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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________________________________________________________
FORM 10-Q
_________________________________________________________________________________
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2024
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to            
Commission file number 1-4448
_________________________________________________________________________________
BAXTER INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
_________________________________________________________________________________
Delaware36-0781620
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
One Baxter Parkway,Deerfield,Illinois60015
(Address of Principal Executive Offices)(Zip Code)
224.948.2000
(Registrant’s telephone number, including area code)
_________________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $1.00 par valueBAX (NYSE)New York Stock Exchange
NYSE Chicago
0.4% Global Notes due 2024BAX 24New York Stock Exchange
1.3% Global Notes due 2025BAX 25New York Stock Exchange
1.3% Global Notes due 2029BAX 29New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x  No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filero
Non-accelerated fileroSmaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes ☐   No x
The number of shares of the registrant’s Common Stock, par value $1.00 per share, outstanding as of July 31, 2024 was 510,177,606 shares.



BAXTER INTERNATIONAL INC.
FORM 10-Q
For the quarterly period ended June 30, 2024





























PART I. FINANCIAL INFORMATION
Item 1.    Financial Statements
Baxter International Inc.
Condensed Consolidated Balance Sheets (unaudited)
(in millions, except share information)
June 30,
2024		December 31,
2023
Current assets:
Cash and cash equivalents $2,095 $3,194 
Accounts receivable, net of allowances of $123 in 2024 and $129 in 2023
2,639 2,690 
Inventories2,985 2,824 
Prepaid expenses and other current assets874 892 
Total current assets8,593 9,600 
Property, plant and equipment, net 4,314 4,433 
Goodwill 6,001 6,514 
Other intangible assets, net 5,741 6,079 
Operating lease right-of-use assets524 524 
Other non-current assets 1,139 1,126 
Total assets $26,312 $28,276 
Current liabilities:
Current maturities of long-term debt and finance lease obligations$2,468 $2,668 
Accounts payable 1,251 1,241 
Accrued expenses and other current liabilities2,412 2,594 
Total current liabilities 6,131 6,503 
Long-term debt and finance lease obligations, less current portion10,436 11,130 
Operating lease liabilities439 438 
Other non-current liabilities 1,598 1,737 
Total liabilities 18,604 19,808 
Commitments and contingencies
Equity:
Common stock, $1 par value, authorized 2,000,000,000 shares, issued 683,494,944 shares in 2024 and 2023
683 683 
Common stock in treasury, at cost, 173,429,843 shares in 2024 and 175,861,893 shares in 2023
(11,104)(11,230)
Additional contributed capital6,353 6,389 
Retained earnings15,539 16,114 
Accumulated other comprehensive loss(3,828)(3,554)
Total Baxter stockholders’ equity7,643 8,402 
Noncontrolling interests65 66 
Total equity7,708 8,468 
Total liabilities and equity$26,312 $28,276 
The accompanying notes are an integral part of these condensed consolidated financial statements.
2

Baxter International Inc.
Condensed Consolidated Statements of Loss (unaudited)
(in millions, except per share data)
Three months ended
June 30,		Six months ended
June 30,
2024202320242023
Net sales$3,812 $3,707 $7,404 $7,220 
Cost of sales2,381 2,596 4,586 4,834 
Gross margin1,431 1,111 2,818 2,386 
Selling, general and administrative expenses1,021 964 2,048 1,959 
Research and development expenses173 165 349 329 
Goodwill impairment430 — 430 — 
Other operating income, net(1)(1)(4)(14)
Operating income (loss)(192)(17)(5)112 
Interest expense, net85 124 163 241 
Other (income) expense, net(20)42 (27)40 
Loss from continuing operations before income taxes(257)(183)(141)(169)
Income tax expense54 10 131 24 
Loss from continuing operations(311)(193)(272)(193)
Income from discontinued operations, net of tax— 54 — 99 
Net loss(311)(139)(272)(94)
Net income attributable to noncontrolling interests3 2 5 3 
Net loss attributable to Baxter stockholders$(314)$(141)$(277)$(97)
Loss from continuing operations per common share
Basic$(0.62)$(0.39)$(0.54)$(0.39)
Diluted$(0.62)$(0.39)$(0.54)$(0.39)
Income from discontinued operations per common share
Basic$0.00 $0.11 $0.00 $0.20 
Diluted$0.00 $0.11 $0.00 $0.20 
Loss per common share
Basic$(0.62)$(0.28)$(0.54)$(0.19)
Diluted$(0.62)$(0.28)$(0.54)$(0.19)
Weighted-average number of shares outstanding
Basic510 506 509 506 
Diluted510 506 509 506 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3

Baxter International Inc.
Condensed Consolidated Statements of Comprehensive Loss (unaudited)
(in millions)
Three months ended
June 30,		Six months ended
June 30,
2024202320242023
Loss from continuing operations$(311)$(193)$(272)$(193)
Other comprehensive income (loss) from continuing operations, net of tax:
Currency translation adjustments, net of tax expense (benefit) of $2 and $4 for the three months ended June 30, 2024 and 2023, respectively, and $13 and ($9) for the six months ended June 30, 2024 and 2023, respectively.
