Baxter International (BAX) 10-K risk factor changes: FY2022 vs FY2021

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

[removed: 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 due to preventive and precautionary measures that we, other businesses and governments have taken and may continue to take.

For example, due to the [removed: recent] spread of the Omicron [removed: variant,] [added: variant in 2022,] many elective procedures [removed: have been] [added: were] suspended or postponed in our principal markets as hospital systems [removed: prioritize] [added: prioritized] treatment of COVID-19 patients again or otherwise comply with changing government guidelines.

[removed: If] [added: While we have started to see a resurgence in the scheduling of elective procedures in at least some of the markets in which we operate, if] patients and hospital systems [removed: continue to] de-prioritize, delay or cancel elective [removed: procedures,] [added: procedures in the future,] our business, financial condition and results of operations [removed: would continue to] [added: may] be negatively affected.

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

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

- We could experience a loss of sales and profitability due to delayed payments, reduced demand or [removed: insolvency] [added: capital constraints] of healthcare professionals, hospitals and other [removed: customers,] [added: customers (including potential insolvency)] and suppliers and vendors facing liquidity or other financial issues.

For example, we have faced increased absenteeism in connection with the rise of [removed: recent] [added: various] COVID-19 variants.

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

[removed: For example,] [added: While many of our employees have returned to work,] remote [added: or hybrid] 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 [added: that employees and third-party developers rely on to work remotely.]

[removed: Finally, to the extent COVID-19] [added: crisis] adversely affects our operations and global economic conditions more generally, many of the other risks described in this “Risk Factors” section may be heightened.

Risks Related to Our [removed: Ability to Grow Our Business][added: Business Operations]

In addition, difficulties in manufacturing or in obtaining regulatory approvals, [removed: including as a result of] [added: have delayed and may in] the [removed: COVID-19 pandemic, might] [added: future] delay or prohibit introduction of new products into the marketplace.

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

If we cannot successfully introduce new [added: competitive] products or adapt to changing technologies, our products may become obsolete and our revenue and profitability could suffer.

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

[removed: They may, in the future,] [added: These obstacles may] prevent suppliers from providing [removed: good] [added: goods] and services to us on reasonable terms or at all.

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

[removed: See “—Risks Related to Legal and Regulatory Matters.” An inability to] address a quality or safety issue in an effective and timely manner may also cause negative publicity, a loss of customer confidence in us or our current or future products, which may result in the loss of sales and difficulty in successfully launching new products.

If we are unable to identify [added: or secure regulatory approval for] 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.

Additionally, third party suppliers are required to comply with our quality [removed: standards.][added: standards (and those of applicable regulatory bodies).]

Failure of a third-party supplier to provide compliant raw materials, component parts or supplies [removed: could result] [added: (or to help us secure all required regulatory approvals for the use of their products or services) has resulted] in [removed: delays,] [added: delays and] service interruptions [added: and may do so in the future] or [removed: other] [added: cause] quality related issues that may negatively impact our business results.

Competition is primarily focused on cost-effectiveness, price, service, product [removed: performance,] [added: performance] and technological innovation.

[removed: If we face an increase in costs or must reduce our prices because] [added: the long-term nature] of [removed: industry consolidation,] [added: our customer contracts] or [added: for other reasons, or] if we lose customers as a result of consolidation, our business, financial condition and results of operations could be adversely affected.

With the healthcare market’s increased focus on hospital asset and resource efficiency as well as reimbursement constraints, [added: we have seen] spending for some of our products [removed: could] decline [added: recently and it may continue to do so] over time.

These factors, along with possible [removed: legislative developments] [added: legislative, regulatory] and [removed: others,] [added: other developments,] 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 [added: diversification of our product portfolio, then our market share, sales and profitability could be adversely impacted through lower volume or decreased prices.]

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 [removed: leverage targets without adversely affecting current revenues and investments in future growth.]

The integration [removed: may be] [added: is] complex and time consuming and [removed: involve delays] [added: aspects of it may be delayed,] or additional and unforeseen [removed: expenses.][added: expenses may result, in light of our recently announced strategic initiatives.]

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 [removed: and Hillrom] have business or other dealings.

[removed: We expect] [added: While we remain committed] to [removed: continue] [added: deleveraging, we expect] to engage in [added: significant] business development [removed: activities,] [added: activities over the longer term (once we have satisfied our net leverage targets),] including evaluating acquisitions, joint development opportunities, technology licensing arrangements and other opportunities.

Our ability to recruit and retain such talent will depend on a number of factors, including hiring practices of our competitors, compensation and [removed: benefits,] [added: benefits (as may be impacted by any financial performance challenges),] work location, work environment (including our competitors’ policies regarding remote [added: or hybrid] work [removed: arrangements and COVID-19 protocols) and industry economic conditions.][added: arrangements, the market’s perception of our recently]

Failure to be included in certain of these agreements could have a material adverse effect on our business, [added: including product sales and service and rental revenue.]

In addition, we have faced and continue to face challenges related to increasing costs associated with these agreements (associated with ongoing supply chain [removed: challenges),] [added: challenges and inflation),] which [added: have] negatively [removed: impact] [added: impacted] our [removed: revenues.][added: revenues and may continue to do so in the future.]

Portions of our business have been, and [removed: following the Hillrom acquisition] may [added: in the future] be, the subject of restructuring, realignment and cost reduction initiatives.

We [removed: have] incurred acquisition-related debt financing of approximately $11.8 billion to fund the cash consideration for the Hillrom acquisition, refinance certain indebtedness of Hillrom and pay related fees and expenses.

Our substantially increased indebtedness and higher debt-to-equity ratio following the acquisition has the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions and has increased our borrowing costs (including as a result of the downgrade in our senior debt credit [removed: ratings).][added: ratings in 2021).]

The increased levels of indebtedness [added: and our recent projected financial performance] could also reduce funds available [added: (under our credit facilities or otherwise)] for investments in product development, capital expenditures, dividend payments, acquisitions, share repurchases and other activities and may create competitive disadvantages for us relative to other companies with lower debt levels.

In addition, until we achieve our commitment to reduce our indebtedness following the Hillrom acquisition, our capital allocation activities and operational flexibility [removed: may be] [added: is] limited.

We manufacture our products in approximately [removed: 50] [added: 60 principal] manufacturing [removed: facilities around the world.][added: locations.]

Risk Factors Summary

This summary of risks below is intended to provide an overview of the risks we face and should not be considered a substitute for the more detailed risk factors discussed immediately following this summary.

Strategic Risks

- The proposed spinoff of our Renal Care and Acute Therapies product categories may not be completed on the terms or timeline currently contemplated, if at all.

- We will be exposed to new risks as a result of the proposed spinoff and other strategic actions we are undertaking.

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

- If our business strategy and development activities are unsuccessful, our business, financial condition and results of operations could be adversely affected.

- Global economic conditions, including inflation and supply chain disruptions, have adversely affected, and could continue to adversely affect, our operations.

- Our operating results and financial condition may fluctuate.

- We may not achieve our financial goals.

- We have incurred a substantial amount of debt in connection with the Hillrom acquisition.

- Changes in foreign currency exchange rates and interest rates could have a material adverse effect on our operating results and liquidity.

- Our common stock price has fluctuated significantly and may continue to do so.

- Future material impairments in the value of our long-lived assets, including goodwill, could negatively affect our operating results.

Other Risks Relating to Our Business

- The effects of the COVID-19 pandemic have had, and we expect will continue to have, a material adverse effect on our business.

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

- Issues with product supply or quality could, among other things, have an adverse effect on our business or cause a loss of customer confidence in us or our products.

- 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.

- If we fail to attract and retain key employees our business may suffer.

- Segments of our business are significantly dependent on major contracts with GPOs, IDNs, and certain other distributors and purchasers.

- We may not be successful in achieving expected operating efficiencies and sustaining or improving operating expense reductions, and might experience business disruptions and adverse tax consequences associated with restructuring, realignment and cost reduction activities.

- If we are unable to obtain sufficient components or raw materials on a timely basis or for a cost-effective price or if we experience other manufacturing, sterilization, supply or distribution difficulties, our business and results of operations may be adversely affected.

- Climate change, or legal, regulatory or market measures to address climate change, could adversely affect our business, results of operations and financial condition.

- Breaches and breakdowns affecting our information technology systems or protected information could have a material adverse effect on us.

- We are subject to risks associated with doing business globally.

- A portion of our workforce is unionized, and we could face labor disruptions that would interfere with our operations.

- We are subject to a number of laws and regulations, and we are susceptible to a changing regulatory environment.

- Increasing regulatory focus on privacy and security issues and expanding laws could impact our business and expose us to increased liability.

- If reimbursement or other payment for our current or future products is reduced or modified in the United States or in foreign countries or changes to policies with respect to pricing, taxation or rebates, our business could suffer.

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

- If we are unable to protect our patents or other proprietary rights, or if we infringe the patents or other proprietary rights of others, our competitiveness and business prospects may be materially damaged.

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

- We are party to a number of pending lawsuits and other disputes which may have an adverse impact on our business, operations or financial condition.

Strategic Risks

The proposed spinoff of our Renal Care and Acute Therapies product categories may not be completed on the terms or timeline currently contemplated, if at all.

We recently announced a series of strategic actions, including the proposed spinoff of our Renal Care and Acute Therapies product categories, a review of strategic alternatives for our BPS product category and plans to implement a simplified operating model and manufacturing footprint.

We may encounter challenges to executing the proposed spinoff of our Renal Care and Acute Therapies product categories on the terms and within the timeframe we announced, or at all.

The spinoff will be subject to the satisfaction of a number of customary conditions, including final approval from the Baxter Board of Directors, the filing and effectiveness of a registration statement on Form 10, receipt of a favorable Internal Revenue Service ruling or tax opinion from counsel with respect to the tax-free nature of the spin, satisfactory completion of financing arrangements and receipt of any necessary regulatory approvals.

The failure to satisfy any of the required conditions could delay the completion of the proposed spinoff for a significant period of time or prevent it from occurring at all.

Risks Relating to the COVID-19 Pandemic

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

We expect that evolving restrictions and 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.

Risks associated with COVID-19 include, but are not limited to, the following:

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.

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).

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 further disruptions in our manufacturing operations or disruptions in other activities and other functions.

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 COVID-related disruptions.

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.

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.

If our business development activities are unsuccessful, we may not realize the intended benefits.

These activities may result in substantial investment of our resources.

including product sales and service and rental revenue.

could adversely affect our ability to manufacture, distribute and sell our products in a timely or cost-effective manner.

