10-Q

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 June 30, 2023

☐ 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

_________________________________________________________________________________

BAXTER INTERNATIONAL INC.

(Exact name of registrant as specified in its charter)

_________________________________________________________________________________

Delaware			36-0781620
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
One Baxter Parkway,	Deerfield,	Illinois	60015
(Address of Principal Executive Offices)			(Zip Code)

224.	948.2000
(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
Common Stock, $1.00 par value	BAX (NYSE)	New York Stock Exchange
		Chicago Stock Exchange
0.4% Global Notes due 2024	BAX 24	New York Stock Exchange
1.3% Global Notes due 2025	BAX 25	New York Stock Exchange
1.3% Global Notes due 2029	BAX 29	New York Stock Exchange

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.

Large accelerated filer	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 July 20, 2023 was 506,404,827 shares.

BAXTER INTERNATIONAL INC.

FORM 10-Q

For the quarterly period ended June 30, 2023

TABLE OF CONTENTS

		Page Number
PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Income (Loss)	3
	Condensed Consolidated Statements of Comprehensive Loss	4
	Condensed Consolidated Statements of Changes in Equity	5
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	47
Item 4.	Controls and Procedures	48
PART II.	OTHER INFORMATION	49
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 5.	Other Information	49
Item 6.	Exhibits	50
Signature		51

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

Baxter International Inc.

Condensed Consolidated Balance Sheets (unaudited)

(in millions, except share information)

	June 30, 2023		December 31, 2022
Current assets:
Cash and cash equivalents	$	1,722	$	1,718
Accounts receivable, net of allowances of $128 in 2023 and $114 in 2022	2,495		2,571
Inventories	2,897		2,679
Prepaid expenses and other current assets	858		857
Current assets of discontinued operations	233		186
Total current assets	8,205		8,011
Property, plant and equipment, net	4,494		4,695
Goodwill	6,418		6,452
Other intangible assets, net	6,470		6,793
Operating lease right-of-use assets	533		541
Other non-current assets	1,067		1,109
Non-current assets of discontinued operations	698		686
Total assets	$	27,885	$	28,287
Current liabilities:
Short-term debt	$	249	$	299
Current maturities of long-term debt and finance lease obligations	1,928		1,105
Accounts payable	1,240		1,110
Accrued expenses and other current liabilities	2,278		2,170
Current liabilities of discontinued operations	70		61
Total current liabilities	5,765		4,745
Long-term debt and finance lease obligations, less current portion	14,306		15,232
Operating lease liabilities	438		447
Other non-current liabilities	1,622		1,848
Non-current liabilities of discontinued operations	123		120
Total liabilities	22,254		22,392
Commitments and contingencies
Equity:
Common stock, $1 par value, authorized 2,000,000,000 shares, issued 683,494,944 shares in 2023 and 2022	683		683
Common stock in treasury, at cost, 177,125,182 shares in 2023 and 179,062,594 shares in 2022	(11,296)		(11,389)
Additional contributed capital	6,341		6,322
Retained earnings	13,655		14,050
Accumulated other comprehensive income (loss)	(3,814)		(3,833)
Total Baxter stockholders’ equity	5,569		5,833
Noncontrolling interests	62		62
Total equity	5,631		5,895
Total liabilities and equity	$	27,885	$	28,287

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)

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Net sales	$	3,707	$	3,594	$	7,220	$	7,152
Cost of sales	2,596		2,223		4,834		4,519
Gross margin	1,111		1,371		2,386		2,633
Selling, general and administrative expenses	964		970		1,959		2,017
Research and development expenses	165		148		329		297
Other operating income, net	(1)		(11)		(14)		(28)
Operating income (loss)	(17)		264		112		347
Interest expense, net	124		89		241		174
Other (income) expense, net	42		(44)		40		(60)
Income (loss) from continuing operations before income taxes	(183)		219		(169)		233
Income tax expense	10		34		24		40
Income (loss) from continuing operations	(193)		185		(193)		193
Income from discontinued operations, net of tax	54		70		99		135
Net income (loss)	(139)		255		(94)		328
Net income attributable to noncontrolling interests	2		3		3		5
Net income (loss) attributable to Baxter stockholders	$	(141)	$	252	$	(97)	$	323
Income (loss) from continuing operations per common share
Basic	$	(0.39)	$	0.36	$	(0.39)	$	0.37
Diluted	$	(0.39)	$	0.36	$	(0.39)	$	0.37
Income from discontinued operations per common share
Basic	$	0.11	$	0.14	$	0.20	$	0.27
Diluted	$	0.11	$	0.14	$	0.20	$	0.27
Net income (loss) per common share
Basic	$	(0.28)	$	0.50	$	(0.19)	$	0.64
Diluted	$	(0.28)	$	0.50	$	(0.19)	$	0.64
Weighted-average number of shares outstanding
Basic	506		504		506		503
Diluted	506		508		506		508

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Baxter International Inc.

Condensed Consolidated Statements of Comprehensive Loss (unaudited)

(in millions)

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Income (loss) from continuing operations	$	(193)	$	185	$	(193)	$	193
Other comprehensive income (loss) from continuing operations, net of tax:
Currency translation adjustments, net of tax expense (benefit) of $4 and $2 for the three months ended June 30, 2023 and 2022, respectively, and ($9) and ($9) for the six months ended June 30, 2023 and 2022, respectively.	(76)		(372)		5		(376)
Pension and other postretirement benefits, net of tax expense (benefit) of ($2) and $5 for the three months ended June 30, 2023 and 2022, respectively, and ($3) and $8 the six months ended June 30, 2023 and 2022, respectively.	(5)		23		(11)		32
Hedging activities, net of tax expense (benefit) of $2 for the three months ended June 30, 2023 and 2022, respectively, and $1 and $3 for the six months ended June 30, 2023 and 2022, respectively.	7		13		5		11
Available-for-sale debt securities, net of tax expense of zero for the three months ended June 30, 2023 and 2022 and zero and $1 for the six months ended June 30, 2023 and 2022, respectively.	—		1		—		2
Total other comprehensive loss from continuing operations, net of tax	(74)		(335)		(1)		(331)
Comprehensive loss from continuing operations	(267)		(150)		(194)		(138)
Income from discontinued operations, net of tax	54		70		99		135
Other comprehensive income (loss) from discontinued operations, net of tax - currency translation adjustments	(1)		(45)		20		(56)
Comprehensive loss	(214)		(125)		(75)		(59)
Less: Comprehensive income attributable to noncontrolling interests	2		3		3		5
Comprehensive loss attributable to Baxter stockholders	$	(216)	$	(128)	$	(78)	$	(64)

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 June 30, 2023
	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 April 1, 2023	683	$	683	178	$	(11,324)	$	6,312	$	13,947	$	(3,739)	$	5,879	$	62	$	5,941
Net income (loss)	—	—		—	—		—		(141)		—		(141)		2		(139)
Other comprehensive income (loss)	—	—		—	—		—		—		(75)		(75)		—		(75)
Stock issued under employee benefit plans and other	—	—		(1)	28		29		—		—		57		—		57
Dividends declared on common stock	—	—		—	—		—		(151)		—		(151)		—		(151)
Change in noncontrolling interests	—	—		—	—		—		—		—		—		(2)		(2)
Balance as of June 30, 2023	683	$	683	177	$	(11,296)	$	6,341	$	13,655	$	(3,814)	$	5,569	$	62	$	5,631

	For the six months ended June 30, 2023
	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, 2023	683	$	683	179	$	(11,389)	$	6,322	$	14,050	$	(3,833)	$	5,833	$	62	$	5,895
Net income (loss)	—	—		—	—		—		(97)		—		(97)		3		(94)
Other comprehensive income (loss)	—	—		—	—		—		—		19		19		—		19
Stock issued under employee benefit plans and other	—	—		(2)	93		19		—		—		112		—		112
Dividends declared on common stock	—	—		—	—		—		(298)		—		(298)		—		(298)
Change in noncontrolling interests	—	—		—	—		—		—		—		—		(3)		(3)
Balance as of June 30, 2023	683	$	683	177	$	(11,296)	$	6,341	$	13,655	$	(3,814)	$	5,569	$	62	$	5,631

5

	For the three months ended June 30, 2022
	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 April 1, 2022	683	$	683	180	$	(11,422)	$	6,207	$	16,994	$	(3,387)	$	9,075	$	44	$	9,119
Net income (loss)	—	—		—	—		—		252		—		252		3		255
Other comprehensive income (loss)	—	—		—	—		—		—		(380)		(380)		—		(380)
Purchases of treasury stock	—	—		—	(8)		—		—		—		(8)		—		(8)
Stock issued under employee benefit plans and other	—	—		—	21		46		—		—		67		—		67
Dividends declared on common stock	—	—		—	—		—		(147)		—		(147)		—		(147)
Change in noncontrolling interests	—	—		—	—		—		—		—		—		(3)		(3)
Balance as of June 30, 2022	683	$	683	180	$	(11,409)	$	6,253	$	17,099	$	(3,767)	$	8,859	$	44	$	8,903

	For the six months ended June 30, 2022
	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, 2022	683	$	683	182	$	(11,488)	$	6,197	$	17,065	$	(3,380)	$	9,077	$	44	$	9,121
Net income (loss)	—	—		—	—		—		323		—		323		5		328
Other comprehensive income (loss)	—	—		—	—		—		—		(387)		(387)		—		(387)
Purchases of treasury stock	—	—		—	(8)		—		—		—		(8)		—		(8)
Stock issued under employee benefit plans and other	—	—		(2)	87		56		—		—		143		—		143
Dividends declared on common stock	—	—		—	—		—		(289)		—		(289)		—		(289)
Change in noncontrolling interests	—	—		—	—		—		—		—		—		(5)		(5)
Balance as of June 30, 2022	683	$	683	180	$	(11,409)	$	6,253	$	17,099	$	(3,767)	$	8,859	$	44	$	8,903

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Baxter International Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(in millions)

	Six months ended June 30,
	2023		2022
Cash flows from operations
Net income (loss)	$	(94)	$	328
Less: Income from discontinued operations, net of tax	99		135
Income (loss) from continuing operations	(193)		193
Adjustments to reconcile net income to cash flows from operations:
Depreciation and amortization	628		723
Deferred income taxes	(156)		(109)
Stock compensation	62		77
Net periodic pension and other postretirement costs	(8)		28
Property, plant and equipment impairments	271		7
Other	31		(48)
Changes in balance sheet items:
Accounts receivable, net	102		55
Inventories	(209)		(296)
Prepaid expenses and other current assets	(39)		(58)
Accounts payable	157		86
Accrued expenses and other current liabilities	160		(204)
Other	(26)		(85)
Cash flows from operations - continuing operations	780		369
Cash flows from operations - discontinued operations	50		113
Cash flows from operations	830		482
Cash flows from investing activities
Capital expenditures	(328)		(277)
Acquisitions, net of cash acquired, and investments	(3)		(190)
Other investing activities, net	5		10
Cash flows from investing activities - continuing operations	(326)		(457)
Cash flows from investing activities - discontinued operations	(17)		(34)
Cash flows from investing activities	(343)		(491)
Cash flows from financing activities
Repayments of debt	(142)		(749)
Net decreases in debt with original maturities of three months or less	(51)		(45)
Cash dividends on common stock	(292)		(281)
Proceeds from stock issued under employee benefit plans	54		88
Other financing activities, net	(61)		(30)
Cash flows from financing activities	(492)		(1,017)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	9		(74)
Decrease in cash, cash equivalents and restricted cash	4		(1,100)
Cash, cash equivalents and restricted cash at beginning of period (1)	1,722		2,956
Cash, cash equivalents and restricted cash at end of period (1)	$	1,726	$	1,856

(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 June 30, 2023, December 31, 2022, and June 30, 2022 (in millions):

	June 30, 2023		December 31, 2022		June 30, 2022
Cash and cash equivalents	$	1,722	$	1,718	$	1,852
Restricted cash included in prepaid expenses and other current assets	4		4		4
Cash, cash equivalents and restricted cash	$	1,726	$	1,722	$	1,856

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

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 Securities and Exchange Commission (SEC) for interim financial reporting. Accordingly, certain information and footnote 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, 2022 (2022 Annual Report).

In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation 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 results of operations for the current interim period are not necessarily indicative of the results of operations to be expected for the full year.

In January 2023, we announced our intention to separate our Renal Care and Acute Therapies product categories into a new, publicly traded company. While the completion of the proposed spinoff is subject to satisfaction of customary conditions, we are targeting completion of the planned separation by July 2024 or earlier. Additionally, we announced that we are pursuing strategic alternatives for our BioPharma Solutions (BPS) product category. In May 2023, we entered into a definitive agreement to sell that business. Closing of that transaction is subject to satisfaction of regulatory approvals and other customary conditions. See Note 2 for additional information.

Risks and Uncertainties

Supply Constraints and Global Economic Conditions

We have experienced significant challenges to our global supply chain in recent periods, including production delays and interruptions, increased costs and shortages of raw materials and component parts (including resins and electromechanical devices) and higher transportation costs, resulting from the pandemic and other exogenous factors including significant weather events, elevated inflation levels, increased interest rates, disruptions to certain ports of call around the world, the war in Ukraine and other geopolitical events. We expect to experience some of these and other challenges related to our supply chain in future periods. These challenges, including the unavailability of certain raw materials and component parts, have also had a negative impact on our sales for certain product categories due to our inability to fully satisfy demand. While we have begun to see improvements in the availability of certain component parts and improved pricing in certain raw materials, these challenges have not completely subsided and may continue to have a negative impact on our sales in the future.

We expect that the challenges caused by global economic conditions, among other factors, may continue to have an adverse effect on our business.

2. DISCONTINUED OPERATIONS

In May 2023, we entered into a definitive agreement to sell our BPS business. That business, which has historically been reported within our Americas segment, provides contract manufacturing and development services, which include sterile fill-finish manufacturing and support services across clinical and commercial applications, primarily serving customers in the pharmaceutical industry. BPS has historically operated through our wholly-owned subsidiaries Baxter Pharmaceutical Solutions, LLC, a Delaware limited liability company, and Baxter Oncology GmbH, a German limited liability company. Under the related equity purchase agreement (EPA), we expect to sell those entities to Advent International and Warburg Pincus for $4.25 billion in cash, subject to certain adjustments specified in the EPA. After giving effect to those adjustments, we currently expect to receive approximately $3.92 billion of net pre-tax cash proceeds (approximately $3.40 billion after tax). The transaction is currently expected to close during the second half of 2023, subject to satisfaction of regulatory approvals and other customary conditions. We intend to use the net after-tax proceeds from this transaction to repay certain of our debt obligations.

We concluded that our BPS business met the criteria to be classified as held-for-sale in May 2023. A component of an entity is reported in discontinued operations after meeting the criteria for held-for-sale classification if the disposition

8

represents a strategic shift that has (or will have) a major effect on the entity's operations and financial results. We analyzed the quantitative and qualitative factors relevant to the pending divestiture of our BPS business, including its significance to our overall net income (loss) and earnings (loss) per share, and determined that those conditions for discontinued operations presentation have been met. As such, the financial position, results of operations and cash flows of that business are reported as discontinued operations in the accompanying consolidated financial statements. Prior period amounts have been adjusted to reflect discontinued operations presentation.

Baxter Pharmaceutical Solutions, LLC includes our BPS manufacturing facility in Bloomington Indiana and Baxter Oncology GmbH includes our manufacturing facilities in Halle and Bielefeld Germany. The Bielefeld site is not part of the BPS business, so it is not part of the pending divestiture transaction and its activities and net assets will be transferred to another Baxter subsidiary prior to closing. Accordingly, amounts related to the Bielefeld site continue to be presented as continuing operations in the accompanying condensed consolidated financial statements.

At closing of the transaction, Baxter will enter into a Transition Services Agreement (TSA) and a Master Commercial Manufacturing and Supply Agreement (MSA) with Baxter Pharmaceutical Solutions, LLC and Baxter Oncology GmbH. Pursuant to the TSA, Baxter on the one hand and Baxter Pharmaceutical Solutions, LLC and Baxter Oncology GmbH on the other hand will provide to each other, on an interim basis, specific transition services for up to 24 months post-closing to help ensure business continuity and minimized disruptions. Services to be provided by Baxter under the TSA include finance, information technology, human resources, integrated supply chain and certain other administrative services. Pursuant to the MSA, Baxter Pharmaceutical Solutions, LLC and Baxter Oncology GmbH will provide development, manufacturing, regulatory and other related services for certain Baxter pharmaceutical products for up to 5 years post-closing (with certain extension rights as provided therein).

Results of Discontinued Operations and Assets and Liabilities of Discontinued Operations

The following table summarizes the major classes of line items included in income from discontinued operations, net of tax, for the three and six months ended June 30, 2023 and 2022:

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Net sales	$	142	$	152	$	278	$	301
Cost of sales	71		70		135		133
Gross margin	71		82		143		168
Selling, general and administrative expenses	14		6		29		11
Research and development expenses	1		—		1		1
Other income, net	(1)		—		—		—
Income from discontinued operations before income taxes	57		76		113		156
Income tax expense	3		6		14		21
Income from discontinued operations, net of tax	$	54	$	70	$	99	$	135

For the three and six months ended June 30, 2023, selling, general and administrative expenses include $8 million and $15 million, respectively, of separation-related costs incurred in connection with the pending sale of BPS.

9

The following table summarizes the carrying amounts of the major classes of assets and liabilities classified as discontinued operations in the condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022:

(in millions)	June 30, 2023		December 31, 2022
Accounts receivable, net of allowances	$	82	$	88
Inventories	60		39
Prepaid expenses and other current assets	91		59
Property, plant and equipment, net	297		284
Goodwill	386		391
Operating lease right-of-use assets	9		9
Other non-current assets	6		2
Assets of discontinued operations	$	931	$	872
Accounts payable	$	40	$	29
Accrued expenses and other current liabilities	30		32
Operating lease liabilities	8		9
Other non-current liabilities	115		111
Liabilities of discontinued operations	$	193	$	181

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 six months ended June 30, 2023 and 2022.

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Balance at beginning of period	$	122	$	129	$	114	$	122
Charged to costs and expenses	9		3		16		9
Write-offs	(5)		(1)		(6)		(2)
Currency translation adjustments	2		(6)		4		(4)
Balance at end of period	$	128	$	125	$	128	$	125

Inventories

(in millions)	June 30, 2023		December 31, 2022
Raw materials	$	742	$	698
Work in process	316		294
Finished goods	1,839		1,687
Inventories	$	2,897	$	2,679

Property, Plant and Equipment, Net

(in millions)	June 30, 2023		December 31, 2022
Property, plant and equipment, at cost	$	11,028	$	10,780
Accumulated depreciation	(6,534)		(6,085)
Property, plant and equipment, net	$	4,494	$	4,695

10

Impairment of Manufacturing Facility

Our manufacturing facility in Opelika, Alabama is one of three Baxter manufacturing facilities that currently produce dialyzers used in hemodialysis (HD) treatments. The current competitive environment has increased the global supply of those products and, in connection with our initiatives to streamline our manufacturing footprint and improve our profitability, we have made the decision to cease production of dialyzers at the Opelika facility near the end of 2023. We believe that there is more than adequate availability of dialyzers in the United States and globally, and we intend to continue to manufacture those products at volumes aligned with the related market demand at our other manufacturing facilities that currently produce them.

We review the carrying amounts of long-lived assets used in operations, other than goodwill and intangible assets not subject to amortization, for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In evaluating recoverability, we group assets and liabilities at the lowest level such that the identified cash flows relating to the group are largely independent of other assets and liabilities. We then compare the carrying amounts of the assets (or asset groups) with the related estimated undiscounted future cash flows. In the event an asset (or asset group) is not recoverable, an impairment charge is recorded as the amount by which its carrying amount exceeds its fair value.

As a result of our decision to cease dialyzer production at this manufacturing facility, we performed a trigger-based recoverability assessment of its long-lived assets, which consist of a building and manufacturing equipment, including specialized equipment used in the production of dialyzers. The carrying amount of that asset group exceeded the estimated undiscounted cash flows expected to be generated, and we recognized an impairment charge of $243 million, classified within cost of sales in the accompanying condensed consolidated statements of income (loss), during the second quarter of 2023 to reduce the carrying amounts to their estimated fair values.

The fair values of the building and manufacturing equipment tested for impairment during the second quarter of 2023 were determined based on transaction prices of comparable assets (a market approach). Significant assumptions used in the determination of the fair values included the identification of representative comparable assets. Our long-lived asset fair value measurements are classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs.

Interest Expense, Net

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Interest expense, net of capitalized interest	$	132	$	93	$	259	$	181
Interest income	(8)		(4)		(18)		(7)
Interest expense, net	$	124	$	89	$	241	$	174

Other (Income) Expense, Net

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Foreign exchange (gains) losses, net	$	22	$	(15)	$	36	$	(26)
Pension and other postretirement benefit plans	(11)		(7)		(21)		(12)
Pension curtailment	—		(11)		—		(11)
Change in fair value of marketable equity securities	11		(8)		6		(8)
Non-marketable investment impairments	23		—		23		—
Other, net	(3)		(3)		(4)		(3)
Other (income) expense, net	$	42	$	(44)	$	40	$	(60)

Non-Cash Operating and Investing Activities

Right-of-use operating lease assets obtained in exchange for lease obligations for the six months ended June 30, 2023 and 2022 were $45 million and $23 million, respectively.

11

Purchases of property, plant and equipment included in accounts payable as of June 30, 2023 and 2022 were $57 million and $62 million, respectively.

Unsettled share repurchases included in accrued expenses and other current liabilities as of June 30, 2022 were $8 million

4. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

The following is a reconciliation of goodwill by business segment.

(in millions)	Americas		EMEA		APAC		Hillrom		Total
Balance as of December 31, 2022	$	1,965	$	289	$	210	$	3,988	$	6,452
Currency translation and other	(22)		(3)		(2)		(7)		(34)
Balance as of June 30, 2023	$	1,943	$	286	$	208	$	3,981	$	6,418

For the periods ended June 30, 2023 and 2022, there were no reductions in goodwill relating to impairment losses.

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		Other amortized intangible assets		Trade names		In process Research and Development		Total
June 30, 2023
Gross other intangible assets	$	3,444	$	3,863	$	320	$	1,570	$	163	$	9,360
Accumulated amortization	(574)		(2,069)		(247)		—		—		(2,890)
Other intangible assets, net	$	2,870	$	1,794	$	73	$	1,570	$	163	$	6,470
December 31, 2022
Gross other intangible assets	$	3,442	$	3,836	$	325	$	1,571	$	202	$	9,376
Accumulated amortization	(460)		(1,888)		(235)		—		—		(2,583)
Other intangible assets, net	$	2,982	$	1,948	$	90	$	1,571	$	202	$	6,793

Intangible asset amortization expense was $157 million and $193 million for the three months ended June 30, 2023 and 2022, respectively, and $319 million and $410 million for the six months ended June 30, 2023 and 2022, respectively.

5. FINANCING ARRANGEMENTS

Credit Facilities

In the first quarter of 2023, we amended the credit agreements governing our U.S. dollar-denominated term loan credit facility and revolving credit facility and the guaranty agreement with respect to our Euro-denominated revolving credit facility, in each case to amend the net leverage ratio covenant to increase the maximum net leverage ratio for the four fiscal quarters ending March 31, 2023, June 30, 2023, September 30, 2023 and December 31, 2023.

Our U.S. dollar-denominated revolving credit facility has a capacity of $2.50 billion and our Euro-denominated revolving credit facility has a capacity of €200 million. Each of the facilities matures in 2026. There were no borrowings outstanding under these credit facilities as of June 30, 2023 or December 31, 2022. Our commercial paper borrowing arrangements require us to maintain undrawn borrowing capacity under our credit facilities for an amount at least equal to our outstanding commercial paper borrowings. Based on our covenant calculations as of June 30, 2023 we have capacity to draw approximately $2.63 billion under our credit facilities, less commercial paper borrowings which were $249 million as of June 30, 2023.

12

In the second quarter of 2023, we repaid $140 million of our $2.00 billion three-year term loan facility. The loss from early extinguishment of this debt was not significant.

Commercial Paper

As of June 30, 2023, we had $249 million of commercial paper outstanding with a weighted-average interest rate of 5.52% and an original weighted-average term of 38 days. As of December 31, 2022, we had $299 million of commercial paper outstanding with a weighted-average interest rate of 4.75% and an original weighted-average term of 32 days.

6. COMMITMENTS AND CONTINGENCIES

We are involved in product liability, patent, commercial, 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, 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. As of June 30, 2023 and December 31, 2022, our total recorded reserves with respect to legal and environmental matters were $28 million.

We have established reserves for certain of the matters discussed below. We are not able to estimate the amount or range of any loss for certain contingencies for which there is no reserve or additional loss for matters already reserved. While our liability in connection with these claims cannot be estimated and the resolution thereof in any reporting period could have a significant impact on our results of operations and cash flows for that period, the outcome of these legal proceedings is not expected to have a material adverse effect on our consolidated financial position. 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 and regulatory matters, these actions may lead to product recalls, injunctions, and other restrictions on our operations and monetary sanctions, including significant civil or criminal penalties. 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.

Environmental

We are involved as a potentially responsible party (PRP) for environmental clean-up costs at six 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 an ongoing environmental remediations associated with historic operations at certain of our facilities. As of June 30, 2023 and December 31, 2022, our environmental reserves, which are measured on an undiscounted basis, were $17 million and $19 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

In August 2019, we were named in an amended complaint filed by Fayette County, Georgia in the MDL In re: National Prescription Opiate Litigation pending in the U.S. District Court, Northern District of Ohio. The complaint alleges that multiple manufacturers and distributors of opiate products improperly marketed and diverted these products, which caused harm to Fayette County. The complaint is limited in its allegations as to Baxter and does not distinguish between injectable opiate products and orally administered opiates. We manufactured generic injectable opiate products in our facility in Cherry Hill, NJ, which we divested in 2011. On July 17, 2023, we were voluntarily dismissed from the litigation without prejudice.

In March 2020, two lawsuits were filed against us in the Northern District of Illinois by 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 sought damages, including compensatory and punitive damages in an unspecified amount, and unspecified injunctive and declaratory relief. The parties reached agreement to settle these lawsuits in the third quarter of 2021 for amounts that were not material to our financial results, which were paid in the fourth

13

quarter of 2021. We have since resolved, without litigation, additional claims of injuries from exposure to ethylene oxide at Mountain Home for amounts within accruals previously established as of December 31, 2021. On October 20, 2022, a lawsuit was filed against us in the Western District of Arkansas alleging injury as a result of exposure to ethylene oxide at Mountain Home. On December 16, 2022, we filed a motion to dismiss and for a more definite statement. In response, Plaintiffs filed a First Amended Complaint on January 6, 2023. We answered the First Amended Complaint on January 27, 2023.

We acquired Hill-Rom Holdings, Inc. (Hillrom) on December 13, 2021. In July 2021, Hill-Rom, Inc., a wholly-owned subsidiary of Hillrom, received a subpoena from the United States Office of Inspector General for the Department of Health and Human Services (the DHHS) requesting documents and information related to compliance with the False Claims Act and the Anti-Kickback Statute. Hillrom has been working with the DHHS and the Department of Justice (DOJ) to provide information responsive to the subpoena. Hillrom also voluntarily began a related internal review and Hillrom and now Baxter have been cooperating fully with the DHHS and the DOJ with respect to these matters. In October 2022, the DOJ issued a separate Civil Investigative Demand (CID) addressed to Hillrom, requesting documents and information related to compliance with the False Claims Act and the Anti-Kickback Statute. Baxter is cooperating fully with the DOJ in responding to the CID. The DHHS and DOJ often issue these types of requests when investigating alleged violations of the False Claims Act.

On December 28, 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, captioned Linet Americas, Inc. v. Hill-Rom Holdings, Inc.; Hill-Rom Company, Inc.; Hill-Rom Services, Inc. Linet alleges that Hillrom violated Sections 1, 2 and 3 of The Sherman Antitrust Act of 1890 and the Illinois Antitrust Act by allegedly engaging in anti-competitive conduct in alleged markets for standard, ICU and birthing beds. Hillrom filed an answer to the complaint on January 28, 2022 and filed a motion challenging certain aspects of plaintiff's case on May 27, 2022.

In July 2023, we and certain of our officers were named in a class action complaint captioned Grover J. Kelley et al. v. Baxter International Inc. et al. that was filed in the United States District Court for the Northern District of Illinois. The plaintiff, who allegedly purchased securities during the specified class period, filed this putative class action on behalf of himself and shareholders who acquired Baxter securities on the public market between May 25, 2022, and February 8, 2023. The plaintiff alleges that we and certain officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements and failing to disclose material facts relating to supply chain and financial guidance.

7. STOCKHOLDERS’ EQUITY

Cash Dividends

Cash dividends declared per share for the three and six months ended June 30, 2023 were $0.29 and $0.58, respectively. Cash dividends declared per share for the three and six months ended June 30, 2022 were $0.29 and $0.57, respectively.

Stock Repurchase Programs

In July 2012, our Board of Directors authorized the repurchase of up to $2.00 billion of our common stock. Our Board of Directors increased this authority by an additional $1.50 billion in each of November 2016 and February 2018, by an additional $2.00 billion in November 2018 and by an additional $1.50 billion in October 2020. During the first half of 2023 we did not repurchase any shares under this authority. During the second quarter of 2022 we repurchased 0.1 million shares under this authority pursuant to Rule 10b5-1 plans. We had $1.30 billion remaining available under the authorization as of June 30, 2023.

8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Comprehensive income includes all changes in stockholders’ equity that do not arise from transactions with stockholders, and consists of net income (loss), cumulative translation adjustments (CTA), certain gains and losses from pension and other postretirement employee benefit (OPEB) plans, gains and losses on cash flow hedges and unrealized gains and losses on available-for-sale debt securities.

14

The following table is a net-of-tax summary of the changes in accumulated other comprehensive income (loss) (AOCI) by component for the six months ended June 30, 2023 and 2022.

	Gains (losses)
(in millions)	CTA		Pension and OPEB plans		Hedging activities		Available-for-sale debt securities		Total
Balance as of December 31, 2022	$	(3,386)	$	(331)	$	(119)	$	3	$	(3,833)
Other comprehensive income (loss) before reclassifications	25		(4)		8		—		29
Amounts reclassified from AOCI (a)	—		(7)		(3)		—		(10)
Net other comprehensive income (loss) from continuing operations	25		(11)		5		—		19
Balance as of June 30, 2023	$	(3,361)	$	(342)	$	(114)	$	3	$	(3,814)

	Gains (losses)
(in millions)	CTA		Pension and OPEB plans		Hedging activities		Available-for-sale debt securities		Total
Balance as of December 31, 2021	$	(2,907)	$	(347)	$	(126)	$	—	$	(3,380)
Other comprehensive income (loss) before reclassifications	(432)		19		13		2		(398)
Amounts reclassified from AOCI (a)	—		13		(2)		—		11
Net other comprehensive income (loss) from continuing operations	(432)		32		11		2		(387)
Balance as of June 30, 2022	$	(3,339)	$	(315)	$	(115)	$	2	$	(3,767)

(a)    See table below for details about these reclassifications.

The following is a summary of the amounts reclassified from AOCI to net income during the three and six months ended June 30, 2023 and 2022.

	Amounts reclassified from AOCI (a)
(in millions)	Three months ended June 30, 2023		Six months ended June 30, 2023		Location of impact in income statement
Pension and OPEB items
Amortization of net losses and prior service costs or credits	$	5	$	10	Other (income) expense, net
Less: Tax effect	(1)		(3)		Income tax expense
	$	4	$	7	Net of tax
Gains (losses) on hedging activities
Foreign exchange contracts	$	3	$	7	Cost of sales
Interest rate contracts	(2)		(3)		Interest expense, net
	1		4		Total before tax
Less: Tax effect	—		(1)		Income tax expense
	$	1	$	3	Net of tax
Total reclassifications for the period	$	5	$	10	Total net of tax

(a)    Amounts in parentheses indicate reductions to net income

15

	Amounts reclassified from AOCI (a)
(in millions)	Three months ended June 30, 2022		Six months ended June 30, 2022		Location of impact in income statement
Amortization of pension and OPEB items
Amortization of net losses and prior service costs or credits	$	(8)	$	(17)	Other (income) expense, net
Less: Tax effect	2		4		Income tax expense
	$	(6)	$	(13)	Net of tax
Gains on hedging activities
Foreign exchange contracts	$	3	$	5	Cost of sales
Interest rate contracts	(2)		(3)		Interest expense, net
	1		2		Total before tax
Less: Tax effect	—		—		Income tax expense
	$	1	$	2	Net of tax
Total reclassifications for the period	$	(5)	$	(11)	Total net of tax

Refer to Note 11 for additional information regarding the amortization of pension and OPEB items and Note 14 for additional information regarding hedging activity.

