81 unchanged sentences
( 28 ) ( 19 ) ( 92 )
−Removed: Hedging activities, net of tax expense (benefit) of $ 3 in 2024, zero in 2023 and $ 2 in 2022
−Removed: Available-for-sale debt securities, net of tax expense of zero in 2024 and 2023 and $ 1 in $ 2 in 2022
+Added: Hedging activities, net of tax expense (benefit) of zero in 2025, $ 3 in 2024 and zero in 2023
+Added: ( 2 ) 12 ( 1 )
Total other comprehensive income (loss) from continuing operations, net of tax 130 ( 655 ) 208
2 unchanged sentences
Other comprehensive income (loss) from discontinued operations
−Removed: Currency translation adjustments, net of tax expense (benefit) of $( 7 ) in 2024, $ 8 in 2023 and $ 6 in 2022
+Added: Currency translation adjustments, net of tax expense (benefit) of zero in 2025, $( 7 ) in 2024 and $ 8 in 2023
Pension and other postretirement benefit plans, net of tax expense of $( 3 ) in 2025, $ 3 in 2024 and $( 2 ) in 2023
15 unchanged sentences
Other comprehensive income (loss) — — — — — — 279 279 ( 3 ) 276
−Removed: Purchases of treasury stock — — — ( 32 ) — — — ( 32 ) — ( 32 )
Stock issued under employee benefit plans and other — — ( 3 ) 159 67 — — 226 — 226
Dividends declared on common stock — — — — — ( 592 ) — ( 592 ) — ( 592 )
−Removed: Change in noncontrolling interests — — — — — — — — 11 11
Balance as of December 31, 2023 683 $ 683 176 $ ( 11,230 ) $ 6,389 $ 16,114 $ ( 3,554 ) $ 8,402 $ 66 $ 8,468
3 unchanged sentences
Dividends declared on common stock — — — — — ( 536 ) — ( 536 ) — ( 536 )
+Added: Change in noncontrolling interests — — — — — — — — ( 1 ) ( 1 )
Balance as of December 31, 2024 683 $ 683 173 $ ( 11,059 ) $ 6,421 $ 14,929 $ ( 4,010 ) $ 6,964 $ 60 $ 7,024
1 unchanged sentence
Other comprehensive income (loss) — — — — — — 141 141 — 141
+Added: Reclassification of other comprehensive income (loss) disposed in the Kidney Care separation — — — — — — 115 115 — 115
Stock issued under employee benefit plans and other — — ( 4 ) 186 ( 53 ) — — 133 — 133
Dividends declared on common stock — — — — — ( 267 ) — ( 267 ) — ( 267 )
−Removed: Change in noncontrolling interests — — — — — — — — ( 1 ) ( 1 )
+Added: Disposition of noncontrolling interest associated with the Kidney Care separation — — — — — — — — ( 87 ) ( 87 )
Balance as of December 31, 2025 683 $ 683 169 $ ( 10,873 ) $ 6,368 $ 13,705 $ ( 3,754 ) $ 6,129 $ ( 27 ) $ 6,102
8 unchanged sentences
Depreciation and amortization 981 997 984
−Removed: Pension settlement and curtailment (gains) losses — 1 ( 12 )
Net periodic pension and other postretirement costs ( 32 ) ( 28 ) ( 29 )
2 unchanged sentences
Goodwill impairments 485 425 —
−Removed: Intangible asset impairments 50 — 344
+Added: Indefinite-lived asset impairments 290 50 —
Other long-lived asset impairments 27 44 ( 11 )
−Removed: Loss on product divestiture arrangement — — 54
−Removed: Reclassification of cumulative translation loss to earnings — — 65
−Removed: Loss on subsidiary liquidation — — 21
+Added: Gain on early extinguishment of debt ( 16 ) — —
Other 30 41 62
6 unchanged sentences
Other ( 81 ) ( 31 ) ( 13 )
−Removed: Cash flows from operations – continuing operations 819 1,207 528
−Removed: Cash flows from operations – discontinued operations 200 519 683
−Removed: Cash flows from operations 1,019 1,726 1,211
+Added: Cash flows from (used in) operations – continuing operations 951 819 1,207
+Added: Cash flows from (used in) operations – discontinued operations ( 106 ) 200 519
+Added: Cash flows from (used in) operations 845 1,019 1,726
Cash flows from investing activities
3 unchanged sentences
Other investing activities, net 58 16 26
−Removed: Cash flows from investing activities - continuing operations ( 410 ) ( 410 ) ( 624 )
−Removed: Cash flows from investing activities - discontinued operations ( 216 ) 3,623 ( 307 )
−Removed: Cash flows from investing activities ( 626 ) 3,213 ( 931 )
+Added: Cash flows from (used in) investing activities - continuing operations ( 464 ) ( 410 ) ( 410 )
+Added: Cash flows from (used in) investing activities - discontinued operations 3,305 ( 216 ) 3,623
+Added: Cash flows from (used in) investing activities 2,841 ( 626 ) 3,213
Cash flows from financing activities
+Added: Issuances of debt 1,998 — —
Increase in short term debt — 1,830 —
3 unchanged sentences
Proceeds from stock issued under employee benefit plans 30 71 95
−Removed: Purchases of treasury stock — — ( 32 )
+Added: Payments of contingent liabilities ( 50 ) — —
Other financing activities, net ( 57 ) ( 31 ) ( 63 )
−Removed: Cash flows from financing activities ( 1,081 ) ( 3,489 ) ( 1,438 )
+Added: Cash flows from (used in) financing activities ( 4,216 ) ( 1,081 ) ( 3,489 )
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash 84 ( 96 ) 26
10 unchanged sentences
Restricted cash included in prepaid expenses and other current assets 2 2 4
+Added: Cash and cash equivalents of discontinued operations — 648 116
Cash, cash equivalents and restricted cash $ 1,968 $ 2,414 $ 3,198
5 unchanged sentences
infusion systems, administrative sets;
−Removed: parenteral nutrition therapies;
−Removed: surgical hemostat, sealant and adhesion prevention products;
+Added: parenteral nutrition therapies and surgical hemostat, sealant, and adhesion prevention products;
connected care solutions and collaboration tools, including smart bed systems, patient monitoring systems and diagnostic technologies;
2 unchanged sentences
injectable pharmaceuticals;
−Removed: inhaled anesthetics and drug compounding services.
+Added: inhaled anesthetics and drug compounding.
These products are used by hospitals, nursing homes, rehabilitation centers, ambulatory surgery centers, doctors’ offices, kidney dialysis centers and patients at home under physician supervision.
4 unchanged sentences
(Carlyle) to sell our Kidney Care business.
−Removed: That business, which is now known as Vantive Health LLC (Vantive) is comprised of our former Kidney Care segment and provides chronic and acute dialysis therapies and services, including peritoneal dialysis, hemodialysis, continuous renal replacement therapies, and other organ support therapies.
+Added: That business, which is now known as Vantive Health LLC (Vantive) is comprised of our former Kidney Care segment.
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.
−Removed: 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 currently estimated to be approximately $ 3.4 billion, subject to certain post-closing adjustments.
−Removed: We determined that our Kidney Care business met the criteria to be classified as held-for-sale in August 2024, and we also concluded that it met the conditions to be reported as a discontinued operation at that time.
−Removed: Accordingly, our Kidney Care business is reported in discontinued operations in the accompanying consolidated financial systems, and our prior period results have been adjusted to reflect discontinued operations presentation.
+Added: 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, prior to giving effect to certain post-closing adjustments.
+Added: 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 consolidated financial statements, and our prior period results have been adjusted to reflect discontinued operations.
See Note 2 for additional information.
2 unchanged sentences
and disrupted operations at that facility.
−Removed: Since then, we have actively worked with our customers, regulators and other stakeholders to manage inventory and minimize disruption to patient care as we worked towards resuming our North Cove manufacturing operations.
−Removed: Our insurance policies generally cover the repair or replacement of our assets that suffer loss or damage, less applicable deductibles and subject to any coverage limits and exclusions.
−Removed: Our insurance policies also provide coverage for interruption to our business, including lost profits, and reimbursement for other expenses and costs that have been incurred relating to the damages and losses suffered.
+Added: In response, we 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.
+Added: The facility was fully operational by the end of the first quarter of 2025.
+Added: In 2025, we recorded $ 133 million of pre-tax net charges related to remediation, air freight and other costs as a result of the damages caused by Hurricane Helene.
In 2024, we recorded $ 110 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 as well as $ 317 million of remediation, idle facility, air freight and other costs offset by $ 251 million of insurance recoveries.
−Removed: These amounts were recorded as a component of cost of sales in the consolidated statement of income (loss) for the year ended December 31, 2024.
−Removed: Risks and Uncertainties
−Removed: Supply Constraints and Global Economic Conditions
−Removed: In recent years, we have experienced significant challenges to our global supply chain, including production delays and interruptions, increased costs and shortages of raw materials and component parts (including resins and electromechanical devices), higher transportation costs, adverse impacts from significant weather events (including Hurricane Helene and the flooding of our North Cove facility), elevated inflation levels and interest rates, disruptions to certain ports of call and access to shipping lanes around the world, the war in Ukraine, the conflict in the Middle East and other geopolitical events.
−Removed: While we have seen improvements in the availability of component parts and
−Removed: improved pricing of raw materials and on transportation costs, some of these challenges (such as additional transportation costs resulting from Hurricane Helene as we transfer product across our global network in the interest of increasing the availability of intravenous solutions for our customers while we work to fully remediate our North Cove facility) are expected to have a negative impact on our results of operations in the future.
−Removed: We expect that the challenges caused by global economic conditions, among other factors, may continue to have an adverse effect on our business.
+Added: These amounts were recorded as a component of cost of sales in the consolidated statements of income (loss) for the years ended December 31, 2025 and 2024.
Use of Estimates
7 unchanged sentences
Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services.
−Removed: A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in the contract.
+Added: A performance obligation is a promise in a contract to transfer a distinct good or service to the
+Added: customer and is the unit of account in the contract.
A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.
10 unchanged sentences
generic injectable pharmaceuticals;
−Removed: surgical hemostat and sealant products, smart bed systems;
+Added: surgical hemostat and sealant products;
+Added: smart bed systems;
patient monitoring and diagnostic technologies;
9 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.
−Removed: As of December 31, 2024, we had $ 5.47 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 Product and Therapies segments.
+Added: As of December 31, 2025, we had $ 8.50 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 Product & Therapies segment.
Some contracts in the United States included in this amount contain index-dependent price increases, which are not known at this time.
−Removed: We expect to recognize approximately 25 % of this amount as revenue in 2025, 20 % in 2026, 20 % in 2027, 35 % in 2028 and the remainder thereafter.
+Added: We expect to recognize approximately 25 % of this amount as revenue in 2026, 25 % in 2027, 15 % in 2028, 15 % in 2029, 10 % in 2030 and the remainder thereafter.
Significant Judgments
2 unchanged sentences
Management's estimates take into consideration historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns.
−Removed: these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract using the expected value method.
+Added: Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract using the expected value method.
The amount of variable consideration included in the net sales price is limited to the amount for which it is probable that a significant reversal in revenue will not occur when the related uncertainty is resolved.
22 unchanged sentences
Property, plant and equipment are stated at cost.
−Removed: Depreciation expense is calculated using the straight-line method over the estimated useful lives of the related assets, which range from 20 to 50 years for buildings and improvements and from 3 to 15 years for machinery and equipment.
+Added: Depreciation expense is calculated using the straight-line method over the estimated useful lives of the related assets, which range from 20 to 50 years for buildings and improvements and from three to 15 years for machinery and equipment.
Leasehold improvements are amortized over the life of the related facility lease (including any renewal periods, if appropriate) or the asset, whichever is shorter.
13 unchanged sentences
We periodically enter into collaborative arrangements in the normal course of business.
−Removed: These collaborative arrangements take a number of forms and structures and are designed to enhance and expedite long-term sales and profitability growth.
+Added: These collaborative arrangements take a number of forms and structures and are designed to enhance and expedite long-term sales
+Added: and profitability growth.
These arrangements may provide for us to obtain commercialization rights to a product under development, and require us to make upfront payments, contingent milestone payments, profit-sharing, and/or royalty payments.
20 unchanged sentences
Indefinite-lived intangible assets, such as IPR&D acquired in business combinations and certain trade names with indefinite lives, are subject to an impairment review annually in the fourth quarter and whenever indicators of impairment exist.
−Removed: We have the option to assess indefinite-lived intangible assets for impairment by first performing
−Removed: qualitative assessments to determine whether it is more-likely-than-not that the fair values of the indefinite-lived intangible assets are less than the carrying amounts.
+Added: We have the option to assess indefinite-lived intangible assets for impairment by first performing qualitative assessments to determine whether it is more-likely-than-not that the fair values of the indefinite-lived intangible assets are less than the carrying amounts.
If we determine that it is more-likely-than-not that an indefinite-lived intangible asset is impaired, or if we elect not to perform an initial qualitative assessment, we then perform the quantitative impairment test by comparing the fair value of the indefinite-lived intangible asset with its carrying amount.
6 unchanged sentences
Assets held for sale are no longer depreciated or amortized and they are reported at the lower of their carrying amount or fair value less cost to sell.
−Removed: See Notes 3 and 5 for further information about impairments of goodwill and intangible assets recognized in the accompanying consolidated financial statements.
+Added: See Note 4 for further information about impairments of goodwill and intangible assets recognized in the accompanying consolidated financial statements.
Investments in Debt and Equity Securities
17 unchanged sentences
Derivative instruments are recognized as either assets or liabilities at fair value in the consolidated balance sheets and are classified as short-term or long-term based on the scheduled maturity of the instrument.
−Removed: certain of our derivatives and foreign-currency denominated debt as hedging instruments in cash flow, fair value or net investment hedges.
+Added: We designate certain of our derivatives and foreign-currency denominated debt as hedging instruments in cash flow, fair value or net investment hedges.
For each derivative instrument that is designated and effective as a cash flow hedge, the gain or loss on the derivative is recorded in AOCI and then recognized in earnings consistent with the underlying hedged item.
5 unchanged sentences
If it is determined that a derivative or nonderivative hedging instrument is no longer highly effective as a hedge, we discontinue hedge accounting prospectively.
−Removed: Gains or losses relating to terminations of effective cash flow hedges generally continue to be deferred and are recognized consistent with the loss or income recognition of the underlying hedged items.
+Added: Gains or losses relating to terminations of effective cash flow hedges generally continue to be deferred and are recognized consistent with the loss or income recognition of the underlying hedged transactions.
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.
9 unchanged sentences
We are currently evaluating the impact of this new standard on our consolidated financial statements.