Any such regulatory changes could have a significant effect on our operating and financial decisions, including those involving capital expenditures to reduce emissions and comply with other regulatory requirements.

Such incidents could result in unauthorized access to patient data and other Confidential Information and could pose a risk to patient safety.

Further, a greater number of our employees are working remotely in response to the COVID-19 pandemic and the emergence of related variants, which (among other things) could expose us to greater risks related to cybersecurity and our information technology systems.

On February 23, 2022, union members are scheduled to vote on whether to enter into a new collective bargaining agreement (in place of the one scheduled to expire in February 2022) or to authorize a potential strike.

In addition, our efforts to comply with FDA regulations have been challenged by the ongoing COVID-19 pandemic.

For example, our attempts to rectify an outstanding warning letter for our facility in Ahmedabad have been thwarted as the FDA inspectors cannot travel to the site to evaluate our remediation efforts.

ability to import materials used in our products at current or increased levels.

We have compliance programs in place, including policies, training and various forms of monitoring, designed to address the risks discussed above.

greater use of home dialysis and kidney transplants for those new to and already on dialysis.

sales, or otherwise materially affect future results of operations.

For example, the Build Back Better framework, if enacted as proposed by President Biden, could adversely affect our financial condition and results of operations.

operations or financial condition.

Current or worsening economic conditions may adversely affect our business and financial condition.

future.

The discussion and analysis of our financial condition as of December 31, [removed: 2020] [added: 2021] and results of operations for the year ended December 31, [removed: 2020] [added: 2021] compared to the year ended December 31, [removed: 2019,] [added: 2020, is] included in Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations, [removed: 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 [removed: Financial Condition and Results of Operations section of the] [added: our] Annual Report on Form 10-K for the year ended December 31, [removed: 2020.][added: 2021.]

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 [removed: new] global segment for our recently acquired Hillrom business.

[removed: The] [added: Our] Americas, EMEA and APAC segments 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.

[removed: These products] [added: Baxter International Inc. is a global medical technology with approximately 60,000 employees worldwide who] are [added: engaged in the development, manufacture and sale of a broad range of products, digital health solutions and therapies] used by hospitals, kidney dialysis centers, nursing homes, rehabilitation centers, doctors’ offices and patients at home under physician supervision.

[removed: The] [added: Our] 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.

Our global footprint and the critical nature of our products and [removed: services] [added: services, which are sold in over 100 countries,] play a key role in expanding access to healthcare in emerging and developed countries.

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

[removed: 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.

Refer to Note 2 [removed: and Note 5] in Item 8 of this Annual Report on Form 10-K for [removed: additional] [added: further] information [removed: on] [added: about] the [removed: Hillrom acquisition and] related [removed: financing arrangements.][added: transactions.]

Refer to Note [removed: 2] [added: 4] in Item 8 of this Annual Report on Form 10-K for [removed: additional] [added: further] information regarding the [removed: acquisition of Seprafilm.][added: impairments.]

Our global net sales totaled [removed: $12.8] [added: $15.1] billion in [removed: 2021,] [added: 2022,] an increase of [removed: 10%] [added: 18%] over [removed: 2020] [added: 2021] on a reported and [removed: 7%] [added: 23%] on a constant currency basis.

International sales totaled [removed: $7.6] [added: $7.9] billion in [removed: 2021,] [added: 2022,] an increase of [removed: 12%] [added: 4%] compared to [removed: 2020] [added: 2021] on a reported basis and [removed: 8%] [added: 12%] on a constant currency basis.

Sales in the United States totaled [removed: $5.2] [added: $7.2] billion in [removed: 2021,] [added: 2022,] an increase of [removed: 6%] [added: 39%] compared to [removed: 2020.][added: 2021.]

Net income [added: (loss)] attributable to Baxter stockholders totaled [removed: $1.3] [added: a loss of $2.4] billion, or [removed: $2.53] [added: $(4.83)] per diluted share, in [removed: 2021.][added: 2022.]

Our special [removed: items] [added: items, which included $3.2 billion of goodwill and intangible asset impairments in 2022,] are discussed in the Results of Operations section below.

Our financial results included R&D expenses totaling [removed: $534] [added: $605] million in [removed: 2021,] [added: 2022,] which reflects our focus on balancing investments to support our new product pipeline with efforts to optimize overall R&D [removed: spending.][added: spending (including with respect to the maintenance of our portfolio).]

[removed: Our] [added: While we continue to face continuing global macroeconomic challenges, our] financial position remains strong, with operating cash flows from continuing operations totaling [removed: $2.2] [added: $1.2] billion in [removed: 2021.][added: 2022.]

We have continued to execute on our disciplined capital allocation framework, [added: as discussed in the Business Strategy section in Item 1 of this Annual Report on Form 10-K,] which is designed to optimize stockholder value creation through reinvestment in our businesses, dividends and share repurchases, as well as acquisitions and other business development initiatives [removed: as discussed in the Strategic Objectives section below.][added: and consistent with our previously stated commitment to achieve our net leverage targets.]

Capital expenditures totaled [removed: $743] [added: $679] million in [removed: 2021] [added: 2022] 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: 2021] [added: 2022] were focused on projects that improve production [removed: efficiency] [added: efficiency, invest in our quality systems] and enhance manufacturing capabilities to support our business growth.

We also continued to return value to our [removed: stockholders in the form of dividends.][added: stockholders.]

During [removed: 2021,] [added: 2022,] we paid cash dividends to our stockholders totaling [removed: $530] [added: $573] million.

Additionally, in [removed: 2021] [added: 2022] we repurchased [removed: 7.3] [added: 0.5] million shares through cash repurchases pursuant to [added: a] Rule 10b5-1 repurchase [removed: plans.][added: plan.]

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

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 we expect will continue to increase our [removed: expenses, including as a result of impacts associated with preventive and precautionary measures that we, other businesses and governments have taken and continue to take.][added: expenses.]

[removed: The pandemic] [added: Over the course of the pandemic, our business] has [removed: created] [added: been impacted by shifting healthcare priorities and] significant volatility in the demand for our products.

[removed: For example, concerns] [added: Concerns] remain regarding the pace of economic recovery due to virus resurgence across the globe from the [removed: Delta and] Omicron [removed: variants] [added: variants, subvariants] 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 [removed: light of] the [removed: continuing spread of the pandemic] [added: future] (including [removed: with respect to] [added: moratoriums on elective procedures and] mandatory [removed: vaccinations for certain] [added: quarantines and travel restrictions), resulting in higher levels] of [added: absenteeism, including at] our [removed: employees] [added: manufacturing] and [removed: moratoriums on elective procedures).][added: distribution facilities.]

Due to the uncertainty caused by the [removed: pandemic,] [added: pandemic (including whether hospital admissions, elective procedures and demand for certain of] our [added: products and services will return to pre-pandemic levels), our] operating performance and financial results, particularly in the short term, may be subject to volatility.

We have experienced significant [removed: 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)] [added: challenges] to our global supply [removed: chain,] [added: chain in recent periods,] including [removed: the cost] [added: production delays] and [removed: availability] [added: interruptions, increased costs and shortages] of raw materials and component parts (including resins and electromechanical devices) and higher transportation costs, [removed: and may experience these] [added: resulting from the pandemic] and other [removed: challenges] [added: exogenous factors including significant weather events, elevated inflation levels, disruptions to certain ports of call around the world, the war] in [removed: future periods.][added: Ukraine and other geopolitical events.]

We expect that [removed: these] [added: the] challenges [added: caused by the pandemic] as well as [removed: evolving governmental restrictions and requirements,] [added: global economic conditions,] among other factors, may continue to have an adverse effect on our business.

The following table provides a summary of our special items and the related impact by line item on our results for [removed: 2021] [added: 2022] and [removed: 2020.][added: 2021.]

| years ended December 31 (in millions) | | | [removed: 2021] [added: 2022] | | | [removed: 2020] [added: 2021] | | |

| Intangible asset amortization expense | | | $ | [removed: (287)] [added: 287] | | $ | [removed: (222)] [added: 11] | |

| Intangible asset [removed: impairment1] [added: impairments1] | | | [removed: —] [added: (344)] | | | [removed: (17)] [added: —] | | |

| Business optimization items2 | | | [removed: (53)] [added: (28)] | | | (53) | | |

| Product-related items3 | | | [removed: —] [added: (44)] | | | [removed: (29)] [added: —] | | |

| Acquisition and integration [removed: expenses4] [added: costs4] | | | [removed: (50)] [added: $] | [added: —] | | [removed: (11)] [added: $] | [added: 48] | |

| European medical devices regulation5 | | | [removed: (42)] [added: (48)] | | | [removed: (33)] [added: (42)] | | |

As discussed below under “Recently Announced Strategic Actions,” we are designing a new operating model intended to simplify and streamline our operations and we expect that our reportable segments will be changed to align with that new operating model when it is fully implemented.

Net income (loss) in 2022 included special items which adversely impacted our results by $4.2 billion, or $8.33 per diluted share.

Recently Announced Strategic Actions

In January 2023, we announced the following planned strategic actions that are intended to enhance our operational effectiveness, accelerate innovation and drive additional stockholder value: (a) a proposed spinoff of our Renal Care and Acute Therapies product categories into an independent publicly traded company focused on kidney care (the proposed spinoff), (b) our development of a new operating model to simplify our operations and (c) our pursuit of strategic alternatives (including a potential sale) for our BioPharma Solutions (BPS) product category.

This proposed spinoff is currently expected to be completed during the first half of 2024, approximately 12 to 18 months from the date of the related announcement.

In 2022 we generated $4.4 billion of combined net sales from our Renal Care and Acute Therapies product categories, representing approximately 29% of our consolidated net sales.

Additionally, in 2022 we generated $644 million of net sales from our BPS product category, representing approximately 4% of our consolidated net sales.

During 2023 and the first quarter of 2024, we expect to incur significant separation and transaction-related costs related to the proposed spinoff and our pursuit of strategic alternatives (including a potential sale) for our BPS product category, which will adversely impact our earnings and operating cash flows.

Additionally, we expect to incur some amount of dis-synergies following those transactions due to the reduced size of our company and, as a result, we will need to undertake actions to ensure that our cost structure is appropriate to support our remaining businesses.

There can be no guarantees that the proposed spinoff, the simplified operating model or the sale of, or other strategic transaction involving, our BPS product category will be completed in the manner or over the timeframes described above, or at all.

