Baxter International : Q1 2024 Financial Schedules

BAXTER - PAGE 8

BAXTER INTERNATIONAL INC.

Consolidated Statements of Income

(unaudited)

(in millions, except per share and percentage data)

	Three Months Ended March 31,
		2024			2023		Change
NET SALES	$	3,592	$	3,513	2%
COST OF SALES		2,205			2,238	(1)%
GROSS MARGIN		1,387			1,275	9%
% of Net Sales		38.6 %			36.3 %		2.3 pts
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		1,027			995	3%
% of Net Sales		28.6 %			28.3 %		0.3 pts
RESEARCH AND DEVELOPMENT EXPENSES		176			164	7%
% of Net Sales		4.9 %			4.7 %		0.2 pts
OTHER OPERATING INCOME, NET		(3)			(13)	(77)%
OPERATING INCOME		187			129	45%
% of Net Sales		5.2 %			3.7 %		1.5 pts
INTEREST EXPENSE, NET		78			117	(33)%
OTHER INCOME, NET		(7)			(2)		NM
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		116			14		NM
INCOME TAX BENEFIT		77			14		NM
% of Income from Continuing Operations Before Income Taxes		66.4 %			100.0 %		(33.6) pts
INCOME FROM CONTINUING OPERATIONS		39			-		NM
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX		-			45	(100)%
NET INCOME		39			45	(13)%
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		2			1	100%
NET INCOME ATTRIBUTABLE TO BAXTER STOCKHOLDERS	$	37	$	44	(16)%
INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE
Basic	$	0.07	$	0.00		NM
Diluted	$	0.07	$	0.00		NM
INCOME FROM DISCONTINUED OPERATIONS PER COMMON SHARE
Basic	$	0.00	$	0.09	(100)%
Diluted	$	0.00	$	0.09	(100)%
NET INCOME PER COMMON SHARE
Basic	$	0.07	$	0.09	(22)%
Diluted	$	0.07	$	0.09	(22)%
WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING
Basic		508			505
Diluted		510			505
ADJUSTED OPERATING INCOME (excluding special items)¹	$	515	$	439	17%
ADJUSTED INCOME FROM CONTINUING OPERATIONS (excluding special	$	333	$	249	34%
items)¹
ADJUSTED INCOME FROM DISCONTINUED OPERATIONS (excluding special	$	-	$	49	(100)%
items)1
ADJUSTED NET INCOME ATTRIBUTABLE TO BAXTER STOCKHOLDERS	$	331	$	297	11%
(excluding special items)¹
ADJUSTED DILUTED EPS FROM CONTINUING OPERATIONS (excluding special	$	0.65	$	0.49	33%
items)¹
ADJUSTED DILUTED EPS FROM DISCONTINUED OPERATIONS (excluding	$	0.00	$	0.10	(100)%
special items)¹
ADJUSTED DILUTED EPS (excluding special items)¹	$	0.65	$	0.59	10%

• Refer to page 9 for a description of the adjustments and a reconciliation to U.S. GAAP measures. NM - Not Meaningful

BAXTER - PAGE 9

BAXTER INTERNATIONAL INC.

Description of Adjustments and Reconciliation of U.S. GAAP to Non-GAAP Measures

(unaudited, in millions)

The company's U.S. GAAP results for the three months ended March 31, 2024 included special items which impacted the U.S. GAAP measures as follows:

					Selling,								Income From												Net Income			Diluted
					Research and					Continuing		Income Tax	Income From						Earnings Per		Diluted
		Gross			General and	Operating		Operations					Attributable to		Share from
			Administrative	Development		Before Income		Expense			Continuing	Net Income		Baxter			Continuing		Earnings
		Margin			Expenses		Expenses			Income			Taxes			(Benefit)		Operations	Stockholders		Operations	Per Share
Reported	$	1,387		$	1,027	$	176		$	187		$	116		$	77		$	39		$	39		$	37		$	0.07	$	0.07
Reported percent of net sales (or effective tax rate for income		38.6	%		28.6 %		4.9	%		5.2	%		3.2	%		66.4	%		1.1	%		1.1	%		1.0	%
tax expense)
Intangible asset amortization		114			(52)		-			166			166			40			126			126			126			0.25		0.25
Business optimization items1		14			(27)		(16)			57			57			15			42			42			42			0.08		0.08
Acquisition and integration items2		1			(4)		-			5			5			1			4			4			4			0.01		0.01
Separation-related costs3		4			(88)		-			92			92			13			79			79			79			0.15		0.15
European medical devices regulation4		8			-		-			8			8			2			6			6			6			0.01		0.01
Tax matters5		-			-		-			-			-			(37)			37			37			37			0.07		0.07
Adjusted	$	1,528		$	856	$	160		$	515		$	444		$	111		$	333		$	333		$	331		$	0.65	$	0.65
Adjusted percent of net sales (or effective tax rate for income		42.5 %		23.8 %		4.5 %		14.3 %		12.4 %		25.0 %		9.3 %		9.3 %		9.2 %
tax expense)
													Reported			Adjusted
Net income												$	39		$	333
Less: Net income attributable to noncontrolling interests													2			2
Net income attributable to Baxter stockholders												$	37		$	331

