Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Refer to our Annual Report on Form 10-K for the year ended December 31, 2025 (2025 Annual Report) for management’s discussion and analysis of our financial condition and results of operations. The following is management’s discussion and analysis of our financial condition and results of operations for the three months ended March 31, 2026 and 2025.

COMPLETED STRATEGIC ACTION; ONGOING BUSINESS TRANSFORMATION

On January 31, 2025, we completed the sale of our former Kidney Care segment (which is now known as Vantive Health LLC (Vantive)) to certain affiliates of Carlyle Group Inc. (Carlyle) and ultimately received approximately $3.2 billion of after-tax cash proceeds that were used to repay short- and long-term legacy indebtedness in 2025.

We have incurred and expect to incur additional dis-synergies following our sale of our Kidney Care business due to the reduced size of our company and, as a result, we have undertaken certain restructuring actions (and intend to undertake additional actions) to help ensure our cost structuring is appropriate to support our remaining business. See Note 10 of this Quarterly Report on Form 10-Q for additional information.

Additionally, we continue to evolve our operating model to better align decision-making, cost structure, and commercial execution across our businesses. As part of this work, we continue to focus on increasing efficiencies through increased automation and digitization (including through our thoughtful exploration of artificial intelligence initiatives). Beginning in October 2025, we launched Baxter Growth and Performance system, our high performance business system grounded in continuous improvement and management by objectives.

FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Novum IQ Large Volume Pump (Novum LVP)

During 2025, we initiated voluntary corrections for the Novum LVP. The U.S. Food and Drug Administration (FDA) classified these voluntary corrections as Class I recalls. We have implemented certain corrections related to the recalls, and are developing additional corrections related to these recalls, some of which may require regulatory clearance or approval. In July 2025, we elected to temporarily stop distributing and installing the Novum LVP in the U.S. and Canada, except in the case of medical necessity. The timing of the release of the ship and installation hold remains uncertain. As a result, we expect no meaningful sales of Novum LVP while these holds are in effect. Our Spectrum IQ large volume pump remains available as an alternative option for customers with Novum LVPs. In 2025, we recorded estimates for sales reductions, for returns or exchanges of Novum LVP, and certain other charges, including estimates of reserves for remediation costs and inventory and contract asset write-downs associated with these Novum LVP corrections. We regularly review these estimates (including those associated with any future additional corrections and customer returns or exchanges), which may be subject to additional change in the future. In the first quarter of 2026, we adjusted certain estimates associated with these Novum LVP corrections that were not material to our condensed consolidated financial statements.

Supply Constraints, Tariffs and Global Economic Conditions

We have experienced challenges to our global supply chain, including, as a result of adverse impacts from significant weather events like Hurricane Helene and other global macroeconomic and geopolitical events, which have had a negative impact on our results of operations and may do so in the future. In addition, announcements regarding changes in U.S. trade policies and practices, including the implementation of global tariffs and proposed further tariffs (including potential medical device and pharmaceutical tariffs), the Supreme Court's decision to invalidate tariffs levied under the International Emergency Economic Powers Act, and responses from other jurisdictions, have significantly affected financial markets and economic conditions. While in the second quarter of 2026 we submitted refund requests for those tariff amounts eligible for refund in the first phase of the process and expect to submit additional refund requests in future phases subject to further rulings by the Court of International Trade, uncertainty remains surrounding the economic impact of the global tariffs and the timing and quantum of any amounts we may ultimately recover on our refund claims, and therefore, we have not recorded an asset for tariff refunds in our condensed consolidated financial statements as of March 31, 2026. We currently expect that our results will continue to be adversely impacted by Section 122 duties that were imposed following the judicial review of certain tariffs. Additionally, continued global macroeconomic uncertainty, including in trade policies and practices, elevated tariffs and operational and policy changes in the governments of the U.S. and other countries and other geopolitical events or conflicts (including the conflict in Iran and the potential for escalation of this and other conflicts), could contribute to further

market volatility, deteriorating or prolonged weakened economic conditions and decreased hospital capital spending levels. We continue to closely monitor these developing situations and the estimated impact on our business, results of operations, financial condition and cash flows.

Over the past few years, the existence of high inflation rates in the United States and in many of the countries where we conduct business has resulted in, and may in the future result in, higher interest rates, shipping costs, labor costs, and other costs and expenses. Additionally, adverse changes in foreign currency exchange rates have increased, and could continue to increase, our costs of sourcing certain raw materials in some jurisdictions. We have experienced and are likely in the future to experience inflationary and other increases in manufacturing costs and operating expenses (including as a result of the aforementioned tariffs) and are limited in our ability to pass these cost increases on to our customers in a timely manner or at all due to the longer term nature of our customer contracts and arrangements, 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.

