Baxter's third-quarter sales from continuing operations rose 5% to $2.8 billion with adjusted EPS of $0.69 beating on the bottom line, but the top line fell short of prior guidance amid weakness in infusion pumps and injectables. The main drags were a shipment and installation hold on the Novum IQ Large Volume Pump, which is expected to persist beyond year-end, slower-than-anticipated recovery in U.S. IV Solutions after Hurricane Helene, and continued premix softness, partly offset by strong Advanced Surgery growth. Management lowered its top-line outlook and cut the dividend to $0.01 per share to accelerate deleveraging, framing the period as a stabilization year ahead of a 2026 Investor Day.
Good morning and welcome. Today we'll discuss Baxter's third quarter 2025 results along with an update to our full year 2025 outlook and newly issued fourth quarter 2025 guidance. This morning, a press release was issued with our preliminary earnings results and updated outlook. The press release and investor presentation are available on the Investors section of the Baxter website. Joining me today are Andrew Heider, President, Chief Executive Officer, and Joel Grade, Executive Vice President and Chief Financial Officer.
During the call, we will be making forward-looking statements, including comments regarding our financial outlook for the fourth quarter and full year 2025 and matters related to future dividend declarations, the anticipated impact of the kidney care sale, including our ability to eliminate related costs, the anticipated impact of various regulatory and operational matters, including ones related to our infusion pump platform, what we believe to be continuing fluid conservation and heightened inventory levels, and commentary regarding the global macroeconomic environment, including tariffs and proposed mitigating actions. Forward looking statements involve risks and uncertainties which could cause our actual results to differ materially from our current expectations. Please refer to today's press release.
Forward looking statement slide at the beginning of our investor presentation and our SEC filings for more details. In addition, please note that on today's call, all our comments will be on a non-GAAP basis unless they are specifically called out as GAAP. Non-GAAP financial measures are used to help investors understand Baxter's ongoing business performance. GAAP to non-GAAP reconciliations for all relevant periods can be found in the schedules attached to our press release and in our investor presentation. Finally, as a reminder, continuing operations excludes Baxter's kidney care business, which is now reported as discontinued operations. Now I'd like to turn the call over to Andrew.
Thank you, Kevin. Let me welcome you officially as the new head of Baxter's relations team, and good morning everyone. I am pleased to be here for my first earnings call as CEO and look forward to getting to know everyone here better as the quarters progress. As I've said in many settings over the last several weeks, it is an honor to have the responsibility to lead this new chapter at Baxter. Our company is essential to healthcare with an iconic brand that is valued and trusted by caregivers and patients globally. Since joining the company, I've immersed myself in Baxter's business, leading teams around the world, 14 site visits across seven countries and counting, working side by side with employees, speaking directly with customers, and gaining a more detailed view of the opportunities and challenges we face.
I have learned a great deal in a short period, but I want to reflect on two things that clearly stand out. First is that we're building from a fundamental position of opportunity. I have been struck by the commitment and pride this team brings to Baxter's mission to save and sustain lives and to serving our customers. This is a business whose portfolio has proven resilient over its almost 100 year history, one that has delivered significant revenues and attractive operating margins and generated solid cash flow over the years. The strength of our business, the critical role we play in healthcare, and the talent and dedication of our people who are committed to win should position us well to deliver lasting value.
Second is that we are proactive and clear-eyed about what needs to improve and change at the company so we're better positioned to deliver on our potential. Let me be clear about that. We are not satisfied with our current performance. There is a recognition that challenges must be met head on with both immediate actions as well as real long-term solutions. I am also very realistic about the road in front of us as we work to prioritize our areas of focus, improve execution and business performance, deliver sustained growth, and improve profitability and cash flows. Turning briefly to this quarter's results, which Joel will speak to in detail, our third quarter top line performance came in lower than our previously issued guidance and exceeded expectations on the bottom line due to a favorable tax rate.
