Baxter International (BAX) Q4 2025 earnings summary

Executive summary

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

• Adjusted earnings from continuing operations were $0.44 per diluted share, down 24% year-over-year due to margin pressures, unfavorable product mix, non-recurring items, and a higher tax rate.

• Full-year 2025 sales reached $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, focusing on stabilizing key business areas, strengthening the balance sheet, and driving continuous improvement.

• A new operating model was introduced to decentralize operations, delayer management, and embed accountability at the business level.

Financial highlights

• Adjusted operating margin for Q4 was 11.8%, down 340 basis points year-over-year; adjusted gross margin was 35.5%, a decrease of 900 basis points from the prior year.

• Free cash flow for 2025 was $438 million, up from $373 million in 2024.

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

• Q4 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.

• Adjusted net income from continuing operations was $225 million, down 24% year-over-year.

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%.

• Full-year adjusted EPS guidance is $1.85–$2.05 per diluted share, with performance expected to improve in the second half.

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

• Free cash flow and earnings are anticipated to be back-half weighted due to seasonality and cost actions.