What changed in this filing

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Item 1. Financial Statements

2025-08-05 compared with 2025-05-06 · 299 added, 166 removed, 770 unchanged (38% of the section changed)

6 unchanged sentences

Cash and cash equivalents $ 1,686 1,764

Accounts receivable, net of allowances of $ 66 in 2025 and $ 71 in 2024

Accounts receivable, net of allowances of $ 71 in 2025 and 2024

Inventories 2,384 2,046

37 unchanged sentences

Three months ended

June 30, Six months ended

2025 2024 2025 2024

Net sales $ 2,810 $ 2,694 $ 5,435 $ 5,184

33 unchanged sentences

Three months ended

June 30, Six months ended

2025 2024 2025 2024

Income (loss) from continuing operations $ 122 $ 95 $ 186 $ 101

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

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

Currency translation adjustments, net of tax expense (benefit) of ($ 18 ) and $ 3 for the three months ended June 30, 2025 and 2024, respectively, and ($ 12 ) and $ 16 for six months ended June 30, 2025 and 2024, respectively.

204 ( 48 ) 135 ( 167 )

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.

Pension and other postretirement benefits, net of tax expense (benefit) of ($ 3 ) and ($ 1 ) for the three months ended June 30, 2025 and 2024, respectively, and ($ 7 ) and $ 2 for six months ended June 30, 2025 and 2024, respectively.

Hedging activities, net of tax expense (benefit) of zero and $ 1 for the three months ended June 30, 2025 and 2024, respectively, and ($ 1 ) and $ 3 for six months ended June 30, 2025 and 2024, respectively.

( 2 ) 3 ( 3 ) 11

Total other comprehensive income (loss) from continuing operations, net of tax 196 ( 45 ) 138 ( 152 )

2 unchanged sentences

Other comprehensive income (loss) from discontinued operations

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.

Currency translation adjustments, net of tax expense (benefit) of zero and $( 2 ) for the three months ended June 30, 2025 and 2024, respectively, and zero and $( 4 ) for six months ended June 30, 2025 and 2024, respectively.

— ( 60 ) 137 ( 125 )

Pension and other postretirement benefits, net of tax expense (benefit) of zero for the three months ended June 30, 2025 and 2024, and $( 3 ) and zero for six months ended June 30, 2025 and 2024, respectively.

— ( 1 ) ( 11 ) ( 1 )

Total other comprehensive income (loss) from discontinued operations — ( 61 ) 126 ( 126 )

8 unchanged sentences

(in millions)

For the three months ended March 31, 2025

For the three months ended June 30, 2025

Baxter International Inc.

3 unchanged sentences

treasury Additional contributed capital Retained earnings Accumulated other comprehensive

loss Total Baxter stockholders' equity Noncontrolling interests Total equity

income (loss) Total Baxter stockholders' equity Noncontrolling interests Total equity

Balance as of April 1, 2025 683 $ 683 170 $ ( 10,937 ) $ 6,309 $ 14,968 $ ( 3,942 ) $ 7,081 $ ( 27 ) $ 7,054

Net income (loss) — — — — — 91 — 91 — 91

Other comprehensive income (loss) — — — — — — 196 196 — 196

Stock issued under employee benefit plans and other — — — 22 19 — — 41 — 41

Dividends declared on common stock — — — — — ( 89 ) — ( 89 ) — ( 89 )

Balance as of June 30, 2025

683 $ 683 170 $ ( 10,915 ) $ 6,328 $ 14,970 $ ( 3,746 ) $ 7,320 $ ( 27 ) $ 7,293

For the six months ended June 30, 2025

Baxter International Inc.

stockholders' equity

Common stock shares Common stock Common stock shares in treasury Common stock in treasury Additional contributed capital Retained earnings Accumulated other comprehensive income (loss) Total Baxter stockholders' equity Noncontrolling interests Total equity

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

Net income — — — — — 126 — 126 — 126

Net income (loss) — — — — — 217 — 217 — 217

Other comprehensive income (loss) — — — — — — 149 149 — 149

3 unchanged sentences

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

Balance as of March 31, 2025

Balance as of June 30, 2025

683 $ 683 170 $ ( 10,915 ) $ 6,328 $ 14,970 $ ( 3,746 ) $ 7,320 $ ( 27 ) $ 7,293

For the three months ended March 31, 2024

For the three months ended June 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 April 1, 2024 683 $ 683 174 $ ( 11,130 ) $ 6,339 $ 16,003 $ ( 3,722 ) $ 8,173 $ 62 $ 8,235