For further discussion, please refer to Item 1A, Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

NON-GAAP FINANCIAL MEASURES

Our presentation of percentage changes in net sales at organic sales growth excludes the impact of the Kidney Care MSA sales not reflected in reportable segments, impacts associated with business acquisitions or divestitures, and is calculated at constant currency rates. Constant currency rates are computed using current period local currency sales at the prior period’s foreign exchange rates. Organic sales growth is a non-GAAP financial measure. This measure provides information about growth (or declines) in our net sales as if the Kidney Care MSA had no impact on our sales and foreign currency exchange rates had not changed between the prior period and the current period. We believe that the non-GAAP measure of percent change in net sales at organic sales growth, when used in conjunction with the U.S. GAAP measure of percent change in net sales at actual rates, may provide a more complete understanding and facilitate a fuller analysis of our results of operations, particularly in evaluating performance from one period to another.

RESULTS OF OPERATIONS

Net income (loss) attributable to Baxter stockholders for the three months ended March 31, 2026 was $(15) million, or $(0.03) per diluted share, compared to $126 million, or $0.25 per diluted share for the three months ended March 31, 2025. For the three months ended March 31, 2026, our results included special items that adversely impacted net income (loss) attributable to Baxter stockholders by $205 million, or $0.40 per diluted share. For the three months ended March 31, 2025, our results included special items that adversely impacted net income (loss) attributable to Baxter stockholders by $194 million, or $0.37 per diluted share.

Net income (loss) from continuing operations for the three months ended March 31, 2026 was $(17) million, or $(0.03) per diluted share, compared to $64 million, or $0.13 per diluted share for the three months ended March 31, 2025. Net income (loss) from continuing operations for the three months ended March 31, 2026 included special items that adversely impacted net income (loss) by $205 million, or $0.39 per diluted share. Net income (loss) from continuing operations for the three months ended March 31, 2025 included special items that adversely impacted net income (loss) by $221 million, or $0.42 per diluted share.

See the subsection entitled “Special Items” for information about special items for all periods presented.

CONSOLIDATED NET SALES

			Three Months Ended March 31,									Percent change
(in millions)			2026			2025						At actual rates			At organic sales growth 1
United States			$	1,435		$	1,490					(4)		%	(4)		%
International			1,266			1,135						12		%	3		%
Total net sales			$	2,701		$	2,625					3		%	(1)		%

1 Percent change in net sales at organic sales growth is a non-GAAP financial measure. See the section entitled “Non-GAAP Financial Measures” for additional information about our use of that measure.

In the first quarter of 2026, the Kidney Care MSA sales favorably impacted sales growth by 1%. Additionally, in the first quarter of 2026, foreign currency rates favorably impacted net sales growth by 3%, compared to the prior year period due to the strengthening of the U.S. Dollar relative to the Euro, Australian Dollar, British Pound and the Canadian Dollar.

NET SALES BY SEGMENT

Medical Products & Therapies

Our Medical Products & Therapies segment includes sales of our sterile IV solutions, infusion systems, administration sets, parenteral nutrition therapies and surgical hemostat, sealant, and adhesion prevention products.

			Three Months Ended March 31,									Percent change
(in millions)			2026			2025						At actual rates			At organic sales growth 1
Infusion Therapies & Technologies			$	981		$	994					(1)		%	(5)		%
Advanced Surgery			304			268						13		%	10		%
Total Medical Product & Therapies net sales			$	1,285		$	1,262					2		%	(2)		%

1 Percent change in net sales at organic sales growth is a non-GAAP financial measure. See the section entitled “Non-GAAP Financial Measures” for additional information about our use of that measure.

Medical Product & Therapies segment net sales increased 2% in the first quarter of 2026, as compared to the prior year period.

Infusion Therapies & Technologies net sales decreased 1% in the first quarter of 2026, as compared to the prior year period. The decline in the first quarter was primarily due to lower Novum LVP pump sales as a result of the voluntary shipment and implementation hold. Sales volumes were further impacted by a strong prior year comparison in U.S. IV solutions businesses, during which we experienced strong sales due to a one-time distributor build following Hurricane Helene. Foreign exchange rates favorably impacted sales growth by 4% for the first quarter of 2026, as compared to the prior year period. As previously discussed in "Factors Affecting our Results of Operations", we elected to temporarily stop distributing and installing the Novum LVP in the U.S. and Canada, except in the case of medical necessity. As a result, we expect no meaningful sales of Novum LVP while these holds are in effect. Our Spectrum IQ large volume pump remains available as an alternative option for customers with Novum LVPs.

Advanced Surgery net sales increased 13% in the first quarter of 2026, as compared to the prior year period. Sales performance was primarily driven by growth in hemostats and sealants and was primarily attributable to increased sales volume globally. Foreign currency exchange rates favorably impacted sales growth by 3% for the first quarter of 2026, as compared to the prior year period.

Healthcare Systems & Technologies

Our Healthcare Systems & Technologies segment includes sales of our connected care solutions and collaboration tools, including smart bed systems, patient monitoring systems and diagnostic technologies, respiratory health devices, and advanced equipment for the surgical space, including operating room integration technologies, precision positioning devices, and other accessories.

			Three Months Ended March 31,									Percent change
(in millions)			2026			2025						At actual rates			At organic sales growth 1
Care & Connectivity Solutions			$	435		$	427					2		%	—		%
Front Line Care			270			277						(3)		%	(4)		%
Total Healthcare Systems & Technologies net sales			$	705		$	704					—		%	(2)		%

1 Percent change in net sales at organic sales growth is a non-GAAP financial measure. See the section entitled “Non-GAAP Financial Measures” for additional information about our use of that measure.

