Sprawling medical devices and technology company Baxter International (BAX 1.22%) looked like it needed some medicine and a little rest on Thursday. The company's shares were down 17% in mid-session trading, on the back of an earnings report that many investors found lackluster.
A flop in the final quarter
Baxter's fourth quarter of 2025 saw total sales rise 8% year over year to $2.97 billion. The company's net income from continuing operations not in accordance with generally accepted accounting principles (GAAP), however, slumped by 24% to $225 million ($0.44 per share).
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This shook out into a mixed quarter, as analysts tracking Baxter were collectively modeling only $2.84 billion for sales, but a notably higher $0.54 per share non-GAAP (adjusted) net income from continuing operations figure.
In its earnings release, Baxter admitted that this performance did not meet its expectations.
It pledged that recently introduced changes to its operating model hold the promise of, in the words of CEO Andrew Hider, "bringing us closer to our customers and ultimately helping us to improve our say-do ratio and execute more consistently."
NYSE: BAX
Key Data Points
Slow improvement?
That turnaround might not be around the corner, however. Baxter provided guidance for the entirety of 2026 forecasting flat to 1% sales growth relative to 2025. Adjusted net income from continuing operations is estimated at $1.85 to $2.05 per share for the year, comparing unfavorably to 2025's $2.27.
While I think Baxter has generally been an effective purveyor of many medical products and technologies, this strategic shift would concern me if I were a shareholder.
A big question mark is when, and even if, it'll start to have a positive and lasting impact on the company's business. I'd be wary of Baxter stock for that reason.
