Baxter International Q1 2024 Earnings Report

Baxter International EPS Results

• Actual EPS: $0.65
• Consensus EPS: $0.61
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: $0.59

Baxter International Revenue Results

• Actual Revenue: $3.59 billion
• Expected Revenue: $3.55 billion
• Beat/Miss: Beat by +$36.33 million
• YoY Revenue Growth: -1.60%

Baxter International Announcement Details

• Quarter: Q1 2024
• Date: 5/2/2024
• Time: Before Market Opens
• Conference Call Date: Thursday, May 2, 2024
• Conference Call Time: 8:30AM ET

Baxter International (NYSE:BAX) is a global healthcare company that develops and supplies medical products and technologies used in hospitals, outpatient facilities, physician offices and other care settings. Its offerings include intravenous therapy products and infusion systems, injectable medications and drug-compounding technologies, surgical products, patient-monitoring systems, respiratory-care equipment, and products used in hospital beds and connected-care environments.

The company serves healthcare providers and patients in numerous countries, with operations and customers across North America, Europe, Asia-Pacific, Latin America, the Middle East and Africa. Baxter’s products are designed to support medication delivery, fluid management, clinical nutrition, surgery, patient monitoring and other essential aspects of care.

Founded in 1931, Baxter has expanded through the development and acquisition of medical technologies and healthcare businesses. The company was historically also a major provider of products for kidney-care and renal-therapy services, but it announced the sale of its Kidney Care business, now known as Vantive, as part of a strategy to focus on its core hospital and medical-product operations.

Baxter International Q1 2024 Earnings Call Transcript

Key Takeaways

• Baxter beat Q1 guidance with 2% reported and 3% constant-currency sales growth and $0.65 adjusted EPS versus prior guidance of $0.59–$0.62.
• Medical Products & Therapies grew 6% on pricing and volume gains, highlighted by FDA clearance of the connected NovumIQ large-volume infusion pump platform set to launch in H2 2024.
• Pharmaceuticals revenue rose 11%, driven by five new U.S. injectable launches in anti-infective and antihypertensive areas and strong international drug-compounding demand.
• Kidney Care sales increased 3% (4% CC) on pricing benefits and acute therapy demand, offset by product/market exits, reduced Chinese volumes from procurement changes, and ongoing separation planning.
• Healthcare Systems & Technologies declined 9% due to order timing and operational execution issues, with management targeting a performance turnaround and meaningful improvement in H2 2024.

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to Baxter International's First Quarter 2024 Earnings Conference Call. Your lines will remain in a listen-only mode until the question-and-answer segment of today's call. At that time, if you have a question, you'll need to press the star one key on your touch-tone phone. If anyone should require assistance during the conference, please press star, then zero on your touch-tone phone. As a reminder, this call is being recorded by Baxter and is copyrighted material. It cannot be recorded or rebroadcast without Baxter's permission. If you have any objections, please disconnect at this time. I would now like to turn the call over to Ms. Clare Trachtman, Senior Vice President, Chief Investor Relations Officer at Baxter International. Ms. Trachtman, you may begin.

[Clare Trachtman, SVP and Chief Investor Relations Officer at Baxter International Inc.]

Good morning, and welcome to our First Quarter 2024 Earnings Conference Call. Joining me today are Joe Almeida, Baxter's Chairman and Chief Executive Officer, and Joel Grade, Baxter's Executive Vice President and Chief Financial Officer. On the call this morning, we will be discussing Baxter's first quarter 2024 results, along with our financial outlook for the second quarter and full year 2024. With that, let me start our prepared remarks by reminding everyone that this presentation, including comments regarding our financial outlook for the second quarter and full year 2024, new product developments, including the potential impact of recent regulatory clearances, the status and potential impact of our ongoing strategic and recent pricing actions, business development, regulatory matters, and the macroeconomic environment, including commentary on improving supply chain conditions and evolving customer capital spending trends, contain forward-looking statements that involve risks and uncertainties.

[Clare Trachtman, SVP and Chief Investor Relations Officer at Baxter International Inc.]

Of course, our actual results could differ materially from our current expectations. Please refer to today's press release and our SEC filings for more detail concerning factors that could cause actual results to differ materially. In addition, on today's call, non-GAAP financial measures will be used to help investors understand Baxter's ongoing business performance. A reconciliation of the non-GAAP financial measures being discussed today to the comparable GAAP financial measures is included in the accompanying investor presentation and also available in our earnings release issued this morning, which are both available on our website. Now I'd like to turn the call over to Joe. Joe?

[José Almeida, Chairman and CEO at Baxter International Inc.]

Thank you, Clare, and good morning, everyone. We appreciate you taking the time to join us today. I will begin with an overview of our first quarter results and then provide some updates regarding our ongoing strategic transformation. Joel Grade will follow with a closer look at our financials as well as our outlook for the second quarter and the remainder of the year. Then, as always, we'll open it up to your questions. Baxter started the year on a positive note, delivering solid results which exceeded previously issued guidance on both the top line and bottom line. First quarter sales from continuing operations were 2% on a reported basis and 3% at constant currency rates. This compares to our original outlook of approximately 1% reported and 1%-2% constant currency.

[José Almeida, Chairman and CEO at Baxter International Inc.]

Overall revenue growth was driven by positive demand and pricing for a broad range of Baxter products. On the bottom line, adjusted earnings per share for continued operations of $0.65 came in above our prior guidance range of $0.59-$0.62 per share. This performance was fueled by top-line results, combined with our intense focus on driving improved supply chain execution across our manufacturing network. Overall, performance is clearly benefiting from the streamlining and strategic clarity afforded by our newly implemented operating model as we leverage the advantages of improved visibility globally, increased accountability, and functional verticalization. Crisp execution of our margin improvement initiatives, along with a more stable macroeconomic backdrop, is driving enhanced performance across our Integrated Supply Chain operations. And as always, Baxter benefits from its enduring emphasis on essential healthcare needs in combination with the diversity and durability of our portfolio.

[José Almeida, Chairman and CEO at Baxter International Inc.]

This is clearly a factor in our overall performance this quarter as the strength of our results across Medical Products and Therapies, Pharmaceuticals, and Kidney Care helped offset underperformance in our Healthcare Systems and Technologies segment. Taking a closer look at our performance by segment, Medical Products and Therapies, or MPT, delivered first quarter growth of 6% in both reported and constant currency rates. Growth was fueled by both pricing and volume gains amid stable market conditions globally. We believe we're well-positioned to build on our momentum in MPT with the recent U.S. FDA clearance of our leading-edge Novum IQ large volume infusion pump and Dose IQ safety software. This integrated platform, which also includes our previously cleared syringe pump, comprises a single connected intelligent system offering a broad range of benefits for nurses, physicians, and other clinicians, as well as the patients who depend on them.

