Baxter International Inc 10-Q for FY2026 Q3
Baxter International Inc (BAX)
10-Q
2026-10-29
For: 2026-09-30
View Original
Added on
October 29, 2026
About this 10-Q
Baxter International Inc filed this 10-Q on October 29, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Baxter reported third-quarter net income of $294 million, or $0.57 per diluted share, compared with $(46) million, or $(0.09) per diluted share, while net sales increased 5%. Nine-month net income was $405 million, or $0.78 per diluted share. AI summary
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.98B
- up 5.0% from $2.84B a year earlier
- Net income
- $294M
- compared with a net loss of $46M a year earlier
- Diluted EPS
- $0.57
- compared with -$0.09 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________________________________________________________
FORM 10-Q
_________________________________________________________________________________
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 30, 2026
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission file number 1-4448
_________________________________________________________________________________
(Exact name of registrant as specified in its charter)
_________________________________________________________________________________
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||||||||||
| (Registrant’s telephone number, including area code) | |||||||||||||||||
_________________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| x | Accelerated filer | o | ||||||||||||
| Non-accelerated filer | o | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
The number of shares of the registrant’s Common Stock, par value $1.00 per share, outstanding as of October 22, 2026 was 517,348,188 shares.
BAXTER INTERNATIONAL INC.
FORM 10-Q
For the quarterly period ended September 30, 2026
TABLE OF CONTENTS
| Page Number | ||||||||
| Item 1A. | ||||||||
| Item 5. | ||||||||
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Baxter International Inc.
Condensed Consolidated Balance Sheets
(in millions, except share information)
| September 30, 2026 (unaudited) | December 31, 2025 | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | |||||||
Accounts receivable, net of allowances of $ | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Goodwill | ||||||||
| Other intangible assets, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Other non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| Current liabilities: | ||||||||
| Short-term debt | $ | $ | ||||||
| Current maturities of long-term debt and finance lease obligations | ||||||||
| Accounts payable | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term debt and finance lease obligations, less current portion | ||||||||
| Operating lease liabilities | ||||||||
| Other non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Equity: | ||||||||
Common stock, $ | ||||||||
Common stock in treasury, at cost, | ( | ( | ||||||
| Additional contributed capital | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( | ( | ||||||
| Total Baxter stockholders’ equity | ||||||||
| Noncontrolling interests | ( | ( | ||||||
| Total equity | ||||||||
| Total liabilities and equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Baxter International Inc.
Condensed Consolidated Statements of Income (Loss) (unaudited)
(in millions, except per share data)
The accompanying notes are an integral part of these condensed consolidated financial statements.
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||
| Cost of sales | |||||||||||||||||
| Gross margin | |||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||
| Research and development expenses | |||||||||||||||||
| Other operating income, net | ( | ( | ( | ( | |||||||||||||
| Operating income | |||||||||||||||||
| Interest expense, net | |||||||||||||||||
| Other (income) expense, net | ( | ( | ( | ( | |||||||||||||
| Income (loss) from continuing operations before income taxes | |||||||||||||||||
| Income tax expense (benefit) | |||||||||||||||||
| Income (loss) from continuing operations | ( | ||||||||||||||||
| Income (loss) from discontinued operations, net of tax | ( | ( | |||||||||||||||
| Net income (loss) | ( | ||||||||||||||||
| Net income attributable to noncontrolling interests | |||||||||||||||||
| Net income (loss) attributable to Baxter stockholders | $ | $ | ( | $ | $ | ||||||||||||
| Income (loss) from continuing operations per common share | |||||||||||||||||
| Basic | $ | $ | ( | $ | $ | ||||||||||||
| Diluted | $ | $ | ( | $ | $ | ||||||||||||
| Income (loss) from discontinued operations per common share | |||||||||||||||||
| Basic | $ | ( | $ | $ | ( | $ | |||||||||||
| Diluted | $ | $ | $ | ( | $ | ||||||||||||
| Income (loss) per common share | |||||||||||||||||
| Basic | $ | $ | ( | $ | $ | ||||||||||||
| Diluted | $ | $ | ( | $ | $ | ||||||||||||
| Weighted-average number of shares outstanding | |||||||||||||||||
| Basic | |||||||||||||||||
| Diluted | |||||||||||||||||
3
Baxter International Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited)
(in millions)
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| Income (loss) from continuing operations | $ | $ | ( | $ | $ | ||||||||||||
| Other comprehensive income (loss) from continuing operations, net of tax: | |||||||||||||||||
Currency translation adjustments, net of tax expense (benefit) of $ | ( | ( | |||||||||||||||
Pension and other postretirement benefits, net of tax expense (benefit) of | ( | ||||||||||||||||
Hedging activities, net of tax expense (benefit) of | ( | ||||||||||||||||
| Total other comprehensive income (loss) from continuing operations, net of tax | ( | ( | |||||||||||||||
| Comprehensive income (loss) from continuing operations | ( | ||||||||||||||||
| Income (loss) from discontinued operations, net of tax | ( | ( | |||||||||||||||
| Other comprehensive income (loss) from discontinued operations | |||||||||||||||||
Currency translation adjustments, net of tax expense (benefit) of | |||||||||||||||||
Pension and other postretirement benefits, net of tax expense (benefit) of | ( | ||||||||||||||||
| Total other comprehensive income (loss) from discontinued operations | |||||||||||||||||
| Comprehensive income (loss) from discontinued operations | ( | ( | |||||||||||||||
| Comprehensive income (loss) | ( | ||||||||||||||||
| Less: Comprehensive income attributable to noncontrolling interests | |||||||||||||||||
| Less: Other comprehensive loss attributable to noncontrolling interests | |||||||||||||||||
| Comprehensive income (loss) attributable to Baxter stockholders | $ | $ | ( | $ | $ | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Baxter International Inc.
Condensed Consolidated Statements of Changes in Equity (unaudited)
(in millions)
| For the three months ended September 30, 2026 | ||||||||||||||||||||||||||||||||
| Baxter International Inc. stockholders' equity | ||||||||||||||||||||||||||||||||
| Common stock shares | Common stock | Common stock shares in treasury | Common stock in treasury | Additional contributed capital | Retained earnings | Accumulated other comprehensive income (loss) | Total Baxter stockholders' equity | Noncontrolling interests | Total equity | |||||||||||||||||||||||
| Balance as of July 1, 2026 | $ | $ | ( | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||
| Stock issued under employee benefit plans and other | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Dividends declared on common stock | — | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||
Balance as of September 30, 2026 | $ | $ | ( | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||
For the nine months ended September 30, 2026 | ||||||||||||||||||||||||||||||||
| Baxter International Inc. stockholders' equity | ||||||||||||||||||||||||||||||||
| Common stock shares | Common stock | Common stock shares in treasury | Common stock in treasury | Additional contributed capital | Retained earnings | Accumulated other comprehensive income (loss) | Total Baxter stockholders' equity | Noncontrolling interests | Total equity | |||||||||||||||||||||||
| Balance as of January 1, 2026 | $ | $ | ( | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||
| Stock issued under employee benefit plans and other | — | — | ( | ( | — | — | — | |||||||||||||||||||||||||
| Dividends declared on common stock | — | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||
Balance as of September 30, 2026 | $ | $ | ( | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||
| For the three months ended September 30, 2025 | ||||||||||||||||||||||||||||||||
| Baxter International Inc. stockholders' equity | ||||||||||||||||||||||||||||||||
| Common stock shares | Common stock | Common stock shares in treasury | Common stock in treasury | Additional contributed capital | Retained earnings | Accumulated other comprehensive income (loss) | Total Baxter stockholders' equity | Noncontrolling interests | Total equity | |||||||||||||||||||||||
| Balance as of July 1, 2025 | $ | $ | ( | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Stock issued under employee benefit plans and other | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Dividends declared on common stock | — | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||
| Balance as of September 30, 2025 | $ | $ | ( | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||
For the nine months ended September 30, 2025 | ||||||||||||||||||||||||||||||||
| Baxter International Inc. stockholders' equity | ||||||||||||||||||||||||||||||||
| Common stock shares | Common stock | Common stock shares in treasury | Common stock in treasury | Additional contributed capital | Retained earnings | Accumulated other comprehensive income (loss) | Total Baxter stockholders' equity | Noncontrolling interests | Total equity | |||||||||||||||||||||||
| Balance as of January 1, 2025 | $ | $ | ( | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Reclassification of other comprehensive income (loss) disposed in the Kidney Care Separation | — | — | — | — | — | — | — | |||||||||||||||||||||||||
| Stock issued under employee benefit plans and other | — | — | ( | ( | — | — | — | |||||||||||||||||||||||||
| Dividends declared on common stock | — | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||
| Disposition of noncontrolling interest associated with the Kidney Care separation | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||
Balance as of September 30, 2025 | $ | $ | ( | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Baxter International Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(in millions)
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operations | ||||||||
| Net income (loss) | $ | $ | ||||||
| Less: Income (loss) from discontinued operations, net of tax | ( | |||||||
| Income (loss) from continuing operations | ||||||||
| Adjustments to reconcile net income (loss) to cash flows from operations: | ||||||||
| Depreciation and amortization | ||||||||
| Deferred income taxes | ( | ( | ||||||
| Stock compensation | ||||||||
| Net periodic pension and other postretirement costs | ( | ( | ||||||
| Gain on early extinguishment of debt | ( | |||||||
| Other long-lived asset impairments and write offs | ||||||||
| Other | ||||||||
| Changes in balance sheet items: | ||||||||
| Accounts receivable, net | ( | |||||||
| Inventories | ( | ( | ||||||
| Prepaid expenses and other current assets | ( | |||||||
| Accounts payable | ( | |||||||
| Accrued expenses and other current liabilities | ( | |||||||
| Other | ( | |||||||
| Cash flows from (used in) operations - continuing operations | ||||||||
| Cash flows from (used in) operations - discontinued operations | ( | ( | ||||||
| Cash flows from (used in) operations | ||||||||
| Cash flows from investing activities | ||||||||
| Capital expenditures | ( | ( | ||||||
| Acquisitions of developed technology and investments | ( | ( | ||||||
| Other investing activities, net | ||||||||
| Cash flows from (used in) investing activities - continuing operations | ( | ( | ||||||
| Cash flows from (used in) investing activities - discontinued operations | ||||||||
| Cash flows from (used in) investing activities | ( | |||||||
| Cash flows from financing activities | ||||||||
| Repayments of debt | ( | ( | ||||||
| Repayments of debt with original maturities of three months or less | ( | |||||||
| Cash dividends on common stock | ( | ( | ||||||
| Proceeds from stock issued under employee benefit plans | ||||||||
| Payments of contingent liabilities | ( | ( | ||||||
| Other financing activities, net | ( | ( | ||||||
| Cash flows from (used in) financing activities | ( | ( | ||||||
| Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash - continuing operations | ( | |||||||
| Increase (decrease) in cash, cash equivalents and restricted cash | ( | |||||||
Cash, cash equivalents and restricted cash of continuing operations at beginning of period (1) | ||||||||
Cash, cash equivalents and restricted cash of continuing operations at end of period (1) | ||||||||
(1) The following table provides a reconciliation of cash, cash equivalents and restricted cash shown above to the amounts reported within the condensed consolidated balance sheet as of September 30, 2026, December 31, 2025, and September 30, 2025 (in millions):
| September 30, 2026 | December 31, 2025 | September 30, 2025 | |||||||||
| Cash and cash equivalents | $ | $ | $ | ||||||||
| Restricted cash included in other non-current assets | |||||||||||
| Cash, cash equivalents and restricted cash | $ | $ | $ | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Baxter International Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
1. BASIS OF PRESENTATION
The unaudited interim condensed consolidated financial statements of Baxter International Inc. and its subsidiaries (we, our or Baxter) have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC) for interim financial reporting. Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) in the United States have been condensed or omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2025 (2025 Annual Report).
In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. All such adjustments, unless otherwise noted herein, are of a normal, recurring nature. The disclosures presented in our notes to the consolidated financial statements are presented on a continuing operations basis. The results of operations for the current interim period are not necessarily indicative of the results of operations to be expected for the full year.
2. DISCONTINUED OPERATIONS
A component of an entity is reported in discontinued operations after meeting the criteria for held-for-sale classification if the disposition represents a strategic shift that has (or will have) a major effect on the entity's operations and financial results. The condensed consolidated financial statements reflect discontinued operations presentation as described below.
Discontinued Operations - Kidney Care
On January 31, 2025, we completed the sale of our Kidney Care business to certain affiliates of Carlyle Group Inc. (Carlyle). That business, which is known as Vantive Health LLC (Vantive) is comprised of our former Kidney Care business and provides chronic and acute dialysis therapies and services, including peritoneal dialysis, hemodialysis, continuous renal replacement therapies, and other organ support therapies.
Upon closing of the sale of the Kidney Care business, pursuant to the Equity Purchase Agreement (EPA), Baxter and Vantive entered into several agreements, including a Manufacturing and Supply Agreement (Kidney Care MSA), a Transition Services Agreement (Kidney Care TSA), a Long Term Master Services Agreement, a Distribution Agreement and certain other arrangements providing for short-term supply of saline products, and an Intellectual Property Agreement. Pursuant to the Kidney Care MSA, Baxter and the Kidney Care divested entities provide each other with certain dialysis-related products, other products, product components and fulfillment services for up to 10 years post-closing (with certain extension rights and early exit rights as provided therein). Pursuant to the Kidney Care MSA, our sales to Vantive are recognized in net sales in the condensed consolidated statements of income (loss). Pursuant to the Kidney Care TSA, Baxter and the entities that were divested in connection with the Kidney Care sale (the Kidney Care divested entities) provide each other, on an interim basis, certain transitional services for up to 30 months post-closing (with certain extension rights and early exit rights as provided therein) to help ensure business continuity and help minimize disruptions to the operations of both parties post-closing. Services provided under the Kidney Care TSA include information technology applications and support, supply chain and certain other corporate and administrative services. Billings by us under the Kidney Care TSA are recorded in other operating income, net in the condensed consolidated statements of income (loss). The costs to provide each respective service is recorded in the applicable expense category in the condensed consolidated statements of income (loss).
In accordance with the EPA, we have agreed to indemnify Vantive for certain items, including taxes imposed on or with respect to the Kidney Care divested entities, for pre-closing tax periods. The net indemnification liability as of September 30, 2026 was $44 million. Further, in accordance with the EPA, Baxter recorded a contingent liability for payments to reimburse Vantive for qualifying capital expenditures of $133 million over a period of three years post sale. The contingent liability as of September 30, 2026 was $33 million based on payments made to date and classified as current liabilities within our condensed consolidated balance sheet.
7
Certain of the business guarantees originally entered by us on behalf of the Kidney Care business were not released prior to the completion of the sale and remain outstanding. These legacy guarantees primarily relate to certain leases, performance contracts and to support regulatory requirements of the Kidney Care business. As of September 30, 2026, the total amount of Kidney Care business guarantees retained by us was approximately $28 million. Under terms of the EPA, Carlyle has agreed to indemnify us for any cost or expense, or payments made in the future under these arrangements.
Results of Discontinued Operations
The following tables summarize the major classes of line items included in income (loss) from discontinued operations, net of tax, for the three and nine months ended September 30, 2025:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| (in millions) | 2025 | 2025 | ||||||||||||||||||||||||
| Net sales | $ | |||||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||
| Gross margin | ||||||||||||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||||||||||
| Research and development expenses | ||||||||||||||||||||||||||
| Operating income (loss) | ||||||||||||||||||||||||||
| Interest expense, net | ||||||||||||||||||||||||||
| Other (income) expense, net | ||||||||||||||||||||||||||
| Income (loss) from discontinued operations before gain on disposition and income taxes | ( | |||||||||||||||||||||||||
| Gain (loss) on disposition | ( | |||||||||||||||||||||||||
| Income tax expense (benefit) | ( | |||||||||||||||||||||||||
| Income (loss) from discontinued operations, net of tax | ||||||||||||||||||||||||||
| Less: Net income attributable to noncontrolling interest included in discontinued operations | ||||||||||||||||||||||||||
| Net income (loss) attributable to Baxter stockholders included in discontinued operations | $ | $ | ||||||||||||||||||||||||
For the three and nine months ended September 30, 2026, activity in discontinued operations primarily related to tax indemnifications.
3. SUPPLEMENTAL FINANCIAL INFORMATION
Allowance for Doubtful Accounts
The following table is a summary of the changes in our allowance for doubtful accounts for the three and nine months ended September 30, 2026 and 2025.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | |||||||||||||
| Charged (released) to costs and expenses | ( | ( | |||||||||||||||
| Write-offs | ( | ( | ( | ||||||||||||||
| Currency translation adjustments | |||||||||||||||||
| Balance at end of period | $ | $ | $ | $ | |||||||||||||
8
Inventories
| (in millions) | September 30, 2026 | December 31, 2025 | ||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished goods | ||||||||
| Inventories | $ | $ | ||||||
Property, Plant and Equipment, Net
| (in millions) | September 30, 2026 | December 31, 2025 | ||||||
| Property, plant and equipment, at cost | $ | $ | ||||||
| Accumulated depreciation | ( | ( | ||||||
| Property, plant and equipment, net | $ | $ | ||||||
Interest Expense, Net
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Interest expense, net of capitalized interest | $ | $ | $ | $ | |||||||||||||
| Interest income | ( | ( | ( | ( | |||||||||||||
| Interest expense, net | $ | $ | $ | $ | |||||||||||||
Other (Income) Expense, Net
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Foreign exchange losses, net | $ | $ | $ | ||||||||||||||
| Pension and other postretirement benefit plans | ( | ( | ( | ( | |||||||||||||
| Change in fair value of marketable equity securities | |||||||||||||||||
| Investment impairments | |||||||||||||||||
| Gain on debt extinguishment | ( | ( | |||||||||||||||
| Other, net | ( | ( | |||||||||||||||
| Other (income) expense, net | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||
Non-Cash Operating and Investing Activities
Right-of-use operating lease assets obtained in exchange for lease obligations for the nine months ended September 30, 2026 and 2025 were $35 million and $14 million, respectively.
9
4. GOODWILL AND OTHER INTANGIBLE ASSETS, NET
Goodwill
The following is a reconciliation of goodwill by segment.
| (in millions) | Medical Products & Therapies | Healthcare Systems & Technologies | Pharmaceuticals | Total | |||||||||||||
| Balance as of December 31, 2025 | $ | $ | $ | $ | |||||||||||||
| Reallocation of goodwill | ( | ||||||||||||||||
| Currency translation | ( | ( | ( | ( | |||||||||||||
| Balance as of September 30, 2026 | $ | $ | $ | $ | |||||||||||||
Change in Reportable Segments
As discussed in Note 16, in the second quarter of 2026, we implemented a new operating model to better align decision-making, cost structure, and execution across our businesses. Our business is now comprised of two three
Other intangible assets, net
The following is a summary of our other intangible assets.
| Indefinite-lived intangible assets | |||||||||||||||||||||||
| (in millions) | Customer relationships | Developed technology, including patents | Trade names | Other amortized intangible assets | Trade names | In process Research and Development | Total | ||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| Gross other intangible assets | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
| Accumulated amortization | ( | ( | ( | ( | — | — | ( | ||||||||||||||||
| Other intangible assets, net | $ | ||||||||||||||||||||||
| September 30, 2026 | |||||||||||||||||||||||
| Gross other intangible assets | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
| Accumulated amortization | ( | ( | ( | ( | — | — | ( | ||||||||||||||||
| Other intangible assets, net | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
Intangible asset amortization expense was $145 million and $147 million for the three months ended September 30, 2026 and 2025, respectively, and $436 million and $453 million for the nine months ended September 30, 2026 and 2025, respectively.
5. FINANCING ARRANGEMENTS
Significant Debt Activity
In August 2026 we commenced and settled cash tender offers to purchase one or more series of our outstanding 3.132 % senior notes due 2051, 3.500 % senior notes due 2046, 4.500 % senior notes due 2043 and 2.539 % senior notes due 2032 for an aggregate purchase price up to $600 million.
