Form 8-K BAXTER INTERNATIONAL For: Jul 25
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 25, 2019
Baxter International Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
| 1-4448 | 36-0781620 | |
| (Commission File Number) | (I.R.S. Employer Identification No.) |
| One Baxter Parkway, Deerfield, Illinois | 60015 | |
| (Address of principal executive offices) | (Zip Code) |
(224) 948-2000
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d 2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter):
☐ Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act: ☐
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
| Common Stock, $1.00 par value | BAX (NYSE) | New York Stock Exchange Chicago Stock Exchange | ||
| 1.3% Global Notes due 2025 | BAX 25 | New York Stock Exchange | ||
| 1.3% Global Notes due 2029 | BAX 29 | New York Stock Exchange | ||
| 0.4% Global Notes due 2024 | BAX 24 | New York Stock Exchange |
Item 2.02 Results of Operations and Financial Condition.
On July 25, 2019, Baxter International Inc. (the Company) issued an earnings press release for the period ended June 30, 2019. The press release, including attachments, is furnished as Exhibit 99.1 to this report.
The press release furnished as Exhibit 99.1 contains financial measures that are not calculated in accordance with generally accepted accounting principles (GAAP). The non-GAAP financial measures include adjusted net income, adjusted diluted earnings per share, adjusted operating income, adjusted other operating income, adjusted gross margin, adjusted selling, general and administrative expenses, adjusted research and development expenses, adjusted income before income taxes and adjusted income tax expense, each excluding special items, constant currency sales, operational sales and free cash flow. Special items are excluded because they are highly variable, difficult to predict or unusual and of a size that may substantially impact the Company’s reported operations for a period. Certain of those items represent estimates based on information reasonably available at the time of the press release. Future events or new information may result in different actual results. Additionally, intangible asset amortization is excluded as a special item to facilitate an evaluation of current and past operating performance and is consistent with how management and the Company’s Board of Directors assess performance.
Net sales amounts are presented on a constant currency basis. This measure provides information on the change in net sales assuming that foreign currency exchange rates have not changed between the prior and current periods. Net sales are also presented on an operational basis. For the quarter ended June 30, 2019, it excludes the impact of foreign exchange and generic competition for U.S. cyclophosphamide. This measure provides information on the change in net sales assuming that foreign currency exchange rates remain constant and excluding the impact of U.S. cyclophosphamide competition.
Free cash flow represents operating cash flow less capital expenditures. This measure provides an indication of cash flow that may be available to fund investments in future growth initiatives.
Non-GAAP financial measures may provide a more complete understanding of the Company’s operations and can facilitate a fuller analysis of the Company’s results of operations, particularly in evaluating performance from one period to another. Management believes that non-GAAP earnings measures, when used in conjunction with the results presented in accordance with GAAP and the reconciliations to corresponding GAAP financial measures, may enhance an investor’s overall understanding of the Company’s past financial performance and prospects for the future. Accordingly, management uses these non-GAAP measures internally in financial planning, to monitor business unit performance, and in some cases for purposes of determining incentive compensation. This information should be considered in addition to, and not as substitutes for, information prepared in accordance with GAAP.
The Company strongly encourages investors to review its consolidated financial statements and publicly filed reports in their entirety and cautions investors that the non-GAAP measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits. |
| Exhibit Number |
Description | |
| 99.1 | Press Release Dated July 25, 2019 | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: July 25, 2019
| BAXTER INTERNATIONAL INC. | ||
| By: | /s/ James K. Saccaro | |
| James K. Saccaro | ||
Exhibit 99.1
FOR IMMEDIATE RELEASE
Media Contact
Steve Brett, (224) 948-5353
Investor Contact
Clare Trachtman, (224) 948-3085
BAXTER REPORTS SECOND-QUARTER 2019 RESULTS
- Anticipates $500 million investment to support Advancing American Kidney Health Initiative -
| • | Second quarter revenue of $2.8 billion was comparable year over year on a reported basis; increased 4% on an operational basis |
| • | Second quarter GAAP earnings per share (EPS) of $0.66 increased 5%; Adjusted EPS of $0.89 increased 16% |
| • | Baxter expects full-year 2019 GAAP EPS of $2.81 to $2.89; Adjusted EPS of $3.34 to $3.401 |
| • | Company is committed to help drive home dialysis adoption in line with U.S. Department of Health and Human Services (HHS) goals and anticipates significant investment to support implementation |
DEERFIELD, Ill., July 25, 2019 — Baxter International Inc. (NYSE: BAX), a leading global medical products company, today reported earnings for the second quarter of 2019 and updated its full-year 2019 earnings outlook.
“Our momentum in the second quarter reflects the ongoing impact of Baxter innovation coupled with our emphasis on operational excellence to deliver on our commitments and potential,” said José (Joe) E. Almeida, chairman and chief executive officer. “We are well positioned to capture new growth opportunities as they emerge to further accelerate performance and drive increased value for patients, healthcare providers and investors.”
Second-Quarter Financial Results
Worldwide sales in the second quarter totaled approximately $2.8 billion, which was comparable to second quarter 2018 performance on a reported basis, and increased 4% on both a constant currency and operational basis. Operational sales in the second quarter exclude the impact of foreign exchange and generic competition for U.S. cyclophosphamide.
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BAXTER REPORTS SECOND-QUARTER 2019 RESULTS — Page 2
Sales in the U.S. totaled $1.2 billion, decreasing 1% on both a reported and operational basis. International sales of $1.6 billion increased 1% on a reported basis and 8% on a constant currency basis. On a regional basis, sales in the Americas were flat on a reported basis and increased 1% on a constant currency basis; sales in Europe, Middle East and Africa (EMEA) decreased 2% as reported and advanced 6% on a constant currency basis; and in Asia Pacific (APAC), reported sales and constant currency sales increased 3% and 9%, respectively.
Key growth drivers in the second quarter included Baxter’s peritoneal dialysis (PD) and continuous renal replacement therapies (CRRT), intravenous (IV) infusion systems, hemostats and sealants, and certain generic pharmaceuticals. In addition, increased demand for Baxter’s hospital pharmacy compounding contributed to growth in the quarter. Sales growth was partially offset by expected lower U.S. sales of Brevibloc and cyclophosphamide as well as in-center hemodialysis (ICHD) products due to increased competition and the exit of the bloodline business, respectively.