Net income (loss) — — — — — ( 314 ) — ( 314 ) 3 ( 311 )

Other comprehensive income (loss) — — — — — — ( 106 ) ( 106 ) — ( 106 )

Stock issued under employee benefit plans and other — — ( 1 ) 26 14 — — 40 — 40

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

Balance as of June 30, 2024 683 $ 683 173 $ ( 11,104 ) $ 6,353 $ 15,539 $ ( 3,828 ) $ 7,643 $ 65 $ 7,708

For the six months ended June 30, 2024

Baxter International Inc.

stockholders' equity

Balance as of January 1, 2024 683 $ 683 176 $ ( 11,230 ) $ 6,389 $ 16,114 $ ( 3,554 ) $ 8,402 $ 66 $ 8,468

Net income — — — — — 37 — 37 2 39

Net income (loss) — — — — — ( 277 ) — ( 277 ) 5 ( 272 )

Other comprehensive income (loss) — — — — — — ( 274 ) ( 274 ) ( 4 ) ( 278 )

2 unchanged sentences

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

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

Balance as of June 30, 2024

683 $ 683 173 $ ( 11,104 ) $ 6,353 $ 15,539 $ ( 3,828 ) $ 7,643 $ 65 $ 7,708

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

2 unchanged sentences

(in millions)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operations

2 unchanged sentences

Income (loss) from continuing operations 186 101

Adjustments to reconcile net loss to cash flows from operations:

Adjustments to reconcile net income (loss) to cash flows from operations:

Depreciation and amortization 504 498

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Other ( 41 ) ( 27 )

Cash flows from operations - continuing operations ( 99 ) 67

Cash flows from operations - discontinued operations ( 94 ) 96

Cash flows from operations ( 193 ) 163

Cash flows from (used in) operations - continuing operations 118 30

Cash flows from (used in) operations - discontinued operations ( 94 ) 248

Cash flows from (used in) operations 24 278

Cash flows from investing activities

Capital expenditures ( 262 ) ( 180 )

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

Proceeds from sale of marketable equity securities — 34

Other investing activities, net 32 8

Cash flows from investing activities - continuing operations ( 124 ) ( 100 )

Cash flows from investing activities - discontinued operations 3,389 ( 66 )

Cash flows from investing activities 3,265 ( 166 )

Cash flows from (used in) investing activities - continuing operations ( 239 ) ( 142 )

Cash flows from (used in) investing activities - discontinued operations 3,389 ( 115 )

Cash flows from (used in) investing activities 3,150 ( 257 )

Cash flows from financing activities

Repayments of debt ( 3,505 ) ( 824 )

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

Repayments of debt with original maturities of three months or less ( 300 ) —

Cash dividends on common stock ( 174 ) ( 295 )

1 unchanged sentence

Other financing activities, net ( 25 ) ( 9 )

Cash flows from financing activities ( 3,226 ) ( 140 )

Cash flows from (used in) financing activities ( 3,988 ) ( 1,076 )

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash - continuing operations 88 ( 47 )

4 unchanged sentences

Cash, cash equivalents and restricted cash of continuing operations $ 1,688 $ 1,575

(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

(1) The following table provides a reconciliation of cash, cash equivalents and restricted cash shown above to the amounts reported within the condensed consolidated balance sheet as of June 30, 2025, December 31, 2024, and June 30, 2024 (in millions):

June 30, 2025 December 31, 2024 June 30, 2024

Cash and cash equivalents $ 1,686 $ 1,764 $ 1,574

27 unchanged sentences

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, 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.

In the second quarter and first six months of 2025, we recorded $ 17 million and $ 115 million, respectively, 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 and six month period ended June 30, 2025.

DISCONTINUED OPERATIONS

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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.

The net indemnification liability as of June 30, 2025 was $ 56 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.

The contingent liability as of June 30, 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.

