Joel Grade
Executive Vice President and Chief Financial Officer at Baxter International
Thanks, Joe and good morning, everyone. As Joe mentioned, we are pleased with our first quarter results, which came in ahead of our expectations. First quarter 2024 global sales of $3.6 billion increased 2% on a reported basis and 3% on a constant currency basis and as mentioned, compared favorably to our previously issued guidance. Performance in the quarter benefited from better-than-expected sales across all our product divisions, with the exception of those within our health care systems and technology segment. On the bottom line, adjusted earnings from continuing operations totaled $0.65 per share increasing 33% versus the prior year period and ahead of our prior guidance $0.59 to $0.62 per share. These results reflect the meaningful operational improvements we are recognizing both commercially as well as within our integrated supply chain network. And these factors drove our outperformance in the quarter.
Now, I'll walk through our results by reportable segments. Commentary regarding sales growth will reflect growth at constant currency rates. Sales on our medical products and therapies or MPT segment are $1.2 billion, increasing 6%. Within MPT, first quarter sales from our infusion therapies and Technologies division totaled $966 million an increased 6%. Sales in the quarter benefited from strong growth internationally across the division including in our IV solutions nutrition and infusion systems portfolios. Solid demand in the US for IV solutions also contributed to growth in the quarter.
Sales from advanced surgery totaled $263,000,000 and drew 8% coming in ahead of expectations and reflecting strong growth internationally. For our healthcare systems and technologies, or HST segments, sales in the quarter were $667 million a declined 9%. Within the HST segment, sales on our Care and Connectivity Solutions, or CCS division, were $402 million declining 7%. Performance in the quarter was impacted by several factors, including the phasing of product installations, particularly for care communications, which is expected to accelerate later in the year by the timing of capital orders which increased mid-single digits in the quarter but are expected to ramp more meaningfully over the course of the year. By lower rental revenues, which negatively impacted sales by approximately $5 million. And finally, by a certain operational challenges for which the team is in the process of implementing clear plans to improve performance and enhance commercial rigor. Given all these factors, we expect to see significant improvements for CCS in both orders and revenue in the second half of the year, which is similar to the [technical difficulties] we experienced last year in this division. Frontline care sales in the quarter were $265 million, declining 12%. Growth in the quarter was impacted by a difficult comparison in the prior year as backlog reductions positively contributed to growth in the prior year period. Performance of the quarter was also affected by softness in the primary care market, which negatively impacted sales in both our connected monitoring and intelligent diagnostics product portfolios. Similar to CCS, we expect performance to meaningfully improve in the second half of the year as market conditions for primary care are anticipated to ease the pace of customer orders are expected to increase and the anniversary of prior year impact from the backlog reduction.
Sales in our pharmaceuticals segment were $578 million, increasing 11%. Performance in the quarter reflected double-digit growth in both our us and international injectables portfolio driven by new product launches as well as continued strong demand for services within our drug compounding portfolio internationally.
Moving on to kidney care. Sales in the quarter are $1.1 billion, increasing 4%. Within kidney care global sales for chronic therapies were $888 million increasing 2%. Solid PD growth in the quarter was partially offset by the negative impact from certain products and market exits. In our in-center HD business as well as reduced sales in China due to government procurement initiatives and lower patient census volumes following the pandemic.
We estimate that these items negatively impacted sales by approximately $50 million in the quarter. Sales in our acute therapies business were $214 million, representing growth of 15%, driven by strong demand and competitive wins in the US and solid performance internationally. Other sales which represent sales not allocated to a segment and primarily includes sales of products and services provided directly through certain of our manufacturing facilities where $16 million and declined 47% during the quarter in line with our expectations and reflecting reduced demand for certain contract manufacturing volumes. Now moving on to the rest of the P&L. Our adjusted gross margin totaled 42.5% and represented an increase of 170 basis points over the prior year and was favorable to our expectations. The year-over-year improvements in gross margin primarily affects the strong operational efficiencies we are realizing within our integrated supply chain network resulting from execution of the margin improvement programs we're implementing and the anniversary of the negative margin impacts from inflationary pressures that drove higher cost of goods sold in the prior year period.
