UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________________________________________________________________________ FORM 10-Q _________________________________________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to C ...

Baxter International Inc. (NYSE:BAX) Q2 2023 Earnings Conference Call July 27, 2023 8:30 AM ET Company Participants Clare Trachtman - Vice President of Investor Relations Jose Almeida - Chairman, President & Chief Executive Officer Brian Stevens - Interim Chief Financial Officer & Chief Accounting Officer Conference Call Participants Robert Marcus - JPMorgan Larry Biegelsen - Wells Fargo Danielle Antalffy - SVB Securities Patrick Wood - Morgan Stanley Travis Steed - Bank of America Securities Vijay Kumar - ...

Financial Performance - Net income attributable to Baxter stockholders for Q2 2023 was $(141) million, or $(0.28) per diluted share, compared to $252 million, or $0.50 per diluted share in Q2 2022, reflecting a significant decline [168]. - Special items decreased net income by $476 million and $729 million for Q2 and the first half of 2023, respectively, impacting earnings per diluted share by $(0.94) and $(1.44) [168]. - Net income from continuing operations for Q2 2023 was $(193) million, compared to $185 million in Q2 2022, indicating a decline in operational performance [170]. - In Q2 2023, total net sales reached $3,707 million, a 3% increase from $3,594 million in Q2 2022, with a 4% increase at constant currency rates [175]. - For the first half of 2023, total net sales were $7,220 million, up 1% from $7,152 million in the same period of 2022, with a 3% increase at constant currency rates [175]. Business Transactions and Spinoffs - The proposed spinoff of the Renal Care and Acute Therapies product categories is expected to be completed by July 2024, with these categories generating $1.12 billion and $2.19 billion in net sales for Q2 and the first half of 2023, respectively, accounting for approximately 30% of consolidated net sales [158]. - The company has entered into an agreement to sell its BioPharma Solutions (BPS) business for $4.25 billion in cash, expecting to receive approximately $3.92 billion in net pre-tax cash proceeds, with a pre-tax gain of about $2.97 billion anticipated upon closing [159]. - The company plans to simplify its operating model and is reviewing strategic alternatives, including a proposed spinoff of its Renal Care and Acute Therapies product categories [230]. Operational Challenges - The company incurred significant separation and transaction-related costs in 2023, which are expected to adversely impact earnings and operating cash flows for the remainder of 2023 and the first half of 2024 [161]. - The company faced supply chain challenges due to production delays, increased costs, and shortages of raw materials, which negatively impacted sales for certain product categories [163]. - High inflation rates have resulted in increased costs, including shipping and labor, which may adversely affect profitability and results of operations [166]. Cost and Expense Management - The company incurred $50 million in business optimization charges in Q2 2023 and $184 million in the first half, compared to $42 million and $123 million in the same periods of 2022, respectively [1]. - Acquisition and integration-related costs in Q2 2023 were $7 million, significantly lower than $18 million in Q2 2022, reflecting integration costs primarily related to Hillrom [2]. - SG&A expenses for the first half of 2023 were $1,959 million, or 27.1% of net sales, compared to $2,017 million or 28.2% in the first half of 2022, a decrease of 2.9% [189]. - R&D expenses increased to $329 million, or 4.6% of net sales in the first half of 2023, up from $297 million or 4.2% in the same period of 2022, an increase of 10.8% [189]. Segment Performance - Renal Care net sales increased by 1% in Q2 2023 to $936 million, with a flat performance in the first half, impacted by lower sales in China due to government procurement initiatives [178]. - Medication Delivery net sales rose 7% in Q2 2023 to $761 million, driven by increased demand for IV administration sets and solutions [179]. - Pharmaceuticals net sales increased by 4% in Q2 2023 to $550 million, supported by growth from U.S. injectable products and new product launches [180]. - Clinical Nutrition net sales grew by 6% in Q2 2023 to $243 million, driven by strong demand for nutrition compounding services [182]. Cash Flow and Debt Management - Cash provided by operating activities for continuing operations was $780 million in the first half of 2023, an increase of $411 million from $369 million in the first half of 2022 [215]. - Cash used for investing activities in the first half of 2023 included capital expenditures of $328 million, compared to $277 million in the first half of 2022 [216]. - As of June 30, 2023, the company had $1.30 billion remaining available under its stock repurchase authorization, with no shares repurchased in the first half of 2023 [218]. - The company had approximately $16.48 billion of long-term debt and finance lease obligations as of June 30, 2023 [221]. - The company had $1.72 billion of cash and cash equivalents as of June 30, 2023, indicating adequate cash available to meet operating requirements [221]. Regulatory and Compliance Issues - The company received a Warning Letter from the FDA on July 25, 2023, based on observations from a January 2023 inspection, and is implementing corrective actions [229]. - The company faces risks related to product quality, including potential recalls and regulatory actions that could delay product development and sales [45]. - There are ongoing tax audits and potential actions by tax authorities that could affect financial results [235]. Market and Economic Risks - The company is monitoring geopolitical risks, particularly related to the war in Ukraine, which could have an adverse effect on business operations [164]. - Foreign exchange risk is significant, with exposure to multiple currencies including Euro, British Pound, and Chinese Renminbi, managed through forward contracts and derivative instruments [236][237]. - A sensitivity analysis indicated that a 10% weakening of the U.S. Dollar against all currencies could change the net pre-tax asset balance of $7 million by $8 million [239]. - The company is exposed to risks from labor disruptions and the loss of key employees, which could impact operations [45]. - Regulatory changes, including healthcare reforms, may significantly affect pricing, reimbursement, and demand for the company's products [45].

