James Saccaro
Executive Vice President & Chief Financial Officer. at Baxter International
Thanks, Joe, and good morning, everyone. As Joe mentioned, our results for the quarter came in largely as expected, with some impact to sales due to select supply chain-related constraints. As discussed earlier, our teams have been and continue to identify opportunities to help mitigate the unprecedented macroeconomic headwinds we continue to face, and we remain committed to delivering on our long-term objectives. Turning to our financial performance. Third quarter 2022 global sales of $3.8 billion advanced 17% on a reported basis, 23% on a constant currency basis and rose slightly on an operational basis. On the bottom line, adjusted earnings decreased 20% to $0.82 per share falling within our guidance range of $0.79 to $0.83 per share. Earnings in the quarter reflect the increased cost of raw materials, freight and labor as well as the impact of rising interest rates, foreign exchange headwinds and a higher tax rate.
Before I review our financial performance for the quarter, I wanted to spend a moment discussing the noncash impairment charge that we recorded related to the Hillrom acquisition. When we purchased Hillrom, we valued the business based on anticipated cash flows, Baxter's prevailing cost of capital and market EBITDA multiples at the time of the transaction. As Joe mentioned, the primary reason for the write-down was due to changes in external factors that have occurred since the acquisition date, specifically, the significant increase in interest rates we have seen and the reduction in market-based EBITDA multiples.
As we evaluated these environmental factors and coupled them with the supply chain impacts we've incurred, which we carry forward in our projections, we deemed it appropriate to reduce the carrying value of goodwill and certain other intangible assets associated with Hillrom. I want to reinforce Joe's earlier comments that we continue to see tremendous potential for our combined portfolios. We have accelerated our cost synergy targets, which continue to track ahead of our expectations, and our commercial leaders are driving actions to unlock the growth of the combined company. Now I'll walk through performance by our regional segments in key product categories. Note that constant currency growth is equal to operational sales growth for all global businesses and Baxter's three legacy geographic regions.
Starting with sales by operating segment. Sales in the Americas were flat to the prior year on a constant currency basis. Sales in Europe, Middle East and Africa grew 3% on a constant currency basis, and sales in our APAC region decreased 2% on a constant currency basis. Quarterly sales in that region reflected a slowdown in growth in China due to the country's Zero COVID policy, which we estimate impacted sales by approximately $10 million in the quarter, as well as the anticipated impact from various value-based procurement initiatives being implemented in the region. Moving on to performance by key product category. Global sales for Renal Care were $942 million, increasing 4% on a constant currency basis. Performance in the quarter was driven by solid growth in our PD business, where we observed an increase in PD patients globally. PD growth was augmented by two discrete items totaling approximately $20 million.
Performance in the quarter was partially offset by lower in-center HD sales partially due to HD monitor supply challenges due to component availability. Sales in Medication Delivery of $725 million were at similar level to prior year sales on a constant currency basis. Within the quarter, we observed strong demand for products in our IV Therapy portfolio. This growth was more than offset by lower infusion system sales as component availability remain challenged, coupled with a large hospital system order in Q3 in 2021, which created this difficult comparator to the prior year. Pharmaceutical sales of $525 million declined 3% on a constant currency basis. Performance in the quarter reflects declines in our global generic injectables portfolio due to continued increased competitive activity, which were partially offset by increased sales of inhaled anesthesia globally.
Moving to Clinical Nutrition. Total sales were $231 million, increasing 4% on a constant currency basis. Performance in the quarter was driven by demand for our broad multichamber product offering, partially offset by supply-related challenges for our vitamins. Sales in Advanced Surgery were $247 million, advancing 6% on a constant currency basis. Growth in the quarter reflects recovery of elective procedures relative to pre-COVID levels. Surgical volume recovery was strong in Europe, while procedures in the U.S. and APAC region came in slightly below our expectations. Within the U.S., we observed a slow start to July with an uptick in August and September.
