What changed in this filing

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Item 1. Financial Statements

2025-11-04 compared with 2025-08-05 · 205 added, 168 removed, 901 unchanged (29% of the section changed)

3 unchanged sentences

(in millions, except share information)

September 30,

2025 December 31,

41 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2025 2024 2025 2024

34 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2025 2024 2025 2024

1 unchanged sentence

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

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.

Currency translation adjustments, net of tax expense (benefit) of ($ 1 ) and $( 19 ) for the three months ended September 30, 2025 and 2024, respectively, and ($ 13 ) and ($ 3 ) for nine months ended September 30, 2025 and 2024, respectively.

13 106 148 ( 61 )

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.

Pension and other postretirement benefits, net of tax expense (benefit) of zero and ($ 2 ) for the three months ended September 30, 2025 and 2024, respectively, and ($ 7 ) and zero for nine months ended September 30, 2025 and 2024, respectively.

( 1 ) ( 6 ) 5 ( 2 )

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

1 ( 9 ) ( 2 ) 2

Total other comprehensive income (loss) from continuing operations, net of tax 13 91 151 ( 61 )

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 June 30, 2025 and 2024, respectively, and zero and $( 4 ) for six months ended June 30, 2025 and 2024, respectively.

Currency translation adjustments, net of tax expense (benefit) of zero and $( 11 ) for the three months ended September 30, 2025 and 2024, respectively, and zero and $( 15 ) for nine months ended September 30, 2025 and 2024, respectively.

— 90 137 ( 35 )

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.

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

— — ( 11 ) ( 1 )

9 unchanged sentences

(in millions)

For the three months ended June 30, 2025

For the three months ended September 30, 2025

Baxter International Inc.

4 unchanged sentences

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

Balance as of July 1, 2025 683 $ 683 170 $ ( 10,915 ) $ 6,328 $ 14,970 $ ( 3,746 ) $ 7,320 $ ( 27 ) $ 7,293

Net income (loss) — — — — — ( 46 ) — ( 46 ) — ( 46 )

2 unchanged sentences

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

Balance as of June 30, 2025

Balance as of September 30, 2025

683 $ 683 170 $ ( 10,891 ) $ 6,345 $ 14,837 $ ( 3,733 ) $ 7,241 $ ( 27 ) $ 7,214

For the six months ended June 30, 2025

For the nine months ended September 30, 2025

Baxter International Inc.

8 unchanged sentences

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

Balance as of June 30, 2025

Balance as of September 30, 2025

683 $ 683 170 $ ( 10,891 ) $ 6,345 $ 14,837 $ ( 3,733 ) $ 7,241 $ ( 27 ) $ 7,214

For the three months ended June 30, 2024

For the three months ended September 30, 2024

Baxter International Inc.

1 unchanged sentence

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

Balance as of April 1, 2024 683 $ 683 174 $ ( 11,130 ) $ 6,339 $ 16,003 $ ( 3,722 ) $ 8,173 $ 62 $ 8,235

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

Net income (loss) — — — — — 140 — 140 4 144

2 unchanged sentences

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

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.

7 unchanged sentences

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

Balance as of June 30, 2024

Balance as of September 30, 2024

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

3 unchanged sentences

(in millions)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operations

31 unchanged sentences

Proceeds from stock issued under employee benefit plans 25 63

Payments of contingent liabilities ( 10 ) —

Other financing activities, net ( 18 ) ( 15 )

1 unchanged sentence

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash - continuing operations 83 ( 45 )

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

Increase (decrease) in cash, cash equivalents and restricted cash ( 686 ) ( 1,118 )

3 unchanged sentences

Cash, cash equivalents and restricted cash of continuing operations $ 1,728 $ 1,422

(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

(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, 2025, December 31, 2024, and September 30, 2024 (in millions):

September 30, 2025 December 31, 2024 September 30, 2024

Cash and cash equivalents $ 1,726 $ 1,764 $ 1,420

20 unchanged sentences

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.

