Baxter International (BAX) 10-K risk factor changes: FY2021 vs FY2020

In addition to the other information in this Annual Report on Form [removed: 10-K,] [added: 10-K (Annual Report),] stockholders or prospective investors should carefully consider the following risk factors.

Risks [removed: Related] [added: Relating] to the COVID-19 Pandemic

COVID-19 has had, and we expect will continue to have, an adverse impact on our operations, supply chains and distribution systems and has increased and will continue to increase our expenses, including [removed: the impact associated with] [added: due to] preventive and precautionary measures that we, other businesses and governments [removed: are taking.][added: have taken and may continue to take.]

We expect that [removed: these] evolving restrictions and [removed: requirements,] [added: precautions,] as well as the corresponding need to adapt to new methods of conducting business remotely, will continue to have an adverse effect on our business.

- We have experienced, and expect to continue to experience, significant and unpredictable reductions or increases in demand for certain of our products as healthcare customers re-prioritize the treatment of [added: patients.]

[removed: Some of our products are particularly sensitive] [added: For example, due] to [removed: reductions in] [added: the recent spread of the Omicron variant, many] elective [removed: medical procedures, and,] [added: procedures have been suspended or postponed in our principal markets] as hospital systems prioritize treatment of COVID-19 patients [removed: and] [added: again or] otherwise comply with [added: changing] government [removed: guidelines, many of those procedures have been suspended or postponed in our principal markets.][added: guidelines.]

If patients and hospital systems continue to de-prioritize, delay or cancel [removed: these] [added: elective] procedures, our business, financial condition and results of operations would continue to be negatively affected.

- A significant number of our suppliers, manufacturers, distributors and vendors have been adversely affected by the COVID-19 pandemic, including with respect to [removed: the ability of] [added: increased absenteeism among] their employees [removed: to get] [added: and other obstacles relating] to their [removed: places of work and] [added: ability to] maintain the continuity of their on-site operations.

Any delay or shortage in the supply of components or materials or other operational or logistical challenges [removed: may result in] [added: impacts] our [removed: inability] [added: ability] to satisfy consumer demand for our products in a timely manner or at all, which could harm our reputation, future sales and profitability.

For example, we have experienced and expect to continue to experience supply constraints for amino acid raw materials used in our parenteral nutrition products, as such materials are [removed: also] being used to produce COVID-19 vaccines.

To the extent our management or other personnel are impacted in significant numbers by COVID-19 and are not available to perform their professional duties, we could experience [removed: delays in, or the suspension of,] [added: further disruptions in] our manufacturing [removed: operations, research and development] [added: operations or disruptions in other] activities and other functions.

- We face increased operational challenges as we continue to take measures to support and protect employee health and safety, including through office [removed: closures] [added: closures, vaccine mandates] and work from home policies.

For example, remote working arrangements heighten our risks associated with information technology systems and networks, including cyber-attacks, computer viruses, malicious software, security breaches, and telecommunication failures, both for systems and networks we control directly and for those [removed: that employees and third-party developers rely on to work remotely.]

These risks are particularly heightened due to COVID‑19 as cybercriminals attempt to profit from [removed: the disruptions caused by the uncertain environment.][added: COVID-related disruptions.]

If we are unable to successfully introduce new products or fail to keep pace with [added: changing consumer preferences and needs and] advances in technology, our business, financial condition and results of operations could be adversely affected.

[removed: Product] [added: Furthermore, product] development requires substantial investment and there is inherent risk in the R&D process.

A successful product development process [added: further] depends on many [added: other] factors, including our ability to [removed: properly anticipate and satisfy customer needs,] adapt to new technologies, [removed: obtain regulatory approvals on a timely basis,] demonstrate satisfactory clinical [removed: results, manufacture products in an economical and timely manner] [added: results] and differentiate our products from those of our competitors.

Our success depends upon the availability and quality of our [removed: products.][added: products and the underlying raw materials and component parts.]

The [removed: pharmaceutical and] medical products [added: and pharmaceutical] industries are competitive and subject to complex market dynamics and varying demand levels.

These levels vary in response to [removed: macro-economic] [added: economic] conditions, regulatory [removed: requirements (including the availability of private or public reimbursement),] [added: requirements,] seasonality, natural disasters, pandemics, epidemics and other matters.

New or unintended uses of our [removed: product] [added: products] (for example, in response to COVID-19 or changing clinical practice) may also raise quality or safety issues.

A quality or safety issue may result in adverse inspection reports, voluntary or official action indicated, warning letters, import bans, product recalls (either voluntary or required by FDA or similar governmental authorities in other countries) or seizures, monetary sanctions, injunctions to halt manufacture and distribution of products, civil or criminal [removed: sanctions,] [added: sanctions (which may include corporate integrity agreements),] costly litigation, refusal of a government to grant approvals and licenses, restrictions on operations or withdrawal of existing approvals and licenses.

Unaffiliated third-party suppliers provide a number of goods and services to our R&D, clinical and manufacturing [removed: organizations.][added: organizations, many of whom do so on a spot basis and not pursuant to a contractual arrangement.]

[removed: Third] [added: Additionally, third] party suppliers are required to comply with our quality standards.

Failure of a third-party supplier to provide compliant raw [removed: materials] [added: materials, component parts] or supplies could result in delays, service interruptions or other quality related issues that may negatively impact our business results.

Although no single company competes with us in all of our businesses, we face substantial competition in all of our markets from international and domestic healthcare [added: medical products] and pharmaceutical companies and providers of all sizes, and these competitors often differ across our businesses.

In addition, many [removed: health care] [added: healthcare] industry companies, including [removed: health care] [added: healthcare] systems, distributors, manufacturers, providers, and insurers, are consolidating or have formed strategic alliances.

As the [removed: health care] [added: healthcare] industry consolidates, competition to provide goods and services to industry participants will become more intense.

For more [removed: information on recent business development activities,] [added: information,] see Note 2 in Item 8 of this Annual [removed: Report on Form 10-K.][added: Report.]

Our ability to compete effectively depends on our ability to attract and retain key employees, including people in senior management, sales, marketing, information technology and R&D [removed: positions.][added: positions and from the recently acquired Hillrom business.]

Competition for top talent in the [added: healthcare industry can be intense.]

Our ability to recruit and retain such talent will depend on a number of factors, including hiring practices of our competitors, compensation and benefits, work location, work environment [added: (including our competitors’ policies regarding remote work arrangements] and [added: COVID-19 protocols) and] industry economic conditions.

Although we do carry strategic inventory and maintain insurance to help mitigate the potential risk related to any supply disruption, [removed: there can be no assurance that] such measures [removed: will] [added: may not] be sufficient or effective.

A [removed: reduction or] [added: reduction,] interruption [added: or suspension] in supply, [removed: an issue in the] [added: other] supply [removed: chain,] [added: chain issues,] including [removed: issues] [added: those] due to the revocation of distribution facilities’ licenses, and our inability to quickly develop acceptable alternative sources for such supply [removed: could adversely affect our ability to manufacture, distribute and sell our products in a timely or cost-effective manner.]

[removed: See “—Risks Related to Legal and Regulatory Matters.”] Additionally, volatility in our costs of energy, transportation/freight, components, raw materials and other supply, manufacturing and distribution costs [added: have had and] could [added: in the future] adversely affect our results of operations.

[removed: Material] [added: For example, material] or sustained increases in the price of oil could have an adverse impact on the cost of many of the plastic materials [added: or resins] we use to make and package our products, as well as our transportation/freight costs.

This is due to the complex nature of manufacturing [added: devices and] pharmaceuticals, including biologics, [removed: and devices,] as well as the strict regulatory regime governing our manufacturing operations.

For example, in [removed: February 2020,] [added: May 2021, our facility in Mountain Home, Arkansas, entered into a Consent Administrative Order with the Arkansas Division of Environmental Quality relating to] certain air emission control technology used to reduce ethylene [removed: oxide emissions] [added: oxide-emissions] from sterilization [removed: equipment at our facility in Mountain Home, Arkansas, was tested and determined not to operate in accordance with applicable emission limitations in our state-issued air permit.][added: equipment.]

Although [removed: we received] [added: the events giving rise to the Consent Administrative Order only caused] a temporary [removed: variance and have recommenced] [added: pause in] operations, these events or other disruptions of manufacturing or sterilization processes that we or third parties may experience, whether due to lack of capacity, environmental, regulatory or compliance issues or otherwise, could result in product shortage, unanticipated costs, loss of revenues, litigation and damage to our reputation, all of which could have a material adverse effect on our business, financial condition and results of operations.

We rely upon information technology systems and infrastructure, including support provided by our partners and third parties, to support our business, [removed: our] products and [removed: our] customers.

Some of our products are particularly sensitive to reductions in elective medical procedures.

It is not possible to predict the timing of a broad resumption of elective medical procedures or whether, once resumed, further delays or cancellations may occur in the future in connection with the spread of new variants.

These impacts have caused interruptions and delays in our supply chain, and may continue to do so, resulting in more expensive alternative sources of labor and materials and heightened supply chain costs.

These constraints have resulted in certain product backorders and may do so in the future.

- COVID-19 has adversely impacted the continued service and availability of skilled personnel necessary to run our operations.

For example, we have faced increased absenteeism in connection with the rise of recent COVID-19 variants.

Although we have sought to mitigate these staffing challenges through overtime and enlisting contingent labor, staffing shortages have strained our operations and increased our expenses.

In addition, we may be unable to retain employees who object to governmental vaccine mandates or heightened safety protocols.

Vaccination is currently required for employees who are customer-facing and/or directly engaged with hospitals and medical care providers covered by the Centers for Medicare and Medicaid Services (CMS).

that employees and third-party developers rely on to work remotely.

We can provide no assurances that our new products will achieve commercial acceptance in the marketplace.

In addition, difficulties in manufacturing or in obtaining regulatory approvals, including as a result of the COVID-19 pandemic, might delay or prohibit introduction of new products into the marketplace.

We may not be able to obtain patent protection on our new products or be able to defend our intellectual property rights globally.

Warranty claims and service costs relating to our new products might be greater than anticipated, and we might be required to devote significant resources to address any quality issues associated with our new products, which could reduce the resources available for further new product development and other matters.

In addition, the introduction of new products might also cause customers to defer purchases of existing products.

Our future financial performance will also depend in part on our ability to influence, anticipate, identify and respond to changing consumer preferences and needs, including those impacted by the COVID-19 pandemic.

We might not correctly anticipate or identify trends in customer preferences or needs or might identify them later than competitors do.

Failure to successfully introduce new products in a cost-effective manner, or delays in customer purchasing decisions related to the evaluation of new products, could cause us to lose market share and could materially adversely affect our business.

For example, for many of our suppliers, the COVID-19 pandemic has created increased employee absenteeism rates and other obstacles relating to their ability to maintain the continuity of their on-site operations.

These increased rates and other obstacles have increased the cost of certain raw materials and component parts and caused us to incur increased freight costs.

They may, in the future, prevent suppliers from providing good and services to us on reasonable terms or at all.

Increased costs relating to freight, raw materials or component parts and difficulties hiring and retaining staff have had and may continue to have a negative impact on product supply.

Our ability to receive goods or services at all or on reasonable financial terms from these third parties will be impacted if they are unable or refuse to supply or service us.

Moreover, we may have limited or no recourse if the goods or services are not subject to contractual terms.

If we are unable to identify an alternative provider on reasonable terms, our ability to meet our obligations to our customers could be negatively impacted, which could adversely affect our financial results and our reputation.

There is substantial competition in the product markets in which we operate and the risk of declining demand and pricing pressures could adversely affect our operating results.

Demand for our products and services depends in large part on overall demand in the healthcare market.

With the healthcare market’s increased focus on hospital asset and resource efficiency as well as reimbursement constraints, spending for some of our products could decline over time.

Further, the competitive pressures in our industry could cause us to lose market share unless we increase our commercial investments or reduce our prices, which could adversely impact our operating results.

These factors, along with possible legislative developments and others, might result in significant shifts in market share among the industry’s major participants, which includes us.

Accordingly, if we are unable to effectively differentiate ourselves from our competitors in terms of new products and

diversification of our product portfolio through business acquisitions, then our market share, sales and profitability could be adversely impacted through lower volume or decreased prices.

We may fail to realize the anticipated benefits of the Hillrom acquisition.

During 2021, we completed the acquisition of Hillrom.

The success of this acquisition depends on, among other things, our ability to integrate Hillrom in a manner that facilitates growth opportunities, realizes anticipated cost and revenue synergies (some of which are still being identified) and achieves certain previously communicated net leverage targets without adversely affecting current revenues and investments in future growth.

If we are not able to successfully achieve these objectives, the anticipated benefits of the Hillrom acquisition may not be realized fully or at all or may take longer to realize than expected.

There is a significant degree of difficulty and management distraction inherent in the process of integrating an acquisition.

These difficulties include challenges consolidating certain operations and functions (including regulatory and other corporate functions), integrating technologies (including differing IT systems and processes), organizations, procedures, policies and operations, addressing differences in the business cultures of the two companies and retaining key personnel.

The integration may be complex and time consuming and involve delays or additional and unforeseen expenses.

The integration process and other disruptions resulting from the Hillrom acquisition may also disrupt our ongoing businesses or cause inconsistencies in standards, controls, procedures and policies that adversely affect our relationships with market participants, employees, regulators and others with whom we and Hillrom have business or other dealings.

In addition to travel restrictions put in place in early 2020, governments have closed borders, imposed prolonged quarantines and may continue those measures or implement other restrictions and requirements in light of the continuing spread of the pandemic.

patients.

In the second, third and fourth quarters of 2020, this resulted in lower levels of general hospital admissions and elective surgery volumes in those markets, which negatively impacted the demand for certain of our products.

It is not possible to predict the timing of a broad resumption of elective medical procedures.

These impacts could impair our ability to move our products through distribution channels to end customers.

