The paragraph is from the introduction of Baxter International's Fourth Quarter 2024 Earnings Conference Call. The operator welcomes participants and explains that the call will remain in listen-only mode until the Q&A segment. The call is being recorded, and recorded material cannot be rebroadcast without permission. Clare Trachtman, Baxter's Senior Vice President and Chief Investor Relations Officer, introduces the call's speakers, including Brent Shafer, Joel Grade, and Heather Knight. They will discuss Baxter's fourth quarter and full-year 2024 results and provide a financial outlook for 2025. The presentation includes forward-looking statements that may differ materially due to risks and uncertainties discussed in their press release and SEC filings. Non-GAAP financial measures will also be used during the call.

The paragraph announces that a reconciliation of non-GAAP to GAAP financial measures is available in the investor presentation and earnings release on the company's website. It clarifies that continuing operations exclude certain Baxter businesses now reported as discontinued. Brent Shafer, the interim CEO, thanks the previous CEO, Joe Almeida, for his service and highlights the board's active search for a permanent CEO. Shafer committed to maintaining the company’s focus on priorities and consistent results during the transition. He noted the recent closure of the Vantive sale as a significant milestone in Baxter's transformation plan, which included a new operating model announced in January 2023.

The paragraph outlines the strategic progress and leadership transitions at Baxter. The Interim CEO discusses the benefits of a segment-driven approach for global opportunities and the recent divestiture of Baxter's non-core BioPharma solutions business in 2023. The CEO expresses pride in the company's strategic shifts and achievements and highlights the positive end to 2024 and optimistic outlook for 2025. The Interim CEO will collaborate closely with Baxter's leadership, including the new COO, Heather Knight, to sustain momentum, focus on innovation, and drive profitable growth.

Heather Knight, with a successful background in leading Baxter's Medical Products & Therapies segment, will oversee day-to-day operations across three segments including global commercial operations, R&D, supply chain, and medical and regulatory affairs. She has been instrumental in initiatives such as the launch of the Novum IQ infusion pump and leading recovery efforts at North Cove following Hurricane Helene. Her efforts resulted in resuming full production at the site. Knight expresses her commitment to spearheading a new chapter of accelerated performance for the company.

The paragraph outlines the achievements and future goals of Baxter. The company is focused on replenishing inventory, meeting customer and patient needs, and renegotiating key contracts with U.S. GPOs to improve pricing. The COO expresses eagerness to use her market knowledge and expertise to enhance collaboration and drive customer-focused innovation. The paragraph transitions to Joel Grade, who discusses Baxter's fourth-quarter and full-year 2024 financial performance. He highlights that the results exceeded expectations, with global sales from continuing operations increasing by 1% on a reported basis and 2% on a constant currency basis, outperforming the previous guidance of a low single-digit sales decline.

In the fourth quarter, Baxter saw positive sales across most product additions, despite the negative impact of Hurricane Helene, which reduced sales by about $110 million. Full-year sales from continued operations were $10.6 billion, a 3% increase, although the hurricane negatively affected growth by over 100 basis points. The fourth quarter's adjusted earnings per share exceeded guidance at $0.58, aided by strong sales and operational performance, though they declined 11% year-over-year due to the hurricane. For the full year, adjusted earnings per share rose by 11% to $1.89, benefiting from lower interest expenses and tax rates. The Medical Products & Therapies segment reported $1.3 billion in sales for the quarter and $5.2 billion for the year, surpassing growth expectations.

In the quarter, MPT's sales growth was about 9% adjusted for Julian's impact and 7% for the year, with Infusion Therapies & Technologies sales at $1 billion, decreasing 1%. The U.S. Infusion Systems portfolio saw significant growth due to the Novum IQ pump platform, while Nutrition sales grew globally, and IV Solutions sales declined due to Hurricane Helene. Advanced Surgery sales were $292 million, up 6% globally, with demand for hemostats and sealants. MPT's adjusted operating margin was 16.5%, better than expected. HST sales totaled $784 million, down 1%, with full-year sales at $3 billion, down 2%. The CCS Division sales were $504 million, up 3% globally, driven by 9% growth in the U.S. for the Patient Support Systems, benefiting from competitive wins and upgrades. Total U.S. capital orders for CCS rose 9% in the quarter and 15% for the year.