Pursuant to the tender offers, we accepted for purchase and repaid $422 million of our 3.132 % senior notes due 2051 for a purchase price of $248 million, $132 million of our 3.500 % senior notes due 2046 for a purchase price of $89 million, $73 million of our 4.500 % senior notes due 2043 for a purchase price of $57 million and $237 million of our 2.539 % senior notes due 2032 for a purchase price of $206 million. In connection with this transaction, we
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recognized a pre-tax gain of $253
Credit Facilities
Our multicurrency revolver credit facility (Multicurrency Revolver) has a maximum capacity of $2.20 billion and matures in 2030. Borrowings under the Multicurrency Revolver in U.S. dollars bear interest on the principal amount outstanding at either Term SOFR plus an applicable margin or a “base rate” plus an applicable margin. The Multicurrency Revolver contains various covenants, including a maximum net leverage ratio. Borrowings in Euros are subject to a sublimit of $300 million. We may, at our option, seek to increase the aggregate commitment under the Multicurrency Revolver by up to $1.10 billion, which would result in a maximum aggregate commitment of up to $3.30 billion. There were no
In the third quarter of 2026, we amended the credit agreement governing our Multicurrency Revolver to increase the maximum net leverage ratio covenant for the five fiscal quarters ending September 30, 2026, December 31, 2026, March 31, 2027, June 30, 2027, and September 30, 2027.
6. COMMITMENTS AND CONTINGENCIES
We are involved in product liability, patent, commercial, employment and other legal matters that arise in the normal course of our business. We record a liability when a loss is considered probable and the amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range, and no amount within the range is a better estimate than any other amount, the minimum amount in the range is accrued. If a loss is not probable or a probable loss cannot be reasonably estimated, no liability is recorded. We regularly review legal contingencies to determine whether our accruals and related disclosures are adequate. The amount of ultimate loss may differ from these estimates and could have a material adverse effect on our results of operations and cash flows. As of September 30, 2026 and December 31, 2025, our total recorded reserves with respect to legal and environmental matters were $41 million and $47 million, respectively.
We have established reserves for certain of the matters discussed below. While we believe that we have valid defenses in the matters set forth below, litigation is inherently uncertain, excessive verdicts do occur, and we may incur material judgments or enter into material settlements of claims.
In addition to the matters described below, we remain subject to the risk of future administrative and legal actions. With respect to governmental, regulatory and quality matters, these actions have led to and may in the future lead to adverse regulatory site inspections and/or inspectional classifications, warning letters, product recalls or seizures, injunctions to halt or restrict the manufacture and distribution of products, consent decrees, other regulatory or enforcement activity, refusal of a government to grant approvals or licenses or withdrawal of existing approvals and licenses, other restrictions on our operations (including our ability to launch new products), and monetary sanctions, including significant civil or criminal penalties, any of which could lead to significant loss of sales, or otherwise materially affect future results of operations. With respect to intellectual property, we may be exposed to significant litigation concerning the scope of our and others’ rights. Such litigation could result in a loss of patent protection or the ability to market products, which could lead to a significant loss of sales, or otherwise materially affect future results of operations.
Novum IQ Large Volume Pump (Novum LVP)
During 2025, we initiated certain voluntary corrections for the Novum LVP. The U.S. Food and Drug Administration (FDA) classified these voluntary corrections as Class I recalls. We have implemented certain corrections related to these recalls and have identified additional corrections to address these recalls, some of which may require regulatory clearance or approval, and are in the early stages of verification testing. In July 2025, we elected to temporarily stop
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distributing and installing the Novum LVP in the U.S. and Canada, except in the case of medical necessity. In 2025, we recorded estimates for sales reductions, for returns or exchanges of Novum LVP, and certain other charges, including estimates of reserves for remediation costs and inventory and contract asset write-downs associated with these Novum LVP corrections. We regularly review these estimates (including those associated with any future additional corrections and customer returns or exchanges), which may be subject to additional change in the future and these and other additional costs could become material in the future. In the first quarter of 2026, we adjusted certain estimates associated with these Novum LVP corrections that were not material to our condensed consolidated financial statements; no such adjustments were recorded in the second or third quarters of 2026.
Environmental
We are involved as a potentially responsible party (PRP) for environmental clean-up costs at several Superfund sites. Under the U.S. Superfund statute and many state laws, generators of hazardous waste sent to a disposal or recycling site are liable for site cleanup if contaminants from that property later leak into the environment. The laws generally provide that a PRP may be held jointly and severally liable for the costs of investigating and remediating the site. Separate from these Superfund cases noted above, we are involved in ongoing environmental remediations associated with historic operations at certain of our facilities. As of September 30, 2026 and December 31, 2025, our environmental reserves, which are measured on an undiscounted basis, were $23 million and $29 million, respectively. After considering these reserves, the outcome of these matters is not expected to have a material adverse effect on our financial position or results of operations.
General Litigation
Since December 2023, lawsuits have been filed against us in the Circuit Court of Cook County, Illinois by plaintiffs alleging injuries as a result of exposure to ethylene oxide used by several companies, including historic use by us for sterilization at our facility in Round Lake, Illinois. The parties resolved these filed cases, for an amount not material to Baxter. In June 2026, the court dismissed with prejudice all pending ethylene oxide matters as to Baxter. On August 17, 2026, a complaint was filed in the Circuit Court of St. Clair County, Illinois by 19 plaintiffs alleging injuries as a result of exposure to ethylene oxide used in our manufacturing facility in Mountain Home, Arkansas to sterilize certain of our products. The plaintiffs seek damages, including compensatory damages in an unspecified amount, and certain declaratory relief.
In October 2022, the Department of Justice (DOJ) issued a Civil Investigative Demand (CID) addressed to Hillrom, requesting documents and information related to compliance with the False Claims Act and the Anti-Kickback Statute. In October 2024, the DOJ issued a subpoena (the 2024 Subpoena), pursuant to 18 U.S.C. 3486, to Hillrom. The 2024 Subpoena substantially overlaps with the CID and requests additional documents relating to Hillrom's respiratory health business. Baxter is cooperating fully with the DOJ in responding to the CID and the 2024 Subpoena. The DOJ often issues these types of requests when investigating alleged violations of the federal health care laws.
In December 2021, Linet Americas, Inc. (Linet) filed a complaint against Hill-Rom Holdings, Inc., Hill-Rom Company, Inc., and Hill-Rom Services, Inc. in the United States District Court for the Northern District of Illinois. Linet alleges that Hillrom violated federal and state antitrust laws by allegedly engaging in anti-competitive conduct in alleged markets for standard, ICU and birthing beds. Hillrom filed an answer to the complaint in January 2022 and filed a motion challenging certain aspects of plaintiff's case in May 2022, which was denied in January 2024, subject to further discovery. Fact and expert discovery are ongoing.
In June 2024, Reading Hospital filed a putative class action complaint against Hill-Rom Holdings, Inc., Hill-Rom Company, Inc., and Hill-Rom Services, Inc. in the United States District Court for the Eastern District of Pennsylvania. The complaint alleged that Hillrom violated federal antitrust laws by allegedly engaging in anti-competitive conduct in alleged markets for standard, ICU and birthing beds. The plaintiff filed the action on behalf of itself and all "direct purchasers of Standard Hospital Beds, ICU Beds, and/or Birthing Beds from Hill-Rom during a period beginning at least as early as June 20, 2020” and continuing past the date of filing. In September 2024, the plaintiff filed a First Amended Complaint. In November 2024, Hillrom filed a Motion to Dismiss Plaintiff's Amended Complaint. After briefing and a hearing, the court granted the motion and dismissed the case with prejudice in September 2025. Reading Hospital appealed. Appellate briefing is complete, and the court held oral argument on September 24, 2026.
In October 2025, we and certain of our current and former officers and employees were named in a class action complaint captioned Electrical Workers Pension Fund, Local 103, I.B.E.W. v. Baxter International Inc. et al. that was filed in the United States District Court for the Northern District of Illinois. The plaintiff, which allegedly purchased or otherwise acquired shares of our common stock during the specified class period, filed this putative class action on
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behalf of itself and those who purchased or otherwise acquired Baxter common stock between February 23, 2022 and July 30, 2025. The plaintiff alleges that we and certain former and current officers and employees violated federal securities laws by making allegedly false and misleading statements and failing to disclose material facts relating to Novum LVP. In December 2025, an additional class action complaint was filed against us and certain of our current and former officers and employees in the United States District Court for the Northern District of Illinois, captioned City of Hallandale Beach Police Officers' and Firefighters' Personnel Retirement Trust v. Baxter International Inc., et al. The additional complaint included substantially the same allegations for the expanded period from February 23, 2022, through October 29, 2025. In June 2026, the court appointed a lead plaintiff and co-lead counsel.
In November 2025, certain of our current and former directors, officers and employees were named in two derivative complaints in the United States District Court for the Northern District of Illinois, captioned Ryan Wood v. Jose E. Almeida, et al. and Kevin Gray v. Jose E. Almeida, et al., respectively. Both complaints allege, nominally on behalf of Baxter International Inc., breaches of fiduciary duties and violations of federal law in connection with public statements about Novum LVP. The two derivative complaints were consolidated before the court in January 2026. By order of the court, the consolidated matter is currently stayed.
In addition, we have received stockholder requests for inspections of our books and records in connection with statements made about Novum LVP.
In December 2025, we received a CID from the DOJ requesting documents and information related to production of Baxter’s IV flexible containers and compliance with the False Claims Act. We are cooperating fully with the DOJ in responding to the CID.
7. STOCKHOLDERS’ EQUITY
Cash Dividends
Cash dividends declared per share for the three months ended September 30, 2026 and 2025 were $0.01 and $0.17 , respectively, and for the nine months ended September 30, 2026 and 2025 were $0.03 and $0.51 , respectively.
Stock Repurchase Programs
8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) represents net earnings plus items that are recorded directly to shareholders’ equity, such as cumulative translation adjustments (CTA), certain gains and losses from pension and other postretirement employee benefit (OPEB) plans, certain gains and losses from hedging activities and unrealized gains and losses on available-for-sale debt securities.
The following table is a net-of-tax summary of the changes in accumulated other comprehensive income (loss) (AOCI) by component for the nine months ended September 30, 2026 and 2025.
| Gains (losses) | |||||||||||||||||
| (in millions) | CTA | Pension and OPEB plans | Hedging activities | Available-for-sale debt securities | Total | ||||||||||||
Balance as of December 31, 2025 | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||
| Other comprehensive income (loss) before reclassifications | ( | ( | |||||||||||||||
Amounts reclassified from AOCI (a) | |||||||||||||||||
| Net other comprehensive income (loss) | ( | ( | |||||||||||||||
| Balance as of September 30, 2026 | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||
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| Gains (losses) | |||||||||||||||||
| (in millions) | CTA | Pension and OPEB plans | Hedging activities | Available-for-sale debt securities | Total | ||||||||||||
| Balance as of December 31, 2024 | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||
| Other comprehensive income (loss) before reclassifications | ( | ||||||||||||||||
Amounts reclassified from AOCI (a) | ( | ( | |||||||||||||||
| Net other comprehensive income (loss) | ( | ( | |||||||||||||||
| Balance as of September 30, 2025 | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||
(a) See table below for details about these reclassifications.
The following is a summary of the amounts reclassified from AOCI to net income (loss) during the three and nine months ended September 30, 2026 and 2025.
| Amounts reclassified from AOCI (a) | |||||||||||
| (in millions) | Three Months Ended September 30, 2026 | Nine Months Ended September 30, 2026 | Location of impact in income statement | ||||||||
| Pension and OPEB items | |||||||||||
| Amortization of net losses and prior service costs or credits | $ | ( | $ | ( | Other (income) expense, net | ||||||
| Less: Tax effect | Income tax expense (benefit) | ||||||||||
| $ | ( | $ | ( | Net of tax | |||||||
| Gains (losses) on hedging activities | |||||||||||
| Interest rate contracts | ( | ( | Interest expense, net | ||||||||
| Less: Tax effect | Income tax expense (benefit) | ||||||||||
| $ | ( | $ | ( | Net of tax | |||||||
| Total reclassifications for the period | $ | ( | $ | ( | Total net of tax | ||||||
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| Amounts reclassified from AOCI (a) | ||||||||||||||
| (in millions) | Three Months Ended September 30, 2025 | Nine Months Ended September 30, 2025 | Location of impact in income statement | |||||||||||
| CTA | ||||||||||||||
| Reclassification of cumulative translation loss to earnings from Kidney Care separation | $ | $ | ( | Income from discontinued operations, net of tax | ||||||||||
| Less: Tax effect | Income from discontinued operations, net of tax | |||||||||||||
| $ | $ | ( | Net of tax | |||||||||||
| Pension and OPEB items | ||||||||||||||
| Amortization of net losses and prior service costs or credits | $ | $ | Other (income) expense, net | |||||||||||
| Pension settlement from Kidney Care separation | Income from discontinued operations, net of tax | |||||||||||||
| Less: Tax effect | ( | Income tax expense | ||||||||||||
| Less: Tax effect on pension settlement from Kidney Care separation | ( | Income from discontinued operations, net of tax | ||||||||||||
| $ | $ | Net of tax | ||||||||||||
| Gains (losses) on hedging activities | ||||||||||||||
| Foreign exchange contracts | $ | $ | Cost of sales | |||||||||||
| Interest rate contracts | ( | ( | Interest expense, net | |||||||||||
| ( | Total before tax | |||||||||||||
| Less: Tax effect | ( | Income tax expense (benefit) | ||||||||||||
| $ | ( | $ | Net of tax | |||||||||||
| Total reclassifications for the period | $ | $ | ( | Total net of tax | ||||||||||
(a) Amounts in parentheses indicate reductions to net income
9. REVENUES
Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in the contract. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Some of our contracts have multiple performance obligations. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. Our global payment terms are typically between 30 to 90 days.
Our primary customers are hospitals, healthcare distribution companies, and government agencies that purchase healthcare products on behalf of providers. Most of our performance obligations are satisfied at a point in time. This includes sales of our broad portfolio of essential healthcare products across our business segments. We earn revenues from sterile intravenous (IV) solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; surgical hemostat and sealant products; smart bed systems; patient monitoring and diagnostic technologies; respiratory health devices; and advanced equipment for the surgical space. For most of those offerings, our performance obligation is satisfied upon delivery to the customer. Shipping and handling activities are considered to be fulfillment activities and are not considered to be a separate performance obligation.
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To a lesser extent, we enter into arrangements for which revenue may be recognized over time. For example, we lease medical equipment to customers under operating lease arrangements and recognize the related revenues on a monthly basis over the lease term. Our Healthcare Systems & Technologies segment includes connected care solutions and collaboration tools that are implemented over time. We recognize revenue for these arrangements over time or at a point in time depending on our evaluation of when the customer obtains control of the promised goods or services. We also earn revenue from contract manufacturing activities, which is recognized over time as the services are performed. Revenue is recognized over time when we are creating or enhancing an asset that the customer controls as the asset is created or enhanced or our performance does not create an asset with an alternative use and we have an enforceable right to payment for performance completed.
As of September 30, 2026, we had $7.58 billion of transaction price allocated to remaining performance obligations related to executed contracts with an original duration of more than one year, which are included in the Medical Products & Therapies segment. Some contracts in the United States included in this amount contain index-dependent price increases, which are not known at this time. We expect to recognize approximately 10 % of this amount as revenue over the remainder of 2026, 25 % in 2027, 20 15 % in 2030 and the remainder thereafter.
Significant Judgments
Revenues from product sales are recorded at the net sales price, which include estimates of variable consideration primarily related to rebates and distributor chargebacks. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are included in accrued expenses and other current liabilities and as reductions of accounts receivable, net on the condensed consolidated balance sheets. Management's estimates take into consideration historical experience, current contractual and statutory requirements, specific known market events and trends, industry data, and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract using the expected value method. The amount of variable consideration included in the net sales price is limited to the amount for which it is probable that a significant reversal in revenue will not occur when the related uncertainty is resolved. Revenue recognized during the three and nine months ended September 30, 2026 and 2025 related to performance obligations satisfied in prior periods was no
Contract Balances
The timing of revenue recognition, billings and cash collections results in the recognition of trade accounts receivable, unbilled receivables, contract assets and customer advances, and deposits (contract liabilities) on our condensed consolidated balance sheets. Net trade accounts receivable was $1.61 billion and $1.70 billion as of September 30, 2026 and December 31, 2025, respectively.
For contract manufacturing arrangements, revenue is primarily recognized throughout the production cycle, which typically lasts up to 90 days, resulting in the recognition of contract assets until the related services are completed and the customers are billed. Additionally, for certain arrangements containing a performance obligation to deliver software that can be used with medical devices, we recognize revenue upon delivery of the software, which results in the recognition of contract assets when customers are billed over time, generally over to five years . For bundled contracts involving equipment delivered up-front and consumable medical products to be delivered over time, total contract revenue is allocated between the equipment and consumable medical products. In certain of those arrangements, a contract asset is created for the difference between the amount of equipment revenue recognized upon delivery and the amount of consideration initially receivable from the customer. In those arrangements, the contract asset becomes a trade account receivable as consumable medical products are delivered and billed, generally over to seven years .
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The following table summarizes our contract assets:
| (in millions) | September 30, 2026 | December 31, 2025 | ||||||
| Contract manufacturing services | $ | $ | ||||||
| Software sales | ||||||||
| Bundled equipment and consumable medical products contracts | ||||||||
| Contract assets | $ | $ | ||||||
Contract liabilities represent deferred revenues that arise as a result of cash received from customers or where the timing of billing for services precedes satisfaction of our performance obligations. Such remaining performance obligations represent the portion of the contract price for which work has not been performed and are primarily related to our installation and service contracts. We expect to satisfy the majority of the remaining performance obligations and recognize revenue related to installation and service contracts within the next 12 months with most of the non-current performance obligations satisfied within 24 months.
The following table summarizes contract liability activity for the nine months ended September 30, 2026 and 2025. The contract liability balance represents the transaction price allocated to the remaining performance obligations.
| Nine Months Ended September 30, | ||||||||
| (in millions) | 2026 | 2025 | ||||||
| Balance at beginning of period | $ | $ | ||||||
| New revenue deferrals | ||||||||
| Revenue recognized upon satisfaction of performance obligations | ( | ( | ||||||
| Currency translation and other | ( | |||||||
| Balance at end of period | $ | $ | ||||||
For the nine months ended September 30, 2026 and 2025, $125 million and $89 million of revenue was recognized that was included in contract liabilities as of December 31, 2025 and 2024, respectively.
The following table summarizes the classification of contract assets and contract liabilities as reported in the condensed consolidated balance sheets:
| (in millions) | September 30, 2026 | December 31, 2025 | ||||||
| Prepaid expenses and other current assets | $ | $ | ||||||
| Other non-current assets | ||||||||
| Contract assets | $ | $ | ||||||
| Accrued expenses and other current liabilities | $ | $ | ||||||
| Other non-current liabilities | ||||||||
| Contract liabilities | $ | $ | ||||||
Disaggregation of Net Sales
Refer to Note 16 for additional information on our net sales including the disaggregation of net sales within each of our segments and net sales by geographic location.
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Lease Revenue
We lease medical equipment, such as smart beds and infusion pumps, to customers, often in conjunction with arrangements to provide consumable medical products such as IV fluids and inhaled anesthetics. Certain of our equipment leases are classified as sales-type leases and the remainder are operating leases. The terms of the related contracts, including the proportion of fixed versus variable payments and any options to shorten or extend the lease term, vary by customer. We allocate revenue between equipment leases and medical products based on their standalone selling prices.