(108)(76)(292)5 
Pension and other postretirement benefits, net of tax expense (benefit) of ($1) and ($2) for the three months ended June 30, 2024 and 2023, respectively, and $2 and ($3) for the six months ended June 30, 2024 and 2023, respectively.
(1)(5)3 (11)
Hedging activities, net of tax expense (benefit) of $1 and $2 for the three months ended June 30, 2024 and 2023, respectively and $3 and $1 for the six months ended June 30, 2024 and 2023, respectively.
3 7 11 5 
Total other comprehensive loss from continuing operations, net of tax(106)(74)(278)(1)
Comprehensive loss from continuing operations(417)(267)(550)(194)
Income from discontinued operations, net of tax— 54 — 99 
Other comprehensive income (loss) from discontinued operations, net of tax - currency translation adjustments— (1)— 20 
Comprehensive income from discontinued operations— 53 — 119 
Comprehensive loss(417)(214)(550)(75)
Less: Comprehensive income attributable to noncontrolling interests3 2 5 3 
Less: Other comprehensive loss attributable to noncontrolling interests— — (4)— 
Comprehensive loss attributable to Baxter stockholders$(420)$(216)$(551)$(78)
The accompanying notes are an integral part of these condensed consolidated financial statements.
4

Baxter International Inc.
Condensed Consolidated Statements of Changes in Equity (unaudited)
(in millions)
For the three months ended June 30, 2024
Baxter International Inc. stockholders' equity
Common stock sharesCommon stockCommon stock shares
in treasury		Common stock in
treasury		Additional contributed capitalRetained earningsAccumulated other comprehensive
loss		Total Baxter stockholders' equityNoncontrolling interestsTotal equity
Balance as of April 1, 2024683 $683 174 $(11,130)$6,339 $16,003 $(3,722)$8,173 $62 $8,235 
Net loss— — — — — (314)— (314)3 (311)
Other comprehensive income (loss)— — — — — — (106)(106)— (106)
Stock issued under employee benefit plans and other— — (1)26 14 — — 40 — 40 
Dividends declared on common stock— — — — — (150)— (150)— (150)
Balance as of June 30, 2024
683 $683 173 $(11,104)$6,353 $15,539 $(3,828)$7,643 $65 $7,708 
For the six months ended June 30, 2024
Baxter International Inc. stockholders' equity
Common stock sharesCommon stockCommon stock shares in treasuryCommon stock in treasuryAdditional contributed capitalRetained earningsAccumulated other comprehensive lossTotal Baxter stockholders' equityNoncontrolling interestsTotal equity
Balance as of January 1, 2024683 $683 176 $(11,230)$6,389 $16,114 $(3,554)$8,402 $66 $8,468 
Net loss— — — — — (277)— (277)5 (272)
Other comprehensive income (loss)— — — — — — (274)(274)(4)(278)
Stock issued under employee benefit plans and other— — (3)126 (36)— — 90 — 90 
Dividends declared on common stock— — — — — (298)— (298)— (298)
Change in noncontrolling interests— — — — — — — — (2)(2)
Balance as of June 30, 2024
683 $683 173 $(11,104)$6,353 $15,539 $(3,828)$7,643 $65 $7,708 
For the three months ended June 30, 2023
Baxter International Inc. stockholders' equity
Common stock sharesCommon stockCommon stock shares in treasuryCommon stock in treasuryAdditional contributed capitalRetained earningsAccumulated other comprehensive lossTotal Baxter stockholders' equityNoncontrolling interestsTotal equity
Balance as of April 1, 2023683 $683 178 $(11,324)$6,312 $13,947 $(3,739)$5,879 $62 $5,941 
Net loss— — — — —(141)— (141)2 (139)
Other comprehensive income (loss)— — — — — — (75)(75)— (75)
Stock issued under employee benefit plans and other— — (1)28 29 — — 57 — 57 
Dividends declared on common stock— — — — — (151)—(151)— (151)
Change in noncontrolling interests— — — — — — — — (2)(2)
Balance as of June 30, 2023683 $683 177 $(11,296)$6,341 $13,655 $(3,814)$5,569 $62 $5,631 
For the six months ended June 30, 2023
Baxter International Inc. stockholders' equity
Common stock sharesCommon stockCommon stock shares in treasuryCommon stock in treasuryAdditional contributed capitalRetained earningsAccumulated other comprehensive income lossTotal Baxter stockholders' equityNoncontrolling interestsTotal equity
Balance as of January 1, 2023683 $683 179 $(11,389)$6,322 $14,050 $(3,833)$5,833 $62 $5,895 
Net loss— — — — — (97)— (97)3 (94)
Other comprehensive income (loss)— — — — — — 19 19 — 19 
Stock issued under employee benefit plans and other— — (2)93 19 — — 112 — 112 
Dividends declared on common stock— — — — — (298)— (298)— (298)
Change in noncontrolling interests— — — — — — — — (3)(3)
Balance as of June 30, 2023
683 $683 177 $(11,296)$6,341 $13,655 $(3,814)$5,569 $62 $5,631 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Baxter International Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(in millions)
Six Months Ended June 30,
20242023
Cash flows from operations
Net loss$(272)$(94)
Less: Income from discontinued operations, net of tax— 99 
Loss from continuing operations(272)(193)
Adjustments to reconcile net loss to cash flows from operations:
Depreciation and amortization623 628 
Deferred income taxes(135)(156)
Stock compensation53 62 
Net periodic pension and other postretirement costs(11)(8)
Goodwill impairment430 — 
Other long-lived asset impairments11 271 
