Medical Services

Return to Article

Baxter Delivers Beat, Issues Recall

Elizabeth Trotta

Baxter International(BAX) posted strong quarterly earnings Thursday and raised full-year guidance. However, the medical product and services company also issued a recall for one of its products.

The Deerfield, Ill., company's adjusted net income excluding items increased to $477 million, or 72 cents a share, in comparison with $309 million, or 47 cents a share, a year earlier. The number surpassed the Thomson Financial consensus target of 67 cents a share and the company's previous guidance of 66 cents to 68 cents a share.

The company said net earnings -- including an after-tax charge of $46 million, or 7 cents a share, primarily for costs and asset impairments associated with the consolidation of certain commercial and manufacturing operations outside the U.S. -- were 65 cents a share, a 38% year-over-year increase.

Net sales for the company were $2.8 million, compared to $2.6 million in the year prior. Its bioscience business, in particular, saw a 20% increase in revenue, with sales of $1.2 billion, resulting from growth in products including Advate, a therapy for hemophelia A, antibody therapy products for immunodeficiencies and other plasma therapeutics.

Baxter also pointed to its highest quarterly vaccine sales driven by demand in Europe for preventives for tick-borne encephalitis (an infection of the brain caused by a virus) and meningitis.

Looking ahead, Baxter increased its earnings outlook for 2007 to $2.65 to $2.70 a share, excluding items, from previous guidance of $2.60 to $2.65 a share, on the same basis. It expects third-quarter earnings of 64 to 66 cents a share before items, with 3% to 4% sales growth.

Amid earnings, Baxter is issuing a recall on its recently manufactured or upgraded Colleague triple-channel infusion pumps. Wednesday night the company announced that the Food and Drug Administration classified it as a Class I recall. Baxter said the error, which is related to a buffer overflow when data or commands are entered too quickly, is associated with 16 serious injuries in the U.S. that have been reported to the company.

The recall affects 4,500 triple-channel pumps distributed between May 14 and June 20.

"Patient safety is our top priority. We identified this error early on in our U.S. remediation process and have taken decisive action to replace these pumps and correct the situation to the satisfaction of our customers," said Peter Arduini, president of Baxter's medication delivery business. "We're currently evaluating a correction, which we will implement following completion of our testing and FDA review."

Baxter was down $2.55, or 4.4%, to $56.05, in recent trading Thursday morning.