What changed in this filing

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Item 1. Financial Statements

2025-05-06 compared with 2024-11-12 · 264 added, 365 removed, 672 unchanged (48% of the section changed)

3 unchanged sentences

(in millions, except share information)

September 30,

2025 December 31,

14 unchanged sentences

Current liabilities:

Short-term debt $ 11 $ 2,126

Current maturities of long-term debt and finance lease obligations 651 626

24 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

2024 2023 2024 2023

Net sales $ 2,625 $ 2,490

7 unchanged sentences

Other (income) expense, net ( 3 ) ( 9 )

Income from continuing operations before income taxes 69 64 232 21

Income tax expense 8 27 70 59

Income (loss) from continuing operations before income taxes ( 3 ) 46

Income tax expense (benefit) ( 67 ) 40

Income (loss) from continuing operations 64 6

22 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

2024 2023 2024 2023

Income (loss) from continuing operations $ 64 $ 6

Other comprehensive income (loss) from continuing operations, net of tax:

Currency translation adjustments, net of tax expense (benefit) of ($ 19 ) and $ 12 for the three months ended September 30, 2024 and 2023, respectively, and ($ 3 ) and $ 2 for the nine months ended September 30, 2024 and 2023, respectively.

106 ( 36 ) ( 61 ) ( 39 )

Pension and other postretirement benefits, net of tax expense (benefit) of ($ 2 ) and zero for the three months ended September 30, 2024 and 2023, respectively, and zero and ($ 3 ) for the nine months ended September 30, 2024 and 2023, respectively.

Currency translation adjustments, net of tax expense (benefit) of $ 6 and $ 13 for the three months ended March 31, 2025 and 2024, respectively.

( 68 ) ( 119 )

Hedging activities, net of tax expense (benefit) of ($ 3 ) and $ 2 for the three months ended September 30, 2024 and 2023, respectively and zero and $ 3 for the nine months ended September 30, 2024 and 2023, respectively.

Pension and other postretirement benefits, net of tax expense (benefit) of ($ 4 ) and $ 3 for the three months ended March 31, 2025 and 2024, respectively.

Hedging activities, net of tax expense (benefit) of ($ 1 ) and $ 2 for the three months ended March 31, 2025 and 2024, respectively.

Total other comprehensive income (loss) from continuing operations, net of tax ( 58 ) ( 107 )

Comprehensive loss from continuing operations 152 5 101 ( 78 )

Comprehensive income (loss) from continuing operations 6 ( 101 )

Income (loss) from discontinued operations, net of tax 62 33

Other comprehensive income (loss) from discontinued operations

Currency translation adjustments, net of tax expense (benefit) of $( 11 ) and $( 1 ) for the three months ended September 30, 2024 and 2023, respectively, and $( 15 ) and $( 1 ) for the nine months ended September 30, 2024 and 2023, respectively.

90 134 ( 35 ) 162

Pension and other postretirement benefits, net of tax expense (benefit) of zero for the three and nine months ended September 30, 2024 and 2023

— ( 4 ) ( 1 ) ( 5 )

Currency translation adjustments, net of tax expense (benefit) of zero and $( 2 ) for the three months ended March 31, 2025 and 2024, respectively.

Pension and other postretirement benefits, net of tax expense (benefit) of $( 3 ) and zero for the three months ended March 31, 2025 and 2024, respectively.

Total other comprehensive income (loss) from discontinued operations 126 ( 65 )

8 unchanged sentences

(in millions)

For the three months ended September 30, 2024

For the three months ended March 31, 2025

Baxter International Inc.

4 unchanged sentences

loss Total Baxter stockholders' equity Noncontrolling interests Total equity

Balance as of July 1, 2024 683 $ 683 173 $ ( 11,104 ) $ 6,353 $ 15,539 $ ( 3,828 ) $ 7,643 $ 65 $ 7,708

Net income — — — — — 140 — 140 4 144

Other comprehensive income (loss) — — — — — — 181 181 — 181

Stock issued under employee benefit plans and other — — — 20 38 — — 58 — 58

Dividends declared on common stock — — — — — ( 150 ) — ( 150 ) — ( 150 )

Change in noncontrolling interests — — — — — — — — 1 1

Balance as of September 30, 2024

683 $ 683 173 $ ( 11,084 ) $ 6,391 $ 15,529 $ ( 3,647 ) $ 7,872 $ 70 $ 7,942

For the nine months ended September 30, 2024

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 loss Total Baxter stockholders' equity Noncontrolling interests Total equity

Balance as of January 1, 2025 683 $ 683 173 $ ( 11,059 ) $ 6,421 $ 14,929 $ ( 4,010 ) $ 6,964 $ 60 $ 7,024

Net loss — — — — — ( 137 ) — ( 137 ) 9 ( 128 )

Net income — — — — — 126 — 126 — 126

Other comprehensive income (loss) — — — — — — ( 47 ) ( 47 ) — ( 47 )

Reclassification of other comprehensive income (loss) disposed in the Kidney Care separation — — — — — — 115 115 — 115

Stock issued under employee benefit plans and other — — ( 3 ) 122 ( 112 ) — — 10 — 10

Dividends declared on common stock — — — — — ( 87 ) — ( 87 ) — ( 87 )

Change in noncontrolling interests — — — — — — — — ( 1 ) ( 1 )

Balance as of September 30, 2024

Disposition of noncontrolling interest associated with the Kidney Care separation — — — — — — — — ( 87 ) ( 87 )

Balance as of March 31, 2025

683 $ 683 170 $ ( 10,937 ) $ 6,309 $ 14,968 $ ( 3,942 ) $ 7,081 $ ( 27 ) $ 7,054

For the three months ended September 30, 2023

For the three months ended March 31, 2024

Baxter International Inc.

1 unchanged sentence

Balance as of July 1, 2023 683 $ 683 177 $ ( 11,296 ) $ 6,341 $ 13,655 $ ( 3,814 ) $ 5,569 $ 62 $ 5,631

Net income — — — — — 2,508 — 2,508 3 2,511

Other comprehensive income (loss) — — — — — — 98 98 — 98

Stock issued under employee benefit plans and other — — ( 1 ) 47 27 — — 74 — 74

Dividends declared on common stock — — — — — ( 148 ) — ( 148 ) — ( 148 )

Balance as of September 30, 2023 683 $ 683 176 $ ( 11,249 ) $ 6,368 $ 16,015 $ ( 3,716 ) $ 8,101 $ 65 $ 8,166

For the nine months ended September 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, 2024 683 $ 683 176 $ ( 11,230 ) $ 6,389 $ 16,114 $ ( 3,554 ) $ 8,402 $ 66 $ 8,468

4 unchanged sentences

Change in noncontrolling interests — — — — — — — — ( 2 ) ( 2 )

Balance as of September 30, 2023

683 $ 683 176 $ ( 11,249 ) $ 6,368 $ 16,015 $ ( 3,716 ) $ 8,101 $ 65 $ 8,166

Balance as of March 31, 2024 683 $ 683 174 $ ( 11,130 ) $ 6,339 $ 16,003 $ ( 3,722 ) $ 8,173 $ 62 $ 8,235

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

2 unchanged sentences

(in millions)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operations

20 unchanged sentences

Capital expenditures ( 122 ) ( 110 )

Acquisitions of developed technology and investments ( 9 ) ( 4 )

Proceeds from sale of marketable equity securities 34 —

Other investing activities, net ( 2 ) 10

4 unchanged sentences

Repayments of debt ( 2,825 ) ( 15 )

Net increases in debt with original maturities of three months or less — 214

Net decreases in debt with original maturities of three months or less ( 300 ) —

Cash dividends on common stock ( 87 ) ( 147 )

3 unchanged sentences

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash - continuing operations 36 ( 25 )

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash - discontinued operations 39 23

Increase (decrease) in cash, cash equivalents and restricted cash ( 118 ) ( 168 )

3 unchanged sentences

Cash, cash equivalents and restricted cash of continuing operations $ 2,296 $ 2,830

(1) The following table provides a reconciliation of cash, cash equivalents and restricted cash shown above to the amounts reported within the condensed consolidated balance sheet as of September 30, 2024, December 31, 2023, and September 30, 2023 (in millions):

September 30, 2024 December 31, 2023 September 30, 2023

(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 March 31, 2025, December 31, 2024, and March 31, 2024 (in millions):

March 31, 2025 December 31, 2024 March 31, 2024

Cash and cash equivalents $ 2,294 $ 1,764 $ 2,826

Restricted cash included in other non-current assets 2 2 4

Cash and cash equivalents of discontinued operations — 648 200

Cash, cash equivalents and restricted cash $ 2,296 $ 2,414 $ 3,030

14 unchanged sentences

On August 12, 2024, we entered into an Equity Purchase Agreement (EPA) with certain affiliates of Carlyle Group Inc.

(Carlyle) to sell our Kidney Care business, which will be known as Vantive, for an aggregate purchase price of $ 3.80 billion.

After giving effect to certain closing adjustments, we currently expect to receive approximately $ 3.50 billion in cash with net after-tax proceeds currently estimated to be in the range of $ 3.15 billion to $ 3.25 billion.

The transaction is currently expected to close in late 2024 or early 2025, subject to the receipt of customary regulatory approvals and satisfaction of other closing conditions.

