Earnings release
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Baxter Reports Third-Quarter 2026 Results October 29, 2026 Third-quarter sales of $2.98 billion increased 5% on both a reported and organic basis,1, 2 reflecting growth in all segments and divisions Third-quarter U.S. GAAP3 diluted earnings per share (EPS) of $0.57; adjusted diluted EPS of $0.581 Company raises full-year 2026 financial outlook DEERFIELD, Ill.--(BUSINESS WIRE)-- Baxter International Inc. (NYSE:BAX), a global medtech leader, today reported results for the third quarter of 2026. “We delivered a strong third quarter, with growth across all segments and divisions globally,” said Andrew Hider, president and CEO. “We continue to make steady progress stabilizing the business, strengthening the balance sheet and driving continuous improvement. Our results reinforce our confidence in this direction as we build a stronger foundation for sustainable growth and long-term value creation.” Third-Quarter 2026 Companywide Financial Results Unless otherwise noted, all financial results reflect continuing operations and exclude Baxterʼs former Kidney Care business, which is reported as discontinued operations. Worldwide sales in the third quarter totaled approximately $2.98 billion, increasing 5% on both a reported and organic basis. U.S. sales in the third quarter totaled approximately $1.6 billion, increasing 3% on a reported basis and 5% on an organic basis. International sales in the third quarter totaled approximately $1.4 billion, increasing 7% on a reported basis and 6% on an organic basis. On a U.S. GAAP basis, net income totaled $298 million, or $0.57 per diluted share. On an adjusted basis, net income in the third quarter was $0.58 per diluted share, decreasing 16% due to a higher effective tax rate, year-over-year. Free cash flow was $448 million in the third quarter and totaled $705 million year-to-date. During the third quarter, the company completed a $600 million cash tender offer, retiring $864 million of debt and accelerating deleveraging while supporting its investment-grade credit objectives. Please see the attached schedules accompanying this press release for additional details on sales performance in the quarter, including breakouts by Baxterʼs segments. Third-Quarter 2026 Segment Results Beginning in the second quarter of 2026, Baxter updated its segment reporting structure to align with changes to the companyʼs operating model.4 Previously reported segment results have been recast to conform to the updated reporting structure and are available on the Investor Relations section at www.baxter.com. In the third quarter, growth continued across all segments and divisions. Medical Products & Therapies sales for the third quarter totaled approximately $2.1 billion, increasing 6% on both a reported and organic basis. Performance in the quarter reflected strength within the Infusion Therapies & Platforms division, driven primarily by Infusion Systems, Drug Compounding and IV Solutions. This growth was partially offset by reduced sales within Injectables. Continued strong global demand for Advanced Surgery products also contributed to performance. Healthcare Systems & Technologies sales for the third quarter totaled approximately $806 million, increasing 4% on both a reported and organic basis. Performance in the quarter reflected strong demand for Care & Connectivity Solutions products, driven by growth in Global Surgical Solutions and Patient Support Systems. Results also reflected growth in Front Line Care. Full-Year 2026 Financial Outlook The company raised its full-year financial outlook: Reported sales growth from continuing operations: 4% to 5% (previously 3% to 4%) Organic sales growth from continuing operations: 3% to 4% (previously 2% to 3%) Adjusted earnings from continuing operations per diluted share: $2.05 to $2.15 (previously $1.95 to $2.15) See the "Non-GAAP Financial Measures" section for explanations of the companyʼs non-GAAP financial measures. Earnings Conference Call Baxter will host a conference call today, Oct. 29, 2026, at 7:30 a.m. CDT to discuss its third-quarter 2026 results and provide an update on the business. The conference call for investors can be accessed live from a link in the Investor Relations section of the companyʼs website at www.baxter.com. Please see www.baxter.com for more information regarding this and future investor events and webcasts. Upcoming Webcasted Investor Events (to be made available on www.baxter.com) J.P. Morgan Healthcare Conference, January 11-13, 2027 About Baxter At Baxter, we are everywhere healthcare happens – and everywhere it is going, with essential solutions in the hospital, physician's office and other sites of care. For nearly a century, our customers have counted on us as a vital and trusted partner. And every day, millions of patients and healthcare providers rely on our unmatched portfolio of connected solutions, medical devices, and advanced injectable technologies. Approximately 37,500 Baxter team members live our enduring Mission: to Save and Sustain Lives. Together, we are redefining how care is delivered to make a greater impact today, tomorrow, and beyond. To learn more, visit www.baxter.com and follow us on X, LinkedIn and Facebook. Non-GAAP Financial Measures Non-GAAP financial measures may enhance an understanding of the company's operations and may facilitate an analysis of those operations, particularly in evaluating performance from one period to another. Management believes that non-GAAP financial measures, when used in conjunction with the results presented in accordance with U.S. GAAP and the company's reconciliations to corresponding U.S. GAAP financial measures (which are included in the tables accompanying this release), may enhance an investorʼs overall understanding of the company's past financial performance and prospects for the future. Management uses these non-GAAP measures internally in financial planning, to monitor business unit performance, and, in some cases, for purposes of determining incentive compensation. This information should be considered in addition to, and not as substitutes for, information prepared in accordance with U.S. GAAP. Organic sales growth is a non-GAAP measure that excludes the impact of the Kidney Care MSA not reflected in reportable segments, impacts associated with business acquisitions or divestitures, and is calculated on a constant currency basis, as if foreign currency exchange rates had remained constant between the prior and current periods. Other non-GAAP financial measures included in this release and the accompanying tables (including within the tables that provide the company's detailed reconciliations to the corresponding U.S. GAAP financial measures) are: adjusted gross margin; adjusted selling, general and administrative expenses; adjusted research and development expenses; adjusted other operating income, net; adjusted operating income (loss); adjusted other income (expense), net; adjusted income (loss) from continuing operations before income taxes; adjusted income tax expense (benefit); adjusted income (loss) from continuing operations; adjusted income (loss) from discontinued operations; adjusted net income (loss); adjusted net income (loss) attributable to Baxter stockholders; adjusted diluted earnings per share from continuing operations; adjusted diluted earnings per share from discontinued operations; and adjusted diluted earnings per share. Those non-GAAP financial measures exclude the impact of special items. For the quarters and nine-month periods ended September 30, 2026 and 2025, special items for one or more periods included intangible asset amortization, business optimization charges, acquisition and integration costs, separation-related costs, expenses related to European medical devices regulation, certain legal matters, investment impairments, product-related items, business transformation costs, the gain on debt extinguishment, the gain on the sale of the Kidney Care business, Hurricane Helene costs, and certain tax matters. These items are excluded because they are highly variable or unusual and of a size that may substantially impact the company's reported operations for a period. Additionally, intangible asset amortization is excluded as a special item to facilitate an evaluation of current and past operating performance and is consistent with how management and the company's Board of Directors assess performance.