We are also designing a new operating model intended to simplify and streamline our operations and better align our manufacturing footprint and supply chain to our commercial activities.

The new operating model will have significant impacts on our systems and processes across our entire company and we expect to have those broader operational changes, including our updated management reporting framework for the new operating model, fully implemented during the second half of 2023.

At that time, we expect that our reportable segments will be changed to align with the new operating model.

FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Supply Constraints and Global Economic Conditions

Due to the nature of our products, which include dense consumable medical products such as IV fluids, and the geographic locations of our manufacturing facilities, which often require us to transport our products long distances, we may be more susceptible to increases in freight costs and other supply chain challenges than certain of our industry peers.

We expect to experience some of these and other challenges related to our supply chain in future periods.

These challenges, including the unavailability of certain raw materials and component parts, have also had a negative impact on our sales for certain product categories (including those acquired in the Hillrom acquisition) due to our inability to fully satisfy demand and may continue to have a negative impact on our sales in the future.

Our results of operations are also affected by macroeconomic conditions and levels of business confidence.

The war in Ukraine and the sanctions and other measures being imposed in response to this conflict have increased the levels of economic and political uncertainty.

In response, we continue to monitor the developing situation with respect to ongoing business in Russia and are working on appropriate contingency plans that will support our desire to serving existing, chronically ill patient populations while remaining compliant with all applicable U.S. and European Union sanctions and regulations.

While Russia and Ukraine do not constitute a material portion of our business, a significant escalation or expansion of economic disruption or the conflict’s current scope could have an adverse effect on our business.

In addition, the existence of inflation in the United States and in many of the countries where we conduct business has resulted in, and may continue to result in, higher interest rates and capital costs, shipping costs, increased costs of labor, weakening exchange rates and other similar effects.

We have experienced and may continue to experience inflationary increases in manufacturing costs and operating expenses as well as negative impacts from weakening exchange rates, caused by the COVID-19 pandemic or as a result of general macroeconomic factors, and may not be able to pass these cost increases on to our customers in a timely manner or at all, which could have a material adverse impact on our profitability and results of operations.

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

COVID-19

Zosyn

On March 22, 2022, we entered into an agreement with a subsidiary of Pfizer Inc. to acquire the rights to Zosyn, a premixed frozen piperacillin-tazobactam product, in the U.S. and Canada.

Zosyn is used for the treatment of intra-abdominal infections, nosocomial pneumonia, skin and skin structure infections, female pelvic infections and community-acquired pneumonia.

Under the terms of the acquisition, we paid the acquisition price of $122 million and received specified intellectual property, including patent rights, in the first quarter of 2022 and will receive additional intellectual property, including the product rights to Zosyn, in the first quarter of 2023.

Under the arrangement, we are entitled to receive profit sharing payments from sales of Zosyn until the product rights transfer to us in March 2023.

In 2022 the Patient Support Systems, Front Line Care and Global Surgical Solutions product categories of our Hillrom segment collectively generated net sales of $2.9 billion.

During 2022, we also recognized $2.8 billion of goodwill impairments and $332 million of indefinite-lived intangible asset impairments related to goodwill and trade name intangible assets that arose from the Hillrom acquisition.

See Notes 2, 4, 5 and 17 in Item 8 of this Annual Report on Form 10-K for additional information about the Hillrom acquisition, goodwill and intangible asset impairments, Hillrom acquisition financing arrangements and Hillrom segment results, respectively.

| Litigation matter8 | | | — | | | 13 | | |

| Goodwill Impairments | | | | | | | | |

| Goodwill impairments1 | | | $ | 2,812 | | $ | — | |

| Total Special Items | | | $ | 2,812 | | $ | — | |

| Loss on product divestiture arrangement9 | | | $ | 54 | | $ | — | |

| Loss on subsidiary liquidation10 | | | 21 | | | — | | |

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.

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

Seprafilm Adhesion Barrier

In February 2020, we completed the acquisition of the product rights to Seprafilm Adhesion Barrier (Seprafilm) from Sanofi for approximately $342 million in cash.

Seprafilm is indicated for use in patients undergoing abdominal or pelvic laparotomy as an adjunct intended to reduce the incidence, extent and severity of postoperative adhesions between the abdominal wall and the underlying viscera such as omentum, small bowel, bladder, and stomach, and between the uterus and surrounding structures such as tubes and ovaries, large bowel, and bladder.

Net income in 2021 included special items which resulted in a net decrease to net income of $552 million, or $1.08 per diluted share.

Strategic Objectives

We continue to focus on several key objectives to successfully execute our long-term strategy to achieve sustainable growth and deliver enhanced stockholder value.

Our diversified and broad portfolio of medical products that treat life-threatening acute or chronic conditions and our global presence are core components of our strategy to achieve these objectives.

We are focused on three strategic factors as part of our pursuit of industry leading performance: optimizing our core portfolio globally; operational excellence focused on streamlining our cost structure and enhancing operational efficiency; and maintaining a disciplined and balanced approach to capital allocation.

Optimizing the Core Portfolio Globally

Our global product portfolio optimization strategy identifies products that we believe to have characteristics of core growth, products that we expect to provide us with a core return on capital, products that we intend to maintain or manage differently and products that we consider to be strategic bets.

For products with core growth characteristics, we look to invest for long-term, higher margin growth.

For products that we expect to generate a core return on capital, we seek to optimize our return on investment and to maintain or enhance our market position.

For products that we intend to maintain or manage differently, we look to sustain or reposition our underlying investment.

Finally, we are evaluating our market position and investment strategy for products that we consider to be strategic bets.

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

In the course of doing so, we expect to continue to reallocate capital to more promising opportunities or business groupings, as described above.

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.

As part of this strategy, we are shifting our investments to drive innovation in product areas where we have compelling opportunities to serve patients and healthcare professionals while advancing our business and we are accelerating the pace in which we bring these advances to market.

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

These comprise a mix of entirely new offerings, improvements on existing technologies, and the expansion of current products into new geographies.

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

Operational Excellence

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 efforts and the Hillrom integration.

We intend to continue to actively manage our cost structure to help ensure that we are committing resources to the highest value uses.

Such high value activities include supporting innovation, building out the portfolio, expanding patient access and accelerating growth for our stockholders.

Maintaining Disciplined and Balanced Capital Allocation

Subject to market conditions and our investment grade targets, our capital allocation strategies include the following:

- reinvest in the business by funding opportunities that are positioned to deliver sustainable growth, support our innovation efforts and improve margin performance;

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

- identify and pursue accretive merger and acquisition (M&A) opportunities.

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.

As of December 31, [removed: 2021,] [added: 2022,] we manufactured products in over 20 countries and sold them in over 100 countries.

For [removed: further] [added: financial] information about our [added: foreign and domestic] revenues [removed: by product category, refer to Note] [added: and segment information, see Notes] 10 [added: and 17, respectively,] in Item 8 of this Annual Report on Form 10-K.

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

[removed: Prior to our acquisition of Hillrom,] Hillrom was a global medical technology leader [removed: whose] [added: and its] 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.

See [removed: Note 2 and Note] [added: Notes 2, 4,] 5 [added: and 17] in Item 8 of this Annual Report on Form 10-K for additional information about the Hillrom [removed: acquisition] [added: acquisition, goodwill] and [removed: related] [added: intangible asset impairments, Hillrom acquisition] financing [removed: arrangements.][added: arrangements and Hillrom segment results, respectively.]

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

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: 2021.][added: 2022.]

The majority of our revenues are generated outside of the United States and geographic expansion remains a component of our [removed: strategy.][added: strategy (including with respect to the Hillrom business).]

Our [added: international] presence includes operations in Europe, the Middle East, Africa, Asia-Pacific, Latin America and Canada.

[added: 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.

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

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, IDNs, [removed: physicians,] [added: physicians] and patients, many of whom self-administer home-based therapies that we supply.

We believe customer purchasing decisions are primarily focused on cost-effectiveness, price, service, product [removed: performance,] [added: 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 [added: organizations and a growing number of enrolled patients.]

[removed: We maintain certain details about our processes, products and] technology as trade secrets and generally require employees, consultants, and business partners to enter into confidentiality agreements.

Expenditures for our R&D activities were [removed: $534] [added: $605] million in [removed: 2021, $521] [added: 2022, $534] million in [removed: 2020,] [added: 2021,] and [removed: $595] [added: $521] million in [removed: 2019.][added: 2020.]

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 [added: expectations.]

For example, we made [added: $6 million,] $33 million and $10 million of capital expenditures in [added: 2022,] 2021 and 2020, respectively, related to a new ethylene oxide emissions control system at our Mountain Home, Arkansas [removed: facility.][added: facility that was substantially completed in 2022.]

As of December 31, [removed: 2021,] [added: 2022,] we employed approximately 60,000 people globally, with approximately 19,000 employees in the United States and approximately 41,000 employees outside of the United States.

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 [added: comprise our global workforce as well as executive officers and other key personnel.]

- Activating Change [removed: Today (ACT).][added: Today.]

Building on [removed: our strong diversity and inclusion platform, our senior leadership is working in close collaboration with] the [removed: Baxter Black Alliance] [added: success of our nine] business resource [removed: group and] [added: groups (BRGs), one such BRG, Baxter’s Black Alliance, joined forces with] colleagues [removed: from] across the company [removed: on] [added: to introduce Activating Change Today (ACT),] a multidimensional program to advance inclusion and racial justice.

[removed: The] ACT [removed: initiative] is focused on driving results across four key areas – Workforce, Workplace, Community and Marketplace – encompassing employees, external [removed: stakeholders,] [added: stakeholders] and the markets and communities we serve.

We use recruitment vehicles to attract diverse talent to our organization and we [removed: invest in] [added: prioritize] learning opportunities that foster a growth mindset.

The results of this engagement survey are also shared with individual managers, who are then tasked with taking action based on their employees’ anonymous [removed: feedback (both quantitative and qualitative).][added: feedback.]

By paying close attention to the results both at an aggregate enterprise level as well as at a department/business/work group level, we have been able to enhance our culture of [removed: respect,] [added: speed, simplicity, courage and collaboration,] help educate employees more effectively about our benefits offerings as well as our learning and development opportunities and further improve our communications content, mechanisms and frequency.

In addition, our Corporate Governance Guidelines, Code of Conduct, and the charters for the committees of our Board of Directors are available on our website at www.baxter.com under [removed: “About Baxter—About us] [added: “Our Story] — [added: Our] Governance.” All the foregoing materials will be made available to stockholders in print upon request by writing to: Corporate Secretary, Baxter International Inc., One Baxter Parkway, Deerfield, Illinois 60015.

