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Baxter to spin off $5 billion kidney care business

by John R. Fischer, Senior Reporter | January 13, 2023
Business Affairs
Baxter is spinning off its renal care and acute therapies divisions as one separate company. (Photo courtesy of Baxter International)
Baxter International plans to split off its renal care and acute therapies businesses as one independent company within the next 12 to 18 months.

Baxter announced the news on January 6, describing it as a “major inflection point” that will allow the separate business entity to pursue more growth opportunities and innovation for kidney care as well as expand margins in the near term and beyond.

Both divisions together made approximately $5 billion in sales globally in 2021. As a stand-alone company, they will compete in market segments worth more than $15 billion and estimated to collectively grow between 3% to 4% on a compound annual basis over the next three years.

Baxter will be able to make more strategic investments that will improve sales growth, better serve patients and customers and create new opportunities for employees, it says.

Beyond this, it is reviewing “strategic alternatives” for its BioPharma Solutions business to boost its capital structure, and plans to simplify its commercial and manufacturing footprint to improve business performance.

“Realizing the full impact of these decisions will take time, but we believe they are essential to enhance our focus, fuel our innovative spirit, and, most crucially, deliver optimal results for the patients, clinicians, shareholders, and other stakeholder communities that depend on us,” said José Almeida, chairman, president and chief executive officer of Baxter, in a statement.

Following the spin off, the renal care and acute therapies divisions will provide the same services they have for nearly 70 years. Their devices in the home, clinic and ICU are used by more than one million patients in 70 countries today, with about 75% of income collected outside the U.S., according to Baxter.

Around the same time as the spin off, Baxter plans to launch digital patient monitoring and management tools, diagnostics for acute kidney injuries and sepsis, and other products sometime in 2023 or 2024.

It also will finalize a simplified operating model to make it more integrated and able to respond to changes faster and effectively, as well as create a more resilient supply chain. It expects to put together a restructuring plan to optimize its manufacturing footprint.

For its pharma and biotech divisions, a potential sale or other form of separation will allow Baxter to focus more on strategic businesses and repay its debts, much of which come from its $10.5 billion acquisition of Hillrom in December 2021.

The Baxter Board of Directors has authorized the company to complete the spin off via a distribution to Baxter shareholders of common stock of a newly formed entity holding assets and liabilities comprising the renal care and acute therapies businesses.

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