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

As of June 30, 2025, the total amount of Kidney Care business guarantees retained by us is approximately $ 250 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 months ended March 31, 2025 and 2024:

Three Months Ended March 31,

The following tables summarize the major classes of line items included in income (loss) from discontinued operations, net of tax, for the three and six months ended June 30, 2025 and 2024:

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2025 2024 2025 2024

4 unchanged sentences

Research and development expenses — 43 16 99

Goodwill impairment — 430 — 430

Operating income (loss) — ( 371 ) 14 ( 299 )

2 unchanged sentences

Income (loss) from discontinued operations before gain on disposition and income taxes — ( 374 ) ( 6 ) ( 304 )

Gain on disposition 191 —

Gain (loss) on disposition ( 21 ) — 170 —

Income tax expense (benefit) 10 32 133 69

Income from discontinued operations, net of tax 62 33

Income (loss) from discontinued operations, net of tax ( 31 ) ( 406 ) 31 ( 373 )

Net income attributable to noncontrolling interest included in discontinued operations — 3 — 5

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

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.

Net income (loss) attributable to Baxter stockholders included in discontinued operations $ ( 31 ) $ ( 409 ) $ 31 $ ( 378 )

For the three months ended June 30, 2025, increased indemnification liabilities reduced the gain from the sale of our Kidney Care business.

For the three months ended June 30, 2024, selling, general and administrative expenses (SG&A) includes $ 79 million of separation-related costs incurred in connection with the sale of our Kidney Care business.

For the six months ended June 30, 2025 and 2024, SG&A includes $ 37 million and $ 167 million, respectively, of separation-related costs incurred in connection with the sale of our Kidney Care business.

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 December 31, 2024:

22 unchanged sentences

Allowance for Doubtful Accounts

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,

The following table is a summary of the changes in our allowance for doubtful accounts for the three and six months ended June 30, 2025 and 2024.

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2025 2024 2025 2024

4 unchanged sentences

Balance at end of period $ 71 $ 67 $ 71 $ 67

(in millions) March 31,

(in millions) June 30,

2025 December 31,

4 unchanged sentences

Property, Plant and Equipment, Net

(in millions) March 31,

(in millions) June 30,

2025 December 31,

4 unchanged sentences

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.

Accordingly, the related assets, primarily consisting of accounts receivable, of $ 38 million and liabilities, consisting of accounts payable, of $ 9 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 June 30, 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.

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 June 30, 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 June 30, 2025 approximates the transaction price net of estimated selling costs.

Interest Expense, Net

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2025 2024 2025 2024

3 unchanged sentences

Other (Income) Expense, Net

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2025 2024 2025 2024

6 unchanged sentences

Non-Cash Operating and Investing Activities

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.

Right-of-use operating lease assets obtained in exchange for lease obligations for the six months ended June 30, 2025 and 2024 were $ 12 million and $ 31 million, respectively.

Purchases of property, plant and equipment included in accounts payable as of June 30, 2025 and 2024 were $ 39 million and $ 44 million, respectively.

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

3 unchanged sentences

Currency translation 69 20 31 120

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

Balance as of June 30, 2025 $ 1,254 $ 3,570 $ 571 $ 5,395

Other intangible assets, net

6 unchanged sentences

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

March 31, 2025

June 30, 2025

Gross other intangible assets $ 3,392 $ 3,207 $ 954 $ 91 $ 680 $ 107 $ 8,431

1 unchanged sentence

Other intangible assets, net $ 2,404 $ 922 $ 817 $ 20 $ 680 $ 107 $ 4,950

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

Intangible asset amortization expense was $ 151 million and $ 154 million for the three months ended June 30, 2025 and 2024, respectively , and $ 306 million and $ 312 million for the six months ended June 30, 2025 and 2024.

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.

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

In June 2025, we amended and restated this term loan facility in its entirety (as further described under "Credit Facilities" below).

Credit Facilities

On June 11, 2025, we entered into an amended and restated U.S.

Dollar-denominated term loan credit facility (the Term Loan Facility), which amends and restates in its entirety our existing term loan credit facility.

As of June 30, 2025, we had $ 645 million outstanding under the Term Loan Facility, which matures in 2027.

Borrowings under the Term Loan Facility bear interest on the principal amount outstanding at either Term SOFR plus an applicable margin or a “base rate” plus an applicable margin.

The Term Loan Facility contains various covenants, including a maximum net leverage ratio.

On June 11, 2025, we entered into an amended and restated revolving credit facility (the Multicurrency Revolver), which amends and restates in its entirety our existing U.S.

Dollar-denominated revolving credit facility and replaces our existing Euro-denominated revolving credit facility.

Our Multicurrency Revolver has a maximum capacity of $ 2.20 billion and matures in 2030.

