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baxter international inc (BAX) Key Developments

Baxter International Inc. Declares Quarterly Dividend Payable on October 1, 2014

The Board of Directors of Baxter International Inc. declared a quarterly dividend of $0.52 per Baxter common share. The dividend is payable on October 1, 2014 to shareholders of record as of September 5, 2014. In May, Baxter increased its dividend by 6%, bringing the annual dividend rate to $2.08 per diluted share and maintaining a dividend payout ratio of approximately 40%.

Baxter International Inc. Announces Unaudited Consolidated Earnings Results for the Second Quarter and Six Months Ended June 30, 2014; Provides Earnings Guidance for the Third Quarter of 2014 and Revises Earnings Guidance for the Full Year of 2014

Baxter International Inc. announced unaudited consolidated earnings results for the second quarter and six months ended June 30, 2014. The company posted net income of $520 million and earnings per diluted share of $0.95 in the second quarter, compared to net income of $590 million and earnings per diluted share of $1.07 in the same period last year. On an adjusted basis, excluding special items in both periods, the company’s second quarter net income of $692 million increased 5% from $659 million reported in 2013. Adjusted earnings per diluted share of $1.26 also increased 5% from $1.20 per diluted share last year. Net sales were $4,264 million against $3,669 million a year ago. Pre-tax income was $661 million against $743 million a year ago. Adjusted pre-tax income was $885 million against $844 million a year ago. Cash flows from operations were $599 million against $763 million for the same period a year ago. Capital expenditures were $423 million against $347 million for the same period a year ago. For the six months of 2014, the company reported net income of $1.1 billion, or $1.96 per diluted share, compared to net income of $1.1 billion and earnings per diluted share of $2.07 reported in 2013. Excluding special items, the company’s adjusted net income increased 7% to $1,344 million against $1,260 million a year ago. Adjusted earnings per diluted share of $2.45 also increased 7% from $2.29 per diluted share reported in the comparable prior-year period. Net sales were $8,215 million against $7,117 million a year ago. Pre-tax income was $1,370 million against $1,436 million a year ago. Adjusted pre-tax income was $1,714 million against $1,607 million a year ago. Cash flows from operations were $1,158 million against $1,149 million for the same period a year ago. Capital expenditures were $844 million against $639 million for the same period a year ago. Net debt as on June 30, 2014 was $6,973 million against $3,046 million a year ago. For the third quarter of 2014, the company expects sales growth of approximately 12% to 13% excluding the impact of foreign currency. The company expects earnings, before special items, of $1.28 to $1.32 per diluted share in the third quarter. The third quarter 2014 earnings guidance excludes approximately $0.07 per diluted share of projected intangible asset amortization expense. For the full year 2014, the company now expects sales growth of 10% to 11% before the impact of foreign exchange. Also for the full year, the company expects earnings, before special items, of $5.10 to $5.20 per diluted share and cash flows from operations of approximately $3.5 billion, excluding cash costs related to the spin-off of the biopharmaceutical business. The full-year 2014 earnings guidance excludes the $0.62 per diluted share of special items comprising $0.49 per diluted share of items recorded in the first half of the year, and projected intangible asset amortization expense of $0.13 per diluted share for the remainder of the year. Reconciling for the inclusion of these items results in GAAP earnings of $4.48 to $4.58 per diluted share for the full-year 2014. The company expects interest expense to total approximately $160 million and the company now expect other income of approximately $70 million for the full year, the vast majority of which has already been recognized in the first half of the year. The company expects the tax rate of approximately 21.5%. From a cash flow perspective, the company continue to expect to generate cash flow from operations of approximately $3.5 billion, which excludes the cash cost associated with the spin off of the biopharmaceuticals business. The company expects capital expenditures of approximately $1.8 billion, which includes Gambro and the investments the company is making to enhance plasma manufacturing footprint in Covington, Georgia. As mentined previously, the company expects earnings per diluted share, excluding special items, of $1.28 to $1.32. The company expects sales growth, excluding the impact of foreign currency, of 12% to 13%. Excluding Gambro, the company expects the base Baxter sales at constant currency rates to grow approximately 4% to 5%. For the full year, the company continue to expect gross margin for the company to decline by approximately 150 basis points from the 2013 margin of 52%.

Baxter Launches Romanian Subsidiary

Baxter has opened a subsidiary in Romania, with an office in the capital, Bucharest, staffed by 12 people who will be responsible for sales, marketing, and regulatory activities, reports Central Europe Pharma News. Baxter has only worked with distributors in the country, rather than having any dedicated representation. Tomov has reportedly estimated that the company's revenue in Romania would reach USD 10 million in 2014.

Baxter International Inc. Initiates Voluntary Worldwide Recall of Four Lots of IV Solutions Due to the Presence of Particulate Matter

Baxter International Inc. announced that it is voluntarily recalling four lots of intravenous (IV) solutions to the hospital/user level. These products have been found to contain particulate matter identified as cellulosic fibers and/or plastics. Baxter received four complaints over a period of six months from customers whose visual inspection identified the appearance of visible particulate matter prior to administration to a patient. If infused, adverse health consequences of particulate matter could vary depending on the amount of particulate matter injected into the patient, the size of the particles, the patient's underlying medical condition and the presence of a right-to-left cardiac shunt. The presence of particulate foreign matter may elicit inflammatory and allergic responses, both chronic and acute, and may be life threatening. There have been no reported adverse events associated with this issue to date, and an investigation is underway to determine root cause. Products affected by this recall are found in the table below: Product CodeDescriptionLot #Expiry DateNDC; 2B13020.9% Sodium Chloride 100 mL (Quad Pack)P298190Aug 20140338-0049-18; 2B00430.9% Sodium Chloride 100 mL MINI-BAG PlusP308650Oct 20140338-0553-18; 2B13060.9% Sodium Chloride, 50 mL (Single Pack)P309187Oct 20140338-0049-41; 2B0822Highly Concentrated Potassium Chloride Injection, 20 mEq/50 mL, VIAFLEX Plus Container P309476Oct 20140338-0703-41. Sodium Chloride Injection, USP is an intravenously administered injectable indicated as a source of water and electrolytes, for use as a priming solution in hemodialysis procedures, and may be used as a diluent for reconstitution of a powdered drug product. Potassium Chloride Injection is an intravenously administered injectable indicated as a potassium replacement to support nerve conduction, muscle contraction and prevention of cardiac arrhythmias. The lots being recalled were distributed worldwide to customers and distributors between February 2013 and June 2014. Baxter has notified customers, who are being directed not to use products from the recalled lots. Recalled products should be returned to Baxter for credit by contacting Baxter Healthcare Center for Service at 1-888-229-0001, Monday through Friday, between the hours of 7:00 a.m. and 6:00 p.m., Central Time. Unaffected lots of product are available for replacement. Adverse reactions or quality problems experienced with the use of these products may be reported to the FDA's MedWatch Adverse Event Reporting program either online, by regular mail or by fax.

Baxter International Inc. Appoints John Orloff, M.D. as Vice President of BioScience R&D

Baxter International Inc. announced the appointment of John Orloff, M.D., as vice president and global head of research and development for Baxter BioScience, effective immediately. Dr. Orloff joins Baxter from Merck Serono Pharmaceuticals, where he served as global head of clinical development. Dr. Orloff will be responsible for advancing the late-stage BioScience pipeline, enhancing the current R&D operating model and pursuing additional innovative opportunities for the business. Prior to his tenure at Merck Serono, Dr. Orloff spent approximately 10 years at Novartis, where he served in roles of increasing responsibility including chief medical officer for global development.

 

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