Baxter International : Q3 2023 Financial Schedules

BAXTER - PAGE 10

BAXTER INTERNATIONAL INC.

Consolidated Statements of Income (Loss)

(unaudited)

(in millions, except per share and percentage data)

		Three Months Ended
		September 30,
		2023			2022		Change
NET SALES	$	3,708	$	3,609	3 %
COST OF SALES		2,591			2,564	1 %
GROSS MARGIN		1,117			1,045	7 %
% of Net Sales		30.1 %			29.0 %		1.1 pts
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		1,002			941	6 %
% of Net Sales		27.0 %			26.1 %		0.9 pts
RESEARCH AND DEVELOPMENT EXPENSES		166			151	10 %
% of Net Sales		4.5 %			4.2 %		0.3 pts
GOODWILL IMPAIRMENTS		-			2,785		NM
OTHER OPERATING INCOME, NET		-			48		NM
OPERATING INCOME (LOSS)		(51)			(2,880)		NM
% of Net Sales		(1.4)%			(79.8)%		78.4 pts
INTEREST EXPENSE, NET		128			104	23 %
OTHER (INCOME) EXPENSE, NET		(7)			61		NM
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(172)			(3,045)		NM
INCOME TAX BENEFIT		(223)			(54)		NM
% of Income (Loss) from Continuing Operations Before Income Taxes		129.7 %			1.8 %		NM
INCOME (LOSS) FROM CONTINUING OPERATIONS		51			(2,991)		NM
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX		2,460			57		NM
NET INCOME (LOSS)		2,511			(2,934)		NM
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		3			3	0 %
NET INCOME (LOSS) ATTRIBUTABLE TO BAXTER STOCKHOLDERS	$	2,508	$	(2,937)		NM
INCOME (LOSS) FROM CONTINUING OPERATIONS PER COMMON SHARE
Basic	$	0.09	$	(5.94)		NM
Diluted	$	0.09	$	(5.94)		NM
INCOME FROM DISCONTINUED OPERATIONS PER COMMON SHARE
Basic	$	4.85	$	0.11		NM
Diluted	$	4.83	$	0.11		NM
NET INCOME (LOSS) PER COMMON SHARE
Basic	$	4.95	$	(5.83)		NM
Diluted	$	4.93	$	(5.83)		NM
WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING
Basic		507			504
Diluted		509			504
ADJUSTED OPERATING INCOME (excluding special items)¹	$	565	$	568	(1)%
ADJUSTED INCOME FROM CONTINUING OPERATIONS (excluding special	$	347	$	365	(5)%
items)¹
ADJUSTED INCOME FROM DISCONTINUED OPERATIONS (excluding special	$	71	$	52	37 %
items)1
ADJUSTED NET INCOME ATTRIBUTABLE TO BAXTER STOCKHOLDERS	$	415	$	414	0 %
(excluding special items)¹
ADJUSTED DILUTED EPS FROM CONTINUING OPERATIONS (excluding special	$	0.68	$	0.71	(4)%
items)¹
ADJUSTED DILUTED EPS FROM DISCONTINUED OPERATIONS (excluding	$	0.14	$	0.10	40 %
special items)¹
ADJUSTED DILUTED EPS (excluding special items)¹	$	0.82	$	0.82	0 %

• Refer to page 11 for a description of the adjustments and a reconciliation to U.S. GAAP measures. NM - Not Meaningful

BAXTER - PAGE 11

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 September 30, 2023 included special items which impacted the U.S. GAAP measures as follows:

