Baxter International plans to spin off kidney care units

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Jan 6 (Reuters) – Baxter International Inc BAX.N said on Friday it plans to spin off its kidney care units, becoming the latest medical device maker to slim down in the face of supply-chain challenges.

Shares of the Deerfield, Illinois-based firm were down about 6% in morning trade. 

The company plans to spin off its renal care and acute therapies units into a separate listed entity in the next 12-18 months. It is also exploring alternatives for its biopharma solutions business, including a potential sale or other separation options.

Dialysis operations, which are a part of Baxter’s renal care unit, are a drag on the parent company’s margins today, said Chief Financial Officer James Saccaro. 

Medical device makers are still grappling with supply-chain shortages that began during the pandemic, with rising costs of raw materials, labor and transportation piling on more pressure.

Baxter’s rival Medtronic MDT.N said in October it would spin off two of its smaller businesses into a new company to streamline its portfolio and increase the pace of revenue growth.

“Our current operating model, which has served us well previously, does create an element of operational complexity, which became more evident last year when working through the challenges created by the unprecedented volatility in the macro environment,” Baxter Chief Executive Officer José Almeida said in a conference call with investors. 

The company said the restructuring will allow it to “create a more resilient supply chain and greater alignment with the company’s manufacturing footprint”. 

For the nine months ended Sept. 30, the renal care unit reported sales of $2.77 billion, down from $2.87 billion the previous year. The acute therapies unit posted sales of $519 million, declining from $580 million a year ago. 

(Reporting by Raghav Mahobe and Leroy Leo in Bengaluru; Editing by Shounak Dasgupta and Devika Syamnath)

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