We determined that our Kidney Care business met the criteria to be classified as held-for-sale in August 2024, and we also concluded that it met the conditions to be reported as a discontinued operation at that time.

Accordingly, our Kidney Care business is reported in discontinued operations in the accompanying condensed consolidated financial statements, and our prior period results have been adjusted to reflect discontinued operations presentation.

(Carlyle) to sell our Kidney Care business.

That business, which is now known as Vantive Health LLC (Vantive) is comprised of our former Kidney Care segment and provides chronic and acute dialysis therapies and services, including peritoneal dialysis, hemodialysis, continuous renal replacement therapies, and other organ support therapies.

On January 31, 2025, we completed the sale of our Kidney Care business to Carlyle for an aggregate purchase price of $ 3.80 billion in cash, subject to certain closing cash, working capital and debt adjustments.

After giving effect to certain adjustments, we received approximately $ 3.71 billion pre-tax cash proceeds at closing of the transaction with the net after tax proceeds of approximately $ 3.3 billion, subject to certain post-closing adjustments.

The financial position, results of operations and cash flows of our Kidney Care business, including the gain on sale of that business and the related cash proceeds received, are reported as discontinued operations in the accompanying condensed consolidated financial statements, and our prior period results have been adjusted to reflect discontinued operations.

See Note 2 for additional information.

Hurricane Helene

In September 2024, Hurricane Helene, which brought significant rain and extensive flooding to Western North Carolina, caused damage to certain of our assets at our North Cove facility in Marion, N.C.

and disrupted operations at that facility.

We are actively working with customers, regulators and other stakeholders to manage inventory and minimize disruption to patient care as we work to fully restore our North Cove manufacturing operations.

Our insurance policies generally cover the repair or replacement of our assets that suffer loss or damage, less applicable deductibles and subject to any coverage limits and exclusions, and we are working closely with our insurance carriers and claims adjusters to ascertain the full amount of insurance proceeds due to us as a result of the damages and the loss we suffered as a result of Hurricane Helene (which proceeds are likely to be less than the applicable losses).

Our insurance policies also provide coverage for interruption to our business, including lost profits, and reimbursement for other expenses and costs that have been incurred relating to the damages and losses suffered.

In the third quarter of 2024, we recorded $ 25 million of pre-tax net charges related to damages caused by Hurricane Helene.

This consisted of $ 44 million related to the write-off of damaged inventory and fixed assets offset by a receivable of $ 19 million, which is the amount of the loss, net of our insurance deductible, related to insurance recoveries expected as a result of those asset write-offs.

These amounts were recorded as a component of cost of sales in the condensed consolidated statements of income for the three and nine month periods ended September 30, 2024.

At this time, the full amount of combined property damage and business interruption costs cannot be estimated and any additional insurance recoveries are not realizable, and accordingly, no additional amounts have been recorded as of September 30, 2024.

On November 1, 2024, we received $ 101 million of cash related to insurance proceeds which included recoveries for expenses incurred after the balance sheet date.

We expect to receive additional related insurance proceeds in the future.

In September 2024, Hurricane Helene, which brought significant rain and extensive flooding to Western North Carolina, caused damage to certain of our assets at our North Cove facility in Marion, North Carolina and disrupted operations at that facility.

Since then, we have actively worked with customers, regulators and other stakeholders to manage inventory and minimize disruption to patient care as we worked towards resuming our North Cove manufacturing operations.

While we continue to increase allocation levels across key impacted product groups, the facility was fully operational by the end of the first quarter of 2025.

In the first quarter of 2025, we recorded $ 98 million of pre-tax net charges related to remediation, air freight and other costs as a result of the damages caused by Hurricane Helene.

These amounts were recorded as a component of cost of sales in the condensed consolidated statements of income for the three month period ended March 31, 2025.

Risks and Uncertainties

Supply Constraints and Global Economic Conditions

In recent years, we have experienced significant challenges to our global supply chain, including production delays and interruptions, increased costs and shortages of raw materials and component parts (including resins and

electromechanical devices), higher transportation costs, adverse impacts from significant weather events (including Hurricane Helene and the flooding of our North Cove facility), elevated inflation levels and interest rates, disruptions to certain ports of call and access to shipping lanes around the world, the war in Ukraine, the conflict in the Middle East, tensions amongst China, Taiwan, and the U.S., and other geopolitical events.

While we have seen improvements in the availability of component parts and improved pricing of raw materials and on transportation costs, some of these challenges (such as additional transportation costs resulting from Hurricane Helene as we transfer product across our global network in the interest of increasing the availability of intravenous and peritoneal dialysis solutions for our customers while we work to fully remediate our North Cove facility) are expected to have a negative impact on our results of operations in the future.

Supply Constraints, Tariffs and Global Economic Conditions

We have experienced significant challenges to our global supply chain, including production delays and interruptions, increased costs and shortages of raw materials and component parts (including resins and electromechanical devices), higher transportation costs, adverse impacts from significant weather events (including Hurricane Helene, which caused the flooding of our North Cove facility), elevated inflation levels and interest rates, disruptions to certain ports of call and access to shipping ports around the world, the war in Ukraine, the conflict in the Middle East and other geopolitical events.

While we have seen improvements in the availability of component parts and improved pricing in raw materials and on transportation costs, some of these challenges are expected to have a negative impact on our results of operations in the future.

In addition, recent announcements regarding changes in U.S.

trade policies and practices, including the implementation of global tariffs and proposed further tariffs (including potential pharmaceutical tariffs), and responses from other jurisdictions, have significantly affected financial markets and economic conditions.

While we are in the process of implementing select offsets for 2025 and working to identify

additional mitigation opportunities in 2025 and beyond, we currently expect that our results will be adversely affected (including as a result of a failure to achieve the anticipated offsets or an inability to identify additional mitigating actions).

Additionally, continued global macroeconomic uncertainty, including in trade policies and practices, elevated tariffs and in operational and policy changes in the governments of the U.S.

and other countries, could contribute to further market volatility, deteriorating or prolonged weakened economic conditions and decreased hospital capital spending levels, all of which could adversely affect our business, results of operations or financial condition.

Sole source supplier relationships may limit our ability to respond to these tariffs with alternative of lower cost raw material or component parts.

We expect that these challenges, among other factors, may continue to have an adverse effect on our business.

DISCONTINUED OPERATIONS

A component of an entity is reported in discontinued operations after meeting the criteria for held-for-sale classification if the disposition represents a strategic shift that has (or will have) a major effect on the entity's operations and financial results.

The condensed consolidated financial statements reflect discontinued operations presentation for two strategic actions, as described below.

The condensed consolidated financial statements reflect discontinued operations presentation as described below.

Discontinued Operations - Kidney Care

On August 12, 2024, we entered into an EPA to sell our Kidney Care business, subject to receipt of customary regulatory approvals and satisfaction of other closing conditions.

That business, which is comprised of our Kidney Care segment, provides chronic and acute dialysis therapies and services, including peritoneal dialysis, hemodialysis, continuous renal replacement therapies, and other organ support therapies.

Pursuant to the EPA, we expect to sell the Kidney Care business to Carlyle for an aggregate purchase price of $ 3.80 billion.

After giving effect to certain adjustments, we currently expect to receive approximately $ 3.50 billion of net pre-tax cash proceeds (approximately $ 3.15 billion to $ 3.25 billion after tax).

The transaction is currently expected to close in late 2024 or early 2025, subject to receipt of customary regulatory approvals and satisfaction of other closing conditions.

We intend to use the net after-tax proceeds from this transaction to repay certain of our debt obligations, consistent with our stated capital allocation priorities.

After giving effect to certain adjustments, we received approximately $ 3.71 billion pre-tax cash proceeds at closing of the transaction.

We recognized a pre-tax gain on the sale of $ 191 million ($ 111 million net of tax).

We concluded that our Kidney Care business met the criteria to be classified as held-for-sale in August 2024.

We analyzed the quantitative and qualitative factors relevant to the pending sale of our Kidney Care business, including its significance to our overall net income (loss), earnings (loss) per share, and net assets, and determined that those conditions for discontinued operations presentation had been met.

As such, the financial position, results of operations and cash flows of that business are reported as discontinued operations in the accompanying condensed consolidated financial statements.

Prior period amounts have been adjusted to reflect discontinued operations presentation.

Upon closing of the pending sale of the Kidney Care business, Baxter and Vantive will enter into several agreements, including a Manufacturing and Supply Agreement (Kidney Care MSA), a long-term Master Services Agreement, a Distribution Agreement, a Transition Services Agreement (Kidney Care TSA), and an Intellectual Property Agreement.

Pursuant to the Kidney Care MSA, Baxter and the Kidney Care divested entities will provide each other with certain dialysis-related products, other products, product components and fulfillment services for a period up to 10 years post-closing (with certain extension rights as provided therein).

Pursuant to the Kidney Care TSA, Baxter and the entities that will be divested in connection with the pending Kidney Care sale (the Kidney Care divested entities) will provide each other, on an interim basis, certain transitional services for up to 30 months post-closing (with certain extension rights as provided therein) to help ensure business continuity and help minimize disruptions to the entities' operations post-closing.

Services to be provided under the TSA include IT, supply chain and certain other corporate and administrative services.