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This release and the accompanying tables also include free cash flow, a non-GAAP financial measure that Baxter defines as operating cash flow less capital expenditures. Free cash flow is used by management and the company's Board of Directors to evaluate the cash generated from Baxter's operating activities each period after deducting its capital spending. This release also includes forecasts of certain of the aforementioned non-GAAP measures on a forward-looking basis as part of the company's financial outlook for upcoming periods. Baxter calculates forward-looking non-GAAP financial measures based on forecasts that omit certain amounts that would be included in GAAP financial measures. For instance, forward-looking organic sales growth represents the company's targeted future sales growth excluding sales to Vantive under the Kidney Care MSA not reflected in reportable segments, reflects impacts associated with business acquisitions or divestitures, and assumes foreign currency exchange rates remain constant in future periods. Additionally, forward- looking adjusted diluted EPS guidance excludes potential charges or gains that would be reflected as non-GAAP adjustments to earnings. Baxter provides forward-looking organic sales growth guidance and adjusted diluted EPS guidance because it believes that these measures provide useful information for the reasons noted above. Baxter has not provided reconciliations of forward-looking adjusted EPS guidance to forward-looking GAAP EPS guidance 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, separation-related costs, business transformation costs, asset impairments and unusual gains and losses, 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. Forward-Looking Statements This release includes forward-looking statements concerning the companyʼs financial results (including the updated outlook for full-year 2026) and certain product development 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: there is substantial competition in the product markets in which the company operates and the risk of declining demand and pricing pressures could adversely affect the companyʼs business, results of operations, financial condition and cash flows; the company 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, the companyʼs operations; the company is 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; the company may not achieve its financial goals; the companyʼs operating results and financial condition have fluctuated and may in the future continue to fluctuate; the company is exposed to risks as a result of its previously completed strategic actions; the company may not achieve the anticipated benefits of its significant transactions, including the sale of its Kidney Care business and its acquisition of Hill-Rom Holdings, Inc.; the company may not be successful in achieving expected operating efficiencies and sustaining or improving operating expense reductions; the company has experienced and may continue to experience issues with quality management or product quality, including with respect to the Novum IQ large volume pump and a recently issued U.S. Food and Drug Administration Warning Letter; the company has experienced disruptions in its supply chain and may experience additional disruptions in the future; the company has experienced and may continue to experience manufacturing, sterilization, supply, or distribution difficulties; the company may be unable to obtain sufficient components or raw materials on a timely basis or for a cost-effective price; the companyʼs significant indebtedness requires it to use a substantial amount of its cash flow for debt service and constrains the companyʼs ability to pursue growth strategies and advance its 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 the companyʼs ability to sell to certain of its significant market segments; segments of the companyʼs 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 the company 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 the companyʼs results of operations, financial condition, cash flows, and liquidity; future material impairments in the value of the companyʼs goodwill, intangible assets, and other long-lived assets would negatively affect the companyʼs operating results; the company has experienced and may in the future experience breaches and other incidents affecting its information technology systems or protected information, including from obsolescence, cyber security breaches and data leakage; the company is exposed to risks associated with incorporating artificial intelligence (AI), machine learning and other emerging technologies into our products, services and operations; a portion of the companyʼs workforce is unionized, and the company could face labor disruptions that would interfere with its operations; the effects of climate change, including evolving legal, regulatory, or market measures related to climate change and other sustainability topics, could adversely affect the companyʼs business, results of operations, financial condition, and cash flows; the companyʼs goals, activities, and disclosures related to sustainability and corporate responsibility matters, and the perception of the companyʼs activities in these areas, may fail to satisfy the differing expectations of key stakeholders on these matters; the company is subject to laws and regulations globally, and its failure to comply with rapidly changing and increasingly divergent expectations of regulators in different jurisdictions could adversely impact the company; 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, the companyʼs business could suffer; increasing regulatory focus on, and expanding laws relating to, privacy, AI, and cybersecurity could impact the companyʼs business and expose it to increased liability; the company is party to a number of pending lawsuits and other disputes which may adversely impact it; changes in tax laws or exposure to additional income tax liabilities may have a negative impact on the companyʼs operating results; the company could be subject to fines or damages and possible exclusion from participation in federal or state healthcare programs if it fails to