Baxter Faces Challenges as Infusion Pump Issues and Hurricane Recovery Impact Financial Outlook

Baxter International, a leading medical technology company, is grappling with multiple challenges that have led to a significant reduction in its financial forecast for 2025. The company's stock price plummeted by over 20% following the announcement of lowered revenue projections and ongoing issues related to its infusion pump shipments.

Hurricane Recovery and IV Fluid Demand

Baxter continues to feel the effects of Hurricane Helene, which struck its Western North Carolina manufacturing site last fall. While the company reported that all production lines were restored to pre-storm levels by February, the impact on IV fluid supplies has been long-lasting. Healthcare providers have adopted a more conservative approach to administering IV fluids, leading to softer-than-expected demand.

Heather Knight, Baxter's chief operating officer, explained, "We attribute a portion of the softness in demand to follow-on impacts related to the hurricane, which caused some hospitals to evaluate IV infusion protocols—including utilizing IV push in lieu of pre-mixed products in certain situations." The company's commercial teams are now working to reinforce the clinical benefits and value proposition of pre-mixed injectables to customers.

Novum IQ Infusion Pump Concerns

Adding to Baxter's challenges is a correction effort for its Novum IQ large-volume infusion pump. The company has temporarily paused planned installations of the device following reports of 79 serious injuries and two deaths potentially linked to under- or overdelivery of medications. The issue stems from unintended drug delivery levels when changing the flow rate.

While current pumps can still be used with new instructions provided by Baxter, the company aims to resume shipments by the end of the year. However, CFO Joel Grade noted that the low end of Baxter's 2025 financial guidance is tied to the possibility of Novum's return being delayed into 2026.

Financial Outlook and Strategic Actions

In light of these challenges, Baxter has revised its operational sales growth projection for the 2025 calendar year from 4-5% down to 3-4%. The company reported second-quarter revenue of $2.81 billion, representing a 1% operational gain over the prior year. U.S. sales declined by 1% to $1.54 billion, while international sales grew by 3% to $1.27 billion.

Baxter is now focusing on improving cash flow generation in the second half of the year. Joel Grade emphasized, "We are intensely focused on improving our cash flow generation in the second half of the year. To achieve this objective, we are taking several actions, with a key focus area on our inventory management."

As Baxter navigates these challenges, the company is also preparing for a leadership transition. Andrew Hider, former head of ATS, is set to take over as CEO, replacing José Almeida who retired in February. The exact start date has not been announced, but interim CEO Brent Shafer indicated it would be before the end of September.