			Selling, General							Loss From					Income		Income From			Net Income		Diluted		Diluted	Diluted
			Research and	Operating		Continuing	Income Tax			Net			(Loss)		Earnings Per	Earnings Per
	Gross			and		Operations	(Loss) From	Discontinued		Attributable	Share from	Share from	Earnings
		Administrative	Development		Income	Before Income		Expense		Continuing	Operations,	Income			to Baxter		Continuing	Discontinued		Per
	Margin			Expenses		Expenses			(Loss)		Taxes		(Benefit)		Operations		Net of Tax	(Loss)		Stockholders	Operations	Operations		Share
Reported	$ 1,117		$	1,002	$	166		$	(51)	$	(172)	$	(223)		$	51		$	2,460		$2,511		$	2,508		$	0.09	$	4.83	$	4.93
Reported percent of net sales (or effective	30.1	%		27.0 %		4.5	%		(1.4) %		(4.6) %		129.7	%		1.4	%		66.3	%	67.7	%		67.6	%
tax rate for income tax expense (benefit))
Intangible asset amortization1	111			(51)		-			162		162		35			127			-		127			127			0.25		0.00		0.25
Business optimization items2	26			(50)		(5)			81		81		19			62			1		63			63			0.12		0.00		0.12
Acquisition and integration items3	1			(1)		-			2		2		1			1			-		1			1			0.00		0.00		0.00
Separation-related costs4	10			(67)		-			77		77		-			77			4		81			81			0.15		0.01		0.16
European medical devices regulation5	14			-		-			14		14		4			10			-		10			10			0.02		0.00		0.02
Legal matters6	-			(13)		-			13		13		3			10			-		10			10			0.02		0.00		0.02
Long-lived asset impairments7	267			-		-			267		267		62			205			-		205			205			0.40		0.00		0.40
Gain on BPS Sale8	-			-		-			-		-		-			-			(2,603)		(2,603)			(2,603)			0.00		(5.11)		(5.11)
Tax matters13	-			-		-			-		-		196			(196)			209		13			13			(0.39)		0.41		0.03
Adjusted	$ 1,546		$	820	$	161		$	565	$	444	$	97		$	347		$	71		$ 418		$	415		$	0.68	$	0.14	$	0.82
Adjusted percent of net sales (or effective	41.7 %		22.1 %		4.3 %		15.2 %		12.0 %		21.8 %		9.4 %		1.9 %	11.3 %		11.2 %
tax rate for income tax expense (benefit))
											Reported		Adjusted
Income (loss) from continuing operations									$	51	$	347
Less: Net income attributable to noncontrolling interests							3		3
Income (loss) from continuing operations attributable to Baxter stockholders				$	48	$	344

BAXTER - PAGE 11

The company's U.S. GAAP results for the three months ended September 30, 2022 included special items which impacted the U.S. GAAP measures as follows:

										Income							Diluted
										(Loss) From		Income				Net Income		Diluted
			Selling,				Other		Other	Continuing	Income				Earnings		Diluted
			Research and		Operating	Operations	(Loss)	Income From	Net	(Loss)	Per Share	Earnings Per
	Gross		General and		Operating	(Income)	Before	Tax	From	Attributable	from		Share from	Earnings
	Administrative	Development Goodwill Expense, Income Expense,	Income	Expense	Continuing	Discontinued	Income	to Baxter	Continuing	Discontinued	Per
	Margin		Expenses		Expenses	Impairment	Net	(Loss)	Net	Taxes	(Benefit)	Operations	Operations	(Loss)	Stockholders	Operations		Operations	Share
Reported	$1,045	$	941	$	151	$ 2,785	$ 48	$(2,880)	$ 61	$ (3,045)	$ (54)	$ (2,991)	$	57	$(2,934)	$ (2,937)	$ (5.94)	$	0.11	$ (5.83)
Reported percent of net	29.0 %		26.1 %		4.2 %	77.2 %	1.3 %	(79.8)%	1.7 %	(84.4)%	1.8 %	(82.9)%		1.6 %	(81.3)%	(81.4)%
sales (or effective tax
rate for income tax
expense (benefit))
Intangible asset	110		(58)		-	-	-	168	-	168	42	126		-	126	126	0.25		0.00	0.25
amortization1
Business optimization	13		(57)		(3)	-	-	73	-	73	21	52		-	52	52	0.10		0.00	0.10
items2
Acquisition and	(2)		(11)		(1)	-	6	4	-	4	2	2		-	2	2	0.00		0.00	0.00
integration items3
European medical	12		-		-	-	-	12	-	12	3	9		-	9	9	0.02		0.00	0.02
devices regulation5
Product-related items9	20		-		-	-	-	20	-	20	2	18		-	18	18	0.04		0.00	0.04
Long-lived asset	332		-		-	-	-	332	-	332	78	254		-	254	254	0.50		0.00	0.50
impairments7
Goodwill	-		-		-	(2,785)	-	2,785	-	2,785	-	2,785		-	2,785	2,785	5.49		0.00	5.49
impairments10
Loss on product
divestiture	-		-		-	-	(54)	54	-	54	14	40		-	40	40	0.08		0.00	0.08
arrangement11
Reclassification of
cumulative translation	-		-		-	-	-	-	(65)	65	-	65		-	65	65	0.13		0.00	0.13
loss to earnings12
Tax matters13	-		-		-	-	-	-	-	-	(5)	5		(5)	-	-	0.01		(0.01)	0.00