[José Almeida, Chairman and CEO at Baxter International Inc.]

Our Novum IQ technology is now available to order in the U.S. as part of our expanding portfolio of connected care solutions. Customers are excited about the Novum IQ platform's ability to advance connectivity and intelligent infusion therapy, and the team is already engaged with many customers interested in this new technology. In fact, a large existing Novum IQ syringe and a Spectrum customer will begin implementing the full Novum IQ platform in the next few months. Just last week, we secured a 100% competitive account conversion to Baxter pumps with a top-tier multi-state health system. As you may remember, Novum LVP clearance was not factored in our original FY 2024 outlook.

[José Almeida, Chairman and CEO at Baxter International Inc.]

Given the time of the approval, we expect the contribution from Novum launch to be more notable in the second half of the year, even as it displaces, to some degree, sales of our Spectrum IQ pump, and the outlook we are sharing today reflects this expected benefit, along with the outperformance in the first quarter. Also, in late-breaking MPT news last week, we received FDA approval of an expanded indication for Clinolipid, our mixed oil lipid emulsion that provides a source of calories and essential omega fatty acids for parenteral nutrition patients. Clinolipid is now indicated for use in pediatric patients, including preterm and term neonates. This is an example of our continued commitment to meeting the nutritional needs of patients of all ages and is expected to be a positive addition to our nutrition portfolio.

[José Almeida, Chairman and CEO at Baxter International Inc.]

Our Pharmaceuticals segment achieved a growth of 11% in the first quarter at both reported and constant currency rates. Results for the quarter reflect the benefit from our recent new product launches in the U.S., including 5 new injectables in key therapeutic areas, including anti-infective and antihypertensive medications. Together, these new product introductions demonstrate our continued focus on innovation and delivering differentiated products that address areas of need with proprietary, ready-to-use presentations that can simplify the preparation process and support patient safety. Our performance in this segment was also strengthened by heightened demand outside the U.S. for our drug compounding services. This overall momentum more than offset declines from inhaled anesthesia products. Our Kidney Care segment delivered 3% growth at reported rates and 4% at constant currency.

[José Almeida, Chairman and CEO at Baxter International Inc.]

Growth was driven by pricing benefits as well as a strong demand for our Acute Therapies portfolio and steady gains of peritoneal patients in nearly all markets. Growth in this business was tempered by the impact from select product and market exits and reduced volumes in China due to government-based procurement initiatives and a lower patient census. As noted, positive results across these three segments helped offset disappointing performance in Healthcare Systems and Technologies, or HST, which declined 9% at both reported and constant currency rates. This decline was driven to some extent by order timing as well as operational factors. Our new operating model has been vital in helping us isolate underlying challenges affecting this segment. Decisive steps are already underway to address and enhance performance in this business and help realize our full opportunity in this space.

[José Almeida, Chairman and CEO at Baxter International Inc.]

These include forging a deeper partnership between the commercial and enterprise accounts teams focused on the value and quality of the broader portfolio, implementing new tools and processes focused on increasing visibility to historical purchases, creating greater differentiation in customer engagement practices and related measures. We expect these steps collectively to improve operational performance for HST, particularly in the second half of the year. I remain excited about HST and the positive contribution it is expected to deliver to the overall Baxter portfolio. The team is working incredibly hard to address this challenge and turn around performance in this business, and I'm grateful for their dedication and efforts. Before I pass it to Joel, I will share an update on our proposed Kidney Care separation.

[José Almeida, Chairman and CEO at Baxter International Inc.]

As we announced in a March 4, 8-K filing, we're now pursuing dual pathways in the proposed separation of this business, including potentially selling the business to a private equity investor. The ultimate path forward will be determined consistent with our objective to accelerate performance for both entities and maximize shareholder value. We currently expect the separation to take place in the second half of 2024. Looking ahead, I want to express my excitement about Baxter's overall trajectory. Our life-sustaining mission is, as always, our North Star, and our colleagues around the world make it come alive with a tenacious focus on execution and operational excellence. Our progress against our strategic transformation initiative showcases our ability to deliver on what we set out to accomplish.

[José Almeida, Chairman and CEO at Baxter International Inc.]

The benefits are clear in our overall outperformance for the quarter, our building momentum, our recent innovation milestones, and the progress of our proposed Kidney Care separation journey. We will continue to maintain the pace and intensity of our transformation and take the necessary steps so that all of our segments are well-positioned to power our performance going forward. I will now pass it to Joel to provide more detail on our performance and outlook.

[Joel Grade, EVP and CFO at Baxter International Inc.]

Thanks, Joe, and good morning, everyone. As Joe mentioned, we are pleased with our first quarter results, which came in ahead of our expectations. First quarter 2024 global sales of $3.6 billion increased 2% on a reported basis and 3% on a constant currency basis, and as mentioned, compared favorably to our previously issued guidance. Performance in the quarter benefited from better-than-expected sales across all our product divisions, with the exception of those within our Healthcare Systems and Technologies segment. On the bottom line, adjusted earnings from continuing operations totaled $0.65 per share, increasing 33% versus the prior year period, and ahead of our prior guidance of $0.59-$0.62 per share.

[Joel Grade, EVP and CFO at Baxter International Inc.]

These results reflect the meaningful operational improvements we are recognizing, both commercially as well as within our Integrated Supply Chain network, and these factors drove our outperformance in the quarter. Now I'll walk through our results by reportable segments. Commentary regarding sales growth will reflect growth at constant currency rates. Sales in our Medical Products and Therapies, or MPT segment, were $1.2 billion, increasing 6%. Within MPT, first quarter sales from our Infusion Therapies and Technologies division totaled $966 million and increased 6%. Sales in the quarter benefited from strong growth internationally across the division, including in our IV solutions, nutrition, and infusion systems portfolios. Solid demand in the U.S. for IV solutions also contributed to growth in the quarter.

[Joel Grade, EVP and CFO at Baxter International Inc.]

