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43 RD ANNUAL J.P. MORGAN HEALTHCARE CONFERENCE José (Joe) Almeida Chair, President & Chief Executive Officer JANUARY 13, 2025 1
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2 SAFE HARBOR STATEMENT This presentation includes forward-looking statements concerning the company’s financial results (including the outlook for full-year 2024 and full-year 2025) and business development, regulatory and operational activities (including the anticipated timing and impact of Hurricane Helene recovery efforts, the company’s cost containment initiatives and new product launch activities). These forward-looking statements are based on assumptions about many important factors, including the following, which could cause actual results to differ materially from those in the forward-looking statements: the company’s ability to execute and complete strategic initiatives, asset dispositions and other transactions and development activities, including the pending sale of the company’s Kidney Care business, the company’s plans to simplify its manufacturing footprint, the timing for such transactions and risks associated with a consolidated manufacturing footprint, the ability to satisfy any applicable conditions and the expected proceeds, consideration and realization of anticipated benefits; failure to accurately forecast or achieve the company’s short- and long-term financial performance and goals (including with respect to the company’s strategic initiatives and other actions and related impacts on its liquidity; the company’s ability to execute on its capital allocation plans, including the company’s debt repayment plans, the timing and amount of any dividends, share repurchases and divestiture proceeds; the company’s ability to successfully integrate acquisitions; the impact of global economic conditions (including, among other things, inflation levels, interest rates, financial market volatility, banking crises, the potential for a recession, the war in Ukraine, the conflict in the Middle East, tensions amongst China, Taiwan and the U.S., and the potential for escalation of these conflicts, the related economic sanctions being imposed globally in response to the conflicts and potential trade wars and global public health crises, pandemics and epidemics or the anticipation of any of the foregoing, on the company’s operations and on the company’s employees, customers, suppliers, and foreign governments in countries in which the company operates; downgrades to the company’s credit ratings or ratings outlooks, or withdrawals by rating agencies from rating us and the company’s indebtedness, and the impact on the company’s funding costs and liquidity; the impact of any goodwill, intangible asset or other long-lived asset impairments on the company’s operating results; product development risks, including satisfactory clinical performance and obtaining and maintaining required regulatory approvals (including as a result of evolving regulatory requirements or the withdrawal or resubmission of any pending applications), the ability to manufacture at appropriate scale and the general unpredictability associated with the product development cycle; regulatory agency inspections, product quality or patient safety issues leading to product recalls, withdrawals, labeling changes, launch delays, warning letters, import bans, denial of import certifications, sanctions, seizures, litigation or declining sales, including the focus on evaluating product portfolios for the potential presence or formation of nitrosamines; future actions of, or failures to act or delays in acting by, FDA, the European Medicines Agency or any other regulatory body or government authority (including the SEC, Department of Justice or the Attorney General of any State) that could delay, limit or suspend product development, manufacturing or sale or result in seizures, recalls, injunctions, monetary sanctions or criminal or civil liabilities; demand and market acceptance risks for, and competitive pressures related to, new and existing products, challenges with the company’s ability to accurately predict changing consumer preferences and future expenditures and inventory levels, and challenges with the company’s ability to monetize new and existing products and services, the impact of those products on quality and patient safety concerns and the need for ongoing training and support for our products; breaches, including by cyber-attack, data leakage, unauthorized access or theft, or failures of or vulnerabilities in, the company’s information technology systems or products; the continuity, availability and pricing of acceptable raw materials and component parts, the company’s ability to pass some or all of these costs to the company’s customers through recent price increases or otherwise, and the related continuity of the company’s manufacturing and distribution and those of the company’s suppliers; inability to create additional production capacity in a timely manner or the occurrence of other manufacturing, sterilization or supply difficulties, including as a result of natural disaster, war, terrorism, global public health crises and epidemics/pandemics, regulatory actions or otherwise (including the impact of the physical effects of climate change such as severe storms and storm related events); the company’s ability to finance and develop new products or enhancements on commercially acceptable terms or at all; loss of key employees (including those involved with any key strategic actions), the occurrence of labor disruptions (including as a result of labor disagreements under bargaining agreements or national trade union agreements or disputes with works councils) or the inability to attract, develop, retain and engage employees; failures with respect to the company’s quality, compliance or ethics programs; future actions of third parties, including third-party payers and the company’s customers and distributors (including GPOs and IDNs); changes to legislation and regulation and other governmental pressures in United States and globally, including the cost of compliance and potential penalties for purported noncompliance thereof, including new or amended laws, rules and regulations as well as the impact of healthcare reform and its implementation, suspension, repeal, replacement, amendment, modification and other similar actions undertaken by the United States or foreign governments, including with respect to pricing, reimbursement, taxation and rebate policies; the outcome of pending or future litigation; the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies; global regulatory, trade and tax policies; the ability to protect or enforce the company’s patents or other proprietary rights (including trademarks, copyrights, trade secrets and know-how) or where the patents of third parties prevent or restrict the company’s manufacture, sale or use of affected products or technology; fluctuations in foreign exchange and interest rates; any changes in law concerning the taxation of income (whether with respect to current or future tax reform); actions by tax authorities in connection with ongoing tax audits; and other risks identified in Baxter’s most recent filings on Form 10-K and Form 10-Q and other SEC filings, all of which are available on Baxter’s website. Baxter does not undertake to update its forward-looking statements unless otherwise required by the federal securities laws.
