Shares of Baxter International plunged Thursday after the company cut its full-year profit outlook on slower-than-expected sales of plasma-based drugs and charges related to health care reform.
In 2010, the company expects profit between $3.92 and $4 per share, down from a previous range of $4.20 to $4.28 per share. It cited increased Medicaid rebates included in the health care overhaul as well as greater competition in the market for plasma-based therapies used to treat hemophilia, immune disorders and other diseases.
"We, in retrospect, were clearly overly optimistic about the short-term market growth, our ability to retain market share and the near-term impact on the market of deploying additional sales resources," said Chief Executive Robert Parkinson
Shares of the Deerfield, Ill.-based fell 9.82, or 16.7 percent, to $49.29 in morning trading.
The sell-off came despite a 2 percent rise in first-quarter profit on a boost of bioscience and kidney care products.
Baxter earned $525 million, or 86 cents per share, in the quarter ended in March, up from $516 million, or 83 cents per share, a year prior.
Sales rose 11 percent to $3.14 billion from $2.82 billion. Excluding the impact of foreign currency, sales increased 5 percent.
Excluding items, the company says it earned 93 cents per share, matching Wall Street expectations. The company posted a charge of $39 million, or 7 cents per share, related to health care reform.
Management estimated health reform-related costs would total $80 million, or 10 cents per share, for all of 2010.
During the second quarter, the company expects profit between 90 cents and 93 cents per share.
Analysts, on average, expect second-quarter profit of $1.06 per share and full-year profit of $4.24 per share.
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