Adjusted

Adjusted percent of net sales (or effective tax rate for income tax expense)

$1,530	$	815	$	147	$	-	$ -	$ 568	$ (4)	$	468	$ 103	$ 365	$	52	$ 417	$	414	$ 0.71	$	0.10	$ 0.82
42.4 %		22.6 %		4.1 %		0.0 %	0.0 %	15.7 %	(0.1)%		13.0 %	22.0 %	10.1 %		1.4 %	11.6 %		11.5 %

	Reported		Adjusted
Income (loss) from continuing operations	$(2,991)	$	365
Less: Net income attributable to noncontrolling interests	3		3
Income (loss) from continuing operations attributable to Baxter stockholders	$(2,994)	$	362
Weighted-average diluted shares as reported	504
Effect of dilutive securities that were anti-dilutive to dilutive EPS as reported	3
Weighted-average diluted shares as adjusted	507

BAXTER - PAGE 11

1

2

3

4

5

6

7

The company's results in 2023 and 2022 included intangible asset amortization expense of $162 million ($127 million, or $0.25 per diluted share, on an after-tax basis) and $168 million ($126 million, or $0.25 per diluted share, on an after-tax basis), respectively.

The company's results in 2023 and 2022 included charges of $81 million ($62 million, or $0.12 per diluted share, on an after-tax basis) and $73 million ($52 million, or $0.10 per diluted share, on an after-tax basis), respectively, associated with its execution of programs to optimize its organization and cost structure. These restructuring and other business optimization costs included actions related to its current implementation of a new operating model intended to simplify and streamline its operations, its integration of Hill-Rom Holdings, Inc. (Hillrom), the decision to cease production of dialyzers at one of its U.S.-based manufacturing facilities later this year, which resulted in a $243 million noncash impairment of property, plant and equipment in the second quarter of 2023, rationalization of certain other manufacturing and distribution facilities and transformation of certain general and administrative functions.

The company's results in 2023 included $2 million ($1 million, or $0.00 per diluted share, on an after-tax basis) of acquisition and integration-related items. That amount includes $2 million of integration costs, which included costs related to its integration of Hillrom. The company's results in 2022 included $4 million ($2 million, or $0.00 per diluted share, on an after-tax basis) of acquisition and integration-related items. That amount includes $10 million of costs related to its acquisition of Hillrom, partially offset by a $6 million benefit from a change in the estimated fair value of contingent consideration liabilities.

The company's results of continuing operations in 2023 included $77 million ($77 million, or $0.15 per diluted share, on an after-tax basis) of separation-related costs. This amount includes costs of external advisors supporting its activities to prepare for the proposed spinoff of its Kidney Care segment, which are reported in continuing operations. The company's results of discontinued operations in 2023 included $4 million ($4 million, or $0.01 per diluted share, on an after-tax basis) of separation-related costs related to the sale of its BioPharma Solutions (BPS) business.