- COVID-19 could adversely impact our ability to retain key employees and the continued service and availability of skilled personnel necessary to run our operations, including members of our management, as well as the ability of our suppliers, manufacturers, distributors and vendors to retain their key employees.

- COVID-19 and related impacts have affected and may further affect the global economy and capital markets worldwide, which, among other consequences, may restrict our access to capital, increase financing costs, adversely affect our liquidity, the perceptions of our creditworthiness, and our ability to complete acquisitions, and increase volatility in foreign currency exchange rates.

The extent of the impact from the pandemic depends on future developments that cannot be predicted at this time, such as the severity and duration of the pandemic (including of related resurgences and future mutations or outbreaks of related strains of the virus); the extent and effectiveness of containment efforts, including the effectiveness and acceptance of any vaccines for COVID-19; and the direct and indirect impact of the pandemic on our employees, customers, counterparties, service providers and regulators, as well as other market participants.

For example, as hospital systems prioritized treatment of COVID-19 patients, elective medical procedures were suspended or postponed in our principal markets, which negatively impacted demand for certain products.

In the event of an oversupply, we may be forced to lower our prices, record asset impairment charges or take other actions, which may adversely affect our business, financial condition and results of operations.

There is substantial competition in the product markets in which we operate.

Our sales could be adversely affected if any of our contracts with GPOs, IDNs or other customers are terminated due to increased competition or otherwise.

healthcare industry can be intense.

Climate change (including laws or regulations passed in response thereto) could increase our costs, in particular our costs of supply, energy and transportation/freight.

expose us to greater risks related to cybersecurity and our information technology systems.

On January 31, 2020, the United Kingdom (UK) formally left the European Union (EU) (commonly known as Brexit) when the UK-EU Withdrawal Agreement became effective.

Under the Withdrawal Agreement, a transition period began that ran until December 31, 2020.

On January 1, 2021, the UK left the EU Single Market and Customs Union, as well as all EU policies and international agreements.

As a result, the free movement of persons, goods, services and capital between the UK and the EU ended, and the EU and the UK formed two separate markets and two distinct regulatory and legal spaces.

On December 24, 2020, the European Commission reached a trade agreement with the UK on the terms of its future cooperation with the EU (Trade Agreement).

The Trade Agreement offers UK and EU companies preferential access to each other’s markets, ensuring imported goods will be free of tariffs and quotas; however, economic relations between the UK and the EU will now be on more restricted terms than existed previously.

The withdrawal by the UK from the EU could result in the deterioration of economic conditions, volatility in currency exchange rates, and increased regulatory complexities, as well as the potential for product shortages, increased costs or other similar effects.

The escalating global economic competition and trade tensions between the U.S. and China could have an adverse effect on our business, financial condition or results of operations.

The impact of this on us is direct to

The requirements of regulatory authorities, including interpretative guidance, are subject to change and compliance with additional or changing requirements or interpretative guidance may subject us to further review, result in product launch delays or otherwise increase our costs.

For information on current regulatory issues affecting us, please refer to the caption entitled “Certain Regulatory Matters” in Item 7 of this Annual Report on Form 10-K.

In connection with these issues, there can be no assurance that additional costs or civil and criminal penalties will not be incurred, that additional regulatory actions with respect to us will not occur, that we will not face civil claims for damages from purchasers or users, that substantial additional charges or significant asset impairments may not be required, that sales of other products may not be adversely affected, or that additional regulation will not be introduced that may adversely affect our operations and consolidated financial statements.

The enactment of additional laws in the future may increase our compliance costs or otherwise adversely impact our operations.

From time to time,

Additional restrictions may be enacted, enforced or interpreted in a way that may adversely affect our operations.

There have been multiple attempts to repeal or amend the PPACA through legislative action and legal challenges, and the most recent challenge is currently before the U.S. Supreme Court.

Recent changes to the composition of the Supreme Court may increase the likelihood that the PPACA is repealed or impacted in some manner.

In the event the PPACA is repealed or significantly altered, it would impact our business in a number of ways, some of which may be material.

These voluntary payment models have a scheduled commencement date of April 2021, but applicants now have the option to delay implementation until January 2022.

Misappropriation or other loss of our intellectual property from any of the foregoing would have an adverse effect on our competitive position and may cause us to incur substantial litigation costs.

In particular, the Tax Cuts and Jobs Act of 2017 and the regulations issued thereunder (collectively, 2017 Tax Act), including, among other things, certain changes in tax rates, deductibility of interest, deductibility of executive compensation expense, expensing of capital expenditures, the ability to use certain tax credits, taxation on earnings from international business operations, and the treatment of deductible payments made by our U.S. affiliates to our foreign affiliates could adversely affect our financial condition and results of operations.

In certain instances, the 2017 Tax Act could have a negative effect on our tax rate and the carrying value of tax balances.

Any of these changes could adversely affect our financial performance.

There remains some uncertainty regarding aspects of the implementation of the 2017 Tax Act that could potentially have adverse impacts on us.

We cannot currently predict the full impact that the 2017 Tax Act may have over time on our business, including revenues, profit margins, profitability, operating cash flows and results of operations.

[removed: Each of our] [added: The Americas, EMEA and APAC] segments [removed: provides] [added: provide] a broad portfolio of essential healthcare [removed: products] [added: products,] including acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products.

For financial information about our segments, see Note [removed: 16] [added: 17] in Item 8 of this Annual Report on Form 10-K.

Refer to Note 2 in Item 8 of this Annual Report on Form 10-K for additional information regarding the acquisition of [removed: Cheetah.][added: PerClot.]

Refer to Note 2 in Item 8 of this Annual Report on Form 10-K for additional information regarding the acquisition of [removed: the Recothrom] [added: Caelyx] and [removed: Preveleak products.][added: Doxil.]

[removed: In February] [added: On March 31,] 2021, we [removed: agreed to acquire] [added: acquired] the rights to Transderm Scop [added: (TDS) for the U.S. and specified territories outside of the U.S.] from subsidiaries of GlaxoSmithKline for an upfront purchase price of [removed: $55] [added: $60] million [removed: plus] [added: including] the cost of acquired inventory and the potential for additional cash consideration of $30 [removed: million] [added: million, which had an acquisition-date fair value of $24 million,] based upon [added: regulatory approval of] a [removed: successful technology transfer] [added: new contract manufacturer] by a specified date.

We [removed: currently sell] [added: previously sold] this product under a distribution license to the U.S. institutional market.

[removed: Transderm Scop] [added: TDS] is indicated for post-operative nausea and vomiting in the U.S. and motion sickness in European markets.

[removed: In December 2020,] [added: On February 17, 2021,] we [removed: agreed to acquire] [added: acquired] the rights to Caelyx and Doxil, the branded versions of liposomal doxorubicin, from a subsidiary of Johnson & Johnson for specified territories outside of the U.S for [added: approximately] $325 [removed: million.][added: million in cash.]

Liposomal doxorubicin is a chemotherapy medicine used [added: to treat various types of cancer.]

Our global net sales totaled [removed: $11.7] [added: $12.8] billion in [removed: 2020,] [added: 2021,] an increase of [removed: 3%] [added: 10%] over [removed: 2019] [added: 2020] on [removed: both] a reported and [added: 7% on a] constant currency basis.

International sales totaled [removed: $6.8] [added: $7.6] billion in [removed: 2020,] [added: 2021,] an increase of [removed: 4%] [added: 12%] compared to [removed: 2019] [added: 2020] on a reported basis and [removed: 5%] [added: 8%] on a constant currency basis.

Sales in the United States totaled [removed: $4.9] [added: $5.2] billion in [removed: 2020,] [added: 2021,] an increase of [removed: 1%] [added: 6%] compared to [removed: 2019.][added: 2020.]

[removed: Income from continuing operations] [added: Net income] in [removed: 2020] [added: 2021] included special items which resulted in a net decrease to [added: net] income [removed: from continuing operations] of [removed: $495] [added: $552] million, or [removed: $0.96] [added: $1.08] per diluted share.

Our financial results included R&D expenses totaling [removed: $521] [added: $534] million in [removed: 2020,] [added: 2021,] which reflects our focus on balancing investments to support our new product pipeline with efforts to optimize overall R&D spending.

Our financial position remains strong, with operating cash flows from continuing operations totaling [removed: $1.9] [added: $2.2] billion in [removed: 2020.][added: 2021.]

Capital expenditures totaled [removed: $709] [added: $743] million in [removed: 2020] [added: 2021] as we continue to invest across our businesses to support future growth, including additional investments in support of new and existing product capacity expansions.

Our investments in capital expenditures in [removed: 2020] [added: 2021] were focused on projects that improve production efficiency and enhance manufacturing capabilities to support our [removed: strategy of geographic expansion with select investments in growing markets.][added: business growth.]

During [removed: 2020,] [added: 2021,] we paid cash dividends to our stockholders totaling [removed: $473] [added: $530] million.

Additionally, in [removed: 2020] [added: 2021] we repurchased [removed: 6.3] [added: 7.3] million shares through cash repurchases pursuant to [removed: a] Rule 10b5-1 repurchase [removed: plan.][added: plans.]

As part of our portfolio management strategy, we seek to optimize our position in product areas where we have a stable, profitable business [removed: model,] [added: model and] identify and alter investments in products that have reached the end of their life [added: cycles or for which market positions have evolved unfavorably.]

We are in the midst of launching several new products, geographic expansions and line extensions [removed: by 2023] including in such areas as chronic and acute renal care, smart pump technology, hospital pharmaceuticals and nutritionals, surgical sealants, and more.

[removed: We] [added: In recent years, we] have undertaken a comprehensive review of all aspects of our operations and are actively implementing changes in line with our business goals.

As part of our pursuit of improved margin performance, we are working to optimize our cost structure and we are critically assessing optimal support levels in light of our ongoing portfolio optimization [removed: efforts.][added: efforts and the Hillrom integration.]

[removed: Our] [added: Subject to market conditions and our investment grade targets, our] capital allocation strategies include the following:

The following table provides a summary of our special items and the related impact by line item on our results [removed: of continuing operations] for [removed: 2020, 2019] [added: 2021] and [removed: 2018.][added: 2020.]

| years ended December 31 (in millions) | | | [removed: 2020 | | | 2019] [added: 2021] | | | [removed: 2018] [added: 2020] | | |

| Gross Margin | | | | | | | | | [removed: | | |]

| Intangible asset amortization expense | | | [removed: $ | (222) | |] $ | [removed: (183)] [added: (287)] | | $ | [removed: (169)] [added: (222)] | |

| Intangible asset impairment1 | | | [removed: (17) | | | (31)] [added: —] | | | [removed: —] [added: (17)] | | |

| Business optimization items2 | | | [removed: (53) | | | (69)] [added: (53)] | | | [removed: (49)] [added: (53)] | | |

| Product-related items3 | | | [removed: (29) | | |] — | | | [removed: 6] [added: (29)] | | |

| Acquisition and integration expenses4 | | | [removed: (11) | | | (30)] [added: (50)] | | | [removed: (27)] [added: (11)] | | |

| European medical devices [removed: regulation7 | | | (33)] [added: regulation5] | | | [removed: (25)] [added: (42)] | | | [removed: (6)] [added: (33)] | | |

| Investigation and related [removed: costs8 | | | (3)] [added: costs6] | | | — | | | [removed: —] [added: (3)] | | |

| Total Special Items | | | [removed: $ | (368) | |] $ | [removed: (338)] [added: (432)] | | $ | [removed: (221)] [added: (368)] | |

| Impact on Gross Margin Ratio | | | [removed: (3.1 pts) | | | (3.0] [added: (3.4] pts) | | | [removed: (2.0] [added: (3.1] pts) | | |

| Selling, General and Administrative (SG&A) Expenses | | | | | | | | | [removed: | | |]

| Business optimization items2 | | | [removed: $ | 78 | | $] [added: 60] | [removed: 70] | | [removed: $] [added: 78] | [removed: 145] | |

| Acquisition and integration expenses4 | | | [removed: 9 | | | 20] [added: 4] | | | [removed: 23] [added: 22] | | |

| Investigation and related [removed: costs8 | | | 19] [added: costs6] | | | [removed: 8] [added: 31] | | | [removed: —] [added: 19] | | |

The discussion and analysis of our financial condition as of December 31, 2020 and results of operations for the year ended December 31, 2020 compared to the year ended December 31, 2019, included in Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations, can be found in our Current Report on Form 8-K filed with the SEC on April 29, 2021 (2020 Annual Report), which revised and superseded the Management's Discussion and Analysis of Financial Condition and Results of Operations section of the Annual Report on Form 10-K for the year ended December 31, 2020.

We manage our global operations based on four segments, consisting of the following geographic segments related to our legacy Baxter business: Americas, EMEA and APAC, and a new global segment for our recently acquired Hillrom business.

The Hillrom segment provides digital and connected care solutions and collaboration tools, including smart bed systems, patient monitoring and diagnostic technologies, respiratory health devices and advanced equipment for the surgical space.

We expect to continue to evaluate our business structure as we integrate Hillrom and any changes as a result of that evaluation could impact the composition of our reportable segments in the future.

Hillrom

On December 13, 2021, we completed the previously announced acquisition of all outstanding equity interests of Hillrom for a purchase price of $10.5 billion.

Including the assumption of Hillrom's outstanding debt obligations, the enterprise value of the transaction was approximately $12.8 billion.

Under the terms of the transaction agreement, Hillrom shareholders received $156.00 in cash per each outstanding Hillrom common share.

Prior to our acquisition of Hillrom, Hillrom was a global medical technology leader whose products and services help enable earlier diagnosis and treatment, optimize surgical efficiency, and accelerate patient recovery while simplifying clinical communication and shifting care closer to home.

Hillrom made those outcomes possible through digital and connected care solutions and collaboration tools, including smart bed systems, patient monitoring and diagnostic technologies, respiratory health devices, advanced equipment for the surgical space and more, delivering actionable, real-time insights at the point of care.