Sales from Advanced Surgery totaled $263 million and grew 8%, coming in ahead of expectations and reflecting strong growth internationally. For our Healthcare Systems and Technologies, or HST segment, sales in the quarter were $667 million and declined 9%. Within the HST segment, sales in our Care and Connectivity Solutions, or CCS division, were $402 million, declining 7%. Performance in the quarter was impacted by several factors, including the phasing of product installations, particularly for care communications, which is expected to accelerate later in the year by the timing of capital orders, which increased mid-single digits in the quarter, but are expected to ramp more meaningfully over the course of the year.

[Joel Grade, EVP and CFO at Baxter International Inc.]

By lower rental revenues, which negatively impacted sales by approximately $5 million, and finally, by certain operational challenges, for which the team is in the process of implementing clear plans to improve performance and enhance commercial rigor. Given all these factors, we expect to see significant improvements for CCS in both orders and revenue in the second half of the year, which is similar to the ramp we experienced last year in this division. Frontline Care sales in the quarter were $265 million, declining 12%. Growth in the quarter was impacted by a difficult comparison to the prior year, as backlog reductions positively contributed to growth in the prior year period. Performance in the quarter was also affected by softness in the primary care market, which negatively impacted sales in both our connected monitoring and intelligent diagnostics product portfolios.

[Joel Grade, EVP and CFO at Baxter International Inc.]

Similar to CCS, we expect performance to meaningfully improve in the second half of the year as market conditions for primary care are anticipated to ease, the pace of custom orders are expected to increase, and the anniversary of the prior year impact from the backlog reduction. Sales in our Pharmaceutical segment were $578 million, increasing 11%. Performance in the quarter reflected double-digit growth in both our U.S. and international injectables portfolio, driven by new product launches, as well as continued strong demand for services within our drug compounding portfolio internationally. Moving on to Kidney Care. Sales in the quarter are $1.1 billion, increasing 4%. Within Kidney Care, global sales for Chronic Therapies were $888 million, increasing 2%.

[Joel Grade, EVP and CFO at Baxter International Inc.]

Solid PD growth in the quarter was partially offset by the negative impact from certain product and market exits in our In-Center HD business, as well as reduced sales in China due to government procurement initiatives and lower patient census volumes following the pandemic. We estimate that these items negatively impacted sales by approximately $50 million in the quarter. Sales in our Acute Therapies business were $214 million, representing growth of 15%, driven by strong demand and competitive wins in the U.S. and solid performance internationally. Other sales, which represent sales not allocated to a segment and primarily include sales of products and services provided directly through certain of our manufacturing facilities, were $16 million and declined 47% during the quarter, in line with our expectations and reflecting reduced demand for certain contract manufacturing volumes.

[Joel Grade, EVP and CFO at Baxter International Inc.]

Now moving on to the rest of the P&L. Our adjusted gross margin totaled 42.5% and represented an increase of 170 basis points over the prior year and was favorable to our expectations. The year-over-year improvement in gross margin primarily reflects the strong operational efficiencies we are realizing within our Integrated Supply Chain network, resulting from execution of the margin improvement programs we're implementing and the anniversary of the negative margin impacts from inflationary pressures that drove higher costs of goods sold in the prior year period... Pricing initiatives in select markets also positively contributed to margin improvement in the quarter. First quarter margins also reflected a benefit from the closure of our dialyzer facility, as production in the facility was increased in advance of the closure, resulting in better absorption and lower costs for these dialyzers.

[Joel Grade, EVP and CFO at Baxter International Inc.]

This benefit is expected to be isolated to the first quarter. Overall product mix in the quarter did partially offset margin expansion in the quarter. Adjusted SG&A totaled $856 million, or 23.8% of sales, consistent with the prior year period, as ongoing transformation initiatives to enhance operational efficiencies were offset by higher spend in select investments in sales and marketing initiatives. SG&A leverage is expected to improve as sales ramp over the course of the year. Adjusted R&D spending in the quarter totaled $160 million and represented 4.5% of sales, similar to the prior year period, and reflects our continued investments in advancing new products across the portfolio and bringing innovation to patients across our segments.

[Joel Grade, EVP and CFO at Baxter International Inc.]

These factors resulted in an adjusted operating margin of 14.3%, an increase of 180 basis points versus the prior year. Net interest expense totaled $78 million in the quarter, a decrease of $39 million versus the prior year period, driven by debt repayments in the fourth quarter of 2023, with proceeds from our BPS divestiture. We plan to continue to repay debt in 2024, consistent with our stated capital allocation priorities. Adjusted other non-operating income totaled $7 million in the quarter, compared to income of $2 million in the prior year period. The adjusted tax rate in the quarter was 25.0%, compared to 23.1% in the prior year period. The year-over-year increase was primarily driven by a valuation allowance recognized in the quarter.

[Joel Grade, EVP and CFO at Baxter International Inc.]

As previously mentioned, adjusted earnings from continuing operations totaled $0.65 per share, an increase 33% versus the prior year, primarily driven by commercial performance and operational efficiencies within our Integrated Supply Chain. Let me conclude my remarks by discussing our outlook for the second quarter and full year 2024, including some key assumptions underpinning the guidance. For full year 2024, Baxter now expects total sales growth of approximately 2% on a reported basis and 2%-3% on a constant currency basis, which is an increase from prior guidance of approximately 2% on a constant currency basis. Constant currency sales guidance for the full year by reportable segments is as follows: For MPT, we expect sales growth of 4%-5%.

[Joel Grade, EVP and CFO at Baxter International Inc.]

This is an increase from the prior guidance of 3%-4% and reflects the first quarter outperformance and the inclusion of Novum, which is currently expected to contribute an incremental $25 million to infusion pump sales and reflects some cannibalization of prior planned sales of Spectrum. Sales in our Healthcare Systems and Technologies segment are expected to be flat to the prior year as compared to previous guidance of approximately 3%. As mentioned earlier, we expect performance to meaningfully improve in the second half of the year, driven by the factors discussed, including timing of installations, order phasing, and improved operational execution. We expect pharmaceutical sales growth of 6%-7%, which compares favorably to prior guidance of 4%-5% and reflects the strong start to the year and continued momentum for our new product launches.

[Joel Grade, EVP and CFO at Baxter International Inc.]

