Good morning ladies and gentlemen and welcome to the Baxter International's fourth quarter 2025 earnings conference call. Your lines will remain in a listen-only mode until the question and answer segment of today's call. At that time if you have a question you will need to press the star then one keys on your touchtone phone. If anyone should require assistance during the conference please press star then zero on your touchtone phone. As a reminder this call is being recorded by Baxter and is copyrighted material. It cannot be recorded or rebroadcast without baxter's permission if you have any objections please disconnect at this time i would now like to turn the call over to mr kevin moran vice president investor relations at baxter international mr moran you may begin good morning and welcome today we will discuss including

in anticipated timing leveraging efforts the amount and time the anticipated impact of various regular and to clinical and common. Please refer to it at the beginning of our and our essay note that on today's call, specifically called non-GAAP can be found in the schedule and the previous MSA revenues from Vantus and any impact from future business acquisitions or divestitures. We plan to utilize the organic growth measure going continuing operation kidney care business, which is now reported as discontinued operations.

Thank you, Kevin. and good morning, everyone. Fourth quarter 2025, global sales from continuing operations totaled $3 billion and increased 8% on a reported basis and 3% on an operational basis. Total company adjusted earnings from continuing operations were 44 cents for diluted share. While the top line exceeded our expectations, adjusted EPS fell short. Joel will get into greater detail on the results, but there were a few areas that differed from our expectations we provided in October. On top line, we saw more modest net impact from Novum IQ large volume pump customer returns, which was favorable to results. While responses have varied, in general, customers are waiting for additional clarity on the nature and timing of the additional corrections that we will look to deploy. Margins were pressured by both an unfavorable mix of sales as well as some non-reoccurring items including inventory adjustments. And finally, we saw a higher tax rate. The results in the quarter are disappointing and underscore the work ahead to improve performance and execute more consistently. I stepped into this role in August with confidence in the potential of the business, given the central role Baxter plays in health care but also with a practical sense of the hurdles before us as I've continued to visit our sites and engage directly with the team and customers I've deepened my understanding of both the challenges and opportunities facing Baxter we're in the early stages of a turnaround and have more work to do to deliver strategically operationally and commercially and recognize it will take time to implement real long-term solutions. That said, there's a strong thesis on where we can take this business, and we saw some examples of this in the quarter's results. For example, the advanced surgery business kept off a great year with a strong quarter, growing 11 percent with contributions both across the portfolio and around the globe, and the healthcare systems and technology segment had another quarter of consistent performance, including a contribution from the recently launched Connect360 Monitor in the frontline care division. We're also preparing for the launch of the recently announced Dynamo Series Stretcher, the latest innovation in our portfolio of smart beds, services, and connected care solutions. Innovation will be a critical element to our success, and we recognize the importance of bringing new innovation into the market. Accordingly, you should expect a heightened focus going forward and continued investment in R&D at or above historical levels. As I said during our last earnings call and reiterated last month, I am focused on three main priorities. These are stabilizing the areas of the business that require increased focus, strengthening our balance sheet and driving a culture of continuous improvement and efficiency. We are moving with focus and urgency on each of these, and our teams are driving relentlessly to improve execution and performance across the enterprise. It is with this in mind that we have decided to hold off on our investor day. Let me share a few updates on our priorities and the actions we have taken. Stabilize. Just a few weeks ago, we internally announced a new operating model that is designed to simplify our organization, accelerate innovation, and improve performance. Most significantly, we are delaying levers of leadership including removing the segment management layer and embedding critical functional roles directly in each of our businesses. This will allow each leader to have full P&L responsibility for their business with fully aligned commercial, R&D, manufacturing, medical, and targeted functional support, and importantly, full accountability to the results. These changes are significant and are designed to reduce complexity, eliminate barriers for decision-making, bringing us closer to our customers, and help us to improve our say-do We've also taken actions within our IV solution business to right-size a support footprint to align to the lower demand environment, which we believe is a new baseline in the market. In pharma, in addition to market demand softness, supply and backorder challenges have impacted revenue and driven unfavorable product mix. Specific initiatives to address these are in progress. However, it will take some time to bear fruit. Overall, across the enterprise, we are taking actions to further strengthen our focus on quality and improving on-time delivery, our two customer value creators. Balance sheet. We continue to focus on improving our cash generation and leverage. In line with our expectations, free cash flow generation exceeded $450 million in the quarter and continuous improvement. As a reminder, operational efficiency is at the center of what we are driving. As you know, a key element of this is our Baxter Growth and Performance System, Baxter GPS, which we rolled out in October to ensure continuous improvement, enterprise efficiency, and a growth and performance mindset are integrated into our day-to-day work. We recently held our first annual President's Kaizen. where I was impressed by the resolve each of our leaders demonstrated in driving change for the better with a focus on 10 events that will drive cross-business impact. Through focused, week-long sprints, teams tackle critical opportunities aligned to our eight value graders. The work underway is helping us reduce complexity, better anticipate customer needs, accelerate innovation, commercialize faster, and deliver value sooner. We are focused on improving every aspect of our operations, and we will be consistently measuring our performance to deliver just that. Importantly, this is not a one-off event. It's how we're building a continuous improvement culture where everyone is empowered to make things better every day. Before I turn it over to Joel, I just wanted to reiterate the key steps we're taking. We have streamlined the organization for greater accountability. We have launched GPS to drive continuous improvement, and we have heightened our focus on innovation to better meet customer needs, all to drive improved performance and long-term shareholder value creation. Now I will turn it over to Joel. Joel, over to you.