comply with the laws and regulations applicable to its business; if the company is unable to protect or enforce its patents or other proprietary rights, or if the company becomes subject to claims or litigation alleging infringement of the patents or other proprietary rights of others, the companyʼs competitiveness and business prospects may be materially damaged; the companyʼs Amended and Restated Bylaws could limit its stockholdersʼ ability to choose their preferred judicial forum for disputes with the company or its directors, officers, or employees; the company decreased its quarterly dividend to $0.01 per share and cannot guarantee that it will increase the amount of dividends it pays, or that it will not cease paying dividends, in the future; the companyʼs common stock price has fluctuated significantly and may continue to do so; and other risks discussed in Baxterʼs most recent filings on Form 10-K and Form 10-Q and other SEC filings, all of which are available on Baxterʼs website. Baxter does not undertake to update its forward-looking statements unless otherwise required by the federal securities laws. Baxter is a trademark of Baxter International Inc. _____________________________ 1 Sales growth on an organic basis and adjusted diluted EPS are non-GAAP financial measures. See the “Non-GAAP Financial Measures” section below for information about the non-GAAP financial measures included in this release and see the accompanying tables to this press release for reconciliations of those non-GAAP measures to the corresponding U.S. GAAP measures. 2 Organic sales growth excludes the impact of the Kidney Care Manufacturing and Supply Agreement (Kidney Care MSA) not reflected in reportable segments, impacts associated with business acquisitions or divestitures, and is calculated at constant currency rates. 3 Generally Accepted Accounting Principles 4 The former Pharmaceuticals segment is now reported within the Infusion Therapies & Platforms (ITP) division of the Medical Products & Therapies (MPT) segment. Additionally, sales of products and services provided directly through certain of the company's manufacturing facilities related to ITP that were previously reported in Other, are now reported in the ITP division of its MPT segment. The remaining Other sales not allocated to a segment consist of sales to Vantive Health LLC (Vantive), pursuant to the related Kidney Care MSA.
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BAXTER INTERNATIONAL INC. Consolidated Statements of Income (Loss) (unaudited) (in millions, except per share and percentage data) Three Months Ended September 30, 2026 2025 Change NET SALES $ 2,976 $ 2,835 5% COST OF SALES 1,982 1,885 5% GROSS MARGIN 994 950 5% % of Net Sales 33.4% 33.5% (0.1) pts SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 730 708 3% % of Net Sales 24.5% 25.0% (0.5) pts RESEARCH AND DEVELOPMENT EXPENSES 125 118 6% % of Net Sales 4.2% 4.2% 0.0 pts OTHER OPERATING INCOME, NET (86) (48) 79% OPERATING INCOME 225 172 31% % of Net Sales 7.6% 6.1% 1.5 pts INTEREST EXPENSE, NET 61 58 5% OTHER (INCOME) EXPENSE, NET (253) (7) NM INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 417 121 NM INCOME TAX EXPENSE (BENEFIT) 119 172 (31)% % of Income (loss) from Continuing Operations Before Income Taxes 28.5% 142.1% (113.6) pts INCOME (LOSS) FROM CONTINUING OPERATIONS 298 (51) NM INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX (4) 5 NM NET INCOME (LOSS) 294 (46) NM NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS — — NM NET INCOME (LOSS) ATTRIBUTABLE TO BAXTER STOCKHOLDERS $ 294 $ (46) NM INCOME (LOSS) FROM CONTINUING OPERATIONS PER COMMON SHARE Basic $ 0.58 $ (0.10) NM Diluted $ 0.57 $ (0.10) NM INCOME (LOSS) FROM DISCONTINUED OPERATIONS PER COMMON SHARE Basic $ (0.01) $ 0.01 NM Diluted $ 0.00 $ 0.01 NM INCOME (LOSS) PER COMMON SHARE Basic $ 0.57 $ (0.09) NM Diluted $ 0.57 $ (0.09) NM WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING Basic 517 514 Diluted 520 514 ADJUSTED OPERATING INCOME (excluding special items)1 $ 432 $ 423 2% ADJUSTED INCOME (LOSS) FROM CONTINUING OPERATIONS (excluding special items)1 $ 303 $ 353 (14)% ADJUSTED INCOME (LOSS) FROM DISCONTINUED OPERATIONS (excluding special items)1 $ (4) $ 2 NM ADJUSTED NET INCOME ATTRIBUTABLE TO BAXTER STOCKHOLDERS (excluding special items)1 $ 299 $ 355 (16)% ADJUSTED DILUTED EPS FROM CONTINUING OPERATIONS (excluding special items)1 $ 0.58 $ 0.69 (16)% ADJUSTED DILUTED EPS FROM DISCONTINUED OPERATIONS (excluding special items)1 $ 0.00 $ 0.00 NM ADJUSTED DILUTED EPS (excluding special items)1 $ 0.58 $ 0.69 (16)% 1 Refer to page 10 for a description of the adjustments and a reconciliation to U.S. GAAP measures. NM - Not Meaningful
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BAXTER INTERNATIONAL INC. Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures (unaudited, in millions) The companyʼs U.S. GAAP results for the three months ended September 30, 2026 included special items which impacted the U.S. GAAP measures as follows: Gross MarginSelling, General and Administrative Expenses Research and Development Expenses Other Operating Income, Net Operating Income (Loss) Other (Income) Expense, Net Income (Loss) From Continuing Operations Before Income Taxes Income Tax Expense (Benefit) Income (Loss) From Continuing Operations Net Income (Loss) Net Income (Loss) Attributable to Baxter Stockholders Diluted Earnings Per Share from Continuing Operations Diluted Earnings Per Share Repo rted $ 994 $ 730 $ 125 $ (86) $225 $(253) $ 417 $ 119 $ 298 $294 $ 294 $ 0.57 $ 0.57 Repo rted perc ent of net sales (or effec tive tax rate for inco me tax expe nse (ben efit)) 33.4% 24.5% 4.2% (2.9) % 7.6% (8.5) % 14.0% 28.5% 10.0% 9.9% 9.9% Intan gible asset amor tizati on 95 (50) — — 145 — 145 34 111 111 111 0.21 0.21 Busin ess opti mizat ion items 1 45 (15) (1) — 61 — 61 15 46 46 46 0.09 0.09 Euro pean medi cal devic es regul ation 2 3 — — — 3 — 3 1 2 2 2 0.00 0.00 Hurri cane Hele ne costs 3 3 — — — 3 — 3 — 3 3 3 0.01 0.01 Sepa ratio n- relat ed costs 4 — (1) (1) — 2 — 2 — 2 2 2 0.00 0.00 Busin ess trans form ation 5 (1) (16) (5) — 20 — 20 5 15 15 15 0.03 0.03 Legal matt ers6 — (11) — 38 (27) — (27) (7) (20) (20) (20) (0.04) (0.04) Gain on debt extin guish ment 7 — — — — — 253 (253) (58) (195) (195) (195) (0.38) (0.38) Tax matt ers11 — — — — — — — (41) 41 41 41 0.08 0.08 Adju sted $1,139 $ 637 $ 118 $ (48) $432 $ — $ 371 $ 68 $ 303 $299 $ 299 $ 0.58 $ 0.58 Adjus ted perc ent of net sales (or effec tive tax rate for inco me tax expe nse (ben efit)) 38.3% 21.4% 4.0% (1.6) % 14.5% 0.0% 12.5% 18.3% 10.2% 10.0% 10.0%