Other24 31 
Changes in balance sheet items:
Accounts receivable, net(23)102 
Inventories(229)(209)
Prepaid expenses and other current assets(44)(39)
Accounts payable 64 157 
Accrued expenses and other current liabilities(165)160 
Other(48)(26)
Cash flows from operations - continuing operations278 780 
Cash flows from operations - discontinued operations— 50 
Cash flows from operations278 830 
Cash flows from investing activities
Capital expenditures(292)(328)
Acquisitions of developed technology and investments(7)(3)
Proceeds from sale of marketable equity securities34 — 
Other investing activities, net8 5 
Cash flows from investing activities - continuing operations(257)(326)
Cash flows from investing activities - discontinued operations— (17)
Cash flows from investing activities(257)(343)
Cash flows from financing activities
Repayments of debt(824)(142)
Net (decreases) increases in debt with original maturities of three months or less— (51)
Cash dividends on common stock(295)(292)
Proceeds from stock issued under employee benefit plans52 54 
Other financing activities, net(9)(61)
Cash flows from financing activities(1,076)(492)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash(47)9 
Increase (decrease) in cash, cash equivalents and restricted cash(1,102)4 
Cash, cash equivalents and restricted cash at beginning of period (1)
3,198 1,722 
Cash, cash equivalents and restricted cash at end of period (1)
$2,096 $1,726 
(1) The following table provides a reconciliation of cash, cash equivalents and restricted cash shown above to the amounts reported within the condensed consolidated balance sheet as of June 30, 2024, December 31, 2023, and June 30, 2023 (in millions):
June 30, 2024December 31, 2023June 30, 2023
Cash and cash equivalents$2,095 $3,194 $1,722 
Restricted cash included in other non-current assets1 4 4 
Cash, cash equivalents and restricted cash$2,096 $3,198 $1,726 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Baxter International Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
1. BASIS OF PRESENTATION
The unaudited interim condensed consolidated financial statements of Baxter International Inc. and its subsidiaries (we, our or Baxter) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial reporting. Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) in the United States have been condensed or omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2023 (2023 Annual Report).
In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. All such adjustments, unless otherwise noted herein, are of a normal, recurring nature. The results of operations for the current interim period are not necessarily indicative of the results of operations to be expected for the full year.
In January 2023, we announced our intention to separate our Kidney Care business into a new, publicly traded company. In March 2024, we announced that we have been in recent discussions with select private equity investors to explore a potential sale of our Kidney Care business in lieu of the proposed spinoff. Regardless of the separation structure ultimately selected, the separation of our Kidney Care business is currently expected to be completed in late 2024 or early 2025, subject to the satisfaction of customary conditions.
Risks and Uncertainties
Supply Constraints and Global Economic Conditions
We have experienced significant challenges to our global supply chain (which we experienced most acutely in 2022), including production delays and interruptions, increased costs and shortages of raw materials and component parts (including resins and electromechanical devices), and higher transportation costs, resulting from the pandemic and other exogenous factors including significant weather events, elevated inflation levels, disruptions to certain ports of call and access to shipping lanes around the world, the war in Ukraine, the conflict in the Middle East (including attacks on merchant ships in the Red Sea), tensions amongst China, Taiwan, and the U.S., and other geopolitical events. 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. While we have seen meaningful improvements in the availability of certain component parts and improved pricing of certain raw materials and on certain transportation costs, these challenges may have a negative impact on our results of operations in the future.
2. DISCONTINUED OPERATIONS
On September 29, 2023, we sold our BioPharma Solutions (BPS) business to Advent International and Warburg Pincus (collectively, the "buyers").
The BPS business, which was historically reported within our former Americas segment, provided contract manufacturing and development services, which include sterile fill-finish manufacturing and support services across clinical and commercial applications, primarily serving customers in the pharmaceutical industry. BPS was historically operated through our former, wholly-owned subsidiaries Baxter Pharmaceutical Solutions LLC, a Delaware limited liability company, and Baxter Oncology GmbH, a German limited liability company (collectively, the divested entities).
