Baxter Provides Update on North Cove, N.C., Facility and Hurricane Helene Relief Plans for Community

Rhea-AI Summary

Baxter International Inc. (NYSE:BAX) has provided an update on the impact of Hurricane Helene on its North Cove facility in Marion, N.C. The facility is currently closed for production due to flooding, and the company is working closely with various government agencies to assess the damage and resume operations. Key points:

1. Baxter is implementing measures to minimize supply disruptions, including managing inventory and using a protective allocation process.
2. The company will leverage its global manufacturing network to mitigate potential supply impacts.
3. The Baxter International Foundation has committed $1.5 million in donations for recovery efforts and is matching employee donations 2:1.
4. Baxter anticipates a negative impact on its financial results due to the disruption and plans to provide an update in its third quarter earnings announcement.

Positive

• Proactive implementation of hurricane preparedness plan
• Close coordination with government agencies for rapid assessment and recovery
• $1.5 million committed for recovery efforts by Baxter International Foundation
• Employee donation matching program at 2:1 ratio
• Leveraging global manufacturing network to mitigate supply impact

Negative

• North Cove facility currently closed for production due to flooding
• Anticipated negative impact on financial results
• Potential supply disruptions for patients and providers
• Damage to site access bridges

Insights

Financial Analyst

The flooding-induced closure of Baxter's North Cove facility in Marion, N.C., due to Hurricane Helene is a significant event with potential short-term negative implications for the company's operations and financial performance. Key points to consider:

• Production disruption at a major facility could lead to supply chain issues and potential revenue loss.
• The $1.5 million commitment for disaster relief, while positive for corporate social responsibility, will impact expenses.
• Baxter's proactive measures, including inventory management and leveraging its global manufacturing network, may help mitigate some negative effects.
• The company's close coordination with regulatory agencies is important for navigating this crisis effectively.
• The full financial impact is yet to be determined, but Baxter anticipates a negative effect on its financial results, which will be detailed in the upcoming Q3 earnings announcement.

Investors should monitor the situation closely, as the speed of recovery and the extent of the damage will be critical factors in assessing the medium-term impact on Baxter's performance.

Supply Chain Expert

The closure of Baxter's North Cove facility presents significant supply chain challenges that require careful management:

• Implementing a protective allocation process by product line is a smart move to ensure equitable distribution and maintain customer relationships.
• Leveraging Baxter's global manufacturing network to offset production losses is important but may incur additional costs and logistical complexities.
• The company's proactive hurricane preparedness, including moving products to secure storage, may have mitigated some potential losses.
• Coordination with regulatory agencies like FDA and ASPR is essential for maintaining compliance and potentially expediting recovery efforts.
• The unknown timeline for resuming production creates uncertainty in supply planning, which could lead to market share losses if prolonged.

Baxter's ability to quickly assess damage, restore operations and effectively communicate with stakeholders will be critical in minimizing long-term supply chain disruptions and maintaining market position.

• Baxter’s North Cove facility affected by flooding and currently closed for production as the company assesses extent of the impact
• Company is working closely with FDA, ASPR, HHS, FEMA, Department of Homeland Security and local and state officials
• Baxter and the Baxter International Foundation are committed to supporting recovery efforts in impacted local communities

DEERFIELD, Ill.--(BUSINESS WIRE)-- Baxter International Inc. (NYSE:BAX), a global medtech leader, today shared updates regarding the impact of Hurricane Helene, which brought unprecedented rain and extensive flooding to Western North Carolina, on the operations of its North Cove facility in Marion, N.C.

Baxter’s North Cove site was affected by flooding due to the storm and is currently closed for production. The company is working around the clock in close coordination with local, state and federal officials to assess the extent of the damage and implement a plan to bring the plant back online as quickly as possible to help mitigate supply disruption to patients.

“Our hearts and thoughts are with all those affected by Hurricane Helene,” said José (Joe) E. Almeida, chair, president and chief executive officer at Baxter. “The safety of our employees, their families, and the communities in which we operate remains our utmost concern, and we are committed to helping ensure reliable supply of products to patients. Remediation efforts are already underway, and we will spare no resource – human or financial – to resume production and help ensure patients and providers have the products they need.”

Ahead of the storm, Baxter implemented its hurricane preparedness plan, which included evacuation plans for colleagues, as well as proactively moving products to higher ground or secure storage where feasible. The heavy rain and storm surge triggered a levee breach, which led to water permeating the site. The bridges accessing the site have also been damaged.