−Removed: In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):
−Removed: Improvement to Income Tax Disclosures, which requires (1) disclosure of specific categories in the rate reconciliation and (2) additional information for reconciling items that meet a quantitative threshold.
−Removed: Additionally, the amendment requires disclosure of certain disaggregated information about income taxes paid, income from continuing operations before income tax expense (benefit) and income tax expense (benefit).
−Removed: The standard is effective for our annual consolidated financial
−Removed: statements for the year ending December 31, 2025.
−Removed: We are currently evaluating the impact of this standard on our consolidated financial statements.
Recently adopted accounting pronouncements
−Removed: As of January 1, 2024, we adopted ASU 2023-07, Segment Reporting (Topic 280):
−Removed: Improvements to Reportable Segment Disclosures, which requires enhanced disclosures about segment expenses on an annual and interim basis.
−Removed: This standard became effective for our annual consolidated financial statements for the year ended December 31, 2024 and for interim periods beginning in 2025.
−Removed: See Note 18 for further information on our segment disclosures.
+Added: As of January 1, 2025, we prospectively adopted ASU 2023-09, Income Taxes (Topic 740):
+Added: Improvement to Income Tax Disclosures (ASU 2023-09), which requires (1) disclosure of specific categories in the rate reconciliation and (2) additional information for reconciling items that meet a quantitative threshold.
+Added: Additionally, the amendment requires disclosure of certain disaggregated information about income taxes paid, income from continuing operations before income tax expense (benefit) and income tax expense (benefit).
+Added: The standard became effective for our annual consolidated financial statements for the year ended December 31, 2025.
+Added: See Note 13 for further information on these disclosures.
As of January 2024, we adopted ASU 2022-03, Fair Value Measurement (Topic 820):
2 unchanged sentences
The impact of the adoption of this ASU did not have a material effect on our consolidated financial statements.
−Removed: As of January 1, 2022, we adopted ASU 2021-05, Leases (Topic 842), which requires a lessor to classify a lease with variable lease payments (that do not depend on an index or rate) as an operating lease if (1) the lease would have been classified as a sales-type or direct financing lease, and (2) the lessor would have recognized a selling loss at lease commencement.
−Removed: These changes are intended to avoid recognizing a day-one loss for a lease with variable payments even though the lessor expects the arrangement will be profitable overall.
−Removed: The adoption of this ASU did not have a material impact on our consolidated financial statements.
DISCONTINUED OPERATIONS
2 unchanged sentences
Discontinued Operations - Kidney Care
−Removed: On August 12, 2024, we entered into an EPA to sell our Kidney Care business, subject to receipt of customary regulatory approvals and satisfaction of other closing conditions.
−Removed: That business, which is comprised of our former Kidney Care segment, provides chronic and acute dialysis therapies and services, including peritoneal dialysis, hemodialysis, continuous renal replacement therapies, and other organ support therapies.
On January 31, 2025, we completed the sale of our Kidney Care business to Carlyle for an aggregate purchase price of $ 3.80 billion in cash, subject to certain closing cash, working capital and debt adjustments.
−Removed: 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 currently estimated to be approximately $ 3.4 billion, subject to certain post-closing adjustments.
+Added: After giving effect to certain adjustments, we received approximately $ 3.71 billion pre-tax cash proceeds and recognized a pre-tax gain on the sale of $ 191 million ($ 111 million net of tax) at closing of the transaction.
+Added: For the year ended
+Added: December 31, 2025, we recognized a pre-tax gain on sale of $ 97 million after final working capital and other adjustments.
We concluded that our Kidney Care business met the criteria to be classified as held-for-sale in August 2024.
We analyzed the quantitative and qualitative factors relevant to the sale of our Kidney Care business, including its significance to our overall net income (loss), earnings (loss) per share, and net assets, and determined that those conditions for discontinued operations presentation had been met.
−Removed: As such, the financial position, results of operations and cash flows of that business are reported as discontinued operations in the accompanying consolidated financial statements.
+Added: As such, the financial position, results of operations and cash flows of that business are reported as discontinued operations in the accompanying condensed consolidated financial statements.
Prior period amounts have been adjusted to reflect discontinued operations presentation.
−Removed: The fair value and carrying value of assets held for sale are evaluated each period and a loss on sale is recognized when the fair value less costs to sell are below the carrying value.
−Removed: There has been no loss on sale recognized for the period ending December 31, 2024.
−Removed: We will recognize a gain or loss upon disposition of the business depending on the carrying value at that date, including any tax impacts of the sale, which may be material.
−Removed: Upon closing of the sale of the Kidney Care business, Baxter and Vantive entered into several agreements, including a Manufacturing and Supply Agreement (Kidney Care MSA), a long-term Master Services Agreement, a Distribution Agreement, a Transition Services Agreement (Kidney Care TSA), and an Intellectual Property Agreement.
−Removed: Pursuant to the Kidney Care MSA, Baxter and the Kidney Care divested entities will provide each other
−Removed: with certain dialysis-related products, other products, product components and fulfillment services for a period up to 10 years post-closing (with certain extension rights as provided therein).
−Removed: Pursuant to the Kidney Care TSA, Baxter and the entities that will be divested in connection with the Kidney Care sale (the Kidney Care divested entities) will provide each other, on an interim basis, certain transitional services for up to 30 months post-closing (with certain extension rights as provided therein) to help ensure business continuity and help minimize disruptions to the entities' operations post-closing.
−Removed: Services to be provided under the Kidney Care TSA include information technology applications and support, supply chain and certain other corporate and administrative services.
−Removed: Pursuant to the EPA, Baxter will retain (i) the manufacture and sale of saline solutions and (ii) the plastics operations of Baxter and its subsidiaries at its Mountain Home, Arkansas facility, which is not part of the Kidney Care segment.
+Added: 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.
+Added: 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).
+Added: Pursuant to the Kidney Care MSA, our sales to Vantive are recognized in net sales in the consolidated statements of income (loss).
+Added: Pursuant to the Kidney Care TSA, Baxter and the entities that were divested in connection with the Kidney Care sale (the Kidney Care divested entities) provide each other, on an interim basis, certain transitional services for up to 30 months post-closing (with certain extension rights and early exit rights as provided therein) to help ensure business continuity and help minimize disruptions to the operations of both parties post-closing.
+Added: Services provided under the Kidney Care TSA include information technology applications and support, supply chain and certain other corporate and administrative services.
+Added: Billings by us under the Kidney Care TSA are recorded in other operating income, net in the condensed consolidated statements of income.
+Added: The costs to provide each respective service is recorded in the applicable expense category in the consolidated statements of income (loss).
+Added: 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.
+Added: The net indemnification liability as of December 31, 2025 was $ 53 million.
+Added: 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.
+Added: The contingent liability as of December 31, 2025 was $ 83 million based on payments made to date.
+Added: 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.
+Added: These legacy guarantees primarily relate to certain leases, performance contracts and ones to support regulatory requirements of the Kidney Care business.
+Added: As of December 31, 2025, the total amount of Kidney Care business guarantees retained by us was approximately $ 35 million.
+Added: 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.
Discontinued Operations - BioPharma Solutions
3 unchanged sentences
We recognized a pre-tax gain on the sale of $ 2.88 billion ($ 2.59 billion net of tax), which represents the excess of (a) the $ 3.91 billion in net consideration received, consisting of (i) $ 3.96 billion in cash proceeds from the buyers, less (ii) $ 47 million in transaction costs, over (b) the sum of (i) the $ 840 million net book value of the BPS business upon the closing of the transaction and (ii) BPS's $ 181 million other comprehensive loss, which was reclassified to earnings.
−Removed: The BPS business, which was historically reported within our former Americas segment, provided contract manufacturing and development services, which include sterile fill-finish manufacturing and support services across clinical and commercial applications, primarily serving customers in the pharmaceutical industry.
+Added: The BPS business, provided contract manufacturing and development services, which include sterile fill-finish manufacturing and support services across clinical and commercial applications, primarily serving customers in the pharmaceutical industry.
BPS was historically operated through our former, wholly-owned subsidiaries Baxter Pharmaceutical Solutions LLC, a Delaware limited liability company, and Baxter Oncology GmbH, a German limited liability company (collectively, the divested entities).
We concluded that our BPS business met the criteria to be classified as held-for-sale in May 2023.
−Removed: A component of an entity is reported in discontinued operations after meeting the criteria for held-for-sale classification if the disposition represents a strategic shift that has (or will have) a major effect on the entity's operations and financial results.
+Added: A component of an entity is reported in discontinued operations after meeting the criteria for held-for-sale classification if the
+Added: disposition represents a strategic shift that has (or will have) a major effect on the entity's operations and financial results.
We analyzed the quantitative and qualitative factors relevant to the divestiture of our BPS business, including its significance to our overall net income (loss) and earnings (loss) per share, and determined that those conditions for discontinued operations presentation had been met.
5 unchanged sentences
At closing of the transaction, Baxter entered into a Transition Services Agreement (BPS TSA) and a Master Commercial Manufacturing and Supply Agreement (BPS MSA) with the divested entities.
−Removed: Pursuant to the BPS TSA, Baxter and the divested entities will provide to each other, on an interim basis, specific transition services for up to 24 months post-closing to help ensure business continuity and minimize disruptions.
+Added: Pursuant to the BPS TSA, Baxter and the divested entities provided to each other specific transition services for a period of time post-closing to help ensure business continuity and minimize disruptions.
Services provided under the BPS TSA include finance, information technology, human resources, integrated supply chain and certain other administrative services.
−Removed: Pursuant to the BPS MSA, the divested entities will provide development, manufacturing, regulatory and other related services for certain Baxter pharmaceutical products for up to 5 years post-closing (with certain extension rights as provided therein).
+Added: Pursuant to the BPS MSA, the divested entities will provide development, manufacturing, regulatory and other related services for certain Baxter pharmaceutical products for up to five years post-closing (with certain extension rights as provided therein).
Results of Discontinued Operations and Assets and Liabilities of Discontinued Operations
19 unchanged sentences
Net income (loss) attributable to Baxter stockholders included in discontinued operations $ ( 57 ) $ ( 323 ) $ ( 257 ) $ — $ — $ 2,732 $ ( 57 ) $ ( 323 ) $ 2,475
−Removed: For the year ended December 31, 2024, SG&A expenses include $ 261 million of separation-related costs incurred in connection with the sale of our Kidney Care business.
+Added: For the year ended December 31, 2025, settlement of certain net working capital adjustments made in accordance with the EPA and increased indemnification liabilities reduced the gain from sale of our Kidney Care business.
+Added: For the years ended December 31, 2025 and 2024, SG&A expenses include $ 37 million and $ 261 million, respectively, of separation-related costs incurred in connection with the sale of our Kidney Care business.
For the year ended December 31, 2023, SG&A expenses include $ 196 million and $ 17 million, respectively, of separation-related costs incurred in connection with the sale of our Kidney Care business and the sale of BPS, respectively.
−Removed: The following table summarizes the carrying amounts of the major classes of assets and liabilities classified as discontinued operations in the consolidated balance sheets as of December 31, 2024 and 2023:
+Added: The following table summarizes the carrying amounts of the major classes of assets and liabilities classified as discontinued operations in the consolidated balance sheets as of December 31, 2024:
as of December 31 (in millions) 2024
5 unchanged sentences
Property, plant and equipment, net 1,516
−Removed: Goodwill 265 721
Other intangible assets, net 148
12 unchanged sentences
Liabilities of discontinued operations $ 1,484
−Removed: ACQUISITIONS AND OTHER ARRANGEMENTS
−Removed: Results of operations of acquired businesses are included in our results of operations beginning as of the respective acquisition dates.
−Removed: The purchase price of each acquisition is allocated to the net assets acquired based on estimates of their fair values (or other measurement attribute required under U.S.
−Removed: GAAP) at the date of the acquisition.
−Removed: Any purchase price in excess of these net assets is recorded as goodwill.
−Removed: Contingent consideration related to business combinations is recognized at its estimated fair value on the acquisition date.
−Removed: Subsequent changes to the fair value of those contingent consideration arrangements are recognized in earnings.
−Removed: Contingent consideration related to business acquisitions may consist of development, regulatory and commercial milestone payments, and sales or earnings-based payments, and are valued using discounted cash flow techniques.
−Removed: The fair value of development, regulatory and commercial milestone payments reflects management’s expectations of the probability of payment, and increases or decreases as the probability of payment or expectation of timing or amount of payments changes.
−Removed: The fair value of sales-based payments is based upon probability-weighted future revenue estimates and increases or decreases as revenue estimates or expectation of timing or amount of payments changes.
−Removed: In 2021, we completed our acquisition of all outstanding equity interests of Hillrom for a purchase price of $ 10.48 billion.
−Removed: Hillrom was a global medical technology leader whose products and services help enable earlier diagnosis and treatment, optimize surgical efficiency, and accelerate patient recovery while simplifying clinical communication and shifting care closer to home.
−Removed: Hillrom made those outcomes possible through digital and connected care solutions and collaboration tools, including smart bed systems, patient monitoring and diagnostic
−Removed: technologies, respiratory health devices, advanced equipment for the surgical space and more, delivering actionable, real-time insights at the point of care.
−Removed: Impairment of Goodwill from Our Hillrom Acquisition
−Removed: During 2024, we recorded a $ 425 million goodwill impairment related to our Front Line Care reporting unit within our Healthcare Systems & Technologies segment.
−Removed: Refer to Note 5 for additional information regarding this goodwill impairment.
−Removed: During the third quarter of 2022, we performed trigger-based impairment tests of the goodwill of each of the reporting units within our Hillrom segment (currently referred to as our Healthcare Systems & Technologies segment), as well as the indefinite-lived intangible assets, consisting primarily of trade names, that we
−Removed: acquired in connection with the Hillrom acquisition.
−Removed: We performed those tests as of September 30, 2022 due to (a) macroeconomic conditions, including the rising interest rate environment and broad declines in equity valuations, and (b) reduced earnings forecasts for our Hillrom reporting units, driven primarily by shortages of certain component parts used in our products, raw materials inflation and increased supply chain costs.
−Removed: Those impairment tests resulted in total pre-tax goodwill impairment charges of $ 2.79 billion in the third quarter of 2022.
−Removed: connection with our annual goodwill impairment assessment in the fourth quarter of 2022, we performed quantitative impairment tests for all of our reporting units and recorded an additional $ 27 million goodwill impairment related to our Hillrom segment.
−Removed: No goodwill impairments were recorded for our remaining reporting units in connection with our annual goodwill impairment tests because the fair values of those reporting units exceeded their carrying amounts
−Removed: The fair values of the reporting units tested for impairment during 2022 were determined based on a discounted cash flow model (an income approach) and earnings multiples (a market approach) based on the guideline public company method.