FI RS T-Q UA RT ER 2023 EA RNI NGS Baxter International Inc. April 27, 2023 FORWA R D- LOOKING STAT EM ENT S This p ...

Baxter International Inc. (NYSE:BAX) Q1 2023 Earnings Conference Call April 27, 2023 8:30 AM ET Company Participants Clare Trachtman - VP, IR Jose Almeida - Chairman, President & CEO James Saccaro - EVP & CFO Conference Call Participants Vijay Kumar - Evercore ISI Pito Chickering - Deutsche Bank Travis Steed - Bank of America Securities Robert Marcus - JPMorgan Rick Wise - Stifel Mattew Miksic - Barclays Joanne Wuensch - Citi Matthew Taylor - Jefferies Operator Good morning, ladies and gentlemen, and welcom ...

Financial Performance - In Q1 2023, net sales from Renal Care and Acute Therapies reached $1.1 billion, accounting for approximately 29% of total consolidated net sales[134]. - Net income attributable to Baxter stockholders for Q1 2023 was $44 million, or $0.09 per diluted share, down from $71 million, or $0.14 per diluted share in Q1 2022[143]. - Total net sales for Q1 2023 were $3.649 billion, a decrease of 2% compared to $3.707 billion in Q1 2022[149]. - The BioPharma Solutions product category generated $139 million in net sales, representing approximately 4% of consolidated net sales[134]. - Medication Delivery net sales decreased by 3% in Q1 2023, impacted by lower sales of infusion pumps and a 3% negative impact from foreign exchange rates[154]. - Pharmaceuticals net sales were flat in Q1 2023, with a 5% negative impact from foreign exchange rates, despite increased demand for international pharmacy compounding services[155]. - Clinical Nutrition net sales decreased by 1% in Q1 2023, primarily due to a 4% negative impact from foreign exchange rates[156]. - Advanced Surgery net sales increased by 8% in Q1 2023, driven by recovery in surgical procedures, partially offset by a 3% negative impact from foreign exchange rates[157]. - BioPharma Solutions net sales decreased by 11% in Q1 2023, primarily due to lower sales of manufacturing services related to COVID-19 vaccines[159]. - Patient Support Systems net sales decreased by 9% in Q1 2023, reflecting lower demand for hospital beds and a 1% negative impact from foreign exchange rates[160]. - Total segment net sales were $3.649 billion in Q1 2023, a decrease from $3.707 billion in Q1 2022[178]. Currency and Foreign Exchange Impact - Foreign currency fluctuations negatively impacted net sales by 4 percentage points in Q1 2023 compared to the prior year[149]. - Renal Care net sales were flat year-over-year, with a 4% negative impact from foreign exchange rates[153]. - The company is primarily exposed to foreign exchange risk with revenues generated outside the U.S. in multiple currencies including Euro, British Pound, and Chinese Renminbi[209]. - As of March 31, 2023, the company has cash flow hedge contracts in place for foreign exchange risk with a maximum term of 12 months[210]. - A sensitivity analysis indicated that if the U.S. Dollar weakened by 10% against all currencies, the net pre-tax balance of foreign exchange contracts would change by $61 million[212]. Operational Changes and Strategic Initiatives - The proposed spinoff of Renal Care and Acute Therapies is expected to be completed by July 2024 or earlier, subject