We concluded that our BPS business met the criteria to be classified as held-for-sale in May 2023. A component of an entity is reported in discontinued operations after meeting the criteria for held-for-sale classification if the disposition represents a strategic shift that has (or will have) a major effect on the entity's operations and financial results. We analyzed the quantitative and qualitative factors relevant to the divestiture of our BPS business, including its significance to our overall net income and earnings per share, and determined that those conditions for discontinued operations presentation had been met. As such, the financial position, results of operations and cash flows of that business are reported as discontinued operations in the accompanying condensed consolidated financial statements. Prior period amounts have been adjusted to reflect discontinued operations presentation.
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At closing of the transaction, Baxter entered into a Transition Services Agreement (TSA) and a Master Commercial Manufacturing and Supply Agreement (MSA) with the divested entities. Pursuant to the TSA, Baxter and the divested entities provide to each other, on an interim basis, specific transition services for up to 24 months post-closing to help ensure business continuity and minimize disruptions. Services provided under the TSA include finance, information technology, human resources, integrated supply chain, and certain other administrative services. Pursuant to the MSA, the divested entities provide development, manufacturing, regulatory, and other related services for certain Baxter pharmaceutical products for up to 5 years post-closing (with certain extension rights as provided therein).
Results of Discontinued Operations
The following table summarizes the major classes of line items included in income from discontinued operations, net of tax, for the three and six months ended June 30, 2023:
Three Months Ended June 30,Six Months Ended June 30,
(in millions)20232023
Net sales$142 $278 
Cost of sales71 135 
Gross margin71 143 
Selling, general and administrative expenses14 29 
Research and development expenses1 1 
Other (income) expense, net(1)— 
Income from discontinued operations before income taxes57 113 
Income tax expense3 14 
Income from discontinued operations, net of tax$54 $99 
For the three and six months ended June 30, 2023, selling, general and administrative expenses (SG&A) include $8 million and $15 million, respectively, of separation-related costs incurred in connection with the sale of BPS.
3. SUPPLEMENTAL FINANCIAL INFORMATION
Allowance for Doubtful Accounts
The following table is a summary of the changes in our allowance for doubtful accounts for the three and six months ended June 30, 2024 and 2023.
Three Months Ended June 30,Six Months Ended June 30,
(in millions)2024202320242023
Balance at beginning of period$121 $122 $129 $114 
Charged to costs and expenses3 9 2 16 
Write-offs(1)(5)(7)(6)
Currency translation adjustments— 2 (1)4 
Balance at end of period$123 $128 $123 $128 
Inventories
(in millions)June 30,
2024		December 31,
2023
Raw materials$750 $731 
Work in process308 285 
Finished goods1,927 1,808 
Inventories$2,985 $2,824 
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Property, Plant and Equipment, Net
(in millions)June 30,
2024		December 31,
2023
Property, plant and equipment, at cost$10,774 $11,223 
Accumulated depreciation(6,460)(6,790)
Property, plant and equipment, net$4,314 $4,433 
Impairment of Manufacturing Facility
Our manufacturing facility in Opelika, Alabama was one of three Baxter manufacturing facilities that produced dialyzers used in hemodialysis (HD) treatments. The competitive environment has increased the global supply of those products and, in connection with our initiatives to streamline our manufacturing footprint and improve our profitability, we made the decision in the second quarter of 2023 to cease production of dialyzers at the Opelika facility near the end of 2023.
As a result of our decision to cease dialyzer production at this manufacturing facility, we performed a trigger-based recoverability assessment of its long-lived assets, which consist of a building and manufacturing equipment, including specialized equipment used in the production of dialyzers. The carrying amount of that asset group exceeded the estimated undiscounted cash flows expected to be generated, and we recognized an impairment charge of $243 million, classified within cost of sales in the accompanying condensed consolidated statements of loss, during the second quarter of 2023 to reduce the carrying amounts to their estimated fair values.
The fair values of the building and manufacturing equipment tested for impairment during the second quarter of 2023 were determined based on transaction prices of comparable assets. Significant assumptions used in the determination of the fair values included the identification of representative comparable assets. Our long-lived asset fair value measurements are classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs.
Interest Expense, Net
Three Months Ended June 30,Six Months Ended June 30,
(in millions)2024202320242023
Interest expense, net of capitalized interest$104 $132 $207 $259 
Interest income(19)(8)(44)(18)
Interest expense, net$85 $124 $163 $241 
Other (Income) Expense, Net
Three Months Ended June 30,Six Months Ended June 30,
(in millions)2024202320242023
Foreign exchange losses, net$— $22 $14 36 
Pension and other postretirement benefit plans(10)(11)(22)(21)
Change in fair value of marketable equity securities— 11 (4)6 
Non-marketable investment impairments— 23 — 23 
Other, net(10)(3)(15)(4)
Other (income) expense, net$(20)$42 $(27)$40 
Non-Cash Operating and Investing Activities
Right-of-use operating lease assets obtained in exchange for lease obligations for the six months ended June 30, 2024 and 2023 were $47 million and $45 million, respectively.
Purchases of property, plant and equipment included in accounts payable as of June 30, 2024 and 2023 were $52 million and $57 million, respectively.