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 30-90 days.

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. Our three legacy Baxter segments include acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products. Our legacy Hillrom segment includes smart bed systems; patient monitoring and diagnostic technologies; respiratory health devices; and advanced equipment for the surgical space. For most of those sales, 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.

To a lesser extent, we enter into arrangements for which revenue may be recognized over time. For example, our Americas segment includes contract manufacturing arrangements, our Hillrom segment includes digital and connected care solutions and collaboration tools that are implemented over time and all of our segments include equipment leases and certain subscription software and licensing arrangements. 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. 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 June 30, 2023, we had $7.99 billion of transaction price allocated to remaining performance obligations related to executed contracts with an original duration of more than one year, which are primarily included in the Americas 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 20% of this amount as revenue over the remainder of 2023, 40% in 2024, 20% in 2025, 10% in 2026 and 10% thereafter.

Significant Judgments

Revenues from product sales are recorded at the net sales price, which includes estimates of variable consideration primarily related to rebates and wholesaler chargebacks. These reserves are based on estimates of the amounts

16

earned or to be claimed on the related sales and are included in accrued expenses and other current liabilities and 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 six months ended June 30, 2023 and 2022 related to performance obligations satisfied in prior periods was not material. Additionally, our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately and determining the allocation of the transaction price may require significant judgement.

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 $2.27 billion and $2.34 billion as of June 30, 2023 and December 31, 2022, 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 one 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 one to seven years.

The following table summarizes our contract assets:

(in millions)	June 30, 2023		December 31, 2022
Contract manufacturing services	$	4	$	10
Software sales	43		43
Bundled equipment and consumable medical products contracts	116		121
Contract assets	$	163	$	174

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.

17

The following table summarizes contract liability activity for the six months ended June 30, 2023 and 2022. The contract liability balance represents the transaction price allocated to the remaining performance obligations.

	Six Months Ended June 30,
(in millions)	2023		2022
Balance at beginning of period	$	194	$	196
New revenue deferrals	271		282
Revenue recognized upon satisfaction of performance obligations	(267)		(289)
Currency translation	1		(5)
Balance at end of period	$	199	$	184

For the six months ended June 30, 2023 and 2022, $64 million and $77 million of revenue was recognized that was included in contract liabilities as of December 31, 2022 and 2021, respectively.

The following table summarizes the classification of contract assets and contract liabilities as reported in the condensed consolidated balance sheets:

(in millions)	June 30, 2023		December 31, 2022
Prepaid expenses and other current assets	$	49	$	52
Other non-current assets	114		122
Contract assets	$	163	$	174
Accrued expenses and other current liabilities	$	158	$	154
Other non-current liabilities	41		40
Contract liabilities	$	199	$	194

Disaggregation of Net Sales

The following tables disaggregate our net sales from contracts with customers by product category between the U.S. and international:

	Three Months Ended June 30,
	2023						2022
(in millions)	U.S.		International		Total		U.S.		International		Total
Renal Care 1	$	234	$	702	$	936	$	225	$	706	$	931
Medication Delivery 2	487		274		761		459		251		710
Pharmaceuticals 3	182		368		550		164		364		528
Clinical Nutrition 4	83		160		243		90		140		230
Advanced Surgery 5	150		122		272		151		112		263
Acute Therapies 6	60		120		180		58		115		173
Patient Support Systems 7	276		83		359		284		80		364
Front Line Care 8	227		80		307		202		80		282
Global Surgical Solutions 9	35		42		77		36		33		69
Other 10	17		5		22		31		13		44
Total Baxter	$	1,751	$	1,956	$	3,707	$	1,700	$	1,894	$	3,594

18

	Six Months Ended June 30,
	2023						2022
(in millions)	U.S.		International		Total		U.S.		International		Total
Renal Care 1	$	466	$	1,362	$	1,828	$	450	$	1,375	$	1,825
Medication Delivery 2	923		525		1,448		931		485		1,416
Pharmaceuticals 3	355		719		1,074		321		728		1,049
Clinical Nutrition 4	161		306		467		174		283		457
Advanced Surgery 5	294		224		518		287		204		491
Acute Therapies 6	121		239		360		126		235		361
Patient Support Systems 7	536		171		707		579		168		747
Front Line Care 8	448		161		609		409		167		576
Global Surgical Solutions 9	73		85		158		73		74		147
Other 10	41		10		51		62		21		83
Total Baxter	$	3,418	$	3,802	$	7,220	$	3,412	$	3,740	$	7,152

1Renal Care includes sales of our peritoneal dialysis (PD), HD and additional dialysis therapies and services.

2Medication Delivery includes sales of our intravenous (IV) therapies, infusion pumps, administration sets and drug reconstitution devices.

3Pharmaceuticals includes sales of our premixed and oncology drug platforms, inhaled anesthesia and critical care products and pharmacy compounding services.

4Clinical Nutrition includes sales of our parenteral nutrition therapies and related products.

5Advanced Surgery includes sales of our biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention.

6Acute Therapies includes sales of our continuous renal replacement therapies (CRRT) and other organ support therapies focused in the intensive care unit (ICU).

7Patient Support Systems includes sales of our connected care solutions: devices, software, communications and integration technologies and smart beds.

8Front Line Care includes sales of our integrated patient monitoring and diagnostic technologies to help diagnose, treat and manage a wide variety of illness and diseases, including respiratory therapy, cardiology, vision screening and physical assessment.

9Global Surgical Solutions includes sales of our surgical video technologies, tables, lights, pendants, precision positioning devices and other accessories.

10Other includes sales of miscellaneous product and service offerings. Contract manufacturing revenues earned by our manufacturing facility in Round Lake Illinois, which totaled $2 million for the six months ended June 30, 2023 and $11 million and $18 million for the three and six months ended June 30, 2022, respectively, were historically presented as BPS sales. Those sales transactions, which are not impacted by the pending divestiture of our BPS business, continue to be presented as continuing operations in the accompanying consolidated financial statements and have been reclassified to our Other product category for all periods presented.

Lease Revenue

We lease medical equipment, such as smart beds, renal dialysis equipment and infusion pumps, to customers, often in conjunction with arrangements to provide consumable medical products such as dialysis therapies, 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.

19

The components of lease revenue for the three and six months ended June 30, 2023 and 2022 were:

(in millions)	Three months ended June 30, 2023		Six Months Ended June 30, 2023
Sales-type lease revenue	$	3	$	7
Operating lease revenue	132		256
Variable lease revenue	14		29
Total lease revenue	$	149	$	292

(in millions)	Three months ended June 30, 2022		Six months ended June 30, 2022
Sales-type lease revenue	$	5	$	8
Operating lease revenue	113		235
Variable lease revenue	12		32
Total lease revenue	$	130	$	275

Our net investment in sales-type leases was $75 million as of June 30, 2023, of which $15 million originated in 2019 and prior, $21 million in 2020, $20 million in 2021, $14 million in 2022, and $5 million in 2023.

10. BUSINESS OPTIMIZATION CHARGES

In recent years, we have undertaken actions to transform our cost structure and enhance operational efficiency. These efforts include restructuring the organization, optimizing the manufacturing footprint, R&D operations and supply chain network, employing disciplined cost management, and centralizing and streamlining certain support functions. From the commencement of our business optimization activities in the second half of 2015 through June 30, 2023, we have incurred cumulative pre-tax costs of $1.86 billion related to these actions. The costs consisted primarily of employee termination costs, implementation costs, contract termination costs, asset impairments and accelerated depreciation. We currently expect to incur additional pre-tax costs, primarily related to implementation of business optimization programs, of approximately $20 million through the completion of initiatives that are currently underway. We continue to pursue cost savings initiatives, including those related the ongoing implementation of our previously announced new operating model intended to simplify and streamline our operations, and, to the extent further cost savings opportunities are identified, we would incur additional restructuring charges and costs to implement business optimization programs in future periods.

During the three and six months ended June 30, 2023 and 2022, we recorded the following charges related to business optimization programs.

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2023		2022		2023		2022
Restructuring charges	$	287	$	26	$	397	$	93
Costs to implement business optimization programs	6		16		30		30
Total business optimization charges	$	293	$	42	$	427	$	123

For segment reporting purposes, business optimization charges are unallocated expenses.

Costs to implement business optimization programs for the three and six months ended June 30, 2023 and 2022, 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.

20

During the three and six months ended June 30, 2023 and 2022, we recorded the following restructuring charges.

	Three months ended June 30, 2023
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	9	$	19	$	—	$	28
Contract termination and other costs	—		2		—		2
Asset impairments	257		—		—		257
Total restructuring charges	$	266	$	21	$	—	$	287

	Three months ended June 30, 2022
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	4	$	16	$	—	$	20
Contract termination and other costs	—		5		—		5
Asset impairments	—		1		—		1
Total restructuring charges	$	4	$	22	$	—	$	26

	Six months ended June 30, 2023
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	26	$	82	$	7	$	115
Contract termination and other costs	3		2		—		5
Asset impairments	269		8		—		277
Total restructuring charges	$	298	$	92	$	7	$	397

	Six months ended June 30, 2022
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	6	$	63	$	—	$	69
Contract termination and other costs	—		17		—		17
Asset impairments	—		7		—		7
Total restructuring charges	$	6	$	87	$	—	$	93

For the three months and six months ended June 30, 2023, $19 million and $97 million, respectively, of the restructuring charges reflected in the table above, consisting of employee termination costs, were related to the ongoing implementation of our previously announced new operating model intended to simplify and streamline our operations. For the three and six months ended June 30, 2023, $253 million of the restructuring charges reflected in the table above, consisting of $243 million of asset impairment charges and $10 million of employee termination costs, were related to our decision to cease production of dialyzers at one of our manufacturing facilities in connection with our initiatives to streamline our manufacturing footprint and improve our profitability. See Note 3 for additional information.

For the three months ended June 30, 2022, $27 million of the restructuring charges reflected in the table above were related to integration activities for the Hillrom acquisition, consisting of $21 million of employee termination costs, $5 million of contract termination and other costs and $1 million of asset impairments. For the six months ended June 30, 2022, $83 million of the restructuring charges reflected in the table above were related to integration activities for the Hillrom acquisition, consisting of $59 million of employee termination costs, $17 million of contract termination and other costs and $7 million of asset impairments.

The following table summarizes activity in the liability related to our restructuring initiatives.

(in millions)
Liability balance as of December 31, 2022	$	107
Charges	132
Payments	(63)
Reserve adjustments	(12)
Currency translation	(1)
Liability balance as of June 30, 2023	$	163

21

Substantially all of our restructuring liabilities as of June 30, 2023 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 2024.

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 June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Pension benefits
Service cost	$	7	$	21	$	13	$	40
Interest cost	35		24		72		48
Expected return on plan assets	(43)		(40)		(87)		(79)
Amortization of net losses and prior service costs	1		11		2		23
Net periodic pension cost	$	—	$	16	$	—	$	32
OPEB
Interest cost	$	2	$	1	$	4	$	2
Amortization of net loss and prior service credit	(6)		(3)		(12)		(6)
Net periodic OPEB cost (income)	$	(4)	$	(2)	$	(8)	$	(4)

12. INCOME TAXES

Our effective income tax rate was (5.5)% and 15.5% for the three months ended June 30, 2023 and 2022, respectively, and (14.2)% and 17.2% for the six months ended June 30, 2023 and 2022 , respectively. Our effective income tax rate can differ from the 21.0% 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 and six months ended June 30, 2023, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily attributable to a $30 million increase in the valuation allowance related to a deferred tax asset from a tax basis step-up that arose from previously enacted Swiss tax reform legislation and a favorable geographic earnings mix.

For the three and six months ended June 30, 2022, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily attributable to a favorable geographic earnings mix and discrete tax matters in various foreign jurisdictions, of which none were individually material, partially offset by an increase in our liabilities for uncertain tax positions.

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, RSUs and PSUs is reflected in the denominator for diluted EPS using the treasury stock method.

22

The following table is a reconciliation of net income (loss) attributable to Baxter stockholders.

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Income (loss) from continuing operations	$	(193)	$	185	$	(193)	$	193
Less: Net income attributable to noncontrolling interests	2		3		3		5
Income (loss) from continuing operations attributable to Baxter stockholders	(195)		182		(196)		188
Income from discontinued operations	54		70		99		135
Net income (loss) attributable to Baxter stockholders	$	(141)	$	252	$	(97)	$	323

The following table is a reconciliation of basic shares to diluted shares.

	Three months ended June 30,		Six months ended June 30,
(in millions)	2023	2022	2023	2022
Basic shares	506	504	506	503
Effect of dilutive securities	—	4	—	5
Diluted shares	506	508	506	508

Basic and diluted shares are the same for the three and six months ended June 30, 2023 due to our net losses for the period. The effect of dilutive securities for the three and six months ended June 30, 2022 includes unexercised stock options, unvested RSUs and contingently issuable shares related to granted PSUs.

Diluted EPS excludes 27 million and 25 million shares issuable under equity awards for the three and six months ended June 30, 2023, respectively, and 12 million and 8 million shares issuable under equity awards for the three and six months ended June 30, 2022, respectively, because their inclusion would have had an anti-dilutive effect on diluted EPS. Refer to Note 7 for additional information regarding items impacting basic and 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, Chinese Renminbi, Japanese Yen, Swedish Krona, British Pound, Polish Zloty, Mexican Peso, Australian Dollar, Canadian Dollar, Korean Won, Colombian Peso, Brazilian Real, Russian Ruble, Turkish Lira and Indian Rupee. 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 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.

All derivative instruments are generally 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.

23

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 item. Option premiums or net premiums paid are initially recorded as assets and reclassified to other comprehensive income (OCI) over the life of the option, and then recognized in earnings consistent with the underlying hedged item. 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.

The notional amounts of foreign exchange contracts designated as cash flow hedges were $377 million and $398 million as of June 30, 2023 and December 31, 2022, respectively. The maximum term over which we have cash flow hedge contracts in place related to forecasted transactions at June 30, 2023 is 12 months for foreign exchange contracts. There were no outstanding interest rate contracts designated as cash flow hedges as of June 30, 2023 and December 31, 2022.

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. For each derivative instrument that is designated and effective as a fair value hedge, the gain or loss on the derivative is recognized immediately to earnings, and offsets changes in fair value attributable to a particular risk, such as changes in interest rates, of the hedged item, which are also recognized in earnings. Changes in the fair value of hedge instruments designated as fair value hedges are classified in interest expense, net, as they hedge the interest rate risk associated with certain of our fixed-rate debt.

There were no outstanding interest rate contracts designated as fair value hedges as of June 30, 2023 and December 31, 2022.

Net Investment Hedges

In May 2017, we issued €600 million of senior notes due May 2025. In May 2019, we issued €750 million of senior notes due May 2024 and €750 million of 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 June 30, 2023, we had an accumulated pre-tax unrealized translation gain in AOCI of $57 million related to the Euro-denominated senior notes.

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 items. 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 cash flow hedge dedesignations in the first six months of 2023 or 2022 resulting from changes in our assessment of the probability that the hedged forecasted transactions would occur.

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 fair value hedges terminated during the first six months of 2023 or 2022.

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 six months of 2023 or 2022.

24

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.

The total notional amount of undesignated derivative instruments was $688 million as of June 30, 2023 and $753 million as of December 31, 2022.

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 June 30, 2023 and 2022.

	Gain (loss) recognized in OCI				Location of gain (loss) in income statement	Gain (loss) reclassified from AOCI into income
(in millions)	2023		2022			2023		2022
Cash flow hedges
Interest rate contracts	$	—	$	—	Interest expense, net	$	(2)	$	(2)
Foreign exchange contracts	10		19		Cost of sales	3		3
Net investment hedges	10		143		Other (income) expense, net	—		—
Total	$	20	$	162		$	1	$	1

	Location of gain (loss) in income statement	Gain (loss) recognized in income
(in millions)		2023		2022
Undesignated derivative instruments
Foreign exchange contracts	Other (income) expense, net	$	(15)	$	(26)

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 six months ended June 30, 2023 and 2022.

	Gain (loss) recognized in OCI				Location of gain (loss) in income statement	Gain (loss) reclassified from AOCI into income
(in millions)	2023		2022			2023		2022
Cash flow hedges
Interest rate contracts	$	—	$	—	Interest expense, net	$	(3)	$	(3)
Foreign exchange contracts	10		16		Cost of sales	7		5
Net investment hedges	(38)		185		Other (income) expense, net	—		—
Total	$	(28)	$	201		$	4	$	2

	Location of gain (loss) in income statement	Gain (loss) recognized in income
(in millions)		2023		2022
Undesignated derivative instruments
Foreign exchange contracts	Other (income) expense, net	$	(18)	$	(23)

As of June 30, 2023, $2 million of deferred, net after-tax gains 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.

25

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 June 30, 2023.

	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
Foreign exchange contracts	Prepaid expenses and other current assets	$	11	Accrued expenses and other current liabilities	$	4
Total derivative instruments designated as hedges		11			4
Undesignated derivative instruments
Foreign exchange contracts	Prepaid expenses and other current assets	2		Accrued expenses and other current liabilities	2
Total derivative instruments		$	13		$	6

The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of December 31, 2022.

	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
Foreign exchange contracts	Prepaid expenses and other current assets	$	8	Accrued expenses and other current liabilities	$	5
Total derivative instruments designated as hedges		8			5
Undesignated derivative instruments
Foreign exchange contracts	Prepaid expenses and other current assets	6		Accrued expenses and other current liabilities	7
Total derivative instruments		$	14		$	12

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.

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.

	June 30, 2023				December 31, 2022
(in millions)	Asset		Liability		Asset		Liability
Gross amounts recognized in the condensed consolidated balance sheets	$	13	$	6	$	14	$	12
Gross amount subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet	(1)		(1)		(4)		(4)
Total	$	12	$	5	$	10	$	8

26

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 June 30, 2023		Balance as of December 31, 2022		Balance as of June 30, 2023		Balance as of December 31, 2022
Long-term debt	$	101	$	101	$	4	$	4

(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 June 30, 2023		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Foreign exchange contracts	$	13	$	—	$	13	$	—
Available-for-sale debt securities	37		—		—		37
Marketable equity securities	37		37		—		—
Total	$	87	$	37	$	13	$	37
Liabilities
Foreign exchange contracts	$	6	$	—	$	6	$	—
Contingent payments related to acquisitions	21		—		—		21
Total	$	27	$	—	$	6	$	21

			Basis of fair value measurement
(in millions)	Balance as of December 31, 2022		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Foreign exchange contracts	$	14	$	—	$	14	$	—
Available-for-sale debt securities	47		—		—		47
Marketable equity securities	32		32		—		—
Total	$	93	$	32	$	14	$	47
Liabilities
Foreign exchange contracts	$	12	$	—	$	12	$	—
Contingent payments related to acquisitions	84		—		—		84
Total	$	96	$	—	$	12	$	84

As of June 30, 2023 and December 31, 2022, cash and cash equivalents of $1.72 billion, included money market and other short-term funds of approximately $303 million and $341 million, respectively, which 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. The 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.

27

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. The fair value of milestone payments reflects management’s expectations of probability of payment, and increases as the 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.

The following table is a reconciliation of recurring fair value measurements that use significant unobservable inputs (Level 3), which consist of contingent payments related to acquisitions and available-for-sale debt securities.

	Three months ended June 30,
	2023				2022
(in millions)	Contingent payments related to acquisitions		Available-for-sale debt securities		Contingent payments related to acquisitions		Available-for-sale debt securities
Fair value at beginning of period	$	70	$	42	$	124	$	53
Change in fair value recognized in earnings	(1)		(5)		(11)		—
Change in fair value recognized in AOCI	—		—		—		1
Transfers out of Level 3	—		—		—		(10)
Payments	(48)		—		—		—
Fair value at end of period	$	21	$	37	$	113	$	44

	Six months ended June 30,
	2023				2022
(in millions)	Contingent payments related to acquisitions		Available-for-sale debt securities		Contingent payments related to acquisitions		Available-for-sale debt securities
Fair value at beginning of period	$	84	$	47	$	143	$	30
Additions	—		—		—		21
Change in fair value recognized in earnings	(14)		(5)		(28)		—
Change in fair value recognized in AOCI	—		—		—		3
Transfers out of Level 3	—		(5)		—		(10)
Payments	(49)		—		(2)		—
Fair value at end of period	$	21	$	37	$	113	$	44

During the second quarter and first half of 2022, $8 million of available-for-sale debt securities that were previously classified as Level 3 converted to marketable equity securities, which are classified as Level 1 in the fair value hierarchy, upon the initial public offering of the investee.

28

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 June 30, 2023 and December 31, 2022.

	Book values				Fair values(a)
(in millions)	2023		2022		2023		2022
Liabilities
Current maturities of long-term debt and finance lease obligations	$	1,928	$	1,105	$	1,894	$	1,079
Long-term debt and finance lease obligations	14,306		15,232		12,884		13,657

(a)    These fair value amounts are classified as Level 2 within the fair value hierarchy as they are estimated based on observable inputs.

The carrying value of short-term debt approximates its fair value due to the short-term maturities of the obligations. 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, short-term debt and accounts payable, approximate their fair values due to the short-term maturities of most of those assets and liabilities.

Investments Without Readily Determinable Fair Values

The carrying values of equity investments without readily determinable fair values that we measure at cost, less impairment were $88 million as of June 30, 2023 and $104 million as of December 31, 2022. When applicable, we also adjust the measurement of such equity investments for observable prices in orderly transactions for an identical or similar investment of the same issuer. Those investments are included in Other non-current assets on our condensed consolidated balance sheets. During the quarter ended June 30, 2023, several of our investees either completed or are in the process of undertaking new financing rounds at lower enterprise valuations as compared to their valuations at the time of our investments. As a result, we recognized $18 million of impairments of equity investments without readily determinable fair values in the current period. In addition, we recognized a $5 million impairment of a convertible debt investment, which is accounted for as an available-for-sale security, during the second quarter of 2023. The fair value measurements of investments in non-marketable equity and convertible debt securities are classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs.

16. SEGMENT INFORMATION

Our business is currently comprised of four segments, consisting of the following geographic segments related to our legacy Baxter business: Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific), and a global segment for our Hillrom business. The Americas, EMEA and APAC segments provide a broad portfolio of essential healthcare products, including acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products. The Hillrom segment provides digital and connected care solutions and collaboration tools, including smart bed systems; patient monitoring and diagnostic technologies; respiratory health devices; and advanced equipment for the surgical space.

We use operating income on a segment basis to make resource allocation decisions and assess the ongoing performance of our business segments. Intersegment sales are eliminated in consolidation.

Certain items are maintained at Corporate and are not allocated to a segment. They primarily include corporate headquarters costs, certain R&D costs, manufacturing variances and centrally managed supply chain costs, product category support costs, stock compensation expense, certain employee benefit plan costs, and certain gains, losses, and other charges (such as business optimization, acquisition and integration costs, intangible asset amortization and asset impairments).

Our chief operating decision maker does not receive any asset information by operating segment and, accordingly, we do not report asset information by operating segment.

29

Financial information for our segments is as follows.

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Net sales:
Americas	$	1,564	$	1,494	$	3,030	$	2,971
EMEA	762		738		1,476		1,437
APAC	638		647		1,240		1,274
Hillrom	743		715		1,474		1,470
Total net sales	$	3,707	$	3,594	$	7,220	$	7,152
Operating income:
Americas	$	498	$	488	$	918	$	1,008
EMEA	112		169		218		288
APAC	118		156		225		307
Hillrom	147		149		305		349
Total segment operating income	$	875	$	962	$	1,666	$	1,952

The following is a reconciliation of segment operating income to income (loss) from continuing operations before income taxes per the condensed consolidated statements of income.

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Total segment operating income	$	875	$	962	$	1,666	$	1,952
Corporate and other	(892)		(698)		(1,554)		(1,605)
Total operating income (loss)	(17)		264		112		347
Interest expense, net	124		89		241		174
Other (income) expense, net	42		(44)		40		(60)
Income (loss) from continuing operations before income taxes	$	(183)	$	219	$	(169)	$	233

We are implementing a new operating model intended to simplify and streamline our operations and we expect that our reportable segments will be changed to align with that new operating model when it is fully implemented, which is currently expected in the second half of 2023.

30

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, 2022 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 six months ended June 30, 2023 and 2022.

RECENT STRATEGIC ACTIONS

In January 2023, we announced the following planned strategic actions that are intended to enhance our operational effectiveness, accelerate innovation and drive additional stockholder value: (a) a proposed spinoff of our Renal Care and Acute Therapies product categories into an independent publicly traded company focused on kidney care (the proposed spinoff), (b) our development of a new operating model to simplify our operations and (c) our pursuit of strategic alternatives for our BioPharma Solutions (BPS) product category.

The proposed spinoff is currently expected to be completed by July 2024 or earlier, subject to the satisfaction of customary conditions. During the second quarter and first half of 2023 we generated $1.12 billion and $2.19 billion, respectively, of net sales from our Renal Care and Acute Therapies product categories, representing approximately 30% of our consolidated net sales, in both periods.

In May 2023, we entered into a definitive agreement to sell our BPS business. That business provides pharmaceutical and contract manufacturing and development services, which include sterile fill-finish manufacturing and support services across clinical and commercial applications, primarily serving customers in the pharmaceutical industry. BPS has historically operated through our subsidiaries Baxter Pharmaceutical Solutions, LLC, a Delaware limited liability company, and Baxter Oncology GmbH, a German limited liability company. Under the related equity purchase agreement (EPA), we have agreed to sell those entities to Advent International and Warburg Pincus for $4.25 billion in cash, subject to certain adjustments specified in the EPA. After giving effect to those adjustments, we currently expect to receive approximately $3.92 billion of net pre-tax cash proceeds (approximately $3.40 billion after tax). The transaction is expected to close during the second half of 2023, subject to regulatory approvals and other customary conditions. Upon closing, we currently expect to recognize a pre-tax gain of approximately $2.97 billion. We intend to use the net after-tax proceeds from this transaction to repay certain of our debt obligations.

We concluded that our BPS business met the criteria to be classified as held-for-sale in May 2023. 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. We analyzed the quantitative and qualitative factors relevant to the pending divestiture of our BPS business, including its significance to our overall net income (loss) and earnings (loss) per share, and determined that those conditions for discontinued operations presentation have been met. As such, the financial position, results of operations and cash flows of that business are reported as discontinued operations in the accompanying consolidated financial statements. Prior period amounts have been adjusted to reflect discontinued operations presentation. Refer to Note 2 in Item 1 of this Quarterly Report on Form 10-Q for further information about our discontinued operations.

During the second quarter and first half of 2023 we incurred significant separation and transaction-related costs related to the proposed spinoff and the pending sale of our BPS product category. For the remainder of 2023 and the first half of 2024 we expect to continue to incur such costs, which will adversely impact our earnings and operating cash flows. Additionally, if these proposed and pending actions are consummated, we expect to incur some amount of dis-synergies following those transactions due to the reduced size of our company and, as a result, we will need to undertake actions to help ensure that our cost structure is appropriate to support our remaining businesses. There can be no guarantees that the proposed spinoff or the pending sale of our BPS product category will be completed in the manner or over the timeframes described above, or at all.

We are also starting to implement a new operating model intended to simplify and streamline our operations and better align our manufacturing footprint and supply chain to our commercial activities. The new operating model will have significant impacts on our systems and processes across our entire company and we expect to have those broader operational changes, including our updated management reporting framework for the new operating model, fully implemented during the second half of 2023. At that time, we expect that our reportable segments will be changed to align with the new operating model. However, there can be no guarantees that the implementation of our new operating model will be completed within that timeframe.

31

FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Supply Constraints, Global Economic Conditions

We have experienced significant challenges to our global supply chain in recent periods, including production delays and interruptions, increased costs and shortages of raw materials and component parts (including resins and electromechanical devices) and higher transportation costs, resulting from the pandemic and a number of exogenous factors including significant weather events, elevated inflation levels, increased interest rates, disruptions to certain ports of call around the world, the war in Ukraine and other geopolitical events. Due to the nature of our products, which include dense consumable medical products such as IV fluids, and the geographic locations of our manufacturing facilities, which often require us to transport our products long distances, we are more susceptible to increases in freight costs and other supply chain challenges than certain of our industry peers. While we have begun to see improvements in the availability of certain component parts and improved pricing in certain raw materials, these challenges have not completely subsided and may continue to have a negative impact on our supply chain in future periods. These challenges, including the unavailability of certain raw materials and component parts, have also had a negative impact on our sales for certain product categories (including those acquired in our December 2021 acquisition of Hill-Rom Holdings, Inc. (Hillrom)) due to our inability to fully satisfy demand and may continue to have a negative impact on our sales in the future.

Our results of operations are also affected by macroeconomic conditions and levels of business confidence. The war in Ukraine and the sanctions and other measures being imposed in response to this conflict have increased the levels of economic and political uncertainty. In response, we continue to monitor the developing situation with respect to ongoing business in Russia and are working on reducing our product offerings in Russia while remaining compliant with all applicable U.S. and European Union sanctions and regulations. While Russia and Ukraine do not constitute a material portion of our business, a significant escalation or expansion of economic disruption or the conflict’s current scope could have an adverse effect on our business.

Our global operations expose us to risks associated with public health crises and epidemics/pandemics, such as COVID-19. COVID-19 had, and COVID-19 or any other future public health crisis could in the future have, an adverse impact on, among other things, our expenses, operations, supply chains and distribution systems. Over the course of the COVID-19 pandemic, our business was impacted by shifting healthcare priorities and significant volatility in the demand for our products, and any resurgence of the pandemic or any new public health crisis could again impact healthcare priorities and cause volatility in the demand for our products.

The existence of high inflation rates in the United States and in many of the countries where we conduct business has resulted in, and may continue 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 our costs of sourcing certain raw materials in some jurisdictions. We have experienced and may continue to experience inflationary increases in manufacturing costs and operating expenses and we may not be able to pass these cost increases on to our customers in a timely manner or at all, which 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 have a material adverse impact on our sales and results of operations.

For further discussion, please refer to Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

RESULTS OF OPERATIONS

Net income (loss) attributable to Baxter stockholders for the three and six months ended June 30, 2023 totaled $(141) million, or $(0.28) per diluted share, and $(97) million, or $(0.19) per diluted share, compared to $252 million, or $0.50 per diluted share, and $323 million, or $0.64 per diluted share, for the three and six months ended June 30, 2022. Net income (loss) attributable to Baxter stockholders for the three and six months ended June 30, 2023 included special items which decreased net income (loss) by $476 million and $729 million, respectively, or $0.94 and $1.44, per diluted share, respectively. See the following subsection for information about special items for all periods presented. Net income (loss) for the three and six months ended June 30, 2022 included special items which decreased net income (loss) by $191 million and $591 million, respectively, or $0.37 and $1.16 per diluted share, respectively.

Net income (loss) from continuing operations for both the three and six months ended June 30, 2023 totaled $(193) million, or $(0.39) per diluted share, compared to $185 million, or $0.36 per diluted share, and $193 million, or $0.37

32

per diluted share, for the three and six months ended June 30, 2022, respectively. Net income (loss) from continuing operations for the three and six months ended June 30, 2023 included special items which decreased net income by $475 million and $724 million, respectively, or $0.94 and $1.43 per diluted share, respectively. Net income (loss) from continuing operations for the three and six months ended June 30, 2022 included special items which decreased net income by $191 million and $591 million, respectively, or $0.37 and $1.16 per diluted share, respectively.