Please see the attached schedules accompanying this press release for additional details on sales performance in the quarter, including breakouts by Baxter’s three geographic segments and six global business units.
Baxter reported net income of $343 million, or $0.66 per diluted share, on a GAAP (Generally Accepted Accounting Principles) basis for the second quarter. These results include special items totaling $121 million after tax, which were primarily related to intangible asset amortization, an intangible asset impairment and business optimization initiatives. On an adjusted basis, Baxter’s second quarter net income totaled $464 million, or $0.89 per diluted share. Earnings growth in the quarter was driven by solid operational performance and the benefit from a lower tax rate and share count as compared to the prior year period.
Advancing American Kidney Health Initiative
On July 10, the White House announced the Advancing American Kidney Health Initiative. This groundbreaking proposal is focused on improving outcomes, lowering health system costs and offering quality-of-life benefits for patients with chronic kidney disease (CKD). CKD impacts the lives of more than 30 million Americans; of those, more than 700,000 have end stage renal disease
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BAXTER REPORTS SECOND-QUARTER 2019 RESULTS — Page 3
(ESRD), or kidney failure, and require dialysis treatment or an organ transplant to survive. As proposed, the Initiative aims to increase the number of new ESRD patients who receive home dialysis and organ transplants to 80% in 2025.2 Baxter is committed to helping drive U.S. home dialysis adoption in line with these goals.
Depending on the Initiative’s final form, Baxter plans to scale investments in the U.S. to align with the proposed models from the Centers for Medicare and Medicaid Services (CMS), and patient and market dynamics across the adoption curve. The investments are currently anticipated at $500 million in potential new U.S. facilities, as well as in existing sites that make and distribute PD solutions, devices and cassettes, and are expected to create hundreds of high-quality manufacturing, supply chain and engineering jobs for Americans. The company anticipates that these investments will help accelerate Renal Care growth and contribute positively to Baxter’s previous financial commitments.
“We stand ready to help the Administration and healthcare providers improve care for Americans who battle end stage renal disease,” said Almeida. “As the leading innovator and provider of home PD therapy in the U.S. and worldwide, we are excited to expand U.S. patient access to the many benefits of PD and look forward to mobilizing in support of the Initiative as its final parameters take shape in the months ahead.”
Business Highlights3
Baxter continues to achieve key milestones in pursuit of its Mission for patients and emphasis on accelerating profitable growth. Among recent highlights, the company:
| • | Announced U.S. Food and Drug Administration (FDA) approval of Myxredlin (Insulin Human in 0.9% Sodium Chloride Injection), the first and only ready-to-use insulin for IV infusion in the hospital and other acute care settings. Utilizing Baxter’s proprietary Galaxy container technology, Myxredlin offers an extended shelf life and delivers a consistent, stable concentration with every administration, which is a key consideration for patient safety. |
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BAXTER REPORTS SECOND-QUARTER 2019 RESULTS — Page 4
| • | Launched the Sharesource 2.0 clinical portal, giving healthcare providers greater insights to their patients’ home PD treatments while offering improved clinic workflow. Sharesource is the most widely adopted telehealth platform globally; it has helped manage more than 7 million PD treatments in more than 40 countries, and there is growing evidence that the remote patient management technology assists healthcare providers with early detection of catheter issues, peritonitis, and adherence-related complications, which can lead to reduced hospitalizations. |
| • | Announced new research on the Oxiris filter, which can be used simultaneously in CRRT and in the removal of cytokines and endotoxin to aid in the management of acute kidney injury (AKI) patients with sepsis. The research was published in a supplemental issue of the peer-reviewed journal Blood Purification and highlighted at the 37th Vicenza Course on AKI and CRRT held in Vicenza, Italy, in May. |
| • | Showcased 19 data presentations across the renal care continuum at the 56th ERA-EDTA Congress, held in June in Budapest, Hungary. Among these were five independent studies on HDx (expanded hemodialysis) using the Theranova dialyzer that further advance growing evidence for the therapy. By extending the range of molecules that can be filtered from the blood, HDx results in a clearance profile that more closely mimics the natural kidney. |
Many recent highlights also reflect Baxter’s ongoing commitment to corporate social responsibility and workplace excellence. Among them, Baxter:
| • | Was named a 2019 Best Company for Multicultural Women by Working Mother magazine, and named to Forbes magazine’s 2019 list of America’s Best Employers for Women. |
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BAXTER REPORTS SECOND-QUARTER 2019 RESULTS — Page 5
| • | Issued its annual Corporate Responsibility Report, outlining the company’s progress on key initiatives to drive more sustainable operations, enhance product quality, foster a strong work environment and improve access to healthcare. |
2019 Financial Outlook
For full-year 2019: The company now expects sales growth of 1% to 2% on a reported basis, and approximately 4% on both a constant currency and operational basis. Baxter expects GAAP earnings from continuing operations of $2.81 to $2.89 per share and adjusted earnings from continuing operations, before special items, of $3.34 to $3.40 per diluted share.
For third-quarter 2019: The company expects sales growth of 3% to 4% on a reported basis, and to grow approximately 5% on both a constant currency and operational basis. Baxter expects GAAP earnings from continuing operations of $0.75 to $0.78 per share and adjusted earnings from continuing operations, before special items, of $0.82 to $0.84 per diluted share.
Full-year and quarterly operational sales estimates for 2019 have been adjusted for the impact of foreign exchange and generic competition for U.S. cyclophosphamide.
A webcast of Baxter’s second-quarter 2019 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 July 25, 2019. Please see www.baxter.com for more information regarding this and future investor events and webcasts.
About Baxter
Every day, millions of patients and caregivers rely on Baxter’s leading portfolio of critical care, nutrition, renal, hospital and surgical products. For more than 85 years, we’ve been operating at the critical intersection where innovations that save and sustain lives meet the healthcare providers that make it happen. With products, technologies and therapies available in more than 100 countries, Baxter’s employees worldwide are now building upon the company’s rich heritage of medical breakthroughs to advance the next generation of transformative healthcare innovations. To learn more, visit www.baxter.com and follow us on Twitter, LinkedIn and Facebook.