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3 This presentation contains certain forward-looking financial measures that are not calculated in accordance with U.S. GAAP (Generally Accepted Accounting Principles). The forward-looking non-GAAP financial measures include forward-looking adjusted operating margin guidance, targeted annual operational sales growth, targeted adjusted operating margin for 2025, and targeted free cash flow conversion ratio. Those measures are provided on a continuing operations basis and exclude any impact of the Kidney Care segment, which will be reported as a discontinued operation. Targeted annual operational sales growth represents the company’s targeted future sales growth excluding sales to Vantive under the related manufacturing supply agreement and assuming foreign currency exchange rates remain constant in future periods. Targeted adjusted operating margin represents targeted adjusted operating income (operating income excluding special items that may occur during the forecast period) divided by targeted net sales. The targeted free cash flow conversion ratio represents the ratio of targeted free cash flow (targeted operating cash flow less capital expenditures) divided by targeted adjusted net income attributable to Baxter stockholders (targeted net income attributable to Baxter stockholders excluding special items that may occur during the forecast period). Baxter has not provided reconciliations of forward-looking adjusted operating margin guidance to GAAP operating margin guidance, targeted annual operational sales growth to a forward-looking estimate of annual GAAP sales growth, targeted adjusted operating margin to a forward-looking estimate of GAAP operating margin, or targeted free cash flow conversion ratio to a forward- looking estimate of the ratio of operating cash flow to GAAP net income attributable to Baxter stockholders because the company is unable to predict with reasonable certainty the impact of legal proceedings, future business optimization actions, separation- related costs, integration-related costs, asset impairments, unusual gains and losses, and changes in foreign currency exchange rates, and the related amounts are unavailable without unreasonable efforts (as specified in the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K). In addition, Baxter believes that such reconciliations would imply a degree of precision and certainty that could be confusing to investors. Such items could have a substantial impact on GAAP measures of financial performance. NON- GAAP FINANCIAL MEASURES
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4 UNWAVERING IN OUR MISSION OF SAVING AND SUSTAINING LIVES
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5 Executing broad strategic transformation to enhance performance, accelerate innovation and drive incremental value for all stakeholders Benefitting from balanced and diversified portfolio to deliver results and advance our Mission Finalizing completion of pending sale of Kidney Care business Established preliminary 2025 guidance post separation Restarted production of North Cove, NC manufacturing facility; expecting to be back to pre- Hurricane production levels early Q1 2025 BUSINESS HIGHLIGHTS
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PROGRESS UPDATE ON STRATEGIC ACTIONS TAKEN TO DELIVER ENHANCED SHAREHOLDER VALUE 6 • On Aug. 13, 2024, Baxter and Carlyle announced a definitive agreement under which Carlyle is to acquire Baxter’s Kidney Care segment, to be known as Vantive, for $3.80 billion In Progress • Completed the divestiture of the BioPharma Solutions (BPS) business at the end of Q3 2023. Utilizing ~$3.7 billion of net after-tax proceeds for debt repayment, consistent with previously noted capital allocation priorities Complete • Finalized operating model and in Q3 2023 began reporting across four verticalized global segments replacing prior structure of nine businesses operating across three geographic regions Complete
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7 PENDING VANTIVE SALE: WHAT’S NEXT 1Subject to receipt of customary regulatory approvals and satisfaction of other closing conditions. Regulatory submissions, clearances under way in global markets Transaction is currently expected to close early 20251 Baxter expects to receive approximately $3.50 billion in cash with net after-tax proceeds currently estimated to be in the range of $3.15 to $3.25 billion, exceeding original expectations
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NEW BAXTER: INCREASED AGILITY, CLEARER FOCUS AND BETTER POSITIONED TO INVEST FOR GROWTH AND INNOVATION 8 Pharmaceuticals Healthcare Systems & Technologies Medical Products & Therapies An essential healthcare partner with an unmatched portfolio of market-leading devices, medicines and technologies Focused on customer-inspired innovation in key care settings where Baxter believes it is best positioned to succeed Exceptional team united by our Mission, focused on consistent execution and driving value for all stakeholders