These results reflect challenges in two divisions, the Infusion Therapies and Technologies division within the Medical Products & Therapies segment and the Injectables and Anesthesia division within the Pharmaceuticals segment. Importantly, Baxter's Healthcare Systems & Technologies segment demonstrated improved performance. Before I turn it to Joel to discuss financial results in more detail, I want to give you a better sense of how I'm approaching the first several months of my time at Baxter and to give you some context on the decisions and actions that we have taken to date and will take in the coming months. We will have more opportunities to discuss long-term strategy down the road, but in the near-term you'll see us take actions and decisions designed to support three areas. First, stabilizing the areas of the business that require increased focus.
Second, strengthening our balance sheet, and third, driving a culture of continuous improvement and enterprise-wide efficiency. Let me share my initial thoughts on each. I'll start with stabilizing the business. Baxter already has undergone significant transformation in recent years and is now a more streamlined and focused enterprise. Of course, there have been challenges in certain areas that have hampered growth and consistent execution, and we expect our growth algorithm to continue to be pressured in the near-term. With my background in operations, I am bringing a keen eye to people, process, and performance of Baxter along with what we call uniform value creators, standardized metrics that we're focused on value creation. One critical area of focus and attention right now, for example, is related to the pause we've taken on deliveries and installations of the Novum IQ Large Volume Pump.
While we're disappointed that we expect the current hold to remain in place beyond year-end, we are working tirelessly to evaluate and test potential corrections to fully resolve the flow rate issues. In parallel, we will continue to closely support current Novum IQ LVP users. We will also continue to offer Baxter's Spectrum IQ LVP, a long-standing and well-known product used in more than 1,500 facilities across the U.S. and Canada as a leading option for infusion therapy, one that Baxter continues to invest in. The Spectrum IQ LVP now operates on a shared gateway with Novum IQ Syringe, creating a cohesive user experience and is built for the future with EMR interoperability, enhanced software, and innovative analytical capabilities. A second area of focus will be improving Baxter's balance sheet.
It is from the basis of a strong balance sheet that we will be better able to invest in the business, support innovation, and deliver and return increased value to our shareholders. This means focusing on improved cash flow and taking a consistent approach to our capital allocation objective. The first step in addressing our balance sheet is taking decisive and clear steps to reduce our leverage. It is in this context that we and the Board intend to reduce the quarterly dividend to $0.01 per share, beginning with the dividend to be paid in January 2026. This will free up cash to accelerate deleveraging consistent with our prior commitments. Joel will provide more details on that in his section of the call as well. The last area you will continue to see us prioritize is building enterprise-wide efficiency into everything we do at Baxter.
Earlier this month we rolled out Baxter GPS, our new growth and performance system aimed at driving continuous improvement and a growth and performance mindset. This data-driven system is inspired by best-in-class models from organizations known for strong cultures of continuous improvement and represents a positive change in how we work. It also adapts in real time, helping to ensure we are moving toward greater efficiency, stronger performance, and impact. Ultimately, this will help build the habits and discipline across the enterprise that will define our future success. I've led this type of system successfully at several other companies and I'm confident it will lead to improved performance at Baxter over the long-term. In closing, I want to step back and reflect on what makes me confident and excited about Baxter's future.
Yes, there is work ahead and the coming quarters will require significant focus, discipline, and execution, but I see a company with a strong foundation, a clear path forward, and the ability to turn challenges into opportunities. You can expect us to work with urgency and focus to accelerate growth, improve margins and cash flow, and drive enhanced innovation.
We are on a journey to build a better Baxter that is more resilient, more agile, and more capable than ever. A Baxter with more consistent execution, what I like to call a higher say-do ratio. A Baxter that will work to redefine healthcare delivery and, in doing so, continue to deliver meaningful impact for customers, patients, and long-term value creation for shareholders. I look forward to keeping you updated on our progress and getting to know you all better in the coming weeks and months. With that, I will now turn it over to Joel. Joel, over to you.