The company's results in 2023 and 2022 included costs of $14 million ($10 million, or $0.02 per diluted share, on an after-tax basis) and $12 million ($9 million, or $0.02 per diluted share, on an after-tax basis), 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. 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 2023 included costs, including associated legal fees, of $13 million ($10 million, or $0.02 per diluted share, on an after-tax basis) related to matters involving alleged violations of the False Claims Act related to a now-discontinued legacy Hillrom sales line, and alleged injury from environmental exposure.

The company's results in 2023 included long-lived asset impairment charges of $267 million ($205 million, or $0.40 per diluted share, on an after-tax basis) related to the Hemodialysis business within its Kidney Care segment. The company's results in 2022 included charges of $332 million ($254 million, or $0.50) per diluted share, on an after-tax basis) related to indefinite-lived intangible asset impairments.

• The company's results of discontinued operations in 2023 included a gain of $2.89 billion ($2.60 billion, or $5.11 per diluted share, on an after-tax basis) from the sale of its BPS business.

• The company's results in 2022 included charges of $20 million ($18 million, or $0.04 per diluted share, on an after-tax basis) related to warranty and remediation activities from a field corrective action on certain of our infusion pumps.

1. The company's results in 2022 included a charge of $2.79 billion (2.79 billion, or $5.49 per diluted share, on an after-tax basis) related to a goodwill impairment.
2. The company's results in 2022 included a loss of $54 million ($40 million, or $0.08 per diluted share, on an after-tax basis) related to an arrangement to divest certain product rights for an amount that is less than the cost of those product rights which was triggered by U.S. and European Union regulatory approvals of the related products.
3. The company's results in 2022 included a charge of $65 million ($65 million, or $0.13 per diluted share, on an after-tax basis) related to cumulative translation adjustments reclassified from accumulated other comprehensive income (loss) as a result of the substantial liquidation of its operations in Argentina.
4. The company's results of continuing operations in 2023 included tax items totaling a $196 million ($0.39 per diluted share), primarily comprised of a $209 million reallocation of income tax expense between discontinued operations and continuing operations resulting from the application of intraperiod tax allocation to the company's adjusted results. That item was partially offset by $13 million of separation-related tax costs. The company's results of continuing operations in 2022 included a $5 million reallocation of income taxes between continuing operations and discontinued operations resulting from the application of intraperiod tax allocation to the company's adjusted results.

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 12

BAXTER INTERNATIONAL INC.

Consolidated Statements of Income (Loss)

(unaudited)

(in millions, except per share and percentage data)

		Nine Months Ended
		September 30,
		2023			2022			Change
NET SALES	$	10,928	$	10,761		2 %
COST OF SALES		7,425			7,083		5 %
GROSS MARGIN		3,503			3,678		(5)%
% of Net Sales		32.1 %			34.2	%		(2.1 pts)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		2,961			2,958		0 %
% of Net Sales		27.1 %			27.5	%		(0.4 pts)
RESEARCH AND DEVELOPMENT EXPENSES		495			448		10 %
% of Net Sales		4.5 %			4.2 %		0.3 pts
GOODWILL IMPAIRMENTS		-			2,785			NM
OTHER OPERATING INCOME, NET		(14)			20			NM
OPERATING INCOME (LOSS)		61			(2,533)			NM
% of Net Sales		0.6 %			(23.5)%		24.1 pts
INTEREST EXPENSE, NET		369			278		33 %
OTHER (INCOME) EXPENSE, NET		33			1			NM
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(341)			(2,812)		(88)%
INCOME TAX EXPENSE		(199)			(14)			NM
% of Income (Loss) from Continuing Operations Before Income Taxes		58.4 %			0.5	%		(57.9 pts)
LOSS FROM CONTINUING OPERATIONS		(142)			(2,798)			NM
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX		2,559			192			NM
NET INCOME (LOSS)		2,417			(2,606)			NM
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		6			8		(25)%
NET INCOME (LOSS) ATTRIBUTABLE TO BAXTER STOCKHOLDERS	$	2,411	$	(2,614)			NM
INCOME (LOSS) FROM CONTINUING OPERATIONS PER COMMON SHARE
Basic	$	(0.29)	$	(5.58)		(95)%
Diluted	$	(0.29)	$	(5.58)		(95)%
INCOME FROM DISCONTINUED OPERATIONS PER COMMON SHARE
Basic	$	5.06	$	0.38			NM
Diluted	$	5.06	$	0.38			NM
NET INCOME (LOSS) PER COMMON SHARE
Basic	$	4.76	$	(5.20)			NM
Diluted	$	4.76	$	(5.20)			NM
WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING
Basic		506			503
Diluted		506			503
ADJUSTED OPERATING INCOME (excluding special items)¹	$	1,493	$	1,683		(11)%
ADJUSTED INCOME (LOSS) FROM CONTINUING OPERATIONS (excluding	$	878	$	1,149		(24)%
special items)¹
ADJUSTED INCOME FROM DISCONTINUED OPERATIONS (excluding special	$	175	$	187		(6)%
items)1
ADJUSTED NET INCOME ATTRIBUTABLE TO BAXTER STOCKHOLDERS	$	1,047	$	1,328		(21)%
(excluding special items)¹
ADJUSTED DILUTED EPS FROM CONTINUING OPERATIONS (excluding special	$	1.72	$	2.25		(24)%
items)1
ADJUSTED DILUTED EPS FROM DISCONTINUED OPERATIONS (excluding	$	0.35	$	0.37		(5)%
special items)1
ADJUSTED DILUTED EPS (excluding special items)¹	$	2.07	$	2.61		(21)%

