Third-Quarter 2017 Earnings Baxter International Inc. October 25, 2017
Safe Harbor Statement This presentation includes forward-looking statements concerning Baxter’s financial results, business development activities (including the recent acquisition of Claris Injectables in July 2017), capital structure, cost savings initiatives, R&D pipeline including results of clinical trials and planned product launches and outlook for 2017. The statements are based on assumptions about many important factors, including the following, which could cause actual results to differ materially from those in the forward-looking statements: demand for and market acceptance of risks for new and existing products, and the impact of those products on quality or patient safety concerns; product development risks; product quality or patient safety concerns; future actions of regulatory bodies and other governmental authorities, including FDA, the Department of Justice, the New York Attorney General and foreign regulatory agencies (including with respect to granting of temporary importation approvals); failures with respect to compliance programs; future actions of third parties, including payers; U.S. healthcare reform and other global austerity measures; pricing, reimbursement, taxation and rebate policies of government agencies and private payers; the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies; global, trade and tax policies; accurate identification of and execution on business development and R&D opportunities and realization of anticipated benefits (including the recent acquisition of Claris Injectables in July 2017); fluctuations in supply and demand (including as a result of natural disaster or otherwise); the availability of acceptable raw materials and component supply; the inability to create timely production capacity or other manufacturing supply difficulties; the ability to achieve the intended results associated with the separation of the biopharmaceutical and medical products businesses; the ability to enforce owned or in-licensed patents or the patents of third parties preventing or restricting manufacture, sale or use of affected products or technology; the impact of global economic conditions; fluctuations in foreign exchange and interest rates; any change in law concerning the taxation of income, including income earned outside the United States; actions taken by tax authorities in connection with ongoing tax audits; breaches or failures of the company’s information technology systems; loss of key employees or inability to identify and recruit new employees; the outcome of pending or future litigation; the adequacy of the company’s cash flows from operations to meet its ongoing cash obligations and fund its investment program; and other risks identified in Baxter’s most recent filing on Form 10-K and other Securities and Exchange Commission filings, all of which are available on Baxter’s website. Baxter does not undertake to update its forward-looking statements. 2
Table Of Contents Performance Summary 5 Financial Results 9 2017 Outlook 16 IV Solutions R&D Alliance Park, Belgium
Executing A Disciplined Strategy To Deliver Top- Quartile Shareholder Returns Focused, market-leading product portfolio Quality and patient safety Leaner, more efficient operating model Best place to work Strengthened profitability and returns Industry-leading performance Strong capital structure Delivering top-quartile performance
Delivering On Our Strategy Business Highlights Building Momentum With Strong Capitalizing On New Product Launches Operational Performance And Geographic Expansions ► ► Delivered solid third-quarter sales and earnings performance; Reallocating investment to higher-margin, faster-growing increased full-year 2017 adjusted earnings outlook businesses ► ► Continuing momentum with new product launches, effective Executing on a robust pipeline with an accelerating launch portfolio management and disciplined expense management cadence in 2017 and beyond ► ► Accelerating growth in core businesses with strategic Increasing R&D efficiency and enhanced capabilities enable 200+ planned launches 1 from 2016 - 2020 acquisitions and partnerships $ Executing Disciplined Focus On Significantly Enhancing Balance Sheet Cost Management Flexibility To Deliver Value ► ► Implementing optimized organizational structure, transforming Generating improved cash flows through effective working cost structure and eliminating waste capital management and reduced capital expenditures ► ► Establishing global centers of excellence to drive efficiencies Continued selective share buyback in Q3 2017 in functional areas ► Maintaining financial optionality with current net debt 2 to ► EBITDA 3 ratio just below zero Simplifying portfolio and optimizing manufacturing footprint 1 Launches include new products, geographic expansions, and line extensions; includes announced acquisitions and partnerships including the recent acquisition of Claris Injectables. 5 2 Long-term debt and lease obligations and current maturities of long-term debt and lease obligations less cash and equivalents. 3 Earnings before interest, tax, depreciation and amortization expense
Continuing Momentum Of Key Metrics Third-Quarter 2017 Financial Snapshot 1 Global Reported Adjusted Adjusted Revenues Operating Margin Diluted EPS $2,707M 16.3% $0.64 16.0% $2,558M $0.56 +6% +30 bps +14% Operational Growth 2 Q3 2016 Q3 2017 Q3 2016 Q3 2017 Q3 2016 Q3 2017 1 See www.baxter.comfor information regarding non-GAAP financial metrics used in this presentation, including constant currency and operational sales, adjusted gross margin, adjusted operating margin, adjusted diluted EPS, free cash flow, adjusted marketing and administrative expense and adjusted research and development expense. 2 Q3 2017 operational sales growth excludes the impact of foreign currency 6 of approximately 0%, Claris of approximately 1%, Cyclo competition of approximately 0%, and strategic product exits of approximately 1%; GAAP sales growth for the period was approximately 6% compared to Q3 2016.