This release includes forward-looking statements concerning the company’s financial results, business development activities, capital structure, cost savings initiatives, R&D pipeline, including results of clinical trials and planned product launches, and outlook for the third quarter and full year 2019. 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
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BAXTER REPORTS SECOND-QUARTER 2019 RESULTS — Page 6
statements: demand for and market acceptance of risks for new and existing products; product development risks; product quality or patient safety concerns; continuity, availability and pricing of acceptable raw materials and component supply; inability to create additional production capacity in a timely manner or the occurrence of other manufacturing or supply difficulties (including as a result of a natural disaster or otherwise); breaches or failures of the company’s information technology systems or products, including by cyberattack, unauthorized access or theft; future actions of regulatory bodies and other governmental authorities, including FDA, the Department of Justice, the New York Attorney General and foreign regulatory agencies; proposed regulatory changes of the U.S. Department of Health and Human Services in kidney health policy (AAKHI) and reimbursement, which may substantially change the U.S. ESRD market and demand for our peritoneal dialysis products, necessitating significant multi-year capital expenditures which are difficult to estimate in advance; failures with respect to compliance programs; accurate identification of and execution on business development and R&D opportunities and realization of anticipated benefits (including the acquisitions of Claris Injectables and two surgical products from Mallinckrodt plc); future actions of third parties, including payers; U.S. healthcare reform and other global austerity measures; pricing, reimbursement, taxation and rebate policies of government agencies and private payers; the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies; global, trade and tax policies; the ability to enforce owned or in-licensed patents or the patents of third parties preventing or restricting the manufacture, sale or use of affected products or technology; the impact of global economic conditions (including potential trade wars); fluctuations in foreign exchange and interest rates; any change in law concerning the taxation of income (including current or future tax reform), including income earned outside the United States and potential taxes associated with the Base Erosion and Anti-Abuse Tax; actions taken by tax authorities in connection with ongoing tax audits; loss of key employees or inability to identify and recruit new employees; the outcome of pending or future litigation; the adequacy of the company’s cash flows from operations to meet its ongoing cash obligations and fund its investment program; and other risks identified in Baxter’s most recent filing on Form 10-K and other Securities and Exchange Commission filings, all of which are available on Baxter’s website. Baxter does not undertake to update its forward-looking statements.
Baxter, Brevibloc, Myxredlin, Oxiris, Sharesource and Theranova are registered trademarks of Baxter International Inc.
# # #
| 1 | See tables to this press release for reconciliations of non-GAAP measures used in this press release to the closest GAAP measures. The company’s outlook for GAAP earnings per share from continuing operations only includes the impact of special items that are known or expected as of the date of this release. Accordingly, actual GAAP earnings per share from continuing operations for the third quarter and full year 2019 may differ significantly from those amounts. For example, the company’s outlook does not reflect the potential impact of future business or asset acquisitions or dispositions, intangible asset impairments, restructuring actions, developments related to gain or loss contingencies, or unusual or infrequently occurring items that may occur during the remainder of 2019. |
| 2 | See U.S. Department of Health and Human Services press release issued 7/10/19 at https://www.hhs.gov/about/news/2019/07/10/hhs-launches-president-trump-advancing-american-kidney-health-initiative.html?amp. |
| 3 | See links to original press releases for additional product information. |
BAXTER — PAGE 7
BAXTER INTERNATIONAL INC.
Consolidated Statements of Income
Three Months Ended June 30, 2019 and 2018
(unaudited)
(in millions, except per share and percentage data)
| Three Months Ended June 30, |
||||||||||||
| 2019 | 2018 | Change | ||||||||||
| NET SALES |
$2,840 | $ 2,842 | (0% | ) | ||||||||
| COST OF SALES |
1,681 | 1,603 | 5% | |||||||||
|
|
||||||||||||
| GROSS MARGIN |
1,159 | 1,239 | (6% | ) | ||||||||
|
|
||||||||||||
| % of Net Sales |
40.8% | 43.6% | (2.8 pts | ) | ||||||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES |
642 | 681 | (6% | ) | ||||||||
| % of Net Sales |
22.6% | 24.0% | (1.4 pts | ) | ||||||||
| RESEARCH AND DEVELOPMENT EXPENSES |
166 | 174 | (5% | ) | ||||||||
| % of Net Sales |
5.8% | 6.1% | (0.3 pts | ) | ||||||||
| OTHER OPERATING INCOME, NET |
(4 | ) | — | NM | ||||||||
|
|
||||||||||||
| OPERATING INCOME |
355 | 384 | (8% | ) | ||||||||
|
|
||||||||||||
| % of Net Sales |
12.5% | 13.5% | (1.0 pts | ) | ||||||||
| INTEREST EXPENSE, NET |
20 | 11 | 82% | |||||||||
| OTHER INCOME, NET |
(28 | ) | (31 | ) | (10% | ) | ||||||
|
|
||||||||||||
| INCOME BEFORE INCOME TAXES |
363 | 404 | (10% | ) | ||||||||
|
|
||||||||||||
| INCOME TAX EXPENSE |
20 | 61 | (67% | ) | ||||||||
|
|
||||||||||||
| % of Income Before Income Taxes |
5.5% | 15.1% | (9.6 pts | ) | ||||||||
| NET INCOME |
$ 343 | $ 343 | 0% | |||||||||
|
|
||||||||||||
| NET INCOME PER COMMON SHARE |
||||||||||||
| Basic |
$ 0.67 | $ 0.64 | 5% | |||||||||
|
|
||||||||||||
| Diluted |
$ 0.66 | $ 0.63 | 5% | |||||||||
|
|
||||||||||||
| WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING |
||||||||||||
| Basic |
510 | 535 | ||||||||||
| Diluted |
519 | 547 | ||||||||||
|
|
||||||||||||
| ADJUSTED OPERATING INCOME (excluding special items) |
$ 512 | A | $ 487 | A | 5% | |||||||
| ADJUSTED INCOME BEFORE INCOME TAXES (excluding special items) |
$ 520 | A | $ 507 | A | 3% | |||||||
| ADJUSTED NET INCOME (excluding special items) |
$ 464 | A | $ 421 | A | 10% | |||||||
| ADJUSTED DILUTED EPS (excluding special items) |
$ 0.89 | A | $ 0.77 | A | 16% | |||||||
| A | Refer to page 8 for a description of the adjustments and a reconciliation to GAAP measures. |
NM - Not Meaningful
BAXTER — PAGE 8
BAXTER INTERNATIONAL INC.