In the third quarter of 2025, the purchase price was reduced by $ 99 million for final closing cash, working capital and other post-closing adjustments in accordance with the terms of the EPA, which are recorded in accrued expenses and other current liabilities in the consolidated balance sheet as of September 30, 2025.

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.

3 unchanged sentences

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 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.

The facility was fully operational by the end of the first quarter of 2025.

In the third quarter and first nine months of 2025, we recorded $ 8 million and $ 123 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.

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 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, 2025 and 2024.

DISCONTINUED OPERATIONS

3 unchanged sentences

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

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

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

In the third quarter of 2025, we recognized a pre-tax reduction of the gain on the sale of $ 55 million as a result of final working capital adjustments made in accordance with the related EPA.

For the nine months ended September 30, 2025, we recognized a pre-tax gain on sale of $ 115 million.

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

2 unchanged sentences

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

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.

Upon closing of the sale of the Kidney Care business, pursuant to the 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).

5 unchanged sentences

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 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 June 30, 2025 was $ 133 million.

The net indemnification liability as of September 30, 2025 was $ 57 million.

Further, in accordance with the EPA, Baxter recorded a contingent liability for payments to reimburse Vantive for qualifying capital expenditures of $ 133 million over a period of three years post sale.

The contingent liability as of September 30, 2025 was $ 124 million based on payments made to date.

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 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.

As of September 30, 2025, the total amount of Kidney Care business guarantees retained by us is approximately $ 230 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 six months ended June 30, 2025 and 2024:

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

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, 2025 and 2024:

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

(in millions) 2025 2024 2025 2024

5 unchanged sentences

Goodwill impairment — — — 430

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

Operating income (loss) — 106 14 ( 193 )

7 unchanged sentences

Net income (loss) attributable to Baxter stockholders included in discontinued operations $ 5 $ 79 $ 36 $ ( 299 )

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.

For the three and nine months ended September 30, 2025, settlement of certain net working capital adjustments made in accordance with the EPA and increased indemnification liabilities reduced the gain from the sale of our Kidney Care business.

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

For the nine months ended September 30, 2025 and 2024, SG&A includes $ 37 million and $ 236 million, respectively, of separation-related costs incurred in connection with the sale of our Kidney Care business.

In the third quarter of 2025, a $ 41 million tax benefit was allocated to discontinued operations due to recording of reserves for uncertain tax positions related to the transfer pricing matters for tax years 2021 through 2025.

See Note 12 for additional information.

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 and six months ended June 30, 2025 and 2024.

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

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

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

(in millions) 2025 2024 2025 2024

4 unchanged sentences

Balance at end of period $ 69 $ 65 $ 69 $ 65

(in millions) June 30,

(in millions) September 30,

2025 December 31,

4 unchanged sentences

Property, Plant and Equipment, Net

(in millions) June 30,

(in millions) September 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 $ 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.

Accordingly, the related assets, primarily consisting of accounts receivable, of $ 32 million and liabilities, consisting of accounts payable, of $ 10 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 September 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 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.

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 September 30, 2025.

The net book value of the assets as of September 30, 2025 approximates the transaction price net of estimated selling costs.

Interest Expense, Net

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

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

(in millions) 2025 2024 2025 2024

3 unchanged sentences

Other (Income) Expense, Net

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

Three Months Ended September 30, Nine Months Ended September 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 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.

Right-of-use operating lease assets obtained in exchange for lease obligations for the nine months ended September 30, 2025 and 2024 were $ 14 million and $ 54 million, respectively.

Purchases of property, plant and equipment included in accounts payable as of September 30, 2025 and 2024 were $ 45 million and $ 34 million, respectively.

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

3 unchanged sentences

Currency translation 72 20 33 125

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

Balance as of September 30, 2025 $ 1,257 $ 3,570 $ 573 $ 5,400

Other intangible assets, net

6 unchanged sentences

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

June 30, 2025

September 30, 2025

Gross other intangible assets $ 3,393 $ 3,208 $ 953 $ 91 $ 680 $ 107 $ 8,432

1 unchanged sentence

Other intangible assets, net $ 2,352 $ 848 $ 799 $ 19 $ 680 $ 107 $ 4,805

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.