Recently Announced Strategic Actions

In January 2023, we announced the following planned strategic actions that are intended to enhance our operational effectiveness, accelerate innovation and drive additional stockholder value: (a) a proposed spinoff of our Renal Care and Acute Therapies product categories into an independent publicly traded company, (b) our development of a new operating model to simplify our operations and (c) our pursuit of strategic alternatives (including a potential sale) for our BioPharma Solutions (BPS) product category.

This proposed spinoff of our Renal Care and Acute Therapies product categories (the proposed spinoff) is currently expected to be completed during the first half of 2024, approximately 12 to 18 months from the date of the related announcement.

In 2022 we generated $4.4 billion of combined net sales from our Renal Care and Acute Therapies product categories, representing approximately 29% of our consolidated net sales.

We intend for the proposed spinoff to qualify as tax-free to Baxter and our shareholders for U.S. federal income tax purposes.

The proposed spinoff is subject to the satisfaction of customary conditions, including final approval from our Board of Directors, the filing and effectiveness of a registration statement on Form 10, receipt of an Internal Revenue Service (IRS) ruling or related tax opinions from counsel, satisfactory completion of financing arrangements, consultations with works councils and other employee representative bodies and any necessary regulatory approvals.

To strengthen our ability to deliver on our vision to transform healthcare, we are designing a new operating model intended to simplify and streamline our operations.

Once the simplified model is implemented, we expect to be a more integrated and nimble organization that can respond more effectively to changes in the macroeconomic environment, while enhancing our ability to drive innovation in our product portfolio.

As part of these actions, we are working to create a more resilient supply chain and better align our manufacturing footprint and supply chain to our commercial activities.

Under the new model, our business will be managed across four global business units consisting of: (1) Medical Products and Therapies, which will include our Medication Delivery, Advanced Surgery and Clinical Nutrition product categories, (2) Healthcare Systems and Technologies, which will include the Patient Support Systems, Front Line Care and Global Surgical Solutions product categories obtained in the Hillrom acquisition, (3) Pharmaceuticals, which will include our BPS product category, for which we are exploring strategic alternatives, and our Pharmaceuticals product category and (4) Kidney Care, which will include our Renal Care and Acute Therapies product categories that we are proposing to spinoff into an independent publicly traded company.

We expect to have our new organizational designs substantially finalized in the second quarter of 2023.

The new operating model will have significant impacts on our systems and processes across our entire company and we expect to have those broader operational changes, including our updated management reporting framework for the new operating model, fully implemented during the second half of 2023.

At that time, we expect that our reportable segments will be changed to align with the new operating model.

We are pursuing strategic alternatives (including a potential sale) for our BPS product category, which includes contract manufacturing services provided to pharmaceutical and biopharmaceutical companies.

In 2022 we generated $644 million of net sales from that product category, representing approximately 4% of our consolidated net sales.

A potential sale of, or other strategic transaction involving, BPS would help us further narrow our strategic focus as a company while providing an opportunity for capital deployment, including debt repayment.

Following these planned strategic actions (including completion of the proposed spinoff), we intend to emerge as a stronger hospital solutions and connected care company.

As a more focused business, we expect to be better positioned to make strategic investments to accelerate our vision and to deliver differentiated value to our stakeholders with our unique combination of products, therapies and connected care platforms.

There can be no guarantees that the proposed spinoff, the simplified operating model or the sale of, or other strategic transaction involving, our BPS product category will be completed in the manner or over the timeframes described above, or at all.

In 2022 the Patient Support Systems, Front Line Care and Global Surgical Solutions product categories of our Hillrom segment collectively generated net sales of $2.9 billion.

During 2022, we also recognized $2.8 billion of goodwill impairments and $332 million of indefinite-lived intangible asset impairments related to goodwill and trade name intangible assets that arose from the Hillrom acquisition.

As discussed above under “Recently Announced Strategic Actions,” we are designing a new operating model intended to simplify and streamline our operations and we expect that our reportable segments will be changed to align with that new operating model when it is fully implemented.

As discussed above under "Recently Announced Strategic Actions," we are pursuing the proposed spinoff of our Renal Care and Acute Therapies product categories and strategic alternatives for our BPS product category.

Business Strategy

Our business strategy is focused on driving sustainable growth and innovation aligned with our mission to save and sustain lives and our vision to transform healthcare with a customer focus to improve patient outcomes, enhance workflow efficiency, and enable cost-effective care.

Our diversified and broad portfolio of medical products that treat life-threatening acute or chronic conditions and our global presence are core components of our strategy as we

work to achieve these objectives.

We are focused on four strategic pillars as part of our pursuit of industry leading performance: innovation; market expansion; operational efficiency; and capital allocation.

Innovation

Our innovation strategy is focused on connected care and core therapies offerings.

Connected care offerings include devices or software that can connect, communicate and/or analyze data to help transform healthcare and improve patient outcomes.

Our acquisition of Hillrom has been a key driver in developing our connected care offerings, as its product portfolio includes digital and connected care solutions and collaboration tools such as 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.

Our core therapies product offerings include medical devices and consumable medical products designed to address essential patient and provider needs across the continuum of care.

As part of this strategy and consistent with our recently announced strategic initiatives, we are shifting our investments to drive innovation in product areas where we have compelling opportunities to serve patients and healthcare professionals while advancing our business.

We are accelerating the pace in which we bring these advances to market to support our future growth.

We are in the midst of launching several new products, geographic expansions and line extensions including in such areas as chronic and acute renal care, smart pump technology, hospital pharmaceuticals and nutritionals, surgical sealants, smart beds, respiratory vests and more.

These comprise a mix of entirely new offerings, improvements on existing technologies and the expansion of current products into new geographies.

Market Expansion

The market expansion component of our strategy includes capturing revenue synergies through the integration of Hillrom, expanding our portfolio geographically, broadening our portfolio through channel expansion and increasing utilization of our products and therapies through market development activities.

These initiatives include using Baxter’s geographic footprint to introduce the Hillrom product portfolio into new markets, as well as expanding value-added services, increasing adoption of underpenetrated therapies and providing education and advocacy to improve access to our products.

COVID-19

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

COVID-19 and its variants have had, and we expect will continue to have, an adverse impact on our operations, supply chains and distribution systems and 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.

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.

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.

We expect that these challenges as well as evolving governmental restrictions and requirements, among other factors, may continue to have an adverse effect on our business.

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

Under the

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

For financial information about our foreign and domestic revenues and segment information, see Note 17 in Item 8 of this Annual Report on Form 10-K.

In the case of

organizations and a growing number of enrolled patients.

expectations.

All material elements of the new system are expected to be completed in 2022 and we currently expect to incur an additional $10 million of capital expenditures related to this project.

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

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.

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

In response to the COVID-19 pandemic and related mitigation measures, we implemented changes in our business in 2020 in an effort to better protect our employees and customers, and to support appropriate health and safety protocols.

For example, we installed physical barriers between employees in production facilities, implemented extensive cleaning and sanitation processes for both production and office administration spaces and implemented broad work-from-home initiatives for employees in our administrative functions.

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

For the fiscal year ended December 31, [removed: 2021][added: 2022]

[removed: ][added: ]

See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and [removed: “emerging growth company” in Rule 12b-2 of the Exchange Act.]

The aggregate market value of the voting common equity held by non-affiliates of the registrant as of June 30, [removed: 2021] [added: 2022] (the last business day of the registrant’s most recently completed second fiscal quarter), based on the per share closing sale price of [removed: $80.50] [added: $64.23] 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: $40] [added: $32] billion.

The number of shares of the registrant’s common stock, $1.00 par value, outstanding as of January 31, [removed: 2022] [added: 2023] was [removed: 502,293,624.][added: 504,672,166.]

Portions of the registrant’s definitive [removed: 2022] [added: 2023] proxy statement for use in connection with its Annual Meeting of Stockholders expected to be held on May [removed: 3, 2022] [added: 2, 2023] are incorporated by reference into Part III of this report.

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“emerging growth company” in Rule 12b-2 of the Exchange Act.

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If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

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

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

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 [removed: new] global segment for our recently acquired Hillrom business.

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

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

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

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

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

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

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

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

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

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

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

As of February [removed: 23, 2022,] [added: 9, 2023,] the following serve as Baxter’s executive officers:

Almeida*, age [removed: 59,] [added: 60,] is Chairman, President and Chief Executive Officer, having served in that capacity since January 2016.

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

*James Borzi*, age [removed: 59,] [added: 60,] is Senior Vice President, Chief Supply Chain Officer.

Prior to that, he was the Chief Operating Officer at AEES [added: Inc.] and Senior Vice President of Americas Operations at [removed: Alcoa.][added: Alcoa Corporation.]

*Cristiano Franzi*, age [removed: 59,] [added: 60,] is Senior Vice President and President, EMEA.

He served as a member of the [removed: board] [added: Board] of [added: Directors of] Eucomed Medical Technology [added: (Eucomed)] from 2013 to [removed: 2015 and again] [added: 2015,] from 2018 to [removed: 2019.][added: 2019 and again from 2021.]

[removed: *Andrew Frye*,] [added: *Steven Flynn*,] age [removed: 56,] [added: 51,] is Senior Vice President and [removed: President,] [added: President] APAC.

Earlier in his career, he held a number of commercial roles with increasing responsibility at [removed: Abbott Laboratories’ Pharmaceutical] [added: Ceva Logistics (formerly known as Thomas Nationwide Transport)] and [removed: Nutrition divisions.][added: General Motors Holden Limited.]

*Jacqueline Kunzler*, Ph.D., age [removed: 56,] [added: 57,] is Senior Vice President and Chief Quality Officer.

[removed: *Sean Martin*,] [added: Rosenbloom*,] age [removed: 59,] [added: 63,] is Senior Vice President and General Counsel.

Mason*, Ph.D., age [removed: 66,] [added: 67,] is Senior Vice President, Human Resources.

Saccaro*, age [removed: 49,] [added: 50,] is Executive Vice President and Chief Financial Officer.

Information about our Executive Officers

Mr. Almeida currently serves on the Board of Directors of Bank of America.

Mr. Flynn joined Baxter in 2006 and prior to being promoted to President, APAC, in 2022, he spent several years leading Baxter’s Australia and New Zealand business.

Mr. Flynn has more than 27 years of experience working in the automotive, logistics and healthcare industries.