Description of Adjustments and Reconciliation of GAAP to Non-GAAP Measures
Three Months Ended June 30, 2019 and 2018
(unaudited)
(in millions, except per share and percentage data)
The company’s GAAP results for the three months ended June 30, 2019 and 2018 included special items which impacted the GAAP measures as follows:
| Three Months Ended June 30, |
||||||||||||
| 2019 | 2018 | Change | ||||||||||
| Gross Margin |
$ 1,159 | $ 1,239 | (6% | ) | ||||||||
| Intangible asset amortization expense 1 |
45 | 44 | ||||||||||
| Intangible asset impairment 2 |
31 | — | ||||||||||
| Business optimization items 3 |
10 | 3 | ||||||||||
| Acquisition and integration expenses 4 |
12 | 6 | ||||||||||
| European medical devices regulation 5 |
6 | — | ||||||||||
|
|
|
|||||||||||
| Adjusted Gross Margin |
$ 1,263 | $ 1,292 | (2% | ) | ||||||||
|
|
|
|||||||||||
| % of Net Sales |
44.5% | 45.5% | (1.0 pts | ) | ||||||||
| Selling, General and Administrative Expenses |
$642 | $ 681 | (6% | ) | ||||||||
| Business optimization items 3 |
(32) | (34 | ) | |||||||||
| Acquisition and integration expenses 4 |
— | (6 | ) | |||||||||
|
|
|
|||||||||||
| Adjusted Selling, General and Administrative Expenses |
$ 610 | $ 641 | (5% | ) | ||||||||
|
|
|
|||||||||||
| % of Net Sales |
21.5% | 22.6% | (1.1 pts | ) | ||||||||
| Research and Development Expenses |
$166 | $ 174 | (5% | ) | ||||||||
| Business optimization items 3 |
(23) | (10 | ) | |||||||||
| Acquisition and integration expenses 4 |
(2) | — | ||||||||||
|
|
|
|||||||||||
| Adjusted Research and Development Expenses |
$ 141 | $ 164 | (14% | ) | ||||||||
|
|
|
|||||||||||
| % of Net Sales |
5.0% | 5.8% | (0.8 pts | ) | ||||||||
| Other Operating Income, Net |
$ (4) | $ — | NM | |||||||||
| Acquisition and integration expenses 4 |
$ 4 | — | ||||||||||
|
|
|
|||||||||||
| Adjusted Other Operating Income |
$ — | $ — | 0% | |||||||||
|
|
|
|||||||||||
| % of Net Sales |
0.0% | 0.0% | 0.0 pts | |||||||||
| Operating Income |
$ 355 | $ 384 | (8% | ) | ||||||||
| Impact of special items |
157 | 103 | ||||||||||
|
|
|
|||||||||||
| Adjusted Operating Income |
$ 512 | $ 487 | 5% | |||||||||
|
|
|
|||||||||||
| % of Net Sales |
18.0% | 17.1% | 0.9 pts | |||||||||
| Income Before Income Taxes |
$ 363 | $ 404 | (10% | ) | ||||||||
| Impact of special items |
157 | 103 | ||||||||||
|
|
|
|||||||||||
| Adjusted Income Before Income Taxes |
$ 520 | $ 507 | 3% | |||||||||
|
|
|
|||||||||||
| Income Tax Expense |
$ 20 | $ 61 | (67% | ) | ||||||||
| Impact of special items 6 |
36 | 25 | ||||||||||
|
|
|
|||||||||||
| Adjusted Income Tax Expense |
$ 56 | $ 86 | (35% | ) | ||||||||
|
|
|
|||||||||||
| % of Adjusted Income Before Income Taxes |
10.8% | 17.0% | (6.2 pts | ) | ||||||||
| Net Income |
$ 343 | $ 343 | 0% | |||||||||
| Impact of special items |
121 | 78 | ||||||||||
|
|
|
|||||||||||
| Adjusted Net Income |
$ 464 | $ 421 | 10% | |||||||||
|
|
|
|||||||||||
| Diluted EPS from Net Income |
$ 0.66 | $ 0.63 | 5% | |||||||||
| Impact of special items |
0.23 | 0.14 | ||||||||||
|
|
|
|||||||||||
| Adjusted Diluted EPS from Net Income |
$ 0.89 | $ 0.77 | 16% | |||||||||
|
|
|
|||||||||||
| WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING |
||||||||||||
| Diluted |
519 | 547 | ||||||||||
|
|
||||||||||||
| 1 | The company’s results in 2019 and 2018 included intangible asset amortization expense of $45 million ($35 million, or $0.07 per diluted share, on an after-tax basis) and $44 million ($34 million, or $0.06 per diluted share, on an after-tax basis), respectively. |
| 2 | The company’s results in 2019 included a $31 million ($24 million, or $0.05 per diluted share, on an after-tax basis) asset impairment related to a developed-technology intangible asset. |
| 3 | The company’s results in 2019 and 2018 included charges of $65 million ($51 million, or $0.10 per diluted share, on an after-tax basis) and $47 million ($34 million, or $0.06 per diluted share, on an after-tax basis), respectively, associated with its execution of programs to optimize its organization and cost structure on a global basis. |
| 4 | The company’s results in 2019 included $10 million ($7 million, or $0.01 per diluted share, on an after-tax basis) of acquisition and integration expenses. This included integration expenses related to its acquisitions of Claris Injectables Limited (Claris) and the RECOTHROM and PREVELEAK products in prior periods, as well as the 2019 acquisition of an in-process research and development asset, partially offset by a benefit related to the change in fair value of contingent consideration liabilities from acquisitions that occurred in prior periods. The company’s results in 2018 included $12 million ($10 million, or $0.02 per diluted share, on an after-tax basis) of acquisition and integration expenses related to the company’s acquisitions of Claris and the RECOTHROM and PREVELEAK products. |
| 5 | The company’s results in 2019 included costs of $6 million ($4 million, or $0.01 per diluted share, on an after-tax basis) related to updating its quality systems and product labeling to comply with the new medical device reporting regulation and other requirements of the European Union’s regulations for medical devices that will become effective in 2020. |
| 6 | Reflected in this item is the income tax impact of the special items identified in this table. The tax effect of each adjustment is based on the jurisdiction in which the adjustment is incurred and the tax laws in effect for each such jurisdiction. |
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.