In the article's paragraph 8, the company reports exiting the year with a strong backlog and positive momentum heading into 2025. While the division experienced weaker sales internationally, particularly in China and France, the quarter's frontline care sales were $280 million, reflecting an 8% decline partly due to backlog reductions. Supply constraints and market exits also impacted sales by $15 million but are expected to improve by the first quarter of 2025. The division anticipates benefits from primary care market stabilization and new product launches later this year, supporting positive performance in 2025. Adjusted operating margins improved sequentially but declined year-over-year due to higher investments. In the Pharmaceuticals segment, fourth-quarter sales exceeded expectations at $643 million, with an 8% increase driven by strong demand in the U.S. The full-year sales reached $2.4 billion, growing by 7%. Specifically, Injectables & Anesthesia sales for the fourth quarter rose by 8%, aided by mid-teens growth in Specialty Injectables and recovery from order timing issues in the third quarter.

The paragraph discusses the performance and strategic initiatives of a pharmaceuticals segment. It highlights the impact of lower sales in inhaled anesthesia on overall performance, despite strong growth in drug compounding services. The adjusted operating margins improved sequentially but decreased compared to the prior year due to the effects of a recent MSA and increased expenses for upcoming launches. The team is focused on margin expansion by stabilizing the anesthesia business and improving the mix. Sales from other segments were $12 million for the quarter and $67 million for the year 2024. Additionally, the report mentions changes in financial reporting due to the reclassification of Kidney Care business results as discontinued operations, with corporate costs now included in unallocated corporate costs. The company plans to offset these expenses in 2025 through incomes from Vantive and cost containment efforts.

The paragraph discusses the company's financial performance and strategic investments. It highlights an aim to offset stranded costs and TSA income losses by 2027, noting a favorable fourth quarter adjusted gross margin of 44.5%, with a slight year-over-year decline. The decline is attributed to Hurricane Helene, increased manufacturing support costs, and manufacturing supply agreements. Positive contributions to the margin came from improvement programs and favorable product mix. The fourth quarter adjusted SG&A expenses increased due to select investments and discrete items, while lower stranded costs partially offset these expenses. The full-year SG&A stood at 25% of sales, while R&D spending saw a slight increase, focusing on innovation and product development.

In 2024, the company reported adjusted R&D spending of $510 million, representing 4.8% of sales. The adjusted operating margin was 15.2% for continuing operations, up 70 basis points sequentially but down 190 basis points from the previous year, partly due to unfavorable foreign exchange impacts. The full-year adjusted operating margin was approximately $1.5 billion, or 13.9% of sales. Net interest expense increased by $18 million to $90 million for the quarter but decreased by $98 million to $341 million for the year due to debt repayment efforts. Adjusted other non-operating income was $4 million for the quarter and $38 million for the year, showing a significant year-over-year increase due to lower foreign exchange losses. The tax rate for continuing operations for the quarter was 10.8%, resulting in a full-year rate of 17.5%, reflecting global tax optimization efforts. Adjusted earnings per share from continuing operations were $0.58 for the quarter, an 11% decrease from the prior year, with positive earnings contributions from new product launches and favorable pricing.

In the quarter, Baxter faced challenges from Hurricane Helene and unfavorable foreign exchange and interest expenses, impacting results by a total of $0.16 per share. Despite these, full-year 2024 adjusted earnings from continuing operations increased by 11% to $1.89 per share. For 2025, Baxter projects total sales growth of 5% to 6%, with a negative 200 basis point impact from foreign exchange, and $345 million anticipated from MSA revenues via Vantive. Excluding these factors, operational sales are expected to grow 4% to 5%, with a 50 basis point impact from exiting the IV Solutions business in China. By segment, MPT sales are expected to rise by 5% due to the Novum IQ launch and positive U.S. pricing, while HST segment sales should grow by 3%. Pharmaceutical sales are anticipated to increase by 5% to 6%, driven by growth in specialty injectables and drug compounding. Guidance excludes impacts from Kidney Care discontinued operations.

The paragraph provides an outlook on various financial aspects for the company. It anticipates a full-year adjusted operating margin of approximately 16.5%, with TSA income contributing around $125 million. Non-operating expenses are projected to be between $250 million and $270 million, with a tax rate of about 19.5%. The average diluted shares count is expected to be around 550 million, without considering share buybacks. Adjusted earnings per diluted share are projected to be between $2.45 and $2.55, with a $0.03 per share negative impact from foreign exchange. For 2025, the guidance accounts for minor impacts from Chinese tariffs, but not for potential tariffs from Mexico and Canada. Starting in 2025, certain costs will be reallocated to three segments. In the first quarter of 2025, sales growth is expected to be 3% to 4% on a reported basis, or 4% operationally, with a negative foreign exchange impact of over 200 basis points. MSA revenues are anticipated to be around $60 million.