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4. GOODWILL AND OTHER INTANGIBLE ASSETS, NET
Goodwill
The following is a reconciliation of goodwill by segment.
(in millions)Medical Products and TherapiesHealthcare Systems and TechnologiesPharmaceuticalsKidney CareTotal
Balance as of December 31, 2023$1,241 $3,989 $563 $721 $6,514 
Impairment— — — (430)(430)
Currency translation (37)(8)(16)(22)(83)
Balance as of June 30, 2024$1,204 $3,981 $547 $269 $6,001 
Goodwill Impairment
In March 2024, we announced that we had been in recent discussions with select private equity investors to explore a potential sale of our Kidney Care business in lieu of the previously announced proposed spinoff of that business. While we have not finalized our decision with respect to the ultimate structure of the proposed Kidney Care separation at the time of this filing, we received bids from prospective buyers in June 2024 following the completion of a related due diligence process in connection with a potential sale transaction. If we were to sell our overall Kidney Care business at a price consistent with the bid we received that we believe to be most representative of fair value, we would recognize a significant gain, although the expected net pre-tax proceeds would be less than the sum of the individual fair values that we previously estimated for the two reporting units within our Kidney Care segment in connection with our most recent goodwill impairment assessments. Additionally, the fair value of our Chronic Therapies reporting unit within our Kidney Care segment exceeded its carrying value by only 6% as of November 1, 2023, the date of our most recent goodwill impairment test for that reporting unit. As a result of those factors, we performed an interim goodwill impairment assessment of our Chronic Therapies reporting unit in the second quarter of 2024, which resulted in a pre-tax goodwill impairment charge of $430 million, representing all of the goodwill of that reporting unit.
The fair value of our Chronic Therapies reporting unit was determined based on a discounted cash flow model (an income approach) and earnings multiples (a market approach) based on the guideline public company method. Significant assumptions used in the determination of the fair value of the reporting unit included forecasted cash flows, discount rates, terminal growth rates, and earnings multiples. The discounted cash flow model used to determine the fair value of our Chronic Therapies reporting unit included our most recent cash flow projections, a 12.5% discount rate, and a 2.5% terminal growth rate, and multiples of forward-looking EBITDA ranged from 4.75 to 5.00. Our Chronic Therapies reporting unit fair value measurement is classified as Level 3 in the fair value hierarchy because it involves significant unobservable inputs.
The fair value of the remaining reporting unit within our Kidney Care segment, Acute Therapies, significantly exceeded its carrying value as of its most recent goodwill impairment test and we determined that an interim goodwill impairment test of that reporting unit was not required. However, in connection with the interim goodwill impairment test of our Chronic Therapies reporting unit during the second quarter of 2024, we also performed a fair value measurement of our Acute Therapies reporting unit and we calibrated the sum of the fair values of those two Kidney Care reporting units to the bid we received for the overall Kidney Care business that we believe to be most representative of fair value.
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Other intangible assets, net
The following is a summary of our other intangible assets.
Indefinite-lived intangible assets
(in millions)Customer relationshipsDeveloped technology, including patentsTrade namesOther amortized intangible assetsTrade namesIn process Research and Development
Total
June 30, 2024
Gross other intangible assets$3,442 $3,806 $1,097 $118 $680 $157 $9,300 
Accumulated amortization(802)(2,451)(206)(100)— — (3,559)
Other intangible assets, net$2,640 $1,355 $891 $18 $680 $157 $5,741 
December 31, 2023
Gross other intangible assets$3,446 $3,823 $1,106 $120 $680 $157 $9,332 
Accumulated amortization(689)(2,285)(180)(99)— — (3,253)
Other intangible assets, net$2,757 $1,538 $926 $21 $680 $157 $6,079 
Intangible asset amortization expense was $167 million and $157 million for the three months ended June 30, 2024 and 2023, respectively, and $333 million and $319 million for the six months ended June 30, 2024 and 2023, respectively.
5. FINANCING ARRANGEMENTS
Credit Facilities
On July 17, 2024, we entered into a credit agreement in which a group of banks have committed to provide us senior unsecured term loans in an aggregate principal amount of up to $2.05 billion ("the bridge facility"). Borrowings under the bridge facility will be available in up to three drawings to fund (a) the refinancing of our 1.322% Senior Notes due November 29, 2024, our Floating Rate Notes due November 29, 2024, and certain borrowings under our existing term loan facility and (b) payment of certain U.S. tax liabilities arising from internal reorganization transactions related to the proposed separation of our Kidney Care business. Borrowings under the bridge facility will bear interest at a rate based on our long-term debt ratings in effect from time to time and the interest rate on any borrowings outstanding beyond December 31, 2024 would increase by 0.25%. We will also incur a ticking fee on undrawn commitments at a rate based on our long-term debt ratings in effect from time to time. The banks’ funding commitments under the bridge facility will terminate upon the earliest to occur of: (i) our consummation of the debt repayments and tax payments described above without us having borrowed under the bridge facility, (ii) our election to terminate the commitments under the bridge facility, (iii) our receipt of net cash proceeds from certain transactions (including from the separation of our Kidney Care business), (iv) the occurrence of three drawings under the bridge facility, and (v) December 31, 2024. Outstanding borrowings under the bridge facility will mature on the earlier of 364 days from the first funding date and November 24, 2025. Additionally, we are required to use the net cash proceeds from certain transactions (including from the separation of our Kidney Care business) to repay any outstanding borrowings under the bridge facility. The bridge facility contains financial and other covenants, including a net leverage covenant, and provides for customary events of default.
