What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-30 compared with 2026-04-30 · 253 added, 173 removed, 253 unchanged (63% of the section changed)

1 unchanged sentence

Refer to our Annual Report on Form 10-K for the year ended December 31, 2025 (2025 Annual Report) for management’s discussion and analysis of our financial condition and results of operations.

The following is management’s discussion and analysis of our financial condition and results of operations for the three months ended March 31, 2026 and 2025.

The following is management’s discussion and analysis of our financial condition and results of operations for the three and six months ended June 30, 2026 and 2025.

COMPLETED STRATEGIC ACTION;

ONGOING BUSINESS TRANSFORMATION

On January 31, 2025, we completed the sale of our former Kidney Care segment (which is now known as Vantive Health LLC (Vantive)) to certain affiliates of Carlyle Group Inc.

On January 31, 2025, we completed the sale of our former Kidney Care business (which is now known as Vantive Health LLC (Vantive)) to certain affiliates of Carlyle Group Inc.

(Carlyle) and ultimately received approximately $3.2 billion of after-tax cash proceeds that were used to repay short- and long-term legacy indebtedness in 2025.

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See Note 10 of this Quarterly Report on Form 10-Q for additional information.

Additionally, we continue to evolve our operating model to better align decision-making, cost structure, and commercial execution across our businesses.

In the second quarter of 2026, we implemented a new operating model to better align decision-making, cost structure, and commercial execution across our businesses.

As part of this work, we continue to focus on increasing efficiencies through increased automation and digitization (including through our thoughtful exploration of artificial intelligence initiatives).

Beginning in October 2025, we launched Baxter Growth and Performance system, our high performance business system grounded in continuous improvement and management by objectives.

As part of our new operating model, we have changed our reportable segments.

Our business is now comprised of two reportable segments under this new operating model:

Medical Products & Therapies and Healthcare Systems & Technologies.

Previously, our business was comprised of three segments:

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

Our former Pharmaceuticals segment is now reported within the Infusion Therapies & Platforms division of the Medical Products & Therapies segment.

Additionally, sales of products and services provided directly through certain of our manufacturing facilities related to Infusion Therapies & Platforms that were previously reported in Other are now reported in our Infusion Therapies & Platforms division of the Medical Products & Therapies segment.

In addition, we have updated our approach to our corporate cost allocations.

Certain shared corporate expenses will now remain unallocated, rather than being fully allocated to the segments (as they had been previously).

Prior period segment disclosures have been recast to reflect the new segment presentation.

See Note 16 of this Quarterly Report on Form 10-Q for additional information.

FACTORS AFFECTING OUR RESULTS OF OPERATIONS

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Food and Drug Administration (FDA) classified these voluntary corrections as Class I recalls.

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

We have implemented certain corrections related to the recalls and have identified additional corrections to address these recalls, some of which may require regulatory clearance or approval, and are in the early stages of verification testing.

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

and Canada, except in the case of medical necessity.

The timing of the release of the ship and installation hold remains uncertain.

The timing of the release of the shipment and installation hold remains uncertain.

As a result, we expect no meaningful sales of Novum LVP while these holds are in effect.

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In the first quarter of 2026, we adjusted certain estimates associated with these Novum LVP corrections that were not material to our condensed consolidated financial statements;

no such adjustments were recorded in the second quarter of 2026.

Supply Constraints, Tariffs and Global Economic Conditions

We have experienced challenges to our global supply chain, including, as a result of adverse impacts from significant weather events like Hurricane Helene and other global macroeconomic and geopolitical events, which have had a negative impact on our results of operations and may do so in the future.

We have experienced challenges to our global supply chain, including, as a result of adverse impacts from significant weather events like Hurricane Helene and other global macroeconomic and geopolitical events (including the ongoing conflict in Iran), which have had a negative impact on our results of operations and may do so in the future.

In addition, announcements regarding changes in U.S.

trade policies and practices, including the implementation of global tariffs and proposed further tariffs (including potential medical device and pharmaceutical tariffs), the Supreme Court's decision to invalidate tariffs levied under the International Emergency Economic Powers Act, and responses from other jurisdictions, have significantly affected financial markets and economic conditions.

While in the second quarter of 2026 we submitted refund requests for those tariff amounts eligible for refund in the first phase of the process and expect to submit additional refund requests in future phases subject to further rulings by the Court of International Trade, uncertainty remains surrounding the economic impact of the global tariffs and the timing and quantum of any amounts we may ultimately recover on our refund claims, and therefore, we have not recorded an asset for tariff refunds in our condensed consolidated financial statements as of March 31, 2026.

We currently expect that our results will continue to be adversely impacted by Section 122 duties that were imposed following the judicial review of certain tariffs.

trade policies and practices, including the implementation of

global tariffs and proposed further tariffs (including potential medical device and pharmaceutical tariffs), the Supreme Court's decision to invalidate tariffs levied under the International Emergency Economic Powers Act (IEEPA), and responses from other jurisdictions, have significantly affected financial markets and economic conditions.

In the second quarter of 2026, we recorded tariff refunds of approximately $75 million to costs of goods sold in our condensed consolidated statements of income (loss) (which is inclusive of $65 million in prepaid expenses and other current assets) for probable receipt of amounts eligible for refund in the first and second phases of the process and expect to submit additional refund requests in future phases subject to further rulings by the Court of International Trade.

While uncertainty remains surrounding the timing of any additional amounts we may ultimately recover on current or future refund claims, we do not expect for any additional amounts to be material to our condensed consolidated financial statements.

We currently expect that our results will continue to be adversely impacted by Section 122 duties and recently announced Section 301 tariffs that have been imposed following the judicial review of certain tariffs.

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

and other countries and other geopolitical events or conflicts (including the conflict in Iran and the potential for escalation of this and other conflicts), could contribute to further

market volatility, deteriorating or prolonged weakened economic conditions and decreased hospital capital spending levels.

and other countries and other geopolitical events or conflicts (including the ongoing conflict in Iran and the potential for escalation of this and other conflicts), could contribute to further market volatility, deteriorating or prolonged weakened economic conditions and decreased hospital capital spending levels.

We continue to closely monitor these developing situations and the estimated impact on our business, results of operations, financial condition and cash flows.

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Additionally, adverse changes in foreign currency exchange rates have increased, and could continue to increase, our costs of sourcing certain raw materials in some jurisdictions.

We have experienced and are likely in the future to experience inflationary and other increases in manufacturing costs and operating expenses (including as a result of the aforementioned tariffs) and are limited in our ability to pass these cost increases on to our customers in a timely manner or at all due to the longer term nature of our customer contracts and arrangements, which could have a material adverse impact on our profitability and results of operations.

We have experienced and are likely in the future to continue to experience inflationary and other increases in manufacturing costs and operating expenses (including as a result of the aforementioned tariffs and conflicts) and are limited in our ability to pass these cost increases on to our customers in a timely manner or at all due to the longer term nature of our customer contracts and arrangements, which could have a material adverse impact on our profitability and results of operations.

Inflation and general macroeconomic factors have caused certain of our customers to reduce or delay orders for our products and services and could cause them to do so in the future, which could have a material adverse impact on our sales and results of operations.

For further discussion, please refer to Item 1A, Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

For further discussion, please refer to Item 1A, Risk Factors in our 2025 Annual Report.