As a Senior Commercial Executive, he held a variety of roles including sales, marketing, business development, market access, and general management.

He also served as a board member for six years – including the last four years of his term as vice chairman at the Medical Technology Association of Australia from 2015 to 2021.

He currently serves as a member of Eucomed.

*David S.

Mr. Rosenbloom joined Baxter from McDermott Will & Emery (McDermott), where he served as a partner for 24 years and Global Head of the Litigation Practice Group from 2017-2022.

Prior to McDermott, he served for eight years in the U.S. Attorney’s Office for the Northern District of Illinois.

Mr. Rosenbloom is a member of the Board of the Digestive Health Foundation, which supports research at Northwestern Digestive Health Center, which is part of Northwestern Medicine at Northwestern Memorial Hospital.

Executive Officers of the Registrant

*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.

Prior to his current role, Mr. Accogli served as Senior Vice President and President, Americas and Global Business Units.

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

He also served as Corporate Vice President and President, Renal from 2016 to 2017 and as Head of the U.S. region for Baxter’s Renal business from 2015 to 2016.

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 Europe, Middle East and Africa (“EMEA”) region for Baxter’s Renal business from 2013 to 2015.

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 serves as a director to AdvaMed, an American medical device trade association, which he has done since September 25, 2019.

Mr. Frye joined Baxter in 2017 from DKSH Holdings Ltd., where he served as Global Head of Healthcare from 2015 to 2017.

In that role, he oversaw a portfolio of pharmaceuticals, over-the-counter and device products across 13 countries.

Previously, he served as Vice President of Business Development from 2011 to 2014 for DKSH Healthcare.

Mr. Martin joined Baxter in 2017 from Apollo Education Group, Inc., where he served as Senior Vice President, General Counsel and Secretary from 2010 to 2017.

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

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

Mr. Martin was a Partner at the law firm Foley & Lardner LLP from 1998 to 2000 and served eight years as Assistant U.S. Attorney for the Northern District of Illinois.

During the fourth quarter of [removed: 2021,] [added: 2022,] we did not repurchase any shares under this authority.

The remaining authorization under this program totaled approximately $1.3 billion at December 31, [removed: 2021.][added: 2022.]

As of January 31, [removed: 2022,] [added: 2023,] there were [removed: 20,939] [added: 20,076] holders of record of our common stock.

[removed: ][added: ]

| as of December 31 (in millions, except share information) | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| Cash and cash equivalents | | | $ | [removed: 2,951] [added: 1,718] | | [added: $] | [added: 2,951] | | $ | 3,730 | |

| Accounts receivable, net of allowance of [removed: $122] [added: $114] in [removed: 2021] [added: 2022] and [removed: $125] [added: $122] in [removed: 2020] [added: 2021] | | | [removed: 2,629] [added: 2,659] | | | | | | [removed: 2,007] [added: 2,629] | | |

| Inventories | | | [removed: 2,453] [added: 2,718] | | | | | | [removed: 1,916] [added: 2,453] | | |

| Prepaid expenses and other current assets | | | [removed: 839] [added: 916] | | | | | | [removed: 758] [added: 839] | | |

| Total current assets | | | [removed: 8,872] [added: 8,011] | | | | | | [removed: 8,411] [added: 8,872] | | |

| Property, plant and equipment, net | | | [removed: 5,178] [added: 4,979] | | | | | | [removed: 4,722] [added: 5,178] | | |

| Goodwill | | | [removed: 9,836] [added: 6,843] | | | | | | [removed: 3,217] [added: 9,836] | | |

| Other intangible assets, net | | | [removed: 7,792] [added: 6,793] | | | | | | [removed: 1,671] [added: 7,792] | | |

| Operating lease right-of-use assets | | | [removed: 630] [added: 550] | | | | | | [removed: 603] [added: 630] | | |

| Other non-current assets | | | [removed: 1,213] [added: 1,111] | | | | | | [removed: 1,395] [added: 1,213] | | |

| Total assets | | | $ | [removed: 33,521] [added: 28,287] | | | | | $ | [removed: 20,019] [added: 33,521] | |

| Short-term debt | | | $ | [removed: 301] [added: 299] | | | | | $ | [removed: —] [added: 301] | |

| Current maturities of long-term debt and finance lease obligations | | | [removed: 210] [added: 1,105] | | | | | | [removed: 406] [added: 210] | | |

| Accounts payable | | | [removed: 1,246] [added: 1,139] | | | | | | [removed: 1,043] [added: 1,246] | | |

| Accrued expenses and other current liabilities | | | [removed: 2,479] [added: 2,202] | | | | | | [removed: 1,884] [added: 2,479] | | |

| Total current liabilities | | | [removed: 4,236] [added: 4,745] | | | | | | [removed: 3,333] [added: 4,236] | | |

| Long-term debt and finance lease obligations | | | [removed: 17,149] [added: 15,232] | | | | | | [removed: 5,786] [added: 17,149] | | |

| Operating lease liabilities | | | [removed: 522] [added: 456] | | | | | | [removed: 501] [added: 522] | | |

| Other non-current liabilities | | | [removed: 2,493] [added: 1,959] | | | | | | [removed: 1,673] [added: 2,493] | | |

| Total liabilities | | | [removed: 24,400] [added: 22,392] | | | | | | [removed: 11,293] [added: 24,400] | | |

| Common stock, $1 par value, authorized 2,000,000,000 shares, issued 683,494,944 shares in [removed: 2021] [added: 2022] and [removed: 2020] [added: 2021] | | | 683 | | | | | | 683 | | |

| Common stock in treasury, at cost, [removed: 181,879,516] [added: 179,062,594] shares in [removed: 2021] [added: 2022] and [removed: 178,580,208] [added: 181,879,516] shares in [removed: 2020] [added: 2021] | | | [removed: (11,488)] [added: (11,389)] | | | | | | [removed: (11,051)] [added: (11,488)] | | |

| Additional contributed capital | | | [removed: 6,197] [added: 6,322] | | | | | | [removed: 6,043] [added: 6,197] | | |

| Retained earnings | | | [removed: 17,065] [added: 14,050] | | | | | | [removed: 16,328] [added: 17,065] | | |

| Accumulated other comprehensive (loss) income | | | [removed: (3,380)] [added: (3,833)] | | | | | | [removed: (3,314)] [added: (3,380)] | | |

| Total Baxter stockholders’ equity | | | [removed: 9,077] [added: 5,833] | | | | | | [removed: 8,689] [added: 9,077] | | |

| Noncontrolling interests | | | [removed: 44] [added: 62] | | | | | | [removed: 37] [added: 44] | | |

| Total equity | | | [removed: 9,121] [added: 5,895] | | | | | | [removed: 8,726] [added: 9,121] | | |

| Total liabilities and equity | | | $ | [removed: 33,521] [added: 28,287] | | | | | $ | [removed: 20,019] [added: 33,521] | |

CONSOLIDATED STATEMENTS OF [removed: INCOME][added: INCOME (LOSS)]

| years ended December 31 (in millions, except per share data) | | | [removed: 2021] [added: 2022] | | | [removed: 2020] [added: 2021] | | | [removed: 2019] [added: 2020] | | |

| Net sales | | | $ | [removed: 12,784] [added: 15,113] | | $ | [removed: 11,673] [added: 12,784] | | $ | [removed: 11,362] [added: 11,673] | |

| Cost of sales | | | [removed: 7,679] [added: 9,716] | | | [removed: 7,086] [added: 7,679] | | | [removed: 6,601] [added: 7,086] | | |

| Gross margin | | | [removed: 5,105] [added: 5,397] | | | [removed: 4,587] [added: 5,105] | | | [removed: 4,761] [added: 4,587] | | |

| Selling, general and administrative expenses | | | [removed: 2,867] [added: 3,887] | | | [removed: 2,469] [added: 2,867] | | | [removed: 2,535] [added: 2,469] | | |

| Research and development expenses | | | [removed: 534] [added: 605] | | | [removed: 521] [added: 534] | | | [removed: 595] [added: 521] | | |

| Other operating [removed: income,] [added: expense (income),] net | | | [removed: (6)] [added: 36] | | | [removed: (19)] [added: (6)] | | | [removed: (141)] [added: (19)] | | |

| Operating income [added: (loss)] | | | [removed: 1,710] [added: (1,943)] | | | [removed: 1,616] [added: 1,710] | | | [removed: 1,772] [added: 1,616] | | |

| Interest expense, net | | | [removed: 192] [added: 395] | | | [removed: 134] [added: 192] | | | [removed: 71] [added: 134] | | |

| Goodwill impairments | | | 2,812 | | | — | | | — | | |

| Available-for-sale debt securities, net of tax expense of $1 in 2022, zero in 2021 and zero in 2020 | | | 3 | | | — | | | — | | |

| Less: Other comprehensive loss attributable to noncontrolling interests | | | (5) | | | — | | | — | | |

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

| Net income (loss) | | | — | | | — | | | — | | | — | | | — | | | (2,433) | | | — | | | (2,433) | | | 12 | | | (2,421) | | |

| Balance as of December 31, 2022 | | | 683 | | | $ | 683 | | 179 | | | $ | (11,389) | | $ | 6,322 | | $ | 14,050 | | $ | (3,833) | | $ | 5,833 | | $ | 62 | | $ | 5,895 | |

| Net income (loss) | | | $ | (2,421) | | $ | 1,295 | | $ | 1,110 | |

| Pension settlement and curtailment (gains) losses | | | (12) | | | 2 | | | 46 | | |

| Losses on debt extinguishments | | | — | | | 5 | | | 110 | | |

| Intangible asset impairments | | | 344 | | | — | | | 17 | | |

| Goodwill impairments | | | 2,812 | | | — | | | — | | |

| Loss on product divestiture arrangement | | | 54 | | | — | | | — | | |

| Reclassification of cumulative translation loss to earnings | | | 65 | | | — | | | — | | |

| Loss on subsidiary liquidation | | | 21 | | | — | | | — | | |

In January 2023, we announced our intention to separate our Renal Care and Acute Therapies product categories into a new, publicly traded company.

While completion of the proposed spinoff is subject to satisfaction of customary conditions, we are targeting completion of the planned separation in 12 to 18 months after the initial announcement.

Supply Constraints and Global Economic Conditions

We expect to experience some of these and other challenges related to our supply chain in future periods.

These challenges, including the unavailability of certain raw materials and component parts, have also had a negative impact on our sales for certain product categories due to our inability to fully satisfy demand and may continue to have a negative impact on our sales in the future.