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The companyʼs U.S. GAAP results for the three months ended September 30, 2025 included special items which impacted the U.S. GAAP measures as follows: Gross MarginSelling, General and Administrativ e Expenses Research and Developmen t Expenses Other Operating Income, Net Operating Income (Loss) Income (Loss) From Continuing Operations Before Income Taxes Income Tax Expense (Benefit) Income (Loss) From Continuing Operations Income (Loss) From Discontinue d Operations, Net of Tax Net Income (Loss) Net Income (Loss) Attributable to Baxter Stockholders Diluted Earnings Per Share from Continuing Operations Diluted Earnings Per Share from Discontinued Operations Diluted Earnings Per Share Re po rte d $ 950 $708 $118 $(48) $172 $121 $ 172 $ (51) $ 5 $(46) $ (46) $(0.10) $ 0.01 $(0.09) Re por ted per ce nt of net sal es (or eff ect ive tax rat e for inc om e tax ex pe ns e (be nef it)) 33.5% 25.0% 4.2% (1.7) % 6.1% 4.3% 142.1% (1.8) % 0.2% (1.6) % (1.6) % Int an gib le ass et am orti zat ion 96 (51) — — 147 147 34 113 — 113 113 0.22 0.00 0.22 Bu sin ess opt imi zat ion ite ms 1 25 (10) (3) — 38 38 10 28 — 28 28 0.05 0.00 0.05 Eur op ea n me dic al de vic es reg ula tio n2 5 — — — 5 5 1 4 — 4 4 0.01 0.00 0.01 Hu rric an e Hel en e co sts 3 8 — — — 8 8 2 6 — 6 6 0.01 0.00 0.01 Se par ati on- rel ate d co sts 4 1 (12) — — 13 13 3 10 — 10 10 0.02 0.00 0.02 Pro du ct- rel ate d ite ms 8 32 — — — 32 32 8 24 — 24 24 0.05 0.00 0.05
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Ac qui siti on an d int egr ati on ite ms 9 — (6) — (2) 8 8 2 6 — 6 6 0.01 0.00 0.01 Gai n on Kid ne y Car e sal e10 — — — — — — — — 37 37 37 0.00 0.07 0.07 Tax ma tte rs1 1 — — — — — — (213) 213 (40) 173 173 0.41 (0.07) 0.34 Adj ust ed $1,117 $629 $115 $(50) $423 $372 $ 19 $353 $ 2 $355 $355 $ 0.69 $ 0.00 $ 0.69 Adj ust ed per ce nt of net sal es (or eff ect ive tax rat e for inc om e tax ex pe ns e (be nef it)) 39.4% 22.2% 4.1% (1.8) % 14.9% 13.1% 5.1% 12.5% 0.1% 12.5% 12.5% Weighted-average diluted shares as reported 514 Effect of dilutive securities that were anti-dilutive to dilutive EPS as reported 1 Weighted-average diluted shares as adjusted 515 1 The company's results of continuing operations in 2026 and 2025 included costs related to programs to optimize its organization and cost structure. These restructuring and business optimization costs in 2026 included costs primarily related to its initiatives to reduce its cost structure following the sale of its former Kidney Care business and the cessation of production of certain products at one of its specialty injectables manufacturing facilities. These restructuring and business optimization costs in 2025 included costs primarily related to its initiatives to reduce its cost structure following the sale of its former Kidney Care business and costs related to the exit of a product line at one of its manufacturing facilities. 2 The companyʼs results of continuing operations in 2026 and 2025 included incremental costs to comply with the European Unionʼs medical device regulations for previously registered products, which primarily consisted of contractor costs and other direct third-party costs. The company considers the adoption of these regulations to be a significant one-time regulatory change and believes that the costs of initial compliance for previously registered products over the implementation period are not indicative of its core operating results. 3 The company's results of continuing operations in 2026 and 2025 included charges related to Hurricane Helene which primarily consisted of remediation, air freight and other costs. 4 The companyʼs results of continuing operations in 2026 and 2025 included separation-related costs primarily related to external advisors supporting its activities related to the sale of its former Kidney Care business. 5 The company's results of continuing operations in 2026 included 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. 6 The company's results of continuing operations in 2026 included a net benefit related to certain legal matters. This included 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. 7 The company's results of continuing operations in 2026 included a gain on the early extinguishment of debt. 8 The company's results of continuing operations in 2025 included charges related to estimates of warranty and remediation activities arising from field corrective actions across its infusion pump category and a revised estimate of warranty and remediation activities arising from a field corrective action on certain of its infusion pumps initially recorded in 2022. 9 The companyʼs results of continuing operations in 2025 included integration-related items comprised of Hill-Rom Holdings, Inc. (Hillrom) acquisition and integration expenses. 10 The company's results of discontinued operations in 2025 included the final settlement of certain net working capital adjustments reducing the gain on sale of its former Kidney Care business made in accordance with the terms of the related Equity Purchase Agreement (Kidney Care EPA). 11 The company's results of continuing operations in 2026 included income tax expense primarily related to the application of intraperiod tax allocation to it adjusted results in an interim period. The company's results of continuing operations in 2025 included an income tax expenses 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. The company's results of discontinued operations in 2025 included an income tax benefit attributable to the allocation of reserves for uncertain tax positions to discontinued operations and indirect impacts of the carryback of the tax benefits generated by the sale of its former Kidney Care business to prior years. For more information on the company's use of non-GAAP financial measures, please see the Non-GAAP Financial Measures section of this press release.