BAXTER - PAGE 9

The company's U.S. GAAP results for the three months ended March 31, 2023 included special items which impacted the U.S. GAAP measures as follows:

											Income												Diluted
											From													Diluted
			Selling,				Other			Continuing		Income		Income					Net Income	Earnings		Diluted
			Research and				Operations			Income From			Per Share	Earnings Per
	Gross		General and	Operating	Operating		Before		Tax		From		Net	Attributable		from		Share from	Earnings
	Administrative	Development	Income,		Income	Expense	Continuing	Discontinued			to Baxter	Continuing	Discontinued		Per
	Margin		Expenses		Expenses		Net		Income		Taxes	(Benefit)	Operations	Operations	Income	Stockholders	Operations		Operations		Share
Reported	$1,275	$	995	$	164	$	(13)	$	129	$	14	$	14	$	-	$	45	$	45	$	44	$	0.00	$	0.09	$	0.09
Reported percent of net sales (or effective tax	36.3 %		28.3 %		4.7 %		(0.4)%		3.7 %		0.4 %	100.0 %		0.0 %		1.3 %		1.3 %		1.3 %
rate for income tax expense)
Intangible asset amortization	110		(52)		-		-		162		162		36		126		-		126		126		0.25		0.00		0.25
Business optimization items1	35		(92)		(7)		-		134		134		27		107		-		107		107		0.21		0.00		0.21
Acquisition and integration items2	-		(6)		-		13		(7)		(7)		(2)		(5)		-		(5)		(5)		(0.01)		0.00		(0.01)
Separation-related costs3	1		(8)		-		-		9		9		-		9		7		16		16		0.02		0.01		0.03
European medical devices regulation4	12		-		-		-		12		12		3		9		-		9		9		0.02		0.00		0.02
Tax matters5	-		-		-		-		-		-		(3)		3		(3)		-		-		0.01		(0.01)		0.00
Adjusted	$1,433	$	837	$	157	$	-	$	439	$	324	$	75	$	249	$	49	$	298	$	297	$	0.49	$	0.10	$	0.59
Adjusted percent of net sales (or effective tax	40.8 %		23.8 %		4.5 %		0.0 %		12.5 %		9.2 %		23.1 %		7.1 %		1.4 %		8.5 %		8.5 %
rate for income tax expense)
											Reported	Adjusted
Income (loss) from continuing operations										$	-	$	249
Less: Net income attributable to noncontrolling interests										1		1
Income (loss) from continuing operations attributable to Baxter stockholders							$	(1)	$	248
Weighted-average diluted shares as reported											505
Effect of dilutive securities that were anti-dilutive to dilutive EPS as reported								2
Weighted-average diluted shares as adjusted											507

1

2

3

The company's results in 2024 and 2023 included costs related to programs to optimize its organization and cost structure. In 2024, these costs primarily related to a program to centralize certain of its research and development activities into a new location and, to a lesser extent, the implementation of a new operating model intended to streamline and simplify its operations. In 2023, these costs primarily related to the implementation of its new operating model.

The company's results in 2024 and 2023 included acquisition and integration-related items comprised of Hillrom acquisition and integration expenses. In 2023 those costs are offset by net gains from changes in the fair value of contingent consideration liabilities.

The company's results in 2024 and 2023 included separation-related costs primarily related to external advisors supporting its activities to prepare for the proposed separation of its Kidney Care segment, which are reported in continuing operations. The company's results in 2023 also included separation-related costs related to the sale of its BioPharma Solutions (BPS) business, which are reported in discontinued operations.

BAXTER - PAGE 9

4

5

The company's results in 2024 and 2023 included 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. The company considers the adoption of these regulations to be a significant one-time regulatory change and believes that the costs of initial compliance for previously registered products over the implementation period are not indicative of its core operating results.

The company's results in 2024 included income tax expenses resulting from internal reorganization transactions related to the proposed separation of its Kidney Care segment. The company's results in 2023 included a reallocation of income tax expense between discontinued operations and continuing operations resulting from the application of intraperiod tax allocation to its adjusted results in an interim period.

For more information on the company's use of non-GAAP financial measures, please see the Non-GAAP Financial Measures section of this press release.

BAXTER - PAGE 10

BAXTER INTERNATIONAL INC.

