)	303	296	280
Pharmaceuticals	596	588	643
Other	18	17	12
Total Revenue	2,729	2,699	2,753

KPIs and cash flow

KPI	Q4 2023	Q3 2024	Q4 2024
Adjusted SG&A % Sales	22.8%	24.6%	24.7%
Adjusted R&D % Sales	0.0%/4.8% (adj R&D 4.8% in 8-K Q4 table)	0.0%/4.8% (adj R&D 4.8%)	4.8%

Cash Flow (FY)	FY 2023	FY 2024
Cash from ops – continuing ops ($M)	$1,207	$819
Free cash flow – continuing ops ($M)	$775	$373

Non-GAAP/adjustments (Q4 2024): special items totaled $908M after-tax; includes goodwill impairment ($425M), intangible amortization, business optimization, Helene costs, tax matters, separation-related costs .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Sales growth (reported)	FY 2025	N/A	+5% to +6%	New
Sales growth (operational)	FY 2025	+4% to +5% (post-Kidney Care framework)	+4% to +5%	Maintained
Adjusted EPS	FY 2025	N/A	$2.45–$2.55	New
Adjusted operating margin	FY 2025	~16.5%	~16.5% (implied by CFO)	Maintained
Reported sales growth	Q1 2025	N/A	+3% to +4%	New
Operational sales growth	Q1 2025	N/A	~4%	New
Adjusted EPS	Q1 2025	N/A	$0.47–$0.50	New
Non-operating expense	FY 2025	N/A	$250–$270M	New
Tax rate	FY 2025	N/A	~19.5%	New
MSA revenues from Vantive	FY 2025	N/A	~$345M; Q1 ~$60M	New
Kidney Care MSA headwind to reported sales	FY/Q1 2025	N/A	~350 bps FY; ~250 bps Q1	New
FX headwind to reported sales	FY/Q1 2025	N/A	~200 bps FY; >200 bps Q1	New
Exit of IV Solutions China	FY/Q1 2025	N/A	~60 bps headwind both	New
Dividend	Ongoing	$0.17 qtrly (declared Nov ’24 as well)	$0.17 per share payable Apr 1, 2025	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q4 2024)	Trend
Novum IQ pump platform and connected ecosystem	Q2: first U.S. sales; pump and CCS drove growth . Q3: infusion platform strong; order timing pushed some injectables to Q4 .	U.S. infusion systems momentum; share gains; strong customer response; more digital suites in 2025 .	Improving
Supply chain / Hurricane Helene	Q3: North Cove restart of largest IV line; Q4 impacts expected .	All 10 lines restarted; back to pre-hurricane levels; Q4 impact ~$110M rev, ~$0.10 EPS, less than prior view .	Recovering
Capital environment (beds/monitoring)	Q3: U.S. CCS strength; international CCS softer .	Capital environment “quite good”; U.S. PSS capital orders +15% FY; backlog/funnel healthy .	Improving in U.S.; mixed OUS
Tariffs/macro	Q3: Not highlighted.	2025 guide includes slight China tariff impact; excludes potential MX/CA tariffs pending outcomes .	Watch risk
Pharmaceuticals (Injectables/Anesthesia/Compounding)	Q2: double-digit Pharma growth; new launches; strong Compounding . Q3: Injectables timing/supply constrained OUS; Compounding double-digit .	Pharma +8% in Q4; mid-teens Specialty Injectables; Compounding +9%; anesthesia a drag mid-single digit .	Improving mix
Regional trends	Q3: U.S. CCS strong; softness in China/France; FLC pressured .	Similar pattern; supply constraints resolving into Q1 2025; stabilization in primary care expected .	Stabilizing
Stranded costs/TSA & margin path	Q3: plan to offset stranded costs by 2027; 2025 adj op margin ~16.5% .	Bridge from 13.9% FY’24 to 16.5% FY’25: +40bps Helene normalization, +220bps stranded cost relief, +100bps mix/price/volume; -40bps residual stranded, -60bps MSA dilution .	Positive trajectory

Management Commentary

“As a streamlined, agile Baxter, we have new opportunities to redefine healthcare delivery and drive profitable growth.” – Brent Shafer, Chair & Interim CEO .
“Net after-tax proceeds from [Kidney Care] are being allocated toward debt repayment…objective of reaching net leverage of approximately 3.0x by the end of 2025.” – CFO Joel Grade .
On pumps: “Novum IQ…has been a resounding success…we took multiple points of market share in 2024 and expect more competitive gains in 2025.” – Management .
On HST/CCS: “Capital environment is quite good…PSS orders +15% for the full year…healthy backlog and strong funnel into 2025.” – CFO .
On margins: Bridge to ~16.5% adj op margin in 2025 detailed (Helene recovery, stranded cost actions, mix/price/volume, and small dilutions from MSA) .

Q&A Highlights

Margin bridge and sustainability: Detailed walk from ~13.9% FY’24 adj op margin to ~16.5% FY’25 including stranded costs/TSA, Helene normalization, mix/pricing, and MSA dilution .
Helene impact quantification: ~-$110M revenue and ~-$0.10 EPS in Q4; negative effect smaller than feared due to faster recovery; IV solutions now at pre-hurricane run-rate .
Pump platform adoption: Strong 2024 growth with share gains; 2025 expected to see continued competitive wins and digital suite expansion .
Capital cycle: U.S. hospital capital purchases remain healthy; CCS U.S. capital orders +15% FY; backlog supports 2025 .
Free cash flow cadence: Target ~80% conversion over time; Q1 2025 pressured by Helene expense timing and inventory restock, with normalization expected over the remaining quarters .

Estimates Context

S&P Global consensus estimates (revenue, EPS, EBITDA) for Q4 2024 were not retrievable at time of writing due to provider rate limits; therefore, Street beat/miss vs consensus cannot be stated. The company did exceed its own Q4 guidance (revenue and adjusted EPS), and introduced FY 2025 and Q1 2025 guidance as detailed above .

Key Takeaways for Investors

Core momentum: Novum IQ platform and mix uplift (Advanced Surgery, Specialty Injectables, Drug Compounding) underpin 2025 growth and margin expansion case .
Margin path credible: Clear bridge to ~16.5% adj operating margin in FY’25 with identifiable drivers and quantified dilutions (MSA), offering a medium-term profitability re-rate if executed .
Supply recovery: North Cove back to pre-hurricane production; Helene headwind smaller than feared, reducing a key near-term risk into 2025 .
Deleveraging catalyst: ~$3.4B net proceeds from Kidney Care sale aimed at debt paydown toward ~3.0x net leverage by YE’25; lower interest expense was a 2024 tailwind .
Segments to watch: HST stabilization (U.S. capital strength vs OUS softness), FLC product pipeline/supply resolution, anesthesia headwinds vs injectables ramp .
Policy sensitivity: 2025 includes minor China tariff impact; excludes potential MX/CA tariff scenarios—monitor for changes and mitigation updates .
Capital returns: Dividend maintained at $0.17 per share; cash flow conversion expected to normalize after Q1 working capital effects .

Appendix: Additional Detail

Segment operating income (Q4 2024): MPT $217M (16.5% margin), HST $145M (18.5%), Pharma $102M (15.9%); total $467M before corporate/adjustments .
Full-year 2024 cash generation (continuing ops): CFO $819M; FCF $373M (capex $446M) .
Q4 2024 special items detail and adjusted reconciliation available in 8-K Exhibit tables .

Citations:
All figures and statements are sourced from Baxter’s Q4 2024 8‑K/press release and earnings call transcript, and other listed press releases: .