Intangible asset amortization expense was $ 147 million and $ 159 million for the three months ended September 30, 2025 and 2024, respectively, and $ 453 million and $ 471 million for the nine months ended September 30, 2025 and 2024.

FINANCING ARRANGEMENTS

5 unchanged sentences

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.

As of September 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.

7 unchanged sentences

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.

There were no borrowings outstanding under the Multicurrency Revolver as of September 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.

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

Based on our covenant calculations as of September 30, 2025, we had capacity to draw $ 1.10 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").

7 unchanged sentences

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.

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

In the first nine months of 2025, we repaid $ 680 million of senior notes at maturity.

Commercial Paper

There was no commercial paper outstanding as of June 30, 2025.

There was no commercial paper outstanding as of September 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 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.

As of September 30, 2025 and December 31, 2024, our total recorded reserves with respect to legal and environmental matters were $ 56 million and $ 40 million, respectively.

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

6 unchanged sentences

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.

Novum IQ Large Volume Pump (Novum LVP)

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

On May 20, 2025, the U.S.

1 unchanged sentence

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.

In August 2025, the FDA classified these additional voluntary corrections as Class I recalls.

We have implemented certain corrections related to the recalls, and are developing additional corrections related to these recalls, some of which will require regulatory approval.

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

and Canada, except in the case of medical necessity.

We have recorded a reserve for remediation costs associated with these initial Novum LVP corrections in the second quarter that is not material to our financial results.

However, these estimates may be subject to change and these and other additional costs (including those associated with any additional corrections) could become material in the future.

Environmental

We are involved as a potentially responsible party (PRP) for environmental clean-up costs at six Superfund sites.

Additionally, we are a defendant in a separate matter regarding a seventh Superfund site.

Additionally, we have reached an agreement in principle to resolve liability through a remedial investigation and feasibility study at a seventh Superfund site for an amount not material to Baxter.

Under the U.S.

2 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 June 30, 2025 and December 31, 2024, our environmental reserves, which are measured on an undiscounted basis, were $ 30 million and $ 29 million, respectively.

As of September 30, 2025 and December 31, 2024, our environmental reserves, which are measured on an undiscounted basis, were $ 29 million.

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.

10 unchanged sentences

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.

Thirty-eight complaints are currently filed and pending.

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

We acquired Hill-Rom Holdings, Inc.

6 unchanged sentences

We paid the settlement amounts, which were not material to our financial results, in January 2024 and the matter was dismissed in February 2024.

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 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 (the 2024 Subpoena), pursuant to 18 U.S.C.

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.

16 unchanged sentences

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

The motion is currently pending before the court.

The court granted the motion and dismissed the case with prejudice on September 12, 2025.

Reading Hospital filed a Notice of Appeal of the dismissal on October 9, 2025.

On October 16, 2025, we and certain of our current and former officers and employees were named in a class action complaint captioned Electrical Workers Pension Fund, Local 103, I.B.E.W.

Baxter International Inc.

that was filed in the United States District Court for the Northern District of Illinois.

The plaintiff, which allegedly purchased or otherwise acquired shares of our common stock during the specified class period, filed this putative class action on behalf of itself and those who purchased or otherwise acquired Baxter common stock between February 23, 2022 and July 30, 2025.

The plaintiff alleges that we and certain former and current officers and employees violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements and failing to disclose material facts relating to Novum LVP.

STOCKHOLDERS’ EQUITY

Cash Dividends

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.

Cash dividends declared per share for the three months ended September 30, 2025 and 2024 were $ 0.17 and $ 0.29 , respectively, and for the nine months ended September 30, 2025 and 2024 were $ 0.51 and $ 0.87 , 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 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.

During the first nine 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 September 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 six months ended June 30, 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 nine months ended September 30, 2025 and 2024.