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BAXTER INTERNATIONAL INC. Consolidated Statements of Income (Loss) (unaudited) (in millions, except per share and percentage data) Nine Months Ended September 30, 2026 2025 Change NET SALES $ 8,637 $ 8,270 4% COST OF SALES 5,720 5,468 5% GROSS MARGIN 2,917 2,802 4% % of Net Sales 33.8% 33.9% (0.1) pts SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,193 2,129 3% % of Net Sales 25.4% 25.7% (0.3) pts RESEARCH AND DEVELOPMENT EXPENSES 393 392 0% % of Net Sales 4.6% 4.7% (0.1) pts OTHER OPERATING INCOME, NET (177) (140) 26% OPERATING INCOME 508 421 21% % of Net Sales 5.9% 5.1% 0.8 pts INTEREST EXPENSE, NET 191 180 6% OTHER (INCOME) EXPENSE, NET (252) (10) NM INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 569 251 NM INCOME TAX EXPENSE (BENEFIT) 153 116 32% % of Income from Continuing Operations Before Income Taxes 26.9% 46.2% (19.3) pts INCOME (LOSS) FROM CONTINUING OPERATIONS 416 135 NM INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX (11) 36 NM NET INCOME (LOSS) 405 171 NM NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS — — NM NET INCOME (LOSS) ATTRIBUTABLE TO BAXTER STOCKHOLDERS $ 405 $ 171 NM INCOME (LOSS) FROM CONTINUING OPERATIONS PER COMMON SHARE Basic $ 0.81 $ 0.26 NM Diluted $ 0.80 $ 0.26 NM INCOME (LOSS) FROM DISCONTINUED OPERATIONS PER COMMON SHARE Basic $ (0.03) $ 0.07 NM Diluted $ (0.02) $ 0.07 NM NET INCOME (LOSS) PER COMMON SHARE Basic $ 0.78 $ 0.33 NM Diluted $ 0.78 $ 0.33 NM WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING Basic 516 513 Diluted 518 514 ADJUSTED OPERATING INCOME (excluding special items)¹ $ 1,150 $ 1,238 (7)% ADJUSTED INCOME FROM CONTINUING OPERATIONS (excluding special items)¹ $ 781 $ 942 (17)% ADJUSTED INCOME FROM DISCONTINUED OPERATIONS (excluding special items)1 $ (11) $ 9 NM ADJUSTED NET INCOME ATTRIBUTABLE TO BAXTER STOCKHOLDERS (excluding special items)¹ $ 770 $ 951 (19)% ADJUSTED DILUTED EPS FROM CONTINUING OPERATIONS (excluding special items)1 $ 1.51 $ 1.83 (17)% ADJUSTED DILUTED EPS FROM DISCONTINUED OPERATIONS (excluding special items)1 $ (0.02) $ 0.02 NM ADJUSTED DILUTED EPS (excluding special items)1 $ 1.49 $ 1.85 (19)% 1 Refer to page 12 for a description of the adjustments and a reconciliation to U.S. GAAP measures. NM - Not Meaningful
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BAXTER INTERNATIONAL INC. Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures (unaudited, in millions) The companyʼs U.S. GAAP results for the nine months ended September 30, 2026 included special items which impacted the U.S. GAAP measures as follows: Gross MarginSelling, General and Administrative Expenses Research and Development Expenses Other Operating Income, Net Operating Income (Loss) Other (Income) Expense, Net Income (Loss) From Continuing Operations Before Income Taxes Income Tax Expense (Benefit) Income (Loss) From Continuing Operations Net Income (Loss) Net Income (Loss) Attributable to Baxter Stockholders Diluted Earnings Per Share From Continuing Operations Diluted Earnings Per Share Rep orte d $2,917 $ 2,193 $ 393 $(177) $ 508 $(252) $ 569 $ 153 $ 416 $405 $ 405 $ 0.80 $ 0.78 Rep orte d perc ent of net sale s (or effe ctive tax rate for inco me tax expe nse (ben efit)) 33.8% 25.4% 4.6% (2.0) % 5.9% (2.9) % 6.6% 26.9% 4.8% 4.7% 4.7% Intan gible asse t amo rtiza tion 284 (152) — — 436 — 436 103 333 333 333 0.64 0.64 Busi ness opti miza tion item s1 59 (61) (16) — 136 — 136 31 105 105 105 0.20 0.20 Euro pean medi cal devi ces regul ation 2 11 — — — 11 — 11 3 8 8 8 0.02 0.02 Prod uct- relat ed item s3 (12) — — — (12) — (12) (3) (9) (9) (9) (0.02) (0.02) Hurri cane Hele ne cost s4 9 — — — 9 — 9 2 7 7 7 0.01 0.01 Sepa ratio n- relat ed cost s5 3 (31) (1) — 35 — 35 8 27 27 27 0.05 0.05 Busi ness tran sfor mati on6 3 (39) (9) (3) 54 — 54 13 41 41 41 0.08 0.08 Lega l matt ers7 — (11) — 38 (27) — (27) (7) (20) (20) (20) (0.04) (0.04) Inve stme nt impa irme nts8 — — — — — (5) 5 1 4 4 4 0.01 0.01 Gain on debt extin guis hme nt9 — — — — — 253 (253) (58) (195) (195) (195) (0.38) (0.38) Tax matt ers12 — — — — — — — (64) 64 64 64 0.12 0.12 Adju sted $3,274 $ 1,899 $ 367 $(142) $1,150 $ (4) $ 963 $ 182 $ 781 $770 $ 770 1.51 1.49
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Adju sted perc ent of net sale s (or effe ctive tax rate for inco me tax expe nse (ben efit)) 37.9% 22.0% 4.2% (1.6) % 13.3% 0.0% 11.1% 18.9% 9.0% 8.9% 8.9%
