Baxter International (BAX) Goldman Sachs 45th Annual Global Healthcare Conference summary

Strategic priorities and transformation

• Focus on operational excellence, cash flow, and working capital management to drive growth investments.

• Recent strategic actions include the sale of BPS, business verticalization, and the planned kidney business separation.

• Emphasis on innovation, especially in digital and connected care, following the Hillrom acquisition.

• Future direction includes accelerating growth, expanding margins, and maintaining 80%+ free cash flow conversion.

• Commitment to serving evolving customer and patient needs through product innovation in pharmaceuticals and HST.

Kidney business separation and financial considerations

• Evaluating spin versus sale for the kidney business, with focus on shareholder value, capital allocation, and valuation certainty.

• Sale offers more immediate cash and balance sheet benefits, while a spin involves gradual deleveraging and less valuation certainty.

• Standalone costs for the kidney business expected to be 1%-2% of sales, with some one-time separation costs.

• The kidney business is the lowest margin segment, and its separation will simplify operations and allow focused investment.

• Timeline for separation is driven by balance sheet needs and strategic clarity.

Financial performance, guidance, and margin outlook

• Q2 sales guidance is 2%-3%, with improvement expected in HST and softness in kidney and compounding businesses.

• Margin expected to decline slightly in Q2 due to increased costs from kidney care separation and logistics.

• Stronger growth expected in the second half of the year, driven by Novum and injectable launches, with ex-kidney business targeting 4%-5% growth by Q4.

• Operational issues in CCS and Front Line Care are being resolved, with no anticipated supply chain constraints.

• At least 50 basis points of operating margin expansion expected this year, with potential to exceed that.