The paragraph discusses the expected financial impacts on Baxter International due to the exit of China IoT Solutions and closing of Vantive. The exit is projected to reduce top-line growth by 60 basis points in Q1, and adjusted earnings per share are anticipated to be $0.47 to $0.50. The closure of Vantive on January 31 negatively affected earnings per share by $0.04 compared to an earlier closing date. The paragraph also includes a Q&A where Robert Marcus from JPMorgan asks about the financial outlook for 2025. Joel Grade responds, noting a conservative sales approach due to hurricane recovery and anticipates a stronger fourth quarter when compared to previous impacts from Helene. A digital replay of the call will be available on Baxter's website.

In the paragraph, the speaker discusses expectations for earnings and business performance. They anticipate a continued increase in earnings throughout the year, driven by ongoing work to address stranded costs and improvements in operations. The HST business is experiencing negative growth, particularly in frontline care, but there are signs of stabilization in Primary Care markets as they move into the new year. The company faced challenges in 2024 due to difficult comparisons with prior government orders and stimulus-related spending, which are not expected to persist in 2025. Additionally, efforts are being made to resolve supply constraints early in the year.

The paragraph discusses the current business outlook compared to the previous year. It highlights that the company expects fewer negative impacts this year and mentions upcoming new product launches. It also notes improvements in their order book and momentum, particularly in the CCS and PSS U.S. divisions, which contrast with last year's softness. These factors contribute to their positive outlook for recovery this year. Additionally, David Roman from Goldman Sachs acknowledges a leadership change and thanks the finance team for detailed information, referencing past external challenges like Hurricane Helene, inflation, and strategic transitions following acquisitions and divestitures.

In the paragraph, Joel Grade discusses the strategic direction and priorities for Baxter moving forward. He emphasizes the importance of customer-inspired innovation, focusing on targeted markets to drive growth, optimizing the company's structure following the sale of the Kidney business, and achieving commercial excellence through consistent execution. These efforts are part of Baxter’s transformational progress and will be further detailed during the company's Capital Markets Day after a new CEO is appointed.

The paragraph discusses the company's focus on disciplined capital allocation to drive growth both organically and inorganically while ensuring value is returned to shareholders. Brent Shafer expresses appreciation for the organization's efforts under challenging projects and emphasizes the shift towards growth through innovation and commercial execution. The company's board is actively searching for a new CEO, seeking candidates with relevant experience and vision to lead the company forward. The organization has undergone significant restructuring, creating opportunities for future success.

In the paragraph, Joel Grade discusses the company's capital structure following the sale of Vantive. He mentions the commitment to achieving a target leverage ratio of 3x net debt-to-EBITDA by the end of 2025 and feels confident about reaching this goal in the latter half of the year. The company has already paid down nearly $3 billion in debt, including a delayed raw turbo taken out in early 2024 and a portion of a $1 billion 2026 term loan. Joel emphasizes the focus on free cash flow generation to achieve the target leverage, which would enable the company to shift capital allocation from primarily debt repayment to investing in organic growth, potential acquisitions, and restarting the share buyback program.

The paragraph discusses new product investments and the product pipeline across various business lines. Joel Grade highlights innovation within the company's portfolio, mentioning the successful launch of the Novum pump in Heather's business and FLC, which is expected to drive growth into 2025. In the pharma sector, the company aims to accelerate new product launches, with nearly 10 launched in the past year and plans for more in 2025, contributing to ongoing growth. The conversation ends with Matt Miksic indicating interest in discussing HST further.

The paragraph discusses the positive environment for capital investments in the healthcare sector, focusing on patient support devices and hospital equipment like fleets and beds. Joel Grade highlights a 15% growth in capital orders for PSS in the U.S., particularly in the second half of the year, which positions the company to maintain strong momentum into 2025. Grade also mentions the success of the Progressive Plus model and new product developments that are expected to continue driving growth. Brent Shafer adds that improvements in the U.S. commercial organization and processes are contributing positively to the business. The overall outlook is optimistic, with expectations of continued progress and competitive wins.

In the paragraph, Vijay asks Joel about TSA and margin improvements, specifically noting a 250 basis point increase year-on-year. Joel explains the margin changes, starting with a current margin of 13.9% and detailing how it could reach a target of 16.5%. He breaks down the components contributing to this improvement: a 40 basis point impact from Helene in 2024, 220 basis points from reduced stranded costs, and 100 basis points from operational improvements and product mix optimizations. These improvements include changes in pricing, enhancements to the injectables portfolio, growth in advanced surgery, and new product launches. Joel also notes that some costs and MSAs could move in the opposite direction, affecting margins negatively.

The paragraph discusses the financial impact of various factors on a company's performance. It highlights a 40 basis point impact from stranded costs and a 60 basis point impact from dilution, affecting gross margins. Despite these challenges, the company managed to increase its margin from 13.9% to 16.5%. Regarding the quarter's performance, Brent Shafer mentions a 100 basis point headwind from Hurricane Helene, resulting in an approximate $110 million top-line and $0.1 bottom-line impact. However, the company recovered more swiftly than expected, particularly with its Northcove site's IV Solutions, bringing in an additional $45 million. Heather Knight emphasizes strong performance in the infusion therapies and pump platform, noting the successful launch of Novum IQ.