Thanks, Andrew, and good morning, everyone. Let me also take a moment to welcome Kevin Moran as our new Vice President of Investor Relations. Many of you already know Kevin from his prior IR roles at other companies in the space. Kevin brings valuable finance, IR, and, importantly, healthcare experience to the team. We're excited to have Kevin on the team and look forward to his leadership in continuing to strengthen our relationships with you all. Before I begin the sales discussion, a reminder that results discussed on today's call will reference operational growth, which excludes the impact of foreign exchange, MSA revenues from Vantiv, and the previously announced exit of IV Solutions from China. Third quarter 2025 global sales from continuing operations totaled $2.8 billion and increased 5% on a reported basis and 2% on an operational basis. Performance in the quarter reflects growth across nearly all divisions.
On the bottom line, total company adjusted earnings from continuing operations were $0.69 per share. Results in the quarter reflect positive pricing in select segments, receipt of Kidney Care TSA income, and lower non-operating expenses, including interest and tax. Now I'll walk you through results by reportable segment. Commentary regarding sales growth will reflect growth on an operational basis. Sales in our Medical Products & Therapies, or MPT, segment were $1.3 billion and declined 1% in the quarter. Performance in the quarter reflects softness in Infusion Therapies and Technologies, or ITT, slightly offset by strong demand for Advanced Surgery products within MPT. Third quarter sales from our ITT division totaled $1 billion and declined 4%, primarily reflecting lower infusion pump sales due to the previously discussed ship and installation hold of Novum LVP and ongoing softness in U.S. Hospital IV Solutions, which we believe is due to continuing post-Hurricane Helene fluid conservation efforts.
Sales decline in Infusion Systems includes lost sales, Novum LVP customer returns, and certain customers electing to transition to our Spectrum IQ LVP. We expect sales across our infusion pump portfolio to remain under pressure as we work with our customers to complete the necessary corrections to fully address the outstanding field actions and lift the shipment and installation hold on Novum. While we see continued interest in our pump portfolio, we recognize that the timing and nature of the resolution of the Novum LVP hold is leading some customers to evaluate alternative solutions. We are actively supporting Novum customers with both initial and eventually additional corrections, as well as offering Spectrum IQ as an alternative.
We remain focused on minimizing disruption and maintaining strong relationships across our installed base. Within IV Solutions. U.S. demand remains below pre-Hurricane Helene levels. Based on our current expectations, we expect further recovery in demand, though at a more moderate pace, and some level of fluid conservation is likely to remain in 2026. Over the medium and longer-term, we remain confident in the strength of our IV Solutions business. Sales in Advanced Surgery totaled $306 million and grew 11% globally.
Results in the quarter reflect solid demand for our portfolio of hemostats and sealants, strong commercial execution across all regions, and steady procedure volumes. MPT's adjusted operating margin totaled 20.5% for the quarter, increasing 50 basis points over the prior year period and reflecting positive pricing in the quarter, partially offset by lower sales volumes and increased manufacturing and supply costs resulting from the factors previously discussed. R&D expense declined in the quarter primarily due to one-time items, while underlying investment remained unchanged.
Kidney Care TSA income contributed to positive performance in the quarter, as well as in Healthcare Systems & Technologies, or HST, sales in the quarter totaled $773 million, increasing 2%. Within HST, sales of our Care and Connectivity Solutions, or CCS, division were $473 million and grew 3% globally. Performance in the quarter was driven by 4% growth in the U.S. for CCS, reflecting double-digit growth in our Surgical Solutions business and continued momentum across our Patient Support Systems and Care Communications portfolios.