NON-GAAP FINANCIAL MEASURES

Our presentation of percentage changes in net sales at organic sales growth excludes the impact of the Kidney Care MSA sales not reflected in reportable segments, impacts associated with business acquisitions or divestitures, and is calculated at constant currency rates.

Our presentation of percentage changes in net sales at organic sales growth excludes the impact of the Kidney Care Manufacturing and Supply Agreement (Kidney Care MSA) sales not reflected in reportable segments, impacts associated with business acquisitions or divestitures, and is calculated at constant currency rates.

Constant currency rates are computed using current period local currency sales at the prior period’s foreign exchange rates.

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RESULTS OF OPERATIONS

Net income (loss) attributable to Baxter stockholders for the three months ended March 31, 2026 was $(15) million, or $(0.03) per diluted share, compared to $126 million, or $0.25 per diluted share for the three months ended March 31, 2025.

For the three months ended March 31, 2026, our results included special items that adversely impacted net income (loss) attributable to Baxter stockholders by $205 million, or $0.40 per diluted share.

For the three months ended March 31, 2025, our results included special items that adversely impacted net income (loss) attributable to Baxter stockholders by $194 million, or $0.37 per diluted share.

Net income (loss) from continuing operations for the three months ended March 31, 2026 was $(17) million, or $(0.03) per diluted share, compared to $64 million, or $0.13 per diluted share for the three months ended March 31, 2025.

Net income (loss) from continuing operations for the three months ended March 31, 2026 included special items that adversely impacted net income (loss) by $205 million, or $0.39 per diluted share.

Net income (loss) from continuing operations for the three months ended March 31, 2025 included special items that adversely impacted net income (loss) by $221 million, or $0.42 per diluted share.

Net income (loss) attributable to Baxter stockholders for the three months ended June 30, 2026 was $126 million, or $0.24 per diluted share, compared to $91 million, or $0.18 per diluted share for the three months ended June 30, 2025.

For the three months ended June 30, 2026, our results included special items that adversely impacted net income (loss) attributable to Baxter stockholders by $155 million, or $0.30 per diluted share.

For the three months ended June 30, 2025, our results included special items that adversely impacted net income (loss) attributable to Baxter stockholders by $185 million, or $0.36 per diluted share.

Net income (loss) attributable to Baxter stockholders for the six months ended June 30, 2026 was $111 million, or $0.21 per diluted share, compared to $217 million, or $0.42 per diluted share for the six months ended June 30, 2025.

For the six months ended June 30, 2026, our results included special items that adversely impacted net income (loss) attributable to Baxter stockholders by $360 million, or $0.70 per diluted share.

For the six months ended June 30,

2025, our results included special items that adversely impacted net income (loss) attributable to Baxter stockholders by $379 million, or $0.74 per diluted share.

Net income (loss) from continuing operations for the three months ended June 30, 2026 was $135 million, or $0.26 per diluted share, compared to $122 million, or $0.24 per diluted share for the three months ended June 30, 2025.

Net income (loss) from continuing operations for the three months ended June 30, 2026 included special items that adversely impacted net income (loss) by $155 million, or $0.30 per diluted share.

Net income (loss) from continuing operations for the three months ended June 30, 2025 included special items that adversely impacted net income (loss) by $182 million, or $0.35 per diluted share.

Net income (loss) from continuing operations for the six months ended June 30, 2026 was $118 million, or $0.23 per diluted share, compared to $186 million, or $0.36 per diluted share for the six months ended June 30, 2025.

Net income (loss) from continuing operations for the six months ended June 30, 2026 included special items that adversely impacted net income (loss) by $360 million, or $0.69 per diluted share.

Net income (loss) from continuing operations for the six months ended June 30, 2025 included special items that adversely impacted net income (loss) by $403 million, or $0.79 per diluted share.

See the subsection entitled “Special Items” for information about special items for all periods presented.

CONSOLIDATED NET SALES

Three Months Ended March 31, Percent change

Three Months Ended June 30, Percent change

(in millions) 2026 2025 At actual

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Total net sales $ 2,960 $ 2,810 5 % 5 %

Six Months Ended June 30, Percent change

(in millions) 2026 2025 At actual

rates At organic sales growth 1

United States $ 3,030 $ 3,026 0 % 0 %

International 2,631 2,409 9 % 4 %

Total net sales $ 5,661 $ 5,435 4 % 2 %

1 Percent change in net sales at organic sales growth is a non-GAAP financial measure.

See the section entitled “Non-GAAP Financial Measures” for additional information about our use of that measure.

In the first quarter of 2026, the Kidney Care MSA sales favorably impacted sales growth by 1%.

Additionally, in the first quarter of 2026, foreign currency rates favorably impacted net sales growth by 3%, compared to the prior year period due to the strengthening of the U.S.

Dollar relative to the Euro, Australian Dollar, British Pound and the Canadian Dollar.

In the second quarter of 2026, the Kidney Care MSA sales adversely impacted sales growth by 1% and foreign exchange rates favorably impacted net sales growth by 1%, compared to the prior year period due to the strengthening of the U.S.

Dollar relative to the Australian Dollar, Euro, Colombian Peso and Brazilian Real.

In the first six months of 2026, the foreign currency rates favorably impacted net sales growth by 2%, compared to the prior year period due to the strengthening of the U.S.

Dollar relative to the Euro, Australian Dollar, British Pound, Brazilian Real, Colombian Peso, and Canadian Dollar.

NET SALES BY SEGMENT

Medical Products & Therapies

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

Three Months Ended March 31, Percent change

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

specialty injectable pharmaceuticals, inhaled anesthesia, drug compounding and sales of products and services provided directly through certain of our manufacturing facilities.

Three Months Ended June 30, Percent change

(in millions) 2026 2025 At actual

rates At organic sales growth 1

Infusion Therapies & Technologies

Infusion Therapies & Platforms

$ 1,745 $ 1,649 6 % 4 %

Advanced Surgery 331 296 12 % 12 %

Total Medical Product & Therapies net sales $ 1,285 $ 1,262 2 % (2) %

Total Medical Products & Therapies net sales $ 2,076 $ 1,945 7 % 5 %

Six Months Ended June 30, Percent change

(in millions) 2026 2025 At actual

rates At organic sales growth 1

Infusion Therapies & Platforms

$ 3,361 $ 3,239 4 % 1 %

Advanced Surgery 635 564 13 % 11 %

Total Medical Products & Therapies net sales $ 3,996 $ 3,803 5 % 2 %

1 Percent change in net sales at organic sales growth is a non-GAAP financial measure.

See the section entitled “Non-GAAP Financial Measures” for additional information about our use of that measure.

Medical Product & Therapies segment net sales increased 2% in the first quarter of 2026, as compared to the prior year period.

Infusion Therapies & Technologies net sales decreased 1% in the first quarter of 2026, as compared to the prior year period.

The decline in the first quarter was primarily due to lower Novum LVP pump sales as a result of the voluntary shipment and implementation hold.

Sales volumes were further impacted by a strong prior year comparison in U.S.

IV solutions businesses, during which we experienced strong sales due to a one-time distributor build following Hurricane Helene.

Foreign exchange rates favorably impacted sales growth by 4% for the first quarter of 2026, as compared to the prior year period.

Medical Products & Therapies segment net sales increased 7% in the second quarter and increased 5% in the first six months of 2026, as compared to the prior year periods.

Infusion Therapies & Platforms net sales increased 6% in the second quarter and increased 4% in the first six months of 2026, as compared to the prior year periods.