PerClot

On July 29, 2021, we acquired certain assets related to PerClot Polysaccharide Hemostatic System (PerClot), including distribution rights for the U.S. and specified territories outside of the U.S., from CryoLife, Inc. for an upfront purchase price of $25 million and the potential for additional cash consideration of up to $36 million, which had an acquisition-date fair value of $28 million, based upon regulatory and commercial milestones.

PerClot is an absorbable powder hemostat indicated for use in surgical procedures, including cardiac, vascular, orthopedic, spinal, neurological, gynecological, ENT and trauma surgery as an adjunct hemostat when control of bleeding from capillary, venous, or arteriolar vessels by pressure, ligature, and other conventional means is either ineffective or impractical.

Net income attributable to Baxter stockholders totaled $1.3 billion, or $2.53 per diluted share, in 2021.

Additionally, to the extent we identify areas that do not align with our longer-term objectives, we will look to exit or divest these businesses while also continuing to identify new opportunities to enhance future performance.

We are also evaluating product development opportunities that leverage the newly acquired Hillrom portfolio.

- return capital to stockholders through dividends and share repurchases; and

Corporate Responsibility at Baxter

Driven by our mission to save and sustain lives, Baxter's corporate responsibility strategy focuses on tackling the environmental, social and governance (ESG) issues that affect our patients, customers, employees, communities and other stakeholders.

Our corporate responsibility approach supports our business priorities to achieve top quartile results relative to industry peers and other comparators across four dimensions: patient safety and quality, growth through innovation, best place to work, and industry-leading performance.

Advancing our corporate responsibility goals contributes to business, social and economic value, including through employee attraction and retention, enhanced operational efficiency, and implementation of enterprise risk management strategies, among others.

In 2021, we launched our 2030 CR Commitment featuring ten goals for focused action, anchored by three pillars - Empower Our Patients, Protect Our Planet and Champion Our People and Communities - on the foundation of

principles of Ethics and Compliance, Human Rights, Inclusion and Diversity, and Privacy and Data Protection.

The 2030 Commitment and Goals highlight Baxter's corporate responsibility focus and help to further advance our ESG performance.

Our progress against these goals is published annually in our Corporate Responsibility Report which is available on our website under "Our Story-Corporate Responsibility".

The Corporate Responsibility Report is not incorporated by reference into this Annual Report on Form 10-K or any other document filed with the SEC.

Risks and Uncertainties Related to COVID-19

Initial measures taken in 2020 led to unprecedented restrictions on, disruptions in, and other related impacts on business and personal activities, including a shift in healthcare priorities, which resulted in a significant decline in medical procedures in 2020.

Some of these disruptions and impacts (including the suspension or postponement of elective medical procedures) in certain of our principal markets have continued into 2021.

The pandemic has created significant volatility in the demand for our products.

Significant uncertainty remains regarding the duration and overall impact of the COVID-19 pandemic.

For example, concerns remain regarding the pace of economic recovery due to virus resurgence across the globe from the Delta and Omicron variants and other virus mutations as well as vaccine distribution and hesitancy.

The U.S. and other governments may continue existing measures or implement new restrictions and other requirements in light of the continuing spread of the pandemic (including with respect to mandatory vaccinations for certain of our employees and moratoriums on elective procedures).

Due to the uncertainty caused by the pandemic, our operating performance and financial results, particularly in the short term, may be subject to volatility.

We have experienced significant challenges, including lengthy delays, shortages and interruptions, posed by the pandemic and other exogenous factors (including significant weather events and disruptions to certain ports of call around the world) to our global supply chain, including the cost and availability of raw materials and component parts (including resins and electromechanical devices) and higher transportation costs, and may experience these and other challenges in future periods.

| Intangible asset amortization expense | | | $ | 11 | | $ | — | |

| Litigation matter7 | | | 13 | | | — | | |

| Interest Expense, Net | | | | | | | | |

| Total Special Items | | | $ | 48 | | $ | — | |

We manage our business based on three geographic segments: Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia-Pacific).

Cheetah Medical

In October 2019, we acquired 100 percent of Cheetah Medical, Inc. (Cheetah) for total cash consideration of $188 million, net of cash acquired, with the potential for additional cash consideration, up to $40 million, based on clinical and commercial milestones for which the acquisition date fair value was $18 million.

Cheetah is a leading provider of hemodynamic monitoring technologies.

Recothrom and Preveleak

In March 2018, we acquired two hemostat and sealant products from Mallinckrodt plc: Recothrom Thrombin topical (Recombinant), the first and only stand-alone recombinant thrombin, and Preveleak Surgical Sealant, which is used in vascular reconstruction.

The purchase price included an upfront payment of approximately $163 million and potential contingent payments in the future.

We expect the transaction to close late in the first quarter or early in the second quarter of 2021, subject to the satisfaction of closing conditions.

to treat various types of cancer.

We expect the transaction to close late in the first quarter or early in the second quarter of 2021, subject to the satisfaction of regulatory approvals and other closing conditions.

Our income from continuing operations totaled $1.1 billion, or $2.13 per diluted share, in 2020.

cycles or for which market positions have evolved unfavorably.

- return capital to stockholders through dividends, which we expect to meaningfully increase with earnings growth;

- share repurchases; and

Responsible Corporate Citizen

We strive for continued growth and profitability, while furthering our focus on acting as a responsible corporate citizen.

To us, sustainability means creating lasting social, environmental and economic value by addressing the needs of our wide-ranging stakeholder base.

Our comprehensive sustainability program is focused on areas in which we are uniquely positioned to make a positive impact.

Priorities include providing employees a safe, healthy and inclusive workplace, fostering a culture that drives integrity, strengthening access to healthcare, enhancing math and science education, and driving environmental performance across the product life cycle, including development, manufacturing and transport.

Along with the Baxter International Foundation, we provide financial support and product donations in support of critical needs, from assisting underserved communities to providing emergency relief for countries experiencing natural disasters.

Throughout 2020, we continued to implement a range of water conservation strategies and facility-based energy saving initiatives.

In the area of product stewardship and life cycle management, we are pursuing efforts such as sustainable design and reduced packaging.

We are also responding to the challenges of climate change through innovative greenhouse gas emissions-reduction programs, such as shifting to less carbon-intensive energy sources in manufacturing and transport.

Additionally, we monitor our progress against long-term goals to drive continued environmental stewardship while creating healthier, more sustainable communities where our employees work and live.

| Litigation5 | | | — | | | — | | | (8) | | |

| Hurricane Maria insurance recoveries6 | | | — | | | — | | | 32 | | |

| Litigation5 | | | — | | | — | | | 2 | | |

| European medical devices regulation7 | | | — | | | — | | | 3 | | |

| Hurricane Maria insurance recoveries6 | | | — | | | (100) | | | (10) | | |

| Claris Settlement⁹ | | | — | | | — | | | (80) | | |

| Insurance recoveries from a legacy product-related matter10 | | | — | | | (37) | | | — | | |

| Pension settlements11 | | | 43 | | | 755 | | | — | | |

| Tax effects of special items and impact of U.S. Tax Reform13 | | | $ | (139) | | $ | (387) | | $ | (277) | |

Our results in 2018 included a net benefit of $6 million related to an adjustment to our accrual for Sigma Spectrum infusion pump inspection and remediation activities.

This included integration expenses relate to our acquisitions of Claris Injectables Limited (Claris) and the Recothrom and Preveleak products in prior periods, as well as the 2019 acquisitions of Cheetah and in-process R&D assets, partially offset by a benefit related to the change in the estimated fair value of contingent consideration liabilities.

Our results in 2018 included $33 million of acquisition and integration costs related to our acquisitions of Claris and the Recothrom and Preveleak products, upfront payments related to R&D collaborations and license agreements, and a gain from remeasuring our previously held investment to fair value upon acquisition of a controlling interest in our joint venture in Saudi Arabia.

5Our results in 2018 included charges of $10 million related to certain product litigation.

6Our results in 2019 and 2018 included benefits of $100 million and $42 million, respectively, related to insurance recoveries as a result of losses incurred due to Hurricane Maria.

This included $15 million in 2020 and $8 million in 2019 related to our investigation of foreign exchange gains and losses associated with certain intra-company transactions and related legal matters.

9Our results in 2018 included a benefit of $80 million for the settlement of certain claims related to the acquired operations of Claris.

Baxter International Inc., through its subsidiaries, provides a broad portfolio of essential healthcare products, including acute and chronic dialysis therapies; sterile intravenous (IV) solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; [removed: and] surgical hemostat and sealant [removed: products.][added: products, advanced surgical equipment; smart bed systems; patient monitoring and diagnostic technologies; and respiratory health devices.]

As of December 31, [removed: 2020,] [added: 2021,] we manufactured products in over 20 countries and sold them in over 100 countries.

As used in this report, “Baxter International” means Baxter International Inc. and “we", "our” or "us" means Baxter International and its consolidated [removed: subsidiaries (after giving effect to the separation and distribution of Baxalta Incorporated (Baxalta) in 2015, as further described below),] [added: subsidiaries,] unless the context otherwise requires.

Our global operations expose us to risks associated with public health crises and epidemics/pandemics, such as the novel strain of coronavirus [removed: (COVID-19).][added: (COVID-19) and its variants.]

COVID-19 [removed: has] [added: and its variants have] had, and we expect will continue to have, an adverse impact on our operations, supply chains and distribution systems and [removed: has] [added: have] increased and we expect will continue to increase our expenses, including as a result of impacts associated with preventive and precautionary measures that we, other businesses and governments are taking.

We expect that these [added: challenges as well as] evolving [added: governmental] restrictions and requirements, [removed: as well as the corresponding need to adapt to new methods of conducting business remotely, will] [added: among other factors, may] continue to have an adverse effect on our business.

We manage our [removed: business] [added: global operations] based on [removed: three] [added: four segments, consisting of the following] geographic [removed: segments:] [added: segments related to our legacy Baxter business:] Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC [removed: (Asia-Pacific).][added: (Asia-Pacific), and a new global segment for our recently acquired Hillrom business.]

[removed: Each of our] [added: The Americas, EMEA and APAC] segments [removed: provides] [added: provide] a broad portfolio of essential healthcare products, including acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products.

For financial information about our segments, see Note [removed: 16] [added: 17] in Item 8 of this Annual Report on Form 10-K.

Sales are made and products are distributed on a direct basis or through independent distributors or sales agents in more than 100 countries as of December 31, [removed: 2020.][added: 2021.]

For financial information about our foreign and domestic revenues and [removed: geographic] segment information, see Note [removed: 16] [added: 17] in Item 8 of this Annual Report on Form 10-K.

[removed: In the case of] hospitals, governments and other facilities, these contracts may specify minimum quantities of a particular product or categories of products to be purchased by the customer.

For example, public contracting authorities [added: often] act as the purchasing entities for the hospitals and other customers of medical products in their region and many hospitals and other customers have joined joint procurement entities and buying consortia.

Raw [removed: Materials][added: Materials and Component Parts]

Raw materials [added: and component parts] essential to our business are purchased from numerous suppliers worldwide in the ordinary course of business.

[removed: Although most] [added: While many] of these materials are generally available, we [removed: at times] [added: have experienced and] may [added: in the future] experience shortages of supply.

In an effort to manage risk associated with raw materials [added: and component] supply, we work closely with our suppliers to help ensure availability and continuity of supply while maintaining high quality and reliability.

We are not always able to recover cost increases for raw materials [added: and component parts] through customer pricing due to contractual [removed: limits] [added: limits, where applicable,] and market forces.

[removed: Accordingly, we] [added: We seek to] utilize long-term supply contracts with some suppliers to help maintain continuity of supply and manage the risk of price increases.

Our businesses benefit from a number of competitive advantages, including the breadth and depth of our product offerings and our strong relationships with customers, including hospitals and clinics, GPOs, [added: IDNs,] physicians, and patients, many of whom self-administer home-based therapies that we supply.

Although no single company competes with us in all of our businesses, we face substantial competition in each of our segments from international and domestic [removed: healthcare] [added: healthcare, medical products] and pharmaceutical companies and providers of all sizes, and these competitors often differ across our businesses.

[removed: Competition is] [added: We believe customer purchasing decisions are] primarily focused on cost-effectiveness, price, service, product performance, and technological innovation.

Managed care organizations seek to contain healthcare expenditures, and their purchasing strength has been increasing due to their consolidation into fewer, larger [removed: organizations and a growing number of enrolled patients.]

Expenditures for our R&D activities were [removed: $521] [added: $534] million in [removed: 2020, $595] [added: 2021, $521] million in [removed: 2019,] [added: 2020,] and [removed: $654] [added: $595] million in [removed: 2018.][added: 2019.]

[added: These expenditures include costs associated with R&D activities performed at our R&D centers located] around the world, which include facilities in Belgium, Sweden, India, Italy, Germany, China, Japan and the United States, as well as in-licensing, milestone and reimbursement payments made to partners for R&D work performed at non-Baxter locations.

Quality management plays an essential role in determining and meeting customer requirements, helping to prevent defects, facilitating [removed: continuous] [added: continuing] improvement of our processes, products and services, and [removed: assuring] [added: helping to assure] the safety and efficacy of our products.

If any of those is determined to be compromised at any time, we endeavor to take corrective and preventive actions designed to ensure compliance with regulatory requirements and to meet customer [removed: expectations.]

For example, we made [added: $33 million and] $10 million of capital expenditures in [removed: 2020] [added: 2021 and 2020, respectively,] related to a new ethylene oxide emissions control system at our Mountain Home, Arkansas facility.

[removed: The] [added: All material elements of the] new system [removed: is] [added: are] expected to be completed in 2022 and we currently expect to incur an additional [removed: $40] [added: $10] million of capital expenditures related to this project.