Collectively, sales for these Baxter businesses are expected to increase 3%-4% in 2024. For Kidney Care, we expect sales growth of flat to 1% as compared to 2023. This also compares favorably to prior guidance and reflects the underlying momentum of this business. Now, turning to our outlook for other P&L line items. We continue to expect adjusted operating margin to increase by at least 50 basis points in 2024. We expect our non-operating expenses, which includes net interest expense and other income and expense, to total approximately $350 million in aggregate during 2024. We continue to anticipate a full-year adjusted tax rate between 22.0% and 22.5%. We expect our diluted share count to increase slightly and average 511 million shares for the year.

[Joel Grade, EVP and CFO at Baxter International Inc.]

Based on all these factors, we now anticipate full-year adjusted earnings, excluding special items, of $2.88-$2.98 per diluted share, which also compares favorably to prior guidance of $2.85-$2.95 per diluted share and reflects the outperformance we realized in the first quarter. Specific to the second quarter of 2024, we expect global sales growth of approximately 1% on a reported basis and 2%-3% on a constant currency basis. We expect adjusted earnings, excluding special items, of $0.65-$0.67 per diluted share. With that, we can now open up the call for Q&A.

[Operator]

Thank you. We will now begin the question-and-answer session. If you have a question, please press the star one key on your touchtone phone. If you wish to remove yourself from the queue, press star one again. If you are using a speakerphone, please lift the handset to ask your question. So that we may be respectful of everyone's time, please limit your comments to one question with one follow-up question if necessary. We appreciate everyone's patience, and we'd like to provide as many of you as possible the opportunity to ask a question. We will pause for a moment while the list is being compiled. I would like to remind participants that this call is being recorded, and a digital replay will be available on the Baxter International website for 60 days at www.baxter.com. Our first question comes from Vijay Kumar of Evercore ISI. Your question, please.

[Vijay Kumar, Analyst at Evercore ISI]

Hey, guys. Thanks for taking my question. I guess my first one is on the top line here. When I look at the business here, the Hillrom portion, Healthcare Systems and Technologies part of the business underperform, all other segments came in about right. And Joe, when you think about this, exiting fiscal 2024, can Baxter get back to, like, 4% top line? Like, when does Hillrom normalize? And perhaps talk about what gives you confidence that this business is actually growing. Is there any reason to fear share loss within that part of the business?

[José Almeida, Chairman and CEO at Baxter International Inc.]

Vijay, we are committing to a 4%, around 4% exit rate for the year. We see what happened in HST in the first quarter as a postponement of orders and some operational issues that we have, that we're addressing very diligently. We're starting to see good results coming out of it. What gives me confidence in the second half of the year for HST is that the orders that we have have improved in the exit of Q1 into Q2, with a healthy funnel of opportunities of the rest of 2024. We have commercial and operational challenges that we identified, and we have very specific actions in action plans in place. We also are executing on the existing backlog, and we also saw some typical seasonality.

[José Almeida, Chairman and CEO at Baxter International Inc.]

The first quarter is always the weakest quarter for HST, and the fourth quarter is the highest quarter for HST. Vis-à-vis 2023, we exit Q4 with 7% growth. So what I want to make sure to our investors that we are, we'll exit Baxter around 4% this year, 4%-5%, actually. 4%-5%, and we will have a recovery of HST based on their operational results and the good funnel that we have established and we're starting to see. This is ex kidney. I want to make sure that you know. When I talk about Baxter exit 4%-5%, it's ex kidney.

[José Almeida, Chairman and CEO at Baxter International Inc.]

To your question, there's good confidence in exiting the business 4-5, good plans in place, and starting to see the recovery in HST. This is the headline.

[Vijay Kumar, Analyst at Evercore ISI]

That's helpful, comments, Joe. One on maybe on margins here. Q1, you know, both gross margins, operating margins came in about. What drove the gross margins? Are we seeing benefits of, cost actions, or is this any timing element? Are we seeing pricing contribution? Because when I look at the second quarter EPS, it's below $3. So was there any timing element here on the margins? Thank you.

[Joel Grade, EVP and CFO at Baxter International Inc.]

Yes, good morning. Thanks. This is Joel. So a couple of things on the Q1 margins I would call out. You know, number one, the ISC drove a substantial portion of that. We had strong operational efficiencies, we had positive manufacturing variances that flowed through, and so I think just in general, our ISC performance was a strong contributor there. You know, our pricing also has, I'd say, a modest but partial part of that as well, in terms of enhancing our margins. There's a little bit of a mix impact that was offsetting some of that, but I think that's really. Those are some of the really primary drivers in the first quarter. I think from a second-quarter standpoint, there's a couple things I'd just call out there.

[Joel Grade, EVP and CFO at Baxter International Inc.]

You know, number one is, there was some favorability in the first quarter that was related to the closing of our dialyzer facility. And, you know, we had production that was increased, so we had better absorption there. And so from a timing standpoint, you know, those that benefited the Q1 margins, to some extent that you won't see as much in Q2. And I think the other thing I would call out in Q2, while we certainly continue to have positive, you know, contribution from the ISC, positive contribution from pricing, in particular some OUS markets, but we also did have a pharma MSA that was part of our BPS divestiture, that has, you know, is impacting pharma margins, in the second quarter as well.

[Joel Grade, EVP and CFO at Baxter International Inc.]

Those are a few of the puts and takes from the Q1, Q2 margins.

[Vijay Kumar, Analyst at Evercore ISI]

Thanks, guys.

[Operator]

Pito Chickering of Deutsche Bank is on the line with a question. Please state your question.

[Pito Chickering, Analyst at Deutsche Bank]

Hey, good morning. Going back to the softness in Healthcare Systems and Technologies, can you give a little more detail on what exactly were the operational factors that impacted the first quarter, and why it should ramp sort of in the back half of the year? And also on the capital orders, I guess, you know, why did those not flow through in the quarter as you guys were expecting? And then finally, kind of why you saw lower rental revenues than you're expecting. I guess I'm trying to understand the delta and the guidance you're seeing sort of today, so down 300 basis points for the year versus three months ago, and what changed so dramatically?

[José Almeida, Chairman and CEO at Baxter International Inc.]

I will take the first part of your question, and Joel will take the second part of your question. We saw the operational issues were more related to how we were integrating our enterprise accounts and our folks who are every day in the field. We had made significant changes halfway through the quarter, but did not catch up fast enough. We've been seeing a great deal of large orders being signed today. As a matter of fact, a couple of them are full conversion, competitive conversions. We have a very effective and large enterprise account that now is fully integrated with HST, and those were the things that we saw. And didn't start in the first quarter. You should have been integrated and done a better job in probably in August, September last year.