The increase in the second quarter was driven by increased demand for our international pharmacy compounding offerings and a weak prior year comparison in the U.S.

IV solutions business, during which we experienced lower sales due to distributor destocking and fluid conservation practices embedded with clinical practice changes.

These increases were partially offset by a sales decline in our Injectables portfolio due to ongoing supply constraints in the U.S.

and international markets and softness in certain premix products.

Sales volumes were further impacted by lower volumes of our Novum LVP due to the continued shipment and implementation hold.

Foreign exchange rates favorably impacted sales growth by 2% for the second quarter of 2026, as compared to the prior year period.

Sales performance in the first six months of 2026 reflected increased demand for our international pharmacy compounding offerings, partially offset by lower sales in our injectables portfolio due to ongoing supply constraints in the U.S.

and international markets and softness in certain premix products, as well as lower volumes of our Novum LVP due to the continued shipment and implementation hold.

Foreign exchange rates favorably impacted sales growth by 3% for the first six months of 2026, as compared to the prior year period.

As previously discussed in "Factors Affecting our Results of Operations", we elected to temporarily stop distributing and installing the Novum LVP in the U.S.

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Our Spectrum IQ large volume pump remains available as an alternative option for customers with Novum LVPs.

Advanced Surgery net sales increased 13% in the first quarter of 2026, as compared to the prior year period.

Advanced Surgery net sales increased 12% in the second quarter and increased 13% in the first six months of 2026, as compared to the prior year periods.

Sales performance was primarily driven by growth in hemostats and sealants and was primarily attributable to increased sales volume globally.

Foreign currency exchange rates favorably impacted sales growth by 3% for the first quarter of 2026, as compared to the prior year period.

Foreign currency exchange rates favorably impacted sales growth by 2% in the first six months of 2026, as compared to the prior year period.

Healthcare Systems & Technologies

Our 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.

Three Months Ended March 31, Percent change

positioning devices, and other accessories.

Three Months Ended June 30, Percent change

(in millions) 2026 2025 At actual

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Total Healthcare Systems & Technologies net sales $ 801 $ 767 4 % 4 %

1 Percent change in net sales at organic sales growth is a non-GAAP financial measure.

See the section entitled “Non-GAAP Financial Measures” for additional information about our use of that measure.

Healthcare Systems & Technologies segment net sales were flat in the first quarter of 2026, as compared to the prior year period.

Care & Connectivity Solutions net sales increased 2% in the first quarter of 2026, as compared to the prior year period.

Sales performance was primarily driven by increased volume associated with increased capital spending by customers in the U.S.

for patient support systems, offset by lower installations in our care communications portfolio.

Foreign currency exchange rates favorably impacted sales growth by 2% for the first quarter of 2026, as compared to the prior year period.

Front Line Care net sales decreased 3% in the first quarter of 2026, as compared to the prior year period.

The decline in the first quarter was primarily impacted by the timing of orders and the impact of planned global portfolio exits.

Foreign currency exchange rates favorably impacted sales growth by 1% for the first quarter of 2026, as compared to the prior year period.

Pharmaceuticals

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

Three Months Ended March 31, Percent change

Six Months Ended June 30, Percent change

(in millions) 2026 2025 At actual

rates At organic sales growth 1

Injectables & Anesthesia

$ 301 $ 335 (10) % (13) %

Drug Compounding 320 246 30 % 20 %

Total Pharmaceuticals net sales $ 621 $ 581 7 % 1 %

1 Percent change in net sales at organic growth rates is a non-GAAP financial measure.

Care & Connectivity Solutions $ 937 $ 901 4 % 3 %

Front Line Care 569 570 (0) % (1) %

Total Healthcare Systems & Technologies net sales $ 1,506 $ 1,471 2 % 1 %

1 Percent change in net sales at organic sales growth is a non-GAAP financial measure.

See the section entitled “Non-GAAP Financial Measures” for additional information about our use of that measure.

Pharmaceuticals segment net sales increased 7% in the first quarter of 2026, as compared to the prior year period.

Injectables & Anesthesia net sales decreased 10% in the first quarter of 2026, as compared to the prior year period.

The sales decline in the first quarter was primarily driven by supply constraints in the U.S.

and international markets and softness in certain premix products in our injectables portfolio and lower demand in anesthesia globally.

Foreign exchange favorably impacted sales growth by 3% for the first quarter, as compared to the prior year period.

Drug Compounding net sales increased 30% in the first quarter of 2026, as compared to the prior year period.

Sales performance was primarily driven by increased demand for our international pharmacy compounding offerings.

Foreign currency exchange rates favorably impacted sales growth by 10% for the first quarter of 2026, as compared to the prior year period.

During the three months ended March 31, 2026 and 2025, we earned $90 million and $78 million, respectively, of revenues that were not attributable to our reportable segments.

The increase in Other sales for the three months ended March 31, 2026 as compared to the prior year period reflects the impact of the Kidney Care MSA entered into upon the sale of our Kidney Care business in January 2025.

Healthcare Systems & Technologies segment net sales increased 4% in the second quarter and increased 2% in the first six months of 2026, as compared to the prior year periods.

Care & Connectivity Solutions net sales increased 6% in the second quarter and increased 4% in the first six months of 2026, as compared to the prior year periods.

Sales performance was primarily driven by increased volume associated with execution against the order backlog in the U.S.

for patient support systems.

Foreign currency exchange rates favorably impacted sales growth by 1% for the second quarter and the first six months of 2026, as compared to the prior year periods.

Front Line Care net sales increased 2% in the second quarter and were flat in the first six months of 2026, as compared to the prior year periods.

The increase in the second quarter was primarily impacted by continued momentum within patient monitoring systems and the timing of orders, partially offset by planned global product exits.

Sales performance in the first six months was driven by increased demand across our respiratory health products, confirm cardiology products and patient monitoring systems, offset by planned global product exits.

Foreign currency exchange rates favorably impacted sales growth by 1% the first six months of 2026, as compared to the prior year period.

Other sales, which represent sales not allocated to a reportable segment, include sales to Vantive, pursuant to the Kidney Care MSA.

During the three months ended June 30, 2026 and 2025, we earned $83 million and $98 million, and $159 million and $161 million for the six months ended June 30, 2026 and 2025, respectively, of revenues that were not attributable to our reportable segments.

The decrease in Other sales for the second quarter and six months ended June 30, 2026 as compared to the prior year periods is driven by reduced volumes under the Kidney Care MSA.

COSTS AND EXPENSES

Special Items

The following table provides a summary of our special items from continuing operations and the related impact by line item on our results for the three months ended March 31, 2026 and 2025.

Three Months Ended March 31,

The following table provides a summary of our special items from continuing operations and the related impact by line item on our results for the three and six months ended June 30, 2026 and 2025.