As of December 31, [removed: 2020,] [added: 2021,] we employed approximately [removed: 50,000] [added: 60,000] people globally, with approximately [removed: 13,000] [added: 19,000] employees in the United States and approximately [removed: 37,000] [added: 41,000] employees outside of the [removed: Unites] [added: United] States.

[removed: All of our employees] [added: They] contribute to our success and, in particular, the employees in our manufacturing, sales, R&D and quality assurance departments are instrumental in driving operational execution and strong financial performance, advancing innovation and maintaining a strong quality and compliance program.

The success and growth of our business depends in large part on our ability to attract, retain and develop a diverse population of talented and high-performing employees at all levels of our organization, including the individuals who [removed: comprise our global workforce as well as executive officers and other key personnel.]

While our essential workers (production and field service employees) have continued to work at our facilities and provide vital [removed: service] [added: services] to our customers, most employees in our administrative functions have effectively [added: worked remotely since March 2020.]

To [removed: measure] [added: assess] the impact of the investments we make in our people, and to help us consistently improve our human resources programs, we regularly conduct anonymous surveys of our global workforce to seek feedback on a variety of topics including confidence in our leadership, competitiveness of our compensation and benefits packages, career growth opportunities and improvements on how we can make our company an employer of choice.

Initial measures taken by businesses and governments beginning in 2020 led to unprecedented restrictions on, disruptions in, and other related impacts on business and personal activities, including a shift in healthcare priorities, which resulted in a significant decline in elective medical procedures in 2020.

Some of these disruptions and impacts (including the suspension or postponement of elective medical procedures) in certain of our principal markets have continued into 2021.

The pandemic has created significant volatility in the demand for our products.

For further information about our revenues by product category, refer to Note 10 in Item 8 of this Annual Report on Form 10-K.

Significant uncertainty remains regarding the duration and overall impact of the COVID-19 pandemic.

For example, concerns remain regarding the pace of economic recovery due to virus resurgence across the globe from the Delta and Omicron variants and other virus mutations as well as vaccine distribution and hesitancy.

The U.S. and other governments may continue existing measures or implement new restrictions and other requirements in light of the continuing spread of the pandemic (including with respect to mandatory vaccinations for certain of our employees and moratoriums on elective procedures).

Due to the uncertainty caused by the pandemic, our operating performance and financial results, particularly in the short term, may be subject to volatility.

We have experienced significant challenges, including lengthy delays, shortages and interruptions, posed by the pandemic and other exogenous factors (including significant weather events and disruptions to certain ports of call around the world) to our global supply chain, including the cost and availability of raw materials and component parts (including resins and electromechanical devices) and higher transportation costs, and may experience these and other challenges in future periods.

Many of our manufacturing plant and distribution center personnel are currently unvaccinated, and we may also experience employee resistance in complying with current and future government vaccine and testing mandates, which may cause labor shortages significantly impacting manufacturing production and distribution center productivity for us and our suppliers.

Acquisition of Hillrom

On December 13, 2021, we completed the previously announced acquisition of all outstanding equity interests of Hill-Rom Holdings, Inc. (Hillrom) for a purchase price of $10.5 billion.

Including the assumption of Hillrom's outstanding debt obligations, the enterprise value of the transaction was approximately $12.8 billion.

Under the

terms of the transaction agreement, Hillrom shareholders received $156.00 in cash per each outstanding Hillrom common share.

Prior to our acquisition of Hillrom, Hillrom was a global medical technology leader whose products and services help enable earlier diagnosis and treatment, optimize surgical efficiency, and accelerate patient recovery while simplifying clinical communication and shifting care closer to home.

Hillrom made those outcomes possible through digital and connected care solutions and collaboration tools, including smart bed systems, patient monitoring and diagnostic technologies, respiratory health devices, advanced equipment for the surgical space and more, delivering actionable, real-time insights at the point of care.

See Note 2 and Note 5 in Item 8 of this Annual Report on Form 10-K for additional information about the Hillrom acquisition and related financing arrangements.

The Hillrom segment provides digital and connected care solutions and collaboration tools, including smart bed systems, patient monitoring and diagnostic technologies, respiratory health devices and advanced equipment for the surgical space.

In the case of

Additionally, our contractual pricing arrangements with GPOs, IDNs and public contracting authorities limit our ability to increase prices in order to offset raw materials or component price increases or otherwise.

Additionally, certain of these materials are secured from single source suppliers or on a spot basis and not pursuant to a contractual arrangement.

Refer to Item 1A.

Risk Factors of this Annual Report on Form 10-K for further information regarding risks related to the supply chain, raw materials and component parts.

organizations and a growing number of enrolled patients.

For further discussion, refer to Item 1A of this Annual Report on Form 10-K.

expectations.

Approximately, 10,000 of those employees joined our organization in December 2021 in connection with our acquisition of Hillrom.

comprise our global workforce as well as executive officers and other key personnel.

These measures have led to unprecedented restrictions on, disruptions in, and other related impacts on businesses and personal activities.

In addition to travel restrictions put in place in early 2020, governments have closed borders, imposed prolonged quarantines and may continue those measures or implement other restrictions and requirements in light of the continuing spread of the pandemic.

In connection with the separation and distribution of Baxalta in 2015, as further described below, we entered into a long-term manufacturing and supply agreement with Baxalta.

Baxalta manufactures and supplies us with ARTISS, TISSEEL, FLOSEAL and stand-alone thrombin, on a cost-plus basis, under that manufacturing and supply agreement.

These expenditures include costs associated with R&D activities performed at our R&D centers located

Separation of Baxalta

On July 1, 2015, we completed the distribution of approximately 80.5% of the outstanding common stock of Baxalta to our stockholders (the Distribution).

The Distribution was made to our stockholders of record as of the close of business on June 17, 2015 (the Record Date), who received one share of Baxalta common stock for each of our shares held as of the Record Date.

As a result of the distribution, Baxalta became an independent public company.

In 2016, we disposed of our remaining 19.5% interest in Baxalta (Retained Shares) through a series of transactions, including debt-for-equity exchanges, an equity-for-equity exchange and a contribution to our U.S. pension plan (Retained Shares Transactions).

As a result of these transactions, we extinguished approximately $3.65 billion of our indebtedness, repurchased 11,526,638 of our shares and contributed 17,145,570 Baxalta shares to our U.S. pension plan.

On June 3, 2016, Baxalta became a wholly-owned subsidiary of Shire plc (Shire).

In January 2019, Takeda Pharmaceutical Company Limited (Takeda) acquired Shire.

As a result of the separation, the consolidated statements of income, consolidated balance sheets, consolidated statements of cash flow, and related financial information reflect Baxalta’s operations, assets and liabilities, and cash flows as discontinued operations for all periods presented.

worked remotely since mid-March.

During 2020, we paid incremental non-recurring special compensation bonuses to our essential workers.

For the fiscal year ended December 31, [removed: 2020][added: 2021]

[removed: ][added: ]

Indicate by check mark whether registrant has submitted electronically every Interactive Data File required to be submitted [removed: and] pursuant to Rule 405 of Regulation S-T [added: (§ 232.405 of this chapter)] during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes ☑ No ☐

The aggregate market value of the voting common equity held by non-affiliates of the registrant as of June 30, [removed: 2020] [added: 2021] (the last business day of the registrant’s most recently completed second fiscal quarter), based on the per share closing sale price of [removed: $86.10] [added: $80.50] on that date and the assumption for the purpose of this computation only that all of the registrant’s directors and executive officers are affiliates, was approximately [removed: $44] [added: $40] billion.

The number of shares of the registrant’s common stock, $1.00 par value, outstanding as of January [removed: 29, 2021] [added: 31, 2022] was [removed: 505,103,894.][added: 502,293,624.]

Portions of the registrant’s definitive [removed: 2021] [added: 2022] proxy statement for use in connection with its Annual Meeting of Stockholders expected to be held on May [removed: 4, 2021] [added: 3, 2022] are incorporated by reference into Part III of this report.

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| [Item [removed: 9B.](#id032277b8ada47a996ec6f4e6a1e7e29_193)] [added: 9B.](#i93d397774bdd4b7396371ce9bc3696a1_154)] | | | [Other [removed: Information](#id032277b8ada47a996ec6f4e6a1e7e29_193)] [added: Information](#i93d397774bdd4b7396371ce9bc3696a1_154)] | | | [removed: [108](#id032277b8ada47a996ec6f4e6a1e7e29_193)] [added: [110](#i93d397774bdd4b7396371ce9bc3696a1_154)] | | |

| [Item [removed: 10.](#id032277b8ada47a996ec6f4e6a1e7e29_196)] [added: 10.](#i93d397774bdd4b7396371ce9bc3696a1_157)] | | | [Directors, Executive Officers and Corporate [removed: Governance](#id032277b8ada47a996ec6f4e6a1e7e29_196)] [added: Governance](#i93d397774bdd4b7396371ce9bc3696a1_157)] | | | [removed: [108](#id032277b8ada47a996ec6f4e6a1e7e29_196)] [added: [110](#i93d397774bdd4b7396371ce9bc3696a1_157)] | | |

| [Item [removed: 11.](#id032277b8ada47a996ec6f4e6a1e7e29_199)] [added: 11.](#i93d397774bdd4b7396371ce9bc3696a1_160)] | | | [Executive [removed: Compensation](#id032277b8ada47a996ec6f4e6a1e7e29_199)] [added: Compensation](#i93d397774bdd4b7396371ce9bc3696a1_160)] | | | [removed: [108](#id032277b8ada47a996ec6f4e6a1e7e29_199)] [added: [110](#i93d397774bdd4b7396371ce9bc3696a1_160)] | | |

| [Item [removed: 12.](#id032277b8ada47a996ec6f4e6a1e7e29_202)] [added: 12.](#i93d397774bdd4b7396371ce9bc3696a1_163)] | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#id032277b8ada47a996ec6f4e6a1e7e29_202)] [added: Matters](#i93d397774bdd4b7396371ce9bc3696a1_163)] | | | [removed: [109](#id032277b8ada47a996ec6f4e6a1e7e29_202)] [added: [110](#i93d397774bdd4b7396371ce9bc3696a1_163)] | | |

| [Item [removed: 13.](#id032277b8ada47a996ec6f4e6a1e7e29_205)] [added: 13.](#i93d397774bdd4b7396371ce9bc3696a1_166)] | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#id032277b8ada47a996ec6f4e6a1e7e29_205)] [added: Independence](#i93d397774bdd4b7396371ce9bc3696a1_166)] | | | [removed: [109](#id032277b8ada47a996ec6f4e6a1e7e29_205)] [added: [111](#i93d397774bdd4b7396371ce9bc3696a1_166)] | | |

| [Item [removed: 14.](#id032277b8ada47a996ec6f4e6a1e7e29_208)] [added: 14.](#i93d397774bdd4b7396371ce9bc3696a1_169)] | | | [Principal Accountant Fees and [removed: Services](#id032277b8ada47a996ec6f4e6a1e7e29_208)] [added: Services](#i93d397774bdd4b7396371ce9bc3696a1_169)] | | | [removed: [109](#id032277b8ada47a996ec6f4e6a1e7e29_208)] [added: [111](#i93d397774bdd4b7396371ce9bc3696a1_169)] | | |

| [Item [removed: 15.](#id032277b8ada47a996ec6f4e6a1e7e29_211)] [added: 15.](#i93d397774bdd4b7396371ce9bc3696a1_172)] | | | [Exhibits and Financial Statement [removed: Schedules](#id032277b8ada47a996ec6f4e6a1e7e29_211)] [added: Schedules](#i93d397774bdd4b7396371ce9bc3696a1_172)] | | | [removed: [110](#id032277b8ada47a996ec6f4e6a1e7e29_211)] [added: [111](#i93d397774bdd4b7396371ce9bc3696a1_172)] | | |

| [Item [removed: 16.](#id032277b8ada47a996ec6f4e6a1e7e29_214)] [added: 16.](#i93d397774bdd4b7396371ce9bc3696a1_175)] | | | [Form 10-K [removed: Summary](#id032277b8ada47a996ec6f4e6a1e7e29_214)] [added: Summary](#i93d397774bdd4b7396371ce9bc3696a1_175)] | | | [removed: [110](#id032277b8ada47a996ec6f4e6a1e7e29_214)] [added: [111](#i93d397774bdd4b7396371ce9bc3696a1_175)] | | |

| 3.95% Global Notes due 2030 | | | | | | BAX 30 | | | | | | New York Stock Exchange | | |

| 1.73% Global Notes due 2031 | | | | | | BAX 31 | | | | | | New York Stock Exchange | | |

| [Item 6.](#i93d397774bdd4b7396371ce9bc3696a1_31) | | | [Reserved](#i93d397774bdd4b7396371ce9bc3696a1_31) | | | [24](#i93d397774bdd4b7396371ce9bc3696a1_31) | | |

| [Item 9C.](#i93d397774bdd4b7396371ce9bc3696a1_1719) | | | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#i93d397774bdd4b7396371ce9bc3696a1_1719) | | | [110](#i93d397774bdd4b7396371ce9bc3696a1_1719) | | |

| | | | | | | | | |

| [Item 6.](#id032277b8ada47a996ec6f4e6a1e7e29_31) | | | [Selected Financial Data](#id032277b8ada47a996ec6f4e6a1e7e29_31) | | | [25](#id032277b8ada47a996ec6f4e6a1e7e29_31) | | |

We own or have long-term leases on all of our manufacturing [removed: facilities.][added: facilities and the location of the principal manufacturing facilities of each of our segments are listed below:]

| [removed: Region] [added: Segments] | | | Location | | | Owned/Leased | | |

We manage our global operations based on four segments, consisting of the following geographic segments related to our legacy Baxter business: Americas, EMEA and APAC, and a new global segment for our recently acquired Hillrom business.

| Hillrom | | | | | | | | |

| | | | Acton, Massachusetts | | | Leased | | |

| | | | Batesville, Indiana | | | Owned | | |

| | | | Bellevue, Washington | | | Leased | | |

| | | | Cary, North Carolina | | | Leased | | |

| | | | Charleston, South Carolina | | | Leased | | |

| | | | Chicago, Illinois | | | Leased | | |

| | | | Milwaukee, Wisconsin | | | Owned | | |

| | | | Sarasota, Florida | | | Leased | | |

| | | | St. Paul, Minnesota | | | Leased | | |

| | | | Skaneateles Falls, New York | | | Owned | | |

| | | | Suzhou, China | | | Leased | | |

| | | | Taicang, China | | | Leased | | |

| | | | Pluvigner, France | | | Owned | | |

| | | | Puchheim, Germany | | | Leased | | |

| | | | Saalfeld, Germany | | | Owned | | |

| | | | Navan, County Meath, Ireland | | | Owned | | |

| | | | Bologna, Italy | | | Leased | | |

| | | | Tijuana, Mexico | | | Owned | | |

| | | | Monterrey, Mexico | | | Owned | | |

| | | | Amsterdam, Netherlands | | | Leased | | |

| | | | Singapore | | | Leased | | |

| | | | Luleå, Sweden | | | Owned | | |

The location of the principal manufacturing facilities of each of our geographic segments are listed below:

| | | | Brooklyn Park, Minnesota | | | Leased | | |

As of February [removed: 11, 2021,] [added: 23, 2022,] the following serve as Baxter’s executive officers:

Almeida*, age [removed: 58,] [added: 59,] is Chairman, President and Chief Executive Officer, having served in that capacity since January 2016.