Healthcare Systems & Technologies segment net sales were flat in the first quarter of 2026, as compared to the prior year period.

Care & Connectivity Solutions net sales increased 2% in the first quarter of 2026, as compared to the prior year period. Sales performance was primarily driven by increased volume associated with increased capital spending by customers in the U.S. for patient support systems, offset by lower installations in our care communications portfolio. Foreign currency exchange rates favorably impacted sales growth by 2% for the first quarter of 2026, as compared to the prior year period.

Front Line Care net sales decreased 3% in the first quarter of 2026, as compared to the prior year period. The decline in the first quarter was primarily impacted by the timing of orders and the impact of planned global portfolio exits. Foreign currency exchange rates favorably impacted sales growth by 1% for the first quarter of 2026, as compared to the prior year period.

Pharmaceuticals

Our Pharmaceuticals segment includes sales of specialty injectable pharmaceuticals, inhaled anesthesia and drug compounding.

			Three Months Ended March 31,									Percent change
(in millions)			2026			2025						At actual rates			At organic sales growth 1
Injectables & Anesthesia			$	301		$	335					(10)		%	(13)		%
Drug Compounding			320			246						30		%	20		%
Total Pharmaceuticals net sales			$	621		$	581					7		%	1		%

1 Percent change in net sales at organic growth rates is a non-GAAP financial measure. See the section entitled “Non-GAAP Financial Measures” for additional information about our use of that measure.

Pharmaceuticals segment net sales increased 7% in the first quarter of 2026, as compared to the prior year period.

Injectables & Anesthesia net sales decreased 10% in the first quarter of 2026, as compared to the prior year period. The sales decline in the first quarter was primarily driven by supply constraints in the U.S. and international markets and softness in certain premix products in our injectables portfolio and lower demand in anesthesia globally. Foreign exchange favorably impacted sales growth by 3% for the first quarter, as compared to the prior year period.

Drug Compounding net sales increased 30% in the first quarter of 2026, as compared to the prior year period. Sales performance was primarily driven by increased demand for our international pharmacy compounding offerings. Foreign currency exchange rates favorably impacted sales growth by 10% for the first quarter of 2026, as compared to the prior year period.

Other

During the three months ended March 31, 2026 and 2025, we earned $90 million and $78 million, respectively, of revenues that were not attributable to our reportable segments. The increase in Other sales for the three months ended March 31, 2026 as compared to the prior year period reflects the impact of the Kidney Care MSA entered into upon the sale of our Kidney Care business in January 2025.

COSTS AND EXPENSES

Special Items

The following table provides a summary of our special items from continuing operations and the related impact by line item on our results for the three months ended March 31, 2026 and 2025.

			Three Months Ended March 31,
(in millions)			2026			2025
Gross Margin
Intangible asset amortization expense			$	(95)		$	(104)
Business optimization items1			(11)			(13)
European medical devices regulation2			(4)			(5)
Product-related items3			12			(6)
Business transformation4			(1)			—
Hurricane Helene costs5			(3)			(98)
Legal matters6			—			(11)
Total Special Items			$	(102)		$	(237)
Impact on Gross Margin Ratio			(3.8)		pts	(9.0)		pts
Selling, General and Administrative (SG&A) Expenses
Intangible asset amortization expense			$	51		$	51
Business optimization items1			42			30
Acquisition and integration items7			—			1
Separation-related costs8			11			$	13
Business transformation4			10			—
Total Special Items			$	114		$	95
Impact on SG&A Ratio			4.3		pts	3.6		pts
Research and Development (R&D) Expenses
Business optimization items1			$	15		$	2
Total Special Items			$	15		$	2
Impact on R&D Ratio			0.5		pts	0.0 pts
Other (Income) Expense, net
Investment impairments9			$	5		$	9
Acquisition and integration items7			—			5
Total Special Items			$	5		$	14
Income Tax Expense
Tax matters10			$	26		$	(43)
Tax effects of special items11			(57)			(84)
Total Special Items			$	(31)		$	(127)
Impact on Effective Tax Rate			(201.6)		pts	2,215.9		pts

1Our results for the first quarter of 2026 and 2025 included business optimization charges of $68 million and $45 million, respectively. These restructuring and business optimization costs in 2026 and 2025 included costs primarily related to initiatives to reduce our cost structure following the sale of our former Kidney Care segment. Refer to Note 10 in Item 1 of this Quarterly Report on Form 10-Q for further information regarding these charges and related liabilities.

2Our results for the first quarter of 2026 and 2025 included $4 million and $5 million, respectively, of incremental costs to comply with the European Union's medical device regulations for previously registered products, which primarily consist of contractor costs and other direct third-party costs. We consider the adoption of these regulations to be a significant one-time regulatory change and believe that the costs of initial compliance for previously registered products over the implementation period are not indicative of our core operating results.

3Our results for the first quarter of 2026 included a benefit of $12 million related to a revised estimate of warranty and remediation activities from field corrective actions across our infusion pump category initially recorded in 2025. Our results for the first quarter of 2025 included charges of $6 million related to a revised estimate of warranty and remediation activities arising from a field corrective action on certain of our infusion pumps initially recorded in 2022.

