Baxter Achieves Its First Quarter Expectations and Confirms 2013 Full-Year Guidance

  Baxter Achieves Its First Quarter Expectations and Confirms 2013 Full-Year
  Guidance

Business Wire

DEERFIELD, Ill. -- April 18, 2013

Baxter International Inc. (NYSE:BAX) today reported first quarter financial
results in line with the company’s previously issued guidance and confirmed
its full-year 2013 financial outlook.

For the first quarter, Baxter reported net income of $552 million and earnings
per diluted share of $1.00, compared to net income of $588 million and
earnings per diluted share of $1.04 in the same period last year. First
quarter 2013 results include after-tax special items totaling $29 million (or
$0.05 per diluted share) primarily for deal-related costs associated with
Baxter’s planned acquisition of Gambro AB, a global medical technology company
focused on developing, manufacturing and supplying dialysis products and
therapies for patients with acute or chronic kidney disease. First quarter
2012 results included a net after-tax benefit from special items totaling $19
million of income (or $0.03 per diluted share) for payments and adjustments
pertaining to business development transactions.

On an adjusted basis, excluding special items in both periods, Baxter’s first
quarter net income of $581 million increased 2 percent from $569 million
reported in 2012. Adjusted earnings per diluted share of $1.05 rose 4 percent
from $1.01 per diluted share last year, in line with the company’s previously
issued earnings guidance of $1.03 to $1.05 per diluted share.

Worldwide sales of $3.45 billion increased 2 percent compared to $3.39 billion
reported in the first quarter of 2012. Sales within the United States
increased 1 percent, totaling $1.48 billion, while international sales of
$1.97 billion increased 2 percent. The impact of foreign currency on sales
growth in the quarter was immaterial.

By business, BioScience revenues of $1.53 billion rose 5 percent, driven
primarily by strong demand for ADVATE [Antihemophilic Factor (Recombinant),
Plasma/Albumin-Free Method] for the treatment of hemophilia, as well as
certain plasma-based therapeutics and vaccines. Medical Products sales of
$1.92 billion were comparable to the prior-year period as growth for
intravenous therapies was more than offset by lower sales in the company’s
pharma-partnering business.

Baxter continued to make investments to support geographic expansion
initiatives and new product introductions, and continued to advance a number
of programs that improve the quality of care and address key, high-potential
areas of unmet medical need. Recent achievements include:

  *Submission of an application with the U.S. Food and Drug Administration
    for approval of FEIBA NF [Anti-Inhibitor Coagulant Complex], Nanofiltered
    and Vapor Heated, for prophylactic use in hemophilia A and B patients with
    inhibitors. Baxter’s Phase III study demonstrated routine prophylactic
    treatment with FEIBA NF reduced median annual bleed rate (ABR) from 28.7
    during FEIBA NF on-demand treatment compared to 7.9 during FEIBA NF
    prophylactic treatment (a 72.5 percent reduction), with 17 percent (3 of
    17) of patients in the intent-to-treat group experiencing zero joint
    bleeds.
  *Receipt of a Positive Opinion from the European Medicines Agency’s
    Committee for Medicinal Products for Human Use for the use of HyQvia
    (solution for subcutaneous use) as replacement therapy for adult patients
    with primary and secondary immunodeficiencies. HyQvia is a combination of
    human normal immunoglobulin (IGSC, 10%) and recombinant human
    hyaluronidase, which facilitates the dispersion and absorption of the
    IGSC.
  *Initiation of a Phase III clinical trial to evaluate the safety and
    efficacy of BAX 817, a recombinant factor VIIa (rFVIIa) for the treatment
    of acute bleeding episodes in hemophilia A or B patients with inhibitors.
    The prospective, open-label, randomized, multicenter study will assess the
    safety and efficacy of BAX 817 in male patients aged 12 to 65 years old
    with hemophilia A or B with inhibitors over a 6-month period of on-demand
    therapy.
  *Initiation of a Phase II/III multi-center, open-label study, PROLONG-ATE,
    assessing the efficacy, safety and pharmacokinetics of BAX 855 for
    prophylaxis and on-demand treatment of bleedingin more than 100
    previously treated adult patients with severe hemophilia A.
  *Acquisition of the investigational hemophilia compound OBI-1 and related
    assets from Inspiration BioPharmaceuticals, Inc. as well as certain other
    OBI-1 related assets, including manufacturing operations, from Ipsen
    Pharma S.A.S. in conjunction with Inspiration’s ongoing bankruptcy
    proceedings. OBI-1 is a recombinant porcine factor VIII (rpFVIII) being
    investigated for the treatment of bleeding in people with acquired
    hemophilia A and congenital hemophilia A patients with inhibitors.
  *Clearance under the Hart-Scott-Rodino Antitrust Improvements Act for the
    company’s acquisition of Gambro. Subject to other regulatory approvals
    (including multiple antitrust approvals) and satisfaction of other closing
    conditions, the acquisition is expected to close at the end of the second
    quarter.

