Baxter has reported Q3 revenues of almost $3bn, but as it raises its 2026 outlook for the second consecutive quarter amid the positive financial performance, the company’s stock price also took a hit.
On an adjusted basis, net income in Q3 was $0.58 per diluted share, decreasing 16% compared to the same period last year. This was partly because of a higher effective tax rate.
Still, revenue of almost $3bn was indicative of a 5% year-over-year (YoY) rise. As a result, Baxter now expects its 2026 earnings to land in the $2.05 to $2.15 per diluted share range, up from $1.95 to $2.15 previously.
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Baxter’s shifting fortunes in recent quarters follow a series of setbacks it experienced throughout Q2 and Q3 2025, leading it to take actions including the establishment of its growth and performance system (GPS) in October 2025, to tighten up its internal protocols and address recent issues with products including its Novum infusion pump.
Throughout its recent more positive quarters, Baxter has made much ado about turning its operations, having been hamstrung by a slew of infusion pump recalls throughout recent years that caused its Q2 2025 revenues to come in below analysts’ estimates at $2.81bn.
However, it appears that quality control issues continue to blight Baxter and may have influenced market sentiment despite its positive Q3 performance.
Baxter received a warning letter from the US Food and Drug Administration (FDA) on 29 September that struck a familiar tone, again citing that multiple current good manufacturing practice (CGMP) violations had been uncovered at one of the company’s US drug manufacturing sites.
These issues and the adjusted EPS dip struck a cautious note with investors. Releasing its Q3 financials ahead of market open on 29 October, Baxter’s shares, listed on the New York Stock Exchange (NYSE), saw a slight uptick to $26 at market open, before declining by over 4% to a $24.61 close. Baxter has a market cap of $12.15bn.
Meanwhile, a Jefferies research note agreed with Baxter’s assessment that execution was improving. It noted, however, that it foresees a “challenging ’27 ahead”, due to factors including ongoing inflationary pressures and Baxter’s plans to fully exit its transition services agreements (TSA) in relation to the $3.5bn sale of its kidney care unit to investment firm Carlyle in August 2024.
Once Baxter exits the TSA in January 2027, it will no longer receive fees from Carlyle. This is customary under a typical TSA through which the buyer gradually assumes responsibility for the business and no longer relies on seller support.
More than two-thirds of Baxter’s Q3 revenues stemmed from its medical products & therapies segment, which totalled around $2.1bn, reflecting a 6% YoY uptick. According to the Illinois-based company, the segment’s performance was primarily driven by its infusion therapies and platforms division, chiefly due to sales in relation to infusion systems and drug compounding and IV solutions, with advanced surgery products also contributing to the segment’s overall performance.
Baxter’s healthcare systems and technologies segment, meanwhile, drew in revenues of around $806m, indicative of a 4% uptick YoY. Performance in the quarter reflected strong demand for care and connectivity solutions products, driven by growth in global surgical solutions and patient support systems, with the results also reflecting growth in front line care, Baxter stated.
Andrew Hider, Baxter’s president and CEO, commented: “We delivered a strong third quarter, with growth across all segments and divisions globally.”
“We continue to make steady progress stabilising the business, strengthening the balance sheet and driving continuous improvement. Our results reinforce our confidence in this direction as we build a stronger foundation for sustainable growth and long-term value creation.”