NM - Not Meaningful
BAXTER — PAGE 9
BAXTER INTERNATIONAL INC.
Consolidated Statements of Income
Six Months Ended June 30, 2019 and 2018
(unaudited)
(in millions, except per share and percentage data)
| Six Months Ended June 30, |
||||||||||||
| 2019 | 2018 | Change | ||||||||||
| NET SALES |
$ 5,472 | $ 5,519 | (1% | ) | ||||||||
| COST OF SALES |
3,233 | 3,166 | 2% | |||||||||
|
|
||||||||||||
| GROSS MARGIN |
2,239 | 2,353 | (5% | ) | ||||||||
|
|
||||||||||||
| % of Net Sales |
40.9% | 42.6% | (1.7 pts | ) | ||||||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES |
1,242 | 1,303 | (5% | ) | ||||||||
| % of Net Sales |
22.7% | 23.6% | (0.9 pts | ) | ||||||||
| RESEARCH AND DEVELOPMENT EXPENSES |
295 | 314 | (6% | ) | ||||||||
| % of Net Sales |
5.4% | 5.7% | (0.3 pts | ) | ||||||||
| OTHER OPERATING INCOME, NET |
(37 | ) | (80 | ) | (54% | ) | ||||||
|
|
||||||||||||
| OPERATING INCOME |
739 | 816 | (9% | ) | ||||||||
|
|
||||||||||||
| % of Net Sales |
13.5% | 14.8% | (1.3 pts | ) | ||||||||
| INTEREST EXPENSE, NET |
38 | 23 | 65% | |||||||||
| OTHER INCOME, NET |
(53 | ) | (49 | ) | 8% | |||||||
|
|
||||||||||||
| INCOME BEFORE INCOME TAXES |
754 | 842 | (10% | ) | ||||||||
|
|
||||||||||||
| INCOME TAX EXPENSE |
64 | 110 | (42% | ) | ||||||||
|
|
||||||||||||
| % of Income Before Income Taxes |
8.5% | 13.1% | (4.6 pts | ) | ||||||||
| NET INCOME |
$ 690 | $ 732 | (6% | ) | ||||||||
|
|
||||||||||||
| NET INCOME PER COMMON SHARE |
||||||||||||
| Basic |
$ 1.35 | $ 1.36 | (1% | ) | ||||||||
|
|
||||||||||||
| Diluted |
$ 1.33 | $ 1.33 | 0% | |||||||||
|
|
||||||||||||
| WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING |
||||||||||||
| Basic |
511 | 537 | ||||||||||
| Diluted |
520 | 549 | ||||||||||
|
|
||||||||||||
| ADJUSTED OPERATING INCOME (excluding special items) |
$ 962 | A | $ 935 | A | 3% | |||||||
| ADJUSTED INCOME BEFORE INCOME TAXES (excluding special items) |
$ 977 | A | $ 961 | A | 2% | |||||||
| ADJUSTED NET INCOME (excluding special items) |
$ 863 | A | $ 809 | A | 7% | |||||||
| ADJUSTED DILUTED EPS (excluding special items) |
$ 1.66 | A | $ 1.47 | A | 13% | |||||||
| A | Refer to page 10 for a description of the adjustments and a reconciliation to GAAP measures. |
BAXTER — PAGE 10
BAXTER INTERNATIONAL INC.
Description of Adjustments and Reconciliation of GAAP to Non-GAAP Measures
Six Months Ended June 30, 2019 and 2018
(unaudited)
(in millions, except per share and percentage data)
The company’s GAAP results for the six months ended June 30, 2019 and 2018 included special items which impacted the GAAP measures as follows:
| Six Months Ended June 30, |
||||||||||||
| 2019 | 2018 | Change | ||||||||||
| Gross Margin |
$ 2,239 | $ 2,353 | (5% | ) | ||||||||
| Intangible asset amortization expense 1 |
88 | 85 | ||||||||||
| Intangible asset impairment 2 |
31 | — | ||||||||||
| Business optimization items 3 |
29 | 9 | ||||||||||
| Acquisition and integration expenses 4 |
17 | 9 | ||||||||||
| Litigation 5 |
— | 8 | ||||||||||
| European medical devices regulation 6 |
10 | — | ||||||||||
|
|
|
|||||||||||
| Adjusted Gross Margin |
$ 2,414 | $ 2,464 | (2% | ) | ||||||||
|
|
|
|||||||||||
| % of Net Sales |
44.1% | 44.6% | (0.5 pts | ) | ||||||||
| Selling, General and Administrative Expenses |
$ 1,242 | $ 1,303 | (5% | ) | ||||||||
| Business optimization items 3 |
(40 | ) | (63 | ) | ||||||||
| Acquisition and integration expenses 4 |
(5 | ) | (10 | ) | ||||||||
| Litigation 5 |
— | (2 | ) | |||||||||
|
|
|
|||||||||||
| Adjusted Selling, General and Administrative Expenses |
$ 1,197 | $ 1,228 | (3% | ) | ||||||||
|
|
|
|||||||||||
| % of Net Sales |
21.9% | 22.3% | (0.4 pts | ) | ||||||||
| Research and Development Expenses |
$ 295 | $ 314 | (6% | ) | ||||||||
| Business optimization items 3 |
(34 | ) | (13 | ) | ||||||||
| Acquisition and integration expenses 4 |
(6 | ) | — | |||||||||
|
|
|
|||||||||||
| Adjusted Research and Development Expenses |
$ 255 | $ 301 | (15% | ) | ||||||||
|
|
|
|||||||||||
| % of Net Sales |
4.7% | 5.5% | (0.8 pts | ) | ||||||||
| Other Operating Income, Net |
$ (37 | ) | $ (80 | ) | (54% | ) | ||||||
| Acquisition and integration expenses 4 |
4 | — | ||||||||||
| Insurance recovery from legacy product-related matter 7 |
33 | — | ||||||||||
| Claris settlement 8 |
— | 80 | ||||||||||
|
|
|
|||||||||||
| Adjusted Other Operating Income, Net |
$ — | $ — | 0% | |||||||||
|
|
|
|||||||||||
| % of Net Sales |
0.0% | 0.0% | 0.0 pts | |||||||||
| Operating Income |
$ 739 | $ 816 | (9% | ) | ||||||||
| Impact of special items |
223 | 119 | ||||||||||
|
|
|
|||||||||||