Thanks, Andrew, and good morning, everyone. Fourth quarter, 2025 global sales from continuing operations totaled $3 billion and increased 8% on a reported basis and 3% on an operational basis. Performance in the quarter reflects growth. Total company adjusted earnings from continuing operations were $0.44 per share. Results in the quarter reflect unfavorable product and geographic mix, some non-recurring items including inventory adjustments and a higher tax rate partially offset by the positive impact from pricing in select segments now i'll walk through our results by reportable commentary regarding sales growth in 2025 will be on an operation sales on our medical product and therapy segments or mpt for 1.4 billion dollars and increased four percent in the quarter Performance in the quarter reflects growth in infusion therapies and technologies, or ITT, as well as continued strength in advanced surgery. Within MPT, fourth quarter sales from our ITT division totaled $1.1 billion and grew 1%. Performance in the quarter was driven by growth in ITT, which benefited from a favorable comparison of the prior year period, partially offset by lower infusion pump sales due to the previously discussed within IV solutions underlying U.S. demand remain below historically discussed. Fluid conservation practices embedded with clinical practice changes in the market remain and continue to weigh on volume. In infusion systems, results of the quarter reflected the net impact of lost sales due to the ongoing shipment and installation returns and transition suspension. This net impact was more modest in the quarter. While customer responses have varied, in general, many are understandably waiting for additional clarity on the nature and timing of additional corrections that we will look to deploy and of the release of the ship and installation hold. The advanced surgery totaled $328 million of 11 percent. The results in the quarter reflect continued solid demand for our portfolio of hemostats and commercial execution across regions and steady procedure volumes. MPT's adjusted operating margin totaled 15.4% for the quarter, decreasing 110 basis points over the prior year period, and reflect increased manufacturing and supply costs, unfavorable product mix, inventory adjustments, and these factors were partially offset that, by positive pricing, kidney care TSA income positively contributed as well. In Healthcare Systems and Technologies, or HST, sales in the quarter totaled $827 million, increasing 4%. Within HST, sales of our care, or CCS division, were $537 million and grew 4% globally. The growth in the quarter was driven by double-digit growth in our surgical solutions business and continued momentum across our patient support. Total U.S. capital orders for CCS increased nearly 30% compared to the prior year. Across patient support systems, care communications, and surgical solutions. To date, we have not observed this. We continue to closely monitor this. Frontline care sales in the quarter were $290 million. dollars, an increase in the quarter reflects increased demand in our cardiology and patient monitoring, which includes our recent launch of Connex 360, totaled 15.2% for the quarter, 130 basis points, unfavorable product and geographic mix, increased corporate allocation expenses, and higher costs, TSA income, moving on to our pharmaceutical segment, sales in the quarter totaled $668 million, increasing 2%. Within pharmaceuticals, sales of our injectables and anesthesia division were $352 million and declined 9%. Performance of the quarter reflects a decline in our injectables portfolio, driven by a difficult comparison to the prior year period, as well as softness in certain pre-mixed products, largely consistent to dynamics discussed last quarter related to IV infusion protocols and increased use of IV push in select hospital settings. Declined high single digits reflecting softer demand for select inhalation. Drug compounding grew 18 percent and reflects continued strong outside the US. Pharmaceuticals adjusted operating results reflect increased manufacturing and supply costs and unfavorable product mix inventory adjustments following the sale of kidney care. These expenses by kidney care of TSA sales not allocated directly through CERC were $7 million in the quarter. MSA revenue from Vantam, these sales, they are not reflected before moving on to the rest of the P&L. An important reminder, following the sale of our kidney care business that did not convey with the business in both cost of goods sold along with income from the TSA, which is currently recognized within other In addition, as previously discussed, we reclassified certain functional expenses from SG&A to cost of goods sold beginning earlier this year, support manufacturing, and are now treated as indirect expenses subject to and recognizing cost of