• Refer to page 13 for a description of the adjustments and a reconciliation to U.S. GAAP measures. NM - Not Meaningful

BAXTER - PAGE 13

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 nine months ended September 30, 2023 included special items which impacted the U.S. GAAP measures as follows:

									Income						Diluted
									(Loss) From		Income			Net Income		Diluted
			Selling,			Other		Other	Continuing	Income	Income From		Earnings		Diluted
			Research and	Operating	Operations	(Loss)	Net	(Loss)	Per Share	Earnings Per
	Gross		General and	Operating	(Income)	Before	Tax	From	Discontinued	Attributable	From	Share from	Earnings
	Administrative	Development	Income,	Income	Expense,	Income	Expense	Continuing	Operations,	Income	to Baxter	Continuing	Discontinued	Per
	Margin		Expenses		Expenses	Net	(Loss)	Net	Taxes	(Benefit)	Operations	Net of Tax	(Loss)	Stockholders	Operations	Operations	Share
Reported	$3,503	$	2,961	$	495	$ (14)	$ 61	$ 33	$ (341)	$ (199)	$ (142)	$ 2,559	$2,417	$ 2,411	$ (0.29)	$	5.06	$ 4.76
Reported percent of net sales (or	32.1 %		27.1 %		4.5 %	(0.1)%	0.6 %	0.3 %	(3.1)%	58.4 %	(1.3)%	23.4 %	22.1 %	22.1 %
effective tax rate for income tax
expense)
Intangible asset amortization1	326		(155)		-	-	481	-	481	106	375	-	375	375	0.74		0.00	0.74
Business optimization items2	327		(169)		(12)	-	508	-	508	92	416	1	417	417	0.82		0.00	0.82
Acquisition and integration	1		(15)		-	14	2	-	2	1	1	-	1	1	0.00		0.00	0.00
items3
Separation-related costs4	15		(108)		-	-	123	-	123	-	123	19	142	142	0.24		0.04	0.28
European medical devices	38		-		-	-	38	-	38	11	27	-	27	27	0.05		0.00	0.05
regulation5
Investment Impairments6	-		-		-	-	-	(20)	20	5	15	-	15	15	0.03		0.00	0.03
Legal matters7	-		(13)		-	-	13	-	13	3	10	-	10	10	0.02		0.00	0.02
Long-lived asset impairments8	267		-		-	-	267	-	267	62	205	-	205	205	0.40		0.00	0.40
Gain on BPS Sale9	-		-		-	-	-	-	-	-	-	(2,603)	(2,603)	(2,603)	0.00		(5.13)	(5.13)
Tax Matters15	-		-		-	-	-	-	-	152	(152)	199	47	47	(0.30)		0.39	0.09