Pursuant to the EPA, Baxter will retain (i) the manufacture and sale of saline solutions and (ii) the plastics operations of Baxter and its subsidiaries at its Mountain Home, Arkansas facility, which is not part of the Kidney Care segment.

Discontinued Operations - BioPharma Solutions

On September 29, 2023, we sold our BioPharma Solutions (BPS) business to Advent International and Warburg Pincus (collectively, the BPS buyers).

The BPS business, which was historically reported within our former Americas segment, provided 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 was historically

operated through our former, wholly-owned subsidiaries Baxter Pharmaceutical Solutions LLC, a Delaware limited liability company, and Baxter Oncology GmbH, a German limited liability company (collectively, the BPS divested entities).

We concluded that our BPS business met the criteria to be classified as held-for-sale in May 2023.

We analyzed the quantitative and qualitative factors relevant to the divestiture of our BPS business, including its significance to our overall net income and earnings per share, and determined that those conditions for discontinued operations presentation had been met.

We analyzed the quantitative and qualitative factors relevant to the sale of our Kidney Care business, including its significance to our overall net income (loss), earnings (loss) per share, and net assets, and determined that those conditions for discontinued operations presentation had been met.

As such, the financial position, results of operations and cash flows of that business are reported as discontinued operations in the accompanying condensed consolidated financial statements.

Prior period amounts have been adjusted to reflect discontinued operations presentation.

At closing of the transaction, Baxter entered into a Transition Services Agreement (BPS TSA) and a Master Commercial Manufacturing and Supply Agreement (BPS MSA) with the divested entities.

Pursuant to the BPS TSA, Baxter and the BPS divested entities provide to each other, on an interim basis, specific transition services for up to 24 months post-closing to help ensure business continuity and minimize disruptions.

Services provided under the BPS TSA include finance, information technology, human resources, integrated supply chain, and certain other administrative services.

Pursuant to the BPS MSA, the BPS divested entities 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).

Upon closing of the sale of the Kidney Care business, pursuant to the Equity Purchase Agreement (EPA), Baxter and Vantive entered into several agreements, including a Manufacturing and Supply Agreement (Kidney Care MSA), a Transition Services Agreement (Kidney Care TSA), a Long Term Master Services Agreement, a Distribution Agreement and certain other arrangements providing for short-term supply of saline products, and an Intellectual Property Agreement.

Pursuant to the Kidney Care MSA, Baxter and the Kidney Care divested entities provide each other with certain dialysis-related products, other products, product components and fulfillment services for up to 10 years post-closing (with certain extension rights and early exit rights as provided therein).

Pursuant to the Kidney Care MSA, our sales to Vantive are recognized in net sales in the condensed consolidated statements of income (loss).

Pursuant to the Kidney Care TSA, Baxter and the entities that were divested in connection with the Kidney Care sale (the Kidney Care divested entities) provide each other, on an interim basis, certain transitional services for up to 30 months post-closing (with certain extension rights and early exit rights as provided therein) to help ensure business continuity and help minimize disruptions to the operations of both parties post-closing.

Services provided under the Kidney Care TSA include information technology applications and support, supply chain and certain other corporate and administrative services.

Billings by us under the Kidney Care TSA are recorded in other operating income, net in the condensed consolidated statements of income.

The costs to provide each respective service is recorded in the applicable expense category in the condensed consolidated statements of income (loss).

In accordance with the EPA, we have agreed to indemnify Vantive for certain items, including taxes imposed on or with respect to the Kidney Care divested entities, for pre-closing tax periods.

The net indemnification liability as of March 31, 2025 was $ 37 million.

Further, in accordance with the EPA, Baxter recorded a contingent liability for payments to reimburse Vantive for qualifying capital expenditures over a period of three years post sale.

The contingent liability as of March 31, 2025 was $ 133 million.

Certain of the business guarantees originally entered by us on behalf of the Kidney Care business were not released prior to the completion of the sale and remain outstanding.

These legacy guarantees primarily relate to leases, performance contracts and ones to support regulatory requirements of the Kidney Care business.

As of March 31, 2025, the total amount of Kidney Care business guarantees retained by us is approximately $ 300 million.

Under terms of the EPA, Carlyle has agreed to indemnify us for any cost or expense, or payments made in the future under these arrangements.

Results of Discontinued Operations and Assets and Liabilities of Discontinued Operations

The following tables summarize the major classes of line items included in income (loss) from discontinued operations, net of tax, for the three and nine months ended September 30, 2024 and 2023:

Kidney Care BioPharma Solutions Total

Three Months Ended September 30, Three Months Ended September 30, Three Months Ended September 30,

The following tables summarize the major classes of line items included in income (loss) from discontinued operations, net of tax, for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

(in millions) 2025 2024

4 unchanged sentences

Research and development expenses 16 56

Other operating income, net ( 1 ) — — — ( 1 ) —

Operating income (loss) 14 72

7 unchanged sentences

Net income attributable to Baxter stockholders included in discontinued operations $ 62 $ 31

Kidney Care BioPharma Solutions Total

Nine Months Ended September 30, Nine Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023 2024 2023

Net sales $ 3,375 $ 3,294 $ — $ 469 $ 3,375 $ 3,763

Cost of sales 2,125 2,841 — 216 2,125 3,057

Gross margin 1,250 453 — 253 1,250 706

Selling, general and administrative expenses 874 691 — 44 874 735

Research and development expenses 140 104 — 2 140 106

Goodwill impairment 430 — — — 430 —

Other operating income, net ( 1 ) — — — ( 1 ) —

Operating income (loss) ( 193 ) ( 342 ) — 207 ( 193 ) ( 135 )

Interest expense, net — 2 — — — 2

Other (income) expense, net ( 2 ) 18 — 2 ( 2 ) 20

Income (loss) from discontinued operations before income taxes ( 191 ) ( 362 ) — 205 ( 191 ) ( 157 )

Gain on disposition — — — 2,890 — 2,890

Income tax expense (benefit) 99 ( 258 ) — 536 99 278

Income (loss) from discontinued operations, net of tax ( 290 ) ( 104 ) — 2,559 ( 290 ) 2,455

Net income attributable to noncontrolling interests included in discontinued operations 9 6 — — 9 6

Net income (loss) attributable to Baxter stockholders included in discontinued operations $ ( 299 ) $ ( 110 ) $ — $ 2,559 $ ( 299 ) $ 2,449

For the three and nine months ended September 30, 2024, selling, general and administrative expenses (SG&A) includes $ 69 million and $ 236 million, respectively, of separation-related costs incurred in connection with the pending sale of our Kidney Care business.

For the three months ended September 30, 2023, SG&A includes separation-related costs of $ 67 million and $ 8 million, incurred in connection with the pending sale of our Kidney Care business and the sale of BPS, respectively.

For the nine months ended September 30, 2023, SG&A includes separation-related costs of $ 108 million and $ 15 million, incurred in connection with the pending sale of our Kidney Care business and the sale of BPS, respectively.

The following table summarizes the carrying amounts of the major classes of assets and liabilities classified as discontinued operations, related to our Kidney Care business, in the condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023:

(in millions) September 30, 2024 December 31, 2023

For the three months ended March 31, 2025 and 2024, selling, general and administrative expenses (SG&A) includes $ 37 million and $ 88 million, respectively, of separation-related costs incurred in connection with the sale of our Kidney Care business.

(in millions) December 31, 2024

Cash and cash equivalents $ 648

4 unchanged sentences

Property, plant and equipment, net 1,516

Goodwill 276 721

Other intangible assets, net 148

14 unchanged sentences

Allowance for Doubtful Accounts

The following table is a summary of the changes in our allowance for doubtful accounts for the three and nine months ended September 30, 2024 and 2023.

Three Months Ended September 30, Nine Months Ended September 30,

The following table is a summary of the changes in our allowance for doubtful accounts for the three months ended March 31, 2025 and 2024.

Three Months Ended March 31,

(in millions) 2025 2024

4 unchanged sentences

Balance at end of period $ 66 $ 56

(in millions) September 30,

(in millions) March 31,

2025 December 31,

4 unchanged sentences

Property, Plant and Equipment, Net

(in millions) September 30,

(in millions) March 31,

2025 December 31,

2 unchanged sentences

Property, plant and equipment, net $ 2,717 $ 2,870

Other Current Assets and Liabilities

In connection with the sale of our Kidney Care business and pursuant to the EPA, the Kidney Care assets and liabilities in certain countries are to be transferred at a later date for operational, regulatory or other reasons.

Accordingly, the related assets, primarily consisting of accounts receivable, of $ 95 million and liabilities, consisting of accounts payable, of $ 7 million of these deferred markets and are presented within prepaid and other current assets and accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheet as of March 31, 2025.

In the first quarter of 2025, we signed a purchase agreement with a buyer to sell our manufacturing facility in Opelika, Alabama for $ 25 million, subject to the satisfaction of various closing conditions.

The related assets are classified as held-for-sale and are presented within prepaid and other current assets in the accompanying condensed consolidated balance sheet as of March 31, 2025.

While the closing remains subject to the satisfaction of various closing conditions, we currently expect the transaction to close in 2025 and the net book value of the assets as of March 31, 2025 approximates the transaction price net of estimated selling costs.