sales when sold. Continuing operations were 35.5%, a decrease of 900 basis points compared to the prior year. Fourth-quarter adjusted SG&A from continuing operations totaled $637 million, or 21.4% as a percentage of sales. A decrease of 330 basis points results reflect disciplined expense management and the benefit from the reclassification of certain functional costs. Adjusted R&D spending from continuing operations in the quarter totaled $116 million, or 3.9 as opposed to which came in lower than our expectations. This reflects the reclassification of certain product support and sustaining activities in the cost of sales, and therefore does not reflect our anticipated level of R&D spending. TSA income and other reimbursements totaled $50 million in the quarter and came in line with our expectations. The associated expenses, including cost of goods sold altogether, these factors resulted in an adjusted operating margin of 11.8% on a continuing operations basis, a decrease of 340 basis points compared to the prior year period. Results reflect unfavorable product mix and non-recurring items, including inventory adjustments, partially offset by positive pricing in select segments and the benefits of TN. Net interest expense from continuing operations sold $58 million in the quarter, a decrease of $32 million versus the prior year period, reflecting lower interest expense following the paydown of existing debt with proceeds from the vant of sale. Adjusted other non-operating income totaled $15 million, driven primarily by amortization of pension benefits compared to the prior period. The continuing operations adjusted tax rate for the quarter was 27.2%, driven primarily by mix of earnings across. In total, adjusted earnings from continuing operations were $0.44 per share. Before turning to our 2026 outlook, I want to comment on cash flow and liquidity. Fourth quarter, free cash flow was $456 million, bringing full-year free cash flow to $438 million. Performance in the quarter reflects improved cash flow generation and seasonality, including progress across select areas of working capital, as well as continued focus on execution as we close out the year. We continue to focus on strengthening cash flow generation and maintaining discipline around foundational elements. Improving the balance sheet continues to be a key area of emphasis, and we intend to deploy cash towards reducing leverage in line with our capital. Now our outlook for the full year of 2026, including some key assumptions. For full year 2026, we expect total sales growth to be flat to 1% growth on a reported basis. This reflects current four are expected to contribute approximately 100 basis points to top-line growth for the year. In addition, reported sales are expected to include a headwind of approximately $25 million from MSA revenues. This represents approximately 30 basis points of impact on reported growth. Including the impact of approximately flat in NPT, we expect full-year organic sales to be flat. This reflects the continued uncertainty, including the potential impact from various customer responses, that the ship and installation hold will remain in place. We expect full-year organic sales. This reflects continued pressure in injectables and anesthesia, supply challenges that have been discussed in prior to our outlook. We estimate a full-year impact, net of minimum, TSA income, and other between 130 from continuing operations, 13 to 14 percent. This primarily reflects including the impact of lower manufacturing volumes and reduced contributions. We expect our non-operating expenses, which include net interest expenses, to total between $280 to recently completed. On a continuing operations basis, we anticipate a full year. We expect our diluted share count of $1.85 to $2.05. While we will not be provided, I want to offer some accurate cadence of results. We expect the first quarter to be the most challenging, with improving performance, specifically the ITT division. Additionally, ITT results in the second half benefit from the recently taken actions, assuming relatively soon. Within HST, new product launches are expected to contribute compared to the first half, including Connex 360 and Dynamo. Pharmaceuticals, we expect the previously mentioned headwinds to continue in the first half. Moving to the back half of the year, we anticipate in the first half of the prior year saw benefit to operating margins related to the timing of certain functional costs being reclassified. These factors support our expectation that organic sales growth, operating margin, and adjusted earnings per share will be back-capped. With respect to free cash flow, similar to 2025, we expect it to be back half-weighted due to our normal seasonality, expected cadence of earnings, as well as recent cost structure. With that, we can now open up the call for Q&A.