Gains (losses)

6 unchanged sentences

Net other comprehensive income (loss) 285 ( 6 ) ( 2 ) — 277

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

Balance as of September 30, 2025 $ ( 3,145 ) $ ( 481 ) $ ( 110 ) $ 3 $ ( 3,733 )

Gains (losses)

5 unchanged sentences

Net other comprehensive income (loss) ( 92 ) ( 3 ) 2 — ( 93 )

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

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

(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 six months ended June 30, 2025 and 2024.

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

Amounts reclassified from AOCI (a)

(in millions) Three Months Ended June 30, 2025 Six Months Ended June 30, 2025 Location of impact in income statement

(in millions) Three Months Ended September 30, 2025 Nine Months Ended September 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

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$ 3 $ 23 Total before tax

Tax effect ( 1 ) ( 2 ) Income tax expense

Tax effect — ( 2 ) Income tax expense (benefit)

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

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( 1 ) 2 Total before tax

Tax effect — ( 1 ) Income tax expense

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

$ ( 1 ) $ 1 Net of tax

1 unchanged sentence

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

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

Pension and OPEB items

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3 — Total before tax

Tax effect 1 1 Income tax expense

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

$ 2 $ — Net of tax

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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 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.

As of September 30, 2025, we had $ 9.89 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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The amount of variable consideration included in the net sales price is limited to the amount for which it is probable that a significant reversal in revenue will not occur when the related uncertainty is resolved.

Revenue recognized during the three and six months ended June 30, 2025 and 2024 related to performance obligations satisfied in prior periods was no t material.

Revenue recognized during the three and nine months ended September 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.

Determining whether products and services are considered distinct performance obligations that should be accounted for separately and determining the allocation of the transaction price may require significant judgement.

Contract Balances

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

Net trade accounts receivable was $ 1.62 billion and $ 1.54 billion as of June 30, 2025 and December 31, 2024, respectively.

consolidated balance sheets.

Net trade accounts receivable was $ 1.64 billion and $ 1.54 billion as of September 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.

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The following table summarizes our contract assets:

(in millions) June 30,

(in millions) September 30,

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 six months ended June 30, 2025 and 2024.

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

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

Six Months Ended June 30,

Nine Months Ended September 30,

(in millions) 2025

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Revenue recognized upon satisfaction of performance obligations ( 394 ) ( 389 )

Currency translation ( 1 ) —

Currency translation and other ( 6 ) ( 3 )

Balance at end of period $ 159 $ 160

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.

For the nine months ended September 30, 2025 and 2024, $ 89 million and $ 94 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) June 30,

(in millions) September 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 and six months ended June 30, 2025 and 2024 were:

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

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

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

(in millions) 2025 2024 2025 2024

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Total lease revenue $ 91 $ 115 $ 292 $ 318

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.

Our net investment in sales-type leases was $ 33 million as of September 30, 2025, of which $ 3 million originated in 2021 and prior, $ 5 million in 2022, $ 6 million in 2023, $ 10 million in 2024, and $ 9 million in 2025.

BUSINESS OPTIMIZATION CHARGES

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For segment reporting, business optimization charges are unallocated expenses.

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,

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

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

(in millions) 2025 2024 2025 2024

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Total business optimization charges $ 38 $ 18 $ 100 $ 49

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.

Costs to implement business optimization programs for the three and nine months ended September 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 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

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

Three months ended September 30, 2025

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

Employee termination costs $ 8 $ 8 $ 2 $ 18

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Total restructuring charges $ 25 $ 10 $ 2 $ 37

Three months ended June 30, 2024

Three months ended September 30, 2024

(in millions) COGS SG&A Total

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Total restructuring charges $ 2 $ 13 $ 15

Six months ended June 30, 2025

Nine months ended September 30, 2025

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

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Total restructuring charges $ 42 $ 50 $ 3 $ 95

Six months ended June 30, 2024

Nine months ended September 30, 2024

(in millions) COGS SG&A Total

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Total restructuring charges $ 5 $ 31 $ 36

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.

For the three and nine months ended September 30, 2025, $ 10 million and $ 41 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 September 30, 2025, $ 21 million of the restructuring charges reflected in the table above, consisting of $ 8 million of asset impairments, $ 8 million of contract termination and other costs, and $ 5 million of employee termination costs, were related to the exit of a product line at one of our manufacturing facilities.

