Baxter International Inc.BAX reported third-quarter 2026 adjusted earnings per share (EPS) from continuing operations of 58 cents, which topped the Zacks Consensus Estimate of 51 cents by 13.7%. The bottom line declined 16% from the year-ago quarter's level, primarily due to a higher effective tax rate.
On a GAAP basis, the company reported EPS from continuing operations of 57 cents compared with a loss of 10 cents per share in the prior-year quarter.
Shares of BAX gained 3.3% in pre-market trading today. Year to date, the company's shares have climbed 33.2%, outperforming the industry's fall of 18.9% and the broader S&P 500 Index's increase of 12.4%.
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BAX's Revenue Mix Shows Broad-Based Growth
Revenues from continuing operations totaled $2.98 billion, up 5% year over year on both a reported and organic basis. The top line surpassed the Zacks Consensus Estimate of $2.90 billion by 2.5%. Growth was driven by gains across all segments and divisions, particularly Infusion Therapies & Platforms and Advanced Surgery.
U.S. sales from continuing operations totaled $1.60 billion, up 3% on a reported basis and 5% organically. International sales amounted to $1.38 billion, reflecting an increase of 7% on a reported basis and 6% organically.
International growth outpaced domestic performance on a reported basis, supporting the company's overall revenue expansion.
Baxter's Medical Products & Therapies Sales Rise
The Medical Products & Therapies segment includes the Infusion Therapies & Platforms and Advanced Surgery divisions.
Sales in this segment totaled $2.10 billion, up 6% year over year on both a reported and organic basis. Growth reflected strength in Infusion Systems, Drug Compounding and IV Solutions, along with continued global demand for Advanced Surgery products. Lower Injectables sales partially offset the increase. Segment operating income increased 7% to $439 million. Operating margin expanded 10 basis points (bps) to 20.9%.
Infusion Therapies & Platforms sales totaled $1.76 billion, up 5% on a reported basis and 4% organically. Advanced Surgery revenues amounted to $342 million, increasing 12% on both a reported and organic basis. Performance benefited from strong demand for hemostats and sealants, effective commercial execution across regions and steady procedure volumes.
BAX's Healthcare Systems & Technologies Gains Momentum
Healthcare Systems & Technologies includes the Care & Connectivity Solutions and Front Line Care divisions.
Total segment sales were $806 million, up 4% year over year on both a reported and organic basis. Segment operating income increased 14% to $139 million, with operating margin expanding 140 bps to 17.2%.
Care & Connectivity Solutions revenues totaled $498 million, increasing 5% on both a reported and organic basis. Growth was driven by Global Surgical Solutions and Patient Support Systems, supported by continued execution against the U.S. backlog and strength across international markets.
Front Line Care revenues amounted to $308 million, up 3% on both a reported and organic basis. Strong demand for Connex 360 supported Connected Monitoring, while planned global product exits partially offset growth.
Baxter's Adjusted Margins Remain Under Pressure
Adjusted gross profit was $1.14 billion, up 2% year over year. Adjusted gross margin contracted 110 bps to 38.3% from 39.4% in the prior-year quarter.
Selling, general and administrative expenses amounted to $730 million, up 3% year over year. Research and development expenses totaled $125 million, increasing 6%.
Adjusted operating income increased 2% to $432 million. However, adjusted operating margin contracted 40 bps to 14.5%, indicating continued profitability pressure despite higher sales.
BAX's Cash Flow Supports Debt Reduction
Cumulative net cash from operating activities at the end of third-quarter 2026 was $1.07 billion compared with $355 million a year ago.
During the quarter, Baxter completed a $600 million cash tender offer, retiring $864 million of debt and accelerating its deleveraging initiatives.
Management continues to target net leverage of approximately 3 times by the end of 2026 while maintaining an investment-grade credit rating. Near-term capital priorities include debt repayment and organic investments in core platforms, innovation and productivity-enhancing initiatives.
Baxter Raises Its 2026 Outlook
Baxter raised its sales growth and adjusted earnings guidance for 2026.
Sales from continuing operations are now expected to grow 4-5% on a reported basis, compared with the previous projection of 3-4%. Organic sales growth is anticipated in the 3-4% range, up from the earlier expectation of 2-3%.
Adjusted EPS from continuing operations is now projected between $2.05 and $2.15, compared with the previous range of $1.95-$2.15.
Medical Products & Therapies is expected to deliver low-to-mid-single-digit organic sales growth, an improvement from the prior low-single-digit growth outlook. Healthcare Systems & Technologies is projected to maintain low-single-digit organic growth.
Baxter International Inc. Price, Consensus and EPS Surprise
Baxter International Inc. price-consensus-eps-surprise-chart | Baxter International Inc. Quote
BAX's Zacks Rank & Stocks to Consider
Currently, Baxter carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are OPKO HealthOPK, Intuitive SurgicalISRG and Globus MedicalGMED.
OPKO Health, currently flaunting a Zacks Rank #1 (Strong Buy), reported a second-quarter 2026 adjusted loss of 1 cent per share, which surpassed the Zacks Consensus Estimate by 87.5%. Revenues of $163.6 million beat the Zacks Consensus Estimate by 24.7%. You can see the complete list of today's Zacks #1 Rank stocks here.
OPK has an estimated earnings growth rate of 23.3% for 2026. The company's earnings beat estimates in each of the trailing four quarters, the average surprise being 95.1%.
Intuitive Surgical, currently carrying a Zacks Rank #2 (Buy), reported third-quarter 2026 adjusted EPS of $3.00, which beat the Zacks Consensus Estimate by 13.6%. Revenues of $3.05 billion surpassed the Zacks Consensus Estimate by 4.9%.
Intuitive Surgical has a long-term estimated growth rate of 14.9%. ISRG's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.1%.
Globus Medical, currently carrying a Zacks Rank #2, reported a second-quarter 2026 adjusted EPS of $1.34, which surpassed the Zacks Consensus Estimate by 19.6%. Revenues of $789.6 million beat the Zacks Consensus Estimate by 0.4%.
GMED has an estimated long-term earnings growth rate of 12.4%. The company's earnings beat estimates in each of the trailing four quarters, the average surprise being 27.9%.
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This article originally published on Zacks Investment Research (zacks.com).