Sales in our Acute Therapies business were $158 million, declining 9% on a constant currency basis and reflecting a tough comparison to the prior year, where we had experienced elevated demand for CRRT given the rise in COVID cases. BioPharma Solutions sales in the quarter were $172 million, declining 10% on a constant currency basis and reflecting a step-down in sales of COVID vaccines compared to the same period last year. COVID vaccine sales for the quarter totaled approximately $30 million. Hillrom contributed $735 million in sales for the quarter, which included $380 million of sales in Patient Support Systems, $279 million of sales in Front Line Care and $76 million of sales in global Surgical Solutions.
Hillrom declined mid-single digits on a constant currency basis as compared to Q3 2021, when the company was a stand-alone entity. Performance in the quarter reflects a difficult comparison to the prior year period as well as the impact of the semiconductor supply constraints we've discussed. We continue to experience record levels of backlog for the legacy Hillrom business. Our order book remains strong. And to date, we have not seen any significant cancellations from customers. As mentioned last quarter, we remain somewhat cautious on capital spending as hospitals continue to assess their budgets in light of the current market environment. Moving through the rest of the P&L.
Our adjusted gross margin of 42.9% decreased by 110 basis points over the prior year, reflecting increased cost of goods sold primarily driven by the factors we've discussed around inflation, freight and supply chain constraints. Adjusted SG&A of $821 million represented 21.8 as a percentage of sales, an increase of 200 basis points versus prior year driven by the addition of Hillrom as well as higher freight expenses. As mentioned earlier, we continue to tightly manage SG&A base. Adjusted R&D spend in the quarter of $148 million represented 3.9 as a percentage of sales, a decrease of 10 basis points versus prior year. Both adjusted SG&A and adjusted R&D reflect a little benefit from lower bonus accruals under our annual employee incentive compensation plans, which is directly tied to Baxter's performance.
These factors resulted in an adjusted operating margin in the quarter of 17.2%, a decrease of 300 basis points versus the prior year. Adjusted net interest expense totaled $104 million in the quarter, an increase of $72 million versus the prior year driven by higher outstanding debt balances related to the acquisition of Hillrom. Adjusted other nonoperating income totaled $2 million in the quarter compared to a $12 million loss in the prior year period driven by -- primarily by amortization of pension benefits. The adjusted tax rate in the quarter was 23.8% as it compared to 14.8% in the prior year period. The year-over-year increase was primarily due to the mix of earnings in the quarter, which has changed following the Hillrom acquisition.
In addition, during the third quarter of 2021, the company recognized a benefit in its effective tax rate from a discrete item due to a reserve release resulting from a favorable tax ruling. And as previously mentioned, adjusted earnings of $0.82 per diluted share declined 20% versus the prior period. Let me conclude my comments by discussing our outlook for the fourth quarter and full year 2022, including some key assumptions underpinning our updated guidance. We have adjusted our full year earnings per share outlook primarily to account for a strengthening U.S. dollar and the resulting foreign exchange headwind, increased interest expense assumptions given rising interest rates and a higher expected full year tax rate due to earnings mix.
As discussed, we anticipate electromechanical component availability will remain challenged in the fourth quarter and into 2023, which will continue to hamper sales growth for select businesses, including Medication Delivery, Front Line Care and Patient Support Systems. For the fourth quarter of 2022, we expect global sales growth of mid- to high single digits on a reported basis, mid-teens on a constant currency basis and approximately flat on an operational basis. And we expect adjusted earnings, excluding special items, of $0.92 to $0.99 per diluted share.
For full year 2022, we now expect global sales growth of 17% to 18% on a reported basis, approximately 23% on a constant currency basis and low single digits operationally. Moving down to P&L. We expect full year adjusted operating margin to be between 17% and 17.5%, reflecting the impact of all of the various dynamics we've discussed today. For the year, we now expect interest expense to total approximately $400 million, given rate increases and adjusted tax rate of approximately 20% and a diluted share count of 508 million shares. Based on these factors, we now expect 2022 adjusted earnings, excluding special items, of $3.53 to $3.60 per diluted share.
With that, we can now open up the call for Q&A.