[José Almeida, Chairman and CEO at Baxter International Inc.]

We did catch up to that, and we see that better. We also have integrated some of the sales systems with more rigor than we had before, and we are making some changes at the mid-level management in that operation, so we can get more rigor in how we sell product. But I have to tell you that we already seen the, the momentum that Baxter brings to HST, the power of the two companies, and how the connectivity of our, for instance, a new Novum pump, and, and how that works with the beds and the monitors, how that makes a difference. So that is one part. There were operational issues in Frontline Care, completely different than ours, our CCS business. The Frontline Care were related to government orders, is slowed down by the government.

[José Almeida, Chairman and CEO at Baxter International Inc.]

Also, primary care issues with the payment system that got hacked in the first quarter. There was a division of UnitedHealthcare that affect the primary care physicians' offices, therefore, affect how they're ordering the products and getting paid. So that affect us as well. And there is a temporary contraction in the front, in the primary care physicians market, which we have very high market share. As a matter of fact, we've probably gained share in that business. Instead of losing, we'd actually have proof that we gained share. So we see there is a temporary blips in the Frontline Care. In the CCS business, we're pure operational issues and lack of better integration in our key account management, enterprise accounts. So the headline of the answer is, we are executing much better right now.

[José Almeida, Chairman and CEO at Baxter International Inc.]

We're starting to see the effect in the CCS. We have converted a couple of very large accounts from the competition, and our offering of launches from last year, Progressa Plus and Centrella, CLR, with a continuous lateral rotation, have done very, very well. As a matter of fact, that was the reason why a Midwest system converted from the competition to us. In terms of Frontline Care, we're starting to see the rebound. I think we hit the bottom in the primary care office, and what we saw there in terms of all the things coming together, the payment system and the slowdown of the market, and we're starting to see that it's starting to pick up. So, I feel cautiously optimistic that our actions are starting to provide results.

[José Almeida, Chairman and CEO at Baxter International Inc.]

Baxter, in general, has a pretty strong portfolio that bringing together, as you could see by the results of the quarter. Now, passing on to Joel on the second part of the question, on the revenue.

[Joel Grade, EVP and CFO at Baxter International Inc.]

Yeah, I would say your question around the, you know, second half of the why, and why are we not recovering fully all the way to the 3%. I mean, I guess what I'd say the first quarter was a fairly sharp, you know, decline relative to expectations, and I think more than anything, it's simply that we're not fully anticipating making that up throughout the rest of the course of the year. Having said that, to Joe's point, we certainly do remain optimistic about the growth prospects in this business. Yeah, we have a number of new product launches that are coming in, they're gonna continue to enhance our growth.

[Joel Grade, EVP and CFO at Baxter International Inc.]

As Joe pointed out, the improvement in, you know, Frontline Care, we had a lot of issues, or, you know, we had going through a lot of backlog last year, and so there was actually a lot of difficult comparisons in this first half of the year that we're gonna be lapping in the second half of the year. We certainly expect our orders from CCS to continue to meaningfully accelerate. And as Joe said, we've taken, you know, specific actions to ensure that commercially and operationally, we're executing better as we head into the back half of the year. So I guess, again, in summary, you know, I don't know that we're planning that, you know, we're not gonna be able to make up the entire impact that we had in the first quarter of the year.

[Joel Grade, EVP and CFO at Baxter International Inc.]

But, you know, we're still confident in how we're moving forward. And I would say this, we've started to see some modest improvements, even starting in Q2 in that business as well.

[Pito Chickering, Analyst at Deutsche Bank]

Okay, and then a follow-up question on the growth margins, which is such a, sort of key part of the Baxter story here. Can you quantify the impact of the closing of the dialyzer facility in the quarter? And looking at the rest of the gross margin improvement year-over-year, what's the split between inflationary pressures easing versus increased pricing, versus just simple operational efficiencies? And should inventories rolling through the balance sheet, on the P&L, be a tailwind to margins this year, and any seasonality around that occurring? Thank you.

[Clare Trachtman, SVP and Chief Investor Relations Officer at Baxter International Inc.]

So, Peter, I'll take that. So there are a lot of questions in there. What I would say is that the key is, within our Integrated Supply Chain, a lot of this comes down to the execution on our margin improvement initiatives. They've always been designed to offset inflation. So even this year, we do have normal inflationary pressures within our organization, but the MIPs that the team is executing against are more than offsetting that and driving the savings, both on a year-over-year basis and relative to our expectations. Now, in the first quarter, we did benefit from some of the positive and favorable manufacturing variances that Joel was referencing. So within the fourth quarter, we did have, you know, better volumes than we had anticipated.

[Clare Trachtman, SVP and Chief Investor Relations Officer at Baxter International Inc.]

So those favorable manufacturing variations rolled off in the first quarter, giving us a benefit, inclusive of what Joel referenced on the Opelika, where we were preparing for the closure of that dialyzer facility down in Opelika, Alabama. So that's really what I would say. Pricing is a benefit. It's a benefit on a year-over-year basis, and it's a benefit relative to our expectations. This is pricing, again, across the organization on a net basis. What we're doing is really outside the U.S., we're looking at those businesses and driving a lot of targeted actions within those markets outside the U.S. So I think this is collective. This is in line with what we said earlier, that a lot of our margin improvement this year would be coming from growth margin.

[Pito Chickering, Analyst at Deutsche Bank]

Great. Thanks so much.

[Operator]

Larry Biegelsen of Wells Fargo is on the line with a question. Please state your question.

[Larry Biegelsen, Analyst at Wells Fargo]

Good morning. Thanks for taking the question. Joel, there was a lot of strength in Q1 outside of HST, but the guidance implies, you know, growth slows in all segments. Why would growth slow, you know, so much, you know, relative to Q1, in Q2 through Q4 in those other segments? And I have one follow-up.

[Clare Trachtman, SVP and Chief Investor Relations Officer at Baxter International Inc.]

So, Larry, maybe I'll start with it and let folks. I would say most of it, we did see some strength within our Kidney Care, that came in favorable to our expectations. So I think that we are still anticipating that to slow in the second half of the year as we get the impact from some of the government-based pricing initiatives in China. Also, just the impact of some of the market exits that we will be incurring for the rest of the year. So that's probably one of the biggest differences if I think about kind of the rest of the year. In addition, within our Pharmaceuticals business, we had really strong performance from our hospital pharmacy compounding business outside the U.S.