−Removed: Significant assumptions used in the determination of the fair values of our reporting units generally include forecasted cash flows, discount rates, terminal growth rates and earnings multiples.
−Removed: The discounted cash flow models used to determine the fair values of our reporting units during 2022 reflected our most recent cash flow projections, discount rates ranging from 9 % to 10 % and terminal growth rates ranging from 2 % to 3 %.
−Removed: Our reporting unit fair value measurements are classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs.
−Removed: Impairment of Indefinite-Lived Intangible Assets from Our Hillrom Acquisition
−Removed: In addition to the goodwill impairments discussed above, we recognized pre-tax impairment charges of $ 332 million in the third quarter of 2022 to reduce the carrying amounts of certain indefinite-lived intangible assets, which primarily related to the Hillrom and Welch Allyn trade names acquired in the Hillrom acquisition, to their estimated fair values.
−Removed: Those intangible asset impairment charges are classified within cost of sales in the accompanying consolidated statements of income (loss) for the year ended December 31, 2022.
−Removed: The fair values of the trade name intangible assets were determined using the relief from royalty method.
−Removed: Significant assumptions used in the determination of the fair value of the trade name intangible assets included revenue growth rates, terminal growth rates, discount rates and royalty rates.
−Removed: The relief from royalty models used in the determination of the fair values of our trade name intangible assets during 2022 reflected our most recent revenue projections, a discount rate of 9.5 %, royalty rates ranging from 3 % to 5 % and terminal growth rates ranging from 2 % to 3 %.
−Removed: Our trade name intangible asset fair value measurements are classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs.
−Removed: In the fourth quarter of 2022, we recognized an impairment charge of $ 12 million related to developed-technology intangible assets due to declines in market expectations for the related products.
−Removed: The fair values of the intangible assets were measured using a discounted cash flow approach and the charge is classified within cost of sales in the accompanying consolidated statements of income (loss) for the year ended December 31, 2022.
−Removed: We consider the fair values of the assets to be Level 3 measurements due to the significant estimates and assumptions, including forecasted future cash flows, that we used in establishing the estimated fair values.
−Removed: Total consideration transferred for other acquisitions totaled $ 32 million in 2022 and primarily resulted in the recognition of goodwill and other intangible assets.
−Removed: These acquisitions did not materially affect our results of operations.
−Removed: Other Business Development Activities
−Removed: In March 2022, we entered into an agreement with a subsidiary of Pfizer Inc.
−Removed: to acquire the rights to Zosyn, a premixed frozen piperacillin-tazobactam product, in the U.S.
−Removed: Zosyn is used for the treatment of intra-abdominal infections, nosocomial pneumonia, skin and skin structure infections, female pelvic infections and community-acquired pneumonia.
−Removed: Under the terms of the acquisition, we paid the acquisition price of $ 122 million and received specified intellectual property, including patent rights, in the first quarter of 2022 and received additional intellectual property, including the product rights to Zosyn, in the first quarter of 2023.
−Removed: Under the arrangement, we received profit sharing payments from sales of Zosyn until the product rights transferred to us in April 2023.
−Removed: The related profit sharing payments that were earned during 2023 and 2022 were not material.
−Removed: The transaction has been accounted for as an asset acquisition, as substantially all of the fair value of the assets acquired under the arrangement was concentrated in the product rights that we received, which we classify as a developed technology intangible asset.
−Removed: Accordingly, the $ 122 million purchase price was primarily allocated to the developed technology intangible asset class and is being amortized over an estimated useful life of 9 years.
−Removed: Celerity Pharmaceuticals, LLC
−Removed: In September 2013, we entered into an agreement with Celerity Pharmaceuticals, LLC (Celerity) to develop certain acute care generic injectable premix and oncolytic products through regulatory approval.
−Removed: We transferred our rights in these products to Celerity and Celerity assumed ownership and responsibility for development of the products.
−Removed: We were obligated to purchase the individual product rights from Celerity if the products obtained regulatory approval.
−Removed: In December 2020, we entered into an agreement with a third party to divest our rights to one of the products that was being developed by Celerity, a generic version of liposomal doxorubicin, for less than $ 1 million if that product were to receive regulatory approval in the U.S.
−Removed: and European Union in 2022.
−Removed: Liposomal doxorubicin is a chemotherapy medicine used to treat various types of cancer and we entered into this transaction to divest our rights to this generic version of that product after we had separately entered into a transaction to acquire the branded version.
−Removed: The related regulatory approvals were subsequently obtained for the generic version of liposomal doxorubicin and we recognized a loss of approximately $ 54 million in the third quarter of 2022, representing the difference between the amount we owed Celerity following those regulatory approvals and the proceeds that we were entitled to receive from our divestiture of those product rights.
−Removed: That loss is reported within other operating expense (income), net in our consolidated statements of income (loss) for the year ended December 31, 2022.
−Removed: Other Asset Acquisitions
−Removed: During 2021, we also entered into distribution license arrangements for multiple products that have not yet obtained regulatory approval.
−Removed: In addition to the cash paid at acquisition, we could make additional payments of up to $ 17 million upon the achievement of certain development, regulatory or commercial milestones.
−Removed: In addition to the arrangements described above, we have entered into several other collaborative arrangements.
−Removed: We could make additional payments of up to $ 20 million upon the achievement of certain development and regulatory milestones, in addition to future payments related to contingent commercialization milestones, profit-sharing and royalties.
SUPPLEMENTAL FINANCIAL INFORMATION
4 unchanged sentences
Balance at beginning of period $ 71 $ 62 $ 50
−Removed: Charged to costs and expenses 7 7 3
+Added: Charged (released) to costs and expenses ( 6 ) 7 7
Write-offs ( 5 ) ( 8 ) ( 4 )
47 unchanged sentences
Pension and other postretirement benefits 39 39
−Removed: Contingent payments related to acquisitions — 3
Other 784 534
22 unchanged sentences
Change in fair value of marketable equity securities ( 1 ) ( 3 ) ( 7 )
−Removed: Pension settlement and curtailment (gains) losses — — ( 12 )
Pension and other postretirement benefit (gains) losses ( 45 ) ( 39 ) ( 48 )
−Removed: Reclassification of cumulative translation loss to earnings — — 65
+Added: Gain on debt extinguishment ( 16 ) — —
+Added: Equity method investment impairment 9 — —
Non-marketable investment impairments — — 34
1 unchanged sentence
Other (income) expense, net $ ( 41 ) $ ( 38 ) $ 26
−Removed: Following the wind down of our operations in Argentina, we determined that the net assets of the related entities were substantially liquidated during the third quarter of 2022.
−Removed: As a result of that determination, we reclassified their $ 65 million cumulative translation loss from accumulated other comprehensive income (loss) to other (income) expense, net.
Supplemental Cash Flow Information
−Removed: Non-Cash Investing Activities
+Added: Non-Cash Operating and Investing Activities
Purchases of property, plant and equipment included in accounts payable and accrued liabilities as of December 31, 2025, 2024 and 2023 was $ 74 million, $ 64 million and $ 58 million, respectively.
Other Supplemental Information
+Added: As discussed in Note 1, Summary of Significant Accounting Policies, we have elected to prospectively adopt the guidance in ASU 2023-09.
+Added: The following table is a summary of income taxes paid by jurisdiction for the year ended December 31, 2025.
year ended December 31 (in millions) 2025
+Added: United States - federal $ 12
+Added: United States - state and local 12
+Added: Total income taxes paid $ 222
+Added: The following table is a summary of interest paid for the years ended December 31, 2025, 2024 and 2023 and income taxes paid, in accordance with the guidance prior to the adoption of ASU 2023-09, for the years ended December 31, 2024 and 2023.
+Added: years ended December 31 (in millions) 2025 2024 2023
Interest paid, net of portion capitalized $ 303 $ 401 $ 484
2 unchanged sentences
The following is a reconciliation of goodwill by business segment.
−Removed: (in millions) Americas EMEA APAC Medical Products & Therapies Healthcare Systems & Technologies 1
−Removed: Pharmaceuticals Total
+Added: (in millions) Medical Products & Therapies Healthcare Systems & Technologies Pharmaceuticals Total
December 31, 2023 $ 1,241 $ 3,989 $ 563 $ 5,793
+Added: Impairments — ( 425 ) — ( 425 )
Currency translation and other ( 56 ) ( 14 ) ( 23 ) ( 93 )
−Removed: Reallocation of goodwill ( 1,646 ) ( 75 ) ( 16 ) 1,195 — 542 —
December 31, 2024 $ 1,185 $ 3,550 $ 540 $ 5,275
−Removed: Impairment — — — — ( 425 ) — ( 425 )
+Added: Impairments — ( 485 ) — ( 485 )
Currency translation and other 80 22 37 139
December 31, 2025 $ 1,265 $ 3,087 $ 577 $ 4,929
−Removed: 1 Prior to the third quarter of 2023, our Healthcare Systems & Technologies segment was referred to as our Hillrom segment.
−Removed: Change in Reportable Segments
−Removed: Our reportable segments were previously comprised of the following geographic segments related to our legacy Baxter business:
−Removed: Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific), and a global segment for our Hillrom business.
−Removed: In the third quarter of 2023, we completed the implementation of a new operating model intended to simplify and streamline our operations and better align our
−Removed: manufacturing and supply chain to our commercial activities.
−Removed: Our segments were changed during the third quarter of 2023 to align with our new operating model.
−Removed: Under this operating model, our business is comprised of three reportable segments:
−Removed: Medical Products & Therapies, Healthcare Systems & Technologies (formerly referred to as our Hillrom segment) and Pharmaceuticals.
−Removed: As a result of this segment change, we reallocated the goodwill from our previous Americas, EMEA and APAC segments to the reporting units within our Medical Products & Therapies and Pharmaceuticals segments based on the relative fair values of those reporting units.
−Removed: We performed goodwill impairment assessments both before and after the reporting unit change and we did not identify any goodwill impairments.
Goodwill Impairment
In connection with our annual goodwill impairment assessment in the fourth quarter of 2025, we recorded a $ 485 million goodwill impairment related to our Front Line Care reporting unit within our Healthcare Systems & Technologies segment.
−Removed: The reduction in value was primarily due to lower forecasted operating results and a lower terminal growth rate utilized in valuing this reporting unit which contributed to reduced expected future cash flows, as well as lower earnings multiples.
+Added: The reduction in value was primarily due to lower forecasted operating results, a higher discount rate and a lower terminal growth rate utilized in valuing this reporting unit which contributed to reduced expected future cash flows, as well as lower earnings multiples.
The fair value of the Front Line Care reporting unit was determined based on a discounted cash flow model (an income approach) and earnings multiples (a market approach) based on the guideline public company method.
4 unchanged sentences
No goodwill impairments were recorded for our remaining reporting units in connection with our annual goodwill impairment tests because the fair values of those reporting units exceeded their carrying amounts.
+Added: In connection with our annual goodwill impairment assessment in the fourth quarter of 2024, we recorded a $ 425 million goodwill impairment related to our Front Line Care reporting unit within our Healthcare Systems & Technologies segment.
+Added: The reduction in value was primarily due to lower forecasted operating results and a lower terminal growth rate utilized in valuing this reporting unit which contributed to reduced expected future cash flows, as well as lower earnings multiples.
+Added: The fair value of the Front Line Care reporting unit was determined based on a discounted cash flow model (an income approach) and earnings multiples (a market approach) based on the guideline public company method.
+Added: Significant assumptions used in the determination of the fair values of our reporting units generally include revenue growth rates, forecasted EBITDA margins, discount rates, terminal growth rates and earnings multiples.
+Added: The discounted cash flow model used to determine the fair value of our Front Line Care reporting unit reflected our most recent cash flow projections, a discount rate of 9.5 % and a terminal growth rate of 3.25 %.
+Added: Our reporting unit fair value measurements are classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs.
+Added: As of December 31, 2024, the carrying amount of goodwill for our Front Line Care reporting unit was $ 1.99 billion.
+Added: No goodwill impairments were recorded for our remaining
+Added: reporting units in connection with our annual goodwill impairment tests because the fair values of those reporting units exceeded their carrying amounts.
Other Intangible Assets, Net
14 unchanged sentences
The anticipated annual amortization expense for definite-lived intangible assets recorded as of December 31, 2025 is $ 568 million in 2026, $ 417 million in 2027, $ 405 million in 2028, $ 383 million in 2029 and $ 320 million in 2030.
−Removed: During the fourth quarter of 2023, as a result of an update to our long-term branding strategy, we reclassified two trade name intangible assets with carrying amounts of $ 870 million and $ 21 million from indefinite-lived intangible assets to amortizing intangible assets.
−Removed: The estimated useful lives assigned to those assets were 15 years and 5 years, respectively.
−Removed: We performed impairment tests of those intangible assets at the time of the reclassification and determined that no impairment had occurred.
Intangible Asset Impairments
+Added: Impairment of Indefinite-Lived Trade Name
+Added: In connection with our annual trade name impairment assessment in the fourth quarter of 2025, we recognized a pre-tax impairment charge of $ 290 million to reduce the carrying amount of the Welch Allyn trade name within our Healthcare Systems & Technologies segment, an indefinite-lived intangible asset, to its estimated fair value.
+Added: The reduction in value was primarily due to lower forecasted revenues and margins which contributed to a lower royalty rate and reduced expected future cash flows.
+Added: The intangible asset impairment charge is classified within cost of sales in the accompanying consolidated statements of income (loss) for the year ended December 31, 2025.
+Added: The fair value of the trade name intangible asset was determined using the relief from royalty method.
+Added: Significant assumptions used in the determination of the fair value of the trade name intangible assets included revenue growth rates, a discount rate and a royalty rate.
+Added: The relief from royalty model used in the determination of the fair value of our trade name intangible asset during 2025 reflected our most recent revenue projections, a discount rate of 9.0 % and a royalty rate of 3.0 %.
+Added: Our trade name intangible asset fair value measurement is classified as Level 3 in the fair value hierarchy because it involves significant unobservable inputs.
Impairment of Indefinite-Lived Intangible Assets from Our Claris Acquisition
12 unchanged sentences
1.3 % notes due 2025
−Removed: 1.322 % notes due 2024
−Removed: 7.0 % notes due 2024
−Removed: Floating-rate notes due 2024 — % — 300
−Removed: Term loan maturing 2024 — % — 130
−Removed: 1.3 % notes due 2025
−Removed: 1.5 % 625 662
Delayed draw term loan due 2025 — % — 1,826
2.6 % notes due 2026
−Removed: 2.7 % 749 748
Term loan maturing 2027 — % — 1,643
8 unchanged sentences
4.45 % notes due 2029
+Added: 3.95 % notes due 2030
4.1 % 497 497
4.9 % notes due 2030
+Added: 1.73 % notes due 2031
2.7 % 647 646
2 unchanged sentences
5.65 % notes due 2035
+Added: 6.25 % notes due 2037
6.3 % 266 266
14 unchanged sentences
In February 2025, we repaid $ 1.00 billion under our $ 1.64 billion five-year term loan facility maturing in 2026.