In the first quarter of 2024, we amended the credit agreements governing our U.S. dollar-denominated term loan credit facility and revolving credit facility and the guaranty agreement with respect to our Euro-denominated revolving credit facility to increase the maximum net leverage ratio covenant for the six fiscal quarters ending June 30, 2024, September 30, 2024, December 31, 2024, March 31, 2025, June 30, 2025, and September 30, 2025. The amendment further provides for the reduction of the capacity under our U.S dollar-denominated revolving credit facility from $2.50 billion to $2.00 billion on the earlier of September 30, 2024 or the date of the sale or spinoff of our Kidney Care business. Costs incurred in connection with the amendment were not material.
In addition to our U.S. dollar-denominated revolving credit facility with a current capacity of $2.50 billion, our Euro-denominated revolving credit facility has a capacity of €200 million. Each of the facilities matures in 2026. There were no borrowings outstanding under these credit facilities as of June 30, 2024 or December 31, 2023. Our commercial paper borrowing arrangements require us to maintain undrawn borrowing capacity under our credit facilities for an
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amount at least equal to our outstanding commercial paper borrowings. Based on our covenant calculations as of June 30, 2024 we have capacity to draw on the full amounts under our credit facilities.
In the first six months of 2024, we repaid $822 million of senior notes at maturity.
6. COMMITMENTS AND CONTINGENCIES
We are involved in product liability, patent, commercial, and other legal matters that arise in the normal course of our business. We record a liability when a loss is considered probable and the amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range, and no amount within the range is a better estimate than any other amount, the minimum amount in the range is accrued. If a loss is not probable or a probable loss cannot be reasonably estimated, no liability is recorded. As of June 30, 2024 and December 31, 2023, our total recorded reserves with respect to legal and environmental matters were $30 million and $31 million, respectively.
We have established reserves for certain of the matters discussed below. We are not able to estimate the amount or range of any loss for certain contingencies for which there is no reserve or additional loss for matters already reserved. While our liability in connection with these claims cannot be estimated and the resolution thereof in any reporting period could have a significant impact on our results of operations and cash flows for that period, the outcome of these legal proceedings is not expected to have a material adverse effect on our consolidated financial position. While we believe that we have valid defenses in the matters set forth below, litigation is inherently uncertain, excessive verdicts do occur, and we may incur material judgments or enter into material settlements of claims.
In addition to the matters described below, we remain subject to the risk of future administrative and legal actions. With respect to governmental and regulatory matters, these actions may lead to product recalls, injunctions, and other restrictions on our operations (including our ability to launch new products) and monetary sanctions, including significant civil or criminal penalties. With respect to intellectual property, we may be exposed to significant litigation concerning the scope of our and others’ rights. Such litigation could result in a loss of patent protection or the ability to market products, which could lead to a significant loss of sales, or otherwise materially affect future results of operations.
Environmental
We are involved as a potentially responsible party (PRP) for environmental clean-up costs at six Superfund sites. Under the U.S. Superfund statute and many state laws, generators of hazardous waste sent to a disposal or recycling site are liable for site cleanup if contaminants from that property later leak into the environment. The laws generally provide that a PRP may be held jointly and severally liable for the costs of investigating and remediating the site. Separate from these Superfund cases noted above, we are involved in ongoing environmental remediations associated with historic operations at certain of our facilities. As of June 30, 2024 and December 31, 2023, our environmental reserves, which are measured on an undiscounted basis, were $14 million and $15 million, respectively. After considering these reserves, the outcome of these matters is not expected to have a material adverse effect on our financial position or results of operations.