[Clare Trachtman, SVP and Chief Investor Relations Officer at Baxter International Inc.]

We are continuing, we have strong demand for that business, but we are also really focused on improving the profitability of that business. So as we look at it going forward, being very disciplined about some of the business and the demand that we're taking on for that. So I'd say that's probably the other impact. Besides that, I think most of the other businesses really kind of continue to perform in line, but those are the two big drivers of what changes between the first half and the second half.

[José Almeida, Chairman and CEO at Baxter International Inc.]

You see a tremendous acceleration for HST, Larry, that is reflective of the pace of the business, but also acceleration of some of our actions that we took, you know, mid Q1 that is starting to get effect in Q2. We have accelerated our pump sales. We also see tremendous demand for our IV solutions and our nutritional pro nutrition IV nutrition doing pretty well. And our pharmaceutical is doing extremely well with the 5 launches. We put those gains into the forecast, into the guidance going forward. However, we see this as us seeking profitability ahead of sales growth, so we make some of the decisions to exit markets where we can actually improve the bottom line. So it's a combination. You saw what happens.

[José Almeida, Chairman and CEO at Baxter International Inc.]

We beat the top, we beat the bottom, and we continue to seek for opportunities to hopefully overperform.

[Joel Grade, EVP and CFO at Baxter International Inc.]

And if I could just add one thing on the kidney piece for a little bit, just the one order of magnitude. That, that business that we talked about going from, you know, flat to 1% guidance, respectively, would be closer to mid-single digits without some of the market exits. So to Clare's point, that is a fairly sizable impact as, as we head into the, the remaining part of the year as a, on a wholeCo basis.

[Larry Biegelsen, Analyst at Wells Fargo]

That, that's helpful. Just one quick follow-up. Joel, on the plan for KidneyCo, a spin versus sale, when do you expect to make a decision, and, and how do you guys think about the, the pros and cons of a spin versus a sale? Thank you.

[José Almeida, Chairman and CEO at Baxter International Inc.]

Larry, we will be separating the business the second half of 2024, and I don't want to comment at the moment in which option is a better option than the other. We're contemplating both options, and we have said that before, that we will maximize shareholder return for the option. So whatever option we choose, it's gonna be one of the two, we will separate, first of all. Second, when we separate, we will separate with maximization of shareholder return in mind.

[Larry Biegelsen, Analyst at Wells Fargo]

Thank you.

[Operator]

Robbie Marcus of J.P. Morgan is on the line with a question. Please state your question.

[Robbie Marcus, Analyst at JPMorgan]

Oh, great. Thanks for taking the questions. Maybe one on R&D. You know, this is one of the first years in a while that R&D is growing slower than sales. How do you think about your R&D investment and where it's going? And are we just seeing some of the benefits of the, Hillrom integration here?

[José Almeida, Chairman and CEO at Baxter International Inc.]

Robbie, good morning. I want to start by saying that we actually increased R&D in HST, the former Hillrom business. We call HST in Baxter now. We increased R&D there. We are very, very judicious about capital allocation within the business and what to put money in R&D. We also have plans in 2024, but also in 2025, to continue to increase the dollar value, not as a percentage of sales, the dollar value that we put there. So we have not reduced the dollar value of our R&D for 2024, we actually increased that. As a percentage, that number may show a slowdown, but it has, dollar-wise, improved. There are no savings that we are requiring from research and development. As a matter of fact, we continue to hire folks.

[José Almeida, Chairman and CEO at Baxter International Inc.]

We are right now exploring alternate sites for more R&D centers, in one in Ireland and another one in the East Coast of the United States. We are actually increasing that. So our objective is to drive our goal to 4%-5% top line growth with innovation, and that's going to be fueled by R&D. You're going to see the Novum. We just had Clinolipid approved in the U.S. for neonate and near- and term babies utilization. We also have significant pipeline coming in from HST. We have wireless communication device, we have new monitors, new thermometers. We have a significant amount of new technology, so there's no slowing down in R&D. It's the other way around.

[Robbie Marcus, Analyst at JPMorgan]

Great. And maybe one, it doesn't get a lot of attention, but I feel like almost every quarter for the past few years, it keeps driving upside, and now it's broken out as drug compounding. You know, nice high teens growth here. You know, kind of same question following up on Larry, but more specific to drug compounding. How do we think about the trajectory of this business? It's one that keeps growing double digits year in and year out, and the expectation is it always will slow, but it hasn't yet. So, what are your views here on how to think about this for the rest of the year? Thanks a lot.

[José Almeida, Chairman and CEO at Baxter International Inc.]

Robbie, we rely on pharmaceuticals outside the U.S. in very key markets. The combination of drug compounding and premix and vial pharmaceuticals, as well as IV solutions, as Baxter provides a full solution to the customers. Drug compounding is not an area, a strategic area for Baxter, but it's strategic in specific markets that we do business. I would look at the performance of injectable pharmaceuticals, which was 8% this first quarter. We're starting to see the new products really taking shape and helping offset the price erosion headwinds, as well as the gross margin that got eroded during the pandemic. So I would say to you that I'm always optimistic on the second half of the compounding business volume.

[José Almeida, Chairman and CEO at Baxter International Inc.]

It is an opportunity that we have to continue to grow, but it's more important to us to grow the new products that we're launching, because for every $1 that we sell of a new molecule or a new launched premix, the gross margin is one of the highest in the company, and it goes between 70%-85%. So that's the focus. Compounding is a good all-around business in Australia, New Zealand, U.K., Canada, Ireland, to bring the IV solution volumes and some of the Pharmaceuticals, but it's not the driver of the business in Pharmaceutical. The new product launches and the volume is.

[Robbie Marcus, Analyst at JPMorgan]

Appreciate it. Thanks a lot.

[Operator]

Danielle Antalffy of UBS is on the line with a question. Please state your question.

[Danielle Antalffy, Analyst at UBS]

Hey, good morning, everyone. Thanks so much for taking the question. And congrats on a good start to the year here. Just wanted to ask about Novum. Obviously, that's probably the biggest event that has happened now since we were all last on the phone together. So just curious what you're seeing. I know it's early days, but with Novum, how much of that is factored into the Q1 outperformance or maybe drove some of the Q1 outperformance and into the higher guide? And just sort of what you're seeing from a competitive dynamic now that you do have Novum out there.

[José Almeida, Chairman and CEO at Baxter International Inc.]