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

(in millions) 2026 2025 2026 2025

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Business optimization items 1

(3) (6) (14) (19)

European medical devices regulation 2

(4) (5) (8) (10)

Separation-related costs 8

(3) (1) (3) (1)

Product-related items 3

— (23) 12 (29)

Business transformation 4

Hurricane Helene costs 5

(3) (17) (6) (115)

Legal matters 6

Total Special Items $ (110) $ (153) $ (212) $ (390)

Impact on Gross Margin Ratio (3.8) pts (9.0) pts

Impact on Gross Margin Ratio (3.7) pts (5.4) pts (3.7) pts (7.2) pts

Selling, General and Administrative (SG&A) Expenses

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Separation-related costs 8

19 $ 13 30 26

Business transformation 4

Total Special Items $ 87 $ 79 $ 201 $ 174

Impact on SG&A Ratio 4.3 pts 3.6 pts

Impact on SG&A Ratio 2.9 pts 2.9 pts 3.5 pts 3.2 pts

Research and Development (R&D) Expenses

Business optimization items 1

$ — $ — $ 15 $ 2

Business transformation 4

Total Special Items $ 4 $ — $ 19 $ 2

Impact on R&D Ratio 0.5 pts 0.0 pts

Impact on R&D Ratio 0.2 pts 0.0 pts 0.3 pts 0.0 pts

Other Operating Income, net

Business transformation 4

$ 3 $ — $ 3 $ —

Total Special Items $ 3 $ — $ 3 $ —

Other (Income) Expense, net

Investment impairments 9

$ — $ — $ 5 $ 9

Acquisition and integration items 7

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Tax matters 10

$ (3) $ 4 $ 23 $ (39)

Tax effects of special items 11

(46) (54) (103) (138)

Total Special Items $ (49) $ (50) $ (80) $ (177)

Impact on Effective Tax Rate (201.6) pts 2,215.9 pts

1 Our results for the first quarter of 2026 and 2025 included business optimization charges of $68 million and $45 million, respectively.

These restructuring and business optimization costs in 2026 and 2025 included costs primarily related to initiatives to reduce our cost structure following the sale of our former Kidney Care segment.

Impact on Effective Tax Rate (5.3) pts (8.4) pts 3.1 pts (60.1) pts

1 Our results for the second quarter of 2026 and 2025 included business optimization charges of $7 million and $17 million, respectively.

Our results for the first six months of 2026 and 2025 included business optimization charges of $75 million and $62 million, respectively.

These restructuring and business optimization costs primarily related to initiatives to reduce our cost structure following the sale of our former Kidney Care business.

Refer to Note 10 in Item 1 of this Quarterly Report on Form 10-Q for further information regarding these charges and related liabilities.

2 Our results for the first quarter of 2026 and 2025 included $4 million and $5 million, respectively, of incremental costs to comply with the European Union's medical device regulations for previously registered products, which primarily consist of contractor costs and other direct third-party costs.

2 Our results for the second quarter of 2026 and 2025 included $4 million and $5 million, respectively, and for the first six months of 2026 and 2025 included $8 million and $10 million, respectively, of incremental costs to comply with the European Union's medical device regulations for previously registered products, which primarily consist of contractor costs and other direct third-party costs.

We consider the adoption of these regulations to be a significant one-time regulatory change and believe that the costs of initial compliance for previously registered products over the implementation period are not indicative of our core operating results.

3 Our results for the first quarter of 2026 included a benefit of $12 million related to a revised estimate of warranty and remediation activities from field corrective actions across our infusion pump category initially recorded in 2025.

Our results for the first quarter of 2025 included charges of $6 million related to a revised estimate of warranty and remediation activities arising from a field corrective action on certain of our infusion pumps initially recorded in 2022.

4 Our results in the first quarter of 2026 included charges of $11 million related to business transformation costs which include expenses incurred in connection with discrete, newly launched enterprise‑wide initiatives to modernize and simplify systems, redesign operating models, and enhance process efficiency and digital capabilities.

3 Our results for the first six months of 2026 included a benefit of $12 million related to a revised estimate of warranty and remediation activities from field corrective actions across our infusion pump category initially recorded in 2025.

Our results for the second quarter and first six months of 2025 included charges of $23 million and $29 million, respectively, related to an estimate of warranty and remediation activities from field corrective actions on certain of our infusion pumps and a revised estimate of warranty and remediation activities arising from a field corrective action on certain of our infusion pumps initially recorded in 2022.

4 Our results in the second quarter and the first six months of 2026 included charges of $23 million and $34 million, respectively, primarily related to business transformation costs which include expenses incurred in connection with discrete, recently launched enterprise‑wide initiatives to modernize and simplify systems, redesign operating models, and enhance process efficiency and digital capabilities.

These costs are distinct from restructuring‑related charges (which are included in footnote 1 above as Business Optimization items) and are excluded to provide investors with greater comparability of underlying operating performance.

5 Our results in the first quarter of 2026 and 2025 included charges of $3 million and $98 million, respectively, related to damages caused by Hurricane Helene which consisted of remediation, air freight and other costs.

6 Our results in the first quarter of 2025 included charges of $11 million related to matters involving alleged injury from environmental exposure.

7 Our results for the first quarter of 2025 included $6 million of integration costs which primarily reflected the recognition of a non-cash impairment of properly, plant and equipment related to integration activities.

8 Our results for the first quarter of 2026 and 2025 included $11 million and $13 million, respectively, of separation-related costs primarily reflecting costs of external advisors supporting our activities related to the sale of our former Kidney Care segment.

9 Our results in the first quarter of 2026 and 2025 included $5 million and $9 million, respectively, related to losses from non-cash impairment write-downs of investments.

10 Our results in the first quarter of 2026 included $26 million of income tax expense primarily related to an increase in interest related to uncertain tax positions and differences arising from the use of a forecasted effective tax rate to compute income tax expense during the quarter.

Our results in the first quarter of 2025, included $43 million of income tax benefit driven by an entity classification election that we made for U.S.

5 Our results in the second quarter of 2026 and 2025 included charges of $3 million and $17 million, respectively, and for the first six months of 2026 and 2025 included $6 million and $115 million, respectively, related to damages caused by Hurricane Helene which consisted of remediation, air freight and other costs.

6 Our results in the first six months of 2025 included charges of $11 million related to matters involving alleged injury from environmental exposure.

7 Our results for the second quarter and first six months of 2025 included $5 million and $11 million, respectively, of integration costs which primarily reflected third party consulting costs related to the ongoing integration of Hill-Rom Holdings, Inc.

In the first six months of 2025 those costs also included the recognition of a non-cash impairment of property, plant and equipment related to integration activities.

8 Our results for the second quarter of 2026 and 2025 included $22 million and $14 million, respectively, and for the first six months of 2026 and 2025 included $33 million and $27 million, respectively of separation-related costs primarily reflecting costs of external advisors supporting our activities related to the sale of our former Kidney Care business.

9 Our results in the first six months of 2026 and 2025 included $5 million and $9 million, respectively, related to losses from non-cash impairment write-downs of investments.

10 Our results in the second quarter of 2026 included a $3 million income tax benefit related to the settlement of certain income tax audits and adjustments to our valuation allowance on U.S.

deferred tax assets, partially offset by the application of intraperiod tax allocation to our adjusted results in an interim period.

Our results in the second quarter of 2025 included $4 million of income tax expense resulting from the application of an intraperiod tax allocation to our adjusted results in an interim period.

Our results in the first six months of 2026 included $23 million of income tax expense primarily related to differences arising from the use of a forecasted effective tax rate to compute income tax expense during the period, partially offset by the settlement of certain income tax audits.

Our results in the first six months of 2025 included $39 million of income tax benefit primarily driven by an entity classification election that we made for U.S.

tax purposes, which resulted in a capital loss.

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Gross Margin and Expense Ratios

Three Months Ended March 31,

Three Months Ended June 30,

2026 % of net sales 2025 % of net sales $ change % change

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R&D $ 129 4.4 % $ 134 4.8 % $ (5) (3.7) %

Our gross margin ratio was 33.0% and 32.8% for the three months ended March 31, 2026 and 2025, respectively.

