Baxter International Inc. (NYSE:BAX) today reported solid financial results for the third quarter of 2009, and provided its fourth quarter and updated full-year 2009 financial outlook.

Net income grew 12 percent to $530 million from $472 million reported in the third quarter of 2008. Earnings per diluted share of $0.87 advanced 18 percent from $0.74 per diluted share reported in the prior-year period. The third quarter results include after-tax special charges totaling $69 million (or $0.11 per diluted share) primarily for fixed asset write-offs related to the discontinuation of the company’s SOLOMIX drug delivery system in development, and planned retirement costs associated with the SYNDEO PCA Syringe Pump. The company recorded after-tax special charges in the third quarter of 2008 totaling $91 million (or $0.14 per diluted share).

On an adjusted basis, excluding special charges in both years, Baxter’s net income of $599 million increased 6 percent in the third quarter from $563 million reported in the third quarter last year. Adjusted earnings per diluted share of $0.98 increased 11 percent from $0.88 per diluted share reported in the prior-year period, and compares favorably with the guidance the company previously provided of $0.95 to $0.97 per diluted share. This financial performance was the result of continued margin expansion, expense leverage and benefits derived from the company’s ongoing share repurchase program.

Baxter’s global sales of $3.1 billion were flat compared to the third quarter last year. Excluding the impact of foreign currency, Baxter’s worldwide sales increased 6 percent. Sales within the United States increased 5 percent to $1.3 billion in the third quarter, while international sales declined 4 percent to $1.8 billion. Excluding the impact of foreign currency, Baxter’s international sales grew 7 percent.

Medication Delivery sales of $1.2 billion increased 1 percent (and excluding foreign currency increased 7 percent). Renal sales of $576 million declined 3 percent (and excluding foreign currency increased 4 percent). Contributing to these results was growth across multiple product categories, including products used in peritoneal dialysis (PD) treatment, intravenous therapies, injectable drugs and anesthesia products.

BioScience revenues totaled $1.4 billion in the third quarter, which represents a 2 percent increase over the prior-year period. Excluding foreign currency, BioScience sales advanced 8 percent, reflecting gains across several core franchises. Key drivers of sales performance include continued growth of recombinant therapies, including ADVATE [Antihemophilic Factor (Recombinant), Plasma/Albumin-Free Method] for the treatment of hemophilia, antibody therapies and several specialty plasma therapeutics, as well as biosurgery products.

“We continue to leverage the benefits derived from our diversified healthcare model to achieve solid financial performance, despite a challenging global macro-economic environment,” said Robert L. Parkinson, Jr., chairman and chief executive officer. “Given our strong financial position, geographic presence, and the medically-necessary nature of Baxter’s products, Baxter is well-positioned to capitalize on opportunities across a broad array of therapeutic areas.”

Nine-Month Results

For the first nine months of 2009, Baxter’s net income totaled $1.6 billion, an increase of 13 percent. Earnings per diluted share of $2.66 advanced 18 percent over $2.26 per diluted share reported in the prior-year period. On an adjusted basis, excluding special items from both years, Baxter’s net income of $1.7 billion increased 8 percent over $1.6 billion reported for the same period last year. Adjusted earnings per diluted share for the nine-month period increased 12 percent to $2.77 per diluted share, from $2.47 per diluted share reported in 2008.

Baxter’s global sales in the first nine months of the year totaled $9.1 billion, and declined 1 percent from $9.2 billion reported in the prior-year period. Excluding the impact of foreign currency, sales growth for the first nine months of 2009 was 7 percent. Sales within the United States totaled $3.9 billion, an increase of 6 percent over the same period last year, while international sales declined 6 percent to $5.2 billion. Excluding the impact of foreign currency, Baxter’s international sales grew 8 percent.

Recent Highlights

Baxter has achieved a number of scientific and commercial milestones over the last several months, including:

• The commercial launch of HYLENEX recombinant (hyaluronidase human injection) in the United States for use in pediatric rehydration. HYLENEX, an enzyme, allows fluids to be administered under the skin (subcutaneously) rather than through a vein. This allows for rapid treatment initiation and delivery of intravenous (IV)-like fluid rates, which can help lead to successful rehydration of children in a less invasive manner.
• Marketing authorization from the European Commission for CELVAPAN H1N1 pandemic vaccine using Baxter’s Vero cell technology. CELVAPAN H1N1 is the first cell culture-based and non-adjuvanted pandemic influenza vaccine to receive marketing authorization in the European Union.
• Completion of the seasonal influenza Phase III confirmatory study in healthy adults in the United States. The company expects final study results to be available by the end of this year, to support filing for regulatory approval in the United States in the first half of 2010.
• Initiation of a Phase III study evaluating the use of ARTISS [Fibrin Sealant (Human)] in facial surgery in the United States. Currently, ARTISS is the first and only slow-setting fibrin sealant indicated for use in adhering skin grafts in adult and pediatric burn patients. ARTISS was developed using Baxter’s proven fibrin sealant technology platform and is the newest agent in the company’s expanding biosurgery portfolio.
• Filing an Investigational Device Exemption (IDE) with the U.S. Food and Drug Administration (FDA) to begin a clinical study to collect safety and effectiveness data required for a 510(k) application for a new home hemodialysis system.
• Completion of the acquisition of certain assets related to Edwards Lifesciences Corporation’s hemofiltration product line, also known as Continuous Renal Replacement Therapy (CRRT). CRRT provides a method of continuous yet adjustable fluid removal that can gradually remove excess fluid and waste products that build up with the acute impairment of kidney function, and is usually administered in an intensive care setting in the hospital.

Fourth Quarter and Full-Year 2009 Outlook

Baxter also announced today its guidance for fourth quarter 2009 and updated its guidance for the full year.

For the fourth quarter of 2009, Baxter expects sales growth, excluding the impact of foreign currency, of 6 to 8 percent. Based on the company’s outlook for foreign exchange rates, the company expects reported sales including the impact of foreign currency to increase 8 to 10 percent over the prior-year period. Baxter also expects to achieve earnings per diluted share of $1.02 to $1.04, before any special items, in the fourth quarter.

For the full year, Baxter expects sales growth, excluding the impact of foreign currency, to increase 7 to 8 percent. Based on the company’s outlook for foreign exchange rates, Baxter expects reported sales growth to increase approximately 0 to 1 percent. In addition, the company expects earnings per diluted share of $3.79 to $3.81, before any special items, and continues to expect cash flow from operations to total more than $2.6 billion.

A webcast of Baxter's third quarter 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 October 15, 2009. Please visit Baxter's website for more information regarding this and future investor events and webcasts.

Baxter International Inc., through its subsidiaries, develops, manufactures and markets products that save and sustain the lives of people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions. As a global, diversified healthcare company, Baxter applies a unique combination of expertise in medical devices, pharmaceuticals and biotechnology to create products that advance patient care worldwide.

This release includes forward-looking statements concerning the company’s financial results and outlook for 2009. 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 statements: demand for and market acceptance risks for new and existing products, such as ADVATE, and other technologies; future actions of regulatory bodies and other governmental authorities, including the FDA and foreign counterparts, that could delay, limit or suspend product development, manufacturing or sales or result in sanctions; product quality or patient safety concerns leading to product recalls, withdrawals, launch delays, litigation, or declining sales; additional legislation or regulation which may affect pricing, reimbursement and rebate policies of government agencies and private payers or other elements of the company’s business; production yields, regulatory clearances and customers’ final purchase commitments with respect to the company’s pandemic vaccine; product development risks; inventory reductions or fluctuations in buying patterns by wholesalers or distributors; the impact of geographic and product mix on the company's sales; the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies; the availability of acceptable raw materials and component supply; the ability to enforce company patents; patents of third parties preventing or restricting the company’s manufacture, sale or use of affected products or technology; any impact of the commercial and credit environment on Baxter and its customers; foreign currency fluctuations and other risks identified in the company’s most recent filing on Form 10-K and other Securities and Exchange Commission filings, all of which are available on the company's website. The company does not undertake to update its forward-looking statements. Financial schedules are attached to this release and available on the company’s website.