Good morning, and thank you for the compliment. Opening the question was very nice of you to recognize that. We agree with you. Novum has had no impact in the first quarter. As a matter of fact, that performance is driven by strong volumes all around the MPT portfolio, but Novum. So Novum is gonna be- will have an impact in the company in the second half of the year when we start shipping. As we noted in the prepared remarks, we have two large accounts that just ordered the product. One is a full conversion from our competitor, our largest competitor, and we're gonna continue to see that as our technology is modern, is new- the equipment was designed with significant amount of productivity built in.

[José Almeida, Chairman and CEO at Baxter International Inc.]

It comes with the best drug library on the market, and we're gonna continue to have a combination of good alternatives to our customers between Sigma Spectrum and Novum. So we, as we transition between one technology and the other, we will have customers who will continue to use Sigma Spectrum with their award-winning version 9 of the pump, and the ones who will have the need for Novum to go there. But our objective right now is competitive conversions, and I think we can make a significant impact there, some in 2024 and more so in 2025.

[Joel Grade, EVP and CFO at Baxter International Inc.]

Yeah, and if I could just add a couple of things to that. Number one, keep in mind, Danielle, as Joe talked about, we've continued to see really strong performance in our Spectrum pump. And so throughout the course of the year, we've anticipated still, you know, strong double-digit growth in the in Spectrum. As we head into the second half of the year, again, we will start rolling out Novum. We talked about in the prepared remarks, you know, we've anticipated some cannibalization of Spectrum with the Novum rollout, but we've included, you know, certainly, as you know, $25 million in the fourth quarter of the year as an anticipation of incremental impact from the Novum rollout, and as Joe said, much more heading into 2025.

[Danielle Antalffy, Analyst at UBS]

Got it. Thanks so much.

[Operator]

Patrick Wood of Morgan Stanley is on the line with a question. Please state your question.

[Patrick Wood, Analyst at Morgan Stanley]

Amazing. Thank you. I'll keep it to one, given the amount going on this morning, so thank you for taking it. Pharmaceuticals, obviously, again, very strong growth. I'm just trying to think bigger picture. The drug shortage list is still very high. You've got some onshoring, certainly of the syringe side of things. You know, I think, you know, the Civica experiment didn't really work, you know, and some of the Indian manufacturers have been having a difficult time. I guess, what do you see as a long-term opportunity there within that business to keep pushing out ANDAs and potentially either benefit from onshoring or pulling back some capacity and better pricing because of the drug shortage? Just curious for the outlook there. Thanks.

[José Almeida, Chairman and CEO at Baxter International Inc.]

Patrick, we are in an injectable space that is called a specialty generic. We take and ANDAs, and we create premixes. They're very safe, they have good shelf life, and they can be deployed to hospitals very quickly. So as we think about drug shortages, we continue to explore drugs that can be put into that format. But we have also a different—we have two technologies. One we call Galaxy, but we have another one that we call VIAFLO. The VIAFLO technology also allows for premix even better without having to refrigerate for the most part. So our portfolio, and Alok Sonig, who runs that business, has brought in a significant amount of opportunities for us to look at more drugs, more molecules.

[José Almeida, Chairman and CEO at Baxter International Inc.]

We revamped our portfolio of new molecules that is going into premix and put more relevant ones. So the CD5 we just launched will have a really good effect in 2024 and 2025 for Baxter. That business is launching probably 3-5 relevant molecules a year. And between expansion of markets outside the U.S. and the U.S., we will have more than 25 different launches in 2025. So we continue to accelerate the innovation, but it's the quality of the innovation. In terms of making the product available, we will continue to invest in the technology. As you know, all Galaxy technology is U.S. based, is made here in Illinois, and we have some of our products made in Puerto Rico as well as Ireland, but most onshore.

[José Almeida, Chairman and CEO at Baxter International Inc.]

That should be of a good, good value proposition for our customers who look for security of supply.

[Patrick Wood, Analyst at Morgan Stanley]

Appreciate the color. Thanks, Joe.

[José Almeida, Chairman and CEO at Baxter International Inc.]

Thank you.

[Operator]

Travis Steed of Bank of America Securities is on the line with a question. Please state your question.

[Travis Steed, Analyst at BofA Securities]

Hey, thanks for the question. I wanted to ask some of the segment margins. Like, renal margins were really strong this quarter. HST margins were lower. I assume that's just the revenue stuff, but I just wanted to make sure any other color you can provide on kind of those segment margins this quarter, just given they were kind of way off trend.

[Joel Grade, EVP and CFO at Baxter International Inc.]

Yeah. Thanks for the question. Yeah, you're correct on your assumption on that. And on the kidney side in particular, there is a lot of impact on that. And some of that I referred to you earlier in terms of closing our Opelika plant. So again, in that, in the first quarter, there’s a lot of increased production that drove a fairly significant amount of margin in our kidney business in Q1 in particular. So I think that’s really the main driver of that business that you saw that looked like a bit of an outsized margin. We’re certainly not anticipating that to continue in Q2.

[Travis Steed, Analyst at BofA Securities]

Okay. And then just kind of bigger picture, when you think about, you know, the core Baxter business, kind of excluding the renal business, just like opportunity for continued margin expansion. You're getting, you know, good margin expansion this year. But just, in general, like, what are the lines of sight that you have? Is it cost rolling off? Is it based on revenue growth, acceleration, you know, cost opportunity that you can take out of this business just to kind of keep this margin trajectory and expansion kind of going longer term?

[José Almeida, Chairman and CEO at Baxter International Inc.]

Yeah, I think it's really a combination of things. First of all, it's the volume, as you said. The continued opportunities from pricing. You know, as you know, we've had some pricing impacts this year, and as you know, we've renegotiated some of our contracts with our GPOs as we head into next year. And we're anticipating continued favorability from a pricing standpoint. We also continue to, you know, the IFC continues to be an area of strength for us that is gonna be positively impacting our margins.

[José Almeida, Chairman and CEO at Baxter International Inc.]

You know, I think the, you know, continued operations, you know, and for execution, the operational efficiencies, some of the automation opportunities we've had, we continue to do work from a procurement standpoint, you know. And some of the, you know, the buying opportunities we have both to, you know, leverage our scale as well as to, you know, for risk mitigation. We, I see continued opportunities in the IFC space.

[Joel Grade, EVP and CFO at Baxter International Inc.]