Interest Expense, Net

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2025 2024

3 unchanged sentences

Other (Income) Expense, Net

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2025 2024

2 unchanged sentences

Change in fair value of marketable equity securities 1 ( 3 )

Non-marketable investment impairments — — — 13

Equity method investment impairment 9 —

Other, net ( 2 ) ( 7 )

1 unchanged sentence

Non-Cash Operating and Investing Activities

Right-of-use operating lease assets obtained in exchange for lease obligations for the nine months ended September 30, 2024 and 2023 were $ 54 million and $ 55 million, respectively.

Purchases of property, plant and equipment included in accounts payable as of September 30, 2024 and 2023 were $ 34 million and $ 30 million, respectively.

Right-of-use operating lease assets obtained in exchange for lease obligations for the three months ended March 31, 2025 and 2024 were $ 5 million and $ 16 million, respectively.

Purchases of property, plant and equipment included in accounts payable as of March 31, 2025 and 2024 were $ 39 million and $ 35 million, respectively.

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

The following is a reconciliation of goodwill by segment.

(in millions) Medical Products and Therapies Healthcare Systems and Technologies Pharmaceuticals Total

(in millions) Medical Products & Therapies Healthcare Systems & Technologies Pharmaceuticals Total

Balance as of December 31, 2024 $ 1,185 $ 3,550 $ 540 $ 5,275

Currency translation 38 8 17 63

Balance as of September 30, 2024 $ 1,234 $ 3,989 $ 560 $ 5,783

Balance as of March 31, 2025 $ 1,223 $ 3,558 $ 557 $ 5,338

Other intangible assets, net

2 unchanged sentences

(in millions) Customer relationships Developed technology, including patents Trade names Other amortized intangible assets Trade names In process Research and Development

September 30, 2024

December 31, 2024

Gross other intangible assets $ 3,387 $ 3,131 $ 958 $ 86 $ 680 $ 107 $ 8,349

1 unchanged sentence

Other intangible assets, net $ 2,509 1,056 851 20 680 107 5,223

December 31, 2023

March 31, 2025

Gross other intangible assets $ 3,389 $ 3,154 $ 953 $ 88 $ 680 $ 107 $ 8,371

1 unchanged sentence

Other intangible assets, net $ 2,457 $ 984 $ 834 $ 19 $ 680 $ 107 $ 5,081

Intangible asset amortization expense was $ 159 million and $ 147 million for the three months ended September 30, 2024 and 2023, respectively, and $ 471 million and $ 434 million for the nine months ended September 30, 2024 and 2023, respectively.

Intangible asset amortization expense was $ 155 million and $ 158 million for the three months ended March 31, 2025 and 2024, respectively .

FINANCING ARRANGEMENTS

Significant Debt Activity

In February 2025, we repaid $ 1.00 billion under our $ 1.64 billion five-year term loan facility maturing in 2026.

Credit Facilities

On July 17, 2024, we entered into a credit agreement in which a group of banks have committed to provide us senior unsecured term loans in an aggregate principal amount of up to $ 2.05 billion ("the bridge facility").

Borrowings under the bridge facility will be available in up to three drawings to fund (a) the refinancing of our 1.322 % Senior Notes due November 29, 2024, our Floating Rate Notes due November 29, 2024, and certain borrowings under our existing term loan facility and (b) payment of certain U.S.

tax liabilities arising from internal reorganization transactions related to the pending sale of our Kidney Care business.

Borrowings under the bridge facility will bear interest at a rate based on our long-term debt ratings in effect from time to time and the interest rate on any borrowings outstanding beyond December 31, 2024 would increase by 0.25 %.

We will also incur a ticking fee on undrawn commitments at a rate based on our long-term debt ratings in effect from time to time.

The banks’ funding commitments under the bridge facility will terminate upon the earliest to occur of:

(i) our consummation of the debt repayments and tax payments described above without us having borrowed under the bridge facility, (ii) our election to terminate the commitments under the bridge facility, (iii) our receipt of net cash proceeds from certain transactions (including from the pending sale of our Kidney Care business), (iv) the occurrence of three drawings under the bridge facility, and (v) December 31, 2024.

Outstanding borrowings under the bridge facility will mature on the earlier of 364 days from the first funding date and November 24, 2025.

Additionally, we are required to use the net cash proceeds from certain transactions (including from the pending sale of our Kidney Care business) to repay any outstanding borrowings under the bridge facility.

The bridge facility contains financial and other covenants, including a net leverage covenant, and provides for customary events of default.

There were no borrowings outstanding under this bridge facility as of September 30, 2024.

In the first quarter of 2024, 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 to increase the maximum net leverage ratio covenant for the six fiscal quarters ending June 30, 2024, September 30, 2024, December 31, 2024, March 31, 2025, June 30, 2025, and September 30, 2025.

The amendment further provided for the reduction of the capacity under our U.S dollar-denominated revolving credit facility from $ 2.50 billion to $ 2.00 billion on the earlier of September 30, 2024 or the date of the sale of our Kidney Care business.

Costs incurred in connection with the amendment were not material.

In addition to our U.S.

dollar-denominated revolving credit facility with a current capacity of $ 2.00 billion, 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 September 30, 2024 or December 31, 2023.

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 September 30, 2024 we have capacity to draw on the full amounts under our credit facilities.

I n the first nine months of 2024, we repaid $ 822 million of senior notes at maturity.

On July 17, 2024, we entered into a credit agreement pursuant to which a group of banks provided us senior unsecured term loans in an aggregate principal amount of up to $ 2.05 billion ("the bridge facility").

Borrowings under the bridge facility were available in up to three drawings to fund (a) the refinancing of our 1.322 % Senior Notes due November 29, 2024, our Floating Rate Notes due November 29, 2024, and certain borrowings under our existing term loan facility and (b) payment of certain U.S.

tax liabilities arising from internal reorganization transactions related to the sale of our Kidney Care business.

Borrowings under the bridge facility bore interest at a rate based on our long-term debt ratings in effect from time to time and the interest rate on any borrowings outstanding beyond December 31, 2024 would increase by 0.25 %.

We also incurred a ticking fee on undrawn commitments at a rate based on our long-term debt ratings in effect from time to time.

The banks’ funding commitments under the bridge facility terminated on December 31, 2024.

Outstanding borrowings under the bridge facility were scheduled to mature on the earlier of 364 days from the first funding date and November 24, 2025.

Additionally, we were required to use the net cash proceeds from certain transactions (including from the sale of our Kidney Care business) to repay any outstanding borrowings under the bridge facility.

The bridge facility contained financial and other covenants, including a net leverage

covenant, and provided for customary events of default.

There was $ 1.83 billion outstanding under this bridge facility as of December 31, 2024.

In January 2025, we used a portion of the approximately $ 3.3 billion of net after-tax cash proceeds from the sale of our Kidney Care business to repay the $ 1.83 billion outstanding under the bridge facility, at which time it was terminated.

As of March 2025, we had a U.S.

Dollar-denominated term loan credit facility, which had one tranche of term loans outstanding, a U.S Dollar-denominated revolving credit facility and a Euro-denominated revolving credit facility.

Dollar-denominated revolving credit facility has a current capacity of $ 2.00 billion and our Euro-denominated revolving credit facility has a capacity of € 200 million .

Each of the facilities is scheduled to mature in 2026.

There were no borrowings outstanding under these credit facilities as of March 31, 2025 or December 31, 2024.

Our commercial paper borrowing arrangements require us to maintain undrawn borrowing capacity under our revolving credit facilities for an amount at least equal to our outstanding commercial paper borrowings.

Based on our covenant calculations as of March 31, 2025 we have capacity to draw $ 2.04 billion under our credit facilities.

Commercial Paper

There was no commercial paper outstanding as of March 31, 2025.

As of December 31, 2024, we had $ 300 million of commercial paper outstanding with a weighted-average interest rate of 4.78 % and an original term of 45 days.

I n the first quarter of 2025, we repaid the $ 300 million balance outstanding as of December 31, 2024.

COMMITMENTS AND CONTINGENCIES

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If a loss is not probable or a probable loss cannot be reasonably estimated, no liability is recorded.

As of September 30, 2024 and December 31, 2023, our total recorded reserves with respect to legal and environmental matters were $ 41 million and $ 25 million, respectively.

As of March 31, 2025 and December 31, 2024, our total recorded reserves with respect to legal and environmental matters were $ 46 million and $ 40 million, respectively.

We have established reserves for certain of the matters discussed below.

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Separate from these Superfund cases noted above, we are involved in ongoing environmental remediations associated with historic operations at certain of our facilities.

As of September 30, 2024 and December 31, 2023, our environmental reserves, which are measured on an undiscounted basis, were $ 30 million and $ 15 million, respectively.

As of March 31, 2025 and December 31, 2024, our environmental reserves, which are measured on an undiscounted basis, were $ 28 million and $ 29 million, respectively.

After considering these reserves, the outcome of these matters is not expected to have a material adverse effect on our financial position or results of operations.

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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 plaintiffs sought damages, including compensatory and punitive damages in an unspecified amount, and unspecified injunctive and declaratory relief.

The parties reached an 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.

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The case was dismissed on October 17, 2023.

Since December 2023, 25 lawsuits (after giving effect to the amendment referenced below) have been filed against us in the Circuit Court of Cook County, Illinois by plaintiffs alleging injuries as a result of exposure to ethylene oxide used by several companies, including historic use by us for sterilization at our facility in Round Lake, Illinois.

