Baxter raises annual profit forecast on strength in drug compounding business

July 30 (Reuters) - Baxter International BAX.N on Thursday raised its annual profit forecast and beat Wall Street estimates for quarterly results, helped by strong sales in its drug-compounding business, sending its shares soaring 17% in morning trading.

The medical products maker is in the middle of a turnaround led by cost-cutting, after a period of uncertainty around its infusion pump business.

The company now expects 2026 adjusted profit per share of $1.95 to $2.15, compared with its prior outlook of $1.85 to $2.05.

"We'd been expecting some level of upside in the quarter, but this level of top- and bottom-line upside was still a positive surprise," said J.P. Morgan analyst Robbie Marcus.

Second-quarter sales at its largest medical products and therapies segment, which includes IV solutions and drug compounding, jumped 7% from a year earlier to $2.08 billion.

Baxter CEO Andrew Hider said its fast-growing drug compounding business, which prepares customized sterile medications, has "favorable cash conversion," adding that there was room for margins to improve.

The company said strength in drug compounding and IV solutions was partly offset by lower infusion systems sales, following a hold on its Novum IQ large volume pump shipments and installations.

Baxter has said the pump shipment hold is expected to remain in place through 2026, as customers await clarity on additional corrections.