Special Items

The following table provides a summary of our special items and the related impact by line item on our results for the three and six months ended June 30, 2023 and 2022.

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Gross Margin
Intangible asset amortization expense	$	(105)	$	(112)	$	(215)	$	(234)
Business optimization items1	(266)		(6)		(301)		(8)
Acquisition and integration items2	—		(9)		—		(173)
European medical devices regulation3	(12)		(12)		(24)		(23)
Divestiture-related costs4	(4)		—		(5)		—
Product-related items5	—		—		—		(23)
Total Special Items	$	(387)	$	(139)	$	(545)	$	(461)
Impact on Gross Margin Ratio	(10.4 pts)		(3.9 pts)		(7.6 pts)		(6.5 pts)
Selling, General and Administrative (SG&A) Expenses
Intangible asset amortization expense	$	52	$	81	$	104	$	176
Business optimization items1	27		36		119		114
Acquisition and integration items2	8		20		14		44
Divestiture-related costs4	33		$	—	41		—
Total Special Items	$	120	$	137	$	278	$	334
Impact on SG&A Ratio	3.2 pts		3.8 pts		3.8 pts		4.7 pts
Research and Development (R&D) Expenses
Business optimization items1	$	—	$	—	$	7	$	1
Total Special Items	$	—	$	—	$	7	$	1
Impact on R&D Ratio	0.0 pts		0.0 pts		0.1 pts		0.1 pts
Other Operating Expense (Income), net
Acquisition and integration items2	$	(1)	$	(11)	$	(14)	$	(28)
Total Special Items	$	(1)	$	(11)	$	(14)	$	(28)
Other (Income) Expense, net
Pension curtailment6	$	—	$	(11)	$	—	$	(11)
Investment impairments7	20		—		20		—
Total Special Items	$	20	$	(11)	$	20	$	(11)
Income Tax Expense
Tax matters8	$	34	$	—	$	34	$	—
Tax effects of special items9	(85)		$	(63)	(146)		(166)
Total Special Items	$	(51)	$	(63)	$	(112)	$	(166)
Impact on Effective Tax Rate	(23.3 pts)		(5.0 pts)		(34.6 pts)		(3.6 pts)

Intangible asset amortization expense is identified as a special item to facilitate an evaluation of current and past operating performance and is consistent with how management and our Board of Directors assess performance. Additional special items are identified above because they are highly variable, difficult to predict and of a size that may substantially impact our reported results of operations for the period. Management believes that providing the

33

separate impact of those items on our results in accordance with U.S. GAAP may provide a more complete understanding of our operations and can facilitate a fuller analysis of our results of operations, particularly in evaluating performance from one period to another.

1Our results in 2023 and 2022 were impacted by costs associated with our execution of programs to optimize our organization and cost structure. These restructuring and other business optimization costs included actions related to our current implementation of a new operating model intended to simplify and streamline our operations, our integration of Hillrom, the decision to close one of our U.S.-based manufacturing facilities later this year, which resulted in a $243 million noncash impairment of property, plant and equipment in the second quarter of 2023, rationalization of certain other manufacturing and distribution facilities and transformation of certain general and administrative functions. Our results in 2023 included business optimization charges of $50 million in the second quarter and $184 million in the first half. Our results in 2022 included business optimization charges of $42 million in the second quarter and $123 million in the first half. 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 in 2023 included $7 million in the second quarter and zero in the first half of acquisition and integration-related items. These amounts reflected $8 million in the second quarter and $14 million in the first half of integration costs, which primarily included third party consulting costs related to our integration of Hillrom, partially offset by a $1 million benefit in the second quarter and fully offset by a $14 million benefit in the first half from changes in the estimated fair values of contingent consideration liabilities. Our results in 2022 included $18 million in the second quarter and $189 million in the first half of acquisition and integration-related items. These amounts included $29 million in the second quarter and $217 million in the first half related to our acquisition of Hillrom, primarily reflecting $159 million of incremental cost of sales from the fair value step-ups on acquired Hillrom inventory that was sold in 2022. Other integration expenses in 2022 included third party consulting costs related to our integration and related cost savings activities. Those acquisition and integration-related expenses related to Hillrom were partially offset by an $11 million benefit in the second quarter and a $28 million benefit in the first half from changes in the estimated fair values of contingent consideration liabilities.

3Our results in 2023 included $12 million in the second quarter and $24 million in the first half 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 charge and believe that the costs of initial compliance for previously registered products over the implementation period are not indicative of our core operating results. Our results in 2022 included $12 million in the second quarter and $23 million in the first half related to these requirements.

4Our results in 2023 included $37 million in the second quarter and $46 million in the first half of divestiture-related costs, primarily reflecting costs of external advisors supporting our activities to prepare for the proposed spinoff of our Renal Care and Acute Therapies product categories. We also incurred $8 million and $15 million of additional divestiture-related costs in the second quarter and first half of 2023, respectively, related to the pending sale of our BPS product category that are reported in discontinued operations and are not presented in the table above. Refer to "Recent Strategic Actions" above for more information about those proposed and pending transactions.

5Our results in 2022 included charges of $23 million in the first half related to warranty and remediation activities arising from two field corrective actions on certain of our infusion pumps.

6Our results in 2022 included a curtailment gain of $11 million in the second quarter and first half related to an announced change for active non-bargaining participants in our U.S. Hillrom pension plan.

7Our results in 2023 included $20 million of net pre-tax losses from non-marketable investments in several early stage companies in the second quarter, consisting of $23 million of noncash impairment write-downs, partially offset by a $3 million gain from the sale of an investment.

8Our results in 2023 included a $30 million valuation allowance recorded to reduce the carrying amount of a deferred tax asset for a tax basis step-up related to previously enacted Swiss tax reform legislation to reflect our current estimate of its recoverability and $4 million of tax costs from divestiture-related activities.

9This 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.

34

NET SALES

	Three Months Ended June 30,				Percent change
(in millions)	2023		2022		At actual currency rates		At constant currency rates
United States	$	1,751	$	1,700	3	%	3	%
International	$	1,956	1,894		3	%	5	%
Total net sales	$	3,707	$	3,594	3	%	4	%

	Six Months Ended June 30,				Percent change
(in millions)	2023		2022		At actual currency rates		At constant currency rates
United States	$	3,418	$	3,412	0	%	0	%
International	$	3,802	3,740		2	%	6	%
Total net sales	$	7,220	$	7,152	1	%	3	%

Foreign currency unfavorably impacted net sales by 1 percentage point during the second quarter of 2023, compared to the prior-year periods, principally due to the strengthening of the U.S. Dollar relative to the Chinese Renminbi, Australian Dollar and Turkish Lira, partially offset by the weakening of the U.S. Dollar relative to the Euro. Foreign currency unfavorably impacted net sales by 2 percentage points during the first half of 2023 due to the strengthening of the U.S. Dollar relative to the Chinese Renminbi, Australian Dollar, Turkish Lira, British Pound and the Colombian Peso.

The comparisons presented at constant currency rates reflect current period local currency sales at the prior period’s foreign exchange rates. This measure provides information on the change in net sales assuming that foreign currency exchange rates had not changed between the prior and the current period. We believe that the non-GAAP measure of change in net sales at constant currency rates, when used in conjunction with the U.S. GAAP measure of change in net sales at actual currency 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.

Product Category Net Sales Reporting

Our product categories include the following:

•    Renal Care includes sales of our peritoneal dialysis (PD), hemodialysis (HD) and additional dialysis therapies and services.

•    Medication Delivery includes sales of our intravenous (IV) therapies, infusion pumps, administration sets and drug reconstitution devices.

•    Pharmaceuticals includes sales of our premixed and oncology drug platforms, inhaled anesthesia and critical care products and pharmacy compounding services.

•    Clinical Nutrition includes sales of our parenteral nutrition therapies and related products.

•    Advanced Surgery includes sales of our biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention.

•    Acute Therapies includes sales of our continuous renal replacement therapies (CRRT) and other organ support therapies focused in the intensive care unit (ICU).

•    Patient Support Systems includes sales of our connected care solutions: devices, software, communications and integration technologies and smart beds.

•    Front Line Care includes sales of our integrated patient monitoring and diagnostic technologies to help diagnose, treat and manage a wide variety of illness and diseases, including respiratory therapy, cardiology, vision screening and physical assessment.

•    Global Surgical Solutions includes sales of our surgical video technologies, tables, lights, pendants, precision positioning devices and other accessories.

•    Other includes sales of other miscellaneous product and service offerings. Contract manufacturing revenues earned by our manufacturing facility in Round Lake Illinois, which totaled $2 million for the six months ended June 30, 2023 and $11 million and $18 million for the three and six months ended June 30, 2022, respectively, were historically presented as BPS sales. Those sales transactions, which are not impacted by the pending divestiture of our BPS business,

35

continue to be presented as continuing operations in the accompany consolidated financial statements and have been reclassified to our Other product category for all periods presented.

The following is a summary of net sales by product category:

	Three Months Ended June 30,				Percent change
(in millions)	2023		2022		At actual currency rates		At constant currency rates
Renal Care	$	936	$	931	1	%	2	%
Medication Delivery	761		710		7	%	7	%
Pharmaceuticals	550		528		4	%	6	%
Clinical Nutrition	243		230		6	%	7	%
Advanced Surgery	272		263		3	%	4	%
Acute Therapies	180		173		4	%	6	%
Patient Support Systems	359		364		(1)	%	(1)	%
Front Line Care	307		282		9	%	9	%
Global Surgical Solutions	77		69		12	%	9	%
Other	22		44		(50)	%	(50)	%
Total Baxter	$	3,707	$	3,594	3	%	4	%

	Six months ended June 30,				Percent change
(in millions)	2023		2022		At actual currency rates		At constant currency rates
Renal Care	$	1,828	$	1,825	0	%	3	%
Medication Delivery	1,448		1,416		2	%	4	%
Pharmaceuticals	1,074		1,049		2	%	6	%
Clinical Nutrition	467		457		2	%	5	%
Advanced Surgery	518		491		5	%	7	%
Acute Therapies	360		361		(0)	%	2	%
Patient Support Systems	707		747		(5)	%	(5)	%
Front Line Care	609		576		6	%	6	%
Global Surgical Solutions	158		147		7	%	8	%
Other	51		83		(39)	%	(39)	%
Total Baxter	$	7,220	$	7,152	1	%	3	%

Renal Care net sales increased 1% in the second quarter and were flat in the first half of 2023, as compared to the prior-year periods. Sales performance in the current year periods was primarily due to patient growth in PD, pricing initiatives and recent government tender awards in EMEA, partially offset by lower sales in China, primarily due to government-based procurement initiatives and the impact of COVID-19 on that country’s renal patient population, the termination of a distribution agreement in the U.S. and negative foreign exchange rate impacts of 1% and 3%, respectively, for the second quarter and first half of 2023, as compared to the prior-year periods.

Medication Delivery net sales increased 7% in the second quarter and 2% in the first half of 2023, as compared to the prior-year periods. Performance in the second quarter benefited from increased demand for our IV administration sets and solutions, reflecting a recovery in hospital admission rates and surgical procedures, competitor supply constraints and some improvement in the availability of certain component parts used in our infusion pumps. Performance in the first half benefited from the same items impacting sales in the second quarter, partially offset by higher U.S. distributor chargebacks and customer rebates and a 2% negative impact from foreign exchange rates, as compared to the prior-year period.

Pharmaceuticals net sales increased 4% in the second quarter and 2% in the first half of 2023, as compared to the prior-year periods. The increases in the second quarter and first half reflect growth from our U.S. injectable products,

36

driven by our recent launches of Zosyn, following the transfer of the related product rights to us earlier this year, Bendamustine and Norepinephrine, and increased demand for our international pharmacy compounding services. Partially offsetting those items were lower sales of inhaled anesthesia and negative foreign exchange rate impacts of 2% and 4%, respectively, for the second quarter and first half of 2023, as compared to the prior-year periods.

Clinical Nutrition net sales increased 6% in the second quarter and 2% in the first half of 2023, as compared to the prior-year periods. The increase in the second quarter and first half was driven by strong demand for our nutrition compounding services and our parenteral nutrition products. Partially offsetting those items was increased competitor activity in the U.S. and negative foreign exchange rate impacts of 1% and 3%, respectively, for the second quarter and first half of 2023, as compared to the prior-year periods.

Advanced Surgery net sales increased 3% in the second quarter and 5% in the first half of 2023, as compared to the prior-year periods. The increase in the second quarter and first half was driven by continued recovery in surgical procedures, partially offset by supply constraints, the exit of a product distribution arrangement, a comparison against prior-year periods that benefited from competitor supply constraints and a 1% and 2%, respectively, negative impact from foreign exchange rate changes, as compared to the prior-year periods.

Acute Therapies net sales increased 4% in the second quarter and were flat in the first half of 2023, as compared to the prior-year periods. The increase in the second quarter was driven by strong demand for our CRRT offerings, partially offset by a 2% negative impact from foreign exchange rate changes, as compared to the prior-year period. The flat net sales in the first half also reflects a comparison against a prior year period that included strong COVID-related demand for our CRRT offerings during the first quarter.

Patient Support Systems net sales decreased 1% in the second quarter and 5% in the first half of 2023, as compared to the prior-year periods. The decreases reflect lower demand for hospital beds, which we believe is being driven by current capital spending constraints at certain of our customers, and lower rental revenues, partially offset by sales generated from recent product launches in the U.S. We are starting to see some improvement in capital spending, as our order rates improved sequentially from the first quarter to the second quarter of 2023.

Front Line Care net sales increased 9% in the second quarter and 6% in the first half of 2023, as compared to the prior-year periods. The increase was driven by increased demand for our physical assessment tools, respiratory health products and cardiology products. Performance in the second quarter benefited from improved availability of component parts used in certain of our products.

Global Surgical Solutions net sales increased 12% in the second quarter and 7% in the first half of 2023, as compared to the prior-year periods, driven by strong international demand. Sales growth in the second quarter reflected a 3% positive impact from foreign exchange rates and sales growth in the first half reflected a 1% negative impact from foreign exchange rates, as compared to the prior-year periods.

Gross Margin and Expense Ratios

	Three months ended June 30,
	2023		% of net sales		2022		% of net sales		$ change		% change
Gross margin	$	1,111	30.0	%	$	1,371	38.1	%	$	(260)	(19.0)	%
SG&A	$	964	26.0	%	$	970	27.0	%	$	(6)	(0.6)	%
R&D	$	165	4.5	%	$	148	4.1	%	$	17	11.5	%

	Six months ended June 30,
	2023		% of net sales		2022		% of net sales		$ change		% change
Gross margin	$	2,386	33.0	%	$	2,633	36.8	%	$	(247)	(9.4)	%
SG&A	$	1,959	27.1	%	$	2,017	28.2	%	$	(58)	(2.9)	%
R&D	$	329	4.6	%	$	297	4.2	%	$	32	10.8	%

Gross Margin

The gross margin ratio was 30.0% and 33.0% in the second quarter and first half of 2023, respectively. The special items identified earlier in this section had an unfavorable impact of approximately 10.4 and 7.6 percentage points on the gross margin ratio in the second quarter and first half of 2023, respectively. The gross margin ratio was 38.1% and 36.8% in the second quarter and first half of 2022, respectively. Special items had an unfavorable impact of

37

approximately 3.9 and 6.5 percentage points on the gross margin ratio in the second quarter and first half of 2022, respectively. Refer to the Special Items caption earlier in this section for additional detail.

Excluding the impact of special items, the gross margin ratio decreased in the second quarter and first half of 2023 compared to the prior-year periods primarily due to the adverse cost impacts of raw materials inflation.

SG&A

The SG&A expenses ratio was 26.0% and 27.1% in the second quarter and first half of 2023, respectively. The special items identified earlier in this section had an unfavorable impact of approximately 3.2 and 3.8 percentage points on the SG&A expenses ratio in the second quarter and first half of 2023, respectively. The SG&A expenses ratio was 27.0% and 28.2% in the second quarter and first half of 2022, respectively. Special items had an unfavorable impact of approximately 3.8 and 4.7 percentage points on the SG&A expenses ratio in the second quarter and first half 2022, respectively. Refer to the Special Items caption earlier in this section for additional detail.

Excluding the impact of special items, the SG&A expenses ratio decreased in the second quarter and first half of 2023 compared to the prior-year periods primarily due to savings from restructuring actions implemented in recent periods, partially offset by higher bonus accruals under our annual employee incentive compensation plan.

R&D

The R&D expenses ratio was 4.5% and 4.6% in the second quarter and first half of 2023, respectively. The special items identified earlier in this section had no impact on the R&D expenses ratio in the second quarter and an unfavorable impact of approximately 0.1 percentage point on the R&D expenses ratio in the first half of 2023. The R&D expenses ratio was 4.1% and 4.2% in the second quarter and first half of 2022, respectively. Special items had no impact on the R&D expenses ratio in the second quarter and an unfavorable impact of approximately 0.1 percentage point on the R&D expenses ratio in the first half of 2022. Refer to the Special Items caption earlier in this section for additional detail.

Excluding the impact of special items, the R&D expenses ratio increased in the second quarter and first half of 2023 compared to the prior-year periods as a result of increased project-related expenditures, particularly related to our connected care portfolio.

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, optimizing our manufacturing footprint, R&D operations and supply chain network, employing disciplined cost management, and centralizing and streamlining certain support functions. From the commencement of our business optimization actions in the second half of 2015 through June 30, 2023, we have incurred cumulative pre-tax costs of $1.86 billion related to these actions. The costs consisted primarily of employee termination costs, implementation costs, contract termination costs, asset impairments, and accelerated depreciation.

We currently expect to incur additional pre-tax costs, primarily related to the implementation of business optimization programs, of approximately $20 million through the completion of initiatives that are currently underway. We continue to pursue cost savings initiatives and, to the extent further cost savings opportunities are identified, we would incur additional restructuring charges and costs to implement business optimization programs in future periods. For example, we expect to incur additional restructuring charges during 2023 related to our implementation of a new operating model intended to simplify and streamline our operations (including our manufacturing footprint), as discussed above under "Recent Strategic Actions." Refer to Note 10 in Item 1 of this Quarterly Report on Form 10-Q for additional information regarding our business optimization programs.

38

Other Operating Income, Net

Other operating income, net was $1 million and $14 million in the second quarter and first half of 2023, respectively, and $11 million and $28 million in the second quarter and first half of 2022, respectively. Those amounts were comprised of changes in the estimated fair value of contingent consideration liabilities.

Interest Expense, Net

Interest expense, net was $124 million and $241 million in the second quarter and first half of 2023, respectively, and $89 million and $174 million in the second quarter and first half of 2022, respectively. The increase in 2023 was driven by higher interest rates on our floating rate debt, partially offset by net repayments in the current year periods.

Other (Income) Expense, Net

Other (income) expense, net was an expense of $42 million and $40 million in the second quarter and first half of 2023, respectively, and income of $44 million and $60 million in the second quarter and first half of 2022, respectively. In the second quarter and first half of 2023, the net expense was primarily driven by foreign exchange losses, non-marketable investment impairments and a decrease in the fair value of marketable equity securities, partially offset by pension and other postretirement benefits. In the second quarter and first half of 2022, the income was primarily due to foreign exchange gains, an increase in the fair value of marketable equity securities, pension and other postretirement benefits and a pension curtailment gain.

Income Taxes

Our effective income tax rate was (5.5)% and 15.5% in the second quarter, and (14.2)% and 17.2% in the first half of 2023 and 2022, 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 and six months ended June 30, 2023, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily attributable to a $30 million increase in the valuation allowance related to a deferred tax asset basis step-up that arose from previously enacted Swiss tax reform legislation and a favorable geographic earnings mix.

For the three and six months ended June 30, 2022, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily attributable to a favorable geographic earnings mix and discrete tax matters in various jurisdictions, of which none were individually material, partially offset by an increase in our liabilities for uncertain tax positions.

Discontinued Operations

In May 2023, we entered into a definitive agreement to sell our BPS business and its results have been presented as discontinued operations for the three and six months ended June 30, 2023 and 2022. Income from discontinued operations, net of tax, was $54 million and $99 million, respectively, in the second quarter and first half of 2023, compared to $70 million and $135 million, respectively, in the second quarter and first half of 2022. The decreases were primarily driven by lower sales in the current year periods, reflecting a comparison against prior year periods that included more significant sales from contract manufacturing of COVID-19 vaccines, as well as increased SG&A expense due to divestiture-related costs of $8 million and $15 million, respectively, in the second quarter and first half of 2023. Refer to Note 2 within Item 1 for additional information.

Segment Results

Our global operations are currently comprised of four segments, consisting of the following geographic segments related to legacy Baxter business: Americas, EMEA and APAC, and a global segment for our Hillrom business. We use net sales and operating income on a segment basis to make resource allocation decisions and assess the

39

ongoing performance of our segments. The following is a summary of financial information for our reportable segments:

	Net sales								Operating income (loss)
	Three months ended June 30,				Six months ended June 30,				Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022		2023		2022		2023		2022
Americas	$	1,564	$	1,494	$	3,030	$	2,971	$	498	$	488	$	918	$	1,008
EMEA	762		738		1,476		1,437		112		169		218		288
APAC	638		647		1,240		1,274		118		156		225		307
Hillrom	743		715		1,474		1,470		147		149		305		349
Total segments	3,707		3,594		7,220		7,152		875		962		1,666		1,952
Corporate and other	—		—		—		—		(892)		(698)		(1,554)		(1,605)
Total	$	3,707	$	3,594	$	7,220	$	7,152	$	(17)	$	264	$	112	$	347

Americas

Segment net sales and operating income were $1.56 billion and $498 million, respectively, in the second quarter of 2023 and $3.03 billion and $918 million, respectively, in the first half of 2023. Segment net sales and operating income were $1.49 billion and $488 million, respectively, in the second quarter and $2.97 billion and $1.01 billion, respectively, in the first half of 2022. The increase in operating income in the second quarter of 2023 was primarily due to increased sales and SG&A savings from restructuring actions implemented in recent periods, partially offset by lower gross margins due to raw materials inflation and higher supply chain costs. The decrease in operating income in the first half of 2023 was due to lower gross margins resulting from raw materials inflation and higher supply chain costs, partially offset by increased sales and SG&A savings from restructuring actions implemented in recent periods.

EMEA

Segment net sales and operating income were $762 million and $112 million, respectively, in the second quarter of 2023 and $1.48 billion and $218 million, respectively, in the first half of 2023. Segment net sales and operating income were $738 million and $169 million, respectively, in the second quarter and $1.44 billion and $288 million, respectively, in the first half of 2022. The decrease in operating income was primarily due to an unfavorable impact of foreign exchange rates on results, as compared to the prior-year period, an unfavorable product mix and higher supply chain and raw materials costs, partially offset by increased sales.

APAC

Segment net sales and operating income were $638 million and $118 million, respectively, in the second quarter of 2023 and $1.24 billion and $225 million, respectively, in the first half of 2023. Segment net sales and operating income were $647 million and $156 million, respectively, in the second quarter $1.27 billion and $307 million, respectively, in the first half of 2022. The decrease in operating income was driven by lower sales, resulting from the unfavorable impact of foreign exchange rates on results, as compared to the prior-year period, and higher supply chain and raw materials costs.

Hillrom

Segment net sales and operating income were $743 million and $147 million, respectively, in the second quarter of 2023 and $1.47 billion and $305 million, respectively, in the first half of 2023. Segment net sales and operating income were $715 million and $149 million, respectively, in the second quarter and $1.47 billion and $349 million, respectively, in the first half of 2022. The increase in operating income in the second quarter was due to savings from restructuring actions implemented during the current year, partially offset by an unfavorable product mix and higher supply chain and raw materials costs. The decrease in operating income in the first half of 2023 was due to lower sales in our Patient Support Systems product category, an unfavorable product mix and higher supply chain and raw materials costs, partially offset by higher sales in our Front Line Care and Global Surgical Solutions product categories.

40

Corporate and Other

Certain items are maintained at Corporate and are not allocated to a segment. They primarily include corporate headquarters costs, certain R&D costs, manufacturing variances and centrally managed supply chain costs, product category support costs, stock compensation expense, certain employee benefit plan costs, and certain gains, losses, and other charges (such as business optimization, acquisition and integration costs, intangible asset amortization and asset impairments).

The Corporate operating loss in the second quarter was higher than the prior-year periods primarily due to business optimization charges, which included a $243 million noncash impairment of property, plant and equipment resulting from our decision to close one of our U.S.-based manufacturing facilities later this year, increased centrally managed manufacturing and supply chain costs and higher bonus accruals under our annual employee incentive compensation plans, partially offset by lower intangible asset amortization expense and acquisition and integration-related expenses.

LIQUIDITY AND CAPITAL RESOURCES

The following table is a summary of the statement of cash flows for the six-month periods ended June 30, 2023 and 2022.

	Six months ended June 30,
(in millions)	2023		2022
Cash flows from operations - continuing operations	$	780	$	369
Cash flows from investing activities - continuing operations	(326)		(457)
Cash flows from financing activities	(492)		(1,017)

Cash Flows from Operations - Continuing Operations

In the first half of 2023, cash provided by operating activities - continuing operations was $780 million, as compared to cash provided by operating activities of $369 million in the first half of 2022, an increase of $411 million. Cash flows from operations in the current year period was favorably impacted, as compared to the prior year period, by lower annual payouts under our employee incentive compensation plans, which were determined based on our 2022 performance, and by the timing of accounts payable payments.

Cash Flows from Investing Activities - Continuing Operations

In the first half of 2023, cash used for investing activities - continuing operations included payments for acquisitions and investments of $3 million and capital expenditures of $328 million. In the first half of 2022, cash used for investing activities included payments for acquisitions and investments of $190 million, primarily related to our payment to acquire the rights to Zosyn, and capital expenditures of $277 million.

Cash Flows from Financing Activities

In the first half of 2023, cash used in financing activities included dividend payments of $292 million and debt repayments of $142 million and a net decrease in commercial paper borrowings of $51 million, partially offset by proceeds from stock issued under employee benefit plans of $54 million. In the first half of 2022, cash used for financing activities included debt repayments of $749 million, dividend payments of $281 million, and a $45 million net repayment of short-term borrowings, partially offset by proceeds from stock issued under employee benefit plans of $88 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 the repurchase of up to $2.00 billion of our common stock. Our Board of Directors increased this authority by an additional $1.50 billion in each of November 2016 and February 2018, by an additional $2.00 billion in November 2018 and by an additional $1.50 billion in October 2020. We did not repurchase any shares under this authority in the first half of 2023. We had $1.30 billion remaining available under this authorization as of June 30, 2023.

41

Credit Facilities and Access to Capital and Credit Ratings

Credit Facilities

As of June 30, 2023, our U.S. dollar-denominated revolving credit facility and Euro-denominated revolving credit facility had a maximum capacity of $2.50 billion and €200 million, respectively. There were no borrowings outstanding under these credit facilities as of June 30, 2023 or December 31, 2022. Our commercial paper borrowing arrangements require us to maintain undrawn borrowing capacity under our credit facilities for an amount at least equal to our outstanding commercial paper borrowings.

In the first quarter of 2023, we amended the credit agreements governing our U.S. dollar-denominated term loan credit facility and revolving credit facility and the guaranty agreement with respect to our Euro-denominated revolving credit facility, in each case to amend the net leverage ratio covenant to increase the maximum net leverage ratio for the four fiscal quarters ending March 31, 2023, June 30, 2023, September 30, 2023 and December 31, 2023. As of June 30, 2023, we were in compliance with the financial covenants in these agreements. Based on our covenant calculations as of June 30, 2023, we had capacity to draw approximately $2.63 billion under our credit facilities, less outstanding commercial paper borrowings, which were $249 million as of June 30, 2023. The non-performance of any financial institution supporting either of the credit facilities would reduce the maximum capacity of these facilities by the institution’s respective commitment. Additionally, a deterioration in our financial performance may further reduce our ability to draw on our credit facilities.

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. We had $1.72 billion of cash and cash equivalents as of June 30, 2023, 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 June 30, 2023, we had approximately $16.48 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.

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 key financial ratios or credit ratings or other significantly unfavorable changes in conditions. However, we believe we have sufficient financial flexibility to issue debt, enter into other financing arrangements and attract long-term capital on acceptable terms to support our growth objectives and reduce our post-acquisition debt levels as we take actions consistent with our capital allocation priorities. In January 2023, Fitch revised our senior debt credit rating outlook from negative to rating watch negative. There have been no changes to our investment grade credit ratings that we disclosed in our 2022 Annual Report.

LIBOR Reform

In 2017, the United Kingdom’s Financial Conduct Authority announced that after 2021 it would no longer compel banks to submit the rates required to calculate the London Interbank Offered Rate (LIBOR) and other interbank offered rates, which have been widely used as reference rates for various securities and financial contracts, including loans, debt and derivatives. This announcement indicated that the continuation of LIBOR on the current basis was not guaranteed after 2021. Regulators in the U.S. and other jurisdictions have been working to replace these rates with alternative reference interest rates that are supported by transactions in liquid and observable markets, such as the Secured Overnight Financing Rate (SOFR). In 2020, it was announced that certain U.S. dollar LIBOR tenors would not cease until 2023. In September 2022, our $2.50 billion U.S. dollar-denominated revolving credit facility and our $4.00 billion Term Loan Credit Agreement were amended to reference SOFR-based rates. Currently, our €200 million Euro-denominated revolving credit facility references EURIBOR-based rates. A discontinuation would require this arrangement to be modified in order to replace EURIBOR with an alternative reference interest rate, which could impact our cost of funds. That credit facility agreement includes provisions related to the determination of a successor rate.

42

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 2022 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 2022 Annual Report.

The valuation of goodwill and intangible assets is one of our critical accounting policies and we recognized significant impairment charges during 2022. During the current year-to-date period, our Patient Support Systems reporting unit has been experiencing lower levels of customer orders for certain products than what we had previously expected. Certain of the products sold by that reporting unit are subject to our customers’ capital budgets and we believe that many of those customers are delaying significant capital purchases due to uncertainty in the current economic environment. We currently expect that such capital spending constraints will likely continue throughout much of 2023. However, we have not reduced our longer-term outlook for that reporting unit and we have seen sequential improvement in capital orders between the first and second quarters of 2023. We currently expect that such capital spending constraints, which are often cyclical and closely aligned with broader economic conditions, will continue to improve in the foreseeable future. Based on the excess of the reporting unit’s fair value over its carrying amount during our most recent annual impairment test in the fourth quarter of 2022 and our expectations for its performance over the forecast period, we determined that it is not more likely than not that the goodwill of that reporting unit was impaired as of June 30, 2023. Therefore, we did not perform a trigger-based quantitative goodwill impairment test during the second quarter of 2023. However, we are continuing to closely monitor the performance of our Patient Support Systems reporting unit and if there is a significant adverse change in our outlook for that business in the future a goodwill impairment could arise at that time.

There have been no significant changes in the application of our critical accounting policies during the first half of 2023.

RECENT ACCOUNTING PRONOUNCEMENTS

There are no accounting standards issued but not yet effective that we believe will have a material impact on our condensed 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 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), the U.S. Food and Drug Administration (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 inspection (2017 Warning Letter).¹ FDA re-inspected the facilities and issued a Form FDA 483 on May 17, 2022. On September 1, 2022, FDA notified us that the inspection had been classified as voluntary action indicated. From January 19, 2023 to January 27, 2023, FDA performed an inspection at the Ahmedabad site, concluding with the issuance of a Form FDA 483. On April 26, 2023, FDA notified us that the inspection had been classified as official action indicated. We received a Warning Letter on July 25, 2023 based on observations identified in the January 2023 inspection (2023 Warning Letter). Since the issuance of the 2017 Warning Letter, we have implemented corrective and preventive actions to address FDA's observations, as well as other enhancements at the site. We intend to fully respond to the 2023 Warning Letter, including the implementation of additional corrective and preventive actions, and to continue to engage with FDA regarding the agency's observations. In addition, since the issuance of the 2017 Warning Letter, we

43

have secured other sites in our manufacturing network and have launched and distribute select products from those sites in the U.S.