+Added: In June 2025, we amended and restated this term loan facility in its entirety (as further described under "Credit Facilities" below).
+Added: In November 2025 we commenced cash tender offers for (i) any and all of our 2.6 % senior unsecured notes due 2026 (the 2026 Notes) and (ii) a portion of our 1.915 % senior unsecured notes due 2027 (the 2027 Notes) in an aggregate purchase price up to $ 600 million.
+Added: The cash tender offers were settled in December 2025.
+Added: In December 2025, we issued $ 300 million of 4.45 % senior notes due in 2029 (the 2029 Notes), $ 700 million of 4.9 % senior notes due in 2030 (the 2030 Notes) and $ 1.00 billion of 5.65 % senior notes due 2035 (the 2035 Notes and together with the 2029 Notes and the 2030 Notes, the Notes).
+Added: The interest rate payable on each series of the Notes will be subject to adjustment from time to time if (1) Moody’s Investors Service, Inc.
+Added: (Moody’s) or Standard & Poor’s Ratings Services (S&P) downgrades (or subsequently upgrades) the debt rating applicable to the Notes of a
+Added: series or (2) Moody’s or S&P ceases to rate the Notes of that series or fails to make a rating of the Notes of that series publicly available for reasons outside of our control, a “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) under the Exchange Act, selected by us as a replacement agency for Moody’s or S&P, downgrades (or subsequently upgrades), or discontinues, a rating of the Notes of that series.
+Added: The indenture governing the Notes contains various covenants, which include limitations on our ability and the ability of certain of our subsidiaries to create, incur, assume or guarantee secured debt and our ability to merge or consolidate with any other entity or sell, transfer or lease all or substantially all of our properties and assets .
+Added: We used the proceeds from the Notes to fund the full repayment of the $ 750 million principal outstanding under the 2026 Notes (inclusive of the cash tender offer and the subsequent satisfaction and discharge with respect to the remaining 2026 Notes), the cash tender offer on the 2027 Notes in an aggregate purchase price of $ 600 million and repaid $ 645 million under the Term Loan Facility (as defined below and which was terminated in connection with this repayment).
+Added: In connection with the completion of these transactions, we recognized a net pre-tax gain of $ 16 million from the early extinguishment of debt, which is included in other (income) expense, net in the consolidated statement of income (loss) for the year ended December 31, 2025.
In 2024, we repaid our $ 13 million 7.0 % notes due 2024, $ 809 million 0.4 % notes due 2024, $ 1.40 billion 1.322 % notes due 2024, $ 300 million floating rate notes due 2024 and $ 130 million three-year term loan facility due 2024.
−Removed: In 2023, we repaid our $ 800 million 0.868 % notes due 2023, our $ 300 million floating rate notes due 2023 and $ 1.54 billion under our $ 2.00 billion three-year term loan facility maturing in 2024.
−Removed: The loss from our early extinguishments of debt in 2023 was not significant.
Credit Facilities
−Removed: On July 17, 2024, we entered into a credit agreement pursuant to which a group of banks provided us with senior unsecured term loans in an aggregate principal amount of up to $ 2.05 billion ("the bridge facility").
+Added: On June 11, 2025, we entered into an amended and restated U.S.
+Added: Dollar-denominated term loan credit facility (the Term Loan Facility), which amended and restated in its entirety our prior term loan credit facility.
+Added: Borrowings under the Term Loan Facility bore interest on the principal amount outstanding at either Term SOFR plus an applicable margin or a “base rate” plus an applicable margin.
+Added: The Term Loan Facility, which has now been terminated, contained various covenants, including a maximum net leverage ratio.
+Added: As discussed above in the Significant Debt Activity section, in December 2025 we repaid the outstanding balance under the Term Loan Facility at which time it was terminated.
+Added: On June 11, 2025, we entered into an amended and restated revolving credit facility (the Multicurrency Revolver), which amended and restated in its entirety our prior U.S.
+Added: Dollar-denominated revolving credit facility and replaced our prior Euro-denominated revolving credit facility.
+Added: Our Multicurrency Revolver has a maximum capacity of $ 2.20 billion and matures in 2030.
+Added: Borrowings under the Multicurrency Revolver in U.S.
+Added: dollars bear interest on the principal amount outstanding at either Term SOFR plus an applicable margin or a “base rate” plus an applicable margin.
+Added: The Multicurrency Revolver contains various covenants, including a maximum net leverage ratio (which ratio was most recently increased for the four fiscal quarters ending December 31, 2025, March 31, 2026, June 30, 2026, and September 30, 2026 pursuant to a November 2025 amendment).
+Added: Costs incurred in connection with the amendments to the Multicurrency Revolver (or its predecessor agreements) were not material.
+Added: Borrowings in Euros are subject to a sublimit of $ 300 million.
+Added: 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.
+Added: There were no borrowings outstanding under the Multicurrency Revolver as of December 31, 2025 or 2024.
+Added: Our commercial paper borrowing arrangements require us to maintain undrawn borrowing capacity under our Multicurrency Revolver for an amount at least equal to our outstanding commercial paper borrowings .
+Added: Based on our covenant calculations as of December 31, 2025, we had capacity to draw approximately $ 1.79 billion under the Multicurrency Revolver.
+Added: On July 17, 2024, we entered into a credit agreement pursuant to which a group of banks provided us with senior unsecured term loans in an aggregate principal amount of up to $ 2.05 billion ("bridge facility").
Borrowings under the bridge facility were available in up to three drawings to fund (a) the refinancing of our 1.322 % Senior Notes due November 29, 2024, our Floating Rate Notes due November 29, 2024, and certain borrowings under our existing term loan facility and (b) payment of certain U.S.
3 unchanged sentences
The banks' funding commitments under the bridge facility terminated on December 31, 2024.
−Removed: Outstanding borrowings under the bridge facility were scheduled to mature on the earlier of 364 days from the first funding date and November 24, 2025.
−Removed: 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.
−Removed: The bridge facility contained financial and other covenants, including a net leverage covenant, and provided for customary events of default.
In November 2024, we reduced the bridge facility capacity from $ 2.05 billion to $ 1.83 billion.
Additionally, during the fourth quarter of 2025 we drew on the bridge facility to repay our 1.322% Senior Notes due November 29, 2024, our Floating Rate Notes due November 29, 2024 and the outstanding balance on our three-year term loan facility.
−Removed: There was $ 1.83 billion outstanding under this bridge facility as of December 31, 2024.
+Added: There was $ 1.83 billion outstanding under this bridge
+Added: 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.
−Removed: In the first quarter of 2024, we amended the credit agreements governing our U.S.
−Removed: dollar-denominated term loan credit facility and revolving credit facility and the guaranty agreement with respect to our Euro-denominated revolving credit facility to increase the maximum net leverage ratio covenant for the six fiscal quarters ending June 30, 2024, September 30, 2024, December 31, 2024, March 31, 2025, June 30, 2025, and September 30, 2025.
−Removed: In accordance with the terms of the amendment, the capacity under our U.S dollar-denominated revolving credit facility was reduced from $ 2.50 billion to $ 2.00 billion on September 30, 2024.
−Removed: As of December 31, 2024, we were in compliance with the financial covenants in these agreements.
−Removed: Costs incurred in connection with the amendment were not material.
−Removed: In the first quarter of 2023, we previously amended the credit agreements governing our U.S.
−Removed: Dollar-denominated term loan credit facility and revolving credit facility and the guaranty agreement with respect to our Euro-denominated revolving credit facility, in each case to amend the net leverage ratio covenant to increase the maximum net leverage ratio for the four fiscal quarters ending March 31, 2023, June 30, 2023, September 30, 2023 and December 31, 2023.
−Removed: As of December 31, 2024, we had a U.S.
−Removed: Dollar-denominated term loan credit facility, which had one tranche of term loans outstanding, a U.S.
−Removed: Dollar-denominated revolving credit facility and a Euro-denominated revolving credit facility.
−Removed: Borrowings under the term loan credit facility bear interest on the principal amount outstanding at either Term SOFR plus an applicable margin plus a credit spread adjustment or a “base rate” plus an applicable margin.
−Removed: The term loan credit facility contains various covenants, including a maximum net leverage ratio.
−Removed: We have the option to prepay outstanding amounts under the term loan credit facility in whole or in part at any time.
−Removed: In addition to our U.S.
−Removed: dollar-denominated revolving credit facility with a current capacity of $ 2.00 billion, our Euro-denominated revolving credit facility has a capacity of € 200 million.
−Removed: Fees under the credit facilities are 0.125 % annually as of December 31, 2024 and 2023, and are based on our credit ratings and the total capacity of the facility.
−Removed: There were no borrowings outstanding under these credit facilities as of December 31, 2024 or 2023.
−Removed: 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.
−Removed: Each of the revolving credit facilities is scheduled to mature in 2026.
−Removed: The revolving credit facilities enable us to borrow funds on an unsecured basis at variable interest rates and contain various covenants, including a maximum net leverage ratio.
−Removed: Based on our covenant calculations as of December 31, 2024 we have capacity to draw on the full amounts under our revolving credit facilities, less commercial paper borrowings which were $ 300 million at year-end.
We also maintain other credit arrangements, which totaled approximately $ 385 million and $ 412 million as of December 31, 2025 and 2024, respectively.
−Removed: The increase over the prior year is due to additional credit arrangements entered into in preparation for the sale of our Kidney Care business.
There were no amounts outstanding under these arrangements as of December 31, 2025 and 2024.
−Removed: As of December 31, 2024, we were in compliance with the financial covenants in these agreements.
−Removed: The non-performance of any financial institution supporting any of the credit facilities would reduce the maximum capacity of these facilities by each institution’s respective commitment.
+Added: As of December 31, 2025, we were in compliance with the financial covenants in the Multicurrency Revolver.
+Added: The non-performance of any financial institution supporting any of the credit facilities would reduce the maximum capacity of these facilities by such institution’s respective commitment.
Commercial Paper
−Removed: 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.
There was no commercial paper outstanding as of December 31, 2025.
−Removed: In 2025, we repaid the $ 300 million balance outstanding as of December 31, 2024.
−Removed: Future Debt and Finance Lease Maturities
+Added: 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.
+Added: In the first quarter of 2025, we repaid the $ 300 million balance outstanding as of December 31, 2024.
+Added: Future Debt Maturities
as of and for the years ended December 31 (in millions) Debt maturities
Thereafter 4,931
−Removed: Total debt and finance lease maturities 13,180
+Added: Total debt maturities 1
Discounts, premiums, and adjustments relating to hedging instruments ( 56 )
−Removed: Total debt and finance lease obligations $ 13,126
+Added: Total debt obligations 1
+Added: 1 Excludes finance leases and other of $ 38 million as of December 31, 2025.
Lessee Activity
We have entered into operating and finance leases primarily for office, manufacturing, warehouse and R&D facilities, vehicles and equipment.
−Removed: Our leases have remaining terms from 1 to 38 years and some of those leases include options that provide us with the ability to extend the lease term for periods ranging from 1 to 10 years.
+Added: Our leases have remaining terms from one to 37 years and some of those leases include options that provide us with the ability to extend the lease term for periods ranging from one to 10 years.
Such options are included in the lease term when it is reasonably certain that the option will be exercised.
56 unchanged sentences
Lessor Activity
−Removed: We lease medical equipment, such as smart beds and infusion pumps, to customers, often in conjunction with arrangements to provide consumable medical products such as intravenous (IV) fluids and inhaled anesthetics.
+Added: We lease medical equipment, such as smart beds and infusion pumps, to customers, often in conjunction with arrangements to provide consumable medical products such as IV fluids and inhaled anesthetics.
Certain of our equipment leases are classified as sales-type leases and the remainder are operating leases.
24 unchanged sentences
Total minimum lease payments $ 32 $ 28
−Removed: 1 Unamortized imputed interest on minimum lease payments was less than $ 1 million as of December 31, 2024 .
+Added: 1 Unamortized imputed interest on minimum lease payments was $ 2 million as of December 31, 2025 .
COMMITMENTS AND CONTINGENCIES
−Removed: Refer to Note 3 for information regarding contingent payments associated with collaborative and other arrangements.
+Added: Refer to Note 2 for information regarding contingent payments related to Vantive, recorded in accordance with the EPA.
Indemnifications
10 unchanged sentences
Based on historical experience and evaluation of the agreements, we do not believe that any payments related to our indemnities will have a material impact on our financial condition or results of operations.
+Added: In accordance with the EPA, we have agreed to indemnify Vantive for certain items.
+Added: Refer to Note 2 for additional information regarding these indemnifications.
Legal Contingencies
3 unchanged sentences
If a loss is not probable or a probable loss cannot be reasonably estimated, no liability is recorded.
+Added: We regularly review legal contingencies to
+Added: determine whether our accruals and related disclosures are adequate.
+Added: The amount of ultimate loss may differ from these estimates and could have a material adverse effect on our results of operations and cash flows.
As of December 31, 2025 and 2024, our total recorded reserves with respect to legal and environmental matters were $ 47 million and $ 40 million, respectively.
We have established reserves for certain of the matters discussed below.
−Removed: We are not able to estimate the amount or range of any loss for certain contingencies for which there is no reserve or additional loss for matters already reserved.
−Removed: While our liability in connection with these claims cannot be estimated and the resolution thereof in any reporting period could have a significant impact on our results of operations and cash flows for that period, the outcome of these legal proceedings is not expected to have a material adverse effect on our consolidated financial position.
While we believe that we have valid defenses in the matters set forth below, litigation is inherently uncertain, excessive verdicts do occur, and we may incur material judgments or enter into material settlements of claims.
In addition to the matters described below, we remain subject to the risk of future administrative and legal actions.
−Removed: 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.
+Added: 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.
+Added: Novum IQ Large Volume Pump (Novum LVP)
+Added: Beginning in April 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.
+Added: Beginning 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.
+Added: Food and Drug Administration (FDA) classified these voluntary corrections as Class I recalls.
+Added: We have implemented certain corrections related to the recalls, and are developing additional corrections related to these recalls, some of which may require regulatory clearance or approval.
+Added: In July 2025, we elected to temporarily stop distributing and installing the Novum LVP in the U.S.
+Added: and Canada, except in the case of medical necessity.
+Added: We have recorded estimates for sales reductions, for returns or exchanges of Novum LVP, and certain other charges, including estimates of reserves for remediation costs and inventory and contract asset write-downs associated with these Novum LVP corrections of approximately $ 105 million in the aggregate in 2025.
