Baxter International Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Worldwide sales totaled $2.98 billion in Q3 2026, a 5% increase on both a reported and organic basis compared to the prior year.
• U.S. GAAP net income was $298 million, or $0.57 per diluted share, compared to a net loss of $51 million, or $(0.10) per diluted share, in Q3 2025.
• Adjusted diluted EPS was $0.58, a 16% decrease year-over-year, primarily due to a higher effective tax rate.
• Free cash flow was $448 million in Q3 2026, with year-to-date free cash flow totaling $705 million.
• Gross margin was 33.4% of net sales in Q3 2026, compared to 33.5% in the prior year period.
• Operating income was $225 million (7.6% of sales) in Q3 2026, up from $172 million (6.1% of sales) in Q3 2025.
• The company completed a $600 million cash tender offer in Q3, retiring $864 million of debt to accelerate deleveraging.

Guidance and Future Outlook:

• The company raised its full-year 2026 reported sales growth guidance from 3%–4% to 4%–5%.
• Full-year 2026 organic sales growth guidance was raised from 2%–3% to 3%–4%.
• Full-year 2026 adjusted diluted EPS guidance was raised to $2.05–$2.15 from a previous range of $1.95–$2.15.

Business Segments and Product Lines:

• Medical Products & Therapies sales reached $2.1 billion, up 6% on both a reported and organic basis.
• Infusion Therapies & Platforms division drove growth in Medical Products & Therapies, specifically through Infusion Systems, Drug Compounding, and IV Solutions.
• Advanced Surgery products contributed to growth within the Medical Products & Therapies segment.
• Sales within the Injectables division were reduced, partially offsetting growth in other areas.
• Healthcare Systems & Technologies sales totaled $806 million, up 4% on both a reported and organic basis.
• Growth in Healthcare Systems & Technologies was driven by Care & Connectivity Solutions, specifically Global Surgical Solutions and Patient Support Systems, as well as Front Line Care.

Market and Competitive Landscape:

• The company reported growth across all segments and divisions globally.
• International sales totaled $1.4 billion, increasing 7% on a reported basis and 6% on an organic basis.
• U.S. sales totaled $1.6 billion, increasing 3% on a reported basis and 5% on an organic basis.

Risks and Challenges:

• The company faces risks related to product quality, including a previously issued U.S. FDA Warning Letter and issues with the Novum IQ large volume pump.
• Significant indebtedness requires substantial cash flow for debt service, constraining the ability to pursue growth strategies and advance R&D.
• The company is exposed to global economic conditions, inflation, tariffs, trade policies, and geopolitical events such as the Iran conflict.
• Supply chain disruptions, manufacturing difficulties, and raw material availability remain potential risks.
• The company decreased its quarterly dividend to $0.01 per share and cannot guarantee future increases or continuation of dividends.
• Regulatory risks include evolving laws regarding privacy, AI, cybersecurity, and medical device regulations in the EU and other jurisdictions.

Management Commentary and Tone:

• Andrew Hider, President and CEO, stated the company delivered a strong third quarter with growth across all segments and divisions globally.
• Management expressed confidence in stabilizing the business, strengthening the balance sheet, and driving continuous improvement.
• The tone emphasized building a stronger foundation for sustainable growth and long-term value creation.

Other Key Points:

• The former Kidney Care business is reported as discontinued operations; sales to Vantive Health LLC pursuant to the Kidney Care Manufacturing and Supply Agreement are included in "Other" sales.
• Segment reporting structure was updated in Q2 2026 to align with the operating model, with prior periods recast for comparability.
• The Pharmaceuticals segment is now reported within the Infusion Therapies & Platforms division of the Medical Products & Therapies segment.
• A conference call was held on October 29, 2026, to discuss results and business updates.
• The company is scheduled to present at the J.P. Morgan Healthcare Conference in January 2027.