The paragraph discusses the success of Baxter's newly developed infusion pump platform, highlighting a 50% growth in their infusion business in 2024 and expecting strong performance in 2025. The platform's success is attributed to its innovative hardware, software, and high customer satisfaction, particularly with implementation and EMR integration. Baxter captured significant market share in 2024 and anticipates further competitive gains and the launch of complementary digital suites. The company is on track for a strong 2025, with stability following Hurricane Helane's recovery, and Brent Shafer acknowledges Heather and her team's efforts in this recovery.

The paragraph discusses the response to a disaster situation that affected a saline manufacturing plant, highlighting the effective recovery efforts and appreciation for those involved, especially Heather. Travis Steed from Bank of America Securities asks about the impact of the hurricane on the saline business and customer behavior. Heather Knight explains that the fast recovery from the disaster was better than expected, and most customers have not added a second source because the company has returned to pre-hurricane production levels. She mentions new U.S. contracts starting in early 2023 and expresses satisfaction with customer loyalty and the company's demonstrated resiliency and investment in its global network during the crisis.

In the paragraph, Baxter discusses its ongoing investments in its platform and IV solutions due to their importance in healthcare. Travis Steed inquires about the company's strategies for free cash flow generation, specifically questioning when they expect to achieve an 80% free cash flow conversion. Joel Grade responds, explaining that they typically aim for an 80% conversion of net earnings to free cash flow, but project a lower rate in the low 70s for this year due to first-quarter impacts. These include expenses incurred from Hurricane Helene that will be settled in Q1 and inventory restocking, which will initially hinder cash flow. However, he expects a return to normal cash conversion in the subsequent quarters and improvement in the future.

The paragraph discusses a conversation involving Brent Shafer and Lawrence Biegelsen regarding Baxter's leadership considerations and company guidance. Brent explains the pros and cons of choosing an internal versus external candidate for the CEO position. An internal candidate has detailed knowledge of the company, while an external candidate offers a fresh perspective but needs time to understand the complex business. The Board prioritizes finding the right fit over speed. Lawrence also asks Brent about how he evaluated company guidance as interim CEO and the process for the permanent CEO to re-evaluate it.

The paragraph features a discussion between Brent Shafer and Lawrence Biegelsen about the potential impact of a new CEO on the company's direction and investment priorities. Biegelsen raises concerns about the new CEO wanting to change guidance and investment focus. Shafer, serving as the interim CEO, acknowledges this possibility but emphasizes that the current board is familiar with the business's three-year plan and its drivers. Shafer expresses confidence in the existing strategies and suggests that any new leader would build upon them. Joel Grade highlights the opportunity for a new leader to capitalize on recent strategic initiatives and guide a company poised for success. Shafer adds that the organization has been deeply involved in challenging project work, facilitating significant changes like company separations and spin-offs.

The paragraph discusses the organization's focus on growth and innovation, emphasizing the leadership's role in driving profitable growth following a period of clean-up. Lawrence Biegelsen thanks the organization for addressing questions, and Danielle Antalffy from UBS enquires about the pipeline drivers for 2025 and 2026, specifically regarding product launches in pharma. Joel Grade responds by highlighting key drivers for 2025 guidance, including strong growth in MPT, excitement about the Novum product launches, expected single-digit growth in advanced surgery, and increased penetration of the clinical nutrition business into the ASC space, alongside the impact of GPO pricing.

The paragraph discusses the recovery and progress in various business areas, including HST, pharma innovations, and anesthesia stabilization. Key drivers include GPO pricing, new product launches, supply chain improvements, and cost reduction strategies. There is a focus on future product launches and creating a connected ecosystem in hospitals to enhance clinical decision support and personalized patient care. Heather Knight highlights the continued development of the pump platform and successful pilots post-Hillrom acquisition, with new product launches planned for 2025 and early 2026. Momentum in Progressive Plus and PFS is also noted, with these initiatives helping to gain market share.

The paragraph discusses the excitement in the Pharma industry due to a high rate of new product launches, particularly complex molecules, which are expected to improve business margins. Investments in alternate sites in the U.S., made two years prior, are now showing positive results, especially in the nutrition portfolio. These successful investments indicate continued growth and momentum heading into 2025 and 2026. Brent Shafer emphasizes the focus on accelerating innovation and product development to bring solutions to market more quickly. The paragraph concludes with the end of a conference call, thanking participants for their involvement.

This summary was generated with AI and may contain some inaccuracies.