to customary conditions[134]. - The company incurred significant separation and transaction-related costs in Q1 2023, which are expected to adversely affect earnings and operating cash flows[135]. - The new operating model aimed at simplifying operations is expected to be fully implemented in the second half of 2023[136]. - The company is pursuing strategic alternatives for its BioPharma Solutions product category, including a potential sale[133]. - The company is evaluating strategic alternatives, including a potential spinoff of its Renal Care and Acute Therapies product categories[204]. Cash Flow and Debt Management - Cash provided by operating activities increased to $479 million in Q1 2023, compared to $208 million in Q1 2022, an increase of $271 million[187]. - As of March 31, 2023, the company had $1.7 billion in cash and cash equivalents, with a long-term debt of approximately $16.4 billion[194]. - The company amended its credit agreements to increase the maximum net leverage ratio for the four fiscal quarters ending March 31, 2023, to December 31, 2023, and had a capacity to draw approximately $2.2 billion under its credit facilities[192]. - The company had no outstanding borrowings under its credit facilities as of March 31, 2023, and outstanding commercial paper borrowings were $50 million[192]. - The company plans to fund obligations through cash on hand, future cash flows, or by issuing additional debt, maintaining adequate cash to meet operating requirements[194]. Tax and Regulatory Considerations - The effective income tax rate increased to 35.7% in Q1 2023 from 22.3% in Q1 2022, primarily due to tax shortfalls on stock compensation awards[174]. - The company has implemented corrective actions in response to FDA observations at Claris facilities and is working with other manufacturing locations to support new product distribution in the U.S.[203]. - Fitch revised the company's senior debt credit rating outlook from negative to rating watch negative in January 2023, with no changes to its investment grade credit ratings[195]. Risk Management - The company is closely monitoring its Patient Support Systems reporting unit due to lower customer orders and expects capital spending constraints to continue throughout much of 2023[198]. - The subsidiary in Turkey reported net monetary assets of $29 million as of March 31, 2023, following the adoption of highly inflationary accounting[214]. - There were no significant changes in interest rate and other risks during the quarter ended March 31, 2023[215]. - The company has not performed a trigger-based quantitative goodwill impairment test during the first quarter of 2023, as it believes the goodwill of its reporting unit is not impaired[199].

Baxter International Inc. (NYSE:BAX) Q4 2022 Earnings Conference Call February 9, 2023 8:30 AM ET Company Participants Clare Trachtman - Vice President of Investor Relations José Almeida - Chairman, President & Chief Executive Officer James Saccaro - Executive Vice President & Chief Financial Officer Conference Call Participants Pito Chickering - Deutsche Bank Robbie Marcus - JPMorgan Vijay Kumar - Evercore ISI Matthew Mishan - KeyBanc Matt Miksic - Barclays Lawrence Biegelsen - Wells Fargo Operator Good mo ...