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MEDICAL PRODUCTS & THERAPIES 1 9 Future LaunchesNear Term Launches2Current Portfolio Infusion Therapies & Technologies IQ Guardian (Digital) Artificial Intelligence Developed Software to Help Identify Infusion Anomalies SVP Viaflo Expansion Novum IQ LVP & Syringe Infusion Platform (Canada / U.S.) Organic Sodium Phosphate (U.S.) IV Solutions & Mini-Bag Plus 2CB & 3CB Clinical Nutrition SIMPLFUSOR Elastomeric Pump (Alt Site) QuickStay Set (Alt Site) PeerVue (Digital) Infusion Data Benchmarking and Knowledge Sharing Novum IQ LVP Rest of World Launches StatusVue (Digital) Infusion Dashboard that Displays Infusion Status House-Wide Novum PCA U.S. & Canada ExactaMix Pro Nutrition Compounder OUS3 Gravity Set New Multi Chambered Parenteral Nutrition Bag ExactaMix Pro Remote Access nonDEHP Viaflex (U.S.) Next Gen IV Global Container 1Not exhaustive; subject to additional capital investment, related regulatory approvals and other risks identified on slide 2. Product launch references include product launches, line extensions, and geographical expansions. 2Recently launched or anticipated to be launched in 2025 or 2026. 3Outside U.S.
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MEDICAL PRODUCTS & THERAPIES 1 10 Floseal with Recothrom Geographic Expansion Coseal Adhesion Reduction (Japan) Accureach MIS Introducer Hemopatch Room Temperature GEM Monitor v3 New Indications and Line Extensions U.S. PERCLOT Future LaunchesNear Term Launches2Current Portfolio Advanced Surgery 1Not exhaustive; subject to additional capital investment, related regulatory approvals and other risks identified on slide 2. Product launch references include product launches, line extensions, and geographical expansions. 2Recently launched or anticipated to be launched in 2025 or 2026.
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HEALTHCARE SYSTEMS & TECHNOLOGIES 1 11 Helion OR Integration Enhancements Handsfree Communication System TS7000 Robotic Table Voalte Nurse Call Progressa+ Voalte Mobile Helux Pro Surgical Light Centrella Smart+ Progressa+ Europe Expansion Birthing Bed Roadmap China Expansion and Affinity 5 Release Robotic Table Update Precision Locating System 1Not exhaustive; subject to additional capital investment, related regulatory approvals and other risks identified on slide 2. Product launch references include product launches, line extensions, and geographical expansions. 2Recently launched or anticipated to be launched in 2025 or 2026. Future LaunchesNear Term Launches2Current Portfolio Care & Connectivity Solutions Connected Overhead Lift System Med Surg Enhancements Fall & Pressure Injury Prediction Next Gen Visualization & Clinical Communication
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HEALTHCARE SYSTEMS & TECHNOLOGIES 1 12 Vest APX Innovative Airway Clearance Therapy Next Gen Monitor Secure, Connected & Workflow-Friendly Extensible Platform Mobile Cardiac Telemetry Continuous Monitoring and Near Real-Time Diagnostics Next Generation Digital Thermometer BardyDX CAM Patch Connex Spot Monitor Volara / Synclara OLE System Disposable Blood Pressure Cuffs PanOptic and MacroView Plus Thermometers & Probe Covers Intelligent Diagnostics Smart Connected Early Detection Vision Screening RetinaVue with LumineticsGo AI Diagnostic for Diabetic Retinopathy Clinical Hub Diagnostic and Communication Hub for Physician Offices 1Not exhaustive; subject to additional capital investment, related regulatory approvals and other risks identified on slide 2. Product launch references include product launches, line extensions, and geographical expansions. 2Recently launched or anticipated to be launched in 2025 or 2026. Future LaunchesNear Term Launches2Current Portfolio Front Line Care
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PHARMACEUTICALS 1 13 Injectables & Anesthesia Drug Compounding Focused on optimizing profitability through the service of higher margin products and manufacturing improvement programs Doxil Zosyn Sevoflurane Future LaunchesCurrent Portfolio Targeting ~10 new product launches per year Vasopressin Vancomycin Norepinephrine Micafungin Ropivicaine Cyclophosphamide InjectionDaptomycin Myxredlin Ifosfamide Near Term Launches2 1Not exhaustive; subject to additional capital investment, related regulatory approvals and other risks identified on slide 2. Product launch references include product launches, line extensions, and geographical expansions. 2Recently launched or anticipated to be launched in 2025 or 2026.