Sales by Operating Segment

(unaudited)

($ in millions)

The Medical Products and Therapies segment includes sales of our sterile IV solutions, infusion systems, administration sets, parenteral nutrition therapies and surgical hemostat, sealant and adhesion prevention products. The Healthcare Systems and Technologies segment includes sales of our connected care solutions and collaboration tools, including smart bed systems, patient monitoring systems and diagnostic technologies, respiratory health devices and advanced equipment for the surgical space, including surgical video technologies, precision positioning devices and other accessories. The Pharmaceuticals segment includes sales of specialty injectable pharmaceuticals, inhaled anesthesia and drug compounding. The Kidney Care segment includes sales of chronic and acute dialysis therapies and services, including peritoneal dialysis, hemodialysis, continuous renal replacement therapies (CRRT) and other organ support therapies. Other sales not allocated to a segment primarily include sales of products and services provided directly through certain of our manufacturing facilities.

		Three Months Ended March 31,	% Growth @	% Growth @
		2024		2023
			Actual Rates	Constant Rates
Infusion Therapies and Technologies	$	966	$	911	6 %	6 %
Advanced Surgery		263		246	7 %	8 %
Medical Products and Therapies		1,229		1,157	6 %	6 %
Care and Connectivity Solutions		402		429	(6)%	(7)%
Front Line Care		265		302	(12)%	(12)%
Healthcare Systems and Technologies		667		731	(9)%	(9)%
Injectables and Anesthesia		328		305	8 %	8 %
Drug Compounding		250		218	15 %	15 %
Pharmaceuticals		578		523	11 %	11 %
Chronic Therapies		888		884	0 %	2 %
Acute Therapies		214		188	14 %	15 %
Kidney Care		1,102		1,072	3 %	4 %
Other		16		30	(47)%	(47)%
Total - Continuing Operations	$	3,592	$	3,513	2 %	3 %

In connection with our segment change in the third quarter of 2023, we reclassified $8 million of sales from the first quarter of 2023 from Chronic Therapies to Acute Therapies to conform to the current period presentation. Additionally, 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 from BPS to Other (within continuing operations), as the related manufacturing facility was not part of that divestiture transaction.

Constant currency growth is a non-GAAP measure. For more information on the company's use of non-GAAP financial measures, please see the Non-GAAP Financial Measures section of this press release.

BAXTER - PAGE 11

BAXTER INTERNATIONAL INC.

Segment Operating Income

(unaudited)

($ in millions)

		Three Months Ended March 31,
		2024		2023
Medical Products and Therapies	$	227	$	197
% of Segment Net Sales		18.5 %		17.0 %
Healthcare Systems and Technologies		67		112
% of Segment Net Sales		10.0 %		15.3 %
Pharmaceuticals		78		87
% of Segment Net Sales		13.5 %		16.6 %
Kidney Care		159		57
% of Segment Net Sales		14.4 %		5.3 %
Other		4		7
Total		535		460
Unallocated corporate costs		(20)		(21)
Intangible asset amortization expense		(166)		(162)
Business optimization items		(57)		(134)
Acquisition and integration items		(5)		7
Divestiture-related costs		(92)		(9)
European Medical Devices Regulation		(8)		(12)
Total operating income		187		129
Interest expense, net		78		117
Other income, net		(7)		(2)
Income from continuing operations before income taxes	$	116	$	14

BAXTER - PAGE 12

BAXTER INTERNATIONAL INC.

Operating Segment Sales by U.S. and International

(unaudited)

($ in millions)

				Three Months Ended March 31,
				2024							2023						% Growth
		U.S.	International		Total			U.S.	International		Total		U.S.		International	Total
Infusion Therapies and Technologies	$	526	$	440	$	966	$	514	$	397	$	911	2	%	11	%	6	%
Advanced Surgery		147		116		263			144		102		246	2	%	14	%	7	%
Medical Products and Therapies		673		556		1,229			658		499		1,157	2	%	11	%	6	%
Care and Connectivity Solutions		278		124		402			298		131		429	(7) %	(5) %	(6) %
Front Line Care		195		70		265			221		81		302	(12) %	(14) %	(12) %
Healthcare Systems and
Technologies		473		194		667			519		212		731	(9) %	(8) %	(9) %
Injectables and Anesthesia		191		137		328			173		132		305	10	%	4	%	8	%
Drug Compounding		-		250		250			-		218		218	0	%	15	%	15	%
Pharmaceuticals		191		387		578			173		350		523	10	%	11	%	11	%
Chronic Therapies		226		662		888			229		655		884	(1) %	1	%	0	%
Acute Therapies		85		129		214			64		124		188	33	%	4	%	14	%
Kidney Care		311		791		1,102			293		779		1,072	6	%	2	%	3	%
Other		11		5		16			24		6		30	(54) %	(17) %	(47) %
Total - Continuing Operations	$	1,659	$	1,933	$	3,592	$	1,667	$	1,846	$	3,513	(0)%	5 %	2 %

BAXTER - PAGE 13

BAXTER INTERNATIONAL INC.