Acquisition and Integration Challenges - The Hillrom acquisition completed in 2021 is expected to yield cost and revenue synergies, but integration challenges may hinder realization of these benefits [69]. - Significant debt was incurred in connection with the Hillrom acquisition, which may impact financial performance and leverage targets [61]. - The company incurred approximately $11.8 billion in acquisition-related debt for the Hillrom acquisition, impacting financial flexibility and increasing borrowing costs [76]. - The acquisition of Hillrom was completed for $10.5 billion, with the segment generating net sales of $2.9 billion in 2022 [146][148]. - The company incurred $213 million in acquisition and integration-related costs in 2022, primarily associated with the Hillrom acquisition [159]. Financial Performance and Market Conditions - Global economic conditions, including inflation and supply chain disruptions, have adversely affected operations and may continue to do so, with inflation rates expected to remain elevated [72]. - Future financial performance is contingent on the successful introduction of new products and adaptation to changing consumer preferences [83]. - The company expects continued fluctuations in operating results and financial condition due to evolving global macroeconomic conditions [74]. - The company’s stock price has experienced significant fluctuations, influenced by market perceptions and operational performance [78]. - Total net sales for the year ended December 31, 2022, were $15,113 million, an increase of 18% compared to $12,784 million in 2021 [169]. Supply Chain and Operational Challenges - Supply chain challenges have negatively impacted sales, with certain product categories unable to meet demand due to raw material shortages [73]. - The company has faced significant supply chain challenges, including increased costs for raw materials and freight due to inflation and geopolitical issues, which may continue to impact operations [84]. - Increased operational challenges and expenses are anticipated due to ongoing COVID-19 impacts, including supply chain disruptions and staffing shortages [81]. - The company has faced difficulties in obtaining key materials due to supply chain disruptions, which could adversely affect manufacturing and distribution capabilities [91]. - Supply chain challenges and inflationary pressures are anticipated to continue affecting operations and sales in the future [140][142]. Regulatory and Legal Risks - The company is subject to various legal and regulatory risks, including potential fines and changes in reimbursement policies that could adversely affect business [65]. - The company is subject to extensive healthcare regulations, including the Healthcare Reform Act, which may result in pricing pressure and impact product demand [99]. - Non-compliance with regulatory requirements could lead to severe penalties, product recalls, and loss of customer confidence, adversely impacting sales [99]. - The company faces increased scrutiny from federal, state, and foreign government agencies regarding compliance with healthcare-related laws, which could adversely affect its operations and financial condition [100]. - The company is subject to stringent data privacy laws, including GDPR and CCPA, which could result in substantial fines for noncompliance [102]. Competition and Market Dynamics - The company faces substantial competition in its product markets, which could lead to declining demand and pricing pressures [62]. - The company is experiencing intense competition in the healthcare market, which may lead to pricing pressures and loss of market share if it fails to innovate or respond to customer demands [86]. - Pharmaceuticals net sales fell by 7% in 2022, primarily due to a 6% negative impact from foreign exchange rates and increased competition from new market entrants [175]. - Renal Care net sales decreased by 4% in 2022, impacted by a 6% negative effect from foreign exchange rates and lower in-center HD sales, partially offset by $28 million in incremental revenue from a customer [172]. Financial Obligations and Debt Management - As of December 31, 2022, the company had $1.7 billion in cash and cash equivalents, with approximately $16.6 billion in long-term debt and finance lease obligations [218]. - Long-term debt and finance lease obligations total $16,702 million, with $1,404 million due within one year and $15,298 million due after one year [224]. - Interest on short- and long-term debt and finance lease obligations amounts to $3,015 million, with $387 million due within one year and $2,628 million due after one year [224]. - The company's senior debt credit ratings are BBB from Standard & Poor's and Fitch, with a negative outlook from both agencies [220]. - A 100 basis point change in interest rates would impact pre-tax earnings and cash flows by approximately $42 million over a one-year period [239]. Goodwill and Impairment Issues - A $2.8 billion goodwill impairment was recorded in Q3 2022 due to macroeconomic conditions, including rising interest rates and supply chain costs [79]. - Goodwill impairments in 2022 amounted to $2,812 million, significantly affecting overall financial performance [156]. - The company recorded $2.8 billion in goodwill impairment charges during 2022 across three reporting units [258]. - The effective income tax rate was (2.9)% in 2022, significantly impacted by non-deductible impairments of goodwill from the Hillrom acquisition [195]. Strategic Initiatives and Future Outlook - The company is undertaking strategic actions, including a review of alternatives for the BPS product category and plans for a simplified operating model, which may incur significant expenses [68]. - The proposed spinoff of the Renal Care and Acute Therapies product categories may face delays or challenges, impacting the anticipated timeline and terms [66]. - Significant separation and transaction-related costs are expected in 2023 and early 2024 due to the proposed spinoff and strategic alternatives for the BPS product category [137]. - The company is designing a new operating model to simplify and streamline operations, which may change its reportable segments [126]. - Key employee retention is critical for the company's success, and competition for talent in the healthcare industry is intense, which could impact operational effectiveness [87].

Baxter International Inc. (NYSE:BAX) Q3 2022 Earnings Conference Call October 27, 2022 8:30 AM ET Company Participants José Almeida - Chairman, President and CEO James Saccaro - EVP and CFO Clare Trachtman - VP, IR Conference Call Participants Travis Steed - Bank of America Securities Robbie Marcus - JPMorgan Rick Wise - Stifel Pito Chickering - Deutsche Bank Joanne Wuensch - Citigroup Joshua Jennings - Cowen and Company Operator Good morning, ladies and gentlemen, and welcome to Baxter International's Thir ...