It appears that Baxter's
Adjusted earnings per share rose 23% year over year for the quarter on just 8% growth in sales. Where did the rest on the bottom-line growth come from? Margins, my friend, margins -- oh, and a stock buyback to the tune of $827 million helped lower the earnings-per-share denominator.
The gross margin climbed 250 basis points to 50%, thanks to increasing sales of high-margin products and services, greater efficiency in manufacturing, and subsequent better prices -- especially for plasma-based products. As you can see below, an increasingly improved gross margin has been the trend for the company over the past year and a half -- during which time it's also been keeping sales, general, and administrative costs relatively in check.
Q1 2006 |
Q2 2006 |
Q3 2006 |
Q4 2006 |
Q1 2007 |
Q2 2007 |
Q3 2007 |
|
---|---|---|---|---|---|---|---|
Gross Margin |
42.8% |
43.7% |
45.1% |
45.6% |
46.5% |
47.8% |
48.6% |
SG&A Margin |
21.0% |
21.3% |
21.7% |
22.0% |
22.0% |
22.0% |
22.5% |
Baxter's bioscience division continues to be on fire. Year-over-year sales growth of 14% included transferring back international marketing rights for the BeneFIX drug to Wyeth
In other drug-therapy news, Baxter announced during the quarter that it will form a new collaboration with Halozyme Therapeutics
Baxter is sitting on a big wad of cash. Management mentioned that although it's interested in using some of that money to buy companies, it's not likely to make any "large-scale" acquisitions. That probably means Baxter won't go around buying companies like they're a dime a dozen, the way Inverness Medical Innovations