''Baxter’s global portfolio remains strong as we benefit from our focus on
lifesaving therapies, achieve important new product milestones and make select
investments to position our company for future success and accelerated
growth,'' said Robert L. Parkinson, Jr., chairman and chief executive officer.

Second Quarter and Full-Year 2013 Outlook

Baxter also announced today its guidance for the second quarter of 2013 and
confirmed its guidance for the full year.

For the second quarter of 2013, Baxter expects sales growth, excluding the
impact of foreign currency, of approximately 4 percent and earnings per
diluted share of $1.12 to $1.14, before any special items.

For full-year 2013, Baxter continues to expect sales growth, excluding the
impact of foreign exchange, of approximately 10 percent. In addition, the
company expects earnings of $4.60 to $4.70 per diluted share, before any
special items, and cash flows from operations of approximately $3.3 billion.
The company’s full-year guidance includes the impact of the Gambro AB
acquisition, which is projected to be dilutive to full-year 2013 earnings by
$0.10 to $0.15 per diluted share.

A webcast of Baxter’s first quarter conference call for investors can be
accessed live from a link on the company's website at www.baxter.com beginning
at 7:30 a.m. CDT on April 18, 2013. Please visit Baxter's website for more
information regarding this and future investor events and webcasts, including
the company’s Annual Meeting of Shareholders on May 7, 2013.

Baxter International Inc., through its subsidiaries, develops, manufactures
and markets products that save and sustain the lives of people with
hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and
other chronic and acute medical conditions. As a global, diversified
healthcare company, Baxter applies a unique combination of expertise in
medical devices, pharmaceuticals and biotechnology to create products that
advance patient care worldwide.

This release includes forward-looking statements concerning the company’s
financial results, business development activities including with respect to
the pending Gambro AB acquisition, R&D pipeline and outlook for 2013. The
statements are based on assumptions about many important factors, including
the following, which could cause actual results to differ materially from
those in the forward-looking statements: demand for and market acceptance
risks for new and existing products, such as ADVATE, and other technologies;
future actions of regulatory bodies and other governmental authorities that
could delay, limit or suspend product development, manufacturing or sales or
result in sanctions; product quality or patient safety concerns leading to
product recalls, withdrawals, launch delays, litigation, or declining sales;
the ability of the company to obtain required regulatory approvals including
multiple antitrust approvals, satisfy closing conditions and close the Gambro
AB transaction in a timely manner; future actions of governmental authorities
and other third parties as U.S. healthcare reform legislation and other
austerity measures are implemented globally; additional legislation,
regulation and other governmental pressures, which may affect pricing,
taxation, reimbursement and rebate policies of government agencies and private
payers or other elements of the company’s business; product development risks,
including satisfactory clinical performance; the company's ability to realize
the anticipated benefits from its business development and R&D activities;
inventory reductions or fluctuations in buying patterns by wholesalers or
distributors; the impact of geographic and product mix on the company's sales;
the impact of competitive products and pricing, including generic competition,
drug reimportation and disruptive technologies; the availability of acceptable
raw materials and component supply; fluctuations in supply and demand and the
pricing of plasma-based therapies; the ability to enforce company patents;
patents of third parties preventing or restricting the company’s manufacture,
sale or use of affected products or technology; the impact of global economic
conditions on Baxter and its customers, including foreign governments in
certain countries in which the company operates; foreign currency fluctuations
and other risks identified in the company’s most recent filing on Form 10-K
and other Securities and Exchange Commission filings, all of which are
available on the company's website. The company does not undertake to update
its forward-looking statements. Financial schedules are attached to this
release and available on the company’s website.