4Our results in the first quarter of 2026 included charges of $11 million related to business transformation costs which include expenses incurred in connection with discrete, newly launched enterprise‑wide initiatives to modernize and simplify systems, redesign operating models, and enhance process efficiency and digital capabilities. These costs are distinct from restructuring‑related charges (which are included in footnote 1 above as Business Optimization items) and are excluded to provide investors with greater comparability of underlying operating performance.

5Our results in the first quarter of 2026 and 2025 included charges of $3 million and $98 million, respectively, related to damages caused by Hurricane Helene which consisted of remediation, air freight and other costs.

6Our results in the first quarter of 2025 included charges of $11 million related to matters involving alleged injury from environmental exposure.

7Our results for the first quarter of 2025 included $6 million of integration costs which primarily reflected the recognition of a non-cash impairment of properly, plant and equipment related to integration activities.

8Our results for the first quarter of 2026 and 2025 included $11 million and $13 million, respectively, of separation-related costs primarily reflecting costs of external advisors supporting our activities related to the sale of our former Kidney Care segment.

9Our results in the first quarter of 2026 and 2025 included $5 million and $9 million, respectively, related to losses from non-cash impairment write-downs of investments.

10Our results in the first quarter of 2026 included $26 million of income tax expense primarily related to an increase in interest related to uncertain tax positions and differences arising from the use of a forecasted effective tax rate to compute income tax expense during the quarter. Our results in the first quarter of 2025, included $43 million of income tax benefit driven by an entity classification election that we made for U.S. tax purposes, which resulted in a capital loss.

11This item reflects the income tax impact of the special items identified in this table. The tax effect of each special item is based on the jurisdiction in which the item was incurred and the tax laws in effect for each such jurisdiction.

Gross Margin and Expense Ratios

			Three Months Ended March 31,
			2026			% of net sales			2025			% of net sales			$ change			% change
Gross margin			$	891		33.0		%	$	861		32.8		%	$	30		3.5		%
SG&A			$	728		27.0		%	$	703		26.8		%	$	25		3.6		%
R&D			$	139		5.1		%	$	140		5.3		%	$	(1)		(0.7)		%

Gross Margin

Our gross margin ratio was 33.0% and 32.8% for the three months ended March 31, 2026 and 2025, respectively. The special items identified earlier in this section had an unfavorable impact of approximately 3.8 and 9.0 percentage points on the gross margin ratio for the three months ended March 31, 2026 and 2025, respectively.

Excluding the impact of special items, the gross margin ratio decreased by 5.0 percentage points in the first quarter of 2026 compared to the prior year period. The lower gross margins were primarily driven by increased manufacturing and supply costs, tariffs and product mix.

SG&A

Our SG&A expenses ratio was 27.0% and 26.8% for the three months ended March 31, 2026 and 2025, respectively. The special items identified earlier in this section had an unfavorable impact of approximately 4.3 and 3.6 percentage points on the SG&A expenses ratio for the three months ended March 31, 2026 and 2025, respectively.

Excluding the impact of special items, the SG&A expenses ratio decreased by 0.5 percentage points in the first quarter of 2026 compared to the prior year period. The decrease primarily reflects lower headcount, partially offset by annual compensation increases.

R&D

Our R&D expenses ratio was 5.1% and 5.3% for each of the three months ended March 31, 2026 and 2025. The special items identified earlier in this section had an unfavorable impact of approximately 0.5 percentage points on the

R&D expenses ratio for the three months ended March 31, 2026 and no impact on the R&D expenses ratio for the three months ended March 31, 2025.

Excluding the impact of special items, the R&D expenses ratio decreased by 0.7 percentage points in the first quarter of 2026 compared to the prior year period primarily due to phasing of R&D spend which is expected to be consistent on a full year basis.

Business Optimization Items

In recent years, we have undertaken actions to transform our cost structure and enhance operational efficiency. These efforts have included restructuring the organization into verticalized segments, optimizing our manufacturing footprint, R&D operations, and supply chain network, employing disciplined cost management, and centralizing and streamlining certain support functions. The related costs of these actions consisted primarily of employee termination costs, implementation costs, contract termination costs, and asset impairments.

For the three months ended March 31, 2026, $58 million of the restructuring charges, consisting of employee termination costs, were related to initiatives to reduce our cost structure following the sale of our Kidney Care segment.

We currently expect to incur additional pre-tax costs, primarily related to the implementation of business optimization programs, of approximately $2 million through the completion of certain initiatives that are currently underway. We continue to pursue cost savings initiatives, including those intended to mitigate a portion of the dis-synergies that arose as a result of the sale of our Kidney Care business, and to the extent further cost savings opportunities are identified, we would incur additional restructuring charges and costs to implement business optimization programs in future periods. Refer to Note 10 in Item 1 of this Quarterly Report on Form 10-Q for additional information regarding our business optimization programs.

Other Operating Income, Net

Other operating income, net was $42 million and $40 million in the first quarter of 2026 and 2025, respectively, and these amounts were primarily related to the income recognized under the Kidney Care TSA entered into upon the sale of the Kidney Care business in January 2025.