He began serving as an executive officer of [removed: the company] [added: Baxter] in October 2015.

Previously, he served as the Chairman, President and Chief Executive Officer of Covidien plc [removed: (Covidien)] [added: (Covidien), a global health care products company,] from March 2012 to January 2015, prior to [removed: Medtronic plc’s (Medtronic)] [added: the] acquisition of [removed: Covidien,] [added: Covidien by Medtronic plc (Medtronic),] and President and Chief Executive Officer of Covidien from July 2011 to March 2012.

Mr. Almeida [removed: is] [added: previously served as] a member of the Board of Directors of Walgreens Boots Alliance, [removed: Inc.][added: Inc., and the board of trustees of Partners in Health.]

[removed: *Giuseppe Accogli*,] [added: *Cristiano Franzi*,] age [removed: 50,] [added: 59,] is Senior Vice President and President, [removed: Americas.][added: EMEA.]

Prior to his current role, Mr. Accogli served as Senior Vice President and President, [added: Americas and] Global [removed: Businesses, from 2017 to 2019.][added: Business Units.]

Mr. Accogli joined Baxter in 2007 as Renal business unit Director in Italy, and assumed positions of increasing responsibility with the Renal business in Europe, including Head of the [removed: EMEA] [added: Europe, Middle East and Africa (“EMEA”)] region for [added: Baxter’s] Renal [added: business] from 2013 to 2015.

[removed: Previously he] [added: Prior to joining Baxter, Mr. Accogli] worked as a Business Unit Manager and Sales and Marketing Manager for Medtronic plc in Italy, and in several sales, product and marketing roles for Tyco and then Covidien in Italy and EMEA.

Mr. Accogli [removed: has served] [added: serves] as a director to AdvaMed, an American medical device trade association, [added: which he has done] since September 25, 2019.

*James Borzi*, age [removed: 58,] [added: 59,] is Senior Vice President, Chief Supply Chain Officer.

[removed: *Cristiano Franzi*,] [added: *Andrew Frye*,] age [removed: 58,] [added: 56,] is Senior Vice President and President, [removed: EMEA.][added: APAC.]

[removed: *Andrew Frye*,] [added: *Sean Martin*,] age [removed: 55,] [added: 59,] is Senior Vice President and [removed: President, APAC.][added: General Counsel.]

*Jacqueline Kunzler*, Ph.D., age [removed: 55,] [added: 56,] is Senior Vice President and Chief Quality Officer.

Previously, he served as Assistant Secretary (2010), Vice President of Corporate Law (2009 to 2010) and Vice President of Commercial Law (2005 to 2009) for Amgen Inc. He also served as Vice President and Deputy [removed: General Counsel at Fresenius Medical Care North America from 2000 to 2005.]

Mason*, Ph.D., age [removed: 65,] [added: 66,] is Senior Vice President, Human Resources.

Saccaro*, age [removed: 48,] [added: 49,] is Executive Vice President and Chief Financial Officer.

He originally joined [removed: the company] [added: Baxter] in 2002 as Manager of Strategy for [removed: the company’s] [added: our] BioScience business, and over the years assumed positions of increasing responsibility, including Vice President of Financial Planning, Vice President of Finance for [removed: the company’s] [added: our] operations in Europe, the Middle East and Africa and Corporate Vice President and Treasurer.

He also previously served as director and chairman of the Board for the Advanced Medical Technology Association (AdvaMed).

*Giuseppe Accogli*, age 51, was appointed in 2021 to a newly created role of Executive Vice President and Chief Operating Officer with responsibility of Baxter’s eight global business units and the Americas.

In 2020, his role was expanded to include President of Baxter’s Global Businesses, a position he held from 2017 to 2019.

General Counsel at Fresenius Medical Care North America from 2000 to 2005.

*Sean Martin*, age 58, is Senior Vice President and General Counsel.

[removed: (1)On] [added: On] July 25, 2012, we announced that our Board of Directors authorized us to repurchase up to $2.0 billion of our common stock on the open market or in private transactions.

The remaining authorization under this program totaled approximately [removed: $1.9] [added: $1.3] billion at December 31, [removed: 2020.][added: 2021.]

As of January [removed: 29, 2021,] [added: 31, 2022,] there were [removed: 22,017] [added: 20,939] holders of record of our common stock.

[removed: ][added: ]

During the fourth quarter of 2021, we did not repurchase any shares under this authority.

The following table includes information about our common stock repurchases during the three-month period ended December 31, 2020.

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Period | | | Total Number of Shares Purchased(1) | | | | | | Average Price Paid per Share | | | | | | Total Number of Shares Purchased as Part of Publicly Announced Programs(1) | | | | | | Approximate Dollar Value of Shares that may yet be Purchased Under the Program(1) | | |

| October 1, 2020 through October 31, 2020 | | | — | | | | | | $ | — | | | | | — | | | | | | | | |

| November 1, 2020 through November 30, 2020 | | | — | | | | | | $ | — | | | | | — | | | | | | | | |

| December 1, 2020 through December 31, 2020 | | | 6,343,100 | | | | | | $ | 78.85 | | | | | 6,343,100 | | | | | | | | |

| Total | | | 6,343,100 | | | | | | $ | 78.85 | | | | | 6,343,100 | | | | | | $ | 1,897,272,535 | |

During the fourth quarter of 2020, we repurchased approximately 6.3 million shares for $500 million in cash pursuant to this authority through a Rule 10b5-1 purchase plan.

The following selected consolidated financial data should be read in conjunction with our consolidated financial statements and the accompanying notes thereto in Item 8 of this Annual Report on Form 10-K, and the information contained in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K.

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | Unaudited | | |

| as of or for the years ended December 31 | | | | | | 2020 | | | 2019¹ | | | 2018 | | | 2017 | | | 2016² | | |

| Operating Results | | | Net sales | | | $ | 11,673 | | 11,362 | | | 11,099 | | | 10,584 | | | 10,133 | | |

| *(in millions)* | | | Income from continuing operations | | | $ | 1,110 | | 1,011 | | | 1,552 | | | 609 | | | 4,936 | | |

| | | | Loss from discontinued operations, net of tax | | | $ | — | | — | | | (6) | | | (7) | | | (1) | | |

| | | | Net income attributable to Baxter stockholders | | | $ | 1,102 | | 1,001 | | | 1,546 | | | 602 | | | 4,935 | | |

| | | | Earnings per share from continuing operations | | | | | | | | | | | | | | | | | |

| | | | Basic | | | $ | 2.17 | | 1.97 | | | 2.91 | | | 1.12 | | | 9.04 | | |

| | | | Diluted | | | $ | 2.13 | | 1.93 | | | 2.84 | | | 1.10 | | | 8.96 | | |

| | | | Loss per share from discontinued operations | | | | | | | | | | | | | | | | | |

| | | | Basic | | | $ | — | | — | | | (0.01) | | | (0.01) | | | — | | |

| | | | Diluted | | | $ | — | | — | | | (0.01) | | | (0.02) | | | — | | |

| | | | Earnings per share | | | | | | | | | | | | | | | | | |

| | | | Basic | | | $ | 2.17 | | 1.97 | | | 2.90 | | | 1.11 | | | 9.04 | | |

| | | | Diluted | | | $ | 2.13 | | 1.93 | | | 2.83 | | | 1.08 | | | 8.96 | | |

| | | | Weighted-average number of shares outstanding | | | | | | | | | | | | | | | | | |

| | | | Basic | | | 509 | | | 509 | | | 534 | | | 543 | | | 546 | | |

| | | | Diluted | | | 517 | | | 519 | | | 546 | | | 555 | | | 551 | | |

| Balance Sheet Information | | | Total assets | | | $ | 20,019 | | 18,193 | | | 15,720 | | | 17,102 | | | 15,459 | | |

| *(in millions)* | | | Total liabilities | | | $ | 11,293 | | 10,281 | | | 7,854 | | | 7,993 | | | 7,238 | | |

| | | | Total equity | | | $ | 8,726 | | 7,912 | | | 7,866 | | | 9,109 | | | 8,221 | | |

| | | | Long-term debt and finance lease obligations | | | $ | 5,786 | | 4,809 | | | 3,481 | | | 3,512 | | | 2,774 | | |

| Cash Flow Information | | | Cash flows from operations - continuing operations | | | $ | 1,870 | | 2,110 | | | 2,017 | | | 1,730 | | | 1,588 | | |

| *(in millions)* | | | Cash flows from investing activities - continuing operations | | | $ | (1,179) | | (1,100) | | | (916) | | | (1,292) | | | (716) | | |

| | | | Cash flows from financing activities | | | $ | (345) | | 498 | | | (2,603) | | | 93 | | | (324) | | |

| | | | Capital expenditures - continuing operations | | | $ | (709) | | (696) | | | (659) | | | (616) | | | (705) | | |

| Common Stock Information | | | Cash dividends declared per share | | | $ | 0.955 | | $ | 0.850 | | $ | 0.730 | | $ | 0.610 | | $ | 0.505 | |

_______________________________________________________________

1.Income from continuing operations for the year ended December 31, 2019 included a pre-tax charge of $755 million ($568 million, or $1.09 per diluted share, on an after-tax basis) related to the annuitization of a portion of our U.S. pension plan.

2.Income from continuing operations for the year ended December 31, 2016 included pre-tax net realized gains of $4.4 billion ($4.4 billion, or $8.07 per diluted share, on an after-tax basis) related to the disposition of our formerly retained shares in Baxalta (Baxalta Retained Shares).

| as of December 31 (in millions, except share information) | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | |

| Cash and cash equivalents | | | [removed: $] [added: $] | [removed: 3,730] [added: 2,951] | | | | | $ | [removed: 3,335] [added: 3,730] | |

| Accounts receivable, net of allowance of [removed: $125] [added: $122] in [removed: 2020] [added: 2021] and [removed: $112] [added: $125] in [removed: 2019] [added: 2020] | | | [removed: 2,077] [added: 2,629] | | | | | | [removed: 1,896] [added: 2,007] | | |

| Inventories | | | [removed: 1,916] [added: 2,453] | | | | | | [removed: 1,653] [added: 1,916] | | |

| Prepaid expenses and other current assets | | | [removed: 688] [added: (41)] | | | [added: (37)] | | | [removed: 619] [added: (31)] | | |

| Total current assets | | | [removed: 8,411] [added: 8,872] | | | | | | [removed: 7,503] [added: 8,411] | | |

| Property, plant and equipment, net | | | [removed: 4,722] [added: 5,178] | | | | | | [removed: 4,512] [added: 4,722] | | |

| Goodwill | | | [removed: 3,217] [added: 9,836] | | | | | | [removed: 3,030] [added: 3,217] | | |

| Other intangible assets, net | | | [removed: 1,671] [added: 7,792] | | | | | | [removed: 1,471] [added: 1,671] | | |

| Operating lease right-of-use assets | | | [removed: 603] [added: 630] | | | | | | [removed: 608] [added: 603] | | |

| Other non-current assets | | | [removed: 1,395] [added: 1,213] | | | | | | [removed: 1,069] [added: 1,395] | | |

| Total assets | | | [removed: $] [added: $] | [removed: 20,019] [added: 33,521] | | | | | $ | [removed: 18,193] [added: 20,019] | |

| Short-term debt | | | [removed: $] [added: $] | [removed: —] [added: 301] | | | | | $ | [removed: 226] [added: —] | |

| Current maturities of long-term debt and finance lease obligations | | | [removed: 406] [added: 210] | | | | | | [removed: 315] [added: 406] | | |

| Total current liabilities | | | [removed: 3,333] [added: 4,236] | | | | | | [removed: 3,230] [added: 3,333] | | |

| Long-term debt and finance lease obligations | | | [removed: 5,786] [added: 17,149] | | | | | | [removed: 4,809] [added: 5,786] | | |

| Operating lease liabilities | | | [removed: 501] [added: 522] | | | | | | [removed: 510] [added: 501] | | |

| Other non-current liabilities | | | [removed: 1,673] [added: 2,493] | | | | | | [removed: 1,732] [added: 1,673] | | |

| Total liabilities | | | [removed: 11,293] [added: 24,400] | | | | | | [removed: 10,281] [added: 11,293] | | |

| Common stock, $1 par value, authorized 2,000,000,000 shares, issued 683,494,944 shares in [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] | | | [removed: 683] [added: 683] | | | | | | 683 | | |