1 Available online at https://www.fda.gov/ICECI/EnforcementActions/WarningLetters/ucm613538.htm

FORWARD-LOOKING INFORMATION

This quarterly report on Form 10-Q includes forward-looking statements. 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 is intended to identify forward-looking statements that represent our current judgment about possible future events. These forward-looking statements may include statements with respect to our plan to implement a simplified operating model, the proposed spinoff of our Renal Care and Acute Therapies product categories, our review of strategic alternatives the pending sale of our BPS product category and other portfolio management activities we may undertake in the future, accounting estimates and assumptions (including with respect to goodwill and other intangible asset impairments), global economic conditions, litigation-related matters, future regulatory filings and our R&D pipeline (including anticipated product approvals or clearances), sales from new product offerings, credit exposure to foreign governments, the adequacy of cash flows and credit facilities, potential developments with respect to credit ratings, investment of foreign earnings, estimates of liabilities including those related to uncertain tax positions, contingent payments, future pension plan contributions, costs, discount rates and rates of return, our exposure to financial market volatility and foreign currency, interest rate and credit risks (including as a result of recent banking crises), the impact of inflation on our business, the impact of competition, future sales growth, business development activities, cost saving initiatives, future capital and R&D expenditures, future debt issuances, the adequacy of tax provisions and reserves, the effective tax rate and all other statements that do not relate to historical facts.

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:

• our ability to execute and complete strategic initiatives, asset dispositions and other transactions, including the proposed spinoff of our Renal Care and Acute Therapies product categories, our plans to simplify our operating model and manufacturing footprint and the pending sale of our BPS product category, the timing for such transactions, the ability to satisfy any applicable conditions and the expected proceeds, consideration and benefits;

• failure to accurately forecast or achieve our short-and long-term financial improvement performance and goals (including with respect to our strategic actions) and related impacts on our liquidity;

• our ability to execute on our capital allocation plans, including our debt repayment plans, the timing and amount of any dividends, share repurchases and divestiture proceeds and the capital structure of the public company that we expect to form as a result of the proposed spinoff (and the resulting capital structure for the remaining company);

• 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 ongoing war in Ukraine, the related economic sanctions being imposed globally in response to the conflict and potential trade wars) and continuing public health crises, pandemics and epidemics, such as the COVID-19 pandemic, or the anticipation of any of the foregoing, on our operations and our employees, customers and suppliers, including foreign governments in countries in which we operate;

• downgrades to our credit ratings or ratings outlooks, and the related impact on our funding costs and liquidity;

• product development risks, including satisfactory clinical performance and obtaining and maintaining required regulatory approvals (including as a result of evolving regulatory requirements), the ability to manufacture at appropriate scale, and the general unpredictability associated with the product development cycle;

44

• product quality or patient safety issues leading to product recalls, withdrawals, launch delays, warning letters, import bans, 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, DOJ 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, including the continued delay in lifting the warning letters at our Ahmedabad facility;

• demand for and market acceptance risks for and competitive pressures related to new and existing products (including challenges with our ability to accurately predict changing customer preferences and future expenditures, which has led to and may continue to lead to increased inventory levels, and needs and advances in technology and the resulting impact on customer inventory levels), and the impact of those products on quality and patient safety concerns;

• breaches, including by cyber-attack, data leakage, unauthorized access or theft, or failures of or vulnerabilities in, our information technology systems or products;

• the continuity, availability and pricing of acceptable raw materials and component parts (and our ability to pass some or all of these costs to our customers through recent price increases or otherwise), and the related continuity of our manufacturing and distribution and those of our 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, public health crises and epidemics/pandemics, regulatory actions or otherwise);

• our ability to finance and develop new products or enhancements on commercially acceptable terms or at all;

• loss of key employees, the occurrence of labor disruptions or the inability to identify and recruit new employees;

• failures with respect to our quality, compliance or ethics programs;

• future actions of third parties, including third-party payers and our customers and distributors (including GPOs and IDNs), 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; legislation, regulation and other governmental pressures in the United States or globally, including the cost of compliance and potential penalties for purported noncompliance thereof, all of which may affect pricing, reimbursement, taxation and rebate policies of government agencies and private payers or other elements of our business, including new or amended laws, rules and regulations (such as the California Consumer Privacy Act of 2018, the European Union’s General Data Protection Regulation and annual proposed regulatory changes of the U.S. Department of Health and Human Services in kidney health policy and reimbursement, which may substantially change the U.S. end stage renal disease market and demand for our peritoneal dialysis products, necessitating significant multi-year capital expenditures, which are difficult to estimate in advance);

• the outcome of pending or future litigation, including the ethylene oxide or other claims;

• the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies;

• global regulatory, trade and tax policies (including with respect to climate change and other sustainability matters);

• the ability to protect or enforce our owned or in-licensed patent or other proprietary rights (including trademarks, copyrights, trade secrets and know-how) or patents of third parties preventing or restricting our manufacture, sale or use of affected products or technology;

• the impact of any goodwill or other intangible asset impairments on our operating results;

• 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);

45

• actions by tax authorities in connection with ongoing tax audits;

• other factors identified elsewhere in this report and other filings with the SEC, including those factors described in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, all of which are available on our website.

Actual results may differ materially from those projected in the forward-looking statements. We do not undertake to update our forward-looking statements.

46

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 Euro, British Pound, Chinese Renminbi, Korean Won, Australian Dollar, Canadian Dollar, Japanese Yen, Colombian Peso, Brazilian Real, Mexican Peso, Indian Rupee and Swedish Krona. 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. The maximum term over which we have cash flow hedge contracts in place related to foreign exchange risk on forecasted transactions as of June 30, 2023 is 12 months. We also enter into derivative instruments to hedge foreign exchange risk on certain intra-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 June 30, 2023, while not predictive in nature, indicated that if the U.S. Dollar uniformly weakened by 10% against all currencies, the net pre-tax asset balance of $7 million with respect to those contracts would change by $8 million.

The sensitivity analysis model recalculates the fair value of the foreign exchange contracts outstanding as of June 30, 2023 by replacing the actual exchange rates as of June 30, 2023 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 June 30, 2023, our subsidiary in Turkey had net monetary assets of $21.6 million.

Interest Rate and Other Risks

Refer to the caption “Interest Rate and Other Risks” in the “Financial Instrument Market Risk” section of the 2022 Annual Report. There were no significant changes during the quarter ended June 30, 2023.

47

Item 4.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our interim 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 Exchange Act as of June 30, 2023. Based on that evaluation, our Chief Executive Officer and our interim Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2023.

Changes in Internal Control over Financial Reporting

During the second quarter of 2023, we completed the implementation of a new financial consolidation system. The implementation of our new system was not made in response to any identified deficiency or weakness in our internal controls over financial reporting. The implementation was subject to various testing and review procedures prior to and after execution. We have updated our internal controls over financial reporting, as necessary, to accommodate any modifications to our business processes or accounting procedures due to the implementation. Management will continue to monitor, test and evaluate the operating effectiveness of internal controls related to the consolidation system during the post-implementation period to ensure that effective controls over financial reporting continue to be maintained.

Other than as described in the preceding paragraph, 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 June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

48

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 2022 Annual Report.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

In July 2012, we announced that our Board of Directors authorized us to repurchase up to $2.00 billion of our common stock on the open market or in private transactions. The Board of Directors increased this authority by an additional $1.50 billion in each of November 2016 and February 2018, by an additional $2.00 billion in November 2018 and by an additional $1.50 billion in October 2020. During the second quarter of 2023, we did not repurchase any shares under this authority. We had $1.30 billion remaining under this program as of June 30, 2023. This program does not have an expiration date.

Item 5. Other Information

Certain of our officers and directors have made elections to participate in, and are participating in, our employee stock purchase plan or have made, and may from time to time make, elections to have shares withheld to cover withholding taxes or pay the exercise price of options, which may constitute non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K).

Updated Almeida Terms of Employment Letter

On July 25, 2023 Baxter entered into an amended offer letter with Mr. Almeida setting forth the terms of his continued employment. Under the new letter, which replaces Mr. Almeida’s prior offer letter, Mr. Almeida will continue to serve as Chairman of the Board and President and Chief Executive Officer of the Company. Mr. Almeida’s base salary will remain $1,300,000 per annum, his target bonus will remain at 165% of base salary, and his current annual long-term incentive target opportunity will continue to be $11,000,000. Mr. Almeida remains eligible to receive benefits to the same extent and on the same terms as those benefits provided to other senior executives. Mr. Almeida also remains eligible to receive cash severance equal to two years’ base salary and target bonus in the event of an involuntary termination without “Cause” or termination with “Good Reason” (each as defined in Mr. Almeida’s Change In Control Agreement dated September 24, 2020). In addition, Mr. Almeida is eligible to use the Company aircraft or, if unavailable, charter aircraft for personal use up to 50 hours per calendar year (prorated for 2023 based on the date of the amended offer letter). Mr. Almeida is required to reimburse the Company for any personal usage of the Company’s aircraft in excess of this allowance pursuant to his time sharing agreement with the Company and is responsible for all taxes associated with the allowance.

In addition to these benefits, in accordance with the terms of his Change In Control Agreement, Mr. Almeida remains eligible for certain payments in the event of his termination for Good Reason or termination without Cause following a “Change in Control” (as defined in such agreement). Mr. Almeida is also subject to certain restrictive covenants, including non-competition, non-solicitation of customers, suppliers and employees and non-disparagement.

The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the full text of the amended offer letter, which is filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q and is incorporated into this filing by reference.

49

Item 6.    Exhibits

Exhibit Index:

Exhibit Number	Description
2.1	Equity Purchase Agreement, dated May 8, 2023, by and among Baxter International Inc., Baxter Healthcare Corporation, Baxter Deutschland Holding GmbH, Gambro Dialysatoren GmbH, Bamboo US BidCo LLC and Blitz 23-317 GmbH (incorporated by reference to Exhibit 2.1 to Baxter International Inc.'s Current Report on Form 8-K, filed on May 9, 2023).
3.1	Amended and Restated Bylaws, dated May 6, 2023 (incorporated by reference to Exhibit 3.1 to Baxter International Inc.'s Current Report on Form 8-K, filed on May 9, 2023).
10.1*	Amended Offer Letter between Baxter International Inc. and José E. Almeida, dated as of July 25, 2023.
10.2*	Change in Control Agreement between Baxter International Inc. and Christopher Toth, dated as of June 15, 2023.
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.
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.
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.
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.
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.

50

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: July 27, 2023
	By:	/s/ Brian C. Stevens
		Brian C. Stevens Senior Vice President, Interim Chief Financial Officer, Chief Accounting Officer and Controller (duly authorized officer and principal financial and accounting officer)

51

EX-10.1

Exhibit 10.1

July 25, 2023

Mr. Jose E. Almeida

Chairman and CEO

Baxter International, Inc.

One Baxter Parkway

Deerfield, IL 60015

UPDATED TERMS OF EMPLOYMENT

Dear Joe,    

The independent members of the Board of Directors of Baxter International Inc. (the Company) believe your leadership and contributions are essential to achieving the successful transformation the Company is undertaking and want to extend your tenure as Chairman and CEO (subject to the Board’s annual election process).  This letter is intended to replace your original employment letter/agreement dated October 28, 2015 and your updated terms of employment letter dated March 12, 2020, and to continue the following terms of your ongoing employment:

•Your annual salary will continue to be $1,300,000, which will be reviewed each year at the same time as other executive officers, when the independent members of the Board may approve an increase but not a reduction unless commonly applied to all executive officers.

•You will continue to be eligible to participate in the Company’s annual cash bonus program. Your target bonus will continue at 165% of your annual salary. The target bonus will be reviewed each year at the same time as other executive officers when the independent members of the Board may approve an increase but not a reduction unless commonly applied to all executive officers. The actual bonus you will receive will continue to vary depending on both business performance and your individual performance, as determined by the independent members of the Board.

•You will continue to be eligible to participate in the long-term incentive (LTI) program for senior management. Your current annual LTI target grant value will continue to be $11,000,000 and your current LTI grant-value mix will continue to be 25% stock options, 25% restricted stock units, and 50% performance share units (PSUs). Please note that the LTI grant-value mix and your target grant value are reviewed annually for all executive officers and are subject to change, including based on market competitiveness and the Company’s financial performance. All LTI awards are made pursuant to the Baxter International 2021 Incentive Plan, as may be amended or replaced with a successor plan from time to time (Equity Plan) and will be subject to the terms and conditions of the Equity Plan and applicable award agreement.

•As agreed in your March 12, 2020 letter, starting with your 2020 LTI grant, and for all of your future regular annual LTI grants, you are or will be eligible for a “Qualifying Retirement” as defined in the applicable award agreement under the Equity Plan based on attaining age 60. Please note that the above definition of a Qualifying Retirement will be unique to the LTI grants specified in this paragraph and will not apply to one-off or special awards made to you under the Equity Plan (unless the terms of such special awards specifically contemplate its application).

•Commencing as of the date of this letter, you will be eligible to use the Company aircraft or, if unavailable, charter aircraft for personal use up to 50 hours per calendar year (prorated for 2023 based on the date of this letter) (the Aircraft Allowance). Any personal usage above this amount will require reimbursement under current processes pursuant to your Aircraft Time Sharing Agreement with the Company entered into in March 2018 (the Time Sharing Agreement) and the Company’s

Baxter International Inc.

One Baxter Parkway / Deerfield, Illinois 60015

T 224.948.2000

aircraft usage policies as in effect from time to time. You will also be responsible for all associated taxes from imputed income in connection with or arising from the Aircraft Allowance; the Company is not providing you with any gross-up in connection with such taxes. The Time Sharing Agreement otherwise remains in effect in accordance with its terms.

•You will continue to be eligible for the existing severance agreement that applies in the event of a change in control of the Company (CIC Agreement).

•Outside the context of the CIC Agreement, if your employment is terminated, other than (a) by the Company for Cause or (b) by you without Good Reason, the Company will continue to provide you not more than sixty days following your Date of Termination of employment with a lump-sum separation payment equal to two times your annual base salary and annual target bonus as of the Date of Termination, as well as health-care coverage described in the CIC Agreement; provided you have properly executed within the applicable timeframe and not timely revoked a customary release of claims in a form reasonably acceptable to the Company. In exchange, you agree to continue to abide by the non-competition, non-solicitation, and non-disparagement provisions provided in Section 9 of the CIC Agreement outside the context of the CIC Agreement. Please note that the capitalized terms in this paragraph have the meanings provided in the CIC Agreement without regard to whether a CIC has occurred.

•Baxter provides comprehensive health-and-welfare benefits, executive physical examinations, an Employee Stock Purchase Plan (ESPP), and a 401(k) Plan. In all cases, your participation and coverages will continue the same as now. Please note that Baxter’s benefit program is subject to change and any such change would supersede this letter.

•You will continue to be eligible to participate in Baxter’s U.S. Deferred Compensation Plan, as in effect from time to time, where you may elect to defer eligible compensation (base salary and annual bonus) and receive Company contributions in respect to amounts above the Internal Revenue Service limits set for qualified 401(k) plans.

•You will continue to be eligible for five weeks of vacation per year.

•Your employment will continue to be “at-will,” meaning that you or the Company may end your employment at any time and for any reason. 

•All payments to you from the Company will continue to be subject to tax and other withholding and deductions, as required or permitted by applicable law and Company policies.

•All payments and awards to you from the Company will continue to be subject to Baxter’s Executive Compensation Recoupment Policy.

All consideration to be paid or provided to you by the Company is intended to comply with or be exempt from Section 409A of the Internal Revenue Code (the Code), so you are not subject to penalties that may be imposed under 409A. For purposes of Section 409A, each payment made under this letter will be treated as a separate payment. In no event may you, directly or indirectly, designate the calendar year of payment. This letter shall be interpreted consistent with that intent, and, to the extent any provision hereof would result in your payment of such taxes or penalties, this letter would be amended in a manner to bring it into compliance with 409A and preserve as possible the economic value of the relevant consideration. Notwithstanding any provision of this letter to the contrary, if and solely to the extent necessary to comply with the restriction in Section 409A(a)(2)(B) of the Code concerning payments to

Baxter International Inc.

One Baxter Parkway / Deerfield, Illinois 60015

T 224.948.2000

“specified employees” (as defined in Section 409A) any payment on account of your separation from service that would otherwise be due hereunder within six months after such separation will nonetheless be delayed until the first business day of the seventh month following your date of termination and the first such payment will include the cumulative amount of any payments that would have been paid prior to such date if not for such restriction.

The letter will be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and performed wholly within that state, without giving effect to the conflict of laws provisions thereof.

Please indicate your written acceptance of by signing below with knowledge that the Board looks forward to your continued successful leadership of a truly outstanding organization that you helped to build.

Sincerely,                                                                               

Baxter Board of Directors by

Brent Shafer, Lead Director

/s/ Brent Shafer__________________________________

Nancy M. Schlichting, Compensation and Human Capital Committee Chair

/s/ Nancy M. Schlichting____________________________

Cathy R. Smith, Nominating, Corporate Governance & Public Policy Committee Chair

/s/ Cathy R. Smith________________________________

Accepted by:      

Jose E. Almeida

/s/ Jose E. Almeida__________________________________       

Baxter International Inc.

One Baxter Parkway / Deerfield, Illinois 60015

T 224.948.2000

EX-10.2

Exhibit 10.2

Change In Control Agreement

This Change in Control Agreement (“Agreement”) is entered into by Baxter International Inc. (the “Company”) and Christopher Toth (the “Executive”).

Whereas, the Company considers it essential to the best interests of its stockholders to foster the continued employment of key management personnel; and

Whereas, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and

Whereas, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s key management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control; and

Now, therefore, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows:

1.Defined Terms. The definitions of capitalized terms used in this Agreement are provided in the last Section.

2.Term of Agreement. The Term of this Agreement shall commence on the Effective Date and shall continue in effect through the second anniversary of the Effective Date; provided, however, that commencing on the first anniversary of the Effective Date and on each anniversary thereafter, the Term shall automatically be extended for one additional year unless, not later than one year before the end of the then-existing Term, the Company or the Executive shall have given notice not to extend the Term; and further provided, however, that if a Change in Control shall have occurred during the Term, the Term shall expire no earlier than twenty-four (24) months beyond the date on which such Change in Control occurred.

3.The Company’s Covenants Summarized. In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive’s covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein. No Severance Payments shall be payable under this Agreement unless there shall have been (or, under the terms of the second sentence of Section 6.1 hereof, there shall be deemed to have been) a termination of the Executive’s employment with the Company following a Change in Control and during the Term, all subject to the terms and conditions set forth herein and provided that such termination of employment constitutes a “separation from service” for purposes of Section 409A of the Code. This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company.

4.The Executive’s Covenants. The Executive agrees that, subject to the terms and conditions of this Agreement, in the event of a Potential Change in Control during the Term, the Executive will remain in the employ of the Company until the earliest of (i) the last day of the Potential Change in Control Period, (ii) the date of a Change in Control, (iii) the date of termination by the

Executive of the Executive’s employment for Good Reason or by reason of death, Disability or Retirement, or (iv) the termination by the Company of the Executive’s employment for any reason.

5.Compensation Other ThanSeverance Payments.

5.1.Following a Change in Control and during the Term, during any period that the Executive fails to perform the Executive’s full-time duties with the Company as a result of incapacity due to physical or mental illness, the Company shall pay the Executive’s full salary to the Executive at the rate in effect at the commencement of any such period, together with all compensation and benefits payable to the Executive under the terms of any compensation or benefit plan, program or arrangement maintained by the Company during such period (other than any disability plan), until the Executive’s employment is terminated by the Company for Disability.

5.2.If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay the Executive’s full salary to the Executive through the Date of Termination at the rate in effect immediately prior to the Date of Termination or, if higher, the rate in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, together with all compensation and benefits payable to the Executive through the Date of Termination under the terms of the Company’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason.

5.3.If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay to the Executive the Executive’s normal post-termination compensation and benefits as such payments become due. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company’s retirement, insurance and other compensation or benefit plans, programs and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the occurrence of the first event or circumstance constituting Good Reason.

5.4.Upon the occurrence of a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company (in any case within the meaning of Section 409A of the Code), notwithstanding any provision of any non-qualified defined contribution deferred compensation plans to the contrary, in lieu of any other benefit under such plans attributable to the period before 2009 or for a year commencing after the date of this Agreement, the Company shall pay to the Executive a lump sum amount, in cash, equal to the then present value of the deferred compensation otherwise payable to the Executive pursuant to the terms of such plans. The payments required by this Section 5.4 shall be made not later than the fifth day following the date of such change in ownership or control of the Company or change in asset ownership. The provisions of this Section 5.4 shall survive the termination of this Agreement.

5.5.For the two-year period commencing immediately following a Change in Control, the Company agrees: (A) to continue in effect any compensation plan in which the Executive participates immediately prior to the Change in Control which is material to the Executive’s total compensation, including but not limited to the Company’s equity-based long term incentive plans and annual incentive plans, or any substitute plans adopted prior to the Change in Control,

-2-

unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan; (B) to continue the Executive’s participation in the plans described in the foregoing paragraph (A) (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount or timing of payment of benefits provided and the level of the Executive’s participation relative to other participants, as existed immediately prior to the Change in Control; and (C) to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Company’s pension, savings, life insurance, medical, health and accident, or disability plans in which the Executive was participating immediately prior to the Change in Control (except for across the board changes similarly affecting all senior executives of the Company and all senior executives of any Person in control of the Company), not to take any other action which would directly or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change in Control, and to provide the Executive with the number of paid vacation days to which the Executive is entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy in effect at the time of the Change in Control.

6.Severance Payments.

6.1.If the Executive’s employment is terminated following a Change in Control and during the Term (provided that such termination of employment constitutes a “separation from service” within the meaning of Section 409A of the Code), other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”), in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof, provided that the Executive shall have properly executed, within forty-five (45) days of his Date of Termination, and not revoked a customary general waiver and release of claims in a form reasonably acceptable to the Company. For purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) and such termination was at the request or direction of a Person who has entered into an agreement with the Company the consummation of which would constitute a Change in Control, (ii) the Executive terminates his employment for Good Reason prior to a Change in Control (whether or not a Change in Control ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that such position is not correct.

(A)In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to one and a half times the sum of (i) the Executive’s base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the

-3-

first occurrence of an event or circumstance constituting Good Reason, and (ii) the Executive’s target annual bonus under any annual bonus or incentive plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination or, if higher, the highest target annual bonus in respect of the fiscal year in which occurs the Change in Control or the first event or circumstance constituting Good Reason.

(B)(1)     For the eighteen (18) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents life, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater after-tax cost to the Executive than the after-tax cost to the Executive immediately prior to such date or occurrence; provided, however, that such health and welfare benefits shall be provided, as applicable, through an arrangement that satisfies the requirements of Section 105 or 106 of the Code and, to the extent the payments represent a reimbursement of expenses incurred by the Participant, shall be paid not later than the last day of the year following the year in which the underlying expenses were incurred. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be eliminated if benefits of the same type are received by or made available to the Executive during the eighteen (18) month period following the Executive’s termination of employment (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive).

        (2)     In addition, if the Executive would have become entitled to benefits under the Company’s post-retirement health care or life insurance plans, as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, had the Executive’s employment terminated at any time during the period of eighteen (18) months after the Date of Termination, the Company shall provide such post-retirement health care or life insurance benefits to the Executive and the Executive’s dependents commencing on the later of (i) the date on which such coverage would have first become available and (ii) the date on which benefits described in subsection (1) terminate.

        (3)     To the extent the benefits to be made available under this Section 6.1(B) are not medical expenses within the meaning of Treas. Reg. § 1.409A-1(b)(9)(v)(B) and are not short-term deferrals within the meaning of Section 409A of the Code, then during the first six months following the Date of Termination the Executive shall pay to the Company, at the time such benefits are provided, the fair market value of such benefits, and the Company shall reimburse the Executive for any such payment not later than the fifth day following the expiration of such six-month period unless the Company reasonably determines, based on the advice of counsel, that the benefits can be provided during such six-month period without causing the Executive to be subject to an “additional tax” under Section 409A(a)(2) of the Code.

(C)Notwithstanding any provision of any annual incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any unpaid incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination under any such plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to a subsequent date, and (ii) a pro rata portion to the Date of

-4-

Termination of the aggregate value of all contingent incentive compensation awards to the Executive for all then uncompleted periods under any such plan, calculated as to each such award by multiplying the award that the Executive would have earned on the last day of the performance award period, assuming the achievement, at the target level, of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period. The provisions of this Section 6.1(C) shall survive the termination of this Agreement in respect of awards granted under any such annual incentive plans before the date of such termination.

(D)The Company shall provide the Executive with outplacement services suitable to the Executive’s position for a period of eighteen months or, if earlier, until the first acceptance by the Executive of an offer of employment, in an aggregate amount not exceeding $35,000. Subject to the foregoing, in no event shall any payment described in this Section 6.1(D) be made after the end of the calendar year following the calendar year in which the services were provided.

(E)The lump-sum cash payments required pursuant to the preceding provisions of this Section 6.1 hereof shall be made not later than the fifth day following the Date of Termination. Notwithstanding the above, the Executive shall not be considered to have terminated employment with the Company for purposes of this Agreement and no payments shall be due to the Executive under this Agreement unless the Executive would be considered to have incurred a “separation from service” from the Company within the meaning of Section 409A of the Code. Each amount to be paid or benefit to be provided under this Agreement shall be construed as a separate identified payment for purposes of Section 409A of the Code. Any payments described in this Agreement that are due within the “short term deferral period” within the meaning of Section 409A of the Code or that are otherwise exempt from application of Section 409A of the Code, shall not be treated as deferred compensation unless applicable law requires otherwise. If the Executive, at the Date of Termination, is a “specified employee” as defined in the Baxter International Inc. and Subsidiaries Deferred Compensation Plan, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Agreement during the six-month period immediately following the Executive’s termination of employment shall instead be paid on the first business day after the date that is six months following the Executive’s termination of employment (or upon the Executive’s death, if earlier) unless the Company reasonably determines, based on the advice of counsel, that such delayed commencement is not required to avoid an “additional tax” under Section 409A(a)(2) of the Code. In addition, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, in the event that the Executive’s termination of employment occurs within fifty-five (55) days prior to the end of a calendar year, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Agreement on or before December 31of the year in which the termination of employment occurs shall, subject to the previous sentence of this section, instead be paid on the first business day following January 1of the first calendar year beginning after the Executive’s termination of employment.

6.2.The payments provided in subsections (A) and (C) of Section 6.1 hereof shall be made not later than the fifth day following the Date of Termination. At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement

-5-

setting forth the manner in which such payments were calculated and the basis for such calculations. If the Executive at the time of such separation from service is a “specified employee” as defined in the Baxter International Inc. and Subsidiaries Deferred Compensation Plan, no payments shall be made to the Executive prior to the earlier of (a) the expiration of the six (6) month period measured from the date of the Executive’s “separation from service” (as such term is defined in Section 409A of the Code), or (b) the date of the Executive’s death unless the Company reasonably determines, based on the advice of counsel, that such delayed commencement is not required to avoid an “additional tax” under Section 409A(a)(2) of the Code.

6.3.The Company also shall pay to the Executive all legal fees and expenses incurred by the Executive in disputing any issue hereunder relating to the termination of the Executive’s employment (provided the Executive shall prevail in such dispute), in seeking to obtain or enforce any benefit or right provided by this Agreement (provided the Executive shall obtain or successfully enforce such benefit or right) or in connection with any tax audit or proceeding to the extent attributable to the application of Section 409A of the Code to any payment or benefit provided hereunder. Such payments shall be made within five (5) business days after delivery of the Executive’s written request for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require; provided that no such payment shall be made in respect of fees or expenses incurred by the Executive after the later of the tenth anniversary of the Date of Termination or the Executive’s death, and provided further, that, upon the Executive’s separation from service with the Company, in no event shall any additional such payments be made prior to the date that is six months after the date of the Executive’s separation from service unless the Company reasonably determines, based on the advice of counsel, that such delay is not required to avoid an “additional tax” under Section 409A(a)(2) of the Code.

7.Termination Procedures.

7.1.Notice of Termination. After a Change in Control and during the Term, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 12 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board (excluding Executive, if Executive is a member of the Board) at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail.

7.2.Date of Termination. “Date of Termination,” with respect to any purported termination of the Executive’s employment after a Change in Control and during the Term, shall mean (i) if the Executive’s employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive’s duties during such thirty (30) day period), and (ii) if the

-6-

Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less than thirty (30) days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than fifteen (15) days nor more than sixty (60) days, respectively, from the date such Notice of Termination is given); provided that Executive shall not be considered to have terminated employment with the Company for purposes of this Agreement and no payments shall be due to the Executive under this Agreement unless the Executive would be considered to have incurred a “separation from service” from the Company within the meaning of Section 409A of the Code.

7.3.Dispute Concerning Termination. If within fifteen (15) days after any Notice of Termination is given, or, if later, prior to the Date of Termination (as determined without regard to this Section 7.3), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be extended until the earlier of (i) the date on which the Term ends or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator or a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); provided, however, that the Date of Termination shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence; and further provided, however, that the provisions of this Section 7.3 shall apply only to the extent that, pursuant to Treas. Reg. § 1.409A-3(g), they will not cause an additional tax under Section 409A of the Code.

8.No Mitigation. The Company agrees that, if the Executive’s employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6. Further, except as specifically provided in Section 6.1(B), no payment or benefit provided for in this Agreement shall be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

9.Certain Restrictive Covenants.

9.1.Noncompetition. The Executive understands that any entrusting of Confidential Information to him by the Company is done in reliance on a confidential relationship arising out of his employment with the Company. The Executive understands that Confidential Information may include, for example, Trade Secrets, inventions, know-how and products, customer, patient, supplier and competitor information, sales, pricing, cost, and financial data, research, development, marketing and sales programs and strategies, manufacturing, marketing and service techniques, processes and practices, and regulatory strategies. The Executive understands that Confidential Information also includes all information received by the Company or the Subsidiaries under an obligation of confidentiality to a third party. The Executive further understands that Confidential Information that the Executive may acquire or to which the Executive may have access, especially with regard to research and development projects and findings, formulae, designs, formulation, processes, the identity of suppliers, customers and patients, methods of manufacture, and cost and pricing data is of great value to the Company. In consequence of such entrusting and such consideration, the Executive shall not, directly or indirectly, for a period of twelve (12) months after the Date of Termination: (i) render services to any Competing Organization in connection with any Competing Product within such geographic

-7-

limits as the Company and such Competing Organization are, or would be, in actual competition when such rendering of services might potentially involve the disclosure or use of confidential information or trade secrets; or (ii) provide advice as to investment in a Competitive Business (including, without limitation, advice with respect to the purchase, sale, or operation of such business, or advice with respect to financing or other economic structuring of such business). The Executive understands that services described in the preceding sentence, including without limitation those rendered to such Competing Organization in an executive, scientific, administrative, or consulting capacity in connection with Competing Products are in support of actual competition in various geographic areas and thus fall within the prohibition of this Agreement regardless of where such services physically are rendered.

9.2.Solicitation of Customers, Suppliers and Employees. While Executive is employed by the Company, and for a period of eighteen (18) months after the Date of Termination for any reason:

(A)The Executive shall not solicit or attempt to solicit any party who is then or, during the 12-month period prior to such solicitation or attempt by the Executive was (or was solicited to become), a customer or supplier of the Company or Affiliate, provided that the restriction in this Section 9.2 shall not apply to any activity on behalf of a business that is not a Competing Organization.

(B)The Executive shall not solicit, entice, persuade or induce any individual who is employed by the Company or the Subsidiaries (or was so employed within 90 days prior to the Executive’s action) to terminate or refrain from renewing or extending such employment or to become employed by or enter into contractual relations with any other individual or entity other than the Company or the Subsidiaries, and the Executive shall not approach any such employee for any such purpose or authorize or knowingly cooperate with the taking of any such actions by any other individual or entity.