+Added: We regularly review these estimates (including those associated with any future additional corrections and customer returns or exchanges) which may be subject to change in the future.
Environmental
We are involved as a potentially responsible party (PRP) for environmental clean-up costs at six Superfund sites.
−Removed: Additionally, we are a defendant in a separate matter regarding a seventh Superfund site.
+Added: 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.
−Removed: As of December 31, 2024 and 2023, our environmental reserves, which are measured on an undiscounted basis, were $ 29 million and $ 15 million, respectively.
+Added: As of December 31, 2025 and 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.
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.
−Removed: On December 16, 2022, we filed a motion to dismiss and for a more definite statement.
−Removed: In response, Plaintiffs filed a First Amended Complaint on January 6, 2023.
−Removed: 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.
−Removed: Since December 2023, 41 lawsuits (after giving effect to the amendment referenced below) have been filed against us in the Circuit Court of Cook County, Illinois by plaintiffs alleging injuries as a result of exposure to ethylene oxide used by several companies, including historic use by us for sterilization at our facility in Round Lake, Illinois.
+Added: 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
+Added: 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.
−Removed: 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.
−Removed: The motion was denied on July 25, 2024, without prejudice to refiling multiple motions each addressing smaller groupings of cases and defendants.
−Removed: On September 11, 2024, the court granted leave to amend one previously-filed complaint to add Baxter as a defendant.
+Added: 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.
+Added: Thirty-eight complaints are currently filed and pending.
+Added: The parties have reached an agreement in principle to resolve the remaining filed cases, for an amount not material to Baxter.
We acquired Hillrom on December 13, 2021.
3 unchanged sentences
Hillrom voluntarily began a related internal review, and Hillrom and Baxter cooperated fully with the DHHS and the Department of Justice (DOJ) with respect to this matter.
−Removed: January 2024, the parties reached an agreement to settle the allegations.
+Added: In January 2024, the parties reached an agreement to settle the allegations.
We paid the settlement amounts, which were not material to our financial results, in January 2024 and the matter was dismissed in February 2024.
13 unchanged sentences
Hillrom filed an answer to the complaint on January 28, 2022 and filed a motion challenging certain aspects of plaintiff's case on May 27, 2022, which was denied on January 17, 2024, subject to further discovery.
+Added: Fact discovery is ongoing.
On June 20, 2024, Reading Hospital filed a putative class action complaint against Hill-Rom Holdings, Inc., Hill-Rom Company, Inc., and Hill-Rom Services, Inc.
4 unchanged sentences
On November 8, 2024, Hillrom filed a Motion to Dismiss Plaintiff's Amended Complaint.
−Removed: Briefing was completed in January 2025 and the motion is pending before the court.
+Added: Briefing was completed in January 2025, and the court held a hearing on the motion on March 25, 2025.
+Added: The court granted the motion and dismissed the case with prejudice on September 12, 2025.
+Added: Reading Hospital filed a Notice of Appeal of the dismissal on October 9, 2025, and briefing is underway.
+Added: 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.
+Added: Baxter International Inc.
+Added: that was filed in the United States District Court for the Northern District of Illinois.
+Added: 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.
+Added: 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.
+Added: On December 3, 2025, an additional class action complaint was filed against us and certain of our current and former officers and employees in the United States District Court for the Northern District of Illinois, captioned City of Hallansdale Beach Police Officers' and Firefighters' Personnel Retirement Trust v.
+Added: Baxter International Inc., et al.
+Added: The additional complaint included substantially the same allegations for the expanded period from February 23, 2022, through October 29, 2025.
+Added: Plaintiffs filed their respective motions to be appointed lead plaintiff on December 15, 2025.
+Added: Those motions are pending before the court.
+Added: In November 2025, certain of our current and former directors, officers and employees were named in two derivative complaints in the United States District Court for the Northern District of Illinois, captioned Ryan Wood v.
+Added: Almeida, et al.
+Added: and Kevin Gray v.
+Added: Almeida, et al., respectively.
+Added: Both complaints allege, nominally on behalf of Baxter International, Inc., breaches of fiduciary duties and violations of federal law in connection with public statements about Novum LVP.
+Added: The two derivative complaints were consolidated before the court on January 6, 2026.
+Added: In addition, we have received stockholder requests for inspections of our books and records in connection with statements made about Novum LVP.
+Added: In December 2025, we received a CID from the DOJ requesting documents and information related to production of Baxter’s IV flexible containers and compliance with the False Claims Act.
+Added: We are cooperating fully with the DOJ in responding to the CID.
STOCKHOLDERS' EQUITY
6 unchanged sentences
The related tax benefit recognized was $ 13 million in 2025, $ 8 million in 2024 and $ 10 million in 2023.
−Removed: Included in the benefit in 2024 and 2023 was tax expense for stock-based compensation shortfalls of $ 9 million and $ 11 million, respectively.
−Removed: Included in the benefit in 2022 were realized excess tax benefits for stock-based compensation $ 5 million.
+Added: Included in the benefit in 2025, 2024 and 2023 was tax expense for stock-based compensation shortfalls of $ 10 million, $ 9 million and $ 11 million, respectively.
Approximately 75 % of stock compensation expense is classified in SG&A expenses, with the remainder classified in cost of sales and R&D expenses.
2 unchanged sentences
Stock Options
−Removed: Stock options are granted to employees and non-employee directors with exercise prices equal to 100 % of the market value on the date of grant.
+Added: Stock options are granted to employees with exercise prices equal to 100 % of the market value on the date of grant.
Stock options granted to employees generally vest in one-third increments over a three-year period.
−Removed: Stock options granted to non-employee directors generally vest immediately on the grant date and are issued with a six-month claw-back provision.
+Added: Stock options granted to non-employee directors prior to 2023 generally vested immediately on the grant date and are issued with a six-month claw-back provision.
Stock options typically have a contractual term of 10 years .
8 unchanged sentences
Fair value per stock option $ 9 $ 9
+Added: The expected volatility assumption required in the Black-Scholes model was calculated principally based on our historical volatility, and to a lesser extent, on implied volatility from options trading on our stock.
+Added: The historical volatility was calculated over a period of time commensurate with the expected term of the options being valued.
+Added: There were no options granted for the year ended December 31, 2024.
The following table summarizes stock option activity for the year ended December 31, 2025 and the outstanding stock options as of December 31, 2025.
3 unchanged sentences
Outstanding as of January 1, 2025
+Added: 17,381 $ 60.15
Granted 1,251 $ 31.25
6 unchanged sentences
The aggregate intrinsic value in the table above represents the difference between the exercise price and our closing stock price on the last trading day of the year.
−Removed: The total intrinsic value of options exercised in 2024, 2023 and 2022 was $ 1 million, $ 5 million and $ 37 million, respectively.
+Added: There were no options exercised in 2025.
+Added: The total intrinsic value of options exercised in 2024 and 2023 was $ 1 million and $ 5 million, respectively.
As of December 31, 2025, $ 10 million of unrecognized compensation cost related to stock options is expected to be recognized as expense over a weighted-average period of approximately 2.0 years.
7 unchanged sentences
Nonvested RSUs as of January 1, 2025
+Added: 6,940 $ 43.94
Granted 4,198 $ 32.63
6 unchanged sentences
Our annual equity awards stock compensation program for senior management includes the issuance of PSUs.
−Removed: PSUs awarded in 2024 (which grants were made solely to the CEO and Chief Financial Officer) were based on our stock performance relative to our peer group over the 3-year performance period.
−Removed: PSUs awarded in 2020 through 2023 were based on our compound annual sales growth rate (CAGR) performance, our adjusted return on invested capital (ROIC) performance and on our stock performance relative to our peer group.
+Added: PSUs awarded in 2025 were based on our compound annual sales growth rate (CAGR) performance and our adjusted return on invested capital (ROIC) and are modified by a multiplicative modifier based on our stock performance relative to our peer group over the 3-year performance period.
+Added: PSUs awarded in 2024 (which grants were made solely to our former CEO and to our current Chief Financial Officer) were based on our stock performance relative to our peer group over the 3-year performance period.
+Added: PSUs awarded in 2021 through 2023 were based on our CAGR performance, our ROIC performance and on our stock performance relative to our peer group.
The vesting condition for these CAGR and ROIC PSUs was set at the beginning of the 3-year performance period.
1 unchanged sentence
The compensation cost for CAGR and adjusted ROIC PSUs is adjusted at each reporting date to reflect the estimated vesting outcome.
−Removed: The fair value for PSUs based on our stock performance relative to our peer group is determined using a Monte Carlo model.
+Added: The fair value for PSUs based on our CAGR and ROIC and awarded in 2025 is modified by a multiplicative modifier based on our stock performance relative to our peer group and the fair value of other PSUs based on our stock performance relative to our peer group (including those awarded in 2021, 2022, 2023 or 2024) is determined using a Monte Carlo model.
The assumptions used in estimating the fair value of these PSUs granted during the period, along with the grant-date fair values, were as follows:
9 unchanged sentences
Granted 1,012 $ 31.72
−Removed: Vested ( 73 ) $ 77.35
Forfeited ( 350 ) $ 35.59
4 unchanged sentences
The employee purchase price is 85 % of the closing market price on the purchase date.
−Removed: As of December 31, 2024, approximately 8 million shares of common stock were available for issuance to eligible participants.
−Removed: During each of the years ended December 31, 2024 and 2023 we issued approximately 1.4 million shares and during the year ended December 31, 2022, we issued approximately 0.9 million shares under the employee stock purchase plan.
+Added: As of December 31, 2025, approximately six million shares of common stock were available for issuance to eligible participants.
+Added: During the year ended December 31, 2025, we issued approximately 1.3 million shares and during each of the years ended December 31, 2024 and 2023, we issued approximately 1.4 million shares under the employee stock purchase plan.
Cash Dividends
6 unchanged sentences
We did not repurchase any shares under this authority in 2025 or 2024.
−Removed: We repurchased 0.5 million shares under this authority pursuant to Rule 10b5-1 plans for $ 32 million in cash in 2022.
We had $ 1.30 billion of repurchase authority available as of December 31, 2025.
2 unchanged sentences
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
−Removed: Comprehensive income (loss) includes all changes in stockholders’ equity that do not arise from transactions with stockholders, and consists of net income (loss), CTA, certain gains and losses from pension and other postretirement employee benefit (OPEB) plans, certain gains and losses from hedging activities and unrealized gains and losses on available-for-sale debt securities.
+Added: Comprehensive income (loss) represents net earnings plus items that are recorded directly to shareholders' equity, such as CTA, certain gains and losses from pension and other postretirement employee benefit (OPEB) plans, certain gains and losses from hedging activities and unrealized gains and losses on available-for-sale debt securities.
The following table is a net-of-tax summary of the changes in AOCI by component for the years ended December 31, 2025, 2024, and 2023.
28 unchanged sentences
in income statement
−Removed: Reclassification of cumulative translation loss to earnings $ — $ — $ ( 65 ) Other (income) expense, net
+Added: Reclassification of cumulative translation loss to earnings from Kidney Care separation $ ( 126 ) $ — $ — Income (loss) from discontinued operations, net of tax
Reclassification of cumulative translation loss to earnings from BPS divestiture — — ( 185 ) Income (loss) from discontinued operations, net of tax
5 unchanged sentences
Settlement charges — — ( 2 ) Other (income) expense, net
+Added: Pension settlement from Kidney Care separation 14 — — Income (loss) from discontinued operations, net of tax
Pension settlement from BPS divestiture — — 4 Income (loss) from discontinued operations, net of tax
1 unchanged sentence
Tax effect ( 2 ) ( 2 ) ( 5 ) Income tax expense (benefit)
+Added: Tax effect on pension settlement from Kidney Care separation ( 3 ) — — Income tax expense (benefit)
$ 20 $ 4 $ 15 Net of tax
8 unchanged sentences
(a) Amounts in parentheses indicate reductions to net income.
−Removed: Refer to Note 4 for additional information regarding the reclassification of a cumulative translation loss to earnings, Note 13 for additional information regarding the amortization of pension and OPEB items and Note 16 for additional information regarding hedging activity.
+Added: Refer to Note 12 for additional information regarding the amortization of pension and OPEB items and Note 15 for additional information regarding hedging activity.
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 consolidated balance sheets.
−Removed: Net trade accounts receivable was $ 1.54 billion as of December 31, 2024 and 2023.
+Added: Net trade accounts receivable was $ 1.70 billion and 1.54 billion as of December 31, 2025 and 2024, respectively.
For contract manufacturing arrangements, revenue is primarily recognized throughout the production cycle, which typically lasts up to 90 days, resulting in the recognition of contract assets until the related services are completed and the customers are billed.
Additionally, for certain arrangements containing a performance obligation to deliver software that can be used with medical devices, we recognize revenue upon delivery of the software, which results in the recognition of contract assets when customers are billed over time, generally over one to five years .
−Removed: bundled contracts involving equipment delivered up-front and consumable medical products to be delivered over time, total contract revenue is allocated between the equipment and consumable medical products.
+Added: For bundled contracts involving equipment delivered up-front and consumable medical products to be delivered over time, total contract revenue is allocated between the equipment and consumable medical products.
In certain of those arrangements, a contract asset is created for the difference between the amount of equipment revenue recognized upon delivery and the amount of consideration initially receivable from the customer.
8 unchanged sentences
Such remaining performance obligations represent the portion of the contract price for which work has not been performed and are primarily related to our installation and service contracts.
−Removed: 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.
+Added: We expect to satisfy the majority of the remaining performance
+Added: 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 years ended December 31, 2025 and 2024.
19 unchanged sentences
BUSINESS OPTIMIZATION CHARGES
−Removed: In recent years, we have undertaken actions to transform our cost structure and enhance operational efficiency.
−Removed: These efforts include restructuring the organization, optimizing the manufacturing footprint, R&D operations and supply chain network, employing disciplined cost management and centralizing and streamlining certain support functions.
+Added: We are continuing to undertake actions to transform our cost structure and enhance operational efficiency.
+Added: In recent years, these efforts have included 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, some of which are still ongoing.
We currently expect to incur additional pre-tax cash costs, primarily related to the implementation of business optimization programs, of approximately $ 2 million through the completion of initiatives that are currently underway.
−Removed: We continue to pursue cost savings initiatives, including those intended to mitigate a portion of the dis-synergies expected to arise 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.
+Added: 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 we expect to incur additional restructuring charges and costs in future periods to implement business optimization programs.
For segment reporting, business optimization charges are unallocated expenses.
23 unchanged sentences
Total restructuring charges $ 30 $ 101 $ 10 $ 141
−Removed: For the year ended December 31, 2024, $ 45 million of the restructuring charges reflected above, consisting of employee termination costs, were related to initiatives to reduce our cost structure following the sale of our Kidney Care segment.