COVID-19

Principles of Consolidation

Reclassifications

This includes sales of our broad portfolio of essential healthcare products across our business segments.

Our legacy Hillrom segment includes smart bed systems; patient monitoring and diagnostic technologies, respiratory health devices; and advanced equipment for the surgical space.

To a lesser extent, we enter into arrangements for which revenue may be recognized over time.

For example, our Americas segment includes contract manufacturing arrangements, our Hillrom segment includes digital and connected care solutions and collaboration tools that are implemented over time and all our segments include equipment leases and certain subscription software and licensing arrangements.

In a quantitative goodwill impairment test, the fair values of our reporting units are generally determined based on a discounted cash flow model (an income approach) and earnings multiples (a market approach).

Significant inputs to reporting unit fair value measurements generally include forecasted cash flows, discount rates, terminal growth rates and earnings multiples.

Each of those inputs can significantly affect the fair values of our reporting units.

from December 31 to November 1.

During the third quarter of 2022, we performed trigger-based impairment tests of the goodwill of each of our Hillrom reporting units as well as the indefinite-lived intangible assets, consisting primarily of trade names, that we acquired in connection with the Hillrom acquisition.

We recognized $2.8 billion of goodwill impairment charges and $332 million of pre-tax impairment charges related to those indefinite-lived intangible assets.

In connection with our annual goodwill impairment assessment in the fourth quarter of 2022, we performed quantitative impairment tests for all of our reporting units and recorded an additional $27 million goodwill impairment related to one of our Hillrom reporting units.

See Note 4, Goodwill and Other Intangible Assets, Net for further information about those impairments.

Long-lived assets are classified as held for sale when certain criteria are met, including when management has committed to sell the asset, the asset is available for sale in its present condition and the sale is probable of being completed within one year of the balance sheet date.

Assets held for sale are no longer depreciated or amortized and they are reported at the lower of their carrying amount or fair value less cost to sell.

We

In June 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sales Restrictions, which (1) clarifies the guidance in Topic 820 on the fair value measurement of an equity security that is subject to contractual restrictions that prohibit the sale of an equity security and (2) requires specific disclosures related to such an equity security.

In the fourth quarter of 2022, we finalized our valuation of the acquisition date assets acquired and liabilities assumed.

The measurement period adjustments recorded in 2022 primarily impacted accounts receivable, property plant and equipment, other intangible assets, accrued expenses and other current liabilities and deferred income tax liabilities.

| Balance as of January 1, 2019 | | | 683 | | | $ | 683 | | 170 | | | $ | (9,989) | | $ | 5,898 | | $ | 15,075 | | $ | (3,823) | | $ | 7,844 | | $ | 22 | | $ | 7,866 | |

| Net income | | | — | | | — | | | — | | | — | | | — | | | 1,001 | | | — | | | $ | 1,001 | | 10 | | | $ | 1,011 | |

| Adoption of new accounting standard | | | — | | | — | | | — | | | — | | | — | | | (4) | | | — | | | (4) | | | — | | | (4) | | |

(1) We did not have restricted cash balances as of December 31, 2019.

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.

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.

Basis of Presentation

Including the assumption of Hillrom's

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

Beginning December 13, 2021, our financial statements include the assets, liabilities and operating results of Hillrom.

Refer to Note 2 for additional information.

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.

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

We previously sold this product under a distribution license to the U.S. institutional market.

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

On February 17, 2021, we 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 approximately $325 million in cash.

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

On February 14, 2020, we completed the acquisition of the product rights to Seprafilm Adhesion Barrier (Seprafilm) from Sanofi for approximately $342 million in cash.

Beginning February 14, 2020, our financial statements include the assets, liabilities and operating results of Seprafilm.

On October 25, 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.

Beginning October 25, 2019, our financial statements include the assets, liabilities and operating results of Cheetah.

To a lesser extent, in all of our segments, we enter into other types of contracts, including contract manufacturing arrangements, equipment leases, and certain subscription software and licensing arrangements.

The following table summarizes the allowance for doubtful accounts.

| Adoption of new accounting standard | | | — | | | 4 | | |

Handling costs, which are costs incurred to

Costs for one-time

Any

Refer to Note 15 for further information regarding our derivative and hedging activities.

As of January 1, 2020, we adopted ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

Our policies for capitalizing implementation costs incurred in a hosting arrangement were not impacted by this ASU.

However, we have historically classified those capitalized costs within property, plant and equipment, net on our consolidated balance sheets and as capital expenditures on our consolidated statements of cash flows.

Under the new ASU, those capitalized costs are presented as other non-current assets on our consolidated balance sheets and within operating cash flows on our consolidated statements of cash flows.

We adopted this ASU on a prospective basis and capitalized $45 million and $44 million of implementation costs related to hosting arrangements that are service contracts during the years ended December 31, 2021 and 2020, respectively.

As of January 1, 2020, we adopted ASU No. 2017-04, Intangibles – Goodwill and Other, Simplifying the Test for Goodwill Impairment.

This standard eliminates Step 2 of the goodwill impairment test and requires a goodwill impairment to be measured as the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of its goodwill.

As of January 1, 2020, we adopted ASU No. 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General (Topic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans.

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: 2021.][added: 2022.]

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: 2021.][added: 2022.]

Management performed an assessment of the effectiveness of our internal control over financial reporting as of December 31, [removed: 2021.][added: 2022.]

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: 2021.][added: 2022.]

The effectiveness of our internal control over financial reporting as of December 31, [removed: 2021] [added: 2022] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

[removed: Other than as described in the preceding paragraph, there] [added: 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: 2021] [added: 2022] 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.

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 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: 3, 2022] [added: 2, 2023] (the Proxy Statement), all of which information is incorporated herein by reference.

Also refer to information regarding executive officers of Baxter under the caption entitled [removed: “Executive Officers of the Registrant”] [added: “Information about our Executive Officers”] in Part I of this Annual Report on Form 10-K.

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: 2021.][added: 2022.]

| Equity Compensation Plans Not Approved by Stockholders | | | [removed: 667,640] [added: 146,798] | | | | | | (4) | | | | | | $ | — | | | | | | | | | | | — | | | | | | | | |

(3)Includes (i) [removed: 11,263,584] [added: 10,409,827] shares of common stock available for purchase under the Employee Stock Purchase Plan and (ii) [removed: 40,173,931] [added: 33,593,760] shares of common stock available under the 2021 Incentive Plan.

(4)Includes [removed: 667,640] [added: 146,798 of outstanding] replacement RSUs granted to holders of Hillrom equity awards at closing of the Hillrom acquisition.

(5)Includes outstanding awards of [removed: 20,696,747] [added: 19,641,273] stock options, which have a weighted-average exercise price of [removed: $61.14] [added: $63.51] and a weighted-average remaining term of [removed: 5.9] [added: 5.3] years, [removed: 1,797,696] [added: 1,912,082] shares of common stock issuable upon vesting of restricted stock units, and [removed: 731,651] [added: 697,865] shares of common stock reserved for issuance in connection with performance share unit grants.

| Equity Compensation Plans Approved by Stockholders | | | 22,119,806 | | | | | | (1) | | | | | | $ | 63.51 | | | | | (2) | | | | | | 44,003,587 | | | | | | (3) | | |

| Total | | | 22,266,604 | | | | | | (5) | | | | | | $ | 63.51 | | | | | (2) | | | | | | 44,003,587 | | | | | | | | |

| 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 | | | | | | | | |

Refer to the information under the first paragraph of the caption entitled “Corporate Governance—at Baxter International Inc.—Board of Directors” and the captions entitled “Corporate Governance at Baxter International Inc.—Board [removed: of Directors—Director] [added: Responsibilities—Director] Independence” and “Corporate Governance at Baxter International Inc.—Other Corporate Governance Information—Certain Relationships and Related Person Transactions” in the Proxy Statement, all of which information is incorporated herein by reference.

| | | | [Consolidated Balance [removed: Sheets](#i93d397774bdd4b7396371ce9bc3696a1_70)] [added: Sheets](#iaf52cd04cebc40b3840281c989335e6b_70)] | | | 48 | | |

| | | | [Consolidated Statements of [removed: Income](#i93d397774bdd4b7396371ce9bc3696a1_73)] [added: Income (Loss)](#iaf52cd04cebc40b3840281c989335e6b_73)] | | | 49 | | |

| | | | [Consolidated Statements of Comprehensive [removed: Income](#i93d397774bdd4b7396371ce9bc3696a1_76)] [added: Income (Loss)](#iaf52cd04cebc40b3840281c989335e6b_76)] | | | 50 | | |

| | | | [Consolidated Statements of Changes in [removed: Equity](#i93d397774bdd4b7396371ce9bc3696a1_82)] [added: Equity](#iaf52cd04cebc40b3840281c989335e6b_82)] | | | 51 | | |

| | | | [Consolidated Statements of Cash [removed: Flows](#i93d397774bdd4b7396371ce9bc3696a1_85)] [added: Flows](#iaf52cd04cebc40b3840281c989335e6b_85)] | | | 52 | | |

| | | | [Notes to Consolidated Financial [removed: Statements](#i93d397774bdd4b7396371ce9bc3696a1_88)] [added: Statements](#iaf52cd04cebc40b3840281c989335e6b_88)] | | | 54 | | |

| | | | [Report of Independent Registered Public Accounting Firm (PCAOB [removed: ID](#i93d397774bdd4b7396371ce9bc3696a1_145) [](#i93d397774bdd4b7396371ce9bc3696a1_145)238[)](#i93d397774bdd4b7396371ce9bc3696a1_145)] [added: ID](#iaf52cd04cebc40b3840281c989335e6b_145) [](#iaf52cd04cebc40b3840281c989335e6b_145)238[)](#iaf52cd04cebc40b3840281c989335e6b_145)] | | | 105 | | |

| | | | [Schedule II — Qualifying and Valuation accounts for each of the three years in the period ended December 31, [removed: 202](#i93d397774bdd4b7396371ce9bc3696a1_184)[1](#i93d397774bdd4b7396371ce9bc3696a1_184)] [added: 20](#iaf52cd04cebc40b3840281c989335e6b_187)[2](#iaf52cd04cebc40b3840281c989335e6b_187)[2](#iaf52cd04cebc40b3840281c989335e6b_187)] | | | 117 | | |