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The companyʼs U.S. GAAP results for the nine months ended September 30, 2025 included special items which impacted the U.S. GAAP measures as follows: Gross MarginSelling, General and Administrativ e Expenses Research and Developme nt Expenses Other Operating Income, Net Operating Income (Loss) Other (Income) Expense, Net Income (Loss) From Continuing Operations Before Income Taxes Income Tax Expense (Benefit) Income (Loss) From Continuing Operations Income (Loss) From Discontinu ed Operations , Net of Tax Net Income (Loss) Net Income (Loss) Attributable to Baxter Stockholder s Diluted Earning s Per Share From Continui ng Operati ons Diluted Earnings Per Share From Discontinue d Operations Diluted Earnings Per Share R e p o rt e d $2,802 $2,129 $392 $(140) $ 421 $(10) $ 251 $116 $135 $36 $171 $171 $0.26$0.07 $0.33 R e p o rt e d p e r c e n t o f n e t s al e s ( o r e ff e c ti v e t a x r a t e f o r in c o m e t a x e x p e n s e ( b e n e fi t) ) 33.9% 25.7% 4.7% (1.7) % 5.1% (0.1) % 3.0% 46.2% 1.6% 0.4% 2.1% 2.1% In t a n gi bl e a s s e t a m o rt iz a ti o n 301 (152) — — 453 — 453 106 347 — 347 347 0.68 0.00 0.68
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B u si n e s s o p ti m iz a ti o n it e m s 1 44 (51) (5) — 100 — 100 25 75 — 75 75 0.15 0.00 0.15 E u r o p e a n m e di c al d e vi c e s r e g ul a ti o n 2 15 — — — 15 — 15 3 12 — 12 12 0.02 0.00 0.02 P r o d u c t- r el a t e d it e m s 3 61 — — — 61 — 61 16 45 — 45 45 0.09 0.00 0.09 H u rr ic a n e H el e n e c o s t s 4 123 — — — 123 — 123 31 92 6 98 98 0.18 0.01 0.19 S e p a r a ti o n - r el a t e d c o s t s 5 2 (38) — — 40 — 40 9 31 31 62 62 0.06 0.06 0.12
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L e g al m a tt e r s 7 11 — — — 11 — 11 2 9 — 9 9 0.02 0.00 0.02 In v e s t m e n t i m p ai r m e n t s 8 — — — — — (9) 9 2 7 — 7 7 0.01 0.00 0.01 A c q ui si ti o n a n d in t e g r a ti o n it e m s 1 0 — (12) — (2) 14 (5) 19 4 15 — 15 15 0.03 0.00 0.03 G ai n o n K id n e y C a r e s al e 11 — — — — — — — — — (74) (74) (74) 0.00 (0.14) (0.14) T a x m a tt e r s 1 2 — — — — — — — (174) 174 10 184 184 0.34 0.02 0.36 A d j u s t e d $3,359 $1,876 $387 $(142) $1,238 $(24) $1,082 $140 $942 $ 9 $951 $951 $1.83$0.02 $1.85
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A dj u s t e d p e r c e n t o f n e t s al e s ( o r e ff e c ti v e t a x r a t e f o r in c o m e t a x e x p e n s e ( b e n e fi t) ) 40.6% 22.7% 4.7% (1.7) % 15.0% (0.3) % 13.1% 12.9% 11.4% 0.1% 11.5% 11.5% 1 The company's results of continuing operations in 2026 and 2025 included costs related to programs to optimize its organization and cost structure. These restructuring and business optimization costs in 2026 included costs primarily related to its initiatives to reduce its cost structure following the sale of its former Kidney Care business and the cessation of production of certain products at one of its specialty injectables manufacturing facilities. These restructuring and business optimization costs in 2025 included costs primarily related to its initiatives to reduce its cost structure following the sale of its former Kidney Care business and costs related to the exit of a product line at one of its manufacturing facilities. 2 The companyʼs results of continuing operations in 2026 and 2025 included incremental costs to comply with the European Unionʼs medical device regulations for previously registered products, which primarily consist of contractor costs and other direct third-party costs. The company considers the adoption of these regulations to be a significant one-time regulatory change and believes that the costs of initial compliance for previously registered products over the implementation period are not indicative of its core operating results. 3 The company's results of continuing operations in 2026 included a benefit related to a revised estimate of warranty and remediation activities from field corrective actions across our infusion pump category initially recorded in 2025. The company's results of continuing operations in 2025 included charges related to estimates of warranty and remediation activities arising from field corrective actions across its infusion pump category and a revised estimate of warranty and remediation activities arising from a field corrective action on certain of its infusion pumps initially recorded in 2022. 4 The company's results of continuing operations in 2026 and 2025 included charges related to Hurricane Helene, which consisted of remediation, air freight and other costs. The company's results of discontinued operations in 2025 included charges related to Hurricane Helene, which consisted of air freight and other costs. 5 The company's results of continuing operations in 2026 and 2025 included separation-related costs primarily related to external advisors supporting its activities related to the sale of its former Kidney Care business. The company's results of discontinued operations in 2025 included separation-related costs related to external advisors supporting its activities related to the sale of its former Kidney Care business. 6 The company's results of continuing operations in 2026 included 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. 