Baxter International (BAX) Q4 2025 earnings summary

Executive summary

• Q4 2025 global sales from continuing operations reached $2.97 billion, up 8% reported and 3% operationally, with all segments contributing to growth.

• Adjusted EPS was $0.44, down 24% year-over-year, impacted by margin pressure from unfavorable mix, non-recurring items, and a higher tax rate.

• Full-year 2025 sales were $11.2 billion, up 6% reported and 3% operationally; adjusted diluted EPS was $2.27, up 20% from 2024.

• The company is in early stages of a turnaround, introducing a new operating model to simplify and decentralize the organization, delayer management, and embed accountability at the business level.

• Announced the Dynamo Series smart stretcher launch and presented positive data on smart infusion pump integration.

Financial highlights

• Q4 2025 adjusted gross margin was 35.5%, down 900 basis points year-over-year; adjusted operating margin was 11.8%, down 340 basis points year-over-year.

• Free cash flow for Q4 was $456 million, with full-year free cash flow at $438 million, up from $373 million in 2024.

• Net interest expense fell to $58 million, down $32 million year-over-year due to debt paydown.

• Q4 2025 GAAP gross margin was 19.4%; GAAP operating margin was -24.5%; GAAP diluted EPS was -$2.01, impacted by a $485 million goodwill impairment and a $330 million deferred tax asset valuation allowance.

Outlook and guidance

• 2026 total sales growth expected to be flat to 1% reported, with organic sales growth approximately flat.

• Adjusted operating margin for 2026 projected between 13% and 14%; adjusted EPS guidance is $1.85–$2.05 per diluted share, with improvement expected in the second half.

• Free cash flow in 2026 anticipated to improve versus 2025, with gains back-half weighted.

• Segment guidance: Medical Products & Therapies flat to slightly up, Healthcare Systems & Technologies low-single-digit growth, Pharmaceuticals flat.