+Added: For the year ended December 31, 2025, $ 100 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.
+Added: For the year ended December 31, 2025, $ 28 million of the restructuring charges reflected in the table above, consisting of $ 14 million of asset impairment charges, $ 9 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.
+Added: For the year ended December 31, 2024, $ 45 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 year ended December 31, 2024, $ 46 million of the restructuring charges reflected in the table above were related to business optimization initiatives within our Healthcare Systems & Technologies segment.
1 unchanged sentence
Additionally, these charges included $ 14 million of employee termination costs related to other business optimization initiatives within this segment.
−Removed: For the year ended December 31, 2023, $ 81 million of the restructuring charges reflected above, consisting of employee termination costs, were related to the implementation of our new operating model intended to streamline our operations.
−Removed: For the year ended December 31, 2022, $ 85 million restructuring charges reflected in the table above were related to integration activities for the Hillrom acquisition, consisting of $ 55 million of employee termination costs, $ 22 million of contract terminations and other costs and $ 8 million of asset impairments.
+Added: For the year ended December 31, 2023, $ 81 million of the restructuring charges reflected in the table above, consisting of employee termination costs, were related to the implementation of our new operating model intended to streamline our operations.
The following table summarizes activity in the liability related to our restructuring initiatives.
7 unchanged sentences
Reserve adjustments ( 9 )
−Removed: Currency translation ( 13 )
Liability balance as of December 31, 2024 122
22 unchanged sentences
Settlements ( 5 ) ( 8 ) — —
−Removed: Acquisitions — 2 — —
+Added: Curtailment ( 2 ) — — —
Plan Amendments — — — ( 2 )
17 unchanged sentences
Actuarial gains and losses result from changes in actuarial assumptions (such as changes in the discount rate and revised mortality rates).
−Removed: Actuarial gains in 2024 and losses in 2023 related to plan benefit obligations were primarily the result of changes in discount rates.
+Added: Actuarial losses in 2025 and gains in 2024 related to plan benefit obligations were primarily the result of changes in discount rates.
The pension obligation information in the table above represents the projected benefit obligation (PBO).
35 unchanged sentences
$ ( 20 ) $ ( 15 ) $ ( 103 )
−Removed: Amortization of gain (loss) to earnings, net of tax of zero in 2024, $( 5 ) in 2023 and $ 6 in 2022
−Removed: Settlement charges, net of tax of zero in 2024, $( 1 ) in 2023 and zero 2022
+Added: Amortization of gain (loss) to earnings, net of tax of $( 3 ) in 2025, zero in 2024 and $( 5 ) in 2023
+Added: ( 8 ) ( 4 ) 13
+Added: Settlement charges, net of tax of zero in 2025 and 2024 and $( 1 ) 2023
Pension and other employee benefits $ ( 28 ) $ ( 19 ) $ ( 92 )
10 unchanged sentences
Net periodic pension benefit cost $ ( 22 ) $ ( 17 ) $ ( 12 )
−Removed: Service cost $ — $ — $ 1
Interest cost $ 7 $ 8 $ 8
36 unchanged sentences
The investment committee, which meets at least quarterly, abides by documented policies and procedures relating to investment goals, targeted asset allocations, risk management practices, allowable and prohibited investment holdings, diversification, use of derivatives, the relationship between plan assets and benefit obligations, and other relevant factors and considerations.
−Removed: The investment committee’s policies and procedures include the following:
−Removed: • Ability to pay all benefits when due;
−Removed: • Targeted long-term performance expectations relative to applicable market indices, such as Russell, MSCI EAFE, and other indices;
−Removed: • Targeted asset allocation percentage ranges (summarized below), and periodic reviews of these allocations;
−Removed: • Diversification of assets among third-party investment managers, and by geography, industry, stage of business cycle and other measures;
−Removed: • Specified investment holding and transaction prohibitions (for example, private placements or other restricted securities, securities that are not traded in a sufficiently active market, short sales, certain derivatives, commodities and margin transactions);
−Removed: • Specified portfolio percentage limits on holdings in a single corporate or other entity (generally 5 % at time of purchase, except for holdings in U.S.
−Removed: government or agency securities);
−Removed: • Specified average credit quality for the fixed-income securities portfolio (at least A- by Standard & Poor’s or A3 by Moody’s);
−Removed: • Specified portfolio percentage limits on foreign holdings;
−Removed: • Periodic monitoring of investment manager performance and adherence to the investment committee’s policies.
−Removed: Plan assets are invested using a total return investment approach whereby a mix of equity securities, debt securities and other investments are used to preserve asset values, diversify risk and exceed the planned benchmark
−Removed: investment return.
+Added: The investment committee utilizes an Outsourced Chief Investment Officer model where investment decisions are outsourced to investment consultants, for our U.S.
+Added: and Puerto Rico Plans, who in turn become co-fiduciaries with the investment committee.
+Added: Plan assets are invested using a total return investment approach whereby a mix of equity securities, debt securities and other investments are used to preserve asset values, diversify risk and exceed the planned benchmark investment return.
Investment strategies and asset allocations are based on consideration of plan liabilities, the plans’ funded status and other factors, such as the plans’ demographics and liability durations.
−Removed: Investment performance is reviewed by the investment committee on a quarterly basis and asset allocations are reviewed at least annually.
+Added: Investment performance is reviewed by the investment committee on a quarterly basis and asset allocations are reviewed on a periodic basis.
Plan assets are managed in a balanced portfolio comprised of two major components:
23 unchanged sentences
Equity securities
−Removed: Common stock 353 353 — — —
Mutual funds 743 222 521 — —
25 unchanged sentences
Balance at December 31, 2023 $ 155
+Added: Unrealized gains (losses) ( 24 )
Balance at December 31, 2024 127
1 unchanged sentence
Balance at December 31, 2025 $ 132
−Removed: 1 Purchases in 2023 included $ 148 million for an insurance contract buy-in related to our pension plan in the United Kingdom.
The assets and liabilities of our pension plans are valued using the following valuation methods:
1 unchanged sentence
Cash equivalents These largely consist of a short-term investment fund, U.S.
−Removed: Dollars and foreign currency.
+Added: dollars and foreign currencies.
The fair value of the short-term investment fund is based on the net asset value.
1 unchanged sentence
Corporate bonds Values are based on reputable pricing vendors, who typically use pricing matrices or models that use observable inputs.
−Removed: Common stock Values are based on the closing prices on the valuation date in an active market on national and international stock exchanges.
Mutual funds Values are based on the net asset value of the units held in the respective fund which are obtained from national and international exchanges or based on the net asset value of the underlying assets of the fund provided by the fund manager.
17 unchanged sentences
Funded status percentage 89 % n/a 93 % n/a 84 %
−Removed: Pension Plan Amendments
−Removed: In May 2022, we announced that the pay and service amounts used to calculate pension benefits for active non-bargaining participants in our U.S.
−Removed: Hillrom pension plan would freeze as of December 31, 2022.
−Removed: Years of additional service earned and eligible compensation received after December 31, 2022 will not be included in the determination of the benefits payable to those participants.
−Removed: This change resulted in an $ 11 million decline in the
−Removed: projected benefit obligation (PBO) with an offsetting curtailment gain included within other (income) expense, net on the consolidated statements of income (loss) for the year ended December 31, 2022.
Defined Contribution Plan
4 unchanged sentences
United States $ ( 1,345 ) $ ( 1,499 ) $ ( 1,057 )
−Removed: International 1,210 1,299 610
+Added: Foreign 840 1,210 1,299
Income (loss) from continuing operations before income taxes $ ( 505 ) $ ( 289 ) $ 242
4 unchanged sentences
State and local 29 21 9
−Removed: International 259 307 116
+Added: Foreign 171 259 307
Current income tax expense (benefit) 318 299 317
2 unchanged sentences
State and local 37 ( 21 ) ( 25 )
−Removed: International ( 44 ) ( 108 ) 53
+Added: Foreign 74 ( 44 ) ( 108 )
Deferred income tax expense (benefit) 77 ( 262 ) ( 256 )
Income tax expense (benefit) $ 395 $ 37 $ 61
+Added: 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.
+Added: international tax framework.
+Added: The legislation has multiple effective dates, with certain provisions effective in 2025 and others to be implemented through 2027.
+Added: The impact of the OBBBA legislation on our income tax expense for the year ending December 31, 2025 was not material.
+Added: We will continue to monitor regulatory guidance and interpretations as they are issued.
Deferred Tax Assets and Liabilities
9 unchanged sentences
Deferred tax liabilities
−Removed: Subsidiaries’ unremitted earnings 21 81
+Added: Unremitted earnings of subsidiaries 33 21
Long-lived assets and other 536 632
7 unchanged sentences
federal and state operating loss and tax credit carryforwards expire between 2026 and 2045, with $ 13 million of the operating loss carryforwards having no expiration date.
−Removed: At December 31, 2024, with respect to our operations outside the U.S., we had foreign operating loss carryforwards totaling $ 74 million and foreign tax credit carryforwards totaling $ 14 million.
−Removed: The foreign operating loss carryforwards expire between 2025 and 2041 with $ 50 million having no expiration date.
−Removed: A ll of the foreign tax credit carryforwards have no expiration date.
+Added: At December 31, 2025, with respect to our operations outside the U.S., we had operating loss carryforwards totaling $ 69 million and tax credit carryforwards totaling $ 16 million.
+Added: operating loss carryforwards expire between 2026 and 2044 with $ 47 million having no expiration date.
+Added: A ll of the non-U.S.
+Added: tax credit carryforwards have no expiration date.
Realization of the U.S.
and foreign operating loss and tax credit carryforwards depends on generating sufficient future earnings.
−Removed: A valuation allowance of $ 536 million and $ 584 million was recognized as of December 31, 2024 and 2023, respectively, to reduce the deferred tax assets associated with net operating loss and tax credit carryforwards because we do not believe it is more likely than not that these assets will be fully realized prior to expiration.
−Removed: After evaluating relevant U.S.
−Removed: tax laws, any elections or other opportunities that may be available and the future expiration of certain U.S.
−Removed: tax provisions that will impact the utilization of our U.S.
−Removed: foreign tax credit carryforwards, management expects to be able to realize some, but not all, of the U.S.
−Removed: foreign tax credit deferred tax assets up to its recurring and non-recurring foreign inclusions.
−Removed: Therefore, a valuation allowance of $ 131 million and $ 130 million was recognized with respect to the foreign tax credit carryforwards as of December 31, 2024 and 2023, respectively.
−Removed: We will continue to evaluate the need for additional valuation allowances and, as circumstances change, the valuation allowance may change.
−Removed: As a result of Swiss tax reform legislation enacted during 2019, we recognized an $ 863 million net asset tax basis step-up that is amortizable as a tax deduction ratably over tax years 2025 through 2029.
−Removed: A deferred tax asset of $ 92 million and $ 157 million for the tax basis step-up was recognized as of December 31, 2024 and 2023, respectively.
−Removed: We expect to realize some, but not all, of the Swiss deferred tax assets for that tax basis step-up based on expected future earnings generated by our Swiss subsidiary during the period in which the tax basis will be amortized.
−Removed: Therefore, a valuation allowance of $ 42 million and $ 90 million was recognized on the Swiss deferred tax assets for the tax basis step-up as of December 31, 2024 and 2023, respectively.
−Removed: For the year ended December 31, 2024, we recorded an adjustment to the tax rate originally applied to the Swiss net asset tax basis step-up, and as a result recorded a net tax expense of $ 25 million to decrease the deferred tax asset by $ 59 million and the related valuation allowance by $ 34 million as of December 31, 2024.
−Removed: We evaluated the impact on prior periods and determined the impact was immaterial.
+Added: During 2025, because of a cumulative history of operating losses in the U.S., we recorded a valuation allowance against our U.S.
+Added: deferred tax assets, including certain federal and state tax attributes such as foreign tax credits.
+Added: Additionally, we recorded additional valuation allowance against deferred tax assets in Switzerland related to the tax basis step-up we received in connection with the 2019 Swiss tax reform.
+Added: We also determined that certain tax losses in Malta would not be realizable due to legal entity restructuring activities and reduced our tax attributes and valuation allowance for the Malta losses accordingly.
The following table is a summary of changes in our deferred tax valuation allowance for the years ended December 31, 2025, 2024 and 2023.
6 unchanged sentences
Income Tax Expense (Benefit) Reconciliation
+Added: As discussed in Note 1, Summary of Significant Accounting Policies, we have elected to prospectively adopt the guidance in ASU 2023-09.
+Added: The following table is a reconciliation of the income tax expense (benefit) at the U.S.
+Added: statutory rate to our income tax expense (benefit) for the year ended December 31, 2025.
+Added: year ended December 31 (in millions) 2025 %
+Added: Income tax expense (benefit) at U.S.
+Added: statutory rate $ ( 106 ) 21.0 %
+Added: State and local income taxes, net of federal (national) income tax effect 1
+Added: 62 ( 12.3 ) %
+Added: Foreign tax effects
+Added: Local tax incentive rate ( 23 ) 4.6 %
+Added: Other 10 ( 2.0 ) %
+Added: Netherlands 26 ( 5.1 ) %
+Added: Local tax incentive rate ( 19 ) 3.8 %
+Added: Other 9 ( 1.8 ) %
+Added: Changes in valuation allowances 54 ( 10.7 ) %
+Added: Other ( 5 ) 1.0 %
+Added: Other jurisdictions 37 ( 7.3 ) %
+Added: Effect of cross-border tax laws
+Added: Global intangible low taxed income, net of tax credits 18 ( 3.6 ) %
+Added: Effect of internal reorganization ( 56 ) 11.1 %
+Added: Other ( 8 ) 1.6 %
+Added: Foreign tax credits ( 24 ) 4.8 %
+Added: Research and development tax credits ( 18 ) 3.6 %
+Added: Changes in valuation allowances 88 ( 17.4 ) %
+Added: Nontaxable or Non-deductible items
+Added: Non-deductible goodwill impairment 90 ( 17.8 ) %
+Added: Other, net 15 ( 3.0 ) %
+Added: Changes in unrecognized tax benefits 246 ( 48.7 ) %
+Added: Other adjustments
+Added: Other, net ( 1 ) 0.2 %
+Added: Income tax expense (benefit) $ 395 ( 78.2 ) %
+Added: 1 State taxes in IL, IN, CA, and PA made up the majority (greater than 50 percent) of the tax effect in this category.
+Added: The following table is a reconciliation of the income tax expense (benefit) at the U.S.
+Added: statutory rate to our income tax expense (benefit) for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU 2023-09.
years ended December 31 (in millions) 2024 2023
21 unchanged sentences
In 2025, the difference between our effective income tax rate and the U.S.