General Litigation
In March 2020, two lawsuits were filed against us in the Northern District of Illinois by plaintiffs alleging injuries as a result of exposure to ethylene oxide used in our manufacturing facility in Mountain Home, Arkansas to sterilize certain of our products. The plaintiffs sought damages, including compensatory and punitive damages in an unspecified amount, and unspecified injunctive and declaratory relief. The parties reached an agreement to settle these lawsuits in the third quarter of 2021 for amounts that were not material to our financial results, which were paid in the fourth quarter of 2021. We have since resolved, without litigation, additional claims of injuries from exposure to ethylene oxide at Mountain Home for amounts within accruals previously established as of December 31, 2021. On October 20, 2022, a lawsuit was filed against us in the Western District of Arkansas alleging injury as a result of exposure to ethylene oxide at Mountain Home. On December 16, 2022, we filed a motion to dismiss and for a more definite statement. In response, Plaintiffs filed a First Amended Complaint on January 6, 2023. We answered the First Amended Complaint on January 27, 2023. The parties reached an agreement to settle this lawsuit in the third quarter of 2023 for an amount that was not material to our financial results, which was paid in the fourth quarter of 2023. The case was dismissed on October 17, 2023. Since December 2023, 24 lawsuits have been filed against us in the Circuit Court of Cook County, Illinois by plaintiffs alleging injuries as a result of exposure to ethylene oxide used by several companies, including historic use by us for sterilization at our facility in Round Lake, Illinois. The plaintiffs seek damages in an unspecified amount. On July 16, 2024, Plaintiffs' counsel filed an omnibus motion seeking leave to add
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certain defendants to hundreds of previously-filed lawsuits, including Baxter with respect to 40 cases. The motion was denied on July 25, 2024, without prejudice to refiling multiple motions each addressing smaller groupings of cases and defendants.
We acquired Hill-Rom Holdings, Inc. (Hillrom) on December 13, 2021. In July 2021, Hill-Rom, Inc., a wholly-owned subsidiary of Hillrom, received a subpoena from the United States Office of Inspector General for the Department of Health and Human Services (the DHHS) requesting documents and information related to compliance with the False Claims Act and the Anti-Kickback Statute. The subpoena was related to a lawsuit brought under the qui tam provisions of the False Claims Act. The allegations included in the unsealed complaint relate to conduct prior to our acquisition of Hillrom, and the division involved is no longer operational. Hillrom voluntarily began a related internal review, and Hillrom and Baxter cooperated fully with the DHHS and the Department of Justice (DOJ) with respect to this matter. In January 2024, the parties reached an agreement to settle the allegations. We paid the settlement amounts, which were not material to our financial results, in January 2024 and the matter was dismissed in February 2024. In October 2022, the DOJ issued a separate Civil Investigative Demand (CID) addressed to Hillrom, requesting documents and information related to compliance with the False Claims Act and the Anti-Kickback Statute. Baxter is cooperating fully with the DOJ in responding to the CID. The DHHS and DOJ often issue these types of requests when investigating alleged violations of the False Claims Act.
On December 28, 2021, Linet Americas, Inc. (Linet) filed a complaint against Hill-Rom Holdings, Inc., Hill-Rom Company, Inc., and Hill-Rom Services, Inc. in the United States District Court for the Northern District of Illinois, captioned Linet Americas, Inc. v. Hill-Rom Holdings, Inc.; Hill-Rom Company, Inc.; Hill-Rom Services, Inc. Linet alleges that Hillrom violated Sections 1 and 2 of The Sherman Antitrust Act of 1890, Section 3 of the Clayton Act, and the Illinois Antitrust Act by allegedly engaging in anti-competitive conduct in alleged markets for standard, ICU and birthing beds. Hillrom filed an answer to the complaint on January 28, 2022 and filed a motion challenging certain aspects of plaintiff's case on May 27, 2022, which was denied on January 17, 2024, subject to further discovery.
On June 20, 2024, Reading Hospital filed a putative class action complaint against Hill-Rom Holdings, Inc., Hill-Rom Company, Inc., and Hill-Rom Services, Inc. in the United States District Court for the Eastern District of Pennsylvania. The complaint alleges that Hillrom violated Sections 1 and 2 of The Sherman Antitrust Act and Section 3 of the Clayton Act by allegedly engaging in anti-competitive conduct in alleged markets for standard, ICU and birthing beds. The plaintiff filed the action on behalf of itself and all "direct purchasers of Standard Hospital Beds, ICU Beds, and/or Birthing Beds from Hill-Rom during a period beginning at least as early as June 20, 2020” and continuing past the date of filing.
7. STOCKHOLDERS’ EQUITY
Cash Dividends
Cash dividends declared per share for the three months ended June 30, 2024 and 2023 were $0.29 and for the six months ended June 30, 2024 and 2023 were $0.58.
Stock Repurchase Programs
In July 2012, our Board of Directors authorized a share repurchase program and the related authorization amount was subsequently increased a number of times. During the first six months of 2024 and 2023 we did not repurchase any shares under this authority. We had $1.30 billion remaining available under the authorization as of June 30, 2024.
8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Comprehensive income includes all changes in stockholders’ equity that do not arise from transactions with stockholders, and consists of net income (loss), cumulative translation adjustments (CTA), certain gains and losses from pension and other postretirement employee benefit (OPEB) plans, gains and losses on cash flow hedges, and unrealized gains and losses on available-for-sale debt securities.
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The following table is a net-of-tax summary of the changes in accumulated other comprehensive income (loss) (AOCI) by component for the six months ended June 30, 2024 and 2023.