9.3.Nondisparagement. The Executive agrees that, while he is employed by the Company, and after his Date of Termination, he shall not make any false, defamatory or disparaging statements about the Company, the Subsidiaries, or the officers or directors of the Company or the Subsidiaries that are reasonably likely to cause material damage to the Company, the Subsidiaries, or the officers or directors of the Company or the Subsidiaries. While the Executive is employed by the Company, and after his Date of Termination, the Company agrees, on behalf of itself and the Subsidiaries, that neither the officers nor the directors of the Company or the Subsidiaries shall make any false, defamatory or disparaging statements about the Executive that are reasonably likely to cause material damage to the Executive.Notwithstanding the foregoing, nothing in this paragraph will prevent either the Company or any Executive from responding to incorrect, disparaging or derogatory public statement by the other to the extent necessary to correct or refute such public statement. The parties acknowledge that the Executive has the right to: (1) report any good faith allegation of unlawful employment practices to any appropriate federal, state, or local government agency enforcing discrimination laws; (2) report any good faith allegation of criminal conduct to any appropriate federal, state, or local official; (3) participate in a proceeding with any appropriate federal, state, or local government agency enforcing discrimination laws; (4) make any truthful statements or disclosures required by law, regulation, or legal process; and (5) request or receive confidential legal advice.

-8-

10.Section 280G. If any payment or benefit received or to be received by the Executive (including any payment or benefit received pursuant to this Agreement or otherwise) would be, in whole or in part, subject to the excise tax imposed by Section 4999 of the Code, or any successor provision thereto, or any similar tax imposed by state or local law, or any interest or penalties with respect to such excise tax (such tax or taxes, together with any interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the payments or benefits provided under this Agreement or any other agreement pursuant to which the Executive receives payments that give rise to the Excise Tax will either be (a) paid in full, or (b) reduced to the extent necessary to make such payments and benefits not subject to such Excise Tax. The Company shall reduce or eliminate the payments in the following order of priority in a manner consistent with Section 409A of the Code: (i) first by reducing cash compensation, (ii) next from equity compensation, and then (iii) pro rata among all remaining payments and benefits, in each case, in reverse order beginning with payments that are to be paid the farthest in time from the determination. The Executive shall receive the greater, on an after-tax basis, of (a) or (b). In no event will the Company be required to gross up any payment or benefit to the Executive to avoid the effects of the Excise Tax or to pay any regular or excise taxes arising from the application of the Excise Tax. Unless the Company and the Executive otherwise agree in writing, any parachute payment calculation will be made in writing by the Accounting Firm, whose calculations will be conclusive and binding upon the Company and the Executive for all purposes. The Company and the Executive will furnish to the Accounting Firm such information and documents as they may reasonably request in order to make a parachute payment determination. The Accounting Firm also will provide its calculations, together with detailed supporting documentation, both to the Company and to the Executive, before making any payments that may be subject to the Excise Tax. For purposes of this Agreement, “Accounting Firm” shall mean the then-current independent auditors of the Company or such other nationally recognized certified public accounting firm as may be designated by the Company.

11.Successors; Binding Agreement.

11.1.In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

11.2.This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate.

12.Notices. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to the Executive, to the address inserted below the Executive’s signature on the final page hereof and, if to the Company, to the address set forth below, or to such other

-9-

address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:

To the Company:                    

Baxter International Inc.

Attention: General Counsel

One Baxter Parkway

Deerfield, Illinois 60015

13.Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; provided, however, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive’s employment with the Company only in the event that the Executive’s employment with the Company is terminated on or following a Change in Control, by the Company other than for Cause or by the Executive for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Illinois. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6, 7 and 9 hereof) shall survive such expiration. To the extent applicable, it is intended that the Agreement comply with the provisions of Section 409A of the Code. The Agreement will be administered and interpreted in a manner consistent with this intent, and any provision that would cause the Agreement to fail to satisfy Section 409A of the Code will have no force and effect until amended to comply therewith (which amendment may be retroactive to the extent permitted by Section 409A of the Code).

14.Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

15.Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

16.Settlement of Disputes; Arbitration.

16.1.All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Board and shall be in writing. Any denial by the Board of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The

-10-

Board shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Board a decision of the Board within sixty (60) days after notification by the Board that the Executive’s claim has been denied. Notwithstanding the above, in the event of any dispute, any decision by the Board hereunder shall be subject to a de novo review by the arbitrator in accordance with Section 16.2 hereof.

16.2.Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Chicago, Illinois in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the Executive shall be entitled to seek specific performance of the Executive’s right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

16.3.The Executive acknowledges that the Company would be irreparably injured by a violation of Section 9 hereof, and the Executive agrees that the Company, notwithstanding the foregoing provisions of this Section 16 and in addition to any other remedies available to it for such breach or threatened breach, shall be entitled to a preliminary injunction, temporary restraining order, or other equivalent relief, restraining the Executive from any actual or threatened breach of Section 9. If a bond is required to be posted in order for the Company to secure an injunction or other equitable remedy, the parties agree that said bond need not be more than a nominal sum.

17.Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated below:

(A)“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

(B)“Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

(C)“Board” shall mean the Board of Directors of the Company.

(D)“Cause” for termination by the Company of the Executive’s employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof) that has not been cured within 30 days after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, (x) no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company and (y) in the event of a dispute concerning the application of this provision, no claim by the Company that Cause

-11-

exists shall be given effect unless the Company establishes to the Board by clear and convincing evidence that Cause exists.

(E) “Change in Control” shall have the same meaning given to such term in the Baxter International Inc. 2021 Incentive Plan, as may be amended and as in effect from time to time, or any shareholder-approved successor plan thereto.

(F)“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

(G)“Company” shall mean Baxter International Inc. and, except in determining under Section 17(E) hereof whether or not any Change in Control of the Company has occurred, shall include any successor to its business and/or assets which assumes this Agreement by operation of law, or otherwise.

(H)“Competing Products” shall mean products, processes, or services of any person or organization other than the Company, in existence or under development, which are substantially the same, may be substituted for, or applied to substantially the same end use as the products, processes or services for which the Executive had any responsibility during the twenty-four (24) months preceding the Date of Termination.

(I)“Competing Organization” shall mean persons or organizations engaged in, or about to become engaged in, research or development, production, distribution, marketing, providing or selling of a Competing Product.

(J)“Competitive Business” means with respect to any business for which the Executive had any responsibility during the twenty-four (24) months preceding the Date of Termination, any business in which the Company or any of the Subsidiaries was engaged during the 12-month period prior to the Executive’s Date of Termination, any business if the Company or any Subsidiary has devoted material resources to entering into such business during such 12-month period prior to the Date of Termination, and any business to the extent that it is engaged in the investing in or acquisition of all or a portion of the assets or stock of the Company or the Subsidiaries.

(K)“Confidential Information” means information relating to the present or planned business of the Company or the Subsidiaries which has not been released publicly by authorized representatives of the Company or the Subsidiaries.

(L)“Date of Termination” shall have the meaning set forth in Section 7.2 hereof.

(M)“Disability” shall be deemed the reason for the termination by the Company of the Executive’s employment, if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive’s duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive’s duties.

(N)“Effective Date” shall mean the the date Executive signs this Agreement.

-12-

(O)“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

(P)“Executive” shall mean the individual named in the first paragraph of this Agreement.

(Q)“Good Reason” for termination by the Executive of the Executive’s employment shall mean the occurrence (without the Executive’s express written consent which specifically references this Agreement) after any Change in Control, or prior to a Change in Control under the circumstances described in clauses (ii) and (iii) of the second sentence of Section 6.1 hereof (treating all references in paragraphs (I) through (V) below to a “Change in Control” as references to a “Potential Change in Control”), of any one of the following acts by the Company, or failures by the Company to act:

(I)the assignment to the Executive of any duties inconsistent with the Executive’s status as a senior executive officer of the Company or a substantial adverse alteration in the nature or status of the Executive’s responsibilities from those in effect immediately prior to the Change in Control;

(II)a material reduction by the Company in the Executive’s annual base salary as in effect on the date hereof or as the same may be increased from time to time;

(III)a material change in the location of the Executive’s principal place of employment, including for this purpose any relocation more than fifty (50) miles from the Executive’s principal place of employment immediately prior to the Change in Control or the Company’s requiring the Executive to be based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on the Company’s business to an extent substantially consistent with the Executive’s present business travel obligations;

(IV)the failure by the Company to pay to the Executive any portion of the Executive’s current compensation, or to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due; or

(V)any other action or inaction that constitutes a material breach of this Agreement, including without limitation Sections 5.5 and 11.1.

The Executive’s right to terminate the Executive’s employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness. The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. For purposes of any determination regarding the existence of Good Reason, any claim by the Executive that Good Reason exists shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that Good Reason does not exist. The Executive shall not be deemed to have resigned for Good Reason unless (i) the Executive provides written notice to the Company of the existence of the Good Reason event within ninety (90) days after its initial occurrence, (ii) the Company fails to cure such Good Reason event within thirty (30) days after receipt of such notice, and (iii) the Executive effectively terminates employment within one-hundred eighty (180) days following the occurrence of the non-cured Good Reason event.

-13-

(R)“Items” include documents, reports, drawings, photographs, designs, specifications, formulae, plans, samples, research or development information, prototypes, tools, equipment, proposals, marketing or sales plans, customer information, customer lists, patient lists, patient information, regulatory files, financial data, costs, pricing information, supplier information, written, printed or graphic matter, or other information and materials that concern the Company’s or the Subsidiaries’ business that come into his possession or about which the Executive has knowledge by reason of his employment.

(S)“Notice of Termination” shall have the meaning set forth in Section 7.1 hereof.

(T)“Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(U)“Potential Change in Control Period” shall mean the period commencing on the occurrence of a Potential Change in Control and ending upon the occurrence of a Change in Control or, if earlier (I) with respect to a Potential Change in Control occurring pursuant to Section 16(V)(I) hereof, immediately upon the abandonment or termination of the applicable agreement, (ii) with respect to a Potential Change in Control occurring pursuant to Section 16(V)(II) hereof, immediately upon a public announcement by the applicable party that such party has abandoned its intention to take or consider taking actions which if consummated would result in a Change in Control or (iii) with respect to a Potential Change in Control occurring pursuant to Section 16(V)(III) or (IV) hereof, upon the eighteen month anniversary of the occurrence of such Potential Change in Control (or such earlier date as may be determined by the Board).

(V)“Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(I)the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(II)the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

(III)any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 15% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates); or

(IV)the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

-14-

(W)“Retirement” shall be deemed the reason for the termination by the Executive of the Executive’s employment if such employment is terminated in accordance with the Company’s retirement policy, including early retirement, generally applicable to its salaried employees.

(X)“Severance Payments” shall have the meaning set forth in Section 6.1 hereof.

(Y)“Subsidiary,” for purposes of Section 9 hereof, shall mean any corporation, partnership, joint venture or other entity during any period in which at least fifty percent in such entity is owned, directly or indirectly, by the Company.

(Z)“Term” shall mean the period of time described in Section 2 hereof (including any extension, continuation or termination described therein).

(AA)“Trade Secrets” include all information encompassed in all Items, including but not limited to all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing, that the Company and its Subsidiaries have taken reasonable measures to keep such information secret, and the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.

[Remainder of page intentionally blank.]

-15-

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date by their signatures below.

EXECUTIVE /s/ Christopher Toth Executive’s Signature June 14, 2023 Executive’s Signature Date	BAXTER INTERNATIONAL INC. /s/ Jeanne Mason By: Jeanne Mason Senior Vice President, Human Resources June 15, 2023 Signature Date
Executive’s Address for Notices: [REDACTED]

-16-

EX-31.1

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, José E. Almeida, 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/ José E. Almeida

José E. Almeida

Chairman of the Board and

Chief Executive Officer

Date: July 27, 2023

EX-31.2

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, Brian C. Stevens, 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/ Brian C. Stevens

Brian C. Stevens

Senior Vice President, Interim Chief Financial Officer, Chief Accounting Officer and Controller

Date: July 27, 2023

EX-32.1

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

José E. Almeida, as Chairman of the Board 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 June 30, 2023 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/ José E. Almeida

José E. Almeida

Chairman of the Board and

Chief Executive Officer

July 27, 2023

EX-32.2

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

Brian C. Stevens, as Interim 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 June 30, 2023 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/ Brian C. Stevens

Brian C. Stevens

Senior Vice President, Interim Chief Financial Officer, Chief Accounting Officer and Controller

July 27, 2023

XML

Cover - shares	6 Months Ended
	Jun. 30, 2023	Jul. 20, 2023
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	1-4448
Entity Registrant Name	BAXTER INTERNATIONAL INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	36-0781620
Entity Address, Address Line One	One Baxter Parkway,
Entity Address, City or Town	Deerfield,
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60015
City Area Code	224.
Local Phone Number	948.2000
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		506,404,827
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Entity Central Index Key	0000010456
Current Fiscal Year End Date	--12-31
Common Stock, $1.00 par value | New York Stock Exchange
Document Information [Line Items]
Title of 12(b) Security	Common Stock, $1.00 par value
Trading Symbol	BAX (NYSE)
Security Exchange Name	NYSE
Common Stock, $1.00 par value | Chicago Stock Exchange
Document Information [Line Items]
Title of 12(b) Security	Common Stock, $1.00 par value
Trading Symbol	BAX (NYSE)
Security Exchange Name	CHX
0.4% Global Notes due 2024 | New York Stock Exchange
Document Information [Line Items]
Title of 12(b) Security	0.4% Global Notes due 2024
Trading Symbol	BAX 24
Security Exchange Name	NYSE
1.3% Global Notes due 2025 | New York Stock Exchange
Document Information [Line Items]
Title of 12(b) Security	1.3% Global Notes due 2025
Trading Symbol	BAX 25
Security Exchange Name	NYSE
1.3% Global Notes due 2029 | New York Stock Exchange
Document Information [Line Items]
Title of 12(b) Security	1.3% Global Notes due 2029
Trading Symbol	BAX 29
Security Exchange Name	NYSE

XML

Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 1,722	$ 1,718
Accounts receivable, net of allowances of $128 in 2023 and $114 in 2022	2,495	2,571
Inventories	2,897	2,679
Prepaid expenses and other current assets	858	857
Current assets of discontinued operations	233	186
Total current assets	8,205	8,011
Property, plant and equipment, net	4,494	4,695
Goodwill	6,418	6,452
Other intangible assets, net	6,470	6,793
Operating lease right-of-use assets	533	541
Other non-current assets	1,067	1,109
Non-current assets of discontinued operations	698	686
Total assets	27,885	28,287
Current liabilities:
Short-term debt	249	299
Current maturities of long-term debt and finance lease obligations	1,928	1,105
Accounts payable	1,240	1,110
Accrued expenses and other current liabilities	2,278	2,170
Current liabilities of discontinued operations	70	61
Total current liabilities	5,765	4,745
Long-term debt and finance lease obligations, less current portion	14,306	15,232
Operating lease liabilities	438	447
Other non-current liabilities	1,622	1,848
Non-current liabilities of discontinued operations	123	120
Total liabilities	22,254	22,392
Commitments and contingencies
Equity:
Common stock, $1 par value, authorized 2,000,000,000 shares, issued 683,494,944 shares in 2023 and 2022	683	683
Common stock in treasury, at cost, 177,125,182 shares in 2023 and 179,062,594 shares in 2022	(11,296)	(11,389)
Additional contributed capital	6,341	6,322
Retained earnings	13,655	14,050
Accumulated other comprehensive income (loss)	(3,814)	(3,833)
Total Baxter stockholders’ equity	5,569	5,833
Noncontrolling interests	62	62
Total equity	5,631	5,895
Total liabilities and equity	$ 27,885	$ 28,287

XML

Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowance for accounts receivable, current	$ 128	$ 114
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, authorized (in shares)	2,000,000,000	2,000,000,000
Common stock, issued (in shares)	683,494,944	683,494,944
Treasury stock, shares (in shares)	177,125,182	179,062,594

XML

Condensed Consolidated Statements of Income (Loss) (unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Net sales	$ 3,707	$ 3,594	$ 7,220	$ 7,152
Cost of sales	2,596	2,223	4,834	4,519
Gross margin	1,111	1,371	2,386	2,633
Selling, general and administrative expenses	964	970	1,959	2,017
Research and development expenses	165	148	329	297
Other operating income, net	(1)	(11)	(14)	(28)
Operating income (loss)	(17)	264	112	347
Interest expense, net	124	89	241	174
Other (income) expense, net	42	(44)	40	(60)
Income (loss) from continuing operations before income taxes	(183)	219	(169)	233
Income tax expense	10	34	24	40
Income (loss) from continuing operations	(193)	185	(193)	193
Income from discontinued operations, net of tax	54	70	99	135
Net income (loss)	(139)	255	(94)	328
Net income attributable to noncontrolling interests	2	3	3	5
Net income (loss) attributable to Baxter stockholders	$ (141)	$ 252	$ (97)	$ 323
Income (loss) from continuing operations per common share
Income from continuing operations per common share, basic (in dollars per share)	$ (0.39)	$ 0.36	$ (0.39)	$ 0.37
Income from continuing operations per common share, diluted (in dollars per share)	(0.39)	0.36	(0.39)	0.37
Income from discontinued operations per common share
Income from discontinued operations per common share, basic (in dollars per share)	0.11	0.14	0.20	0.27
Income from discontinued operations per common share, diluted (in dollars per share)	0.11	0.14	0.20	0.27
Net income (loss) per common share
Basic (in dollars per share)	(0.28)	0.50	(0.19)	0.64
Diluted (in dollars per share)	$ (0.28)	$ 0.50	$ (0.19)	$ 0.64
Weighted-average number of shares outstanding
Basic (in shares)	506	504	506	503
Diluted (in shares)	506	508	506	508

XML

Condensed Consolidated Statements of Comprehensive Income Loss (unaudited) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Income (loss) from continuing operations	$ (193)	$ 185	$ (193)	$ 193
Other comprehensive income (loss) from continuing operations, net of tax:
Currency translation adjustments, net of tax expense (benefit) of $4 and $2 for the three months ended June 30, 2023 and 2022, respectively, and ($9) and ($9) for the six months ended June 30, 2023 and 2022, respectively.	(76)	(372)	5	(376)
Pension and other postretirement benefits, net of tax expense (benefit) of ($2) and $5 for the three months ended June 30, 2023 and 2022, respectively, and ($3) and $8 the six months ended June 30, 2023 and 2022, respectively.	(5)	23	(11)	32
Hedging activities, net of tax expense (benefit) of $2 for the three months ended June 30, 2023 and 2022, respectively, and $1 and $3 for the six months ended June 30, 2023 and 2022, respectively.	7	13	5	11
Available-for-sale debt securities, net of tax expense of zero for the three months ended June 30, 2023 and 2022 and zero and $1 for the six months ended June 30, 2023 and 2022, respectively.	0	1	0	2
Total other comprehensive loss from continuing operations, net of tax	(74)	(335)	(1)	(331)
Comprehensive loss from continuing operations	(267)	(150)	(194)	(138)
Income from discontinued operations, net of tax	54	70	99	135
Other comprehensive income (loss) from discontinued operations, net of tax - currency translation adjustments	(1)	(45)	20	(56)
Comprehensive loss	(214)	(125)	(75)	(59)
Less: Comprehensive income attributable to noncontrolling interests	2	3	3	5
Comprehensive loss attributable to Baxter stockholders	$ (216)	$ (128)	$ (78)	$ (64)

XML

Condensed Consolidated Statements of Comprehensive Income Loss (unaudited) (Parenthetical) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Currency translation adjustments, tax	$ 4	$ 2	$ (9)	$ (9)
Pension and other postretirement benefits, tax	(2)	5	(3)	8
Hedging activities, tax	2	2	1	3
Debt securities, tax	$ 0	$ 0	$ 0	$ 1

XML

Condensed Consolidated Statements of Changes in Equity (unaudited) - USD ($) $ in Millions	Total	Total Baxter stockholders' equity	Common stock	Common stock in treasury	Additional contributed capital	Retained earnings	Accumulated other comprehensive income (loss)	Noncontrolling interests
Balance, beginning of period (in shares) at Dec. 31, 2021			683,000,000
Balance, beginning of period (in usd) at Dec. 31, 2021	$ 9,121	$ 9,077	$ 683	$ (11,488)	$ 6,197	$ 17,065	$ (3,380)	$ 44
Balance, Treasury, beginning period (in shares) at Dec. 31, 2021				182,000,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	328	323				323		5
Other comprehensive income (loss)	(387)	(387)					(387)
Purchases of treasury stock	(8)	(8)		$ (8)
Stock issued under employee benefit plans and other (in shares)				(2,000,000)
Stock issued under employee benefit plans and other	143	143		$ 87	56
Dividends declared on common stock	(289)	(289)				(289)
Change in noncontrolling interests	(5)							(5)
Balance, end of period (in shares) at Jun. 30, 2022			683,000,000
Balance, end of period (in usd) at Jun. 30, 2022	8,903	8,859	$ 683	$ (11,409)	6,253	17,099	(3,767)	44
Balance, Treasury, ending period (in shares) at Jun. 30, 2022				180,000,000
Balance, beginning of period (in shares) at Mar. 31, 2022			683,000,000
Balance, beginning of period (in usd) at Mar. 31, 2022	9,119	9,075	$ 683	$ (11,422)	6,207	16,994	(3,387)	44
Balance, Treasury, beginning period (in shares) at Mar. 31, 2022				180,000,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	255	252				252		3
Other comprehensive income (loss)	(380)	(380)					(380)
Purchases of treasury stock	(8)	(8)		$ (8)
Stock issued under employee benefit plans and other	67	67		21	46
Dividends declared on common stock	(147)	(147)				(147)
Change in noncontrolling interests	(3)							(3)
Balance, end of period (in shares) at Jun. 30, 2022			683,000,000
Balance, end of period (in usd) at Jun. 30, 2022	8,903	8,859	$ 683	$ (11,409)	6,253	17,099	(3,767)	44
Balance, Treasury, ending period (in shares) at Jun. 30, 2022				180,000,000
Balance, beginning of period (in shares) at Dec. 31, 2022			683,000,000
Balance, beginning of period (in usd) at Dec. 31, 2022	$ 5,895	5,833	$ 683	$ (11,389)	6,322	14,050	(3,833)	62
Balance, Treasury, beginning period (in shares) at Dec. 31, 2022	179,062,594			179,000,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	$ (94)	(97)				(97)		3
Other comprehensive income (loss)	19	19					19
Stock issued under employee benefit plans and other (in shares)				(2,000,000)
Stock issued under employee benefit plans and other	112	112		$ 93	19
Dividends declared on common stock	(298)	(298)				(298)
Change in noncontrolling interests	(3)							(3)
Balance, end of period (in shares) at Jun. 30, 2023			683,000,000
Balance, end of period (in usd) at Jun. 30, 2023	$ 5,631	5,569	$ 683	$ (11,296)	6,341	13,655	(3,814)	62
Balance, Treasury, ending period (in shares) at Jun. 30, 2023	177,125,182			177,000,000
Balance, beginning of period (in shares) at Mar. 31, 2023			683,000,000
Balance, beginning of period (in usd) at Mar. 31, 2023	$ 5,941	5,879	$ 683	$ (11,324)	6,312	13,947	(3,739)	62
Balance, Treasury, beginning period (in shares) at Mar. 31, 2023				178,000,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(139)	(141)				(141)		2
Other comprehensive income (loss)	(75)	(75)					(75)
Stock issued under employee benefit plans and other (in shares)				(1,000,000)
Stock issued under employee benefit plans and other	57	57		$ 28	29
Dividends declared on common stock	(151)	(151)				(151)
Change in noncontrolling interests	(2)							(2)
Balance, end of period (in shares) at Jun. 30, 2023			683,000,000
Balance, end of period (in usd) at Jun. 30, 2023	$ 5,631	$ 5,569	$ 683	$ (11,296)	$ 6,341	$ 13,655	$ (3,814)	$ 62
Balance, Treasury, ending period (in shares) at Jun. 30, 2023	177,125,182			177,000,000

XML

Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Millions		6 Months Ended
		Jun. 30, 2023	Jun. 30, 2022
Cash flows from operations
Net income (loss)		$ (94)	$ 328
Less: Income from discontinued operations, net of tax		99	135
Income (loss) from continuing operations		(193)	193
Adjustments to reconcile net income to cash flows from operations:
Depreciation and amortization		628	723
Deferred income taxes		(156)	(109)
Stock compensation		62	77
Net periodic pension and other postretirement costs		(8)	28
Property, plant and equipment impairments		271	7
Other		31	(48)
Changes in balance sheet items:
Accounts receivable, net		102	55
Inventories		(209)	(296)
Prepaid expenses and other current assets		(39)	(58)
Accounts payable		157	86
Accrued expenses and other current liabilities		160	(204)
Other		(26)	(85)
Cash flows from operations – continuing operations		780	369
Cash flows from operations – discontinued operations		50	113
Cash flows from operations		830	482
Cash flows from investing activities
Capital expenditures		(328)	(277)
Acquisitions, net of cash acquired, and investments		(3)	(190)
Other investing activities, net		5	10
Cash flows from investing activities - continuing operations		(326)	(457)
Cash flows from investing activities - discontinued operations		(17)	(34)
Cash flows from investing activities		(343)	(491)
Cash flows from financing activities
Repayments of debt		(142)	(749)
Net decreases in debt with original maturities of three months or less		(51)	(45)
Cash dividends on common stock		(292)	(281)
Proceeds from stock issued under employee benefit plans		54	88
Other financing activities, net		(61)	(30)
Cash flows from financing activities		(492)	(1,017)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		9	(74)
Decrease in cash, cash equivalents and restricted cash		4	(1,100)
Cash, cash equivalents and restricted cash at beginning of period	[1]	1,722	2,956
Cash, cash equivalents and restricted cash at end of period	[1]	$ 1,726	$ 1,856

[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 June 30, 2023, December 31, 2022, and June 30, 2022 (in millions): June 30, 2023December 31, 2022June 30, 2022Cash and cash equivalents$1,722 $1,718 $1,852 Restricted cash included in prepaid expenses and other current assets4 4 4 Cash, cash equivalents and restricted cash$1,726 $1,722 $1,856 

XML

Condensed Consolidated Statements of Cash Flows (unaudited) (Parenthetical) - USD ($) $ in Millions		Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022
Statement of Cash Flows [Abstract]
Cash and cash equivalents		$ 1,722	$ 1,718	$ 1,852
Restricted cash included in prepaid expenses and other current assets		4	4	4
Cash, cash equivalents and restricted cash	[1]	$ 1,726	$ 1,722	$ 1,856

[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 June 30, 2023, December 31, 2022, and June 30, 2022 (in millions): June 30, 2023December 31, 2022June 30, 2022Cash and cash equivalents$1,722 $1,718 $1,852 Restricted cash included in prepaid expenses and other current assets4 4 4 Cash, cash equivalents and restricted cash$1,726 $1,722 $1,856 

XML

BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

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 Securities and Exchange Commission (SEC) for interim financial reporting. Accordingly, certain information and footnote 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, 2022 (2022 Annual Report).

In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation 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 results of operations for the current interim period are not necessarily indicative of the results of operations to be expected for the full year.

In January 2023, we announced our intention to separate our Renal Care and Acute Therapies product categories into a new, publicly traded company. While the completion of the proposed spinoff is subject to satisfaction of customary conditions, we are targeting completion of the planned separation by July 2024 or earlier. Additionally, we announced that we are pursuing strategic alternatives for our BioPharma Solutions (BPS) product category. In May 2023, we entered into a definitive agreement to sell that business. Closing of that transaction is subject to satisfaction of regulatory approvals and other customary conditions. See Note 2 for additional information.

Risks and Uncertainties

Supply Constraints and Global Economic Conditions

We have experienced significant challenges to our global supply chain in recent periods, including production delays and interruptions, increased costs and shortages of raw materials and component parts (including resins and electromechanical devices) and higher transportation costs, resulting from the pandemic and other exogenous factors including significant weather events, elevated inflation levels, increased interest rates, disruptions to certain ports of call around the world, the war in Ukraine and other geopolitical events. We expect to experience some of these and other challenges related to our supply chain in future periods. These challenges, including the unavailability of certain raw materials and component parts, have also had a negative impact on our sales for certain product categories due to our inability to fully satisfy demand. While we have begun to see improvements in the availability of certain component parts and improved pricing in certain raw materials, these challenges have not completely subsided and may continue to have a negative impact on our sales in the future.

We expect that the challenges caused by global economic conditions, among other factors, may continue to have an adverse effect on our business.

XML

DISCONTINUED OPERATIONS

6 Months Ended

Jun. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

In May 2023, we entered into a definitive agreement to sell our BPS business. That business, which has historically been reported within our Americas segment, provides contract manufacturing and development services, which include sterile fill-finish manufacturing and support services across clinical and commercial applications, primarily serving customers in the pharmaceutical industry. BPS has historically operated through our wholly-owned subsidiaries Baxter Pharmaceutical Solutions, LLC, a Delaware limited liability company, and Baxter Oncology GmbH, a German limited liability company. Under the related equity purchase agreement (EPA), we expect to sell those entities to Advent International and Warburg Pincus for $4.25 billion in cash, subject to certain adjustments specified in the EPA. After giving effect to those adjustments, we currently expect to receive approximately $3.92 billion of net pre-tax cash proceeds (approximately $3.40 billion after tax). The transaction is currently expected to close during the second half of 2023, subject to satisfaction of regulatory approvals and other customary conditions. We intend to use the net after-tax proceeds from this transaction to repay certain of our debt obligations.

We concluded that our BPS business met the criteria to be classified as held-for-sale in May 2023. 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. We analyzed the quantitative and qualitative factors relevant to the pending divestiture of our BPS business, including its significance to our overall net income (loss) and earnings (loss) per share, and determined that those conditions for discontinued operations presentation have been met. As such, the financial position, results of operations and cash flows of that business are reported as discontinued operations in the accompanying consolidated financial statements. Prior period amounts have been adjusted to reflect discontinued operations presentation.

Baxter Pharmaceutical Solutions, LLC includes our BPS manufacturing facility in Bloomington Indiana and Baxter Oncology GmbH includes our manufacturing facilities in Halle and Bielefeld Germany. The Bielefeld site is not part of the BPS business, so it is not part of the pending divestiture transaction and its activities and net assets will be transferred to another Baxter subsidiary prior to closing. Accordingly, amounts related to the Bielefeld site continue to be presented as continuing operations in the accompanying condensed consolidated financial statements.

At closing of the transaction, Baxter will enter into a Transition Services Agreement (TSA) and a Master Commercial Manufacturing and Supply Agreement (MSA) with Baxter Pharmaceutical Solutions, LLC and Baxter Oncology GmbH. Pursuant to the TSA, Baxter on the one hand and Baxter Pharmaceutical Solutions, LLC and Baxter Oncology GmbH on the other hand will provide to each other, on an interim basis, specific transition services for up to 24 months post-closing to help ensure business continuity and minimized disruptions. Services to be provided by Baxter under the TSA include finance, information technology, human resources, integrated supply chain and certain other administrative services. Pursuant to the MSA, Baxter Pharmaceutical Solutions, LLC and Baxter Oncology GmbH will provide development, manufacturing, regulatory and other related services for certain Baxter pharmaceutical products for up to 5 years post-closing (with certain extension rights as provided therein).

Results of Discontinued Operations and Assets and Liabilities of Discontinued Operations

The following table summarizes the major classes of line items included in income from discontinued operations, net of tax, for the three and six months ended June 30, 2023 and 2022:

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Net sales	$	142	$	152	$	278	$	301
Cost of sales	71		70		135		133
Gross margin	71		82		143		168
Selling, general and administrative expenses	14		6		29		11
Research and development expenses	1		—		1		1
Other income, net	(1)		—		—		—
Income from discontinued operations before income taxes	57		76		113		156
Income tax expense	3		6		14		21
Income from discontinued operations, net of tax	$	54	$	70	$	99	$	135

For the three and six months ended June 30, 2023, selling, general and administrative expenses include $8 million and $15 million, respectively, of separation-related costs incurred in connection with the pending sale of BPS.