I think the other thing I would say, you know, I've said this before, I'll say it again: you know, we're not going to SG&A our way to prosperity. However, there are areas of opportunity there. For example, we'll, you know, I'll be hiring, you know, even starting next week, a person that's gonna be leading our global business services. That is an opportunity for us to continue to, you know, think about how we what our operating model is, post-verticalization, and how we can leverage some of the those opportunities across our organization. So I think, again, I see a variety of ways, really up and down our P&L, in terms of those type of opportunities to continue to expand our margins.

[Vijay Kumar, Analyst at Evercore ISI]

Great. Thanks a lot.

[Operator]

Josh Jennings of TD Cowen is on the line with a question. Please state your question.

[Josh Jennings, Analyst at TD Cowen]

Hi, good morning. Thanks a lot. I was hoping to ask, Joe and team, just about the geographic expansion initiative for the Hillrom or HST portfolio. You know, has it taken a little bit longer than Baxter actually thought, or are there challenges to bring Hillrom technologies into international geographies where Baxter's are present and Hillrom didn't? It sounds like some of the international softness was based on government order timing in Q1. But just wanted to get an update there, as it was part of the strategic rationale for the Hillrom acquisition.

[José Almeida, Chairman and CEO at Baxter International Inc.]

Yeah, we, we have good performance. In, in Western Europe, we see that, and we see good performance in Latin America as well. So we see that Baxter combination with Hillrom has expanded Hillrom opportunity in those, in those markets. We are making changes in our Asia Pacific organization to bring more focus on capital sales to supplement what Baxter is strong, which is general acute market sales. So we're increasing talent in the Asia Pacific with some changes we just recently made. And Western Europe continues to be a strong market for us, and we continue to strengthen that group there. Latin America as well. So it has been a positive positive take on Baxter and Hillrom combined for outside U.S. One market where things are not as strong is China.

[José Almeida, Chairman and CEO at Baxter International Inc.]

But in China, because specifically made in China restrictions in VBP, as is known in the market. But our sales ambitions there were not very great, as opposed to the fact that in Latin America, Europe, Middle East and Africa, and the rest of Asia Pac, they become very strong, including Australia. We're very successful in Australia, just closed some really good deals there. So Baxter brought a lot of talent into that equation, and we continue to strengthen the team with new hires that we're bringing on board.

[Josh Jennings, Analyst at TD Cowen]

Understood. And just one follow-up. Wanted to just ask about the connectivity solutions technology. It sounds like Novum IQ, the smart beds, they're adding to that connectivity solutions portfolio. But maybe you could just share with us any pipeline initiatives and how you think they can roll in and start delivering bigger sales impacts, as we move into 2025 and 2026. Thanks for taking this question.

[José Almeida, Chairman and CEO at Baxter International Inc.]

Thank you. We with Novum IQ, syringe and LVP, large volume parenteral, now we have a suite that connects with Baxter gateway, overall gateway called Connexis. And the Connexis brings all these devices to talk to each other. Right now, if you went to our center, our customer experience center in Batesville or in any other place that we have, you would see the pump communicating to devices like Voalte, the bed communicating to Voalte. You see the connectivity, and as it becomes more important to our customers, Baxter has the right solutions for the hospitals. Interestingly speaking, that it has to bring productivity improvement to the hospital.

[José Almeida, Chairman and CEO at Baxter International Inc.]

The ability to connect by just connecting is table stakes, but what Baxter is seeking is continue to innovate, to bring specific solutions to improve productivity in the hospital setting. So when we do our later this year, we do our Investor Day, we'll be able to bring a demo where you're gonna be able to see how these devices will be connecting to each other. But they're very important, and with Novum now, the last piece of this puzzle is complete.

[Josh Jennings, Analyst at TD Cowen]

Thank you, Joe.

[Operator]

We have time for one final question. Matt Miksic of Barclays is on the line with our final question. Please state your question.

[Matt Miksic, Analyst at Barclays]

Hey, thanks so much for squeezing me in. Caught me off guard there. So, you know, I'd love to understand, you know, one of the things that, a question I get often on, on Baxter is sort of where is the, the sort of tall pole in a tent, you know, where is the, you know, where is the, the sort of significant single growth driver, you know, and if there is one. And, you know, looking into, into the end of back half of this year and 25, you know, maybe Joe, or, or you could highlight, you know, which, which of the product lines or business lines, do you think are going to emerge as, you know, as something that we're all going to look to, to, to sort of see lifting growth or lifting leverage into 25? Thanks.

[José Almeida, Chairman and CEO at Baxter International Inc.]

Matt, one of the advantages of Baxter is diversity of portfolio that brings things to a point where acute, the acute market, we provide significant amount of infrastructure products for those markets, IV solutions, pharmaceuticals, pumps. We also have the capital market with beds, monitors. And so when we think about Baxter in general, we have several drivers of growth. You could see this quarter was a significant amount of growth, and it was more than enough to offset some headwinds that we had in HST. And HST is going to continue to cautiously optimistic about their business, and I think we're back into our cadence of growth for that business. We have innovation in every single part of Baxter. We have significant drivers coming out of pharmaceutical, our injectable pharmaceutical portfolio.

[José Almeida, Chairman and CEO at Baxter International Inc.]

Our pump conversion rates will be what's going to make that business grow is going to be competitive conversions to our biggest competitor, because we have a product that is new and it, and it fulfills significant market needs. We also have in our HST portfolio more than 7 significant launches in 2025. So innovation in Baxter is not, is not dependent on one or two products. It's a wide range of products that de-risk the company and put the company in a good, solid footing to achieve ex-Kidney 4%-5% growth.

[Matt Miksic, Analyst at Barclays]

That's great. Thanks so much, Joe.

[José Almeida, Chairman and CEO at Baxter International Inc.]

Thank you.

[Operator]

Ladies and gentlemen, this concludes today's conference call with Baxter International. Thank you for participating.

Participants

Executives

• Clare Trachtman, SVP and Chief Investor Relations Officer
• Joel Grade, EVP and CFO
• José Almeida, Chairman and CEO

Analysts

• Danielle Antalffy, Analyst at UBS
• Josh Jennings, Analyst at TD Cowen
• Larry Biegelsen, Analyst at Wells Fargo
• Matt Miksic, Analyst at Barclays
• Patrick Wood, Analyst at Morgan Stanley
• Pito Chickering, Analyst at Deutsche Bank
• Robbie Marcus, Analyst at JPMorgan
• Travis Steed, Analyst at BofA Securities
• Vijay Kumar, Analyst at Evercore ISI