BAXTER INTERNATIONAL INC.
Consolidated Statements of Income
Three Months Ended March 31, 2013 and 2012
(unaudited)
(in millions, except per share and percentage data)
                                                                
                                                                     
                                             Three Months Ended
                                             March 31,
                                             2013        2012        Change
                                                                     
NET SALES                                    $3,448      $3,388      2%
                                                                     
COST OF SALES                                1,692       1,674       1%
                                                            
GROSS MARGIN                                1,756     1,714     2%
% of Net Sales                               50.9%       50.6%       0.3 pts
                                                                     
MARKETING AND ADMINISTRATIVE EXPENSES        795         752         6%
% of Net Sales                               23.1%       22.2%       0.9 pts
                                                                     
RESEARCH AND DEVELOPMENT EXPENSES            246         269         (9%)
% of Net Sales                               7.1%        7.9%        (0.8 pts)
                                                                     
NET INTEREST EXPENSE                         25          18          39%
                                                                     
OTHER INCOME, NET                            (3)         (57)        N/M
                                                            
PRE-TAX INCOME                              693       732       (5%)
                                                                     
INCOME TAX EXPENSE                          141       144       (2%)
% of Pre-Tax Income                          20.3%       19.7%       0.6 pts
                                                                     
NET INCOME                                  $552      $588      (6%)
                                                                     
BASIC EPS                                   $1.01     $1.05     (4%)
DILUTED EPS                                 $1.00     $1.04     (4%)
                                                                     
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING
Basic                                        545         559
Diluted                                     551       563       
                                                                     
ADJUSTED PRE-TAX INCOME (excluding special   $738   ^A   $727   ^A   2%
items)
ADJUSTED NET INCOME (excluding special       $581   ^A   $569   ^A   2%
items)
ADJUSTED DILUTED EPS (excluding special      $1.05  ^A   $1.01  ^A   4%
items)
                                                                     

^A  Refer to page 7 for a description of the adjustments and a reconciliation
     to generally accepted accounting principles (GAAP) measures.
     
     
     

BAXTER INTERNATIONAL INC.
Note to Consolidated Statements of Income
Three Months Ended March 31, 2013 and 2012
Description of Adjustments and Reconciliation of GAAP to Non-GAAP Measures
(unaudited)
(in millions, except per share and percentage data)
                                                            
The company's GAAP results for the three months ended March 31, 2013 and 2012
included special items which impacted the GAAP measures as follows:

                                  Three Months Ended
                                  March 31,
                                  2013             2012           Change
Gross Margin                      $1,756           $1,714         2%
Currency-related items ^1         1                -
Business development items ^ 3    -               6             
Adjusted Gross Margin             $1,757          $1,720        2%
% of Net Sales                    51.0%            50.8%          0.2 pts
                                                                  
Marketing and Administrative      $795             $752           6%
Expenses
Business development items ^ 2, 3 (17)            (9)           
Adjusted Marketing and            $778            $743          5%
Administrative Expenses
% of Net Sales                    22.6%            21.9%          0.7 pts
                                                                  
Research and Development Expenses $246             $269           (9%)
Business development items ^ 3    -               (33)          
Adjusted Research and Development $246            $236          4%
Expenses
% of Net Sales                    7.1%             7.0%           0.1 pts
                                                                  
Other Income, Net                 $(3)             $(57)          N/M
Currency-related items ^1         (27)             -
Reserve adjustments ^4            -               53            
Adjusted Other Income, Net        $(30)           $(4)          N/M
                                                                  
Pre-Tax Income                    $693             $732           (5%)
Impact of special items           45              (5)           
Adjusted Pre-Tax Income           $738            $727          2%
                                                                  
Income Tax Expense                $141             $144           (2%)
Impact of special items           16              14            
Adjusted Income Tax Expense       $157            $158          (1%)
% of Adjusted Pre-Tax Income      21.3%            21.7%          (0.4 pts)
                                                                  
Net Income                        $552             $588           (6%)
Impact of special items           29              (19)          
Adjusted Net Income               $581            $569          2%
                                                                  
Diluted EPS                       $1.00            $1.04          (4%)
Impact of special items           0.05            (0.03)        
Adjusted Diluted EPS              $1.05           $1.01         4%
                                                                  
WEIGHTED-AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Diluted                           551             563           
                                                                  