Interest Expense, Net

Interest expense, net was $66 million and $64 million in the first quarter of 2026 and 2025, respectively. The slight increase in 2026 was driven by higher interest expense on senior notes issued in the fourth quarter of 2025 partially offset by debt repayments in the first three months of 2025.

Other (Income) Expense, net

Other (income) expense, net was expense of $6 and income of $3 million in the first quarter of 2026 and 2025, respectively. In the current year period, the decrease in other (income) expense, net was primarily driven pension and other postretirement benefits and foreign exchange losses.

Income Taxes

Our effective income tax rate can differ from the 21% U.S. federal statutory rate due to a number of factors, including foreign rate differences, tax incentives, non-deductible expenses, non-taxable income, increases or decreases in valuation allowances, increases or decreases in liabilities for uncertain tax positions, and excess tax benefits or shortfalls on stock compensation awards.

For the three months ended March 31, 2026, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily driven by our near break-even pre-tax results and increases to our valuation allowance on U.S. deferred tax assets. The quarter also reflects income tax recorded related to tax shortfalls on stock compensation awards.

For the three months ended March 31, 2025, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily driven by our near break-even pre-tax income and a tax benefit driven by an entity classification election that we made for U.S. tax purposes, which resulted in a capital loss.

We are currently under examination by the Internal Revenue Service (IRS) for transfer pricing matters related to transactions with our manufacturing operations in Costa Rica and Puerto Rico for the 2019 and 2020 tax years. During the quarter, we received a Notice of Proposed Adjustment (NOPA) from the IRS covering the 2019 and 2020 tax years that is consistent with our existing and previously disclosed uncertain tax position reserves. We did not record further reserves in connection with the NOPA, other than interest that may be owed upon conclusion of the audit. While we believe that our transfer pricing positions are well documented and properly supported, and adequate amounts have been reserved to account for any adjustments that may ultimately result from this examination, the matter remains open for resolution. Additionally, if the IRS were to assert we owe additional taxes and prevails in this assertion, such outcome could have a material impact on our financial position, results of operations, and cash flows.

During 2025, because of a cumulative history of operating losses in the U.S., we recorded a valuation allowance against our U.S. deferred tax assets, including certain federal and state tax attributes such as foreign tax credits. Although we expect to remain in a U.S. valuation allowance position for at least the next 12 months, we also anticipate future changes in the amount of the valuation including during 2026, which could be material, due to operational activity and movement in our routine deferred tax assets and liabilities.

The Organization of Economic Co-operation and Development (OECD) reached agreement among over 140 countries to implement a minimum 15% tax rate on certain multinational enterprises, commonly referred to as Pillar Two. During the quarter, the OECD published administrative guidance proposing a Side-by-Side safe harbor, which may reduce the impact of Pillar Two for U.S. headquartered multinational corporations. We will monitor the implementation of the Side-by-Side safe harbor by individual jurisdictions, however we do not expect the impact of Pillar Two to be material in any case.

Discontinued Operations

On January 31, 2025, we completed the sale of our Kidney Care business and its results have been presented as discontinued operations for the three months ended March 31, 2026 and 2025. Income (loss) from discontinued operations, net of tax was $2 million in the first quarter of 2026, compared to $62 million in the first quarter of 2025.The decrease in the current year period was primarily driven by the gain on the sale of our Kidney Care business for the three months ended March 31, 2025. Refer to Note 2 within Item 1 for additional information.

SEGMENT OPERATING INCOME

The following is a summary of our operating income for our reportable segments.

			Three Months Ended March 31,
(in millions)			2026			2025
Medical Products & Therapies			$	186		$	244
% of Segment Net Sales			14.5		%	19.3		%
Healthcare Systems & Technologies			66			93
% of Segment Net Sales			9.4		%	13.2		%
Pharmaceuticals			46			63
% of Segment Net Sales			7.4		%	10.8		%
Total reportable segment operating income			298			400
Other			11			9
Unallocated corporate costs			(12)			(17)
Intangible asset amortization expense			(146)			(155)
Legal matters			—			(11)
Business optimization items			(68)			(45)
Acquisition and integration items			—			(1)
Separation-related costs			(11)			(13)
European Medical Devices Regulation			(4)			(5)
Product-related items			12			(6)
Business transformation			(11)			—
Hurricane Helene Costs			(3)			(98)
Total operating income			66			58
Interest expense, net			66			64
Other (income) expense, net			6			(3)
Income from continuing operations before income taxes			$	(6)		$	(3)

Medical Products & Therapies

Segment operating income was $186 million and $244 million in the first quarter of 2026 and 2025, respectively. The decrease in segment operating income in the first quarter compared to the prior year period was primarily driven by increased manufacturing and supply costs, tariffs and lower sales volumes.

Healthcare Systems & Technologies

Segment operating income was $66 million and $93 million in the first quarter of 2026 and 2025, respectively. Segment operating income decreased in the first quarter compared to the prior year period primarily due to increased manufacturing and supply costs, tariffs and lower sales volumes.