Since December 2023, 41 lawsuits (after giving effect to the September 2024 amendment referenced below) have been filed against us in the Circuit Court of Cook County, Illinois by plaintiffs alleging injuries as a result of exposure to ethylene oxide used by several companies, including historic use by us for sterilization at our facility in Round Lake, Illinois.

The plaintiffs seek damages in an unspecified amount.

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On September 11, 2024, the court granted leave to amend one previously-filed complaint to add Baxter as a defendant.

In the second quarter of 2025, plaintiffs filed a motion to voluntarily dismiss Baxter from 29 of the filed cases, which was granted by the Court.

The parties have reached an agreement in principle to resolve the remaining filed cases, along with certain additional matters, for an amount not material to Baxter.

We acquired Hill-Rom Holdings, Inc.

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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.

In October 2024, the DOJ issued a subpoena (2024 Subpoena), pursuant to 18 U.S.C.

In October 2024, the DOJ issued a subpoena (the 2024 Subpoena), pursuant to 18 U.S.C.

3846, to Hillrom.

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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, which was denied on January 17, 2024, subject to further discovery.

Fact discovery is ongoing.

On June 20, 2024, Reading Hospital filed a putative class action complaint against Hill-Rom Holdings, Inc., Hill-Rom Company, Inc., and Hill-Rom Services, Inc.

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On September 30, 2024, the plaintiff filed a First Amended Complaint.

On November 8, 2024, Hillrom

filed a Motion to Dismiss Plaintiff's Amended Complaint.

Briefing was completed in January 2025, and the court held a hearing on the motion on March 25, 2025.

The motion is pending before the court.

STOCKHOLDERS’ EQUITY

Cash Dividends

Cash dividends declared per share for the three months ended September 30, 2024 and 2023 were $ 0.29 and for the nine months ended September 30, 2024 and 2023 were $ 0.87 .

Cash dividends declared per share for the three months ended March 31, 2025 and 2024 were $ 0.17 and $ 0.29 , respectively.

Stock Repurchase Programs

In July 2012, our Board of Directors authorized a share repurchase program and the related authorization amount was subsequently increased a number of times.

During the first nine months of 2024 and 2023 we did not repurchase any shares under this authority.

We had $ 1.30 billion remaining available under the authorization as of September 30, 2024.

During the first three months of 2025 and 2024 we did not repurchase any shares under this authority.

We had $ 1.30 billion remaining available under the authorization as of March 31, 2025.

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 nine months ended September 30, 2024 and 2023.

The following table is a net-of-tax summary of the changes in accumulated other comprehensive income (loss) (AOCI) by component for the three months ended March 31, 2025 and 2024.

Gains (losses)

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Net other comprehensive income (loss) 69 1 ( 2 ) — 68

Balance as of September 30, 2024 $ ( 3,077 ) $ ( 455 ) $ ( 118 ) $ 3 $ ( 3,647 )

Balance as of March 31, 2025 $ ( 3,361 ) $ ( 474 ) $ ( 110 ) $ 3 $ ( 3,942 )

Gains (losses)

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Net other comprehensive income (loss) ( 180 ) 4 8 — ( 168 )

Balance as of September 30, 2023 $ ( 3,263 ) $ ( 347 ) $ ( 109 ) $ 3 $ ( 3,716 )

Balance as of March 31, 2024 $ ( 3,165 ) $ ( 448 ) $ ( 112 ) $ 3 $ ( 3,722 )

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

The following is a summary of the amounts reclassified from AOCI to net income (loss) during the three and nine months ended September 30, 2024 and 2023.

Amounts reclassified from AOCI (a)

(in millions) Three Months Ended September 30, 2024 Nine Months Ended September 30, 2024 Location of impact in income statement

Pension and OPEB items

Amortization of net losses and prior service costs or credits $ 1 $ 4 Other (income) expense, net

Tax effect — ( 1 ) Income tax expense

$ 1 $ 3 Net of tax

Gains (losses) on hedging activities

Foreign exchange contracts $ 4 $ 9 Cost of sales

Interest rate contracts ( 1 ) ( 4 ) Interest expense, net

Fair value hedges — ( 5 ) Other (income) expense, net

3 — Total before tax

Tax effect ( 1 ) — Income tax expense

$ 2 $ — Net of tax

Total reclassifications for the period $ 3 $ 3 Total net of tax

The following is a summary of the amounts reclassified from AOCI to net income (loss) during the three months ended March 31, 2025 and 2024.

Amounts reclassified from AOCI (a)

(in millions) Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023 Location of impact in income statement

Reclassification of cumulative translation loss to earnings from BPS divestiture $ ( 185 ) $ ( 185 ) Income from discontinued operations, net of tax

(in millions) Three Months Ended March 31, 2025 Three Months Ended March 31, 2024 Location of impact in income statement

Reclassification of cumulative translation loss to earnings from Kidney Care separation $ ( 126 ) $ — Income from discontinued operations, net of tax

Tax effect — — Income from discontinued operations, net of tax

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Amortization of net losses and prior service costs or credits $ 3 $ 2 Other (income) expense, net

Pension settlement from BPS divestiture 4 4 Income from discontinued operations, net of tax

Pension settlement from Kidney Care separation 14 — Income from discontinued operations, net of tax

17 2 Total before tax

Tax effect ( 1 ) ( 1 ) Income tax expense

Tax effect on pension settlement from Kidney Care separation ( 3 ) — Income from discontinued operations, net of tax

$ 13 $ 1 Net of tax

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Interest rate contracts 4 ( 1 ) Interest expense, net

Fair value hedges — ( 3 ) Other (income) expense, net

3 ( 2 ) Total before tax

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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 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.

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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.

Our global payment terms are typically between 30 to 90 days.

Our primary customers are hospitals, healthcare distribution companies, and government agencies that purchase healthcare products on behalf of providers.

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For example, we lease medical equipment to customers under operating lease arrangements and recognize the related revenues on a monthly basis over the lease term.

Our Healthcare Systems and Technologies segment includes connected care solutions and collaboration tools that are implemented over time.

Our Healthcare Systems & Technologies segment includes connected care solutions and collaboration tools that are implemented over time.

We recognize revenue for these arrangements over time or at a point in time depending on our evaluation of when the customer obtains control of the promised goods or services.

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Revenue is recognized over time when we are creating or enhancing an asset that the customer controls as the asset is created or enhanced or our performance does not create an asset with an alternative use and we have an enforceable right to payment for performance completed.

As of September 30, 2024, we had $ 2.75 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 Medical Products and Therapies segment.

As of March 31, 2025, we had $ 10.19 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 Medical Products & Therapies segment.

Some contracts in the United States included in this amount contain index-dependent price increases, which are not known at this time.

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Significant Judgments

Revenues from product sales are recorded at the net sales price, which include estimates of variable consideration primarily related to rebates and wholesaler chargebacks.

Revenues from product sales are recorded at the net sales price, which include estimates of variable consideration primarily related to rebates and distributor chargebacks.

These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are included in accrued expenses and other current liabilities and as reductions of accounts receivable, net on the condensed consolidated balance sheets.

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The amount of variable consideration included in the net sales price is limited to the amount for which it is probable that a significant reversal in revenue will not occur when the related uncertainty is resolved.

Revenue recognized during the three and nine months ended September 30, 2024 and 2023 related to performance obligations satisfied in prior periods was no t material.

Revenue recognized during the three months ended March 31, 2025 and 2024 related to performance obligations satisfied in prior periods was no t material.

Additionally, our contracts with customers often include promises to transfer multiple products and services to a customer.

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The timing of revenue recognition, billings and cash collections results in the recognition of trade accounts receivable, unbilled receivables, contract assets and customer advances, and deposits (contract liabilities) on our condensed consolidated balance sheets.

Net trade accounts receivable was $ 1.54 billion as of September 30, 2024 and December 31, 2023.

Net trade accounts receivable was $ 1.49 billion and $ 1.54 billion as of March 31, 2025 and December 31, 2024, 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 .

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.

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.

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The following table summarizes our contract assets:

(in millions) September 30,

(in millions) March 31,

2025 December 31,

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We expect to satisfy the majority of the remaining performance obligations and recognize revenue related to installation and service contracts within the next 12 months with most of the non-current performance obligations satisfied within 24 months.

The following table summarizes contract liability activity for the nine months ended September 30, 2024 and 2023.

The following table summarizes contract liability activity for the three months ended March 31, 2025 and 2024.

The contract liability balance represents the transaction price allocated to the remaining performance obligations.

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2025

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Balance at end of period $ 175 $ 169

For the nine months ended September 30, 2024 and 2023, $ 94 million and $ 111 million of revenue was recognized that was included in contract liabilities as of December 31, 2023 and 2022, respectively.

For the three months ended March 31, 2025 and 2024, $ 34 million and $ 43 million of revenue was recognized that was included in contract liabilities as of December 31, 2024 and 2023, respectively.

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

(in millions) September 30,

(in millions) March 31,

2025 December 31,

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We allocate revenue between equipment leases and medical products based on their standalone selling prices.

