Baxter's 1Q16 Earnings Beat Estimates, Post Improved Margins
1Q16 performance
Baxter International (BAX) reported ~$2.4 billion in total revenues in 1Q16. Of that, ~$898 million, or ~38%, came from Baxter’s Renal Products business. These sales figures represent approximately 5% YoY (year-over-year) increase in 1Q16 on an operational basis.
In the United States, the Renal business grew by approximately 8%, driven by the double-digit growth in the US PD (peritoneal dialysis) business and ~20% growth in the Acute Therapies business segment.
Key growth drivers
Baxter witnessed strong operational sales growth in its Renal Products business in 1Q16. The sales were driven by the launch of AMIA APD cycler, which is a piece of home dialysis equipment, which performed better than expected with more than 500 products sold in the quarter.
Also, the SHARESOURCE technology in AMIA APD, which enables two-way remote connectivity, generated a positive response from the customers. For more information on Baxter’s innovative product portfolio driving the company’s growth, please read Can Innovation Drive Baxter’s Growth through 2016 and Beyond?
The Acute Dialysis business segment also exhibited growth in 1Q16. This growth was driven by the continued adoption of Baxter’s renal therapies, including renal replacement therapy for acute kidney injuries. Also, the company’s Chronic Hemodialysis business witnessed low single-digit sales growth as compared to the weak performance in the previous quarter.
Investors can gain diversified exposure to Baxter International by investing in the Vanguard Health Care ETF (VHT). Baxter accounts for approximately 0.8% of VHT’s total holdings. Among the other major medical device companies, Becton Dickinson (BDX), CR Bard (BCR), and ResMed (RMD) constitute approximately 1.1%, 0.49% and 0.25% of ETF’s total holdings, respectively.
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