The following table summarizes the carrying amounts of the major classes of assets and liabilities classified as discontinued operations in the condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022:

(in millions)	June 30, 2023		December 31, 2022
Accounts receivable, net of allowances	$	82	$	88
Inventories	60		39
Prepaid expenses and other current assets	91		59
Property, plant and equipment, net	297		284
Goodwill	386		391
Operating lease right-of-use assets	9		9
Other non-current assets	6		2
Assets of discontinued operations	$	931	$	872
Accounts payable	$	40	$	29
Accrued expenses and other current liabilities	30		32
Operating lease liabilities	8		9
Other non-current liabilities	115		111
Liabilities of discontinued operations	$	193	$	181

XML

SUPPLEMENTAL FINANCIAL INFORMATION

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

SUPPLEMENTAL FINANCIAL INFORMATION

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 six months ended June 30, 2023 and 2022.

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Balance at beginning of period	$	122	$	129	$	114	$	122
Charged to costs and expenses	9		3		16		9
Write-offs	(5)		(1)		(6)		(2)
Currency translation adjustments	2		(6)		4		(4)
Balance at end of period	$	128	$	125	$	128	$	125

Inventories

(in millions)	June 30, 2023		December 31, 2022
Raw materials	$	742	$	698
Work in process	316		294
Finished goods	1,839		1,687
Inventories	$	2,897	$	2,679

Property, Plant and Equipment, Net

(in millions)	June 30, 2023		December 31, 2022
Property, plant and equipment, at cost	$	11,028	$	10,780
Accumulated depreciation	(6,534)		(6,085)
Property, plant and equipment, net	$	4,494	$	4,695

Impairment of Manufacturing Facility

Our manufacturing facility in Opelika, Alabama is one of three Baxter manufacturing facilities that currently produce dialyzers used in hemodialysis (HD) treatments. The current competitive environment has increased the global supply of those products and, in connection with our initiatives to streamline our manufacturing footprint and improve our profitability, we have made the decision to cease production of dialyzers at the Opelika facility near the end of 2023. We believe that there is more than adequate availability of dialyzers in the United States and globally, and we intend to continue to manufacture those products at volumes aligned with the related market demand at our other manufacturing facilities that currently produce them.

We review the carrying amounts of long-lived assets used in operations, other than goodwill and intangible assets not subject to amortization, for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In evaluating recoverability, we group assets and liabilities at the lowest level such that the identified cash flows relating to the group are largely independent of other assets and liabilities. We then compare the carrying amounts of the assets (or asset groups) with the related estimated undiscounted future cash flows. In the event an asset (or asset group) is not recoverable, an impairment charge is recorded as the amount by which its carrying amount exceeds its fair value.

As a result of our decision to cease dialyzer production at this manufacturing facility, we performed a trigger-based recoverability assessment of its long-lived assets, which consist of a building and manufacturing equipment, including specialized equipment used in the production of dialyzers. The carrying amount of that asset group exceeded the estimated undiscounted cash flows expected to be generated, and we recognized an impairment charge of $243 million, classified within cost of sales in the accompanying condensed consolidated statements of income (loss), during the second quarter of 2023 to reduce the carrying amounts to their estimated fair values.

The fair values of the building and manufacturing equipment tested for impairment during the second quarter of 2023 were determined based on transaction prices of comparable assets (a market approach). Significant assumptions used in the determination of the fair values included the identification of representative comparable assets. Our long-lived asset fair value measurements are classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs.

Interest Expense, Net

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Interest expense, net of capitalized interest	$	132	$	93	$	259	$	181
Interest income	(8)		(4)		(18)		(7)
Interest expense, net	$	124	$	89	$	241	$	174

Other (Income) Expense, Net

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Foreign exchange (gains) losses, net	$	22	$	(15)	$	36	$	(26)
Pension and other postretirement benefit plans	(11)		(7)		(21)		(12)
Pension curtailment	—		(11)		—		(11)
Change in fair value of marketable equity securities	11		(8)		6		(8)
Non-marketable investment impairments	23		—		23		—
Other, net	(3)		(3)		(4)		(3)
Other (income) expense, net	$	42	$	(44)	$	40	$	(60)

Non-Cash Operating and Investing Activities

Right-of-use operating lease assets obtained in exchange for lease obligations for the six months ended June 30, 2023 and 2022 were $45 million and $23 million, respectively.

Purchases of property, plant and equipment included in accounts payable as of June 30, 2023 and 2022 were $57 million and $62 million, respectively.

Unsettled share repurchases included in accrued expenses and other current liabilities as of June 30, 2022 were $8 million

XML

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

The following is a reconciliation of goodwill by business segment.

(in millions)	Americas		EMEA		APAC		Hillrom		Total
Balance as of December 31, 2022	$	1,965	$	289	$	210	$	3,988	$	6,452
Currency translation and other	(22)		(3)		(2)		(7)		(34)
Balance as of June 30, 2023	$	1,943	$	286	$	208	$	3,981	$	6,418

For the periods ended June 30, 2023 and 2022, there were no reductions in goodwill relating to impairment losses.

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		Other amortized intangible assets		Trade names		In process Research and Development		Total
June 30, 2023
Gross other intangible assets	$	3,444	$	3,863	$	320	$	1,570	$	163	$	9,360
Accumulated amortization	(574)		(2,069)		(247)		—		—		(2,890)
Other intangible assets, net	$	2,870	$	1,794	$	73	$	1,570	$	163	$	6,470
December 31, 2022
Gross other intangible assets	$	3,442	$	3,836	$	325	$	1,571	$	202	$	9,376
Accumulated amortization	(460)		(1,888)		(235)		—		—		(2,583)
Other intangible assets, net	$	2,982	$	1,948	$	90	$	1,571	$	202	$	6,793

Intangible asset amortization expense was $157 million and $193 million for the three months ended June 30, 2023 and 2022, respectively, and $319 million and $410 million for the six months ended June 30, 2023 and 2022, respectively.

XML

FINANCING ARRANGEMENTS

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

FINANCING ARRANGEMENTS

FINANCING ARRANGEMENTS

Credit Facilities

In the first quarter of 2023, we amended the credit agreements governing our U.S. dollar-denominated term loan credit facility and revolving credit facility and the guaranty agreement with respect to our Euro-denominated revolving credit facility, in each case to amend the net leverage ratio covenant to increase the maximum net leverage ratio for the four fiscal quarters ending March 31, 2023, June 30, 2023, September 30, 2023 and December 31, 2023.

Our U.S. dollar-denominated revolving credit facility has a capacity of $2.50 billion and our Euro-denominated revolving credit facility has a capacity of €200 million. Each of the facilities matures in 2026. There were no borrowings outstanding under these credit facilities as of June 30, 2023 or December 31, 2022. Our commercial paper borrowing arrangements require us to maintain undrawn borrowing capacity under our credit facilities for an amount at least equal to our outstanding commercial paper borrowings. Based on our covenant calculations as of June 30, 2023 we have capacity to draw approximately $2.63 billion under our credit facilities, less commercial paper borrowings which were $249 million as of June 30, 2023.

In the second quarter of 2023, we repaid $140 million of our $2.00 billion three-year term loan facility. The loss from early extinguishment of this debt was not significant.

Commercial Paper

As of June 30, 2023, we had $249 million of commercial paper outstanding with a weighted-average interest rate of 5.52% and an original weighted-average term of 38 days. As of December 31, 2022, we had $299 million of commercial paper outstanding with a weighted-average interest rate of 4.75% and an original weighted-average term of 32 days.

XML

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

We are involved in product liability, patent, commercial, 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, 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. As of June 30, 2023 and December 31, 2022, our total recorded reserves with respect to legal and environmental matters were $28 million.

We have established reserves for certain of the matters discussed below. We are not able to estimate the amount or range of any loss for certain contingencies for which there is no reserve or additional loss for matters already reserved. While our liability in connection with these claims cannot be estimated and the resolution thereof in any reporting period could have a significant impact on our results of operations and cash flows for that period, the outcome of these legal proceedings is not expected to have a material adverse effect on our consolidated financial position. 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 and regulatory matters, these actions may lead to product recalls, injunctions, and other restrictions on our operations and monetary sanctions, including significant civil or criminal penalties. 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.

Environmental

We are involved as a potentially responsible party (PRP) for environmental clean-up costs at six 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 an ongoing environmental remediations associated with historic operations at certain of our facilities. As of June 30, 2023 and December 31, 2022, our environmental reserves, which are measured on an undiscounted basis, were $17 million and $19 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

In August 2019, we were named in an amended complaint filed by Fayette County, Georgia in the MDL In re: National Prescription Opiate Litigation pending in the U.S. District Court, Northern District of Ohio. The complaint alleges that multiple manufacturers and distributors of opiate products improperly marketed and diverted these products, which caused harm to Fayette County. The complaint is limited in its allegations as to Baxter and does not distinguish between injectable opiate products and orally administered opiates. We manufactured generic injectable opiate products in our facility in Cherry Hill, NJ, which we divested in 2011. On July 17, 2023, we were voluntarily dismissed from the litigation without prejudice.

In March 2020, two lawsuits were filed against us in the Northern District of Illinois by 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 sought damages, including compensatory and punitive damages in an unspecified amount, and unspecified injunctive and declaratory relief. The parties reached agreement to settle these lawsuits in the third quarter of 2021 for amounts that were not material to our financial results, which were paid in the fourth

quarter of 2021. We have since resolved, without litigation, additional claims of injuries from exposure to ethylene oxide at Mountain Home for amounts within accruals previously established as of December 31, 2021. On October 20, 2022, a lawsuit was filed against us in the Western District of Arkansas alleging injury as a result of exposure to ethylene oxide at Mountain Home. On December 16, 2022, we filed a motion to dismiss and for a more definite statement. In response, Plaintiffs filed a First Amended Complaint on January 6, 2023. We answered the First Amended Complaint on January 27, 2023.

We acquired Hill-Rom Holdings, Inc. (Hillrom) on December 13, 2021. In July 2021, Hill-Rom, Inc., a wholly-owned subsidiary of Hillrom, received a subpoena from the United States Office of Inspector General for the Department of Health and Human Services (the DHHS) requesting documents and information related to compliance with the False Claims Act and the Anti-Kickback Statute. Hillrom has been working with the DHHS and the Department of Justice (DOJ) to provide information responsive to the subpoena. Hillrom also voluntarily began a related internal review and Hillrom and now Baxter have been cooperating fully with the DHHS and the DOJ with respect to these matters. In October 2022, the DOJ issued a separate Civil Investigative Demand (CID) addressed to Hillrom, requesting documents and information related to compliance with the False Claims Act and the Anti-Kickback Statute. Baxter is cooperating fully with the DOJ in responding to the CID. The DHHS and DOJ often issue these types of requests when investigating alleged violations of the False Claims Act.

On December 28, 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, captioned Linet Americas, Inc. v. Hill-Rom Holdings, Inc.; Hill-Rom Company, Inc.; Hill-Rom Services, Inc. Linet alleges that Hillrom violated Sections 1, 2 and 3 of The Sherman Antitrust Act of 1890 and the Illinois Antitrust Act by allegedly engaging in anti-competitive conduct in alleged markets for standard, ICU and birthing beds. Hillrom filed an answer to the complaint on January 28, 2022 and filed a motion challenging certain aspects of plaintiff's case on May 27, 2022.

In July 2023, we and certain of our officers were named in a class action complaint captioned Grover J. Kelley et al. v. Baxter International Inc. et al. that was filed in the United States District Court for the Northern District of Illinois. The plaintiff, who allegedly purchased securities during the specified class period, filed this putative class action on behalf of himself and shareholders who acquired Baxter securities on the public market between May 25, 2022, and February 8, 2023. The plaintiff alleges that we and certain officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements and failing to disclose material facts relating to supply chain and financial guidance.

XML

STOCKHOLDERS’ EQUITY

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

Cash Dividends

Cash dividends declared per share for the three and six months ended June 30, 2023 were $0.29 and $0.58, respectively. Cash dividends declared per share for the three and six months ended June 30, 2022 were $0.29 and $0.57, respectively.

Stock Repurchase Programs

In July 2012, our Board of Directors authorized the repurchase of up to $2.00 billion of our common stock. Our Board of Directors increased this authority by an additional $1.50 billion in each of November 2016 and February 2018, by an additional $2.00 billion in November 2018 and by an additional $1.50 billion in October 2020. During the first half of 2023 we did not repurchase any shares under this authority. During the second quarter of 2022 we repurchased 0.1 million shares under this authority pursuant to Rule 10b5-1 plans. We had $1.30 billion remaining available under the authorization as of June 30, 2023.

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)Comprehensive income includes all changes in stockholders’ equity that do not arise from transactions with stockholders, and consists of net income (loss), cumulative translation adjustments (CTA), certain gains and losses from pension and other postretirement employee benefit (OPEB) plans, gains and losses on cash flow hedges 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 six months ended June 30, 2023 and 2022.

	Gains (losses)
(in millions)	CTA		Pension and OPEB plans		Hedging activities		Available-for-sale debt securities		Total
Balance as of December 31, 2022	$	(3,386)	$	(331)	$	(119)	$	3	$	(3,833)
Other comprehensive income (loss) before reclassifications	25		(4)		8		—		29
Amounts reclassified from AOCI (a)	—		(7)		(3)		—		(10)
Net other comprehensive income (loss) from continuing operations	25		(11)		5		—		19
Balance as of June 30, 2023	$	(3,361)	$	(342)	$	(114)	$	3	$	(3,814)

	Gains (losses)
(in millions)	CTA		Pension and OPEB plans		Hedging activities		Available-for-sale debt securities		Total
Balance as of December 31, 2021	$	(2,907)	$	(347)	$	(126)	$	—	$	(3,380)
Other comprehensive income (loss) before reclassifications	(432)		19		13		2		(398)
Amounts reclassified from AOCI (a)	—		13		(2)		—		11
Net other comprehensive income (loss) from continuing operations	(432)		32		11		2		(387)
Balance as of June 30, 2022	$	(3,339)	$	(315)	$	(115)	$	2	$	(3,767)

(a)    See table below for details about these reclassifications.

The following is a summary of the amounts reclassified from AOCI to net income during the three and six months ended June 30, 2023 and 2022.

	Amounts reclassified from AOCI (a)
(in millions)	Three months ended June 30, 2023		Six months ended June 30, 2023		Location of impact in income statement
Pension and OPEB items
Amortization of net losses and prior service costs or credits	$	5	$	10	Other (income) expense, net
Less: Tax effect	(1)		(3)		Income tax expense
	$	4	$	7	Net of tax
Gains (losses) on hedging activities
Foreign exchange contracts	$	3	$	7	Cost of sales
Interest rate contracts	(2)		(3)		Interest expense, net
	1		4		Total before tax
Less: Tax effect	—		(1)		Income tax expense
	$	1	$	3	Net of tax
Total reclassifications for the period	$	5	$	10	Total net of tax

(a)    Amounts in parentheses indicate reductions to net income

	Amounts reclassified from AOCI (a)
(in millions)	Three months ended June 30, 2022		Six months ended June 30, 2022		Location of impact in income statement
Amortization of pension and OPEB items
Amortization of net losses and prior service costs or credits	$	(8)	$	(17)	Other (income) expense, net
Less: Tax effect	2		4		Income tax expense
	$	(6)	$	(13)	Net of tax
Gains on hedging activities
Foreign exchange contracts	$	3	$	5	Cost of sales
Interest rate contracts	(2)		(3)		Interest expense, net
	1		2		Total before tax
Less: Tax effect	—		—		Income tax expense
	$	1	$	2	Net of tax
Total reclassifications for the period	$	(5)	$	(11)	Total net of tax

Refer to Note 11 for additional information regarding the amortization of pension and OPEB items and Note 14 for additional information regarding hedging activity

XML

REVENUES

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

REVENUES

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 30-90 days.

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. Our three legacy Baxter segments include acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products. Our legacy Hillrom segment includes smart bed systems; patient monitoring and diagnostic technologies; respiratory health devices; and advanced equipment for the surgical space. For most of those sales, 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.

To a lesser extent, we enter into arrangements for which revenue may be recognized over time. For example, our Americas segment includes contract manufacturing arrangements, our Hillrom segment includes digital and connected care solutions and collaboration tools that are implemented over time and all of our segments include equipment leases and certain subscription software and licensing arrangements. 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. 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 June 30, 2023, we had $7.99 billion of transaction price allocated to remaining performance obligations related to executed contracts with an original duration of more than one year, which are primarily included in the Americas 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 20% of this amount as revenue over the remainder of 2023, 40% in 2024, 20% in 2025, 10% in 2026 and 10% thereafter.

Significant Judgments

Revenues from product sales are recorded at the net sales price, which includes estimates of variable consideration primarily related to rebates and wholesaler 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 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 six months ended June 30, 2023 and 2022 related to performance obligations satisfied in prior periods was not material. Additionally, our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately and determining the allocation of the transaction price may require significant judgement.

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 $2.27 billion and $2.34 billion as of June 30, 2023 and December 31, 2022, 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 one 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 one to seven years.

The following table summarizes our contract assets:

(in millions)	June 30, 2023		December 31, 2022
Contract manufacturing services	$	4	$	10
Software sales	43		43
Bundled equipment and consumable medical products contracts	116		121
Contract assets	$	163	$	174

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 six months ended June 30, 2023 and 2022. The contract liability balance represents the transaction price allocated to the remaining performance obligations.

	Six Months Ended June 30,
(in millions)	2023		2022
Balance at beginning of period	$	194	$	196
New revenue deferrals	271		282
Revenue recognized upon satisfaction of performance obligations	(267)		(289)
Currency translation	1		(5)
Balance at end of period	$	199	$	184

For the six months ended June 30, 2023 and 2022, $64 million and $77 million of revenue was recognized that was included in contract liabilities as of December 31, 2022 and 2021, respectively.

The following table summarizes the classification of contract assets and contract liabilities as reported in the condensed consolidated balance sheets:

(in millions)	June 30, 2023		December 31, 2022
Prepaid expenses and other current assets	$	49	$	52
Other non-current assets	114		122
Contract assets	$	163	$	174
Accrued expenses and other current liabilities	$	158	$	154
Other non-current liabilities	41		40
Contract liabilities	$	199	$	194

Disaggregation of Net Sales

The following tables disaggregate our net sales from contracts with customers by product category between the U.S. and international:

	Three Months Ended June 30,
	2023						2022
(in millions)	U.S.		International		Total		U.S.		International		Total
Renal Care 1	$	234	$	702	$	936	$	225	$	706	$	931
Medication Delivery 2	487		274		761		459		251		710
Pharmaceuticals 3	182		368		550		164		364		528
Clinical Nutrition 4	83		160		243		90		140		230
Advanced Surgery 5	150		122		272		151		112		263
Acute Therapies 6	60		120		180		58		115		173
Patient Support Systems 7	276		83		359		284		80		364
Front Line Care 8	227		80		307		202		80		282
Global Surgical Solutions 9	35		42		77		36		33		69
Other 10	17		5		22		31		13		44
Total Baxter	$	1,751	$	1,956	$	3,707	$	1,700	$	1,894	$	3,594

	Six Months Ended June 30,
	2023						2022
(in millions)	U.S.		International		Total		U.S.		International		Total
Renal Care 1	$	466	$	1,362	$	1,828	$	450	$	1,375	$	1,825
Medication Delivery 2	923		525		1,448		931		485		1,416
Pharmaceuticals 3	355		719		1,074		321		728		1,049
Clinical Nutrition 4	161		306		467		174		283		457
Advanced Surgery 5	294		224		518		287		204		491
Acute Therapies 6	121		239		360		126		235		361
Patient Support Systems 7	536		171		707		579		168		747
Front Line Care 8	448		161		609		409		167		576
Global Surgical Solutions 9	73		85		158		73		74		147
Other 10	41		10		51		62		21		83
Total Baxter	$	3,418	$	3,802	$	7,220	$	3,412	$	3,740	$	7,152

1Renal Care includes sales of our peritoneal dialysis (PD), HD and additional dialysis therapies and services.

2Medication Delivery includes sales of our intravenous (IV) therapies, infusion pumps, administration sets and drug reconstitution devices.

3Pharmaceuticals includes sales of our premixed and oncology drug platforms, inhaled anesthesia and critical care products and pharmacy compounding services.

4Clinical Nutrition includes sales of our parenteral nutrition therapies and related products.

5Advanced Surgery includes sales of our biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention.

6Acute Therapies includes sales of our continuous renal replacement therapies (CRRT) and other organ support therapies focused in the intensive care unit (ICU).

7Patient Support Systems includes sales of our connected care solutions: devices, software, communications and integration technologies and smart beds.

8Front Line Care includes sales of our integrated patient monitoring and diagnostic technologies to help diagnose, treat and manage a wide variety of illness and diseases, including respiratory therapy, cardiology, vision screening and physical assessment.

9Global Surgical Solutions includes sales of our surgical video technologies, tables, lights, pendants, precision positioning devices and other accessories.

10Other includes sales of miscellaneous product and service offerings. Contract manufacturing revenues earned by our manufacturing facility in Round Lake Illinois, which totaled $2 million for the six months ended June 30, 2023 and $11 million and $18 million for the three and six months ended June 30, 2022, respectively, were historically presented as BPS sales. Those sales transactions, which are not impacted by the pending divestiture of our BPS business, continue to be presented as continuing operations in the accompanying consolidated financial statements and have been reclassified to our Other product category for all periods presented.

Lease Revenue

We lease medical equipment, such as smart beds, renal dialysis equipment and infusion pumps, to customers, often in conjunction with arrangements to provide consumable medical products such as dialysis therapies, 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 six months ended June 30, 2023 and 2022 were:

(in millions)	Three months ended June 30, 2023		Six Months Ended June 30, 2023
Sales-type lease revenue	$	3	$	7
Operating lease revenue	132		256
Variable lease revenue	14		29
Total lease revenue	$	149	$	292

(in millions)	Three months ended June 30, 2022		Six months ended June 30, 2022
Sales-type lease revenue	$	5	$	8
Operating lease revenue	113		235
Variable lease revenue	12		32
Total lease revenue	$	130	$	275

Our net investment in sales-type leases was $75 million as of June 30, 2023, of which $15 million originated in 2019 and prior, $21 million in 2020, $20 million in 2021, $14 million in 2022, and $5 million in 2023.

XML

BUSINESS OPTIMIZATION CHARGES

6 Months Ended

Jun. 30, 2023

Restructuring and Related Activities [Abstract]

BUSINESS OPTIMIZATION CHARGES

BUSINESS OPTIMIZATION CHARGES

In recent years, we have undertaken actions to transform our cost structure and enhance operational efficiency. These efforts include restructuring the organization, optimizing the manufacturing footprint, R&D operations and supply chain network, employing disciplined cost management, and centralizing and streamlining certain support functions. From the commencement of our business optimization activities in the second half of 2015 through June 30, 2023, we have incurred cumulative pre-tax costs of $1.86 billion related to these actions. The costs consisted primarily of employee termination costs, implementation costs, contract termination costs, asset impairments and accelerated depreciation. We currently expect to incur additional pre-tax costs, primarily related to implementation of business optimization programs, of approximately $20 million through the completion of initiatives that are currently underway. We continue to pursue cost savings initiatives, including those related the ongoing implementation of our previously announced new operating model intended to simplify and streamline our operations, and, to the extent further cost savings opportunities are identified, we would incur additional restructuring charges and costs to implement business optimization programs in future periods.

During the three and six months ended June 30, 2023 and 2022, we recorded the following charges related to business optimization programs.

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2023		2022		2023		2022
Restructuring charges	$	287	$	26	$	397	$	93
Costs to implement business optimization programs	6		16		30		30
Total business optimization charges	$	293	$	42	$	427	$	123

For segment reporting purposes, business optimization charges are unallocated expenses.

Costs to implement business optimization programs for the three and six months ended June 30, 2023 and 2022, 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.

During the three and six months ended June 30, 2023 and 2022, we recorded the following restructuring charges.

	Three months ended June 30, 2023
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	9	$	19	$	—	$	28
Contract termination and other costs	—		2		—		2
Asset impairments	257		—		—		257
Total restructuring charges	$	266	$	21	$	—	$	287

	Three months ended June 30, 2022
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	4	$	16	$	—	$	20
Contract termination and other costs	—		5		—		5
Asset impairments	—		1		—		1
Total restructuring charges	$	4	$	22	$	—	$	26

	Six months ended June 30, 2023
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	26	$	82	$	7	$	115
Contract termination and other costs	3		2		—		5
Asset impairments	269		8		—		277
Total restructuring charges	$	298	$	92	$	7	$	397

	Six months ended June 30, 2022
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	6	$	63	$	—	$	69
Contract termination and other costs	—		17		—		17
Asset impairments	—		7		—		7
Total restructuring charges	$	6	$	87	$	—	$	93

For the three months and six months ended June 30, 2023, $19 million and $97 million, respectively, of the restructuring charges reflected in the table above, consisting of employee termination costs, were related to the ongoing implementation of our previously announced new operating model intended to simplify and streamline our operations. For the three and six months ended June 30, 2023, $253 million of the restructuring charges reflected in the table above, consisting of $243 million of asset impairment charges and $10 million of employee termination costs, were related to our decision to cease production of dialyzers at one of our manufacturing facilities in connection with our initiatives to streamline our manufacturing footprint and improve our profitability. See Note 3 for additional information.

For the three months ended June 30, 2022, $27 million of the restructuring charges reflected in the table above were related to integration activities for the Hillrom acquisition, consisting of $21 million of employee termination costs, $5 million of contract termination and other costs and $1 million of asset impairments. For the six months ended June 30, 2022, $83 million of the restructuring charges reflected in the table above were related to integration activities for the Hillrom acquisition, consisting of $59 million of employee termination costs, $17 million of contract termination and other costs and $7 million of asset impairments.

The following table summarizes activity in the liability related to our restructuring initiatives.

(in millions)
Liability balance as of December 31, 2022	$	107
Charges	132
Payments	(63)
Reserve adjustments	(12)
Currency translation	(1)
Liability balance as of June 30, 2023	$	163

Substantially all of our restructuring liabilities as of June 30, 2023 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 2024.

XML

PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS

6 Months Ended

Jun. 30, 2023

Retirement Benefits [Abstract]

PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS

PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMSThe following is a summary of net periodic benefit cost relating to our pension and OPEB plans.

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Pension benefits
Service cost	$	7	$	21	$	13	$	40
Interest cost	35		24		72		48
Expected return on plan assets	(43)		(40)		(87)		(79)
Amortization of net losses and prior service costs	1		11		2		23
Net periodic pension cost	$	—	$	16	$	—	$	32
OPEB
Interest cost	$	2	$	1	$	4	$	2
Amortization of net loss and prior service credit	(6)		(3)		(12)		(6)
Net periodic OPEB cost (income)	$	(4)	$	(2)	$	(8)	$	(4)

XML

INCOME TAXES

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Our effective income tax rate was (5.5)% and 15.5% for the three months ended June 30, 2023 and 2022, respectively, and (14.2)% and 17.2% for the six months ended June 30, 2023 and 2022 , respectively. Our effective income tax rate can differ from the 21.0% 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 and six months ended June 30, 2023, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily attributable to a $30 million increase in the valuation allowance related to a deferred tax asset from a tax basis step-up that arose from previously enacted Swiss tax reform legislation and a favorable geographic earnings mix.

For the three and six months ended June 30, 2022, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily attributable to a favorable geographic earnings mix and discrete tax matters in various foreign jurisdictions, of which none were individually material, partially offset by an increase in our liabilities for uncertain tax positions.

XML

EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHAREThe 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, RSUs and PSUs is reflected in the denominator for diluted EPS using the treasury stock method.

The following table is a reconciliation of net income (loss) attributable to Baxter stockholders.

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Income (loss) from continuing operations	$	(193)	$	185	$	(193)	$	193
Less: Net income attributable to noncontrolling interests	2		3		3		5
Income (loss) from continuing operations attributable to Baxter stockholders	(195)		182		(196)		188
Income from discontinued operations	54		70		99		135
Net income (loss) attributable to Baxter stockholders	$	(141)	$	252	$	(97)	$	323

The following table is a reconciliation of basic shares to diluted shares.

	Three months ended June 30,		Six months ended June 30,
(in millions)	2023	2022	2023	2022
Basic shares	506	504	506	503
Effect of dilutive securities	—	4	—	5
Diluted shares	506	508	506	508

Basic and diluted shares are the same for the three and six months ended June 30, 2023 due to our net losses for the period. The effect of dilutive securities for the three and six months ended June 30, 2022 includes unexercised stock options, unvested RSUs and contingently issuable shares related to granted PSUs.

Diluted EPS excludes 27 million and 25 million shares issuable under equity awards for the three and six months ended June 30, 2023, respectively, and 12 million and 8 million shares issuable under equity awards for the three and six months ended June 30, 2022, respectively, because their inclusion would have had an anti-dilutive effect on diluted EPS. Refer to Note 7 for additional information regarding items impacting basic and diluted shares.

XML

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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, Chinese Renminbi, Japanese Yen, Swedish Krona, British Pound, Polish Zloty, Mexican Peso, Australian Dollar, Canadian Dollar, Korean Won, Colombian Peso, Brazilian Real, Russian Ruble, Turkish Lira and Indian Rupee. 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 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.

All derivative instruments are generally 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 item. Option premiums or net premiums paid are initially recorded as assets and reclassified to other comprehensive income (OCI) over the life of the option, and then recognized in earnings consistent with the underlying hedged item. 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.

The notional amounts of foreign exchange contracts designated as cash flow hedges were $377 million and $398 million as of June 30, 2023 and December 31, 2022, respectively. The maximum term over which we have cash flow hedge contracts in place related to forecasted transactions at June 30, 2023 is 12 months for foreign exchange contracts. There were no outstanding interest rate contracts designated as cash flow hedges as of June 30, 2023 and December 31, 2022.

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. For each derivative instrument that is designated and effective as a fair value hedge, the gain or loss on the derivative is recognized immediately to earnings, and offsets changes in fair value attributable to a particular risk, such as changes in interest rates, of the hedged item, which are also recognized in earnings. Changes in the fair value of hedge instruments designated as fair value hedges are classified in interest expense, net, as they hedge the interest rate risk associated with certain of our fixed-rate debt.

There were no outstanding interest rate contracts designated as fair value hedges as of June 30, 2023 and December 31, 2022.

Net Investment Hedges

In May 2017, we issued €600 million of senior notes due May 2025. In May 2019, we issued €750 million of senior notes due May 2024 and €750 million of 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 June 30, 2023, we had an accumulated pre-tax unrealized translation gain in AOCI of $57 million related to the Euro-denominated senior notes.

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 items. 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 cash flow hedge dedesignations in the first six months of 2023 or 2022 resulting from changes in our assessment of the probability that the hedged forecasted transactions would occur.

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 fair value hedges terminated during the first six months of 2023 or 2022.

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 six months of 2023 or 2022.

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.

The total notional amount of undesignated derivative instruments was $688 million as of June 30, 2023 and $753 million as of December 31, 2022.

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 June 30, 2023 and 2022.

	Gain (loss) recognized in OCI				Location of gain (loss) in income statement	Gain (loss) reclassified from AOCI into income
(in millions)	2023		2022			2023		2022
Cash flow hedges
Interest rate contracts	$	—	$	—	Interest expense, net	$	(2)	$	(2)
Foreign exchange contracts	10		19		Cost of sales	3		3
Net investment hedges	10		143		Other (income) expense, net	—		—
Total	$	20	$	162		$	1	$	1

	Location of gain (loss) in income statement	Gain (loss) recognized in income
(in millions)		2023		2022
Undesignated derivative instruments
Foreign exchange contracts	Other (income) expense, net	$	(15)	$	(26)

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 six months ended June 30, 2023 and 2022.

	Gain (loss) recognized in OCI				Location of gain (loss) in income statement	Gain (loss) reclassified from AOCI into income
(in millions)	2023		2022			2023		2022
Cash flow hedges
Interest rate contracts	$	—	$	—	Interest expense, net	$	(3)	$	(3)
Foreign exchange contracts	10		16		Cost of sales	7		5
Net investment hedges	(38)		185		Other (income) expense, net	—		—
Total	$	(28)	$	201		$	4	$	2

	Location of gain (loss) in income statement	Gain (loss) recognized in income
(in millions)		2023		2022
Undesignated derivative instruments
Foreign exchange contracts	Other (income) expense, net	$	(18)	$	(23)

As of June 30, 2023, $2 million of deferred, net after-tax gains 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 June 30, 2023.