| Adjusted Operating Income |
$ 962 | $ 935 | 3% | |||||||||
|
|
|
|||||||||||
| % of Net Sales |
17.6% | 16.9% | 0.7 pts | |||||||||
| Income Before Income Taxes |
$ 754 | $ 842 | (10% | ) | ||||||||
| Impact of special items |
223 | 119 | ||||||||||
|
|
|
|||||||||||
| Adjusted Income Before Income Taxes |
$ 977 | $ 961 | 2% | |||||||||
|
|
|
|||||||||||
| Income Tax Expense |
$ 64 | $ 110 | (42% | ) | ||||||||
| Impact of special items and U.S. tax reform 9 |
50 | 42 | ||||||||||
|
|
|
|||||||||||
| Adjusted Income Tax Expense |
$ 114 | $ 152 | (25% | ) | ||||||||
|
|
|
|||||||||||
| % of Adjusted Income Before Income Taxes |
11.7% | 15.8% | (4.1 pts | ) | ||||||||
| Net Income |
$ 690 | $ 732 | (6% | ) | ||||||||
| Impact of special items |
173 | 77 | ||||||||||
|
|
|
|||||||||||
| Adjusted Net Income |
$ 863 | $ 809 | 7% | |||||||||
|
|
|
|||||||||||
| Diluted EPS from Net Income |
$ 1.33 | $ 1.33 | 0% | |||||||||
| Impact of special items |
0.33 | 0.14 | ||||||||||
|
|
|
|||||||||||
| Adjusted Diluted EPS from Net Income |
$ 1.66 | $ 1.47 | 13% | |||||||||
|
|
|
|||||||||||
| WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING |
||||||||||||
| Diluted |
520 | 549 | ||||||||||
|
|
||||||||||||
| 1 | The company’s results in 2019 and 2018 included intangible asset amortization expense of $88 million ($68 million, or $0.13 per diluted share, on an after-tax basis) and $85 million ($70 million, or $0.13 per diluted share, on an after-tax basis), respectively. |
| 2 | The company’s results in 2019 included a $31 million ($24 million, or $0.05 per diluted share, on an after-tax basis) asset impairment related to a developed-technology intangible asset. |
| 3 | The company’s results in 2019 and 2018 included charges of $103 million ($81 million, or $0.16 per diluted share, on an after-tax basis) and $85 million ($68 million, or $0.12 per diluted share, on an after-tax basis), respectively, associated with its execution of programs to optimize its organization and cost structure on a global basis. |
| 4 | The company’s results in 2019 included $24 million ($18 million, or $0.03 per diluted share, on an after-tax basis) of acquisition and integration expenses. This included integration expenses related to the company’s acquisitions of Claris and the RECOTHROM and PREVELEAK products in prior periods as well as the 2019 acquisitions of in-process research and development assets, partially offset by a benefit related to the change in fair value of contingent consideration liabilities from acquisitions that occurred in prior periods. The company’s results in 2018 included $19 million ($16 million, or $0.02 per diluted share, on an after-tax basis) of acquisition and integration expenses related to the company’s acquisitions of Claris and the RECOTHROM and PREVELEAK products. |
| 5 | The company’s results in 2018 included a charge of $10 million ($9 million, or $0.02 per diluted share, on an after-tax basis) related to certain product litigation. |
| 6 | The company’s results in 2019 included costs of $10 million ($8 million, or $0.02 per diluted share, on an after-tax basis) related to updating its quality systems and product labeling to comply with the new medical device reporting regulation and other requirements of the European Union’s regulations for medical devices that will become effective in 2020. |
| 7 | The company’s results in 2019 included a benefit of $33 million ($26 million, or $0.05 per diluted share, on an after-tax basis) related to its allocation of insurance proceeds received pursuant to a settlement and cost-sharing agreement for a legacy product-related matter. |
| 8 | The company’s results in 2018 included a benefit of $80 million ($78 million, or $0.14 per diluted share, on an after-tax basis) for the settlement of certain claims related to the acquired operations of Claris. |
| 9 | Reflected in this item is the income tax impact of the special items identified in this table. Additionally, the company’s results in the first half of 2018 included a tax benefit of $8 million, or $0.01 per diluted share, related to updates to the estimated impact of U.S. federal tax reform previously made in 2017. The tax effect of each adjustment is based on the jurisdiction in which the adjustment is incurred and the tax laws in effect for each such jurisdiction. |
For more information on the company’s use of non-GAAP financial measures in this press release, please see the company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on the date of this press release.
BAXTER — PAGE 11
BAXTER INTERNATIONAL INC.