| Common stock in treasury, at cost, [removed: 178,580,208] [added: 181,879,516] shares in [removed: 2020] [added: 2021] and [removed: 177,340,358] [added: 178,580,208] shares in [removed: 2019] [added: 2020] | | | [removed: (11,051)] [added: (11,488)] | | | | | | [removed: (10,764)] [added: (11,051)] | | |

| Additional contributed capital | | | [removed: 6,043] [added: 6,197] | | | | | | [removed: 5,955] [added: 6,043] | | |

| Retained earnings | | | [removed: 16,328] [added: 17,065] | | | | | | [removed: 15,718] [added: 16,328] | | |

| Accumulated other comprehensive (loss) income | | | [removed: (3,314)] [added: (3,380)] | | | | | | [removed: (3,710)] [added: (3,314)] | | |

| Total Baxter stockholders’ equity | | | [removed: 8,689] [added: 9,077] | | | | | | [removed: 7,882] [added: 8,689] | | |

| Noncontrolling interests | | | [removed: 37] [added: 44] | | | | | | [removed: 30] [added: 37] | | |

| Total equity | | | [removed: 8,726] [added: 9,121] | | | | | | [removed: 7,912] [added: 8,726] | | |

| Total liabilities and equity | | | [removed: $] [added: $] | [removed: 20,019] [added: 33,521] | | | | | $ | [removed: 18,193] [added: 20,019] | |

| years ended December 31 (in millions, except per share data) | | | [removed: 2020] [added: 2021] | | | [removed: 2019] [added: 2020] | | | [removed: 2018] [added: 2019] | | |

| Net sales | | | [removed: $] [added: $] | [removed: 11,673] [added: 12,784] | | $ | [removed: 11,362] [added: 11,673] | | $ | [removed: 11,099] [added: 11,362] | |

| Cost of sales | | | [removed: 7,086] [added: 7,679] | | | [removed: 6,601] [added: 7,086] | | | [removed: 6,340] [added: 6,601] | | |

| Gross margin | | | [removed: 4,587] [added: 5,105] | | | [removed: 4,761] [added: 4,587] | | | [removed: 4,759] [added: 4,761] | | |

| Selling, general and administrative expenses | | | [removed: 2,469] [added: 2,867] | | | [removed: 2,535] [added: 2,469] | | | [removed: 2,620] [added: 2,535] | | |

| Research and development expenses | | | [removed: 521] [added: 534] | | | [removed: 595] [added: 521] | | | [removed: 654] [added: 595] | | |

| Other operating income, net | | | [removed: (19)] [added: (6)] | | | [removed: (141)] [added: (19)] | | | [removed: (99)] [added: (141)] | | |

| Operating income | | | [removed: 1,616] [added: 1,710] | | | [removed: 1,772] [added: 1,616] | | | [removed: 1,584] [added: 1,772] | | |

| Interest expense, net | | | [removed: 134] [added: 192] | | | [removed: 71] [added: 134] | | | [removed: 45] [added: 71] | | |

| Other [removed: (income)] expense, net | | | [removed: 190] [added: 41] | | | [removed: 731] [added: 190] | | | [removed: (78)] [added: 731] | | |

| Income [removed: from continuing operations] before income taxes | | | [removed: 1,292] [added: 1,477] | | | [removed: 970] [added: 1,292] | | | [removed: 1,617] [added: 970] | | |

| Income tax expense (benefit) | | | [removed: 182] [added: 182] | | | [removed: (41)] [added: 182] | | | [removed: 65] [added: (41)] | | |

| Prepaid expenses and other current assets | | | 839 | | | | | | 758 | | |

| Accrued expenses and other current liabilities | | | 2,479 | | | | | | 1,884 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Net income | | | — | | | — | | | — | | | — | | | — | | | 1,284 | | | — | | | 1,284 | | | 11 | | | 1,295 | | |

| Balance as of December 31, 2021 | | | 683 | | | $ | 683 | | 182 | | | $ | (11,488) | | $ | 6,197 | | $ | 17,065 | | $ | (3,380) | | $ | 9,077 | | $ | 44 | | $ | 9,121 | |

| Accounts payable | | | 104 | | | 57 | | | (23) | | |

| Accrued expenses and other current liabilities | | | 108 | | | 86 | | | (196) | | |

| Repayments of debt | | | (2,823) | | | (1,181) | | | — | | |

| Net increase (decrease) in debt with original maturities of three months or less | | | 246 | | | (226) | | | 222 | | |

| Debt issuance costs | | | (98) | | | (5) | | | (2) | | |

amount reported in the consolidated balance sheet as of December 31, 2021 and 2020:

Initial measures taken in 2020 led to unprecedented restrictions on, disruptions in, and other related impacts on business and personal activities, including a shift in healthcare priorities, which resulted in a significant decline in medical procedures in 2020.

The pandemic has created significant volatility in the demand for our products.

For further information about our revenues by product category, refer to Note 10.

Significant uncertainty remains regarding the duration and overall impact of the COVID-19 pandemic.

For example, concerns remain regarding the pace of economic recovery due to virus resurgence across the globe from the Omicron and Delta variants and other virus mutations as well as vaccine distribution and hesitancy.

The U.S. and other governments may continue existing measures or implement new restrictions and other requirements in light of the continuing spread of the pandemic (including with respect to mandatory vaccinations for certain of our employees and moratoriums on elective procedures).

Due to the uncertainty caused by the pandemic, our operating performance and financial results, particularly in the short term, may be subject to volatility.

We have experienced significant challenges, including lengthy delays, shortages and interruptions, posed by the pandemic and other exogenous factors (including significant weather events and disruptions to certain ports of call around the world) to our global supply chain, including the cost and availability of raw materials and component parts (including resins and electromechanical devices) and higher transportation costs, and may experience these and other challenges in future periods.

Many of our manufacturing plant and distribution center personnel are currently unvaccinated, and we may also experience employee resistance in complying with current and future government vaccine and testing mandates, which may cause labor shortages significantly impacting manufacturing production and distribution center productivity.

On December 13, 2021, we completed the previously announced acquisition of all outstanding equity interests of Hill-Rom Holdings, Inc. (Hillrom) for a purchase price of $10.5 billion.

Including the assumption of Hillrom's

outstanding debt obligations, the enterprise value of the transaction was approximately $12.8 billion.

On July 29, 2021, we acquired certain assets related to PerClot Polysaccharide Hemostatic System (PerClot), including distribution rights for the U.S. and specified territories outside of the U.S., from CryoLife, Inc. for an upfront purchase price of $25 million and the potential for additional cash consideration of up to $36 million, which had an acquisition-date fair value of $28 million, based upon regulatory and commercial milestones.

Beginning July 29, 2021, our financial statements include the assets, liabilities and operating results of PerClot.

Beginning on March 31, 2021, our financial statements include the assets, liabilities and operating results of TDS.

Beginning February 17, 2021, our financial statements include the assets, liabilities and operating results of Caelyx and Doxil.

Refer to Note 2 for additional information.

| years ended December 31 (in millions) | | | 2021 | | | 2020 | | |

Handling costs, which are costs incurred to

Costs for one-time

In 2021, we changed the measurement date of our annual goodwill impairment test from December 31st to November 1st.

This change better aligns the timing of the goodwill impairment test with our long-term business planning process.

The change was not material to our consolidated financial statements as it did not result in the delay, acceleration or avoidance of an impairment charge.

In 2021, we changed the measurement date of our annual indefinite-lived intangible asset impairment tests from December 31st to November 1st.

This change better aligns the timing of the impairment tests with our long-term business planning process.

The change was not material to our consolidated financial statements as it did not result in the delay, acceleration or avoidance of an impairment charge.

Any

*Recently issued accounting standards not yet adopted*

In July 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2021-05, Leases (Topic 842), which requires a lessor to classify a lease with variable lease payments (that do not depend on an index or rate) as an operating lease if (1) the lease would have been classified as a sales-type or direct financing lease, and (2) the lessor would have recognized a selling loss at lease commencement.

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Accounts payable and accrued liabilities | | | 2,927 | | | | | | 2,689 | | |

| Income from continuing operations | | | 1,110 | | | 1,011 | | | 1,552 | | |

| Loss from discontinued operations, net of tax | | | — | | | — | | | (6) | | |

| Earnings per share from continuing operations | | | | | | | | | | | |

| Loss per share from discontinued operations | | | | | | | | | | | |

| Basic | | | $ | — | | $ | — | | $ | (0.01) | |

| Diluted | | | $ | — | | $ | — | | $ | (0.01) | |

| Basic | | | $ | 2.17 | | $ | 1.97 | | $ | 2.90 | |

| Diluted | | | $ | 2.13 | | $ | 1.93 | | $ | 2.83 | |

| Balance as of January 1, 2018 | | | 683 | | | $ | 683 | | 142 | | | $ | (7,981) | | $ | 5,940 | | $ | 14,014 | | $ | (3,539) | | $ | 9,117 | | $ | (8) | | $ | 9,109 | |

| Net income | | | $ | 1,110 | | $ | 1,011 | | $ | 1,546 | |

| Loss from discontinued operations, net of tax | | | — | | | — | | | 6 | | |

| Accounts payable and accrued liabilities | | | 143 | | | (212) | | | 60 | | |

| (Repayments) borrowings under revolving credit facility | | | (226) | | | 222 | | | — | | |

These measures have led to unprecedented restrictions on, disruptions in, and other related impacts on businesses and personal activities.

In addition to travel restrictions put in place in early 2020, governments have closed borders, imposed prolonged quarantines and may continue those measures or implement other restrictions and requirements in light of the continuing spread of the pandemic.

On November 18, 2018, we acquired a controlling financial interest in our joint venture in Saudi Arabia.

The acquisition allows us to increase manufacturing output and utilize the facilities for additional capacity for certain products in the region.

Beginning November 18, 2018, we consolidated the financial statements of the joint venture with our consolidated financial statements.

On March 16, 2018, we acquired two hemostat and sealant products from Mallinckrodt plc: Recothrom Thrombin topical (Recombinant) and Preveleak Surgical Sealant for total consideration of $184 million.

Beginning March 16,

Additionally, for arrangements containing a performance obligation to deliver software

| Accounts payable and accrued liabilities | | | $ | 32 | | $ | — | |

| Medication Delivery2 | | | 1,782 | | | 953 | | | 2,735 | | | | | | 1,822 | | | 977 | | | 2,799 | | | | | | 1,690 | | | 974 | | | 2,664 | | |

| Pharmaceuticals3 | | | 874 | | | 1,249 | | | 2,123 | | | | | | 940 | | | 1,215 | | | 2,155 | | | | | | 996 | | | 1,091 | | | 2,087 | | |

| Clinical Nutrition4 | | | 342 | | | 580 | | | 922 | | | | | | 320 | | | 552 | | | 872 | | | | | | 321 | | | 554 | | | 875 | | |

| Advanced Surgery5 | | | 518 | | | 370 | | | 888 | | | | | | 535 | | | 342 | | | 877 | | | | | | 466 | | | 332 | | | 798 | | |

| Other7 | | | 228 | | | 280 | | | 508 | | | | | | 234 | | | 251 | | | 485 | | | | | | 260 | | | 249 | | | 509 | | |

7 Other primarily includes sales of contract manufacturing services from our pharmaceutical partnering business.

Refer to the Recently Adopted Accounting Pronouncements section of this note and Note 12 for additional information related to the Tax Cuts and Jobs Act of 2017 (2017 Tax Act).

by a reporting entity at each reporting date.

The adjustment to record operating lease right-of-use assets and operating lease liabilities was $502 million as of January 1, 2019.

As of January 1, 2018, we adopted ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory (ASU No. 2016-16) using the modified retrospective method.

ASU No. 2016-16 generally accelerates the recognition of income tax consequences for intra-company asset transfers other than inventory.

We recorded a $70 million reduction to retained earnings upon adoption of the standard on January 1, 2018 related to the unrecognized income tax effects of asset transfers that occurred prior to adoption.

Net income increased $14 million for the year ended December 31, 2018 as a result of the adoption of the standard.

As of January 1, 2018, we adopted Topic 606, which amends the existing accounting standards for revenue recognition.

ASU No. 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled to receive when products are transferred to customers.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, [removed: 2020.][added: 2021.]

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, [removed: 2020.][added: 2021.]

Management performed an assessment of the effectiveness of our internal control over financial reporting as of December 31, [removed: 2020.][added: 2021.]

Based on that assessment under the framework in *Internal Control-Integrated Framework (2013)*, management concluded that our internal control over financial reporting was effective as of December 31, [removed: 2020.][added: 2021.]

The effectiveness of our internal control over financial reporting as of December 31, [removed: 2020] [added: 2021] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

Other than as described in the preceding [removed: paragraph and in the *Remediation of Material Weakness* section above,] [added: paragraph,] there have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, [removed: 2020] [added: 2021] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In December 2021, Baxter acquired 100 percent of the voting equity interest in Hillrom.

As permitted by guidance issued by the SEC, management has excluded the internal controls of Hillrom from its annual assessment of the effectiveness of our internal control over financial reporting for December 31, 2021.

Hillrom is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment of internal control over financial reporting represent approximately 6% and 2%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2021.

During the three months ended December 31, 2021, we implemented the first phase of a new global treasury management system supporting cash management, external debt, and risk management processes.

In conjunction with the implementation, we modified business processes impacted by the new system, such as transaction processing, user access security, authorization procedures and system reporting.

In subsequent periods, the remaining phases of the treasury management system will be implemented.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not Applicable.

Remediation of Material Weakness

As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2019, we identified a material weakness over the accounting for certain foreign exchange gains and losses.

Specifically, we did not have controls in place to monitor and quantify the difference between the foreign exchange gains and losses that we reported and the foreign exchange gains and losses that we would have reported using exchange rates determined in accordance with U.S. GAAP.