| [removed: 2.1] [added: C 10.11] | | | [removed: [Separation and Distribution Agreement] [added: [Baxter International Inc. Equity Plan for the 2015 Incentive Plan] (incorporated by reference to Exhibit [removed: 2.1] [added: 10.6] to the Company’s Current Report on Form 8-K, filed on July 7, [removed: 2015).](http://www.sec.gov/Archives/edgar/data/10456/000119312515246136/d57625dex21.htm)] [added: 2015).](http://www.sec.gov/Archives/edgar/data/10456/000119312515246136/d57625dex106.htm)] | | |

| [removed: 2.2] [added: 2.1] | | | [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) | | |

| 3.1 | | | [removed: [Amended] [added: [A](https://www.sec.gov/Archives/edgar/data/10456/000119312522143745/d147479dex31.htm)[mended] and Restated [removed: Certificate] [added: Certific](https://www.sec.gov/Archives/edgar/data/10456/000119312522143745/d147479dex31.htm)[ate] of Incorporation [added: of Baxt](https://www.sec.gov/Archives/edgar/data/10456/000119312522143745/d147479dex31.htm)[er International Inc.] (incorporated by reference to Exhibit 3.1 to the [removed: Company’s] [added: Company's] Current Report on Form 8-K, filed on May [removed: 10, 2013).](http://www.sec.gov/Archives/edgar/data/10456/000119312513214390/d537200dex31.htm)] [added: 6, 2022).](https://www.sec.gov/Archives/edgar/data/10456/000119312522143745/d147479dex31.htm)] | | |

| 3.2 | | | [removed: [Certificate of Amendment to the Amended] [added: [B](https://www.sec.gov/Archives/edgar/data/10456/000119312522143745/d147479dex32.htm)[ylaws, as amended] and [removed: Restated Certificate of Incorporation dated] [added: restated on] May [removed: 3, 2016 (incorporated by reference] [added: 5, 2022](https://www.sec.gov/Archives/edgar/data/10456/000119312522143745/d147479dex32.htm) [(incorporated by](https://www.sec.gov/Archives/edgar/data/10456/000119312522143745/d147479dex32.htm) [refer](https://www.sec.gov/Archives/edgar/data/10456/000119312522143745/d147479dex32.htm)[ence] to Exhibit [removed: 3.1] [added: 3.2] to the [removed: Company’s Current] [added: Company's Curre](https://www.sec.gov/Archives/edgar/data/10456/000119312522143745/d147479dex32.htm)[nt] Report on Form [removed: 8-K,] [added: 8-K](https://www.sec.gov/Archives/edgar/data/10456/000119312522143745/d147479dex32.htm)[,] filed on May [removed: 4, 2016).](http://www.sec.gov/Archives/edgar/data/10456/000119312516577979/d191725dex31.htm)] [added: 6, 2022).](https://www.sec.gov/Archives/edgar/data/10456/000119312522143745/d147479dex32.htm)] | | |

| [removed: 3.3] [added: C 10.30] | | | [removed: [Bylaws, as amended] [added: [Baxter International Inc.] and [removed: restated on November 13, 2018] [added: Subsidiaries Pension Plan (Amended and Restated effective January 5, 2018)] (incorporated by reference to Exhibit [removed: 3.1] [added: 10.1] to the Company’s Current Report on Form 8-K, filed on [removed: November 15, 2018).](http://www.sec.gov/Archives/edgar/data/10456/000119312518328076/d639069dex31.htm)] [added: January 8, 2018).](http://www.sec.gov/Archives/edgar/data/10456/000119312518005221/d520610dex101.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, [removed: 2021).](https://www.sec.gov/Archives/edgar/data/10456/000119312521290255/d218121dex102.htm)[1](https://www.sec.gov/Archives/edgar/data/10456/000119312521290255/d218121dex102.htm)] [added: 2021).](https://www.sec.gov/Archives/edgar/data/10456/000119312521290255/d218121dex102.htm)] | | |

| C 10.8 | | | [Baxter International Inc. [removed: 2007] [added: 2011] Incentive Plan (incorporated by reference to Appendix [removed: A] [added: B] to the Company’s Definitive Proxy Statement on Schedule 14A, filed on March [removed: 20, 2007).](http://www.sec.gov/Archives/edgar/data/10456/000095013707004087/c13022ddef14a.htm)] [added: 18, 2011).](http://www.sec.gov/Archives/edgar/data/10456/000095012311026923/c62262ddef14a.htm)] | | |

| C 10.9 | | | [Baxter International Inc. Equity Plan for the [removed: 2007] [added: 2011] Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s [removed: Current] [added: Quarterly] Report on Form [removed: 8-K,] [added: 10-Q,] filed on [removed: March 16, 2007).](http://www.sec.gov/Archives/edgar/data/10456/000095013707003994/c13397exv10w1.htm)] [added: May 3, 2011).](http://www.sec.gov/Archives/edgar/data/10456/000095012311043980/c63383exv10w1.htm)] | | |

| C 10.10 | | | [Baxter International Inc. [removed: 2011] [added: 2015] Incentive Plan (incorporated by reference to Appendix [removed: B] [added: A] to the Company’s Definitive Proxy Statement on Schedule 14A, filed on March [removed: 18, 2011).](http://www.sec.gov/Archives/edgar/data/10456/000095012311026923/c62262ddef14a.htm)] [added: 25, 2015).](http://www.sec.gov/Archives/edgar/data/10456/000119312515104161/d864138ddef14a.htm#toc864138_20)] | | |

| C [removed: 10.11] [added: 10.12] | | | [Baxter International Inc. Equity Plan for [added: José E. Almeida under] the [removed: 2011] [added: 2015] Incentive Plan (incorporated by reference to Exhibit [removed: 10.1] [added: 10.2] to the Company’s [removed: Quarterly] [added: Current] Report on Form [removed: 10-Q,] [added: 8-K,] filed on [removed: May 3, 2011).](http://www.sec.gov/Archives/edgar/data/10456/000095012311043980/c63383exv10w1.htm)] [added: October 29, 2015).](http://www.sec.gov/Archives/edgar/data/10456/000119312515357002/d39629dex102.htm)] | | |

| C [removed: 10.12] [added: 10.15] | | | [Baxter International Inc. [removed: 2015] [added: 2021] Incentive Plan (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A, filed on March [removed: 25, 2015).](http://www.sec.gov/Archives/edgar/data/10456/000119312515104161/d864138ddef14a.htm#toc864138_20)] [added: 22, 2021).](https://www.sec.gov/Archives/edgar/data/10456/000119312521089604/d30485ddef14a.htm#toc30485_53)] | | |

| C 10.13 | | | [Baxter International Inc. [added: 2017] Equity [removed: Plan for the 2015 Incentive Plan] [added: Plan, effective as of March 2, 2017] (incorporated by reference to Exhibit [removed: 10.6] [added: 10.2] to the Company’s Current Report on Form 8-K, filed on [removed: July 7, 2015).](http://www.sec.gov/Archives/edgar/data/10456/000119312515246136/d57625dex106.htm)] [added: March 3, 2017).](http://www.sec.gov/Archives/edgar/data/10456/000119312517068798/d344320dex102.htm)] | | |

| C [removed: 10.14] [added: 10.20] | | | [removed: [Baxter] [added: [Offer Letter between Baxter] International Inc. [removed: Equity Plan for] [added: and] José E. [removed: Almeida under the] [added: Almeida, dated as of October 28,] 2015 [removed: Incentive Plan] (incorporated by reference to Exhibit [removed: 10.2] [added: 10.1] to the Company’s Current Report on Form 8-K, filed on October 29, [removed: 2015).](http://www.sec.gov/Archives/edgar/data/10456/000119312515357002/d39629dex102.htm)] [added: 2015).](http://www.sec.gov/Archives/edgar/data/10456/000119312515357002/d39629dex101.htm)] | | |

| C [removed: 10.15] [added: 10.14] | | | [Baxter International Inc. [removed: 2017] [added: 2020] Equity Plan, effective as of March [removed: 2, 2017] [added: 16, 2020] (incorporated by reference to Exhibit [removed: 10.2] [added: 10.22] to the Company’s [removed: Current] [added: Annual] Report on Form [removed: 8-K,] [added: 10-K,] filed on March [removed: 3, 2017).](http://www.sec.gov/Archives/edgar/data/10456/000119312517068798/d344320dex102.htm)] [added: 17, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020003693/bax-20191231xexx1022.htm)] | | |

| C [removed: 10.16] [added: 10.31] | | | [removed: [Baxter] [added: [First Amendment to the Baxter] International Inc. [removed: 2020 Equity Plan, effective as of March 16, 2020] [added: and Subsidiaries Pension Plan] (incorporated by reference to Exhibit [removed: 10.22] [added: 10.34] to 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-20191231xexx1022.htm)] [added: 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020003693/bax-20191231xexx1034.htm)] | | |

| C [removed: 10.17] [added: 10.25] | | | [Baxter International Inc. [removed: 2021 Incentive] [added: Employee Stock Purchase] Plan [added: (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 [removed: 22, 2021).](https://www.sec.gov/Archives/edgar/data/10456/000119312521089604/d30485ddef14a.htm#toc30485_53)] [added: 18, 2011).](http://www.sec.gov/Archives/edgar/data/10456/000095012311026923/c62262ddef14a.htm)] | | |

| C [removed: 10.18*] [added: 10.19] | | | [Baxter International Inc. Directors’ Deferred Compensation Plan (amended and restated effective 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: 10.19] [added: 10.23] | | | [Offer [removed: Letter] [added: Letter,] between Baxter International Inc. and [removed: José E. Almeida,] [added: Giuseppe Accogli,] dated [removed: as of October 28, 2015] [added: November 29, 2021] (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on [removed: October 29, 2015).](http://www.sec.gov/Archives/edgar/data/10456/000119312515357002/d39629dex101.htm)] [added: November 30, 2021).](https://www.sec.gov/Archives/edgar/data/10456/000119312521342946/d246996dex101.htm)] | | |

| C [removed: 10.20] [added: 10.21] | | | [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: 10.21] [added: 10.22] | | | [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: 10.22] [added: 10.41] | | | [removed: [Offer Letter, between Baxter] [added: [Baxter] International Inc. [removed: and Giuseppe Accogli, dated] [added: Executive Severance Plan, effective] November [removed: 29, 2021] [added: 16, 2020] (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on November [removed: 30, 2021).](https://www.sec.gov/Archives/edgar/data/10456/000119312521342946/d246996dex101.htm)] [added: 20, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020016670/exhibit101-baxterexecu.htm)] | | |

