Baxter Q3 Preview: Can Core Segments Deliver Another Solid Quarter?

Baxter International Inc. BAX is scheduled to release third-quarter 2025 results on Oct. 30, before the opening bell. In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 1.67%. BAX’s earnings beat estimates in three of the trailing four quarters and missed once, delivering an average surprise of 6.75%.

Q3 Estimates

Currently, the consensus estimate for revenues is pegged at $2.87 billion, indicating an improvement of 6.4% from the prior-year quarter’s reported figure. The consensus mark for earnings is pinned at 60 cents per share, implying a 25% year-over-year decline.

Our model estimates total revenues from continuing operations to improve 3.1% at constant currency (cc) to $2.87 billion. Adjusted earnings per share are expected to decline 31.6% to 55 cents.

Important Factors to Note

Baxter is expected to post modest growth when it reports results for the third quarter of 2025, following a mixed second-quarter performance that highlighted both operational resilience and ongoing headwinds. In the second quarter, sales from continuing operations grew 4% on a reported basis and 1% operationally, supported by strength in Drug Compounding, Advanced Surgery, and Care & Connectivity Solutions (“CCS”), but pressured by softness in Infusion Therapies & Technologies (“ITT”), Injectables & Anesthesia, and Front Line Care. Adjusted earnings per share (EPS) of 59 cents came in at the low end of guidance, while operating margin improved 180 basis points to 15.1%, reflecting disciplined cost controls, TSA reimbursements and ongoing expense management.

For the third quarter, management expects revenue growth of 6-7% and operational growth of 3-4%, supported by roughly 100 bps of FX tailwinds and nearly $80 million in MSA revenues from Vantive. Adjusted EPS is projected to be in the range of 58-62 cents, with margin stability expected despite volume-related pressures in IV solutions and continued softness in select injectables.

Notably, the low end of guidance assumes no resumption of Novum IQ pump shipments in 2025 and minimal improvement in U.S. hospital fluid conservation trends.

Baxter is likely to have continued to benefit from its streamlined portfolio post-Vantive sale, with management emphasizing improved operational agility and targeted innovation under incoming CEO Andrew Hider. The near-term focus remains on stabilizing fluid utilization, managing mix pressures and driving execution across key product platforms.

Baxter International Inc. Price and EPS Surprise

Baxter International Inc. price-eps-surprise | Baxter International Inc. Quote

BAX’s Segmental Overview

Medical Products & Therapies (“MPT”)

Second-quarter sales rose 1% operationally to $1.3 billion, as strength in Advanced Surgery was offset by weakness in ITT. Hospitals have been slow in normalizing IV fluid usage despite allocations being removed, with conservation still weighing on volumes. Baxter has partnered with Vizient to expand reserve programs for IV fluids, which might have supported demand recovery in the third quarter.

However, the voluntary pause of Novum IQ LVP pump shipments presents a key overhang, with guidance assuming no further shipments in 2025. For the third quarter, incremental uptake of Spectrum pumps and stabilization in IV solutions are expected to have partly offset this headwind, but performance is likely to have remained moderate. Our model estimates revenues from this segment to improve 3.5% at cc to $1.39 billion.

Healthcare Systems & Technologies (“HST”)

Segment revenues rose 2% to $767 million in the second quarter, driven by 4% growth in CCS, with notable strength internationally (+7%). U.S. capital orders faced a tough prior-year comparison, but overall demand trends remained intact, with no major slowdown observed in hospital capital spending. For the third quarter, backlog execution and digital upgrades in CCS are expected to have supported growth, though management is monitoring macro uncertainty. Our model estimates revenues from this segment to improve 2.6% at cc to $775.6 million.

Pharmaceuticals

Sales from this segment grew 1% to $612 million, as strong Drug Compounding (+7%) offset declines in Injectables (-1%) and global anesthesia (low double digit decline). U.S. premix demand remained soft, partly due to shifts toward IV push protocols post-hurricane. Management expects sequential stability but has acknowledged near-term pressures. For the third quarter, compounding growth and new product launches are expected to have lent support, while anesthesia headwinds might have persisted. Our model estimates revenues from this segment to improve 1.2% at cc to $600.8 million.

Other Sales & Transitional Revenues

Other sales totaled $13 million in the second quarter, while MSA revenues from Vantive contributed $98 million. For the third quarter, MSA revenues are projected at nearly $80 million, continuing to provide a temporary boost but raising investor focus on the trajectory post-2026 TSA phase-out. Our model estimates revenues from this segment to improve 52.5% at cc to $110.9 million.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Baxter this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here, as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00% for Baxter.

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Baxter currently has a Zacks Rank #3.

Stocks Worth a Look

Here are some medical product stocks worth considering, as these have the right combination of elements to post an earnings beat this reporting cycle.

Globus Medical GMED has an Earnings ESP of +1.02% and a Zacks Rank #3 at present. The company is set to release third-quarter 2025 results on Nov. 6.

GMED’s earnings surpassed estimates in three of the trailing four quarters and missed once, with the average surprise being 10.82%. According to the Zacks Consensus Estimate, GMED’s third-quarter EPS is expected to decline 6% from the year-ago reported figure.

Cencora COR has an Earnings ESP of +0.31% and a Zacks Rank #3 at present. The company is set to release fourth-quarter fiscal 2025 results on Nov. 5.

COR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 6.19%. According to the Zacks Consensus Estimate, COR’s third-quarter EPS is expected to improve 13.5% from the year-ago reported figure.

McKesson MCK has an Earnings ESP of +1.72% and a Zacks Rank #1 at present. The company is slated to release second-quarter fiscal 2026 results on Nov. 5.

MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 1.50%. According to the Zacks Consensus Estimate, MCK’s fiscal second-quarter EPS is expected to gain 26.2% from the year-ago reported figure.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research