Baxter International Inc.

phone. If anyone should require assistance during the conference, please press star then zero on your touchtone 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. Claire Trackman, Senior Vice President, Chief Investor Relations Officer at Baxter International. Ms. Trackman, you may begin.

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 development, 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. And 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?

Thank you, Claire, 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. Joe Grady 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% on the constant currency rates. This compares to our original outlook of approximately 1% reported and 1% to 2% constant currency. 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 continual operations of $0.65 came in above our prior guidance range of $0.59 to $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 health care needs in combination with the diversity and durability of our portfolio. This is clearly a factor in our overall performance this quarter as a strength of our results across medical products and therapies, pharmaceuticals, and kidney care helped offset underperformance in our health care systems and technology 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 those 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. Our NovoMyQ 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 platform's ability to advance connectivity, intelligent infusion therapy, and the team is already engaged with many customers interested in this new technology. In fact, a large existing Novum syringe and spectrum customer will begin implementing the full Novum platform in the next few months. And 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 factoring in our original FY2024 outlook. 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 NPT news, last week we received FDA approval of an expanded indication for clinolipid, our mixed oil lip 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. Our pharmaceutical segment achieved a growth of 11% in the first quarter, and both reported in constant currency rates. Results for the quarter reflect the benefit from our recent new product launches in the U.S., including five new injectables in key therapeutic areas, including anti-infective and anti-hypotensive 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. 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 these segments. Decisive steps are already underway to address and enhance performance in this business and help realize our full opportunity in this space. 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 these challenges 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 As we announced in a March 4th 8K 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. 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.