Adjusted

Adjusted percent of net sales (or effective tax rate for income tax expense)

$4,477	$	2,501	$	483	$ -	$1,493	$ 13	$ 1,111	$ 233	$ 878	$	175	$1,053	$	1,047	$ 1.72	$ 0.35	$ 2.07
41.0 %		22.9 %		4.4 %	0.0 %	13.7 %	0.1 %	10.2 %	21.0 %	8.0 %		1.6 %	9.6 %		9.6 %

		Reported	Adjusted
Income (loss) from continuing operations	$	(142)	$ 878
Less: Net income attributable to noncontrolling interests		6	6
Income (loss) from continuing operations attributable to Baxter stockholders	$	(148)	$ 872
Weighted-average diluted shares as reported		506
Effect of dilutive securities that were anti-dilutive to dilutive EPS as reported		1
Weighted-average diluted shares as adjusted		507

BAXTER - PAGE 13

The company's U.S. GAAP results for the nine months ended September 30, 2022 included special items which impacted the U.S. GAAP measures as follows:

															Income
														(Loss) From								Net Income		Diluted		Diluted
				Selling,						Other			Other	Continuing		Income		Income	Income From				Diluted
				Research and				Operating		Operations			Net		(Loss)	Earnings Per	Earnings Per
		Gross		General and			Operating	(Income)		Before		Tax	(Loss) From	Discontinued	Attributable	Share From	Share From	Earnings
		Administrative	Development Goodwill Expense, Income Expense,		Income		Expense	Continuing	Operations,	Income		to Baxter	Continuing	Discontinued		Per
		Margin		Expenses		Expenses	Impairment		Net	(Loss)		Net		Taxes	(Benefit)	Operations		Net of Tax	(Loss)	Stockholders	Operations	Operations		Share
Reported		$3,678	$	2,958	$	448	$	2,785	$	20	$(2,533)	$	1	$	(2,812)	$	(14)	$	(2,798)	$	192	$(2,606)	$	(2,614)	$	(5.58)	$	0.38	$	(5.20)
Reported percent of	34.2 %		27.5 %		4.2 %		25.9 %		0.2 %	(23.5)%		0.0 %		(26.1)%		0.5 %		(26.0)%		1.8 % (24.2)%		(24.3)%
net sales (or
effective tax rate for
income tax
expense)
Intangible asset	344		(234)		-		-		-	578		-		578		137		441		-	441		441		0.87		0.00		0.87
amortization1
Business		21		(171)		(4)		-		-	196		-		196		52		144		-	144		144		0.28		0.00		0.28
optimization items2
Acquisition and 3	171		(55)		(1)		-		34	193		-		193		36		157		-	157		157		0.31		0.00		0.31
integration items
European medical5	35		-		-		-		-	35		-		35		8		27		-	27		27		0.05		0.00		0.05
devices regulation
Product-related	43		-		-		-		-	43		-		43		5		38		-	38		38		0.07		0.00		0.07
items10
Pension		-		-		-		-		-	-		11		(11)		(2)		(9)		-	(9)		(9)		(0.02)		0.00		(0.02)
curtailment11
Long-lived asset	332		-		-		-			332		-		332		78		254		-	254		254		0.50		0.00		0.50
impairments8
Goodwill		-		-		-		(2,785)		-	2,785		-		2,785		-		2,785		-	2,785		2,785		5.48		0.00		5.48
impairments11
Loss on product
divestiture	13	-		-		-		-		(54)	54		-		54		14		40		-	40		40		0.08		0.00		0.08
arrangement
Reclassification of
cumulative
translation loss to	-		-		-		-		-	-		(65)		65		-		65		-	65		65		0.13		0.00		0.13
earnings14
Tax matters15	-		-		-		-		-	-		-		-		(5)		5		(5)	-		-		0.01		(0.01)		0.00
Adjusted		$4,624	$	2,498	$	443	$	-	$	-	$1,683	$	(53)	$	1,458	$	309	$	1,149	$	187	$1,336	$	1,328		2.25		0.37		2.62
Adjusted percent of
43.0 %		23.2 %		4.1 %		0.0 %		0.0 %	15.6 %		(0.5)%		13.5 %		21.2 %		10.7 %		1.7 %	12.4 %		12.3 %
net sales (or
effective tax rate for
income tax
expense)