Thank you. We will now begin the question and answer session. If you have a question, please press the star then one keys on your touchtone phone. If you wish to remove yourself from the queue, again, press star then one. If you are using a speakerphone, please lift the handset to ask your question. So that we may be respectful of everyone's time, please limit your comments to one question with one follow-up question if necessary. We appreciate everyone's patience and would like to provide as many of you as possible the opportunity to ask a question. We will pause for a moment while the list is being compiled. I would like to remind participants that this call is being recorded and a digital replay will be available on the Baxter International website for 60 days at www.baxter.com. Our first question comes from David Roman of Goldman Sachs. Your question, please.

Thank you. Good morning, everybody. I wanted to start with one strategic question that had one financial follow-up. Maybe firstly for you, Andrew, as you just think about the number of moving parts you're trying to navigate here, strategic review, catching up on innovation, de-leveraging. What are you doing to ensure sustainability of the business as it relates to the competitive dynamic, and how are you gaining sufficient visibility to drive the forecasting process?

Yeah, so good morning, David. Look, let me start by just walking through. Part of my standard work as a CEO is to visit customers on an ongoing basis, and I'll tell you that the The message is loud and clear that we are essential to not only supporting, but to enabling their ability to bring high-level patient care. And we're an essential and trusted brand through that. As a reminder, we touch over 350 million patients per year. All that said, we need to get better. And we are not satisfied with our current performance. And you've heard me consistently talk about not only near-term, and to walk through, it starts with stabilizing the business. And I've outlined that in my prepared remarks. To get more specific, we are driving the accountability at the lowest levels in the organization. Additionally, it's about strengthening our balance sheet. And lastly, our focus on continuous improvement and really enabling that such that we focus on the customer and streamline the organization to be able to execute at the pace we expect. We're early in our journey, but we're making progress. Now, to date, we've aligned around streamlining the organization, we've launched GPS, and we've heightened our focus on innovation. And back to listening to our customers and launching products, it starts with our Connect360 that I talked about, and then additionally we launched earlier in the year or talked about launching earlier in the year the Dynamo Stretcher platform. So while we're making progress, we have a lot more work to do.

Look, I certainly – GPS gives us a continued visibility that drives the predictability of our results over time.

And as Andrew likes to say – And then maybe just as a follow-up here, Can you just remind us on where you are and the progress you're making on reducing the G&A and support costs that today are getting reimbursed by Vantiv via the TSA and how we should think about the runoff of the TSA over the course of the year and into next year and your retained costs? Can that be a one-for-one offset and maybe just help us think through the nature of the operating dynamics there?

Yeah, sure. So a couple of things there. Number one, you know, for 2025, one of the things we've said is that we had, including, we continue to make the progress.

Yes, thank you for taking the question.

Robbie Marcus of JPMorgan is on the line with a question. Please state your question.

Yeah, great. Thanks for taking the questions, and good morning. Two for me. Joel, maybe just to follow up on David's question, especially as the TSAs roll off, and I know it's early here, but do you think you'll be able to grow earnings next year as the TSAs roll off where you sit today?

Just to be really clear, next year, maybe 2027. The TSA typically are 20...

Great. Maybe a follow-up question. You know, the gross margins obviously came in well below where the street was and operating margin as well. I was hoping you could just bridge us from the fourth quarter, 25 to the 2026 guide, how much shifted from below gross cost of goods into cost of goods. and if you could also help put a finer point on first quarter so we could get a better sense of cadence through the year. Thanks.

Sure. So maybe I'll start again. Again, we haven't provided. And while that's the total company, 18% growth in manufacturing. And that ended up.

Thanks a lot.

Vijay Kumar of Evercore ISI is on the line with a question. Please state your question.

Hey, guys. Thank you for taking my question. And Andrew, maybe my first one for you is you mentioned customers are awaiting, you know, how you resolve GNOME, right? But your guidance assumes GNOME shithole remains in place for the full year. Have you communicated this to customers? Like, what have you told customers, right? I understand the guidance assumption, but I'm curious.

Are customers willing to wait for a year for GNOME to resolve? yeah good morning vj so so let me let me walk this through a little bit here um so first and foremost uh customers can and are continuing to use the device according to existing instructions and mitigating actions we've continued to make progress on our novum solution and and the corrections and we're staying close and as we go through testing as we go through really identifying buying the longer term solution set, we will update. As a reminder, we have a strong pump portfolio. We have our Spectrum LVP that we utilize through this transition. And I even walked through earlier in the year, we've launched Spectrum with the IQX platform. And it enables us to really not only work with our customers, but to have a total pump portfolio with Spectrum being our LVP and Novum being our syringe and Novum being a newer product set that we've launched in the recent history. And so while we're going through our Novum updates, we have a strong platform that we can bring to market. And as a reminder, we're also launching early Q2 Peerview on the IQX platform. And PeerView is designed to really support our customers and their ability to identify and work on fluid processing. So we're continuing to innovate, continuing to build on. And given our pump platform, we are in a position to support our customers through this.

And maybe my second one for you, Andrew. You mentioned the operating model change. Curious on, you know, what has changed from prior model rate? How is this model better, and what's the impact or implication of free cash flow? I know you mentioned P&L responsibility. Is free cash flow going to improve from fiscal 25?

Yeah, so I guess I'll take the first part, and then I'll let you all. Just a few weeks ago, we internally announced the new operating model, and it's designed around simplifying our organization, accelerating innovation and improving performance and and we are putting the accountability at the lower levels in the organization and i would say most significantly or one of the areas is de-layering at the top level removing the segment management and embedding critical functional roles directly into the business and so this allows us to really further eliminate the barriers for decision-making, and it's streamlining to listening to our customers and ultimately helping us improve our say-do ratio and execute on a more consistent basis. So this approach is really moving down that decentralizing and streamlining the organization with blacked-out accountability.

Yeah, BJ, and then I'll take the cash piece of this. Certainly, as you've heard Andrew talk about, we do expect in 2023 cash flow perspective that includes a charge here, drivers I mentioned, GPS is playing a role in our cash conversion to continue to move in the right direction as we execute through 2026.

Thank you. Larry Beigelson of Wells Fargo is on the line with a question. Please stay your question.

Good morning. Thanks for taking the question. Two for me, one on the gross margin, one on pharma. So, Joel, could you please give us a little bit more color on, you know, the Q4 gross margin, how much of the year-over-year decline was due to, you know, tariffs, mix, reclassifications, and the one-time items you called out, and how much lower do you expect the gross margin to be in 26 versus 25? I assume it's more than, you know, the decline we see in the operating margin guidance. And I had one follow-up.

Yeah, thanks, Larry. I appreciate the question. Yeah, so from a, again, I'll call gross margin, certainly a business mix, you know, this as well, the non-recurring.

And Joel, 20, 26 versus 25 gross margin. I didn't hear that.

Yeah, I know. Yeah, but we haven't given specific guidance on that. I guess what I would say, a little bit to the common each one, the impact of that.

That's helpful. And Andrew, thanks for giving us the P&Ls by SECBID. You know, pharma has an operating margin of 9%, and it was even lower in Q4. My guess is compounding, which is your fastest-growing business, doesn't make a lot of money. What are you doing to improve the margins in this business, and, you know, why does it make sense to keep a low-margin business like compounding that seems to hurt your kind of mix every quarter?

Yeah, and I'll just walk through kind of the fundamentals of pharma, and really outline. So overall, we like the fundamentals of this business. And just a couple items. We've also taken this part of the organization and we've combined it with our ITT business. And the reason being is it's synergistic with that organization. And it's common customers, common call points. And there's an opportunity to improve the business. And we have and we're continuing to take actions to do so. Additionally, there's been some areas that have been in our control that we've been challenged with. And through GPS and through this identification with driving the accountability at the lowest levels, we've taken critical actions around aligning to improve. And one of them is around operational execution. And not to get into too much specifics, but we saw one of our facilities really hindered by the ability to drive output, and we took an action team around this. They've already improved. They're continuing to improve. We're going to see that performance improve to the first half of the year. But more importantly, it's around how do we not get back into this situation? How do we build this and have this being sustained performance? And the role GPS plays in that is around identification and critical action. The second piece within our control is we had a supplier challenge. And to be quite candid, it was an area that we identified, we are working through. It is going to take us a part of the year to get through this, and we're identifying how we have alternatives to continue to support the product. We are continuing to ship. That said, we are looking to identify for long-term solutions. So, you know, to answer your question head on, we like the fundamentals of the business. We've got some work to do here, and we need to continue to align around the value creation we have for our customers.

And, Larry, two other things I would maybe just add to that. I think, number one, relative level of growth.

Thank you.

Travis Steed of Bank of America is on the line with a question. Please state your question.

April, I'm still a little confused on what to put in the model for Q1 and to understand kind of the slope of the recovery in 26. Is revenue kind of down low single digits, down mid single digits? Are gross margins, off margins, flat down sequentially? What percent of earnings should fall in Q1 versus kind of the second half of the year? Is there any more details on how to model the Q1?

Yeah, thanks for the question. So, again, we have a continued element. The headwinds from, again, we capitalized in the...

We'll hopefully get more offline. Two little kind of nitpicky questions. One, just kind of curious if you're assuming share gains or share losses in infusion pumps this year. And OUS Care and Connectivity Solutions was up $50 million. Was there anything kind of one-time in that line item?

Yeah, so I guess I'll start with the first question here. Look, we have good opportunities as we go into the year. And, you know, as a reminder, Spectrum is a workhorse in the space. And not only is a workhorse, we continue to innovate on the platform. And now that it speaks with Novum Syringe, we're continuing to be confident in our ability to bring high value to the market we serve.

Can you repeat the second part of your question? I'm sorry.

Yeah, International Care and Connectivity Solutions was up $50 million sequentially. I didn't know if there was anything one time in there. It looked like a big growth rate in the international business.

Yeah, I mean, I would just say in general that business has been performing well at one time. I would say in general, overall, we've talked about that. It remains a strong business.

Okay, thank you.

Danielle Antelphi of UBS is on the line with a question. Please state your question.

Hey, good morning, guys. Thank you so much for taking the question. Andrew, I appreciate it's not been terribly long, but I guess I'm just curious about looking at the Baxter portfolio in its totality, sort of how you feel about the state of the portfolio today, appreciating, you know, you're not going to be doing probably M&A anytime soon, but A, sort of where you see the most exciting opportunities with the current portfolio that might be underappreciated by investors, and then be where you think there's opportunity to sort of vamp up the product portfolio. Thanks so much.

You bet. And if I miss something, Danielle, certainly feel free to jump in. I'll take this as you outline in the question. So look, Baxter's fundamental, and it's fundamental to the healthcare system. And as I mentioned earlier in the call, it's a trusted partner. We have market leadership across multiple product categories. We have a resilient portfolio and deep customer relationships that really give us a competitive advantage. Now, as we go forward, innovation will be a critical element to our success. And, you know, as we look at innovation as an enabler, it's really extremely important as we bring new innovation to the market. And not only from listening to our customers and identifying the pain points to solution, but also just that staying in front of our total portfolio of product set. So there's an opportunity to not only improve our performance, but GPS becomes the foundational and foundation for how we really drive disciplined, not only operating rhythm, but also clear accountability and clear enablement to listen to our customers, streamline our ability to bring strong capability to the market. and really have real-time visibility to bring innovation to solve issues and to solve challenges that our customers face. So like the fundamentals of where we sit, certainly areas we need to continue to challenge on. And, you know, there's some areas internationally that we're looking at. We do have smaller exits that we're looking at in 26 as we look at our total portfolio. And as far as areas where, you know, I called it out with our performance in many of our businesses, but more specifically in how we bring our solution from not only our advanced surgery business, but the capability we have in that space and how customers. We look to Baxter to support and have high value when they're treating and working with patients. But we have many of those. MPT has areas we're looking at, as well as HST and as well as pharma. So more to come. And, you know, if I could just characterize how we think about innovation for the future, it's a base hit discussion, not walk off grand slam. It's about that constant drive to launch products, to launch solutions that really enable our customers to bring higher levels of care at a more efficient pace. And last hand, capital allocation. You know, it is a critical element. We talk as direct on capital allocation as we do around our market strategy. And I've outlined it starts with delevering our balance sheet. And we've taken critical actions around that. When we look at the other levers, reinvesting in the business, and I walk through, we're going to be at or above on our innovation reinvestment, expecting new product launches, expecting areas to drive R&D, not just sustainment, but also as we get into future and we delever, identifying targets that can add high value from an M&A perspective. And we have a strong funnel, but we need to delever first. So hopefully I answered your question.

Yeah, no, very helpful. Thanks, Andrew.

Appreciate it.

We have time for one more question. Joanne Wench of Citi is on the line with a question. Please state your question.

Good morning, and thank you for squeezing me in. I'm just curious, when you went to put guidance together for 2026, what was sort of your philosophy of how to deliver it so you can deliver on the guidance? Thank you.

Thanks, Joanne. and how the challenges we're facing as we sort of operate.

But I want to reiterate, GPS will become who we are and how we operate. And it will allow and enable us to go very deep in the organization and drive accountability. And it's part of our journey around the continuous improvement model and how we need to continue to improve our say-do ratio. And, you know, it's an area that we'll continue to update as we go throughout the year.

Thank you. And at this time, I will now hand the call back over to Andrew for some final closing comments.

Yeah, thanks, operator. Look, in closing, we're not where we want to be, but we're confronting our challenges head on and taking deliberate steps each day to better position Baxter for the long term. I'm energized by the opportunity to head driven by the essential role Baxter plays in patient care and our mission-driven team that is committed to driving stronger and performing over a long period of time. Thank you very much. Stay safe and goodbye for now.

Ladies and gentlemen, this concludes today's conference call with Baxter International. Thank you for participating.