+Added: federal statutory rate was primarily driven by an increase in liabilities for uncertain tax positions, an increase in the valuation allowance related to the realizability of our deferred tax assets, changes in the treatment of accumulated earnings that are considered indefinitely reinvested as of December 31, 2025 and a tax benefit driven by an entity classification election that we made for U.S.
+Added: tax purposes, which resulted in a capital loss for the period.
+Added: In 2024, the difference between our effective income tax rate and the U.S.
federal statutory rate was adversely impacted by a non-deductible impairment of goodwill and legislative changes under IRC Section 987 (which is the exchange gain or loss on foreign branch remittances in the U.S., effective in 2024), and a net revaluation of the Swiss basis step-up deferred tax asset and related valuation allowance that arose from Swiss tax reform legislation in 2019, partially offset by a favorable geographic earnings mix, a decrease in valuation allowance mainly related to U.S.
1 unchanged sentence
In 2023, our effective income tax rate was impacted favorably by geographic earnings mix, a $ 50 million net tax benefit after related valuation allowances from notional interest deductions that are received by certain wholly-owned foreign subsidiaries that have financed their operations with equity capital and a $ 17 million tax benefit related to research and development tax credits, partially offset by tax shortfalls on stock compensation awards.
−Removed: In 2022, our effective income tax rate was adversely impacted by non-deductible impairments of goodwill acquired in the Hillrom acquisition and valuation allowance increases, including the increase described above related to
−Removed: deferred tax assets from a tax basis step-up that arose from Swiss tax reform legislation in 2019.
−Removed: Those items were partially offset by a $ 47 million net tax benefit after related valuation allowances from notional interest deductions.
−Removed: We plan to repatriate our foreign earnings with the exception of approximately $ 607 million of accumulated earnings that are indefinitely reinvested as of December 31, 2024 related to three of our foreign operations.
−Removed: Additional withholding and capital gain taxes of $ 70 million would be incurred if such earnings were remitted currently.
+Added: Certain of our unremitted foreign earnings are considered to be indefinitely reinvested.
+Added: The determination of taxes that would be incurred upon the future remittance of such earnings is not practicable.
Our tax provisions for 2025, 2024 and 2023 do not include any significant tax charges related to either the Base Erosion and Anti-Abuse Tax (BEAT) or Global Intangible Low Taxed Income (GILTI) provisions, except for the inability to fully utilize foreign tax credits against such GILTI.
5 unchanged sentences
The total amount of gross unrecognized tax benefits that, if recognized, would impact the effective tax rate are $ 110 million, $ 51 million and $ 47 million as of December 31, 2025, 2024 and 2023, respectively.
−Removed: We believe that it is reasonably possible that our gross unrecognized tax benefits will be reduced within the next 12 months by $ 13 million.
The following table is a reconciliation of our unrecognized tax benefits for the years ended December 31, 2025, 2024 and 2023.
8 unchanged sentences
Tax Incentives
−Removed: We have received tax incentives in Puerto Rico, Switzerland, Dominican Republic, and Costa Rica.
+Added: We have received tax incentives in Puerto Rico, Dominican Republic, Costa Rica, and Switzerland.
The financial impact of the reductions as compared to the statutory tax rates is indicated in the income tax expense (benefit) reconciliation table above.
−Removed: The tax reductions as compared to the local statutory rate favorably impacted earnings (loss) per diluted share by $ 0.34 in 2024, $ 0.39 in 2023 and $ 0.31 in 2022.
−Removed: The above grants provide that our manufacturing operations are and will be partially exempt from local taxes with varying expirations from 2024 to 2034.
+Added: The tax reductions as compared to the local statutory rate favorably impacted earnings (loss) by $ 57 million in 2025, $ 176 million in 2024, and $ 200 million in 2023, and favorably impacted earnings (loss) per diluted share by $ 0.11 in 2025, $ 0.34 in 2024 and $ 0.39 in 2023.
+Added: The Switzerland incentive program expired at the end of 2024 and therefore did not provide any benefit in 2025, however did contribute to the benefits recognized in 2024 and 2023.
+Added: The other tax incentives provide that our manufacturing operations are and will be partially exempt from local taxes with varying expirations from 2025 to 2034.
Examinations of Tax Returns
−Removed: As of December 31, 2024, we had ongoing audits in the United States, Germany, Italy and other jurisdictions.
−Removed: During 2022, we closed U.S.
−Removed: tax years 2017-2018 with the IRS with no material adjustments to our financial statements.
−Removed: Tax years 2019 and 2020 remain under examination by the IRS, including with respect to transfer pricing matters, and tax years 2012 and forward remain under examination by various foreign taxing authorities.
+Added: As of December 31, 2025, we had ongoing audits in the United States, Belgium, Germany, Italy and other jurisdictions.
+Added: 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.
+Added: While we have not yet received a final 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.
+Added: entities and these foreign manufacturers.
+Added: As a result, we have recorded reserves for uncertain tax positions related to these transfer pricing matters for tax years 2019 through 2025.
+Added: These reserves in aggregate are recorded to expense for approximately $ 280 million, exclusive of any potential penalties and interest.
+Added: 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 final NOPA or otherwise).
+Added: Tax years 2012 and forward remain open to examination by various foreign taxing authorities.
While the final outcome of these matters is inherently uncertain, we believe we have made adequate tax provisions for all years subject to examination.
30 unchanged sentences
Our hedging policy attempts to manage these risks to an acceptable level based on our judgment of the appropriate trade-off between risk, opportunity and costs.
−Removed: We are primarily exposed to foreign exchange risk with respect to recognized assets and liabilities, forecasted transactions and net assets denominated in the Euro, British Pound, Australian Dollar, Canadian Dollar, Chinese Renminbi, Japanese Yen, Mexican Peso, Indian Rupee and Swedish Krona.
+Added: We are primarily exposed to foreign exchange risk with respect to recognized assets and liabilities, forecasted transactions and net assets denominated in the Euro, British Pound, Chinese Renminbi, Swedish Krona, Polish Zloty, Swiss Franc, Australian Dollar, Turkish Lira, Singapore Dollar and Korean Wan.
We manage our foreign currency exposures on a consolidated basis, which allows us to net exposures and take advantage of any natural offsets.
9 unchanged sentences
We periodically use treasury rate locks to hedge the risk to earnings associated with movements in interest rates relating to anticipated issuances of debt.
−Removed: The notional amounts of foreign exchange contracts designated as cash flow hedges were $ 99 million and $ 340 million as of December 31, 2024 and 2023, respectively.
−Removed: The maximum term over which we have cash flow hedge contracts in place related to forecasted transactions at December 31, 2024 is 11 months for foreign exchange contracts.
+Added: There were no foreign exchange contracts designated as cash flow hedges outstanding as of December 31, 2025.
+Added: The notional amounts of foreign exchange contracts designated as cash flow hedges were $ 99 million as of December 31, 2024.
There were no outstanding interest rate contracts designated as cash flow hedges as of December 31, 2025 and 2024.
7 unchanged sentences
In May 2017, we issued € 600 million of 1.3 % senior notes due May 2025.
+Added: We had designated these debt obligations as hedges of our net investment in our European operations and, as a result, mark to spot rate adjustments of the outstanding debt balances were previously recorded as a component of AOCI.
+Added: In March 2025, we dedesignated this previously designated net investment hedge and concurrently entered into forward contracts to manage foreign exchange risk in earnings related to these outstanding debt balances.
+Added: These forward contracts matured in May 2025.
In May 2019, we issued € 750 million of 1.3 % senior notes due May 2029.
1 unchanged sentence
In May 2019, we issued € 750 million of 0.40 % senior notes due May 2024, which we repaid in full on their maturity date.
−Removed: We had designated these debt obligations as hedges of our investment in our European operations and, as a result, mark to spot rate adjustments of the outstanding debt balances were previously recorded as a component of AOCI.
+Added: We had designated these debt obligations as hedges of our investment in our European operations and, as a result, mark to spot rate adjustments of the outstanding debt balances were previously recorded as a component of
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.
−Removed: As of December 31, 2024, we had an accumulated pre-tax unrealized translation gain in AOCI of $ 124 million related to the Euro-denominated senior notes.
+Added: As of December 31, 2025, we had an accumulated pre-tax unrealized translation loss in AOCI of $ 3 million related to the Euro-denominated senior notes.
Dedesignations
If it is determined that a derivative or nonderivative hedging instrument is no longer highly effective as a hedge, we discontinue hedge accounting prospectively.
−Removed: Gains or losses relating to terminations of effective cash flow hedges generally continue to be deferred and are recognized consistent with the loss or income recognition of the underlying hedged items.
+Added: Gains or losses relating to terminations of effective cash flow hedges generally continue to be deferred and are recognized consistent with the loss or income recognition of the underlying hedged transactions.
However, if it is probable that hedged forecasted transactions will not occur, any gains or losses would be immediately reclassified from AOCI to earnings.
4 unchanged sentences
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.
−Removed: In October 2023, we dedesignated one of our net investment hedges as discussed in the "Net Investment Hedges" section above.
−Removed: There were no net investment hedges terminated in 2024 or 2022.
+Added: In both March 2025 and October 2023, we dedesignated one of our net investment hedges as discussed in the "Net Investment Hedges" section above.
+Added: There were no net investment hedges terminated in 2024.
Undesignated Derivative Instruments
1 unchanged sentence
These derivative instruments are generally not formally designated as hedges and the terms of these instruments generally do not exceed one month.
+Added: 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.
+Added: These forward contracts matured in May 2025.
The total notional amount of undesignated derivative instruments was $ 323 million and $ 389 million as of December 31, 2025 and 2024, respectively.
27 unchanged sentences
Accumulated other comprehensive income (loss) balance at end of year $ ( 110 ) $ ( 108 ) $ ( 120 )
−Removed: As of December 31, 2024, $ 1 million of deferred, net after-tax gains on derivative instruments included in AOCI are expected to be recognized in earnings during the next 11 months, coinciding with when the hedged items are expected to impact earnings.
+Added: As of December 31, 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 consolidated balance sheet as of December 31, 2025.
−Removed: Derivatives in asset positions Derivatives in liability positions
−Removed: (in millions) Balance sheet location Fair value Balance sheet location Fair value
+Added: Derivatives in liability positions
+Added: (in millions) Balance sheet location Fair value
Derivative instruments designated as hedges
−Removed: Foreign exchange contracts
−Removed: Prepaid expenses and other current assets $ 6 Accrued expenses and other current liabilities $ —
+Added: Net investment hedges Long-term debt and finance lease obligations, less current portion $ 834
Undesignated derivative instruments
Foreign exchange contracts
−Removed: Prepaid expenses and other current assets 1 Accrued expenses and other current liabilities 2
+Added: Accrued expenses and other current liabilities 1
Total derivative instruments $ 835
5 unchanged sentences
Prepaid expenses and other current assets $ 6 Accrued expenses and other current liabilities $ —
+Added: Net investment hedges Current maturities of long-term debt and finance lease obligations 618
+Added: Net investment hedges Long-term debt and finance lease obligations, less current portion 727
Undesignated derivative instruments
27 unchanged sentences
(Level 2) Significant
−Removed: Foreign exchange contracts $ 7 $ — $ 7 $ —
Available-for-sale debt securities $ 1 $ — $ — $ 1
3 unchanged sentences
Contingent payments related to acquisitions 7 — — 7
+Added: Indemnifications related to Kidney Care separation 1
Total $ 61 $ — $ 1 $ 60
+Added: 1 See Note 2 for additional information.
Basis of fair value measurement
11 unchanged sentences
Total $ 14 $ — $ 2 $ 12
−Removed: As of December 31, 2024 and 2023, cash and cash equivalents of $ 1.76 billion and $ 3.08 billion, respectively, included money market and other short-term funds of approximately $ 583 million and $ 1.63 billion, respectively, that are considered Level 2 in the fair value hierarchy.
+Added: As of December 31, 2025 and 2024, cash and cash equivalents of $ 1.97 billion and $ 1.76 billion, respectively, included money market and other short-term funds of approximately $ 832 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.
7 unchanged sentences
The fair value of milestone payments increases as the estimated probability of payment increases or the expected timing of payments is accelerated.
−Removed: The fair value of sales-based payments is based upon probability-weighted future
−Removed: revenue estimates, and increases as revenue estimates increase, probability weighting of higher revenue scenarios increases or the expected timing of payment is accelerated.
−Removed: The following table is a reconciliation of recurring fair value measurements that use significant unobservable inputs (Level 3), which consist of contingent payments related to acquisitions and available-for-sale debt securities.
−Removed: as of and for the years ended December 31 (in millions) Contingent payments related to acquisitions Available-for-sale debt securities Contingent payments related to acquisitions Available-for-sale debt securities
+Added: 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.
+Added: 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.
+Added: For additional information on these items see Note 2.
+Added: 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.
+Added: as of and for the years ended December 31 (in millions) Indemnifications related to Kidney Care separation Contingent payments related to acquisitions Available-for-sale debt securities Contingent payments related to acquisitions Available-for-sale debt securities
Fair value at beginning of period $ — $ 12 $ 1 $ 14 $ 1
+Added: Additions 67 — — — —
Change in fair value recognized in earnings — 2 — — —
2 unchanged sentences
Fair value at end of period $ 53 $ 7 $ 1 $ 12 $ 1
−Removed: During the year ended December 31, 2023, available-for-sale debt securities were reclassified from Level 3, upon conversion to marketable equity securities, which are classified as Level 1 in the fair value hierarchy, upon initial public offerings of the investees.
Financial Instruments Not Measured at Fair Value
4 unchanged sentences
Short-term debt $ — $ 2,126 $ — $ 2,126
−Removed: Current maturities of long-term debt and finance lease obligations 626 2,667 619 2,621
−Removed: Long-term debt and finance lease obligations 10,374 11,089 9,295 10,026
+Added: Current maturities of long-term debt — 626 — 619
+Added: Long-term debt 9,436 10,374 8,714 9,295
(a) These fair value amounts are classified as Level 2 within the fair value hierarchy as they are estimated based on observable inputs.
11 unchanged sentences
The Healthcare Systems & Technologies segment includes sales of our connected care solutions and collaboration tools, including smart bed systems, patient monitoring systems and diagnostic technologies, respiratory health devices and advanced equipment for the surgical space, including operating room integration technologies, precision positioning devices, and other accessories.
−Removed: The Pharmaceuticals segment includes sales of specialty injectable pharmaceuticals, inhaled anesthetics and drug compounding services.
−Removed: Other sales not allocated to a segment primarily include sales of products and services provided directly through certain of our manufacturing facilities and royalty income under a business development arrangement that ended in early 2023 when we acquired the related product rights.
+Added: The Pharmaceuticals segment includes sales of specialty injectable pharmaceuticals, inhaled anesthetics and drug compounding.