	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
Foreign exchange contracts	Prepaid expenses and other current assets	$	11	Accrued expenses and other current liabilities	$	4
Total derivative instruments designated as hedges		11			4
Undesignated derivative instruments
Foreign exchange contracts	Prepaid expenses and other current assets	2		Accrued expenses and other current liabilities	2
Total derivative instruments		$	13		$	6

The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of December 31, 2022.

	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
Foreign exchange contracts	Prepaid expenses and other current assets	$	8	Accrued expenses and other current liabilities	$	5
Total derivative instruments designated as hedges		8			5
Undesignated derivative instruments
Foreign exchange contracts	Prepaid expenses and other current assets	6		Accrued expenses and other current liabilities	7
Total derivative instruments		$	14		$	12

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.

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.

	June 30, 2023				December 31, 2022
(in millions)	Asset		Liability		Asset		Liability
Gross amounts recognized in the condensed consolidated balance sheets	$	13	$	6	$	14	$	12
Gross amount subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet	(1)		(1)		(4)		(4)
Total	$	12	$	5	$	10	$	8

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 June 30, 2023		Balance as of December 31, 2022		Balance as of June 30, 2023		Balance as of December 31, 2022
Long-term debt	$	101	$	101	$	4	$	4

(a) These fair value hedges were terminated in 2018 and earlier periods.

XML

FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

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 June 30, 2023		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Foreign exchange contracts	$	13	$	—	$	13	$	—
Available-for-sale debt securities	37		—		—		37
Marketable equity securities	37		37		—		—
Total	$	87	$	37	$	13	$	37
Liabilities
Foreign exchange contracts	$	6	$	—	$	6	$	—
Contingent payments related to acquisitions	21		—		—		21
Total	$	27	$	—	$	6	$	21

			Basis of fair value measurement
(in millions)	Balance as of December 31, 2022		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Foreign exchange contracts	$	14	$	—	$	14	$	—
Available-for-sale debt securities	47		—		—		47
Marketable equity securities	32		32		—		—
Total	$	93	$	32	$	14	$	47
Liabilities
Foreign exchange contracts	$	12	$	—	$	12	$	—
Contingent payments related to acquisitions	84		—		—		84
Total	$	96	$	—	$	12	$	84

As of June 30, 2023 and December 31, 2022, cash and cash equivalents of $1.72 billion, included money market and other short-term funds of approximately $303 million and $341 million, respectively, which 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. The 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. The fair value of milestone payments reflects management’s expectations of probability of payment, and increases as the 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.

The following table is a reconciliation of recurring fair value measurements that use significant unobservable inputs (Level 3), which consist of contingent payments related to acquisitions and available-for-sale debt securities.

	Three months ended June 30,
	2023				2022
(in millions)	Contingent payments related to acquisitions		Available-for-sale debt securities		Contingent payments related to acquisitions		Available-for-sale debt securities
Fair value at beginning of period	$	70	$	42	$	124	$	53
Change in fair value recognized in earnings	(1)		(5)		(11)		—
Change in fair value recognized in AOCI	—		—		—		1
Transfers out of Level 3	—		—		—		(10)
Payments	(48)		—		—		—
Fair value at end of period	$	21	$	37	$	113	$	44

	Six months ended June 30,
	2023				2022
(in millions)	Contingent payments related to acquisitions		Available-for-sale debt securities		Contingent payments related to acquisitions		Available-for-sale debt securities
Fair value at beginning of period	$	84	$	47	$	143	$	30
Additions	—		—		—		21
Change in fair value recognized in earnings	(14)		(5)		(28)		—
Change in fair value recognized in AOCI	—		—		—		3
Transfers out of Level 3	—		(5)		—		(10)
Payments	(49)		—		(2)		—
Fair value at end of period	$	21	$	37	$	113	$	44

During the second quarter and first half of 2022, $8 million of available-for-sale debt securities that were previously classified as Level 3 converted to marketable equity securities, which are classified as Level 1 in the fair value hierarchy, upon the initial public offering of the investee.

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 June 30, 2023 and December 31, 2022.

	Book values				Fair values(a)
(in millions)	2023		2022		2023		2022
Liabilities
Current maturities of long-term debt and finance lease obligations	$	1,928	$	1,105	$	1,894	$	1,079
Long-term debt and finance lease obligations	14,306		15,232		12,884		13,657

(a)    These fair value amounts are classified as Level 2 within the fair value hierarchy as they are estimated based on observable inputs.

The carrying value of short-term debt approximates its fair value due to the short-term maturities of the obligations. 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, short-term debt and accounts payable, approximate their fair values due to the short-term maturities of most of those assets and liabilities.

Investments Without Readily Determinable Fair Values

The carrying values of equity investments without readily determinable fair values that we measure at cost, less impairment were $88 million as of June 30, 2023 and $104 million as of December 31, 2022. When applicable, we also adjust the measurement of such equity investments for observable prices in orderly transactions for an identical or similar investment of the same issuer. Those investments are included in Other non-current assets on our condensed consolidated balance sheets. During the quarter ended June 30, 2023, several of our investees either completed or are in the process of undertaking new financing rounds at lower enterprise valuations as compared to their valuations at the time of our investments. As a result, we recognized $18 million of impairments of equity investments without readily determinable fair values in the current period. In addition, we recognized a $5 million impairment of a convertible debt investment, which is accounted for as an available-for-sale security, during the second quarter of 2023. The fair value measurements of investments in non-marketable equity and convertible debt securities are classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs.

XML

SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

Our business is currently comprised of four segments, consisting of the following geographic segments related to our legacy Baxter business: Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific), and a global segment for our Hillrom business. The Americas, EMEA and APAC segments provide a broad portfolio of essential healthcare products, including acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products. The Hillrom segment provides digital and connected care solutions and collaboration tools, including smart bed systems; patient monitoring and diagnostic technologies; respiratory health devices; and advanced equipment for the surgical space.

We use operating income on a segment basis to make resource allocation decisions and assess the ongoing performance of our business segments. Intersegment sales are eliminated in consolidation.

Certain items are maintained at Corporate and are not allocated to a segment. They primarily include corporate headquarters costs, certain R&D costs, manufacturing variances and centrally managed supply chain costs, product category support costs, stock compensation expense, certain employee benefit plan costs, and certain gains, losses, and other charges (such as business optimization, acquisition and integration costs, intangible asset amortization and asset impairments).

Our chief operating decision maker does not receive any asset information by operating segment and, accordingly, we do not report asset information by operating segment.

Financial information for our segments is as follows.

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Net sales:
Americas	$	1,564	$	1,494	$	3,030	$	2,971
EMEA	762		738		1,476		1,437
APAC	638		647		1,240		1,274
Hillrom	743		715		1,474		1,470
Total net sales	$	3,707	$	3,594	$	7,220	$	7,152
Operating income:
Americas	$	498	$	488	$	918	$	1,008
EMEA	112		169		218		288
APAC	118		156		225		307
Hillrom	147		149		305		349
Total segment operating income	$	875	$	962	$	1,666	$	1,952

The following is a reconciliation of segment operating income to income (loss) from continuing operations before income taxes per the condensed consolidated statements of income.

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Total segment operating income	$	875	$	962	$	1,666	$	1,952
Corporate and other	(892)		(698)		(1,554)		(1,605)
Total operating income (loss)	(17)		264		112		347
Interest expense, net	124		89		241		174
Other (income) expense, net	42		(44)		40		(60)
Income (loss) from continuing operations before income taxes	$	(183)	$	219	$	(169)	$	233

We are implementing a new operating model intended to simplify and streamline our operations and we expect that our reportable segments will be changed to align with that new operating model when it is fully implemented, which is currently expected in the second half of 2023.

XML

Pay vs Performance Disclosure - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ (141)	$ 252	$ (97)	$ 323

XML

Insider Trading Arrangements	3 Months Ended
	Jun. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

XML

BASIS OF PRESENTATION (Policies)

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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 Securities and Exchange Commission (SEC) for interim financial reporting. Accordingly, certain information and footnote 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, 2022 (2022 Annual Report).In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation 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 results of operations for the current interim period are not necessarily indicative of the results of operations to be expected for the full year.

Risks and Uncertainties

Risks and Uncertainties

Supply Constraints and Global Economic Conditions

We have experienced significant challenges to our global supply chain in recent periods, including production delays and interruptions, increased costs and shortages of raw materials and component parts (including resins and electromechanical devices) and higher transportation costs, resulting from the pandemic and other exogenous factors including significant weather events, elevated inflation levels, increased interest rates, disruptions to certain ports of call around the world, the war in Ukraine and other geopolitical events. We expect to experience some of these and other challenges related to our supply chain in future periods. These challenges, including the unavailability of certain raw materials and component parts, have also had a negative impact on our sales for certain product categories due to our inability to fully satisfy demand. While we have begun to see improvements in the availability of certain component parts and improved pricing in certain raw materials, these challenges have not completely subsided and may continue to have a negative impact on our sales in the future.

We expect that the challenges caused by global economic conditions, among other factors, may continue to have an adverse effect on our business.

XML

DISCONTINUED OPERATIONS (Tables)

6 Months Ended

Jun. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

Results of Discontinued Operations and Assets and Liabilities of Discontinued Operations

The following table summarizes the major classes of line items included in income from discontinued operations, net of tax, for the three and six months ended June 30, 2023 and 2022:

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Net sales	$	142	$	152	$	278	$	301
Cost of sales	71		70		135		133
Gross margin	71		82		143		168
Selling, general and administrative expenses	14		6		29		11
Research and development expenses	1		—		1		1
Other income, net	(1)		—		—		—
Income from discontinued operations before income taxes	57		76		113		156
Income tax expense	3		6		14		21
Income from discontinued operations, net of tax	$	54	$	70	$	99	$	135

The following table summarizes the carrying amounts of the major classes of assets and liabilities classified as discontinued operations in the condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022:

(in millions)	June 30, 2023		December 31, 2022
Accounts receivable, net of allowances	$	82	$	88
Inventories	60		39
Prepaid expenses and other current assets	91		59
Property, plant and equipment, net	297		284
Goodwill	386		391
Operating lease right-of-use assets	9		9
Other non-current assets	6		2
Assets of discontinued operations	$	931	$	872
Accounts payable	$	40	$	29
Accrued expenses and other current liabilities	30		32
Operating lease liabilities	8		9
Other non-current liabilities	115		111
Liabilities of discontinued operations	$	193	$	181

XML

SUPPLEMENTAL FINANCIAL INFORMATION (Tables)

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

The following table is a summary of the changes in our allowance for doubtful accounts for the three and six months ended June 30, 2023 and 2022.

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Balance at beginning of period	$	122	$	129	$	114	$	122
Charged to costs and expenses	9		3		16		9
Write-offs	(5)		(1)		(6)		(2)
Currency translation adjustments	2		(6)		4		(4)
Balance at end of period	$	128	$	125	$	128	$	125

Inventories

Inventories

(in millions)	June 30, 2023		December 31, 2022
Raw materials	$	742	$	698
Work in process	316		294
Finished goods	1,839		1,687
Inventories	$	2,897	$	2,679

Property, Plant and Equipment, Net

Property, Plant and Equipment, Net

(in millions)	June 30, 2023		December 31, 2022
Property, plant and equipment, at cost	$	11,028	$	10,780
Accumulated depreciation	(6,534)		(6,085)
Property, plant and equipment, net	$	4,494	$	4,695

Interest Expense, Net

Interest Expense, Net

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Interest expense, net of capitalized interest	$	132	$	93	$	259	$	181
Interest income	(8)		(4)		(18)		(7)
Interest expense, net	$	124	$	89	$	241	$	174

Other Income, Net

Other (Income) Expense, Net

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Foreign exchange (gains) losses, net	$	22	$	(15)	$	36	$	(26)
Pension and other postretirement benefit plans	(11)		(7)		(21)		(12)
Pension curtailment	—		(11)		—		(11)
Change in fair value of marketable equity securities	11		(8)		6		(8)
Non-marketable investment impairments	23		—		23		—
Other, net	(3)		(3)		(4)		(3)
Other (income) expense, net	$	42	$	(44)	$	40	$	(60)

XML

GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Tables)

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The following is a reconciliation of goodwill by business segment.

(in millions)	Americas		EMEA		APAC		Hillrom		Total
Balance as of December 31, 2022	$	1,965	$	289	$	210	$	3,988	$	6,452
Currency translation and other	(22)		(3)		(2)		(7)		(34)
Balance as of June 30, 2023	$	1,943	$	286	$	208	$	3,981	$	6,418

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		Other amortized intangible assets		Trade names		In process Research and Development		Total
June 30, 2023
Gross other intangible assets	$	3,444	$	3,863	$	320	$	1,570	$	163	$	9,360
Accumulated amortization	(574)		(2,069)		(247)		—		—		(2,890)
Other intangible assets, net	$	2,870	$	1,794	$	73	$	1,570	$	163	$	6,470
December 31, 2022
Gross other intangible assets	$	3,442	$	3,836	$	325	$	1,571	$	202	$	9,376
Accumulated amortization	(460)		(1,888)		(235)		—		—		(2,583)
Other intangible assets, net	$	2,982	$	1,948	$	90	$	1,571	$	202	$	6,793

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Summary of Changes in AOCI by Component

The following table is a net-of-tax summary of the changes in accumulated other comprehensive income (loss) (AOCI) by component for the six months ended June 30, 2023 and 2022.

	Gains (losses)
(in millions)	CTA		Pension and OPEB plans		Hedging activities		Available-for-sale debt securities		Total
Balance as of December 31, 2022	$	(3,386)	$	(331)	$	(119)	$	3	$	(3,833)
Other comprehensive income (loss) before reclassifications	25		(4)		8		—		29
Amounts reclassified from AOCI (a)	—		(7)		(3)		—		(10)
Net other comprehensive income (loss) from continuing operations	25		(11)		5		—		19
Balance as of June 30, 2023	$	(3,361)	$	(342)	$	(114)	$	3	$	(3,814)

	Gains (losses)
(in millions)	CTA		Pension and OPEB plans		Hedging activities		Available-for-sale debt securities		Total
Balance as of December 31, 2021	$	(2,907)	$	(347)	$	(126)	$	—	$	(3,380)
Other comprehensive income (loss) before reclassifications	(432)		19		13		2		(398)
Amounts reclassified from AOCI (a)	—		13		(2)		—		11
Net other comprehensive income (loss) from continuing operations	(432)		32		11		2		(387)
Balance as of June 30, 2022	$	(3,339)	$	(315)	$	(115)	$	2	$	(3,767)

(a)    See table below for details about these reclassifications.

Summary of Reclassification from AOCI to Net Income

The following is a summary of the amounts reclassified from AOCI to net income during the three and six months ended June 30, 2023 and 2022.

	Amounts reclassified from AOCI (a)
(in millions)	Three months ended June 30, 2023		Six months ended June 30, 2023		Location of impact in income statement
Pension and OPEB items
Amortization of net losses and prior service costs or credits	$	5	$	10	Other (income) expense, net
Less: Tax effect	(1)		(3)		Income tax expense
	$	4	$	7	Net of tax
Gains (losses) on hedging activities
Foreign exchange contracts	$	3	$	7	Cost of sales
Interest rate contracts	(2)		(3)		Interest expense, net
	1		4		Total before tax
Less: Tax effect	—		(1)		Income tax expense
	$	1	$	3	Net of tax
Total reclassifications for the period	$	5	$	10	Total net of tax

(a)    Amounts in parentheses indicate reductions to net income

	Amounts reclassified from AOCI (a)
(in millions)	Three months ended June 30, 2022		Six months ended June 30, 2022		Location of impact in income statement
Amortization of pension and OPEB items
Amortization of net losses and prior service costs or credits	$	(8)	$	(17)	Other (income) expense, net
Less: Tax effect	2		4		Income tax expense
	$	(6)	$	(13)	Net of tax
Gains on hedging activities
Foreign exchange contracts	$	3	$	5	Cost of sales
Interest rate contracts	(2)		(3)		Interest expense, net
	1		2		Total before tax
Less: Tax effect	—		—		Income tax expense
	$	1	$	2	Net of tax
Total reclassifications for the period	$	(5)	$	(11)	Total net of tax

XML

REVENUES (Tables)

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Contract with Customer, Contract Asset

The following table summarizes our contract assets:

(in millions)	June 30, 2023		December 31, 2022
Contract manufacturing services	$	4	$	10
Software sales	43		43
Bundled equipment and consumable medical products contracts	116		121
Contract assets	$	163	$	174

The following table summarizes contract liability activity for the six months ended June 30, 2023 and 2022. The contract liability balance represents the transaction price allocated to the remaining performance obligations.

	Six Months Ended June 30,
(in millions)	2023		2022
Balance at beginning of period	$	194	$	196
New revenue deferrals	271		282
Revenue recognized upon satisfaction of performance obligations	(267)		(289)
Currency translation	1		(5)
Balance at end of period	$	199	$	184

For the six months ended June 30, 2023 and 2022, $64 million and $77 million of revenue was recognized that was included in contract liabilities as of December 31, 2022 and 2021, respectively.

The following table summarizes the classification of contract assets and contract liabilities as reported in the condensed consolidated balance sheets:

(in millions)	June 30, 2023		December 31, 2022
Prepaid expenses and other current assets	$	49	$	52
Other non-current assets	114		122
Contract assets	$	163	$	174
Accrued expenses and other current liabilities	$	158	$	154
Other non-current liabilities	41		40
Contract liabilities	$	199	$	194

Net Sales from Contracts with Customers by Global Business Unit

The following tables disaggregate our net sales from contracts with customers by product category between the U.S. and international:

	Three Months Ended June 30,
	2023						2022
(in millions)	U.S.		International		Total		U.S.		International		Total
Renal Care 1	$	234	$	702	$	936	$	225	$	706	$	931
Medication Delivery 2	487		274		761		459		251		710
Pharmaceuticals 3	182		368		550		164		364		528
Clinical Nutrition 4	83		160		243		90		140		230
Advanced Surgery 5	150		122		272		151		112		263
Acute Therapies 6	60		120		180		58		115		173
Patient Support Systems 7	276		83		359		284		80		364
Front Line Care 8	227		80		307		202		80		282
Global Surgical Solutions 9	35		42		77		36		33		69
Other 10	17		5		22		31		13		44
Total Baxter	$	1,751	$	1,956	$	3,707	$	1,700	$	1,894	$	3,594

	Six Months Ended June 30,
	2023						2022
(in millions)	U.S.		International		Total		U.S.		International		Total
Renal Care 1	$	466	$	1,362	$	1,828	$	450	$	1,375	$	1,825
Medication Delivery 2	923		525		1,448		931		485		1,416
Pharmaceuticals 3	355		719		1,074		321		728		1,049
Clinical Nutrition 4	161		306		467		174		283		457
Advanced Surgery 5	294		224		518		287		204		491
Acute Therapies 6	121		239		360		126		235		361
Patient Support Systems 7	536		171		707		579		168		747
Front Line Care 8	448		161		609		409		167		576
Global Surgical Solutions 9	73		85		158		73		74		147
Other 10	41		10		51		62		21		83
Total Baxter	$	3,418	$	3,802	$	7,220	$	3,412	$	3,740	$	7,152

1Renal Care includes sales of our peritoneal dialysis (PD), HD and additional dialysis therapies and services.

2Medication Delivery includes sales of our intravenous (IV) therapies, infusion pumps, administration sets and drug reconstitution devices.

3Pharmaceuticals includes sales of our premixed and oncology drug platforms, inhaled anesthesia and critical care products and pharmacy compounding services.

4Clinical Nutrition includes sales of our parenteral nutrition therapies and related products.

5Advanced Surgery includes sales of our biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention.

6Acute Therapies includes sales of our continuous renal replacement therapies (CRRT) and other organ support therapies focused in the intensive care unit (ICU).

7Patient Support Systems includes sales of our connected care solutions: devices, software, communications and integration technologies and smart beds.

8Front Line Care includes sales of our integrated patient monitoring and diagnostic technologies to help diagnose, treat and manage a wide variety of illness and diseases, including respiratory therapy, cardiology, vision screening and physical assessment.

9Global Surgical Solutions includes sales of our surgical video technologies, tables, lights, pendants, precision positioning devices and other accessories.

10Other includes sales of miscellaneous product and service offerings. Contract manufacturing revenues earned by our manufacturing facility in Round Lake Illinois, which totaled $2 million for the six months ended June 30, 2023 and $11 million and $18 million for the three and six months ended June 30, 2022, respectively, were historically presented as BPS sales. Those sales transactions, which are not impacted by the pending divestiture of our BPS business, continue to be presented as continuing operations in the accompanying consolidated financial statements and have been reclassified to our Other product category for all periods presented.

Sales-type Lease, Lease Income

The components of lease revenue for the three and six months ended June 30, 2023 and 2022 were:

(in millions)	Three months ended June 30, 2023		Six Months Ended June 30, 2023
Sales-type lease revenue	$	3	$	7
Operating lease revenue	132		256
Variable lease revenue	14		29
Total lease revenue	$	149	$	292

(in millions)	Three months ended June 30, 2022		Six months ended June 30, 2022
Sales-type lease revenue	$	5	$	8
Operating lease revenue	113		235
Variable lease revenue	12		32
Total lease revenue	$	130	$	275

Operating Lease, Lease Income

The components of lease revenue for the three and six months ended June 30, 2023 and 2022 were:

(in millions)	Three months ended June 30, 2023		Six Months Ended June 30, 2023
Sales-type lease revenue	$	3	$	7
Operating lease revenue	132		256
Variable lease revenue	14		29
Total lease revenue	$	149	$	292

(in millions)	Three months ended June 30, 2022		Six months ended June 30, 2022
Sales-type lease revenue	$	5	$	8
Operating lease revenue	113		235
Variable lease revenue	12		32
Total lease revenue	$	130	$	275

XML

BUSINESS OPTIMIZATION CHARGES (Tables)

6 Months Ended

Jun. 30, 2023

Restructuring and Related Activities [Abstract]

Summary of Business Optimization Charges

During the three and six months ended June 30, 2023 and 2022, we recorded the following charges related to business optimization programs.

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2023		2022		2023		2022
Restructuring charges	$	287	$	26	$	397	$	93
Costs to implement business optimization programs	6		16		30		30
Total business optimization charges	$	293	$	42	$	427	$	123

Components of Restructuring Charges

During the three and six months ended June 30, 2023 and 2022, we recorded the following restructuring charges.

	Three months ended June 30, 2023
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	9	$	19	$	—	$	28
Contract termination and other costs	—		2		—		2
Asset impairments	257		—		—		257
Total restructuring charges	$	266	$	21	$	—	$	287

	Three months ended June 30, 2022
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	4	$	16	$	—	$	20
Contract termination and other costs	—		5		—		5
Asset impairments	—		1		—		1
Total restructuring charges	$	4	$	22	$	—	$	26

Summary of Activity in Reserves Related to Restructuring Initiatives

The following table summarizes activity in the liability related to our restructuring initiatives.

(in millions)
Liability balance as of December 31, 2022	$	107
Charges	132
Payments	(63)
Reserve adjustments	(12)
Currency translation	(1)
Liability balance as of June 30, 2023	$	163

XML

PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS (Tables)

6 Months Ended

Jun. 30, 2023

Retirement Benefits [Abstract]

Net Periodic Benefit Cost Relating to Pension and Other Postemployment Employee Benefit Plans

The following is a summary of net periodic benefit cost relating to our pension and OPEB plans.

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Pension benefits
Service cost	$	7	$	21	$	13	$	40
Interest cost	35		24		72		48
Expected return on plan assets	(43)		(40)		(87)		(79)
Amortization of net losses and prior service costs	1		11		2		23
Net periodic pension cost	$	—	$	16	$	—	$	32
OPEB
Interest cost	$	2	$	1	$	4	$	2
Amortization of net loss and prior service credit	(6)		(3)		(12)		(6)
Net periodic OPEB cost (income)	$	(4)	$	(2)	$	(8)	$	(4)

XML

EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Schedule of Net Income (Loss) attributable to Stockholder

The following table is a reconciliation of net income (loss) attributable to Baxter stockholders.

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Income (loss) from continuing operations	$	(193)	$	185	$	(193)	$	193
Less: Net income attributable to noncontrolling interests	2		3		3		5
Income (loss) from continuing operations attributable to Baxter stockholders	(195)		182		(196)		188
Income from discontinued operations	54		70		99		135
Net income (loss) attributable to Baxter stockholders	$	(141)	$	252	$	(97)	$	323

Reconciliation of Basic Shares to Diluted Shares

The following table is a reconciliation of basic shares to diluted shares.

	Three months ended June 30,		Six months ended June 30,
(in millions)	2023	2022	2023	2022
Basic shares	506	504	506	503
Effect of dilutive securities	—	4	—	5
Diluted shares	506	508	506	508

XML

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of Gains and Losses on 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 June 30, 2023 and 2022.

	Gain (loss) recognized in OCI				Location of gain (loss) in income statement	Gain (loss) reclassified from AOCI into income
(in millions)	2023		2022			2023		2022
Cash flow hedges
Interest rate contracts	$	—	$	—	Interest expense, net	$	(2)	$	(2)
Foreign exchange contracts	10		19		Cost of sales	3		3
Net investment hedges	10		143		Other (income) expense, net	—		—
Total	$	20	$	162		$	1	$	1

	Location of gain (loss) in income statement	Gain (loss) recognized in income
(in millions)		2023		2022
Undesignated derivative instruments
Foreign exchange contracts	Other (income) expense, net	$	(15)	$	(26)

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 six months ended June 30, 2023 and 2022.

	Gain (loss) recognized in OCI				Location of gain (loss) in income statement	Gain (loss) reclassified from AOCI into income
(in millions)	2023		2022			2023		2022
Cash flow hedges
Interest rate contracts	$	—	$	—	Interest expense, net	$	(3)	$	(3)
Foreign exchange contracts	10		16		Cost of sales	7		5
Net investment hedges	(38)		185		Other (income) expense, net	—		—
Total	$	(28)	$	201		$	4	$	2

	Location of gain (loss) in income statement	Gain (loss) recognized in income
(in millions)		2023		2022
Undesignated derivative instruments
Foreign exchange contracts	Other (income) expense, net	$	(18)	$	(23)

Classification and Fair Values of Derivative Instruments

The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of June 30, 2023.

	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
Foreign exchange contracts	Prepaid expenses and other current assets	$	11	Accrued expenses and other current liabilities	$	4
Total derivative instruments designated as hedges		11			4
Undesignated derivative instruments
Foreign exchange contracts	Prepaid expenses and other current assets	2		Accrued expenses and other current liabilities	2
Total derivative instruments		$	13		$	6

The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of December 31, 2022.

	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
Foreign exchange contracts	Prepaid expenses and other current assets	$	8	Accrued expenses and other current liabilities	$	5
Total derivative instruments designated as hedges		8			5
Undesignated derivative instruments
Foreign exchange contracts	Prepaid expenses and other current assets	6		Accrued expenses and other current liabilities	7
Total derivative instruments		$	14		$	12

Derivative Positions Presented On Net Basis

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.

	June 30, 2023				December 31, 2022
(in millions)	Asset		Liability		Asset		Liability
Gross amounts recognized in the condensed consolidated balance sheets	$	13	$	6	$	14	$	12
Gross amount subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet	(1)		(1)		(4)		(4)
Total	$	12	$	5	$	10	$	8

Amounts Recorded on Condensed Consolidated Balance Sheet Related to Fair Value Hedges

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 June 30, 2023		Balance as of December 31, 2022		Balance as of June 30, 2023		Balance as of December 31, 2022
Long-term debt	$	101	$	101	$	4	$	4

(a) These fair value hedges were terminated in 2018 and earlier periods.

XML

FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Summary of Financial Instruments Measured at Fair Value on Recurring Basis

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 June 30, 2023		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Foreign exchange contracts	$	13	$	—	$	13	$	—
Available-for-sale debt securities	37		—		—		37
Marketable equity securities	37		37		—		—
Total	$	87	$	37	$	13	$	37
Liabilities
Foreign exchange contracts	$	6	$	—	$	6	$	—
Contingent payments related to acquisitions	21		—		—		21
Total	$	27	$	—	$	6	$	21

			Basis of fair value measurement
(in millions)	Balance as of December 31, 2022		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Foreign exchange contracts	$	14	$	—	$	14	$	—
Available-for-sale debt securities	47		—		—		47
Marketable equity securities	32		32		—		—
Total	$	93	$	32	$	14	$	47
Liabilities
Foreign exchange contracts	$	12	$	—	$	12	$	—
Contingent payments related to acquisitions	84		—		—		84
Total	$	96	$	—	$	12	$	84

Reconciliation of Fair Value Measurements that Use Significant Unobservable Inputs

The following table is a reconciliation of recurring fair value measurements that use significant unobservable inputs (Level 3), which consist of contingent payments related to acquisitions and available-for-sale debt securities.

	Three months ended June 30,
	2023				2022
(in millions)	Contingent payments related to acquisitions		Available-for-sale debt securities		Contingent payments related to acquisitions		Available-for-sale debt securities
Fair value at beginning of period	$	70	$	42	$	124	$	53
Change in fair value recognized in earnings	(1)		(5)		(11)		—
Change in fair value recognized in AOCI	—		—		—		1
Transfers out of Level 3	—		—		—		(10)
Payments	(48)		—		—		—
Fair value at end of period	$	21	$	37	$	113	$	44

Book Values and Fair Values of Financial Instruments

For these financial instruments, the following table provides the values recognized in the condensed consolidated balance sheets and the estimated fair values as of June 30, 2023 and December 31, 2022.

	Book values				Fair values(a)
(in millions)	2023		2022		2023		2022
Liabilities
Current maturities of long-term debt and finance lease obligations	$	1,928	$	1,105	$	1,894	$	1,079
Long-term debt and finance lease obligations	14,306		15,232		12,884		13,657

(a)    These fair value amounts are classified as Level 2 within the fair value hierarchy as they are estimated based on observable inputs.

XML

SEGMENT INFORMATION (Tables)

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Summary of Financial Information for Our Segments

Financial information for our segments is as follows.

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Net sales:
Americas	$	1,564	$	1,494	$	3,030	$	2,971
EMEA	762		738		1,476		1,437
APAC	638		647		1,240		1,274
Hillrom	743		715		1,474		1,470
Total net sales	$	3,707	$	3,594	$	7,220	$	7,152
Operating income:
Americas	$	498	$	488	$	918	$	1,008
EMEA	112		169		218		288
APAC	118		156		225		307
Hillrom	147		149		305		349
Total segment operating income	$	875	$	962	$	1,666	$	1,952

Operating Income to Income Before Income Taxes Reconciliation

The following is a reconciliation of segment operating income to income (loss) from continuing operations before income taxes per the condensed consolidated statements of income.