The components of lease revenue for the three and nine months ended September 30, 2024 and 2023 were:

Three Months Ended September 30, Nine Months Ended September 30,

The components of lease revenue for the three months ended March 31, 2025 and 2024 were:

Three Months Ended March 31,

(in millions) 2025 2024

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Total lease revenue $ 106 $ 114

Our net investment in sales-type leases was $ 36 million as of September 30, 2024, of which $ 5 million originated in 2020 and prior, $ 10 million in 2021, $ 5 million in 2022, $ 7 million in 2023, and $ 9 million in 2024.

Our net investment in sales-type leases was $ 47 million as of March 31, 2025, of which $ 13 million originated in 2021 and prior, $ 6 million in 2022, $ 7 million in 2023, $ 10 million in 2024, and $ 11 million in 2025.

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.

The related costs of those actions consisted primarily of employee termination costs, implementation costs, contract termination costs, and asset impairments.

These efforts include restructuring the organization into verticalized segments, optimizing the manufacturing footprint, R&D operations and supply chain network, employing disciplined cost management, and centralizing and streamlining certain support functions.

We currently expect to incur additional pre-tax costs, primarily related to the implementation of business optimization programs, of approximately $ 4 million through the completion of initiatives that are currently underway.

We continue to pursue cost savings initiatives, including those related to our newly implemented operating model, intended to simplify and streamline our operations, and to the extent further cost savings opportunities are identified (including after completion of the pending Kidney Care sale), we would incur additional restructuring charges and costs to implement business optimization programs in future periods.

During the three and nine months ended September 30, 2024 and 2023, we recorded the following charges related to business optimization programs.

Three Months Ended September 30, Nine Months Ended September 30,

We continue to pursue cost savings initiatives, including those intended to mitigate a portion of the dis-synergies that arose as a result of the sale of our Kidney Care business, and to the extent further cost savings opportunities are identified, we would incur additional restructuring charges and costs to implement business optimization programs in future periods.

For segment reporting, business optimization charges are unallocated expenses.

During the three months ended March 31, 2025 and 2024, we recorded the following charges related to business optimization programs.

Three Months Ended March 31,

(in millions) 2025 2024

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Total business optimization charges $ 45 $ 22

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

Costs to implement business optimization programs for the three and nine months ended September 30, 2024 and 2023, respectively, consisted primarily of external consulting and transition costs, including employee compensation and related costs.

Costs to implement business optimization programs for the three months ended March 31, 2025 and 2024, 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 nine months ended September 30, 2024 and 2023, we recorded the following restructuring charges.

Three months ended September 30, 2024

(in millions) COGS SG&A Total

Employee termination costs $ 2 $ 10 $ 12

Contract termination and other costs — 3 3

Total restructuring charges $ 2 $ 13 $ 15

Three months ended September 30, 2023

During the three months ended March 31, 2025 and 2024, we recorded the following restructuring charges.

Three months ended March 31, 2025

(in millions) COGS SG&A R&D Total

Employee termination costs $ 12 $ 13 $ 1 $ 26

Contract termination and other costs — 2 — 2

Asset write offs 1 17 — 18

Total restructuring charges $ 13 $ 30 $ 1 $ 44

Nine months ended September 30, 2024

Three months ended March 31, 2024

(in millions) COGS SG&A Total

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Total restructuring charges $ 3 $ 14 $ 17

Nine months ended September 30, 2023

(in millions) COGS SG&A R&D Total

Employee termination costs $ 25 $ 89 $ 10 $ 124

Contract termination and other costs — 5 — 5

Asset impairments 3 8 — 11

Total restructuring charges $ 28 $ 102 $ 10 $ 140

For the three and nine months ended September 30, 2024, $ 7 million and $ 14 million of the restructuring charges reflected in the table above, consisting of employee termination costs, were related to business optimization initiatives within our Healthcare Systems and Technologies segment.

Additionally, for the nine months ended September 30, 2024, $ 7 million of the restructuring charges reflected in the table above, consisting of employee termination costs, were related to our recent implementation of a new operating model intended to simplify and streamline our operations.

For the three and nine months ended September 30, 2023, $ 11 million and $ 79 million, respectively, of the restructuring charges reflected in the table above, consisting of employee termination costs, were related to the implementation of our previously announced new operating model intended to simplify and streamline our operations.

For the three months ended March 31, 2025, $ 25 million of the restructuring charges reflected in the table above, consisting of employee termination costs, were related to initiatives to reduce our cost structure following the sale of our Kidney Care segment.

For the three months ended March 31, 2024, $ 6 million of the restructuring charges reflected in the table above, consisting of employee termination costs, were related to the implementation of our operating model intended to streamline our operations.

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

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Payments ( 36 )

Reserve adjustments ( 8 )

Currency translation 2

Liability balance as of September 30, 2024 $ 74

Substantially all of our restructuring liabilities as of September 30, 2024 relate to employee termination costs, with the remaining liabilities attributable to contract termination costs.

Liability balance as of March 31, 2025 $ 114

Substantially all of our restructuring liabilities as of March 31, 2025 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 2025.

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

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2025 2024

8 unchanged sentences

Net periodic OPEB cost (income) $ ( 2 ) $ ( 3 )

Our effective income tax rate was 11.6 % and 42.2 % for the three months ended September 30, 2024 and 2023, respectively, and 30.2 % and 281.0 % for the nine months ended September 30, 2024 and 2023, respectively.

Our effective income tax rate can differ from the 21 % U.S.

For the three months ended March 31, 2025 and 2024, our effective income tax rate differs significantly from the 21 % U.S.

federal statutory rate due to a number of factors, including foreign rate differences, tax incentives, non-deductible expenses, non-taxable income, increases or decreases in valuation allowances, increases or decreases in liabilities for uncertain tax positions, and excess tax benefits or shortfalls on stock compensation awards.

For the three months ended September 30, 2024, the difference between our effective income tax rate and the U.S.

federal statutory rate was primarily attributable to a favorable geographic earnings mix, the tax impacts of the write-off of damaged inventory and fixed assets at our North Cove facility caused by Hurricane Helene, and a change in our assertion on the reinvested foreign earnings related to the pending sale of our Kidney Care segment allocated to continuing operations, partially offset by a $ 26 million valuation allowance recorded to reduce the carrying amount of a tax attribute carryforward in the U.S.

related to the pending sale of our Kidney Care segment.

For the nine months ended September 30, 2024, the difference between our effective income tax rate and the U.S.

federal statutory rate was primarily attributable to a $ 26 million valuation allowance recorded to reduce the carrying amount of a tax attribute carryforward in the U.S.

related to the pending sale of our Kidney Care segment, an increase in a valuation allowance in a foreign jurisdiction resulting from changes in future projected income, an increase in income tax expense resulting from internal reorganization transactions related to the pending sale of our Kidney Care segment, and an increase in our liabilities for various uncertain tax positions, partially offset by a favorable geographic earnings mix.

For the three months ended September 30, 2023, the difference between our effective income tax rate and the U.S.

federal statutory rate was primarily attributable to an increase in the valuation allowance in a foreign jurisdiction resulting from changes in future projected income, partially offset by a favorable geographic earnings mix.

For the nine months ended September 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, an increase in the valuation allowance in a foreign jurisdiction resulting from changes in future projected income, and excess tax shortfalls on stock compensation awards.

For the three months ended March 31, 2025, the difference between our effective income tax rate and the U.S.

federal statutory rate was primarily driven by our near break-even pre-tax income and a tax benefit driven by an entity classification election that we made for U.S.

tax purposes, which resulted in a capital loss.

For the three months ended March 31, 2024, the difference between our effective income tax rate and the U.S.

federal statutory rate was primarily driven by income tax expense resulting from internal reorganization transactions related to the sale of our Kidney Care segment, an increase in a valuation allowance in a foreign jurisdiction resulting from changes in future projected income, and an increase in our liabilities for various uncertain tax positions.

EARNINGS PER SHARE

3 unchanged sentences

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

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2025 2024

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

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2025 2024

2 unchanged sentences

Diluted shares 514 510

Basic and diluted shares are the same for nine months ended September 30, 2023 due to our loss from continuing operations attributable to Baxter stockholders.

The effect of dilutive securities includes unexercised stock options, unvested RSUs and contingently issuable shares related to granted PSUs.

The computation of diluted EPS excludes 18 million and 19 million shares issuable under equity awards for the three and nine months ended September 30, 2024, and 18 million and 25 million shares issuable under equity awards for the three and nine months ended September 30, 2023, respectively, because their inclusion would have had an anti-dilutive effect on diluted EPS.

The computation of diluted EPS excludes 20 million and 16 million shares issuable under equity awards for the three months ended March 31, 2025 and 2024, respectively, because their inclusion would have had an anti-dilutive effect on diluted EPS.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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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, British Pound, Chinese Renminbi, Japanese Yen, Swedish Krona, Mexican Peso, Australian Dollar, Canadian Dollar, Turkish Lira, and Indian Rupee.

We are primarily exposed to foreign exchange risk with respect to recognized assets and liabilities, forecasted transactions and net assets denominated in the Euro, British Pound, Canadian Dollar, Australian Dollar, Indian Rupee, Turkish Lira, Japanese Yen, Mexican Peso, Korean Wan and Swiss Franc.

We manage our foreign currency exposures on a consolidated basis, which allows us to net exposures and take advantage of any natural offsets.

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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 $ 225 million and $ 340 million as of September 30, 2024 and December 31, 2023, respectively.

The maximum term over which we have cash flow hedge contracts in place related to forecasted transactions at September 30, 2024 is 12 months for foreign exchange contracts.

