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TheStreet Open House

Baxter Enhances Renal Therapies Portfolio With Acquisition Of Gambro

Stocks in this article: BAX

More than two million patients globally are on some form of dialysis, with dialysis treatment rates increasing more than 5 percent annually in part due to the rising rates of diabetes and hypertension. Additionally, healthcare providers are seeking comprehensive dialysis offerings, which vary by region, to serve patients based on clinical need, existing infrastructure and reimbursement policy.

The transaction will provide a number of long-term growth opportunities for Baxter around the world. With a broad and complementary dialysis product portfolio, Baxter can accelerate product sales in established markets such as Europe, where Gambro has an extensive footprint. Baxter can also expand Gambro’s reach in high-growth regions of Latin America and Asia-Pacific, where Baxter has steadily grown its peritoneal dialysis (PD) business. In addition, Baxter will also build upon its pipeline of investigational home HD and automated PD systems by adding Gambro’s highly innovative and next-generation monitors, dialyzers, devices and dialysis solutions.

Excluding special items, the company expects this transaction to be dilutive to adjusted earnings per diluted share by $0.10 to $0.15 in 2013 and neutral to modestly accretive to adjusted earnings per diluted share in 2014. Excluding the impact of special items and estimated amortization of intangible assets, the company expects this transaction to be neutral to adjusted earnings per diluted share in 2013, and accretive in 2014 by $0.20 to $0.25 per diluted share. The company expects this transaction to be increasingly accretive to adjusted earnings per diluted share beyond 2014 and, in addition to an array of commercial synergies, projects opportunities for annual cost synergies totaling approximately $300 million by 2017. Baxter now expects over its five-year long-range financial plan to increase sales (excluding the impact of foreign currency) by 7 to 8 percent and to grow adjusted earnings per diluted share in the 8 to 10 percent range, both on a compounded annual basis.

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