Borrowings under the Multicurrency Revolver bear interest on the principal amount outstanding at either Term SOFR plus an applicable margin or a “base rate” plus an applicable margin.

Multicurrency Revolver contains various covenants, including a maximum net leverage ratio.

Borrowings in Euros are subject to a sublimit of $ 300 million.

We may, at our option, seek to increase the aggregate commitment under the Multicurrency Revolver by up to $ 1.10 billion, which would result in a maximum aggregate commitment of up to $ 3.30 billion.

There were no borrowings outstanding under the Multicurrency Revolver as of June 30, 2025.

As of December 31, 2024, there were no borrowings outstanding under our previously existing credit facilities.

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.

As of June 30, 2025, we were in compliance with the financial covenants in these agreements.

Based on our covenant calculations as of June 30, 2025, we had capacity to draw $ 1.77 billion under the Multicurrency Revolver.

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").

1 unchanged sentence

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.

Borrowings under the bridge facility bore interest 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.

1 unchanged sentence

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.

In the second quarter of 2025, we repaid $ 680 million of senior notes at maturity.

Commercial Paper

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

There was no commercial paper outstanding as of June 30, 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.

5 unchanged sentences

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

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.

As of June 30, 2025 and December 31, 2024, our total recorded reserves with respect to legal and environmental matters were $ 51 million and $ 40 million, respectively.

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

3 unchanged sentences

In addition to the matters described below, we remain subject to the risk of future administrative and legal actions.

With respect to governmental and regulatory matters, these actions may lead to product recalls, injunctions, and other restrictions on our operations (including our ability to launch new products) and monetary sanctions, including significant civil or criminal penalties.

With respect to governmental and regulatory matters, these actions may lead to additional product recalls, injunctions and other restrictions on our operations (including our ability to launch new products) and monetary sanctions, including significant civil or criminal penalties.

With respect to intellectual property, we may be exposed to significant litigation concerning the scope of our and others’ rights.

Such litigation could result in a loss of patent protection or the ability to market products, which could lead to a significant loss of sales, or otherwise materially affect future results of operations.

Novum IQ Large Volume Pump

On April 24, 2025, we initiated a voluntary correction for the Novum LVP due to the potential for under-infusion with Novum LVP when the pump is in "standby mode" for an extended period of time.

On May 20, 2025, the U.S.

Food and Drug Administration (FDA) classified this voluntary correction as a Class I recall.

In July 2025, we initiated voluntary corrections for the Novum LVP due to the potential for under-infusion when the pump is directed to deliver a bolus infusion or significantly increase the rate of infusion after it has been running at a lower infusion rate and the potential for over- and under-infusion related to set misloading as well as certain software anomalies.

We are in the process of developing and preparing to implement corrections related to these recalls.

In July 2025, we elected to temporarily stop distributing Novum LVP in the U.S.

and Canada, except in the case of medical necessity, pending our review of the process for implementing corrections and interim mitigations.

We have recorded a reserve for the potential obligation related to Novum LVP in the second quarter that is not material to our financial results.

However, these estimates may change and could become material in the future.

Environmental

5 unchanged sentences

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

As of June 30, 2025 and December 31, 2024, our environmental reserves, which are measured on an undiscounted basis, were $ 30 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.

5 unchanged sentences

On October 20, 2022, a lawsuit was filed against us in the Western District of Arkansas alleging injury as a result of exposure to ethylene oxide at Mountain Home.

On December 16, 2022, we filed a motion to dismiss and for a more definite statement.

In response, Plaintiffs filed a First Amended Complaint on January 6, 2023.

We answered the First Amended Complaint on January 27, 2023.

The parties reached an agreement to settle this lawsuit in the third quarter of 2023 for an amount that was not material to our financial results, which was paid in the fourth quarter of 2023.

The case was dismissed on October 17, 2023.

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.

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

The plaintiffs seek damages in an unspecified amount.

On July 16, 2024, Plaintiffs' counsel filed an omnibus motion seeking leave to add certain defendants to hundreds of previously-filed lawsuits, including Baxter with respect to 40 cases.

The motion was denied on July 25, 2024, without prejudice to refiling multiple motions each addressing smaller groupings of cases and defendants.

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.

In the second quarter of 2025, plaintiffs voluntarily dismissed Baxter from 30 of the filed cases, which dismissal was granted by the court, and have filed additional complaints.