     Cost of sales and other income, net in 2013 included a charge of $11
     million ($7 million, or $0.01 per diluted share, on an after-tax basis)
     related to the Venezuelan currency devaluation announced by the
     government of Venezuela in February 2013. Additionally, other income, net
^1  in 2013 included a loss of $17 million ($11 million, or $0.02 per diluted
     share, on an after-tax basis) related to derivative instruments entered
     into in December 2012 and January 2013 to hedge the anticipated foreign
     currency cash outflows associated with the planned acquisition of Gambro
     AB (Gambro).
     Marketing and administrative expenses in 2013 included business
^2   development charges of $17 million ($11 million, or $0.02 per diluted
     share, on an after-tax basis) associated with pre-acquisition costs for
     the planned acquisition of Gambro.
     Cost of sales, marketing and administrative expenses and research and
     development (R&D) expenses in 2012 included business development charges
^3   totaling $48 million ($34 million, or $0.06 per diluted share, on an
     after-tax basis) which principally related to an R&D charge associated
     with the company’s global collaboration with Momenta Pharmaceuticals,
     Inc. (Momenta).
     Other income, net in 2012 included a gain of $53 million, or $0.09 per
^4   diluted share, related to the reduction of a contingent payment liability
     for milestones associated with the 2011 acquisition of Prism
     Pharmaceuticals, Inc., for which there was no net tax expense recognized.
     
For more information on the company's use of non-GAAP financial measures in
this press release, please see the company's Current Report on Form 8-K filed
with the Securities and Exchange Commission on the date of this press release.




BAXTER INTERNATIONAL INC.
Cash Flows from Operations and Changes in Net Debt
(unaudited)
($ in millions)

                                                                       
Cash Flows from Operations                                               
(Brackets denote cash outflows)                          Three Months Ended
                                                         March 31,
                                                         2013        2012
                                                                            
Net income                                               $552        $588
Adjustments
   Depreciation and amortization                         183         175
   Deferred income taxes                                 38          54
   Stock compensation                                    32          28
   Realized excess tax benefits from stock issued under  (12)        (7)
   employee benefit plans
   Other                                                 10          (25)
Changes in balance sheet items
   Accounts and other current receivables, net           85          24
   Inventories                                           (181)       (72)
   Accounts payable and accrued liabilities              (299)       (288)
   Business optimization and infusion pump payments      (26)        (84)
  Other                                                 4          53     
Cash flows from operations                               $386       $446   
                                                                       
Changes in Net Debt                                                      
Increase (decrease)                                      Three Months Ended
                                                         March 31,
                                                         2013        2012
                                                                            
Net debt, beginning of period                            $2,660      $2,290
                                                                            
Cash flows from operations                               (386)       (446)
Capital expenditures                                     292         239
Dividends                                                246         188
Proceeds from stock issued under employee benefit plans  (184)       (154)
Purchases of treasury stock                              534         575
Acquisitions and investments                             67      ^A  337    ^A
Sales of investments and other investing activities      (10)        (43)
Other, including the effect of exchange rate changes     (41)       (49)   
Increase in net debt                                     518        647    
                                                                            
Net debt, March 31                                       $3,178     $2,937 
                                                                       
Key statistics, March 31:
Days sales outstanding                                   53.6        58.0
Inventory turns                                          2.2        2.3    
                                                                            

     Acquisitions and investments in 2013 and 2012 included $51 million for
     the first quarter 2013 acquisition of the investigational hemophilia
^A  compound OBI-1 and related assets from Inspiration BioPharmaceuticals,
     Inc. and Ipsen Pharma S.A.S., $304 million for the first quarter 2012
     acquisition of Synovis Life Technologies, Inc., and $33 million for the
     first quarter 2012 payment to execute the Momenta collaboration.
     
     
     

BAXTER INTERNATIONAL INC.
Net Sales
Periods Ending March 31, 2013 and 2012
(unaudited)
($ in millions)
                                                     
                                                  
                                                          %                % Growth
                        Q1               Q1               Growth           @
                                                          @
                 2013        2012        Actual      Constant
                                                          Rates            Rates
                                                  
BioScience
United States           $773             $725             7%               7%
International      757         737         3%          3%
Total              $1,530      $1,462      5%          5%
BioScience
                                                  
Medical
Products
United States           $709             $743             (5%)             (5%)
International      1,209       1,183       2%          2%
Total Medical      $1,918      $1,926      0%          (1%)
Products
                                                  
Baxter
International
Inc.
United States           $1,482           $1,468           1%               1%
International      1,966       1,920       2%          2%
Total Baxter       $3,448      $3,388      2%          2%
                                                                           
                                                                           
                                                                           

BAXTER INTERNATIONAL INC.
Sales by Franchise ^1
Periods Ending March 31, 2013 and 2012
(unaudited)
($ in millions)
                                                    
                                                            %                % Growth
                    Q1          Q1          Growth      @
                                                            @
                   2013        2012        Actual      Constant
                                                            Rates            Rates
                                                    