The components of lease revenue for the three and nine months ended September 30, 2026 and 2025 were:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Sales-type lease revenue | $ | $ | $ | $ | |||||||||||||
| Operating lease revenue | |||||||||||||||||
| Variable lease revenue | |||||||||||||||||
| Total lease revenue | $ | $ | $ | $ | |||||||||||||
Our net investment in sales-type leases was $29 million as of September 30, 2026, of which $4 million originated in 2022 and prior, $3 million in 2023, $6 million in 2024, $3 million in 2025, and $13 million in 2026.
10. BUSINESS OPTIMIZATION CHARGES
We are continuing to undertake actions to transform our cost structure and enhance operational efficiency. In recent years, these efforts have included restructuring the organization into verticalized segments, optimizing the manufacturing footprint, research and development (R&D) operations and supply chain network, employing disciplined cost management, and centralizing and streamlining certain support functions, some of which are still ongoing. We currently expect to incur additional pre-tax cash costs, primarily related to the implementation of business optimization programs, that are not material to our condensed consolidated financial statements, through the completion of certain initiatives that are currently underway. We continue to pursue cost savings initiatives, including those intended to mitigate a portion of the dis-synergies that arose as a result of the sale of our Kidney Care business, and we expect to incur additional restructuring charges and costs in future periods to implement business optimization programs. For segment reporting, business optimization charges are unallocated expenses.
During the three and nine months ended September 30, 2026 and 2025, we recorded the following charges related to business optimization programs.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Restructuring charges | $ | $ | $ | $ | |||||||||||||
Costs to implement business optimization programs1 | ( | ||||||||||||||||
| Total business optimization charges | $ | $ | $ | $ | |||||||||||||
1Costs to implement business optimization programs for the three and nine months ended September 30, 2026 and 2025, respectively, consisted primarily of external consulting and transition costs, including employee compensation and related costs. These costs were primarily included within cost of sales and SG&A expense.
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During the three and nine months ended September 30, 2026 and 2025, we recorded the following restructuring charges.
| Three months ended September 30, 2026 | ||||||||||||||
| (in millions) | COGS | SG&A | Total | |||||||||||
| Employee termination costs | $ | $ | $ | |||||||||||
| Contract termination and other costs | ||||||||||||||
| Asset write offs | ||||||||||||||
| Total restructuring charges | $ | $ | $ | |||||||||||
| Three months ended September 30, 2025 | ||||||||||||||
| (in millions) | COGS | SG&A | R&D | Total | ||||||||||
| Employee termination costs | $ | $ | $ | $ | ||||||||||
| Contract termination and other costs | ||||||||||||||
| Asset write offs | ||||||||||||||
| Total restructuring charges | $ | $ | $ | $ | ||||||||||
| Nine months ended September 30, 2026 | ||||||||||||||
| (in millions) | COGS | SG&A | R&D | Total | ||||||||||
| Employee termination costs | $ | $ | $ | $ | ||||||||||
| Contract termination and other costs | ||||||||||||||
| Asset write offs | ||||||||||||||
| Total restructuring charges | $ | $ | $ | $ | ||||||||||
| Nine months ended September 30, 2025 | ||||||||||||||
| (in millions) | COGS | SG&A | R&D | Total | ||||||||||
| Employee termination costs | $ | $ | $ | $ | ||||||||||
| Contract termination and other costs | ||||||||||||||
| Asset write offs | ||||||||||||||
| Total restructuring charges | $ | $ | $ | $ | ||||||||||
For the three and nine months ended September 30, 2026, $21 million and $79 million, respectively, of the restructuring charges reflected in the table above, consisting of employee termination costs, were related to initiatives to reduce our cost structure following the sale of our Kidney Care business. For the three and nine months ended September 30, 2026, $39 7 32
For the three and nine months ended September 30, 2025, $10 million and $41 million, respectively, of the restructuring charges reflected in the table above, consisting of employee termination costs, were related to initiatives to reduce our cost structure following the sale of our Kidney Care business. For the three months ended September 30, 2025, $21 million of the restructuring charges reflected in the table above, consisting of $8 million of asset write offs, $8 million of contract termination and other costs, and $5 million of employee termination costs, were related to the exit of a product line at one of our manufacturing facilities. For the nine months ended September 30, 2025, $24 million of the restructuring charges reflected in the table above, consisting of $11 million of asset write offs, $8 million of contract termination and other costs, and $5 million of employee termination costs, were related to the exit of a product line at one of our manufacturing facilities.
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The following table summarizes activity in the liability related to our restructuring initiatives.
| (in millions) | |||||
| Liability balance as of December 31, 2025 | $ | ||||
| Charges | |||||
| Payments | ( | ||||
| Reserve adjustments | ( | ||||
| Currency translation | ( | ||||
| Liability balance as of September 30, 2026 | $ | ||||
Substantially all of our restructuring liabilities as of September 30, 2026 relate to employee termination costs, with the remaining liabilities attributable to contract termination costs. Substantially all of the cash payments for those liabilities are expected to be disbursed by the end of 2027.
11. PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS
The following is a summary of net periodic benefit cost relating to our pension and OPEB plans.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Pension benefits | |||||||||||||||||
| Service cost | $ | $ | $ | $ | |||||||||||||
| Interest cost | |||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | |||||||||||||
| Amortization of net losses and prior service costs | |||||||||||||||||
| Net periodic pension cost (benefit) | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||
| OPEB | |||||||||||||||||
| Interest cost | $ | $ | $ | $ | |||||||||||||
| Amortization of net loss and prior service credit | ( | ( | ( | ||||||||||||||
| Net periodic OPEB cost (income) | $ | $ | ( | $ | $ | ( | |||||||||||
12. INCOME TAXES
Our effective income tax rate was 29 % and 142 % for the three months ended September 30, 2026 and 2025, respectively, and 27 % and 46 % for the nine months ended September 30, 2026 and 2025, respectively. Our effective income tax rate can differ from the 21 % U.S. federal statutory rate due to a number of factors, including foreign rate differences, tax incentives, non-deductible expenses, non-taxable income, increases or decreases in valuation allowances, increases or decreases in liabilities for uncertain tax positions, and excess tax benefits or shortfalls on stock compensation awards.
For the three months ended September 30, 2026, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily driven by increases to our valuation allowance on U.S. deferred tax assets, partially offset by global earnings mix.
For the nine months ended September 30, 2026, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily driven by increases to our valuation allowance on U.S. deferred tax assets and tax shortfalls on stock compensation awards, partially offset by global earnings mix and global tax audit developments.
For the three months ended September 30, 2025, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily driven by an increase in liabilities for uncertain tax positions, partially offset by a reduction in the valuation allowance on foreign tax credits and changes in the treatment of accumulated earnings that are considered indefinitely reinvested as of December 31, 2024.
For the nine months ended September 30, 2025, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily driven by an increase in liabilities for uncertain tax positions, partially offset by a reduction in the valuation allowance on foreign tax credits, changes in the treatment of accumulated earnings that are
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considered indefinitely reinvested as of December 31, 2024 and a tax benefit driven by an entity classification election that we made for U.S. tax purposes, which resulted in a capital loss for the period.
In the first quarter of 2026, we received a Notice of Proposed Adjustment (NOPA) from the Internal Revenue Service (IRS) for examination related to transfer pricing matters related to transactions with our manufacturing operations in Costa Rica and Puerto Rico for the 2019 and 2020 tax years. In the second quarter of 2026, we settled the examination by the IRS related to these matters for amounts materially consistent with our existing and previously disclosed uncertain tax position reserves. Uncertain tax position reserves for tax years 2021 through 2025 were not adjusted as a result of the IRS settlement for 2019 and 2020 tax years.
13. EARNINGS PER SHARE
The numerator for both basic and diluted earnings per share (EPS) is net income (loss) attributable to Baxter stockholders. The denominator for basic EPS is the weighted-average number of shares outstanding during the period. The dilutive effect of outstanding stock options, restricted stock units (RSUs) and performance share units (PSUs) is reflected in the denominator for diluted EPS using the treasury stock method.
The following table is a reconciliation of income (loss) from continuing operations to net income (loss) attributable to Baxter stockholders.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Income (loss) from continuing operations | $ | $ | ( | $ | $ | ||||||||||||
| Less: Net income attributable to noncontrolling interests | |||||||||||||||||
| Income (loss) from continuing operations attributable to Baxter stockholders | ( | ||||||||||||||||
| Income (loss) from discontinued operations | ( | ( | |||||||||||||||
| Net income (loss) attributable to Baxter stockholders | $ | $ | ( | $ | $ | ||||||||||||
The following table is a reconciliation of basic shares and diluted shares.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Basic shares | |||||||||||||||||
| Effect of dilutive securities | |||||||||||||||||
| Diluted shares | |||||||||||||||||
14. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
We operate on a global basis and are exposed to the risk that our earnings, cash flows and equity could be adversely impacted by fluctuations in foreign exchange and interest rates. Our hedging policy attempts to manage these risks to an acceptable level based on our judgment of the appropriate trade-off between risk, opportunity and costs.
We are primarily exposed to foreign exchange risk with respect to recognized assets and liabilities, forecasted transactions and net assets denominated in the Euro, Polish Zloty, Chinese Renminbi, British Pound, Australian Dollar, Swiss Franc, Korean Won, Swedish Krona, Czech Koruna and Singapore Dollar. We manage our foreign currency exposures on a consolidated basis, which allows us to net exposures and take advantage of any natural offsets. In addition, we use derivative and nonderivative instruments to further reduce the net exposure to foreign exchange risk. Gains and losses on the hedging instruments offset losses and gains on the hedged transactions and
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reduce the earnings and equity volatility resulting from changes in foreign exchange rates. Financial market and currency volatility may limit our ability to cost-effectively hedge these exposures.
We are also exposed to the risk that our earnings and cash flows could be adversely impacted by fluctuations in interest rates. Our policy is to manage interest costs using the mix of fixed- and floating-rate debt that we believe is appropriate at that time. To manage this mix in a cost-efficient manner, we periodically enter into interest rate swaps in which we agree to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional amount.
We do not hold any instruments for trading purposes and none of our outstanding derivative instruments contain credit-risk-related contingent features.
Derivative instruments are recognized as either assets or liabilities at fair value in the condensed consolidated balance sheets and are classified as short-term or long-term based on the scheduled maturity of the instrument. We designate certain of our derivatives and foreign-currency denominated debt as hedging instruments in cash flow, fair value or net investment hedges.
Cash Flow Hedges
We may use options, including collars and purchased options, forwards and cross-currency swaps to hedge the foreign exchange risk to earnings relating to forecasted transactions and recognized assets and liabilities. We periodically use treasury rate locks to hedge the risk to earnings associated with movements in interest rates relating to anticipated issuances of debt.
For each derivative instrument that is designated and effective as a cash flow hedge, the gain or loss on the derivative is recorded in AOCI and then recognized in earnings consistent with the underlying hedged transaction. Cash flow hedges are classified in cost of sales and interest expense, net, and are primarily related to forecasted intra-company sales denominated in foreign currencies and forecasted interest payments on anticipated issuances of debt, respectively.
There were no no
Fair Value Hedges
We periodically use interest rate swaps to convert a portion of our fixed-rate debt into variable-rate debt. These instruments hedge our earnings from changes in the fair value of debt due to fluctuations in the designated benchmark interest rate.
There were no
Net Investment Hedges
In May 2017, we issued €600 million of 1.3 % senior notes due May 2025. We had designated these debt obligations as hedges of our net investment in our European operations and, as a result, mark to spot rate adjustments of the outstanding debt balances were previously recorded as a component of AOCI. In March 2025, we dedesignated this previously designated net investment hedge and concurrently entered into forward contracts to manage foreign exchange risk in earnings relating to these outstanding debt balances. These forward contracts matured in May 2025.
In May 2019, we issued €750 million of 1.3 % senior notes due May 2029. We have designated these debt obligations as hedges of our net investment in our European operations and, as a result, mark to spot rate adjustments on the outstanding debt balances are recorded as a component of AOCI.
As of September 30, 2026, we had an accumulated pre-tax unrealized translation gain in AOCI of $25 million related to the Euro-denominated senior notes.
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Dedesignations
If it is determined that a derivative or nonderivative hedging instrument is no longer highly effective as a hedge, we discontinue hedge accounting prospectively. Gains or losses relating to terminations of effective cash flow hedges generally continue to be deferred and are recognized consistent with the loss or income recognition of the underlying hedged transactions. However, if it is probable that the hedged forecasted transactions will not occur, any gains or losses would be immediately reclassified from AOCI to earnings.
There were no
If we terminate a fair value hedge, an amount equal to the cumulative fair value adjustment to the hedged item at the date of termination is amortized to earnings over the remaining term of the hedged item. There were no
If we remove a net investment hedge designation, any gain or loss recognized in AOCI is not reclassified to earnings until we sell, liquidate, or deconsolidate the foreign investments that were being hedged. There were no net investment hedges terminated during the first nine months of 2026. In March 2025, we dedesignated one of our net investment hedges as discussed in the "Net Investment Hedges" section above.
Undesignated Derivative Instruments
We use forward contracts to hedge earnings from the effects of foreign exchange relating to certain of our intra-company and third-party receivables and payables denominated in a foreign currency. These derivative instruments are generally not formally designated as hedges and the terms of these instruments generally do not exceed one month.
In March 2025, as discussed in the "Net Investment Hedges" section above, we entered into forward contracts with a notional amount of $655 million to hedge the repayment of our Euro-denominated senior notes due May 2025. These forward contracts matured in May 2025. The total notional amount of undesignated derivative instruments was $151 million as of September 30, 2026 and $323 million as of December 31, 2025.
Gains and Losses on Hedging Instruments and Undesignated Derivative Instruments
The following tables summarize the gains and losses on our hedging instruments and the classification of those gains and losses within our condensed consolidated financial statements for the three months ended September 30, 2026 and 2025.
| Gain (loss) recognized in OCI | Location of gain (loss) in income statement | Gain (loss) reclassified from AOCI into income | ||||||||||||||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Cash flow hedges | ||||||||||||||||||||||||||
| Interest rate contracts | $ | $ | Interest expense, net | $ | ( | $ | ( | |||||||||||||||||||
| Foreign exchange contracts | Cost of sales | |||||||||||||||||||||||||
| Net investment hedges | ( | Other (income) expense, net | ||||||||||||||||||||||||
| Total | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
| Location of gain (loss) in income statement | Gain (loss) recognized in income | |||||||||||||
| (in millions) | 2026 | 2025 | ||||||||||||
| Undesignated derivative instruments | ||||||||||||||
| Foreign exchange contracts | Other (income) expense, net | $ | ( | $ | ||||||||||
| Total | $ | ( | $ | |||||||||||
The following tables summarize the gains and losses on our hedging instruments and the classification of those gains and losses within our consolidated financial statements for the nine months ended September 30, 2026 and 2025.
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| Gain (loss) recognized in OCI | Location of gain (loss) in income statement | Gain (loss) reclassified from AOCI into income | ||||||||||||||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Cash flow hedges | ||||||||||||||||||||||||||
| Interest rate contracts | $ | $ | Interest expense, net | $ | ( | $ | ( | |||||||||||||||||||
| Foreign exchange contracts | Cost of sales | |||||||||||||||||||||||||
| Net investment hedges | ( | Other (income) expense, net | ||||||||||||||||||||||||
| Total | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||
| Location of gain (loss) in income statement | Gain (loss) recognized in income | |||||||||||||
| (in millions) | 2026 | 2025 | ||||||||||||
| Undesignated derivative instruments | ||||||||||||||
| Foreign exchange contracts | Other (income) expense, net | ( | ||||||||||||
| Total | $ | ( | $ | |||||||||||
As of September 30, 2026, $4 million of deferred, net after-tax losses on derivative instruments included in AOCI are expected to be recognized in earnings during the next 12 months, coinciding with when the hedged items are expected to impact earnings.
Derivative Assets and Liabilities
The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of September 30, 2026.
| Derivatives in asset positions | Derivatives in liability positions | ||||||||||||||||
| (in millions) | Balance sheet location | Fair value | Balance sheet location | Fair value | |||||||||||||
| Derivative instruments designated as hedges | |||||||||||||||||
| Net investment hedges | Long-term debt and finance lease obligations, less current portion | $ | |||||||||||||||
| Undesignated derivative instruments | |||||||||||||||||
| Foreign exchange contracts | Prepaid expenses and other current assets | $ | Accrued expenses and other current liabilities | ||||||||||||||
| Total derivative instruments | $ | $ | |||||||||||||||
The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of December 31, 2025.
| Derivatives in liability positions | |||||||||||||||||
| (in millions) | Balance sheet location | Fair value | |||||||||||||||
| Derivative instruments designated as hedges | |||||||||||||||||
| Net investment hedges | Long-term debt and finance lease obligations, less current portion | $ | |||||||||||||||
| Undesignated derivative instruments | |||||||||||||||||
| Foreign exchange contracts | Accrued expenses and other current liabilities | ||||||||||||||||
| Total derivative instruments | $ | ||||||||||||||||
While some of our derivatives are subject to master netting arrangements, we present our assets and liabilities related to derivative instruments on a gross basis within the condensed consolidated balance sheets. Additionally, we are not required to post collateral for any of our outstanding derivatives.
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The following table provides information on our derivative positions as if they were presented on a net basis, allowing for the right of offset by counterparty.
| September 30, 2026 | December 31, 2025 | ||||||||||||||||
| (in millions) | Asset | Liability | Asset | Liability | |||||||||||||
| Gross amounts recognized in the condensed consolidated balance sheets | $ | $ | $ | $ | |||||||||||||
| Gross amount subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet | |||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||
The following table presents the amounts recorded on the condensed consolidated balance sheet related to fair value hedges:
| Carrying amount of hedged item | Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged item (a) | ||||||||||||||||
| (in millions) | Balance as of September 30, 2026 | Balance as of December 31, 2025 | Balance as of September 30, 2026 | Balance as of December 31, 2025 | |||||||||||||
| Long-term debt | $ | $ | $ | $ | |||||||||||||
(a) These fair value hedges were terminated in 2018 and earlier periods.
15. FAIR VALUE MEASUREMENTS
The following tables summarize our assets and liabilities that are measured at fair value on a recurring basis.
| Basis of fair value measurement | ||||||||||||||
| (in millions) | Balance as of September 30, 2026 | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||
| Assets | ||||||||||||||
| Available-for-sale debt securities | $ | $ | $ | $ | ||||||||||
| Marketable equity securities | ||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||
| Liabilities | ||||||||||||||
| Foreign exchange contracts | $ | $ | $ | $ | ||||||||||
| Contingent payments related to acquisitions | ||||||||||||||
Indemnifications related to Kidney Care separation1 | ||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||
1 See Note 2 for additional information.
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| Basis of fair value measurement | ||||||||||||||
| (in millions) | Balance as of December 31, 2025 | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||
| Assets | ||||||||||||||
| Available-for-sale debt securities | $ | $ | $ | $ | ||||||||||
| Marketable equity securities | ||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||
| Liabilities | ||||||||||||||
| Foreign exchange contracts | $ | $ | $ | $ | ||||||||||
| Contingent payments related to acquisitions | ||||||||||||||
Indemnifications related to Kidney Care separation1 | ||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||
1 See Note 2 for additional information.
As of September 30, 2026 and December 31, 2025, cash and cash equivalents of $1.98 billion and $1.97 billion, respectively, included money market fund and other short-term funds of approximately $1.06 billion and $832 million, respectively, that are considered Level 2 in the fair value hierarchy.
For assets that are measured using quoted prices in active markets, the fair value is the published market price per unit multiplied by the number of units held, without consideration of transaction costs. A majority of the derivatives entered into by us are valued using internal valuation techniques as no quoted market prices exist for such instruments. The principal techniques used to value these instruments are discounted cash flow and Black-Scholes models. The key inputs, which are considered observable and vary depending on the type of derivative, include contractual terms, interest rate yield curves, foreign exchange rates and volatility.