Gains (losses)
(in millions)CTAPension and OPEB plansHedging activitiesAvailable-for-sale debt securitiesTotal
Balance as of December 31, 2023
$(2,985)$(452)$(120)$3 $(3,554)
Other comprehensive income (loss) before reclassifications(288)5 9 — (274)
Amounts reclassified from AOCI (a)— (2)2 — — 
Net other comprehensive income (loss) (288)3 11 — (274)
Balance as of June 30, 2024$(3,273)$(449)$(109)$3 $(3,828)
Gains (losses)
(in millions)CTAPension and OPEB plansHedging activitiesAvailable-for-sale debt securitiesTotal
Balance as of December 31, 2022$(3,386)$(331)$(119)$3 $(3,833)
Other comprehensive income (loss) before reclassifications25 (4)8 — 29 
Amounts reclassified from AOCI (a)
— (7)(3)— (10)
Net other comprehensive income (loss) 25 (11)5 — 19 
Balance as of June 30, 2023$(3,361)$(342)$(114)$3 $(3,814)
(a)    See table below for details about these reclassifications.
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The following is a summary of the amounts reclassified from AOCI to net income (loss) during the three and six months ended June 30, 2024 and 2023.
Amounts reclassified from AOCI (a)
(in millions)Three Months Ended June 30, 2024Six Months Ended June 30, 2024Location of impact in income statement
Pension and OPEB items
Amortization of net losses and prior service costs or credits$1 $3 Other (income) expense, net
Less: Tax effect— (1)Income tax expense
$1 $2 Net of tax
Gains (losses) on hedging activities
Foreign exchange contracts$3 $5 Cost of sales
Interest rate contracts(2)(3)Interest expense, net
Fair value hedges(2)(5)Other (income) expense, net
(1)(3)Total before tax
Less: Tax effect1 1 Income tax expense
$— $(2)Net of tax
Total reclassifications for the period$1 $— Total net of tax
Amounts reclassified from AOCI (a)
(in millions)Three Months Ended June 30, 2023Six Months Ended June 30, 2023Location of impact in income statement
Pension and OPEB items
Amortization of net losses and prior service costs or credits$5 $10 Other (income) expense, net
Less: Tax effect(1)(3)Income tax expense
$4 $7 Net of tax
Gains (losses) on hedging activities
Foreign exchange contracts$3 $7 Cost of sales
Interest rate contracts(2)(3)Interest expense, net
1 4 Total before tax
Less: Tax effect— (1)Income tax expense
$1 $3 Net of tax
Total reclassifications for the period$5 $10 Total net of tax
(a)    Amounts in parentheses indicate reductions to net income
Refer to Note 11 for additional information regarding the amortization of pension and OPEB items and Note 14 for additional information regarding hedging activity.
9. REVENUES
Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in the contract. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Some of our contracts have multiple performance obligations. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. Our global payment terms are typically between 30-90 days.
Our primary customers are hospitals, healthcare distribution companies, dialysis providers, and government agencies that purchase healthcare products on behalf of providers. Most of our performance obligations are satisfied at a point in time. This includes sales of our broad portfolio of essential healthcare products across our business segments. We earn revenues from acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral
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nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; surgical hemostat and sealant products; smart bed systems; patient monitoring and diagnostic technologies; respiratory health devices; and advanced equipment for the surgical space. For most of those offerings, our performance obligation is satisfied upon delivery to the customer. Shipping and handling activities are considered to be fulfillment activities and are not considered to be a separate performance obligation.
To a lesser extent, we enter into arrangements for which revenue may be recognized over time. For example, we lease medical equipment to customers under operating lease arrangements and recognize the related revenues on a monthly basis over the lease term. Our Healthcare Systems and Technologies segment includes connected care solutions and collaboration tools that are implemented over time. We recognize revenue for these arrangements over time or at a point in time depending on our evaluation of when the customer obtains control of the promised goods or services. We also earn revenue from contract manufacturing activities, which is recognized over time as the services are performed. Revenue is recognized over time when we are creating or enhancing an asset that the customer controls as the asset is created or enhanced or our performance does not create an asset with an alternative use and we have an enforceable right to payment for performance completed.
As of June 30, 2024, we had $4.16 billion of transaction price allocated to remaining performance obligations related to executed contracts with an original duration of more than one year, which are primarily included in the Medical Products and Therapies and Kidney Care segments. Some contracts in the United States included in this amount contain index-dependent price increases, which are not known at this time. We expect to recognize approximately 35% of this amount as revenue over the remainder of 2024, 30% in 2025, 25% in 2026, and 10% in 2027.
Significant Judgments
Revenues from product sales are recorded at the net sales price, which includes estimates of variable consideration primarily related to rebates and wholesaler chargebacks. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are included in accrued expenses and other current liabilities and as reductions of accounts receivable, net on the condensed consolidated balance sheets. Management's estimates take into consideration historical experience, current contractual and statutory requirements, specific known market events and trends, industry data, and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract using the expected value method. The amount of variable consideration included in the net sales price is limited to the amount for which it is probable that a significant reversal in revenue will not occur when the related uncertainty is resolved. Revenue recognized during the three and six months ended June 30,