Pharmaceuticals

Segment operating income was $46 million and $63 million in the first quarter of 2026 and 2025, respectively. Segment operating income decreased in the first quarter compared to the prior year period primarily due to increased manufacturing and supply costs, price impacts resulting from increased competition and supply constraints which impacted select higher margin products.

Other

Other operating income, which represents operating income not attributable to our reportable segments, was $11 million and $9 million in the first quarter of 2026 and 2025, respectively. Other operating income increased in the first quarter compared to the prior year period primarily due to a longer period of income recognition in the current quarter.

In the prior year period, income from revenues earned under the Kidney Care MSA was recognized following the closing of the sale of the Kidney Care business on January 31, 2025, whereas income from revenues earned under the Kidney Care MSA was recognized for the full period in the current year.

Unallocated Corporate Costs

Under our operating model, most global functional support costs, overhead costs and other shared costs that benefit our segments are allocated to those segments. Corporate costs that are not allocated to our segments, as well as any differences between actual corporate costs and the amounts allocated to our segments, are presented as unallocated corporate costs. Additionally, intangible asset amortization and other special items are not allocated to our segments.

LIQUIDITY AND CAPITAL RESOURCES

The following table is a summary of the statement of cash flows for the three-month periods ended March 31, 2026 and 2025.

			Three Months Ended March 31,
(in millions)			2026						2025
Cash flows from (used in) operations - continuing operations			$	213					$	(99)
Cash flows from (used in) investing activities - continuing operations			(133)						$	(124)
Cash flows from (used in) financing activities			(11)						$	(3,226)

Cash Flows from Operations - Continuing Operations

For the three months ended March 31, 2026, operating cash flows from continuing operations were $213 million. For the three months ended March 31, 2025, operating cash flows used in continuing operations were $99 million. Operating cash flows from continuing operations in the current year period were favorably impacted by improved collections on accounts receivable and the extension of vendor payment terms.

Cash Flows from Investing Activities - Continuing Operations

For the three months ended March 31, 2026, cash used in investing activities from continuing operations primarily included capital expenditures of $137 million. For the three months ended March 31, 2025, cash used in investing activities from continuing operations primarily included capital expenditures of $122 million.

Cash Flows from Financing Activities

For the three months ended March 31, 2026, cash used in financing activities primarily included payments for tax shares withheld for stock issued under employee benefit plans. For the three months ended March 31, 2025, cash used in financing activities included debt repayments of $2.83 billion, a decrease in commercial paper borrowings of $300 million, and dividend payments of $87 million, partially offset by proceeds from stock issued under employee benefit plans of $10 million.

As authorized by our Board of Directors, we repurchase our stock depending upon our cash flows, net debt levels and market conditions. In July 2012, our Board of Directors authorized a share repurchase program and the related authorization was subsequently increased a number of times. We did not repurchase any shares under this authority in the first three months of 2026. We had $1.30 billion remaining available under this authorization as of March 31, 2026.

Credit Facilities, Commercial Paper Program and Access to Capital and Credit Ratings

Credit Facilities and Commercial Paper Program

As of March 31, 2026, we had a multicurrency revolving credit facility, as described below.

Our Multicurrency Revolver has a maximum capacity of $2.20 billion and matures in 2030. Borrowings under the Multicurrency Revolver in U.S. dollars bear interest on the principal amount outstanding at either Term SOFR plus an applicable margin or a “base rate” plus an applicable margin. The Multicurrency Revolver contains various covenants, including a maximum net leverage ratio. Borrowings in Euros are subject to a sublimit of $300 million. We may, at our option, seek to increase the aggregate commitment under the Multicurrency Revolver by up to $1.10 billion, which

would result in a maximum aggregate commitment of up to $3.30 billion. There were no borrowings outstanding under the Multicurrency Revolver as of March 31, 2026 or December 31, 2025. Our commercial paper borrowing arrangements require us to maintain undrawn borrowing capacity under the Multicurrency Revolver for an amount at least equal to our outstanding commercial paper borrowings.

As of March 31, 2026, we were in compliance with the financial covenant in the Multicurrency Revolver. Based on our covenant calculations as of March 31, 2026, we had capacity to draw $1.62 billion under the Multicurrency Revolver. The non-performance of any financial institution supporting the Multicurrency Revolver would reduce the maximum capacity thereunder by such institution’s respective commitment.

Access to Capital and Credit Ratings

We intend to fund short-term and long-term obligations as they mature through cash on hand, future cash flows from operations, or by issuing additional debt, which could include commercial paper. We had $2.02 billion of cash and cash equivalents as of March 31, 2026, with adequate cash available to meet operating requirements in each jurisdiction in which we operate. We invest our excess cash in money market and other funds and diversify the concentration of cash among different financial institutions. As of March 31, 2026, we had approximately $9.46 billion of long-term debt and finance lease obligations, including current maturities and short-term debt. Subject to market conditions, we regularly evaluate opportunities with respect to our capital structure (including with respect to the potential refinancing of our outstanding indebtedness).