Sales by Operating Segment
Periods Ending June 30, 2019 and 2018
(unaudited)
($ in millions)
| Q2 | Q2 | % Growth @ | % Growth @ | YTD | YTD | % Growth @ | % Growth @ | |||||||||||||||||||||||||
| 2019 | 2018 | Actual Rates | Constant Rates | 2019 | 2018 | Actual Rates | Constant Rates | |||||||||||||||||||||||||
| Americas |
$1,520 | $1,525 | (0% | ) | 1% | $2,928 | $2,967 | (1% | ) | 0% | ||||||||||||||||||||||
| EMEA |
744 | 758 | (2% | ) | 6% | 1,449 | 1,482 | (2% | ) | 5% | ||||||||||||||||||||||
| APAC |
576 | 559 | 3% | 9% | 1,095 | 1,070 | 2% | 8% | ||||||||||||||||||||||||
| Total Baxter |
$2,840 | $2,842 | (0% | ) | 4% | $5,472 | $5,519 | (1% | ) | 3% | ||||||||||||||||||||||
Constant currency growth is a non-GAAP measure. For more information on the company’s use of non-GAAP financial measures in this press release, please see the company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on the date of this press release.
BAXTER — PAGE 12
BAXTER INTERNATIONAL INC.
Sales by GBU
Periods Ending June 30, 2019 and 2018
(unaudited)
($ in millions)
| Q2 2019 |
Q2 2018 |
% Growth @ Actual Rates |
% Growth @ Constant Rates |
YTD 2019 |
YTD 2018 |
% Growth @ Actual Rates |
% Growth @ Constant Rates |
|||||||||||||||||||||||||
| Renal Care ¹ |
$ 910 | $ 931 | (2% | ) | 3% | $1,761 | $1,799 | (2% | ) | 3% | ||||||||||||||||||||||
| Medication Delivery ² |
689 | 681 | 1% | 4% | 1,323 | 1,357 | (3% | ) | (0% | ) | ||||||||||||||||||||||
|
Pharmaceuticals ³ |
539 | 537 | 0% | 4% | 1,048 | 1,033 | 1% | 5% | ||||||||||||||||||||||||
| Clinical Nutrition 4 |
215 | 221 | (3% | ) | 2% | 420 | 444 | (5% | ) | (1% | ) | |||||||||||||||||||||
| Advanced Surgery 5 |
232 | 204 | 14% | 17% | 430 | 386 | 11% | 15% | ||||||||||||||||||||||||
| Acute Therapies 6 |
133 | 129 | 3% | 8% | 261 | 258 | 1% | 6% | ||||||||||||||||||||||||
|
Other 7 |
122 | 139 | (12% | ) | (9% | ) | 229 | 242 | (5% | ) | (2% | ) | ||||||||||||||||||||
| Total Baxter |
$2,840 | $2,842 | (0% | ) | 4% | $5,472 | $5,519 | (1% | ) | 3% | ||||||||||||||||||||||
| 1 | Includes sales of the company’s peritoneal dialysis (PD), hemodialysis (HD) and additional dialysis therapies and services. |
| 2 | Includes sales of the company’s intravenous (IV) therapies, infusion pumps, administration sets and drug reconstitution devices. |
| 3 | Includes sales of the company’s premixed and oncology drug platforms, inhaled anesthesia and critical care products and pharmacy compounding services. |
| 4 | Includes sales of the company’s parenteral nutrition (PN) therapies and related products. |
| 5 | Includes sales of the company’s biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention. |
| 6 | Includes sales of the company’s continuous renal replacement therapies (CRRT) and other organ support therapies focused in the intensive care unit (ICU). |
| 7 | Includes primarily sales of contract manufacturing services from the company’s pharmaceutical partnering business. |
Constant currency growth is a non-GAAP measure. For more information on the company’s use of non-GAAP financial measures in this press release, please see the company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on the date of this press release.
BAXTER — PAGE 13
BAXTER INTERNATIONAL INC.
GBU Sales by U.S. and International
Periods Ending June 30, 2019 and 2018
(unaudited)
($ in millions)
| Q2 2019 | Q2 2018 | % Growth |
||||||||||||||||||||||||||||||||||
| U.S. | International | Total | U.S. | International | Total | U.S. | International | Total | ||||||||||||||||||||||||||||
| Renal Care |
$ 196 | $ 714 | $ 910 | $ 204 | $ 727 | $ 931 | (4% | ) | (2% | ) | (2% | ) | ||||||||||||||||||||||||
| Medication Delivery |
441 | 248 | 689 | 426 | 255 | 681 | 4% | (3% | ) | 1% | ||||||||||||||||||||||||||
| Pharmaceuticals |
235 | 304 | 539 | 262 | 275 | 537 | (10% | ) | 11% | 0% | ||||||||||||||||||||||||||
| Clinical Nutrition |
79 | 136 | 215 | 80 | 141 | 221 | (1% | ) | (4% | ) | (3% | ) | ||||||||||||||||||||||||
| Advanced Surgery |
143 | 89 | 232 | 118 | 86 | 204 | 21% | 3% | 14% | |||||||||||||||||||||||||||
| Acute Therapies |
44 | 89 | 133 | 42 | 87 | 129 | 5% | 2% | 3% | |||||||||||||||||||||||||||
| Other |
55 | 67 | 122 | 78 | 61 | 139 | (29% | ) | 10% | (12% | ) | |||||||||||||||||||||||||
| Total Baxter |
$1,193 | $1,647 | $2,840 | $1,210 | $1,632 | $2,842 | (1% | ) | 1% | (0% | ) | |||||||||||||||||||||||||
BAXTER — PAGE 14
BAXTER INTERNATIONAL INC.
GBU Sales by U.S. and International
Periods Ending June 30, 2019 and 2018
(unaudited)
($ in millions)
| YTD 2019 | YTD 2018 | % Growth | ||||||||||||||||||||||||||||||||||
| U.S. | International | Total | U.S. | International | Total | U.S. | International | Total | ||||||||||||||||||||||||||||
| Renal Care |
$ 388 | $1,373 | $ 1,761 | $ 400 | $ 1,399 | $ 1,799 | (3% | ) | (2% | ) | (2% | ) | ||||||||||||||||||||||||
| Medication Delivery |
847 | 476 | 1,323 | 862 | 495 | 1,357 | (2% | ) | (4% | ) | (3% | ) | ||||||||||||||||||||||||
| Pharmaceuticals |
467 | 581 | 1,048 | 505 | 528 | 1,033 | (8% | ) | 10% | 1% | ||||||||||||||||||||||||||
| Clinical Nutrition |
156 | 264 | 420 | 163 | 281 | 444 | (4% | ) | (6% | ) | (5% | ) | ||||||||||||||||||||||||
| Advanced Surgery |
263 | 167 | 430 | 217 | 169 | 386 | 21% | (1% | ) | 11% | ||||||||||||||||||||||||||
| Acute Therapies |
92 | 169 | 261 | 88 | 170 | 258 | 5% | (1% | ) | 1% | ||||||||||||||||||||||||||
| Other |
100 | 129 | 229 | 122 | 120 | 242 | (18% | ) | 8% | (5% | ) | |||||||||||||||||||||||||
| Total Baxter |
$ 2,313 | $ 3,159 | $ 5,472 | $2,357 | $ 3,162 | $ 5,519 | (2% | ) | (0% | ) | (1% | ) | ||||||||||||||||||||||||
BAXTER — PAGE 15
BAXTER INTERNATIONAL INC.