The special items identified earlier in this section had an unfavorable impact of approximately 3.8 and 9.0 percentage points on the gross margin ratio for the three months ended March 31, 2026 and 2025, respectively.

Excluding the impact of special items, the gross margin ratio decreased by 5.0 percentage points in the first quarter of 2026 compared to the prior year period.

The lower gross margins were primarily driven by increased manufacturing and supply costs, tariffs and product mix.

Our SG&A expenses ratio was 27.0% and 26.8% for the three months ended March 31, 2026 and 2025, respectively.

The special items identified earlier in this section had an unfavorable impact of approximately 4.3 and 3.6 percentage points on the SG&A expenses ratio for the three months ended March 31, 2026 and 2025, respectively.

Excluding the impact of special items, the SG&A expenses ratio decreased by 0.5 percentage points in the first quarter of 2026 compared to the prior year period.

Six Months Ended June 30,

2026 % of net sales 2025 % of net sales $ change % change

Gross margin $ 1,923 34.0 % $ 1,852 34.1 % $ 71 3.8 %

SG&A $ 1,463 25.8 % $ 1,421 26.1 % $ 42 3.0 %

R&D $ 268 4.7 % $ 274 5.0 % $ (6) (2.2) %

Our gross margin ratio was 34.9% and 35.3% for the three months ended June 30, 2026 and 2025, respectively.

The special items identified earlier in this section had an unfavorable impact of approximately 3.7 and 5.4 percentage points on the gross margin ratio for the three months ended June 30, 2026 and 2025, respectively.

Our gross margin ratio was 34.0% and 34.1% for the first six months ended June 30, 2026 and 2025, respectively.

The special items identified earlier in this section had an unfavorable impact of approximately 3.7 and 7.2 percentage points on the gross margin ratio for the first six months ended June 30, 2026 and 2025, respectively.

Excluding the impact of special items, the gross margin ratio decreased by 2.1 and 3.6 percentage points in the second quarter and first six months of 2026, respectively, compared to the prior year periods.

The lower gross margins were primarily driven by increased manufacturing and supply costs, including an updated estimate of indirect costs previously recorded in SG&A now capitalized into inventory after the separation of our former Kidney Care business, and product mix, partially offset by IEEPA tariff refunds recorded in the second quarter of 2026.

Our SG&A expenses ratio was 24.8% and 25.6% for the three months ended June 30, 2026 and 2025, respectively.

The special items identified earlier in this section had an unfavorable impact of approximately 2.9 percentage points on the SG&A expenses ratio for the three months ended June 30, 2026 and 2025.

Our SG&A expenses ratio was 25.8% and 26.1% for the first six months ended June 30, 2026 and 2025, respectively.

The special items identified earlier in this section had an unfavorable impact of approximately 3.5 and 3.2 percentage points on the SG&A expenses ratio for the first six months ended June 30, 2026 and 2025, respectively.

Excluding the impact of special items, the SG&A expenses ratio decreased by 0.8 and 0.6 percentage points in the second quarter and first six months of 2026, respectively, compared to the prior year periods.

The decrease primarily reflects lower headcount, partially offset by annual compensation increases.

Our R&D expenses ratio was 5.1% and 5.3% for each of the three months ended March 31, 2026 and 2025.

The special items identified earlier in this section had an unfavorable impact of approximately 0.5 percentage points on the

R&D expenses ratio for the three months ended March 31, 2026 and no impact on the R&D expenses ratio for the three months ended March 31, 2025.

Excluding the impact of special items, the R&D expenses ratio decreased by 0.7 percentage points in the first quarter of 2026 compared to the prior year period primarily due to phasing of R&D spend which is expected to be consistent on a full year basis.

Our R&D expenses ratio was 4.4% and 4.8% for the three months ended June 30, 2026 and 2025, respectively.

The special items identified earlier in this section had an unfavorable impact of approximately 0.2 percentage points on the R&D expenses ratio for the three months ended June 30, 2026 and no impact on the R&D expenses ratio for the three months ended June 30, 2025.

Our R&D expenses ratio was 4.7% and 5.0% for the first six months ended June 30, 2026 and 2025.

The special items identified earlier in this section had an unfavorable impact of approximately 0.3 percentage points on the R&D expenses ratio for the first six months ended June 30, 2026 and no impact on the R&D expenses ratio for the first six months ended June 30, 2025.

Excluding the impact of special items, the R&D expenses ratio decreased by 0.6 percentage points in the second quarter and first six months of 2026, compared to the prior year periods.

The decrease is primarily due to phasing of R&D spend which is expected to be flat on a full year basis.

Business Optimization Items

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

For the three months ended March 31, 2026, $58 million of the restructuring charges, consisting of employee termination costs, were related to initiatives to reduce our cost structure following the sale of our Kidney Care segment.

We currently expect to incur additional pre-tax costs, primarily related to the implementation of business optimization programs, of approximately $2 million through the completion of certain initiatives that are currently underway.

For the six months ended June 30, 2026, $58 million of the restructuring charges, consisting of employee termination costs, were related to initiatives to reduce our cost structure following the sale of our Kidney Care business.

We currently expect to incur additional pre-tax costs, primarily related to the implementation of business optimization programs, that are not material to our condensed consolidated financial statements, through the completion of certain initiatives that are currently underway.

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

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Other Operating Income, Net

Other operating income, net was $42 million and $40 million in the first quarter of 2026 and 2025, respectively, and these amounts were primarily related to the income recognized under the Kidney Care TSA entered into upon the sale of the Kidney Care business in January 2025.

Other operating income, net was $49 million and $52 million in the second quarter of 2026 and 2025, respectively, and $91 million and $92 million for first six months ended June 30, 2026 and 2025, respectively.

These amounts were

primarily related to the income recognized under the Kidney Care TSA entered into upon the sale of the Kidney Care business in January 2025.

Interest Expense, Net

Interest expense, net was $66 million and $64 million in the first quarter of 2026 and 2025, respectively.

The slight increase in 2026 was driven by higher interest expense on senior notes issued in the fourth quarter of 2025 partially offset by debt repayments in the first three months of 2025.

Interest expense, net was $64 million and $58 million in the second quarter of 2026 and 2025, respectively, and $130 million and $122 million for first six months ended June 30, 2026 and 2025, respectively.

The increase in the second quarter and first six months of 2026 was driven by higher interest expense on senior notes issued in the fourth quarter of 2025 partially offset by debt repayments in the first six months of 2025.

Other (Income) Expense, net

Other (income) expense, net was expense of $6 and income of $3 million in the first quarter of 2026 and 2025, respectively.

In the current year period, the decrease in other (income) expense, net was primarily driven pension and other postretirement benefits and foreign exchange losses.

Other (income) expense, net was income of $5 million and zero in the second quarter of 2026 and 2025, respectively.

In the current year period, other income, net was primarily driven by pension and other postretirement benefits.

In the prior year period, other (income) expense, net was primarily driven by pension and other postretirement benefits, offset by foreign exchange losses.

Other (income) expense, net was expense of $1 million and income of $3 million for the first six months ended June 30, 2026 and 2025, respectively.

In the current year period, other expense, net was primarily driven by losses from investments and foreign exchange losses, offset by pension and other postretirement benefits.

In the prior year period, other income, net was primarily driven by pension and other postretirement benefits, partially offset by foreign currency losses and losses from a noncash impairment write-down in an equity method investment.