Our ability to generate cash flows from operations, issue debt, including commercial paper, or enter into other financing arrangements on acceptable terms could be adversely affected if there is a material decline in the demand for our products or in the solvency of our customers or suppliers, deterioration in our credit ratings (as discussed below), or other significantly unfavorable changes in conditions (including if our key financial ratios do not show sustained improvement). However, we believe we have sufficient financial flexibility to issue additional debt, enter into other financing arrangements, and attract long-term capital on acceptable terms to support our growth objectives and reduce our debt levels as we take actions consistent with our capital allocation priorities.

Our credit ratings are subject to ongoing review by the rating agencies, and they consider a number of factors, including our financial strength, performance, prospects and operations as well as factors not under our control. The rating agencies could make adjustments to our ratings at any time, and they provide no assurances that they will maintain our ratings at current level. During the first quarter of 2026, Standard & Poor's and Moody's Ratings revised our outlook from Stable to Negative. There have been no other changes to our credit ratings that we disclosed in our 2025 Annual Report.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. A summary of our significant accounting policies is included in Note 1 to our consolidated financial statements in our 2025 Annual Report. Certain of our accounting policies are considered critical, as these policies are the most important to the depiction of our financial statements and require significant, difficult or complex judgments by us, often employing the use of estimates about the effects of matters that are inherently uncertain. Such policies are summarized in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section in our 2025 Annual Report.

Impairment of Goodwill and Other Long-Lived Assets

Front Line Care Reporting Unit

In connection with our November 1, 2025 annual goodwill impairment tests, we recorded a goodwill impairment

related to our Front Line Care reporting unit within our Healthcare Systems & Technologies segment to reduce the carrying value of the reporting unit to its fair value. While no triggering events were identified during the three months ended March 31, 2026, we are continuing to closely monitor the performance of this reporting unit (including in light of evolving global macroeconomic conditions and capital spending patterns), and if there is a significant adverse change in our outlook for this business in the future, a goodwill impairment could arise at that time. As of March 31, 2026, the carrying amount of goodwill for our Front Line Care reporting unit was $1.51 billion.

Welch Allyn Trade Name

In connection with our annual trade name impairment assessment in the fourth quarter of 2025, we recognized an impairment charge to reduce the carrying amount of the Welch Allyn trade name within our Healthcare Systems & Technologies segment, an indefinite-lived intangible asset, to its estimated fair value. While no triggering events were identified during the three months ended March 31, 2026, we are continuing to closely monitor the performance of this intangible asset (including in light of evolving global macroeconomic conditions and capital spending patterns), and if there is a significant adverse change in our outlook for this intangible asset in the future, an intangible asset impairment could arise at that time. As of March 31, 2026, the carrying amount of the Welch Allyn Trade Name was $390 million.

There have been no significant changes in the application of our critical accounting policies during the first three months of 2026.

RECENT ACCOUNTING PRONOUNCEMENTS

Recently issued accounting standards not yet adopted

In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of certain expenses on an interim and annual basis in the notes to the financial statements. This standard is effective for annual consolidated financial statements for the year ending December 31, 2027 and for interim periods beginning in 2028. We are currently evaluating the impact of this new standard on our consolidated financial statements.

LEGAL CONTINGENCIES

Refer to Note 6 within Item 1 for a discussion of our legal contingencies. Upon resolution of any of these uncertainties, we may incur charges in excess of presently established liabilities. While our liability in connection with certain claims cannot be estimated with any certainty, and although the resolution in any reporting period of one or more of these matters could have a significant impact on our results of operations and cash flows for that period, the outcome of these legal proceedings is not currently expected to have a material adverse effect on our consolidated financial position. While we believe that we have valid defenses in these matters, litigation is inherently uncertain, excessive verdicts do occur, and we may in the future incur material judgments or enter into material settlements of claims.

CERTAIN REGULATORY MATTERS

In July 2017, immediately prior to the closing of our acquisition of Claris Injectables Limited (Claris), FDA commenced an inspection of the Claris’ facilities in Ahmedabad, India. FDA completed the inspection and subsequently issued a Warning Letter based on observations identified in the 2017 inspection¹. FDA completed a re-inspection of the facilities in May 2022, which was subsequently classified as Voluntary Action Indicated (VAI). FDA performed an additional inspection of the facilities in January 2023. In April 2023, the site received an Official Action Indicated, or “OAI”, classification following FDA’s January 2023 inspection. In July 2023, FDA issued a Warning Letter to the site based on the observations from the agency’s January 2023 inspection (2023 Warning Letter)2. In June 2025, FDA performed another re-inspection of the site. On October 31, 2025, FDA classified the June 2025 inspection as VAI, indicating that the site is in acceptable compliance with FDA’s current Good Manufacturing Practice requirements. Based on the VAI reclassification, Baxter expects that the 2023 Warning Letter will be closed and no additional Warning Letters on the facilities will remain outstanding.

1 Available online at https://www.fda.gov/ICECI/EnforcementActions/WarningLetters/ucm613538.htm

2 Available online at https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/baxter-healthcare-corporation-654136-07252023

FORWARD-LOOKING INFORMATION

Certain statements contained in this quarterly report on Form 10-Q may constitute “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. These statements by their nature address matters that are

uncertain to different degrees. Use of the words “may,” “will,” “would,” “could,” “should,” “believes,” “estimates,” “projects,” “potential,” “expects,” “plans,” “seeks,” “intends,” “evaluates,” “pursues,” “anticipates,” “continues,” “designs,” “impacts,” “affects,” “forecasts,” “target,” “outlook,” “initiative,” “objective,” “designed,” “priorities,” “goal,” or the negative of those words or other similar expressions may identify forward-looking statements, although not all forward-looking statements contain such words.