Third-Quarter 2017 Sales And Adjusted Earnings 1 Q3 2017 Q3 2017 Metric Guidance 2 Actual Operational ~6% +6% Sales Growth Reported ~4% +6% Sales Growth Adjusted Diluted EPS $0.58 - $0.60 $0.64 Growth vs. Prior-Year Period 4% - 7% +14% Delivering Accelerated Top And Bottom-Line Performance 1 See www.baxter.comfor information regarding non-GAAP financial metrics used in this presentation, including constant currency and operational sales, adjusted gross margin, adjusted operating margin, 7 adjusted diluted EPS, free cash flow, adjusted marketing and administrative expense and adjusted research and development expense. 2 Provided on 07/26/17.
Advancing Our New Product Portfolio Third-Quarter 2017 R&D Milestones Hospital Products Renal ► Completed the acquisition of Claris Injectables, ► Launched oXiris, the first 3-In-1 set for use in broadening generic injectables product platform CRRT and sepsis management protocols in Europe ► Announced collaboration with ASPEN 1 to reduce ► Enrolled first patients in two new clinical trials for malnutrition through parenteral nutrition therapy HDx therapy enabled by Theranova ► Launched DeviceVue, an advanced asset tracking ► Building momentum with approximately 2,400 system for Sigma Spectrum infusion pumps patients on AMIA in the U.S. 1 American Society for Parenteral and Enteral Nutrition 8
Financial Results Third-Quarter 2017 Earnings October 25, 2017 SIGMA SPECTRUM Manufacturing Medina, New York
Third-Quarter 2017 Sales By Franchise 1 Q3 2017 Revenue Total Growth U.S. International Total Reported Constant Operational $ In Millions Fluid Systems $369 $241 $610 +6% +6% +7% I.P.S. 2 $283 $344 $627 +11% +11% +8% Surgical Care $191 $147 $338 +6% +5% +6% Other $76 $46 $122 0% (2%) (2%) Hospital Products $919 $778 $1,697 +7% +7% +6% Renal $229 $781 $1,010 +3% +3% +6% Total Baxter $1,148 $1,559 $2,707 +6% +6% +6% 1 See www.baxter.comfor information regarding non-GAAP financial metrics used in this presentation, including constant currency and operational sales, adjusted gross margin, adjusted operating margin, 10 adjusted diluted EPS, free cash flow, adjusted marketing and administrative expense and adjusted research and development expense. 2 Integrated Pharmacy Solutions
Year-To-Date 2017 Sales By Franchise 1 YTD 2017 Revenue Total Growth U.S. International Total Reported Constant Operational $ In Millions Fluid Systems $1,093 $709 $1,802 +7% +7% +9% I.P.S. 2 $824 $923 $1,747 +4% +5% +5% Surgical Care $597 $427 $1,024 +5% +6% +6% Other $198 $142 $340 +1% +1% +1% Hospital Products $2,712 $2,201 $4,913 +5% +5% +6% Renal $670 $2,204 $2,874 +1% +2% +4% Total Baxter $3,382 $4,405 $7,787 +4% +4% +5% 1 See www.baxter.comfor information regarding non-GAAP financial metrics used in this presentation, including constant currency and operational sales, adjusted gross margin, adjusted operating margin, 11 adjusted diluted EPS, free cash flow, adjusted marketing and administrative expense and adjusted research and development expense. 2 Integrated Pharmacy Solutions
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