Our effective income tax rate was 15% and 8% for the three months ended June 30, 2026 and 2025, respectively, and 22% and (43)% for the first six months ended June 30, 2026 and 2025, respectively.

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

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

For the three months ended March 31, 2026, the difference between our effective income tax rate and the U.S.

federal statutory rate was primarily driven by our near break-even pre-tax results and increases to our valuation allowance on U.S.

deferred tax assets.

The quarter also reflects income tax recorded related to tax shortfalls on stock compensation awards.

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

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

For the three months ended June 30, 2026, the difference between our effective income tax rate and the U.S.

federal statutory rate was primarily driven by global earnings mix, partially offset by increases to our valuation allowance on U.S.

deferred tax assets and tax shortfalls on stock compensation awards.

For the first six months ended June 30, 2026, the difference between our effective income tax rate and the U.S.

federal statutory rate was primarily driven by global earnings mix, partially offset by increases to our valuation allowance on U.S.

deferred tax assets and tax shortfalls on stock compensation awards.

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

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

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

federal statutory rate was primarily driven by a tax benefit driven by an entity classification election that we made for U.S.

tax purposes, which resulted in a capital loss.

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.

During the quarter, we received a Notice of Proposed Adjustment (NOPA) from the IRS covering the 2019 and 2020 tax years that is consistent with our existing and previously disclosed uncertain tax position reserves.

We did not record further reserves in connection with the NOPA, other than interest that may be owed upon conclusion of the audit.

In the first quarter of 2026, we received a Notice of Proposed Adjustment (NOPA) from the Internal Revenue Service (IRS) for examination related to transfer pricing matters related to transactions with our manufacturing operations in Costa Rica and Puerto Rico for the 2019 and 2020 tax years.

In the second quarter of 2026, we settled the examination by the IRS related to these matters for amounts materially consistent with our existing and previously disclosed uncertain tax position reserves.

The previously disclosed uncertain tax position reserves for tax years 2021 through 2025 were not adjusted as a result of the aforementioned IRS settlement for 2019 and 2020 tax years.

While we believe that our transfer pricing positions are well documented and properly supported, and adequate amounts have been reserved to account for any adjustments that may ultimately result from this examination, the matter remains open for resolution.

Additionally, if the IRS were to assert we owe additional taxes and prevails in this assertion, such outcome could have a material impact on our financial position, results of operations, and cash flows.

Additionally, if the IRS were to assert we owe additional taxes and prevail in this assertion, such outcome could have a material impact on our financial position, results of operations, and cash flows.

During 2025, because of a cumulative history of operating losses in the U.S., we recorded a valuation allowance against our U.S.

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Although we expect to remain in a U.S.

valuation allowance position for at least the next 12 months, we also anticipate future changes in the amount of the valuation including during 2026, which could be material, due to operational activity and movement in our routine deferred tax assets and liabilities.

valuation allowance position for at least the next 12 months, we also

anticipate future changes in the amount of the valuation allowance including during 2026, which could be material, due to operational activity and movement in our routine deferred tax assets and liabilities.

The Organization of Economic Co-operation and Development (OECD) reached agreement among over 140 countries to implement a minimum 15% tax rate on certain multinational enterprises, commonly referred to as Pillar Two.

During the quarter, the OECD published administrative guidance proposing a Side-by-Side safe harbor, which may reduce the impact of Pillar Two for U.S.

During the first quarter of 2026, the OECD published administrative guidance proposing a Side-by-Side safe harbor, which may reduce the impact of Pillar Two for U.S.

headquartered multinational corporations.

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Discontinued Operations

On January 31, 2025, we completed the sale of our Kidney Care business and its results have been presented as discontinued operations for the three months ended March 31, 2026 and 2025.

Income (loss) from discontinued operations, net of tax was $2 million in the first quarter of 2026, compared to $62 million in the first quarter of 2025.The decrease in the current year period was primarily driven by the gain on the sale of our Kidney Care business for the three months ended March 31, 2025.

On January 31, 2025, we completed the sale of our Kidney Care business and its results have been presented as discontinued operations for the three and six months ended June 30, 2026 and 2025.

Income (loss) from discontinued operations, net of tax was $(9) million in the second quarter of 2026, compared to $(31) million in the second quarter of 2025.

The decrease in the current year period was primarily driven by changes in related tax indemnification liabilities.

For the first six months ended June 30, 2026 and 2025, income (loss) from discontinued operations, net of tax was $(7) million and $31 million, respectively.

The decrease in the current year period was primarily driven by the gain on the sale of our Kidney Care business for the six months ended June 30, 2025.

Refer to Note 2 within Item 1 for additional information.

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The following is a summary of our operating income for our reportable segments.

Three Months Ended March 31,

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

(in millions) 2026 2025 2026 2025

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% of Segment Net Sales 20.3 % 20.3 % 17.4 % 18.9 %

Pharmaceuticals 46 63

% of Segment Net Sales 7.4 % 10.8 %

Total reportable segment operating income 563 600 1,012 1,125

Other 6 6 13 12

Unallocated corporate costs (148) (183) (307) (322)

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Medical Products & Therapies

Segment operating income was $186 million and $244 million in the first quarter of 2026 and 2025, respectively.

The decrease in segment operating income in the first quarter compared to the prior year period was primarily driven by increased manufacturing and supply costs, tariffs and lower sales volumes.

Segment operating income was $400 million and $444 million in the second quarter of 2026 and 2025, respectively, and $750 million and $847 million for the first six months ended June 30, 2026 and 2025, respectively.

The decrease in segment operating income in the second quarter and first six months ended June 30, 2026 compared to the prior year periods were primarily driven increased manufacturing and supply costs, pricing reductions, and the timing

impact of an updated cost estimate of indirect costs capitalized into inventory in the prior year.

This was partially offset by IEEPA tariff refunds recognized in the second quarter of 2026.

Healthcare Systems & Technologies

Segment operating income was $66 million and $93 million in the first quarter of 2026 and 2025, respectively.

Segment operating income decreased in the first quarter compared to the prior year period primarily due to increased manufacturing and supply costs, tariffs and lower sales volumes.

Pharmaceuticals

Segment operating income was $46 million and $63 million in the first quarter of 2026 and 2025, respectively.

Segment operating income decreased in the first quarter compared to the prior year period primarily due to increased manufacturing and supply costs, price impacts resulting from increased competition and supply constraints which impacted select higher margin products.

Other operating income, which represents operating income not attributable to our reportable segments, was $11 million and $9 million in the first quarter of 2026 and 2025, respectively.

Other operating income increased in the first quarter compared to the prior year period primarily due to a longer period of income recognition in the current quarter.

Segment operating income was $163 million and $156 million in the second quarter of 2026 and 2025, respectively, and $262 million and $278 million for the first six months ended June 30, 2026 and 2025, respectively.

Segment operating income increased in the second quarter compared to the prior year period primarily due to cost savings and IEEPA tariff refunds recognized in the second quarter of 2026, largely offset by increased manufacturing and supply costs.

The decrease in the first six months ended June 30, 2026 compared to the prior year period was primarily due to increased manufacturing and supply costs, partially offset by improved sales volumes and IEEPA tariff refunds recognized in the second quarter of 2026.

Other operating income, which represents operating income not attributable to our reportable segments, was $6 million in the second quarter of 2026 and 2025, and $13 million and $12 million for the first six months ended June 30, 2026 and 2025, respectively.