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Total segment operating income	$	875	$	962	$	1,666	$	1,952
Corporate and other	(892)		(698)		(1,554)		(1,605)
Total operating income (loss)	(17)		264		112		347
Interest expense, net	124		89		241		174
Other (income) expense, net	42		(44)		40		(60)
Income (loss) from continuing operations before income taxes	$	(183)	$	219	$	(169)	$	233

XML

DISCONTINUED OPERATIONS - Narrative (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended	6 Months Ended
	May 31, 2023	Jun. 30, 2023	Jun. 30, 2023
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Transaction Service Agreement, period	24 months
Manufacturing And Supply Agreement, period	5 years
Discontinued Operations, Disposed of by Sale | BioPharma Solutions
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Agreed purchase price	$ 4,250
Pre-tax cash proceeds	3,920
Proceeds from divestiture of businesses	$ 3,400
Separation costs		$ 8	$ 15

XML

DISCONTINUED OPERATIONS - Major Classes of Line Items in Income From Discontinued Operations (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income from discontinued operations, net of tax	$ 54	$ 70	$ 99	$ 135
Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net sales	142	152	278	301
Cost of sales	71	70	135	133
Gross margin	71	82	143	168
Selling, general and administrative expenses	14	6	29	11
Research and development expenses	1	0	1	1
Other income, net	(1)	0	0	0
Income from discontinued operations before income taxes	57	76	113	156
Income tax expense	3	6	14	21
Income from discontinued operations, net of tax	$ 54	$ 70	$ 99	$ 135

XML

DISCONTINUED OPERATIONS - Carrying Amounts of the Assets and Liabilities Classified As Discontinued Operations (Details) - Discontinued Operations - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Accounts receivable, net of allowances of $128 in 2023 and $114 in 2022	$ 82	$ 88
Inventories	60	39
Prepaid expenses and other current assets	91	59
Property, plant and equipment, net	297	284
Goodwill	386	391
Operating lease right-of-use assets	9	9
Other non-current assets	6	2
Assets of discontinued operations	931	872
Accounts payable	40	29
Accrued expenses and other current liabilities	30	32
Operating lease liabilities	8	9
Other non-current liabilities	115	111
Liabilities of discontinued operations	$ 193	$ 181

XML

SUPPLEMENTAL FINANCIAL INFORMATION - Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance at beginning of period	$ 122	$ 129	$ 114	$ 122
Charged to costs and expenses	9	3	16	9
Write-offs	(5)	(1)	(6)	(2)
Currency translation adjustments	2	(6)	4	(4)
Balance at end of period	$ 128	$ 125	$ 128	$ 125

XML

SUPPLEMENTAL FINANCIAL INFORMATION - Inventories (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Raw materials	$ 742	$ 698
Work in process	316	294
Finished goods	1,839	1,687
Inventories	$ 2,897	$ 2,679

XML

SUPPLEMENTAL FINANCIAL INFORMATION - Property, Plant and Equipment, Net (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Property, plant and equipment, at cost	$ 11,028	$ 10,780
Accumulated depreciation	(6,534)	(6,085)
Property, plant and equipment, net	$ 4,494	$ 4,695

XML

SUPPLEMENTAL FINANCIAL INFORMATION - Interest Expense, Net (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Interest Income Expense Net
Interest expense, net of capitalized interest	$ 132	$ 93	$ 259	$ 181
Interest income	(8)	(4)	(18)	(7)
Interest expense, net	$ 124	$ 89	$ 241	$ 174

XML

SUPPLEMENTAL FINANCIAL INFORMATION - Other (Income) Expense, Net (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Other Income, net
Foreign exchange (gains) losses, net	$ 22	$ (15)	$ 36	$ (26)
Pension and other postretirement benefit plans	(11)	(7)	(21)	(12)
Pension curtailment	0	(11)	0	(11)
Change in fair value of marketable equity securities	11	(8)	6	(8)
Non-marketable investment impairments	23	0	23	0
Other, net	(3)	(3)	(4)	(3)
Other (income) expense, net	$ 42	$ (44)	$ 40	$ (60)

XML

SUPPLEMENTAL FINANCIAL INFORMATION - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2023	Jun. 30, 2022
Property, Plant and Equipment [Line Items]
Right-of-use asset obtained in exchange for operating lease liability		$ 45	$ 23
Unsettled share repurchase	$ 8	8
Property, plant and equipment impairments		271	7
Property, Plant and Equipment
Property, Plant and Equipment [Line Items]
Capital expenditures incurred but not yet paid		$ 57	$ 62
Manufacturing Facility
Property, Plant and Equipment [Line Items]
Property, plant and equipment impairments	$ 243

XML

GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Goodwill (Details) $ in Millions	6 Months Ended
	Jun. 30, 2023 USD ($)
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 6,452
Currency translation and other	(34)
Goodwill, ending balance	6,418
Americas
Goodwill [Roll Forward]
Goodwill, beginning balance	1,965
Currency translation and other	(22)
Goodwill, ending balance	1,943
EMEA
Goodwill [Roll Forward]
Goodwill, beginning balance	289
Currency translation and other	(3)
Goodwill, ending balance	286
APAC
Goodwill [Roll Forward]
Goodwill, beginning balance	210
Currency translation and other	(2)
Goodwill, ending balance	208
Hillrom
Goodwill [Roll Forward]
Goodwill, beginning balance	3,988
Currency translation and other	(7)
Goodwill, ending balance	$ 3,981

XML

GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill impairments			$ 0	$ 0
Intangible asset amortization expense	$ 157	$ 193	$ 319	$ 410

XML

GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Other Intangible Assets, Net (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Intangible Asset Excluding Goodwill [Line Items]
Gross other intangible assets	$ 9,360	$ 9,376
Accumulated amortization	(2,890)	(2,583)
Other intangible assets, net	6,470	6,793
Trade names
Intangible Asset Excluding Goodwill [Line Items]
Indefinite-lived intangible assets	1,570	1,571
In process Research and Development
Intangible Asset Excluding Goodwill [Line Items]
Indefinite-lived intangible assets	163	202
Customer relationships
Intangible Asset Excluding Goodwill [Line Items]
Gross other intangible assets, finite-lived	3,444	3,442
Accumulated amortization	(574)	(460)
Other intangible assets, net, finite-lived	2,870	2,982
Developed technology, including patents
Intangible Asset Excluding Goodwill [Line Items]
Gross other intangible assets, finite-lived	3,863	3,836
Accumulated amortization	(2,069)	(1,888)
Other intangible assets, net, finite-lived	1,794	1,948
Other amortized intangible assets
Intangible Asset Excluding Goodwill [Line Items]
Gross other intangible assets, finite-lived	320	325
Accumulated amortization	(247)	(235)
Other intangible assets, net, finite-lived	$ 73	$ 90

XML

FINANCING ARRANGEMENTS (Details) € in Millions	3 Months Ended	6 Months Ended		12 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)	Jun. 30, 2023 EUR (€)
Debt Instrument [Line Items]
Commercial paper, average outstanding		$ 249,000,000		$ 299,000,000
Repayments of debt		142,000,000	$ 749,000,000
Original weighted-average term				32 days
Term Loan
Debt Instrument [Line Items]
Repayments of debt	$ 140,000,000
Term loan facility	$ 2,000,000,000	$ 2,000,000,000
Term loan facility term (in years)	3 years	3 years			3 years
Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit, current borrowing capacity	$ 2,500,000,000	$ 2,500,000,000			€ 200
Borrowings outstanding	0	0		$ 0
Domestic Line of Credit
Debt Instrument [Line Items]
Line of credit, current borrowing capacity	$ 2,630,000,000	$ 2,630,000,000
Commercial Paper
Debt Instrument [Line Items]
Weighted average interest rate	5.52%	5.52%		4.75%	5.52%
Original weighted-average term		38 days

XML

COMMITMENTS AND CONTINGENCIES (Details) $ in Millions	6 Months Ended
	Jun. 30, 2023 USD ($) site	Dec. 31, 2022 USD ($)	Mar. 31, 2020 lawsuit
Loss Contingencies [Line Items]
Litigation reserve	$ 28
Number of lawsuits | lawsuit			2
Superfund Sites | Environmental Clean-up
Loss Contingencies [Line Items]
Number of sites | site	6
Environmental reserves	$ 17	$ 19

XML

STOCKHOLDERS' EQUITY - Narrative (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Billions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Oct. 31, 2020	Nov. 30, 2018	Feb. 28, 2018	Nov. 30, 2016	Jul. 31, 2012
Share-Based Payment Arrangement [Abstract]
Cash dividends declared per common share (in dollars per share)	$ 0.29	$ 0.29	$ 0.58	$ 0.57
Stock repurchase program, authorized amount									$ 2.0
Stock repurchase program, additional authorized amount					$ 1.5	$ 2.0	$ 1.5	$ 1.5
Purchases of treasury stock (in shares)		0.1
Remaining value available under stock repurchase programs	$ 1.3		$ 1.3

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Summary of Changes in AOCI by Component (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period (in usd)	$ 5,895	$ 9,121
Other comprehensive income (loss) before reclassifications	29	(398)
Amounts reclassified from AOCI	(10)	11
Net other comprehensive income (loss) from continuing operations	19	(387)
Balance, end of period (in usd)	5,631	8,903
CTA
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period (in usd)	(3,386)	(2,907)
Other comprehensive income (loss) before reclassifications	25	(432)
Amounts reclassified from AOCI	0	0
Net other comprehensive income (loss) from continuing operations	25	(432)
Balance, end of period (in usd)	(3,361)	(3,339)
Pension and OPEB plans
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period (in usd)	(331)	(347)
Other comprehensive income (loss) before reclassifications	(4)	19
Amounts reclassified from AOCI	(7)	13
Net other comprehensive income (loss) from continuing operations	(11)	32
Balance, end of period (in usd)	(342)	(315)
Hedging activities
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period (in usd)	(119)	(126)
Other comprehensive income (loss) before reclassifications	8	13
Amounts reclassified from AOCI	(3)	(2)
Net other comprehensive income (loss) from continuing operations	5	11
Balance, end of period (in usd)	(114)	(115)
Available-for-sale debt securities
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period (in usd)	3	0
Other comprehensive income (loss) before reclassifications	0	2
Amounts reclassified from AOCI	0	0
Net other comprehensive income (loss) from continuing operations	0	2
Balance, end of period (in usd)	3	2
Total
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance, beginning of period (in usd)	(3,833)	(3,380)
Balance, end of period (in usd)	$ (3,814)	$ (3,767)

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Summary of Amounts Reclassification from AOCI to Net Income (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other (income) expense, net	$ (42)	$ 44	$ (40)	$ 60
Income tax expense	(10)	(34)	(24)	(40)
Cost of sales	(2,596)	(2,223)	(4,834)	(4,519)
Total before tax	(183)	219	(169)	233
Total net of tax	(141)	252	(97)	323
Amounts reclassified from AOCI
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total net of tax	5	(5)	10	(11)
Amounts reclassified from AOCI | Pension and OPEB items
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other (income) expense, net	5	(8)	10	(17)
Income tax expense	(1)	2	(3)	4
Total net of tax	4	(6)	7	(13)
Amounts reclassified from AOCI | Gains (losses) on hedging activities
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income tax expense	0	0	(1)	0
Total before tax	1	1	4	2
Total net of tax	1	1	3	2
Amounts reclassified from AOCI | Gains (losses) on hedging activities | Foreign exchange contracts
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Cost of sales	3	3	7	5
Amounts reclassified from AOCI | Gains (losses) on hedging activities | Interest rate contracts
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest expense, net	$ (2)	$ (2)	$ (3)	$ (3)

XML

REVENUES - Additional Information (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Revenue From Contract With Customer [Line Items]
Transaction price allocated to remaining performance obligations	$ 7,990
Net trade accounts receivable	2,270		$ 2,340
Revenue recognized upon satisfaction of performance obligations	64	$ 77
Sales-type lease, net of investment in lease	75
Sales-type leases, receivables	$ 5		$ 14	$ 20	$ 21	$ 15
Minimum
Revenue From Contract With Customer [Line Items]
Global payment terms	30 days
Minimum | Software sales
Revenue From Contract With Customer [Line Items]
Revenue recognized contract period	1 year
Minimum | Consumable Medical Products
Revenue From Contract With Customer [Line Items]
Revenue recognized contract period	1 year
Maximum
Revenue From Contract With Customer [Line Items]
Global payment terms	90 days
Maximum | Contract manufacturing services
Revenue From Contract With Customer [Line Items]
Revenue recognized contract period	90 days
Maximum | Software sales
Revenue From Contract With Customer [Line Items]
Revenue recognized contract period	5 years
Maximum | Consumable Medical Products
Revenue From Contract With Customer [Line Items]
Revenue recognized contract period	7 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2023-07-01
Revenue From Contract With Customer [Line Items]
Remaining revenue performance obligation, percentage of revenue expected to be recognized	20.00%
Remaining performance obligations period	6 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-01-01
Revenue From Contract With Customer [Line Items]
Remaining revenue performance obligation, percentage of revenue expected to be recognized	40.00%
Remaining performance obligations period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2025-01-01
Revenue From Contract With Customer [Line Items]
Remaining revenue performance obligation, percentage of revenue expected to be recognized	20.00%
Remaining performance obligations period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2026-01-01
Revenue From Contract With Customer [Line Items]
Remaining revenue performance obligation, percentage of revenue expected to be recognized	10.00%
Remaining performance obligations period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2027-01-01
Revenue From Contract With Customer [Line Items]
Remaining revenue performance obligation, percentage of revenue expected to be recognized	10.00%
Remaining performance obligations period

XML

REVENUES - Contract Assets and Contract Liabilities (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Revenue From Contract With Customer [Line Items]
Contract assets	$ 163		$ 174
Contract liabilities	199	$ 184	194
Revenue From Contract With Customer [Roll Forward]
Balance at beginning of period	194	196
New revenue deferrals	271	282
Revenue recognized upon satisfaction of performance obligations	(267)	(289)
Currency translation	1	(5)
Balance at end of period	199	$ 184
Prepaid expenses and other current assets
Revenue From Contract With Customer [Line Items]
Contract assets	49		52
Other non-current assets
Revenue From Contract With Customer [Line Items]
Contract assets	114		122
Accrued expenses and other current liabilities
Revenue From Contract With Customer [Line Items]
Contract liabilities	158		154
Revenue From Contract With Customer [Roll Forward]
Balance at beginning of period	154
Balance at end of period	158
Other non-current liabilities
Revenue From Contract With Customer [Line Items]
Contract liabilities	41		40
Revenue From Contract With Customer [Roll Forward]
Balance at beginning of period	40
Balance at end of period	41
Contract manufacturing services
Revenue From Contract With Customer [Line Items]
Contract assets	4		10
Software sales
Revenue From Contract With Customer [Line Items]
Contract assets	43		43
Bundled equipment and consumable medical products contracts
Revenue From Contract With Customer [Line Items]
Contract assets	$ 116		$ 121

XML

REVENUES - Net Sales from Contracts with Customers by Global Business Unit (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenue From Contract With Customer [Line Items]
Net sales	$ 3,707	$ 3,594	$ 7,220	$ 7,152
U.S.
Revenue From Contract With Customer [Line Items]
Net sales	1,751	1,700	3,418	3,412
International
Revenue From Contract With Customer [Line Items]
Net sales	1,956	1,894	3,802	3,740
Round Lake, Illinois
Revenue From Contract With Customer [Line Items]
Net sales		11	2	18
Renal Care
Revenue From Contract With Customer [Line Items]
Net sales	936	931	1,828	1,825
Renal Care | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	234	225	466	450
Renal Care | International
Revenue From Contract With Customer [Line Items]
Net sales	702	706	1,362	1,375
Medication Delivery
Revenue From Contract With Customer [Line Items]
Net sales	761	710	1,448	1,416
Medication Delivery | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	487	459	923	931
Medication Delivery | International
Revenue From Contract With Customer [Line Items]
Net sales	274	251	525	485
Pharmaceuticals
Revenue From Contract With Customer [Line Items]
Net sales	550	528	1,074	1,049
Pharmaceuticals | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	182	164	355	321
Pharmaceuticals | International
Revenue From Contract With Customer [Line Items]
Net sales	368	364	719	728
Clinical Nutrition
Revenue From Contract With Customer [Line Items]
Net sales	243	230	467	457
Clinical Nutrition | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	83	90	161	174
Clinical Nutrition | International
Revenue From Contract With Customer [Line Items]
Net sales	160	140	306	283
Advanced Surgery
Revenue From Contract With Customer [Line Items]
Net sales	272	263	518	491
Advanced Surgery | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	150	151	294	287
Advanced Surgery | International
Revenue From Contract With Customer [Line Items]
Net sales	122	112	224	204
Acute Therapies
Revenue From Contract With Customer [Line Items]
Net sales	180	173	360	361
Acute Therapies | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	60	58	121	126
Acute Therapies | International
Revenue From Contract With Customer [Line Items]
Net sales	120	115	239	235
Patient Support Systems
Revenue From Contract With Customer [Line Items]
Net sales	359	364	707	747
Patient Support Systems | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	276	284	536	579
Patient Support Systems | International
Revenue From Contract With Customer [Line Items]
Net sales	83	80	171	168
Front Line Care
Revenue From Contract With Customer [Line Items]
Net sales	307	282	609	576
Front Line Care | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	227	202	448	409
Front Line Care | International
Revenue From Contract With Customer [Line Items]
Net sales	80	80	161	167
Surgical Solutions
Revenue From Contract With Customer [Line Items]
Net sales	77	69	158	147
Surgical Solutions | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	35	36	73	73
Surgical Solutions | International
Revenue From Contract With Customer [Line Items]
Net sales	42	33	85	74
Other
Revenue From Contract With Customer [Line Items]
Net sales	22	44	51	83
Other | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	17	31	41	62
Other | International
Revenue From Contract With Customer [Line Items]
Net sales	$ 5	$ 13	$ 10	$ 21

XML

REVENUES - Lease Revenue (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenue from Contract with Customer [Abstract]
Sales-type lease revenue	$ 3	$ 5	$ 7	$ 8
Operating lease revenue	132	113	256	235
Variable lease revenue	14	12	29	32
Total lease revenue	$ 149	$ 130	$ 292	$ 275

XML

BUSINESS OPTIMIZATION CHARGES - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Restructuring Cost and Reserve [Line Items]
Cumulative pre-tax costs incurred	$ 1,860		$ 1,860
Expected additional pre-tax costs	20		20
Charges	287	$ 26	397	$ 93
Exit Of Manufacturing Facility
Restructuring Cost and Reserve [Line Items]
Charges	253		253
Employee termination costs
Restructuring Cost and Reserve [Line Items]
Charges	28	20	115	69
Employee termination costs | New Operating Model
Restructuring Cost and Reserve [Line Items]
Charges	19		97
Employee termination costs | Exit Of Manufacturing Facility
Restructuring Cost and Reserve [Line Items]
Charges			10
Contract termination and other costs
Restructuring Cost and Reserve [Line Items]
Charges	2	5	5	17
Asset impairments
Restructuring Cost and Reserve [Line Items]
Charges	$ 257	1	277	7
Asset impairments | Exit Of Manufacturing Facility
Restructuring Cost and Reserve [Line Items]
Charges			$ 243
Hillrom | Employee termination costs
Restructuring Cost and Reserve [Line Items]
Charges		21		59
Hillrom | Integration Activities
Restructuring Cost and Reserve [Line Items]
Charges		27		83
Hillrom | Contract termination and other costs
Restructuring Cost and Reserve [Line Items]
Charges		5		17
Hillrom | Asset impairments
Restructuring Cost and Reserve [Line Items]
Charges		$ 1		$ 7

XML

BUSINESS OPTIMIZATION CHARGES - Summary of Business Optimization Charges (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 287	$ 26	$ 397	$ 93
Business Optimization Programs
Restructuring Cost and Reserve [Line Items]
Restructuring charges	287	26	397	93
Costs to implement business optimization programs	6	16	30	30
Total business optimization charges	$ 293	$ 42	$ 427	$ 123

XML

BUSINESS OPTIMIZATION CHARGES - Components of Restructuring Charges (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 287	$ 26	$ 397	$ 93
COGS
Restructuring Cost and Reserve [Line Items]
Restructuring charges	266	4	298	6
SG&A
Restructuring Cost and Reserve [Line Items]
Restructuring charges	21	22	92	87
R&D
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	0	7	0
Employee termination costs
Restructuring Cost and Reserve [Line Items]
Restructuring charges	28	20	115	69
Employee termination costs | COGS
Restructuring Cost and Reserve [Line Items]
Restructuring charges	9	4	26	6
Employee termination costs | SG&A
Restructuring Cost and Reserve [Line Items]
Restructuring charges	19	16	82	63
Employee termination costs | R&D
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	0	7	0
Contract termination and other costs
Restructuring Cost and Reserve [Line Items]
Restructuring charges	2	5	5	17
Contract termination and other costs | COGS
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	0	3	0
Contract termination and other costs | SG&A
Restructuring Cost and Reserve [Line Items]
Restructuring charges	2	5	2	17
Contract termination and other costs | R&D
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	0	0	0
Asset impairments
Restructuring Cost and Reserve [Line Items]
Restructuring charges	257	1	277	7
Asset impairments | COGS
Restructuring Cost and Reserve [Line Items]
Restructuring charges	257	0	269	0
Asset impairments | SG&A
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	1	8	7
Asset impairments | R&D
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 0	$ 0	$ 0	$ 0

XML

BUSINESS OPTIMIZATION CHARGES - Summary of Activity in Reserves Related to Restructuring Initiatives (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Restructuring Reserve [Roll Forward]
Charges	$ 287	$ 26	$ 397	$ 93
Severance and Other Employee Related Costs
Restructuring Reserve [Roll Forward]
Reserve, beginning balance			107
Charges			132
Payments			(63)
Reserve adjustments			(12)
Currency translation			(1)
Reserve, ending balance	$ 163		$ 163

XML

PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS - Net Periodic Benefit Cost Relating to Pension and Other Postemployment Employee Benefit Plans (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Pension benefits
Net periodic benefit cost
Service cost	$ 7	$ 21	$ 13	$ 40
Interest cost	35	24	72	48
Expected return on plan assets	(43)	(40)	(87)	(79)
Amortization of net losses and prior service costs	1	11	2	23
Net periodic pension cost (income)	0	16	0	32
OPEB
Net periodic benefit cost
Interest cost	2	1	4	2
Amortization of net losses and prior service costs	(6)	(3)	(12)	(6)
Net periodic pension cost (income)	$ (4)	$ (2)	$ (8)	$ (4)

XML

INCOME TAXES (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Effective income tax rate	(5.50%)	15.50%	(14.20%)	17.20%
U.S. Federal statutory rate			21.00%
Increase in valuation allowance	$ 30		$ 30

XML

EARNINGS PER SHARE - Schedule of Net Income (Loss) Attributable to Stockholder (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Earnings Per Share [Abstract]
Income (loss) from continuing operations	$ (193)	$ 185	$ (193)	$ 193
Net income attributable to noncontrolling interests	2	3	3	5
Income (loss) from continuing operations attributable to Baxter stockholders	(195)	182	(196)	188
Income from discontinued operations, net of tax	54	70	99	135
Net income (loss) attributable to Baxter stockholders	$ (141)	$ 252	$ (97)	$ 323

XML

EARNINGS PER SHARE - Reconciliation of Basic Shares to Diluted Shares (Details) - shares shares in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Reconciliation of Basic Shares to Diluted Shares
Basic (in shares)	506	504	506	503
Effect of dilutive securities (in shares)	0	4	0	5
Diluted (in shares)	506	508	506	508

XML

EARNINGS PER SHARE - Additional Information (Details) - shares shares in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Earnings Per Share [Abstract]
Anti-dilutive securities excluded from computation of EPS (in shares)	27	12	25	8

XML

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Additional Information (Details) € in Millions	6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)	May 31, 2019 EUR (€)	May 31, 2017 EUR (€)
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, notional amount	$ 0	$ 0
Derivative, fair value, terminated	0	0
Derivative, net investment terminated	0	$ 0
Deferred, net after-tax gains on derivative instruments	2,000,000
Undesignated derivative instruments
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, notional amount	688,000,000		$ 753,000,000
Net investment hedge
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Accumulated pre-tax unrealized translation gain in AOCI	57,000,000
1.30% Senior Notes Due May 2025
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Senior notes | €					€ 600
0.4% Senior Notes Due May 2024
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Senior notes | €				€ 750
1.3% Senior Notes Due May 2029
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Senior notes | €				€ 750
Foreign exchange contracts
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, notional amount	$ 377,000,000		398,000,000
Maximum length of time hedge in cash flow hedge	12 months
Interest rate contracts
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, fair value, net	$ 0		0
Interest rate swap
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, fair value, net	$ 0		$ 0

XML

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Summary of Gains and Losses on Hedging Instruments (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Derivative Instruments, Gain (Loss) [Line Items]
Other comprehensive income (loss), cash flow hedge and net investment hedge, gain (loss), before reclassification, tax	$ 20	$ 162	$ (28)	$ 201
Other comprehensive income (loss), reclassification adjustment from AOCI, cash flow hedges and net investment hedges, net of tax	1	1	4	2
Net Investment Hedging
Derivative Instruments, Gain (Loss) [Line Items]
Other comprehensive income (loss), net investment hedge, gain (loss), before reclassification and tax	10	143	(38)	185
Net Investment Hedging | Other (income) expense, net
Derivative Instruments, Gain (Loss) [Line Items]
Other comprehensive income (loss), net investment hedge, gain (loss), before reclassification and tax	0	0	0	0
Interest rate contracts | Cash Flow Hedging
Derivative Instruments, Gain (Loss) [Line Items]
Other comprehensive income (loss), cash flow hedge, gain (loss), before reclassification, tax	0	0	0	0
Interest rate contracts | Cash Flow Hedging | Interest expense, net
Derivative Instruments, Gain (Loss) [Line Items]
Other comprehensive income (loss), cash flow hedge, gain (loss), reclassification, before tax	(2)	(2)	(3)	(3)
Foreign exchange contracts | Other (income) expense, net
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in income, undesignated derivative instruments	(15)	(26)	(18)	(23)
Foreign exchange contracts | Cash Flow Hedging
Derivative Instruments, Gain (Loss) [Line Items]
Other comprehensive income (loss), cash flow hedge, gain (loss), before reclassification, tax	10	19	10	16
Foreign exchange contracts | Cash Flow Hedging | Cost of sales
Derivative Instruments, Gain (Loss) [Line Items]
Other comprehensive income (loss), cash flow hedge, gain (loss), reclassification, before tax	$ 3	$ 3	$ 7	$ 5

XML

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Classification and Fair Value Amounts of Derivative Instruments (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Derivatives, Fair Value [Line Items]
Derivative asset, fair value	$ 13	$ 14
Derivative liability, fair value	6	12
Derivative instruments designated as hedges
Derivatives, Fair Value [Line Items]
Derivative asset, fair value	11	8
Derivative liability, fair value	4	5
Derivative instruments designated as hedges | Foreign exchange contracts | Prepaid expenses and other current assets
Derivatives, Fair Value [Line Items]
Derivative asset, fair value	11	8
Derivative instruments designated as hedges | Foreign exchange contracts | Accrued expenses and other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability, fair value	4	5
Undesignated derivative instruments | Foreign exchange contracts | Prepaid expenses and other current assets
Derivatives, Fair Value [Line Items]
Derivative asset, fair value	2	6
Undesignated derivative instruments | Foreign exchange contracts | Accrued expenses and other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability, fair value	$ 2	$ 7

XML

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Derivative Positions Presented On Net Basis (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Asset
Gross amounts recognized in the condensed consolidated balance sheets	$ 13	$ 14
Gross amount subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet	(1)	(4)
Derivative asset, fair value, total	12	10
Liability
Gross amounts recognized in the condensed consolidated balance sheets	6	12
Gross amount subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet	(1)	(4)
Derivative liability, fair value, total	$ 5	$ 8

XML

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Amounts Recorded on Condensed Consolidated Balance Sheet Related to Fair Value Hedges (Details) - Long-term debt - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Derivatives, Fair Value [Line Items]
Carrying amount of hedged item	$ 101	$ 101
Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged item	$ 4	$ 4

XML

FAIR VALUE MEASUREMENTS - Summary of Financial Instruments Measured at Fair Value on Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Assets
Foreign exchange contracts	$ 13	$ 14
Available-for-sale debt securities	37	47
Marketable equity securities	37	32
Total assets	87	93
Liabilities
Foreign exchange contracts	6	12
Contingent payments related to acquisitions	21	84
Total liabilities	27	96
Quoted prices in active markets for identical assets (Level 1)
Assets
Foreign exchange contracts	0	0
Available-for-sale debt securities	0	0
Marketable equity securities	37	32
Total assets	37	32
Liabilities
Foreign exchange contracts	0	0
Contingent payments related to acquisitions	0	0
Total liabilities	0	0
Significant other observable inputs (Level 2)
Assets
Foreign exchange contracts	13	14
Available-for-sale debt securities	0	0
Marketable equity securities	0	0
Total assets	13	14
Liabilities
Foreign exchange contracts	6	12
Contingent payments related to acquisitions	0	0
Total liabilities	6	12
Significant unobservable inputs (Level 3)
Assets
Foreign exchange contracts	0	0
Available-for-sale debt securities	37	47
Marketable equity securities	0	0
Total assets	37	47
Liabilities
Foreign exchange contracts	0	0
Contingent payments related to acquisitions	21	84
Total liabilities	$ 21	$ 84

XML

FAIR VALUE MEASUREMENTS - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Fair Value Disclosures [Line Items]
Cash and cash equivalents	$ 1,722	$ 1,852	$ 1,722	$ 1,852	$ 1,718
Impairment of investments without readily determinable value	18
Debt Securities
Fair Value Disclosures [Line Items]
Impairment of convertible debt investment	5
Available-for-sale debt securities
Fair Value Disclosures [Line Items]
Impairment of convertible debt investment	5	0	5	0
Transfers out of Level 3		$ 8		$ 8
Other Assets
Fair Value Disclosures [Line Items]
Other equity investments without readily determinable fair values	88		88		104
Significant other observable inputs (Level 2)
Fair Value Disclosures [Line Items]
Money market funds, at carrying value	$ 303		$ 303		$ 341

XML

FAIR VALUE MEASUREMENTS - Reconciliation of Fair Value Measurements that Use Significant Unobservable Inputs (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2022	Dec. 31, 2021
Contingent payments related to acquisitions
Contingent payments related to acquisitions
Fair value at beginning of period	$ 21	$ 113	$ 21	$ 113	$ 70	$ 84	$ 124	$ 143
Additions			0	0
Change in fair value recognized in earnings	(1)	(11)	(14)	(28)
Change in fair value recognized in AOCI	0	0	0	0
Transfers out of Level 3	0	0	0	0
Payments	(48)	0	(49)	(2)
Fair value at end of period	21	113	21	113
Available-for-sale debt securities
Available-for-sale debt securities
Fair value at beginning of period	42	53	47	30
Additions			0	21
Change in fair value recognized in earnings	(5)	0	(5)	0
Change in fair value recognized in AOCI	0	1	0	3
Transfers out of Level 3	0	(10)	(5)	(10)
Payments	0	0	0	0
Fair value at end of period	$ 37	$ 44	$ 37	$ 44

XML

FAIR VALUE MEASUREMENTS - Book Values and Fair Values of Financial Instruments (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Book values
Fair Value And Carrying Value By Balance Sheet Grouping [Line Items]
Current maturities of long-term debt and finance lease obligations	$ 1,928	$ 1,105
Long-term debt and finance lease obligations	14,306	15,232
Fair values
Fair Value And Carrying Value By Balance Sheet Grouping [Line Items]
Current maturities of long-term debt and finance lease obligations	1,894	1,079
Long-term debt and finance lease obligations	$ 12,884	$ 13,657

XML

SEGMENT INFORMATION - Summary of Financial Information for Our Segments (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) segment	Jun. 30, 2022 USD ($)
Segment Reporting Information [Line Items]
Number of operating segments | segment			4
Total net sales	$ 3,707	$ 3,594	$ 7,220	$ 7,152
Total segment operating income	(17)	264	112	347
Operating Segments
Segment Reporting Information [Line Items]
Total net sales	3,707	3,594	7,220	7,152
Total segment operating income	875	962	1,666	1,952
Operating Segments | Americas
Segment Reporting Information [Line Items]
Total net sales	1,564	1,494	3,030	2,971
Total segment operating income	498	488	918	1,008
Operating Segments | EMEA
Segment Reporting Information [Line Items]
Total net sales	762	738	1,476	1,437
Total segment operating income	112	169	218	288
Operating Segments | APAC
Segment Reporting Information [Line Items]
Total net sales	638	647	1,240	1,274
Total segment operating income	118	156	225	307
Operating Segments | Hillrom
Segment Reporting Information [Line Items]
Total net sales	743	715	1,474	1,470
Total segment operating income	$ 147	$ 149	$ 305	$ 349

XML

SEGMENT INFORMATION - Operating Income to Income Before Income Taxes Reconciliation (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Total segment operating income	$ (17)	$ 264	$ 112	$ 347
Interest expense, net	124	89	241	174
Other (income) expense, net	42	(44)	40	(60)
Income (loss) from continuing operations before income taxes	(183)	219	(169)	233
Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Total segment operating income	875	962	1,666	1,952
Corporate and other
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Total segment operating income	$ (892)	$ (698)	$ (1,554)	$ (1,605)