BAXTER - PAGE 13

	Reported	Adjusted
Income (loss) from continuing operations	$(2,798)	$	1,149
Less: Net income attributable to noncontrolling interests	8		8
Income (loss) from continuing operations attributable to Baxter stockholders	$(2,806)	$	1,141

Weighted-average diluted shares as reported	503
Effect of dilutive securities that were anti-dilutive to dilutive EPS as reported	5
Weighted-average diluted shares as adjusted	508

1

2

3

4

5

6

7

8

The company's results in 2023 and 2022 included intangible asset amortization expense of $481 million ($375 million, or $0.74 per diluted share, on an after-tax basis) and $578 million ($441 million, or $0.87 per diluted share, on an after-tax basis), respectively.

The company's results in 2023 and 2022 included charges of $508 million ($416 million, or $0.82 per diluted share, on an after-tax basis) and $196 million ($144 million, or $0.28 per diluted share, on an after-tax basis), respectively, associated with its execution of programs to optimize its organization and cost structure. These restructuring and other business optimization costs included actions related to its implementation of a new operating model intended to simplify and streamline its operations, its integration of Hillrom, the decision to cease production of dialyzers at one its U.S.-based manufacturing facilities later this year, which resulted in a $243 million noncash impairment of property, plant and equipment in the first half of 2023, rationalization of certain other manufacturing and distribution facilities and transformation of certain general and administrative functions.

The company's results in 2023 included a $2 million ($1 million, or $0.00 per diluted share, on an after-tax basis) of acquisition and integration-related expenses. That amount included $16 million of costs related to its integration of Hillrom, partially offset by a $14 million benefit from changes in the estimated fair values of contingent consideration liabilities. The company's results in 2022 included $193 million ($157 million, or $0.31 per diluted share, on an after-tax basis) of acquisition and integration-related expenses. That amount includes $227 million of costs related to its acquisition of Hillrom, including $159 million of incremental costs of sales from the fair value step-ups on acquired Hillrom inventory that was sold in the first quarter. The acquisition and integration-related expenses related to Hillrom were partially offset by $34 million of benefits from changes in the estimated fair value of contingent consideration liabilities.

The company's results of continuing operations in 2023 included costs of $123 million ($123 million, or $0.24 per diluted share, on an after-tax basis) of separation-related costs. This amount includes costs of external advisors supporting its activities to prepare for the proposed spinoff of its Kidney Care segment, which are reported in continuing operations. The company's results of discontinued operations in 2023 included $19 million ($19 million, or $0.04 per diluted share, on an after-tax basis) of separation-related costs related to the sale of its BioPharma Solutions (BPS) business.

The company's results in 2023 and 2022 included costs of $38 million ($27 million, or $0.05 per diluted share, on an after-tax basis) and $35 million ($27 million, or $0.05 per diluted share, on an after-tax basis), 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. 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 2023 included losses of $20 million ($15 million, or $0.03 per diluted share, on an after-tax basis) from non-marketable investments in several early stage companies, consisting of $23 million of noncash impairment write-downs, partially offset by a $3 million gain from the sale of an investment.

The company's results of continuing operations in 2023 included costs, including associated legal fees, of $13 million ($10 million, or $0.02 per diluted share, on an after-tax basis) are related to matters involving alleged violations of the False Claims Act related to a now-discontinued legacy Hillrom sales line, and alleged injury from environmental exposure.

The company's results in 2023 included long-lived asset impairment charges of $267 million ($205 million, or $0.40 per diluted share, on an after-tax basis) related to the Hemodialysis business within its Kidney Care segment. The company's results in 2022 included charges of $332 million ($254 million, or $0.50 per diluted share, on an after-tax basis) related to indefinite-lived intangible asset impairments.