BioScience
Hemophilia ^2             $765             $743             3%               3%
BioTherapeutics           509              498              2%               2%
^3
BioSurgery ^4             172              154              12%              11%
Vaccines ^5          84          67          25%         28%
Total                $1,530      $1,462      5%          5%
BioScience
                                                    
Medical
Products
Fluid Systems             $740             $720             3%               2%
^6
Renal ^7                  590              588              0%               1%
Specialty
Pharmaceuticals           363              368              (1%)             (2%)
^8
BioPharma            225         250         (10%)       (11%)
Solutions ^9
Total Medical        $1,918      $1,926      0%          (1%)
Products
                                                    
Total Baxter         $3,448      $3,388      2%          2%
                                                                             

     Effective January 1, 2013, Baxter has transitioned to a commercial
^1  franchise structure for reporting net sales. Prior period net sales have
     been reclassified to reflect the new commercial franchise structure. See
     Notes 2 - 9 below for a description of each commercial franchise.
     Includes sales of recombinant FVIII products (ADVATE and RECOMBINATE) and
^2   plasma-derived hemophilia products (primarily FVII, FVIII and FEIBA).
     Recombinant and plasma-based products were previously reported
     separately.
     Includes sales of the company's liquid formulation of the
     antibody-replacement therapy immunoglobulin product (GAMMAGARD LIQUID)
^3   and other plasma-based therapies such as albumin and alpha-1 antitrypsin
     products. Antibody therapies and plasma-based products were previously
     reported separately.
     Consists of biological products and delivery devices used for hemostasis,
^4   tissue sealing, adhesion reduction and hard tissue regeneration, as well
     as soft tissue repair and microsurgery products.
^5   Consists of vaccines for seasonal and pandemic influenza, as well as
     meningitis C and tick-borne encephalitis.
     Principally includes IV therapies, infusion pumps, administration sets
^6   and premixed drugs platforms. IV therapies were previously reported with
     nutrition products in IV Therapies, and Infusion Systems and Global
     Injectables were previously reported separately.
^7   Consists of PD and HD therapies.
     Principally includes nutrition and anesthesia products. Nutrition
^8   products were previously reported with IV therapies in IV Therapies and
     anesthesia products were previously reported separately.
     Principally includes sales from the pharmaceutical partnering business
     and pharmacy compounding services, which were previously reported with
^9   Global Injectables. Also includes revenues associated with manufacturing,
     distribution and other services provided by the company to the buyer of
     the Transfusion Therapies business after the February 2007 divestiture.
     
     
     

BAXTER INTERNATIONAL INC.
Franchise Sales by U.S. and International ^ 1
Periods Ending March 31, 2013 and 2012
(unaudited)
($ in millions)
                                                                                                                     
                                                                                                             
                          Q1 2013                                  Q1 2012                                  % Growth
                   U.S.     International   Total       U.S.     International   Total       U.S.    International   Total
BioScience
Hemophilia                $332       $433              $765             $310       $433              $743             7%        0%                3%
BioTherapeutics           342        167               509              328        170               498              4%        (2%)              2%
BioSurgery                99         73                172              87         67                154              14%       9%                12%
Vaccines             0        84              84          0        67              67          0%      25%             25%
Total                $773     $757            $1,530      $725     $737            $1,462      7%      3%              5%
BioScience
                                                                                                             
Medical
Products
Fluid Systems             $385       $355              $740             $374       $346              $720             3%        3%                3%
Renal                     98         492               590              97         491               588              1%        0%                0%
Specialty                 160        203               363              172        196               368              (7%)      4%                (1%)
Pharmaceuticals
BioPharma            66       159             225         100      150             250         (34%)   6%              (10%)
Solutions
Total Medical        $709     $1,209          $1,918      $743     $1,183          $1,926      (5%)    2%              0%
Products
                                                                                                             
Total Baxter         $1,482   $1,966          $3,448      $1,468   $1,920          $3,388      1%      2%              2%
                                                                                                                                                  

     Effective January 1, 2013, Baxter has transitioned to a commercial
^1  franchise structure for reporting net sales. Prior period net sales have
     been reclassified to reflect the new commercial franchise structure.
     Refer to page 10 for additional details.

Contact:

Baxter International Inc.
Media Contact:
Deborah Spak, (224) 948-2349
or
Investor Contacts:
Mary Kay Ladone, (224) 948-3371
Clare Trachtman, (224) 948-3085