Twenty-seven complaints are currently filed and pending.

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.

10 unchanged sentences

3846, to Hillrom.

The 2024 Subpoena substantially overlaps with the CID and requests additional documents relating to Hillrom's respiratory health business.

The 2024 Subpoena substantially

overlaps with the CID and requests additional documents relating to Hillrom's respiratory health business.

Baxter is cooperating fully with the DOJ in responding to the CID and the 2024 Subpoena.

14 unchanged sentences

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.

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.

The motion is currently pending before the court.

STOCKHOLDERS’ EQUITY

Cash Dividends

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

Cash dividends declared per share for the three months ended June 30, 2025 and 2024 were $ 0.17 and $ 0.29 , respectively, and for the six months ended June 30, 2025 and 2024 were $ 0.34 and $ 0.58 , 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 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.

During the first six 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 June 30, 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 three months ended March 31, 2025 and 2024.

The following table is a net-of-tax summary of the changes in accumulated other comprehensive income (loss) (AOCI) by component for the six months ended June 30, 2025 and 2024.

Gains (losses)

4 unchanged sentences

Amounts reclassified from AOCI (a)

126 ( 15 ) ( 2 ) — 109

Net other comprehensive income (loss) 272 ( 5 ) ( 3 ) — 264

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

Balance as of June 30, 2025 $ ( 3,158 ) $ ( 480 ) $ ( 111 ) $ 3 $ ( 3,746 )

Gains (losses)

5 unchanged sentences

Net other comprehensive income (loss) ( 288 ) 3 11 — ( 274 )

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

Balance as of June 30, 2024 $ ( 3,273 ) $ ( 449 ) $ ( 109 ) $ 3 $ ( 3,828 )

(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 months ended March 31, 2025 and 2024.

The following is a summary of the amounts reclassified from AOCI to net income (loss) during the three and six months ended June 30, 2025 and 2024.

Amounts reclassified from AOCI (a)

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

(in millions) Three Months Ended June 30, 2025 Six Months Ended June 30, 2025 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

11 unchanged sentences

Interest rate contracts ( 2 ) ( 3 ) Interest expense, net

— 3 Total before tax

Tax effect — ( 1 ) Income tax expense

$ — $ 2 Net of tax

Total reclassifications for the period $ 2 $ ( 109 ) Total net of tax

Amounts reclassified from AOCI (a)

(in millions) Three Months Ended June 30, 2024 Six Months Ended June 30, 2024 Location of impact in income statement

Pension and OPEB items

Amortization of net losses and prior service costs or credits $ 1 $ 3 Other (income) expense, net

Tax effect — ( 1 ) Income tax expense (benefit)

1 2 Total before tax

Gains (losses) on hedging activities

Foreign exchange contracts $ 3 $ 5 Cost of sales

Interest rate contracts ( 2 ) ( 3 ) Interest expense, net

Fair value hedges ( 2 ) ( 5 ) Other (income) expense, net

32 unchanged sentences

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 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.

As of June 30, 2025, we had $ 10.08 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.

We expect to recognize approximately 15 % of this amount as revenue over the remainder of 2025, 20 % in 2026, 15 % in each of 2027 and 2028 and 35 % thereafter.

We expect to recognize approximately 10 % of this amount as revenue over the remainder of 2025, 20 % in each of 2026 and 2027, 15 % in 2028 and 35 % thereafter.

Significant Judgments

4 unchanged sentences

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

Revenue recognized during the three and six months ended June 30, 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.

2 unchanged sentences

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 $ 1.49 billion and $ 1.54 billion as of March 31, 2025 and December 31, 2024, respectively.

Net trade accounts receivable was $ 1.62 billion and $ 1.54 billion as of June 30, 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.

4 unchanged sentences

The following table summarizes our contract assets:

(in millions) March 31,

(in millions) June 30,

2025 December 31,

6 unchanged sentences

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 three months ended March 31, 2025 and 2024.

The following table summarizes contract liability activity for the six months ended June 30, 2025 and 2024.

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

Three Months Ended March 31,

Six Months Ended June 30,

(in millions) 2025

4 unchanged sentences

Balance at end of period $ 178 $ 156

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.

For the six months ended June 30, 2025 and 2024, $ 57 million and $ 73 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) March 31,

(in millions) June 30,

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 months ended March 31, 2025 and 2024 were:

Three Months Ended March 31,

The components of lease revenue for the three and six months ended June 30, 2025 and 2024 were:

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2025 2024 2025 2024

3 unchanged sentences

Total lease revenue $ 95 $ 89 $ 201 $ 203

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.