Reconciliation of Non-GAAP Financial Measure
Operating Cash Flow to Free Cash Flow
(unaudited)
($ in millions)
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2019 | 2018 | |||||||
| Cash flows from operations - continuing operations |
$617 | $852 | ||||||
| Capital expenditures |
(352 | ) | (311 | ) | ||||
| Free cash flow - continuing operations |
$265 | $541 | ||||||
Free cash flow is a non-GAAP measure. 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 — PAGE 16
BAXTER INTERNATIONAL INC.
Reconciliation of Non-GAAP Financial Measure
Change in Net Sales As Reported to Operational Sales
From The Three Months Ended June 30, 2018 to The Three Months Ended June 30, 2019
(unaudited)
| Q2 2019* | ||||||||||||||||
| Net Sales | U.S. | Operational | ||||||||||||||
| As Reported | Cyclophosphamide | FX | Sales | |||||||||||||
| Renal Care |
(2% | ) | 0% | 5% | 3% | |||||||||||
| Medication Delivery |
1% | 0% | 3% | 4% | ||||||||||||
| Pharmaceuticals |
0% | 2% | 4% | 7% | ||||||||||||
| Clinical Nutrition |
(3% | ) | 0% | 5% | 2% | |||||||||||
| Advanced Surgery |
14% | 0% | 3% | 17% | ||||||||||||
| Acute Therapies |
3% | 0% | 5% | 8% | ||||||||||||
| Other |
(12% | ) | 0% | 3% | (9% | ) | ||||||||||
| Total Baxter |
(0% | ) | 0% | 4% | 4% | |||||||||||
| U.S. |
(1% | ) | 1% | 0% | (1% | ) | ||||||||||
| International |
1% | 0% | 7% | 8% | ||||||||||||
| * | Totals may not foot due to rounding |
Change in operational sales is a non-GAAP measure. 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 — PAGE 17
BAXTER INTERNATIONAL INC.
Reconciliation of Non-GAAP Financial Measure
Change in Net Sales As Reported to Operational Sales
From The Six Months Ended June 30, 2018 to The Six Months Ended June 30, 2019
(unaudited)
| YTD 2019* | ||||||||||||||||
| Net Sales | U.S. | Operational | ||||||||||||||
| As Reported | Cyclophosphamide | FX | Sales | |||||||||||||
| Renal Care |
(2% | ) | 0% | 5% | 3% | |||||||||||
| Medication Delivery |
(3% | ) | 0% | 3% | (0% | ) | ||||||||||
| Pharmaceuticals |
1% | 2% | 4% | 8% | ||||||||||||
| Clinical Nutrition |
(5% | ) | 0% | 4% | (1% | ) | ||||||||||
| Advanced Surgery |
11% | 0% | 4% | 15% | ||||||||||||
| Acute Therapies |
1% | 0% | 5% | 6% | ||||||||||||
| Other |
(5% | ) | 0% | 3% | (2% | ) | ||||||||||
| Total Baxter |
(1% | ) | 0% | 4% | 3% | |||||||||||
| U.S. |
(2% | ) | 1% | 0% | (1% | ) | ||||||||||
| International |
(0% | ) | 0% | 7% | 7% | |||||||||||
| * | Totals may not foot due to rounding |
Change in operational sales is a non-GAAP measure. 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 — PAGE 18
BAXTER INTERNATIONAL INC.
Reconciliation of Non-GAAP Financial Measures
Projected 2019 GAAP Sales Growth and Projected Adjusted Sales Growth, and
Projected 2019 GAAP Earnings Per Share and Projected Adjusted Earnings Per Share
(unaudited)
| 2019 Sales Growth Guidance | Q3 2019 | FY 2019 | ||
| Sales Growth – GAAP |
3% - 4% | 1% - 2% | ||
| U.S. cyclophosphamide |
0% - 1% | 0% - 1% | ||
| Foreign exchange |
1% - 2% | 2% - 3% | ||
| Sales Growth - Operational |
5% | 4% | ||
| 2019 Earnings Per Share Guidance | Q3 2019 | FY 2019 | ||
| Earnings per Diluted Share – GAAP |
$0.75 - $0.78 | $2.81 - $2.89 | ||
| Estimated intangible asset amortization |
$0.07 | $0.26 | ||
| Intangible asset impairment |
— | $0.05 | ||
| Estimated business optimization charges |
$0.02 - $0.03 | $0.20 - $0.22 | ||
| Estimated Hurricane Maria insurance recoveries |
($0.06) | ($0.06) | ||
| Estimated acquisition and integration expenses |
$0.01 | $0.06 | ||
| Insurance recovery from legacy product-related matter |
— | ($0.05) | ||
| Estimated European medical devices regulation |
$0.02 | $0.05 | ||
| Earnings per Diluted Share - Adjusted |
$0.82 - $0.84 | $3.34 - $3.40 |
The company’s outlook for GAAP earnings per share only includes the impact of special items that are known or expected as of the date of this release. Accordingly, actual GAAP earnings per share for the third quarter and full year 2019 may differ significantly from those amounts. For example, the company’s outlook does not reflect the potential impact of future business or asset acquisitions or dispositions, intangible asset impairments, restructuring actions, developments related to gain or loss contingencies, or unusual or infrequently occurring items that may occur during the remainder of 2019.