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STRATEGIC TRANSFORMATION DESIGNED TO CREATE A MORE STREAMLINED, AGILE COMPANY FOCUSED ON ENHANCING VALUE 1 • Targeting 4% - 5% operational sales growth annually • Driving sales growth faster than market through innovation and market expansion • Anticipate adjusted operating margin of ~16.5% in 2025 and expanding annually thereafter • Targeting ~80% Free Cash Flow Conversion driven by anticipated improved operating results and working capital enhancements • Focused on deleveraging to reach investment-grade target of ~3.0X by the end of 2025 • Deploying capital towards higher-growth, higher-return opportunities Driving operational efficiencies to deliver results and improve cash flow profile Reinvesting in the business both organically and inorganically to enhance growth profile and improve WAMGR2 Financial Capital 14 1Non-GAAP financial metrics referenced in this slide includes operational sales growth, adjusted operating margin guidance and free cash flow conversion ratio. Information about our use of non-GAAP measures can be found herein and is available at www.baxter.com. 2Weighted average market growth rate.
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FY 2024 Adjusted Operating Income Guidance4 Net Benefit from TSA5 and Cost Containment Hurricane Helene Impact Operational Margin Expansion MSA5 Impact FY 2025 Adjusted Operating Income Guidance 13.7% to 13.8% ~210 bps ~(60) bps ~16.5% 1(CO) defined as Continuing Operations. 2Non-GAAP financial metrics referenced in this slide includes adjusted operating margin guidance. Information about our use of non-GAAP measures can be found herein and is available at www.baxter.com. 3Net Stranded Costs. 4Guidance as of Q3 2024 earnings. 5Kidney Care TSA = Transition Service Agreement; Kidney Care MSA = Manufacturing Supply Agreement. Includes ~250 bps impact from stranded costs ~30 bps ~100 bps 15 ~(40) bps3 ~250 bps BAXTER (CO) PRELIMINARY OPERATING INCOME BRIDGE 1,2
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16 NORTH COVE STRONG 9 of 10 manufacturing lines restarted, with 10th line expected to resume imminently 9 plants activated across global network to help increase available inventory 100% allocation reached across majority of critical IV product groups by the end of 2024 ~200 airplanes delivered product to the U.S., representing nearly 18,000 tons of product by the end of 2024 1,200+ truckloads of pre-hurricane manufactured product transported off site and to customers September 29, 2024January 9, 2025
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CONTINUING MOMENTUM IN 2025 AND BEYOND 17 Building on underlying 2024 business momentum and financial progress Assessing potential opportunities to exit select product and/or markets to further optimize portfolio and enhance performance Continuing to drive benefits from vertical operating model through increased accountability, differentiated investments and enhanced visibility to end markets Plan to host an investor conference in 2025 to discuss Baxter’s longer-term strategic and financial outlook
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43 RD ANNUAL J.P. MORGAN HEALTHCARE CONFERENCE JANUARY 13, 2025 18 José (Joe) Almeida Chair, President & Chief Executive Officer