The increase in the first six months of 2026 compared to the prior year period was primarily due to a longer period of income recognition in the current year period.

In the prior year period, income from revenues earned under the Kidney Care MSA was recognized following the closing of the sale of the Kidney Care business on January 31, 2025, whereas income from revenues earned under the Kidney Care MSA was recognized for the full period in the current year.

Unallocated Corporate Costs

Under our operating model, most global functional support costs, overhead costs and other shared costs that benefit our segments are allocated to those segments.

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

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

Corporate costs that do not benefit our segments are presented as unallocated corporate costs.

Additionally, intangible asset amortization and other special items are not allocated to our segments.

LIQUIDITY AND CAPITAL RESOURCES

The following table is a summary of the statement of cash flows for the three-month periods ended March 31, 2026 and 2025.

Three Months Ended March 31,

The following table is a summary of the statement of cash flows for the six-month periods ended June 30, 2026 and 2025.

Six Months Ended June 30,

(in millions) 2026 2025

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Cash Flows from Operations - Continuing Operations

For the three months ended March 31, 2026, operating cash flows from continuing operations were $213 million.

For the three months ended March 31, 2025, operating cash flows used in continuing operations were $99 million.

Operating cash flows from continuing operations in the current year period were favorably impacted by improved collections on accounts receivable and the extension of vendor payment terms.

For the six months ended June 30, 2026, operating cash flows from continuing operations were $510 million.

For the six months ended June 30, 2025, operating cash flows from continuing operations were $118 million.

Operating cash flows from continuing operations in the current year period increased primarily due to favorable changes in working capital, driven by reductions in inventory and prepaid expenses and improved collections of accounts receivable.

Cash Flows from Investing Activities - Continuing Operations

For the three months ended March 31, 2026, cash used in investing activities from continuing operations primarily included capital expenditures of $137 million.

For the three months ended March 31, 2025 , cash used in investing activities from continuing operations primarily included capital expenditures of $122 million.

For the six months ended June 30, 2026, cash used in investing activities from continuing operations primarily included capital expenditures of $253 million.

For the six months ended June 30, 2025 , cash used in investing activities from continuing operations primarily included capital expenditures of $262 million.

Cash Flows from Financing Activities

For the three months ended March 31, 2026, cash used in financing activities primarily included payments for tax shares withheld for stock issued under employee benefit plans.

For the three months ended March 31, 2025, cash used in financing activities included debt repayments of $2.83 billion, a decrease in commercial paper borrowings of $300 million, and dividend payments of $87 million, partially offset by proceeds from stock issued under employee benefit plans of $10 million.

For the six months ended June 30, 2026, cash used in financing activities primarily included payments of a contingent liability to Vantive of $31 million.

For the six months ended June 30, 2025, cash used in financing activities included debt repayments of $3.51 billion, a decrease in commercial paper borrowings of $300 million, and dividend payments of $174 million, partially offset by proceeds from stock issued under employee benefit plans of $16 million.

As authorized by our Board of Directors, we repurchase our stock depending upon our cash flows, net debt levels and market conditions.

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

We did not repurchase any shares under this authority in the first three months of 2026.

We had $1.30 billion remaining available under this authorization as of March 31, 2026.

We did not repurchase any shares under this authority in the first six months of 2026.

We had $1.30 billion remaining available under this authorization as of June 30, 2026.

Credit Facilities, Commercial Paper Program and Access to Capital and Credit Ratings

Credit Facilities and Commercial Paper Program

As of March 31, 2026, we had a multicurrency revolving credit facility, as described below.

As of June 30, 2026, we had a multicurrency revolving credit facility, as described below.

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

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

We may, at our option, seek to increase the aggregate commitment under the Multicurrency Revolver by up to $1.10 billion, which

would result in a maximum aggregate commitment of up to $3.30 billion.

There were no borrowings outstanding under the Multicurrency Revolver as of March 31, 2026 or December 31, 2025.

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

There were no borrowings outstanding under the Multicurrency Revolver as of June 30, 2026 or December 31, 2025.

Our commercial paper borrowing arrangements require us to maintain undrawn borrowing capacity under the Multicurrency Revolver for an amount at least equal to our outstanding commercial paper borrowings.

As of March 31, 2026, we were in compliance with the financial covenant in the Multicurrency Revolver.

Based on our covenant calculations as of March 31, 2026, we had capacity to draw $1.62 billion under the Multicurrency Revolver.

As of June 30, 2026, we were in compliance with the financial covenant in the Multicurrency Revolver.

Based on our covenant calculations as of June 30, 2026, we had capacity to draw $1.41 billion under the Multicurrency Revolver.

The non-performance of any financial institution supporting the Multicurrency Revolver would reduce the maximum capacity thereunder by such institution’s respective commitment.

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We intend to fund short-term and long-term obligations as they mature through cash on hand, future cash flows from operations, or by issuing additional debt, which could include commercial paper.

We had $2.02 billion of cash and cash equivalents as of March 31, 2026, with adequate cash available to meet operating requirements in each jurisdiction in which we operate.

We had $2.15 billion of cash and cash equivalents as of June 30, 2026, with adequate cash available to meet operating requirements in each jurisdiction in which we operate.

We invest our excess cash in money market and other funds and diversify the concentration of cash among different financial institutions.

As of March 31, 2026, we had approximately $9.46 billion of long-term debt and finance lease obligations, including current maturities and short-term debt.

As of June 30, 2026, we had approximately $9.46 billion of long-term debt and finance lease obligations, including current maturities and short-term debt.

Subject to market conditions, we regularly evaluate opportunities with respect to our capital structure (including with respect to the potential refinancing of our outstanding indebtedness).

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A summary of our significant accounting policies is included in Note 1 to our consolidated financial statements in our 2025 Annual Report.

Certain of our accounting policies are considered critical, as these policies are the most important to the depiction of our financial statements and require significant, difficult or complex judgments by us, often employing the use of estimates about the effects of matters that are inherently uncertain.

about the effects of matters that are inherently uncertain.

Such policies are summarized in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section in our 2025 Annual Report.

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Front Line Care Reporting Unit

In connection with our November 1, 2025 annual goodwill impairment tests, we recorded a goodwill impairment

related to our Front Line Care reporting unit within our Healthcare Systems & Technologies segment to reduce the carrying value of the reporting unit to its fair value.

While no triggering events were identified during the three months ended March 31, 2026, we are continuing to closely monitor the performance of this reporting unit (including in light of evolving global macroeconomic conditions and capital spending patterns), and if there is a significant adverse change in our outlook for this business in the future, a goodwill impairment could arise at that time.

As of March 31, 2026, the carrying amount of goodwill for our Front Line Care reporting unit was $1.51 billion.

In connection with our November 1, 2025 annual goodwill impairment tests, we recorded a goodwill impairment related to our Front Line Care reporting unit within our Healthcare Systems & Technologies segment to reduce the carrying value of the reporting unit to its fair value.

While no triggering events were identified during the six months ended June 30, 2026, we are continuing to closely monitor the performance of this reporting unit (including in light of evolving global macroeconomic conditions and capital spending patterns), and if there is a significant adverse change in our outlook for this business in the future, a goodwill impairment could arise at that time.

As of June 30, 2026, the carrying amount of goodwill for our Front Line Care reporting unit was $1.51 billion.

Welch Allyn Trade Name

In connection with our annual trade name impairment assessment in the fourth quarter of 2025, we recognized an impairment charge 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.