For the nine months ended September 30, 2025, $ 24 million of the restructuring charges reflected in the table above, consisting of $ 11 million of asset impairments, $ 8 million of contract termination and other costs, and $ 5 million of employee termination costs, were related to the exit of a product line at one of our manufacturing facilities.

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 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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Currency translation 5

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.

Liability balance as of September 30, 2025 $ 93

Substantially all of our restructuring liabilities as of September 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 2026.

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

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

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

(in millions) 2025 2024 2025 2024

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Amortization of net losses and prior service costs 1 4 3 11

Net periodic pension cost $ ( 6 ) $ ( 6 ) $ ( 12 ) $ ( 10 )

Net periodic pension cost (benefit) $ ( 6 ) $ ( 2 ) $ ( 18 ) $ ( 13 )

Interest cost $ 2 $ 2 $ 6 $ 6

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Net periodic OPEB cost (income) $ ( 2 ) $ ( 3 ) $ ( 6 ) $ ( 8 )

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 was 142 % and 12 % for the three months ended September 30, 2025 and 2024, respectively, and 46 % and 30 % for the nine months ended September 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 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 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.

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

federal statutory rate was primarily driven by an increase in liabilities for uncertain tax positions, partially offset by a reduction in the valuation allowance on foreign tax credits and changes in the treatment of accumulated earnings that are considered indefinitely reinvested as of December 31, 2024.

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

federal statutory rate was primarily driven by an increase in liabilities for uncertain tax positions, partially offset by a reduction in the valuation allowance on foreign tax credits, changes in the treatment of accumulated earnings that are considered indefinitely reinvested as of December 31, 2024 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 period.

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 sale of our former 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 sale of our former 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 sale of our former 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 sale of our former Kidney Care segment, and an increase in our liabilities for various uncertain tax positions, partially offset by a favorable geographic earnings mix.

We are currently under examination by the Internal Revenue Service (IRS) for transfer pricing matters related to transactions with our manufacturing operations in Costa Rica and Puerto Rico for the 2019 and 2020 tax years.

While we have not yet received a Notice of Proposed Adjustment (NOPA) from the IRS, the examination is ongoing, and we are in the process of responding to inquiries from, and engaging in ongoing discussions with, the IRS related to certain intercompany transactions between our U.S.

entities and these foreign manufacturers.

As a result, we have recorded reserves for uncertain tax positions related to these transfer pricing matters for tax years 2019 through 2025.

These reserves in aggregate are recorded to expense for approximately $ 300 million, exclusive of any potential penalties and interest.

While we believe that our transfer pricing positions are well documented, properly supported, and adequate amounts have been reserved to account for any adjustments that may ultimately result from this examination, the ultimate outcome of this matter is uncertain (upon the receipt of a NOPA or otherwise).

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.

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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.

We currently expect that the impact of the OBBBA legislation on our income tax expense for the year ending December 31, 2025 will not be material.

We will continue to monitor regulatory guidance and interpretations as they are issued.

EARNINGS PER SHARE

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

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

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

(in millions) 2025 2024 2025 2024

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

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

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

(in millions) 2025 2024 2025 2024

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Diluted shares 514 512 514 511

Basic and diluted shares are the same for three months ended September 30, 2025 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 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.

The computation of diluted EPS excludes 22 million and 20 million shares issuable under equity awards for the three and nine months ended September 30, 2025, respectively, and 18 million and 19 million shares issuable under equity awards for the three and nine months ended September 30, 2024, respectively, because their inclusion would have had an anti-dilutive effect on diluted EPS.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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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.

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

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

Cash Flow Hed g es

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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 $ 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.

The notional amounts of foreign exchange contracts designated as cash flow hedges were $ 6 million and $ 99 million as of September 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 September 30, 2025 is two months for foreign exchange contracts.

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

There were no outstanding interest rate contracts designated as fair value hedges as of September 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.

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

As of September 30, 2025, we had an accumulated pre-tax unrealized translation loss in AOCI of $ 5 million related to the Euro-denominated senior notes.

Dedesignations

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However, if it is probable that the hedged forecasted transactions will not occur, any gains or losses would be immediately reclassified from AOCI to earnings.

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

There were no fair value hedges terminated during the first nine 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 six months of 2024.

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 nine months of 2024.

Undesignated Derivative Instruments

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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.

The total notional amount of undesignated derivative instruments was $ 381 million as of September 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 June 30, 2025 and 2024.

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

4 unchanged sentences

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

Fair value hedges

Foreign exchange contracts — ( 1 ) Other (income) expense, net — ( 2 )

Net investment hedges ( 2 ) ( 68 ) Other (income) expense, net — —

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(in millions) 2025 2024

Fair value hedges

Foreign exchange contracts Other (income) expense, net $ — $ ( 1 )

Undesignated derivative instruments

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Total $ 1 $ 6

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

15 unchanged sentences

Total $ 32 $ ( 24 )

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.

As of September 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 June 30, 2025.

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

Derivatives in asset positions Derivatives in liability positions

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Foreign exchange contracts Prepaid expenses and other current assets 2 Accrued expenses and other current liabilities 3

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

Total derivative instruments $ 2 $ 839

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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.

June 30, 2025 December 31, 2024

September 30, 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 June 30, 2025 Balance as of December 31, 2024 Balance as of June 30, 2025 Balance as of December 31, 2024

(in millions) Balance as of September 30, 2025 Balance as of December 31, 2024 Balance as of September 30, 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 June 30, 2025 Quoted prices in active markets for identical assets

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

(Level 1) Significant other

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Total $ 14 $ — $ 2 $ 12

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.

As of September 30, 2025 and December 31, 2024, cash and cash equivalents of $ 1.73 billion and $ 1.76 billion, respectively, included money market fund and other short-term funds of approximately $ 631 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

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

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

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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 June 30,

acquisitions and available-for-sale debt securities.

Three Months Ended September 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

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Additions 1 — — — —

Change in fair value recognized in earnings — 2 — — —

Payments — — — ( 2 ) —

Fair value at end of period $ 57 $ 14 $ 1 $ 12 $ 1

Six Months Ended June 30,

Nine Months Ended September 30,

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Additions 57 — — — —

Change in fair value recognized in earnings 2 — — —

Payments — — — ( 2 ) —

Fair value at end of period $ 57 $ 14 $ 1 $ 12 $ 1

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

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

Book values Fair values(a)

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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 $ 38 million as of June 30, 2025 and $ 37 million as of December 31, 2024.

The carrying values of equity investments without readily determinable fair values that we measure at cost, less impairment were $ 51 million as of September 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.

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and international disaggregated net sales.

Three Months Ended June 30,

Three Months Ended September 30,

(in millions) U.S.

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Total Baxter $ 1,544 $ 1,291 $ 2,835 $ 1,500 $ 1,199 $ 2,699

Six Months Ended June 30,

Nine Months Ended September 30,

(in millions) U.S.

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

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

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

(in millions) 2025 2024 2025 2024

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Segment Operating Income

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.

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) was comprised of our Chair and Interim Chief Executive Officer, and the Executive Vice President, Chief Operating Officer and Interim Group President, Medical Products & Therapies.

In the third quarter of 2025, in conjunction with the appointment of Andrew Hider as our Chief Executive Officer, we determined that our President and Chief Executive Officer is now the CODM, who reviews the financial information presented for purposes of evaluating the performance of our segments and to make resource allocation decisions.

The change in CODM during both the first quarter and third 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.

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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

Three Months Ended September 30, 2025 Three Months Ended September 30, 2024

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

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Segment operating income $ 273 $ 104 $ 56 $ 268 $ 136 $ 58

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

Nine Months Ended September 30, 2025 Nine Months Ended September 30, 2024

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

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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 June 30, Six Months Ended June 30,

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

(in millions) 2025 2024 2025 2024

18 unchanged sentences

Additional financial information for our segments is as follows:

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

Three Months Ended September 30, Nine Months Ended September 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