These forward-looking statements are based on certain assumptions and analyses made in light of our experience and perception of historical trends, current conditions, and expected future developments as well as other factors that we believe are appropriate in the circumstances. While these statements represent our judgment on what the future may hold, and we believe these judgments are reasonable, these statements are not guarantees of any events or financial results. Whether actual future results and developments will conform to expectations and predictions is subject to a number of risks and uncertainties, including the following factors, many of which are beyond our control:

• We are exposed to risks as a result of our strategic actions;

• We may not achieve the anticipated benefits of our significant transactions, including the sale of our Kidney Care business and our acquisition of Hillrom;

• Our significant indebtedness requires us to use a substantial amount of our cash flow for debt service and constrains our ability to pursue growth strategies and advance our R&D capabilities;

• 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 business, results of operations, financial condition and cash flows;

• We may be unable to successfully introduce or monetize new and existing products or services or keep pace with changing consumer preferences and needs or advances in technology;

• We may not achieve our financial goals;

• We have experienced disruptions in our supply chain;

• Global economic conditions, including inflation, have adversely affected, and could continue to adversely affect, our operations;

• We may not be successful in achieving expected operating efficiencies and sustaining or improving operating expense reductions;

• Continued consolidation in the health care industry or additional governmental controls exerted over pricing and access in key markets could lead to increased demands for price concessions or limit or eliminate our ability to sell to certain of our significant market segments;

• Our operating results and financial condition have fluctuated and may in the future continue to fluctuate;

• Management transition creates uncertainties, and we may experience difficulties in managing such transitions, including attracting and retaining key employees;

• Changes in foreign currency exchange rates and interest rates have had, and may in the future have, an adverse effect on our results of operations, financial condition, cash flows, and liquidity;

• We are subject to risks associated with doing business globally, including changes in tariffs and trade policies and treaties (including with respect to the validity of previously issued tariffs and the availability of any related refunds) as well as the ongoing Iran conflict and other geopolitical events;

• Future material impairments in the value of our goodwill, intangible assets, and other long-lived assets would negatively affect our operating results;

• Segments of our business are significantly dependent on major contracts with group purchasing organizations, integrated delivery networks, and certain other distributors and purchasers;

• We may be unable to obtain sufficient components or raw materials on a timely basis or for a cost-effective price;

• We may experience manufacturing, sterilization, supply, or distribution difficulties;

• We have experienced and may continue to experience issues with quality management or product quality, including with respect to Novum LVP;

• We may experience breaches and breakdowns affecting our information technology systems or protected information, including from obsolescence, cyber security breaches and data leakage;

• We are exposed to risks associated with incorporating artificial intelligence (AI), machine learning and other emerging technologies into our products, services and operations;

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

• The effects of climate change, including legal, regulatory, or market measures related to climate change and other sustainability topics, could adversely affect our business, results of operations, financial condition, and cash flows;

• Our commitments, goals, activities, and disclosures related to sustainability and corporate responsibility matters, and the perception of our activities in these areas, may fail to satisfy the differing expectations of key stakeholders on these matters;

• We are subject to laws and regulations globally, and our failure to comply with rapidly changing and increasingly divergent expectations of regulators in different jurisdictions could adversely impact the company;

• If reimbursement or other payment for our current or future products is reduced or modified in the U.S. or in foreign countries, or there are changes to policies with respect to pricing, taxation, or rebates, our business could suffer;

• Increasing regulatory focus on, and expanding laws relating to, privacy, AI, and cybersecurity could impact our business and expose us to increased liability;

• We are party to a number of pending lawsuits and other disputes which may adversely impact us;

• 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 or enforce our patents or other proprietary rights, or if we become subject to claims or litigation alleging infringement of 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;

• Our Amended and Restated Bylaws could limit our stockholders’ ability to choose their preferred judicial forum for disputes with us or our directors, officers, or employees;

• We recently decreased our quarterly dividend to $0.01 per share and cannot guarantee that we will increase the amount of dividends we pay, or that we will not cease paying dividends;

• Our common stock price has fluctuated significantly and may continue to do so; and

• other factors discussed elsewhere in this report and other filings with the SEC, including those factors described in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, all of which are available on our website.

Actual results may differ materially from those projected in the forward-looking statements, which are more fully discussed in Item 1A. Risk Factors and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in our 2025 Annual Report. These forward-looking statements are not exclusive and are in addition to other factors discussed elsewhere in our 2025 Annual Report. Further, other unknown or unpredictable factors could also have material adverse effects on future results. Any forward-looking statement in this Quarterly Report on Form 10-Q speaks only as of the date on which it is made. Except as required by law, we assume no obligation, and expressly disclaim any obligation, to update or revise any forward-looking statements, whether as a result of new information or future events.