Additionally, our policies and controls related to approvals and monitoring of intra-company transactions were insufficient to prevent or detect intra-company transactions undertaken solely for the purpose of generating foreign exchange gains or avoiding losses under our historical exchange rate convention.

This material weakness resulted in misstatements that were corrected in the restatement included in our Annual Report on Form 10-K for the year ended December 31, 2019.

Due to the actions taken by us to implement new controls and procedures, management has concluded that this material weakness has been remediated as of December 31, 2020.

The actions we took to remediate the material weakness were as follows:

- Exchange Rate Policy – We discontinued the use of our historical exchange rate convention and are using the exchange rates determined in accordance with U.S. GAAP for purposes of measuring foreign currency transactions and remeasuring monetary assets and liabilities denominated in a foreign currency.

- Automated Feed – We implemented an automated feed that extracts foreign exchange rates on a daily basis from a recognized third-party exchange rate source.

- Daily Rate Comparison – We implemented a daily rate comparison control that extracts foreign exchange rates from (a) a third-party exchange rate source, (b) our treasury application, and (c) our enterprise resource planning (ERP) system and compares those rates in order to identify any potential differences and provide assurance that the correct rates were captured and are being used in our financial systems.

- Intra-company Transaction Approvals – We updated our policies to require additional approvals of intra-company transactions and implemented a requirement that such transactions be supported by a documented business purpose.

- Personnel - We made personnel changes including hiring a new treasurer from outside Baxter with more than thirty years of treasury experience and responsibility, including at four publicly traded companies.

We have also hired another experienced treasury professional in a newly created director role responsible for treasury governance and controls.

Additionally, we created a treasury controller role within our accounting function and are continuing to add resources as appropriate to improve our financial reporting controls related to treasury activities.

We and our Board of Directors are committed to maintaining a strong control environment and we believe that these remediation efforts represent significant improvements in our controls.

We monitored the related processes and controls throughout the remediation period and have concluded that they are operating effectively.

As previously disclosed, since 2017, we have been implementing a long-term business transformation project within our finance, human resources, purchasing and information technology functions which will further centralize and standardize business processes and systems across the company.

We have transitioned and continue to transition some processes to our shared services centers while others have been moved to outsourced providers.

This multi-year initiative is being conducted in phases and includes modifications to the design and operation of controls over financial reporting.

Refer to information under the captions entitled “Corporate Governance at Baxter International Inc. — Proposal 1 — Election of Directors,” “— Board of Directors — Nomination of Directors,” “— Committees of the Board — Audit Committee,” “— Board Responsibilities — Code of Conduct,” and “Ownership of [removed: Our] [added: Baxter] Stock — Delinquent Section 16(a) Reports” in Baxter’s definitive proxy statement to be filed with the Securities and Exchange Commission and delivered to stockholders in connection with the Annual Meeting of Stockholders expected to be held on May [removed: 4, 2021] [added: 3, 2022] (the Proxy Statement), all of which information is incorporated herein by reference.

Refer to information under the captions entitled “Executive Compensation,” and “Corporate Governance at Baxter [removed: International—Director] [added: International Inc.—Director] Compensation” in the Proxy Statement, all of which information is incorporated herein by reference.

The following table provides information relating to shares of common stock that may be issued under our existing equity compensation plans as of December 31, [removed: 2020.][added: 2021.]

| Equity Compensation Plans Not Approved by Stockholders | | | [removed: 53,160] [added: 667,640] | | | | | | (4) | | | | | | $ | [removed: 28.97] [added: —] | | | | | | | | | | | — | | | | | | | | |

(3)Includes (i) [removed: 2,002,996] [added: 11,263,584] shares of common stock available for purchase under the Employee Stock Purchase [removed: Plan; (ii) 447,261 shares of common stock available under the 2007 Incentive Plan; (iii) 2,689,357 shares of common stock available under the 2011 Incentive Plan;] [added: Plan] and [removed: (iv) 11,771,363] [added: (ii) 40,173,931] shares of common stock available under the [removed: 2015] [added: 2021] Incentive Plan.

(5)Includes outstanding awards of [removed: 20,195,617] [added: 20,696,747] stock options, which have a weighted-average exercise price of [removed: $56.88] [added: $61.14] and a weighted-average remaining term of [removed: 6.1] [added: 5.9] years, [removed: 1,137,920] [added: 1,797,696] shares of common stock issuable upon vesting of restricted stock units, and [removed: 759,681] [added: 731,651] shares of common stock reserved for issuance in connection with performance share unit grants.

Refer to information under the captions entitled “Ownership of [removed: Our] [added: Baxter] Stock — Security Ownership by Directors and Executive Officers” and “— Security Ownership by Certain Beneficial Owners” in the Proxy Statement, all of which information is incorporated herein by reference.

| Equity Compensation Plans Approved by Stockholders | | | 22,591,682 | | | | | | (1) | | | | | | $ | 61.14 | | | | | (2) | | | | | | 51,437,515 | | | | | | (3) | | |

| Total | | | 23,259,322 | | | | | | (5) | | | | | | $ | 61.14 | | | | | (2) | | | | | | 51,437,515 | | | | | | | | |

(4)Includes 667,640 replacement RSUs granted to holders of Hillrom equity awards at closing of the Hillrom acquisition.

These replacement RSUs were approved by our Board of Directors, not our stockholders.

| Equity Compensation Plans Approved by Stockholders | | | 22,075,966 | | | | | | (1) | | | | | | $ | 56.95 | | | | | (2) | | | | | | 16,910,977 | | | | | | (3) | | |

| Total | | | 22,129,126 | | | | | | (5) | | | | | | $ | 56.88 | | | | | (2) | | | | | | 16,910,977 | | | | | | | | |

(4)Includes shares of common stock issuable upon exercise of options granted under the 2001 Incentive Compensation Program.

These shares were made available pursuant to an amendment thereto not approved by stockholders.

These additional shares were approved by our Board of Directors, not our stockholders, although our stockholders have approved the 2001 Incentive Compensation Program.

| | | | [Consolidated Balance [removed: Sheets](#id032277b8ada47a996ec6f4e6a1e7e29_70)] [added: Sheets](#i93d397774bdd4b7396371ce9bc3696a1_70)] | | | 48 | | |

| | | | [Consolidated Statements of [removed: Income](#id032277b8ada47a996ec6f4e6a1e7e29_73)] [added: Income](#i93d397774bdd4b7396371ce9bc3696a1_73)] | | | 49 | | |

| | | | [Consolidated Statements of Comprehensive [removed: Income](#id032277b8ada47a996ec6f4e6a1e7e29_76)] [added: Income](#i93d397774bdd4b7396371ce9bc3696a1_76)] | | | 50 | | |

| | | | [Consolidated Statements of Changes in [removed: Equity](#id032277b8ada47a996ec6f4e6a1e7e29_82)] [added: Equity](#i93d397774bdd4b7396371ce9bc3696a1_82)] | | | 51 | | |

| | | | [Consolidated Statements of Cash [removed: Flows](#id032277b8ada47a996ec6f4e6a1e7e29_85)] [added: Flows](#i93d397774bdd4b7396371ce9bc3696a1_85)] | | | 52 | | |

| | | | [Notes to Consolidated Financial [removed: Statements](#id032277b8ada47a996ec6f4e6a1e7e29_88)] [added: Statements](#i93d397774bdd4b7396371ce9bc3696a1_88)] | | | 54 | | |

| | | | [Report of Independent Registered Public Accounting [removed: Firm](#id032277b8ada47a996ec6f4e6a1e7e29_184)] [added: Firm (PCAOB ID](#i93d397774bdd4b7396371ce9bc3696a1_145) [](#i93d397774bdd4b7396371ce9bc3696a1_145)238[)](#i93d397774bdd4b7396371ce9bc3696a1_145)] | | | 105 | | |

| | | | [Schedule II — Qualifying and Valuation accounts for each of the three years in the period ended December 31, [removed: 20](#id032277b8ada47a996ec6f4e6a1e7e29_223)[20](#id032277b8ada47a996ec6f4e6a1e7e29_223)] [added: 202](#i93d397774bdd4b7396371ce9bc3696a1_184)[1](#i93d397774bdd4b7396371ce9bc3696a1_184)] | | | 117 | | |

| [removed: 4.11] [added: 4.16] | | | [Registration Rights Agreement, dated as of [removed: March 26, 2020,] [added: December 1, 2021,] by and among the Company and [removed: Citigroup Global Markets Inc., Goldman Sachs & Co. LLC and] J.P. Morgan Securities LLC [added: and Citigroup Global Markets Inc.] (as representatives of the initial purchasers) (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K, filed on [removed: March 27, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000156459020013650/bax-ex43_24.htm)] [added: December 2, 2021).](https://www.sec.gov/Archives/edgar/data/10456/000119312521346720/d270061dex43.htm)] | | |

| [removed: 4.12] [added: 4.11] | | | [Second Supplemental Indenture, dated as of November 2, 2020, to the Indenture, dated as of March 26, 2020, between the Company and The Bank of New York Mellon Trust Company, N.A., as Trustee, (including form of 1.730% Senior Notes due 2031) (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on November 6, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020015975/exhibit41-supplemental.htm) | | |

| [removed: 4.14] [added: 4.12] | | | [Description of Securities Registered Under Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.9 to [removed: the](https://www.sec.gov/Archives/edgar/data/10456/000162828020003693/bax-20191231xexx49.htm) [Company’s] [added: the Company’s] Annual Report on Form 10-K, filed on March 17, [removed: 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020003693/bax-20191231xexx49.htm)[](https://www.sec.gov/Archives/edgar/data/10456/000162828020003693/bax-20191231xexx49.htm)] [added: 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020003693/bax-20191231xexx49.htm)] | | |

| 10.1 | | | [removed: [Five-Year Credit] [added: [Credit] Agreement, dated as of December 20, 2019, among Baxter [removed: International Inc.] [added: Healthcare SA and Baxter World Trade SPRL,] as [removed: Borrower, JPMorgan Chase Bank, National Association,] [added: Borrowers, J.P. Morgan Europe Limited,] as Administrative Agent and certain other financial institutions named therein (incorporated by reference to Exhibit [removed: 10.1] [added: 10.2] to the Company’s Current Report on Form 8-K, filed on December 20, [removed: 2019).](http://www.sec.gov/Archives/edgar/data/10456/000119312519321056/d843903dex101.htm)] [added: 2019).](https://www.sec.gov/Archives/edgar/data/10456/000119312519321056/d843903dex102.htm)] | | |

| 10.2 | | | [removed: [Credit] [added: [First Amendment, dated as of October 1, 2021, to the Credit] Agreement, dated as of December 20, 2019, among Baxter Healthcare SA and Baxter World Trade [removed: SPRL,] [added: SRL,] as Borrowers, [added: the Company, the several banks party thereto,] J.P. Morgan [removed: Europe Limited,] [added: AG,] as Administrative Agent and [removed: certain] [added: each] other [removed: financial institutions named therein] [added: party thereto] (incorporated by reference to Exhibit [removed: 10.2] [added: 10.3] to the Company’s Current Report on Form 8-K, filed on [removed: December 20, 2019).](http://www.sec.gov/Archives/edgar/data/10456/000119312519321056/d843903dex102.htm)] [added: October 4, 2021).](https://www.sec.gov/Archives/edgar/data/10456/000119312521290255/d218121dex103.htm)] | | |

| [removed: 10.30] [added: 10.5] | | | [Tax Matters Agreement, dated as of June 30, 2015, by and between Baxter International Inc. and Baxalta Incorporated (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on July 7, 2015).](http://www.sec.gov/Archives/edgar/data/10456/000119312515246136/d57625dex102.htm) | | |

| [removed: 10.4] [added: 10.6] | | | [Letter Agreement, dated as of January 11, 2016, by and among Baxter International Inc., Baxalta Incorporated and Shire plc. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on January 11, 2016).](http://www.sec.gov/Archives/edgar/data/10456/000119312516426696/d51194dex101.htm) | | |

| C [removed: 10.6] [added: 10.7] | | | [Form of Indemnification Agreement entered into with directors and officers (incorporated by reference to Exhibit 10.8 to the Company's Annual Report on Form 10-K, filed on February 21, 2019).](http://www.sec.gov/Archives/edgar/data/10456/000156459019003727/bax-ex108_609.htm) | | |

| C [removed: 10.7] [added: 10.8] | | | [Baxter International Inc. 2007 Incentive Plan (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A, filed on March 20, 2007).](http://www.sec.gov/Archives/edgar/data/10456/000095013707004087/c13022ddef14a.htm) | | |

| C [removed: 10.8] [added: 10.9] | | | [Baxter International Inc. Equity Plan for the 2007 Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on March 16, 2007).](http://www.sec.gov/Archives/edgar/data/10456/000095013707003994/c13397exv10w1.htm) | | |

| C [removed: 10.9] [added: 10.10] | | | [Baxter International Inc. 2011 Incentive Plan (incorporated by reference to Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A, filed on March 18, 2011).](http://www.sec.gov/Archives/edgar/data/10456/000095012311026923/c62262ddef14a.htm) | | |

| C [removed: 10.10] [added: 10.11] | | | [Baxter International Inc. Equity Plan for the 2011 Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed on May 3, 2011).](http://www.sec.gov/Archives/edgar/data/10456/000095012311043980/c63383exv10w1.htm) | | |

| C [removed: 10.11] [added: 10.12] | | | [Baxter International Inc. 2015 Incentive Plan (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A, filed on March 25, 2015).](http://www.sec.gov/Archives/edgar/data/10456/000119312515104161/d864138ddef14a.htm#toc864138_20) | | |

| C [removed: 10.12] [added: 10.13] | | | [Baxter International Inc. Equity Plan for the 2015 Incentive Plan (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K, filed on July 7, 2015).](http://www.sec.gov/Archives/edgar/data/10456/000119312515246136/d57625dex106.htm) | | |