While no triggering events were identified during the three months ended March 31, 2026, we are continuing to closely monitor the performance of this intangible asset (including in light of evolving global macroeconomic conditions and capital spending patterns), and if there is a significant adverse change in our outlook for this intangible asset in the future, an intangible asset impairment could arise at that time.

As of March 31, 2026, the carrying amount of the Welch Allyn Trade Name was $390 million.

There have been no significant changes in the application of our critical accounting policies during the first three months of 2026.

While no triggering events were identified during the six months ended June 30, 2026, we are continuing to closely monitor the performance of this intangible asset (including in light of evolving global macroeconomic conditions and capital spending patterns), and if there is a significant adverse change in our outlook for this intangible asset in the future, an intangible asset impairment could arise at that time.

As of June 30, 2026, the carrying amount of the Welch Allyn Trade Name was $390 million.

There have been no significant changes in the application of our critical accounting policies during the first six months of 2026.

RECENT ACCOUNTING PRONOUNCEMENTS

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In June 2025, FDA performed another re-inspection of the site.

On October 31, 2025, FDA classified the June 2025 inspection as VAI, indicating that the site is in acceptable compliance with FDA’s current Good Manufacturing Practice requirements.

On October 31, 2025, FDA classified the June 2025 inspection as VAI,

indicating that the site is in acceptable compliance with FDA’s current Good Manufacturing Practice requirements.

Based on the VAI reclassification, Baxter expects that the 2023 Warning Letter will be closed and no additional Warning Letters on the facilities will remain outstanding.

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2 Available online at https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/baxter-healthcare-corporation-654136-07252023

References to websites, links or other information are provided for convenience only.

None of the information or data included on these websites or accessible at these links is incorporated into, and will not be deemed to be part of, this quarterly report on Form 10-Q or any of Baxter's other filings with the SEC.

FORWARD-LOOKING INFORMATION

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Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact.

These statements by their nature address matters that are

uncertain to different degrees.

These statements by their nature address matters that are uncertain to different degrees.

Use of the words “may,” “will,” “would,” “could,” “should,” “believes,” “estimates,” “projects,” “potential,” “expects,” “plans,” “seeks,” “intends,” “evaluates,” “pursues,” “anticipates,” “continues,” “designs,” “impacts,” “affects,” “forecasts,” “target,” “outlook,” “initiative,” “objective,” “designed,” “priorities,” “goal,” or the negative of those words or other similar expressions may identify forward-looking statements, although not all forward-looking statements contain such words.

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• We may not achieve our financial goals;

• We have experienced disruptions in our supply chain;

• We have experienced disruptions in our supply chain and may experience additional disruptions in the future;

• Global economic conditions, including inflation, have adversely affected, and could continue to adversely affect, our operations;

• We are subject to risks associated with doing business globally, including changes in tariffs and trade policies and treaties (including with respect to the validity of previously issued tariffs and the availability of any related refunds) as well as the ongoing Iran conflict and other geopolitical events;

• We may be unable to obtain sufficient components or raw materials on a timely basis or for a cost-effective price;

• We may experience manufacturing, sterilization, supply, or distribution difficulties;

• We have experienced and may continue to experience issues with quality management or product quality, including with respect to Novum LVP;

• We may not be successful in achieving expected operating efficiencies and sustaining or improving operating expense reductions;

• Continued consolidation in the health care industry or additional governmental controls exerted over pricing and access in key markets could lead to increased demands for price concessions or limit or eliminate our ability to sell to certain of our significant market segments;

• Segments of our business are significantly dependent on major contracts with group purchasing organizations, integrated delivery networks, and certain other distributors and purchasers;

• Our operating results and financial condition have fluctuated and may in the future continue to fluctuate;

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• Changes in foreign currency exchange rates and interest rates have had, and may in the future have, an adverse effect on our results of operations, financial condition, cash flows, and liquidity;

• Future material impairments in the value of our goodwill, intangible assets, and other long-lived assets would negatively affect our operating results;

• Segments of our business are significantly dependent on major contracts with group purchasing organizations, integrated delivery networks, and certain other distributors and purchasers;

• We may be unable to obtain sufficient components or raw materials on a timely basis or for a cost-effective price;

• We may experience manufacturing, sterilization, supply, or distribution difficulties;

• We have experienced and may continue to experience issues with quality management or product quality, including with respect to Novum LVP;

• We may experience breaches and breakdowns affecting our information technology systems or protected information, including from obsolescence, cyber security breaches and data leakage;

• We have experienced and may in the future experience breaches and breakdowns affecting our information technology systems or protected information, including from obsolescence, cyber security breaches and data leakage;

• We are exposed to risks associated with incorporating artificial intelligence (AI), machine learning and other emerging technologies into our products, services and operations;

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• The effects of climate change, including legal, regulatory, or market measures related to climate change and other sustainability topics, could adversely affect our business, results of operations, financial condition, and cash flows;

• Our commitments, goals, activities, and disclosures related to sustainability and corporate responsibility matters, and the perception of our activities in these areas, may fail to satisfy the differing expectations of key stakeholders on these matters;

• Our goals, activities, and disclosures related to sustainability and corporate responsibility matters, and the perception of our activities in these areas, may fail to satisfy the differing expectations of key stakeholders on these matters;

• We are subject to laws and regulations globally, and our failure to comply with rapidly changing and increasingly divergent expectations of regulators in different jurisdictions could adversely impact the company;

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• We are party to a number of pending lawsuits and other disputes which may adversely impact us;

• Changes in tax laws or exposure to additional income tax liabilities may have a negative impact on our operating results;

• We could be subject to fines or damages and possible exclusion from participation in federal or state healthcare programs if we fail to comply with the laws and regulations applicable to our business;

• If we are unable to protect or enforce our patents or other proprietary rights, or if we become subject to claims or litigation alleging infringement of the patents or other proprietary rights of others, our competitiveness and business prospects may be materially damaged;

• Changes in tax laws or exposure to additional income tax liabilities may have a negative impact on our operating results;

• Our Amended and Restated Bylaws could limit our stockholders’ ability to choose their preferred judicial forum for disputes with us or our directors, officers, or employees;

• We recently decreased our quarterly dividend to $0.01 per share and cannot guarantee that we will increase the amount of dividends we pay, or that we will not cease paying dividends;

• We decreased our quarterly dividend to $0.01 per share and cannot guarantee that we will increase the amount of dividends we pay, or that we will not cease paying dividends;

• Our common stock price has fluctuated significantly and may continue to do so;

• other factors discussed elsewhere in this report and other filings with the SEC, including those factors described in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, all of which are available on our website.

• other factors discussed elsewhere in this report and other filings with the SEC, including those factors described in Item 1A of our 2025 Annual Report, all of which are available on our website.

Actual results may differ materially from those projected in the forward-looking statements, which are more fully discussed in Item 1A.

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Except as required by law, we assume no obligation, and expressly disclaim any obligation, to update or revise any forward-looking statements, whether as a result of new information or future events.

We use the Investor Relations page of our website to disclose material information for purposes of the SEC's Regulation Fair Disclosure.

We encourage our investors to monitor this website in addition to our other public announcements and SEC filings as information posted on that page could be deemed to be material information.

None of the information or data included on this website is incorporated into, and will not be deemed to be a part of, this quarterly report on Form 10-Q or any of Baxter's other filings with the SEC.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis