Investors might have been taken aback somewhat when Baxter International, Inc. (NYSE:BAX) reported a net loss in its 2017 fourth-quarter results, announced in February. However, the underlying reason for that loss -- a one-time tax hit related to U.S. corporate tax reform -- also pointed to better news down the road due to lower tax payments for the medical supply company.

Baxter provided an update on its 2018 first-quarter performance on Thursday morning. A lower tax rate definitely helped the company's bottom line, but that wasn't the only positive for Baxter. Here are the highlights from the company's first-quarter results.

Red 1st quarter button on computer keyboard

Image source: Getty Images.

Baxter results: The raw numbers

Metric 

Q1 2018 

Q1 2017 

Year-Over-Year Change

Sales

$2.68 billion $2.48 billion

8.2%

Net income from continuing operations

$389 million $272 million

43%

Adjusted earnings per share

$0.70 $0.58

20.7%

Data Source: Baxter. 

What happened with Baxter this quarter?

Baxter received some help from foreign exchange fluctuations in the first quarter. On a constant currency basis, the company's sales increased 4% year over year. In addition, a settlement of claims related to the Claris Injectables acquisition boosted revenue during the quarter by $80 million. 

The company performed better in international markets, with sales increasing 12% year over year to $1.5 billion. U.S. sales climbed 4% to $1.1 billion. There were several factors fueling Baxter's revenue growth. An especially nasty flu season drove strong demand for the company's continuous renal replacement therapies. Baxter also saw solid sales growth for its injectable pharmaceuticals, advanced surgery products, and, in the U.S., its IV solutions and peritoneal dialysis therapies.

There were also some headwinds. Generic competition in the U.S. for chemotherapy drug cyclophosphamide weighed on overall sales in the first quarter. Baxter also continued to feel residual negative impacts of temporary manufacturing disruptions in Puerto Rico caused by Hurricane Maria.

Thanks to U.S. corporate tax reform passed in late 2017, Baxter's tax bill declined by 11% in the first quarter. This benefit flowed right to the company's bottom line.

GAAP diluted earnings per share (EPS) grew from $0.49 in the prior-year period to $0.71 in the first quarter of 2018. This increase was due largely to Baxter's business optimization efforts and the Claris settlement. 

The company repurchased around $522 million of its stock during the first quarter. Baxter still has $2.1 billion remaining for share buybacks under a repurchase plan authorized by its board of directors on March 31. 

What management had to say

Baxter International Chairman and CEO Jose Almeida said that the company "is off to a strong start in 2018." Almeida gave his take on the first-quarter results and what's next for Baxter, stating:

Solid top-line performance coupled with a relentless focus on increasing operational efficiency were key drivers of earnings growth in the quarter. We look forward to building on this momentum and sharing the next chapter in Baxter's ongoing transformation at our upcoming investor conference on May 21st. At the conference, we will highlight the strategic roadmaps for our six global businesses and provide investors an opportunity to learn more about Baxter's promising innovation pipeline that will help fuel the company's growth going forward.

Looking forward

Baxter expects sales will increase in the second quarter by around 9% year over year. Adjusted earnings from continuing operations, before special items, are anticipated to be between $0.69 and $0.71 per diluted share in the second quarter.

The company boosted its outlook for the full year. Baxter now projects sales growth between 7% and 8%, with around 5% growth on a constant currency basis. The company also expects full-year 2018 adjusted earnings from continuing operations, before special items, of $2.85 to $2.93 per diluted share.

Investors should begin to see the impact in the second quarter from a couple of recent acquisitions made by Baxter. The company bought two surgical products from Mallinckrodt -- Recothrom Thrombin topical, a topical clotting prompter used to help stop bleeding, and Preveleak Surgical Sealant, which is used in vascular reconstruction.