There were no outstanding interest rate contracts designated as cash flow hedges as of September 30, 2024 and December 31, 2023.

The notional amounts of foreign exchange contracts designated as cash flow hedges were $ 49 million and $ 99 million as of March 31, 2025 and December 31, 2024, respectively.

The maximum term over which we have cash flow hedge contracts in place related to forecasted transactions at March 31, 2025 is eight months for foreign exchange contracts.

There were no outstanding interest rate contracts designated as cash flow hedges as of March 31, 2025 and December 31, 2024.

Fair Value Hed g es

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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 September 30, 2024 and December 31, 2023.

There were no outstanding interest rate contracts designated as fair value hedges as of March 31, 2025 and December 31, 2024.

In October 2023, we entered into a foreign currency forward contract with a notional amount of $ 798 million and designated that derivative as a fair value hedge of our € 750 million of 0.40 % senior notes due May 2024.

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In May 2017, we issued € 600 million of 1.3 % senior notes due May 2025.

We had designated these debt obligations as hedges of our net investment in our European operations and, as a result, mark to spot rate adjustments of the outstanding debt balances were previously recorded as a component of AOCI.

In March 2025, we dedesignated this previously designated net investment hedge and concurrently entered into forward contracts to manage foreign exchange risk in earnings relating to these outstanding debt balances.

In May 2019, we issued € 750 million of 1.3 % senior notes due May 2029.

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In October 2023, we dedesignated this previously designated net investment hedge and concurrently entered into a fair value hedging relationship as discussed in the "Fair Value Hedges" section above.

As of September 30, 2024, we had an accumulated pre-tax unrealized translation gain in AOCI of $ 18 million related to the Euro-denominated senior notes.

As of March 31, 2025, we had an accumulated pre-tax unrealized translation gain in AOCI of $ 63 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 nine months of 2024 or 2023 resulting from changes in our assessment of the probability that the hedged forecasted transactions would occur.

There were no cash flow hedge dedesignations in the first three months of 2025 or 2024 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 nine months of 2024 or 2023.

There were no fair value hedges terminated during the first three months of 2025 or 2024.

If we remove a net investment hedge designation, any gain or loss recognized in AOCI is not reclassified to earnings until we sell, liquidate, or deconsolidate the foreign investments that were being hedged.

There were no net investment hedges terminated during the first nine months of 2024 or 2023.

In March 2025, we dedesignated one of our net investment hedges as discussed in the "Net Investment Hedges" section above.

There were no net investment hedges terminated during the first three months of 2024.

Undesignated Derivative Instruments

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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 $ 527 million as of September 30, 2024 and $ 305 million as of December 31, 2023.

In March 2025, as discussed in the "Net Investment Hedges" section above, we entered into forward contracts with a notional amount of $ 655 million to hedge the repayment of our Euro-denominated senior notes due May 2025.

The total notional amount of undesignated derivative instruments was $ 955 million as of March 31, 2025 and $ 389 million as of December 31, 2024.

Gains and Losses on Hedging Instruments and Undesignated Derivative Instruments

The following tables summarize the gains and losses on our hedging instruments and the classification of those gains and losses within our condensed consolidated financial statements for the three months ended September 30, 2024 and 2023.

Gain (loss) recognized in OCI Location of gain (loss)

in income statement Gain (loss) reclassified from AOCI into income

(in millions) 2024 2023 2024 2023

Cash flow hedges

Interest rate contracts $ — $ — Interest expense, net $ ( 1 ) $ ( 1 )

Foreign exchange contracts ( 9 ) 9 Cost of sales 4 3

Net investment hedges ( 68 ) 48 Other (income) expense, net — —

Total $ ( 77 ) $ 57 $ 3 $ 2

Location of gain (loss) in income statement Gain (loss) recognized in income

(in millions) 2024 2023

Undesignated derivative instruments

Foreign exchange contracts Other (income) expense, net 6 ( 1 )

Total $ 6 $ ( 1 )

Gain (loss) recognized in OCI Location of gain (loss)

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Total $ ( 2 ) $ ( 28 )

As of September 30, 2024, $ 8 million of deferred, net after-tax losses on derivative instruments included in AOCI are expected to be recognized in earnings during the next 12 months, coinciding with when the hedged items are expected to impact earnings.

As of March 31, 2025, $ 2 million of deferred, net after-tax losses on derivative instruments included in AOCI are expected to be recognized in earnings during the next 12 months, coinciding with when the hedged items are expected to impact earnings.

Derivative Assets and Liabilities

The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of September 30, 2024.

The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of March 31, 2025.

Derivatives in asset positions Derivatives in liability positions

(in millions) Balance sheet location Fair value Balance sheet location Fair value

Undesignated derivative instruments

Foreign exchange contracts Prepaid expenses and other current assets $ 2 Accrued expenses and other current liabilities $ 2

Derivative instruments designated as hedges

Foreign exchange contracts Prepaid expenses and other current assets $ 3 Accrued expenses and other current liabilities $ —

Net investment hedges Long-term debt and finance lease obligations, less current portion 761

Undesignated derivative instruments

Foreign exchange contracts Prepaid expenses and other current assets — Accrued expenses and other current liabilities 4

Net investment hedges Current maturities of long-term debt and finance lease obligations 648

Total derivative instruments $ 3 $ 1,413

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(in millions) Balance sheet location Fair value Balance sheet location Fair value

Undesignated derivative instruments

Foreign exchange contracts Prepaid expenses and other current assets $ 41 Accrued expenses and other current liabilities $ —

Derivative instruments designated as hedges

Foreign exchange contracts Prepaid expenses and other current assets $ 6 Accrued expenses and other current liabilities $ —

Net investment hedges Current maturities of long-term debt and finance lease obligations 618

Net investment hedges Long-term debt and finance lease obligations, less current portion 727

Undesignated derivative instruments

Foreign exchange contracts Prepaid expenses and other current assets 1 Accrued expenses and other current liabilities 2

Total derivative instruments $ 7 $ 1,347

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The following table provides information on our derivative positions as if they were presented on a net basis, allowing for the right of offset by counterparty.

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(in millions) Asset Liability Asset Liability

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in the carrying amount of the hedged item (a)

(in millions) Balance as of September 30, 2024 Balance as of December 31, 2023 Balance as of September 30, 2024 Balance as of December 31, 2023

(in millions) Balance as of March 31, 2025 Balance as of December 31, 2024 Balance as of March 31, 2025 Balance as of December 31, 2024

Long-term debt $ 99 $ 99 $ 2 $ 2

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Basis of fair value measurement

(in millions) Balance as of September 30, 2024 Quoted prices in active markets for identical assets

(in millions) Balance as of March 31, 2025 Quoted prices in active markets for identical assets

(Level 1) Significant other

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Contingent payments related to acquisitions 12 — — 12

Indemnifications related to Kidney Care separation 1

Total $ 53 $ — $ 4 $ 49

1 Recorded in connection with the sale of our Kidney Care business and was measured as of January 31, 2025.

See Note 2 for additional information.

Basis of fair value measurement

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Total $ 14 $ — $ 2 $ 12

As of September 30, 2024 and December 31, 2023, cash and cash equivalents of $ 1.42 billion and $ 3.08 billion, respectively, included money market funds of approximately $ 427 million and $ 1.63 billion, respectively, which are considered Level 2 in the fair value hierarchy.

As of March 31, 2025 and December 31, 2024, cash and cash equivalents of $ 2.29 billion and $ 1.76 billion, respectively, included money market fund and other short-term funds of approximately $ 1.21 billion and $ 583 million, respectively, that are considered Level 2 in the fair value hierarchy.

For assets that are measured using quoted prices in active markets, the fair value is the published market price per unit multiplied by the number of units held, without consideration of transaction costs.

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The fair value of milestone payments increases as the estimated probability of payment increases or the expected timing of payments is accelerated.

The fair value of sales-based payments is based upon probability-weighted future revenue

estimates, and increases as revenue estimates increase, probability weighting of higher revenue scenarios increases or the expected timing of payment is accelerated.

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 September 30,

(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 $ 14 $ 1 $ 21 $ 17

Payments ( 2 ) — ( 2 ) —

Fair value at end of period $ 12 $ 1 $ 19 $ 17

Nine Months Ended September 30,

(in millions) Contingent payments related to acquisitions Available-for-sale debt securities Contingent payments related to acquisitions Available-for-sale debt securities

The fair value of sales-based payments is based upon probability-weighted future revenue estimates, and increases as revenue estimates increase, probability weighting of higher revenue scenarios increases or the expected timing of payment is accelerated.

In addition, we have contingent payments related related to the Kidney Care separation, which consist of reimbursements to Vantive for certain indemnifications contemplated in the EPA.

For additional information on these items see Note 2.

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

Three Months Ended March 31,

(in millions) Indemnifications related to Kidney Care separation 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 $ — $ 12 $ 1 $ 14 $ 1

Change in fair value recognized in earnings — — ( 14 ) ( 5 )

Transfers out of Level 3 — — — ( 5 )

Payments ( 2 ) — ( 51 ) —

Additions 37 — — — —

Fair value at end of period $ 37 $ 12 $ 1 $ 14 $ 1

During the nine months ended September 30, 2023, available-for-sale debt securities were reclassified from Level 3, upon conversion to marketable equity securities, which are classified as Level 1 in the fair value hierarchy, upon initial public offerings of the investees.