Baxter is communicating with its customers about the actions the company is taking to minimize potential disruptions. These include actively managing inventory and implementing a protective allocation process by product line to help support supply continuity and equitable product distribution. The company will leverage Baxter's global manufacturing network to help mitigate potential supply impact as it continues efforts to fully restore North Cove's manufacturing operations.

The Baxter International Foundation has committed $1.5 million in donations to its humanitarian aid partners to help address recovery needs, including allocating additional funds to its Employee Disaster Relief Fund, and is matching employee donations $2:$1 to relief efforts.

Baxter is working diligently with and is grateful for the strong support of regulatory agencies, including HHS (Department of Health and Human Services), FDA (U.S. Food and Drug Administration), ASPR (Administration for Strategic Preparedness & Response), FEMA (Federal Emergency Management Agency), DHS (Department of Homeland Security), and local and state authorities, its partners on the ground, and the dedication and resilience of Baxter colleagues. Baxter will continue to provide updates as additional information becomes available and aims to provide an update on estimated timing to resume production as soon as it is able.

While the company is working expeditiously to restore its manufacturing operations and return to production, the disruption is anticipated to negatively impact the company's financial results. Once the company can more fully assess the damage, it will be in a better position to estimate any expected impact and plans to provide an update in its third quarter earnings announcement.

About North Cove, N.C.

Opened in 1972, North Cove is Baxter’s largest manufacturing facility and includes more than 2,500 employees. The site primarily manufactures intravenous and peritoneal dialysis solutions and is the largest manufacturer of these solutions in the United States.

About Baxter

Every day, millions of patients, caregivers and healthcare providers rely on Baxter’s leading portfolio of diagnostic, critical care, kidney care, nutrition, hospital and surgical products used across patient homes, hospitals, physician offices and other sites of care. For more than 90 years, we’ve been operating at the critical intersection where innovations that save and sustain lives meet the healthcare providers who make it happen. With products, digital health solutions and therapies available in more than 100 countries, Baxter’s employees worldwide are now building upon the company’s rich heritage of medical breakthroughs to advance the next generation of transformative healthcare innovations. To learn more, visit www.baxter.com and follow us on X, LinkedIn and Facebook.

Forward-Looking Statements

This press release contains forward-looking statements related to the impact of Hurricane Helene on Baxter’s North Cove, N.C. facility and Baxter’s relief plans including Hurricane Helene’s anticipated negative financial impact, Baxter’s plans to provide further commentary during its third-quarter 2024 earnings announcement, Baxter’s use of resources to resume production and help ensure that patients and providers have required resources, Baxter’s actions and communication to minimize disruptions, mitigate the supply impact of Hurricane Helene and restore operations, Baxter’s commitment to provide updates regarding the timing to resume production and Baxter International Foundation’s commitment to help address recovery needs. These forward-looking statements are subject to risks and uncertainties that include, among other things, risks related to further disruption due to Hurricane Helene or other storm-related events and other risks identified in Baxter's most recent filings on Form 10-K and Form 10-Q and other SEC filings, all of which are available on Baxter's website. Actual results could differ materially from anticipated results. Baxter does not undertake to update its forward-looking statements or any of the statements contained in this press release.

Baxter is a registered trademark of Baxter International Inc. or its subsidiaries.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240929200201/en/

Media Contact

Stacey Eisen, (224) 948-5353

media@baxter.com

Investor Contact

Clare Trachtman, (224) 948-3020

Source: Baxter International Inc.

FAQ

How has Hurricane Helene affected Baxter's North Cove facility in Marion, N.C.?

Hurricane Helene caused extensive flooding at Baxter's North Cove facility, leading to its closure for production. The storm triggered a levee breach, allowing water to permeate the site, and damaged access bridges.

What measures is Baxter (BAX) taking to address potential supply disruptions?

Baxter is actively managing inventory, implementing a protective allocation process by product line, and leveraging its global manufacturing network to help mitigate potential supply impacts while working to restore North Cove's operations.

How much has the Baxter International Foundation committed to Hurricane Helene recovery efforts?

The Baxter International Foundation has committed $1.5 million in donations to its humanitarian aid partners for recovery efforts, including allocating funds to its Employee Disaster Relief Fund and matching employee donations 2:1.

When will Baxter (BAX) provide an update on the financial impact of the Hurricane Helene disruption?

Baxter plans to provide an update on the estimated financial impact of the disruption in its third quarter earnings announcement, once it can more fully assess the damage to its North Cove facility.