7 The company's results of continuing operations in 2026 included a net benefit related to certain legal matters. This included 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. The company's results of continuing operations in 2025 included charges related to matters involving alleged injury from environmental exposure. 8 The company's results of continuing operations in 2026 and 2025 included investment impairments which include losses from noncash impairment write-downs of investments. 9 The company's results of continuing operations in 2026 included a gain on the early extinguishment of debt. 10 The companyʼs results of continuing operations in 2025 included integration-related items comprised of Hillrom acquisition and integration expenses consisting of third-party consulting costs and the recognition of a noncash impairment of property, plant and equipment related to integration activities. 11 The company's results of discontinued operations in 2025 included a gain from the sale of its former Kidney Care business, partially offset by the final settlement of certain net working capital adjustments made in accordance with the Kidney Care EPA. 12 The company's results of continuing operations in 2026 included 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. The company's results of continuing operations in 2025 included an 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 a tax benefit primarily driven by an entity classification election that it made for U.S. tax purposes, which resulted in a capital loss. The company's results of discontinued operations in 2025 included indirect impacts of the carryback of tax benefits generated by the sale of its former Kidney Care business to prior years and an income tax benefit attributable to the allocation of reserves for uncertain tax positions to discontinued operations. For more information on the company's use of non-GAAP financial measures, please see the Non-GAAP Financial Measures section of this press release.
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BAXTER INTERNATIONAL INC. Sales by Operating Segment (unaudited) ($ in millions) 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 Manufacturing and Supply Agreement (Kidney Care MSA). Three Months Ended September 30, % Change @ Actual Rates % Change @ Organic Sales Growth Nine Months Ended September 30, % Change @ Actual Rates % Change @ Organic Sales Growth2026 2025 2026 2025 Infusion Therapies & Platforms $ 1,760$ 1,671 5% 4% $ 5,121$ 4,910 4% 2% Advanced Surgery 342 306 12% 12% 977 870 12% 11% Medical Products & Therapies 2,102 1,977 6% 6% 6,098 5,780 6% 3% Care & Connectivity Solutions 498 473 5% 5% 1,435 1,374 4% 4% Front Line Care 308 300 3% 3% 877 870 1% 0% Healthcare Systems & Technologies 806 773 4% 4% 2,312 2,244 3% 2% Other 68 85 (20)% 0% 227 246 (8)% 0% Total - Continuing Operations $ 2,976$ 2,835 5% 5% $ 8,637$ 8,270 4% 3% Organic sales growth is a non-GAAP measure. For more information on the companyʼs use of non-GAAP financial measures, please see the Non-GAAP Financial Measures section of this press release. BAXTER INTERNATIONAL INC. Segment Operating Income (unaudited) ($ in millions) Three Months Ended September 30, Nine Months Ended September 30, 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% Other 10 5 23 17 Total 588 538 1,613 1,675 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 (loss) 225 172 508 421 Interest expense, net 61 58 191 180 Other (income) expense, net (253) (7) (252) (10) Income (Loss) from continuing operations before income taxes $ 417 $ 121 $ 569 $ 251 BAXTER INTERNATIONAL INC. Operating Segment Sales by U.S. and International (unaudited) ($ in millions) Three Months Ended September 30, 2026 2025 % Growth U.S. International Total U.S. International Total U.S. International Total Infusion Therapies & Platforms $ 768$ 992 $ 1,760 $ 740$ 931 $ 1,671 4% 7% 5% Advanced Surgery 186 156 342 168 138 306 11% 13% 12% Medical Product & Therapies 954 1,148 2,102 908 1,069 1,977 5% 7% 6% Care & Connectivity Solutions 362 136 498 348 125 473 4% 9% 5% Front Line Care 239 69 308 229 71 300 4% (3)% 3% Healthcare Systems & Technologies 601 205 806 577 196 773 4% 5% 4% Other 40 28 68 59 26 85 (32)% 8% (20)% Total - Continuing Operations $ 1,595$ 1,381 $ 2,976 $ 1,544$ 1,291 $ 2,835 3% 7% 5% BAXTER INTERNATIONAL INC. Operating Segment Sales by U.S. and International (unaudited) ($ in millions) Nine Months Ended September 30, 2026 2025 % Growth U.S. International Total U.S. International Total U.S. International Total Infusion Therapies & Platforms $ 2,248$ 2,873 $ 5,121 $ 2,279$ 2,631 $ 4,910 (1)% 9% 4% Advanced Surgery 533 444 977 471 399 870 13% 11% 12% Medical Products & Therapies 2,781 3,317 6,098 2,750 3,030 5,780 1% 9% 6% Care & Connectivity Solutions 1,038 397 1,435 1,005 369 1,374 3% 8% 4% Front Line Care 663 214 877 652 218 870 2% (2)% 1% Healthcare Systems & Technologies 1,701 611 2,312 1,657 587 2,244 3% 4% 3% Other 143 84 227 163 83 246 (12)% 1% (8)% Total - Continuing Operations $ 4,625$ 4,012 $ 8,637 $ 4,570$ 3,700 $ 8,270 1% 8% 4%
