Following its blockbuster buy of medtech manufacturer Hillrom late last year, Baxter may now be preparing to trim some of the fat from its newly expanded product portfolio.
The devicemaker is said to be considering a sale of two units within its kidney care division, Bloomberg reports. Unnamed sources familiar with the considerations told the outlet that Baxter is working with advisers to explore the potential sale of its renal care services and hemodialysis divisions.
That said, the sources noted that the discussions are in an early stage and that the Chicago-area company could still decide not to shed the businesses at all. Baxter didn’t immediately reply to Fierce Medtech’s request for comment.
Both of the segments potentially on the table are housed within Baxter’s renal care business, the largest of its 10 core business divisions. In 2021, the kidney-focused division brought in around $3.9 billion, nearly a third of the company’s $12.8 billion total for the year.
The hemodialysis unit is responsible for developing machines used to filter and clean waste from the blood of patients with kidney failure. Baxter’s renal care service business, meanwhile, operates a line of clinics where those dialysis services are performed.
The sources told Bloomberg that the dialysis clinics rake in about $250 million in revenue per year, while the devicemaking division earns about $1 billion—but isn’t yet profitable. If sold, the units would together draw an asking price “well under $1 billion,” they said, and may be particularly attractive to a private equity buyer.
Such a sale wouldn’t be completely out of left field. As Bloomberg pointed out, just a few weeks ago, CEO Jose Almeida hinted that some of Baxter’s business units might soon find themselves on the chopping block.
“The portfolio actions that we're going to take and are currently examining are long-lasting initiatives to make sure that Baxter is aligned in allocating capital to the businesses that will be connected to our strategy and our vision,” he said during a late July call with investors. “And right now, Baxter has some businesses that fall outside our main area of vision.”
Though he didn’t specify those possibly extraneous businesses, he predicted that Baxter would take at least one divestiture action by the end of 2022, with a second, more complex one still in the works.
After following a solidly downward trend since the beginning of the year, Baxter’s stock price saw a slight tick upwards following the release of Bloomberg’s report, which went live on Tuesday after the markets had closed. Baxter’s stock closed on Tuesday at $58.14, but opened on Wednesday about 15 cents higher and proceeded to climb past the $59 mark in the initial hours of trading.