Pricing initiatives in select markets also positively contributed to margin improvement in the quarter. First quarter margins also reflected a benefit from the closure of our dialyzer facility as production in the facility was increased in advance of the closure, resulting in better absorption and lower costs for these dialyzers. This benefit is expected to be isolated to the first quarter. Overall product mix in the quarter did partially offset margin expansion in the quarter. Adjusted, SG&A totaled $856 billion, or 23.8 as a percentage of sales consistent with the prior year period as ongoing transformation, initiatives to enhance operational efficiencies were offset by higher spend in select investments in sales and marketing initiatives.
SG&A leverage is expected to improve as sales ramp over the course of the year.
Adjusted R&D spending in the quarter total $160 million and represented four and a half as a percentage of sales. Similar to the prior year period and reflects our continued investments in advancing new products across the portfolio and bringing innovation to patients across our [technical difficulties]. These factors resulted in an adjusted operating margin of 14.3% an increase of 180 basis points versus the prior year.
Net interest expense totaled $78 million in the quarter, a decrease of $39 million versus the prior year period, driven by debt repayments in the fourth quarter of 2023, with proceeds from our BPS divestiture. We plan to continue to repay debt in 2024 consistent with our stated capital allocation priorities.
Adjusted other nonoperating income totaled $7 million in the quarter, compared to income of $2 million in the prior year period. The adjusted tax rate in the quarter was 25.0% compared to 23.1% in the prior year period. The year-over-year increase is primarily driven by evaluation allowance recognized in the quarter. And as previously mentioned, adjusted earnings from continuing operations totaled $0.65 per share an increased 33% versus the prior year, primarily driven by commercial performance and operational efficiencies within our integrated supply chain.
Let me conclude my remarks by discussing our outlook for the second quarter and full year 2024 including some key assumptions underpinning the guidance.
For full year 2024, Baxter now expects total sales growth of approximately 2% on a reported basis and 2% to 3% on a constant currency basis, which is an increase from prior guidance of approximately 2% on constant currency basis. Constant currency sales guidance for the full year by reportable segments is as follows.
For MPT, we expect sales growth of 4% to 5%. This is an increase from the prior guidance of 3% to 4% and reflects the first quarter outperformance and the inclusion of Novum, which is currently expected to contribute an incremental $25 million to infusion pump sales and reflects some cannibalization of prior planned sales of spectrum. Sales in our health care systems and technology segments are expected to be flat the prior year as compared to previous guidance, or approximately 3%.
As mentioned earlier, we expect performance to meaningfully improve in the second half of the year, driven by the factors discussed including timing of installations order, phasing and improved operational execution.
We expect pharmaceutical sales growth of 6% to 7% which compares favorably to prior guidance of 4% to 5% and reflects the strong start to the year and continued momentum for our new product launches. Collectively, sales for these Baxter businesses are expected to increase 3% to 4% in 2024. For kidney care, we expect sales growth of flat to 1% as compared to 2023. This also compares favorably to prior guidance and reflects the underlying momentum of this business. Now turning to our outlook for other PNL line items.
We continue to expect adjusted operating margin to increase by at least 50 basis points in 2024. We expect our nonoperating expenses, which include net interest expense and other income and expense to total approximately $350 million in aggregate during 2024. We continue to anticipate a full year adjusted tax rate between 22.0% and 22.5%. We expect our diluted share count to increase slightly and average 511 million shares for the year.
Based on all these factors, we now anticipate full year adjusted earnings, excluding special items of $2.88 to $2.98 per diluted share which also compares favorably to prior guidance of $2.85 to $2.95 per diluted share and reflects the outperformance we realized in the first quarter. Specific to the second quarter of 2024, we expect global sales growth of approximately 1% on a reported basis on a reported basis and 2% to 3% on a constant currency basis. And we expect adjusted earnings excluding special items of $0.65 to $0.67 per diluted share.
With that, we can now open up the call for Q&A. Thank you.