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BAXTER INTERNATIONAL INC. Reconciliation of Non-GAAP Financial Measure Operating Cash Flow to Free Cash Flow (unaudited) ($ in millions) Three Months Ended September 30, 2026 Cash flows from (used in) operations - continuing operations $ 558 Cash flows from (used in) investing activities - continuing operations (110) Cash flows from (used in) financing activities (620) Cash flows from (used in) operations - continuing operations $ 558 Capital expenditures - continuing operations (110) Free cash flow - continuing operations $ 448 Nine Months Ended September 30, 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 (used in) operations - continuing operations $ 1,068 $ 355 Capital expenditures - continuing operations (363) (373) Free cash flow - continuing operations $ 705 $ (18) Free cash flow is a non-GAAP measure. For more information on the companyʼs use of non-GAAP financial measures, please see the Non-GAAP Financial Measures section of this press release. BAXTER INTERNATIONAL INC. Reconciliation of Non-GAAP Financial Measure Change in Net Sales Growth As Reported to Organic Sales Growth From the Three Months Ended September 30, 2025 to the Three Months Ended September 30, 2026 (unaudited) Net Sales Growth As Reported Kidney Care MSA FX Organic Sales Growth* Infusion Therapies & Platforms 5 % 0 %(1) % 4 % Advanced Surgery 12 % 0 % 0 % 12 % Medical Products & Therapies 6 % 0 %(0) % 6 % Care & Connectivity Solutions 5 % 0 % 0 % 5 % Front Line Care 3 % 0 % 0 % 3 % Healthcare Systems & Technologies 4 % 0 % 0 % 4 % Other (20) % 21 %(1) % 0 % Total - Continuing Operations 5 % 1 %(1) % 5 % *Totals may not add across due to rounding Organic sales growth is a non-GAAP measure. For more information on the companyʼs use of non-GAAP financial measures, please see the Non-GAAP Financial Measures section of this press release. BAXTER INTERNATIONAL INC. Reconciliation of Non-GAAP Financial Measure Change in Net Sales Growth As Reported to Organic Sales Growth From The Nine Months Ended September 30, 2025 to The Nine Months Ended September 30, 2026 (unaudited) Net Sales Growth As Reported Kidney Care MSA FX Organic Sales Growth* Infusion Therapies & Platforms 4 % 0 %(2) % 2 % Advanced Surgery 12 % 0 %(1) % 11 % Medical Products & Therapies 6 % 0 %(3) % 3 % Care & Connectivity Solutions 4 % 0 %(0) % 4 % Front Line Care 1 % 0 %(1) % 0 % Healthcare Systems & Technologies 3 % 0 %(1) % 2 % Other (8) % 10 %(2) % 0 % Total - Continuing Operations 4 % 1 %(2) % 3 % *Totals may not add across due to rounding Organic sales growth is a non-GAAP measure. For more information on the companyʼs use of non-GAAP financial measures, please see the Non-GAAP Financial Measures section of this press release. BAXTER INTERNATIONAL INC. Reconciliation of Non-GAAP Financial Measures Projected Full Year 2026 U.S. GAAP Sales Growth to Projected Organic Sales Growth and Projected Full Year 2026 Adjusted Earnings Per Share (unaudited) Sales Growth Guidance FY 2026* Sales growth - U.S. GAAP 4% - 5% Kidney Care MSA ~30 bps Foreign Exchange (~100 bps) Organic sales growth 3% - 4% Adjusted Earnings Per Share Guidance FY 2026 Adjusted diluted EPS $2.05 - $2.15 *Totals may not foot due to rounding Baxter calculates forward-looking non-GAAP financial measures based on forecasts that omit certain amounts that would be included in GAAP financial measures. For instance, forward-looking organic sales growth represents the companyʼs targeted future sales growth excluding the impact of the Kidney Care MSA not reflected in reportable segments, impacts associated with business acquisitions or divestitures, and is calculated on a constant currency basis, as if foreign currency exchange rates had remained constant between the prior and current periods. Additionally, forward-looking adjusted diluted EPS guidance excludes potential charges or gains that would be reflected as non-GAAP adjustments to earnings. Baxter provides forward-looking organic sales growth guidance and adjusted diluted EPS guidance because it believes that these measures provide useful information for the reasons noted above. Baxter has not provided reconciliations of forward-looking adjusted EPS guidance to forward-looking GAAP EPS guidance because the company is unable to predict with reasonable certainty the impact of legal proceedings, future business optimization actions, separation-related costs, business transformation-related costs, asset impairments and unusual gains and losses, 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. Media Contact Andrea Johnson, (224) 948-5353 media@baxter.com
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Investor Contact Kevin Moran, (224) 948-3085 global_corp_investor_relations@baxter.com Source: Baxter International Inc.