Financial Instruments Not Measured at Fair Value

In addition to the financial instruments that we are required to recognize at fair value in the condensed consolidated balance sheets, we have certain financial instruments that are recognized at amortized cost or some basis other than fair value.

For these financial instruments, the following table provides the values recognized in the condensed consolidated balance sheets and the estimated fair values as of September 30, 2024 and December 31, 2023.

For these financial instruments, the following table provides the values recognized in the condensed consolidated balance sheets and the estimated fair values as of March 31, 2025 and December 31, 2024.

Book values Fair values(a)

(in millions) 2025 2024 2025 2024

Short-term debt $ 11 $ 2,126 $ 11 $ 2,126

Current maturities of long-term debt and finance lease obligations 651 626 650 619

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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 $ 33 million as of September 30, 2024 and December 31, 2023.

The carrying values of equity investments without readily determinable fair values that we measure at cost, less impairment were $ 37 million as of March 31, 2025 and December 31, 2024.

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 first nine months of 2023, several of our investees either completed or were 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 $ 8 million of impairments of equity investments without readily determinable fair values in the prior year 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 first nine months 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.

These investments are included in Other non-current assets on our condensed consolidated balance sheets.

SEGMENT INFORMATION

In the third quarter of 2023, we completed the implementation of a new operating model intended to simplify and streamline our operations and better align our manufacturing and supply chain to our commercial activities.

Under this new operating model, our business is currently comprised of four segments:

Medical Products and Therapies, Healthcare Systems and Technologies, Pharmaceuticals, and Kidney Care (which we are planning to divest through the pending sale and accordingly, the results are reported in discontinued operations as discussed in Note 1).

The Medical Products and Therapies segment includes sales of our sterile IV solutions, infusion systems, administration sets, parenteral nutrition therapies and surgical hemostat, sealant, and adhesion prevention products.

The Healthcare Systems and Technologies segment includes sales of our connected care solutions and collaboration tools, including smart bed systems, patient monitoring systems and diagnostic technologies, respiratory health devices, and advanced equipment for the surgical space, including operating room integration technologies, precision positioning devices, and other accessories.

Our business is comprised of three segments:

Medical Products & Therapies, Healthcare Systems & Technologies, and Pharmaceuticals.

The Medical Products & Therapies segment includes sales of our sterile IV solutions, infusion systems, administration sets, parenteral nutrition therapies and surgical hemostat, sealant, and adhesion prevention products.

The Healthcare Systems & Technologies segment includes sales of our connected care solutions and collaboration tools, including smart bed systems, patient monitoring systems and diagnostic technologies, respiratory health devices, and advanced equipment for the surgical space, including operating room integration technologies, precision positioning devices, and other accessories.

The Pharmaceuticals segment includes sales of specialty injectable pharmaceuticals, inhaled anesthesia, and drug compounding.

Other sales not allocated to a segment primarily include sales of products and services provided directly through certain of our manufacturing facilities and royalty income under a business development arrangement that ended in early 2023 when we acquired the related product rights.

Other sales not allocated to a segment

primarily includes sales to Vantive, pursuant to the Kidney Care MSA, and sales of products and services provided directly through certain of our manufacturing facilities.

Disaggregation of Net Sales

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and International disaggregated net sales.

Intersegment sales, which are eliminated in consolidation, are not presented in the table below.

Three Months Ended September 30,

(in millions) U.S.

International Total U.S.

International Total

Infusion Therapies and Technologies

$ 613 $ 457 $ 1,070 $ 570 $ 433 $ 1,003

Advanced Surgery

149 123 272 139 116 255

Medical Products and Therapies 762 580 1,342 709 549 1,258

Care and Connectivity Solutions

335 121 456 317 126 443

Front Line Care

222 74 296 234 67 301

Healthcare Systems and Technologies

557 195 752 551 193 744

Injectables and Anesthesia

178 143 321 195 156 351

Drug Compounding — 267 267 — 229 229

Pharmaceuticals 178 410 588 195 385 580

Other 3 14 17 12 5 17

Total Baxter $ 1,500 $ 1,199 $ 2,699 $ 1,467 $ 1,132 $ 2,599

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) U.S.

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145 123 268 147 116 263

Medical Products and Therapies 2,164 1,729 3,893 2,087 1,604 3,691

Medical Products & Therapies 729 533 1,262 673 556 1,229

Care and Connectivity Solutions

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202 75 277 195 70 265

Healthcare Systems and Technologies

Healthcare Systems & Technologies

518 186 704 473 194 667

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Our net sales are attributed to the following geographic regions based on the location of the customer.

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(in millions) 2025 2024

United States $ 1,490 $ 1,348

Emerging markets 1

347 353 1,001 985

Rest of world 2

852 779 2,542 2,349

Total Baxter $ 2,625 $ 2,490

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Segment Operating Income

We use segment operating income to evaluate the performance of our segments and to make resource allocation decisions.

Segment operating income represents income before income taxes, interest and other non-operating income or expense, unallocated corporate costs, intangible asset amortization, and other special items.

Special items, which are presented below in our reconciliations of segment operating income to income from continuing operations before income taxes, are excluded from segment operating income because they are highly variable, difficult to predict and of a size that may substantially impact our reported results of operations for the period.

Most global functional support costs, overhead costs and other shared costs that benefit our segments are allocated to those segments.

In the first quarter of 2025, in conjunction with the change in our Chief Executive Officer, we determined that our chief operating decision maker (CODM) comprises of our Chair and Interim Chief Executive Officer, and the Executive Vice President, Chief Operating Officer and Interim Group President, Medical Products & Therapies, who review the financial information presented for purposes of evaluating the performance of our segments and to make resource allocation decisions.

The change in CODM during the first quarter of 2025 did not result in a change in our segments.

Segment operating income is the measure of segment profitability and represents income before income taxes, interest and other non-operating income or expense, unallocated corporate costs, intangible asset amortization, and other special items.

Special items, which are presented below in our reconciliations of reportable segment operating income to income (loss) from continuing operations before income taxes, are excluded from segment operating income because they are highly variable, difficult to predict and of a size that may substantially impact our reported results of operations for the period.

Corporate costs, inclusive of global functional support costs, overhead costs and other shared costs that benefit our segments are allocated to those segments.

Corporate costs that are not allocated to our segments, as well as any differences between actual corporate costs and the amounts allocated to our segments, are presented as unallocated corporate costs.

With the results of our Kidney Care segment reported in discontinued operations, corporate costs that had previously been allocated to the Kidney Care segment which will not convey with the Kidney Care segment in the pending sale, are

now presented as unallocated corporate costs.

The following table presents our segment operating income and reconciliations of segment operating income to income from continuing operations before income taxes.

Three Months Ended September 30, Nine Months Ended September 30,

Segment results include net sales, cost of sales, selling, general and administrative expenses, research and development expenses, corporate costs that had previously been allocated to our former Kidney Care segment which did not convey in the related sale, and other segment items which are directly allocated to each segment.

Beginning in 2024 annual reporting, we adopted ASU 2023-07 retrospectively.

The following table presents our segment information of net sales, significant expense and operating income during the periods presented.

Three Months Ended March 31, 2025 Three Months Ended March 31, 2024

(in millions) Medical Products & Therapies Healthcare Systems & Technologies Pharmaceuticals Medical Products & Therapies Healthcare Systems & Technologies Pharmaceuticals

Net sales $ 1,262 $ 704 $ 581 $ 1,229 $ 667 $ 578

Cost of sales 694 356 396 668 346 382

Selling, general and administrative expenses 286 217 103 284 207 96

Research and development expenses 59 45 26 52 47 22

Other segment items ( 21 ) ( 7 ) ( 7 ) ( 2 ) — —

Segment operating income $ 244 $ 93 $ 63 $ 227 $ 67 $ 78

The following table presents our reportable segment operating income and reconciliations of reportable segment operating income to income (loss) from continuing operations before income taxes.

Three Months Ended March 31,

(in millions) 2025 2024

Medical Products and Therapies $ 268 $ 245 $ 733 $ 706

Healthcare Systems and Technologies 136 115 323 327

Medical Products & Therapies $ 244 $ 227

Healthcare Systems & Technologies 93 67

Pharmaceuticals 63 78

Other 2 6 15 19

Total 464 474 1,282 1,336

Total reportable segment operating income 400 372

Unallocated corporate costs ( 17 ) ( 69 )

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Acquisition and integration items ( 1 ) ( 5 )

Separation-related costs ( 13 ) —

European Medical Devices Regulation ( 5 ) ( 7 )

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Income from continuing operations before income taxes $ ( 3 ) $ 46

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

Additional financial information for our segments is as follows:

Three Months Ended March 31,

(in millions) 2025 2024

Depreciation Expense 1

Medical Products & Therapies $ 49 $ 58

Healthcare Systems & Technologies 27 30

Pharmaceuticals 16 25

Total depreciation expense $ 92 $ 113

1 Depreciation expense related to Corporate property, plant and equipment has been fully allocated to our segments and those segment allocations are reflected in the depreciation amounts presented herein.

Our CODM does not receive asset or capital expenditure information by reportable segment and, accordingly, we do not report that information for our segments.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements