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Analyzing Baxter International’s Operational Performance

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Performances of advanced surgery and acute therapies businesses

Sales from Baxter International’s (BAX) advanced surgery business, which includes biological products and medical devices that are used in surgical procedures, increased from $178 million in the second quarter of 2017 to $204 million in the second quarter of 2018. This increase was driven by Baxter’s acquisitions of Recothrom and Preveleak from Mallinckrodt.

Sales from the acute therapies business, which includes continuous renal replacement therapies (or CRRT) and other organ support therapies, increased from $112 million in the second quarter of 2017 to $129 million in the second quarter of 2018 due to higher demand for Baxter’s CRRT systems.

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Operating expenses

The marketing and administrative expenses incurred by Baxter International increased from $630 million in the second quarter of 2017 to $681 million in the second quarter of 2018. Its research and development expenses also increased from $155 million in the second quarter of 2017 to $174 million in the second quarter of 2018.

Baxter’s operating income increased from $347 million in the second quarter of 2017 to $384 million in the second quarter of 2018.

Bottom line

Baxter International’s net interest expense decreased from $13 million in the second quarter of 2017 to $11 million in the second quarter of 2018. The company incurred net other expenses of $28 million in the second quarter of 2017. In comparison, it earned net other income of $31 million in the second quarter of 2018. Baxter’s income tax expenses, on the other hand, increased from $42 million in the second quarter of 2017 to $61 million in the second quarter of 2018.

Baxter International’s net income increased from $265 million in the second quarter of 2017 to $343 million in the second quarter of 2018, which translated into a net income per share of $0.63 in the quarter. In comparison, Baxter’s net income per share was $0.48 in the second quarter of 2017.

We’ll take a closer look at Baxter International’s valuation metrics, analyst ratings, and share buyback program in the next article.

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