Reconciliation of Non-GAAP Financial Measure

Operating Cash Flow to Free Cash Flow

(unaudited)

($ in millions)

	Three Months Ended March 31,
	2024				2023
Cash flows from operations - continuing operations	$	163	$	469
Cash flows from investing activities - continuing operations		(166)			(163)
Cash flows from financing activities - continuing operations		(140)			(372)
Cash flows from operations - continuing operations	$	163	$	469
Capital expenditures - continuing operations		(176)			(165)
Free cash flow - continuing operations	$	(13)	$	304

		Three Months Ended March 31,
		2024						2023
Cash flows from operations - discontinued operations	$	-				10
Cash flows from investing activities - discontinued operations		-				(7)
Cash flows from operations - discontinued operations	$	-	$	10
Capital expenditures - discontinued operations		-				(7)
Free cash flow - discontinued operations	$	-		$	3
		Three Months Ended March 31,
		2024						2023
Cash flows from operations - Total Baxter	$	163		$	479
Cash flows from investing activities - Total Baxter		(166)					(170)
Cash flows from financing activities - Total Baxter		(140)					(372)
Cash flows from operations - Total Baxter	$	163		$	479
Capital expenditures - Total Baxter			(176)					(172)
Free cash flow - Total Baxter	$	(13)		$	307

Free cash flow is a non-GAAP measure. For more information on the company's use of non-GAAP financial measures, please see the Non- GAAP Financial Measures section of this press release.

BAXTER - PAGE 14

BAXTER INTERNATIONAL INC.

Reconciliation of Non-GAAP Financial Measure

Change in Net Sales Growth As Reported to Constant Currency Sales Growth

From the Three Months Ended March 31, 2023 to the Three Months Ended March 31, 2024

(unaudited)

	Net Sales				Constant
	Growth		FX		Currency Sales
	As Reported		Growth*
Infusion Therapies and Technologies	6	%	0	%	6	%
Advanced Surgery	7	%	1	%	8	%
Medical Products and Therapies	6	%	0	%	6 %
Care and Connectivity Solutions	(6) %	(1) %	(7) %
Front Line Care	(12) %	0	%	(12) %
Healthcare Systems and Technologies	(9) %	0	%	(9)%
Injectables and Anesthesia	8	%	0	%	8	%
Drug Compounding	15	%	0	%	15	%
Pharmaceuticals	11	%	0	%	11 %
Chronic Therapies	0	%	2	%	2	%
Acute Therapies	14	%	1	%	15	%
Kidney Care	3	%	1	%	4 %
Other	(47) %	0	%	(47)%
Total - Continuing Operations	2	%	1	%	3 %

*Totals may not add across due to rounding

Constant currency sales growth is a non-GAAP measure. For more information on the company's use of non-GAAP financial measures, please see the Non-GAAP Financial Measures section of this press release.

BAXTER - PAGE 15

BAXTER INTERNATIONAL INC.

Reconciliation of Non-GAAP Financial Measures

Projected Second Quarter and Full Year 2024 U.S. GAAP Sales Growth to Projected Constant Currency Sales Growth

and Projected Second Quarter and Full Year 2024 Adjusted Earnings Per Share

(unaudited)

Sales Growth Guidance	Q2 2024*	FY 2024*
Sales growth - U.S. GAAP	~ 1%	~ 2%
Foreign Exchange	> 100 bps	~ 50 bps
Sales growth - Constant currency	2% - 3%	2% - 3%

Adjusted Earnings Per Share Guidance	Q2 2024	FY 2024*
Adjusted diluted EPS	$0.65 - $0.67	$2.88 - $2.98

*Totals may not foot due to rounding

Baxter calculates forward-lookingnon-GAAP financial measures based on forecasts that omit certain amounts that would be included in GAAP financial measures. For instance, forward-looking adjusted diluted EPS guidance excludes potential charges or gains that would be reflected as non-GAAP adjustments to earnings. Baxter provides forward-looking adjusted diluted EPS guidance because it believes that this measure provides useful information for the reasons noted in the accompanying release. Baxter has not provided reconciliations of forward-looking adjusted EPS guidance to forward-looking GAAP EPS guidance because the company is unable to predict with reasonable certainty the impact of legal proceedings, future business optimization actions, separation-related costs, integration-related costs, asset impairments and unusual gains and losses, and the related amounts are unavailable without unreasonable efforts (as specified in the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K). In addition, Baxter believes that such reconciliations would imply a degree of precision and certainty that could be confusing to investors. Such items could have a substantial impact on GAAP measures of financial performance.