Total U.S. capital orders for CCS increased 30% compared to the prior year, driven by broad-based strength across Patient Support Systems, Care Communications, and Surgical Solutions. We continue to believe our order pipeline remains strong. To date, we have not observed a slowdown in U.S. hospital capital spending. However, given the broader macroeconomic uncertainty, we continue to closely monitor the situation. Frontline Care sales in the quarter were $300 million and increased 1%. Performance in the quarter reflects increased demand in our cardiology portfolio. HSC adjusted operating margin totaled 13.5% for the quarter, decreasing 460 basis points compared to the prior year. These results reflect higher costs related to tariffs, increased R&D investments, and increased corporate allocation expenses following the sale of Kidney Care.
TSA income partially offset these increased expenses. Moving on to our Pharmaceuticals segment, sales in the quarter totaled $632 million, increasing 7%. Within Pharmaceuticals, sales of our Injectables and Anesthesia division were $333 million and grew 3% globally. Performance in the quarter reflects high single-digit growth in our Anesthesia portfolio driven by increased volumes in certain markets outside the U.S. Injectables growth benefited from a favorable comparison to the prior year period, which was negatively impacted by the timing of certain sales and supply constraints impacting international sales. We continue to experience softness in certain Premix products, largely consistent with the dynamics discussed last quarter related to IV infusion protocols and increased use of IV push in select hospital settings. Our teams remain focused on reinforcing the clinical value of our Premix portfolio and driving improved commercial execution.
Drug Compounding grew 11% and reflects strong demand for our services outside the U.S. Pharmaceuticals adjusted operating margin totaled 8.9% for the quarter, decreasing 100 basis points compared to the prior year. These results reflect unfavorable product mix, increased procurement costs, and increased corporate allocation expenses. These expenses were partially offset by Kidney Care TSA income. Finally, other sales, which represent sales not allocated to a segment and primarily include sales of products and services provided directly through certain manufacturing facilities, were $16 million in the quarter. MSA revenue from Vantiv totaled $85 million. As a reminder, these sales are included in our reported growth. However, they are not reflected in our operational growth for the quarter.
Before moving on to the rest of the P&L, an important reminder on our continuing operations reporting: following the sale of the Kidney Care business, certain corporate costs that did not convey with the business are now allocated across our segments in both cost of goods sold and SG&A, along with income from the TSAs, which is currently recognized within other operating income. In addition, as previously discussed, we reclassified certain functional expenses from SG&A to cost of goods sold beginning earlier this year. These costs support manufacturing and are now treated as indirect expenses subject to inventory capitalization and recognized in cost of sales when sold. Therefore, as a result of these cost shifts across the P&L, we believe it is most appropriate to focus on operating income expansion.
Importantly, operating margin on a continuing operations basis was 14.9% in the quarter, improving 40 basis points compared to the prior year period. Results reflect disciplined expense management and the benefit of TSA income, partially offset by softer volumes and mix. Third quarter adjusted gross margins from continuing operations were 39.4%, a decrease of 430 basis points compared to the prior year. The decline reflects the factors I just discussed. Third quarter adjusted SG&A from continuing operations totaled $629 million or 22.2% as a percentage of sales, a decrease of 240 basis points from the prior year period. Results reflect disciplined expense management and the benefit from the reclassification of functional costs. Adjusted R&D spending from continuing operations in the quarter totaled $115 million or 4.1% as a percentage of sales, a decrease of 70 basis points from the prior year period.
Results reflect the timing of certain R&D expenses currently expected to shift into the fourth quarter and certain one-time items and therefore do not reflect our anticipated level of R&D spend going forward. Kidney care, TSA income, and other reimbursements totaled $85 million in the quarter and came in line with our expectations. As previously discussed, the associated expenses related to this income are reflected in other lines of the P&L, including cost of goods sold and SG&A. Altogether, these factors resulted in an adjusted operating margin of 14.9% on a continuing operations basis, improving 40 basis points compared to the prior year period. Net interest expense from continuing operations totaled $58 million in the quarter, a decrease of $29 million versus the prior year period, reflecting lower interest expense following the pay down of existing debt with proceeds from the sale of Vantiv.