Baxter International reported higher sales but lower earnings in the second quarter and missed Wall Street estimates as it suffered from inflation and disrupted supply chains.
The Illinois-based medical device giant saw second-quarter revenue grow 21% to $3.75 billion, with sales in the U.S., the company's biggest market, up 47% to $1.76 billion. Net income was $252 million for the second quarter, down 15%, with adjusted earnings per share of 87 cents.
Both revenue and earnings missed Wall Street estimates. Analysts surveyed by Zacks Investment Research on average estimated that Baxter would report revenue of $3.89 billion and earnings of 88 cents per share.
The closing of the second quarter marks two quarters since Baxter acquired Hillrom, a maker of hospital beds and other medical equipment. The addition of Hillrom’s front-line care, patient support systems and surgical solutions contributed $715 million to Baxter’s second-quarter sales.
Baxter’s stock was down 9.2% Thursday morning and has fallen 30% since the beginning of the year, while the S&P 500 has declined 16%.
Baxter CEO Joe Almeida said on a conference call Thursday morning that revenue was dampened by inflation and supply chain issues, particularly when it comes to the shortage of semiconductor chips. The shortage has affected the production and availability of Baxter products, which has created a backlog of orders.
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“Overall, demand remains strong across our combined portfolio,” Almeida said. “At the same time, we’re experiencing significant back orders and backlogs for certain products.”
Missing supplies have forced Baxter to temporarily shut down some of its manufacturing facilities, Almeida said.
On the inflation side, Almeida said growing freight, fuel and oil, and labor costs are challenging Baxter. To offset expenses, Almeida said, Baxter intends to raise prices in the second half of the year and beyond.
Baxter’s reported earnings come just days after the U.S. Food & Drug Administration issued a Class I recall for Baxter’s Abacus software, which calculates and administers medication doses for patients. The recall is based on five complaints that allege the software poses a risk to patients through printed labels it produces for compounded medication mixtures.
This story first appeared in our sister publication, Crain's Chicago Business.
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