BAXTER - PAGE 13

• The company's results of discontinued operations in 2023 included a gain of $2.89 billion ($2.60 billion, or $5.13 per diluted share, on an after-tax basis) from the sale of its BPS business.

1. The company's results in 2022 included charges of $43 million ($38 million, or $0.07 per diluted share, on an after-tax basis) related to warranty and remediation activities from two field corrective actions on certain of its infusion pumps.
2. The company's results in 2022 included a curtailment gain of $11 million ($9 million, or $0.02 per diluted share, on an after-tax basis) on an announced change for active non-bargaining participants in our U.S. Hillrom pension plan.
3. The company's results in 2022 included charges of $2.79 billion ($2.79 billion, or $5.48 per diluted share, on an after-tax basis) related to goodwill and indefinite-lived intangible asset impairments.
4. The company's results in 2022 included a loss of $54 million ($40 million, or $0.08 per diluted share, on an after-tax basis) related to an arrangement to divest certain product rights for an amount that is less than the cost of those product rights which was triggered by U.S. and European Union regulatory approvals of the related products.
5. The company's results in 2022 included a charge of $65 million ($65 million, or $0.13 per diluted share, on an after-tax basis) related to cumulative translation adjustments reclassified from accumulated other comprehensive income (loss) as a result of the substantial liquidation of its operations in Argentina.
6. The company's results of continuing operations in 2023 included tax expense items totaling $152 million ($0.30 per diluted share), primarily comprised of a $199 million reallocation of income tax expense between discontinued operations and continuing operations resulting from the application of intraperiod tax allocation to the company's adjusted results. That item was partially offset by a $30 million valuation allowance recorded to reduce the carrying amount of a deferred tax asset for a tax basis step-up related to previously enacted Swiss tax legislation and $17 million of separation-related tax costs. The company's results of continuing operations in 2022 included a $5 million reallocation of income taxes between continuing operations and discontinued operations resulting from the application of intraperiod tax allocation to the company's adjusted results.

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.

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			Nine Months Ended
September 30,			September 30,
		% Growth	% Growth			% Growth	% Growth
2023	2022	@ Actual	@ Constant	2023	2022	@ Actual	@ Constant
Rates	Rates	Rates	Rates

Infusion Therapies and Technologies	$	1,003	$	956
Advanced Surgery		255		247
Medical Products and Therapies		1,258		1,203
Care and Connectivity Solutions		443		456
Front Line Care		301		279
Healthcare Systems and Technologies		744		735
Injectables and Anesthesia		351		325
Drug Compounding		229		200
Pharmaceuticals		580		525
Chronic Therapies		921		934
Acute Therapies		188		166
Kidney Care		1,109		1,100
Other		17		46
Total - Continuing Operations	$	3,708	$	3,609

5 %	4 %	$	2,918	$	2,829	3 %	4 %
3 %	3 %		773		738	5 %	6 %
5 %	4 %		3,691		3,567	3 %	4 %
(3)%	(4)%		1,307		1,350	(3)%	(3)%
8 %	8 %		911		855	7 %	7 %
1 %	0 %		2,218		2,205	1 %	1 %
8 %	7 %		987		961	3 %	4 %
15 %	13 %		665		613	8 %	12 %
10 %	9 %		1,652		1,574	5 %	7 %
(1)%	(3)%		2,730		2,744	(1)%	1 %
13 %	12 %		564		542	4 %	6 %
1 %	0 %		3,294		3,286	0 %	2 %
(63)%	(61)%		73		129	(43)%	(46)%
3 %	2 %	$	10,928	$	10,761	2 %	3 %

In connection with our segment change in the third quarter of 2023, we made the following reclassifications of prior period sales amounts to conform to the current period presentation. We reclassified $16 million of sales from the first half of 2023 and $8 million and $23 million for the three and nine months ended September 30, 2022, respectively, from Chronic Therapies to Acute Therapies. 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 and $8 million and $26 million for the three and nine months ended September 30, 2022, respectively, 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.