+Added: Other sales not allocated to a segment primarily include sales to Vantive, pursuant to the Kidney Care MSA, and sales of products and services provided directly through certain of our manufacturing facilities.
Disaggregation of Net Sales
11 unchanged sentences
Medical Products & Therapies 2,884 2,415 5,299 2,882 2,325 5,207 2,809 2,202 5,011
−Removed: Care and Connectivity Solutions
+Added: Care & Connectivity Solutions
1,372 539 1,911 1,311 503 1,814 1,263 537 1,800
3 unchanged sentences
2,243 828 3,071 2,154 797 2,951 2,168 845 3,013
−Removed: Injectables and Anesthesia
+Added: Injectables & Anesthesia
749 603 1,352 780 593 1,373 759 588 1,347
1 unchanged sentence
Pharmaceuticals 749 1,744 2,493 780 1,631 2,411 759 1,490 2,249
−Removed: 34 33 67 66 21 87 137 40 177
+Added: Other 246 135 381 34 33 67 66 21 87
Total Baxter $ 6,122 $ 5,122 $ 11,244 $ 5,850 $ 4,786 $ 10,636 $ 5,802 $ 4,558 $ 10,360
−Removed: 1 In connection with the reclassification of our BPS business to discontinued operations during the second quarter of 2023, we reclassified $ 2 million of contract manufacturing revenues from the first quarter of 2023 and $ 37 million of sales for the year ended December 31, 2022 from BPS to Other (within continuing operations), as the related manufacturing facility was not part of that divestiture transaction.
Geographic Information
17 unchanged sentences
Segment Information
−Removed: Our chief operating decision maker who has been identified as our Chair, President and Chief Executive Officer, reviews the financial information presented for purposes of evaluating the performance of our segments and to make resource allocation decisions.
+Added: 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 our former Executive Vice President, Chief Operating Officer and Interim Group President, Medial Products & Therapies.
+Added: In the third quarter of 2025, in conjunction with the appointment of Andrew Hider as our President and 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.
+Added: The change in CODM during both the first 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.
2 unchanged sentences
Corporate costs that are not allocated to our segments, as well as any differences between actual corporate costs and the amounts allocated to our segments, are presented as unallocated corporate costs.
−Removed: With the results of our former Kidney Care segment reported in discontinued operations, corporate costs that had previously been allocated to the Kidney Care segment which did not convey with the Kidney Care segment in the completed sale are now presented as unallocated corporate costs.
−Removed: Segment results include net sales, cost of sales, selling general and administrative expenses, research and development expenses, and other segment items which are directly allocated to each segment.
−Removed: Beginning in 2024
−Removed: annual reporting, we adopted ASU 2023-07 retrospectively.
+Added: Segment results include net sales, cost of sales, SG&A, R&D 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.
+Added: Billings by us under the Kidney Care TSA are included in other segment items as further described in Note 2.
+Added: Beginning in 2024 annual reporting, we adopted ASU 2023-07 retrospectively.
The following tables present our segment information of net sales, significant expenses and operating income during the periods presented.
34 unchanged sentences
European Medical Devices Regulation ( 21 ) ( 33 ) ( 41 )
−Removed: Long-lived asset impairments ( 50 ) — ( 344 )
+Added: Indefinite-lived asset impairments ( 290 ) ( 50 ) —
+Added: Separation-related costs ( 58 ) — —
Legal matters ( 11 ) ( 17 ) ( 7 )
Acquisition and integration items ( 27 ) ( 23 ) —
−Removed: Product-related items ( 15 ) — ( 44 )
+Added: Product-related reserves ( 113 ) ( 15 ) —
Hurricane Helene Costs ( 133 ) ( 110 ) —
−Removed: Loss on product divestiture arrangement — — ( 54 )
Goodwill impairments ( 485 ) ( 425 ) —
−Removed: Loss on subsidiary liquidation — — ( 21 )
+Added: Gain on sale of long-lived asset 16 — —
Total operating income (loss) ( 308 ) 14 707
10 unchanged sentences
1 Depreciation expense related to Corporate property, plant and equipment has been fully allocated to our segments and those allocations are reflected in the depreciation amounts presented herein.
−Removed: Our chief operating decision maker does not receive asset or capital expenditure information by segment and, accordingly, we do not report that information for our segments.
−Removed: QUARTERLY FINANCIAL DATA (UNAUDITED)
−Removed: The following table represents data from our unaudited consolidated statements of income (loss) for the most recent eight quarters.
−Removed: This quarterly information has been prepared on the same basis as the consolidated financial statements and includes all normal recurring adjustments necessary to fairly state the information for the periods
−Removed: The results of operations of any quarter are not necessarily indicative of the results that may be expected for any future period.
−Removed: (in millions, except per share data) First
−Removed: Quarter Second Quarter 2
−Removed: Quarter Fourth Quarter 3
−Removed: Net sales $ 2,490 $ 2,694 $ 2,699 $ 2,753 $ 10,636
−Removed: Gross margin 961 1,031 1,033 959 3,984
−Removed: Income (loss) from continuing operations 6 95 61 ( 488 ) ( 326 )
−Removed: Income (loss) from discontinued operations 33 ( 406 ) 83 ( 22 ) ( 312 )
−Removed: Net income (loss) 39 ( 311 ) 144 ( 510 ) ( 638 )
−Removed: Net income (loss) attributable to Baxter stockholders 37 ( 314 ) 140 ( 512 ) ( 649 )
−Removed: Income (loss) from continuing operations per common share
−Removed: Basic $ 0.01 $ 0.19 $ 0.12 $ ( 0.95 ) $ ( 0.64 )
−Removed: Diluted $ 0.01 $ 0.19 $ 0.12 $ ( 0.95 ) $ ( 0.64 )
−Removed: Income (loss) from discontinued operations per common share
−Removed: Basic $ 0.06 $ ( 0.81 ) $ 0.15 $ ( 0.05 ) $ ( 0.63 )
−Removed: Diluted $ 0.06 $ ( 0.81 ) $ 0.15 $ ( 0.05 ) $ ( 0.63 )
−Removed: Net Income (loss) per common share
−Removed: Basic $ 0.07 $ ( 0.62 ) $ 0.27 $ ( 1.00 ) $ ( 1.27 )
−Removed: Diluted $ 0.07 $ ( 0.62 ) $ 0.27 $ ( 1.00 ) $ ( 1.27 )
−Removed: (in millions, except per share data) First
−Removed: Quarter Second Quarter 4
−Removed: Fourth Quarter Full Year 1
−Removed: Net sales $ 2,441 $ 2,591 $ 2,599 $ 2,729 $ 10,360
−Removed: Gross margin 964 1,030 1,056 1,100 4,150
−Removed: Income (loss) from continuing operations ( 48 ) ( 27 ) 37 219 181
−Removed: Income from discontinued operations 93 ( 112 ) 2,474 27 2,482
−Removed: Net income (loss) 45 ( 139 ) 2,511 246 2,663
−Removed: Net income (loss) attributable to Baxter stockholders 44 ( 141 ) 2,508 245 2,656
−Removed: Income (loss) from continuing operations per common share
−Removed: Basic $ ( 0.10 ) $ ( 0.05 ) $ 0.07 $ 0.43 $ 0.36
−Removed: Diluted $ ( 0.10 ) $ ( 0.05 ) $ 0.07 $ 0.43 $ 0.36
−Removed: Income from discontinued operations per common share
−Removed: Basic $ 0.19 $ ( 0.23 ) $ 4.88 $ 0.05 $ 4.89
−Removed: Diluted $ 0.19 $ ( 0.23 ) $ 4.86 $ 0.05 $ 4.87
−Removed: Net Income (loss) per common share
−Removed: Basic $ 0.09 $ ( 0.28 ) $ 4.95 $ 0.48 $ 5.25
−Removed: Diluted $ 0.09 $ ( 0.28 ) $ 4.93 $ 0.48 $ 5.23
−Removed: 1 The sum of per share amounts for quarterly periods may not equal full year amounts due to rounding.
−Removed: 2 Our results from discontinued operations for the quarter ended June 30, 2024 included a $ 430 million charge related to a goodwill impairment of our Chronic Therapies reporting unit within our Kidney Care segment.
−Removed: 3 Our results from continuing operations for the fourth quarter ended December 31, 2024 included a $ 425 million charge related to a goodwill impairment of our Front Line Care reporting unit within our Healthcare Systems & Technologies segment.
−Removed: 4 Our results from discontinued operations for the quarter ended June 30, 2023 included $ 243 million of long-lived asset impairment charges resulting from our decision to cease production at one of our dialyzer manufacturing facilities.
−Removed: 5 Our results from discontinued operations for the quarter ended September 30, 2023 included a gain of $ 2.88 billion from the sale of our BPS business, partially offset by $ 267 million of long-lived asset impairment charges related to our the hemodialysis business of our former Kidney Care segment.
+Added: Our CODM does not receive asset or capital expenditure information by segment and, accordingly, we do not report that information for our reportable segments.
Report of Independent Registered Public Accounting Firm
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Critical Audit Matters
−Removed: The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
+Added: The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
+Added: The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Goodwill Impairment Assessment – Front Line Care Reporting Unit
−Removed: As described in Notes 1 and 5 to the consolidated financial statements, the Company’s consolidated goodwill balance as of December 31, 2024 was $5.3 billion, and the goodwill associated with the Front Line Care reporting unit was $1.99 billion.
+Added: As described in Notes 1 and 4 to the consolidated financial statements, the Company’s consolidated goodwill balance as of December 31, 2025 was $4,929 million, and the goodwill associated with the Front Line Care reporting unit was $1,520 million.
Management performs an impairment test in the fourth quarter of each year, or whenever events or changes in circumstances indicate that the fair value of the reporting unit is more-likely-than-not below its carrying amount.
−Removed: If management determines that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, or they do not elect the option to perform an initial qualitative assessment, they perform a quantitative goodwill impairment test.
−Removed: In the quantitative impairment test, management calculates the estimated fair value of the reporting unit, and if the carrying amount of the reporting unit exceeds the estimated fair value, an impairment charge is recorded.
+Added: If management determines that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, or management does not elect the option to perform an initial qualitative assessment, management performs a quantitative goodwill impairment test.
+Added: In the quantitative impairment test, management calculates the estimated fair value of the reporting unit.
+Added: If the carrying amount of the reporting unit exceeds the estimated fair value, an impairment charge is recorded.
The fair values of the Company’s reporting units are generally determined based on a discounted cash flow model (an income approach) and earnings multiples (a market approach) based on the guideline public company method.
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The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the Front Line Care reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the reporting unit;
−Removed: (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the revenue growth rate, forecasted EBITDA margin, discount rate, and terminal growth rate used in the discounted cash flow model and earnings multiples used in the earnings multiples approach;
+Added: (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the revenue growth rates, forecasted EBITDA margins, discount rate, and terminal growth rate used in the discounted cash flow model and earnings multiples used in the earnings multiples approach;
and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
−Removed: These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessments, including controls over the valuation of the Front Line Care reporting unit.
+Added: These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Front Line Care reporting unit.
These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the Front Line Care reporting unit;
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(iii) testing the completeness and accuracy of underlying data used in the discounted cash flow model and the earnings multiples approach;
−Removed: (iv) and evaluating the reasonableness of the significant assumptions used by management related to the revenue growth rate, forecasted EBITDA margin, discount rate, terminal growth rate and earnings multiples.
−Removed: Evaluating management’s significant assumptions related to the revenue growth rate and forecasted EBITDA margin involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Front Line Care reporting unit;
+Added: and (iv) evaluating the reasonableness of the significant assumptions used by management related to the revenue growth rates, forecasted EBITDA margins, discount rate, terminal growth rate and earnings multiples.
+Added: Evaluating management’s assumptions related to the revenue growth rates and forecasted EBITDA margins involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Front Line Care reporting unit;
(ii) the consistency with external market and industry data;
−Removed: and (iii) whether the assumption was consistent with evidence obtained in other areas of the audit.
−Removed: Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the
−Removed: discounted cash flow model and the earnings multiples approach and (ii) the reasonableness of the discount rate, terminal growth rate and earnings multiples assumptions.
+Added: and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.
+Added: Professionals
+Added: with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the discounted cash flow model and the earnings multiples approach and (ii) the reasonableness of the discount rate, terminal growth rate and earnings multiples assumptions.
+Added: Indefinite-Lived Intangible Asset Impairment Assessment - Welch Allyn Trade Name
+Added: As described in Notes 1 and 4 to the consolidated financial statements, the Company’s consolidated trade names indefinite-lived intangible asset balance as of December 31, 2025 was $390 million.
+Added: Indefinite-lived intangible assets are subject to an impairment review by management annually in the fourth quarter and whenever indicators of impairment exist.
+Added: If management determines that it is more-likely-than-not that an indefinite-lived intangible asset is impaired, or if management elects not to perform an initial qualitative assessment, management then performs the quantitative impairment test by comparing the fair value of the indefinite-lived intangible asset with its carrying amount.
+Added: If the carrying amount exceeds the fair value of the indefinite-lived intangible asset, management writes the carrying amount down to the fair value.
+Added: The fair value of the trade name intangible asset was determined by management using the relief from royalty method.
+Added: Significant assumptions used by management in the determination of fair value of the trade name intangible assets included revenue growth rates, discount rate, and royalty rate.
+Added: In connection with the annual impairment assessment, management recognized a pre-tax impairment charge of $290 million to reduce the carrying amount of the Welch Allyn trade name, an indefinite-lived intangible asset, to its estimated fair value.
+Added: The principal considerations for our determination that performing procedures relating to the indefinite-lived intangible asset impairment assessment for the Welch Allyn trade name is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the Welch Allyn trade name;
+Added: (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the revenue growth rates, discount rate, and royalty rate;
+Added: and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
+Added: Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
+Added: These procedures included testing the effectiveness of controls relating to management’s indefinite-lived intangible asset impairment assessment, including controls over the valuation of the Company’s Welch Allyn trade name.
+Added: These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the Welch Allyn trade name;
+Added: (ii) evaluating the appropriateness of the relief from royalty valuation model used by management;
+Added: (iii) testing the completeness and accuracy of underlying data used in the relief from royalty model;
+Added: and (iv) evaluating the reasonableness of the significant assumptions used by management related to the revenue growth rates, discount rate, and royalty rate.
+Added: Evaluating management’s assumption related to the revenue growth rates involved evaluating whether the assumption used by management was reasonable considering (i) the current and past performance of the products supported by the trade name, (ii) the consistency with external market and industry data, and (iii) whether the assumption was consistent with evidence obtained in other areas of the audit.
+Added: Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the relief from royalty model and (ii) the reasonableness of the discount rate, and royalty rate assumptions.
/s/ PricewaterhouseCoopers LLP
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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.