Our net investment in sales-type leases was $ 38 million as of June 30, 2025, of which $ 7 million originated in 2021 and prior, $ 5 million in 2022, $ 6 million in 2023, $ 10 million in 2024, and $ 10 million in 2025.

BUSINESS OPTIMIZATION CHARGES

1 unchanged sentence

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 currently expect to incur additional pre-tax costs, primarily related to the implementation of business optimization programs, of approximately $ 3 million through the completion of certain initiatives that are currently underway.

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

During the three and six months ended June 30, 2025 and 2024, we recorded the following charges related to business optimization programs.

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2025 2024 2025 2024

2 unchanged sentences

Total business optimization charges $ 17 $ 9 $ 62 $ 31

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.

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

Three months ended March 31, 2025

During the three and six months ended June 30, 2025 and 2024, we recorded the following restructuring charges.

Three months ended June 30, 2025

(in millions) COGS SG&A Total

Employee termination costs $ ( 1 ) $ 6 $ 5

Contract termination and other costs 2 2 4

Asset write offs 3 2 5

Total restructuring charges $ 4 $ 10 $ 14

Three months ended June 30, 2024

(in millions) COGS SG&A Total

Employee termination costs $ ( 1 ) $ 4 $ 3

Contract termination and other costs 1 — 1

Total restructuring charges $ — $ 4 $ 4

Six months ended June 30, 2025

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

Employee termination costs $ 11 $ 19 $ 1 $ 31

Contract termination and other costs 2 2 — 4

Asset write offs 4 19 — 23

Total restructuring charges $ 17 $ 40 $ 1 $ 58

Three months ended March 31, 2024

Six months ended June 30, 2024

(in millions) COGS SG&A Total

2 unchanged sentences

Total restructuring charges $ 3 $ 18 $ 21

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.

For the three and six months ended June 30, 2025, $ 6 million and $ 31 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 six months ended June 30, 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.

2 unchanged sentences

Payments ( 67 )

Reserve adjustments ( 7 )

Currency translation 7

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.

Liability balance as of June 30, 2025 $ 97

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

1 unchanged sentence

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2025 2024 2025 2024

8 unchanged sentences

Net periodic OPEB cost (income) $ ( 2 ) $ ( 3 ) $ ( 4 ) $ ( 6 )

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

Our effective income tax rate was 8 % and 19 % for the three months ended June 30, 2025 and 2024, respectively, and ( 43 )% and 38 % for the six months ended June 30, 2025 and 2024, respectively.

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

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

For the three months ended 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.

For the three months ended June 30, 2025, the difference between our effective income tax rate and the U.S.

federal statutory rate was primarily driven by our global earnings mix.

For the six months ended June 30, 2025, the difference between our effective income tax rate and the U.S.

federal statutory rate was primarily driven by 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.

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

federal statutory rate was primarily driven by our global earnings mix.

For the six months ended June 30, 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, an increase in our liabilities for various uncertain tax positions and an unfavorable geographic earnings mix.

On July 4, 2025, the United States enacted the One Big Beautiful Bill Act (OBBBA), which includes significant tax provisions, including extensions of key provisions from the 2017 Tax Cuts and Jobs Act and modifications to the U.S.

international tax framework.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others to be implemented through 2027.

As the legislation was signed into law after the close of our second quarter, the impacts are not included in our results of operations for the three and six months ended June 30, 2025.

We are currently evaluating the effect of OBBBA on our financial statements, including potential effects on U.S.

deferred tax assets and liabilities, as well any related implications for U.S.

valuation allowance assessments.

EARNINGS PER SHARE

1 unchanged sentence

The denominator for basic EPS is the weighted-average number of shares outstanding during the period.

The dilutive effect of outstanding stock options, RSUs and PSUs is reflected in the denominator for diluted EPS using the treasury stock method.

The dilutive effect of outstanding stock options, restricted stock units (RSUs) and performance share units (PSUs) is reflected in the denominator for diluted EPS using the treasury stock method.

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2025 2024 2025 2024

7 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2025 2024 2025 2024

3 unchanged sentences

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 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.

The computation of diluted EPS excludes 20 million shares issuable under equity awards for the three and six months ended June 30, 2025, respectively, and 22 million and 19 million shares issuable under equity awards for the three and six months ended June 30, 2024, respectively, because their inclusion would have had an anti-dilutive effect on diluted EPS.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

11 unchanged sentences

Derivative instruments are recognized as either assets or liabilities at fair value in the condensed consolidated balance sheets and are classified as short-term or long-term based on the scheduled maturity of the instrument.

We designate certain of our derivatives and foreign-currency denominated debt as hedging instruments in cash flow, fair value or net investment hedges.

designate certain of our derivatives and foreign-currency denominated debt as hedging instruments in cash flow, fair value or net investment hedges.

Cash Flow Hed g es

3 unchanged sentences

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 $ 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.

The notional amounts of foreign exchange contracts designated as cash flow hedges were $ 22 million and $ 99 million as of June 30, 2025 and December 31, 2024, respectively.

The maximum term over which we have cash flow hedge contracts in place related to forecasted transactions at June 30, 2025 is five months for foreign exchange contracts.

There were no outstanding interest rate contracts designated as cash flow hedges as of June 30, 2025 and December 31, 2024.

Fair Value Hed g es

3 unchanged sentences

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 March 31, 2025 and December 31, 2024.

There were no outstanding interest rate contracts designated as fair value hedges as of June 30, 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.

4 unchanged sentences

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

These forward contracts matured in May 2025.

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

3 unchanged sentences

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 March 31, 2025, we had an accumulated pre-tax unrealized translation gain in AOCI of $ 63 million related to the Euro-denominated senior notes.

As of June 30, 2025, we had an accumulated pre-tax unrealized translation loss in AOCI of $ 3 million related to the Euro-denominated senior notes.

Dedesignations

2 unchanged sentences

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 three months of 2025 or 2024 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 six 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 three months of 2025 or 2024.

There were no fair value hedges terminated during the first six 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.

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.

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

Undesignated Derivative Instruments

2 unchanged sentences

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.

These forward contracts matured in May 2025.

The total notional amount of undesignated derivative instruments was $ 358 million as of June 30, 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 March 31, 2025 and

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

15 unchanged sentences

Total $ 33 $ ( 2 )

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.

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

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

(in millions) 2025 2024 2025 2024

Cash flow hedges

Interest rate contracts $ — $ — Interest expense, net $ ( 3 ) $ ( 3 )

Foreign exchange contracts ( 2 ) 14 Cost of sales 6 5

Fair value hedges

Foreign exchange contracts — ( 3 ) Other (income) expense, net — ( 5 )

Net investment hedges ( 127 ) 49 Other (income) expense, net — —

Total $ ( 129 ) $ 60 $ 3 $ ( 3 )

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

(in millions) 2025 2024

Fair value hedges

Foreign exchange contracts Other (income) expense, net $ — $ ( 24 )

Undesignated derivative instruments

Foreign exchange contracts Other (income) expense, net 31 ( 6 )

Total $ 31 $ ( 30 )

As of June 30, 2025, $ 4 million of deferred, net after-tax losses on derivative instruments included in AOCI are expected to be recognized in earnings during the next 12 months, coinciding with when the hedged items are expected to impact earnings.

Derivative Assets and Liabilities

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

The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of June 30, 2025.

Derivatives in asset positions Derivatives in liability positions

20 unchanged sentences

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.

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

(in millions) Asset Liability Asset Liability

5 unchanged sentences

in the carrying amount of the hedged item (a)

(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

(in millions) Balance as of June 30, 2025 Balance as of December 31, 2024 Balance as of June 30, 2025 Balance as of December 31, 2024

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

3 unchanged sentences

Basis of fair value measurement

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

(in millions) Balance as of June 30, 2025 Quoted prices in active markets for identical assets

(Level 1) Significant other

10 unchanged sentences

Total $ 69 $ — $ 1 $ 68

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

1 See Note 2 for additional information.

12 unchanged sentences

Total $ 14 $ — $ 2 $ 12

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.

As of June 30, 2025 and December 31, 2024, cash and cash equivalents of $ 1.69 billion and $ 1.76 billion, respectively, included money market fund and other short-term funds of approximately $ 648 million 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.

A majority of the derivatives entered into by us are valued using internal valuation techniques as no quoted market prices exist for such instruments.

The principal techniques used to value these instruments are discounted cash flow and Black-Scholes models.