Available-for-sale debt securities, which consist of convertible debt and convertible redeemable preferred shares issued by nonpublic entities, are measured using discounted cash flow and option pricing models. Those available-for-sale debt securities are classified as Level 3 fair value measurements when there are no observable transactions near the balance sheet date due to the lack of observable data over certain fair value inputs such as equity volatility. The fair values of available-for-sale debt securities increase when interest rates decrease, equity volatility increases, or the fair values of the equity shares underlying the conversion options increase.
Contingent payments related to acquisitions, which consist of milestone payments and sales-based payments, are valued using discounted cash flow techniques incorporating management's expectations of future outcomes. The fair value of milestone payments increases as the estimated probability of payment increases or the expected timing of payments is accelerated. The fair value of sales-based payments is based upon probability-weighted future revenue estimates, and increases as revenue estimates increase, probability weighting of higher revenue scenarios increases or the expected timing of payment is accelerated.
In addition, we have contingent payments related to the Kidney Care separation, which consist of reimbursements to Vantive for certain indemnifications contemplated in the EPA. For additional information on these items see Note 2.
The following table is a reconciliation of recurring fair value measurements that use significant unobservable inputs (Level 3), which consist of indemnifications related to the Kidney Care separation, contingent payments related to
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acquisitions and available-for-sale debt securities.
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in millions) | Indemnifications related to Kidney Care separation | Contingent payments related to acquisitions | Available-for-sale debt securities | Indemnifications related to Kidney Care separation | Contingent payments related to acquisitions | Available-for-sale debt securities | |||||||||||||||||
| Fair value at beginning of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Additions | |||||||||||||||||||||||
| Change in fair value recognized in earnings | |||||||||||||||||||||||
| Fair value at end of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in millions) | Indemnifications related to Kidney Care separation | Contingent payments related to acquisitions | Available-for-sale debt securities | Indemnifications related to Kidney Care separation | Contingent payments related to acquisitions | Available-for-sale debt securities | |||||||||||||||||
| Fair value at beginning of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Additions | |||||||||||||||||||||||
| Change in fair value recognized in earnings | |||||||||||||||||||||||
| Payments | ( | ||||||||||||||||||||||
| Fair value at end of period | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Financial Instruments Not Measured at Fair Value
In addition to the financial instruments that we are required to recognize at fair value in the condensed consolidated balance sheets, we have certain financial instruments that are recognized at amortized cost or some basis other than fair value. For these financial instruments, the following table provides the values recognized in the condensed consolidated balance sheets and the estimated fair values as of September 30, 2026 and December 31, 2025.
| Book values | Fair values(a) | ||||||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Liabilities | |||||||||||||||||
| Current maturities of long-term debt | |||||||||||||||||
| Long-term debt | |||||||||||||||||
(a) These fair value amounts are classified as Level 2 within the fair value hierarchy as they are estimated based on observable inputs.
The estimated fair values of current and long-term debt were computed by multiplying price by the notional amount of the respective debt instruments. Price is calculated using the stated terms of the respective debt instrument and yield curves commensurate with our credit risk. The carrying values of other financial instruments not presented in the above table, such as accounts receivable, accounts payable and short-term debt, approximate their fair values due to the short-term maturities of most of those assets and liabilities.
Investments Without Readily Determinable Fair Values
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16. SEGMENT INFORMATION
In the second quarter of 2026, as part of our new operating model to better align decision-making, cost structure, and execution across our businesses, we have changed our reportable segments to reflect the way our chief operating decision maker (CODM), who has been identified as our President and Chief Executive Officer, allocates resources and assesses our performance. Starting in the second quarter of 2026, our business is now comprised of two three
The Medical Products & Therapies segment includes sales of our sterile IV solutions, infusion systems, administration sets, parenteral nutrition therapies and surgical hemostat, sealant and adhesion prevention products, specialty injectable pharmaceuticals, inhaled anesthesia, drug compounding and sales of products and services provided directly through certain of our manufacturing facilities. The Healthcare Systems & Technologies segment includes sales of our connected care solutions and collaboration tools, including smart bed systems, connected monitoring systems, formerly known as patient monitoring systems, and diagnostic technologies, respiratory health devices, and advanced equipment for the surgical space, including operating room integration technologies, precision positioning devices, and other accessories. Other sales not allocated to a segment includes sales to Vantive, pursuant to the Kidney Care MSA.
Disaggregation of Net Sales
The following table presents our U.S. and international disaggregated net sales.
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in millions) | U.S. | International | Total | U.S. | International | Total | |||||||||||||||||
Infusion Therapies & Platforms | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Advanced Surgery | |||||||||||||||||||||||
| Medical Products & Therapies | |||||||||||||||||||||||
Care & Connectivity Solutions | |||||||||||||||||||||||
Front Line Care | |||||||||||||||||||||||
Healthcare Systems & Technologies | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total Baxter | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in millions) | U.S. | International | Total | U.S. | International | Total | |||||||||||||||||
Infusion Therapies & Platforms | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Advanced Surgery | |||||||||||||||||||||||
| Medical Products & Therapies | |||||||||||||||||||||||
Care & Connectivity Solutions | |||||||||||||||||||||||
Front Line Care | |||||||||||||||||||||||
Healthcare Systems & Technologies | |||||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total Baxter | $ | $ | $ | $ | $ | $ | |||||||||||||||||
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Segment Operating Income
Our CODM reviews the financial information presented for purposes of evaluating the performance of our segments and to make resource allocation decisions.
Segment operating income is the measure of segment profitability and represents income before income taxes, interest and other non-operating income or expense, unallocated corporate costs, intangible asset amortization, and other special items. Special items, which are presented below in our reconciliations of reportable segment operating income to income (loss) from continuing operations before income taxes, are excluded from segment operating income because they are highly variable, difficult to predict and of a size that may substantially impact our reported results of operations for the period.
Corporate costs, inclusive of global functional support costs, overhead costs and other shared costs that benefit our segments are allocated to those segments. Corporate costs that do not benefit our segments are presented as unallocated corporate costs.
Segment results include net sales, cost of sales, selling, general and administrative expenses, R&D expenses, and other segment items which are directly allocated to each segment. Billings by us under the Kidney Care TSA are included in segment operating income. The following table presents our segment information of net sales, significant expenses and operating income during the periods presented.
| Three Months Ended September 30, 2026 | Three Months Ended September 30, 2025 | ||||||||||||||||
| (in millions) | Medical Products & Therapies | Healthcare Systems & Technologies | Medical Products & Therapies | Healthcare Systems & Technologies | |||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||
| Cost of sales | |||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||
| Research and development expenses | |||||||||||||||||
| Other segment items | ( | ( | ( | ( | |||||||||||||
| Segment operating income | $ | $ | $ | $ | |||||||||||||
| Nine Months Ended September 30, 2026 | Nine Months Ended September 30, 2025 | ||||||||||||||||
| (in millions) | Medical Products & Therapies | Healthcare Systems & Technologies | Medical Products & Therapies | Healthcare Systems & Technologies | |||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||
| Cost of sales | |||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||
| Research and development expenses | |||||||||||||||||
| Other segment items | ( | ( | ( | ( | |||||||||||||
| Segment operating income | $ | $ | $ | $ | |||||||||||||
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The following table presents our reportable segment operating income and reconciliations of reportable segment operating income to income (loss) from continuing operations before income taxes.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Medical Products & Therapies | $ | $ | $ | $ | |||||||||||||
| Healthcare Systems & Technologies | |||||||||||||||||
| Total reportable segment operating income | |||||||||||||||||
| Other | |||||||||||||||||
| Unallocated corporate costs | ( | ( | ( | ( | |||||||||||||
| Intangible asset amortization expense | ( | ( | ( | ( | |||||||||||||
| Legal matters | ( | ||||||||||||||||
| Business optimization items | ( | ( | ( | ( | |||||||||||||
| Acquisition and integration items | ( | ( | |||||||||||||||
| Separation-related costs | ( | ( | ( | ( | |||||||||||||
| European Medical Devices Regulation | ( | ( | ( | ( | |||||||||||||
| Business transformation | ( | ( | |||||||||||||||
| Hurricane Helene costs | ( | ( | ( | ( | |||||||||||||
| Product-related items | ( | ( | |||||||||||||||
| Total operating income | |||||||||||||||||
| Interest expense, net | |||||||||||||||||
| Other (income) expense, net | ( | ( | ( | ( | |||||||||||||
| Income (loss) from continuing operations before income taxes | $ | $ | $ | $ | |||||||||||||
Additional financial information for our segments is as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Depreciation Expense | |||||||||||||||||
| Medical Products & Therapies | $ | $ | $ | $ | |||||||||||||
| Healthcare Systems & Technologies | |||||||||||||||||
| Total segment depreciation expense | |||||||||||||||||
| Unallocated corporate depreciation expense | |||||||||||||||||
| Total depreciation expense | $ | $ | $ | $ | |||||||||||||
Our CODM does not receive asset information by reportable segment and, accordingly, we do not report that information for our segments.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Refer to our Annual Report on Form 10-K for the year ended December 31, 2025 (2025 Annual Report) for management’s discussion and analysis of our financial condition and results of operations. The following is management’s discussion and analysis of our financial condition and results of operations for the three and nine months ended September 30, 2026 and 2025.
ONGOING BUSINESS TRANSFORMATION
On January 31, 2025, we completed the sale of our former Kidney Care business (which is now known as Vantive Health LLC (Vantive)) to certain affiliates of Carlyle Group Inc. (Carlyle) and ultimately received approximately $3.2 billion of after-tax cash proceeds that were used to repay short- and long-term legacy indebtedness in 2025.
We have incurred and expect to incur additional dis-synergies following our sale of our Kidney Care business due to the reduced size of our company and, as a result, we have undertaken certain restructuring actions (and intend to undertake additional actions) to help ensure our cost structure is appropriate to support our remaining business. See Note 10 of this Quarterly Report on Form 10-Q for additional information.
In the second quarter of 2026, we implemented a new operating model to better align decision-making, cost structure, and commercial execution across our businesses. As part of this work, we continue to focus on increasing efficiencies through increased automation and digitization (including through our thoughtful exploration of artificial intelligence initiatives). Beginning in October 2025, we launched Baxter Growth and Performance system, our high performance business system grounded in continuous improvement and management by objectives.
As part of our new operating model, we have changed our reportable segments. Our business is now comprised of two reportable segments under this new operating model: Medical Products & Therapies and Healthcare Systems & Technologies. Previously, our business was comprised of three segments: Medical Products & Therapies, Healthcare Systems & Technologies, and Pharmaceuticals. Our former Pharmaceuticals segment is now reported within the Infusion Therapies & Platforms division of the Medical Products & Therapies segment. Additionally, sales of products and services provided directly through certain of our manufacturing facilities related to Infusion Therapies & Platforms that were previously reported in Other are now reported in our Infusion Therapies & Platforms division of the Medical Products & Therapies segment. In addition, we have updated our approach to our corporate cost allocations. Certain shared corporate expenses will now remain unallocated, rather than being fully allocated to the segments (as they had been previously). Prior period segment disclosures have been recast to reflect the new segment presentation. See Note 16 of this Quarterly Report on Form 10-Q for additional information.
FACTORS AFFECTING OUR RESULTS OF OPERATIONS
Novum IQ Large Volume Pump (Novum LVP)
During 2025, we initiated voluntary corrections for the Novum LVP. The U.S. Food and Drug Administration (FDA) classified these voluntary corrections as Class I recalls. We have implemented certain corrections related to the recalls and have identified additional corrections to address these recalls, some of which may require regulatory clearance or approval, and are in the early stages of verification testing. In July 2025, we elected to temporarily stop distributing and installing the Novum LVP in the U.S. and Canada, except in the case of medical necessity. The timing of the release of the shipment and installation hold remains uncertain. As a result, we expect no meaningful sales of Novum LVP while these holds are in effect. Our Spectrum IQ large volume pump remains available as an alternative option for customers with Novum LVPs. In 2025, we recorded estimates for sales reductions, for returns or exchanges of Novum LVP, and certain other charges, including estimates of reserves for remediation costs and inventory and contract asset write-downs associated with these Novum LVP corrections. We regularly review these estimates (including those associated with any future additional corrections and customer returns or exchanges), which may be subject to additional change in the future. In the first quarter of 2026, we adjusted certain estimates associated with these Novum LVP corrections that were not material to our condensed consolidated financial statements; no such adjustments were recorded in the second and third quarters of 2026.
Supply Constraints, Tariffs and Global Economic Conditions
We have experienced challenges to our global supply chain, including, as a result of adverse impacts from significant weather events like Hurricane Helene and other global macroeconomic and geopolitical events (including the ongoing conflict in Iran and the potential for escalation of this and other conflicts), which have had a negative impact on our results of operations and may do so in the future. In addition, announcements regarding changes in U.S. trade
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policies and practices, including the implementation of global tariffs and proposed further tariffs (including potential medical device and pharmaceutical tariffs), the Supreme Court's decision to invalidate tariffs levied under the International Emergency Economic Powers Act (IEEPA), and responses from other jurisdictions, have significantly affected financial markets and economic conditions. In the second quarter of 2026, we recorded tariff refunds of approximately $75 million to costs of goods sold in our condensed consolidated statements of income (loss) (which was substantially collected during the third quarter of 2026) for probable receipt of amounts eligible for refund in the first and second phases of the process and expect to submit additional refund requests in future phases subject to further rulings by the Court of International Trade. While uncertainty remains surrounding the timing of any additional amounts we may ultimately recover on current or future refund claims, we do not expect for any additional amounts to be material to our condensed consolidated financial statements. We currently expect that our results will continue to be adversely impacted by Section 122 duties and previously announced Section 301 tariffs. Additionally, continued global macroeconomic uncertainty, including in trade policies and practices, elevated tariffs and operational and policy changes in the governments of the U.S. and other countries and other geopolitical events or conflicts, could contribute to further market volatility, deteriorating or prolonged weakened economic conditions and decreased hospital capital spending levels. We continue to closely monitor these developing situations and the estimated impact on our business, results of operations, financial condition and cash flows.
Over the past few years, the existence of high inflation rates in the United States and in many of the countries where we conduct business has resulted in, and are likely in the future to result in, higher interest rates, shipping costs, labor costs, and other costs and expenses. Additionally, adverse changes in foreign currency exchange rates have increased, and could continue to increase, our costs of sourcing certain raw materials in some jurisdictions. We have experienced and are likely in the future to continue to experience inflationary and other increases in manufacturing costs and operating expenses (including as a result of the aforementioned tariffs and conflicts) and are limited in our ability to pass these cost increases on to our customers in a timely manner or at all due to the longer term nature of our customer contracts and arrangements. We are also limited in our ability to switch suppliers given the regulated nature of our products and the lead times associated with qualifying new suppliers. These constraints could have a material adverse impact on our profitability and results of operations. Inflation and general macroeconomic factors have caused certain of our customers to reduce or delay orders for our products and services and could cause them to do so in the future, which could also have a material adverse impact on our sales and results of operations.
For further discussion, please refer to Item 1A, Risk Factors in our 2025 Annual Report.
NON-GAAP FINANCIAL MEASURES
Our presentation of percentage changes in net sales at organic sales growth excludes the impact of the Kidney Care Manufacturing and Supply Agreement (Kidney Care MSA) sales not reflected in reportable segments, impacts associated with business acquisitions or divestitures, and is calculated at constant currency rates. Constant currency rates are computed using current period local currency sales at the prior period’s foreign exchange rates. Organic sales growth is a non-GAAP financial measure. This measure provides information about growth (or declines) in our net sales as if the Kidney Care MSA had no impact on our sales and foreign currency exchange rates had not changed between the prior period and the current period. We believe that the non-GAAP measure of percent change in net sales at organic sales growth, when used in conjunction with the U.S. GAAP measure of percent change in net sales at actual rates, may provide a more complete understanding and facilitate a fuller analysis of our results of operations, particularly in evaluating performance from one period to another.
RESULTS OF OPERATIONS
Net income (loss) attributable to Baxter stockholders for the three months ended September 30, 2026 was $294 million, or $0.57 per diluted share, compared to $(46) million, or $(0.09) per diluted share for the three months ended September 30, 2025. For the three months ended September 30, 2026, our results included special items that adversely impacted net income (loss) attributable to Baxter stockholders by $5 million, or $0.01 per diluted share. For the three months ended September 30, 2025, our results included special items that adversely impacted net income (loss) attributable to Baxter stockholders by $401 million, or $0.78 per diluted share.
Net income (loss) attributable to Baxter stockholders for the nine months ended September 30, 2026 was $405 million, or $0.78 per diluted share, compared to $171 million, or $0.33 per diluted share for the nine months ended September 30, 2025. For the nine months ended September 30, 2026, our results included special items that adversely impacted net income (loss) attributable to Baxter stockholders by $365 million, or $0.71 per diluted share.
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For the nine months ended September 30, 2025, our results included special items that adversely impacted net income (loss) attributable to Baxter stockholders by $780 million, or $1.52 per diluted share.
Net income (loss) from continuing operations for the three months ended September 30, 2026 was $298 million, or $0.57 per diluted share, compared to $(51) million, or $(0.10) per diluted share for the three months ended September 30, 2025. Net income (loss) from continuing operations for the three months ended September 30, 2026 included special items that adversely impacted net income (loss) by $5 million, or $0.01 per diluted share. Net income (loss) from continuing operations for the three months ended September 30, 2025 included special items that adversely impacted net income (loss) by $404 million, or $0.79 per diluted share.
Net income (loss) from continuing operations for the nine months ended September 30, 2026 was $416 million, or $0.80 per diluted share, compared to $135 million, or $0.26 per diluted share for the nine months ended September 30, 2025. Net income (loss) from continuing operations for the nine months ended September 30, 2026 included special items that adversely impacted net income (loss) by $365 million, or $0.71 per diluted share. Net income (loss) from continuing operations for the nine months ended September 30, 2025 included special items that adversely impacted net income (loss) by $807 million, or $1.57 per diluted share.
See the subsection entitled “Special Items” for information about special items for all periods presented.
CONSOLIDATED NET SALES
| Three Months Ended September 30, | Percent change | ||||||||||||||||
| (in millions) | 2026 | 2025 | At actual rates | At organic sales growth 1 | |||||||||||||
| United States | $ | 1,595 | $ | 1,544 | 3 | % | 5 | % | |||||||||
| International | 1,381 | 1,291 | 7 | % | 6 | % | |||||||||||
| Total net sales | $ | 2,976 | $ | 2,835 | 5 | % | 5 | % | |||||||||
| Nine Months Ended September 30, | Percent change | ||||||||||||||||
| (in millions) | 2026 | 2025 | At actual rates | At organic sales growth 1 | |||||||||||||
| United States | $ | 4,625 | $ | 4,570 | 1 | % | 2 | % | |||||||||
| International | 4,012 | 3,700 | 8 | % | 5 | % | |||||||||||
| Total net sales | $ | 8,637 | $ | 8,270 | 4 | % | 3 | % | |||||||||
1 Percent change in net sales at organic sales growth is a non-GAAP financial measure. See the section entitled “Non-GAAP Financial Measures” for additional information about our use of that measure.
In the third quarter of 2026, the Kidney Care MSA sales adversely impacted sales growth by 1% and foreign exchange rates favorably impacted net sales growth by 1%, compared to the prior year period due to the weakening of the U.S. Dollar relative to the Australian Dollar and Colombian Peso, partially offset by the strengthening of the U.S. Dollar relative to the Euro. In the first nine months of 2026, the Kidney Care MSA sales adversely impacted sales growth by 1% and foreign currency rates favorably impacted net sales growth by 2%, compared to the prior year period due to the weakening of the U.S. Dollar relative to the Australian Dollar, Euro, Colombian Peso, British Pound, Brazilian Real, and Mexican Peso, partially offset by the strengthening of the U.S. Dollar relative to the Turkish Lira.
NET SALES BY SEGMENT
Medical Products & Therapies
Our Medical Products & Therapies segment includes sales of our sterile intravenous (IV) solutions, infusion systems, administration sets, parenteral nutrition therapies, surgical hemostat, sealant and adhesion prevention products,
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specialty injectable pharmaceuticals, inhaled anesthesia, drug compounding and sales of products and services provided directly through certain of our manufacturing facilities.
| Three Months Ended September 30, | Percent change | |||||||||||||||||||
| (in millions) | 2026 | 2025 | At actual rates | At organic sales growth 1 | ||||||||||||||||
Infusion Therapies & Platforms | $ | 1,760 | $ | 1,671 | 5 | % | 4 | % | ||||||||||||
| Advanced Surgery | 342 | 306 | 12 | % | 12 | % | ||||||||||||||
| Total Medical Products & Therapies net sales | $ | 2,102 | $ | 1,977 | 6 | % | 6 | % | ||||||||||||
| Nine Months Ended September 30, | Percent change | ||||||||||||||||
| (in millions) | 2026 | 2025 | At actual rates | At organic sales growth 1 | |||||||||||||
Infusion Therapies & Platforms | $ | 5,121 | $ | 4,910 | 4 | % | 2 | % | |||||||||
| Advanced Surgery | 977 | 870 | 12 | % | 11 | % | |||||||||||
| Total Medical Products & Therapies net sales | $ | 6,098 | $ | 5,780 | 6 | % | 3 | % | |||||||||
1 Percent change in net sales at organic sales growth is a non-GAAP financial measure. See the section entitled “Non-GAAP Financial Measures” for additional information about our use of that measure.
Medical Products & Therapies segment net sales increased 6% in the third quarter and first nine months of 2026, as compared to the prior year periods.
Infusion Therapies & Platforms net sales increased 5% in the third quarter and increased 4% in the first nine months of 2026, as compared to the prior year periods. The increase in the third quarter was driven by sales of our Spectrum IQ pump, contributions from our portfolio of digital solutions and administrative sets portfolio. Sales volumes were further driven by increased demand for our international pharmacy compounding offerings and growth in the U.S. IV solutions business reflecting a lower baseline level of demand following clinical practice changes in the market, partially offset by lower sales in our Injectables portfolio. Foreign exchange rates favorably impacted sales growth by 1% for the third quarter of 2026, as compared to the prior year period. Sales performance in the first nine months of 2026 reflected increased demand for our international pharmacy compounding offerings, partially offset by lower sales in our Injectables portfolio due to ongoing supply constraints in the U.S. and international markets. Foreign exchange rates favorably impacted sales growth by 2% for the first nine months of 2026, as compared to the prior year period. As previously discussed in "Factors Affecting our Results of Operations", we elected to temporarily stop distributing and installing the Novum LVP in the U.S. and Canada, except in the case of medical necessity. As a result, we expect no meaningful sales of Novum LVP while these holds are in effect. Our Spectrum IQ large volume pump remains available as an alternative option for customers with Novum LVPs.
Advanced Surgery net sales increased 12% in the third quarter and first nine months of 2026, as compared to the prior year periods. Sales performance was primarily driven by growth in hemostats and sealants and was primarily attributable to increased sales volume globally. Foreign currency exchange rates favorably impacted sales growth by 1% in the first nine months of 2026, as compared to the prior year period.
Healthcare Systems & Technologies
Our Healthcare Systems & Technologies segment includes sales of our connected care solutions and collaboration tools, including smart bed systems, connected monitoring systems, formerly known as patient monitoring systems, and diagnostic technologies, respiratory health devices, and advanced equipment for the surgical space, including
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operating room integration technologies, precision positioning devices, and other accessories.
| Three Months Ended September 30, | Percent change | ||||||||||||||||
| (in millions) | 2026 | 2025 | At actual rates | At organic sales growth 1 | |||||||||||||
| Care & Connectivity Solutions | $ | 498 | $ | 473 | 5 | % | 5 | % | |||||||||
| Front Line Care | 308 | 300 | 3 | % | 3 | % | |||||||||||
| Total Healthcare Systems & Technologies net sales | $ | 806 | $ | 773 | 4 | % | 4 | % | |||||||||
| Nine Months Ended September 30, | Percent change | ||||||||||||||||
| (in millions) | 2026 | 2025 | At actual rates | At organic sales growth 1 | |||||||||||||
| Care & Connectivity Solutions | $ | 1,435 | $ | 1,374 | 4 | % | 4 | % | |||||||||
| Front Line Care | 877 | 870 | 1 | % | 0 | % | |||||||||||
| Total Healthcare Systems & Technologies net sales | $ | 2,312 | $ | 2,244 | 3 | % | 2 | % | |||||||||
1 Percent change in net sales at organic sales growth is a non-GAAP financial measure. See the section entitled “Non-GAAP Financial Measures” for additional information about our use of that measure.
Healthcare Systems & Technologies segment net sales increased 4% in the third quarter and increased 3% in the first nine months of 2026, as compared to the prior year periods.
Care & Connectivity Solutions net sales increased 5% in the third quarter and increased 4% in the first nine months of 2026, as compared to the prior year periods. The increase in the third quarter was primarily driven by acceleration of our global surgical solutions business and increased volume associated with partial execution against the order backlog in the U.S. for patient support systems. The increase in the first nine months was primarily driven by increased volume associated with execution against the order backlog in the U.S. for patient support systems and acceleration of our global surgical solutions business.
Front Line Care net sales increased 3% in the third quarter and increased 1% in the first nine months of 2026, as compared to the prior year periods. The increase in the third quarter was primarily impacted by continued momentum within connected monitoring systems, partially offset by planned global product exits. The increase in the first nine months was driven by increased demand across our connected monitoring systems and respiratory health products, partially offset by planned global product exits. Foreign currency exchange rates favorably impacted sales growth by 1% the first nine months of 2026, as compared to the prior year period.
Other
Other sales, which represent sales not allocated to a reportable segment, include sales to Vantive, pursuant to the Kidney Care MSA. During the three months ended September 30, 2026 and 2025, we earned $68 million and $85 million, and $227 million and $246 million for the nine months ended September 30, 2026 and 2025, respectively, of revenues that were not attributable to our reportable segments. The decrease in Other sales for the third quarter and nine months ended September 30, 2026 as compared to the prior year periods is driven by reduced volumes under the Kidney Care MSA.
COSTS AND EXPENSES
Special Items
The following table provides a summary of our special items from continuing operations and the related impact by line item on our results for the three and nine months ended September 30, 2026 and 2025.
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| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Gross Margin | |||||||||||||||||
| Intangible asset amortization expense | $ | (95) | $ | (96) | $ | (284) | $ | (301) | |||||||||
Business optimization items1 | (45) | (25) | (59) | (44) | |||||||||||||
European medical devices regulation2 | (3) | (5) | (11) | (15) | |||||||||||||
Separation-related costs8 | — | (1) | (3) | (2) | |||||||||||||
Product-related items3 | — | (32) | 12 | (61) | |||||||||||||
Business transformation4 | 1 | — | (3) | — | |||||||||||||
Hurricane Helene costs5 | (3) | (8) | (9) | (123) | |||||||||||||
Legal matters6 | — | — | — | (11) | |||||||||||||
| Total Special Items | $ | (145) | $ | (167) | $ | (357) | $ | (557) | |||||||||
| Impact on Gross Margin Ratio | (4.9) | pts | (5.9) | pts | (4.1) | pts | (6.7) | pts | |||||||||
| Selling, General and Administrative (SG&A) Expenses | |||||||||||||||||
| Intangible asset amortization expense | $ | 50 | $ | 51 | $ | 152 | $ | 152 | |||||||||
Business optimization items1 | 15 | 10 | 61 | 51 | |||||||||||||
Acquisition and integration items7 | — | 6 | — | 12 | |||||||||||||
Separation-related costs8 | 1 | $ | 12 | 31 | 38 | ||||||||||||
Business transformation4 | 16 | — | 39 | — | |||||||||||||
Legal matters6 | 11 | — | 11 | — | |||||||||||||
| Total Special Items | $ | 93 | $ | 79 | $ | 294 | $ | 253 | |||||||||
| Impact on SG&A Ratio | 3.1 | pts | 2.8 | pts | 3.4 | pts | 3.0 | pts | |||||||||
| Research and Development (R&D) Expenses | |||||||||||||||||
Business optimization items1 | $ | 1 | $ | 3 | $ | 16 | $ | 5 | |||||||||
Separation-related costs8 | 1 | — | 1 | — | |||||||||||||
Business transformation4 | 5 | — | 9 | — | |||||||||||||
| Total Special Items | $ | 7 | $ | 3 | $ | 26 | $ | 5 | |||||||||
| Impact on R&D Ratio | 0.2 | pts | 0.1 pts | 0.4 | pts | 0.0 pts | |||||||||||
| Other Operating Income, net | |||||||||||||||||
Legal matters6 | $ | (38) | $ | — | $ | (38) | $ | — | |||||||||
Acquisition and integration items7 | — | 2 | — | 2 | |||||||||||||
Business transformation4 | — | — | 3 | — | |||||||||||||
| Total Special Items | $ | (38) | $ | 2 | $ | (35) | $ | 2 | |||||||||
| Other (Income) Expense, net | |||||||||||||||||
Gain on debt extinguishment9 | $ | (253) | $ | — | $ | (253) | $ | — | |||||||||
Investment impairments10 | — | — | 5 | 9 | |||||||||||||
Acquisition and integration items7 | — | — | — | 5 | |||||||||||||
| Total Special Items | $ | (253) | $ | — | $ | (248) | $ | 14 | |||||||||
| Income Tax Expense | |||||||||||||||||
Tax matters11 | $ | 41 | $ | 213 | $ | 64 | $ | 174 | |||||||||
Tax effects of special items12 | 10 | (60) | (93) | (198) | |||||||||||||
| Total Special Items | $ | 51 | $ | 153 | $ | (29) | $ | (24) | |||||||||
| Impact on Effective Tax Rate | 10.2 | pts | 137.0 | pts | 8.0 | pts | 33.3 | pts | |||||||||
1Our results for the third quarter of 2026 and 2025 included $61 million and $38 million, respectively, and for the first nine months of 2026 and 2025 included $136 million and $100 million, respectively, of business optimization charges. These restructuring and business optimization charges in the third quarter and first nine months of 2026 included costs primarily related to our initiatives to reduce our cost structure following the sale of our former Kidney Care business and the cessation of production of certain products at one of our specialty injectables
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manufacturing facilities. These restructuring and business optimization charges in the third quarter and first nine months of 2025 included costs primarily related to our initiatives to reduce our cost structure following the sale of our former Kidney Care business and the exit of a product line at one of our manufacturing facilities. Refer to Note 10 in Item 1 of this Quarterly Report on Form 10-Q for further information regarding these charges and related liabilities.
2Our results for the third quarter of 2026 and 2025 included $3 million and $5 million, respectively, and for the first nine months of 2026 and 2025 included $11 million and $15 million, respectively, of incremental costs to comply with the European Union's medical device regulations for previously registered products, which primarily consist of contractor costs and other direct third-party costs. We consider the adoption of these regulations to be a significant one-time regulatory change and believe that the costs of initial compliance for previously registered products over the implementation period are not indicative of our core operating results.
3Our results for the first nine months of 2026 included a benefit of $12 million related to a revised estimate of warranty and remediation activities from field corrective actions across our infusion pump category initially recorded in 2025. Our results for the third quarter and first nine months of 2025 included charges of $32 million and $61 million, respectively, related to estimates of warranty and remediation activities from field corrective actions on certain of our infusion pumps and a revised estimate of warranty and remediation activities arising from a field corrective action on certain of our infusion pumps initially recorded in 2022.
4Our results in the third quarter and the first nine months of 2026 included charges of $20 million and $54 million, respectively, primarily related to business transformation costs which include external expenses incurred in connection with discrete, recently launched enterprise‑wide initiatives to modernize and simplify systems, redesign operating models, and enhance process efficiency and digital capabilities. These costs are distinct from restructuring‑related charges (which are included in footnote 1 above as Business Optimization items) and are excluded to provide investors with greater comparability of underlying operating performance.
5Our results in the third quarter of 2026 and 2025 included charges of $3 million and $8 million, respectively, and for the first nine months of 2026 and 2025 included $9 million and $123 million, respectively, related to damages caused by Hurricane Helene which consisted of remediation, air freight and other costs.
6Our results in the third quarter and first nine months of 2026 included a net benefit of $27 million. This includes a gain recognized primarily from the settlement of certain patent infringement claims, partially offset with a loss recognized from the settlement of certain patent infringement claims and related fees associated with these matters. Our results for the first nine months of 2025 included charges of $11 million related to matters involving alleged injury from environmental exposure.
7Our results for the third quarter and first nine months of 2025 included $8 million and $19 million, respectively, of integration costs which primarily reflected third party consulting costs related to the ongoing integration of Hill-Rom Holdings, Inc. (Hillrom). In the first nine months of 2025 those costs also included the recognition of a non-cash impairment of property, plant and equipment related to integration activities.
8Our results for the third quarter of 2026 and 2025 included $2 million and $13 million, respectively, and for the first nine months of 2026 and 2025 included $35 million and $40 million, respectively of separation-related costs primarily reflecting costs of external advisors supporting our activities related to the sale of our former Kidney Care business.
9Our results for the third quarter and the first nine months of 2026 included a gain of $253 million on the early extinguishment of debt. Refer to Note 5 in Item 1 of this Quarterly Report on Form 10-Q for further information on the debt repayments.
10Our results in the first nine months of 2026 and 2025 included $5 million and $9 million, respectively, related to losses from non-cash impairment write-downs of investments.
11Our results in the third quarter of 2026 included $41 million income tax expense primarily related to the application of intraperiod tax allocation to our adjusted results in an interim period. Our results in the first nine months of 2026 included $64 million of income tax expense primarily related to differences arising from the use of a forecasted effective tax rate to compute income tax expense during the period, partially offset by the settlement of certain income tax audits and adjustments to the U.S. valuation allowance. Our results in the third quarter of 2025 included $213 million of income tax expense primarily related to an increase in reserves for uncertain tax positions and a step-up in Swiss valuation allowances, partially offset by the release of valuation allowances on foreign tax credits. Our results in the first nine months of 2025 included $174 million of income tax expense primarily related to an increase in reserves for uncertain tax positions and a step-up in Swiss valuation allowances, partially offset by the release of valuation allowances on foreign tax credits and an entity classification election that we made for U.S. tax purposes, which resulted in a capital loss.
12This item reflects the income tax impact of the special items identified in this table. The tax effect of each special item is based on the jurisdiction in which the item was incurred and the tax laws in effect for each such jurisdiction.
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Gross Margin and Expense Ratios
| Three Months Ended September 30, | ||||||||||||||||||||
| 2026 | % of net sales | 2025 | % of net sales | $ change | % change | |||||||||||||||
| Gross margin | $ | 994 | 33.4 | % | $ | 950 | 33.5 | % | $ | 44 | 4.6 | % | ||||||||
| SG&A | $ | 730 | 24.5 | % | $ | 708 | 25.0 | % | $ | 22 | 3.1 | % | ||||||||
| R&D | $ | 125 | 4.2 | % | $ | 118 | 4.2 | % | $ | 7 | 5.9 | % | ||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||
| 2026 | % of net sales | 2025 | % of net sales | $ change | % change | |||||||||||||||
| Gross margin | $ | 2,917 | 33.8 | % | $ | 2,802 | 33.9 | % | $ | 115 | 4.1 | % | ||||||||
| SG&A | $ | 2,193 | 25.4 | % | $ | 2,129 | 25.7 | % | $ | 64 | 3.0 | % | ||||||||
| R&D | $ | 393 | 4.6 | % | $ | 392 | 4.7 | % | $ | 1 | 0.3 | % | ||||||||
Gross Margin
Our gross margin ratio was 33.4% and 33.5% for the three months ended September 30, 2026 and 2025, respectively. The special items identified earlier in this section had an unfavorable impact of approximately 4.9 and 5.9 percentage points on the gross margin ratio for the three months ended September 30, 2026 and 2025, respectively. Our gross margin ratio was 33.8% and 33.9% for the first nine months ended September 30, 2026 and 2025, respectively. The special items identified earlier in this section had an unfavorable impact of approximately 4.1 and 6.7 percentage points on the gross margin ratio for the first nine months ended September 30, 2026 and 2025, respectively.
Excluding the impact of special items, the gross margin ratio decreased by 1.1 percentage points in the third quarter of 2026 compared to the prior year period, primarily due to unfavorable product mix and a lower contribution from pricing. Excluding the impact of special items, the gross margin ratio decreased by 2.7 percentage points in the first nine months of 2026 compared to the prior year period, primarily due to increased manufacturing and supply costs, unfavorable product mix and lower contribution from pricing, partially offset by IEEPA tariff refunds recorded in the second quarter of 2026.
SG&A
Our SG&A expenses ratio was 24.5% and 25.0% for the three months ended September 30, 2026 and 2025, respectively. The special items identified earlier in this section had an unfavorable impact of approximately 3.1 and 2.8 percentage points on the SG&A expenses ratio for the three months ended September 30, 2026 and 2025. Our SG&A expenses ratio was 25.4% and 25.7% for the first nine months ended September 30, 2026 and 2025, respectively. The special items identified earlier in this section had an unfavorable impact of approximately 3.4 and 3.0 percentage points on the SG&A expenses ratio for the first nine months ended September 30, 2026 and 2025, respectively.
Excluding the impact of special items, the SG&A expenses ratio decreased by 0.8 and 0.7 percentage points in the third quarter and first nine months of 2026, respectively, compared to the prior year periods. The decrease primarily reflects the benefits of previously implemented cost actions, partially offset by higher accruals under our annual employee incentive compensation plans.
R&D
Our R&D expenses ratio was 4.2% for the three months ended September 30, 2026 and 2025. The special items identified earlier in this section had an unfavorable impact of approximately 0.2 and 0.1 percentage points on the R&D expenses ratio for the three months ended September 30, 2026 and 2025, respectively. Our R&D expenses ratio was 4.6% and 4.7% for the first nine months ended September 30, 2026 and 2025. The special items identified earlier in this section had an unfavorable impact of approximately 0.4 percentage points on the R&D expenses ratio for the first nine months ended September 30, 2026 and no impact on the R&D expenses ratio for the first nine months ended September 30, 2025.
Excluding the impact of special items, the R&D expenses ratio decreased by 0.1 and 0.5 percentage points in the third quarter and first nine months of 2026, respectively, compared to the prior year periods. The decrease is primarily due to the benefits of previously implemented cost actions.
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Business Optimization Items
In recent years, we have undertaken actions to transform our cost structure and enhance operational efficiency. These efforts have included restructuring the organization into verticalized segments, optimizing our manufacturing footprint, R&D operations, and supply chain network, employing disciplined cost management, and centralizing and streamlining certain support functions. The related costs of these actions consisted primarily of employee termination costs, implementation costs, contract termination costs, and asset write offs.
For the three and nine months ended September 30, 2026, $21 million and $79 million, respectively, of the restructuring charges, consisting of employee termination costs, were related to initiatives to reduce our cost structure following the sale of our Kidney Care business. For the three and nine months ended September 30, 2026, $39 million of the restructuring charges, consisting of $7 million of contract termination and other costs and $32 million of asset write offs, were related to the cessation of production of certain products at one of our specialty injectables manufacturing facilities.
We currently expect to incur additional pre-tax costs, primarily related to the implementation of business optimization programs, that are not material to our condensed consolidated financial statements, through the completion of certain initiatives that are currently underway. We continue to pursue cost savings initiatives, including those intended to mitigate a portion of the dis-synergies that arose as a result of the sale of our Kidney Care business, and to the extent further cost savings opportunities are identified, we would incur additional restructuring charges and costs to implement future business optimization programs in future periods. Refer to Note 10 in Item 1 of this Quarterly Report on Form 10-Q for additional information regarding our business optimization programs.
Other Operating Income, Net
Other operating income, net was $86 million and $48 million in the third quarter of 2026 and 2025, respectively, and $177 million and $140 million for first nine months ended September 30, 2026 and 2025, respectively. These amounts were primarily related to the income recognized under the Kidney Care TSA entered into upon the sale of the Kidney Care business in January 2025. In the third quarter and first nine months of 2026, this amount also included a net benefit from the settlement of certain patent infringement claims.
Interest Expense, Net
Interest expense, net was $61 million and $58 million in the third quarter of 2026 and 2025, respectively, and $191 million and $180 million for first nine months ended September 30, 2026 and 2025, respectively. The increase in the third quarter and first nine months of 2026 was driven by higher interest expense on senior notes issued in the fourth quarter of 2025, partially offset by debt repayments in the first nine months of 2026 and 2025.
Other (Income) Expense, net
Other (income) expense, net was income of $253 million and $7 million in the third quarter of 2026 and 2025, respectively, and income of $252 million and $10 million for the first nine months ended September 30, 2026 and 2025, respectively. In the third quarter and first nine months of 2026, the other income, net was primarily driven by a gain on the early extinguishment of debt, and pension and other postretirement benefits, partially offset by foreign exchange losses. In the third quarter and first nine months of 2025, other (income) expense, net was primarily driven by pension and other postretirement benefits, partially offset by foreign exchange losses. The first nine months of 2025, was further partially offset by losses from a non-cash impairment write-down in an equity method investment.
Income Taxes
Our effective income tax rate was 29% and 142% for the three months ended September 30, 2026 and 2025, respectively, and 27% and 46% for the first nine months ended September 30, 2026 and 2025, respectively. Our effective income tax rate can differ from the 21% U.S. federal statutory rate due to a number of factors, including foreign rate differences, tax incentives, non-deductible expenses, non-taxable income, increases or decreases in valuation allowances, increases or decreases in liabilities for uncertain tax positions, and excess tax benefits or shortfalls on stock compensation awards.
For the three months ended September 30, 2026, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily driven by increases to our valuation allowance on U.S. deferred tax assets, partially offset by global earnings mix.
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For the first nine months ended September 30, 2026, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily driven by increases to our valuation allowance on U.S. deferred tax assets and tax shortfalls on stock compensation awards, partially offset by global earnings mix and global tax audit developments.
For the three months ended September 30, 2025, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily driven by an increase in liabilities for uncertain tax positions, partially offset by a reduction in the valuation allowance on foreign tax credits and changes in the treatment of accumulated earnings that are considered indefinitely reinvested as of December 31, 2024.
For the first nine months ended September 30, 2025, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily driven by an increase in liabilities for uncertain tax positions (as discussed below), partially offset by a reduction in the valuation allowance on foreign tax credits, changes in the treatment of accumulated earnings that are considered indefinitely reinvested as of December 31, 2024 and a tax benefit driven by an entity classification election that we made for U.S. tax purposes, which resulted in a capital loss.
In the first quarter of 2026, we received a Notice of Proposed Adjustment (NOPA) from the Internal Revenue Service (IRS) for examination related to transfer pricing matters related to transactions with our manufacturing operations in Costa Rica and Puerto Rico for the 2019 and 2020 tax years. In the second quarter of 2026, we settled the examination by the IRS related to these matters for amounts materially consistent with our existing and previously disclosed uncertain tax position reserves. Uncertain tax position reserves for tax years 2021 through 2025 were not adjusted as a result of the IRS settlement for 2019 and 2020 tax years. While we believe that our transfer pricing positions are well documented and properly supported, and adequate amounts have been reserved to account for any adjustments that may ultimately result from this examination, the matter remains open for resolution for tax years 2021 through 2024. Additionally, if the IRS were to assert we owe additional taxes and prevail in this assertion, such outcome could have a material impact on our financial position, results of operations, and cash flows.
During 2025, because of a cumulative history of operating losses in the U.S., we recorded a valuation allowance against our U.S. deferred tax assets, including certain federal and state tax attributes such as foreign tax credits. Although we expect to remain in a U.S. valuation allowance position for at least the next 12 months, we also anticipate future changes in the amount of the valuation allowance including during 2026, which could be material, due to operational activity and movement in our routine deferred tax assets and liabilities.
The Organization for Economic Co-operation and Development (OECD) reached agreement among over 140 countries to implement a minimum 15% tax rate on certain multinational enterprises, commonly referred to as Pillar Two. During the first quarter of 2026, the OECD published administrative guidance proposing a Side-by-Side safe harbor, which may reduce the impact of Pillar Two for U.S. headquartered multinational corporations. We will monitor the implementation of the Side-by-Side safe harbor by individual jurisdictions, however we do not expect the impact of Pillar Two to be material in any case.
Discontinued Operations
On January 31, 2025, we completed the sale of our Kidney Care business and its results have been presented as discontinued operations for the three and nine months ended September 30, 2026 and 2025. Income (loss) from discontinued operations, net of tax was $(4) million in the third quarter of 2026, compared to $5 million in the third quarter of 2025. The decrease in the current year period was primarily driven by changes in related tax indemnification liabilities. For the first nine months ended September 30, 2026 and 2025, income (loss) from discontinued operations, net of tax was $(11) million and $36 million, respectively. The decrease in the current year period was primarily driven by the gain on the sale of our Kidney Care business for the nine months ended September 30, 2025. Refer to Note 2 within Item 1 for additional information.
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SEGMENT OPERATING INCOME
The following is a summary of our operating income for our reportable segments.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Medical Products & Therapies | $ | 439 | $ | 411 | $ | 1,189 | $ | 1,258 | |||||||||
| % of Segment Net Sales | 20.9 | % | 20.8 | % | 19.5 | % | 21.8 | % | |||||||||
| Healthcare Systems & Technologies | 139 | 122 | 401 | 400 | |||||||||||||
| % of Segment Net Sales | 17.2 | % | 15.8 | % | 17.3 | % | 17.8 | % | |||||||||
| Total reportable segment operating income | 578 | 533 | 1,590 | 1,658 | |||||||||||||
| Other | 10 | 5 | 23 | 17 | |||||||||||||
| Unallocated corporate costs | (156) | (115) | (463) | (437) | |||||||||||||
| Intangible asset amortization expense | (145) | (147) | (436) | (453) | |||||||||||||
| Legal matters | 27 | — | 27 | (11) | |||||||||||||
| Business optimization items | (61) | (38) | (136) | (100) | |||||||||||||
| Acquisition and integration items | — | (8) | — | (14) | |||||||||||||
| Separation-related costs | (2) | (13) | (35) | (40) | |||||||||||||
| European Medical Devices Regulation | (3) | (5) | (11) | (15) | |||||||||||||
| Product-related items | — | (32) | 12 | (61) | |||||||||||||
| Business transformation | (20) | — | (54) | — | |||||||||||||
| Hurricane Helene Costs | (3) | (8) | (9) | (123) | |||||||||||||
| Total operating income | 225 | 172 | 508 | 421 | |||||||||||||
| Interest expense, net | 61 | 58 | 191 | 180 | |||||||||||||
| Other (income) expense, net | (253) | (7) | (252) | (10) | |||||||||||||
| Income from continuing operations before income taxes | $ | 417 | $ | 121 | $ | 569 | $ | 251 | |||||||||
Medical Products & Therapies
Segment operating income was $439 million and $411 million in the third quarter of 2026 and 2025, respectively, and $1.19 billion and $1.26 billion for the first nine months ended September 30, 2026 and 2025, respectively. The increase in segment operating income in the third quarter of 2026 compared to the prior year period was primarily driven by increased sales volumes and the associated incremental operating leverage and the benefits of previously implemented cost actions, partially offset by a lower contribution from pricing and an unfavorable product mix. The decrease in segment operating income in the first nine months ended September 30, 2026 compared to the prior year period was primarily driven by increased manufacturing and supply costs, lower contribution from pricing, and the timing impact of an updated cost estimate of indirect costs capitalized into inventory in the prior year. This was partially offset by the benefits of previously implemented cost actions and IEEPA tariff refunds recognized in the second quarter of 2026.
Healthcare Systems & Technologies
Segment operating income was $139 million and $122 million in the third quarter of 2026 and 2025, respectively, and $401 million and $400 million for the first nine months ended September 30, 2026 and 2025, respectively. Segment operating income increased in the third quarter compared to the prior year period primarily due to the benefits of previously implemented cost actions and increased sales volumes and the associated incremental operating leverage, partially offset by an unfavorable product mix. The increase in the first nine months ended September 30, 2026 compared to the prior year period was primarily due to the benefits of previously implemented cost actions, increased sales volumes and IEEPA tariff refunds recognized in the second quarter of 2026, partially offset by increased manufacturing and supply costs.
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Other
Other operating income, which represents operating income not attributable to our reportable segments, was $10 million and $5 million in the third quarter of 2026 and 2025, and $23 million and $17 million for the first nine months ended September 30, 2026 and 2025, respectively. The increase in the first nine months of 2026 compared to the prior year period was primarily due to a longer period of income recognition in the current year period. In the prior year period, income from revenues earned under the Kidney Care MSA was recognized following the closing of the sale of the Kidney Care business on January 31, 2025, whereas income from revenues earned under the Kidney Care MSA was recognized for the full period in the current year.
Unallocated Corporate Costs
Under our operating model, global functional support costs, overhead costs and other shared costs that benefit our segments are allocated to those segments. Corporate costs that do not benefit our segments are presented as unallocated corporate costs. Additionally, intangible asset amortization and other special items are not allocated to our segments.
LIQUIDITY AND CAPITAL RESOURCES
The following table is a summary of the statement of cash flows for the nine-month periods ended September 30, 2026 and 2025.
| Nine Months Ended September 30, | |||||||||||
| (in millions) | 2026 | 2025 | |||||||||
| Cash flows from (used in) operations - continuing operations | $ | 1,068 | $ | 355 | |||||||
| Cash flows from (used in) investing activities - continuing operations | (360) | $ | (350) | ||||||||
| Cash flows from (used in) financing activities | (662) | $ | (4,069) | ||||||||
Cash Flows from Operations - Continuing Operations
For the nine months ended September 30, 2026, operating cash flows from continuing operations were $1.07 billion. For the nine months ended September 30, 2025, operating cash flows from continuing operations were $355 million. Operating cash flows from continuing operations in the current year period increased primarily due to improved earnings and favorable changes in working capital, driven by reductions in inventory and improved collections of accounts receivable.
Cash Flows from Investing Activities - Continuing Operations
For the nine months ended September 30, 2026, cash used in investing activities from continuing operations primarily included capital expenditures of $363 million. For the nine months ended September 30, 2025, cash used in investing activities from continuing operations primarily included capital expenditures of $373 million.
Cash Flows from Financing Activities
For the nine months ended September 30, 2026, cash used in financing activities primarily included debt repayments of $600 million and payments of a contingent liability to Vantive of $50 million. For the nine months ended September 30, 2025, cash used in financing activities included debt repayments of $3.51 billion, a decrease in commercial paper borrowings of $300 million, and dividend payments of $261 million, partially offset by proceeds from stock issued under employee benefit plans of $25 million.
As authorized by our Board of Directors, we repurchase our stock depending upon our cash flows, net debt levels and market conditions. In July 2012, our Board of Directors authorized a share repurchase program and the related authorization was subsequently increased a number of times. We did not repurchase any shares under this authority in the first nine months of 2026. We had approximately $1.30 billion remaining available under this authorization as of September 30, 2026.
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Credit Facilities, Commercial Paper Program and Access to Capital and Credit Ratings
Credit Facilities and Commercial Paper Program
As of September 30, 2026, we had a multicurrency revolving credit facility, as described below.
Our Multicurrency Revolver has a maximum capacity of $2.20 billion and matures in 2030. Borrowings under the Multicurrency Revolver in U.S. dollars bear interest on the principal amount outstanding at either Term SOFR plus an applicable margin or a “base rate” plus an applicable margin. The Multicurrency Revolver contains various covenants, including a maximum net leverage ratio (which ratio was most recently increased for the five fiscal quarters ending September 30, 2026, December 31, 2026, March 31, 2027, June 30, 2027, and September 30, 2027 pursuant to an August 2026 amendment). Borrowings in Euros are subject to a sublimit of $300 million. We may, at our option, seek to increase the aggregate commitment under the Multicurrency Revolver by up to $1.10 billion, which would result in a maximum aggregate commitment of up to $3.30 billion. There were no borrowings outstanding under the Multicurrency Revolver as of September 30, 2026 or December 31, 2025. Our commercial paper borrowing arrangements require us to maintain undrawn borrowing capacity under the Multicurrency Revolver for an amount at least equal to our outstanding commercial paper borrowings.
As of September 30, 2026, we were in compliance with the financial covenant in the Multicurrency Revolver. Based on our covenant calculations as of September 30, 2026, we had capacity to draw on the full amount under the Multicurrency Revolver. The non-performance of any financial institution supporting the Multicurrency Revolver would reduce the maximum capacity thereunder by such institution’s respective commitment.
Access to Capital and Credit Ratings
We intend to fund short-term and long-term obligations as they mature through cash on hand, future cash flows from operations, or by issuing additional debt, which could include commercial paper. We had $1.98 billion of cash and cash equivalents as of September 30, 2026, with adequate cash available to meet operating requirements in each jurisdiction in which we operate. We invest our excess cash in money market and other funds and diversify the concentration of cash among different financial institutions. As of September 30, 2026, we had approximately $8.60 billion of long-term debt and finance lease obligations, including current maturities and short-term debt. Subject to market conditions, we regularly evaluate opportunities with respect to our capital structure (including with respect to the potential refinancing of our outstanding indebtedness).
Our ability to generate cash flows from operations, issue debt, including commercial paper, or enter into other financing arrangements on acceptable terms could be adversely affected if there is a material decline in the demand for our products or in the solvency of our customers or suppliers, deterioration in our credit ratings (as discussed below), or other significantly unfavorable changes in conditions (including if our key financial ratios do not show sustained improvement). However, we believe we have sufficient financial flexibility to issue additional debt, enter into other financing arrangements, and attract long-term capital on acceptable terms to support our growth objectives and reduce our debt levels as we take actions consistent with our capital allocation priorities.
Our credit ratings are subject to ongoing review by the rating agencies, and they consider a number of factors, including our financial strength, performance, prospects and operations as well as factors not under our control. The rating agencies could make adjustments to our ratings at any time, and they provide no assurances that they will maintain our ratings at current level. During the first quarter of 2026, Standard & Poor's and Moody's Ratings revised our outlook from Stable to Negative. There have been no other changes to our credit ratings that we disclosed in our 2025 Annual Report.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. A summary of our significant accounting policies is included in Note 1 to our consolidated financial statements in our 2025 Annual Report. Certain of our accounting policies are considered critical, as these policies are the most important to the depiction of our financial statements and require significant, difficult or complex judgments by us, often employing the use of estimates about the effects of matters that are inherently uncertain. Such policies are summarized in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section in our 2025 Annual Report.
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Impairment of Goodwill and Other Long-Lived Assets
Front Line Care Reporting Unit
In connection with our November 1, 2025 annual goodwill impairment tests, we recorded a goodwill impairment related to our Front Line Care reporting unit within our Healthcare Systems & Technologies segment to reduce the carrying value of the reporting unit to its fair value. While no triggering events were identified during the nine months ended September 30, 2026, we are continuing to closely monitor the performance of this reporting unit (including in light of evolving global macroeconomic conditions and capital spending patterns), and if there is a significant adverse change in our outlook for this business in the future, a goodwill impairment could arise at that time. As of September 30, 2026, the carrying amount of goodwill for our Front Line Care reporting unit was $1.51 billion.
Welch Allyn Trade Name
In connection with our annual trade name impairment assessment in the fourth quarter of 2025, we recognized an impairment charge to reduce the carrying amount of the Welch Allyn trade name within our Healthcare Systems & Technologies segment, an indefinite-lived intangible asset, to its estimated fair value. While no triggering events were identified during the nine months ended September 30, 2026, we are continuing to closely monitor the performance of this intangible asset (including in light of evolving global macroeconomic conditions and capital spending patterns), and if there is a significant adverse change in our outlook for this intangible asset in the future, an intangible asset impairment could arise at that time. As of September 30, 2026, the carrying amount of the Welch Allyn Trade Name was $390 million.
There have been no significant changes in the application of our critical accounting policies during the first nine months of 2026.
RECENT ACCOUNTING PRONOUNCEMENTS
Recently issued accounting standards not yet adopted
In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of certain expenses on an interim and annual basis in the notes to the financial statements. This standard is effective for annual consolidated financial statements for the year ending December 31, 2027 and for interim periods beginning in 2028. We are currently evaluating the impact of this new standard on our consolidated financial statements.
LEGAL CONTINGENCIES
Refer to Note 6 within Item 1 for a discussion of our legal contingencies. Upon resolution of any of these uncertainties, we may incur charges in excess of presently established liabilities. While our liability in connection with certain claims cannot be estimated with any certainty, and although the resolution in any reporting period of one or more of these matters could have a significant impact on our results of operations and cash flows for that period, the outcome of these legal proceedings is not currently expected to have a material adverse effect on our consolidated financial position. While we believe that we have valid defenses in these matters, litigation is inherently uncertain, excessive verdicts do occur, and we may in the future incur material judgments or enter into material settlements of claims.
CERTAIN REGULATORY MATTERS
In July 2017, immediately prior to the closing of our acquisition of Claris Injectables Limited (Claris), FDA commenced an inspection of the Claris’ facilities in Ahmedabad, India. FDA completed the inspection and subsequently issued a Warning Letter based on observations identified in the 2017 inspection¹. FDA completed a re-inspection of the facilities in May 2022, which was subsequently classified as Voluntary Action Indicated (VAI). FDA performed an additional inspection of the facilities in January 2023. In April 2023, the site received an Official Action Indicated, or “OAI”, classification following FDA’s January 2023 inspection. In July 2023, FDA issued a Warning Letter to the site based on the observations from the agency’s January 2023 inspection (2023 Warning Letter)2. In June 2025, FDA performed another re-inspection of the site. On October 31, 2025, FDA classified the June 2025 inspection as VAI, indicating that the site is in acceptable compliance with FDA’s current Good Manufacturing Practice requirements.
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Based on the VAI reclassification, Baxter expects that the 2023 Warning Letter will be closed and no additional Warning Letters on the facilities will remain outstanding.
In March 2026, FDA commenced an inspection of our sterile injectable drug manufacturing facility in Round Lake, Illinois (Round Lake). Upon completion of the inspection in April 2026, FDA issued a Form-483 providing a list of observations. In June 2026, Round Lake received an OAI classification following the inspection. In September 2026, FDA issued a Warning Letter (2026 Warning Letter)3 based on the observations identified in the inspection. In October 2026, we responded to the 2026 Warning Letter and are continuing to implement corrective and preventive actions to address FDA’s observations as set forth in the 2026 Warning Letter and the related Form 483.
1 Available online at https://www.fda.gov/ICECI/EnforcementActions/WarningLetters/ucm613538.htm
2 Available online at https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/baxter-healthcare-corporation-654136-07252023
3 Available online at https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/baxter-international-inc-733231-09292026
References to websites, links or other information are provided for convenience only. None of the information or data included on these websites or accessible at these links is incorporated into, and will not be deemed to be part of, this quarterly report on Form 10-Q or any of Baxter's other filings with the SEC.
FORWARD-LOOKING INFORMATION
Certain statements contained in this quarterly report on Form 10-Q may constitute “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. These statements by their nature address matters that are uncertain to different degrees. Use of the words “may,” “will,” “would,” “could,” “should,” “believes,” “estimates,” “projects,” “potential,” “expects,” “plans,” “seeks,” “intends,” “evaluates,” “pursues,” “anticipates,” “continues,” “designs,” “impacts,” “affects,” “forecasts,” “target,” “outlook,” “initiative,” “objective,” “designed,” “priorities,” “goal,” or the negative of those words or other similar expressions may identify forward-looking statements, although not all forward-looking statements contain such words.