| C [removed: 10.23] [added: 10.24] | | | [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: 10.24] [added: 10.34] | | | [Baxter International Inc. [removed: Employee Stock Purchase] [added: and Subsidiaries Supplemental Pension] Plan [removed: (as amended] [added: (Amended] and [removed: restated] [added: Restated] effective [removed: July 1, 2011)] [added: January 5, 2018)] (incorporated by reference to [removed: Appendix A] [added: Exhibit 10.3] to the Company’s [removed: Definitive Proxy Statement] [added: Current Report] on [removed: Schedule 14A,] [added: Form 8-K,] filed on [removed: March 18, 2011).](http://www.sec.gov/Archives/edgar/data/10456/000095012311026923/c62262ddef14a.htm)] [added: January 8, 2018).](http://www.sec.gov/Archives/edgar/data/10456/000119312518005221/d520610dex103.htm)] | | |

| C [removed: 10.25] [added: 10.26] | | | [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: 10.26] [added: 10.35] | | | [Baxter International Inc. [removed: Non-Employee Director] [added: and Subsidiaries Deferred] Compensation Plan [removed: (as amended] [added: (As Amended] and [removed: restated] [added: Restated] effective [removed: July] [added: January] 1, 2021) (incorporated by reference to Exhibit [removed: 10.4] [added: 10.31] to the Company's [removed: Quarterly] [added: Annual] Report on Form [removed: 10-Q,] [added: 10-K,] filed on [removed: October 28, 2021).](https://www.sec.gov/Archives/edgar/data/10456/000162828021020692/bax-093021xex104.htm)] [added: February 11, 2021).](https://www.sec.gov/Archives/edgar/data/10456/000162828021001867/bax-20201231xexx1031.htm)] | | |

| C [removed: 10.27] [added: 10.28] | | | [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: 10.28R] [added: 10.29R] | | | [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: 10.29] [added: 10.33] | | | [Baxter International Inc. and Subsidiaries Pension Plan [added: II] (Amended and Restated effective January [removed: 5, 2018)] [added: 1, 2019)] (incorporated by reference to Exhibit [removed: 10.1] [added: 10.36] to the Company’s [removed: Current] [added: Annual] Report on Form [removed: 8-K,] [added: 10-K,] filed on [removed: January 8, 2018).](http://www.sec.gov/Archives/edgar/data/10456/000119312518005221/d520610dex101.htm)] [added: March 17, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020003693/bax-20191231xexx1036.htm)] | | |

| C [removed: 10.30] [added: 10.32] | | | [removed: [First] [added: [Second] Amendment to the Baxter International Inc. and Subsidiaries Pension Plan (incorporated by reference to Exhibit [removed: 10.34] [added: 10.35] to 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-20191231xexx1034.htm)] [added: 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020003693/bax-20191231xexx1035.htm)] | | |

| C [removed: 10.31] [added: 10.36] | | | [removed: [Second Amendment to the Baxter] [added: [Baxter] International Inc. [removed: and Subsidiaries Pension Plan] [added: Management Incentive Compensation Program – 2020 Program Document] (incorporated by reference to Exhibit [removed: 10.35] [added: 10.1] to the Company’s [removed: Annual] [added: Quarterly] Report on Form [removed: 10-K,] [added: 10-Q,] filed on [removed: March 17, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020003693/bax-20191231xexx1035.htm)] [added: July 30, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020010911/bax-20200630xex101.htm)] | | |

| C [removed: 10.34] [added: 10.27*] | | | [Baxter International Inc. [removed: and Subsidiaries Deferred] [added: Non-Employee Director] Compensation Plan [removed: (As Amended] [added: (as amended] and [removed: Restated] [added: restated] effective January 1, [removed: 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 to](https://www.sec.gov/Archives/edgar/data/10456/000162828021001867/bax-20201231xexx1031.htm) [Exhibit 10.31 to the Company's Annual Report 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 February 11, 2021).](https://www.sec.gov/Archives/edgar/data/10456/000162828021001867/bax-20201231xexx1031.htm)] [added: 2023.](https://www.sec.gov/Archives/edgar/data/10456/000162828023002864/bax-20221231xexx1027.htm)] | | |

| C [removed: 10.35] [added: 10.18] | | | [removed: [Baxter] [added: [Form of Stock Option Grant Agreement under Baxter] International Inc. [removed: Management] [added: 2021] Incentive [removed: Compensation Program – 2020 Program Document] [added: Plan] (incorporated by reference to Exhibit [removed: 10.1] [added: 10.3] to the [removed: Company’s] [added: Company's] Quarterly Report on Form 10-Q, filed on [removed: July 30, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020010911/bax-20200630xex101.htm)] [added: April 28, 2022).](https://www.sec.gov/Archives/edgar/data/10456/000162828022010922/bax-20220331xex103.htm)] | | |

| C [removed: 10.36] [added: 10.37] | | | [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: 10.37] [added: 10.38] | | | [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: 10.38] [added: 10.39] | | | [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: 10.39] [added: 10.40] | | | [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: 10.40] [added: 10.17] | | | [removed: [Baxter] [added: [Form of Restricted Stock Unit Grant Agreement under Baxter] International Inc. [removed: Executive Severance Plan, effective November 16, 2020] [added: 2021 Incentive Plan] (incorporated by reference to Exhibit [removed: 10.1] [added: 10.2] to the [removed: Company’s Current] [added: Company's Quarterly] Report on Form [removed: 8-K,] [added: 10-Q,] filed on [removed: November 20, 2020).](https://www.sec.gov/Archives/edgar/data/10456/000162828020016670/exhibit101-baxterexecu.htm)] [added: April 28, 2022).](https://www.sec.gov/Archives/edgar/data/10456/000162828022010922/bax-20220331xex102.htm)] | | |

| 21* | | | [Subsidiaries of Baxter International [removed: Inc.](https://www.sec.gov/Archives/edgar/data/10456/000162828022003432/bax-20211231xexx21.htm)] [added: Inc.](https://www.sec.gov/Archives/edgar/data/10456/000162828023002864/bax-20221231xexx21.htm)] | | |

| 23* | | | [Consent of PricewaterhouseCoopers [removed: LLP.](https://www.sec.gov/Archives/edgar/data/10456/000162828022003432/bax-20211231xexx23.htm)] [added: LLP.](https://www.sec.gov/Archives/edgar/data/10456/000162828023002864/bax-20221231xexx23.htm)] | | |

| 31.1* | | | [Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as [removed: amended.](https://www.sec.gov/Archives/edgar/data/10456/000162828022003432/bax-20211231xexx311.htm)] [added: amended.](https://www.sec.gov/Archives/edgar/data/10456/000162828023002864/bax-20221231xexx311.htm)] | | |

| 4.17 | | | [Indenture, dated July 29, 2021, between Baxter International Inc. and U.S. Bank Trust Company, National Association, as successor in interest of U.S. Bank National Association, as trustee for the debt securities (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form S-3ASR, filed on April 28, 2022).](https://www.sec.gov/Archives/edgar/data/10456/000119312522125536/d310531dex41.htm) | | |

| 4.18 | | | [First Amendment, dated as of September 28, 2022, to the Credit Agreement, dated as of September 30, 2021, among Baxter International Inc., as Borrower, JPMorgan Chase Bank, National Association, as Administrative Agent and certain other financial institutions named therein (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on September 30, 2022).](https://www.sec.gov/Archives/edgar/data/10456/000119312522255523/d378856dex101.htm) | | |

| 4.19 | | | [Second Amendment, dated as of September 28, 2022, to the Credit Agreement, dated as of September 30, 2021, as amended by the First Amendment, dated as of September 28, 2022, amount Baxter International Inc., as Borrower, JPMorgan Chase Bank, National Association, as Administrative Agent and certain other financial institutions named therein (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, filed on September 30, 2022).](https://www.sec.gov/Archives/edgar/data/10456/000119312522255523/d378856dex102.htm) | | |

| 4.20 | | | [First Amendment, dated as of September 28, 2022, to the Five-Year Credit Agreement, dated as of September 30, 2021, among Baxter International Inc., as Borrower, JPMorgan Chase Bank, National Association, as Administrative Agent and certain other financial institutions named therein (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K, filed on September 30, 2022).](https://www.sec.gov/Archives/edgar/data/10456/000119312522255523/d378856dex103.htm) | | |

| 4.21 | | | [Second Amendment, dated as of September 28, 2022, to the Five-Year Credit Agreement, dated as of September 30, 2021, among Baxter International Inc., as Borrower, JPMorgan Chase Bank, National Association, as Administrative Agent and certain other financial institutions named therein (incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K, filed on September 30, 2022).](https://www.sec.gov/Archives/edgar/data/10456/000119312522255523/d378856dex104.htm) | | |

| 4.22 | | | [Second Amendment, dated as of September 28, 2022, to the Credit Agreement, dated as of December 20, 2019, as amended by the First Amendment, dated as of October 1, 2021, among Baxter Healthcare SA and Baxter World Trade SRL, as Borrowers, JPMorgan SE, as Administrative Agent and certain other financial institutions named therein (incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K, filed on September 30, 2022).](https://www.sec.gov/Archives/edgar/data/10456/000119312522255523/d378856dex105.htm) | | |

| C 10.16 | | | [Form of Performance Stock Unit Grant Agreement under Baxter International Inc. 2021 Incentive Plan](https://www.sec.gov/Archives/edgar/data/10456/000162828022010922/bax-20220331xex101.htm) [(incorporated by refere](https://www.sec.gov/Archives/edgar/data/10456/000162828022010922/bax-20220331xex101.htm)[nce to Exhibit 10.1 to t](https://www.sec.gov/Archives/edgar/data/10456/000162828022010922/bax-20220331xex101.htm)[he Company's Quarterly Rep](https://www.sec.gov/Archives/edgar/data/10456/000162828022010922/bax-20220331xex101.htm)[ort on Form 10-Q, filed on April](https://www.sec.gov/Archives/edgar/data/10456/000162828022010922/bax-20220331xex101.htm) [28, 2022).](https://www.sec.gov/Archives/edgar/data/10456/000162828022010922/bax-20220331xex101.htm) | | |

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| /s/ Brent Shafer | | | | | | Director | | |

| Brent Shafer | | | | | | | | |

| Peter M. Wilver | | | | | | | | |

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

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| /s/ John D. Forsyth | | | | | | Director | | |

| John D. Forsyth | | | | | | | | |

| Peter S. Hellman | | | | | | | | |

| /s/ Thomas T. Stallkamp | | | | | | Director | | |

| Thomas T. Stallkamp | | | | | | | | |