| C [removed: 10.13] [added: 10.14] | | | [Baxter International Inc. Equity Plan for José E. Almeida under the 2015 Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on October 29, 2015).](http://www.sec.gov/Archives/edgar/data/10456/000119312515357002/d39629dex102.htm) | | |

| C [removed: 10.14] [added: 10.15] | | | [Baxter International Inc. 2017 Equity Plan, effective as of March 2, 2017 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on March 3, 2017).](http://www.sec.gov/Archives/edgar/data/10456/000119312517068798/d344320dex102.htm) | | |

| C [removed: 10.15] [added: 10.16] | | | [Baxter International Inc. 2020 Equity Plan, effective as of March 16, 2020 (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K, filed on March 17, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020003693/bax-20191231xexx1022.htm) | | |

| C [removed: 10.16] [added: 10.26] | | | [Baxter International Inc. [removed: Directors’ Deferred] [added: Non-Employee Director] Compensation Plan [removed: (amended] [added: (as amended] and restated effective [removed: May 6, 2019)] [added: July 1, 2021)] (incorporated by reference to Exhibit [removed: 10.16] [added: 10.4] to the Company's Quarterly Report on Form 10-Q, filed on [removed: May 8, 2019).](http://www.sec.gov/Archives/edgar/data/10456/000156459019016660/bax-ex1016_737.htm)] [added: October 28, 2021).](https://www.sec.gov/Archives/edgar/data/10456/000162828021020692/bax-093021xex104.htm)] | | |

| C [removed: 10.17] [added: 10.19] | | | [Offer Letter between Baxter International Inc. and José E. Almeida, dated as of October 28, 2015 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on October 29, 2015).](http://www.sec.gov/Archives/edgar/data/10456/000119312515357002/d39629dex101.htm) | | |

| C [removed: 10.18] [added: 10.20] | | | [Offer Letter between the Company and José E. Almeida, dated as of March 12, 2020 (incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K, filed on March 17, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020003693/bax-2019x1231xexx1025.htm) | | |

| C [removed: 10.19] [added: 10.21] | | | [Offer letter between Baxter Healthcare SA and Cristiano Franzi, dated June 8, 2017 (incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K, filed on March 17, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020003693/bax-20191231xexx1026.htm) | | |

| C [removed: 10.20] [added: 10.23] | | | [Form of Severance Agreement entered into with executive officers (incorporated by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K, filed on February 21, 2014).](http://www.sec.gov/Archives/edgar/data/10456/000119312514061654/d596470dex1011.htm) | | |

| C [removed: 10.21] [added: 10.24] | | | [Baxter International Inc. Employee Stock Purchase Plan (as amended and restated effective July 1, 2011) (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A, filed on March 18, 2011).](http://www.sec.gov/Archives/edgar/data/10456/000095012311026923/c62262ddef14a.htm) | | |

| C [removed: 10.22] [added: 10.25] | | | [First Amendment to Baxter International Inc. Employee Stock Purchase Plan (dated as of July 15, 2016) (incorporated by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K, filed on February 23, 2017).](http://www.sec.gov/Archives/edgar/data/10456/000156459017002240/bax-ex1027_383.htm) | | |

| C [removed: 10.23] [added: 10.29] | | | [Baxter International Inc. [removed: Non-Employee Director Compensation] [added: and Subsidiaries Pension] Plan [removed: (as amended] [added: (Amended] and [removed: restated] [added: Restated] effective January [removed: 1,] [added: 5,] 2018) (incorporated by reference to Exhibit [removed: 10.21] [added: 10.1] to the [removed: Company's Annual] [added: Company’s Current] Report on Form [removed: 10-K,] [added: 8-K,] filed on [removed: February 21, 2019).](http://www.sec.gov/Archives/edgar/data/10456/000156459019003727/bax-ex1021_608.htm)] [added: January 8, 2018).](http://www.sec.gov/Archives/edgar/data/10456/000119312518005221/d520610dex101.htm)] | | |

| C [removed: 10.24] [added: 10.27] | | | [Form of Non-Competition, Non-Solicitation and Confidentiality Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on April 14, 2017).](http://www.sec.gov/Archives/edgar/data/10456/000119312517124024/d365699dex101.htm) | | |

| C [removed: 10.25R] [added: 10.28R] | | | [Commitment Agreement, dated as of October 4, 2019, by and among the Company, The Prudential Insurance Company of America and State Street Global Advisors Trust Company, acting solely in its capacity as the independent fiduciary of the Baxter International Inc. and Subsidiaries Pension Plan (incorporated by reference to Exhibit 10.32 to the Company’s Annual Report on Form 10-K, filed on March 17, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020003693/bax-20191231xexx1032.htm) | | |

| C [removed: 10.26] [added: 10.33] | | | [Baxter International Inc. and Subsidiaries [added: Supplemental] Pension Plan (Amended and Restated effective January 5, 2018) (incorporated by reference to Exhibit [removed: 10.1] [added: 10.3] to the Company’s Current Report on Form 8-K, filed on January 8, [removed: 2018).](http://www.sec.gov/Archives/edgar/data/10456/000119312518005221/d520610dex101.htm)] [added: 2018).](http://www.sec.gov/Archives/edgar/data/10456/000119312518005221/d520610dex103.htm)] | | |

| C [removed: 10.27] [added: 10.30] | | | [First Amendment to the Baxter International Inc. and Subsidiaries Pension Plan (incorporated by reference to Exhibit 10.34 to the Company’s Annual Report on Form 10-K, filed on March 17, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020003693/bax-20191231xexx1034.htm) | | |

| C [removed: 10.28] [added: 10.31] | | | [Second Amendment to the Baxter International Inc. and Subsidiaries Pension Plan (incorporated by reference to Exhibit 10.35 to the Company’s Annual Report on Form 10-K, filed on March 17, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020003693/bax-20191231xexx1035.htm) | | |

| C [removed: 10.29] [added: 10.32] | | | [Baxter International Inc. and Subsidiaries Pension Plan II (Amended and Restated effective January 1, 2019) (incorporated by reference to Exhibit 10.36 to the Company’s Annual Report on Form 10-K, filed on March 17, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020003693/bax-20191231xexx1036.htm) | | |

| C [removed: 10.30] [added: 10.34] | | | [Baxter International Inc. and Subsidiaries [removed: Supplemental Pension] [added: Deferred Compensation] Plan [removed: (Amended] [added: (As Amended] and Restated effective January [removed: 5, 2018) (incorporated] [added: 1, 2021)](https://www.sec.gov/Archives/edgar/data/10456/000162828021001867/bax-20201231xexx1031.htm) [](https://www.sec.gov/Archives/edgar/data/10456/000162828021001867/bax-20201231xexx1031.htm)[(](https://www.sec.gov/Archives/edgar/data/10456/000162828021001867/bax-20201231xexx1031.htm)[inco](https://www.sec.gov/Archives/edgar/data/10456/000162828021001867/bax-20201231xexx1031.htm)[rporated] by reference [removed: to Exhibit 10.3] [added: to](https://www.sec.gov/Archives/edgar/data/10456/000162828021001867/bax-20201231xexx1031.htm) [Exhibit 10.31] to the [removed: Company’s Current] [added: Company's Annual] Report [removed: on Form 8-K,] [added: on](https://www.sec.gov/Archives/edgar/data/10456/000162828021001867/bax-20201231xexx1031.htm) [Form 10-](https://www.sec.gov/Archives/edgar/data/10456/000162828021001867/bax-20201231xexx1031.htm)[K,] filed on [removed: January 8, 2018).](http://www.sec.gov/Archives/edgar/data/10456/000119312518005221/d520610dex103.htm)] [added: February 11, 2021).](https://www.sec.gov/Archives/edgar/data/10456/000162828021001867/bax-20201231xexx1031.htm)] | | |

| C [removed: 10.31*] [added: 10.18*] | | | [Baxter International Inc. [removed: and Subsidiaries] [added: Directors’] Deferred Compensation Plan [removed: (As Amended] [added: (amended] and [removed: Restated] [added: restated] effective [removed: January 1, 2021).](https://www.sec.gov/Archives/edgar/data/10456/000162828021001867/bax-20201231xexx1031.htm)] [added: November 11, 2021) (as amended and restated effective November 11, 2021)](https://www.sec.gov/Archives/edgar/data/10456/000162828022003432/bax-20211231xexx1018.htm)] | | |

| C [removed: 10.32] [added: 10.35] | | | [Baxter International Inc. Management Incentive Compensation Program – 2020 Program Document (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed on July 30, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020010911/bax-20200630xex101.htm) | | |

| C [removed: 10.33] [added: 10.36] | | | [New Change-in-Control Agreement, dated as of September 24, 2020, between the Company and José E. Almeida (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on September 25, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020013919/bax-20200924xex101.htm) | | |

| C [removed: 10.34] [added: 10.37] | | | [Form of Amended Grandfathered Change-in-Control Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on September 25, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020013919/bax-20200924xex102.htm) | | |

| C [removed: 10.35] [added: 10.38] | | | [Amended OUS Change-in-Control Agreement, dated as of September 25, 2020, between Baxter Healthcare SA and Cristiano Franzi (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on September 25, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020013919/bax-20200924xex103.htm) | | |

| C [removed: 10.36] [added: 10.39] | | | [Form of Change-in-Control Agreement (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q, filed on October 29, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020015042/bax-20200930xex104.htm) | | |

| C [removed: 10.37] [added: 10.40] | | | [Baxter International Inc. Executive Severance Plan, effective November 16, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on November 20, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020016670/exhibit101-baxterexecu.htm) | | |

| 21* | | | [Subsidiaries of Baxter International [removed: Inc.](https://www.sec.gov/Archives/edgar/data/10456/000162828021001867/bax-20201231xexx21.htm)] [added: Inc.](https://www.sec.gov/Archives/edgar/data/10456/000162828022003432/bax-20211231xexx21.htm)] | | |

| 2.2 | | | [Agreement and Plan of Merger, dated September 1, 2021, among Hill-Rom Holdings, Inc., the Company and Bel Air Subsidiary, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on September 2, 2021).](https://www.sec.gov/Archives/edgar/data/0000010456/000119312521263688/d222750dex21.htm) | | |

| 4.13 | | | [Indenture, dated as of July 29, 2021, between the Company, as Issuer, and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-3, filed on July 29, 2021).](https://www.sec.gov/Archives/edgar/data/0000010456/000119312521228248/d197286dex41.htm) | | |

| 4.14 | | | [Indenture, dated as of December 1, 2021, between the Company, as Issuer, and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on December 2, 2021).](https://www.sec.gov/Archives/edgar/data/10456/000119312521346720/d270061dex41.htm) | | |

| 4.15 | | | [First Supplemental Indenture, dated as of December 1, 2021, to the Indenture, dated as of December 1, 2021, between the Company and U.S. Bank National Association, as Trustee (including forms of 0.868% Senior Notes due 2023, 1.322% Senior Notes due 2024, 1.915% Senior Notes due 2027, 2.272% Senior Notes due 2028, 2.539% Senior Notes due 2032, 3.132% Senior Notes due 2051, Floating Rate Senior Notes due 2023 and Floating Rate Senior Notes due 2024) (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed on December 2, 2021).](https://www.sec.gov/Archives/edgar/data/10456/000119312521346720/d270061dex42.htm) | | |

| 10.3 | | | [Credit Agreement, dated as of September 30, 2021, among the Company, as Borrower, the financial institutions named therein, as Banks, JPMorgan Chase Bank, N.A., as Administrative Agent, and Citibank, N.A., as Syndication Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on October 4, 2021).](https://www.sec.gov/Archives/edgar/data/10456/000119312521290255/d218121dex101.htm) | | |

| 10.4 | | | [Five-Year Credit Agreement, dated as of September 30, 2021, among the Company, as Borrower, the financial institutions named therein, as Banks, JPMorgan Chase Bank, N.A., as Administrative Agent, and Bank of America, N.A. and Citibank, N.A., as Syndication Agents (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on October 4, 2021).](https://www.sec.gov/Archives/edgar/data/10456/000119312521290255/d218121dex102.htm)[1](https://www.sec.gov/Archives/edgar/data/10456/000119312521290255/d218121dex102.htm) | | |

| C 10.17 | | | [Baxter International Inc. 2021 Incentive Plan (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A, filed on March 22, 2021).](https://www.sec.gov/Archives/edgar/data/10456/000119312521089604/d30485ddef14a.htm#toc30485_53) | | |

| C 10.22 | | | [Offer Letter, between Baxter International Inc. and Giuseppe Accogli, dated November 29, 2021 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on November 30, 2021).](https://www.sec.gov/Archives/edgar/data/10456/000119312521342946/d246996dex101.htm) | | |

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| | | | Number and Description of Exhibit | | |

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| /s/ Nancy Schlichting | | | | | | Director | | |

| Nancy M. Schlichting | | | | | | | | |

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| /s/ David S. Wilkes, M.D. | | | | | | Director | | |

| David S. Wilkes, M.D. | | | | | | | | |

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| 4.13 | | | [Registration Rights Agreement, dated as of November 2, 2020, by and among the Company and BofA Securities, Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC, as representatives of the Initial Purchasers (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed on November 6, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020015975/exhibit42-registration.htm) | | |

| 10.50 | | | [Support Agreement, dated as of September 29, 2015, by and among Baxter International Inc., Third Point LLC, Third Point Partners L.P., Third Point Partners Qualified L.P., Third Point Offshore Master Fund L.P., Third Point Ultra Master Fund L.P., Third Point Reinsurance Co. Ltd., Third Point Advisors LLC, Third Point Advisors II LLC, Daniel S. Loeb and Munib Islam (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on September 30, 2015).](http://www.sec.gov/Archives/edgar/data/10456/000119312515333393/d93131dex101.htm) | | |

| /s/ James R. Gavin III, M.D., Ph.D. | | | | | | Director | | |

| James R. Gavin III, M.D., Ph.D. | | | | | | | | |

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