These forward-looking statements are based on certain assumptions and analyses made in light of our experience and perception of historical trends, current conditions, and expected future developments as well as other factors that we believe are appropriate in the circumstances. While these statements represent our judgment on what the future may hold, and we believe these judgments are reasonable, these statements are not guarantees of any events or financial results. Whether actual future results and developments will conform to expectations and predictions is subject to a number of risks and uncertainties, including the following factors, many of which are beyond our control:
•There is substantial competition in the product markets in which we operate and the risk of declining demand and pricing pressures could adversely affect our business, results of operations, financial condition and cash flows;
•We may be unable to successfully introduce or monetize new and existing products or services or keep pace with changing consumer preferences and needs or advances in technology;
•Global economic conditions, including inflation, have adversely affected, and could continue to adversely affect, our operations;
•We are subject to risks associated with doing business globally, including changes in tariffs and trade policies and treaties (including with respect to the validity of previously issued tariffs and the availability of any related refunds) as well as the ongoing Iran conflict and other geopolitical events;
•We may not achieve our financial goals;
•Our operating results and financial condition have fluctuated and may in the future continue to fluctuate;
•We are exposed to risks as a result of our previously completed strategic actions;
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•We may not achieve the anticipated benefits of our significant transactions, including the sale of our Kidney Care business and our acquisition of Hillrom;
•We may not be successful in achieving expected operating efficiencies and sustaining or improving operating expense reductions;
•We have experienced and may continue to experience issues with quality management or product quality, including with respect to Novum LVP and a recently issued FDA Warning Letter;
•We have experienced disruptions in our supply chain and may experience additional disruptions in the future;
•We have experienced and may continue to experience manufacturing, sterilization, supply, or distribution difficulties;
•We may be unable to obtain sufficient components or raw materials on a timely basis or for a cost-effective price;
•Our significant indebtedness requires us to use a substantial amount of our cash flow for debt service and constrains our ability to pursue growth strategies and advance our R&D capabilities;
•Continued consolidation in the health care industry or additional governmental controls exerted over pricing and access in key markets could lead to increased demands for price concessions or limit or eliminate our ability to sell to certain of our significant market segments;
•Segments of our business are significantly dependent on major contracts with group purchasing organizations, integrated delivery networks, and certain other distributors and purchasers;
•Management transition creates uncertainties, and we may experience difficulties in managing such transitions, including attracting and retaining key employees;
•Changes in foreign currency exchange rates and interest rates have had, and may in the future have, an adverse effect on our results of operations, financial condition, cash flows, and liquidity;
•Future material impairments in the value of our goodwill, intangible assets, and other long-lived assets would negatively affect our operating results;
•We have experienced and may in the future experience breaches and other incidents affecting our information technology systems or protected information, including from obsolescence, cyber security breaches and data leakage;
•We are exposed to risks associated with incorporating artificial intelligence (AI), machine learning and other emerging technologies into our products, services and operations;
•A portion of our workforce is unionized, and we could face labor disruptions that would interfere with our operations;
•The effects of climate change, including evolving legal, regulatory, or market measures related to climate change and other sustainability topics, could adversely affect our business, results of operations, financial condition, and cash flows;
•Our goals, activities, and disclosures related to sustainability and corporate responsibility matters, and the perception of our activities in these areas, may fail to satisfy the differing expectations of key stakeholders on these matters;
•We are subject to laws and regulations globally, and our failure to comply with rapidly changing and increasingly divergent expectations of regulators in different jurisdictions could adversely impact the company;
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•If reimbursement or other payment for our current or future products is reduced or modified in the U.S. or in foreign countries, or there are changes to policies with respect to pricing, taxation, or rebates, our business could suffer;
•Increasing regulatory focus on, and expanding laws relating to, privacy, AI, and cybersecurity could impact our business and expose us to increased liability;
•We are party to a number of pending lawsuits and other disputes which may adversely impact us;
•Changes in tax laws or exposure to additional income tax liabilities may have a negative impact on our operating results;
•We could be subject to fines or damages and possible exclusion from participation in federal or state healthcare programs and government tenders if we fail to comply with the laws and regulations applicable to our business;
•If we are unable to protect or enforce our patents or other proprietary rights, or if we become subject to claims or litigation alleging infringement of the patents or other proprietary rights of others, our competitiveness and business prospects may be materially damaged;
•Our Amended and Restated Bylaws could limit our stockholders’ ability to choose their preferred judicial forum for disputes with us or our directors, officers, or employees;
•We decreased our quarterly dividend to $0.01 per share and cannot guarantee that we will increase the amount of dividends we pay, or that we will not cease paying dividends, in the future;
•Our common stock price has fluctuated significantly and may continue to do so; and
•other factors discussed elsewhere in this report and other filings with the SEC, including those factors described in Item 1A, Risk Factors of our 2025 Annual Report, all of which are available on our website.
Actual results may differ materially from those projected in the forward-looking statements, which are more fully discussed in Item 1A. Risk Factors and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in our 2025 Annual Report. These forward-looking statements are not exclusive and are in addition to other factors discussed elsewhere in our 2025 Annual Report. Further, other unknown or unpredictable factors could also have material adverse effects on future results. Any forward-looking statement in this Quarterly Report on Form 10-Q speaks only as of the date on which it is made. Except as required by law, we assume no obligation, and expressly disclaim any obligation, to update or revise any forward-looking statements, whether as a result of new information or future events.
We use the Investor Relations page of our website to disclose material information for purposes of the SEC's Regulation Fair Disclosure. We encourage our investors to monitor this website in addition to our other public announcements and SEC filings as information posted on that page could be deemed to be material information. None of the information or data included on this website is incorporated into, and will not be deemed to be a part of, this quarterly report on Form 10-Q or any of Baxter's other filings with the SEC.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Currency Risk
We are primarily exposed to foreign exchange risk with respect to revenues generated outside of the United States denominated in the Australian Dollar, Euro, Colombian Peso, British Pound, Brazilian Real, Mexican Peso, and Turkish Lira. We manage our foreign currency exposures on a consolidated basis, which allows us to net exposures and take advantage of any natural offsets. In addition, we use derivative and nonderivative financial instruments to further reduce the net exposure to foreign exchange. Gains and losses on the hedging instruments offset losses and gains on the hedged transactions and reduce the earnings and stockholders’ equity volatility relating to foreign exchange. However, we don't hedge our entire foreign exchange exposure and are still subject to earnings and stockholders' equity volatility relating to foreign exchange risk. Financial market and currency volatility may limit our ability to cost-effectively hedge these exposures.
We primarily use forward contracts to hedge the foreign exchange risk to earnings relating to forecasted transactions and recognized assets and liabilities denominated in foreign currencies. We also enter into derivative instruments to hedge foreign exchange risk on certain inter-company and third-party receivables and payables, and debt denominated in foreign currencies.
As part of our risk-management program, we perform sensitivity analyses to assess potential changes in the fair value of our foreign exchange instruments relating to hypothetical and reasonably possible near-term movements in foreign exchange rates.
A sensitivity analysis of changes in the fair value of foreign exchange contracts outstanding as of September 30, 2026, while not predictive in nature, indicated that if the U.S. Dollar uniformly weakened by 10% against all currencies, the net pre-tax liability balance of $2 million with respect to those contracts would change by $6 million.
The sensitivity analysis model recalculates the fair value of the foreign exchange contracts outstanding as of September 30, 2026 by replacing the actual exchange rates as of September 30, 2026 with exchange rates that are 10% weaker compared to the actual exchange rates for each applicable currency. All other factors are held constant. These sensitivity analyses disregard the possibility that currency exchange rates can move in opposite directions and that gains from one currency may or may not be offset by losses from another currency. The analyses also disregard the offsetting change in value of the underlying hedged transactions and balances.
In February 2022, the three-year cumulative inflation rate in Turkey exceeded 100 percent. As a result, on April 1, 2022, we began reporting the results of our subsidiary in that jurisdiction using highly inflationary accounting, which requires that the functional currency of the entity be changed to the reporting currency of its parent. As of September 30, 2026, our subsidiary in Turkey had net monetary assets of $34 million.
Interest Rate and Other Risks
Refer to the caption “Interest Rate and Other Risks” in the “Financial Instrument Market Risk” section of the 2025 Annual Report. There were no significant changes during the quarter ended September 30, 2026.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), as of September 30, 2026. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2026.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The information in Part I, Item 1, Note 6 is incorporated herein by reference.
Item 1A. Risk Factors
We do not believe that there have been any material changes to the risk factors previously disclosed in our 2025 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
In July 2012, the Board of Directors authorized a share repurchase program and the related authorization was subsequently increased a number of times. During the third quarter of 2026, we did not repurchase any shares under this authority. We had approximately $1.30 billion remaining under this program as of September 30, 2026. This program does not have an expiration date.
Item 5. Other Information
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Item 6. Exhibits
Exhibit Index:
| Exhibit Number | Description | ||||||||||
| 10.1 | |||||||||||
| C10.2 | |||||||||||
| C10.3* | |||||||||||
| 31.1* | |||||||||||
| 31.2* | |||||||||||
| 32.1** | |||||||||||
| 32.2** | |||||||||||
| 101.INS* | XBRL Instance Document | ||||||||||
| 101.SCH* | XBRL Taxonomy Extension Schema Document | ||||||||||
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | ||||||||||
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | ||||||||||
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | ||||||||||
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | ||||||||||
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained within the Inline XBRL Instance Document in Exhibit 101) | ||||||||||
_____________________________________
* Filed herewith.
** Furnished herewith. This exhibit shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
C Management contract or compensatory plan or arrangement
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Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BAXTER INTERNATIONAL INC. | ||||||||
| (Registrant) | ||||||||
| Date: October 29, 2026 | ||||||||
| By: | /s/ John Rogers | |||||||
| John Rogers Executive Vice President and Chief Financial Officer, (duly authorized officer and principal financial officer) | ||||||||
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Exhibit 10.3
Private & Confidential
John Rogers
John Rogers
25 September 2026
Dear John
I have the pleasure to confirm your position of Executive Vice President and Chief Financial Officer, commencing on October 1, 2026, consistent with your U.S. offer letter dated August 18, 2026.
The terms and conditions applying to this position are set out in your Contract of Employment. In addition, please read your contract of employment for any other conditional clauses that may be applicable to you.
The compensation elements previously disclosed in your U.S. offer letter dated August 18, 2026, will continue to apply to your employment in the United Kingdom, including participation in Baxter’s Annual Equity Program grant process, eligibility for two off-cycle equity grants, and eligibility for a sign-on bonus.
To comply with Auto Enrolment legislation, if you are an Eligible Jobholder, you will become an active member of the Company’s Group Personal Pension Plan with effect from the first day of the month following your first full month of employment. As part of the Auto Enrolment process you will be regularly assessed based on your age and earnings; this determines your Worker Category, which in turn determines whether you should be automatically enrolled in the Pension Plan. You will receive further information about Auto Enrolment and the Pension Plan when you join the Company.
Further details regarding policies and procedures can be found on the UK Human Resources Employee Toolkit once your employment commences.
Your benefits will revert to United States benefits outlined in your offer letter dated August 18, 2026 once you are authorised to work in the United States.
Please sign your contract and associated paperwork, using the online Adobe Sign tool.
Should you wish to speak to me regarding any queries relating to any items in your Job Offer pack, please don’t hesitate to contact me.
May I take this opportunity, on behalf of Baxter Healthcare Limited, to welcome you to the Company and wish you every success in your new role.
Yours sincerely
Helena Gardiner
Senior HR Manager
Baxter Healthcare Ltd
Registered Office: Caxton Way / Thetford / Norfolk / IP24 3SE Registered in England No. 461365
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CONTRACT OF EMPLOYMENT
(including particulars of terms of employment
required by the Employment Rights Act 1996)
EMPLOYER: BAXTER HEALTHCARE LIMITED of Caxton Way, Thetford, Norfolk, IP24 3SE (the “Company”)
EMPLOYEE: John Rogers (“you” and “your”)
DATE: 25 September 2026
PART ONE - CONTRACTUAL TERMS AND CONDITIONS
1.Commencement of employment and probationary period
1.1You represent and warrant that you are not bound by or subject to any court order, agreement, arrangement or undertaking which in any way restricts or prohibits you from entering into this Contract, performing your duties under it [or holding office as a director of the Company or any Group Company]. You undertake to indemnify the Company against all costs, claims, damages and expenses which the Company may incur in connection with any claim that you are subject to any such prohibition or restriction.
1.2Your employment with the company will begin on October 1, 2026 which is the date of commencement of your period of continuous employment. No period of employment with any previous employer will count as part of your period of continuous employment with the Company. Your employment is for an indefinite period, terminable on notice or otherwise as set out below.
1.3If your role exposes you to areas of the business where you will potentially be at risk from infected products, our Company policy is to encourage you to undergo the Hepatitis B Immunisation. The Company will reimburse you for any payments made to your GP Surgery for the immunisation.
1.4Should you decide that you do not wish to undergo immunisation, this will not affect your ability to continue working within this environment. If you would like any further details about the Hepatitis B Immunisation, then please contact the Baxter Occupational Health Team.
1.5Your continued employment may be subject to the Company obtaining a Disclosure and Barring Service (DBS) check on you which is acceptable to the Company. By signing this contract, you are agreeing to register annually with the DBS Update Service and are giving your consent for
Baxter Healthcare Ltd
Registered Office: Caxton Way / Thetford / Norfolk / IP24 3SE Registered in England No. 461365
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the Company to perform an annual status review of your DBS certificate using the DBS Update Service.
1.6You warrant that you are entitled to work in the UK without any additional approvals and will notify the Company immediately if you cease to be so entitled at any time during your employment with the Company
1.7Refusing or failing to observe these obligations may lead to disciplinary action being taken against you under the Disciplinary Procedure.
2.Job title and duties
You are employed as Executive Vice President and Chief Financial Officer, but you are expected to be willing to undertake other work of which you are capable and for which you have been trained or will receive training from the Company. From time to time the Company may require you to undertake additional or other duties as necessary to meet the needs of the business.
3.Place of work
3.1Your normal place of work will be Home based or such other place as the Company may reasonably require may reasonably require at its sole discretion from time to time.
3.2You agree to travel on the Company’s business (either within the UK or abroad) as may be required for the proper performance of your duties.
3.3You will not be required to work outside the UK for any continuous period of more than one month during the term of your employment.
4.Remuneration
4.1The Company operates a voluntary scheme which allows you to enter into a salary exchange scheme. As a result of this scheme, there are two salary terms used as follows:
4.1.1reference salary - this is the gross salary on which your salary review and overtime (if applicable) are calculated (“Reference Salary”), and
4.1.2adjusted salary – this is your salary after any reductions have been made as a result of entering into a salary exchange scheme (“Adjusted Salary”).
4.2If you do not enter into a salary exchange scheme, your Reference Salary and Adjusted Salary will be the same.
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4.3Your Reference Salary will be £683,085.30 (USD 925,000) per annum, which is payable monthly (one week in advance and three weeks in arrears) on the 25th day of each month by BACS.
4.4Your Reference Salary will be reviewed by the Compensation and Human Capital Committee of the Board of Directors of Baxter International annually and may be increased from time to time at the Company's discretion without affecting the other terms of your employment. There is no obligation to award an increase. There will be no review of your salary after notice has been given by either party to terminate your employment.
4.5Incentive Plan
4.5.1You will be eligible to participate in the Management Incentive Compensation Program (MICP) with a 2026 bonus target of 100% of your annual Reference Salary. It is important to note that your 2026 bonus will be pro-rated based on the number of calendar days of plan participation in the calendar year. The actual bonus you receive will vary depending on both business performance and your individual assessment for the year.
4.5.2A copy of the current plan is enclosed in your benefits pack.
4.5.3The Company reserves the right to revise, alter, amend or terminate cash incentive plans at any time.
4.5.4Unless stated otherwise in Plan rules, or otherwise agreed, on termination of your employment you will be paid all bonus that has accrued to you at the date on which your employment with the Company ends. You will not be entitled to any further bonus.
5.Expenses
If you incur travelling expenses, accommodation or other expenses in the course of carrying out your duties, you will be reimbursed for these by the Company in accordance with the Company’s Travel and Expense policies as amended from time to time.
6.Hours of work
6.1The normal hours of work are 37.5 per week, spread Monday to Friday, from 9am to 5pm with 30 minutes unpaid lunch break each day.
6.2You will be required to work such additional hours as may be necessary for the proper performance of your duties, for which you will receive no additional payment.
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7.Holidays and holiday pay
7.1In addition to the usual bank and public holidays recognised in England and Wales, you are entitled to 30 working days’ paid holiday in each full holiday year worked, and such holiday will be accrued at the rate of 2.08 days per calendar month (pro rata if you work part time or if your shift pattern differs from five days/shifts per week). Where you are employed for part of a holiday year only - either on commencement or termination of your employment - you will be entitled to paid holiday pro rata to the number of calendar months worked by you in the relevant holiday year. You will receive your full monthly holiday accrual for the month you join if your start date is on or before the 15th. If your start date is after the 15th, you will start accruing holiday from the following month. The holiday year runs from 1st January to 31st December. The dates of your holiday must be approved beforehand by your line manager.
7.2Holidays are provided to enable employees to take time to rest, and therefore, employees should make every effort to take their holidays each year. You must take at least 20 working days’ holiday (or the pro rata equivalent) in each calendar year. Up to 5 working days holiday (or the pro rata equivalent) may be carried over to the following year with the approval of your manager. These carried over days must be taken in the year following the holiday year in which they were accrued or else they will be lost.
7.3You may take holiday in advance of your accrual up to a maximum of 10 days (or pro rata equivalent). However, you may not take more than 3 weeks’ holiday consecutively without the approval of your line manager and HR. The Company may require you to take some of your holiday during a designated "shutdown" period and you will be notified as soon as possible if this is the case. Upon the termination of your employment, where you have taken more or less than your accrued holiday entitlement as calculated above, an adjustment based on your normal rate of pay will be made in your final pay. The adjustment will be either by way of a deduction if you have taken more than your accrued entitlement, or by way of an additional payment where you have taken less than your accrued entitlement, calculated on a pro rata basis by reference to the number of days’ holiday in respect of which such adjustment is made. You will receive the full monthly accrual in the month you leave the Company if you leave on or after the 15th of the month.
7.4The Company may require you to take any or all of your holiday entitlement during any notice period.
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8.Sickness and sick pay
8.1If you are absent from work due to illness or injury or for any other reason you must inform your line manager at least one hour before your normal start time on your first day of absence that you will be unable to attend. You must also keep the Company advised regularly if you continue to be absent and of your likely return date. If you are absent due to sickness, injury or for any other reason except holidays, immediately on your return to work you must complete a sickness self-certification form (Employee Statement of Absence form) which is available on the UK HR Employee Toolkit. If you do not have access to a computer, then you can obtain this from your line manager. You should then submit the completed form to your line manager.
8.2If you are absent for more than seven consecutive days (including Saturdays and Sundays) due to illness or injury, you must obtain a doctor’s certificate (if necessary, at your own expense) and give or send it immediately to your manager. Thereafter any further absence must continue to be supported by a doctor’s certificate.
8.3Failure to comply with the above procedures will result in the loss of Company Sick Pay (referred to below) and may also disqualify you from receiving Statutory Sick Pay (“SSP”).
8.4Your “qualifying days” for SSP purposes are those days of the week on which you are due to work in accordance with this Contract of Employment.
8.5The Company will be entitled, at its expense, to require you to be examined by either your own GP, the Company’s Occupational Health Team or an independent medical practitioner of the Company’s choice at any time (whether or not you are absent by reason of sickness or injury) and you agree that the doctor carrying out the examination may disclose to and discuss with the Company the results of the examination.
