Baxter to Recall Pumps - Analyst Blog

Baxter International Inc. (BAX) reported that it will recall COLLEAGUE infusion pumps in the U.S. due to remediation of these devices. The decision is based on the judgment of the U.S. Food and Drug Administration (FDA) pronounced in June 2006.

In June 2006, Baxter entered into a consent decree with FDA under which the company has been pursuing remediation of COLLEAGUE infusion pumps. The company will work with the FDA in ensuring that patients get proper replacement pumps based on their medical needs. Baxter plans to exchange its Sigma SPECTRUM infusion pumps for COLLEAGUE infusion pumps without charging customers anything.

Baxter expects to record a pre-tax special charge of $400 to $600 million in the first quarter of fiscal 2010 due to this product recall. However, the company has kept its earnings per share guidance for the year intact.

Baxter recently reported first quarter fiscal 2010 earnings per share of 93 cents, in line with the Zacks Consensus Estimate and higher than the year-ago figure of 83 cents.

Net sales in the first quarter increased 11% year over year to $3.1 billion. Excluding the favorable foreign currency translation, net sales increased 5% year over year. Baxter has registered sales growth across all business segments.

BioScience revenues increased 9% year over year to $1.4 billion. Growth was due to higher sales of recombinant products (including ADVATE), biosurgery products, and shipments of the H1N1 pandemic vaccine, CELVAPAN.

Medication Delivery sales increased 14% year over year to $1.2 billion. Renal sales increased 13% year over year to $584 million. Growth in both these segments can be attributed to strong sales of peritoneal dialysis, anesthesia products, the acquisition of continuous renal replacement therapy business, intravenous and nutritional therapies, and global injectables.

Baxter is a leading global medical products and services company that develops, manufactures and markets products to treat hemophilia, kidney disease, infectious diseases, etc. Baxter’s main competitors include Becton, Dickinson and Company (BDX) and Johnson & Johnson (JNJ).