The principal techniques used to value these instruments are discounted cash flow and Black-Scholes

The key inputs, which are considered observable and vary depending on the type of derivative, include contractual terms, interest rate yield curves, foreign exchange rates and volatility.

5 unchanged sentences

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.

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

For additional information on these items see Note 2.

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

Three Months Ended March 31,

Three Months Ended June 30,

(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

2 unchanged sentences

Fair value at end of period $ 56 $ 12 $ 1 $ 14 $ 1

Six Months Ended June 30,

Fair value at beginning of period $ — $ 12 $ 1 $ 14 $ 1

Additions 56 — — — —

Fair value at end of period $ 56 $ 12 $ 1 $ 14 $ 1

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 March 31, 2025 and December 31, 2024.

For these financial instruments, the following table provides the values recognized in the condensed consolidated balance sheets and the estimated fair values as of June 30, 2025 and December 31, 2024.

Book values Fair values(a)

8 unchanged sentences

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 $ 37 million as of March 31, 2025 and December 31, 2024.

The carrying values of equity investments without readily determinable fair values that we measure at cost, less impairment were $ 38 million as of June 30, 2025 and $ 37 million as of 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.

11 unchanged sentences

and international disaggregated net sales.

Three Months Ended March 31,

Three Months Ended June 30,

(in millions) U.S.

1 unchanged sentence

International Total

Infusion Therapies and Technologies

Infusion Therapies & Technologies

$ 554 $ 470 $ 1,024 $ 579 $ 466 $ 1,045

2 unchanged sentences

Medical Products & Therapies 712 608 1,320 729 593 1,322

Care and Connectivity Solutions

Care & Connectivity Solutions

341 133 474 332 120 452

3 unchanged sentences

562 205 767 550 198 748

Injectables and Anesthesia

Injectables & Anesthesia

187 145 332 197 144 341

3 unchanged sentences

Total Baxter $ 1,536 $ 1,274 $ 2,810 $ 1,492 $ 1,202 $ 2,694

Six Months Ended June 30,

(in millions) U.S.

International Total U.S.

International Total

Infusion Therapies & Technologies

$ 1,138 $ 880 $ 2,018 $ 1,105 $ 906 $ 2,011

Advanced Surgery

303 261 564 297 243 540

Medical Products & Therapies 1,441 1,141 2,582 1,402 1,149 2,551

Care & Connectivity Solutions

657 244 901 610 244 854

Front Line Care

423 147 570 413 148 561

Healthcare Systems & Technologies

1,080 391 1,471 1,023 392 1,415

Injectables & Anesthesia

382 285 667 388 281 669

Drug Compounding — 526 526 — 511 511

Pharmaceuticals 382 811 1,193 388 792 1,180

Other 123 66 189 27 11 38

Total Baxter $ 3,026 $ 2,409 $ 5,435 $ 2,840 $ 2,344 $ 5,184

Geographic Sales Information

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2025 2024 2025 2024

1 unchanged sentence

Emerging markets 1

344 347 641 654

Rest of world 2

930 855 1,768 1,690

Total Baxter $ 2,810 $ 2,694 $ 5,435 $ 5,184

9 unchanged sentences

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

Billings by us under the Kidney Care TSA are included in other segment items as further described in Note 2.

Beginning in 2024 annual reporting, we adopted Accounting Standards Update (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 June 30, 2025 Three Months Ended June 30, 2024

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

5 unchanged sentences

Segment operating income $ 239 $ 118 $ 64 $ 238 $ 120 $ 75

Six Months Ended June 30, 2025 Six Months Ended June 30, 2024

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

Net sales $ 2,582 $ 1,471 $ 1,193 $ 2,551 $ 1,415 $ 1,180

Cost of sales 1,449 744 824 1,402 726 789

Selling, general and administrative expenses 581 439 209 577 409 194

Research and development expenses 122 94 51 107 93 44

Other segment items ( 53 ) ( 17 ) ( 18 ) — — —

Segment operating income $ 483 $ 211 $ 127 $ 465 $ 187 $ 153

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,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2025 2024 2025 2024

3 unchanged sentences

Total reportable segment operating income 421 433 821 805

Other 6 9 15 13

Unallocated corporate costs ( 4 ) ( 85 ) ( 21 ) ( 154 )

12 unchanged sentences

Additional financial information for our segments is as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in millions) 2025 2024 2025 2024

7 unchanged sentences

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