9.Pension and benefits
9.1The Company shall comply with any duties it may have in respect of you under part 1 of the Pensions Act 2008.
9.2The Company is currently using the Company’s group personal pension plan (the “Plan”) in respect of its duties under part 1 of the Pensions Act 2008. Membership of the Plan is subject to the rules of the Plan in force or amended from time to time. The Company reserves the right to vary, alter or discontinue the Plan in place from time to time. Full details of the Plan are available from the HR department.
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9.3It is your responsibility to advise us if you have any form of Fixed Protection allowing you to retain a historic Lifetime Allowance as there could be significant tax implications for you if you are auto enrolled (or re-enrolled) and contributions are paid to the Plan.
9.4Upon becoming a member of the Plan, any contributions you wish to make will be paid by the Company via salary exchange (also known as salary sacrifice), and your salary will be reduced accordingly. You have the right to opt out of salary exchange should you wish. This will not affect your membership of the Plan. The terms of the salary exchange are subject to amendments from time to time, in line with any legislative changes. Further details of salary exchange, how to opt out of salary exchange and alternative ways of funding your contributions are available from the HR department.
9.5Subject to clause 9.4 above:
9.5.1the contributions payable by you and the Company to the Plan shall be equivalent to the minimum contributions set out in the Pensions Act 2008 (“Option A”), or
9.5.2you may elect for the Company to contribute an amount equal to 8% of your Reference Salary provided that you also contribute an amount equal to 4% of your Reference Salary to the Plan during each year of your employment (“Option B”).
9.5.3Subject to clause 9.2 above, pension contributions paid by or in respect of you and the contributions paid by the Company shall at all times be sufficient to ensure compliance with the Pensions Act 2008.
9.6Any pension contributions shall be payable in equal monthly instalments in arrears. Subject to clause 9.4 above, your contributions shall be made by way of deduction from your salary.
9.7If you elect for contributions to be payable to the Plan under Option B:
9.7.1subject as follows, you will during your employment under this Contract be entitled to participate in a group income protection scheme as the Company shall from time to time maintain for your benefit subject to the Company’s right to terminate this Contract. If the scheme insurer of any group income protection scheme paid for or maintained by the Company accepts any claim by you under such scheme, you shall no longer, with effect from the date such claim is accepted, be eligible for or entitled to receive any remuneration or other benefits under this contract, save for pension contributions
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under Option B where you are treated as remaining an active member of the Plan,
9.7.2you may make additional employee pension contributions to the Plan, but this will not affect the amount of the Company’s pension contributions.
9.8The group income protection scheme is not available under Option A.
9.9Subject as follows, you are entitled to life insurance cover under the terms of the Company’s scheme up to four times your Reference Salary under clause 4.3.
9.10If the insurance provider for any of the above benefits refuses for any reason to provide a benefit to you, that is entirely a matter for the scheme insurer and the Company accepts no obligation to take any legal or other proceedings to challenge or enforce the scheme insurer’s decision in respect of any such claim and the Company shall not be liable to provide to you any replacement benefit of the same or similar kind or to pay any compensation in lieu of such benefit.
9.11The above benefits are subject to the relevant insurer accepting you for cover under the relevant scheme, the rules of the relevant scheme (and any replacement schemes provided by the Company) from time to time and subject to you being eligible to participate in or benefit from such schemes pursuant to their rules at a cost which is acceptable to the Company.
9.12The above benefits can be amended or removed at any time by the Company, including changing the provider, and are subject to the rules of the schemes as amended from time to time.
9.13Medical Cover
You are entitled to single private medical cover under the terms of the Company’s scheme. You will automatically be covered by this from the first day of joining the Company. Please note there is an annual excess charge per scheme year which you will be required to pay directly to the insurer should you make a claim. Full details about your private medical insurance are available in the Scheme Booklet.
9.14If the insurance provider for any of the above benefits refuses for any reason to provide a benefit to you, that is entirely a matter for the scheme insurer and the Company accepts no obligation to take any legal or other proceedings to challenge or enforce the scheme insurer’s decision in respect of any such claim and the Company shall not be liable to provide to you any replacement benefit of the same or similar kind or to pay any compensation in lieu of such benefit.
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9.15The above benefits are subject to the relevant insurer accepting you for cover under the relevant scheme, the rules of the relevant scheme (and any replacement schemes provided by the Company) from time to time and subject to you being eligible to participate in or benefit from such schemes pursuant to their rules at a cost which is acceptable to the Company.
10.Paid Leave and Other Benefits
10.1Details of any paid leave to which you are entitled, in addition to your entitlement to sick pay and holiday set out above, can be found on the UK HR Employee Toolkit.
10.2In addition to the benefits referred to elsewhere in this agreement the Company offer access to the following non-contractual benefits:
10.2.1Westfield Health Cash Plan
10.2.2Long Service Awards
10.2.3Flexible Benefit Scheme (where employees can choose to purchase various benefits)
10.2.4Annual Health Screening
10.3The above benefits are entirely discretionary and can be amended or removed at any time by the Company and are subject to the rules of the schemes as amended from time to time.
11.Confidentiality
11.1In the ordinary course of your employment you will be exposed to information about the business of the Company and Group Companies and the suppliers, clients and customers of the Company and Group Companies which is confidential or is commercially sensitive and which may not be readily available to competitors or the general public and which if disclosed will be liable to cause significant harm to the Company or any Group Company.
11.2You must not whether during or after your employment, except as authorised or required by your duties as an employee of the Company, reveal to any person, firm, company or organisation or otherwise make use of any of the trade secrets, secret or confidential operations, processes or dealings or any information (other than that within the public domain) concerning the organisation, business, finances, transactions or affairs of the Company or any Group Company (including lists of the customers or clients) of the Company or of any such suppliers, clients and customers which may come to your knowledge during your employment. Nothing in this clause shall prevent you from
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disclosing information to comply with a Court Order, from complying with any statutory obligation on you to disclose information or from making a protected disclosure under the Public Interest Disclosure Act 1998.
12.Data Protection
12.1You agree to act in accordance with Data Protection Legislation at all times during your employment and to comply with any policy introduced by the Company in order to comply with it, including any policy on the transfer of data outside the European Economic Area.
12.2The Company will process personal data about you in accordance with and to the extent permitted by Data Protection Legislation in order for the Company to perform its obligations under this Agreement, for example paying your salary, or to pursue its legitimate interests. Personal data relating to you may be kept electronically or in hard copy format.
12.3The Company will process sensitive personal data relating to you in accordance with and to the extent permitted by Data Protection Legislation in order for the Company to carry out its obligations and exercise its rights in the fields of employment, social security and social protection law.
12.4The Company agrees to abide by its commitments under any policy introduced by the Company in order to comply with Data Protection Legislation and to process personal data (including sensitive personal data) in relation to you in accordance with any fair processing notices notified to you.
12.5In this clause the expressions “personal data” and “sensitive personal data” have the same meanings as those expressions bear in the Data Protection Act 1998 (or shall have the same meanings as equivalent definitions in subsequent Data Protection Legislation which supersedes the Data Protection Act 1998).
13.Activities during your employment
You may not be directly or indirectly engaged, concerned or interested in any other trade, business or occupation which would adversely affect your duties for the Company or could represent a conflict of interest. If you are contemplating taking on additional work, you should obtain prior permission from your line manager, who may give permission at his/her absolute discretion. In any event, no work or employment other than for the Company may be undertaken during the Company’s working time and the Company’s offices and property may not be used for the business, or other purposes, of any other organisation.
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14.Discipline
14.1The Company reserves the right to suspend you on full pay for a reasonable period of time in order to investigate any allegation of misconduct or other disciplinary matter. During such a period of suspension, the Company may require you to stay away from your place of work and not to undertake some or any of your duties.
15.Termination of employment
15.1Consistent with the terms of your U.S. offer, you will continue to be eligible for benefits under the Baxter Executive Severance and Change in Control Plan. Participation in, and any benefits payable under, such plans shall be governed exclusively by the applicable plan documents, as amended from time to time.
15.2For the avoidance of doubt, during the period of your temporary employment in the United Kingdom pending receipt of U.S. work authorization, you shall be deemed an Eligible Employee under the Baxter International Inc. Executive Severance and Change in Control Plan, notwithstanding that you are employed by Baxter Healthcare Limited and not employed in the United States. To the extent necessary to effect the foregoing, the Company hereby designates you as a participant in the Plan pursuant to Section 2(a).
15.3For avoidance of doubt, your transfer from the Company to the U.S. is not considered a termination of service under the Baxter Executive Severance and Change in Control Plan.
15.4In the event that your employment is terminated by the Company for any reason other than gross misconduct (within the meaning of the Employment Rights Act 1996), you will receive the greater of the statutory minimum notice and severance entitlements required by applicable law or the benefits provided under the Company's Executive Severance and Change in Control Plan, as applicable.
16.Intellectual property
16.1The definitions in this clause apply in this Contract.
16.1.1Company Intellectual Property means any Intellectual Property made, created or discovered by you during your employment (whether or not in the course of your employment or during normal hours of work or using the facilities of the Company) that:
16.1.1.1in any way affects or relates to the business of the Company or any Group Company, or
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16.1.1.2is capable of being used or adapted for use in or in connection with such business.
16.1.2Intellectual Property means all intellectual property rights including but not limited to patents and any other rights in inventions, discoveries and improvements; registered and unregistered trademarks, including any trade, brand or business names and get-ups and rights in domain names, devices and logos; registered design and, design rights; copyright (including in any information, know-how or techniques relating to the business of the Company or any Group Company, and in any computer software and typographical rights) database rights and moral rights; all industrial, commercial and technical and accounts records and information (wherever located) relating to the activities of the Company or any Group Company; any confidential information as described in clause 11 above; any other industrial or intellectual property right that may now or in the future subsist in any country of the world; and applications and the right to apply for any of the above in any country in the world.
16.2You acknowledge that you may make, discover or create Intellectual Property in the course of your duties and that in this respect you have a special obligation to further the interests of the Company and any Group Company.
16.3You must disclose to the Company in writing full details of any Company Intellectual Property promptly following its making, creation or discovery.
16.4Any Company Intellectual Property shall so far as the law permits upon creation belong to and be the absolute property of the Company or any other Group Company as the Company may direct. You will hold on trust for the benefit of the Company any Company Intellectual Property that does not automatically belong to the Company upon creation until such time as it is vested absolutely in the Company or such other Group Company. You hereby assign to the Company or such other Group Company with full title guarantee by way of present and future assignment all such Company Intellectual Property.
16.5If required to do so by the Company you must, at the expense of the Company, as the Company or any other Group Company may direct:
16.5.1give and supply to the Company or such Group Company any information, data, drawings and assistance that the Company or such Group Company may require in order to exploit the Company Intellectual Property to best advantage,
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16.5.2apply or join with the Company or such Group Company in applying for patents or other protection or registration in the United Kingdom and in any other part of the world for the Company Intellectual Property, and
16.5.3execute all instruments and do all things necessary for vesting in the Company or such Group Company or in such other person as the Company may specify, as sole beneficial owner, any Company Intellectual Property including such patents or other protection or registration when obtained and all right, title and interest to and in them absolutely.
16.6You irrevocably and unconditionally waive any and all moral rights in connection with your authorship of any existing or future copyright work referred to in clause 16.4.
16.7The rights and obligations under this clause shall continue in force after termination of this Contract in respect of Company Intellectual Property and shall be binding on your representatives.
16.8Nothing in this clause shall be construed as restricting your rights under sections 39 to 43 of the Patents Act 1977.
17.Company property
17.1On request and in any event on termination of your employment for any reason or the commencement of any period of Garden Leave, you are required to return to the Company all company property including all documents in whatever form (including notes and minutes of meetings, customer lists, diaries and address books, computer printouts, plans, projections) together with all copies (irrespective of by whom and in what circumstances such copies were made) which are in your possession or under your control.
17.2You agree that you will not remove from the Company’s premises any documents, files, records, correspondence, notes or other papers (including copies) relating to the Company’s business, except as required by the terms of this Contract and with the permission of an authorised Company representative.
18.Deductions
18.1You hereby authorise the Company to deduct from your pay any amounts which are owed by you to the Company or Group Company during your employment and/or on termination, including but not limited to:
18.1.1any overpayment of wages, salary, remuneration or other payment made to you during the course of this employment
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(including holiday pay, sick pay, bonus or incentive and pay in lieu of notice)
18.1.2any relocation assistance
18.1.3any cost of repairing damage to or loss of property caused by you
18.1.4any monies paid or payable by the Company to any third party which directly or indirectly relate to any act or omission by you during your employment with the Company for which the Company is vicariously liable on your behalf.
19.Rules, policies and procedures
You must comply at all times with the Company’s rules, policies and procedures. Copies of all rules, policies and procedures can be obtained from the HR department and are on the UK HR Employee Toolkit. For the avoidance of doubt such rules, policies and procedures are not incorporated by reference into this Contract and they can be changed, replaced or withdrawn at any time at the discretion of the Company.
20.Collective agreement
There are no collective agreements directly affecting your terms and conditions of employment.
21.Entire agreement
This Contract sets out the terms and conditions governing your temporary employment in the United Kingdom while you await approval for your U.S. work authorization. The terms of your U.S. offer letter dated August 18, 2026, and any agreements or plans referenced therein (other than with respect to U.S. employee benefits), shall remain in full force and effect and continue to govern the overall relationship between you and the Company. For the avoidance of doubt, entering into this contract with Baxter Healthcare Limited does not release, replace, novate, amend or otherwise affect any obligation of you or Baxter International Inc under the U.S. offer letter dated August 18th, 2026 or any agreement or plan referenced therein (except with respect to U.S. employee health and welfare benefits as contemplated under the U.S. offer letter to which you shall not be eligible to receive during the pendency of your status as a Company employee).
22.Notices
22.1Any notice or other document to be given by the Company under this Contract shall be in writing and may be given personally to you; or may be sent by first-class post or other fast postal service to either to your address shown on the face of this Contract or to your last known place
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of residence; or by email to either your work email address or your personal email address as notified by you to HR.
22.2Any notice or other document to be given by you under this Contract shall be in writing and may be given personally to your line manager or may be sent by first class post or other fast postal service to, the Company’s registered office for the time being or by email to your line manager’s work email address.
22.3Any such notice shall (unless the contrary is proved) be deemed served:
22.3.1if delivered by hand, at the time the notice is left at the address or given to the addressee
22.3.2in the case of pre-paid first-class UK post or other next working day delivery service, at 9.00 am on the second business day after posting or at the time recorded by the delivery service
22.3.3if sent by email, at the time of transmission, or, if this time falls outside business hours, when business hours resume, in this clause business hours means 9.00am to 5.00pm Monday to Friday on a day that is not a public holiday.
In proving such service, it shall be sufficient to prove, where appropriate, that the notice was addressed properly and sent.
22.4The provisions of this clause do not apply to the service of legal proceedings.
23.Meaning of words used
23.1In this Contract “Group Company” means any holding company or subsidiary of the Employer and any subsidiary of any such holding company, with "holding company" and "subsidiary" being defined in accordance with section 1159 Companies Act 2006.
23.2In this Contract “Data Protection Legislation” means the Data Protection Act 1998 (“DPA”), or, from the date it comes into force in the UK, the General Data Protection Regulation (EU) 2016/679 (“GDPR”), and the Privacy and Electronic Communications (EC Directive) Regulations 2003 (or any successor to the DPA, GDPR or Privacy and Electronic Communications Regulations) and the applicable version at the relevant time of any guidance or codes of practice in relation thereto issued by the Information Commissioner’s Office from time to time.
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24.Variation to standard and other terms and conditions
The Company reserves the right to make reasonable changes to these and any other agreed terms and conditions of employment. Minor changes of details (e.g. in procedures) may be made from time to time and will be effected by a general notice to employees. You will be given not less than one month’s written notice before significant changes are made. For the avoidance of doubt, nothing in clause 24 permits the Company to amend, vary or supersede the terms of the U.S. offer letter dated August 18th, 2026 or any agreement or plan referenced therein (except with respect to U.S. employee health and welfare benefits as contemplated under the U.S. offer letter to which you shall not be eligible to receive during the pendency of your status as a Company employee).
PART TWO - INFORMATION
25.Training
25.1All mandatory training you must complete is set out in the BAXU online training site. There is no training which the Company requires you to complete which the Company will not pay for.
25.2You are entitled to take part in various training courses which may be provided by the Company from time to time in-house. Details of available courses will be set out on the BAXU online training site.
25.3There is no entitlement to attend any external training courses and external training funding approval is entirely at the discretion of your line manager and subject to any training policy in place from time to time.
26.Disciplinary policy and procedure and grievance procedure
26.1The Company’s disciplinary policy and procedure are set out in the Disciplinary Policy which is available on the UK HR Employee Toolkit and from the HR Department. The disciplinary policy and procedure do not form part of your Contract of Employment.
26.2If you are dissatisfied with any disciplinary decision including a decision to dismiss you, you may appeal, where possible, to a more senior manager than has been involved so far. If you wish to appeal, you should contact the HR Department who will inform you of the appropriate person to whom the appeal should be made. You should, where possible, give written notice of your desire to appeal, setting out the grounds on which the appeal is based. Notice of your intention to appeal should be received by the appropriate person within five working days of the date of dismissal or imposition of a disciplinary sanction. The Company’s disciplinary policy and procedure set out in full how your appeal will be dealt with.
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26.3If you have any grievance in relation to your employment, you should first raise it by discussing informally with your line manager. As an alternative, and if your complaint relates to your line manager, you can discuss the matter on an informal basis with a member of the HR team. If your complaint cannot be resolved informally, you should set out your grievance in writing and send it to your HR Manager. Your HR Manager will then provide a copy to your line manager who will be responsible for dealing with the grievance. If your complaint relates to your line manager’s conduct, the grievance will, where possible, be dealt with by the next appropriate line manager. Full details of how your grievance will be dealt with are set out in the Company’s grievance procedure which is available on the UK HR Employee Toolkit and from the HR Department. The Company’s grievance procedure does not form part of your contract of employment.
27.Code of Conduct
As part of this contract, it is essential that you read and adhere to the contents of the Company Code of Conduct. Upon joining the Company, you will be asked to go online to confirm you have read, understand and will adhere to this.
I understand and agree to the terms and conditions of my Contract of Employment as set out above.
SIGNED by Helena Gardiner
for and on behalf of THE COMPANY
| /s/ Helena Gardiner | |||||||||||
| Helena Gardiner | |||||||||||
SIGNED by John Rogers
| /s/ John Rogers | |||||||||||
| John Rogers | |||||||||||
| September 26, 2026 | |||||||||||
| Date | |||||||||||
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EXHIBIT 31.1
Certification of Chief Executive Officer
Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as Amended
I, Andrew P. Hider, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Baxter International Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ Andrew P. Hider | |||||
| Andrew P. Hider | |||||
| President and Chief Executive Officer | |||||
Date: October 29, 2026 | |||||
EXHIBIT 31.2
Certification of Chief Financial Officer
Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as Amended
I, John Rogers, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Baxter International Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ John Rogers | |||||
| John Rogers | |||||
| Executive Vice President and Chief Financial Officer | |||||
Date: October 29, 2026 | |||||
EXHIBIT 32.1
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Andrew P. Hider, as President and Chief Executive Officer of Baxter International Inc. (the “Company”), certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ Andrew P. Hider | |||||
| Andrew P. Hider | |||||
| President and Chief Executive Officer | |||||
Date: October 29, 2026 | |||||
EXHIBIT 32.2
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
John Rogers, as Executive Vice President and Chief Financial Officer of Baxter International Inc. (the “Company”), certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ John Rogers | |||||
| John Rogers | |||||
| Executive Vice President and Chief Financial Officer | |||||
Date: October 29, 2026 | |||||